Private Credit in CRE: A Lender’s Perspective with Hunter Buresh

In This Edition: A Lender’s Perspective on Private Credit

Featuring Guest Author: Hunter Buresh, MCube Financial

In this edition of the Peoples Perspective, I’m pleased to welcome my friend and collaborator, Hunter Buresh. Hunter serves as a commercial real estate underwriting analyst at MCube Financial in Charlotte, NC, where he focuses on structuring agency-backed multifamily loans and evaluating risk in evolving credit markets. His insight aligns perfectly with today’s focus on private credit — especially for owners and developers navigating transitional CRE deals.

MCube Financial is a firm grounded in financial strategy, helping clients optimize capital structure and investment execution. With Hunter’s experience in lender-side analysis and his grasp of credit flows, his perspective adds real value to the conversation for any CRE investor or borrower weighing private capital alternatives.

Now, I’ll turn it over to Hunter for the full article.

Why Private Credit Matters for Today’s CRE Borrowers?

If you’re a developer or owner tackling a transitional project such as an apartment refurbishing, private credit could be the funding solution you’re looking for. Traditional banks often shy away from unstabilized properties, but private lenders specialize in these scenarios, offering speed and flexibility.

Private credit is nothing new, but it has come into the spotlight as banks have tightened certain types of lending, and borrowers look for alternative capital. Borrowers are seeking speed and more tailored structures and are willing to pay a higher cost of capital to get it.

Private credit is filling that gap. Global private credit AUM is now estimated at roughly $1.7–1.8 trillion, up from around $500 billion in 2015, with projections at $2.64 trillion by 2029.(1) & (2)

To put this into context, we’ll examine the macro trends and why they matter for CRE borrowers.

Macro Forces Shaping Private Credit Demand

Market Conditions and Investor Behavior

Elevated asset valuations and uncertainty around fiscal policy are pushing investors to safer assets relative to the stock market. Recent tariff policies have introduced uncertainty for businesses, particularly around inventory and supply chain planning. Several analysts and institutions have argued that equity markets may be experiencing an AI-driven bubble. This is happening while the central bank is addressing persistent inflation and responding to signs of labor market weakness. (3)

What Treasury Yields Are Signaling

This cautious economic outlook and expectation of easier monetary policy is displayed in bond pricing data. Demand for less risky assets has increased government bond prices, lowering bond yields.

10-year Treasury recently dropped below 4% for the first time in over a year.
2-year Treasury trending lower as investors lock in higher rates in the near term. (4)

Figure 1: Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity (https://fred.stlouisfed.org/series/DGS10)

Figure 2: Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity (https://fred.stlouisfed.org/series/DGS2)

These shifts matter because benchmark rates like Treasuries and SOFR influence pricing across all credit markets, including private credit.

Why Lower Treasury Yields Affect Credit Spreads

When Treasury yields fall:

The gap between safe and risky loans (credit spreads) often narrows — unless investors demand higher premiums for riskier bonds.
Corporate bonds become relatively more attractive (higher yield vs risk free assets)
Investors may buy more credit, pushing prices up

Why Credit Spreads Matter

This happens because the falling risk-free rate from Treasuries makes the additional yield from corporate bonds appear more attractive, causing investors to buy them and push prices up. However, if falling Treasury yields are driven by worsening economic outlook, spreads may widen as investors move into the relative safety of Treasuries in a “flight to safety” scenario.

Where We Are Today

Today we are not in a full flight-to-safety scenario. Instead, the dominant trend since the September rate cut has been risk-on, with credit spreads near historic lows and strong demand for corporate and private credit. However, geopolitical risks and economic uncertainty could quickly reverse this if conditions deteriorate. (5)

This is reflected in the ICE BofA US High Yield Index Option-Adjusted Spread, which remains near cycle lows, signaling strong risk appetite among credit investors.

Figure 3: ICE BofA US High Yield Index Option-Adjusted Spread (https://fred.stlouisfed.org/series/BAMLH0A0HYM2/)

What are the opportunities and costs for borrowers?

The Borrower Trade-Off

For borrowers, private credit offers speed and flexibility but at a higher interest rate compared to traditional loans. (6)

Compared with the peak-rate environment of 2023, all-in borrowing costs in private credit have moderated somewhat as base rates have edged lower and spreads have compressed. Even so, private credit still commands a meaningful premium over bank and public-market loans, reflecting its illiquidity and flexibility. (7)

Because these projects carry more risk, expect pricing to reflect that. CRE bridge loans from private credit providers typically come at a meaningful premium that is higher than senior public loans. (8)

What Borrowers Get In Return

In exchange, you get:

Faster Closing: Often within weeks, not months.
Flexible Structures: Interest-only periods and draw schedules tied to renovation milestones.
Less Red Tape: Fewer regulatory constraints compared to banks.
All-in rate: Often 7–10% depending on risk profile and leverage.

For borrowers, the trade-off is clear: higher cost of capital in exchange for speed, certainty and tailored terms that make transitional projects possible. (9) & (10)

Risks to Watch and How to Prepare

As the rate environment shifts and private credit continues expanding, borrowers should be intentional in their approach.

Potential Challenges

Lower base rates can reduce all-in borrowing costs, but they also tend to compress yields
Increased competition among lenders may bring tighter underwriting
Some lenders may become more selective as capital becomes cheaper

That can benefit borrowers, yet it may also come with tighter underwriting or more selective credit approval as lenders reassess risk.

Documentation and Covenant Risk

Increased competition among private credit funds can lead to:

Weaker covenants
Looser underwriting standards in some parts of the market.

While this may feel borrower- friendly in the short run, history suggests that weaker documentation can lead to:

More aggressive lender actions
Requests for additional collateral
Restructuring pressures (11)

This is largely caused because lenders have fewer contractual protections.

Where Private Credit Works Best In CRE

Private credit remains particularly useful for:

Transitional projects
Bridge loans
Value-add business plans
Lease-up properties

Such projects value speed and flexibility over the lowest possible rate. But the advantages come with trade-offs — especially around risk.

Borrowers should keep an eye on rising delinquencies, shifting underwriting standards, and stricter covenants.

Risk management principles going forward:

Avoid overly aggressive leverage on transitional or value-add deals
Maintain more conservative interest-reserve assumptions
Stress test pro formas for higher spreads or slower lease ups

Bottom Line

In short, today’s market conditions offer meaningful opportunities for well-prepared borrowers. Lower base rates can support project budgets, and private credit can unlock business plans that might stall under traditional bank requirements.

But success still hinges on disciplined underwriting, realistic assumptions, and a clear understanding of how quickly credit conditions can change.