Private credit

Opportunity in real estate credit

November 18, 2025
Michael Sobolik
Mike Sobolik
Investment Strategist, Direct Real Estate, North America
Opportunity in real estate credit

Opportunity in real estate credit: 4 key takeaways

Private lender originations in commercial real estate (CRE) credit have surged significantly, surpassing pre-pandemic levels and indicating a growing market share for private lenders in CRE financing.1 This trend is driven by policy rate reductions and stabilizing property prices, creating renewed investor interest in this asset class. Our four key takeaways:

  • Private lender originations surged — CRE loan originations by private lenders increased 64% over the past year and are 35% higher than 2019 levels,1 marking a substantial rise in private lender market share. 
  • Historically strong risk-adjusted returns — Over the past decade, private real estate credit has delivered higher return potential with lower volatility compared to other asset classes, making it an attractive investment option.2
  • Historically higher income yields — Commercial real estate credit has historically provided enhanced income yields relative to traditional fixed income investments, supporting its appeal for income-focused investors.3
  • Favorable current conditions — With policy rates expected to remain meaningfully higher than the near-zero rate of the previous decade,4 and real estate prices reset about 19% below peak values,5 the environment offers a timely entry point for real estate credit investments. 
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  • 1

    Sources: Invesco Real Estate, utilizing data from Mortgage Bankers Association, as of Sept. 2025.
  • 2

    Sources: Invesco Real Estate using data from the following indexes: Private real estate credit – Giliberto-Levy High-Yield Real Estate Debt Index (G-L 2) with a 2.6%10-year annualized standard deviation and 8.0% 10-year annualized total return; highyield – Bloomberg US Corporate High Yield Index with a 8.6% 10-year annualized standard deviation and 5.4% 10-year annualized total return; senior loans – Morningstar LSTA Leverage Loan 100 Index with a 6.4% 10-year annualized standard deviation and 5.1% 10-year annualized total return; private real estate equity – NCREIF Property Index with a 4.0% 10-year annualized standard deviation and 5.2% 10-year annualized total return; corporate bonds – Bloomberg US Corporate Total Return Value Unhedged USD Index with a 7.3% 10-year annualized standard deviation and 2.9% 10-year annualized total return; commercial mortgage-backed securities (CMBS) – Bloomberg US CMBS Investment Grade Index with a 4.5% 10-year annualized standard deviation and 2.6% 10-year annualized total return; investment grade bonds – Bloomberg U.S. Aggregate Total Return Index with a 5.3% 10-year annualized standard deviation and 1.8% 10-year annualized total return; Treasuries – Bloomberg U.S. Treasury Total Return Unhedged Index with a 5.6% 10-year annualized standard deviation and 1.2% 10-year annualized total return; US equity – S&P 500 Index with a 16.0%10-year annualized standard deviation and 13.6% 10-year annualized total return; direct lending – Cliffwater Direct Lending Index with a 2.9% 10-year annualized standard deviation and 9.0% 10-year annualized total return. Trailing 10 years of data, last 10 years of quarterly returns, annualized 2015-Q3 to 2025-Q2. An investment cannot be made into an index. Past performance does not guarantee future results. The indexes aren’t subject to fees or expenses.
  • 3

    Sources: Invesco Real Estate using data from the following indexes: Direct lending – Cliffwater Direct Lending Index with a 10.36% 10-year average distribution yield; private real estate debt – Giliberto-Levy High-Yield Real Estate Debt Index (G-L 2) with a 10.32% 10-year average distribution yield; high yield – Bloomberg US Corporate High Yield Index with a 7.09% 10-year average distribution yield;, senior loans – Morningstar LSTA Leverage Loan 100 Index with a 6.56% 10-year average distribution yield;, private real estate equity – NCREIF Property Index with a 4.48% 10-year average distribution yield; corporate bonds – Bloomberg U.S. Corporate Total Return Value Unhedged USD Index with a 3.78% 10-year average distribution yield; commercial mortgage-backed securities (CMBS) – Bloomberg US CMBS Investment Grade Index with a 3.43% 10-year average distribution yield; investment grade bonds – Bloomberg U.S. Aggregate Total Return Index with a 3.04% 10-year average distribution yield; Treasuries – Bloomberg U.S. Treasury Total Return Unhedged Index with a 2.42% 10-year average distribution yield. Trailing 10 years of data, the last 10 years of quarterly yields (Q3-2015 to Q2-2025) are annualized. Past performance is not a guarantee of future results. An investment cannot be made into an index. There is no guarantee that any trends shown herein will continue.
  • 4

    Source: Federal Open Market Committee, median projections, Sept. 17, 2025.
  • 5

    Sources: Invesco Real Estate, utilizing data from Green Street as of Oct. 2025.

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