The Ides of March came a bit early for private-credit funds this year. Blackstone, the world’s largest alternative asset manager, managing over $1 trillion in assets as of early 2026, said in early March that redemption requests from its $82-billion Blackstone private credit fund, known as Bcred, rose to 7.9% of its assets in the first quarter.
It’s not the only one in reclamation worry. In February, Blue Owl Capital, an asset manager that specializes in private credit with over $307 billion in assets under management as of late 2025, restricted withdrawals from one of its private-credit funds after spooked individual investors began asking for their money back.
Shares of private-credit lenders, including Apollo, Blackstone, Ares and KKR, have fallen more than 25% so far this year.
Much of the concern in the nearly $2-trillion private credit market is around loans these funds have made to the software sector, where valuations have plunged in public markets on the threat of artificial intelligence. This is exacerbated by the illiquidity of private-credit loans that are not publicly traded on exchanges and often held to maturity of around five years. Investors in this space accept this lack of liquidity in exchange for an “illiquidity premium,” which provides higher yields and returns compared to public, tradeable debt.
Does commercial real estate face a similar danger in the private-credit sphere? Not according to those who work squarely in it; in fact, they say, it will only get bigger.
“Absolutely—you’re seeing private credit play a bigger role,” said Leeny Oberg, the outgoing CFO and EVP of development for Marriott International.
Private credit is one of a handful of debt instruments borrowers can turn to. It has key distinctions compared to traditional bank lending, including faster execution (private credit deals can close in 30–60 days) and broader flexibility in loan structuring. It’s not the wild west, but, in short, private credit has the pluck to step in and fill gaps left by stricter bank regulations brought about by protection acts like Dodd-Frank and Basel III.
Private credit is not new, but found more opportunity, Oberg noted, in the past few years as the appetite by traditional banks to originate new loans became more restrained over regulatory concerns and the way they’re charged for capital structures. There is one caveat: “Private credit is very expensive,” Oberg said.
Going Private
Private-credit loans often contain a floating interest rate and are structured with customized terms unique to the borrower and lender. It’s an attractive debt vehicle for the hospitality industry, especially for transitional hotel assets, including acquisitions, intensive PIPs, brand conversions and repositionings, said Jay Morrow, senior managing director of hospitality for Walker & Dunlop, one of the largest providers of capital to the commercial real estate industry, in particular because hotels aren’t like any other commercial asset class, where rates can be reset daily and occupancy and sales are so tied to consumer discretionary spend and corporate travel.
“Hotels are operationally intensive and subject to seasonality, demand volatility and CapEx requirements,” Morrow said. “Traditional lenders struggle to underwrite these risks.”
Walker & Dunlop has arranged private credit across senior, stretch senior and structured capital solutions for hotel acquisitions, refinancings and recapitalizations, including, in January, the $112-million refinancing of Ace Hotel Brooklyn, where, as Morrow put it, speed, structure and underwriting to a transitional business plan were critical.
Peachtree Group, a direct lender, deployed $3 billion in credit transactions across an array of asset classes in 2025, representing an 86.8% increase from 2024. It entered private credit in 2010. “With banks pulling back and refinancing risk rising across the market, demand for experienced private lenders has accelerated,” said Daniel Siegel, president and principal, CRE at Peachtree Group.
A few examples of its work include a $130-million construction loan for the VOCE Hotel & Residences in Nashville; a $72.5-million bridge loan for the 346-room Westin Atlanta Gwinnett; and a $53-million refinancing for the 203-room Morrow Hotel in Washington D.C.
Peachtree manages multiple vehicles. One of those targets debt opportunities, explained Jared Schlosser, who is head of credit originations and commercial PACE at Peachtree Group. Hotels are a space Peachtree knows: It launched in 2007 as a family office to invest in premium-branded, select-service hotels. “Our original thesis was, ‘We know hotels, where we’re comfortable being 100 cents, which is the equity. Why not be 70 cents, which is the debt?” Schlosser said.
In 2023, the U.S. banking sector experienced its largest tumult since 2008 driven by high-volume bank runs in quick succession at several regional banks. These collapses were largely triggered by unrealized losses from rising interest rates and high uninsured deposit levels. The upshot was banks pulling back in their lending activity. It presented opportunity for groups like Peachtree, which had been raising equity vehicles. Interest rates were high, cap rates were high, “We can’t put those dollars into equity deals,” Schlosser said.
Private credit up to that time had been the smaller percentage of the pie chart of debt, which, for the hotel industry was overshadowed by CMBS and traditional bank loans. “Private credit is going to be massively bigger than it was in 2023,” Schlosser said.
Rising Up
JLL is no stranger to the debt markets. It’s one of the largest commercial real estate brokerages in the world. Kevin Davis, Americas CEO for the hotels and hospitality division, displays tennis paraphernalia in his office as a subtle reminder or messaging to clients. JLL wants to hold serve. “We want to sell an asset to you. We expect to finance it for you. We expect to sell it for you,” Davis said.
The private credit space, he and others argue, became more ubiquitous after the Great Financial Crisis. Until then, CMBS dominated the landscape, but that primacy came to a halt post-GFC as lenders, saddled with bad debt, winded down and segued into selloff mode.
“A lot of those guys never got back into the market,” Davis said, allowing for a gap in the financing markets that began to be filled by private credit.
Traditionally, a large portion of commercial real estate debt was originated and held by banks. “Following the Great Recession, banking institutions largely withdrew,” said Alex Horn, managing partner and founder of BridgeInvest. With less capital being allocated toward real estate, a gap emerged. “This presented an opportunity for debt funds to step in and capture deal flow,” he added.
The GFC was hard; COVID was existential. Overnight, hotels went to zero occupancy and zero cash flow—covering debt service became impractical. Hotels were arguably hit harder by COVID than any other asset class. In December 2020, the overall CMBS lodging delinquency rate soared to a staggering 19.8%, compared to just 1.5% at the end of 2019, according to Trepp. Past headwinds have showed how financing from traditional platforms and banks can prove challenging, making room for optionality. “The flexibility of the private-lending platform can pose a meaningful solution to hotel owners and investors facing distressed situations,” Horn said.
On Structure
One of the big distinctions between private credit and CMBS is that while most CMBS lenders are cash-flow lenders, private credit is generally willing to underwrite more transitional loans that have either little to no cash flow and will provide up to 65% leverage. (CMBS loans also have strict prepayment penalties designed to protect investors from losing interest income if a loan is paid off early. This convention discourages owners from selling an asset early.) “They’ve carved out a niche relative to the CMBS lenders relative to the bank lenders and relative to the life company lenders,” Davis said. “Their pricing tends to be more expensive, but they’re also offering loans on assets that frequently have a higher risk profile relative to the traditional risk profile of banks.”
In essence, it allows these debt funds to be much more entrepreneurial since they have flexibility in their risk profile about what they’re willing to do and not do. One of these is Atlanta-based Access Point Financial, which has carved out a $3-billion space in the private-credit landscape and focuses exclusively on hospitality. In August, it completed the refinancing of $1.1 billion of floating rate mortgage loans backed by 67 properties with ATLAS SP Partners. In January of last year, it provided $195 million refinancing for The Beekman, A Thompson Hotel in New York.
Direct lenders like Access Point fill a breach since their risk tolerance is typically higher than a traditional bank lender; it often means their money is more expensive. Consider a $10-million loan where a bank might provide up to 60% leverage. “But that requires some very real credit metrics,” said James Reivitis, chief development officer and managing director at Access Point Financial. War in Iran and its attendant ramifications have clouded the economic environment and when things get a little bumpy, traditional banks may reconsider its credit box. “If they pull back, somebody like us would say, ‘I still think we’re good at 65 cents on the dollar,’” Reivitis said.
It doesn’t mean banks are totally out of the game. Many non-bank lenders tap banks to fulfill private-credit lending through what is knows as “back leverage,” a financing method where a lender, often a private-credit fund, borrows money from a third-party bank, using their existing portfolio of loans as collateral. This strategy allows funds to increase their lending capacity and improve investor returns. It also allows banks to put money to work without the mechanics of managing the loan and dealing directly with the borrower.
This symbiosis allows deal structures to benefit the bank and private-credit lender. In a typical example, private-credit loans are SOFR-based, floating-rate, five-year loans. In this scenario, a bank provides a credit facility that the fund will price at SOFR-plus a certain spread above what the bank priced the debt—maybe 200 basis points. “If my back leverage is charging me SOFR plus 300, I’m going to try to go out and charge a lender SOFR plus 500. I’m making a 200-basis-point spread on the loan, but I’m also dealing with servicing it,” Reivitis said. Accordingly, should the loan go upside down, Access Point, in this example, is on the hook. “If they miss a payment, I still owe a payment,” he said.
As Reivitis put it, private credit acts ostensibly like mezzanine debt, where, in an alternative scenario, a borrower might have two loans to pay back—one to the bank and one to the alternative lender. Now, it’s one product, one loan. “Instead of having to deal with a bank and a mezz lender, they’re just dealing with us,” he said.
It’s not easy being private credit right now. A Morningstar piece called it “crunch time” for private credit. There is a distinction, however: commercial real estate private credit is a separate part of the broader private-credit market. Cracks in the latter don’t necessarily correlate to any distress in private credit earmarked for hotels.
Brian Klinksiek, global head of research for LaSalle Investment Management, recently said that the collateral behind real estate private credit is so different. It’s that distinction that keeps it going unabated.