Commercial real estate debt amid perpetual transitions

Episode notes

In part one of our InvestorExchange private credit series, Ravi Anand, portfolio manager and head of private real estate credit, explores how the asset class is evolving and highlights why we believe there is a perpetual need for transitional lending.

Key topics:

2:00 – Ravi’s background in CRE debt

4:45 – Investing in today's CRE market

6:50 – Two rapid cycles: Behavior and investment flows

9:10 – Transitional lending is perpetual

12:00 – The case for large loans

13:45 – Real estate debt versus equity

15:20 – Banks evolving role in CRE

17:30 – Navigating CRE’s risks

19:00 – Ravi Anand, poker player

Transcript

Ravi Anand: Real estate is inherently cyclical. There is no lease in perpetuity, right? The evolution I described is just the latest in a long line of shifts that I believe create a perpetual need for transitional lending. 

Sonali Wilson: Private credit has gone from niche to necessary. Born out of the void left by banks post GFC, it's now a sprawling $40 trillion opportunity spanning everything from investment grade to high yield and many collateral types across corporate real estate, asset backed and infrastructure. In this three part mini series, we spotlight three of the most exciting corners of this PC 2.0 landscape, guided by the OGs who helped build it before it was cool and mainstream. In this first episode, we're discussing commercial real estate credit. After weathering both Covid and a rapid rate hiking cycle, the $6 trillion market is undergoing a transformation. We'll explore how shifting demographics are reshaping the way we live, work, and travel, and why transitional lending is emerging as a potential source of consistent asset-based income beyond traditional corporate credit. Hello and welcome to the Wellington Investor Exchange. My name is Sonali Wilson and I'm platform leader for Wellington's private credit platform. I'm joined today by Ravi Anand, head of private real estate credit. Ravi leads the firm's private lending activity and commercial real estate, and there's no better person to help us navigate the transformation that we're witnessing in real estate than him. Welcome, Ravi.

Ravi Anand: Thanks, Sonali, for having me.

Sonali Wilson: Ravi, before we dive into the markets, I always love to just hear about people's stories and what got them to where they are. And your story is quite phenomenal. How does a young boy that immigrated to this country and grew up in Queens end up as one of the most prolific real estate lenders out there?

Ravi Anand: Oh, boy. Well, yeah, I did grow up in Flushing, Queens, fortunate to have two very hardworking parents who instilled in me and my siblings hard work, dedication, forward looking, always type of lens. I think a little bit of luck to be able to get into a good school system in Queens. And then going to a sound university in NYU, really set the stage. I actually often joke that I started off as a pre-med hopeful at NYU, and that's because my parents had hoped that to become a doctor.

Sonali Wilson: Oh my gosh, me too. And then I got there and I decided not to do it.

Ravi Anand: That's what a professional was, right? But then I got a D in honors bio that didn't help. But, I was fortunate that NYU had a business school that I could transfer into. And New York was an amazing place to do finance. Real estate, to me, embodied the ability to take what I learned in academia, whether it be my finance 101 class, my accounting 101 class, my economics class, my operations management class. If you look at a billion, $2 billion building, look at Rockefeller Center is worth several billion dollars. It's a complex operating business where all these disciplines have to come together. It's a company of its own. And to me, that was a very direct way to apply what I learned and to invest and focus on something that was tangible. You can touch, feel real estate. It's a hard asset. So for me that was that was just simple and easy. And I found it exciting. So that's how I ended up in real estate.

I started first as an equity investor investing in apartment buildings and commercial properties, working for the then owners of the New York Mets. I left them to join GE capital just to run myself out. Because real estate is a capital intensive sector, it requires financing. And I thought to myself, I'll go to GE, one of the most prolific, long tenured, successful, non-bank lenders of its time. And then perhaps I can move at GE and go back to the equity side. But I found my calling, I believe. And that's where I built my domain and expertise and grew my relationships. And an overall experience as a lender. I went on then to spend some time with the CiM Group, that led me to PIMCO, where I spent seven years leading the team, investing across CRE loans in the US. And excited to be here at Wellington now leading the team for commercial real estate debt.

Sonali Wilson: Ravi, you talked about your family teaching you at a young age to be forward looking. Commercial real estate that's been around for decades. Long before, as I said in my intro, it became en vogue, in such a large and mature market, what does it take to stand out?

Ravi Anand: Yeah, Sonali, I think having experience through cycles is hugely helpful. It is mature. It's gone through cycles. It's nearly $6 trillion. It's dominated by banks. But it's all evolving and it's evolving pretty quickly. I mentioned I was a lender at GE capital. GE had been in that business for 30 years. So there was a lot of principles and policies that were established over cycles and from experience, which I was the fortunate beneficiary. What's different today is the transformation of the lending landscape. Capital is more diverse, but it's also more regulated. Projects are more complex, and success depends on a combination of research, underwriting, structuring, as well as financing capabilities and access to information. As you know, real estate houses the economy. You need beds for students and seniors alike and sheds for Amazon and, say, construction companies. If you think about e-commerce adoption still being in its infancy. Manufacturers and distributors need to get their products to customers. They need these goods to be housed in warehouses. So to really understand it, investors need people who have seen real estate through cycles, who can underwrite assets, anticipate economic shifts and draw on relationships that reveal opportunity before it shows up in the data. In my view, those who can bring it all together, who can see the macro picture and assess investments at a very micro level will stand out.

Sonali Wilson: Ravi, you talked about real estate housing the economy, and you've been doing this for 25 plus years. And so I imagine over that time, right, every cycle that we've seen has brought its own set of challenges and financing needs. As you think about the two cycles we've just been through COVID and rate hiking. What kind of solutions are most in demand right now and what's driving them?

Ravi Anand: You suggested, the two cycles, right? So let's level set. We're coming through two very rapid cycles. I'd call it one of behavior and one of capital and investment flows. In a growing, increasingly connected global economy, consumer behavior was already changing as e-commerce and digital adoption reshaped how people live, work, travel, and how consumers spend. The pandemic didn't start that shift, right, Sonali? It accelerated it. fundamentally changing how space is used and what tenants and communities need. Maybe we take e-commerce as an example. I'd give you the example of my 75 year old mother who had never ordered anything online until 2020. It wasn't until my wife and my sisters started getting groceries delivered to her door. Now she's doing it all the time. That kind of behavior change shows how deep and lasting this transformation really is.

Also consider interest rates rose at record speed, disrupting financing and financial models that had been stable for years. Thus the slowdown, I would say a near stop and transaction activity and leasing and other decisions has delayed business plans, and it's created uncertainty for owners and lenders alike. Real estate is feeling all those shocks, sometimes with the lag, given the longer term nature of leases. The result is a market and physical structures in transition and transitional lending sits right at the center of it, and financing solutions are currently high in demand but low in supply. It's an exciting segment of CRE lending universe that sits at the forefront of reimagining real estate, aligning properties with the needs of the digital economy. I would say the trends shaping local communities, supporting demographic shifts and evolving customer behaviors. All these are creating new patterns of use and the goal to take assets in good, great locations to higher and better use requires financing. And that's why the opportunity is so compelling.

Sonali Wilson: So Ravi, that theme of transitional lending, which as you said, it's taking assets in good, great locations to their highest and best current use is one that's quite front of mind for you. Why is this opportunity so persistent and where does underwriting that risk come into play with what you do as a lender?

Ravi Anand: Yeah. Look, I think the way to think about it is, real estate is inherently cyclical. There is no lease in perpetuity. Right. The evolution I described is just the latest in a long line of shifts that I believe create a perpetual need for transitional lending. Because any real estate asset at any given time is going through a time where it's creating value stabilizing or then going obsolete. Take office as an example. Just like consumer behavior that shift didn’t start with the pandemic. I remember the concept of hoteling when I began my consulting career right out of school in ‘98. It's simply been accelerated, and today's offices need programing for collaboration and wellness. They have to be amenity rich first. I believe that innovation in many ways accelerates obsolescence. So transitional lending is perpetual. There's so many examples of how usage changes are evolving. Logistic networks are becoming denser, retail real estate is moving from places to buy things towards places to experience things. And at the same time we're seeing hotels converted into student housing and older office buildings repurposed into apartments and for residential use. Again, a few examples of how the built environment is being reshaped into real estate in real time. In our view, those transitions will continue. And they all need financing. You ask why underwriting matters so much in this space? So transitional lending focuses on improvements. They're the defining characteristics of how we think about it. And these improvements are borrowers needing to execute a capital plan to pursue a leasing strategy or deliver some sort of operational fix. This requires equally thoughtful lenders who can assess business plans, evaluate sponsor capabilities, provide structured and flexible financing solutions where banks cannot or will not. Now, most traditional franchises aren't set up to underwrite these types of business plan risks. It could be a lack of applied resources or, for many, the inefficiency of the capital provisions for that kind of exposure. In my view, specialty managers are able to provide flexible, predictable, bespoke solutions and they benefit from the value creation and the subordination. So said another way, the safety that comes from the value creating efforts of our sponsors protects us lenders. Thus, we underwrite and get comfortable with execution risk. But in our loans, we're able to maintain significant alignment with our borrowers that bring safety.

Sonali Wilson: So Ravi, within transitional lending you've also mentioned in the past your preference for larger balance, transitional loans, sort of what draws you to those. And then is there a concentration risk or other risks that need to get managed?

Ravi Anand: Yeah, philosophically, I like large loans. A lot of this is informed by my experience at GE and my experience as a lender. Think of them as typically $100 to $300 million in size. And we like to make them two cycles test as sponsors in deep liquid markets. Those markets have strong fundamentals, good transparency and are resilient in demand. So they tend to be the last to go first to come back. I believe such profile delivers better quality assets supported by substantial absolute equity cushions, which provide an added layer of protection. We also like large loans because when you focus on large loans, you can get the benefit of making portfolio loans, which I describe as more than one asset in more than one distinct location. Those are cross collateralized. By virtue of making portfolio loans, you get the benefit of geographic and demand diversity. And it's tough to break a well-structured loan. Larger loans I agree with you, bring some concentration, but I believe that it can be offset by sponsor alignment. They have significant equity at risk and we’ll partner with like minded investors to manage exposure while maintaining pricing discipline and gain stronger structure, more meaningful covenants. In a sense, scale can be a strength. Large loans let us be price makers, not price takers.

Sonali Wilson: Ravi, with that philosophy in mind, you and I talk to a lot of investors together, and we often get asked, you know, why would one allocate to debt over equity. In your view, why is today an interesting time to access real estate through credit markets, maybe over equity markets?

Ravi Anand: Well, I'll first start by suggesting that we know there's a nearly trillion dollars in CRE loans coming to due over the next two years, and that's just as rates remain higher. And we expect those rates to stay higher for longer. Many borrowers need creative financing to refinance, reposition, or stabilize assets, and that sometimes the capital structures themselves. These dynamics with valuation resets, balance sheet reallocation, higher rates and maturities are reshaping the market and creating lasting opportunities for lenders.

I don't really think I would express it as debt is more compelling than equity. We lend to sponsors the equity owners who are pursuing value add or opportunistic business plans. The question for investors is what role this plays in their portfolio. In my view, CRE debt is a diversifier or a complement to traditional fixed income. It can offer less volatility, more stability and consistent current income through cycles, including pandemic. So I think that's why debt is compelling. But I do think there is a place for both.

Sonali Wilson: Ravi, that makes a ton of sense. Maybe we can shift on the composition of those providing this debt. We've heard a lot and you referenced being able to do what the banks maybe can't or won't do in the market. And that there's other lenders filling the gap, including private lenders like yourself. Can you talk a little bit more about this dynamic and how durable the opportunity set can be for private lenders going forward?

Ravi Anand: By and large, regulated lenders are rebalancing and reallocating. Think about the banks who make up half of the US$6 trillion US CRE market. They're facing tighter capital requirements. They're generally originating fewer loans, holding smaller positions and shifting towards lower risk, senior parts of the capital stack. It's a practical move for them. It's more efficient for their capital, and it's more resilient from their perspective. Even in CMBS in 2025, a very large origination year, it's been effectively an agent only business. Banks simply aren't able to take large principal risk for their balance sheets. That's creating a clear financing gap, and private lenders are increasingly stepping in to fill it. Banks will, of course, continue to play a meaningful role in this large market, but their focus seems to be shifting towards capital efficiency and also partnerships with trusted counterparties across the broader financial ecosystem. Over time, I believe those partnerships will help define who the long term winners are. I go back to my earlier point about how quickly the sector is changing, not just in capital markets, but in how we use real estate itself. Transitional lending is perpetual because innovation is constant, and that innovation accelerates obsolescence across most asset types. As new technologies and business models emerge, physical structures must keep adapting. And real estate is a capital intense sector, so the need for flexible credit is large, it's durable, and, in my view, it creates an enduring opportunity for lenders who can combine underwriting depth with scale and discipline. Ultimately, I believe private capital will continue to fill the gap and provide the debt needed to support the market. Sonali, it's a simple story of supply and demand and that imbalance creates opportunity.

Sonali Wilson: Ravi picking up on that thread. You know imbalance creates opportunities. Opportunities can also bring risk. And you've highlighted that capital markets seem relatively exuberant. How does that inform your views on the market?

Ravi Anand: I do think we need to be careful not to rush in. Patience and letting trends settle will be important. I mean, in the near term, I'm focused on fundamentally sound sectors as usual. That's housing because we're short, industrial, because e-commerce is still in its infancy, and there might be some green shoots around office, which has been the talk for the many past years since the onset of the pandemic. I think on the ground, it still feels gray despite the buoyancy in the equity markets. And the key question lies ultimately with where long rates normalize, because that's the best barometer for real estate valuations. So I think from past cycles I've learned that patience is key. The lender's basis is paramount. And most importantly, structure is critical to managing asymmetric risks. So I think the biggest and the brightest prevail. Those who can invest with data driven, not momentum driven, mindsets. And cycles have always rewarded discipline and patience. And I think the next few years will be no different.

Sonali Wilson: So, patience is a virtue.

Ravi Anand: My mom told me that.

Sonali Wilson: My dad used to say the same. So patience is a virtue. And you clearly have created a career taking calculated risks. So if we Google “Ravi Anand, poker player,” some really fun images come up and I have to think that how you play poker certainly has helped inform how you invest.

Ravi Anand: Well, I think firstly we have to understand that there is a misconception that poker is gambling. So I certainly think that investing is about patience and not gambling. So that's true. And in poker, there is a need to gather information. You're always gathering information around about the players, their habits, their tendencies, their desire for risk. So I never really thought of it that that way before. I don't think it's ever been that prescriptive, but, yeah, maybe there's some correlations in the way I was raised, and how I play poker, and how I invest. In that it's about information, it's about trends, and it's about taking calculated risk.

Sonali Wilson: Ravi, it's clear that your ability to read the room on the fly is critical to your poker game. And it seems that ability to discern and distill information is what has allowed you to navigate multiple real estate cycles. Thank you for walking us through the shifts you're seeing in commercial real estate, informed by your 25 plus years in the market. Once again, this is Ravi Anand, head of Private Real Estate Credit. Ravi, thanks for being on the show.

Ravi Anand: Thanks a lot for having me here.

Views expressed are those of the speaker(s) and are subject to change. Other teams may hold different views and make different investment decisions. For  professional/institutional investors only. Your capital may be at risk. Podcast produced January 2026.

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