Private credit stress and real estate opportunities (with Dani Burger)

Software credit faces disruption with lower recoveries; over-concentrated managers will underperform. Fortress avoids AI/data center credit concentration, prefers diversified real estate credit at low LTVs with high yields. Higher-for-longer rates could trigger more opportunities.

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Fortress Investment Group 8.2
Hedge Fund $45.00B
Jack Neumark 9.0

Private credit stress and real estate opportunities (with Dani Burger)

yields

Higher-for-longer rates expected; real estate credit yields attractive at cycle-bottom, implying rates stay elevated.

Dani Burger

Is credit stress headline-driven or real?
Jack Neumark

Software credit will see disruption with lower recoveries; other sectors still performing well.
Dani Burger

Has the reckoning happened yet?
Jack Neumark

More anticipation than actual bankruptcies; defaults expected but not yet materialized.
Dani Burger

What about AI/data center concentration?
Jack Neumark

Avoid over-concentration in AI/data centers as a credit manager; prefer diversification. Data center trades compelling but residual value questions remain.
Dani Burger

What about SRTs from banks?
Jack Neumark

Prefer originating own exposure rather than passive SRTs; SRTs at lower double-digit yields not attractive enough.
Dani Burger

Where are biggest opportunities?
Jack Neumark

Real estate credit: lending at low LTVs with high single/low double-digit unlevered yields at cycle-bottom cap rates; can generate high teens levered returns.
Dani Burger

Impact of hikes instead of cuts on real estate?
Jack Neumark

Higher-for-longer rates hit everything; companies with little cash flow cushion face pressure; could trigger more corporate/real estate opportunities.

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