Through ongoing dialogue with our lender partners, we have found that the challenge in today’s market is not a lack of capital, but rather stricter requirements for accessing it. Debt-service constraints, coupled with the higher cost of debt, make it challenging for commercial real estate investors to find capital partners that align with their objectives. As a result, real estate investors seeking capital benefit from working with an experienced mortgage banking team that can structure project-specific financing solutions based on current market conditions.
Outlook on Current Debt and Equity Markets
By the end of 2026, an estimated $1.15 trillion of U.S. commercial real estate debt is expected to mature, with maturities peaking in 2027 at a projected $1.26 trillion, according to S&P Global1. This growing cohort of sponsors looking to refinance is facing a new lending environment that is more challenging to navigate compared to when these projects were initially financed.
Chart 1: U.S. Commercial Mortgage Maturities Expected to Peak at $1.26 Trillion in 2027
Source: S&P Global, Peakhill Capital
Borrowers looking to refinance are faced with today’s higher rate environment in tandem with lower property values, which have restricted lending terms. As a result, creative capital structuring has become an essential tool in bridging the gap between senior debt availability and client financing objectives. How these structures are applied within the capital stack will determine their overall impact on a project’s financing terms, which requires expertise and experience to effectively align client objectives with economic realities.
“In cities which experienced an influx of deliveries over the last several years, we saw suppressed rent growth and widespread concessions during lease-ups. Even as those concessions are burning off, expenses have moved the other way. When you put all of that together, cash flow is tighter, which directly limits how much lenders are willing to lend. With a large wave of loans maturing in 2026 and 2027, many secondary market lenders have already increased their allocations for 2026, and we typically see larger volumes get done earlier in the year. As those allocations fill up, lenders become more selective, which makes understanding these dynamics early critical to structuring a refinancing.“
The Debt Markets Perspective
Today’s capital stacks are built for resilience rather than maximizing leverage. With interest rates at their lowest level since 2022, borrowing costs have eased. What has not eased accordingly is underwriting discipline. Lenders continue to apply conservative assumptions, including higher stress tests and elevated expense ratios, which have limited the amount of senior debt available for transactions. As a result, commercial property owners are relying more heavily on mortgage bankers to help navigate these constraints to identify viable debt solutions in an increasingly selective lending environment.
“As we navigate the U.S. commercial real estate debt markets in early 2026, amid a backdrop of stabilizing fundamentals and easing borrowing costs, we have signals of renewed lender confidence. However, with lingering distress in some types of maturing loans, we enter the year with senior debt spreads at a higher-than-average premium over corporate credit, an estimated 100-200 bps. This dynamic underscores the importance of partnering with seasoned advisors who can help sponsors capitalize on positive signals and navigate through negative signals to arrive at a win-win outcome for both borrowers and lenders.“
The Equity Markets Perspective
Today’s market requires a clear understanding of which equity structure best fits a given project, whether mezzanine, co-GP, or preferred equity. In addition to up-to-date knowledge of each structure’s investment criteria. This process is both an art and a science. It involves aligning a project’s capital needs with the return expectations and hold periods of prospective equity partners, all while achieving the right cultural fit where the partner shares the client’s goals, values and long-term vision.
“I have several developer/investor clients who have worked with advisors who didn’t fully consider their objectives relative to the equity sources. In one case, a developer was being forced to sell due to a fund-based investor’s mandate. Interest rates at the time were unfavourable, and the equity investor was inflexible regarding timing. The project sold for far below expectation, and the developer lost out on millions on their promote. Scenarios like this drive home the importance of up-front strategic alignment, which leads to better investment outcomes for all parties.“
Peakhill’s Decades of Market Expertise
With decades of experience across debt and equity markets and longstanding relationships across hundreds of capital partners, Peakhill accurately understands what is feasible in today’s environment. This perspective allows us to advise clients with confidence, clarity and a grounded view on current market conditions and what lies ahead.
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Footnotes
- S&P Global. 2024. Commercial real estate maturity wall $950B in 2024, peaks in 2027. ↩︎
This article is for information and discussion purposes only. The contents of this article are not to be construed as investment, legal, business, or tax advice. Peakhill does not provide tax advice. Please consult with a qualified tax professional or financial advisor to understand how any investment decision may impact your individual tax situation. If any information related to the contents of this article, or regarding Peakhill’s corporate strategy and organization, is provided at any time, orally or otherwise, such information is provided as a convenience only without representation or warranty as to its accuracy or completeness and should not be relied upon without independent investigation and verification. All investments carry risks, and past performance is not indicative of future results.
