EXECUTIVE SUMMARY
While uncertainty continues to challenge sentiment and activity, the stability and resilience of private real estate credit may provide a reliable income stream with built-in downside protection.
- At $4.8 trillion the U.S. private CRE credit market is an asset class comparable in size to major fixed income markets, offering a robust foundation for diversified investment.
- Private CRE credit aims to enhance portfolio returns by providing predictable income streams and offering downside protection, while maintaining low correlation to other major asset classes, helping to manage portfolio risk.
- Normalizing interest rates drive high current income while a recovering real estate market strengthens credit fundamentals, boosting the potential for solid returns on new investments while reducing risk.
- Increased need for debt capital, driven by loan maturities, building modernization needs and selective bank appetite, creates opportunities for alternative and flexible financing solutions.
- A growing range of property types, including operational assets, provides an expanded universe of investment opportunities, allowing for greater diversification and higher value-creation potential.
The views expressed herein are those of PGIM Real Estate investment professionals at the time the comments were made and may not be reflective of their current opinions and are subject to change without notice. Neither the information contained herein nor any opinion expressed shall be construed to constitute an offer to sell or a solicitation to buy any security.
Certain information in this commentary has been obtained from sources believed to be reliable as of the date presented; however, we cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. The manager has no obligation to update any or all such information, nor do we make any express or implied warranties or representations as to the completeness or accuracy. Any projections or forecasts presented herein are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated, based on assumptions, subject to significant revision, and may change materially as economic and market conditions change.
This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation. Clients seeking information regarding their particular investment needs should contact their financial professional.
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