What stabilising base rates mean for commercial real estate

In this episode of Spotlight, Zachary Vaughan, chief investment officer and global head of real estate at Arrow Global, speaks to Jonathan Brasse, editor-in-chief, real estate at PEI Group, about the impact of stabilising interest rates and the best strategies for investors navigating the current market landscape. He discusses the significance of localised expertise in Europe, the emergence of situational distress in smaller transactions, and the shift towards operational real estate investments. He also discusses evolving portfolios and the increasing appeal of sectors like hospitality and retail.

“I think you’re in an environment now where even though spreads on certain transactions may not be abnormally wide, the quality of the underlying credit is much better… So I think you’re in an environment where the underlying credit as it relates to your risk level is better than it was a couple of years ago.”

“We’re starting to see distress come particularly in the smaller transactions where we focus… Arrow’s obviously got a lot of experience at restructuring debt, working with complex credit situations, but at the same time, we can bring some of our real estate capabilities to that and find an opportunity.”

“I think it’s a better time to start positioning yourself for this investment period, which I think will be quite long… This is the time when private capital in general can take advantage.”