Over the next three years, $1.5 trillion worth of real estate debt will need to be refinanced[1]. Money management firms around the country and the world are lining up to compete for this debt, which makes up what industry insiders call a “massive opportunity.” Analysts estimate that about $450 billion of new capital will be needed to bail out the troubled portions of property loans, but only about $250 billion will be amassed via conventional sources to fill the need. Around $60 billion of that is likely to take the form of distressed commercial mortgage-backed securities that will need to be restructured.

All types of investment firms are “leaping in” to fill the void, with private equity firms, mortgage real estate investment trusts, hedge funds, equity real estate managers and real estate debt managers are all moving in to participate in the buying spree. They are raising new funds and allocating portions of other funds to buying debt.

With analysts everywhere concerned that there will not be enough conventional financing in the coming years, these actions seem to indicate that as many real estate investors and experts predicted, private funds are moving in to fill the void. Do you think that this is a good sign for the real estate market?

Thank you for reading the Bryan Ellis Real Estate Letter!

Your comments and questions are welcomed below.

[1] http://www.pionline.com/article/20110613/PRINTSUB/306139973