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Shadow Lenders Making Bigger Mark in CRE


Private funds in the US have continued to push into traditional banking and their involvement in commercial real estate is growing. The expanding role of so-called shadow lenders has been made possible by tighter lending restrictions imposed on banks after the financial crisis. Shadow banks that target debt investments in commercial real estate raised a record $14.2B last year and could pick up as much as $118B in commercial real estate mortgages and development loans over the next several years, reports Bloomberg. The banks are firms that act like lenders but aren't limited by federal bank regulations and don't have depositors or access to the Federal Reserve’s discount window. Blackstone Mortgage Trust, Blackstone’s publicly traded REIT, purchased $4.8B of commercial mortgages from GE last month to almost double its assets under management. Loans by regulated banks to shadow lenders were one of the fastest-growing categories of bank credit last year, rising 36%, and allow regulated banks to keep their hands in the market. [Bloomberg]