Private Credit Bridge
Private Credit Has Become the Default Bridge Lender — And It's Repricing Accordingly
When regional banks began pulling back from CRE bridge lending in earnest in mid-2023 — caught between rising deposit costs, regulatory scrutiny of CRE concentration, and a wave of extension requests on distressed office and retail loans — the conventional assumption was that they'd return once conditions normalized. That assumption has not played out. Regional bank appetite for new-origination CRE bridge loans in 2026 remains materially below 2021 levels, and the gap has been filled not by banks recovering their nerve but by private credit funds stepping into the vacuum.
The implication is structural, not cyclical. And it's repricing what bridge debt costs.
The current private credit landscape for CRE:
The dominant players in non-bank CRE bridge lending as of mid-2026 are a recognizable roster: Ares Management, Blackstone Real Estate Debt Strategies, KKR Real Estate Credit, Benefit Street Partners, Mesa West Capital (Morgan Stanley), and a growing cohort of mid-market debt funds — Arbor, Ready Capital, Greystone on the multifamily side, and a range of single-family-to-midsize-commercial platforms filling the under-$25M space.
Collectively, these platforms originated an estimated $38 billion in CRE bridge loans in H1 2026, according to tracking by Commercial Mortgage Alert — representing approximately 62% of total non-agency CRE bridge origination volume. Banks accounted for the remaining 38%, down from roughly 55% in 2022.
What private credit bridge debt actually costs right now:
Spreads over SOFR for private credit bridge loans on stabilized or lightly transitional assets (value-add multifamily, anchored retail, Class B industrial) are currently running 275–325 basis points, depending on sponsorship quality, LTV, and recourse structure. On more transitional assets — ground-up construction, heavy value-add, or markets with meaningful supply risk — spreads are 350–425 bps.
With 1-month SOFR at approximately 4.30%, that puts all-in bridge rates at 7.05%–8.55% for transitional deals. That's the cost of non-bank capital in the current environment. It's not cheap. But it's available.
The refinement that matters: private credit lenders are competing with each other now in a way they weren't 18 months ago. More capital has entered the space, and spread compression at the margin is beginning. Deals with strong sponsorship, institutional-quality collateral, and sub-65% LTV are seeing aggressive execution from multiple lenders — which means operators with that profile have genuine pricing leverage for the first time since 2021.
The structural shift worth tracking:
Private credit's dominance in bridge lending has a second-order effect that hasn't received enough attention: documentation and reporting requirements. Unlike regulated banks — which operate under standardized OCC/FDIC examination frameworks — private credit lenders impose their own covenant and reporting packages, which vary by fund and are often more idiosyncratic and demanding than bank covenants.
A borrower working with a private credit bridge lender in 2026 may face monthly NOI certifications, real-time rent roll submissions, lender approval rights on leases above a certain square footage, and quarterly third-party property condition assessments. These are not hypothetical — they are standard in current-generation private credit term sheets.
The operational implication: the administrative burden of managing a private credit bridge loan is higher than managing a bank credit facility. For operators with multiple assets in transition across multiple private credit lenders, that compliance stack adds up quickly.
Klyvora note: Managing covenant compliance, NOI certifications, rent roll submissions, and lender reporting packages across a portfolio of private credit loans is exactly the kind of structured, recurring work where Klyvora's offshore accounting and compliance teams add immediate value. Our clients don't miss covenant deadlines — because they're not relying on an already-stretched asset management team to catch them.
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