February 2026

·Private credit turmoil continues with fund outflows for Blue Owl and Blackstone. Blackstone's flagship $82 billion Blackstone Private Credit Fund, a business development company (BDC) that lends to mid-sized companies and distributes over 90% of income as dividends to retail and wealthy investors, saw $3.7 billion in first-quarter 2026 withdrawal requests, or 7.9% of its $82 billion assets, leading to $1.7 billion net outflows after new commitments. Blackstone raised the standard 5% quarterly redemption cap to 7% and invested $400 million alongside employees to fully meet demands, attributing pressures to fund structure rather than liquidity issues, as shares dropped 8% to a two-year low. The outflows mirror turmoil at Blue Owl Capital, where Doug Ostrover and Marc Lipschultz's bets on software and AI lending crumbled under redemption runs, loan sales, and a $24 billion market value loss from AI disruption fears and credit fraud echoes. Peers Apollo, Ares, and KKR fell over 25% year-to-date amid dividend cuts, a UK lender collapse, and bank exposure worries, amplifying $2 trillion private credit strains. Key errors included insufficient redemption gates for retail-focused BDCs and overexposure to volatile sectors without robust stress tests. RA Stanger forecasts a 40% drop in BDC capital formation for 2026, signalling a sharp pivot away from private credit. Evercore analyst Glenn Schorr cautions that Blue Owl's scale heightens fears of widespread losses. Ostrover's assurances of past-cycle resilience underscore testing times ahead. (Source: FactSet, Wall Street Journal, Evercore, Bloomberg, Reuters, 2026)

Shares of big private credit providers since H2 2025

·Blackstone struggles to exit its $2 billion Willis Tower stake amid persistent Chicago market distress. Blackstone has owned Chicago's iconic 110-story Willis Tower since 2015, and with more than $2 billion committed including debt, how it eventually exits has become one of commercial real estate's most closely watched situations. The firm has reportedly been gauging investor appetite for assuming its $1.325 billion CMBS loan, which would be the largest single-property CMBS loan assumption ever, but the sheer deal size dramatically narrows the buyer pool. The building itself is not in distress, generating $129.8 million in net operating income against $91.4 million in debt service, and sitting at 89% occupancy with the Skydeck observatory contributing over $52 million in annual revenue. The problem is valuation: a recent appraisal pegged the property at $1.03 billion, well below the loan balance, meaning a clean exit at a profit looks nearly impossible in today's market. Handing back the keys, as Blackstone has done with other Chicago and Manhattan office investments, would represent a significant reputational hit given the scale of capital deployed and the very public commitment made to the building's transformation. That leaves creative structures as the most plausible path, partial interest sales, carving out the observatory as a standalone asset, or placing the tower into a public REIT similar to the Empire State Building. (Source: Avison Young, CoStar, Blackstone, Morningstar Credit, 2026)

Five largest office tower sales in downtown Chicago since 2024

·US office demand turns positive for first time since 2019 but recovery remains uneven. For the first time since 2019, US office tenants are committing to more space than they are giving up, with net absorption reaching approximately 12.5 million square feet in positive territory across 2025, a meaningful milestone on the market's long road to recovery. The final quarter of 2025 alone saw 9.5 million square feet of positive absorption, a stark contrast to the negative 30 million square feet recorded in the same period of 2020. National vacancy has edged down from a record high of 14.2% to 14%, with CoStar research suggesting the rate may have peaked. Major landlords including BXP, Cousins Properties and Vornado are bullish on momentum building further, citing near-zero new construction and roughly 20 million square feet annually being removed from inventory, a combination that could create a genuine supply squeeze in premium space by 2028. However, the recovery remains sharply bifurcated: demand is concentrating in the newest and best-located buildings, while older, secondary stock continues to struggle. (Source: CoStar, Boston Properties, Newmark, 2026)

Manhattan’s office leasing has driven the national market’s rebound.

·Senior lenders, Goldman Sachs and Deutsche Bank, and mezzanine lender, Extell, race to seize Worldwide Plaza as value collapses nearly 80%. Worldwide Plaza, a 2 million sq ft Midtown Manhattan trophy tower, is now in foreclosure after owners SL Green and RXR defaulted on a $ 940M senior loan. Its appraised value has fallen from $ 1.74B in 2017 to about $ 390M dollars, leaving the building deeply underwater relative to its debt stack. The trigger was the 2024 departure of anchor tenant Cravath, Swaine & Moore, which occupied roughly 620,000 sq ft and generated about 45% of the property’s rent, with that income not yet replaced. Following Cravath’s move to Two Manhattan West, the borrowers began missing or partially paying monthly interest, underfunding operating costs, and failing to pay more than $ 6.4M of property taxes. Senior lenders Goldman Sachs, Deutsche Bank and CMBS bondholders have now filed a foreclosure suit in New York State court seeking to take control of the asset and recover roughly 960M dollars of principal, interest, default interest and costs. At the same time, Extell Development, which bought a large mezzanine loan last year, has been pursuing a separate UCC foreclosure on the equity in the ownership entity, creating a high‑stakes battle between mezzanine and senior creditors for control. The case highlights how older, non‑best‑in‑class towers are struggling even in a recovering leasing market as tenants migrate to new or heavily repositioned product, with leveraged capital structures leaving little room for error when a single major tenant departs. (Source: CoStar, The Real Deal, Bisnow, 2026)

JV between SL Green Realty and RXR own the Worldwide Plaza in Manhattan, New York.

·CMBS distress hits hotels, single family rentals and shopping malls amid rate pressures with Starwood’s hotel portfolio entering special servicing. Distress in CMBS is intensifying across US hotels, single-family rentals, and malls due to high interest rates squeezing cash flows, persistent inflation in operating costs, and revenues lagging pre-pandemic peaks despite partial recovery. Starwood Capital's 22-hotel portfolio, collateral for $265 million CMBS debt, entered special servicing in January on imminent default, with net operating income 57% below 2019 levels, occupancy at 63% (from 73%), and debt service coverage at 0.64x amid a looming $48 billion hotel maturity wall. Broader CMBS hotel delinquencies reached 7.3% by late 2025, concentrated in oversupplied Sun Belt markets where demand has softened. President Trump's order restricting large investors from single-family home purchases is forecast by Fitch to have limited near-term effects on securitisations, as institutions own just 2-3% of stock and shift to exempt build-to-rent developments; issuance has fallen from $1.6 billion in 2025 to under $900 million in 2026. New Jersey's Paramus Park mall highlights retail woes, its value plunging 71% to $61 million, below $120 million debt, on net operating income halved from underwriting, despite steady 82% occupancy. This trifecta underscores CMBS vulnerabilities, with analysts eyeing workouts over the next 2-3 years as rates stabilise slowly and property fundamentals bifurcate between resilient assets and distressed legacies. (Source: Morningstar DBRS, CoStar, Fitch, 2026)

St. Louis Airport Hotel is one of Starwood Capital’s hotels in the CMBS loan portfolio that entered special servicing

Europe

·Ares acquires £160m Netflix London HQ at 4.4% yield signals strong demand for core trophy London offices. Ares Real Estate Funds' c. £160 million purchase of Netflix's 106,000 sq ft Copyright Building in Fitzrovia from Union Investment heralds renewed appetite for large-ticket core London offices, with signing done and March 2026 close ahead. Priced near £160 million guide (4.39% yield, £1,493/sq ft), the BREEAM Excellent trophy office, let long-term to Capita/Netflix near three Tubes, marks Union's second major London exit in seven months, freeing capital for redeployment. This transaction underscores a pivot to stabilised, ESG-superior primes yielding reliable income in supply-scarce West End submarkets like Fitzrovia, where rents have rebounded post-vacancy waves. Ares co-head Wilson Lamont positions it as core strategy exploiting rental growth in transport-hubs, contrasting distressed secondary sales. For institutional investors, it exemplifies core+ transactions (~£100m+) regaining traction via long leases and sustainability premiums, akin to Prologis' £130m logistics play. London's bifurcation accelerates: trophy assets command sub-5% yields, drawing US/European capital amid rate stabilisation. Union plans reinvestment, affirming cycle-low entry points for quality stock. Such deals boost transaction velocity for £150m+ blocks, signalling 2026 uptick in core flows. (Source: Bloomberg, CoStar, Union Investment, 2026)

Ares acquires 106,000 sq ft office Netflix London HQ building in Fitzrovia, London.

·Paris's La Défense enters distress cycle as vacancy rates hit near-decade highs. Paris's La Défense office market is showing serious cracks, with lenders taking back assets and forced sales emerging across the district's iconic tower skyline. A toxic mix of post-pandemic remote work, the end of cheap financing, and domestic French political uncertainty has pushed vacancy rates in the area to nearly 32%, compared to just 5.5% in central Paris, triggering a wave of distress that is now spilling into the open. The most striking example is Tour Hopen, where lender Cale Street Partners (backed by the Kuwait Investment Authority) has effectively taken the keys from its owners after loan covenants were breached and the building sat empty following TechnipFMC's departure in 2021. The property carried roughly €455 million in debt as of late 2024, with no tenants in sight. Meanwhile, Tour Europe,  bought by Korean investors for €280 million in 2019, is now being marketed with bids expected to come in below €170 million, the current debt secured against it, representing a 40%+ loss in under six years. TotalEnergies is also offloading a pair of towers as it consolidates to new offices nearby. For real estate investors, the situation presents a classic distressed market dynamic: entry prices are falling sharply, but the real question is whether demand will follow. (Source: Bloomberg, 2026)

Paris's La Défense office towers showing signs of material distress.

·Nuveen agrees to buy Schroders in £9.9bn deal, creating a $2.5 trillion asset management giant. US asset manager Nuveen has agreed to acquire UK-listed Schroders in a £9.9 billion all-cash deal, marking one of the largest asset management transactions in recent years. The combined group would manage nearly $2.5 trillion in assets across more than 40 markets and for real estate investors, the scale is significant. Nuveen Real Estate already manages $139 billion across debt and equity, while Schroders Capital's real estate arm oversees €33 billion spanning more than 1,100 properties globally, meaning the merged platform would rank among the world's largest real estate investment managers. The deal brings together Nuveen's Americas-heavy platform, backed by institutional giant TIAA, with Schroders' predominantly EMEA-focused business creating genuinely complementary geographic coverage that could open new capital channels and co-investment opportunities for clients of both platforms. London will remain the non-US headquarters with the Schroders brand intact, and CEO Richard Oldfield will continue to lead the group for at least the first 12 months post-close, suggesting limited near-term disruption to existing mandates and relationships. The transaction is expected to close in Q4 2026, pending shareholder and regulatory approval. (Source: Green Street, CoStar, 2026)

Schroder’s London HQ at 1 London Wall Place

·DWS pulls €300m Frankfurt tower sale as investor hesitation over large tickets grows in Germany. DWS has pulled the sale of WestendDuo, a 30,300 sqm office tower in Frankfurt, after failing to find a buyer at its €300 million asking price, a significant signal for the broader German office market. Despite attracting strong interest from both domestic and international investors, bidders balked at a price they felt did not adequately reflect the building's refurbishment needs and its slightly off-centre location on the fringe of the banking district. The situation was further complicated by German open-ended fund regulations, which limit how far DWS can deviate from the asset's last book value of €285 million, effectively tying the seller's hands in any price negotiation. The failed sale is the second high-profile Frankfurt office deal to collapse in under two years, following Amundi's €200 million Grand Central transaction falling through in June 2024. Large ticket hesitation is spreading beyond offices too. DWS also paused the sale of its Spectrum warehouse in Hamburg after the €160 million price tag met with little market interest. All eyes now turn to two other major Frankfurt listings: the €900 million Opernturm, being sold by GIC and JP Morgan, and Invesco's €400 million Die Welle complex, which faces added leasing risk after anchor tenant Citigroup departed in 2025. Together, these deals will serve as the clearest test yet of whether investor appetite for large-lot German real estate is recovering or still firmly on hold. (Source: Green Street, 2026)

DWS’ WestendDuo tower pulled from market

·European hotel investment surpasses €27bn in 2025, marking strongest year since pre-pandemic with UK, Spain, and France leading the way. European hotel transaction volumes exceeded €27 billion in 2025, with more than 1,050 hotels and 133,400 rooms changing hands, up 23% from 2024 and 28% above the 10-year average, marking the sector's strongest year for investment since before Covid. The UK, Spain and France led activity, accounting for €13.4 billion in volumes, while Denmark, Czech Republic and Ireland recorded the most dramatic relative growth, with transaction volumes surging 660%, 425% and 116% respectively. Standout deals included Capman's Nordic hotel acquisition from Midstar at over €900 million, Queensgate's €776 million sale of the Generator Hostels portfolio to Brookfield, and Eagle Hills' €220 million purchase of a 10-hotel Croatian portfolio. Cushman & Wakefield attribute the strong volumes to improving operational performance, particularly across Eastern and Southern Europe, a more favourable debt environment, and the continued institutional shift toward the "sheds and beds" investment thesis. The buyer mix is broadening too, with value-add investors and owner-operators now being joined by a growing re-entry of core capital, suggesting the market is maturing beyond opportunistic plays. (Source: Green Street, Cushman & Wakefield, 2026)

Grand Joanne Hotel, Copenhagen, was part of Capman’s Nordic hotel acquisition