October 2025

North America

·Brookfield expands credit power with full Oaktree takeover in $3bn move. Brookfield Asset Management will take full control of Oaktree Capital Management by acquiring the remaining 26% stake it does not yet own in a deal valued at about $3 billion. The transaction, expected to close in early 2026 pending regulatory approval, values Oaktree at roughly $11.5 billion. Brookfield first bought a 62% stake in Oaktree in 2019 for $4.7 billion, and full ownership now aims to accelerate its growth in private credit and distressed debt markets. The purchase will be funded jointly by Brookfield Asset Management and its parent, Brookfield Corporation, with proportional contributions of $1.6 billion and $1.4 billion. Oaktree, founded by Howard Marks and Bruce Karsh, brings $209 billion in assets under management, further strengthening Brookfield’s $1 trillion global investment platform across real estate, infrastructure, renewables, and private equity. Brookfield CEO Bruce Flatt said that complete integration will deepen the firm’s credit capabilities, enhance collaboration, and position Brookfield as a global leader in alternative credit. The company confirmed the move will not result in significant operational changes but will allow stronger alignment and expansion of its long-term credit strategy. (Source: Green Street, Brookfield, Oaktree, 2025)

Brookfield Place in Bay Street, Toronto

·SL Green secures Park Avenue Tower as Midtown office demand surges in one of the year’s largest office deals. SL Green Realty has entered a contract to acquire Park Avenue Tower in New York from Blackstone for $730 million, one of the year's largest office deals. The 36-story, 621,824 square-foot building is located in the Park Avenue corridor, which now boasts a vacancy rate below 6%, making it one of Manhattan’s tightest office markets. This acquisition comes as Manhattan’s premium office sector outpaces the rest of the city, benefiting from a "flight to quality" trend among tenants seeking modern space, top amenities, and prime location. Recently renovated, Park Avenue Tower offers upgraded infrastructure and is currently leased at below-market rents, providing significant potential for rent growth. Office leasing volumes in Midtown have surged 30% year-to-date, with foot traffic returning to pre-pandemic levels—an achievement unique among major world cities. SL Green’s expanding Park Avenue holdings further position the firm as the dominant owner in this sought-after corridor, reinforcing long-term value at a time when demand for top-tier assets has never been stronger. The sale demonstrates the momentum behind recently renovated assets and the enduring appeal of Manhattan’s best office locations. (Source: CoStar, SL Green, 2025)

Average vacancy rate in the Park Avenue office corridor has dropped below 6%

·Refinancing wave puts $60bn of US hotel debt to the test. The US hotel industry is entering a critical refinancing cycle, with nearly $60 billion in commercial mortgage-backed securities (CMBS) loans maturing between late 2025 and 2028. Roughly 1,900 hotels comprising over 315,000 rooms are affected, most originated during a lower-rate period at an average interest rate of 6.5 percent. Today’s elevated interest rates and tight credit markets are set to challenge borrowers, particularly those with weak cash flows or assets in secondary markets. Suburban hotels face the greatest exposure, representing nearly half of all properties tied to maturing loans. Upper‑midscale and upscale select‑service brands—such as Hampton, Holiday Inn Express, and Fairfield Inn—make up the majority of loans, reflecting CMBS’s role in financing standardized formats. Urban and resort properties, while fewer, carry outsized risk because of high loan balances and market volatility. Analysts see the next three years as a decisive test for hotel capital markets, with distress, restructuring, and opportunistic acquisitions likely to reshape the sector. (Source: CoStar, 2025)

Upcoming loan maturity wall largest for midmarket and economy segments of the hotel industry

·Hong Kong - headquartered Gaw Capital to wind down US and European institutional business. Gaw Capital Partners is retrenching from US and European institutional business after over 15 years of aggressive expansion, prompted by mixed performance, shifting investor demand, and challenging local market conditions. The firm’s US and Europe-focused funds struggled to match the returns and growth achieved in pan-Asia vehicles, with Western markets beset in recent years by pricing volatility, inflationary pressures, and stiff competition for high-quality deals. The general outcome did not consistently deliver the standout yields seen in Asia-Pacific operations. US institutional funds faced heavy headwinds in office and retail segments, and European ventures encountered a tough market for scaling value-add strategies. The company’s latest statements emphasize their pivot back to core Asian markets where they retain local expertise, stronger network effects, and a track record of revitalizing underperforming assets with innovative financing. Gaw has committed to ensuring all outstanding investor capital is exited in an orderly and profitable manner from Western funds, while continuing select opportunistic deals primarily in tech and hospitality in the US and UK. Ultimately, Gaw Capital’s retrenchment serves as a strategic realignment toward markets with proven outperformance, resilience, and greater growth prospects for their funds. (Source: PERE, 2025)

Gaw Capital’s US Fund Performance To Date

·US industrial real estate faces prolonged headwinds in 2026 due to rising vacancy rate. The outlook for US industrial property in 2026 is cautious, with rising vacancy rates forecast to peak around 7.9% by Q3, driven by persistent weakness in tenant demand and a continuing freight recession. Despite some positive net absorption in late 2025, absorption rates remain far below prior years and rent growth is forecast to be near 13-year lows at just 1%. Logistics assets—especially larger and newer properties—are under acute pressure: absorption has dropped 30% year over year, leasing activity is subdued, and available space is building up, leading to more subleases at lower rents. New construction starts have plunged to their lowest in a decade, yet a backlog of speculative completions in the coming quarters will continue to increase supply and keep vacancies elevated. Trade and macroeconomic risks persist, as unresolved US-China negotiations and the potential for further weakening in consumer spending could push logistics vacancy up to 8-9% and trigger the first national industrial rent decline since the Great Recession. On a positive note, some easing of inflation or a rebound in consumer confidence could support renewed absorption and tighter vacancy by late 2026, but leading indicators currently skew downside. Overall, the sector is entering a period of slow rent growth, sluggish leasing, and a challenging reset after years of supply-driven expansion. (Source: CoStar, 2025)

Industrial vacancy rate is forecasted to peak in 2026

Europe

·Blackstone eyes growth in Europe’s prime office and logistics markets. Blackstone’s head of Europe, James Seppala, says the firm is stepping up investments in prime European office markets following its €700 million acquisition of Centre d’Affaires Paris Trocadéro from Union Investment this year. The move marks Blackstone’s renewed focus on high-quality office assets in key cities such as London, Munich, Milan, and Stockholm, where Seppala sees significant opportunities for value creation through capital strength and asset management expertise. At the same time, logistics remains a dominant pillar of Blackstone’s European real estate portfolio now accounting for around 50% driven by the growth of e-commerce, limited new supply, and demand for modern last-mile facilities. The firm recently made waves with a €2 billion takeover of French logistics platform Proudreed and the £470 million acquisition of Warehouse REIT in the UK, complementing its launch of Proxity, a new pan-European logistics platform set to go live next year. Seppala says Blackstone is adapting lessons from its earlier successes building Logicor, Mileway, and Indurent to make Proxity a scale player across Continental Europe. Beyond real estate, the firm is expanding in data centres—seen as essential infrastructure supporting artificial intelligence growth—by focusing on preleased developments with major tenants to limit risk. While Seppala acknowledges ongoing geopolitical uncertainty, he highlights improving liquidity, rebounding financing markets, and Europe’s strong fiscal position as signs that global capital is returning with renewed confidence in the region’s real estate opportunities. (Source: Blackstone, Green Street, 2025)

Blackstone’s recent Tracadero Paris office acquisition

·Back leverage becomes a defining force in Europe’s debt markets. Back leverage is rapidly emerging as a defining trend in today’s commercial real estate debt market, reshaping competition and funding structures across Europe. Once the domain of US investment banks, the financing model—where banks fund the lower-risk portion of debt fund loans—now attracts a wide range of providers, from clearing banks to asset managers. Its popularity has surged as higher regulatory costs for direct mortgage lending push banks to seek indirect exposure, while debt funds use it to stretch equity and boost returns. With liquidity returning to property markets and investor appetite strengthening, back leverage has intensified price competition, especially for larger loans, giving leveraged lenders a clear advantage. However, it brings heightened risk: any misalignment between loan terms or asset value declines can magnify losses for debt funds and investors. Market participants note that while leverage levels typically remain conservative, growing reliance on this structure has created a divide between funds that can access it and those that cannot. Some lenders are concerned that an eventual regulatory crackdown could disrupt credit flows given its growing role in non-bank lending. For now, back leverage continues to fuel Europe’s recovery, powering loan growth and reinforcing the dominance of larger alternative lenders in the market. (Source: Green Street, DRC Savills, Art Capital, 2025)

Key Terms in Back Leverage

Key Term	Explanation
Loan-on-loan	This is the most common back leverage structure. The debt fund makes a loan to a borrower and then takes out a separate back leverage loan from a bank or lender. The bank’s loan is secured against the borrower’s loan, not the property, allowing the debt fund to borrow more capital while keeping control of the lending relationship.
Repurchase agreement (repo)	In this setup, the debt fund temporarily sells its loan or group of loans to a back leverage provider and agrees to buy them back later at a higher price. The back leverage provider earns the difference as profit and may request more capital if the value of the sold loans declines.
Advance rate	This represents how much of the debt fund’s loan is financed by the back leverage provider. For example, if a debt fund issues a £100 million loan and a bank provides £70 million of back leverage funding, the advance rate is 70%.
Look-through LTV (loan-to-value)	This measures the size of the back leverage loan compared to the actual property value behind the original loan. If a property is worth £100 million and the back leverage loan totals £50 million, the look-through LTV equals 50%.

·Art-Invest nears deal to acquire Frankfurt’s insolvent Trianon Tower. Cologne-based Art-Invest Real Estate is in advanced negotiations to acquire Frankfurt’s 186-meter Trianon Tower, more than a year after the property’s insolvency filing. Once sold for €670 million in 2018, the tower’s value plummeted to around €200 million following the exit of anchor tenant DekaBank and the resulting default on a €375 million loan. Administrator Stephan Laubereau is leading the sale, advised by Mellum Capital, with Art-Invest positioned as frontrunner and the final price potentially exceeding the latest valuation. The deal’s success partly hinges on parallel discussions with Deutsche Bundesbank, which already leases about 23,000 square meters in the 68,000 square meter tower but is considering taking over the full building. A long-term lease would yield roughly €37 million in annual rent but require about €41 million of capital expenditure for upgrades and modernisation. Market sources view Bundesbank’s potential expansion as critical to stabilising the tower’s income and reigniting investor confidence in Frankfurt’s office market. If completed, the acquisition would mark Art-Invest’s return to a landmark it previously co-owned and refurbished, positioning the firm to capture a rebound in Germany’s recovering prime office segment. (Source: Green Street, 2025)

Trianon Tower, Frankfurt

·London and UK top cross-border commercial real estate investment thanks to resilience and rental growth. London and the UK have solidified their positions as the leading destinations for global commercial real estate (CRE) capital in 2025, attracting the highest volumes of cross-border investment worldwide. Strong total returns are being driven by continued rental growth, especially for prime London offices and key sectors such as logistics, data centres, and hotels. Foreign investors are prioritizing the UK due to its transparent market, robust income returns and ability to weather global uncertainty better than many peers. The country's capital markets have shown surprising resilience, with capital values beginning to rebound and liquidity improving alongside a broader investor pool. London remains centre stage, thanks to occupier demand, low vacancy in prime locations, and a steady stream of institutional capital. The UK’s regulatory environment and stable credit conditions further reinforce its attractiveness for cross-border investors, ensuring it continues to outperform competing global hubs. Overall, investor confidence is fuelled by the UK’s unique mix of rental growth, operational efficiency, and sectoral diversity, marking it as the top choice for international CRE capital. (Source: Knight Frank, MSCI, RCA, Capital Economics, Oxford Economics, 2025)

2025 YTD Global Commercial Real Estate Capital Destination

·Banks fuel UK commercial real estate lending boom as development finance surges. UK commercial real estate lending jumped 33% in the first half of 2025 to £22.3 billion, signaling renewed confidence across the market. According to Bayes Business School, banks have pared back defaulted loans by up to 20% and are aggressively re‑entering the market with tighter pricing and larger ticket sizes. Secondary loan syndication also soared above £10 billion, nearly matching last year’s total, reflecting a more liquid and stable debt environment. Competitive pressures have pushed senior loan margins on prime offices down by 35 basis points to 231 bps, with further declines for logistics and residential development loans. Development lending now accounts for 22% of new activity, nearing pre‑2007 highs as banks expand alongside debt funds to finance new projects. Prime office and logistics assets remain lenders’ top targets, though selective appetite persists for secondary properties. Analysts say the strong rebound marks the most bullish lending sentiment in years—driven by reduced defaults, cheaper capital, and rising confidence in the UK’s property recovery cycle. (Source: Bayes Business School, CoStar, 2025)

Loan Origination Volume by Lender Type

Loan Margins by Asset Class