GSN Roundup: CLO Outlook, Lenders Look at ’26, and $1B Florida Project

Top stories in US CRE News this week:

Asset Backed Alert 01.09.26 
Opposing Forces Inform CLO Outlook 

The collateralized loan obligation market is headed for another busy year in 2026, though issuance might not top 2025’s record. 

New-issue volume is poised to benefit from a growing supply of collateral loans as anticipated interest-rate cuts by the Federal Reserve fuel mergers-and-acquisitions activity and corporate spending on artificial-intelligence initiatives. However, the outlook also takes into account macroeconomic factors that could push bond spreads wider, limiting growth. 

The upshot is that market participants expect the U.S. volume of deals backed by broadly syndicated and middle-market corporate loans this year to approach, if not reach, the $184.6 billion of deals recorded in Asset-Backed Alert’s ABS Database for 2025. 

At $315.7 billion, U.S. repricing activity outstripped new issuance in 2025 for the second consecutive year as managers continued to work through a backlog of deals with coupons below current market levels that had exited their two-year noncall periods. With 2024-vintage CLOs now lining up as repricing candidates, bankers say such activity is likely to remain robust — so long as prevailing spreads hold near the tight end of their historical range. 

The risk is that broader economic headwinds, such as a softening labor market and persistently high inflation, could prove a drag on the economy and cause some spread widening that would cut into the flow of new CLOs and repricings alike. Deutsche Bank expects benchmark new-issue spreads for triple-A-rated CLO notes to widen to 135 bp over SOFR by yearend 2026 from around 125 bp in November 2025. And at the bottom of the capital stack, double-B-rated notes could widen by 70 bp to 590 bp over SOFR. 

For now, the CLO market is expected to pick up at the same pace as it finished in 2025, with a dozen deals having priced in the last full week of the year. “There was a frantic attempt to get stuff closed by yearend,” said an attorney who advises CLO issuers. “No one wants to be in the back of the queue.” 

Factors influencing supply and demand are fueling the near-term optimism.  

A scarcity of collateral loans has been a drag on new issuance, and a resulting rise in loan prices has prompted many corporate borrowers to refinance into lower-interest debt. That’s led to a reduction in the arbitrage between the interest rates paid to CLO investors and the higher yields on the underlying loans — resulting in reduced profits for equity holders, who are entitled to whatever funds are left after paying down more-senior securities. 

But M&A has been picking up and is expected to accelerate in 2026 amid expectations of more rate cuts, stimulating loan supply and likely keeping a lid on collateral prices. At the same time, existing borrowers might be less motivated to refinance in such an environment, preventing further deterioration in CLO arbitrage. And some managers might be able to boost returns by redeploying loan distributions into discounted holdings. 

On the other side of the technical balance, exchange-traded funds that invest in CLOs continue to attract new capital. And U.S. banks, among the biggest buyers of triple-A-rated CLO notes, recently received reassurances about the regulatory capital treatment of tranches structured as loans, as opposed to notes. Demand from insurance companies also is expected to remain robust. 

One trend that could reverse is a narrowing differential between spreads on CLOs issued by top-tier managers and those issued by second- or third-tier managers. Historically, the biggest and best-performing managers could issue CLOs with much lower weighted average costs than their peers. But the gap narrowed significantly in 2025 amid strong demand and low net issuance.  

Now, some market professionals expect the differential to widen as broadening troubles among corporate borrowers demonstrate the importance of management expertise. Already, there is talk that issuers whose current deals include exposures to bankrupt auto-parts maker First Brands could have to offer wider spreads to investors when they float new deals or refinance. 

Commercial Mortgage Alert 01.09.26 
Balance-Sheet Lenders See Solid Year Ahead 

Banks and insurers are poised to maintain brisk lending activity in 2026, as multiple factors draw investors back into the market to seek new debt. 

Firms that deploy capital for their own balance sheets expect that the increased originations they saw in 2025 likely will carry over into the coming year. Overall, that positive liquidity signal could translate to good news for investors looking to refinance or purchase commercial properties. 

“The past two years were somewhat muted overall in regard to commercial real estate activity. I think those gates really started to open up with the first rate cut [in 2024] and carried over into 2025,” said Nipul Patel, a managing director at Wells Fargo who oversees the bank’s balance-sheet lending program. “I think going into 2026, with the expectation of further rate cuts, that transaction activity will continue to pick up, so inevitably those asset classes we’ve deployed into will continue to be active in ’26.” 

Anecdotally, banks and life companies say they expect to originate at least as much debt on commercial properties this year as they did in 2025. That activity, they say, will be driven by a healthy volume of maturing loans that investors will need to refinance, along with an uptick in sales encouraged by anticipated further Federal Reserve rate cuts. 

“I think rates are helping,” said Mark Silverstein, a managing director at Flagstar Bank focused on New York private equity and debt funds. “That’s wind to the back. SOFR being cut will continue to be wind to the back. Treasurys have been stable … and I think that’s going to create a little momentum and shrink that bid-ask spread.” 

Banks and others also are watching the continuing rise of private credit with interest. That catch-all category, essentially covering most nonregulated lenders, has become even more of a buzzword in real estate investment circles over the past year or two. 

While originators such as private equity fund operators and mortgage REITs once were viewed as competition, mainstream lenders now have found ways to work with them regularly — partly out of necessity. Sister publication Real Estate Alert reported that at midyear 2025, commitments from U.S. public pensions to debt-focused vehicles totaled $3.3 billion. That represented 21% of total pledges to commercial property funds, close to the record 22% of all deployments to debt vehicles in 2023. 

The increasing amount of private capital shoveled toward commercial real estate finance strategies has changed the playing field a bit for banks and others that long have been the most active players in the space. 

“I think the big thing out there that everybody’s trying to figure out is private credit … will [those firms] be active?” said Kathy Farrell, head of Truist’s asset-finance division, which includes its commercial-property lending business. “They can be a very formidable competitor, but in many cases they’re also a client. They certainly have moved into areas that have been the domain of banks in terms of the bread-and-butter deals that banks do.” 

Bigger banks, such as Truist and Wells, typically have significant resources devoted to warehouse or other credit lines that provide capital to fund-based lenders. Even though fund managers might concentrate on property types and scenarios outside many banks’ core areas, the proliferation of private-credit lenders has meant more overlap between groups. 

Patel said Wells and others have developed creative solutions to partner with fund lenders that have upside for both entities. 

“When we lose [a deal] to a debt fund now,” he added, “the debt fund is coming to us to say, ‘Would you like to partner via a back-leverage repo or loan-on-loan’ ” package that effectively gives a bank credit exposure to the same asset, albeit with a different yield and leverage attachment point. 

Bryan McDonnell, head of real estate credit strategies for PGIM, pointed out that the private credit pool has been growing for at least a couple of decades. But now that that class of lenders has achieved a certain mass, a wide range of calculations — on yield, risk and credit — has changed among other lender groups, too. All lenders, including insurers, are looking for ways to get more yield from their businesses, and that competition can compress returns on debt. 

“There’s been more change in the life-insurance market in the last three years than in the 30 years before that,” McDonnell said. PGIM projects that it likely will lend more on transitional assets in 2026 than on fully stabilized properties. That would be a first for its business, driven by new competition patterns and the growth of its own program to deploys capital for investors, including other insurance companies — many of which have higher yield targets. 

“We don’t spend a ton of time worrying about the short-term rates. It is a factor, but real estate in our opinion still drives off the 10-year [Treasurys],” he said. “The thing we think more about a lot going forward is how many investors, including insurance companies, are looking for yield in their portfolios. As more investors try to drive yield, who does the low-spread stuff?” 

Silverstein echoed that sentiment. Managers are “all out here trying to raise money by mentioning ‘private credit,’ and there’s been a tremendous amount of growth,” he said. “It has concerned banks. Are we getting disintermediated” by private equity players looking to push into real estate? 

“The banks have to figure out ways to work with them because XYZ [credit fund] making 6.5% isn’t enough rate, so they go get loan-on-loan [financing] to get the 9% to 11% return they need,” he said.  

Those adjustments are playing out in real time and remapping the landscape for many banks and insurers. Still, despite the competition mix, the consensus is there will be opportunities. 

Flagstar, which is moving back into the market with a wider remit, has pointed to the health of the industry as one factor in its expansion. The bank hadn’t projected it would restart its program this year, but it saw a wave of payoffs in its book of New York multifamily mortgages that freed up capital and helped rebalance its portfolio. 

“Those dollars, that liquidity, has allowed us to reduce exposures more quickly than we thought,” said Scott Shepherd, the bank’s president of commercial real estate. “There is capital looking to be deployed in multifamily in New York for banks of all sizes.” 

That data point offers one glimpse of how active lenders have become over the past year, after several years of muffled volume caused by higher interest rates, along with issues in many firms’ loan portfolios. 

The pool of asset classes that most lenders favor looks much different now than it did five years ago. The aftermath of the pandemic, which squeezed many companies into remote-work protocols, now is a part of the DNA of commercial real estate. 

Most continue to tread lightly, if at all, in the office sector. Meanwhile, industrial and multifamily assets are the most favored product types, along with data centers and student-housing projects. 

Truist is among those that continue to look at the office category from a distance, Farrell said. Last summer, the bank opened its Truist at the Five Ballpark Center office building adjacent to Truist Park, the home of the Atlanta Braves. Outside of that project, a joint venture between the bank and the Braves Development Co., it hasn’t made a strong push back toward those assets. 

“We have not broadly reengaged in the office sector yet, aside from this building, but we are seeing the impact of the shift to back-to-office and what that is doing in terms of invigorating markets that remained largely dormant after Covid,” she said. 

Meanwhile, the bank has leaned into its long-running interest in financing data centers, Farrell added.  

“For us, it worked really well because we have the real estate expertise but also the telecom/media expertise in our investment-banking area,” she said. “Working together, we’ve had a really good understanding of the sector and have grown with it over the years.” 

Many banks have plowed money into data-center financing programs, and that sector is expected to remain hot. However, lenders say they’ll continue to examine each situation carefully.   

 “It is appropriate to ask questions about what’s the right amount,” Farrell said. “You don’t want to find yourself in a situation where you’ve overbuilt. So how do you assess the risk there?” 

Real Estate Alert 0113.26 
Land Set for $1B Florida Project Up for Grabs 

A partnership led by American Landmark Apartments and BH Group has put a regional shopping center in South Florida on the market with price guidance over $200 million. 

The owners will consider an outright sale of the entire Southland Mall, a joint venture with a master developer that would take a lead role in executing an approved mixed-use redevelopment project, or transactions involving individual components. 

The varied structures mean the final price could end up as high as $250 million, but bids are likely to vary widely based on project proposals. The multiphase project is expected to cost $1 billion and take seven years to build. The mall’s interior would be demolished and replaced with an open-air retail space and entertainment district. 

CBRE is the broker for Tampa-based multifamily shop American Landmark, its Electra America affiliate and Aventura, Fla.-based BH. 

The site, to be rebranded as Southplace City Center, is in a federal opportunity zone and spans approximately 98 acres in Cutler Bay, 17 miles southwest of Miami. The 671,000 sq ft Southland Mall was developed in 1959 and is 90% occupied. 

In 2022, the ownership group acquired it out of foreclosure for $100.4 million, according to media reports, and later that year purchased a former Sears building at the site for an additional $34 million. 

Under the approved master plan, the site is entitled for a mixed-use redevelopment that would include 5,000 residential units, along with approximately 145,000 sq ft of so-called experiential retail space, 177,000 sq ft of medical-office space and a 150-room hotel. 

Southland Mall is anchored by Macy’s (145,000 sq ft), JCPenney (83,000 sq ft) and Regal Cinemas (70,000 sq ft). According to marketing materials, each is expected to remain in place. 

The redevelopment plan also preserves a fully leased, 190,000 sq ft power center, which is expected to remain in its current configuration. Tenants include DSW, Five Below, Florida Technical College, LA Fitness, Old Navy, PetSmart, Ross and T.J.Maxx. 

The property, at 20505 South Dixie Highway, is on U.S. Route 1 at its junction with Florida’s Turnpike. It’s adjacent to a Bus Rapid Transit stop that opened in October as part of a $300 million infrastructure project, providing connections regionally and to the Metrorail system. Plans also call for a pedestrian bridge connecting the transitway to the property at no cost to ownership. 

According to marketing materials, the mall draws from a local population of 340,000 and is within a 30-minute commute of roughly 637,000 jobs. The property is near major employment centers including Downtown Miami, Brickell and Coral Gables. 

Joe Lubeck is the chief executive of both American Landmark and Electra America. BH is led by Isaac Toledano.