In today's unpredictable market landscape, private credit has emerged as a critical avenue for investors seeking to balance risk and reward. With its potential for delivering equity-like returns while maintaining a more secure debt position, private credit offers a compelling opportunity in times of volatility.
Q&A with Brian Waldman, Chief Investment Officer at Peachtree Group
Q: What are your primary responsibilities as Chief Investment Officer at Peachtree Group?
Brian Waldman: As the CIO, a significant part of my role involves pricing risk. Within the Peachtree Group ecosystem, we have various businesses that invest across different parts of the capital stack and in multiple classes of commercial real estate. My job is to assess the opportunities presented in each of these businesses and guide the strategy for where we deploy capital. This involves understanding the current market landscape and identifying the best opportunities for investment.
Q: How does Peachtree Group price risk?
BW: The focus of our investments can shift depending on the market. At different points, we see better opportunities indifferent asset classes or investment strategies. Currently, the most promising opportunities are on the private credit side. We’re particularly drawn to this area because, in the current volatile market, we can secure debt positions with a lower attachment point, yet still earn equity-like returns. This combination of lower risk and high returns makes private credit very attractive right now.
Q: Can you elaborate on the specific opportunities in Private Credit Peachtree Group is currently pursuing?
BW: Absolutely. We’re focused on three key areas at the moment
- Hotel Lending: We’ve been active in hotel lending for a long time, and the current market dislocation is providing outsized returns on our investments in this space. The disruption in the market has actually enhanced the value of our investments here.
- Commercial Real Estate Financing: Similar to our approach in hotel lending, we’re financing other asset classes such as industrial, self-storage, multifamily, and even office spaces. In each of these areas, we believe that the returns we’re seeing are significantly higher than the risks we’re taking on as lenders.
- Note Purchases: The third opportunity involves purchasing existing loans, or "paper," that other lenders have originated. With banks facing increased regulatory pressure and a wave of loan maturities over the next few years, they’re often forced to offload these loans. As a private lender, Peachtree Group has the flexibility to purchase this paper, typically at a discount, and then restructure it with the borrower. This flexibility allows us to offer borrowers a path forward and, in turn, achieve significant returns for the risk involved.
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Q: How does Peachtree Group approach restructuring these purchased loans?
BW: When we buy this paper, we usually acquire it at a discount from the originating lender. This gives us the ability to restructure the loan in a way that works better for the borrower while still achieving strong returns. Banks, due to regulatory constraints, often can’t provide the same level of flexibility. By offering borrowers a way to restructure their loans, we not only help them find a path to stability but also secure higher returns for Peachtree Group.
As the financial landscape continues to evolve, Peachtree Group remains agile andforward-thinking in its approach to private credit. Through strategic investments in hotel lending, commercial real estate financing, and note purchases, Peachtree Group is not only navigating market volatility but also uncovering opportunities for outsized returns.
Learning about private credit through the perspective of seasoned professionals is the best way to understand its potential. If you want to learn more about Private Credit follow our “What is Private Credit in CRE” series on the Peachtree Group YouTube Channel.