by: Adam Horowitz

The commercial real estate market in 2025 is shaped by volatility, price dislocation, and tighter credit conditions. With over $1.8 trillion in CRE loans maturing by 2026, asset owners across property types are facing capital stack pressure, valuation resets, and increased scrutiny from lenders. For seasoned sponsors, this environment presents a rare opening to acquire underperforming or distressed assets at attractive pricing, assuming capital is secured with precision.

The challenge is clear. Traditional lenders are retrenching, underwriting standards are more conservative, and execution timelines are compressed. Those who can bring capital certainty to the table will have a clear advantage in unlocking value from assets others are forced to exit.

Understanding the Current Landscape

Distress is growing across key asset classes. Many Class B and C office buildings, older multifamily properties, and retail centers are facing diminished cash flows and declining valuations. Rising interest rates and expiring fixed-rate debt have created a liquidity gap, especially for sponsors with limited access to alternative capital.

At the same time, market fundamentals in many locations remain strong, particularly in sectors like industrial, data centers, and workforce housing. This divergence has led to selective but active interest from non-bank capital sources who are willing to engage when the structure, plan, and sponsorship are sound.

However, capital is not flowing freely. Securing financing for transitional or distressed assets today requires a tailored approach, disciplined underwriting, and alignment between sponsor and capital provider.

Best Practices to Attract Capital in 2025

If you are actively pursuing value-add or distressed opportunities, capital partners are evaluating more than just the asset. Focus on these core principles:

• Sharpen your underwriting. Reflect current leasing assumptions, capex costs, and exit cap rates. Use sensitivity analysis to demonstrate risk awareness.
  
• Be transparent about risk. Sponsors that proactively identify challenges and articulate mitigation strategies build greater trust with capital sources.
  
• Show alignment. Demonstrating meaningful sponsor equity and hands-on involvement sends a strong signal to both debt and equity providers.
  

Act with urgency, not haste. Having a vetted capital network in place shortens timelines and strengthens offers in competitive or distressed bidding environments. 

Capital for Value-Add and Distressed Strategies

Capital for value-add and distressed strategies typically includes several components. These may involve acquisition financing for properties with repositioning potential—such as lease-up, renovations, or rebranding. It can also include rescue capital or preferred equity to recapitalize assets facing maturity defaults or operational shortfalls. Additionally, bridge or mezzanine debt is often used to fill gaps in the capital stack during the value creation process.

In all cases, sponsors must present a credible path to upside, usually through improved NOI, market repositioning, or cap rate compression. Lenders and investors look for well-supported pro formas, conservative exit assumptions, and sponsors with a proven track record of execution.

How Lever Capital Partners Adds Value

Lever Capital Partners provides a competitive advantage by sourcing and structuring tailored financing solutions across the capital stack, including senior loans, mezzanine debt, preferred equity, and JV equity. With strong relationships across non-bank lenders, private credit funds, and institutional investors, Lever combines market insight with real-time access to capital. Beyond placement, the firm offers hands-on support throughout the deal process, from packaging to closing, ensuring alignment between complex strategies and capital execution.

Distressed assets are not without risk, but for prepared sponsors, they offer meaningful upside. In 2025, access to capital will define who can take advantage of this market cycle. With the right strategy and the right advisor, today’s market uncertainty can become tomorrow’s competitive advantage.