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Our monthly newsletter is designed to serve as your primary source for navigating the world of alternative investments.
Coming into 2023, commercial real estate (CRE) continued to face significant pressure, resulting from a rapid increase in interest rates and weakened post-pandemic demand, combined with fears of an economic slowdown.
At the same time, the banking sector, particularly regional banks, is contributing to growing CRE concerns. Regional banks account for 70% of total bank CRE loan exposure. Given the increased strain on regional banks over the past two weeks, there is further concern that these banks may retreat from being an important source of capital to operators and developers.
As a result, we expect CRE to face more downward pressure. Real estate operators will encounter increased challenges in financing projects, including refinancing of existing credit facilities. Further, expectations of an economic slowdown will force weaker operators to accept significantly less attractive forms of financing.
But these challenges are creating opportunities for value-minded real estate investors.
We believe opportunistic real estate presents investors with an attractive buying opportunity, as fund managers can purchase quality properties at discounted levels.
Steve Houston
Managing Director,
Head of Investment Products
CHART OF THE MONTH
Regional banks account for 70% of total CRE loan exposure, with CRE loans representing 43% of all loans for small banks (versus only 13% for large banks). Coupled with an upcoming wall of maturities in CRE loans, it is easy to see the potential for rising default risk in CRE portfolios of smaller banks.
WEEKLY MARKET PULSE
While the Fed raised rates by 25 bps this week, we still consider this a de facto pause. But while a pause is one thing, rate cuts in the coming months are another. Learn why bank credit conditions may be the new metric to track inflation in Chief Investment Strategist 
‘s 
.
MONTHLY MARKET ROUNDUP
Get a breakdown of the differences between the two types of funds in terms of strategy, targeted returns, and investment horizons.
Bain examines how macroeconomic uncertainty has put an end to the extraordinary surge in dealmaking over the past several years and explains what to expect from the year ahead.
The start of 2023 has seen a period of refinement in acquisition activity by private equity PE firms, with buyers proceeding selectively in their approach.
Read why private equity can be additive to traditional portfolios, especially for investors who are concerned about inflation and/or do not face meaningful near-term liquidity constraints.
IN CASE YOU MISSED IT
From stable cash flows to potential ESG benefits, explore the broader benefits of infrastructure investments. 
Historical data indicates European private equity offers an outsized return premium over the region’s public markets. Learn how diversifying exposure across geographical regions can increase return potential. 
Your comprehensive source for alternative investment terms and definitions. 
NEW AT iCAPITAL
iCapital is proud to be named by Forbes as one of America’s Best Startup Employers for the third consecutive year! We’re honored to continue to be considered for this award based on our employer reputation, employee satisfaction, and company growth.
PODCAST: MONEY LIFE
Anastasia Amoroso, iCapital’s Chief Investment Strategist, joined the 
podcast and shared her thoughts about opportunities in private markets, specifically private credit, private equity, and real estate.
SPOTLIGHT: STRUCTURED INVESTMENTS 101
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