"Debt is a great instrument, until it's not", says Brad Greenway (JLL)

Written by Helen Richards

During GRI’s biggest event to date, Brad Greenway from JLL sat down with Gustavo Favaron, CEO and Managing Partner of GRI Club. As Co-Head of EMEA Debt & Structured Finance at JLL, Brad explained that this “challenging” market is not experiencing a liquidity crisis, but rather a cost of capital crisis.

We are still seeing liquidity in the market and transactions are happening. Alternative lenders have come into the space, and there are a number of instruments allowing people to refinance. This is only expected to increase, as funds close and assets need to be sold.

The good news is interest rates are expected to level off. After 18 months of uncertainty, there is light at the end of the tunnel. That said, rates will not return to the low levels they once were, or at least not so soon. Nevertheless, the market is becoming accustomed to the new rates, and will eventually reset, helping transaction volume regain strength.

Brad’s main concern was regarding irresponsible use of debt to buy time. As he explained, history reminds us we must be smart in how we use debt, and not as a financial tool to buy time and avoid insolvency or selling assets. The global financial crisis saw debt within real estate contribute substantially to bringing down the global economy.

The upcoming GRI Credit Opportunities & Real Estate Debt conference, on November 30 in London, will gather the biggest players in real estate to explore this topic in more depth. Find out more and register here.

Watch the full interview with Brad Greenway here: