Debt Fund

A debt fund is a private investment vehicle that provides commercial real estate financing — typically bridge loans, mezzanine debt, or preferred equity — as an alternative to traditional bank or CMBS lending. Major CRE debt funds include Blackstone Mortgage Trust, Ares Management, Starwood Capital, and Mesa West Capital. They've grown from ~5% to over 10% of CRE lending market share since 2020, filling gaps left by banks that tightened lending after SVB and rising rates. Debt funds offer speed (2-4 week closings), flexibility (interest-only terms, higher leverage), and willingness to lend on transitional or value-add assets. The trade-off is cost — rates of 8-10.5% versus 6-7% for bank or insurance company financing. For NNN investors, debt funds are most useful as bridge capital for acquisitions that need 12-24 months of stabilization before permanent financing.