Investors
Private debt as an alternative to ownership
Running interest, security in the land register, shorter commitment — sometimes lending simply beats buying.
Real estate investors think about ownership first. Yet in certain market phases the debt side is the better risk-adjusted position — particularly when banks are cautious and developers need capital.
What speaks for the credit position
Running interest instead of expected capital growth, security in the land register, a defined term instead of an open hold. Investors who do not want to forecast pricing get a return that does not depend on valuation.
Add the position in the waterfall. The lender is served before equity — at 60 to 70 per cent leverage that is a substantial buffer.
Where the risks sit
In enforcement. A charge is only worth what the asset realises in a forced sale, and that is regularly well below market value. Anyone doing private debt must be prepared to take the asset over and finish it.
And in servicing: loan monitoring, use-of-funds control, construction progress checks. That is operational work.
Typical structures
Whole loans with a single counterparty across the full leverage, junior tranches behind a bank, or bridge facilities with a short term and a clearly defined exit. The short tenor is the real attraction for many family offices: twelve to twenty-four months instead of ten years.
In short
Private debt delivers running income with registered security — but only for investors who could genuinely see an enforcement through.
Read next
Related articles
Investors
Core to opportunistic: setting realistic return targets
Which IRR each strategy actually supports — and where business plans break in practice.
Investors
What investment committees really test
Ten questions that come up in every committee. Answer them in the memorandum and you save a full loop.
Investors
Club deal instead of going it alone
Governance, waterfall, call and put rights: how several family offices share an asset without a later dispute.
Want to go deeper?
Half an hour on the phone usually beats ten pages of paper.