FundFire: ‘State of Limbo’: Real Estate DebtManagers Face Sharp TariffsHangover
- Parkview Financial
- May 5
- 4 min read
Updated: May 8
By Davide Mamone | FundFire | May 2, 2025
High 10-year Treasury yields and tariff uncertainty continue to add pressure to an already strained commercial real estate market. As lenders reassess strategy, pricing, and risk—especially in rate-sensitive sectors—Parkview Financial CEO Paul Rahimian shares his take with FundFire on what it means for refinancing prospects and areas of ongoing opportunity in the current environment.
Read the full article below, originally published by FundFire.
Real estate debt managers are on alert – and holding their breath – as they assess how stubbornly high U.S. Treasury bond yields will impact their portfolios and lending capacity.
While President Trump's proposed tariffs announced last month had some advance notice, few real estate debt managers anticipated the higher 10-year yields that have followed.
The yield on 10-year U.S. Treasurys – a tool that firms monitor to decide on commercial real estate debt pricing – spiked to 4.49% on April 11, up sharply from 3.99% on April 4. It closed at 4.21% on Thursday.
The higher yields – alongside recent remarks from Federal Reserve Chair Jay Powell that the U.S. central bank is in no rush to cut interest rates further – has left debt fund managers walking on eggshells – especially after many of them had thought tariffs might even boost property owners' ability to refinance their debt.
"There's a school of thought that maybe one of the motivations behind the tariffs was to alter the bond market and hopefully get lower rates," said Paul Rahimian, CEO at Parkview Financial, a direct private lender specializing in ground-up commercial and residential real estate financing.
"That really hasn't materialized, and I think that's probably a frustration," he told FundFire.
A higher-for-longer 10-year Treasury level could force net operating income yields up slightly over the typical deal forecast period and dampen any recovery in U.S. commercial real estate pricing over the next two years, according to a paper by Oxford Economics in February.
Ten-year Treasury yields actually had fallen significantly, by over 70 basis points, following Trump's election in November. But the bond market's disjointed reaction to the new tariff plan almost wiped out the post-election gains over the past month.
The Treasury index coming down would be "obviously helpful to real estate managers," said Rahimian.
"We're in a state of limbo," he said. "And I think one of the concerns is, how is this really going to play out?"
It's also unclear whether interest rates will remain at current levels or even move higher again, according to Andrew Korz, senior vice president at FS Investments, an $83 billion alternatives manager.
"Everybody expects, if tariffs stay on, that inflation numbers are probably going to get worse, so the Fed will have to react to that," he told FundFire.
Already StretchedThe outlook for real estate loans had already gotten cloudier. U.S. banks reported the highest percentage of delinquent commercial real estate loans in 10 years in the fourth quarter last year, according to government data.
The delinquency percentage rose to 1.57% – the same level as in the fourth quarter of 2014 – as the volume of outstanding loans at the end of 2024 topped $3 trillion, Fed data showed.
Those numbers also don't reflect the number of loans where lenders – hoping for a recovery in market conditions – have postponed defaults by extending maturity dates rather than writing off capital. Such "extend and pretend" activity has reached a peak, according to Jeff Brown, co-chief investment officer at T2 Capital Management.
"Unfortunately, that extend-and-pretend model is as persistent as ever," he said. "[Borrowers get] a maturity coming up and they're stuck, and their existing lender is working with them, giving them a short-term extension in order to try to get to the other end of the tariffs or some sort of uncertainty that exists out there."
While lenders are sitting "much better than borrowers" in such scenarios, most market participants are broadly hoping for lower rates to boost deal activity, FS Investments' Korz said.
Lingering IssuesThe blowback from tariffs could go in other unhelpful directions. Uncertainty over rates and Treasury yields could limit how property owners refinance debt even for properties with growing income, Korz said.
"We're being really selective with the loans that we decide to refinance in our own books and those that we don't," he said. "As a lender, we can pick and choose those we want to and those we don't."
And more lenders are deciding they are "out of time" and forced to take over properties from borrowers that have gone through multiple rounds of loan modifications, said Rahimian.
"As a lender, you really are not in a situation where you can continue to extend, continue to be accommodating," he said. "At a certain point, you have to rip off the Band-aid, so to speak, be aggressive and take back assets even if you don't want to."
The debt crunch is not affecting all real estate segments equally, however, with multifamily housing assets continuing to be a safe harbor for real estate debt managers.
Multifamily is "certainly" the segment that investors should focus on, especially from a lending standpoint, said Parkview's Rahimian.
The residential segment also is least likely to be directly impacted by tariffs, Korz said.
"Multi-family is clearly the sector that... has the as the best sort of secular drivers," he said.
ABOUT PARKVIEW FINANCIAL
Parkview Financial is a direct private lender specializing in commercial and residential real estate financing. Parkview provides short-term bridge and construction loans secured by first trust deeds to sponsors throughout major markets in the United States. Since inception, Parkview has successfully executed more than $4 billion in financing for multifamily, retail, office, industrial and mixed-use projects with executed loans ranging from $5 million to $300 million.
Headquartered in Los Angeles and with offices in New York and Las Vegas, Parkview has grown exponentially since it was founded in 2009 by CEO Paul Rahimian. Parkview has earned an unparalleled reputation within the commercial real estate industry as one of the most respected private lenders in the nation. This has been accomplished through Parkview’s proven ability to provide fast, creative financing solutions to borrowers who need certainty of execution. Fortified with an experienced team of in-house experts, Parkview is able to be nimble and creative even when it comes to some of the most challenging projects.
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