A new fault line has opened on Wall Street. On one side: a $2 trillion asset class that has quietly replaced banks as the engine of middle-market credit, creating new growth opportunities across industries while also encumbering businesses with higher-cost debt that will need to be repaid or refinanced in the coming years. On the other: a chorus of warnings from some of the most credentialed voices in finance, cautioning that the machine is running faster than its brakes were built to handle.
Private credit is no longer a niche strategy. It is the market. And the debate now is not whether it matters, it is whether it is being done right, at what scale, and with whose capital on the line when the cycle finally turns. What follows is not a neutral survey. It is an honest read on where the market stands, who the key voices are, what they are actually saying. From SAB’s perspective, tenancy is one of the most underutilized financing tools on a middle-market balance sheet. Institutional net lease investors often value occupancy more aggressively than operators realize, creating opportunities to convert owned and leased real estate into non-dilutive capital that can reduce leverage, strengthen earnings, and
CRE Is the Proving Ground
The commercial real estate market in 2026 is not just a backdrop to the private credit story. It is the most important test of whether private credit can perform its stated function (patient, disciplined, long-term capital) under real stress conditions.
The maturity wall is the immediate catalyst. Roughly $875 billion to $1 trillion of commercial real estate debt comes due in 2026. Not all of it will be refinanced cleanly at existing terms. Some assets will trade because they must. Some will be recapitalized. And a meaningful portion will require the kind of flexible, creative capital structure that traditional bank lenders are not positioned to provide, which is precisely where private credit comes in.
For the private credit manager, this is inventory. Sale-leasebacks, structured debt transactions, and recapitalization opportunities are all being generated by the same pressure that is stressing less-prepared balance sheets. The question is not whether the opportunity exists, but whether the capital chasing it is being underwritten with the discipline the moment requires.
Two structural dynamics are doing significant work in the background. First, construction costs have risen approximately 23% since 2021 while achievable rents in many CRE sectors remain roughly 20% below the level needed to justify new development. The result is a meaningful slowdown in new supply, which is supporting the valuations of existing, well-located assets. Private credit flowing toward stabilized assets and difficult-to-replicate locations is not chasing yield compression, it’s buying scarcity.
Cap rate spreads relative to real long-term interest rates have recently reverted toward historical averages after the dislocation of 2022–2023. Private credit investors in U.S. CRE are being compensated for the risk they are taking in a way that was not true at the peak of the prior cycle. The reset, in other words, has already happened. The CBRE Lending Momentum Index reached a five-year high in Q1 2026. Alternative lenders now account for 53% of non-agency CRE loan closings (up from 19% a year ago) and debt fund lending volume up 280% year-over-year. The private credit takeover of CRE finance is not a thesis. It is a measurement.
The SLB Bridge: Depreciable Private Credit
The sale-leaseback is not just a real estate transaction; it’s a private credit instrument with a real asset wrapper. The One Big Beautiful Bill Act (OBBBA) reaffirmed the unique structural upside offered through SLBs, depreciable private credit.
Where a traditional mortgage or term loan maxes out at 50–75% of asset value, a sale-leaseback provides 100% asset financing. Lease rates typically trade 150–300 basis points inside prevailing borrowing rates, giving borrowers lower effective costs of capital without the personal guaranties, maintenance covenants, or dilution that accompany traditional debt and equity structures. OBBBA’s permanent reinstatement of 100% bonus depreciation layered in a tax advantage that institutional managers had not previously been able to access at this scale through credit-like instruments.
The market validated this thesis emphatically in 2025. SAB Capital’s proprietary database identified $9.7 billion of sale-leaseback volume during the year, a 27.6% increase over 2024’s $7.6 billion. Asset managers completed over $14 billion in M&A activity acquiring net lease and SLB platforms, treating them not as real estate strategies but as credit diversification plays.
The 2026 pipeline looks materially larger. Broader CRE transaction volumes are expected to increase 15–20%, approaching the 2015–2019 annual average. Buyout investors are sitting on approximately $2.5 trillion in dry powder. U.S. policy is actively incentivizing industrial buildout and reshoring, generating additional SLB opportunities in the industrial sectors. Tight banking standards continue to push corporate borrowers toward the private credit and SLB markets as a more efficient alternative.
For private credit managers seeking real asset backing, income durability, and tax efficiency in a single structure, the sale-leaseback is the most compelling instrument the current market offers. It is not equity. It is not traditional debt. It is its own category, and the capital markets are finally pricing it accordingly.
Fink’s World: The 50/30/20 Portfolio Is Now
Larry Fink’s 2025 annual letter to BlackRock shareholders contained a line that should be read as a structural statement rather than a market call: the traditional 60/40 portfolio may no longer represent true diversification. The future standard allocation, in his framing, looks more like 50% stocks, 30% bonds, and 20% private assets: real estate, infrastructure, and private credit.
This is not a radical idea from a disruptive outsider. It is the considered view of the CEO of the world’s largest asset manager, after a year in which BlackRock saw nearly $20 billion in net private credit inflows and completed the acquisition of HPS to build out its private credit platform.
The structural case is straightforward. Pension funds that have allocated to private assets for decades have historically outperformed 401(k) plans that have not by approximately 0.5% annually. Private credit assets are projected to more than double by the end of this decade, and 94% of institutional investors are already there.
The question for 2026 is not whether private assets belong in a diversified portfolio. The question is which private assets, structured how, and at what entry point. And on that question, the answer being offered by the CRE private credit market is competitive on every relevant dimension: income durability, tax efficiency, real asset backing, and limited correlation with public market volatility.
Conclusion: The Convergence
The three themes of, 1) private credit as the new mainstream financing channel, 2) CRE as its most important proving ground, and 3) sale-leasebacks as the structural bridge between the two, are not separate trends. They are one story.
Capital is leaving high-tax, high-regulation coastal jurisdictions. It is migrating away from overvalued public equities and toward real assets with durable income. It is moving from traditional bank-financed real estate into private credit structures that offer better economics, more flexibility, and, under current law, meaningful tax advantages. And it is landing in net lease retail, industrial, and sale-leaseback markets anchored by essential-services tenants in landlord-friendly, low-tax markets.
The cockroaches mentioned by Jamie Dimon and Howard Marks warned about are real. But they are concentrated in parts of private credit that have nothing to do with hard assets. Real property backed, long-leased, investment-grade-tenanted private credit is a different instrument with a different risk profile.
Marc Rowan asked the question worth asking: what if private was never actually riskier than public? Just less accessible. That reframe is most persuasive when applied to hard-asset, long-leased real estate credit. A 15-year triple-net lease on a Home Depot is not the same instrument as a leveraged loan to a software company at 15x EBITDA. The only direction for investment grade tenants is to move down, not up, leading to more value creation to be achieved through diligent underwriting on middle market tenancies, rather than investment-grade lease guaranties. The market is beginning to understand this distinction. Investors who understood it earlier are already positioned.
The window for entry at rational cap rates, before the full weight of institutional capital that has been on the sidelines redeploys into the sector, is real. And it is not permanent. The reset has already happened. What comes next is the recovery.
SAB Capital’s 1031, Net Lease, and Sale-Leaseback desks operate at the intersection of private credit and commercial real estate. We don’t believe in pushing deals, we believe in understanding them. The asset, the tenancy, the buyer, and the structure. SAB’s principals are professional advisors that investigate and inform to provide owners and managers with the highest return on time. Because at the end of the day, the market doesn’t pay for what something is. It pays for what it solves.
If you are interested in understanding how private credit structures can be applied to your real estate or corporate capital stack, reach out to our transaction professionals.
