Kayne Anderson Real Estate Debt Eyes $300B Refinancing Wave as Multifamily and Office Loans Mature

Kayne Anderson Real Estate Debt is positioning itself to capitalize on a refinancing cycle driven by roughly $300 billion in commercial real estate loans maturing through 2027 with loan-to-value ratios of 80 percent or higher, according to Lee Levy, head of real estate debt at Kayne Anderson.

In a June 2026 interview published by PERE Credit, Levy outlined how over-leveraged capital structures — many originated during the 2020 through mid-2022 period at peak valuations and near-zero interest rates — are creating openings for alternative lenders to provide creative commercial real estate financing solutions that traditional banks are unwilling to extend.

A Market Defined by Refinancing Activity

U.S. commercial real estate lending volume reached approximately $850 billion in 2025, a figure Levy described as close to the 2021 market peak and more than double the cycle low of $400 billion. He noted that refinancings have been the primary driver of that volume, with investment sales activity still lagging 2021 levels as buyer and seller price expectations remain misaligned.

Levy said refinancings are expected to account for more than two-thirds of origination volume in 2026, with asset sales continuing to trend toward peak transaction volume. Despite episodic volatility tied to geopolitical uncertainty and uneven economic data, he characterized real estate credit markets as resilient, citing $250 billion to $300 billion in dry powder across real estate equity and debt funds, active money center banks and life insurance companies, and well-bid CMBS and CLO markets.

"Despite the periodic noise in the capital markets, real estate credit has held up well," Levy said in the interview.

Multifamily Faces Elevated Stress

Levy identified multifamily real estate as among the asset classes most exposed to refinancing stress, noting that it hit peak cycle valuations in 2021 and 2022. Of the approximately $300 billion in loans maturing with LTVs of 80 percent or higher, Levy said roughly $120 billion is concentrated in the multifamily sector. Approximately one-third of those maturing loans were originated by banks. The source also references office as an over-levered sector, though Levy's detailed stress commentary focused on multifamily.

He described a pattern of "upside-down capital structures" in multifamily, where senior mortgage debt and subordinate debt combined now approach or exceed current property values. Contributing factors include aggressive leverage at the time of real estate acquisition, base rates more than 350 basis points higher than at origination, and rental growth that has slowed or turned negative after expectations of 3 to 5 percent annual increases.

"Sponsors are much more realistic today about where values sit, having come to the realization that 2021-22 pricing is behind us and interest rate cuts aren't going to save the day," Levy said.

He also noted a pattern of bridge loans being refinanced with new bridge loans rather than transitioning to permanent debt or asset sales, reflecting both sponsor reluctance to sell at current prices and lenders seeking to extend time on assets that have not met their business plans.

Alternative Lenders Step In Where Banks Pull Back

Levy said debt funds are expected to handle the bulk of refinancing activity in over-leveraged situations, while banks continue to play a supporting role by providing back leverage to firms like Kayne Anderson rather than taking last-dollar risk themselves. Smaller banks, which in some cases carry commercial real estate exposure of up to 30 percent of total assets, are seen as more likely sellers of troubled loans than larger, well-capitalized institutions.

Kayne Anderson's approach, according to Levy, centers on bilateral deal structuring — working directly with sponsors on a case-by-case basis rather than participating in syndicated processes — and the ability to provide single-source execution covering both mortgage and mezzanine debt. The firm also purchases performing, sub-performing, and non-performing loans in addition to originating new debt.

On underwriting, Levy said the firm begins with real estate valuation and submarket analysis before evaluating sponsorship quality, loan structure, proceeds, and pricing. Loans are structured with milestones, covenants, and pre-leasing or lease-up thresholds designed to allow the firm to re-engage if a business plan begins to deviate from projections.

"Remaining disciplined is key, not chasing pricing and structure downward to secure deals," Levy said.

Self-Storage and Large Loans Among 2026 Targets

Kayne Anderson's real estate debt platform focuses on multifamily, student housing, seniors housing, medical office, industrial, and self-storage — asset classes that mirror the firm's equity investment strategy. Levy said the firm's debt and equity teams share sector expertise, which informs its relative value approach across both private and public markets.

After concentrating a large portion of 2025 investments in the housing sector, Levy said Kayne Anderson is expanding its focus in 2026 to include self-storage and larger loan transactions. He acknowledged that self-storage has presented challenges for equity investors but characterized it as an attractive debt investment opportunity in select situations.

On the large loan front, Levy noted that banks are not actively pursuing highly structured deals through the last dollar of risk, creating an opening for firms with the scale and capital base to step into that segment of the market.

Levy said the firm's flexible capital structure — enabling it to originate or purchase loans, and to participate in new issue or secondary bond markets — positions it to pursue risk-adjusted returns across market conditions. "Our strategy, sector experience and relative value lens across private and public markets allow us to be wherever the best risk-reward is," he said.