Global capital sources including banks, debt funds, insurance companies and CMBS lenders offer private investors a range of options depending on their business needs.

Alternative debt structures allow investors to pool multiple capital sources through a single loan with greater flexibility.

“A lot of property owners in the London market are anticipating net operating income (NOI) growth,” said Luca Giangolini, senior director of debt and structured finance, JLL international capital markets. “When it’s time to refinance, we model it and look at what the constraints are: Is it LTV? Is it interest coverage? From there we create the right solution—usually a whole loan solution.”

Refinancing in today’s economic climate requires a keen understanding of market conditions at both a local and broad level. While the first half of 2025 generally saw multi-housing/living and industrial sectors securing the best rates, followed by retail and office, terms vary based on location, vintage and business profile.

Given these market dynamics, private investors can secure favorable terms by exploring their refinancing options well before maturity. Most importantly, since loans typically take six months to close, beginning discussions at least nine months before maturity is crucial. 

In cases of low-yielding assets where ICR ratios are the biggest refinancing constraint, sponsors can use interest-rate derivatives trades as a buffer against market headwinds. This involves the use of financial instruments that include interest rate swaps, swaptions, caps, and collars which help mitigate future rate risk and can improve interest cover.

After an extended period of historically low interest rates, investors in both Europe and North America have been acclimating to a “new normal” with uncertainty around the timing of additional interest rate cuts. That combined with adjusted asset values and wider bid-ask spreads has put pressures on maturing loans in recent years.

Projections for this year look more favorable. In the U.S., liquidity and transaction activity continue to grow. Market fundamentals continue to be strong across most sectors. But challenges persist for owners of class B and C office and retail properties. That means private investors will need to work through any asset management issues to secure the best terms on refinancing in 2025.

“Even with very strong debt markets overall, it’s important to determine a business plan for each asset from here into the medium and long term and structure your financing accordingly,” said John Flynn, director, JLL capital markets.

Recapitalising through one or more equity sources is another avenue for private investors. Preferred equity and mezzanine financing are two options for those looking outside of the traditional debt markets.

For those who plan to wait out the current market uncertainty, equity partnerships provide necessary capital while helping share the risk. 

In 2023’s tight capital markets environment, JLL helped a boutique real estate investment firm secure a strategic joint venture (JV) partnership to revitalise a 176-unit Texas apartment complex. The joint venture provided $1.5 million for property improvements, enhancing both facilities and curb appeal.

JVs may be relevant for situations where significant capital injections are needed to execute new business plans, such as redeveloping assets. But JV partnerships can be a more difficult fit for some private investors due to long-term commitments, uneven contributions, and potential conflicts of interests. In cases where private investors are looking to take a step back from daily operations, working with a family office is another means of managing financing pain points without giving up property ownership.

Across all markets, private investors can invest directly or through family offices, and partner with well-connected debt experts to source capital from banks, insurance companies, and debt funds. Investors can additionally bolster their capital stacks by tapping into new equity sources with family offices as their fund managers. This gives property owners greater flexibility and more time to decide whether they want to do a complete loan refinance or extend their existing debt, such as with an equity funded paydown. Some investors may want to look at other options.

“There is a lot of liquidity for residential, logistic and hotel assets in the German markets,” said Dominik Rüger, senior director of debt and structured finance, JLL. “Private investors can use various debt combinations to reach their ideal leverage ratios.”