The post-2022 interest rate shock completely dismantled the capital models that underpinned the commercial real estate bull run of the previous decade. As interest rates normalized at higher levels, senior lenders retrenched, compressed their loan-to-value (LTV) limits, and intensified debt service coverage
requirements. This structural shift has created a massive financing gap, forcing sponsors to either recapitalize using structured debt and equity or face
punishing dilutive events. The traditional capital stack has been permanently compressed.