Deleveraging in an economic context refers to the reduction of debt levels across both private and public sectors, aiming to lower the total debt relative to GDP. This process typically starts a few years after a financial crisis begins and can create unique investment opportunities during what we term ‘The Great Deleveraging.’ In this phase, short-term borrowing becomes more expensive than long-term borrowing due to these macroeconomic adjustments.

Currently, borrowers are compelled to secure financing under more stringent terms, resulting in lower risk for investors. Loans maturing soon will require significant reductions, and the shortfall in expected funds will likely necessitate bridge or mezzanine financing.

Investors with foresight, like those at ApartmentCapital.com, who have maintained substantial liquidity reserves, are well-positioned to leverage these conditions, demanding higher returns for their crucial liquidity in what is expected to be a temporary market realignment.