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Key Risks: Real Estate Debt
Default Risk
The borrower may fail to make interest payments or repay the principal. While loans are secured by collateral, recovery may not cover the full investment amount.
Interest Rate Risk
Changes in prevailing interest rates can affect the relative attractiveness of fixed-rate debt investments and the ability of borrowers to refinance.
Collateral Risk
The value of the underlying property collateral may decrease. In a default scenario, the liquidation value may be insufficient to recover the full loan amount.
Prepayment Risk
The borrower may repay the loan earlier than expected, potentially reducing your total interest income from the investment.