If you’ve been in this business long enough, you know the fundamentals don’t change—but the strategy must. We’ve operated in challenging markets before. What makes today’s environment particularly complex is the prolonged uncertainty around monetary policy, combined with rising costs, inconsistent asset performance, and mounting pressure from capital partners to deliver results.
The easy move is to wait. To preserve capital. To delay decisions. But in many cases, that “safe” choice could prove riskier than it seems. Inaction in this environment can quietly erode performance—whether through reduced cashflow, missed refinancing windows, or declining asset value due to deferred investment. The challenge, then, is to identify where real risk exists, and where opportunity is simply hiding behind discomfort.
Start with Understanding Your Real Exposure
Balancing risk starts with knowing exactly where you stand. That means taking a hard look at your debt structure, lease maturity schedules, tenant exposure, and operating performance under current and future rate scenarios.
Tools like business intelligence (BI), artificial intelligence (AI), and human intelligence (HI) work best in tandem here. You need more than just raw data—you need insights informed by experience. These help you model scenarios, assess downside protection, and create frameworks that allow for calculated action, rather than reactive decisions.
Ask yourself:
- How rate-sensitive is my current debt portfolio?
- What refinancing risks will I face in the next 12–18 months?
- How do my operating fundamentals hold up if rates stay elevated through 2025?
- Where am I sitting on idle capital or unleveraged equity?
These questions form the basis for rational, strategic planning in an otherwise emotional market.
Look for Opportunity in the Gaps
Once you have clarity on your exposure, the next step is targeted opportunity identification. In this climate, it’s less about finding perfect deals and more about identifying asymmetrical upside—where the risk is manageable, but the potential returns are significant.
That could mean:
- Acquiring distressed or mismanaged assets where the underwriting remains strong
- Restructuring debt to unlock liquidity or extend runway
- Optimizing operational efficiencies to boost NOI and preserve valuation
- Investing in tech or analytics that improve decision-making at the asset or portfolio level
We’re seeing operators use creative approaches to extend loan terms, optimize cap structures, and even convert risk into leverage with select lenders. Some are choosing to proactively recapitalize projects, while others are taking smaller, high-conviction bets in emerging submarkets or niche asset classes.
The thread that connects all of them? They’re acting with intention—not waiting for the market to make the call for them.
Accepting That Risk Will Always Be Present
One mindset shift I’ve found helpful—both personally and across the companies I’ve built—is this: risk never disappears. It just changes form. High-rate environments come with one kind of risk. Low-rate environments come with another. What sets great operators apart is how they anticipate, measure, and adapt.
In this moment, the priority is to avoid binary thinking. We don’t need to go all-in, and we don’t need to sit on the sidelines. Instead, we need to adopt disciplined flexibility—backed by real-time data and clear strategic goals.
That’s why the most forward-thinking firms I know are investing just as much in their decision-making processes as they are in their actual investments. They’re refining how they gather intel, how they model scenarios, and how they communicate strategy internally and externally.
Final Thoughts: Precision Over Paralysis
The high-rate environment we’re operating in will eventually shift—but how you position yourself today will define how you perform when it does.
So, as you evaluate your own portfolio or organization, consider this: Are you navigating from a place of fear, or from a place of clarity? Can you separate true risk from noise? And are you prepared to seize the right opportunities when they appear?