The developer is a unit of Blue Owl Capital. The notice is about power: the project’s natural gas supply has been tangled up in permit denials. According to the Wall Street Journal, Oracle’s lease is “hell-or-high-water”: it can’t be terminated, and Oracle must pay rent whether or not the campus has power. The force majeure provision can delay the start of full rent payments by up to three years, after which the lease extends automatically.

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Oracle’s shares fell more than 3% that day. Blue Owl’s shares also declined. And the $18 billion of construction debt behind the project was already being quoted below 90 cents on the dollar.

Both companies moved quickly to calm things down. Oracle said force majeure notices are “commonplace in developments of this scale.” Blue Owl said the notice “does not change the financial commitments” to the project.

The Financial Times reported a key detail: even if rent is delayed, Oracle still owes a “carry cost” that covers interest to the lenders and a set return to Blue Owl’s equity. The WSJ described it differently: Blue Owl’s roughly 9% return during construction comes out of the money raised to build the project, and the financing set aside funds for up to three years of delays before lease payments begin.

Oracle, of course, is not the borrower [insert shocked Pikachu emoji]

The $18 billion construction loan sits with four companies called Red Chiles (there are Green Chiles in this story, too. Keep reading). The power plant’s financing sits somewhere else. The equity sits somewhere else again. And some of those pieces ended up in funds that individual investors can buy.

So who actually owns the risk?

I don’t have a dog in this fight. Build all the data centers you want, and if you want to invest in AI, more power to you (pun very much intended). I would actually like this project to succeed: at the moment, I slightly prefer Claude, but heck, Anthropic needs strong competition.

I was curious, and wanted to see what I could find. And find, I did.

How I went looking

I won’t be the first to tell you that data-center financing is complicated. These projects sit at the intersection of real estate, massive capex and hype. And your girl is a sucker for punishment. In other words, we are a match made in heaven.

I started where any reasonable person would: searching disclosed fund holdings for “Project Jupiter” and “Oracle.” That gave me a big fat zero relevant results, plus two unrelated deals that happened to share the codename. (Apparently every dealmaker’s favorite planet is Jupiter).

Now, remember, aside from imaginary things (future demand and pro-forma revenues) the project involves a very real tract of land. And land, of all things, gets recorded at the county. So I went to the Doña Ana County Clerk’s records and found Ordinance 367-2025, recorded September 22, 2025, as instrument #2520581.

The document was a goldmine of entity names:

• Yucca Growth Infrastructure, LLC.

• Red Chiles A, B, C and D, LLC.

• Green Chile Ventures LLC.

None of them say “Oracle,” “Blue Owl” or “Jupiter” on the tin, which explains why my first search found nothing.

I then traced those names through state business registries and SEC filings, with much better results.

Today I’ll tell you the story of this project. It’s incomplete, and I’ll tell you why. But I’ll show you what I found and exactly where I found it.

Three numbers that aren’t the same number

Let’s go through the numbers. We’ll start with the headline: a $165 billion data center (NYT likened it to “the fever dream of a modern pharaoh”). That number comes from the bond ordinance, and it isn’t $165 billion of financing.

It’s a ceiling on industrial revenue bonds, a standard New Mexico tax-incentive tool. The county takes title to the property, which takes it off the property-tax rolls, and leases it back to the developers for 30 years.

The county gets payments in lieu of taxes: $360 million over 30 years, or $12 million a year.

So the $165 billion is a tax structure. The ordinance splits it three ways: up to $15 billion for Yucca (power), $25 billion for Red Chiles (the buildings) and $125 billion for Green Chile (the tenant's equipment), and each series is bought by the company's own affiliate.

The actual project financing is much smaller:

• About $18 billion of construction debt, from more than 20 banks, priced at SOFR plus 2.5% (FT).

• About $3 billion of Blue Owl equity, according to Reuters.

Follow the names

Now we are going to play Hansel and Gretel (I play the part of Gretel, not the Witch). We are going to use the LLC name breadcrumbs to find our way. And yes, I'm deliberately using breadcrumbs, not pebbles. I'll tell you why at the end.

Start with the oldest. BorderPlex Manager, LLC was formed in Delaware on November 15, 2024:

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Now, on to the part you won’t like: Fitch’s most recent private credit default rate:

Nearly half of what Fitch calls a default is a borrower that stopped paying cash interest (and switched to PIK, cause we all love not paying in cash, amirite?)

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In this issue:

1️⃣ Private Credit: redemption pressure is becoming K-shaped, while AI becomes the credit market's biggest borrower.
2️⃣ Private Equity: Partners Group considers splitting its evergreen fund into good assets and old assets.
3️⃣ Commercial Real Estate: 2021 bridge loans meet a higher-for-longer rate path, and an AAA tranche gets hosed.
4️⃣ Regulatory: hide your children. "Responsible retailization" is upon us.

Accredited Insight delivers the LP’s perspective on private credit, private equity, and CRE, drawing on hundreds of deals reviewed, and thousands of conversations. Paid subscribers gain access to our database of over 40 case studies and articles on everything from evergreen funds to due diligence (the kind of analysis that tells you what the GP pitch deck left out).

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1️⃣ Private Credit

Is three quarters of data enough to call it?

Across the nine largest non-traded private credit BDCs, only two show requests below 5% in Q3:

One important caveat: those headline percentages overstate new exit demand. When a fund prorates redemptions, the same investor can keep submitting requests quarter after quarter.

So the queue becomes self-sustaining: a capped fund with persistent outflows creates its own next-quarter redemption requests. The line doesn't really disappear until requests fall below the cap.

➡️ Which makes Oaktree's and Goldman's funds interesting outliers (the upper part of the K-shaped evergreen PC recovery). Is the difference better communication around liquidity? A different investor base? Something else? Meaningfully better portfolios? (I'm asking, the comment section is yours).

The AI buildout is now the credit market's biggest borrower

Apollo's latest deck has an interesting numAber: hyperscalers have issued nearly $250 billion of investment-grade debt in 2026 so far, more than the cumulative total of the prior decade.

AI-related issuers accounted for 54% of net IG issuance through August, up from 34% last year and effectively zero in 2024.

2️⃣ Private Equity

Partners Group is considering splitting its capped evergreen fund into good assets and old assets, according to the FT.

Global Value SICAV has been capping redemptions since June, when requests hit roughly 9.8% of NAV.

The proposed solution, subject to shareholder approval: turn the €6.6 billion vehicle into an umbrella with two portfolios:

• A “distributing” fund holding the older, weaker-performing assets and meeting redemptions by selling them.

• A “compounding” fund holding newer investments and targeting higher returns.

Existing investors would start at roughly 75% distributing, 25% compounding. The 5% cap is expected to apply to both. New money goes only into the compounding side.

The logic is straightforward: don't force a mature fund to sell its most liquid, best-performing holdings to satisfy redemptions and leave everyone else holding the leftovers (what I call “the bagholder problem”).

It creates a clean vehicle for new subscriptions while preserving the existing redemption queue.

➡️ This is worth watching, IMO. It’s an interesting solution to a common problem for mature evergreen PE vehicles.

Here are two case studies (both different funds from the one discussed above):

3️⃣ Commercial Real Estate

On September 16, the FOMC raised the funds rate 25 bps to 3.75–4.00%, the first hike since July 2023. Core PCE has remained above 3% throughout the year, and the median dot still showed one more increase before December. Every floating-rate borrower waiting for relief got a little less relieved.

👉The 2021 bridge loans are doing exactly what 2021 bridge loans were expected to do (and regular readers will find none of this surprising, see the date on this article):

Rate caps are expiring into a hiking cycle, and in-place income isn't close to the underwriting. The WSJ reports that Ashcroft Capital's five-property Georgia and Texas portfolio averaged Q1 rents of $1,423 against the $1,953 the lender projected. Income covers 57% of the payment.

And then another SASB AAA tranche gets in trouble:

From Bloomberg: Centre Square, the twin towers at 1500 Market Street in Philadelphia, was appraised at $471 million in 2019. Last month, a judge approved its sale for $70 million. (That’s an 85% decline, for those of you who are not good with doing math this early in the morning).

The $368 million CMBS deal behind it was a single-asset, single-borrower transaction that closed weeks before Covid, when the complex was 93% leased. By the end of June, occupancy was 28%. The borrower couldn’t refinance at the 2022 maturity.

The formerly AAA class is expected to recover roughly 44 cents, while seven junior tranches are wiped out. PIMCO, the largest holder, is looking at a loss north of $35 million.

This is the third AAA hit since the financial crisis, after 1740 Broadway and the Palisades Center mall. All three were SASBs.

4️⃣ Regulatory Updates

Meanwhile, the SEC proposes to widen the door.

On September 30, the Commission voted out a package it calls “responsible retailization” (formerly known as “democratization”).

The proposal would allow advisers to charge performance fees to registered funds, capped at 20%. It would also modernize the interval fund framework so repurchases can better match a portfolio’s liquidity profile, and create a rules-based path for multi-class closed-end funds.

➡️ Separately, the SEC is taking comments on new routes to accredited status: a FINRA-built exam, plus the CPA, CFA, CFP and Series 79/86/87.

The proposed exam would run roughly 75 multiple-choice questions over two hours, cost about $100, be open to anyone 18 or older, and stay valid for ten years. The largest section (20–28% of the questions) covers investment risk, explicitly including redemption restrictions and the impact of fees on net returns.

I’ll spare you the full extent of my skepticism here, - and I say that as someone who put the word Accredited in the title of a newsletter. Widening the pool is good for business, where I’m concerned.

On that note: unlike the funds, I don't check your investor status at the door. Subscribe whether or not you're accredited.

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What I’ll say instead is what’s missing. If the SEC wants more retail money in private funds, the package should come with expanded disclosure requirements for any fund sold to them.

‼️ Let's crowdsource the comment file. What would you add? ‼️

Standardized disclosure should include:

• standardized fee presentation (including underlying funds)

• valuation methodology, in writing (including underlying funds) - a girl can dream

• quarterly fund financials (I’m talking to you, Regulation D vehicles)

• redemption history: requests submitted versus requests filled, by quarter, going back at least three years

• all-in leverage, including fund-level credit facilities and subscription lines, with their effect on reported IRR

• full structural map — every SPV, holdco and feeder in the chain, what sits in each, and what each is obligated to; all off-balance-sheet commitments (guarantees, capital calls, backstops, unfunded obligations); and any securitization of fund assets, stated plainly, including what was transferred, what was retained, and whether the fund holds residual risk. (Pretty please? With a bow on top?🎀)

• realized versus unrealized returns, separately stated

• related-party and affiliate transactions, including any fees paid to the sponsor outside the management fee

• the GP’s own commitment, in dollars, and whether it was funded in cash or waived fees

• for credit funds: the share of income accrued as PIK rather than received in cash

What am I missing? Reply or leave a comment. I’ll compile the list and share it before the comment window closes.

-Leyla

P.S. I care. Do you?

The retailization train is coming regardless of what you and I think. I started this newsletter because I found the information asymmetry abhorrent. This is our shot to make the playing field flatter and less opaque. Let's use it.

P.P.S. New here?

Here’s where you’ll find the full archive (somewhat organized):

RREEF Property Trust, a $203 million daily-NAV REIT advised by an affiliate of DWS, just gave us an answer. On September 15, its board approved a plan to sell every property and wind the fund down, subject to a shareholder vote.

The company cited “heightened redemption activity” and “the challenges of attracting new capital.” New share sales, redemptions, and dividend reinvestment were all suspended immediately.

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The redemptions are only part of the story. For two years, almost no outside capital came in, while investors asked to take $223.8 million out. The fund sold properties, borrowed, and even took a $15 million investment from its own sponsor. All the while, it paid out more than its properties earned after interest and fees.

When an evergreen fund runs out of new money, it has three options: gate redemptions and wait (see Starwood REIT), list on an exchange, or liquidate. RREEF chose to liquidate.

👉 Here’s what happened at Starwood, which took option one:

👉 And here’s a real estate case study with a different twist:

Disclosure: This case study is provided for educational and informational purposes only and should not be construed as investment, legal, tax, or financial advice. The views expressed are solely those of the author. All examples are illustrative in nature and not guarantees of future outcomes. Readers should conduct their own independent research and consult with qualified professionals before making any investment or financial decisions.

Here’s what we’ll look at today:

1. Redemptions vs. new money: how much investors asked for, and how much they actually got back

2. Distributions: what the properties earned vs. what the fund paid out

3. The portfolio: what RREEF owns and what it paid for each property

4. Yield on cost: how to calculate it, and which properties are pulling their weight

5. The sales: what the fund sold, at what price, and the two properties to watch

Let’s jump in.

Invest in real estate? You’ll like this series - oldie but goodie:

The Money Stopped Coming In

For the last eight quarters, RREEF raised almost nothing from outside investors. Excluding dividend reinvestment and one sponsor purchase, it sold $12.7M of new shares in two years.

In Q1 2026, DWS itself bought $15M of shares. That was nearly all of that quarter’s new money, and it helped fund the exits.

Over the same period, investors asked to redeem $223.8M. Redemption requests peaked at $44.8M in Q2 2025. That quarter, investors received just 26% of what they asked for. By mid-2026 the redemption queue had mostly cleared, but new capital never came back. Seven months after the sponsor's purchase, the board voted to liquidate.

The headline yield vs. the rent

The press release highlights a 6.35% since-inception annualized return (Class I) and distribution rates of 5.1%–6.9%.

What the properties actually produced in H1 2026:

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I called it “leverage on leverage” and walked through the mechanics: GP sets up an SPV → pledges the portfolio → borrows against it → and in some cases uses the proceeds to pay distributions to LPs who don’t know the money came from a loan.

Before we get in the weeds: this article is about fund-level NAV borrowing initiated by the GP. LPs can also borrow against their own fund stakes. That’s a different animal: it’s the LP’s decision, and it’s the LP’s risk.

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The issue with GP-initiated NAV facilities is that someone else is adding leverage to your equity position.

Twenty months later, the market is bigger, the SEC is paying attention, and (in an unexpected turn of events) LP pushback is actually working. Sort of.

Let’s catch up.

Disclosure: this is educational content, not investment advice. The author has no business relationship with any fund or lender mentioned here. Do your own due diligence (and read the darn footnotes).

Who’s Lending?

The largest single player remains 17Capital, the London-based specialist now majority-owned by Oaktree Capital. In March 2026, 17Capital closed its Credit Fund 2 at $7.5 billion (the largest NAV loan fundraise ever recorded).

That’s almost three times the size of its 2022 predecessor, which raised $2.9 billion. As of mid-2026, 17Capital has already deployed over $2 billion from Credit Fund 2 alone.

➡️ But the more interesting story is the bank vs. alternative lender segmentation. Banks now account for 60% of reported NAV lending volume, up from just 27% in 2024 (Rede Partners).

And banks are going after larger deals: the median bank deal size tripled in a single year, from €150 million to €500 million, while the alternative lender median held flat at €200 million.

The product has bifurcated: banks for the mega-cap books, specialist credit funds for everyone else.

Did LP Pushback Actually Work?

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The struggle is real across the board: from one-off syndicated deals to publicly listed REITs and everything in between. And while funds and REITs that own actual properties have some flexibility (you know, sell properties, raise additional capital, refinance), real estate fund-of-funds have a different problem.

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They don’t control the assets underneath them.

We’ve seen this with Bluerock (BPRE):

Today, we're looking at another fund caught in the same pickle: Harrison Street Real Estate Fund (VCMIX).

But I’m less interested in enumerating all of VCMIX problems. The fund’s financial statements do a pretty good job of that themselves.

What’s more interesting is what happens next.

In May 2026, Nasdaq Fund Secondaries, LODAS Markets, and Harrison Street announced a collaboration to build a secondary-auction environment for interval-fund shares. Harrison Street said VCMIX would be the first manager to authorize transfers.

The development is interesting, and not just for VCMIX, but for the many other semi-liquid vehicles that are pro-rating redemptions. Remember, an interval fund has a mechanism for investors to get out (quarterly repurchase offers, at NAV), but it’s typically limited, and once the fund is pro-rating redemptions, there are few options for investors who want immediate liquidity.

And VCMIX’s repurchase history tells us there are plenty of investors who would like to leave:

The question is: at what price would someone else be willing to take their place?

That’s what we’re going to try to figure out.

Important disclosure. This case study is independent analysis published for educational purposes only and does not constitute investment advice, a recommendation, or a solicitation to buy or sell any security. All information is sourced from SEC filings (N-CSR and N-CSRS), the fund's prospectus, and publicly available company materials. Return estimates are hypothetical and for illustrative purposes only; they are not projections or guarantees. The author has no position in VCMIX and no business relationship with Harrison Street, Colliers, Nasdaq Fund Secondaries, or LODAS Markets.

The Fund

Harrison Street Real Estate Fund (VCMIX) is a $1.4 billion interval fund that invests in private and public real estate through a fund-of-funds structure:

• roughly 80% in institutional private real estate vehicles,

• 20% in public REITs and preferred stock.

It’s managed by Harrison Street Private Wealth, a division of Harrison Street Asset Management, which sits under the Colliers International umbrella. The fund charges 0.95% on NAV, plus sub-adviser fees, plus the underlying private fund fees (0.87%) that don’t show up in the headline expense ratio (1.82%). All-in, investors are paying roughly 2.7%.

The Shrink

Four years ago, VCMIX had $3.2 billion in net assets. Today it has $1.5 billion. The 54% decline is a two-part story: capital flight and shrinking valuation.

1. Capital Flight

Let’s start with capital flight: I’ve written before that once returns slow down (or turn negative), investors run for the exits. We’re seeing this play out with VCMIX.

Speaking of capital flight, here’s another CRE case study:

Every single quarter for the past three years, investor demand to sell has overwhelmed the offer. The fill rate has been declining, and by April 2026 it dropped to 17%. Nearly 20 million shares were tendered (about 30% of the fund's outstanding shares) and roughly $380 million worth went unfilled.

Inflows haven’t dried up entirely (color me shocked): the fund still attracted $147 million during the 12 months ended 3/31/26 (in addition to $9 million in reinvestments).

2. NAV Decline

Now let’s look at the valuation side of the story:

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Today, I’m going to show you a close sibling of that practice, used in new-vintage PE evergreens, that can have a similar effect: massive early IRRs.

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Once you see it, you can’t unsee it. And once you understand the math behind it, you’ll see the trade.

Yes, I said “trade.”

No, I’m not advocating it. As always, none of this is investment advice. This is hypothetical, and today I’m not naming names.

For this hypothetical trade to work, two things need to happen. We’ll get to both later in the article. And because fund GPs are smart people, they’re doing what they can to minimize the number of wiseguys trying to execute the trade. I’ll show you what they’re doing, too.

And by the way: none of this is to say that evergreen PE funds aren’t worth owning. The point here is to understand what’s driving the returns you see in the first few quarters, and whether they reflect actual value creation or an accounting head start (spoiler: it’s often the latter).

The Setup

Imagine you are a large alternative asset manager. You run several flagship private equity funds (call them Fund I through Fund XIII) each one a traditional drawdown vehicle with a long, distinguished track record.

Now imagine you want to launch a new product: an evergreen fund, continuously offered, available to a broader investor base. Let’s say it’s a private equity fund. One that comes with a smooth upward-sloping NAV/share chart, direct investments in companies (rather than stakes in other funds), and supposedly great diversification. Wealth advisers and their HNW clients love those like cats love catnip.

You have a small problem: your new fund has no portfolio and no track record.

Enter the Seed Portfolio

Here’s how it works.

Read more

I have a gem of a chart for you today.

If you spend any time on X, you’ll know HVAC roll-ups are the butt of all PE-themed jokes. Laugh all you want. They’re still near the top of the PE deal leaderboard.

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In this issue:

1️⃣ Regulatory: the SEC proposed opening private markets to retail investors.
2️⃣ Private Equity: 63% of portfolio companies held 4+ years. Secondaries hit a record $121B in H1.
3️⃣ Private Credit: aggressive sponsors pay more to borrow.
4️⃣ Commercial Real Estate: CRE transaction volume is recovering, pricing is up 8.6% YoY, and one awesome chart.

Accredited Insight delivers the LP’s perspective on private credit, private equity, and CRE, drawing on hundreds of deals reviewed, and thousands of conversations. Paid subscribers gain access to our database of over 40 case studies and articles on everything from evergreen funds to due diligence (the kind of analysis that tells you what the GP pitch deck left out).

Subscribe now

1️⃣ Higher Thresholds, Wider Doors

The SEC wants to open private markets to retail investors (a familiar theme, no?)

A proposed rule titled “Enhancing Retail Exposure to Private Markets” landed at the White House Office of Management and Budget on September 1(RegInfo). It would do two things:

1. amend both the Investment Advisers Act and Investment Company Act to let retail investors access private markets through registered investment companies, and

2. expand the universe of clients who can be charged performance fees (this is the interesting part).

From the SEC: “Exposure to the full dynamism of our markets — both public and private — should not be reserved for wealthy insiders.”

And there’s an amusing bit of timing here.

Back in June, the SEC raised the qualified-client thresholds under Rule 205-3. This rule determines who can be charged performance fees by registered investment advisers.

The AUM test went from $1.1 million to $1.4 million; the net-worth test from $2.2 million to $2.7 million. Existing contracts are generally grandfathered, but new subscriptions and investments after June 29 have to meet the new numbers.

My first thought was: “Wait a second. Isn’t there a fund-of-funds workaround?”

(One can invest in a fund-of-funds without meeting the qualifications for the underlying funds, even when those underlying funds are only open to qualified clients).

Thankfully, the SEC appears to have thought of that, too. The new thresholds apply indirectly to certain fund-of-funds structures, including secondary funds. (White & Case)

Let’s play this one out a few steps. What happens when there is a flood of new money into any given asset class?

I’ll tell you what my crystal ball says 🔮 More semi-liquid (“evergreen”) vehicles. More ’40 Act structures chasing the same assets.

2️⃣ Private Equity: More Activity, Less Liquidity

274 days. (How’s that for a hook?)

That’s the median time it took to close a North American PE deal in Q2 2026, according to With Intelligence by S&P Global. (For those who struggle to divide by 30, that’s about 9 months)

Deals are getting done (despite slower fundraising, see chart below), but the exit bottleneck is not easing up.

More than 63% of active North American portfolio companies have now been held for more than four years. Median holding periods exceed five years across every major sector except industrials, at 4.9 years.

And when exits don't happen, someone eventually has to create liquidity. Enter secondaries.

H1 secondary transaction volume reached $121 billion, according to Evercore, the strongest first half on record. Full-year estimates are now $250–270 billion. Fundraising topped $50 billion in H1, led by Coller’s $17 billion and Partners Group’s $9 billion raises.

➡️ Let me connect some dots: remember how we speculated that opening the gates to allow more investors into private markets could create a surge in evergreen fund offerings?

What’s better to put into a fund than secondary stakes in stale primary funds?
(Buy them at a discount, mark them up, and generate beautiful, glorious unrealized gains..)

You really should read this, if you haven’t yet:

3️⃣ Sponsor Reputation Comes With a Yield Spread

How much more does it cost to borrow money when you’re that sponsor?

A new paper from Greg Nini at Drexel and Vincent Buccola at the University of Chicago Law School puts some data behind something credit investors have long suspected: sponsors develop reputations in the debt markets, and lenders price accordingly.

“The Sponsor Premium” uses leveraged-loan data from 2016–2025 to test whether a sponsor’s reputation for fair dealing (or the lack thereof) shows up in loan pricing. The paper comes with a naughty list of sponsors. (FT wrote about it here)

Whelp, turns out it does.

Across three different measures of sponsor reputation, portfolio companies backed by the most aggressive sponsors paid meaningfully higher yields than those backed by sponsors with more cooperative track records.

➡️ What the paper doesn’t ask is whether the more aggressive sponsors came out ahead (via more favorable outcomes in cases of default) to compensate for their higher borrowing cost.
If I had to bet, I’d say the aggressive sponsors weren’t doing it for nothin’.

4️⃣ Real Estate

Altus group published Q2 Transaction Analysis Report. Tons of good data:

• Q2 transaction dollar volume rose 11.3% QoQ, with trailing-four-quarter volume up 16.3% YoY.

• Pricing is recovering too: median transaction pricing rose 8.6% YoY to $131/SF, led by industrial (+13.2%). Multifamily and retail also posted solid gains, while hospitality was the only major sector with declining prices.

• Larger deals are taking an increasing share of transaction value, with investors favoring larger, higher-quality assets, durable income, and markets with strong fundamentals.

But the chart that caught me off-guard? This one:

I’m speechless.

Thanks for reading! As always, if you have any suggestions, reply to this email, leave a comment, or find me on socials (unhinged me on X, slightly more prim and proper me on LinkedIn). Have a great week!

-Leyla

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P.S. New here?

Here’s where you’ll find the full archive (somewhat organized):

The news created some waves, but this isn’t really a story about one lender getting one loan wrong. Blue Owl may have been acting entirely in good faith, and every individual mark may have been technically defensible under the applicable accounting framework.

That’s the problem.

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Whether Blue Owl got Loparex wrong is nearly beside the point (OBDC’s total position before the write-down was ~1.4% of total assets). The more interesting question is whether anyone outside Blue Owl could have known it was wrong.

And the most interesting question of them all is what that means for a $1.8 trillion private credit market.

There is no continuously observable price telling investors what a private loan is actually worth. Instead, there is an appraisal-like process: management estimates fair value, an independent valuation firm reviews the methodology, auditors test the process, and investors receive the number with a three-month delay.

A mark can be perfectly reasonable under accounting rules and still turn out to be spectacularly disconnected from economic reality.

Check out this Medallia chart:

And here’s the story on that loan:

The counter-argument, of course, is that public opinion can be spectacularly disconnected from economic reality too. But in the public markets, at least, investors have the option to trade on that information (or sell and cut their losses). That latter option is not available to investors in OBDC II, which also holds the Loparex loan.

Speaking of OBDC II:

The private credit ecosystem asks investors to treat internally generated estimates as if they were observable market prices. Unfortunately, we have very little way of knowing how wrong those estimates are (until something breaks).

What Happened

Back to issue at hand. Loparex makes very decidedly non-software things like engineered films and silicone release liners. That’s the backing you peel off a label or a bandage. (I too, had no idea what they were called).

In August 2019, Pamplona Capital Management acquired the company with roughly $600 million in debt, implying leverage of approximately 7.6x EBITDA. A bolt-on acquisition a few months later pushed leverage closer to 8x.

Enter our protagonist, Blue Owl, then Owl Rock Capital Corporation, who underwrote the second-lien loan at closing. This was a direct origination. Blue Owl held it exclusively across two BDCs: $112 million of the second lien on OBDC’s books; and $28 million on the books of its smaller sibling, OBDC II (4:1 investment ratio, that split will remain constant throughout the years).

A second tranche was added for the bolt-on. Combined par across both vehicles: approximately $172 million. For the next four years, the positions were carried near par.

The Restructuring

I’ll spare you the full saga of what Covid —> supply chain issues —> cost increases did to the financials of the borrower. Suffice it to say the company, saddled with substantial leverage, has not done well.

By January 2024, every party in the capital structure had retained restructuring counsel. In March’24, Loparex executed one of the year’s most aggressive liability management exercise (LME). This was an uptier transaction (when some creditors get priority over others).

From Octus: “Loparex completed a liability management exercise in 2024. In the first stage of the Loparex transaction, 75% of the first lien lenders provided $135 million of new money in the form of tranche A of a new superpriority term loan facility due February 2027.

They also swapped their $334 million of the $354 million U.S. dollar S+450 bps first lien loan due July 2026 and $76 million of the $194 million euro E+525 bps first lien loan due July 2026 for first-out with a total principal of $175 million, $280 million of S+450 bps second-out term loan and $120 million of S+450 bps third-out term loan.”

In plain English: the deal created a five-layer waterfall in repayment priority. The lenders who put up new money jumped to the front of the line. Everyone else got pushed down.

S&P downgraded the company to selective default, deeming the exchange tantamount to default because non-participating lenders received materially less than originally promised.

On April 12, 2024, S&P upgraded Loparex from SD to CCC+ with a negative outlook. The language in that report is not pretty, let’s put it that way. S&P explicitly stated that the capital structure remained “unsustainable” and assigned recovery ratings across the new tranches.

S&P’s recovery rating scale runs from ‘1’ (highest expected recovery, 90–100%) to ‘6’ (lowest, 0–10%). At origination in 2019, S&P assigned the second lien a ‘6.’ After the 2024 LME, S&P affirmed it.

Here’s the full post-restructuring picture:

• Tranche A (superpriority new money): ‘B’ rating, ‘1’ recovery (90–100%)

• First-out and second-out: ‘CCC+’ rating, ‘3’ recovery (50–70%)

• Third-out and existing first lien (non-participating): ‘CCC-’ rating, ‘6’ recovery (0–10%)

• Second lien: ‘CCC-’ rating, ‘6’ recovery (0–10%)

❓Pop quiz: which tranche did Blue Owl hold?
Yes, it was the very bottom one. $166 million of their $172 million total exposure (96%) sat in the second lien.

Monroe Capital

If you are doing mental math, you know we’re missing some $400 million dollars in loans (the company was purchased with ~$550 million in debt, Blue Owl’s exposure was around $172 million), so I tried looking for the “missing” money.

Monroe Capital Income Plus Corporation, a small BDC managed by Monroe Capital, held a tiny piece of Loparex’s original first-lien term loan (about $754,000 in par, acquired in April 2023.)

Pocket change compared with Blue Owl’s combined $166 million second lien.

But Monroe’s marks tell a story that Blue Owl’s don’t:

Read more

On August 30, Apollo announced a $9 billion investment in ONEOK, the Tulsa-based midstream energy company. The headlines called it an “equity investment.” Technically, it is.

But upon closer inspection, it’s neither fish nor fowl. It’s equity with debt-like features, but not preferred equity. It has debt-like features but not the lender’s priority in repayment. It’s a financial instrument engineered so that both sides get to call it what they need it to be.

ONEOK gets $9 billion of capital that counts as equity on its balance sheet, doesn’t dilute existing shareholders, and helps reduce its leverage.

Apollo gets a contractual cash-flow stream that can potentially be packaged, tranched and sold as investment-grade securities to insurance companies and other institutional investors.

In other words: equity for the borrower, debt-like cash flows for the investor, and potentially investment-grade bonds for the eventual buyer.

Today we’ll walk through two things:

1. how this deal was structured on the corporate side,

2. and how equity gets converted into rated bonds.

If you missed the CLO article, you’ll want to read that first. This transaction isn’t technically a CLO, but the mechanism (taking contractual cash flows and turning them into rated securities) is nearly the same, with one important difference: a CLO diversifies across hundreds of borrowers, while this structure depends entirely on a single company’s cash flows.

This is what shows up on insurance balance sheets:

This is a case study examining the structure of a publicly announced transaction. It is based on SEC filings, public press releases, and reporting by Bloomberg. The author holds no position in ONEOK, Apollo, or any securities discussed. Nothing in this article is investment, legal, or financial advice.

What ONEOK is doing with the money

ONEOK is using the $9 billion for two things.

First, it’s acquiring Brazos Midstream’s natural gas gathering and processing assets in the Permian Basin for $4.4 billion. This nearly doubles ONEOK’s processing capacity in the region.

Second, it’s using roughly $5 billion to extinguish existing senior debt through tender offers, make-whole calls and term-loan repayment.

Net result: ONEOK gets bigger while reducing leverage. Pro forma 2027 leverage is expected to fall to roughly 3.25x debt-to-EBITDA, from around 4x.

And it does this without issuing common stock.

‼️ If ONEOK had issued $9 billion of new bonds, leverage would have gone the wrong direction. If it had issued $9 billion of common equity, existing shareholders would have been significantly diluted (current market cap is roughly $60 billion). Apollo’s structured equity lets ONEOK thread the needle.

The structure

This is the dense part (it’s your cue to get your coffee).

Read more

Well, CLOs are like that for me lately (no, I’m not shopping one, thanks for asking).

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Last fall, when First Brands filed for bankruptcy, I wrote about CLO mechanics (the fun stuff: the tranching, the waterfall, the difference between BSL and middle-market collateral).

If you missed that piece, start here:

Today’s piece is the companion. We’ll tackle a different question: why they work (and where they don’t).

‼️ CLOs, CDOs (collateralized debt obligations), CFOs (collateralized fund obligations) and a slew of other structured financial products are all the same species. No, they are not the same (think chihuahua vs. German shepherd: you won’t mistake one for another, but they are both dogs). Once you understand the mechanics, you'll be able to grasp newfangled wonders of finance, like the recent Apollo equity structuring (stay tuned, more on this in a separate post). And maybe you’ll start seeing them everywhere too…

📚 In the interest of keeping you awake, this article is fairly high-level. If you suffer from insomnia (or are dying to learn more about OC ratios for mezzanine tranches) I’ve included further reading at the end. Let’s get into it..

A Very Quick CLO Refresher

A typical broadly syndicated loan CLO issues six to seven rated debt tranches plus unrated equity. The AAA tranche (the largest slice, up to ~64% of the deal) gets paid first and benefits from substantial subordination beneath it.

That subordination means more than a third of the underlying loan portfolio would need to default with zero recovery before the AAA tranche loses a dollar.

Now look at the bottom of the stack (the dark blue equity slice in the chart above). The equity tranche has no guaranteed return. It collects whatever cash is left after every debt tranche above it has been paid (and after management fees, trustee expenses, etc).

In good years, that residual can deliver 15–25% cash-on-cash distributions. In bad years, overcollateralization tests fail, the waterfall redirects cash upward to senior debt tranches, and equity distributions stop entirely.

The median unlevered IRR for CLO equity vintages from 2003 through 2023 is approximately 11%. But median numbers only tell part of the story: deals priced at wide loan spreads (2008–2009, 2020) significantly outperformed, while tight-spread vintages (2014, 2021) delivered lower returns.

We’ve published case studies on several funds that hold CLO debt and equity on the books:

One important caveat: everything above describes broadly syndicated loan (BSL) CLOs. Private credit CLOs (sometimes called middle-market CLOs) are a slightly different animal. The underlying loans are to smaller, often unrated borrowers, with less liquidity, less transparency, and historically higher default rates.

To compensate, private credit CLOs are built with thicker cushions at the bottom: the AAA tranche is a smaller share of the deal, and the equity and junior mezzanine slices are proportionally larger. Spreads are roughly 200 bps wider than BSL equivalents. More on that here.

What Protects Senior Tranches

So how do you take a pool of below-investment-grade loans and turn them into AAA-rated securities?

Read more

Every other week, we send a quick digest on what’s catching our eye in private markets.

Before we get into it, here’s the chart of the day:

Non-listed BDC fundraising fell to $2 billion in Q2 2026 (an 82% drop from a year ago and the lowest quarterly total since 2020). Redemptions hit 12.4% of NAV, the highest level Stanger has ever recorded. Sponsors fulfilled 38% of requests and returned $5.9 billion (against a record $15.4 billion in requests), but net outflows still came in at roughly $3.8 billion for the quarter and $5.6 billion for H1. Aggregate NAV declined 3.1% quarter-over-quarter to approximately $122.4 billion.

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In this issue:

1️⃣ Private Credit: BDC fundraising hits a five-year low. But trapped investors are not willing to take a haircut to get out (yet?)

2️⃣ Commercial Real Estate: Apollo injects $1 billion into SREIT’s affordable housing portfolio. We’ll take a closer look at the deal terms below.

3️⃣ Private Equity: who’s actually investing in continuation funds? Plus, Vanguard makes a $4 billion bet on advisor infrastructure.

Accredited Insight delivers the LP’s perspective on private credit, private equity, and CRE, drawing on hundreds of deals reviewed, and thousands of conversations. Paid subscribers gain access to our database of over 40 case studies and articles on everything from evergreen funds to due diligence (the kind of analysis that tells you what the GP pitch deck left out).

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1️⃣ Private Credit

1. 26% discount was a no-go for trapped investors

Cox Capital Partners offered to purchase up to $90 million of shares in five non-traded BDCs managed by HPS, Apollo, Ares, and Blue Owl at an average 26% discount to NAV (I wrote about the Blue Owl fund here).

The result? Less than $5 million in orders. Apparently, investors want liquidity, they just don’t want to pay 26% for it. (Yet??)

Cox is now extending its tender offers to interval funds managed by Cliffwater and Variant Investments. Variant, for context, saw requests to redeem roughly 50% of its shares last quarter.

Meanwhile, on the publicly traded BDC side, the discount between NAV and share prices is starting to narrow. The S&P BDC index is up 6% QTD.

But the underlying pressure hasn’t exactly disappeared: defaults are up (you’ll find the chart here), fundraising continues to crater, while the largest public BDCs have seen their portfolios contract for three consecutive quarters, as repayments continue to outpace new originations.

2. BlackRock is shopping what’s left of TCP Capital

BlackRock is sounding out buyers for the $671 million loan portfolio remaining in TCP Capital Corp.

KBW has reportedly begun pitching the portfolio to firms including Ares, although talks are still early, Bloomberg reports. TCPC is also considering other options, including reinvesting, returning capital to shareholders, or merging with another entity.

This follows TCPC’s sale of $523 million of loans to a Pantheon-backed vehicle earlier this month. That was an interesting transaction, read the full story here:

2️⃣ Commercial Real Estate

1. SREIT’s $1 billion structured lifeline

Apollo is investing $1.02 billion in a joint venture with Starwood Real Estate Income Trust, the $22.5 billion non-traded REIT that suspended redemptions earlier this year.

The basic idea is simple:

• Apollo gets 41.5% of a portfolio of ~120 affordable-housing properties,

• SREIT keeps 58.5% and uses the proceeds to pay down debt.

But, as always, the interesting stuff is in the fine print (did I get you in the habit of opening SEC filings yet?)

Apollo’s investment is rated investment-grade and carries a guaranteed minimum yield that increases over time. SREIT owes those payments regardless of portfolio performance.

SREIT can buy Apollo out between years 5 and 12. If it does so in years 5–10, Apollo’s IRR is capped at 7%. The economics get increasingly expensive with a longer wait (higher minimum payments, make-whole contributions, and contingent obligations). If SREIT can’t meet those obligations, Apollo gets governance rights over the portfolio.

So the trade is pretty straightforward:

SREIT gets liquidity and time. Apollo gets a protected return.
(What do existing investors get? You tell me in comments please)

Economically, Apollo’s JV investment functions as preferred equity:

And here’s an example of a recapitalization in a one-off multifamily deal:

3️⃣ Private Equity

1. Who’s actually in continuation funds?

As continuation funds become a bigger story in PE, Preqin's latest data, as of April 2026, gives us a pretty interesting look at who's actually putting money into these vehicles:

Public pension funds (19.1%), foundations and endowments (18.8%), and private-sector pension funds (18.1%) collectively account for 56% of CV investors. Fund-of-funds managers represent another 16.6%.

You see private wealth? At just 2.5%? Of course, there's an asterisk: many fund-of-funds managers are themselves targeting wealth investors, so retail exposure is higher than this chart suggests.

👉 Here’s a fund with CVs on the books:

👉 And here’s your primer on CVs:

2. Vanguard buys Altruist for $4 billion

Last, but most certainly not least: Vanguard is buying Altruist for roughly $4 billion (WSJ). The price is more than 2x Altruist’s $1.9 billion valuation from April 2025. (Umm. Maybe not the value acquisition.)

Altruist is an AI-forward wealth technology and custody platform for independent financial advisors. It provides the plumbing behind an advisor’s practice: self-clearing brokerage, account opening, trading, portfolio management, billing, reporting, and all the other glamorous infrastructure that nobody thinks about until it breaks.

It competes directly with Schwab and Fidelity in the RIA custody space.

CEO Salim Ramji is pushing Vanguard beyond index funds and deeper into wealth-advice infrastructure.

Vanguard already has partnerships with Blackstone and Wellington to bring private-market products to the wealth channel.

This is my personal opinion, take it for what it’s worth, but I just can’t fathom how this product will set the world on fire:

But products are only half the equation. You also need the pipes (now you own the product and the distribution channel). Altruist gives Vanguard those pipes, and, importantly, lays them directly underneath the independent advisors.

Altruist will operate as a standalone business, retaining its leadership and brand.

Thanks for reading! As always, if you have any suggestions, reply to this email, leave a comment, or find me on socials (unhinged me on X, slightly more prim and proper me on LinkedIn). Have a great week!

-Leyla

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Here’s where you’ll find the full archive (somewhat organized):

In today’s guest post , who writes investigative research on insurance, structured credit, and private equity, provides a roadmap to the private asset categories that end up on insurance balance sheets, why they’re there, and what the labels actually mean. If you’ve followed the private credit and insurance conversation and found the terminology confusing, this is your field guide.

-Leyla

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Overview

Out of the ashes of the Savings and Loan crisis a book was published with the title – The Best Way to Rob a Bank is to Own One, by the great chronicler of the S&L crisis, William Black. I think the same can be said about today’s insurance industry.

I have published many articles focusing on insurance and the Private Equity (PE)/ Private Credit (PC) ecosystem. Those articles focused on specific insurers and/or asset types.

The goal of this article is to demystify the many ways insurance companies are exposed to the PE/PC ecosystem and to describe the growing influence of private asset managers over the insurance industry.

There are many risky asset types that insurance companies invest in. This is not new. What is new is the more aggressive push to invest in illiquid private assets originated by an affiliated PE/PC sponsor. The investment categories are many and often in the public discourse are incorrectly defined and / or conflated.

This article provides an overview of 2 trends:

1) PE ownership of insurance companies, and

2) Insurance companies increasingly investing in Private Assets.

These trends are inextricably linked. The primary goal of PE/PC and insurance tie ups are the ability to use insurance company balance sheets to absorb PE/PC originated assets, increase Assets Under Management (AUM) and perpetuate the fee generation machine.

I first focus on the broader trends and then dive into specific asset categories and risks that PE linked insurance companies are exposed to. This article doesn’t cover all risky asset classes, but rather those most connected to PE/PC sponsors. Asset classes like Commercial Mortgage-Backed Securities (CMBS) and Commercial Real Estate Mortgages, merit attention but are beyond the scope of this article.

As an example of the latter, Apollo dissolved their Commercial Mortgage REIT and “sold” $9B of its commercial mortgages to Athene at a price near 100, when the REIT was trading at a deep discount to NAV. To me, this raised questions about whether Apollo was using its insurance balance sheet to support an affiliated vehicle. This illustrates the fact that PE/PC sponsors can influence the assets of their captive insurer far beyond the private assets label.

How and why Private Asset sponsors control insurance companies

Before jumping in, it’s important to understand the flow from the PE/PC sponsor to the insurance companies. Apollo was among the first to invest in, control and scale an insurance company (Athene).

The first goal is for the sponsor to control the investment decisions at the insurance company. This can be achieved in several ways. Most straight forward is for the PE/PC sponsor to own the insurance company. Once they own the insurance company, the control is complete. Once owned, the PE/PC sponsor can appoint themselves as the Investment Manager (IM) for the insurance company. This role is generally formalized under an Investment Manager Agreement or IMA.

A PE/PC sponsor doesn’t need to have complete ownership to benefit from the above relationship. Ownership levels run the gamut from 0 to 100%. The key is to be appointed Investment Manager. Ownership gives more control, but even absent ownership, the PE/PC role as IM can achieve some of the same goals and presents similar risks.

See below for the basic flow of the relationship.

Private asset sponsors want control of insurance companies for 5 reasons: 1) the holy grail of permanent capital, 2) efficient leverage, 3) ability to commit a large balance sheet for deals that wouldn’t be possible with a traditional fund structure, 4) ability to grow Assets Under Management and therefore fees, 5) weak regulatory oversight.

Trends in Private Assets and insurance

As noted above, two trends are occurring in parallel. Growing control of insurance balance sheets by private equity or private credit sponsors and insurance companies increasingly investing in private assets.

The chart below (source: McKinsey) illustrates the explosive growth in private capital-controlled insurance companies. While McKinsey doesn’t identify the specific insurers, it’s likely that Apollo, KKR and Brookfield alone comprise 50% of the assets. Notably, I don’t believe McKinsey includes MassMutual since they own the asset manager, rather than Vice Versa (Barings) and it’s likely they wouldn’t consider Barings as a private asset manager. Adding MassMutual alone would bring the total close to $2T.

Turning to the specific assets, the chart below shows that the increase in private placements held by insurance companies closely tracks the growth shown in the above chart. It’s important to note that private placements are not the same as Private Letter Ratings (PLR) - a topic that has gained a lot of attention. While private placements often have private letter ratings, they can also have public ratings. Therefore, the categories are related, but not the same.

A late 2025 Fitch report revealed that PE affiliate insurers have 6X the exposure to private assets (as a percentage of asset) relative to non-PE affiliate insurers.^[1]

Read more

Private credit is a catch-all phrase that includes virtually all non-bank lending. Real estate private credit is one of the buckets, with its own unique wrinkles:

The vast majority of such funds file a Regulation D form, which exempts them from filing financials with the SEC and makes them totally opaque.

For a while, I wanted to do a case study on one. I just didn’t have a good candidate. Well, folks, I finally found one.

Bonus: the fund is new (less than a year old), which makes the financial statements somewhat easy to decipher (ok, ok… they are never easy, this set happens to be a little less convoluted than others).

Here’s another real estate debt case study, also full of interesting things:

Disclosure: This case study is provided for educational and informational purposes only and should not be construed as investment, legal, tax, or financial advice. The views expressed are solely those of the author. All examples are illustrative in nature and not guarantees of future outcomes. Readers should conduct their own independent research and consult with qualified professionals before making any investment or financial decisions.

What’s in the fund

As of December 31, 2025, the fund had $50.3 million in net assets across 70 positions. So, what can we learn from the financial statements? Quite a bit.

1. Start with the balance sheet

“Why do we start with the balance sheet, Leyla?” Because it’s the first statement in the annual report.
(In this case, you only have to flip through 16 pages to get there.)

And because reading financial statements is hard enough as is, so we’ll choose the path of least resistance.

A few things jump out:

1. Cost and value of investments

The fund held $52,408,408 of investments at cost and $52,449,483 at fair value (are your eyes bleeding yet?) The gap is only $41,075 in net unrealized appreciation (it’s from the RMBS sleeve, not the loans).

The loans are short-term, with a weighted-average term of 13.7 months, and are carried at par. Which brings us to a very important point for investors:

Read more

(No idea why I decided to pursue a degree in English my first go-around in college, but that’s beside the point. I came to my senses later in life, when faced with the prospect of living in abject poverty surrounded by books.)

Enough about college majors, back to math problems.

(The stock rallied 11% on the news, but that’s a separate story.)

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👉 I kid you not, today’s math problem was solved by reading the footnotes to appendixes. So read the dang financial statements (and footnotes, and appendixes, and exhibit 99.1, while you are at it)

To solve today’s math problem, we first need to identify what exactly was sold. And no, “loans” is not the right answer.

Step 1: CLO

On May 27, 2026, TCP took $535.8 million of loans on its books (TCP’s assets, not the borrowings of the fund) and packaged them into a securitization (a CLO):

• TCP sold the senior, investment-grade-style slices of the pool to outside CLO debt investors, raising $405.9 million.

• It kept Class D tranche, and the bottom slice (the “equity” or first-loss piece) for itself.

• That retained slice was worth roughly $130 million at par, against a $536 million pool.

For those not yet sufficiently caffeinated to do the math, that’s about 3x debt-to-equity leverage on that specific slice of the portfolio, layered inside a fund that was already carrying its own leverage (1.38x net debt-to-equity) at the company level.

None of this is unusual, I’m simply showing you the plumbing inside. TCP owned and consolidated the entire structure on its own balance sheet for about ten weeks before announcing the Pantheon transaction.

The first case study on this fund:

Step 2: What got sold to Pantheon and at what price

By June 30, 2026, the loan pool inside this structure (plus some additional contributed positions) was marked at $523 million. We know there is $406 million of CLO debt sitting on top of it. Add the roughly $74 million TCP separately posted to cash-collateralize the vehicle's unfunded commitments, and TCP's total equity claim comes to:

Read more

And even within real estate credit, “secured by real estate” tells you surprisingly little about the investment you’re actually making.

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You can buy a public mREIT, commit to a drawdown debt fund, invest in an interval fund (or heck, become a hard money lender and originate whole loans directly).

The collateral behind all of the above may be real estate. But the actual assets can range from individual whole loans to slices of securitized loan pools. And importantly, the risk you’re actually taking can be radically different in each case.

Speaking of securitizations in real estate:

So, today we’re going to take a tour through this corner of private credit. We’ll look at three things:

1. The assets: what you’re actually lending against.

2. The plumbing: how the lender finances, packages, and distributes that credit.

3. The wrappers: what the investor actually owns, and how that structure changes the risk.

At the end of the article, you’ll find a list of questions to ask if you’re evaluating real estate credit.

I use “real estate credit” broadly to mean nonbank lending and credit strategies backed by real estate. This includes private loans, funds, publicly traded vehicles, and securitized credit that give investors exposure to the same underlying lending ecosystem.

The Big Picture

I hate acronyms. I really do. But I also write by the rule “Omit unnecessary words,” which necessitates a certain brevity. (Ain’t nobody got time to read a 5,000-word lending manifesto, amirite?)

So, a quick-and-dirty glossary:

• CRE = commercial real estate

• DSCR = debt service coverage ratio. Essentially, the property's cash flow relative to its debt payments (more on that here)

• QM = qualified mortgage (think a conventional 30-year mortgage that meets specific borrower and underwriting requirements.).

• MBS = mortgage-backed securities. This is when mortgages get bundled into securities, with different levels of risk and seniority assigned to them depending on where each security sits in the capital structure

• CMBS = commercial mortgage-backed securities. The “C” is for commercial.

  RMBS = residential mortgage-backed securities. The “R” is for residential.
  (I think I covered everything? 😅)

Let’s start from the top. Here are the various strategies for real estate loans:

Read more

Every other week, we send a quick digest on what’s catching our eye in private markets.

Before we get into it, here’s the chart of the day:

Fitch’s U.S. Private Credit Default Rate hit 6.0% in April and hasn’t budged through June. But that’s not the interesting part. The interesting part is which borrowers are defaulting. Take a look at the composition:

The PCDR combines two components. The MCO universe (model-based credit opinions used to rate middle-market CLOs) is running at 4.9%. The PMR universe (privately monitored ratings used by insurers for regulatory capital) is at 9.4%.

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This shows you how unevenly stress is distributed across private credit. Smaller borrowers are breaking at a much higher rate than the bigger ones.

In 2025, issuers with EBITDA of $25 million or less defaulted at a 15.8% rate, nearly four times the 4.0% rate for borrowers above $100 million (Fitch).

In this issue:

1️⃣ Private Equity: Carlyle and Bain are the last two standing in a $7B fight for Wealth Enhancement Group. Meanwhile, Ares is in talks to buy Leonard Green.

2️⃣ Private Credit: Revolut is letting Europeans into private markets for €1. UBS told clients to sell out of a Blue Owl fund it helped build.

3️⃣ Commercial Real Estate: Blackstone Mortgage is pivoting hard out of office. KKR’s CRE lender is exploring a sale. Apollo’s mortgage REIT is dissolving entirely.

Accredited Insight delivers the LP’s perspective on private credit, private equity, and CRE, drawing on hundreds of deals reviewed, and thousands of conversations. Paid subscribers gain access to our database of over 40 case studies and articles on everything from evergreen funds to due diligence (the kind of analysis that tells you what the GP pitch deck left out).

Subscribe now

Private Equity

1. The $7B wealth manager auction

Carlyle and Bain Capital are the final two bidders for Wealth Enhancement Group at a valuation of roughly $7 billion including debt (FT reported it here). The platform oversees nearly $160 billion in client assets. If the deal closes, it would rank among the largest disclosed US private equity acquisitions of a wealth manager.

The strategic logic is pretty clear: buy the distribution, then sell more private markets products into it.

Carlyle CEO Harvey Schwartz has called the wealth channel a top growth priority; the firm's evergreen wealth strategies now hold $19 billion (up 4x from three years ago). Carlyle also owns a stake in Captrust and completed a $2.8 billion investment in MAI Capital in June.

Bain is following the similar trajectory: the firm owns roughly 29% of Carson Group, participated in Osaic's recapitalization, and took Envestnet private for $4.6 billion in 2024.

You can use your imagination to insert the related insurer in the graphic below. The ouroboros remains undefeated.

In a separate, but related story, Ares Management has held talks to acquire Leonard Green & Partners, according to the Financial Times. Ares manages roughly $644 billion in AUM, but only about 4% (~$25 billion) is in private equity. Leonard Green manages about $85 billion.

It’s asset gathering in action... (speaking of which, are we at all surprised?)

2️⃣ Private Credit

1. UBS pulled the plug on a Blue Owl fund it helped build

UBS helped trigger a wave of withdrawals from Blue Owl Technology Income (OTIC), a $3 billion direct lending fund distributed mainly through UBS wealth management, according to the Financial Times. Starting in late 2025, UBS advised over-allocated clients to diversify away from private credit, and investors started pulling large sums of money.

At least 60% of OTIC’s capital came from UBS clients, most of whom were based in Asia. That’s double what executives at another large private capital group said they’d want from any single distributor.

The unfortunate part for investors: it’s impossible to know whether a fund has this kind of concentrated capital base. Fund disclosures don’t tell you how much of the capital comes from a single distributor.

2. Revolut Offers €1 Private Credit / Equity / Infrastructure

Revolut announced it will offer European customers access to private markets funds from Apollo, Ares, Hamilton Lane, and Partners Group, with minimum investments of €1 through Revolut-managed ELTIF 2.0 feeders.

The timing is, let’s call it, interesting.

Apollo and Ares are among the managers that have restricted redemptions on other vehicles. Partners Group capped withdrawals from a major evergreen buyout fund last month (Bloomberg). And now Revolut (75 million users, no platform commissions) is opening the gates to private markets. €1 buys you a key.

Revolut emphasized that these funds are designed for investors with a “multiyear horizon” and said its in-house team screened managers for their redemption-management track records.

As Revolut’s head of wealth and trading put it: “If a fund manager was not able to show a history that they were able to manage the redemption requirements, that manager was not considered.”

3️⃣ Commercial Real Estate

Three CRE lenders, three outcomes: reposition, sell, dissolve.

If you want a snapshot of where commercial real estate lending stands in mid-2026, look at what three major mortgage REITs did this summer.

1. Blackstone Mortgage Trust (BXMT)

BXMT reported a net loss of $81.2 million ($0.48 per share) for Q2 2026, compared with net income of $7 million in Q2 2025. The CECL reserve (the provision for expected credit losses) jumped to $398 million, up from $284 million at year-end 2025, with asset-specific reserves on nine impaired loans.

But the story here is repositioning. BXMT received $1.2 billion in loan repayments during the quarter and reinvested $1.4 billion into new opportunities, including residential, industrial, and a new single-family homebuilder finance vertical. The company is actively rotating out of legacy office exposure into other sectors.

2. KKR Real Estate Finance Trust (KREF)

KREF is taking a different route. The publicly traded CRE lender is considering strategic alternatives that could include a merger, sale, or asset sale. Its board established a committee to review the options, according to Bloomberg.

KREF’s Q2 net loss nearly doubled from the prior quarter as it increased provisions for credit losses. Shares have dropped 65% over the past five years. CEO Matt Salem said the company has “made substantial progress repositioning the portfolio,” but the strategic review is open-ended with no timetable or guarantee of a transaction.

3. Apollo Commercial Real Estate Finance (ARI)

This is June news, but worth resurfacing. After selling its $9 billion loan portfolio to Athene in April at 99.7 cents on the dollar, ARI’s board determined that dissolution, liquidation, and winding down the business is “advisable and in the best interest of stockholders”. (Reuters)

Stay tuned, I’m working on a couple of case studies of evergreen real estate funds.

Thanks for reading! As always, if you have any suggestions, reply to this email, leave a comment, or hit me up on socials (unhinged me on X, slightly more filtered me on LinkedIn). Have a great week!

-Leyla

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P.S. New here?

Here’s where you’ll find the full archive (somewhat organized):

Not due to lack of funds to cover (there are plenty), but because each one takes considerable time and effort. Like all unhappy families in Tolstoy’s Anna Karenina, every fund is different, and thus impossible to fully streamline.

This week, I'm making an exception. The minute I read the announcement, I knew I'd be clearing my calendar to write about it.

Before we get into the details, a disclosure: of all financial organizations, Vanguard is probably the one I’m most loyal to. I’ve been a happy customer for over two decades.

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Fun fact: many moons ago, bright-eyed and bushy-tailed, I called Vanguard’s 1-800 number before opening my very first IRA with income from my first job. As part of my extremely sophisticated due diligence process, I asked the representative: “What happens to my money if Vanguard goes bankrupt?” I’m sure she got a good chuckle out of that one.

Over the years, I've had nothing but excellent experiences with the company and the people who work there. Which is why it took me about 24 hours (and a screaming pillow) to get into the right mind to write this piece in a neutral way.

Anywho, I’ll present you with the facts first, and reserve my opinion until the very end.

Important disclosure. This case study is independent analysis published for educational purposes only and does not constitute investment advice, a recommendation, or a solicitation to buy or sell any security. All information is sourced from the fund's prospectus (dated June 30, 2026), the prospectus supplement (dated July 21, 2026), the Statement of Additional Information, SEC filings, and publicly available company materials. Return estimates are hypothetical and for illustrative purposes only — they are not projections or guarantees. The author has no position in the WVB All Markets Fund and no business relationship with Wellington Management, Blackstone, or Vanguard.

A good time to resurrect this great post (you’ll see why in a minute):

What WVB Got Right

Let’s start with what this fund gets right.

1. Access

Deep in my heart, I believe that a bigger menu of investment options is good for investors. With the right guardrails in place (things like, you know, hefty penalties for fraud), and good disclosure (being able to see what’s inside funds and how much it costs to invest, for example), there is no reason to gatekeep anything from any class of investors. If you can place Fed rate bets on Kalshi, why shouldn’t you be able to access private equity funds?

On the access front, this fund delivers.

Investors get institutional-quality public/private asset allocation in a single ticker, with daily subscriptions, 1099 tax reporting, a $2,500 minimum, and a headline management fee of just 0.10%.

Which brings us to the second good point.

2. Fees

The very Vanguard-esque 0.10% is what the fund leads with. Bogleheads rejoice? Not so fast. This is a fund-of-funds, and the underlying fund fees are a thing to behold.

Before we get into the fee structure, let me give you a question to ponder:

Why are they doing it?

👉 The real business here is the asset gathering. I wrote about it just a few days ago:

Wellington earns advisory fees (their bread and butter). Vanguard gets another flagship product to keep assets inside its ecosystem (new wrapper for their existing products). Blackstone gets access to one of the largest retail distribution channels in the world (and gets to collect management fees of 1-1.25% plus carry of 10-15% on the underlying funds).

The prospectus requires that at least 20% of assets be invested in Blackstone funds and at least 20% in Vanguard funds (measured at the time of investment). That effectively creates a permanent pipeline of capital into each partner's products.

And here are two deep dives on the Blackstone funds:

And a fun side note on BREIT:

The Fee Stack

From the prospectus:

The 0.10% management fee is waived for three years (with no clawback). So the advisory fee is effectively zero until ~2029. And the 2.56% in "Other Expenses" is a launch-phase number based on an estimated $100M in assets; it should compress as the fund scales.

IMPORTANT:

The 0.68% in underlying fund fees (the “Acquired Fund Fees and Expenses”, or AFFE) covers the operating costs of the Blackstone and Vanguard funds inside this vehicle. What it does not include, per the prospectus itself, are “performance-based fees or allocations calculated solely on the realization and/or distribution of gains.”

Translation: Blackstone’s carry (which runs 10–15% of net profits) is not in the expense ratio.

Note that expense limitation agreement (the thing keeping “Other Expenses” from eating you alive) is renewable annually but not guaranteed. It also lets Wellington recapture absorbed expenses within 36 months.

Now. All of that said. I’ve said this before and I’ll say it again: don’t get too hung up on fees if your returns compensate you for them.

So let’s look at that.

What Do You Get for All Those Fees?

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Six months of new filings are now in, so time for a vibe check an update on where the fund stands: how much capital came in, how the fund’s leverage picture changed, and what the earnings underneath the distributions actually look like.

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Here’s the post from December (which feels like a lifetime ago)

Disclosure: This case study is provided for educational and informational purposes only and should not be construed as investment, legal, tax, or financial advice. The views expressed are solely those of the author. All examples are illustrative in nature and not guarantees of future outcomes. Readers should conduct their own independent research and consult with qualified professionals before making any investment or financial decisions. All figures below are from CELFX's SEC filings, in six-month increments ending each March 31 and September 30. Gain/loss figures are shown net and after-tax.

👉 No idea what an interval fund is? Lucky you (j/k)!
Start here:

And then read this:

What Hasn’t Changed

Something of note: many of the underlying funds are not registered under the 1940 Act (unlike CELFX itself), which has two implications:

1. They likely rely on Section 3(c)(1) (fewer than 100 beneficial owners) or Section 3(c)(7) (qualified purchasers only) exclusions. Translation: most mere mortals are not wealthy or connected enough to invest in them directly.
   CELFX, meanwhile, dropped the accredited investor self-certification requirement in its latest prospectus supplement. Regulatory arbitrage, if you will.

2. The underlying funds are not subject to the 1940 Act’s leverage limits. This means their borrowing is constrained only by LP agreements and lender appetite. More on leverage in a minute.

Assets Keep Growing

Net assets have grown in every reporting period. Most recently, from roughly $5.36B (3/31/25) to $7.82B a year later (~46% in twelve months), but the growth is slowing down:

Why is it slowing down?

Capital inflows are reversing, that’s why.

👉 Say it with me one more time:

Capital Flows

The growth is driven by new subscriptions, which (for now?) continue to run ahead of redemptions. Measured against net assets at the start of each period, sales have remained robust. That’s the good news.

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That’s when fund managers stopped hunting returns and started farming assets.

The hunter’s model was simple: 2% management fees kept the lights on. 20% carried interest made you rich. Funds were small, and GPs ate what they killed.

Then the industry discovered agriculture.

Why spend your life chasing unpredictable carry when you can cultivate an ever-growing field of fee-paying capital? Carry once made fortunes. Today, fortunes are made from recurring management fees.

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The strongest evidence that gathering won? Management fees fell. It sounds backwards, but I’ll explain.

Case in point: when Bridgepoint agreed to pay $1.4 billion for Kayne Anderson Real Estate this summer, it bought 100% of the fee-related earnings, and just 15% of the carry in historic funds:

Falling Rates, Fatter Harvest

Buyout funds raised in 2025 charged an average management fee of 1.61% (the lowest ever recorded). It’s been a steady 15-year slide (with a brief reversion during the 2020 fundraising boom):

Victory for LPs? Maybe.

Preqin argues the biggest driver is simply fund size. Nearly half of all capital raised in 2025 flowed to the ten largest buyout funds (up from 34.5% in 2024). There are economies of scale in managing larger funds.

But decreasing fee rates do not mean asset managers are earning fewer dollars. Look at the math:

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That's what reading CIM Real Assets & Credit Fund's schedule of investments felt like.

Most interval funds own one thing. Private credit funds own loans. Real estate funds own buildings. Infrastructure funds own… I dunno, some cables. RACR apparently looked at that concept and said, “Why choose?”

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The fund is not big by institutional standards ($237.7M in net assets), but it comes with a lot of different things in one small package. The portfolio is:

• part direct real estate,

• part commercial mortgage bonds,

• part CLO debt,

• part CLO equity,

• part leveraged loans, sprinkled with common stocks for good measure,

and held in piece with derivatives and financing agreements. Plus unitranche loans and, of course, some PIK. (I am not kidding)

Anywho, lack of diversification is not this fund’s problem.

The problem is that nearly every major asset class in the portfolio is financed with leverage, derivatives, or repos, yet shareholders have earned remarkably little for taking on all that complexity.

🔎 It is my hope that today’s case study inspires you to start looking at the schedule of investments. Closely. And reading the fine print on how things are financed. Also closely.

If I haven’t yet turned you into someone who compulsively reads schedules of investments and footnotes, I’m clearly not doing my job (or you are new here).

Disclosure: This case study is provided for educational and informational purposes only and should not be construed as investment, legal, tax, or financial advice. The views expressed are solely those of the author. All examples are illustrative in nature and not guarantees of future outcomes. Readers should conduct their own independent research and consult with qualified professionals before making any investment or financial decisions.

What’s in the fund

As of March 31, 2026:

• Cost of investments: ~$350 million.

• Current fair value: ~$314 million.

In other words: the fund is sitting on approximately $36 million of unrealized losses (or 10.3% of cost):

Now let’s look at the more interesting thing: what’s inside and how it’s financed

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