Although bank credit remains an important funding source, Drumond notes that financial institutions have raised the bar and imposed more restrictions — especially for greenfield projects. “Banks continue to be a relevant funding source, but with more restrictions for greenfield developments,” he says.

In practice, traditional bank lending has lost some of its central role in commercial real estate financing — not due to a lack of capital, but because of a combination of higher costs and increased risk perception. “Naturally, in a scenario of high interest rates and more stressed credit conditions, banks raise their standards for CRE development lending and, as a result, reduce its appeal,” he explains.

Even so, bank credit remains competitive in lower-risk structures. Among the cases in which banks are still more active are projects backed by developers with strong credit profiles and, especially, built-to-suit deals with top-tier tenants.

One of the main drivers behind the transformation in CRE funding is the widening gap between the cost of capital and asset returns. “With high interest rates and NTN-B yields so stretched, it has become difficult to make the leverage cost versus cap rate equation work,” Drumond says.

This new balance directly impacts the capital structure of developments. Where debt once played a central role in making projects viable, equity participation has now increased, and leverage for greenfield projects has become more restricted.

“This is an equation that depends on several factors, such as asset type, location, maturity timeline, and development cycle. What we can determine is that, regardless of these variables, equity participation has increased and appetite for leverage in greenfield projects remains reduced,” he summarizes.

The shift in financial structures has also redefined the investor’s role. Rather than acting solely as a lender, a significant share of capital now enters projects as a partner — taking equity risk in exchange for governance and protective mechanisms.

“This investor profile, which has been financing project development, is more willing to act as a partner,” Drumond says. He notes, however, that this type of investor considers the full investment and maturation cycle and tends to plan a future exit strategy — especially in the case of FIIs or asset managers.

In this new environment, developers are also more exposed. “Developers are more exposed to equity due to tighter credit and a higher bar for leverage. In this scenario, ‘skin in the game’ matters even more,” he adds.

Capital selectivity has also reshaped which assets are considered financeable. According to Drumond, lower-risk structures continue to receive priority — particularly A+ assets and logistics projects with built-to-suit agreements already in place.

Segments such as retrofit and multifamily face greater restrictions from traditional credit when they are not tied to top-tier developers.

In Drumond’s view, the concept of a “good asset” has changed. Today, a financeable project must demonstrate stronger fundamentals and greater operational predictability. This includes proven demand, signed pre-leasing agreements (when applicable), well-modeled feasibility, capex control, a detailed and realistic timeline, and governance throughout development and operations.

Looking ahead, Drumond believes commercial real estate financing will become increasingly institutional, even in a potential lower-interest-rate environment. “Real estate financing continues to trend toward being carried out primarily by institutional investors, followed by private investors,” he says. More fragmented funding is expected to remain a relevant alternative, especially at the exit stage of mature assets.