This Viewpoint is the third installment in a series exploring the relationship between the CRE quadrants of public debt, private debt, private equity and public equity. Specifically, we will analyze the historic performance of private debt (senior commercial mortgages) in relation to the quadrants.

• Senior mortgage returns are far more correlated across property types than property investments.
• Senior mortgage returns are strongly correlated with returns on other fixed-income asset classes such as Baa corporate bonds.
• The majority of senior mortgage returns can be explained by returns on BBB CMBS, Baa corporate bonds, and the bond default premium.

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1 CBRE Econometric Advisors invited Dr. Randall Zisler to co-author this paper on the real estate quadrants. His unique approach reflects a multifaceted career as a Princeton University professor, Goldman Sachs research director, pension fund consultant, and investment banker.

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