Back leverage becomes a defining feature of European CRE credit

According to ‘Behind the Stack 2.0’ – a new report published today by Knight Frank Capital Advisory (KFCA) – the last 12 months has been defined by a clear expansion and acceleration of back leverage utilisation across the commercial real estate credit market.

KFCA, an FCA-regulated, wholly owned subsidiary of global property consultancy Knight Frank, conducted a survey of 120 back leverage borrowers and providers for its annual report.

Nine out of ten (90%) of debt fund respondents said they can use back leverage, marking a solid increase from last year’s 80%. Meanwhile, 40% of respondents said they now use back leverage on all or the majority of their transactions, up from 25% who said the same in 2025 – a 15-point rise underscoring rapidly-accelerating adoption. Of the borrower respondents, 76% said they had increased their back leverage borrowing over the last 12 months.

Jessica Qureshi, Associate at Knight Frank Capital Advisory and author of Behind the Stack 2.0, said: “Back leverage has moved beyond its infancy and is now a defining force in the maturing CRE credit market. The sheer pace of adoption suggests a structural shift in how liquidity, returns and capital efficiency are engineered across the sector.”

Highlighting a steadily improving supply of credit, around 30% of active back leverage lenders entered the market within the past year. According to KFCA, 90% of providers who are already active in back leverage lending expect to increase their activity over the next 12 months.

Commenting on the findings, Jessica Qureshi of KFCA, added: “Comparing the results from last year and this year, what we’ve seen is that back leverage lenders are shifting their appetite and offering more competitive terms. The lender landscape is now moving towards increasingly flexible structures, enabling more borrowers to implement back leverage into their lending strategies. This reflects confidence in CRE debt as an asset class but also increasing competition among lenders seeking scale.”

Findings from this year’s report reveal that, through the role of back leverage, the non-banking and banking markets are becoming more symbiotic. Synthetic Risk Transfers (SRTs), a tool traditionally not seen utilised within European CRE, has emerged and is growing in popularity.

Indeed, 65% of our banking respondents said they believe SRTs are already, or will grow to become, an important tool for the European CRE lending market. Around 36% of banks already use or are exploring SRTs, while another 30% would consider doing so.

Programmatic back leverage facilities are also rising in popularity. Over 60% of survey respondents said they currently utilise programmatic facilities, while an additional 26% would consider it. This is in comparison to 32% that were utilising programmatic structures last year, representing a 90% increase.

Jessica Qureshi of KFCA concluded: “Over the last year the back leverage market has undergone a notable transformation. Driven by market demand and innovation among providers, we have seen the sophistication of back leverage offerings grow, expanding beyond basic facilities to encompass more tailored, flexible solutions, with a greater number of market participants.”

ENDS

Notes to Editors

Knight Frank Capital Advisory (KFCA) – Incorporated in July 2018, Knight Frank Capital Advisory (KFCA) is an FCA-regulated, wholly owned subsidiary of Knight Frank LLP that offers Debt and Equity Advisory services. As a complete entity, KFCA provides a capital sourcing service for clients and has the capability to advise clients (defined as Eligible Counterparties or Professionals) on a range of requirements, including one-off acquisitions; programmatic capital to grow portfolios; back leverage and corporate capital to fund strategic acquisitions. KFCA can also support with arranging seed capital to buy land, fund planning and subsidise construction; as well as recapitalisation to reposition existing assets; and rescue capital when assets become distressed. KFCA works with many of Knight Frank’s existing teams in the UK and across Europe – with a particularly strong focus on living sectors –to better service clients by inputting into strategies and arranging finance.