"We had a three-hour IC on an equity JV with our strongest sponsor but everything's changed, Flynn. We could be heading into a major downturn," a family office-backed $500m equity JV fund told me recently.

Since the Iran war, caution has spread across many of my equity capital partners:

 • inflation is rising (again)
 • builders are seeking to reopen fixed-price contracts (again)
 • commercial borrowers are rolling off low-rate debt into higher rates and softer valuations
 • 𝗰𝗼𝗻𝘀𝗲𝗿𝘃𝗶𝗻𝗴 𝗳𝘂𝗻𝗱𝘀 𝗮𝘀 '𝗱𝗿𝘆 𝗽𝗼𝘄𝗱𝗲𝗿'

Meanwhile, the private credit party continues. Pressure to lend remains intense, and lenders are still finding ways to keep money moving, including profit-on-cost hurdles as low as 10% (vs 15–18% pre-COVID) on selective deals.

Equity, however, increasingly believes the best opportunities are not today, but in 6–12 months when distress starts to emerge.

If that view is right, today’s favourable credit terms may not last.

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𝗙𝗶𝗿𝘀𝘁 𝘁𝗵𝗲 𝗺𝗮𝗷𝗼𝗿𝘀, 𝗻𝗼𝘄 𝗳𝗮𝗺𝗶𝗹𝘆 𝗼𝗳𝗳𝗶𝗰𝗲𝘀 𝗮𝗿𝗲 𝘀𝗹𝗼𝘄𝗶𝗻𝗴 𝗲𝗾𝘂𝗶𝘁𝘆
The surge of capital into private credit since COVID, combined with lower margins and higher risk, pushed many major institutions and family offices towards equity JVs in search of better risk-adjusted returns.

That arguably created the best conditions for developers to secure JV equity through 2024 and into 2025.

But high-profile defaults by borrowers during 2025 saw some larger equity houses retreat or pause.

More recently, over the last eight weeks, multiple 𝗳𝗮𝗺𝗶𝗹𝘆 𝗼𝗳𝗳𝗶𝗰𝗲 𝗯𝗮𝗰𝗸𝗲𝗱 𝗲𝗾𝘂𝗶𝘁𝘆 𝗳𝘂𝗻𝗱𝘀 across Melbourne, Sydney, Brisbane, and Perth have told me they are 𝗮𝗹𝘀𝗼 𝘀𝗹𝗼𝘄𝗶𝗻𝗴 𝗻𝗲𝘄 𝗲𝗾𝘂𝗶𝘁𝘆 𝗱𝗲𝗽𝗹𝗼𝘆𝗺𝗲𝗻𝘁𝘀.

Examples relayed to me include:
 • a builder seeking a $20m variation to a project's fixed price contract
 • a reversal of a two-year interstate expansion strategy and return to plain, first-mortgage lending.

That is not panic. But it is a clear move toward preserving dry powder and reducing risk.

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𝗞𝗲𝘆 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀
 1. A divergence is emerging between ongoing credit deployment and equity caution
 2. Large equity funds hit the brakes in 2025, with family offices now following
 3. Equity investment committees are taking longer and seeking more downside protection before approving new deals
 4. Increasingly, equity capital wants to preserve capacity for future distress and 'White Knight' investing
 5. Developers should think about locking in favourable debt and equity terms while they are still available

𝗗𝗲𝘃𝗲𝗹𝗼𝗽𝗲𝗿𝘀: are you seeing more hesitation, slower IC processes, or stronger downside protections from equity partners?

Developers wanting confidential benchmarking of current terms, or introductions to lenders and equity JV partners, are welcome to reach out. No exclusivity required.

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