Why Spectra Capital's Real Estate-Backed Strategy Outperforms in Uncertainty

Equity markets are reeling. Tariff-driven uncertainty, supply chain disruptions, and political instability have triggered sharp selloffs. Volatility has returned with a vengeance, putting traditional 60/40 portfolios under immense pressure as correlations across asset classes continue to rise.

At the same time, we're seeing credit spreads widen while liquidity dries up. Traditional lenders are pulling back significantly—creating pain for borrowers but opening extraordinary opportunities for flexible capital providers who can move quickly and decisively.

This combination of market conditions has created a particularly challenging environment for investors seeking both yield and stability. As banks face increased regulatory scrutiny and balance sheet constraints, they've dramatically slowed their lending activities in commercial real estate. The resulting financing gap has left many otherwise viable projects stranded, creating a perfect opportunity for alternative lenders with patient capital and expertise in special situations.

The recent wave of tariff implementations is reshaping the commercial real estate landscape in ways that particularly favor Spectra's strategy. Four key dynamics are emerging:

Construction Cost Impacts (Neutral to Positive): While new tariffs are expected to drive construction costs higher, this has minimal impact on Spectra's portfolio. Our limited exposure to ground-up construction projects insulates us from material cost inflation. For the construction loans we do undertake, our conservative underwriting already incorporates substantial contingency reserves. Additionally, rising construction costs may further constrain new supply, potentially strengthening fundamentals for existing assets that secure our loans.

Accelerating Distress (Positive): The tariff-induced economic uncertainty is prompting many traditional lenders to accelerate their exit from troubled positions rather than continuing "extend and pretend" strategies. This is creating a surge in secondary market transactions and special situations—precisely the environment where Spectra thrives. We're seeing an increasing flow of opportunities to acquire distressed loans at attractive discounts or provide rescue capital to borrowers abandoned by retreating lenders.

Interest Rate Trajectory (Positive): The economic pressures created by tariffs have increased the likelihood of accelerated interest rate cuts from the Federal Reserve. This monetary policy shift would be broadly accretive to commercial real estate valuations, strengthening the collateral values underlying our loan portfolio. As property values potentially increase, our already-conservative loan-to-value ratios would improve further, enhancing our downside protection.

Short-Duration Advantage (Positive): The economic pressures created by tariffs have increased the likelihood of accelerated interest rate cuts from the Federal Reserve. This monetary policy shift would be broadly accretive to commercial real estate valuations, strengthening the collateral values underlying our loan portfolio. As property values potentially increase, our already-conservative loan-to-value ratios would improve further, enhancing our downside protection.

Spectra Capital is a private credit platform purpose-built for market dislocation. Our focus is refreshingly straightforward: we provide short-term (3-12 months), low-LTV (~55%), first-position real estate loans with tangible collateral and robust downside protection.

We combine speed, creativity, and tech-enabled sourcing to capitalize on urgency, mispricing, and complexity—all without using leverage or taking unnecessary balance sheet risk. This approach has allowed us to build a diverse portfolio of commercial real estate loans across multiple property types and geographies, further enhancing stability through diversification.

Our Core Principles:

Capital Preservation First. We maintain unwavering discipline through first-position liens, conservative LTVs (averaging approximately 55%), and short durations (averaging around 9 months). This approach creates multiple layers of protection against market volatility. Our investment committee rigorously evaluates each opportunity, focusing not just on the primary repayment source but also on secondary and tertiary exit strategies. We often secure additional collateral beyond the subject property, including personal guarantees, equity pledges, and cross-collateralization with other assets.

Speed is Our Moat. While traditional lenders are slowing down or stepping back entirely, we fund transactions in just 10 to 15 business days. This rapid execution creates tremendous value for borrowers facing time-sensitive situations and allows us to command premium pricing. Our streamlined underwriting process focuses on the key risk factors that matter most, allowing us to make confident decisions quickly without compromising on due diligence. For borrowers facing looming deadlines, expiring purchase contracts, or pending foreclosures, this speed can be the difference between success and failure.

Tech-Driven Origination. Our proprietary technology platform generates over $1 billion in monthly deal flow, enabling us to underwrite at scale and select only the most compelling opportunities that meet our strict criteria. This technology advantage is a key differentiator in our ability to identify and execute on opportunities others miss. Led by our CTO Jason Rudder, our engineering team has developed sophisticated algorithms that help us identify potential borrowers with urgent capital needs before they even approach the broader market. This allows us to engage early and build relationships with sponsors, often becoming their preferred capital provider.

Spectra's approach has delivered impressive results since inception. We've generated 19% net annualized returns* over our two-year track record, with zero down months to date. This consistency is particularly noteworthy given the market volatility during this period.

We've achieved these returns without the use of leverage at the fund level and without charging management fees to our investors. Our alignment-focused fee structure ensures we only earn performance fees after our investors receive their preferred return, creating a true partnership approach.

Our growth trajectory has been equally impressive, scaling from $20 million to $100 million in assets under management over the past 12 months. This rapid expansion reflects both strong investor demand and our ability to efficiently deploy capital into attractive opportunities. We now count over 150 accredited investors among our limited partners, ranging from family offices to institutional allocators.

The firm was founded by Chris Brunner, a successful technology entrepreneur who previously founded and sold Telo to a subsidiary of TransUnion. This technology DNA is evident throughout our operations, from our proprietary origination platform to our data-driven underwriting processes. Our leadership team brings deep expertise across real estate, finance, technology, and legal disciplines, providing a multifaceted approach to opportunity evaluation and risk management.

We offer an investor-friendly, open-ended structure with monthly subscriptions and quarterly redemptions, providing flexibility while encouraging a long-term investment horizon. This structure allows us to maintain stable capital while accommodating investor liquidity needs.

The current market environment is increasingly characterized by two trends that directly benefit Spectra's strategy: accelerating distress and increasing transaction volume in the secondary market. As economic uncertainty drives lenders to shed troubled assets rather than extending terms, we're seeing a fundamental shift from "extend and pretend" to "accelerate and liquidate." This creates prime opportunities for Spectra to provide creative capital solutions at attractive risk-adjusted returns.

Our short-duration approach is particularly valuable in this rapidly changing landscape. While many competitors are locked into long-term positions that limit their ability to adapt, our average loan duration of just 9 months allows us to continuously refresh our portfolio. This means we can quickly pivot toward emerging opportunities and away from potential challenges—a critical advantage when market conditions are evolving rapidly.

The likelihood of accelerated interest rate cuts in response to economic pressures offers another tailwind for our strategy. Lower rates typically support higher commercial real estate valuations, which would strengthen the collateral values underlying our loans. This dynamic could enhance our already-conservative loan-to-value positions, providing additional downside protection while potentially creating refinancing opportunities for our borrowers.

In today's uncertain market environment, investors need three critical elements in their portfolio that are increasingly difficult to find through traditional investment vehicles.

First, they need uncorrelated returns that can withstand broad market volatility. Spectra's strategy generates returns based primarily on interest income from loans secured by hard assets, largely insulating performance from public market swings. Our focus on short-duration loans further reduces exposure to interest rate volatility and market cycles.

Second, investors require collateral-backed yield that doesn't rely on market sentiment or perpetually rising valuations. Each loan in our portfolio is secured by real property with substantial equity cushions, providing multiple paths to recovery even in adverse scenarios. This tangible collateral backing creates a fundamental difference from unsecured credit or equity investments.

Third, effective downside protection has become essential, but without the performance drag often associated with defensive positioning. By eliminating management fees and avoiding fund-level leverage, we've removed two significant sources of return erosion that plague many alternative strategies. Our first-position lien status and conservative LTVs provide natural downside protection without requiring complex hedging strategies or derivatives.

Spectra Capital delivers all three of these elements—at scale and with speed. Our real estate-backed lending strategy offers a compelling alternative to traditional fixed income and equity investments, particularly during periods of heightened volatility and uncertainty.

As traditional financing sources continue to pull back, Spectra's ability to provide rapid, creative solutions for borrowers with time-sensitive needs creates a significant competitive advantage. This allows us to generate attractive risk-adjusted returns while maintaining strong collateral positions that protect investor capital.

Our experience has shown that borrowers in special situations are far less rate-sensitive than conventional borrowers. When facing tight deadlines, potential foreclosures, or compelling acquisition opportunities, these sponsors prioritize execution certainty and speed over interest rates and borrowing costs. This allows us to maintain attractive pricing even as competition increases in certain market segments.

As we move through 2025, Spectra Capital is not simply enduring the volatility—we are accelerating through it. The structural dislocation in credit markets has created one of the most attractive lending environments in recent memory. With traditional lenders increasingly sidelined by regulatory pressure, duration mismatch, and tightening credit standards, the opportunity for agile, disciplined private capital is not only growing—it's compounding. Spectra was built for precisely this type of market regime, and we are now scaling into that opportunity with purpose.

Importantly, the opportunity set we're pursuing is growing rapidly. More than $1.2 trillion in commercial real estate loans are scheduled to mature by the end of 2025, with an additional $1.8 trillion following in 2026 and beyond. Traditional lending channels are ill-equipped to meet this refinancing demand. Spectra is ideally positioned to step into the gap with flexible, fast, and creative capital solutions. Whether it's sponsors seeking bridge-to-sale financing, recapitalizations, or rescue capital for transitional assets, our model is designed to provide execution certainty in moments where timing and structure matter most.

We believe this is not a short-term trade. The dynamics reshaping credit markets—higher rates, tighter bank capital, and increased borrower complexity—are secular, not cyclical. In this environment, disciplined lenders who can underwrite complexity, move with speed, and maintain strong collateral protections will be best positioned to outperform. Spectra Capital is not chasing yield—we are creating it, by staying selective, defensive, and scalable. Our conviction is clear: this is our market, and our model is built to lead in it.