Julie Solomon, Partner and Head of Real Estate at Ares Management, warns that recent interest rate increases are creating headwinds for the real estate sector. While lower-quality office assets and secondary market properties face particular challenges, Solomon notes that overall lending conditions remain supportive for well-positioned investments.

Speaking on the impact of monetary policy tightening, Solomon emphasized the importance of cash flow discipline for real estate investors navigating the higher rate environment. The sector has seen increased pressure on property valuations and refinancing options, particularly for assets with weaker fundamentals or in less desirable locations.

Despite these challenges, Solomon suggests that disciplined investors focusing on quality assets and strong cash flows can still find opportunities in the current market. The key, she argues, is maintaining rigorous underwriting standards and avoiding speculative plays in challenged property categories.