(Bloomberg) -- Blue Owl Capital Inc. is seeking to strike deals in the property market — an opportunity its co-president estimates could be $5 trillion or more — after agreeing to buy real estate lender Prima Capital Advisors. 

“It’s a phenomenal entry point to real estate finance today,” Marc Zahr, co-president of Blue Owl, said in an interview on Bloomberg Television. “As traditional lenders are slowing down and you’re seeing a pickup in rates and spreads, we think it’s a great time to enter that marketplace.”

The US commercial-property market has come under pressure from higher borrowing costs that are weighing on valuations. Many real estate owners are finding it more challenging to secure loans and refinance maturing debt given the higher level of interest rates and a pullback from lenders.

Higher rates make the opportunity for lenders jumping into the market now even more lucrative, Zahr said.

“As rates creep up, especially with the combination of higher rates, less credit availability and spreads increasing as well, when you take that combination, it makes it harder for groups to transact, which makes it a better buying opportunity,” Zahr said. 

Earlier this week, Blue Owl announced it was launching a real estate finance strategy with its $170 million purchase of Prima, which focuses on investing in commercial mortgage-backed securities. The company also hired Jesse Hom from Singaporean sovereign wealth fund GIC Pte to help build out the strategy.

Blue Owl Capital, one of the largest private lenders in North America, was formed in the 2021 merger of Owl Rock and Dyal Capital through a special-purpose acquisition company deal. Later that year, the company agreed to buy Oak Street Real Estate Capital. As to whether the firm wants to acquire more real estate companies, Zahr said the business is doing fine for now.

“Never say never, but we’re focusing on the acquisition that we currently have and deploying the capital base that we just raised,” Zahr said.

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