Market & Topical Perspectives

Reflections: Homing in on Residential Real Estate Debt

Reflections: Homing in on Residential Real Estate Debt

With supply constrained and demand persistent amid high home prices and high mortgage rates, the secular themes supporting the US housing market remain intact. Napier Park’s Head of Real Estate Debt Strategies Rajesh Agarwal and Managing Director Tim Ruberti discuss why they believe the current environment favors private investment opportunities in real estate specialty lending.

US Residential Real Estate Market Remains Imbalanced

The supply of housing in the US has grown increasingly strained in the years following the global financial crisis, as a credit crunch amid the turmoil of that period prompted a massive decline in housing starts from which the construction industry has yet to fully recover. The demand side of the equation, meanwhile, has been well supported by unabated household formation. As shown in Exhibit 1, the number of US households has doubled since 1970 while housing starts remain stuck at the same level.

Exhibit 1. New Housing Supply Has Lagged Household Formation for Most of This Century
In Thousands, 1959 through 2023

Source: Federal Reserve; data as of December 31, 2023.
  

The impact of new-home underbuilding has been exacerbated by the limited supply of existing homes for sale. This is primarily due to the “lock-in effect” of the higher mortgage rate regime, as demonstrated in Exhibit 2. Though the 30-year fixed-rate mortgage ended 2024 down from 2023’s peaks, it far exceeds the 4% average on existing mortgages and remains a significant disincentive to sell.1 This locked-in cohort includes many of the country’s 65 million baby boomers, who account for 36% of homeowner households in the US; a recent survey found that nearly 70% of this group plan to age in place in their current homes.2

Exhibit 2. Much Higher Interest Rates on New Mortgages Have “Locked In” Current Homeowners
30-Year Fixed-Rate Mortgage Average, January 2000 through December 2024

Source: Morgan Stanley Research, National Association of Realtors, Freddie Mac, US Census Bureau, Bureau of Labor Statistics; data as of December 26, 2024. Reflects latest available data for each series.

Housing demand remains well supported by consumer fundamentals, which, together with a shortage in supply, have buoyed home prices. Household net worth stands at a record high, debt levels remain manageable even off Covid-19-era lows, and indicators of consumer confidence have been biased higher.3 This is evidenced in Exhibit 3 by Fannie Mae’s Home Purchase Sentiment Index, which has reclaimed levels consistent with pre-tightening trends as consumers acclimate to the environment of higher home prices and higher mortgage rates.

Exhibit 3. Consumer Housing Sentiment Has Rebounded from All-Time Lows
Fannie Mae Home Purchase Sentiment Index, December 2019 through December 2024

Source: Fannie Mae; data as of January 7, 2025.

Such acclimation may continue to be necessary. Mortgage rates have been on the rise since the Federal Reserve began cutting its policy rate in September, contrary to what many observers may have expected. This is because mortgage rates are based on long-term Treasury yields, which in turn are impacted by expectations for future short-term interest rates rather than their current levels. Due in large part to persistent inflation, expectations for future rates have been biased higher, pulling long Treasury and mortgage rates along with them.

But while improved affordability could drive additional demand, supply is likely to remain the US housing market’s main problem.

Credit Risk Premia in Public Markets Has Shrunk…

The strong performance of credit over the last 18 months has driven spreads for most public securities markets well below their long-term averages. This is particularly true of traditional public fixed income products, which enter 2025 facing the most severe valuation constraints seen in more than two decades, as shown in Exhibit 4.

Exhibit 4. Valuations Are Constrained Across Many Public Credit Segments 
Spread Percentile Ranks, January 2010 through December 2024

Note: Auto Loan ABS = ICE BofA AA-BBB US Fixed Rate Automobile ABS Index; Credit Card ABS = ICE BofA AA-BBB US Floating Rate Credit Card ABS Index; Agency CRTs (BBB Rated) and Agency CRTs (B Rated) = Goldman Sachs Global Investment Research calculations using outstanding prices; CLOs (BBB Rated) = Palmer Square CLO BBB Index; CLOs (AAA Rated) = Palmer Square CLO AAA Index; Student Loan ABS = ICE BofA AA-BBB US Floating Rate Student Loan ABS Index; High Yield US Corporates = Bloomberg US Corporate High Yield Index; Investment Grade US Corporates = Bloomberg US Corporate Index.
Source: PitchBook | LCD, Goldman Sachs Global Investment Research; data as of December 3, 2024.


There are a range of real estate-backed structured credit products that trade publicly. In addition to the spread pressures felt across the fixed income complex, many of these products have been further squeezed by the “technical” bid for absolute yield as well as the resilient macro backdrop for US residential real estate. Credit risk transfer (CRT) securities—non-guaranteed mortgage-backed securities issued by US government sponsored enterprises Fannie Mae and Freddie Mac—are one such example.

CRTs have been particularly successful of late. CRTs pay a fixed spread over 30-day SOFR (Secured Overnight Financing Rate), which is highly sensitive to changes in the federal funds rate and rose from near zero to well above 5% during the Fed’s 2022–23 hiking cycle.4 CRT spreads to SOFR widened significantly on concerns that central bank tightening would trigger a recession and an associated increase in mortgage delinquencies. As a result of higher rates and wider spreads, these securities offered very high yields despite containing attractive structural provisions; through the Covid-19 dislocation, for example, no CRT transaction experienced a loss greater than two basis points.5 With the US economy proving resilient despite tighter financial conditions, risk appetites soon returned and CRT spreads have tightened by about 1,000 basis points since late 2022, as shown in Exhibit 5. This tightening provided CRT investors with robust returns, but we believe the current entry point for these vehicles appears less attractive at current levels.

Exhibit 5. Credit Risk Transfer Spreads Have Tightened Meaningfully Over the Past Two Years
CRT B2 Spread to 30-Day SOFR in Basis Points, December 2020 through December 2024

Source: Citi Research; data as of December 13, 2024.
 

…but We Believe Opportunities in Private Residential Real Estate Debt Remain Attractive

With public credit spreads near all-time tights entering 2025, the returns on residential mortgage securities like CRTs are likely to be more modest in the months ahead.6 At this time, we believe there are more attractive opportunities to be found on the private side of the real estate debt market, including residential transitional loans and land banking. Private markets tend to have a delayed and lagged response to changes in lending costs, and their structural complexity and illiquidity typically provide an additional boost to yields. Further, the short durations and robust cash flows typical of these assets enable the frequent reinvestment of proceeds, providing investors optionality to migrate into public credit opportunities should market conditions shift.

While high home prices and strong demand would seem to be powerful motivators for homebuilders to aggressively fill the housing gap, significant headwinds persist. Notably, rising construction costs have weighed on builders’ profit margins and put further upward pressure on home prices. Materials, equipment and labor costs are all up sharply post-Covid, and the price of land has outstripped the rise in housing prices nationally.7 The explicit and/or implicit costs of regulatory compliance in order to develop buildable lots—which include a range of requirements from zoning approval to permitting to environmental studies—have remained high as well; a study from 2021 found that regulations imposed by all levels of government account for nearly 24% of the final price of a new single-family home.8

Given high costs and lengthy timelines, homebuilders have long relied heavily on credit to finance new construction or the renovation of existing properties for resale. But commercial banks, their traditional source of funding, have pulled back from certain types of real estate activities—including acquisition, development and construction lending—due to regulatory changes enacted in the wake of the global financial crisis. As shown in Exhibit 6, construction loans as a percentage of bank total assets today are less than half of what they were in 2007.

Exhibit 6. Traditional Banks Have Pulled Back from Certain Types of Real Estate Lending
Construction Loans as a Percentage of Total Bank Assets, 2007 through 2024

Source: Federal Deposit Insurance Corporation; data as of December 31, 2024.


As commercial bank activity has receded, a fragmented collection of specialty lenders have stepped in. The majority of these lenders lack the capital to underwrite and hold these loans at meaningful scale, however, which has presented an opportunity for asset managers to provide necessary liquidity to the real estate industry at attractive terms.

Residential transitional loans are an example of one such opportunity. To many buyers, a refurbished home in an established neighborhood with proven infrastructure like schools, parks and retail is more desirable than a new home in a new area. As could be inferred from the aged state of the US housing stock depicted in Exhibit 7, not every legacy property is in turnkey condition, which has fueled the proliferation of “fix and flip” activity. Real estate developers purchase single family residences with the intent of renovating and reselling them at a profit within a short period of time. There is a similar dynamic evident in the multifamily space, as existing rental properties are upgraded to standards that can command higher rents.

Exhibit 7. Aged US Housing Stock Fuels Demand for Renovation Capital
Estimates of Median Age in Years of US Owner-Occupied Housing, 2005 through 2022

Note: The Census Bureau did not release the standard American Community Survey in 2020 due to data-collection disruptions experienced during the Covid-19 pandemic.
Source: US Census Bureau, American Community Survey; data as of December 31, 2022. Reflects latest data available.


Residential transitional loans provide the capital for these rehabs. These loans are typically 12 to 18 months in tenor and secured by a first lien on the property, with interest-only payments until the principal is due at maturity. Frequently, these loans are originated by small, regional private lenders focused exclusively on this type of financing and related services. Lacking the scale to hold these loans to maturity, originators often sell them to large, nonbank asset managers looking to build diversified portfolios of residential transitional loans they believe will generate compelling risk-adjusted long-term returns.

Land banking is another area where we see opportunity. The limited supply of buildable land is among the factors constraining the rebound in US new-home construction, a fact often overlooked in a country with a land area in excess of 3.5 million square miles.9 Beyond the limitations of local zoning laws, the process of preparing raw land for construction—from design to infrastructure build—often takes two years or more as a result of significant local, state and national regulations.10

This lag can be a challenge for homebuilders trying to maintain robust development pipelines without compromising liquidity and financial flexibility, and many have moved toward “land-light” business models in response. As such, off-balance-sheet financing solutions like land banking—in which a capital provider, in exchange for a fee, acquires and holds property on behalf of a builder that has agreed to purchase lots on the property at a predetermined schedule—have become a staple of builders’ land inventory-management strategies. Large public homebuilders, in particular, have demonstrated a willingness to pay a significant premium to the prevailing interest rate on corporate debt for the benefits of such an arrangement.

Staying Nimble Within a Secular Growth Story

While dynamics remain supportive of the US housing market as a whole, we believe current return prospects favor private lending opportunities. However, history has shown that public markets can quickly grow volatile, especially in an environment of tight credit spreads; it would not be surprising to see spreads widen significantly should some sort of near-term dislocation occur. We believe investors able to nimbly adjust their public and private exposures and seize upon unique opportunities as they emerge may be well positioned for success in the residential real estate debt space.

1. Source: Morningstar; data as of October 31, 2024.
2. Source: Investment Company Institute; data as of November 4, 2024.
3. Source: Securities Industry and Financial Markets Association; data as of December 2, 2024.
4. Source: Board of Governors of the Federal Reserve System, US Bureau of Economic Analysis, National Association of State Budget Officers; data as of November 30, 2024.
5. Source: Moody’s Investors Service; data as of November 15, 2024.
6. Source: FactSet; data as of December 31, 2024.
7. Source: Federal Reserve; data as of December 18, 2024.
9. Source: Freddie Mac; data as of May 15, 2024.
10. Source: US Census Bureau, US Department of Housing and Urban Development, National Association of Realtors; data as of November 26, 2024.
11. Source: Moody’s Investors Service; data as of December 31, 2022.
12. Source: Securities Industry and Financial Markets Association; data as of December 2, 2024.

The opinions expressed are not necessarily those of the firm. These materials are provided for informational purposes only. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. Any statistics contained herein have been obtained from sources believed to be reliable, but the accuracy of this information cannot be guaranteed. The views expressed herein may change at any time subsequent to the date of issue hereof. The information provided is not to be construed as a recommendation to buy, hold or sell or the solicitation or an offer to buy or sell any fund or security.

Past performance is not indicative of future results.

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• Loss of all or a substantial portion of the investment; 
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Indexes are unmanaged and one cannot invest directly in an index.
Bloomberg Municipal Bond Index (Gross/Total) measures the performance of the US municipal tax-exempt investment grade bond market. A total-return index tracks price changes and reinvestment of distribution income.
Bloomberg US Aggregate Bond Index (Gross/Total) measures the performance of the investment grade, US dollar-denominated, fixed-rate taxable bond market in the US, including Treasuries, government-related and corporate securities, fixed-rate agency MBS (agency fixed-rate and hybrid ARM passthroughs), ABS and CMBS. A total-return index tracks price changes and reinvestment of distribution income.
Bloomberg US Corporate Bond Index (Gross/Total) measures the performance of investment grade, fixed-rate, taxable corporate bond market. It includes US dollar denominated securities publicly issued by US and non-US industrial, utility and financial issuers. A total-return index tracks price changes and reinvestment of distribution income.
Bloomberg US Corporate High Yield Bond Index (Gross/Total) measures the US dollar-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below. A total-return index tracks price changes and reinvestment of distribution income.
Cliffwater Direct Lending Index is an asset-weighted index of US middle market direct loans.
Consumer price index (CPI) (Price) measures inflation as experienced by consumers in their day-to-day living expenses by capturing the average change over time in the prices paid for a representative basket of consumer goods and services. A price-return index only measures price changes. 
Fannie Mae Home Purchase Sentiment Index (HPSI) (Gross/Total) distills consumer responses to Fannie Mae’s monthly National Housing Survey into a single indicator designed to provide signals on future housing outcomes. A total-return index tracks price changes and reinvestment of distribution income.
ICE BofA AA-BBB US Fixed Rate Automobile ABS Index (Gross/Total) measures the performance of asset-backed securities collateralized by automobile loans with a middle rating in a range of AA/Aa to BBB/Baa as measured Moody’s, Fitch and S&P. A total-return index tracks price changes and reinvestment of distribution income.
ICE BofA AA-BBB US Floating Rate Credit Card ABS Index (Gross/Total) measures the performance of asset-backed securities collateralized by credit card loans with a middle rating in a range of AA/Aa to BBB/Baa as measured Moody’s, Fitch and S&P. A total-return index tracks price changes and reinvestment of distribution income.
ICE BofA AA-BBB US Floating Rate Student Loan ABS Index (Gross/Total) measures the performance of asset-backed securities collateralized by student loans with a middle rating in a range of AA/Aa to BBB/Baa as measured Moody’s, Fitch and S&P. A total-return index tracks price changes and reinvestment of distribution income.
ICE BofA Current 10-Year US Treasury Index measures the performance of US Treasury securities with a remaining maturity exceeding seven years and less than or equal to 10 years. A total-return index tracks price changes and reinvestment of distribution income.
Morningstar LSTA US Leveraged Loan Index (Gross/Total) is a market value-weighted index that measures the performance of the US leveraged loan market. A total-return index tracks price changes and reinvestment of distribution income.
MSCI China Index (Net) measures the performance of large and midcap representation across China A shares, H shares, B shares, Red chips, P chips and foreign listings. A net-return index tracks price changes and reinvestment of distribution income net of withholding taxes.
MSCI World Index (Net) measures the performance of large and midcap equities across developed markets. A net-return index tracks price changes and reinvestment of distribution income net of withholding taxes.
Palmer Square CLO AAA Index (Gross/Total) is a subindex of the Palmer Square CLO Debt Index that tracks only CLOs originally rated AAA. A total-return index tracks price changes and reinvestment of distribution income.
Palmer Square CLO BBB Index (Gross/Total) is a subindex of the Palmer Square CLO Debt Index that tracks only CLOs originally rated BBB. A total-return index tracks price changes and reinvestment of distribution income.
Russell 2000® Index (Gross/Total) measures the performance of the small cap segment of the US equity universe. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership. A total-return index tracks price changes and reinvestment of distribution income.
S&P 500 Index (Gross/Total) measures the performance of 500 of the top companies in the leading industries of the US economy and is widely recognized as a proxy for the US market as a whole. A total-return index tracks price changes and reinvestment of distribution income.
S&P Municipal Bond High Yield Index (Gross/Total) measures the performance of bonds in the S&P Municipal Bond Index that are not rated or whose ratings are below investment grade. A total-return index tracks price changes and reinvestment of distribution income.
S&P Municipal Yield Index (Gross/Total) measures the performance of high yield and investment grade municipal bonds. A total-return index tracks price changes and reinvestment of distribution income.

Definitions

A 10-year Treasury note is a debt obligation of the US government with a maturity of 10 years upon issuance.
AA credit rating—as used by S&P Global Ratings and Fitch Ratings—is an investment grade rating on a bond considered to have a very strong capacity to meet its financial commitments. The equivalent rating from Moody’s Investors Service is Aa.
AAA credit rating—as used by S&P Global Ratings and Fitch Ratings—is an investment grade rating on a bond considered to have an extremely strong capacity to meet its financial commitments. The equivalent rating from Moody’s Investors Service is Aaa.
Asset-based lending (ABL) is corporate borrowing supported by specific assets of the borrower rather than its cash flows.
BBB credit rating—as used by S&P Global Ratings and Fitch Ratings—is an investment grade rating on a bond considered to have adequate capacity to meet its financial commitments but that is more susceptible to adverse business, financial and economic conditions. The equivalent rating from Moody’s Investors Service is Baa.
Beta is a measure of an investment’s price volatility relative to that of the overall market.
A bull market is generally defined as a period during which a securities market index rises by 20% or more.
A business development company is a closed-end investment vehicle that invests in early stage and/or distressed small and medium- sized companies.
Collateralized loan obligations (CLO) are financial instruments collateralized by a pool of corporate loans.
Collective investment funds (CIFs), also known as collective investment trusts (CITs), are bank-administered trusts that hold commingled assets.
A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other bonds. Ratings are measured on a scale that generally ranges from AAA/Aaa (highest) to D/RD (lowest); ratings are subject to change without notice. Not rated (NR) indicates that the debtor was not rated and should not be interpreted as indicating low quality.
Credit-risk transfer (CRT) securities are synthetic securitizations that reference the credit risk of a designated group of mortgage loans guaranteed by Fannie Mae or Freddie Mac.
Currency debasement refers to the reduction of a currency’s purchasing power.
Direct lending refers to a loan agreement between a borrower and single lender or small group of lenders. Direct lending can also be referred to as “private credit” or “private lending.”
Exchange-traded funds (ETFs) are listed investment vehicles that seek to provide exposure to a benchmark, index or actively managed strategy.
Federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight on an uncollateralized basis.
General obligation bonds are municipal securities in which payments are backed by the full faith and credit of the issuer and by extension its ability to tax its residents.
A Goldilocks economic scenario refers to a level of growth that is neither strong enough to promote inflation pressures nor weak enough to suggest recession may be near.
Government-sponsored enterprises (GSEs) were established and chartered by the US federal government for public policy purposes. They are private companies, and their securities are not backed by the full faith and credit of the federal government.
High yield municipal bonds are debt securities issued by states, cities, counties and other public entities that offer a higher rate of interest due to their perceived higher risk of default.
An interval fund is a pooled investment vehicle that offers investors periodic liquidity at an interval specified in its prospectus.
Moody’s Investors Service is a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other bonds. Ratings are measured on a scale that generally ranges from Aaa (highest) to RD (lowest); ratings are subject to change without notice.
Mortgage-backed securities (MBS) are debt securities whose payments of principal and interest are backed by the cash flow generated by pools of mortgage loans.
Net orderly liquidation value (NOLV) is the estimated proceeds from selling a borrower’s collateral assets in an orderly manner, including a reasonable amount of time to find a buyer, after all costs related to the sale.
Not rated (NR) indicates that the debtor was not rated and should not be interpreted as indicating low quality.
A private fund is a pooled investment vehicle that is not required to be registered or regulated as an investment company under the Investment Company Act of 1940, as amended.
Revenue bonds are municipal securities whose payments are backed not by a government’s taxing power but by revenues from a specific project or source, such as highway tolls or lease fees.
Secured Overnight Financing Rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.
A separately managed account (SMA) is a portfolio of securities that is managed by a professional investment firm.
A soft landing refers to a gradual economic slowdown that comes to an end without triggering a recession.
Sovereign debt refers to debt obligations issued by a country’s government as a means to borrow capital.
S&P Global Ratings is a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments, or other bonds. Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest); ratings are subject to change without notice.
A tranche is a portion of a security issue with its own unique risk/reward characteristics and credit rating.
Undertakings for Collective Investment in Transferable Securities (UCITs) are pooled investment vehicles registered in countries in the European Union.
Volatility represents the degree to which an investment’s price has deviated from its average over time.
A yield curve is a graphical representation of interest rates on debt of equal credit quality across a range of maturities.

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This material and the information contained herein is provided for informational purposes only, does not constitute and is not intended to constitute an offer of securities, and accordingly should not be construed as such. Any funds or other products or services referenced in this material may not be licensed in all jurisdictions and unless otherwise indicated, no regulator or government authority has reviewed this document or the merits of the products and services referenced herein. This material and the information contained herein has been made available in accordance with the restrictions and/or limitations implemented by any applicable laws and regulations. This material is directed at and intended for institutional investors (as such term is defined in any applicable jurisdiction). This material is provided on a confidential basis for informational purposes only and may not be reproduced in any form. Before acting on any information in this material, prospective investors should inform themselves of and observe all applicable laws, rules and regulations of any relevant jurisdictions and obtain independent advice if required. This material is for the use of the named addressee only and should not be given, forwarded or shown to any other person (other than employees, agents or consultants in connection with the addressee’s consideration thereof).

Important Information for Residents of the State of Kuwait 
The Capital Markets Authority and all other Regulatory Bodies in Kuwait assume no responsibility whatsoever for the contents of this material and do not approve the contents thereof or verify their validity and accuracy. The Capital Markets Authority and all other Regulatory Bodies in Kuwait assume no responsibility whatsoever for any damages that may result from relying on the contents of this material either wholly or partially. It is recommended to seek the advice of an investment advisor.

Important Information for Residents of the State of Qatar 
Any funds, products or services referenced in this material may not be licensed in all jurisdictions, including the State of Qatar (“Qatar”), and unless otherwise indicated, no regulator or government authority, including the Qatar Financial Markets Authority (QFMA), has reviewed this material or the merits of the products and services referenced herein. If you receive a copy of this material, you may not treat this as constituting an offer, and you should note that there may be restrictions or limitations as to whom these materials may be made available. This material is directed at and intended for a limited number of “qualified” investors (as such term is defined under the laws of Qatar). This material is provided on a confidential basis for informational purposes only and may not be reproduced in any form. Before acting on any information in this material, prospective clients should inform themselves of and observe all applicable laws and regulations of any relevant jurisdictions, including any laws of Qatar. This material is for the use of the named addressee only and should not be given, forwarded or shown to any other person (other than employees, agents or consultants in connection with the addressee’s consideration thereof). Any entity responsible for forwarding this material to other parties takes responsibility for ensuring compliance with applicable securities laws.

Important Information for Residents of the Kingdom of Saudi Arabia
The information contained herein is provided for informational purposes only and should not be considered a solicitation or offering of investment services, nor a solicitation to sell or buy any shares of any securities (nor shall any such securities be offered or sold to any person) in any jurisdiction where such solicitation or offering would be unlawful under the applicable laws of such jurisdiction. Unless otherwise indicated, no regulator or government authority has reviewed this material or the merits of the products and services referenced herein, including the Saudi Arabian Capital Market Authority. This material and the information contained herein has been made available in accordance with the restrictions and/or limitations implemented by any applicable laws and regulations. This material is directed at and intended for institutional investors (as such term is defined under the laws of the Kingdom of Saudi Arabia). This material is provided on a confidential basis for informational purposes only and may not be reproduced in any form. Before acting on any information in this material, prospective investors should inform themselves of and observe all applicable laws, rules and regulations of any relevant jurisdictions and obtain independent advice if required. This material should not be relied upon as investment advice and is not a recommendation to adopt any investment strategy. This material is for the use of the named addressee only and should not be given, forwarded or shown to any other person (other than employees, agents or consultants in connection with the addressee’s consideration thereof).

Important Information for Residents of Taiwan 
First Eagle Investment Management, LLC is not licensed to engage in an investment management or investment advisory business in Taiwan and the services described herein are not permitted to be provided in Taiwan. However, such services may be provided outside Taiwan to Taiwan resident clients.

Important Information for Residents of United Arab Emirates (Abu Dhabi) 
The offering of the products and/or services described herein have not been approved or licensed by the UAE Central Bank, the UAE Securities and Commodities Authority (SCA), the Dubai Financial Services Authority (DFSA) or any other relevant licensing authorities in the UAE, and accordingly does not constitute a public offer in the UAE in accordance with the commercial companies law, Federal Law No. 2 of 2015 (as amended), SCA Board of Directors’ Decision No. (13/Chairman) of 2021 on the Regulations Manual of the Financial Activities and Status Regularization Mechanisms or otherwise. Accordingly, this material is not offered to the public in the UAE (including the Dubai International Financial Centre (DIFC)). This material is strictly private and confidential and is being issued to a limited number of institutional and individual clients: a) who meet the criteria of a Professional Investor as defined in SCA Board of Directors’ Decision No. (13/ Chairman) of 2021 on the Regulations Manual of the Financial Activities and Status Regularization Mechanisms or who otherwise qualify as sophisticated clients; b) upon their request and confirmation that they understand that the products and/or services described in this material have not been approved or licensed by or registered with the UAE Central Bank, the SCA, DFSA or any other relevant licensing authorities or governmental agencies in the UAE; and c) must not be provided to any person other than the original recipient and may not be reproduced or used for any other purpose.

Important Information for Residents of United Kingdom This material is issued by First Eagle Investment Management, LLC and is lawfully distributed in the United Kingdom by First Eagle Investment Management, Ltd. First Eagle Investment Management, Ltd is authorised and regulated by the Financial Conduct Authority (FRN: 798029) in the United Kingdom. This material is directed only at persons in the United Kingdom who qualify as “professional investors.” This material is not directed at any persons in the United Kingdom who would qualify as “retail investors” within the meaning of the UK Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773) or the EU Packaged Retail and Insurance-based Investment Products Regulation (No 1286/2014), the UK PRIIPs Regulation, and such persons may not act or rely on the information in this material. 

First Eagle Investments is the brand name for First Eagle Investment Management, LLC and its subsidiary investment advisers. First Eagle Alternative Credit and Napier Park are brand names for the two subsidiary investment advisers engaged in the alternative credit business.

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