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Together with
Good morning. Student housing pre-leasing for Fall 2024 shows continued growth but at a slower pace than in previous years. Plus, Arbor Realty Trust is under investigation by the FBI for its lending practices.
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Today’s issue is brought to you by Pine Peak Partners—be the bank with bridge debt and earn consistent cash flow.
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Market Snapshot
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*Data as of 7/12/2024 market close.
STUDENT HOUSING
Student Housing Rent Growth Softens as Pre-Leasing Chugs On in June
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Student housing pre-leasing for Fall 2024 shows continued growth but at a slower pace than in previous years.
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Pre-leasing trends: As of June, pre-leasing rates at the 175 core universities tracked by RealPage stood at 84.5%, slightly down from 85.8% last year and 86.2% in 2022. Despite this, pre-leasing momentum grew by 6% from May to June, surpassing the typical summer slowdown.
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Occupancy rates: Properties farthest from campus (over one mile) reported the highest pre-lease occupancy at just above 85%. Those within half a mile of campus matched the overall average of 84.5%. Properties located between half a mile to one mile from campus had the lowest, but still historically strong, pre-lease occupancy rate of 84%.
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Rent growth: Annual effective rent growth across the RealPage 175 softened to 4.4% in June, marking the lowest rate seen this pre-lease season. Properties more than a mile from campus reported the strongest rent growth at nearly 6%, while properties within a mile of campus saw slightly lower rent growth rates.
➥ THE TAKEAWAY
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Looking ahead: Despite a general slowdown, student housing pre-leasing and rent growth remain strong, especially for properties farther from campus, indicating a resilient demand in the sector. The University of Tennessee leads in student housing rent growth with over 25% year-over-year as of May, followed by over 10% growth at other campuses such as Ole Miss, University of Kentucky, Purdue, College of Charleston, and University of Arizona.
TOGETHER WITH PINE PEAK PARTNERS
Be The Bank with Bridge Debt & Earn Consistent Cash Flow
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At Pine Peak Partners, we aim to deliver strong risk-adjusted returns to our investors by directly accessing first-lien transactions through bridge lending opportunities, ensuring immediate cash flow on a monthly basis.
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Strong Alignment: 50% of the capital in each opportunity is our own, creating a direct alignment between our investors and our firm.
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This alignment removes the typical investment firm’s focus on fee generation and emphasizes attractive, downside-protected returns.
✍️ Editor’s Picks
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Rate cut rally: Real estate stocks soared as much as 3.1% Thursday, their biggest gain of 2024, driven by cooling inflation and expectations of Federal Reserve rate cuts in September.
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DOJ probe: Arbor Realty Trust is under investigation by federal prosecutors and the FBI over its lending practices and loan portfolio performance following short-seller allegation.
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Banking squeeze: Fed rate cuts may initially hurt banks by squeezing interest earnings amid rising deposit costs and slow loan growth before potentially boosting lending and earnings.
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Historic sale: Miami’s nearly 100-year-old Dade County Courthouse is for sale at $52.3 million, marketed as an adaptive reuse project amid downtown redevelopment efforts.
🏘️ MULTIFAMILY
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Policy changes: Starting Feb. 28, 2025, new multifamily mortgage loans from Fannie Mae and Freddie Mac will require a 30-day notice for rent increases, lease term expiration, and a five-day grace period for late rent.
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Oversupply: Florida’s four biggest metro areas saw significant rent declines, with Jacksonville reporting the largest drop in median asking rent in five years.
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Rent Cap: President Biden’s proposal to cap rent increases at 5% has sparked confusion and controversy, leading to speculation about a potential national rent control policy.
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Workforce housing: Ron Simon donates $100M to build housing in Orange County through RSI Dream Communities, partnering with local employers to expedite development.
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Managing expenses: Multifamily property owners are grappling with skyrocketing operational costs, particularly in insurance, utilities, and maintenance, threatening NOI.
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Make it affordable: Atlanta Housing is exploring better collaboration methods with developers to create 10,000 affordable housing units within five years.
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Conversion: Asana Partners and MRP Realty will convert Duke Energy’s former HQ in Charlotte into 448 apartments and 55,000 square feet of retail, with a $250 million investment.
🏭 Industrial
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Warehouse sale: Darielle Singerman sold a Boca Raton industrial building for $18.7 million to investor Serge Abecassis, marking a significant return on her 2021 purchase price of $10.5 million.
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Pullman Park: Ryan Companies secured $16.3M to develop a 170,000 sq ft industrial building in Chicago’s historic Pullman Park.
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Fully leased: Bixby Land Co. and a global investment manager sold a fully leased, 104,500 sq ft industrial property in San Bernardino to Overton Moore Properties.
🏬 RETAIL
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Going small: According to a new Colliers report, U.S. retail growth is mostly being driven by smaller tenants leasing stores in shopping centers.
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Acquisition: Finmarc Management Inc. bought Riverview Plaza, a 185,275 sq ft shopping center in Frederick, Md., from EDENS and JPMorgan Chase & Co. for $30 million.
🏢 OFFICE
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Doubling down: Boston Properties proposes increasing its office development at Reston Town Center from 645,000 to 930,000 square feet, aiming to capitalize on high-end office demand.
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Special servicing: Brookfield’s $400M loan on LA’s Bank of America Plaza has moved to special servicing due to falling occupancy rates, ahead of the loan’s September maturity.
🏨 HOSPITALITY
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Chicago Casino: Bally’s (BALY) has secured $940M in construction financing for a 34-story hotel tower at its Chicago casino project.
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Trading hands: Hotel property trades surged from $4.3 billion in Q1 to over $5.7 billion in Q2, matching last year’s Q2 total, driven by key motivations for buyers and sellers.
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Hiking fees: Oakland increases hotel fees to 2% of room rates to fund Visit Oakland’s marketing efforts, aiming to double revenue and boost tourism despite the city’s ongoing challenges.
📈 CHART OF THE DAY
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Major U.S. markets have rebounded from pandemic job losses, with Dallas leading the way, adding over 343,000 jobs by May 2024, and Austin seeing an 18.6% increase, highlighting significant employment growth since February 2020.
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