Mass. Passes Historic $5.2B Housing Bill, Economic Efforts Stall

Massachusetts lawmakers have passed the largest housing bill in the state’s history, addressing the housing crunch with a $5.2 billion bond bill.

Jordan B. & Han-Gwon Lung
August 05, 2024

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Good morning. Massachusetts lawmakers have passed the largest housing bill in the state’s history. Plus, a decline in Treasury yields is unlocking new opportunities for multifamily transactions.

Today’s issue is sponsored by ATM Investors—building and operating turnkey ATM businesses for investors.

🎙️ Listen: In episode 4 of No Cap, Jack and Alex chat with Brad Sumrok, the “Apartment King.” Brad shares his journey from starting as a chemical engineer to purchasing over $2 billion worth of apartment buildings.

🖥️ Webinar: Join Travis Watts (Ashcroft Capital) as he delves into the “Mark-to-Market Value-Add Approach” and how this strategy redefines value-add strategies in Class A multifamily properties.

Market Snapshot

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GSPC

5,346.56

Pct Chg:
-1.84%

FTSE NAREIT

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789.59

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10Y Treasury

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SOFR

1-month

5.35%

Pct Chg:
0.0%

*Data as of 8/2/2024 market close.

legislative session

Mass. Passes Historic $5.2B Housing Bill, But Economic Development Bill Stalls

Massachusetts lawmakers have passed the largest housing bill in the state’s history, addressing the housing crunch with a $5.2 billion bond bill, though the economic development bill stalled.

Making history: The $5.2 billion housing bond bill aims to alleviate the state’s housing shortage with zoning reforms and substantial funding for affordable housing. Notable inclusions are zoning for by-right accessory dwelling units and billions for affordable housing initiatives. Despite broad support, the bill excluded a proposed transfer fee and tenant broker fee elimination.

Zoom in: The bill dedicates $2B to repairing the state’s 40,000-unit public housing infrastructure and includes a momentum fund for mixed-income developments. Additionally, eviction records can be sealed for tenants in specific situations. Accessory dwelling units (ADUs) could generate 8,000 to 10,000 new housing units over five years, a significant boost for the pro-housing movement.

Ready for change: This bond bill is the first major housing initiative since Gov. Maura Healey took office, initially proposed as a $4 billion package. Lawmakers reached the final $5.2 billion agreement after passing separate versions in July.

➥ THE TAKEAWAY

Economic development: Despite this victory, lawmakers were unable to pass a $2.9 billion economic development bill, which included provisions for a new soccer stadium in Everett and investments in life sciences, AI, and wind energy. Additionally, a proposed bill for increased oversight of hospitals did not pass, leaving some legislative efforts incomplete as the session ended.

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✍️ Editor’s Picks

Southern Charm: As job markets tighten, Southern cities like Raleigh, Austin, and Atlanta are emerging as prime destinations for recent college grads due to their strong hiring, affordable living, and vibrant social scenes.
Rising inventory: The inventory of homes for sale rose by 36.6% in July 2024, particularly in smaller and more affordable segments, despite stable median prices.
More vacancy: The life sciences sector saw a vacancy rate rise to 16.7% in Q2 2024 due to nearly 5 million square feet of vacant new deliveries and reduced net absorption.
Settlement: Hawaiian Electric agreed to a nearly $2 billion contribution to a $4 billion settlement resolving lawsuits related to the 2023 Maui wildfires, which killed 102 people and caused extensive damage.
Power shift: The US has seen a significant transition in electricity generation from coal to natural gas and renewables, with each state charting its own path in this evolving energy landscape.

🏘️ MULTIFAMILY

Boost: A decline in Treasury yields is unlocking new opportunities for multifamily transactions, with increased buyer interest and financing options fueling market activity.
Rent recovery: Sun Belt markets, previously struggling with negative rent growth, saw a resurgence in July, with 24 of the top 30 metros reporting increases.
Can it get worse? Arbor Realty Trust reported $1 billion in delinquencies in Q2, a 10% increase, as loan modifications slowed and the company faces scrutiny from federal prosecutors.
New landlords on the block: Ryco Capital acquired nine East Village apartment buildings for $132 million from Jonis Realty, aiming to renovate the portfolio, which has 700+ violations, and capitalize on New York City’s rising rents.
Senior housing: PACS Group secured a $260 million loan and a $43 million preferred equity investment for acquiring a senior housing and skilled nursing portfolio across eight states.

🏭 Industrial

Jumping ship: Hartz Mountain Industries unexpectedly abandoned plans to develop a 2 MSF warehouse project in Roxbury Township, New Jersey, after two years of negotiations.
Data expansion: Panattoni Development plans to build one gigawatt of data center capacity across North America over the next five years, driven by increased demand from the AI boom.

🏬 RETAIL

Coming back: Torose Equities capitalizes on strong retail demand in Miami amid wealth migration, though CEO Scott Sherman notes a potential slowdown in consumer spending.
Debt reduction: Macerich sold its 50% stake in Phoenix’s Biltmore Fashion Park to Red Development for $110M, with proceeds earmarked for debt reduction and renovations.
Mandatory relocation: Walmart employees face a difficult decision as the company mandates relocation to its Bentonville, Arkansas HQ or coastal hubs, with the alternative being job loss.

🏢 OFFICE

Acquisition: A JV between Cousins Properties and Town Lane purchased the Proscenium office building in Atlanta for $83M, with plans for significant upgrades.
Refinance: Westdale Real Estate secured a $115 million loan from Israeli investors to refinance the Epic I office tower in Dallas, aiming to attract new tenants following Uber’s exit.
FBI relocation: The Senate subcommittee approved $375 million for relocating the FBI headquarters to Greenbelt, Maryland, but the plan faces significant political hurdles and scrutiny.

🏨 HOSPITALITY

Off-market deal: RLJ Lodging Trust purchased Denver’s Hotel Teatro for $35.5 million, enhancing its portfolio with this boutique property, which features strong location advantages.
Dispute: Bondholders have sued JPMorgan Chase for allegedly failing to disclose complex ownership details of the Palmer House hotel in Chicago, complicating a $333 million foreclosure process.

A MESSAGE FROM ASHCROFT CAPITAL

Join Travis Watts, Director of Investor Development at Ashcroft Capital, as he delves into the “Mark-to-Market Value-Add Approach” and how this approach redefines value-add strategies in Class A multifamily properties.

This webinar will provide an in-depth look at how aligning rents to current market rates can significantly enhance property value and investor returns.