Together with

Good morning. U.S. banks reported no change in commercial and industrial loan demand last quarter, the strongest result in two years, according to a Federal Reserve survey released Monday.

Today’s issue is brought to you by 10 East—a membership-based investment firm focused on private market exposure.

📆 Webinar: ​Join Travis Watts (Ashcroft Capital) and CRE Daily for a LIVE webinar on the “Mark-to-Market Value-Add Approach” to learn why value-add strategies are not limited to older properties and how Class A assets can be prime investment opportunities.

🎙️ 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.

Market Snapshot

*Data as of 8/6/2024 market close.

lending market

TOGETHER WITH 10 EAST

10 East, led by Michael Leffell, allows qualified individuals to invest alongside private market veterans in vetted deals across private credit, real estate, niche venture/private equity, and other one-off investments that aren’t typically available through traditional channels.

Benefits of 10 East membership include:

• Flexibility – members have full discretion over whether to invest on an offering-by-offering basis.

• Alignment – principals commit material personal capital to every offering.

•  Institutional resources – a dedicated investment team that sources, monitors, and diligences each offering.

10 East is where founders, executives, and portfolio managers from industry-leading firms diversify their personal portfolios.

• Allegedly: Arbor Realty Trust (ABR) faces an investor lawsuit that alleges the firm hid a ‘toxic’ portfolio to inflate its share price. ABR’s financials have also been investigated by the government.

• Money woes: NYC’s infamous MTA projects a $900M deficit in 2027–2028 due to fare evasion and CRE tax shortfalls, prompting upcoming expense cuts and fare hikes.

• Resilient assets: Starwood (STWD) CEO predicts that AI investment will soon decline, highlighting real estate as a safe haven with Fed rate cuts expected soon.

• Coastal crunch: In Hawaii and California, current housing costs can eat up over 70% of local per capita income, making them highly overvalued residential markets.

• Construction conundrum: Rising costs and high interest rates are causing a surge in abandoned commercial construction projects across the U.S.

• Housing highs and lows: NY leads the nation as the priciest state for student housing at $2,487/mo. Meanwhile, Wyoming was the most affordable state at <$550/mo.

• Full-cycle: Conserve Holdings has closed the Spartanburg portfolio. The assets were acquired in early 2021 and completed a successful value-add renovation, resulting in an impressive 21% IRR for investors.

• ADU revolution: NYC’s Mayor Adams is pushing a City of Yes proposal for accessory dwelling units that would create 26K–40K units over 15 years, spurring housing growth.

• Residential rebound: June ended with a staggering $928B in total private residential construction spending nationwide, up 7.3% from the previous year.

• Too hot to handle: The Sun Belt’s apartment REITs face challenges as new construction saturates the market, leading to increased concessions and cautious optimism about future growth.

• Squeezing the stone: Dan Hosseini is planning a 54-unit complex on a Woodland Hills parking lot in LA, including ground-floor shops, 41 parking spots, and 6 affordable units.

• Midwest gem: One Liberty Properties bought a 236.3 KSF Iowa industrial property on 23.5 acres bordering Nebraska for $28.3M.

• SoCal shifts: The LA industrial market is slowly adjusting to cooling demand due to the influx of new properties, although there seems to be higher deal activity among smaller users.

• Capitalizing in Cali: Staley Point Capital and Bain Capital Real Estate acquired two SoCal industrial properties featuring 26 dock-high loading doors and totaling 232 KSF for $42.6M.

• Transformation: Stotan Industrial bought a 16.6 KSF DuPage County office in Chicago, which it plans to convert to warehouses, for $8.2M (or $495 PSF).

• Fashionable deal: Vornado Realty Trust (VNO) is set to sell a part of Uniqlo’s flagship store in Manhattan at 666 Fifth Ave., yielding $340M, which will be used to pay off debts.

• Simon says: Simon Property Group (SPG), America’s largest mall owner, reported record Q2 real estate NOI, 95.6% occupancy, and $493.5M net income.

• Redefining refinancing: JMB Realty refinanced a 66-story tower on Chicago’s Michigan Avenue with a $180M loan for 831.4 KSF of commercial space.

• X marks the spot: Social media giant X (formerly Twitter) exited a 463 KSF office space in San Francisco and is relocating to San Jose and Palo Alto.

• Greenwich gamble: Columbia Property Trust is seeking a short sale of a $250M Greenwich Village office building with a $270M mortgage.

• Downsizing done right: Fannie Mae (FNMA) downsizes, renewing its lease in D.C.’s Midtown Center for 340 KSF, or half its previous space, in a long-term deal.

• Towering lease: Bain Capital renewed and expanded its HQ lease at BXP’s 200 Clarendon St. in Boston, now totaling 378 KSF.

• Foreclosure fiasco: CGI Merchant Group lost control of the Waldorf Astoria in Washington, DC, in a foreclosure auction after buying it for $375M from the Trump family just two years ago.

• Sky-high luxury: Signia by Hilton (HLT), Atlanta’s largest hotel in 40 years, stands 453 feet high and offers 976 guest rooms and 100 KSF of meeting space.

• Standard to Public: Hoteliers Scheetz and Schrager secured a $121M loan for a former Standard hotel in West Hollywood that they plan to redevelop as part of the Public brand.

A MESSAGE FROM ASHCROFT CAPITAL

Join Travis Watts, Director of Investor Development at Ashcroft Capital, as he explores the “Mark-to-Market Value-Add Approach” in Class A multifamily properties. This webinar covers how aligning rents to market rates can enhance property value and boost investor returns.

📈 CHART OF THE DAY