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Good morning. Oxford Economics predicts a CRE market recovery within 12–18 months, with strategic opportunities emerging in industrial and hotel sectors, especially in Europe, as interest rates decline and market conditions stabilize.

Today’s issue is brought to you by RSN Property Group.

🚨 New Episode: Jack and Alex sit down with Jilliene Helman, founder & CEO of RealtyMogul, to explore her entrepreneurial journey and the evolution of building RealtyMogul into a crowdfunding juggernaut. (Apple / Spotify)

Market Snapshot

*Data as of 10/23/2024 market close.

UPBEAT OUTLOOK

TOGETHER WITH RSN PROPERTY GROUP

Blue-chip Institutional Operator and Asset Open to Accredited Investors

RSN Property Group and Monday Properties are offering investments in “The Villas at Princeton Lakes”, a core-plus asset featuring 210 units located in Atlanta, Georgia.

This is a unique chance for accredited investors to join forces with a blue-chip operator boasting $16B in acquisitions and RSN’s decade of expertise in multifamily real estate and invest in an institutional-grade asset at a fraction of the typical entry point – starting at $50K!

Investment highlights:

• Strong Risk-Adjusted Returns: 2.02x EM, 16.26% IRR, 7.4% CoC, 20.31% AAR.

• Off-Market Acquisition: Monday Properties has secured The Villas at Princeton Lakes off-market, avoiding investor competition for this premium asset.

• Low Cost-Basis: We are buying this asset at an attractive basis of $175K/unit, representing a +30% discount below the average of recent sales comps.

• Limited Access: Only $5M in allocations are available to accredited investors.

*Please see the advertising disclosure at the bottom of this newsletter.

• Banking on debt: Deutsche Bank (DB) plans to sell $1B in CRE loans (40% non-performing) amid office sector challenges. Experts believe this is a sign of a potential market bottom.

• Tax trap: Landlords opting for deed-in-lieu-of-foreclosure to offload properties face unexpected taxes, as forgiven debt is considered taxable income, potentially resulting in  37% capital gains taxes.

• Tax compromise: Boston Mayor Michelle Wu secured a deal to implement a temporary hike in CRE taxes, preventing a 28% tax increase for homeowners.

• Uncertainty ahead: Bank of Japan Governor Kazuo Ueda expressed cautious optimism about the US economy's outlook, highlighting continuing market volatility.

• Condo cuisine: Miami's luxury condominium market continues to thrive, with branded residences like Jean-Georges Miami Tropic offering units from $1.6M.

• Boldly cutting: The Bank of Canada lowered its policy rate by 50 bps to 3.75% in Q4, aiming to maintain low inflation. It was the fourth rate cut from the bank this year, and the biggest to date.

• Unlocking affordability: A Bronx Rep. introduced the ASAP Act to exempt 100% of affordable housing projects from volume caps, potentially boosting housing production.

• Costly compliance: Local Law 157 mandates gas detectors in  NYC units with gas appliances, potentially leading to costly service shut-offs and prolonged repairs.

• Manhattan acquisition: Canvas Property Group's JV acquired the 204-unit Gramercy Park complex for $104.5M. The complex is 95% occupied and features modern amenities and renovations.

• Multifamily magic: West Shore secured a staggering $533M loan to refinance 9 Sunbelt multifamily properties, which span 2,806 units in 6 states.

• AI boom: Texas is hosting an increasing number of large language model-driven (LLM) AI firms, including Meta's (META) $1B data center, reflecting growing industry demand across the state.

• Winds of change: Chicago's industrial market leads the Midwest with $1.9B in transactions and ranks fourth nationally with 10.3 MSF under construction.

• Nice deal: A Velocity Venture Partners affiliate sold a 96%-occupied, 450 KSF industrial property in Yeadon, PA, for $59M. If you’ve never heard of Yeadon before, you’re certainly not alone.

• Retail revolution: Acadia Realty Trust (AKR) bought a trio of retail buildings in Williamsburg, Brooklyn, for $35M, alongside Empire State Realty's (ESRT) $143M acquisition.

• Cut to the quick: Fast food chain Denny's (DENN) plans to close up to 150 restaurants, or about 10% of its 1,525 worldwide locations, by 2025.

• Missing rent: High office vacancy rates in Dallas and Houston are costing the fast-growing Texas cities billions in potential rent income. Dallas has 53MSF of empty space, ranked third nationally.

• Deals double: Bay Area office deals have doubled to 54 in 2024 with a total volume of $1.8B, as average prices dropped down to $282 PSF, enticing investors to return to the market.

• Profit dip: Hilton (HLT) lowered its profit outlook for 2024 as slower travel demand and disruptions from strikes and storms outweighed gains from new hotel additions and partnerships.

• Safer hotels: The NYC Council voted 45-4 to pass the city’s Safe Hotels Act, which requires licenses, panic buttons, and staffed front desks for hotels.

📈 CHART OF THE DAY