Together with

Good morning. The U.S. is set to add a record-breaking number of apartments this year, with over half a million new units expected to hit the market. Plus, Jamie Dimon still sees a 65% chance of a U.S. recession.

Today’s issue is sponsored by Reap Capital.

🎙️ Listen: Episode 5 of No Cap by CRE Daily is live! Jack Stone and Alex Gornik sit down with Michael Mandel, a former broker and CompStak® founder, to talk about the impact of data and AI on CRE.

Market Snapshot

*Data as of 8/9/2024 market close.

Construction Outlook

Source: RentCafe Analysis of Yardi Matrix

TOGETHER WITH REAP CAPITAL

1995 Vintage Core-Plus: 50% Below Replacement Cost

Reap Capital is excited to announce its latest acquisition: The Calvin. It is located in a prime submarket of Plano, TX, with access to the highly coveted Plano ISD and a one-mile median income of $114k.

Deal Highlights

✅ Lender Forced Sale
✅ Acquiring at 50% of Replacement cost
✅ Exit price matches current sale comps
✅ 100% Depreciation on invested capital

Investment Highlights

✅ 17.88% IRR*
✅ 2.09x EM*
✅ 8.48% CoC*

“By capitalizing on this forced sale, we are able to acquire a core plus asset at a price that is 20% below previous trade in 2021.” —David Lilley, CEO

Click here for more information on The Calvin and access to Reap Capitals webinar on August 15th at 6:30 pm CST.

• Going private? Bill Ackman’s Pershing Square Capital is considering taking Howard Hughes Corporation private, following the recent spinoff of Seaport.

• Healthcare JV: Catalyst Healthcare Real Estate and Heitman formed a $300M joint venture to develop healthcare properties across five states.

• Never coming back: Job listings are shifting from large city centers to smaller metro and rural areas, possibly signaling a long-term geographic redistribution.

• Ethics scandal: D.C.’s No. 2 buildings official, Caroline Lian, resigned after a probe revealed she secretly held a full-time job at Freddie Mac while working for the city.

• Red-hot: CRE brokerage stocks like CBRE, JLL, and Newmark are seeing stock increases of up to 23% over the past month, fueled by improved earnings and anticipated Fed rate cuts.

• Holding firm: Jamie Dimon sees a 65% chance of a U.S. recession, diverging from JPMorgan’s economists who estimate a 35% likelihood.

• Buffett’s bungalows: Three Palm Beach homes owned by the late Jimmy Buffett are listed for over $20M, offering potential buyers a “Key West meets Palm Beach” experience.

• Deep discount: Ready Capital sold $20M in loans at $0.70 on the dollar and has $450M more in contract for Q3, expected to sell at even steeper discounts.

• Rising distress: Multifamily CLO distress is surging, with nearly $57B in troubled loans, threatening apartment flippers who invested during the pandemic’s low-interest boom.

• Slowing down: Nationwide single-family rental home inventory increased by 16.7% YoY in 1H24, leading to longer market times and slower rent growth, especially in Florida.

• Miami development: The owner of South Beach’s Sagamore Hotel plans a 561-unit multifamily project with 20K SF of retail space on a long-vacant North Miami site.

• Boston’s senior solution: Massachusetts’ $5.2B housing bond bill aims to tackle the severe shortage of affordable senior housing as the state’s elderly population grows rapidly.

• Data Center deal: Thor Equities purchased a 270-acre site near Atlanta for $50M, aiming to convert the facility into a data center.

• Industrial expansion: Tempus Realty Partners acquired three industrial properties across Maryland, Alabama, and Wisconsin for $29M, marking their second portfolio addition this year.

• Rethinking retail: Ace Hardware is investing $1B in a new experiential store concept, “Elevated Ace,” featuring enhanced showrooms and outdoor spaces, with a rollout starting in Q4.

• Lucrative conversion: Montreal’s Centre Carnaval mall sold for $70M after securing approval to add 1,800 residential units, showcasing the profit potential in retail-to-mixed-use conversions.

• Acquisition: DLC and Meadow Partners acquired the Penn Mar Shopping Center near Washington, D.C., for $68.5M, enhancing their grocery-anchored retail portfolio in Prince George’s County.

• High-stakes gamble: Related California plans a $600M, 41-story hotel and office tower in San Francisco, betting on premium space despite high office vacancies.

• Add it to the collection: Oracle founder Larry Ellison has acquired the luxurious Eau Palm Beach Resort & Spa, expanding his portfolio of high-end resorts.

• “Rock ‘n’ roll”: French-born baker Michel Suas bought the land beneath San Francisco’s Phoenix Hotel for $9M, with redevelopment options when the ground lease ends in 2025.

• A better choice: Choice Hotels sold its remaining $91M stake in Wyndham after a failed hostile takeover, shifting focus to expanding its own brands like Everhome Suites and Radisson.

📈 CHART OF THE DAY

MSCI