Fannie, Freddie Tighten Lending Rules to Fight Mortgage Fraud

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Good morning. New regulations from Fannie Mae and Freddie Mac aim to combat rising mortgage fraud in commercial property lending. Plus, a new report found that Miami's traffic mess costs the city $3.1B annually.

Today’s issue is sponsored by Neutral—align your investments with a sustainable future.

🖥️ 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.

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FIGHTING FRAUD

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• Real estate resilience: New Western revealed that 91% of real estate investors predict more growth in 2H24, while 80% plan to flip 1–5 single-family homes for the year.

• Gridlock gambit: A recent analysis estimates that Miami's traffic mess costs the city $3.1B annually, with an average of 70 hours lost per commuter per year.

• Shifting sands: Texas and Florida have emerged as top destinations for corporate relocations thanks to tax benefits and growth opportunities.

• Monday’s sell-off: S&P 500 futures are up after the index's worst day in nearly two years, buoyed by a significant rebound in Japanese stocks.

• Shiny Big Apple: KPG Funds predicts a 50–60% rise in NYC’s commercial property pricing as interest rates fall.

• Goldman shrugs: Goldman Sachs (GS) economists raised their US recession risk chance to 25% but admit the current data looks 'fine,' with the Fed expected to cut rates soon.

• Reviving apartments: Large apartment owners are resuming acquisitions, driven by strong renter demand and reduced construction starts, with second-quarter transactions reaching $23 billion—a 40% increase from Q1.

• Housing heroics: The Atlanta Housing Board approved financing for 1,039 new units, including 903 affordable homes, and the preservation of 140 units.

• Record construction: South Florida developers are building a record number of multifamily units amid slowing rent growth and declining occupancy rates.

• Seattle surprises: Greystar paid $109M in Renton for a 357-unit complex, while Goldman Sachs (GS) invested $175M in a 338-unit tower in South Lake Union.

• Record renters: The number of renter households across America grew 1.9% YoY to 45.2M, easily outpacing the rate of homeowner growth.

• Growing pains: The University of Texas at San Antonio seeks a developer for a mixed-use project on 28 acres near its Park West campus to accommodate rising enrollment and demand for amenities.

• The empire reigns: California’s Inland Empire once again leads the nation in large industrial leases, accounting for 15 of the top 100 leases totaling 13.5MSF in 1H24.

• Small but mighty: In Kansas City, small industrial properties (under 10 KSF) made up over 50% of metro sales through June 2024, up 22% YoY.

• Storage splurge: Zenith IOS forms a $700M JV with J.P. Morgan (JPM) to create a $1.5B institutional-quality industrial outdoor storage portfolio across the US.

• Drugstore revolution: Walgreens (WBA) and CVS Health (CVS) are leading a national drugstore transformation with smaller store formats and primary care clinics to compete with Amazon et al.

• Haunted ghost kitchens: Reef Technology, a ghost kitchen company, is closing its 3 NYC facilities, laying off 53 workers as the niche retail sector struggles.

• Budding success: In a recent crackdown on unlicensed cannabis stores in NYC, 779 locations were sealed, with over $65.6M in penalties issued.

• Office leasing surge: Colliers reported a 32% increase in office leasing in the Americas last quarter, alongside a 6% revenue growth, driven by a rebound in confidence and a significant acquisition in Canada.

• Leasing leaders: Boston-based BXP signed 1.3 MSF of leases in Q2, totaling 2.2 MSF for the year, with a respectable lease term average of 9 years.

• Office evolution: 50% of 1H24 development sales in Manhattan are office-to-residential conversions, with overall development sales in the city doubling to $1.12B.

• Waldorf woes: DC’s Waldorf Astoria was sold at a foreclosure auction for $100M to lender BDT & MSD Partners, although previous owner CGI is still fighting to keep it.

• Sky-high luxury: Cain International and Oko Group are seeking up to $5.25B to build the ultra-luxury One Beverly Hills, which will include two of the tallest towers in the area.

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.

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