Loan Standards Stabilize, But Credit Demand Slips in Q2

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Good morning. Banks are dialing back the heavy-handed credit tightening of the past two years, but borrowers aren’t biting. Loan demand slipped again in Q2, leaving the market stuck between steadier standards and softer appetite.

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Credit Caution

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• Industry insights: Despite headwinds, the build-to-rent industry is continuing to expand across the U.S. See what’s coming. (sponsored)

• Global gains: Global real estate surged in August, led by Asia and North America, as hopes for rate cuts lifted investor sentiment.

• Risk reset: Commercial mortgage REITs are rebounding in 2025 as credit conditions ease, loan activity picks up, and diversification boosts stability. 

• HUD lending: HUD lending rose 50% YTD to $10.4B, fueled by rising demand and limited supply in senior housing. 

• Economic split: The Atlanta Fed projects 3.1% Q3 GDP growth, while the St. Louis Fed estimates just 0.57%, highlighting sharp differences in economic models.

• Labor revision: A major government revision erased 911,000 jobs from prior counts, sparking CRE uncertainty and fueling expectations for a Fed rate cut. 

• Ponzi charges: Orange County private equity CEO Marco Santarelli is accused of defrauding over 500 investors out of $62.5M through an alleged promissory note scheme.

• Rent rebound: U.S. apartment rents climbed 0.3% in August to $1,790, the highest since 2022, as demand outpaced slowing construction. 

• Price pause: Manhattan rents dipped 2.1% in August, ending a four-month streak of record highs as falling mortgage rates eased pressure on the rental market. 

• JV launch: Manulife and TruAmerica launched a $1B JV with the purchase of 6K units to expand affordable housing in supply-constrained U.S. markets. 

• Aging assets: Limited supply and growing demand are attracting investors to seniors housing, drawn by strong yields, long-term holds, and tech-driven operations. 

• Milestone raise: Milestone Group closed a $1.1B oversubscribed fund to acquire and reposition multifamily properties in high-growth Sunbelt and Mid-Atlantic markets. 

• Rent run: Mid-Atlantic apartments saw rents rise by up to 3.5%, and occupancy held above 95%, as job growth and high mortgage rates fueled demand. 

• Debt drag: Student loan burdens are eroding renter finances, slowing multifamily absorption and raising risks for both rent growth and tenant stability.

• Data debt: DataBank is raising $1.1B by securitizing three fully leased data centers, tapping a growing trend of ABS financing in the sector. 

• Market tightness: Data center vacancy hit a record low 1.6% in H1 as hyperscale and AI demand outpaced a 43% jump in new development. 

• Industrial boost: BKM and Kayne added 900K SF of Phoenix small-bay space to their $1.5B JV, expanding their Arizona footprint. 

• Vacancy creep: Chicago industrial landlords face rising vacancy and are leaning on rent abatements to keep deals flowing as rents flatten. 

• DFW deal: Ares scooped up 1.6M SF of Fort Worth industrial space across four logistics properties, extending its national buying spree.

• Retail gamble: MetLife is testing the market with its Oak Brook shopping center listing, even as key tenant Guidepost Montessori works through bankruptcy. 

• Toasty takeover: RaceTrac is acquiring Potbelly for $566M to fuel the chain’s expansion from 445 shops to 2,000. 

• Portfolio boost: Steerpoint Capital paid $71.5M for 727K SF of The Shoppes at Carlsbad, planning $4M in upgrades to boost the San Diego retail hub.

• Office ultimatum: NBCUniversal will require employees to be in the office four days a week starting January 2026, offering severance to those who opt out.

• Experience design: CBRE tapped ex-Facebook exec Annie Dean to redesign offices with hotel-style experiences.

• MOB financing: Boulevard Investment Group secured a $48M loan from Voya to refinance its 15-story Good Samaritan Medical Tower in LA. 

• Loan issued: CIM Group issued a $132.5M loan to expand Peridot’s office-to-residential conversion at Dallas’ Santander Tower.

• Brickell buy: Blackstone acquired the 352-key East Miami hotel at Brickell City Centre, signaling continued investor confidence in South Florida’s hospitality market. 

• Ritz expansion: Houston’s Post Oak Boulevard is getting a 44-story Ritz-Carlton Hotel & Residences, marking the brand’s first in the city and second in the region. 

• Campus cash: AJ Capital landed a $304M loan to refinance seven Graduate Hotels near major universities, while Hilton continues to operate the brand.

📈 CHART OF THE DAY