Mass. Passes Historic $5.2B Housing Bill, Economic Efforts Stall

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Good morning. Massachusetts lawmakers have passed the largest housing bill in the state's history. Plus, a decline in Treasury yields is unlocking new opportunities for multifamily transactions.

Today’s issue is sponsored by ATM Investors—building and operating turnkey ATM businesses for investors.

🎙️ 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.

🖥️ Webinar: ​Join Travis Watts (Ashcroft Capital) as he delves into the "Mark-to-Market Value-Add Approach" and how this strategy redefines value-add strategies in Class A multifamily properties.

Market Snapshot

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• Southern Charm: As job markets tighten, Southern cities like Raleigh, Austin, and Atlanta are emerging as prime destinations for recent college grads due to their strong hiring, affordable living, and vibrant social scenes.

• Rising inventory: The inventory of homes for sale rose by 36.6% in July 2024, particularly in smaller and more affordable segments, despite stable median prices.

• More vacancy: The life sciences sector saw a vacancy rate rise to 16.7% in Q2 2024 due to nearly 5 million square feet of vacant new deliveries and reduced net absorption.

• Settlement: Hawaiian Electric agreed to a nearly $2 billion contribution to a $4 billion settlement resolving lawsuits related to the 2023 Maui wildfires, which killed 102 people and caused extensive damage.

• Power shift: The US has seen a significant transition in electricity generation from coal to natural gas and renewables, with each state charting its own path in this evolving energy landscape.

• Boost: A decline in Treasury yields is unlocking new opportunities for multifamily transactions, with increased buyer interest and financing options fueling market activity.

• Rent recovery: Sun Belt markets, previously struggling with negative rent growth, saw a resurgence in July, with 24 of the top 30 metros reporting increases.

• Can it get worse? Arbor Realty Trust reported $1 billion in delinquencies in Q2, a 10% increase, as loan modifications slowed and the company faces scrutiny from federal prosecutors.

• New landlords on the block: Ryco Capital acquired nine East Village apartment buildings for $132 million from Jonis Realty, aiming to renovate the portfolio, which has 700+ violations, and capitalize on New York City's rising rents.

• Senior housing: PACS Group secured a $260 million loan and a $43 million preferred equity investment for acquiring a senior housing and skilled nursing portfolio across eight states.

• Jumping ship: Hartz Mountain Industries unexpectedly abandoned plans to develop a 2 MSF warehouse project in Roxbury Township, New Jersey, after two years of negotiations.

• Data expansion: Panattoni Development plans to build one gigawatt of data center capacity across North America over the next five years, driven by increased demand from the AI boom.

• Coming back: Torose Equities capitalizes on strong retail demand in Miami amid wealth migration, though CEO Scott Sherman notes a potential slowdown in consumer spending.

• Debt reduction: Macerich sold its 50% stake in Phoenix's Biltmore Fashion Park to Red Development for $110M, with proceeds earmarked for debt reduction and renovations.

• Mandatory relocation: Walmart employees face a difficult decision as the company mandates relocation to its Bentonville, Arkansas HQ or coastal hubs, with the alternative being job loss.

• Acquisition: A JV between Cousins Properties and Town Lane purchased the Proscenium office building in Atlanta for $83M, with plans for significant upgrades.

• Refinance: Westdale Real Estate secured a $115 million loan from Israeli investors to refinance the Epic I office tower in Dallas, aiming to attract new tenants following Uber's exit.

• FBI relocation: The Senate subcommittee approved $375 million for relocating the FBI headquarters to Greenbelt, Maryland, but the plan faces significant political hurdles and scrutiny.

• Off-market deal: RLJ Lodging Trust purchased Denver's Hotel Teatro for $35.5 million, enhancing its portfolio with this boutique property, which features strong location advantages.

• Dispute: Bondholders have sued JPMorgan Chase for allegedly failing to disclose complex ownership details of the Palmer House hotel in Chicago, complicating a $333 million foreclosure process.

A MESSAGE FROM ASHCROFT CAPITAL

​Join Travis Watts, Director of Investor Development at Ashcroft Capital, as he delves into the "Mark-to-Market Value-Add Approach" and how this approach redefines value-add strategies in Class A multifamily properties.

​This webinar will provide an in-depth look at how aligning rents to current market rates can significantly enhance property value and investor returns.

📈 CHART OF THE DAY