US Banks Report Best Loan Demand for First Time in Two Years

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Good morning. U.S. banks reported no change in commercial and industrial loan demand last quarter, the strongest result in two years, according to a Federal Reserve survey released Monday.

Today’s issue is brought to you by 10 East—a membership-based investment firm focused on private market exposure.

📆 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.

🎙️ 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.

Market Snapshot

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• Allegedly: Arbor Realty Trust (ABR) faces an investor lawsuit that alleges the firm hid a ‘toxic’ portfolio to inflate its share price. ABR’s financials have also been investigated by the government.

• Money woes: NYC's infamous MTA projects a $900M deficit in 2027–2028 due to fare evasion and CRE tax shortfalls, prompting upcoming expense cuts and fare hikes.

• Resilient assets: Starwood (STWD) CEO predicts that AI investment will soon decline, highlighting real estate as a safe haven with Fed rate cuts expected soon.

• Coastal crunch: In Hawaii and California, current housing costs can eat up over 70% of local per capita income, making them highly overvalued residential markets.

• Construction conundrum: Rising costs and high interest rates are causing a surge in abandoned commercial construction projects across the U.S.

• Housing highs and lows: NY leads the nation as the priciest state for student housing at $2,487/mo. Meanwhile, Wyoming was the most affordable state at <$550/mo.

• Full-cycle: Conserve Holdings has closed the Spartanburg portfolio. The assets were acquired in early 2021 and completed a successful value-add renovation, resulting in an impressive 21% IRR for investors.

• ADU revolution: NYC’s Mayor Adams is pushing a City of Yes proposal for accessory dwelling units that would create 26K–40K units over 15 years, spurring housing growth.

• Residential rebound: June ended with a staggering $928B in total private residential construction spending nationwide, up 7.3% from the previous year.

• Too hot to handle: The Sun Belt's apartment REITs face challenges as new construction saturates the market, leading to increased concessions and cautious optimism about future growth.

• Squeezing the stone: Dan Hosseini is planning a 54-unit complex on a Woodland Hills parking lot in LA, including ground-floor shops, 41 parking spots, and 6 affordable units.

• Midwest gem: One Liberty Properties bought a 236.3 KSF Iowa industrial property on 23.5 acres bordering Nebraska for $28.3M.

• SoCal shifts: The LA industrial market is slowly adjusting to cooling demand due to the influx of new properties, although there seems to be higher deal activity among smaller users.

• Capitalizing in Cali: Staley Point Capital and Bain Capital Real Estate acquired two SoCal industrial properties featuring 26 dock-high loading doors and totaling 232 KSF for $42.6M.

• Transformation: Stotan Industrial bought a 16.6 KSF DuPage County office in Chicago, which it plans to convert to warehouses, for $8.2M (or $495 PSF).

• Fashionable deal: Vornado Realty Trust (VNO) is set to sell a part of Uniqlo's flagship store in Manhattan at 666 Fifth Ave., yielding $340M, which will be used to pay off debts.

• Simon says: Simon Property Group (SPG), America's largest mall owner, reported record Q2 real estate NOI, 95.6% occupancy, and $493.5M net income.

• Redefining refinancing: JMB Realty refinanced a 66-story tower on Chicago’s Michigan Avenue with a $180M loan for 831.4 KSF of commercial space.

• X marks the spot: Social media giant X (formerly Twitter) exited a 463 KSF office space in San Francisco and is relocating to San Jose and Palo Alto.

• Greenwich gamble: Columbia Property Trust is seeking a short sale of a $250M Greenwich Village office building with a $270M mortgage.

• Downsizing done right: Fannie Mae (FNMA) downsizes, renewing its lease in D.C.'s Midtown Center for 340 KSF, or half its previous space, in a long-term deal.

• Towering lease: Bain Capital renewed and expanded its HQ lease at BXP's 200 Clarendon St. in Boston, now totaling 378 KSF.

• Foreclosure fiasco: CGI Merchant Group lost control of the Waldorf Astoria in Washington, DC, in a foreclosure auction after buying it for $375M from the Trump family just two years ago.

• Sky-high luxury: Signia by Hilton (HLT), Atlanta's largest hotel in 40 years, stands 453 feet high and offers 976 guest rooms and 100 KSF of meeting space.

• Standard to Public: Hoteliers Scheetz and Schrager secured a $121M loan for a former Standard hotel in West Hollywood that they plan to redevelop as part of the Public brand.

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.

📈 CHART OF THE DAY