Author: Edward Brawer

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Tuesday, September 23, 2025, here’s what we’re covering today: Manhattan’s office market shows faint signs of life; the Fed’s rate cuts fuel cautious optimism for CRE investors; and rising commercial loan delinquencies signal ongoing stress.

Manhattan Office Leasing Shows a Pulse – We actually have some positive news out of the beleaguered office sector. Manhattan’s office availability rate is finally inching down, ever so slowly, after years of rising vacancies. August leasing activity hit about 3.7 million square feet – that’s over 20% higher than July and about one-third above the 10-year monthly average. Midtown South led the charge with several big new leases, helping push 2025’s leasing volume on pace to be the highest since 2019. Now, to be clear, vacancy levels are still near record highs – roughly one in five Manhattan office floors remains empty – but the fact that more tenants are signing deals is a welcome change. Landlords have been slashing rents and offering hefty incentives, and it seems some tenants are finally biting. It’s not a full comeback by any stretch, but for owners and investors, any uptick in demand is a breath of fresh air in a market that’s been suffocating. The hope is that this nascent momentum continues into the fall, especially as more companies firm up their return-to-office plans. For once, we’re talking about a few green shoots in the concrete jungle, rather than just more distress.

Fed Easing Boosts Investor Sentiment – Shifting to the macro scene, the Federal Reserve’s latest moves are injecting a bit of cautious optimism into commercial real estate. The Fed cut interest rates last week for the first time in ages, and Fed Chair Jerome Powell is set to speak later today – his first remarks since that rate cut. Investors will be hanging on his every word for clues about more rate reductions ahead. And indeed, markets are betting on at least two more quarter-point cuts by the end of the year. All this is starting to nudge borrowing costs down and brighten the mood in CRE. We’re already hearing that capital which sat on the sidelines is tiptoeing back into the market. Lower short-term rates are pushing some investors out of cash and into higher-yield assets like real estate. According to brokerage chatter, cap rates – which move inversely to property values – have begun to compress slightly in certain segments. Asset classes like industrial and multifamily are seeing the biggest pickup in buyer interest, since their fundamentals are strong and now financing is a bit more affordable. Even the retail sector, which has been relatively stable on pricing, could see more action if cheaper debt and renewed confidence bring buyers back for shopping centers and storefront assets. Now, let’s keep this in perspective – long-term yields are still relatively high, and lenders remain picky. Powell’s tone today will matter: if he reinforces that inflation is cooling and the Fed can keep easing, that could further bolster investor confidence. For CRE folks, a gentle downward trend in interest rates is hugely relieving after the pain of the past two years. Deals penciling out at 7% or 8% loan rates might finally work at 6% or below. So, cautious optimism is the phrase of the day – the outlook is improving, but nobody expects a sudden flood of easy money or a return to 2021’s frenzy. Prudent investors are slowly stepping back in, but they’ll be listening closely to the Fed’s guidance to see how far and fast this easing cycle might go.

Loan Delinquencies on the Rise – Finally, a reality check on the financial side: new data shows commercial mortgage delinquencies are climbing, underscoring that parts of the industry are still under serious stress. In the second quarter of 2025, the delinquency rate on loans packaged in CMBS (commercial mortgage-backed securities) jumped to about 6.4% – up nearly half a percentage point from Q1 and marking the highest level since 2013. The main culprits? Office and multifamily properties struggling to cover their debt. We’re seeing more office landlords default or seek extensions as leasing weakens their cash flow, and some multifamily owners are coming under strain too (especially those hit with higher interest payments after rate hikes). What’s noteworthy is that delinquencies ticked up across all major lender categories – not just CMBS. Banks, life insurance companies, and even the typically rock-solid Fannie Mae and Freddie Mac portfolios saw slight increases in late payments, though their delinquency rates remain very low (around half a percent or so for most). In other words, the stress is broadening out, even if it’s still most acute in securities and loans tied to riskier properties. This trend has real implications: lenders are likely to stay defensive and selective, making it harder for borrowers to refinance maturing loans, and special servicers will be busy with loan workouts. We could see a pickup in distressed sales or restructurings heading into 2026, especially for outdated offices or overleveraged apartment buildings that can’t find new financing. The silver lining? If interest rates continue to fall as we discussed, some of these troubled loans might get a lifeline – lower rates could improve debt service coverage or open the door to refinances that weren’t possible a few months ago. But for now, rising delinquencies remind us that the hangover from the high-rate environment isn’t over. CRE investors should stay vigilant: even as optimism grows in some corners of the market, the debt side is flashing some warning signals that merit caution when allocating capital.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael — Until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Monday, September 22, 2025, here’s what we’re covering today: the Fed cuts rates at long last, but CRE still seeks clarity; regional banks adjust lending as prime rates move; and the proposed Paramount-Rithm deal shines a light on Manhattan’s office revival.

The Federal Reserve has finally made its move: rates are down by 25 basis points, marking the first cut of 2025. CRE markets have been waiting for this signal, and while it offers some relief, the bigger story is how officials framed what’s next. The updated Fed projections suggest at least two more rate reductions could happen this year—depending on how inflation and labor trends evolve. For real estate investors, that’s a mixed bag. Lower rates ease financing costs, which helps with refinancing and development deals. But because inflation hasn’t cooled as much as hoped, lenders are still cautious. Deal flow isn’t expected to immediately rebound, but underwriting assumptions may gradually loosen.

Next up, banks are responding quickly. Major U.S. lenders like JPMorgan, Citi, Wells Fargo and Bank of America have already lowered their prime lending rates from 7.50% to 7.25% following the Fed cut. That change matters more than it may seem—it filters down into many commercial loans, business credit and mortgages, loosening some of the tight credit conditions that were crimping CRE activity. For property developers and investors locked into high borrowing costs, even small rate adjustments can shift what deals are viable. It doesn’t fix everything—credit is still expensive, and many loans are still priced for risk. But easing prime rates is a key sign that banks are aligning with the Fed’s move.

Finally, the proposed Paramount Group acquisition by Rithm Capital is getting renewed industry attention. The deal values the REIT at $1.6 billion and has sparked discussion in Manhattan about whether office values have truly turned a corner. Paramount’s portfolio—13 million square feet of office space in Manhattan and San Francisco—was reported to be more than 85% leased in recent filings, one of its strongest leases in years. Rithm is betting big on recovery, assuming that solid tenants plus improving demand will justify the risk. Some shareholders argue the valuation still underestimates the upside, especially for properties repositioned for hybrid work or upgraded amenities. If the deal closes (expected in Q4), it could set a benchmark for how investors are pricing top-tier office assets in urban cores.

So what does this all mean for you in CRE? The Fed’s rate cut gives breathing room. Banks adjusting prime rates shows willingness to restart credit. And the Paramount deal is a real underline: the market’s not dead, but it’s picking its winners. That said, caveats remain—some sectors might lag for longer, especially older offices in secondary markets. But today’s developments signal that hope has shifted from “just endure” to “position for recovery.”

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael—Until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Thursday, September 19, 2025, here’s what we’re covering today: a major shakeup in the multifamily sector as a homebuilder bows out; trophy office and industrial deals defy a struggling market; and the Fed’s first rate cut in a year sends mixed signals for real estate investors.

First, a shakeup in apartment development. Luxury homebuilder Toll Brothers is exiting the multifamily business entirely, and it’s doing so with a splash. Toll is selling off its entire “Apartment Living” division – basically all of its interests in apartment and student housing projects – to Kennedy Wilson, a global real estate investment firm. The price tag: roughly $350 million upfront. For that, Kennedy Wilson gains Toll’s stakes in 18 existing apartment and student housing properties (worth about $2.2 billion collectively) and a development pipeline of 29 future projects (worth another $3.6 billion upon completion). In short, a huge portfolio of rentals is changing hands. Toll Brothers is getting out of the landlord game to refocus on its core homebuilding business, while Kennedy Wilson is doubling down on rentals. Why does this matter? It’s one of the most significant consolidations in the multifamily sector this year. Toll Brothers stepping away signals how challenging and capital-intensive the development side has become – rising construction costs, high interest rates, you name it – even big players are retrenching. Meanwhile, Kennedy Wilson sees opportunity, effectively saying: we’ll take those assets off your hands. They’re also picking up Toll’s experienced apartment management team in the deal, which gives them instant scale and expertise. For investors, this underscores a trend: strong operators with cash are swooping in to acquire portfolios from those looking to lighten their load. It’s a changing of the guard in multifamily, and it shows that even in a murky market, there’s capital ready to pounce on the right opportunities.

Next, let’s talk commercial property deals – specifically in offices and industrial – where we’re seeing a real tale of two markets. The office sector as a whole is still on the ropes in many cities – high vacancies, falling rents, distress stories left and right. But even so, top-quality buildings are still trading for top dollar. Case in point: one of the biggest office sales in Los Angeles this year just closed. Tishman Speyer sold Maple Plaza, a prominent 290,000-square-foot office property in Beverly Hills, for about $205 million. The buyer? Kilroy Realty, a major office REIT known for high-end West Coast properties. That price – roughly $707 per square foot – shows that investors will pay up for prime location and solid tenants. Tishman had owned that building for 20 years and doubled its money, even in today’s environment. And it’s not just LA seeing confidence in trophy assets. Up in Washington State, we saw a $225 million deal for a pair of office buildings fully leased to Microsoft. A private investor group (Preylock) bought those at Esterra Park in the Seattle suburbs. Now, let’s be clear: deals of this size are extremely rare these days for offices – they stand out precisely because the broader office market is so strained. But these sales prove there’s a bid for the “best of the best.” Well-leased, well-located offices – think tech headquarters, iconic addresses – are still deemed long-term winners. At the same time, lesser offices are struggling to find buyers at almost any price. We’re talking older, half-empty towers trading at huge discounts or falling into foreclosure. So, for office investors, the gap between winners and losers is widening. Quality and leasing matter more than ever.

Now, on the industrial side – it’s almost the inverse story: the sector is hot across the board, and expansion continues at a healthy clip. A great example this week: Trader Joe’s just bought a massive new distribution center in Colorado. The grocery chain paid about $70 million for a brand-new, 614,000-square-foot warehouse outside Denver. That’s a big move aimed at bolstering their supply chain in the Mountain region. It shows that even as e-commerce growth has moderated, companies still need modern logistics facilities to keep stores stocked and online orders flowing. In fact, demand for large, well-located warehouses remains fierce. We’re seeing developers and investors continue to pour into key industrial markets. Phoenix, for instance, just attracted a new entrant – IDI Logistics snapped up a 100,000-square-foot warehouse there as its first foothold in Phoenix, betting it can lease it quickly. So, unlike office, industrial real estate hasn’t lost its momentum. Vacancies are low, rents are high, and end-users like retailers, grocery chains, and manufacturers are still expanding their warehouse footprint. For those invested in industrial, the fundamentals in 2025 remain solid, and the sector is proving to be a continued bright spot in commercial real estate.

Finally, let’s zoom out to the macro picture – interest rates and the economy – because this backdrop influences all CRE sectors. The Federal Reserve just delivered its first interest rate cut since last year, responding to some clear signs of economic cooling. They trimmed the benchmark rate by a quarter point, bringing it down to a target range of around 4%. Now, normally a rate cut is welcome news for real estate – cheaper debt is a relief when we’ve been through a storm of rate hikes. But the Fed’s message this time was cautious. Fed Chair Jerome Powell basically said: “We’re cutting, but don’t get too excited just yet.” Why? Inflation is still running around 3% – not far off, but above the Fed’s 2% goal – and recent data showed prices picking up in August for things like housing and food. Plus, oil prices have been on the rise, which could keep inflation sticky. On the other hand, the job market is finally showing some cracks – unemployment has ticked up into the low 4% range after being at historic lows, and job growth has been slowing. That softening labor market is exactly why officials like Neel Kashkari (over at the Minneapolis Fed) argue that more rate cuts may be appropriate. Kashkari said this week he thinks the Fed might need to cut rates a couple more times by year-end if the job market continues to weaken. So we have a bit of a push-pull: the Fed is opening the door to easier money, but they’re also signaling any further moves will depend on inflation behaving itself.

What does all this mean for CRE investors? In the short term, don’t expect an immediate windfall. Borrowing costs are likely to come down only gradually. In fact, right after the Fed announcement, long-term bond yields actually rose slightly – the 10-year Treasury went up as markets digested the nuanced outlook. Remember, mortgage rates and commercial loan rates key off those longer-term bonds, not just the Fed’s rate. So, 30-year mortgages are still hovering around the mid-6% range and cap rates for prime properties haven’t budged yet. The Fed’s cautious tone gave lenders and investors a bit of pause – it’s not the all-clear signal bulls were hoping for. That said, the direction of travel has changed. We’re no longer talking about rate hikes; we’re talking about cuts and easing of financial conditions. That trend, if it continues, could stabilize property values and make refinancing a little less painful going into 2026. We also got strong retail sales data recently – consumer spending in August jumped more than expected. That resilience is a double-edged sword: it keeps cash registers ringing for retailers (good for retail landlords), but it also means the economy isn’t cooling fast, which could complicate the inflation fight. For now, CRE investors should stay nimble. We’re in a period of transition – monetary policy is shifting, but we’re not out of the woods. The best strategy is to watch those inflation reports and Fed signals closely, because the path of interest rates from here will heavily influence real estate financing and pricing in the months ahead.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael — until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Wednesday, September 18, 2025, here’s what we’re covering today: the Fed’s long-awaited rate cut finally arrives, a $1.6 billion bet on beleaguered office towers, and new signs of capital flowing back into real estate.

The Fed Blinks on Interest Rates: The Federal Reserve has cut interest rates for the first time since last year, trimming its benchmark by a quarter-point to 4.00%–4.25%. It ends a long pause and marks a tentative pivot away from the “higher for longer” stance. For context, this is the first rate reduction since December 2024, signaling a long-awaited turn in monetary policy. For commercial real estate, this is a welcome relief – but not an instant cure. Borrowing costs remain high, yet a lower rate trend could start to thaw frozen dealmaking. The Fed hinted at possible further easing, though it’s still wary of inflation. The bottom line for investors: cautious optimism. Refinancings and new projects might pencil out a bit easier now, and just as importantly, the psychological tide is turning. We may not see values rebound overnight, but the outlook is improving for the first time in a while.

Paramount’s Fire Sale – Betting on an Office Rebound: In the office sector, we have a blockbuster deal born of distress. Rithm Capital is buying Paramount Group – an office REIT with landmark towers in New York and San Francisco – for roughly $1.6 billion cash. Paramount’s gleaming skyscrapers were struggling with vacancies and debt, and its stock had been beaten down. In fact, even heavyweights like Blackstone and Vornado reportedly showed interest before Rithm ultimately sealed the deal. Now Rithm is swooping in at a bargain-basement price, essentially betting that prime urban offices will recover in the long run. It’s a bold contrarian play at a time when many have written off big-city offices. The sale price represents a steep discount to what those buildings were worth a few years ago. But the thinking is: buy low now, profit later if leasing demand returns. It’s a reminder that not every office is doomed – the highest-quality properties in great locations still have suitors. For investors, this move highlights how turmoil can create opportunity. If Rithm is right, they’ve snapped up trophy assets on the cheap and could ride the recovery when the pendulum swings back.

Financing Thaws: Big Refi and Big Bank Moves: Finally, some encouraging news on the financing front. In New York, Brookfield just nailed down a $1.25 billion refinancing for its Five Manhattan West office tower – a 1.7 million-square-foot building that’s fully leased to blue-chip tenants like Amazon and JPMorgan. That huge loan, backed by major lenders, shows that banks will still write big checks for top-tier assets even amid an office slump. Meanwhile, J.P. Morgan is expanding its real estate lending arsenal by securing a special Freddie Mac license to boost affordable housing loans. In other words, one of the nation’s biggest banks is committing more capital to multifamily projects, especially in the affordable space. Both developments are signs that capital is cautiously flowing back into commercial real estate – at least for the right deals. Quality assets and essential housing are finding financing, which bodes well as the market looks to stabilize. It’s another signal that as interest rates ease, lenders and investors are tiptoeing back into the game.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael—Until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Wednesday, September 17, 2025, here’s what we’re covering today: Rithm Capital bets on an office market rebound with a $1.6 billion Paramount Group deal; a $1.1 billion multifamily portfolio recapitalization highlights creative financing in apartments; and the Fed eyes a rate cut as housing construction slumps.

Our top story is a bold wager on the beleaguered office sector. Asset manager Rithm Capital has agreed to acquire Paramount Group – a New York-based office REIT – for about $1.6 billion in cash. Paramount owns a portfolio of prime office buildings in New York City and San Francisco. Rithm’s CEO calls the deal a “springboard” to expand their real estate platform, showing conviction that big-city offices will bounce back. It’s a gutsy move: the office market’s been hammered by remote work, high interest rates, and plunging values, with office loan distress at record highs. By buying at a discount, Rithm is effectively betting the bottom is in. If they’re right, they’ll have picked up marquee assets on the cheap and could lead a broader revival in office investment. The deal still needs Paramount shareholder approval, but it’s set to close by year-end.

Meanwhile in multifamily, a huge apartment deal is getting done through creative means. Fairfield Residential and Sunroad Enterprises just recapitalized a $1.1 billion apartment portfolio instead of a full sale. Sunroad spent years assembling 15 properties – nearly 3,800 units across six Sun Belt states – and now they’re partnering with Fairfield to inject fresh capital. JLL arranged new financing, including a major Freddie Mac loan and equity from KKR. The strategy lets Sunroad cash out some equity and continue to co-own the assets, while Fairfield deploys capital into a mix of stabilized and value-add communities. It’s a sign of the times: apartment fundamentals are solid, but higher interest rates have made traditional sales tougher. Recapitalizations like this provide liquidity without selling at today’s softer prices. Big lenders and investors are still willing to back quality multifamily deals, even if it means structuring them in novel ways.

On the macro front, all eyes are on the Federal Reserve today. The Fed is widely expected to announce a quarter-point interest rate cut this afternoon – the first cut in almost a year. For real estate investors, even a small rate drop could ease financing costs that have been weighing on deals. But it comes as economic signals turn cautious. New data shows single-family housing starts and permits fell in August, with building permits now at their lowest since early 2020, in the depths of the pandemic. Moody’s Analytics warns that the slump in permits is a serious recession signal. The central bank is trying to engineer a soft landing – offering just enough rate relief to cushion the job market without rekindling inflation. Still, the prospect of lower rates is welcome news for the CRE market after a long stretch of tightening.

Before we wrap up, a quick note on industrial real estate: Electric vehicle maker Rivian just broke ground on a massive $5 billion factory project in Georgia. The 2,000-acre plant will eventually produce hundreds of thousands of EVs annually and create thousands of jobs. It’s one of the largest industrial developments in years, underscoring that demand for specialized production and logistics space remains strong in some areas, even as other sectors slow.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael—until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Tuesday, September 16, 2025, here’s what we’re covering today: the Fed appears poised for a long-awaited interest rate cut amid new political pressure; a legal fight over rent-setting algorithms shakes up the multifamily sector; and major deals in retail, industrial and development reveal where investors are placing bets.

Federal Reserve Set to Ease Up

For the first time in over a year, the Federal Reserve is poised to trim interest rates this week as economic signals soften. The Fed’s meeting begins today, and markets overwhelmingly bet on a quarter-point rate cut to finally ease borrowing costs after a long stretch of hikes. Job growth has essentially stalled and unemployment ticked up, giving policymakers cover to shift course. In a twist, President Donald Trump on Monday publicly demanded an even “bigger” cut, claiming it would ignite the housing market – an unusual dose of political pressure on the central bank. Commercial real estate investors would welcome any rate relief, since high financing costs have been choking deals. But a cut now also flags a cooling economy that could pinch tenant demand. All eyes are on what the Fed will signal in its decision tomorrow about the path ahead.

Rent-Setting Algorithms Under Fire

A high-stakes showdown is underway in the apartment sector over rent pricing software. RealPage – a tech firm whose algorithm helps landlords set rents – is fighting back after a federal lawsuit accused it of enabling price-fixing. The company now plans to sue cities that banned its software, arguing officials are overreaching because its tool merely suggests prices rather than fixing them. So far, at least nine cities including San Francisco and Philadelphia have outlawed algorithmic rent-setting amid fears it drives up housing costs. The outcome could set a national precedent for how far tech can go in influencing rents. If RealPage loses, big landlords may have to go back to the old way of pricing units, a win for regulators pushing affordability. Multifamily investors are watching closely, as this clash highlights the tension between embracing AI efficiency and guarding against anti-competitive practices.

Big Deals Reveal Selective Optimism

Even as many buyers sit tight, some notable real estate deals are proving that capital will flow to perceived safe bets. In Florida, a Whole Foods-anchored shopping center in Boca Raton just sold for about $118 million – a hefty price that shows grocery-anchored retail is still coveted for its steady foot traffic. In industrial real estate, a partnership secured a $180 million refinancing for a 34-property outdoor storage portfolio across multiple states. Lenders remain willing to bankroll well-located logistics assets where demand stays solid. And out in Arizona, ground just broke on a massive $2 billion mixed-use development in Mesa that will bring millions of square feet of offices, housing, retail, and a resort hotel. Kicking off such a mega-project now signals long-term confidence in the Sunbelt’s growth prospects despite near-term uncertainty. Together, these moves underscore that while much of the market is cautious, money is targeting necessity retail, core industrial sites, and Sunbelt growth projects as bright spots.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael—until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Monday, September 15, 2025. Here’s what we’re covering today: the Federal Reserve looks ready to cut interest rates amid a slowing economy; major players are closing big real estate deals across apartments, retail and more; and rising loan defaults are pushing commercial real estate distress to new highs.

First, the macro backdrop is tilting toward lower interest rates. Inflation has settled near the Fed’s target, but the labor market has hit a wall. August saw almost no job growth, and prior months were revised down sharply – unmistakable signs the economy is losing momentum. With price pressures modest and growth faltering, the Fed is widely expected to cut rates by a quarter point at its meeting this week. For commercial real estate, a rate reduction would be welcome news: cheaper debt could breathe life into deals and refinancings that stalled when borrowing costs surged. However, that relief comes only because the economy is weaker – easier credit might spur activity, but weaker growth could also mean softer demand for space. CRE investors are happy about the prospect of lower financing costs, but they’re staying cautious given the economic headwinds behind it.

Next, despite uncertainty, big deals are still happening in commercial real estate. August’s transaction volume dipped slightly after a busy July, but we still saw several headline deals across sectors. In multifamily, Cortland Partners is set to buy 19 apartment communities for about $1.6 billion as one real estate trust exits the market. In retail, a venture just paid roughly $332 million for a Los Angeles mega-mall with plans to reinvent the aging property. All told, these deals show that well-capitalized players still have appetite for CRE, especially in segments viewed as long-term winners – from rental housing to modern logistics facilities. Sellers have adjusted to the new pricing reality: deals now reflect higher interest rates, and some owners are even taking losses to offload properties. But the fact that buyers are writing big checks in this environment is a vote of confidence in the assets they’re targeting. If the Fed’s rate cut comes through, it could give deal-making a boost by making financing slightly cheaper. In short, the investment market isn’t frozen – it’s selective but active wherever the fundamentals look strong.

Our final story is the growing distress in commercial real estate loans. New data shows the share of commercial mortgages in trouble has climbed to its highest level in over a decade – roughly 12% of loans in CMBS are now delinquent or in default. The main culprit is the “maturity wall”: a wave of loans from the last boom coming due now, just as interest rates have skyrocketed. Many owners can’t refinance their old low-rate debt at today’s much higher rates, and a significant number are defaulting instead. It’s not just office towers feeling the pain – some apartment complexes and shopping centers have gone delinquent after failing to replace maturing mortgages. Lenders are ramping up foreclosures and workouts as more borrowers decide to give up properties. For property owners, it’s a warning sign that values – especially for older or less-competitive buildings – are under serious pressure. But for investors with cash, this shakeout could open the door to buy solid assets at distressed prices. The key is separating the gems from the junk: only the stronger properties will attract buyers and new financing in these fire sales. The bottom line: managing debt is now the name of the game, and those with strong balance sheets and patience may turn this turmoil into opportunity.

That’s all for now. We’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael – until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Wednesday, September 11, 2025, here’s what we’re covering today: CRE deal volume hits a 2025 peak led by multifamily; a $1 billion bet on distressed properties; and the Fed finally signals an interest rate cut ahead.

First up, commercial real estate deal activity is showing signs of life. July saw a 10% jump in transaction volume over June – the strongest month of the year so far, according to LightBox’s nationwide tracker. Mid-sized deals in the $50–$100 million range surged, with 72 sales recorded (up from 58 the month prior) as investors pivoted toward more manageable assets. Multifamily led the charge, accounting for the bulk of those mid-market deals and topping the list of big-ticket sales as well. Even hotels showed renewed life with a handful of trades after a quiet June.

However, not every sector is sharing in the rebound. Office properties remained the outlier, barely registering a handful of significant deals – a clear sign of continued caution around that segment. Still, the overall uptick in deal-making suggests that plenty of buyers and sellers are finding ways to transact despite higher financing costs. Industry analysts note that ample capital is hunting for stable cash flow, which is why apartments and industrial assets are drawing most of the attention. There are headwinds looming – a softening jobs picture, volatile Treasury yields, and a tick up in inflation could all temper investor confidence heading into the fall – but for now, deals are getting done. It seems some investors aren’t waiting on the Fed to blink; they’re adjusting to the new normal and chasing opportunities where they see long-term demand.

Meanwhile, big players are gearing up for a wave of distress. Cottonwood Group, a Los Angeles investment firm, just closed a $1 billion fund focused on distressed commercial real estate. That’s double the $500 million they initially targeted, reflecting strong investor appetite to pounce on troubled assets. About $300 million is already deployed, mainly through loans that give Cottonwood the option to take control of properties if borrowers default. The strategy is clear: with an estimated $2 trillion in commercial mortgages set to mature by 2027, many property owners will struggle to refinance in today’s high-rate environment. This fund sees a once-in-a-decade chance to scoop up properties on the cheap if owners can’t cover their loans.

And it’s not just specialty funds moving in – traditional lenders are starting to offload risk as well. Just this week, an Indiana-based bank agreed to sell nearly $870 million of commercial real estate loans to Blackstone at roughly 95 cents on the dollar. In effect, the bank is trimming its exposure to long-term CRE debt, taking a small haircut now to shore up capital. For Blackstone’s debt arm, it’s an opportunity to buy a large portfolio of performing loans at a discount. This follows a broader trend of private equity stepping in where banks fear to tread: over the last two years Blackstone has acquired tens of billions in real estate loans from banks looking to reduce risk. The big picture? Stress is building in parts of the market – especially in office and other sectors under pressure – but there’s a war chest of opportunistic capital assembling to pick those bones clean. For investors, the message is mixed: distress is becoming very real, but well-funded players stand ready to snap up the bargains, which ultimately could help put a floor under falling property values.

Finally, let’s turn to the macro scene, where all eyes are on the Federal Reserve. It’s looking more likely that the Fed will cut interest rates next week – the first rate reduction of the year. A Reuters poll of economists released this morning shows an overwhelming consensus that a quarter-point cut is effectively a done deal at the Fed’s September meeting. What’s changed? In short, the job market is finally showing some cracks. August’s employment report came in weak, and the Labor Department also revealed that job growth was significantly lower over the past year than previously thought. That labor market softness is overshadowing inflation concerns for the moment.

Now, inflation did tick up slightly in August – the Consumer Price Index rose about 2.9% year-over-year, up from 2.7% in July – but that level isn’t ringing alarm bells like it was a year ago. With price growth relatively contained and the economy clearly downshifting, Fed Chair Jerome Powell and company have been hinting that some modest easing is in order. Markets have taken the hint: investors are fully pricing in a rate cut, which would bring the Fed’s benchmark down to roughly a 4.0%–4.25% range. Many on Wall Street even expect another cut after that by year-end if current trends continue. For the real estate world, this is a welcome sign. Higher interest rates have been the number one headache for CRE deals and valuations this past year. Even a small cut should provide a bit of relief – lowering borrowing costs at the margin and, perhaps more importantly, boosting investor sentiment that the worst is behind us. That said, no one is expecting a return to rock-bottom rates anytime soon. The Fed is likely to telegraph caution, emphasizing that it’s not taking its eye off inflation. In other words, think of this as the start of a long, gradual exhale for the market – a step toward more normal financing conditions, but one taken carefully and incrementally. CRE investors will take it. Any signal of monetary relief, however slight, could help stabilize cap rates and get more buyers off the sidelines as we head into the end of the year.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael—Until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Wednesday, September 10, 2025, here’s what we’re covering today: a billion-dollar push into affordable housing, a massive industrial real estate deal, and new warnings about a commercial refinancing crunch.

Our first story: investors are making a big bet on affordable housing. Manulife Investment Management and Los Angeles-based TruAmerica Multifamily have launched a joint venture committing $1 billion to preserve affordable apartment communities. The partnership, named Anchor Point Residential, is kicking off by acquiring a portfolio of 6,000 income-restricted units across 51 properties in California, Texas and Washington. These are Low-Income Housing Tax Credit (LIHTC) projects, many at risk of losing their affordability as their compliance periods end. By taking over the general partner stakes, the JV will keep rents affordable while aiming for steady returns. And it’s timely – hundreds of thousands of older affordable units nationwide are nearing the end of their mandated rent restrictions in the next few years. Why it matters: demand for affordable housing far outstrips supply. Big institutional capital stepping in signals confidence that subsidized housing can be both a social good and a solid investment. With market-rate apartment deals slowing, investors are finding opportunity in segments backed by government incentives and reliable occupancy.

Next up, a blockbuster industrial sale shows where investor appetite remains strong. New Mountain Capital just closed on a $640 million acquisition of a net-lease portfolio spanning 53 industrial and manufacturing properties. It’s the largest deal to date for New Mountain’s net-lease strategy. The seller wasn’t named, but the hefty price tag suggests high conviction in the industrial sector. New Mountain deployed a dedicated fund to seize this opportunity, even as higher interest rates have cooled some deals. Big picture: while office buildings struggle, well-leased industrial facilities continue to attract major capital. Investors with dry powder are cherry-picking portfolios that offer reliable cash flow from long-term tenants. This bet assumes that e-commerce and manufacturing demand will keep warehouses and factories resilient despite rising financing costs.

Our third story is more cautionary: commercial real estate faces a looming debt refinancing wall, and banks are feeling the pressure. A new Moody’s report warns that roughly 63% of U.S. bank CRE loans mature by the end of 2025 – an amount nearly equal to those banks’ total common equity. Refinancing that much debt is a high-wire act. With interest rates still elevated, many property owners can’t replace their loans without sharply higher costs or lower valuations. Lenders are responding by granting short-term extensions – often six to twelve months – hoping that rates fall next year. For investors, it’s a double-edged sword. Fewer immediate loan defaults mean less forced selling right now, but it sets up a high-stakes test late next year. If borrowing costs stay high and fundamentals don’t improve, more owners could default once those extensions expire. Office properties are particularly vulnerable, with national office vacancies around 20% today versus roughly 15% pre-pandemic. Moody’s has even placed several regional banks on watch due to heavy CRE exposure. The takeaway: the lending environment is likely to stay tight. Potential relief, like Federal Reserve rate cuts, is on the horizon but uncertain. Until borrowing costs come down, refinancing will remain challenging, and investors may demand better pricing to compensate for added risk.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael—until next time!