Good morning. It is Friday, June 26th, and this is Debt Desk.

Before we get into commercial real estate and multifamily debt, here is the broader morning brief.

The national backdrop this morning is being set by the courts, by inflation, and by the fact that immigration policy keeps landing back in front of the Supreme Court. The first headline to know is a fresh election ruling out of Boston. The Associated Press reported that a federal judge halted President Trump’s executive order that aimed to create a federal voter list and limit who could receive a mail ballot. The practical takeaway is that the administration’s effort to pull election machinery closer to Washington just ran into another constitutional wall. For markets and for business planning, that matters less because of the voting mechanics themselves and more because it is another reminder that aggressive executive actions are still meeting legal friction before they can become operating reality.

The second headline is the one with the clearest direct economic read. AP reported that the Federal Reserve’s preferred inflation gauge rose 4.1 percent in May from a year earlier, the highest annual reading in three years. Core inflation also moved higher, and the report reinforced the idea that the Fed is still dealing with an inflation problem, not a cooling economy that obviously justifies easier policy. That matters to this audience because every stubborn inflation print pushes rate-cut hopes further out and keeps financing conversations anchored to a higher-for-longer base case. Even when Treasury yields improve for a day or two, borrowers still have to price around the reality that policy relief is not arriving quickly.

A third national story came from the Supreme Court, which handed the administration another immigration win. AP reported that the justices allowed the government to end temporary protected status for Haitians and Syrians, while also clearing the way for the administration to potentially revive a restrictive asylum metering policy at the southern border. Put simply, immigration enforcement is still moving through the courts in big, consequential pieces, and the White House is still winning enough of those fights to keep labor, housing demand, and local political pressure as active policy themes through the summer. For cities, employers, and apartment owners, immigration policy is not abstract politics. It affects labor availability, household formation, shelter systems, and local spending.

Then there is New York, where another corruption case widened around the old Eric Adams orbit. AP reported that Frank Carone, Adams’s former chief of staff, was arrested Wednesday in a federal bribery case tied to a migrant shelter contract. Prosecutors say he helped steer business to a hotel that had already been rejected by city social services. The significance here is not just scandal fatigue. It is that one of the biggest urban stress stories of the last two years, migrant sheltering, keeps bleeding into procurement, public trust, and city operating risk. That does not immediately reset municipal credit, but it does keep the spotlight on governance quality in a city that remains central to U.S. real estate capital markets.

So the broad morning brief is fairly straightforward. Courts are still setting the boundaries of presidential power. Inflation is still hot enough to keep the Fed defensive. Immigration policy is still a live legal and economic driver. And major city governance stories are still producing fresh legal fallout. That is the national setting for today’s debt conversation.

Now let’s move into Debt Desk.

The first thing to know this morning is that the long end of the Treasury market improved again on the latest official print, but not enough to declare victory on borrowing costs. Using the verified Treasury data for June 25, the 2-year closed at 4.09 percent, the 5-year at 4.15 percent, the 10-year at 4.40 percent, and the 30-year at 4.86 percent. The latest official SOFR print is 3.62 percent for June 24. That combination is useful, but it is still a mixed setup. The front end remains restrictive enough to make floating debt expensive, while the long bond is still high enough that fixed-rate coupons are not exactly easy money.

The shape of the curve matters as much as the level. The 2-year and 5-year are sitting fairly close together, which tells you the market is not pricing a clean, fast easing cycle. Then the curve steepens out as you move toward the 10-year and especially the 30-year, which means duration still carries a real cost. For borrowers, that creates two different pressure points at once. Bridge debt is still painful unless there is a strong leasing, construction, or repositioning catalyst. Permanent debt is more appealing than it was a few weeks ago, but not so cheap that sponsors can ignore debt service, proceeds, and refinance gaps. That is why execution still feels selective even when the market tone sounds a little better.

You can see that selectivity in the deals that are actually getting done. Commercial Observer reported Thursday that Apollo, Affinius Capital, and RXR assembled a $785 million debt-and-equity package for 175 Third Street at Gowanus Wharf in Brooklyn. The project is expected to deliver 1,100 housing units and an 85,000-square-foot Life Time fitness center. This is exactly the kind of transaction worth paying attention to because it is large, complicated, and institutionally sponsored. A capital stack like that does not come together because money is loose. It comes together because high-conviction capital still wants scale, location, and a business plan it can defend.

The debt fund lane remains one of the clearest channels for transactions that require execution tolerance rather than plain-vanilla underwriting. Commercial Observer’s June 23 report on S3 Capital’s $102 million construction loan for the Press Building office-to-residential conversion in Hell’s Kitchen still matters this morning because it is a clean example of where private credit keeps winning. Conversions ask lenders to get comfortable with cost risk, timing risk, and lease-up uncertainty all at once. Banks can do some of that. CMBS usually does not want to. Debt funds can, if the pricing and sponsorship make sense. That is why this lane continues to belong to private credit.

Banks, meanwhile, are still lending, but the tone remains relationship-heavy and highly selective. On the multifamily side, Commercial Observer reported that Capital One provided a $96.2 million letter of credit to support construction of the 300-unit Edgemere Commons B2 affordable housing project in Far Rockaway. This is not the same as saying banks are back in full force for every market-rate construction deal. It is saying they are still showing up where there is policy support, structured credit enhancement, and a clear public-private framework. In other words, banks are open, but they still want explainable risk.

That same tone carries into conventional apartment refinancings. Commercial Observer reported this week that Mesa West Capital provided $82.5 million to refinance Olin Fields, a 352-unit apartment community outside Seattle, using a five-year nonrecourse loan. The point here is not just that one refinance closed. It is that lenders are still willing to provide durable takeout capital for stabilized or near-stabilized housing assets when the sponsor has already done the operating work. In this market, a refinance without drama is its own signal that credit is functioning.

HUD and FHA remain part of that functioning credit picture. Commercial Observer also reported this week that Dwight Capital refinanced a newly built multifamily project in Oregon City with $39 million of HUD-backed debt. That matters because the HUD lane continues to solve a specific problem in this market: borrowers who need longer-term, government-backed proceeds and are willing to trade speed for certainty. FHA execution is never the quickest route, but when proceeds matter more than velocity, it keeps earning a place in the stack.

The agencies still set the benchmark for clean multifamily execution. Freddie Mac’s latest issuance calendar shows K-7671 scheduled in the week of June 22 with a projected issuance size of about $965 million in a seven-year conventional fixed-rate deal. Fannie Mae on June 17 announced that multifamily bulk deliveries are now eligible for resecuritization, which is a technical change but an important one because it adds flexibility and liquidity around agency-backed apartment paper. The bottom line is the same one we keep coming back to: if a multifamily asset is clean enough to fit the agency box, the GSEs are still forcing the rest of the market to compete harder on spread, leverage, or speed.

CMBS is still open, but the tone remains split between new issuance and old-book stress. The freshest deal-specific reminder came from Washington. Commercial Observer reported Thursday that the $102 million CMBS loan backed by 425 Eye Street NW, a Department of Veterans Affairs office building, transferred to special servicing for imminent monetary default. That is not just another office problem headline. It is a reminder that legacy office exposure keeps shaping how investors and lenders think about securitized credit, even when multifamily and select industrial or mixed-use assets are still trading and financing.

The broader CMBS data tell the same story. Trepp’s latest monthly updates show the overall CMBS delinquency rate at 7.55 percent for May and the special servicing rate at 10.86 percent. Those are not catastrophic numbers by themselves, but they are elevated enough to keep securitized lenders disciplined. When the legacy book still carries that much ...