← The TreppWire Podcast: A Commercial Real Estate Show
The TreppWire Podcast: A Commercial Real Estate Show
379. Squaring the Macro Circle, The Retail Rationalization, Multifamily Recalibration, & Lodging Capital Rotation
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Foreign.
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Welcome to the Tripwire Podcast, the show where commercial real estate meets data and insights. This is our week in review for the week ending February 13, 2026. I'm Hailey Keen with Trep, a data modeling and analytics firm for the CMBS Commercial Real Estate and CLO Markets. I'm with Lonnie Hendry, Chief Product Officer and Steven Bushbaum, head head of Applied Research and Analytics. This week kicked off with Tuesday's retail sales print which came in softer than the market wanted and you could feel the tone shift pretty quickly. Treasury yields dropped and investors started to lean into the idea that if the consumer is cooling then the jobs number could disappoint too. We also saw the January jobs report. It was a reminder that this cycle keeps refusing to give anyone a clean narrative. Payrolls came in stronger than expected, unemployment held in the low fours and wages were still firm. So the market had to reconcile cooling consumer with still hanging in labor. From there we'll pivot into CRE and specifically the retail stress headlines that keep stacking up. We've had a fresh wave of store closures and restructuring spanning apparel, restaurants and department stores including names like Eddie Bauer, Francesca's, Pizza Hut, Red Lobster and Saks. And we'll talk through what that means for shopping centers, malls and leasing momentum. And finally we're going to spend some time on multifamily because there's been a lot. We'll unpack the latest in the high profile antitrust fight involving rent setting algorithms and we'll also hit big strategic moves like Camden signaling it's exiting California. A pretty loud statement about where capital wants to be and where it doesn't. Let's get into it. Steven, can you walk us through this week's macro data and distill what this all means for crew?
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Well, sequencing was quite interesting this week on the macro side. On Tuesday the retail sales hit and immediately pushed the market into a more cautious posture. Yields fell and you could tell investors were bracing for a weaker jobs backdrop or at least a report that would confirm the economy is losing speed. The 10 year treasury yields declined from about 4.22% as of mid morning on Monday to about 4.14% by mid morning on Tuesday after after that retail sales report dropped. And so let's look at what rattles investors and triggered that flight to safety trade. The December retail sales report came in essentially flat at 735 billion month over month which was a miss versus expectations that were looking for a rebound. And it reinforced the idea that the consumer may be Losing a little momentum heading into 2026. The weakness was concentrated in more discretionary categories, I think, much like we all would expect. Reports showed declines in areas like furniture and home furnishings, electronics and appliances, and even restaurants slipped slightly with a few areas like building materials, slash garden, gas stations, and food and beverage. Those all held up better. Importantly, the consensus numbers are seasonally adjusted, but not inflation adjusted. And the release itself was delayed, slash rescheduled after the government shutdown, which also added to the market's sensitivity. So the immediate market read through was growth scare. So treasury yields sank, and investors started leaning into the idea that Wednesday's job report could come in soft, pulling forward the conversation about eventual Fed cuts. I mean, the text I was getting from my friends that, you know, we all love to do economic forecasting and, you know, speculation, it was. It was wild. But after that jobs report hit, the texts all of a sudden had a lot different emojis attached to them. Wasn't exactly what my friends and other investors were expecting. Or at least the headline number wasn't. So, Johnny, can you walk us through what happened with this week's labor report?
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Yeah, happy to do that, Stephen. But before we do that, I gotta take a second. Haley, are you texting your friends on macroeconomic news and forecast?
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I was wondering if you were gonna ask about that. I think I spend mostly the weekends doing that, but not during the week, Steven.
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Okay.
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Yeah, we got a little bit of insight into what Steven is spending his time on, and I gotta love it. I mean, like, we love the macro discussion. I'm not part of those group texts, in case anyone was wondering. Steven and I just connect on the macro here on the pod. So, yeah, non farm payrolls, you know, number came in sturdier than feared, adding about 130,000 payrolls. You know, Stephen, you hit on this a little bit, and Hayley did on the intro. Unemployment fell to 4.3%, down a tenth of a percent. You know, wage growth, though, is still running hot, and so you can't really just wave away the inflation risk. And I think that's the part that everyone is still a little bit concerned about. Sets up the big macro question for us. And Steven, you talked a little bit about this on the consumer side. Are we actually starting to see a consumer shutdown or slow down that eventually drags on hiring, or are we just rotating spending while the labor market stays resilient? I think that's one question that remains unanswered. I think there's additional layers here. If you look at the Revisions were a huge part of the payroll release this week. So nothing new there. But the BLS benchmark payrolls to the March 2025 universe counts. And that process took about 898,000 jobs off the seasonally adjusted payroll level, or 862,000 on a non seasonally adjusted basis. Those revisions materially rewrote, you know, how strong was last year. Story 2025 job growth was revised down from a positive 584,000 to just 181,000. So it reinforces how concentrated the job engine has been. If you look at this, Stephen, you know, healthcare was up about 82,000 of the 130,000 headline in January. And BLS noted that healthcare averaged about 33,000 jobs per month in 2025. So if you just add that up quickly, it's about 396,000 healthcare jobs in 2025 versus just the positive revised 181,000 total. So outside of healthcare payroll, employment was down on the net by about 215,000 jobs last year, give or take. So I think that's, you know, maybe a little contra to just the overarching headlines and kind of narrative that we've seen. So, happy to get your take on what, what you think that means. I think the consumer side of this, that's the part that's been so surprising throughout this entire disruption, is just how resilient the consumer has been. And so that gives me a little bit of pause if we're starting to say, maybe see a realized slowdown there.
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Yeah, I have a real difficulty squaring this macro circle. If anything, it feels more like a macro octagon or a hexagon. I don't want to get too geometry nerdy, but in case you're wondering, I believe a hexagon is the lowest cost way to approximate a circle. So maybe this is a macro hexagon. Anywho. So the real difficulty I have with this is if you listen to the narratives that have come out this week and you have like one group that says, oh my gosh, January's job growth was amazing. They just kind of brush aside the 2025 stuff and say, yeah, but still look at unemployment. Like a lot of the jobs revision stuff is getting too much in the weeds. Stop second guessing the data, take the data for what it is. And importantly, like, none of this impacts the unemployment rate. So we're still bullish, yada, yada yada. Then you have this other group that says, yeah, but look at consumer sentiment, look at consumer spending, look at actual Hiring numbers like, none of this is good for the consumer and, and the consumer is pulling back and we're getting even stronger of a K shaped economy. It's no longer like middle and high income households and then lower income households. Now you start seeing the separation between high income households and middle income households as well. And this could kind of bleed into some really lackluster spending and economic data throughout this year. So, you know, I have a difficult time deciding exactly where I fall in the spectrum of bullishness or bearishness in the economic data. I guess at the end of the day I look at this and say, okay, the unemployment rate, I get that story, I believe it. Yes, the data is noisy. I'll still continue second guessing some of this data, but until I start seeing more things break, I think I'm going to hold a bullish line.
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Right.
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But there are cracks, more cracks and wider cracks that have opened up that I think are worth taking caution. So like from the macro front, this feeds really nicely into the series story because we had all those restructurings and closures announced this week. So like Eddie Bauer, Francesca's Pizza Hut, Red Lobster, Saks, right. This is a wide spectrum. It's no longer just kind of concentrated and like say the fast casual or whatever. I mean, this is, this is a nice cross section of closures. And it doesn't necessarily make me concerned about the broader retail sector because you see a common thread here and that it's these store closures have, you know, seen a lot of pressure on traffic margin compression and the store economics just don't make sense for a lot of these locations. So this is really just a continuation of what we seen of the underperforming stores that have kind of held on through the pandemic rebound, but never really made it back to where they, the managers wanted to see them. It's time to cut bait. Right. And so that's what we've been doing over the last call it 18 months or so is just gradually cutting bait on the underperformers when the time is right, when either you're forced to, or when you have wide enough margins to kind of absorb some of those closure costs. But I think where things will get really interesting for us this year will be the multifamily thread. There's a lot of things going on in that sector. I think that'll be very fun to watch. And well, one of them we're going to talk about is Camden's recent announcement to exit California and double down elsewhere. So I'm excited To get into this today in the pod.
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Yeah, we have a lot to cover today. And you know, I just took a touch on the retail stuff, Stephen. You know, the one thing that I think each of those retailers have in common is they just feel like legacy brands to me.
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Yes.
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And I feel like that that's the part that doesn't give me as much cause for concern in the sense that if it was like 1990, Eddie Bauer was something like if you had an Eddie Bauer edition Ford Explorer or something, or you're shopping at the Eddie Bauer that had some sort of like quantifiable status to it. But it's been 20 plus years since that was the case. And some of these other restaurant chains, they just haven't adapted to the current market cycle. And it's, you know, these things restructuring to me is just really a byproduct of how the market is supposed to work. You're supposed to get rid of things that don't meet consumer demand at this point. And so I may be a little less concerned on some of these announcements just because I think that's part of the overarching, you know, retail cycle. I don't think this is, this isn't giving me vibes of the retail apocalypse or this like broader retail threat that we saw several years ago. This is really just kind of a continuation of what we saw, you know, during COVID and post Covid of people that couldn't adapt their model don't survive in this new retail environment.
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Yeah. One thing, one, one little game that I like to play, and I should probably do this on a more systematic basis, is when I drive around my local market and I see vacant standalone spots like, you know, a pharmacy or a restaurant. Restaurants in particular, I like to track those. I like to see how long it takes to backfill it. And some will stay perpetually vacant. Um, but the ones that don't, I feel like it's pretty telling. I mean, we're talking about in particular like the high traffic locations. Right. The ones that you think somebody should surely go in there and backfill the space and. Right. It's, you don't want to do too much extrapolation from your local market to the national market. But it is a fun game to play to see how long is it taking to backfill those high traffic standalone spots that clearly should have an alternative use. And I feel like that speaks to the broader health of retail spending.
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Right.
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Is when you see six 12 month downtime, you know, that's about what you would Expect for one of those spaces versus when it's hanging around for two years, that's a little bit more concerning.
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You know, it's just, it's hard on that second generation restaurant space because in a lot of cases the land cost is prohibitive for converting the use to something else because even if you buy it for land, it's challenging to then convert that to something else. The locations are generally ideal for some sort of retail restaurant type of use because of the traffic, visibility and other things. But a lot of restaurants don't want to buy a previously occupied, you know, restaurant space and then try to convert it because there's a lot of just conversion costs. You know, I think this is one of the more challenging parts of real estate to your point. It shouldn't be and it's kind of funny that it is, but it's, it's really tough. You'll see a lot of second generation restaurant space stay on the market for an extremely long period of time. And some of them actually have some restrictions on use too, depending on how big the chain was and what the, what the seller will allow or, you know, landlord will allow to be there. Sometimes they won't allow you to come back with a competing restaurant franchise. So. Interesting thing to keep an eye on. I think this kind of cycles through though. I don't think this becomes a bigger story.
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Yeah, the most recent second generation restaurant backfill in my market, Dave's Hot Chicken. Which.
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Yeah, they're on fire.
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Yeah, yeah. And we talked about that in the, the rundown here leading up to the super bowl about the, the recent, you know, trends we've seen in restaurant space. So I was pleased to see a Dave's Hot Chicken come in because I been wanting to try them for a while.
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Yeah, it's too hot for me, man. Like I get the mild or like with the wimpy or whatever and I'm still sweating at the end. Like I'm just not made for that stuff. I do think some of these though, you'll see torn down in Dutch Bros. Or some of these new concept retail come in fast, drive thru type of, of settings. You guys have those in your, in your location there in the Carolinas?
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Oh yeah, yeah, we got, we got plenty. And I got to say I'm a, I'm a big fan. The, the speed is, that's key.
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Yeah, very cool.
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Yeah. So I think the headlines definitely sound dramatic. All the retailer bankruptcies, store closings. But there was actually an article in CNBC this week that said store closures in the US Are expected to fall to the lowest level in the past. So the projections out there are positive for retail. And I think it reminds me that maybe we should do a quick refresher on the original retail apocalypse, the 2017-2019 period where we were seeing massive department store closures, Sears, JCPenney, Toys R Us bankruptcies, and then issues with mall anchors.
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Yeah, Hayley, the retail apocalypse that we had really centered around the CMBS 2.0 cohort was absolutely wild. In fact, you know, it's, it's probably something we should do on the show is to circle back on the Carl ICAHN Big Short 2.0 trade because I believe there was some resolution, there was some legal resolution to that lawsuit. But anyway, for some of our listeners who aren't familiar with that, Carl Icahn put on a huge short in cmbx. So it's the synthetic CMBS indices that allow you to place bets equivalent to what was done in the GFC when, if you watch the movie, the Big Short, all of those investors were putting on trades against residential mortgage backed security pools, specifically subprime pools, where they were expecting the triple B's up to the single A and in some cases the AA tranches to take a loss. So you can do a trade that's equivalent to that in CMBS space using the CMBX indices. So long story short, Carl Icahn placed a sizable bet that a particular cohort of CMBS bonds was going to take substantial losses because of their exposure to the retail sector and in particular regional malls. And losses crept right up to the edge. And then the last mall that needed to be liquidated in order for Carl Icahn's bet to be paid off ended up being purchased for an amount that was higher than what the market thought it was going to be purchased for. So anyway, well, that's, that's something we can circle back on into another point because it is a very fun and interesting story about CMBS trading. In the current context, though, the retail apocalypse left us, I would say, you know, very, very scarred in terms of how much we've built out in retail space since then and also how much retail exposure we had put into CMBS pools in recent years. I would say largely we've shaken a lot of that off. And as we talked about in the pod, the retail sector has been doing extremely well, but there have been pockets of weakness, weakness. And so some of these, as Lonnie just mentioned, legacy retailers that have had underperforming stores have been closing en masse. So we had a piece that just came out recently from CNBC talking about the most store openings and closures planned for 2026. And interestingly, CNBC said that store closures in the US are expected to fall to the lowest level in the past three years as the retail industry is moving beyond this major wave of bankruptcies that we've seen. So on the positive side, we have Dollar General, Aldi and Tractor Supply top the list of retailers with the most planned openings this year. And as demand for retail space rises and supply falls, JLL's Naveen Jaggi said developers could see opportunity to build new strip malls, which is something we haven't seen, honestly, en masse in quite a while.
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Yeah, but the strip mall craze started by our friend Strip Mall Guy Online has really taken over. I mean, I think you're seeing a lot of new activity and interest in that sector from an institutional level, whereas before you probably didn't see that. So listen, I'm still bullish on the retail sector, I think. And we had Carmen Spinoso on the podcast not that long ago. Obviously he specializes in the mall space, but he had some really valid points as to why retail continues to be viable. And listen, like Eddie Bauer, 175 store closures, you know, not significant on the whole Pizza Hut, 250 store closures. Red Lobster, which we've already seen them shrink their footprint once from a 2024 bankruptcy, you know, are going to be closing some stores and then Saks Fifth Avenue again. This is noteworthy or newsworthy now because it's like back in the headlines. But they've been struggling for a while and they've been taking on more debt to try to like stay relevant and keep their business afloat. And that just doesn't work when you're a legacy brand. And so, you know, I'm bullish. You talked about some of these, you know, strip malls potential, Stephen. But if you look at Aldi and some of these other retailers, which I posted on LinkedIn a couple weeks ago, we'd love to get someone from Aldi on the show. So if you, if you're a listener and you know someone connect us because I'd love to hear about their story. I think our listeners would really appreciate how they've come to the US and really been incredibly successful and have like, really strong growth prospects. Same for the Boot Barn folks that are backfilling a lot of these party cities and other stores that have gone out. So for the small negative retail headline, it's valid. We should talk about it. But I think there's some resiliency in retail still post Covid. That is really where the story is.
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I mean, you mentioned boots and I can't help but toss this fun little fact out to Covis, which is my favorite boot brand, used to be online only. And then eventually they had their. I shouldn't say eventually. I think they maybe always had a storefront in Austin.
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Yeah.
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But when I was browsing their website the other day, it's wild how many stores they have now. I was like, wait, you're no longer just an online only store. It's like really looks like a typical brick and mortar presence. So I mean that speaks to just how much consumer demand is out there for still the in person brick and mortar experience.
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Yeah. To cover handmade good boots.
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They are. And free returns.
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So Stephen, as we wrap up the retail talk track here, I know you mentioned on your intro a little bit of the multifamily stuff that we want to cover today. So you know, for those listening, we've been teasing out in some form or fashion some of the, this broader multifamily segment that we were going to do. And this is the week. So why don't you kind of walk us through. This is a pretty robust segment. Walk us through what we're going to cover today.
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Yeah, I mean to, to give the high level overview here. The main takeaway is the fundamentals are weakening but not broken. So some of the key themes we'll walk through today, record new supply is still delivering. Right. We're still having to digest this. Rent growth has flattened. I mean, in some cases we're actually seeing net declines. Wage growth is improving affordability. So on the margin, we are growing out of some of these affordability crunches. Investor demand is still incredibly strong and capital is positioning for the turn. I mean, I think we've heard just countless, countless times how much money is out there chasing these opportunistic deals, but also how hard it is to land these opportunistic deals. Now the first story to walk through here, this is a recent major headline was Camden's announcement. They're seeing huge investor demand for apartment buildings, but interestingly that they will be looking to exit the California market, which is, I mean, absolutely wild. I don't know, Lonnie, does that hit you as a surprise or was that kind of, I don't know, somewhat expected, Maybe not the market or the announcement, but not too much of a surprise.
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Well, it's interesting because I think we're finally seeing the reality of some of this political, I'll call it political nonsense that we've seen taking place attacking the multifamily industry, whether it be, you know, rent control. We've had the antitrust issues, like all of these things. At some level we, we know, like logic tells us that these investors are going to go to places where they don't have to deal with those headaches. So what I have put on my, you know, wager line that Camden would be the first one that kind of steps up to the plate and says, hey, we've had enough. We're leaving California. Probably not. Like, I think that's kind of a shock in the sense that, you know, they're a top 10 multifamily REIT. They started marketing their entire California apartment portfolio, about 11 properties valued over one and a half billion dollars. You know, so I think for them, like 11 Camden properties in California is probably not huge. It's not like they have a hundred. But the writing's on the wall. I mean, listen, like New York, California, these other states that are enacting these rent control measures and other things, capital is going to leave those places. And, you know, I think people will follow suit with Camden. I mean, listen, if Camden can transition out of California and they show positive results in some of these other locations where they reinvest, I think you're going to see other people starting to take the same, the same track.
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Yeah, I mean, I like this play for them. And you alluded to it, Lonnie, like, this is just 11 properties on their portfolio. Granted, it's a huge chunk. It's roughly 1.5 billion. But if it's really not your core focus, maybe don't keep it on your balance sheet as a distraction.
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Right.
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Pivot into what you have far more conviction in and far more comfort with. And fortunately for Camden, they have huge demand for that portfolio. The CEO said it's not like one or two or three bidders, but like hundreds supposedly. So if we can take him at his word and face value there, I mean, that's great to hear because with an institution like that saying they're going to exit a market, sometimes that might kind of signal caution to the investor demand side and maybe work against them in that liquidation.
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Yeah, I mean, I think this is an interesting dynamic because you have a lot of local California folks that know how to navigate the current environment and they're supply constrained across the state. So you're going to see demand here. But I, you know, I just think the smart Money is going to go elsewhere because it just changes how you have to operate. I mean, from a capital expenditure perspective, from keeping the property updated, it's just much more challenging because you don't have the opportunity to recapture that through rent growth. It's, it's really, it's just a, it's just a nuance to the market that, you know, for some people that have navigated that for the last, you know, decade or two, they, they're probably equipped to handle that bigger, better than some of these bigger REITs. Where to your point, this is, you know, sometimes just a distraction on the whole. And listen, they're bullish on the Sun Belt, which I think is nice to hear. There's been a lot of distraction, negative distress, whatever kind of talk track you want to call it over the last three or four years in the Sunbelt markets. But I'm with them. I think the population, demographic trends, the Sunbelt's going to be, they, they had too much new construction, but we're starting to see that level off. And I'm, I'm with them. I think 26 and 27 are going to be some really strong years for Sunbelt multifamily.
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Yeah, I mean, the political pressure in California with like the billionaire tax and like countless other issues just in the mix, it's a tough place to do business. I mean.
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Yeah, it's not just, it's not just the tax and the rent control, it's the evictions. I mean, like when you can't evict someone that doesn't pay rent and they can stay in your apartment for two or three years or you have to buy them out. I mean, like the economics on that just don't work. They just do not work. And so I don't know if you saw this week in New York, the new mayor now is, has filed a lawsuit against the self storage industry because he's alleging that self storage operators have been raising rents on their tenants, you know, with no market driver or necessity. And so, you know, rent control in New York at least now has the possibility to extend beyond multifamily and into self storage. I mean, if, if that's successful. Listen, I think this is a very slippery slope just for commercial real estate. Generally, like these owners have to do a better job of aligning themselves and getting ahead of some of this stuff. In my opinion. It's, it's for being as institutionalized as the industry is. They have not done a great job of keeping some of this stuff off the books.
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You mean like exposure to.
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I'm just saying, like you're seeing all these grassroots groups pop up in favor of rent control, in favor of eviction moratoriums, in favor of all of these things. You're seeing all these nonprofits and like those, those people have a place like we should, we do need advocates that kind of protect tenants and all of those things. But for these large operators, like, what are they doing to combat that? To like actually explain the, the overarching good that's provided by building apartments or by providing consumers with a place to store their stuff that they probably should just donate but they want to keep. There's just not a. I know they're lobbying in Washington, but this is a local, local level challenge, right? This is. And I think that's where the, the disconnect is, is that for a lot of these operators, they're too focused at the national level and these local boots on the ground organizations are taking control because the institutions aren't there in those local markets to actually explain, advocate, showcase, educate people on why their services are needed and what the common good is. So I don't know if you saw Bob Nackles talk track around the rent regulation and kind of New York multifamily. I mean, he, you know, as Bob can do, he just boils it down to a simple concept that's very easy to understand. And it's, in his words, distress is simple math. You know, he basically highlights it in rent. Regulated housing expense growth is greater than the regulated rent growth. Capex requirements are increasing, financing costs are higher and values are going down. So you add those things up and what do you get? You get, you get a untenable math situation where it just doesn't make any sense. Like these are no longer investable assets. They're effectively commodities that have a shelf life that are not infinite anymore. I mean, real estate generally has, you know, the ability to, through capex and reinvestment to stay viable for a very long period of time. When you remove that component, they, they waste away pretty quickly. And so, you know, I'm hopeful, like Bob, Bob's a great example. Like, he's someone that has a large following. He's very well known in New York. More people like him need to be speaking out on these things and educating the public on what the real challenge is. This is not politics, it's just math.
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C
Yeah, really what we need, both on the public side and probably more importantly on the government side, is a stronger willingness to negotiate and talk before just coming out there and saying we're going to ram this down your throat. You know, we're going to enact rent rent control and instead say, okay, well what factors are driving you to increase rents? And maybe what can we do as a government to combat some of those factors that, you know, we actually have control over that we can change? It's like a perfect example is the, the housing acts that's just been pushed through Congress is at least on the table. And for like manufactured housing, it's absolutely silly. The way the current laws or regulations are written, you have to have a permanently attached chassis to manufactured homes. So that raises the cost, but also means that in certain locales you're prohibited from putting manufactured housing on a lot. You know, they say you can't have any housing with a permanently attached chassis, but by definition the manufactured housing has to have a permanently attached chassis. So like, this is silly. Let's just do away with that federal regulation on the chassis requirement and try and find some middle ground because manufactured housing is incredibly cheap and we're not talking about your, you know, single wide coaches of the 1970s. I don't know a lot of you. Have you seen any of these new, like, I hate to use the term because it's, it's underselling how nice they are, but the new, like double widespread.
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Yeah.
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C
These days.
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Yeah, they're, they're very nice. They have all of the amenities, kitchen build outs and everything that you would see in a typical house. You know, I'm with you on that. Listen, it doesn't, it's not just manufactured housing, it's modular construction as well. Yes, the building codes are very prohibitive against modular construction because they, they protect the, the industry. Right. The, the unions and others that want to play in the space and be the, the monopoly on who can build what. But technology has evolved to a level where you can build apartment buildings, hotels and other things using modular construction. We see it all across the world. They can build these things in a matter of weeks to months versus years. And when they're completed, the structural stability of them, the utility of them is as good or better, but the building code prohibits it in a lot of places. And it's, you know, those are the things where, to your point, like if level headed, logical people could just sit down in a room and say we think that we have an affordability issue or we have a supply issue. Let's talk about reasonable, practical, you know, solutions that can actually be implemented. There are solutions available for this without overarching government regulation which has a negative impact if we wanted to take a little bit of a U turn here and have some maybe positive stories around some government intervention, Los Angeles actually has passed an adaptive reuse ordinance. I don't know if you saw this, Stephen. So this is, this is positive news for California multi family space. Supposing that it can get some traction here. But LA officials made it easier to convert empty commercial buildings to housing, which opens the door at least to the creation of thousands of apartments across the city, which has a significant deficit in terms of supply. So you know, Garrett Lee, which is a developer, they're already up and running to do this. You know, they've been a really challenged office operator, not being able to find tenants for their office high rise. And so they started converting their office space into an apartment facility which is going to have 700 apartments. And so this, this new ordinance is citywide, it goes into effect this month and they're expecting a lot of conversions to come in. So I think, you know, some, someone was quoted as saying this is monumental for the city and I would agree with it. I mean, I think it's similar to what we saw with Florida with the Live Local act, where you can actually have positive government intervention where it actually entices the type of development and you know, facilitates that trends those transactions that organically maybe wouldn't have happened and makes it easier for them to, to build what's needed.
- [31:49]
C
So Lonnie, I think probably one of the biggest elephants in the room that we haven't mentioned yet is a certain piece of legislation that was recently settled. This was, I mean, earth shaking might be an understatement here. So this, this litigation that was settled is on rent setting software. So companies have denied wrongdoing through their use of this rent setting software and the algorithmic rent approach to apartment management. But the agreements may restrict certain data sharing practices going forward. So in a nutshell, basically what was happening was all of these apartment owners were contributing data to the platform and then the platform could then turn around and suggest really what to do with the apartment, what, what rent level to raise it to. And I think the, the most, probably the most difficult part to overcome from the operator standpoint is the fact that the software importantly could recommend how long to keep a unit offline. So it was directly impacting apartment supply, which I mean we all know from basic economics, Supply and Demand101. If supply drops, demand stays the same, prices have to go up. And so from the court's side, that looked too much like antitrust or anti competitive practice. And at least in my personal opinion. I'm not a lawyer, but I think that was probably the most, most difficult part for the owners to battle against in this, in this litigation.
- [33:19]
A
I agree with you, Steven. If you were just controlling the rent in an organic fashion, like you had a data, and so you were aggregating that data to get to what you think is the most competitive rent, probably okay, when you start controlling the supply side of availability, which then in turn impacts the rent, that's where it gets a little bit dicey. And so I know there's been some settlements, there's been some, some payouts. There's been, you know, resolution to this, which I think is good for the industry, you know, but it does change the way they can operate in some of these instances. I mean, like market surveys and other things that have been kind of a mainstay of that sector now, you know, have to be done in a, in a compliant fashion. Right. So it makes data like traps that's, you know, readily available for license much more valuable for these folks. So if you, if you're looking for multifamily data, you should give us a call. We'd be happy to, to walk you through how and where we can fill some of the void created by some of these settlements.
- [34:17]
C
Yeah, One of the largest was an apartment operator that struck a $53 million deal to settle its part of a sprawling class action lawsuit. Now, the company denied any wrongdoing, but it agreed not to share certain data, a term the company said it was already following. The judge still needs to sign off on the deal. And this is an agreement that's similar to what was reached with 27 other firms in the same case related to this litigation. The fine will be paid in two installments, with the first going out sometime after March 2nd and the second due 30 days later. But the bottom line here is it sounds like we're pretty much close to wrapping up all of this litigation and now we're moving to the new market data paradigm. Or like you said, Lonnie, firms like Trep have, I think, a really interesting void to come back and fill with our data. It's super transparent. It's compliant. It is what it is. It's the, that's the beauty of it.
- [35:13]
A
You know, and it's. It's. This comes on the heels of the Realtor settlement, you know, with NARA the last couple of years. And listen, everyone thought that that was going to be. That residential brokerage was going to be transformed in a way, and no one knew what was going to happen. And in practice, the industry and the markets just kind of kept going. And I think we'll see some of that here in the multifamily. Obviously they're going to need the data. They'll find ways to get it through firms like Trep and others. But you know, the industry is going to continue to move forward, which I think is a good thing.
- [35:44]
B
So let's keep on the topic of multifamily and share some recent apartment stories we've seen in our Deals and Data section. This week we saw a headline that cbre wrote a $128.2 million Fannie loan for Quinc, Massachusetts apartments.
- [36:00]
C
Yes, the financing was against the 465 units Ashler park apartment property in the Boston suburb of Quincy, Massachusetts. The financing, which was also arranged by CBRE, takes out a 128.7 million dollar construction loan that Citizens bank provided in 2022. Ashler park at 100 Whitwell street is owned by Foxrock Properties of Quincy. The property has units with up to two bedrooms each and monthly rents starting at $2,300 per month. Next door we have is Bussini. Poland lines up $50 million of financing for Wellington, Delaware apartments. This financing is against the 203 unit Crosby Hills Apartments at 517 N. Shipley St. In Wilmington, Delaware. This news coming to us from the Commercial Observer. MF1 Capital provided a $45 million senior loan while Pearlmark provided $5.5 million of mezzanine financing that was arranged by Arrow Real estate advisors. The three year old property has units with up to two bedrooms each that carry monthly rents starting at 1570 per month. Last story we have here is Sherman Residential has purchased a Charlotte, North Carolina apartment complex for $58.6 million that pencils out to just over $195,000 per unit. This is for the 300 units Elon Prosperity Village apartment complex in Charlotte, North Carolina. This news coming to us from the Charlotte Business Journal. The Chicago Investment Company purchased the 11 building property from its developer Raystar of Charleston which completed construction in 2024. Eland Prosperity Village at 2020 Winter's Eve Drive has a mix of studio one and two bedroom units ranging in size from 560 to 1261 square feet with monthly rents between 1515 per month and 22. The property includes a resort style swimming pool, 24 hour fitness center, clubhouse, business center, courtyards, grilling stations, residence lounge and yes, on site management. The property has been renamed the Rinling Love it on site Management.
- [38:08]
A
I Know, I will say this one's interesting too. And they rename these. I mean, we've kind of seen the evolution of multifamily naming conventions there for a while during COVID it was everything that got bought. They took the address and they did some sort of play on the address. And here, as you mentioned, this property is named the Renly, but that's W R E N L E Y. You know, they're trying to make it a little bit more chic.
- [38:35]
C
Yes, the Renly.
- [38:37]
B
And let's close with some stories for hotels. We haven't covered the lodging market in a little while and this week we saw a nice headline in Commercial observer that includes our friends over at Madison Realty Capital. And this said that Madison Realty and KSL Capital have provided a $372 million loan to build a Nashville hotel.
- [38:59]
C
Yes. Title Real Estate Partners has secured a $371.5 million construction loan to build the Nashville Edition hotel and residence, 261 room luxury hotel with 64 on site residences in downtown Nashville. According to this release, Madison Realty Capital and KSL Capital Partners provided the construction debt while Walker and Dunlops, Keith Kurland, Aaron Appel, Jonathan Schwartz, Adam Schwartz, Dustin Stolle, Ari Hurt and Michael Ayano arranged the deal together with the firm's hospitality professionals, Jay Morrow, Carter Gradwell and Jack Hughes. A lot of shout outs there.
- [39:41]
A
I think this is just another great example. If you have a big deal, hundreds of millions, Madison seems to be the firm that gets those deals done. I mean, all of these transactions that they're part of are really big transactions. I'd like to see your thoughts on this, Stephen. It feels like Nashville was one of those markets that everyone was teetering on the last couple of years. I mean, it had blown up. You saw all this new construction, development, too much multifamily supply rent started to pull back. You saw a couple of hotel sales that were lower than what was expected. But it feels like the worst is over for them and it's almost back to like, pretty bullish.
- [40:19]
C
I mean, I hope so. They seem to, at least from the outside, it seems like they have enough critical business mass to kind of sustain and weather the disruption. I mean, it's, it's absolutely wild. Absolutely wild. How much more traffic you see in that metro compared to like right about 20 years ago. I mean, I remember doing some due diligence on a hotel in downtown Nashville in January of 2006. And I mean, I was, you know, doing this during peak business hours. And if I was doing that today, I mean, I would have to plan for probably an additional three hours of commute time. It's absolutely wild how much that Metro has grown over the last 20 years. So excited to see where they go from here. There is a lot of, you know, very sophisticated, very old money down there in Nashville and there's also a lot of new money. You've had a lot of California transplants that have moved there. It's a, it's got a fantastic nightlife, great set of amenities and culture. So, yeah, I'm happy to see Nashville thriving.
- [41:20]
B
And quickly, let's cover two other hotel markets. Another story from our friends at Commercial Observer. Gencom bought New York City's Ritz Carlton in their third latest luxury hotel acquisition.
- [41:33]
C
Yes, the real estate firm Gencom has acquired Midtown's 253 key Ritz Carlton New York Central Park Hotel, its third luxury hotel acquisition in New York City in the last 16 months. The buyer announced Friday. GenCom bought the famed 33 story hotel at 50 Central Park south from Westbrook Partners for an undisclosed amount. The original bidding price for the Property was about 400 million in March of 2024. At least that's what was reported. The deal comes as part of New York City's buying spree for GenCom. In September 2024, the Miami based investment development firm bought the 588 key Thompson Central Park New York Hotel from Elliott Management and GFI Hospitality for between 300 and $310 million, according to the Commercial Observer. And then in December, Gencom and a partnership with Highgates and Argent ventures purchased the 607 key InterContinental New York Times Square Hotel from Tishman Realty and MetLife Investment Management for around $230 million.
- [42:34]
B
And speaking of New York City and its hotel market, there was some breaking news in the Wall Street Journal this week about the Waldorf Astoria, saying that the hotel's Chinese owners plan to sell the hotel after an extravagant makeover.
- [42:51]
C
Yes, I mean, this was a much delayed overhaul, multi billion dollar deal. Absolutely wild. I'm a little bit surprised to see him sell it right after this renovation. But just given all of the other geopolitical tensions and the recent news this past weekend about the Chinese government telling banks to basically sell off US Treasuries, maybe this isn't that much of a surprise of another divestiture of a U.S. asset. The historic Waldorf Astoria occupies a full city block on Park Avenue in Midtown Manhattan and reopened this past fall after, get this, Lonnie, an eight year Gut renovation, eight years. I mean I can't, I can't do it. Like if, if I was going to go buy a property and I knew ahead of time it was going to take me eight years to gut renovate it. I don't know that I have the stomach for that.
- [43:45]
A
You listen, this deal is just one of those that just stands out. I remember when they purchased this, this was part of the Anbang Chinese insurance company buying spree in the U.S. they, they had this and they had a few others where like back to, back to back transactions in the, in the billions of dollars. And then to your point, like this particular project, I mean delay after delay after delay. It's incredible what they've done now. I mean I've seen some of the coverage and some of the, you know, newly amenitized units and everything, but I don't see how this is going to turn cash flow positive for them selling so quickly after the renovation. This one again feels like it's probably not market driven. There's probably some other factors pushing the transaction here. This is an iconic property in the, in the US and it's top of the line at this point. So it'll be interesting to see what buyer interest is for this given the fact that at this point whoever buys it really doesn't have to do anything.
- [44:42]
C
Yeah, this is wild. It was five years behind schedule and more than $1 billion over budget. And some developers and real estate executives say it was the most complicated and likely the most expensive real estate conversion ever attempted. So the Chinese reinsurance Firm bought the 1400 room Waldorf Astoria in 2014 for 1.95 billion in one of the most expensive hotel sales ever. And then they spent more than 2 billion on construction costs for a total all in cost of more than 4 billion. So this went from a 1400 room Waldorf Astoria to now they've trimmed it down to a smaller hotel with 375 guest rooms and 372 condominium units for sale. Probably no surprise here, Lonnie, the seller does not expect to get all of its costs back on the sale.
- [45:33]
A
Yeah, it's not going to happen.
- [45:36]
C
So also as part of this Waldorf Astoria sale, the Chinese government company has hired Eastill to market a dozen luxury hotels in the US they're part of its Strategic Hotels and Resorts portfolio. The collection includes JW Marriott, Essex House near Central park in Manhattan and the four seasons in Washington D.C. so this is a much part of a much larger portfolio sale here that's planned. So this will be something that we will, I'm sure be covering a few more times throughout the coming months or coming year.
- [46:08]
B
So I'll take us home today with some programming notes if you missed it. TREP released our CMBS Special Servicing report for January and we found that the special servicing rate increased 20 basis points to 10.91%, led by several new transfers in the office sector. If you'd like to see all of the shifts across property types and see some of the new transfers to Special servicing, send a note to podcastrep.com and we'd be happy to share the full report with you. And speaking of reports and deep dive analyses, Steven, you teased this out on a recent Market Pulse and a past podcast episode. But next week we are releasing a playbook on CMBS Maturities and I want to make sure it's on our listeners radar. You've been digging into CMBS Hard maturities and the 2026 wall of $76.6 billion. For those that have been following the maturity well narrative for years, these maturity volume numbers might sound like a crisis in waiting given that the aggregate volume of hard maturities from 2024 through 2026 represents just over 40% of all private label CMBS loans. So maybe you can just quickly explain what a hard maturity is, Steven, and give us a quick preview of what you found and what will be revealed in our in depth playbook.
- [47:34]
C
Sure, Hayley. So one of the issues that you run into when you start reading through the headlines of commercial real estate's loan maturity volumes is that the headline number a lot of times isn't the number you want to be paying attention to. The headline number includes a lot of loans that have extension options and can extend their maturity a lot of times more than one year out in the future. And so really what you want to look at is the subset of loans that are coming up on their firm final maturity date, which I call the hard maturity date. So this year we have 76.6 billion, which is a little less than half of the over $140 billion total maturity volume. So that leaves another call it 60 odd billion that can extend beyond 2026. Now the 76.6 is actually a slight downtick from the past couple of years. 2024, 2025 had a little bit over 80 billion in hard maturities. So what I did was I went back and looked at a subset of those hard maturities in 2024 and 2025. Specifically what I did was I pared it down to the loans that really never had any extension options. I wanted to look at just the traditional core set of loans where the final maturity date was unambiguous and look at the resolution outcomes. Did the loan pay off at or before maturity? Did it eventually pay off after maturity? Or is it still unresolved or hanging out there in the CMBS universe? And look at some of the underlying performance metrics so that we can kind of infer, okay, what are we staring down the barrel at for 2026? How much of these loans are probably just going to pay off and perform as expected, and how much additional maturity distress might we be adding to an already elevated headline number? So that's really what I break down in this maturity playbook is where do we come from and potentially where are we going?
- [49:29]
B
So if you want to make sure you get access to this analysis, send an email to podcastrep.com and we'll get you on our research list. And we're excited to share this with our listeners, our clients and the market. And I'll turn us over to a few events that we have lined up either that we're hosting or participating in. If you are a user of our front end platform trepcre, we have an upcoming targeted training and really this training is to showcase that our tools are built for how you work. We're trying to get all of our clients streamlining their workflows and unlocking deeper insights with the use of our platform. So if you are a Trapsieri user, sign up for this in depth training taking place on Tuesday, February 24th at 2pm Eastern. We'll walk through how to create safe searches for your market and the assets that you're most interested in. Set custom alerts and track activity in real time so loan performance changes, property or market changes and do a lot more with the system, building custom views using our stratification engine and getting a preview of some of our research assistant tools. If you're not a client and you're interested in seeing some of this firsthand, send us a note and we will get you access or get on a call with you and walk you through it. Also that week we will have a team in Las Vegas at the Structured Finance Association's Vegas conference February 22nd through 25th. We'll be walking through everything Trep CLO, the corporate CLO market and our CMBS suite products and solutions. So if you're on the structured side and will be in Vegas that week, send us a note. We'll be at Booth 144. We'd love to meet with you there and if you're not going to be there and you're curious about what we're building and enhancing for our clients on the structured side, reach out to us and we'd love to chat with you. And then before we finish today, I wanted to share a quick update on our Trep Connect in New York City conference that we've been talking about, which is taking place May 6th and 7th in New York City at Studio Gather in Rockefeller Center. We now have an agenda live on our trep.com website and we've really built a program that takes you from macro to markets to emerging opportunity. We'll have sessions on dislocation to deployment, looking at where capital is moving now. We'll dive into the lending reset and bring banks, private credit, insurance capital and institutional asset managers on stage on a panel together to talk about how they're positioning across the cycle. We'll also do a deep dive into AI technology and data in CRE decision making and really go beyond the buzzwords here and bring some folks who are doing big things in AI and technology and share how they're bringing that knowledge to their business and to their deal making. We'll look at bifurcation and recovery and bring together property sector and specialists from across the industry and we'll also hear from regulators, risk leaders. We'll have fireside chats with some executives at large institutions and we'll also have a panel on digital infrastructure and data centers and he'll hear from the people who are really in that business. We have some confirmed panelists from Manulife, Madison Realty Capital, Cushman and Wakefield, Marcus and Millichap PwC Tripp's own data leadership has been confirmed to speak and we'll have a lot more speakers announced in the coming months and weeks, so we'd love to have you at the event. We still have an early bird rate going, but only till the end of February, so get your ticket now. We have hotel room blocks and we're happy to meet your needs and accommodate you, but we'd love to host you in New York City in May, so reach out to us at. Podcastrep.com will send you all the details, the agenda and any additional information that you may need. Turning to shout Outs Spencer S. Was interested in our 2026 outlook report that we released with our friends at Eisner Amper. Juan Q is a commercial real estate student and was interested in taking our CMBS course and certification. As a reminder for those of you who don't know we do offer training solutions for the commercial mortgage backed securities and commercial real estate markets. If you're looking for foundational knowledge on CMBS or a 201 course on commercial real estate, reach out to us. We'd love to have you take part in our course and we can share all of the details about that. Juan thanked us for all we do on the Trepwire podcast and appreciates all the help we've given him on credit and capital markets knowledge, so we're excited for you to take part in our course. Freddie M was also interested in our joint research report with Eisner Amper. Trey W gave us a shout out on LinkedIn and said we were featured in his multifamily download newsletter as a weekly listen and gave us a shout out for episode 377. Andrew M shared details from our latest delinquency report where we released that the office rate has hit its all time high. So if you haven't seen that, send us a note tien posted on LinkedIn giving you some shout outs. Lonnie from the CCIM event that you spoke at recently. You got a lot of great shout outs, feedback and coverage there. So thank you to everyone who reached out to us and got in touch after they heard Lonnie speaking. We also were featured in Commercial Property Executives Top CRE podcast, so thank you to that team for reaching out to us and letting us know that we made the list. So a lot of coverage this week as usual. Thank you guys for another great episode and with that we'll close. Thanks to our producers Carly Sento and Mariana Sobrana. Join us next week as we look at what's happened during the week and how it may be impacting you. If you have a question or just a comment, send an email to podcastrep.com and subscribe to the Trepwire Podcast with your favorite provider. Thank you for listening and stay well.
- [55:44]
C
All right.