← The TreppWire Podcast: A Commercial Real Estate Show
The TreppWire Podcast: A Commercial Real Estate Show
384. Volatility Returns: Oil Shock, Two Market Risks, Student Housing Exposure, Savills-Eastdil Deal, & More Impactful Headlines
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- [00:00]
A
Foreign. Welcome to the trepwire Podcast, the show where commercial real estate meets data and insights. This is our Week in Review for the week ending March 13, 2026. I'm Haley 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 of Applied Research and Analytics. This week in the macro volatility returned to markets as geopolitical tensions in the Middle east pushed oil prices sharply higher and injected new uncertainty into the economic outlook. Crude briefly surged above $100 per barrel as the conflict involving Iran escalated and raised concerns about disruptions to global energy supply through the Strait of Hormuz. At the same time, the latest inflation data showed consumer prices rising 2.4% year over year, largely in line with expectations. But the oil shock now complicates the outlook for inflation, interest rates and the Federal Reserve as energy prices ripple through the broader economy. Gas prices have already jumped more than 20% over the past month and some developers are beginning to take a wait and see approach as uncertainty rises again. In this episode, we'll also touch on new housing legislation that could reshape the single family rental market. And in commercial real estate news, there's also breaking industry consolidation with reports that Savills is set to acquire Estill Secured in a deal valued around $1.2 billion. Later in the episode, we'll dive into Trep's latest CMBS special Servicing Report, discuss new insights from our TREP property price index and take a look at the student housing market as March Madness approaches. But first, Stephen, after several months where markets seem to be settling into a steadier rhythm, volatility came back this week. From your perspective, what signal should investors and lenders in commercial real estate be watching most closely right now?
- [02:09]
B
To me, the biggest signal for Siri investors and lenders right now is that the market suddenly has to price two risks at the same time, sticky inflation risk and slowing growth risk. So February CPI came in at 2.4% year over year with core running at 2.5%. So on the surface, inflation still looks relatively contained. The problem is that this oil shock hits right on top of that and energy driven inflation tends to muddy the outlook for the Fed very quickly. To say this another way, the CPI print this week really didn't matter all that much because it's a time capsule, so backward looking and everything the market is pricing right now is current and forward looking, namely oil. So for interest rates, I think the takeaway is less about an intermediate straight line move higher and more about renewed volatility. If oil stays elevated and supply disruption fears around the Strait of Hormuz persist, treasury yields can stay jumpy because the market has to account for a more cautious Fed and a wider range of inflation outcomes. That does not help borrowers who are hoping for a cleaner, more stable rate backdrop this spring. For credit markets, volatility usually means wider spreads, more selective underwriting, and less conviction around execution. Lenders can still lend in that environment, but they tend to demand more structure, more cushion and more certainty around sponsorship and cash flow. And for commercial real estate more broadly, that really reinforces the market that we've already been in. The best assets and best borrowers can still get financed, but everything else faces a higher bar. If this macro pressure lingers, it could slow transaction volume, delay refinancings, and keep stress elevated for assets that were already vulnerable going into the year. So the key thing I'd watch is not just the headline CPI prints or headline data prints in general, but whether oil driven volatility starts to harden financing conditions over the next several weeks.
- [04:04]
C
I think you've hit the nail on the head here, Steven, in the sense that pricing in dual risk is tricky. And I think the one thing that I just have some questions around I'd like to get your thoughts on is when this persistent inflation just become the new benchmark. And we talked about this a little bit a month ago or so, but it's like we keep saying, inflation sticky. Well, it hasn't really moved and it hasn't gone down. So it's, it's, you know, I guess persistent inflation is, you know, technically correct, but it feels like it's not really, they're not managing, I mean, like it's, it's consistently not where it needs to be, not where we hope it is. And every geopolitical, every thing that happens outside of the US just puts increased pressure on this inflation. I mean, first it was tariffs. We thought tariffs was going to drive inflation up. Luckily for us, we haven't seen that play out at scale. And now tariffs are going to be refunded, whatever, we've talked about that. But now you have this oil, which definitely will put inflationary pressure on the market if it lasts at any period of time, which I think we're going to talk here in a second, around, you know, most likely outcomes if this conflict resolves in the next week, month, over the next quarter. But it just seems to me, you know, from a CRE perspective I mean I would have to, the Fed can say what they want but to me the benchmark is like 2 1/2% inflation. Like that's what you have to kind of base case it, right?
- [05:22]
B
Yeah. And I think that's what the market is priced. I mean this is a moot discussion that I almost hesitate to toss out there, but I'm going to toss the question out there anyway. I'd be curious what our inflation print would be running right now if, if none of this tariff stuff had happened. Like I really, I'm really curious about that counterfactual just to know, okay, would we really be sitting like closer to two and an eight, two and a quarter percent, like how much of this is somewhat tariff induced and macro global noise that's keeping us around this two and a half again that doesn't really matter. We're at where we're at and the longer oil stays elevated, the, the harder it's going to creep into everything else.
- [06:04]
C
Yeah, I mean it's like the old NFL football coach, he's like Bill Parcells. I think he was like, you are what your record says you are.
- [06:10]
B
That's right.
- [06:11]
C
That's kind of where we're at. You know, people have to just come to terms with where we are. I do think, you know, the interesting thing from a CRE perspective is you know, on the whole nothing has really changed. Like the, the catalyst of maybe what could change has changed. First it was tariffs, now it's oil, now it's just unrest. But all of that equates effectively to uncertainty. Now whether it was interest rates being hiked by the Fed, whether it was Covid, whether it was whatever, the catalyst has changed but the uncertainty has remained. And I think, you know, if I'm taking an optimistic look at this, I'm saying one thing we've learned over the last six years is that even amidst the uncertainty, to your point, good, well located assets are going to continue to be just fine. I think the story is more on some of those tertiary markets or second tier assets and guess what? They come back to maturity default risk and they come back to cap rate expansion where values have diminished and you know there's, there's some, some refi risk around you know, their current mortgage and, or their ability to sell. But guess what, we've been dealing with that like real time for the last three plus years. Like this is nothing new.
- [07:18]
B
Yeah, I mean I gotta, I gotta just extend my heart out, like really feel for the CEOs at companies like Lowe's. And Home Depot right now who are thinking, okay, maybe we're gonna see signs of life in the housing market this spring and maybe we're will start to rebound on our sales trajectory going forward. And all of a sudden this stuff hits and you gotta just hang your head and shake it, you know, you're like, what? What am I supposed to do with this? This is now a devastating blow for the housing market that already wasn't on great footing. I have to imagine a lot of transactions that maybe could have gotten closed all of a sudden are getting shelved because so much more uncertainty and budget pressures out there in the economy right now.
- [07:58]
C
Yeah, the one thing here, Steven, and I totally agree with you, is I think the difference between tariff inflation and oil inflation is you, you feel the oil inflation immediately at the pump. I mean, we've seen it already, you know, diesel fuel, $5 a gallon on average, nationally, regular gasoline, I think 350 or something a gallon already. Highest level since 2024. And if the conflict continues, obviously those prices are not going to come down anytime soon. They may try to use the petroleum reserve and, you know, counteract some of the pressure. But, you know, this is something we've seen when inflation was ticking up and it was 7, 8, 9%. Groceries and gasoline are things that people just can't avoid. And so it's really regressive relative on that end. And I think, you know, we've been asking the question of when does the consumer resilience maybe slow down? And I think this might be part of it. You know, people are getting be tired of paying exorbitant high prices for gasoline and groceries. At some point they're just going to stop spending on the other things. So Steven, I teased it out a minute ago about some of this horizon, right. And I think we've broken it out by week, month, quarter. What's your hot take on each of those three time horizons?
- [09:16]
B
Yes. So over the next week, the bull case for me is that this remains mostly an event driven scare. Oil volatility cools, treasury yields stabilize and credit spreads give back some of the widening they've seen. The bear case is that energy keeps climbing, headline inflation expectations move higher and lenders get even more cautious on floating rates and transitional assets. That would mean a tougher tone for CRE financing almost immediately. Now I said over the next week. Right. Obviously transactions don't get done in the span of a week. So what I'm saying is that, you know, the outlook crystallizes for the 1 month and 1 quarter outlook and we actually start seeing this get reflected real time or near term in lender commentary and lender sentiment or surveys. So over the next month, I think the market will be asking one core question. Does higher energy act like attacks on growth faster than acts like a driver of sustained inflation? If growth concerns win, treasury yields could level off or even drift lower on the front end, even while credit markets stay selective. Now, if inflation concerns win, the rates stay higher for longer and spreads probably remain wider, which is really not a great mix for transaction volume or refinancing sentiment and cre. I was curious if we were seeing any sort of like strategist movement. So I checked Reuters latest bond strategist poll, and it's seeing only a modest rise in the ten year from here. But that comes with a much more fragile backdrop. Then over the next quarter, the range of outcomes broadens. In the better scenario, this shock fades, the Fed can get back to focusing on softer growth, and capital markets reopen a bit more cleanly for commercial real estate. In other words, any stall that we've seen in the issuance pipeline gets removed and basically pipelines start rebuilding immediately. Now the worst case scenario, oil stays elevated, inflation proves sticky again, and you get a combination Siri hates most higher borrowing costs, wider credit spreads and slower tenant demand. So for me, the key watch points are oil inflation expectations and credit spread behavior, because that trio will tell us whether this is just a volatility spike or the start of a more durable tightening in financial conditions for commercial real estate and really more broadly at the macro level, dare I say stagflation, because that's the real, real risk right here. Now, the benefits that we have is that, you know, the stagflation that we had in the 1970s probably doesn't function the same way it does today, namely because, well, number one, the US is a much more oil independent economy or country than it was back in the 70s. But that's a debate that we can have for weeks to come if this continues to play out for weeks.
- [12:04]
A
So Steven, this is kind of a fun segment that we wanted to dig into this week that really ties into the start of March Madness and also a sector that continues to draw a lot of investor interest, which is student housing. So Stephen, why don't you share with us how you pull together this analysis and some of the findings.
- [12:26]
B
Sure. So what I did was I started off with, well, first all securitized loans backed by student housing properties in our universe of data. And then I aggregated up the exposures by MSA and I filtered down to the MSAs with the 50 highest exposure balances, so current outstanding loan balances to student housing, and then sorted those MSAs on a variety of metrics to see who our top contenders are for a given data point. So let's run through it. First up, where do the most securitized student housing loans situation? Well, number one out there goes to good old Austin. Austin has just over 1.2 billion in securitized student housing loans out there. Second up is Tallahassee, followed by the New York msa, then Los Angeles, College Station, Gainesville, Atlanta, Philadelphia, Sacramento and Dallas. So when we were looking at the projected number one seeds by region, we got Duke, Arizona, Michigan, Florida. Well, Florida overlaps in there. You got Gainesville coming in at just over 600 million of student loan exposure. Now one metric that everybody wants to know, how are loans performing? What's the delinquency rate for student housing for a given metro? Now I'll just be fully transparent here. This can be a bit of a squirrely rank when you have large loans in a metro that, well, doesn't have all that many loans to begin with. So even though we're looking at the 50 largest exposures, you could still have a single loan. That's skewing the delinquency statistic for a property segment like student housing. So the number one ranked metro for delinquency in student housing is Chicago. That clocks in at just under 20%, which is wild. Next up you have Dallas, then Birmingham, Lubbock, Texas and Philadelphia. So outside of Philadelphia, those other four MSAs had double digit delinquency rates. Philadelphia clocked in at about 5.5%. So now onto occupancy. The five MSAs with the highest weighted average trailing 12 month occupancy rates. Number one ranked is Minneapolis with a about 99.6% occupancy rate. Next up you have Richmond, Virginia, followed by the Washington D.C. metro, then Provo, Utah and then finally Lafayette, Indiana. And those weighted average occupancies from the top down you got 99.6%, 99.3%, 99.2%. I mean, gosh, for all intents and purposes, those top three MSAs are almost fully occupied. Provo had a 98.7% occupancy rates and Lafayette had a 90, let's call it a 98% occupancy rate. Finally, our last stat is the percent of loans with a debt service coverage less than 1.0. So this is not a metric where you want to be number one on the list. So even though Minneapolis had the highest occupancy rate, interestingly, they also have the highest percentage of loans with a DSCR less than 1.0. Now I'm just going to go on a limb here and guess that some of this may be some cre cielo debt in here because those loans do get structured oftentimes with a debt coverage right around that break even threshold. And so Minneapolis has over 50% of those loans with a debt coverage ratio less than 1. When I've seen stats like that, again that tends to indicate a high percentage of series clo debt. Second up on the list was San Francisco, then Binghamton, New York, Syracuse, New York, followed by Tampa.
- [16:18]
C
Well, you just went through a lot of stats there, Steven. So let me kind of give you my thoughts on these. You know, I think interesting on the, on the outstanding balance rank, if you look at Austin, I don't know if you saw there were a few charts that were put out this week relative to all the construction projects in Austin for multifamily, broadly, you know, student housing being a subset of that. Just off the charts, the number of units that they've added, especially around the university. I mean it's incredible. And you're seeing that even with significant rent pullback, you know, mostly on the conventional multi side. But I think Austin is one of those interesting markets where supply has so far exceeded demand at this point. Even on the student side, you're probably going to see some really attractive rental rates for a very long period of time. On delinquency, you know, the Dallas Fort Worth number kind of jumps off the page at me because that market has been really strong for conventional multi. Then the student here, you know, I would not have expected it to be that high. I think Chicago, I would have. You know, I'm not surprised by that. You know, Philly, not surprised by that. Lubbock, I'm kind of surprised and definitely dfw, I'm surprised. So we'll see if that trend continues. I think on the occupancy, it's important to point out that these occupancies are physical occupancy and don't reflect the concessions or the free rent. And so some of these may look really Great. Top line, 99% occupied physically. But their economic loss might be one or two months worth of concessions. So that definitely impairs some of the economics on that side. And if we look at the dscr, you know, it is interesting. San Francisco, not a surprise, 43%. I mean I'm hopeful. I'm hoping 2026 is San Francisco's year. And I actually I owe our friend James Nelson response to an email and a text that he sent about maybe getting some of their experts on from the San Francisco market on a guest pod show so we can get some some deeper boots on the ground perspective there. You know, Tampa at 17, almost 17% is pretty interesting. Minnesota, look, Minnesota is all over the place. Man, that market is so unique right now and it's been that way since COVID the office, multifamily, retail, et cetera. I'm hoping San Francisco, if we run this again next year is off the list and that that market which is so important for cre, gets back to normal.
- [18:33]
B
Yeah, I mean if these are series CLO loans behind some of these metros, then you will see these stats shift around a pretty good bit as those loans move in and out of the universe well, fairly quickly.
- [18:45]
A
So, Steven, I think that's a really helpful way to frame the market across those different time horizons. And while it seems like everyone is clearly watching the macro backdrop, there was also a policy story this week that could have some real implications for housing and institutional real estate investors. The Wall Street Journal reported that lawmakers have added a provision to a Senate housing proposal that would require large investors to sell newly built single family rental homes within seven years of completing them. The idea is to make home ownership more accessible by limiting how long institutional investors can hold build to rent housing. But builders and industry groups say that kind of requirement could actually disrupt the build to rent model and make those projects harder to finance. So, Lonnie, can you help unpack this a little bit for our listeners? What exactly is this proposal trying to do and what could it mean for the build to rent market?
- [19:45]
C
Well, look, I mean, this garnered a ton of headlines about a month ago, maybe six weeks ago, and it kind of fell off for a while and with all the other stuff that's garnered the headlines. But just to refresh everyone effectively, you know, it's a bipartisan bid. They want to make homeownership affordable. I mean, at this point in time, everything single family housing related has to have some sort of affordability moniker attached to it. So the Senate's trying to restrict the industry that builds homes to rent them. You know, they inserted a new provision in the latest housing legislation that would require large single family home investors to sell their newly built rental properties to individuals within seven years of completing them. Investors and builders, you know, this comes as a blindside for them. You know, they think it's effectively going to dismantle their rental business for large companies and REITs, which there are a couple of these publicly traded REITs, that this is their business model and ultimately lead to higher housing costs. You know, the trade groups across the country, this includes national association of Homebuilders, National Multifamily Housing Council, they both sent letters to the White House and lawmakers opposing the new seven year sale proposal. But if you look at some of the other groups like the national association of Realtors, they represent the real estate agents, they've come out in support of this obviously because this hopefully generates more sales for them. So what do we say on our podcast? Everyone's always talking their book. Well, guess what happens in real life. Everyone's always talking their book. The Senate's expected to vote on the bill as soon as this week. You know, previously the White House had sent Congress a proposed addition to the Senate's housing bill to ban large institutional investors from buying existing homes, which would in the practice of deep pocketed investors competing with, you know, less wealthy traditional home buyers. But this, you know, that proposal did at that time exempted build to rent developers that construct new homes for the purpose of renting them out. So this is an interesting, this is just how politics play. You know, I mean I think the original headline was that we're going to get these big bad Wall street investors out of the single family market. Now we're seeing additional what they used to call pork in the bills. I guess I don't know if they do that anymore. But you know, restrictions, from my perspective, look, I don't like government restriction. I like the market to deal with things. I don't think this actually aids in affordability. I think this effectively disrupts a component of the market that seems to be well liked by the industry. I mean people like renting homes instead of renting apartments. People like renting places that have yards. People, you know, don't like necessarily competing with investors buying in their neighborhoods. But I think that has really waned. If you look at the overall percentages, means less than 1 or 2% nationally of the inventory. So I think this is a whole lot of nothing that creates regulation that has some real negative consequence for the sector.
- [22:32]
B
Yeah, I mean I read this and I think like really guys, this is the best you can come up with? This is your solution? No way, it's not going to work. I can guarantee you these bill. I'm not a builder rent person. I've never run one of the pro formas but I've run enough pro formas to tell you ain't no way one of these things is penciling on a seven year time horizon. No freaking way. I mean, this is a nightmare for somebody like that. It's like, wait a second, you're telling me for how much time it's going to take me on the front end to identify prospective land, get it teed up, entitled, built, yada yada, I can only hold this thing for seven years and have to restart it all over again. No way. I'm not playing the game. I'm not. You can obviously tell which side I'm on here.
- [23:18]
C
Well, it's just, it's just so funny, Stephen, because the current administration is like so adamantly opposed to rent control for some of these same issues. Like it doesn't actually do what its aim is. It doesn't provide more affordable housing or better housing or more housing. And in this case, if you choke this part of the sector out, then they maybe just invest in a different. They may not invest in real estate at all. These large institutional funds, you're just take their money and invest in something else. And to your point, yeah, no one's underwriting one of these build to rent neighborhoods on a seven year hold. I mean, it doesn't make any sense. And so, you know, this is a de facto destruction of that industry. And I don't think it helps with the affordability issue. I mean, these are all just tricks, smoke and mirrors, whatever this is to try to garner some goodwill. But it doesn't actually move the needle. It just doesn't. And so, you know, I think we're pretty, we've been rough on the rent control folks on our show and I'm going to be rough on this because I think this is terrible.
- [24:22]
B
Yeah, like you said, it's destruction. That's the cleanest way to put it. It's destruction of an industry.
- [24:27]
C
Now what I will say, look, these, these trade groups, they have some lobby and this isn't codified yet. I wouldn't be shocked if you start seeing some of this stuff amended or reconsidered or whatever. I mean, that's the one thing that we know is with this, when politics are involved, nothing is done until it's done.
- [24:50]
A
So let's stay in the world of institutional real estate for a moment. There was some major industry news this week involving one of the biggest names in capital markets. Reports Surface that Savils is set to acquire Estill Secured in a deal valued at around $1.2 billion. So walk us through what happens when you guys see a deal like this in the headlines.
- [25:16]
B
Wow, wow, wow, wow. Estill Secured is no joke. I mean, that is a incredibly strong brokerage firm. And so, I mean, it wasn't really on my list of possible targets. But I gotta say, this does make sense the way it sounds like they're going to structure it. So just to walk through some of the details here. London based Savills has reached an agreement to absorb estill secured for 1.2 billion. The deal is expected to be announced Thursday when Saville's quarterly earnings are disclosed. Eastill Secured will keep its name and remain, quote, culturally independent, according to this news report, which said Savills would pay 60% of the purchase price in cash and the remainder in shares. So Easto last traded hands in 2019 when Wells Fargo offloaded a majority share to Guggenheim Investments on behalf of Guggenheim's clients and Singapore based investment company Timasek. So Wells Fargo remains a minority owner here. So this move comes just months after Savills welcomed a new top executive. Simon Shaw came in as CEO on January 1, succeeding Mark Ridley, who retired at the end of 2025. Based in New York City, Eastil was founded in 1967. The firm is headed by Roy March, who is also a board member of the Real Estate Roundtable. March started at Eastil as an intern in 1978, just a decade after its founding. In addition to its traditional brokerage business, Eastil does M and A and corporate advisory as well as joint venture formation and structuring and capital raises. The firm is advising an investor consortium led by Affinius Capital in its planned $3.4 billion acquisition of Jersey City based REIT Varys Residential.
- [27:00]
C
This is a big news for the industry, Stephen. I mean, this is a billion dollar transaction. I will say when they first went to market, I think the valuation estimates that they had was around 1.6 to 2 billion. So this 1.2 billion is probably a little bit lower than what east had hoped to, to be able to get in the marketplace. But east as a powerhouse, I mean they, they control a large swath of the marketplace. They trade on a lot of the really great, well located buildings across the us the name brand reputation, the way they conduct business, all really, really solid. This will be a nice addition for Savills. You know, I think it'll be important, as he still said here, they want to maintain that cultural independence because I do think they view themselves as doing things better than some of the others in the market. And it'll be interesting to see how this plays out. I mean, we've seen some consolidation across some of the banking space, maybe in the brokerage industry. Now we start seeing some consolidation here where there's an opportunistic bent for some of these well capitalized players to acquire some really high producing teams.
- [28:03]
A
So thanks for digging into that, Steven. We can track this type of data for so many different property types and so many different markets. I know we have another interesting look at the lodging market that we'll be doing on our upcoming Market Pulse webinar. So if you're interested in seeing how we can slice and dice our data, send an email to podcastrep.com we'll make sure you can either get on the phone with one of our experts and see all of the different property types we cover and the markets, or you get access to our marketplace webinar. I wanted to do a quick plug here for two other analyses we put out this week. We released the TREP CMBS Special Servicing Report and found that the rate declined modestly by 18 basis points in February to 10.73%. The decline was driven by seven office and three mixed use loans which transferred out of Special Servicing, though that was nearly offset by a large retail loans transfer in so if you're interested in seeing the breakdown the rates across property types and then which of those loans moved in and out of those buckets, send an email to podcastrep.com, we'll get you access to the report. You can also find it in your email if you subscribe to our research or on our social media pages on X or LinkedIn. The other analysis we have this week is our TREP Property Price Index. So we released the findings from Q4 2025 and found that CRE pricing held its footing in the fourth quarter and offered a clearer view of where stability has emerged. So if you want to see our breakdown of our price index, looking at looking across different property sectors and some of our findings about what pricing looks like for the market, reach out to us. We'll be happy to share that analysis with you too and walk you through how we developed this price index and where we see the trends, I gotta
- [29:59]
B
say there was some interesting data on the multifamily sector in this current report. So anybody that's tracking the multifamily sector who wants to see, you know, basically what our price data is showing, I think we'll have some interesting findings for you in the current quarter's report. Not to say that everybody else is you know, ignored here. Just, just teasing out one of the results that really stuck out to me the most.
- [30:23]
A
All right, so let's pivot here to our deals and data property type news segment. We have a headline here in the office sector from the New York Post that says, Manhattan office tower values plummet below Covid era slump amid fears that I will wreak a white collar bloodbath.
- [30:41]
B
Yeah, I got to say, the New York Post was very strategic in how they crafted this headline. So, Lonnie, like, if you read or hear a headline like this, Manhattan Office Tower values plummet below Covid era slump. I mean, just that first part, like, what is your immediate reaction to that? Like, what are you envisioning has been measured?
- [31:02]
C
I'm thinking like land value. Like, if it's. Is like no go, no go.
- [31:08]
B
Yeah, we need a little bit more context, don't we, on headlines like this. So this report was from brokerage firm Evercore isi. And what they were looking at was publicly traded landlords with large Manhattan office portfolios. So effectively what they're looking at is, well, publicly traded REITs. And yeah, what they found was that those stock prices would imply that the office portfolios are worth less than they were in June 2020, which is absolutely horrible. Wild. I mean, to just kind of think back where we've come over the last, let's call it six years round numbers. Yeah, this was kind of a shocker. I mean, it tells you just how deep and dramatic the cuts from the software doom and gloom have gone for the AI trade.
- [31:54]
C
Yeah, I mean, listen, I think. I don't know that necessarily. I would think it's all AI driven, Stephen. I think at some level it's AI coupled with the interest rates. I mean, you know, if you, if you look at the. And this is. I've done this on a couple of presentations I've given. If you look at our taller data and you look at loan origination volume in 2020 for office, and even 2021, it was higher than it was when the Fed started raising rates. So I think it just highlights how directly impactful the Fed's actions were for the sector at large. Don't get me wrong, there was a lot more nervousness around uncertainty with, with COVID Nobody knew what was going to happen. But we sometimes underestimate just the real ramifications of the fed raising rates. 500 basis points in 18 months.
- [32:39]
B
Honestly, when I look at this, this kind of makes me want to go buy some office REIT stock. How deeply discounted this is. In today's terms to me feels a little bit like it's overblown. Now I say that obviously with the current backdrop with what's going on in the Gulf, I would probably pause on some of that trade execution for a little bit. But yeah, this to me sounds more like a buying oper select, a buying opportunity pricing in much more doom and gloom than what's probably going to happen. Should also point out that we think about how these companies are valued. You know, present value of future lease income. If these, if the that lease income snaps to zero quicker than those leases are structured, we've got a much bigger economic problem on our hands.
- [33:23]
C
Yeah.
- [33:25]
A
All right, and let's talk some multifamily transactions and happenings. There was an article in the Real Deal this week that a major landlord on Chicago south side who was recently hit with a string of foreclosures is now selling 22 other multifamily properties in the sprawling portfolio that they have.
- [33:45]
B
The properties that the Brooklyn based Shia Wurzburger is selling are not part of a previously reported 12 building foreclosure complaint against this company, according to an analysis from the real deal. Wurzberger's new listing with Colliers includes 22 properties totaling 311 units, according to marketing materials. He said he's interested in testing the market for the properties but open to hanging onto them as well. To quote the seller, they say if a buyer doesn't give me the number I'm looking for, I will keep operating it and maybe I will sell it in the future. So far, the properties have performed well, maintaining between 95 and 98% occupancy, according to the owner. The owner previously told the Real Deal that he owns 1,000 apartments across Chicago, that he spent about 100 million buying between 2022 and 2025. The real deal analysis verified that that he owns upward of 500 units, which he spent 50 million to purchase between 22 and mid-2025, according to public records. Though the analysis was not comprehensive of all of Wurzberger's properties. Now, whether he sells the portfolio or not, Wurzberger said that he is not planning on downsizing his Chicago portfolio permanently and is instead looking for opportunities to buy more buildings in the city. So as he tries to offload the 22 property portfolio, he said he's facing legal troubles related to a separate group of his Chicago apartment buildings.
- [35:11]
C
So Stephen, sometimes when the wind comes out of your sails on a sailboat, it's kind of hard to find your direction. After that you got to you got to know how to navigate to get things picked back up and get your momentum. And I think this is one of those things that we're going to see. This is not just in Chicago and It's not just Mr. Wurzberger. There's a lot of these deals that are struggling right now in multifamily. Now we had some talk at CREF C in January about multifamily being a pretty sizable area of distress. And I was on record saying I think it's overblown. I still think it's overblown, but I do think, and we'll talk about it here in just a moment, I think you're going to see some of these pockets popping up where you have somebody that when there was tailwinds, low interest rates, LP capital available, buying a lot of properties without a real operational plan. And those are coming home to roost at this point.
- [35:59]
B
So next up we have Affinius has lent 145 million against a Philadelphia apartment property. Now this mortgage is against the 255 unit Josephine apartment property in Philadelphia's Rittenhouse Square neighborhood. The loan was arranged by Newmark and allowed the property's developer, Southern Land Co. To pay off a $122 million construction loan that RBC provided in 2022. Southernland purchased the development site a year earlier for 24.5 million. The Josephine at 1620 Sansome St. Has units with up to three bedrooms each, with rents starting at just over $3,000 for a one bedroom with 600 square feet on the building's 17th floor. Units have floor to ceiling windows, quartz countertops, stainless steel appliances, luxury vinyl plank flooring and kitchen islands or peninsulas. Next up we have a Phoenix area apartment Property sold for 82.16 million. Terra Cap Management paid just about 228,000 per unit for the 360 unit Teresa at Arrowhead Apartments in Glendale, Arizona, a northern suburb of Phoenix. The Naples, Florida investment manager acquired the property at 17722 North 79th Avenue from Hamilton Zanza, which bought it in 2016 for $47 million. CBRE arranged the latest deal and provided a $53.4 million Fannie Mae loan to facilitate the purchase, according to a report from Mult. A new debt takes out a $30.47 million Fannie Mae loan that paid a 4.13% coupon and was set to mature in June. Teresa at Arrowhead was built in 1999 about 26 miles north of Phoenix. It has one, two and three bedroom units with between 638 and 1,353 square feet and monthly rents that start at $1,351 per unit.
- [37:55]
C
It's interesting, Steven. You know, it's great to see some of these Phoenix deals get done. This is a good story in the sense that the previous owner paid 47 million back in 2016, and now you're seeing a pretty nice price appreciation. And I think, you know, the demise of the Phoenix multifamily market maybe never came to full fruition.
- [38:15]
B
Just as an aside, Lonnie, like, because that's a funny market for me. I've always had difficulty, like, pinning down the strength or weakness for that market. Like, what, what do you think has been lending strength there? Like, what's, what's the driving economic force here?
- [38:29]
C
Yeah, it is. If you drive through Phoenix, like, there's. I'm not super familiar with it, but I've been there a handful of times. Like, there's no real economic engine there. I mean, they have some professional sports teams there. The downtown is, I would say, lackluster relative to other large cities. And there was just this huge influx of multifamily. But I'm thinking it has to be demographic, population trends. Like, there just have to be people that want to move to Arizona for either quality of life, affordability, weather, potentially, even though it's crazy hot there. But, yeah, I don't mean obviously, in some of the. More, you know, Scottsdale and some of these other areas. I mean, it's a huge retiree community, very wealthy. But yeah, there's not a whole lot of economic engine driving going on. And from, from what I can tell, my, my few visits there.
- [39:11]
B
Yeah, I mean, I feel like maybe they got a really strong migration shift during COVID and remote work, and that coupled with the ongoing kind of retirement tilt. Right. Because. Well, great climate for golf year round. So, yeah, it's. It's an interesting metro for me. I've never quite been able to put my finger on you know, which way I think the, the wind is blowing there because, well, let's face it, it blows a lot out there. Better when it's 110, 120 degrees.
- [39:39]
C
You know, I, I made a joke. I did a presentation out there a couple of years ago, and I got on stage and I said, you know, luckily when I flew in everyone, I didn't have to worry about the heat out here because it's a dry heat. I'm like, what? My undershirt tells me that you still sweat like crazy in A dry heat because it was like 110 degrees and it was nasty out there. You know I think one other thing might just be the cost of living in California for some people. They can get similar climate, maybe similar vibe in Phoenix and in Arizona broadly. You know I did look online, it does look like there's a forward looking driver. I don't know. This has impacted things to date but TSMC Semiconductor investment in North Phoenix. So they've expanded about 165 billion. Plan for Habs 2 advanced packaging facilities in R and D center. The hope is to create 6,000 direct high wage jobs. So anchors are growing, you know what they're calling Silicon Desert manufacturing corridor in north and west Phoenix. So obviously you know that is is a huge draw at this point given what we've talked about. And I think just overall they have a very business friendly environment. You know, it's just typical Sunbelt drivers.
- [40:42]
B
Yeah, I mean I think back to like mid 2000s, like 2005 to 2010. I mean you saw some just mega industrial deals getting done out there both on logistics as well as like high end manufacturing. Like you're saying tsmc, I mean that's a newer project but it's a really, really interesting growth story for me.
- [41:01]
A
So we mentioned Affinius Capital in the multifamily segment, but we also have a story in industrial that Affinius lent $94.5 million for purchase of an industrial complex near Fort Wor, Texas. So I think we'll have you take this one. Lonnie.
- [41:16]
C
Yeah, Shout out FTW Fort Worth, Texas. Best small big city in the country and cleanest, safest downtown for sure. So you talked about the industrial complex near Fort Worth, Haley. So it's at Chisholm 20 Commerce Park. 917000 square foot industrial complex in Benbrook, Texas. So this is actually southwest of Fort Worth. According to the real deal, locally based energy company purchased the four building property from Jackson Shaw out of Dallas. Sales price was not immediately known te non disclosure state. But as you mentioned, affinius did lend 94 and a half million on the on the the complex. They provided the financing which was arranged by CBRE. Chisholm 20 sits on a 69 acre site. It's about 10 miles southwest of Fort Worth, was completed in November of 2024 and is 82.6% leased to five tenants.
- [42:06]
A
Okay, so we'll close today with some programming notes. I can't close this podcast without mentioning Trep Connect. This is our conference taking place May 6th and 7th in New York City and we haven't given a shout out to all of our speakers yet. So I wanted to quickly run through the list of all our confirmed speakers. We have several other firms who have committed and we will be announcing those speaker names soon. But you'll get to hear from executives including Bill Sexton, CEO of Trimont Victor Kalanog, Managing Director and Global co Head of Research and Strategy at Manulife Lindsey Stevenson, Managing Director of CMBS Investments at Prime Finance Sameer Tejpal, Managing Director and Head of Capital Markets at Madison Realty Henry Fox, Managing Director, Data Centers and Digital Infrastructure at Newmark Seth Glasser, Senior Managing Director at Marcus and Millichap Sam Tenenbaum, Senior Economist and Head of Multifamily Insights at Cushman and Wakefield Barbara Denham, lead Economist at Oxford Economics our friend John B. Aka Dr. Jetyield, EVP and head of Commercial Real Estate and Specialty Finance at Byline Bank Stuart Baldwin, Partner at Hoads Wheel and Associates Fraser Gizzelman, Director of Loan Strategies at Stifel and Robert Sarama, Principal Financial services advisory at PwC. So lots of great firms speaking on all different topics across lending, capital markets, data centers, AI, infrastructure, risk. So stay tuned for more announcements from our team. We'll have full panels announced in the next few weeks and we'd love to have you join us. We still have some tickets available, so reach out to us today. If you're coming from out of town, we have hotel room blocks. We'd love to make it as easy as possible to get you in New York City, meet the Trek team and really get access to the 200 attendees throughout the conference. This is not a trade show event. You'll really get one on one time with a lot of the decision makers and the people really doing great things in commercial real estate. So we hope to see you there. And turning to some shout outs for this week, we have to give a shout out to Katherine S. Who is a longtime listener and now friend of the show, who will also be joining us as a speaker at TREP Connect. We're still waiting on confirmation, so we'll give you the official shout out once you're ready. But it was so great to meet you and hear about how you've really built yourself up in this business and how you've grown your teams and have your teams listening to the show. So we loved meeting with you and can't wait to see you in New York City. Jonah T. Reached out to us and said he loves the show and listens every week on his morning walks. Jim r. Shared our cre cielo data on LinkedIn and said he listens to the podcast every week. We got a lot of great feedback on last week's Cre Cielo segment and we released a blog that had some of those data points in written form if you're interested in that. We'll also be digging into Cre Cielo's more more deeply on our upcoming Market Pulse webinar, so we'll share the invite for that on next week's episode. If you want access, reach out to us and we'll make sure you're on the registrant list. Sean G. Shared our delinquency data on LinkedIn, Mary J. Said she has her whole team of associates listening to the podcast every week, and Samuel P. Wants access to our AI tools and is interested in learning how he can get our data into his models. Trep does not only have front end platforms where you log in and can see our data within our systems, we can get you our data via API. Snowflake if you're building MCP servers or you need our data into in your models or in different ways, reach out to us. We'd love to partner with you and find a way to get our data to make sense for where you work. So great to hear from everyone and we're really excited for the Trep Connect event. Lonnie Steven A lot of our internal Trep employees will also be moderating and presenting at that event, so reach out to us and hope to see you there. So with that we'll close. Thanks to our producer Mariana Sobrana. Join us next week as we look at what's happened during the week and how it may be impacting. If you have a question or just a comment, send an email to podcast at trep. Com and subscribe to the trepwire podcast with your favorite provider. Thank you for listening and stay well.
- [46:31]
B
All right.