There’s a lot going on with REITs this morning, so we’ll take you through a few highlights.

Starwood REIT, whose liquidity issues have led it to limit redemptions this year, has gotten a tender offer from MacKenzie Realty Capital. MacKenzie has offered to buy 700,000 Class S shares for $17.50 per share. That would give SREIT $12M to play with, but the offer is a 24% discount to Starwood’s estimated net asset value.

Equity Residential and Welltower both raised their earnings guidance for the remainder of the year after strong Q2 results. Equity Residential’s profit rose from $139.2M a year ago to $177.5M last quarter, as its same-store net operating income increased 3%. Funds from operation rose but fell short of analyst expectations. 

Healthcare REIT Welltower said its senior housing investments led its quarterly gains — same-store NOI in that space rose 21.7% in Q2. It completed $1.4B in acquisitions and loan funding and $251M in development funding last quarter.

NETSTREIT Corp., a single-tenant net lease retail investor that owns 11.7M SF nationwide, took a $2.8M loss in Q2 from an email phishing scam. Fraudsters posing as one of the company’s development partners received payments totaling $3.3M via an email scam. Insurance covered $500K. 

— Kayla Carmicheal, Catie Dixon, Jay Rickey and Mark F. Bonner

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On Our Radar

• The two-day Federal Reserve meeting has begun. Investors and CRE are on high alert for any clues about how Fed chiefs will dissect recent economic data. Though few economists expect a rate cut on Wednesday, economists are hoping Fed Chair Jerome Powell will offer some sort of clear indication of when cuts could begin (we’ll see).

• The U.S. national debt has exceeded $35T for the first time. About $1T has been added to the debt level since the beginning of the year. Last week, JPMorgan warned investors that the debt ceiling will continue to grow and further limit “fiscal flexibility” if the U.S. government needs to respond to an economic downturn. On the campaign trail, Vice President Kamala Harris and former President Donald Trump have said little about the ballooning national deficit.

• Consumer enthusiasm is becoming a tale of three age groups. The consumer confidence index increased to 100.3 in July from 97.8 in June, reflecting mixed feelings about the U.S. economy, new data showed this morning. While the index showed a slight uptick in income and labor sentiment for the young and old, consumers in the 35 to 54 age range are becoming more cautious about their spending habits as they weigh economic uncertainty. 

• The S&P Case-Shiller National House Price Index rose 5.9% year-over-year in May. Though the pace of growth has decelerated compared to previous months, this is still a new high for the index. New York had the highest annual gain with a 9.4% spike in May, followed by San Diego and Las Vegas with increases of 9.1% and 8.6%, respectively.

• There are a bunch of CRE earnings reports today: American Tower Corp., Brixmor Property Group, M/I Homes, Extra Space Storage, Site Centers, Public Storage, W.P. Carey, Acadia Realty Trust, JBG Smith. Microsoft is also reporting.

• America’s quirky, Rubik’s cube-solving pommel horse prodigy doesn’t wear a cape. Stephen Nedoroscik wears thick-rimmed glasses like Buddy Holly, but when he took them off on Monday, he transformed into Superman and carried the U.S. men’s gymnastics crew to its first team medal in 16 years. The 25-year-old became one of these Games’ first internet celebrities (check your feed) and he can still win gold individually when he straddles the pommel horse once more on Saturday.

• The U.S. women’s gymnastics team will compete for gold at 12:15 p.m. ET. The world will be watching to see if Simone Biles has shaken the twisties and if the calf injury she sustained Sunday has healed.

This Morning's News

BROKERAGE — Cushman Sees 5% Revenue Drop Despite Better News On Leasing And Cash Flow (Bisnow): Cushman & Wakefield cut $20M in jobs last quarter and sold a portion of its business but it wasn’t enough to counteract a fall in revenue. On the other hand, global leasing rose 2% and the company paid off $45M in loans maturing this year and reduced interest rates on $1B more. Parse through Cushman & Wakefield's Q2 results.

INVESTMENT — First Foundation Pulls Back From Multifamily (Mortgage Professional America): First Foundation, which this month received a $228M financial injection from a group of investors headlined by Fortress Investment Group, said it plans to reduce its exposure to multifamily loans. Why is the bank backing away from apartments?

RETAIL — Big Lots’ Turnaround Efforts (Retail Dive): Big Lots is executing a transformation plan aimed at revitalizing its business. Lease concessions and deferrals and sale-leasesbacks are a big part of its strategy, which analysts say may not be sufficient to get the retailer back on track. See what Big Lots is trying to do.

Today’s Deep Dive: For Drugmakers, Outsourcing In The U.S. Brings Biomanufacturing Building Boom 

Weight-loss drugs are continuing to bulk up demand for real estate.  

Contract development and manufacturing organizations, the biomanufacturers that make medications, are expected to double globally by 2033. The spike in demand for semaglutide medications is behind that boom, and real estate is a big winner as CDMOs look for land and factories. 

“We're seeing a huge influx in the U.S.,” said Charlie Hoff, JLL life sciences contract organizations leader. “Time is money, and big firms are competing to see how fast they can get drugs to market.”

Read the full story here.

LIFE SCIENCES — Biomed Realty's Big Refi (CoStar): Blackstone's BioMed Realty is close to securing a $717M refi on a portfolio of life sciences properties. The loan origination was delayed a month and is coming in lower than expected. Get the details.

INVESTMENT — NFL's Richard Sherman Dives Into Real Estate (Forbes): NFL star Richard Sherman's Players Company, an investment platform for professional athletes and other accredited investors, is expanding its reach into real estate investments through a collaboration with real estate investment platform Mogul Club. See how they are taking the CRE gridiron.

INVESTMENT — Investors Circle £930M UK Property Trust (Bisnow): Balanced Commercial Property Trust, which has a portfolio value of £928M, in considering offers from outside investors to buy the company. The company began a strategy review in April because it is trading far below its NAV. It intends to wrap it up this quarter, which could result in a sale of a “managed wind down.” Here’s the deal.

HOUSING — Mortgage Industry's Rate Paradox (WSJ): The mortgage servicing industry has benefited from higher rates as people are holding on to their mortgages longer. Nonbank mortgage servicers like Mr. Cooper Group, which last week announced it would acquire New York Community Bancorp's mortgage-servicing and origination businesses, could even continue benefiting if interest rates start going down. Explore the Catch-22.

DEVELOPMENT — As Obama Center Progress Accelerates, Its Leaders Hope It Will Rev Up South Side Economy (Bisnow): Construction of the Obama Presidential Center topped off in June as it moves toward a 2026 opening. Community leaders hope it will revitalize Chicago’s South Side, which is typically an underfunded part of the city. Learn what economic impact the museum is expected to have.

OFFICE — Colliers On Modern Office Spaces (Colliers): A new report from Colliers explores how office design is evolving to accommodate hybrid work models, focusing on flexibility and employee preferences. What do tenants want?

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The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from ChatGPT. We’d love your feedback! Email us at firstdraft@bisnow.com.