Hello Brick Brief readers, 

Happy Monday. In recent news, the housing market is cooling as inventories climb and price growth slows, August office traffic dipped for seasonal reasons, and real estate finance saw blockchain gain fresh validation with a high-profile IPO.

Major news this week includes the Fed’s interest rate decision and national homebuilder Lennar’s Q3 earnings. The Fed is expected to cut rates by 25 basis points. 

🏡 Cooling Home Prices Show Shift Toward Buyers
US home prices rose 1.4% YoY but slipped 0.2% from June to July 2025, signaling improved affordability as investors gain share and half of major metros post price declines. The trend matches Parcl Labs’ August index showing a 0.4% YoY drop, while builders face shrinking profits as demand shifts east and oversupply in the South and West forces heavy incentives.

🏢 Office Visits Dip for Seasonal Reasons, Not RTO Reversal
Nationwide office visits in August were 34.3% below 2019 levels, a gap driven by one fewer workday and peak summer vacations rather than a slowdown in return-to-office momentum. Chicago visits rose 12.5% YoY and San Francisco gained 10.2% on strong AI-driven leasing, while Boston inched up 3.1% and Washington, D.C. fell 3.9%.

🔗 Figure IPO Shows Blockchain’s Edge in Mortgage Finance
Figure’s $787.5M Nasdaq debut jumped 44% to a $7.6B valuation, signaling strong investor confidence in its blockchain-based home-equity lending model. The company’s Provenance platform originated about $6B in loans over the past year by replacing custodians, title firms, and multiple verification layers with a single shared ledger that cuts fees and settles transactions in hours instead of days, giving it a clear speed and cost advantage over traditional mortgage systems.

30Y Mortgage: 6.29%

10Y Treasury Yield: 4.07% (+4 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 781.40 (-0.40%) 

30-day SOFR Average: 4.37%

Fed is expected to cut rates 25 bps in September – Policymakers signal cautious easing as a cooling labor market collides with inflation still above the 2% target (Reuters)

US hiring stalls as tariffs bite – Manufacturing, wholesale trade, and energy lead job losses as companies freeze expansion plans (FT)

US consumer sentiment sinks to a four-month low – University of Michigan index falls to 55.4 from 58.2 in August, marking the second straight monthly decline as worries about business conditions, jobs, and inflation intensify (Reuters)

Tarsadia Capital sent a letter urging $1.86B-listed REIT Sunstone Hotel Investors to sell the company or liquidate assets, arguing that its concentrated portfolio and limited scale leave it undervalued and exposed to earnings swings.

🧱 Sunstone owns just 14 hotels, and its top seven properties generate about 85 % of total profit. This heavy concentration means a single renovation, weather event, or market downturn can significantly impact results.

🧱 The portfolio leans toward upper-upscale and luxury resorts, including the Four Seasons Napa Valley, Wailea Beach Resort in Maui, Hilton San Diego Bayfront, and Marriott Boston Long Wharf. Luxury hotels have recently outperformed the broader hospitality sector, but overall lodging demand is softening as economic uncertainty weighs on travel.

🧱 Shares have struggled since Sunstone’s 2004 listing, falling roughly 44 % while larger peer Host Hotels gained value. Investors view Sunstone as subscale and less liquid, making it harder to raise growth capital and leaving the stock at a discount to estimated NAV.

🧱 Subscale REITs trading below NAV is a theme we track closely. Limited scale, weak liquidity, and constrained growth prospects are driving similar moves across the sector, with $200M-listed REIT Braemar Hotels beginning a sale process after citing a steep NAV discount. Dream Residential’s $354M take-private at a 60% premium and Plymouth Industrial’s $1.07B offer from Sixth Street at a 65% premium show how private buyers are unlocking value through full takeovers or targeted asset liquidations.

🧱 Tarsadia wants Sunstone’s board to launch a strategic alternatives process and add new directors. If the board resists, the fund may nominate its own slate to push for a full sale or a carefully managed asset-by-asset liquidation to capture private-market pricing.

Takeaway: Sunstone owns high-end hotels that remain attractive to private buyers, but its small size and market discount keep the shares below estimated NAV. Tarsadia likely believes a sale or asset liquidation is the most direct way to unlock the value of this luxury-weighted portfolio and avoid the persistent challenges that subscale REITs face in public markets.

US home prices are cooling as inventories rise and prices slip, pressuring homebuilders in the overbuilt South and West to offer steep incentives while tighter Northeast and Midwest markets keep prices firm.

US home prices rose 1.4% YoY and slipped 0.2% from June to July 2025 – Affordability improves as investors gain share and half of major metros post price declines (Cotality)

Homebuilders face shrinking profits as demand shifts east – Overbuilt inventories in the South and West force heavy incentives while tight supply in the Northeast and Midwest drives price gains (WSJ)

US housing market tilts toward buyers – Major metros like Austin and South Florida see rising inventory and price cuts although luxury segments in NYC remain resilient (TheRealDeal)

Insight: Rising inventories in the Sunbelt are forcing real price discovery, which confirms our recent analysis that builder mortgage buydowns could only keep prices temporarily elevated. Recent data from Parcl Labs and Cotality point to housing prices turning negative YoY in August, signaling that a correction is taking hold. This reinforces the view that lasting home affordability has one real solution: making new construction easier and more profitable so supply can meet demand.

 On the other hand, it is possible that Warren Buffett sees this difficult period as a bottom for homebuilders, as he recently made a $1B investment in national homebuilders Lennar and D.R. Horton despite the recent troubles in the Sunbelt housing market, suggesting that he may expect demand and pricing power to strengthen as rates decline.

New apartment supply is tightening as construction slows – 48% of units completed in Q1 2025 rented within three months, lifting asking rents 2.6% YoY to $1,790 (Redfin)

Austin shifts to a buyer’s market – Inventory has climbed to 7.1 months and median list prices have fallen 13.2% from their 2022 peak, improving affordability and giving buyers leverage (Realtor.com)

Nationwide visits were 34.3% below 2019 – Fewer workdays and peak summer vacations explain the wider gap more than a real RTO slowdown (Placer.ai)

Chicago office visits rose 12.5% YoY – San Francisco gained 10.2% on strong AI leasing that is pulling workers back downtown (Placer.ai)

Boston visits increased 3.1% YoY – Washington, D.C. slipped 3.9% as hybrid work and weak tenant demand held back recovery (Placer.ai)

Simpson Thacher set to lease 700K SF at 570 Fifth Ave. in Manhattan, NY – Extell 

Salesforce leases additional 71K SF at Salesforce Tower in Manhattan, NY – La Caisse signs renewal and expansion deal boosting the tech firm’s footprint to over 310K SF (CoStar)

Development negotiating major Midtown office deal with global law firm (CommercialObserver)

Alvarez & Marsal leases 23K SF at One Biscayne Tower in Miami, FL – CP Group signs 11-year deal with the consulting firm’s tax division (CommercialObserver)

Trans-Pacific container rates decline as carriers remove China-built ships – Upcoming U.S. port fees drive vessel swaps and disrupt capacity on Asia–U.S. routes (FreightWaves)

Black Rock Coffee Bar shares surged 32.5% in its IPO to a $1.27B valuation – The 2008-founded chain operates 158 stores in seven states and plans to expand to 1,000 locations by 2035 (Reuters)

Activist investor Tarsadia pushes $1.9B Sunstone REIT to sell or liquidate – The fund cites a small 14-property portfolio, concentrated earnings risk, and years of underperformance to justify a strategic overhaul (Reuters)

Lionstone Development, Flag Luxury, and Ben-Josef Group secure $61.2M loan for Ritz-Carlton South Beach – BHI finances predevelopment of 30 condos and Sagamore Hotel redevelopment (TheRealDeal) 

Rialto markets defaulted $100M loan on vacant 90 Fifth Ave. office in Manhattan, NY – Special servicer seeks buyers after foreclosure attempt on Aby Rosen’s Midtown South property (TheRealDeal)

Blockchain lender Figure jumps 44% in $787.5M Nasdaq IPO to $7.6B valuation – Company specializes in home-equity lending with $6B originated over the past year via its Provenance blockchain (Reuters)

Insight: Figure is an example of how blockchain and crypto are finally seeing real applications in finance, as its Provenance platform enabled about $6B in home-equity loan originations over the past year. By replacing custodians, title firms, and multiple verification layers with a single shared ledger, Provenance cuts intermediary fees and settles transactions in hours instead of days, giving Figure a clear cost and speed advantage over legacy mortgage systems.