The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing new tariffs, major M&A activity, and a continued race to expand data center infrastructure.

🌐 Tariff Tensions Rise Again

The U.S. will impose 25% tariffs on all Japanese and South Korean imports starting August 1, escalating a global trade war and triggering warnings of retaliation. While the EU secured exemptions for key goods, heightened trade uncertainty adds risk to supply chains and global investment flows.

🏢 BlackRock Expands Private Market Reach

BlackRock is acquiring $7.3B net-lease firm ElmTree Funds to deepen its exposure to long-duration real estate cash flow and scale its Private Financing Solutions platform. By blending real estate and private credit, BlackRock is building a flexible alternative investment engine for institutional clients.

⚙️ AI Fuels Data Center Arms Race

Traditional industrial players like Honeywell and Generac are pivoting to data center infrastructure amid cooling factory output and surging AI-linked demand. CoreWeave’s $9B acquisition of Core Scientific adds 1.3 GW of capacity as firms race to secure the power and scale needed for AI growth.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.79% (+4 bps) 

10Y Treasury Yield: 4.39% (+6 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 764.32 (-0.93%) 

30-day SOFR Average: 4.33%

Market Pulse & Rate Watch

Rising tariffs and rate uncertainty add pressure to global supply chains and capital markets, creating a more volatile backdrop for real estate investment and development.

Trump ramps up tariff war – U.S. to impose 25% tariffs on all imports from Japan and South Korea starting Aug. 1, extending global trade war as letters warn of retaliation (Reuters)

EU avoids U.S. tariff hike notice – Bloc nears deal for limited exemptions on autos, aircraft parts, and key exports as August 1 deadline looms (Reuters)

Fed paper warns risk of returning to near-zero rates remains – Despite higher current levels, long-term uncertainty could push the Fed back toward ultra-low borrowing costs (Reuters)

Brick by Brick: BlackRock to Acquire $7.3B Net-Lease Firm ElmTree Funds

BlackRock is acquiring ElmTree Funds, a St. Louis-based net-lease real estate investment firm managing $7.3B in assets across 122 properties and 31 states. The deal expands BlackRock’s push into private real estate and will integrate ElmTree into its newly formed Private Financing Solutions platform, created through its $12B acquisition of HPS Investment Partners.

• ElmTree specializes in build-to-suit industrial properties leased to single tenants under long-term agreements, often with investment-grade credit
• The acquisition is primarily stock-based, with additional performance-tied payouts over the next five years
• ElmTree brings expertise in owning and operating triple-net assets, which are critical to corporate tenants and provide durable cash flow
• BlackRock aims to scale its alternatives platform by combining ElmTree’s real estate knowledge with HPS’s credit solutions and deal origination capabilities
• CEO James Koman will remain in place and continue to lead ElmTree’s investment strategy within BlackRock
• The $1T net-lease market is seen as a major growth area for institutional investors seeking stable yield and inflation protection

Takeaway: BlackRock is continuing its expansion into private markets by pairing long-duration, income-generating real estate with flexible private credit. ElmTree’s assets provide BlackRock with consistent cash flow and strategic exposure to the net-lease sector, while the broader Private Financing Solutions platform offers the scale and capital to pursue larger sponsor-backed deals in a shifting commercial real estate landscape.

Residential

Affordability and economic uncertainty are sidelining buyers, pushing more households into rentals and reinforcing demand strength for multifamily investors

U.S. home price growth slows to 1.8% in May – National gains hit post-2012 low as affordability, inventory, and ownership costs weigh on buyer demand (Cotality)

U.S. renter households hit record 46M as first-time buyers vanish – Affordability pressures fuel demand for rentals, boosting landlords amid falling vacancies (WSJ)

Home purchase sentiment dips as job fears rise – Fannie Mae index falls below 70 in June amid rate uncertainty and growing recession concerns (Realtor.com)

Multifamily

U.S. apartment rent growth slows to 0.9% in Q2 – Surge in new supply cools pricing power as San Francisco, Chicago lead gains among top markets (CoStar)

Multifamily sales fall 18% in May – Transaction volume dropped to $8.2B, ending an 11-month streak of growth, as garden deals plunged 30% and sellers face pricing pressure and maturing debt (MultiFamilyDive)

Office

Leasing

WeWork leases 60K SF in New York City at 250 Broadway – New Lower Manhattan location spans five floors as firm ramps NYC coworking presence post-bankruptcy (Bloomberg)

Mott MacDonald leases 25K SF at NYC’s Empire State Building – Engineering firm adds second Manhattan office in Midtown property owned by ESRT (CommercialObserver)

Industrial

U.S. import tariffs average 21% on containers – Maersk says effective rate down from April peak of 54% as China tariff pause nears expiration (FreightWaves)

Market Mix

Retail

Mall traffic dips in June after spring surge – Indoor malls lead with smallest drop as visit duration rises and long-term open-air momentum holds (Placer.ai)

Financings

Loans

Dwight Mortgage Trust lends $230M for Ohio healthcare portfolio buy – Complete Care and LionStone secure financing for 19 nursing and assisted living properties totaling 1,896 beds (CommercialObserver)

Refinancings

QuadReal provides $79M refi for cold-storage facility in suburban Atlanta, GA – RL Cold and BGO JV secures loan for fully leased 268K SF property in Lula, GA (CommercialObserver)

M&A

Company M&A

Cloud computing firm CoreWeave to acquire Bitcoin miner Core Scientific in $9B all-stock deal – Purchase adds 1.3 GW of U.S. data center capacity as firm deepens AI infrastructure control (Bloomberg)

BlackRock will acquire $7.3B AUM industrial real estate firm ElmTree Funds – Deal adds 122-property portfolio across 31 states as BlackRock expands private markets push (Bloomberg)

Japanese financial services firm ORIX acquires 71% stake in lending and advisory firm Hilco Global for $776M – Deal includes $1B commitment to launch private credit strategy in U.S (ConnectCRE)

Building & Portfolio M&A

Hospitality

Blackstone to buy Florida’s Sunseeker Resort for $200M – Allegiant exits $720M Charlotte Harbor project after pandemic and storm setbacks strained returns (Bloomberg)

Cain to buy former Trump SoHo in Manhattan for $175M – CIM exits Dominick Hotel on Spring Street as Cain expands luxury repositioning strategy in NYC (Bloomberg)

Land

New York Power Authority buys Astoria site from BP for $207M – 15.7-acre Queens property to support clean energy infrastructure near existing NYPA facility (CommercialObserver)

Office

Saudi sovereign wealth fund PIF invests $200M in NYC office tower – Takes two-thirds stake with Related in $1B+ Central Park skyscraper as foreign capital returns to Manhattan (WSJ)

Multifamily

Bell Partners buys Montane Apartments in Denver, CO for $133M – The 400-unit complex in Parker, sold by Starlight Investments, adds to Bell’s 7,400-unit regional portfolio (ConnectCRE)

Institutional Fundraising

Apollo to raise $5B for nontraded CRE REIT – SEC clears share sale for ARIS, Apollo’s debt-focused vehicle with multifamily and industrial assets (Bisnow)

Texas Teachers’ Retirement System commits $675M to value-add real estate funds – June allocations include $250M to Blue Owl for industrial, office, retail and $225M to Faropoint’s industrial fund (IREI)

S2 Capital raises $373M for multifamily value-add Fund II – New vehicle exceeds prior fund as firm targets high-growth market investments (IREI)

Distress Watch

Office CMBS delinquencies hit a record 11.08% in June, while overall CRE delinquencies rose to $31.4B in Q1 2025, with multifamily the only major sector showing improvement

Office CMBS delinquencies hit record 11.08% in June – Overall delinquency rate rose to 7.13% as lodging also spiked, while multifamily was the only major sector to improve (Trepp)

CRE delinquencies hit $31.4B in Q1 2025 – Multifamily losses peak at $767M as loan distress grows across FDIC-insured banks, per CRED iQ (CommercialObserver)

Gift wrap maker DGA files for bankruptcy amid tariffs and retailer Joann’s collapse – Plans to sell assets and wind down ribbon unit as consumer demand weakens (WSJ)