Hello Brick Brief readers, 

Good morning. Today we’re seeing more M&A in the REIT space, data centers on spending watch after Nvidia’s earnings, and affordability continue to strain housing. 

🏭 REIT M&A Unlocks Value
Elliott has taken a top-five stake in Rexford Industrial as its Southern California portfolio trades near NAV and faces softening fundamentals. Paramount Group is drawing bids from SL Green, Vornado, Empire State, and Blackstone, while Braemar Hotels has launched a sale process after activist pressure, showing how undervalued REITs are turning to M&A to close the gap between public pricing and private asset values.

💾 Data Center Spending Watch
Nvidia’s latest results showed growth slowing and data center revenue landing just below expectations. Analysts see this as a sign hyperscaler spending could tighten in the near term, though Google’s $9B Virginia buildout and Jensen Huang’s $3T–$4T projection for AI infrastructure by 2030 reinforce expectations of continued demand.

🏠 Housing Affordability Strains
Zillow expects mortgage rates to hold in the mid-6% range through 2025 which will keep affordability stretched. Sellers are retreating for the first time in two years while late rental payments continue to rise, signaling persistent pressure across the housing market.

30Y Mortgage: 6.51% (-1 bps) 

10Y Treasury Yield: 4.23% (-4 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 776.74 (-0.76%) 

30-day SOFR Average: 4.36%

Fed’s Williams cautious on September cut – Says rate decision hinges on upcoming jobs and inflation data, despite markets betting on easing (Reuters)

EU to propose removing US tariffs this week – Plan fast tracks industrial duty cuts and grants preferential rates on seafood and agriculture to secure car tariff relief (Bloomberg)

Elliott Investment Management has built an active stake in $9.9B REIT Rexford Industrial Realty, making it one of the REIT’s top five investors and setting the stage for potential activist pressure.

• Elliott is one of the world’s most prominent activist funds, known for taking positions in undervalued companies and pushing for strategic shifts, restructurings, or outright sales to unlock shareholder value
• Rexford is a pure-play industrial REIT focused on Southern California, where it owns roughly 424 infill and last-mile properties totaling 51M SF near ports, airports, and population centers one of the most supply-constrained industrial markets globally
• The stock is trading near or slightly below NAV depending on the valuation model. Some estimates peg NAV in the high-30s per share, while others stretch into the mid-50s, suggesting Rexford could be undervalued if private market cap rates are applied
• Analysts have long speculated that Rexford could be a takeover target, especially given private equity’s appetite for industrial assets. Smaller peer Plymouth Industrial REIT just received a $1.07B buyout offer from Sixth Street, highlighting how private capital is circling the space
• Elliott may see Rexford as a candidate for similar strategic action, particularly with shares lagging despite the company’s trophy SoCal portfolio and recent $1B acquisition from Blackstone
• Cushman & Wakefield’s latest Q2 report shows Southern California industrial is cooling, with Inland Empire vacancy at 7.9% and rents down more than 10% YoY. Elliott could press Rexford’s management to accelerate capital allocation changes or explore a sale while valuations remain near NAV
• The broader theme is clear: private capital is circling undervalued REITs, and Elliott may view Rexford as a chance to unlock shareholder value through a transaction, whether via a merger, asset sale, or outright buyout

Takeaway: By building this position, Elliott is now in a place to influence one of the most strategically located industrial REITs in the country. With Rexford’s stock trading near NAV and Southern California fundamentals showing signs of cooling, market analysts suggest there may be a window for Elliott to push for a sale, merger, or capital shift to narrow the gap between public market pricing and private asset values.

Trump administration takes control of Union Station in Washington, D.C. – DOT to assume management of the 118-year-old hub from Amtrak and Union Station Redevelopment Corp. amid planned $8.8B renovation (Bisnow)

Zillow does not see affordability improving this year with mortgage rates expected to stay in the mid-6% range, leaving the housing market frozen as renters fall behind on payments even while affordable listings rise.

Zillow sees mortgage rates ending 2025 in mid-6% range – Powell’s Jackson Hole remarks boosted odds of a September cut, but affordability hurdles keep pressure on buyers and sellers (Zillow)

Insight: Zillow’s forecast for mortgage rates to hold near 6.5% through 2025 signals they expect the Fed to cut once this year rather than ease significantly.

Home sellers retreat alongside buyers – Active sellers fell by 14K since May to 1.95M, the first decline in two years, though sellers still outnumber buyers by 36% creating the widest gap on record (Redfin)

Affordable listings hit 3-year high – 439K homes were affordable to median-income buyers in July, up 20% YoY as inventory rose 18%, though just 31.7% of listings were affordable overall (Zillow)

Renter distress deepens as late payments rise – Share of late collections in small rentals climbed to 11.7% in June, up from 8.8% in 2024, as household debt and costs outpace earnings (GlobeSt)

Commuting shifts to 4 p.m. departures – JLL research shows hybrid work and childcare are reshaping office worker patterns and real estate strategies (IREI)

Nearly half of office sales close at discounts – 46% of 2025 deals sold below prior valuations, with steepest declines in Houston (69%), San Francisco (67%) and Manhattan (64%) as distress deepens (GlobeSt)

Elliott takes activist stake in $9.9B REIT Rexford – Shares rose 4.4% as takeover speculation builds (Bloomberg)

Trans-Pacific container rates are falling – July frontloading ahead of tariffs marked the peak, with implementation lags and weak demand limiting further surges (FreightWaves)

SitusAMC reports early CRE recovery signs – Cap rate growth is stabilizing, transaction activity is starting to return, and originations are picking up as investors redeploy record cash reserves despite high rates and policy volatility (ConnectCRE)

Bath & Body Works visits surged 17.5% in July – Semi-annual sale drove same-store traffic up 12.7% despite weaker discretionary spending (Placer.ai)

Google to invest $9B in Virginia AI infrastructure – Funding through 2026 will expand cloud and AI capacity (Reuters)

Nvidia beat Q2 earnings expectations but gave a cautious Q3 revenue outlook that signaled its AI-driven growth is starting to slow. Data center revenue landed just below expectations, showing hints that hyperscaler spending may be tightening at the margins if near-term returns from AI remain unclear. CEO Jensen Huang still projected $3T to $4T in AI infrastructure investment by 2030 and emphasized the long-term scale of demand.

Affinius Capital provides $90M refinancing for 1.5M SF industrial park in Adairsville, GA – Loan recapitalizes Georgia North Logistics Buildings 3 and 4 developed by Ashley Capital (CommercialObserver)

Madison Newbond provides $79M refinancing for JW Marriott Marquis in Miami, FL – Loan recapitalizes 357-key, 41-story hotel owned by MetLife and MDM Group within the Met Square complex (CommercialObserver)

$1.5B REIT Paramount Group draws bids from SL Green, Vornado, Empire State and Blackstone – NYC and San Francisco office landlord advances to second sale round amid SEC probe of CEO perks (TheRealDeal)

$186M luxury hotel REIT Braemar begins sale process – 3,400-room portfolio faces low multiples and activism pressure (Bisnow)

Insight: Geopolitical tensions are dragging on U.S. hotels as international arrivals are projected to fall 8.2% in 2025, including a 20.2% plunge from Canada, delaying recovery to pre-2019 levels until 2029. Luxury has held up better than other segments, yet Braemar’s board believes its $186M portfolio may be undervalued by public markets and has begun a sale process.

Braemar is following a precedent set by Dream Residential’s $354M take-private at a 60% premium and Plymouth Industrial’s $1.07B offer from Sixth Street at a 65% premium to pursue similar value for its shareholders. This highlights a theme we’ve been tracking at The Brick Brief: subscale REITs face limited scale, weak liquidity, and scarce growth capital, making them targets for private buyers looking to acquire quality portfolios at discounted valuations.

Related Fund Management buys 292-unit Aura Delray Beach in Delray Beach, FL from Trinsic for $116M – First South Florida deal since Stephen Ross spinoff, with $59M Freddie Mac loan (Bisnow)

Raintree Partners buys Cypress Point apartments in Ventura, CA from The Towbes Group for $100M – 268-unit complex sold for ~$373K per unit, one of few large trades in the city over the past decade (CommercialObserver)

Highwoods buys 1.1M SF SEVEN20 garage in Charlotte, NC from Lincoln Harris for $110M – 14-level facility includes 3,057 stalls, 14.4K SF of retail, and a pedestrian bridge to Bank of America Tower (REBusinessOnline)

 $60M loan default pushes Herald Square hotel in New York, NY toward foreclosure – LuxUrban allegedly failed to pay $1.6M in rent at 960 Sixth Ave, compounding landlord’s debt troubles (TheRealDeal)

Construction tech startup Heave raises $7M Series A – Tampa-based online heavy equipment repair marketplace serves 600+ machines monthly and plans Southeast expansion (CommercialObserver)