Hello Brick Brief readers, 

Happy Monday! Recent reports point to rising concern over regional bank underwriting risks spreading through the financial system, a stabilizing multifamily outlook in 2026, and a temporary boost in weekly hotel performance driven by one-off factors.

I’ll be traveling tonight, so tomorrow’s edition is up in the air depending on Wi-Fi strength and availability.

🧱 Regional Bank Risks Ripple Through Real Estate
The 10-year Treasury yield briefly dipped below 4% last week as investors fled to safety amid renewed concern over regional lenders. The drop followed several bankruptcies in real estate and auto finance that exposed borrowers pledging the same collateral to multiple lenders, raising fears of broader underwriting failures and hidden credit risk across mid-sized banks.

🏢 Multifamily Outlook Stabilizes for 2026
Apartments.com projects that new multifamily supply will slow sharply by 2026, with starts down 71% from 2022 peaks as developers pause in response to high costs and tight credit. Rent growth is expected to resume gradually as excess inventory burns off, though roughly 30% of properties are likely to continue offering concessions as landlords compete for tenants in oversupplied markets.

🏨 Hotel Gains Driven by One-Off Factors
U.S. hotel RevPAR rose 0.6% YoY for the week ending October 11, supported by 2.6% ADR growth and a surge in group bookings across top markets. The improvement appears idiosyncratic, driven by seasonal travel and event timing rather than a meaningful rebound in occupancy or sustained demand momentum.

30Y Mortgage: 6.23% 

10Y Treasury Yield: 4.01% (+6%) 

WSJ Prime Rate: 7.25%

FTSE NAREIT Index: 776.90 (+0.68%) 

30-day SOFR Average: 4.18%

Treasuries rally as investors seek safety – 10-year yield dips below 4% amid regional bank credit concerns, government shutdown delays, and rising Fed rate cut bets (Bloomberg)

Federal worker jobless claims surge – Filings hit their highest level since 2019 as the government shutdown triggers widespread furloughs and income disruptions (WSJ)

U.S. and China plan tariff talks in Malaysia this week – Treasury Secretary Scott Bessent and Vice Premier He Lifeng aim to avert new U.S. tariff hikes ahead of Trump-Xi meeting in South Korea (Reuters)

Fed’s Musalem leans toward October rate cut – St. Louis Fed president signaled support for another 25-bp reduction if labor risks rise, while warning tariffs could keep inflation elevated into 2026 (Reuters)

 The 10-year Treasury yield briefly slipped below 4% last week as investors rushed into government bonds amid rising fears of contagion across regional banks. Shares of Jefferies and several mid-sized lenders fell, with Jefferies shares down about ~25% over the past month. The selloff followed a series of real estate and auto bankruptcies that revealed borrowers had pledged the same collateral to multiple lenders, heightening concern that double-pledged assets and loose underwriting could extend across the banking system.

🧱 Collateral Confusion Hits Real Estate Lenders
Zions uncovered overlapping liens on a $60M loan portfolio tied to MOM CA Investco after finding that several properties securing its debt had already been pledged to other creditors. Western Alliance faced nearly identical exposure through $98M in loans to the same investor group and filed suit to recover losses. Both lenders are now contesting repayment priority in court as evidence points to borrowers pledging the same real estate to multiple lenders. The case adds a new layer of risk for regional lenders already contending with rising delinquencies and refinancing stress across office, retail, and multifamily loans.

🧱 Fraud Fears Broaden Beyond Real Estate
The wave of concern began in auto finance, where Fifth Third Bancorp uncovered irregularities tied to bankrupt lender Tricolor Holdings after finding that assets securing its loans had been pledged to multiple creditors. Jefferies followed with $715M in exposure to car-parts maker First Brands, which also collapsed amid allegations of fraud. In both cases, lenders found that collateral had been double pledged to multiple lenders, leaving them with unexpected losses due to being unable to recover principal once the assets were liquidated in bankruptcy. After multiple cases of double-pledged collateral surfaced through bankruptcy proceedings, investors are now asking a deeper question: how much of this risk is sitting on bank balance sheets built during the current credit boom, where lenders are competing aggressively for growth and loosening verification standards.

🧱 Systemwide Risk Questions Rise
Investors now suspect that overlapping collateral and weak verification standards could extend across regional banks that have lent aggressively. Jamie Dimon warned that the issue may be far broader, stating, “When you see one cockroach, there are probably many more. Everyone should be forewarned on this one.” Each new case adds pressure on banks to strengthen collateral tracking, audit loan structures, and tighten documentation standards. The situation also exposes a structural gap in credit markets: consumer lenders can instantly view every personal loan on a borrower’s record, so why do commercial lenders lack a unified system to confirm whether corporate assets have already been pledged elsewhere?

Takeaway: The bankruptcies of MOM CA Investco, Tricolor Holdings, and First Brands reveal the growing risk of double-pledged collateral across real estate and asset-backed lending. Zions, Western Alliance, Jefferies, and Fifth Third now face exposure that raises doubts about the resilience of regional bank underwriting. We need to watch this closely, as banks remain a primary source of credit for the real estate sector, and the recent drop in Treasury yields shows how quickly markets react when signs of stress hint at a broader banking crisis.

Note: While not directly tied to real estate, I thought this was an important story to highlight. Real estate is incredibly rate-sensitive, and banks remain a key source of financing for the sector.

Construction catches up with demand, giving renters an affordability break – Nationwide rent burden falls from 28.8% to 28.4% as record new supply and landlord concessions cool prices (Zillow)

All-cash home purchases held at 29% in August – Share stayed flat YoY as easing mortgage rates reduced urgency, while the typical down payment hit a record $70K (Redfin)

Multigenerational, co-living, and cohousing models grow for older Americans – Longer lifespans and social needs are reshaping how seniors choose to live and build community (WSJ)

Perenco oil heirs target Brooklyn, NY and Austin, TX housing markets – Family office BNF Capital is scouting residential deals in both cities as it expands beyond its UK office portfolio into high-growth US housing opportunities (Bloomberg)

Salt Lake City and Austin rank as most affordable rental markets in 2025 – DWS Group’s Housing Affordability Review cites high U.S. incomes and fewer supply barriers, placing Dallas and Atlanta among the top 10 (ConnectCRE)

Apartments.com projects 2026 supply slowdown – Multifamily construction starts are down 71% from 2022 highs, setting up gradual rent growth as excess supply is absorbed (Apartments.com)

2026 apartments concessions to stay elevated – Over 30% of properties expected to offer rent discounts as landlords compete for tenants nationwide (Apartments.com)

2026 marks rise of AI leasing – Apartment operators expand use of AI for marketing, fraud detection, and virtual tours to boost efficiency (Apartments.com)

Insight: As you may know, New York and Connecticut have banned AI rent-setting tools, and RealPage is currently facing lawsuits in multiple states over alleged rent-fixing. Even with these restrictions, apartment operators are expected to keep using AI for leasing efficiency, fraud detection, and marketing rather than for price algorithms.

Multifamily capital flows surge despite distress – Investment demand tightens spreads as delinquencies climb to 6.6% and distress tops 9.8%, driven by high supply, soft absorption, and rising costs (GlobeSt)

Jamie Dimon bets $3B NYC HQ will revive office culture – JPMorgan opens its new 270 Park Avenue skyscraper to symbolize New York’s financial strength and in-person work revival (WSJ)

Downtown LA office buildings sell at steep discounts – Properties trade up to 70% below prepandemic values, yet rents have only fallen 22.5% as landlords resist deep concessions despite high vacancies (Bisnow)

Databricks leases 37.5K SF at City Center Bellevue in Bellevue, WA – The San Francisco-based AI firm expands to 110K SF across the region amid rising AI office demand (TheRealDeal)

Manufacturing foot traffic weakens to 2.5% below 2024 levels – September visits lagged last year’s pace as auto sector activity fell sharply following the Novelis plant fire and broader industrial slowdown (Placer.ai)

AI turns the power grid into real estate’s hottest commodity – Developers and investors race to secure “powered land” as hyperscaler demand drives record deals, from BlackRock’s $40B Aligned acquisition to massive Texas buildouts (TheRealDeal)

Cushman & Wakefield highlights nuclear power’s rise for data centers – Explosive AI-driven demand is spurring billions in investment for small modular reactors and carbon-free energy infrastructure (CushmanWakefield)

U.S. hotel RevPAR rises 0.6% YoY for week of 5–11 October 2025 – STR cites 2.6% ADR growth and strong group demand across Top 25 markets, marking the first positive weekly comp since August (STR)

Insight: This is welcome news for a cooling hospitality market. Unfortunately, the strength appears idiosyncratic, driven by fall travel, group events, and favorable calendar timing rather than a sustained recovery in occupancy or underlying demand.

Banks expect CRE loan growth to rebound by early 2026 – M&T, PNC, First Horizon, and KeyCorp forecast renewed lending for multifamily and industrial assets as rates fall and credit conditions stabilize (CoStar)

Harwood secures $100M construction loan for 23-story office tower in Dallas, TX – TPG Capital provided financing for Harwood No. 15, a 340K-SF Uptown project featuring a rooftop restaurant and sky garden, marking a rebound after prior loan distress (TheRealDeal)

Brookfield nears $1.3B refinancing for 660 Fifth Avenue in New York, NY – Citi Real Estate, Barclays, ING, Bank of America, and Santander are providing the two-year CMBS and mezzanine loans following Brookfield’s $400M redevelopment of the 1.3M-SF tower, now fully leased (TheRealDeal)

Dwight Mortgage Trust provides $53M refinancing for multifamily complex in Knoxville, TN – Dominion Group secured the bridge loan for the 230-unit South Banks apartments near the University of Tennessee (CommercialObserver)

BlackChamber Group acquires 38-acre data center site in Gainesville, VA for $160M - Merrifield Garden Center sold 6895 Wellington Rd in Prince William County’s Data Center Opportunity Zone for planned hyperscale development (CommercialObserver)

JDL Development acquires northern portion of failed $6B Lincoln Yards project in Chicago, IL for $84M – Bank OZK sold the land after seizing it from Sterling Bay, which defaulted on a $128M loan issued in 2019 (Bloomberg)

Nahla Capital acquires stalled hotel and condo project The Raleigh Miami Beach in Miami Beach, FL for $270M – The firm bought the property from Michael Shvo, who purchased it in 2019 for $220M (CommercialObserver)

Zions and Western Alliance disclose bad loans linked to a failed Southern California real estate firm – Bank lawsuits allege manipulated loan structures and hidden foreclosures tied to $160M in distressed CRE debt (Bloomberg)

Short-term rental firm Sonder seeks creditor deal to avoid bankruptcy – The company faces $1.5B in liabilities and is working with Moelis and AlixPartners to restructure its balance sheet (Bloomberg)

Rowlett, TX issues default notice to $1B Sapphire Bay mixed-use project – City moves against stalled Lake Ray Hubbard development after years of delays on commercial, residential, and resort components (TheRealDeal)

Madison Realty Capital moves to foreclose on $202M debt tied to 23-story apartment tower The Fay in San Jose, CA – London-based developer Scape defaulted on a $182.5M construction loan secured by the 363-unit property (TheRealDeal)

Qatari owner Al Rayyan Tourism Investment Company faces special servicing on $188M CMBS loan for St. Regis Bal Harbour Resort in Bal Harbour, FL – Firm is seeking a maturity extension on the November-due loan as 2024 net cash flow fell to half of 2021 levels despite positive coverage (TheRealDeal)

Bank OZK prepares to seize 320K-SF life sciences building at Lincoln Yards in Chicago, IL over $59M loan default – Developer Sterling Bay failed to sell or lease the vacant 8-story property at 1229 W. Concord Place (TheRealDeal)

Stand Insurance expands AI-driven coverage – Startup raised $35M Series B to grow from wildfire-prone California into hurricane-exposed Florida, targeting luxury homes with tech-based risk modeling (Bloomberg)

Insight: Stand Insurance uses remote sensing data and AI to model how wind, heat, and embers could damage properties and create tailored mitigation plans for homeowners. One question I have, however, is how accurately the company’s models can account for black-swan disasters like the Palisades or Maui fires or a Category 5 hurricane, since major insurers have pulled back from these markets precisely because one catastrophic event can erase years of profits.

Juniper Square survey finds 80% of GPs piloting AI in private markets – Efficiency emerges as the leading application frontier for AI adoption (IREI)