S2 Just Swiped Right On Fort Capital

[Bisnow First Draft]

It’s a multifamily-industrial meet-cute.  S2 Capital, a multifamily investor with 50,000 units under its belt, is buying Fort Capital, which owns 11M SF of Sun Belt industrial.  The deal is just for the operating company and does not include Fort Capital’s properties, according to The Promote. S2 CEO Scott Everett told PERE the firm intends to scale up its industrial footprint to match its residential one. That will be spearheaded by Chris Roach, former CEO of appraiser BBG, as president and Parker McCormack, a former JLL senior director of capital markets, as chief investment officer.  Fort Capital founder Chris Powers will serve as an adviser for six months and will retain control of its properties until they are sold or recapitalized.         Multifamily and industrial have had similar trajectories since the Global Financial Crisis and especially since the pandemic began.  Demand for both exploded, construction ramped up aggressively and pricing soared. Industrial’s 10-year pricing growth is an insane 102.7% as of June, per MSCI, and was consistently the best-performing asset class up until February. Multifamily had the second-best growth over the last decade, at 68.1%. But both sectors overbuilt, and pricing and rental growth have been moderating. Industrial prices are up 1.6% YOY, and apartments are up 0.1%.  Everett said he thinks both asset classes have hit bottom and are poised to take off again. He sees a five-year runway of opportunity. It has a new $373M fund to do it with. That just closed a few weeks ago, behind its $600M target. — Catie Dixon, Jay Rickey, Mark F. Bonner and Kayla Carmicheal Not getting The First Draft in your inbox? Click here to sign up. Got any feedback or a news tip? Email first...@bisnow.com. You can catch all episodes of First Draft Live here. CRE News Quiz Another real estate company is hopping on the data center gold rush, launching a new division to enter the sector. Who has Cresa hired after nearly three decades at Newmark to lead the venture? (Answer at the bottom.) On Our Radar RFK Jr. cuts deepen the uncertainty for struggling life sciences. U.S. Health and Human Services Secretary Robert F. Kennedy Jr. has canceled 22 mRNA vaccine projects totaling $500M, escalating what industry leaders are calling a full-blown crisis for life sciences real estate. The cuts are part of a Trump administration rollback that includes $2.6B in National Institutes of Health contract cuts and 10,000 HHS layoffs, including 3,500 at the FDA. Back in April, Blue Rise Ventures’ Mark Romney had a warning for Bisnow: “You’re not trimming fat — you’re cutting into the muscle.” Duke University has since paused expansion after losing $580M in NIH grants. Incubators dependent on federal dollars face an uncertain future, and national lab vacancy now exceeds 20%, according to CBRE.  JLL’s quiet hot streak continues. JLL pulled in $6.25B in revenues in Q2, up 10% from last year, with earnings per share rising 29% — its fifth straight quarter of double-digit growth. The company is riding strong demand for outsourced services, with project and workplace management driving an 11% jump in property services revenue. Investment sales and debt advisory also showed signs of recovery, pushing capital markets revenue up 12%. Leasing rose 5%, led by industrial and pockets of office strength. JLL also boosted cash flow, cut its debt to $1.6B and doubled its stock buybacks. Apparently, JLL liked what it saw and raised its full-year profit target, a common refrain this quarter. Who needs FEMA or NOAA? Well, property managers. Sweeping cuts to the National Oceanic and Atmospheric Administration, including the firing of 800 scientists and a proposed 17% budget reduction, are leaving property managers scrambling to prepare for hurricane season without key federal forecasting support. With NOAA now dropping key storm cost-tracking metrics and FEMA suffering staffing losses, multifamily firms like Greystar and Bainbridge are ramping up private partnerships, AI-based response systems and emergency supply chains. “The tragedies really happen when people think FEMA will save them,” Bainbridge’s Kevin Kochersperger said. “You can never depend on a government agency to be there.” UK’s got the yield. CBRE’s 2025 UK real estate midyear review shows total property returns reached 4.2% in H1 and are projected to surpass 8% by year-end, driven by a 1.6% rise in rental values and 1.4% capital value growth. Investment volumes remain down YOY, but momentum is building: £4.3B in BTR deals are under offer, retail investment hit £3.6B, and logistics saw £2.5B in H1. Inflation is expected to peak at 3.5% this summer, with three more Bank of England rate cuts forecast. London’s office rebound is real, with red-hot demand, vanishing Grade A space and big-money moves. This Morning’s News M&A — Boxabl Going Public Via SPAC At $3.5B Valuation (Bisnow): Boxabl is merging with special purpose acquisition company FG Merger II Corp. at a $3.5B valuation. Boxabl offers prefabricated modular homes marketed as accessory dwelling units. Read more here.     Courtesy of Shalom Baranes Associates         AFFORDABLE HOUSING — FHFA Expands LIHTC Caps (FHFA): U.S. Federal Housing says it will double the amount that Fannie Mae and Freddie Mac can invest in Low Income Housing Tax Credits properties to $2B each. Read more here. 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RETAIL — 7-Eleven U.S. IPO To Fuel Expansion (Seeking Alpha): A listing of its 7-Eleven business would allow for faster store rollouts in the U.S., Seven & i Holdings CEO said. Read more here. RETAIL — Claire’s Files For Bankruptcy Again (BBC): Teen jewelry chain Claire’s is seeking bankruptcy protection for the second time. The retailer says its stores will remain open. Read more here.           Courtesy of Sudio V Architecture         HOUSING — This Suburb Shows Rent Relief Is Possible (WSJ): Streamlined environmental reviews, tax incentives and standardized zoning have made it easier to build homes in New Rochelle, New York. As median rents surged nationally, New Rochelle’s median rent declined. Read more here. CAPITAL MARKETS — One-Third Of California CRE Projects Delayed (Allen Matkins and UCLA): About 36% of developers are pausing or killing construction, 85% are hesitant to launch new California projects and 44% expect distress levels in CRE capital markets to rise over the next year. Read more here. HOUSING — Prices Falling In Over A Third Of U.S. (John Burns): Resale prices are down YOY in 53 of the 150 markets tracked by John Burns. Builders have too many completed and unsold homes for the first time in years. Read more here. *** BTW … It's Beyoncé versus SNL. Outstanding Variety Special (Live) has been added to the Emmys lineup. For its first winner, Bey’s Super Bowl halftime performance on Netflix and NBC’s 50th birthday special for SNL are going head-to-head. Most-read story on the website yesterday: Trump Nominates Former Cushman & Wakefield CEO To Be GSA's Permanent Leader  Most-clicked story in yesterday’s edition of The First Draft: Commercial Real Estate Investors Are Done Waiting For A Rate Cut  So You’ve Come For An Answer Michael Morris.  Morris launched Newmark’s data center practice 20 years ago but is ready to knock it down a peg — he said he is being given “any and all necessary resources” to make Cresa’s platform the best in the world. *** 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 AI. We’d love your feedback! Email us at first...@bisnow.com.

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