$2,000 In, $5,479 Out

[Bisnow First Draft]

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Editor’s Note: The First Draft is where Bisnow connects the dots — policy, capital, deals and power — before the market fully wakes up. Subscribers receive the complete briefing each morning, including exclusive reporting and analysis you won’t find elsewhere. Not a First Draft Insider yet? Sign up here.   Here are two numbers that should stop you cold.  The average monthly Social Security check is just over $2,000.  The average monthly rent for a senior housing unit is $5,479.  That gap is a policy failure playing out in slow motion across every metro in America, and commercial real estate is about to inherit it. The oldest boomers turn 80 this year. Over the next two decades, the 85-plus population will more than double, and that cohort will arrive at a market that has been systematically underbuilt for years and is getting worse. Just 16,423 senior housing units were under construction last quarter, the smallest in the U.S. pipeline since 2012. In part, that’s because it takes up to seven years from entitlement to first resident. And the people who should be breaking ground right now aren't because the numbers don't pencil out without rents that only the wealthiest seniors can afford. Meanwhile, the money that could theoretically solve this is doing something else entirely.  Investors spent $12.1B buying senior housing in Q1 alone — the most active quarter in at least two decades — and the average price per unit hit a record $147K, up 39% in two years.  MetLife Investment Management now calls it the No. 1 CRE investment asset class. But as our newsroom discovered, Wall Street is not piling into senior housing to build more of it. Wall Street is piling in because the shortage itself is the trade. “There were only about 2,500 new senior housing units started in the fourth quarter of 2025, while we expect over 2 million people to turn 80 in 2026,” Ventas CEO Debra Cafaro said on her company's earnings call in May. “Both sides of this demand-supply imbalance are weighted strongly in our favor.”  That tension — between a sector that desperately needs capital formation and a capital market that has discovered it can make more money off scarcity than supply — is one of the defining stories of this real estate cycle, and it extends well beyond senior housing.  READ MORE: America Faces A Massive Senior Housing Shortage. Wall Street Sees Opportunity — Mark F. Bonner, Editor-in-Chief The First Draft is written by Mark F. Bonner, Catie Dixon, Jay Rickey and Kayla Carmicheal. Got feedback or news tips? Hit us up at first...@bisnow.com.  On Our Radar Uncle Sam just became a distressed industrial seller. The Department of Homeland Security spent more than $700M acquiring warehouses as part of a planned $38.3B spree to build out the most aggressive detention expansion in U.S. history, but it is now looking to offload seven of the 11 properties it bought. Bisnow has tracked the program from the start — the above-market acquisitions, the legal challenges, the pause, the inspector general probe — and now the unraveling. The government paid 11% to 13% above market on the way in. With investors working through record vacancy, it won't get that on the way out. 600%, 92%, 31% … let's do the math. The property count of data centers in the main institutional real estate index rose 600% since 2019 as pension funds, sovereign wealth funds and insurers rewrote their portfolios around the artificial intelligence build-out, according to Oxford Economics. The sector returned 92% over that period, but the broader market returned 31%. The best returns are increasingly hoarded by the biggest players. A small group of trophy assets leased to hyperscalers is doing most of the heavy lifting, while smaller operators are scrambling for financing and fighting for power. Over 220 projects are in the global pipeline. Not all of them will make it. 19 states and D.C. are suing to strip a DEI clause from your lease. The coalition filed suit this month to block a Trump executive order that requires federal contractors — including anyone holding a General Services Administration lease or federal construction contract — to certify they won’t “engage in any racially discriminatory DEI activities.” Holland & Knight warned clients that noncompliance risks contract default, False Claims Act liability or exclusion from government leasing entirely. The states argue that the rules are too vague to enforce fairly. For an industry that was already quietly retreating from DEI long before this order landed, the irony is that the government forced the conversation back into the open. ONE NUMBER: 52%. That’s the percentage gap between CRE’s best- and worst-performing asset classes since before the pandemic. In Q1, industrial is up 88.5%, while office is sitting at 36.6% over the same period. That’s the widest spread ever recorded, according to Altus Group. “That is not a recovery gap,” Altus wrote. “It is a structural repricing.”     Sponsored Multifamily Financing In 2026: How Are Projects Moving Ahead?             After a dramatic few years, pressure seems to be easing on the multifamily market, with construction starts slowing and absorption catching up to inventory growth. That doesn’t mean developers should be scrapping their plans for new developments, however, particularly if they are interested in the affordable market.                     CBD Offices: Damsels In Distress Troubled office asset transactions have risen to 19.4% of all sales by volume since 2024, shooting up from 6.2% between 2021 and 2023, according to CommercialCafe.  Central business districts have been hit especially hard. Roughly 73% of offices in these areas have been offloaded at a discount in the last two years. And the average distressed sale has doubled to 200K SF in the last two years, showing larger buildings lack the flexibility to adapt quickly. As such, their value is depreciating. In urban areas outside of CBDs and the suburbs, 48% and 42% of transactions are distressed assets. Overall office vacancy declined again this month to 17.6%, 230 basis points below the peak of March 2025, and construction pipelines are all but dry, but that won't alleviate rampant downtown distress.  — Kayla Carmicheal, Deputy Newsletter Editor This Morning's News OFFICE — REIT Emerges From Bankruptcy (Bisnow): Office Income Properties Trust, which has 122 properties totaling 17M SF across the U.S., filed for Chapter 11 in October. Read more here. ECONOMY — Hormuz Closes Again (CNBC): Iran declared the strait shut Saturday. Windward tracked only 12 transits Sunday vs. 21 the prior day. Read more here.       Wikimedia Commons/Farragutful         GAMING — Little Caesars Family Forms Ilitch Gaming (Ilitch): Ilitch Cos., owner of MotorCity Casino Hotel, the Detroit Tigers and Little Caesars, launched Ilitch Gaming and announced deals to acquire full ownership of Ocean Casino Resort in Atlantic City and purchase Scarlet Pearl Casino Resort in Mississippi. Read more here. LEGAL — AGs Settle With LivCor Over RealPage Rent-Fixing (KGW8): Nine state AGs reached a $7M settlement with LivCor, which manages about 200,000 units, over allegations it fed nonpublic pricing data into RealPage's algorithm. Read more here. FINANCE — Brookfield REIT Sweetens The Deal: Bonus Shares, NAV-Linked Yield (AltsWire): New investors get 3% bonus shares through Oct. 1 or until $250M is raised. Existing investors get 4%. Read more here. HOTELS — Bass Pro Shops Buys Luxury Fishing Resort (Bisnow): Bass Pro is acquiring Cheeca Lodge & Spa in the Florida Keys for $300M. Bass Pro Shops has nearly 200 stores in the U.S. and operates several resorts. Read more here. FINANCE — Private Credit Wobble Pushes Debt Investors To Real Estate (Bloomberg): Pretium’s Jon Pruzan says elevated business development company defaults are redirecting institutional capital toward CRE debt, where hard asset collateral and scarce lenders are creating favorable dynamics for lending. Read more here. OZs — IRS Gives Pre-OBBBA Funds A Safe Harbor (AltsWire): Notice 2026-40 plugs a compliance gap for the 8,800 original OZ funds, allowing them to continue satisfying tangible property and gross income tests through Dec. 31, 2047, even after zone designations expire. Read more here. OFFICE — Assigned Seating Is Coming Back (Bisnow): Hot-desking has been linked to anxiety. Almost 90% of employees with assigned seating report feeling a sense of belonging at work. Read more here. HOTELS — Marriott Portfolio Deal (Hotel Dive): Palisociety will add its 16 hotels in nine U.S. destinations into Marriott's Design Hotels collection, which has more than 300 independent hotels. Read more here. M&A — Brightstar Capital Buys Architecture Firm Erdman (Brightstar): The Dallas PE firm, which acquired architecture platform KZF Design last year, adds Wisconsin-based Erdman to build out a national healthcare and senior living architecture practice. Read more here. CONSTRUCTION — Costs Surge Again (Construction Dive): The Dodge Momentum Index rose 5.9% in May and overall construction starts are up despite material costs running nearly 10% above year-ago levels and grid power constraints. Read more here. DATA CENTERS — Fired Fermi CEO's Proxy War Gets Messier (Fermi): Toby Neugebauer, co-founder and former Fermi CEO, said Double Eagle's John Sellers should be the REIT’s new CEO. But Fermi says Sellers has no interest in the job. Read more here. REITs — Short Interest Ticks Up (S&P Global): Average short interest in U.S. equity REITs rose in May. Single-tenant REIT NETSTREIT was the most-shorted stock at 30.3% of shares outstanding. Read more here. M&A — Digital Realty Buys 1,440 Acres, Acquires Columbia Capital (Digital Realty): The data center REIT agreed to acquire digital infrastructure investor Columbia Capital and separately paid $475M for land near Kansas City capable of 2 GW at full delivery. Read more here. DATA CENTERS — Microsoft To Build Massive Project (Microsoft/Chevron): Microsoft is building a 2 GW data center campus near Pecos, Texas, and signed a 20-year deal with Chevron to provide natural-gas fired power for the $7B project. Read more here. MULTIFAMILY — The Obama Presidential Center Opened (TRD): The $850M center opened on Juneteenth. Single-family and multifamily home prices in its East Woodlawn neighborhood doubled between 2019 and 2025. Read more here. *** BTW … Most-read story on the website Friday: ICE Looks To Offload $700M In U.S. Warehouses As Detention Overhaul Unravels  Most-clicked story in the last edition of The First Draft: World Cup Booking Paces Below Forecasts At 80% Of Hotels  Alan Greenspan, one of the most influential Fed chairs, died this morning at 100. He took up the post in 1987 and held the position for the next 19 years, going on to lead a post-Cold War economic boom. He retired in 2006, just shy of the beginning of the Global Financial Crisis. *** 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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