Headlines

What’s new in the world of Real Estate

• Another record for housing prices

• KKR’s big bet on rentals

• Commercial prices inch up

• New homes are cheaper than existing homes

Plus: Where prices might fall, retail on the upswing, REITs hit by redemptions, and more.

Listing of the week: A Manhattan office tower.

Performance

_{as of market close on July 1}

Partner

Partners Land Fund I: Transforming Raw Land into High-Value Assets

Partners Land Fund I is an investment strategy designed to capitalize on the potential of land tracts in Texas and beyond. By leveraging an all-cash, un-levered approach, we aim to minimize debt financing and interest rate exposure while maximizing value through strategic improvements.

The Strategy:

Acquisition: Secure land tracts at attractive wholesale prices using cash, minimizing reliance on debt.

Enhancement: Increase land value through entitlements, including utility and road improvements, zoning enhancements, and drainage solutions.

Maximization: Optimize exit valuations by identifying strategic end-users for the land parcels.

Expertise: Utilize Partners Real Estate’s extensive industry knowledge and resources to uncover unique opportunities, engage strategic partners, and achieve risk-adjusted returns for investors.

Partners Land Fund I offers accredited investors a unique opportunity to invest in strategically selected land tracts, enhanced for maximum value and positioned for high returns.

Market Updates

Both the Case-Shiller and FHFA House Price indices hit record highs. Even with persistently high mortgage rates and softening home sales, prices continue to rise, with both indices reporting a 6.3% year-over-year gain in their April numbers. But the rate of appreciation is slowing as more inventory has been coming to the market. The Northeast was the best performing region in the Case-Shiller index, and similarly, New England and the Middle Atlantic came out on top in the FHFA index. Case-Shiller also looks at city trends, and reported top 5 increases in the past year coming in San Diego, New York, Chicago, Los Angeles and Cleveland.

Investment giant KKR acquired $2.1 billion worth of multifamily assets. In their largest ever purchase of real estate, they bought 18 properties from a closed-end fund sponsored by Quarterra Multifamily, a real estate developer. The portfolio includes 5,200 apartments across eight states, and the purchase is a clear bet on rental buildings. KKR’s head of real estate equity in the Americas said “[w]e believe this is a great moment to invest in real estate.” Retail investors should always take note when a major firm makes a splash like this.

Commercial real estate prices increased slightly in May. CoStar’s Commercial Repeat-Sale Indices (CCRSI), based on 1,207 repeat sales, showed a 1.3% value-weighted increase and a 0.2% equal-weighted increase. The value-weighted index is more influenced by biggest transaction in major markets, while the equal-weighted index tracks sales in smaller markets. Transaction activity was up by 0.6%, the third straight month it has increased, showing that more investors believe now is a good time to buy.

The average new home now costs less than the average existing home. The median sale price of a new home dropped by 0.9% in May to $417,400, compared to the median existing home price of $419,300. This represents a major shift, as new homes have generally been pricier than existing homes for decades. Reasons include the low supply of existing homes, the pace of new construction, and the trend towards building smaller homes that are more affordable. Sales of new homes actually dropped in May by 11.3% compared to April, and roughly 1 in 4 homebuilders cut prices.