Can Austin’s Housing Reforms Deliver Long-Term Affordability?

• Keep Austin cheap: Austin has enacted aggressive reforms being watched as a possible solution to housing affordability problems.

• Big fat Fannie: The Federal government has rekindled plans to take Fannie and Freddy public.

• Highest best bidder: A UK healthcare property giant has chosen to merge with a rival rather than accept a takeover bid from global private equity firm KKR.

• Upcoming webinar: How AI and data tools are transforming energy management in commercial real estate asset operations. Sign up

Former Zillow exec targets $1.3T

The top companies target big markets. Like Nvidia growing ~200% in 2024 on AI’s $214B tailwind. That’s why the same VCs behind Uber and Venmo also backed Pacaso. Created by a former Zillow exec, Pacaso’s co-ownership tech transforms a $1.3 trillion market. With $110M+ in gross profit to date, Pacaso just reserved the Nasdaq ticker PCSO.

Invest for $2.90/Share

_{Paid advertisement for Pacaso’s Regulation A offering. Read the offering circular at invest.pacaso.com. Reserving a ticker symbol is not a guarantee that the company will go public. Listing on the NASDAQ is subject to approvals.}

Urban Development

Can Austin’s Housing Reforms Deliver Long-Term Affordability?

Austin is testing some of the most aggressive housing reforms in the country, including a first-of-its-kind code change to allow five-story, single-staircase apartment buildings citywide. Common abroad but banned in most U.S. cities for decades, the design can reduce construction costs, fit on smaller parcels, and avoid the bulky parking-heavy layouts of recent multifamily trends. The city is pairing these zoning shifts with innovative financing, notably through the Texas Housing Conservancy, an open-ended private equity fund that has preserved thousands of affordable units while delivering competitive returns to investors. Combined with land banking efforts and a rethinking of density bonus programs, Austin’s approach aims to expand affordability while retaining community character.

The reforms reflect a broader break from mid-century planning rules that restricted high density buildings. The single-staircase allowance borrows from models in Tokyo and Paris. The Conservancy’s fund structure offers a scalable alternative to public subsidies, locking in affordability for up to 99 years. Austin is also experimenting with preservation funds, land trusts, and program tweaks to address displacement concerns tied to redevelopment projects. Market conditions are also playing a role, with high vacancy rates temporarily pushing rents down to their lowest point since 2021.

Austin’s experiment is a potential blueprint for balancing profitability with long-term affordability—particularly in high-growth markets where conventional approaches have failed to keep pace. The combination of building code flexibility, private capital structures, and preservation incentives could open new product types and investment vehicles, while also influencing tenant retention and community stability. If these tools prove effective, they could reshape underwriting models, spur mid-scale infill development, and provide a competitive edge for developers willing to embrace mixed-income, smaller-footprint projects. But with legal and political hurdles still in play, the city’s housing future will hinge on whether policy innovation can outpace the market forces it’s trying to tame.

Overheard

Fannie and Freddie IPO Plan Could Reshape Real Estate Finance

TThe White House is dusting off plans to take Fannie Mae and Freddie Mac public, setting up what could be one of the biggest IPOs in history. The idea is to sell off a slice, somewhere between 5 and 15 percent, of the government’s holdings, which could raise around $30 billion and value the pair at more than half a trillion dollars. Even with the move toward private ownership, Washington is hinting that some form of government guarantee will linger, keeping the safety net that underpins America’s housing finance system.

These two mortgage machines are the quiet plumbing of the housing market, buying up loans, turning them into securities, and making sure the money keeps flowing to lenders. Privatizing them doesn’t just change who collects the dividends—it shifts the balance of liquidity, risk, and control in a system that touches nearly every home loan in the country. What happens next will hinge on how much freedom they get to act like private companies versus how tightly they stay leashed to public policy goals.

For commercial real estate, the implications are worth watching. A leaner, more profit-driven Fannie and Freddie could mean stricter lending terms and higher yields, nudging up borrowing costs. But if the IPO gives them deeper pockets and more flexibility, it could open new avenues for financing and innovation in the debt markets. Either way, their next chapter is going to ripple far beyond the single-family world and into the credit pipelines that fuel multifamily and mixed-use sectors.

Healthcare Property Giant Chooses Merger Over Private Equity Buyout

Assura, one of the UK’s largest owners of primary care real estate, has doubled down on its support for a £1.79 billion takeover bid from Primary Health Properties (PHP). This support comes as KKR, the U.S.-based private equity giant, continues to push its competing bid. Assura sees PHP—a direct rival with a similar portfolio of GP surgeries and community health facilities—as a more natural fit. The proposed deal would combine two major landlords in the UK’s publicly funded healthcare system. KKR, known for bold buyouts across industries, has argued that falling share prices since the offer was announced now make its cash bid more attractive. Assura’s directors aren’t convinced.

PHP has built its business around long, inflation-adjusted leases backed by the National Health Service, making it a steady, income-focused play in the healthcare property space. A merger with Assura would consolidate ownership of hundreds of medical buildings, potentially creating a dominant landlord in the sector. KKR’s approach, by contrast, would take Assura private, shifting its strategy away from public market discipline and toward private equity’s often more aggressive operational model. That divergence (strategic integration versus leveraged buyout) has become the heart of the takeover debate.

Healthcare property offers some of the most stable cash flows in the market, and the way this deal unfolds could influence how investors view consolidation versus privatization plays. A PHP-Assura will be a sector-defining merger in UK healthcare real estate. It also shows that money isn't always enough when it comes to M&A. KKR has global reach and a huge war chest, but in the end it looks like it lacks the domain expertise and synergistic assets that PHP can offer.

Are You Enjoying This Newsletter?

Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

📧 Forward it to a friend and suggest they check it out.

🔗 Share a link to this post on social media.

🗣 Have ideas for future topics (or just want to say hello)? Share your feedback and tips at [email protected] or connect with us on X through @propmodo.

✅ Not subscribed yet? Sign up for this newsletter here.

📫️ Please add our newsletter email, [email protected], to your contacts to make sure you don’t miss any updates.

Enjoy reading about trends and innovation in commercial real estate? Subscribe to Propmodo.com for unrestricted access to reliable, data-driven journalism and exclusive insights available only to subscribers.