Wednesday, April 8, 2026
On Tap Today
Below ask: Office owners are finally selling at prices that reflect how far values have really fallen.
Code of conduct: A judge narrowed New Jersey’s case against RealPage but left the central claim of algorithmic rent coordination intact.
Board to death: A familiar REIT activist is escalating its fight by arguing that governance, not just valuation, is what needs to change.
| The S&P closed down 0.47% Monday as Iran rejected the 45-day ceasefire and Trump warned of "Power Plant Day" by Tuesday 8 p.m. The 10-year pushed to 4.35%, a level analysts are starting to call the new structural floor. But the biggest development came after the bell: Trump agreed to a two-week "double-sided ceasefire," subject to Iran immediately and fully reopening the Strait of Hormuz. If the Strait actually reopens, the implications for CRE are significant. Analysts estimate oil could drop $20–30 on a credible deal, which would ease the energy-driven inflation pressure that has kept the Fed locked at 3.50–3.75% and killed any remaining 2026 rate-cut hopes. That relief would flow directly into cap rates, refi spreads, and construction costs. But "subject to" is doing a lot of heavy lifting in that sentence. Iran has said the Strait returns only under a protocol tied to permanent war termination, and the EIA warned Tuesday that even after a deal, full restoration of Hormuz oil flows will take months. Floating-rate borrowers should not plan around a quick fix. |
Editor’s Pick
The office market may finally be entering the phase many have been waiting for, but few owners wanted to face. Some office buildings are trading at discounts of up to 90 percent from their prior valuations, a level of price discovery that signals something more than distress. It suggests capitulation. After years of holding out for a recovery that has yet to fully materialize, some owners are beginning to accept that the value of their assets has fundamentally changed.
These transactions are no longer isolated. In cities like San Francisco, Los Angeles, and Washington, D.C., office towers have been sold at steep losses compared to their pre-2020 pricing. A San Francisco building once valued near $300 million traded for a fraction of that. In Washington, D.C., multiple assets have changed hands at discounts exceeding 60 percent. Even high-profile properties in Los Angeles have seen similar resets. What stands out is not just the magnitude of the discounts, but the growing willingness of sellers to transact at those levels rather than extend, refinance, or wait.
The timing is not accidental. A wall of debt maturities is approaching, and refinancing conditions remain difficult. Higher interest rates have pushed borrowing costs well above the levels at which many of these assets were financed. At the same time, occupancy remains uneven, especially in older office stock that lacks the amenities and location advantages needed to compete for tenants. For many owners, the math no longer works. Injecting new equity into a declining asset with uncertain leasing prospects is a harder case to make, particularly for institutional investors with portfolio-level return targets.
There is also a shift happening on the lending side. Banks and servicers have become less willing to extend loans without meaningful concessions. In some cases, they are pushing borrowers to recapitalize or sell rather than carry loans that may become impaired. The CMBS market adds another layer of pressure. A significant volume of office-backed loans is approaching maturity, and many of those properties would struggle to refinance at current valuations. Selling at a loss, while painful, can be cleaner than navigating a prolonged workout or foreclosure process.
What makes this moment different is that it may reset expectations across the market. For the past few years, buyers and sellers have been stuck in a wide bid-ask gap, with few transactions to establish a new baseline. As more properties trade at steep discounts, that gap begins to close. Pricing becomes clearer, even if it is lower than many had hoped. That clarity could eventually bring more capital off the sidelines, particularly from opportunistic investors looking to acquire assets at a new basis. The willingness to transact at deep discounts marks a turning point. It suggests that the market is moving from denial to acceptance, from waiting to acting. For investors, that shift may be the first real sign that the office sector is beginning to find its floor, even if that floor is far below where it once stood.
Overheard
A federal judge has partially dismissed New Jersey’s antitrust lawsuit against RealPage and a group of major landlords, trimming back several of the state’s claims while allowing the central allegations to move forward. The ruling removed some counts tied to consumer fraud and certain aspects of the antitrust arguments, but it did not dismantle the case. At its core, the lawsuit still alleges that RealPage’s revenue management software enabled landlords to coordinate rents by sharing non-public data and aligning pricing strategies. The judge’s decision effectively narrows the legal path without resolving the underlying accusation of algorithmic collusion.
The case is one piece of a much larger legal campaign against RealPage and similar pricing technologies. Over the past two years, regulators and private plaintiffs have argued that these systems function as a kind of digital cartel, allowing competitors to outsource pricing decisions to a shared algorithm. RealPage and its clients have consistently denied those claims, arguing that the software simply reflects market conditions rather than dictating them. Still, federal and state actions, along with settlements and ongoing litigation, show that regulators are increasingly focused on how data sharing and AI-driven pricing intersect with antitrust law.
What makes this ruling notable is not that the case survived, but how it survived. By dismissing some claims while preserving others, the court is signaling that traditional antitrust frameworks may not cleanly map onto algorithmic pricing. That creates a more complex legal environment where plaintiffs must be more precise in how they define collusion, especially when it is mediated through software rather than direct coordination. In other words, the burden is shifting from broad accusations about “the algorithm” to more specific claims about how data is shared and used.
Land & Buildings has once again turned up the pressure on First Industrial Realty Trust, sending a letter urging shareholders to push for change at the board level. The activist investor is calling on investors to withhold votes from long-tenured directors, arguing that entrenched leadership has overseen governance failures and contributed to a persistent valuation discount. The firm also stepped back from placing its founder, Jonathan Litt, on the board, signaling that it believes it can be more effective applying pressure from the outside rather than working within the company’s governance structure.
At the core of Land & Buildings’ argument is a familiar activist playbook. The firm claims First Industrial is trading below its net asset value and lagging peers, and it is pushing for clearer capital allocation strategies, potential asset sales, and a more shareholder-focused board. In earlier communications, it floated steps like large-scale dispositions, returning capital to shareholders, and even exploring strategic alternatives if the valuation gap does not close.
This is also very much in line with Land & Buildings’ history. The firm has built a reputation as one of the more persistent activist investors in real estate, often targeting REITs it believes are undervalued due to governance or strategic missteps. It has previously pushed for changes at companies like Mack-Cali (now Veris Residential) and has not hesitated to pursue proxy fights, board nominations, and public campaigns to force change. The strategy is consistent: identify a NAV discount, argue that management is underperforming, and push for structural moves that unlock value, whether through asset sales, spin-offs, or leadership changes.
With public REIT valuations still under pressure relative to private market pricing, activists have a clearer opening to argue that companies are mispriced and mismanaged. But what is notable here is the shift in tactics. Land & Buildings is not just pushing for financial engineering. It is targeting governance itself as the root of the valuation gap. That suggests the next phase of REIT activism may be less about one-time transactions and more about sustained pressure on boards to justify strategy, transparency, and capital allocation. If that trend continues, it could reshape how public real estate companies balance long-term development strategies with the growing demand for near-term shareholder returns.
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