{{first_name | Loyal Reader}},
I remember the exact moment I realized I was chasing ghosts.
Yes, this is my confession of my old addiction…CRE trophy hunting.
I was standing in the lobby of a former high-end hotel near the Galleria in Houston.
It was the same trip I was on to walk through a potential hotel conversion in the same city, in less-than-desirable area of Houston’s Harris county. (We actually never bought the property, which was actually a great thing because we dodged a bullet!)
In front of 702 Same Houston in Houston, TX…”The one that THANKFULLY got away”
You know the type, the kind of place where the air smells like expensive bergamot and the chandeliers cost more than my first car (Jalapeño green Hyundai Elantra that squealed when I turned left…still worth $1,500)
We were touring it because it was being converted into "luxury multifamily." On paper, it was the ultimate trophy. Faux Italian marble, 12-foot ceilings, and a location so "prime" it felt like it would be a sin to sell. But as I walked through the gut-renovation of the third floor, past the exposed piping and the ghost-white dust of demolished hotel suites, I didn’t see a trophy.
I saw a ticking clock.
The Reckoning is Here
An interview with head of Family Office Club, Richard Wilson, when hotel conversions were a no-brainer investment thesis.
3 Tricks Billionaires Use to Help Protect Wealth Through Shaky Markets
“If I hear bad news about the stock market one more time, I’m gonna be sick.”
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Have 3 long-term investing tips UBS (Swiss bank) shared for shaky times:
Hold extra cash for expenses and buying cheap if markets fall.
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Contemporary and post war art by legends like Banksy, Basquiat, and more.
Sounds crazy, but it’s real. One way to help reclaim control this week:
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According to the Mortgage Bankers Association (MBA), we are currently staring down a $1.8 trillion "Maturity Wall" hitting between 2025 and the end of 2026. That’s $1,800,000,000,000 in debt that officially runs out of "extend and pretend" options this year.
This Houston project is a perfect microcosm of the danger. The developer showed me the upgrades:
Quartz countertops replacing old hotel desks
Luxury pet manicure and wash station
Rearrangements of the floorplan to accommodate ADA and multifamily requirements
High-end luxury vinyl plank flooring (the thick stuff that looked and felt like Teak)
"State-of-the-art" fitness center that used to be a smaller conference center/ballroom.
It was beautiful. It was also a capital-intensive nightmare.
The problem? Most of these "trophy" conversions were underwritten when money was effectively free.
For institutional capital tied to seasoned operators, the plan was simple:
Buy a distressed hotel operator’s nightmare in the thick of COVID at a 13% cap
Spend millions on beautification and adaptation
Hike the rents
Refinance at a 3% commercial mortgage rate with a new 9% cap valuation in year 3 and wait another year or two for a healthy 2-3X multiple and an arbitraged liquidity event… securing a 33% IRR.
Yes…this is real life.
But those days are over. Now, that same developer is staring at a 7% refinance rate on buildings that would eat $15M in renovation costs if they repeated that same model.
Standing in that Galleria-lite lobby, I realized something: I’ve got to get over the "shiny" stuff. While the industry sweats over $100M hotel-to-multifamily conversions, I’ve been spending my time in much less glamorous places. I’m talking about scatted-site Student and Senior Housing and Build-to-Rent (BTR) communities.
If you want to feel cool at a cocktail party, tell people you’re converting a Houston landmark. If you want to protect your investors' legacy, buy 50 duplexes within walking distance of Arizona State University at a 7% cap when the market is trading at 4.6-5.4% cap.
It’s Boring…but Beautiful. These properties don't have marble, but they are Class A. They have functional plumbing and durable flooring. They are "Essential Real Estate." Students still need to live near campus. Families priced out of 7% mortgages still need a backyard for their dog. Multiple exit strategies, larger buyer pool. And it still offers a profit margin.
In a $1.8 trillion crisis (maturing loans today), the most valuable person in the room isn't the guy who found the complicated project that draws eyes. It’s the guy who can build the Rescue Capital bridge.
I’ve shifted my soul focus to raising capital from core+ friendly “quasi-institutions”, family offices, RIA’s, and UHNWIs because the traditional banking system is retreating to its bunker. We aren't looking for "deals."
We are looking for structured solutions.
We provide the Preferred Equity that saves the asset. We are the ones building the bridge over the maturity wall.
The 2026 Playbook:
Stop chasing the trophy: Glass towers are for egos; cash flow and upside equity is for legacies.
Respect the wall: If you don't know the debt maturity date, you don't know the deal. Be like Larry Fink and make a name from “solution-engineering” (cough cough debt reform or debt mod with new equity players) a new capital stack.
Trust "Boring": If it’s essential to daily life, it’s usually worth a conversation.
I’m not a "suit" in a glass tower. I’m a guy with an iPhone, a capital structure that actually works, and the realization that the greatest opportunity of our lifetime is hidden in the "boring" stuff.
I am currently vetting opportunities in this tech-enabled, residential senior housing space. If you are interested in where this asset class is heading, let's have a conversation.
Reply to this email if you’d like to discuss what you are in need of in CRE, or if you’d be interested to hear why a firm at $1.2B AUM believes Senior and Student Housing is an underrated treasure chest.
I'm also connected to family offices and institutional capital worldwide, and I can help connect you to to someone who can help you on your next allocation or capital raise goal.
To your success,
Andrew LeBaron
P.S. I put together a more in depth version of this newsletter on my site. I also include other articles with data I’ve collected from the CRE markets.
You can read the full breakdown here: