Dear Investors and Partners,
Despite the challenging year that everyone faced, the Golden Bridge Fund is concluding its most successful year since its establishment, achieving a remarkable net annual return of 9.49%! In December, the fund marked its highest monthly return ever since its inception, reaching 0.81%! These outstanding performances are not coincidental; they are the result of extensive effort and dedication during a tough year marked by market interest rate hikes and the challenges posed by the collapse of several American banks, which significantly impacted the US real estate market.
Before delving into the summary of 2023 and exploring forecasts for 2024, I want to express my gratitude to all our partners for contributing to the success of the fund. As we wrap up seven years of extensive activity, I extend my thanks to the dedicated staff in both the US and Israel. Despite continuous growth, they consistently uphold the professionalism, dedication, and commitment that have consistently led to the fund’s excellent results year after year.
A special thank you goes to our valued investors, family offices, and agents who have placed their trust in us throughout the years. Your belief in us has been instrumental in propelling us to become one of the leading credit funds in the New York metropolitan area!
Golden Bridge – 2023 in numbers :
- 33 new loans, accumulating to $73 million
- 127 disbursements for construction progress, reaching a total of $64 million
- 62 loans fully repaid, totaling an impressive $130 million
The notable rise in interest rates and a reduction in transaction volume throughout the year heightened the fund’s core objective – generating high returns with low volatility for investors while maintaining an appropriate risk-opportunity balance.
Throughout 2023, we adopted a highly conservative approach in approving new loans. Our focus shifted towards refining and enhancing underwriting processes, steering clear of sectors and assets deemed risky (even if the numbers appeared promising). We reinforced our relationships with current borrowers, providing close support to ongoing projects. Additionally, we proactively looked ahead, expanding connections with brokers and partners in New York, positioning ourselves for the anticipated market release when the current “bottleneck” subsides.
Many real estate experts and economists are optimistic about the housing market in 2024. The Federal Reserve’s indication in December that it may lower interest rates several times this year has created an expectation for a reduction in mortgage rates along with the ongoing challenge of a tight housing supply.
In comparison to last October, when mortgage rates hit a 20-year high at around 8%, there has been a significant decrease. Current rates for the most common home loans now fall within the range of 6% to 7%. This substantial decline in mortgage rates is seen as a positive development that could contribute to a more favorable housing market environment.
According to forecasts, the projected monthly payment (including mortgage and interest) for a median-priced home in 2024 is expected to be just under $2,200, constituting approximately 35% of the typical national household income. This represents an improvement from 2023, where purchase costs accounted for nearly 37% of income.
The forecasted increase in affordability is anticipated to create opportunities for prospective buyers entering the market. Several economies express optimism about the 2024 housing market, citing positive signs driven by necessities such as job changes, family situations, and downsizing to more affordable markets. These factors are expected to stimulate home sales in the upcoming year, with buyers seeking markets that offer value for their investment and homes that better align with their needs.
Jessica Lautz, the deputy chief economist at the National Association of Realtors, highlighted encouraging trends in the housing market. She noted an uptick in new construction from home builders entering the market and observed a shift in buyer demographics. As baby boomers approach retirement age, there is a growing interest in retirement properties, while millennials are aspiring to become first-time homebuyers. Lautz pointed out that baby boomers, in general, appear less concerned about mortgage interest rates, with half of older boomers having paid for their homes in cash last year. Meanwhile, millennials, as the largest adult generation, are likely in search of their first property or a move-up family home.
In the previous year, New York City investors allocated $21.6 billion in investments, marking a substantial 41 percent decrease in dollar volume compared to 2022 and standing out as one of the most challenging years in the last decade. The number of buildings sold in the city plummeted by 27 percent to 2,516.
Despite these trends, hotels and retail sites remained resilient, defying high borrowing costs. The city witnessed a substantial influx of travelers, ranging from 60 million to 62 million last year—nearly a return to pre-pandemic levels. The city’s response to a migrant crisis contributed to the stabilization of hotel demand, as temporary lodging for newcomers became a priority. Indicators such as job recovery to pre-pandemic levels further enhanced the attractiveness of these asset classes.
Conversely, multifamily sales experienced a drastic 52 percent decrease, dropping from $15.4 billion in 2022 to $7.4 billion in the past year.
Manhattan rents showed signs of stabilization, taking a pause from their downward trend. In December, the median rent in the borough saw a slight increase to $4,050, a 1.3% rise from November and essentially flat year over year. This marked the first month-over-month increase since July. New leases also exhibited growth, rising from 3,179 to 3,632 year over year, a 7.8% increase month over month.
Brooklyn experienced a marginal month-over-month rent decrease but a year-over-year increase at $3,469. Northwest Queens saw both year-over-year and month-over-month increases, reaching a median rent of $3,485. New lease signings in northwest Queens surged from 332 in December 2022 to 525 in December of the past year, marking their highest rate of increase in almost two years, while listing inventory increased year over year for the fourth consecutive month, rising from 440 to 493 apartments.
Manhattan’s office market not only experienced a robust last quarter in 2023 according to that year’s standards but also exceeded pre-Covid benchmarks. The closing quarter of 2023 saw firms leasing approximately 8.2 million square feet of space, surpassing the borough’s five-year average of about 7.2 million square feet and its 10-year average of around 8.1 million square feet, as indicated by the latest data from Colliers. This marked a significant 26.7% increase in leasing quarter over quarter and a substantial two-thirds surge year over year. A noteworthy portion of the total for the fourth quarter resulted from the sizable 766,000-square-foot lease secured by the law firm Paul, Weiss, Rifkind, Wharton & Garrison at 1345 Sixth Ave., making it Manhattan’s largest office lease in four years.
In summary, while the persistently high interest rates are expected to pose a challenge to the real estate market in 2024, it appears that entrepreneurs and real estate investors in New York have adapted to the new interest rate landscape. Moreover, the limited supply of apartments in the city, coupled with anticipated interest rate decreases throughout the year and other outlined trends, could potentially provide a substantial uplift to the real estate market in 2024.
Wishing each and every one of us a prosperous and successful year ahead,
Erez Britt, Founder and CEO
See below links to Golden Bridge and to our new fund fact sheets:
Example of loan:
Address: Jamaica Avenue Richmond Hill, NY
Golden Bridge funded the acquisition of a mixed-use building in the Richmond Hill neighborhood of Queens. This property comprises a total of three stories, totaling 3363 square feet. The ground floor is occupied by a restaurant, while the second and third floors house two residential units, each featuring three bedrooms.
Richmond Hill is diverse and vibrant, known for its cultural richness and home to a mix of ethnic communities, contributing to a unique and dynamic atmosphere. Richmond Hill features a blend of residential and commercial spaces, with tree-lined streets and various amenities, making it a desirable place to live for individuals and families alike.
Loan Amount: $ 500,000
Property Value: $ 1,150,000
LTV (loan to property value ratio): 43%
Loan Maturity: 12 Months
Type of Securitization: Full First Lien + Borrower’s Personal Guarantee
Reminder that it is possible to see the fund’s loans on New York City’s website:
https://a836-acris.nyc.gov/DS/DocumentsSearch/PartyName
(Business party name: Golden Bridge)