We are a little late for New Year’s wishes, so I guess we will also wish you a belated Happy Hanukkah, Merry Christmas, Joyous Kwanzaa, and of course, Happy Festivus. 2023 is behind us, and 2024 is here.
2023 was the first full year for Greenwood Beach Partners, Inc. and it was a successful one. During the year we looked at 187 properties, fully underwrote 25 transaction and and bought one, the Mercantile Lofts in Milwaukee.
We also started our outreach program for new investors. Joe and I recorded a webinar and are actively looking to expand our Investor Partner Network. If you have not already seen the webinar, you can access it through this link. Please feel free to share this with anyone you think might have an interest in our investments.
2023 was a difficult year to buy good real estate. During 2022, the 10-year treasury increased from about 1.5% to about 3.75%, then fluctuated during 2023 from a low of 3.25% to a high of 5% before settling down at year-end at just over 4%. While these interest rate changes affect underwriting and property values, I think the biggest effect this has had is reducing the supply of multifamily for sale as owners wait for better days to sell. This means looking at a lot of lousy real estate and trying to find the good ones, then hoping that the seller will “meet the market” and sell even if they don’t get the offer they want.
I am more encouraged about the market in 2024. Right now, we hear about maturing bridge loans and failed value-added transactions that will create great opportunities. So far, we have seen very few truly distressed deals hit the market except for some large properties exceeding our target price range. While we do expect to see some distress in 2024, we do not think this will be a 2008 situation. We do think there will be opportunities, just not dirt-cheap deals. There is too much capital on the sidelines waiting for a good deal. Life goes on, loans mature, people retire or change business plans. There are lots of reasons for people to sell real estate.
We don’t need to purchase distressed deals, just solid real estate and real sellers willing to meet the market. I’m confident we will see this and be able to buy some apartments in 2024. I hope you can join us in these investments.