Bridge Investment Group’s leadership is beginning to see some renewed commercial real estate activity, even as market uncertainty persists amid higher interest rates and debt market volatility.
“We’ve been patient over the last half of 2022 and the first half of 2023, as it related to deployment because we felt that asset values were resetting,” said executive chairman Robert Morse during the Utah-headquartered firm’s Q2 2023 earnings call. “We’ve worked hard operationally to maintain and enhance the value of existing assets while we’ve been patient in deploying incremental capital. We’ve been, to use the analogy of wetting in the water, not diving into the water, as it relates to asset deployment as of late recently.”
The firm has found “some pretty attractive opportunities” in residential rental and logistics sectors, he said. “We are in the markets every day, and we think that those opportunities are going to continue to manifest and probably accelerate over the course of the balance of the year,” Morse added. “We’re excited about some of the opportunities that we’re seeing now.”
According to Jonathan Slager, chief executive officer and co-chief investment officer, Bridge Multifamily, the firm has $4.1 billion in dry powder to deploy into multifamily logistics, workforce and affordable, and debt strategies. “We are actively underwriting investment opportunities, and our pipelines have been increasing from the historically low levels experienced in Q1,” he said. “This momentum is building in a number of strategies across our platform.”
In terms of investment opportunities, Slager said the firm is starting to see some larger off-market portfolio transactions, including the acquisition of a six-property portfolio of workforce and affordable housing properties in the Greater Boston Area, with a total of 1,722 residential units.
“Those larger portfolio opportunities, some of the off-market things, could move the needle pretty substantially in terms of deployment,” he said. “On the regular transactions side, there is still a lot of uncertainty about when the Fed is going to stop, and when we will see more stability in the debt market. We are seeing spreads tightening in the debt market, which is helping, and we are starting to see people get to the point where they are recognizing valuations at a more attractive level that can be executed on.”
‘Busier than ever’
On the fundraising front, “we are busier than ever before in the institutional, wealth management and direct high-net-worth channels,” Morse said. Investors remained cautious during the second quarter, committing a total of $320 million of new capital across the firm’s vehicles. “Yet the high volume of constructive dialogue and interest support our optimism entering the second half of the year.”
Morse also said Bridge Investment Group had reached the required deployment threshold in its latest workforce and affordable housing fund. In October, the firm raised $1.74 billion for Bridge Workforce & Affordable Housing Fund II, becoming the largest dedicated workforce housing fund ever raised, according to PERE. The fund will be 72 percent invested in August, according to the earnings call.
The firm is now ready to launch the successor vehicles in both its workforce and affordable housing and debt strategies. Year-to-date, Bridge Investment Group also raised approximately $1 billion for its newer businesses, including agency mortgage backed securities, net lease, proptech, secondaries as well as its debt strategies and opportunity zone vehicles.
According to Morse, the firm continues to have a number of growth vectors in its high-conviction areas of investing including residential, logistics, credit and secondaries.
“Our 2023 outlook is one of entitled conviction, and looking at the broader market of trying to discern where there is opportunity of making sure that those opportunities are priced right, and then successfully pursuing them,” Morse said. “And we think 2023 is shaping up to be the beginning of a very good vintage of opportunity within real estate.”
Bridge had approximately $48.9 billion in assets under management as of June 30, 2023.
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