Dear Investors,

I am excited to announce that the NYC Opportunity Fund is officially launching. I have partnered with RiverOak Investment Corp to execute on an expanded investment strategy targeting residential, retail, and office buildings across New York City. The Fund will invest alongside best-in-class real estate operators to capitalize on distressed properties to benefit from the recovery that is already underway.

The New York City real estate market has been quickly evolving. The Fund had initially targeted residential bulk condo sales but found few opportunities as the sales market surged. In the 2^nd quarter, Manhattan resales hit the highest level on record, according to Douglas Elliman. Meanwhile, 220 Manhattan penthouses have been sold year to date, according to Corcoran. As strong as this residential activity has been, commercial has yet to experience the same recovery. Retail is still reeling from the impact of the Covid shutdown and a slowdown in tourism which has suffered a 50% decrease in activity since 2019.

Meanwhile, the office market is facing headwinds. Manhattan’s 12.3% recovery rate is less than half of LA’s, and Boston’s and Manhattan’s office availability rate now stands at 19.2%, its highest since 2005. Considering that 56% of office employees plan to work remotely at least part time, the prevalence of remote workers will present challenges to Manhattan’s leasing velocity in the near term. It is no surprise that 2021’s prorated leasing activity is only 38% of 2019.

During the pandemic, lenders were willing to provide forbearance to give borrowers time to service their debt, but those accommodations are now burning off. As the willingness of banks to provide relief to borrowers wanes, the sluggish recovery of Manhattan’s leasing market is likely to create additional short-term distress. Landlords suffering from vacancies or delinquent tenants will be under pressure to sell if they are over-leveraged, which will be an incredible buying opportunity in the next two years.

I am confident New York City will rebound. Whether it was after the dot com bust, 9/11, or the Financial Crisis, it always has. The pendulum will swing back, and the market will realize it was too punitive during these uncertain times.

The Fund is well positioned to identify and execute on these opportunities, and I am excited to announce the strategic partnership with RiverOak, with whom I have raised two prior funds consisting of over $350 million in total capitalization. These funds benefited from a rising market but those buying opportunities will pale in comparison to those that exist today. According to Real Capital Analytics, average pricing in NYC multifamily and office has not been this low in over 5 years.

Now that we have launched our fund, we invite accredited investors to formalize their investments so we can begin taking advantage of the opportunities in the marketplace today. We couldn’t be more excited for you to join us.

https://republic.co/real-estate/nyc-opportunity-fund

Thank you,

The NYC Opportunity Fund Team