IRVINE, CA-The Bascom Group LLC has closed its second fully discretionary real estate investment fund, Bascom Value Added Apartment Investors II LLC. The fund provides up to $300 million of buying power, with leverage, for value-added multifamily acquisitions across an 11-state region.
Bascom tells GlobeSt.com that the states in this region include Arizona, California, Colorado, Hawaii, Nevada, Oregon, Washington, Utah, Texas, Georgia and Florida.
Since the start of the capital raise, the fund has acquired six multifamily properties and has specified another two properties that are expected to close in the first quarter of 2014. According to Jerome Fink, managing partner of Bascom, “Fund II is designed to acquire individual properties priced between $8 million and $45 million. The main focus of the fund is on class-B and –C properties that are often outside the typical investment parameters of many institutional investors. Historically, we have been able to find better risk-adjusted returns on value-added deals with these characteristics.”
Chad Sanderson, principal and fund manager for Bascom, adds that the firm had very strong investor interest in the second fund, which closed with $80 million of equity, exceeding its $75-million target. “The investor base was again predominantly high-net-worth investors. Overall, the discretionary fund program has complimented our long-standing institutional-quality partnerships.”
To date, the fund has acquired Andalucia Apartments in Palm Springs, a 175-unit property constructed in 1979; Arcadia Cove in Phoenix, 432 units, constructed in 1996; Campbell Plaza in Campbell, CA, 121 units built in 1972; the Terraces in Prescott, AZ, 226 units constructed in 2003; Broadstone Montecito in Las Vegas, 336 units built in 2007; and Huntington Villas in Huntington Beach, 114 units built in 1987, on which GlobeSt.com reported earlier this month.
“We are very pleased with the fund’s investment properties to date,” says David Kim, managing partner of Bascom. “The fund has a blend of investments across several markets ranging from heavily distressed properties to light rehab acquisitions. We continue to see investment opportunities with a large spread between going-in cap rates and borrowing rates. The combination of these two factors is producing very attractive current cash flow on top of the longer-term income growth potential from renovations and operational improvements.”
Check back with the Orange County page for an exclusive interview with Bascom’s Chad Sanderson on capitalizing on class-B and –C properties.