Bascom Closes Its Second Apartment-Investment Fund

The Bascom Group closes its second fully discretionary real estate investment fund, which provides up to $300 million of buying power.

Irvine, Calif.—The Bascom Group L.L.C. has closed its second fully discretionary real estate investment fund, Bascom Value Added Apartment Investors II L.L.C. According to the company, the fund provides up to $300 million of buying power, including leverage, for value-added multifamily acquisitions across an 11-state region.

Bascom principal and fund manager Chad Sanderson says that there was strong investor interest in the fund. It closed with $80 million of equity, exceeding the $75 million target, with an investor base predominantly of individual high-net-worth investors. “Overall, the discretionary fund program has complimented our long-standing institutional equity partnerships,” he notes.

Fund II, according to Bascom, was designed to acquire individual properties priced between $8 and $45 million, with a primary focus on Class B and C properties that are often outside many institutional investors’ typical investment parameters. The fund has a blend of investments across several markets, ranging from heavily distressed properties to light rehab acquisitions.

Since the start of capital raise, the fund has acquired six multifamily properties and has specified another two that are expected to close in the first quarter of 2014. So far, the acquisitions include Andalucia Apartments in Palm Springs, 175 units, constructed in 1979; Arcadia Cove in Phoenix, 432 units, constructed in 1996; Campbell Plaza located in Campbell, Calif., 121 units, constructed in 1972; The Terraces located in Prescott, Ariz., 226 units, constructed in 2003; Broadstone Montecito in Las Vegas, 336 units, constructed in 2007; and Huntington Villas located in Huntington Beach, Calif., 114 units, constructed in 1987.

“We continue to see investment opportunities with a large spread between going-in cap rates and borrowing rates,” adds David Kim, managing partner of Bascom. “The combination of these factors is producing attractive current cash flow on top of the longer-term income growth potential from renovations and operational improvements.”