The fund, Base Preferred Equity Fund I, will invest in commercial real estate assets.
It will target $1 million to $5 million preferred equity real estate investments focused on multifamily transactions from $5 million to $30 million.
“We are one of the only reliable providers of small-balance preferred equity, an investment that takes priority in the capital stack,” Michael Bastan, a co-founder and principal of Base Equities, said in a statement. “This fund is uniquely dedicated to this underrepresented segment of the capital stack and offers investors the opportunity to be insulated from loss while receiving current cash flow due to each investment’s protections in the lowest equity loss position.
“With this model of short-term investment, in which sponsors typically only need funds for one to three years, investors in the fund will be able to capitalize on current trends rather than depend on future market growth,” he added.
The company will look at deals nationwide. It expects to provide a 14% net return to investors.
Base Equities is already invested in three hotel-to-multifamily conversions.
In Phoenix, the company provided $2.5 million of preferred equity to convert a 188-room hotel to a 96-unit multifamily property and $3 million to change a 141-room hotel into a multifamily site.
In Tempe, Ariz., Base Equities provided $2.5 million for a 157-room hotel to be converted to a 113-unit multifamily property.
Eli Moghavem, a co-founder and principal at the company, added that it was “an ideal time” to fundraise and that the company could “offer tremendous benefit to both investors and sponsors of value-add real estate.”
