“The new equity investor is high net worth, sitting on a lot of money and looking at a down market as a place to jump in and buy a property at 50 percent less than it traded for three years ago,” Kim says. “A lot of times, the private investor doesn’t even look at internal rates of return (IRRs); they look at discount and what is a Âdecent 5 percent to 7 percent cash-on-cash return even without improvement.”
The Bascom Group
Credit: Courtesy The Bascom Group
Founded: 1996
Headquarters: Irvine, Calif.
Number of Employees: 24
Number of Units Owned: 32,051 (all third-party managed)
2010 Revenue: $218.9 million
Market Coverage: Hawaii, Washington, Oregon, California, Arizona, Utah, Colorado, Georgia, Florida, Texas
Such underwriting requirements open a large spectrum of deals for Bascom acquisition executives but also require flexibility on debt placement as well as the confidence that merely meeting the market will be good enough for the significant NOI and asset value improvement necessary to profit on disposition. “We’re not trying to hit a rent level that no one is achieving,” Sanderson says. “We are looking to move rents within our markets as they exist today, but with the range of deals that we buy, we cannot be reliant on any singular line of financing on either the debt or equity side. We need to match the right capital with the right deal in the right market.”
Operation: Outsource
Bascom’s strategy of matching its partners with specific real estate also extends to the construction and management side of the firm’s operations. At its core, The Bascom Group is an apartment investment advisory firm with a GC’s aptitude for managing the renovation and repositioning of real estate assets. It also hires best-in-class regional management and construction firms as partners for the on-the-ground execution of the Bascom game plan.
