BAC has a flexible and individual approach to each investment. The firm’s strategy is not controlled by a predetermined investment thesis, growth commitments, or compensation targets. The primary driver is a healthy risk-return relationship and building trust with partners and investors.
Strategy
BAC is mindful of real estate economic cycles and partners with local real estate operators who specialize in different asset classes in most of its deals. This allows BAC to participate in a broad variety of project sectors with operators who can respond quickly to the changing conditions of each market and property sector.
BAC co-invests with investors (primarily high net worth individuals) and focuses on mid-sized projects ranging in size between $10 million and $100 million, a niche market where it is not uncommon to find off-market, undervalued assets. The standard holding period for a project is usually between three and eight years. BAC typically employs a moderate amount of debt in the form of a non-recourse mortgage from a commercial bank to maximize returns through increasing levels of cash distributions to investors, greater tax deferrals from project depreciation, and greater asset appreciation. Each BAC project is held by a sole purpose pass-through ownership entity with a limited number of investors and is designed for simplicity and for the protection of capital. This allows flexibility for decisions to be taken, given changes in asset-related or market conditions.
Target Regions
BAC’s primary focus since 2010 has been Boston and the New England region where fundamentals have remained strong even during severe economic crises. BAC has also invested in other regions including the Mid-Atlantic and a few Latin American countries after finding market opportunities and projects with upside potential. BAC has offices in Boston, Buenos Aires and Bogota, and all BAC executives are bi-lingual.
Investment Objective
BAC’s investment objective is to maximize returns and mitigate risks by sourcing and underwriting projects across various real estate sectors. By prioritizing asset management, BAC implements investment strategies with a focus on generating value and prioritizing the Investor’s interests.
BAC’s flexible investment strategy allows for a variety of approaches, including acquiring assets with a stable cashflow, acquiring assets with upside potential which can be realized with intensive improvement programs, and developing residential assets for lease or sale.
BAC reviews many opportunities throughout a year and selects a very limited number to underwrite. Each selected opportunity undergoes a thorough due-diligence process which takes into account a variety of factors, including (i) market analysis for the asset type in its location and changing conditions; (ii) assumptions regarding future uncertainties and projections showing possible results under varying assumed conditions; (iii) structural conditions and design features of the property; (iv) soil and environmental conditions; (v) costs and potential benefits of potential capital improvement programs or value-add opportunities; (vii) legal matters, including a review of title documents, lease contracts and other project agreements; and (viii) other relevant fundamental issues regarding the investment.
Communication & Reporting
After BAC acquires a property or begins a development, it assumes ongoing leadership in monitoring, oversight, and communication responsibilities on behalf of the investors. BAC offers clear, individualized, and regular communication to investors for each project throughout the holding period with an attempt to communicate all relevant information in a clear and orderly manner. The financial results of each project are reviewed annually by a certified accounting firm, and annual reports and tax reporting information is distributed to Investors as soon as available.