Los Angeles-based private equity firm, Base Equities, recently launched its new fund, Base Preferred Equity Fund I, targeting $50 million in commitments. According to Michael Bastan, co-founder and principal of Base Equities, the fund will strategically focus solely on small-balance – $1 to 5 million – preferred equity for commercial real estate investments. The fund’s emphasis will be on multifamily transactions in the $5 to 30 million range with proven sponsors that can maximize the upside through value-add renovations.

“We are one of the only reliable providers of small-balance preferred equity, an investment that takes priority in the capital stack,” explains Bastan. “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.”

Bastan, along with Eli Moghavem, principal, co-founded Base Equities.

“Demand for equity is high and sponsors must be able to react quickly and nimbly to take advantage of strong opportunities with a reliable equity partner,” Moghavem. “This small-balance preferred equity fund creates the potential for investors to achieve equity-level returns while undertaking less risk than in typical equity investments.”