Investing with BAI Capital
We focus on private equity fund investments in the US Real Estate sector, applying capital in the development of new multi-family buildings, mixed-use commercial as well as in the redevelopment of upscale hotels.
At BAI Capital we are well known for thorough and exacting project analysis and carefully selected investments.
Our real estate equity funds only get the green light if the development displays the following characteristics:
• Ideal location
• Reasonable land and purchase costs
• Low loan rates
• Partnership with the most experienced builders and general contractors.
Our projects are financed by combining a construction loan with raised equity capital at a very conservative 55/45% ratio. Split 3 ways, common shares are initially offered followed by 2 rounds of preferred shares.
We invite you to join us as a preferred or common partner in our exclusive real estate investment opportunities.
The team at BAI Capital – the best real estate investment company in Florida – can take the time to show you our current projects and future options. After a careful analysis, you can decide how much to invest in your chosen fund, whether in common or preferred shares. Your capital will be protected in a legal structure that transforms it into an assets partner, in this case, of the developing venture.
Minimum investment is 150,000 USD.
To learn more about equity investment in real estate development projects please download our Equity FAQ brochure.
The preferred equity investor can expect to receive a yearly coupon of 7%, and in the 5th to 7th year the project should receive 100% of the amount invested. As well as receiving 30% and 24% of yearly net operating profit, respectively.
Common share investors will receive up to 36% of net operating profit yearly and the remaining portion of their funds when the project is completed.
Additionally, all shareholders, as an ongoing project partner, can expect up to 10% per year in capital gains distribution.
Choosing BAI means you expect considerate attention, conservative financing, unwavering professionalism and consistent ROI’s.
Our experience and cautious approach in equity capital regularly result in attractive returns on investment for the investor, both local or international. Profits are realized in US dollars and can be redeemed as preferred equity partners.
BAI Capital is here to work with you with your mid and long term investment goals.
We invite you to take a look at our current funds.
Frequently Asked Questions
Here you will find answers to the most fundamental private equity fund questions.
A qualified investor with a certain net worth or meeting income tests, as per Rule 501 of Regulation D of the Securities Act.(see Regulation D)
Short term capital provided by investors until the next round of capital raise. Commonly structured as convertible debt or as Simple Agreements for Future Equity -SAFE.(see SAFE)
All of the invested capital combined in the project is known as the capital stack. Highest risk and higher return investments at the top, and lower risk and lower return investments at the bottom of the stack. Here is an example of a project investment stack:
- Sponsor and common equity
- Preferred equity
- Mezzanine investors (hybrid debt and equity)4. Second and other junior mortgages
- Investment-grade first mortgages(see LP, GP, and preferred and common share)
The cap rate helps indicate the rate of return, helpful in analyzing how fast an asset repays itself and begins to make a profit. Defined as the net income an asset produces in a year, divided by its purchase price. Can vary from year to year.(see coupon)
Carry, or carried interest, is what the general partner receives as a share of the profits in the project. Commonly 20% and peaks at 30%. Redeemable yearly and at end term.(see redeem)
Cash Flow Statement
A financial statement that reflects changes in balance sheet accounts and breaks the analysis down to operating, investing, and financing activities.
A percentage of a company or fund, and a way to designate ownership and returns. Common shares, also known as unlimited shares, hold more risk than preferred shares, as they are paid out last, but they come with the potential for more profit.(see preferred share)
Common Share Partner
An accredited investor in a fund. In contrast to a preferred partner, common shares are paid out last, but with more potential profit.(see preferred partner)
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity.
The means and methods of ending one’s investment in a project while realizing maximum profit.(See redeem)
EBITDA: Earnings Before Interest Taxes Depreciation and Amortization
Simply put, EBITDA helps gauge a company’s cash flow.
General Manager or General Partner of the Partnership: GP
The general partner of a private equity fund is the entity which manages the fund. In the case of BAI Capital projects, BAI is the General Partner as they are the entity managing the fund.(See PP, CP and LP)
The price paid for borrowing money. It is expressed as a percentage rate over a period of time property.
IRR: Internal Rate of Return
There are two types of Internal Rates of Returns, Gross and Net, similar to general business models of profit. Gross IRR is profit BEFORE taking in management fees, fund expenses and carried interest. Net IRR is return on investment AFTER taking to account these associated expenses. Interim Internal Rate of Returns are used to help disperse profits on a yearly or annual basis to preferred and common investors. Final IRR is calculated at project completion after all investments have been returned to investors.
The investment period is the time during which the fund will make investments in new opportunities. Most funds make all initial investments in a 2-3 year time frame, after which it will make follow-on investments rounds. This investment period is part of the fund’s investment strategy.
LLP: Limited Liability Partnership
A business partnership in which the liability of all of the partners is limited to the capital they have invested.
Limited Partner LP
Multiple investors in a limited partnership, as distinct from the general partner, who manages the investment.(see PP, CP, GP)
Mezzanine loans rank above equity loans in the capital stack and below the bank or senior debt. Used similarly to equity financing.(See capital stack)
Preferred Equity Partner
An accredited investor in a fund. In contrast to a common partner, preferred shares are paid out first, but with less potential profit.(see common partner)
Preferred Equity Financing
Preferred equity shares are a type of hybrid investment that hold characteristics of both bonds and common shares. Preferred shares pay more regular returns than common shares.
A preferred return is a carried interest provision providing the preferred equity investor with a threshold return before the CP’s and GP are entitled to receive any carried interest. The preferred return often provides the preferred partner with an 8% annual return on their investment before the and common partners and general partners can receive any of their interest.(See common return)
Private equity is a type of asset class organized as limited partnerships, such as investment funds, that are not publicly traded.(see Regulation D)
Private Placement Memorandum
A document explaining a new private offering of securities. A private placement memorandum sells shares without SEC registration. Therefore, the placement must explain exactly why the offering complies with SEC Regulation D; this is done to protect both the issuer and the investors. According to Regulation D, a PPM must contain a complete description of the security and the terms of the sales. It must also include applicable information about the issuer’s financial situation and applicable risk factors.
Redeem of Shares
Preferred equity investors have a provision to redeem their shares in the fund by having the issuer buy back the investment at an agreed date and rate.
Reg. D is part of the Securities Act of 1933. Shares in private equity funds are often issued under exemption Rule 506 of Regulation D, whereby shares can be sold to accredited investors without being publicly traded. Fund issuers (ie the General Partner) must file a Form D with SEC with the following information: the company’s promoters, executive officers and directors, and some details about the offering.(See Securities and Exchange Commission, accredited investor)
ROI: Return on Investments
The “return on investment” or “ROI” is the gain or loss on an investment, expressed as a percentage.(see coupon)
SAFE – Simple Agreement for Future Equity
An agreement where capital is loaned in exchange for equity in a new fund. (see bridge financing)
SEC: Securities and Exchange Commission
The SEC is the US government agency responsible for overseeing all securities transactions that are bound by the Securities Act.(See Regulation D, accredited investor)
The senior loan holds priority over the other debts and fund investments. It is secured using the company’s assets.(See capital stack)
Source of Funds
SOF refers to the origin of the funds used in a particular project, invested by the general partner, limited partners and lenders.(See use of funds)
Use of Funds
Where all the raised funds will be used in all stages of the project, from start-up to to construction to management and completion.
(See source of funds)
Waterfall of Distribution
Related to the capital stack, the distribution waterfall allocates capital gains between the preferred, common and general partners.
(See capital stack)
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