Dear Fund IV Investors,

I’m writing to share my perspective and insight on BAM Multifamily Growth & Income Fund IV — where it stands today, where I believe it is headed, and why my conviction in this portfolio is stronger than current performance marks might suggest.

Fund IV is a recent-vintage fund comprising six communities assembled between May 2023 and August 2024. The timing places us directly into the teeth of the sharpest interest rate cycle in forty years. Rent growth across the portfolio has been essentially flat since inception, up just 0.3% and B Share preferred returns continue to accrue. I won’t gloss over those facts. 

But that is the paper. Here is what is actually happening underneath it and why I am excited about these assets.

The assets are good, and they are performing. Fund IV is 1,626 units across six Class A communities — in Noblesville, Fishers, and Whitestown, Indiana; Rogers, Arkansas; Wexford, Pennsylvania; and Kansas City, Missouri. These are newer properties in supply-constrained, growth-oriented submarkets, the kind of real estate that is very difficult to build today at a price that pencils. Net operating income is up 6.5% since inception and, in the first quarter, came in ahead of budget at $4.35 million. Portfolio occupancy has climbed to 90.8%, up 240 basis points from a year ago, and collections are running at 98.1%. These are not the numbers of a portfolio in trouble. They are the numbers of a portfolio grinding its way up.

Several assets are already showing what this fund can do. Altitude 970 in North Kansas City reached 94.8% occupancy this quarter, its highest since we acquired it, with trailing NOI up 16.3% year over year. Ascent 430 outside Pittsburgh grew NOI 27.4% year over year as occupancy recovered from 85% to nearly 89%. This is exactly the operational alpha we built BAM to capture, and it is starting to come through. Nese, in Whitestown, Indiana, points to the kind of demand tailwind building ahead of this fund: occupancy climbed to 91.6% in the first quarter, well ahead of plan, and the property sits in Boone County — home to the LEAP Research and Innovation District in neighboring Lebanon. Eli Lilly has now committed more than $20 billion to its Indiana manufacturing build-out anchored there, including what will become the largest active pharmaceutical ingredient plant in the country, and that wave of high-wage jobs is only beginning to translate into rental demand on Nese’s doorstep. 

We are taking cost out of the portfolio. In the fourth quarter we moved all six assets onto a single master insurance policy, cutting average per-unit insurance cost from roughly $750 to $520 a year. In a period when insurance has punished multifamily owners across the country, we pushed ours down, and that savings flows straight to NOI for the rest of 2026 and beyond.We are actively managing the capital structure to navigate this macro environment. Fund IV currently carries a 66.4% loan-to-value and a debt service coverage ratio of 1.21x. While these metrics represent an improvement over last quarter, we recognize that the current economic environment requires a disciplined, defensive posture. To that end, we currently have $12.5 million in reserves to provide the runway that ensures the A Share preferred investors continue to receive their 10% annualized distribution, paid monthly. Our focus is on operational execution; we have the liquidity to manage through the current cash flow constraints and are under no pressure to execute forced asset sales at the bottom of the cycle.

Now, here is why I’m genuinely excited.

Fund IV’s value looks muted because of the denominator and the timing, not the real estate. Interest rates have stayed higher for longer than almost anyone expected, and cap rates have stayed elevated right alongside them. At the same time, we haven’t yet seen income growth bounce back, because the wave of new supply delivered over the past few years still needs to burn off before rents can reaccelerate. The result is that the same dollar of NOI is capitalized at a lower value than it would have commanded three years ago, which has compressed values for every multifamily owner in America, ours included. But it is a math problem that reverses. We own newer Class A product at a basis at least 15% below current replacement cost — we could not build these communities today for what we paid for them — in markets where very little new supply is coming behind us. Construction starts have collapsed from their 2022 peak, and the delivery pipeline falls off a cliff in 2028 and beyond. As that excess supply is absorbed and debt markets normalize, income growth returns and cap rates compress, and the value of this same portfolio moves meaningfully in the other direction. We do not need a heroic outcome here; we need the cycle to do what cycles do.

I have been buying multifamily in these markets for sixteen years, and I’ll tell you plainly: owning newer Class A communities at this basis, with this little new supply coming behind them, is not how this product normally trades. We got into Fund IV at prices the next cycle will not offer again. That is why I look at the interim marks with patience rather than worry, and why I believe that when we look back at this fund in five years, the basis we established in 2023 and 2024 will be the headline of the story, not the marks we are carrying today.

Thank you for your trust and for your patience. The hardest part of a cycle is also where the best deals are made, and I am convinced Fund IV will prove to be a strong vintage. As always, my door is open. I’m glad to walk through any asset or answer any question, and our capital markets and investor relations team are here whenever you need them.


With gratitude,

Ivan Barratt
Founder & CEO
The BAM Companies

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