Groma Closes Second Greater Boston Value-Add Fund

GromaCorp, Inc. (Groma), a Boston-based real estate and fintech startup, has announced the closure of investment in Boston Fund II, its second closed-end fund focused on small-unit-count multifamily properties in Greater Boston.

Boston Fund II, which launched in January 2024, raised $22M in equity from investors ranging from high-net-worth individuals to family offices. Thus far, it has 45 properties acquired or under agreement, with a total asset value of $60.2M at acquisition basis and comprising 158 residential units. Some of the fund’s debt financing is expected to come in the form of assumable debt at a competitive rate, with other assets being financed with local and regional banking partners at current rates. The fund expects a 4-year hold period, with distributions beginning after portfolio stabilization and exit upon stabilized portfolio sale or recapitalization.

Boston Fund II builds off of the successes of Boston Fund I, which launched in 2020 with a similar mandate to invest in small-unit-count multifamily properties under Groma’s value-add Modern Urban Rental (MUR) strategy. Five years in, Fund I is achieving an average of 5% distributions and a 24% internal rate of return based on a recent internal mark-to-market valuation exercise.

“Since we launched Fund II, our operational platform has continued to improve, enabling more efficient acquisition, modernization, and operation of this asset class”, said Christina Dorobek, Groma’s Head of Investor Strategies. “Grobot, our custom-built AI property management agent, is now doing the work of three full-time employees across our portfolio, and we expect its abilities to continue to improve as we gain access to more data and better ways of structuring it.”

Grobot enables Groma to handle every stage of the property lifecycle, from acquisitions to repairs, more efficiently. It reduces the amount of human time spent on decision-making and communication and allows for faster, more accurate responses to tenant requests. Its ability to analyze vast quantities of data on everything from market conditions to appliance instruction manuals allows it to make and apply connections that would take most humans weeks.

“Our reputation as a highly qualified buyer has given us access to larger, off-market portfolios, enabling us to leverage the acquisition team’s time more effectively”, said Michael Rosenstein, Groma’s Head of Acquisitions. “Scaling our acquisitions pipeline will be essential as Groma grows, and Fund II has provided an excellent case study of what we expect that to look like.”

Groma continues to be a strong believer in the fundamentals of the Greater Boston market and the small multifamily asset close as a whole, with future vehicles expected to focus on scaling Groma’s local footprint.