Groma Launches Second Greater Boston Value-Add Fund

GromaCorp, Inc. (Groma), a Boston-based real estate and fintech startup, is launching a new closed-end fund focused on small-unit-count multifamily properties in the Boston area. This fund, called Boston Fund II, is intended to continue Groma’s successful exploration of emerging trends in multifamily investment.

Boston Fund II, which launched in January, is a closed-end fund seeking to raise $25M in equity with a $100k minimum investment. The fund expects a 3-5 year hold period, with distributions beginning after portfolio stabilization and exit upon stabilized portfolio sale or recapitalization. It will be managed by Groma, with advisory board seats available to strategic investors.

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. Three years in, Fund I is achieving 6+% distributions and a 31% internal rate of return.

“Fund I’s performance benefited enormously from Groma’s custom-built tech platform, which enables us to acquire, modernize, and operate MURs more efficiently than has previously been possible”, said Christina Dorobek, Groma’s Head of Investor Strategies. “In the years since Fund I closed, we’ve continued to upgrade our tech stack and operational processes, including the official launch of Grobot, our AI property management system, in order to improve our opex ratio.”

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.

“In addition to our operational improvements, we believe that broader market conditions for 2024 present a unique opportunity for the small multifamily asset class”, said Michael Rosenstein, Groma’s VP of Acquisitions. “Stresses from the pandemic mean that many of these properties are still undervalued. Coupled with expected rate cuts later this year, it’s possible that we won’t see a better buying opportunity than this for quite some time.”