ALKAID FUND 2 - Balanced Investing Fund

Alkaid (Eta Ursae Majoris) is the star at the tip of the Big Dipper's handle, named from Arabic for "the leader of the daughters of the bier" and signifies vigor, achievement, and progress. As such, we thought it a fitting name for BENA Capital’s first two sister funds, the Value-Added Fund and the Balanced Investing Fund.

The Balanced Investing Fund was formed for the purpose of investing in cash-flowing real estate properties with value-add potential. It focused on properties in stable and growing metro areas, located throughout the United States. The Fund targeted assets up to 20 units, where value-add opportunities could be capitalized on and where the Fund’s ability to underwrite opportunities and close swiftly produced pricing advantages.

The Fund successfully delivered on its objectives, returning a stunning 17.0% ROI, compared to a 22.5% ROI target, despite facing significant headwinds related to COVID-19.

Fund SUMMARY

• Investment Profile: Core-Plus & Value-Add Real Estate

• Investment Period: 2.5 years

• Target Return On Investment: 22.5%

• Actual Return on Investment: 17.0%

• Debt Free

investment strategy & Results

A Disciplined, Repeatable Value-Add Framework

Alkaid Fund 2 was executed using BENA Capital’s disciplined value-add investment framework, designed to protect investor capital while capturing upside. The Fund focused on acquiring mispriced assets through all-cash transactions, implementing targeted physical and operational improvements, and actively managing assets through changing market conditions.

This approach emphasized process over prediction—combining bottom-up underwriting with continuous market monitoring and disciplined exit decision-making.

Investment Selection: Buying Right

The Fund targeted underperforming or inefficiently managed multifamily assets where value creation could be achieved through controllable actions rather than reliance on market appreciation alone. Each investment was evaluated across four core dimensions:

1. Macroeconomic Fundamentals – Employment trends, population growth, housing supply constraints, and affordability dynamics.

2. Submarket Dynamics – Neighborhood-level demand, rent comparables, tenant profiles, and competitive positioning.

3. Capital Market Conditions – Liquidity, buyer demand, and pricing trends relevant to both acquisition and exit.

4. Property-Specific Characteristics – Physical condition, deferred maintenance, operational inefficiencies, and repositioning potential.

All acquisitions were completed using all-cash offers, enabling below-market entry pricing, faster execution, and reduced transaction risk.

Value Creation: Active Ownership, Not Financial Engineering

Alkaid Fund 2 employed a hands-on asset management strategy focused on improving property-level fundamentals. Value creation initiatives included:

• Targeted Capital Improvements – Invested across the portfolio to address deferred maintenance and enhance unit quality.

• Operational Optimization – Improved property management oversight, expense discipline, and leasing practices.

• Revenue Enhancement – Rent optimization through improved tenant quality, unit condition, and market alignment.

• Continuous Performance Monitoring – Regular review of operating metrics and local market conditions to inform tactical decisions.

This active ownership model translated directly into increased net operating income and asset values.

Capital Strategy: Conservative by Design

Capital preservation and reliable cash flow were central to the Fund’s structure. The capital strategy was defined by three core principles:

• No Interest-Bearing Debt – Eliminating refinancing risk, interest rate exposure, and forced-sale scenarios.

• Efficient Capital Deployment – Capital expenditures were incremental, targeted, and return-driven.

• Disciplined Exit Execution – Assets were sold when market conditions favored value realization, not according to a rigid timeline.

This conservative posture allowed the Fund to remain flexible during periods of market disruption.

Results: Strategy Executed as Intended

Over the three-year hold period, the Fund successfully executed its strategy, resulting in:

• 10 consecutive quarters of investor distributions

• Meaningful asset value appreciation driven by operational improvements rather than leverage

Risk Management & Market Awareness

While the Fund’s original plan contemplated a 1031 exchange into additional value-add properties, BENA Capital continuously evaluates whether market conditions support optimal risk-adjusted outcomes. In 2020, several factors informed the decision to exit and lock in gains:

• A pronounced seller’s market with elevated pricing driven by supply constraints

• COVID-related operational risks, including eviction moratoriums and leasing disruptions

• A shrinking opportunity set for attractively priced distressed value-add assets

Exiting under these conditions aligned with the Fund’s core objective: preserving and maximizing investor capital.

A Foundation for Future Funds

Alkaid Fund 2 reflects BENA Capital’s commitment to disciplined underwriting, conservative capital structures, and active asset management. The Fund’s outcomes were not the result of favorable timing alone, but of a repeatable investment process executed with rigor and restraint. Equally important, the decision to exit when conditions shifted reflects a commitment to capital preservation and fiduciary responsibility. This approach underpins BENA Capital’s investment philosophy and informs how future funds are structured, managed, and exited.

DISCLAIMERS & Footnotes

This website is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy securities. Investments involve risk, including loss of principal. Past performance does not guarantee future results.