EquityMultiple’s Latest Fund Offering Focuses On Real Estate Debt

The volatility across the broader financial markets since mid-2022 has created a unique opportunity to invest in real estate debt. This opportunity is driven by two key factors: 1) rapidly rising interest rates, which drives higher returns in real estate lending and 2) the regional banking crisis, which has reduced real estate lending competition. Following the Federal Reserve’s increase in interest rates in late July 2023, benchmark interest rates are now at their highest point since 2001. Real estate loans, which are generally tied to benchmark interest rates, have raised their rates in parallel, increasing the absolute returns that can be earned by investors in the sector. At the same time many regional banks, who make up a huge portion of the real estate lending market, have pulled back from lending following the collapse of several of their peers. This creates more opportunity for debt funds and other private lenders.

To take advantage of this market dislocation, EquityMultiple is launching the Ascent Income Fund (the “Fund”) to provide investors with diversified exposure to U.S. commercial real estate loans. The Fund will focus primarily on first lien debt investments in the middle market, where EquityMultiple believes the greatest opportunity resides. The focus on first lien debt and diversification across borrowers, geography and property types is intended to mitigate risk and provide greater stability of returns.

The Fund will target 11–13% net annualized returns, and distributions will be paid quarterly or can be automatically reinvested. All investments involve risk, including loss of principal. However, the Ascent Income Fund prioritizes senior mortgage positions, potentially mitigating risk on behalf of EquityMultiple investors.

Fund rates as of 5/10/23, sourced from, respectively, https://investor.vanguard.com/investment-products/etfs/profile/bnd, https://www.pimco.com/en-us/income/, https://yieldstreetprismfund.com/. Actual yields will vary over time. Returns are not guaranteed and this graph serves for purposes of comparison only. *An elevated portfolio refers to the addition of diversified CRE debt positions.

Who is the Fund Ideal For?

The Ascent Fund can potentially be a great fit for many different types of portfolios and investors, but it is particularly catered towards:

• Short-term Time Horizons: Investors who want to be able to adjust their positions more frequently, achieve greater portfolio diversification, and reach short-term financial goals.
• Liquidity Needs: Investors who want to quickly access their funds and respond to changing market conditions.
• A Desire for a Simplified Tax Process: Investors who want an easier and more streamlined K-1 tax document.

The initial launch of the Ascent Income Fund required a minimum investment of $25,000, but subsequently was reduced to the current minimum of $20,000. Investors in the Ascent Income Fund will have redemption options after one year. Combined with the Alpine Note, the Ascent Income Fund forms a highly flexible wealth generation ecosystem. In combination with equity investments in EquityMultiple’s ‘Grow’ pillar, investors can pursue a blend of cash management, current income, and total return potential.