Velocis Fund has launched its second fund, Velocis Fund II, which will invest in the US commercial real estate market.
Velocis’ first fund completed its final closing in March 2013.
With a targeted equity capital raise of USD300 million, Fund II will pursue similar office, medical office and retail properties in select US growth markets, but will allow for larger asset purchases, possibly including portfolios.
“The Velocis team’s industry experience, relationships and our proven ability to unlock value in assets will provide our investors with unique opportunities in the US commercial real estate market,” says Fred Hamm, Velocis managing principal. “We took a similar approach with Fund I, which allowed us to secure assets, create value and maximise the return for our investors.”
Velocis Fund II is targeting an equity raise of USD300 million. Using moderate leverage of up to 65 per cent, the fund anticipates having purchasing power of USD800 million. The fund will target financially distressed or under-managed US real estate assets in the USD20 million to USD70 million range where fund principals can unlock value. The fund anticipates securing 25 or more properties over a three-year investment period. Potential investors include institutional investors, large family offices, and high-net worth individuals in the US, Mexico and Europe.
Fund I is currently 76 per cent deployed and has assets under management of approximately USD305 million.
Fund I’s first two asset sales, The Jefferson and 7700 San Felipe, exceeded initial goals. The Jefferson, a medical office building in Austin, Texas provided investors with a 30.4 per cent net IRR and 2.02x equity multiple. Its second sale was 7700 San Felipe, an office building in Houston, Texas which provided investors with a 28.6 per cent net IRR and 1.81x equity multiple for investors. As of Q1 2014, Velocis Fund I is currently up more than 25 per cent on equity.
Velocis Fund II will be led by a team of five principals who are directly responsible for the acquisition, asset management and disposition of assets.