DALLAS—Velocis Fund LP, a Dallas-based private equity real estate fund, announces the launch of its second fund, Velocis Fund II. This launch follows the success of Velocis’ first fund, which completed its final closing in March 2013, and has performed beyond underwriting expectations. With a targeted equity capital raise of $300 million, Fund II will pursue similar office, medical office and retail properties in select U.S. growth markets, but will allow for larger asset purchases, possibly including portfolios.
Fred Hamm, Velocis managing principal, tells GlobeSt.com, “We are going to enter into a more value-add strategy. We’d like to do bigger deals and portfolios. Our investors are very happy with us. We are proud of the performance of Fund I and we want to continue along that path.”
Velocis Fund II is targeting an equity raise of $300 million. Using moderate leverage of up to 65%, the fund anticipates having purchasing power of $800 million. The fund will target financially distressed or under-managed U.S. real estate assets in the $20 to $70 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 United States, Mexico and Europe.
Fund I is currently 76% deployed and has assets under management of approximately $305 million. “We currently have a few deals in the contract stage and anticipate having Fund I fully deployed by late Q3 of this year,” Hamm says.
Fund I’s first two asset sales, The Jefferson and 7700 San Felipe exceeded initial goals. The Jefferson, a medical office building in Austin provided investors with a 30.4% net IRR and 2.02x equity multiple. Its second sale was 7700 San Felipe, an office building in Houston which provided investors with a 28.6 percent net IRR and 1.81x equity multiple for investors. As of Q1 2014, Velocis Fund I is currently up more than 25% on equity.
Velocis Fund II will be led by a team of five seasoned principals who are directly responsible for the acquisition, asset management and disposition of assets.
“We did see opportunities in Fund I that we weren’t able to take advantage of,” says Paul Smith, a new Velocis Fund Principal. “They overweighed Fund I. There were deals we liked; they were just too big.”
Joining Hamm and Smith as principals in Fund II are Mike Lewis, Jim Yoder and David Seifert.