DALLAS–As GlobeSt.com reported earlier in the month,locally-based Velocis Fund LP has launched itssecond fund. Velocis Fund II has a targeted equitycapital raise of $300 million and will pursue office, medicaloffice and retail properties in growth markets throughout the US.GlobeSt.com caught up with Managing Principal Fred Hamm to find outfirst hand about the initial fund and the new one.

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GlobeSt.com: Can you walk me through briefly the currentstatus of Fund I?

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Hamm: Velocis launched in February of2010, targeting U.S. real estate assets in demand driven/supplyconstrained markets in the $10 million to $50 million range,focusing on core-plus office, medical office and retail properties.Velocis successfully closed Fund I in March of 2013 with equitycommitments exceeding $141 million. Currently, Velocis hasapproximately $305 million in total assets under management. TheFund is currently 76% deployed and anticipates being fully deployedby late Q3 2014, thus, achieving a portfolio size of approximately$400 million.

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Fund I's first two asset sales, The Jefferson and 7700 SanFelipe exceeded initial goals. The Jefferson, a medical officebuilding in Austin, Texas provided investors with a 30.4% net IRRand 2.02x equity multiple. The Fund's second sale was 7700 SanFelipe, an office building in Houston, Texas, which providedinvestors with a 28.6% net IRR and 1.81x equity multiple forinvestors. As of Q1 2014, Velocis Fund I is currently up more than25 percent on equity.

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GobeSt.com: How will the second fund differ from thefirst?

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Hamm: Fund II will be similar to FundI, but with a larger targeted equity raise of $300 million,allowing the GP to pursue larger asset purchases, possiblyincluding portfolios. Velocis has added Phoenix and San Jose,California to their target markets. The Velocis team will continueto utilize the same industry experience, relationships and provenability to unlock value in assets.

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GlobeSt.com: What type of properties are youtargeting?

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Hamm: Fund II will pursue office,medical office and retail properties in select US growthmarkets.

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GlobeSt.com: Why the emphasis on office, medical officeand retail?

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Hamm: (Office) In most markets acrossthe U.S., there has been very little new supply added in infilllocations. As the country recovers from the economic recession, jobgrowth in select markets is translating into increased demand forspace – and is leading to strong rental increases in our targetmarkets.

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(Medical Office) Many hospital systems in growth markets areworking to expand their footprint and services. MOB's located nearstrong, expanding hospital systems are seeing strong occupanciesand rent pressure. We are targeting MOBs near campuses with tenantsthat have near-term lease expirations. This allows us to improvethe revenue stream and add value for our investors.

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(Retail) Similar to office, very little speculative retail spacehas been added since the recession. In growth markets, consumerspending has been strong in the retail sector. Additionally thereis strong investor demand for stabilized retail product. Ourstrategy is to identify under-utilized properties, reposition theassets and sell to a core buyer (like a REIT).

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GlobeSt.com: Which markets are really holding yourinterest at this point?

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Hamm: We focus on markets with strongjob growth, pro-business environments, and favorable accessibility- specifically we are looking at: major markets in Texas, Denver,Colorado, Southern Florida, Washington D.C., Raleigh and Charlotte,NC, Phoenix, and San Jose, California.

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GlobeSt.com: Can you share one example of a propertyacquired through the first fund that you were able to turnaround?

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Hamm: Our first asset sale was TheJefferson, a medical office building in Austin, Texas. That assetexceeded our expectations, providing investors with a 30.4 percentnet IRR and 2.02x equity multiple, net of all fees and expenses. Wewere able to push occupancy and rental rates faster than weunderwrote. The Velocis team's active management of this propertyresulted in superior performance for our investors.

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