Despite the uncertain economic backdrop, Almanac moved forward on the acquisition because it viewed Virtus’s strategy of focusing on sectors like healthcare, education, self-storage, student housing and middle-income workforce housing to be stable and cycle-resilient.
Almanac was also attracted to the firm’s demonstrable track record and proven fundraising capabilities, Justin Hakimian, a partner at Almanac, told PERE.
“We were introduced to Virtus several years ago and they were thinking through ways to grow and expand their business,” said Hakimian, who led the transaction. “This investment was the culmination of those discussions and our analysis of the firm’s growth prospects.”
The move marks Almanac’s second GP stakes investment this year, after taking a minority interest in Chicago-based investment firm Waterton in May. Previously, Almanac also invested in Slate Asset Management, CA Ventures, RXR Realty, Claros and ACRE, and provided additional capital for the execution of their specific real estate strategies.
Most of Almanac’s prior deals, however, have been growth capital investments into real estate operating companies rather than managers. The firm declined to disclose the size of the stake.
The partnership provides Virtus with stepping stones – Almanac’s capital base and its resources through Neuberger Berman – to help fuel the niche manager’s next phase of growth. Virtus’s primary growth objectives include raising capital for value-add and core plus funds, expanding investor relationships and building internal development capabilities, initially focused on workforce multi-family housing, but expanding into other cycle-resilient sectors over time.
Additionally, Virtus plans to evaluate new strategies which may include debt investing and investing in similar property sectors outside the US.
Terrell Gates, Virtus’s founder and chief executive, described the investment as “an exciting development” for the firm. Virtus invests via a series of value-added and core-plus strategies with a focus on the acquisition and development of properties within the residential, healthcare and self-storage sectors.