GTIS to launch new US residential fund

After closing on the largest US residential real estate fund ever in October, the New York-based private equity real estate firm already is preparing to roll out a successor vehicle.

GTIS Partners is returning to market with its second US residential real estate fund, GTIS US Residential Strategies Fund II. The New York-based private equity real estate firm has begun talking with existing investors about the new vehicle, which will target $750 million in commitments, according to sources familiar with the fund. Although the firm has not formally launched the fund yet, PERE understands that GTIS is anticipated to hold a first close on Fund II in the next couple of months. GTIS officials declined to comment.

The anticipated launch follows the completion of the firm’s capital raise for the predecessor vehicle, GTIS US Residential Strategies Fund, just six months ago. That fund had an original equity goal of between $400 million and $500 million, but it ultimately raised a total of $716 million, including $527 million through the fund and $189 million through related co-investment vehicles. The $716 million in capital now is said to be approximately 84 percent invested.

Moreover, GTIS is said to have made some early exits on behalf of Fund I. These include the initial public offering in November of LGI Homes, which GTIS had backed in 13 homebuilding ventures, approximately half of which were executed through the fund and the remainder through a predecessor vehicle. Additionally, the firm sold 105 acres of a 560-acre master-planned community, Pacific Proving Grounds, in Mesa, Arizona for $160,000 per acre at the end of 2013. The firm originally acquired the development site for $36.5 million, or approximately $65,000 an acre, in October 2012.

Fund II is expected to have a similar strategy to that of the predecessor vehicle, which is pursuing opportunities such as the acquisition of distressed residential land and partially completed subdivisions; land development and homebuilding; purchases of foreclosed homes for rent; and urban high-rise development in US gateway cities. The vehicle will primarily focused on markets such as New York, California, South Florida, Texas, Nevada, Georgia and Arizona.

GTIS has been investing in US residential real estate since 2009, a time when most other investors had shied away from the sector. To date, the firm has acquired 40,000 homebuilding lots in the US and currently has 6,000 homes under construction around the country.