Velocis, a Dallas-based private equity real estate firm, closed its second value-added fund on $270 million, with an expected $50 million additional co-investment to come, the firm said Wednesday.
The firm launched its debut vehicle, Velocis Fund I, in February 2010 and closed it in March 2013 on $142 million. Velocis opened the second fund in July 2014 with a $300 million target, PERE previously reported. About 90 percent of Velocis Fund I investors returned to invest in the second fund. In addition to the high net worth individuals and family offices that invested in the debut vehicle, Velocis garnered commitments from two state pension funds and a college endowment for Velocis Fund II.
“Fundraising is never easy, but certainly going to market with a second fund, particularly after a successful first fund, is much easier,” Fred Hamm, the firm’s co-founder, told PERE. “We’re really pleased with the balance and makeup of our investor pool. It puts us in a great position to continue to grow as an emerging manager.”
Similar to the first fund’s strategy, Velocis is deploying capital from the latest vehicle in office, medical office and retail in southern and central US regions. The firm also added data centers to its product mix for the second fund.
“We see data centers as similar to medical office because it’s a niche asset class and emerging product type, and in a lot of ways it’s inefficient,” David Seifert, one of Velocis’ principals, told PERE. “The demand side of the equation is growing exponentially.”
With capital from the second fund, Velocis plans to execute between 20 and 25 deals in the $20 million to $70 million range and has a target net internal return rate of 18 percent. Velocis Fund II is currently 27 percent invested through five deals, the first of which closed in February 2015.
The firm’s most recent transaction, the acquisition of Park One (pictured), a class A office building in Phoenix, Arizona, closed last month. Velocis bought the property, located at 2141 East Highland Avenue, for $39 million from a joint venture comprising Morgan Stanley Real Estate and California developer McCarthy Cook & Co, according to real estate data provider Real Capital Analytics.
Founded in 2010, Velocis is comprised of two entities: Velocis Fund and Velocis Advisors. The latter entity, its advisory services group, works on separate accounts with real estate investors in the core space.