Virtus launches $500m fund

The Austin-based private real estate firm will target student housing, self-storage, medical offices and senior living projects throughout the US for its largest diversified fund to date.

Virtus Real Estate Capital has launched its first diversified vehicle to target multiple ‘recession-proof’ property types throughout the US, PERE has learned. 

Sources familiar with the situation have revealed that Virtus Real Estate Capital Fund is seeking $500 million in equity commitments, with a hard cap of $700 million, making it the largest fund the Austin-based private real estate firm has launched. Virtus will seek both opportunistic and value-added strategies for student housing, self-storage, medical offices and senior living projects. 

After focusing on storage properties for its first four funds, Virtus Storage Investment I-IV, the firm expanded its focus toward student housing with the launch of its Virtus Student Housing fund in the spring of 2011. Since Virtus now has experience in both markets, as well as with medical offices and senior living projects, all of which saw investor appetite increase, the firm decided to move towards a multi-property type strategy with the new fund. 

With Virtus Real Estate Capital, the firm is seeking self-storage assets primarily in the Sunbelt region of the US. The other property types, however, have not been limited to any particular region. The fund is targeting net returns of 20 percent and higher. 

Whereas it previously sought the bulk of commitments for its prior funds primarily through independent broker-dealer channels, Virtus is now expanding its horizons to include more institutional and offshore investors. In fact, to accommodate potential foreign participation, the firm intends to launch Virtus Real Estate Note II within the next few months to feed into the Virtus Real Estate Capital Fund offering, enabling offshore investors to commit to the fund while mitigating their tax vulnerability. 

In August, Virtus Storage Investment IV closed on $46 million in equity commitments. Virtus Student Housing is still open and seeking $100 million to $150 million from investors, although sources expect that fund to close in June or July. Virtus officials declined to comment.