Velocis Closes On New $172M Fund To Invest In High-Growth-Market Real Estate

Private equity real estate fund manager Velocis closed on a new $172M investment fund aimed at sidestepping rising interest rates and a more difficult lending environment, especially for office properties, by buying up assets from sellers in need of liquidity.

The fund, Velocis Secondary Partners III, allows the Dallas-based company to deploy capital to acquire limited partnership interests or stakes in real estate funds and assets through the private secondary market, in which an investor sells a stake in existing funds and assets, CoStar reported. The fund raised in excess of 70% more than the low end of its target.

Velocis wrapped up its capital campaign for the fund earlier this month, and the unleveraged fund is about 20% invested, Green Street’s Real Estate Alert reported.

Velocis had a fundraising target of between $100M and $170M. Contributors to the fund included corporate pension funds, insurance firms, endowments, foundations, registered investment advisers, family offices and high net worth individuals, according to CoStar.

The fund aims to produce an 18% return on investments in recapitalizations of funds and property portfolios, according to Green Street.

Velocis’ investment strategy “is rooted in opportunities created by the migration of people, jobs, capital and resources to our Sun Belt markets,” according to its website. 

Velocis Secondary Partners III will invest 80% of its equity in the U.S. and another 10% each in Asia and Europe. Expected investments include industrial, apartments, office, retail, data centers, hospitality, life sciences, senior housing, medical office and single-family residential assets, CoStar reported.

Velocis has been focused on buying $40M to $80M assets, especially industrial and multifamily properties, using its value-add fund it raised last year, Velocis co-founder and Managing Partner Fred Hamm told CoStar. It plans to finish deploying capital from that fund after “values settle,” Hamm said.

“We’ve been intentional about creating diversification to satisfy our investors, so if one property type is out of favor, another one might be more favored,” Hamm said, according to CoStar. “Every real estate manager is challenged with capital markets being problematic and locked up, which is why we’ve built a diversified multi-strategy platform.”