Monday, April 14, 2014

Velocis’ Second Fund Could Be Bigger
Velocis is contemplating a new fund that could double the size of its first. Considering the $150M Fund 1 has $303M of assets under management, you can see why we were excited to get the news first from co-founder Jim Yoder.
Jim (here, with his wife Ana) tells us Fund 1 will end up with about $385M of assets. That means there’s $80M left to spend. (That ain't pocket change, unless you have huge pockets.) Nothing is set in stone with Fund 2, he emphasizes, but Jim and his partners (Fred Hamm, Mike Lewis, and Steve Lipscomb) hope to reach the goal in 12 to 18 months with multiple closings during the fund raise. Velocis typically targets MOBs, retail, and traditional office. The specific markets or property types have not been finalized, but Jim thinks this second fund will look similar to the first.
Fund 1 was core-plus to opportunistic, Jim says, but Fund 2 will be slightly more opportunistic. The first fund purchased 15 properties and still owns 13, including 3131 McKinney in Uptown (acquired May 2013). Recently, law firm Wick Phillips signed a 13k SF lease bringing occupancy to 95%. Since taking over, the building went from a gross+E to a triple-net rent structure. Velocis added a tenant lounge and locker rooms (the Katy Trail is just two blocks away), and food trucks come every other Friday. (If you do have huge pockets, put food in them to survive the week food trucks aren't there.)
The most recent buy, Town Center Colleyville, is an example of awesome demographics: the average annual median income of the region at $167k. The shopping center is anchored by Market Street. Additionally, Studio Movie Grill invested a large amount of capital to revamp the existing theater, with opening targeted for mid-May. That will be a great traffic driver, Jim says. The plan: make the center more upscale, adding tenants like you might find in Preston Center or North Dallas.  
Velocis is looking for off-market acquisitions in Uptown as well as in Preston Center for office. For MOBs, the target is around major medical campuses. Jim stays busy, following his lacrosse-playing high school daughter and his three college students (University of Virginia, Harvard, and the University of Richmond). The UVA student will graduate next month and already has a job lined up in DC at Deloitte, the proud poppa tells us.