Virtus Real Estate, an Austin-based private equity firm, has launched a $408.5 million fund to make what it calls “cycle-resilient” real estate investments.
Of that total, $308.5 million is committed to Virtus Real Estate Capital II and $100 million to a discretionary separate account, according to Virtus.
Unlike traditional real estate investing firms, Virtus’ strategy is based on demographic and economic trends rather than speculation.
The trends that Virtus seeks to capitalize on include the aging of the baby boomer generation, the coming of age of millennials, the growth of the Hispanic market in the U.S. and the transitory nature and decreased job tenure of the American worker.
Examples of Virtus’ target property types include student housing, senior living, medical office buildings, self-storage facilities and workforce housing.
Virtus says it considers these properties “cycle resilient” in that they can sustain their income stream and value even in the face of a recession or a decline in general real estate values.
“Knowing which deals to avoid is equally as important as knowing which deals to seek. Likewise, it pays to be hands-on and more local in these more operationally intensive property types,” Robert Schweizer, chief investment officer at Virtus, said in a written statement.
The firm began raising the fund in 2015 and initially targeted a $400 million close. Limited partners include public pensions, endowments, foundations and high net worth individuals.
Virtus Real Estate Capital II has already made 12 property investments across six states totaling $116.5 million of equity.
In March, Virtus invested in The Residence at Selleck’s Woods, a 105-unit senior living project under development in Darien, Connecticut. The development cost is $52.4 million with Virtus contributing $16.1 million.
In the acquisition announcement, Virtus projected a 20.5 percent return.
In 2012, Virtus launched a $500 million fund using the same investment strategy.
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