Dallas private equity fund Velocis makes big real estate buy in Scottsdale

Terms of the acquisition were undisclosed. Velocis bought the property from a joint venture between Dallas-based Lincoln Property Co. and a fund managed by Oaktree Capital Management LP.

The three-story, 174,917-square-foot office building, called Camelback Square, sits at the southwest corner of Camelback and Goldwater roads at 6991 E. Camelback Road in Scottsdale. The property is 95 percent leased, with tenants including Ashton Woods, Mastro’s City Hall Steakhouse and Digital Airstrike.

Along with the steakhouse, the property also has a bistro, tenant meeting space and a common area outfitted with Wi-Fi for tenants. In the past few years, the property has undergone a series of renovations, including new building entrances, a modern lobby, a courtyard water feature and patio feature and updated common area finishes.

The Old Town Scottsdale office market has been extremely popular, with steadily rising rents and property values, Velocis Principal Paul Smith said.

“Camelback Square is our first acquisition in the Phoenix market, and one we hope to build on as we pursue additional assets in the Southwest region,” Smith said.

Since becoming active in real estate investment in 2011, Velocis has bought 16 office properties in Texas, Colorado, Florida, Georgia and North Carolina.

In June 2011, the previous ownership group bought the property from a special servicer and with the help of brokers from Lee & Associates has leased up the building from 50 percent to now about 95 percent of the property leased by tenants.

CBRE’s Barry Gabel, Chris Marchildon, Kevin Shannon, Ken White and Paul Jones led the marketing of the building.The Old Town Scottsdale property will continue to be managed by Lincoln Property Co. for Velocis.

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Recession-Era Buyers Cashing Out

Lincoln Property Co reaped the benefit of good timing and capital improvements with the sale of Camelback Square in Old Town Scottsdale to Dallas-based Velocis, a private equity real estate fund that paid over $42M. Lincoln Property and Oaktree Capital Management acquired Camelback Square out of special servicing back in 2011 for a reported $19M. They then followed a repositioning plan that re-energized the 175k SF asset as a centerpiece project, EVP David Krumwiede tells us (snapped with his daughter at the Cubs spring training facility). Also, Old Town Scottsdale is the revitalized kind of place investors look for, because tenants want to be there now. David completed the deal along with VP Amr Ceran.

Since ’11, Lincoln Property completed new building entrances, modern lobby and common area finishes, a courtyard water feature and patio furniture, and upgraded building signage. The company also initiated an aggressive leasing plan in partnership with Lee & Associates that moved the building from 50% occupied to 95%. Velocis has been a real estate investor since 2011, acquiring 16 assets in markets in Texas, Colorado, Georgia, Florida and North Carolina. The buyer cites the steadily rising rents and values in Old Town Scottsdale as proof that the market’s getting even stronger.

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Upswing in Old Town Scottsdale: Velocis Purchases Camelback Square

PHOENIX, Feb. 17, 2015 – Velocis, a private equity real estate fund, today announced the purchase of Camelback Square, a three-story Class-A office project in the heart of Old Town Scottsdale, Arizona. The asset was previously owned by Lincoln Property Company (LPC), along with a subsidiary of a fund managed by Oaktree Capital Management, L.P. (Oaktree).
The sale underscores the attractiveness of the project and Old Town Scottsdale.

“The Old Town Scottsdale office market is an extremely popular area that is experiencing steadily rising rents and values,” said Velocis Principal Paul Smith. “Camelback Square is our first acquisition in the Phoenix market, and one we hope to build on as we pursue additional assets in the Southwest region.”

The project buyer, Dallas-based Velocis, has been active in real estate investment since 2011, purchasing 16 assets located in markets in Texas, Colorado, Georgia, Florida and North Carolina. Velocis is led by a team of five seasoned principals who are directly responsible for the acquisition, asset management and disposition of assets.

LPC will continue to manage the property for the new owner.

“Over the last few years, we’ve witnessed a strong tenant demand in Old Town Scottsdale due to the surrounding amenity base of high-end residential, luxury shopping, hotels and entertainment options,” said Oaktree Managing Director Mark Jacobs. “We believe the tenant demand will continue and are looking to make additional investments in Old Town Scottsdale along with other areas of Phoenix.”

The 174,917-square-foot Camelback Square is located at 6991 E. Camelback Rd., at the southwest corner of Camelback and Goldwater roads. It is currently 95 percent leased to tenants including Mastro’s City Hall Steakhouse, ZocDoc, Regus, Ashton Woods, Echo Global Logistics and Digital Airstrike. The project’s on-site amenities include the award-winning Mastro’s (a top 10 steakhouse in the U.S.), a bistro, tenant collaboration space and common area Wi-Fi.

“Old Town Scottsdale is an example of the new creative office environment, with the amenities investors look for to deliver solid rent growth, rising values and strong tenants year after year,” said Lincoln Property Company’s Executive Vice President David Krumwiede, who completed the deal along with Vice President Amr Ceran. “We recognized this when we purchased Camelback Square almost four years ago, and that foundation is even more evident today – following the execution of a repositioning plan that re-energized this asset as a long term centerpiece project.”

LPC and Oaktree purchased Camelback Square out of special servicing in June 2011. Since that time, they have completed a major renovation including new building entrances, modern lobby and common area finishes, a courtyard water feature and patio furniture, and upgraded building signage. They also initiated an aggressive leasing plan that – in partnership with Bill Blake, Craig Coppola, Andrew Cheney, Colton Trauter and Gregg Kafka of Lee & Associates – moved the project from just 50 percent occupied to almost 100 percent occupied.

Kevin Shannon, Barry Gabel, Ken White, Paul Jones and Chris Marchildon of CBRE led the project’s investment sales listing campaign.

Camelback Square sits adjacent to the 2 million-square-foot Scottsdale Fashion Square regional shopping center featuring the state’s only Barney’s New York and Neiman Marcus. It is located in the heart of Old Town Scottsdale, a submarket that consistently attracts forward-thinking companies seeking the area’s contemporary mix of office, residential, dining, arts and entertainment destinations.

For leasing information on Camelback Square or to discuss additional investment opportunities in the Desert West Region, please contact David Krumwiede or Amr Ceran at (602) 912-8888.

About Velocis
Velocis consists of real estate funds and Velocis Advisors, LLC. Velocis is active in the acquisition, operation/management, and disposition of commercial real estate in the United States. Velocis Advisors, LLC provides asset management and advisory services to both investors and real estate clients. Additional information about Velocis can be found at https://www.velocis.com.

About Lincoln Property Company
Lincoln Property Company (LPC) is an international full service real estate firm offering real estate investment, development, design/construction management, leasing and property management/receivership/asset management services. Founded in 1965, LPC has approximately 6,800 employees and maintains a presence in more than 200 municipalities in the United States and three countries throughout Europe. The company has developed more than 126 million square feet of office, industrial and retail projects, and 182,000 multi-family units. Property management assignments currently include more than 148 million square feet of commercial space and 146 million square feet of residential property. Acquisition activities exceed $4.0 billion in commercial properties and $3.5 billion in residential properties. LPC’s Desert West Region, which includes Arizona, Nevada, Utah and New Mexico, is based in Phoenix and has been operating since 2001. In that time, the regional office has developed approximately 3 million square feet, acquired 4 million square feet and manages approximately 7 million square feet of commercial space, including major, award-winning and LEED Certified developments and investments. LPC is consistently ranked among Phoenix’s top commercial real estate firms for both development and property management. For more information, visit www.lpc.com or www.lpcphx.com.

About Oaktree
Oaktree is a leader among global investment managers specializing in alternative investments, with $90.8 billion in assets under management as of December 31, 2014. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in distressed debt, corporate debt (including high yield debt and senior loans), control investing, convertible securities, real estate and listed equities. Headquartered in Los Angeles, the firm has over 900 employees and offices in 17 cities worldwide. For additional information, please visit Oaktree’s website at www.oaktreecapital.com.

This does not constitute an offer to sell, or a solicitation of any offer to buy any securities or investment advice, nor is it intended to be a description of all material factors an investor should consider before making any investment.

Meet D Real Estate Daily’s 20 New Contributing Editors

New contributing editors for 2015 include company presidents Charlie Myers of MYCON General Contractors, Scott Beck of Beck Ventures, Greg Miller of Henry S. Miller Cos., and Justin Keane of Wynmark Commercial. Joseph Cahoon, director of SMU’s Folsom Institute for Real Estate also is on board, as are research experts Walter Bialas of JLL, Chris Summers of Xceligent Inc., and Ian Pierce of The Weitzman Group.

Here’s more information on all 20 new contributors. Watch for their posts in the coming weeks, and see the full lineup of D Real Estate Daily contributing editors here.

Paul Smith. A principal at Velocis, Paul Smith has nearly three decades of experience in dealing with institutional real estate clients, including portfolio management, marketing, financing, acquisitions and dispositions involving nearly every product type. He previously was chief operating officer of Brook Partners in Dallas and managing director at Crescent Real Estate. Prior to that, he was with Invesco Real Estate. Smith is a graduate of Harvard University and received his MBA from The University of Texas-Austin.

Jim Yoder. A founding principal at Velocis, Jim Yoder has more than 30 years of commercial real estate experience in leasing, asset management, acquisition, disposition, due diligence and market intelligence. He previously was managing director of JLL’s investor services group, serving both institutional and private clients, and prior to that was a principal at Trammell Crow Co., where he directed both the corporate advisory services division and the office buildings group.

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Velocis Fund II Announces First Fund Closing

DALLAS – Velocis Fund II, L.P. announced its first fund closing, accepting $64.9 million of capital commitments on October 30, 2014. Fund II will be open and will continue to accept capital commitments for 18 months, or until it reaches its targeted capital raise of $300 million. When incorporating moderate leverage of 65 percent, $300 million of equity will give Velocis Fund II approximately $850 million in purchasing power.

“We are quite pleased with our momentum and the strong show of support from Limited Partners at this early stage of our capital raise. We exceeded our initial fund raising goals just 60 days after launching and already have verbal commitments for an anticipated second closing before the end of 2014,” said Fred Hamm, Velocis managing principal. “This is in part due to the work we did in our previous fund by leveraging our experience and relationships to deploy capital and unlock hidden value in assets.”

Fund II will pursue a value-add strategy and will focus on office, medical office and retail properties in select U.S. growth markets.

“We are pleased with our investor feedback on our past performance and we strive to continue to meet or exceed our investment goals. Our team thoroughly understands office, medical office, and retail and we understand our markets, so we’re going to stay the course. We do anticipate acquiring slightly larger assets than we purchased previously, possibly including portfolios,” says Paul Smith, Chief Investment Officer.

The Fund will target financially distressed or under-managed U.S. real estate assets in the $20 to $70 million range where Fund principals can unlock value. The Fund anticipates securing 25 or more properties over a three-year investment period. Potential investors include institutional investors, large family offices, and high-net worth individuals in the United States, Mexico and Europe.

Velocis Fund II is led by a team of five seasoned principals who are directly responsible for the acquisition, asset management and disposition of assets. Joining Fred Hamm as principals in Fund II are Mike Lewis, Jim Yoder, Paul Smith and David Seifert.

Velocis has been active in real estate investment since 2011, purchasing 15 assets located in markets in Texas, Colorado, Georgia, Florida and North Carolina.

About Velocis, LLC
Velocis consists of real estate funds and Velocis Advisors, LLC. Velocis is active in the acquisition, operation/management, and disposition of commercial real estate in the United States. Velocis Advisors, LLC provides asset management and advisory services to both investors and real estate clients. Additional information about Velocis can be found at https://www.velocis.com/.

Velocis Launches Fund II to Invest in U.S. Commercial Real Estate Market

DALLAS – (June 10, 2014) – Velocis Fund LP, a Dallas-based private equity real estate fund, today announced the launch of its second fund, Velocis Fund II. This launch follows the success of Velocis’ first fund, which completed its final Closing in March 2013, and has performed beyond underwriting expectations. With a targeted equity capital raise of $300 million, Fund II will pursue similar office, medical office and retail properties in select U.S. growth markets, but will allow for larger asset purchases, possibly including portfolios.

“The Velocis team’s industry experience, relationships and our proven ability to unlock value in assets will provide our investors with unique opportunities in the U.S. commercial real estate market,” said Fred Hamm, Velocis Managing Principal. “We took a similar approach with Fund I, which allowed us to secure assets, create value and maximize the return for our investors.”

Velocis Fund II is targeting an equity raise of $300 million. Using moderate leverage of up to 65%, the Fund anticipates having purchasing power of $800 million. The Fund will target financially distressed or under-managed U.S. real estate assets in the $20 to $70 million range where Fund principals can unlock value. The Fund anticipates securing 25 or more properties over a three-year investment period. Potential investors include institutional investors, large family offices, and high-net worth individuals in the United States, Mexico and Europe.

Fund I is currently 76% deployed and has assets under management of approximately $305 million. “We currently have a few deals in the contract stage and anticipate having Fund I fully deployed by late Q3 of this year”, Hamm says. Fund I’s first two asset sales, The Jefferson and 7700 San Felipe exceeded initial goals. The Jefferson, a medical office building in Austin, Texas provided investors with a 30.4 percent net IRR and 2.02x equity multiple. Its second sale was 7700 San Felipe, an office building in Houston, Texas which provided investors with a 28.6 percent net IRR and 1.81x equity multiple for investors. As of Q1 2014, Velocis Fund I is currently up more than 25 percent on equity.

Velocis Fund II will be led by a team of five seasoned principals who are directly responsible for the acquisition, asset management and disposition of assets.

“Velocis’ team understands how to source, acquire, manage and add value to commercial real estate as well as any group of managers in the industry”, said Paul Smith, a new Velocis Fund Principal. Smith joins Fund II after serving as a Principal of Velocis Advisors, LLC. Smith goes on to say, “It’s critically important for managers to be able to execute, and as shown in Fund I, Velocis investors have clearly benefitted from the Velocis team’s 130 years of experience.”

Joining Fred Hamm and Paul Smith as principals in Fund II are Mike Lewis, Jim Yoder and David Seifert.

About Velocis, LLC
Velocis consists of two entities: Velocis Fund, LP and Velocis Advisors, LLC. Velocis Fund, LP is a private equity real estate fund, active in the acquisition, operation/management, and disposition of commercial real estate in the United States. Additionally, Velocis Advisors, LLC provides asset management and advisory services to both investors and real estate clients. Additional information about Velocis can be found at https://www.velocis.com/.

Past performance does not predict future results. This article does not constitute an offer to sell, or a solicitation of any offer to buy any securities of the Fund, nor is it intended to be a description of all material factors an investor should consider before investing in the Fund. Prior to making an investment decision, prospective investors should carefully review the offering documents of the Fund for a description of material factors to consider, including risk factors and investor suitability requirements.

Velocis buys large Colleyville shopping center

Dallas-based Velocis’ private equity real estate fund and its investors have bought Town Center Colleyville for an undisclosed sum.

The 138,000-square-foot grocery-anchored, shopping center is Velocis’ 15th purchase and brings the funds total assets under management to more than $303 million.

The Market Street-anchored shopping center is in an attractive demographic area and offers quality retail to Colleyville residents, said Steve Lipscomb, the firm’s principal and co-founder.

Lipscomb says Velocis plans to spend money upgrading the center for tenants. The shopping center, which soon will be home to a Studio Movie Grill, is 93 percent occupied.

Clay Smith and Lance Taylor of JLL represented the buyer and seller. Easley Waggoner Jr. and Amy Pjetrovic of Venture Commercial was awarded the leasing of the property.

Along with the Colleyville shopping center, Velocis owns eight properties in Texas, one in Colorado, one in Florida, one in Georgia and one in North Carolina. The firm was launched in Dallas in 2010.

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Raleigh medical office buildings sold

The Texas private equity fund Velocis Fund has bought two medical office buildings near Rex Hospital in Raleigh for nearly $5 million.

Velocis acquired the Sunset One and Sunset Two office buildings on Sunset Ridge Road from a local real estate investment group, JDL Investments LLC, led by Rick Polm of Cary. The buildings have a combined 36,000 square feet and were 82 percent leased at the time of the deal to several local physician practices.

The deal was the first in North Carolina for Velocis Fund, which was formed in 2010. It also owns real estate properties in Texas, Colorado, Florida and Georgia.

Gary Lyon and Michael Vulpis of Avision Young in Raleigh represented the seller in the deal. The Lincoln Harris real estate firm will take over leasing and management of the properties.

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Velocis Advisors Closes On Flatiron Business Park Property

Velocis Advisors, the asset management and advisory service division of Dallas-based Velocis Partners, acquired 5775 Flatiron Pky. in Boulder, CO’s Flatiron Business Park on behalf of its client, a Dallas-based family office.
Constructed in 1987, 5775 Flatiron Pky. is a 96,000-square-foot office complex anchored by global financial information services provider Markit On Demand. The two-story, fully-leased property is located minutes away from the University of Colorado and downtown Boulder, just off major thoroughfare Foothills Pky. Additional features of the property include a full-height glass atrium lobby, nine-foot ceilings and renovated common areas.
“This was a broadly-marketed asset that we were able to secure on behalf of our client by leveraging our long-standing industry relationships. We were drawn to the asset’s strong tenancy and how well it fit our client’s income-oriented investment needs,” said Paul Smith, Velocis Advisors principal. “With its strong credit tenants and high occupancy rate, we anticipate the building will provide our client dividend-like returns for many years.”

Never Mind the Governor: CA to TX Migration Is Already Strong

DALLAS – Since the early days of February, business headlines in Texas and California have been focused on efforts by Texas Governor Rick Perry to woo California businesses to the Lone Star State. Much has been made in the Texas media about the millions spent by the governor’s office on public relations and advertising in the Golden State in attempts to lure businesses there to the Lone Star State.

But experts tell GlobeSt.com that the governor’s promotion activities haven’t really been necessary. The eastward migration of businesses to Texas from California has been in play for quite some time now. “This has been a phenomenon we’ve experienced during the past 10 years,” notes Mike Lewis, co-founder and principal with Dallas-based Velocis Partners. “But it’s been getting stronger recently.” Transwestern senior vice president Larry Mendez, who is based in San Antonio, pinpoints the increase of California business in Texas from before the recent financial crash, though acknowledges that there seems to be more interest than ever these days. Adds Tom Pearson, executive vice president with Colliers International’s Dallas office: “The governor really didn’t need to do this; there are plenty of people promoting Texas and coming here right now.”

Governor Perry’s office didn’t respond to requests for an interview, however, commercial real estate experts throughout Texas were more than happy to weigh in on the issue of business relocation. “This has been happening in all the major markets in Texas,” remarks Lewis. “There has been good, positive growth out of California.”

Many of the relocations have generated their own headlines over the years, as has news about comparisons between the two states. Waste Connections moved its headquarters from Sacramento to The Woodlands. Furthermore, Google Inc., Apple, Medtronic and Facebook moved their operations to various points in Texas, well before the governor opted to flood the California airwaves with the benefits of doing business in Texas. In recent months, Chevron Corp. announced it would relocate 800 jobs from San Ramon, CA to its oil exploration location in Houston (though Chevron’s headquarters will remain in San Ramon).

“We’ve definitely been seeing companies coming into Texas, not only to establish a new presence here, but existing California headquarters committing to the area here and growing,” comments Stream Realty Partners vice president Stewart Lyman, who works out of the Houston office. Adds Dallas-based KDC CEO Steve Van Amburgh: “If you look at our pipeline of prospective new projects, we’ve always had two or three large groups from California interested in the Dallas-Fort Worth area and Texas” What’s of interest, however, Van Amburgh continues, is that the amount of interest is on the rise. “Since last summer, that number has tripled. Instead of seeing two or three groups, we’ve had nine or ten inquiries,” he comments.

Certainly the reasons for the eastward migration have been touted often enough: Lower cost of living, a decent GDP, strong quality of life, the fact that Texas is a right-to-work state, no state income tax and a central location can be appealing to business owners. And it’s no secret that the propositions recently passed in California have business owners rethinking whether they want to remain and pick up stakes to move. “Those propositions lit a fire under a lot of decision-makers,” Van Amburgh observes. “Whether they’re making the move or not, they are studying alternatives and inquiring.”

Lyman also points out that Texas’ strength in oil and gas has also proved appealing to many Golden State firms. “A lot of companies have seen that there is plenty of skilled labor here for the oil and gas sector,” Lyman points out. Speaking of skilled labor, Mendez continues, the workers to be found in the Lone Star State tend to be well-educated and affordable – and many are bilingual as well. “Labor, by far, seems to be the biggest ticket,” he comments. “Real estate and intellectual property come in second and third.”

There is also the issue of space and time. Colliers International’s executive vice presidents Chris Teesdale and Tom Pearson point out that an investor or corporate user can come into the Dallas area, for example, find a decent amount of land at a reasonable price and build on it. What might take a year to 18 months in California for zoning and entitlements might take three to six months in Dallas, the men note.

Given the ongoing interest in Texas from businesses in California (and other states as well), does this mean that Governor Perry’s efforts have been wasted? Not necessarily, Lyman says.

“Obviously the larger companies, such as the Chevrons of the world, have groups dedicated to finding the right location to do business,” he comments. “But for smaller companies out there that may not have a dedicated real estate group, the governor’s campaign is an opportunity to get in front of them and to show them the potential benefits of Texas.”

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