Origin Investments Launches $250m Origin Growth Fund IV

Jan 20, 2022 | News

Origin Investments, a top-performing private real estate manager, is launching Growth Fund IV, a $250m closed-end capital fund targeted to invest in up to $1bn of ground-up developments in high-growth markets across the Southwest and Southeast U.S.

The Fund will invest as both a general and limited partner alongside sponsors in Origin’s target markets. Origin has secured seed assets for the Fund, including a 310-unit single-family rental community in a booming, job-rich suburb of Austin, Texas.

“Growth Fund IV has been designed to maximize risk-adjusted returns. We see the greatest opportunity in ground-up development given changing multifamily housing market conditions,” Origin Investments Co-CEO Michael Episcope said.

Episcope elaborates “There is too much investment capital targeting value-add opportunities today, and it’s pushing pricing on existing deals well above replacement cost. Developing is just a better way to enter these markets because we will have a portfolio of Class A properties at a lower basis than properties 10-15 years older.”

Earlier in January, Origin predicted the pace of ground-up construction will increase this year because development fundamentals are favorable for both equity and debt financing and there’s so much capital available to put into these investments. Origin’s analytics show ground-up development can fetch 10% to 30% above replacement cost upon disposition while value-add properties are trading at or above replacement cost.

Get the week’s top news delivered directly to your inbox – Sign up for our newsletter

Sign up

A unique feature of Origin’s Growth Fund IV is a flexible hold period option. Four years after the end of the capital raising period, investors can redeem up to 100% of their interests in Growth Fund IV or elect to remain in the Fund and continue collecting tax-efficient distributions.

“Historically, the most successful investment strategy for creating wealth has been long-term investing in quality real estate assets. This optional hold period will offer investors the ability to benefit from a tax efficient income stream and additional appreciation. Investors are beginning to realize that the buy, fix and sell strategy doesn’t maximize wealth,” Episcope said. “However, investment objectives can change, so we’ve added liquidity on an annual basis after the initial four years as a flexible option to satisfy investors’ needs.”

The first investment for Growth Fund IV is Preserve at Star Ranch, through a co-general partner joint venture with Houston-based Guefen Development. It will be the third joint venture between the two companies in less than two years, with three more expected to close between the companies later this year.

“Launching a fund with multiple projects already in place offers investors tremendous value,” Episcope pointed out. “In addition to putting capital to work immediately, investors can see and evaluate where their money is going.”

Preserve at Star Ranch is a 310-building, horizontal single-family residential community in Pflugerville, Texas, a rapidly growing suburb of Austin. The community will capitalize on recent single-family home rentals and will feature state-of-the-art amenities including a pool, a fitness center and expansive common and community-building areas.

Including the Preserve at Star Ranch development, Origin already has a pipeline of development deals totaling approximately $350 million that could close in the first quarter of 2022.

Source: Business Wire

Can’t stop reading? Read more