Value-Add Real Estate Fund Reopens With 17.5% Target IRR

The Palladius Real Estate Fund I LP is once again open for funding and has set a target IRR of 17.5%.

“While we have exceeded our target capital raise of $100 million, we decided to reopen our offering on RealtyMogul to take advantage of the highly attractive investment opportunities we are seeing in the market,” Palladius Senior Managing Director Manish Shah said. “This strategic decision aligns with our goals to position ourselves to generate strong risk-adjusted returns for our investors and to further democratize real estate investing.” 

The Palladius Capital Management-sponsored real estate fund focuses on producing returns through the acquisition, management and disposition of equity interests in multifamily and student housing assets throughout the country. The fund operator seeks cash-flowing assets with high value-add potential that can be acquired at a discount to replacement cost. 

The fund has six properties. Five of the acquired assets are traditional value-add multifamily properties, and the other is a student housing property. The six properties combine for a total of 1,412 units and a total capitalization of $383 million. 

The value adding comes in the form of targeted upgrades to the properties and bringing the rent up to a market-matching rate. The rents in place are roughly 12% below market, and 76% of the units are unrenovated. This provides the operators with significant value-add potential to increase yields for investors. 

While the original size of the fund was set to be capped at $100 million, the investment firm decided to expand funding to be able to take advantage of other potentially high-yielding acquisitions in the market. 

• Minimum investment: $35,000
• Target internal rate of return (IRR): 17.5%
• Target equity multiple: 1.75x
• Target cash yield: 7%
• Target investment term: four to six Years

Palladius is an Austin, Texas-based real estate investment firm that pursues multifamily housing, student housing, hospitality and industrial assets with high value-add potential. The firm’s track record includes over $1.1 billion in assets acquired, a 31.8% net IRR and a 2.3x equity multiple. The firm manages over $400 million worth of real estate assets across the country. 

The fund is available to accredited investors through the RealtyMogul investment platform.

Photo: Courtesy of RealtyMogul