Virtus Real Estate Capital: Company Profile

Background

Founded in 2003 and headquartered in Austin, Texas, Virtus Real Estate Capital is a private equity real estate investment firm specializing in cycle-resilient, needs-based property sectors. The firm's mission is to be hands-on, data-driven, and curious investors who consistently deliver compelling results that benefit all stakeholders, agnostic to market cycles. Virtus focuses on sectors such as healthcare, education, storage, and middle-income workforce housing, aiming to foster thriving communities that empower people to live better lives.

Key Strategic Focus

Virtus employs a differentiated property type strategy, emphasizing operational details, data excellence, and future-oriented planning. The firm is uniquely structured and staffed to align with its chosen sectors and investment philosophy, maintaining high-quality teams experienced in their dedicated sectors and an elevated ratio of personnel to assets under management. This approach allows Virtus to consistently optimize risk and return by pursuing the best available opportunities and matching them with appropriate capital strategies and horizons.

Financials and Funding

Virtus has a history of successful capital raises to support its investment strategies. In July 2017, the firm raised total commitments of $408.5 million, exceeding its initial target, to execute its cycle-resilient opportunistic strategy. This included $308.5 million committed to Virtus Real Estate Capital II, LP, and $100 million to a discretionary separate account. In November 2022, Virtus announced a strategic minority investment from Almanac Realty Investors, the private real estate investment arm of Neuberger Berman. This partnership is intended to provide additional resources to support Virtus' continued growth while having minimal impact on the firm's day-to-day management and operations.

Pipeline Development

Virtus has been active in expanding its portfolio across its targeted sectors. In July 2018, the firm acquired a 21-property portfolio of early education schools throughout Colorado, North Carolina, and South Carolina, marking a commitment to the early education industry. The portfolio is leased to Cadence Education, the seventh-largest early education operator in the U.S. In September 2024, Virtus entered into a joint venture with Strategic Asset Management I, LLC to acquire YOUnion@Fayetteville, a student housing property located at the University of Arkansas. The property comprises 198 units and 589 beds and is 100% leased for the 2024-2025 academic year.

Technological Platform and Innovation

Virtus emphasizes a data-driven approach to investment, leveraging innovative data analysis and predictive analytics to inform its strategies. The firm maintains a collaborative relationship between acquisitions, asset management, and portfolio analytics, ensuring that decisions are grounded in comprehensive data insights. This commitment to data excellence allows Virtus to anticipate market trends and adapt its strategies accordingly.

Leadership Team

Terrell Gates: Founder and CEO, responsible for all strategic decisions. Mr. Gates is a third-generation commercial real estate investor and developer with experience in real estate, law, and finance. Prior to founding Virtus, he was Director of the GGS Private Banking group at Merrill Lynch. He holds B.A.s in Economics and Spanish from The University of Texas at Austin and a law degree from Southern Methodist University Law School.

Kevin White: Chief Investment Officer and Senior Managing Director, leading the Acquisitions and Asset Management teams. Mr. White has an eighteen-year track record in real estate investing and holds a B.B.A. in Finance from The Ohio State University and an M.B.A. from The University of Texas at Austin.

William A. Strong: Chief Operating Officer and Chief Financial Officer, overseeing the firm's operations and financial management.

Craig Davis: General Counsel and Chief Compliance Officer, responsible for legal and compliance matters.

Scott Humphreys: Managing Director – Asset Management, overseeing the performance of Virtus' property portfolio.

Leadership Changes

In November 2022, Virtus announced a strategic minority investment from Almanac Realty Investors, intended to support the firm's continued growth. This partnership is expected to provide additional resources while having minimal impact on the firm's day-to-day management and operations.

Competitor Profile

Market Insights and Dynamics

The real estate investment market, particularly in cycle-resilient sectors such as healthcare, education, storage, and workforce housing, has seen increased interest due to their stability across economic cycles. These sectors benefit from demographic trends and societal needs, making them attractive to investors seeking consistent returns.

Competitor Analysis

Virtus Real Estate Capital operates in a competitive landscape with several key players:

Strategic Asset Management I, LLC (SAM): A diversified real estate company focused on commercial real estate, with an emphasis on student and senior housing. SAM has completed approximately $6 billion in real estate transactions since 2004.

Almanac Realty Investors: The private real estate investment arm of Neuberger Berman, providing growth capital to public and private real estate companies. Almanac has committed more than $7.0 billion in capital to 50 real estate companies throughout North America.

Alternative Investment Exchange (AIX): A market leader that simplifies alternatives investing, offering a digital platform to improve processes related to buying, owning, and selling alternative investments. AIX has partnered with Virtus to enhance the digital investor experience.

Strategic Collaborations and Partnerships

Virtus has engaged in several strategic partnerships to strengthen its market position:

Almanac Realty Investors: In November 2022, Almanac acquired a passive, minority ownership stake in Virtus, providing additional resources to support the firm's growth.

Alternative Investment Exchange (AIX): In December 2023, Virtus expanded its partnership with AIX to leverage proprietary technology, creating a best-in-class digital investor experience for Virtus clients.

Strategic Asset Management I, LLC (SAM): In September 2024, Virtus entered into a joint venture with SAM to acquire YOUnion@Fayetteville, a student housing property at the University of Arkansas.

Operational Insights

Virtus' strategic focus on cycle-resilient, needs-based property sectors provides a competitive advantage in the real estate investment market. The firm's emphasis on data-driven decision-making, deep sector expertise, and strategic partnerships positions it to effectively navigate market dynamics and deliver consistent returns to investors.

Strategic Opportunities and Future Directions

Looking ahead, Virtus aims to continue expanding its portfolio within its targeted sectors, leveraging demographic trends and societal needs to identify investment opportunities. The firm's strategic partnerships and commitment to innovation are expected to support its growth objectives and enhance its ability to deliver value to stakeholders.