Origin Investments Launches $250 Million Growth Fund for Ground-Up Development
Origin Investments Launches $250 Million Origin Growth Fund IV for Ground-Up Development
Announces Austin Single-Family Rental Development as First Investment
CHICAGO (January 20, 2022)—Origin Investments, a top-performing private real estate manager, is launching Growth Fund IV, a $250 million closed-end capital fund targeted to invest in up to $1 billion 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. “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.
Invest for Growth, Stay for Tax-Efficient Income
The key benefits of Origin Growth Fund IV include:
- A targeted, opportunistic net Internal Rate of Return (IRR) of 14%-16% and a net equity multiple of 1.7x-1.8x.
- Investment in 10-12 new ground-up development projects, diversified across high-performing markets with the greatest long-term potential across the Southwest and Southeast U.S.
- One of the shortest fund durations in the market; initial Fund term ends four years after the end of the capital raising period.
- Access to an exclusive deal flow pipeline based on Origin’s longstanding relationships and a prolific track record as one of the most active investment managers and developers in multifamily housing over the past 12-18 months.
- An option to stay in after four years to benefit from a high-yield, tax-efficient income stream of 7%-9% on invested capital.
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.”
Origin’s First Growth Fund IV Investment in Suburban Austin
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.
Origin will accept commitments from accredited investors for the Growth Fund IV until it raises $250 million in capital or the end of March 2023. For more information about investing in Origin Growth Fund IV, go to https://origininvestments.com/offerings/growth-fund-iv/. Origin is actively fundraising for Growth Fund IV as well as its three other Funds: The IncomePlus Fund, Origin Qualified Opportunity Zone Fund II and the Multifamily Credit Fund. All four Funds have been designed to meet different investing criteria based on high-net-worth individuals’ needs. In 2021, Origin raised $500 million for capital investment across four funds.
About Origin Investments
Origin Investments is a private real estate manager that provides best-in-class real estate solutions for individual investors, family offices and advisors to build and preserve wealth. They build, buy and finance multifamily real estate projects in fast-growing markets throughout the U.S. Since its founding in 2007, Origin has executed more than $2.5 billion in real estate transactions and its principals have invested more than $60 million alongside investors. Origin prides itself on offering unparalleled service to investors and its performance; they are in the top decile of the best-performing global private real estate fund managers ranked by Preqin, an independent provider of data on alternative investments. Origin is currently accepting new investors for its IncomePlus and Multifamily Credit Funds, which seek to provide tax efficiency, enhance portfolio yield, maximize growth and minimize portfolio volatility. To learn more, visit www.origininvestments.com.