Vulcan Investment Partners Fund Investing $150 Million On Distressed Properties in South Florida
MIAMI, Oct. 2, 2012 /PRNewswire/ -- Vulcan Investment Partners (www.vulcanfunds.com), founded by a group of leading Mexican businessmen and financial experts, will invest $150 million on purchasing 1,200 repossessed and foreclosed homes in South Florida.
Vulcan administers Vulcan Dynamic Realty Fund LP, a fund dedicated to purchasing and renovating distressed properties at 50 percent of their original construction cost.
Vulcan acquires foreclosed properties or those that are bank owned and rents them for several years at an attractive cap rate (about 14 percent annually) before selling them as the housing recovery takes hold. The firm expects to rent 70 percent of its properties and sell the remainder at high margins.
"The residential home market in South Florida is definitely on the rise, but we still see about 700 single family homes come out of foreclosure every week in Broward and Miami-Dade counties," said Inaki Negrete, CEO of Vulcan Investment Partners.
When Vulcan liquidates the fund in 2017, it expects to see a 100 percent increase in the values of the properties in its portfolio, plus an annual rental cap rate above 14 percent.
"When we looked at the low acquisition prices, along with property appreciation and a high rental cap rate, we were able to project a high return on investment over five years," said Emilio Braun, Vulcan's chief marketing officer.
At once risky, the distressed South Florida property market has gotten the support of investors. Among Vulcan's board of directors is Guillermo Prieto Trevino, former chairman and CEO of Bolsa Mexicana de Valores SAB de CV.
"Many see this strategy as a way of taking advantage of the demand for rentals and the low U.S. home prices," Negrete said. "We're buying properties once valued at $200,000 or more for $75,000 and making them available for a reasonable $1500-a-month rent."
Earlier this year, South Florida had the second-highest increase nationwide in foreclosure activity with a 53 percent increase in foreclosure filings. As investors absorb the distressed properties, the market will balance out, with properties increasing in value and construction activity picking up, Negrete said.
Vulcan's founders see significant community benefits from their multimillion-dollar investment.
"Vulcan in essence is helping revitalize the South Florida real estate market by reducing the number of foreclosed properties and making them affordable to renters and buyers," Negret said.
About Vulcan Investment Partners
Vulcan Investment Partners, LLC incorporated on July 13, 2011 to act as General Partner to private real estate funds engaged in the purchase, sale, and leasing of distressed properties in the East Coast and Sunbelt region. Vulcan controls investment strategies and structural and organizational decisions of private real estate funds. www.VulcanFunds.com.
Contact: Patricia Maldonado
SOURCE Vulcan Investment Partners