Transwestern Investment Group has raised $200 million to start its TSP Value and Income Fund II, which is targeting a 12.5 percent or higher net IRR for investors.
The fund’s strategy will follow that of its first successful TSP Value and Income Fund, which reduced volatility in the value-add space by focusing on current income and providing value creation. At its closing, the TSP Value and Income Fund II already had 40 percent of its equity tied to seed assets.
The success of Fund I
In March, TIG completed Fund I, which made its first investment in 2015. Overall, it made nine investments—three office campuses and six industrial portfolios, totaling 3.5 million square feet in the states of Illinois, Indiana, Kentucky and Ohio.
One of the properties in the final portfolio sale was 2000 Connor Road in Hebron, Ken. At the time of that sale, Scott Fitzgerald, Transwestern Investment Group’s executive managing director, told Commercial Property Executive that after stabilizing rent rolls and increasing the portfolio’s net operating income in the first three years of ownership, the time was right for the sale. “That, coupled with the increased demand for infill industrial product, led us to explore an early monetization of the investment,” he said.
Overall, the fund had $150 million in committed equity and delivered a 17 percent net IRR to investors. That success has led to a return of all of TIG’s investors from Fund I, as well as some new institutional investors looking to find that same profit realization.
“Our fund strategy targets property types with limited capital expenditure profiles that can deliver significant cash flow during the value-add process,” Fitzgerald said. “We are well-positioned to capitalize on the value-add opportunities we’ve identified in markets with strong economic drivers, supply constraints and liquidity to achieve superior results for our investors.”