Discovering real estate credit: My internship at Velo Capital
– Oskari Vappula, Investment intern, Helsinki (Spring 2024)
My internship at Velo was incredibly educational and gave me a great introduction to real estate, credit markets, and private investment in general. Many of my tasks as an intern in the Nordic investment team directly involved Velo’s expansion efforts in the Nordics, which was an exciting experience. One of the most rewarding aspects was the opportunity to witness firsthand how strategic decisions are made in a growing company.
I thoroughly enjoyed working with Velo’s tight-knit investment team, where the atmosphere was welcoming and easy-going from day one. The team’s diverse backgrounds enriched my learning experience, as I could gain insights from professionals with varied expertise and perspectives. I can wholeheartedly recommend that anyone interested apply for an internship.
Key responsibilities and experiences during the internship
My primary responsibility as an Investment Intern was assisting the team in the process of analyzing inbound credit investment opportunities. The first analysis usually involves assessing materials such as financing requests and investment memorandums to form a qualitative understanding of the proposed investment structure and underlying asset. Then, the credit investment and underlying assets’ cash flows are modelled over the proposed term of the investment. If the opportunity is pursued further, we take a closer look at e.g., the asset’s location, compare its economics with similar properties in the area, and calculate sensitivities to downside scenarios. The credit investment proposal is then structured based on our analyses and presented to a broader team at various stages of the analysis, culminating in an Investment Committee meeting, where a final decision is made. I participated in all of the stages above during my tenure at Velo, with the opportunity to present early-stage findings being a clear highlight of my internship.
During my internship, the group was also in the process of fundraising for two new credit mandates, which allowed me to assist the Investor Relations team in preparing research and sales material for investor meetings. Examples of assignments included estimating the size of our addressable markets and gathering data on investors’ appetite toward sustainability.
Since Velo was at a relatively early stage of its development, I had the opportunity to advance several internal development projects as well. One major project involved the reconstruction of an outdated central fund management workbook used regularly by most Velo functions.
How does working at Velo compare to working at Nrep?
The underwriting process is broadly similar at Velo compared to Nrep, which means that the assignments given to an intern are also much alike. The main difference is the Velo funds’ position as a Nordic credit investor rather than an equity investor. Because of this distinction, we focus our analysis much more on assessing downside risk, as credit investments provide a fixed, contractually-secured expected return compared to equity’s unlimited upside potential. This means that we must carefully analyze sensitivities in the assets’ and borrowers’ financial position and be comfortable with risks related to the equity sponsor(s) and other relevant stakeholders, e.g. developers, as well.
My internship at Velo was also a distinctly international experience – it was not uncommon for me to work with people based in Sweden, Germany, or the UK during any given week. Despite working with different types of tasks, Velo and Nrep are closely connected both professionally and socially, collaborating in producing quarterly macroeconomic reports, for example, and participating in office-wide events, such as ice bathing and after-works at the office and a three-day Urban Partners Group-wide summit in southern Sweden.
What is Velo Capital?
Velo Capital is Urban Partners’ credit investment strategy, launched in 2023 with the establishment of the Urban Partners platform. Velo Capital advises on flexible real estate credit solutions, supporting borrowers focused on sustainable assets. With 10 years of alternative real estate credit track record, Velo Capital exclusively advises four active funds with approximately €1bn AUM focused on real estate assets in the key metropolitan areas of our target markets Germany, Sweden, Finland, and Denmark.