Tuesday, September 18, 2018

Foreign Investor Closes On Its Biggest U.S. Industrial Deal to Date Including Philadelphia Area

A Bahrain-based global investor with $22 billion in assets closed on its biggest U.S. industrial portfolio yet, giving the firm another 4.5 million square feet spanning 56 properties throughout seven major markets including Chicago and Dallas.

Investcorp, which now owns 14 million square feet of U.S. industrial properties, has been gobbling up industrial portfolios here, with this latest $300 million deal marking the ninth such acquisition in the last 36 months.

The purchase is a sign U.S. industrial properties have become the darling of the global investment world, with demand increasing for e-commerce facilities, warehouses and distribution hubs that deliver stable returns. Historically, overseas investors were lured by the U.S. office and hospitality markets.

Foreign investment in U.S. industrial real estate has already hit $6.6 billion in the first five months of 2018, surpassing the $5.8 billion spent for the entire year in 2017, according to Avison Young's 2018 Mid-Year Foreign Investment Spotlight report. Brokers say there is a significant amount of overseas capital on the sidelines seeking high-quality real estate, which is getting harder to find.

The Investcorp deal is the largest U.S. warehouse portfolio acquisition since the inception of the business, said Mohammed Alardhi, an executive chairman of Investcorp who is helping to oversee the firm's expansion in industrial real estate.

"This investment further reflects our commitment to growing Investcorp's footprint in the United States, which is a key driver of the firm's overall growth strategy and an area in which we will look to continue expanding as opportunities arise," Alardhi said in announcing the acquisition.

At the time of the deal, the portfolio of Class A and B warehouse, light manufacturing and flex properties was 90 percent leased to companies in the e-commerce, food services, wholesaling and manufacturing industries. The property addresses were not immediately disclosed, but the portfolio includes the following:

  • 16 multi-tenant Class B industrial building in the Dallas area.
  • 14 single- and multi-tenant Class B industrial buildings in Chicago.
  • Nine multi-tenant Class A and B warehouses in Minneapolis.
  • Nine multi-tenant Class A and B industrial buildings in the Philadelphia/Delaware area.
  • Five multi-tenant Class A and Class B industrial warehouse/manufacturing buildings in Phoenix.
  • Two multi-tenant Class B industrial buildings in Houston.
  • One multi-tenant Class B warehouse building in San Antonio.

About 60 percent of the portfolio is located in top-tier industrial markets.

The properties are also in supply-constrained infill areas needing proximity to major population centers to deliver "last mile" services in the supply chain, said Rishi Kapoor, Investcorp's co-chief executive officer.

Kapoor said the investment helps the firm's clients gain and increase exposure in the highly relevant industrial sector that will benefit from some of the trends shaping the retailing industry.

Along with U.S. industrial real estate, Investcorp's New York team is also shopping for existing office, retail, industrial, multifamily and hospitality properties in the 30 largest U.S. markets. The team is seeking to acquire mid-market core and core-plus investments to add to its holdings, which now total about 550 properties.

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