Industrial REITs outperform; Mesa West raises $1.9 billion for open end debt origination fund; $300 million in new LP commitments
In Age of Amazon, You Could Invest in Tech—or in Warehouses. REITs that specialize in industrial properties, such as Prologis, Rexford Industrial Realty, and Terreno Realty Corp., have recently outperformed REITs that focus on malls, residential rentals and office buildings. Many attribute this trend to the rise in e-commerce. Online shopping still accounts for less than 10% of retail sales in the U.S. but is reconfiguring supply chains: online retailers require about three times the warehouse space of traditional brick-and-mortar stores, and more-sophisticated logistical services
“E-commerce has taken a business that was already pretty solid and turbocharged it… a regular warehouse that supplies a retail store, you are dealing with pallets of goods that are moved around. In the case of e-commerce, there is a lot of packing and handling.” – Hamid Moghadam, CEO, Prologis
CAPITAL RAISING UPDATES
Bkm Capital Partners nears first close for second industrial fund with $125 million in commitments. BKM Industrial Value Fund II was launched in 2017 with a $300 million fundraising target. The firm specializes in value-add multi-tenant industrial properties in metro areas across the western United States. In February, the fund received a $30 million commitment from the Montana Board of Investments. The fund’s predecessor raised $135 million in 2014.
Bridge Investment Group raises capital for multiple funds. The firm is currently seeking more than $1.5 billion in capital commitments across three funds. To date, the firm’s multifamily strategy, Bridge Multifamily Fund IV, has raised $92.3 million of its $1 billion target. In addition, Bridge’s Workforce and Affordable Housing Fund has raised $180 million for its value-added strategy (the target is unknown.) Finally, Bridge Office Fund has raised $235 million of its $500 million target for investments in U.S. office properties in prime suburban markets. Across all strategies, the firm currently manages more than $10 billion in AUM.
CenterSquare holds $100 million first close for fourth value-added vehicle. CenterSquare Value-Added Fund IV will invest in middle-market transitional real estate assets in the U.S., with a focus on the office, multifamily, retail, industrial, parking and hospitality sectors. The fund’s target is unknown, but the fund’s predecessor held a $145.75 million final close in 2016.
CBRE Global Investors launches new fund, CBRE U.S. Development Partners 5. The fund will invest in opportunistic real estate assets in the U.S. The target for the fund is unknown but CBRE has already received a $200 million commitment from Texas TRS. Texas TRS has previously $200 million to CBRE Strategic Partners U.S. Value 8, which held a $1.34 billion final close in 2017.
Mesa West Capital raises more capital for open-ended fund. Mesa West Core Lending Fund, focused on U.S. first-mortgage debt origination across property types, has now raised $1.9 billion in equity commitments. Investors in the fund include the San Diego City Employees’ Retirement System ($50 million) and School Employees Retirement System of Ohio ($75 million). In 2017, the firm held a $900 million final close for its largest closed-end real estate debt fund, Mesa West Real Estate Income Fund IV.
USAA Real Estate appoints Lou Jug to its global investors group. Lou Jug has been named managing director in the global investors group for USAA Real Estate where he will focus on relationships with investors and will serve as a resource to domestic investment partners across the U.S. Prior to joining USAA Real Estate, Jug spent five years serving as the Head of Institutional Clients for MetLife Investment Management. Previously, Jug held senior management and marketing roles at Fortress Investment Group and Clarion Partners and was senior principal investment officer at CalPERs.
LIMITED PARTNER NEWS
Virginia Retirement System (VRS) has committed $75 million to Artemis Real Estate Partners Fund III. The fund is a value-add/opportunistic vehicle focused on the multifamily, office, industrial, retail, senior housing and self-storage sectors across the U.S. The fund has raised $661.05 million so far. The fund’s predecessor held a $580 million final close in 2014, surpassing its $500 million target. The Virginia Retirement System currently manages $78.3 billion in assets and allocates 5% to real estate, below its 15% target.
Maine Public Employees’ Retirement System (MainePERS) has committed $50 million to BPEA Real Estate Fund II. The fund, managed by Baring Private Equity Asia, will invest in debt secured by properties throughout Asia. Additional commitments include $100 million from the Texas County & District Retirement System and $101 million from Texas ERS. The fund’s predecessor held a $365 million final close in 2015. MainePERS currently manages $14.3 billion in assets and allocates 9% to real estate, slightly below its 10% target.
Sacramento County Employees’ Retirement System committed $40 million to NREP Nordic Strategies Fund III. The fund, managed by NREP, is focused on value-added investments across Nordic markets. The $9.25 billion public pension currently allocates 8.6% of assets to real estate, above its 7% target.
South Carolina Retirement Systems has committed $125 million to Digital Colony Partners. Digital Colony Partners is an infrastructure fund managed through a joint venture between Digital Bridge Holdings and Colony NorthStar. The $31.8 billion public pension fund currently allocates 7.9% to real estate, just under its 8% target.