By Jon Peterson
There is no indication that the industrial market in the U.S. is slated for a slowdown, and investors pouring significant amounts of money into the sector is one sign of its sustained health. Los Angeles-based CBRE Global Investors is just the latest in a long line of institutional investors looking to capitalize on the industry’s growth. It just recently accounted that it has created the CBRE U.S. Logistics Partners commingled fund to invest in industrial assets in the United States. Part of the pre-seeded assets to the fund are located in California, Oregon and Washington, as stated in an email by the Tennessee Consolidated Retirement System.
CBRE Global Investors declined to comment when contacted for this story.
The assets already in the fund have a gross asset value of $1.7 billion. Besides the West Coast, the fund also has exposure in Arizona, Texas, Georgia, Florida, Maryland, New Jersey, Massachusetts, Illinois and Pennsylvania. Overall, the major concentration of the fund at this point is 33 percent in both the West Coast and East region and 30 percent in the South.
There is a total of 31 assets in the fund at this time totaling 13.3 million square feet. 11 of the properties are existing assets that are leased and stabilized totaling 7.7 million square feet. The other 20 properties will be developed in the future. All of the assets now in the fund were contributed to the fund at cost.
Tennessee Consolidated is one of the initial investors into U.S. Logistics Partners. It has approved a total commitment of $250 million with an initial commitment not to exceed $150 million, according to information provided by the pension fund.
The commingled fund will be looking for investments that can produce net IRR returns of 8 percent to 10 percent. The amount of leverage placed into the fund will be 40 percent to 50 percent with a maximum of 50 percent permitted at the portfolio level.
The U.S. Logistics Partners has an open-ended investment structure. A benefit of having the partial pre-seeded portfolio is that investors’ capital can be deployed right away. This compares to going into an entry queue to an older fund where an investor capital might take a year before the capital is called.