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EQT Exeter to Close $4B Industrial Fund with Portion of Investment to Allocated to West Coast Markets

ASB Real Estate Investments
Photo by Tyler Casey on Unsplash

By Jon Peterson

Arguably the best performer in the commercial real estate industry, the industrial sector, continues to draw investment interest from institutional grade investors across the country. Conshohocken, Pa.-based EQT Exeter Property Group is looking to grow its footprint in the industry by raising a substantial amount of money that it hopes to deploy in industrial properties across the country. The investment firm is planning on a final close on its EQT Exeter Industrial Value Fund VI by the end of September, according to a written document provided for the Pennsylvania Public School Employees’ Retirement System. The final capital raise is projected to be around $4 billion with a hard cap of $5 billion.

Some of the capital will be invested in markets up and down the West Coast, according to the document. Around half of the portfolio for the commingled fund is planned for the five top distribution center markets, which includes the Southern California market. The other four are New York, Dallas, Atlanta and Chicago.

Another 25 percent of the fund is projected to be invested in high-growth markets across the country. This would include transactions in the San Francisco Bay Area and Seattle. Other markets that fall into this category would include San Antonio/Austin, Phoenix and Washington, D.C. The final 25 percent of the fund could be invested in markets like South Florida and cities such as Charlotte, which are considered to be mid-South e-commerce hubs.

Pennsylvania Public School is a new investor into the fund with a $100 million commitment, according to the pension fund’s statement. Another recent investor with a commitment of $75 million was the Los Angeles City Employees’ Retirement System.

EQT Exeter is going to be investing in three types of industrial assets across the country, according to a board meeting document. This would be big box warehouses, last mile assets and industrial service properties that can provide high-quality properties to logistics-oriented businesses that are improving their supply chain efficiency.

Around 60 percent of the portfolio for Fund VI will be the acquisition of cash-flowing existing assets that can be improved over time. The value-add strategies planned for these assets would be leasing up empty space and increasing rents through a mark-to-market opportunity. The remainder of the portfolio would be made up of development opportunities. The exit strategy for the commingled fund would be sell one or multiple bulk portfolios to institutional investors looking to increase its industrial exposure.

The number of investments planned for the fund would be somewhere in the range of 225 to 250 equity investments. These transactions would be somewhere in the range of $10 million to $800 million.