Home AEC LBA Realty to Cap $1.95B Industrial Fund with Southern California and Pacific...

LBA Realty to Cap $1.95B Industrial Fund with Southern California and Pacific Northwest Focus

Colliers, Spokane, Bridge Investment Group, Dogwood Industrial Properties, Cheney
Photo by Pickawood on Unsplash

By Jon Peterson

Institutional investors continue to pour funds into industrial opportunities, and in a sign of a healthy demand for these types of properties, Irvine-based LBA Realty has been busy working on raising funds for its LBA Logistics Value Fund IX commingled fund. This fund is now closed, and the total amount of capital raised for the fund stands at $1.95 billion hard cap, as reported by the Arkansas Teacher Retirement System in a board meeting document.

The pension fund approved a $55 million commitment into the commingled fund, while the manager of the fund will be issuing a co-investment of 2 percent of the total commitments, or up to as much as $13 million. 

LBA is anticipating that 40 percent of the fund could be in invested in the western states markets. These would include industrial markets in Inland Empire, Los Angeles, Orange County, San Diego, Seattle and Portland. Other cities planned for investments in this region include Reno, Salt Lake City, Las Vegas, Phoenix and Denver. The rest of the portfolio makeup calls for 35 percent of the fund to allocated in the eastern markets, and another 25 percent in the central region of the country.

The main investment strategy for Fund IX will be to acquire single- or multi-tenant warehouse/distribution and light industrial/business parks. The commingled fund will have three other secondary investment strategies. 

One part of this will be development and forward take-outs, which could make up somewhere between 15 percent and 35 percent of the fund. These properties would involve infill or last mile locations where there has been historically low vacancy and strong demand for industrial leases. The West and East Coast markets are anticipated to be a target for these types of assets. Alternatively, of this strategy could be deployed in the development of build-to-suit opportunities with corporate relationships it already has across the industry.

A secondary strategy could include an allocation toward food logistics properties covering in the range of 10 percent to 20 percent of the fund. This would likely be for multi-tenant dry temperature leased distribution centers located near major transportation and delivery hubs.

High throughput facilities could make up another 10 percent to 15 percent of the fund, which would be focused on acquiring properties near major ports and airports.

Fund IX’s strategy is to be a value-add fund. It will be looking for investments to achieve net IRRs in the range of 11 percent to 13 percent. The amount of leverage planned for the fund is capped at 65 percent loan-to-value with the targeted use of leverage ranging from 55 percent to 60 percent loan-to-value once the fund is fully invested.