By Jon Peterson
Irvine, Calif.-based LBA Realty is planning to have a fourth-quarter, final close on its latest commingled fund called LBA Logistics Value Fund VII, as stated in a board meeting document for the Orange County Employees Retirement System. This pension fund has approved a $100 million commitment to the fund. The targeted capital raise for Fund VII is $1 billion.
This commingled fund will have a West Coast focus, likely engaging all its offices located there. LBA Realty has regional offices that are located in both San Francisco and San Jose, and its other regional offices on the West Coast are located in Seattle, Los Angeles and San Diego.
Fund VII is a value-add industrial-only fund. This will be the first time that LBA has had a commingled fund focused only on investing in industrial assets, as stated in a board meeting document from Orange County. Its previous funds included the purchase of both industrial and office assets with the industrial component comprising somewhere in the range of 40 percent to 60 percent.
Most of the capital will be invested in existing assets with an opportunity to create additional income in the future. This would involve warehouse/distribution buildings or light industrial/business parks. Approximately 25 percent of the fund could be invested in new development projects, high infill/last mile locations, cold storage and high throughput locations.
The targeted returns for the commingled fund are 12 percent to 14 percent net IRRs. This would include a 5 percent to 7 percent annualized cash return upon portfolio stabilization. The maximum portfolio leverage allowed on the fund is 65 percent.
LBA Realty has been an active investor in the Puget Sound area for some time. According to earlier reporting from The Registry, the company has spent nearly $100 million to acquire six properties in SeaTac from Prologis earlier this year. It also purchased properties in the last year or so in Kent and Renton, growing its industrial portfolio steadily across the region.