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Investment Highlights

Our partner seeks to efficiently deploy investor capital into net-leased industrial real estate investments. Their focus is on current cash flowing assets, supported by a diversified portfolio of creditworthy, middle-market tenants on a below-replacement cost basis. Utilizing their in-house credit team and development expertise, we seek to provide exceptional risk-adjusted returns.

  • Minimum investment: $50,000
  • Tax Advantaged Direct and REIT Investment Options
  • Quarterly Distributions
  • 6-Year Hold Horizon

14%-16%

PROJECTED
NET IRR

1.95x

MULTIPLE ON INVESTED CAPITAL (MOIC)

6% – 8%

TARGET CASH-ON-CASH DURING HOLD

14%-16%

PROJECTED
NET IRR

1.95x

MULTIPLE ON INVESTED CAPITAL (MOIC)

6% – 8%

TARGET CASH-ON-CASH DURING HOLD

Fund III Overview

Investment Classes And Channels

Why Now?

Why Industrial? 

INDUSTRIAL DEMAND DRIVERS

Onshoring and reshoring manufacturing to the U.S. and Mexico is an ongoing structural change.

  • The global supply chain disruption of 2020 revealed a clear need for domestic logistics and manufacturing, leading to significant public and private investment into this sector
  • 2nd generation industrial real estate is priced below replacement costs, and space demand is outstripping constrained supply into the foreseeable future

IMMEDIATE BUYING OPPORTUNITIES

Onshoring and reshoring manufacturing to the U.S. and Mexico is an ongoing structural change.

  • Acquisition cap rates remain higher than capital costs
  • Opportunity to acquire quality assets at or below replacement costs with positive leverage and healthy yield spreads
  • Fixed rate debt remains available at 150-200 bps below acquisition cap rates
Industrial Funds I & II

Snapshot KPIs And Performance

Our Partner

Our partner is a commercial real estate investment firm focused on single-tenant, net leased industrial properties throughout the United States. They specialize in sale-leaseback structured industrial acquisitions and value-add opportunities. The firm is led by seasoned principals with over 60 years of combined experience in complex commercial real estate acquisitions, operations, and development, consistently delivering strong results. The company is vertically integrated, offering services such as tenant credit advisory, construction and facilities management, asset management, capital markets, and full-service accounting.

$1B+

ASSETS
UNDER MANAGEMENT

<0.2%

ANNUAL
TENANT DEFAULT RATE

$150M+

REALIZED
INVESTMENT EXIT

18.1%

REALIZED NET
INVESTMENT IRR

Case Studies

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Phoenix, Arizona

Arizona
Natural Resources (2020)

Tenant

Arizona Natural Resources (ANR), founded in 1972, is a manufacturing facility located in Phoenix, AZ specializing in chemical formulation and contract manufacturing solutions for skin and hair care products.

Acquisition

ANR was acquired by a Chicago, IL based private equity firm in 2020. The firm completed a SLB with our partner simultaneous with its acquisition of ANR and invested institutional proceeds from the sale into the operating company. Our partner was awarded the opportunity besting 10 buyers and closing in 23 days.

Lease

New 20-year, Absolute NNN lease with 2% annual rent increases and quarterly financial reporting

Cash on Cash

Investor Cash on Cash
began at 8.5% and escalates annually

Initial investment

  • 131,000 SF – Single Asset
  • Total Capitalization: $13,700,000
  • Equity : $4,100,000
  • Debt: $9,600,000

Value Add

Speed and execution surety provided the opportunistic acquisition, with returns further compounded by CAP rate compression from the tightening Phoenix market. ANR’s credit also continues to strengthen both through organic growth, increased sales and add-on platform acquisitions facilitated by the firm Industrial’s strong private equity sponsorship.

Exit + Returns (2022)

Exit: The investment is currently estimated to be worth $22,000,000 in current market. Returns: Projections at acquisition of 19% returns. Insert: Under current market conditions, we believe that final return would exceed target projections.

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Mansfield Texas

Gamma
Aerospace (2018)

Tenant

Gamma Aerospace, founded in 1971, is an aerospace manufacturing facility located in Dallas-Fort Worth supplying Tier-1 firms including Boeing, Airbus, Lockheed, L-3 and Bell.

Acquisition

Gamma Aerospace was acquired by a private equity firm. The private equity firm and our partner executed a sale leaseback of real estate in Mansfield, TX, deploying proceeds into capital improvements at the site and operating company

Lease

15-year, absolute NNN lease with 2% annual rent increases

23K SF expansion, fresh 20-year lease extension upon completion

Cash on Cash

LP annual cash-on-cash began at 8%, increasing to 10% through annual rent escalations.

Initial investment

  • 123,000 SF – Single Asset
  • Original Capitalization: $5,900,000
  • Expansion: $4,300,000
  • Equity : $1,350,000
  • Real Estate Debt: $8,850,000 (original and construction)

Value Add

After acquiring the real estate in a sale leaseback, our partner financed and constructed a 23,000 SF expansion of the manufacturing facility. Upon completion of construction, the lease was extended to a new 20-year term.

Exit + Returns (2022)

Exit: Gamma sold to large Fund after approximately 4 years. Returns: Investors achieved average annual returns of 18%, exceeding targeted returns of 16% by 200 basis points.

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Multiple Locations, Pennsylvania

Metal Powder
Products (2021)

Tenant

Metal Powder Products (MPP), founded in 1948, is a global provider of custom-engineered powder metallurgy solutions to a variety of industries.

Acquisition

MPP was acquired in 2016 by a New York City based private equity firm. The firm executed a sale leaseback of five locations located in Indiana and Pennsylvania to our partner in 2021, investing proceeds into the tenant operating company.

Lease

New 20-year, Absolute NNN lease with 2% annual rent increases and quarterly financial reporting.

Cash on Cash

Investor cash-on-cash began at 8% and increases to 10% from annual rent escalations

Initial investment

  • 484,000 SF – 5 Property Assets
  • Total Capitalization: $27,150,000
  • Equity: $10,700,00
  • Recourse Debt: $16,450,000

Exit + Returns (2022)

Exit: MPP sold as part of a portfolio sale in 2022. Returns: Investors achieved average annual returns of 20.6%, exceeding targeted returns of 18% by 260 basis points.

Investment Risk Mitigation

Overall Tenant Credit

  • Evaluate tenant’s long term financial profile
  • Overall financial health
  • Tenant access to capital
  • Avoid highly vulnerable companies

Unit Profitability

  • Review business unit-level financials for all target properties
  • Profitable locations
  • Mission-critical tenant operations
  • Tenant investments into properties

Defensible Real Estate

  • Real estate acquisition basis below replacement value
  • Limit downside scenarios (bankruptcy, liquidation, lease rejection)
  • Value Floor – Purchase near value of property if it becomes vacant
CUMMULATIVE FUND III PROJECTED NET DISTRIBUTIONS

Cash Flow Projection

Download Industrial Fund III Offer Memorandum

Projected Investment Lifecycle

01 →

Roll Up + Acquisition

Acquisition of Industrial Assets

YEARS: 0 – 1

  • $250M of equity invested
  • $500M-$700M of leveraged assets
  • Immediate distributions

02 →

Compounding + Management

Annual cash-flow escalations

YEARS: 1 – 5

  • Escalating cash flow from leases
  • Debt principal pay-down
  • Value-add opportunities

03 →

Active Lending Environment

Sale and return of capital and profits

YEARS: 5 – 6

  • Exit of properties
  • Individual or portfolio sales
  • Manager discretion on market timing
FLEXIBLY PURSUING PROFITABLE EXITS

Exit Strategies

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