Big box real estate listings aren’t getting much bigger.
EQT Exeter has completed a $ 6.8 billion, 70.5 million square foot portfolio sale on behalf of its private real estate funds EQT Exeter Industrial Value Fund IV and related investment vehicles.
The deal is one of the largest in US history. The portfolio consists primarily of logistics properties serving the supply chains of large companies, including facilities for regional big box distribution, e-commerce fulfillment and last mile distribution.
The properties include the five major US sales hubs of New York, Dallas, Atlanta, Chicago and Los Angeles as well as the major e-commerce and air freight hubs of Memphis, Indianapolis, Columbus and Louisville.
EQT Exeter has assembled the portfolio through more than 100 transactions carried out over three years.
These investments were made on behalf of investors in Industrial Value Funds who were looking to increase value through development and leasing activities. In total, EQT Exeter has developed 15 million square feet of the portfolio and another 7 million square feet under construction; leases 45 million square meters of vacant space; and signed 28 million square foot renovations during the fund’s life.
EQT Exeter increased the occupancy rate from an initial 55% to 95% at the time of sale and thus increased the non-debt return at costs from 4.8% to 6.9%.
Industrial goods remain “critical”
Maggie Holmes, director of the Stan Johnson Company’s Atlanta office, describes the deal as a monster deal that perfectly illustrates how critical industrial assets have become for tenants and investors alike.
“In the last decade in particular, with the rise of e-commerce, industrial distribution and warehouse facilities have become more sophisticated,” she tells GlobeSt. “These assets are often tailored to the specific tenant needs for picking, sorting and other fulfillment needs.
“These specifications affect the value of these assets, and location continues to be a value driver. I can’t say if we’ll see any more deals of this magnitude, but I’m confident the industrial sector will continue to see strong investor demand as we forecast the best year on record for the net leasing industrial sector. “
The transaction is another example of the strong demand for high quality industrial equipment in major metropolitan areas, David Lari, partner, Cox, Castle & Nicholson, told GlobeSt. “In a highly competitive market, a portfolio of high quality assets is even more desirable than individual assets. This sale will have an impact on the market. However, every industrial transaction is different and still depends heavily on the quality of the asset and its geographic location. “
The industrial market is also likely to continue to grow outside of the major centers. One of the main reasons for this activity will continue to be e-commerce, says Scott Harrell, principal and co-owner of Mancini, a technology-driven design firm in New York City that finds big brands like Peloton and Volkswagen are signing major leases in the U.S. nearly a million square feet each. “
“The shift from retail to online shopping has become so great that you can even buy your next car online.”
“This price point shows that these companies are willing to pay almost anything to buy space to expand and grow their business.”
A commitment to sustainability
In line with EQT Exeter’s commitment to sustainability, the 22 million square meters of newly constructed properties are equipped with the latest renewable design features in the industry.
As part of the re-leasing of existing space, EQT Exeter has taken a number of measures to reduce its environmental impact, including installing LED lighting, reflective roofing materials and daylight elements, as well as introducing permeable parking and trailer areas and on-site rainwater retention.