Equus Capital Pays $900M for Industrial Portfolio

1500 SW 5th Court Pompano Beach, Fla. Image courtesy of Equus Capital Partners

Equus Capital Partners, a Newtown Square, Pa.,-based real estate investment manager, has acquired a 75-property, 5.4 million-square-foot industrial portfolio in seven high-growth, East Coast and Sun Belt distribution markets for more than $900 million.

The acquisition was made on behalf of Equus Investment Partnership XII LP, an Equus-sponsored value-added fund, and a consortium of strategic co-investment partners.

The firm did not release the purchase price or the seller, but the Philadelphia Business Journal reported Prologis sold the portfolio for nearly $1 billion. The Business Journal noted about 80 percent of the buildings had previously been owned by Liberty Property Trust. Prologis acquired Liberty’s 107 million-square-foot logistics portfolio in early 2020.

The portfolio comprises mainly multi-tenant in-fill shallow bay properties located in established transportation corridors. Markets in the portfolio are: South Florida, including Pompano Beach, Fla.; Houston; Dallas; Atlanta; Richmond, Va.; Greenville, S.C.; and the Baltimore-Washington Corridor.

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It is 98 percent leased to nearly 250 tenants in industries including e-commerce, logistics providers, manufacturing, business-to-business and business-to-consumer uses. The rent roll was described as diversified, with a balanced lease maturity schedule. No single tenant represents more than 3.5 percent of the portfolio’s income and no tenant industry accounts for more than 23 percent of the occupied square footage. The high occupancy and short-term nature of the rent roll will provide immediate value creation through a mark-to-market of rental rates and expansion of lease duration.

Coveted locations, durable cash flow

Tim Feron, Equus Capital vice president of acquisitions, said in a prepared statement the diversity of the portfolio in terms of geography and tenancy combined with the in-fill nature of the locations should allow for durable cash flow and consistent rent growth going forward.

Kyle Turner, Equus Capital partner and director of development, told Commercial Property Executive the portfolio fits well with the firm’s investment strategy focused on high quality, in-fill shallow bay and distribution properties in high barrier to entry locations. Describing them as last-touch, final-mile properties in highly sought-after markets, Turner said being able to gain a foothold and build a portfolio of immediate scale in those markets is helpful for continued expansion.

He added the acquisition further diversifies the platform’s holdings in the industrial sector and provides access to dynamic distribution locations poised to benefit from improving industrial fundamentals and sustained population growth.

In addition to Turner and Feron, the Equus team overseeing the transaction included Senior Vice President Laura Brestelli, Vice President Joe Felici, Associate Scott Miller and Analyst Ryan Klancic. Equus legal counsel was Howard Grossman at Cozen O’Connor. Eastdil Secured advised on the debt placement.

Earlier industrial deals

This latest blockbuster transaction comes just months after Equus acquired a 74-property, 7.3 million square-foot industrial portfolio in the Phoenix and Tucson, Ariz., metro areas for nearly $1.2 billion. The acquisition, which closed in October, was made through Equus-sponsored value-added funds and a consortium of strategic co-investment partners. The seller was not disclosed. About 85 percent of the portfolio is located across six submarkets in Phoenix, and the remaining approximately 15 percent is in Tucson.

Another industrial transaction worth more than $1 billion closed in April 2021. The recapitalization deal was a joint venture between Equus and Partners Group of Switzerland that sold an 8.6 million-square-foot portfolio of industrial properties to a new partnership of Equus and AIG.