LCN Closes Latest Sale-Leaseback Funds at $1.3B

Edward LaPuma, Co-Founder & Managing Partner, LCN Capital Partners. Image courtesy of LCN Capital Partners

LCN Capital Partners has raised the equivalent of more than $1.3 billion in equity commitments for its third pair of sale-leaseback funds.

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Its LCN North American Fund III LP exceeded a target of $500 million and closed at a hard cap of $635 million. The Luxembourg-domiciled LCN European Fund III SLP exceeded its target of €500 million ($601 million), closing at a hard cap of €600 million ($721 million).

LCN specializes in the primary corporate sale-leaseback and build-to-suit markets. Its funds continue the company’s strategy of originating and structuring primary market sale-leaseback and build-to-suit investments directly with North American and European corporate owner-occupants, across all industry sectors and commercial real estate types.  

The two latest funds received capital commitments from global institutions that included pension funds, insurance companies and foundations, as well as multi-family offices and high-net-worth individuals across nine countries and three continents. The funds also received capital commitments from all of the institutional partners in LCN Funds II.

LCN North American Fund II LP and LCN European Fund II SLP closed in 2017 with about $750 million in capital commitments, and LCN North American Fund LP and LCN European Fund FCP-SIF closed in 2014 with about $450 million in capital commitments.

In a prepared statement, LCN Co-Founder & Managing Partner Edward LaPuma noted that these funds, the largest of LCN’s sale-leaseback funds to date, closed at their hard caps despite the disruption caused by COVID-19. He added that Funds III “are already significantly invested across North America and Europe.”

Pandemic encourages sale-leasebacks 

In October, LCN sold a vacant 350,000-square-foot warehouse, along with an adjacent 16-acre development site, in Boise, Idaho, to LDK Ventures.

Meanwhile, numerous articles, reports and blog posts have documented the increased attractiveness of sale-leasebacks, often under net-lease terms, for owner-operators that might be facing difficulties with their usual lending sources.

Even before the pandemic, some retailers were using sale-leasebacks as a way of moving toward an “asset-light” strategy. But more recently, both the CRE industry overall and the office sector specifically have seen more interest in sale leasebacks.