Logistics Property Co. Closes $1.8B Industrial Real Estate Fund

Butterfield Distribution Center at 2800 W. Diehl Road, Aurora, Ill. Image courtesy of Logistics Property Co.

Logistics Property Co. LLC has closed LPC Logistics Venture Two LP, its second develop-to-core fund, with total equity commitments of $1.8 billion, LPC announced on Tuesday, Nov. 9.

The fund was closed with backing from several global institutional investors, along with co-investment by LPC. Those investors included both entities that had also committed to this new fund’s predecessor, Venture I, and several new major institutions.

Similar to Venture I, Venture II’s execution strategy is to buy well-located property in U.S. markets with strong demographics and significant in-place infrastructure, develop Class A industrial buildings to modern specifications (including key ESG considerations), stabilize the assets and hold to assemble a geographically diverse portfolio, the company stated.

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So far, 35 percent of Venture II has been allocated to investments in Atlanta, Chicago, Dallas, Denver, California’s Inland Empire, Pennsylvania, Phoenix, and Southern New Jersey.

To date in 2022, LPC has announced starts on five new developments for Venture II totaling 2.3 million square feet: Covington Commerce Center in Georgia; First State Logistics Center in Delaware; 2800 W. Diehl Road and 4275 Ferry Road, both in Aurora, Ill.; and 975 Algonquin, also in Illinois.

A Venture II project that’s scheduled to break ground before year-end is the four-building, 613,000-square-foot Palm Gateway Logistics Center, in Mesa, Ariz.

Venture II also closed on the land for a 341,000-square-foot warehouse development in San Bernardino, Calif., with construction slated to start in the second quarter of 2023.

MAM Real Estate, part of Macquarie Group and LPC’s majority shareholder, acted as Venture II’s exclusive financial advisor and placement agent and partnered with the LPC management team in forming the platform. MAM Real Estate is part of Macquarie Asset Management, one of the world’s leading alternative asset managers.

LPC launched Venture I, its inaugural develop-to-core venture, in August 2019, raising $1 billion of equity commitments from global institutional investors and LPC by the time it closed, in December 2020. That equity has been fully allocated to projects totaling more than 20 million square feet across the U.S.

Slowing, still strong

Although the macroeconomic environment has lost some momentum, fundamentals in the industrial real estate sector remained solid through the third quarter, according to a brand-new report from JLL.

2021’s strong leasing activity resulted in year-to-date absorption totaling 356.9 million square feet. Total absorption of industrial product for 2022 is expected to hit more than 400 million square feet.

The third quarter marked the seventh straight quarter of declining vacancy, taking the overall U.S. industrial vacancy to a record-low 3.3 percent, also according to JLL.