Stos Partners Sets Up $500M Industrial Fund
This investor’s strategy is to acquire value-add assets, give them attention and sell at a premium.
Stos Partners has closed on the Stos Partners Fund I, which will have about $500 million in purchasing power. The fund will seek value-add industrial properties in West Coast markets as well as Arizona, Nevada, Colorado, Utah, Texas and the Southeast.
As an industrial and multifamily investor, Stos looks for assets in need of stabilization, repositioning or redevelopment, and which are not competitive due to poor maintenance or functional obsolescence, according to the company.
Stos is also on the lookout for sale-leaseback opportunities from owners needing to improve their balance sheet, as well as purchase opportunities from distressed merchant builder portfolio sales, or from partnership disputes and cash calls.
The privately owned Stos has a history of investing in real estate directly and in partnership with high net worth and institutional investors. So far the company has been involved in transactions valued at a combined $1.7 billion.
READ ALSO: Industrial Property Values on the Upswing
Industrial market fundamentals remain strong, according to Stos Partners Principal CJ Stos, noting the evolution of the sector in recent years as e-commerce has grown and onshoring has accelerated. The industrial sector will grow for years to come, he predicts.
San Diego-based Stos Partners is both an active buyer and seller of properties. Recently the company acquired the 35,000-square-foot 2325 W. Cypress St. in Phoenix for nearly $4.5 million, and plans to undertake a capital improvement program, stabilizing and re-tenanting the asset. Late last year, Stos bought 620 N. 43rd Ave., an 49,500-square foot industrial asset, also in Phoenix, paying about $9 million.
Early in July 2024, Stos sold an industrial building at 14575 Firestone Boulevard in La Mirada, Calif., to an owner user for $9.3 million. In the two years that Stos owned the property, it made various capital improvements, including parking lot resurfacing, door renovations, LED lighting systems and mechanical improvements.
U.S. industrial slower but not stagnant
The industrial market nationwide, especially the construction pipeline, has cooled in recent quarters. Between 2021 and 2022, construction began for more than 1.1 billion square feet, but starts fell to 357.5 million square feet in 2023, Commercial Edge reported.
Phoenix is far and away the market with the most industrial projects, with just over 39 million square feet in the construction pipeline as of June. That is more than twice the total of the second-largest pipeline, in Dallas, at 15.7 million square feet.
The reshoring of manufacturing will impact the industrial real estate supply over the long run, according to CommercialEdge. Between 2018 and 2021, manufacturing accounted for 7 percent to 8 percent of the new construction starts annually. By 2022 and 2023, manufacturing’s share jumped to more than 13 percent, and so far this year, it accounts for 16.1 percent.
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