Stop us if you’ve heard this one before — a real estate investment firm is buying warehouses.
Elion Partners, a Miami-based vertically integrated private equity real estate firm and partner of industry leader Brookfield Asset Management, on Monday announced the expansion of its last-mile delivery portfolio, adding 10 facilities that total 1.2 million square feet of warehouse space.
The assets, which span several large U.S. markets including Los Angeles, Miami, Seattle, San Diego and New Jersey, were acquired in the second and third quarters of 2021 for $245 million, the firm said in a press release.
“We are targeting well-located properties with the opportunity to generate appreciation through vacancy lease-up, capital investment and create efficiencies through functionality improvement,” said James Lambert, senior managing director of industrial investments at Elion. “Through our relationships and data-driven approach to sourcing opportunities early, we have been able to aggregate a portfolio of primarily premarketed assets while identifying value-add opportunities that meet the needs of today’s logistics providers.”
Watch: Is your warehouse strategy ready?
Elion’s real estate investment strategy targets last-mile logistics real estate assets in supply-constrained, core coastal markets. Those are locations like warehouses and distribution centers, facilities that can be used by brands to enable quicker and more reliable fulfillment in the age of the e-commerce boom and heightened demand.
These recent transactions made use of the company’s Elion Real Estate Fund V, an institutional industrial fund backed by $500 million from a collective that includes Vintage Funds within Goldman Sachs Asset Management, Wells Fargo Bank N.A., BGO Strategic Capital Partners, Belay Investment Group and other U.S. industrial investors. The fund, which closed in August, is Elion’s first institutional industrial fund.
With the close of this latest $245 million acquisition, the fund now invests in nearly 4 million square feet of warehouse space totaling about $1 billion in gross asset value. And given that projections from real estate firm JLL estimate that the U.S. will need to add another 1 billion-plus square feet of warehouse space by 2025, the feeding frenzy may just be beginning for Elion and others.
Just look at the bigger players in industrial real estate. Last week, CBRE Investment Management, the investment arm of CBRE Group, snapped up a 28-million-square-foot industrial logistics portfolio worth nearly $5 billion in one of the largest industrial real estate transactions in history. And last month, investment management firm Blackstone Inc. spent nearly $3 billion on a 17.4-million-square-foot portfolio.
Elion, though not as large as some of its competitors, has its own billion-dollar backer. In September, it entered into a $1 billion industrial development partnership with Brookfield Asset Management (NYSE: BAM) to expand the Toronto-based firm’s logistics real estate portfolio across Elion’s U.S. assets. As part of the partnership, Brookfield also contributed $80 million to Elion’s Real Estate Fund V.
Elion’s previous major last-mile acquisition in May netted the company another 864,000 square feet in a $216 million deal.