Investcorp has decided to cash in on its roughly 3.5 million square foot industrial portfolio in the Midwest — but the company doesn't appear to be giving up on the asset class yet, signaling it may look for future investments.
In a liquidation valued at $365 million, the portfolio's properties are located in Columbus, Chicago, Cincinnati and Cleveland. They are distributed into groups of three. The biggest of them contains 23 light industrial properties across Columbus, Cincinnati and Cleveland for two million square feet of space in total. Another applies to a 430,000 square foot distribution facility in the Cleveland metro area. And the other is for eight buildings (one million square feet), a few miles away from the O’Hare International Airport.
Investcorp said the decision came after swooping in during the pandemic to buy these assets at a favorable price point. It noted that the returns on these properties exceeded its initial underwriting projections.
"We continue to believe in the industrial asset class, and the success of this portfolio liquidation is a testament to our prudent capital deployment into key U.S. markets,” Herb Myers, global head of real assets for Investcorp, emphasized in a statement.
“We capitalized on peak pandemic dislocation in 2020 to acquire these well-located assets at a highly attractive basis and were able to drive NOI growth via lease-up and mark-to-market opportunities.
While Myers highlights that industrial demand has generally pulled back since, Investcorp does note that the Midwest is defying that trend. This is because companies want supply chains near Chicago and Cleveland, which serve as population strongholds, according to the company.
While Investcorp did not state if it would target the Midwest in the future, it does "see a strong opportunity to invest" in industrial submarkets in proximity to areas with favorable population dynamics.
"We remain committed to and focused on selective investment in business-friendly environments with strong fundamentals, which we expect to continue to flourish in the coming years," Myers said.
In fact, Investcorp has already made at least one bet in industrial this year. That was in February, when it announced the buy of portfolios in Baltimore and Minneapolis for more than $335 million. A total of 27 buildings were included.
With 98 percent of the New York-based firm's holdings in either industrial or residential assets, Investcorp has acquired roughly 1,500 properties for more than $28 billion since 1996.
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