By Joshua Burd
Faropoint, the Hoboken-based industrial real estate investment manager, has launched a $300 million fund targeting sale-leaseback deals in the asset class.
The firm this week said it planned to target strategically located, functional infill industrial properties ranging from 20,000 to 200,000 square feet, with an average lease term of 10 years as it looks to provide liquidity to would-be sellers through off-market transactions. The so-called Industrial SLB Fund has already acquired and placed under contract 12 fully occupied buildings totaling some 1 million square feet, inking deals in key markets such as Long Island, Atlanta, Chicago, Charlotte and northern New Jersey.
The investment vehicle is off to a fast start, having secured $170 million in committed capital during an initial close in August 2024, as Faropoint expects to capitalize on the debt gap of local and regional U.S. banks that hope to reduce commercial real estate exposure.
“In today’s banking environment, sale-leaseback transactions offer a compelling alternative to traditional financing — allowing businesses to convert real estate assets into working capital and continue to operate seamlessly in the same space at a lower cost compared to bank loans,” Faropoint CEO Adir Levitas said. “One of the challenges with traditional SLB structures is the potential loss of residual value as the lease runs out. By targeting well-located, highly functional industrial assets in core urban markets we ensure that these properties retain long-term value.
“For investors, this creates an opportunity to tap into stable, long-term leased assets that not only provide reliable income but also maintain strong upside potential.”
The firm noted that, since 2018, it has acquired more than 80 sale-leaseback buildings totaling around 5 million square feet. It has done so without any defaults, Faropoint added, citing its underwriting and a technology-driven approach that allows it to secure off-market assets with strong long-term leasing potential.
Faropoint, which operates across 16 strategic U.S. markets, said it has seen a marked uptick in sale-leaseback demand. It noted that a significant portion of the U.S. industrial real estate market is owned by users, making sale-leasebacks a strategic choice for businesses in today’s liquidity-constrained environment.
This week’s announcement follows the recent final close of Faropoint’s Industrial Value Fund III at $915 million, exceeding its $750 million target and attracting premier institutions across North America, Europe, and the Middle East, the firm said.
“Elevated interest rates naturally increased investors’ demand for debt-related vehicles,” said Raz Rahamim, the firm’s global head of capital development and investor relations. “By playing to our strengths — leveraging our deep market relationships, data-driven approach, and ability to source and execute off-market opportunities we are able to provide investors a solution that capitalizes on the market’s debt needs while maintaining the low risk of the supply-constrained infill industrial sector.”
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