Alterra Reaches $500M Hard Cap for Industrial Outdoor Storage Fund

Alterra Property Group and Park Madison Partners announced the final close of the fund Alterra IOS Venture II, LP. Venture II was oversubscribed, closing $524 million of total commitments, exceeding the original fundraising goal of $400 million. 

Limited partners in the fund included a wide mix of public and private pensions, endowment and foundations, asset managers, family offices, and high net worth individuals.

Venture II is a continuation of Alterra’s Industrial Outside Storage (IOS) investment strategy launched in 2016. Alterra focuses on acquiring low density, supply chain and infrastructure real estate in core infill locations. 

Alterra targets smaller transactions that average between $5 million to $20 million and are below the radar of most institutional investors.  Today, the company says it is one of the largest institutional owners of IOS properties in the US.

IOS No Longer a Niche Market

Once a niche market, industrial parking and storage has transformed into an established asset class that is essential to fueling a healthy supply chain. According to a recent market report, the pandemic has increased the demand for industrial assets across the country. In the last quarter of 2021, the national vacancy rate dropped to 4.2%.

The Alterra transaction joins the growing number of deals in the IOS sector.

Criterion Group and Columbia Pacific Advisors last week announced a joint venture to acquire and stabilize an industrial outdoor storage (IOS) portfolio throughout the United States.

And last month, as another example, Zenith IOS and JP Morgan announced a new joint venture dedicated to building a national IOS platform.

‘Significant Investor Interest’

Alterra launched fundraising for Venture II in the summer of 2021 and received significant investor interest in this burgeoning sub asset class of Industrial, Leo Addimando, founder and managing partner/CEO of Alterra, said in prepared remarks. 

One reason for investor interest is the diversification that IOS offers, Park Madison Partners’ Rob Kohn noted.“The incredible investor support for this fund is a testament to both the market opportunity within IOS and to investors’ confidence in the Alterra team as fiduciaries,” he said in prepared remarks. 

The IOS market is a $200 billion market that is highly fragmented with limited institutional ownership, Matthew Pfeiffer, Managing Partner/CIO of Alterra explains. “Every major city in the country needs IOS real estate to support its infrastructure, logistics, and transportation industries.”