Faropoint Targets Sale Leasebacks in Industrial Funding Strategy
There has been an uptick in demand for these transactions.
Faropoint is looking to raise more capital after fetching nearly $1 billion from a funding round. This time, the Hoboken, New Jersey-based firm has launched the Industrial Sale-Leaseback (“SLB”) Fund, targeting to raise $300 million, as it looks to capitalize on a long-standing strategy that as an additional appeal in a tough economic landscape.
So far, the SLB fund has generated $170 million from its initial close, which occurred in August.
The fund has acquired 12 contract properties, spanning roughly one million square feet collectively. They are located across Atlanta, Chicago, Charlotte, Northern New Jersey, and Long Island.
Mainly the fund is looking to target off-market deals for infill industrial properties that range from 20,000 to 200,000 square feet, according to Faropoint. The average lease term the real estate investment manager is focusing on is 10 years.
“This approach ensures the preservation and enhancement of residual value, setting it apart from typical SLB deals,” Faropoint said in a statement.
With high interest rates slowing down borrowing demand, Faropoint said it has noticed an uptick in sale-leasebacks.
“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,” Adir Levitas, CEO of Faropoint, said in a statement.
“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 move by the company follows the final close of its Industrial Value Fund III. That raised $915 million, higher than the $750 million target Faropoint initially set. The Industrial Value Fund has attracted institutions not only in North America – but across the Middle East and Europe as well.
Faropoint has acquired more than 80 sale-leaseback properties, taking up roughly five million square feet over the past six years.
The industrial-focused firm manages over $2.5 billion in assets and has acquired more than 400 warehouses.