By Mark Heschmeyer
Montreal-based Ivanhoé Cambridge made its first major move into the 'last mile' warehouse market this week, closing on its purchase of Evergreen Industrial Properties from private equity investment firm TPG Real Estate. The investment unit of Montreal pension fund advisor Caisse de Depot et Placement du Quebec announced it plans to buy more.
Financial terms of the transaction were not disclosed, although media reports speculated the owner/operator of the 16 million-square-foot light industrial portfolio across 150 properties sold for approximately $1 billion.
Evergreen, which focuses on infill, multi-tenant distribution properties measuring less than 250,000 square feet, has buildings in 18 markets, including Seattle, Denver, and Charlotte, Atlanta, Chicago, and Dallas. Such properties are in hot demand by investors who see them as serving the 'last-mile' distribution channel for online retailers to consumers.
7777 Market, El Paso
“We started looking at companies in the industrial real estate sector over two years ago with the intention of making a strategic investment in this asset class,” said Arthur Lloyd, president, Office North America, at Ivanhoé Cambridge.
“Industrial real estate offers an attractive current return and good diversification for our office portfolio in terms of underlying economic drivers. We believe we have found the right fit with Evergreen. We continue to look for opportunities as we plan to grow our industrial business in the years to come.”
TPG Real Estate created Evergreen in 2014, seeding the platform with a 7.5 million square foot portfolio acquisition. In May 2014, it bought a portfolio of 59 properties containing 7.48 million square feet from affiliates of Prologis for $375 million about $21/square foot.
12880 Valley Branch, Dallas
That deal was followed in August 2014 with a second portfolio purchase from Prologis involving 25 properties totaling 3 million square feet for $95.1 million or about $32/square foot.
Through 11 distinct acquisitions, Evergreen then went on to acquire an additional 127 properties in 18 targeted markets. Those deals included two large portfolio buys:
· A portfolio of 42 properties containing 3.42 million square feet bought in September 2015 from affiliates of Crow Holdings for $162.9 million or about $50/square foot;
· A portfolio of 32 properties containing 1.66 million square feet bought in August 2015 from the Fleeman family for $103 million or about $62/square foot.
“In creating Evergreen, we saw an opportunity to build a platform that was positioned to benefit from a dynamic sector shift to “last mile” and infill locations by light industrial and e-commerce users,” said Avi Banyasz, partner and co-head of TPG Real Estate.
907-1037 Thomas Ave. SW, Seattle
Graydon Bouchillon, a former executive at Colony Capital and Cobalt Capital, joined Evergreen as its CEO in 2015. Ivanhoé Cambridge acquired Evergreen’s full operating platform as well as its portfolio, and Bouchillon is expected to stay on under the company's new ownership.
Meanwhile, other major investors continue to make forays into the light-industrial market. After buying a 55-warehouse portfolio totaling 6 million square feet in April, TPG-rival Blackstone is reported to be interested in buying another 8.7 million-square-foot industrial portfolio from a DRA Advisors partnership.
That deal reportedly includes 100 light-industrial buildings with a heavy concentration in northern California with the remaining properties located in the St. Louis and Indianapolis markets.