Firm expands $3.5 billion realty portfolio with $640 million acquisition

Investcorp, a Bahrain-based asset manager which counts Mubadala Investment Company as its biggest shareholder, on Tuesday announced that it has acquired 64 industrial properties totaling approximately 5.6 million square feet across seven major US markets for an all-in value of $640 million.

The properties grow Investcorp’s US industrial real estate holdings to approximately $3.5 billion across approximately 32 million square feet comprised of more than 425 buildings, a company press release said on Tuesday.

The latest acquisitions provide Investcorp with Class B+/B industrial warehouses that are 95 per cent leased.

Yusef Al Yusef, Managing Partner for Investcorp’s Private Wealth, commented, “We are pleased to have made another acquisition in the industrial and logistics sector as this sector continues to benefit from strong tailwinds, mainly driven by an increase in e-commerce, that were heightened by the pandemic. We believe that through such acquisitions, we will further strengthen our position as a leading global, alternative investment firm.”

“Our investment strategy has long approached the US industrial market with optimism, due to increased demand brought about by the rise of e-commerce and evolving supply-chain challenges,” said Khulood Ebrahim, Real Estate Product Specialist at Investcorp.

“We believe that our latest acquisitions, which unlock access to highly coveted industrial markets across the country, should be well-equipped to deliver attractive potential returns for our investors.”

Earlier last week Investcorp, a global investment manager specialising in alternative investments, has led a $55 million investment in NDR Warehousing.

DR’s well-diversified asset portfolio comprises 18 high quality logistics parks spread across over 8 cities including Chennai, Mumbai, the National Capital Region, Bangalore, Coimbatore and Kolkata. Over the next few years, the company is planning to double its portfolio from the current 11.6 million square feet as it expands into other cities such as Pune and Goa.

Ritesh Vohra, partner and head of real estate at Investcorp India, said: “In our experience, warehousing has been one of the few sectors to have demonstrated resilience and continued growth, despite the economic headwinds brought by the pandemic. This structured equity investment in India, backed by a robust operational portfolio, will provide our investors with an opportunity to invest in one of the attractive real estate growth opportunities, with what we believe are attractive risk-return metrics.”

N Amrutesh Reddy, MD, NDR, said: “We intend to continue our aggressive growth plans nationally, underpinned by our strong execution capabilities and long-standing tenant relationships.”

So far, the business has deployed $200 million through two funds across 26 projects. It has an established history in the senior structured credit space within real estate, with a focus on mid-market and affordable residential projects being developed by well-established developers.

Investcorp is also active in the mid-market private equity space in India and has invested across the consumer tech, healthcare, financial services, retail, SaaS, e-commerce, and technology sectors. Its investments over the last four years include Intergrow Brands, Bewakoof.com, Freshtohome, Zolo, InCred, Citykart, ASG, NephroPlus, Unilog, XpressBees, and Safari Industries.

Meanwhile last month the Investcorp, the alternative asset manager that counts Mubadala Investment Company as its biggest shareholder, completed the sale of a portfolio of 10 industrial and logistics assets in the UK to separate buyers as it seeks to cash in on demand for industrial assets while e-commerce booms.

The properties, which are located around the UK, were sold to global property investment company Kennedy Wilson, to Realty Income and to Investra Capital for £108.4 million ($145.3m), Investcorp said in a statement on Sunday.

The properties were sold after the Bahraini asset manager implemented a strategy which involved significant lease extensions and improvements in revenue.

“The industrial and logistics real estate assets are essential for driving e-commerce and supporting supply chains, and we remain focused on investing in these sectors,” Khulood Ebrahim, real estate product specialist at Investcorp, said.

The demand for industrial and logistics assets has been rising because of greater e-commerce activity during the coronavirus pandemic. Europe’s e-commerce market grew to €757 billion in 2020, up about 10 per cent from €690bn a year earlier, according to 2021 European E-commerce Report by trade bodies Ecommerce Europe and EuroCommerce.

Investcorp acquired the assets during the second half of 2017 for £69m and sold them last month.

The sale to Kennedy Wilson comprised a portfolio of eight “mid box” industrial and logistics warehouses located in the established distribution markets of Doncaster, Leeds, Bilston, Glasgow and Motherwell. The second sale, to Realty Income, comprised a modern detached industrial unit located in Hull, totalling 270,388 square feet, according to the company.

The third sale, to Investra Capital, comprised a collection of manufacturing and distribution units located in Tamworth, totalling 201,309 sq ft.

Since launching its European real estate business in 2017, Investcorp has invested approximately €1bn into 80 properties across the UK, Germany, the Netherlands, Italy and Belgium, the company said.

Investcorp conducted real estate deals worth $4 billion in the US in 2021, tapping into demand for residential and industrial properties.

The company bought 200 properties valued at $2.5 billionn and sold properties worth $1.5 billion in the world’s largest economy.

“The record level of activity within our North American real estate business in 2021 has created many opportunities to help drive Investcorp’s growth and retain its position as a top cross-border real estate buyer and seller in the US,” said executive chairman Mohammed Alardhi.

“Long before the pandemic, we perceived residential and industrial real estate investments to be one of the most recession-proof sectors, and this strategy has proven to be attractive given business and lifestyle changes, many of which were accelerated because of Covid-19.”

The Bahrain-based company invested $1bn of clients’ capital in US property last year and expanded its industrial holdings in the country to $3.5bn, comprising more than 425 buildings.

It also grew the value of its US residential assets to about $4.1 billion across 18,000 multifamily units and 2,700 student housing beds.