Companies for Industrial Acquisitions/Transactions- roles at GPs? LPs?
Currently a rising college senior interning at a LifeCo placed on a team doing Senior Housing transactions, 2nd half of the summer I’ll rotating to the multi-fam AM side.
I’ve enjoyed my time so far this summer, people are nice, pay is good, been able to learn a lot, and helping underwrite new deals is fun. The other day I got taken on a property tour to see industrial assets the company owns in our local MSA, and I was super impressed with how cool all the properties were and what the tenants did. So it got me more curious about industrial real estate. Now, I know that my company invests in pretty much every type of CRE. The only catch is that they don’t have an equity team for Industrial transactions/acquisitions.
Since I’m still young and relatively new to the CRE world. I wanted to ask, what are some companies out there that have work in Industrial acquisitions/transactions on the GP and LP side? Does anyone work in that space or know anything about it?
Tons of players, you have your dedicated players such as Prologis, Clarion, Cabot as well as funds that run operating partners such as Bx, KKR, GIC, or a lot of diversified funds buy themselves such as Hines, CBRE IM.
Industrial, more broadly known as Industrial & Logistics (I&L) used to be a sort of boring game prior to Covid. Logistics is inherently tied to e-commerce because a significant portion of your tenants will be 3PLs (DHL, Amazon, etc). Industrial can be many things but generally refers to some sort of machinery in the whs. One of my tenants is a tire supplier who has machines that make rims and punch tires onto them. And then there’s Light Industrial which is small shops of no more than a few thousand sqft which could be like hardware store or a garage.
During Covid, I&L exploded and it was the hottest asset you could get. Not that it wasn’t great before but the rapid increase of demand was crazy. Now it’s here to stay and is pretty institutionalised. The thing about I&L is generally you need a big fund for it because a significant portion of stock are single asset, single tenant warehouses that are $40m+. Portfolios quickly get weed out players in size or a single asset isn’t secure enough with no diversification of tenants if it’s single let.
Then there’s the actual layout of the warehouses themselves. Are they single sided, cross docked, what’s the dock door ratio to GLA, how much mezzanine does it have, what’s the office content? A lot of thought is put into second life, ie who will buy this warehouse after me. What if a new tenant comes in and instead of being a tire producer they store and ship tvs, can I convert my warehouse for their use? Interesting, gum is awful for a warehouse because the smell gets stuck and you need capex to remove the smell (or add protective barriers to contain it into one room).
It’s a really interesting space and you can sometimes tread the line between real estate and infrastructure when you start to look at port/airport/freight terminal buildings, or REITs that have solar farms to power logistic parks etc.
Happy to answer questions
That line between infrastructure and real estate def sums up what I think is cool.
What do you think would be the difference between an underwriter working for a GP/Principal vs an LP? What’s the difference in compensation/pay like?
I’ve never worked for an LP before so I’m not really placed to answer that. I’ve always been GP side, and am currently at an operator, and I get into the weeds on all the deals. I am speculating so could be wrong but I think LP side is going to get the high level details about the deal whereas the GP side is going to negotiate everything and package it up nice and neat for an LP to review. Which one you prefer just depends on what kind of work you like.
As far as comp, there’s no discount or premium for being in I&L. It’s comped like every other real estate firm is. I am paid market with a bonus that’s 25-100%. Your comp is more tied to how your fund makes money than what they buy. If you’re at a core fund, you’re making money from AUM. If you’re a developer you operate through DM and AM fees plus any leasing or promote incentives. A REPE fund may pay salaries from AM fees but bonuses from acquisition fees. Just focus on getting the best training for the first like 5-10yrs. Real estate is an old man’s game, it’s all about networking and having connections. Focus on knowing the levers of a deal, what a good deal looks like, and get close with a few brokers, developers, valuers and leasing agents. Id rather take a job that supports that networking while taking a haircut on pay than one better paid but doesn’t. With a few friends anywhere from Bx to unknown operators, the best paid one is at a niche firm doing self storage. Point being find what you enjoy, find where you can be given responsibility and the money will come to you eventually.
What regions of the US are you curious about? It depends on the location - for example, the guys operating in NJ will be different than the guys who operate in the Mid Atlantic region.
I go to an SEC school, so been really curious about the south (Texas included)
Unfortunately, not too familiar with groups out there. I'm assuming the main capital partners would be guys like Affinius, Metlife, Principal, etc, but I'm only speculating. No clue who the main operators in that region would be.
It’s so funny to me that many people thought it was boring pre covid. I worked on it for 3 years at a Life Co and always loved it. My mantra for investing has always been - simplicity - and that is exactly what industrial can be. Plus with less management intensity you can focus more on acquisitions.
Reprehenderit amet ex rerum. Quos optio quo ipsum velit molestiae. Dicta ab ipsum similique sit hic.
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