Logistics/Warehousing under RE
Hey guys, do Logistics and/or warehousing assets come under Infrastructure PE? and what the hell are Industrials?
Hey guys, do Logistics and/or warehousing assets come under Infrastructure PE? and what the hell are Industrials?
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Industrial real estate does not fall under infrastructure PE. An example of an infrastructure PE transaction would be like buying a toll road, or purchasing a portfolio of cell towers.
In the context of corporate PE/investment banking, an example do an industrial company would be a mining company. It could also include companies that manufacture equipment used in industrial industries.
then what is industrial real estate?
Warehouses
Warehouses, factories, refrigerator warehouses, truck terminals, lumberyards, scrap yards, r&d buildings, etc.
what is amazon?
Amazon’s real estate footprint includes an ton of distribution warehouses, plus cooler space for food distribution.
Amazon is off being a tech company in the stock market, but the leased industrial buildings they occupy look like logistics to real estate investors.
edit: This was a Jeopardy answer, wasn’t it.
got it, thank you! and how are these affected by the slowdown?
Depends on the asset. I'm not in industrial so don't take my word as law, but I would imagine that any industrial properties with quality tenants is doing quite well right now given the uptick in e-commerce and increased demand on grocery stores and the like. Probably just as safe if not safer than multi-family right now provided you own quality properties - but just like multi-family, still susceptible to further damage to the economy and job loss if consumer spending drops much further.
That being said, I also think industrial will continue to see significant growth in its popularity as we move more and more away from traditional retail (I'm a huge believer that traditional retail isn't going anywhere, but that it will be changing significantly and there will be a culling of assets).
E-commerce is driving a lot of volume through warehouses right now, but it is somewhat tenant by tenant. An Amazon distribution center is going to be attractive, while something leased to a company that is manufacturing or distributing restaurant equipment might be a bit different right now.
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