A trio of major institutional investors are zeroing in on industrial assets and forming the first nontraded real estate investment trusts this year.
ElmTree Funds, Fortress Investment Group and Morgan Stanley are in various stages of a ramp-up to sell stock in newly created REITs not linked to the larger market, CoStar reports. All three companies' new REITs will likely center their investments on industrial properties, experts told CoStar.
“Industrial is becoming more preferred as investors are reducing exposure to office and industrial has been the main beneficiary,” Randy Blankstein, president of the suburban Chicago net-lease property brokerage firm The Boulder Group, told CoStar.
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Fortress Investment is preparing to get the Fortress Net Lease REIT up and running. The REIT already has a $142.7M portfolio made up of six industrial properties, including a 212K SF property it purchased in Parkesburg, Pennsylvania, for $21.8M in January.
Elmtree is creating two REITs designed to work together to acquire and manage a diversified portfolio of net-lease industrial properties throughout the country. ElmTree Industrial Trust and ElmTree Industrial Access Trust acquired a 170K SF industrial property in St. Louis as their initial investment, CoStar reports.
“Industrial real estate has long been a cornerstone of the U.S. economy and we believe the sector’s strong fundamentals will remain attractive over the long term,” James Koman, ElmTree’s CEO and founder, told CoStar in a statement.
A wholly-owned subsidiary of Morgan Stanley, MSREF Real Estate Advisor, is spearheading the final new REIT: North Haven Net REIT. North Haven doesn't have any assets in its portfolio as of yet.
Blankstein told CoStar that many sponsors are seeing the success of REITS like Blackstone Real Estate Investment Trust and are looking to tap into private demand for REITs.
Though BREIT is the largest nontraded REIT with $109B in real estate property investments as of the end of February, according to CoStar, a lengthy failure to meet investors' redemption requests has dimmed its shine over the past year and change.
February 2024 marked the first time BREIT was able to meet its investors' redemption requests since November 2022. In January of this year, the REIT met 88% of its investors $1.3B in requests. In December 2023, investors made $1.1B in redemption requests and BREIT paid out $569M, or roughly 52%.
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