EQT Exeter, the real estate arm of Swedish investment giant EQT and one of the world's largest industrial property owners, has bought 33 distribution buildings spanning 12 U.S. markets.
The deal, consisting of nearly 5 million square feet, comes as EQT Exeter has said it's a compelling time to buy because high interest rates in the past two years have led to distress, forcing property owners to sell. It also comes as the U.S. industrial market has seen slowing signs, including rising vacancy and a decline in rent growth, because of increased new supply.
EQT Exeter Industrial Value Fund VI bought the properties that are located near interstates and major population centers, EQT Exeter said Monday in a statement, adding that 21 of the properties are located in markets with an EQT Exeter office.
A company spokesperson declined to comment on details including the purchase price.
The properties, with an average building size of over 138,000 square feet and including big-box and last-mile facilities, are located in the Southeast, Midwest and Texas and in such markets as Atlanta, Cincinnati, Chicago, and El Paso, Texas, the statement said.
The portfolio is 90% leased with staggered lease terms, EQT Exeter said, adding that about 40% of the properties’ 34 unique tenants already lease from EQT Exeter.
Henry Steinberg, global head of EQT Exeter, recently told CoStar News the firm is “rapidly accelerating” its capital deployment. Industrial property, which makes up about 95% of its portfolio, remains a big growth opportunity despite some recent signs of a market slowdown, Steinberg said.
The U.S. industrial market has seen nine consecutive quarters of rising vacancy, leading to a slower rent growth rate, amid increased new supply coming to the market, according to a CoStar analysis. Still, higher interest rates have led to a sharp drop in new industrial properties’ construction starts over the past two years.
“There is potential for rent growth to reaccelerate late next year as the drop-off in new construction completions coming in mid-2025 could set the stage for vacancies to begin tightening again,” the CoStar report found, adding that more than 20 large electric vehicle, battery and semiconductor plants are planning to open in the United States between 2024 and 2026. That will lead suppliers for these facilities to likely take “millions of square feet” during that period, the report said.
EQT Exeter's newly unveiled EQT Exeter Real Estate Income Trust this year also bought a last-mile delivery center leased by Amazon in the Seattle region’s biggest industrial property sale ranked by price in nearly two years. The brokerage JLL later said EQT Exeter picked up a four-building industrial portfolio near Columbus, Ohio, where CoStar data shows Amazon is a tenant. In August, EQT Exeter REIT announced two other industrial acquisitions totaling over $245 million.
Radnor, Pennsylvania-based EQT Exeter's assets under management total about $31 billion, while its parent EQT has the equivalent of about $265 billion in assets under management.
For the record
Chris Riley of CBRE arranged the transaction with assistance from Ryan Bain, Frank Fallon, Judd Welliver, José Lobón, Jonathan Beard and Jonathan Bryan of CBRE National Partners.