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Dream holds first close for US industrial fund

The vehicle is the second private real estate offering that the Canadian real estate company has launched in less than a year.

Dream Equity Partners, the private real estate arm of Toronto-based real estate manager Dream Unlimited, has raised the first round of capital for its open-ended Dream US Industrial Fund, PERE has learned.

PERE understands the firm has collected nearly $500 million in equity commitments in the fund’s first close. The perpetual capital vehicle’s more-than-a-dozen investors include public and corporate pension plans in the US, Europe and Asia.

In June, Dream Unlimited announced it was forming and launching a private US industrial fund. As part of the fund formation, Dream Industrial REIT contributed its US portfolio to seed Dream US Industrial Fund and co-invested 25 percent of the vehicle’s capital alongside other limited partners. Dream Industrial REIT originally acquired the assets – which include 29 properties totaling 7.3 million square feet in the Midwest and Southern US – in 2017 for $414 million.

Dream US Industrial Fund, which has nearly $1 billion of investment capacity, will focus on core, core-plus, value-add and development opportunities in the US, including bulk distribution, last-mile warehouses, business parks and light industrial facilities. Value-add and development opportunities will represent up to 25 percent of the vehicle’s target portfolio value.

The fund’s 16 target markets include Denver, Las Vegas, Salt Lake City, Nashville, Phoenix, Charlotte, Dallas and Atlanta. These markets are experiencing strong demographic trends such as population, job and wage growth. They further have the benefit of coastal market migration and serve as major non-port distribution hubs, and they are also locations where Dream has had a successful track record in acquisitions and development.

“Coming out of the pandemic, as companies rethink their supply chains and the resiliency of their operations, the demand for highly functional, in-fill industrial assets has only strengthened as supply remains constrained,” Dream Equity Partners president Rahul Idnani told PERE. “We are keen to continue acquiring and developing across growth markets in the US that are demonstrably benefiting from strong demographic, social and consumption trends.”

Dream US Industrial Fund will target 9 to 11 percent net returns, according to Idnani. Since inception, the fund’s seed portfolio has delivered a levered IRR of 19 percent, according to a July press release announcing Dream Industrial REIT’s sale of the assets to the vehicle.

PERE understands that the fund to date has deployed approximately 50 percent of the capital and is aiming to deploy the remainder of its equity by the end of the year.

Dream US Industrial Fund will be the second commingled fund for Dream Equity Partners, which Dream Unlimited launched in May 2020 with Idnani, formerly global chief operating officer at Nuveen Real Estate. In March, the firm held a first close on C$136 million ($108.96 million; €91.39 million) for its open-ended real assets impact investing vehicle, Dream Impact Fund, after less than six months of fundraising. That fund secured commitments from institutional investors that included Oxford Properties Group. Dream Equity Partners has now grown to more than $1 billion in AUM since its launch.

In May, the firm hired Angeli Stirbei as head of global client relations. Stirbei, who was formerly head of client relations, western US and Canada at Prologis, will be working with Idnani to continue building the Dream Equity Partners platform, including servicing and expanding its base of clients.