EQT Exeter makes first investment for private REIT

The acquisition comes eight months after the launch of the vehicle, which has a $5bn target, in August 2023.

EQT Exeter has made its first acquisition for its non-traded real estate investment trust, EQT Exeter Real Estate Income Trust, PERE has learned.

The Philadelphia-based real estate arm of Swedish private equity firm EQT has purchased 110 Southeast Inner Loop Road, a 449,642-square-foot industrial property in Georgetown, Texas, for $61 million. PERE understands that the seller of the facility was Longhorn Junction Owner, an affiliate of property developer Portman Holdings.

The deal was funded with the proceeds from the sale of shares under EQT Exeter’s subscription agreement to invest up to $200 million in the REIT.

The asset is fully occupied by GAF Energy, a California-based solar roofing producer, on a long-term lease. The newly built manufacturing and distribution facility features 106 doors, a 36-foot-tall ceiling, 123 trailer parking spaces and more than 500 total parking spaces.

GAF Energy announced the completion of the property in November. In its announcement, the firm noted the facility will bring its total production of solar shingles to 300 megawatts annually, making it the world’s largest producer of solar roofing. The firm intends to employ more than 240 people at the site.

“We are thrilled to complete EQRT’s first acquisition,” said EQT Exeter CEO Ward Fitzgerald in a statement. “Given the current interest rate environment and consequent attractive property valuations, we are pursuing a number of similar deals. We look forward to continuing to make well-timed, strategic acquisitions across key submarkets in the US.”

The firm has made the investment following a dramatic slowdown in US commercial real estate transaction activity last year, dropping 44 percent year-on-year in Q4 2023, according to the latest US capital markets report from commercial real estate brokerage CBRE. Industrial and logistics investment volume fell 46 percent year-on-year during the same period.

However, “considering the current market, sellers are getting more realistic about pricing and we are seeing an increase in transactions in the industrial sector,” Ali Houshmand, EQRT’s portfolio manager, told PERE. “We are well placed to take advantage of this increased transaction velocity at ‘reset’ pricing.”

Aside from market timing, he saw several long-term drivers supporting industrial real estate demand, including continued e-commerce growth, as well as near- and on-shoring of manufacturing in sectors like semiconductors and electric vehicles.

“Accordingly, we believe that acquiring well-located industrial assets with financially strong tenants in this period of flux is a recipe for outperformance in successive years,” he said.

EQRT’s first acquisition comes eight months after EQT Exeter announced the private REIT’s initial public offering in August 2023. The IPO, meanwhile, took place nearly a year after the formation of the REIT in September 2022, according to an S-11 filing with the Securities and Exchange Commission. EQT Exeter is seeking to raise up to $5 billion through sales of common stock shares in the vehicle.

EQRT is one of the most recent private REITs to be launched by a top 10 PERE 100 manager. The vehicle’s IPO followed that of New York-based BentallGreenOak’s Industrial Real Estate Income Trust last July. EQRT will primarily target stabilized, income-oriented commercial real estate in the US. Approximately 80 percent of the vehicle’s capital is expected to be invested in properties with business tenants, such as industrial or life science assets, while the remainder will be invested in assets with consumer users, such as multifamily or self-storage buildings.