NorthBridge Partners has closed its latest value-add logistics fund above its fundraising target and is now back in the market for acquisitions after a buying hiatus. NB Partners Fund IV was oversubscribed at almost $950 million final close, ahead of the target at $800 million.
Approximately 50 percent of the capital came from existing institutional investors, the other half coming from fresh relationships, representatives told PERE in an interview. The investors were a mix of public and private pensions, endowments and foundations, insurance companies, sovereign wealth funds, asset managers, family offices and high-net-worth individuals. Capital advisory firm Park Madison Partners served as the fund’s exclusive agent, per a statement.
Fundraising took about 20 months, which was longer than usual for the firm but in keeping with the generally slower private real estate capital market currently. However, NorthBridge managing partner and chief investment officer Greg Lauze said the fund ended up being oversubscribed because NorthBridge has been deploying capital in the last six months again, which makes it easier to secure commitments.
“It’s pretty hard to get new relationships coming in when you’re saying, ‘This isn’t a good time, let’s be patient, and the opportunities will come,’” he said. “Once you can start demonstrating those opportunities with real acquisitions and show the metrics around those – that’s when we really saw a real uptick in investor interest.”
So far, the firm has deployed about $200 million of equity from this fund across 20 investments, including 23 buildings.
“There was a period of time when capital markets were largely shut down for new investments,” the firm’s managing partner and general counsel Dean Atkins added. “I think people felt across [it] across the industry.”
NorthBridge started its value-add logistics strategy focused on the purchase and development of small-to-mid sized infill logistics assets in coastal US markets a decade ago. For Fund IV, the firm is targeting markets that benefit from what it described as “high population density, significant port activity or clusters of advanced manufacturing that benefit from reshoring” trends.
The industrial sector has remained attractive for investors in the US, particularly amid changing consumer habits, as many take the view it is a safe place to operate because of favorable, long-term demand trends.
However, such sentiment has not yet seen a turnaround in activity. Amid a slow private real estate capital market generally, fundraising for North American industrial-focused funds reached $6.5 billion last year, down from $10.7 billion the year prior, according to PERE data.
Furthermore, sales activity has been sluggish; in Q4 2023, industrial investment fell 45 percent for the quarter compared to the same period last year to $19.4 billion, per CBRE data, with only multifamily and hotels recording worse drops in percentage terms.
Meanwhile, the US industrial availability rate finished last year at 7.1 percent, according to report released by NAIOP, the Commercial Real Estate Development Association last month. That figure is well above the post-pandemic low of 4.6 percent hit in the second quarter of 2022.
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