Invesco Real Estate Buys Minority Stake in Faropoint

Strategic investment underscores investment manager’s conviction in last-mile industrial sector.

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Invesco Real Estate (IVZ) has inked a strategic investment with Faropoint aimed at scaling its industrial portfolio into more last-mile warehouse properties. 

The deal announced Wednesday involves Invesco Real Estate acquiring an undisclosed minority stake in Faropoint’s platform. The transaction was led by Andrew Lane, senior director at Invesco Real Estate.

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Faropoint CEO Adir Levitas first connected with Lane in early 2022 when the industrial investment firm was eyeing a strategic partner to further scale the decade-old company. The commercial real estate market was in a far different place during that initial meeting, with near-zero borrowing conditions, but the relationship grew stronger through the future volatility that ensued culminating in a strategic investment inked between the firms in mid-November.

Levitas, who founded Faropoint in 2012, said the chance to partner with an investment management platform like Invesco with more than 40 years of relationships was particularly appealing. 

“This relationship with them has stood that test of the volatile times that changed many, many, many business plans,” Levitas told CO. 

“I hope that it can supercharge us in all directions from experienced decision-making to new lines of business to relationships with LPs and others,” Levitas added. “For us, it’s like a big brother we can learn from.”

Faropoint has acquired more than 400 warehouses and 20 million square feet of last-mile industrial properties since 2018. The New Jersey-based firm has focused largely on growth markets east of the Mississippi River along with Texas, and Levitas hopes the Invesco partnership can help Faropoint expand further west, particularly in the Los Angeles market.

Invesco has long been an active player in the industrial sector, owning around 70 million square feet of warehouse space. The new partnership with Faropoint will help it further expand into last-mile and urban infill properties given the firm’s expertise in these areas, according to Bert Crouch, head of North America at Invesco Real Estate. 

“We wanted to align with someone that had a sizable team, had a differentiated strategy, was data driven, tech enabled, and had the track record to back it up, and Faropoint checked all those boxes,” Crouch told CO. “We invested in the platform as opposed to just doing a programmatic venture, and that further aligns us with all aspects of their platform, their team, their capitalization and their broader strategic outlook going forward.”

Crouch said he hopes to help Faropoint expand into new markets on a global level. He added that there is also potential for Faropoint to scale its business through Invesco’s active lending platform, which originated more than $300 million on industrial deals across various credit strategies over the past few months. 

While the overall industrial sector has cooled since the red hot growth it experienced during the height of the COVID-19 pandemic, Levitas stressed that last-mile warehouses in urban locations not tied to big-box stores remain in big demand with low supply. He noted that more than 75 percent of tenants in Faropoint’s portfolio were created before the year 2000 and have very little leverage. 

“Urban logistics is not about e-commerce and global supply chain as much as big box is,” Levitas said. “It’s really different customers, different uses, different businesses and a different supply demand.”

Andrew Coen can be reached at acoen@commercialobserver.com