Triten Real Estate Partners, TPG Angelo Gordon Seal $150M Refi for IOS Portfolio

Triten Real Estate Partners and TPG Angelo Gordon had plenty to celebrate ahead of the Fourth of July holiday. The joint venture partners sealed a $150 million loan for a portfolio of 29 industrial outdoor storage properties on June 30, Triten principal Zach Dobin told Commercial Observer. 

BMO provided the unsecured credit facility, while Cooper Horowitz’s Justin Horowitz negotiated the financing on behalf of the joint venture. 

“We were glad to get it done, and it was a pretty competitive process,” Dobin said of the financing. “Justin generated a ton of interest in the financing, and I think it speaks to how far the IOS space has come. It went from firms like us not being able to find equity or debt for these opportunities or having to scratch and claw for it, to all of a sudden being able to generate a market with a bunch of lenders interested. It’s also a testament to Justin running a great process.” 

Despite there being 29 assets in the portfolio — located across six states, no less — the refinancing process was “shockingly smooth,” Dobin said and laughed. 

Triten Real Estate began aggregating the portfolio assets — located in Texas, Georgia, Missouri, Maryland, California and Florida — toward the end of 2020 when it formed its joint venture with TPG Angelo Gordon. The $150 million refinance retired existing debt on the portfolio that was coming due later this year and, seeing as Triten and TPG Angelo Gordon had added quite a bit of value to the portfolio since acquiring the assets, allowed the realization of some of that value. 

The JV invested in its first IOS site in December 2020, and has since invested in upward of 75 IOS projects including truck terminals, storage yards, freight facilities and low-coverage industrial facilities.

Like several other groups, Triten “stumbled into” the IOS space as an early mover in 2018, Dobin said. 

The firm bought an infill industrial property in Houston that had some surplus land, with a plan to develop the land into a Class A distribution center. While doing the predevelopment work, Triten was approached by a tenant to lease the building plus the land on a long-term basis. “The risk-adjusted returns doing that were just much better than doing ground-up development,” Dobin said. “That’s what initially sparked our interest.” 

At the time, Triten was working with a different partner on the infill strategy, aggregating assets.” They decided to commit a little bit of equity to allow us to explore IOS, figure out what it was, develop a thesis around it, and figure out the asset class. So we built a small portfolio of those assets in Houston and Dallas, and really gained a lot of conviction in the space,” Dobin said.  

The firm built its IOS seed portfolio between 2018 and 2020 before joining forces with TPG Angelo Gordon and rolling the firm’s activities into a much larger joint venture. 

While it took lenders significantly longer to get comfortable with IOS back in 2020, it’s becoming an increasingly institutionalized, and coveted, asset class, highlighted by several industry giants within their list of high-conviction themes. 

“If this recent process showed us anything, it’s that the financing environment — certainly when it comes to IOS — has gotten better,”  Dobin said. “Spreads have come in and, more importantly, lenders have an understanding of the space. I’d say it’s even gotten much better compared with year ago, and there’s been continual improvement from when we entered the space in 2018 when lenders were saying: ‘OK, we’re going to look at this as if it were just land.’”

Horowitz, who has transacted on behalf of Triten in the past, said there were a number of term sheets in play for the deal, from life companies, money center banks, regional banks and debt funds. Some had lent on IOS previously, and some were new to the asset class. 

“We were able to build out a marketplace because of TPG Angelo Gordon and Triten,” Horowitz said.

With a bow now tied on this refinance, Triten is looking to continue to build its IOS portfolio. 

“We re-upped our joint venture with TPG Angelo Gordon at the end of 2023, and that was an additional $300 million in equity,” Dobin said.

And it sounds like it’s just the beginning. 

Cathy Cunningham can be reached at ccunningham@commercialobserver.com.