By Jon Peterson
Irvine, Calif.-based LBA Realty is planning to have a fourth-quarter, final close on its latest commingled fund called LBA Logistics Value Fund VII, as stated in a board meeting document for the Orange County Employees Retirement System. This pension fund has approved a $100 million commitment to the fund. The targeted capital raise for Fund VII is $1 billion.
This commingled fund will have a West Coast focus, likely engaging all its offices located there. LBA Realty has regional offices that are located in both San Francisco and San Jose, and its other regional offices on the West Coast are located in Seattle, Los Angeles and San Diego.
Fund VII is a value-add industrial-only fund. This will be the first time that LBA has had a commingled fund focused only on investing in industrial assets, as stated in a board meeting document from Orange County. Its previous funds included the purchase of both industrial and office assets with the industrial component comprising somewhere in the range of 40 percent to 60 percent.
Most of the capital will be invested in existing assets with an opportunity to create additional income in the future. This would involve warehouse/distribution buildings or light industrial/business parks. Approximately 25 percent of the fund could be invested in new development projects, high infill/last mile locations, cold storage and high throughput locations.
The targeted returns for the commingled fund are 12 percent to 14 percent net IRRs. This would include a 5 percent to 7 percent annualized cash return upon portfolio stabilization. The maximum portfolio leverage allowed on the fund is 65 percent.
LBA Realty has been an active investor in the Bay Area for some time. Oakland has been one of its more active markets. In February of last year, the company paid $15.5 million to acquire the 205,900 square foot industrial asset located at 8511 Blaine Street.