Jeddah: Sidra Capital today announced that it has initiated its first US-based single tenant absolute – net leased industrial real estate aggregation program. The fund, which was fully subscribed within three weeks from launch, will invest approximately $155 million in the acquisition of industrial properties in the United States.
The fund embodies Sidra’s strategy of investing in industrial real estate and represents the company’s first real estate aggregation strategy. “Industrial, warehouse and logistical real estate continue to generate strong demand,” noted Hani Baothman, Chairman of Sidra Capital. “Despite the near-term impact of the pandemic on the commercial real estate (CRE) sector, we are witnessing continued growth in the U.S. industrial sector, and to take advantage of this, we have utilized our proven asset sourcing ability to create a portfolio that we believe will generate an attractive cash on cash return with significant additional value created by aggregating the individual properties into a single portfolio.”
The importance of US industrial real estate sector can be gauged from its sheer size. The US industrial real estate market was valued at $1.5 trillion in 2018, which is equivalent to about 7% of the US GDP. The total industrial real estate space square meter totaled approximately 2 billion, accounting for about 30% of total US commercial real estate space. The inbound investments in the US industrial real estate increased from $6.3 billion in 2019 to $8.5 billion in 2020, registering a solid 35% year-on-year growth.
The demand for industrial real estate has been rising steadily for several years, driven by the emergence of two main structural drivers – the acceleration of e-commerce adoption and the need for more inventory as supply chains emphasize resilience over efficiency. As a result, the need for warehouse and distribution space is expected to increase in the future, resulting in higher rents and lower vacancy rates. The reopening of the US economy is boosting demand for warehouse and logistics facilities, as indicated by growing preleasing rates, which rose to 61.3% in Q2 2021 from 34.6% last year. According to recent reports, Industrial rent is expected to rise in the range of 4% to 7% in 2021 and 2022.
Sidra Capital is making the investment through its Heartland industrial aggregation fund. The company currently owns 40 industrial properties strategically located in metropolitan areas across the U.S.
The new fund bolsters Sidra Capital’s real estate acquisitions strategy in the United States, where deal volume has surpassed $1.2 billion dollars as of Q3 2021.
About Sidra Capital
Sidra Capital was founded in 2009 and headquartered in Jeddah, Saudi Arabia – with offices in Riyadh, London, and Singapore. Licensed and regulated by the Saudi Arabian Capital Market Authority, Sidra Capital is a Shariah compliant asset manager that focuses on alternative asset classes mainly global income generating real estate, private finance and private equity.
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