EverWest, a Denver-based real estate private equity firm that focuses mainly on the industrial sector, is working to line up new credit facilities as it prepares to significantly expand its investment platform.
The move comes after the roughly $3.8 billion company, acquired by Winnipeg-based insurance company Great-West Life in 2018, was sold to Sagard Holdings last month. Sagard, a Toronto-based investment company, struck the deal as part of a broader plan to expand its real estate investment platform into the US.
As part of the transaction, Great-West will invest about $2 billion into direct real estate, with the potential to commit another $500 million. As part of the transaction, Great-West will also acquire a minority equity stake in Sagard and EverWest will continue to be linked to the insurance company and its parent company, Canada Life.
“They have committed to help us seed and grow new funds, which means that we get all of the good parts of what we experienced and the potential for additional capital beyond,” Paul Andrews, chief operating officer of EverWest, told Real Estate Capital USA.
EverWest, which has a 20-year track record as an owner and operator, has been steadily growing its portfolio and the size of the transactions that it completes over the past four to five years. The firm operates open- and closed-ended funds and separate accounts that concentrate mainly on core, core-plus and value-added industrial properties. EverWest also does ground-up construction.
“Since 2018, we have been expanding our portfolio and added separate accounts. We also acquired an open-ended ODCE fund from Guggenheim Real Estate,” Andrews said, noting the firm is working to line up two or three new separate accounts and considering new fund launches in 2023 or beyond.
As EverWest has grown, its financing needs have become more sophisticated. Over the past 18 months, the firm has been working to wrap up a one or two fund-level unsecured credit facilities that are non-recourse.
“We are also working with a couple of lenders to put together a programmatic life that will make it very efficient to take down assets,” Andrews said. “We find that to be the most efficient way to do industrial financing.”
The firm is also targeting a larger average deal size and has been finding there is much more liquidity for transactions of more than $50 million.
“Three to four years ago, our average deal size was $20 million. Now it’s north of $40 million and it will continue to grow on a forward basis,” Andrews said. “We are now able to access larger deals and more institutional clients and also able to do more stabilized and core deals.”
Lenders have been demonstrating vociferous interest in industrial loans, with large, speculative development projects seeing aggressive terms.
“There are large money center banks that are stepping up to do these loans and do them on a non-recourse basis. It’s a good time to be a developer and pricing on our projects is coming in better than expected,” Andrews said. “Industrial is an in-demand product type, but it is also dirty, scrappy and competitive. At the end of the day, industrial is just hard work.”