Invesco Real Estate is sizing up more investment opportunities after last week taking a minority stake in Hoboken, New Jersey-based infill industrial investment manager Faropoint.
Bert Crouch, head of the Americas at the Dallas-based manager, told Real Estate Capital USA the investment is confirmation of Invesco’s long-term conviction in the industrial sector and specifically the last-mile, urban infill assets that Faropoint has carved out its niche focus on.
“This type of differentiated access and execution can provide scalable outperformance over an extended period of time,” Crouch said. “That is our end game.”
More investments to come
Invesco’s sights do not stop with the Faropoint investment, though. The minority stake – which carries unknown terms not disclosed by either manager involved – marked Invesco’s sixth investment in an external manager or operator over the past three years.
Invesco has used a similar minority stake strategy to pick up more exposure toward sub-categories including single family rental, build-to-rent and ground leases.
Such investments have become a means for the firm to add expertise and capabilities in sectors Invesco may not be fully steeped in but do present perceived long-term performance benefits.
“You are going to continue to see us make strategic investments in top-tier, first-class platforms like Faropoint,” Crouch said, noting the firm is continuing its focus on other growth-geared subsectors such as self-storage, medical office and data centers as part of the expansion plans.
“[The coming year] is going to present great opportunities. It is a tough time in the market, it is a tough time to be an operating company, especially one that is specific to one sector that needs capital to continue to grow.”
Crouch said with Invesco’s capital base, the firm can continue building a differentiated offering and deepen its access vertically in sectors the firm is already focused on too.
Focusing on Faropoint
Invesco’s minority stake in Faropoint opens the door toward more product development for the two firms.
The deal – which has been a year and a half in the making – is more than a pairing between Faropoint’s platform and Invesco’s access to capital.
Adir Levitas, chief executive officer at Faropoint, told Real Estate Capital USA his firm has ambitions to expand the platform’s horizons, including its investor base, technologic power and geographic scope.
“Partnering with someone like Invesco, the unknown of what you can do together is larger than the known.”
Levitas said Faropoint is interested in diversifying its products, expanding into the Western US and commercializing its investment product to reach more LPs as opposed to a niche subset of investors.
At present, Faropoint has three value-add vintages in its investment product roster. Levitas said the firm would look to diversify with the addition of a core-plus product and potentially a debt product with Invesco’s expertise on tap.
Faropoint maintains a staff of 120 employees and invests in 15 markets across the East Coast, Midwest and Southwest. From 2018 onward, the infill industrial investment manager has acquired more than 400 warehouses and 20 million square feet of last mile-industrial properties.
On average, Faropoint’s sourcing platform logs $5 billion to $7 billion of quarterly dealflow across the US. Levitas said this means the firm is seeing 65 percent of all deals being traded in the market in real time on the proprietary platform.
With select community, regional and national banks still tapped out of the lending market because of elevated interest rates and higher costs linked to originating fresh loans, the opportunity to garner more debt market share has grown for both firms.
“The consensus is maybe the economy is getting to a somewhat stabilized soft landing but there is still a lack of debt and motivated sellers in the market. So, it should be a good year to make some plays and some good bets,” Levitas added.