Private equity funds raising $1.8 billion for industrial real estate

Private equity funds this year are looking to raise $1.8 billion in aggregate commitments for industrial-focused real estate funds, a number that, if achieved, would be the most raised in this sector since at least 2006, according to a research note. Most of that capital is destined for the U.S. industrial property market, as five of the eight funds are U.S.-focused, and they are seeking $1.3 billion, according to the report from real estate research analyst Farhaz Miah at Preqin Ltd., a research and consultancy firm focused on alternative assets. Two of the funds raising capital this year are targeting mainly European markets, including the Light Industrial Building Fund managed by Bank of London and The Middle East, a £75 million ($123 million) Sharia-compliant vehicle for investing in sustainable light industrial property assets. One “Asia and Rest of World-focused” fund, PLA Industrial IV, managed by Pramerica Real Estate Investors, is seeking $350 million for investments in the Brazil Industrial Triangle, an area in southeastern Brazil that includes Rio de Janeiro, São Paulo and Belo Horizonte. The last time industrial-focused private equity funds raised anywhere close to their goal amount this year was in 2007, when eight funds reached a final close on $1.6 billion in aggregate commitments. Fundraising for industrial property has been up and down since the mid-2000s. The sector saw just $800 million raised in 2006 before volume spiked in 2007, and fundraising fell to $700 million in 2008. Overall, between 2005 and year-to-date 2011, “34 solely industrial-focused funds have held a final close, raising $9.3 billion in aggregate commitments from investors,” said Miah in his research note. Of those funds, 17 were focused on the U.S., raising $3.9 billion, nine focused on Europe raised $1.2 billion, and eight “Asia and Rest of World focused” funds garnered $4.2 billion in commitments. Write to Liz Enochs.