Imperium Capital's IG Logistics Takes Big Aim at Outdoor-Storage Sector

Investment manager Imperium Capital has quickly moved into the industrial outdoor-storage facility sector, a long-overlooked niche, and is aiming to make more than $250 million of investments in the sector in the coming year.

The New York company, through its IG Logistics operation, already has completed roughly $75 million of investments and has another $100 million of deals under contract. Most recently, it paid $3.5 million for a four-acre truck terminal site at 3200 South 70th St. in Philadelphia. The site is near Philadelphia International Airport and Interstate 95. Before that, it paid $1.75 million for a four-acre site at 32 Mincey Blvd. near the Port of Savannah in Savannah, Ga. That was the company's first investment in Savannah.

Industrial outdoor-storage properties, often called laydown yards, are exterior sites with few structures that are used to store tools, material, heavy equipment as well as construction and other types of large vehicles. They're also often used to store shipping containers. They're most often owned by the companies that use them, while some are owned by local investors. That's where the bulk of investment opportunities lie, as those mom-and-pop owners often decide to sell for estate-planning or other reasons. The companies that use them seldom sell. When they do, it's typically because they need a larger facility.

Other institutional investors have been drawn to the asset class. Last year, for instance,

JPMorgan Asset Management created a venture with Alterra Property Group of Philadelphia to buy what could be $1 billion of industrial outdoor storage properties. But still, the sector remains niche.

"These are crucial properties," explained Daniel Glaser, managing partner and co-founder of Imperium. "They were overlooked (by the investment community) for a long time." He noted that most investors that pursue industrial properties tend to look for warehouses and distribution facilities. But over the past couple of years, the outdoor-storage sector has become "red hot ... there's almost no vacancy."

Values benefit from the fact that supply is very limited, while most properties sit in markets with very high barriers to entry. Most sit along industrial corridors or near major distribution hubs, like airports or ports. In addition, most municipalities frown upon outdoor-storage properties because of the truck traffic they might generate, so few land parcels get approved for such purposes. Investors also typically have an option to redevelop: take what amounts to a largely vacant parcel and build it out as a warehouse or distribution facility.

"Deal-flow is our number-one challenge," Glaser said. "If you have that, there's plenty of capital that wants to be in this space."

IG Logistics is pursuing properties in nine markets: Denver, Dallas, Savannah, South and Central Florida, Nashville, Tenn., Philadelphia, Phoenix and the greater Baltimore/Washington, D.C., area. Each of those markets are squeezed for supply, and what land is available typically is acquired for development into warehouses or distribution facilities.

The company's existing portfolio is concentrated in the Denver area, where it owns about $45 million of properties. It recently paid $21 million for a 34.4-acre site at 6045 Lipan St. that's leased to a number of tenants, including Freeman Expositions, an event-services provider; System Transport, a flatbed-trucking company; and Mesilla Valley Transportation.

Glaser said that IG underwrites its potential investments on an as-is basis - what's the property worth given existing income and the credit-quality of its tenant or tenants. But it also will consider the property's development potential. However, he said, "we're not building anything."

Imperium, which Glaser and Sam Schneider had founded in 2010, also invests in built-out industrial properties, office, retail and multifamily properties. Among its investments is the 798,555-square-foot One Soho Square office property in lower Manhattan that it owns with Stellar Management. The company also operates a venture with Greystone through which it originates agency loans against apartment properties.

Glaser and Schneider launched its IG Logistics platform specifically to pursue outdoor-storage facilities. The company funds its investments internally, raising capital from its network of high net-worth investors and institutions as needed. It also places financing on its investments. Lenders, Glaser noted, "have gotten sophisticated with this product." 

Source : Link