Faropoint on Tuesday launched its $300 million Industrial Sale-Leaseback Fund. The fund, which secured $170 million in committed capital during its initial close in August, is poised to capitalize on the debt gap of local and regional U.S. banks as they strive to reduce commercial real estate exposure.
The announcement follows the recent close of the Hoboken-based industrial real estate investment manager’s Industrial Value Fund III after shooting past its $750 million goal by raising $915 million. By targeting strategically located, functional infill industrial properties ranging from 20,000 to 200,000 square feet, with an average lease term of 10 years, the fund is positioned to meet businesses’ liquidity needs through off-market transactions.
According to Faropoint’s proprietary sourcing platform, it has seen a marked uptick of in sale-leaseback demand, driven by companies that are seeking capital but are unable to secure favorable rates from their banking relationships. In particular, a significant portion of the U.S. industrial real estate market is owned by users, making sale-leasebacks a strategic choice for businesses in today’s liquidity-constrained environment.
“In today’s banking environment, sale-leaseback transactions offer a compelling alternative to traditional financing — allowing businesses to convert real estate assets into working capital and continue to operate seamlessly in the same space at a lower cost compared to bank loans,” Adir Levitas, CEO of Faropoint, said. “One of the challenges with traditional SLB structures is the potential loss of residual value as the lease runs out. By targeting well-located, highly functional industrial assets in core urban markets, we ensure that these properties retain long-term value. For investors, this creates an opportunity to tap into stable, long-term leased assets that not only provide reliable income, but also maintain strong upside potential.”
Since 2018, Faropoint has successfully acquired over 80 sale-leaseback buildings, totaling approximately 5 million square feet, all without any defaults. Faropoint operates across 16 strategic U.S. markets and utilizes advanced technology to secure off-market assets with strong long-term leasing potential.
The Industrial SLB Fund has already acquired and placed under contract 12 buildings totaling approximately 1 million square feet. These properties, located in key markets such as North Jersey, Long Island, Atlanta, Chicago and Charlotte, North Carolina, are all fully occupied.
“Elevated interest rates naturally increased investors’ demand for debt-related vehicles,” Raz Rahamim, global head of capital development & investor relations, said. “By playing to our strengths — leveraging our deep market relationships, data-driven approach and ability to source and execute off-market opportunities, we are able to provide investors a solution that capitalizes on the market’s debt needs while maintaining the low risk of the supply-constrained infill industrial sector.”
