First Industrial Realty Trust, Inc. has formed a new joint venture, FirstCal Industrial Canada, LLC, with the California State Teachers’ Retirement System (CalSTRS), the second-largest public pension fund in the United States with a $175 billion portfolio.
The new venture will invest in a wide range of industrial real estate that is projected to benefit from several growth trends: rising international trade, growing demand among customers to reconfigure their supply chains, and increasing use of intermodal facilities to transport goods. Investments will be made in strategically-located land parcels for build-to-suit and speculative development, as well as acquisitions of industrial facilities to be redeveloped, repositioned and leased. CB Richard Ellis Investors is the advisor to CalSTRS on this venture.
“This new joint venture capital will support further investments in Canada through our recently-opened offices serving the growing Toronto and Calgary/Edmonton markets,” said Mike Brennan, president and chief executive officer of First Industrial. “These markets feature major intermodal transportation networks, which offer First Industrial many opportunities to help customers improve their supply chains.”
The Toronto industrial market is the fourth largest in North America and is a critical distribution hub for Ontario, Northwestern Quebec and the Northeastern United States. Calgary is the major western distribution hub for Canada, and Edmonton serves as a key distribution and service center for major natural resource industries.
“The Toronto, Calgary, and Edmonton markets offer multiple investment opportunities ranging from new development to acquisitions due to strong demand and limited vacancies in these markets,” said Johannson Yap, First Industrial’s chief investment officer.
The total investment capacity of the new venture is approximately $285 million. The expected capitalization is 35 percent equity and 65 percent debt. CalSTRS has agreed to initially contribute equity up to $90 million and First Industrial has agreed to initially contribute up to $10 million, representing a 90 percent and 10 percent equity interest, respectively. Since the joint venture recycles capital back into the venture as properties are sold, the $285 million investment capacity is a “point-in-time” limit and total investments can exceed $285 million over the life of the venture