UNITED STATES - New York State Teachers Retirement System (NYSTRS) has created a new joint venture to invest in western US industrial properties.
Called OMP Industrial III, the venture is teamed with operating partner Overton Moore Properties, based in Gardena, California, but NYSTRS is the majority owner as it has supplied most of the $150m (€102m) in assets.
Total capitalization on the project is $450m, thanks the two-thirds leverage, to invest in industrial properties in Southern California, Arizona and Nevada.
Two previous projects between NYSTRS and Overton Moore had only invested in Southern California, according to Timur Tecimer, president of Overton Moore.
"We wanted to expand outside of Southern California for diversification reasons. We also think that markets like Phoenix and Reno/Sparks in Nevada are solid industrial markets and will have some good investment opportunities this year," said Tecimer.
The JV is looking for a low teens leverage IRR on its purchases and its strategy is to buy properties will all-cash while putting leverage on the asset later.
The investment strategy for OMP Industrial III is to seek value-add industrial acquisitions, such as vacant buildings, assets with rollover leasing risk within the first two years, asset repositioning and re-development.
These kind of industrial buildings could include both warehouse/distribution and manufacturing buildings.
There is currently one asset inside the venture: the 40.6915m2 OMP Cooley Ranch Industrial Park based in Gardena, California, which consists of two buildings occupied by Stater Brothers until June of this year and which OMP then plans to reposition and refurbish during the second quarter.
NYSTRS made the investment in the JV through its real estate manager, JP Morgan Asset Management.