First Industrial in JV to invest in the Netherlands, Belgium

First Industrial Realty Trust, a provider of industrial real estate supply chain solutions, has formed a new joint venture, FirstCal Industrial Europe, LLC, with the California State Teachers' Retirement System (CalSTRS), the second-largest public pension fund in the United States with a EUR 119 bn ($175 bn) portfolio. According to the company announcement, the venture will serve a wide spectrum of customer needs by investing in various types of real estate: land for build-to-suit and speculative development, existing industrial facilities to be redeveloped, repositioned and leased, and sale-leasebacks. CB Richard Ellis Investors is the adviser to CalSTRS on this venture.

The total investment capacity of the new venture is approximately EUR 324 mln ($475 mln). The expected capitalisation is 35% equity and 65% debt. For the equity portion, CalSTRS has agreed to initially contribute up to EUR 102 mln ($150 mln) and First Industrial has agreed to initially contribute up to EUR 11.5 mln ($17 mln), representing a 90% and 10% equity interest, respectively. Since the joint venture recycles capital back into the venture as properties are sold, the EUR 324 mln investment capacity is a 'point-in-time' limit and total investments can exceed EUR 324 mln over the life of the venture. Credit facilities in multiple currencies have been arranged with WestLB, New York branch, the lead lender.

'Supply chains continue to evolve in the European Union, and we expect customer demand for distribution centers and other industrial facility types to grow in key logistics hubs such as Rotterdam, Amsterdam, and the Golden Triangle in Belgium,' said Mike Brennan, president and chief executive officer of First Industrial. 'This new joint venture with our partner, CalSTRS, provides us with additional capital to deliver state-of-the-art supply chain solutions in these strategic markets.'

The deal follows First Industrial’s announcement last summer that it planned to expand into the Netherlands and Belgium and the appointment of Jan Scheers as new managing director to lead the expansion into these markets. The company believes that these countries offer significant growth prospects due to rising volumes of containerised cargoes moving through their ports, increasing demand for modern distribution facilities, a rising need for redevelopment in established markets and an emerging trend towards leasing and away from direct ownership on the part of corporate customers.