Taurus Investment ponies up $174M for Sun Belt warehouses

Boston-based PE firm still a net buyer of industrial real estate even as ecommerce giants cut space

National /
Jun.June 08, 2022 08:30 AM
Taurus' Lathan Allen with Sunbelt, Warehouse

Taurus’ Lathan Allen with Sun Belt industrial property (iStock)

Don’t call it a pullback.

Private equity firm Taurus Investment Holdings bought a 13-property industrial portfolio spanning 1.4 million square feet across the Sun Belt for $174 million and change, it said Wednesday.

The portfolio comprises four so-called class A buildings — state-of-the-art facilities of a recent vintage — and nine class B properties in Houston, Atlanta, Tampa and Orlando. Two of the properties are new builds in Houston, said Lathan Allen, managing director at Taurus.

The company did not name the seller, which Allen described as “a well-known operator based in the Midwest,” or disclose the capitalization rate.

Boston-headquartered Taurus commands more than 16 million square feet of industrial space after the deal, which closed June 1. Allen said the firm remains a net buyer of warehouses even as major e-commerce companies trim excess space after a voracious, pandemic-fueled expansion.

Amazon’s recent decision to cut its industrial footprint and put 10 million or more square feet up for sublease — a move widely read as a sign that one of commercial real estate’s hottest segments may finally be cooling — represents an “adjustment” more than a downturn in the market, according to Allen. Large retailers don’t need to hoard as much inventory as they did previously, but the sector is still growing, he said.

“Now that we’re post-pandemic, there are adjustments that have to be made relative to buying patterns,” Allen said. “Yes, there has been a slowdown to some degree, but that was to be expected.”

Taurus said its overall industrial portfolio is 96 percent leased.

A falloff of industrial investment sales in April may portend weakness in the market, but so far there has been no material decline in property values, which rose 26 percent year over year in April and still hover around all-time highs, MSCI Real Assets data show.

Taurus’ industrial holdings are oriented to the East, but the company owns property as far west as Phoenix. The firm describes itself as a value-add player in industrial real estate, focusing mainly on infill locations in primary and secondary markets, targeting returns in the mid-teens or higher. That niche remains “extremely tight,” according to Allen.

“It’s all light distribution,” he said. “There’s really no manufacturing.”

Tenants in the newly acquired buildings include Walmart, Raytheon, Iron Mountain, DAP America and SC Johnson.

Taurus has acquired some 27 million square feet over the past five years as industrial real estate boomed with e-commerce’s expansion.





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