IP Capital Partners announced on Mar. 10 the launch of a $250 million fund aimed at acquiring industrial properties in the Southeast United States, responding to increased demand for domestic manufacturing space.
The new IPCP Southeast Industrial Fund II targets up to $1 billion in purchases across Florida, Georgia, Tennessee, and North and South Carolina. The fund will focus on mid-sized properties ranging from 150,000 to 300,000 square feet and priced between $15 million and $50 million.
“This is a small and nimble income and growth fund,” said Jason Isaacson, president of IP Capital Partners. He added, “A large institutional fund is too big to buy these mid-market type sizes, which ironically to us is the sweet spot of demand. By being small and nimble, it allows us to take advantage of these institutional blind spots.”
The seed round for the fund raised $37 million, surpassing its initial goal of $25 million. The next funding close is targeted for July 1 with a cap set at $300 million. The fund will be available through global fintech platform iCapital.
Isaacson said the strategy involves targeting properties with five- to eight-year lease terms and holding them until leases roll over so rents can be increased if market conditions allow before selling. SEIF II will consider assets such as manufacturing facilities, bulk distribution centers, cold storage warehouses, and last-mile distribution centers.
“The supply chain is being decentralized and because of that, it needs smaller, more nimble warehouses. The proliferation of demand for spaces is concentrated in smaller bulk formats,” Isaacson said. He also noted that having more warehouses closer to consumers helps reduce transportation and labor costs: “Real estate is one of the cheapest elements of the supply chain, with transportation being one of the most expensive.”
Part of IP Capital’s investment thesis relies on continued growth in domestic production due in part to recent tariff policies and legislation signed last year. Isaacson said many tenants are moving production back to the U.S. to avoid future supply-chain disruptions like those seen during the pandemic or caused by tariffs. He also pointed out that U.S. policy allows businesses to write off investments in plant equipment as an incentive.
Examples cited include a sale-leaseback deal where SEIF I invested in a Nashville facility after its tenant relocated tire repair equipment manufacturing from Shanghai.
IP Capital plans joint ventures on some investments while operating and managing the fund directly to eliminate double fees for investors. Previous funds managed by IP Capital include IPCP Florida Realty Value Fund IV—an opportunistic value-add vehicle—and Southeast Industrial Fund I, which raised about $150 million for nearly 4 million square feet across roughly $400 million in purchases.
