STAG Capital Kicks Off Industrial Fund with Anticipated $1.3B Buying Power

Boston-based STAG Capital Partners has initiated STAG Investments V L.P., a fund targeting commitments of $400 million for the acquisition of predominantly high-yield single-tenant industrial properties across the country. The newly launched fund marks STAG’s fifth such investment vehicle, and, as has been the case with the previous four funds, approximately 85 percent of STAG V will focus on industrial properties, with the remaining investments encompassing both flex and office assets. STAG V will have an anticipated buying power of approximately $1.3 billion. Markets across the U.S. will be fair game for STAG V, but acquisitions will not necessarily center on particularly successful markets like Los Angeles where the vacancy rate is just 2.3 percent, according to a third quarter report by real estate services firm Grubb & Ellis Co. “We will evaluate transactions within the markets they’re located in, as opposed to targeting specific markets,” Benjamin Butcher (pictured), Stag Capital president & CEO, told CPN. The timing of the creation of STAG V can be described as just right. The frigid lending climate and the discrepancy between the perceived value of properties between buyers and sellers continues, but if you have cold hard cash to fork over, the real estate market, in many instances, can be yours for the taking. “We’re seeing very good investment opportunities in the market these days; it’s especially good right now,” Butcher said. While the national average industrial vacancy rate has been on the rise for four consecutive quarters, it presently stands at a relatively respectable 8.5 percent, as per the Grubb & Ellis report. STAG V is seeking institutional limited partners as investors. “We believe that our investment thesis, which produces both high current and high future returns, will be attractive in these market conditions,” noted Butcher. Acquisition activity, however, will not likely begin until 2009, as STAG Capital is just completing investment executions of STAG IV. With STAG V, the company hopes to ultimately purchase somewhere in the neighborhood of 200 individual assets. Currently, STAG Capital has properties in 37 states. Established in 2003, Stag Capital acquires single-tenant properties via third-party transactions and corporate sale-leaseback deals to enhance its existing group of assets. The company’s real estate portfolio encompasses industrial, flex and non-urban office buildings.