A Buying Opportunity in Industrial Real Estate

By Richard Kent | Sep 12, 2023 Industrial Real Estate Investing
A Buying Opportunity in Industrial Real Estate

Avistone LLC, a growing real estate investment firm specializing in capturing opportunities in the multi-tenant industrial market, recently launched its latest offering, Avistone Industrial Parks III, LLC.

Avistone’s previous industrial fund –– Avistone Industrial Fund II, LLC –– delivered a commendable 20.24% Internal Rate of Return (IRR) and 9.15% cash distribution yield over a 3.01-year holding period. *Over the past decade, Avistone has completed full-cycle investments on 24 industrial projects encompassing 4 million square feet, surpassing industry performance benchmarks such as the NCREIF Property Index for Industrial Properties. We believe this strong performance can be attributed to five key factors: acquiring the right property at the right price in the right location during the opportune stage of the market cycle, coupled with highly effective property management.

Identifying the right time in the market cycle: Avistone is re-entering the industrial market, deeming the previous 2 to 3 years as a period when prices skyrocketed to unsustainable levels, rendering it an unfavorable phase for purchasing. Presently, as prices exhibit a decline, we believe the timing is right to aggressively return to the market.

Buying the right property at the right price supports Avistone’s investment objective of providing an 8% preferred return.

Avistone targets properties that can be acquired below their replacement cost. The prevailing high interest rates have compelled numerous property owners burdened by floating-rate loans or impending loan maturities to list their properties at reduced prices. Avistone believes that multi-tenant industrial real estate is now priced in a manner that presents lucrative investment opportunities, fostering potential cash flow and capital appreciation for buyers like our new fund, facilitated by access to reasonably priced debt.

Right locations – We buy multi-tenant industrial properties in select metropolitan areas with healthy economies, diverse economic drivers, and strong job growth.

Avistone strategically invests in regions where such businesses thrive and job opportunities flourish. According to the US Small Business Association, small businesses of 500 employees or fewer make up 99.9% of all U.S. businesses and 99.7% of firms with paid employees. Of the new jobs created between 1995 and 2020, small businesses accounted for 62%—12.7 million compared to 7.9 million by large enterprises.

Top-notch property management: Leveraging years of expertise in managing millions of square feet of multi-tenant industrial properties, Avistone excels in property management within this property sector. Effective property management

significantly influences both cash flow and capital appreciation, as even the finest properties may underperform without meticulous oversight.

Safety of a multi-tenant industrial investment

While no investment is entirely risk-free, Avistone has chosen the multi-tenant industrial property type due to its distinctive attributes that offer investors enticing risk-adjusted returns.

8 risk-mitigating characteristics of Avistone’s approach to multi-tenant industrial real estate include:

  • Targeting properties below replacement cost
  • Diminishing supply of multi-tenant industrial real estate due to high land prices in desirable locations
  • Ability to increase rents as an inflation hedge, bolstering capital appreciation and cash flow
  • Diversification of lease risk, with no single tenant occupying over 30% of the space
  • Growing demand from internet retail operators seeking warehouse space
  • Increased demand for last-mile distribution
  • The surge in demand for warehouse space driven by the 3D printing and robotics revolutions

For more information on Avistone Industrial Parks III, LLC and investment opportunities in the industrial market, click here.

© 2024 Avistone, LLC. All rights reserved.

*IMPORTANT DISCLOSURES: This communication is intended exclusively for the private and confidential use of accredited investors. It is transmitted by the sponsor of the investment opportunity, Avistone, LLC, or one of its affiliates (referred to as "Avistone" or "Sponsor") and is provided solely for informational purposes. All information and opinions contained herein, including assumptions and projections (collectively referred to as "Projections"), are furnished by the Sponsor. The Sponsor and its affiliates make no representations or warranties regarding the accuracy of such information and disclaim any liability in this regard. None of the content in this communication is intended to create a binding obligation on the part of the Sponsor or its affiliates. This communication is fully qualified by reference to the comprehensive information regarding the offering set forth in the Sponsor's offering documents, including any private placement memorandum, operating agreement, and subscription agreement (collectively referred to as "Offering Documents"), which should be carefully reviewed before making any investment.

The Projections provided by the Sponsor, including target IRR, target cash-on-cash, and target equity multiple (referred to as "Targets"), are hypothetical and are not based on actual investment results. They are presented solely to provide insight into the Sponsor's investment objectives, outline anticipated risk and reward characteristics, and establish a benchmark for future evaluation of the Sponsor's performance. The Sponsor's Projections and Targets do not constitute predictions, projections, or guarantees of future performance. There is no assurance that the Sponsor will achieve these Projections or Targets. Forward-looking statements, including the Sponsor's Projections and Targets, inherently involve a variety of risks and uncertainties, and actual results may substantially and materially vary from those anticipated. Refer to the applicable Offering Documents for disclosures concerning forward-looking statements. Projections and Targets, including forward-looking statements, should not be the primary basis for an investment decision. Avistone and its affiliates do not provide any assurance regarding returns, or the accuracy or reasonableness of the Projections or Targets provided by the Sponsor. Past performance does not predict future results. The historical performance record of Avistone is not indicative of future outcomes. Third-party audits have not been conducted on the performance of Avistone's prior projects. Differing property offerings and commitment dates for individual property offerings resulted in varying returns for investors.

The metrics of the Full-Cycle Track Record on industrial properties are calculated based on weighted averages that treat investment dollars equally and are computed by aggregating the outcomes of all Avistone full-cycle industrial property investments, with weights corresponding to the respective capitalization amounts for each Full Cycle Investment. This real estate investment is speculative and involves substantial risk. There is a potential for a partial or complete loss of principal investment and should only be undertaken if you are prepared to bear the consequences of such a loss. Thoroughly review all of the Sponsor's Offering Documents, including any "Risk Factors" therein. For additional information concerning risks and disclosures, please visit https://www.avistone.com. None of the content in this communication should be considered investment advice, whether regarding a specific security or an overall investment strategy. Reproduction or distribution of this message to any individual or entity outside the recipient's organization is prohibited without the express consent of Avistone.