Offering Closed
SMARTCAP Industrial Value Fund 3
A value-add fund targeting strategic industrial properties in the greater Pacific Northwest with a primary focus on the Seattle & Portland MSA.
| Targeted Investor IRR: | 20% |
| Targeted Equity Multiple: | 2.0x - 2.5x |
| Targeted Stabilized Cash Yield: | 3.0% |
| Targeted Investment Period: | 5-7 years |
| Minimum Investment: | $25,000 |
| Property Type: | 100% Industrial |
| Investment Profile: | Value-Add |
| Distribution Commencement: | January 1st, 2022 |
| Offers Due: | March 31, 2022 |
| Funds Due: | March 31, 2022 |
| Targeted Project Level IRR: | 20% |
| Sponsor Co-Investment: | 5% Targeted Co-Investment |
Offering Summary
Target Assets
- Value Fund 3 (VF3) is a discretionary fund that will target both industrial acquisitions and industrial developments in the Pacific Northwest.
- VF3, managed by SMARTCAP, will focus on functional and flexible industrial assets in infill and growth-oriented locations. Targeting Core, Value, Opportunistic, and Development investments.
Competitive Advantage: Profit Share Model
- Within Value Fund 3, SMARTCAP will pursue projects with a Joint Venture Institutional Partner. If a specific project utilizes a JV Partner (JV), SMARTCAP will share 50% of the fund profits with VF3.
Blended Risk Profile (Acquisitions and Development)
- VF3 will target 2 -3 developments utilizing an Institutional JV Partner, allowing investors to take advantage of the profit-sharing model offered by SMARTCAP.
- Developments typically target a 20% IRR to the JV. With the profit-sharing strategy offered in VF3, a 20% IRR to the JV generally results in a 32% IRR to VF3, inclusive of profit sharing.
- For the remaining funds in VF3, SMARTCAP will add 1-2 acquisitions, targeting a 12%-15% IRR for these respective transactions.
- The profit-sharing model allows us to blend the return profiles of higher risk development projects and lower risk existing assets, while still targeting a 20+% blended IRR across all acquisitions and developments.
SMARTCAP Advantage
We have the expertise, resources, and connections you need to break into the industrial market.
Discover more of what sets our company apart in the Seattle and Portland markets.
100% FOCUS ON LOCAL MARKETS
Our local focus and expertise gives us a competitive advantage over other investing firms in the Seattle and Portland markets.
HIGHEST DEGREE OF LOCAL KNOWLEDGE
You can trust in our inside insight generated from years of successful purchasing to acquire only income-producing assets that outperform time and time again.
SUPERIOR MARKET ANALYSIS
Our research capability and expertise work synergistically to support our acquisitions phase.
BEST BROKERAGE RELATIONSHIP
Our connection with local brokers allows us to acquire off-market opportunities ahead of the competition—leading to better returns for investors.
DATA DRIVEN
We only move in the market when our decisions are backed by hard data and research to ensure we're bringing the best industrial value-add to our investors.
SMARTCAP Historical Track Record
Industrial Properties Investment Strategy
Focus on Top Tier Markets – Primary Targets Include Seattle & Portland
Supply of new industrial product is limited due to physical and regulatory constraints. When combined with strong demand, and generators such as population growth, and proximity to ports, the Seattle and Portland markets have continually generated superior returns.
High-Quality Industrial Real Estate
We invest in functional, flexible industrial real estate that meets our customers’ needs. Our target markets are in areas with growing demand and limited supply.
Three-Pronged Strategy
Combining direct acquisitions, ground-up development, and the highest-quality relationships in our markets, we provides great opportunity for portfolio growth and increased investor value.
Middle Market / Local Operator Advantage
SMARTCAP targets middle-market assets in the $5MM - $30MM range where larger institutions are less competitive, and smaller investors cannot buy.
SMARTCAP is a boots-on-the-ground, local operator with top relationships in the market.
Ecommerce Demand projected to be 25% or retail sales by 2030
The Pandemic is further accelerating E-Commerce and the necessity for resilience across the domestic supply chain
- Ecommerce as a percentage of total retail sales are accelerating. An expected 400 million SF of new logistics warehouses are needed through 2022.
- Supply chain bottlenecks from the economic shutdown and a spike in e-commerce demand likely to increase inventory-to-sales ratio, subsequently increasing required inventory storage space.
- Expanded purchase categories notably experiencing a spike in e-commerce adoption (e.g. grocery, furniture).
- Online returns rate frequently up to 30% of purchases. Post-pandemic trends should expand this already significant driver of modern facility space.
- 35% of industrial leasing activity was related to e-commerce pre-Covid. This has increased to 50% post-Covid (JLL).
- Re-shoring of manufacturing to North America should create need for more resources on-hand domestically.
Favorable Tailwinds Support Industrial Demand In Seattle
“Each 100 bps of share shift from bricks and mortar to online translates to 46 MSF of net demand in the U.S.”
Listen to Will O'Donnell, Director of Prologis Ventures Here.
2020 e-commerce growth of 30%+ suggests that the demand could generate an 140-185 million SQ FT of annual industrial requirements over the next decade.
SMARTCAP Industrial Fund will focus on logistics, multi-market distribution, last-mile distribution, and manufacturing assets.
A Supply Deficit of Industrial Space in Seattle Will Prop up Prices & Rent
Seattle and Portland are supply-constrained markets, with significant growth, which results in higher rental rates. Rental rates in these markets have cumulatively grown by 12% more than the national average since 2012, and vacancy rates have been consistently lower.
The SMARTCAP Team
SMARTCAP is a direct real estate investment firm operating in the Puget Sound area, one of the top real estate markets in the world. Your risk is minimized by acquiring assets at value-add pricing. Our track record for our entire portfolio is over 23% IRR paid to investors, net of fees and expenses.
Smart, Transparent Real Estate Investment
Investors are our life-blood and appreciate our detailed monthly communication and financial reporting. Your questions are answered quickly and with honesty and transparency. You will receive monthly updates, including detailed property summaries and financial reporting, as well as monthly distributions.
