Fortress Investment Group executes $708m industrial outdoor storage refinancing

Fortress Investment Group LLC has successfully completed refinancing deals totaling $708 million for its industrial outdoor storage (IOS) properties, marking a significant milestone in the commercial real estate sector. This refinancing includes a groundbreaking $493 million single-asset, single-borrower (SASB) commercial mortgage-backed securities (CMBS) loan and a $215 million balance sheet loan, with Deutsche Bank leading the financing. The transactions were finalized on June 7, 2024, emphasizing Fortress’s strategic financial management in the real estate market.

The SASB CMBS loan is backed by a robust portfolio of 41 IOS properties spread across the West Coast, including 32 properties in California, eight in Seattle, and one in Portland. This portfolio, which encompasses a total of 1.9 million square feet of building space across 142 acres, is strategically located near key transportation hubs, with 75% of the properties within one mile of the nearest highway and all within 25 miles of a port. Valued at approximately $740 million, this portfolio showcases the high demand and strategic importance of logistics real estate located near major urban centers.

This transaction not only represents the largest IOS refinancing by Fortress but also sets a precedent in the real estate sector by validating IOS assets as an institutional asset class. Tom Pulley, Fortress Global Head of Real Estate, noted the deal’s significance, stating that the transparency and pricing achieved in this transaction demonstrate the capital market’s recognition of IOS assets on par with traditional industrial properties.

Since initiating its infill logistics business in 2021, Fortress has aggressively expanded its portfolio, focusing on key global supply chain nodes with proximity to ports in highly sought-after markets like Southern California, the Bay Area, Seattle, and the Netherlands. This strategic acquisition and development approach has positioned Fortress as a leader in the logistics real estate market, capitalizing on the growing need for well-located industrial spaces that facilitate quick and efficient distribution.

The transaction was supported by a team of advisors and legal experts, including Eastdil Secured on capital markets and law firms Sidley Austin, Allen Matkins, and Gibson Dunn covering borrower and lender legal aspects, respectively. These collaborations ensured a smooth transaction process, adhering to regulatory requirements and strategic investment goals.