Key takeaways
- Industrial real estate is a specific category within commercial real estate, and often includes the leasing of factories and industrial spaces to tenants.
- A great number of opportunities in the space fit into the core real estate segment, – which tends to generate more steady returns compared to other segments such as value-add and core plus.
- Norfolk Industrial Complex Equity II, which recently launched on the platform, touts many of the benefits of industrial CRE opportunities.
For investors just dipping their toes into the real estate asset class and familiarizing with different property types, industrial real estate, a category of commercial real estate, can provide benefits to investors more averse to risk but still eager for an opportunity to diversify their portfolio. For those unfamiliar with the space, here’s a brief primer on what investors should often expect.
Benefits of Industrial Real Estate – Different Risk Return Profiles
Industrial real estate can offer relatively stable, long-term returns in the real estate space. While we’ve previously written about the different levels of risk and return related to commercial real estate, industrial opportunities are usually included in the core segment.
Core properties are relatively stable, and usually generate returns in the form of high rents from stable tenants. Often these properties retain an additional degree of stability, giving investors confidence that their investment won’t decline significantly as long as the real estate market doesn’t experience a crash. Unlike an office building caught in the back-and-forth of workers deciding to commute, many industrial opportunities may carry a more moderate amount of risk due to their importance in the supply chain and manufacturing processes.
Industrial Real Estate on Yieldstreet
Yieldstreet has long believed in the value of industrial real estate for our portfolios, and have leaned into the space before. This week, Norfolk Industrial Complex Equity II was opened on the platform. Expected to generate a target net annualized return of 13-15%, the opportunity give investors a chance to add this subcategory of real estate to their portfolio.* The offering provides investors with exposure to three flex-industrial properties that are leased by 25 tenants including the GSA and Fortune 500 companies. The Sponsor intends to drive net operating income (NOI) at each of the properties with the expectation that it will be distributed to investors on a quarterly basis at a target net annualized rate of ~6%. The remainder of returns are expected to be achieved via capital appreciation when the properties are anticipated to be sold in 4 years time at an attractive price.
*Target returns are offered as opinion and are not referenced to past performance. Target returns are not guaranteed and results may differ materially.
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2 Represents an average net realized internal rate of return (IRR) with respect to all matured investments in your portfolio, utilizing the effective dates and amounts to and from the investments and net of management fees and all other expenses charged to the investments. Past performance is not a reliable indicator of future results and should not be relied upon as the basis for making an investment decision. All securities involve risk and may result in significant losses, including the loss of principal invested.[read more]