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.
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.
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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