Investment Firm Westcore Gets $500 Million Infusion From Arizona Pension System

Article originally posted on CoStar on June 9, 2021

Investment firm Westcore's projects in development include a distribution center in Goodyear, Arizona. (Westcore)

Industrial-focused investment firm Westcore received a $500 million equity capital infusion from the Arizona State Retirement System, with plans to pursue further acquisitions and development in high-demand sectors including e-commerce distribution facilities.

“Continued growth in e-commerce and robust economic recovery are fueling unprecedented demand for well-located, quality industrial real estate,” CEO Don Ankeny said in a statement from the privately held Westcore, which is based in San Diego and oversees a $10 billion portfolio across 10 states.

Officials said the equity commitment comes after prior investments into Westcore ventures by the investment arm of the Phoenix-based state employee pension system, which represents more than 100,000 retirees.

Combined with infusions from two undisclosed life insurance companies, the commitment gives Westcore $1.3 billion in institutional equity for upcoming investments in “strong primary and secondary markets” with favorable supply-demand metrics and growth potential.

Westcore joins numerous investors and developers responding to nationwide industrial demand that has soared during the past year, even as other property sectors have struggled during the coronavirus pandemic. Developers are adding space as e-commerce providers, led by tech giant Amazon, respond to rising need for last-mile facilities geared to fast deliveries of goods ordered online.

Investment and development have also trended toward data centers, 5G wireless infrastructure, industrial storage and other properties tied to the tech-logistics ecosystem. Westcore itself has 1.8 million square feet of warehouse space in development, officials said.

CoStar Market Analytics data shows developers through the end of April had broken ground on roughly 90 million square feet of industrial space so far this year, bringing the U.S. industrial construction total to a record 358 million square feet. More than half of the industrial construction is for projects planned to include at least 500,000 square feet of space.

The 3,700 U.S. industrial leases signed in April, totaling 61 million square feet, represented a 76% boost from April 2020. Activity is being driven largely by pet care, home improvement and other consumer goods segments needing to grow their distribution and fulfillment channels, said CoStar Group managing director and senior economist Abby Corbett.

Westcore acquired more than $1 billion worth of industrial real estate during 2020, including a 4 million-square-foot portfolio from USAA Real Estate that included properties across Texas, Colorado, Georgia, Illinois and Florida. Ankeny told CoStar News in January that rising industrial demand is driving up pricing expectations, especially in core markets including Texas, Seattle, Pennsylvania and California’s Inland Empire.