Miami-based TRX Investments, the U.S. affiliate of Brazil's no. 2 industrial developer, is eyeing Orlando land and value-add assets for its northward expansion after establishing a South Florida base in 2014, and is flush with capital and demand for small-bay flex industrial, the company's CEO told GrowthSpotter.
Founded in 2007 in Brazil, the company's vertically integrated platform makes it a developer with a fund management arm, rather than a capital allocator. It has raised nearly $2 billion from institutional and retail investors for public and private equity funds, and debt funds.
TRX has $60 million worth of development projects under production today in South Florida. It should double that to $120 million in additional projects in 2017, and invest another $60 million to $80 million in 2018, said Scott F. Pryce, founding partner and CEO of TRX Investments, the U.S. affiliate of TRX Group.
"Our first projects were based in Miami for two reasons: South Florida is a prime market for industrial rental growth, with clear space and investor demand," he said. "And because of Brazilian demand for investments in South Florida."
TRX has 14,000 investors from Brazil, most in retail publicly traded funds that it manages, with BRL5.6 billion (US$1.7 billion) under management that's traded on Brazil's BM&F Bovespa stock market. Its investors also include many high-net worth individuals, Pryce said.
"The bulk of our investors today are from Brazil, but it's an investor base we want to expand from," Pryce continued. "Due to economic declines in Brazil, we're looking for new investors in Latin America and the U.S."
The company's expansion path is pointed next to Orlando, followed by Tampa and Jacksonville, he said, and is seeking land to develop, as well as established distribution warehouse assets they can acquire and add value to.
"We don't know the Orlando market that well yet, we've looked at a couple sites near the airport," Pryce said. "We're looking for industrial and self storage sites, and submarkets near the airport are most interesting."
TRX is targeting sites of 5-20 acres, with no new project to be less than 100,000 square feet for industrial. The group would develop buildings of 100,000 to 300,000 square feet, has done build-to-suit projects before, but finds its best investor return via small-bay flex industrial space in a modular layout, Pryce said.
"We're catering in Florida to the smaller distributors and companies, often last-mile distribution," he said. "A big driver of our supply chain is the growth of e-commerce and last-mile distribution. Those tend to be investments other developers don't like, because they involve multiple tenants and shorter leases with multiple bays. But we take that on."
TRX has several capital sources, which it's also looking to expand on in the U.S. It has a diversified investment fund, TRX Capital Partners Fund, that can invest in industrial, residential, self storage and office.
That fund is fully invested, Pryce said, with $20 million in capital committed to two new warehouse developments in Miami. TRX is still raising capital for the fund with an open subscription period, allowing new capital partners to come in with a minimum of $50,000.
The company also structures capital via club deals, where it sources from family offices and high-net worth individuals to create an investment vehicle for a specific project. Typical investment size is $10 million to $15 million in equity for such projects.
TRX's third capital structure is the occasional condo conversion of industrial or commercial properties. It will purchase existing property, add value via management and bring on individual condo investors.
Prior to founding TRX Investments in 2014, Pryce was the director-president of Global Logistic Properties in Brazil, an owner-operator of that country's largest industrial real estate portfolio, with capital from GLP and three sovereign investors.
He was also previously director for multi-strategy real estate ventures in Europe for Prologis.