Strong lender interest continues across secondary markets despite softening national conditions.
EQT Real Estate and its institutional partners have successfully completed an $859 million refinancing deal for an expansive industrial portfolio, primarily consisting of warehouses located in high-potential secondary markets. The financing package, structured as a commercial mortgage-backed securities (CMBS) transaction, highlights growing lender confidence in industrial assets beyond major U.S. hubs.
According to presale bond reports from Fitch Ratings and DBRS Morningstar, the portfolio includes 60 industrial properties across nine states, totaling 14.8 million square feet. The assets currently operate at about 86% occupancy, with rental rates sitting up to 30% below market averages—offering significant upside potential as leases renew.
Despite a broader cooling in the industrial sector, with national vacancy climbing to 7.5% as of the fourth quarter (based on CoStar data), EQT’s assets continue to perform resiliently. The portfolio’s average rent of $5.70 per square foot trails market averages by roughly 25–30%, suggesting substantial room for rent growth. Key markets represented include Memphis (25%), Louisville (22.1%), Indianapolis (16.9%), and St. Louis (13%).
Major tenants include PetSmart, Spectrum Brands, and Amazon, among 125 total occupants. The properties, originally acquired between 2007 and 2020, were appraised by Colliers at $1.3 billion. The loan, originated by Wells Fargo, Citi Real Estate Funding, Bank of America, and Société Générale, will pay interest-only over its five-year term.
While rising vacancies and slower rent growth—currently averaging just 1.4% annually—pose challenges nationwide, EQT’s recent leasing activity tells a different story. The company secured 13 new leases in 2025, achieving average rent increases of nearly 28%, demonstrating the portfolio’s embedded value in below-market rents.
Still, analysts note a potential refinancing risk, as 83.4% of leases are set to expire before the loan’s 2030 maturity. Market forecasts suggest U.S. industrial vacancy will peak near 8% by 2026, before easing as new construction moderates.
Following its 2021 merger with Exeter Property Group, EQT now manages more than $35 billion in assets across 2,000 properties spanning 400 million square feet globally.
Source: Original reporting by Mark Heschmeyer, CoStar News.
