Faropoint Secures $474M Industrial Refi With 'Earn Out' Strategy
The refinancing includes $574 million in full commitments courtesy of an $84 million reserve, which will be paid out if income requirements are met.
Faropoint has agreed to refinance an 85-property industrial portfolio across the U.S. for $474 million in a deal structure that gives it flexibility to execute business goals and rake in more benefits possibly later on.
The Commercial Observer reported the news, with both Truist Bank and Capital One issuing the debt.
The properties are positioned in 12 states and near major cities including New York City, Chicago and Philadelphia.
Also, both Truist and Capital One will support future distributions and repay the existing acquisition debt tied to the portfolio. The assets are covered through Faropoint's Industrial Value Fund III, which, as of June, has fetched $2.2 billion in financing.
“The earn-out is what sets this financing apart,” said Mark DeCesare, head of corporate finance at Faropoint, in a statement.
“The structure also gives Fund III meaningful flexibility to execute its business plan, from funding future distributions through the earn-out to adding properties through the accordion.”
In addition, Faropoint launched Industrial Value Fund IV in June, seeking to raise $1 billion. This pool is targeting logistics properties in primary, gateway and secondary national regions surrounded by scarce supply, with in-place rents below the market. Also, Fund IV projects to assemble a portfolio with roughly 200-250 properties.
Moreover, this isn't the first time Faropoint has worked with Truist, with the two collaborating on a $340 million refinancing in 2025 and a $600 million Fund IV purchase credit facility earlier this year, as reported by the CO.
But the latest Faropoint refinancing will offer it more flexibility to focus on short-term business goals, with the potential for an earn-out to kick in.
The last-mile industrial-focused firm has been active in transactions in recent months and whether that continues as interest rate volatility persists remains to be seen.
The Commercial Observer reported the news, with both Truist Bank and Capital One issuing the debt.
The properties are positioned in 12 states and near major cities including New York City, Chicago and Philadelphia.
Earn Out Option Becomes Overlooked
For Faropoint, perhaps the most overlooked part of the deal is the earn-out option. The refinancing includes $574 million in full commitments courtesy of an $84 million reserve, which will be paid out should net operating income rise during the tenure of the loan, according to the CO.Also, both Truist and Capital One will support future distributions and repay the existing acquisition debt tied to the portfolio. The assets are covered through Faropoint's Industrial Value Fund III, which, as of June, has fetched $2.2 billion in financing.
“The earn-out is what sets this financing apart,” said Mark DeCesare, head of corporate finance at Faropoint, in a statement.
“The structure also gives Fund III meaningful flexibility to execute its business plan, from funding future distributions through the earn-out to adding properties through the accordion.”
Faropoint Has Stayed Active In Transactions
Capital One's interest stemmed from Faropoint's experience with funds. The bank was also involved with Faropoint's $273 million industrial refinance of 61 other properties announced earlier this year. This portfolio, which was part of its previous Fund II strategy, was located across eight metros through the Midwest, Southwest and Northeast regions.In addition, Faropoint launched Industrial Value Fund IV in June, seeking to raise $1 billion. This pool is targeting logistics properties in primary, gateway and secondary national regions surrounded by scarce supply, with in-place rents below the market. Also, Fund IV projects to assemble a portfolio with roughly 200-250 properties.
Moreover, this isn't the first time Faropoint has worked with Truist, with the two collaborating on a $340 million refinancing in 2025 and a $600 million Fund IV purchase credit facility earlier this year, as reported by the CO.
But the latest Faropoint refinancing will offer it more flexibility to focus on short-term business goals, with the potential for an earn-out to kick in.
The last-mile industrial-focused firm has been active in transactions in recent months and whether that continues as interest rate volatility persists remains to be seen.
Source: GlobeSt/ALM