Meet Faropoint, the industrial investment firm that wants to be one of DFW's biggest property owners – Dallas Business Journal – Dallas Business Journal






Another company has thrown its hat into North Texas’s piping hot industrial market, with ambitious plans for how much property it hopes to buy.
Meet Faropoint, a private equity firm with headquarters in Hoboken, New Jersey and Tel Aviv, Israel. Founded in 2012, the company focuses on last-mile industrial real estate within the U.S. So far, Faropoint has acquired more than 13 million square feet of warehouse space through its various funds up and down the East Coast, in the Midwest and Texas. Earlier this year, the company closed on credit facilities of about $550 million that will help it acquire an additional $1 billion of assets across the U.S. over the next two years. These facilities were co-led by KeyBank Real Estate Capital and Citizens Bank.
A major focus of this expansion will be on North Texas, where Faropoint recently acquired four warehouses in Dallas, Arlington and North Richland Hills, totaling around 466,000 square feet. The company’s Texas portfolio currently consists of about 15 properties totaling some 1.3 million square feet. This portfolio is home to roughly 33 tenants in markets like Dallas-Fort Worth, Houston and San Antonio.
Leading Faropoint’s expansion efforts in Texas will be Jacob Rich, senior vice president and Texas Market Leader at Faropoint. Rich joined the company earlier this year, previously working in North Texas at companies like Marcus & Millichap Capital Corp. and Spirit Realty Capital Inc. To discuss Faropoint’s investment goals in North Texas and what the company is looking for, Rich recently spoke with the Dallas Business Journal.
What is Faropoint’s investment goal in North Texas over the next few years? How much space does the company hope to acquire here?
Faropoint’s investment goal is to be amongst the largest property owners in North Texas. As we continue to build our network amongst brokers, property owners and tenants and expand our team and close new deals, we can see the firm’s exposure in the market grow by millions of square feet in the next few years. As part of our recent fund, we will look to grow off our initial end-year target of more than $100 million in acquisitions annually throughout Dallas-Fort Worth.
Where does Texas, or specifically North Texas, rank among Faropoint’s top markets?
We believe the surge in population and overall economic growth has positioned Dallas-Fort Worth as the number one industrial growth market. After spending meaningful time learning about North Texas’ fundamentals, we only see a pathway forward. Faropoint understands that North Texas is a critical piece to the national supply chain and we expect to grow our portfolio in correlation with the market’s continued growth.
What kind of property is Faropoint looking for specifically? Is there a dollar amount or building size that would be its sweet spot?
Faropoint seeks distribution and light industrial assets within dense infill submarkets. Our ideal property will range between 30,000 and 300,000 square feet and is typically a generation or two behind new construction deliveries. Our average deal size is roughly about 75,000 square feet per asset. Some investors may look at this segment as being too small. We see it as an opportunity to build exposure in assets that see continued limitations of new supply while seeing steady increases in demand. We’re very convicted in the growth of micro-fulfillment and are assembling assets of this profile in urban cores so that we can meet the growing demand.
As a relatively new investor to North Texas, have you noticed any difficulties entering the market?
Anytime you’re a new investor in a competitive market such as North Texas, there’s going to be initial challenges around educating the market on who you are, what you’re seeking and the resources the firm has to offer. We understand that it takes time to penetrate the market, but Faropoint is here to stay. As we grow our asset exposure and overall local presence over time, we’re confident the market will become increasingly familiar with Faropoint and our capabilities.
What is the industrial investment market like today? How competitive is it in Texas, and how much more expensive is product today versus last year or in 2019? 
The industrial investment market is currently very competitive throughout Texas, and moreover, nationwide. There’s an unprecedented amount of new capital from gateway markets across the country coming into North Texas currently. We’re continuing to see record lease executions and capital markets trades. Despite the already extraordinary growth, Faropoint believes Dallas-Fort Worth’s rapid increase in population and impacts on fulfillment demands have positioned the market to experience continued growth above that of the national average.
You mentioned earlier that Faropoint wants to be a strategic partner to its tenants than a traditional landlord. How are you able to do this?
Small and medium-sized businesses typically don’t have access to the same technology and resources that larger national companies do, making it harder to scale their real estate presence. It’s for that reason that Faropoint sees itself as a partner to those users in their growth. We work alongside our tenants and provide a firsthand look at their growth potential, which allows us to offer nationwide solutions most small and medium-sized businesses may not otherwise have. Moreover, Faropoint has continued to invest in logistical operating businesses that we hope to roll out to our tenants, creating synergies and subsequently more efficiencies to their businesses.
I read that Faropoint uses in-house software to assemble its portfolio. Can you explain to me how this works?
As it stands, Faropoint is currently on pace to close more than 100 assets this year, representing nearly double that of 2020. We have the objective to continue growing that number. We are amongst one of the top volume buyers in the nation right now. As a relatively small company, plus or minus 40 people, it’s imperative that we rely on the technology to underwrite better, leverage our brokerage networks and streamline decision-making to maintain an advantage in the increasingly competitive national industrial market. 
This interview has been edited for brevity and clarity.
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