EQT Exeter Real Estate Income Trust acquired a 76,007-square-foot last-mile industrial facility in Torrance, California, for approximately $51.5 million in a sale-leaseback transaction that closed on December 23, 2025. The deal provides long-term occupancy for what industry sources identified as the property located at 1500 Francisco St., which is home to Frito-Lay, a division of PepsiCo. The lease runs through 2035, with rental rates well above South Bay market averages.
The acquisition marks EQT Exeter’s continued expansion into Southern California’s industrial sector, following a 197 million dollar purchase of an 819,000 square foot warehouse in Fontana last year. The real estate investment trust, a subsidiary of Swedish private equity firm EQT, funded the all-cash Torrance acquisition using proceeds from its common stock offerings.
The 9.6-acre property serves as a warehouse and distribution facility for products from the tenant’s parent company, which offers a diverse portfolio of well-known brands across beverages, salty snacks, convenient foods, and nutrition-focused products. Under the terms of the sale-leaseback agreement, the tenant will lease back 100 percent of the facility that it previously owned.
The transaction values the property at approximately $677 per square foot. The current annual rental rate of $34.20 per square foot significantly exceeds the South Bay industrial market average. According to third quarter CBRE data, comparable facilities in the South Bay averaged $1.41 per square foot monthly, or approximately $16.92 per square foot annually.
The lease structure includes a 10-year initial term expiring December 31, 2035, with two five-year extension options that could extend occupancy through 2045. Built-in annual rent escalations of 3 percent will increase the base rent throughout the initial term. The current annualized base rent, adjusted to straight-line contractual increases through the lease term, stands at approximately $2.98 million.
The Torrance acquisition comes as the Los Angeles industrial market faces challenging conditions. The region recorded negative absorption for nine consecutive quarters through the end of 2024, according to a Savills market report. Overall vacancy in Los Angeles climbed to 6.6 percent in the fourth quarter of 2024, up 200 basis points from 4.6 percent a year earlier. The South Bay submarket specifically experienced occupancy declines, with National Road Logistics vacating 684,900 square feet in Torrance during the fourth quarter.
Despite broader market softness, demand for smaller industrial facilities suitable for last-mile distribution has remained more resilient. According to a Kidder Mathews market report from late 2025, leasing activity in the Los Angeles industrial market appeared to be stabilizing with demand trending upward. The report noted that Hadrian, a manufacturer specializing in autonomous factories, expanded its presence by leasing a 200,000 square foot building on Normandie in Torrance, demonstrating continued appetite for South Bay industrial space among advanced manufacturing and technology companies.
Sale-leaseback transactions have gained traction in the industrial sector, particularly among food and beverage companies seeking to convert real estate assets into working capital while maintaining operational control. According to Beverage Industry, industrial transactions comprised 38 percent of all sale-leaseback deals in 2024. The financing structure allows companies to unlock property value while securing long-term occupancy at predictable costs.
The Torrance property was constructed in 2000 and requires no significant renovations or improvements, according to the Securities and Exchange Commission filing. EQT Exeter entered into a property management agreement with EQT Real Estate Advisors, an affiliate of its adviser, to provide management and leasing services for the facility. The agreement renews automatically for successive one-year periods unless terminated with 30 days notice.
The transaction reflects growing investor appetite for credit-quality industrial assets with long-term net leases. Net lease structures typically require tenants to pay substantially all operating costs associated with properties, including maintenance, property taxes, and insurance. This arrangement reduces landlord responsibilities while providing predictable income streams backed by the tenant’s creditworthiness.
For EQT Exeter, the Torrance acquisition aligns with its strategy of investing in commercial properties subject to net leases following the closure of its multifamily fund in 2024.
The Torrance facility’s location provides access to major transportation corridors serving the greater Los Angeles region. Last-mile distribution facilities near dense urban populations have remained attractive to investors despite broader industrial market headwinds, as e-commerce and direct distribution models continue driving demand for warehouse space close to end consumers.
The facility will face competition from similarly situated properties throughout the South Bay submarket, where landlords have been offering significant concession packages including free rent and tenant improvement allowances to attract tenants, according to the Kidder Mathews report.
The transaction’s rental economics reflect the premium value of occupied industrial assets with creditworthy tenants in strategic locations. With a current average rental rate of $39.19 per square foot over the remaining 10-year lease term, the property generates stable cash flow supported by contractual rent escalations that provide inflation protection for the investor.
