New Mountain Pays $640M for Net Lease Portfolio
The transaction includes 53 mission-critical manufacturing assets.
Funds advised by New Mountain Net Lease, part of New York-based alternative investment firm New Mountain Capital, have completed the acquisition of a 53-asset global net lease portfolio for $640 million.
It is the largest acquisition for New Mountain Net Lease since the strategy’s inception in 2016. New Mountain Net Lease has completed $3.5 billion in acquisitions across 65 transactions to date.
The seller of the portfolio was described as a net lease real estate asset manager, but the name was not disclosed.
The acquisition was made with capital from New Mountain Net Lease Partners II, LP, which closed in June 2023 with $825 million in equity capital commitments.
The portfolio is mainly located in 16 U.S. states with additional assets situated in Canada, the U.K. and Germany. New Mountain stated the portfolio consists of pre-existing long-term net leases with 11 institutional-quality tenants. New Mountain Net Lease had a prior relationship with some of the tenants.
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The firm noted the portfolio provides exposure to mission-critical manufacturing assets across a range of industries such as food products and distributors, industrial machinery, supplies and components as well as pharmaceuticals, biotech and life sciences. New Mountain described the assets as closely aligning with the firm’s focus on defensive growth sectors.
Calling the acquisition a milestone transaction, Teddy Kaplan, managing director & head of New Mountain Net Lease, said in a company statement the firm believes mission-critical assets in defensive growth sectors are well positioned to provide the most attractive opportunities in the net lease asset class. He stated that the complex and sizable transaction illustrates the evolution of net lease from a niche real estate subsector to an established, widely recognized asset class that spans a range of asset types.
Steve Klinsky, founder & CEO of New Mountain, said in prepared remarks the acquisition builds on the strong momentum New Mountain Net Lease has developed over the past several years. He expects the platform to continue to expand along with the asset class.
Net lease fund details
In addition to its relationship with some of the tenants, its deep sector expertise and network of senior advisors, New Mountain Net Lease also brought significant capital to the deal from NMNLP II that closed just over two years ago.
The fund was the firm’s second net lease real estate fund. Of the $825 million in equity capital raised, about $725 million represented third party Limited Partner commitments. The remainder came from the General Partner. The total amount raised surpassed the initial fundraising goal of $750 million. New Mountain said the fund included several new participants as well as previous investors, and included commitments from pension funds, insurance companies, asset managers, endowments, high-net worth individuals and family offices.
The fund targets middle market facilities and private equity-sponsored businesses, with investments ranging from $5 million to $75 million of equity capital per transaction. By the final close in June 2023, the fund had executed six transactions representing about $315 million of acquisition value and $115 million of equity capital commitments.
New Mountain currently manages more than $55 million in assets under management across private equity, strategic equity, credit and net lease real estate funds.
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