Why co-GP equity fits industrial
Co-GP equity is capital invested alongside the general partner in the sponsor's own share of a transaction. The co-GP investor shares in the GP's obligations and participates in the promote the GP earns for executing the plan.
Co-GP equity in industrial supports operators acquiring or developing logistics and light industrial space where the GP contribution outgrows the operator's balance sheet.
Industrial market context
Industrial real estate remains one of the most resilient CRE asset classes heading into 2026. Cap rates have stabilized, with Class A, B, and C industrial averaging approximately 5.28%, 6.02%, and 7.38% respectively. Investors anticipate gradual interest rate decreases in the second half of 2026, which could compress cap rates further in core distribution markets.
Leasing activity recovered in late 2025, driven by large-scale logistics occupiers taking buildings over 500,000 square feet. Occupiers are consolidating into larger, more efficient Class A facilities and shifting toward lower-cost interior markets over expensive coastal locations. Build-to-suit development remains active for credit tenants.
Underwriting considerations for industrial
H Equities evaluates industrial deals based on location, tenant quality, lease structure, and logistics demand fundamentals. Our platform is built to move quickly on transitional industrial assets that need bridge capital for acquisitions, lease-up, or repositioning. For co-GP equity specifically, the request is evaluated against the asset-level factors below and the structural questions that follow.
- Clear height, column spacing, truck court depth, and dock configuration directly impact tenant demand and achievable rents.
- Proximity to transportation infrastructure -- interstate access, ports, rail, and airports -- is a primary value driver for logistics tenants.
- Evaluate environmental risk carefully; industrial properties carry higher Phase I/II due diligence requirements than other asset classes.
- Tenant credit quality varies widely in industrial; understand the difference between investment-grade logistics tenants and small manufacturing operators.
- New supply pipelines in major distribution markets can impact occupancy and rent growth projections -- model absorption carefully.
- The operator's track record with the property type and business plan, including deals taken through a full cycle
- The joint venture terms: GP co-invest requirement, promote structure, fees, and major decisions
Situations where industrial sponsors use co-gp equity
Operators use co-GP capital when a joint venture or lender requires a meaningful GP contribution and the sponsor's balance sheet is spread across several deals, or when a growing operator wants to compete for larger transactions than its own capital allows.
- Meeting GP Equity Requirements: Joint venture agreements typically require the GP to contribute a meaningful percentage of equity. Co-GP capital helps sponsors meet this requirement when their own balance sheet is stretched across multiple deals.
- Scaling a Portfolio: Operators with strong track records who are growing faster than their personal capital allows. Co-GP equity enables sponsors to pursue multiple deals simultaneously without being capital-constrained.
- Balance Sheet Support: Provide the financial strength that LP investors and senior lenders look for when evaluating a sponsor. Co-GP capital demonstrates additional backing and commitment to the deal.
- Emerging Sponsor Partnerships: Talented operators building their track records who need a capital partner to help them compete for larger deals. Co-GP equity provides both capital and credibility.
Alternatives and structures nearby
Co-GP equity is part of the general partner's position, beneath LP equity, preferred equity, and all debt. It is the only structure here that shares in the promote.
For industrial, H Equities also publishes bridge loans, mezzanine loans, and preferred equity. The right choice depends on the senior lender's requirements, the sponsor's ownership goals, and how much of the plan's value has already been created.
Risks and trade-offs
Co-GP capital sits in the riskiest position in the stack and shares the GP's obligations, including any completion or carry guaranties. The promote only pays if the plan delivers, so the co-GP partner is underwriting the operator as much as the property. Misaligned decision rights between GP partners can slow execution, so the partnership agreement deserves the same attention as the loan documents.
How to start
Present the deal, your track record, and the GP equity need. We evaluate the sponsor as much as the deal itself. For industrial, include the rent roll or sales plan, the capital budget, and the exit assumptions. H Equities responds with questions or a view on fit, not an automated decision.