U.S. private equity firm TPG Inc. has acquired a majority stake in a portfolio of warehouse properties around Toronto for $1 billion, according to people familiar with the deal.

TPG will get 75 per cent ownership of two industrial parks in the suburban cities of Brampton and Vaughan, the people said, declining to be named because the deal has not been officially announced. The seller, Oxford Properties Group, will retain a 25 per cent interest and continue to manage the assets, the people said. 

It’s a rare sign of life in a commercial real estate market that’s been ground to a near-halt by interest rates stuck at multi-decade highs. But investors have still been bullish about the outlook for warehouse and logistics properties, one of the market’s best-performing segments, even as the surge in e-commerce activity has cooled since the end of the pandemic. 

Vacancy rates for warehouses in many Canadian cities are some of the lowest in North America, and supply remains constrained by difficulties in getting new ones built.

That has made Canada’s industrial real estate a target for foreign investors. In February, GIC, Singapore’s sovereign wealth fund, completed its $5.9 billion buyout of Summit Industrial Income REIT in partnership with a local player, Dream Industrial REIT. And Blackstone Inc. has been building its portfolio of Canadian industrial real estate for years.

Meanwhile, Oxford — the property arm for the pension plan representing Ontario’s municipal employees — has been following many of its peers in selling off some of its real estate holdings in Canada, where pension funds are already some of the biggest landlords. Instead, those funds have started to focus more on building new properties as an avenue to generating bigger returns. In Ontario, Oxford has sought to develop new industrial properties.

The TPG transaction values the 5.1 million-square-foot (473,800-square-meter) portfolio at $1.3 billion.