W. P. Carey Enhances Portfolio With $170M in Asset Purchases

W. P. Carey has added approximately 1.1 million square feet to its holdings in the U.S. with the recent acquisition of four properties. In separate transactions totaling an aggregate $170 million, the net lease REIT purchased three industrial properties and a student housing community.

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WPC paid a total of $144 million for the three industrial properties, which are all mission-critical assets that are net leased to industry-leading tenants.

“We are continuing to see yields compress for high-quality industrial deals, and even more so for those with investment-grade tenants,” Joseph Mastrocola, executive director, Investments, with W. P. Carey Inc., told Commercial Property Executive.

In San Jose, Calif., WPC acquired a 203,800-square-foot flex R&D and manufacturing facility at 5521 Hellyer Ave. in a $52 million transaction. Sensor technologies provider Velodyne Lidar occupies the property and maintains its headquarters onsite as well.

In an off-market transaction, WPC purchased a 567,000-square-foot industrial property in Groveport, Ohio, a suburb of Columbus, for $27 million. The light manufacturing facility is leased to a subsidiary of Knowlton Development Corp., a beauty and personal care custom formulation and package design solutions provider, under a triple net agreement.

WPC also acquired a 316,300-square-foot food production facility in Illinois in a $65 million sale-leaseback transaction with Berner Food & Beverage. The state-of-the-art building, which serves the ready-to-drink beverage market, is one of the most advanced of its kind in the rapidly expanding food and beverage space.

“We have a long history of deep credit underwriting and structuring complex deals, which provides a competitive advantage and enables us to continue sourcing accretive deals within the industrial sector,” Mastrocola said.

“Furthermore, when it comes to sale-leasebacks versus existing lease acquisitions, there’s inherently less investors that are able to participate in that market thereby further differentiating ourselves.”

Forward thinking

While the industrial sector thrived amid the pandemic due to the spike in e-commerce, the student housing sector has not fared as well. WPC certainly still sees the value in the sector and purchased a 94-unit student housing community net leased to Monroe College in New Rochelle, N.Y., for $26 million. Sited along Locust Ave. within close proximity of a transit station, the 49,500-square-foot property can accommodate 282 beds.

According to a first quarter 2021 report by valuation advisory firm Marshall & Stevens, the student housing market is in a precarious situation over the long term because the market is dependent on the reopening strategies of various schools around the country.

However, Mastrocola noted, “For the Monroe College student housing investment, it was less about the student housing market and more about the quality of the asset, the criticality of the real estate to the college and its prime location near the New Rochelle transit station with service into New York City.”