How much do investors know about investing in real estate located in Scotland?
Probably like most regular folk, not very much.
That is a big part of the W.P. Carey (NYSE: WPC) strategy of sourcing real estate assets through a network of offices strategically located around the world.
On August 21, the company announced the acquisition of six "trade parks" located throughout Scotland. Trade counter assets are typically light retail businesses, co-located in a warehouse/office/showroom configuration.
These parks were acquired for $17.8 million USD and are currently 90 percent occupied by 24 tenants on triple-net leases, whereby tenants pay for almost all of the property expenses in addition to rent each month.
What Investors Need To Know
1. W.P. Carey CEO Trevor Bond is not a big fan of investing in retail properties located in the United States.
Why not? In a nutshell, it is a very competitive marketplace with single-tenant net-lease peers like National Retail Properties (NYSE: NNN), Realty Income (NYSE: O) and American Realty Capital Partners (NASDAQ: ARCP) all competing and driving down the returns on these prime U.S. real estate assets.
2. Here is a look at the big picture:
W.P. Carey is part of a group of companies that are beating the market -- something most investors struggle to do. The REIT asset class is often ignored by investors, when actually it can be a valuable way for investors to diversify their portfolio, as illustrated by the chart above.
3. W.P. Carey also specializes in underwriting the sale-leaseback and/or build-to-suit of specialized mission critical assets on long-term leases by credit-worthy tenants.
This can be easily illustrated by the announced sale-leaseback on August 7 of the $114 million USD acquisition of the Norwegian headquarters of oil and gas giant Total SA:
- Total SA is rated AA-/Stable by S&P.
- Total Norway has occupied this corporate headquarters facility since its construction in 1975.
- The facility is located adjacent to the Dusavik supply port, near 56 percent of Norway's oil and gas reserves.
- Total Norway recently expanded its headquarters and signed a 17-year lease extension in June 2014.
This acquisition illustrates how W.P. Carey operates worldwide in contrast to its more U.S.-focused peer group.
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