W. P. Carey Inc. WPC is making concerted efforts to enhance its position in the market and recently announced industrial investments worth $111 million. These include mission-critical industrial properties and of the total amount, $45 million are completed sale-leasebacks and $66 million forward commitment.
With fixed annual rent escalations and a weighted average lease term of approximately 22 years, the investments seem a strategic fit for W. P. Carey. The asset class is witnessing high demand and the latest move reflects the company’s ability to secure accretive transactions efficiently.
Specifically, the transactions included a $30-million sale-leaseback of three industrial facilities, aggregating 619,000 square feet in Wisconsin. Net leased to Wendorff Bros. Co., Inc. under a 25-year master lease, the mission-critical properties constitute the majority of Wendorff's operating footprint.
The other one is a $15-million sale-leaseback of two industrial facilities in Ontario, Canada. Aggregating 285,000 square feet, these facilities are triple-net leased for a period of 22 years, with fixed annual rent escalations to Trillium Health Care Products Inc., which is a manufacturer of branded over-the-counter pharmaceutical and prescription products.
Moreover, W. P. Carey decided to acquire a to-be-constructed Class-A distribution facility aggregating 614,000 square feet in Tennessee, for approximately $66 million. On completion of the construction, expected in April 2020, the facility will be acquired and leased back to the company on a triple-net lease basis for 20 years. The company owns and operates dialysis facilities, outpatient cardiac and vascular labs, and urgent care facilities. It is also a leading manufacturer and distributor of dialysis equipment and renal pharmaceuticals in North America.
With a high-quality portfolio of critical commercial real estate, diversified net lease REIT, W. P. Carey will likely witness high occupancy, growing rent and healthy lease revenues in the near term. The company focuses on investing in high-quality single-tenant industrial, warehouse, office, retail and self-storage properties, which it leases back to creditworthy tenants on a long-term basis, with built-in rent escalators.
Notably, the e-commerce boom, resilient consumer sentiment, low unemployment level and rising wages are playing key roles in keeping up the industrial and logistics sector’s healthy performance. Companies are making immense efforts to improve supply-chain efficiencies, spurring demand for logistics infrastructure and efficient distribution networks. This is opening up ample opportunities for REITs including W. P. Carey, Duke Realty Corp. DRE, Prologis PLD and Liberty Property Trust LPT to prosper.
W. P. Carey currently carries a Zacks Rank #3 (Hold). In the year-to-date period, shares of the company have outperformed the industry. While the stock has appreciated 35.8%, the industry has increased 23.6% during this period.
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