The US firm that has not taken out a loan out on a European investment for several years, has agreed an all-equity purchase of a cross-border portfolio of manufacturing-related properties.
W P Carey’s latest all-equity deal is for eight assets used by Siderforgerossi, an Italian company acquired by mid-market private equity firm, KPS Capital Partners, in 2021. It makes and tests various products, for example large diameter metal products used in the wind power, oil and gas, automotive, and nuclear power generating industries.
Due diligence performed by the US Reit established that the eight properties spanning 118,000 m2 are “mission critical” to the owner. The deal is structured with triple net leases (obligating the tenant to pay for property expenses) for each facility with two master leases – one for the five northern Italian assets and the other for the three Basque country ones.
The leasing term back to the operator is for 25 years with annual CPI-based rent increases.
The investment value and yield has not been declared by W P Carey, whose operational model is to hold assets for the long term.
It already has over €300 mln of assets in Italy having begun there in 2011. The firm entered Spain earlier. It has invested over €1 bn in the country since 2009.
W P Carey, which is 25 years old, has consistently tried to negate assumptions that its investments are predicated upon finding companies requiring equity urgently due to a position of financial weakness.
It hunts firms with strong balance sheets. The company declined to comment on the underlying reasons for Siderforgerossi wishing to raise equity but it is thought to be a mixture of finding a more beneficial way of financing operations given rising interest rates with one eye on potential m&a opportunities should they arise.
Christopher Mertlitz, head of European investments, said in a statement the European manufacturing industry had ‘demonstrated impressive resilience’.
‘We remain positive about this sector given that it benefits from secular trends. We are pleased to have been able to leverage our unique cross-border capabilities to help Siderforgerossi monetise its real estate.’
