International REIT WP Carey has completed the sale and leaseback of 16 grocery stores, net leased to Danish food retailer, Coop Danmark.
The two transactions of approximately €40 mln and €24 mln closed in June and August, respectively, and include a commitment by WP Carey to acquire seven additional stores by the end of 2022, once refurbishments are completed.
The portfolio comprises established food retail properties located in dense urban locations. Strict Danish planning laws and licensing requirements make opening new retail stores difficult, thereby providing inherent value to established food retail sites.
The newly acquired stores are net leased for a term of 15 years with Danish NPI-based rent increases.
Karolis Adlis, executive director, investments, WP Carey said: 'We’re delighted to extend our partnership with Coop and add 16 high-quality assets to our portfolio.
'Coop is an established player that has seen tremendous growth as the grocery retail sector in Denmark has expanded. Denmark remains an important market for us along with the rest of the Nordics in which we have invested over €900 million since our first transaction in 2001.
'We look forward to continuing our relationship with Coop moving forward.'
The transaction follows two prior sale-leasebacks with Coop completed in December 2021 and February 2022. As a result, WP Carey will own 42 of Coop’s food retail stores by the end of 2022.
According to the REIT, proximity food retailers have benefited from increased consumer interest in at-home cooking, a trend accelerated by the Covid-19 pandemic, and discount retail in particular has been a growing sub-sector in Denmark, taking market share from other forms of retail.
With a history dating back to 1866, Coop is one of Denmark’s leading grocery retailers with a market share of over 30%. Coop has a well-diversified portfolio of brands accommodating all grocery retail sectors including, discount, supermarket, hypermarket and premium.
Flemming Møller Hansen, real estate director at Coop Danmark, said: 'We are thrilled to partner with WP Carey once again. This deal is demonstrative of the trust it has in our business model and will help to facilitate our national expansion strategy.'
EDC International Poul Erik Bech advised WP Carey.
