W.P. Carey Scores $468M Sale-Leaseback of Toronto Life Science Portfolio

Net Lease REIT W.P. Carey executed the largest transaction in the company’s 50-year history this week with a $468M sale-leaseback of a portfolio of four pharmaceutical R&D and manufacturing campuses in the Greater Toronto Area (GTA).

The portfolio represents the lion’s share of the global operations of Apotex Pharmaceutical Holdings, the largest generic drug manufacturer in Canada.

The four campuses acquired by W.P. Carey include 11 buildings encompassing 2.3M SF located in attractive industrial submarkets within the GTA. The deal was structured as a triple-net master lease with rent payable in US dollars and fixed rent escalations over a 20-year term.

The sale-leaseback closed concurrently with private equity firm SK Capital’s majority buyout of Apotex, which financed a portion of the buyout.

W.P. Carey said the transaction, which closed on April 3, brings the company’s year-to-date investment volume to approximately $650M, mostly in industrial properties.

As the mega-deal was announced, GlobeSt. convened its annual Net Lease Spring conference in New York City. Several speakers at the conference said that mission critical light manufacturing and lab space have become ripe targets for sale-leaseback transactions involving long-term net lease deal.

“We’re thrilled to close this sale-leaseback and welcome Apotex as a top tenant. In addition to its existing scale, we believe Apotex will continue to benefit from the deep expertise of its private equity sponsor in the pharmaceutical manufacturing sector,” said Tyler Swann, Managing Director, W.P. Carey, in a statement.

“This investment is a great example of our ability to partner with private equity firms to leverage sale-leaseback proceeds to optimize the capital stack for new acquisitions,” Swann said.

In a recent interview with GlobeSt., Zachary Pasanen, managing director, investments at W.P. Carey, said sale-leasebacks offer sellers a “naturally accretive” alternative funding source. Holders of fungible, mission-critical real estate that are willing to sign a long-term lease with market or better rental increases built in will likely find that the underlying rate with which they can monetize those assets is inside the going long-term borrowing rate, he said.

W.P. Carey specializes in corporate sale-leasebacks, build-to-suits and the acquisition of single-tenant net lease properties. The company ranks among the largest net lease REITs with an enterprise value of approximately $24 billion and a well-diversified portfolio of high-quality, operationally critical commercial real estate.

The NYC-based company’s portfolio included 1,449 net lease properties encompassing about 176M SF and 84 self-storage operating properties, as of December 31, 2022.

With offices in New York, London, Amsterdam and Dallas, the company remains focused on investing primarily in single-tenant, industrial, warehouse and retail properties located in the US and Northern and Western Europe, under long-term net leases with built-in rent escalations.