W.P. Carey Buys 1.9M-SF Industrial Portfolio in $55M Leaseback Deal

W.P. Carey has acquired seven manufacturing facilities from Grand Rapids, MI-based Tower Automotive Inc., a global designer and producer of vehicle structural components and assemblies used by the major automakers. Tower will commit to 18-year net leases on all seven facilities. The properties are located in Clinton Township, MI; Granite City, IL; Auburn and Kendalville, IN; Bluffton and Upper Sandusky, OH; and Milan, TN.

"W.P. Carey and its investors received the opportunity to own seven key facilities on a long-term lease [that will] generate long-term cash flow," Edward V. LaPuma, managing director at W. P. Carey tells GlobeSt.com. "This is another group of assets that we can own and that will generate the cash flow that our investors want. They are real estate players." He adds that Tower will use the proceeds from the sale to pay down existing debt.

The acquisition was made on behalf of Corporate Property Associates 14 Inc. and Corporate Property Associates 15 Inc., both members of the $3.5 billion W.P. Carey Group of publicly held non-traded REITs. CPA 14 will own the Granite City, Kendalville, Upper Sandusky and Clinton Township properties, while, under a second lease, CPA 15 will own the facilities in Auburn, Bluffton and Milan, TN.

LaPuma tells GlobeSt.com that the trend toward sale/leaseback transactions is gaining momentum "substantially. It's continuing to move in quick fashion. Companies need capital and today's capital markets are volatile." He notes, however, that while the current economic climate may be driving many sale/leasebacks, the trend is not dependent on the uncertain economy. Such transactions "may have become more recognizable due to the current slump," but companies utilizing sale/leaseback revenues to pare down debt, institute capital improvement programs or expansion plans "is going to be a trend that stays."

Tower Automotive OEMs include Ford, DaimlerChrysler, GM, Honda, Toyota, Nissan, Fiat, Kia, Hyundai, BMW and Volkswagen. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components.