W.P. Carey Closes 894,000-SF Sale-Leaseback Deal

NEW YORK CITY-Real estate investment banking firm W.P. Carey & Co. LLC has picked up 12 retail stores and an industrial facility in a sale-leaseback deal with pet products retailer Petsmart. Price tag is $71 million.

The 12 retail stores included in the transaction are roughly 26,000 each. According to W.P. Carey, the retail component of the deal totals 274,000 sf and stores are located across the country. The industrial property is a 620,000-sf distribution facility in Phoenix, AZ that includes a newly constructed forward distribution center. Lease terms are 20 years on all the properties.

W.P. Carey purchased the assets on behalf of member fund Corporate Property Associates 14 Inc., a non-traded REIT. In addition, a minority portion of the deal will be owned by Corporate Property Associates 15, the firm’s newest REIT. CPA 15′s ownership stake in the Petsmart properties will kick in once the fund reaches its $10 million minimum.

“We thought it was a good risk adjustment return,” says W.P. Carey vice president Ben Harris, who represented the firm as an acquisition officer in the transaction. “This was a chance to invest in a package of retail and a distribution center in one shot. And it’s diversified all over the US, so its sort of a nice package deal,” Harris tells GlobeSt.com.

The retail locations included in the sale are Westlake Village, CA; Evanston, IL; Lake Mary, Boca Raton, Tallahassee and Sawgrass, FL; Oxon Hill, MD; Braintree, MA; Flint, MI; Fridley, MN; and Southlake and Dallas, TX.

According to Harris, the deal gives Petsmart an opportunity to reconfigure its fiscal position. “We helped Petsmart refinance a synthetic lease that they had outstanding,” he says. “They had the opportunity to pay down their bank debt and put long-term financing in place for their real estate assets.”

Both CPA 14 and its successor, CPA 15, invest in single-tenant commercial properties that are typically purchased under a long-term, triple-bond net leases in which the tenant is responsible for maintaining the premises, insuring the buildings and paying real estate taxes.