W. P. Carey Inc., a global net-lease real estate investment trust (REIT) that owns more than 180 self-storage facilities nationwide, has agreed to acquire Corporate Property Associates 18 – Global Inc. (CPA:18), a publicly registered, non-traded REIT it already manages. The $2.7 billion cash-and-stock deal will bring fresh self-storage properties and other diversified assets into the W. P. Carey portfolio. The transaction is expected to close during the third quarter, according to a press release.
As of Dec. 31, the CPA:18 portfolio included full or partial ownership in 65 self-storage facilities and four student-housing projects (one operating and three in development) that total 5.1 million square feet. It also has ownership interests in 53 triple-net-lease properties comprising 10.4 million square feet, the release stated.
Under the merger agreement, W. P. Carey has offered CPA:18 shareholders 0.0978 of a share of W. P. Carey common stock, plus $3 of cash, for each share of CPA:18 common stock. The offer had an implied value of $10.45 per chare as of Feb. 25, the release stated. W. P. Carey expects to fund the purchase with existing liquidity and net proceeds from the sale of some CPA:18 assets prior to closing. Once the transaction is complete, W. P. Carey stockholders will own about 93% of the combined company, with CPA:18 stockholders owning 7%.
“This acquisition presents a unique and compelling opportunity to acquire assets we know extremely well that are aligned with our current portfolio, in a transaction that’s immediately accretive to our real estate AFFO [adjusted funds from operations] per share,” said Jason Fox, CEO of W. P. Carey. “We expect this accretion to largely replace the income we generated from managing CPA:18, with higher-quality lease revenues; and we see the potential for additional upside. Furthermore, it will essentially conclude our exit from investment management, further simplifying our business and enhancing our scale.”
CPA:18 has a 30-day “go shop” window until March 30, which allows it to negotiate alternative proposals with third parties.
W.P. Carey ranked No. 10 on the 2021 Inside Self-Storage Top-Operators List of facility owners, with 189 properties comprising more than 13.4 million rentable square feet. Self-storage is the smallest segment of the company’s portfolio at 4.8% of its holdings. In contrast, industrial/warehouse properties comprise 49.7%, followed by office (19.5%) and retail (17.6%), according to the company website.
Based in New York, W. P. Carey has an enterprise value of approximately $22 billion. Its diversified portfolio of commercial real estate includes 1,304 net-lease properties comprising approximately 156 million square feet.
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