W. P. Carey to Merge with One of Its Non-Traded REITs in $6 Billion Deal
The board of W. P. Carey Inc. (NYSE: WPC), a publicly traded real estate investment trust, has unanimously approved a definitive merger agreement where one of its non-traded REITs, Corporate Property Associates 17 — Global Incorporated, will merge with a subsidiary of W. P. Carey.
The board of W. P. Carey Inc. (NYSE: WPC), a publicly traded real estate investment trust, has unanimously approved a definitive merger agreement where one of its non-traded REITs, Corporate Property Associates 17 — Global Incorporated, will merge with a subsidiary of W. P. Carey in a stock-for-stock transaction valued at approximately $6 billion. With shareholder approval, the merger is expected to close on or around December 31, 2018.
If approved, CPA:17 stockholders will receive a fixed exchange ratio of 0.160 shares of W. P. Carey common stock for each share of CPA:17, equivalent to $10.72 per share based on W. P. Carey’s closing share price of $67.03 as of June 15, 2018. Shares of CPA: 17 common stock originally sold for $10.00 each and have an annual distribution rate of 6.5 percent.
“This transaction simplifies our business and effectively transforms W. P. Carey into a pure-play net lease REIT with earnings derived almost entirely from higher-multiple lease revenues,” said Jason Fox, W. P. Carey’s chief executive officer. “In addition to creating value by reweighting our earnings mix and enhancing our credit profile, it provides a unique and compelling opportunity to acquire a large portfolio of high-quality assets well-aligned with our existing portfolio at a favorable cap rate.”
Post-closing, W. P. Carey is expected to have a pro forma equity market capitalization of approximately $11 billion and an enterprise value of approximately $17 billion. CPA: 17 stockholders will own approximately 33 percent of the combined company, and W.P. Carey expects to maintain its current quarterly dividend of $1.02 per share. Additional merger information can be found here.
J.P. Morgan Securities LLC is acting as lead financial advisor, Barclays is acting as co-financial advisor and DLA Piper LLP is acting as legal advisor to W. P. Carey. Morgan Stanley & Co. LLC is acting as financial advisor to the CPA:17 special committee; Clifford Chance US LLP is acting as legal advisor to CPA:17; and Pepper Hamilton LLP is acting as legal advisor to the CPA:17 special committee.
W. P. Carey, one of the largest net lease REITs, has an enterprise value of more than $10 billion and a portfolio of commercial real estate totaling 886 properties. The company invests in single-tenant industrial, warehouse, office and retail properties with long-term leases with built-in rent escalators. Its portfolio is located primarily in North America and Northern and Western Europe.
In June 2017, the W.P. Carey board approved a plan to exit all non-traded retail fundraising activities to focus exclusively on net lease investing for the company’s balance sheet. W.P. Carey’s managed programs include non-traded REITs, non-traded business development companies, and private funds.
CPA:17’s offering was declared effective by the SEC in November 2007 and closed in January 2013 after raising nearly $3 billion in investor equity. The company’s multi-billion-dollar portfolio consists of 411 properties.
