WP Carey says drive into UK market could provide foothold for Europe
US real estate group WP Carey has launched its drive into the UK market with the £4m purchase of a regional distribution warehouse.
The New York-based corporate real estate group has bought the property through its private Reit, CIP, and is leasing it back to the former owner-occupier, food distribution group Gloystarne.
The deal is the first since WP Carey announced last June that it was willing to plough £500m into the UK property market over the next five years.
In the US, WP Carey owns and manages property totalling $3bn. The group specialises in offering owner-occupiers the opportunity to release capital with off-balance sheet financing off their occupational property.
Gloystarne is a major food packaging and distribution group in the UK that is backed by leading venture capital group 3i. The property WP Carey has bought is an 11,055m2 warehouse in Rotherham, northern England, which has been leased back to Gloystarne for 20 years. WP Carey has refinanced its purchase with a non-recourse mortgage from Bristol & West.
Head of WP Carey’s London office Anne Coolidge said that all the deals are cash flow driven. “We take a view on the covenant. We look hard at the management team, the industry in which they operate, their competition, five to 10 year financial performance and future prospects.”
Coolidge said the properties that the fund finds attractive are not necessarily typical prime real estate. She expects to find more deals in manufacturing and distribution, hotels and storage, much of which will be in the provinces. Celexa Real Estate Investment Management advises WP Carey.
The company is also looking for opportunities elsewhere in Europe. Coolidge thinks its new foothold in the UK may give it access to more opportunities among large multi-national corporations with pan-European operational property portfolios.
“We have had a joint venture investment business in Paris for a year and a half,” she says, “but with the 3,6,9-year structure of leases in France it is not always easy to create long-term financing solutions. We are looking closely at other markets and expect to see opportunities in eastern Europe, especially Poland.”
