U.S.-based REIT W.P. Carey (WPC-N) announced this morning it will invest $468 million US to acquire a “critical portfolio of four pharmaceutical R&D and manufacturing campuses” in the Greater Toronto Area operated by Canadian global generic drug giant Apotex Pharmaceutical Holdings Inc.
The portfolio represents the majority of Apotex’s global operations, comprising 11 properties which cover about 2.3 million square feet of space. It is being acquired as a sale-leaseback.
The lease is structured as a triple-net master lease with rent payable in U.S. dollars and fixed rent escalations over a 20-year term. The sale-leaseback transaction closed April 3, concurrently with private equity firm SK Capital's majority buyout of Apotex, financing a portion of the buyout.
Financial terms of SK Capital's buyout of Apotex have not been released.
"We're thrilled to close this sale-leaseback and welcome Apotex as a top tenant. In addition to its existing scale, we believe Apotex will continue to benefit from the deep expertise of its private equity sponsor in the pharmaceutical manufacturing sector,” Tyler Swann, managing director of W. P. Carey, said in the announcement. “This investment is a great example of our ability to partner with private equity firms to leverage sale-leaseback proceeds to optimize the capital stack for new acquisitions. We look forward to growing our partnership with Apotex and SK Capital alike.”
W.P. Carey a major net lease REIT
W. P. Carey is a major net lease REIT specializing in corporate sale-leasebacks, build-to-suits and the acquisition of single-tenant net lease properties. The firm has made significant investments in industrial assets so far in 2023, with this transaction bringing its total year-to-date investment volume to approximately $650 million – most of it in industrial assets.
W. P. Carey reports an enterprise value of approximately $24 billion, holding a diversified portfolio of commercial real estate which includes 1,449 net lease properties covering approximately 176 million square feet, and a portfolio of 84 self-storage operating properties, as of Dec. 31, 2022.
With offices in New York, London, Amsterdam and Dallas, the company's focus remains investing primarily in single-tenant, industrial, warehouse and retail properties located in the U.S. and Northern and Western Europe, under long-term net leases with built-in rent escalations.
Apotex was founded in the mid-1970s by Barry Sherman, a billionaire who was found murdered in his Toronto home with wife Honey in 2017. The future of the company has since been uncertain, and embroiled in controversy.
Apotex has also been the subject of legal action including a price-fixing scandal in the United States.
At the time of Sherman’s death, the company was considered to be worth about $3 billion.