W.P. Carey Buys Logistics Portfolio in Denmark for $188M

The firm’s first investment in the country expands its Nordic portfolio to nearly $1 billion in properties, including assets in Finland, Sweden and Norway.
Arvi Luoma, head of European investments, W.P. Carey
Arvi Luoma, head of European investments, W.P. Carey

In a $188 million deal, W.P. Carey Inc. has acquired a Denmark-based portfolio of 14 logistic properties and one corporate headquarters, totaling nearly 2 million square feet.

The portfolio is triple-net leased to freight carrier Danske Fragtmænd. It has an annual rent escalation tied to Danish CPI and a remaining term of 17.8 years.

“We are constantly seeking investment opportunities that meet our investment criteria,” Arvi Luoma, W.P. Carey’s head of European investments, told Commercial Property Executive. “We believe Denmark is an attractive investment market given its gateway location, strong economy and ease of doing business, as well as attractive real estate fundamentals such as the acutely under-supplied industrial sector.”

There were several factors that made the acquisition particularly attractive to the company, starting with the quality of the tenant—an established market-leading operator in Denmark, with a history dating back more than 100 years. Danske Fragtmaend provides a critical service to almost all businesses in Denmark.

“Secondly, the portfolio represents approximately 90 percent of the company’s logistics footprint in Denmark and is therefore critical for its operations and of long-term strategic value,” Luoma said. “And finally, Denmark’s industrial real estate market is acutely under-supplied, so acquiring a high-quality logistics portfolio was a rare and compelling opportunity, especially subject to a long-term lease.”

With the deal, W.P. Carey’s Nordic portfolio increased to nearly $1 billion, with properties throughout Finland, Sweden and Norway.

Investment strategy

W.P. Carey is focused on investing in a range of long-term net lease assets that meet its investment criteria. Last summer, W.P. Carey announced it was exiting the non-traded REIT business after more than 40 years to focus on its net-leased real estate portfolio.

“Our goal is to maintain and grow a diversified portfolio by investing in long-term net lease assets that provide secure inflation-protected cash flow and capital preservation,” Luoma said. “This transaction supports our diversified investment strategy with our inaugural investment in Denmark and expanding our Nordic portfolio to approximately €800 million ($1 billion) of assets in the region, including Finland, Sweden and Norway.”

He added that the company’s presence in North America and Europe supports its diversified strategy by offering a wide opportunity set for new acquisitions across geography, property type and tenant industry.

“We continue to look for similar accretive investments for mission-critical real estate in Denmark across all asset classes,” Luoma added.

Although there are no immediate plans for updates or expansions for these assets, Luoma noted the company prides itself on being a long-term partner to its tenants and look forward to working closely with the Danske Fragtmænd team, as they seek to expand the company’s market share across Denmark.

EDC Erhverv Poul Erik Bech advised on the off-market acquisition.

Image courtesy of W.P. Carey