W.P. Carey Shows Retail Some Love

A 1 million-square-foot collection of retail assets has made its way into the portfolio of a non-traded REIT managed by W. P. Carey.
Gino Sabatini

Gino Sabatini, W.P. Carey

A 1 million-square-foot collection of retail assets has made its way into the portfolio of CPA: 17–Global. The non-traded REIT, managed by net lease REIT W. P. Carey, recently acquired six Midwestern retail properties from The Bon-Ton Stores Inc. in an $88 million sale-leaseback transaction.

This is not W.P. Carey’s first endeavor with Bon-Ton. The companies’ relationship dates back to 1997 when CPA: 12 Inc. purchased land, a distribution center and a retail store in Pennsylvania from Bon-Ton for $12 million.

“The transaction allowed us to expand our relationship with Bon-Ton with the inclusion of these properties in CPA: 17’s portfolio while also providing sale-leaseback financing to Bon-Ton,” Gino Sabatini, a managing director with W. P. Carey, told Commercial Property Executive. “By unlocking the value in these corporate assets it provided funding for the repayment of a portion of their existing mortgage facilities.”

CPA 17 - Global Bon-Ton Stores

CPA 17 – Global Bon-Ton Stores

The retail assets span three states, with three properties located in metropolitan Milwaukee; one in suburban Green Bay, Wisc.; and one each in Joliet, Ill., and Fargo, N.D. An affiliate of Bon-Ton leases the stores under a 20-year agreement that provides the apparel and home furnishings department store with three renewal options. The portfolio has it all: a strong tenant, anchor positions at high-quality malls or lifestyle centers and the all-important promise of steady cash flow.

“As significant long-term assets for Bon-Ton, [the properties] are an attractive income-generating addition to our portfolio in the context of a deal structure that provided a mutually beneficial solution for both Bon-Ton and CPA: 17–Global,” Sabatini added. Bon-Ton will utilize proceeds from the sale-leaseback to refinance the six properties, which comprise a small portion of the department store’s 270-property portfolio of stores, furniture galleries and clearance centers across 26 states.

  1. W.P. Carey has been having an activity-filled year through its managed REITs. In May and June alone, CPA: 18–Global made four other moves, including the $29 million funding of the construction of a 207-room hotel in Hamburg, Germany, and another transaction in Germany involving $85 million in financing for the completion of a 290-key hotel in Munich. CPA: 18 also snapped up a 208,900-square-foot Minnesota warehouse and distribution facility leased by Core-Mark International in a $17 million sale-leaseback, and acquired a 335,700-square-foot multi-tenant retail site in Oslo, Norway, for approximately $105 million. And the year is only half over.