June 18, 2018 / 11:19 AM / a year ago

W.P. Carey plans to buy Corporate Property Associates in $6 billion deal

(Reuters) - W.P. Carey Inc (WPC.N) said on Monday it plans to buy commercial property owner Corporate Property Associates 17 – Global Inc in a $6 billion deal that could make it the No.2 U.S. net lease real estate investment trust by market value.

The combined company’s portfolio, spanning North America and Europe, will include both office properties and industrial facilities and boast clients such as The New York Times, Marriott International and German home improvement store chain Hellweg.

CPA 17 stockholders will receive 0.160 shares of W.P. Carey for each share held, equivalent to $10.72 per share based on the company’s Friday closing price.

The combined company will have a proforma enterprise value of $17.3 billion and a market capitalization of $11 billion, W.P. Carey said, behind Realty Income Corp (O.N) - the largest U.S. net lease REIT with $15 billion market value.

Net lease REITS collect a portion or all of the taxes and maintenance costs that are normally paid by the property owner, allowing them to maintain low cost structures.

Office properties will form the biggest chunk of their portfolio at 26 percent, W.P. Carey said. Industrial facilities will account for 24 percent of the combined company, while warehouses and retail properties making up 19 percent each.

According to the terms of the offer, CPA 17 may evaluate alternative proposals and enter into negotiations with third parties for a period of 30 days, the companies said.

CPA 17 had full or partial ownership interests in 411 properties totaling about 44.4 million square feet as of Dec. 31. W.P. Carey has a portfolio of 886 commercial real estate properties covering about 85 million square feet.

Morgan Stanley & Co LLC was financial adviser to CPA 17, while JPMorgan Securities LLC and Barclays advised W.P. Carey.

Reporting by Ankit Ajmera in Bengaluru; Editing by Saumyadeb Chakrabarty

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