Oxford Properties Sells Controlling Stake in C$1.3B Canadian Logistics to TPG
Global asset manager TPG has acquired a 75% stake in a C$1.3bn (€888m) industrial park portfolio in Canada owned by Oxford Properties.
TPG, investing on behalf of a fund managed by its real estate arm, has acquired the majority interest in Brampton Business Park and Vaughan Business Park, Oxford’s two industrial business parks in the Greater Toronto Area (GTA).
Oxford will retain the remaining 25% interest in the assets and will continue to manage the fully leased 5.1m sqft portfolio.
Jacob Muller, partner at TPG, said: “We see the GTA as one of the most attractive industrial markets globally, with strong real estate fundamentals and population and employment growth outpacing many major US markets.
“We have followed the Canadian industrial sector for several years, and believe this joint venture provides a unique opportunity to enter the market at scale through the acquisition of some of the highest quality industrial assets in all of Toronto.”
Jeff Miller, head of North American industrial at Oxford Properties, said: “Attracting a partner of TPG’s calibre to our Canadian portfolio speaks not only to the quality of these assets, but also the value generated by our active asset management which has improved these assets over time and brought them to full occupancy.
“With this transaction, we generate significant capital to reinvest back into Ontario, which includes 3m sqft of new GTA industrial developments we are set to deliver by 2026.”
Milos Dajic, vice president of investments at Oxford Properties, said: “The GTA remains one of the best performing industrial markets in North America, and, as of Q3 2023, enjoys a sub 2% availability rate. It remains a high barrier to entry market, with new construction representing less than 2% of the existing stock.
“This bolsters our long-term conviction in this market, which has helped to attract a likeminded investor such as TPG.”
Oxford Properties, OMERS' real estate subsidiary, issued a press release stating TPG has acquired majority of Oxford’s Greater Toronto Area Industrial Portfolio for C$1 billion in new joint venture:
TPG, a global alternative asset management firm, and Oxford Properties Group (‘Oxford’), a leading global real estate investor, developer, and manager, announced today a new partnership whereby TPG has acquired a 75% interest in Oxford’s two Class-A industrial business parks in the Greater Toronto Area (‘GTA’): Brampton Business Park and Vaughan Business Park. Oxford has retained a 25% interest in the assets and will continue to manage the 5.1 million square-foot portfolio. The transaction values the portfolio at C$1.3 billion.
The joint venture, which is the first between TPG and Oxford, represents one of the largest private industrial real estate transactions in Canada to date. TPG Real Estate, TPG’s diversified real estate investment platform, is acquiring the properties through its dedicated real estate equity fund series.
Jacob Muller, Partner at TPG, commented: “We see the GTA as one of the most attractive industrial markets globally, with strong real estate fundamentals and population and employment growth outpacing many major U.S. markets. We have followed the Canadian industrial sector for several years, and believe this joint venture provides a unique opportunity to enter the market at scale through the acquisition of some of the highest quality industrial assets in all of Toronto. We are excited to partner with the Oxford team, which has a distinct track record in the space and deep local expertise, to support the properties and grow a leading industrial portfolio.”
The properties are located in market-leading distribution nodes in the GTA, accessible by several highways and close to intermodal yards, labor, and airports. Each business park includes five buildings, spanning approximately 2.9 million square feet in Brampton and approximately 2.2 million square feet in Vaughan. The fully leased portfolio is bolstered by a roster of high-quality tenants with strong credit, including Mondelez, Best Buy, Campbells, and Olympia Tile, among others, and benefits from longer-term leases.
Jeff Miller, Head of North American Industrial at Oxford Properties, commented: “Oxford is a long-time believer in Canadian Industrial, where we have built up a phenomenal portfolio over the past 15-plus years, and we continue to see strong underlying fundamentals within this asset class. Attracting a partner of TPG’s calibre to our Canadian portfolio speaks not only to the quality of these assets, but also the value generated by our active asset management which has improved these assets over time and brought them to full occupancy.
“With this transaction, we generate significant capital to reinvest back into Ontario, which includes 3 million square feet of new GTA industrial developments we are set to deliver by 2026. We look forward to working together with TPG to create long-term value in the portfolio on behalf of our respective stakeholders.”
TPG has invested or committed approximately US$1.6 billion of equity in industrial real estate over the past decade, primarily in scaled portfolios and platforms in the U.S. and Europe. The industrial sector represents Oxford’s largest allocation to real estate globally, with over a third of its own capital invested into the sector, and a portfolio that spans ~90 million square feet across 25 countries. Oxford’s global industrial portfolio includes big box warehouses, light industrial and niche opportunities such as cold storage, all located in major consumption and critical supply chain nodes across North America, Europe and the Asia-Pacific region.
Milos Dajic, Vice President of Investments at Oxford Properties commented: “The GTA remains one of the best performing industrial markets in North America, and, as of Q3 2023, enjoys a sub 2% availability rate. It remains a high barrier to entry market, with new construction representing less than 2% of the existing stock. This bolsters our long-term conviction in this market, which has helped to attract a likeminded investor such as TPG.”
RBC Capital Markets and Desjardins Capital Markets served as financial advisors to the joint venture and CBRE acted as an additional financial advisor to Oxford. Stikeman Elliott LLP acted as lead legal counsel to Oxford. Davies Ward Phillips & Vineberg and Kirkland & Ellis served as legal counsel to TPG.
Oxford decided to sell a majority stake of its C$1.3bn industrial park portfolio in Canada to TPG and the latter wisely seized on the opportunity.
Oxford is one of the best global real estate investors with a massive exposure to logistics/ industrial properties all over the world and these properties in Canada are ideally located serving the GTA, one of the best performing industrial markets in North America.
Are there risks for TPG? Yes and no. I see a major recession coming to Canada over the next two years and it will impact all real estate portfolios, but over the long run this is a great investment for them.
Oxford has retained a 25% interest in the assets and will continue to manage the 5.1 million square-foot portfolio, ensuring alignment of interests.
The fully leased
portfolio is bolstered by a roster of high-quality tenants with strong
credit, including Mondelez, Best Buy, Campbells, and Olympia Tile, among
others, and benefits from longer-term leases.
For Oxford, this transaction allows it to realize gains on top assets it holds, boosting returns of OMERS' real estate and it bolsters their liquidity to invest in other assets.
Attracting a top caliber investment fund like TPG just speaks volumes to the quality of the assets Oxford owns, and the quality of its management team.
On that note, let me publicly congratulate Oxford senior leader Joanne Mcnamara who joins ESR Group board in support of the company’s strategic development:
Oxford Properties Group (“Oxford”), a leading global real estate investor, developer and manager, congratulates Joanne McNamara, EVP, Europe at Oxford, on her appointment as a Non-executive Director of ESR Group Limited (“ESR”) effective January 1, 2024. ESR is the largest real asset manager powered by the New Economy in Asia Pacific (APAC).
ESR is the largest APAC-focused real estate logistics platform with operations in China, South Korea, Japan, India, Singapore and Australia. Oxford was a cornerstone investor in ESR’s IPO to the Hong Kong Stock Exchange in late 2019. A follow-on investment in 2020 made Oxford one of its largest institutional shareholders.
McNamara’s appointment adds significant depth in global investment and development experience to ESR’s board.
In a recent statement welcoming McNamara onto the ESR board, the Chairman of ESR, Jeffrey Perlman, highlighted her accomplished track record, extensive knowledge and experience in real estate, and broad exposure to asset management across different real estate sectors, and noted that McNamara would be an invaluable addition to ESR.
Joanne McNamara, EVP, Europe at Oxford Properties, commented: “The ESR team has built a market-leading real estate investment and investment management business across key APAC markets through their New Economy investment and development capabilities. I am delighted to be joining ESR’s board of directors and look forward to contributing fresh perspectives to ESR’s further strategic development.”
Alessandro Fiascaris, SVP, Head of Asia at Oxford Properties, commented: “This appointment is very welcome news both for our team and for ESR. Jo’s addition to the board is a powerful signal to the market, aligning Oxford’s equity position with a commensurate role within ESR’s governance structure. We very much look forward to continuing our support for ESR in its strategic evolution.
“My team and I continue to be responsible for all investments and operations in the region, including ESR — and we are pleased that ESR will benefit greatly from having Jo’s experience and expertise in the ESR boardroom.”
McNamara also sits on the board of M7, a leading pan-European industrial real estate investment and investment management business which was acquired by Oxford in September 2021. Prior to Oxford, she worked at DTZ and Hammerson Plc in corporate finance, investment, and development. Highly regarded by her industry peers, McNamara was voted by the industry as the 2021 PERE European Industry Figure of the Year and recognised as a 2021 PERE Woman of Influence.
Remember the name Joanne McNamara and don't be surprised if she leads Oxford Properties in the future.
Alright, let me wrap it up there.
Below, Dominique Lapointe, global macro strategist from Manulife Investment Management, joins BNN Bloomberg to talk about Canada's economy and the Bank of Canada's dovish message with tightening bias.
Mr. Lapointe thinks next year will be very weak in Canada. I agree, I see a terrible recession hitting us over the next two years, forcing the Bank of Canada to cut rates first next year.
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