07/26/2013 | By Carisa Chappell
W. P. Carey Inc. (NYSE: WPC) announced a proposed merger with its non-traded REIT affiliate, Corporate Property Associates 16 – Global Incorporated, (CPA: 16), that is expected to increase the company’s size and create increased portfolio diversification.
In the July 25 announcement, the New York-based net-lease investor noted that the transaction is valued at approximately $4 billion and is expected to close in the first quarter of 2014.
Trevor Bond, CEO and president of W.P. Carey, said that the merger will help facilitate the company’s continued evolution from an LLC that got most of its revenue from investment management fees into a leading global net lease REIT.
“Because W. P. Carey originated and has managed CPA:16’s portfolio for several years, we know it well. We know the joint venture assets and the European assets. Because of these and other factors we were able to bid in confidence,” he said.
After the merger closes, the combined company will have an equity market capitalization of approximately $6.5 billion and a total enterprise value of approximately $10.1 billion.
With a combined portfolio of more than 700 properties worldwide, the merger will add to the company’s diverse asset base by tenant, property type and geography.
“We have never not been diversified and the CPA portfolio plays to that strength,” said Bond. “The proposed merger will enhance the W. P. Carey brand value in the net lease sector.”
John Park, W. P. Carey’s managing director and director of strategic planning, said that the transaction will allow W. P. Carey to “acquire a high quality portfolio that fits our own like a glove.”
In addition to increasing the company’s size and portfolio diversification, W. P. Carey executives noted that other benefits of the proposed merger include enhancing the company’s position for future access to diverse an attractively priced sources of capital, simplifies W. P. Carey’s financial statements by consolidating joint ventures with CPA: 16-Global, and supports the continuation of the company’s tradition of stable dividend growth through anticipated accretion to AFFO per share.
“The company will look different in terms of its revenue composition and balance sheet,” said Park.
W.P. Carey merged with CPA:15 last year in conjunction with its conversion to REIT status in September 2012.