TPG ACQUIRES MAJORITY OF OXFORD';S GREATER TORONTO AREA INDUSTRIAL PORTFOLIO FOR C$1 BILLION IN NEW JOINT VENTURE

Rhea-AI Summary

TPG Acquires 75% Interest in Oxford's Class-A Industrial Business Parks in Toronto, Valued at C$1.3 Billion - PR Newswire

Positive

• TPG acquires 75% interest in Oxford's Class-A industrial business parks in the Greater Toronto Area (GTA)
• Transaction values the portfolio at C$1.3 billion
• Joint venture represents one of the largest private industrial real estate transactions in Canada
• Oxford retains a 25% interest in the assets and will continue to manage the 5.1 million square-foot portfolio
• TPG Real Estate is acquiring the properties through its dedicated real estate equity fund series

Negative

• None.

Insights

Real Estate Investment Expert

The acquisition of a 75% interest in two Class-A industrial business parks by TPG from Oxford Properties Group is a strategic investment that reflects confidence in the Greater Toronto Area (GTA) as a robust industrial market. The valuation of the portfolio at C$1.3 billion underscores the significance of the transaction, which is one of the largest private industrial real estate transactions in Canada.

TPG's history of investing in industrial real estate, with commitments of US$1.6 billion over the past decade, aligns with this move, suggesting a consistent strategy of targeting scaled portfolios in key markets. Oxford's retention of a 25% stake and the continuation of its management role indicates a partnership approach, leveraging Oxford's local expertise and track record.

The fully leased nature of the portfolio and the presence of high-quality tenants with strong credit profiles provide immediate cash flow stability and lower risk for TPG. The long-term leases and strategic location of the properties in distribution nodes enhance the attractiveness of this investment.

Oxford's reinvestment plans into Ontario, including new industrial developments, demonstrate an ongoing commitment to the region and the potential for further growth. For investors, the transaction may signal opportunities in the Canadian industrial real estate sector, particularly in high-barrier-to-entry markets like the GTA.

Overall, this partnership between TPG and Oxford is poised to create value for stakeholders through active asset management and strategic positioning in a thriving market.

Financial Analyst

The joint venture between TPG and Oxford Properties Group represents a significant move in the real estate investment landscape, particularly within the industrial sector. TPG's investment strategy, as evidenced by its previous equity commitments, suggests a bullish outlook on industrial real estate, which is further reinforced by the partnership with Oxford, a company with a vast and diversified industrial portfolio.

The industrial sector's resilience, especially in the context of the GTA's low availability rate and the market's high barrier to entry, may offer a hedge against market volatility. This could be particularly attractive to investors seeking stable returns in a climate where other asset classes might be experiencing uncertainty.

It is important to note the role of financial and legal advisors in the transaction, as this indicates thorough due diligence and structuring of the deal. RBC Capital Markets, Desjardins Capital Markets, and CBRE's involvement as financial advisors, along with the legal counsel provided by Stikeman Elliott LLP, Davies Ward Phillips & Vineberg, and Kirkland & Ellis, suggest that the transaction has been meticulously planned and executed.

Investors should consider the potential long-term benefits of the deal, such as asset appreciation, rental income growth, and the possibility of further acquisitions or developments in the region. The strategic locations of the properties could also provide logistical advantages, catering to the growing demand for distribution and warehousing driven by e-commerce and supply chain optimization.

TORONTO, SAN FRANCISCO and FORT WORTH, Texas, Dec. 18, 2023 /PRNewswire/ - 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.

About TPG

TPG (Nasdaq: TPG) is a leading global alternative asset management firm, founded in San Francisco in 1992, with $212 billion of assets under management and investment and operational teams around the world. TPG invests across a broadly diversified set of strategies, including private equity, impact, credit, real estate, and market solutions, and our unique strategy is driven by collaboration, innovation, and inclusion. Our teams combine deep product and sector experience with broad capabilities and expertise to develop differentiated insights and add value for our fund investors, portfolio companies, management teams, and communities. For more information, visit www.tpg.com.

About Oxford Properties

Oxford Properties Group ("Oxford") is a leading global real estate investor, developer and manager. Established in 1960, Oxford and its portfolio companies manage approximately C$85 billion of assets across four continents on behalf of their investment partners. Oxford's owned portfolio encompasses logistics, office, retail, multifamily residential, life sciences, credit and hotels in global gateway cities and high-growth hubs. A thematic investor with a committed source of capital, Oxford invests in properties, portfolios, development sites, debt, securities and real estate businesses across the risk-reward spectrum. Together with its portfolio companies, Oxford is one of the world's most active developers with over 70 projects currently underway globally across all major asset classes. Oxford is owned by OMERS, the Canadian defined benefit pension plan for Ontario's municipal employees.

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SOURCE Oxford Properties Group Inc.

FAQ

What is the value of the portfolio acquired by TPG from Oxford Properties Group in Toronto?

The portfolio is valued at C$1.3 billion in the joint venture.

How much interest has TPG acquired in Oxford's Class-A industrial business parks in the Greater Toronto Area?

TPG has acquired a 75% interest in Oxford's Class-A industrial business parks in the GTA.

Who is acquiring the properties through its dedicated real estate equity fund series?

The properties are being acquired by TPG Real Estate through its dedicated real estate equity fund series.

Which financial advisors served the joint venture in the transaction?

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.

What is the significance of the joint venture between TPG and Oxford Properties Group?

The joint venture represents one of the largest private industrial real estate transactions in Canada to date.