TORONTO
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.
