Oxford Properties Group has sold a 75 per cent stake in two of its most significant Toronto-area industrial parks to San Francisco-based TPG (TPG-Q) for approximately $1 billion.
Toronto-based Oxford will retain a 25 per cent interest in the portfolio, and will continue to manage the properties, which comprise 5.1 million square feet. The transaction values the class-A Brampton Business Park and Vaughan Business Park properties at a combined $1.3 billion.
This is the first time Oxford and TPG have partnered on such an investment.
TPG Real Estate, TPG’s diversified real estate investment platform, is acquiring the properties through its dedicated real estate equity fund series.
“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,” Jeff Miller, Oxford’s head of North American industrial, said in Monday afternoon’s announcement. “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.”
The proceeds will be utilized to fund Oxford’s extensive industrial development program.
“With this transaction, we generate significant capital to reinvest back into Ontario, which includes three million square feet of new GTA industrial developments we are set to deliver by 2026,” Miller said. “We look forward to working together with TPG to create long-term value in the portfolio on behalf of our respective stakeholders.”
About the Brampton and Vaughan business parks
The properties are located in market-leading distribution nodes in the northern part of the Greater Toronto Area, accessible by several highways and close to intermodal yards, labour and Toronto’s Pearson International 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 leased to a roster of “high-quality tenants with strong credit” the announcement states, including Mondelez, Best Buy, Campbells and Olympia Tile.
The industrial sector represents Oxford’s largest allocation to real estate, with over a third of its capital invested into a portfolio that spans approximately 90 million square feet across 25 countries. This includes big box warehouses, light industrial and niche opportunities such as cold storage in major consumption and supply-chain nodes across North America, Europe and the Asia-Pacific region.
“The GTA remains one of the best-performing industrial markets in North America, and, as of Q3 2023, enjoys a sub-two per cent availability rate,” Milos Dajic, Oxford’s vice-president of investments, said in the announcement.
“It remains a high-barrier-to-entry market, with new construction representing less than two per cent of the existing stock. This bolsters our long-term conviction in this market, which has helped to attract a like-minded investor such as TPG.”
The investment is the continuation of an ongoing strategy for TPG, which has invested or committed approximately $2.14 billion of equity in industrial real estate over the past decade, primarily in scaled portfolios and platforms in the U.S. and Europe.
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 Oxford and TPG
TPG is a 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.
Oxford Properties Group is a global real estate investor, developer and manager.
Established in 1960, Oxford and its portfolio companies manage approximately $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, 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 under way globally across all major asset classes.
Oxford is owned by OMERS, the Canadian defined benefit pension plan for Ontario’s municipal employees.