W. P. Carey Inc., a leading net lease REIT specializing in corporate sale-leasebacks, build-to-suits and the acquisition of single-tenant net lease properties, recently revealed that it has entered into an agreement with its existing tenant, Cuisine Solutions, to invest $75 million in a build-to-suit state-of-the-art food production facility in San Antonio, TX.
W. P. Carey was joined by partners and local leaders at a groundbreaking ceremony for what will be a 290,000-square-foot facility. Construction is projected to begin in March 2019, pending the issuance of permits and building plan approvals. As part of the overall transaction, W. P. Carey also made an additional $10 million investment in existing improvements to Cuisine’s Sterling, Virginia facility, which W. P. Carey acquired in 2012.
Existing, market-leading tenant:
Cuisine is the world’s largest manufacturer and distributor of sous vide foods, a technique of slow cooking under vacuum seal pioneered by the company in 1971. Its high-quality prepared products serve a variety of food service providers around the world, including international airlines, cruise ship operators, the U.S. military, major hotels chains, restaurant franchises, retailers and schools.
Mission-critical, strategic facility:
The state-of-the-art facility will support Cuisine’s future growth plans, enabling increased production capacity amid growing demand from its core partners. The facility will be located in Brooks, the former U.S. Brooks Air Force base, less than ten miles south of downtown San Antonio, which has been redeveloped as a 1,300 acre mixed-use community with property tax incentives and access to a local workforce. The USDA- and FDA-compliant facility adds diversity to its manufacturing sources and helps to mitigate supply interruption risk. Cuisine is funding the remaining balance of the total project cost, reinforcing its commitment to the location. Upon completion in mid-2020, the facility is anticipated to create more than 500 jobs over the next four years.
Master leased on a long-term, triple net basis with built-in rent growth:
As part of the transaction, W. P. Carey’s existing lease with Cuisine for its Virginia facility will be incorporated into a new triple net master lease governing both the Virginia and Texas facilities, with a term of 26.5 years and 2% rental bumps.
Gino Sabatini, Head of Investments, W. P. Carey, said: “Today’s announcement is a great example of how we can work with existing tenants to support their ongoing business needs and advance their strategic growth objectives. The new production facility will not only help Cuisine respond to increasing customer demand, but will create additional value for W. P. Carey shareholders. We look forward to deepening our relationship with Cuisine as they continue to grow their position in the sous vide global food market.”
Stanislas Vilgrain, Chairman and CEO, Cuisine Solutions, added: “Working in coordination with W. P. Carey and developer Cambridge Holdings, we were able to execute on a plan that efficiently addresses our expanding operations. The long-term investment from W. P. Carey will enable us to fund our long-term operational needs with a new global food processing facility, while also upgrading our existing Virginia facility. Our ongoing relationship and positive experience working with W. P. Carey on the original financing of our Virginia facility made them the obvious capital partner for this transaction.”
T. Michael Scott, Principal, Cambridge Holdings, noted: “Together with Cuisine and W. P. Carey, we were able to craft and execute on a development and capital plan that allowed Cuisine to reap the full benefit of locating the facility at Brooks, while supporting economic development and job growth in San Antonio.