One of the largest private industrial real estate transactions Canada has ever seen was just finalized in the Greater Toronto Area.
TPG and Oxford Properties have struck a new partnership that will see the former acquire a 75% interest in two of Oxford’s Class-A industrial business parks in the GTA.
The 5.1-million-sq.-ft portfolio is valued at $1.3B and includes the Brampton Business Park and the Vaughan Industrial Park. Oxford will retain a 25% interest in the properties and continue to manage them.
"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 US markets," said Jacob Muller, Partner at TPG.
"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."
Both business parks include five buildings, with the Brampton properties spanning approximately 2.9 million sq. ft and Vaughan’s covering 2.2 million sq. ft. Tenants of the fully leased portfolio include Mondelez, Best Buy, Campbells, and Olympia Tile.
In a release, TPG highlighted the properties’ location in market-leading distribution nodes, accessibility via several highways, and proximity to intermodal yards, airports, and labor, as driving factors behind the acquisition.
Although the GTA’s industrial market has softened slightly over the last few quarters, the availability rate stood at a tight 2.2% as of Q3 2023, and average rents climbed to $18.38 psf., a 14% annual increase and a 153% jump over the last five years.
"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," said Jeff Miller, Head of North American Industrial at Oxford Properties.
"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."
Miller added that the capital generated by the transaction will help Oxford "reinvest back into Ontario," including through the 3 million sq. ft of new industrial space the company will deliver across the GTA by 2026.
Oxford's global industrial portfolio spans approximately 90 million sq. ft in 25 counties; over one-third of its own capital is invested in the sector.
