W.P. Carey Builds Do-It-Yourself Approach

The DIY Growth Bet

In choosing Hellweg as the vehicle for a distinctive presence in European retail, Carey is also staking a claim to what LaPuma sees as a serious opportunity in Germany's $40 billion DIY industry. That industry continues to capitalize on the handyman activities that proliferated in pre-1989 East Germany, when do-it-yourself home improvement -- on housing stock that was among Europe's oldest and home ownership among its lowest -- was not a matter for discretionary spending (something that itself was in extremely short supply). It was simply a matter of making things work despite little resources. Now, with the Iron Curtain gone, Germans are pleasuring in fixing things up.

Thus, what Carey and LaPuma -- and, most likely Semer as well -- are looking toward is consolidation in the DIY retailing sector. If Hellweg becomes part of such a wave, says LaPuma, that would boost Carey's "investment premise severalfold," not just by bulking up the retailer but by boosting its creditworthiness as well.

Finally, although it might seem counterintuitive for a U.S. investor to make a big move in Europe as the dollar falls against the euro, LaPuma finds upside there as well. While he says U.S. lenders have a "historical bias" that does not favor single-tenant assets, such properties "are more highly prized outside the U.S." Thus, he adds, "we can get very good leverage at pretty attractive rates."