WPC
W P Carey INC
NYSE
8-K: W. P. Carey Reports Q4 and Full Year 2023 Results, Narrows 2024 AFFO Guidance
Sentiment:
Quarterly Report
9 February 2024 7:39 AM
W. P. Carey announced its fourth quarter and full year 2023 financial results, highlighting strategic office exits and narrowing its 2024 AFFO guidance.
Worse than expected
The company's AFFO per diluted share for the fourth quarter and full year 2023 decreased compared to the previous year.
The company's 2024 AFFO guidance is lower than the 2023 full year AFFO.
Net income attributable to W. P. Carey decreased by 31.1% in the fourth quarter of 2023 compared to the same period in 2022.
Summary
- W. P. Carey reported a net income of $144.3 million for the fourth quarter of 2023, a decrease from $209.5 million in the same quarter of 2022.
- Diluted earnings per share were $0.66 for the quarter and $3.28 for the full year.
- Adjusted Funds From Operations (AFFO) was $1.19 per diluted share for the fourth quarter, down from $1.29 in the prior year.
- Full year AFFO was $5.18 per diluted share, a decrease from $5.29 in 2022.
- The company narrowed its 2024 AFFO guidance to between $4.65 and $4.75 per diluted share.
- This guidance is based on an anticipated investment volume of $1.5 billion to $2.0 billion.
- The company completed $345.6 million in investments during the fourth quarter and $1.3 billion for the full year 2023.
- They also completed $177.1 million in investments in January 2024.
- The company sold 79 office properties for gross proceeds of $608.1 million as part of its strategic office exit program.
- The company's office exposure is now below 3% of total ABR.
- The company's contractual same-store rent growth was 4.1%.
Sentiment
Score: 6
Explanation: The sentiment is neutral to slightly positive. While the company is making strategic moves to improve its portfolio, the financial results show a decline in key metrics. The narrowed guidance for 2024 is a positive sign, but the overall tone is cautious due to the transitional nature of the year.
Positives
- The company has made significant progress in its strategic office exit, reducing office exposure to less than 3% of ABR.
- The company has a strong liquidity position and a lower cost of capital.
- The company has a growing pipeline of investment opportunities.
- The company has a diversified portfolio of high-quality, operationally critical commercial real estate.
- The company has a strong track record of investing and operating through multiple economic cycles.
Negatives
- Net income attributable to W. P. Carey decreased by 31.1% in the fourth quarter of 2023 compared to the same period in 2022.
- AFFO per diluted share decreased by 7.8% in the fourth quarter of 2023 compared to the same period in 2022.
- Dividends declared during 2023 decreased by 4.1% compared to 2022.
- The company's 2024 AFFO guidance is lower than the 2023 full year AFFO.
Risks
- The company's future results could be materially different from forward-looking statements due to various risks and uncertainties.
- Fluctuating interest rates, inflation, pandemics, and geopolitical crises could have material adverse effects on future results.
- The company's strategic office exit may have near-term impacts on financial results.
- The company's investment volume and disposition volume may not meet expectations.
Future Outlook
The company expects to report total AFFO of between $4.65 and $4.75 per diluted share for the 2024 full year, based on investment volume of between $1.5 billion and $2.0 billion and disposition volume of between $1.2 billion and $1.4 billion.
Management Comments
- Our 2023 fourth quarter and full year results largely reflected the near-term impacts of executing the office exit strategy we announced in September, said Jason Fox, Chief Executive Officer of W. P. Carey.
- We've made excellent progress in a short space of time thanks to the hard work and dedication of our employees, bringing our office exposure down to less than 3% of ABR.
- Looking ahead, we view 2024 as a transitional year, establishing a new baseline from which to grow AFFO.
- We've raised our expectations for 2024 investment volume and were very well-positioned to execute with exceptionally strong liquidity and a lower cost of capital in an improving investment environment.
Industry Context
The strategic office exit reflects a broader trend in the REIT sector to reduce exposure to office properties due to changing work patterns and increased vacancy rates. The company's focus on industrial, warehouse, and retail properties aligns with current market demand.
Comparison to Industry Standards
- W. P. Carey's strategic shift away from office assets mirrors moves by other REITs like SL Green Realty Corp. and Boston Properties, who are also facing challenges in the office sector.
- The company's focus on industrial and warehouse properties is consistent with the trend of increased demand for logistics and distribution facilities, similar to companies like Prologis and Duke Realty.
- The company's same-store rent growth of 4.1% is comparable to the average rent growth seen in the net lease sector, but may be lower than some of the top performing industrial REITs.
- The company's leverage metrics are within the range of investment grade REITs, but may be higher than some of the more conservative peers.
- The company's dividend yield of 5.3% is competitive with other net lease REITs, but may be lower than some of the higher yielding REITs.
Stakeholder Impact
- Shareholders will see a lower dividend payout ratio in the short term due to the strategic office exit.
- Employees have been instrumental in the execution of the office exit strategy.
- Tenants will continue to benefit from the company's focus on mission-critical assets.
- Creditors will see a strengthened balance sheet due to the company's debt repayment strategy.
Next Steps
- The company plans to complete the remaining sales under the office exit program during the first half of 2024.
- The company intends to use proceeds from transactions to fund future acquisitions and repay debt.
- The company has $110.6 million in capital projects and commitments scheduled for completion in 2024.
Key Dates
- September 21, 2023: The company announced a strategic plan to exit office assets.
- November 1, 2023: The spin-off of Net Lease Office Properties (NLOP) was completed.
- December 7, 2023: The company declared a quarterly cash dividend of $0.860 per share.
- December 14, 2023: The company amended and restated its senior unsecured credit facility.
- December 29, 2023: Shareholders of record date for the quarterly dividend.
- December 31, 2023: End of the fourth quarter and full year 2023.
- January 16, 2024: The quarterly dividend was paid.
- February 9, 2024: The company issued an earnings release announcing its financial results for the quarter ended December 31, 2023.
Keywords
AFFO, Net Lease, Real Estate, REIT, Office Exit, Investment, Dispositions, Rent Growth, Portfolio, W. P. Carey
WPC
W P Carey INC
NYSE
Sector: Real Estate
Filings with Classifications
Capital raise
1 May 2025 5:22 PM
Capital Raising Announcement
- W. P. Carey Inc. has entered into an Equity Sales Agreement to offer and sell shares of its common stock, with an aggregate offering price of up to $1,250,000,000.
- The shares may be offered and sold from time to time through various agents.
- W. P. Carey may also sell shares to an agent as principal for its own account.
Worse than expected
30 April 2025 4:08 PM
Quarterly Report
- Net income attributable to W. P. Carey decreased due to higher losses from foreign debt remeasurement and increased allowance for credit losses.
Better than expected
1 April 2025 5:10 PM
Credit Agreement Amendment
- The amendment extends the maturity of a significant €500 million term loan by three years, improving the company's debt maturity profile.
- It introduces the potential for lower borrowing costs through a new pricing tier linked to higher credit ratings.
- The removal of specific spread adjustments on USD SOFR and CAD CORRA borrowings offers potential interest savings.
Worse than expected
12 February 2025 4:27 PM
Annual Results
- Total revenues decreased in 2024 as compared to 2023, primarily due to lower lease revenues and lower operating property revenues.
- Net income attributable to W. P. Carey decreased in 2024 as compared to 2023, primarily due to lower gain on sale of real estate, non-cash unrealized losses recognized on investment in shares of Lineage, and the impact of the Spin-Off and the Office Sale Program.
- AFFO decreased in 2024 as compared to 2023, primarily due to the impact of the Spin-Off and Office Sale Program.
Capital raise
12 February 2025 4:27 PM
Annual Results
- The company may access the capital markets through additional debt (denominated in both U.S. dollars and euros) and equity offerings, as well as term loans and other bank debt.
- The company may use existing cash resources, available capacity under our Senior Unsecured Credit Facility, proceeds from term loans or other bank debt, proceeds from dispositions of properties (including the Office Sale Program), and the issuance of additional debt or equity securities, such as issuances of common stock through our ATM Program, in order to meet our short-term and long-term liquidity needs.
Worse than expected
11 February 2025 4:10 PM
Earnings Release
- Net income attributable to W. P. Carey decreased by 67.4% in the fourth quarter compared to the same period in 2023.
- Full year AFFO per diluted share decreased by 9.3% from $5.18 in 2023 to $4.70 in 2024.
- Dividends declared during 2024 decreased by 14.2% compared to 2023.
- Revenues, including reimbursable costs, for the 2024 full year totaled $1.58 billion, down 9.2% from $1.74 billion for the 2023 full year.
Capital raise
13 November 2024 4:28 PM
Debt Offering Announcement
- W. P. Carey Inc. is raising $600 million through the issuance of 3.700% Senior Notes due in 2034.
- The offering is being underwritten by Barclays Bank PLC, BNP PARIBAS, J.P. Morgan Securities plc, and Bank of Montreal, London Branch.
Worse than expected
30 October 2024 4:06 PM
Quarterly Report
- The company's revenue, net income, and AFFO all decreased compared to the same period last year, indicating worse than expected results.
Worse than expected
29 October 2024 4:10 PM
Quarterly Report
- The company's net income and AFFO per share decreased compared to the same quarter last year, indicating worse results.
Worse than expected
15 October 2024 6:10 AM
Current Report
- The bankruptcy filing of a major tenant is generally considered a negative event that could impact future revenue.
Worse than expected
31 July 2024 4:06 PM
Quarterly Report
- Total revenues decreased due to lower lease revenues and operating property revenue.
- Net income attributable to W. P. Carey decreased due to the impact of the spin-off, asset sales, and impairment charges.
- AFFO decreased due to the impact of the spin-off, asset sales, lease restructurings and property vacancies.
Worse than expected
30 July 2024 4:06 PM
Quarterly Report
- The company's AFFO per diluted share decreased by 14.0% compared to the same quarter last year.
- The company lowered its full-year AFFO guidance by two cents per diluted share.
- Revenues decreased by 13.9% compared to the same quarter last year.
Capital raise
28 June 2024 4:15 PM
Debt Issuance Announcement
- W. P. Carey Inc. has raised $400 million through the issuance of 5.375% Senior Notes due 2034.
- The proceeds from this offering will be used for general corporate purposes, including potential investments and debt repayment.
Capital raise
20 June 2024 4:32 PM
Debt Offering Announcement
- The document details a $400 million offering of 5.375% Senior Notes due 2034.
- The company intends to use the net proceeds for general corporate purposes, including funding potential future investments and repaying indebtedness.
Capital raise
16 May 2024 4:10 PM
Debt Offering Announcement
- W. P. Carey Inc. has raised €650 million through the issuance of 4.250% Senior Notes due 2032.
- The offering was made pursuant to the company's automatic shelf registration statement and a final prospectus supplement.
Capital raise
8 May 2024 5:25 PM
Debt Offering Announcement
- W. P. Carey Inc. is raising $650 million through the issuance of senior notes.
- The notes are being offered to the public through an underwritten offering.
- The proceeds will be used for general corporate purposes and to repay existing debt.
Capital raise
1 May 2024 4:09 PM
Quarterly Report
- The company may use the at-the-market program (ATM Program) to issue additional equity securities.
- The company may also access the capital markets through additional debt offerings.
Worse than expected
1 May 2024 4:09 PM
Quarterly Report
- The company's revenue and net income decreased year-over-year, indicating worse performance compared to the previous year.
- AFFO also decreased, which is a key metric for REIT performance, suggesting a decline in operational profitability.
Worse than expected
30 April 2024 4:04 PM
Quarterly Report
- Net income and AFFO per share were down compared to the same period last year, indicating worse results.
Capital raise
9 February 2024 4:56 PM
Annual Results
- The company may access the capital markets through additional debt and equity offerings, as well as term loans and other bank debt.
- The company may issue common stock through its ATM Program.
Worse than expected
9 February 2024 4:56 PM
Annual Results
- The company's net income from Investment Management decreased due to the cessation of fees from CPA:18 Global.
- The company's fourth quarter dividend of $0.860 per share reflects a lower payout ratio.
Worse than expected
9 February 2024 7:39 AM
Quarterly Report
- The company's AFFO per diluted share for the fourth quarter and full year 2023 decreased compared to the previous year.
- The company's 2024 AFFO guidance is lower than the 2023 full year AFFO.
- Net income attributable to W. P. Carey decreased by 31.1% in the fourth quarter of 2023 compared to the same period in 2022.
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