WPC
W P Carey INC
NYSE
8-K: W. P. Carey Reports Second Quarter 2024 Results, Completes Office Exit Strategy
Sentiment:
Quarterly Report
30 July 2024 4:06 PM
W. P. Carey announced its second quarter 2024 financial results, highlighting the completion of its strategic office exit plan and a revised AFFO guidance.
Worse than expected
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.
Summary
- W. P. Carey reported a net income of $142.9 million for the second quarter of 2024, a slight decrease from $144.6 million in the same period last year.
- Adjusted Funds from Operations (AFFO) per diluted share was $1.17, down from $1.36 in the second quarter of 2023.
- The company has revised its full-year 2024 AFFO guidance to between $4.63 and $4.73 per diluted share, based on an anticipated investment volume of $1.25 billion to $1.75 billion.
- W. P. Carey completed $641 million in investments year-to-date, including $293.4 million in the second quarter and $67.3 million subsequent to quarter end.
- The company completed dispositions of $152.2 million during the second quarter, including $62.3 million from the Office Sale Program.
- W. P. Carey has effectively completed its strategic plan to exit office assets, including the NLOP spin-off and dispositions under the Office Sale Program.
- Contractual same-store rent growth was 2.9% year-over-year.
- The company issued $650 million of 4.25% Senior Unsecured Notes due 2032 and $400 million of 5.375% Senior Unsecured Notes due 2034.
- W. P. Carey repaid $500 million of 4.6% Senior Unsecured Notes due April 2024 and $500 million of 2.25% Senior Unsecured Notes due July 2024.
- Total liquidity was $3.2 billion as of June 30, 2024.
Sentiment
Score: 6
Explanation: The sentiment is neutral to slightly positive. While the company has completed its office exit strategy and has strong liquidity, the decrease in AFFO and revenue, along with the lowered guidance, temper the positive aspects. The management commentary is optimistic about future growth, but the current results are mixed.
Positives
- W. P. Carey has successfully completed its strategic plan to exit office assets.
- The company has addressed its debt and equity needs for the year.
- Liquidity remains at an all-time high, positioning the company well for future deals.
- The company has a diversified portfolio of high-quality, operationally critical commercial real estate.
- Contractual same-store rent growth was a solid 2.9% year-over-year.
- The company has a strong investment grade balance sheet.
Negatives
- Revenues decreased by 13.9% compared to the second quarter of 2023, primarily due to the office exit strategy.
- AFFO per diluted share decreased by 14.0% compared to the second quarter of 2023.
- The company lowered its full-year AFFO guidance by two cents per diluted share.
- Two larger-sized transactions recently fell out of the company's pipeline.
Risks
- The company's performance is subject to risks related to fluctuating interest rates.
- The impact of inflation on tenants and the company could affect future results.
- Pandemics and global outbreaks of contagious diseases could have material adverse effects.
- Domestic or geopolitical crises could impact the company's performance.
- The company's performance is subject to the risk of lease restructurings and property vacancies.
Future Outlook
The company expects higher AFFO in the second half of the year as they redeploy capital into new investments, despite trimming expectations for the full year due to two larger-sized transactions falling out of the pipeline. They are well-positioned to close active deals and grow their pipeline, taking advantage of a more active period around the end of the year.
Management Comments
- Dispositions from our office exit strategy are now behind us and we have completed refinancing our two 2024 bond maturities, raising over a billion dollars of attractively priced debt.
- With our debt and equity needs this year already addressed, and as we further redeploy capital into new investments, we expect higher AFFO in the second half.
- Although we're trimming our expectations for the full year driven primarily by two larger-sized transactions that recently fell out of our pipeline our liquidity remains at an all-time high, and we are very well positioned to close active deals and grow our pipeline, while taking advantage of what is typically a more active period around the end of the year.
Industry Context
This announcement reflects a strategic shift in the net lease REIT sector, with W. P. Carey completing its exit from office assets and focusing on industrial, warehouse, and retail properties. This move aligns with broader industry trends favoring these sectors due to their stability and growth potential.
Comparison to Industry Standards
- W. P. Carey's contractual same-store rent growth of 2.9% is within the range of other large net lease REITs, such as Realty Income (O) and National Retail Properties (NNN), which have also reported similar growth rates in recent quarters.
- The company's focus on industrial and warehouse properties is consistent with the trend of increased demand for logistics and distribution facilities, similar to what is seen in the portfolios of Prologis (PLD) and Duke Realty (DRE).
- W. P. Carey's diversification across geographies and tenant industries is a common strategy among large net lease REITs, aiming to mitigate risks associated with specific sectors or regions, similar to the approach of companies like STORE Capital (STOR).
- The company's liquidity of $3.2 billion is a strong position compared to many of its peers, providing flexibility for future acquisitions and capital management, similar to the financial strength of companies like Agree Realty (ADC).
- The completion of the office exit strategy is a significant move, differentiating W. P. Carey from some peers that still hold significant office assets, such as some smaller regional REITs.
Stakeholder Impact
- Shareholders will see a decrease in AFFO per share for the quarter and a slightly reduced full-year guidance.
- Employees may experience changes as the company shifts its focus away from office assets.
- Tenants will continue to be managed under long-term net leases.
- Creditors will see the company's strong liquidity and successful bond issuances as positive signs.
Next Steps
- The company will continue to redeploy capital into new investments.
- W. P. Carey will focus on closing active deals and growing its pipeline.
- The company will take advantage of what is typically a more active period around the end of the year.
Key Dates
- April 1, 2024: W. P. Carey repaid $500 million of 4.6% Senior Unsecured Notes due April 2024.
- May 16, 2024: W. P. Carey completed an underwritten public offering of $650 million aggregate principal amount of 4.25% Senior Notes due July 2032.
- June 13, 2024: The Board of Directors declared a quarterly cash dividend of $0.870 per share.
- June 28, 2024: W. P. Carey completed an underwritten public offering of $400 million aggregate principal amount of 5.375% Senior Notes due June 2034.
- June 30, 2024: End of the second quarter, financial results reported.
- July 15, 2024: The quarterly dividend was paid to shareholders of record as of June 28, 2024.
- July 30, 2024: W. P. Carey issued an earnings release announcing its financial results for the quarter ended June 30, 2024.
- July 31, 2024: Live conference call and audio webcast scheduled at 11:00 a.m. Eastern Time.
Keywords
Net Lease REIT, Real Estate Investment Trust, AFFO, Office Exit Strategy, Real Estate Dispositions, Senior Unsecured Notes, Investment Volume, Same-Store Rent Growth, Commercial Real Estate, Capital Investments
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.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.