• Fourth Quarter Investment Volume: Over $840 million, bringing the annual total to approximately $1.6 billion.
• Initial Cash Cap Rates: Mid to low 7% for Q4 investments, averaging 7.5% for the year.
• Average Yields on New Investments: Above 9% for 2024.
• 2024 AFFO Per Share: $4.70, with Q4 AFFO per share at $1.21.
• Contractual Same-Store Rent Growth: 2.6% year-over-year for Q4.
• Comprehensive Same-Store Rent Growth: 2.5% year-over-year for Q4.
• 2025 AFFO Guidance: Between $4.82 and $4.92 per share, implying 3.6% growth at the midpoint.
• 2024 Disposition Volume: $1.2 billion, including $119 million from Q4.
• 2024 Operating Property NOI: $17.6 million for Q4.
• 2024 Nonoperating Income: $52.2 million for the full year.
• 2024 Debt Capital Raised: Approximately $1.7 billion at a weighted average coupon of 4.3%.
• 2024 Weighted Average Interest Rate on Debt: 3.2%.
• 2024 Total Liquidity: Approximately $2.6 billion at year-end.
• Debt to Gross Assets: 41.6% at the end of 2024.
• Net Debt to EBITDA: 5.5 times at the end of 2024.

• Warning! GuruFocus has detected 6 Warning Signs with WPC.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• W.P. Carey Inc (NYSE:WPC) successfully exited the office sector, establishing a new baseline for AFFO and setting the foundation for future growth.
• The company closed a record quarterly investment volume of over $840 million in Q4, reaching the top half of its investment volume guidance range for the year.
• W.P. Carey Inc (NYSE:WPC) achieved attractive rent bump structures, with average yields over the life of leases on new investments remaining above 9% for 2024.
• The company has a strong balance sheet and access to efficiently priced debt capital, enhancing its ability to fund deals accretively.
• W.P. Carey Inc (NYSE:WPC) expects AFFO growth in the mid-3% range for 2025, supporting a total return of around 10% when combined with its dividend yield of over 6%.

Negative Points

• The potential for larger scale M&A in 2025 may create uncertainties, impacting deal activity and widening bid-ask spreads.
• The company faces uncertainties related to interest rates, inflation, and potential impacts of the new administration, which could affect investment volume and tenant credit.
• W.P. Carey Inc (NYSE:WPC) has adopted a cautious approach to its initial guidance on investment volume due to limited visibility and uncertainty in the transaction environment.
• The company anticipates potential rent loss from tenant credit events, with an estimated $15 million to $20 million included in its 2025 AFFO guidance.
• W.P. Carey Inc (NYSE:WPC) faces operational headwinds with certain tenants, such as Hellweg, which is executing a turnaround plan amidst a slowdown in German consumer spending.

Q & A Highlights

Q: How might tariffs affect W.P. Carey's portfolio and investment strategy? A: Jason Fox, CEO, explained that tariffs add uncertainty to the market, potentially impacting inflation and interest rates. However, W.P. Carey's diversified portfolio offers protection. Tariffs could also lead to onshoring in manufacturing, benefiting their warehouse and industrial portfolio. The company will maintain rigorous underwriting for new investments, considering downside exposure and protections.

Q: Can you provide updates on the Joanne's distribution center and Advance Auto Parts? A: Brooks Gordon, Head of Asset Management, stated that Joanne's has filed for bankruptcy again, and W.P. Carey has one warehouse involved. They expect the company to liquidate mid-year, with no retenanting assumptions in guidance. For Advance Auto Parts, they own 28 facilities under a single master lease, with no near-term impact expected despite some warehouse closures.

Q: What is the outlook for same-store growth within the net lease portfolio? A: Toni Sanzone, CFO, indicated that same-store growth is expected to be highest in Q1 2025, in the low to mid-2% range, and decline to the low 2s by year-end. This forecast considers higher inflation prints in the U.S., with adjustments made as necessary.

Q: How does W.P. Carey view capital allocation to Europe given current market conditions? A: Jason Fox, CEO, noted that Europe offers wider spreads due to lower borrowing costs compared to the U.S. Cap rates are similar in both regions, allowing for attractive investments. W.P. Carey has a long-standing presence in Europe, with a strong understanding of the markets and tenant credit.

Q: What is the strategy for non-core asset dispositions, particularly self-storage? A: Jason Fox, CEO, mentioned that most non-core assets are operating assets, primarily self-storage, with some student housing and a hotel. The plan is to sell a subset of the self-storage portfolio, likely in the second half of the year, aiming for a positive spread between disposition and reinvestment cap rates.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.