W. P. Carey Announces 2023 Investment Volume of $1.3 Billion

Rhea-AI Summary

W. P. Carey Inc. (WPC) announced a fourth-quarter investment volume of $320 million at a weighted-average cap rate of 7.7%. An additional $180 million of investments is scheduled to close in January 2024. The company's 2023 full-year investment volume was approximately $1.3 billion, with 75% of investments in single-tenant warehouse and industrial assets. Approximately 80% of the volume was in North America and 20% in Europe.

Insights

Financial Analyst

The disclosed investment volume of $1.3 billion for W. P. Carey in 2023 is a significant indicator of the company's growth and strategic positioning within the net lease REIT sector. The focus on high-quality, single-tenant industrial and warehouse assets, which comprised 75% of the year's volume, aligns with current market trends favoring logistics and distribution centers due to the e-commerce boom. The geographic distribution, with 80% of investments in North America, suggests a robust confidence in the domestic market, despite global economic uncertainties.

The reported weighted-average capitalization rate (cap rate) of 7.7% for Q4 investments is notably above the industry's average, which has hovered around 5% to 6% for industrial properties in recent years. A higher cap rate may indicate that the company is acquiring properties at lower relative prices, which could translate to higher yields and potentially more attractive returns for investors. However, it also may suggest that these properties carry higher risks or are located in less desirable markets. The discipline shown in deal negotiations to preserve spread in a climate of rising interest rates is commendable and reflects a prudent approach to growth.

Market Research Analyst

W. P. Carey's strategic emphasis on single-tenant properties is reflective of a broader industry trend where investors are seeking stable cash flows and lower management overhead. Single-tenant net lease properties often provide long-term leases and predictable revenue streams, which are attractive features in a volatile market. The company's focus on warehouse and industrial assets is particularly prescient given the ongoing shift in consumer behavior towards online shopping and the resultant need for sophisticated logistics networks.

The scheduled closing of an additional $180 million in investments in January 2024 indicates forward momentum and a healthy pipeline. However, market participants should monitor how the broader economic context, including potential shifts in consumer spending patterns and the trajectory of interest rates, might impact the net lease sector and W. P. Carey's performance specifically. The CEO's remarks on deal negotiation challenges in the second half of 2023 due to a lag in seller pricing expectations could hint at broader market adjustments that may affect future investment opportunities and property valuations.

Economist

The reported activities of W. P. Carey within the net lease REIT industry provide a microcosm of the larger economic environment. The company's ability to close deals at higher cap rates during a period of rising interest rates is indicative of a changing economic landscape where access to cheap capital is diminishing. This could signal a broader tightening of credit conditions and a potential shift towards a more conservative investment strategy across the sector.

Additionally, the emphasis on North American and European markets, with a particular focus on industrial and warehouse assets, mirrors the economic pivot towards supply chain resilience and the strengthening of domestic production capacities. The cross-border sale-leaseback transactions, such as those with Fedrigoni Group, illustrate the ongoing globalization of the real estate market and the importance of cross-border investment flows in the industry. Stakeholders should consider the potential impact of currency fluctuations, trade policies and geopolitical tensions on such international investments.

Includes Fourth Quarter Investment Volume of $320 Million at a Weighted-Average Cap Rate of 7.7%

Additional $180 Million of Investments Scheduled to Close in January 2024

NEW YORK, Jan. 10, 2024 /PRNewswire/ -- W. P. Carey Inc. (W. P. Carey, NYSE: WPC), a leading net lease REIT specializing in corporate sale-leasebacks, build-to-suits and the acquisition of single-tenant net lease properties, today announced investment volume for the 2023 full year of approximately $1.3 billion, including investments totaling approximately $320 million completed during the fourth quarter.

Fourth quarter investment activity included the $157 million cross-border sale-leaseback of 11 facilities across Italy, Spain and Germany net leased under master leases by country to Fedrigoni Group, a global manufacturer of high added value specialty papers for luxury packaging and other creative applications, premium labels and self-adhesive materials. As part of the same transaction, W. P. Carey is scheduled to close the acquisition of five additional properties in Italy for approximately $148 million in January 2024, subject to certain conditions.

During 2023, the company remained focused on acquiring high-quality, single-tenant warehouse and industrial assets, which comprised approximately 75% of its full-year investment volume. From a geographic perspective, approximately 80% of its 2023 volume was in North America and 20% was in Europe.

Jason Fox, Chief Executive Officer, W. P. Carey said: "Throughout 2023, pricing expectations among sellers persistently lagged rising interest rates, causing deals to take longer to negotiate and close, especially during the second half of the year. Given this dynamic, we remained disciplined and actively exerted our pricing power to preserve spread, closing $320 million of investments at an approximately 7.7% weighted-average cap rate during the fourth quarter. This brought our 2023 investment volume to $1.3 billion, with two additional investments totaling around $180 million scheduled to close in January."

W. P. Carey Inc.

W. P. Carey ranks among the largest net lease REITs with a well-diversified portfolio of high-quality, operationally critical commercial real estate, which includes 1,413 net lease properties covering approximately 171 million square feet and a portfolio of 86 self-storage operating properties, pro forma for the spin-off of Net Lease Office Properties, as of September 30, 2023. With offices in New York, London, Amsterdam and Dallas, the company remains focused on investing primarily in single-tenant, industrial, warehouse and retail properties located in the U.S. and Northern and Western Europe, under long-term net leases with built-in rent escalations.

www.wpcarey.com

Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, among other things, statements regarding the intent, belief or expectations of W. P. Carey and can be identified by the use of words such as "may," "will," "should," "would," "will be," "goals," "believe," "project," "expect," "anticipate," "intend," "estimate" "opportunities," "possibility," "strategy," "maintain" or the negative version of these words and other comparable terms. These forward-looking statements include, but are not limited to, statements made by Mr. Jason Fox regarding transactions that are scheduled to close in 2024. These statements are based on the current expectations of our management, and it is important to note that our actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Other unknown or unpredictable risks or uncertainties, like the risks related to fluctuating interest rates, the impact of inflation on our tenants and us, the effects of pandemics and global outbreaks of contagious diseases and domestic or geopolitical crises, such as terrorism, military conflict, war or the perception that hostilities may be imminent, political instability or civil unrest, or other conflict, and those additional risk factors discussed in reports that we have filed with the Securities and Exchange Commission (SEC), could also have material adverse effects on our future results, performance or achievements. Discussions of some of these other important factors and assumptions are contained in W. P. Carey's filings with the SEC and are available at the SEC's website at http://www.sec.gov, including Part I, Item 1A. Risk Factors in W. P. Carey's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in Part II, Item 1A, Risk Factors in W. P. Carey's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication, unless noted otherwise. Except as required under the federal securities laws and the rules and regulations of the SEC, W. P. Carey does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this communication or to reflect the occurrence of unanticipated events.

Institutional Investors:
Peter Sands
1 (212) 492-1110
institutionalir@wpcarey.com

Individual Investors:
W. P. Carey Inc.
1 (212) 492-8920
ir@wpcarey.com

Press Contact:
Anna McGrath
1 (212) 492-1166
amcgrath@wpcarey.com

 

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SOURCE W. P. Carey Inc.

FAQ

What is the investment volume announced by W. P. Carey Inc. (WPC) in the fourth quarter?

W. P. Carey Inc. (WPC) announced a fourth-quarter investment volume of $320 million at a weighted-average cap rate of 7.7%.

How much additional investment is scheduled to close in January 2024 for W. P. Carey Inc. (WPC)?

An additional $180 million of investments is scheduled to close in January 2024 for W. P. Carey Inc. (WPC).

What was the 2023 full-year investment volume for W. P. Carey Inc. (WPC)?

The 2023 full-year investment volume for W. P. Carey Inc. (WPC) was approximately $1.3 billion.

What percentage of the 2023 investment volume of W. P. Carey Inc. (WPC) comprised single-tenant warehouse and industrial assets?

Approximately 75% of the 2023 investment volume of W. P. Carey Inc. (WPC) comprised single-tenant warehouse and industrial assets.

In which regions did W. P. Carey Inc. (WPC) focus its investments in 2023?

Approximately 80% of W. P. Carey Inc.'s (WPC) 2023 investment volume was in North America, and 20% was in Europe.