W. P. Carey Announces Strategic Plan to Exit Office
- Spin-off expected to provide a clear path to monetizing legacy office assets, enhance growth profile, improve earnings and cash flows, and benefit credit profile.
- NLOP's portfolio consists of 62 corporate tenants generating ABR of over $141 million.
- None.
Large Majority of Office Portfolio to be Spun-Off into a Separate Publicly-Traded REIT
On-Balance Sheet Office Sale Program Implemented to Exit Remaining Office Assets by January 2024
Assets Representing Over Half of Office Sale Program ABR in the Advanced Stages of a Sale or Sold
Strategic Rationale
The key benefits to W. P. Carey are expected to include:
- Providing a clear path to monetizing its legacy office portfolio
- Enhancing its growth profile through an improved cost of capital
- Increasing the quality and stability of its earnings and cash flows through better end-of-lease outcomes, including higher overall releasing spreads, reduced downtimes and carrying costs, and lower capex requirements
- Improving overall portfolio quality and key portfolio metrics, including an increased weighting to warehouse and industrial assets
- Maintaining a strong, scalable investment grade balance sheet
"While we've meaningfully reduced our office exposure in recent years, the plan we've announced this morning vastly accelerates our exit from office — enhancing the overall quality of our portfolio, improving the quality and stability of our earnings, and incrementally benefiting our credit profile," said Jason Fox, W. P. Carey's Chief Executive Officer. "Ultimately, with a clear path to monetizing our legacy office assets, we believe we will achieve a lower cost of capital and be better positioned for long-term value creation for our shareholders."
NLOP Spin-Off
The assets being contributed to NLOP represent approximately
NLOP is expected to comprise a portfolio of 59 high-quality office properties, totaling approximately 9.2 million leasable square feet primarily leased to corporate tenants on a single-tenant net lease basis. The vast majority of the office properties that will be owned by NLOP are located in the
In addition to
As a separate company, NLOP will pursue a business plan focused on realizing value for its shareholders primarily through the strategic asset management and disposition of its property portfolio over time. It is anticipated that NLOP will pay distributions to its shareholders from its operating cash flows and disposition proceeds, after first repaying its obligations under the new debt facility. Given W. P. Carey's extensive knowledge of the assets that will form NLOP, the desire to maintain efficiency and the timeline for executing NLOP's business plan, W. P. Carey is expected to act as NLOP's external advisor following the Spin-Off.
The Spin-Off, which does not require shareholder approval, is expected to close on or around November 1, 2023, subject to certain closing conditions. Upon completion, W. P. Carey stockholders as of the record date for the Spin-Off will receive shares of NLOP via a pro rata special distribution, which is expected to be taxable for
Additional information regarding NLOP and the proposed Spin-Off can be found in the preliminary Registration Statement on Form 10 filed by NLOP with the Securities and Exchange Commission (the "SEC") on September 21, 2023 (as may be amended, the "Form 10"), as well as in an investor presentation regarding the proposed transactions in the Investor Relations section of W. P. Carey's website at www.wpcarey.com/presentation. The Form 10 currently filed is subject to change and will be made final prior to its effective date. The Spin-Off will follow the satisfaction of customary conditions which are disclosed in the Form 10, including effectiveness of the Form 10 with the SEC.
J.P. Morgan is acting as exclusive financial advisor and Latham & Watkins LLP is acting as legal advisor to W. P. Carey.
Office Sale Program
In addition to the Spin-Off, 87 office properties, which generated approximately
Conference Call and Audio Webcast Scheduled for 8:30 a.m. Eastern Time
An investor presentation regarding the proposed transactions may be found on the Investor Relations portion of W. P. Carey's website at www.wpcarey.com/presentation.
W. P. Carey will host a conference call and live audio webcast to discuss the proposed transactions at 8:30 a.m. Eastern Time today (September 21, 2023), details of which are provided below.
Date/Time: Thursday, September 21, 2023, at 8:30 a.m. Eastern Time
Call-in Number: 1 (877) 465-1289 (
Please dial in at least 10 minutes prior to the start time.
Live Audio Webcast and Replay: www.wpcarey.com/announcement
W. P. Carey Inc.
Celebrating its 50th anniversary, W. P. Carey ranks among the largest net lease REITs with an enterprise value of approximately
Cautionary Statement Concerning Forward-Looking Statements
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 regarding the contemplated Spin-Off transactions with NLOP, including the expected timing and outcome of the Spin-Off, if it occurs at all, and NLOP's ability to successfully operate as an independent company; and statements regarding W. P. Carey's anticipated Office Sale Program, including the timing and outcome of any sales, if any, as well as any expected tax efficiencies relating thereto, the anticipated timing of the funding of NLOP's financing arrangements and the impacts of exiting office on our portfolio, earnings, credit profile or cost of capital. 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 inflation and increased interest rates, the effects of pandemics and global outbreaks of contagious diseases (such as the COVID-19 pandemic) and domestic or geopolitical crises, such as terrorism, military conflict (including the ongoing conflict between
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.