W. P. Carey Provides Business Update

Rhea-AI Summary

W. P. Carey (NYSE: WPC) has completed Q1 2025 investments of $275 million, primarily in industrial property sale-leasebacks. The company maintains its 2025 investment volume forecast of $1.0-1.5 billion and expects disposition proceeds of $500 million to $1.0 billion.

Key tenant updates include:

• Hellweg: Agreement to terminate leases on 12 stores by 2026, with active negotiations to lease 8 stores at current rent levels
• Do it Best (formerly True Value): Executed lease amendments for six facilities, while three assets will be vacated and sold
• Hearthside: Successfully emerged from Chapter 11 with leases maintained at existing terms

The company refinanced its €500 million term loan, extending maturity to 2029, and affirmed its 2025 AFFO guidance of $4.82-$4.92 per diluted share. Expected rent loss from tenant credit events remains projected at $15-20 million for 2025.

Positive

• Completed Q1 2025 investments of $275 million in industrial properties
• Successfully refinanced €500 million term loan with extended maturity to 2029
• Hearthside emerged from Chapter 11 with leases maintained at existing terms
• Active negotiations to re-lease 8 Hellweg stores at current rent levels
• Do it Best maintains existing rents on six facilities post-restructuring

Negative

• Expected rent loss of $15-20 million from tenant credit events in 2025
• Hellweg terminating leases on 12 stores (0.56% of ABR) due to challenging operations
• Three Do it Best properties (0.35% of ABR) to be vacated by June 2025
• German tenant Hellweg facing weak consumer spending and competitive pressures

Insights

REIT Investment Analyst

W. P. Carey's business update reveals a balanced picture with both strengths and challenges. The company affirmed its 2025 AFFO guidance of $4.82-$4.92 per share while addressing several tenant situations, suggesting management has effectively incorporated these challenges into their projections.

The $275 million Q1 investment volume puts WPC on track toward their $1.0-1.5 billion full-year target, while $130 million in Q1 dispositions supports their strategic capital recycling plan. Their focus on industrial property acquisitions aligns with institutional demand for this asset class.

The tenant updates reveal both challenges and effective risk management. The Hellweg situation involves terminating 0.56% of ABR across 12 stores, but WPC has mitigated this by already negotiating replacement tenants for most locations at comparable rents. The Do it Best resolution preserves 1.05% of ABR while planning dispositions for vacated properties. Most notably, Hearthside's emergence from bankruptcy with WPC's leases intact (1.29% of ABR) represents a significant risk successfully navigated.

The refinancing of their €500 million term loan at an all-in rate of 2.80% extending to 2029 demonstrates proactive liability management, addressing approximately half of debt maturities through 2026. The company's maintained projection of $15-20 million in rent losses from tenant credit events suggests these tenant situations were already factored into guidance.

Overall, WPC demonstrates effective portfolio management despite tenant challenges, maintaining financial projections while actively addressing credit risks.

Commercial Real Estate Strategist

WPC's update highlights their sophisticated approach to tenant relationship management amid retail and industrial sector challenges. The company's handling of three significant tenant situations demonstrates a multi-faceted strategy that preserves long-term value.

With Hellweg, rather than facing potential payment defaults later, WPC has negotiated a controlled exit strategy for 12 locations. The critical element here is their pre-emptive leasing efforts for 8 properties "at rents in line with current rents" while marketing 4 others for sale - effectively minimizing the financial impact through forward planning rather than reactive measures.

The Do it Best resolution showcases WPC's flexibility in tenant restructuring. By executing amendments on six properties (1.05% of ABR) with staggered lease maturities averaging 7 years, they've secured stable income streams while simultaneously preparing to market three properties (0.35% of ABR) that will be vacated. This bifurcated approach maximizes recovery value from a bankruptcy situation.

Hearthside's successful emergence from Chapter 11 with WPC's leases intact validates their tenant underwriting and asset quality. Properties with strong intrinsic value and operational importance are typically affirmed in bankruptcy proceedings.

The broader capital recycling strategy - prioritizing disposition of self-storage operating properties to fund industrial acquisitions - represents a strategic portfolio shift toward assets with longer lease terms and more predictable income streams. This recalibration should enhance portfolio stability while maintaining yield profiles that support their AFFO targets.

Completes First Quarter Investment Volume of $275 Million

Provides Updates on Hellweg, True Value and Hearthside and Affirms 2025 AFFO Guidance

Recasts Existing €500 Million Term Loan Extending Maturity to 2029

NEW YORK, April 1, 2025 /PRNewswire/ -- W. P. Carey Inc. (NYSE: WPC) (W. P. Carey or the Company), a leading net lease REIT specializing in corporate sale-leasebacks, build-to-suits and the acquisition of single-tenant net lease properties, today provided the following business update and affirmed its full-year 2025 AFFO guidance.

Investments

During the 2025 first quarter, W. P. Carey completed investments totaling approximately $275 million, primarily comprising sale-leasebacks of industrial properties. In addition, the Company currently has capital investments and commitments totaling approximately $120 million scheduled to be completed during 2025.

For the 2025 full year, the Company continues to expect investment volume totaling between $1.0 billion and $1.5 billion.

Dispositions 

During the 2025 first quarter, W. P. Carey completed dispositions with gross proceeds totaling approximately $130 million.

For the 2025 full year, the Company continues to expect to fund new investments with gross disposition proceeds totaling between $500 million and $1.0 billion, the majority of which is expected to comprise accretive non-core asset sales, primarily of self-storage operating properties.

Tenant Credit

The Company is providing the following updates on three of its top 25 tenants and continues to expect rent loss from tenant credit events to total between $15 million and $20 million for the 2025 full year.

Hellweg

• Hellweg remains current on rent, although it continues to face a challenging operating environment, including weak German consumer spending and a competitive German Do-It-Yourself industry. To support its ongoing turnaround, Hellweg is working to improve liquidity with its key stakeholders, including its landlords and lenders.
  
  
• W. P. Carey is working with Hellweg to take back 12 stores, representing 0.56% of total ABR¹. Accordingly, the two parties executed an agreement to terminate leases on seven stores by September 2025, representing 0.33% of total ABR, and five stores by September 2026, representing 0.23% of total ABR.
  
  
  • W. P. Carey is in active negotiations with other operators to lease eight of the stores at rents in line with their current rents. Leases with new tenants are expected to be signed in advance of the Hellweg termination dates, minimizing the impact on W. P. Carey's AFFO.
    
    
  • Negotiations are ongoing to sell the four remaining stores.
    
    
  • The total expected impact on lease revenues from downtime during the transition to new tenants and dispositions of vacant stores is embedded in the expected rent loss from tenant credit events affirmed above.
• Separately, during the 2025 first quarter, W. P Carey completed the sale of one store and placed three additional stores under binding contracts to sell. In total, the four stores, which remain leased and occupied by Hellweg, represent 0.13% of total ABR.
  
  
• The re-leasing and sale of stores outlined above is expected to further reduce W. P. Carey's exposure to Hellweg, which is anticipated to rank below the Company's top 10 tenants (by ABR) by the end of 2025.

Do it Best (formerly True Value)

• On March 28, 2025, W. P. Carey executed lease amendments and assignments with Do it Best on five distribution facilities and one industrial facility at the existing rents, which together represent 1.05% of total ABR. The leases have staggered maturities, with a weighted-average term of approximately seven years. All other lease terms were unchanged.
  
  
• On June 30, 2025, Do it Best will vacate the remaining three assets, which represent 0.35% of total ABR. The properties are currently being marketed for sale with closings anticipated during the second half of 2025.
  
  
• The transaction with Do it Best remains subject to customary bankruptcy court approval.

Hearthside

• On March 31, 2025, Hearthside's Chapter 11 restructuring plan became effective under which W. P. Carey's leases were assumed at the existing rents and with no changes to their terms.
  
  
• Properties leased to Hearthside represent 1.29% of total ABR.

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(1)	Total ABR refers to total contractual minimum annualized base rent as of December 31, 2024.

2025 AFFO Guidance Affirmed

For the 2025 full year, W. P. Carey affirms its expectation that it will report AFFO of between $4.82 and $4.92 per diluted share, based on the assumptions stated above for investment volume, disposition volume and expected rent loss from tenant credit events.

Euro-Denominated Term Loan

On March 31, 2025, W. P. Carey:

• Refinanced its existing €500 million term loan, extending its maturity three years to April 24, 2029, with options to extend up to an additional year at the Company's discretion, subject to the satisfaction of certain customary conditions.
  
  
• Executed a €500 million variable-to-fixed interest rate swap fixing one-month EURIBOR at 2.00% and resulting in an all-in annual rate of 2.80%.

In conjunction with the repayment of the $450 million senior unsecured notes that matured on February 1, 2025, the Company has now addressed approximately half of its debt maturing through the end of 2026.

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 1,555 net lease properties covering approximately 176 million square feet and a portfolio of 78 self-storage operating properties as of December 31, 2024. 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 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 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, 2024. 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 W. P. Carey's (WPC) investment volume target for 2025?

WPC targets investment volume between $1.0 billion and $1.5 billion for 2025, with Q1 already completing $275 million in investments.

How much rent loss does WPC expect from tenant credit events in 2025?

WPC expects rent loss from tenant credit events to total between $15 million and $20 million for the 2025 full year.

What is WPC's AFFO guidance for 2025?

WPC affirms its AFFO guidance of $4.82 to $4.92 per diluted share for full-year 2025.

How is WPC handling the Hellweg store terminations in 2025-2026?

WPC is terminating leases on 12 Hellweg stores (0.56% of ABR), with 8 stores in negotiations for new tenants at similar rents and 4 stores planned for sale.

What are the terms of WPC's refinanced Euro term loan in 2025?

WPC refinanced its €500 million term loan with maturity extended to 2029, fixing EURIBOR at 2.00% for an all-in annual rate of 2.80%.