W. P. Carey Releases 2023 CEO Letter

Rhea-AI Summary

W. P. Carey (WPC) releases its 2023 CEO Letter, showcasing $1.3 billion new investments, strong rent growth, and exceptional liquidity. The company focuses on industrial assets, exits office assets, and aims for continued growth and value delivery.

Insights

Financial Analyst

The announcement of W. P. Carey's investment activity and the closure of $1.3 billion in new investments at spreads above their cost of capital is a strong indicator of the company's strategic positioning within the net lease sector. This level of investment activity suggests a robust acquisition strategy that is likely to influence earnings positively. By focusing on industrial and warehouse assets, the company is tapping into a market segment that has seen consistent demand, particularly as e-commerce continues to grow. The expansion into U.S. retail, despite the sector's volatility, can be seen as a diversification strategy that might hedge against industrial market fluctuations.

Their emphasis on leases tied to the Consumer Price Index (CPI) has evidently paid off, as evidenced by the record year-over-year contractual same store rent growth of 4.1%. This is a significant figure, especially when compared to the industry average, which typically hovers around 2-3% for well-performing REITs. Such performance is likely to be well-received by investors looking for stable and growing income streams, especially in an inflationary environment where CPI-linked leases can provide a hedge against inflation.

Real Estate Market Analyst

W. P. Carey's strategic exit from office assets reflects a broader trend in the real estate market where companies are re-evaluating their portfolios in light of the post-pandemic work environment. The shift away from office assets to focus on industrial and retail properties is indicative of where the company sees long-term value and growth potential. The industrial real estate sector, buoyed by the rise of e-commerce and the need for sophisticated logistics networks, continues to show resilience and growth prospects. W. P. Carey's deliberate investment in this sector aligns with current market trends.

The mention of exceptionally strong liquidity, including a $2 billion revolver and significant cash reserves, positions W. P. Carey as a company with the financial flexibility to capitalize on market opportunities as they arise. For investors, this signifies a company with the potential to navigate economic uncertainties and invest in growth-oriented assets without the immediate pressure of financial constraints.

Economist

From an economic perspective, W. P. Carey's performance metrics provide insights into the broader commercial real estate market's health. The company's ability to achieve attractive spreads above its cost of capital indicates a favorable lending environment and efficient capital management. The high liquidity and internal sources of capital suggest that W. P. Carey is well-prepared to withstand potential economic downturns or take advantage of acquisition opportunities that may arise due to market corrections.

The rent growth tied to inflation metrics, such as CPI, is particularly noteworthy in the current economic climate. With inflation concerns prevalent in the market, W. P. Carey's strategy to secure CPI-linked leases offers a clear advantage, as it provides a natural inflation hedge for their revenue streams. This could be a critical factor for investors seeking to mitigate inflation risk in their portfolios.

NEW YORK, April 1, 2024 /PRNewswire/ -- W. P. Carey (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 the release of its 2023 CEO Letter to shareholders. The letter can be viewed and downloaded from W. P. Carey's website at www.wpcarey.com/CEO-Letter.

Highlights from the letter include:­

• Investment Activity and Focus:­ In 2023, W. P. Carey closed $1.3 billion of new investments at attractive spreads to its cost of capital. The company remained focused on investing in industrial / warehouse assets while also expanding into new subsectors of industrial and U.S. retail.
• Inflation Continued to Provide a Boost:­ 56% of W. P. Carey's rents came from leases tied to CPI, and in combination with strong fixed rent escalations, the company generated record year-over-year contractual same store rent growth, which at 4.1% was among the best in the net lease sector.
• Exceptionally Strong Liquidity Position: W. P. Carey entered 2024 with exceptionally strong liquidity, including its $2 billion revolver and significant cash, in addition to unique internal sources of capital over both the near- and long-term.
• Out of Office:­ W. P. Carey successfully executed on its plan to vastly accelerate its exit from office assets, thereby clarifying its path forward and setting a new baseline from which to grow AFFO.

Jason Fox, Chief Executive Officer, W. P. Carey, said: "As I look forward to 2024 and beyond, I am energized by our company's strong positioning and the dedicated team around me. Our exceptional liquidity and best-in-class rent growth coupled with our proven investment approach give me full confidence in our ability to produce meaningful growth and continue delivering long-term value to our shareholders."

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 1,424 net lease properties covering approximately 173 million square feet and a portfolio of 89 self-storage operating properties as of December 31, 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

This press release may contain forward-looking statements within the meaning of U.S. Federal securities laws. The comments of Mr. Fox are examples of forward-looking statements. A number of factors could cause W. P. Carey's actual results, performance or achievement to differ materially from those anticipated. 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, 2023. 

Supplemental Information

For further information concerning AFFO, which is a non-GAAP supplemental performance metric, including descriptions of non-GAAP financial measures and reconciliations to GAAP measures, please see our Current Report on Form 8-K filed with the SEC on February 9, 2024, and made available on the Company's website at ir.wpcarey.com/investor-relations.

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 ticker symbol for W. P. Carey?

The ticker symbol for W. P. Carey is WPC.

What were the highlights from W. P. Carey's 2023 CEO Letter?

Highlights from the 2023 CEO Letter include $1.3 billion new investments, strong rent growth, exceptional liquidity, focus on industrial assets, and exit from office assets.

Where can the 2023 CEO Letter be viewed and downloaded?

The 2023 CEO Letter can be viewed and downloaded from W. P. Carey's website at www.wpcarey.com/CEO-Letter.

What percentage of W. P. Carey's rents came from leases tied to CPI in 2023?

In 2023, 56% of W. P. Carey's rents came from leases tied to CPI.

What was the year-over-year contractual same store rent growth for W. P. Carey in 2023?

In 2023, W. P. Carey achieved a record year-over-year contractual same store rent growth of 4.1%.