W. P. Carey Releases 2023 CEO Letter
- None.
- None.
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.
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.
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.
Highlights from the letter include:
- Investment Activity and Focus: In 2023, W. P. Carey closed
$1.3 billion 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 at4.1% 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 - 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
This press release may contain forward-looking statements within the meaning of
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
View original content to download multimedia:https://www.prnewswire.com/news-releases/w-p-carey-releases-2023-ceo-letter-302103045.html
SOURCE W. P. Carey Inc.
FAQ
What is the ticker symbol for W. P. Carey?
What were the highlights from W. P. Carey's 2023 CEO Letter?
Where can the 2023 CEO Letter be viewed and downloaded?
What percentage of W. P. Carey's rents came from leases tied to CPI in 2023?
What was the year-over-year contractual same store rent growth for W. P. Carey in 2023?
