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W. P. Carey (WPC) Receives Ratings Upgrade From Moody's
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W. P. Carey Inc. (WPC - Free Report) recently announced that its senior unsecured debt and issuer ratings have been upgraded to Baa1, with a stable outlook, from Baa2, with a positive outlook, by Moody’s Investors Service.
In addition, WPC’s European affiliate — WPC Eurobond B.V.— received ratings upgrade to Baa1, with a stable outlook, from Baa2, with a positive outlook, for its senior unsecured debt.
Per Jason Fox, chief executive officer of W. P. Carey, “Our upgrade by Moody's to Baa1 reflects not only the quality of our portfolio and the strength of our balance sheet, but also our differentiated approach within net lease.”
Particularly, W.P. Carey’s large and diversified net lease portfolio, prudent approach to capital management, strong fixed charge coverage and healthy liquidity position were the main factors behind the ratings upgrade by the rating agency.
WPC has an encouraging portfolio mix and draws most of its revenues from industrial, warehouse and self-storage properties. As of Jun 30, 2022, W. P. Carey's portfolio included 1,390 net lease properties encompassing around 170 million square feet and a portfolio of 84 self-storage operating properties.
Notably, almost WPC’s entire portfolio has contractual rent escalators, with a major portion linked to CPI or fixed. Moody’s identified this as an important credit strength amidst the present inflationary environment.
Moody’s also acknowledged that WPC’s moderate and stable leverage metrics are consistent with the latter’s prudent capital strategy and reflect the company’s proven access to multiple sources of capital.
The ratings upgrade will likely boost WPC’s creditworthiness in the market and in all likelihood, intensify investors' confidence in the stock. Such encouraging moves allow the company to enjoy favorable costs on debts and solid access to capital.
The company maintains a healthy balance sheet with ample liquidity. It exited second-quarter 2022 with approximately $2.1 billion of liquidity. As of Jun 30, 2022, it had nearly $1.4 billion of available capacity under its unsecured revolving credit facility. Its pro rata net debt to adjusted EBITDA was 5.6X and the fixed charge coverage was 6.8X as of the same date.
Analysts seem bullish on the Zacks Rank #3 (Hold) stock. The Zacks Consensus Estimate for the company’s 2022 funds from operations (FFO) per share indicates a favorable outlook for the company as it has been marginally revised upward in the past month to $5.24.
Shares of WPC have lost 8.7% in the past three months, narrower than the industry’s decline of 22.2%.
The Zacks Consensus Estimate for SBA Communications’ 2022 FFO per share has moved marginally upward in the past month to $12.17.
The Zacks Consensus Estimate for CubeSmart’s current-year FFO per share has moved 2.9% northward in the past two months to $2.50.
The Zacks Consensus Estimate for Xenia Hotels & Resorts’ 2022 FFO per share has moved 15.2% upward in the past two months to $1.59.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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W. P. Carey (WPC) Receives Ratings Upgrade From Moody's
W. P. Carey Inc. (WPC - Free Report) recently announced that its senior unsecured debt and issuer ratings have been upgraded to Baa1, with a stable outlook, from Baa2, with a positive outlook, by Moody’s Investors Service.
In addition, WPC’s European affiliate — WPC Eurobond B.V.— received ratings upgrade to Baa1, with a stable outlook, from Baa2, with a positive outlook, for its senior unsecured debt.
Per Jason Fox, chief executive officer of W. P. Carey, “Our upgrade by Moody's to Baa1 reflects not only the quality of our portfolio and the strength of our balance sheet, but also our differentiated approach within net lease.”
Particularly, W.P. Carey’s large and diversified net lease portfolio, prudent approach to capital management, strong fixed charge coverage and healthy liquidity position were the main factors behind the ratings upgrade by the rating agency.
WPC has an encouraging portfolio mix and draws most of its revenues from industrial, warehouse and self-storage properties. As of Jun 30, 2022, W. P. Carey's portfolio included 1,390 net lease properties encompassing around 170 million square feet and a portfolio of 84 self-storage operating properties.
Notably, almost WPC’s entire portfolio has contractual rent escalators, with a major portion linked to CPI or fixed. Moody’s identified this as an important credit strength amidst the present inflationary environment.
Moody’s also acknowledged that WPC’s moderate and stable leverage metrics are consistent with the latter’s prudent capital strategy and reflect the company’s proven access to multiple sources of capital.
The ratings upgrade will likely boost WPC’s creditworthiness in the market and in all likelihood, intensify investors' confidence in the stock. Such encouraging moves allow the company to enjoy favorable costs on debts and solid access to capital.
The company maintains a healthy balance sheet with ample liquidity. It exited second-quarter 2022 with approximately $2.1 billion of liquidity. As of Jun 30, 2022, it had nearly $1.4 billion of available capacity under its unsecured revolving credit facility. Its pro rata net debt to adjusted EBITDA was 5.6X and the fixed charge coverage was 6.8X as of the same date.
Analysts seem bullish on the Zacks Rank #3 (Hold) stock. The Zacks Consensus Estimate for the company’s 2022 funds from operations (FFO) per share indicates a favorable outlook for the company as it has been marginally revised upward in the past month to $5.24.
Shares of WPC have lost 8.7% in the past three months, narrower than the industry’s decline of 22.2%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are SBA Communications (SBAC - Free Report) , CubeSmart (CUBE - Free Report) and Xenia Hotels & Resorts (XHR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for SBA Communications’ 2022 FFO per share has moved marginally upward in the past month to $12.17.
The Zacks Consensus Estimate for CubeSmart’s current-year FFO per share has moved 2.9% northward in the past two months to $2.50.
The Zacks Consensus Estimate for Xenia Hotels & Resorts’ 2022 FFO per share has moved 15.2% upward in the past two months to $1.59.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.