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W.P. Carey Releases Business Update, Affirms 2025 AFFO Guidance
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W.P. Carey (WPC - Free Report) recently provided a business update regarding its first-quarter investment and disposition volume, tenant credit position, loan refinance, loan assumption and repayment.
The company affirmed 2025 adjusted funds from operations (AFFO) guidance, boosting shareholders’ confidence in this leading net lease real estate investment trust (REIT).
Let’s gather insight on the line items on which the company has provided an update.
WPC’s Investment and Disposition Volume
During the first quarter of 2025, W.P. Carey made investments to the tune of $275 million, largely through the sale-leaseback of industrial properties, and disposed of assets worth around $130 million.
For 2025, the company has capital investments and commitments amounting to around $120 million and continues to expect an investment volume between $1 billion and $1.5 billion, as guided in its fourth-quarter 2024 earnings release.
This REIT also continues to expect a gross disposition volume amounting to the earlier guided range of $500 million-$1 billion. The sale would largely include non-core assets comprising self-storage operating properties. The gross sale proceeds are to be used for funding value-accretive investments. This way, WPC can efficiently finance its future endeavors by reducing the stress on its balance sheet, which is encouraging.
WPC’s Tenant Credit Position
W.P. Carey has provided an update on three of its top 25 tenants — Hellweg, True Value and Hearthside — and expects rent loss from the ensuing tenant credit events to be between $15 and $20 million for 2025.
As per the update, Hellweg remains exposed to a challenging operating environment due to weak German consumer spending and a competitive market. WPC plans to take back 12 stores from Hellweg, which constitute 0.56% of the total annualized base rent (ABR) as of Dec. 31, 2024, seven by September 2025 and five by September 2026. For eight of the above stores, WPC is in active negotiations to lease them at their current rents before HellWeg’s termination, with the remaining four to be sold off.
Additionally, WPC has disposed of one store and placed three other stores under binding contracts to sell during the first quarter of 2025. As such, only four stores remain leased and occupied by Hellweg, representing 0.13% of ABR at present, pulling Hellweg’s rank below the company’s top 10 tenants (by ABR) by the end of 2025.
In March, WPC amended lease terms with Do It Best for five distribution facilities and one industrial facility, together constituting 1.05% of total ABR. With staggered maturities, the leases have a weighted average term of around seven years, while all the other terms remain unchanged. Additionally, Do it Best will vacate the remaining three assets, representing 0.35% of the total ABR. These assets are being marketed for sale, expected to be completed in the second half of 2025. However, the transaction with Do it Best can proceed upon customary bankruptcy court approval.
In March, Hearthside’s Chapter 11 restructuring plan became effective with W.P. Carey’s leases assumed at their existing rents and no other changes to their terms. The properties leased to Hearthside represent 1.29% of the total ABR.
WPC’s 2025 AFFO Guidance Affirmed
W.P. Carey reaffirmed its previous guided range of 2025 AFFO between $4.82 and $4.92 per share. The same is based on the assumptions listed above for investment and disposition volume and rent loss from tenant credit events.
WPC’s Loan Refinance, Assumption and Repayment
In March, WPC refinanced a €500 million term loan with a maturity extension of three years to April 24, 2029. This can be further extended by a year, subject to the fulfillment of certain customary conditions.
Additionally, WPC assumed a €500 million variable-to-fixed interest rate swap fixing one-month EURIBOR at 2.00% and an all-in annual rate of 2.80%.
Moreover, with the repayment of $450 million senior unsecured notes, which matured in February, WPC has repaid around half of its debt set to mature through 2026.
Final Take on WPC
The recent update by W.P. Carey showcases this REIT’s strategic repositioning efforts and how efficiently it can navigate a challenging business environment and tenant bankruptcies.
W.P. Carey invests in high-quality assets that are mission-critical for its tenants’ operations. The company specializes in sale-leaseback transactions, whereby it acquires critical real estate from other entities and then leases them back to the seller on a long-term, triple-net basis. Moreover, the existence of long-term net leases with built-in rent escalations yields stable cash flows. Strategic portfolio repositioning efforts and a healthy balance sheet position are encouraging.
However, the choppiness in the industrial real estate market, with subdued demand, remains a concern for W.P. Carey. Moreover, potential tenant bankruptcies and high-interest expenses add to its woes.
Shares of this Zacks Rank #2 (Buy) company have rallied 16.1% over the past three months, outperforming the industry’s growth of 5.2%. Analysts seem bullish on this stock, with the Zacks Consensus Estimate for its 2025 AFFO per share being revised marginally northward to $4.85 over the past two months.
The Zacks Consensus Estimate for Welltower’s 2025 FFO per share has been moved marginally northward to $4.93 over the past week.
The consensus estimate for Cousins Properties’ 2025 FFO per share has been moved upward by 1.8% to $2.79 over the past month.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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W.P. Carey Releases Business Update, Affirms 2025 AFFO Guidance
W.P. Carey (WPC - Free Report) recently provided a business update regarding its first-quarter investment and disposition volume, tenant credit position, loan refinance, loan assumption and repayment.
The company affirmed 2025 adjusted funds from operations (AFFO) guidance, boosting shareholders’ confidence in this leading net lease real estate investment trust (REIT).
Let’s gather insight on the line items on which the company has provided an update.
WPC’s Investment and Disposition Volume
During the first quarter of 2025, W.P. Carey made investments to the tune of $275 million, largely through the sale-leaseback of industrial properties, and disposed of assets worth around $130 million.
For 2025, the company has capital investments and commitments amounting to around $120 million and continues to expect an investment volume between $1 billion and $1.5 billion, as guided in its fourth-quarter 2024 earnings release.
This REIT also continues to expect a gross disposition volume amounting to the earlier guided range of $500 million-$1 billion. The sale would largely include non-core assets comprising self-storage operating properties. The gross sale proceeds are to be used for funding value-accretive investments. This way, WPC can efficiently finance its future endeavors by reducing the stress on its balance sheet, which is encouraging.
WPC’s Tenant Credit Position
W.P. Carey has provided an update on three of its top 25 tenants — Hellweg, True Value and Hearthside — and expects rent loss from the ensuing tenant credit events to be between $15 and $20 million for 2025.
As per the update, Hellweg remains exposed to a challenging operating environment due to weak German consumer spending and a competitive market. WPC plans to take back 12 stores from Hellweg, which constitute 0.56% of the total annualized base rent (ABR) as of Dec. 31, 2024, seven by September 2025 and five by September 2026. For eight of the above stores, WPC is in active negotiations to lease them at their current rents before HellWeg’s termination, with the remaining four to be sold off.
Additionally, WPC has disposed of one store and placed three other stores under binding contracts to sell during the first quarter of 2025. As such, only four stores remain leased and occupied by Hellweg, representing 0.13% of ABR at present, pulling Hellweg’s rank below the company’s top 10 tenants (by ABR) by the end of 2025.
In March, WPC amended lease terms with Do It Best for five distribution facilities and one industrial facility, together constituting 1.05% of total ABR. With staggered maturities, the leases have a weighted average term of around seven years, while all the other terms remain unchanged. Additionally, Do it Best will vacate the remaining three assets, representing 0.35% of the total ABR. These assets are being marketed for sale, expected to be completed in the second half of 2025. However, the transaction with Do it Best can proceed upon customary bankruptcy court approval.
In March, Hearthside’s Chapter 11 restructuring plan became effective with W.P. Carey’s leases assumed at their existing rents and no other changes to their terms. The properties leased to Hearthside represent 1.29% of the total ABR.
WPC’s 2025 AFFO Guidance Affirmed
W.P. Carey reaffirmed its previous guided range of 2025 AFFO between $4.82 and $4.92 per share. The same is based on the assumptions listed above for investment and disposition volume and rent loss from tenant credit events.
WPC’s Loan Refinance, Assumption and Repayment
In March, WPC refinanced a €500 million term loan with a maturity extension of three years to April 24, 2029. This can be further extended by a year, subject to the fulfillment of certain customary conditions.
Additionally, WPC assumed a €500 million variable-to-fixed interest rate swap fixing one-month EURIBOR at 2.00% and an all-in annual rate of 2.80%.
Moreover, with the repayment of $450 million senior unsecured notes, which matured in February, WPC has repaid around half of its debt set to mature through 2026.
Final Take on WPC
The recent update by W.P. Carey showcases this REIT’s strategic repositioning efforts and how efficiently it can navigate a challenging business environment and tenant bankruptcies.
W.P. Carey invests in high-quality assets that are mission-critical for its tenants’ operations. The company specializes in sale-leaseback transactions, whereby it acquires critical real estate from other entities and then leases them back to the seller on a long-term, triple-net basis. Moreover, the existence of long-term net leases with built-in rent escalations yields stable cash flows. Strategic portfolio repositioning efforts and a healthy balance sheet position are encouraging.
However, the choppiness in the industrial real estate market, with subdued demand, remains a concern for W.P. Carey. Moreover, potential tenant bankruptcies and high-interest expenses add to its woes.
Shares of this Zacks Rank #2 (Buy) company have rallied 16.1% over the past three months, outperforming the industry’s growth of 5.2%. Analysts seem bullish on this stock, with the Zacks Consensus Estimate for its 2025 AFFO per share being revised marginally northward to $4.85 over the past two months.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top stocks from the broader REIT sector are Welltower (WELL - Free Report) )and Cousins Properties (CUZ - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Welltower’s 2025 FFO per share has been moved marginally northward to $4.93 over the past week.
The consensus estimate for Cousins Properties’ 2025 FFO per share has been moved upward by 1.8% to $2.79 over the past month.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.