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W. P. Carey(WPC) - 2024 Q4 - Annual Report
WPCW. P. Carey(WPC)2025-02-12 21:27
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Portfolio Overview - As of December 31, 2024, W. P. Carey Inc. owned 1,555 properties net-leased to 355 tenants across 26 countries, with approximately 61% of annualized base rent generated from the United States and 33% from Europe[11]. - The portfolio's net-lease occupancy rate was approximately 98.6% as of December 31, 2024[38]. - The weighted-average lease term across the portfolio is 12.3 years[38]. - 16% of tenants are rated as investment grade, while an additional 8% are considered implied investment grade[38]. - As of December 31, 2024, 22% of the company's Annual Base Rent (ABR) is concentrated in the retail sector, and 67% of the ABR is located in North America[44]. - Properties outside the United States represent 39% of the company's ABR, with 33% of that in Europe[45]. - The portfolio consisted of 1,555 net-leased properties with an annualized base rent (ABR) of 1.337billion,maintaininganoccupancyrateof98.61.337 billion, maintaining an occupancy rate of 98.6%[161]. - The international portfolio contributes 39.2% of the total ABR, totaling 524,072,000[170]. - Industrial properties make up 36.2% of the total ABR, amounting to 484,660,000,whilewarehousepropertiesaccountfor27.4484,660,000, while warehouse properties account for 27.4% at 366,555,000[171]. - The retail sector represents 22.3% of the total ABR, amounting to 298,058,000[173].FinancialPerformance−TotalrevenuesfortheyearendedDecember31,2024,decreasedto298,058,000[173]. Financial Performance - Total revenues for the year ended December 31, 2024, decreased to 1.583 billion from 1.741billionin2023,primarilyduetolowerleaserevenuesandoperatingpropertyrevenues[153].−NetincomeattributabletoW.P.Careyfor2024was1.741 billion in 2023, primarily due to lower lease revenues and operating property revenues[153]. - Net income attributable to W. P. Carey for 2024 was 460.8 million, down from 708.3millionin2023,impactedbylowergainsonrealestatesalesandunrealizedlossesoninvestments[157].−Adjustedfundsfromoperations(AFFO)decreasedto708.3 million in 2023, impacted by lower gains on real estate sales and unrealized losses on investments[157]. - Adjusted funds from operations (AFFO) decreased to 1.036 billion in 2024 from 1.118billionin2023,primarilyduetotheimpactoftheSpin−OffandOfficeSaleProgram[158].−TotalleaserevenuesfortheyearendedDecember31,2024,were1.118 billion in 2023, primarily due to the impact of the Spin-Off and Office Sale Program[158]. - Total lease revenues for the year ended December 31, 2024, were 1,331,788, a decrease of 95,588comparedto95,588 compared to 1,427,376 in 2023[182]. - Lease revenues from existing net-leased properties increased to 1,164,619in2024from1,164,619 in 2024 from 1,129,414 in 2023, reflecting a growth of 35,205[182].−Operatingpropertyrevenuestotaled35,205[182]. - Operating property revenues totaled 180,257 in 2024, down from 146,813in2023,adecreaseof146,813 in 2023, a decrease of 33,444[182]. - Cash dividends declared totaled 3.490persharefor2024,withquarterlydividendsof3.490 per share for 2024, with quarterly dividends of 0.865, 0.870,0.870, 0.875, and 0.880[152].DebtandFinancing−AsofDecember31,2024,thecompany′sconsolidatedindebtednesswasapproximately0.880[152]. Debt and Financing - As of December 31, 2024, the company's consolidated indebtedness was approximately 8.0 billion, with a debt to gross assets ratio of about 41.6%[68]. - The company had 6.5billioninSeniorUnsecuredNotesand6.5 billion in Senior Unsecured Notes and 1.1 billion in Unsecured Term Loans as part of its total indebtedness[68]. - The company maintains a 2.0billionunsecuredrevolvingcreditfacilitytosupportitsliquidityandfundingneeds[31].−Theaverageoutstandingdebtbalancefor2024was2.0 billion unsecured revolving credit facility to support its liquidity and funding needs[31]. - The average outstanding debt balance for 2024 was 7,948,034, down from 8,404,466in2023,withaweighted−averageinterestrateremainingstableat3.28,404,466 in 2023, with a weighted-average interest rate remaining stable at 3.2%[205]. - Interest expense decreased by 14.5 million in 2024 compared to 2023, primarily due to lower outstanding balances on the Unsecured Revolving Credit Facility and the repayment of 583.0millioninnon−recoursemortgageloans[204].RisksandChallenges−Thecompanyfacesincreasedoperationalcostsduetoinflationandhighinterestrates,whichcouldnegativelyimpactfinancialresultsandlimitinvestmentopportunities[50].−Thecompanyfacesrisksrelatedtotenantbankruptcies,whichcouldleadtoreducedrevenueandincreasedexpensesduetopotentialleaselosses[64].−Highinterestratesandinflationmayadverselyaffecttenants′financialconditions,increasingthelikelihoodoftenantbankruptcies[65].−Thecompanyissubjecttopotentialliabilitiesrelatedtoenvironmentalmatters,whichcouldincurunexpectedcostsandaffectpropertysales[60].−Compliancewithclimatechangeregulationsmayresultinsubstantialcosts,includingmonitoringandreportingexpenses[58].−Thecompanycompeteswithvariousinstitutionsforinvestments,whichmaypressurerevenuegrowthduetoincreasedcompetition[43].CorporateGovernanceandCompliance−ThecompanybelievesitqualifiesasaREITundertheInternalRevenueCode,butthereisnoguaranteeofcontinuedqualification[79].−Thecompanymustdistributeatleast90583.0 million in non-recourse mortgage loans[204]. Risks and Challenges - The company faces increased operational costs due to inflation and high interest rates, which could negatively impact financial results and limit investment opportunities[50]. - The company faces risks related to tenant bankruptcies, which could lead to reduced revenue and increased expenses due to potential lease losses[64]. - High interest rates and inflation may adversely affect tenants' financial conditions, increasing the likelihood of tenant bankruptcies[65]. - The company is subject to potential liabilities related to environmental matters, which could incur unexpected costs and affect property sales[60]. - Compliance with climate change regulations may result in substantial costs, including monitoring and reporting expenses[58]. - The company competes with various institutions for investments, which may pressure revenue growth due to increased competition[43]. Corporate Governance and Compliance - The company believes it qualifies as a REIT under the Internal Revenue Code, but there is no guarantee of continued qualification[79]. - The company must distribute at least 90% of its REIT taxable income to maintain its REIT status, which could impact its cash available for distribution[82]. - If the company fails to qualify as a REIT, it would be subject to federal income tax at corporate rates, including a 15% corporate minimum tax and a 1% excise tax on certain stock repurchases[85]. - The company is required to satisfy various asset tests to maintain REIT qualification, and failure to do so may require liquidation of investments[86]. - The Board has the authority to revoke the REIT election without stockholder approval, which could lead to adverse tax consequences and affect total returns to stockholders[101]. - Changes in federal and state income tax laws governing REITs could negatively impact the company and its stockholders, with no assurance on the predictability of such changes[102]. Cybersecurity - The company has implemented a comprehensive cybersecurity program to mitigate risks, but there is no guarantee against potential incidents impacting financial results[111]. - As of December 31, 2024, there have been no material cybersecurity incidents reported in the last three years, but risks remain[133]. Acquisitions and Dispositions - The company disposed of 176 properties for total proceeds of 1.2 billion, including 78 U-Haul properties for 464.1millionand78propertiesundertheOfficeSaleProgramfor464.1 million and 78 properties under the Office Sale Program for 524.8 million[148]. - The company acquired 29 investments totaling 1.4billionandcompletedfiveconstructionprojectsatacostof1.4 billion and completed five construction projects at a cost of 87 million during 2024[150]. - The company acquired 37 investments, comprising 342 properties, since January 1, 2023[185].