W. P. Carey(WPC) - 2025 Q2 - Quarterly Results

Overview Summary Metrics W. P. Carey's Q2 2025 highlights include an AFFO per diluted share of $1.28, pro rata net debt to adjusted EBITDA of 5.8x, and 98.2% net-leased property occupancy Q2 2025 Key Financial Results | Metric | Value | | :--- | :--- | | Revenues, including reimbursable costs | $430,777 (in thousands) | | Net income attributable to W. P. Carey | $51,220 (in thousands) | | Net income per diluted share | $0.23 | | AFFO attributable to W. P. Carey | $282,670 (in thousands) | | AFFO per diluted share | $1.28 | | Dividends declared per share | $0.900 | Q2 2025 Capitalization & Credit Metrics | Metric | Value | | :--- | :--- | | Enterprise value | $22,079,394 (in thousands) | | Pro rata net debt to enterprise value | 38.1% | | Pro rata net debt to adjusted EBITDA (annualized) | 5.8x | | Total consolidated debt to gross assets | 43.2% | | Weighted-average debt maturity | 4.7 years | Q2 2025 Real Estate Portfolio Highlights (Pro Rata) | Metric | Value | | :--- | :--- | | ABR – total portfolio | $1,469,552 (in thousands) | | Number of net-leased properties | 1,600 | | Occupancy – net-leased properties | 98.2% | | Weighted-average lease term | 12.1 years | | Investment volume – current quarter | $548,638 (in thousands) | | Dispositions – current quarter | $364,203 (in thousands) | Components of Net Asset Value This section details W. P. Carey's Net Asset Value components as of June 30, 2025, showing $369.2 million in normalized pro rata cash NOI and $8.8 billion in total pro rata debt Normalized Pro Rata Cash NOI (Q2 2025) | Category | Amount (in thousands) | | :--- | :--- | | Net lease properties | $353,095 | | Self-storage and other operating properties | $16,083 | | Total normalized pro rata cash NOI | $369,178 | Selected Balance Sheet Items (As of June 30, 2025) | Item | Amount (in thousands) | | :--- | :--- | | Total pro rata debt outstanding | $8,799,502 | | Cash and cash equivalents | $244,831 | | Investment in shares of Lineage (a cold storage REIT) | $201,827 | | Cash held at qualified intermediaries | $135,181 | Financial Results Consolidated Statements of Income – Last Five Quarters Q2 2025 consolidated income shows $430.8 million in total revenues and $51.2 million net income, impacted by $148.8 million in other losses Quarterly Income Statement Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $430,777 | $409,858 | $406,165 | $397,383 | $389,672 | | Net Income Attributable to W. P. Carey | $51,220 | $125,824 | $47,023 | $111,698 | $142,895 | | Diluted Earnings Per Share | $0.23 | $0.57 | $0.21 | $0.51 | $0.65 | - The 'Other gains and (losses)' for Q2 2025 included a $69.0 million mark-to-market unrealized loss on the Lineage investment, $66.4 million in net losses on foreign currency exchange, and a $9.9 million allowance for credit losses[23] FFO and AFFO, Consolidated – Last Five Quarters Q2 2025 AFFO attributable to W. P. Carey reached $282.7 million, or $1.28 per diluted share, with FFO at $0.57 per diluted share, reflecting non-cash adjustments Quarterly FFO and AFFO per Diluted Share | Metric | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | FFO per diluted share | $0.57 | $0.99 | $0.85 | $0.83 | $1.18 | | AFFO per diluted share | $1.28 | $1.17 | $1.21 | $1.18 | $1.17 | - The primary adjustment from FFO to AFFO in Q2 2025 was the add-back of $148.8 million in 'Other (gains) and losses', which included mark-to-market losses and foreign currency movements[27][29] Elements of Pro Rata Statement of Income and AFFO Adjustments This section details Q2 2025 AFFO adjustments to GAAP income, highlighting reversals for $121.9 million in depreciation and $148.7 million in other gains/losses - The purpose of this presentation is to help investors understand the impact of each AFFO adjustment on the GAAP statement of income line items[31] - Major non-cash adjustments to arrive at AFFO for Q2 2025 include reversing $121.9 million in depreciation and amortization and adding back $148.7 million in 'Other gains and (losses)'[32] Capital Expenditures Q2 2025 capital expenditures totaled approximately $2.1 million in turnover costs and $1.1 million in maintenance capital expenditures Capital Expenditures (Q2 2025, in thousands) | Category | Amount | | :--- | :--- | | Turnover Costs | | | Total Tenant Improvements and Leasing Costs | $1,714 | | Property improvements | $366 | | Total Turnover Costs | $2,080 | | Maintenance Capital Expenditures | $1,105 | Balance Sheets and Capitalization Consolidated Balance Sheets As of June 30, 2025, total assets reached $18.0 billion, with net debt at $8.6 billion and total equity at $8.2 billion, reflecting changes from year-end 2024 Balance Sheet Comparison (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $17,998,197 | $17,535,024 | | Debt, net | $8,635,985 | $8,039,002 | | Total equity | $8,225,332 | $8,434,124 | Capitalization As of June 30, 2025, W. P. Carey's total market capitalization was approximately $22.5 billion, comprising $13.7 billion in equity and $8.8 billion in pro rata debt Market Capitalization (As of June 30, 2025, in thousands) | Component | Market Value | | :--- | :--- | | Total Equity Market Capitalization | $13,659,904 | | Total Pro Rata Debt | $8,799,502 | | Total Capitalization | $22,459,406 | Debt Overview As of June 30, 2025, total pro rata debt was $8.8 billion, with a 3.2% weighted-average interest rate and 4.7-year maturity, predominantly recourse senior unsecured notes Pro Rata Debt Summary (As of June 30, 2025) | Metric | Value | | :--- | :--- | | Total Outstanding Balance | $8,799,502 (in thousands) | | Weighted-Average Interest Rate | 3.2% | | Weighted-Average Maturity | 4.7 years | | % Fixed Rate (incl. swapped) | ~92.6% (75.0% fixed notes + 11.3% swapped + 3.4% fixed non-recourse) | | % Floating Rate | ~7.8% (7.4% revolver + 0.4% floating non-recourse) | Debt Maturity The debt maturity schedule is well-laddered, with 12.6% maturing in 2026 and the majority of debt maturing after 2028, indicating minimal near-term risk Upcoming Debt Maturities (% of Total Outstanding) | Year of Maturity | % of Total Outstanding Balance | | :--- | :--- | | Remaining 2025 | 0.5% | | 2026 | 12.6% (1.9% Non-Recourse + 6.7% + 4.0% Recourse) | | 2027 | 7.1% | | 2028 | 10.5% | | 2029 | 12.9% | Senior Unsecured Notes W. P. Carey maintains investment-grade credit ratings and was in compliance with all Senior Unsecured Note financial covenants as of June 30, 2025, with ample headroom Senior Unsecured Note Covenant Compliance (As of June 30, 2025) | Covenant Metric | Required | Actual | | :--- | :--- | :--- | | Total Debt / Total Assets | ≤ 60% | 42.1% | | Secured Debt / Total Assets | ≤ 40% | 1.2% | | Consolidated EBITDA / Annual Debt Service Charge | ≥ 1.5x | 4.9x | | Unencumbered Assets / Total Unsecured Debt | ≥ 150% | 230.4% | Real Estate Portfolio Investment Activity H1 2025 saw $823.8 million in investments, mainly industrial and warehouse properties, alongside $494.0 million in dispositions and $289.7 million in capital commitments Investment Volume YTD 2025 investment volume reached $823.8 million, with Q2 contributing $548.6 million primarily in property investments and loan funding for industrial and warehouse assets YTD 2025 Investment Volume (in thousands) | Period | Property Investments | Loan Funding | Total | | :--- | :--- | :--- | :--- | | 1Q25 | $273,168 | $1,984 | $275,152 | | 2Q25 | $545,460 | $3,178 | $548,638 | | Year-to-Date Total | $818,628 | $5,154 | $823,782 | Capital Investments and Commitments Total capital commitments are $289.7 million, with $109.5 million expected in 2025, covering build-to-suits, redevelopments, and renovations through 2027 Capital Commitments by Completion Year (in thousands) | Expected Completion | Remaining Commitment | Total Commitment | | :--- | :--- | :--- | | 2025 | $65,412 | $109,525 | | 2026 | $62,627 | $71,943 | | 2027 | $99,595 | $108,269 | | Total | $227,634 | $289,737 | Dispositions YTD 2025 dispositions totaled $494.0 million in gross sale price, with Q2 sales of $364.2 million including specialty properties and self-storage assets YTD 2025 Dispositions (in thousands) | Period | Gross Sale Price | | :--- | :--- | | 1Q25 | $129,832 | | 2Q25 | $364,203 | | Year-to-Date Total | $494,035 | Joint Ventures As of June 30, 2025, joint ventures reported $33.8 million in pro rata ABR, with unconsolidated JVs holding $210.0 million in pro rata debt Joint Venture Summary (Pro Rata, in thousands) | Venture Type | Debt Outstanding | ABR | | :--- | :--- | :--- | | Unconsolidated JVs | $209,948 | $23,295 | | Consolidated JVs | $— | $10,463 | | Total | $209,948 | $33,758 | Portfolio Diversification The portfolio is highly diversified, with top 10 tenants at 19.4% ABR, industrial/warehouse at 63.9%, and 60.2% of ABR from the U.S. Top 25 Tenants Tenant diversification is strong, with the top 10 tenants representing 19.4% of ABR and the largest tenant, Extra Space Storage, Inc., at 2.7% Tenant Concentration by ABR | Tenant Group | % of Total ABR | | :--- | :--- | | Top 10 Tenants | 19.4% | | Top 20 Tenants | 31.7% | | Top 25 Tenants | 36.1% | Diversification by Property Type The portfolio is concentrated in industrial (37.7%) and warehouse (26.2%) properties, totaling 63.9% of ABR, with retail at 22.3% ABR by Property Type | Property Type | ABR % | | :--- | :--- | | Industrial | 37.7% | | Warehouse | 26.2% | | Retail | 22.3% | | Other | 13.8% | Diversification by Tenant Industry The portfolio is diversified across essential industries, with Food Retail (10.3%), Packaged Foods & Meats (9.1%), and Home Improvement Retail (7.2%) as top sectors Top 5 Industries by ABR | Industry Type | ABR % | | :--- | :--- | | Food Retail | 10.3% | | Packaged Foods & Meats | 9.1% | | Home Improvement Retail | 7.2% | | Auto Parts & Equipment | 5.7% | | Automotive Retail | 5.3% | Diversification by Geography Geographic diversification shows 60.2% of ABR from the U.S. and 39.8% internationally, with key international exposures in Italy, Netherlands, and Poland ABR by Geography | Region | ABR % | | :--- | :--- | | U.S. Total | 60.2% | | International Total | 39.8% | | Top U.S. Regions | | | Midwest | 16.6% | | South | 16.4% | | Top International Countries | | | Italy | 4.7% | | The Netherlands | 4.6% | | Poland | 4.5% | Lease Characteristics The portfolio features robust lease characteristics, with 96.3% having contractual rent increases, 4.0% comprehensive same-store growth, and a well-staggered expiration schedule Contractual Rent Increases The net-lease portfolio benefits from built-in rent growth, with 50.0% of ABR CPI-linked and 46.3% having fixed rent increases, ensuring predictable revenue ABR by Rent Adjustment Measure | Rent Adjustment Measure | ABR % | | :--- | :--- | | CPI-linked | 50.0% | | Fixed | 46.3% | | Other | 3.3% | | None | 0.4% | Same-Store Analysis Same-store portfolio showed healthy growth, with contractual ABR up 2.3% year-over-year and comprehensive pro rata rental income increasing 4.0% for the quarter Same-Store Growth Metrics | Metric | % Increase | | :--- | :--- | | Contractual Same-Store Growth (YoY ABR) | 2.3% | | Comprehensive Same-Store Growth (QoQ Rental Income) | 4.0% | Leasing Activity Q2 2025 leasing activity included two renewals with 76.8% rent recapture and four new leases adding $3.7 million in ABR with an 18.6-year average term - Lease renewals and extensions in Q2 2025 had a weighted average rent recapture of 76.8% and an incremental lease term of 5.4 years[122] - New leases signed in Q2 2025 added $3.7 million in ABR with a weighted average lease term of 18.6 years, primarily driven by two new self-storage net leases[123][124] Lease Expirations The lease expiration schedule is well-laddered, with only 1.2% of ABR expiring in remaining 2025 and 44.4% after 2038, indicating long-term stability Lease Expirations by ABR | Year of Expiration | ABR % | | :--- | :--- | | Remaining 2025 | 1.2% | | 2026 | 2.6% | | 2027 | 4.3% | | 2028 | 4.6% | | Thereafter (>2038) | 44.4% | Self-Storage Operating Properties Portfolio The self-storage portfolio comprises 66 properties totaling 4.8 million square feet with 90.6% occupancy, diversified across key U.S. states Self-Storage Portfolio Summary | Metric | Value | | :--- | :--- | | Number of Properties | 66 | | Total Square Footage | 4,788 (in thousands) | | Total Occupancy | 90.6% | Appendix Normalized Pro Rata Cash NOI This section reconciles to Normalized Pro Rata Cash NOI, a non-GAAP measure, showing $369.2 million for Q2 2025 after adjustments for non-cash items and portfolio changes Reconciliation to Normalized Pro Rata Cash NOI (Q2 2025, in thousands) | Line Item | Amount | | :--- | :--- | | Pro Rata Cash NOI | $366,646 | | Adjustment to normalize for net lease investments and dispositions | $4,015 | | Adjustment to normalize for operating property dispositions | ($1,483) | | Normalized Pro Rata Cash NOI | $369,178 | Adjusted EBITDA – Last Five Quarters Q2 2025 Adjusted EBITDA was $361.4 million, an increase from the prior quarter, reconciled from net income by adding back depreciation, interest, and non-core items Quarterly Adjusted EBITDA (in thousands) | Period | Adjusted EBITDA | | :--- | :--- | | Q2 2025 | $361,370 | | Q1 2025 | $335,499 | | Q4 2024 | $342,628 | | Q3 2024 | $339,036 | | Q2 2024 | $326,773 | Disclosures Regarding Non-GAAP and Other Metrics This section provides definitions and rationale for non-GAAP financial measures and other key metrics, including FFO, AFFO, Pro Rata Cash NOI, and Adjusted EBITDA - Defines FFO (Funds from Operations) consistent with NAREIT standards, as net income excluding gains/losses from property sales, impairment charges, and real estate depreciation[150][151] - Defines AFFO (Adjusted Funds from Operations) as FFO further adjusted for non-cash items like straight-line rent, stock-based compensation, amortization of intangibles, and certain non-core expenses[152] - Explains that Pro Rata Metrics present the company's proportionate share of assets, liabilities, revenues, and expenses from jointly owned investments, based on economic ownership[160]