W. P. Carey(US:WPC)2025-04-30 15:00Financial Data and Key Metrics Changes - The company generated AFFO per share of $1.17 for Q1 2025, reflecting a year-over-year increase of 2.6% [22] - The AFFO guidance range has been reaffirmed at $4.82 to $4.92 per share, indicating a cautious optimism for exceeding the 3.6% growth implied in the guidance [22][31] - Operating property NOI totaled $16.6 million, with expectations of generating between $70 million and $75 million of operating NOI during 2025, excluding expected dispositions [27][29] Business Line Data and Key Metrics Changes - The company closed approximately $450 million in investments year-to-date, with an initial weighted average cap rate of 7.4% [9] - Contractual same-store rent growth for the quarter was 2.4% year-over-year, expected to remain around that level for the full year [23] - Comprehensive same-store growth for the quarter was 4.5% year-over-year, partly benefiting from prior rent abatements [24] Market Data and Key Metrics Changes - The investment pipeline is expected to close approximately $570 million in deals for 2025, with a solid near-term pipeline [10] - The company has seen little disruption in net lease transaction activity, indicating resilience in the market for net lease real estate [10][11] - The company is currently in the market with a sizable portfolio of operating self-storage assets, representing about half of its total self-storage operating NOI [14] Company Strategy and Development Direction - The company remains focused on executing its investment strategy while navigating uncertainties related to tariffs and tenant credit [6][8] - The strategy includes funding investments primarily through non-core asset sales, with expectations of generating proceeds at cap rates that allow for accretive funding [23][29] - The company believes its investment spreads are underappreciated by the market, emphasizing the importance of rent growth over the life of leases [15] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the operating environment, noting that uncertainty surrounding tariffs has not yet impacted business performance [6][7] - The company remains comfortable with its guidance assumptions and sees potential for increasing AFFO growth estimates as visibility improves [19][32] - Management highlighted that the portfolio is built to withstand economic downturns, focusing on large companies with greater liquidity [16] Other Important Information - The company refinanced its euro term loan, fixing its interest rate below 3% through an interest rate swap, and has minimal additional debt maturities in 2025 [12][29] - The company declared a dividend of $0.89 per share, representing a 2.9% increase over the prior year, with an expected annual payout ratio of 73% [31] Q&A Session Summary Question: Can you provide details on cap rates and the pipeline split between retail, industrial, and US/Europe? - The company targets deals in the mid-sevens for cap rates, with the pipeline being approximately 50% weighted towards Europe [35][37] Question: Will you consider selling more self-storage assets to fund acquisitions above the current outlook? - The company has flexibility in its disposition strategy and can consider selling more self-storage assets if needed [43][45] Question: How does the company view the impact of tariffs on its European exposure? - The majority of European tenants operate domestically, making them less susceptible to tariff impacts [54][55] Question: What is the company's strategy regarding potential rent loss and tenant credit? - The company has accounted for potential rent loss in its guidance and believes its estimates are sufficient even if tariffs pressure tenants [26][62] Question: Is there any concern regarding input costs for capital projects? - Most capital investments are subject to guaranteed contracts, minimizing exposure to cost fluctuations [75][76] Question: How competitive is the net lease market currently? - The net lease market remains competitive, particularly in the US, but the company benefits from being an all-cash buyer [78][80]