W. P. Carey(US:WPC)2026-02-11 18:00Financial Data and Key Metrics Changes - The company achieved a 5.7% growth in AFFO for 2025, which is among the best in the net lease industry, reflecting strong performance and record investment activity [3][12] - AFFO per share for Q4 was $1.27, a 5% increase year-over-year, while the full year AFFO totaled $4.97 per share [12][14] - The total return for shareholders was 25% for the year, placing the company in the top tier of publicly traded REITs [3] Business Line Data and Key Metrics Changes - The company allocated 68% of its investment volume to warehouse and industrial sectors, with retail accounting for 22% [6] - The average cash cap rate for investments was 7.6%, translating into an average yield just above 9% over long-term leases averaging 17 years [5][12] - Contractual same-store rent growth averaged 2.4% for both Q4 and the full year, with CPI-linked rent escalations averaging 2.6% [14][15] Market Data and Key Metrics Changes - 26% of the investment volume was in Europe, while 74% was in North America, predominantly in the U.S. [6] - The company expects cap rates to be incrementally lower in 2026, anticipating going-in cap rates in the mid- to low-7% range [10][41] Company Strategy and Development Direction - The company aims to continue generating higher investment volumes, with an initial investment volume guidance range of $1.25 billion to $1.75 billion for 2026 [10][19] - The Carey Tenant Solutions platform is expected to enhance the company's capabilities in build-to-suit and redevelopment projects, with a focus on increasing the volume of such projects [9][52] - The company is targeting to increase retail investments to 25%-30% of annual deal volume, focusing on tenant credit and lease structure [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining high levels of investment activity and delivering attractive AFFO growth in 2026, supported by strong funding positions and a sizable investment pipeline [8][29] - The company is taking a conservative approach to rent loss estimates, projecting $10-$15 million for 2026, while not seeing any material changes in credit quality across the portfolio [17][87] - The company anticipates portfolio occupancy to remain over 98% through a combination of releasing and dispositions [17] Other Important Information - The company successfully refinanced its euro-denominated term loan, locking in an attractive all-in rate below 3% [7] - The company ended the year with liquidity totaling $2.2 billion, including cash on hand and unsettled forward equity [27] - The quarterly dividend was increased by 4.5% year-over-year to $0.92 per share, supported by a payout ratio of approximately 73% [27] Q&A Session Summary Question: Expansion in U.S. retail and targeted categories - Management confirmed that retail accounted for about 22% of deal volume in 2025, with plans to increase this to 25%-30% [33] Question: Industrial asset types and competition - Management indicated that industrial remains a core part of the business, focusing on manufacturing and logistics, with expectations of cap rate tightening [40][41] Question: Development risks associated with Carey Tenant Solutions - Management explained that development risks are mitigated through fixed-price contracts and guaranteed rent start dates [52][53] Question: Credit loss estimates and portfolio management - Management stated that the $10-$15 million range for credit loss is a conservative estimate with no specific concerns in the portfolio at the moment [87] Question: Debt refinancing and overall debt composition - Management confirmed that they have flexibility in refinancing upcoming bonds and will likely replace them with unsecured debt in the same currencies [88][93]