W. P. Carey(US:WPC)2026-02-11 18:02Financial Data and Key Metrics Changes - The company achieved a 5.7% growth in AFFO for the year, which is among the best in the net lease industry, reflecting strong performance and record investment activity [4][14] - AFFO per share for Q4 was $1.27, a 5% increase year-over-year, while full-year AFFO totaled $4.97 per share [14] - The total return for shareholders was 25% for the year, placing the company in the top tier of publicly traded REITs [4] Business Line Data and Key Metrics Changes - The company allocated 68% of its investment volume to warehouse and industrial assets, with retail accounting for 22% [7] - 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 [6] - Contractual same-store rent growth averaged 2.4% for both Q4 and the full year, with CPI-linked rent escalations averaging 2.6% [15][16] 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. [7] - The company expects cap rates to be incrementally lower in 2026, anticipating going-in cap rates in the mid- to low-7% range compared to 2025's average of 7.6% [11] Company Strategy and Development Direction - The company aims to expand its retail presence, targeting 25%-30% of annual deal volume in retail, including both U.S. and European markets [34] - 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 [37][54] - The company plans to maintain a conservative approach to investment volume guidance, starting with a range of $1.25 billion to $1.75 billion for 2026 [11][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining high investment activity and delivering attractive AFFO growth in 2026, supported by a strong funding position [9][30] - The company anticipates a slight increase in contractual same-store rent growth for 2026, with expectations of maintaining portfolio occupancy over 98% [18][21] - Management noted that there are no significant disruptions in the market, and they expect to refine investment guidance as the year progresses [76] Other Important Information - The company successfully refinanced its euro-denominated term loan at an attractive rate below 3% and has a strong liquidity position of $2.2 billion [8][29] - The company has reduced its HELVIG exposure to 1.1% of total ABR by year-end and is actively engaged in transactions to further reduce this exposure [17] Q&A Session Summary Question: Expansion in U.S. retail and other targeted categories - Management indicated that retail accounted for about 22% of deal volume last year, with a goal to increase this to 25%-30% annually, focusing on tenant credit and lease structure [34][35] Question: Growth of Carey Tenant Solutions platform - Management expects the volume of projects under the Carey Tenant Solutions platform to increase, with $50 million completed and another $280 million in construction [36][37] Question: Industrial asset cap rates and competition - Management noted that industrial assets remain core to the business, with expectations of cap rates tightening slightly in 2026, while competition from Realty Income is more pronounced in Europe [41][44] Question: Credit loss estimates - Management set a conservative range for rent loss from tenant credit at $10-$15 million for 2026, with no specific concerns currently in the portfolio [86][90] Question: Debt refinancing strategy - Management plans to refinance upcoming bonds with unsecured debt in the same currencies, with current pricing expectations for euro bonds in the low 4% range [91][92]