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 the 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 trend 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 a mix of larger sale-leaseback opportunities and other retail categories [33] - The Carey Tenant Solutions platform is expected to enhance the company's capabilities in build-to-suit and redevelopment projects, with a goal to increase the volume of such projects [36][53] - The company plans to maintain a conservative investment volume guidance of $1.25 billion-$1.75 billion for 2026, with the potential to refine this as visibility improves [11][75] 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 is mindful of potential credit losses, setting a conservative estimate for rent loss from tenant credit at $10 million-$15 million for 2026 [18][86] - Portfolio occupancy increased to 98% by year-end, with expectations to maintain this level through re-leasing and dispositions [18] Other Important Information - The company successfully refinanced its Euro-denominated term loan, locking in an attractive all-in rate below 3% [8] - The liquidity at year-end totaled $2.2 billion, providing ample flexibility for funding investment activities [29] - The quarterly dividend was increased by 4.5% year-over-year to $0.92 per share, supported by a payout ratio of approximately 73% [29] Q&A Session Summary Question: Expansion strategy in U.S. retail - Management indicated that retail accounted for about 22% of deal volume in 2025, with plans to increase this to 25%-30% in the future, focusing on tenant credit and lease structure [33][34] Question: Growth of Carey Tenant Solutions platform - Management noted that they completed about $50 million in projects year-to-date, with another $280 million in construction planned over the next 12-18 months [36] Question: Industrial asset cap rates and competition - Management stated that industrial assets remain a core part of the business, with expectations for cap rates to tighten slightly in 2026 [41][42] Question: Credit loss estimates - Management clarified that the $10 million-$15 million range for credit loss is a conservative estimate with no specific concerns currently in the portfolio [86] Question: Debt refinancing plans - Management confirmed plans to refinance upcoming bond maturities with unsecured debt in the same currencies, with current pricing expectations in the low 4% range for Eurobonds [87][88]