W.P. Carey, Inc. Q3 FY2025 earnings call

• Strong momentum continued in the second half of 2025, with the company ahead of prior expectations and raising full year AFFO guidance to mid-5% year-over-year growth. • Year-to-date, $1.65 billion of investments were completed at mid-7s initial cap rates, with fixed rent escalations averaging high 2% range. Investment volume for the full year is raised to $1.8 billion to $2.1 billion. • Same-store rent growth remains in mid-2% range and expected to be around there or slightly higher in 2026. • Progress made in funding investments through asset sales, with better than initially expected disposition cap rates. • Original rent loss assumption was conservative, and the portfolio performance allowed lowering the estimate. • European platform has over 50 people across London and Amsterdam offices, with strong broker and developer relationships. • Near-term pipeline remains strong with several hundred million dollars of transactions in process, and near $70 million of capital projects scheduled for completion in Q4.

Warehouse and industrial represents over 3/4 of W. P. Carey's investment volume year-to-date. Year-to-date, the company completed $1.65 billion of investments at attractive initial cap rates averaging in the mid-7s, primarily with fixed rent escalations averaging in the high 2% range. Contractual same-store rent growth for the third quarter was 2.4% year-over-year, comprised of CPI-linked rent escalations averaging 2.5% for the quarter, while fixed rent increases averaged 2.1%.

• Raised full year AFFO guidance to between $4.93 and $4.99 per share, implying 5.5% year-over-year growth at the midpoint. • Raised full year investment volume expectation to between $1.8 billion and $2.1 billion. • Revised expected disposition volume to between $1.3 billion and $1.5 billion, including additional sales of operating self-storage assets. • Expect overall spreads of approximately 150 basis points between investments and dispositions for the year.

• Competition from private net lease platforms in the U.S. and Europe, which may lead to pricing pressures. • Hellweg's turnaround is challenging, although it remains current on rent. • Potential impact of inflation moderation on same-store rent growth and lease negotiations. • Currency movements could impact AFFO, although hedging strategy is in place to mitigate material impact.

Q: Now that you guys are rounding the corner on the operating self-storage asset sales, can you maybe give us a sense as to what the menu of noncore and other internally generated capital sources, maybe as we start to think about deal activity next year and maybe perhaps how to help fund it?

A: Yes, sure. Equity is going to be a much bigger picture than this year, and dispositions should revert back to a more typical run rate. The company has a strong balance sheet with revolver at over $2 billion mostly undrawn, $250 million of free cash flow, and $230 million of forwards issued on the ATM program, putting it in good shape for funding next year.

Q: Now that you guys are rounding the corner on the operating self-storage asset sales, can you maybe give us a sense as to what the menu of noncore and other internally generated capital sources, maybe as we start to think about deal activity next year and maybe perhaps how to help fund it?

A: Yes, sure. Equity is going to be a much bigger picture than this year, and dispositions should revert back to a more typical run rate. The company has a strong balance sheet with revolver at over $2 billion mostly undrawn, $250 million of free cash flow, and $230 million of forwards issued on the ATM program, putting it in good shape for funding next year.

Q: Now that you guys are rounding the corner on the operating self-storage asset sales, can you maybe give us a sense as to what the menu of noncore and other internally generated capital sources, maybe as we start to think about deal activity next year and maybe perhaps how to help fund it?

A: Yes, sure. Equity is going to be a much bigger picture than this year, and dispositions should revert back to a more typical run rate. The company has a strong balance sheet with revolver at over $2 billion mostly undrawn, $250 million of free cash flow, and $230 million of forwards issued on the ATM program, putting it in good shape for funding next year.

Q: Now that you guys are rounding the corner on the operating self-storage asset sales, can you maybe give us a sense as to what the menu of noncore and other internally generated capital sources, maybe as we start to think about deal activity next year and maybe perhaps how to help fund it?

A: Yes, sure. Equity is going to be a much bigger picture than this year, and dispositions should revert back to a more typical run rate. The company has a strong balance sheet with revolver at over $2 billion mostly undrawn, $250 million of free cash flow, and $230 million of forwards issued on the ATM program, putting it in good shape for funding next year.