W.P. Carey, Inc. Q4 FY2025 earnings call

• 2025 was a standout year with 5.7% AFFO growth, among the best in the net lease industry. Dividends plus stock price appreciation gave shareholders a 25% total return. - Record investment activity in 2025: $2.1 billion closed, with a weighted average initial cash cap rate of 7.6%. - Industry-leading rent growth: generated strong internal growth independent of transaction activity. - Capital sources: disciplined capital raising, including sales of non-core assets, refinancing of euro-denominated term loan, and use of ATM program for forward equity. - Portfolio performance: occupancy increased to 98% at year-end, rent loss from tenant credit events was $400,000 in 2025, and Helvec exposure was reduced to 1.1% of total ABR by year-end.

In 2025, W. P. Carey finished the year at the top end of its guidance range, closing record annual investment volume totaling $2.1 billion. Warehouse and industrial accounted for 68% of full-year investment volume, retail 22%. Geographically, 26% was in Europe and 74% in North America. AFFO per share for the fourth quarter was $1.27 (5% increase year-over-year), and for the full year, AFFO totaled $4.97 per share (5.7% year-over-year growth). Contractual same store rent growth averaged 2.4% for both the fourth quarter and full year, with VPI linked rent escalations averaging 2.6% and fixed increases 2.1%.

For 2026, expected AFFO is between $5.13 and $5.23 per share (4.2% year-over-year growth midpoint) based on investment volume of $1.25 billion to $1.75 billion. Dispositions are expected to total $250 million to $750 million. G&A is expected to be $103 million to $106 million, non-reimbursed property expenses $56 million to $60 million. Balance sheet: liquidity was $2.2 billion at year-end, net debt to adjusted EBITDA was 5.6 times, and the quarterly dividend was increased by 4.5% to 92¢ per share.

Factors that could cause actual results to differ materially from expectations, as per SEC filings, including market conditions, credit events, and changes in interest rates that could affect cap rates and investment spreads.

Q: Jana Galan with Bank of America asked about U.S. Retail expansion and carry tenant solutions platform.

A: Jason Fox responded on targeting retail categories like grocery, c-stores, and fitness, and that the carry tenant solutions platform could grow beyond the historical $200 million.

Q: Greg McGinnis with Scotiabank inquired about industrial assets, cap rates, and Realty Income.

A: Jason Fox discussed industrial mix (manufacturing, logistics), expected cap rate tightening, and that Realty Income is seen more in Europe.

Q: John Kim with BMO Capital Markets asked about carrier tenant solutions risks and leverage.

A: Jason Fox addressed development risk mitigation and that leverage is targeted in mid to high five times.

Q: Jason Wayne with Barclays asked about disposition cap rates and noncore deals.

A: Jason Fox and Brooks Gordon mentioned disposition cap rates depend on asset mix and there are opportunistic noncore deals available.

Q: Smedes Rose with Citi asked about acquisitions outlook and Lifetime Fitness.

A: Jason Fox talked about conservative initial guidance with potential to raise, and highlighted Lifetime Fitness as a strong credit with attractive basis.

Q: Anthony Paolone with JPMorgan asked about credit loss range and debt refinancing.

A: ToniAnn Sanzone discussed credit loss range as a cushion and debt refinancing plans.

Q: Jim Kammert with Evercore ISI asked about euro debt capacity and retail escalators.

A: ToniAnn Sanzone and Jason Fox spoke about euro debt capacity and retail escalator blends.

Q: Michael Goldsmith with UBS asked about cap rate compression and spread sustainability.

A: Jason Fox discussed cap rate compression impact on acquisition strategy and spread sustainability.

Q: Ryan Caviola with Green Street Advisors asked about vacant property decisions and healthcare acquisitions.

A: Brooks Gordon and Jason Fox addressed vacant property decisions and healthcare as an attractive venue.