Earnings call transcript Q4 2022

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Operator

Hello and welcome to W. P. Carey’s Fourth Quarter and Full Year 2022 Earnings Conference Call. My name is Donna and I will be your operator today. [Operator Instructions] Please note that today’s event is being recorded. we taking remarks, phone via prepared line. today’s will questions be the After to be so appropriate on do Instructions how will time. given the at

Head I to Sands, today’s turn go of Sands, please will Mr. Investor program ahead. Relations. now Peter over

Peter Sands

us Thank fourth our call. joining earnings morning for Good morning, for this everyone. you XXXX quarter

could on to like filings. deemed conference of our not where are historic materially also find available and maybe I Before our everyone P. are other some call made we presentations would Carey’s replay approximately begin, will An results section of SEC wpcarey.com, you in can provided this and that at for online and statements. it cause Factors from where W. in of call that will investor related forward-looking remind differ to the actual year statements made expectations of website Relations copies materials. facts be this the Investor archived be X our

will over And that, Officer. to the Executive Chief I with Fox, Jason pass call

Jason Fox

the real AFFO we backdrop lease AFFO in in growth, REIT estate market investments non-traded to culminating morning the a also and that Europe, XX XXXX, our XX last for was share began with anniversaries X.X% P. focus Thank over net Bill for years. W. It from you, company. we business, estate our per in generated we And where several rent marks exit year. escalations. ago accretive sale-leasebacks. investing It the everyone. our by XX ago that became founded on evolved the growth ago most pioneered XXXX completion REIT XXXX the our considerably transition Carey. of despite years that and CPA:XX. Carey XX merger development being challenging company, a years driven has public pure-play reflects was years in real Peter recent The of we good Company The

guidance our on our outlook sheet focus our morning my cover Toni This Sanzone, will I recent announced remarks CFO, positioning. and XXXX and and investment morning, will we the this activity results, balance our

and We also have line Management, our of Asset to John Gordon, the questions. take President, Brooks on our Head Park

investment U.S. rose to course XXX Starting with of transactions basis preserve as X.X% the with average points, driven over often take over treasury rates lagged negotiate longer behind close, a rate growth, volume the while lease the corporate spread XXXX, weighted expectations. especially sellers to their totaled billion weighted year to slow XX-year and of fought tied our a M&A. term Buyers XX of cap sale-leasebacks externally well rate adjust cap and to at years. $X.X Overall, for average were

actively our willing pricing to added power With we In moving spreads. October, as the transact addition the in $X and to attractive exerted rates a opportunities quarter, patient cap real the in at estate, began interest at than through fourth billion rates during be to higher of more to yields the CPA:XX more merger. we requiring creating leg move, another mid-Xs higher cap rate

high and to reflecting investments say with of although we Xs $XXX primarily meaningfully a rates fourth to the rates average volume industrial cap the cap executed X.X%, weighted in into blended in during and million. on these am higher rate warehouse going a Xs. As quarter, Overall, investments the totaling investments lighter pleased was result, I anticipated, we that at than investment cap

for are rates than comfortable also considerably have levels have quarter, are were are cap and evaluating we more they rates interest fallen XXXX spreads in large opportunities fourth of Xs the where transacting. the While in and investment attractive into investment high Xs of today the at somewhat the the majority resulting we most since that

take to positioned market environment. Looking well ahead, we are of advantage current the

across see invest with to of ability and the us across possible companies gives of and widest both a we property in types, funnel the Europe opportunities have U.S. the approach variety ensures diversified Our And interest to we up industries. rates actionable in expect currently rates. cap in rates we adjusted do higher have catch while opportunities cap with where more Europe the more quickly, U.S.

for environment loans seen the very alternative capital, sale sale-leasebacks as favorable are Furthermore, Companies have expensive. is debt high-yield we sources and of as including as it exploring leveraged ever remain leasebacks. increasingly

us looking equity previously relationships. new sponsor private we leasebacks it now of firms sale capital, that are a at fact, never enabling use saw to source as In develop

We conditions and market course, of increased gives foreseeable leasebacks. flow that the to sheet a the who major us leader of about including we significant competitive of advantage be as in the sale remain strength with risk. market expect balance future execution continue deal And liquidity, beneficiary sellers our these concerned will for the the

competitive bidders position particularly or expensive unavailable, is either we compelling Our compared just rely which who asset-level investment below debt, especially that grade to prohibitively become target. on has tenants for

into pipeline to have are gives to billion higher stages strong a spreads. million XXXX, advanced XXXX and million intent. higher and month near-term or investment closed meaningfully of $XXX visibility in at $XXX scheduled under of little at complete deals have about at least investments a or with million today, letters rates us $X volume of in what the a wider a capital totaling investments conjunction commitments into expect This over $XXX we seeing the volume Overall, in we with cap year. year-to-date deal given of close over roughly Currently, we we

our ended extremely price of agreements, one despite rates turbulent sharply million stock and price about well. capital of held of performing under Moving per currently markets to has available about us capital much We forward activities, well-priced capital a to equity we of have enabled top of REITs. settlement $XXX raised in The strength as the average our backdrop year raise throughout markets an relative for equity higher our up the at share. interest XXXX, $XX stock sale

recognized by with of million to in with S&P which BaaX improvement €XXX improve ago. was the bond small say that us rate BBB+ interest our private And mid-Xs. incrementally currently a by an relatively debt among attractively to sector. upgrading few debt best one our group is were upgrading our profile These agencies, of in to inaugural issue we upgrades access lease placement September Moody’s to in side, at the cost weeks debt, offering I both debt us followed pleased credit the the September, price am a to of REITs and net On the XXXX, in in in the rating priced

positioned enough execute dry XXXX our in leverage-neutral Our basis. near-term on ability pipeline well-priced powder more with conjunction revolving on we exceptionally has facility with our to than to well capital XXXX ensured in credit have raise a entered

it deploy around through this in the and current appear raised, to where capital currently into with cap investments given new deals was levels. Given our be are our ability very pipeline comfortable rates that stabilizing we accretively to transaction

with expect see comfortable than to investing interesting are accretively where be to raise to opportunities, cap tighter given also We capital ability rates targets, if we at in our continue able we our current XXXX.

fourth of real rent touch collections of positioned a potential and healthy, on It Lastly, just with over companies be to the I inflation within rent recession. XX.X%, least quality also growth benign remain want mild leased with at under well-diversified to upon with net about uniquely portfolio amid concerns a term XX% critical best-in-class portfolio remains for of lease our lease large leases XX proven at We occupancy quarter a a and and watch briefly on resiliency, average years. long-term list. of estate weighted the

helped like shape I’d over take past to Toni, to years thank today. the over Before past company P. I W. it is hand Carey employees, our opportunity who to present the have XX this into and

one achieved results for the not dedicated the handful Bloomberg be only inclusive I our year All and possible year a in we this without third equality team. have selected of gender row, of am have been the culture. to Index proud the are an this Gender longstanding highlighting would in included REITs we milestones we year, commitment talented celebrating that And of and and a solid Equality our

pass will Toni. over call the to And that, with I

Toni Sanzone

and increase the share to strength as real estate Thank $X.XX share you, of AFFO reflecting good the share and bringing impact fourth everyone. quarter, with accretive the reported both rent merger new This over we to $X.XX as for AFFO per full and per of AFFO morning our Jason morning, August X.X% per of our investments year, well an in of the prior CPA:XX, $X.XX, growth. which year closed

Overall, we benefit basis the inflation contractual same-store continued into During fourth which the X.X% a remained up XXX portfolio. year-over-year, our growth record quarter. rent ago year points at quarter, protection versus is built from to

to AFFO, scheduled inflation primarily for in around inflation remain same-store comes X% the elevated year. which will prior which rata net roughly the inflation-based our pro Given increase year tied will for rent rent fourth rent quarter go expect bumps the and growth XXXX, with rent even We when into based increases was growth around in lease lag if in through the the is and X% leases reflecting X% the on period. same-store that Comprehensive on full rent estimate XXXX first well ABR recoveries quarter, to throughout included to it remain contractual escalate, our down. timing elevated year-over-year, XX% rent of we

the XXXX year. and which repositioned with below to recoveries our historical Comprehensive basis same-store of majority sold line this of brings comprehensive in of or are expected process points above be the included large the X%, trends. during is vacant on quarter in fourth also downtime assets, Normalizing for which same-store these about half same-store XXX contractual in the first being

X weighted X.X this we and or timing lease-related for was bringing of recapture settlement item $XX included our lease term. the million, rents positive on above of claim the income total Fourth driven which XXX% years just expectations quarter renewals of quarter adding comprised $X fourth lease year. to full year warehouse the extensions. the to overall, industrial of rent the million a the and by a for the Other leasing totaling achieve activity line of prior average for prior guarantor accelerated, And continue

relatively lease-related million assuming income remains quarter. For XXXX, levels. the from the realized for that for we hedges income currency $X gains third quarter down almost currently XXXX fourth are Non-operating from comprised with $X million, consistent primarily totaling other

gains full million, totaled For including currency $XX from realized the hedges. non-operating million income year, in $XX

or current in result around remain currency assumes gains approximately of their guidance at levels, XXXX hedges million. expected would which from $XX rates currency Our

offset. our flows our also and As with hedging positively a strengthening a would from in reminder, an cash $X received interest Logistics. lower gains equity euro million in Lineage impact as XXXX dividends Non-operating in income earnings included

quarter fourth in now investment $XX totals from our on well not just most not receive valuation. XXXX. mark-to-market have and $XXX gain during Lineage million do continues the including our investment dividend to expect over received based a We a to perform million, its offering recent and

quarter, the third quarter CPA:XX portion transaction. for million, of Disposition quarter which Operating gross the during million the from in X quarter during bringing for properties for proceeds a from the a activity as primarily comprised with total generated to assets of of of fourth with were million the portfolio legacy merger. large reflecting contribution properties acquired disposition the proceeds $XXX $XX up disposition full conjunction NOI we CPA:XX operating whose $XX increase was contemplated $XX year self-storage part fourth the the million,

upon converted operate At student housing lease. which Separately, we to of were XX hotel. and leased, self-storage of this to comprised continue properties X X previously net January year in assets hotels these opportunities. as under exception of will than end, which and X, of to Marriott operating These million own, we operating are properties, $XX their assets Marriott we lease master they our manage the with franchise year, expiration XX that agreements net plan of higher and non-core generated ABR for expect attractive pursuing we very redevelopment assets. their be hotels to marginally contribution XXXX the the are long-term in sell NOI properties

provide in they will updates of are progress as to the recognizing into our potential the late the have assuming We XXXX. but occur purposes with sales, XXXX we Marriott make year, we they for move guidance

XXXX. properties to which is self-storage, with operating high mid quarters For coming around from roughly expect growth NOI $XXX million, NOI the to to that of achieve to XXXX, in total we compared all expected from single-digits three as

a discussed I reflect As net the lease same-store non-operating and earlier only reminder, properties. metrics assets

on million, million bringing average $XXX fourth the prior expense Turning was full expenses, rate X% total year. quarter our year. X.X% totaled the fourth interest the the over The to $XX and for to year quarter up debt XX% weighted for full the interest now for

specific mid-Xs, rate cost approaching Our as and although timing further this the on markets guidance our base activity well rates result movements. debt is currently dependent interest assumes as will the in weighted capital execution higher average of of

The the to maintenance fourth million carrying as accruals. both vacant expenses $XX higher were total elevated the tax periods costs, result well full as year asset as for $XX legal property were of real million. estate quarter, bringing a expenses Non-reimbursed for higher and amounts

to lease For of tenant-related XXXX, asset the certain taxes and as for that up. expenses The to we either of between us to $XX anticipated property currently $XX a the million million of decline sales could and expect non-reimbursed back result vacant timing full range. and of resolution asset end move sales year

was bringing to full with $XX range. the line expense for our amount G&A $XX million, quarter, year fourth million the guidance in

inflationary well of $XX $XXX reimbursements G&A CPA:XX be For million larger includes base loss as our as to from expect between reflects XXXX, which we and and increases. million, asset

quarter mainly European basis, on of AFFO taxes foreign expense fourth totaled an comprised on for $XX our the is Tax which million portfolio.

expense million well foreign acquired for driven and assets inflationary addition $XX impact XXXX the CPA:XX million as tax $XX rents by expect between total of the merger. to in as We the on

Turning this morning. now the announced we to guidance XXXX

We AFFO will at exit which REIT of given of have the investment $X.XX billion. growth from of billion business, AFFO Jason And come estate between about per from estate we $X.XX as is million real of share, between at X% based good least on the This $X.XX non-traded implying generate into expected expect $XXX on and currently that. all visibility to and midpoint. discussed, volume $X.XX our real

relatively occurs anticipated for million, the now, our reflecting currently we assumed year volume Marriott activity to to with hotel late million is the operating investment in covered $XXX earlier. the between throughout Disposition I year. total assuming the evenly for are and For timing sales, the occur assumed year, which $XXX majority

dry We supported by ample capital Moving remain and strong markets our liquidity position activity capital powder, use activity. further raising which a very sheet to significant of balance leverage, positioning. moderate capital our and in with is

be quarter, Towards X.X shares the forwards, fourth therefore, outstanding the our reflected our under in diluted fully count. end equity million settled just we of quarter share will, of first which

fourth We ATM also issued this our forwards both through the during year. and January of program, quarter in additional equity XXXX

near-term $XXX in equity revolving undrawn forwards, million equity existing forward $XXX therefore billion, We in settle. with totaling the continue liquidity with drawn we providing $X.X equity basis to our conjunction billion execute capital position, on and forwards, ensuring In credit XXXX maintains an excellent about pipeline just of ample leverage-neutral a facility, our ended when to liquidity available we with over our currently on markets. $X.X have we have which, flexibility significant access conjunction million to on

At as to $XXX of which and even have be continue a plans end XXXX, ability XXXX. given within our relative markets target to access our was of capital of XXXX, will assets currently mid disposition and of low to all our to the especially net mortgages XX.X% of high target low the no and Debt-to-gross due our range very portion million mid of maturing XXs we bonds ranges. range to at We was retired part in capital leverage during to of view debt was as in debt case EBITDA the X.Xx proven turbulent manageable, year-end, as our improving remained Xx. target which markets until metrics our

for X.Xx largely the rising was coverage to rates. reflecting interest X.Xx, third expense which compared the interest moderated Cash quarter,

growing with stockholders ratio a provide we X.X%. dividend and XX.X% for Lastly, currently the income around of continue payout yield attractive with an to well-covered year dividend

our results, we of look the produced rent with strength on as a despite well challenging and full our we strength strong the pipeline, of as execute near-term have closing, we merger escalations. as the investments ahead, sheet. impact year primarily new which of well to we reflecting given backdrop, balance CPA:XX our And accretive solid In positioned market are the

And back operator with questions. the that, I’ll the to call hand for

Operator

go BMO Capital Markets. Thank you. today question Kim ahead. of [Operator Instructions] Our coming John Please from first is

Unidentified Analyst

Hey, then of OpEx expense? could puts What’s you impact through John. just kind share AFFO on I interest guys. walk for and from the us and It’s of per from the Thanks. if takes was curious Derek guidance.

Jason Fox

Toni, do one? want to you that take

Toni Sanzone

one. Yes, I got John. that Thanks,

we’ve So of on the yes, think a highlighted number factors I call.

seeing but kind from activity summarize, are our are I fair we factors. seeing a of amount embedded in think from and the investment we just CPI-based offsetting of increases of the a to growth portfolio, number

On the interest biggest expense, about and that that’s the offset. on X% I think headwind that’s growth really we’re the seeing, roughly

projecting over in year. terms what the say kind just side, where in FX so given we’re part settled they I’d XXXX, On of now, of the of rates the it’s where are last for and less

as could the worked So I against a us have say potentially us FX it would in to way XXXX. for tailwind opposed

would in which some included I in leakage expense largest the certain receiving dividend say assets addition the prior higher other we But would the we’re vacancy to and So that expect are downtime which expenses. interest and then definitely highlighted we side. drivers from well I received points, some G&A that, a from on as year and as Walt few smaller that Lineage tax payments items, that or not

against of that about us growth we’re year. aggregates all the So, X% that seeing for really gets the to

Unidentified Analyst

as rates And kind where seeing that. you’re biggest I And of what Appreciate widening of we just move are walk first on is kind out the the you year. amongst color cap spreads the into today? the sectors quarter Can rates then the the different Right. cap and appreciate through of geographies?

Jason Fox

Yes. sure. Yes,

the should has was this the finally quarter was year full quarter, which of So in a points XX I rates fourth and Fourth reached we an bit than average basis cap think higher of say. that X.X%, to carried or that about year. cap rates equilibrium kind higher average, on over

markets flowing the transaction that’s as think through I well.

codes point Europe say in U.S. at ZIP and this I time. terms maybe there cap rates. regions, In similar would of

see a across bit think, little is bit at maybe the would of probably trades in bit I type to and a in in Europe. cost end rate that cap types, still there to of U.S. to stabilized maybe probably terms maybe that net then spreads some increases say we it’s could on property increase probably in has I we XXXX Europe, – of the transact sense, borrowers has think And low more bit think is a more, little And – U.S. that little to given the would crowded retail be we proven the want I more want where lease the the makes generate a of within lingering. maybe competition stickier.

I think on the high in be move the in particular, end, it’s rates cap we’ve seen where sale-leasebacks. industrial would segment,

when and you think utilizing be corporates largely that debt are high-yield the capital, think alternative those firms market mainly or loan private looking sale-leasebacks. the equity sources about really and leveraged are of at They markets are what in I their dislocated. still and would

power pricing So now think cap have reflecting some I right that that. within and we rates market are

Unidentified Analyst

the guys. Alright. Thanks, Appreciate time.

Jason Fox

welcome. are You

Operator

you. Thank

Scotiabank. Our Greg next question coming is from go McGinniss ahead. Please of

Greg McGinniss

Hey, good the anniversary. morning. Congrats on

Jason Fox

you. Thank

Greg McGinniss

you robust opening for very the remarks. And thank

with couple was a do I me of reserve of ask. still leave have can’t going that But questions You to many my I here.

cap So of and Where one, the are pipeline Jason, most in right the just seeing reasonable property if perspective. the with in types now? assets you on success terms type tenant of a the from touch more could rates you assets

Jason Fox

sure. Yes,

mentioned that volume that year-to-date we that $XXX So rest that’s That’s $XXX scheduled are complete other advanced closed the comprised commitments million, million. that we of kind stages. capital of XXXX. it projects have at of and visibility I to just probably The call in each $XXX that already through these pipeline either deals that investments kind and of is of and year over million million have about we about have, deal or of go the $XXX the to

of Europe. still the little go pipeline, more as America more sharper deals, Europe in to U.S. of weighted the a right saw to adjust in in are terms types bit rate our more transaction the increases we markets In I of and source to to it’s That towards seems mentioned the actionable now deals to broadly. room earlier, left North maybe be

Property type in been we’ve past. little buying is So It’s consistent the U.S. XXXX. what weighted towards more a with North bit and America. the

do remainder looking I our some think Europe production, be warehouse retail. XX% industrial, predominantly I and That’s and was in that for It’s going of the as true the both and R&D. have probably and retail And R&D, were industrial, to warehouse the deals at. pipeline both we’re well. U.S. then think manufacturing some we

in And or I of of equity-backed bulk this should transactions sale-leasebacks, in say support really M&A what we’re private are doing, activity. the and deals again, the pipeline larger

parts it’s or is bit with uncertainty how moving timing I you’re more that deals. So transactions buyout. execution closing sellers the more in in on. much something concurrently those we’re a that pricing plays get from when course, on we the focused great the the there little And But reflected are risk can is a of think of reason, for execution and works, partner

Greg McGinniss

you Okay. much for very Thank the color there.

Just questions quick a expirations. on couple of lease

expiring on First been XXXX of then Can include this especially maybe the for view strong, leases? new that’s more industrial for we fairly X% does the Marriott. assets. in recapture normal warehouse recent and industrial rent is the X.X% those as a And has

Jason Fox

want Brooks, do to that? you take

Brooks Gordon

Sure.

Marriott. So include the X.X% does

of if you X.X%, it, off, been call since. has XX sort back points So resolved it’s another, already basis about that

ABR expiring manageable. We even and actual respect we’ve of That really of and With around that. to leasing eight a at like by X.X% said, quite XXX% about quarter a wouldn’t of leaves good number extrapolate that’s I to had that recapture. run encouraged quite metrics, the quarters. we’re there, in couple and more so XXXX, question any a so results And certainly, of or look on your specific trailing in

there are have that. agree that industrial in tailwinds, and given warehouse hard But very So some extrapolate to assets keep to benefiting been our it’s transaction-specific. look capturing us, a and quarter, especially I we

Greg McGinniss

you. Okay, thank

Operator

Bank coming Thank Please go of from you. is question America. ahead. Joshua Dennerlein The next of

Joshua Dennerlein

expectations John. guide you. for Thank commentary driving are and Jason same would me, Excuse And be on any Joshua your appreciated. additional what store XXXX? Hello. Dennerlein. your what’s is, It’s My in question

Jason Fox

want that? Yes. talk Toni, about you do to

Toni Sanzone

the on get there. I side, some same-store comments Yes,

inflation our through see We to to expecting continue are the just given lag leases. push in

up expect and X% the of level that for full we catch question. store the tick and the on I to the around part that’s year, So side. about that contractual didn’t do same second to remain right

Joshua Dennerlein

commentary type on what’s driving any the Just guidance. of provided additional

Toni Sanzone

I’m sorry, driving the…

Joshua Dennerlein

Driving guidance.

Toni Sanzone

for In full year? the terms growth the of

Brooks Gordon

Yes.

Toni Sanzone

Yes.

I headwinds mention factor, aggregation a the bit did an little I the other of really we’re of a the being that the just there being the expense year. items I smaller upcoming then as in expense, that think an in mentioned. number largest I dividend years, experiencing is this tax and that just Walt interest highlighted XXXX from of next G&A occur we Lineage expense of from and some received have to would And

some So we’re to those leakage aggregating some addition are assets on vacancy downtime. downside and things on that certain seeing in

Joshua Dennerlein

you. Awesome. Thank

Operator

question from Green go ahead. Street. The Spenser Allaway coming is Thank of you. next Please

Spenser Allaway

you. Thank Yes.

at looks Just you the how on Marriott comment just going high But you these are if as a assets, understand to just on market that I can level that the currently color – go provide along. curious for more how you assets?

Brooks Gordon

Sure.

were retain So, yes, interest And timing, exact down will looking timing One Three in assets we we noted, think in the the to is Marriott in to comment on to pretty But are and of very converted January, sell to and XX this in which at guidance, to Hard we operating tie a seamless assuming gauge transition. York. point. terms continuing that’s it at execution. strong. operating as that they we are of pricing of really an hard were year-end. assets closes wouldn’t operate New well. But those opportunity industrial those those is nine to our excellent be opportunities. of going we development specifically again, assets

opportunity and operate pursue lab those Diego, third in good the but those opportunities, potential And very Urban, well-located meantime then sites will San again, really the California. we as redevelopment there. is in is Another in seamlessly

Spenser Allaway

then on both guys Can provide maybe have year compared the And in broadly deal U.S. the in volume year? you total how the thus last far sourced you just Europe just Thanks. more some to on color that and market. transaction

Jason Fox

mean that point in the last Spencer? Is compared to I point at the this this question, year year?

Spenser Allaway

Yes.

how you there maybe sourced? volume Just trying just that are get seriously looks, market but overall sense being like to underwriting, of on deal like of just a just terms everything out in the total not

Jason Fox

seen mean probably we ever think factors is I Look, it, that and of I leading earlier, it’s as Yes. as the right a sale-leaseback is market as number to – mentioned strong there that. I now have

private firms One how their is of equity they which and capitalize businesses.

I think cost-wise, just high-yield debt the loans. not are competitive, leverage mainly or alternatives as

I still not strong how at mortgage uncertain. little is think that the market is all the really second least in sale-leaseback we compete the or is availability that within execution factor, a bit

So, of the that buyers a private on are we they equity would I the largely real estate lot say sidelines. traditional still with compete

bit, which led a fact rates have stabilized So, I little buyers that together has those really think the mention maybe the spread sellers and to are for two factors kind coming a bid-ask tightening of to between to of – not deals. debt

from the now, of changed There have year. year, are first of And market. kind obviously, to we last the were year, increases bullish. rate really of as for last interest started long quite we pipeline a I the trajectory a there. the I this when deals of Compared think last kind in quarter chunkier as the this year sit has of up But some sharp that combined had the where we in time. right set beginning is all strong in well transaction us pipeline look, mean time we as

now. M&A are but those sit several earlier, a of uncertain, little activity we bit where be can timing mentioned we I that so As about supporting right feel good

now. it’s a it’s of course, progresses but see I we And and market, the good so think year will favorable how quite right

Spenser Allaway

Thank you.

Jason Fox

You’re welcome.

Operator

not The is ahead. Mitch go JMP of Germain Mitch, Please on you. from line ahead. sure is next Make coming your your Thank line muted question end. live. Please your Securities. is go

Mitch Germain

that. Sorry about

it’s about only guess coming that’s debt debt? due mortgage X% I the this of What’s Sorry, your year. for that strategy

Toni Sanzone

Yes, that’s right.

$XXX about this think it’s a mortgages year. million maturing of little I over

see really of our in the of I as really we and sheet positioning, manageable. that think context balance the size being pretty our

have I think optionality. a we of lot

billion $X.X capacity waiting forwards and facility kind equity over credit the of of take have million out. are $XXX to in that our We balance sheet, sitting about of on

think options of a of in how that. we have terms I lot So, we address

You a size think of expect But being the volume we $XXX debt side, the million some position deal the with pipeline the see on this I for the expect and we market us. in are year. really will of to given manageable the in good us

Mitch Germain

portfolio? thinking And your Great. evolved Jason, in on operating storage the anything has

Jason Fox

that look, we property mean we we like. evaluating that I have – Yes. are still type It’s it. a

a We have time. owned it long for

property good supporting us CubeSmart. managers have Space in Extra We in

So,I has say thinking the that evolved. wouldn’t

We still options. of can at are we these. new at all attractive think We considering fund the own some can to continue them look way We that’s some to lease. best selling convert prices raw net to if also can We transactions. the

it and – the be combination big could but above, So has certainly changed. a nothing all of

the from year. think really of I same-store this still we portfolio slowed the in strong industry’s a for XXXX, fundamentals. expecting we this maybe the Growth are growth has meantime, like peak but

portfolio. the think budgets, digits on I high-single to mid are in level property we our based probably for this

some of complement can be think to net portfolio. patient So, and overall, the lease nice we increases. And I to it’s ride that our a continue

So, I what just chose be on more here. will path we opportunistic we think

Mitch Germain

you. Thank

Jason Fox

welcome. You’re

Operator

Please The you. JPMorgan. coming is of Anthony Thank from next question Paolone ahead. go

Anthony Paolone

Thank you.

Lineage. one just on First is

a not marked getting I year. but dividend like up, you you talked think this it about

there. that if what’s you happening wondering reconcile Just on could

Toni Sanzone

are taxable from year. reflective the same it’s we of of you their dividend as dividend really continues XXXX, in kind value is in But we to a didn’t of what positioning. think that January looking which received We We and investment highlighted, get of Lineage this appreciate. in at, it January was income I the the believe of have Yes.

are this it an million. did have We that year, with they about offering up $XXX marked and we at

So, really are the continually we year-to-year. variable the somewhat flow they off is probably generating performing that of investment they are think but from cash well,

Anthony Paolone

addressed the bumps the versus And Okay. Toni, comprehensive same-store gap Understand. the then same-store between year-over-year XXXX. sort of in you

there are that some same-store, that about down you AFFO, you outlined, to do are we as do as So, the comprehensive thinking or number that’s that drags think think the that? or you ‘XX like converts X% to

Toni Sanzone

lot of I was of even think right, that thing. XXXX, are recoveries you parts with comprehensive there and and kind rental a a moving somewhat sort XXXX the of of and

expectation move XXX so point top kind about a pre-pandemic line of the So, reasonable expectation be some that probably into future against would we point seeing drag a drag XXX it for always us are from run say is offsets kind of of there. historically or there kind good But did contractual same-store. that I through that’s line And the and that us, top will period-to-period. for basis us. usually think from for basis is the I

Anthony Paolone

Okay.

think, I understand guess I to so just And make I it. sure

I if slows So, assumptions and XXX there want, we FX you maybe a what on really points we drag whatever thinking basis is we of four, of of build, start guess kind be are the would down. with that, about then think make top through

Toni Sanzone

sounds yes. That right,

Anthony Paolone

just And then last clarify. Okay. to one, just

you or said And didn’t of operating properties, I months I not include catch stuff? think the NOI that include you if property Marriott XX $XXX this, that million for does the Marriott ‘XX. said in

Toni Sanzone

$XXX are in does that include Marriotts. the million. That embedded They

Anthony Paolone

Thank it. Got you. Okay.

Operator

Thank you.

coming question from is go Brad Heffern Please of next RBC Our Markets. Capital ahead.

Brad Heffern

I higher like duration, curious longer escalators, rates Jason, everybody. I robust. better you really in about Hey higher things like and being market the lease am sale-leaseback seeing any are better addition terms to anything protections, lease Yes. if volumes that? guess you have talked cap the

Jason Fox

Yes.

own dictate focused leases, that’s on we all leases, our we sale-leasebacks negotiate Lease think for I say us. I would to are has been the term I our write benefits above. XXXX. as some important that say. one of the to the of own And terms one can of extent, mean I should we

was But with term, think on to average deals, new Our lease XXXX we that as for XX.X or years do focus with been. line I line in in expect which is we line where in that be I to be weighted have that. would well.

that addition some we I the of bumps rates, upward we to pressures think in are cap get. still type seeing on

are place pushback imagine. we think Those more we on and from getting you that some that’s put maybe the have increases I higher than where as But are of in conversation been our they inflation-linked historically. time-to-time caps now. can

the through some fixed well. has to rate as that of And increases flowed

a been that around are is be I fixed that we X% above XXXX. we for are little bit have think to I that going historically, mean this for average, increases we the year. fixed on expectation above probably leases and increases my

in bit to negotiating that think firms raise I leverage look, So, a maybe little alternatives we given that capital. more there have these deals some of is for fewer

sale-leaseback have as that that and even in opportunity execution. as are target think good of none maybe fewer There right that really there have long ours is and – I a history fewer now. is terms competition sale-leasebacks

those structuring abilities factors to think kind So, will we what’s to measure us lead us of and get. and what all I we important having of incremental

Brad Heffern

And I Has that. the tenants wondering eye the on list. expanded you anything maybe there that And through to of contracted? an ABR it that watch Okay. I could is obvious keeping we if Thanks guess disclosed need from for you the for? XX% isn’t or was that talk then be

Brooks Gordon

Yes, is quality Again, about XX% investment Brooks. Credit of is ABR This grade. overall reiterate quite good. is

dealing largely From materially over perspective, of peak in with and are put list great rent. X.X% context, collecting the all to with large that maybe COVID to We was – watch ABR and just X%. access our a of capital it’s into around companies

very improved watching But any headwinds. anecdotal specific. industry-specific So, credit want we that. certainly, That we attention we the tenant very and this then. and quality cycle, and doing pay at very, said, has in It’s both not certainly close to themes watch in list. is closely the or are There since point really macroeconomic are trends

I in of anything kind list, per that’s So, se different as watch characterize and recent wouldn’t the status it the quarters. of

Brad Heffern

Thank Prefect. you.

Operator

Thalmann. Please coming next Ladenburg Thank of John question go you. ahead. The is from Massocca

John Massocca

are acquisition things in Maybe sale-leasebacks grade deals divergence expectations pricing to seeing latter those non-investment I side tenants? going you change tenants? two particular, for the where Good tenants most just has of morning. to a in of rated is pricing rated a in potential back the you there but kind terms been and kind tend and investment-grade do often, of terms of between know kind of of different buckets of

Jason Fox

we really that’s And as say mentioned, have John, not not investment-grade are seeing rated typically we leasebacks. I focused. we – many you are not where would

those is here opportunity where pretty much real the divergence. just – and The have where I suspect a think below companies real fewer investment big credits capital. there grade, I those alternatives and opportunity here is to access

where as that into are, I So, increased guessing that’s hasn’t not think am I again, investment-grade probably much more tuned been much. stable and sale-leasebacks but

investment-grade high-yield the bond as much the haven’t moved markets. as like markets Just

pricing well. the sale-leasebacks as that’s think in I reflective on

John Massocca

leverage you And given But kind maybe thinking sense relative your bring is, make terms you today? pricing in own leverage where where implies kind Okay. of to sheet, historically? especially then guidance balance does longer particularly just leverage of a It pretty how versus are differential to are XQ. is about flat like sounded because pricing the it versus debt of pricing, term equity down attractive, relatively

Jason Fox

we Look, are… Yes.

Toni Sanzone

Yes.

kind to think are looking in our levels I we of high-Xx still target leverage at that mid range.

we I our have think equity. leaned into

the capital. equity think of where is view we been don’t we in I of out issue as terms of market long-term. a favorable us our cost future can has debt keeping pricing pretty the Our of source kind of environment

think in we to there. I priced the kind I of neutral been. kind of right we agree what are so how continue seeing in will range well the it’s that leaning stay definitely now, are But given we into to leverage you somewhat are So, equity,

John Massocca

that in opportunity the in kind just range mid-X of because current guess set I X here change But environment. an the maybe target new no is philosophical of to

Toni Sanzone

reaffirmed to upgrades No. the I the continue got from say I think our target at we with just was the credit of agencies. rating range. we existing look And kind would look, profile

in with have So, place ranges I think we that are we comfortable target the now.

John Massocca

much. That’s it for me. Thank you very

Jason Fox

John. Thanks

Operator

next ahead. McGinniss coming Scotiabank. from Greg The Please Instructions] of is question [Operator go

Greg McGinniss

sorry. Hey,

quick on follow-up. am looking properties. on the from I this the at color properties. that dropped Just operating rata quarter. income from for appreciate operating curious cash expected other Toni, pro the and NOI normalized I last quarter the one I just self-storage saw

what’s wondering So, just going on there?

Toni Sanzone

of from is nothing kind really There there. of quarter-to-quarter Yes. note going

storage. our And digit the growth on There I probably for we are of expectations that continue think well. there. upcoming I to highlighted high-single see performed seasonality storage some the think we year. is in to sort mid what

hotel rather through We runs the asset hotel line. in have portfolio one that or one portfolio that

that for that probably of annualizing a I So, look say, projecting that year just taking to basis, number all a million. is we what are to But full on more portfolio, bit. down would is $XXX which

Greg McGinniss

me. Okay. Thanks. That’s it for

Operator

back the turn Mr. Thank to you. At for floor Sands closing this time, over I would like to comments.

Peter Sands

interest line P. on your And the Carey. Donna. thanks in everybody for Thanks W.

XXX-XXX-XXXX. That have you today’s please additional directly Relations Investor on call. If questions, call concludes

disconnect. now may You

W. P. Carey (WPC) 10 Feb 232022 Q4 Earnings call transcript