WPC - Earnings call 4 2023 | W. P. Carey Inc.

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Operator

Hello, and welcome to W. P. Carey's Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Daryl, and I will be your operator today. [Operator Instructions] Please note that today's event is being recorded. Instructions] [Operator

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

Peter Sands

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

provided some Carey's Before we like may our not statements to would in cause begin, be are materially expectations deemed on call W. facts Factors differ of that actual everyone this could filings. to made historic the remind I are that P. and forward-looking from SEC statements. results

investor An online for made materials. wpcarey.com, Relations our replay and copies of call presentations archived will our can at X approximately this section and available be conference you other where website be find where Investor related in will year it the also of of

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

Jason Fox

of good and details impacts I'll our how with Toni Thank on certain successfully our everyone. guidance impacts results XXXX office guidance, on in the of announced deploy strategy we to exit we we're executing in you, will the transaction CFO, some Sanzone, will which of reflect also for focus our recap our about XXXX, significant the which both positioned September. XXXX of financial cover expect the morning, Peter, tenant-specific and also reflects. year ahead market outlook. an XXXX, ready talk Toni and Today, improving capital briefly

questions. also President; the our Gordon, John Park, take Management, Head and Brooks on Asset our call to of are

rates. remained us. high existed rates assets, largely one XXXX investing without growth. continuation external was in lagging Preserving of a with therefore, resorting spreads that The riskier to with XXXX, for Starting investment in cap priority a rising interest backdrop, the transaction

expensive. financing source of as very reaching other remained high-yield debt attractive the In move and the peak for Their October. however, interest to a an alternatives capital year, leasebacks, for of in rates most higher became continued U.S., companies

backed R&D manufacturing In April, subsector leaseback investment with the assets That advanced and flows have was a with we a business we single invest shares tenant to us, for X a long-term investment of expanded properties industrial portfolio many Apotex dedicated lease largest ever the operating on industrial including campuses. reliable rent bumps. also cash other a completed our characteristics key sale with pharmaceutical but with officers by retail our on U.S. include to of critical now and attractive new in, that sector. We've more focus

transactions XXXX and As a U.S. result, retail in both of subsectors are across exploring various in we the others, completed handful a Europe. and

those we on other believe with and Focusing our property terms achieve on those consistent types. we we get structures can

resulted Europe, XXXX. activity a steep wide bid-ask in spreads interest in rise In slowdown throughout pronounced transaction in a and rates

$XXX of opportunity, and find a Spain premium completed to Fedrigoni, We and pockets cross-border continued in with global Germany a sale-leaseback, facilities of for however, specialty million XX manufacturer manufacturing papers labeling. and packaging is November, Italy, in which

for however, office, volume of and wide about both the investment warehouse X.X%. volume rate a average full of Industrial now the average providing very of subsectors, cap a to and of investment exit larger set portfolio. are opportunity diversification. $XXX added and XXXX brought our execution our comprised majority year weighted quarter given X/X at Investment from investment categories, our up volume billion represented and of many which for makes assets weighted cap a totaled industrial broad rate X.X%, a warehouse $X.X at million Single-tenant overall of

close Sale XXXX XX% to lease investment leasebacks, to which the the our have volume. advantage enabling structure us represented of of terms,

to get terms originating continue strong lease rent and order in we're structuring. build-to-suits lease achieve to will we Going forward, escalations, through focus able through and long investments on the to robust sale-leasebacks protections

Looking ahead, spread transaction to able transact U.S. recent of to attractive Europe. capital. improved, our has in cost say at Xs, the to providing outlook Today, the I'm and in months, the into environment pleased both we're cap for that an well the rates

sellers some in We're often opportunities. M&A, expect, expect a out play seeing market which pent-up and for also supply pickup corporate higher positioned as very from we're If sale-leaseback investment in we believe we conditions creates volume well XXXX.

commitments and still the XXXX, addition complete in early, into totaling over million capital acquisition X investments investments weeks to $XXX million that pipeline have While an in year, to and completed we've scheduled of $XXX continues build. it's to

highlight our Spanish paid for down that $XXX government the cash, paying on want credit from At XXXX funded of Since some end position. disposition. acquisitions liquidity million with we One proceeds I of sheet. we've XXXX, over and cash our debt is including with the our aspect positioning some substantial then, our facility down our balance to of had

close After for the balance to be sale $X $XXX the of billion. U-Haul cash million, will approximately our portfolio

remaining to we from asset cash XXXX. additional could flow generate dividend, in paying $X.X to invest office free of cash the billion plus to cash With close after expect we our sales have

also which longer address additional equity at debt to have approximately capital stake our in deals some have we've will short over fund our sources we continue to maturities we the in Logistics, marked term, or the Lineage past, internal $XXX We million. currently as including have unique $X revolver the discussed term. in billion And of

flexibility to any differentiating compared REITs. cash year. view other markets sources we issuance liquidity lease have many meaningful to factors we net capital and need how position, fund to don't lot investments, this We and our new new capital internal We approach as raise of of on a

the some our from announced signaled since in Fed exit The broader tightening we rally weeks. XXX to since equities our cycle, the Our has and the also REIT improved end its our multiple weaker recent has benefited S&P recent office of liquidity in stock equity the of benefited performance addition from notwithstanding Index.

in and generally in the Xs returns Deals over Xs very Despite we of on with spread the rent and our our have Xs, funded issued of substantial capital of executing been we mindful into supportive their coming lease They have their going new markets are, spreads comfortable an take even cap and REIT XXXX compressing. returns rates if bond capital. unlevered bumps capital we also with XXXX, remain with we're newly investments. built attractive and that in appropriate far the provide long cost achieving on issuance hand. liquidity So highs with overall terms the up, deals therefore, rates off

to investments. have a continue new deploy into cash we So bias strong to

of strategy and in progress since. exit I they've our and efficiently time with out and we announcement our briefly to ambitious successfully the executing September, hard proactively not want to made work be the in up we've exposure plan employees over We're could and frame. both Lastly, laying an I discuss office an announced office the on prouder exit the dentition time the in and the shown, that plan, to lead accelerated

equity, properties of off addition which reduced we Andalusia ABR. completed amount that the and date, to XX were our has under the a negligible AFFO us exposure the making remained expect X.X% deals, of to expanded, short all time our office reduce in of achieve the just the or more of will enhancing spun remaining announcement, coming In wider strategy November, generate AFFO, which NLOP to sell of months. associated owning portfolio ability pressure, to reset has office in we've cost State sale over investment to our on our which on properties of office competitive without exposure multiple to has over We're reinforcing baseline our benefiting transactions our Since the Exiting the was January, actively working to XX able office we have spreads XX in to fundamentals headwinds largest to properties our a sold into sale the of assets. component growth. with the thereby grow program, conviction under office from the and space office while

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

ToniAnn Sanzone

and and of good the by spin-off $X.XX . X.X% which periods, $X.XX everyone. from XXXX lower Thank NLOP morning, year, we the office for early of the per full AFFO assets, our and exit in This fourth year you, prior the morning, for November. respectively, quarter diluted Jason, including versus share X.X% reported were driven

gross million $XXX under $XXX quarter, fourth XX $XXX of total sold Program, year our of for million. the During for million, to dispositions properties proceeds Office bringing the including we properties Sale the X sale for

properties sold throughout Our the fourth quarter year. million. but of next operating hotel of to lease The disposition and XX properties activity Marriott the Hotel one from Marriott years, sell January we few of operating also X for redevelopment held as net the remaining sale XXXX, hotels Marriott converted properties now continue that operating will for additional We've to over in this X included will $XX be XXXX. expect X

sale completed with sale office this In date brings million. January under This, Program gross year, the State approximately of XXXX of and of we along Office of total the to proceeds our million to the $XXX I'm largest office asset, Sales million. another pleased in portfolio in the January, $XXX to for Andalusia asset to the say $XXX

our the million completed the already sales office under the between first totaling million with program of weighted and sales including XXXX, half $XXX guidance assumes to million Looking the the ahead $XXX to remaining year. $XXX

approximately through sale the of lease the guidance portfolio, purchase of its for also includes $XXX million. net disposition Our U-Haul the option exercise self-storage

We on quarter receive tranches rent the the the expect of first portfolio first million. to totaling proceeds and the during collected quarter in full have $X.X

million, earlier. Ordinary course are I in between hotel total the million includes to expected dispositions operating and Marriott $XXX mentioned $XXX XXXX which

and for both current high its same-store net X% fourth increases U.S. rent well to expect to high generated inflation, contractual the XXXX reflected our of leases XXXX, quarter This lease from in we we rent proportion the peak, the to year-over-year be year. average to an below benefit X.X% contractual as inflation full close same-store is the for with growth the Europe. Based forecasts, on moderate to the growth in remained even for to XXXX Xs inflation mid- first rents from quarter. During portfolio our reported and continued tied in the

work growth X.X% over This rent million. previously we expiration of vacancy for same-store year-end ABR lower the by $X.X Comprehensive property the retenant also XX.X% driven large lease our the year-over-year quarter, lease was generated to near at net a to the reduced property, as occupancy warehouse fourth term. portfolio which on

currently negotiations the in slightly assumes most guidance of are although at or to the for property rent, on prior our downtime active in-place property re-lease potentially above the We XXXX.

for While specific closely our our monitoring. we're assets, reflects outlook expectations XXXX which loss rent with our negligible, has been historical relatively on experience X

our working leases and improve restructure works First, to with are financial Europe, in position. retailer tenants, top proactively to extend do-it-yourself one of it a XX we its Hellweg, as its

currently assumes this ABR portfolio million rent totaling guidance and our this million $X.X from forward estimated Although situation, a abatement reduction is first $XX quarter going an developing in a a approximately for of million. the on rent annual to $XX

cold and produces we Second, operating Central the fruit storage in $X.X has tenant packing X which of ABR million bankruptcy. of California, own Valley, been facilities in

on lease of through is rent the rejected. be tenant current the end expect to we While our February,

assumes as rents Our we no the a work tenant through guidance, properties and additional XXXX this in carry therefore, from vacant. and resolution

In offset to million, XXXX of course expectations aggregate, an of lease-related costs, a pushed into fourth taxes. includes by rent AFFO, basis to the and as the for X were XX full slightly our certain Incremental have bringing lease ABR. partly XXXX year guidance impact below these assumes combination on million, of tenant a related $X.X our our points around contingency quarter total income negotiations $X.XX was Other $XX.X normal lost through XXXX. estimated rent our guidance lower this, situations carrying income

currently year, XXXX of million we low- in on full line negotiations to mid-$XX based range are with into process. expecting item that almost the For to total visibility currently this the half in

comprises currently generate approximately and X housing X XX which self-storage. $XX in and with coming are hotels portfolio properties, XX% $XX properties property between to million expected self-storage operating NOI from million XXXX, Our student of

assumes guidance relatively to portfolio the XXXX self-storage prior NOI operating from year. flat our Our same-store is

the for NLOP. a million as $X.X manager quarter of partial totaled primarily reflecting reimbursements external the and fourth fees management Asset period

to our of year expect we $X XXXX, expected from asset over sales. million, are $X total between the NLOP our $X is total management fixed over declining For course time and million, with administrative reimbursement to the million while which asset fees

our a As on both impact G&A no have of expense. reminder, items these

on $X.X Non-operating the gains primarily $X.X interest fourth million cash driven million. income of quarter, hedges on for income million $X.X totaled by realized and of currency

income. of of For interest totaled million currency full nonoperating the realized year, million $X.X gains in income $XX.X hedges and $XX.X comprised from million

year million, remain excess $XX in and in at It million from current interest totaling currency assumes XXXX million $XX million, expected also of including assumes early their which between or cash. expected that $XX Our be and income guidance higher is the nonoperating gains between to as and $XX result income around totaling million. on which invest hedges decline cash approximately we would levels, rates currency $XX

also Logistics, Lineage expenses which guidance in were January will fourth includes XXXX which a property bringing million for Our million we the nonoperating total of early this property and $X income quarter. Nonreimbursed XXXX. tax of approximately quarter in through to first flow from received the $XX.X full year $X dividend accrual $XX.X million year a million, in included the

in offset vacancies, exited to a costs expenses expect the total million, reduction I property with an carrying earlier. office in expected we nonreimbursed partly increase the have discussed we $XX which reflecting XXXX, to expenses associated For $XX between and by related million assets

G&A the to full million. quarter, $XX the total expense year was $XX.X bringing fourth million for

fall For certain expect higher typically XXXX, $XXX G&A items. increases. reflecting trends expense payroll-related the million between first to given G&A we million, inflationary in timing quarter, of and $XXX the

our quarter and reflects expense basis, foreign totaled taxes on million for for cash fourth which on Tax $XX.X European $XX.X or million XXXX. a the assets AFFO primarily

total For XXXX, these between million we our taxes are guidance. $XX and million in anticipating $XX

XXXX to our now guidance. Turning

volume AFFO Sale $X full by decline and the between $X.XX the driven $X.XX, the spin-off, investment reflects of office assumes and with and be We year year completion with of U-Haul NLOP year Andalusia primarily and expect impact generate weighted, the to are the the the share Guidance dispositions driven per by versus option. full Office to more volume of Program. full and back-end purchase the XXXX, more portfolio dispositions billion investments weighted, of billion expected $X.X between and while State sale timing primarily of investment front-end

million equity the all net NLOP fourth the December, proceeds capital and outstanding of we settled spin-off. In recast balance to X.X markets shortly during activity on revolver our forwards of Moving portion issuing term to pushing billion and its maturity of our a sheet. years. $X credit the quarter, We the $XXX February for facility, out to shares million existing over billion the upsized XXXX. completed few before our multicurrency maturing X significant from unsecured next of pushed $X.X We out years debt

term a to term to to loan the their pound option also refinanced recast, year a maturities we with extending of a As part euro extend XXXX, for the years of certain sterling further and February loan, X subject conditions.

demonstrates sheet growth the The strength balance extension and upsizing and our of with also our credit liquidity, valued of well as further It accretive continued participating. our going lenders our breadth enhances the relationships XX external supporting as facility of flexibility banking forward.

our now liquidity of position. Turning the strength to

billion, of all the $XXX cash. we including us, total NLOP part During XXXX of quarter, settlement capital the to of spin-off fourth came distribution of of from $X.X of with significant the back liquidity ended the the received forwards. including outstanding We amount as equity and million

quarter, liquidity primarily from our Sale the disposition. during U-Haul Program proceeds further increase first and by expect position the driven to the Office We

exceptionally As our fund access maturities both we very a result, capital XXXX, well will we positioned plenty manage gives markets. debt our as of flexibility allows which, us in remain to when choose acquisitions and noted, the us Jason to opportunistic be to and

range gross to which target assets well XXs. our low at At the be we range to in mid- X.Xx into first are disposition XXXX expect to target with low in of our half. within as the of was the targeted is end during investments redeployed the of ranges our Xx, it Net Xs proceeds although at remained target second before of year-end, mid- debt debt-to-EBITDA relative returning new metrics our to to our low leverage to XX.X%, range half high

Lastly, our dividend. regarding

to $X.XX fourth mid-XX% greater our payout AFFO quarter, per to enables about to a ratio retain us the the and the to reflecting exit dividend flow. ratio, cash reset impact target strategy accretively generated targeted we our on reducing internally low of During XX% office share lower and reinvest lower range payout

our we to intention will dividend in which Going growth dividend recent the enhance years. with anticipate forward, to our compared line AFFO, grow is our

of by the In and the FFO embedded our We establishing in year, that, to primarily an of assets. supported And the term well very AFFO strong reflecting is growth investment office questions. we're primarily with an grow as portfolio forward. well position long within liquidity new operator hand the improving growth and a over our transitional our strategy generate a environment, term, net closing, a call I for baseline and from industrial which as XXXX execution positioned believe to both near balance sheet warehouse back the exceptional exit high-quality, to rent lease and

Operator

from questions of Our Instructions] Heffern RBC. with [Operator the first come line Brad

Brad Heffern

with offset warehouse it guess, guide, issues extent confirm is is first seems the investment the volumes that lease offset? that to the that these moving the I of credit And you those guide? contemplated the like the the full And On correct? X higher prior and weren't can of issues all, expiration. in

Jason Fox

do Toni, want take that? to you

ToniAnn Sanzone

of since range rent just Things handful a to then. aggregating months recoveries. sight probably releasing into then And and on X fairly Brad, in That a I not on I in our is $X.XX, guidance. of The about that. preliminary correct. contemplated out that is better terms things wide interest-based is items. there handful delta rates there the We the come correct. line November. the ago. focus impact call outlook that on think of got early went were assumptions I of a offset, have that say was since And I'd highlighted with was better generally a

midpoint. have our keeping combination guidance, at that November offsetting in us $X.XX anticipated is really largely which that, in with about dividend, the So the we not Lineage

Brad Heffern

I list unconcerned. Okay. there we watch commentary the been Got come these on X did is in And think a on an to issues as had recent your be those? eye need I to surprise? then addition else anything credit that recent And it. guess relatively largely keeping

Brooks Gordon

is This Brooks.

both. really it's So

situation So the list, that we on been, we're described And on but on hadn't and really one are the proactively as watch was the very list. development. that watch tenant situation, list. our now was that Hellweg Toni in of year They them addressing other watch with mentioned, a the was the late

Brad Heffern

watch the else movement But in notable nothing Okay. in of terms list?

Brooks Gordon

adding Hellweg. list The really the story No. is somewhat. came of big down Outside actually watch that,

X.XX%. So -- in around it's that's total,

up, real on the is in net ABR So Hellweg. but of that's there addition certainly list. Outside the that, reduction watch

Operator

Our line next the Kim Capital Markets. of questions John BMO come with from

John Kim

So on there why the abatement could you reason this about new shows that you is metric had an Hellweg that. I rent $X look that rents also of top on EBITDA is Is coverage reset sustainable? at ask down million. The rent that rent

So it rent seems be like a may necessary. further cut

Brooks Gordon

Yes.

landlords other mentioned, in I as them to really better their conjunction So trajectory. we're well put as working on with a

our slowdown position. very a year. them towards the across The rent reductions So ongoing end puts a their portfolio, in sharp in the real much rent last think better we with abatement, business estate combined of

taking do actions this of will proactive execution they're execute watch them on other coming much keep operate expect we we them plan. what basis, stakeholders But slow range, better we a place think but very coverage we robust a We we're real them puts in but our we to watch X.XX think is this. again, closely, that on would a very the the to going see to that's are through coverage to be because a turnaround and period, they before kind need in From there. off list

John Kim

list? paying who -- define some have And at paying on starts look visibility Or issue be going tenant you your late? provide clarity or Is you that the their you metric any at rents that may other how it do watch rent do if forward?

Brooks Gordon

frame. XX- is we at list XX-month really be default be meant time to watch us The a for in tool could monitor tenants that risk to Yes. a of to think

methodology decades, we are period watch been has up us monitor over portion defaulting. tenants I'll tool track includes that, that a actually where consistent And a small the potential a of that time, it's of in that. that and a so see frame, the tenants default note in that really and of well long bankruptcy, for as tenants time management but happen, on very do for operating risk end does list as It the certainly future. to

it's mind. frames the kind time be in looking, really to So we that's and meant forward of have

John Kim

with just quarter. I'm wondering you have the money didn't last of one to issues tenant list the watch

it could So on others the Yes. surprise. these today, I watch is not question pop a up. as your that list be that can obviously that are mean came

Brooks Gordon

leverage Yes. was year. that last years to operated quickly rapidly Really, And with Certainly, that smaller somewhat they've a a for situation. It's we as a of Hellweg company into very came at with higher evolving operates a contributed setup. the that really developing play of overall a and end But scale. saw situation. consistently very a what factors XX-plus very variety point

so And work to other with their path. proactive, on to wanted a better really put stakeholders we them be

year out, So working through one we agreed and seen had a it's that it. something addressing we're proactively but wasn't

Operator

Our come questions Anthony with the line JPMorgan. from next Paolone of

Anthony Paolone

same-store, another credit vacancy, I a Toni, number the But of us on land in you contractual incorporate expectations down. first said we 'XX So that I comprehensive if you I core bps, then to like couple the then industrial guess guess, gave that X% drifting or items, and these where XX for basis? from on close and a like, does just like the quarter guess the

ToniAnn Sanzone

Yes.

the with would and the I that that happen that, items various kind first quarter the highlighted. be Hellweg quarter then reflecting most I down year would think expected expectation, the rent that the be abatement sort course stabilize, impacted first negatively for of of in but especially of the still to over is our

at we a year a basis. standpoint, So do from relatively are on that think a year flat I comprehensive full same-store looking

Anthony Paolone

asset storage happens Like existing like a the that? to with or Okay. the cold look an for asset what new an like does facility, agreement get that like just mean, with have recovery like I operator And for for released then, instance, it like? does what

Brooks Gordon

Yes.

packing farmland Central storage cold and really adjacent the right So are to these fruit in Valley. facilities the

remain is operating [indiscernible] So the for through resolution that of critical working farmland. find where very are right operators we they now that to the farmland,

And contact square buyer that. there. low being close land in rents I'll pool our around and with It's sold, is per foot. so quite $X.XX on we're the note that are

think So facilities attractive be mentioned, to our land. we will of these the assets. in the operating very Toni critical vacancy year includes as guidance, for those remainder said, and That

Anthony Paolone

$X.X of than can then skew And billion Jason, more the maybe idiosyncratic confidence maybe that Okay. you which investments for just to just for $X day level? the You the leasebacks, billion a being to help talked to day you're secondary in just seems towards guidance, assuming intuitively your deals. in with us bit maybe market sale about

And and do, the like there I get confidence the that guess, skew I towards just so volume level like deals level there. to just you'll of us don't with know, that with that you help the

Jason Fox

then have closed we've to mentioned and $XXX about a $XXX million commitment little year. capital expect and million we that. deals complete projects this year-to-date And fundings loan that we I be sure. another of underneath earlier, Yes, of

given actually, over meaningful pent-up a there in the that even saw U.S., X I think I we visibility spike is is are that is there of sellers in our $XXX that XXXX. rates more is the be in million. month, environment. out pipeline we building, a a interesting then the supply pretty So shaping weeks Europe both year, clear have mean but up there, to the view And XXXX into so maybe and into

I wide to think spreads and markets. frozen that persistently bid-ask led transaction

And pricing, I a to a rates deals little we then we us think of I think lot And allowed deal come with interest mentioned combination open aggressive where sale have up that adjusted leasebacks. expectations lean bit you get help sellers' think down, more have flow. some. that's and on having should really interest, in

especially there. it's think I true

that strong. for attractive and environment that fund think options quite just It's deals. below grade those particular, to fewer cheaper have option corporates is I still sponsor-backed in companies, investment very a

has markets remained bid quite unreliable. private competition remain CMBS The thinned not back. the still constrained think We out. and They are

going competitive position. seeing So to opportunities. we're I that's a think from help And

we're relative been We also as as cash position probably peers in which is as we've sitting capital much we as ever mentioned strong the our in, to are. on

So think how do interesting. we're the is like positioned. We environment do we

a the But that bias and of But have put don't lot of we together. that we to year have a We this course, guidance to have full time. about at in this come at feel to into range capital things good work. visibility point, point

Operator

Our next line with from Smedes come Rose of the questions Citibank.

Bennett Rose

I the time guess, maybe year line a bit that's a you midpoint you them owning longer? It first -- outlook early visibility your kind more little or just half earnings just anything space. 'XX. little I the, wanted there have sale? the the has bit like to on a little that for delaying of Or from by about that? the to a less that exit the And little office looks is extended final from ask supporting of unchanged of XXXX some Is

Jason Fox

take the of first want half that? you can take do the Brooks, to second Toni half. Maybe

Brooks Gordon

program the as our half. first I'll office overall contract. of continue target office sales mentioned, I either we to sale or XX% note about for is binding under Yes, Sure. remaining the still closed

approves time Another diligence before to jurisdiction really XX% periods pass is these. it XX% on sale. the in that and local some jurisdictions under is few a in of perspective, note take the can to to preemption From I'll Europe, statutory in need comes timing also a that down contract the then diligence in there's remainder progress.

of So little a and bit the is good making But that's progress, we're very it. real complete. heavy lift

to and working actively prospects through this we're complete on imminently optimistic it. And so our

ToniAnn Sanzone

have didn't disposition And really in the terms I'd say timing of the guidance, material a impact.

anything, our expectations. initial was if from I $X.XX think, maybe it about

Bennett Rose

year. cap And Okay. pipeline? and seeing of full I you think increased from bit. near-term quantify what what little maybe the could I back rate just commentary for term? visibility. see pipeline million just your talked in of turn the the speak quarter, Obviously, of you you wanted of the about you just maybe sort now the at But to Can the sort as you're a near then in $XXX third sort near-term you midpoint to just

Jason Fox

Yes, several sure. deals, to pipeline. does I stages. mean it, early now include It large It's it's certainly the building. but a little very quantify right are difficult at, near-term I'd call those

of kind into and is a we that are number, to the a going of good ago we as now, to right we think seller off to for a market with that So sale-leasebacks kind explained and closed, of difficult do second market. lot backdrop there a deals we with the it's come but to start supply us like translate out

feel we positive. pretty yes, So

think cap think, the over the bouncing I the rates stabilizing U.S., have low around last at has -- XX-year -- been in cap the came Interest the highs quarter rates X Xs. off treasury from least in rates, so. October, the or been we

bid-ask spreads have tightened. So

we at think market year, that some more translates activity. We into Last were X.X%.

For was year full the X%. the X% fourth quarter, I -- think

we've a bit an So little seen uptick. of

in we I Xs think certainly that have. that works we're right deals consider from the targeting the us we cost now, capital for of standpoint, a liquidity

to that there a think that Europe little so a debt steeper there's some XX is increases mentioned the dynamic. maybe the bit reversal past of And more over more and recently. XX yes, so months markets I I in

we at point, can we or you where go this at and par. of quarter which U.S. in basis can to borrow X points XXX that probably a inside XXX borrow think I back was dollars,

country. gap a allows bit maybe And little certainly to with Germany, some like country Europe, inside varies range. for that be a in lower numbers up would it U.S., of loosen more we adjusting, help Put a multinational aggressive more working the Italy, can targeting little going big we're rates of and seen bit and seller by that's think on in probably the get expectations it, cap instance, get maybe those end rates a we that on of a where bridge to even us on little market certainly but in we've some. tightening of So with is bit Europe markets. though which companies we're kind yield

Operator

JMP Our from with of Securities. Germain the comes question Mitch line

Mitch Germain

can share? additions mentioned Anything more to Jason, team. additions some -- maybe the you to retail, on you some emphasis that or

Jason Fox

look, long mean been we've for diversified I time. Yes. a

we've verticals. part I our I we always U.S. you the market. about think been focused when we've growing net think been on more explore has always the lease a it's opportunities in. retail that Las been and the And Europe, other new areas. of we're some done big say, been consistently I In that in of something U.S., more opportunistic Vegas active think it's deals would growth

hired last with retail community. in and have the net over acquiring year several experience we've brokerage relationships so dedicated investment lease lots really tenants They yes, or so, of deep officers. the So

a we market the think some So scale, market There's good. seen. of our we've The given timing we fewer share. competitors consolidation result reputation, can seems as take our some of that

limits certain some the to and exposure segments specific players even starting And reach are to of tenants. existing

we're help I So and conversations brokers from tenants partners. diversify think with we've that capital a that welcome heard participant, their

And good so that's a optimistic we to our we're contributor volume. forward think going to a be and it's deal time going to up, ramp

Mitch Germain

you. Got

bit or little similar balance suggested I'm you sheet tenants model had if they b, leverage. high on a, business portfolio have your other curious either believe You was a a structure? there mentioned any in that ran similar Hellweg, I And

Brooks Gordon

Yes.

a the tenant-specific really with On and Hellweg few that's was of a very which a sheet for combined one caused issues. situation and business, demand through in their COVID balance combined factors, by pull situation, forward was inventory

the think really and really where every a default it's risk. portfolio, potential a In tenant-specific diversified. broadly portfolio is view the that's see my watch broader huge situation. our of sort. But tenants There's list for we So we

And business to and it's of really specific and there, so sheets but broad regions tenants any models, industries. range hard comment a balance on

Operator

come the questions Greg with of from Scotiabank. next line McGinniss Our

Greg McGinniss

This is Scotia. Greg,

lease are close an the active large of or not elsewhere that of lease Just timing falling and and move was kind the end guidance, typical decided to term tenant are resigning? process the just that that to industrial Can regarding through typically walk negotiation out us tenants of lease consolidating? negotiation regarding they how you are

Brooks Gordon

to needed was too specific Yes. was just a building where they It downsize. them. big for a one This very situation

It's that. there market. as the that mentioned, negotiations So to there in negotiation. actively an renewal in about excellent We building Chicago release a very do wasn't situation. good And we're feel Toni

years lease typically of tenants before generally, on the be lease X So good think with more outcome even X negotiations expiration, are terms in we to from we pursuing would anywhere depending a that situation.

But it situation where needed they building, it a so served really well, a runs great unique gamut. but this them was was And size. the just different

Greg McGinniss

Okay.

they're a moving expecting were tenant to you impact a if out. just than you different are getting have So had you it guidance, in there on earlier moving already is one, which knew why negative

Jason Fox

to you that? Toni, clarify do want

ToniAnn Sanzone

of that in. one Yes, guidance issues the was changes were not really the that other baked our that credit into was range. not was It initial baked

was contemplated. So that one

Greg McGinniss

Okay.

to clarify And Hellweg. myself on just sorry, for

X providing and a year month at going You're million to forward? potentially, rate renegotiating old the rent $XX of then a

Brooks Gordon

clarify it's ongoing are as than a one that QX an I'll other quarter as We're other reduction described. for and a note also that to lease similar to we're XX extending so that's there, well, landlords abatement that, years. you other us. So And stakeholders -- the doing structure rent

really, puts our their position better a substantially plan. them turnaround that footing robust in and to so really And on view, financial up pursue there shores a

So the position there proactive to a put to that's them in approach really execute.

Greg McGinniss

what catalyst them thought. financial so is good the hey, as as to you? realizing not out position that deal that, Is this their And doing we and maybe reaching was to

Brooks Gordon

after proactive No. inventory which broader mismatch. factors quickly of tenants. and in We took forward, demand combination again, think COVID. A a from last again, potential a was really And when late that's really when then dropped off aligned. their disclosure that then consumer that quite year, deteriorated pull we an get I half our slowdown spending of financial had And saw second quickly approach. And that we that's quite all

a in need when a And and be aggressive. liquidity constrained really have there could they position that so what buying saw we XXXX. was being to risk inventory And they

to wanted we itself. there So the manage company that situation lenders working other landlords and with as are and

all we're and in working kind perspective, it. of in agreed From status is to table largely place. on and the a put stakeholders deal the a we're The actively company have come So better documentation mode.

get And month completed that over so we or the coming expect so. we'll

Greg McGinniss

been some to news your they if with level comfort level you're with then not once I for saw leasebacks? kind to And they're level quite equity-backed that for saw the last your to one door them? to store grocery We you you doing as Morrisons the And opening disclose of What's private of operating a were? Okay. financials the if with Curious more well. U.K. the tenants doing be that could There's in did other me. exposure there? you business just sale just that's -- deal able if

Jason Fox

Yes.

with it a fund deal. kind Morrisons, in that pretty It purchased small the a that liquidity one-off deal pressures I was relatively that some as was a from opportunistic redemption had more at we look and had So of opportunity. and needs. that nature

time, it new wouldn't some buy and anything grocery solid could a right say, that we relationship opportunity they're quite good very there's direct as think I future that we I be Could wouldn't deals. don't in to we've was level it necessarily lead and say rule I'd location, leverage It But helps for there? active to we a good not Potentially, higher What view any was So that a Europe out. at. working so leaseback, think -- the there on we're think in there mitigate now. there's into. a operating economics, I unit sale been imminently deals any

Operator

from come of the Spenser questions Allaway with next line Our Green Street.

Spenser Allaway

U.S. cited up whether seller demand there industry? on trends property you just or either by type are in on pent-up Maybe in just of the and Europe. you Can theme any elaborate the tenant following both

Jason Fox

being say up about the talked of I more lot We wanting source options. of cheap capital I with would sale and relatively terms a of leasebacks compared Yes. retail. many to probably broader theme ramp a mean correlates it's a in other of to

seeing opportunities that there. we're hoping we're So more

that most is to most that the relevant sale think correlate transactions maybe tend industrial with I probably leasebacks. to theme

don't themes think that than broader I now. So right there's any

Spenser Allaway

Okay. on But you expectations the of in then and you're anything far. has process thank the since you the for ago? asset buyer ongoing And terms the few the office initiated with terms conversations of having months lastly, sales a thus changed front, commentary in

Brooks Gordon

final firmly on little bit where period this over this. a the our expected But have Timing say pricing to thought. we has about in held is time, of in I'd a very of around think point, moved expectations be again, piece No. to that's I place. remained

I is and closed. And And that we on confident get the as majority so already can that said, good making large we're the balance. progress done of

Operator

next R.J. come questions from Raymond the with of Our line Milligan James.

R.J. Milligan

just loss I think known mentioned in Toni, of some Just original credit what was has new for And guidance, the a issues? that of for how the you 'XX? much stuff, credit couple follow-ups. been of contemplated

ToniAnn Sanzone

remarks ABR quantified rent-related not that the of That a contingency. tenant XX basis an mentioned, I my in did for -- roughly discussed that impact. starting year $X.XX mentioned with issues that the points about I I Yes. X we're we that's separate overall having of as as from estimate

in So in in we us, November. of would had points assumed normal more $X.XX is the for and our the course that we guidance, did basis back not XX but the what initial be have range

R.J. Milligan

So does guidance still assume points XX additional basis or...

ToniAnn Sanzone

year. the generally tenant disruptions Yes, start mean just time where on they're if relatively to think a of of basis tenants kind any there's we the from the and really and are kind keeping points of -- conservative rent. basis that's we cash outside I additional XX I time, disputing

So specific the that issue separate to issues cover really Hellweg nothing that's the eating Brook course mentioned. kinds is of There's the now broad this meant and outside all of over from right into that year. the bankruptcy and

R.J. Milligan

And lease then obviously, go the of a watch is, but expirations. back question just lot on the my second want towards I questions more to list,

discussions ABR But $XX curious, XXXX? of is looks expirations, of year, and there expiring any or expected I'm for And other gone have like this just nonrenewals some that some as are U-Haul. there's your I realize so these with major it million of about material

Brooks Gordon

Yes.

expirations far of been on progress making by U-Haul we year, not given has sizable others. In our mentioned, of and XXXX lot you any here As biggest piece non-renewals good ones. couple a or the a have there, of the

potentially it's a ABR for little and points think I XX working actively those. of nonrenewals, under on basis

on nothing warehouse certainly, material So retenanting we're right or working the now. size the of

Operator

America. Bank from of Joshua line of with questions the [Operator Dennerlein Instructions] Our next come

Farrell Granath

more of down behalf about in X.X% or this through be on the capital having kind maturities if line. paying holding on the walk could on a like yield or [indiscernible] was getting Josh you you me Granath elaborate Farrell XXXX and X.X%? is wondering would I hand, cash This of at what

Jason Fox

Yes.

ToniAnn Sanzone

I can that. gave on a little color

go Jason. Sorry, ahead,

Jason Fox

Yes. okay. That's

deployed cash as bit the we term, can of given well, lot the that in in your little in can returns capital haven't investments, short that generate. if we hold a point, result of new to we But in that a likely So delevering.

be probably that to still the kind at target high but longer is expectation mid- of on low not delever a Xs the net leverage our think term. the 'XX, We're debt-to-EBITDA to targeting in basis. of half planning for I the we'll first we're range end of

Farrell Granath

off about Okay. And I other just the being XX wanted to aspects the is that? decline ask in point that driven basis of occupancy, Or there bankruptcies? is in

Jason Fox

do you to want Brooks, that? take

Brooks Gordon

No. biggest is warehouse. that driver Sure. The

we're part again, so in And But really the working moving vacancy actively on that. piece. that's the

Operator

Mr. call the am I to time, now Thank showing questions. no further you. over At hand this I'll Sands. back

Peter Sands

your in for everyone P. interest W. Thanks Carey.

If directly you today's have Investor (XXX) concludes on questions, call. additional that And XXX-XXXX. Relations please call

you. disconnect. Thank may You now

Operator

participation. your That teleconference. you. We today's conclude does Thank appreciate

disconnect You time. this at now may

W. P. Carey (WPC) 9 Feb 242023 Q4 Earnings call transcript