W. P. Carey Acquires State Farm Assets

Zacks

W. P. Carey Inc. (WPC), a real estate investment trust (:REIT), through its affiliates, acquired the State Farm Operation Center from State Farm Mutual Automobile Insurance Company in Austin, Texas.

It was made through a sale-lease back deal for $110 million plus transaction costs. Leased to State Farm for an initial term of 15 years, this facility spans 448,898 square foot on 83.5 acres in AmberOaks Corporate Center.

Serving since 1994 as State Farm's Operation Center, this Class A office property enjoys locational advantage for being positioned in a vibrant metro area that is among the top performing ones in the nation. Also, the deal is made with State Farm - an AA credit rated tenant – that indicates a superior rent paying ability of the tenant.

Earlier this month, W. P. Carey reported second-quarter 2013 funds from operations (:FFO) of 77 cents per share, exceeding the Zacks Consensus Estimate of 71 cents by nearly 8.5% and the year-ago quarter FFO per share of 53 cents by 45.3%. It acquired 3 properties for around $113 million and structured $305 million of investments on behalf of the managed REITs during the quarter.

The company also made a 2.4% sequential hike and a 48% year-over-year increase in the quarterly dividend rate to 84 cents per share. This also represents the company’s 49th consecutive quarterly increase.

W. P. Carey provides long-term sale-leaseback and build-to-suit financing for companies worldwide and manages an investment portfolio of approximately $15.4 billion. The company primarily invests in commercial properties that are generally leased to corporate tenants. Following the second-quarter end, the company disclosed a merger agreement with Corporate Property Associates 16 – Global Incorporated.

W. P. Carey currently carries a Zacks Rank #3 (Hold). However, other REITs that are performing better and deserve a look include Douglas Emmett Inc. (DEI), Highwoods Properties Inc. (HIW) and RLJ Lodging Trust (RLJ), all carrying a Zacks Rank #2 (Buy).


Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
 

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