W. P. Carey Inc. (NYSE:WPC) Q4 2023 Earnings Call Transcript
W. P. Carey Inc. (NYSE:WPC) Q4 2023 Earnings Call Transcript February 9, 2024
W. P. Carey Inc. misses on earnings expectations. Reported EPS is $0.00066 EPS, expectations were $1.21. W. P. Carey Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Hello. And welcome to W. P. Carey’s Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Daryl, and I’ll be your operator today. All lines have been placed on mute to prevent any background noise. Please note that today’s event is being recorded. After today’s prepared remarks, we will be taking questions via the phone line. Instructions on how to do so will be given at the appropriate time. And I will now turn today’s program over to Peter Sands, Head of Investor Relations. Mr. Sands, please go ahead.
Peter Sands: Good morning, everyone. And thank you for joining us this morning for our 2023 fourth quarter earnings call. Before we begin, I would like to remind everyone that some of the statements made on this call are not historic facts and may be deemed forward-looking statements. Factors that could cause actual results to differ materially from W. P. Carey’s expectations are provided in our SEC filings. An online replay of this conference call will be made available in the Investor Relations section of our website at wpcarey.com, where it will be archived for approximately one year and where you can also find copies of our investor presentations and other related materials. And with that, I’ll hand the call over to our Chief Executive Officer, Jason Fox.
Jason Fox: Thank you, Peter, and good morning, everyone. Today, I'll briefly recap 2023, talk about how we're positioned for the year ahead with significant capital ready to deploy and an improving transaction market outlook. Toni Sanzone, our CFO, will focus on some of the details of our 2023 financial results in our 2024 guidance, both of which reflect the impacts of successfully executing on the office exit strategy we announced in September. Toni will also cover certain tenant specific impacts we expect in 2024, which our guidance also reflects. John Park, our President; and Brooks Gordon, our Head of Asset Management are also on the call to take questions. Starting with external growth. The 2023 transaction backdrop was largely a continuation of the one that existed in 2022, with cap rates lapping rising interest rates.
Preserving investment spreads without resorting to investing in riskier assets therefore remained a high priority for us. In the U.S., interest rates continue to move higher for most of the year, reaching a peak in October. Their leasebacks, however, remain an attractive source of capital for companies as high yield debt and other financing alternatives became very expensive. In April, we completed our single largest ever investment with the Apotex sale-leaseback on a portfolio of 4 Pharmaceutical R&D and Advanced Manufacturing campuses. That was a new industrial subsector for us, but shares many of the key characteristics with other industrial assets invest in, including critical operating properties backed by tenant business with reliable cash flows on a long-term lease with attractive rent bumps.
We've also expanded our focus to include more U.S. retail and now have investment officers dedicated to that sector. As a result, we completed a handful of retail transactions in 2023 across various subsectors and are exploring others, both in the U.S. and Europe. Focusing on those we believe we can achieve terms and structures consistent with those we get on our other property types. In Europe, a steep rise in interest rates resulted in wide bid ask spreads and a pronounced slowdown in transaction activity throughout 2023. We continue to find pockets of opportunity, however, and in November, completed a $157 million cross border sale-leaseback of 11 manufacturing facilities in Italy, Spain and Germany with Fedrigoni, which is a global manufacturer of specialty papers for premium packaging and labeling.
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