W. P. Carey Inc. WPC recently announced investments worth $200 million. This primarily includes Class-A warehouse facilities on long-term net leases. The investments are in line with the company’s externally-driven growth strategy which is focused on high-quality industrial and warehouse assets.
So far in the year, the company has completed $1.2 billion of investments, out of which 70% comprises investments in the industrial and warehouse assets.
The investments comprised three Class-A warehouse assets, aggregating $166 million, the largest being a $114-million acquisition of a 1.5-million-square-foot warehouse and distribution facility in Indiana. The other two included a $27-million sale-leaseback of an 187,000-square-foot temperature-controlled and refrigerated warehouse facility in Minneapolis, and a 505,000-square-foot warehouse and logistics redevelopment in Lehigh Valley, Pennsylvania worth $25 million.
The Indiana asset is net leased to an investment-grade company in the North American consumer packaged food market. While the Minneapolis asset is net leased to a wholesale distributor of brand-name alcoholic beverages, the Pennsylvania facility is fully leased and expected to receive a LEED certification.
Amid an e-commerce boom, growth in industries and companies making efforts to improve supply-chain efficiencies, the demand for logistics infrastructure and efficient distribution networks has been shooting up. The company’s latest move reflects its ability to secure accretive transactions efficiently.
Along with the fast adoption of e-commerce, the logistics real estate is anticipated to benefit from a likely increase in inventory levels post the coronavirus crisis. Hence, W. P. Carey is well poised to benefit from investments in the industrial distribution warehouse space in some of the busiest distribution markets across the globe.
With a high-quality portfolio of critical commercial real estate, the diversified net lease REIT, W. P. Carey, is likely to benefit from the recovery in the economy. The company is focused on investing in high-quality single-tenant industrial, warehouse, office, retail and self-storage properties, which it leases on a long-term basis, with built-in rent escalators.
W. P. Carey currently carries a Zacks Rank #3 (Hold).
In the past six months, shares of the company have underperformed the industry. While the stock has appreciated 8.4%, the industry has rallied 14% during this period.
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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs
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