W. P. Carey Inc. WPC is making concerted efforts to enhance its position in the market and recently announced industrial investments worth $53 million. These include mission-critical industrial properties that are triple-net leased to tenants with solid private equity sponsorship.
With built-in rent escalations and a weighted average lease term of 20 years, the investments seem a strategic fit for W. P. Carey. The asset class is experiencing high demand and the latest move reflects the company’s ability to secure accretive transactions efficiently.
Specifically, the transactions included a $19-million sale-leaseback of a 301,000-square foot warehouse and light-manufacturing facility in Statesville, NC. Net leased to Founder Sport Group for 20 years with annual uncapped CPI rent raises, the property operates as Founder Sport Group's main fulfillment center in the United States as well as its corporate headquarters.
The other one is a $24-million sale-leaseback of eight production facilities located across the United States and Mexico. Aggregating 525,000 square feet, these facilities are triple-net leased for a period of 20 years, with annual rent escalations to a global manufacturer of electrical wire harnesses, control boxes and other value-added components.
Moreover, there is a $10-million sale-leaseback of two manufacturing and distribution facilities in Westerville, OH and North Wales, PA. Aggregating 147,000 square feet, the facilities are net leased to Integrated Warehouse Solutions which is a manufacturer of specialty heavy-duty industrial material handling equipment and provides warehouse safety solutions as well.
With a high-quality portfolio of critical corporate real estate, diversified net lease REIT, W. P. Carey will likely witness high occupancy, growing rent and healthy lease revenues in the near term. The company focuses on investing in high-quality single-tenant industrial, warehouse, offices and retail properties, which it leases back to creditworthy tenants on a long-term basis, with built-in rent escalators.
W. P. Carey currently carries a Zacks Rank #3 (Hold). In the year-to-date period, shares of the company have outperformed the industry. While the stock has appreciated 31.1%, the industry has increased 21.8% during this period.
Stocks to Consider
Some better-ranked stocks from the real-estate space include Host Hotels & Resorts, Inc. HST, Lamar Advertising Company LAMR and PS Business Parks, Inc. PSB, each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Host Hotels’ Zacks Consensus Estimate for 2019 funds from operations (FFO) per share moved 2.8% north to $1.82 in the past two months.
Lamar’s FFO per share estimates for the current year inched up 0.3% to $5.83 over the past month.
PS Business Parks’ Zacks Consensus Estimate for the ongoing year’s FFO per share moved up 1.5% to $6.71 in the past month.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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