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Rating Action: Moody's affirms W. P. Carey's Baa2 ratings; outlook revised to positiveGlobal Credit Research - 23 Apr 2021New York, April 23, 2021 -- Moody's Investors Service, ("Moody's") has affirmed W. P. Carey's Inc.'s ('W .P. Carey' or 'the REIT') Baa2 senior unsecured and issuer ratings, its (P)Baa2 senior unsecured debt shelf rating and (P)Baa3 preferred stock shelf. In the same rating action, the Baa2 senior unsecured debt rating and the (P)Baa2 senior unsecured debt shelf rating of its European affiliate WPC Eurobond B.V. were also affirmed. The outlook has been revised to positive from stable.The affirmations reflect the stable and substantial cash flows generated by W. P. Carey's large and diversified portfolio of net lease assets, its prudent capital management strategy, and strong liquidity position. The positive outlook reflects the REIT's stable operating performance, potential for improvement in the REIT's aggregate leverage metrics, and enhanced liquidity from significant growth in the unencumbered asset base.Affirmations:..Issuer: W. P. Carey Inc..... Issuer Rating, Affirmed Baa2....Senior Unsecured Debt, Affirmed Baa2....Preferred Stock Shelf, Affirmed (P)Baa3....Senior Unsecured Debt Shelf, Affirmed (P)Baa2..Issuer: WPC Eurobond B.V.....Backed Senior Unsecured Debt, Affirmed Baa2....Senior Unsecured Debt Shelf, Affirmed (P)Baa2Outlook Actions:..Issuer: W. P. Carey Inc.....Outlook, Changed To Positive From Stable..Issuer: WPC Eurobond B.V.....Outlook, Changed To Positive From StableRATINGS RATIONALEW. P. Carey's Baa2 issuer and senior unsecured ratings reflect its diversified net lease portfolio that has performed well through real estate and economic cycles including the pandemic, moderate leverage ratios, strong fixed charge coverage and good liquidity position. Contractual rent escalators, a laddered lease maturity schedule, meaningful exposure to non-investment grade tenants, and proven access to multiple sources of capital are some other important credit considerations. Like many other net lease REITs, growth via acquisitions is an important part of W. P. Carey's strategy, however the REIT has been funding its growth on a leverage neutral basis such that aggregate leverage metrics have stayed within a reasonable range. Given W. P. Carey's strong preference for unsecured public debt issuances over the last few years, its secured leverage has declined meaningfully.The REIT's ownership of many types of commercial real estate assets (industrial, office, warehouse, retail and self-storage) in US and Europe provides earnings stability. While the outlook is favorable for W. P. Carey' industrial, warehouse and self-storage properties, structural changes in the retail and office segments could create some leasing challenges and pricing pressure over time. The laddered lease expiration schedule, expirations through YE 2023 account for 9.5% of annualized revenue, and contractual rent escalators for about 99% of the portfolio, most of which are fixed or CPI based, are credit positive.W. P. Carey's liquidity profile is adequate with substantial availability on its $1.8 billion credit facility with less than $100 million drawn at YE 2020, a sizeable unencumbered asset base and good capital market access. In the first quarter of 2021, the REIT raised over $1.0 billion of debt capital via US and Eurobond issues and used proceeds to pay down debt. W. P. Carey has also raised equity capital through a forward issue. Declining mortgage debt balances have resulted in significant improvement in its unencumbered asset ratio over the last few quarters, 82% at YE 2020 relative to 57% at the end of Q1 2019, providing another valuable source of liquidity. The REIT's near-term capital needs are modest and are primarily related to remaining investment for its ongoing development/redevelopment projects.W. P. Carey's effective leverage, debt + preferred to gross assets, was 39.8% at the end of 2020 and net debt + preferred to EBITDA was also moderate at 6.0x, on a TTM basis. Secured leverage is low at 6.7% and fixed charge coverage is strong at 5.0x.The positive rating outlook reflects our expectation of healthy and steady operating performance, improvement in certain key credit metrics such as net debt to EBITDA, secured leverage and fixed charge coverage, and maintenance of a strong liquidity profile.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSA ratings upgrade would require net debt to EBITDA to remain below 6.0x, secured leverage below 10%, and fixed charge coverage above 4.0x, all on a consistent basis. Stable operating performance including same-store ABR growth of 1.5% or higher, and an unencumbered asset ratio close to 85% would be some other key considerations.A downgrade is unlikely over the next 12-18 months given the positive outlook, but would likely reflect net debt to EBITDA remaining above 6.5x, fixed charge coverage at 3.5x or lower, and unencumbered asset ratio below 75%.W.P. Carey Inc. owns and manages a portfolio of mostly single tenant, triple-net lease assets acquired through sale-leaseback investments of corporate-owned real estate. The REIT also earns advisory fees from two non-traded programs. As of December 31, 2020, W. P. Carey's owned portfolio consisted of full or partial ownership of 1243 properties with 144 million square feet of leased space that was 98.5% occupied.The principal methodology used in these ratings was REITs and Other Commercial Real Estate Firms published in September 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1095505. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Ranjini Venkatesan Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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