W.P. Carey Revenue Beats Consensus And Hypes Sale-Leaseback Trend, Narrows Outlook

W.P. Carey Inc WPC reported a second-quarter (Q2) 2023 revenue (including reimbursable costs) increase of 31.4% Y/Y to $452.6 million, beating the consensus of $442.4 million. 

Real Estate revenues (including reimbursable costs) rose 33.1% Y/Y to $452.2 million on higher lease, operating property revenues, and income from finance leases and loans receivable.

Adjusted funds from operations (AFFO) per share rose 3.8% Y/Y to $1.36, led by the Real Estate segment. 

The company witnessed an investment volume of $760.7 million in Q2 and $938.5 million year to date.

Gross disposition proceeds stood at $48.2 million in H1 FY23.

As of June 30, the net lease portfolio comprised 1,475 properties, with 180 million square feet leased to 398 tenants with a weighted-average lease term of 11.2 years and an occupancy rate of 99%.

As of June 30, cash and cash equivalents stood at $204 million.

Dividend: The company raised the quarterly dividend per share to $1.069 from $1.067 in the prior quarter, equivalent to an annualized dividend per share of $4.28. 

Outlook: WPC narrowed AFFO per share guidance to $5.32 and $5.38 (vs. consensus of $5.23) from $5.30-$5.40 in 2023.

W.P. Carey CEO Jason Fox expects further deal momentum over the second half of the year, given the competitiveness of sale-leasebacks as an alternative source of financing and the investment spreads the firm is achieving.

"We're also confident in our ability to fund our investments and other capital needs without having to raise additional capital this year, something we view as a distinct competitive advantage in the current environment. Furthermore, we expect rent growth to remain elevated, reflecting the lagged impact of CPI on rents, as well as higher fixed increases," he said.

Price Action: WPC shares are trading higher by 0.03% at $71.39 on the last check Friday.

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