Why Commercial Real Estate Company W.P. Carey Shares Are Down Today

W.P. Carey Inc WPC shares are trading lower after the company reported fourth-quarter FY23 earnings.

Revenue (including reimbursable costs) increased 2.4% Y/Y to $412.4 million. Real Estate revenues (including reimbursable costs) rose 2.1% Y/Y to $410.4 million, missing the consensus of $422.12 million. 

Lease revenues decreased Y/Y owing to the reclassifications of lease revenues related to the U-Haul and State of Andalusia portfolios and the spin-off of 59 office properties with ABR totaling $145 million into Net Lease Office Properties (NLOP) and creating a separate publicly-traded REIT.

Adjusted funds from operations (AFFO) per share fell 7.8% Y/Y to $1.19, missing the consensus of $1.21.

The company witnessed an investment volume of $345.6 million in the quarter and $1.3 billion in the year.

As of December 31, 2023, the net lease portfolio comprised 1,424 properties, with 173 million square feet leased to 336 tenants, with a weighted-average lease term of 11.7 years and an occupancy rate of 98.1%. 

As of December 31, cash and cash equivalents stood at $633.9 million.  

The company declared a quarterly dividend per share of $0.860 in the prior quarter, equivalent to an annualized dividend of $3.44. 

Outlook: WPC expects AFFO per share for FY24 of $4.65-$4.75 (estimate $4.70), with an investment volume of $1.5 billion-$2.0 billion and disposition volume of $1.2 billion-$1.4 billion.

W.P. Carey CEO Jason Fox said, “Looking ahead, we view 2024 as a transitional year, establishing a new baseline from which to grow AFFO…We’ve raised our expectations for 2024 investment volume and we’re very well-positioned to execute — with exceptionally strong liquidity and a lower cost of capital — in an improving investment environment.”

Price Action: WPC shares are down 7.29% at $56.88 on the last check Friday.