Large Majority of Office Portfolio
to be Spun-Off into a Separate Publicly-Traded REIT
On-Balance Sheet Office Sale Program
Implemented to Exit Remaining Office Assets by January 2024
Assets Representing Over Half of Office Sale
Program ABR in the Advanced Stages of a Sale or Sold
NEW
YORK, Sept. 21, 2023 /PRNewswire/ -- W. P.
Carey Inc. (W. P. Carey, NYSE: WPC) today announced that its Board
of Directors has unanimously approved a plan to exit the office
assets within its portfolio by (i) spinning-off 59 office
properties into Net Lease Office Properties ("NLOP"), so that it
will become a separate publicly-traded REIT (the "Spin-Off"), and
(ii) implementing an asset sale program to dispose of 87 office
properties retained by W. P. Carey (the "Office Sale Program"). The
Spin-Off is expected to close on or around November 1, 2023, subject to the satisfaction of
certain conditions, and all sales under the Office Sale Program are
targeted to be completed by January
2024.
Strategic Rationale
The key benefits to W. P. Carey are expected to include:
- Providing a clear path to monetizing its legacy office
portfolio
- Enhancing its growth profile through an improved cost of
capital
- Increasing the quality and stability of its earnings and cash
flows through better end-of-lease outcomes, including higher
overall releasing spreads, reduced downtimes and carrying costs,
and lower capex requirements
- Improving overall portfolio quality and key portfolio metrics,
including an increased weighting to warehouse and industrial
assets
- Maintaining a strong, scalable investment grade balance
sheet
"While we've meaningfully reduced our office exposure in recent
years, the plan we've announced this morning vastly accelerates our
exit from office — enhancing the overall quality of our portfolio,
improving the quality and stability of our earnings, and
incrementally benefiting our credit profile," said Jason Fox, W. P. Carey's Chief Executive
Officer. "Ultimately, with a clear path to monetizing our legacy
office assets, we believe we will achieve a lower cost of capital
and be better positioned for long-term value creation for our
shareholders."
NLOP Spin-Off
The assets being contributed to NLOP represent
approximately 10% of W. P. Carey's annualized based rent (ABR) as
of June 30, 2023.
NLOP is expected to comprise a portfolio of 59 high-quality
office properties, totaling approximately 9.2 million leasable
square feet primarily leased to corporate tenants on a
single-tenant net lease basis. The vast majority of the office
properties that will be owned by NLOP are located in the U.S., with
the balance in Europe. NLOP's
portfolio will consist of 62 corporate tenants operating in a
variety of industries, generating ABR of more than $141 million as of June
30, 2023.
In addition to $169 million of
existing mortgage debt outstanding to be assumed by NLOP, NLOP has
also entered into a new $455 million
debt facility with J.P. Morgan, which was executed by NLOP and is
expected to be funded upon the consummation of the Spin-Off,
subject to certain conditions. Approximately $350 million is expected to be transferred by
NLOP to W. P. Carey in connection with the Spin-Off.
As a separate company, NLOP will pursue a business plan focused
on realizing value for its shareholders primarily through the
strategic asset management and disposition of its property
portfolio over time. It is anticipated that NLOP will pay
distributions to its shareholders from its operating cash flows and
disposition proceeds, after first repaying its obligations under
the new debt facility. Given W. P. Carey's extensive knowledge of
the assets that will form NLOP, the desire to maintain efficiency
and the timeline for executing NLOP's business plan, W. P. Carey is
expected to act as NLOP's external advisor following the
Spin-Off.
The Spin-Off, which does not require shareholder approval, is
expected to close on or around November 1,
2023, subject to certain closing conditions. Upon
completion, W. P. Carey stockholders as of the record date for the
Spin-Off will receive shares of NLOP via a pro rata special
distribution, which is expected to be taxable for U.S. federal
income tax purposes. Shares of NLOP are expected to trade on the
New York Stock Exchange under the ticker symbol NLOP.
Additional information regarding NLOP and the proposed Spin-Off
can be found in the preliminary Registration Statement on Form 10
filed by NLOP with the Securities and Exchange Commission (the
"SEC") on September 21, 2023 (as may
be amended, the "Form 10"), as well as in an investor presentation
regarding the proposed transactions in the Investor Relations
section of W. P. Carey's website at
www.wpcarey.com/presentation. The Form 10 currently
filed is subject to change and will be made final prior to its
effective date. The Spin-Off will follow the satisfaction of
customary conditions which are disclosed in the Form 10, including
effectiveness of the Form 10 with the SEC.
J.P. Morgan is acting as exclusive financial advisor and Latham
& Watkins LLP is acting as legal advisor to W. P. Carey.
Office Sale Program
In addition to the Spin-Off, 87 office properties, which
generated approximately $77 million
of ABR and represented approximately 5% of W. P. Carey's total ABR
as of June 30, 2023, will initially
be retained on W. P. Carey's balance sheet and sold under the
Office Sale Program, preserving certain tax efficiencies, with all
sales targeted to be completed by January
2024. Properties representing over half of the ABR generated
by assets within the Office Sale Program are currently either in
the advanced stages of a sale or have been sold.
Conference Call and Audio Webcast Scheduled for 8:30 a.m. Eastern Time
An investor presentation regarding the proposed transactions may
be found on the Investor Relations portion of W. P. Carey's
website at www.wpcarey.com/presentation.
W. P. Carey will host a conference call and live audio webcast
to discuss the proposed transactions at 8:30
a.m. Eastern Time today (September
21, 2023), details of which are provided below.
Date/Time: Thursday, September 21, 2023, at
8:30 a.m. Eastern Time
Call-in Number: 1 (877) 465-1289 (U.S.) or +1 (201)
689-8762 (international)
Please dial in at least 10 minutes prior to the start
time.
Live Audio Webcast and
Replay: www.wpcarey.com/announcement
W. P. Carey Inc.
Celebrating its 50th anniversary, W. P. Carey ranks among the
largest net lease REITs with an enterprise value of approximately
$23 billion and a well-diversified
portfolio of high-quality, operationally critical commercial real
estate, which includes 1,475 net lease properties covering
approximately 180 million square feet and a portfolio of 85
self-storage operating properties, as of June 30, 2023. With offices in New York, London, Amsterdam and Dallas, the company remains focused on
investing primarily in single-tenant, industrial, warehouse and
retail properties located in the U.S. and Northern and Western Europe, under long-term net leases
with built-in rent escalations.
www.wpcarey.com
Cautionary Statement Concerning Forward-Looking
Statements
Certain of the matters discussed in this communication
constitute forward-looking statements within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934,
both as amended by the Private Securities Litigation Reform Act of
1995. The forward-looking statements include, among other things,
statements regarding the intent, belief or expectations of W. P.
Carey and can be identified by the use of words such as "may,"
"will," "should," "would," "will be," "goals," "believe,"
"project," "expect," "anticipate," "intend," "estimate"
"opportunities," "possibility," "strategy," "maintain" or the
negative version of these words and other comparable terms. These
forward-looking statements include, but are not limited to,
statements regarding the contemplated Spin-Off transactions with
NLOP, including the expected timing and outcome of the Spin-Off, if
it occurs at all, and NLOP's ability to successfully operate as an
independent company; and statements regarding W. P. Carey's
anticipated Office Sale Program, including the timing and outcome
of any sales, if any, as well as any expected tax efficiencies
relating thereto, the anticipated timing of the funding of NLOP's
financing arrangements and the impacts of exiting office on our
portfolio, earnings, credit profile or cost of capital. These
statements are based on the current expectations of our management,
and it is important to note that our actual results could be
materially different from those projected in such forward-looking
statements. There are a number of risks and uncertainties that
could cause actual results to differ materially from the
forward-looking statements. Other unknown or unpredictable risks or
uncertainties, like the risks related to inflation and increased
interest rates, the effects of pandemics and global outbreaks of
contagious diseases (such as the COVID-19 pandemic) and domestic or
geopolitical crises, such as terrorism, military conflict
(including the ongoing conflict between Russia and Ukraine and the global response to it), war or
the perception that hostilities may be imminent, political
instability or civil unrest, or other conflict, and those
additional risk factors discussed in reports that we have filed
with the SEC, could also have material adverse effects on our
future results, performance or achievements. Discussions of some of
these other important factors and assumptions are contained in W.
P. Carey's filings with the SEC and are available at the SEC's
website at http://www.sec.gov, including Part I, Item
1A. Risk Factors in W. P. Carey's Annual Report on Form 10-K for
the fiscal year ended December 31,
2022. Investors are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
of this communication, unless noted otherwise. Except as required
under the federal securities laws and the rules and regulations of
the SEC, W. P. Carey does not undertake any obligation to release
publicly any revisions to the forward-looking statements to reflect
events or circumstances after the date of this communication or to
reflect the occurrence of unanticipated events.
Institutional Investors:
Peter Sands
1 (212) 492-1110
institutionalir@wpcarey.com
Individual Investors:
W. P. Carey
Inc.
1 (212) 492-8920
ir@wpcarey.com
Press Contact:
Anna
McGrath
1 (212) 492-1166
amcgrath@wpcarey.com
View original content to download
multimedia:https://www.prnewswire.com/news-releases/w-p-carey-announces-strategic-plan-to-exit-office-301934642.html
SOURCE W. P. Carey Inc.