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Shares of WP Carey (NYSE: WPC) decreased by 15.9% in 2024, according to data from S&P Global Market Intelligence. This significantly underperformed the S&P 500which gained 23.3% in the year.
Here’s a look at what it weighed Diversified REIT last year and if it can be recovered in 2025.
WP Carey made a major strategic shift at the end of 2023 REIT decided to exit the challenging office sector by spinning off and selling off office wallet As a result of this move and a desire to retain additional cash flow for further investments, the company also reinstated its dividend towards the end of this year. This cut ended a quarter century of dividend increases.
The REIT spent much of the first half of 2024 by selling its remaining office properties. He also sold other properties, among them a big one own storage wallet, which went back to the operator. The owner was about to sell for $1.3 billion to $1.4 billion of properties last year. This followed the sale of more than $450 million of properties in 2023 and the spin off of other office properties by creating office REITs Net lease office properties.
These divestments weighed on WP Carey’s earnings. He expected his adjusted funds from operations (FFO) between $4.65 and $4.71 per share last year, well below the $5.18 it earned in 2023.
WP Carey consistently recycled capital of these sales to new properties with better long-term fundamentals. Last year he invested $1.6 billion in new propertiesincluding record fourth quarter volume of $845 million. That was toward the upper half of its $1.25 billion to $1.75 billion guidance range. It mainly bought industrial and commercial properties in North America and Europe, secured for the long term net leases with rent increases incorporated.
The REIT also slowly recovered its dividend. It increased its payout every quarter last year after it reset to late 2023.
WP Carey’s strong finish last year gave it a big boost heading into 2025. “The full benefit of these investments will flow through our earnings in 2025,” CEO Jason Fox said in a press release which detailed its investment volume in 2024. It also noted that the company would continue to benefit from its better rental escalation.
So is the REIT in a strong position to continue making new investments this year without selling any shares. It has built up substantial liquidity from asset sales and has additional non-core assets it can sell to fund new investments. These catalysts position the REIT to increase its adjusted FFO from last year’s new baseline and continue to increase its reset dividend in 2025 and beyond. Add that growth to the REIT’s already attractive yield of around 6.5%, and it could produce a strong total return from there.
