WPC | Q3 2025

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Overview

• FFO of $1.25 beats by $0.04.

• Revenue of $431.3M (+8.5% Y/Y) beats by $6.51M.

KEY Takeaways

• AFFO per share rose 6% to $1.25, and full-year guidance was raised again to $4.93–$4.99, implying about 5.5% growth.

• Mid-7% cap rates on buys vs. ~6% on asset sales translates to roughly 150 bps of positive spread.

• Same-store rent up 2.4% in Q3 and expected to average ~2.5% for 2025, with management confident in equal or better growth in 2026.

• Fell to 97% due to a few known move-outs (Tesco, True Value, Hellweg), most of which are already re-leased or in process.

• Hellweg is now current on rent, and exposure is being reduced significantly—expected to exit top-25 tenants next year.

• New investments mostly funded through noncore asset sales rather than new equity, maintaining balance sheet strength.

• Watsco is exiting self-storage assets at ~6% cap rates and focusing more on industrial and warehouse properties.

NOTES

W. P. Carey (WPC) kept its foot on the gas in Q3, and management sounded confident they can carry that momentum into 2026.

Adjusted FFO per share was $1.25, up about 6% from last year, and they raised full-year guidance again to $4.93–$4.99, implying roughly 5.5% growth at the midpoint.

According to management, there are a few drivers of this growth: they’re finding plenty of good deals at sensible prices, they’re able to grow rents internally, and they’re funding new investments primarily with sales of non-core assets—so the math works without having to lean on the equity markets too hard.

On the investing side, they’ve done $1.65 billion year-to-date at an average initial cap rate of 7.6%. These are mostly sale-leasebacks with leases that run ~18 years and include average fixed lease bumps around 2.7%.

When you factor in those escalators, management says the “all-in” yield on these deals pencils into the mid-9% range, which they view as very attractive versus their cost of capital.

With that, contractual same-store rent rose 2.4% year over year in the quarter and should average about 2.5% for 2025. Because many CPI-linked leases look back to this year’s inflation readings and many bumps occur in Q1, they already have a good line of sight into next year, and they expect 2026 contractual growth to be at or above this year’s pace.

Occupancy dipped to 97%, which they framed as temporary and largely already in hand. The vacancy comes from a few known situations—two former Tesco warehouses, two former True Value warehouses, and some Hellweg stores in Germany.

About a quarter of the vacant square footage is already resolved or closing now, and another half is in active negotiations. Management expects occupancy to move back toward normal over the next quarter to quarter-and-a-half.

On that note, the Hellweg saga continues to trend the right way. Hellweg is officially current on rent, and WPC has been selling and re-leasing stores. Exposure to Hellweg has fallen from them being a top-six tenant to now being #14, with the intent to have them exit the top-25 next year and the top-50 by the end of 2026.

Outside of that, credit metrics across the broader portfolio have improved as other problem names have been resolved. One small headwind: two AMC theaters were renewed at lower rents to keep them operating, but theaters are a tiny slice of ABR and WPC wants to take that exposure to zero over time.

Capital remains a bright spot for WPC. They’ve been funding much of the year’s investment activity with sales of non-core and operating assets—mainly self-storage—at cap rates around 6%, which creates a roughly 150-basis-point spread versus the 7-something they’re buying at.

Overall, the tone of the call was upbeat. If WPC keeps executing the current playbook, management thinks double-digit total returns in 2026 (between AFFO growth near the top of the range and the ~5% dividend) are very much on the table.

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