EPRT - W. P. Carey: The Good And The Bad I'm Not Adding
2024-07-17 04:44:26 ET
Summary
- W. P. Carey is a diversified triple net lease REIT leaning towards industrial properties.
- The Company has top-tier business metrics and strong upside potential.
- Although the low valuation is tempting, several factors limit investors' willingness to engage in the business.
- Lack of clarity in management communication, relatively low spreads on investments, and significant debt maturities in the upcoming years lead me to engage in other alternatives.
- WPC is a "hold" for me, and it may take a lot to shift that view - regardless of the stock price development.
Investment Thesis
I can't help but respect W. P. Carey's ( WPC ) strong business metrics (high occupancy rate, solid WALT, reasonable tenant diversification) and the quality of its portfolio leaning towards industrial properties. These factors made me invest in the business in the first place. Nevertheless, there are some factors that cannot go unnoticed that made me stop adding since the announcement of the office properties exit plan:
- low quality of the management communication
- relatively low spreads on investments given the high cost of equity
- significant debt maturities in light of the current interest rate environment