2024-04-15 03:31:42 ET
Summary
- WPC has disappointed investors with a negative total return over the past 5 years.
- The company's exit plan from the office market is expected to rekindle growth and strengthen its balance sheet.
- In the meantime, its valuation metrics suggest an attractive buying opportunity with a potential discount.
- The current high dividend yield (7%+) adds the icing on the cake.
WPC has disappointed investors
It is an understatement to say that W. P. Carey ( WPC ) has been disappointed in recent years. The chart below shows the total return on WPC stock over the past 5 years. As seen, the total return has been a negative 7.67%. To add insult to injury, the overall equity market had some of the best total returns during this period. The key issues in my mind are twofold. First, the macroeconomic conditions have not been the best for REIT over the past few years, especially the sharp increase in borrowing rates (more on this later). Second, a key segment of the business WPC operates, office properties, has been dragging its performance - which is the main topic for this article....
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W. P. Carey: Office Market Exit Creates Growth Potential