W. P. Carey Inc. Reit · NYSE:WPC
W. P. Carey Inc. Reit — W. P. Carey — Merger or Acquisition (September 2023)
22 slides from W. P. Carey Inc. Reit's merger presentation, Sep 22, 2023
Slide 1: Investor Presentation September 2023: Strategic Plan to Exit Office
Investing for the Long Run® Investor Presentation September 2023 Strategic Plan to Exit Office
Slide 2: Overview
2 Overview Strategic Plan – Accelerated exit of office (the “Transaction”) by: (i) Spinning-off the majority of WPC’s office portfolio into a publicly-traded REIT, Net Lease Office Properties (NYSE: NLOP) (the “Spin-Off”) (ii) Selling office assets remaining on WPC’s balance sheet (the “Office Sale
Slide 3: Strategic Rationale
3 Strategic Rationale Clear path to monetizing WPC’s legacy office portfolio – Transaction accelerates WPC’s office exit strategy, aligning WPC’s portfolio with its investment focus on growing its core net lease portfolio Enhances WPC’s growth profile through improved cost of capital – Transaction i
Slide 4: Accelerates Existing Office Disposition Strategy
4 30.0% 25.5% 16.1% 5.8% 0.0% YE 2015 YE 2018 Today (6/30/23) Post-Spin-Off Post-Office Sale Program • WPC has reduced its office exposure from 30% of ABR in 2015 to 16% today – the Transaction greatly accelerates that trajectory • Expect balance sheet sales to be completed by early 2024 and generat
Slide 5: Two-Part Office Exit Strategy
5 Part #1 – Portfolio Spun-Off to NLOP Part #2 – Office Sale Program Other Office Portfolio Spanish government (1) Number of Properties 59 70 17 Number of Tenants 62 1 20 Square Footage 8.7 million 2.8 million 3.2 million ABR $141 million $32 million $45 million Property Expenses and Taxes ~$7.0 mil
Slide 6: W. P. Carey Pro Forma Portfolio
6 W. P. Carey Pro Forma Portfolio Note: Portfolio information reflects pro rata ownership of real estate assets (excluding operating properties) as of June 30, 2023. Percentage figures may not sum to 100% due to rounding. (1) Gross real estate value represents consolidated real estate assets before
Slide 7: Go Forward W. P. Carey Net Lease Portfolio Post-Transaction
7 1.6% 5.6% 3.2% 4.7% 5.0% 4.2% 5.4% 2.7% 5.2% 3.2% 59.2% 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Thereafter 66% 33% 1% Go Forward W. P. Carey Net Lease Portfolio Post-Transaction Note: portfolio information reflects pro rata ownership of real estate assets (excluding operating properties)
Slide 8: Internal Growth Profile
8 37% 18% 42% 3% 0% Internal Growth Profile Note: portfolio information reflects pro rata ownership of real estate assets (excluding operating properties) as of June 30, 2023. Percentage figures may not sum to 100% due to rounding. (1) Represents leases with percentage rent (i.e., participation in t
Slide 9: Transaction Expected to Drive Re-rating of W. P. Carey's Valuation Multiple
9 92% 8% Transaction Expected to Drive Re-rating of W. P. Carey’s Valuation Multiple Net Lease Price / 2023E AFFO Multiples WPC Pro Forma for Transaction Property Type (% of ABR) Portfolio focused on higher quality and lower cap rate real estate Increases weighting to industrial / warehouse from 53%
Slide 10: Leverage Metrics and Capitalization
10 Leverage Metrics June 30, 2023 Capitalization ($MM) June 30, 2023 Pro Forma Transaction (1) (1) Amounts may not sum to totals due to rounding. (2) Based on a closing stock price of $67.56 on June 30, 2023 and 213,901,170 common shares outstanding as of June 30, 2023. (3) Pro rata net debt to ente
Slide 11: Transaction Timeline
11 Transaction Timeline Office Sale Program underway; closing of the Spin-Off is anticipated on or around November 1 NLOP Office Sales Office Sale Program Today October 2023 November 2023 2024 Beyond Early November: Funding of NLOP debt financing; Distribution of NLOP shares to WPC shareholders Earl
Slide 12: Compelling Strategic Transaction
12 Compelling Strategic Transaction Greatly accelerates trajectory of reducing WPC’s exposure to office and focusing exclusively on growing core net lease portfolio Results in a highly-desirable, more valuable core real estate portfolio largely consisting of industrial / warehouse, essential retail
Slide 13: Net Lease Office Properties (NLOP)
13 Net Lease Office Properties (NLOP)
Slide 14: Portfolio Overview
14 U.S. Europe Total Number of Properties 54 5 59 Number of Tenants 57 5 62 Square Footage 7.9 million 0.8 million 8.7 million ABR $126 million $16 million $141 million Escalations: CPI-linked / Fixed / Other (1) (% of ABR) 15% / 78% / 7% 68% / 32% / --% 21% / 73% / 6% WALT 5.8 years 5.0 years 5.7 y
Slide 15: Top Tenants and Select Asset Overview
15 Top 10 Tenants and Select Asset Overview Long-Term Cash Flow Long-Term Renewal • Situation: 15-year lease renewal upon completion of in-process renovation • Tenant: Caremark PCS Health, LLC • Guarantor: CVS Health Corporation • Location: Scottsdale, Arizona • ABR: $4.3 million • Size: 354,888 squ
Slide 16: NLOP Financing, Advisory Agreements and Governance
16 NLOP Financing, Advisory Agreements and Governance Mortgage Loan • Size: $335 million • Maturity: Two years plus two one-year extension options • Rate: Term SOFR + 5.00%, subject to a 3.85% floor and a required purchase of a SOFR cap no greater than 5.35% Mezzanine Loan • Size: $120 million • Mat
Slide 17: Appendix
17 Appendix
Slide 18: NLOP Property Schedule
18 Primary Tenant Location Primary Tenant Industry Credit (1) Rent Increase Type Property ABR ($000s) % of Total ABR Property SF (000s) (2) Property WALT (years) (3) In-Place Mortgage Debt ($000s) KBR, Inc. Houston, Texas Construction & Engineering Non-IG Fixed $18,179 12.9% 1,063 6.8 $ -- FedEx Cor
Slide 19: NLOP Property Schedule (continued)
19 Primary Tenant Location Primary Tenant Industry Credit (1) Rent Increase Type Property ABR ($000s) % of Total ABR Property SF (000s) (2) Property WALT (years) (3) In-Place Mortgage Debt ($000s) Cofinity, Inc./Aetna Life Insurance Co. Southfield, Michigan Multi-line Insurance IG Fixed 1,907 1.3% 9
Slide 20: Cautionary Statement Concerning Forward-Looking Statements
20 Cautionary Statement Concerning Forward-Looking Statements Overview 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
Slide 21: Disclosures: FFO and AFFO
21 Disclosures The following non-GAAP financial measures are used in this presentation FFO and AFFO Due to certain unique operating characteristics of real estate companies, as discussed below, NAREIT, an industry trade group, has promulgated a non-GAAP measure known as FFO, which we believe to be a
Slide 22: Disclosures (cont.): EBITDA and Adjusted EBITDA
22 Disclosures (cont.) The following non-GAAP financial measures are used in this presentation EBITDA and Adjusted EBITDA We believe that EBITDA is a useful supplemental measure to investors and analysts for assessing the performance of our business segments because (i) it removes the impact of our