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Date

Tuesday, Feb. 10, 2026 at 12:00 p.m. ET

Call participants

  • Chief Executive Officer — Jason Fox
  • Chief Financial Officer — Toni Ann Sanzone
  • Head of Asset Management — Brooks G. Gordon
  • Chairman — Peter Sands

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Takeaways

  • AFFO per share -- $4.97 for the year and $1.27 for the fourth quarter, reflecting 5.7% and 5% year-over-year increases, respectively.
  • Total return -- 25% for shareholders, as reported by management, positioning the company "in the top tier of publicly traded REITs."
  • Investment volume -- $2.1 billion for the year, with $625 million completed in the fourth quarter; above the initial guidance range.
  • Weighted average initial cash cap rate -- 7.6% on 2025 investments, yielding over 9% on average, with 17-year average lease duration.
  • Disposition volume -- $1.5 billion in 2025, including $785 million from 63 self-storage operating properties, leaving 11 self-storage assets for targeted sale in the first half of the next year.
  • Investment allocation -- 68% of deployed capital to warehouse and industrial assets, 22% to retail, 26% of overall investment volume in Europe, and 74% in North America.
  • AFFO guidance -- $5.13 to $5.23 per share for next year, implying midpoint growth of 4.2% based on $1.25 billion to $1.75 billion investment volume guidance.
  • Rent growth -- Contractual same-store rent growth averaged 2.4% for both the fourth quarter and full year, with CPI-linked escalations at 2.6% and fixed increases at 2.1% for the year.
  • Portfolio occupancy -- 98% at year end, up 100 basis points from the prior quarter due to vacant asset sales and new leases.
  • Rent loss from tenant credit events -- $4 million in 2025, equating to about 40 basis points of rent, within expectations and below the earlier assumption of around $10 million.
  • Balance sheet liquidity -- $2.2 billion of liquidity at year end, including credit facility availability, cash, and unsettled forward equity.
  • Dividend -- Increased by 4.5% to $0.92 per share quarterly, with a payout ratio of approximately 73% supporting an annualized yield over 5% at the current stock price.
  • Net debt to adjusted EBITDA -- 5.6x including unsettled forward equity, and 5.9x excluding it, in line with the target mid to high five times range.
  • 2026 disposition guidance -- $250 million to $750 million expected, including planned sales of remaining self-storage, selected Helwig assets, and ordinary course dispositions.
  • Forward equity raised -- 6.3 million shares sold through the ATM program at a weighted average price of $67.53, for $423 million in gross proceeds, all still available for settlement.
  • G&A guidance -- $103 million to $106 million in expenses forecast, including new investments in AI and technology, with a first quarter spike to about $28 million due to payroll taxes.
  • Weighted average interest rate on debt -- 3.2% for 2025, with expectations for the next year to remain in the low to mid-3% range, including planned euro and U.S. bond refinancings.
  • Other lease-related income -- $24.6 million for the year, projected to reach the low to mid-$30 million range next year, including about $20 million expected in the first half.
  • Capital projects pipeline -- About $50 million completed and $290 million underway, scheduled to deliver over the next 12 to 18 months, further enhanced by the newly branded Carey Tenant Solutions platform.
  • Comprehensive same-store rent growth -- 70 basis points for the quarter and 2.8% for the full year, after accounting for releasing, rent collections, vacancies, and lease restructurings.

Summary

W. P. Carey (WPC +0.04%) emphasized a record year for investment activity and disciplined capital allocation, resulting in sector-leading AFFO growth. The company stated it has fully funded its initial 2026 guidance for acquisitions, with management expressing confidence that momentum will permit potential upward revisions as the year progresses. The call featured detailed commentary on the transition away from self-storage, robust diversification by geography and asset type, and capital cost advantages through euro-denominated financing.

  • Management described flexibility to exceed initial acquisition and disposition guidance, supported by both ample liquidity and identified non-core asset sale opportunities.
  • Initial acquisition cap rates for the coming year are projected in the mid to low 7% range, lower than the prior year's 7.6%, reflecting tightening in the market for certain transactions.
  • The recently launched Carey Tenant Solutions platform is expected to expand the company’s build-to-suit and redevelopment deal flow beyond the historical $200 million active pipeline level.
  • Fixed rent escalations in new investments are outpacing the averages in the legacy portfolio, supporting internal growth prospects even as inflation moderates.
  • The disposition mix, including vacant and non-core assets, was identified as a variable influencing realized cap rates, with ongoing execution expected to maintain advantageous investment spreads.
  • No material changes in portfolio credit quality were noted, and year-ahead guidance for potential rent loss is positioned as conservative and not reflective of specific current credit issues.
  • Debt maturities in both euros and dollars are expected to be refinanced in the same currencies at attractive rates, leveraging the company’s diversified and investment-grade balance sheet.
  • Management commented that recent U.S. retail transaction growth, including exposure to tenants like Life Time, reflects carefully underwritten credit, favorable lease terms, and well-located assets in desirable markets.
  • The company’s active investment presence in healthcare, particularly inpatient rehabilitation facilities, is poised for further expansion within the existing net lease strategy.

Industry glossary

  • ABR: Annualized base rent, referring to the annual total contract rental income (excluding percentage rent, reimbursements, and other income) generated by leased properties, used as a key portfolio performance indicator.
  • AFFO: Adjusted funds from operations, a REIT-specific performance metric that adjusts FFO for recurring capital expenditures, straight-line rent adjustments, and other non-cash items, providing a proxy for sustainable, cash-based earnings.
  • ATM program: At-the-market equity offering program, enabling the continuous or opportunistic sale of company shares into the open market at prevailing prices, often used to flexibly raise capital.
  • Build-to-suit: A real estate development method where a property is custom-built to the specifications of a tenant, often resulting in new long-term net leases and frequently associated with above-market yields.
  • Cap rate: Capitalization rate, a measure of property yield calculated as the net operating income divided by the acquisition price, used to compare relative value in property acquisitions or dispositions.
  • Net lease: Lease structure in which the tenant is responsible for most or all property operating expenses in addition to base rent, common in REIT portfolios for industrial, retail, and office assets.
  • NLOP: Refers to a specific investment management assignment or client referenced in company disclosures, in this context indicating a source of declining fee income as assets are sold.

Full Conference Call Transcript

Jason Fox: Thanks, Peter. Afternoon, everyone, and thank you for joining us. 2025 was a standout year for W. P. Carey Inc., reflecting successful execution across our business, producing strong performance for the year and laying the foundation for attractive, sustainable growth. Supports long-term value creation. The 5.7% AFFO growth we generated for the year was among the best in the net lease industry, reflecting our record investment activity, sector-leading rent growth, and strong portfolio performance. The dividends we paid combined with the appreciation of our stock price provided our shareholders with a total return of 25% for the year, placing us in the top tier of publicly traded REITs.

Looking ahead, we are confident the momentum we established in 2025 will carry into this year. Our deal flow remains strong, we have access to multiple forms of accretive capital, we expect incrementally higher contractual rent growth compared to last year, and stable credit quality within our portfolio. Our competitive advantage on investment spreads should also continue to differentiate us. Our average yields and IRRs are among the highest of the public net lease REITs, reflecting both the strength of our rent bumps and the long duration of our leases.

But combined with our lower average cost of debt, aided by access to euro-denominated financing, we believe we are exceptionally well positioned to drive industry-leading AFFO growth in 2026 and beyond. On this call, I will briefly recap 2025 and expand on how we are positioned to continue delivering attractive growth. I am joined by Toni Sanzone, our CFO, who will review the key details behind our results, balance sheet, and guidance, and Brooks Gordon, our Head of Asset Management, to take your questions. Starting with our investment activity.

We finished the year at the top end of our guidance range, closing record annual investment volume totaling $2,100,000,000, representing substantial growth over our initial guidance and demonstrating our ability to source and close a high volume of transactions in a competitive market. Throughout 2025, we put capital to work at attractive spreads relative to the pricing we achieved on our asset sales, as well as to our overall cost of capital. Our investments carried a weighted average initial cash cap rate of 7.6% for the year, translating into an average yield just above 9% over long-term leases averaging seventeen years.

In contrast, the occupied assets we sold traded at cap rates averaging 6%, generating an average spread of about 150 basis points and creating significant value as we recycled capital from non-core asset sales to higher-yielding net lease investments. We allocated the most capital to warehouse and industrial, which accounted for 68% of our full-year investment volume, and found additional compelling opportunities in retail, which represented 22%. Geographically, 26% of our 2025 investment volume was in Europe, and 74% was in North America, the vast majority of which was in the U.S. Importantly, we finished the year with continued strong momentum, completing $625,000,000 of investments during the fourth quarter.

Among them was our $322,000,000 investment in a portfolio of high-quality, Life Time fitness facilities, which significantly expanded our relationship with that tenant, making it our third largest by ABR. One of the compelling aspects of our business model that continued to stand out in 2025 was our industry-leading rent growth. Even with inflation remaining below the peak levels of recent years, we generated among the best internal growth in the net lease sector, driving a meaningful share of our overall AFFO growth independent of our transaction activity. We expect this to continue in 2026, supported by the strength of our fixed rent escalations. Turning to our sources of capital.

As mentioned, our 2025 investment activity was supported by disciplined capital raising, funding new transactions primarily with sales of non-core operating assets. This approach enabled us to both accretively recycle capital and further simplify our portfolio mix, effectively exiting the operating self-storage business. During the year, we also successfully refinanced our euro-denominated term loan, locking in an attractive all-in rate below 3%, further demonstrating the advantages of having access to euro-denominated debt in multiple forms of capital. In midyear, we achieved execution on our five-year U.S. bond issuance, giving us additional funding flexibility. Furthermore, during the second half of the year, we utilized our ATM program to sell forward equity, getting ahead of our 2026 needs.

So looking ahead to 2026, we remain very well positioned to sustain a high level of investment activity and deliver attractive AFFO growth. Following the strong fourth quarter, we have already closed approximately $312,000,000 of new investments year to date. And we currently have a sizable investment pipeline with several $100,000,000 of transactions at various stages of completion. In addition, our year-to-date investment volume includes roughly $50,000,000 of completed capital projects, with another $290,000,000 underway and scheduled to deliver over the next twelve to eighteen months. We remain just as active, if not more active, in other net lease REITs and build-to-suits, expansions, redevelopment projects.

These are capabilities we have built over many years and view as a meaningful competitive strength, now further supported by a recently launched Carey Tenant Solutions platform. Historically, we have generally maintained a pipeline around $200,000,000 of such projects, which typically deliver above-market yields, extend lease terms, and enhance the strategic importance of the assets involved, creating highly attractive proprietary deal flow that leverages and strengthens our tenant relationships. We see significant opportunity to lean further into these capabilities, with our Carey Tenant Solutions platform position us to do even more going forward, alongside other initiatives such as our expansion in U.S. retail.

With all these factors in mind, we are confident in our ability to continue generating higher investment volumes. We have historically, as we demonstrated in 2025. At the same time, we are mindful that it is still early in the year, so we are starting with an initial investment volume guidance range of $1,250,000,000 to $1,750,000,000. As we move through the year and gain more visibility to the second half, we expect to refine and potentially raise that range, as we did in 2025. We also foresee cap rates being incrementally lower this year. Based on our current pipeline, we are anticipating going-in cash cap rates in the mid to low 7% range, compared to 2025's weighted average of 7.6%.

The momentum we are generating on the investment side of the business is supported by our strong funding position, having already accounted for the vast majority of our anticipated 2026 equity needs. The more than $400,000,000 of forward equity we sold in 2025 remains available for settlement, with an active ATM program in place enabling us to issue additional forward equity as needed. We also anticipate generating close to $300,000,000 of retained cash flow this year, providing an additional source of equity capital. And importantly, with the option to pursue additional accretive disposition opportunities, potentially taking us over the top end of our initial disposition guidance range, should we choose to do so, enabling us to continue driving AFFO growth.

Accordingly, we have ample flexibility to fund additional investments above the top end of our initial acquisition guidance range, regardless of equity capital market conditions. Let me pause there and hand the call over to Toni to discuss our results, balance sheet, and guidance in more detail.

Toni Ann Sanzone: Thanks, Jason, and good afternoon, everyone. Our fourth quarter and full-year results demonstrate a strong, consistent pace of investment activity throughout 2025 at attractive spreads, coupled with sector-leading internal rent growth from our portfolio. I will walk through the details of those results starting with AFFO. AFFO per share for the fourth quarter was $1.27, representing a 5% increase over the prior-year fourth quarter. For the full year, AFFO totaled $4.97 per share, representing 5.7% year-over-year growth and coming in just above the midpoint of our guidance range.

As Jason mentioned, the record investment volume we completed came in just above the top end of our guidance range at an average spread of just over 150 basis points to our dispositions, which will continue to benefit our earnings in 2026 as the full-year impact flows through our results. During the fourth quarter, we continued to fund our investment activity accretively through opportunistic dispositions, selling 44 properties for gross proceeds totaling $507,000,000, bringing full-year disposition volume to $1,500,000,000, the vast majority of which was sales of non-core assets.

Our 2025 dispositions included sales of 63 self-storage operating properties for gross proceeds totaling approximately $785,000,000, leaving us with 11 such properties at year end, which we are currently in the process of selling and hope to complete in the first half of the year. Turning to our portfolio growth. Contractual same-store rent growth remained strong, averaging 2.4% both for the fourth quarter and the full year, on a year-over-year basis. CPI-linked rent escalations averaged 2.6% for the year, which comprise about half of our ABR, while fixed increases, which make up the other half, average 2.1% for the year.

We continue to see fixed increases in new investments trend higher than the averages in our existing portfolio, which will support sustained higher levels of internal growth even as CPI is moderating. About three quarters of our 2025 investment volume had leases with fixed rent escalations averaging 2.5%. For 2026, we anticipate the contractual same-store rent growth will trend slightly higher than it did in 2025, although still averaging in the mid-2% range for the full year. Comprehensive same-store rent growth for the quarter was 70 basis points, which moderated from the first half of the year as anticipated, driven by the impact of a prior-year fourth-quarter rent recovery, as well as higher vacancy over the back half of 2025.

On a full-year basis, comprehensive same-store averaged 2.8%, in line with our contractual same-store growth, after taking into account the impacts of releasing, rent collections, vacancies, and lease restructurings. Our portfolio continued to perform well throughout 2025, with minimal rent disruption. As previously announced, rent loss from tenant credit events totaled $4,000,000 for 2025, or about 40 basis points of rent, which was well within our conservative assumption of around $10,000,000 earlier in the fourth quarter. We continued reducing our Helwig exposure in 2025 through a combination of releasing activities and asset sales, bringing it down to 1.1% of total ABR by year end, and we are currently engaged in active transactions that will further reduce our exposure by midyear.

Looking ahead to 2026, we are taking a similar approach to last year, initially assuming a conservative estimate for rent loss from tenant credit totaling $10,000,000 to $15,000,000, or 60 to 90 basis points of expected rent. Importantly, we have not seen any material changes in credit throughout the portfolio since our last earnings call. As was the case in 2025, hope to be able to reduce our rent loss estimate as the year progresses, which could provide some upside to our initial AFFO guidance.

Portfolio occupancy at the end of the year increased to 98%, up 100 basis points from the end of the third quarter, as we completed vacant asset sales and entered into new leases during the fourth quarter, as we had anticipated. During 2026, we expect portfolio occupancy to remain over 98% through a combination of releasing and dispositions. Fourth quarter releasing activity resulted in the recapture of 100% prior rent on 1.3% of ABR and added almost eight years of weighted average lease term. We saw similar positive results for the full year, about 100% recapture on 5.3% of total portfolio ABR, adding 5.7 years of weighted average lease term.

Other lease-related income for the fourth quarter was $8,100,000, bringing the total for the year to $24,600,000, in line with our expectations. While the timing of these payments can vary from quarter to quarter and even from year to year, they demonstrate our proactive approach to managing our portfolio, often identifying opportunities to maximize the outcome for assets that may be better suited for releasing, redevelopment, or disposition. Turning now to our guidance. For 2026, we currently expect to generate AFFO of between $5.13 and $5.23 per share, implying a healthy 4.2% year-over-year growth at the midpoint, and which is based on investment volume of between $1,250,000,000 and $1,750,000,000. Currently, we are assuming 2026 dispositions total between $250,000,000 and $750,000,000.

This includes ordinary course net lease dispositions, notably certain of our vacant assets and a subset of our Helwig portfolio, as well as the expected sale of our remaining operating self-storage assets. And as Jason discussed, we have identified additional opportunistic and non-core asset sales we could execute at attractive cap rates, giving us a great deal of optionality and funding investments accretively. As the year progresses and we have greater visibility, we will be able to refine that range. G&A is expected to total between $103,000,000 to $106,000,000 for 2026, which includes additional investments in data and technology initiatives, with a focus on expanding AI further into our business processes and portfolio monitoring.

We have a highly scalable operating platform and remain keenly focused on driving further long-term efficiencies. For modeling purposes, just a reminder that our G&A expense runs highest in the first quarter, mainly due to the timing of payroll taxes. We currently expect first quarter G&A to total about $28,000,000, with the balance of the year expected to trend lower and more evenly. Non-reimbursed property expenses are expected to total between $56,000,000 and $60,000,000 for 2026, including approximately $6,000,000 of expected demolition costs associated with the planned redevelopment work.

I will note these incremental costs are expected to mostly occur in the first half of the year and will be more than offset by an associated termination payment, which will be recognized in other lease-related income since we proactively terminated the in-place lease at these facilities to commence the development work. Excluding demolition costs, we expect non-reimbursed property expenses to decline as we continue reducing vacancy and the related carrying costs. Including the termination payment related to this redevelopment, other lease-related income is expected to total in the low- to mid-$30 million range for 2026, with about $20,000,000 of that total expected to be recognized in the first half of the year.

Tax expense on an AFFO basis, the vast majority of which comprises foreign taxes on our European assets, is anticipated to fall between $45,000,000 and $49,000,000 for 2026, with the increase over last year mainly reflecting growth in our European portfolio. As we have now exited the vast majority of our operating assets, we expect operating NOI to total only about $10,000,000 in 2026, which contemplates the sale of our remaining self-storage properties by the end of the first quarter. Investment management fees are expected to decline to about $5,000,000 this year, down from $9,000,000 in 2025 as NLOP continues asset sales.

Nonoperating income for 2026 is currently estimated to total between $7,000,000 and $11,000,000, declining from about $17,000,000 in 2025. For 2026, we assume a flat dividend from our equity stake in Lineage of about $11,000,000, as well as lower estimated FX derivative hedging impacts, assuming the euro remains around its current level for the full year. Given the effectiveness of our hedging strategy, movements in the foreign currency rates are not expected to result in any meaningful impact on our 2026 AFFO. Considering all these factors, we see encouraging momentum heading into the year. The midpoint of our initial AFFO guidance range implies meaningful year-over-year growth of 4.2%, driven primarily by accretive external growth and continued strong internal growth.

And importantly, we are delivering this growth outlook even while initiating guidance with a conservative stance towards both investment volume and credit-related rent loss. Moving to our balance sheet. In 2025, we demonstrated we have a variety of capital sources to fund our investment activity accretively, and we expect to continue to optimize our funding approach in the coming year, allowing us to execute on a strong pipeline of activity, generating attractive spreads. We sold 6,300,000 shares of forward equity through our ATM program at a weighted average price of $67.53 for gross proceeds totaling $423,000,000. All of this forward equity remains outstanding, positioning us well to fund our investment activity throughout the year.

Our strong investment-grade balance sheet and diversified asset base also gives us the unique opportunity to access attractive debt capital across a variety of markets. We have two bonds maturing in 2026, a €500,000,000 bond in April and a $350,000,000 U.S. bond in October. Our initial guidance assumes we refinanced these bonds with issuances in the same currencies, although we continue to have a wide range of options available to us. Our weighted average interest rate on debt was 3.2% for 2025, which we believe is among the lowest in the net lease sector. Despite having to refinance our upcoming bond maturities, our weighted average interest rate for 2026 is expected to remain in the low to mid-3% range.

Net debt to adjusted EBITDA was 5.6 times, inclusive of unsettled forward equity at the end of the year, well within our target range. Excluding the impact of unsettled equity forwards, net debt to adjusted EBITDA was 5.9 times. We expect to continue to manage the balance sheet, maintaining leverage within our target range of mid to high five times. We ended the year with liquidity totaling $2,200,000,000, including the availability of our credit facility, cash on hand or held for 1031 exchanges, and unsettled forward equity. In December, we increased our quarterly dividend by 4.5% year-over-year to $0.92 per share.

Based on our current stock price, that equates to an attractive annualized dividend yield over 5%, which remains well supported with a full-year payout ratio of approximately 73%. We expect our dividend to continue to grow in line with our AFFO growth, while maintaining a conservative payout ratio. And with that, I will hand the call back to Jason.

Jason Fox: Thanks, Toni. 2025 was a successful year that demonstrated the strength of our business model, the quality of our portfolio, and the dedication of our team. We executed on our objectives across the company, delivering attractive external and internal growth, maintaining disciplined capital allocation, and continuing to strengthen and incrementally optimize our portfolio composition. We have entered 2026 well prepared to build on that progress. Our investment momentum remains strong, and our initial acquisition guidance for the year is effectively fully funded, with the flexibility to execute additional investments without needing to access the equity capital markets.

Through the combination of our internal growth, the spreads we are achieving on new investments, and a well-supported dividend, we are confident that we can again deliver attractive double-digit total returns this year, before factoring in any expansion to our multiple. That includes our prepared remarks. I will pass the call back to the operator for questions.

Operator: At this time, we will take questions. If you would like to ask a question, please press. If you would like to withdraw your question, please press the star, then the number two. And your first question comes from Jana Galan with Bank of America. Please state your question.

Jana Galan: Thank you. Hi, and congratulations on a very successful 2025. Jason, I wanted to follow up on the strategy of the expansion in U.S. retail. It looks like Life Time Fitness was part of this goal. I am kind of curious what other categories within retail you are targeting, and whether these will be in the form of more larger sale-leaseback opportunities.

Jason Fox: Yeah. Sure. Yeah. We are making good progress. In retail, it accounted for about 22% of our deal volume last year, and, of course, about two thirds of that was the Life Time deal. You know, looking forward to this year, you know, a good chunk of our pipeline is retail. It is probably about half and half right now. Overall, lease retail is the biggest part of the net lease market, especially in the U.S. And you know, we think it could become a bigger part of our deal volume on an annual basis. I would like to build it to maybe 25%, even 30% of our annual deal volume. That would include both the U.S. and Europe.

When you think about what we are targeting, I mean, we have done deals recently with Dollar General and Life Time, some other fitness. We have done some family entertainment, some grocery, some c-stores in Europe. I mean, we are kind of looking across the sector, and, you know, we will be somewhat opportunistic in, you know, the things that we typically look for in, you know, generally what we do in net lease. We are focused on tenant credit and lease term and structure. You know, master lease versus individual leases. Coverage, things like that are all important, and that will not change.

Jana Galan: Thank you. And then maybe also on the Carey Tenant Solutions platform, you know, maybe just near term, how much above $200 should we think about that growing?

Jason Fox: Yeah. Sure. So we have historically, as I mentioned, done about $200,000,000 per year, or had, you know, active projects, maybe in that range at any given point. And we do think that this can become a larger component of the business. You know, last year, we started, you know, a number of new projects. Year to date, we completed about $50,000,000 of those. And there is another $280,000,000 in construction that will deliver over the next twelve to eighteen months. Know, some of those new deals were done in conjunction with some recent investments where we agreed to either a build-to-suit or an expansion as part of that.

And then there are other things that we are doing related to our existing portfolio. I mean, namely, there are some expansions and redevelopments. It includes, you know, I think two redevelopments that Toni had referenced earlier as well as an expansion for one of our top tenants. So it is becoming more of an emphasis for us and, you know, it is hard to predict exactly how big of a component it could be. You know? But I do think we can increase it.

Operator: Thank you. Your next question comes from Greg McGinniss with Scotiabank. Please state your question.

Greg McGinniss: Hey, Jason. I appreciate the commentary on the retail side. Also hoping you can kind of dig in a bit more on the end on the industrial, you know, types of assets that you are finding or looking for, cap rates, and then kind of U.S. versus Europe. And if you comment on whether or not, you know, Realty Income is becoming more of a competitive company that you are seeing more on deals in Europe as well, that would be appreciated.

Jason Fox: Yeah. Sure. I mean, industrial is still, you know, really the core part of our business. You know, we want to keep on adding retail, but, you know, industrial is significant. It has probably made up two thirds to maybe even three quarters of our deal volume over the last number of years. In terms of, you know, what type of industrial, it is really a mix between both manufacturing and logistics. And we do provide some disclosure on those two components. I think in the past, we have also layered in some food production and processing, which we have always liked. Those tend to be, you know, non-discretionary spend type products.

The tenants tend to have a very meaningful investment in these facilities. We also tend to get, you know, long lease terms, and in many cases, you know, higher yields as well. So that is certainly a component as well. You know, in terms of cap rates, I mentioned earlier, I think that there is maybe some expectation they could tighten a little bit this year. Last year, our average for the year was 7.6%. We will continue to target deals in the sevens this year, but I do think they could come in some. Maybe that ends up somewhere in the low to mid-7% range on average for us, versus the mid-sevens last year.

Maybe that is 25, you know, basis points of tightening. But it is early in the year. It is kind of hard to predict what will happen over the next ten months or so. In terms of Realty Income, I mean, we see them time to time. I would say more in Europe than we have in the U.S. But they have focused a lot of their investing in the U.K., which has not been a country in which we have allocated a lot of capital. We are still doing more of our deals in Continental Europe, and we are doing more of our deals, at least lately, in industrial. So, you know, we see them time to time.

But Europe is a big market, and there is not a lot of competition there generally. So I would not say it is all that impactful. Okay. And then just I do not know if I missed anything else there.

Greg McGinniss: Yeah. No. Thank you. I appreciate that. And just on the potential cap rate tightening, is that just kind of an assumption based on maybe cost borrow lowering or increased competition? Is it anything that you are seeing today or is it just some conservatism that we should be building in there?

Jason Fox: Yeah. You know, it is really a combination of all of that. I think that to the extent rates come down and stay stable, I mean, they have really been range bound in this kind of low fours for probably the better part of six months now. I think a lot of that, you know, maybe has flowed through to cap rates, but probably not all of that. Incremental competition, yep, maybe there is some of that, but we have not seen a lot of it. We hear about, you know, new entrants, but we have not seen it, and we have not seen it, you know, be all that impactful yet.

But I think ultimately that could be a little bit of a catalyst towards that as well. So yeah. And I think overall cost of capital across the sector is getting a little stronger too. But we have not seen a lot of it. I would say our year-to-date deals are still within our target range. Maybe at the low end, but I would probably attribute most of that being that the bulk of what we have done year to date have been in Europe. And, you know, we can borrow, call it, 100 basis points in euros inside of where we can borrow in dollars.

So even if those cap rates are a little bit lower than what we have done historically, I think our spreads are still wider than where we have been. So it is shaping up. It is a good market. You know, we think that we are going to be quite active this year. And I think our spreads are, you know, probably are going to be similar to what we did last year.

Operator: Okay. Great. Thank you.

Jason Fox: Thank you. And your next question comes from John Kim with BMO Capital Markets. Please state your question.

John Kim: Thank you. I wanted to ask about Carey Tenant Solutions, which I think is just your branding for build-to-suit. Just want to make sure that was the case. But how do you protect yourself from development risks associated with these type of projects? And I think in the past, you talked about a 25 to 50 basis point premium on build-to-suit versus acquisitions. Is that still the right range to think about?

Jason Fox: Yes. Sure. Yes. Maybe it is helpful just to kind of, you know, spend a minute or so high level on Carey Tenant Solutions. I mean, we have been quite active on what we call capital investment projects for some time. It has been in our disclosure and our sub for many years at this point in time, and it includes build-to-suits, expansions, and redevelopments. You know, we are good at these type of investments. We have a lot of experience on the team. I have mentioned that I would like to see us do more, and I think there is, you know, real potential for that.

So, you know, part of our effort around this is to formalize it, you know, brand it, be a bit more holistic in our outreach to our tenants, and more proactive in our approach overall, and, you know, I think that we can see some increased activity. I mentioned earlier that we historically have seen about $200,000,000 of in-process capital projects. I think that can get bigger and become a more meaningful component of our annual deal volume. And look, it is also something that investors ask us about. I think there has been some more, you know, some other REITs that have made it more high profile, and we have been asked about what our capabilities are.

So, you know, that is kind of the thought process behind our recent launch of Carey Tenant Solutions, you know, what we are calling it. You know, in terms of development risk, most of what we are doing here are build-to-suits and expansions. There are, you know, occasionally, really high-quality, very attractive redevelopment, and it is a real high bar for us to do that type of work. So it is going to be predominantly build-to-suits and expansions, and you can see that in our supplemental. That is what the disclosure is as well. So, you know, the development risk, typically you have, you know, very strong and large general contractors that provide fixed-price contracts.

In many cases, on build-to-suits, we will have, you know, guaranteed rent start dates built into the structures. So even if there are delays, we still get our rent. We will also have a construction rent kind of built into the budget as well. So we effectively either earn or accrue interest, something, you know, for our cost of capital during the construction period. So I said, we have done this for a really long time. We box the risks. We have a great team in place. One of the benefits of being as large as we are and having the scale is, you know, we can build out a dedicated in-house project management team.

They have lots of experience, a lot of connections to local partners, and, you know, it is a real competitive advantage for us. I think you also asked last cap rate spreads. Yeah. Yeah. I would say on a build-to-suit, which is more of a market deal, it is probably in the, you know, 25 to 50 basis point premium, and a lot of that will depend on the length of the build period and maybe the specifics of the deal with, you know, basis, you know, relative, you know, the construction cost relative to kind of the market, you know, market basis or where that puts you relative to market rents.

I think on the other end of the spectrum are these expansions that we do for our tenants where, you know, this is truly proprietary deal flow. To captive deal. You know, the tenant can either fund these expansions themselves on property that we own, is likely a really, or they can, you know, choose to maybe do something outside of what, you know, critical core facility for them, or they can do a deal with us. And so we have, you know, some pricing power. Of course, you know, we are very mindful of our tenant relationships. We want to make sure that, you know, there is, you know, kind of fairness in how we price it.

But we will typically see on those anywhere from 100 to, you know, 200 or 300 basis points of spread depending on the specific project. And it is not just the premium that we benefit from in many cases on these expansions and kind of follow-on deals that we do for tenants. We are also, you know, increasing the criticality of the real estate. We are lengthening lease terms. When those are on master leases with other properties, you know, there is a drag-along effect with other properties as well, you know, and also just deepening the tenant relationship through these separate transactions.

So, you know, all those are reasons why we want to lean into this more, you know, especially because we are quite good at

John Kim: Great. Thank you. And then my second question is on your leverage. You talked about operating at a mid to high five times leverage. Is that where you think you could the premium multiple for your stock? Just wondering how you balance AFFO growth versus having a cleaner balance sheet with more firepower.

Jason Fox: Yeah. Sure. I mean, look, there is no real changes to our leverage targets. We will continue to operate in the mid to high fives. We are very comfortable with that. But I think you are right. There is certainly impact on equity multiple based on leverage. And I think over time, you know, I can see us drifting to the lower end of that range. I would not say there is a specific timeline in that. And that should help the equity multiple, but right now, we are very comfortable within that, you know, mid to high fives range.

Operator: Great. Thank you. And your next question comes from Jason Wayne with Barclays. Please state your question.

Jason Wayne: Hi, good afternoon. Just on the $60,000,000 in dispositions year to date, I am just wondering the cap rate there. And can you give some color on the cap rates that you are assuming on dispositions for the full year?

Jason Fox: Yes. Maybe I will start, and if Brooks has any color he can add. For the full year, you know, our disposition guide is quite wide. As you know, it includes, you know, a—sorry. Another call came in. It includes kind of a, you know, normal course dispositions, you know, example would be, you know, some Helwigs, but it also includes a meaningful number of assets that we have talked about how we can sell opportunistically at very attractive pricing. It is what I would characterize as non-core. And we have referred to, you know, call it several $100,000,000 of those deals.

So the average disposition cap rate for the year is very much going to depend on the mix of assets we choose to sell. There are certainly scenarios that could put us in and around the execution we saw in 2025, especially if we factor in some vacant sales. So, you know, we will dial that in, you know, as we execute and as, you know, the year continues. In terms of the $60,000,000, I mean, it is a small amount. It really probably depends on the exact assets we have disclosed. We tend not to go into that level of detail.

I do not know, Brooks, if you have any commentary on broadly, you know, if that is any indication for the rest of the year.

Brooks G. Gordon: No. I think you have largely hit it. You know, we have closed a few transactions. The largest so far in Q1 was a warehouse property formerly leased at the time to JOANN, which vacated. We sold that at an extremely attractive price relative to the prior in-place rent. I cannot share a specific cap rate, but highly accretive.

Jason Wayne: Got it. And then, yeah, just on the non-core deals that you have identified to go above the high end of the guidance range? Can you just go into, you know, what is still available there?

Jason Fox: What is still available there? Yeah. Sure. I mean, it is a mixture, you know, of assets, and, you know, maybe I will just rattle off a couple. These are just examples, of course. I mean, we do have a final property in Japan, and given where rates are, where they are, those tend to sell tight. We have an operating student housing asset. A net lease hotel. And really, there is a number of assets that are leased to tenants who regularly approach us about repurchasing properties. Those tend to be at very aggressive pricing. Think that we can, you know, answer the phone on some of those if we feel a need to do it.

And, of course, Brooks has mentioned the JOANN deal, you know, is very attractive as a sub-6% cap rate based on prior rent for a vacant asset. You know, good transaction there. But I think maybe the important note is we have lots of flexibility here. We mentioned earlier that we feel that we have prefunded our equity needs for the year, and to the extent, you know, we need to, if our deal volumes are higher than our initial guidance would suggest, you know, we can lean into some of these accretive asset sales. We can also consider, you know, equity as well.

We have certainly had a nice run over the last twelve months, and equity is a lot more interesting too. But, you know, there is a lot of flexibility. There is no immediate needs though based on our current deal volume guidance. It is fully funded.

Operator: Got it. Thank you. And your next question comes from Smedes Rose with Citi. Please state your question.

Smedes Rose: I wanted to ask a little bit more about your acquisitions outlook for the year. I understand you said that you were coming into the year from a conservative standpoint. But just going back and looking at some of your comments on your third quarter call, you know, you talked about having the infrastructure in place to support a similar pace of activity you were seeing in 2025, and not seeing anything that would disrupt the pace of activity that you were seeing from a broader kind of macro perspective. It seems like this is more than conservative.

It seems like a very marked slowdown from what you are seeing and especially in light of what you have already talked about in year to date. So can you just kind of help me understand a little bit more, you know, conservative versus, like, if there is something disruptive that is happening that is slowing down the overall pace and trying to get a better sort of handle on that.

Jason Fox: Yeah. No. There is nothing that we are seeing in the market right now that suggests there could be a slowdown. It is strong. Constructive, stable interest rates. And look, we are confident in our ability to continue generating high deal volumes, and maybe we are, you know, to what we did in 2025. And if you look back to last year, maybe at the beginning of last year, we took a measured approach to how we view guidance, and that led to a series of increases throughout the year. And know, I think that is our preference going forward.

So you can think about our initial guidance as a starting point, and our expectation is that as we progress through the year and get more visibility into the back half of the year, we will refine that range and hopefully, you know, raise it as we did in 2025. But, you know, it is worth noting, and Toni mentioned this earlier, that even at the current midpoint of what I think could be characterized as conservative deal volume guidance, you know, we believe we can achieve AFFO growth of over 4%, and that should be, you know, very attractive, you know, relative to many, you know, of our net lease peers.

I think also just look at where we have started the year. We are off to a good start. A little over $300,000,000 closed already. I mentioned earlier that we have about $200,000,000 of capital projects that will deliver this year and then a sizable near-term pipeline that I would characterize as several $100,000,000. So we are probably ahead of pace of our initial guidance. But again, we do not have visibility into the back half of the year to necessarily extrapolate this initial pace out for the full year. So as we get more into the year, we will continue to review it and hopefully be in a position to raise it.

Smedes Rose: You know, you talked a little bit more about, you know, you are leaning into more retail, you made Life Time Fitness your number three tenant. I am just wondering if you could talk a little bit about the profile of that tenant. I do not know if you can give kind of coverage levels. And I am just asking because it seems like the fitness world can be subject to maybe a certain amount of fickleness on the part of consumers, and things come and go. I realize this is a popular asset class among the large, you know, net lease companies.

But I am just wondering if you could talk a little bit about your comfort level of moving them to such a large position within the portfolio.

Jason Fox: Yeah. Sure. I think, first of all, this is not a new tenant for us. You know, we have done deals with them in the past and had, because of that, good access to management during underwriting, both on the credit itself but also, you know, into the specific assets. And we like Life Time as a credit. They are one of, if not the strongest, of the U.S. fitness operators. They are publicly traded, have a $6 to $7 billion equity market cap, had a nice run since their IPO, and they have been bringing leverage down as well. So it is a good credit. We bought 10 facilities.

These are all well located in affluent and highly desirable markets near dense retail. Very difficult to replicate these locations. I think our basis is very attractive, well below replacement costs. Low in-place rents, and that is both for these locations but also relative to, you know, the rents that Life Time pays on, you know, other properties throughout the country. And we also have strong site-level coverage. I cannot get into the details on the specifics for it, but it is quite strong, and,you know, our understanding, it is better than the median within their portfolio.

I think the other part about this deal is the seller is a group we know well and have transacted with before on other portfolio deals, and they were exiting a fund, looking to make distributions to their investors by year end. So that drove a quick close, and we think that dynamic contributed to the better-than-market economics. But overall, I think fitness is something that we have done some deals over the last couple years, but clearly, this is the largest one, and we do like Life Time. And look. I do not live in the suburbs, I live in the city. But if I did and I lived near a Life Time Fitness, I would be a member.

I have a number of kids, and these are, it is a great model. I mean, it is a very unique model relative to none of the other, you know, fitness operators out there. These are more like country clubs with outdoor pools and water slides and restaurants and, obviously, very large and modern, you know, fitness facilities and workout rooms, etcetera.

Operator: Okay. Thank you. I appreciate that. Your next question comes from Anthony Paolone with JPMorgan. Please state your question.

Anthony Paolone: Thanks. Yeah. Just first one on credit loss, the $10,000,000 to $15,000,000. If I go back to last year at this time, I think the number you gave incorporated a couple of situations that maybe you wanted some room for, like True Value, perhaps, and maybe another one. So just wondering if any of the $10,000,000 to $15,000,000 is spoken for at this point, or if that is just kind of the number you are giving yourself cushion on?

Toni Ann Sanzone: Yeah. We are setting the range there really to capture a wide variety of scenarios there. I think there is nothing really specific in the portfolio at the moment. We set this range last year and this year. Our objective is really early in the year, taking a broad view so that we have no concerns around any AFFO impact from rent disruption. And I think that, you know, again, similar to what Jason said on the investment side, our guidance is set at a level where we can achieve over 4% growth even with a range of rent loss at this level. So again, nothing specific. It is probably the only uncertainty out there is in the macro environment.

And it is something that, you know, we feel comfortable with at this stage of the game. But I think our goal here is to continue, you know, managing the portfolio, seeing the same limited level of disruption that we are seeing now, and hopefully be able to reduce that and see some upside to our guidance.

Anthony Paolone: Okay. Thanks. And then second question is coming up just on the balance sheet. You have 2.25% euro bonds. Where do those get refinanced today? And just any other details on how you are thinking about, you know, debt refinancing over the course of the year?

Jason Fox: Yeah. Sure. Maybe I will start here. Do not know if there is anything to add, Toni. But yeah, the 2026 maturities are very manageable. It is two bonds. It is one in each market, a euro bond, and then later in the year, U.S. dollar bond. Think the balance sheet is in great shape. We have access to, you know, multiple forms of debt and lots of flexibility right now given our liquidity. So, you know, I think our guidance assumes that we replace each bond coming due with unsecured debt, probably in the same currency. I think that is what we will do, but,you know, we have lots of flexibility.

In terms of where things are pricing, you know, a ten-year euro bond is probably somewhere, you know, in the low 4% range, and U.S. is maybe 100 basis points inside of that. Obviously, we will think about which tenors we want to do, and to the extent it is a little bit less than ten years in Europe, which is maybe more the norm, we will pick up some basis points and get inside of 4% is my guess.

Operator: Okay. Thank you. Your next question comes from Jim Kammert with Evercore ISI. Please state your question.

Jim Kammert: Thank you. Good afternoon. Perhaps just an extension of that last topic. You obviously have done a very nice job. It has benefited the company having a lot of euro debt exposure. Could you remind me where do you stand in terms of capacity, in terms of, it is about two thirds of your overall debt. Can you do a lot more there? Or how are you thinking about that going forward in terms of your overall debt composition?

Jason Fox: Yeah. Toni, do you want to take that?

Toni Ann Sanzone: Sure. Yeah. I would say we still have room in our capital structure to issue incremental euro-denominated debt. You know, as Jason mentioned, we have a euro bond that is maturing this year as well, and a big part of our pipeline is denominated in euro. So we will still have room beyond that. I would say it still continues to create an effective hedge for us both on the foreign currency side, and then, you know, we are benefiting from a lower cost of borrowing there. So I think you will continue to see us access those markets when the time makes sense for us.

But overall, we do see that there is really no bright line at the moment. We have some room for additional capital there.

Jim Kammert: Okay. And then a different question. Obviously, you are not going all in on retail investing assets, but thinking about protecting your above sector average escalator, weighted average escalator, can you get, you know, industrial-like escalators on c-stores in Europe or fitness centers in the U.S., etcetera? I am just curious how that blend is incorporated into your numbers.

Jason Fox: Certainly. I mean, in Europe, I would say that retail, like industrial, typically has inflation-based increases. So I think that we will continue to get that, whether we are doing industrial or retail. I think in the U.S., you are right. We have always talked about this, that the bump structures in retail deals tend to be a little bit lower. I think that it is probably, if we are doing industrial deals in the 2.5% to 3% range, I would say that the retail deals are probably 50 to 100 basis points below that, but it depends on the deal.

I mean, I think that sale-leasebacks, a lot of times, you can, you know, kind of play with the different economics, and there is always trade-offs between going-in cap rates and what the bump structure is, which is why, you know, we are always, you know, quick to remind people that it is not just the going-in cap rate that matters. The cap rate plus the bump structure is important. And, you know, when we are investing in the mid-sevens, based on a going-in cap rate with bumps that are in the, you know, mid to high twos on average, that puts us to average yields in the nines, which I think is quite attractive.

And, you know, there will be a mix of retail in there, but we do not think it is going to be overall impactful.

Jim Kammert: Appreciate the comments. Thank you.

Jason Fox: Thank you. And your next question comes from Michael Goldsmith with UBS. Please state your question.

Michael Goldsmith: Good afternoon. Thanks a lot for taking my questions. You talked about cap rates compressing this year to the mid to low 7% range versus 7.6% in 2025. So are there specific areas where you are not seeing that compression, and does that help drive your acquisition strategy? I am just trying to understand what the implications of this of the cap rate compression is for your acquisition strategy.

Jason Fox: Yeah. I mean, it is a good question, Michael. And, you know, we tend to target, you know, a diverse set of opportunities. The cap rate range tends to be quite wide depending on lots of factors. You know, certainly, the bumps that I mentioned on the prior question, you know, are a factor in that as well. You know, I would say that the more commodity-driven net lease is going to have the most compression, and I think that is going to be, you know, investment grade retail is an area that we have seen that, and it is not something that we target.

I would say mostly for that reason, is that the cap rates and the bump structures are being driven down, you know, more and more there. I think on the other side of that, sale-leasebacks, which is maybe our specialty and where a large part of our deal volume is generated from, we are able to maintain, I would say, you know, cap rates that are closer to what we have done historically. I think there could be a little bit of compression there. I think we will have more pricing power around there, and I think you will continue to see us, you know, have a bigger emphasis on sale-leasebacks as a means to source new transactions.

Michael Goldsmith: Thanks for that, Jason. And then just as a follow-up, you guys cited a roughly 150 basis points spread between dispositions and acquisitions. So is that expected to be, is that sustainable this year? And just, you know, given what you are disposing, is that the right range to think about this? And then does that still make sense in a more competitive net lease environment?

Jason Fox: Yeah. I mean, sure. I mentioned earlier that our dispo range is quite wide, and where we shake out on cap rates is going to depend on what that mix is of what we actually sell, and it is a combination of, you know, our normal course dispositions, which, you know, this year probably includes some Helwigs among others. It is going to be some of these kind of accretive non-core assets that I listed off earlier. And, you know, maybe we can probably factor in some vacant assets there as well, you know, like the JOANN asset that I mentioned. So when you put all that together, we are probably in and around where we were last year.

But, again, it is really going to depend on the mix. You know, I think where we started last year with spreads, we talked about that we think we can achieve at least 100 basis points, and then we dialed that up through the year. That is probably a reasonable starting point for year. I think that cap rates could come down, but, you know, our equity price has gotten better to the extent, you know, we choose to fund deals with incremental deals above our investment volume with new equity.

And I think there is also, you know, a number of assets we can lean into with very attractive pricing if we choose to fund, you know, incremental deals, you know, through asset sales. But we feel pretty comfortable we could be, you know, in the same or similar ballpark to where we were last year. And that certainly gives us a green light to keep on investing and driving earnings growth.

Operator: Thank you. And before we take the next question, press the star, then the number two. Our next question comes from Ryan Caviola with Green Street Advisors. Please state your question.

Ryan Caviola: Good afternoon, everyone. There were four vacant warehouse sales in the fourth quarter, and it sounds like there is a fifth after the quarter end. You just walk us through the decision on retenanting versus disposing of those properties? Were retenanting opportunities not there, or is the choice to sell just opportunistic?

Jason Fox: Brooks, do you want to take that?

Brooks G. Gordon: Sure. Yeah. We look at vacancy just like we would any new investment. You know, we want to understand what are the forward-looking risk-adjusted returns that we can underwrite to. Where those returns are sufficient and attractive on a risk-adjusted basis, we will aggressively lease properties up, you know, make those forward-looking. When available disposition opportunities render returns insufficient, we will not hesitate to sell and do so quickly. So that is really the exercise we pursue. And so something like a JOANN, where an owner-occupier needed to own it and could pay a large premium, you know, that is a very easy decision for us on a sale.

But, you know, elsewhere, we will not hesitate to release properties where we see a direct path to leasing velocity and an ability to underwrite those forward-looking returns.

Ryan Caviola: Thanks. Appreciate that. And then it was outshined by the Life Time purchase, but there was the healthcare acquisition with NewEra for $140,000,000 during the quarter. And I also noticed there is an expansion on the capital commitments with the same tenant. Just wanted to see if you could share color on the relationship there and if healthcare is a venue you view as attractive going into 2026.

Jason Fox: Yeah. Sure. I mean, we are always looking to expand our opportunity set, and healthcare is an area we have been tracking for a while, and we do have some in-house expertise as well. You know, it is a competitive space, but, you know, we do think that there is probably opportunity to add some deal volume there over time. And it is a diverse sector, lots of segments. I think broadly, it continues to outperform. The real estate outperforms, and that is probably supported by long-term dynamics of a growing and aging population. So I think that what we target in healthcare, we still want to make sure it fits within our existing net lease framework.

It is going to be single tenant, going to be long-term leases, typically absolute net, going to want to partner with. We are going to focus on strong site-level coverage and, of course, you know, reputable operators and creditworthy tenants. So yeah. So, you know, example of what we are targeting is what we recently closed. And those are in the inpatient rehab facility space. You know, I think to be clear, we are not looking at acute care hospitals, just when I talk about healthcare more generally. But on the NewEra deals, there is one else that we did earlier in the year called Ernest Health as well, which is a large IRF operator at the same time.

You know, these were all kind of somewhat recently developed. They are well located, attractive basis. I mentioned earlier, strong site-level coverage, and they are good operators. So I think that the IRF model is one that we like, and I think we could do, you know, hopefully, more of those. Anyway, one of them did come with an expansion. That is one of the properties that is performing quite well with, you know, a lot of demand, and so that is an easy thing to do if you have the land to expand these properties and get the kind of operating leverage with additional rooms.

Operator: Got it. Appreciate the commentary. I am, at this time, I am not showing any further questions. I will now hand the call back to Mr. Sands.

Peter Sands: Great. Thank you, everyone, for your interest in W. P. Carey Inc. If anyone has additional questions, please call Investor Relations directly at (212) 492-1110. And that concludes today's call. You may now disconnect.