Shares of W. P. Carey (WPC -1.70%) rallied 16% in November, according to data provided by S&P Global Market Intelligence. That was a nice bounce-back month for the real estate investment trust (REIT), which plunged 17% in September when it revealed its accelerated plan to exit the office sector. Investors seemed to come to terms with that strategy last month. That was one of a few factors driving the REIT's rally last month.

In a better mood

W. P. Carey caught its investors off guard in late September when the diversified REIT unveiled an accelerated plan to exit the office sector. The two-part strategy would see the company spin off part of its office portfolio into a new office REIT, Net Lease Office Properties, which it completed in November. The company planned to sell the remaining properties by early next year.

The abrupt exit from the office sector would cut into the company's cash flow. As a result, W. P. Carey expects to reduce its dividend by around 20%. That dividend cut didn't sit well with investors, especially since the company had increased its payout again one week before unveiling its strategic exit from the office space. The REIT had grown its dividend every year for nearly a quarter century.

However, investors started to buy into the company's strategy in November after seeing its third-quarter earnings results and initial outlook for 2024. While the REIT does expect its adjusted funds from operations (FFO) per share to decline next year (from a range of $5.17-$5.23 per share in 2023 to $4.60-$4.80 per share in 2024), earnings should start growing at an accelerated rate toward the end of the year. Driving that growth is the roughly $2 billion in cash it has coming in the doors over the next few months from office and other property sales that it can redeploy into higher returning investment opportunities.

That number doesn't include the potential cash infusion from monetizing its position in Lineage Logistics. According to a report last month, the cold storage company is considering an initial public offering (IPO) that could value it at more than $30 billion. That event could enable W. P. Carey to sell its stake in a non-income-earning investment and redeploy that cash into income-generating properties.

Is W. P. Carey a buy after its November rally?

While W. P. Carey rallied sharply last month, shares of the REIT are still down nearly 17% on the year and sit about 25% below their 52-week high. The main issue has been the impact of higher interest rates, which has made it more expensive to borrow money to fund acquisitions. However, that headwind could fade in 2024. Many forecasters anticipate that interest rates have peaked and could start falling in the coming months. That's a potential additional catalyst for W. P. Carey stock, which could continue rallying as rates fall and give it even greater access to capital to invest in new income-producing properties to grow its FFO.