W.P. Carey Inc., a net leased REIT, recently approved a plan to exit all non-traded retail fundraising activities, in keeping with its long-term strategy of focusing exclusively on net lease investing for the Company’s balance sheet.
According to a prepared statement, W. P. Carey’s management and Board of Directors believes this approach will create long-term value for shareholders by optimizing the Company’s cost of capital and enhancing its ability to grow Adjusted Funds From Operations through a combination of single-asset investments and portfolio acquisitions.
In conjunction with this decision, the company will cease all non-traded retail fundraising activities carried out by its wholly-owned broker-dealer subsidiary, Carey Financial LLC, effective June 30, 2017. All existing Managed Programs will continue to be managed by the Company through to the end of their natural lifecycles.
By taking these actions and executing on its long-term strategy, the company anticipates the following benefits:
Elimination of costs associated with its retail fundraising platform, while preserving recurring, stable income streams from the existing Managed Programs through to the end of their natural lifecycles; Increasingly stable and more predictable earnings as the contribution from variable structuring revenue further declines and earnings are ultimately derived entirely from long-term, recurring lease revenues generated by a high-quality, diversified portfolio of net lease assets; New net lease acquisition opportunities become exclusively available for the Company’s balance sheet; Simplified disclosure and communication with the investment community; and
Remains well-positioned to potentially acquire the net lease assets currently owned by the CPA REITs, which it has acquired and managed on their behalf.
Mark J. DeCesaris, W. P. Carey’s CEO says that “The Board and management team continually evaluate the Company’s business strategy to maximize long-term value for our shareholders. We looked closely at the potential structures for new products such as CPA:19 – Global, including the types of investments that would satisfy their liquidity and leverage needs, and the time and scale required for them to reach profitability. Our conclusion was that our shareholders would be better served by focusing on our core net lease investment expertise.”
He adds that “Since our founding by Bill Carey more than 40 years ago, we have focused on delivering increasing income and sustainable long-term value to our investors. Over that time, our corporate structure, revenue composition and capital sources have changed significantly. The decision we are announcing today is an affirmation of the net lease business Bill began in 1973 and another step in our evolution. Our entire team is committed to delivering value to W. P. Carey’s shareholders and all of the investors in the funds we manage.”