WP Carey Q2 2024 Earnings Expected to Be a Transition Year (NYSE:WPC)

W.P. Carey (NYSE:WPC) Q2 earnings, which will be announced after the market close on Tuesday, July 30, will likely show 2024 as a transition year for the diversified net leasing REIT.

The consensus FFO estimate is $1.16 (-13.15% YoY) and the consensus revenue estimate is estimates are USD 394.47 million (-12.84% y/y).

WP Carey missed Wall Street’s consensus for Q1 earnings and revenue as the REIT continued to sell office properties and build its pipeline. The company reaffirmed its 2024 adjusted FFO per share guidance of $4.65-$4.75, compared with the consensus of $4.74.

“The management has signaled that 2024 is a transition year and should be considered as a new benchmark going forward,” said Sanjay Chandiramani, author of Seeking Alpha.

The author reiterates a “Hold” rating for WPC, taking into account investment spreads, margin of safety and tenant-related issues.

“Despite ongoing lease issues, WPC has returned to a new normal with a stronger portfolio and a conservative dividend. WPC is currently trading at a discount to sector peers like O, but the company’s new prospects are stronger than they were prior to the NLOP spin-off,” an associate told SA REITer’s Digest.

South African analysts give the stock an average rating of Buy.

Meanwhile, sell-side analysts and Quant Rating have given the REIT, which is primarily focused on the industrial and retail sectors, a “Hold” rating.

JP Morgan estimates Q2 AFFO per share at $1.17 and 2024 AFFO per share at $4.66 (-10% YoY)

“We suspect we are below Wall Street for several reasons, including increased caution on tenant credit (flat 2024 full-service same-store revenue growth and 2% or less in 2025 even after a large warehouse lease is entered into), lower deal volume ($1.6 billion in 2024 vs. $1.5 billion to $2.0 billion expected), and higher capital costs (bond financing in the mid-5% range in 2025 vs. potential for a lower rate via a Eurobond issuance),” the investment bank said in a recent note.

Quant has given WPC a rating of 3.25 on a 5-point scale, with B denoting valuation, C growth, A+ profitability, D+ momentum and B+ revisions.

Stocks fell ~6.43% since the beginning of the year, but is currently traded 6% above its 20-day simple moving average. Short interest stood at 1.54% of shares outstanding on July 15, representing 3.37 million shares sold short.

For the sector, REIT net leasing earnings in Q2 are expected to confirm the availability of traditional sale-and-leaseback transactions at target investment-grade spreads, Scotiabank Global Equity Research said in a recent note.

The number of sale-and-leaseback transactions in the first quarter fell 14% from a year ago, partly due to slower merger and acquisition activity, but buyer demand has since picked up, the research note said.