WP Carey: Evidence of Predictable Growth-Upgrade to Outperform

研报英文原文证据摘录

WP Carey: Evidence of Predictable Growth-Upgrade to Outperform

June 8, 2026

Investment Conclusion

With this report, we upgrade WPC to Outperform from Peer Perform. Our $85 year-end 26 price target implies ~18%

total return using dividends through year-end. Our $85 price target assumes a 20% discount to our sector 2026

multiple on 2027 earnings. We think the company has begun to build a path of predictable recurring earnings after

historical obstacles which are now backward-looking.

Fundamentals:

●Internal Growth could be enhanced by CPI-linked leases (48.6% of leases by ABR, see Exhibit 1). This is a

big advantage versus other net lease REITs who primarily have fixed escalations in the current inflationary

environment.

●Credit can be a “black box” as many WPC tenants are private. The company has noted the following tenants

facing challenges:

○Hellweg, the German DIY retailer (~1% of Annual Base Rents or ABR, 17 locations) has been a challenge

for some time, but the exposure has been significantly reduced (it was 180 basis points of rent as of 1Q25).

Year to date, two Hellweg locations have been sold, along with two former Hellwegs. The company

believes Hellweg will be out of the company top 25 (the bottom of which is at 80 basis points of ABR)

by the end of the year.

○Cornerstone Building Brands, the U.S. building products company (60 basis points of ABR) now has a

2031 term loan trading at 51 cents on the dollar. The company appears to be a candidate for restructure

($451 million of EBITDA in 2025 according to the 10-K), but, with too much debt ($5.2 billion as of the

latest 10-Q). Note 1Q EBITDA had fallen to $1.1 million. According to Costar, WPC has four buildings to

Cornerstone, with 1.25 million square feet.