W. P. Carey Inc. REIT

Hello and welcome to WP Carey's first quarter 2026 earnings conference call. My name is Diego and I will be your operator today. All lines have been placed on mute to prevent any background noise. Please note that today's event is being recorded. After today's prepared remarks, we will be taking questions via the phone line. Instructions on how to do so will be given at the appropriate time. I will now turn the program over to Peter Sands head of investor relations. Mr. Sands, please go ahead.

Good morning, everyone, and thank you for joining us for our 2026 first quarter earnings call. Before we begin, I need to remind everyone that some of the statements made on this call are not historic facts and may be deemed forward-looking statements. Factors that could cause actual results to differ materially from WP Carey's expectations are provided in our SEC filings. An online replay of this conference call will be made available in the investor relations section of our website at wpcary.com, where it'll be archived for approximately one year and where you can also find copies of our investor presentations and other related materials. And with that, I'll hand the call over to WP Cary's Chief Executive Officer, Jason Fox.

Thanks, Peter. Good morning, everyone. I'm pleased to say we've started the year with continued strong execution across the business, particularly in our investment activity and capital raising, building on the foundation we've established for attractive, sustainable growth. Given our performance to date, we're raising our full year guidance for both investment volume and AFFO per share, reflecting the investments we've completed to date, the strength of our pipeline and a more favorable outlook for estimated rent loss. This morning, I'll briefly recap some of the highlights from the quarter, focusing on our investment activity. Tony Sanzone, our CFO, will then take you through the details behind our results, balance sheet, and guidance. We're joined by Brooks Gordon, our head of asset management, to help answer your questions. Starting with our investment activity. So far this year, we've completed investments totaling approximately $680 million. Our pipeline remains very strong, with over half a billion dollars of deals currently at advanced stages. including the sale-leaseback of a large industrial portfolio that's in the final stages of closing. That gives us clear visibility into well over a billion dollars of investments. Importantly, we've continued to see strong momentum in our deal flow, with no noticeable impact on transaction activity to date from recent geopolitical tensions. Given our activity and outlook, we've raised our guidance range for full-year investment volume by $250 million to between $1.5 and $2 billion. Factoring in what we've already closed, our current pipeline, and the capital projects we have delivering this year, results in an average cap rate of approximately 7.5%, and for the full year, we expect to remain around that level. We continue to transact across a range of cap rates, and the deals we've closed year to date have generally skewed toward the low end of our target range, and below where our pipeline is pricing, with closed transactions averaging 7.2%. This largely reflects timing, as it includes some of what we expect to be our tightest cap rate deals over the first half of the year. I'd also highlight that our investment activity to start the year has been mostly weighted towards Europe and Canada, where we secured lower-cost debt during the quarter, including a two-trunch Euro bond offering at a 3.5% average coupon and a Canadian dollar term loan at just over 3%, helping maintain attractive spreads to our going and cap rates. We also continue to originate deals with fixed rent bumps, averaging in the high 2% range, or with CPI-based rent escalations. As a result, we're still achieving average yields of around 9% over long lease terms. During the first quarter, we allocated the majority of our capital to warehouse and industrial properties, which accounted for approximately 60% of investment volume. Retail represented the remaining 40%, driven largely by the sale-lease back we completed with Go Auto, for a portfolio of auto dealerships with strong site-level coverage concentrated in the greater Vancouver area. GoAuto is the second largest automotive dealership group in Canada and now ranks among W.B. Carey's top 25 largest tenants by EBR. We completed four capital projects during the quarter, totaling $68 million, which are included in our year-to-date investment volume, and added a handful of small projects scheduled to deliver later this year. In total, we have 11 capital projects totaling approximately $280 million, delivering over the next 12 months. These projects are generating cap rates incrementally higher than both our year-to-date investments and our full-year expectations, providing attractive, risk-adjusted returns. As I've discussed on prior calls, these projects, particularly the expansions, frequently deliver above market yields, while also extending lease terms and enhancing the strategic importance of the assets involved. Given the size of our portfolio and our long history in this area, further supported by our recent Cary Tenant Solutions initiative, we believe we're well positioned to expand this highly attractive proprietary source of deal flow. Our internal growth also remains strong and continues to trend higher on new investments. And if inflationary pressures from higher energy prices persist, our portfolio is uniquely positioned to benefit, given the high proportion of ABR with rent escalations tied to CPI. Lastly, turning to our sources of capital, our investment activity continues to be supported by well-executed capital raising, driven by the debt issuance and forward equity sales we completed in February. In addition to further strengthening our balance sheet, these actions have effectively pre-funded our investment needs for 2026. We've also locked in attractive pricing and meaningfully reduced our exposure to potential further capital markets volatility this year. As a result, we're confident we can continue deploying capital throughout 2026. As a reminder, we also expect to generate around $300 million of retained cash flow this year, providing an additional source of equity capital. And while additional asset sales are not a core part of our funding strategy, we continue to have the flexibility to pursue additional accretive dispositions at attractive cap rates if needed. Let me pause there and hand the call over to Tony to discuss our results, balance sheet, and guidance in more detail.