W. P. Carey Inc. REIT

Hello and welcome to WP Carey's second 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 today's 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 second 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 wpcarey.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 Carey's Chief Executive Officer, Jason Fox.

Thanks, Peter, and good morning, everyone. The strong momentum we established last year has continued over the first half of this year, driven by execution across both investments and capital markets. And I'm pleased to say we're once again raising our full-year outlook for both investment volume and AFFO per share. This morning, I'll focus primarily on our investment activity, which remained strong over the first two quarters, and how we're particularly well positioned from a capital perspective. to continue investing over the second half of the year. I'll also touch upon how we've substantially mitigated the risks associated with Helvig. Our CFO, Toni Sanzone, will take you through our results, balance sheet, and guidance, and our head of asset management, Brooks Gordon, joins us to answer your questions. Starting with our investment activity, the transaction environment during the second quarter remained largely unchanged from the first, both in the US and Europe, and to date, We've not experienced any noticeable impact on transaction activity from the ongoing tensions in the Middle East. Cap rates on our closed deals were a little higher during the second quarter versus the first, but that was mostly a function of the timing of specific deal closings rather than any change in market conditions. We expect cap rates for the full year to average in the mid to low 7% range consistent with our view at the start of the year. The vast majority of the investments we closed during the second quarter were warehouse and industrial properties, with the mix between the U.S. and Europe broadly in line with our long-run average. We completed a little over $700 million of investments during the second quarter, which brings our investment volume year-to-date to $1.3 billion at a weighted average initial cash cap rate of 7.4%. Factoring in rent escalations and an average lease term of 18 years on new investments, This translates to an average yield over 9%, which remains one of the highest in the net lease sector and continues to provide an attractive spread to our cost of capital. The largest transaction we completed during the second quarter was the $400 million sale-leaseback with Garden Corps, which is a leading U.S. manufacturer of lawn and garden consumables and now ranks as our fourth largest tenant. The portfolio comprises 43 manufacturing, packaging, and IOS facilities across 24 states, are under a 20-year triple net master lease with fixed rent escalations this transaction was compelling for several reasons including the defensive nature of the underlying business the mission critical nature of the real estate and the attractive rent growth it provides over a long lease term looking ahead our near-term pipeline currently includes several hundred million dollars of investments at various stages of completion in addition We have $133 million of capital projects delivering over the second half of this year, part of 10 projects we're currently working on that will add approximately $300 million to our investment volume over the next 18 months, supported by our Carey Tenant Solutions Initiative. I'm pleased to say that the strong pace of investment activity so far this year has enabled us to raise our guidance range for full-year investment volume to between $1.7 and $2.1 billion. While deal closings could slow somewhat during the summer, which is fairly typical, especially in Europe, and it's too early to have clear visibility into the fourth quarter, our pipeline remains active, and we believe we're well positioned to be in the top half of our guidance range, particularly if fourth quarter activity is in line with recent years. Our overall AFFO growth continues to benefit from our sector-leading rent growth. Given the high proportion of ABR generated by leases with rent escalations tied to CPI, We remain uniquely positioned to benefit from the inflationary pressure stemming from higher energy prices. And we expect to see those tailwinds increasingly flow through to rents over the second half of the year and trend even higher in 2027. Turning to capital markets, our investment activity continues to be supported by well executed capital markets transactions. With nearly $900 million of forward equity sold and approximately $1.5 billion of bonds issued so far this year. With the forward equity we sold during the second quarter, we ended the first half of the year with nearly $700 million available for settlement. And in early July, we completed a U.S. bond issuance that addressed our only remaining 2026 bond maturity. Our balance sheet is in excellent shape with ample liquidity, leverage at the low end of our target range, and no near-term debt maturities. We've comfortably pre-funded our anticipated investment activity through the end of 2026. with the flexibility to continue deploying capital well into 2027 without needing to access the capital markets. And that's before considering the approximately $300 million of annual retained cash flow we generate, as well as additional accretive disposition opportunities. Looking further ahead, our lineage shares could also be another source of equity capital beginning in late 2027. Lastly, regarding Helvig, We've proactively reduced our exposure over the past two years from 35 stores to 16 through lease terminations, releasing activity, and asset sales. Importantly, Helvig's recent insolvency filing may help accelerate the process of taking back the remaining stores and bringing the situation to a close. Our remaining gross exposure is now just 90 basis points of ADR, with Helvig no longer a top 20 tenant. We already have springing leases in place on half of the stores at rents comparable to what Helbig was paying. And for the remainder, we're in active discussions with potential tenants and buyers and expect to have lease agreements or asset sales lined up by year end. The bottom line is that Helbig has a negligible impact on our 2026 earnings outlook, which is clearly reflected in our decision to raise AFFO guidance this quarter. So let me pause there and hand the call over to Toni to discuss our results, balance sheet, and guidance in more detail.