W.P. Carey (NYSE:WPC) executives said 2025 marked a “standout year” for the net lease REIT, highlighting record investment activity, sector-leading rent growth, and what management described as a strong foundation for continued earnings and dividend growth in 2026.
On the company’s fourth-quarter earnings call, CEO Jason Fox and CFO Toni Sanzone pointed to 5.7% year-over-year AFFO per share growth in 2025 and a 25% total shareholder return for the year, driven by dividends and share price appreciation. Management also issued initial 2026 guidance calling for continued AFFO growth and another active year of acquisitions, funded by a mix of retained cash flow, forward equity, debt markets, and potential dispositions.
2025 results and portfolio performance
Same-store rent growth remained a key theme. Contractual same-store rent growth averaged 2.4% for both the fourth quarter and full year. CPI-linked escalations averaged 2.6% for the year and represented about half of annualized base rent (ABR), while fixed escalations averaged 2.1%. Sanzone said fixed escalations on new investments were trending higher, noting roughly three-quarters of 2025 investment volume included fixed rent escalations averaging 2.5%.
Portfolio occupancy ended the year at 98%, up 100 basis points from the end of the third quarter, aided by vacant asset sales and new leasing. Fourth-quarter re-leasing resulted in 100% rent recapture on 1.3% of ABR and extended weighted average lease term by nearly eight years, while full-year re-leasing recaptured about 100% of prior rent on 5.3% of ABR and added 5.7 years of weighted average lease term.
Management also discussed credit-related rent disruption. Sanzone said rent loss from tenant credit events totaled $6.4 million in 2025, or about 40 basis points of rent, below the company’s prior conservative assumption of around $10 million. The company reduced exposure to Hellweg to 1.1% of ABR by year-end and said it was engaged in transactions that could reduce exposure further by mid-year.
Record investment activity and capital recycling
Fox said W.P. Carey closed $2.1 billion of investments in 2025, finishing at the top end of guidance and representing record annual volume. Investments carried a weighted average initial cash cap rate of 7.6% for the year, translating into an average yield “just above 9%” over long-term leases averaging 17 years, according to Fox.
On the disposition side, Fox contrasted 2025 acquisition economics with occupied asset sales that averaged a 6% cap rate. Sanzone said the company sold 44 properties in the fourth quarter for $507 million of gross proceeds, bringing full-year disposition volume to $1.5 billion. Dispositions included 63 self-storage operating properties for approximately $785 million, leaving 11 at year-end that management said it hopes to sell in the first half of the year.
By sector, Fox said the company allocated most 2025 investment capital to:
- Warehouse and industrial: 68% of full-year investment volume
- Retail: 22% of investment volume
Geographically, 26% of 2025 investment volume was in Europe, with 74% in North America, “the vast majority” in the U.S. Fox cited a $322 million fourth-quarter investment in a portfolio of Life Time Fitness facilities, which expanded the relationship and made Life Time the company’s third-largest tenant by ABR.
2026 outlook: acquisitions, cap rates, and AFFO guidance
For 2026, Sanzone guided to AFFO of $5.13 to $5.23 per share, implying 4.2% growth at the midpoint. That outlook assumes investment volume of $1.25 billion to $1.75 billion and dispositions of $250 million to $750 million, including vacant assets, a subset of the Hellweg portfolio, and the remaining operating self-storage assets.
Fox said management expects “incrementally higher” contractual rent growth in 2026 than in 2025, while Sanzone said contractual same-store rent growth should trend slightly higher but remain in the “mid-2% range.” Management also built a conservative assumption for tenant credit-related rent loss of $10 million to $15 million (60 to 90 basis points of expected rent). In Q&A, Sanzone said there was “nothing really specific in the portfolio at the moment” driving that range.
Fox also signaled a potential modest cap-rate decline. Based on the current pipeline, the company anticipates going-in cap rates in the mid- to low-7% range versus 2025’s weighted average of 7.6%. In Q&A, Fox said cap-rate tightening assumptions reflected a combination of stable interest rates, sector cost of capital, and the possibility of incremental competition, though he noted the company had not seen competition become “all that impactful.”
Funding, leverage, and dividend
Management emphasized what it called a strong funding position heading into 2026. Fox said the company had already accounted for the “vast majority” of anticipated equity needs, including more than $400 million of forward equity sold in 2025 that remains available for settlement. Sanzone said W.P. Carey sold 6.3 million shares of forward equity via its ATM program at a weighted average price of $67.53, for $423 million of gross proceeds.
The company expects to generate close to $300 million of retained cash flow in 2026, according to Fox. Sanzone said W.P. Carey ended 2025 with $2.2 billion of liquidity, including credit facility availability, cash on hand or held for 1031 exchanges, and unsettled forward equity. Net debt to Adjusted EBITDA was 5.6x including unsettled forward equity (or 5.9x excluding it), and management reiterated a leverage target in the mid- to high-5x range.
On the debt side, Sanzone said two bonds mature in 2026: a $500 million Eurobond in April and a $350 million U.S. bond in October. Guidance assumes refinancing in the same currencies. Fox said 10-year Eurobond pricing was “probably somewhere in the low 4% range,” with U.S. pricing about 100 basis points inside that level, while Sanzone said the company expects its weighted average interest rate to remain in the low- to mid-3% range in 2026 after refinancing.
In December, the company increased its quarterly dividend 4.5% year over year to $0.92 per share. Sanzone said the payout ratio was approximately 73% for the full year and that management expects dividend growth to track AFFO growth while maintaining a conservative payout ratio.
Strategy updates: retail expansion, Carey Tenant Solutions, and healthcare
During Q&A, Fox said the company is making progress expanding in retail and would like retail to reach 25% to 30% of annual deal volume across the U.S. and Europe over time. He cited recent retail-related activity including Dollar General and Life Time, as well as categories such as “family entertainment,” grocery, and European convenience stores, while emphasizing underwriting focus on tenant credit, lease structure, and coverage.
Fox also discussed the newly launched Carey Tenant Solutions platform, describing it as a formalization and branding of the company’s long-running capital investment project capabilities—build-to-suit, expansions, and redevelopments. He said W.P. Carey historically maintained around $200 million of such projects, but expects it to grow. Fox noted year-to-date completion of about $50 million of projects, with roughly $280 million in construction expected to deliver over the next 12 to 18 months. He added that build-to-suit projects typically earn a 25 to 50 basis point premium versus acquisitions, while tenant expansions can generate wider spreads depending on project specifics.
In addition, Fox said the company is tracking healthcare as a potential area for incremental volume, pointing to recent inpatient rehabilitation facility (IRF) investments, including a fourth-quarter acquisition with NewEra and an associated expansion commitment tied to demand at one facility.
About W.P. Carey (NYSE:WPC)
W. P. Carey Inc is a diversified net-lease real estate investment trust specializing in single-tenant commercial properties. The company structures sale-leaseback and build-to-suit transactions to provide long-term net lease financing across a variety of asset classes, including industrial facilities, office buildings, retail centers and self-storage facilities. By employing triple net leases, W. P. Carey transfers property operating expenses, taxes and maintenance responsibility to tenants, creating a stable, predictable income stream for investors.
Founded in 1973 by William Polk Carey, the firm has expanded organically and through strategic mergers and acquisitions.
