W. P. Carey Sees “Sweet Spot” in Just-Below Investment Grade Space
07/09/2019 | by Nareit Staff

Jason Fox, CEO of W. P. Carey (NYSE: WPC), joined Nareit in New York for a video interview at REITweek: 2019 Investor Conference.

Fox said that W. P. Carey has made a number of structural changes since the company became a REIT in 2012. He said it has focused on its investment-grade-rated balance sheet, as well as its unsecured strategy, and that W. P. Carey now has broad access to capital markets.

“We’ve also focused on simplifying our business,” Fox said. “We were, at one point, more of a hybrid between a REIT and an investment management company. At this point in time, we’ve really shifted our revenue mix to about 95% generated from our real estate investments.”

Fox said W. P. Carey has always focused on diversification because it lends itself well to net lease investing since there isn’t a daily property management aspect.

“We’re not overexposed to any one sector or asset type, so it provides some protection in the event there’s a disruption in any particular area,” Fox said.

Fox also said that many companies focused in the net lease space look for investment-grade opportunities, and that has led to the most capital inflows, but also the most yield compression.

“We instead focus on the just-below investment grade credit space. We think that’s the sweet spot in net lease investing,” Fox said. He said W. P. Carey’s credit expertise, underwriting, and structuring provide the REIT with the best risk-return in that space.