WPC

Hello, and welcome to W. P. 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 W. P. 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. With that, I'll hand the call over to W. P. 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. 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 remains 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 Hellweg. 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 U.S. and Europe. 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 GardenCore, 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, which 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 billion 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. 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. 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 Hellweg, we've proactively reduced our exposure over the past two years from 35 stores to 16 through lease terminations, re-leasing activity, and asset sales. Importantly, Hellweg'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 ABR, with Hellweg no longer a top 20 tenant. We already have springing leases in place on half of the stores at rents comparable to what Hellweg was paying. 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 Hellweg has a negligible impact on our 2026 earnings outlook, which is clearly reflected in our decision to raise AFFO guidance this quarter. Let me pause there and hand the call over to Toni to discuss our results, balance sheet, and guidance in more detail.

Thanks, Jason, good morning, everyone. Starting with earnings, AFFO per share for the 2026 second quarter was $1.34, up $0.06 or 4.7% year-over-year. Investment activity continues to be the primary driver of our growth, having closed over $3 billion of accretive investments since the first quarter of 2025, including the $1.3 billion we've completed so far this year. Our second quarter results are also benefiting from the timing of elevated other lease related income, which was previously anticipated, minimal rent disruption, and a one-time tax benefit, all of which I will cover in more detail shortly. Looking ahead, we've raised and narrowed our guidance range for full-year AFFO per share to between $5.19 and $5.27, which increases the midpoint by $0.02 and implies 5.2% year-over-year growth. Our guidance raise is driven by a combination of factors.

In addition to higher lease revenues reflecting stronger net investment activity, the beginning of higher CPI flowing through our leases, as well as a more favorable outlook for potential rent loss, we also now expect lower property and tax expenses. Partly offsetting those benefits is the impact of the forward equity we settled during the second quarter, which also had the effect of reducing leverage to the low end of our target range. As Jason discussed, our revised guidance assumes higher investment volume totaling between $1.7 billion and $2.1 billion for the year, up from our previous range of $1.5 billion-$2 billion. During the second quarter, we completed dispositions totaling $84 million, bringing the total proceeds from dispositions over the first half of the year to $246 million.

Based on our current visibility, we've narrowed and lowered our disposition volume range for the full-year to total between $350 million-$550 million, down from our initial range of $250 million-$750 million. Moving to our portfolio. Rent increases also contributed to our results with contractual same-store rent growth of 2.6% year-over-year, driven by the continued strength of both our CPI linked and fixed rent escalations. CPI linked increases, which represent 49% of our same-store leases, averaged 2.7% for the quarter as we are beginning to see the impacts of higher inflation flow through our lease revenue. Fixed rent escalations, which represent 48% of our same-store leases, averaged 2.5%, in part due to our ability to achieve higher fixed rent increases over recent years. The new investments we've closed year-to-date, just over half had fixed increases, averaging 2.6%.

Looking ahead, we expect contractual same-store rent growth to trend marginally higher in the second half of the year as certain multi-year fixed rent escalations and higher inflation linked increases flow through lease revenues. Our expectation for contractual same-store rent growth for the 2026 full-year has increased to 2.6% and is expected to trend higher in 2027 based on current inflation expectations both in the U.S. and Europe. Comprehensive same-store rent growth for the quarter was 20 basis points with approximately 90 basis points of the variance to contractual growth attributable to a rent recovery in the prior year period. The remaining variance primarily reflects uncollected June rent from Hellweg, along with the impact of vacancy and leasing activity.

As a reminder, one-time items or properties moving in or out of the same-store pool can cause this metric to move around from one period to the next. Based on our current visibility, we expect comprehensive same-store growth to average between 1%-1.5% for the full-year, depending on the timing of leasing activity and dispositions, as well as the amount of rent loss that materializes. We're lowering our estimate of potential rent loss from tenant credit events to between $7 million-$10 million, or about 40 basis points-60 basis points of ABR, down from our prior estimate of $8 million-$12 million. Through the end of June, rent loss across the entire portfolio, including Hellweg, has been minimal, totaling $1.7 million, which factors in certain rent recoveries.

Hellweg did not make its June rent payment totaling approximately $1.2 million, has since paid its July rent in full as they work through the insolvency process. While Hellweg may make additional rent payments throughout this process, our updated rent loss assumption assumes that we receive no additional rent from Hellweg this year That we recognize the full benefit of the three-month bank guarantees, resulting in a net rent loss of approximately $3 million from Hellweg in 2026. Overall, our portfolio continues to perform well, and portfolio occupancy at the end of the second quarter was 98.5%, up 40 basis points from the first quarter, driven mainly by the disposition of vacant properties. Moving on to other lease-related income, which totaled $11.2 million for the second quarter.

This was in line with our expectations and brought the total for the first half of the year to $21.7 million, including termination payments, deferred maintenance, and other lease-related settlements as we continue to proactively manage our portfolio. Certain payments were more material in the first half of the year. We therefore expect the total for this line item to decline over the remaining two quarters. For the full-year, we continue to expect other lease-related income to total in the low to mid $30 million range. That brings me to expenses and non-operating income. G&A expense totaled $25.9 million for the second quarter, bringing the total for the first half of the year to $53.3 million. For the full-year, we continue to expect G&A to total between $103 million and $106 million, unchanged from our previous range.

Non-reimbursed property expenses totaled $15.2 million for the second quarter and $29.8 million for the first half of the year, including approximately $2.1 million of demolition costs related to redevelopment work. With greater visibility into the timing of redevelopment work, re-leasing activity, and lower vacant asset carrying costs, we're reducing our full-year estimate for property expenses to between $54 million and $58 million. Tax expense on an AFFO basis, which primarily reflects our current taxes on our international assets, totaled $10.5 million for the second quarter and included a one-time tax benefit that was not anticipated in our initial guidance. Accordingly, we're lowering our full-year guidance assumption for tax expense by $2 million to between $43 million and $47 million.

This line item primarily reflects the $2.9 million quarterly dividend on our equity stake in Lineage, along with interest income on cash deposits and realized gains and losses on foreign currency hedges. As a reminder, while changes in FX rates may impact realized hedging gains and losses, those impacts are generally offset by changes in foreign denominated revenues and expenses, resulting in no material impact to AFFO. Moving now to our balance sheet. As Jason touched upon, we've remained active in the capital markets this year, enabling us to stay well ahead of our capital needs, including funding our projected investment activity and prepaying our October bond maturity. During the second quarter, we sold 5.3 million shares on a forward basis, representing gross proceeds totaling $392 million at an average price of $74.32 per share.

We also settled 5.1 million shares under forward sale agreements for net proceeds totaling $345 million. As a result, we ended the quarter with 9.9 million shares remaining to be settled, representing anticipated net proceeds of $691 million. Our capital markets activity, together with our $2 billion credit facility, which was largely undrawn at the end of the quarter, saw us end the quarter with substantial liquidity totaling approximately $2.7 billion. We therefore continue to have ample runway to fund investment volume above the top end of our current guidance range, as well as into 2027. We've also continued to proactively manage our debt maturity profile. At the end of June, we priced the issuance of $350 million of 10-year U.S. dollar bonds with a coupon rate of 5.2%, which settled in early July. Proceeds will be used to prepay our October bond maturity with no associated prepayment costs.

As a result, we have no debt maturities remaining this year, with our next maturity being the EUR 500 million denominated bonds due in April of 2027. The weighted average interest rate on our debt remained low during the second quarter, averaging 3.2%, which is expected to increase marginally over the second half of the year, reflecting our recent bond refinancing. For leverage, net debt to adjusted EBITDA ended the quarter at 5.1x, inclusive of unsettled forward equity. Excluding the impact of unsettled forward equity, net debt to adjusted EBITDA was 5.5x, which is at the low end of our target range of mid to high 5x and down from 5.7x at the end of the first quarter. Lastly, regarding our dividend, in June, we raised our quarterly dividend 4.4% year-over-year to $0.94 per share, maintaining a healthy payout ratio just over 70%.

At our current share price, that provides an attractive annualized dividend yield close to 5%. With that, I'll hand the call back to Jason.

Thanks, Toni. A few final comments. Overall, the first half of the year has reflected a continuation of the momentum we established in 2025. Deal volume has remained strong, while our cap rates and average yields on new deals remain compelling relative to our cost of capital. The balance sheet is in a very strong position, with all maturities in 2026 fully addressed and leverage now sitting at the low end of our target range. Significant forward equity has already been raised, enabling us to fund deals accretively well into 2027, and our portfolio is set up to further benefit from inflation through our CPI-based leases. Our expectations for earnings in 2026 continue to trend higher despite the headlines from Hellweg. We don't believe the recent stock performance relative to peers is fully reflecting how well we've executed.

We also believe we will continue to be positioned towards the top end of the sector on both AFFO growth and total return, factoring in our dividend yield. With that, I'll hand the call back to the operator for questions.

Thank you. At this time, we will take questions. If you would like to ask a question, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, press star, then the number 2. Our first question comes from Spenser Glimcher with Green Street. Please state your question.

Thank you. Can you guys just walk us through your capital allocation priority list? Just as it relates to build-to-suits, expansions, and wholly owned acquisitions, just trying to understand where you guys are seeing the best returns today.

Yeah, sure. Good morning, Spenser. I would say across those categories, I wouldn't say that there is a priority in any of those. It's more about where do we see the best deal opportunities and the right return dynamics. I think we're active on all fronts. We've done $1.3 billion of total deal volume for the year, that includes sale leasebacks. It includes buying existing leases. We've had deliveries of build-to-suits as well as expansions within there. It's across the board. I think when we think about Carey Tenant Solutions, where the build-to-suit and expansion component of our asset management team. Those are typically some of the highest quality deals because they're captive.

To the extent we can generate more opportunities there, I think that would certainly be welcome, but it won't be at the expense of doing deals in other areas of our target market.

Okay, thanks. That's really helpful. You guys continue to source a lot of industrial deals abroad. I was just curious if you could provide some color on the state of that property sector in Europe. I know it spans different countries, but just broadly speaking, if there's anything you can share on competition for those assets, demand for capital from the client's perspective, or pricing.

Yeah, sure. Competition, I would say Europe has historically always been less crowded from a competitive standpoint. We're seeing, I would say more or some more U.S. companies pop up there for competition. Maybe it's worth noting that entering Europe and doing it well is probably easier said than done, and we've been on the ground there now and investing for almost three decades. We have 50 people spread across our London and Amsterdam offices. We have a lot of deep relationships across the market. I think we have a very good brand and track record. We do know the markets well. We have Europeans that are operating the platform across Europe for us. We do have our advantages, and there is more competition maybe than there was five years ago. It's a big fragmented market.

Activity levels have been increasing over the past year and a half. I think we do see good opportunities for more deal volume there. Look, there's a lot of different markets there. That's part of the challenge of covering it well and having experience. They're obviously there's overlap there in terms of fundamentals, but it does vary from market to market.

Awesome. Thank you, guys.

You're welcome.

Your next question comes from Jamie Feldman with Wells Fargo. Please state your question.

Great. Thanks. I'm sitting in for John Kilichowski today. I guess, for this quarter, we saw the straight-line rent adjustment step down without a commensurate move in GAAP rent revenue. Can you tell us what's driving that?

Well, the GAAP rent revenue did move down in relation to these specific adjustments and what you saw there. There's certainly other movements and growth that we saw in terms of our rental increases. I think when you're specifically talking about the straight-line rent add back, we did see an acceleration of straight-line rent associated with two separate transactions on the leasing side. We assigned two leases where there's no impact on the cash side. The cash rent continues, and we write off the straight-line rent balances for accounting purposes and reset those. There's really no net impact on AFFO there. There's a lowering of the GAAP revenue and a reduction in the add back.

Okay. Was there any type of termination activity that might have impacted it, or no, pretty clean this quarter?

No. We have some rent recovery in there, as well, as kind of our normal recurring rent growth. I think it's all part of the general growth for the year.

Okay. On the investment front, can you talk a little bit more about the cap rates you're getting across, the difference between U.S. and Europe, and then maybe broader question, just the investment landscape. It just seems like there's more capital coming into commercial real estate. Debt markets are tightening up. Any thoughts just on the competitive landscape and if you think that'll put any more pressure on your ability to hit some of your numbers?

Yeah, sure.

Maybe force you to find other opportunities. Sorry about that.

Yeah. The U.S. net lease market has always been competitive. We have had some new entrants over the last couple of years. Some of the big asset managers have formed some funds, many of which are non-traded. That's likely put some pressure on cap rates. It's hard to quantify, and I wouldn't say it's been overly impactful on us. Certainly the type of deals that we target, we've continued to generate substantial deal volume at what we think are very attractive pricing and spreads irrespective of competition. Yeah, more competition, but I don't think it's been all that impactful as of late. In terms of cap rates, we continue to transact across a wide range of cap rates with expectations that we'll average somewhere in the mid to low 7s for the year, which is similar to where at least our expectations when we started the year.

I would say overall cap rates have been fairly stable, That's despite having Treasuries moving meaningfully since the beginning of the year, up and down for that matter. Look, if the Treasuries stay in the 4.6, 4.7 zip code, and let's also see what the Fed does today, I could see cap rates begin to adjust higher at some point. As I just mentioned, there are some competitive pressures that may limit or offset that. We're in good shape. We've raised a lot of capital already that can get us through 2026 and well into 2027. We feel quite comfortable we can continue to deploy capital in that mid to low 7s range.

Maybe last point is, we frequently remind people that that's one metric that we look at, We also want to make sure that everyone's focused on our bump structures and lease terms, which when you factor that into mid to low 7s cap rates, that equates to an average yield in the 9s, which we believe is among the strongest or highest in the net lease sector, That's an important metric as well.

Thank you for that. If I could just throw in a quick follow-up. With higher rates, how are you thinking about just underwriting assumptions and exit cap rates? How are you just changing your view of the world as you put capital to work?

Yeah, certainly, if we have higher rates, we think that's going to flow through to cap rates ultimately, there's not always perfect correlation there, over long periods of time, that should do that. Yeah, I would expect in our underwriting models, we would flow some of that increase in cap rates into the exits that we assume. We're generally quite conservative on residual values in how we look at transactions and model them. I think we're building in pretty good cushions for residual values at whatever point in time we feel like we want to model an exit.

Okay. Thank you.

You're welcome.

Your next question comes from Mitch Germain with Citizens Bank. Please state your question.

Thank you. Jason, it's been a couple of quarters in a row where you've had some pretty sizable sale leaseback activity. You're pretty positive about the state of your pipeline. Are you seeing a recurrence of these kind of bulkier transactions and a continuation? Do you see that happening?

The majority of our deals fall within, call it the $25 million-$100 million size range, with the average probably around $50 million. We do consistently see larger deals. They're part of a regular deal flow any given year. I think we can expect to bid on a number of these larger sale leasebacks, call it $200 million, $300 million, or even larger deals. As you noted, yeah, this year we have completed several larger transactions, including the $400 million GardenCore deal I mentioned earlier. I think the other thing that's important, we're one of the largest net lease REITs. One of the benefits of our scale is that we can do some larger deals, and it's part of our business, and I would expect that to continue. Some of it is going to be dependent on what's out in the market.

When they're there, we're going to be quite competitive on them.

Great. Maybe one for Toni Ann. Can you provide the building blocks of the one-time items in 2Q that should be eliminated when we're thinking about 3Q earnings?

Sure. Yeah. I'll recap there. I'll start by saying that despite there being some variability in the items from quarter to quarter, we are expecting strong overall AFFO growth for the year above 5%. That's coming from our core growth investing and within the portfolio. There are a few factors that impact first half versus second half comparisons. The largest of which is the other lease related income, which I mentioned. Fluctuations in this line item are expected from quarter to quarter. We don't view this as any kind of deceleration in growth. The first half we had about $22 million of other lease related income. We're expecting the total for that line item for the year to be in the low to mid $30 million range, which implies a drop off in Q3 and Q4.

In addition to that, we'll see the impact of the timing of our capital markets activity. With interest expense expected to increase with the refinancing of maturing bonds this year, that'll come through in the third quarter and towards the second half of the year. Lastly, on the rent loss side, I mentioned on my remarks that year-to-date we've incurred about $1.7 million of rent disruption. That includes Hellweg's June rent payment and some recoveries in the second quarter. We have lowered our overall rent loss range to $7 million-$10 million for the full-year. That implies that our guidance assumes we see the majority of that being used in the third and fourth quarters. We did highlight our expected losses from Hellweg. That's our most material exposure.

There is likely some conservatism in that in our revised range as we approach the latter part of the year. That's a bit more of the timing difference. Those are three of the largest factors that are going to contribute to that change.

Great. If I could just add, just what was the one-time tax benefit? What was that, $2 million, I believe? Or no, it was a little different than that.

Well, we reduced guidance by about $2 million on that line item. I think the impact is a little over $1 million in the quarter specific to that. It's really just the application of net operating loss that we were able to utilize against some current income on an international asset. Not really recurring in nature, but it helps and benefits us for AFFO this year.

Thank you.

Your next question comes from Jana Galan with Bank of America. Please state your question.

Thank you. Good morning. Congrats on a great second quarter. Curious, just following up on the potential rent loss estimates. Curious if there's any specific industries, regions, anything to call out on how you're being conservative but thinking about potential issues or is it all idiosyncratic one-offs?

Yeah, I think-

Brooks, I think you cover that.

Go ahead, Toni. You can jump in.

Yeah, I think the rent loss in general, maybe just to recap here, I highlighted our expected losses from Hellweg are really maximum loss we expect this year could be around $3 million of rent. That's $3 million of the $7 million-$10 million in our range. Outside of that, there's no real themes across any industries. I would say we have a small handful of tenants that have some partial rent disruption. I don't think there's any themes, Brooks, worth highlighting, but I think we're still viewing some conservatism into the back half of the year, as I mentioned. That's more about the macro environment and less about anything specific we're seeing in our asset tenant base. There haven't really been any new material rent disruptions in the existing portfolio.

Yeah, nothing to add to that. CreditWatch broadly is very stable. No really new adds, some have come off, so that's come in a bit. That's reflected as well in our lowering net rent loss assumption.

Great. Thank you.

Your next question comes from Jason Wayne with Barclays. Please state your question.

Hi, thanks for the question. You said that CPI-linked escalators are more customary on European assets. Just wondering what's a blended growth, kind of CPI growth there that you're assuming on your leases?

In terms of new transactions that we're originating, or I'm not sure if we disclose this or if it's in our supp, the breakout between Europe and U.S., and the expectations around same-store.

Right. Yeah.

Was it

Kind of both of those.

Maybe I'll start with the first one, and Toni, if you have the information on the second one. On new deals, yes. It is more customary in Europe to have CPI increases. We've mentioned this before, since the spike in inflation a couple of years back, CPI has generally gotten a little bit more difficult to get, especially in the U.S. In Europe, maybe there's some discussions or negotiation around that as well. That said, so far this year, about half of our deals closed to date have included CPI-based leases. A lot of that is driven by an increase in European deals, and our larger Canadian deal at the beginning of the year was also a CPI-based transaction. The pipeline also has a fair amount of CPI. I think it's close to half as well.

Again, a function of doing some more deals in Europe. We've talked about this as well. When we're not getting CPI-linked increases, we're seeing the effects of higher inflation on our ability to negotiate higher fixed increases. Historically, those have averaged, called around 2% per year, and more recently over the last four or five years, they are 50 to 100 basis points higher than that. For example, our 2026 closed deals that have fixed increases, those averaged around 2.6% per year. I think the pipeline is maybe even slightly higher than that. Inflation's kind of flowing through both components of our leases.

On the existing portfolio, I would just add that again, about half of them being CPI based. I think we're weighted more towards about 70% of international leases are CPI based, where it's about 30% of those bumps are from the U.S. We're seeing the trends go up in both areas, both domestically and internationally. I'd say since the start of the year, we've seen the international CPI increase about 100 basis points from our initial projections. U.S. CPI is maybe just shy of that, around 90 basis points. Again, that'll all start to flow through in the back half of this year and more meaningfully as we get into the start of 2027, just given the lag in our leases and the timing in which the escalations are computed.

Got it. Just on a dispositions guidance, are you still planning on selling any non-core assets this year? Is that just more of a long-term kind of option for you?

Brooks, you want to cover that?

Yeah. The dispositions guidance we refined this quarter but still has a fair degree of flexibility for the back half of the year. The breakdown is roughly a third non-core. Maybe two-thirds is more risk mitigation and vacancy cleanup. On the non-core side, as you recall, we sold the final chunk of operating storage earlier this year. We also sold our only Asian asset in Japan in Q2 for a great price. Those are both what we would consider non-core. Yes to that question.

All right. Thank you.

Your next question comes from Smedes Rose with Citibank. Please state your question.

Hi. Thanks. We were just wondering about the implied investment volume, your range through the second half. The low end seems particularly conservative, and I was just wondering, is there anything in particular that you are thinking sort of could happen that would drive that sort of market slowdown in investment activity, or are you just trying to be somewhat conservative at the low end?

Yeah. There's no read through in the low end of the guidance to what we're seeing in terms of activity. We continue to take a measured approach to how we view guidance. As you recall, back in February, we talked about our initial guidance as a starting point and then increased it by $250 at the midpoint in April and by another $150 million today. As we get more visibility into the back half of the year and specifically the fourth quarter, we will review and potentially refine it at that point in time. Activity levels are still robust for us. Again, we don't have a lot of visibility in that fourth quarter and we can't quite predict exactly what will happen.

If the environment continues as we see it today, I wouldn't expect that low end to come into play, and it's probably more the top half of the guidance range if I had to guess right now.

Okay. We're looking at the real estate impairment charges. Looks like they've gone up sequentially for several quarters now and a pretty big step up for this quarter. Is that just related to assets potentially for sale, or is there anything going on there that you can speak to?

Yeah. I'd say the marks this quarter are really more disposition related. There are a couple of larger ones this quarter. The first one relates to our one remaining student housing operating property in the U.K. Current pricing indications are lower than our current carrying value, which triggers the impairment. I will say that although it is a mark on the carrying value, we do still expect at that sale price that the asset sale would be marginally accretive from a cap rate perspective relative to where we could reinvest the proceeds. Generally net neutral to positive from an AFFO perspective. The balance is really, I think, related more to Hellweg.

We have some impairments on a few of the properties in the portfolio that, again, reducing them to their expected selling prices, we expect to sell those assets. Those are really the material drivers this quarter. Importantly, no AFFO impact. No concerns within the broader portfolio.

Great. Thank you. Appreciate that.

Your next question comes from John Kim with BMO Capital Markets. Please state your question.

Thank you. On your updated rent loss guidance for the year, $3 million of which is attributed to Hellweg net of the bank guarantees. Given they unexpectedly paid rent in June, what is the likelihood, in your view, that they will make further rent payments this year? Also in your guidance, is Cornerstone part of that rent loss? They were called out as being on your watch list last quarter.

Yeah, I can cover that, and then Brooks can add any color. I think in terms of the overall rent loss for Hellweg, you're right, $3 million assumes they don't pay rent from August on. They did pay July. They didn't pay June. They have indicated that they're likely to continue paying rent. It's hard for us to say with liquidity and where they are in the insolvency process, whether and how long that continues. This could be a conservative position based on where we sit now. Their rent's a little over $1.2 million a month, and as I mentioned, we do have the benefit of the bank guarantees assumed in the back half of the year, covering about three months of lost rent there. There could be some upside if they continue to pay rent and there's less of a loss on Hellweg.

In terms of Cornerstone, again, we have a generally more broad view in terms of the remaining rent loss reserve. Cornerstone specifically, while we expect that they could go through some kind of a restructuring on the balance sheet, we do expect that they would continue paying rent. We don't have a specific component there, but generally, if there were any rent disruption, we should be covered.

Okay. Then I wanted to ask about your stake in Lineage and your latest views on using that as a funding source when your lock-up period ends next year. I realize it's a non-core holding, but when you look at consensus estimates, the DPS growth is expected to grow or exceed 3% annually, which is pretty attractive, and it is a taxable event for you when you sell. Where does selling Lineage shares fall in terms of priority as a source of capital?

We expect that in the second half of the year, and maybe it's more towards the late part of the second half of the year, that we'll have the ability to consider selling Lineage at that point in time. I don't think we're going to take a view on the direction of the stock price and where it could go. Tax is certainly something we think about. We do have a gain because we've invested very early when we helped seed the company with some sale leasebacks over 10 years ago at this point in time. There will be some gains, but we'll be able to manage those. This is not a huge investment. It's a couple hundred million at this point in time, and the gains will be manageable. I don't think that's really a big consideration that'll affect timing.

I think overall, over a several quarter period, my guess is that we'll use it as a liquidity source for us, and it will be accretive. They pay a dividend yield that's inside of by a couple of hundred basis points where we would reinvest it into core net lease for us. That'll be a positive source of capital.

Thank you.

Your next question comes from Anthony Paolone with JPMorgan. Please state your question.

Thanks. Can you talk about just your deal pipeline and activity levels in some of your newer areas or focal points like retail healthcare? In some of the build-to-suit work that you'll pursue.

Yeah, sure. Maybe I'll start with retail. I think we're making progress there. We had, I think it was a little over 20%, maybe 22% of deal volume last year came from retail. This year to date, deal volume is about 24%. We do have some smaller retail deals in our pipeline right now. It's a big market. The net lease retail is the biggest market within net lease. We hope that over time we can increase that, and that can be really additive to our deal volume. I think sometimes the challenge is the initial cap rates are generally in the right zip code for us, but bump structures tend to be a little lighter than what we would target. I do think we can take some market share, and we are finding good deals there.

Yeah, healthcare is another area that we think that we can do about $200 million a deal in the healthcare industry, that'll be additive as well. It's a big opportunity set. While it's competitive, we should be able to find some deals there, and we have. It's diverse. We do like the long-term dynamics of a growing and aging population. I think mostly we've been focusing on IRFs or inpatient rehab facilities. We did call it about $200 million of that last year, maybe it was a little under 200, and we've added to that some this year. It's going to be more opportunistic in that space, though. I'm trying to think what else. In terms of the build-to-suits and expansions under Carey Tenant Solutions. Historically, we've generally done about $200 million a year or that's been under construction.

Right now we're at about $300 million of construction projects in process. I mentioned earlier that about 133 of those are still expected to deliver this year with the bulk of the remainder in next year. All these areas are contributing. If you think about it, if we can add a couple hundred million dollars in each of those categories, that'll help us move from maybe a deal volume target of $2 billion or something that can be above that, which will obviously all help in flowing through to our growth on an annual basis.

Okay, thanks. Just my second question. I know you don't have any real debt maturities, but you do have equity. If you were going to pair equity with debt, where would you look in the debt market right now? Where would costs be, and what would be your most favored sort of market duration, et cetera?

Yeah. Right now, the euro-denominated debt, that's around 100 basis points tighter than where we can issue debt in the U.S. That's our most attractively priced debt capital. I think there's lots of factors for us to consider, including capital needs and pricing, as I just mentioned, but also market conditions, what our deal pipeline looks like. Those are all things that we consider in terms of which currency we would elect to issue in. I think generally speaking, we repay bonds in the same currencies as the expiring bond. I think the bottom line is we have lots of flexibility there when we look to raise capital, whether it's on the equity side or the types of debt we want to issue.

Okay. Thank you.

You're welcome.

Your next question comes from Greg McGinniss with Scotiabank. Please state your question.

Hey, thanks. Given the $690 million forward equity remaining, do you anticipate needing to use overnights going forward, or you just support the acquisition pipeline funding utilizing a similar equity raise strategy as Q2?

I think over the past couple of quarters, as you just mentioned, you saw us raise equity both through the ATM as well as a larger marketed issuance. I think both are options. I think when everybody feel like it's a good time to be in the market. I think we are covered for this year and probably well into next year as well. We still can be opportunistic with equity and flexible on how we think about the types of equity that we raise. Going forward in the future, my guess it's going to be a combination of both of those, and we'll kind of evaluate our needs as we go.

Okay, thanks. Just looking at the remaining operating assets, we appreciate the color on the student housing facility in the U.K., which sounds like it might be sold this year. Is there any update on the potential hotel redevelopments and sales?

Brooks, you want to cover that?

Sure. Yeah. As a reminder, we own four operating hotels. One is a Hilton in Minneapolis. We will sell that when the time is right, potentially into next year. On the Marriotts, which you are referring to, we have three operating Marriotts. Two of those likely pivot to sale potentially later in this year but maybe into next year. The one which we are targeting for redevelopment is adjacent to the Newark Airport. Targeting Q1 of 2027 likely for a project start there, but we retain a lot of flexibility there. The hotel will keep operating as we assess kind of market dynamics there. All those in one shape or fashion will come out of the system likely over the next 12 months-18 months.

Thank you. Can you give any details in terms of the size of that potential redevelopment? Invested dollars, expected yield.

I think it's premature to provide specific details on that development. It certainly it'll hit our disclosure when we kick that off.

Okay. Thank you.

Your next question comes from James Kammert with Evercore ISI. Please state your question.

Thank you very much. Fully appreciate that Carey spent years sort of exiting, let's call it the fund management business with the CPA funds. I'm curious, what's your strategic appetite today to sort of reengage in the fund management or third-party assets, given your scale, your global reach, your differentiated asset access? There's a lot of money looking to get into the net lease, and just curious what your thoughts are about becoming more of a fund manager.

Yeah, we did exit that years ago. Our view is that for public net lease REIT simplicity, there's certainly benefits to that. I think those who we've seen get into that business typically have much larger scale, which means that their growth needs may be higher and the public equity markets may not be able to support as much funding that's required to hit deal volume targets. We're a large top 20 REIT, but we're not at that scale yet. We feel very comfortable that we can continue to funding our investments with the mix of equity and debt, and I don't think that that's something that we would consider in near term. Long term, I wouldn't say that it would be off the table, but it's not on our radar right now at all.

Fair enough. Thank you.

You're welcome.

Your next question comes from Brad Heffern with RBC Capital Markets. Please go ahead.

Yeah. Hey, everybody. Thanks. You had three new tenants join the top 25 in the quarter. You talked about GardenCore in the prepared comments. You also have Rocky Vista and Kesko Senukai. I may have butchered that. Can you just go through those other two tenants?

Yeah, sure. Let me start with Senukai. Not a new investment per se. They're an existing tenant. That investment, the original investment, was held in a JV. The JV fund structure owning those assets was maturing. We took over 100% control of those assets by buying out our partners, which is not unusual for a majority owner to consolidate and buy out minority partners at the end there. That was the reason for that increase. As for the tenant, they're a dominant DIY retailer in the Baltics. They're backed by a company called Kesko, which is a Finland-based company and one of the largest retailers in Northern Europe. They're publicly traded, I think have a market cap of around $10 billion, sizable. They're not explicit guarantor for the tenant, Kesko. It's always good to have a deep-pocketed backstop there.

The other one that you mentioned, Rocky Vista, that is a for-profit medical school. We did an expansion for them. Very good tenant. They're filling a much needed demand for more pathways for higher supply of doctors in certain regions. Very good company that we've backed now for a number of years.

Okay. Got it. Looking at Apotex, obviously your second largest tenant. There was this announcement about potential generic drug tariffs. I know 2028 is a long time from now. These tariff threats kind of come and go. Sorry, there's construction in the building. Not sure if you can hear that. How do you think your assets would be positioned if that were to actually happen, the potential tariffs on generic drugs?

Yeah, maybe that's part of your question, like most announcements on tariffs, it's very uncertain on how this will play out and whether there will be any for that matter or what happens with some of the uncertainty now around the United States-Mexico-Canada Agreement. I think even in a scenario where Apotex stops serving the U.S. market or moves in some of their production into the U.S., we're confident in the mission-critical nature of our assets. They're also infill Toronto, which is one of the better industrial markets in North America. The company itself, Apotex, they're very important to the Canadian healthcare system. They provide a very large percentage of the generic drugs that are used across Canada. I think we feel pretty good about that investment regardless of any impacts that tariffs may have on their ability to sell into the U.S.

It's probably also worth noting, we did that deal about three years ago, and since that time, the company has gone public. Now has an equity market cap of around $6 billion, total enterprise value of around $8 billion. It was a strong credit when we did the deal originally, but it's now gotten bigger. It's gotten more profitable, has access to the public market capital. There's more disclosure now that it's a public company, and leverage is down. All positives for the credit. Again, I think we feel quite good in their ability to continue to pay our rent, and that's going to be a good investment for us.

Okay. Thank you.

Yep. You're welcome.

Thank you. A reminder to the audience, to ask a question, simply press the star key, then the number one on your telephone keypad. To withdraw your question, press the star key, then the number two. Your next question comes from Michael Goldsmith with UBS. Please state your question.

Good morning. Thanks a lot for taking my questions. You noted that CPI tailwinds should flow through the second half of 2026 and into 2027. Just based on today's inflation expectations, where do you think contractual same-store rent growth can ultimately stabilize?

Stabilize is probably a longer-term question. I would say if we're looking into 2027, we're seeing same-store on a contractual basis, probably trend upwards towards the mid to high 2% range, even approaching 3%. We'd probably start to see that in the first quarter, where we have about 40% of our leases escalating at that time. Longer term, I think we're seeing stabilization is even landing at a higher rate than it was previously, both internationally and domestically. Again, that'll help support longer-term growth, but it's hard to say exactly where that lands. It certainly moves from period to period.

Got it. Thanks for that. As a follow-up, we've touched on a lot today, but just given the commentary around higher CPI rent growth, a favorable transaction market, steady cap rates, and substantial pre-funded capital, is it fair to think that 2027 AFFO growth could compare favorably with 2026? Are there any offsets investors should be considering?

I think too early to get into 2027, Michael. Good try. I think as we get towards the end of the year, we'll probably have some trends that could carry over to next year, and obviously we'll issue guidance in all likelihood on our Q4 call in February. Nothing specific about 2027. I will say that we are having a strong year from a deal volume perspective, and that certainly will help drive growth going into next year. Toni mentioned same-store rent growth is trending higher, that's a positive as well. Like everyone in the REIT industry, there's refinancing headwinds given where rates have gone over the last number of years, that's something to consider. I think overall, we feel good about the story.

Jason, maybe asking a different way. What would be the one or two factors that we should be watching that could interrupt the momentum that you're seeing?

I don't think there's anything specific right now. I think the interest rate headwinds on refinancing, again, that's going to be a question for all REITs. That's in front of us. You can look at our maturities, which I think, Toni, do we just have one next year? Is that right?

We do. We have one euro bond in April of 2027.

Yeah. It won't be overly substantial, but there's probably some leakage there. I think you just got to keep an eye on the big drivers of our growth, which tends to be deal volume, same-store and CreditWatch, or credit loss, I should say. Those are three inputs that we provide guidance around, and likely have the biggest impact on growth. I would say those are trending well for us.

Thank you very much. Good luck in the back half.

Yeah. Thank you.

At this time, I am not showing any further questions. I'll now hand the call back to Mr. Sands.

Thanks, Diego, and thanks everyone for your interest in W. P. Carey. If anyone has additional questions, please call investor relations directly on 212-492-1110. That concludes today's call. You may now disconnect.

Hello, and welcome to W. P. 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. 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 W. P. 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. You can also find copies of our investor presentations and other related materials. With that, I'll hand the call over to W. P. Carey'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. Toni 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 $1 billion 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 billion 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%. 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 tranche Eurobond offering at a 3.5% average coupon and a Canadian dollar term loan at just over 3%, helping maintain attractive spreads to our going-in 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 leaseback we completed with Go Auto for a portfolio of auto dealerships with strong site-level coverage concentrated in the Greater Vancouver area. Go Auto is the second largest automotive dealership group in Canada and now ranks among W. P. Carey's top 25 largest tenants by ABR.

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 Carey 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. 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. 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 Toni to discuss our results, balance sheet, and guidance in more detail.

Thanks, Jason, and good morning, everyone. Starting with earnings, AFFO per share was $1.30 for the first quarter, which represents a $0.13 or 11.1% increase compared to the first quarter of last year. Accretive investment activity continues to drive our year-over-year growth, having closed $2.8 billion of investments since the start of 2025 at accretive cap rates and healthy spreads to our funding sources. As Jason mentioned, given the pace and volume of our investment activity to start the year, as well as the strength of our pipeline, we've raised our expectations for both full year investment volume and AFFO per share.

As outlined in our earnings release, we've increased our investment volume guidance to a range of $1.5 billion-$2 billion, which together with lower estimated potential rent loss, results in an aggregate $0.03 increase to our AFFO per share guidance at the midpoint. For 2026, we therefore currently expect AFFO per share to total between $5.16 and $5.26, implying 4.8% growth at the midpoint. Turning to our portfolio, starting with dispositions. First quarter asset sales generated gross proceeds totaling $163 million. This included the sale of the 11 remaining operating self-storage properties in our portfolio for $75 million.

With that, we've now completed our exit from operating self-storage, further simplifying our business and generating aggregate proceeds of approximately $860 million at an average cap rate just below 6%, which we've recycled accretively into higher yielding investments. Contractual same-store rent growth for the quarter was 2.4% year-over-year, with both fixed and CPI-linked rent escalations averaging 2.4%. For the full year, we continue to expect contractual same-store rent growth to average in the mid 2% range. We continue to achieve strong rent escalations on our new investments. About 3/4 of our investment volume during the first quarter had leases with rent increases tied to CPI, while the other one quarter had fixed rent escalations averaging 2.8% annually.

Comprehensive same-store rent growth for the quarter, which takes into account the impacts of re-leasing, rent collections, vacancies, and lease restructurings, was 1%, with the variance to contractual driven largely by the impact of vacancy during the quarter. Given the nature of this metric, comprehensive same-store rent growth can vary from period to period, often due to one-time items or properties moving in and out of the same-store pool. Historically, our comprehensive same-store rent growth has trailed contractual by approximately 100 basis points on average, and we believe that's a reasonable estimate for the portfolio over the long term. Portfolio occupancy at the end of the first quarter was 98.1%, up slightly from the fourth quarter, and is expected to improve further as we continue to retenant or dispose of vacant assets.

Our portfolio continues to perform well with no new material changes in credit throughout the portfolio so far this year. We've therefore lowered the potential rent loss assumption embedded in our AFFO guidance to between $8 million and $12 million, or about 50 to 75 basis points of ABR, down from our prior estimate of $10 million-$15 million. Based on what we see today, we would still characterize our revised assumption as conservative. Our first quarter re-leasing activity resulted in the overall recapture of 103% of prior rents on 1.4% of portfolio ABR and added just over five years of weighted average lease term. Other lease-related income for the first quarter was $10.5 million, in line with our expectations, and includes termination income related to redevelopment work that commenced this quarter.

Based on our current visibility, we expect other lease-related income for the second quarter to be in line with the first quarter and to total in the low to mid $30 million range for the full year as we continue to proactively manage our portfolio. Non-reimbursed property expenses totaled $14.6 million for the quarter, which includes approximately $1.2 million of demolition costs related to redevelopment work, as we discussed on our last call. We expect to incur additional demolition costs in the second quarter, which would increase non-reimbursed property expenses further before resuming to a more normalized run rate in the back half of the year. For the full year, we continue to expect non-reimbursed property expenses to total between $56 million and $60 million.

G&A expense totaled $27.3 million for the first quarter, in line with our expectations, since the first quarter tends to be the highest of the year for G&A, given the timing of payroll taxes. For the full year, we continue to expect G&A to total between $103 million and $106 million, with the second quarter resuming a more regular run rate. Moving to our balance sheet.

We were very active in the capital markets during the first quarter, accessing close to $2 billion of capital across a variety of sources, taking proactive steps to further strengthen our balance sheet and ensure we're well-positioned to fund our projected investment activity. In February, we issued EUR 1 billion of senior unsecured notes comprising two EUR 500 million tranches with coupon rates of 3.25% on a long five-year maturity and 3.75% on a long nine-year maturity. We executed during a particularly attractive window with proceeds used to address our April Eurobond maturity, which we repaid in March to retire a EUR 215 million term loan and to increase our overall liquidity to support extenally driven growth.

In March, we amended our credit agreement, replacing the euro term loan I just mentioned with a new Canadian dollar term loan at a current all-in rate of approximately 3.1%, with proceeds used to fund our Canadian investment activity. At the same time, we were able to improve our overall revolver pricing grid by 5 basis points at all levels, incrementally lowering our cost of debt. We also successfully executed in the equity markets during the quarter, selling 6.9 million shares on a forward basis, representing total gross proceeds of $497 million. This, combined with the forward equity we sold under our ATM program in the second half of 2025, gives us enough runway to execute investment volume above the top end of our current guidance range.

At the end of the first quarter, we settled 3.45 million shares under forward sale agreements for net proceeds totaling $247 million, leaving us with 9.7 million shares remaining to be settled, representing anticipated net proceeds of $653 million as of the end of March. Driven by our capital markets activity, we ended the first quarter with substantial liquidity totaling approximately $2.8 billion, including availability on our credit facility, cash on hand, and unsettled forward equity. Our remaining debt maturities this year are minimal, primarily comprising the $350 million of U.S. bonds we have maturing in October.

The weighted average interest rate on our debt remains low at 3.1% for the first quarter and is expected to remain in the low to mid 3% range for the full year after taking into account our recent bond issuances. Net debt to Adjusted EBITDA ended the quarter at 5.3x, inclusive of unsettled forward equity. Excluding the impact of unsettled forward equity, net debt to Adjusted EBITDA was 5.7x, down from 5.9x at year-end and well within our target range of mid to high 5x. Lastly, on our dividend. In March, we increased our quarterly dividend 4.5% year-over-year to $0.93 per share, maintaining a healthy payout ratio of 72%. Based on our current stock price, that equates to an attractive annualized dividend yield of over 5%.

We expect our dividend to continue to grow in line with our AFFO growth while maintaining a conservative payout ratio. With that, I'll hand the call back to Jason.

Thanks, Toni. In closing, we're pleased with our performance year-to-date, driven by the continued momentum in our investment activity, the strength of our pipeline, and our capital markets execution, all of which position us well to continue executing going forward. As we look ahead, we remain confident we're on track to deliver double-digit total shareholder returns again in 2026, and that's before any multiple expansion. Our projected earnings growth compares favorably across the net lease sector, and over time, we would expect that to be further reflected in our trading multiple. That concludes our prepared remarks, so I'll pass the call back to the operator for expansion.

Thank you. At this time, we will take questions . Your first question comes from Michael Goldsmith with UBS. Please state your question.

Good morning. Thanks a lot for taking my questions. First, you know, you have a third of the portfolio in Europe. You know, you continue to acquire there. Are you seeing any impact of the portfolio or is there any worry that you have just given some of these global macro events and also just the conflict in Iran? Is that having any impact on your portfolio in Europe?

No. You know, I guess there's a little bit more potential for uncertainty in Europe, you know, given, you know, higher energy prices there, but it hasn't impacted us. If you think about our portfolio, it's diversified. We, you know, mainly have very large companies that can, you know, ride through, you know, the different cycles. We've shown that in the past. You know, there's not big concerns there. We feel good about, you know, the portfolio. We haven't seen anything yet. I think that's certainly something I can say definitively.

Thanks for that, Jason. My follow-up question is, you know, you said in the prepared remarks you've effectively pre-funded your investment needs for 2026. You know, I guess, like, how are you thinking about just funding going forward or do you just sit back and just kind of wait to see what comes to you and be opportunistic with your fundraising? Is this the time where you can be a little bit more aggressive, start to pre-fund 2027 and then if the volumes continue to pick up in 2026, it gets you the position to be more aggressive? Just trying to get an understanding of your thoughts in the funding environment and what's next there. Thanks.

Yeah. Yeah. I mean, we're sitting on $650 million of forward equity right now that's left to be settled. We have, you know, lots of liquidity, as you pointed out. You know, in terms of more equity, I would say if there's good opportunities to get ahead of our needs, you know, for 2027 and raise more equity, I think we'll always consider that. We're certainly comfortable where we are today, and a lot of it will depend on the investment opportunity set and what that looks like. That's probably gonna be the biggest driver. You know, bottom line is we really don't have any visible needs right now, so we can be, you know, I think your words were opportunistic.

Thank you very much. Good luck in the second quarter.

Thanks. You're welcome.

Your next question comes from Jana Galan with Bank of America. Please state your question.

Morning. This is Dan on for Jana. Could you please provide any updates on the Carey Tenant Solutions platform?

Yeah, sure. I mean, we talked about this in some detail on last quarter's call. You know, these are the types of construction projects that we've been doing for quite some time, you know, dating back several decades. They include build-to-suits and expansions and redevelopments. You know, the reason why we've been more deliberate about talking about it is just to make sure that people understand that this is part of our business and it's, you know, maybe another part of our business that we think we can grow. You know, part of, you know, the branding around it is to, you know, formalize it and maybe be a little bit more holistic in our outreach to our tenants. If you look at historically what we've done, it's probably been around $200 million per year.

You know, that'll vary from year to year, but that's probably a decent average. You know, we think that can perhaps get bigger. You know, one of the benefits of being a large REIT like we are, we have built up a very capable in-house project management team, so that's a real competitive advantage. You know, what we found in our outreach to tenants and when we can offer them, you know, various development services and other solutions that, you know, that can lead to follow-on deals. Currently, and we provide a lot of detail on our SUP around this, we have about $280 million of projects in process, and about $180 of that 280 will complete this year.

Beyond that, there's a, you know, really active pipeline of potential projects that, you know, we would expect to move along over the coming quarters.

Thank you. Also with the self-storage operating asset dispositions now completed, what additional assets are you targeting to meet your full year disposition guidance? You know, any plans on the other five operating assets?

Brooks, you wanna take that?

Sure. You know, as Toni mentioned, we maintain a pretty flexible disposition strategy for the year. This early in the year, a range between $250 million and $750 million. We really value that flexibility. In terms of other operating assets, we have a few hotels and one student housing property that we are evaluating for dispositions, potentially in the back half of this year, but also potentially into next year. Something we're looking at. Again, we maintain a lot of flexibility from a liquidity and capital perspective. That'll really investment pipeline will help drive kind of where we land in that range.

Thank you very much.

Your next question comes from Anthony Paolone with JPMorgan. Please state your question.

Great. Thanks. Good morning. Can you talk about the investment pipeline and what the geographic skew looks like at the moment, and also, the property type, kind of pockets where you're seeing more or less, and just where the dispersion around that mid-sevenths cap rate resides?

Yeah, sure. Pipeline remains strong. I mentioned earlier that includes over a half billion of identified transactions, some of which are in advanced stages. It includes one larger sale leaseback of a sizable industrial portfolio in the U.S. that should close, you know, over the, you know, next couple weeks. We mentioned also that we have around $180 million of cap projects that are scheduled to complete this year. That's all part of the visibility into the deal volume that we have this year. In terms of geography, Europe continues to ramp. I think of the deals closed year to date, about half of those were in Europe. A deal in Poland, Robin, was the largest. Another 30% of that was in Canada. The range was in the U.S.

Yeah, but for Europe, we, you know, see a continuation of the increased activity that we started seeing in the second half of last year. That doesn't mean that U.S. is slowing. I think the pipeline is roughly back in line with our ABR mix. It's about 2/3 in the U.S. and 1/3 in Europe right now. Property types, I think this is a, you know, consistent theme for us. We continue to see interesting opportunities in industrial, and that's both manufacturing and warehouse. Year-to-date, about 60% were industrial, and 2/3 of that were warehouse. We also saw a pickup in retail. A lot of that was driven by the Go Auto deal that we talked about earlier. The pipeline is more heavily weighted towards industrial.

That's probably 80% right now. You know, there's a lot of opportunities at the top of the funnel that'll come in as well.

Okay. Just second question. You all have historically had a strong tie-in with private equity. I was wondering if you've seen sort of some of the challenges on the private credit side have any implications on your deal pipeline, either making sale leaseback more attractive or just generally having any impact on your tenant base?

Let me start on the deal impact. I mean, I think our expectations are that potentially sale leasebacks could become, you know, a more interesting opportunity for some of the private equity backed companies that, and, you know, maybe there's a void with private capital to the extent underwriting or capital flows tighten up there. I wouldn't say that's a theme we're seeing right now, but certainly, you know, it's a possibility that that emerges more. Brooks, I don't know if you're seeing anything within our portfolio related to private credit.

No, we haven't seen really discernible specific impacts. Something we'll continue to watch out for, but that hasn't been a factor as of yet.

Okay. Thank you.

Your next question comes from Smedes Rose with Citi. Please state your question.

Hi. Thanks a lot. I wanted to ask you just a little bit about in the past, you know, you've spoken about leaning into retail more. You obviously completed some in Canada this quarter. I just wanted to ask you, how do you think about kind of the rent in that segment versus maybe in other asset classes?

Yeah, sure. I mean, there is a difference. I think market standards for retail tend to be lighter bumps than what we're able to negotiate in industrial, in warehouse. I think that makes sense. I think the, you know, the warehouse, your market generally has grown substantially over the last couple of years in terms of rent growth. You know, a lot of the bumps we put into our leases are meant to be a proxy for market rent. You know, the rents for warehouses or manufacturing plants for industrial companies tend not to be a big part of their cost inputs, whereas retail, you know, rent typically is their biggest expense, there's more of a focus on that. I think that's why historically you've seen flatter leases.

I think where we target, which is sub-investment grade retail, you know, bump structures are probably in the, you know, on average maybe the 1.5%-2% range compared to industrial, where we're seeing probably more like 2.5%, 3%, or even above that. I think once you get into investment grade retail, which, you know, we view as the commodity segment of net lease and tend not to participate in that all that much. You know, those leases tend to be even flatter. Really the only way to differentiate yourself when investing there is through pricing. You know, there's meaningful differences there, I think, between the two in terms of bump structures.

Thanks. I guess I just wanted to ask you too, I mean, you mentioned some tighter cap rate spread deals, I think, you're looking at in the first half of 2026. I mean, does that pertain to the larger kind of industrial type portfolios that you're looking at? Or is it more for one-off opportunities? Or maybe just commentary on kind of the pricing, you know, across like larger deals versus smaller deals.

Yeah. It's not related to larger or smaller deals. Really the reference to the tighter cap rates was to the deals that we've closed year to date. It's about $680 million. Those deals blended towards the lower end of our target range at 7.2%. My expectation is that those will be some of the tighter cap rate deals we close this quarter. Those also, I think maybe it's important to note, and we talked about this earlier, that the bulk of those deals were done in Europe and Canada, where our borrowing costs are meaningfully cheaper than that in the U.S. You know, despite the lower cap rate, you know, we did see attractive spreads on those deals.

I think the other half of this is our pipeline in addition to our capital investment projects delivering this year. Those are more in the upper, you know, end of our target range, which helps us to blend to the mid-7s for the year. I think overall it feels like cap rates have been relatively stable for the year despite, you know, the macro volatility. Hard to predict, of course, what's gonna happen the second half of the year. You know, because we transact across a wide range of cap rates, sometimes the timing or the mix will create some dispersion there. I don't think it's any read-through to any market trends or specific, you know, geographies or asset classes.

Great. Okay. Thank you. Appreciate it.

You're welcome.

Your next question comes from Ryan Caviola with Green Street Advisors. Please state your question.

Good morning. Thanks for taking my question. Just a quick one on onshoring. Obviously, this trend should be helpful for the in-place industrial portfolio. Do you think those tailwinds will lead to more competition and bidding trends with new buyers interested in industrial net lease? Will this lead to a continued focus on industrial acquisitions in Europe? Do you see it just being an overall benefit for all buyers in that space? Thanks.

Yeah. Yeah. I think it's the latter. I think that, you know, to the extent there is more onshoring or reshoring, I think we stand, certainly within our portfolio, stand to benefit substantially. We're one of the larger owners of industrial properties, especially manufacturing and, you know, to the extent it increases demand on the types of buildings that we own. We think that's good for rent growth. We think that's good for, you know, the criticality factor that we tend to underwrite in the buildings that we own. Could it attract more competition? Perhaps. I mean, if a particular end of the market becomes more attractive, I think you could see some capital flows in there.

It's a big market, and I think the positives certainly, you know, would outweigh any kind of increased competitive cash flow or capital flows.

Thank you. On the mix between new deals in terms of embedding in inflation-based increases in the lease or focusing on higher fixed escalators, could you just update us on where that stands and if this has any differences, whether it be by country or flows?

Yeah, sure. I mean, since the spike in inflation, you know, four or five years back, the CPI-based leases have gotten to be a little bit more difficult to negotiate into new deals. That's, I guess, particularly in the U.S. In 2025 last year, about 1/4 of our deals had CPI-linked increases. So far this year, it's actually the opposite. It's about 3/4 of deals closed to date were CPI based. I think to your point, I think that's a function of geography more than anything else. Europe leases, it's still customary to have inflation-based increases embedded in there. You know, year-to-date, as we mentioned, there's been, you know, more of our deals have been in Europe.

I think the Go Auto deal in Canada, that's also a CPI base increase negotiated in there. You know, something that we certainly value having that inflation hedge, you know, built into our portfolio, and it's important to get. You know, when we don't get inflation-based increases, the effects of higher inflation have still kind of flowed through to our fixed increases, where historically our average fixed increase is probably closer to 2%, whereas the last three or four years we're probably 50 to 100 basis points above that on new deals with fixed increases. We're still seeing, you know, some of the benefits there. It's probably a good reminder of the.

We talk about this a lot about the differentiation of our portfolio compared to many of our net lease peers where we have, you know, substantial internal growth, you know, built into our, our model as opposed to just relying on spread investing and external growth.

Thank you. That was very helpful.

Okay.

Your next question comes from Mitch Germain with Citizens Bank Please state your question.

Jason, just following up on that topic, is it more standard to have a CPI-based lease in Europe versus kind of what the acceptable rate is here in the U.S.?

Yeah, it is. It's definitely more standard and more customary in Europe. I think that we've always made it part of our model, you know, to the extent we can in the U.S. You know, this dates back to, I mean, we've been around for 50 something years at this point in time, and a lot of this dates back to, you know, the eighties on the themes of trying to, you know, create an inflation hedge, you know, within a, you know, fixed income type stream that net lease can sometimes be, and we think we've done a good job of that.

Got you. Clearly there's a lot of momentum in the business. I'm curious, though, if you're seeing some of the buyers that, you know, for the last couple of years have been on the sidelines reemerge, and is any real change in the competitive balance within the investment sales markets?

Yeah. I mean, the net lease market has always been competitive, especially in the U.S. I would say there have been some new entrants over the last couple of years. It's a lot of the names that we read about. Some of the big asset managers have, you know, acquired other platforms. I mean, one of the things that we've observed, and we've heard this from some bankers as well, is it doesn't necessarily mean there's new, kind of incrementally new players in the business. You know, many of them have just changed brands from being independent to be part of a big asset manager. Regardless, it doesn't feel like it's been all that impactful, and I think ultimately the results speak for themselves as we continue to generate substantial deal volume at attractive pricing and spreads and that's irrespective of competition.

You know, I think beyond pricing, I mean, we have a lot of competitive advantages. We've been doing this for a long time. Experience and execution really matter, especially when we're focused on more complex sale leasebacks, I think our track record and reputation in the market are something that helps differentiate us. It all seems manageable, again, it's not showing up in the numbers, that's for sure.

Congrats on the quarter.

Great. Thank you.

Your next question comes from Eric Borden with BMO Capital Markets. Please state your question.

Hey, good morning. Thanks for taking my question. You know, I just understand that the spread between contractual and comprehensive growth can fluctuate from quarter-to-quarter. You know, over the long term, the average spread has been around 100 basis points. Just, you know, curious what your expectation is for this, for that spread for the remainder of the year, as it sounded like you may have some vacancies to address.

Toni, you wanna take that?

Sure. Yeah. I think you covered kind of the highlights there. I think as, you know, we've mentioned the contractual side, we're expecting around mid 2% growth from our contractual base lease escalations. On the comprehensive side, again, factoring in vacancy is probably the biggest impact we see over the course of this year. As you mentioned, it does move around from quarter to quarter. That can be, you know, collecting rents, recovery of rent in any one period. We could see that move. I think the 100 basis points, you know, it's a good round number we use in terms of kind of our historical average. Really is a good estimate over the long term.

I think, you know, factoring that in, we could certainly see the range for this year being between 1% and 2% on the comprehensive side, but it really does depend on how soon we address vacant asset dispositions and, like I said, timing of things like rent recoveries.

Okay, that's helpful. Jason, just going back to your comments around your well-capitalized, European tenant base who can absorb oil shocks and supply chain volatility. You know, do you have any exposure to maybe less capitalized tenants or tenant categories with higher sensitivity to commodity price swings? You know, how are you underwriting or monitoring that risk today?

Yeah. Brooks, do you wanna take that? It's kind of a, I guess, a broad question, but.

I think the key point in there is what Jason mentioned, is the broad diversification, long-term leases and high criticality. We transact with businesses of all sizes, from the biggest in the world to smaller companies. The bulk of our companies, by large margin, are large, well-capitalized companies, and that remains true in Europe as well. You know, our overall view of oil shock is it's a risk we need to monitor very closely. We haven't thus far seen direct impacts. It's something we'll pay very close attention to. Again, our portfolio is really constructed intentionally to absorb any types of shocks or headwinds, and we've seen that a number of times over the decades.

You know, we're confident in that, and, you know, think that diversification really is key there.

All right. Thank you very much. Appreciate the time. Your next question comes from Jim Kammert with Evercore ISI. Please state your question.

Good morning. Thank you. Jason or team, are you willing to provide a little bit of color on terms of financial data regarding, say, Robin and Go Auto, both from their websites look to be pretty substantial companies, but I think they're both privately owned, if I'm not mistaken. I'm just, you know, curious if you can provide a little sort of financial flair or color around the size and give scope of those companies.

Yeah, sure. They are private companies, I think we are, you know, under, you know, some restrictions in terms of talking about, you know, financial details. You know, with Go Auto, we talked about earlier that they're the second largest auto dealership platform in Canada. You know, they're diversified across, you know, pretty much all the OEMs or the brands, and they have, you know, a proven tracker to have growth through, you know, over, you know, many years at this point in time. I think sales for them are greater than $3 billion. I think Robin also a large company. They are a Dutch company, one of the largest 3PL operators in Poland.

I don't think we can talk about kind of revenue or EBITDA, but they're one of the market leaders in the Poland market from a 3PL standpoint.

It's helpful. Sort of derivative of the first question, it seems like you've knocked out a growing list. I mean, Life Time, and we just talked about Robin and Go Auto, kind of $200+ million transactions. Is that just happenstance, or is there some message to read into that in terms of your investing efficiency and where you're spending your time on the external side?

Yeah, sure. I mean, look, it's, I guess I would say the majority of our deals typically fall within the, you know, call it $25 million-$100 million deal size range. Average transaction is maybe around $50 million, perhaps a little bit bigger than that. But we do consistently see larger deals. They're part of our regular deal flow. On any given year, we would expect on a number of these larger sale leasebacks, you know, call it $200 million or $300 million or even larger deals. You mentioned Go Auto and Robin and last year, Life Time. We, you know, we do tend to complete several of these larger deals each year.

I just mentioned earlier that we have one larger sale leaseback in the pipeline, an industrial deal in the U.S. that should close over the next week or two. Yeah. It's part of the deal flow. Look, we're one of the largest net lease REITs, so I think one of the benefits of our scale is that we can do larger deals and, yeah, they're a regular part of our business.

All right. Thank you, Jason. Team, thank you.

Yeah, you're welcome.

Thank you. Your next question comes from John Kilichowski with Wells Fargo. Please state your question.

Hi. Good morning. Thanks for taking my question. My first one is just on the new credit loss guide. I know last quarter you talked about there wasn't any maybe specific items that you were looking into. Is there anything now this quarter that you have some sense of this is where credit's gonna turn out, or is the eight to 12 number still more of an open-ended space just for things that may come up in the rest of the year?

Toni, do you wanna just touch on kind of the range and how that's changed, and then maybe, Brooks, you can just give a little bit of color on credit watch?

Yeah. I'd say it's more the latter. I would say we've not really seen any material credit change in the portfolio since the start of the year, and that's really amongst our watch list and more broadly. Really with four months of good rent collections behind us and our current view of the tenants, we did feel comfortable bringing down the range. The range is still larger than our typical historical losses. You know, again, that's more about being prudent in this uncertain macro environment and then really ensuring we're covered in any number of scenarios rather than anything that we're seeing currently in the portfolio.

Yeah. Then just on credit watch and credit quality generally, you know, as Toni Sanzone mentioned, it's pretty stable. You know, as you noted, we lowered the rent loss assumption range, which is sort of the most direct tool we can offer you there. Watch list came down slightly as well. You know, some color commentary on the watch list is Hellweg remains the biggest exposure there. It's about 1% by ABR and coming down quite quickly. We're on track to have that out of our top 25 in the first half or around mid-year, I should say. The only other tenant to note is Cornerstone, which is about 60 basis points of ABR. They're the largest exterior building products manufacturer. Very large company, over $5 billion in revenue.

They've been on watch, and we expect they'll restructure at some point. Their balance sheet is over-levered. We own very critical real estate. Don't expect any impact there. That's the only one of size. The rest of the credit watch list is really diversified and much smaller tenants.

Okay. That's helpful. Thank you. Then on the second one, earlier you gave some helpful color around some operating assets that you may consider selling the rest of the year. I was just hoping if you can give maybe some idea of the buckets of capital that you're considering selling and then maybe to add on to that, the cap rates that you know, you think you could blend to for the rest of the year.

Brooks, you wanna take that?

You know, again, as I mentioned, it's a little difficult to pin down with precision because we are maintaining a lot of flexibility there in the disposition plan. You know, roughly at the midpoint, you can kind of view it as a split in two buckets. The first is a non-core, kind of accretive exit. The primarily operating properties, the final tranche of storage was the biggest piece of that. We're evaluating one student housing property and several hotels for the second half. Too early to determine exactly timing on those. A few other non-core opportunities, including, we exited recently post-quarter, our only remaining Asian asset for a very good price. That's kinda your first bucket.

The balance is kind of your risk mitigation and vacancy. That's transactions such as the JOANN Stores, former Jo-Ann Stores warehouse we sold, which we, I think we discussed last call, but sold at very attractive cap rate, mid-5s cap rate on the prior rent. Also some Hellweg we've been exiting and a few warehouse assets. From a pricing perspective, again, tricky to pin it down with precision. I'd say that first bucket would be kind of in your mid-6s cap rate range. Really depends exactly on what closes, but in that universe. On the second bucket, harder to pin down at this point in the year, you know, considering that there's some vacancy embedded in that, it's going to be a nice earnings tailwind in any event.

Hopefully that helps from a color perspective, but a bit premature to nail it down.

Yeah. Very helpful. Thank you.

Thank you. Before I take the next question in queue, a reminder to the audience, to ask a question, just press star one on your phone now. We are also accepting additional questions from those who have already asked one. If you just would like to ask any additional questions, you could press star one on your phone now. Your next question comes from Greg McGinniss with Scotiabank. Please state your question.

Hey, good morning, Jason, how are you thinking about geographic diversity and density in certain countries in Europe? You know, with Poland now as your number one international exposure following the Robin acquisition, do you expect to see further increase in exposure there? Is there a limit at a country or regional level that you think is best for the portfolio?

I mean, there's no specific cap or maximum exposure, but I think, you know, we're certainly very mindful of diversification. You know, at the same time, you know, given our scale, it would take, you know, some meaningful size Poland transactions to really move the needle there. You know, we've been investing in Poland for a long time now. It's over two decades, and it's really become a core piece of the broader European net lease market. I think people that don't follow Europe as closely, you may not know it, but it's the sixth largest economy in the EU. It's also top 20 economy globally. It's one of the fastest growing economies in the EU as well. Projected growth is about 3.3% this year. It's an attractive market for us.

I mean, the bulk of what we own there supports supply chains for large multinational companies, both manufacturing and, you know, logistics assets that, you know, it kinda serves as a low cost, you know, manufacturing and distribution hub into Western Europe. Yeah, good market for us. I think we'll stay active there, but we're certainly mindful that it's become about 5% of our portfolio. It's not, you know, huge exposure, but we certainly keep an eye on that.

Yeah. Thanks for the color. That's helpful. Then with visibility into over $1 billion of deals at this point of the year, do you see investment guidance as, you know, conservative, or is there some expectation for deals to slow into year-end?

I mean, look, we're confident that we'll continue generating, you know, higher deal volume throughout the year as we did, you know, last year. I think from a guidance perspective, and we did this last year, we, you know, we wanna take a measured approach. I think last year that led to a series of increases and that's kinda the preference going forward. You know, last quarter, our initial guidance, we talked about that as a starting point, and obviously we just increased that by $250 million at the midpoint. The expectation is as we progress through the year and get more visibility into the back half of the year, we'll refine that range and hopefully raise it further. We're off to a good start.

You mentioned the $1 billion of visibility. That includes, you know, almost $700 million of closed investments to date. I think the elements are there for us to have another strong year, and, you know, I think we'll kinda reflect that in our guidance as appropriate and as the year progresses.

Thanks, sir. All right, thank you.

Your next question comes from Jason Wayne with Barclays. Please state your question.

Thanks for the question. Just looking at the lease expiration schedule, kinda quarter-over-quarter, lease expirations came down as a percentage of ABR, this year and next year. I guess how much of that is due to, you know, looking at upcoming maturities proactively, you know, versus just changes in the portfolio?

Brooks, you wanna take that?

Yeah. You know, as you noted, we've been making a lot of progress on lease expirations. I'd say that cadence is pretty normal for us. You know, the track record over the past 10 or so years has been very good on rent recapture, you know, around 100%, and very low TIs. You can kinda see that flowing through our disclosure numbers there. You know, in other cases, we're, we've noted a few assets where we're looking to re-lease, so we're working through those. That's a part of it as well. From a lease expiration outlook perspective, 2026 is very manageable. It's about 1.8% by ABR. You know, that's coming down pretty quickly. We're making good progress on that.

You know, we have a couple of non-renewals expected in Q4. These are really high quality warehouses, below market rents, we're optimistic that we're gonna be able to push rents higher on those. Those are sort of towards the end of the year, so not impactful to 2026. In 2027, we've got about 3.5% expiring. That's actually come down a little bit subsequently as well from some renewals we've achieved post-quarter. You know, manageable year. You know, one item to note is we have the expiration of the final tranche of net lease Marriott in 2025. That's around $5 million of ABR. We'll exit those in due course, but, you know, important to note there's coverage there, so there's no earnings impact.

That's something we'll look to address in 2027. All in all, making good progress on the lease expirations, and those assets that do have some non-renewal, we're quite optimistic about our ability to push rent higher there.

All right. Thank you all.

Thank you. At this time, I am not showing any further questions. I will now hand the call back to Mr. Sands.

Great. Thank you everyone for your interest in W. P. Carey. If there are additional questions, please call investor relations directly on 212-492-1110. That concludes today's call. You may now disconnect.