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Hello, and welcome to W. P. Carey's Fourth Quarter and full year 2024 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. Mister Sands, please go ahead.

Good morning, everyone, and thank you for joining us this morning for our 2024 fourth quarter earnings call. Before we begin, I would like 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. It will be archived for approximately one year and where you can also find copies of our investor presentations and other related materials. And with that, I'll pass the call over to our chief executive officer, Jason Fox.

Thank you, Peter, and good morning, everyone. 2024 was a pivotal year for W. P. Carey, during which we successfully exited the office sector, establishing a new baseline for AFFO. Sets the foundation for future growth. We also ended the year with strong fourth quarter investment volume, the full benefit of which will flow through to our earnings in 2025. As we look to the year ahead, we believe W. P. Carey presents a compelling investment opportunity. Even with conservative assumptions on investment volume and tenant credit, reflecting the uncertainties around inflation, interest rates, the potential impacts of the new administration on markets. We expect to generate AFFO growth in the mid-three percent range, supporting a total return of around ten percent combined with our dividend yield of over six percent. This morning, I'll briefly recap our recent investment activity and the continued strength of our balance sheet. But we'll focus my remarks on transaction environment and our ability to continue funding new investments without issuing equity. I'll also provide an update on tenant credit. Tony Sanzone, our CFO, will review our results and guidance, and Brooks Gordon, our head of asset management, is also here to take questions. Starting with investments. During the fourth quarter, we closed record quarterly investment volume, totaling just over $840 million, which brought us into the top half of our investment volume guidance range for the year at approximately $1.6 billion. Initial cash cap rates on our fourth quarter investments averaged in the mid to low sevens, following the decline in ten-year treasury rates during the fall. And for the year, average 7.5%. We continue to achieve very attractive rent bump structures, averaging in the mid-two percent range and up into the threes for certain deals. As a result, our average yields over the life of the leases on new investments remained above nine percent for 2024, providing attractive returns relative to our spot cost of capital. And even more attractive returns considering that we were deploying cash accumulated earlier in the year rather than from raising new equity. 2024 investments added over $100 million to ADR on leases with a weighted average lease term of seventeen years. Approximately three-quarters of our investment volume was in North America, the vast majority being in the US. And one quarter was in Europe. While about sixty percent went into warehouse and industrial, a meaningful proportion was also directed towards US retail. Retail remains the largest segment of the US net lease market. We have done retail deals in the past, primarily in Europe, but also in the US. Importantly, we view additional investments in US retail as complementary to our traditional focus on warehouse and industrial rather than an alternative to it. Our access to efficiently priced debt capital remains a competitive advantage, enhancing our ability to fund deals accretively, something we believe is currently underappreciated by the market. Our mix of US dollar and euro-denominated debt gives us one of the lowest average interest rates in the net lease sector. And we expect to continue funding part of our capital structure with long-term euro bonds currently pricing in the high three percent range. When combined with US bonds pricing in the mid-fives, this provides an attractive source of financing for net lease deals cap rates in the sevens and average yields greater than nine percent. On the equity side, we have a variety of very attractive potential sources of capital available to us. Primarily self-storage operating properties, but also other attractively priced non-core assets, which we would expect to sell at cap rates meaningfully inside of where we can redeploy the proceeds into new investments. These asset sales will also further simplify our portfolio, significantly reducing the non-core operating assets we own, and provide us with a high degree of confidence that we can continue closing accretive net lease investments at a time when we view our equity as undervalued. Turning now to the deal environment. As I mentioned at the outset, markets currently face a range of uncertainties, including the direction of interest rates, inflation, potential impacts of the new administration. In the early part of 2025, ten-year treasury rates spiked. This has the potential to widen bid-ask spreads and slow deal activity, although things could change quickly if ten-year treasury yields continue to come down and stabilize. The potential for larger-scale M&A in 2025 may also create opportunities for sale-leasebacks. And over the medium or longer term, onshoring or nearshoring could provide a tailwind to both our investment activity and portfolio. While the first quarter is unlikely to be as active as the fourth quarter, we continue to find appealing opportunities to put capital to work. Our pipeline currently includes over $300 million of identified transactions, most of which we expect to close this quarter. And we have about $100 million of capital projects scheduled for completion this year. We've adopted a more cautious approach to our initial guidance on investment volume, however, given the limited visibility we have this early in the year and the uncertainty that exists over the transaction environment. As the year progresses, however, and we have greater clarity on deal activity, we hope to raise our expectations. And we're confident that we can fund deal volume even if above the top end of our initial guidance range without having to issue equity. Even with this conservatism, I want to reiterate we view estimated AFFO per share growth of around three and a half percent as an attractive starting point for the year. Before I hand the call over to Tony to discuss our guidance assumptions in more detail, I want to provide an update on the significant tenants we're focused on from a credit perspective. Currently, comprises the three tenants we've identified on prior calls: True Value, HELDIG, and Hearthside, which in aggregate represent 4.5% of ABR. I'll review the details, but in summary, we've agreed to a resolution on True Value that should remove a prominent point of uncertainty for Valhalla, Heltig, and Hearthside are essentially unchanged from a credit perspective versus last quarter. Since our last earnings call, Do It Best has completed its acquisition of True Value and remains current on rent for all our properties, comprising eight warehouses and one paint manufacturing facility. We've negotiated an agreement with Do It Best subject to final documentation that includes several important points. Do It Best will retain six facilities at their existing rents on leases with a weighted average lease term of seven years and ADR of $14.1 million. The remaining three assets will pay rent through June of 2025, at which point they will be vacated. We're proactively marketing them for sale and expect to sell them during the second half of the year. Assuming their timely sale, we would expect minimal impact on 2025 AFFO, which is factored into our guidance. Lastly, given the strength of Do It Best's credit, we no longer view it as a credit risk concern. Elvig's situation is little changed from last quarter. Remains current on rent and continues to execute its turnaround plan to reduce costs and manage liquidity. And has successfully pushed out its debt maturities to 2027. So it continues to face meaningful operational headwinds driven by the slowdown in German consumer spending, which we're monitoring closely, including an active dialogue with Helvig's management team reviewing its financials as they become available. We also continue to take steps to proactively mitigate the risk of a potential rent disruption. Based on the specific interest we've received, we have confidence there's demand for our stores from other operators and rents generally in line with current rents. So that would incur some downtime in CapEx. We're also evaluating several dispositions which could incrementally reduce Helvig's contribution to our ABR this year. Finally, on our side, there's no change to our view we don't expect any rent disruption. Our side is targeting to emerge from bankruptcy early this year, at which point we will evaluate taking it off our credit watch list. I'll pause there and hand it over to Tony to discuss our results and guidance.

Thanks, Jason, and good morning, everyone. We finished the year reporting strong fourth quarter results, generating AFFO per share of $1.21, which brought our full year AFFO to $4.70 per share, marked by a quarter of record investment volume and internally generated growth from our portfolio. Dispositions during the fourth quarter comprised the sale of five properties for gross proceeds totaling $119 million. This brought full year disposition volume to $1.2 billion, driven by sales of office properties under our office sale program, as well as the exercise of the U-Haul purchase option. Contractual same-store rent growth for the fourth quarter was 2.6% year over year, and we anticipate that it will remain in the mid-two percent range for the first quarter of 2025, moderating to an average in the low to mid-twos for the full year. Comprehensive same-store rent growth for the fourth quarter was 2.5% year over year, which reflects the impact of vacancies, leasing, restructurings, and rent recoveries. During the fourth quarter, we collected rents from cash basis tenants, putting us in a net rent recovery position for the order, most of which was anticipated in our 2024 guidance. Currently, our 2025 AFFO guidance includes an estimated $15 million to $20 million for potential rent loss from tenant credit events, which is cautiously higher than where we typically start the year, given the current backdrop of broader economic uncertainty. We will continue to provide updates on tenant credit as the year progresses and refine our estimates accordingly. Fourth quarter leasing activity comprised eleven renewals or extensions and continued to trend positively, recapturing 107% of the prior rents overall, including positive releasing spreads on warehouse and retail. Releasing activity impacted just under 2% of portfolio ABR and added close to 5.5 years of incremental weighted average lease term. Other lease-related income for the fourth quarter was just $1.3 million, bringing the total for the year to $20.3 million, in line with our expectations. Based on the visibility we currently have, we expect other lease-related income to total between $20 and $25 million for 2025, consistent with where it's been in recent years. As a result of our investment and asset management activities during 2024, we ended the year with a net lease portfolio comprised generating ABR of over $1.3 billion, with a weighted average lease term of 12.3 years, and an occupancy rate of 98.6%. At year-end, our operating property portfolio comprised seventy-eight self-storage properties, four hotels, and two student housing assets. During the fourth quarter, operating property NOI declined to $17.6 million, reflecting the conversion of twelve self-storage operating properties to net leases under the transaction we completed with extra space in September and discussed in our last earnings call. Our operating asset portfolio is expected to generate between $70 million and $75 million of operating NOI, which is an annual number and excludes the impact of expected dispositions. A significant proportion of our dispositions this year are expected to be sales of self-storage operating assets, which our guidance assumes occur primarily in the second half of the year. As we get more clarity on the timing of asset sales, we'll update our operating NOI estimate as needed. Driven by our role as the external advisor to NLOP, we received $6.6 million in asset management fees and $4.2 million in other advisory income and reimbursements for the 2024 full year. For 2025, we expect these line items to total approximately $8 million, with the management fees expected to decline over the year with additional NLP asset sales, while the reimbursement remains fixed at $4 million. Non-operating income for the fourth quarter comprised $6.6 million of interest income on cash deposits, $4.5 million from realized gains on currency hedges, and $2.8 million in dividends from our equity stake in Lineage. This totals $13.8 million, which was essentially flat to the third quarter. As lower interest income was offset by higher realized gains on currency hedges. For the full year, non-operating income totaled $52.2 million. For 2025, our guidance currently assumes non-operating income totals in the mid-thirty million dollars range, assuming a flat quarterly dividend from Lineage of $2.8 million per quarter, lower interest income on cash totaling around $5 million for the year, and higher gains on currency hedges given the current strength of the US dollar. Turning now to key drivers of our 2025 guidance. For 2025, we expect to generate AFFO of between $4.82 and $4.92 per share, implying about 3.6% growth at the midpoint based on investment volume of between $1 billion and $1.5 billion, primarily through accretive sales of non-core assets. Currently, we're assuming dispositions total between $500 million and $1 billion, the large majority expected to be opportunistic non-core asset sales, executed at cap rates averaging around the low to mid-6s, with proceeds reinvested in net lease assets at initial cap rates in the sevens. If deal volume is more robust than we're initially assuming, we have ample flexibility to sell additional assets accretively. Ordinary course net lease dispositions are expected to comprise the smallest portion of our disposition guidance, around $250 million. DNA is expected to total between $100 to $103 million for 2025, and non-reimbursed property expenses are expected to total between $49 and $53 million. Tax expense on an AFFO basis, which primarily reflects current foreign taxes on European assets, is anticipated to range between $39 and $43 million. Moving now to our balance sheet and leverage. Our investment activity continued to be supported by success. During 2024, we raised approximately $1.7 billion of debt capital at a weighted average coupon of 4.3%, issuing bonds at attractive pricing relative to the yields we achieved on new investments, and benefiting from our ability to access the euro bond market. Overall, the weighted average interest rate on our debt averaged 3.2% for 2024, and is expected to remain at or slightly below this rate in 2025 as we continue to benefit from weighting of euro-denominated debt in our capital structure. We ended 2024 with total liquidity of approximately $2.6 billion as we were virtually undrawn on our $2 billion revolver and holding $640 million in cash, although since then, $450 million has been applied to repaying the senior unsecured notes that matured at the start of February. With our 2025 bond addressed, our debt maturity profile remains very manageable, comprising only about $200 million of mortgage debt due in 2025. Our next bond maturity is the euro bond maturing in April of 2026. Given our liquidity, we continue to have significant flexibility to access the bond market when we view the market conditions as most favorable. Although our guidance currently does not assume any debt issuance this year. We also expect to recast our 2026 euro term loan this year ahead of its maturity. Our key leverage metrics ended the fourth quarter at levels consistent with where they've been throughout 2024. Debt to gross assets was 41.6%, which is at the low end of our target range of mid to low forties, and net debt to EBITDA ended 2024 at 5.5 times relative to our target range of mid to high five times. We expect both of these key leverage metrics to remain well within our target ranges in 2025, particularly given our plans to fund new investments with asset sales. And with that, I'll hand the call back to Jason.

Thanks, Tony. Given some of the uncertainty we see heading into 2025, we've incorporated a degree of conservatism in our initial guidance, both on investments and tenant credit. Despite the uncertainty, we believe we're well-positioned to navigate the markets and have confidence in our ability to execute this year. We had a very strong fourth quarter on deal volume, and we have visibility on continuing to put capital to work in the first quarter. While investment spreads are somewhat tight compared to going-in cap rates across most of the net lease sector, the spreads to average yields we're generating and the associated GAAP cap rates remain very attractive. The dilutive headwinds from office dispositions and the U-Haul purchase option that we faced in 2024 are now fully behind us. From a balance sheet perspective, we remain to the low side of all our leverage targets. Our only bond maturity in 2025 has been addressed, and our liquidity remains very high. Most importantly, we will not need to raise equity to fund deals in 2025. Instead, we will access alternative sources of capital through accretive asset sales, primarily through selling non-core operating assets meaningfully inside of where we can reinvest the proceeds in net lease assets. Giving us confidence in our ability to continue doing deals and driving AFFO growth this year. That concludes our prepared remarks. I'll hand the call back to the operator to take questions.

Thank you. And at this time, we will take questions. If you would like to ask a question, simply press star then the number one on your telephone keypad. Press the star then the number two. Our first question comes from Brad Heffern with RBC Capital Markets. Please state your question.

Yeah. Hey. Good morning, everyone. Thanks for taking the questions. Tariffs, obviously, you know, a lot of news around those and a lot of uncertainty, of course. I'm curious if you can give your thoughts on how your portfolio might be affected by those, and if it's changing at all, how you think about new investments.

Yeah. Sure, Brad. Morning. Yeah. Look. I mean, tariffs certainly add a degree of uncertainty to the market environment, and we talked about that a little bit. And clearly, they could have broader economic impact, especially on potentially on inflation and therefore rates. I mean, we're diversified. I think that's an important layer of protection within our portfolio. You know, it may be on the plus side in the medium to long term. If tariffs are substantial and they stay in place, we could see some tailwinds from onshoring manufacturing. Maybe that'll benefit our warehouse and industrial portfolio. Think on new investments, you know, we'll continue to maintain the same approach of underwriting, which is rigorous. You know, we think about the downside exposure and protections and how we structure deals, like we always do. You know, we'll continue that. But, you know, by and large, I think we're gonna have to react to what tariffs look like given that they're, you know, it's been a bit uncertain.

Okay. Got it. Thanks. And then two other tenant updates I was interested in that weren't in the prepared comments. Can you give your thoughts on the Joanne's distribution Advanced Auto Parts, obviously, closing stores. I know you own distribution centers, not stores, but any update you can give on how those are positioned would be great.

Yeah. Sure, Brooks. You wanna take that?

Sure. On Joanne, as you know, they've filed for the second time in as many years, and we owe one warehouse. It's about twenty basis points of ABR. Rent below market we think we'll be able to retain that pretty effectively. Now I think that said, we're not including any assumptions of reteniting in our guidance, but we are assuming that that company goes into a liquidation around midyear. So, you know, we think that the conservative approach to that one from a modeling perspective. On Advanced Auto, we own twenty-eight facilities. It's a single master lease. About 1.4% of ABR eight years of term, so there's really no near-term impact to us. They will close a few warehouses. I think they've announced three that we own that'll give us a lot of flexibility to work those while the lease remains in place. So those will be good opportunities for us to potentially push rents a bit higher on those. But we don't expect and we're not modeling any actual impacts in the near term.

Okay. Thank you.

Our next question comes from Rich Hightower with Barclays. Please state your question.

Hey, good morning, everybody. I think I missed the comment on sort of the cadence of same-store growth, but did you say that portfolio same-store growth, at least within the net lease part of the portfolio, is going to decelerate to the low twos by year-end? I just want to make sure I've got that right.

Yeah. I'll take that. Rich, that's about right. I think we expect the first quarter of 2025 to be probably our highest print and, you know, in the low to mid-two percent range and see it decline from there below twos. Now, again, today, we're factoring in kind of higher prints on inflation on the US side, so we'll adjust that accordingly, but I don't think that'll have a material movement.

Alright. Thanks, Tony. Very helpful. And then just on the capital allocation side, obviously, a big part of the positive spread that you can generate on your European investments has to do with the cost of debt relative to the US. And I'm just maybe as a general matter, you know, the next incremental dollar of capital allocated to Europe, you know, how do you feel about that kind of given everything going on in the world as we sit here today?

Yeah. Look. I think that, you know, Europe is something that we've been there for a long time since 1998. I think we have, you know, a good feel for the markets. You know, boots on the ground, just staffed by Europeans. So, you know, like everything we do, we're certainly very diligent in our underwriting and how we look at markets. And obviously, tenant credits, etcetera. So you know? And look, there's a reason why we've always wanted to generate wider spreads in Europe, and then we can do that. I mean, right now, we can borrow in euros about a hundred and fifty basis points inside of where we can borrow in the US. And, you know, I'd say cap rates are in similar

Alright. Thanks, Jason.

You're welcome.

Your next question comes from Mitch Germain with Citizens JMP. Please state your question. Congrats on the quarter, guys. Just curious, Jason, with those sort of cap rates that you're assuming on the dispositions, obviously, it seems like there is a bunch of self-storage in that number. Tony Ann said that. But I'm curious, is there anything else that's sitting in your what you would characterize to be non-core bucket?

Yeah. I mean, big picture, I mean, we talk about our disposition plan and how we're gonna fund deals. You know, I think most of what's in there is non-core. The bulk of it, as you mentioned, is operating assets and the bulk of that portion is storage, but there's also some student housing and, you know, I would say an operating hotel that we would likely sell this year as well. But the bulk of it is self-storage. You know, we're targeting to sell, I would say, a subset of that portfolio. Likely in the second half of the year. But the expectation generally is that, you know, across the portfolio that we sell that, you know, we'll generate maybe a hundred basis points of positive spread between disposition cap rates and reinvestment cap rates. You know, that's kind of our big round number right now. And obviously, as the year goes on and we complete some of the dispositions, we can provide updates. But that's the kind of general map for you.

And you mentioned four hundred million, give or take, of identified pipeline. In terms of deals versus your guidance. Should I mean, from a cadence perspective, should we still think things will be back-weighted to match it up with the timing of those sales?

Yeah. Look. It's a good question. I think our guide right now is seven fifty at the midpoint, and you know, probably a little bit more back half-weighted, but the actual amount and timing of dispositions is probably gonna be more driven by investment volume and investment pacing. We wanna match that the best we can. So again, there'll be some ins and outs throughout the year, but I think the numbers that Tony went through are probably the best direction we can give right now.

Great. Just a quick one for Tony Ann if I can sneak one more in. Is there any noise in interest expense, Tony Ann? I noticed, you know, obviously quarter over quarter down. You were sitting on a little bit more debt. Obviously, in anticipation of selling sorry, of redeeming the bond in February, is there any new without the k being filed here, is there anything in that number that is racking?

No. I think the right way to look at it is to look at interest expense and interest income on a net basis. So, you know, kind of on a year over year, again, we've addressed a lot of benchmark rates decline from 2024 levels. So on a year over year, if you look on a net basis, net interest income based on the cash we were holding on our deposits, we really should be relatively flat year over year, so no headwinds there that we're experiencing. Looking into 2025, and there was no disruption or nothing material in the fourth quarter if that's what you're referring to.

Thank you.

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

Hi. Thank you. I just wanted to ask sort of bigger picture. You talked about cap rates in the fourth quarter, and it sounds like kind of expectations for a relatively similar pace in 2025. But with the ten-year continuing to rise, I mean, do you think seller expectations will still need to change potentially more in your favor, or is it more likely that potentially just transaction volumes slow? The current environment. Just kind of interested in your thoughts around that.

Yeah. Look. It's hard to predict. I think in the fourth quarter, transaction cap rates, they came in a little bit. They were slightly below our average for the year, and I think that's reflective of, you know, a lower but, you know, both a lower ten-year at the time, I think, in the fourth quarter, maybe early on, we saw it, you know, in the mid to high threes at that point in time. You know? And I think there was also an expectation that rates were gonna come down with dead rate cuts even further. I think that's changed some and obviously the new news today is the hot print with inflation. So we'll see, you know, what that does over the, you know, coming weeks or months. But yeah. I mean, long term, cap rates will certainly track, you know, long-term interest rates. In the short term, it creates some volatility, probably widens bid-ask spreads, to some extent that, you know, may impact deal volume. And I think that's, you know, part of the reason why, you know, we initiated deal volume guidance at what I would view as a conservative range because there is uncertainty out there and how that flows through to, you know, sellers' needs and expectations and what that means for being in the market. But, you know, hard to predict, obviously, but, you know, long term, I think, it certainly calapers will track interest rates and want to see where they go.

Yeah. Okay. Okay. Then I you know, in 2024, I mean, I know you did some investing in Mexico and in Canada. Just wondering, are you pausing or are we thinking maybe how you underwrite investing in those countries given, you know, a fair amount of uncertainty around?

Yeah. I mean, the deals we did in both those countries in Mexico, I think it was one transaction. It was a US-based company. Big company, I think, one of the larger private industrial conglomerates. So good credit. The lease, importantly, is US dollar denominated. You know, this is a these were very high-quality pieces of real estate as well. Long-term lease. So, yeah, there might be some short-term fluctuations in, you know, maybe how people view Mexico depending on what happens with tariffs. And, you know, I would say that could apply to Canada as well. But we have long leases with good credit, so there's not, you know, long-term concerns there. We'll keep on monitoring those markets. Sometimes a little bit of dislocation or uncertainty creates opportunity as well. I think we'll wanna make sure we structure them right to, and to make sure there's no kind of short-term exposure that we'd be concerned with. You know but overall, I don't think it changes materially how we look at, you know, Mexico or Canada certainly in the long term.

Alright. Thank you for that.

Our next question comes from Anthony Paolone with JPMorgan. State your question.

Yeah. Thanks. I think if I'm doing the rough math right on kind of what you talked about disposition-wise, against this seventy to seventy-five million dollars of operating property. And why it seems like you're gonna get rid of maybe forty, fifty percent of that over the course of this year. And so just wondering kind of how you're thinking about the rest of it and whether this is, you know, something you're gonna continue to wind down in 2026 and then we don't have any of it in 2027 or just gotcha there.

Yeah. I mean, I think base case may be midpoint of the dispo range. You know, your math is probably right, but we'll keep on evaluating our, you know, funding needs depending on where deal volume goes. And, you know, certainly, we can lean into storage more, and we also wanna see what the transaction environment looks like for storage. I think, you know, maybe, you know, if not this year, you know, probably next year, we're mostly out of the operating storage business, if not entirely. I think that there'll be opportunities to sell, but there could also be opportunities to convert some of it to net lease as well. But, you know, for now, I think there's a bit of your range on how we view what we'll do with the storage properties we own right now.

Got it. Okay. And then just second one back to the sort of credit items. You guys covered a lot of the ground with the specific names. But I may have missed this. What's just the broader sort of bad debt, if you will, that's in guidance for 2025. I'm just trying to ascertain whether there's, you know, some cushion beyond just the items you mentioned with, like, True Value and Joanne's and stuff.

Yeah. Tony, do you wanna tackle that to this number?

Yeah. I think embedded in the initial guidance is a range for credit loss at around $15 to $20 million. So, you know, that's probably about fifty basis points wider than where we typically start the year and really just, again, based on broader economic conditions, our approach really was to take kind of a bottoms-up assessment of risk on a tenant-by-tenant basis and estimate a range of possible outcomes. So, you know, we did take a top-down view as well, and we've built some conservatism there to cover a degree of uncertainty. So you know, broadly, I think we talked about the larger tenants. We don't expect any imminent disruption there, but we do have again, a broad range of outcomes that could that would well be covered by the $15 to $20 million range over the course of the year.

K. Sorry. Just to make sure that that fifteen to twenty does it include True Value in Joanne's or that's on top of it?

It does. It's all-inclusive. That's every tenant in the portfolio. And I'll note Jason referenced kind of the outcome with True Value. They're we really expect minimal downside there. But, you know, it does encompass everything that we've discussed.

Okay. Great. Thank you.

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

Good morning. Realized you only have 1.8% of leases expiring this year, but I was wondering if you could break that out especially among warehouse and retail where you have the stronger recapture rates this year. Alright then. Last quarter.

Sure. Yeah. So we have 1.8% expiring in 2025, as you said. It's a very small amount. I'd say the majority of that have transactions in progress. We're making good progress. On that. Yeah. We'll have I think, one nonrenewal in the back half of the year on a couple of warehouses in Europe which we're currently marketing. Reasonable rents there. So work on that. In terms of property split, the large majority is warehouse and industrial. There's about twenty percent retail. And the balance is really warehouse and industrial there. So really manageable lease expiration outlook for 2025.

Okay. And then you talked about euro-denominated debt as being an attractive source of capital. Right now, you have five billion, roughly of euro debt. Assets, maybe give or take six billion. I'm wondering on your end, where you see loan to value of your exposure and how much capacity do you have to borrow more.

Yeah. I think loan to value, we're certainly in range or maybe even below the range that we've seen other, you know, large REITs that have EuroDebt and have a presence in Europe. You know, we're probably, you know, in the seventy, eighty percent range, and that's an estimate and a bit of a guess there. In terms of limits, you know, I think we can go higher, and some of that will depend on, you know, the deal activity we're doing and what our currency needs are. But, you know, we certainly like the flexibility of having the option of issuing bonds in different currencies, and the euro certainly does that for us.

Does that change how you look at acquisitions in Europe? I know there are questions on the other end about the risks of foreign exposure. But does that make you more inclined to acquire assets in your?

Yeah. As I said earlier, I think we are generating wider spreads there. Given that we can borrow right now about a hundred and fifty basis points inside of where we can borrow in the US. So we do like generating wider spreads there. I think that's been the case historically whenever we've been buying assets. I think there's an ability to lean into pricing maybe a little bit more if we think we see the right, the right deals and you know, I think that's our expectation.

Great. Thanks.

Thank you. And our next question comes from Greg McGinnis with Scotiabank. Please state your question.

Hey. Good afternoon. Jason, could you just expand on your comment regarding retail as complementary to the industrial and warehouse holdings?

Yeah. Sure. I mean, we're always looking for ways to expand our opportunity set and certainly our diversified approach supports that. You know, we've been active in European retail for quite some time. And the US, you know, we've been active there, but I would say it's been more opportunistic. And so now, you know, I think we've mentioned maybe on a call or two ago that we're ramping it up with a dedicated team. But I think that but we importantly, we wanna make sure that it is complementary. We're not shifting our focus away from warehouse industrial. This is gonna be in addition to doing warehouse industrial. And the hope is that we're expanding our opportunity set, which can help us do more deal volume and ultimately lead to more growth. But it's not in lieu of industrial warehouse.

Okay. And I guess with regards to the current investment pipeline you guys talked about earlier, could you disclose what percent of that is US retail and then how you expect that to trend for the full year? And if you could also add in cap rates and escalators on retail versus industrial transactions. That'd be appreciated. Thank you.

Yeah. Sure. So we talked about our pipeline being over $300 million at this point in time with identified transactions, and we also have another $100 million of capital projects that are scheduled to close throughout the year. So that's kind of the visibility we have right now. I think the capital projects are largely non-retail. In case you're gonna be more warehouse and manufacturing expansions. Some retail perhaps associated with that with the Las Vegas loan that would fall into that bucket. Last year, about a third of our deal was retail. This year, it's a little lighter to start off the year. It's probably, you know, depending on how you kind of cut through the pipeline. Maybe it's in the ten to twenty percent range. I think cap rates on average are probably similar to our targets across the portfolio, I'd say in the sevens. You know, the bump structures are a little bit lower in the retail. So if you think about average yields or GAAP cap rates, you know, the retail that we're targeting is probably gonna be a little bit inside of what we can generate certainly in manufacturing and in many cases in warehouse as well. But that's kind of how we view the world.

Okay. Thanks, Jason.

Our next question comes from Jim Cammer with Evercore ISI. Please state your question.

Thank you. Good morning. Could you remind me what percentage of your ABR do you receive tenant financials or reporting and periodicity of that? Brooks, you wanna take that?

Sure. It's materially all of the ten I mean, there's an exception here and there, but it's really materially all the tenants we get financial reporting from. And each lease is different, but we get on balance. Quarterly unaudited, typically on a delay of call it, forty-five days. And then annual audited on a delay of, say, sixty days on average. Maybe a little longer for the audits. And then on certain deals we get, especially around retail, store level. Financials as well, but also from some manufacturing.

Great. And then as a driller, that second part of the question, how has your sort of tenant slash credit monitoring process and the heft sort of evolved over the last couple of years. I mean, you've done a great job addressing the couple that have come date in terms of credit problems, but have you made any modifications in the team and the staffing and the so the rigor applied? Thank you.

Well, we've always had a really rigorous credit review process both on new investments and on an ongoing basis. And, you know, it's really driven by tenant relationships as well as financial statement monitoring. I'd say where we've made some incremental changes is what we've chosen to disclose publicly. So for example, we've expanded our top ten list substantially to top twenty-five. We've made a point of identifying specific larger tenant situations on a recurring basis and providing updates directly on those. And then lastly, as Tony went through, you know, providing what we view as a conservative and really all-inclusive credit reserve bucket. That's kind of the most direct way to model credit risk. So, you know, we're quite confident in our process. We've made some improvements around disclosure and communication. And we'll continue to do so.

Thank you.

And your next question comes from Michael Goldsmith with UBS. Please state your question.

Good morning. Thanks for the opportunity. Taking my question. Wanted to continue to dive into just the expansion into retail. You know, you did a portfolio deal with some Dollar General's. I know you're underexposed to that category. Maybe relative to some of the peers that have focused more on retail over. But can you talk a little bit about, you know, what you see in dollar stores now, like, that puts you makes you feel comfortable about stepping in at this time, and are you considering kind of more exposure to the category going forward?

Yeah. Sure, Michael. Yeah. We completed it's about a $200 million deal on Dollar General assets in Q4. There's a couple more, from one of the sellers that is gonna spill over into Q1. Maybe about $20 million more or so. But if a pretty typical Dollar General investment. Obviously, individual assets, they're quite granular. You know, it's about maybe a little over a hundred properties in total. They're spread out across twenty-one states. I mean, look. I would say it's consistent that we've been talking about expanding more into US retail. Where we can generate some, you know, incremental increased deal flow. We'd like Dialog General because we think it's the strongest of the discount retailers. And in terms of timing, the sector was somewhat out of favor, you know, at points during 2024, which created maybe a little bit more interesting opening for us. As you mentioned, many of our competitors are pretty full on their exposure to dollar stores. So, you know, we are able to make up what I would say, you know, reasonably substantial investment without taking on any outsized exposure relative to our top twenty-five. In fact, you know, that investment barely cracks into our top twenty. So you know, I think that's the idea here. We do like the credit despite some of the bumps that it went through in 2024. You know, we don't think that is a risk from a cash flow standpoint. We certainly view it as a safe investment. A reliable cash flow for, you know, the length of the lease, and I think these assets tend to have strong renewal characteristics as well. So, you know, will we do more? I mentioned our pipeline has a couple more in it. I think there's nine more stores to close, likely in Q1. You know, beyond that, I'll say it'll depend on the economics, but, you know, I suspect we'll look at more at some point.

Really helpful. And then just as a follow-up, you also did a data center in the fourth quarter. What would make you more constructive about data centers and to do additional deals in that group?

Yeah. Sure. Yeah. We did do one data center deal in the first quarter. It's around a $100 million acquisition, little over two hundred thousand square foot data center. Leased to a company called Center Square. It's out in Weehawken, New Jersey if you're familiar with the New York market. That's just a few miles outside of New York City, and we view the rents as well below market. Good credit. You know, they have seventy-two locations. It's really a co-locator. That's kind of where they focus. I think they provide around four hundred megawatts of power capacity. And we like the basis. It's about $8 million per megawatt. So a good deal for us to do. Would we do more of these? Yeah. We've been spending time on data centers. We've been working with advisers and bankers on the space. I think this deal was a bit unique. But, yeah, let's see if it's something we can build on.

Thank you very much.

Welcome.

Our next question comes from John Konachowski with Wells Fargo. Please state your question.

Good morning. You know, we've heard on some competitor calls that competition is picking up from the private side this year. I'm curious how much of that is influencing the lower guide outside of just maybe traditional conservatism?

Yeah. I mean, I would agree with that. I think that competition has picked up. I mean, look. The market in the US, especially the US, has always been competitive. I think we've observed some private equity entrants coming into the market, you know, and they've been at least one of them has been fairly aggressive on some portfolio deals that, you know, we may view as weaker portfolios. Feels like the lending markets were starting to come back. We'll see if kind of the rate volatility impacts that at all. But yeah. I mean, look. The US has been competitive, and I think that's all factored in when we set guidance. And probably plays a role in the conservatism from the start here. I think Europe, you know, less competitive, and that's one of the things we've always liked about it. There's no real established, you know, net lease market over there from a public company standpoint, certainly not a pan-European competitor. So a little less over there, but, yeah, I would kind of echo that competition is picking up a little bit.

Got it. And then maybe just to clarify an earlier comment that I think you made in the opening remarks. I just want to make sure I heard it right. Her side, I know that there's a potential for there's room to maybe restructure rent, but it sounds like you think that you're gonna recoup everything. I just want to make sure I heard that right. Are you not considering rent restructuring at this point?

No. We have a it's a big company. They are in bankruptcy. I think our expectation is that they'll come out of bankruptcy, you know, likely first quarter, and what we'll see what the exact timing is. And we have highly critical assets that produce, you know, a big portion of the products that they generate. You know, their customers are the big consumer packaged, good companies that rely on them for a lot of their outsource production. So, yeah, we think our facilities are needed and therefore won't have any rent disruption, and we'll go in and out of bankruptcy, you know, without any disruption and, you know, that's the expectation right now.

Great. Thank you.

Welcome.

Comes from Spencer Glimcher with Green Street Advisors. Please state your question.

Thank you. On the storage assets you guys have earmarked for sale, have you guys begun marketing these, and or do you have a sense of how deep the buyer pool is? Just curious because, obviously, the sector's been out of favor. That's, you know, it doesn't seem like that's gonna get better just because of where the housing market is. And then they've also been operated, so there tends to be less operational upside for potential buyers. So if you could just expand on, you know, the buyer pool as you see it today.

Yeah. Let me take this in first so you can have some color if you'd like. Yeah. But we have not taken it to market yet. We're kind of in the premarketing process right now, going through the portfolio and identifying, you know, the subportfolio that we expect to sell. It could be sold as one big portfolio. It could be sold as a number of smaller or medium-sized portfolios. I think we can be flexible here. I think we're gonna size it. And, you know, the marketing approach will be based on what we think the buyer pool looks like, the depth and the size that are being targeted. So no real details right now, Spencer, on how we look at that, but, you know, I think that we'll update, you know, as we get deeper into that process. In terms of kind of the storage fundamentals, yeah. I mean, look, it's not as robust as maybe we would like it to be. I think same-store comps are getting easier compared to last year. Maybe there is some potential for increased housing mobility mortgage rates come down or as we get into the second half of the year. I mean, there's certainly a lot of pent-up demand for housing change. So that could start flowing through at some point, and that's obviously a big, you know, driver and storage. But I think by and large, you know, we're still comfortable and expect, you know, across our disposition plan that, you know, we can probably generate a hundred basis points of spread between what we sell and what we buy, and I think that's gonna, you know, generate some good growth for us.

Okay. Great. That's all for me. Thanks so much.

Okay. You're welcome.

Thank you. And before we take the next question, just a final reminder to ask a question at Our next question comes from Pharrell Granis with Bank of America. Please state your question.

Hi. This is Pharrell. Thanks so much for the question. I was curious, given your portfolio acquisitions tended traditionally tilt more sale leaseback, can you give a comment on how you're seeing sale leasebacks in the market today? And how you're thinking about that going forward in your acquisition guidance compared to portfolio acquisitions?

Yeah. Sure. Yeah. We have historically done I would say, the majority and maybe in some years, the vast majority of our new deals in as sale leasebacks or build-to-suits, which have very similar characteristics. I think last year was a bit of an exception. Over half of our deals last year were, you know, for existing leases either from, you know, say, developers or portfolio sellers. You know, we hope to do a little bit more of that this year again, but right now, I think that our pipeline is back, you know, more heavily weighted towards sale leasebacks. And, look, sale leasebacks, there's certainly correlation to M&A, and in some regards, and I think there is expectation that as we get into 2025, maybe M&A, pick up. But it's not just, you know, tied to M&A. Certainly, you know, when we're in a down cycle or there's dislocation in the financing market, sale leasebacks provide, you know, a nice alternative to debt or equity capital, and I think we've seen a lot of that over the last couple of years. And, you know, maybe there's opportunities to do more of that going forward. And of course, we've done a lot of sale leasebacks alongside, you know, private equity sponsors, and we have a great bench of relationships there that we can lean on and provide, you know, capital when it's needed. So yeah, it's still a market that we'll rely on quite a bit, but maybe a little less so than we have historically because I think we can lean into some existing lease, and maybe that'll be the case, especially with US retail.

K. Thank you. And one other one on your acquisition of the Tidal Wave Auto Spa. Curious of your thoughts in the car wash industry. I've been hearing more pressures kind of anecdotally about the area itself and your thoughts about continued expansion in that area.

Sure. We've done a handful of car washes. It's quite a small exposure for us. But, you know, I think the news item was around the bankruptcy of

Okay. Thank you.

Thank you. At this time, I'm not showing any further questions. I'll now hand the call back to Mister Sands.