Peter Sands - Director of Institutional IR Mark DeCesaris - CEO Jason Fox - President, Head of Global Investments Hisham Kader - MD and CFO Mark Goldberg - President, Investment Management, Chairman of Carey Financial, LLC.

Sheila McGrath - Evercore Partners Juan Sanabria - Bank of America Michael Bilerman – Citigroup Paul Adornato - BMO Capital Markets Jon Woloshin - UBS Dan Donlan - Ladenburg Chris Lucas - CapitalOne Securities.

Hello and welcome to W.P. Carey’s Fourth Quarter and Full Year 2015 Earnings Conference Call. My name is Amanda and I’ll be your event specialist 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 presentation we will be taking questions via the phone line.

[Operator Instructions] It is now my pleasure to turn today’s program over to Peter Sands, Director of Institutional Investor Relations. Mr. Sands, please go ahead..

Good morning everyone and thank you all for joining us on this conference call to review our 2015 fourth quarter and full year results. 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. Lastly, an online rebroadcast of this conference call will be made available in the Investor Relations section of our website at wpcarey.com, where it will be archived for approximately one year. And with that, I will hand the call over to Mark.

Mark DeCesaris Thank you, Peter and good morning, everyone. And thank you for joining us today. For those of you who don’t know me, I have been with W.P. Carey for more than a decade having previously served as an executive of the company from 2005 until 2013, including as the company’s Chief Financial Officer.

I’ve also served on the Board of Directors since 2012. I’m fortunate to be able to work with a very talented Senior Management Team all of whom I’ve worked closely with during my tenure as CFO. I’ve asked several of them to join me on this call today.

Jason Fox, President and Head of Global Investments; Hisham Kader, our Chief Financial Officer; Mark Goldberg who is Chairman at Carey Financial and heads up capital raising for our investment management business; John Park, Managing Director of our Strategic Planning and Capital Markets Group and Tom Zacharias, our Chief Operating Officer and Head of Asset Management.

Before we talk about our 2015 results I want to make a few comments about the direction of our company. Along with the board in management team I recognized that there has been some uncertainty about what’s next for W.P. Carey.

As we noted earlier this month we are continuing our review of a range of strategic alternatives with the assistance of JP Morgan. We remain focused on evaluating the most effective avenues to enhance our growth and value for our shareholders. We are committed to reaching a conclusion as expeditiously as possible.

However, as we noted earlier this month we’ll not be commenting further until that strategic alternative process is completed. Separately, W.P. Carey evaluates its business every day, we always have and we always will.

We are constantly reviewing our structure, new products, liquidation alternatives for our funds under management and new markets both from a capital raising standpoint and an investment point. We have always viewed these alternatives through a single lens asking ourselves fundamental question.

Do they provide superior risk adjusted returns that create sustainable long-term value for our shareholders? When we believe that value is created, we execute on that strategy and if you look at our history, this execution is ranged from our public listing beginning in 1998 of the first nine funds, the internalization of our manager in 2000 to our reconversion in 2012.

This process is ongoing and will not stop. For the time being, we will continue to generate value for our shareholders by executing our current model. We will further optimize our balance sheet through acquisitions, dispositions and active asset management in order to improve portfolio quality and extend its weighted average lease term.

We will also continue to grow our investor management business. Our current business model offers significant diversity. In terms of capital sources our ability to invest both in the U.S. and aboard and the diversity within our real estate portfolios, which helps to protect shareholder value during industry specific downturns.

We believe it’s a model that allows us to perform across business cycles. For example, our shareholders have benefitted greatly from our investor management business. We have made some of our best investments during some of the most challenging economic periods as a direct result of our ability to access multiple sources of capital. At W.P.

Carey we have a 40 year track record of managing complexity and our shareholders have benefited from that expertise.

We will continue to work with our stakeholders to be transparent in the supplemental financial information we provide and make decisions related to both capital and investment allocations based on what we believe to be in the best interest of all of our investors.

We are committed to building on our successful track record of delivering value to shareholders of W.P. Carey and the shareholders of the funds we managed. Now, I'll hand it over to Jason to talk about our owned real estate portfolio..

Thank you, Mark. Good morning, everyone. I will start with the brief recap of our owned real estate portfolio followed by some comments on the market environment. At the end of the fourth quarter the company’s owned real estate portfolio was comprised primarily of 869 properties covering just over 90 million square feet, net leased to 222 tenants.

At year-end 64% of our annualized base rents came from properties in the U.S. and 33% from Europe. Portfolio occupancy remained high at 98.8% and 95% of annualized base rent came from leases with contractual rent escalations, either linked to CPI or through fixed rent increases.

And the portfolio’s weighted average lease term stood at nine years, which is up slightly from the prior quarter. Our same store analysis shows that rents were about 1% higher compared to the 2014 fourth quarter. Please note, our same store data has presented on a constant currency basis for purposes of comparability.

As shown in the leasing activity schedule provided on page 31 of our supplemental, during the fourth quarter we extended or modified seven leases at approximately 91% of the existing rent. Adding just over 10 years in incremental weighted average lease term. The average rent of the new leases over that 10 year period is 3.9% above the existing rent.

And the TI and leasing commissions for those seven deals were very low at only $1.29 per square foot. We also entered into two new leases with a weighted average lease term of about 14 years.

Looking ahead we have 14 leases expiring in 2016, representing 2.6% at annualized base rent and we are currently in active discussions to address these maturities.

As you look at our lease maturity schedule keep in mind that because we proactively manage our portfolio we begin lease negotiations with tenants very early on typically negotiating and extending leases three to five years ahead of their expiration.

Given the rent growth built into our leases and their long duration we generally experience a roll down in rent when leases are renewed or extended, which over the past three years has average between 7% and 8%. However average rents over the term of the extended lease tend to be above the prior rent.

And because their leases are tripling that with tenants renewing critical facilities typically very little CapEx is required. Over the last three years on 87 lease renewals the TI’s and leasing commissions averaged just $2.65 per square foot.

And as we’ve said on prior calls re-leasing and new leasing activity is a very small component of our overall portfolio. For example, for the 2015 fourth quarter it represented less than 2% of total annualized base rent. Turning to our recent acquisitions and the market environment.

During the fourth quarter we completed three acquisitions for our owned real estate portfolio totaling $145 million bringing total on balance sheet investment volume for 2015 to $689 million. In October we acquired a net lease portfolio of six Courtyard by Marriott hotels in the U.S.

for $52 million with the remaining lease term of approximately 11 years and fixed rents escalations. The portfolio has shown strong operating performance in recent years with very strong NOI coverage providing downside protection at a high likelihood of renewal.

In November, we completed a sale-lease back transaction with Stern Group for a portfolio of 10 automotive retail and service sites in the Netherlands for about $62 million. The facilities are strategically located in and around three of Netherland’s largest cities and are among the best performing in Stern’s portfolio.

The acquired portfolio is triple net leased for a 17 year term and includes full Dutch CPI annual rent escalations. And finally in December we close on the acquisition of a creative office facility in Irvine California for $31 million. Net leased to Harvest Christian fellowship a not for profit organization to serve as its orange county campus.

It is a high quality office facility well located in strong sub market with the remaining lease term of just over 13 years and 3% annual fixed rent escalations.

So combined acquisitions for our owned portfolio during the fourth quarter had a weighted average initial cap rate of 7.2% and acquisitions completed in 2015 had a weighted average initial cap rate of approximately 7%. As always we are focused on extending the overall weighted average lease term of our portfolio.

The deals we completed in the fourth quarter were all additive to it with a weighted average lease term of approximately 14 years, which was also the weighted average lease term for total acquisitions completed during 2015.

Disposition activity remained fairly light during the fourth quarter totaling $6.7 million bringing total dispositions for the 2015 full year to about $39 million.

We currently expect 2016 to be an active year for capital recycling with significantly higher dispositions than we had in 2015, enabling us to fund the vast majority of our acquisition pipeline with proceeds from asset sales.

We will provide specific details on our expected acquisition disposition volumes in conjunction with AFFO guidance on our first quarter earnings call. Turning briefly to the investment environment. Net lease in the U.S. remains competitive.

However, we are seeing an increased emphasize on certainty of close an execution rather than purely on price, which we view as a function of several factors. Weakness in the CMBS market, reduced capital flows into market from established investors and volatility and uncertainty in financial markets in general.

As we previously said Europe remains at a different point in the cycle. Cap rates are continuing to compress as U.S. investors become increasingly more comfortable with investing in the region thereby creating capital inflows. However, giving the lower cost of debt in Europe attracted investments with significant spreads are still available.

And with that I’ll hand it over to Hisham to discuss our financial results..

Thank you, Jason and good morning, everyone. For the 2015 full year, we generated AFFO of $4.99 per diluted share, up 3.7% compared to $4.81 per diluted share for 2014. This increase was driven by three key factors. First, the real estate that we acquired for our owned real estate portfolio had a positive net impact on AFFO.

Second, within our investment management business, growth in assets under management resulted in both higher asset management fees and higher distributions from our general partnership interest in the managed REITs.

And thirdly, structuring revenues net of associated cost increased as a result of higher investment volume on behalf of the managed REITs. These factors are partly offset by the impact of a stronger U.S. dollar and higher G&A expenses mostly related to a new accounting software system we implemented in 2015.

For the 2015 fourth quarter we generated AFFO of $1.27 per diluted share this is up $0.067 compared to $1.19 per diluted share for the 2014 fourth quarter, due primarily to two key factors. First, growth in assets under management within our investment management business and second the positive net impact of acquisitions on our balance sheet.

These factors are partly offset by lower structuring revenues due to lower investment volume on behalf of the managed REITs and the impact of a stronger US dollar year-over-year. As previously announced we will provide 2016 AFFO guidance on our first quarter earnings call in early May.

Turning to dividend, during the fourth quarter we raised our quarterly cash dividend to $0.9646 per share equivalent to an annualized dividend rate of $3.86 per share. Based on yesterday’s closing stock price this represents an annualized dividend yield of about 7%.

Dividend declared during 2015 totaled $3.83 per share, an increase of 3.8% over 2014, reflecting the growth in our business as well as a full year payout ratio of 76.8%. Turning briefly to our balance sheet and leverage metrics. At year-end, pro rata net debt to enterprise value stood at 40.9%.

Total consolidated debt to gross assets was 49.2%, and pro rata net debt to adjusted EBITDA was 5.5 times. Also at year-end the weighted average cost of our pro rata secured debt was 5.5%. And our overall weighted average cost to debt was 4.1%. We have approximately $309 million of debt maturing in 2016.

Compared to total liquidity at year-end was about $1.2 billion, which includes cash and cash equivalence and the undrawn availability on our credit facility revolver. Now before I turn it back to Mark, I’ll briefly touch upon some of the key metrics for our investment management business.

Three of our six funds are in the initial public offering state CWI 2 and our BDC funds. For the 2015 fourth quarter investor capital inflows totaled approximately $157 million up from $76 million for the third quarter. And we’re primarily into CWI 2 our second lodging fund.

This brought total investor capital inflows for the 2015 full year to $349 million. In addition, dividend reinvestment proceeds net of redemptions for the managed REITs totaled approximately $135 million for 2015. Over the course of 2015, we structured $2.5 billion of investments on behalf of the managed REITs.

And at year-end our managed programs had total assets under management of $11 billion, up about 20% from $9.2 billion at the end of 2014.

This growth is reflected in the year-over-year growth of both our asset management fees and cash distributions from our general partnership interest in the managed REITs and ultimately in AFFO, as I discussed earlier. And with that I’ll hand it back to Mark..

Thanks, Hisham. Following on the Hisham’s comments we plan to continue to grow our investment management business and in 2016 expect assets under management to grow as we raise and invest inflows into our lodging and BDC strategies. Currently we are focused on reviewing and refining our business plans for the year ahead.

And therefore have postponed providing 2016 guidance until our first quarter earnings call. Purpose of today’s call is to discuss our 2015 results. So I ask that you please keep your questions focused on the company’s results and operations. With that I’ll hand it back to the operator to take any questions..

[Operator Instructions] And your first question comes from the line of Sheila McGrath of Evercore. Your line is open..

Good morning. I was wondering if you….

Good morning, Sheila..

I was wondering if you could describe to us how much dry powder the CPA 17 and 18 have left to invest.

And also given your stock price below NAV, is there any consideration to revisiting raising capital for net lease again through the non-traded REIT funds?.

Let me answer the second part of your question first and I’ll turn it over to Jason to answer the first part of your question. Clearly our equity cost of capital is not as favorable as it was at some points in the past year.

But as you said our ability to access other capital resources, recycle capital in our portfolio with an eye on improving portfolio metrics as well as extending lease term and with over a billion in liquidity that will limit our need to access the equity market in the near-term.

We are reviewing ways to grow our investment management business and have not ruled anything out at this point, Sheila, so everything is on the table.

Jason, do you want to take the first part of Sheila’s questions?.

Yeah, sure. In terms of dry powder for CPA 17 and 18 it’s in the $200 million to $300 million range in most of that is spoken for given our pipeline coming into the year..

Okay.

And then also maybe it would be helpful you talked about the non-traded REITs fund raising business in light of the recent regulatory changes in Department of Labor, how do you view this business in ‘16 and beyond?.

That’s one of the things we are working on as we evaluating the funds obviously we are evaluating it through the length of 1502 and the Department of Labor regulation. I’m going to ask Mark Goldberg to comment on that who heads up our capital raising..

Hi, Sheila..

Good morning, Mark..

Good morning. As you know we’ve had good visibility both on 1502 and the DOL in terms of our engagement with the regulators and the Department of Labor over the years and we generally view that in the context of increased transparency and potentially as intended by the DOL as reducing the cost of raising capital.

So as a general rule we view them as positives with the understanding that any regulatory change at times cause short-term disruptions.

Our funds today on a going basis for the fourth quarter over 60% of our sales took place in low cost funds, low or no cost funds that’s 2% or under we feel we are very well positioned for 2016 beyond when the April implementation date of 1502 takes place as Mark pointed out we stand ready for the fiduciary rule as well..

Okay, thank you..

Our next question comes from the line of Juan Sanabria with Bank of America. Your line is open..

Hi, good morning guys. Thanks for the time..

Good morning, Juan..

Just wondering if you can give us a sense of what the dollar number should be for the on balance sheet portfolio on a go forward basis with regards to maintenance and leasing CapEx given you have a significant office at industrial portfolio..

This is Jason. I can tackle that, I mean we’ve averaged over the last couple of years on our re-leasing and renewals less than $3 per square foot..

And total gross dollar volume including CapEx review what side?.

Less than $3 per square foot. .

Okay. And is that just what you’re rolling or as a percentage of a total how should we think about that on a…..

That’s just what’s rolling, I mean, our leases are predominantly triple net almost exclusively, so there will be very little reserves on a go forward basis except for those assets that are renewing order re-leasing that we think we need to provide some levels CapEx..

Okay.

Could you given any color on the $15 million term fee was that attaining previously on the watch list somebody go bankrupt and how is the watch list been trending?.

Juan I’ll take that, but just before I respond to that questions I just want to correct something I said during my prepared remarks, I said that pro rata net debt to adjusted EBITDA was 5.5% its 5.5 times.

But now coming to your question, it relates to the disposition of Kraft, I think we’ve discussed that on earlier calls that Kraft after its acquisition it's moving its headquarters and we had this great opportunity to sell this asset. So it’s the termination income associated with the Kraft sale most of the $15 million is exactly that..

Okay..

And I should add to that quickly as Hisham has said we are in a contract to sell the asset. So combining the termination payment with the sales price will exit at a low to mid five cap rate, which is a great outcome for us..

Okay.

And are any of the funds particularly I guess CPA 17 when should we be thinking about those maybe looking at a liquidation scenario?.

That’s highly dependent on what we view to be the best interest for the shareholders of their funds and that linked to some extent on what the current market conditions the CPA directors have a great deal of latitude both in the timing of those liquidations and the form they may take as Independent Directors on that.

So there is currently no timeframe in mind for that..

Okay, great. Thanks a lot. I'll get in the queue..

And your next question comes from the line of Nick Joseph of Citi Group. Your line is open..

Hey, good morning. It's Michael Bilerman here with Nick. .

Good morning, Michael..

So, on page eight footnote C there was expenses related to the strategic alternatives of $4.5 million in the quarter and Grath it’s been a long time since I was an investment banker $4.5 million seems like a big amount for like a retainer fee to explore sort of alternatives I am just curious what you’re spending money on how should we think about what you’re going to spend and maybe just give us a little bit more color given the size of the cost?.

The $4.5 million was primarily related to legal tax accounting fees associated with that, we won’t have any color on any additional fees until we conclude the process..

$4.5 million what goes into legal and accounting and tax that it’s such a high number what type of work is being done to cause such a massive expense?.

Just to review of our legal tax and accounting fees, we have tax issues both internationally and domestically. So, other than categorizing in those three categories it’s about as much detail as I can give you..

And who is running the process right now and what’s the timing.

I know KD had previously been put into that role and was promoted so I am not sure if she is still doing it or I guess what color can you give us there?.

John Park who has been with the company for close to 30 years and has headed up the strategic planning for the company and has been involved in every major transaction that company is undertaking he is heading up that process and as we’ve said he is working with JP Morgan to study those alternatives and when they complete that process we’ll discuss that point..

Okay.

And then Mark can you give us a little bit of color sort of on the CEO transition process and the reason I ask is the last two board members and nothing against your experience and your knowledge of the company, but the last two CEOs to be put in place came right from the Board without sort of any external process or an interim type role and so you go back when Gordon left abruptly and Bond came in and came off the Board and then Bond left abruptly and you came on.

What confidence can you give us that the Board is thinking externally and trying to think about the right roles and why wasn’t an...

Why weren’t you given an interim title so to get through the strategic review process and then figure out what the right level is?.

So as I mentioned in previous discussions with a lot of you. The Board felt that based on my experience with the company, my understanding of the business, most importantly my relationship with the rest of the Senior Management team that have a tenure on average of about 15 years that I was the best individual suited to take over as CEO.

What we focused on in the transition clearly is coming in a reviewing, refining our business plans, trying to grow the company, even while that process is going on and I don’t believe that growing the company quite frankly is mutually exclusive of any of the alternatives on the table being studied. So that’s what we are focused on right now.

It’s been a smooth transition so far. We haven’t really skipped a beep, I’m very comfortable working with the senior team, they are a talented group of people as I’m sure you can ask your team from some of the answers you are getting on this call. And that’s what we are doing..

Right and there is no doubt that that’s important.

But in the number of other cases you’ve seen companies name an interim internal person run a process to make sure that they are getting outside perspectives into the company and it’s just surprising that the last two times this company has not or this Board has not gone down the road and try to at least seek some external advice.

So that would just be that perspective. Can you just give us the last one just the dollars that will be expensed for Trevor’s departure this year as additional cost and I don’t know if you can confirm or not whether if KD is also out and whether there is cost associate with that just from a modeling perspective..

Any cost associated with Trevor has been filed and I would point to our public filings related to that and feel better, if you look at that those numbers exactly. As I said before on earlier calls of KD Rice is not with the firm at the present time. We thank both Trevor and KD for their contributions and wish them well in their future endeavors.

But as I said we are focused on right now running this business and growing it. That’s our main focus today and we are reviewing those plans, we expect in the first quarter earnings call to come out with a plan that we’ll describe in detail that to you as well as provide guidance for the current year..

Okay, thank you..

And your next question comes from the line Paul Adornato with BMO Capital Markets. Your line is open..

Good morning..

Good morning, Paul..

I was wondering if you could talk about the European net lease business just in terms of the risk reward that you see in Europe versus U.S. for new investment.

And also at 33% how big do you want that business to be and what sort of European exposure should we expect over the longer term?.

Let me just first give you my view of having European exposure and being able to do business in Europe. As I said in my opening comments, I view both the diversity and our ability to access different capital sources as well as invest that capital in both U.S. and abroad has a real value to our shareholders.

There were different economic cycles that the two continents hit at certain points in time and at certain points we see more attractive investments in Europe and at certain times we see more attractive investments in the U.S. So for me I think that’s a big benefit to us.

I’ll turn it over to Jason tough to kind of give you some color on what we are seeing over there and what the value is..

Right and just to reiterate, it is an important part of our business model to allocate capital where we think the best risk return opportunities are, if you look at our last in four or five years you’ll see that on certain years we’ve meaningfully more weighted to one region over the other and that’s one of the benefits we can choose where those best risk return opportunities are.

In terms of Europe right now the investment environment competition is increasing and we are seeing some cap rate compression. But by and large there still are sufficient spreads over there given the cost of debt to make it an attractive and favorable investment environment for us.

In the U.S., we are seeing cap rates at least if the types of deals that we look at tick up slightly. I would say if I have to put a number on it may be around 25 basis points on average. I think this year, it looks like that the pipeline may shift a little bit more heavily weighted towards the U.S.

compared to Europe, which has been opposite in the past..

And would you say that there are any limits as to European exposure or if the opportunities are very, very great that portfolio could grow to more than a third of the total?.

We don’t put any limits on ourselves as I said we view it more through the lens of what do we feel as the team will deliver the most value to our shareholders and we view the investments through that lens. .

Thank you. .

And your next question comes from the line of Jon Woloshin with UBS. Your line is open. .

You mentioned shareholders a lot in your prepared remarks; I just had a couple of observations for you. Over the last two years, you’ve underperformed reality income by 4,600 basis points triple then by 3,800 and the VNQ this is a broad measure raised by 2,100 basis points.

You’ve been looking at this restructuring as a company for the last almost eight months now.

Your CEO leaves with very little details, so the question I have for you is as shareholders what do we supposed to with the whole of this? I mean I go back to Mike Bilerman’s question, which I thought was pretty fair about is the company really looking at shareholders as it looking internally because right now I’m really gone to scratch my head a little bit..

I think and it’s a fair think and I think you’re looking at it through the lens of the current environment. From a strategic planning process and the shareholder return process I tend and I think as a company and management team we tend to look at it over a much longer term.

What I would point out to you and go back 10 years if you look back over the past 10 years. And through the current date through 2016, we’ve had a total of shareholder return of about 306% to our shareholders and I think if you compare to some of the names you’ve mentioned you’ll see that we’re probably in line with that.

If you take it back through the end of 2014 and the reason I do that is because our shares did pay some significant pressure in 2015. But if you take it through the end of 2014, we’ve returned about 392% in total shareholder returns to our investors which outperforms the shareholder returns as some of the names you have mentioned in the past too.

So I tend to look at it through that means on a longer term basis as oppose to a shorter term. [indiscernible] looking at your third questions and as I said I think we have a 42 year history of delivering value to our shareholders. We’re focused on the long-term on continuing that record and that’s what we plan to do it. .

Well the market has spoken about your business model at least the institutional market. So I guess my question to you is, is the message that we should internalize and I’m asking and I’m not telling you.

Is the message we are running this long-term for the individual shareholder if the institutional shareholder is not comfortable with our business model we respect them and we understand it. And their companies that have business models you maybe more comfortable with. .

I think what we’re telling is we’re going to run the business today based on our current business model through the lens of what we need to do to increase shareholder value for our shareholders today.

We look at strategic alternatives to our model, to our capital sources to our investment allocations every single day we’ll continue to do that and we’ll do it through the lens of looking at it on how we increase overall shareholder value..

Okay, thank you..

And your next question comes from the line of Dan Donlan with Ladenburg. Your line is open..

Thank you and good morning. .

Good morning, how are you?.

Good. Just wanted to kind of go back to your comments on the strategic alternatives.

Should we expect a conclusion of that potentially with the first quarter earnings or is there any other type of concrete timeframe you could get?.

I really can’t when we’re completed with it we’ll give a conclusion to it..

Okay. And then switching gears to the non-traded business, I was just curious if you could comment on the fund raising effort with the BDC and kind a how that’s progressing the sales team to slow.

So just kind of curious where you think that’s going to progress in going forward and has there been some different hurdles that you’ve to encounter there versus your transitional non-traded REIT product?.

Sure. I’m going to ask Mark Goldberg Dan to address that..

Hi, Dan, CCIF much like our other funds goes through a process of registration building up a selling group then introducing the product and in my experience CCIF is following a very familiar pattern.

One that we experience all the time including in the introduction of our Carey Watermark funds, our lodging funds, that fund itself was the clear defective in late July, we have about one-third of our selling group, our typical selling group in place.

We see week-over-week improvements in the numbers and we feel very comfortable that the pattern of engaging with our broker dealers in terms of sign ups, our flows is following very familiar patterns in our fund raising and we expect good flows into those funds in the coming quarters..

Okay, that’s helpful.

And then Mark just maybe sticking with this the Department of Labor legislation that’s going through, could you maybe update us on some of the changes that that could encounter specifically the legislation goes through as currently proposed, would you be able to sell non-traded REITs and/or the BDC product into retirement accounts?.

Right, it’s a good question Dan. I think it’s a question that’s on everybody’s mind. The rule that’s currently proposed. Let me step back from the DOL and describe what it is and what it’s not because there seems to be at times confusion about it.

The DOL or as I refer to it is the fiduciary rule is really a rule not governing investment managers par se but governing delivery of services or investment advice through the financial intermediary market. So the impact is more to our distribution partners than it is to us as an investment management business.

What they are trying to do is to increase transparency and lower the cost of that advice. So from the perspective of an investment manager we certainly embrace the idea of transparency and we’d certainly appreciate the benefits of raising capital at less cost. So the rule as proposed, getting to the core of your question.

The rule as proposed before it went into the common period and ultimately the editing period that was submitted to the OMB and should come out in a few weeks.

Specifically said that a -- with regard to one of the exemptions that were offered, which was referred to the best interest contract exemption, big exemption, is that if you are going to sell a commissionable product it needs to be a common security and common securities are many, but not on the list was non-traded REITs and as such the conclusion was arrived that non-traded REITs would not be able to be sold to IRA investors.

That is not entirely accurate in a sense that if the rule does go through exactly as it was written before W.P. Carey will be prepared to offer the similar investment management programs, offering the same store opportunities for investors to invest in our vehicles that do comply with the rule as it’s currently proposed.

We’ll all wait and see how the rule comes out and then as I mentioned earlier and as Mark reiterated we stand ready to have products available for our 150,000 existing customers, if the DOL rule goes through as proposed..

Okay, Mark. Thanks. That’s hugely helpful. And then just maybe touching on potential resurgence in the CPAs, is that something you guys have started to recently think about or is that something that you started to think about because of advisers maybe looking for that bread and butter product that you guy have kind of put out for 35-40 plus years..

I can only discuss it through the view of since I’ve been on board and as I said Dan, nothing is off the table. My view is while this process goes on our job is to run the business the best way we know how to which is in our current model, which we think deliver significant value to our shareholders.

So we will continue as I said to work on our own balance sheet, we’ll continue to growth the IAM process and as part of that all products are currently being reviewed to see what makes the most sense for the business.

Okay.

And then last question from me, I was just curious if there are any large known tenant move outs in 2016 that we need to be aware of?.

Nothing significant that I am aware of, but I will turn it over Jason for some….

Yeah we’ll have a couple of new vacancies a 220,000 square foot office building and roughly 30,000 square feet in San Diego, that’s kind Q1, Q2ish. So nothing substantial that’s kind of our outlook at this point in time..

Okay, thanks so much really appreciate it. .

Thanks, Dan. .

And your next question comes from the line of Chris Lucas with CapitalOne Securities. Your line is open. .

Good morning, everyone. .

Good morning. .

Good morning. Can you give us -- WPC has done a good job of executing both in the U.S. and in Europe as it relates to the bond market.

I guess I was wondering I have a couple of things, one is that what is the pricing differential that exists right now for long-term on secured debt between the two markets for you guys? And then what sort of capacity do you have to continue to issue euro bonds given your investment and exposure to Europe?.

Yeah I’ll ask John Park to address that Chris. Obviously there is the pricing difference in some market conditions at the time, but there is a significant spread between the bond pricing for between Europe and U.S. I think it’s about 150 basis points or even greater.

And I think that the -- where we issue that it will depend on our portfolio mix and current market conditions and pricing at the time..

Okay.

And then if I could get some color maybe on the $8.7 million of credit loss that was reported in the quarter just in terms of NOI exposure and maybe what was going on there?.

Yeah that’s an international asset that we have where we have a finance lease. So at year-end we were reviewing that lease and then we saw that the tenant was in some distress. So we have we put an allowance against the receivable.

The key point over here is that the tenant there is another 13 plus years remaining on the lease term and tenant current on its payments. It was like a non-GAAP adjustment it has no impact on our AFFO..

Okay, great. Thank you..

And your next question comes from the line of Juan Sanabria with Bank of America. Your line is open..

Hi, thanks for taking the follow-up question.

Just wondering in the low sort of CPI environment how should we think about base bumps from here as we think about 2016?.

Yeah I mean it’s as you know we have a fair amount of leases I think greater than 50% that have CPI based increases whether on caps or with some structure around it. So I think it all depends on where inflation goes and that’s going to have a meaningful impact on our rental increases year-over-year..

Okay.

What percentage is uncapped?.

Yeah I think if you go to page 29 in our supplemental it’s around 40% is uncapped CPI, 28% is CPI based. And this is on just the net lease portfolio..

And when you say uncapped that means it’s basically it’s whatever CPI at that point in time..

That’s correct. .

Okay. And then just I guess a question for Mark. It seems like trying to reading between the line you really like the funds management business you really like the European exposure given you sort of more flexibility.

Is there a chance that the strategic review yields no change?.

With the strategic as I said the strategic review process is ongoing. I like our current business model I think it’s delivered significant return to our shareholders.

I like the diversity and the capital sources, I like the diversity of being able to invest that both here and abroad because I think it allows us as a firm to really perform across economic cycles.

I mean gives us great flexibility in that, I understand there is complexity in it and as I said in my opening comments we’ve a 40 year track record of managing that complexity and delivering value to our shareholders. So that’s a model I’m currently focused on utilizing to grow our business.

When the strategic process is done and whatever the outcome of that is we’ll make a decision at that point in time and announce it and go forward with it. But all alternatives are on the table for that so..

And with regards to all alternatives being on the table, are you running a separate or a concurrent structure where you are looking at potentially selling pieces of the business that may or may not be spun out as an alternative?.

The only thing I can tell you is what I’ve said that we are working with JP Morgan to review alternatives and when that’s done I’ll have comment on it..

Okay, thank you. Operator [Operator Instructions] And your next question comes from the line of Nick Joseph with Citi Group. Your line is open..

Thanks for taking a follow-up, Michael Bilerman..

Good morning, Michael..

Mark, just sticking with sort of the non-traded business with the REIT and you sort of talked about managing the conflict successfully over the last 40 years. I’m just curious now that W.P.

Carey is a REIT and you think about the higher level of focus on conflict of interest whether they are perceived or whether they are real in every other instance between the non-traded funds they were always merged together or merged into the parent and I think that concern is something that is significantly weighing on the stock.

And I’m curious as much as you can have independent directors, how do you ever get over the conflict of what’s good for W.P.

Carey the REIT and what’s good for the non-traded shareholders if in fact there is this risk in some of the legacy at lease funds, how can that not be a conflict whether it’s perceived or real?.

What I would say as we have a 40 year track record in managing the complexity of our business model and delivering the value to shareholders.

Each of those funds have their own independent directors and have various options available to them when they study liquidation as I said I think if you look at our track record, look at our long-term total shareholder return not only for W.P.

Carey shareholders, but for the shareholders of the liquidated funds, which on average is about 10% a year over the life of those funds.

We’ve done a pretty good job of managing through that process and we will continue to make decisions based on both from a capital and an investment allocation standpoint based on what’s best for all of our shareholders..

Okay. And then just from a disclosure perspective and materiality, why wasn’t KD Rice’s departure releases in 8-K or as a press release as you were CFO of the company last June at that point that she was promoted. So arguably to a higher level, so arguably more senior level than being CFO of the company.

Why -- it sounds like this was discussed with the potential investors or analysts in private that she was out, why wasn’t an 8-K or press release put out at the same time like you did with Trevor?.

Whatever 8-Ks and press releases we were required to file we filed. It wasn’t discussed in private, it was in answer to questions during as we talk with analyst and investors after releasing the transition to my becoming CEO and as a direct answer to a question whether KD Rice was with the firm or not.

As I said before and it’s about all I’m going to comment on it. We wish both Trevor and KD well, we thank them for their contribution. But quite frankly both of myself and the rest of the senior management team were focused on growing this business right now and that’s what we’ll continue to focus on..

Okay, thank you..

At this time I'm not showing any further questions. I would like to turn the call back over to Peter Sands for closing remarks..

Thanks everyone for joining us today and for your interest in W.P. Carey. This concludes today’s call and you may now disconnect..