W.P. Carey sets fundraising record in first half

$909 million raised is almost as much as the $1.04 billion the firm raised all of last year.
NOV 05, 2015
W.P. Carey Inc. is well on its way to a record-breaking year in raising funds for its stable of nontraded real estate investment trusts. Over the first half of the year, the publicly listed REIT reported $909 million raised on behalf of its nontraded REITs. W.P. Carey's best full year in raising equity for its nontraded REITs was in 2012, when it raised $1.04 billion, according to investment bank Robert A. Stanger & Co. Inc. Last year, W.P. Carey raised $655 million, according to Stanger. “Our investment management business generated strong revenues as a result of robust fundraising and transaction volumes on behalf of the managed REITs,” said W.P. Carey president and chief executive Trevor Bond Tuesday in a conference call with analysts. W.P. Carey spokesman Peter Sands confirmed that the REIT scored a first half record in capital raised in aggregate for its managed REITs. He declined to comment about a potential record-setting year. W.P. Carey's nontraded REITs are sold through a network of independent broker-dealers, including LPL Financial, Commonwealth Financial Network and Cetera Financial Group. In the quarter ended in June, independent registered reps and advisers at those firms and others sold $398.7 million of W.P. Carey's Corporate Property Associates 18 Global Inc., known as CPA 18, which is a net lease REIT. Reps and advisers during the second quarter sold $93.7 million of Carey Watermark Investors Inc., which focuses on buying lodging properties and hotels. The potential record sales for W.P. Carey come as the REIT has started backing away from the sector that has long been its forte — net-lease real estate — while it seeks other opportunities. For example, while the fundraising is almost complete for CPA 18, the REIT has not launched a CPA 19. The net-lease market has been getting crowded and pricey, analysts have recently said. In the call with analysts, Mr. Bond noted that some net lease acquisitions have become highly competitive with “capitalization rates” — meaning the rate of return based on expected income — of less than 6%. W.P. Carey has backed away from such acquisitions and believes the outlook for deals is brighter in Europe, Mr. Bond said. W.P. Carey revenue totaled $205.2 million for the second quarter, an increase of 119% from $93.7 million for the same quarter last year. The increase was due primarily to additional real estate revenue from properties acquired in the REIT's merger in January with another of its nontraded REITs, Corporate Property Associates 16 Global Inc. Adjusted funds from operation for the second quarter were $122.2 million, an increase of 68.3% from $72.6 million in the same period last year.

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