W.P. Carey Inc. is getting out of the office sector, announcing a plan to spin off 59 office properties into Net Lease Office Properties (NLOP), which will become a separate, publicly traded real estate investment trust, and selling 87 other office properties. The spinoff, which does not require shareholder approval, is expected to close on or about November 1, 2023, with all sales of the other properties targeted to be completed by January 2024.
The move will monetize its legacy office portfolio and enhance its growth profile through an improved cost of capital, among other benefits, the company said.
“While we’ve meaningfully reduced our office exposure in recent years, the plan we’ve announced vastly accelerates our exit from office — enhancing the overall quality of our portfolio, improving the quality and stability of our earnings, and incrementally benefiting our credit profile,” said Jason Fox, W. P. Carey CEO. “Ultimately, with a clear path to monetizing our legacy office assets, we believe we will achieve a lower cost of capital and be better positioned for long-term value creation for our shareholders.”
NLOP is expected to comprise a portfolio of 59 high-quality office properties, totaling approximately 9.2 million leasable square feet primarily leased to corporate tenants on a single-tenant net lease basis. The vast majority of the office properties that will be owned by NLOP are located in the United States, with the balance in Europe. NLOP’s portfolio will consist of 62 corporate tenants operating in a variety of industries.
As a separate company, NLOP will pursue a business plan focused on realizing value for its shareholders primarily through the strategic asset management and disposition of its property portfolio over time. W. P. Carey is expected to act as NLOP’s external advisor following the spinof.
