WP Carey, Inc. (WPC) Q1 2022 Earnings Call Transcript

For the period ending March 31, 2022

April 29, 2022 10:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Hello, and welcome to W. P. Carey's First Quarter 2022 Earnings Conference Call. My name is Jesse, and I will be your operator today. [Operator Instructions]. I will now turn the program over to Peter Sands, Head of Investor Relations. Mr. Sands, please go ahead.

Peter Sands

Good morning, everyone. Thank you for joining us this morning for our 2022 first 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, where it will be archived for approximately 1 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.

Jason Fox

Thank you, Peter, and good morning, everyone. The strong year-over-year AFFO growth we reported this morning reflects both our sustained higher investment activity and inflation beginning to more meaningfully flow through to our rents. Our CFO, Toni Sanzone, will cover our earnings in more detail and give an update on our portfolio, balance sheet and guidance.

It's been over a decade since we've seen any real upward pressure on cap rates. So I'll focus my remarks this morning on the current environment, including the impact of higher interest rates and inflation. I'll also review our recent investment activity and pipeline and give a brief update on our acquisition of CPA team as we move towards closing that transaction.

And in light of the conflict in Ukraine, I'll touch upon the continued strong performance of our European portfolio and expectations moving forward. Tony and I are joined this morning by John Park, our President; and Brooks Gordon, our Head of Asset Management, who are available to take questions.

Plenty to get through, so let's jump right in. Starting with the broader environment, particularly the impact of higher interest rates on cap rates and investment spreads. The 10-year treasury rates up about 100 basis points since early March and 150 basis points compared to much of 2021. The long-term cost of debt for all net lease REITs has moved meaningfully higher.