W.P. Carey approves plan for publicly traded spin-off of office portfolio

W. P. Carey’s Board of Directors has unanimously approved a plan to exit the office assets within its portfolio by spinning-off 59 office properties into Net Lease Office Properties so that it will become a separate publicly-traded REIT, and implementing an asset sale program to dispose of 87 office properties retained by W. P. Carey. The Spin-Off is expected to close on or around November 1, and all sales under the Office Sale Program are targeted to be completed by January 2024. The assets being contributed to NLOP represent approximately 10% of W. P. Carey’s annualized based rent as of June 30. NLOP is expected to comprise a portfolio of 59 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 U.S., with the balance in Europe. NLOP’s portfolio will consist of 62 corporate tenants operating in a variety of industries, generating ABR of more than $141M as of June 30. In addition to $169M of existing mortgage debt outstanding to be assumed by NLOP, NLOP has also entered into a new $455M debt facility with J.P. Morgan expected to be funded upon the consummation of the Spin-Off. Approximately $350M is expected to be transferred by NLOP to W. P. Carey in connection with the Spin-Off. 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. The Spin-Off, which does not require shareholder approval, is expected to close on or around November 1. Upon completion, W. P. Carey stockholders will receive shares of NLOP via a pro rata special distribution. Shares of NLOP are expected to trade on the New York Stock Exchange under the ticker symbol NLOP.