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W.P. Carey, Inc. Updates 1 Key Risk Factor
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W.P. Carey, Inc. Updates 1 Key Risk Factor

Shares of net lease real estate investment trust W.P. Carey, Inc. (WPC) have declined 7% so far this year. Recently, WPC delivered a better-than-estimated fourth-quarter performance marked by double-digit growth in its top-line.

Revenue increased 22% year-over-year to $374.9 million, outperforming estimates by $44.1 million. Earnings per share at $0.53 came in line with the Street’s estimates. Driven by higher lease revenues due to higher investment volume and rent escalations, coupled with lower interest costs, WPC generated a share growth of 6.1% during the year in adjusted funds from operations (AFFO).

Furthermore, in its real estate investment portfolio the company achieved an overall collection rate of more than 99.8% and portfolio occupancy of 98.5% during the quarter.

With these developments in mind, let us take a look at the changes in WPC’s key risk factors that investors should know.

Risk Factors

According to the TipRanks Risk Factors tool, W.P. Carey’s top risk category is Finance & Corporate, contributing 19 of the total 41 risks identified for the stock, compared to a sector average of 27 risk factors under the same category.

In its recent report, the company has added one key risk factor under the Finance & Corporate risk category.

The  London Inter-bank Offered Rate (LIBOR) is anticipated to be replaced by an alternative reference rate (Secured Overnight Financing Rate or SOFR) by June 30, 2023. WPC highlighted that after this point the risks related to the transition to an alternative reference rate will be heightened. This may also lead to additional basis risk and higher volatility.

The company acknowledged that it is not able to predict when LIBOR will finally cease to be published, or how SOFR will be calculated and implemented as an alternative. Further, possible consequent factors such as financial market disruptions, higher benchmark rates, or borrowing costs to borrowers may adversely affect WPC.

Hedge Fund Activity

According to TipRanks data, the Wall Street’s top hedge funds have decreased holdings in W.P. Carey by 478.6 thousand shares in the last quarter, indicating a very negative hedge fund confidence signal in the stock based on activities of 5 hedge funds. Notably, Ken Fisher’s Fisher Asset Management has a holding worth $455.3 thousand in WPC.

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