W.P. Carey: Buy, Sell, or Hold?
Investors hate dividend cuts. So when a company with a very long track record of increasing its payouts decides to decrease them instead, it's a big deal. That's the backstory at W.P. Carey (NYSE: WPC), which recently reduced its quarterly amount from $1.07 to $0.86. But there's more to this dividend cut. And in the end, it will probably be in the best interest of shareholders. Here's what you need to know whether this real estate investment trust (REIT) is worth buying.
Although W.P. Carey had been telling investors for years that it was looking to get out of the office space, it had been a very slow exit. Then office real estate took a sudden downturn with the start of the coronavirus pandemic and widespread work-from-home policies.
As a net lease REIT, W.P. Carey's properties are rented out to single tenants that take on most property-level operating costs. That means any single property is a high risk should the tenant leave after the end of the lease. Given the uncertain office environment and the relative size of office assets, W.P. Carey decided that a slow exit from the space was no longer wise. So it created a plan to spin off some of its office assets into a new REIT called Net Lease Office Properties (NYSE: NLOP) that would focus on selling the properties, and the parent company would sell whatever was left behind.
Source Fool.com
