W.P. Carey Buys Buildings; Leases Back To Occupants


W.P. Carey has purchased a $47 million office building occupied by Bose, which it will lease back to the stereo maker.

It is the latest acquisition byW.P. Carey ( WPC ), a real estate investment trust (REIT) that specializes in buying corporate and commercial properties and leasing them back to either the former owner or the occupant.

The Carey move to buy a building provides capital to the former owner, plus provides Carey and investors in its REIT a source of income.

Carey announced the acquisition Wednesday. Earlier this month, Carey announced the acquisition of the Norwegian headquarters of the French oil and gas companyTotal ( TOT ).

Carey was founded in 1973 by William Polk Carey, who died in 2012.

The company owns 686 buildings with 216 tenants and 82 million square feet, and collects annual rent of $640 million. The average lease term is 8.6 years, and the occupancy rate is 98.5%. It operates in 16 countries.

Among its tenants are U-Haul,Dick's Sporting Goods ( DKS ) and even the headquarters of the iconicNew York Times ( NYT ).

Earnings growth has been uneven the past few years. After peaking at $4.70 a share in 2011, it declined to $3.62 in 2012, then grew to $4.23 in 2013. Analysts expect 10% growth this year but an 11% decline in 2015.

Pretax margins for 2013 were a healthy 19%, but have been much higher. They were 58% in 2011.

From a technical standpoint, Carey is building a long base going back to May 2013. It appears to be working on the right side of the base.

Carey has been growing its dividend at a steady rate. Its five-year annualized dividend growth rate is 11%. Its current quarterly dividend is 90 cents per share, which works out to an annual yield of 5.3%. The most recent dividend was paid out July 15.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: WPC , TOT , DKS , NYT

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