When W.P. Carey CEO Jason E. Fox announced a bold plan last week to quickly unload the property investment trust's international office building holdings, real estate watchers took note.
Other investors around the world have whittled down their office portfolios, but there are few examples of companies decisively shedding their workplace properties as fast as Fox wants to make it happen at W.P. Carey. The real estate owner has set a timeline to complete the sales by year's end.
The company's office portfolio contains 87 properties that the 50-year-old REIT has held for years, including one office property it's owned for nearly four decades.
The unusually quick sell-off comes at a time of historically low demand for office properties as companies adjust to worker schedules that combine remote and in-office work in the wake of the pandemic. Economic uncertainty fueled by higher interest rates and inflation also are disrupting the global office market.
The move signals that W.P. Carey is betting that a clear picture of future office demand may not emerge anytime soon. It also reflects the REIT’s strategy to sell off noncore holdings as a means to raise new investment capital as the cost of borrowing money has reached its highest point this century. For these reasons, the W.P. Carey CEO is the Person of the Week.
WHO: Jason E. Fox was appointed CEO and as a member of W.P. Carey’s board in 2018. Prior to his current position, Fox served as president from 2015 to 2017, head of global investments from 2015 to 2016 and co-head of global investments from 2012 to 2015.
STREET CRED: Known for his strategic thinking and investment acumen, Fox has overseen more than $10 billion of acquisitions. Under his leadership, W.P. Carey has grown into one of the largest net lease REITs in the world. The company had a portfolio of 1,475 properties in 26 countries as of June 30. W.P. Carey has a stock market value of over $12.5 billion. At the University of Notre Dame, he graduated magna cum laude after serving as captain of the school's soccer team. He remains a member of the U.S. Soccer Foundation's New York Leadership Council.
WHAT HAPPENED?: The REIT approved a plan to exit its office assets through the spin-off of 59 of the properties into a new real estate investment trust. The new publicly traded REIT known as Net Lease Office Properties will implement the asset sale program to dispose of those properties as well as 28 other office properties retained by W.P. Carey.
WHY IT MATTERS: The definitive decision for W.P. Carey to sell its office holdings sent a signal that a rebound in the sector might not happen soon. “W.P. Carey’s strategic plan to exit the office sector is a significant one coming from the original net lease REIT,” according to Scott Merkle, managing partner for SLB Capital Advisors. “It is expected to improve the REIT’s portfolio quality and provide clear visibility into how quickly the company will remove a perceived overhang on the stock.” Much of the company’s recent investment activity has been in industrial property as well as retail.
Editor's Note: Person of the Week highlights someone whose recent actions, statements or issues affected the commercial real estate industry. If you'd like to nominate someone for consideration, please email news@costar.com.