W. P. Carey (WPC) 2026年第3四半期決算説明会：AFFOガイダンスを上方修正

W. P. Carey（NYSE: WPC）は、投資活動、契約賃料の伸び、予想を上回るテナントからの回収状況が第3四半期の業績に寄与したことを受け、2026年のAFFO（調整後事業キャッシュフロー）見通しを引き上げ、レンジを縮小しました。また、経営陣は、長期金利の高止まりにより第4四半期の案件成立時期の視認性が低下しているものの、足元の取引では資本還元率（キャップレート）が上昇していると述べました。

要点

• 第3四半期のAFFOは1株あたり1.33ドルと、前年同期比6.4%増加（前年同期は1.25ドル）しました。投資活動や賃料の伸びが好影響を与えた一方、前渡株式の決済により一部相殺されました。
• W. P. Careyは通期の2026年AFFO見通しを引き上げ、レンジを1株あたり5.23ドル〜5.29ドルに縮小しました。中間値は0.03ドル増加し、前年比5.8%の成長を意味します。
• 年初来の投資額は約16億ドルに達し、加重平均の初期キャッシュキャップレートは7.5%となりました。足元および第4四半期に予定されている取引の平均キャップレートは7%台半ばから後半となっています。
• 契約ベースの既存物件賃料成長率は2.6%となり、インフレ連動型リースや複数年の賃料スライド条項に支えられました。ポートフォリオの賃料収入のほぼ半分がCPI（消費者物価指数）に連動しています。
• 同社はテナントの信用問題による2026年の想定賃料損失額を、従来の見通しである700万ドル〜1000万ドルから300万ドル〜500万ドルへ引き下げました。
• 四半期末時点の手元流動性は26億ドルとなり、20億ドルの信用枠のほぼ全額が利用可能な状態で含まれています。経営陣は、追加の株式発行を行うことなく、2027年までの投資活動資金を充当できると見込んでいます。

主要財務データ

事業および運用実績

物流・産業用物件が近年と同様にW. P. Careyの2026年投資額の大半を占めました。米国と欧州の地域別構成比も過去の実績と概ね一致しており、年初来の取引額の約30%を欧州が占めました。

既存ポートフォリオも、増築、BTS（注文建設型）プロジェクト、再開発を通じて資本投下に寄与しています。同社は11件のプロジェクトを進行中であり、今後12〜24か月で約3億2500万ドルの投資に相当します。そのうち約9500万ドルが第4四半期中に完成予定となっています。

経営陣によると、第3四半期に完了した取引および第4四半期に完了予定の取引における初期キャップレートは7%台半ばから後半となっています。取り決めた賃料スライド条項を含めると、これらの投資による平均利回りは9%台を大きく超え、場合によっては10%近くに達します。

当四半期中、ポートフォリオの信用パフォーマンスは改善しました。W. P. CareyはHellwegの当期賃料の全額に加え、未払いとなっていた6月分の支払いも回収しました。同社はまた、より優良な事業者との新規リース契約を通じてHellwegへのリスク露出（エクスポージャー）を縮小し、従来の賃料の100%近くを確保しました。これらの代替賃料は2026年後半から2027年中旬にかけて発生し始める予定です。

経営陣による業績見通し（ガイダンス）

経営陣は、契約ベースの既存物件賃料成長率が今後数四半期にわたってやや上昇傾向を示し、2027年を通じて2%台半ばから後半で推移すると予想しています。また、2027年の契約成長率は2026年に想定している2%台半ばの水準をわずかに上回ると見込んでいます。

第4四半期のAFFOは、再リースに伴うフリーレント（賃料免除）が一因となり減少する見通しです。Nord Angliaのリース延長には約4か月分のフリーレント（約300万ドル〜350万ドル相当）が含まれており、主に第4四半期に影響します。その他の潜在的取引を含めると、第4四半期のフリーレントによる影響額は合計で1株あたり0.02ドル〜0.03ドルに達する可能性があります。経営陣は、第4四半期の業績を2027年のベースライン（ランレート）と見なすべきではないと注意を促し、第3四半期の方がより適切な参照点であると指摘しました。

リスクと注視事項

• 金利の変動性：経営陣は、長期金利の急昇により第4四半期の取引完了時期の予測が難しくなっており、投資スプレッドが縮小する可能性があると述べました。
• 売り手による価格再設定：売り手が期待価格を調整するまで、売買スプレッドの拡大によって取引活動が減速する可能性があります。経営陣は、長期金利が高止まりした場合、キャップレートへの上昇圧力が続くと予想しています。
• 資金調達コストの上昇：借換金利の影響が反映されるにつれ、支払利息は第4四半期および2027年にかけてさらに増加すると見込まれます。
• 2027年のリファイナンス：同社は2027年4月に満期を迎える5億ドルのユーロボンドを1件保有しています。経営陣はリファイナンスによる逆風を対応可能な範囲と見ており、同一通貨での借り換えを予定しています。
• テナントの信用リスク露出：信用リスクは全体として改善しましたが、経営陣はウォッチリスト上のテナントの監視を継続しています。Hellwegは第4四半期中にリストから除外される見通しです。

アナリストQ&Aの要点

2027年の資金調達能力：経営陣は、約5億4000万ドルの未決済前渡株式、約3億ドルの年間内部留保キャッシュフロー、通常の物件売却、ほぼ未利用の回転信用枠、およびLineage株式の売却による潜在的収入を挙げました。これらの資金源を合わせることで、新規の株式発行を行うことなく、近年と同水準の投資額を維持できる見通しです。

キャップレートの見通し：現在の案件パイプラインの平均初期キャップレートは7%台半ばから後半であり、個別取引は7%台から8%台にわたっています。経営陣は、長期金利が5%近辺で推移し続けた場合、時期は不確実なものの、最終的に平均価格設定が7%台後半に向かう可能性があると述べました。

セール・アンド・リースバックの価格設定：W. P. Careyは、投資適格未満の産業用物件が関係する複雑なセール・アンド・リースバックにおいて最も高い価格決定力を維持しています。一方、投資適格の小売物件のキャップレートは、より多くの資本がそれらの資産を競合するため、調整がより遅くなる可能性があります。

近々のパイプライン：経営陣は、進行中の取引として2億ドル〜3億ドルを挙げたほか、より初期段階にある大型の案件機会が存在することも示しました。一部の案件はより広範な企業取引と連動しているため、完了時期の予測が難しくなっています。

欧州対米国：欧州の取引環境は、高金利や売買スプレッドの拡大など、米国の状況を概ね反映しています。欧州のセール・アンド・リースバックにおけるキャップレートは米国の取引と同等ですが、欧州の低い借入コストがより広い投資スプレッドを支援する可能性があります。

決算説明会文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Hello, and welcome to W. P. Carey's Third Quarter 2026 Earnings Conference Call. My name is Donna, and I will be your operator today. [Operator Instructions]. Please note that today's event is being recorded. [Operator Instructions]. I will now turn the call this program over to Peter Sands, Head of Investor Relations. Mr. Sands, please go ahead.

Peter Sands

Good morning, everyone, and thank you for joining us today for our 2026 Third Quarter Earnings Call. Before we begin, I would like to remind everyone that some of the statements made on this call are not historic facts and may be deemed forward-looking statements.

Factors that could cause actual results to differ materially from W. P. Carey's expectations are provided in our SEC filings. An online replay of this conference call will be made available in the Investor Relations section of our website at wpcarey.com, where it will be archived for approximately 1 year and where you can also find copies of our investor presentations and other related materials. And with that, I will pass the call over to W. P. Carey's Chief Executive Officer, Jason Fox.

Jason Fox

Good morning, everyone, and thank you for joining us. We've continued to execute at a high level throughout 2026, enabling us to further raise our outlook for AFFO per share growth which we believe will be among the strongest in the net lease sector this year. Importantly, our growth has been supported by broad-based momentum across the business.

Year-to-date investment activity has continued to exceed our initial expectations, enabling us to raise the low end of our full year guidance range for investment volume. While the recent sharp rise in long-term interest rates has made the outlook for fourth quarter activity harder to predict, we continue to see a path to the top half of the range.

Our AFFO growth also continues to be supported by the strength of our rent escalations, providing a meaningful source of earnings growth independent of transaction activity. And our portfolio is performing well, reducing our outlook for rent loss for the remainder of 2026. As we look further ahead to 2027, we're pleased with the early signs of repricing we're seeing.

With the significant amount of capital we've raised this year, we're very well positioned to continue investing if attractive opportunities remain available. And with only one bond scheduled to mature in each of 2027 and 2028, our exposure to refinancing headwinds should be manageable, even if interest rates remain elevated.

This morning, I'll briefly review our progress so far this year and how we're thinking about the transaction market outlook for the fourth quarter and into 2027. Our CFO, Toni Sanzone, will focus on our results and guidance and touch upon aspects of our portfolio and balance sheet. And we're joined by Brooks Gordon, our Head of Asset Management, to answer your questions.

Starting with our investment activity. Year-to-date, we've completed approximately $1.6 billion of investments at a weighted average initial cash cap rate of 7.5%. The cap rates have moved incrementally higher compared to the first half of the year. The investments we closed during the third quarter and those we expect to close in the fourth quarter have cap rates averaging in the mid- to high 7s. That translates to average yields well into the 9s and approaching double digits in some cases.

We continue to invest across a range of property types and cap rates, with most of our investment volume so far this year going into warehouse and industrial properties, consistent with what we've done in recent years. Similarly, from a geographic perspective, the mix between the U.S. and Europe has remained broadly in line with what we've done historically.

Our existing portfolio remains a meaningful source of investment opportunities, including expansions, build-to-suits and redevelopment projects, supported by our carry tenant solutions initiative. These projects allow us to deepen tenant relationships while deploying capital at attractive returns.

Currently, we have 11 projects underway that will add approximately $325 million to our investment volume over the next 12 to 24 months, including about $95 million scheduled to deliver during the fourth quarter. And we continue to find these projects at higher cap rates and longer lease terms than traditionally sourced investments.

Turning our attention to fourth quarter investment activity specifically. As the broader transaction market continues to adjust to higher rates, has added some uncertainty around fourth quarter deal timing, particularly for deals in our pipeline tied to broader corporate transactions that may take longer to close in the current environment.

If those transactions remain on their anticipated time lines, we could see a path to the top half of our investment volume guidance range. Until we have greater visibility, however, we're maintaining a measured outlook for the remainder of the year and only moderately raising the low end, resulting in an overall range of $1.8 billion to $2.1 billion.

Moving to our sources of capital. Our balance sheet remains in exceptional shape with ample liquidity, including about $540 million of forward equity available for settlement and leverage at the low end of our target ranges. As we look further ahead to next year, we expect to generate approximately $300 million of annual retained cash flow from our real estate portfolio, providing another meaningful source of equity capital.

We also retain the flexibility to pursue accretive asset sales, in addition to ordinary course dispositions. Depending on investment activity and relative pricing, we can lean further into that source of capital if needed. And beginning in the second half of 2027, our lineage shares will provide another source of liquidity.

Together, these sources position us very well to continue deploying capital accretively throughout 2027 without needing to access the equity capital markets. With our funding needs well covered and limited refinancing requirements we're approaching 2027 from a position of strength. The key remaining questions therefore are how quickly will sellers adjust to the higher rate environment? And what will that mean for investment activity?

While we started to see cap rates on comparable deals move higher, not all sellers will alter their expectations immediately, which can create a period where bid-ask spreads widen and transaction activity slows. If long-term rates remain elevated, however, we expect to see the upward pressure on cap rates to continue next year. Ultimately, that should create more opportunities to transact with initial cap rates in the high 7s and in some cases, into the 8s.

In the meantime, we're continuing to pursue attractive opportunities while pushing for yields and returns that reflect current market conditions, taking into consideration both our spot cost of capital and the more favorable pricing achieved on the capital we've already raised. Given our diversified approach across property types and geographies, we expect to see a wide range of cap rates and believe we're well equipped to find opportunities where pricing has adjusted appropriately and spreads remain attractive.

It's also worth remembering that most of our investment activity comes from sale leasebacks, which are often driven by a company's capital needs. Frequently, there is a specific use of proceeds, whether that's funding growth, pursuing M&A or strengthening their balance sheet. As a result, many of these companies need to access capital within a defined time frame, which we believe should continue to support attractive investment opportunities in 2027.

Our focus on sale-leasebacks also gives us greater pricing power. And our expectation is that we'll see pricing move faster than in other areas than net lease market, particularly those focused on smaller investment-grade commodity retail. In addition to external growth, a meaningful portion of next year's earnings growth is already embedded in our portfolio.

We expect contractual same-store growth in 2027 to be slightly above the mid-2% range we anticipate for this year, reflecting current inflation forecasts and the fact that almost half of our rent escalations are tied to CPI. Combined with our relatively high rent bumps, that gives us a unique profile amongst our net lease peers, providing a more predictable source of growth hedge against rising inflation and making us less dependent overall on transaction market conditions to drive earnings growth. Let me pause there and hand the call over to Toni to discuss our results, guidance and balance sheet in more detail.

ToniAnn Sanzone

Thank you, Jason, and good morning, everyone. Before I get started, I'd like to quickly note our new investor presentation. We've updated and expanded it to provide a more comprehensive overview of our portfolio, strategy and the key drivers of our growth and you can find it posted to the Investor Relations section of our website.

Starting now with earnings and guidance. AFFO per share for the third quarter was $1.33, up $0.08 or 6.4% year-over-year driven by the continued strength of both our investment activity and rent growth, partly offset by the impact of settling forward equity. The $0.01 decline in AFFO per share compared to the second quarter was mainly a function of timing for other lease-related income, which was higher in the second quarter as anticipated and built into our initial guidance.

For the full year, we further raised and narrowed our expectations for 2026 AFFO per share to between $5.23 and $5.29, increasing the midpoint by $0.03 and implying year-over-year growth of 5.8%. As Jason mentioned, we believe the AFFO per share growth we will deliver this year will be among the strongest in the net lease sector. While the underlying drivers of our growth remains strong, our AFFO guidance implies a lower fourth quarter, partly reflecting the impact of rent abatements associated with certain re-leasing activity, which I'll come back to in a moment.

Our portfolio continues to perform well with strong tenant collections and no new rent disruption from credit events. During the third quarter, we collected rent for the full period from Hellweg and received its previously outstanding June rent payment, contributing to better-than-expected rent collections. As a result, we're lowering our estimated potential rent loss from tenant credit events to between $3 million and $5 million or 25 basis points of ABR at the midpoint, down from our prior estimate of $7 million to $10 million.

We've made good progress reducing our overall Hellweg exposure this year, moving it out of our top 25 tenants by the end of the third quarter. This included executing new leases with stronger operators, recapturing close to 100% of the prior rent, with rents scheduled to commence between late 2026 and mid-2027, following Hellweg's remaining lease terminations at the end of November. And we expect to complete the sales of the other Hellweg stores over the remainder of this year and into early 2027.

Other lease-related income for the full year is expected to total in the mid-$30 million range, inclusive of the proceeds from the Hellweg Bank guarantees, which we expect to draw upon in the fourth quarter. Our third quarter results continued to benefit from the strength of our internal growth built into the portfolio with contractual same-store rent growth of 2.6% year-over-year, reflecting the impact of higher inflation on lease revenues as well as certain multiyear rent escalations occurring this year.

With nearly half of our rent coming from leases tied to CPI, we expect inflation to remain a tailwind to contractual same-store rent growth, trending slightly higher over the next few quarters and remaining in the mid- to high 2% range throughout next year, supporting what we believe will be the strongest embedded internal growth in the net lease sector.

Comprehensive same-store rent growth for the third quarter was 2.2%, benefiting from improving occupancy and a strong quarter of rent collections. As we've noted on prior calls, comprehensive same-store rent growth can fluctuate from period to period due to certain impacts in the quarter, which are more onetime in nature.

Over the long term, however, we continue to expect comprehensive same-store growth to trail contractual, in line with our historic average of about 100 basis points. We had another strong quarter on the re-leasing front, recapturing about 105% of prior rents and adding about 9 years of incremental weighted average lease term on just under 1% of total ABR.

Our third quarter re-leasing activity included a 10-year lease extension on a property leased to one of our top tenants, Nord Anglia, completed in conjunction with an expansion project. This is a good example of how we work closely with our tenants to support their growth while enhancing the value of our real estate. The transaction also provided for a onetime rent abatement that will primarily flow through the fourth quarter.

Occupancy increased by 10 basis points to 98.6% at the end of the third quarter, reflecting our third quarter disposition activity, which was mainly comprised of vacant asset sales. During the quarter, we completed asset sales totaling $27 million, bringing total dispositions for the first 9 months of the year to $273 million. Based on our current visibility, we've tightened our expected dispositions for the full year to between $350 million and $450 million.

Moving to expenses and nonoperating income. Property expenses were lower in the third quarter, reflecting the timing of demolition costs, which we had previously anticipated would be higher in the first half of the year. Additionally, during the third quarter, we had lower property tax expenses as a result of tenant payment of amounts we were previously accruing.

For the full year, we have reduced our expectation for property expenses to between $54 million and $57 million. We've also lowered our full year expectation for tax expense to total between $40 million and $43 million, resulting from international leasing activity, tax structuring optimization and our current visibility into the composition of our investment activity.

G&A expense for the full year is now expected to total between $104 million and $106 million, representing a slight increase from our previous guidance. Nonoperating income totaled $4.7 million for the third quarter, which is also a reasonable quarterly run rate for the fourth quarter. This line item includes the $2.8 million quarterly dividend on our equity stake in lineage, interest income on cash deposits and realized gains and losses on foreign currency hedges. As a reminder, hedging impacts are generally offset by changes in foreign denominated revenues and expenses, resulting in no material impact on our AFFO.

Moving to our balance sheet and capital markets activity. We remain well ahead of our capital needs after raising substantial debt and equity capital during the first half of the year to prefund our investment activity and prepay our October bond maturity. That execution has left us very well positioned, particularly given the current capital market backdrop.

The weighted average interest rate on our debt was 3.3% during the third quarter, increasing marginally versus the second quarter as expected, reflecting the bond refinancings we completed earlier this year. We expect interest expense to increase further in the fourth quarter and into next year, those higher rates continue to flow through.

Looking ahead, our bond refinancing needs remain very manageable, with only one bond maturity in each of 2027 and 2028, both nominated in euro. Consistent with our prior approach, we would expect to refinance these maturities in the same currency, allowing us to continue benefiting from the lower cost of debt in Europe.

On the equity side, we settled 2.3 million shares under forward sale agreements during the third quarter for net proceeds totaling approximately $150 million, leaving us with about $540 million of forward equity available to settle which was raised in around a $73 stock price. At the end of the third quarter, net debt to adjusted EBITDA was 5.5x, excluding the impact of unsettled forward equity, which is at the low end of our target range, inclusive of unsettled forward equity, net debt to adjusted EBITDA was 5.2x.

Our liquidity position also remained strong, ending the third quarter at $2.6 billion including almost full availability on our $2 billion credit facility. We, therefore, continue to have ample runway to fund our investment activity for the remainder of the year and throughout 2027 without the need to raise additional equity capital.

And lastly, turning to our dividend. In September, we raised our quarterly dividend 4.4% year-over-year to $0.95 per share or $3.80 annualized while maintaining a healthy payout ratio of 71%. At our current stock price, that equates to an attractive dividend yield of around 6%. And with that, I'll hand the call back to Jason.

Jason Fox

Thanks, Toni. Despite the uncertainty around interest rates and how that will flow through to net lease investments in the broader REIT market, 2026 is shaping up to be a very strong year for W. P. Carey.

We expect to have one of the highest levels of earnings growth in net lease sector, with AFFO growth approaching 6%, exceeding last year's already strong year-over-year results. We expect to maintain healthy deal volume, supported by attractively priced capital that we raised in the first half of 2026. And our portfolio performance has remained steady with our rent loss numbers trending lower throughout the year.

While it's too early to set specific expectations for 2027, we're encouraged by early signs of repricing we're seeing in the market, as well as our ability to move cap rates higher on transactions in our pipeline, particularly on sale leasebacks driven by sellers with defined capital needs and timelines. If that trend continues, we expect to see increasingly attractive opportunities next year to put the capital we raised to work. We're confident that we can fund deals in 2027 without needing to raise new equity. Through a combination of the forward equity dry powder we have, retained cash flow ordinary course dispositions and accretive reinvestment for our Lineage position.

We also see a meaningful portion of next year's earnings growth already embedded in our portfolio through rent escalations that have upside if inflation runs higher. Taken together, we believe the building blocks remain firmly in place to continue delivering durable and competitive returns for our shareholders through a combination of our earnings growth and our attractive and well-covered dividend yield. That concludes our prepared remarks. So I'll hand the call back to the operator for questions.

Operator

[Operator Instructions]. Today's first question is coming from Brad Heffern of RBC Capital Markets.

質疑応答

Brad Heffern

Jason, maybe just following off on your last comment there about 2027, post all the business transformations, you've talked about mid-single-digit AFFO growth and the double-digit TSR. Is there any reason that we shouldn't expect that next year, either just because the cost of capital has gone higher cap rates maybe not adjusting? Any other reasons that you can think about?

Jason Fox

Yes. It's a good question. I mean it's a bit early to talk about details for 2027, but some of the things that you mentioned are in play. There are higher rates. That's going to be a headwind for everyone, higher financing costs, mean more interest expense and maybe tighter spreads, too, and it probably brings some uncertainty around the transaction markets. And that's something that really the REIT industry is going to have to navigate next year.

But as I also mentioned, we think we have a lot of factors that position us very well to still generate interesting and competitive growth next year. We talked about the type of deals that we do and our ability to push cap rates higher. We've already seen that. Toni went through the details on the capital that we've already raised at attractive pricing, that's going to continue to allow us to invest accretively.

And then our bumps, we have a portfolio with high same-store contractual rent increases. A large percentage of those are indexed to inflation, so that could provide some offset to higher interest expense. So we do think that we'll be competitive in terms of growth relative to the peers in the sector. I think that looking at the dividend yield is important as well. And you can find those 2 where we should be able to continue to deliver some interesting returns to our shareholders.

Brad Heffern

Okay. And then you walked through some of the funding options for '27 without raising equity. You didn't bring up the Vegas construction loan. I know it matures mid-'27. There's a couple of extensions there as well. Would you expect to get that back and that potentially to be a source of capital? Or would you expect that to stay in place?

Jason Fox

Potentially, second half of the year, I would say, no real updates right now. We've mentioned before that our development partner controls, the refinancing decision. There's a little bit of leasing to do. I think it's probably 90% leased right now, and there's one unit that once that gets leased and there's a lease negotiation in place now, I think that the developer could go to market.

Obviously, not a great time to be looking at the financing market. I think you know that the coupon on the loan that we have, it's 6% right now, but it's worth noting that, that [ ratchets ] up to 8% starting in January. So there's potential for upside for us is keeping that loan in place. And obviously, if it's refinanced, that will provide some more liquidity.

Operator

The next question is coming from John Kim of BMO Capital Markets.

John Kim

You talked about pricing adjusting quicker on sale leasebacks. I'm wondering if you're seeing the same thing on build-to-suit developments. And if you could just comment overall on the investment spreads you expect just given your cost of capital changes and where you see cap rates moving?

Jason Fox

Yes, certainly on sale leasebacks where there are defined proceeds earmarked for the seller. They're also more complex. So that tends to reduce the buyer pool some and we certainly stand out from an execution standpoint. I think some of those carry over to build-to-suits where you have an added layer of complexity. We can come in and purchase land and fund construction from the get-go.

There is a forward component to build-to-suits as well in a rising interest rate environment that tends to give you some pricing power also. So we haven't added a lot of build-to-suits over the last quarter. So I can't say that it's flowing through into our pipeline or into our closed deals right now, but we anticipate as we see more build-to-suits that there'll be some ability to continue to pass higher rates through? I think you had a last question there. What was that the final question you asked?

John Kim

Yes, investment spreads, like where you see that?

Jason Fox

Yes. I mean spreads it's a bit of a nuanced question when we think about spreads. I mean, certainly, cost of capital has gotten more expensive and spreads have gotten tighter across the REIT sector.

But for us, how we look at it right now, given our liquidity position and ability to fund deals with premise equity or free cash flow and dispositions if needed, that allows us to really continue to invest accretively next year without having to access the equity market. So when we think about spreads, that capital matters, we don't solely tie new deals to where our spot cost of capital is.

Obviously, that's a factor that we consider and it's part of our underwriting and pricing. But the actual accretion we'll generate is really based on the previous capital that we used to fund new investments, and that's much cheaper than where we can raise capital right now. So spreads are interesting, especially as we push cap rates higher. We'll have to see where the equilibrium is once kind of we see you have more [indiscernible] place in rates as well.

John Kim

Okay. And my second question is on the interest rate environment and how you're seeing refinancing headwinds in 2027. I know a lot of your swaps and maturities, some of that is back-end loaded next year. But if you can comment at all on what kind of earnings impact you're seeing from that?

Jason Fox

Yes. Toni, do you want to talk about that?

ToniAnn Sanzone

Yes. I think we addressed sort of all of our '26 maturities earlier this year. And as we look into 2027, we have 1 Eurobond, $500 million maturing in April. So that's our biggest refinancing risk, if you will. And I think as we've said before, we still believe that we can replace Eurobonds with Eurobonds and that those are trading probably 100 to 150 basis points, maybe right now at the lower end of that, inside of where the U.S. bonds are trading.

So we still expect to see some spread to the maturity of the coupon of the maturity that's in April, but we do think that, that's manageable. It certainly will contribute to some of the headwind next year, but we do agree that, that will be manageable for us.

Operator

The next question is coming from Greg McGinniss of Scotiabank.

Greg McGinniss

On those projected Q4 acquisitions, an additional $330 million or so at this point. Are you already seeing the high 7% cap rates on those deals? And does that level of volume maybe the [ 500 ] for the quarter, whatever it happens to be, feel like a fair minimum for quarterly acquisitions as cap rates continue to adjust, seeing enough at that kind of high 7%, 8% bogey?

Jason Fox

Yes. I mean we have been able to move cap rates higher. If you look at the first half of the year, we were transacting in the low to mid-7s. And what we've closed since then a little bit in the third quarter and the beginning of the fourth quarter, those have averaged in the mid to high 7s. So we are seeing some movement. And that's, again, both closed deals, but it's also reflective of the pricing that's in our pipeline right now to kind of think mid- to high 7s.

I mean look, we hope to continue to be able to push cap rates higher if rates stay at or above 5% on the 10-year treasury. The pipeline is interesting right now, I kind of referenced $200 million to $300 million of deals that are in process. We do have some larger deals at earlier stages at the top of the funnel that could materialize, but some of those are part of broader corporate transactions. So I'm clear exactly on timing or execution is a little less predictable. But we are seeing activity in the activities at this higher pricing level that we referenced earlier.

Greg McGinniss

And with the rent abatement on Nord, should we just think about that as kind of a quarter of free rent or maybe 4 months of free rent? How should we think about that in relation to how it's going to impact Q4 and what we should be pulling out of the model?

Jason Fox

Toni, do you want to tackle that?

ToniAnn Sanzone

Yes, that's right. We have about -- on the Nord transaction that I specifically referenced, we have 4 months of free rent there on just the 1 property. It's about $3 million, $3.5 million in exchange, we extended the lease term by 10 years. had rent recapture there of over 100%. And that's all done in connection with an expansion with an attractive yield on newly invested capital.

So that free rent specifically, a little bit in the third quarter, the majority in the fourth quarter. And then really baked into our guidance, I mentioned that we're active on the re-leasing front. There's potentially 1 or 2 transactions that would also have rent abatement baked into the fourth quarter. In total could be $0.02 to $0.03 impact in Q4, and that's part of the dip that you're seeing between Q3 and Q4. Again, really depends on whether the transactions close as we expect them to, but that's what we have embedded in our guidance.

Greg McGinniss

Okay. And Toni, is there anything else notable in kind of Q4 assumptions that we should be aware of that's kind of creating that range?

ToniAnn Sanzone

I mean, nothing outside of the assumptions that we provided. I think you'll look at some of the midpoints of the expense ranges. There's a little bit of seasonality in there. I think if you factor that in with the rent abatements, it's probably reasonable not to look at Q4 as a run rate or a starting point for 2027 growth. I think if you look at Q3, that's probably a better jumping off point from which to grow for 2027.

Operator

The next question is coming from Smedes Rose of Citi.

Bennett Rose

I guess I just wanted to follow up on the rent abatements as you look into '27, I mean, is it fairly typical if someone re-ups for the lease that you would give them a certain amount of rent? And is that something that might come into play across the course of '27 for you?

Jason Fox

Brooks, do you want to tackle that?

Brooks Gordon

It's not atypical, but it's not something that we do particularly often. It's one of the number of levers we have in a lease negotiation, rental rate potential some rent abatement. TIs, et cetera. So it's just another tool in our toolbox in these particular deals that emerged as the preferred one in the negotiation, but I wouldn't expect that to be a trend.

Bennett Rose

Okay. And then I mean, you mentioned that cap rates are adjusting something we're hearing from other companies. I was just wondering, as you look out across potential investment opportunities? Are there any areas where cap rates are maybe changing more quickly kind of outside of your sort of core food groups, if you will, or anything there you can share?

Jason Fox

Yes, sure. I mean we mentioned on sale-leasebacks, especially where we target subinvestment-grade industrial properties. That's where we've had the most pricing power at this point in time for the reasons that I mentioned earlier.

Probably on the other end of the spectrum, it's going to be retail, in particular, investment-grade credits, we can see kind of adjustments or changing cap rates to take a little bit longer there. There's more capital chasing those. And I think investment-grade retailers tend to have more capital options than, say, a company is looking to do a sale leaseback.

Operator

The next question is coming from Jason Wayne of Barclays.

Jason Wayne

Just on the rent loss assumption proved to be conservative, pretty much every quarter this year. Just wondering if you could walk through your tenant credit losses at this point, and if you're seeing any change in tenant credit funds recently?

Jason Fox

Do you want to take that, Brooks?

Brooks Gordon

Yes. Sure. Overall, credit risk has improved. I mean several companies have come off our watch list, Hellweg comes off completely in Q4, as Toni mentioned, We've, as you said, consistently reduced our rent loss assumption over the course of the year. We started from a conservative place there intentionally.

One tenant we've previously discussed is [ Cornerstone ] around 60 basis points. Another we've recently added as [ Hertz ] also about 60 basis points. Everything else is much smaller in the credit watch list. And then maybe just quickly on [ Hertz], we own 3 of their most important sites serving airports at SFO, Newark and [ Logan]. So it's possible they'll seek to restructure their balance sheet, but very similar to [ Cornerstone], we wouldn't expect any impacts on us in our leases.

And should either of those restructure expect to have improved credit on the other side of that. So broadly speaking, [ credit watch ] has come down and will come down further as Hellweg comes off the list in Q4.

Operator

The next question is coming from Michael Goldsmith of UBS.

Michael Goldsmith

It seems like you've already moved from low to mid-7 cap rates in the first half to mid to high in the current pipeline, you kind of mentioned visibility or potential for cap rates to move to the high 7s and even into 8. So I guess, like, how quickly would you expect that to play out? And then also, if cap rates do start to get to is that back to kind of like business as usual type environment?

Jason Fox

Yes. I mean, timing is hard to predict and maybe seeing the obvious, a lot of it can depend on where and when interest rates settle and that's obviously very complicated, lots of different factors in [indiscernible] rates.

So I think we first need to see some stability in long-term yields, and we don't have that right now, but maybe the -- maybe a hypothetical is, if we see a month or 2 of stable rates stay around 5%, then I think we can say that maybe the real estate market will settle around what the right pricing is. In our world, that probably means somewhere in the high 7s on average. But if you think about it where we are right now, we're still in the period of volatility, so it's hard to predict exactly how quickly that could happen.

Maybe it's worth noting again, we do think the types of deals that we target in particular, sale leasebacks, pricing there will adjust fastest and maybe other areas of retail, for instance, may take a little bit longer. But if things do settle into the high 7s, you're in and around 8, I think you're right. It's maybe business as usual.

But keep in mind, we've raised a lot of capital at this point in time, and we're going to be comfortable and confident investing through 2027 without the need to raise any new equity capital. So we're going to pick and choose and continue to put capital to work. It will be measured the approach we take and in some ways, if we have a rising rate environment, we can think of it as dollar cost averaging into it. But we have well-priced capital that we can invest, and I think that gives us the ability to continue to grow next year.

Michael Goldsmith

Got it. And then as a follow-up what was I going to ask -- just to clarify, of those that are doing are you actually having discussions right now at around [ 8%]? Or is that just more your expectation of where it ultimately settles if the rate remains here?

Jason Fox

Yes. Pipeline is mid- to high 7s on average. I think there's always a range in what we do, I would say, the range across the 7 into the 8s, depending on the deals. Certainly, the deal specifics matter, the rent bumps are really important and maybe that's worth emphasizing when we're talking about mid- to high 7s on initial cap rates, year 1 cap rates with the bump structures we're able to negotiate both inflation and/or kind of high and interesting fixed rate increases.

That translates or generates average yields over the life of the lease well into the 9s. And so that's still generating spreads that are within our historical target range of 200 to 300 basis points over a spot cost of capital. And obviously, it's going to be more for factoring in the price at which we raised our forward equity. So yes, I mean, there's discussions happening right now in that ZIP code and depending on the deal and the bump structure, it could vary a little bit, but that's where the averages are right now.

Michael Goldsmith

Got it. And now I remember what I was going to ask is just third quarter investment volume was a little bit slow. I know third quarter is kind of like a seasonally slow period for you. But did any deals that were set to close in the third quarter get repriced and have potential to close now in the fourth quarter?

Jason Fox

Yes. I think the way you characterize that is right in that the Q3 can be slow for us. It's not that unusual, especially in Europe for the summer to be quite a bit slower. We had 1 deal, about a $100 million deal that closed on October 1. So that, I guess, just easily have been September 30 and falling into the third quarter as opposed to the fourth quarter.

But what's in our pipeline right now, call it, $200 million to $300 million, I wouldn't suggest those are deals that are holdovers from the third quarter. I mean most of them kind of came into the top of our funnel during third quarter. or perhaps early fourth quarter, but I don't think there was an expectation that the ones in our pipeline now could have or should have closed earlier.

Operator

Our next question is coming from Jana Galan of Bank of America.

Jana Galan

Congrats on a strong 2Q. I know still a lot of unknowns in the transaction market, but curious if you're seeing a difference in volume or willingness to negotiate in Europe versus the U.S.?

Jason Fox

Yes, in many ways, the Europe environment kind of mirrors what we're seeing and talking about in the U.S. in headlines are similar increased rates, volatility, higher inflation, higher energy prices. All of those things like they've done in the U.S. have added a degree of uncertainty. So yes, there's wider bid-ask spreads over there.

Europe has been choppy over the last couple of years, so I wouldn't say that's anything new. But we are still finding pockets of activity. Year-to-date, we -- about 30% of our deal volume has been in Europe. I think the pipeline is at similar levels. And most of what we're doing, I think, pretty much all what we're doing over there are sale leasebacks.

And we're seeing those at cap rates that are kind of in line with the cap rates in the U.S. So those can still generate maybe wider, more attractive spreads given the lower borrowing cost that we still enjoy in Europe. So I wouldn't say there's big differences, but we are seeing activity over there with similar dynamics to what we're seeing in the U.S.

Jana Galan

And I just wanted to ask, there were press reports of W. P. Carey acquiring an education asset from another REIT. Just curious if there's anything you'd want to comment on why that was attractive to you guys and growing in the education space.

Jason Fox

Yes, sure. I mean the asset we bought is one of the schools run by Nord Anglia. They are a current tenant of ours. I think they're now maybe #4 in our top 25 list. We like the company. They're one of the largest, I think maybe the largest international K-12 private school operator in the world at close to 100 schools across 30 countries. We particularly like the schools that we own, we have 4 of them now, 1 in Orlando, 1 in Miami, 1 in Houston in the most recent deal we bought it was in Chicago.

We like the schools, they're highly respected in their markets, but also if you think about the operational performance, they have very attractive site level coverage as well. So this is just a tenant that we knew well. We had comfort with them. We know the management team well, and we think we executed a good deal and we like to follow-on deals with our tenant base as well. So Brooks mentioned earlier that we've done some expansions and some re-leasing with them as well. So it's a very good relationship and perhaps there will be more opportunities there.

Operator

Our next question is coming from Jamie Feldman of Wells Fargo.

James Feldman

Great. I was hoping you could talk a little bit more about your disposition guidance and the change to it. And just -- is it -- are deals falling out of bed? Are you just not getting the pricing you wanted? Do you just kind of want to wait and see what changes here? Just maybe a little bit more color on the types of assets you were thinking about selling and why things have changed.

Brooks Gordon

Yes. Overall, as we discussed in previous several calls, we retained a lot of flexibility and that was kind of indicative in our wide disposition guidance range. It's really just a matter of we've been simplifying that down and refining it as we go through the year. So it's not that deals have fallen out of bed. It's just we've decided to narrow that the size there.

We have ample capital, as Jason has described. In 2027, as Jason alluded to in his remarks, we retain a lot of optionality. I mean there's a number of different levers we can pull on to generate incremental accretive capital, but we'll evaluate the market conditions at the time, the pipeline at the time and our overall amount of capital we've raised to kind of make inform that range going to '27. But I wouldn't read too much into the range. It was just quite a wide range at start of the year that we've continuously narrowed.

James Feldman

Okay. And then I guess just thinking about your capital sources before you raise equity, I mean, can you frame the magnitude? I know you talked about multiple buckets there, but let's just say, a ton comes your way. I mean, what would that look like in terms of buying power when you think about all the options you discussed?

Jason Fox

Yes. I mean we have, call it, $540 million of unsettled forward equity raised at around $73 a share. We generate about $300 million of annual free cash flow. I think the expectation is that next year, we find it obviously when we issue guidance, but we'll generate call it, several hundred million dollars of proceeds from normal course dispositions.

In the next year, in particular, we also have this lineage stake that unlocks. That's another depending on where the stock price is $150 million to $200 million of capital. So you take all that together, you factor in the largely undrawn revolver. The fact that we're right now at the low end of our target range for leverage. So we feel that we can invest at similar levels to what we did last year and what we expect to do this year in 2027 without the need to raise any equity.

And so I think that gives us a lot of comfort and confidence to continue to invest, of course, we're going to push on pricing and certainly monitor where spot cost of capital is and then for most and how we price deals, but we're pretty well set up to execute the business plan next year without the need to raise equity.

Operator

Okay. The next question is coming from Anthony Paolone of JPMorgan.

Anthony Paolone

So my question is looking out into 2027 and trying to just think through what you talked about with limited debt refinancing, different things like that. And is it fair that there's no greater headwinds in '27 as you sit now than there were in '26? Did they seem pretty comparable? And I guess where I'm going with that is 6% growth this year is pretty strong. And I'm trying to think whether there's anything in the way of that other than the deal activity for '27.

Jason Fox

Yes. I mean certainly, deal activity and spreads are going to have a big impact. Obviously, what's built into the portfolio right now in terms of the rent bumps, that's going to be a meaningful driver and also help offset especially the inflation component of our rent increases helped offset at least some of the rising interest expense.

The other details, I think a lot of the details will matter. We'll get into those when we issue guidance in February. But we think we're well positioned. We'll have some leasing activity that we'll do as well next year and all that flows through to our comprehensive same-store. But we think the drivers are in place to have another year that will generate certainly interesting growth relative to what we're seeing and maybe expecting from the peers, but too early to get into any details on all the drivers.

Anthony Paolone

Okay. Got it. And then just my second one, I think, Jason, in the past, when you've been asked about competition in the market from the various PE shops and asset managers that have gone into net lease. You've said it's been limited -- just can you update us on your thoughts there now? And also, we've been hearing more about just the bonus depreciation being a driver behind some deals and whether that's something you see or whether it has any implications in the market from your point of view?

Jason Fox

Yes, in terms of competition, a lot of the competition that we see, and we see from time to time. I wouldn't say that they're any more active than they've been over the last year or 2 since a number of these funds have formed or some of the larger asset managers had bought smaller fund operators. Most of them are private equity. I wouldn't say we run into them any more so than we have in the past.

And maybe one thing that has changed a little bit is that private equity funds do tend to underwrite the higher leverage. So the higher rate environment is likely to be more impactful to their model. So we'll see how that impacts things. But it doesn't feel like the competitive environment is any different than it has been over the last year or 2 from a new capital standpoint.

So we've competed well up to this point, and there's probably not a lot of reason to think that could change. A termabonus depreciation, I think for certain property types that has become a bit of a driver around pricing and obviously, not all real estate will qualify for bonus depreciation. So things like we've seen some one-offs in car washes and C-stores that should qualify for bonus depreciation, at least the vast majority of the purchase price.

I think when those trade in smaller chunks, especially individual assets, I think we've seen or heard about some fairly aggressive pricing around that, but it doesn't really impact or flow through to the bulk of what we're doing, which are big industrial sale-leasebacks and portfolio deals.

Operator

The next question is coming from Spenser Glimcher of Green Street Advisors.

Spenser Allaway

I know you guys obviously haven't issued '27 guidance. It's too early to talk numbers, but just curious your higher-level thoughts on dispositions in the current environment. So even with cap rates moving higher, if you can't find the same opportunistic divestment opportunities, how important is pruning the portfolio just from an asset management standpoint, regardless of executing at better prices for you guys?

Jason Fox

Yes. But Brooks, do you want to tackle that?

Brooks Gordon

Sure. I mean we've navigated strategic portfolio dispositions through every sort of cycle. And so I think we're very well set up to accomplish that. From a capital creation perspective if we choose to increase the disposition cadence to create incremental accretive capital. In many cases, those are situational where maybe a tenant really wants to buy back a property or a portfolio of properties, and we can drive pricing, which is a little less tied to kind of the market interest rate dynamics.

So there's a lot of different types of disposition transactions I'd say many of ours are not your kind of true investment sales, they're very situationally specific and so a little less exposure to directly the kind of the ups and downs of interest rate markets. So -- but it's a fair observation, something we certainly watch closely, but I think we have a lot of flexibility to certainly close out '26 and then into '27 to have a number of options at our disposal.

Jason Fox

Yes. The only thing I will mention, Spenser. The heavy lifting in terms of shifting the composition of the portfolio, that's in the past, a lot of that was the self-storage operating assets that we sold. And if you go back a couple of years, obviously, there was a lot of office sales there as well.

So the pruning the portfolio is more around the margins and as Brooks mentioned, there'll be opportunities for us to pick and choose which ones to do, but I don't think it's going to have a big impact on how we prune and kind of manage for risk.

Spenser Allaway

Okay. Great. And then maybe just one follow-up on the Nord Anglia, can you just update us on your thesis in general for childhood education just beyond this one operator? And how large of a concentration would you be comfortable for that segment?

Jason Fox

Yes, the vast, vast majority, maybe almost all of it at this point that we own in K-12 education is Nord like the operator and in particular, we like the schools that we're in. I think it's a case by case. We want to underwrite strong operators, site level coverage. It makes a lot of sense, and we want to be in markets where we think there there's demand and kind of the right supply balance at the same time.

So I think we'll pick and choose. I wouldn't say it's a strategy where we're trying to expand our educational portfolio it's more opportunistic at this point. Maybe it's worth noting we do have some higher ed as well with medical schools, which we believe that supply demand dynamic is it's undersupplied. So that was a bit of a thesis that we backed there and perhaps there are some more deals do down the road there, but nothing specific at this point in time.

Operator

The next question is coming from Jim Kammert of Evercore ISI.

James Kammert

Just one quickly, please. Is it safe to assume that given it's a very competitive transaction market, clearly, but is it reasonable to assume that [indiscernible] is really focused on really even pushing escalators further in terms of your lease negotiations on new deals, particularly the sale leasebacks. Can you get that today?

Jason Fox

Yes, that's an important component of the terms in our deals. And when you think about the economics of a sale leaseback, there's the going in cap rate, which is obviously very important. But the bumps are also very important. I mean flat leases, we should be able to demand much higher going in cap rates if we chose to go that route. Instead, there is a focus for us to make sure that we can drive a fair amount of growth through all internal growth through the portfolio so that as we get larger, we won't have as much of an issue of having to put up more and more deal volume.

So it's certainly a focus of ours. We've been very successful doing it. I think generally speaking, we do want to set rents or the bumps that are in line with market rents. I think to the extent we can get CPI, we've been doing that. And on average, I would say, it's kind of mid- to high 2s right now in our fixed increases. And then CPI and obviously, the expectations what those bumps look like will depend on a lot of factors, in particular, the region in which we're operating.

Operator

[Operator Instructions]. Our next question is coming from Greg McGinniss of Scotiabank.

Greg McGinniss

Just one more for me. Is the expectation that the linen shares will be kind of sold right when they unlock -- it's a 6.9-ish percent cost of equity. Just thinking how you guys compare that to your forwards are slightly more expensive.

Jason Fox

Yes. I mean I wouldn't say that the day that they're available to trade were going to hit the sell button, I mean I think that we will make sure that we're not selling into some bad trading environment or dynamic, I should say, because they do have a lot of capital locked up.

But probably safe to say over a quarter or 2, we would look to liquidate that and reinvest into core net lease. And all we're recognizing right now is our dividend yield. So we'll have a step up. It will be accretive capital at almost any price at this point in time or any expected price.

Operator

Thank you. I'm showing no further questions. I'll now turn the call back over to Mr. Sands.

Peter Sands

Thanks, Donna, and thanks, everyone, for joining us and for your interest in W. P. Carey. If anyone has additional questions, please call Investor Relations directly on (212) 492-1110. That concludes today's call. So you may now disconnect.