A Comparison of W. P. Carey Inc. and Agree Realty Corporation

February 13, 2024 | by


In this article, a comprehensive comparison is made between W. P. Carey Inc. and Agree Realty Corporation, focusing on their portfolios, rent growth, lease expirations, balance sheets, and valuations. W. P. Carey’s portfolio is heavily concentrated in industrial and warehouse properties, while Agree Realty’s portfolio is primarily retail-focused. Additionally, W. P. Carey’s rent increases are linked to inflation, whereas Agree Realty’s rents only see an annual increase of approximately 1%. When it comes to lease maturity and balance sheet strength, W. P. Carey holds a higher safety net in terms of weighted average lease maturity, but it also displays a weaker balance sheet compared to Agree Realty. Despite these differences, both companies are considered to be well-priced in terms of valuation. However, W. P. Carey’s management trust has faced challenges due to an NLOP spinoff and dividend cut, while the preferred shares of Agree Realty have become relatively expensive compared to the common shares. As a result, the article suggests a draw between the two companies and explores the possibility of adding W. P. Carey to one’s portfolio if the stock price drops below $50.

A Comparison of W. P. Carey Inc. and Agree Realty Corporation


W. P. Carey’s industrial and warehouse-focused portfolio

W. P. Carey Inc. is known for its industrial and warehouse-focused portfolio. This means that a significant portion of their real estate holdings consists of industrial properties such as warehouses, manufacturing facilities, and distribution centers. These types of properties are in high demand due to the growing e-commerce industry and global supply chain needs. By focusing on industrial real estate, W. P. Carey is able to take advantage of the strong demand for these properties and potentially generate stable rental income.

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Agree Realty’s retail-focused portfolio

On the other hand, Agree Realty Corporation has a retail-focused portfolio. This means that a majority of their properties are retail properties such as shopping centers, malls, and standalone retail stores. While the retail sector has faced challenges in recent years due to the rise of e-commerce, Agree Realty has strategically positioned itself by investing in essential, necessity-based retail properties. These properties cater to businesses such as grocery stores, pharmacies, and convenience stores, which have demonstrated resilience even in the face of economic downturns.

Rent Growth

W. P. Carey’s rent increases influenced by inflation

Rent growth is an important factor to consider when evaluating real estate investment opportunities. In the case of W. P. Carey, their rent increases are influenced by inflation. This means that as the cost of living and operating expenses rise, W. P. Carey can adjust their rental rates accordingly. This inflation-linked rent growth provides a level of stability and potential for increased income over time.

Agree Realty’s rents increase about 1% per year

In contrast, Agree Realty experiences more modest rent growth of about 1% per year. This relatively slower rate of rent increase may be due to the nature of their retail-focused portfolio. Retail properties, especially those in non-essential sectors, may face greater challenges when it comes to maintaining high rental rates and increasing rents consistently. However, the advantage of this slower growth is that it may be more predictable and less susceptible to economic fluctuations.

A Comparison of W. P. Carey Inc. and Agree Realty Corporation

Lease Expirations

W. P. Carey’s lease expirations

Lease expirations are a crucial aspect of a real estate company’s operations as they impact the stability of rental income. W. P. Carey has demonstrated a safer weighted average lease maturity compared to Agree Realty. This means that W. P. Carey has a longer average remaining lease term across their portfolio. A longer lease term provides more certainty for future rental income and reduces the risk of vacancies or lease renegotiations.

Agree Realty’s lease expirations

Agree Realty, on the other hand, may have a shorter weighted average lease maturity compared to W. P. Carey. This means that a portion of their portfolio may have leases that are closer to expiration. While shorter lease terms can provide flexibility for rent adjustments and property repositioning, they also introduce higher levels of uncertainty and may require more active management to ensure a stable stream of rental income.

Balance Sheets

W. P. Carey’s weaker balance sheet compared to Agree Realty

The financial strength of a real estate company is a crucial consideration for potential investors. When comparing W. P. Carey’s balance sheet to that of Agree Realty, it becomes evident that W. P. Carey may have a weaker balance sheet. This could be due to a variety of factors such as higher debt levels or lower cash reserves. A weaker balance sheet may increase the company’s vulnerability to economic downturns or unforeseen market conditions.

Comparison of key financial metrics

In addition to the overall strength of their balance sheets, it is important to evaluate key financial metrics of both companies to gain a more comprehensive understanding of their financial health. These metrics may include debt-to-equity ratio, current ratio, and interest coverage ratio. Analyzing these metrics can provide insights into the companies’ ability to manage their debt, liquidity, and financial obligations. Investors should carefully evaluate these financial indicators to assess the companies’ risk profiles and investment potential.

A Comparison of W. P. Carey Inc. and Agree Realty Corporation


Both companies are well-priced in terms of valuation

Valuation is a key aspect to consider when making investment decisions. In the case of W. P. Carey and Agree Realty, both companies are generally considered to be well-priced in terms of valuation. This means that their current stock prices are in line with their underlying assets and earnings potential. A well-priced stock can offer investors an opportunity to enter the market at a fair valuation and potentially benefit from future appreciation.

Key valuation metrics

To determine the valuation of a company, investors often rely on various metrics such as price-to-earnings ratio (P/E), price-to-book ratio (P/B), and dividend yield. These metrics provide insights into the relationship between the company’s stock price and its financial performance. While valuation metrics should not be the sole determining factor for investment decisions, they can be useful in comparing companies within the same industry and assessing their relative attractiveness from a valuation perspective.

Trust in Management

Impact of NLOP spinoff on trust in W. P. Carey’s management

Trust in management is an important consideration for investors as it reflects the company’s ability to effectively execute its business strategies and generate returns for its shareholders. W. P. Carey’s management faced challenges in terms of trust when they initiated the spinoff of their net lease operating partnership (NLOP). This decision raised concerns among investors regarding the motivations behind the move and the potential impact on the company’s financial performance. The NLOP spinoff may have temporarily affected trust in W. P. Carey’s management, requiring them to actively rebuild confidence and demonstrate their commitment to shareholder interests.

Dividend cut and its effect on trust

Another factor that may have impacted trust in W. P. Carey’s management is the decision to cut the dividend. Dividend cuts can be seen as a sign of financial distress or instability. When a company reduces or eliminates its dividend, it can erode investor confidence and raise questions about the company’s ability to generate consistent income. However, it is important to note that dividend cuts are sometimes necessary strategic decisions to strengthen the company’s financial position or invest in growth opportunities. Investors should carefully evaluate the reasons behind the dividend cut and consider the long-term implications for trust in management.


A Comparison of W. P. Carey Inc. and Agree Realty Corporation

Preferred Shares vs Common Shares

Expensive preferred shares of Agree Realty compared to common shares

Agree Realty offers both preferred shares and common shares to investors. Preferred shares generally come with additional benefits such as preferred dividends and higher priority in receiving distributions in the event of liquidation. However, it is worth noting that the preferred shares of Agree Realty may be relatively expensive compared to the common shares. This means that investors may have to pay a premium to acquire the preferred shares and may not necessarily gain a proportionate increase in benefits or returns.

Comparison of benefits and risks

When comparing preferred shares to common shares, investors should carefully consider the benefits and risks associated with each. Preferred shares typically offer a fixed dividend rate, providing more predictable income for investors. However, they may have limited upside potential compared to common shares, which can experience greater price appreciation if the company performs well. On the other hand, common shares carry more risk as they rank lower in the capital structure and may be subject to greater price volatility. Investors should evaluate their risk tolerance and investment objectives before deciding between preferred shares and common shares.

Comparative Analysis

Strengths and weaknesses of each company

When conducting a comparative analysis of W. P. Carey and Agree Realty, it is important to consider the strengths and weaknesses of each company. W. P. Carey’s industrial and warehouse-focused portfolio provides exposure to a sector with strong demand and potential rent growth. However, their weaker balance sheet and trust challenges may introduce additional risks. Agree Realty’s retail-focused portfolio focuses on necessity-based retail properties, which can provide stability, but may face challenges in the evolving retail landscape. Understanding the unique strengths and weaknesses of each company is essential for making informed investment decisions.

Overall performance in the real estate sector

Both W. P. Carey and Agree Realty operate in the real estate sector, which can be influenced by various macroeconomic factors. Evaluating the overall performance of the companies within the broader real estate sector is crucial to assess their competitive position and potential for growth. Factors such as interest rates, economic conditions, and industry trends can impact the performance of real estate companies. Investors should analyze these factors and their potential influence on W. P. Carey and Agree Realty to gain insights into the companies’ long-term prospects.

A Comparison of W. P. Carey Inc. and Agree Realty Corporation

Considerations for Investment

Analysis of potential investment opportunities

Before making an investment decision, it is important to conduct a thorough analysis of potential investment opportunities. This analysis should include evaluating the companies’ financial health, portfolio composition, rent growth potential, and management track record. Investors should also consider the broader market conditions and trends that may impact the real estate sector as a whole. By conducting a comprehensive analysis, investors can identify investment opportunities that align with their risk tolerance, investment objectives, and expected returns.

Price threshold for considering W. P. Carey

Based on the information available, the article suggests a threshold of considering W. P. Carey if the stock price drops below $50. This price threshold may be an indication of a potential buying opportunity for investors who believe in the long-term prospects of W. P. Carey. However, it is important to conduct further research and analysis before making any investment decisions. Assessing the company’s financial health, portfolio performance, and future growth potential should be part of the decision-making process.

In conclusion, when comparing W. P. Carey Inc. and Agree Realty Corporation, it is important to consider various factors such as portfolio composition, rent growth, lease expirations, balance sheets, valuations, trust in management, and investment considerations. Each company has its own unique strengths and weaknesses, and investors should carefully evaluate these factors to make informed investment decisions. Ultimately, the decision to invest in either company should be based on individual risk tolerance, investment objectives, and the alignment of the company’s performance with the investor’s expectations.


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