Greg McGinniss: So then just to follow up on that. So are you not the — in terms of the decrease to acquisitions guidance this year, is that just a function of maybe deals that you’ve been looking at in Q2 that aren’t seeing their cap rates move to where you’re comfortable transacting or are those deals fully out of the market? Just curious any color you can provide.
Jason Fox: Did you say increase to our guidance this year? I missed the first part of that.
Greg McGinniss: No. No. No. The decrease to acquisition guidance this year.
Jason Fox: Yeah.
Greg McGinniss: Just trying to understand…
Jason Fox: Yeah.
Greg McGinniss: … the key drivers there with cap rates having moved up already.
Jason Fox: Yeah. The — I think the key driver was the third quarter. I mean, heading kind of end of summer, call it August, on our last earnings call and that’s really the last time we gave an update to the market. We were sitting on about $1 billion of deals closed year-to-date, some capital projects that were scheduled to deliver later this year. And we had a pipeline of over $400 million at that time and so we felt pretty good of the $2 billion number at that point in time. But with rate movements, we did decide to reprice deals. And deal volume, you think of the big picture, it’s not about deal volume. It’s about how those trans — how that translates into earnings growth and so that’s what we’re focused on. We did push pricing higher.
I think a lot of what was in our pipeline early in the summer that slowed down, in some cases went away and is now back for that matter, is what we hope to close this year and may be bleeding a little bit into January. But that’s kind of the environment for us right now. It’s kind of reset back to what we were looking at over the summer and we feel pretty good about the prospects going forward as well, given the kind of the longer term pipeline has started to build, too.
Greg McGinniss: All right. Thank you, Jason.
Jason Fox: Yeah. You’re welcome.
Operator: And the next question comes from the line of Connor Siversky with Wells Fargo. Please proceed with your question.
Jamie Feldman: Great. Thank you. This is actually Jamie Feldman here with Connor. I guess just to start. So the $1.5 billion of investments you have in your guidance, I know you said that’s kind of a placeholder. But can you just give more color on where you are on any of that? I mean, is there stuff that maybe just handicap, if you can maybe bucket it into like, this is stuff we’re actually working on, this is stuff we think is on the come? And then also, any thought — any kind of thoughts on yield for those different buckets?
Jason Fox: Yeah. The $1.5 billion for next year, I mean, that’s an assumption right now. I wouldn’t quite call it a placeholder. I think that we’ve historically been able to put money to work in all different types of environments. So I think that’s a good starting point. We’re hoping to update that in February, maybe depending on the markets, with some upside to that. But where we sit right now, we don’t have a lot of visibility into 2024. I think deals typically take from when we first start seeing them until they close typically it’s several months. So maybe some of the deals that we’re currently working on right now could be January type closes. I think the early-stage pipelines are some larger transactions.
Especially in Europe, where we’re seeing some opportunities. Again, pretty wide bid-ask spreads, but these are sale leasebacks. There are uses of proceeds. We do think that these sellers will likely transact, but they do take some time. So I would say we have some green shoots of deal opportunities, but not far enough along where we have a comfort level to say that we have a chunk of that $1.5 billion done. But look, I think, over the years we’ve been able to get deals done in different environments. And I think importantly right now, we’re sitting on a lot of dry powder. We mentioned the $2 billion that either has come in or is coming in over the next couple months. That’s going to provide us with a real competitive advantage and we do have a bias to put that to work.
Jamie Feldman: Thank you. That’s helpful. And then, to your point, you are sitting on a lot of dry powder. There’s probably a lot of real estate that’s going to need to be recapitalized, assuming rates don’t pull in too much and bail people out. I know you had mentioned kind of industrial warehouse being a target, but as you sit back and think about the future of this company, you just made a — you just kind of exited office in one fell swoop. I mean, how do you think about other property types that might work for WPC over time that maybe, most people aren’t thinking about or do you feel like, your messaging today is this is where we’re going to grow, these are the types of assets we’re going to put in the portfolio, we’re not going to veer from that at all.
Jason Fox: No. Look, we’re diversified to at least three. I mean, we’ve always been open to adding more diversification and new verticals and I think we’ve shown that we’ve done that. I think, recently we’ve done a little bit more retail. This year we did some medical schools with some really kind of strong market leaders earlier in the year and the bulk of what we’ve been doing, call it, 70% plus over the last several years has been industrial and warehouse. But even within those categories, there’s some diversification, there’s cold storage and there’s food production and processing, some R&D. Clearly we also own self-storage, both as a net lease and in some cases operating assets. I think there’s opportunities to convert more of that to net lease over time too.
So we’re pretty diversified as is, which I think gives us the opportunity to see a wide kind of opportunity set to kind of — to look at where we want to put our capital work. I don’t think that’s going to change.
Jamie Feldman: So maybe a better way to ask it is if you look at your portfolio composition as a percentage of NOI post the office sales, I mean, do you think that that pie chart would change meaningfully after you put a lot of this capital to work or do you think it’s going to be kind of… The last couple — yeah. the last couple of years are any indication, I can see industrial, warehouse drifting up a little bit. I mean, right now, pro forma for the separation of office, once the Office Sale Program is complete, it will be a little over 60% industrial and warehouse. Maybe that drifts up, but I think we do want to maintain diversification and I think the other verticals that I mentioned are all opportunities that we’ll see. But I think that the bulk probably still flows into industrial.
