W.P. Carey Is Exiting the Office Market

By Holly Dutton

W.P. Carey, a New York-based REIT that has been in business for 50 years, is saying goodbye to the office market. The company announced it will spin off a large share of its office portfolio into a separate, publicly traded REIT as part of an overall office exit plan. W.P. Carey’s board of directors approved a plan to spin off 59 office properties into net lease office properties and to begin selling 87 other office properties owned by the company. The spin-off deal is expected to close later this fall, and the sale of the other office buildings is anticipated to be completed by January 2024. The company owns 180 million square feet of commercial space across nearly 1,500 buildings. Office properties accounted for 25 percent of W.P. Carey’s portfolio in 2018 and, by this past June, had fallen to 16 percent. “While we’ve meaningfully reduced our office exposure in recent years, the plan we’ve announced this morning vastly accelerates our exit from office,” said W.P. Carey CEO Jason Fox in the announcement. 

As W.P. Carey makes its rapid exit from the ailing office sector, it follows other companies looking to lessen their exposure to the uncertain segment as well. New Jersey-based real estate development firm Veris Residential sold off $766 million worth of office assets last fall as part of a plan to offload office assets that began in early 2021. By shedding the office properties, the firm is looking to become purely a multifamily REIT. Blackstone has majorly reduced its exposure to the office sector in recent years, but that has been a process that began back in 2007. However, last year, Blackstone handed back the keys to 1740 Broadway, a Manhattan office building it owned. Other major property owners are looking to shed office buildings in their portfolio that are the least viable, like Silverstein Properties, which sold a 20-story office building near Bryant Park for $105 million, which was $66 million less than the amount the firm had refinanced the building for in 2020. With office occupancy slow to rise and a high interest rate environment still cooling the commercial real estate market, we’ll likely see more real estate owners back away from the office market before it weighs down the rest of their portfolio, at least for now.

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