W. P. Carey (WPC) risk factors, FY2024 10-K

Risks Related to Our Portfolio and Ownership of Real Estate

1. 01We face an increasingly competitive marketplace for investments
2. 02Our portfolio is concentrated by tenant industry and geographic location
3. 03Because we invest in properties located outside the United States, we are exposed to additional risks
4. 04Inflation and high interest rates have adversely affected our financial condition and results of operations and may continue to do so in the future
5. 05A significant amount of our leases will expire within the next five years and we may have difficulty re-leasing or selling our properties if tenants do not renew their leases
6. 06Certain of our leases permit tenants to purchase a property at a predetermined price, which could limit our realization of any appreciation or result in a loss
7. 07Our ability to control the management of our net-leased properties is limited, which could impact our ability to make ESG disclosures
8. 08We may be materially adversely affected by laws, regulations or other issues related to climate change as well as by potential physical impacts related to climate change
9. 09The direct and indirect impact on us and our tenants from severe weather, flooding, and other effects of climate change, and the economic and reputational impacts of the transition to non-carbon based energy, could adversely affect our financial condition, operating results, and cash flows
10. 10Because we are subject to possible liabilities relating to environmental matters, we could incur unexpected costs and our ability to sell or otherwise dispose of a property may be negatively impacted
11. 11The value of our real estate is subject to fluctuation
12. 12Our success is materially dependent on the financial stability of our tenants
13. 13The bankruptcy or insolvency of tenants may cause a reduction in our revenue and an increase in our expenses
14. 14We may acquire or develop properties or acquire other real estate related companies, and this may create risks

Risks Related to Our Liquidity and Capital Resources

1. 15Our level of indebtedness could have significant adverse consequences and our cash flow may be insufficient to meet our debt service obligations
2. 16Restrictive covenants in our credit agreement and indentures may limit our ability to expand or fully pursue our business strategies
3. 17A downgrade in our credit ratings could materially adversely affect our business and financial condition as well as the market price of our Senior Unsecured Notes
4. 18Some of our properties are encumbered by mortgage debt, which could adversely affect our cash flow

Risks Related to our Corporate Structure and Maryland Law

1. 19Certain provisions of our charter and Maryland law could inhibit changes in control

Risks Related to our REIT Structure

1. 20While we believe that we are properly organized as a REIT in accordance with applicable law, we cannot guarantee that the Internal Revenue Service will find that we have qualified as a REIT
2. 21If we fail to remain qualified as a REIT, we would be subject to federal income tax at corporate income tax rates and would not be able to deduct distributions to stockholders when computing our taxable income
3. 22If we fail to make required distributions, we may be subject to federal corporate income tax
4. 23Because certain covenants in our debt instruments may limit our ability to make required REIT distributions, we could be subject to taxation
5. 24Because we are required to satisfy numerous requirements imposed upon REITs, we may be required to borrow funds, sell assets, or raise equity on terms that are not favorable to us
6. 25Because the REIT rules require us to satisfy certain rules on an ongoing basis, our flexibility or ability to pursue otherwise attractive opportunities may be limited
7. 26Because the REIT provisions of the Internal Revenue Code limit our ability to hedge effectively, the cost of our hedging may increase and we may incur tax liabilities
8. 27We use TRSs, which may cause us to fail to qualify as a REIT
9. 28Because the REIT rules limit our ability to receive distributions from TRSs, our ability to fund distribution payments using cash generated through our TRSs may be limited
10. 29Transactions with our TRSs could cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on an arm’s-length basis
11. 30We may be subject to a limitation on our deductions for business interest expense
12. 31Because distributions payable by REITs generally do not qualify for reduced tax rates, the value of our common stock could be adversely affected
13. 32Even if we continue to qualify as a REIT, certain of our business activities will be subject to other tax liabilities, which will continue to reduce our cash flows, and we will have potential deferred and contingent tax liabilities
14. 33Because dividends received by foreign stockholders are generally taxable, we may be required to withhold a portion of our distributions to such persons
15. 34The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes
16. 35The ability of our Board to revoke our REIT election, without stockholder approval, may cause adverse consequences for our stockholders
17. 36Federal and state income tax laws governing REITs and related interpretations may change at any time, and any such legislative or other actions affecting REITs could have a negative effect on us and our stockholders

Risks Related to Our Overall Business

1. 37We are subject to the volatility of the capital markets, which may impact our ability to deploy capital
2. 38Future issuances of debt and equity securities may negatively affect the market price of our common stock
3. 39There can be no assurance that we will be able to maintain cash dividends
4. 40We may make investments in asset classes or countries outside of our core investment strategy which may be perceived as complicating our strategy relative to our peers
5. 41Failure to hedge effectively against interest rate changes and foreign exchange rate changes may have a material adverse effect on our business, financial condition and results of operations
6. 42The occurrence of cyber incidents, or a deficiency in our cyber security, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results