W. P. Carey (WKN: A1J5SB) is a really exciting dividend stock. Foolish investors who have the stock on their radar probably know about the more than 5% dividend yield. As well as the fact that management has increased the distribution amount per share in every single year since the IPO in 1998 and has not lowered it a single time.
The last quarterly update has also been very solid and shows another small operational turnaround. So far, so good. Today we shall be interested in a different focus: Namely, that of the balance sheet. Let's take a look at what's behind the current figures and how much substance the Real Estate Investment Trust actually contains.
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W. P. Carey: Here's what the balance sheet says
In general, the balance sheet of W. P. Carey typical of a real estate company. This means there is some credit leverage, in real estate most players are polarized to finance growth with debt. It's kind of like most consumers buying their own house: Some equity and debt make up the financing.
Let's take a closer look. Currently, the U.S. REIT has a net debt of 7.78 billion. U.S. dollars. This compares to equity of $8.79 billion. US dollar. Two stocks that are actually very okay on balance. In any case, management has not gone too far in using credit and borrowing to build up its own portfolio.
W. P. Carey chooses, as is also common for REITs, so-called senior unsecured notes as debt capital. The balance sheet item of around 5.5 billion. U.S. dollars the largest share of net debt. This is a corporate bond, which will be serviced on a priority basis in the event of insolvency. So far, so good, and nothing significant, really. Another billion dollars is stuck in non-recourse mortgages, as well as each ca. Half a billion U.S. dollars in an unsecured line of credit and unsecured loans. That, as I said, is not so dramatic on the bottom line.
At the same time, W. P. Carey currently 186 million. US dollars in cash. On the asset side, most of the capital is over 15 billion. U.S. dollars tied up in real estate. So much for the basics of the balance sheet of this exciting U.S. real estate investment trust.
typical, but not with so much risk
That which is of interest to W. P. Carey is very typical, generally speaking, is debt. We can just attribute the high debt to the real estate approach. However, total debt is relatively moderate compared with total assets and real estate assets. This means that there is a good equity position.
Another advantage is that W. P. Carey issuing bonds that have some maturity and no floating interest rate. As a result, the debt side is also very, very solid. So on balance I am very happy with what I see.
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Vincent owns shares of W. P. Carey. The Motley Fool recommends W.P.Carey.