On September 21, 2023, W. P. Carey (NYSE: WPC) announced it intended to spin off a portfolio of 59 office properties into a separate publicly traded REIT called Net Lease Office Properties (the “Spin-Off”) by way of a pro rata special dividend of common shares of Net Lease Office Properties to W. P. Carey common stockholders of record as of the close of business on the record date for the distribution (the “Distribution”).
Net Lease Office Properties is a publicly traded REIT that trades on the NYSE under the symbol “NLOP.” Its portfolio is comprised of 59 high-quality office properties, totaling approximately 8.7 million leasable square feet and generating approximately $145 million in annualized base rent, as of September 30, 2023. As a separate company, Net Lease Office Properties will pursue its own business strategy focused on realizing value for its shareholders primarily through the strategic asset management and disposition of its assets over time. Given W. P. Carey’s extensive knowledge of the portfolio, Net Lease Office Properties is externally managed and advised by wholly owned affiliates of W. P. Carey to successfully execute on its business strategy.
The Spin-Off occurred on November 1, 2023.
No stockholder approval of the Distribution was required. The Distribution did not affect the number of outstanding shares of W. P. Carey common stock or any rights of W. P. Carey stockholders. Stockholders of W. P. Carey as of the record date did not need to pay any consideration, exchange or surrender existing shares of W. P. Carey common stock or take any other action to receive Net Lease Office Properties common shares in the Distribution.
Net Lease Office Properties common shares were distributed to W. P. Carey stockholders of record as of the close of business on the record date on a pro rata basis.
For every 15 shares of W. P. Carey common stock held as of the close of business on the record date, a stockholder received one Net Lease Office Properties common share. Stockholders will receive cash in lieu of any fractional Net Lease Office Properties common shares that would have otherwise been received as a result of the Distribution.
If you owned shares of W. P. Carey common stock as of the close of business on the record date, Computershare, as the distribution agent, distributed Net Lease Office Properties common shares and recorded your shares in book-entry form or distributed to your brokerage firm on your behalf. W. P. Carey stockholders received Net Lease Office Properties common shares through the same channels that they use to hold or trade shares of W. P. Carey common stock, whether through a brokerage account, directly by W. P. Carey’s transfer agent, Computershare, in a 401(k) plan or other channels. No fractional shares of Net Lease Office Properties were issued in the Distribution. W. P. Carey stockholders will receive cash in lieu of any fractional Net Lease Office Properties common shares that such holders would have otherwise received as a result of the Distribution.
The distribution of Net Lease Office Properties common shares to W. P. Carey stockholders in the Spin-Off is a taxable distribution for U.S. federal income tax purposes.The distribution of Net Lease Office Properties (NYSE: NLOP) relating to the Spin-Off on November 1, 2023 was approximately $0.7627 per share of W. P. Carey Inc (NYSE: WPC). The fair market value (FMV) of NLOP shares distributed in the spin-off was determined to be $11.44 per NLOP share, which was calculated using the three-day volume weighted average price (VWAP) and based on the exchange ratio of one share of NLOP distributed for every 15 shares of W. P. Carey Inc (NYSE: WPC) held. The tax consequences of the Distribution will be affected by a number of facts that are yet to be determined, including WPC’s final earnings and profits for 2023, the fair market value of NLOP common shares on the Distribution Date and the extent to which WPC recognizes gain on the sales of U.S. real property interests (USRPIs) or other capital assets. Thus, a definitive calculation of the U.S. federal income tax consequences of the Distribution will not be possible until after the end of the 2023 calendar year. WPC will provide its stockholders with tax information on an IRS Form 1099-DIV, informing them of the character of distributions made during the taxable year, including the Distribution.The particular consequences of the Distribution to each WPC stockholder depend on such holder’s particular facts and circumstances, and investors are urged to consult their tax advisor regarding the consequences of the Distribution.
Net Lease Office Properties intends to pay dividends to shareholders to satisfy the requirements to qualify as a REIT. We expect Net Lease Office Properties to pay distributions to its shareholders from its operating cashflow and disposition proceeds, after first repaying the financing obligations associated with the Spin-Off.
Net Lease Office Properties common shares are listed on the NYSE under the symbol “NLOP.”
The Information Statement of Net Lease Office Properties dated October 6, 2023 was distributed to all W. P. Carey stockholders of record as of the close of business on the record date for the Distribution. Net Lease Office Properties’ SEC filings are available on its website at www.nloproperties.com.