W. P. Carey Inc. (WPC) Earnings Call Transcript & Summary

Hello, everybody, and thanks for being with us on this call covering our second quarter of 2026 earnings. Ahead of getting started, I must point out that certain remarks shared today aren't historical facts and might be considered forward-looking statements. Details on factors that could lead actual outcomes to vary materially from what W. P. Carey expects can be found in our SEC filings. A web replay of this conference call will be posted in the investor relations portion of our site, wpcarey.com, and it will stay archived there for roughly 1 year, plus copies of our investor presentations and other associated materials are available in that same place. Having said that, I'll now pass things over to Jason Fox, Chief Executive Officer of W. P. Carey.

Thanks, Peter, and good morning to all of you. The robust momentum we built up in the prior year has carried forward through this year's first six months, fueled by the way we've executed on both the investment side and in capital markets. I'm happy to report that we are lifting our outlook for the entire year once more, on both investment volume and AFFO per share; this morning, my main focus will be our investment activity, which has stayed strong across the first two quarters, and how our capital position leaves us especially well placed to keep investing through this year's second half. I'll also address how we've largely reduced the exposure tied to Hellweg. Toni Sanzone, our CFO, will walk you through the results, the balance sheet, and guidance, and Brooks Gordon, who heads Asset Management, is here with us to take your questions. Let's begin with investment activity. During the second quarter, the deal environment stayed pretty much the same as in the first, in both the U.S. and Europe. So far, we haven't seen any meaningful effect on transaction activity stemming from the continuing tensions in the Middle East. Cap rates on deals we closed came in slightly higher in the second quarter compared with the first, though that largely reflected when particular deals happened to close rather than any shift in market conditions. For the entire year, we anticipate cap rates will average in the mid to low 7% range, which matches what we expected when the year began. Warehouse and industrial properties made up the overwhelming majority of what we closed in the second quarter, and the split between the U.S. and Europe was broadly consistent with our long-run average; we finished a bit more than $700 million of investments in the second quarter, taking our year-to-date investment volume to $1.3 billion at a weighted average initial cash cap rate of 7.4%. Once you factor in rent escalations and an average lease term of 18 years on new investments, that works out to an average yield above 9%, which is still among the highest in the net lease sector and keeps delivering an appealing spread over our cost of capital. The biggest deal we closed in the second quarter was the $400 million sale leaseback with GardenCore, a top U.S. maker of lawn and garden consumables, which now stands as our fourth largest tenant. The portfolio is made up of 43 manufacturing, packaging, and IOS facilities spread across 24 states, all under a 20-year triple net master lease featuring fixed rent escalations. Several factors made this transaction appealing, among them the defensive character of the underlying business, how mission-critical the real estate is, and the attractive rent growth it delivers across a long lease term. When we look forward, the pipeline we're working with in the near term holds a few hundred million dollars of investments sitting at different points of completion. On top of that, $133 million in capital projects are set to be delivered across the back half of this year — that's a portion of 10 projects we're handling right now, which should add roughly $300 million to our investment volume across the coming 18 months, with our Carey Tenant Solutions initiative backing them. I'm happy to report that because investment activity has moved along at such a strong clip this year, we've been able to lift our guidance range for full-year investment volume to somewhere between $1.7 billion and $2.1 billion. Deal closings might ease up a bit over the summer months — that's pretty normal, particularly in Europe — and it's too soon to see the fourth quarter clearly, but our pipeline is still active, and we think we're sitting in a good spot to land in the upper half of that guidance range, especially if fourth quarter activity matches what we've seen in recent years. Sector-leading rent growth keeps fueling our overall AFFO growth. Because such a large share of ABR comes from leases whose rent escalations are tied to CPI, our position is unique when it comes to gaining from the inflationary pressure created by higher energy prices, and we expect those tailwinds to increasingly reach rents through the second half of the year and then climb even further in 2027. Shifting to capital markets, well-executed capital markets transactions keep supporting our investment activity. We've sold close to $900 million of forward equity and issued about $1.5 billion of bonds this year; thanks to the forward equity sold in the second quarter, we finished the first half with almost $700 million available for settlement. Early in July, we wrapped up a U.S. bond issuance that took care of our sole remaining 2026 bond maturity. Our balance sheet looks great — plenty of liquidity, leverage sitting at the low end of our target range, and no debt maturities coming up soon. Through the end of 2026, we've comfortably pre-funded the investment activity we anticipate, with room to keep deploying capital well into 2027 without any need to tap the capital markets. And that's without counting the roughly $300 million in annual retained cash flow we produce, plus further accretive disposition opportunities. Further out, our Lineage shares might become another source of equity capital starting in late 2027. Finally, on Hellweg: over the past two years we've proactively cut our exposure from 35 stores down to 16 by way of lease terminations, re-leasing activity, and asset sales. Notably, Hellweg's recent insolvency filing could speed up the process of taking back the stores that remain and winding the situation down. Our remaining gross exposure now amounts to just 90 basis points of ABR, and Hellweg is no longer among our top 20 tenants. On half of those stores, we already have springing leases in place at rents similar to what Hellweg had been paying. As for what's left, we're currently in the middle of talks with prospective renters and purchasers, and we anticipate having either leases signed or sales of assets arranged before the year is out. The key point here is that Hellweg barely affects what we expect for earnings in 2026, and that's plainly shown by our choice to lift AFFO guidance during this quarter. I'll stop at that point and pass things along to Toni so she can go through our results, balance sheet, and guidance in greater depth.

Thanks, Jason, and good morning, everyone. Starting with earnings: for the second quarter of 2026, AFFO per share was $1.34, an increase of $0.06, or 4.7%, versus the prior-year period. Investment activity remains the primary driver of our growth — more than $3 billion of accretive investments have been closed since the first quarter of 2025, including the $1.3 billion completed thus far in 2026. Nonoperating income for the second quarter totaled $4.2 million. The second quarter additionally benefited from the timing of elevated other lease related income, which we had expected, as well as minimal rent disruption and a one-time tax benefit — all of which I'll cover in greater detail shortly. Looking ahead, we have raised and narrowed our full-year AFFO per share guidance range to $5.19 to $5.27, an increase of $0.02 at the midpoint, which implies 5.2% growth year-over-year. A combination of factors is driving this guidance increase. In addition to higher lease revenues reflecting stronger net investment activity, the beginning of higher CPI flowing through our leases, and an improved outlook for potential rent loss, we now expect lower property and tax expenses as well. Partly offsetting these benefits is the impact of the forward equity we settled in the second quarter, which also reduced leverage to the low end of our target range. As Jason noted, our updated guidance assumes greater investment volume, totaling $1.7 billion to $2.1 billion for the year, up from our prior range of $1.5 billion — $2 billion. During the second quarter, we completed dispositions of $84 million, bringing total disposition proceeds for the first half of the year to $246 million. Based on what is currently visible to us, we have narrowed and lowered our full-year disposition volume range to $350 million-$550 million, from our initial range of $250 million-$750 million. Now on to our portfolio. Rent increases contributed as well, with contractual same-store rent growth of 2.6% year-over-year, reflecting continued strength in both our CPI linked and fixed rent escalations. CPI linked increases, which account for 49% of our same-store leases, averaged 2.7% in the quarter, as higher inflation begins to flow through our lease revenue. Fixed rent escalations, representing 48% of our same-store leases, averaged 2.5%, partly reflecting our success in securing higher fixed rent increases in recent years. Among the new investments closed year-to-date, slightly more than half carried fixed increases, averaging 2.6%. Looking forward, we expect contractual same-store rent growth to rise modestly in the second half of the year as certain multi-year fixed rent escalations and higher inflation linked increases flow through lease revenues. For the 2026 full-year, our expectation for contractual same-store rent growth has increased to 2.6%, and it should trend higher in 2027 based on current inflation expectations in both the U.S. and Europe. During the quarter, comprehensive same-store rent growth was 20 basis points, and about 90 basis points of the shortfall against contractual growth resulted from a rent recovery in the comparable period last year. The remaining portion of that gap largely reflects June rent not yet received from Hellweg, along with vacancy and leasing activity effects. Bear in mind that one-time items, or properties joining or exiting the same-store pool, may cause this metric to swing from period to period. Based on what is visible at present, we expect comprehensive same-store growth to finish the full year somewhere in the 1% to 1.5% range, depending on the timing of leasing activity and dispositions and on how much rent loss ultimately materializes. Our estimate for possible rent loss related to tenant credit events is being lowered to a range of $7 million to $10 million, equal to about 40 basis points to 60 basis points of ABR, versus the $8 million to $12 million we had previously projected. Through the end of June, rent loss across the entire portfolio, Hellweg included, has been modest, totaling $1.7 million, which factors in certain rent recoveries. Hellweg did not pay its June rent of approximately $1.2 million, and has since paid July rent in full while working through the insolvency process. Even though Hellweg might make additional rent payments during this process, our updated rent loss assumption assumes no further collection from Hellweg this year, and that we receive the full benefit of the three-month bank guarantees, resulting in a net rent loss from Hellweg of about $3 million in 2026. Overall, our portfolio continues to perform well, and portfolio occupancy was 98.5% at the close of the second quarter, an increase of 40 basis points from the first quarter, primarily due to sales of vacant properties. Now for other lease-related income, the second quarter amount was $11.2 million; that was in line with our expectations and brought the first-half total to $21.7 million, which includes termination payments, deferred maintenance, and other lease-related settlements as we continue managing our portfolio proactively. Certain payments were bigger in the first half, so we expect this line item's total to decline over the two remaining quarters. For the full year, our outlook for other lease-related income is still a total in the low to mid $30 million range. That brings me to expenses and non-operating income. G&A expense was $25.9 million in the second quarter, bringing the first-half total to $53.3 million; for the full year, we continue to expect G&A between $103 million and $106 million, unchanged from our prior range. Non-reimbursed property expenses were $15.2 million in the second quarter and $29.8 million for the first half, including roughly $2.1 million of demolition costs related to redevelopment work. Nonoperating income totaled $4.2 million for the second quarter. Since we can see more clearly now when redevelopment work will take place and when re-leasing will occur, and since holding vacant assets costs us less, we're lowering our full-year property expense forecast to a range of $54 million to $58 million. On an AFFO basis, tax expense — largely reflecting current taxes on our international assets — was $10.5 million in the second quarter, a figure that got a boost from a one-time tax item that wasn't in our original guidance. As a result, we're reducing our full-year tax expense assumption by $2 million, which brings it to a range of $43 million to $47 million. Nonoperating income for the second quarter totaled $4.2 million. This line item mostly consists of the $2.9 million quarterly dividend from our equity stake in Lineage, along with interest income on cash deposits and realized gains and losses on foreign currency hedges. Do keep in mind that while FX rate movements can influence realized hedging gains and losses, those impacts tend to be offset by changes in revenues and expenses denominated in foreign currencies, so AFFO ultimately sees no material effect. Now to the balance sheet. As Jason said, we've remained active in the capital markets all year, which keeps us well ahead of our capital needs, including funding our planned investment activity and retiring our October bond maturity early. During the second quarter, we sold 5.3 million shares on a forward basis, which generated gross proceeds of $392 million, at an average price of $74.32 per share. We also settled 5.1 million shares under forward sale agreements, yielding net proceeds of $345 million. As a result, we ended the quarter with 9.9 million shares still to be settled, representing anticipated net proceeds of $691 million. Thanks to our capital markets activity, together with our $2 billion credit facility — which was largely undrawn at quarter-end — we closed the quarter with substantial liquidity of roughly $2.7 billion. That gives us ample runway to fund investment volume beyond the top end of our current guidance range, and into 2027 as well. We've also continued actively managing our debt maturity schedule. At the end of June, we priced a $350 million issuance of 10-year U.S. dollar bonds with a coupon rate of 5.2%, which settled in early July. Those proceeds will be used to prepay our October bond maturity, with no prepayment penalties. Consequently, we have no debt maturities remaining this year, and our next maturity is the EUR 500 million denominated bonds due in April of 2027. The weighted average interest rate on our debt remained low in the second quarter, averaging 3.2%, and it should tick up slightly over the second half of the year, reflecting our recent bond refinancing. On leverage, net debt to adjusted EBITDA ended the quarter at 5.1 x, including unsettled forward equity. When you set aside the impact of unsettled forward equity, our net debt to adjusted EBITDA came in at 5.5 x. That lands at the bottom of the mid to high 5x range we target, and it's lower than the 5.7 x we saw at the close of the first quarter. Nonoperating income for the second quarter added up to $4.2 million. Then, to close on the dividend: in June, we raised the quarterly payment by 4.4% versus the same time a year ago, taking it to $0.94 per share, and the payout ratio stayed at a healthy mark just over 70%. Based on where our shares are trading today, that translates into an attractive annualized dividend yield of close to 5%. With that, I'll hand it back to Jason.

Appreciate it, Toni. Just a handful of closing remarks. Broadly speaking, the opening six months of the year carried forward the momentum that we set in motion during 2025. Transaction activity has stayed robust, and the cap rates along with average yields we're seeing on newly acquired properties continue to look attractive when measured against our cost of capital. Our balance sheet stands in a very solid place, since every maturity coming due in 2026 has been completely taken care of, and leverage has moved down to the lower boundary of our targeted range. We've already brought in a meaningful amount of forward equity, which lets us finance acquisitions in an accretive manner all the way into 2027, and because of our CPI-linked leases, the portfolio is positioned to capture additional upside from inflation. Even with the news coming out of Hellweg, our outlook for 2026 earnings keeps improving. In our view, the stock's recent performance versus peers doesn't yet capture how effectively we've been executing. We're also confident that we'll stay near the sector's upper tier for AFFO growth as well as total return, once our dividend yield is taken into account; so with that, I'll turn things back over to the operator for the Q&A.

Thank you. Could you just take us through the order of your capital allocation priorities? Specifically with build-to-suits, expansions, and wholly owned acquisitions, I’m trying to get a sense of where you’re finding the strongest returns right now.

Yeah, sure. Good morning, Spenser. Across those buckets, I wouldn’t say any single one ranks above the others. It really comes down to where we spot the most attractive deal flow and the right return profile. I’d say we’re active in all of those areas. Our total deal volume for the year stands at $1.3 billion, and that figure includes sale leasebacks. It also covers purchasing existing leases. Within that total we’ve had build-to-suit deliveries along with expansions; it spans everything. When we look at Carey Tenant Solutions, which houses the build-to-suit and expansion work inside our asset management group, those tend to be among the highest-quality transactions because they’re captive. If we can create more of those opportunities, that would certainly be a positive, but it won’t come at the cost of pursuing deals elsewhere in our target market.

All right, thank you. That is genuinely useful. Your firm keeps originating quite a few industrial transactions outside the U.S. I wanted to ask whether you might give us some detail regarding how that real estate segment looks right now in Europe. I realize it covers multiple nations, yet at a high level, if you have anything to offer regarding rivalry over those properties, appetite for capital on the client side, or how assets get priced.

Yes, of course. On rivalry, my take is that from a competitive angle, Europe has always tended to be less congested. What we're noticing is, I'd say, additional or a growing number of American firms appearing over there as competitors. It may be useful to point out that getting into Europe and performing well is likely simpler to talk about than to actually accomplish, and by now we've had people on the ground there, putting money to work, for close to 30 years. Across our offices in London and Amsterdam, we have 50 staff members. We hold numerous strong connections throughout that market. My view is that our brand and our track record are quite solid; we genuinely understand those markets. We have European professionals running the platform for us throughout the continent. Our edge does exist, and perhaps competition is heavier than it was 5 years back; it's a sizable market that's fragmented. Over the last 18 months, activity has been climbing. I believe we are indeed seeing solid chances for additional transaction volume in that region. Of course, many distinct markets exist there; that's partly why covering it effectively and possessing experience matters. Fundamentals do clearly overlap in certain ways, but they differ across individual markets.

Awesome. Thank you, guys.

You're welcome.

Great. Thanks. I'm filling in for John Kilichowski today. So, regarding this quarter, we noticed the straight-line rent adjustment decreased without a corresponding shift in GAAP rent revenue. Could you explain what's causing that?

Sure, GAAP rent revenue did decline in connection with those particular adjustments and what you observed there. There are definitely other changes and growth we experienced when it comes to our rental increases. I think when you're talking specifically about the straight-line rent add back, we saw an acceleration of straight-line rent tied to two distinct transactions on the leasing side. We assigned two leases where there's no effect on the cash side. The cash rent carries on, and for accounting purposes we write off the straight-line rent balances and reset them. There's really no net impact on AFFO there. There's a decrease in GAAP revenue and a reduction in the add back.

Alright. Did any termination activity perhaps have an effect on that, or was this quarter fairly clean?

Nope; included in there is a bit of rent recovery too, along with the usual recurring increase in rent that we see. In my view, that all falls under the overall growth for the year.

All right; regarding investments, could you expand a bit on the cap rates you're seeing in different places, how the U.S. compares with Europe, and then perhaps a wider question, just the overall investment environment. It appears that additional capital is flowing into commercial real estate. Debt markets are getting tighter. Any views on the competitive landscape and whether you believe that will create more strain on your capacity to reach some of your targets?

Yes, certainly.

Maybe that steers you toward different opportunities. I'm sorry about that.

Correct. There's always been competition in U.S. net lease. Over the last 2 years, a handful of new entrants appeared. A number of big asset managers rolled out funds, and many of those are non-traded. That's likely put some upward pressure on cap rates. It's hard to put a number on it, and I wouldn't say it's had an outsized effect on us. Regarding the types of deals we go after, we've continued to generate significant deal volume at pricing and spreads we view as highly attractive, regardless of what competitors are up to. Yes, competition has increased, but I don't think it's been especially impactful lately; on cap rates, we're still transacting across a wide span of them, and for the year we expect to average in the mid to low 7s, which is at least in line with what we expected coming into the year. On the whole, cap rates have been pretty steady, even while Treasuries have swung considerably since the year started, in both directions. Look, if Treasuries stay in the 4.6%, 4.7% ZIP code, and let's also see what the Fed does today, I could see cap rates beginning to move higher at some point. As I just said, certain competitive pressures might cap or offset that; we're in good shape. We've already raised a substantial amount of capital that can get us through 2026 and well into 2027. We're pretty comfortable that we can continue putting capital to work in that mid to low 7s range. Maybe one final thing: we frequently remind people that's only one metric we consider, and we also want to ensure everyone stays focused on our bump structures and lease terms, which, once you factor those into mid to low 7s cap rates, works out to an average yield in the 9s, which we think ranks among the strongest or highest in the net lease sector. That's a key metric too.

I appreciate that. Let me squeeze in one brief follow-up here. When rates are elevated, what's your approach to underwriting assumptions and exit cap rates? As you deploy capital, how is your outlook on the world shifting?

Sure, absolutely — when rates run higher, our view is that this will eventually feed into cap rates. That relationship isn't consistently exact, but across extended timeframes, it ought to play out that way. In the models we use for underwriting, I'd anticipate incorporating a portion of that cap rate rise into the exits we project; when it comes to transactions and how we model them, we tend to be fairly conservative regarding residual values. At whichever future moment we decide we'd like to model an exit, I believe we're incorporating solid cushions for residual values.

Okay. Thank you.

You're welcome.

Thanks. Jason, for two quarters straight now, you've done some fairly large sale leaseback deals. Your pipeline looks strong in your view. Are these bigger kinds of transactions showing up again and continuing? Do you think that's going on?

Most of our deals land in what you'd call the $25 million to $100 million band, and the typical one is likely near $50 million; bigger deals do show up regularly; in any given year they're just part of the normal flow. My sense is we'll be bidding on several of those bigger sale leasebacks, say $200 million, $300 million, or deals that are even bigger. Yeah, as you pointed out, we've closed a number of larger transactions this year, among them the $400 million GardenCore deal that I brought up earlier. Another point worth making, we rank among the biggest net lease REITs. Our scale gives us an advantage: we're able to handle certain larger deals, that's simply part of how we operate, and my expectation is that it keeps going. How much of it happens will hinge on what the market offers. Whenever those opportunities exist, we'll be very competitive going after them.

Great. Perhaps one for Toni Ann. Could you lay out the components of the one-time items in 2Q that ought to be stripped out when we consider 3Q earnings?

Sure. Yeah. Let me sum that up. To begin, even though these items can vary somewhat from one quarter to the next, we anticipate robust AFFO growth overall this year, exceeding 5%. That stems from our core growth investing and from within the portfolio. A handful of elements affect how the first half stacks up against the second half. The biggest one is other lease related income, which I referenced. This line item is going to swing around quarter by quarter. We don't see that as any sort of slowdown in growth. During the first half, other lease related income came to roughly $22 million. For the full year, we expect that line item to land somewhere in the low to mid $30 million range, which means it falls off in Q3 and Q4. Beyond that, the timing of our capital markets activity will play a role; interest expense should rise as maturing bonds get refinanced this year, and that will show up in the third quarter and into the back half of the year. Finally, regarding rent loss, I noted in my remarks that so far this year we've taken on about $1.7 million of rent disruption. That figure includes Hellweg's June rent payment along with some recoveries during the second quarter. We've brought our overall rent loss range down to $7 million-$10 million for the full year. What that means is our guidance bakes in the assumption that most of it gets used across the third and fourth quarters. We did call out our anticipated losses from Hellweg. That represents our most material exposure. There's probably a degree of conservatism built into that within our revised range as we get further into the year; it's more a matter of timing differences. Those are three of the biggest elements that will drive that change.

Great. Let me just add one thing — what exactly was that one-time tax benefit? Was it $2 million, I think? Or actually, it was somewhat different from that.

So on that line item, we lowered guidance by roughly $2 million. For the quarter, the effect tied specifically to that is a bit above $1 million. Essentially, it comes down to applying net operating loss that we could use against certain current income from an international asset. It isn't truly recurring, though it does help us and benefits AFFO for this year.

Thanks.

Thanks. Morning, everyone. Nice work on a strong second quarter. I wanted to circle back on those possible rent loss figures. Is there anything particular — certain sectors, certain geographies, anything worth flagging — in how you're taking a cautious stance while weighing potential trouble? Or is this simply a set of isolated, one-off situations?

Right, I'd say-

I think that's something you address, Brooks.

Toni, go ahead — feel free to jump in.

So, on rent loss overall, let me just quickly sum up where things stand. I pointed out that what we anticipate losing from Hellweg represents the worst case for this year — roughly $3 million in rent. That accounts for $3 million out of the $7 million to $10 million range we gave. Beyond that one, no particular patterns show up in any sector. A few tenants of ours, a small number, are dealing with some partial interruption to rent. Brooks, I don't believe there's any pattern there that deserves calling out, though as I said earlier, we're still building in a bit of caution for the second half of the year. The reason is the broader economy rather than anything concrete showing up among our assets or tenants. Within the portfolio we already hold, no significant new rent interruptions have really emerged.

Right, there's not much more for me to say on that point. Overall, CreditWatch remains quite steady. We haven't had any significant new additions, and a few names have dropped off, so that figure has come down somewhat; you can see that reflected too in the reduction of our net rent loss assumption.

Great. Thank you.

Hi, thanks for the question. You mentioned that escalators tied to CPI are more typical for European properties. I'm just curious, what blended growth — sort of CPI growth — are you assuming on your leases?

Regarding new deals that we're originating, or I'm not certain whether we disclose this or whether it's in our supplement, the split between Europe and the U.S., and the expectations around same-store.

Right. Yeah.

Was it

A bit of both, really.

Let me take the first one, perhaps, and Toni, if you've got the details on the second, jump in. Regarding new deals, yes. In Europe, having CPI increases is more the norm. We've brought this up before — since inflation spiked a couple of years ago, CPI has generally become a little harder to secure, particularly in the U.S. Over in Europe, there may be some talks or back-and-forth about that too. That said, so far this year, roughly half of the deals we've closed to date have carried CPI-based leases. A lot of that comes from more European deals getting done, and the larger Canadian deal we closed at the start of the year was also a CPI-based transaction. The pipeline has a decent amount of CPI as well. I'd say it's near half too. Again, that's a result of doing more deals in Europe. We've discussed this too. When CPI-linked increases aren't part of the deal, we're seeing higher inflation affect our ability to negotiate bigger fixed increases. Historically, those averaged, call it around 2% per year, and more recently, over the last four or five years, they come in 50 to 100 basis points above that. For instance, our 2026 closed deals that have fixed increases averaged around 2.6% per year. The pipeline, I think, might be a touch higher than that. Inflation is sort of working its way through both components of our leases.

Regarding what we already own, let me mention once more that roughly 50% is tied to CPI. My sense is that our exposure leans closer to 70% when it comes to overseas agreements linked to CPI, while approximately 30% of those increases originate in the U.S. Increases are being observed in both markets, here at home and abroad. Since the beginning of the year, international CPI has climbed roughly 100 basis points beyond what we originally forecast. For U.S. CPI, the figure is slightly lower, near 90 basis points. All of this will begin showing up during the latter portion of this year and become more significant as we enter the early part of 2027, simply because of the delay built into our leases and when the escalations get calculated.

Understood. As for the guidance on dispositions, do you still intend to divest any non-core assets during this year? Or is that really more of a longer-term sort of option for you?

Brooks, would you like to address that?

Right. The guidance on dispositions that we updated during this quarter still leaves a decent amount of wiggle room for the second half of the year. Split out, it's about one-third non-core. Probably closer to two-thirds is more about mitigating risk and clearing out vacancy. On that non-core portion, if you remember, we disposed of the last piece of operating storage back earlier in the year; we also offloaded our sole Asian holding, in Japan, during Q2 at an excellent price; both of those fall into what we'd call non-core. Yes, that answers your question.