Jason Wayne

Jason Wayne inquired about the strategy for the rental home business, its growth prospects, and how rental home operating expenses are expected to trend, particularly after a Q4 increase.

Answer

Patrick Waite (EVP and COO) stated that the rental home business strategy is demand-driven, with the primary goal being to sell homes. Rentals are accepted when demand allows, serving as a positive business that exposes prospects to future homeownership, noting 15-20% of sales are to current residents (renters or upgraders). Paul Seavey (EVP and CFO) explained that rental home expenses are embedded in overall operating expense guidance. He noted that incremental rental homes lead to higher expenses, and the mix of new vs. previously occupied rental homes can influence expense levels, with previously occupied homes potentially incurring higher costs.

Jason Wayne inquired about the strategy for the rental home business, asking if the company intends to continue growing it. He also asked about the trend and drivers of rental home operating expenses, particularly the Q4 increase and subsequent expected decrease.

Answer

Patrick Waite (EVP and COO) explained that rental homes are primarily used to expose prospects to future homeownership, with sales being the first priority, and that 15-20% of sales are to current residents. Paul Seavey (EVP and CFO) clarified that rental home expenses are embedded in overall operating expense guidance, with increases tied to incremental rental homes and the mix of new versus previously occupied units affecting expense levels.

Jason Wayne asked about the weaker-than-expected RV and Marina annual performance, specifically if it was still impacted by storm-damaged properties and whether those properties are now back online.

Answer

Patrick Waite, President and COO, confirmed that three specific Marina properties are still impacted by storm damage, with permitting and construction taking longer than expected. These properties are anticipated to be fully online in 2026, causing reduced capacity rather than an overall demand issue.

Jason Wayne asked about the sales strategy for the two-to-four-year membership subscriptions, noting that the campground membership count was stabilizing after several quarters of decline.

Answer

CEO Marguerite Nader explained that the membership count saw a slight increase due to strong paid origination sales and a rise in promotional memberships from RV dealers. She detailed a new dues-based upgrade product, launched based on customer feedback, which offers benefits like advanced booking windows for an increased annual due of $1,500 to $3,500, shifting away from large one-time upgrade payments.

Jason Wayne noted the stabilization in campground membership counts and asked for details on the sales strategy behind the new two-to-four-year membership subscriptions.

Answer

CEO Marguerite Nader confirmed a slight increase in member count after ten quarters of declines, driven by strong origination sales and promotional memberships. She detailed the new dues-based upgrade product, which replaces a large one-time payment with higher annual dues ($1,500-$3,500) in exchange for benefits like advanced booking windows and discounts, a change made based on customer feedback.

Jason Wayne noted the stabilization in campground membership counts and asked about the sales strategy for the new two-to-four-year membership subscriptions.

Answer

CEO Marguerite Nader confirmed a slight increase in member count for the first time in roughly ten quarters, driven by strong paid origination sales and a recovery in promotional memberships. She detailed the new dues-based upgrade product, which offers enhanced benefits for an increased annual fee of $1,500 to $3,500, shifting away from a large one-time payment model based on customer feedback.

Jason Wayne asked about the stabilizing campground membership count and the sales strategy behind the new two-to-four-year membership subscriptions.

Answer

CEO Marguerite Nader highlighted the first increase in member count in roughly ten quarters, driven by strong sales and promotional originations. She explained that a new dues-based upgrade product, with annual dues of $1,500-$3,500, was launched based on customer feedback to replace a one-time payment model, offering enhanced benefits.

Jason Wayne noted the stabilization in campground membership count and asked for details on the sales strategy for the new two-to-four-year membership subscriptions.

Answer

CEO Marguerite Nader confirmed a slight increase in member count after about ten quarters of negative growth, driven by strong paid origination sales and a rise in promotional memberships from RV dealers. She detailed the new dues-based upgrade product, which offers enhanced benefits for an increased annual fee of $1,500 to $3,500, shifting away from a large one-time payment model based on customer feedback.

Jason Wayne asked about the strategy for managing occupancy when known vacates occur, specifically regarding the recent sequential drop in occupancy. He also inquired about the expected pricing for debt raises in the U.S. and Europe for 2026.

Answer

Head of Asset Management Brooks Gordon explained that the recent vacancy uptick was temporary, primarily due to known vacates like Tesco and True Value warehouses, and Hellweg properties. He stated that roughly 30% of vacant square footage is resolved or closing imminently, with another 50% in active negotiations, expecting occupancy to normalize within a quarter or two. CEO Jason Fox indicated that U.S. debt pricing is anticipated in the low 5% range, while European debt is expected to be around high 3% to 4% for 2026 refinancings.

Jason Wayne asked about W. P. Carey's strategy for managing occupancy given known move-outs that led to a sequential drop, and the expected pricing for debt raises in the U.S. and Europe next year.

Answer

Brooks Gordon, Head of Asset Management, explained that the occupancy decline was a temporary spike due to known vacates (Tesco, True Value, Helveg warehouses) which are actively being resolved, with 30% already closed or closing imminently and 50% in active negotiations. He expects the vacancy rate to normalize within the next quarter or quarter and a half. Jason Fox, Chief Executive Officer, provided expected debt pricing for 2026 refinancings: low 5% in the U.S. and high 3% to around 4% in Europe.

Jason Wayne inquired about the reasons for the sequential decline in same-store growth in Europe, asking if it was driven by changes in the property pool or lease escalator structures.

Answer

CFO ToniAnn Sanzone attributed the change primarily to moderating CPI. She explained that a majority of leases have rent bumps in the first quarter based on prior months' inflation data, which had been trending lower. The decline was therefore more a function of lower inflation than any specific tenant or property-type issue.

Jason Wayne of Barclays asked for a breakdown of the increase in lease expirations by cause, such as bankruptcies, and inquired about the portfolio's exposure to Family Dollar after its separation from Dollar Tree.

Answer

CEO Sumit Roy did not provide a specific breakdown but noted a high 93% renewal rate suggests natural expirations were the main driver. He clarified that post-separation, the combined exposure is about 3% (2% Family Dollar, 1% Dollar Tree), with minimal near-term risk as only 10 basis points of leases for each brand expire through 2026.

Jason Wayne of Barclays inquired about the impairment charges recorded in the quarter, asking about the underlying strategic shift and whether the UK write-downs were related to the ground lease acquisitions. He also asked if the company plans to sell its UK operations.

Answer

EVP & CFO Fernando Castro-Caratini clarified that the impairment charges were not related to the ground lease deals but stemmed from a strategic shift to halt new greenfield development projects in both the US and UK. Chairman & CEO Gary Shiffman stated there are no current plans to sell the UK operations. The focus remains on supporting the UK team and executing the strategy of growing recurring property income, which is creating value.

Jason Wayne of Barclays noted a recent acquisition of a veterinarian retail property and asked for the company's outlook on that industry. He also inquired about what made FCPT comfortable pursuing more deals in this space, given the deal's cap rate was above recent levels.

Answer

William Lenehan, President, CEO & Director, positioned veterinarian properties within the company's medical retail strategy, calling it an interesting space. He acknowledged being cautious about private equity's role in the industry but confirmed that FCPT expects to do more deals in the sector, attracted by reasonable property bases and decent returns.

Jason Wayne of Barclays noted a recent acquisition of a veterinarian retail property at a relatively high cap rate and asked for FCPT's outlook on the industry and its comfort level with pursuing more deals in that sector.

Answer

President, CEO & Director William Lenehan positioned veterinarian properties within the company's medical retail strategy. He described the industry as an interesting space with decent returns, and while FCPT is wary of private equity's role, he confirmed that the company expects to do more deals in the sector going forward.

Jason Wayne of Barclays inquired about the small number of tenants not paying rent and asked about the historical re-leasing spreads FCPT has achieved on such properties.

Answer

CEO William Lenehan clarified that the non-payment issue is related to 'basically one tenant' in a couple of buildings, which he described as a 'very, very small, one-off thing.' The company is pursuing a personal guarantee and is already making progress on re-leasing the properties. He declined to comment on specific re-leasing spreads for the ongoing negotiations, given the small number of properties involved.