WPC: Slam Dunk? Rejected.

W.P. Carey (WPC) came out with a plan that could've been great. It could've been. Or in other words, it wasn't. 

Let's be clear. I'm not pulling any punches. WPC is a big net lease REIT with a strong record prior to today. They successfully navigated difficult environments.

What Happened?

WPC announced they would eliminate office from their portfolio. That's good. They decided they could do it faster by using a spin-off. That will make it a "pro rata special distribution" which is expected to be taxable.

That's not great since many shareholders may hold WPC in taxable accounts. It was a long-term dividend growth stock. It was suitable for many taxable accounts owned by income investors. The new REIT will be Net Lease Office Properties and the ticker will be (NLOP). Perhaps FLOP was unavailable.

I'm not thrilled with this choice. It wasn't optimal, but it's not enough to botch the plan.

Unfortunately, this transaction was structured to not require shareholder approval. If it did, shareholders may have rejected this terrible plan.

Dumb Decision

This is where things get stupid. 

WPC indicated that this plan was expected to result in the company being more appealing to many investors. It won't.