Exhibit 99.1
FOR IMMEDIATE RELEASE
COMPANY CONTACT: | PRESS CONTACT: | |
Kristina McMenamin | Guy Lawrence | |
W. P. Carey & Co. LLC | Ross & Lawrence | |
212-492-8995 | 212-308-3333 | |
kmcmenamin@wpcarey.com | gblawrence@rosslawpr.com |
CORRECTION
(NOVEMBER 6, 2009) While preparing our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, we determined that there was an error in our earnings release dated November 5, 2009 regarding the calculation of the provision for income taxes for the third quarter of 2009. As a result, the provision for income taxes for both the three and nine months ended September 30, 2009 was overstated by $0.5 million, and consequently our net income for each of those periods was understated by the same amount.
To mitigate any confusion from this correction, a copy of our November 5, 2009 earnings release, revised to reflect the above correction, is set forth below.
W. P. Carey Announces Third Quarter Financial Results
New York, NY — November 5, 2009 — Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today reported financial results for the third quarter ended September 30, 2009.
QUARTERLY AND NINE-MONTH RESULTS
• | Cash flows from operating activities for the nine months ended September 30, 2009 increased to $49.4 million from $47.5 million for the prior year period. | |
• | Adjusted cash flow from operating activities for the nine months ended September 30, 2009 was $71.3 million, compared to $70.1 million for the comparable period in 2008. | |
• | Total revenues net of reimbursed expenses for the third quarter of 2009 were $47.7 million, compared to $55.2 million for the third quarter of 2008. Total revenues net of reimbursed expenses for the nine months ended September 30, 2009 were $142.5 million, compared to $149.4 million for the comparable period in 2008. Reimbursed expenses are excluded from total revenues because they have no impact on net income. | |
• | Net income for the third quarter of 2009 was $13.4 million, compared to $19.2 million for the same period in 2008. For the nine months ended September 30, 2009, net income was $46.0 million, compared to $56.1 million for the comparable period in 2008. | |
• | Funds from operations (FFO) for the third quarter of 2009 were $30.2 million or $0.75 per diluted share, compared to $33.5 million or $0.83 per diluted share for the comparable period in 2008. FFO for the nine months ended September 30, 2009 was $89.2 million or $2.24 per diluted share, compared to $90.6 million or $2.25 per diluted share for the comparable period in 2008. | |
• | We incurred impairment charges of $2.4 million for the third quarter of 2009 and $4.7 million for the nine months ended September 30, 2009 and our CPA® REITs incurred impairment charges of $54.1 million for the quarter and $108.7 million for the nine months. This reduced the amount of income we recognize from these equity investments by approximately $3.6 million for the third quarter and $6.4 million for the nine-month period. We received approximately $10.5 million in cash distributions from our equity ownership in the CPA® REITs for the nine months ended September 30, 2009. | |
• | Further information concerning FFO and adjusted cash flow from operating activities, non-GAAP supplemental performance metrics, is presented in the accompanying tables. |
INVESTMENT, FUNDRAISING AND FINANCING ACTIVITY
• | Investment volume, for our own portfolio and on behalf of the CPA® REITs, for the nine months ended September 30, 2009 was $395.4 million, compared to $404.0 million for the comparable period in 2008. | |
• | In the third quarter, we closed two international transactions on behalf of the REITs—a $93.6 million sale-leaseback with UK retailer Tesco plc, our first Hungarian transaction, and a $27.5 million build-to-suit transaction with UK public transport provider National Express for their main coach terminal and headquarters building. | |
• | We continue to raise investor capital through our latest REIT offering, CPA®:17 — Global, so that we may take advantage of attractive investment opportunities that we believe are afforded by the current market environment. Through October 31, 2009, CPA®:17 — Global has raised more than $685 million of its up-to $2 billion offering. For the third quarter of 2009, we raised $124.6 million, compared to $100.3 million in the second quarter and $71.5 million in the first quarter of this year. |
• | Since the beginning of the credit crunch in September 2008, W. P. Carey and our CPA® REITs have secured more than $390 million in debt financings, including a $120 million loan with the Bank of China, New York Branch for The New York Times Company’s Midtown Manhattan headquarters that was purchased in March 2009. |
ASSETS UNDER MANAGEMENT
• | W. P. Carey is the advisor to the CPA® REITs, which had real estate assets of $7.9 billion and total assets of $8.4 billion as of September 30, 2009. |
• | As of September 30, 2009, the occupancy rate of our 16.7 million square foot owned portfolio was approximately 95%. In addition, for the 92.7 million square feet owned by the CPA® REITs, the occupancy rate was approximately 97%. |
DISTRIBUTIONS
• | The Board of Directors raised the quarterly cash distribution to $0.50 per share for the third quarter of 2009. The distribution was paid on October 15, 2009 to shareholders of record as of September 30, 2009. This was our 34th consecutive quarterly dividend increase. | |
• | Over the past 36 years, W. P. Carey and the CPA® programs have paid more than $3 billion to investors over 800 cash distributions. |
Gordon DuGan, President and CEO of W. P. Carey, said, “While our FFO for the quarter is down due to lower investment volume for the quarter, our adjusted cash flow year-to-date is up. Our fundraising for CPA®:17 — Global continued to increase in the third quarter and we are seeing a healthy investment pipeline today. We believe our fundraising efforts provide us the investment capital needed for future acquisitions, which will allow us to continue to grow our assets under management.”
CONFERENCE CALL & WEBCAST
Please call at least 10 minutes prior to call to register.
Time:Thursday, November 5, 2009 at 11:00 AM (ET)
Call-in Number:800-860-2442
(International) +1-412-858-4600
(International) +1-412-858-4600
Webcast:www.wpcarey.com/earnings
Podcast:www.wpcarey.com/podcast
Available after 2:00 PM (ET)
Available after 2:00 PM (ET)
Replay Number:877-344-7529
(International) +1-412-317-0088
(International) +1-412-317-0088
Replay Passcode:434585#
Replay Available until November 19, 2009 at midnight ET.
Replay Available until November 19, 2009 at midnight ET.
2
W. P. Carey & Co. LLC
W. P. Carey & Co. LLC is an investment firm that provides long-term sale-leaseback and build-to-suit financing for companies worldwide and manages a global investment portfolio approaching $10 billion. Publicly traded on the New York Stock Exchange (WPC), W. P. Carey and its CPA® series of income-generating, non-traded REITs help companies and private equity firms release capital tied up in real estate assets. The W. P. Carey Group’s investments are highly diversified, comprising contractual agreements with approximately 300 long-term corporate obligors spanning 28 industries and 15 countries.http://www.wpcarey.com.
Individuals interested in receiving future updates on W. P. Carey via e-mail can register atwww.wpcarey.com/alerts.
This press release contains forward-looking statements within the meaning of the Federal securities laws. A number of factors could cause the Company’s actual results, performance or achievement to differ materially from those anticipated. Among those risks, trends and uncertainties are the general economic climate; the supply of and demand for office and industrial properties; interest rate levels; the availability of financing; and other risks associated with the acquisition and ownership of properties, including risks that the tenants will not pay rent, or that costs may be greater than anticipated. For further information on factors that could impact the Company, reference is made to the Company’s filings with the Securities and Exchange Commission.
3
W. P. CAREY & CO. LLC
Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)
(in thousands, except share and per share amounts)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Revenues | ||||||||||||||||
Asset management revenue | $ | 19,106 | $ | 20,205 | $ | 57,441 | $ | 60,370 | ||||||||
Structuring revenue | 5,476 | 10,818 | 16,250 | 17,403 | ||||||||||||
Wholesaling revenue | 1,869 | 1,517 | 4,426 | 4,145 | ||||||||||||
Reimbursed costs from affiliates | 13,503 | 11,303 | 33,747 | 32,749 | ||||||||||||
Lease revenues | 17,448 | 18,816 | 52,690 | 57,187 | ||||||||||||
Other real estate income | 3,768 | 3,834 | 11,672 | 10,261 | ||||||||||||
61,170 | 66,493 | 176,226 | 182,115 | |||||||||||||
Operating Expenses | ||||||||||||||||
General and administrative | (14,970 | ) | (17,013 | ) | (48,246 | ) | (48,242 | ) | ||||||||
Reimbursable costs | (13,503 | ) | (11,303 | ) | (33,747 | ) | (32,749 | ) | ||||||||
Depreciation and amortization | (5,936 | ) | (6,293 | ) | (18,348 | ) | (18,460 | ) | ||||||||
Property expenses | (2,236 | ) | (1,735 | ) | (6,235 | ) | (5,267 | ) | ||||||||
Impairment charges | (2,390 | ) | — | (4,090 | ) | — | ||||||||||
Other real estate expenses | (1,758 | ) | (1,989 | ) | (5,596 | ) | (6,204 | ) | ||||||||
(40,793 | ) | (38,333 | ) | (116,262 | ) | (110,922 | ) | |||||||||
Other Income and Expenses | ||||||||||||||||
Other interest income | 470 | 753 | 1,278 | 2,193 | ||||||||||||
Income from equity investments in real estate and CPA® REITs | 2,923 | 2,272 | 9,866 | 10,917 | ||||||||||||
Gain on sale of investments in direct financing lease | — | 1,103 | — | 1,103 | ||||||||||||
Other income and (expenses) | 251 | (1,566 | ) | 3,532 | 3,093 | |||||||||||
Interest expense | (3,889 | ) | (5,004 | ) | (11,600 | ) | (14,579 | ) | ||||||||
(245 | ) | (2,442 | ) | 3,076 | 2,727 | |||||||||||
Income from continuing operations before income taxes | 20,132 | 25,718 | 63,040 | 73,920 | ||||||||||||
Provision for income taxes | (6,018 | ) | (5,839 | ) | (15,938 | ) | (20,405 | ) | ||||||||
Income from continuing operations | 14,114 | 19,879 | 47,102 | 53,515 | ||||||||||||
Discontinued Operations | ||||||||||||||||
Income (loss) from operations of discontinued properties | 70 | (40 | ) | (30 | ) | 3,666 | ||||||||||
Gain on sale of real estate | — | — | 343 | — | ||||||||||||
Impairment charges | — | (538 | ) | (580 | ) | (538 | ) | |||||||||
Income (loss) from discontinued operations | 70 | (578 | ) | (267 | ) | 3,128 | ||||||||||
Net Income | 14,184 | 19,301 | 46,835 | 56,643 | ||||||||||||
Add: Net loss attributable to noncontrolling interests | 186 | 238 | 559 | 578 | ||||||||||||
Less: Net income attributable to redeemable noncontrolling interests | (1,019 | ) | (341 | ) | (1,357 | ) | (1,074 | ) | ||||||||
Net Income Attributable to W. P. Carey Members | $ | 13,351 | $ | 19,198 | $ | 46,037 | $ | 56,147 | ||||||||
Basic Earnings Per Share | ||||||||||||||||
Income from continuing operations attributable to W. P. Carey members | $ | 0.33 | $ | 0.50 | $ | 1.16 | $ | 1.35 | ||||||||
Income (loss) from discontinued operations attributable to W. P. Carey members | — | (0.01 | ) | (0.01 | ) | 0.08 | ||||||||||
Net income attributable to W. P. Carey members | $ | 0.33 | $ | 0.49 | $ | 1.15 | $ | 1.43 | ||||||||
Diluted Earnings Per Share | ||||||||||||||||
Income from continuing operations attributable to W. P. Carey members | $ | 0.34 | $ | 0.49 | $ | 1.16 | $ | 1.32 | ||||||||
Income (loss) from discontinued operations attributable to W. P. Carey members | — | (0.01 | ) | (0.01 | ) | 0.08 | ||||||||||
Net income attributable to W. P. Carey members | $ | 0.34 | $ | 0.48 | $ | 1.15 | $ | 1.40 | ||||||||
Weighted Average Shares Outstanding | ||||||||||||||||
Basic | 39,727,460 | 39,294,889 | 39,163,186 | 39,125,329 | ||||||||||||
Diluted | 40,368,946 | 40,299,073 | 39,770,196 | 40,293,094 | ||||||||||||
Amounts Attributable to W. P. Carey Members | ||||||||||||||||
Income from continuing operations, net of tax | $ | 13,281 | $ | 19,776 | $ | 46,304 | $ | 53,019 | ||||||||
Income (loss) from discontinued operations, net of tax | 70 | (578 | ) | (267 | ) | 3,128 | ||||||||||
Net income | $ | 13,351 | $ | 19,198 | $ | 46,037 | $ | 56,147 | ||||||||
Distributions Declared Per Share | $ | 0.500 | $ | 0.492 | $ | 1.494 | $ | 1.461 | ||||||||
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W. P. CAREY & CO. LLC
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
(in thousands)
Nine months ended September 30, | ||||||||
2009 | 2008 | |||||||
Cash Flows — Operating Activities | ||||||||
Net income | $ | 46,835 | $ | 56,643 | ||||
Adjustments to net income: | ||||||||
Depreciation and amortization including intangible assets and deferred financing costs | 18,385 | 20,412 | ||||||
Income from equity investments in real estate and CPA® REITs in excess of distributions received | (4,303 | ) | (1,224 | ) | ||||
Straight-line rent adjustments | 1,560 | 1,718 | ||||||
Management income received in shares of affiliates | (23,451 | ) | (30,237 | ) | ||||
Gain on sale of real estate and investment in direct financing lease | (343 | ) | (1,103 | ) | ||||
Gain on extinguishment of debt | (6,991 | ) | — | |||||
Allocation of earnings to profit sharing interest | 3,976 | — | ||||||
Unrealized (gain) loss on foreign currency transactions, warrants and securities | (257 | ) | 324 | |||||
Realized gain on foreign currency transactions and other | (260 | ) | (1,567 | ) | ||||
Impairment charges | 4,670 | 538 | ||||||
Stock-based compensation expense | 7,777 | 5,894 | ||||||
Decrease in deferred acquisition revenue received | 23,109 | 46,695 | ||||||
Increase in structuring revenue receivable | (8,196 | ) | (8,845 | ) | ||||
Decrease in income taxes, net | (11,137 | ) | (6,527 | ) | ||||
Decrease in settlement provision | — | (29,979 | ) | |||||
Net changes in other operating assets and liabilities | (1,991 | ) | (5,250 | ) | ||||
Net cash provided by operating activities | 49,383 | 47,492 | ||||||
Cash Flows — Investing Activities | ||||||||
Distributions received from equity investments in real estate and CPA® REITs in excess of equity income | 33,917 | 7,566 | ||||||
Capital contributions to equity investments | (3,709 | ) | (1,361 | ) | ||||
Purchases of real estate and equity investments in real estate | (39,632 | ) | (184 | ) | ||||
Capital expenditures | (6,110 | ) | (8,355 | ) | ||||
VAT refunded on purchase of real estate | — | 3,189 | ||||||
Proceeds from sale of real estate and securities | 6,927 | 5,062 | ||||||
Proceeds from transfer of profit sharing interest | 21,928 | — | ||||||
Funds released from escrow in connection with the sale of property | — | 636 | ||||||
Payment of deferred acquisition revenue to affiliate | — | (120 | ) | |||||
Net cash provided by investing activities | 13,321 | 6,433 | ||||||
Cash Flows — Financing Activities | ||||||||
Distributions paid | (58,787 | ) | (67,987 | ) | ||||
Contributions from noncontrolling interests | 2,137 | 1,957 | ||||||
Distributions to noncontrolling interests | (4,589 | ) | (1,659 | ) | ||||
Distributions to profit sharing interest | (5,372 | ) | — | |||||
Scheduled payments of mortgage principal | (7,527 | ) | (7,196 | ) | ||||
Proceeds from mortgages and credit facilities | 158,994 | 122,968 | ||||||
Prepayments of mortgage principal and credit facilities | (137,436 | ) | (102,427 | ) | ||||
Proceeds from loan from affiliates | 1,625 | — | ||||||
Repayment of loan from affiliates | — | (7,569 | ) | |||||
Payment of financing costs, net of deposits refunded | (849 | ) | (375 | ) | ||||
Proceeds from issuance of shares | 1,356 | 21,242 | ||||||
Windfall tax benefits associated with stock-based compensation awards | 275 | 697 | ||||||
Repurchase and retirement of shares | (10,686 | ) | (5,134 | ) | ||||
Net cash used in financing activities | (60,859 | ) | (45,483 | ) | ||||
Change in Cash and Cash Equivalents During the Period | ||||||||
Effect of exchange rate changes on cash | 364 | (94 | ) | |||||
Net increase in cash and cash equivalents | 2,209 | 8,348 | ||||||
Cash and cash equivalents, beginning of period | 16,799 | 12,137 | ||||||
Cash and cash equivalents, end of period | $ | 19,008 | $ | 20,485 | ||||
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W. P. CAREY & CO. LLC
Financial Highlights (Unaudited)
(in thousands, except share and per share amounts)
(in thousands, except share and per share amounts)
These financial highlights include non-GAAP financial measures, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), funds from operations (“FFO”) and adjusted cash flow from operating activities. A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures is provided on the following pages.
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
EBITDA | ||||||||||||||||
Investment management | $ | 11,789 | $ | 18,207 | $ | 35,287 | $ | 48,726 | ||||||||
Real estate ownership | 17,412 | 18,229 | 56,791 | 61,170 | ||||||||||||
Total | $ | 29,201 | $ | 36,436 | $ | 92,078 | $ | 109,896 | ||||||||
FFO | ||||||||||||||||
Investment management | $ | 12,788 | $ | 17,579 | $ | 38,748 | $ | 37,704 | ||||||||
Real estate ownership | 17,445 | 15,963 | 50,455 | 52,919 | ||||||||||||
Total | $ | 30,233 | $ | 33,542 | $ | 89,203 | $ | 90,623 | ||||||||
EBITDA Per Share (Diluted) | ||||||||||||||||
Investment management | $ | 0.29 | $ | 0.45 | $ | 0.89 | $ | 1.21 | ||||||||
Real estate ownership | 0.43 | 0.45 | 1.43 | 1.52 | ||||||||||||
Total | $ | 0.72 | $ | 0.90 | $ | 2.32 | $ | 2.73 | ||||||||
FFO Per Share (Diluted) | ||||||||||||||||
Investment management | $ | 0.32 | $ | 0.43 | $ | 0.97 | $ | 0.94 | ||||||||
Real estate ownership | 0.43 | 0.40 | 1.27 | 1.31 | ||||||||||||
Total | $ | 0.75 | $ | 0.83 | $ | 2.24 | $ | 2.25 | ||||||||
Adjusted Cash Flow From Operating Activities | ||||||||||||||||
Adjusted cash flow | $ | 71,300 | $ | 70,081 | ||||||||||||
Adjusted cash flow per share (diluted) | $ | 1.79 | $ | 1.74 | ||||||||||||
Distributions declared per share | $ | 1.494 | $ | 1.461 | ||||||||||||
Payout ratio (distributions per share/adjusted cash flow per share) | 83 | % | 84 | % | ||||||||||||
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W. P. CAREY & CO. LLC
Reconciliation of Net Income to EBITDA (Unaudited)
(in thousands, except share and per share amounts)
(in thousands, except share and per share amounts)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Investment Management | ||||||||||||||||
Net income from investment management attributable to W. P. Carey members | $ | 5,059 | $ | 11,201 | $ | 17,718 | $ | 25,255 | ||||||||
Adjustments: | ||||||||||||||||
Provision for income taxes | 5,606 | 5,846 | 14,811 | 20,186 | ||||||||||||
Depreciation and amortization | 1,124 | 1,160 | 2,758 | 3,285 | ||||||||||||
EBITDA — investment management | $ | 11,789 | $ | 18,207 | $ | 35,287 | $ | 48,726 | ||||||||
EBITDA per share (diluted) | $ | 0.29 | $ | 0.45 | $ | 0.89 | $ | 1.21 | ||||||||
Real Estate Ownership | ||||||||||||||||
Net income from real estate ownership attributable to W. P. Carey members | $ | 8,292 | $ | 7,997 | $ | 28,319 | $ | 30,892 | ||||||||
Adjustments: | ||||||||||||||||
Interest expense | 3,889 | 5,004 | 11,600 | 14,579 | ||||||||||||
Provision for income taxes | 412 | (7 | ) | 1,127 | 219 | |||||||||||
Depreciation and amortization | 4,812 | 5,133 | 15,590 | 15,175 | ||||||||||||
Reconciling items attributable to discontinued operations | 7 | 102 | 155 | 305 | ||||||||||||
EBITDA — real estate ownership | $ | 17,412 | $ | 18,229 | $ | 56,791 | $ | 61,170 | ||||||||
EBITDA per share (diluted) | $ | 0.43 | $ | 0.45 | $ | 1.43 | $ | 1.52 | ||||||||
Total Company | ||||||||||||||||
EBITDA | $ | 29,201 | $ | 36,436 | $ | 92,078 | $ | 109,896 | ||||||||
EBITDA per share (diluted) | $ | 0.72 | $ | 0.90 | $ | 2.32 | $ | 2.73 | ||||||||
Diluted weighted average shares outstanding | 40,368,946 | 40,299,073 | 39,770,196 | 40,293,094 | ||||||||||||
Non-GAAP Financial Disclosure
EBITDA as disclosed represents earnings before interest, taxes, depreciation and amortization. We believe that EBITDA is a useful supplemental measure for assessing the performance of our business segments, although it does not represent net income that is computed in accordance with GAAP. Accordingly, EBITDA should not be considered an alternative for net income as an indicator of our financial performance. EBITDA may not be comparable to similarly titled measures of other companies.
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W. P. CAREY & CO. LLC
Reconciliation of Net Income to Funds From Operations (FFO) (Unaudited)
(in thousands, except share and per share amounts)
(in thousands, except share and per share amounts)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Investment Management | ||||||||||||||||
Net income from investment management attributable to W. P. Carey members | $ | 5,059 | $ | 11,201 | $ | 17,718 | $ | 25,255 | ||||||||
Amortization, deferred taxes and other non-cash charges | 1,247 | 2,290 | 5,166 | 3,777 | ||||||||||||
FFO from equity investments | 6,482 | 4,088 | 15,864 | 8,672 | ||||||||||||
FFO — investment management | $ | 12,788 | $ | 17,579 | $ | 38,748 | $ | 37,704 | ||||||||
FFO per share (diluted) | $ | 0.32 | $ | 0.43 | $ | 0.97 | $ | 0.94 | ||||||||
Real Estate Ownership | ||||||||||||||||
Net income from real estate ownership attributable to W. P. Carey members | $ | 8,292 | $ | 7,997 | $ | 28,319 | $ | 30,892 | ||||||||
Gain on sale of direct financing lease | — | (1,103 | ) | — | (1,103 | ) | ||||||||||
Gain on sale of real estate, net | — | — | (343 | ) | — | |||||||||||
Gain on extinguishment of debt, net(a) | — | — | (2,796 | ) | — | |||||||||||
Depreciation, amortization and other non-cash charges | 4,189 | 6,764 | 14,537 | 15,714 | ||||||||||||
Straight-line and other rent adjustments | 396 | (613 | ) | 808 | 715 | |||||||||||
Impairment charges | 2,390 | 538 | 4,670 | 538 | ||||||||||||
FFO from equity investments | 2,274 | 2,551 | 5,687 | 6,679 | ||||||||||||
Noncontrolling interests’ share of FFO | (96 | ) | (171 | ) | (427 | ) | (516 | ) | ||||||||
FFO — real estate ownership | $ | 17,445 | $ | 15,963 | $ | 50,455 | $ | 52,919 | ||||||||
FFO per share (diluted) | $ | 0.43 | $ | 0.40 | $ | 1.27 | $ | 1.31 | ||||||||
Total Company | ||||||||||||||||
FFO | $ | 30,233 | $ | 33,542 | $ | 89,203 | $ | 90,623 | ||||||||
FFO per share (diluted) | $ | 0.75 | $ | 0.83 | $ | 2.24 | $ | 2.25 | ||||||||
Diluted weighted average shares outstanding | 40,368,946 | 40,299,073 | 39,770,196 | 40,293,094 | ||||||||||||
Non-GAAP Financial Disclosure
Funds from operations (FFO) is a non-GAAP financial measure that is commonly used in evaluating real estate companies. Although the National Association of Real Estate Investment Trusts (NAREIT) has published a definition of FFO, real estate companies often modify this definition as they seek to provide financial measures that meaningfully reflect their operations. FFO should not be considered as an alternative to net income as an indication of a company’s operating performance or to cash flow from operating activities as a measure of its liquidity. It should be used in conjunction with GAAP net income. FFO disclosed by other REITs may not be comparable to our FFO calculation.
NAREIT’s definition of FFO adjusts GAAP net income to exclude depreciation and gains/losses from the sales of properties and adjusts for FFO applicable to unconsolidated partnerships and joint ventures. We calculate FFO in accordance with this definition and then include other adjustments to GAAP net income to adjust for certain non-cash charges such as amortization of intangibles, deferred income tax benefits and expenses, straight-line rents, stock compensation, impairment charges on real estate and unrealized foreign currency exchange gains and losses. We exclude these items from GAAP net income as they are not the primary drivers in our decision making process. Our assessment of our operations is focused on long term sustainability and not on such non-cash items which may cause short-term fluctuations in net income but that have no impact on cash flows.
(a) | In January 2009, Carey Storage repaid, in full, the $35 million outstanding balance on its secured credit facility for $28 million and recognized a gain of $7 million on the repayment of this debt at a discount, inclusive of profit sharing interest of $4.2 million. |
8
W. P. CAREY & CO. LLC
Adjusted Cash Flow from Operating Activities (Unaudited)
(in thousands, except share and per share amounts)
Adjusted Cash Flow from Operating Activities (Unaudited)
(in thousands, except share and per share amounts)
Nine months ended September 30, | ||||||||
2009 | 2008 | |||||||
Cash flow from operating activities — as reported | $ | 49,383 | $ | 47,492 | ||||
Adjustments: | ||||||||
Distributions received from equity investments in real estate in excess of equity income (a) | 15,285 | 7,265 | ||||||
Contributions received from noncontrolling interests, net (b) | (382 | ) | — | |||||
Changes in working capital(c) | 7,014 | 6,603 | ||||||
CPA®:16 — Global performance adjustment, net(d) | — | (12,291 | ) | |||||
Settlement payment(e) | — | 21,012 | ||||||
Adjusted cash flow from operating activities | $ | 71,300 | $ | 70,081 | ||||
Adjusted cash flow per share (diluted) | $ | 1.79 | $ | 1.74 | ||||
Distributions declared per share | $ | 1.494 | $ | 1.461 | ||||
Payout ratio (distributions per share/adjusted cash flow per share) | 83 | % | 84 | % | ||||
Diluted weighted average shares outstanding | 39,770,196 | 40,293,094 | ||||||
Non-GAAP Financial Disclosure
Adjusted cash flow from operating activities is a non-GAAP financial measure that represents cash flow from operating activities on a GAAP basis adjusted for certain timing differences and deferrals as described below. We believe that adjusted cash flow from operating activities is a useful supplemental measure for assessing the cash flow generated from our core operations and is used in evaluating distributions to shareholders. Adjusted cash flow from operating activities should not be considered as an alternative for cash flow from operating activities computed on a GAAP basis as a measure of our liquidity. Adjusted cash flow from operating activities may not be comparable to similarly titled measures of other companies.
(a) | We take a substantial portion of our asset management revenue in shares of the CPA® REIT funds. To the extent we receive distributions in excess of the equity income that we recognize, we include such amounts in our evaluation of cash flow from core operations. | |
(b) | Represents noncontrolling interests’ share of contributions/distributions made by ventures that we consolidate in our financial statements. This adjustment in the calculation of adjusted cash flow from operating activities was introduced during the fourth quarter of 2008 because we believe that it results in a more accurate presentation of this supplemental measure. | |
(c) | Timing differences arising from the payment of certain liabilities in a period other than that in which the expense is recognized in determining net income may distort the actual cash flow that our core operations generate. We adjust our GAAP cash flow from operating activities to record such amounts in the period in which the liability was actually incurred. We believe this is a fairer measure of determining our cash flow from core operations. | |
(d) | Amounts deferred in lieu of CPA®:16 — Global achieving its performance criterion, net of a 45% tax provision. In determining cash flow generated from our core operations, we believe it is more appropriate to normalize cash flow for the impact of CPA®:16 — Global achieving its performance criterion, rather than recognizing the entire deferred amount in the quarter in which the performance criterion was met (second quarter of 2007), as this revenue was actually earned over a three-year period. | |
(e) | In March 2008, we entered into a settlement with the SEC with respect to all matters relating to their investigation. As a result, we paid $30 million in the first quarter of 2008 and recognized an offsetting $9 million tax benefit in the same period. |
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