Exhibit 99.1
FOR IMMEDIATE RELEASE
Institutional Investors:
Peter Sands
W. P. Carey Inc.
212-492-1110
psands@wpcarey.com
Individual Investors:
W. P. Carey Inc.
212-492-8920
ir@wpcarey.com
Press Contact:
Guy Lawrence
Ross & Lawrence
212-308-3333
gblawrence@rosslawpr.com
W. P. Carey Inc. Announces Second Quarter 2014 Financial Results
New York, NY – August 5, 2014 – W. P. Carey Inc. (NYSE: WPC) (W. P. Carey or the Company), a global net-lease real estate investment trust, today reported its financial results for the second quarter ended June 30, 2014.
Financial Update – Second Quarter 2014
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| • | Revenues of $252.9 million and revenues, excluding reimbursable expenses, of $205.2 million |
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| • | AFFO of $122.2 million, equivalent to $1.21 per diluted share |
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| • | Quarterly dividend of $0.90, equivalent to an annualized dividend rate of $3.60 per share |
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| • | Full year 2014 AFFO guidance range raised to $4.62 to $4.82 per diluted share |
Business Update – Second Quarter 2014
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| • | Acquired one property for $47.2 million |
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| • | Disposed of 15 properties for total proceeds of $170.6 million |
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| • | Owned portfolio occupancy of 98.5% |
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| • | Structured $559.3 million of investments on behalf of the Managed REITs |
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| • | Raised $492.4 million on behalf of the Managed REITs |
MANAGEMENT COMMENTARY
“We have better clarity on our earnings capacity now that we have completed our first full quarter following the merger with CPA®:16 – Global and also have enhanced our supplemental disclosure,” said W. P. Carey President and CEO, Trevor Bond. “We continued to be an active capital recycler in the second quarter, disposing of several smaller properties with relatively short lease terms while focusing on building an opportunity pipeline containing longer-duration assets. Also, our investment management business generated strong revenues as a result of robust fundraising and transaction volumes on behalf of the Managed REITs.
W. P. Carey Inc. 6/30/2014 Earnings Release 8-K – 1
"Given the AFFO generated during the first six months and with greater visibility into the second half of the year, we are pleased to announce that we are raising our full year AFFO guidance range to $4.62 to $4.82 per diluted share.”
FINANCIAL RESULTS
Revenues
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| • | Total Company: Revenues, excluding reimbursable costs, for the 2014 second quarter totaled $205.2 million, up 25.7% from $163.3 million for the 2014 first quarter, and up 119.0% from $93.7 million for the 2013 second quarter. In each case, the increase was due primarily to additional real estate revenues from properties acquired in the Company’s merger with CPA®:16 – Global, which closed on January 31, 2014 (the CPA®:16 Merger). |
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| • | Real Estate Ownership: Real estate revenues, excluding reimbursable tenant costs, for the 2014 second quarter were $171.0 million, up 32.5% from $129.1 million for the 2014 first quarter, and up 129.2% from $74.6 million for the 2013 second quarter. In each case, the increase was due primarily to additional lease revenues from properties acquired in the CPA®:16 Merger. |
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| • | Investment Management: Revenues from the Managed REITs, excluding reimbursable costs, for the 2014 second quarter were $34.2 million, virtually unchanged from the 2014 first quarter as higher dealer manager fees were principally offset by the cessation of asset management revenue from CPA®:16 – Global upon completion of the CPA®:16 Merger. Compared to the 2013 second quarter, revenues from the Managed REITs, excluding reimbursable costs, increased 79.1% from $19.1 million, due primarily to higher structuring revenue and higher dealer manager fees resulting from increased activity on behalf of the Managed REITs. |
Adjusted Funds from Operations (AFFO)
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| • | AFFO for the 2014 second quarter was $122.2 million, which included the impact of properties acquired in the CPA®:16 Merger for three months, versus two months for the 2014 first quarter. This compares to AFFO of $118.2 million for the 2014 first quarter, which also included the impact of a tax benefit in connection with the payment of annual incentive compensation. |
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| • | AFFO per diluted share for the 2014 second quarter was $1.21, which included the impact of: (i) properties acquired in the CPA®:16 Merger for three months, versus two months for the 2014 first quarter; and (ii) 30.7 million shares issued in connection with the CPA®:16 Merger in weighted average shares outstanding for three months, versus two months for the 2014 first quarter. This compares to AFFO per diluted share for the 2014 first quarter of $1.31, which also included the impact of a tax benefit in connection with the payment of annual incentive compensation. |
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| • | Compared to the 2013 second quarter, AFFO and AFFO per diluted share increased 68.3% and 15.2%, respectively, from $72.6 million, or $1.05 per diluted share, due primarily to additional real estate revenues from properties acquired in the CPA®:16 Merger. |
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| • | Note: Further information concerning AFFO, a non-GAAP supplemental performance metric, is presented in the accompanying tables and related notes. |
Dividend
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| • | As previously announced, on June 19, 2014 the Company’s Board of Directors declared a quarterly cash dividend of $0.90 per share, equivalent to an annualized dividend rate of $3.60 per share, which was paid on July 15, 2014 to stockholders of record as of the close of business on June 30, 2014. The dividend represented a 0.6% increase over the 2014 first quarter and was the Company’s 53rd consecutive quarterly increase. |
W. P. Carey Inc. 6/30/2014 Earnings Release 8-K – 2
AFFO GUIDANCE
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| • | The Company has raised its 2014 full year AFFO guidance range to $4.62 to $4.82 per diluted share, up from its previously announced range of $4.40 to $4.65 per diluted share, based on assumed full year 2014 total acquisition volume of approximately $1.9 billion to $2.6 billion, including approximately $1.4 billion to $2.0 billion on behalf of the Managed REITs. |
BALANCE SHEET AND CAPITALIZATION
Mortgage Prepayments
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| • | During the 2014 second quarter, in connection with its long-term plan to become a primarily unsecured borrower, the Company prepaid non-recourse mortgage loans with an aggregate outstanding principal balance of $85.0 million, which was in addition to scheduled mortgage loan principal payments totaling $44.9 million. |
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| • | As a result, for the six months ended June 30, 2014, principal prepayments on non-recourse mortgage loans totaled $201.8 million and scheduled mortgage loan principal payments totaled $61.6 million. |
OWNED REAL ESTATE PORTFOLIO
Acquisitions and Dispositions
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| • | During the 2014 second quarter, the Company completed one investment for $47.2 million and disposed of 15 properties for total gross proceeds of $170.6 million as part of its active capital recycling program, intended to extend the portfolio’s average lease term, improve overall portfolio credit quality and increase asset criticality within the portfolio. |
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| • | Transactions during the 2014 second quarter brought total acquisitions and dispositions for the six months ended June 30, 2014 to $89.1 million and $298.3 million, respectively. |
Composition
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| • | As of June 30, 2014, the Company’s owned portfolio consisted of 686 net-leased properties, comprising 81.8 million square feet leased to 216 tenants, and four operating properties. As of that date, the average lease term of the net-leased portfolio was 8.6 years and the occupancy rate was 98.5%. |
INVESTMENT MANAGEMENT
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| • | W. P. Carey is the advisor to CPA®:17 – Global, CPA®:18 – Global (together the CPA® REITs) and Carey Watermark Investors Incorporated (CWI) (together the Managed REITs). At June 30, 2014, the Managed REITs, in aggregate, had total assets under management of approximately $8.2 billion. |
Acquisitions
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| • | During the 2014 second quarter, the Company structured ten new investments totaling $151.9 million on behalf of the CPA® REITs, bringing total acquisitions for the six months ended June 30, 2014 to $526.8 million. In addition, during the 2014 second quarter the Company structured new investments in five hotels totaling $407.4 million on behalf of CWI. |
W. P. Carey Inc. 6/30/2014 Earnings Release 8-K – 3
Fundraising
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| • | During the 2014 second quarter, the Company raised $492.4 million on behalf of the Managed REITs, comprised of $398.7 million on behalf of CPA®:18 – Global in its initial public offering and $93.7 million on behalf of CWI in its follow-on offering, bringing the total raised on behalf of the Managed REITs during the six months ended June 30, 2014 to $909.0 million. |
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| • | In May 2014, the board of directors of CPA®:18 – Global approved the discontinuation of sales of its Class A common stock through June 30, 2014 in order to moderate the pace of its fundraising. In order to facilitate the final sales of Class A shares as of June 30, 2014 and the continued sale of Class C shares, the board of directors of CPA®:18 – Global also approved the reallocation to its initial public offering of up to $250.0 million of the shares that were initially allocated to sales of its stock through its dividend reinvestment plan. |
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Supplemental Information
The Company has provided supplemental unaudited financial and operating information regarding the 2014 second quarter, including a description of non-GAAP financial measures and reconciliations to GAAP measures, in a Current Report on Form 8-K filed with the SEC on August 5, 2014.
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Live Conference Call and Audio Webcast Scheduled for 11:00 a.m. Eastern Time
Please call to register at least 15 minutes prior to the start time.
Date/Time: Tuesday, August 5, 2014 at 11:00 a.m. Eastern Time
Call-in Number: +1-877-317-6789 (US) or +1-412-317-6789 (international)
Audio Webcast: www.wpcarey.com/earnings
Audio Webcast Replay
An audio replay of the call will be available at www.wpcarey.com/earnings.
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W. P. Carey Inc.
W. P. Carey Inc. is a leading global net-lease REIT that provides long-term sale-leaseback and build-to-suit financing solutions for companies worldwide. At June 30, 2014, the Company had an enterprise value of approximately $9.9 billion. In addition to its owned portfolio of diversified global real estate, W. P. Carey manages a series of non-traded REITs with assets under management of approximately $8.2 billion. Its corporate finance-focused credit and real estate underwriting process is a constant that has been successfully leveraged across a wide variety of industries and property types. Furthermore, its portfolio of long-term leases with creditworthy tenants has an established history of generating stable cash flows, enabling it to deliver consistent and rising dividend income to investors for over four decades.
www.wpcarey.com
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W. P. Carey Inc. 6/30/2014 Earnings Release 8-K – 4
Cautionary Statement Concerning Forward-Looking Statements:
Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Act and the Exchange Act, both as amended by the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, among other things, statements regarding the intent, belief, or expectations of W. P. Carey and can be identified by the use of words such as “may,” “will,” “should,” “would,” “assume,” “outlook,” “seek,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” and other comparable terms. These forward-looking statements include, but are not limited to, the statements made by Mr. Bond as well as statements regarding the benefits of the CPA®:16 Merger, annualized dividends, funds from operations coverage and guidance, plans to become a primarily unsecured borrower through mortgage prepayments, and with regard to its capital recycling and intended results thereof, and anticipated future financial and operating performance and results, including estimates of growth. These statements are based on the current expectations of the management of W. P. Carey. It is important to note that W. P. Carey’s actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results, performance, or achievements of W. P. Carey. Discussions of some of these other important factors and assumptions are contained in W. P. Carey’s filings with the SEC and are available at the SEC’s website at http://www.sec.gov, including Item 1A. Risk Factors in W. P. Carey’s Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the SEC on March 3, 2014. In light of these risks, uncertainties, assumptions, and factors, the forward-looking events discussed in this communication may not occur. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication, unless noted otherwise. Except as required under the federal securities laws and the rules and regulations of the SEC, W. P. Carey does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this communication or to reflect the occurrence of unanticipated events.
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W. P. Carey Inc. 6/30/2014 Earnings Release 8-K – 5
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| | | | | | | |
| W. P. CAREY INC. |
| Consolidated Balance Sheets (Unaudited) |
| (in thousands) |
| | June 30, 2014 | | December 31, 2013 |
| Assets | | | |
| Investments in real estate: | | | |
| Real estate, at cost | $ | 4,497,999 |
| | $ | 2,516,325 |
|
| Operating real estate, at cost | 84,544 |
| | 6,024 |
|
| Accumulated depreciation | (217,155 | ) | | (168,958 | ) |
| Net investments in properties | 4,365,388 |
| | 2,353,391 |
|
| Net investments in direct financing leases | 880,000 |
| | 363,420 |
|
| Assets held for sale | — |
| | 86,823 |
|
| Equity investments in real estate and the Managed REITs | 211,225 |
| | 530,020 |
|
| Net investments in real estate | 5,456,613 |
| | 3,333,654 |
|
| Cash and cash equivalents | 214,971 |
| | 117,519 |
|
| Due from affiliates | 39,516 |
| | 32,034 |
|
| Goodwill | 698,891 |
| | 350,208 |
|
| In-place lease intangible assets, net | 966,406 |
| | 467,127 |
|
| Above-market rent intangible assets, net | 570,498 |
| | 241,975 |
|
| Other assets, net | 346,853 |
| | 136,433 |
|
| Total Assets | $ | 8,293,748 |
| | $ | 4,678,950 |
|
| | | | |
| Liabilities and Equity | | | |
| Liabilities: | | | |
| Non-recourse debt | $ | 2,823,415 |
| | $ | 1,492,410 |
|
| Senior credit facility and unsecured term loan | 476,700 |
| | 575,000 |
|
| Senior unsecured notes | 498,255 |
| | — |
|
| Below-market rent and other intangible liabilities, net | 180,364 |
| | 128,202 |
|
| Accounts payable, accrued expenses and other liabilities | 298,432 |
| | 166,385 |
|
| Deferred income taxes | 87,991 |
| | 39,040 |
|
| Distributions payable | 90,610 |
| | 67,746 |
|
| Total liabilities | 4,455,767 |
| | 2,468,783 |
|
| Redeemable noncontrolling interest | 6,418 |
| | 7,436 |
|
| | | | |
| Equity: | | | |
| W. P. Carey stockholders’ equity: | | | |
| Preferred stock (None issued) | — |
| | — |
|
| Common stock | 100 |
| | 69 |
|
| Additional paid-in capital | 4,024,039 |
| | 2,256,503 |
|
| Distributions in excess of accumulated earnings | (327,460 | ) | | (318,577 | ) |
| Deferred compensation obligation | 30,624 |
| | 11,354 |
|
| Accumulated other comprehensive income | 14,215 |
| | 15,336 |
|
| Less: treasury stock at cost | (60,948 | ) | | (60,270 | ) |
| Total W. P. Carey stockholders’ equity | 3,680,570 |
| | 1,904,415 |
|
| Noncontrolling interests | 150,993 |
| | 298,316 |
|
| Total equity | 3,831,563 |
| | 2,202,731 |
|
| Total Liabilities and Equity | $ | 8,293,748 |
| | $ | 4,678,950 |
|
W. P. Carey Inc. 6/30/2014 Earnings Release 8-K – 6
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| | | | | | | | | | | |
| W. P. CAREY INC. |
| Quarterly Consolidated Statements of Income (Unaudited) |
| (in thousands, except share and per share amounts) |
| | Three Months Ended |
| | June 30, 2014 | | March 31, 2014 | | June 30, 2013 |
| Revenues | | | (Revised) (a) | | |
| Real estate revenues: | | | | | |
| Lease revenues | $ | 148,253 |
| | $ | 123,068 |
| | $ | 73,984 |
|
| Reimbursable tenant costs | 5,749 |
| | 6,014 |
| | 3,040 |
|
| Operating property revenues | 8,251 |
| | 4,992 |
| | 231 |
|
| Lease termination income and other | 14,481 |
| | 1,000 |
| | 402 |
|
| | 176,734 |
| | 135,074 |
| | 77,657 |
|
| Revenues from the Managed REITs: | | | | | |
| Reimbursable costs | 41,925 |
| | 39,732 |
| | 15,467 |
|
| Structuring revenue | 17,254 |
| | 17,750 |
| | 6,422 |
|
| Asset management revenue | 9,045 |
| | 9,777 |
| | 10,355 |
|
| Dealer manager fees | 7,949 |
| | 6,676 |
| | 2,320 |
|
| | 76,173 |
| | 73,935 |
| | 34,564 |
|
| | 252,907 |
| | 209,009 |
| | 112,221 |
|
| Operating Expenses | |
| | | | |
|
| Depreciation and amortization | 63,445 |
| | 52,673 |
| | 29,772 |
|
| Reimbursable tenant and affiliate costs | 47,674 |
| | 45,746 |
| | 18,507 |
|
| General and administrative | 19,133 |
| | 22,671 |
| | 14,545 |
|
| Property expenses, excluding reimbursable tenant costs | 11,209 |
| | 8,418 |
| | 2,282 |
|
| Stock-based compensation expense | 7,957 |
| | 7,043 |
| | 8,429 |
|
| Dealer manager fees and expenses | 6,285 |
| | 5,424 |
| | 3,163 |
|
| Subadvisor fees | 2,451 |
| | 18 |
| | 985 |
|
| Impairment charges | 2,066 |
| | — |
| | — |
|
| Merger and acquisition expenses | 1,137 |
| | 29,613 |
| | 3,128 |
|
| | 161,357 |
| | 171,606 |
| | 80,811 |
|
| Other Income and Expenses | |
| | | | |
|
| Net income from equity investments in real estate and the Managed REITs | 9,452 |
| | 14,262 |
| | 32,541 |
|
Gain on change in control of interests (a) | — |
| | 104,645 |
| | — |
|
| Interest expense | (47,733 | ) | | (39,075 | ) | | (25,750 | ) |
| Other income and (expenses) | (883 | ) | | (5,451 | ) | | 2,450 |
|
| | (39,164 | ) | | 74,381 |
| | 9,241 |
|
| Income from continuing operations before income taxes | 52,386 |
| | 111,784 |
| | 40,651 |
|
| (Provision for) benefit from income taxes | (8,053 | ) | | (2,240 | ) | | 1,134 |
|
| Income from continuing operations before (loss) gain on sale of real estate | 44,333 |
| | 109,544 |
| | 41,785 |
|
| Income from discontinued operations, net of tax | 26,460 |
| | 6,392 |
| | 4,364 |
|
| (Loss) gain on sale of real estate, net of tax | (3,821 | ) | | 80 |
| | (333 | ) |
| Net Income | 66,972 |
| | 116,016 |
| | 45,816 |
|
| Net income attributable to noncontrolling interests | (2,344 | ) | | (1,578 | ) | | (2,692 | ) |
| Net loss (income) attributable to redeemable noncontrolling interest | 111 |
| | (262 | ) | | 43 |
|
| Net Income Attributable to W. P. Carey | $ | 64,739 |
| | $ | 114,176 |
| | $ | 43,167 |
|
| Basic Earnings Per Share | |
| | | | |
|
| Income from continuing operations attributable to W. P. Carey | $ | 0.38 |
| | $ | 1.20 |
| | $ | 0.57 |
|
| Income from discontinued operations attributable to W. P. Carey | 0.26 |
| | 0.07 |
| | 0.06 |
|
| Net Income Attributable to W. P. Carey | $ | 0.64 |
| | $ | 1.27 |
| | $ | 0.63 |
|
| Diluted Earnings Per Share | |
| | | | |
|
| Income from continuing operations attributable to W. P. Carey | $ | 0.38 |
| | $ | 1.19 |
| | $ | 0.56 |
|
| Income from discontinued operations attributable to W. P. Carey | 0.26 |
| | 0.07 |
| | 0.06 |
|
| Net Income Attributable to W. P. Carey | $ | 0.64 |
| | $ | 1.26 |
| | $ | 0.62 |
|
| Weighted Average Shares Outstanding | |
| | | | |
|
| Basic | 100,236,362 |
| | 89,366,055 |
| | 68,406,771 |
|
| Diluted | 100,995,225 |
| | 90,375,311 |
| | 69,493,902 |
|
| Amounts Attributable to W. P. Carey | |
| | | | |
|
| Income from continuing operations, net of tax | $ | 38,236 |
| | $ | 107,636 |
| | $ | 39,133 |
|
| Income from discontinued operations, net of tax | 26,503 |
| | 6,540 |
| | 4,034 |
|
| Net Income | $ | 64,739 |
| | $ | 114,176 |
| | $ | 43,167 |
|
| Distributions Declared Per Share | $ | 0.900 |
| | $ | 0.895 |
| | $ | 0.840 |
|
W. P. Carey Inc. 6/30/2014 Earnings Release 8-K – 7
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| | | | | | | |
| W. P. CAREY INC. |
| Year-to-Date Consolidated Statements of Income (Unaudited) |
| (in thousands, except share and per share amounts) |
| | Six Months Ended June 30, |
| | 2014 (a) | | 2013 |
| Revenues | | | |
| Real estate revenues: | | | |
| Lease revenues | $ | 271,320 |
| | $ | 146,444 |
|
| Reimbursable tenant costs | 11,763 |
| | 6,157 |
|
| Operating property revenues | 13,244 |
| | 458 |
|
| Lease termination income and other | 15,479 |
| | 1,082 |
|
| | 311,806 |
| | 154,141 |
|
| Revenues from the Managed REITs: | | | |
| Reimbursable costs | 81,657 |
| | 27,435 |
|
| Structuring revenue | 35,005 |
| | 12,764 |
|
| Asset management revenue | 18,822 |
| | 20,369 |
|
| Dealer manager fees | 14,626 |
| | 3,542 |
|
| | 150,110 |
| | 64,110 |
|
| | 461,916 |
| | 218,251 |
|
| Operating Expenses | |
| | |
|
| Depreciation and amortization | 116,118 |
| | 59,147 |
|
| Reimbursable tenant and affiliate costs | 93,420 |
| | 33,592 |
|
| General and administrative | 41,802 |
| | 31,596 |
|
| Merger and acquisition expenses | 30,751 |
| | 3,249 |
|
| Property expenses, excluding reimbursable tenant costs | 19,627 |
| | 4,047 |
|
| Stock-based compensation expense | 15,000 |
| | 17,578 |
|
| Dealer manager fees and expenses | 11,710 |
| | 5,126 |
|
| Subadvisor fees | 2,469 |
| | 1,670 |
|
| Impairment charges | 2,066 |
| | — |
|
| | 332,963 |
| | 156,005 |
|
| Other Income and Expenses | |
| | |
|
| Net income from equity investments in real estate and the Managed REITs | 23,714 |
| | 43,197 |
|
Gain on change in control of interests (a) | 104,645 |
| | — |
|
| Interest expense | (86,808 | ) | | (51,334 | ) |
| Other income and (expenses) | (6,335 | ) | | 3,849 |
|
| | 35,216 |
| | (4,288 | ) |
| Income from continuing operations before income taxes | 164,169 |
| | 57,958 |
|
| (Provision for) benefit from income taxes | (10,293 | ) | | 2,341 |
|
| Income from continuing operations before loss on sale of real estate | 153,876 |
| | 60,299 |
|
| Income from discontinued operations, net of tax | 32,853 |
| | 1,688 |
|
| Loss on sale of real estate, net of tax | (3,742 | ) | | (332 | ) |
| Net Income | 182,987 |
| | 61,655 |
|
| Net income attributable to noncontrolling interests | (3,921 | ) | | (4,400 | ) |
| Net (income) loss attributable to redeemable noncontrolling interest | (151 | ) | | 93 |
|
| Net Income Attributable to W. P. Carey | $ | 178,915 |
| | $ | 57,348 |
|
| Basic Earnings Per Share | |
| | |
|
| Income from continuing operations attributable to W. P. Carey | $ | 1.53 |
| | $ | 0.81 |
|
| Income from discontinued operations attributable to W. P. Carey | 0.35 |
| | 0.02 |
|
| Net Income Attributable to W. P. Carey | $ | 1.88 |
| | $ | 0.83 |
|
| Diluted Earnings Per Share | |
| | |
|
| Income from continuing operations attributable to W. P. Carey | $ | 1.52 |
| | $ | 0.80 |
|
| Income from discontinued operations attributable to W. P. Carey | 0.34 |
| | 0.01 |
|
| Net Income Attributable to W. P. Carey | $ | 1.86 |
| | $ | 0.81 |
|
| Weighted Average Shares Outstanding | |
| | |
|
| Basic | 94,855,067 |
| | 68,776,108 |
|
| Diluted | 95,857,916 |
| | 69,870,849 |
|
| Amounts Attributable to W. P. Carey | |
| | |
|
| Income from continuing operations, net of tax | $ | 145,884 |
| | $ | 56,268 |
|
| Income from discontinued operations, net of tax | 33,031 |
| | 1,080 |
|
| Net Income | $ | 178,915 |
| | $ | 57,348 |
|
| Distributions Declared Per Share | $ | 1.795 |
| | $ | 1.660 |
|
W. P. Carey Inc. 6/30/2014 Earnings Release 8-K – 8
__________
| |
| (a) | Gain on change in control of interests for the three months ended March 31, 2014 represents a gain of $74.4 million recognized on our previously-held interest in shares of CPA®:16 – Global common stock, and a gain of $30.2 million recognized on the purchase of the remaining interests in nine investments from CPA®:16 – Global, which we had previously accounted for under the equity method. During the six months ended June 30, 2014, one of these investments was sold. During the second quarter of 2014, we identified certain measurement period adjustments which increased the fair value of our previously-held interest in shares of CPA®:16 – Global common stock by $1.3 million. We did not record this adjustment during the three months ended June 30, 2014 but rather in the three months ended March 31, 2014. Consequently, amounts presented above for gain on change in control of interests and net income for the three months ended March 31, 2014 differ from amounts presented in the first quarter filings. |
W. P. Carey Inc. 6/30/2014 Earnings Release 8-K – 9
W. P. CAREY INC.
Quarterly Reconciliation of Net Income to Adjusted Funds From Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
|
| | | | | | | | | | | |
| | Three Months Ended |
| | June 30, 2014 | | March 31, 2014 | | June 30, 2013 |
| Real Estate Ownership | | | (Revised) (a) | | |
| Net income from Real Estate Ownership attributable to W. P. Carey | $ | 61,469 |
| | $ | 111,691 |
| | $ | 43,107 |
|
| Adjustments: | | | | | |
| Depreciation and amortization of real property | 62,354 |
| | 51,620 |
| | 30,170 |
|
| Impairment charges | 2,066 |
| | — |
| | 1,671 |
|
| Gain on sale of real estate, net | (25,582 | ) | | (3,176 | ) | | (981 | ) |
| Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO | 533 |
| | 1,265 |
| | (16,304 | ) |
| Proportionate share of adjustments for noncontrolling interests to arrive at FFO | (2,586 | ) | | (3,492 | ) | | (4,247 | ) |
| Total adjustments | 36,785 |
| | 46,217 |
| | 10,309 |
|
| FFO (as defined by NAREIT) - Real Estate Ownership | 98,254 |
| | 157,908 |
| | 53,416 |
|
| Adjustments: | | | | | |
Gain on change in control of interests (a) | — |
| | (104,645 | ) | | — |
|
Merger and acquisition expenses (b) | 915 |
| | 29,511 |
| | 218 |
|
| Loss (gain) on extinguishment of debt | 721 |
| | 7,463 |
| | (141 | ) |
| Other gains, net | (13 | ) | | (3 | ) | | — |
|
| Other depreciation, amortization and non-cash charges | 1,719 |
| | 483 |
| | (515 | ) |
| Stock-based compensation | 220 |
| | 220 |
| | 911 |
|
| Deferred tax benefit | (1,246 | ) | | (5,944 | ) | | (21 | ) |
Acquisition expenses (c) | 224 |
| | 100 |
| | 2,909 |
|
| Realized losses on foreign currency, derivatives and other | 156 |
| | 655 |
| | 102 |
|
| Amortization of deferred financing costs | 999 |
| | 873 |
| | 549 |
|
| Straight-line and other rent adjustments | (8,999 | ) | | (2,669 | ) | | (2,277 | ) |
| Above- and below-market rent intangible lease amortization, net | 17,124 |
| | 13,486 |
| | 7,237 |
|
| Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO | (32 | ) | | 5 |
| | 279 |
|
| AFFO adjustments to equity earnings from equity investments | 935 |
| | 2,936 |
| | 10,718 |
|
| Proportionate share of adjustments for noncontrolling interests to arrive at AFFO | 259 |
| | (1,417 | ) | | (1,083 | ) |
| Total adjustments | 12,982 |
| | (58,946 | ) | | 18,886 |
|
| AFFO - Real Estate Ownership | $ | 111,236 |
| | $ | 98,962 |
| | $ | 72,302 |
|
| | | | | | |
| Investment Management | | | | | |
| Net income from Investment Management attributable to W. P. Carey | $ | 3,270 |
| | $ | 2,485 |
| | $ | 60 |
|
| FFO (as defined by NAREIT) - Investment Management | 3,270 |
| | 2,485 |
| | 60 |
|
| Adjustments: | | | | | |
Merger-related income tax expense (b) | — |
| | 13,867 |
| | — |
|
| Other depreciation, amortization and other non-cash charges | — |
| | 937 |
| | 253 |
|
| Stock-based compensation | 7,737 |
| | 6,823 |
| | 7,518 |
|
| Deferred tax benefit | — |
| | (4,986 | ) | | (7,815 | ) |
| Realized losses on foreign currency | 3 |
| | 6 |
| | 2 |
|
| Amortization of deferred financing costs | — |
| | 152 |
| | 318 |
|
| Total adjustments | 7,740 |
| | 16,799 |
| | 276 |
|
| AFFO - Investment Management | $ | 11,010 |
| | $ | 19,284 |
| | $ | 336 |
|
| | | | | | |
| Total Company | | | | | |
| FFO (as defined by NAREIT) | $ | 101,524 |
| | $ | 160,393 |
| | $ | 53,476 |
|
| FFO (as defined by NAREIT) per diluted share | $ | 1.01 |
| | $ | 1.77 |
| | $ | 0.77 |
|
| AFFO | $ | 122,246 |
| | $ | 118,246 |
| | $ | 72,638 |
|
| AFFO per diluted share | $ | 1.21 |
| | $ | 1.31 |
| | $ | 1.05 |
|
| Diluted weighted average shares outstanding | 100,995,225 |
| | 90,375,311 |
| | 69,493,902 |
|
W. P. Carey Inc. 6/30/2014 Earnings Release 8-K – 10
W. P. CAREY INC.
Year-to-Date Reconciliation of Net Income to Adjusted Funds From Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
|
| | | | | | | |
| | Six Months Ended June 30, |
| | 2014 (a) | | 2013 |
| Real Estate Ownership | | | |
| Net income from Real Estate Ownership attributable to W. P. Carey | $ | 173,157 |
| | $ | 59,799 |
|
| Adjustments: | | | |
| Depreciation and amortization of real property | 113,974 |
| | 59,857 |
|
| Impairment charges | 2,066 |
| | 4,950 |
|
| Gain on sale of real estate, net | (28,758 | ) | | (50 | ) |
| Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO | 1,798 |
| | (13,150 | ) |
| Proportionate share of adjustments for noncontrolling interests to arrive at FFO | (6,078 | ) | | (8,514 | ) |
| Total adjustments | 83,002 |
| | 43,093 |
|
| FFO (as defined by NAREIT) - Real Estate Ownership | 256,159 |
| | 102,892 |
|
| Adjustments: | | | |
Gain on change in control of interests (a) | (104,645 | ) | | — |
|
Merger and acquisition expenses (b) | 30,426 |
| | 329 |
|
| Loss (gain) on extinguishment of debt | 8,184 |
| | (67 | ) |
| Other gains, net | (16 | ) | | (270 | ) |
| Other depreciation, amortization and non-cash charges | 2,202 |
| | 285 |
|
| Stock-based compensation | 440 |
| | 1,085 |
|
| Deferred tax benefit | (7,190 | ) | | (1,046 | ) |
Acquisition expenses (c) | 325 |
| | 2,909 |
|
| Realized losses on foreign currency, derivatives and other | 811 |
| | 154 |
|
| Amortization of deferred financing costs | 1,872 |
| | 1,060 |
|
| Straight-line and other rent adjustments | (11,668 | ) | | (4,446 | ) |
| Above- and below-market rent intangible lease amortization, net | 30,610 |
| | 14,493 |
|
| Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO | (27 | ) | | 557 |
|
| AFFO adjustments to equity earnings from equity investments | 3,872 |
| | 19,967 |
|
| Proportionate share of adjustments for noncontrolling interests to arrive at AFFO | (1,158 | ) | | (2,644 | ) |
| Total adjustments | (45,962 | ) | | 32,366 |
|
| AFFO - Real Estate Ownership | $ | 210,197 |
| | $ | 135,258 |
|
| | | | |
| Investment Management | | | |
| Net income (loss) from Investment Management attributable to W. P. Carey | $ | 5,758 |
| | $ | (2,451 | ) |
| FFO (as defined by NAREIT) - Investment Management | 5,758 |
| | (2,451 | ) |
| Adjustments: | | | |
| Merger-related income tax expense | 13,867 |
| | — |
|
| Other depreciation, amortization and other non-cash charges | 937 |
| | 515 |
|
| Stock-based compensation | 14,560 |
| | 16,493 |
|
| Deferred tax benefit | (4,986 | ) | | (5,562 | ) |
| Realized losses on foreign currency | 9 |
| | 4 |
|
| Amortization of deferred financing costs | 152 |
| | 636 |
|
| Total adjustments | 24,539 |
| | 12,086 |
|
| AFFO - Investment Management | $ | 30,297 |
| | $ | 9,635 |
|
| | | | |
| Total Company | | | |
| FFO (as defined by NAREIT) | $ | 261,917 |
| | $ | 100,441 |
|
| FFO (as defined by NAREIT) per diluted share | $ | 2.73 |
| | $ | 1.44 |
|
| AFFO | $ | 240,494 |
| | $ | 144,893 |
|
| AFFO per diluted share | $ | 2.51 |
| | $ | 2.07 |
|
| Diluted weighted average shares outstanding | 95,857,916 |
| | 69,870,849 |
|
W. P. Carey Inc. 6/30/2014 Earnings Release 8-K – 11
__________
| |
| (a) | Gain on change in control of interests for the three months ended March 31, 2014 represents a gain of $74.4 million recognized on our previously-held interest in shares of CPA®:16 – Global common stock, and a gain of $30.2 million recognized on the purchase of the remaining interests in nine investments from CPA®:16 – Global, which we had previously accounted for under the equity method. During the six months ended June 30, 2014, one of these investments was sold. During the second quarter of 2014, we identified certain measurement period adjustments which increased the fair value of our previously-held interest in shares of CPA®:16 – Global common stock by $1.3 million. We did not record this adjustment during the three months ended June 30, 2014 but rather in the three months ended March 31, 2014. Consequently, amounts presented above for gain on change in control of interests and net income for the three months ended March 31, 2014 differ from amounts presented in the first quarter filings. |
| |
| (b) | Amount for the three months ended March 31, 2014 and the six months ended June 30, 2014 included $29.5 million and $30.4 million, respectively, of merger expenses for the Real Estate Ownership segment and $13.9 million of merger-related income tax expense for both periods for the Investment Management segment incurred in connection with the CPA®:16 Merger. |
| |
| (c) | Prior to the second quarter of 2013, this amount was insignificant and therefore not included in the AFFO calculation. |
Non-GAAP Financial Disclosure
Funds from Operations, or FFO, is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as net income or loss (as computed in accordance with GAAP) excluding: depreciation and amortization expense from real estate assets, impairment charges on real estate, gains or losses from sales of depreciated real estate assets, and extraordinary items; however, FFO related to assets held for sale, sold, or otherwise transferred and included in the results of discontinued operations are included. These adjustments also incorporate the pro rata share of unconsolidated subsidiaries. FFO is used by management, investors, and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers. Although NAREIT has published this definition of FFO, companies often modify this definition as they seek to provide financial measures that meaningfully reflect their distinctive operations.
We modify the NAREIT computation of FFO to include other adjustments to GAAP net income to adjust for certain non-cash charges such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rents, stock compensation, gains or losses from extinguishment of debt and deconsolidation of subsidiaries, and unrealized foreign currency exchange gains and losses. 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 have no impact on cash flows. Additionally, we exclude acquisition expenses and non-core expenses such as merger expenses. Merger expenses are related to the CPA®:16 Merger. We also exclude realized gains or losses on foreign exchange and derivatives which are not considered fundamental attributes of our business plan and do not affect our overall long-term operating performance. We refer to our modified definition of FFO as AFFO. We exclude these items from GAAP net income as they are not the primary drivers in our decision making process and excluding those items provides investors a view of our portfolio performance over time and make it more comparable to other REITs not currently engaged in acquisitions, mergers, and restructuring, which are not part of our normal business operations. We use AFFO as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies, and determine executive compensation.
We believe that AFFO is a useful supplemental measure for investors to consider because it will help them to better assess the sustainability of our operating performance without the potentially distorting impact of these short-term fluctuations. However, there are limits on the usefulness of AFFO to investors. For example, impairment charges and unrealized foreign currency losses that we exclude may become actual realized losses upon the ultimate disposition of the properties in the form of lower cash proceeds or other considerations. We use our FFO and AFFO measures as supplemental financial measures of operating performance. We do not use our FFO and AFFO measures as, nor should they be considered to be, alternatives to net earnings computed under GAAP or as alternatives to cash from operating activities computed under GAAP or as indicators of our ability to fund our cash needs.
W. P. Carey Inc. 6/30/2014 Earnings Release 8-K – 12
