NEW
YORK, Feb. 9, 2024 /PRNewswire/ -- W. P.
Carey Inc. (NYSE: WPC) (W. P. Carey or the Company), a net lease
real estate investment trust, today reported its financial results
for the fourth quarter and full year ended December 31, 2023.
Financial Highlights
|
2023
|
|
Fourth Quarter
|
|
Full
Year
|
Net income
attributable to W. P. Carey (millions)
|
$144.3
|
|
$708.3
|
Diluted earnings per
share
|
$0.66
|
|
$3.28
|
|
|
|
|
AFFO
(millions)
|
$261.4
|
|
$1,118.3
|
AFFO per diluted
share
|
$1.19
|
|
$5.18
|
- 2024 AFFO guidance range narrowed to between $4.65 and $4.75 per
diluted share, based on anticipated full year investment volume of
between $1.5 billion and $2.0 billion
- Fourth quarter cash dividend of $0.860 per share, equivalent to an annualized
dividend rate of $3.44 per share,
reflecting both the Company's strategic exit from the office assets
within its portfolio and a lower payout ratio
Strategic Office Exit
- Spin-Off of Net Lease Office Properties (NLOP) completed on
November 1, 2023
- Office Sale Program
- 79 properties sold to date under the program for
gross proceeds of $608.1 million,
including eight properties totaling gross proceeds of $220.3 million sold during the 2023 third and
fourth quarters and 71 properties totaling gross proceeds of
$387.8 million sold in January 2024, including the Company's largest
office portfolio
- Office assets sales to date under the program bring office
exposure below 3% of total ABR
- Remaining sales under the program targeted to be completed
during the first half of 2024
Real Estate Portfolio
- Investment volume of $345.6
million completed during the fourth quarter, bringing total
investment volume for 2023 to $1.3
billion
- Investment volume of $177.1
million completed in January
2024
- Active capital investments and commitments of $80.1 million and construction loan funding of
$30.5 million scheduled to be
completed in 2024
- Non-Office Sale Program gross disposition proceeds totaled
$133.6 million for the fourth quarter
and $242.0 million for 2023
- Contractual same-store rent growth of 4.1%
Balance Sheet and Capitalization
- Settled all outstanding forward sale agreements, issuing
approximately 4.7 million shares of common stock for net proceeds
of $384 million
- Received approximately $344
million, net of transaction expenses, from NLOP in
connection with the Spin-Off
- Senior unsecured credit facility amended and restated,
increasing the capacity of the unsecured revolving credit facility
to $2.0 billion and extending its
maturity to 2029, and refinancing £270 million and €215 million
term loans, extending their maturities to 2028.
MANAGEMENT COMMENTARY
"Our 2023 fourth quarter and full year results largely reflected
the near-term impacts of executing the office exit strategy we
announced in September," said Jason
Fox, Chief Executive Officer of W. P. Carey. "We've made
excellent progress in a short space of time thanks to the hard work
and dedication of our employees, bringing our office exposure down
to less than 3% of ABR.
"Looking ahead, we view 2024 as a transitional year,
establishing a new baseline from which to grow AFFO. In addition to
the rent growth embedded in our portfolio and a growing pipeline,
I'm pleased to say we've already closed $177
million of investments and have over $100 million of capital projects and commitments
scheduled for completion this year. We've raised our expectations
for 2024 investment volume and we're very well-positioned to
execute — with exceptionally strong liquidity and a lower cost of
capital — in an improving investment environment."
QUARTERLY FINANCIAL RESULTS
Revenues
- Total Company: Revenues, including reimbursable costs,
for the 2023 fourth quarter totaled $412.4
million, up 2.4% from $402.6
million for the 2022 fourth quarter.
- Real Estate: Real Estate revenues, including
reimbursable costs, for the 2023 fourth quarter were $410.4 million, up 2.1% from $402.1 million for the 2022 fourth quarter.
- Lease revenues decreased primarily as a result of the
reclassifications of lease revenues related to the U-Haul and State
of Andalusia portfolios described below and the Spin-Off, which
more than offset the impact of net investment activity and rent
escalations.
- Operating property revenues increased primarily as a result of
the conversion of 12 hotel properties from net lease to operating
upon lease expiration during the 2023 first quarter (eight of which
were sold during the 2023 third and fourth quarters).
- Income from finance leases and loans receivable increased
primarily as a result of the reclassification of lease revenues (i)
after receiving notice during the 2023 first quarter of the
purchase option exercise on the portfolio of 78 U-Haul properties
(the properties are expected to be sold during the first quarter of
2024) and (ii) after signing a purchase and sale agreement during
the 2023 fourth quarter for the Company's largest office portfolio
of 70 properties net leased to the State of Andalusia in a sale
back to the tenant (which closed in January
2024). The reclassifications had no impact on total Real
Estate revenues.
Net Income Attributable to W. P. Carey
- Net income attributable to W. P. Carey for the 2023 fourth
quarter was $144.3 million, down
31.1% from $209.5 million for the
2022 fourth quarter. Net income from Real Estate attributable to W.
P. Carey was $142.8 million, which
decreased due primarily to higher impairment charges and allowances
for credit losses, a non-cash mark-to-market gain recognized on the
Company's shares of Lineage Logistics of $38.6 million during the prior-year period and
the impact of the Spin-Off, partly offset by a higher aggregate
gain on sale of real estate and the impact of net investment
activity and rent escalations.
Adjusted Funds from Operations (AFFO)
- AFFO for the 2023 fourth quarter was $1.19 per diluted share, down 7.8% from
$1.29 per diluted share for the 2022
fourth quarter, primarily reflecting the impact of the
Spin-Off. Higher revenue from net investment activity and rent
escalations was mostly offset by higher interest expense and lower
other lease-related income during the 2023 fourth quarter.
Note: Further information concerning AFFO and Real Estate
AFFO, which are both non-GAAP supplemental performance metrics, is
presented in the accompanying tables and related notes.
Dividend
- As previously announced, on December 7,
2023, the Company reported that its Board of Directors
declared a quarterly cash dividend of $0.860 per share, equivalent to an annualized
dividend rate of $3.44 per share,
reflecting both the Company's strategic exit from the office assets
within its portfolio (announced on September
21, 2023) and a lower payout ratio. The dividend was paid
on January 16, 2024 to shareholders of record as of
December 29, 2023.
FULL YEAR FINANCIAL RESULTS
Revenues
- Total Company: Revenues, including reimbursable costs,
for the 2023 full year totaled $1.74
billion, up 17.6% from $1.48
billion for the 2022 full year.
- Real Estate: Real Estate revenues, including
reimbursable costs, for the 2023 full year totaled $1.74 billion, up 18.4% from $1.47 billion for the 2022 full year.
- Lease revenues increased primarily as a result of net
investment activity, rent escalations and net lease properties
acquired in the CPA:18 Merger, which more than offset the
reclassifications of lease revenues related to the U-Haul and State
of Andalusia portfolios described below and the impact of the
Spin-Off.
- Operating property revenues increased primarily as a result of
the self-storage and other operating properties acquired in the
CPA:18 Merger, as well as the conversion of 12 hotel properties
from net lease to operating upon lease expiration during the 2023
first quarter (eight of which were sold during the 2023 third and
fourth quarters).
- Income from finance leases and loans receivable increased
primarily as a result of the reclassification of lease revenues (i)
after receiving notice during the 2023 first quarter of the
purchase option exercise on the portfolio of 78 U-Haul properties
(the properties are expected to be sold during the first quarter of
2024) and (ii) after signing a purchase and sale agreement during
the 2023 fourth quarter for the Company's largest office portfolio
of 70 properties net leased to the State of Andalusia in a sale
back to the tenant (which closed in January
2024). The reclassifications had no impact on total Real
Estate revenues.
Net Income Attributable to W. P. Carey
- Net income attributable to W. P. Carey for the 2023 full
year totaled $708.3 million, up 18.2%
from $599.1 million for the 2022 full
year. Net income from Real Estate attributable to W. P. Carey was
$704.8 million, which increased due
primarily to a higher aggregate gain on sale of real estate, the
impact of net investment activity (including properties acquired in
the CPA:18 Merger) and rent escalations, partly offset by higher
interest expense, a non-cash mark-to-market gain of $49.2 million recognized on the Company's
investment in common stock of Watermark Lodging Trust, higher
impairment charges and allowances for credit losses, a non-cash
mark-to-market gain recognized on the Company's shares of Lineage
Logistics of $38.6 million during the
prior year and the impact of the Spin-Off. Net income from
Investment Management attributable to W. P. Carey was $3.5 million, which decreased due primarily to a
$29.3 million impairment charge
recognized on goodwill within that segment. The Company also
recognized a $33.9 million gain on
change in control of interests in connection with the CPA:18 Merger
during the prior year.
AFFO
- AFFO for the 2023 full year was $5.18 per diluted share, down 2.1% from
$5.29 per diluted share for the 2022
full year, primarily reflecting higher interest expense (due
primarily to higher interest rates) and the impact of the Spin-Off,
which more than offset higher revenue from net investment activity
and rent escalations.
Note: Further information concerning AFFO and Real Estate
AFFO, which are both non-GAAP supplemental performance metrics, is
presented in the accompanying tables and related notes.
Dividend
- Dividends declared during 2023 totaled $4.067 per share, a decrease of 4.1% compared to
total dividends declared during 2022 of $4.242 per share, reflecting the impact on the
dividend declared during the 2023 fourth quarter of both the
Company's strategic exit from the office assets within its
portfolio and a lower payout ratio.
AFFO GUIDANCE
2024 AFFO Guidance
- For the 2024 full year, the Company expects to report total
AFFO of between $4.65 and
$4.75 per diluted share, based on the
following key assumptions:
(i) investment volume of between $1.5 billion and $2.0
billion;
(ii) disposition volume of between $1.2 billion and $1.4
billion, including:
(a) completion of the Company's strategic
plan to exit office, including anticipated asset sales under the
Office Sale Program totaling between $550
million and $600 million
during the first half of 2024;
(b) exercise of the U-Haul purchase option
during the 2024 first quarter, generating approximately
$465 million in gross proceeds;
and
(c) other dispositions totaling between
$150 million and $350 million; and
(iii) total general and administrative expenses
of between $100 million and
$103 million.
Note: The Company does not provide guidance on
net income. The Company only provides guidance on total AFFO and
does not provide a reconciliation of this forward-looking non-GAAP
guidance to net income due to the inherent difficulty in
quantifying certain items necessary to provide such reconciliation
as a result of their unknown effect, timing and potential
significance. Examples of such items include impairments of assets,
gains and losses from sales of assets, and depreciation and
amortization from new acquisitions.
STRATEGIC OFFICE EXIT
- On September 21, 2023, the
Company announced a strategic plan to exit the office assets within
its portfolio by:
(i) spinning-off 59 office properties with ABR totaling
$145 million into NLOP, a separate
publicly-traded REIT (the "Spin-Off"), which was completed on
November 1, 2023; and
(ii) implementing an asset sale program to dispose of
87 office properties retained by W. P. Carey (the "Office Sale
Program"), with all sales under the program targeted to be
completed in first half of 2024.
- To date through February 9, 2024,
the Company has sold 79 properties under the Office Sale Program
for gross proceeds of approximately $608.1
million, comprising:
- Eight properties sold during the 2023 third and fourth quarters
for gross proceeds of approximately $220.3
million; and
- 71 properties sold subsequent to year end, for gross proceeds
of approximately $387.8 million,
including a portfolio of 70 office properties net leased to State
of Andalusia.
- As a result of the progress made to date executing on the
Company's strategic plan to exit the office assets within its
portfolio, office assets currently represent approximately 2.7% of
total ABR (as of December 31,
2023).
- Remaining sales under the program are targeted for completion
during the first half of 2024, for office assets that generate
$21 million of ABR.
REAL ESTATE
Investments
- During the 2023 fourth quarter, the Company completed
investments totaling $345.6 million,
bringing total investment volume for the year ended December 31, 2023 to $1.3
billion.
- Year to date through February 9,
2024, the Company completed investment volume of
$177.1 million.
- The Company currently has seven capital investments and
commitments totaling $80.1 million
and construction loan funding of $30.5
million scheduled to be completed during 2024, for an
aggregate total of $110.6
million.
Dispositions
- In addition to dispositions under the Office Sale Program,
during the 2023 fourth quarter, the Company disposed of ten
properties for gross proceeds of $133.6
million (including the sales of five hotel operating
properties for gross proceeds of $83.9
million), bringing total non-Office Sale Program
dispositions for the year ended December 31,
2023 to $242.0 million
(including the sales of eight hotel operating properties for gross
proceeds of $132.6 million).
Contractual Same-Store Rent Growth
- The Company's net lease portfolio generated contractual
same-store rent growth of 4.1% on a constant currency basis.
Composition
- As of December 31, 2023, the
Company's net lease portfolio consisted of 1,424 properties,
comprising 173 million square feet leased to 336 tenants, with a
weighted-average lease term of 11.7 years and an occupancy rate of
98.1%. In addition, the Company owned 89 self-storage operating
properties, five hotel operating properties and two student housing
operating properties, totaling approximately 7.3 million square
feet.
BALANCE SHEET AND CAPITALIZATION
Forward Equity
- The Company settled all of its outstanding forward sale
agreements, issuing 4,744,973 shares of common stock for net
proceeds of $384 million.
Spin-Off Distribution
- The Company received a distribution of approximately
$344 million, net of transaction
expenses, from NLOP in connection with the Spin-Off on
November 1, 2023.
The Company intends to use proceeds from these transactions
primarily to fund future acquisitions and repay debt, including
amounts outstanding under its unsecured revolving credit facility.
The Company may hold net proceeds in cash and/or marketable
securities earning interest until deployed.
Senior Unsecured Credit Facility
- As previously announced, on December 14,
2023, the Company amended and restated its senior unsecured
credit facility, (i) increasing the capacity of its unsecured
revolving credit facility from $1.8
billion to $2.0 billion and
extending its maturity by four years to 2029, and (ii) refinancing
its £270 million and €215 million term loans and extending their
maturities by three years to 2028. Each of the term loans include
an option to extend up to an additional year at the Company's
discretion, subject to the satisfaction of certain customary
conditions.
*
* *
* *
Supplemental Information
The Company has provided supplemental unaudited financial and
operating information regarding the 2023 fourth quarter and
certain prior quarters, including a description of non-GAAP
financial measures and reconciliations to GAAP measures, in a
Current Report on Form 8-K filed with the Securities and Exchange
Commission (SEC) on February 9, 2024, and made available on
the Company's website at ir.wpcarey.com/investor-relations.
*
* *
* *
Live Conference Call and Audio Webcast Scheduled for 10:00
a.m. Eastern Time
Please dial in at least 10
minutes prior to the start time.
Date/Time: Friday, February 9, 2024 at 10:00 a.m. Eastern Time
Call-in Number: 1 (877) 465-1289 (U.S.) or +1 (201) 689-8762
(international)
Live Audio Webcast and Replay:
www.wpcarey.com/earnings
*
* *
* *
W. P. Carey Inc.
W. P. Carey ranks among the largest net lease REITs with a
well-diversified portfolio of high-quality, operationally critical
commercial real estate, which includes 1,424 net lease properties
covering approximately 173 million square feet and a portfolio of
89 self-storage operating properties as of December 31, 2023. With offices in New York, London, Amsterdam and Dallas, the company remains focused on
investing primarily in single-tenant, industrial, warehouse and
retail properties located in the U.S. and Northern and Western Europe, under long-term net leases
with built-in rent escalations.
www.wpcarey.com
*
* *
* *
Cautionary Statement Concerning Forward-Looking
Statements
Certain of the matters discussed in this communication
constitute forward-looking statements within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934,
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," "will be," "goals," "believe,"
"project," "expect," "anticipate," "intend," "estimate"
"opportunities," "possibility," "strategy," "maintain" or the
negative version of these words and other comparable terms. These
forward-looking statements include, but are not limited to,
statements made by Mr. Jason Fox
regarding expectations for capital projects and commitments and
2024 investment volume. These statements are based on the current
expectations of our management, and it is important to note that
our 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 risks or uncertainties, like the risks related
to fluctuating interest rates, the impact of inflation on our
tenants and us, the effects of pandemics and global outbreaks of
contagious diseases, and domestic or geopolitical crises, such as
terrorism, military conflict, war or the perception that
hostilities may be imminent, political instability or civil unrest,
or other conflict, and those additional risk factors discussed in
reports that we have filed with the SEC, could also have material
adverse effects on our future results, performance or achievements.
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
Part I, Item 1A. Risk Factors in W. P. Carey's Annual Report on
Form 10-K for the fiscal year ended December
31, 2023. Investors 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.
Institutional Investors:
Peter
Sands
1 (212) 492-1110
institutionalir@wpcarey.com
Individual Investors:
W. P. Carey Inc.
1 (212) 492-8920
ir@wpcarey.com
Press Contact:
Anna
McGrath
1 (212) 492-1166
amcgrath@wpcarey.com
*
* *
* *
W. P. CAREY
INC. Consolidated Balance Sheets (in thousands,
except share and per share amounts)
|
|
|
December
31,
|
|
2023
|
|
2022
|
Assets
|
|
|
|
Investments in real
estate:
|
|
|
|
Land, buildings
and improvements — net lease and other
|
$
12,095,458
|
|
$
13,338,857
|
Land, buildings
and improvements — operating properties
|
1,256,249
|
|
1,095,892
|
Net investments
in finance leases and loans receivable
|
1,514,923
|
|
771,761
|
In-place lease
intangible assets and other
|
2,308,853
|
|
2,659,750
|
Above-market
rent intangible assets
|
706,773
|
|
833,751
|
Investments in real
estate
|
17,882,256
|
|
18,700,011
|
Accumulated
depreciation and amortization (a)
|
(3,005,479)
|
|
(3,269,057)
|
Assets held for
sale, net
|
37,122
|
|
57,944
|
Net investments in real
estate
|
14,913,899
|
|
15,488,898
|
Equity method
investments
|
354,261
|
|
327,502
|
Cash and cash
equivalents
|
633,860
|
|
167,996
|
Other assets,
net
|
1,096,474
|
|
1,080,227
|
Goodwill
|
978,289
|
|
1,037,412
|
Total
assets
|
$
17,976,783
|
|
$
18,102,035
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Debt:
|
|
|
|
Senior
unsecured notes, net
|
$
6,035,686
|
|
$
5,916,400
|
Unsecured term
loans, net
|
1,125,564
|
|
552,539
|
Unsecured
revolving credit facility
|
403,785
|
|
276,392
|
Non-recourse
mortgages, net
|
579,147
|
|
1,132,417
|
Debt, net
|
8,144,182
|
|
7,877,748
|
Accounts payable,
accrued expenses and other liabilities
|
615,750
|
|
623,843
|
Below-market rent and
other intangible liabilities, net
|
136,872
|
|
184,584
|
Deferred income
taxes
|
180,650
|
|
178,959
|
Dividends
payable
|
192,332
|
|
228,257
|
Total
liabilities
|
9,269,786
|
|
9,093,391
|
|
|
|
|
Preferred stock, $0.001
par value, 50,000,000 shares authorized; none issued
|
—
|
|
—
|
Common stock, $0.001
par value, 450,000,000 shares authorized; 218,671,874 and
210,620,949
shares, respectively, issued and
outstanding
|
219
|
|
211
|
Additional paid-in
capital
|
11,784,461
|
|
11,706,836
|
Distributions in excess
of accumulated earnings
|
(2,891,424)
|
|
(2,486,633)
|
Deferred compensation
obligation
|
62,046
|
|
57,012
|
Accumulated other
comprehensive loss
|
(254,867)
|
|
(283,780)
|
Total stockholders'
equity
|
8,700,435
|
|
8,993,646
|
Noncontrolling
interests
|
6,562
|
|
14,998
|
Total
equity
|
8,706,997
|
|
9,008,644
|
Total
liabilities and equity
|
$
17,976,783
|
|
$
18,102,035
|
________
|
(a)
|
Includes $1.6
billion and $1.7 billion of accumulated depreciation on buildings
and improvements as of December 31, 2023 and 2022,
respectively, and $1.4 billion and $1.6 billion of accumulated
amortization on lease intangibles as of December 31, 2023 and
2022, respectively.
|
W. P. CAREY
INC. Quarterly Consolidated Statements of
Income (in thousands, except share and per share
amounts)
|
|
|
Three Months
Ended
|
|
December 31,
2023
|
|
September 30,
2023
|
|
December 31,
2022
|
Revenues
|
|
|
|
|
|
Real
Estate:
|
|
|
|
|
|
Lease
revenues
|
$
336,757
|
|
$
369,159
|
|
$
347,636
|
Income from
finance leases and loans receivable
|
31,532
|
|
27,575
|
|
17,472
|
Operating
property revenues
|
39,477
|
|
49,218
|
|
28,951
|
Other
lease-related income
|
2,610
|
|
2,310
|
|
8,083
|
|
410,376
|
|
448,262
|
|
402,142
|
Investment
Management:
|
|
|
|
|
|
Asset
management revenue (a)
|
1,348
|
|
194
|
|
383
|
Other advisory
income and reimbursements (b)
|
667
|
|
—
|
|
—
|
Reimbursable
costs from affiliates
|
46
|
|
97
|
|
104
|
|
2,061
|
|
291
|
|
487
|
|
412,437
|
|
448,553
|
|
402,629
|
Operating
Expenses
|
|
|
|
|
|
Depreciation and
amortization
|
129,484
|
|
144,771
|
|
140,749
|
Impairment charges —
real estate (c)
|
71,238
|
|
15,173
|
|
12,734
|
General and
administrative
|
21,533
|
|
23,258
|
|
22,728
|
Operating property
expenses
|
20,403
|
|
26,570
|
|
11,719
|
Reimbursable tenant
costs
|
18,942
|
|
20,498
|
|
21,084
|
Property expenses,
excluding reimbursable tenant costs
|
13,287
|
|
13,021
|
|
13,879
|
Stock-based
compensation expense
|
8,693
|
|
9,050
|
|
9,739
|
Merger and other
expenses (d)
|
(641)
|
|
4,152
|
|
2,058
|
Reimbursable costs
from affiliates
|
46
|
|
97
|
|
104
|
|
282,985
|
|
256,590
|
|
234,794
|
Other Income and
Expenses
|
|
|
|
|
|
Gain on sale of real
estate, net (e)
|
134,026
|
|
2,401
|
|
5,845
|
Interest
expense
|
(72,194)
|
|
(76,974)
|
|
(67,668)
|
Other gains and
(losses) (f)
|
(45,777)
|
|
2,859
|
|
97,059
|
Non-operating income
(g)
|
7,445
|
|
4,862
|
|
6,526
|
Earnings from equity
method investments
|
5,006
|
|
4,978
|
|
6,032
|
|
28,506
|
|
(61,874)
|
|
47,794
|
Income before income
taxes
|
157,958
|
|
130,089
|
|
215,629
|
Provision for income
taxes
|
(13,714)
|
|
(5,090)
|
|
(6,126)
|
Net
Income
|
144,244
|
|
124,999
|
|
209,503
|
Net loss attributable
to noncontrolling interests
|
50
|
|
41
|
|
35
|
Net Income
Attributable to W. P. Carey
|
$
144,294
|
|
$
125,040
|
|
$
209,538
|
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
0.66
|
|
$
0.58
|
|
$
1.00
|
Diluted Earnings Per
Share
|
$
0.66
|
|
$
0.58
|
|
$
1.00
|
Weighted-Average
Shares Outstanding
|
|
|
|
|
|
Basic
|
219,277,446
|
|
215,097,114
|
|
209,281,888
|
Diluted
|
219,469,641
|
|
215,252,969
|
|
209,822,650
|
|
|
|
|
|
|
Dividends Declared
Per Share
|
$
0.860
|
|
$
1.071
|
|
$
1.065
|
W. P. CAREY
INC. Full Year Consolidated Statements of
Income (in thousands, except share and per share
amounts)
|
|
|
Years Ended December
31,
|
|
2023
|
|
2022
|
Revenues
|
|
|
|
Real
Estate:
|
|
|
|
Lease
revenues
|
$
1,427,376
|
|
$
1,301,617
|
Income from
finance leases and loans receivable
|
107,173
|
|
74,266
|
Operating
property revenues
|
180,257
|
|
59,230
|
Other
lease-related income
|
23,333
|
|
32,988
|
|
1,738,139
|
|
1,468,101
|
Investment
Management:
|
|
|
|
Asset
management and other revenue
|
2,184
|
|
8,467
|
Other advisory
income and reimbursements
|
667
|
|
—
|
Reimbursable
costs from affiliates
|
368
|
|
2,518
|
|
3,219
|
|
10,985
|
|
1,741,358
|
|
1,479,086
|
Operating
Expenses
|
|
|
|
Depreciation and
amortization
|
574,212
|
|
503,403
|
General and
administrative
|
96,027
|
|
88,952
|
Operating property
expenses
|
95,141
|
|
27,054
|
Impairment charges —
real estate
|
86,411
|
|
39,119
|
Reimbursable tenant
costs
|
81,939
|
|
73,622
|
Property expenses,
excluding reimbursable tenant costs
|
44,451
|
|
50,753
|
Stock-based
compensation expense
|
34,504
|
|
32,841
|
Merger and other
expenses
|
4,954
|
|
19,387
|
Reimbursable costs
from affiliates
|
368
|
|
2,518
|
Impairment charges —
Investment Management goodwill
|
—
|
|
29,334
|
|
1,018,007
|
|
866,983
|
Other Income and
Expenses
|
|
|
|
Gain on sale of real
estate, net
|
315,984
|
|
43,476
|
Interest
expense
|
(291,852)
|
|
(219,160)
|
Other gains and
(losses)
|
(36,184)
|
|
96,038
|
Non-operating
income
|
21,442
|
|
30,309
|
Earnings from equity
method investments
|
19,575
|
|
29,509
|
Gain on change in
control of interests
|
—
|
|
33,931
|
|
28,965
|
|
14,103
|
Income before income
taxes
|
752,316
|
|
626,206
|
Provision for income
taxes
|
(44,052)
|
|
(27,724)
|
Net
Income
|
708,264
|
|
598,482
|
Net loss attributable
to noncontrolling interests
|
70
|
|
657
|
Net Income
Attributable to W. P. Carey
|
$
708,334
|
|
$
599,139
|
|
|
|
|
Basic Earnings Per
Share
|
$
3.29
|
|
$
3.00
|
Diluted Earnings Per
Share
|
$
3.28
|
|
$
2.99
|
Weighted-Average
Shares Outstanding
|
|
|
|
Basic
|
215,369,777
|
|
199,633,802
|
Diluted
|
215,760,496
|
|
200,427,124
|
|
|
|
|
Dividends Declared
Per Share
|
$
4.067
|
|
$
4.242
|
__________
|
(a)
|
Amount for the three
months ended December 31, 2023 is comprised of $1.2 million from
NLOP and $0.1 million from CESH.
|
(b)
|
Amounts are related
to administrative reimbursement for our management of
NLOP.
|
(c)
|
Amount for the three
months ended December 31, 2023 includes an impairment charge of
$47.3 million recognized on the 59 properties contributed to
NLOP in connection with the Spin-Off.
|
(d)
|
Amount for the three
months ended September 30, 2023 is primarily comprised of
costs incurred in connection with the Spin-Off.
|
(e)
|
Amount for the three
months ended December 31, 2023 includes a gain on sale of real
estate of $59.1 million recognized upon entering into an agreement
to sell our portfolio of 70 office properties located in Spain to
the tenant occupying the properties and the reclassification of the
investment to net investments in sales-type leases.
|
(f)
|
Amount for the three
months ended December 31, 2023 is primarily comprised of a non-cash
allowance for credit losses of $35.2 million, net losses on foreign
currency exchange rate movements of $6.5 million and non-cash
losses on non-hedging derivatives of $4.3 million.
|
(g)
|
Amount for the three
months ended December 31, 2023 is comprised of interest income on
deposits of $4.6 million and realized gains on foreign currency
exchange derivatives of $2.9 million.
|
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
|
|
December 31,
2023
|
|
September 30,
2023
|
|
December 31,
2022
|
Net income attributable
to W. P. Carey
|
$
144,294
|
|
$
125,040
|
|
$
209,538
|
Adjustments:
|
|
|
|
|
|
Gain on sale of
real estate, net (a)
|
(134,026)
|
|
(2,401)
|
|
(5,845)
|
Depreciation
and amortization of real property
|
128,839
|
|
144,111
|
|
140,157
|
Impairment
charges — real estate (b)
|
71,238
|
|
15,173
|
|
12,734
|
Proportionate
share of adjustments to earnings from equity method
investments (c)
|
2,942
|
|
2,950
|
|
2,296
|
Proportionate
share of adjustments for noncontrolling interests
(d)
|
(133)
|
|
34
|
|
(294)
|
Total
adjustments
|
68,860
|
|
159,867
|
|
149,048
|
FFO (as defined by
NAREIT) Attributable to W. P. Carey (e)
|
213,154
|
|
284,907
|
|
358,586
|
Adjustments:
|
|
|
|
|
|
Other (gains)
and losses (f)
|
45,777
|
|
(2,859)
|
|
(97,059)
|
Straight-line
and other leasing and financing adjustments
|
(19,071)
|
|
(18,662)
|
|
(14,766)
|
Stock-based
compensation
|
8,693
|
|
9,050
|
|
9,739
|
Above- and
below-market rent intangible lease amortization, net
|
6,644
|
|
7,835
|
|
8,652
|
Amortization of
deferred financing costs
|
4,895
|
|
4,805
|
|
5,705
|
Tax expense
(benefit) – deferred and other
|
2,507
|
|
(4,349)
|
|
(3,325)
|
Merger and
other expenses (g)
|
(641)
|
|
4,152
|
|
2,058
|
Other
amortization and non-cash items
|
152
|
|
584
|
|
490
|
Proportionate
share of adjustments to earnings from equity method
investments (c)
|
(663)
|
|
(691)
|
|
(319)
|
Proportionate
share of adjustments for noncontrolling interests
(d)
|
(97)
|
|
(380)
|
|
(85)
|
Total
adjustments
|
48,196
|
|
(515)
|
|
(88,910)
|
AFFO Attributable to
W. P. Carey (e)
|
$
261,350
|
|
$
284,392
|
|
$
269,676
|
|
|
|
|
|
|
Summary
|
|
|
|
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey (e)
|
$
213,154
|
|
$
284,907
|
|
$
358,586
|
FFO (as defined by
NAREIT) attributable to W. P. Carey per diluted share
(e)
|
$
0.97
|
|
$
1.32
|
|
$
1.70
|
AFFO attributable to W.
P. Carey (e)
|
$
261,350
|
|
$
284,392
|
|
$
269,676
|
AFFO attributable to W.
P. Carey per diluted share (e)
|
$
1.19
|
|
$
1.32
|
|
$
1.29
|
Diluted
weighted-average shares outstanding
|
219,469,641
|
|
215,252,969
|
|
209,822,650
|
W. P. CAREY
INC. Quarterly Reconciliation of Net Income from Real
Estate to Adjusted Funds from Operations (AFFO) from Real Estate
(Unaudited) (in thousands, except share and per share
amounts)
|
|
|
Three Months
Ended
|
|
December 31,
2023
|
|
September 30,
2023
|
|
December 31,
2022
|
Net income from Real
Estate attributable to W. P. Carey
|
$
142,753
|
|
$
124,167
|
|
$
210,142
|
Adjustments:
|
|
|
|
|
|
Gain on sale of
real estate, net (a)
|
(134,026)
|
|
(2,401)
|
|
(5,845)
|
Depreciation
and amortization of real property
|
128,839
|
|
144,111
|
|
140,157
|
Impairment
charges — real estate (b)
|
71,238
|
|
15,173
|
|
12,734
|
Proportionate
share of adjustments to earnings from equity method
investments (c)
|
2,942
|
|
2,950
|
|
2,296
|
Proportionate
share of adjustments for noncontrolling interests
(d)
|
(133)
|
|
34
|
|
(294)
|
Total
adjustments
|
68,860
|
|
159,867
|
|
149,048
|
FFO (as defined by
NAREIT) Attributable to W. P. Carey – Real Estate
(e)
|
211,613
|
|
284,034
|
|
359,190
|
Adjustments:
|
|
|
|
|
|
Other (gains)
and losses (f)
|
45,303
|
|
(2,180)
|
|
(96,846)
|
Straight-line
and other leasing and financing adjustments
|
(19,071)
|
|
(18,662)
|
|
(14,766)
|
Stock-based
compensation
|
8,693
|
|
9,050
|
|
9,739
|
Above- and
below-market rent intangible lease amortization, net
|
6,644
|
|
7,835
|
|
8,652
|
Amortization of
deferred financing costs
|
4,895
|
|
4,805
|
|
5,705
|
Tax expense
(benefit) – deferred and other
|
2,507
|
|
(4,349)
|
|
(3,862)
|
Merger and
other expenses (g)
|
(641)
|
|
4,152
|
|
2,058
|
Other
amortization and non-cash items
|
152
|
|
584
|
|
490
|
Proportionate
share of adjustments to earnings from equity method
investments (c)
|
(663)
|
|
(691)
|
|
(320)
|
Proportionate
share of adjustments for noncontrolling interests
(d)
|
(97)
|
|
(380)
|
|
(85)
|
Total
adjustments
|
47,722
|
|
164
|
|
(89,235)
|
AFFO Attributable to
W. P. Carey – Real Estate (e)
|
$
259,335
|
|
$
284,198
|
|
$
269,955
|
|
|
|
|
|
|
Summary
|
|
|
|
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey – Real Estate
(e)
|
$
211,613
|
|
$
284,034
|
|
$
359,190
|
FFO (as defined by
NAREIT) attributable to W. P. Carey per diluted share
–
Real Estate (e)
|
$
0.96
|
|
$
1.32
|
|
$
1.70
|
AFFO attributable to W.
P. Carey – Real Estate (e)
|
$
259,335
|
|
$
284,198
|
|
$
269,955
|
AFFO attributable to W.
P. Carey per diluted share – Real Estate (e)
|
$
1.18
|
|
$
1.32
|
|
$
1.29
|
Diluted
weighted-average shares outstanding
|
219,469,641
|
|
215,252,969
|
|
209,822,650
|
W. P. CAREY
INC. Full Year Reconciliation of Net Income to Adjusted
Funds from Operations (AFFO) (Unaudited) (in thousands,
except share and per share amounts)
|
|
|
Years Ended December
31,
|
|
2023
|
|
2022
|
Net income attributable
to W. P. Carey
|
$
708,334
|
|
$
599,139
|
Adjustments:
|
|
|
|
Depreciation
and amortization of real property
|
571,750
|
|
500,764
|
Gain on sale of
real estate, net (a)
|
(315,984)
|
|
(43,476)
|
Impairment
charges — real estate (b)
|
86,411
|
|
39,119
|
Gain on change
in control of interests (h) (i)
|
—
|
|
(33,931)
|
Impairment
charges — Investment Management goodwill (j)
|
—
|
|
29,334
|
Proportionate
share of adjustments to earnings from equity method investments
(c)
|
11,381
|
|
15,155
|
Proportionate
share of adjustments for noncontrolling interests
(d)
|
(666)
|
|
(491)
|
Total
adjustments
|
352,892
|
|
506,474
|
FFO (as defined by
NAREIT) Attributable to W. P. Carey (e)
|
1,061,226
|
|
1,105,613
|
Adjustments:
|
|
|
|
Straight-line
and other leasing and financing adjustments
|
(71,869)
|
|
(54,431)
|
Other (gains)
and losses
|
36,184
|
|
(96,038)
|
Stock-based
compensation
|
34,504
|
|
32,841
|
Above- and
below-market rent intangible lease amortization, net
|
34,164
|
|
41,390
|
Amortization of
deferred financing costs
|
20,544
|
|
17,203
|
Merger and
other expenses (g)
|
4,954
|
|
19,387
|
Other
amortization and non-cash items
|
1,735
|
|
1,931
|
Tax expense
(benefit) – deferred and other
|
(199)
|
|
(3,759)
|
Proportionate
share of adjustments to earnings from equity method investments
(c)
|
(2,535)
|
|
(2,770)
|
Proportionate
share of adjustments for noncontrolling interests
(d)
|
(441)
|
|
(769)
|
Total
adjustments
|
57,041
|
|
(45,015)
|
AFFO Attributable to
W. P. Carey (e)
|
$
1,118,267
|
|
$
1,060,598
|
|
|
|
|
Summary
|
|
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey (e)
|
$
1,061,226
|
|
$
1,105,613
|
FFO (as defined by
NAREIT) attributable to W. P. Carey per diluted share
(e)
|
$
4.92
|
|
$
5.52
|
AFFO attributable to W.
P. Carey (e)
|
$
1,118,267
|
|
$
1,060,598
|
AFFO attributable to W.
P. Carey per diluted share (e)
|
$
5.18
|
|
$
5.29
|
Diluted
weighted-average shares outstanding
|
215,760,496
|
|
200,427,124
|
W. P. CAREY
INC. Full Year Reconciliation of Net Income from Real
Estate to Adjusted Funds from Operations (AFFO) from Real Estate
(Unaudited) (in thousands, except share and per share
amounts)
|
|
|
Years Ended December
31,
|
|
2023
|
|
2022
|
Net income from Real
Estate attributable to W. P. Carey
|
$
704,837
|
|
$
591,603
|
Adjustments:
|
|
|
|
Depreciation
and amortization of real property
|
571,750
|
|
500,764
|
Gain on sale of
real estate, net (a)
|
(315,984)
|
|
(43,476)
|
Impairment
charges — real estate (b)
|
86,411
|
|
39,119
|
Gain on change
in control of interests (h)
|
—
|
|
(11,405)
|
Proportionate
share of adjustments to earnings from equity method investments
(c)
|
11,381
|
|
15,155
|
Proportionate
share of adjustments for noncontrolling interests
(d)
|
(666)
|
|
(491)
|
Total
adjustments
|
352,892
|
|
499,666
|
FFO (as defined by
NAREIT) Attributable to W. P. Carey – Real Estate
(e)
|
1,057,729
|
|
1,091,269
|
Adjustments:
|
|
|
|
Straight-line
and other leasing and financing adjustments
|
(71,869)
|
|
(54,431)
|
Other (gains)
and losses
|
36,427
|
|
(97,149)
|
Stock-based
compensation
|
34,504
|
|
32,841
|
Above- and
below-market rent intangible lease amortization, net
|
34,164
|
|
41,390
|
Amortization of
deferred financing costs
|
20,544
|
|
17,203
|
Merger and
other expenses (g)
|
4,954
|
|
19,384
|
Other
amortization and non-cash items
|
1,735
|
|
1,931
|
Tax expense
(benefit) – deferred and other
|
(199)
|
|
(8,164)
|
Proportionate
share of adjustments to earnings from equity method investments
(c)
|
(2,535)
|
|
(723)
|
Proportionate
share of adjustments for noncontrolling interests
(d)
|
(441)
|
|
(769)
|
Total
adjustments
|
57,284
|
|
(48,487)
|
AFFO Attributable to
W. P. Carey – Real Estate (e)
|
$
1,115,013
|
|
$
1,042,782
|
|
|
|
|
Summary
|
|
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey – Real Estate
(e)
|
$
1,057,729
|
|
$
1,091,269
|
FFO (as defined by
NAREIT) attributable to W. P. Carey per diluted share –
Real Estate (e)
|
$
4.90
|
|
$
5.44
|
AFFO attributable to W.
P. Carey – Real Estate (e)
|
$
1,115,013
|
|
$
1,042,782
|
AFFO attributable to W.
P. Carey per diluted share – Real Estate (d)
|
$
5.17
|
|
$
5.20
|
Diluted
weighted-average shares outstanding
|
215,760,496
|
|
200,427,124
|
__________
|
(a)
|
Amounts for the
three months and year ended December 31, 2023 include a gain on
sale of real estate of $59.1 million recognized upon entering into
an agreement to sell our portfolio of 70 office properties located
in Spain to the tenant occupying the properties and the
reclassification of the investment to net investments in sales-type
leases. Amount for the year ended December 31, 2023 includes a gain
on sale of real estate of $176.2 million recognized upon receiving
notice of the exercise of a purchase option for a portfolio of 78
net-lease self-storage properties and the reclassification of the
investment to net investments in sales-type leases.
|
(b)
|
Amount for the three
months and year ended December 31, 2023 includes an impairment
charge of $47.3 million recognized on the 59 properties
contributed to NLOP in connection with the Spin-Off.
|
(c)
|
Equity
income, including amounts that are not typically recognized
for FFO and AFFO, is recognized within Earnings from equity method
investments on the consolidated statements of income. This
represents adjustments to equity income to reflect FFO and AFFO on
a pro rata basis.
|
(d)
|
Adjustments
disclosed elsewhere in this reconciliation are on a consolidated
basis. This adjustment reflects our FFO or AFFO on a pro rata
basis.
|
(e)
|
FFO and AFFO are
non-GAAP measures. See below for a description of FFO and
AFFO.
|
(f)
|
AFFO and Real Estate
AFFO adjustment amounts for the three months ended December 31,
2023 are primarily comprised of a non-cash allowance for credit
losses of $35.2 million, net losses on foreign currency exchange
rate movements of $6.5 million and non-cash losses on non-hedging
derivatives of $4.3 million.
|
(g)
|
Amounts for the
three months ended September 30, 2023 and the year ended December
31, 2023 are primarily comprised of costs incurred in connection
with the Spin-Off. Amount for the year ended December 31, 2022 is
primarily comprised of costs incurred in connection with the CPA:18
Merger.
|
(h)
|
Amount for the year
ended December 31, 2022 represents a gain recognized on the
remaining interests in four investments acquired in the CPA:18
Merger, which we had previously accounted for under the equity
method.
|
(i)
|
Amount for the year
ended December 31, 2022 represents a gain recognized on our
previously held interest in shares of CPA:18 – Global common stock
in connection with the CPA:18 Merger
|
(j)
|
Amount for the year
ended December 31, 2022 represents an impairment charge recognized
on goodwill within our Investment Management segment, since future
Investment Management cash flows are expected to be
minimal.
|
Non-GAAP Financial Disclosure
Funds from Operations (FFO) and Adjusted Funds from
Operations (AFFO)
Due to certain unique operating characteristics of real
estate companies, as discussed below, the National Association of
Real Estate Investment Trusts (NAREIT), an industry trade group,
has promulgated a non-GAAP measure known as FFO, which we believe
to be an appropriate supplemental measure, when used in addition to
and in conjunction with results presented in accordance with GAAP,
to reflect the operating performance of a REIT. The use of FFO is
recommended by the REIT industry as a supplemental non-GAAP
measure. FFO is not equivalent to, nor a substitute for, net income
or loss as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the
standards established by the White Paper on FFO approved by the
Board of Governors of NAREIT, as restated in December 2018.
The White Paper defines FFO as net income or loss computed in
accordance with GAAP, excluding gains or losses from the sale of
certain real estate, impairment charges on real estate or other
assets incidental to the company's main business, gains or losses
on changes in control of interests in real estate and depreciation
and amortization from real estate assets; and after adjustments for
unconsolidated partnerships and jointly owned investments.
Adjustments for unconsolidated partnerships and jointly owned
investments are calculated to reflect FFO on the same
basis.
We also modify the NAREIT computation of FFO to adjust GAAP
net income for certain non-cash charges, such as amortization of
real estate-related intangibles, deferred income tax benefits and
expenses, straight-line rent and related reserves, other non-cash
rent adjustments, non-cash allowance for credit losses on loans
receivable and finance leases, stock-based compensation, non-cash
environmental accretion expense, amortization of discounts and
premiums on debt and amortization of deferred financing costs. 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 non-core income and expenses, such as
gains or losses from extinguishment of debt, merger and acquisition
expenses, and spin-off expenses. We also exclude realized and
unrealized gains/losses on foreign currency exchange rate movements
(other than those realized on the settlement of foreign currency
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 to arrive at AFFO as they
are not the primary drivers in our decision-making process and
excluding these items provides investors a view of our portfolio
performance over time and makes it more comparable to other REITs
that are currently not engaged in acquisitions, mergers and
restructuring, which are not part of our normal business
operations. AFFO also reflects adjustments for unconsolidated
partnerships and jointly owned investments. 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 as we believe 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 income computed under GAAP, or as
alternatives to net cash provided by operating activities computed
under GAAP, or as indicators of our ability to fund our cash
needs.
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SOURCE W. P. Carey Inc.