NEW YORK, Aug. 4, 2017
/PRNewswire/ -- W. P. Carey Inc. (NYSE: WPC) (W. P. Carey or the Company), an
internally-managed net lease real estate investment trust, today
reported its financial results for the second quarter ended
June 30, 2017.
Total Company
- Net income attributable to W. P.
Carey of $64.3 million, or
$0.59 per diluted share
- AFFO of $148.4 million, or
$1.38 per diluted share
- Affirm 2017 AFFO guidance range of $5.10 to $5.30 per diluted share
- Quarterly cash dividend raised to $1.00 per share, equivalent to an annualized
dividend rate of $4.00 per
share
- As previously announced, the Company's Board of Directors
approved a plan to exit all non-traded retail fundraising
activities as of June 30,
2017
Business Segments
Owned Real Estate
- Segment components revised to exclude equity income from the
Company's interests in the Managed REITs
- Segment net income attributable to W. P. Carey of $43.5
million
- Segment AFFO of $117.4
million, or $1.09 per diluted
share
- Completed investments totaling $60.3
million
- Gross disposition proceeds totaling $20.1 million
- Portfolio occupancy of 99.3%
Investment Management
- Segment components revised to include equity income from the
Company's interests in the Managed REITs
- Segment net income attributable to W. P. Carey of $20.8
million
- Segment AFFO of $31.0 million,
or $0.29 per diluted share
- Assets under management of $13.2
billion
Balance Sheet & Capitalization
- Utilized ATM offering program to raise $22.9 million in net proceeds
- €88.7 million ($100.0 million)
drawn under the Company's delayed draw term loan
MANAGEMENT COMMENTARY
"I'm pleased to report that we generated AFFO per diluted share
of $1.38 during the second quarter,
up 11% from the prior year period, and we are currently on track to
be above the midpoint of our full year guidance range," said
Mark J. DeCesaris, Chief Executive
Officer of W. P. Carey. "Given the
inherent unevenness of transaction timing, the bulk of acquisitions
and dispositions for our owned portfolio are expected to occur
towards the end of the year, resulting in little to no impact on
our overall 2017 results."
"Amid a challenging acquisition environment, we are remaining
disciplined and not chasing deals that do not meet our risk-reward
criteria. As a result, our investments year-to-date have been
primarily build-to-suit expansions and we continue to focus on
generating accretive opportunities within our portfolio — through
such expansions, renovations and follow-on deals with existing
tenants — where we are able to extend lease terms and enhance
criticality, often at above-market yields."
BUSINESS SEGMENT COMPONENTS REVISED
- As a result of its decision to exit all non-traded retail
fundraising activities as of June 30,
2017, the Company has revised how it views and therefore
presents its two business segments. Equity income earned through
its ownership interests in the Managed REITs and its special member
interests in the operating partnerships of the Managed REITs are
now recognized within its Investment Management segment.
Previously, these items were recognized within its Owned Real
Estate segment. For purposes of comparability, segment financial
statements for all periods presented have been revised to reflect
this change.
QUARTERLY FINANCIAL RESULTS
Revenues
- Total Company: Revenues excluding reimbursable costs
(net revenues) for the 2017 second quarter totaled $202.7 million, up 2.0% from $198.8 million for the 2016 second quarter, due
primarily to higher net revenues from Investment Management, partly
offset by lower net revenues from Owned Real Estate.
- Owned Real Estate: Owned Real Estate revenues excluding
reimbursable tenant costs (net revenues from Owned Real Estate) for
the 2017 second quarter were $168.7
million, down 4.4% from $176.4
million for the 2016 second quarter, due primarily to lower
lease revenues resulting from planned dispositions.
- Investment Management: Investment Management revenues
excluding reimbursable costs (net revenues from Investment
Management) for the 2017 second quarter were $34.0 million, up 52.5% from $22.3 million for the 2016 second quarter, due
primarily to higher structuring revenues resulting from increased
investment activity on behalf of the Managed Programs and higher
asset management fees as a result of growth in assets under
management.
Net Income Attributable to W. P.
Carey
- Net income attributable to W. P.
Carey for the 2017 second quarter was $64.3 million, up 24.4% compared to $51.7 million for the 2016 second quarter, due
primarily to $35.4 million of
impairment charges recorded during the prior-year period, higher
net revenues from Investment Management and lower interest expense,
partly offset by a lower gain on sale of real estate, higher
provision for income taxes, restructuring expenses recorded during
the current-year period and lower net revenues from Owned Real
Estate.
Adjusted Funds from Operations (AFFO)
- AFFO for the 2017 second quarter was $1.38 per diluted share, up 11.3% from
$1.24 per diluted share for the 2016
second quarter, due primarily to (i) higher structuring revenues;
(ii) lower interest expense; (iii) lower general and administrative
expenses; and (iv) higher asset management fees. These factors were
partly offset by lower lease revenues resulting from planned
dispositions.
Note: Further information concerning AFFO, a non-GAAP
supplemental performance metric, is presented in the accompanying
tables and related notes.
Dividend
- As previously announced, on June 16,
2017, the Company's Board of Directors declared a quarterly
cash dividend of $1.00 per share,
equivalent to an annualized dividend rate of $4.00 per share. The dividend was paid on
July 14, 2017 to stockholders of
record as of June 30, 2017.
AFFO GUIDANCE
- For the 2017 full year, the Company affirms that it expects to
report AFFO of between $5.10 and
$5.30 per diluted share.
Note: The Company does not provide guidance on net income. The
Company only provides guidance on 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.
BALANCE SHEET AND CAPITALIZATION
Delayed Draw Term Loan
- On June 8, 2017, the Company drew
down in full €88.7 million (equivalent to $100.0 million) under its delayed draw term loan
and used the proceeds to pay down amounts then outstanding under
its revolving line of credit, bringing the aggregate amount
outstanding as of June 30, 2017 on
term loans under its senior unsecured credit facility to €325.0
million (equivalent to $370.9
million).
"At-The-Market" (ATM) Offering Program
- During and subsequent to the 2017 second quarter, the Company
issued 345,253 shares of common stock under its ATM offering
program at a weighted-average price of $67.78 per share, for net proceeds of
$22.9 million.
OWNED REAL ESTATE
Investments
- During the 2017 second quarter, the Company completed
investments totaling $60.3 million,
including transaction-related costs and fees, comprised of three
completed expansion projects at a cost totaling $54.3 million and one acquisition for
$6.0 million, bringing total
investment activity for the first half of 2017 to $63.6 million.
Dispositions
- During the 2017 second quarter, the Company disposed of five
properties for total gross proceeds of $20.1
million, before transaction-related costs and fees, bringing
total dispositions for the first half of 2017 to $73.0 million.
Composition
- As of June 30, 2017, the Company's Owned Real Estate
portfolio consisted of 895 net lease properties, comprising 86.6
million square feet leased to 214 tenants, and two hotel
operating properties. As of that date, the weighted-average lease
term of the net lease portfolio was 9.6 years and the occupancy
rate was 99.3%.
INVESTMENT MANAGEMENT
- W. P. Carey is the advisor to CPA®:17 –
Global and CPA®:18 – Global (the CPA® REITs),
Carey Watermark Investors Incorporated (CWI 1) and Carey Watermark
Investors 2 Incorporated (CWI 2) (the CWI REITs, and together with
the CPA® REITs, the Managed REITs), Carey Credit Income
Fund (CCIF) and Carey European Student Housing Fund I, L.P. (CESH
I, and together with the Managed REITs and CCIF, the Managed
Programs).
Fundraising Platform Exit
- As previously announced, the Company's Board of Directors
approved a plan to exit all non-traded retail fundraising
activities carried out by its wholly-owned broker-dealer
subsidiary, Carey Financial LLC, as of June
30, 2017, in keeping with its long-term strategy of focusing
exclusively on net lease investing for the Company's balance sheet.
The Company currently expects to manage all existing Managed
Programs through the end of their natural lifecycles.
Acquisitions
During the 2017 second quarter, the Company structured new
investments on behalf of the Managed Programs totaling $506.0 million, including transaction-related
costs and fees, comprised of $141.5
million on behalf of the CPA® REITs and
$364.5 million on behalf of other
Managed Programs.
- Activity during the 2017 second quarter brings total investment
volume on behalf of the Managed Programs for the first half of 2017
to $617.0 million, including
transaction-related costs and fees, comprised of $209.1 million on behalf of the CPA®
REITs and $407.9 million on behalf of
other Managed Programs.
Assets Under Management
- As of June 30, 2017, the Managed Programs had total assets
under management of approximately $13.2
billion, up 2.3% from $12.9
billion as of June 30, 2016.
Net Investor Capital Inflows
- During the 2017 second quarter, investor capital inflows for
the Managed Programs, including Distribution Reinvestment Plan
proceeds, net of redemptions, totaled $72.3
million, primarily into CWI 2 and CESH I.
*
* *
* *
Supplemental Information
The Company has provided supplemental unaudited financial and
operating information regarding the 2017 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
Securities and Exchange Commission (SEC) on August 4,
2017.
*
* *
* *
Live Conference Call and Audio Webcast Scheduled for
10:00 a.m. Eastern Time
Please call to register at least 10 minutes prior to the start
time.
Date/Time: Friday, August 4, 2017 at 10:00 a.m. Eastern Time
Call-in Number: 1-877-465-1289 (US) or +1-201-689-8762
(international)
Audio Webcast: www.wpcarey.com/earnings
Audio Webcast Replay
An audio replay of the call will be available
at www.wpcarey.com/earnings.
*
*
* * *
W. P. Carey Inc.
W. P. Carey Inc. is a leading internally-managed net lease REIT
that provides long-term sale-leaseback and build-to-suit financing
solutions primarily for companies in the U.S. and Europe. At June 30, 2017, the Company had
an enterprise value of approximately $11.2
billion. In addition to its owned portfolio of diversified
global real estate, W. P. Carey manages a series of
investment programs with assets under management of approximately
$13.2 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
*
* *
* *
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 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," "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. DeCesaris, including statements regarding
our operational efficiencies and cost reductions; weighted-average
lease term, criticality, yields, and occupancy rate of our owned
real estate and other portfolio characteristics; growth in assets
under management; the acquisition environment and our risk-reward
criteria, including the impact of such factors on the types of
investments we make and whether they are accretive; annualized
dividends and payout ratio; disposition and capital recycling
plans, and the intended results thereof; investor capital inflows,
including our access to capital markets, as well as our financing
activities, cost of debt and interest expense levels; adjusted
funds from operations coverage and guidance, including underlying
assumptions, such as the timing of acquisitions and dispositions
and the impact thereof, and current trends; our revenue mix; and
anticipated future financial and operating performance and results,
including underlying assumptions and 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, 2016.
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.
*
* *
* *
W. P. CAREY
INC.
Consolidated
Balance Sheets (Unaudited)
(in
thousands)
|
|
|
June 30,
2017
|
|
December 31,
2016
|
Assets
|
|
|
|
Investments in real
estate:
|
|
|
|
Real
estate
|
$
|
5,276,976
|
|
|
$
|
5,204,126
|
|
Operating real
estate
|
81,902
|
|
|
81,711
|
|
Net investments in
direct financing leases
|
708,997
|
|
|
684,059
|
|
In-place lease and
other intangible assets
|
1,199,289
|
|
|
1,172,238
|
|
Above-market rent
intangible assets
|
639,654
|
|
|
632,383
|
|
Assets held for sale
(a)
|
32,470
|
|
|
26,247
|
|
Investments in real
estate
|
7,939,288
|
|
|
7,800,764
|
|
Accumulated
depreciation and amortization (b)
|
(1,174,374)
|
|
|
(1,018,864)
|
|
Net investments in
real estate
|
6,764,914
|
|
|
6,781,900
|
|
Equity investments in
the Managed Programs and real estate (c)
|
330,540
|
|
|
298,893
|
|
Cash and cash
equivalents
|
171,587
|
|
|
155,482
|
|
Due from
affiliates
|
129,337
|
|
|
299,610
|
|
Other assets,
net
|
280,110
|
|
|
282,149
|
|
Goodwill
|
640,761
|
|
|
635,920
|
|
Total
assets
|
$
|
8,317,249
|
|
|
$
|
8,453,954
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Debt:
|
|
|
|
Unsecured senior
notes, net
|
$
|
2,415,400
|
|
|
$
|
1,807,200
|
|
Unsecured term loans,
net
|
369,300
|
|
|
249,978
|
|
Unsecured revolving
credit facility
|
165,501
|
|
|
676,715
|
|
Non-recourse
mortgages, net
|
1,314,463
|
|
|
1,706,921
|
|
Debt, net
|
4,264,664
|
|
|
4,440,814
|
|
Accounts payable,
accrued expenses and other liabilities
|
281,415
|
|
|
266,917
|
|
Below-market rent and
other intangible liabilities, net
|
118,736
|
|
|
122,203
|
|
Deferred income
taxes
|
86,593
|
|
|
90,825
|
|
Distributions
payable
|
108,638
|
|
|
107,090
|
|
Total
liabilities
|
4,860,046
|
|
|
5,027,849
|
|
Redeemable
noncontrolling interest
|
965
|
|
|
965
|
|
|
|
|
|
Preferred stock,
$0.001 par value, 50,000,000 shares authorized; none
issued
|
—
|
|
|
—
|
|
Common stock, $0.001
par value, 450,000,000 shares authorized; 106,866,623 and
106,294,162
shares, respectively, issued and outstanding
|
107
|
|
|
106
|
|
Additional paid-in
capital
|
4,423,841
|
|
|
4,399,961
|
|
Distributions in
excess of accumulated earnings
|
(989,384)
|
|
|
(894,137)
|
|
Deferred compensation
obligation
|
46,711
|
|
|
50,222
|
|
Accumulated other
comprehensive loss
|
(243,648)
|
|
|
(254,485)
|
|
Total stockholders'
equity
|
3,237,627
|
|
|
3,301,667
|
|
Noncontrolling
interests
|
218,611
|
|
|
123,473
|
|
Total
equity
|
3,456,238
|
|
|
3,425,140
|
|
Total
liabilities and equity
|
$
|
8,317,249
|
|
|
$
|
8,453,954
|
|
________
(a)
|
At June 30,
2017, we had three properties classified as Assets held for sale.
At December 31, 2016, we had one property classified as Assets held
for sale, which was sold during the six months ended June 30,
2017.
|
(b)
|
Includes $552.4
million and $484.4 million of real estate asset depreciation as of
June 30, 2017 and December 31, 2016, respectively, and
$622.0 million and $534.4 million of lease intangible amortization
as of June 30, 2017 and December 31, 2016,
respectively.
|
(c)
|
Our equity
investments in the Managed Programs totaled $191.3 million and
$160.8 million as of June 30, 2017 and December 31, 2016,
respectively. Our equity investments in real estate joint ventures
totaled $139.2 million and $138.1 million as of June 30, 2017
and December 31, 2016, respectively.
|
W. P. CAREY
INC.
Quarterly
Consolidated Statements of Income (Unaudited)
(in thousands,
except share and per share amounts)
|
|
|
Three Months
Ended
|
|
June 30,
2017
|
|
March 31,
2017
|
|
June 30,
2016
|
Revenues
|
|
|
|
|
|
Owned Real
Estate:
|
|
|
|
|
|
Lease
revenues
|
$
|
158,255
|
|
|
$
|
155,781
|
|
|
$
|
167,328
|
|
Operating property revenues
|
8,223
|
|
|
6,980
|
|
|
8,270
|
|
Reimbursable tenant costs
|
5,322
|
|
|
5,221
|
|
|
6,391
|
|
Lease
termination income and other
|
2,247
|
|
|
760
|
|
|
838
|
|
|
174,047
|
|
|
168,742
|
|
|
182,827
|
|
Investment
Management:
|
|
|
|
|
|
Asset
management revenue
|
17,966
|
|
|
17,367
|
|
|
15,005
|
|
Structuring revenue
|
14,330
|
|
|
3,834
|
|
|
5,968
|
|
Reimbursable costs from affiliates
|
13,479
|
|
|
25,700
|
|
|
12,094
|
|
Dealer
manager fees
|
1,000
|
|
|
3,325
|
|
|
1,372
|
|
Other
advisory revenue
|
706
|
|
|
91
|
|
|
—
|
|
|
47,481
|
|
|
50,317
|
|
|
34,439
|
|
|
221,528
|
|
|
219,059
|
|
|
217,266
|
|
Operating
Expenses
|
|
|
|
|
|
Depreciation and
amortization
|
62,849
|
|
|
62,430
|
|
|
66,581
|
|
Reimbursable tenant
and affiliate costs
|
18,801
|
|
|
30,921
|
|
|
18,485
|
|
General and
administrative
|
17,529
|
|
|
18,424
|
|
|
20,951
|
|
Property expenses,
excluding reimbursable tenant costs
|
10,530
|
|
|
10,110
|
|
|
10,510
|
|
Restructuring and
other compensation (a)
|
7,718
|
|
|
—
|
|
|
452
|
|
Subadvisor fees
(b)
|
3,672
|
|
|
2,720
|
|
|
1,875
|
|
Stock-based
compensation expense
|
3,104
|
|
|
6,910
|
|
|
4,001
|
|
Dealer manager fees
and expenses
|
2,788
|
|
|
3,294
|
|
|
2,620
|
|
Property acquisition
and other expenses (c)
|
1,000
|
|
|
73
|
|
|
(207)
|
|
Impairment
charges
|
—
|
|
|
—
|
|
|
35,429
|
|
|
127,991
|
|
|
134,882
|
|
|
160,697
|
|
Other Income and
Expenses
|
|
|
|
|
|
Interest
expense
|
(42,235)
|
|
|
(41,957)
|
|
|
(46,752)
|
|
Equity in earnings of
equity method investments in the Managed Programs
and real
estate
|
15,728
|
|
|
15,774
|
|
|
16,429
|
|
Other income and
(expenses)
|
(916)
|
|
|
516
|
|
|
426
|
|
|
(27,423)
|
|
|
(25,667)
|
|
|
(29,897)
|
|
Income before income
taxes and gain on sale of real estate
|
66,114
|
|
|
58,510
|
|
|
26,672
|
|
(Provision for)
benefit from income taxes
|
(2,448)
|
|
|
1,305
|
|
|
8,217
|
|
Income before gain on
sale of real estate
|
63,666
|
|
|
59,815
|
|
|
34,889
|
|
Gain on sale of real
estate, net of tax
|
3,465
|
|
|
10
|
|
|
18,282
|
|
Net
Income
|
67,131
|
|
|
59,825
|
|
|
53,171
|
|
Net income
attributable to noncontrolling interests
|
(2,813)
|
|
|
(2,341)
|
|
|
(1,510)
|
|
Net Income
Attributable to W. P. Carey
|
$
|
64,318
|
|
|
$
|
57,484
|
|
|
$
|
51,661
|
|
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
|
0.60
|
|
|
$
|
0.53
|
|
|
$
|
0.48
|
|
Diluted Earnings
Per Share
|
$
|
0.59
|
|
|
$
|
0.53
|
|
|
$
|
0.48
|
|
Weighted-Average
Shares Outstanding
|
|
|
|
|
|
Basic
|
107,668,218
|
|
|
107,562,484
|
|
|
106,310,362
|
|
Diluted
|
107,783,204
|
|
|
107,764,279
|
|
|
106,530,036
|
|
|
|
|
|
|
|
Distributions
Declared Per Share
|
$
|
1.0000
|
|
|
$
|
0.9950
|
|
|
$
|
0.9800
|
|
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,
|
|
2017
|
|
2016
|
Revenues
|
|
|
|
Owned Real
Estate:
|
|
|
|
Lease
revenues
|
$
|
314,036
|
|
|
$
|
342,572
|
|
Operating property revenues
|
15,203
|
|
|
15,172
|
|
Reimbursable tenant costs
|
10,543
|
|
|
12,700
|
|
Lease
termination income and other (d)
|
3,007
|
|
|
33,379
|
|
|
342,789
|
|
|
403,823
|
|
Investment
Management:
|
|
|
|
Reimbursable costs from affiliates
|
39,179
|
|
|
31,832
|
|
Asset
management revenue
|
35,333
|
|
|
29,618
|
|
Structuring revenue
|
18,164
|
|
|
18,689
|
|
Dealer
manager fees
|
4,325
|
|
|
3,544
|
|
Other
advisory revenue
|
797
|
|
|
—
|
|
|
97,798
|
|
|
83,683
|
|
|
440,587
|
|
|
487,506
|
|
Operating
Expenses
|
|
|
|
Depreciation and
amortization
|
125,279
|
|
|
151,033
|
|
Reimbursable tenant
and affiliate costs
|
49,722
|
|
|
44,532
|
|
General and
administrative
|
35,953
|
|
|
42,389
|
|
Property expenses,
excluding reimbursable tenant costs
|
20,640
|
|
|
28,282
|
|
Stock-based
compensation expense
|
10,014
|
|
|
10,608
|
|
Restructuring and
other compensation (a)
|
7,718
|
|
|
11,925
|
|
Subadvisor fees
(b)
|
6,392
|
|
|
5,168
|
|
Dealer manager fees
and expenses
|
6,082
|
|
|
5,972
|
|
Property acquisition
and other expenses (e)
|
1,073
|
|
|
5,359
|
|
Impairment
charges
|
—
|
|
|
35,429
|
|
|
262,873
|
|
|
340,697
|
|
Other Income and
Expenses
|
|
|
|
Interest
expense
|
(84,192)
|
|
|
(95,147)
|
|
Equity in earnings of
equity method investments in the Managed Programs and real
estate
|
31,502
|
|
|
31,440
|
|
Other income and
(expenses)
|
(400)
|
|
|
4,297
|
|
|
(53,090)
|
|
|
(59,410)
|
|
Income before income
taxes and gain on sale of real estate
|
124,624
|
|
|
87,399
|
|
(Provision for)
benefit from income taxes
|
(1,143)
|
|
|
7,692
|
|
Income before gain on
sale of real estate
|
123,481
|
|
|
95,091
|
|
Gain on sale of real
estate, net of tax
|
3,475
|
|
|
18,944
|
|
Net
Income
|
126,956
|
|
|
114,035
|
|
Net income
attributable to noncontrolling interests
|
(5,154)
|
|
|
(4,935)
|
|
Net Income
Attributable to W. P. Carey
|
$
|
121,802
|
|
|
$
|
109,100
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
|
1.13
|
|
|
$
|
1.02
|
|
Diluted Earnings
Per Share
|
$
|
1.13
|
|
|
$
|
1.02
|
|
Weighted-Average
Shares Outstanding
|
|
|
|
Basic
|
107,615,644
|
|
|
106,124,881
|
|
Diluted
|
107,801,318
|
|
|
106,504,226
|
|
|
|
|
|
Distributions
Declared Per Share
|
$
|
1.9950
|
|
|
$
|
1.9542
|
|
__________
(a)
|
Amounts for the
three and six months ended June 30, 2017 represent restructuring
expenses resulting from our exit of all non-traded retail
fundraising activities. Amounts for the three and six months ended
June 30, 2016 represent restructuring and other
compensation-related expenses resulting from a reduction in
headcount and employee severance arrangements, primarily in
connection with the reduction in force that we completed in March
2016.
|
(b)
|
We earn investment
management revenue from CWI 1 and CWI 2 in our role as their
advisor. Pursuant to the terms of their subadvisory agreements,
however, 20% of the fees we receive from CWI 1 and 25% of the fees
we receive from CWI 2 are paid to their respective subadvisors. In
connection with the acquisitions of multi-family properties on
behalf of CPA®:18 – Global, we entered into agreements
with third-party advisors for the day-to-day management of the
properties for which we pay 30% of the initial acquisition fees and
100% of asset management fees paid to us by CPA®:18 –
Global. Pursuant to the terms of the subadvisory agreement we have
with the subadvisor in connection with CCIF, we pay a subadvisory
fee equal to 50% of the asset management fees and organization and
offering costs paid to us by CCIF.
|
(c)
|
Amounts for the
three and six months ended June 30, 2017 are primarily comprised of
accruals for estimated one-time legal settlement
expenses.
|
(d)
|
Amount for the six
months ended June 30, 2016 includes $32.2 million of lease
termination income related to a property sold during that
period.
|
(e)
|
Amount for the six
months ended June 30, 2016 reflects expenses related to our formal
strategic review, which was completed in May 2016.
|
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,
2017
|
|
March 31,
2017
|
|
June 30,
2016
|
Net income
attributable to W. P. Carey
|
$
|
64,318
|
|
|
$
|
57,484
|
|
|
$
|
51,661
|
|
Adjustments:
|
|
|
|
|
|
Depreciation and amortization of real property
|
61,636
|
|
|
61,182
|
|
|
65,096
|
|
Gain on
sale of real estate, net
|
(3,465)
|
|
|
(10)
|
|
|
(18,282)
|
|
Impairment charges
|
—
|
|
|
—
|
|
|
35,429
|
|
Proportionate share of adjustments for noncontrolling interests to
arrive at
FFO
|
(2,562)
|
|
|
(2,541)
|
|
|
(2,662)
|
|
Proportionate share of adjustments to equity in net income of
partially owned
entities to arrive
at FFO
|
833
|
|
|
2,717
|
|
|
1,331
|
|
Total
adjustments
|
56,442
|
|
|
61,348
|
|
|
80,912
|
|
FFO Attributable
to W. P. Carey (as defined by NAREIT) (a)
|
120,760
|
|
|
118,832
|
|
|
132,573
|
|
Adjustments:
|
|
|
|
|
|
Above-
and below-market rent intangible lease amortization, net
|
12,323
|
|
|
12,491
|
|
|
13,105
|
|
Restructuring and other compensation (b)
|
7,718
|
|
|
—
|
|
|
452
|
|
Other
amortization and non-cash items (c) (d)
|
6,693
|
|
|
2,094
|
|
|
404
|
|
Stock-based compensation
|
3,104
|
|
|
6,910
|
|
|
4,001
|
|
Straight-line and other rent adjustments
|
(2,965)
|
|
|
(3,500)
|
|
|
(2,234)
|
|
Amortization of deferred financing costs (d)
|
2,542
|
|
|
1,400
|
|
|
541
|
|
(Gain)
loss on extinguishment of debt
|
(2,443)
|
|
|
912
|
|
|
(112)
|
|
Tax
benefit – deferred
|
(1,382)
|
|
|
(5,551)
|
|
|
(16,535)
|
|
Property
acquisition and other expenses (e)
|
1,000
|
|
|
73
|
|
|
(207)
|
|
Realized
(gains) losses on foreign currency
|
(378)
|
|
|
403
|
|
|
1,222
|
|
Proportionate share of adjustments to equity in net income of
partially owned
entities to arrive
at AFFO
|
1,978
|
|
|
550
|
|
|
(841)
|
|
Proportionate share of adjustments for noncontrolling interests to
arrive at
AFFO
|
(513)
|
|
|
(376)
|
|
|
(131)
|
|
Total
adjustments
|
27,677
|
|
|
15,406
|
|
|
(335)
|
|
AFFO Attributable
to W. P. Carey (a)
|
$
|
148,437
|
|
|
$
|
134,238
|
|
|
$
|
132,238
|
|
|
|
|
|
|
|
Summary
|
|
|
|
|
|
FFO attributable to
W. P. Carey (as defined by NAREIT) (a)
|
$
|
120,760
|
|
|
$
|
118,832
|
|
|
$
|
132,573
|
|
FFO attributable to
W. P. Carey (as defined by NAREIT) per diluted share
(a)
|
$
|
1.12
|
|
|
$
|
1.10
|
|
|
$
|
1.24
|
|
AFFO attributable to
W. P. Carey (a)
|
$
|
148,437
|
|
|
$
|
134,238
|
|
|
$
|
132,238
|
|
AFFO attributable to
W. P. Carey per diluted share (a)
|
$
|
1.38
|
|
|
$
|
1.25
|
|
|
$
|
1.24
|
|
Diluted
weighted-average shares outstanding
|
107,783,204
|
|
|
107,764,279
|
|
|
106,530,036
|
|
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,
|
|
2017
|
|
2016
|
Net income
attributable to W. P. Carey
|
$
|
121,802
|
|
|
$
|
109,100
|
|
Adjustments:
|
|
|
|
Depreciation and amortization of real property
|
122,818
|
|
|
148,053
|
|
Gain on
sale of real estate, net
|
(3,475)
|
|
|
(18,944)
|
|
Impairment charges
|
—
|
|
|
35,429
|
|
Proportionate share of adjustments for noncontrolling interests to
arrive at FFO
|
(5,103)
|
|
|
(5,287)
|
|
Proportionate share of adjustments to equity in net income of
partially-owned entities to arrive at FFO
|
3,550
|
|
|
2,640
|
|
Total
adjustments
|
117,790
|
|
|
161,891
|
|
FFO Attributable
to W. P. Carey (as defined by NAREIT) (a)
|
239,592
|
|
|
270,991
|
|
Adjustments:
|
|
|
|
Above-
and below-market rent intangible lease amortization, net
(f)
|
24,814
|
|
|
11,287
|
|
Stock-based compensation
|
10,014
|
|
|
10,608
|
|
Other
amortization and non-cash items (c) (d)
|
8,787
|
|
|
(2,798)
|
|
Restructuring and other compensation (b)
|
7,718
|
|
|
11,925
|
|
Tax
benefit – deferred
|
(6,933)
|
|
|
(19,523)
|
|
Straight-line and other rent adjustments (g)
|
(6,465)
|
|
|
(29,146)
|
|
Amortization of deferred financing costs (d)
|
3,942
|
|
|
1,264
|
|
(Gain)
loss on extinguishment of debt
|
(1,531)
|
|
|
1,813
|
|
Property
acquisition and other expenses (e) (h)
|
1,073
|
|
|
5,359
|
|
Realized
losses on foreign currency
|
25
|
|
|
1,010
|
|
Allowance for credit losses
|
—
|
|
|
7,064
|
|
Proportionate share of adjustments to equity in net income of
partially-owned entities to arrive at
AFFO
|
2,528
|
|
|
480
|
|
Proportionate share of adjustments for noncontrolling interests to
arrive at AFFO
|
(889)
|
|
|
1,368
|
|
Total
adjustments
|
43,083
|
|
|
711
|
|
AFFO Attributable
to W. P. Carey (a)
|
$
|
282,675
|
|
|
$
|
271,702
|
|
|
|
|
|
Summary
|
|
|
|
FFO attributable to
W. P. Carey (as defined by NAREIT) (a)
|
$
|
239,592
|
|
|
$
|
270,991
|
|
FFO attributable to
W. P. Carey (as defined by NAREIT) per diluted share
(a)
|
$
|
2.22
|
|
|
$
|
2.54
|
|
AFFO attributable to
W. P. Carey (a)
|
$
|
282,675
|
|
|
$
|
271,702
|
|
AFFO attributable to
W. P. Carey per diluted share (a)
|
$
|
2.62
|
|
|
$
|
2.55
|
|
Diluted
weighted-average shares outstanding
|
107,801,318
|
|
|
106,504,226
|
|
__________
(a)
|
FFO and AFFO are
non-GAAP measures. See below for a description of FFO and
AFFO.
|
(b)
|
Amounts for the
three and six months ended June 30, 2017 represent restructuring
expenses resulting from our exit of all non-traded retail
fundraising activities. Amounts for the three and six months ended
June 30, 2016 represent restructuring and other
compensation-related expenses resulting from a reduction in
headcount and employee severance arrangements, primarily in
connection with the reduction in force that we completed in March
2016.
|
(c)
|
Represents
primarily unrealized gains and losses from foreign exchange and
derivatives.
|
(d)
|
Effective July 1,
2016, the amortization of debt premiums and discounts, which was
previously included in Other amortization and non-cash items, is
included in Amortization of deferred financing costs. Prior periods
have been revised to reflect this change. Amortization of debt
premiums and discounts for the three and six months ended June 30,
2016 was $0.8 million and $1.4 million,
respectively.
|
(e)
|
Amounts for the
three and six months ended June 30, 2017 are primarily comprised of
accruals for estimated one-time legal settlement
expenses.
|
(f)
|
Amount for the six
months ended June 30, 2016 includes an adjustment of $15.6 million
due to the acceleration of a below-market lease from a tenant of a
domestic property that was sold during that period.
|
(g)
|
Amount for the six
months ended June 30, 2016 includes an adjustment to exclude $27.2
million of the $32.2 million of lease termination income recognized
in connection with a domestic property that was sold during that
period, as such amount was determined to be non-core income. Amount
for the six months ended June 30, 2016 also reflects an adjustment
to include $1.8 million of lease termination income received in
December 2015 that represented core income for the six months ended
June 30, 2016.
|
(h)
|
Amount for the six
months ended June 30, 2016 reflects expenses related to our formal
strategic review, which was completed in May 2016.
|
Non-GAAP Financial Disclosure
Due to certain unique operating characteristics of real
estate companies, as discussed below, the National Association of
Real Estate Investment Trusts, Inc., or 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 revised in February 2004. The
White Paper defines FFO as net income or loss computed in
accordance with GAAP, excluding gains or losses from sales of
property, impairment charges on 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. Our FFO calculation
complies with NAREIT's policy described above.
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 non-core income and
expenses such as property acquisition and other expenses (which
includes expenses related to the formal strategic review that we
completed in May 2016), certain lease
termination income, expenses related to restructuring and other
compensation-related expenses resulting from a reduction in
headcount and employee severance arrangements, primarily during the
first quarter of 2016 and the second quarter of 2017, and accruals
for estimated one-time legal settlement expenses. We also exclude
realized gains/losses on foreign exchange transactions (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 which are
currently not 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 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 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.
Institutional Investors:
Peter Sands
W. P. Carey Inc.
212-492-1110
institutionalir@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
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content:http://www.prnewswire.com/news-releases/w-p-carey-inc-announces-second-quarter-2017-financial-results-300499675.html
SOURCE W. P. Carey Inc.