NEW YORK, Nov. 3, 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 third quarter
ended September 30, 2017.
Total Company
- Net income attributable to W. P.
Carey of $80.3 million, or
$0.74 per diluted share
- AFFO of $148.2 million, or
$1.37 per diluted share
- 2017 AFFO guidance range raised and narrowed to $5.25 to $5.35 per diluted share
- Quarterly cash dividend raised to $1.005 per share, equivalent to an annualized
dividend rate of $4.02 per
share
Business Segments
Owned Real Estate
- Segment net income attributable to W. P. Carey of $56.5
million
- Segment AFFO of $116.3
million, or $1.07 per diluted
share
- Commenced expansion and build-to-suit projects for an
expected total investment of $83.0
million
- Gross disposition proceeds totaling $59.6 million
- Portfolio occupancy of 99.8%
Investment Management
- Segment net income attributable to W. P. Carey of $23.8
million
- Segment AFFO of $31.9 million,
or $0.30 per diluted share
- Assets under management of $13.2
billion
- Management of BDC transitioned to Guggenheim Partners
- Completed wind-down of Carey Financial
MANAGEMENT COMMENTARY
"We reported solid third quarter results, generating AFFO of
$1.37 per diluted share, and raised
our full year 2017 guidance range to between $5.25 and $5.35 per diluted share," said
Mark J. DeCesaris, Chief Executive
Officer of W. P. Carey. "Our revenue mix continues to move
towards more stable, recurring income streams and our results
continue to benefit from both a lower weighted-average cost of debt
and the enhancements we have made to our cost structure. Along with
our strategic shift towards focusing exclusively on net lease
investing for our owned portfolio, these initiatives lay the
foundation for W. P. Carey's
continued growth under Jason Fox's
leadership, when he assumes the role of CEO in January, as we
announced earlier today."
QUARTERLY FINANCIAL RESULTS
As previously announced, as a result of its decision to exit
all non-traded retail fundraising activities, the Company revised
its segment presentation recognizing equity income earned through
its ownership interests in the Managed REITs and its special member
interests in the operating partnerships of the Managed REITs within
its Investment Management segment. Prior to the 2017 second
quarter, 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.
Revenues
- Total Company: Revenues excluding reimbursable costs
(net revenues) for the 2017 third quarter totaled $199.1 million, down 2.5% from $204.2 million for the 2016 third quarter, due to
lower net revenues from both Owned Real Estate and Investment
Management.
- Owned Real Estate: Owned Real Estate net revenues for
the 2017 third quarter were $171.2
million, down 1.3% from $173.5
million for the 2016 third quarter, due primarily to lower
lease revenues resulting from property dispositions, which more
than offset additional lease revenues from property acquisitions
and rent escalations, and a stronger euro relative to the U.S.
dollar.
- Investment Management: Investment Management net
revenues for the 2017 third quarter were $28.0 million, down 8.5% from $30.6 million for the 2016 third quarter, due
primarily to lower structuring revenues and lower dealer manager
fees, which more than offset higher asset management fees resulting
from growth in assets under management.
Net Income Attributable to W. P.
Carey
- Net income attributable to W. P.
Carey for the 2017 third quarter was $80.3 million, down 27.6% compared to
$110.9 million for the 2016 third
quarter, due primarily to a lower aggregate gain on sale of real
estate.
Adjusted Funds from Operations (AFFO)
- AFFO for the 2017 third quarter was $1.37 per diluted share, up 2.2% from
$1.34 per diluted share for the 2016
third quarter, due primarily to lower interest expense and higher
distributions of available cash from the Company's interests in the
Managed REITs, which were partly offset by lower net revenues from
Investment Management and lower lease revenues.
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 September
20, 2017, the Company's Board of Directors declared a
quarterly cash dividend of $1.005 per
share, equivalent to an annualized dividend rate of $4.02 per share. The dividend was paid on
October 16, 2017 to stockholders of
record as of October 2, 2017.
AFFO GUIDANCE
- The Company has raised and narrowed its AFFO guidance range for
the 2017 full year to between $5.25 and
$5.35 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.
OWNED REAL ESTATE
Investments
- During the 2017 third quarter, the Company did not complete any
investments for its Owned Real Estate portfolio. Total investment
activity for the nine months ended September
30, 2017 was $63.6
million.
- During the 2017 third quarter, the Company commenced four
expansion projects with existing tenants and one build-to-suit
project, for an expected total investment of approximately
$83.0 million, which are expected to
be completed over the next 12 months.
Dispositions
- During the 2017 third quarter, the Company disposed of five
properties for total gross proceeds of $59.6
million, bringing total dispositions for the nine months
ended September 30, 2017 to
$132.5 million.
Composition
- As of September 30, 2017, the
Company's Owned Real Estate portfolio consisted of 890 net lease
properties, comprising 85.9 million square feet leased to 211
tenants, and two hotel operating properties. As of that date, the
weighted-average lease term of the net lease portfolio was 9.5
years and the occupancy rate was 99.8%.
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), and Carey European Student Housing Fund I, L.P. (CESH I,
and together with the Managed REITs, the Managed Programs).
Management of BDC Transitioned to Guggenheim Partners
- During the 2017 third quarter, the Company resigned as the
advisor to its business development company (BDC) fund, Carey
Credit Income Fund (CCIF). On October 20,
2017, the shareholders of CCIF approved the appointment of
CCIF's former subadvisor, Guggenheim Partners Investment
Management, LLC, which had been acting as interim advisor, as sole
advisor.
Acquisitions
- During the 2017 third quarter, the Company structured new
investments on behalf of the Managed Programs totaling $484.1 million, primarily related to the CWI
REITs and CESH I, bringing total investment volume on behalf of the
Managed Programs for the nine months ended September 30, 2017 to $1.1
billion.
Assets Under Management
- As of September 30, 2017, the
Managed Programs had total assets under management of approximately
$13.2 billion, up 8.2% from
$12.2 billion as of September 30, 2016.
*
* *
* *
Supplemental Information
The Company has provided supplemental unaudited financial and
operating information regarding the 2017 third 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 November 3,
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, November 3, 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 September 30, 2017, the
Company had an enterprise value of approximately $11.4 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 enhanced cost structure;
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; 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 the stability and recurring
nature of our income streams, as well as the benefits and results
of our strategic shift towards focusing exclusively on net lease
investing for our Owned Portfolio; 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, except share and per share
amounts)
|
|
|
September 30,
2017
|
|
December 31,
2016
|
Assets
|
|
|
|
Investments in real
estate:
|
|
|
|
Land, buildings and
improvements (a)
|
$
|
5,429,239
|
|
|
$
|
5,285,837
|
|
Net investments in
direct financing leases
|
717,184
|
|
|
684,059
|
|
In-place lease and
other intangible assets
|
1,204,770
|
|
|
1,172,238
|
|
Above-market rent
intangible assets
|
639,140
|
|
|
632,383
|
|
Assets held for sale
(b)
|
10,596
|
|
|
26,247
|
|
Investments in real
estate
|
8,000,929
|
|
|
7,800,764
|
|
Accumulated
depreciation and amortization (c)
|
(1,249,024)
|
|
|
(1,018,864)
|
|
Net investments in
real estate
|
6,751,905
|
|
|
6,781,900
|
|
Equity investments in
the Managed Programs and real estate (d)
|
327,598
|
|
|
298,893
|
|
Cash and cash
equivalents
|
169,770
|
|
|
155,482
|
|
Due from
affiliates
|
154,336
|
|
|
299,610
|
|
Other assets,
net
|
287,481
|
|
|
282,149
|
|
Goodwill
|
643,321
|
|
|
635,920
|
|
Total
assets
|
$
|
8,334,411
|
|
|
$
|
8,453,954
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Debt:
|
|
|
|
Unsecured senior
notes, net
|
$
|
2,455,383
|
|
|
$
|
1,807,200
|
|
Unsecured term loans,
net
|
382,191
|
|
|
249,978
|
|
Unsecured revolving
credit facility
|
224,213
|
|
|
676,715
|
|
Non-recourse
mortgages, net
|
1,253,051
|
|
|
1,706,921
|
|
Debt, net
|
4,314,838
|
|
|
4,440,814
|
|
Accounts payable,
accrued expenses and other liabilities
|
255,911
|
|
|
266,917
|
|
Below-market rent and
other intangible liabilities, net
|
116,980
|
|
|
122,203
|
|
Deferred income
taxes
|
86,581
|
|
|
90,825
|
|
Distributions
payable
|
109,187
|
|
|
107,090
|
|
Total
liabilities
|
4,883,497
|
|
|
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; 106,897,515 and
106,294,162
shares, respectively, issued and
outstanding
|
107
|
|
|
106
|
|
Additional paid-in
capital
|
4,429,240
|
|
|
4,399,961
|
|
Distributions in
excess of accumulated earnings
|
(1,017,901)
|
|
|
(894,137)
|
|
Deferred compensation
obligation
|
46,711
|
|
|
50,222
|
|
Accumulated other
comprehensive loss
|
(229,581)
|
|
|
(254,485)
|
|
Total stockholders'
equity
|
3,228,576
|
|
|
3,301,667
|
|
Noncontrolling
interests
|
221,373
|
|
|
123,473
|
|
Total
equity
|
3,449,949
|
|
|
3,425,140
|
|
Total
liabilities and equity
|
$
|
8,334,411
|
|
|
$
|
8,453,954
|
|
________
|
|
|
(a)
|
Includes $82.1
million and $81.7 million of amounts attributable to operating
properties as of September 30, 2017 and December 31, 2016,
respectively.
|
(b)
|
At September 30,
2017, we had one property 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 nine months ended September 30,
2017.
|
(c)
|
Includes $593.9
million and $484.4 million of accumulated depreciation on buildings
and improvements as of September 30, 2017 and December 31,
2016, respectively, and $655.1 million and $534.4 million of
accumulated amortization on lease intangibles as of
September 30, 2017 and December 31, 2016,
respectively.
|
(d)
|
Our equity
investments in the Managed Programs totaled $187.6 million and
$160.8 million as of September 30, 2017 and December 31, 2016,
respectively. Our equity investments in real estate joint ventures
totaled $140.0 million and $138.1 million as of September 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
|
|
September 30,
2017
|
|
June 30,
2017
|
|
September 30,
2016
|
Revenues
|
|
|
|
|
|
Owned Real
Estate:
|
|
|
|
|
|
Lease
revenues
|
$
|
161,511
|
|
|
$
|
158,255
|
|
|
$
|
163,786
|
|
Operating
property revenues
|
8,449
|
|
|
8,223
|
|
|
8,524
|
|
Reimbursable
tenant costs
|
5,397
|
|
|
5,322
|
|
|
6,537
|
|
Lease
termination income and other
|
1,227
|
|
|
2,247
|
|
|
1,224
|
|
|
176,584
|
|
|
174,047
|
|
|
180,071
|
|
Investment
Management:
|
|
|
|
|
|
Asset
management revenue
|
17,938
|
|
|
17,966
|
|
|
15,978
|
|
Structuring
revenue
|
9,817
|
|
|
14,330
|
|
|
12,301
|
|
Reimbursable
costs from affiliates
|
6,211
|
|
|
13,479
|
|
|
14,540
|
|
Dealer manager
fees
|
105
|
|
|
1,000
|
|
|
1,835
|
|
Other advisory
revenue
|
99
|
|
|
706
|
|
|
522
|
|
|
34,170
|
|
|
47,481
|
|
|
45,176
|
|
|
210,754
|
|
|
221,528
|
|
|
225,247
|
|
Operating
Expenses
|
|
|
|
|
|
Depreciation and
amortization
|
64,040
|
|
|
62,849
|
|
|
62,802
|
|
General and
administrative
|
17,236
|
|
|
17,529
|
|
|
15,733
|
|
Reimbursable tenant
and affiliate costs
|
11,608
|
|
|
18,801
|
|
|
21,077
|
|
Property expenses,
excluding reimbursable tenant costs
|
10,556
|
|
|
10,530
|
|
|
10,193
|
|
Subadvisor fees
(a)
|
5,206
|
|
|
3,672
|
|
|
4,842
|
|
Stock-based
compensation expense
|
4,635
|
|
|
3,104
|
|
|
4,356
|
|
Restructuring and
other compensation (b)
|
1,356
|
|
|
7,718
|
|
|
—
|
|
Dealer manager fees
and expenses
|
462
|
|
|
2,788
|
|
|
3,028
|
|
Other expenses
(c)
|
65
|
|
|
1,000
|
|
|
—
|
|
Impairment
charges
|
—
|
|
|
—
|
|
|
14,441
|
|
|
115,164
|
|
|
127,991
|
|
|
136,472
|
|
Other Income and
Expenses
|
|
|
|
|
|
Interest
expense
|
(41,182)
|
|
|
(42,235)
|
|
|
(44,349)
|
|
Equity in earnings of
equity method investments in the Managed Programs
and real
estate
|
16,318
|
|
|
15,728
|
|
|
16,803
|
|
Other income and
(expenses)
|
(4,569)
|
|
|
(916)
|
|
|
5,101
|
|
|
(29,433)
|
|
|
(27,423)
|
|
|
(22,445)
|
|
Income before income
taxes and gain on sale of real estate
|
66,157
|
|
|
66,114
|
|
|
66,330
|
|
Provision for income
taxes
|
(1,760)
|
|
|
(2,448)
|
|
|
(3,154)
|
|
Income before gain on
sale of real estate
|
64,397
|
|
|
63,666
|
|
|
63,176
|
|
Gain on sale of real
estate, net of tax
|
19,257
|
|
|
3,465
|
|
|
49,126
|
|
Net
Income
|
83,654
|
|
|
67,131
|
|
|
112,302
|
|
Net income
attributable to noncontrolling interests
|
(3,376)
|
|
|
(2,813)
|
|
|
(1,359)
|
|
Net Income
Attributable to W. P. Carey
|
$
|
80,278
|
|
|
$
|
64,318
|
|
|
$
|
110,943
|
|
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
|
0.74
|
|
|
$
|
0.60
|
|
|
$
|
1.03
|
|
Diluted Earnings
Per Share
|
$
|
0.74
|
|
|
$
|
0.59
|
|
|
$
|
1.03
|
|
Weighted-Average
Shares Outstanding
|
|
|
|
|
|
Basic
|
108,019,292
|
|
|
107,668,218
|
|
|
107,221,668
|
|
Diluted
|
108,143,694
|
|
|
107,783,204
|
|
|
107,468,029
|
|
|
|
|
|
|
|
Distributions
Declared Per Share
|
$
|
1.0050
|
|
|
$
|
1.0000
|
|
|
$
|
0.9850
|
|
W. P. CAREY
INC. Year-to-Date Consolidated Statements of Income
(Unaudited) (in thousands, except share and per share
amounts)
|
|
|
Nine Months Ended
September 30,
|
|
2017
|
|
2016
|
Revenues
|
|
|
|
Owned Real
Estate:
|
|
|
|
Lease
revenues
|
$
|
475,547
|
|
|
$
|
506,358
|
|
Operating
property revenues
|
23,652
|
|
|
23,696
|
|
Reimbursable
tenant costs
|
15,940
|
|
|
19,237
|
|
Lease
termination income and other (d)
|
4,234
|
|
|
34,603
|
|
|
519,373
|
|
|
583,894
|
|
Investment
Management:
|
|
|
|
Asset
management revenue
|
53,271
|
|
|
45,596
|
|
Reimbursable
costs from affiliates
|
45,390
|
|
|
46,372
|
|
Structuring
revenue
|
27,981
|
|
|
30,990
|
|
Dealer manager
fees
|
4,430
|
|
|
5,379
|
|
Other advisory
revenue
|
896
|
|
|
522
|
|
|
131,968
|
|
|
128,859
|
|
|
651,341
|
|
|
712,753
|
|
Operating
Expenses
|
|
|
|
Depreciation and
amortization
|
189,319
|
|
|
213,835
|
|
Reimbursable tenant
and affiliate costs
|
61,330
|
|
|
65,609
|
|
General and
administrative
|
53,189
|
|
|
58,122
|
|
Property expenses,
excluding reimbursable tenant costs
|
31,196
|
|
|
38,475
|
|
Stock-based
compensation expense
|
14,649
|
|
|
14,964
|
|
Subadvisor fees
(a)
|
11,598
|
|
|
10,010
|
|
Restructuring and
other compensation (b)
|
9,074
|
|
|
11,925
|
|
Dealer manager fees
and expenses
|
6,544
|
|
|
9,000
|
|
Other expenses
(c) (e)
|
1,138
|
|
|
5,359
|
|
Impairment
charges
|
—
|
|
|
49,870
|
|
|
378,037
|
|
|
477,169
|
|
Other Income and
Expenses
|
|
|
|
Interest
expense
|
(125,374)
|
|
|
(139,496)
|
|
Equity in earnings of
equity method investments in the Managed Programs and real
estate
|
47,820
|
|
|
48,243
|
|
Other income and
(expenses)
|
(4,969)
|
|
|
9,398
|
|
|
(82,523)
|
|
|
(81,855)
|
|
Income before income
taxes and gain on sale of real estate
|
190,781
|
|
|
153,729
|
|
(Provision for)
benefit from income taxes
|
(2,903)
|
|
|
4,538
|
|
Income before gain on
sale of real estate
|
187,878
|
|
|
158,267
|
|
Gain on sale of real
estate, net of tax
|
22,732
|
|
|
68,070
|
|
Net
Income
|
210,610
|
|
|
226,337
|
|
Net income
attributable to noncontrolling interests
|
(8,530)
|
|
|
(6,294)
|
|
Net Income
Attributable to W. P. Carey
|
$
|
202,080
|
|
|
$
|
220,043
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
|
1.87
|
|
|
$
|
2.06
|
|
Diluted Earnings
Per Share
|
$
|
1.87
|
|
|
$
|
2.05
|
|
Weighted-Average
Shares Outstanding
|
|
|
|
Basic
|
107,751,672
|
|
|
106,493,145
|
|
Diluted
|
107,947,490
|
|
|
106,853,174
|
|
|
|
|
|
Distributions
Declared Per Share
|
$
|
3.0000
|
|
|
$
|
2.9392
|
|
__________
|
|
|
(a)
|
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 100% of asset management fees paid to
us by CPA®:18 – Global. Pursuant to the terms of the
subadvisory agreement we had with the subadvisor in connection with
CCIF (prior to our resignation as the advisor to CCIF in the third
quarter of 2017), we paid a subadvisory fee equal to 50% of the
asset management fees and organization and offering costs paid to
us by CCIF.
|
(b)
|
Amounts for the
three months ended September 30, 2017, three months ended June 30,
2017 and nine months ended September 30, 2017 represent
restructuring expenses resulting from our exit from all non-traded
retail fundraising activities, which we announced in June 2017.
Amount for the nine months ended September 30, 2016 represents
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)
|
Amounts for the
three months ended June 30, 2017 and nine months ended September
30, 2017 are primarily comprised of an accrual for estimated
one-time legal settlement expenses.
|
(d)
|
Amount for the
nine months ended September 30, 2016 includes $32.2 million of
lease termination income related to a domestic property sold during
that period.
|
(e)
|
Amount for the
nine months ended September 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
|
|
September 30,
2017
|
|
June 30,
2017
|
|
September 30,
2016
|
Net income
attributable to W. P. Carey
|
$
|
80,278
|
|
|
$
|
64,318
|
|
|
$
|
110,943
|
|
Adjustments:
|
|
|
|
|
|
Depreciation and amortization of real
property
|
62,621
|
|
|
61,636
|
|
|
61,396
|
|
Gain on
sale of real estate, net
|
(19,257)
|
|
|
(3,465)
|
|
|
(49,126)
|
|
Impairment charges
|
—
|
|
|
—
|
|
|
14,441
|
|
Proportionate share of adjustments for
noncontrolling interests to arrive at
FFO
|
(2,692)
|
|
|
(2,562)
|
|
|
(3,254)
|
|
Proportionate share of adjustments to
equity in net income of partially owned
entities to arrive at FFO
|
866
|
|
|
833
|
|
|
1,354
|
|
Total
adjustments
|
41,538
|
|
|
56,442
|
|
|
24,811
|
|
FFO Attributable
to W. P. Carey (as defined by NAREIT) (a)
|
121,816
|
|
|
120,760
|
|
|
135,754
|
|
Adjustments:
|
|
|
|
|
|
Above-
and below-market rent intangible lease amortization, net
|
12,459
|
|
|
12,323
|
|
|
12,564
|
|
Other
amortization and non-cash items (b) (c)
|
6,208
|
|
|
6,693
|
|
|
(4,897)
|
|
Stock-based compensation
|
4,635
|
|
|
3,104
|
|
|
4,356
|
|
Straight-line and other rent
adjustments
|
(3,212)
|
|
|
(2,965)
|
|
|
(5,116)
|
|
Amortization of deferred financing
costs
|
2,184
|
|
|
2,542
|
|
|
1,007
|
|
Loss
(gain) on extinguishment of debt
|
1,566
|
|
|
(2,443)
|
|
|
2,072
|
|
Restructuring and other compensation
(d)
|
1,356
|
|
|
7,718
|
|
|
—
|
|
Tax
benefit – deferred
|
(1,234)
|
|
|
(1,382)
|
|
|
(2,999)
|
|
Realized
(gains) losses on foreign currency
|
(449)
|
|
|
(378)
|
|
|
1,559
|
|
Other
expenses (e)
|
65
|
|
|
1,000
|
|
|
—
|
|
Proportionate share of adjustments to
equity in net income of partially owned
entities to arrive at AFFO
|
3,064
|
|
|
1,978
|
|
|
261
|
|
Proportionate share of adjustments for
noncontrolling interests to arrive at
AFFO
|
(216)
|
|
|
(513)
|
|
|
(90)
|
|
Total
adjustments
|
26,426
|
|
|
27,677
|
|
|
8,717
|
|
AFFO Attributable
to W. P. Carey (a)
|
$
|
148,242
|
|
|
$
|
148,437
|
|
|
$
|
144,471
|
|
|
|
|
|
|
|
Summary
|
|
|
|
|
|
FFO attributable to
W. P. Carey (as defined by NAREIT) (a)
|
$
|
121,816
|
|
|
$
|
120,760
|
|
|
$
|
135,754
|
|
FFO attributable to
W. P. Carey (as defined by NAREIT) per diluted share
(a)
|
$
|
1.13
|
|
|
$
|
1.12
|
|
|
$
|
1.26
|
|
AFFO attributable to
W. P. Carey (a)
|
$
|
148,242
|
|
|
$
|
148,437
|
|
|
$
|
144,471
|
|
AFFO attributable to
W. P. Carey per diluted share (a)
|
$
|
1.37
|
|
|
$
|
1.38
|
|
|
$
|
1.34
|
|
Diluted
weighted-average shares outstanding
|
108,143,694
|
|
|
107,783,204
|
|
|
107,468,029
|
|
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)
|
|
|
Nine Months Ended
September 30,
|
|
2017
|
|
2016
|
Net income
attributable to W. P. Carey
|
$
|
202,080
|
|
|
$
|
220,043
|
|
Adjustments:
|
|
|
|
Depreciation and amortization of real
property
|
185,439
|
|
|
209,449
|
|
Gain on
sale of real estate, net
|
(22,732)
|
|
|
(68,070)
|
|
Impairment charges
|
—
|
|
|
49,870
|
|
Proportionate share of adjustments for
noncontrolling interests to arrive at FFO
|
(7,795)
|
|
|
(8,541)
|
|
Proportionate share of adjustments to
equity in net income of partially-owned entities to arrive at
FFO
|
4,416
|
|
|
3,994
|
|
Total
adjustments
|
159,328
|
|
|
186,702
|
|
FFO Attributable
to W. P. Carey (as defined by NAREIT) (a)
|
361,408
|
|
|
406,745
|
|
Adjustments:
|
|
|
|
Above-
and below-market rent intangible lease amortization, net
(f)
|
37,273
|
|
|
23,851
|
|
Other
amortization and non-cash items (b) (c)
|
14,995
|
|
|
(7,695)
|
|
Stock-based compensation
|
14,649
|
|
|
14,964
|
|
Straight-line and other rent adjustments
(g)
|
(9,677)
|
|
|
(34,262)
|
|
Restructuring and other compensation
(d)
|
9,074
|
|
|
11,925
|
|
Tax
benefit – deferred
|
(8,167)
|
|
|
(22,522)
|
|
Amortization of deferred financing
costs
|
6,126
|
|
|
2,271
|
|
Other
expenses (e) (h)
|
1,138
|
|
|
5,359
|
|
Realized
(gains) losses on foreign currency
|
(424)
|
|
|
2,569
|
|
Loss on
extinguishment of debt
|
35
|
|
|
3,885
|
|
Allowance
for credit losses
|
—
|
|
|
7,064
|
|
Proportionate share of adjustments to
equity in net income of partially-owned entities to arrive at
AFFO
|
5,592
|
|
|
741
|
|
Proportionate share of adjustments for
noncontrolling interests to arrive at AFFO
|
(1,105)
|
|
|
1,278
|
|
Total
adjustments
|
69,509
|
|
|
9,428
|
|
AFFO Attributable
to W. P. Carey (a)
|
$
|
430,917
|
|
|
$
|
416,173
|
|
|
|
|
|
Summary
|
|
|
|
FFO attributable to
W. P. Carey (as defined by NAREIT) (a)
|
$
|
361,408
|
|
|
$
|
406,745
|
|
FFO attributable to
W. P. Carey (as defined by NAREIT) per diluted share
(a)
|
$
|
3.35
|
|
|
$
|
3.81
|
|
AFFO attributable to
W. P. Carey (a)
|
$
|
430,917
|
|
|
$
|
416,173
|
|
AFFO attributable to
W. P. Carey per diluted share (a)
|
$
|
3.99
|
|
|
$
|
3.89
|
|
Diluted
weighted-average shares outstanding
|
107,947,490
|
|
|
106,853,174
|
|
__________
|
|
|
(a)
|
FFO and AFFO are
non-GAAP measures. See below for a description of FFO and
AFFO.
|
(b)
|
Represents
primarily unrealized gains and losses from foreign exchange and
derivatives.
|
(c)
|
Amounts for the
three and nine months ended September 30, 2016 include an
adjustment of $0.6 million to exclude a portion of a gain
recognized on the deconsolidation of an affiliate.
|
(d)
|
Amounts for the
three months ended September 30, 2017, three months ended June 30,
2017 and nine months ended September 30, 2017 represent
restructuring expenses resulting from our exit of all non-traded
retail fundraising activities, which we announced in June 2017.
Amount for the nine months ended September 30, 2016 represents
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.
|
(e)
|
Amounts for the
three months ended June 30, 2017 and nine months ended September
30, 2017 are primarily comprised of an accrual for estimated
one-time legal settlement expenses.
|
(f)
|
Amount for the
nine months ended September 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
nine months ended September 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 nine months ended September 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 nine months ended September 30, 2016.
|
(h)
|
Amount for the
nine months ended September 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 certain lease termination income, restructuring
and other compensation-related expenses resulting from a reduction
in headcount and employee severance arrangements and other expenses
(which includes expenses related to the formal strategic review
that we completed in May 2016 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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SOURCE W. P. Carey Inc.