NEW YORK, Oct. 30, 2020 /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 third quarter ended September 30, 2020.
Financial Highlights
- Net income attributable to W. P. Carey of $149.4 million, or $0.85 per diluted share, including Real Estate
segment net income attributable to W. P. Carey of $147.0 million, or $0.84 per diluted share
- AFFO of $202.0 million, or
$1.15 per diluted share, including
Real Estate segment AFFO of $196.8
million, or $1.12 per diluted
share
- 2020 AFFO guidance reinstated with a range of $4.65 to $4.75 per
diluted share, including Real Estate AFFO of between $4.51 and $4.61 per
diluted share and assuming full year investment volume totaling
between $750 million and $1 billion
- Quarterly cash dividend raised to $1.044 per share, equivalent to an annualized
dividend rate of $4.176 per
share
Real Estate Portfolio
- Overall collection rate of 98% for 2020 third quarter rent
due and 99% for October rent due
- Investment volume of $566.9
million year to date, including $515.9 million during the first nine months and
$51.0 million subsequent to quarter
end
- Gross disposition proceeds of $63.3
million during the third quarter, bringing total
dispositions for the first nine months to $179.7 million
- Portfolio occupancy of 98.9%
- Weighted-average lease term of 10.6 years
Balance Sheet and Capitalization
- During the 2020 third quarter, the Company settled a portion
of the equity forward sales agreements entered into in the second
quarter, issuing 1,488,291 shares of common stock for net proceeds
of $100 million
- Subsequent to quarter end, the Company issued $500 million of 2.400% Senior Unsecured Notes due
2031
MANAGEMENT COMMENTARY
"Our third quarter results reflect the consistently high rent
collections our portfolio has generated since the start of the
pandemic, including a 98% collection rate for the period. I'm also
pleased to say that after a pause in deal flow due to the pandemic
we've resumed external investment activity and, given increased
visibility into our pipeline, reinstated AFFO guidance" said
Jason Fox, Chief Executive Officer
of W. P. Carey. "The strength of our collections and balance sheet
ensure we're well positioned amid renewed uncertainty over the
course of the pandemic. And with a robust pipeline, ample liquidity
and having locked in a cost of capital that supports accretive
investments, we're equally well positioned to execute on the
growing number of transaction opportunities before us."
QUARTERLY FINANCIAL RESULTS
Revenues
- Total Company: Revenues, including reimbursable costs,
for the 2020 third quarter totaled $302.4
million, down 4.9% from $318.0
million for the 2019 third quarter.
- Real Estate: Real Estate revenues, including
reimbursable costs, for the 2020 third quarter were $297.4 million, down 1.8% from $302.8 million for the 2019 third quarter. For
the 2019 third quarter, lease termination and other income included
$8.3 million of proceeds from a
bankruptcy claim. Lease revenues increased, primarily through the
combined impact of net acquisitions, the strengthening of foreign
currencies in relation to the U.S. dollar between the periods and
rent escalations, partly offset by the impact of the COVID-19
pandemic on rent collections during the 2020 third quarter. In
addition, operating revenues for the 2019 third quarter reflected
the operations of a hotel operating property that was disposed in
the 2020 first quarter.
- Investment Management: Investment Management revenues,
including reimbursable costs, for the 2020 third quarter were
$5.0 million, down 67.3% from
$15.3 million for the 2019 third
quarter, due primarily to lower asset management revenues and
reimbursable costs resulting from the management internalization by
Carey Watermark Investors Incorporated (CWI 1) and Carey Watermark
Investors 2 Incorporated (CWI 2).
Net Income Attributable to W. P. Carey
- Net income attributable to W. P. Carey for the 2020 third
quarter was $149.4 million, up 261.7%
from $41.3 million for the 2019 third
quarter. Net income from Real Estate attributable to W. P. Carey
was $147.0 million, which increased
due primarily to a mark-to-market gain of $48.8 million for the Company's investment in
shares of a cold storage operator, impairment charges totaling
$25.8 million recognized during the
prior year period, a higher aggregate gain on sale of real estate
and the impact of net acquisitions. Net income from Investment
Management attributable to W. P. Carey was $2.4 million, which decreased due primarily to
the cessation of Investment Management revenues and distributions
previously earned from CWI 1 and CWI 2.
Adjusted Funds from Operations (AFFO)
- AFFO for the 2020 third quarter was $1.15 per diluted share, down 11.5% from
$1.30 per diluted share for the 2019
third quarter. AFFO from the Company's Real Estate segment (Real
Estate AFFO) was $1.12 per diluted
share, which decreased due primarily to higher lease termination
and other income during the 2019 third quarter and, to a lesser
extent, the impact of COVID-19 on rent collections during the 2020
third quarter, partly offset by the accretive impact of net
investment activity and rent escalations. AFFO from the Company's
Investment Management segment was $0.03 per diluted share, which declined,
reflecting the Company's continued move out of Investment
Management through the management internalization by CWI 1 and CWI
2, resulting in lower asset management fees and distributions from
the Company's special general partner interests. Segment AFFO also
reflects the full allocation of general and administrative expenses
to the Company's Real Estate segment.
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 September
17, 2020 the Company's Board of Directors declared a
quarterly cash dividend of $1.044 per
share, equivalent to an annualized dividend rate of $4.176 per share. The dividend was paid on
October 15, 2020 to stockholders of
record as of September 30, 2020.
AFFO GUIDANCE
- The Company has reinstated its guidance for the 2020 full year,
and expects to report total AFFO of between $4.65 and $4.75 per
diluted share, including Real Estate AFFO of between $4.51 and $4.61 per
diluted share, based on the following key assumptions:
(i) investments for the Company's Real Estate portfolio
of between $750 million and
$1 billion;
(ii) dispositions from the Company's Real Estate
portfolio of between $300 million and
$350 million; and
(iii) total general and administrative expenses of between
$76 million and $79 million.
Note: The Company does not provide guidance on net income.
The Company only provides guidance on total AFFO (and Real Estate
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
Liquidity
- As of September 30, 2020, the
Company had approximately $1.9
billion of total liquidity, including $1.6 billion of capacity available on the
Company's Senior Unsecured Credit Facility, available net proceeds
under the forward sale agreements of $166
million and cash and cash equivalents of $152 million.
Forward Equity Offering
- During the 2020 third quarter, the Company settled a portion of
its forward sale agreements, issuing 1,488,291 shares for net
proceeds of $100 million. As of
September 30, 2020, the Company had
the ability to settle the remaining 2,510,709 shares under the
forward sale agreements by December 17,
2021, for anticipated net proceeds of approximately
$166 million.
Bond Issuance – Subsequent to Quarter End
- As previously announced, on October 14,
2020, the Company completed an underwritten public offering
of $500 million aggregate principal
amount of 2.400% Senior Notes due February
1, 2031. The Company intends to use the net proceeds from
the offering to repay certain indebtedness, including amounts
outstanding under the Company's unsecured revolving credit facility
(which was used in part to repay secured mortgage debt
outstanding), to fund potential future acquisitions and for general
corporate purposes.
REAL ESTATE
COVID-19 Update on Rent Collections
- The Company received 98% of contractual base rent that was due
in the 2020 third quarter and 99% of contractual base rent that was
due in October.
- 2020 third quarter collection rates by property type were:
|
|
|
Industrial
|
99%
|
|
|
|
Warehouse
|
94%
|
|
|
|
Office
|
100%
|
|
|
|
Retail
|
100%
|
|
|
|
Fitness, theater and
restaurant
|
65%
|
|
|
|
Self Storage (net
lease)
|
100%
|
|
|
|
Other
|
98%
|
- 2020 third quarter collection rates by geography were:
|
|
|
U.S.
|
97%
|
|
|
|
Europe
|
99%
|
|
|
|
Other
|
100%
|
Investments
- During the 2020 third quarter, the Company completed
investments totaling $112.0 million,
consisting of two acquisitions for $84.0
million in aggregate and one capital investment project at a
cost of $28.0 million, bringing total
investment volume for the nine months ended September 30, 2020 to $515.9 million.
- Subsequent to quarter end, the Company completed one additional
investment for $51.0 million,
bringing total investment volume year to date to $566.9 million.
- As of September 30, 2020, the
Company had six capital investment projects outstanding for an
expected total investment of approximately $172.0 million, of which one project totaling
$3.0 million is currently expected to
be completed during the 2020 fourth quarter.
Dispositions
- During the 2020 third quarter, the Company disposed of four
properties for gross proceeds of $63.3
million, bringing total disposition proceeds for the nine
months ended September 30, 2020 to
$179.7 million.
Composition
- As of September 30, 2020, the
Company's net lease portfolio consisted of 1,215 properties,
comprising 142 million square feet leased to 351 tenants, with a
weighted-average lease term of 10.6 years and an occupancy rate of
98.9%. In addition, the Company owned 19 self-storage operating
properties and one hotel operating property, totaling approximately
1.4 million square feet.
*
* *
* *
Supplemental Information
The Company has provided supplemental unaudited financial and
operating information regarding the 2020 third 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 October 30, 2020, 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, October 30, 2020 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 an
enterprise value of approximately $18
billion and a diversified portfolio of
operationally-critical commercial real estate that includes 1,215
net lease properties covering approximately 142 million square feet
as of September 30, 2020. For nearly five decades, the company
has invested in high-quality single-tenant industrial, warehouse,
office, retail and self-storage properties subject to long-term net
leases with built-in rent escalators. Its portfolio is located
primarily in the U.S. and Northern and Western Europe and is well-diversified by
tenant, property type, geographic location and tenant
industry.
www.wpcarey.com
*
* *
* *
Cautionary Statement Concerning Forward-Looking Statements
and COVID-19 Update on Rent Collections
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,
statements made by Mr. Fox regarding our outlook and transaction
opportunities. 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 the
effects of pandemics and global outbreaks of contagious diseases or
the fear of such outbreaks (such as the current COVID-19 pandemic)
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 II, Item
1A. Risk Factors in W. P. Carey's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2020 and Part I,
Item 1A. Risk Factors in W. P. Carey's Annual
Report on Form 10-K for the year ended December 31, 2019.
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.
In addition, given the significant uncertainty regarding the
duration and severity of the impact of the COVID-19 pandemic, the
Company is unable to predict its tenants' continued ability to pay
rent. Therefore, information provided regarding historical rent
collections should not serve as an indication of expected future
rent collections. Additional details regarding the Company's update
relating to COVID-19 can be found in a presentation furnished as
Exhibit 99.3 of the Current Report on Form 8-K filed on
October 30, 2020.
*
* *
* *
W. P. CAREY
INC.
Consolidated
Balance Sheets (Unaudited)
(in thousands,
except share and per share amounts)
|
|
|
|
September 30,
2020
|
|
December 31,
2019
|
Assets
|
|
|
|
Investments in real
estate:
|
|
|
|
Land, buildings and
improvements (a)
|
$
|
10,560,534
|
|
|
$
|
9,856,191
|
|
Net investments in
direct financing leases
|
715,541
|
|
|
896,549
|
|
In-place lease
intangible assets and other
|
2,243,117
|
|
|
2,186,851
|
|
Above-market rent
intangible assets
|
900,503
|
|
|
909,139
|
|
Investments in real
estate
|
14,419,695
|
|
|
13,848,730
|
|
Accumulated
depreciation and amortization (b)
|
(2,382,971)
|
|
|
(2,035,995)
|
|
Assets held for sale,
net (c)
|
10,626
|
|
|
104,010
|
|
Net investments in
real estate
|
12,047,350
|
|
|
11,916,745
|
|
Equity investments in
the Managed Programs and real estate (d)
|
288,444
|
|
|
324,004
|
|
Cash and cash
equivalents
|
152,215
|
|
|
196,028
|
|
Due from
affiliates
|
4,347
|
|
|
57,816
|
|
Other assets,
net
|
793,079
|
|
|
631,637
|
|
Goodwill
|
904,075
|
|
|
934,688
|
|
Total
assets
|
$
|
14,189,510
|
|
|
$
|
14,060,918
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Debt:
|
|
|
|
Senior unsecured
notes, net
|
$
|
4,513,243
|
|
|
$
|
4,390,189
|
|
Unsecured term loans,
net
|
304,221
|
|
|
—
|
|
Unsecured revolving
credit facility
|
182,799
|
|
|
201,267
|
|
Non-recourse
mortgages, net
|
1,234,197
|
|
|
1,462,487
|
|
Debt, net
|
6,234,460
|
|
|
6,053,943
|
|
Accounts payable,
accrued expenses and other liabilities
|
549,899
|
|
|
487,405
|
|
Below-market rent and
other intangible liabilities, net
|
192,445
|
|
|
210,742
|
|
Deferred income
taxes
|
137,460
|
|
|
179,309
|
|
Dividends
payable
|
185,877
|
|
|
181,346
|
|
Total
liabilities
|
7,300,141
|
|
|
7,112,745
|
|
|
|
|
|
Preferred stock,
$0.001 par value, 50,000,000 shares authorized; none
issued
|
—
|
|
|
—
|
|
Common stock, $0.001
par value, 450,000,000 shares authorized; 175,396,158 and
172,278,242 shares,
respectively, issued and outstanding
|
175
|
|
|
172
|
|
Additional paid-in
capital
|
8,919,520
|
|
|
8,717,535
|
|
Distributions in
excess of accumulated earnings
|
(1,800,875)
|
|
|
(1,557,374)
|
|
Deferred compensation
obligation
|
42,014
|
|
|
37,263
|
|
Accumulated other
comprehensive loss
|
(273,124)
|
|
|
(255,667)
|
|
Total stockholders'
equity
|
6,887,710
|
|
|
6,941,929
|
|
Noncontrolling
interests
|
1,659
|
|
|
6,244
|
|
Total
equity
|
6,889,369
|
|
|
6,948,173
|
|
Total liabilities
and equity
|
$
|
14,189,510
|
|
|
$
|
14,060,918
|
|
________
|
(a)
Includes $83.5 million and $83.1 million of amounts attributable
to operating properties as of September 30, 2020 and
December 31, 2019, respectively.
|
(b)
Includes $1.2 billion and $1.0 billion of accumulated
depreciation on buildings and improvements as of September 30,
2020 and December 31, 2019,
respectively, and $1.2 billion and
$1.1 billion of accumulated amortization on lease intangibles as of
September 30, 2020 and December 31, 2019,
respectively.
|
(c)
At September 30, 2020, we had two properties classified as
Assets held for sale, net, one of which was sold in October 2020.
At December 31, 2019, we
had one hotel operating property
classified as Assets held for sale, net, which was sold in January
2020.
|
(d)
Our equity investments in real estate totaled $236.9 million and
$194.4 million as of September 30, 2020 and December 31,
2019, respectively. Our equity
investments in the Managed Programs
totaled $51.6 million and $129.6 million as of September 30,
2020 and December 31, 2019, respectively.
|
W. P. CAREY
INC.
Quarterly
Consolidated Statements of Income (Unaudited)
(in thousands,
except share and per share amounts)
|
|
|
|
Three Months
Ended
|
|
September 30,
2020
|
|
June 30,
2020
|
|
September 30,
2019
|
Revenues
|
|
|
|
|
|
Real
Estate:
|
|
|
|
|
|
Lease
revenues
|
$
|
293,856
|
|
|
$
|
280,303
|
|
|
$
|
278,839
|
|
Operating
property revenues
|
1,974
|
|
|
1,427
|
|
|
9,538
|
|
Lease
termination income and other
|
1,565
|
|
|
1,917
|
|
|
14,377
|
|
|
297,395
|
|
|
283,647
|
|
|
302,754
|
|
Investment
Management:
|
|
|
|
|
|
Asset
management revenue
|
3,748
|
|
|
4,472
|
|
|
9,878
|
|
Reimbursable
costs from affiliates
|
1,276
|
|
|
2,411
|
|
|
4,786
|
|
Structuring and
other advisory revenue
|
—
|
|
|
—
|
|
|
587
|
|
|
5,024
|
|
|
6,883
|
|
|
15,251
|
|
|
302,419
|
|
|
290,530
|
|
|
318,005
|
|
Operating
Expenses
|
|
|
|
|
|
Depreciation and
amortization
|
108,351
|
|
|
107,477
|
|
|
109,517
|
|
General and
administrative
|
19,399
|
|
|
17,472
|
|
|
17,210
|
|
Reimbursable tenant
costs
|
15,728
|
|
|
13,796
|
|
|
15,611
|
|
Property expenses,
excluding reimbursable tenant costs
|
11,923
|
|
|
11,651
|
|
|
10,377
|
|
Stock-based
compensation expense
|
4,564
|
|
|
2,918
|
|
|
4,747
|
|
Operating property
expenses
|
1,594
|
|
|
1,388
|
|
|
8,547
|
|
Reimbursable costs
from affiliates
|
1,276
|
|
|
2,411
|
|
|
4,786
|
|
Merger and other
expenses
|
(596)
|
|
|
1,074
|
|
|
70
|
|
Subadvisor
fees
|
—
|
|
|
192
|
|
|
1,763
|
|
Impairment
charges
|
—
|
|
|
—
|
|
|
25,781
|
|
|
162,239
|
|
|
158,379
|
|
|
198,409
|
|
Other Income and
Expenses
|
|
|
|
|
|
Interest
expense
|
(52,537)
|
|
|
(52,182)
|
|
|
(58,626)
|
|
Other gains and
(losses) (a)
|
45,113
|
|
|
8,847
|
|
|
(12,402)
|
|
Gain on sale of real
estate, net
|
20,933
|
|
|
—
|
|
|
71
|
|
Equity in earnings of
equity method investments in the Managed Programs and real estate
(b)
|
1,720
|
|
|
33,983
|
|
|
5,769
|
|
Loss on change in
control of interests (c)
|
—
|
|
|
—
|
|
|
(8,416)
|
|
|
15,229
|
|
|
(9,352)
|
|
|
(73,604)
|
|
Income before income
taxes
|
155,409
|
|
|
122,799
|
|
|
45,992
|
|
Provision for income
taxes
|
(5,975)
|
|
|
(7,595)
|
|
|
(4,157)
|
|
Net
Income
|
149,434
|
|
|
115,204
|
|
|
41,835
|
|
Net income
attributable to noncontrolling interests (b)
|
(37)
|
|
|
(9,904)
|
|
|
(496)
|
|
Net Income
Attributable to W. P. Carey
|
$
|
149,397
|
|
|
$
|
105,300
|
|
|
$
|
41,339
|
|
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
|
0.85
|
|
|
$
|
0.61
|
|
|
$
|
0.24
|
|
Diluted Earnings
Per Share
|
$
|
0.85
|
|
|
$
|
0.61
|
|
|
$
|
0.24
|
|
Weighted-Average
Shares Outstanding
|
|
|
|
|
|
Basic
|
174,974,185
|
|
|
173,401,749
|
|
|
172,235,066
|
|
Diluted
|
175,261,812
|
|
|
173,472,755
|
|
|
172,486,506
|
|
|
|
|
|
|
|
Dividends Declared
Per Share
|
$
|
1.044
|
|
|
$
|
1.042
|
|
|
$
|
1.036
|
|
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,
|
|
2020
|
|
2019
|
Revenues
|
|
|
|
Real
Estate:
|
|
|
|
Lease
revenues
|
$
|
856,269
|
|
|
$
|
811,580
|
|
Lease
termination income and other
|
9,991
|
|
|
23,951
|
|
Operating
property revenues
|
9,368
|
|
|
40,970
|
|
|
875,628
|
|
|
876,501
|
|
Investment
Management:
|
|
|
|
Asset
management revenue
|
18,109
|
|
|
29,400
|
|
Reimbursable
costs from affiliates
|
7,717
|
|
|
12,475
|
|
Structuring and
other advisory revenue
|
494
|
|
|
3,163
|
|
|
26,320
|
|
|
45,038
|
|
|
901,948
|
|
|
921,539
|
|
Operating
Expenses
|
|
|
|
Depreciation and
amortization
|
332,022
|
|
|
335,528
|
|
General and
administrative
|
57,616
|
|
|
58,224
|
|
Reimbursable tenant
costs
|
42,699
|
|
|
42,699
|
|
Property expenses,
excluding reimbursable tenant costs
|
33,649
|
|
|
30,204
|
|
Impairment
charges
|
19,420
|
|
|
25,781
|
|
Stock-based
compensation expense
|
10,143
|
|
|
13,848
|
|
Operating property
expenses
|
8,205
|
|
|
30,015
|
|
Reimbursable costs
from affiliates
|
7,717
|
|
|
12,475
|
|
Subadvisor
fees
|
1,469
|
|
|
5,615
|
|
Merger and other
expenses
|
665
|
|
|
912
|
|
|
513,605
|
|
|
555,301
|
|
Other Income and
Expenses
|
|
|
|
Interest
expense
|
(157,259)
|
|
|
(179,658)
|
|
Other gains and
(losses)
|
49,537
|
|
|
(12,118)
|
|
Gain on sale of real
estate, net
|
32,684
|
|
|
642
|
|
Equity in (losses)
earnings of equity method investments in the Managed Programs
and real estate
(b) (d)
|
(10,087)
|
|
|
15,211
|
|
Loss on change in
control of interests (c)
|
—
|
|
|
(8,416)
|
|
|
(85,125)
|
|
|
(184,339)
|
|
Income before income
taxes
|
303,218
|
|
|
181,899
|
|
Benefit from
(provision for) income taxes
|
28,122
|
|
|
(5,147)
|
|
Net
Income
|
331,340
|
|
|
176,752
|
|
Net income
attributable to noncontrolling interests (b)
|
(10,553)
|
|
|
(881)
|
|
Net Income
Attributable to W. P. Carey
|
$
|
320,787
|
|
|
$
|
175,871
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
|
1.84
|
|
|
$
|
1.03
|
|
Diluted Earnings
Per Share
|
$
|
1.84
|
|
|
$
|
1.03
|
|
Weighted-Average
Shares Outstanding
|
|
|
|
Basic
|
173,879,068
|
|
|
170,276,085
|
|
Diluted
|
174,144,038
|
|
|
170,545,665
|
|
|
|
|
|
Dividends Declared
Per Share
|
$
|
3.126
|
|
|
$
|
3.102
|
|
__________
|
(a)
|
Amount for the
three months ended September 30, 2020 is primarily comprised of a
mark-to-market adjustment for our investment in shares of a cold
storage operator of $48.8 million, non-cash allowance for credit
losses on direct financing leases and other assets of $(8.4)
million and net gains on foreign currency transactions of $5.2
million.
|
(b)
|
Amounts for the
three months ended June 30, 2020 and nine months ended September
30, 2020 include a non-cash net gain of $33.0 million (inclusive of
$9.9 million attributable to the redemption of a noncontrolling
interest that the former subadvisors for CWI 1 and CWI 2 held in
the special general partner interests) recognized in connection
with consideration received at closing of the CWI 1 and CWI 2
merger, which reflects the allocation of $34.3 million of goodwill
within our Investment Management segment.
|
(c)
|
Amounts for the
three and nine months ended September 30, 2019 represent a loss
recognized on the purchase of the remaining interest in an
investment from CPA:17 – Global (CPA:17) in our merger with that
former affiliate in October 2018 (the CPA:17 Merger), which we had
previously accounted for under the equity method. We recognized
this loss because we identified certain measurement period
adjustments during the third quarter of 2019 that impacted the
provisional accounting for this investment.
|
(d)
|
Amount for the
nine months ended September 30, 2020 includes non-cash
other-than-temporary impairment charges totaling $47.1 million
recognized on our former equity investments in CWI 1 and CWI
2.
|
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,
2020
|
|
June 30,
2020
|
|
September 30,
2019
|
Net income
attributable to W. P. Carey
|
$
|
149,397
|
|
|
$
|
105,300
|
|
|
$
|
41,339
|
|
Adjustments:
|
|
|
|
|
|
Depreciation
and amortization of real property
|
107,170
|
|
|
106,264
|
|
|
108,279
|
|
Gain on sale of
real estate, net
|
(20,933)
|
|
|
—
|
|
|
(71)
|
|
Impairment
charges
|
—
|
|
|
—
|
|
|
25,781
|
|
Loss on change
in control of interests (a)
|
—
|
|
|
—
|
|
|
8,416
|
|
Proportionate
share of adjustments to equity in net income of partially owned
entities (b) (c)
|
3,500
|
|
|
(19,117)
|
|
|
4,210
|
|
Proportionate
share of adjustments for noncontrolling interests
(d)
|
(4)
|
|
|
(588)
|
|
|
(4)
|
|
Total
adjustments
|
89,733
|
|
|
86,559
|
|
|
146,611
|
|
FFO (as defined by
NAREIT) Attributable to W. P. Carey (e)
|
239,130
|
|
|
191,859
|
|
|
187,950
|
|
Adjustments:
|
|
|
|
|
|
Other (gains)
and losses (f)
|
(44,648)
|
|
|
(4,259)
|
|
|
18,618
|
|
Straight-line
and other rent adjustments (g)
|
(13,115)
|
|
|
(11,720)
|
|
|
(6,370)
|
|
Above- and
below-market rent intangible lease amortization, net
|
12,472
|
|
|
12,956
|
|
|
14,969
|
|
Stock-based
compensation
|
4,564
|
|
|
2,918
|
|
|
4,747
|
|
Amortization of
deferred financing costs
|
2,932
|
|
|
2,993
|
|
|
2,991
|
|
Tax benefit –
deferred and other (h)
|
(715)
|
|
|
(229)
|
|
|
(1,039)
|
|
Merger and
other expenses
|
(596)
|
|
|
1,074
|
|
|
70
|
|
Other
amortization and non-cash items
|
508
|
|
|
488
|
|
|
379
|
|
Proportionate
share of adjustments to equity in net income of partially owned
entities (c) (i)
|
1,429
|
|
|
1,251
|
|
|
1,920
|
|
Proportionate share of
adjustments for noncontrolling interests (d)
|
(6)
|
|
|
579
|
|
|
(12)
|
|
Total
adjustments
|
(37,175)
|
|
|
6,051
|
|
|
36,273
|
|
AFFO Attributable
to W. P. Carey (e)
|
$
|
201,955
|
|
|
$
|
197,910
|
|
|
$
|
224,223
|
|
|
|
|
|
|
|
Summary
|
|
|
|
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey (e)
|
$
|
239,130
|
|
|
$
|
191,859
|
|
|
$
|
187,950
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey per diluted share
(e)
|
$
|
1.36
|
|
|
$
|
1.11
|
|
|
$
|
1.09
|
|
AFFO attributable to
W. P. Carey (e)
|
$
|
201,955
|
|
|
$
|
197,910
|
|
|
$
|
224,223
|
|
AFFO attributable to
W. P. Carey per diluted share (e)
|
$
|
1.15
|
|
|
$
|
1.14
|
|
|
$
|
1.30
|
|
Diluted
weighted-average shares outstanding
|
175,261,812
|
|
|
173,472,755
|
|
|
172,486,506
|
|
|
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
|
|
September 30,
2020
|
|
June 30,
2020
|
|
September 30,
2019
|
Net income from Real
Estate attributable to W. P. Carey
|
$
|
146,983
|
|
|
$
|
81,825
|
|
|
$
|
33,556
|
|
Adjustments:
|
|
|
|
|
|
Depreciation
and amortization of real property
|
107,170
|
|
|
106,264
|
|
|
108,279
|
|
Gain on sale of
real estate, net
|
(20,933)
|
|
|
—
|
|
|
(71)
|
|
Impairment
charges
|
—
|
|
|
—
|
|
|
25,781
|
|
Loss on change
in control of interests (a)
|
—
|
|
|
—
|
|
|
8,416
|
|
Proportionate
share of adjustments to equity in net income of partially
owned
entities (c)
|
3,500
|
|
|
3,352
|
|
|
4,210
|
|
Proportionate share of
adjustments for noncontrolling interests (d)
|
(4)
|
|
|
(588)
|
|
|
(4)
|
|
Total
adjustments
|
89,733
|
|
|
109,028
|
|
|
146,611
|
|
FFO (as defined by
NAREIT) Attributable to W. P. Carey – Real Estate
(e)
|
236,716
|
|
|
190,853
|
|
|
180,167
|
|
Adjustments:
|
|
|
|
|
|
Other (gains)
and losses (f)
|
(44,115)
|
|
|
(5,437)
|
|
|
18,956
|
|
Straight-line
and other rent adjustments (g)
|
(13,115)
|
|
|
(11,720)
|
|
|
(6,370)
|
|
Above- and
below-market rent intangible lease amortization, net
|
12,472
|
|
|
12,956
|
|
|
14,969
|
|
Stock-based
compensation
|
4,564
|
|
|
2,918
|
|
|
3,435
|
|
Amortization of
deferred financing costs
|
2,932
|
|
|
2,993
|
|
|
2,991
|
|
Tax benefit –
deferred and other
|
(2,909)
|
|
|
(3,051)
|
|
|
(1,414)
|
|
Merger and
other expenses
|
(1,016)
|
|
|
935
|
|
|
70
|
|
Other
amortization and non-cash items
|
508
|
|
|
488
|
|
|
180
|
|
Proportionate
share of adjustments to equity in net income (loss) of partially
owned
entities (c) (i)
|
739
|
|
|
166
|
|
|
(113)
|
|
Proportionate share of
adjustments for noncontrolling interests (d)
|
(6)
|
|
|
579
|
|
|
(12)
|
|
Total
adjustments
|
(39,946)
|
|
|
827
|
|
|
32,692
|
|
AFFO Attributable
to W. P. Carey – Real Estate (e)
|
$
|
196,770
|
|
|
$
|
191,680
|
|
|
$
|
212,859
|
|
|
|
|
|
|
|
Summary
|
|
|
|
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey – Real Estate
(e)
|
$
|
236,716
|
|
|
$
|
190,853
|
|
|
$
|
180,167
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey per diluted share –
Real
Estate (e)
|
$
|
1.35
|
|
|
$
|
1.10
|
|
|
$
|
1.04
|
|
AFFO attributable to
W. P. Carey – Real Estate (e)
|
$
|
196,770
|
|
|
$
|
191,680
|
|
|
$
|
212,859
|
|
AFFO attributable to
W. P. Carey per diluted share – Real Estate
(e)
|
$
|
1.12
|
|
|
$
|
1.10
|
|
|
$
|
1.23
|
|
Diluted
weighted-average shares outstanding
|
175,261,812
|
|
|
173,472,755
|
|
|
172,486,506
|
|
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,
|
|
2020
|
|
2019
|
Net income
attributable to W. P. Carey
|
$
|
320,787
|
|
|
$
|
175,871
|
|
Adjustments:
|
|
|
|
Depreciation
and amortization of real property
|
328,347
|
|
|
331,742
|
|
Gain on sale of
real estate, net
|
(32,684)
|
|
|
(642)
|
|
Impairment
charges
|
19,420
|
|
|
25,781
|
|
Loss on change
in control of interests (a)
|
—
|
|
|
8,416
|
|
Proportionate
share of adjustments to equity in net income of partially owned
entities (b) (c) (j)
|
34,860
|
|
|
13,123
|
|
Proportionate
share of adjustments for noncontrolling interests
(d)
|
(14)
|
|
|
(65)
|
|
Total
adjustments
|
349,929
|
|
|
378,355
|
|
FFO (as defined by
NAREIT) Attributable to W. P. Carey (e)
|
670,716
|
|
|
554,226
|
|
Adjustments:
|
|
|
|
Tax benefit –
deferred and other (h) (k) (l) (m)
|
(48,867)
|
|
|
(6,900)
|
|
Other (gains)
and losses
|
(39,092)
|
|
|
29,272
|
|
Above- and
below-market rent intangible lease amortization, net
|
37,208
|
|
|
47,346
|
|
Straight-line
and other rent adjustments (g) (n)
|
(31,927)
|
|
|
(20,603)
|
|
Stock-based
compensation
|
10,143
|
|
|
13,848
|
|
Amortization of
deferred financing costs
|
9,014
|
|
|
8,489
|
|
Other
amortization and non-cash items
|
1,404
|
|
|
2,652
|
|
Merger and
other expenses
|
665
|
|
|
912
|
|
Proportionate
share of adjustments to equity in net income of partially owned
entities (c) (i)
|
6,575
|
|
|
5,257
|
|
Proportionate
share of adjustments for noncontrolling interests
(d)
|
566
|
|
|
(44)
|
|
Total
adjustments
|
(54,311)
|
|
|
80,229
|
|
AFFO Attributable
to W. P. Carey (e)
|
$
|
616,405
|
|
|
$
|
634,455
|
|
|
|
|
|
Summary
|
|
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey (e)
|
$
|
670,716
|
|
|
$
|
554,226
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey per diluted share
(e)
|
$
|
3.85
|
|
|
$
|
3.25
|
|
AFFO attributable to
W. P. Carey (e)
|
$
|
616,405
|
|
|
$
|
634,455
|
|
AFFO attributable to
W. P. Carey per diluted share (e)
|
$
|
3.54
|
|
|
$
|
3.72
|
|
Diluted
weighted-average shares outstanding
|
174,144,038
|
|
|
170,545,665
|
|
W. P. CAREY
INC.
Year-to-Date
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)
|
|
|
|
Nine Months Ended
September 30,
|
|
2020
|
|
2019
|
Net income from Real
Estate attributable to W. P. Carey
|
$
|
329,722
|
|
|
$
|
147,732
|
|
Adjustments:
|
|
|
|
Depreciation
and amortization of real property
|
328,347
|
|
|
331,742
|
|
Gain on sale of
real estate, net
|
(32,684)
|
|
|
(642)
|
|
Impairment
charges
|
19,420
|
|
|
25,781
|
|
Loss on change
in control of interests (a)
|
—
|
|
|
8,416
|
|
Proportionate
share of adjustments to equity in net income of partially owned
entities (c)
|
10,217
|
|
|
13,123
|
|
Proportionate
share of adjustments for noncontrolling interests
(d)
|
(14)
|
|
|
(65)
|
|
Total
adjustments
|
325,286
|
|
|
378,355
|
|
FFO (as defined by
NAREIT) Attributable to W. P. Carey – Real Estate
(e)
|
655,008
|
|
|
526,087
|
|
Adjustments:
|
|
|
|
Tax benefit –
deferred and other (k)
|
(43,916)
|
|
|
(1,777)
|
|
Other (gains)
and losses
|
(38,579)
|
|
|
28,773
|
|
Above- and
below-market rent intangible lease amortization, net
|
37,208
|
|
|
47,346
|
|
Straight-line
and other rent adjustments (g) (n)
|
(31,927)
|
|
|
(20,603)
|
|
Stock-based
compensation
|
9,452
|
|
|
9,717
|
|
Amortization of
deferred financing costs
|
9,014
|
|
|
8,489
|
|
Other
amortization and non-cash items
|
1,205
|
|
|
2,192
|
|
Merger and
other expenses
|
(213)
|
|
|
912
|
|
Proportionate
share of adjustments to equity in net income of partially owned
entities (c) (i)
|
631
|
|
|
(87)
|
|
Proportionate
share of adjustments for noncontrolling interests
(d)
|
566
|
|
|
(44)
|
|
Total
adjustments
|
(56,559)
|
|
|
74,918
|
|
AFFO Attributable
to W. P. Carey – Real Estate (e)
|
$
|
598,449
|
|
|
$
|
601,005
|
|
|
|
|
|
Summary
|
|
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey – Real Estate
(e)
|
$
|
655,008
|
|
|
$
|
526,087
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey per diluted share –
Real Estate (e)
|
$
|
3.76
|
|
|
$
|
3.08
|
|
AFFO attributable to
W. P. Carey – Real Estate (e)
|
$
|
598,449
|
|
|
$
|
601,005
|
|
AFFO attributable to
W. P. Carey per diluted share – Real Estate
(e)
|
$
|
3.44
|
|
|
$
|
3.52
|
|
Diluted
weighted-average shares outstanding
|
174,144,038
|
|
|
170,545,665
|
|
__________
|
(a)
|
Amounts for the
three and nine months ended September 30, 2019 represent a loss
recognized on the purchase of the remaining interest in a real
estate investment from CPA:17 in the CPA:17 Merger, which we had
previously accounted for under the equity method. We recognized
this loss because we identified certain measurement period
adjustments during the third quarter of 2019 that impacted the
provisional accounting for this investment.
|
(b)
|
Amounts for the
three months ended June 30, 2020 and the nine months ended
September 30, 2020 include a non-cash net gain of $33.0 million
(inclusive of $9.9 million attributable to the redemption of a
noncontrolling interest that the former subadvisors for CWI 1 and
CWI 2 held in the special general partner interests) recognized in
connection with consideration received at closing of the CWI 1 and
CWI 2 merger, which reflects the allocation of $34.3 million of
goodwill within our Investment Management segment.
|
(c)
|
Equity income,
including amounts that are not typically recognized for FFO and
AFFO, is recognized within Equity in earnings of equity method
investments in the Managed Programs and real estate 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 amount for
the three months ended September 30, 2020 is primarily comprised of
a mark-to-market adjustment for our investment in shares of a cold
storage operator of $48.8 million, allowance for credit losses of
$(8.4) million and net gains on foreign currency transactions of
$5.2 million. Real Estate AFFO amount for the three months ended
September 30, 2020 is primarily comprised of a mark-to-market
adjustment for our investment in shares of a cold storage operator
of $48.8 million, non-cash allowance for credit losses on direct
financing leases and other assets of $(8.4) million and net gains
on foreign currency transactions of $5.0 million. Amounts from
period to period will not be comparable due to unpredictable
fluctuations in these gains and losses.
|
(g)
|
Amounts for the
three and nine months ended September 30, 2019 include
straight-line rent adjustments of $4.3 million and $12.5 million,
respectively, for a property that was sold in December
2019.
|
(h)
|
Amounts for the
three months ended June 30, 2020 and the nine months ended
September 30, 2020 include one-time taxes incurred upon the
recognition of taxable income associated with the accelerated
vesting of shares previously issued by CWI 1 and CWI 2 to us for
asset management services performed, in connection with the CWI 1
and CWI 2 merger.
|
(i)
|
Beginning with the
first quarter of 2020, this adjustment includes distributions
received from CWI 1 and CWI 2 for AFFO (through April 13, 2020, the
closing date of the CWI 1 and CWI 2 merger) and from WLT for both
AFFO and Real Estate AFFO (after April 13, 2020) in place of our
pro rata share of net income from our ownership of shares of CWI 1,
CWI 2, and WLT, as applicable. We did not receive any such
distributions during the second or third quarter of 2020, due to
the adverse effect of COVID-19.
|
(j)
|
Amount for the
nine months ended September 30, 2020 includes non-cash
other-than-temporary impairment charges totaling $47.1 million
recognized on our former equity investments in CWI 1 and CWI
2.
|
(k)
|
Amount for the
nine months ended September 30, 2020 include a non-cash deferred
tax benefit of $37.2 million as a result of the release of a
deferred tax liability relating to our investment in shares of a
cold storage operator, which converted to a REIT during that period
and is therefore no longer subject to federal income
taxes.
|
(l)
|
Amount for the
nine months ended September 30, 2020 include a one-time tax benefit
of $4.7 million as a result of carrying back certain net operating
losses in accordance with the CARES Act, which was enacted on March
27, 2020.
|
(m)
|
Amount for the
nine months ended September 30, 2019 includes a current tax
benefit, which is excluded from AFFO as it was incurred as a result
of the CPA:17 Merger.
|
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, Inc. (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 sales of
property, impairment charges on real estate, 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.
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 direct
financing leases and other assets, stock-based compensation,
non-cash environmental accretion expense 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 and
merger and acquisition expenses. We also exclude realized and
unrealized gains/losses on foreign currency 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
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.
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.