0001025378false00010253782024-02-092024-02-09
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 9, 2024
W. P. Carey Inc.
(Exact Name of Registrant as Specified in its Charter)
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Maryland | 001-13779 | 45-4549771 |
(State of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| | | |
One Manhattan West, 395 9th Avenue, 58th Floor | | |
New York, | New York | | 10001 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (212) 492-1100
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Stock, $0.001 Par Value | | WPC | | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On February 9, 2024, W. P. Carey Inc. (the “Company”) issued an earnings release announcing its financial results for the quarter ended December 31, 2023. A copy of the earnings release is attached as Exhibit 99.1.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that Section, and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
Item 7.01 Regulation FD Disclosure.
On February 9, 2024, the Company made available certain unaudited supplemental financial information at December 31, 2023. A copy of this supplemental information is attached as Exhibit 99.2.
On February 9, 2024, the Company posted its fourth quarter investor presentation on its website at http://www.wpcarey.com. A copy of the investor presentation is also attached as Exhibit 99.3.
The information furnished pursuant to this Item 7.01, including Exhibits 99.2 and 99.3, shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that Section, and shall not be incorporated by reference into any filing under the Securities Act or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No. | | Description |
99.1 | | |
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99.2 | | |
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99.3 | | |
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104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | | W. P. Carey Inc. |
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Date: | February 9, 2024 | By: | /s/ ToniAnn Sanzone |
| | | ToniAnn Sanzone |
| | | Chief Financial Officer |
Exhibit 99.1
W. P. Carey Announces Fourth Quarter and Full Year 2023 Financial Results
New York, NY – February 9, 2024 – W. P. Carey Inc. (NYSE: WPC) (W. P. Carey or the Company), a net lease real estate investment trust, today reported its financial results for the fourth quarter and full year ended December 31, 2023.
Financial Highlights
| | | | | | | | | | | |
| 2023 |
| Fourth Quarter | | Full Year |
Net income attributable to W. P. Carey (millions) | $144.3 | | | $708.3 | |
Diluted earnings per share | $0.66 | | | $3.28 | |
| | | |
| | | |
| | | |
AFFO (millions) | $261.4 | | | $1,118.3 | |
AFFO per diluted share | $1.19 | | | $5.18 | |
| | | |
| | | |
•2024 AFFO guidance range narrowed to between $4.65 and $4.75 per diluted share, based on anticipated full year investment volume of between $1.5 billion and $2.0 billion
•Fourth quarter cash dividend of $0.860 per share, equivalent to an annualized dividend rate of $3.44 per share, reflecting both the Company's strategic exit from the office assets within its portfolio and a lower payout ratio
Strategic Office Exit
•Spin-Off of Net Lease Office Properties (NLOP) completed on November 1, 2023
•Office Sale Program
◦79 properties sold to date under the program for gross proceeds of $608.1 million, including eight properties totaling gross proceeds of $220.3 million sold during the 2023 third and fourth quarters and 71 properties totaling gross proceeds of $387.8 million sold in January 2024, including the Company’s largest office portfolio
◦Office assets sales to date under the program bring office exposure below 3% of total ABR
◦Remaining sales under the program targeted to be completed during the first half of 2024
Real Estate Portfolio
•Investment volume of $345.6 million completed during the fourth quarter, bringing total investment volume for 2023 to $1.3 billion
•Investment volume of $177.1 million completed in January 2024
W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 1
•Active capital investments and commitments of $80.1 million and construction loan funding of $30.5 million scheduled to be completed in 2024
•Non-Office Sale Program gross disposition proceeds totaled $133.6 million for the fourth quarter and $242.0 million for 2023
•Contractual same-store rent growth of 4.1%
Balance Sheet and Capitalization
•Settled all outstanding forward sale agreements, issuing approximately 4.7 million shares of common stock for net proceeds of $384 million
•Received approximately $344 million, net of transaction expenses, from NLOP in connection with the Spin-Off
•Senior unsecured credit facility amended and restated, increasing the capacity of the unsecured revolving credit facility to $2.0 billion and extending its maturity to 2029, and refinancing £270 million and €215 million term loans, extending their maturities to 2028.
MANAGEMENT COMMENTARY
“Our 2023 fourth quarter and full year results largely reflected the near-term impacts of executing the office exit strategy we announced in September,” said Jason Fox, Chief Executive Officer of W. P. Carey. “We’ve made excellent progress in a short space of time thanks to the hard work and dedication of our employees, bringing our office exposure down to less than 3% of ABR.
“Looking ahead, we view 2024 as a transitional year, establishing a new baseline from which to grow AFFO. In addition to the rent growth embedded in our portfolio and a growing pipeline, I’m pleased to say we’ve already closed $177 million of investments and have over $100 million of capital projects and commitments scheduled for completion this year. We’ve raised our expectations for 2024 investment volume and we’re very well-positioned to execute — with exceptionally strong liquidity and a lower cost of capital — in an improving investment environment.”
QUARTERLY FINANCIAL RESULTS
Revenues
•Total Company: Revenues, including reimbursable costs, for the 2023 fourth quarter totaled $412.4 million, up 2.4% from $402.6 million for the 2022 fourth quarter.
•Real Estate: Real Estate revenues, including reimbursable costs, for the 2023 fourth quarter were $410.4 million, up 2.1% from $402.1 million for the 2022 fourth quarter.
◦Lease revenues decreased primarily as a result of the reclassifications of lease revenues related to the U-Haul and State of Andalusia portfolios described below and the Spin-Off, which more than offset the impact of net investment activity and rent escalations.
◦Operating property revenues increased primarily as a result of the conversion of 12 hotel properties from net lease to operating upon lease expiration during the 2023 first quarter (eight of which were sold during the 2023 third and fourth quarters).
◦Income from finance leases and loans receivable increased primarily as a result of the reclassification of lease revenues (i) after receiving notice during the 2023 first quarter of the purchase option exercise on the portfolio of 78 U-Haul properties (the properties are expected to be sold during the first quarter of 2024) and (ii) after signing a purchase and sale agreement during the 2023 fourth quarter for the Company’s largest office portfolio of 70 properties net leased to the State of Andalusia in a sale back to the tenant (which closed in January 2024). The reclassifications had no impact on total Real Estate revenues.
W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 2
Net Income Attributable to W. P. Carey
•Net income attributable to W. P. Carey for the 2023 fourth quarter was $144.3 million, down 31.1% from $209.5 million for the 2022 fourth quarter. Net income from Real Estate attributable to W. P. Carey was $142.8 million, which decreased due primarily to higher impairment charges and allowances for credit losses, a non-cash mark-to-market gain recognized on the Company’s shares of Lineage Logistics of $38.6 million during the prior-year period and the impact of the Spin-Off, partly offset by a higher aggregate gain on sale of real estate and the impact of net investment activity and rent escalations.
Adjusted Funds from Operations (AFFO)
•AFFO for the 2023 fourth quarter was $1.19 per diluted share, down 7.8% from $1.29 per diluted share for the 2022 fourth quarter, primarily reflecting the impact of the Spin-Off. Higher revenue from net investment activity and rent escalations was mostly offset by higher interest expense and lower other lease-related income during the 2023 fourth quarter.
Note: Further information concerning AFFO and Real Estate AFFO, which are both non-GAAP supplemental performance metrics, is presented in the accompanying tables and related notes.
Dividend
•As previously announced, on December 7, 2023, the Company reported that its Board of Directors declared a quarterly cash dividend of $0.860 per share, equivalent to an annualized dividend rate of $3.44 per share, reflecting both the Company's strategic exit from the office assets within its portfolio (announced on September 21, 2023) and a lower payout ratio. The dividend was paid on January 16, 2024 to shareholders of record as of December 29, 2023.
FULL YEAR FINANCIAL RESULTS
Revenues
•Total Company: Revenues, including reimbursable costs, for the 2023 full year totaled $1.74 billion, up 17.6% from $1.48 billion for the 2022 full year.
•Real Estate: Real Estate revenues, including reimbursable costs, for the 2023 full year totaled $1.74 billion, up 18.4% from $1.47 billion for the 2022 full year.
◦Lease revenues increased primarily as a result of net investment activity, rent escalations and net lease properties acquired in the CPA:18 Merger, which more than offset the reclassifications of lease revenues related to the U-Haul and State of Andalusia portfolios described below and the impact of the Spin-Off.
◦Operating property revenues increased primarily as a result of the self-storage and other operating properties acquired in the CPA:18 Merger, as well as the conversion of 12 hotel properties from net lease to operating upon lease expiration during the 2023 first quarter (eight of which were sold during the 2023 third and fourth quarters).
◦Income from finance leases and loans receivable increased primarily as a result of the reclassification of lease revenues (i) after receiving notice during the 2023 first quarter of the purchase option exercise on the portfolio of 78 U-Haul properties (the properties are expected to be sold during the first quarter of 2024) and (ii) after signing a purchase and sale agreement during the 2023 fourth quarter for the Company’s largest office portfolio of 70 properties net leased to the State of Andalusia in a sale back to the tenant (which closed in January 2024). The reclassifications had no impact on total Real Estate revenues.
W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 3
Net Income Attributable to W. P. Carey
•Net income attributable to W. P. Carey for the 2023 full year totaled $708.3 million, up 18.2% from $599.1 million for the 2022 full year. Net income from Real Estate attributable to W. P. Carey was $704.8 million, which increased due primarily to a higher aggregate gain on sale of real estate, the impact of net investment activity (including properties acquired in the CPA:18 Merger) and rent escalations, partly offset by higher interest expense, a non-cash mark-to-market gain of $49.2 million recognized on the Company’s investment in common stock of Watermark Lodging Trust, higher impairment charges and allowances for credit losses, a non-cash mark-to-market gain recognized on the Company’s shares of Lineage Logistics of $38.6 million during the prior year and the impact of the Spin-Off. Net income from Investment Management attributable to W. P. Carey was $3.5 million, which decreased due primarily to a $29.3 million impairment charge recognized on goodwill within that segment. The Company also recognized a $33.9 million gain on change in control of interests in connection with the CPA:18 Merger during the prior year.
AFFO
•AFFO for the 2023 full year was $5.18 per diluted share, down 2.1% from $5.29 per diluted share for the 2022 full year, primarily reflecting higher interest expense (due primarily to higher interest rates) and the impact of the Spin-Off, which more than offset higher revenue from net investment activity and rent escalations.
Note: Further information concerning AFFO and Real Estate AFFO, which are both non-GAAP supplemental performance metrics, is presented in the accompanying tables and related notes.
Dividend
•Dividends declared during 2023 totaled $4.067 per share, a decrease of 4.1% compared to total dividends declared
during 2022 of $4.242 per share, reflecting the impact on the dividend declared during the 2023 fourth quarter of both the Company's strategic exit from the office assets within its portfolio and a lower payout ratio.
AFFO GUIDANCE
2024 AFFO Guidance
•For the 2024 full year, the Company expects to report total AFFO of between $4.65 and $4.75 per diluted share, based on the following key assumptions:
(i) investment volume of between $1.5 billion and $2.0 billion;
(ii) disposition volume of between $1.2 billion and $1.4 billion, including:
(a) completion of the Company’s strategic plan to exit office, including anticipated asset sales under the Office Sale Program totaling between $550 million and $600 million during the first half of 2024;
(b) exercise of the U-Haul purchase option during the 2024 first quarter, generating approximately $465 million in gross proceeds; and
(c) other dispositions totaling between $150 million and $350 million; and
(iii) total general and administrative expenses of between $100 million and $103 million.
Note: The Company does not provide guidance on net income. The Company only provides guidance on total AFFO and does not provide a reconciliation of this forward-looking non-GAAP guidance to net income due to the inherent difficulty in quantifying certain items necessary to provide such reconciliation as a result of their unknown effect, timing and potential significance. Examples of such items include impairments of assets, gains and losses from sales of assets, and depreciation and amortization from new acquisitions.
W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 4
STRATEGIC OFFICE EXIT
•On September 21, 2023, the Company announced a strategic plan to exit the office assets within its portfolio by:
(i) spinning-off 59 office properties with ABR totaling $145 million into NLOP, a separate publicly-traded REIT (the “Spin-Off”), which was completed on November 1, 2023; and
(ii) implementing an asset sale program to dispose of 87 office properties retained by W. P. Carey (the “Office Sale Program”), with all sales under the program targeted to be completed in first half of 2024.
•To date through February 9, 2024, the Company has sold 79 properties under the Office Sale Program for gross proceeds of approximately $608.1 million, comprising:
◦Eight properties sold during the 2023 third and fourth quarters for gross proceeds of approximately $220.3 million; and
◦71 properties sold subsequent to year end, for gross proceeds of approximately $387.8 million, including a portfolio of 70 office properties net leased to State of Andalusia.
•As a result of the progress made to date executing on the Company’s strategic plan to exit the office assets within its portfolio, office assets currently represent approximately 2.7% of total ABR (as of December 31, 2023).
•Remaining sales under the program are targeted for completion during the first half of 2024, for office assets that generate $21 million of ABR.
REAL ESTATE
Investments
•During the 2023 fourth quarter, the Company completed investments totaling $345.6 million, bringing total investment volume for the year ended December 31, 2023 to $1.3 billion.
•Year to date through February 9, 2024, the Company completed investment volume of $177.1 million.
•The Company currently has seven capital investments and commitments totaling $80.1 million and construction loan funding of $30.5 million scheduled to be completed during 2024, for an aggregate total of $110.6 million.
Dispositions
•In addition to dispositions under the Office Sale Program, during the 2023 fourth quarter, the Company disposed of ten properties for gross proceeds of $133.6 million (including the sales of five hotel operating properties for gross proceeds of $83.9 million), bringing total non-Office Sale Program dispositions for the year ended December 31, 2023 to $242.0 million (including the sales of eight hotel operating properties for gross proceeds of $132.6 million).
Contractual Same-Store Rent Growth
•The Company’s net lease portfolio generated contractual same-store rent growth of 4.1% on a constant currency basis.
Composition
•As of December 31, 2023, the Company’s net lease portfolio consisted of 1,424 properties, comprising 173 million square feet leased to 336 tenants, with a weighted-average lease term of 11.7 years and an occupancy rate of 98.1%. In addition, the Company owned 89 self-storage operating properties, five hotel operating properties and two student housing operating properties, totaling approximately 7.3 million square feet.
W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 5
BALANCE SHEET AND CAPITALIZATION
Forward Equity
•The Company settled all of its outstanding forward sale agreements, issuing 4,744,973 shares of common stock for net proceeds of $384 million.
Spin-Off Distribution
•The Company received a distribution of approximately $344 million, net of transaction expenses, from NLOP in connection with the Spin-Off on November 1, 2023.
The Company intends to use proceeds from these transactions primarily to fund future acquisitions and repay debt, including amounts outstanding under its unsecured revolving credit facility. The Company may hold net proceeds in cash and/or marketable securities earning interest until deployed.
Senior Unsecured Credit Facility
•As previously announced, on December 14, 2023, the Company amended and restated its senior unsecured credit facility, (i) increasing the capacity of its unsecured revolving credit facility from $1.8 billion to $2.0 billion and extending its maturity by four years to 2029, and (ii) refinancing its £270 million and €215 million term loans and extending their maturities by three years to 2028. Each of the term loans include an option to extend up to an additional year at the Company’s discretion, subject to the satisfaction of certain customary conditions.
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Supplemental Information
The Company has provided supplemental unaudited financial and operating information regarding the 2023 fourth quarter and certain prior quarters, including a description of non-GAAP financial measures and reconciliations to GAAP measures, in a Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on February 9, 2024, and made available on the Company’s website at ir.wpcarey.com/investor-relations.
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Live Conference Call and Audio Webcast Scheduled for 10:00 a.m. Eastern Time
Please dial in at least 10 minutes prior to the start time.
Date/Time: Friday, February 9, 2024 at 10:00 a.m. Eastern Time
Call-in Number: 1 (877) 465-1289 (U.S.) or +1 (201) 689-8762 (international)
Live Audio Webcast and Replay: www.wpcarey.com/earnings
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W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 6
W. P. Carey Inc.
W. P. Carey ranks among the largest net lease REITs with a well-diversified portfolio of high-quality, operationally critical commercial real estate, which includes 1,424 net lease properties covering approximately 173 million square feet and a portfolio of 89 self-storage operating properties as of December 31, 2023. With offices in New York, London, Amsterdam and Dallas, the company remains focused on investing primarily in single-tenant, industrial, warehouse and retail properties located in the U.S. and Northern and Western Europe, under long-term net leases with built-in rent escalations.
www.wpcarey.com
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Cautionary Statement Concerning Forward-Looking Statements
Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, among other things, statements regarding the intent, belief or expectations of W. P. Carey and can be identified by the use of words such as “may,” “will,” “should,” “would,” “will be,” “goals,” “believe,” “project,” “expect,” “anticipate,” “intend,” “estimate” “opportunities,” “possibility,” “strategy,” “maintain” or the negative version of these words and other comparable terms. These forward-looking statements include, but are not limited to, statements made by Mr. Jason Fox regarding expectations for capital projects and commitments and 2024 investment volume. These statements are based on the current expectations of our management, and it is important to note that our actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Other unknown or unpredictable risks or uncertainties, like the risks related to fluctuating interest rates, the impact of inflation on our tenants and us, the effects of pandemics and global outbreaks of contagious diseases, and domestic or geopolitical crises, such as terrorism, military conflict, war or the perception that hostilities may be imminent, political instability or civil unrest, or other conflict, and those additional risk factors discussed in reports that we have filed with the SEC, could also have material adverse effects on our future results, performance or achievements. Discussions of some of these other important factors and assumptions are contained in W. P. Carey’s filings with the SEC and are available at the SEC’s website at http://www.sec.gov, including Part I, Item 1A. Risk Factors in W. P. Carey’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication, unless noted otherwise. Except as required under the federal securities laws and the rules and regulations of the SEC, W. P. Carey does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this communication or to reflect the occurrence of unanticipated events.
Institutional Investors:
Peter Sands
1 (212) 492-1110
institutionalir@wpcarey.com
Individual Investors:
W. P. Carey Inc.
1 (212) 492-8920
ir@wpcarey.com
Press Contact:
Anna McGrath
1 (212) 492-1166
amcgrath@wpcarey.com
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W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 7
W. P. CAREY INC.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
| | | | | | | | | | | |
| December 31, |
| 2023 | | 2022 |
Assets | | | |
Investments in real estate: | | | |
Land, buildings and improvements — net lease and other | $ | 12,095,458 | | | $ | 13,338,857 | |
Land, buildings and improvements — operating properties | 1,256,249 | | | 1,095,892 | |
Net investments in finance leases and loans receivable | 1,514,923 | | | 771,761 | |
In-place lease intangible assets and other | 2,308,853 | | | 2,659,750 | |
Above-market rent intangible assets | 706,773 | | | 833,751 | |
Investments in real estate | 17,882,256 | | | 18,700,011 | |
Accumulated depreciation and amortization (a) | (3,005,479) | | | (3,269,057) | |
Assets held for sale, net | 37,122 | | | 57,944 | |
Net investments in real estate | 14,913,899 | | | 15,488,898 | |
Equity method investments | 354,261 | | | 327,502 | |
Cash and cash equivalents | 633,860 | | | 167,996 | |
Other assets, net | 1,096,474 | | | 1,080,227 | |
Goodwill | 978,289 | | | 1,037,412 | |
Total assets | $ | 17,976,783 | | | $ | 18,102,035 | |
| | | |
Liabilities and Equity | | | |
Debt: | | | |
Senior unsecured notes, net | $ | 6,035,686 | | | $ | 5,916,400 | |
Unsecured term loans, net | 1,125,564 | | | 552,539 | |
Unsecured revolving credit facility | 403,785 | | | 276,392 | |
Non-recourse mortgages, net | 579,147 | | | 1,132,417 | |
Debt, net | 8,144,182 | | | 7,877,748 | |
Accounts payable, accrued expenses and other liabilities | 615,750 | | | 623,843 | |
Below-market rent and other intangible liabilities, net | 136,872 | | | 184,584 | |
Deferred income taxes | 180,650 | | | 178,959 | |
Dividends payable | 192,332 | | | 228,257 | |
Total liabilities | 9,269,786 | | | 9,093,391 | |
| | | |
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued | — | | | — | |
Common stock, $0.001 par value, 450,000,000 shares authorized; 218,671,874 and 210,620,949 shares, respectively, issued and outstanding | 219 | | | 211 | |
Additional paid-in capital | 11,784,461 | | | 11,706,836 | |
Distributions in excess of accumulated earnings | (2,891,424) | | | (2,486,633) | |
Deferred compensation obligation | 62,046 | | | 57,012 | |
Accumulated other comprehensive loss | (254,867) | | | (283,780) | |
Total stockholders’ equity | 8,700,435 | | | 8,993,646 | |
Noncontrolling interests | 6,562 | | | 14,998 | |
Total equity | 8,706,997 | | | 9,008,644 | |
Total liabilities and equity | $ | 17,976,783 | | | $ | 18,102,035 | |
________
(a)Includes $1.6 billion and $1.7 billion of accumulated depreciation on buildings and improvements as of December 31, 2023 and 2022, respectively, and $1.4 billion and $1.6 billion of accumulated amortization on lease intangibles as of December 31, 2023 and 2022, respectively.
W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 8
W. P. CAREY INC.
Quarterly Consolidated Statements of Income
(in thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
| December 31, 2023 | | September 30, 2023 | | December 31, 2022 |
Revenues | | | | | |
Real Estate: | | | | | |
Lease revenues | $ | 336,757 | | | $ | 369,159 | | | $ | 347,636 | |
Income from finance leases and loans receivable | 31,532 | | | 27,575 | | | 17,472 | |
Operating property revenues | 39,477 | | | 49,218 | | | 28,951 | |
Other lease-related income | 2,610 | | | 2,310 | | | 8,083 | |
| 410,376 | | | 448,262 | | | 402,142 | |
Investment Management: | | | | | |
Asset management revenue (a) | 1,348 | | | 194 | | | 383 | |
Other advisory income and reimbursements (b) | 667 | | | — | | | — | |
Reimbursable costs from affiliates | 46 | | | 97 | | | 104 | |
| 2,061 | | | 291 | | | 487 | |
| 412,437 | | | 448,553 | | | 402,629 | |
Operating Expenses | | | | | |
Depreciation and amortization | 129,484 | | | 144,771 | | | 140,749 | |
Impairment charges — real estate (c) | 71,238 | | | 15,173 | | | 12,734 | |
General and administrative | 21,533 | | | 23,258 | | | 22,728 | |
Operating property expenses | 20,403 | | | 26,570 | | | 11,719 | |
Reimbursable tenant costs | 18,942 | | | 20,498 | | | 21,084 | |
Property expenses, excluding reimbursable tenant costs | 13,287 | | | 13,021 | | | 13,879 | |
Stock-based compensation expense | 8,693 | | | 9,050 | | | 9,739 | |
Merger and other expenses (d) | (641) | | | 4,152 | | | 2,058 | |
Reimbursable costs from affiliates | 46 | | | 97 | | | 104 | |
| 282,985 | | | 256,590 | | | 234,794 | |
Other Income and Expenses | | | | | |
Gain on sale of real estate, net (e) | 134,026 | | | 2,401 | | | 5,845 | |
Interest expense | (72,194) | | | (76,974) | | | (67,668) | |
Other gains and (losses) (f) | (45,777) | | | 2,859 | | | 97,059 | |
Non-operating income (g) | 7,445 | | | 4,862 | | | 6,526 | |
Earnings from equity method investments | 5,006 | | | 4,978 | | | 6,032 | |
| 28,506 | | | (61,874) | | | 47,794 | |
Income before income taxes | 157,958 | | | 130,089 | | | 215,629 | |
Provision for income taxes | (13,714) | | | (5,090) | | | (6,126) | |
Net Income | 144,244 | | | 124,999 | | | 209,503 | |
Net loss attributable to noncontrolling interests | 50 | | | 41 | | | 35 | |
Net Income Attributable to W. P. Carey | $ | 144,294 | | | $ | 125,040 | | | $ | 209,538 | |
| | | | | |
Basic Earnings Per Share | $ | 0.66 | | | $ | 0.58 | | | $ | 1.00 | |
Diluted Earnings Per Share | $ | 0.66 | | | $ | 0.58 | | | $ | 1.00 | |
Weighted-Average Shares Outstanding | | | | | |
Basic | 219,277,446 | | | 215,097,114 | | | 209,281,888 | |
Diluted | 219,469,641 | | | 215,252,969 | | | 209,822,650 | |
| | | | | |
Dividends Declared Per Share | $ | 0.860 | | | $ | 1.071 | | | $ | 1.065 | |
W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 9
W. P. CAREY INC.
Full Year Consolidated Statements of Income
(in thousands, except share and per share amounts)
| | | | | | | | | | | |
| Years Ended December 31, |
| 2023 | | 2022 |
Revenues | | | |
Real Estate: | | | |
Lease revenues | $ | 1,427,376 | | | $ | 1,301,617 | |
Income from finance leases and loans receivable | 107,173 | | | 74,266 | |
Operating property revenues | 180,257 | | | 59,230 | |
Other lease-related income | 23,333 | | | 32,988 | |
| 1,738,139 | | | 1,468,101 | |
Investment Management: | | | |
Asset management and other revenue | 2,184 | | | 8,467 | |
Other advisory income and reimbursements | 667 | | | — | |
Reimbursable costs from affiliates | 368 | | | 2,518 | |
| 3,219 | | | 10,985 | |
| 1,741,358 | | | 1,479,086 | |
Operating Expenses | | | |
Depreciation and amortization | 574,212 | | | 503,403 | |
General and administrative | 96,027 | | | 88,952 | |
Operating property expenses | 95,141 | | | 27,054 | |
Impairment charges — real estate | 86,411 | | | 39,119 | |
Reimbursable tenant costs | 81,939 | | | 73,622 | |
Property expenses, excluding reimbursable tenant costs | 44,451 | | | 50,753 | |
Stock-based compensation expense | 34,504 | | | 32,841 | |
Merger and other expenses | 4,954 | | | 19,387 | |
Reimbursable costs from affiliates | 368 | | | 2,518 | |
Impairment charges — Investment Management goodwill | — | | | 29,334 | |
| 1,018,007 | | | 866,983 | |
Other Income and Expenses | | | |
Gain on sale of real estate, net | 315,984 | | | 43,476 | |
Interest expense | (291,852) | | | (219,160) | |
Other gains and (losses) | (36,184) | | | 96,038 | |
Non-operating income | 21,442 | | | 30,309 | |
Earnings from equity method investments | 19,575 | | | 29,509 | |
Gain on change in control of interests | — | | | 33,931 | |
| 28,965 | | | 14,103 | |
Income before income taxes | 752,316 | | | 626,206 | |
Provision for income taxes | (44,052) | | | (27,724) | |
Net Income | 708,264 | | | 598,482 | |
Net loss attributable to noncontrolling interests | 70 | | | 657 | |
Net Income Attributable to W. P. Carey | $ | 708,334 | | | $ | 599,139 | |
| | | |
Basic Earnings Per Share | $ | 3.29 | | | $ | 3.00 | |
Diluted Earnings Per Share | $ | 3.28 | | | $ | 2.99 | |
Weighted-Average Shares Outstanding | | | |
Basic | 215,369,777 | | | 199,633,802 | |
Diluted | 215,760,496 | | | 200,427,124 | |
| | | |
Dividends Declared Per Share | $ | 4.067 | | | $ | 4.242 | |
__________
(a)Amount for the three months ended December 31, 2023 is comprised of $1.2 million from NLOP and $0.1 million from CESH.
(b)Amounts are related to administrative reimbursement for our management of NLOP.
(c)Amount for the three months ended December 31, 2023 includes an impairment charge of $47.3 million recognized on the 59 properties contributed to NLOP in connection with the Spin-Off.
(d)Amount for the three months ended September 30, 2023 is primarily comprised of costs incurred in connection with the Spin-Off.
(e)Amount for the three months ended December 31, 2023 includes a gain on sale of real estate of $59.1 million recognized upon entering into an agreement to sell our portfolio of 70 office properties located in Spain to the tenant occupying the properties and the reclassification of the investment to net investments in sales-type leases.
(f)Amount for the three months ended December 31, 2023 is primarily comprised of a non-cash allowance for credit losses of $35.2 million, net losses on foreign currency exchange rate movements of $6.5 million and non-cash losses on non-hedging derivatives of $4.3 million.
(g)Amount for the three months ended December 31, 2023 is comprised of interest income on deposits of $4.6 million and realized gains on foreign currency exchange derivatives of $2.9 million.
W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 10
W. P. CAREY INC.
Quarterly Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
| December 31, 2023 | | September 30, 2023 | | December 31, 2022 |
Net income attributable to W. P. Carey | $ | 144,294 | | | $ | 125,040 | | | $ | 209,538 | |
Adjustments: | | | | | |
Gain on sale of real estate, net (a) | (134,026) | | | (2,401) | | | (5,845) | |
Depreciation and amortization of real property | 128,839 | | | 144,111 | | | 140,157 | |
Impairment charges — real estate (b) | 71,238 | | | 15,173 | | | 12,734 | |
Proportionate share of adjustments to earnings from equity method investments (c) | 2,942 | | | 2,950 | | | 2,296 | |
Proportionate share of adjustments for noncontrolling interests (d) | (133) | | | 34 | | | (294) | |
Total adjustments | 68,860 | | | 159,867 | | | 149,048 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey (e) | 213,154 | | | 284,907 | | | 358,586 | |
Adjustments: | | | | | |
Other (gains) and losses (f) | 45,777 | | | (2,859) | | | (97,059) | |
Straight-line and other leasing and financing adjustments | (19,071) | | | (18,662) | | | (14,766) | |
Stock-based compensation | 8,693 | | | 9,050 | | | 9,739 | |
Above- and below-market rent intangible lease amortization, net | 6,644 | | | 7,835 | | | 8,652 | |
Amortization of deferred financing costs | 4,895 | | | 4,805 | | | 5,705 | |
Tax expense (benefit) – deferred and other | 2,507 | | | (4,349) | | | (3,325) | |
Merger and other expenses (g) | (641) | | | 4,152 | | | 2,058 | |
Other amortization and non-cash items | 152 | | | 584 | | | 490 | |
Proportionate share of adjustments to earnings from equity method investments (c) | (663) | | | (691) | | | (319) | |
Proportionate share of adjustments for noncontrolling interests (d) | (97) | | | (380) | | | (85) | |
Total adjustments | 48,196 | | | (515) | | | (88,910) | |
AFFO Attributable to W. P. Carey (e) | $ | 261,350 | | | $ | 284,392 | | | $ | 269,676 | |
| | | | | |
Summary | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey (e) | $ | 213,154 | | | $ | 284,907 | | | $ | 358,586 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (e) | $ | 0.97 | | | $ | 1.32 | | | $ | 1.70 | |
AFFO attributable to W. P. Carey (e) | $ | 261,350 | | | $ | 284,392 | | | $ | 269,676 | |
AFFO attributable to W. P. Carey per diluted share (e) | $ | 1.19 | | | $ | 1.32 | | | $ | 1.29 | |
Diluted weighted-average shares outstanding | 219,469,641 | | | 215,252,969 | | | 209,822,650 | |
W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 11
W. P. CAREY INC.
Quarterly Reconciliation of Net Income from Real Estate to Adjusted Funds from Operations (AFFO) from Real Estate (Unaudited)
(in thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
| December 31, 2023 | | September 30, 2023 | | December 31, 2022 |
Net income from Real Estate attributable to W. P. Carey | $ | 142,753 | | | $ | 124,167 | | | $ | 210,142 | |
Adjustments: | | | | | |
Gain on sale of real estate, net (a) | (134,026) | | | (2,401) | | | (5,845) | |
Depreciation and amortization of real property | 128,839 | | | 144,111 | | | 140,157 | |
Impairment charges — real estate (b) | 71,238 | | | 15,173 | | | 12,734 | |
Proportionate share of adjustments to earnings from equity method investments (c) | 2,942 | | | 2,950 | | | 2,296 | |
Proportionate share of adjustments for noncontrolling interests (d) | (133) | | | 34 | | | (294) | |
Total adjustments | 68,860 | | | 159,867 | | | 149,048 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (e) | 211,613 | | | 284,034 | | | 359,190 | |
Adjustments: | | | | | |
Other (gains) and losses (f) | 45,303 | | | (2,180) | | | (96,846) | |
Straight-line and other leasing and financing adjustments | (19,071) | | | (18,662) | | | (14,766) | |
Stock-based compensation | 8,693 | | | 9,050 | | | 9,739 | |
Above- and below-market rent intangible lease amortization, net | 6,644 | | | 7,835 | | | 8,652 | |
Amortization of deferred financing costs | 4,895 | | | 4,805 | | | 5,705 | |
Tax expense (benefit) – deferred and other | 2,507 | | | (4,349) | | | (3,862) | |
Merger and other expenses (g) | (641) | | | 4,152 | | | 2,058 | |
Other amortization and non-cash items | 152 | | | 584 | | | 490 | |
Proportionate share of adjustments to earnings from equity method investments (c) | (663) | | | (691) | | | (320) | |
Proportionate share of adjustments for noncontrolling interests (d) | (97) | | | (380) | | | (85) | |
Total adjustments | 47,722 | | | 164 | | | (89,235) | |
AFFO Attributable to W. P. Carey – Real Estate (e) | $ | 259,335 | | | $ | 284,198 | | | $ | 269,955 | |
| | | | | |
Summary | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (e) | $ | 211,613 | | | $ | 284,034 | | | $ | 359,190 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (e) | $ | 0.96 | | | $ | 1.32 | | | $ | 1.70 | |
AFFO attributable to W. P. Carey – Real Estate (e) | $ | 259,335 | | | $ | 284,198 | | | $ | 269,955 | |
AFFO attributable to W. P. Carey per diluted share – Real Estate (e) | $ | 1.18 | | | $ | 1.32 | | | $ | 1.29 | |
Diluted weighted-average shares outstanding | 219,469,641 | | | 215,252,969 | | | 209,822,650 | |
W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 12
W. P. CAREY INC.
Full Year Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
| | | | | | | | | | | |
| Years Ended December 31, |
| 2023 | | 2022 |
Net income attributable to W. P. Carey | $ | 708,334 | | | $ | 599,139 | |
Adjustments: | | | |
Depreciation and amortization of real property | 571,750 | | | 500,764 | |
Gain on sale of real estate, net (a) | (315,984) | | | (43,476) | |
Impairment charges — real estate (b) | 86,411 | | | 39,119 | |
Gain on change in control of interests (h) (i) | — | | | (33,931) | |
Impairment charges — Investment Management goodwill (j) | — | | | 29,334 | |
Proportionate share of adjustments to earnings from equity method investments (c) | 11,381 | | | 15,155 | |
Proportionate share of adjustments for noncontrolling interests (d) | (666) | | | (491) | |
Total adjustments | 352,892 | | | 506,474 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey (e) | 1,061,226 | | | 1,105,613 | |
Adjustments: | | | |
Straight-line and other leasing and financing adjustments | (71,869) | | | (54,431) | |
Other (gains) and losses | 36,184 | | | (96,038) | |
Stock-based compensation | 34,504 | | | 32,841 | |
Above- and below-market rent intangible lease amortization, net | 34,164 | | | 41,390 | |
Amortization of deferred financing costs | 20,544 | | | 17,203 | |
Merger and other expenses (g) | 4,954 | | | 19,387 | |
Other amortization and non-cash items | 1,735 | | | 1,931 | |
Tax expense (benefit) – deferred and other | (199) | | | (3,759) | |
Proportionate share of adjustments to earnings from equity method investments (c) | (2,535) | | | (2,770) | |
Proportionate share of adjustments for noncontrolling interests (d) | (441) | | | (769) | |
Total adjustments | 57,041 | | | (45,015) | |
AFFO Attributable to W. P. Carey (e) | $ | 1,118,267 | | | $ | 1,060,598 | |
| | | |
Summary | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey (e) | $ | 1,061,226 | | | $ | 1,105,613 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (e) | $ | 4.92 | | | $ | 5.52 | |
AFFO attributable to W. P. Carey (e) | $ | 1,118,267 | | | $ | 1,060,598 | |
AFFO attributable to W. P. Carey per diluted share (e) | $ | 5.18 | | | $ | 5.29 | |
Diluted weighted-average shares outstanding | 215,760,496 | | | 200,427,124 | |
W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 13
W. P. CAREY INC.
Full Year Reconciliation of Net Income from Real Estate to Adjusted Funds from Operations (AFFO) from Real Estate (Unaudited)
(in thousands, except share and per share amounts)
| | | | | | | | | | | |
| Years Ended December 31, |
| 2023 | | 2022 |
Net income from Real Estate attributable to W. P. Carey | $ | 704,837 | | | $ | 591,603 | |
Adjustments: | | | |
Depreciation and amortization of real property | 571,750 | | | 500,764 | |
Gain on sale of real estate, net (a) | (315,984) | | | (43,476) | |
Impairment charges — real estate (b) | 86,411 | | | 39,119 | |
Gain on change in control of interests (h) | — | | | (11,405) | |
Proportionate share of adjustments to earnings from equity method investments (c) | 11,381 | | | 15,155 | |
Proportionate share of adjustments for noncontrolling interests (d) | (666) | | | (491) | |
Total adjustments | 352,892 | | | 499,666 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (e) | 1,057,729 | | | 1,091,269 | |
Adjustments: | | | |
Straight-line and other leasing and financing adjustments | (71,869) | | | (54,431) | |
Other (gains) and losses | 36,427 | | | (97,149) | |
Stock-based compensation | 34,504 | | | 32,841 | |
Above- and below-market rent intangible lease amortization, net | 34,164 | | | 41,390 | |
Amortization of deferred financing costs | 20,544 | | | 17,203 | |
Merger and other expenses (g) | 4,954 | | | 19,384 | |
Other amortization and non-cash items | 1,735 | | | 1,931 | |
Tax expense (benefit) – deferred and other | (199) | | | (8,164) | |
Proportionate share of adjustments to earnings from equity method investments (c) | (2,535) | | | (723) | |
Proportionate share of adjustments for noncontrolling interests (d) | (441) | | | (769) | |
Total adjustments | 57,284 | | | (48,487) | |
AFFO Attributable to W. P. Carey – Real Estate (e) | $ | 1,115,013 | | | $ | 1,042,782 | |
| | | |
Summary | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (e) | $ | 1,057,729 | | | $ | 1,091,269 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (e) | $ | 4.90 | | | $ | 5.44 | |
AFFO attributable to W. P. Carey – Real Estate (e) | $ | 1,115,013 | | | $ | 1,042,782 | |
AFFO attributable to W. P. Carey per diluted share – Real Estate (d) | $ | 5.17 | | | $ | 5.20 | |
Diluted weighted-average shares outstanding | 215,760,496 | | | 200,427,124 | |
__________
(a)Amounts for the three months and year ended December 31, 2023 include a gain on sale of real estate of $59.1 million recognized upon entering into an agreement to sell our portfolio of 70 office properties located in Spain to the tenant occupying the properties and the reclassification of the investment to net investments in sales-type leases. Amount for the year ended December 31, 2023 includes a gain on sale of real estate of $176.2 million recognized upon receiving notice of the exercise of a purchase option for a portfolio of 78 net-lease self-storage properties and the reclassification of the investment to net investments in sales-type leases.
(b)Amount for the three months and year ended December 31, 2023 includes an impairment charge of $47.3 million recognized on the 59 properties contributed to NLOP in connection with the Spin-Off.
(c)Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Earnings from equity method investments on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis.
(d)Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
(e)FFO and AFFO are non-GAAP measures. See below for a description of FFO and AFFO.
(f)AFFO and Real Estate AFFO adjustment amounts for the three months ended December 31, 2023 are primarily comprised of a non-cash allowance for credit losses of $35.2 million, net losses on foreign currency exchange rate movements of $6.5 million and non-cash losses on non-hedging derivatives of $4.3 million.
(g)Amounts for the three months ended September 30, 2023 and the year ended December 31, 2023 are primarily comprised of costs incurred in connection with the Spin-Off. Amount for the year ended December 31, 2022 is primarily comprised of costs incurred in connection with the CPA:18 Merger.
(h)Amount for the year ended December 31, 2022 represents a gain recognized on the remaining interests in four investments acquired in the CPA:18 Merger, which we had previously accounted for under the equity method.
(i)Amount for the year ended December 31, 2022 represents a gain recognized on our previously held interest in shares of CPA:18 – Global common stock in connection with the CPA:18 Merger
(j)Amount for the year ended December 31, 2022 represents an impairment charge recognized on goodwill within our Investment Management segment, since future Investment Management cash flows are expected to be minimal.
W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 14
Non-GAAP Financial Disclosure
Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts (NAREIT), an industry trade group, has promulgated a non-GAAP measure known as FFO, which we believe to be an appropriate supplemental measure, when used in addition to and in conjunction with results presented in accordance with GAAP, to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to, nor a substitute for, net income or loss as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as restated in December 2018. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from the sale of certain real estate, impairment charges on real estate or other assets incidental to the company’s main business, gains or losses on changes in control of interests in real estate and depreciation and amortization from real estate assets; and after adjustments for unconsolidated partnerships and jointly owned investments. Adjustments for unconsolidated partnerships and jointly owned investments are calculated to reflect FFO on the same basis.
We also modify the NAREIT computation of FFO to adjust GAAP net income for certain non-cash charges, such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rent and related reserves, other non-cash rent adjustments, non-cash allowance for credit losses on loans receivable and finance leases, stock-based compensation, non-cash environmental accretion expense, amortization of discounts and premiums on debt and amortization of deferred financing costs. Our assessment of our operations is focused on long-term sustainability and not on such non-cash items, which may cause short-term fluctuations in net income but have no impact on cash flows. Additionally, we exclude non-core income and expenses, such as gains or losses from extinguishment of debt, merger and acquisition expenses, and spin-off expenses. We also exclude realized and unrealized gains/losses on foreign currency exchange rate movements (other than those realized on the settlement of foreign currency derivatives), which are not considered fundamental attributes of our business plan and do not affect our overall long-term operating performance. We refer to our modified definition of FFO as AFFO. We exclude these items from GAAP net income to arrive at AFFO as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs that are currently not engaged in acquisitions, mergers and restructuring, which are not part of our normal business operations. AFFO also reflects adjustments for unconsolidated partnerships and jointly owned investments. We use AFFO as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies and determine executive compensation.
We believe that AFFO is a useful supplemental measure for investors to consider as we believe it will help them to better assess the sustainability of our operating performance without the potentially distorting impact of these short-term fluctuations. However, there are limits on the usefulness of AFFO to investors. For example, impairment charges and unrealized foreign currency losses that we exclude may become actual realized losses upon the ultimate disposition of the properties in the form of lower cash proceeds or other considerations. We use our FFO and AFFO measures as supplemental financial measures of operating performance. We do not use our FFO and AFFO measures as, nor should they be considered to be, alternatives to net income computed under GAAP, or as alternatives to net cash provided by operating activities computed under GAAP, or as indicators of our ability to fund our cash needs.
W. P. Carey Inc. 12/31/2023 Earnings Release 8-K – 15
Exhibit 99.2
W. P. Carey Inc.
Supplemental Information
Fourth Quarter 2023
Terms and Definitions
As used in this supplemental package, the terms “W. P. Carey,” “WPC,” “we,” “us” and “our” include W. P. Carey Inc., its consolidated subsidiaries and its predecessors, unless otherwise indicated. Other terms and definitions are as follows:
| | | | | |
REIT | Real estate investment trust |
NLOP | Net Lease Office Properties |
Spin-Off | The spin-off of 59 office properties owned by WPC into NLOP, a separate publicly-traded REIT, which was completed on November 1, 2023 |
U.S. | United States |
ABR | Contractual minimum annualized base rent |
SEC | Securities and Exchange Commission |
NAREIT | National Association of Real Estate Investment Trusts (an industry trade group) |
EUR | Euro |
EURIBOR | Euro Interbank Offered Rate |
SOFR | Secured Overnight Financing Rate |
SONIA | Sterling Overnight Index Average |
TIBOR | Tokyo Interbank Offered Rate |
Important Note Regarding Non-GAAP Financial Measures
This supplemental package includes certain “non-GAAP” supplemental measures that are not defined by generally accepted accounting principles (“GAAP”), including funds from operations (“FFO”); adjusted funds from operations (“AFFO”); earnings before interest, taxes, depreciation and amortization (“EBITDA”); adjusted EBITDA; pro rata cash net operating income (“pro rata cash NOI”); normalized pro rata cash NOI; same-store pro rata rental income; cash interest expense; and cash interest expense coverage ratio. FFO is a non-GAAP measure defined by NAREIT. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures are provided within this supplemental package. In addition, refer to the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of these non-GAAP financial measures and other metrics.
Amounts may not sum to totals due to rounding.
W. P. Carey Inc.
Supplemental Information – Fourth Quarter 2023
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Overview | |
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Financial Results | |
Statements of Income – Last Five Quarters | |
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FFO and AFFO – Last Five Quarters | |
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Balance Sheets and Capitalization | |
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Real Estate | |
Investment Activity | |
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Appendix | |
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Adjusted EBITDA – Last Five Quarters | |
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W. P. Carey Inc.
Overview – Fourth Quarter 2023
As of or for the three months ended December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | |
Financial Results | | | | | | | | | |
| | | | | Real Estate Segment | | |
| | | | | | Total (a) |
Revenues, including reimbursable costs – consolidated ($000s) | | $ | 410,376 | | | | | $ | 412,437 | |
Net income attributable to W. P. Carey ($000s) | | 142,753 | | | | | 144,294 | |
Net income attributable to W. P. Carey per diluted share | | 0.65 | | | | | 0.66 | |
Normalized pro rata cash NOI from real estate ($000s) (b) (c) | | 349,342 | | | | | 349,342 | |
Adjusted EBITDA ($000s) (b) (c) | | 338,653 | | | | | 340,668 | |
AFFO attributable to W. P. Carey ($000s) (b) (c) | | 259,335 | | | | | 261,350 | |
AFFO attributable to W. P. Carey per diluted share (b) (c) | | 1.18 | | | | | 1.19 | |
| | | | | | | | | |
Dividends declared per share – current quarter | | | | | | 0.860 | |
Dividends declared per share – current quarter annualized | | | | | | 3.440 | |
Dividend yield – annualized, based on quarter end share price of $64.81 | | | | | | 5.3 | % |
Dividend payout ratio – for the full year ended December 31, 2023 (d) | | | | | | 78.5 | % |
Dividend payout ratio – for the three months ended December 31, 2023 (e) | | | | | | 72.3 | % |
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Balance Sheet and Capitalization | | | | | | | | | |
Equity market capitalization – based on quarter end share price of $64.81 ($000s) | | | | | | $ | 14,172,124 | |
Pro rata net debt ($000s) (f) | | | | | | | | | 7,654,170 | |
Enterprise value ($000s) | | | | | | | | | 21,826,294 | |
| | | | | | | | | |
Total consolidated debt ($000s) | | | | | | | | | 8,144,182 | |
Gross assets ($000s) (g) | | | | | | | | | 19,566,570 | |
Liquidity ($000s) (h) | | | | | | | | | 2,223,621 | |
| | | | | | | | | |
Pro rata net debt to enterprise value (c) | | | | | | | | | 35.1 | % |
Pro rata net debt to adjusted EBITDA (annualized) (b) (c) | | | | | | 5.6x |
Total consolidated debt to gross assets | | | | | | | | | 41.6 | % |
Total consolidated secured debt to gross assets | | | | | | | | | 3.0 | % |
Cash interest expense coverage ratio (b) (c) | | | | | | | | | 5.3x |
| | | | | | | | | |
Weighted-average interest rate (c) | | | | | | | | | 3.2 | % |
Weighted-average debt maturity (years) (c) | | | | | | | | | 3.9 | |
| | | | | | | | | |
Moody's Investors Service – issuer rating | | | | | | | | | Baa1 (stable) |
Standard & Poor's Ratings Services – issuer rating | | | | | | | | | BBB+ (stable) |
| | | | | | | | | |
Real Estate Portfolio (Pro Rata) | | | | | | | | | |
ABR – total portfolio ($000s) (i) | | | | | | | | | $ | 1,339,352 | |
ABR – unencumbered portfolio (% / $000s) (i) (j) | | | | | 94.0% / | | | | $ | 1,259,190 | |
Number of net-leased properties | | | | | | | | | 1,424 | |
Number of operating properties (k) | | | | | | | | | 96 | |
Number of tenants – net-leased properties | | | | | | | | | 336 | |
| | | | | | | | | |
ABR from top ten tenants as a % of total ABR – net-leased properties | | | | | | 21.1 | % |
ABR from investment grade tenants as a % of total ABR – net-leased properties (l) | | | | | | 23.9 | % |
Contractual same-store growth (m) | | | | | | | | | 4.1 | % |
| | | | | | | | | |
Net-leased properties – square footage (millions) | | | | | | | | | 172.7 | |
| | | | | | | | | |
Occupancy – net-leased properties | | | | | | | | | 98.1 | % |
Weighted-average lease term (years) | | | | | | | | | 11.7 | |
| | | | | | | | | |
Investment volume – current quarter ($000s) | | | | $ | 345,565 | |
Dispositions – current quarter ($000s) | | | | | | | | | 266,059 | |
| | | | | | | | | |
Maximum commitment for capital investments and commitments expected to be completed during 2024 ($000s) | | | | 80,142 | |
Construction loan funding expected to be completed during 2024 ($000s) | | | | 30,500 | |
Total capital investments, commitments and construction loan funding expected to be completed during 2024 ($000s) | | 110,642 | |
________
| | | | | | | | |
| | Investing for the Long Run® | 1 |
W. P. Carey Inc.
Overview – Fourth Quarter 2023
(a)Includes immaterial amounts from our Investment Management segment.
(b)Normalized pro rata cash NOI, adjusted EBITDA, AFFO and cash interest expense coverage ratio are non-GAAP measures. See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of our non-GAAP measures and for details on how certain non-GAAP measures are calculated. (d)Represents dividends declared per share divided by AFFO per diluted share on a year-to-date basis.
(e)Represents dividends declared per share divided by AFFO per diluted share on a quarter-to-date basis
(g)Gross assets represent consolidated total assets before accumulated depreciation on buildings and improvements. Gross assets are net of accumulated amortization on in-place lease intangible assets of $934.1 million and above-market rent intangible assets of $481.6 million.
(h)Represents (i) availability under our Senior Unsecured Credit Facility (net of amounts reserved for standby letters of credit) and (ii) consolidated cash and cash equivalents.
(j)Represents ABR from properties unencumbered by non-recourse mortgage debt.
(k)Comprised of 89 self-storage properties, five hotels and two student housing properties.
(l)Percentage of portfolio is based on ABR, as of December 31, 2023. Includes tenants or guarantors with investment grade ratings (18.1%) and subsidiaries of non-guarantor parent companies with investment grade ratings (5.8%). Investment grade refers to an entity with a rating of BBB- or higher from Standard & Poor’s Ratings Services or Baa3 or higher from Moody’s Investors Service. See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of ABR.
| | | | | | | | |
| | Investing for the Long Run® | 2 |
W. P. Carey Inc.
Overview – Fourth Quarter 2023
| | | | | |
Components of Net Asset Value |
Dollars in thousands, except per share amounts.
| | | | | | | | | | | | | | | | | |
Normalized Pro Rata Cash NOI (a) (b) | | | | | Three Months Ended Dec. 31, 2023 |
Net lease properties | | | | | $ | 328,659 | |
Self-storage and other operating properties (c) | | | | 20,683 | |
Total normalized pro rata cash NOI (a) (b) | | | | | $ | 349,342 | |
| | | | | |
Balance Sheet – Selected Information (Consolidated Unless Otherwise Stated) | | As of Dec. 31, 2023 |
Assets | | | | | |
Book value of real estate excluded from normalized pro rata cash NOI (d) | | | | $ | 235,486 | |
Cash and cash equivalents | | | | | 633,860 | |
Las Vegas retail complex construction loan (e) | | | | | 235,979 | |
Other secured loans receivable, net | | | | | 11,250 | |
Other assets, net: | | | | | |
Investment in shares of Lineage Logistics (a cold storage REIT) | | | | | $ | 404,921 | |
Straight-line rent adjustments | | | | | 305,049 | |
Deferred charges | | | | | 68,416 | |
Restricted cash, including escrow | | | | | 58,111 | |
Office lease right-of-use assets, net | | | | | 54,730 | |
Taxes receivable | | | | | 52,468 | |
Non-rent tenant and other receivables | | | | | 51,863 | |
Deferred income taxes | | | | | 18,518 | |
Securities and derivatives | | | | | 15,864 | |
Leasehold improvements, furniture and fixtures | | | | 13,763 | |
Prepaid expenses | | | | | 12,868 | |
Rent receivables (f) | | | | | 2,344 | |
Due from affiliates | | | | 2,176 | |
Other | | | | | 35,383 | |
Total other assets, net | | $ | 1,096,474 | |
| | | | | |
Liabilities | | | | | |
Total pro rata debt outstanding (b) (g) | | | | | $ | 8,288,030 | |
Dividends payable | | | | | 192,332 | |
Deferred income taxes | | | | | 180,650 | |
Accounts payable, accrued expenses and other liabilities: | | | | | |
Accounts payable and accrued expenses | | | | | $ | 177,460 | |
Operating lease liabilities | | | | | 138,733 | |
Prepaid and deferred rents | | | | | 125,957 | |
Tenant security deposits | | | | | 65,196 | |
Accrued taxes payable | | | | | 56,172 | |
Other | | | | | 52,232 | |
Total accounts payable, accrued expenses and other liabilities | | | | | $ | 615,750 | |
________
(c)Other operating properties include five hotels and two student housing properties.
(d)Represents the value of real estate not included in normalized pro rata cash NOI, such as vacant assets, in-progress build-to-suit properties, real estate under construction for certain expansion projects at existing properties and a common equity interest in the Harmon Retail Corner in Las Vegas.
(e)Represents a construction loan for a retail complex in Las Vegas, Nevada, which is included in Equity method investments (as an equity method investment in real estate) on our consolidated balance sheets. See the Investment Activity – Investment Volume section for additional information about this investment. (f)Comprised of rent receivables that were substantially collected as of the date of this report.
(g)Excludes unamortized discount, net totaling $31.8 million and unamortized deferred financing costs totaling $21.5 million as of December 31, 2023.
| | | | | | | | |
| | Investing for the Long Run® | 3 |
W. P. Carey Inc.
Financial Results
Fourth Quarter 2023
| | | | | | | | |
| | Investing for the Long Run® | 4 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2023
| | | | | |
Consolidated Statements of Income – Last Five Quarters |
In thousands, except share and per share amounts.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2023 | | Sep. 30, 2023 | | Jun. 30, 2023 | | Mar. 31, 2023 | | Dec. 31, 2022 |
Revenues | | | | | | | | | |
Real Estate: | | | | | | | | | |
Lease revenues | $ | 336,757 | | | $ | 369,159 | | | $ | 369,124 | | | $ | 352,336 | | | $ | 347,636 | |
Income from finance leases and loans receivable | 31,532 | | | 27,575 | | | 27,311 | | | 20,755 | | | 17,472 | |
Operating property revenues | 39,477 | | | 49,218 | | | 50,676 | | | 40,886 | | | 28,951 | |
Other lease-related income | 2,610 | | | 2,310 | | | 5,040 | | | 13,373 | | | 8,083 | |
| 410,376 | | | 448,262 | | | 452,151 | | | 427,350 | | | 402,142 | |
Investment Management: | | | | | | | | | |
Asset management revenue (a) | 1,348 | | | 194 | | | 303 | | | 339 | | | 383 | |
Other advisory income and reimbursements (b) | 667 | | | — | | | — | | | — | | | — | |
Reimbursable costs from affiliates | 46 | | | 97 | | | 124 | | | 101 | | | 104 | |
| 2,061 | | | 291 | | | 427 | | | 440 | | | 487 | |
| 412,437 | | | 448,553 | | | 452,578 | | | 427,790 | | | 402,629 | |
Operating Expenses | | | | | | | | | |
Depreciation and amortization | 129,484 | | | 144,771 | | | 143,548 | | | 156,409 | | | 140,749 | |
Impairment charges — real estate (c) | 71,238 | | | 15,173 | | | — | | | — | | | 12,734 | |
General and administrative | 21,533 | | | 23,258 | | | 24,788 | | | 26,448 | | | 22,728 | |
Operating property expenses | 20,403 | | | 26,570 | | | 26,919 | | | 21,249 | | | 11,719 | |
Reimbursable tenant costs | 18,942 | | | 20,498 | | | 20,523 | | | 21,976 | | | 21,084 | |
Property expenses, excluding reimbursable tenant costs | 13,287 | | | 13,021 | | | 5,371 | | | 12,772 | | | 13,879 | |
Stock-based compensation expense | 8,693 | | | 9,050 | | | 8,995 | | | 7,766 | | | 9,739 | |
Merger and other expenses (d) | (641) | | | 4,152 | | | 1,419 | | | 24 | | | 2,058 | |
Reimbursable costs from affiliates | 46 | | | 97 | | | 124 | | | 101 | | | 104 | |
| 282,985 | | | 256,590 | | | 231,687 | | | 246,745 | | | 234,794 | |
Other Income and Expenses | | | | | | | | | |
Gain on sale of real estate, net (e) | 134,026 | | | 2,401 | | | 1,808 | | | 177,749 | | | 5,845 | |
Interest expense | (72,194) | | | (76,974) | | | (75,488) | | | (67,196) | | | (67,668) | |
Other gains and (losses) (f) | (45,777) | | | 2,859 | | | (1,366) | | | 8,100 | | | 97,059 | |
Non-operating income (g) | 7,445 | | | 4,862 | | | 4,509 | | | 4,626 | | | 6,526 | |
Earnings from equity method investments | 5,006 | | | 4,978 | | | 4,355 | | | 5,236 | | | 6,032 | |
| 28,506 | | | (61,874) | | | (66,182) | | | 128,515 | | | 47,794 | |
Income before income taxes | 157,958 | | | 130,089 | | | 154,709 | | | 309,560 | | | 215,629 | |
Provision for income taxes | (13,714) | | | (5,090) | | | (10,129) | | | (15,119) | | | (6,126) | |
Net Income | 144,244 | | | 124,999 | | | 144,580 | | | 294,441 | | | 209,503 | |
Net loss (income) attributable to noncontrolling interests | 50 | | | 41 | | | 40 | | | (61) | | | 35 | |
Net Income Attributable to W. P. Carey | $ | 144,294 | | | $ | 125,040 | | | $ | 144,620 | | | $ | 294,380 | | | $ | 209,538 | |
| | | | | | | | | |
Basic Earnings Per Share | $ | 0.66 | | | $ | 0.58 | | | $ | 0.67 | | | $ | 1.39 | | | $ | 1.00 | |
Diluted Earnings Per Share | $ | 0.66 | | | $ | 0.58 | | | $ | 0.67 | | | $ | 1.39 | | | $ | 1.00 | |
Weighted-Average Shares Outstanding | | | | | | | | | |
Basic | 219,277,446 | | | 215,097,114 | | | 215,075,114 | | | 211,951,930 | | | 209,281,888 | |
Diluted | 219,469,641 | | | 215,252,969 | | | 215,184,485 | | | 212,345,047 | | | 209,822,650 | |
| | | | | | | | | |
Dividends Declared Per Share | $ | 0.860 | | | $ | 1.071 | | | $ | 1.069 | | | $ | 1.067 | | | $ | 1.065 | |
________
(a)Amount for the three months ended December 31, 2023 is comprised of $1.2 million from NLOP and $0.1 million from CESH.
(b)Amounts are related to administrative reimbursement for our management of NLOP.
(c)Amount for the three months ended December 31, 2023 includes an impairment charge of $47.3 million recognized on the 59 properties contributed to NLOP in connection with the Spin-Off.
(d)Amount for the three months ended September 30, 2023 is primarily comprised of costs incurred in connection with the Spin-Off.
(e)Amount for the three months ended December 31, 2023 includes a gain on sale of real estate of $59.1 million recognized upon entering into an agreement to sell our portfolio of 70 office properties located in Spain to the tenant occupying the properties and the reclassification of the investment to net investments in sales-type leases. Amount for the three months ended March 31, 2023 includes a gain on sale of real estate of $176.2 million recognized upon receiving notice of the exercise of a purchase option for a portfolio of 78 net-lease self-storage properties and the reclassification of the investment to net investments in sales-type leases.
(f)Amount for the three months ended December 31, 2023 is primarily comprised of a non-cash allowance for credit losses of $35.2 million, net losses on foreign currency exchange rate movements of $6.5 million and non-cash losses on non-hedging derivatives of $4.3 million.
(g)Amount for the three months ended December 31, 2023 is comprised of interest income on deposits of $4.6 million and realized gains on foreign currency exchange derivatives of $2.9 million.
| | | | | | | | |
| | Investing for the Long Run® | 5 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2023
| | | | | |
Statements of Income, Real Estate – Last Five Quarters |
In thousands, except share and per share amounts.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2023 | | Sep. 30, 2023 | | Jun. 30, 2023 | | Mar. 31, 2023 | | Dec. 31, 2022 |
Revenues | | | | | | | | | |
Lease revenues | $ | 336,757 | | | $ | 369,159 | | | $ | 369,124 | | | $ | 352,336 | | | $ | 347,636 | |
Income from finance leases and loans receivable | 31,532 | | | 27,575 | | | 27,311 | | | 20,755 | | | 17,472 | |
Operating property revenues | 39,477 | | | 49,218 | | | 50,676 | | | 40,886 | | | 28,951 | |
Other lease-related income | 2,610 | | | 2,310 | | | 5,040 | | | 13,373 | | | 8,083 | |
| 410,376 | | | 448,262 | | | 452,151 | | | 427,350 | | | 402,142 | |
Operating Expenses | | | | | | | | | |
Depreciation and amortization | 129,484 | | | 144,771 | | | 143,548 | | | 156,409 | | | 140,749 | |
Impairment charges — real estate (a) | 71,238 | | | 15,173 | | | — | | | — | | | 12,734 | |
General and administrative | 21,533 | | | 23,258 | | | 24,788 | | | 26,448 | | | 22,728 | |
Operating property expenses | 20,403 | | | 26,570 | | | 26,919 | | | 21,249 | | | 11,719 | |
Reimbursable tenant costs | 18,942 | | | 20,498 | | | 20,523 | | | 21,976 | | | 21,084 | |
Property expenses, excluding reimbursable tenant costs | 13,287 | | | 13,021 | | | 5,371 | | | 12,772 | | | 13,879 | |
Stock-based compensation expense | 8,693 | | | 9,050 | | | 8,995 | | | 7,766 | | | 9,739 | |
Merger and other expenses (b) | (641) | | | 4,152 | | | 1,419 | | | 24 | | | 2,058 | |
| 282,939 | | | 256,493 | | | 231,563 | | | 246,644 | | | 234,690 | |
Other Income and Expenses | | | | | | | | | |
Gain on sale of real estate, net (c) | 134,026 | | | 2,401 | | | 1,808 | | | 177,749 | | | 5,845 | |
Interest expense | (72,194) | | | (76,974) | | | (75,488) | | | (67,196) | | | (67,668) | |
Other gains and (losses) (d) | (45,303) | | | 2,180 | | | (890) | | | 7,586 | | | 96,846 | |
Non-operating income | 7,445 | | | 4,862 | | | 4,509 | | | 4,613 | | | 6,508 | |
Earnings from equity method investments in real estate | 5,006 | | | 4,978 | | | 4,355 | | | 5,236 | | | 6,032 | |
| 28,980 | | | (62,553) | | | (65,706) | | | 127,988 | | | 47,563 | |
Income before income taxes | 156,417 | | | 129,216 | | | 154,882 | | | 308,694 | | | 215,015 | |
Provision for income taxes | (13,714) | | | (5,090) | | | (10,236) | | | (15,402) | | | (4,908) | |
Net Income from Real Estate | 142,703 | | | 124,126 | | | 144,646 | | | 293,292 | | | 210,107 | |
Net loss (income) attributable to noncontrolling interests | 50 | | | 41 | | | 40 | | | (61) | | | 35 | |
Net Income from Real Estate Attributable to W. P. Carey | $ | 142,753 | | | $ | 124,167 | | | $ | 144,686 | | | $ | 293,231 | | | $ | 210,142 | |
| | | | | | | | | |
Basic Earnings Per Share | $ | 0.65 | | | $ | 0.58 | | | $ | 0.67 | | | $ | 1.38 | | | $ | 1.00 | |
Diluted Earnings Per Share | $ | 0.65 | | | $ | 0.58 | | | $ | 0.67 | | | $ | 1.38 | | | $ | 1.00 | |
Weighted-Average Shares Outstanding | | | | | | | | | |
Basic | 219,277,446 | | | 215,097,114 | | | 215,075,114 | | | 211,951,930 | | | 209,281,888 | |
Diluted | 219,469,641 | | | 215,252,969 | | | 215,184,485 | | | 212,345,047 | | | 209,822,650 | |
________
(a)Amount for the three months ended December 31, 2023 includes an impairment charge of $47.3 million recognized on the 59 properties contributed to NLOP in connection with the Spin-Off.
(b)Amount for the three months ended September 30, 2023 is primarily comprised of costs incurred in connection with the Spin-Off.
(c)Amount for the three months ended December 31, 2023 includes a gain on sale of real estate of $59.1 million recognized upon entering into an agreement to sell our portfolio of 70 office properties located in Spain to the tenant occupying the properties and the reclassification of the investment to net investments in sales-type leases. Amount for the three months ended March 31, 2023 includes a gain on sale of real estate of $176.2 million recognized upon receiving notice of the exercise of a purchase option for a portfolio of 78 net-lease self-storage properties and the reclassification of the investment to net investments in sales-type leases.
(d)Amount for the three months ended December 31, 2023 is primarily comprised of a non-cash allowance for credit losses of $35.2 million, net losses on foreign currency exchange rate movements of $6.5 million and non-cash losses on non-hedging derivatives of $4.3 million.
| | | | | | | | |
| | Investing for the Long Run® | 6 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2023
| | | | | |
Statements of Income, Investment Management – Last Five Quarters |
In thousands, except share and per share amounts.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2023 | | Sep. 30, 2023 | | Jun. 30, 2023 | | Mar. 31, 2023 | | Dec. 31, 2022 |
Revenues | | | | | | | | | |
Asset management revenue (a) | $ | 1,348 | | | $ | 194 | | | $ | 303 | | | $ | 339 | | | $ | 383 | |
Other advisory income and reimbursements (b) | 667 | | | — | | | — | | | — | | | — | |
Reimbursable costs from affiliates | 46 | | | 97 | | | 124 | | | 101 | | | 104 | |
| 2,061 | | | 291 | | | 427 | | | 440 | | | 487 | |
Operating Expenses | | | | | | | | | |
Reimbursable costs from affiliates | 46 | | | 97 | | | 124 | | | 101 | | | 104 | |
| 46 | | | 97 | | | 124 | | | 101 | | | 104 | |
Other Income and Expenses | | | | | | | | | |
Other gains and (losses) | (474) | | | 679 | | | (476) | | | 514 | | | 213 | |
Non-operating income | — | | | — | | | — | | | 13 | | | 18 | |
| (474) | | | 679 | | | (476) | | | 527 | | | 231 | |
Income (loss) before income taxes | 1,541 | | | 873 | | | (173) | | | 866 | | | 614 | |
Benefit from (provision for) income taxes | — | | | — | | | 107 | | | 283 | | | (1,218) | |
Net Income (Loss) from Investment Management Attributable to W. P. Carey | $ | 1,541 | | | $ | 873 | | | $ | (66) | | | $ | 1,149 | | | $ | (604) | |
| | | | | | | | | |
Basic Earnings Per Share | $ | 0.01 | | | $ | 0.00 | | | $ | 0.00 | | | $ | 0.01 | | | $ | 0.00 | |
Diluted Earnings Per Share | $ | 0.01 | | | $ | 0.00 | | | $ | 0.00 | | | $ | 0.01 | | | $ | 0.00 | |
Weighted-Average Shares Outstanding | | | | | | | | | |
Basic | 219,277,446 | | | 215,097,114 | | | 215,075,114 | | | 211,951,930 | | | 209,281,888 | |
Diluted | 219,469,641 | | | 215,252,969 | | | 215,184,485 | | | 212,345,047 | | | 209,822,650 | |
________
(a)Amount for the three months ended December 31, 2023 is comprised of $1.2 million from NLOP and $0.1 million from CESH.
(b)Amounts are related to administrative reimbursement for our management of NLOP
| | | | | | | | |
| | Investing for the Long Run® | 7 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2023
| | | | | |
FFO and AFFO, Consolidated – Last Five Quarters |
In thousands, except share and per share amounts.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2023 | | Sep. 30, 2023 | | Jun. 30, 2023 | | Mar. 31, 2023 | | Dec. 31, 2022 |
Net income attributable to W. P. Carey | $ | 144,294 | | | $ | 125,040 | | | $ | 144,620 | | | $ | 294,380 | | | $ | 209,538 | |
Adjustments: | | | | | | | | | |
Gain on sale of real estate, net (a) | (134,026) | | | (2,401) | | | (1,808) | | | (177,749) | | | (5,845) | |
Depreciation and amortization of real property | 128,839 | | | 144,111 | | | 142,932 | | | 155,868 | | | 140,157 | |
Impairment charges — real estate (b) | 71,238 | | | 15,173 | | | — | | | — | | | 12,734 | |
Proportionate share of adjustments to earnings from equity method investments (c) | 2,942 | | | 2,950 | | | 2,883 | | | 2,606 | | | 2,296 | |
Proportionate share of adjustments for noncontrolling interests (d) | (133) | | | 34 | | | (268) | | | (299) | | | (294) | |
Total adjustments | 68,860 | | | 159,867 | | | 143,739 | | | (19,574) | | | 149,048 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey (e) | 213,154 | | | 284,907 | | | 288,359 | | | 274,806 | | | 358,586 | |
Adjustments: | | | | | | | | | |
Other (gains) and losses (f) | 45,777 | | | (2,859) | | | 1,366 | | | (8,100) | | | (97,059) | |
Straight-line and other leasing and financing adjustments | (19,071) | | | (18,662) | | | (19,086) | | | (15,050) | | | (14,766) | |
Stock-based compensation | 8,693 | | | 9,050 | | | 8,995 | | | 7,766 | | | 9,739 | |
Above- and below-market rent intangible lease amortization, net | 6,644 | | | 7,835 | | | 8,824 | | | 10,861 | | | 8,652 | |
Amortization of deferred financing costs | 4,895 | | | 4,805 | | | 5,904 | | | 4,940 | | | 5,705 | |
Tax (benefit) expense – deferred and other | 2,507 | | | (4,349) | | | (2,723) | | | 4,366 | | | (3,325) | |
Merger and other expenses (g) | (641) | | | 4,152 | | | 1,419 | | | 24 | | | 2,058 | |
Other amortization and non-cash items | 152 | | | 584 | | | 527 | | | 472 | | | 490 | |
Proportionate share of adjustments to earnings from equity method investments (c) | (663) | | | (691) | | | (255) | | | (926) | | | (319) | |
Proportionate share of adjustments for noncontrolling interests (d) | (97) | | | (380) | | | (24) | | | 60 | | | (85) | |
Total adjustments | 48,196 | | | (515) | | | 4,947 | | | 4,413 | | | (88,910) | |
AFFO Attributable to W. P. Carey (e) | $ | 261,350 | | | $ | 284,392 | | | $ | 293,306 | | | $ | 279,219 | | | $ | 269,676 | |
| | | | | | | | | |
Summary | | | | | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey (e) | $ | 213,154 | | | $ | 284,907 | | | $ | 288,359 | | | $ | 274,806 | | | $ | 358,586 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (e) | $ | 0.97 | | | $ | 1.32 | | | $ | 1.34 | | | $ | 1.29 | | | $ | 1.70 | |
AFFO attributable to W. P. Carey (e) | $ | 261,350 | | | $ | 284,392 | | | $ | 293,306 | | | $ | 279,219 | | | $ | 269,676 | |
AFFO attributable to W. P. Carey per diluted share (e) | $ | 1.19 | | | $ | 1.32 | | | $ | 1.36 | | | $ | 1.31 | | | $ | 1.29 | |
Diluted weighted-average shares outstanding | 219,469,641 | | | 215,252,969 | | | 215,184,485 | | | 212,345,047 | | | 209,822,650 | |
________
(a)Amount for the three months ended December 31, 2023 includes a gain on sale of real estate of $59.1 million recognized upon entering into an agreement to sell our portfolio of 70 office properties located in Spain to the tenant occupying the properties and the reclassification of the investment to net investments in sales-type leases. Amount for the three months ended March 31, 2023 includes a gain on sale of real estate of $176.2 million recognized upon receiving notice of the exercise of a purchase option for a portfolio of 78 net-lease self-storage properties and the reclassification of the investment to net investments in sales-type leases.
(b)Amount for the three months ended December 31, 2023 includes an impairment charge of $47.3 million recognized on the 59 properties contributed to NLOP in connection with the Spin-Off.
(c)Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Earnings from equity method investments on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis.
(d)Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
(f)Amount for the three months ended December 31, 2023 is primarily comprised of a non-cash allowance for credit losses of $35.2 million, net losses on foreign currency exchange rate movements of $6.5 million and non-cash losses on non-hedging derivatives of $4.3 million.
(g)Amount for the three months ended September 30, 2023 is primarily comprised of costs incurred in connection with the Spin-Off.
| | | | | | | | |
| | Investing for the Long Run® | 8 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2023
| | | | | |
FFO and AFFO, Real Estate – Last Five Quarters |
In thousands, except share and per share amounts.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2023 | | Sep. 30, 2023 | | Jun. 30, 2023 | | Mar. 31, 2023 | | Dec. 31, 2022 |
Net income from Real Estate attributable to W. P. Carey | $ | 142,753 | | | $ | 124,167 | | | $ | 144,686 | | | $ | 293,231 | | | $ | 210,142 | |
Adjustments: | | | | | | | | | |
Gain on sale of real estate, net (a) | (134,026) | | | (2,401) | | | (1,808) | | | (177,749) | | | (5,845) | |
Depreciation and amortization of real property | 128,839 | | | 144,111 | | | 142,932 | | | 155,868 | | | 140,157 | |
Impairment charges — real estate (b) | 71,238 | | | 15,173 | | | — | | | — | | | 12,734 | |
Proportionate share of adjustments to earnings from equity method investments (c) | 2,942 | | | 2,950 | | | 2,883 | | | 2,606 | | | 2,296 | |
Proportionate share of adjustments for noncontrolling interests (d) | (133) | | | 34 | | | (268) | | | (299) | | | (294) | |
Total adjustments | 68,860 | | | 159,867 | | | 143,739 | | | (19,574) | | | 149,048 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (e) | 211,613 | | | 284,034 | | | 288,425 | | | 273,657 | | | 359,190 | |
Adjustments: | | | | | | | | | |
Other (gains) and losses (f) | 45,303 | | | (2,180) | | | 890 | | | (7,586) | | | (96,846) | |
Straight-line and other leasing and financing adjustments | (19,071) | | | (18,662) | | | (19,086) | | | (15,050) | | | (14,766) | |
Stock-based compensation | 8,693 | | | 9,050 | | | 8,995 | | | 7,766 | | | 9,739 | |
Above- and below-market rent intangible lease amortization, net | 6,644 | | | 7,835 | | | 8,824 | | | 10,861 | | | 8,652 | |
Amortization of deferred financing costs | 4,895 | | | 4,805 | | | 5,904 | | | 4,940 | | | 5,705 | |
Tax (benefit) expense – deferred and other | 2,507 | | | (4,349) | | | (2,723) | | | 4,366 | | | (3,862) | |
Merger and other expenses (g) | (641) | | | 4,152 | | | 1,419 | | | 24 | | | 2,058 | |
Other amortization and non-cash items | 152 | | | 584 | | | 527 | | | 472 | | | 490 | |
Proportionate share of adjustments to earnings from equity method investments (c) | (663) | | | (691) | | | (255) | | | (926) | | | (320) | |
Proportionate share of adjustments for noncontrolling interests (d) | (97) | | | (380) | | | (24) | | | 60 | | | (85) | |
Total adjustments | 47,722 | | | 164 | | | 4,471 | | | 4,927 | | | (89,235) | |
AFFO Attributable to W. P. Carey – Real Estate (e) | $ | 259,335 | | | $ | 284,198 | | | $ | 292,896 | | | $ | 278,584 | | | $ | 269,955 | |
| | | | | | | | | |
Summary | | | | | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (e) | $ | 211,613 | | | $ | 284,034 | | | $ | 288,425 | | | $ | 273,657 | | | $ | 359,190 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (e) | $ | 0.96 | | | $ | 1.32 | | | $ | 1.34 | | | $ | 1.29 | | | $ | 1.70 | |
AFFO attributable to W. P. Carey – Real Estate (e) | $ | 259,335 | | | $ | 284,198 | | | $ | 292,896 | | | $ | 278,584 | | | $ | 269,955 | |
AFFO attributable to W. P. Carey per diluted share – Real Estate (e) | $ | 1.18 | | | $ | 1.32 | | | $ | 1.36 | | | $ | 1.31 | | | $ | 1.29 | |
Diluted weighted-average shares outstanding | 219,469,641 | | | 215,252,969 | | | 215,184,485 | | | 212,345,047 | | | 209,822,650 | |
________
(a)Amount for the three months ended December 31, 2023 includes a gain on sale of real estate of $59.1 million recognized upon entering into an agreement to sell our portfolio of 70 office properties located in Spain to the tenant occupying the properties and the reclassification of the investment to net investments in sales-type leases. Amount for the three months ended March 31, 2023 includes a gain on sale of real estate of $176.2 million recognized upon receiving notice of the exercise of a purchase option for a portfolio of 78 net-lease self-storage properties and the reclassification of the investment to net investments in sales-type leases.
(b)Amount for the three months ended December 31, 2023 includes an impairment charge of $47.3 million recognized on the 59 properties contributed to NLOP in connection with the Spin-Off.
(c)Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Earnings from equity method investments on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis.
(d)Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
(f)Amount for the three months ended December 31, 2023 is primarily comprised of a non-cash allowance for credit losses of $35.2 million, net losses on foreign currency exchange rate movements of $6.5 million and non-cash losses on non-hedging derivatives of $4.3 million.
(g)Amount for the three months ended September 30, 2023 is primarily comprised of costs incurred in connection with the Spin-Off.
| | | | | | | | |
| | Investing for the Long Run® | 9 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2023
| | | | | |
FFO and AFFO, Investment Management – Last Five Quarters |
In thousands, except share and per share amounts.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2023 | | Sep. 30, 2023 | | Jun. 30, 2023 | | Mar. 31, 2023 | | Dec. 31, 2022 |
Net income (loss) from Investment Management attributable to W. P. Carey | $ | 1,541 | | | $ | 873 | | | $ | (66) | | | $ | 1,149 | | | $ | (604) | |
| | | | | | | | | |
| | | | | | | | | |
FFO (as defined by NAREIT) Attributable to W. P. Carey – Investment Management (a) | 1,541 | | | 873 | | | (66) | | | 1,149 | | | (604) | |
Adjustments: | | | | | | | | | |
Other (gains) and losses | 474 | | | (679) | | | 476 | | | (514) | | | (213) | |
Tax expense – deferred and other | — | | | — | | | — | | | — | | | 537 | |
Proportionate share of adjustments to earnings from equity method investments (b) | — | | | — | | | — | | | — | | | 1 | |
Total adjustments | 474 | | | (679) | | | 476 | | | (514) | | | 325 | |
AFFO Attributable to W. P. Carey – Investment Management (c) | $ | 2,015 | | | $ | 194 | | | $ | 410 | | | $ | 635 | | | $ | (279) | |
| | | | | | | | | |
Summary | | | | | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey – Investment Management (a) | $ | 1,541 | | | $ | 873 | | | $ | (66) | | | $ | 1,149 | | | $ | (604) | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Investment Management (a) | $ | 0.01 | | | $ | 0.00 | | | $ | 0.00 | | | $ | 0.00 | | | $ | 0.00 | |
AFFO attributable to W. P. Carey – Investment Management (a) | $ | 2,015 | | | $ | 194 | | | $ | 410 | | | $ | 635 | | | $ | (279) | |
AFFO attributable to W. P. Carey per diluted share – Investment Management (a) | $ | 0.01 | | | $ | 0.00 | | | $ | 0.00 | | | $ | 0.00 | | | $ | 0.00 | |
Diluted weighted-average shares outstanding | 219,469,641 | | | 215,252,969 | | | 215,184,485 | | | 212,345,047 | | | 209,822,650 | |
________
(b)Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Earnings from equity method investments on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis.
| | | | | | | | |
| | Investing for the Long Run® | 10 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2023
| | | | | |
Elements of Pro Rata Statement of Income and AFFO Adjustments |
In thousands. For the three months ended December 31, 2023.
We believe that the table below is useful for investors to help them better understand our business by illustrating the impact of each of our AFFO adjustments on our GAAP statement of income line items. This presentation is not an alternative to the GAAP statement of income, nor is AFFO an alternative to net income as determined by GAAP.
| | | | | | | | | | | | | | | | | | | | |
| Equity Method Investments (a) | | Noncontrolling Interests (b) | | AFFO Adjustments | |
Revenues | | | | | | |
Real Estate: | | | | | | |
Lease revenues | $ | 4,269 | | | $ | (256) | | | $ | (14,567) | | (c) |
Income from finance leases and loans receivable | — | | | — | | | 524 | | |
Operating property revenues: | | | | | | |
Hotel revenues | — | | | — | | | — | | |
Self-storage revenues | 2,464 | | | — | | | — | | |
Student housing revenues | — | | | — | | | — | | |
Other lease-related income | — | | | — | | | (459) | |
|
| | | | | | |
Investment Management: | | | | | | |
Asset management revenue | — | | | — | | | — | | |
Other advisory income and reimbursements | — | | | — | | | — | | |
Reimbursable costs from affiliates | — | | | — | | | — | | |
| | | | | | |
Operating Expenses | | | | | | |
Depreciation and amortization | 2,787 | | | (133) | | | (131,592) | | (d) |
Impairment charges — real estate | — | | | — | | | (71,238) | | (e) (f) |
General and administrative | — | | | — | | | — | | |
Operating property expenses: | | | | | | |
Hotel expenses | — | | | — | | | — | | |
Self-storage expenses | 884 | | | — | | | (28) | | |
Student housing expenses | — | | | — | | | — | | |
Reimbursable tenant costs | 227 | | | (32) | | | — | |
|
Property expenses, excluding reimbursable tenant costs | 182 | | | (20) | | | (477) | | (f) |
Stock-based compensation expense | — | | | — | | | (8,693) | | (f) |
Merger and other expenses | — | | | — | | | 641 | |
|
Reimbursable costs from affiliates | — | | | — | | | — | | |
| | | | | | |
Other Income and Expenses | | | | | | |
Gain on sale of real estate, net | — | | | — | | | (134,026) | | (g) |
Interest expense | (394) | | | 75 | | | 4,897 | | (h) |
Other gains and (losses) | (31) | | | 99 | | | 45,709 | | (i) |
Non-operating income | 14 | | | (5) | | | — | | |
Earnings from equity method investments: | | | | | |
Income related to joint ventures | (1,919) | | | — | | | 715 | | (j) |
| | | | | | |
Provision for income taxes | (323) | | | (21) | | | 2,876 | | (k) |
Net loss attributable to noncontrolling interests | — | | | (77) | | | — | | |
________
(a)Represents the break-out by line item of amounts recorded in Earnings from equity method investments.
(b)Represents the break-out by line item of amounts recorded in Net income attributable to noncontrolling interests.
(c)Represents the reversal of amortization of above- or below-market lease intangibles of $6.6 million and the elimination of non-cash amounts related to straight-line rent and other of $21.2 million.
(d)Adjustment is a non-cash adjustment excluding corporate depreciation and amortization.
(e)Includes an impairment charge of $47.3 million recognized on the 59 properties contributed to NLOP in connection with the Spin-Off.
(f)Adjustment to exclude a non-cash item.
(g)Includes a gain on sale of real estate of $59.1 million recognized upon entering into an agreement to sell our portfolio of 70 office properties located in Spain to the tenant occupying the properties and the reclassification of the investment to net investments in sales-type leases.
(h)Represents the elimination of non-cash components of interest expense, such as deferred financing costs, debt premiums and discounts.
(i)Represents eliminations of gains (losses) related to the extinguishment of debt, unrealized gains (losses) on foreign currency exchange rate movements, gains (losses) on marketable securities, non-cash allowance for credit losses on loans receivable and finance leases, and other items.
(j)Adjustments to include our pro rata share of AFFO adjustments from equity method investments.
(k)Primarily represents the elimination of deferred taxes.
| | | | | | | | |
| | Investing for the Long Run® | 11 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2023
In thousands. For the three months ended December 31, 2023.
| | | | | |
Tenant Improvements and Leasing Costs | |
Tenant improvements | $ | 10,023 | |
Leasing costs | 698 | |
Tenant Improvements and Leasing Costs | 10,721 | |
| |
Maintenance Capital Expenditures | |
Net-lease properties | 1,967 | |
Operating properties | 1,193 | |
Maintenance Capital Expenditures | 3,160 | |
| |
Total: Tenant Improvements and Leasing Costs, and Maintenance Capital Expenditures | $ | 13,881 | |
| |
Non-Maintenance Capital Expenditures | |
Net-lease properties | $ | 3,345 | |
Operating properties | — | |
Non-Maintenance Capital Expenditures | $ | 3,345 | |
| |
Other Capital Expenditures | |
Net-lease properties | $ | 287 | |
Operating properties | — | |
Other Capital Expenditures | $ | 287 | |
| | | | | | | | |
| | Investing for the Long Run® | 12 |
W. P. Carey Inc.
Balance Sheets and Capitalization
Fourth Quarter 2023
| | | | | | | | |
| | Investing for the Long Run® | 13 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2023
| | | | | |
Consolidated Balance Sheets |
In thousands, except share and per share amounts.
| | | | | | | | | | | |
| December 31, |
| 2023 | | 2022 |
Assets | | | |
Investments in real estate: | | | |
Land, buildings and improvements — net lease and other | $ | 12,095,458 | | | $ | 13,338,857 | |
Land, buildings and improvements — operating properties | 1,256,249 | | | 1,095,892 | |
Net investments in finance leases and loans receivable | 1,514,923 | | | 771,761 | |
In-place lease intangible assets and other | 2,308,853 | | | 2,659,750 | |
Above-market rent intangible assets | 706,773 | | | 833,751 | |
Investments in real estate | 17,882,256 | | | 18,700,011 | |
Accumulated depreciation and amortization (a) | (3,005,479) | | | (3,269,057) | |
Assets held for sale, net | 37,122 | | | 57,944 | |
Net investments in real estate | 14,913,899 | | | 15,488,898 | |
Equity method investments | 354,261 | | | 327,502 | |
Cash and cash equivalents | 633,860 | | | 167,996 | |
Other assets, net | 1,096,474 | | | 1,080,227 | |
Goodwill | 978,289 | | | 1,037,412 | |
Total assets | $ | 17,976,783 | | | $ | 18,102,035 | |
| | | |
Liabilities and Equity | | | |
Debt: | | | |
Senior unsecured notes, net | $ | 6,035,686 | | | $ | 5,916,400 | |
Unsecured term loans, net | 1,125,564 | | | 552,539 | |
Unsecured revolving credit facility | 403,785 | | | 276,392 | |
Non-recourse mortgages, net | 579,147 | | | 1,132,417 | |
Debt, net | 8,144,182 | | | 7,877,748 | |
Accounts payable, accrued expenses and other liabilities | 615,750 | | | 623,843 | |
Below-market rent and other intangible liabilities, net | 136,872 | | | 184,584 | |
Deferred income taxes | 180,650 | | | 178,959 | |
Dividends payable | 192,332 | | | 228,257 | |
Total liabilities | 9,269,786 | | | 9,093,391 | |
| | | |
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued | — | | | — | |
Common stock, $0.001 par value, 450,000,000 shares authorized; 218,671,874 and 210,620,949 shares, respectively, issued and outstanding | 219 | | | 211 | |
Additional paid-in capital | 11,784,461 | | | 11,706,836 | |
Distributions in excess of accumulated earnings | (2,891,424) | | | (2,486,633) | |
Deferred compensation obligation | 62,046 | | | 57,012 | |
Accumulated other comprehensive loss | (254,867) | | | (283,780) | |
Total stockholders' equity | 8,700,435 | | | 8,993,646 | |
Noncontrolling interests | 6,562 | | | 14,998 | |
Total equity | 8,706,997 | | | 9,008,644 | |
Total liabilities and equity | $ | 17,976,783 | | | $ | 18,102,035 | |
________
(a)Includes $1.6 billion and $1.7 billion of accumulated depreciation on buildings and improvements as of December 31, 2023 and 2022, respectively, and $1.4 billion and $1.6 billion of accumulated amortization on lease intangibles as of December 31, 2023 and 2022, respectively.
| | | | | | | | |
| | Investing for the Long Run® | 14 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2023
In thousands, except share and per share amounts. As of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Description | | Shares | | Share Price | | Market Value |
Equity | | | | | | | |
Common equity | | | | 218,671,874 | | | $ | 64.81 | | | $ | 14,172,124 | |
Preferred equity | | | | | | | | — | |
Total Equity Market Capitalization | | | | | | 14,172,124 | |
| | | | | | | | |
| | | | | | | | Outstanding Balance (a) |
Pro Rata Debt | | | | | | | |
Non-recourse mortgages | | | | | | | | 673,989 | |
Unsecured term loans (due February 14, 2028) | | | | | | 580,881 | |
Unsecured term loans (due April 24, 2026) | | | | | | 552,500 | |
Unsecured revolving credit facility (due February 14, 2029) | | | | | | | 403,785 | |
Senior unsecured notes: | | | | | | | |
Due April 1, 2024 (USD) | | | | | | 500,000 | |
Due July 19, 2024 (EUR) | | | | | | 552,500 | |
Due February 1, 2025 (USD) | | | | | | 450,000 | |
Due April 9, 2026 (EUR) | | | | | | 552,500 | |
Due October 1, 2026 (USD) | | | | | | 350,000 | |
Due April 15, 2027 (EUR) | | | | | | 552,500 | |
Due April 15, 2028 (EUR) | | | | | | 552,500 | |
Due July 15, 2029 (USD) | | | | | | 325,000 | |
Due September 28, 2029 (EUR) | | | | | | | | 165,750 | |
Due June 1, 2030 (EUR) | | | | | | 580,125 | |
Due February 1, 2031 (USD) | | | | | | 500,000 | |
Due February 1, 2032 (USD) | | | | | | 350,000 | |
Due September 28, 2032 (EUR) | | | | | | | | 221,000 | |
Due April 1, 2033 (USD) | | | | | | 425,000 | |
Total Pro Rata Debt | | | | | | 8,288,030 | |
| | | | | | | | |
Total Capitalization | | | | | | $ | 22,460,154 | |
________
(a)Excludes unamortized discount, net totaling $31.8 million and unamortized deferred financing costs totaling $21.5 million as of December 31, 2023.
| | | | | | | | |
| | Investing for the Long Run® | 15 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2023
Dollars in thousands. Pro rata. As of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| USD-Denominated | | | EUR-Denominated | | | Other Currencies (a) | | | Total |
| | | | | | | | | | | | | | | | Outstanding Balance | | | | |
| Out-standing Balance (in USD) | | Weigh-ted Avg. Interest Rate | | | Out-standing Balance (in USD) | | Weigh-ted Avg. Interest Rate | | | Out-standing Balance (in USD) | | Weigh-ted Avg. Interest Rate | | | Amount (in USD) | | % of Total | | Weigh-ted Avg. Interest Rate | | Weigh-ted Avg. Maturity (Years) |
Non-Recourse Debt (b) (c) | | | | | | | | | | | | | | | | | | | | | | |
Fixed (d) | $ | 417,755 | | | 4.7 | % | | | $ | 142,678 | | | 2.6 | % | | | $ | 48,272 | | | 4.2 | % | | | $ | 608,705 | | | 7.3 | % | | 4.2 | % | | 1.4 | |
Floating | — | | | — | % | | | 65,284 | | | 5.6 | % | | | — | | | — | % | | | 65,284 | | | 0.8 | % | | 5.6 | % | | 0.3 | |
Total Pro Rata Non-Recourse Debt | 417,755 | | | 4.7 | % | | | 207,962 | | | 3.5 | % | | | 48,272 | | | 4.2 | % | | | 673,989 | | | 8.1 | % | | 4.3 | % | | 1.3 | |
| | | | | | | | | | | | | | | | | | | | | | |
Recourse Debt (b) (c) | | | | | | | | | | | | | | | | | | | | | | |
Fixed – Senior unsecured notes: | | | | | | | | | | | | | | | | | | | | | |
Due April 1, 2024 | 500,000 | | | 4.6 | % | | | — | | | — | % | | | — | | | — | % | | | 500,000 | | | 6.0 | % | | 4.6 | % | | 0.3 | |
Due July 19, 2024 | — | | | — | % | | | 552,500 | | | 2.3 | % | | | — | | | — | % | | | 552,500 | | | 6.7 | % | | 2.3 | % | | 0.6 | |
Due February 1, 2025 | 450,000 | | | 4.0 | % | | | — | | | — | % | | | — | | | — | % | | | 450,000 | | | 5.4 | % | | 4.0 | % | | 1.1 | |
Due April 9, 2026 | — | | | — | % | | | 552,500 | | | 2.3 | % | | | — | | | — | % | | | 552,500 | | | 6.7 | % | | 2.3 | % | | 2.3 | |
Due October 1, 2026 | 350,000 | | | 4.3 | % | | | — | | | — | % | | | — | | | — | % | | | 350,000 | | | 4.2 | % | | 4.3 | % | | 2.8 | |
Due April 15, 2027 | — | | | — | % | | | 552,500 | | | 2.1 | % | | | — | | | — | % | | | 552,500 | | | 6.7 | % | | 2.1 | % | | 3.3 | |
Due April 15, 2028 | — | | | — | % | | | 552,500 | | | 1.4 | % | | | — | | | — | % | | | 552,500 | | | 6.7 | % | | 1.4 | % | | 4.3 | |
Due July 15, 2029 | 325,000 | | | 3.9 | % | | | — | | | — | % | | | — | | | — | % | | | 325,000 | | | 3.9 | % | | 3.9 | % | | 5.5 | |
Due September 28, 2029 | — | | | — | % | | | 165,750 | | | 3.4 | % | | | — | | | — | % | | | 165,750 | | | 2.0 | % | | 3.4 | % | | 5.7 | |
Due June 1, 2030 | — | | | — | % | | | 580,125 | | | 1.0 | % | | | — | | | — | % | | | 580,125 | | | 7.0 | % | | 1.0 | % | | 6.4 | |
Due February 1, 2031 | 500,000 | | | 2.4 | % | | | — | | | — | % | | | — | | | — | % | | | 500,000 | | | 6.0 | % | | 2.4 | % | | 7.1 | |
Due February 1, 2032 | 350,000 | | | 2.5 | % | | | — | | | — | % | | | — | | | — | % | | | 350,000 | | | 4.2 | % | | 2.5 | % | | 8.1 | |
Due September 28, 2032 | — | | | — | % | | | 221,000 | | | 3.7 | % | | | — | | | — | % | | | 221,000 | | | 2.7 | % | | 3.7 | % | | 8.8 | |
Due April 1, 2033 | 425,000 | | | 2.3 | % | | | — | | | — | % | | | — | | | — | % | | | 425,000 | | | 5.1 | % | | 2.3 | % | | 9.3 | |
Total Senior Unsecured Notes | 2,900,000 | | | 3.4 | % | | | 3,176,875 | | | 2.0 | % | | | — | | | — | % | | | 6,076,875 | | | 73.3 | % | | 2.7 | % | | 4.3 | |
Swapped to Fixed: | | | | | | | | | | | | | | | | | | | | | |
Unsecured term loans (due April 24, 2026) (e) | — | | | — | % | | | 552,500 | | | 4.3 | % | | | — | | | — | % | | | 552,500 | | | 6.7 | % | | 4.3 | % | | 2.3 | |
Floating: | | | | | | | | | | | | | | | | | | | | | | |
Unsecured term loans (due February 14, 2028) (f) | — | | | — | % | | | 237,575 | | | 4.8 | % | | | 343,306 | | | 6.0 | % | | | 580,881 | | | 7.0 | % | | 5.5 | % | | 4.1 | |
Unsecured revolving credit facility (due February 14, 2029) (g) | — | | | — | % | | | 386,750 | | | 4.6 | % | | | 17,035 | | | 0.9 | % | | | 403,785 | | | 4.9 | % | | 4.5 | % | | 5.1 | |
Total Recourse Debt | 2,900,000 | | | 3.4 | % | | | 4,353,700 | | | 2.7 | % | | | 360,341 | | | 5.8 | % | | | 7,614,041 | | | 91.9 | % | | 3.1 | % | | 4.2 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Pro Rata Debt Outstanding | $ | 3,317,755 | | | 3.6 | % | | | $ | 4,561,662 | | | 2.7 | % | | | $ | 408,613 | | | 5.6 | % | | | $ | 8,288,030 | | | 100.0 | % | | 3.2 | % | | 3.9 | |
________
(a)Other currencies include debt denominated in British pound sterling, Norwegian krone and Japanese yen.
(c)Excludes unamortized discount, net totaling $31.8 million and unamortized deferred financing costs totaling $21.5 million as of December 31, 2023.
(d)Includes $120.5 million of non-recourse mortgage debt which is swapped to fixed-rate through mortgage maturity.
(e)Interest rate swap expiration date is December 31, 2024.
(f)We incurred interest at SONIA or EURIBOR, plus 0.85% for both base rates, on our Unsecured term loans.
(g)Depending on the currency, we incurred interest on our Unsecured revolving credit facility at EURIBOR or TIBOR, plus 0.775% for all base rates. Each has a floor of 0.00% under the terms of our credit agreement. Availability under our Unsecured revolving credit facility (net of amounts reserved for standby letters of credit) was approximately $1.6 billion as of December 31, 2023.
| | | | | | | | |
| | Investing for the Long Run® | 16 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2023
Dollars in thousands. Pro rata. As of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Real Estate | | Debt |
| | Number of Properties (a) | | | | Weighted-Average Interest Rate | | | | Total Outstanding Balance (b) (c) | | % of Total Outstanding Balance |
Year of Maturity | | | ABR (a) | | | Balloon | | |
Non-Recourse Debt | | | | | | | | | | | | |
2024 | | 51 | | | $ | 39,564 | | | 4.0 | % | | $ | 286,862 | | | $ | 289,300 | | | 3.5 | % |
2025 | | 38 | | | 20,915 | | | 4.3 | % | | 243,682 | | | 250,669 | | | 3.0 | % |
2026 | | 18 | | | 16,480 | | | 5.0 | % | | 90,320 | | | 103,722 | | | 1.3 | % |
2027 | | 1 | | | — | | | 4.3 | % | | 21,450 | | | 21,450 | | | 0.3 | % |
2031 | | 1 | | | 1,096 | | | 6.0 | % | | — | | | 2,659 | | | — | % |
2033 | | 1 | | | 1,375 | | | 5.6 | % | | 1,671 | | | 3,693 | | | — | % |
2039 | | 1 | | | 732 | | | 5.3 | % | | — | | | 2,496 | | | — | % |
Total Pro Rata Non-Recourse Debt | | 111 | | | $ | 80,162 | | | 4.3 | % | | $ | 643,985 | | | 673,989 | | | 8.1 | % |
| | | | | | | | | | | | |
Recourse Debt | | | | | | | | | | | | |
Fixed – Senior unsecured notes: | | | | | | | | | | | | |
Due April 1, 2024 (USD) | | 4.6 | % | | | | 500,000 | | | 6.0 | % |
Due July 19, 2024 (EUR) | | 2.3 | % | | | | 552,500 | | | 6.7 | % |
Due February 1, 2025 (USD) | | 4.0 | % | | | | 450,000 | | | 5.4 | % |
Due April 9, 2026 (EUR) | | 2.3 | % | | | | 552,500 | | | 6.7 | % |
Due October 1, 2026 (USD) | | 4.3 | % | | | | 350,000 | | | 4.2 | % |
Due April 15, 2027 (EUR) | | 2.1 | % | | | | 552,500 | | | 6.7 | % |
Due April 15, 2028 (EUR) | | 1.4 | % | | | | 552,500 | | | 6.7 | % |
Due July 15, 2029 (USD) | | 3.9 | % | | | | 325,000 | | | 3.9 | % |
Due September 28, 2029 (EUR) | | | | | | 3.4 | % | | | | 165,750 | | | 2.0 | % |
Due June 1, 2030 (EUR) | | 1.0 | % | | | | 580,125 | | | 7.0 | % |
Due February 1, 2031 (USD) | | 2.4 | % | | | | 500,000 | | | 6.0 | % |
Due February 1, 2032 (USD) | | 2.5 | % | | | | 350,000 | | | 4.2 | % |
Due September 28, 2032 (EUR) | | | | | | 3.7 | % | | | | 221,000 | | | 2.7 | % |
Due April 1, 2033 (USD) | | 2.3 | % | | | | 425,000 | | | 5.1 | % |
Total Senior Unsecured Notes | | 2.7 | % | | | | 6,076,875 | | | 73.3 | % |
Swapped to Fixed: | | | | | | | | | | | | |
Unsecured term loans (due April 24, 2026) (d) | | 4.3 | % | | | | 552,500 | | | 6.7 | % |
Floating: | | | | | | | | | | | | |
Unsecured term loans (due February 14, 2028) (e) | | 5.5 | % | | | | 580,881 | | | 7.0 | % |
Unsecured revolving credit facility (due February 14, 2029) (f) | | 4.5 | % | | | | 403,785 | | | 4.9 | % |
Total Recourse Debt | | 3.1 | % | | | | 7,614,041 | | | 91.9 | % |
| | | | | | | | |
Total Pro Rata Debt Outstanding | | 3.2 | % | | | | $ | 8,288,030 | | | 100.0 | % |
________
(a)Represents the number of properties and ABR associated with the debt that is maturing in each respective year.
(b)Debt maturity data is presented on a pro rata basis. See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of pro rata. Total outstanding balance includes balloon payments and scheduled amortization for our non-recourse debt. (c)Excludes unamortized discount, net totaling $31.8 million and unamortized deferred financing costs totaling $21.5 million as of December 31, 2023.
(d)Interest rate swap expiration date is December 31, 2024.
(e)We incurred interest at SONIA or EURIBOR, plus 0.85% for both base rates, on our Unsecured term loans.
(f)Depending on the currency, we incurred interest on our Unsecured revolving credit facility at EURIBOR or TIBOR, plus 0.775% for all base rates. Each has a floor of 0.00% under the terms of our credit agreement. Availability under our Unsecured revolving credit facility (net of amounts reserved for standby letters of credit) was approximately $1.6 billion as of December 31, 2023.
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| | Investing for the Long Run® | 17 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2023
As of December 31, 2023.
Ratings
| | | | | | | | | | | | | | | | | | | | |
| | Issuer | | Senior Unsecured Notes |
Ratings Agency | | Rating | | Outlook | | Rating |
Moody's | | Baa1 | | Stable | | Baa1 |
Standard & Poor’s | | BBB+ | | Stable | | BBB+ |
Senior Unsecured Note Covenants
The following is a summary of the key financial covenants for the Senior Unsecured Notes, along with our estimated calculations of our compliance with those covenants at the end of the period presented. These ratios are not measures of our liquidity or performance and serve only to demonstrate our ability to incur additional debt, as permitted by the covenants for the Senior Unsecured Notes.
| | | | | | | | | | | | | | | | | | | | |
Covenant | | Metric | | Required | | As of Dec. 31, 2023 |
Limitation on the incurrence of debt | | "Total Debt" / "Total Assets" | | ≤ 60% | | 42.3% |
Limitation on the incurrence of secured debt | | "Secured Debt" / "Total Assets" | | ≤ 40% | | 3.1% |
Limitation on the incurrence of debt based on consolidated EBITDA to annual debt service charge | | "Consolidated EBITDA" / "Annual Debt Service Charge" | | ≥ 1.5x | | 4.7x |
Maintenance of unencumbered asset value | | "Unencumbered Assets" / "Total Unsecured Debt" | | ≥ 150% | | 225.8% |
| | | | | | | | |
| | Investing for the Long Run® | 18 |
W. P. Carey Inc.
Real Estate
Fourth Quarter 2023
| | | | | | | | |
| | Investing for the Long Run® | 19 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
| | | | | |
Investment Activity – Investment Volume |
Dollars in thousands. Pro rata. For the year ended December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Property Type(s) | | Closing Date / Asset Completion Date | | Gross Investment Amount | | Investment Type | | Lease Term (Years) (a) | | Gross Square Footage |
Tenant / Lease Guarantor | | Property Location(s) | | | | | | |
1Q23 | | | | | | | | | | | | | | |
Plaskolite, LLC (6 properties) | | Various, United States | | Industrial | | Jan-23 | | $ | 64,861 | | | Sale-leaseback | | 24 | | | 931,521 | |
Siderforgerossi Group S.P.A. (8 properties) (b) | | Various, Italy (5 properties) and Spain (3 properties) | | Industrial | | Mar-23 | | 79,218 | | | Sale-leaseback | | 25 | | | 1,256,209 | |
Berry Global Inc. (2 properties) | | Evansville, IN and Lawrence, KS | | Industrial | | Mar-23 | | 20,000 | | | Renovation | | 17 | | | N/A |
1Q23 Total | | | | | | | | 164,079 | | | | | 24 | | | 2,187,730 | |
| | | | | | | | | | | | | | |
2Q23 | | | | | | | | | | | | | | |
Apotex Pharmaceutical Holdings (11 properties) | | Various, Canada | | Industrial, Warehouse | | Apr-23 | | 467,811 | | | Sale-leaseback | | 20 | | | 2,268,417 | |
ABC Technologies Holdings Inc. (9 properties) (c) | | Various, United States (4 properties), Canada (3 properties), and Mexico (2 properties) | | Industrial | | Apr-23 | | 97,952 | | | Sale-leaseback | | 20 | | | 1,225,951 | |
TWAS Holdings, LLC (9 properties) | | Various, United States | | Retail (Car Wash) | | May-23 | | 39,713 | | | Sale-leaseback | | 20 | | | 33,433 | |
Bear Holdings, LP (4 properties) | | Various, United States | | Education (Medical School) | | Jun-23 | | 139,092 | | | Sale-leaseback | | 25 | | | 410,332 | |
Storage Space (d) | | Little Rock, AR | | Self-Storage (Operating) | | Jun-23 | | 6,166 | | | Operating | | N/A | | 55,850 | |
2Q23 Total | | | | | | | | 750,734 | | | | | 21 | | | 3,993,983 | |
| | | | | | | | | | | | | | |
3Q23 | | | | | | | | | | | | | | |
Unchained Labs, LLC | | Pleasanton, CA | | Laboratory | | Aug-23 | | 13,905 | | | Redevelopment | | 16 | | | N/A |
3 Men Movers | | Houston, TX | | Self-Storage (Operating) | | Aug-23 | | 13,120 | | | Operating | | N/A | | 78,372 | |
3Q23 Total | | | | | | | | 27,025 | | | | | 16 | | | 78,372 | |
| | | | | | | | | | | | | | |
4Q23 | | | | | | | | | | | | | | |
TWAS Holdings, LLC (2 properties) | | Dothan, AL and Queensbury, NY | | Retail (Car Wash) | | Oct-23 | | 8,657 | | | Sale-leaseback | | 20 | | | 8,614 | |
TWAS Holdings, LLC (7 properties) | | Various, United States | | Retail (Car Wash) | | Nov-23 | | 35,577 | | | Sale-leaseback | | 20 | | | 24,488 | |
Chattem, Inc. | | Chattanooga, TN | | Warehouse | | Nov-23 | | 25,864 | | | Expansion | | 10 | | | 128,766 | |
Fiber JVCo S.p.A (11 properties) (b) | | Various, Italy (7 properties), Spain (3 properties), and Germany (1 property) | | Industrial, Warehouse | | Nov-23 | | 157,095 | | | Sale-leaseback | | 20 | | | 2,719,202 | |
Tailored Brands, Inc. | | Houston, TX | | Warehouse | | Dec-23 | | 61,610 | | | Sale-leaseback | | 20 | | | 834,400 | |
Assured TN (2 properties) | | Knoxville and Springfield, TN | | Self-Storage (Operating) | | Dec-23 | | 15,580 | | | Operating | | N/A | | 121,575 | |
Fabric8 Labs, Inc. (2 properties) | | San Diego, CA | | Industrial, Research & Development | | Dec-23 | | 13,324 | | | Acquisition | | 8 | | | 43,530 | |
CubeSmart | | Bastrop, TX | | Self-Storage (Operating) | | Dec-23 | | 12,443 | | | Operating | | N/A | | 73,870 | |
EOS Fitness OPCO Holdings, LLC | | Phoenix, AZ | | Retail | | Dec-23 | | 13,791 | | | Acquisition | | 20 | | | 40,000 | |
4Q23 Total | | | | | | | | 343,941 | | | | | 19 | | | 3,994,445 | |
| | | | | | | | | | | | | | |
Year-to-Date Total | | | | | | | | 1,285,779 | | | | | 21 | | | 10,254,530 | |
| | | | | | | | |
| | Investing for the Long Run® | 20 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Property Type(s) | | Funded During Current Quarter | | Funded Year to Date | | Expected Funding Completion Date | | Total Funded | | Maximum Commitment |
Description | | Property Location(s) | | | | | | |
Construction Loan | | | | | | | | | | | | | | |
Southwest Corner of Las Vegas Boulevard & Harmon Avenue Retail Complex (e) | | Las Vegas, NV | | Retail | | $ | 1,624 | | | $ | 38,219 | | | Q3 2024 | | $ | 231,387 | | | $ | 261,887 | |
Total | | | | | | | | 38,219 | | | | | | | |
| | | | | | | | | | | | | | |
Year-to-Date Total Investment Volume | | | | | | $ | 1,323,998 | | | | | | | |
________
(a)Total lease terms are based on weighted-average ABR for the investments as of the respective period ends.
(b)Amount reflects the applicable exchange rate on the date of the transaction.
(c)Amount includes $3.1 million for an expansion at a property leased to this tenant that we already own.
(d)We also committed to fund an additional $3.6 million for an expansion at this facility, which is expected to be completed in the first quarter of 2024.
(e)This construction loan is accounted for as an equity method investment on our consolidated balance sheets, in accordance with U.S. GAAP. The interest rate is 6.0% and interest income is recognized within Earnings from equity method investments on our consolidated statements of income.
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| | Investing for the Long Run® | 21 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
| | | | | |
Investment Activity – Capital Investments and Commitments (a) |
Dollars in thousands. Pro rata.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Primary Transaction Type | | Property Type | | Expected Completion / Closing Date | | Gross Square Footage | | Lease Term (Years) (b) | | Funded During Three Months Ended Dec. 31, 2023 | | Total Funded Through Dec. 31, 2023 | | Maximum Commitment / Gross Investment Amount |
Tenant | | Location | | | | | | | | | Remaining | | Total |
TWAS Holdings, LLC (4 properties) (c) | | Various, US | | Purchase Commitment | | Retail (Car Wash) | | Various | | 14,420 | | | 20 | | | $ | — | | | $ | — | | | $ | 20,317 | | | $ | 20,317 | |
Terran Orbital Corporation | | Irvine, CA | | Redevelopment | | Industrial | | Q1 2024 | | 94,195 | | | 10 | | | 4,719 | | | 7,974 | | | 7,126 | | | 15,100 | |
Hexagon Composites ASA | | Salisbury, NC | | Expansion | | Industrial | | Q1 2024 | | 113,000 | | | 15 | | | 3,317 | | | 10,994 | | | 2,806 | | | 13,800 | |
Storage Space | | Little Rock, AR | | Expansion | | Self-Storage (Operating) | | Q1 2024 | | 59,850 | | | N/A | | 1,330 | | | 1,386 | | | 2,184 | | | 3,570 | |
Danske Fragtmaend Ejendomme A/S (d) | | Fredericia, Denmark | | Renovation | | Warehouse | | Q1 2024 | | N/A | | 17 | | | — | | | — | | | 1,957 | | | 1,957 | |
Unidentified | | Atlanta, GA | | Redevelopment | | Warehouse | | Q3 2024 | | 213,834 | | | N/A | | 204 | | | 630 | | | 17,022 | | | 17,652 | |
Outfront Media, LLC (6 properties) | | Various, NJ | | Build-to-Suit | | Specialty | | Various | | N/A | | 30 | | | — | | | 7,272 | | | 474 | | | 7,746 | |
Expected Completion Date 2024 Total | | | | | | 495,299 | | | 16 | | | 9,570 | | | 28,256 | | | 51,886 | | | 80,142 | |
| | | | | | | | | | | | | | | | | | | | |
ZF Friedrichshafen AG (e) | | Washington, MI | | Redevelopment | | Research and Development | | Q1 2025 | | 81,200 | | | 20 | | | 1,735 | | | 4,044 | | | 43,546 | | | 47,823 | |
Fraikin SAS (d) | | Various, France | | Renovation | | Industrial | | Q4 2025 | | N/A | | 18 | | | — | | | 1,155 | | | 6,469 | | | 7,624 | |
Expected Completion Date 2025 Total | | | | | | 81,200 | | | 20 | | | 1,735 | | | 5,199 | | | 50,015 | | | 55,447 | |
| | | | | | | | | | | | | | | | | | | | |
Capital Investments and Commitments Total | | | | | | 576,499 | | | 18 | | | $ | 11,305 | | | $ | 33,455 | | | $ | 101,901 | | | $ | 135,589 | |
________
(a)This schedule includes future estimates for which we can give no assurance as to timing or amounts. Completed capital investments and commitments are included in the Investment Activity – Investment Volume section. Funding amounts exclude capitalized construction interest. (b)Total lease terms are based on weighted-average ABR for the investments expected upon completion.
(c)Projects will be funded upon completion and are contingent on buildings being constructed according to our standards.
(d)Commitment amounts are based on the applicable exchange rate at period end.
(e)We earn interest from this tenant, which is accrued through the construction period and deducted from the remaining commitment.
| | | | | | | | |
| | Investing for the Long Run® | 22 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
| | | | | |
Investment Activity – Dispositions |
Dollars in thousands. Pro rata. For the year ended December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Tenant / Lease Guarantor | | Property Location(s) | | Gross Sale Price | | Closing Date | | Property Type(s) | | Gross Square Footage |
1Q23 | | | | | | | | | | |
Adler Modemarkte AG (a) | | Haibach, Germany | | $ | 11,151 | | | Jan-23 | | Office | | 180,909 | |
Vacant | | Columbus, GA | | 8,000 | | | Feb-23 | | Industrial | | 273,667 | |
Vacant | | Bloomington, MN | | 3,150 | | | Mar-23 | | Office | | 221,800 | |
Vacant | | Chicago, IL | | 17,500 | | | Mar-23 | | Office | | 178,490 | |
Vacant | | Virginia, MN | | 2,900 | | | Mar-23 | | Office | | 62,973 | |
1Q23 Total | | | | 42,701 | | | | | | | 917,839 | |
| | | | | | | | | | |
2Q23 | | | | | | | | | | |
Vacant (a) | | Doncaster, United Kingdom | | 945 | | | May-23 | | Land | | N/A |
Vacant (formerly Pendragon PLC) (a) | | West Bromwich, United Kingdom | | 3,285 | | | May-23 | | Retail | | 23,236 | |
Vacant (formerly Pendragon PLC) (a) | | Cardiff, United Kingdom | | 1,266 | | | Jun-23 | | Retail | | 14,894 | |
2Q23 Total | | | | 5,496 | | | | | | | 38,130 | |
| | | | | | | | | | |
3Q23 | | | | | | | | | | |
RLJ-McLarty-Landers Automotive Holdings, LLC | | Lee's Summit, MO | | 10,800 | | | Jul-23 | | Retail | | 33,167 | |
Telefónica España Filiales, S.A.U (a) | | Tres Cantos, Spain | | 87,888 | | | Jul-23 | | Office | | 451,431 | |
Marriott Corporation (3 properties) | | Louisville, KY; Linthicum, MD; and Spokane, WA | | 48,740 | | | Aug-23; Sep-23 | | Hotel (Operating) | | 259,439 | |
Vacant | | Pinconning, MI | | 630 | | | Sep-23 | | Industrial | | 220,588 | |
3Q23 Total | | | | 148,058 | | | | | | | 964,625 | |
| | | | | | | | | | |
4Q23 | | | | | | | | | | |
Vacant (a) | | Warsaw, Poland | | 30,360 | | | Oct-23 | | Office | | 423,814 | |
Vacant | | Toledo, OH | | 1,500 | | | Oct-23 | | Industrial | | 61,000 | |
Marriott Corporation (5 properties) | | Orlando, FL; Des Plaines, IL; Indianapolis, IN; and Albuquerque, NM | | 83,884 | | | Oct-23; Nov-23 | | Hotel (Operating) | | 441,517 | |
ALSO Actebis GmbH (a) | | Soest, Germany | | 3,518 | | | Oct-23 | | Office | | 284,680 | |
Infineon Technologies AG (a) | | Warstein, Germany | | 20,811 | | | Oct-23 | | Office | | 120,900 | |
J-M Eagle Inc. (4 properties) (b) | | Perris, CA; Eugene, OR; West Jordan, UT; and Tacoma, WA | | 53,500 | | | Nov-23 | | Warehouse; Office; Industrial | | 245,294 | |
Danske Fragtmaend Ejendomme A/S (a) | | Aarhus, Denmark | | 5,642 | | | Nov-23 | | Office | | 37,179 | |
Pendragon PLC (a) | | Nottingham, United Kingdom | | 1,264 | | | Dec-23 | | Retail | | 12,406 | |
Perkin Elmer, Inc. (a) | | Turku, Finland | | 42,580 | | | Dec-23 | | Office | | 308,665 | |
Level 3 Communications, Inc. | | Lone Tree, CO | | 23,000 | | | Dec-23 | | Office | | 161,218 | |
4Q23 Total | | | | 266,059 | | | | | | | 2,096,673 | |
| | | | | | | | | | |
Year-to-Date Total Dispositions | | $ | 462,314 | | | | | | | 4,017,267 | |
________
(a)Amount reflects the applicable exchange rate on the date of the transaction.
(b)Includes one office property sold for gross proceeds of $6.5 million.
| | | | | | | | |
| | Investing for the Long Run® | 23 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
Dollars in thousands. As of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Joint Venture or JV (Principal Tenant) | | JV Partnership | | Consolidated | | Pro Rata (a) |
| Asset Type | | WPC % | | Debt Outstanding (b) | | ABR | | Debt Outstanding (c) | | ABR |
Unconsolidated Joint Venture (Equity Method Investment) (d) | | | | | | | | |
Harmon Retail Corner | | Common equity interest | | 15.00% | | $ | 143,000 | | | $ | — | | | $ | 21,450 | | | $ | — | |
Kesko Senukai (e) | | Net lease | | 70.00% | | 107,172 | | | 16,101 | | | 75,020 | | | 11,271 | |
Johnson Self Storage | | Self-storage operating | | 90.00% | | — | | | N/A | | — | | | N/A |
Total Unconsolidated Joint Ventures | | | | 250,172 | | | 16,101 | | | 96,470 | | | 11,271 | |
| | | | | | | | | | | | |
Consolidated Joint Ventures | | | | | | | | | | | |
COOP Ost SA (e) | | Net lease | | 90.10% | | 53,576 | | | 7,016 | | | 48,272 | | | 6,321 | |
State of Iowa Board of Regents | | Net lease | | 90.00% | | 6,205 | | | 643 | | | 5,585 | | | 579 | |
Fentonir Trading & Investments Limited (e) | | Net lease | | 94.90% | | — | | | 8,736 | | | — | | | 8,291 | |
McCoy-Rockford, Inc. | | Net lease | | 90.00% | | — | | | 948 | | | — | | | 853 | |
Total Consolidated Joint Ventures | | | | 59,781 | | | 17,343 | | | 53,857 | | | 16,044 | |
Total Unconsolidated and Consolidated Joint Ventures | | $ | 309,953 | | | $ | 33,444 | | | $ | 150,327 | | | $ | 27,315 | |
________
(b)Excludes unamortized discount, net totaling $0.7 million and unamortized deferred financing costs totaling $0.4 million as of December 31, 2023.
(c)Excludes unamortized discount, net totaling $0.6 million and unamortized deferred financing costs totaling less than $0.1 million as of December 31, 2023.
(d)Excludes a construction loan for a retail complex in Las Vegas, Nevada, accounted for as an equity method investment in real estate, as described in the Components of Net Asset Value section. (e)Amounts are based on the applicable exchange rate at the end of the period.
| | | | | | | | |
| | Investing for the Long Run® | 24 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
Dollars in thousands. Pro rata. As of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Tenant / Lease Guarantor | | Description | | Number of Properties | | ABR | | ABR % | | Weighted-Average Lease Term (Years) |
U-Haul Moving Partners Inc. and Mercury Partners, LP (a) | | Net lease self-storage properties in the U.S. | | 78 | | | $ | 38,751 | | | 2.9 | % | | 0.2 | |
State of Andalusia (b) (c) | | Government office properties in Spain | | 70 | | | 32,539 | | | 2.4 | % | | 11.0 | |
Apotex Pharmaceutical Holdings Inc. (d) | | Pharmaceutical R&D and manufacturing properties in Canada | | 11 | | | 31,528 | | | 2.3 | % | | 19.2 | |
Metro Cash & Carry Italia S.p.A. (b) | | Business-to-business wholesale stores in Italy and Germany | | 20 | | | 30,352 | | | 2.3 | % | | 4.5 | |
Hellweg Die Profi-Baumärkte GmbH & Co. KG (b) | | Do-it-yourself retail properties in Germany | | 35 | | | 30,182 | | | 2.2 | % | | 13.2 | |
Extra Space Storage, Inc. | | Net lease self-storage properties in the U.S. | | 27 | | | 25,036 | | | 1.9 | % | | 20.3 | |
OBI Group (b) | | Do-it-yourself retail properties in Poland | | 26 | | | 24,857 | | | 1.9 | % | | 7.4 | |
ABC Technologies Holdings Inc. (d) (e) | | Automotive component manufacturing properties in North America | | 23 | | | 24,251 | | | 1.8 | % | | 19.3 | |
Fortenova Grupa d.d. (b) | | Grocery stores and warehouses in Croatia | | 19 | | | 22,367 | | | 1.7 | % | | 10.3 | |
Nord Anglia Education Inc. | | K-12 private schools in the U.S. | | 3 | | | 22,245 | | | 1.7 | % | | 19.7 | |
Total (e) | | | | 312 | | | $ | 282,108 | | | 21.1 | % | | 11.8 | |
________
(a)Mercury Partners, LP (a related party of U-Haul Moving Partners Inc.) provided notice that it intends to exercise its option to repurchase the 78 properties it is leasing during the first quarter of 2024.
(b)ABR amounts are subject to fluctuations in foreign currency exchange rates.
(c)In January 2024, we sold this portfolio of properties.
(d)ABR from these properties is denominated in U.S. dollars.
(e)Of the 23 properties leased to ABC Technologies Holdings Inc., nine are located in Canada, eight are located in the United States, and six are located in Mexico.
| | | | | | | | |
| | Investing for the Long Run® | 25 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
| | | | | |
Diversification by Property Type |
In thousands, except percentages. Pro rata. As of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
Property Type | | ABR | | ABR % | | Square Footage (a) | | Square Footage % |
U.S. | | | | | | | | |
Industrial | | $ | 306,255 | | | 22.9 | % | | 52,129 | | | 30.2 | % |
Warehouse | | 213,323 | | | 15.9 | % | | 43,383 | | | 25.1 | % |
Retail (b) | | 75,618 | | | 5.7 | % | | 3,672 | | | 2.1 | % |
Office | | 17,282 | | | 1.3 | % | | 1,161 | | | 0.7 | % |
Self Storage (net lease) | | 63,786 | | | 4.7 | % | | 5,810 | | | 3.4 | % |
Other (c) | | 97,771 | | | 7.3 | % | | 4,909 | | | 2.8 | % |
U.S. Total | | 774,035 | | | 57.8 | % | | 111,064 | | | 64.3 | % |
| | | | | | | | |
International | | | | | | | | |
Industrial | | 126,001 | | | 9.4 | % | | 16,833 | | | 9.7 | % |
Warehouse | | 140,458 | | | 10.5 | % | | 21,341 | | | 12.4 | % |
Retail (b) | | 202,908 | | | 15.1 | % | | 17,452 | | | 10.1 | % |
Office | | 54,785 | | | 4.1 | % | | 4,041 | | | 2.3 | % |
Self Storage (net lease) | | — | | | — | % | | — | | | — | % |
Other (c) | | 41,165 | | | 3.1 | % | | 1,937 | | | 1.2 | % |
International Total | | 565,317 | | | 42.2 | % | | 61,604 | | | 35.7 | % |
| | | | | | | | |
Total | | | | | | | | |
Industrial | | 432,256 | | | 32.3 | % | | 68,962 | | | 39.9 | % |
Warehouse | | 353,781 | | | 26.4 | % | | 64,724 | | | 37.5 | % |
Retail (b) | | 278,526 | | | 20.8 | % | | 21,124 | | | 12.2 | % |
Office | | 72,067 | | | 5.4 | % | | 5,202 | | | 3.0 | % |
Self Storage (net lease) | | 63,786 | | | 4.7 | % | | 5,810 | | | 3.4 | % |
Other (c) | | 138,936 | | | 10.4 | % | | 6,846 | | | 4.0 | % |
Total (d) | | $ | 1,339,352 | | | 100.0 | % | | 172,668 | | | 100.0 | % |
________
(a)Includes square footage for vacant properties.
(b)Includes automotive dealerships.
(c)Includes ABR from tenants with the following property types: education facility, specialty, laboratory, hotel (net lease), research and development, and land.
| | | | | | | | |
| | Investing for the Long Run® | 26 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
| | | | | |
Diversification by Tenant Industry |
In thousands, except percentages. Pro rata. As of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
Industry Type | | ABR | | ABR % | | Square Footage | | Square Footage % |
Retail Stores (a) | | $ | 306,553 | | | 22.9 | % | | 37,151 | | | 21.5 | % |
Consumer Services | | 127,118 | | | 9.5 | % | | 8,288 | | | 4.8 | % |
Beverage and Food | | 110,599 | | | 8.3 | % | | 15,759 | | | 9.1 | % |
Automotive | | 95,700 | | | 7.1 | % | | 14,502 | | | 8.4 | % |
Grocery | | 83,227 | | | 6.2 | % | | 7,406 | | | 4.3 | % |
Healthcare and Pharmaceuticals | | 72,079 | | | 5.4 | % | | 6,656 | | | 3.9 | % |
Cargo Transportation | | 60,993 | | | 4.6 | % | | 9,122 | | | 5.3 | % |
Containers, Packaging, and Glass | | 49,844 | | | 3.7 | % | | 8,580 | | | 5.0 | % |
Capital Equipment | | 49,300 | | | 3.7 | % | | 8,053 | | | 4.7 | % |
Durable Consumer Goods | | 47,361 | | | 3.5 | % | | 10,240 | | | 5.9 | % |
Construction and Building | | 47,206 | | | 3.5 | % | | 9,036 | | | 5.2 | % |
Sovereign and Public Finance | | 43,424 | | | 3.2 | % | | 3,368 | | | 2.0 | % |
Hotel and Leisure | | 42,030 | | | 3.1 | % | | 2,053 | | | 1.2 | % |
Chemicals, Plastics, and Rubber | | 32,779 | | | 2.5 | % | | 5,929 | | | 3.4 | % |
Non-Durable Consumer Goods | | 32,680 | | | 2.4 | % | | 6,805 | | | 3.9 | % |
Business Services | | 28,054 | | | 2.1 | % | | 2,983 | | | 1.7 | % |
High Tech Industries | | 23,614 | | | 1.8 | % | | 2,624 | | | 1.5 | % |
Metals | | 22,765 | | | 1.7 | % | | 4,347 | | | 2.5 | % |
Telecommunications | | 14,030 | | | 1.1 | % | | 1,500 | | | 0.9 | % |
Other (b) | | 49,996 | | | 3.7 | % | | 8,266 | | | 4.8 | % |
Total (c) | | $ | 1,339,352 | | | 100.0 | % | | 172,668 | | | 100.0 | % |
________
(a)Includes automotive dealerships.
(b)Includes ABR from tenants in the following industries: wholesale, aerospace and defense, insurance, banking, environmental industries, oil and gas, media: advertising, printing, and publishing, consumer transportation, forest products and paper, and electricity. Also includes square footage for vacant properties.
| | | | | | | | |
| | Investing for the Long Run® | 27 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
| | | | | |
Diversification by Geography |
In thousands, except percentages. Pro rata. As of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
Region | | ABR | | ABR % | | Square Footage (a) | | Square Footage % |
U.S. | | | | | | | | |
South | | | | | | | | |
Texas | | $ | 86,296 | | | 6.4 | % | | 11,274 | | | 6.5 | % |
Florida | | 42,710 | | | 3.2 | % | | 3,816 | | | 2.2 | % |
Georgia | | 27,542 | | | 2.1 | % | | 4,333 | | | 2.5 | % |
Tennessee | | 24,161 | | | 1.8 | % | | 3,921 | | | 2.3 | % |
Alabama | | 22,270 | | | 1.7 | % | | 3,353 | | | 1.9 | % |
Other (b) | | 16,288 | | | 1.2 | % | | 2,402 | | | 1.4 | % |
Total South | | 219,267 | | | 16.4 | % | | 29,099 | | | 16.8 | % |
Midwest | | | | | | | | |
Illinois | | 57,057 | | | 4.3 | % | | 10,164 | | | 5.9 | % |
Ohio | | 33,767 | | | 2.5 | % | | 6,947 | | | 4.0 | % |
Indiana | | 29,727 | | | 2.2 | % | | 5,137 | | | 3.0 | % |
Michigan | | 24,103 | | | 1.8 | % | | 4,241 | | | 2.4 | % |
Wisconsin | | 16,624 | | | 1.2 | % | | 3,074 | | | 1.8 | % |
Other (b) | | 52,296 | | | 3.9 | % | | 7,713 | | | 4.5 | % |
Total Midwest | | 213,574 | | | 15.9 | % | | 37,276 | | | 21.6 | % |
East | | | | | | | | |
North Carolina | | 35,530 | | | 2.7 | % | | 8,156 | | | 4.7 | % |
Pennsylvania | | 30,459 | | | 2.3 | % | | 3,374 | | | 2.0 | % |
New York | | 20,556 | | | 1.5 | % | | 2,262 | | | 1.3 | % |
South Carolina | | 19,208 | | | 1.4 | % | | 4,952 | | | 2.9 | % |
Kentucky | | 18,130 | | | 1.4 | % | | 2,983 | | | 1.7 | % |
Massachusetts | | 16,836 | | | 1.3 | % | | 1,255 | | | 0.7 | % |
New Jersey | | 13,680 | | | 1.0 | % | | 797 | | | 0.5 | % |
Virginia | | 13,623 | | | 1.0 | % | | 1,761 | | | 1.0 | % |
Other (b) | | 24,145 | | | 1.8 | % | | 3,799 | | | 2.2 | % |
Total East | | 192,167 | | | 14.4 | % | | 29,339 | | | 17.0 | % |
West | | | | | | | | |
California | | 60,741 | | | 4.5 | % | | 5,889 | | | 3.4 | % |
Arizona | | 20,133 | | | 1.5 | % | | 2,664 | | | 1.5 | % |
Utah | | 14,522 | | | 1.1 | % | | 2,021 | | | 1.2 | % |
Other (b) | | 53,631 | | | 4.0 | % | | 4,776 | | | 2.8 | % |
Total West | | 149,027 | | | 11.1 | % | | 15,350 | | | 8.9 | % |
U.S. Total | | 774,035 | | | 57.8 | % | | 111,064 | | | 64.3 | % |
International | | | | | | | | |
Germany | | 73,065 | | | 5.5 | % | | 6,535 | | | 3.8 | % |
Spain | | 68,077 | | | 5.1 | % | | 5,862 | | | 3.4 | % |
The Netherlands | | 62,775 | | | 4.7 | % | | 7,054 | | | 4.1 | % |
Poland | | 59,988 | | | 4.5 | % | | 8,158 | | | 4.7 | % |
Canada (c) | | 50,861 | | | 3.8 | % | | 5,087 | | | 2.9 | % |
United Kingdom | | 48,505 | | | 3.6 | % | | 4,432 | | | 2.6 | % |
Italy | | 42,238 | | | 3.1 | % | | 5,381 | | | 3.1 | % |
Denmark | | 25,053 | | | 1.9 | % | | 3,002 | | | 1.7 | % |
Croatia | | 23,200 | | | 1.7 | % | | 2,063 | | | 1.2 | % |
France | | 21,745 | | | 1.6 | % | | 1,679 | | | 1.0 | % |
Lithuania | | 13,569 | | | 1.0 | % | | 1,640 | | | 1.0 | % |
Other (d) | | 76,241 | | | 5.7 | % | | 10,711 | | | 6.2 | % |
International Total | | 565,317 | | | 42.2 | % | | 61,604 | | | 35.7 | % |
Total (e) | | $ | 1,339,352 | | | 100.0 | % | | 172,668 | | | 100.0 | % |
________
(a)Includes square footage for vacant properties.
(b)Other properties within South include assets in Louisiana, Arkansas, Oklahoma and Mississippi. Other properties within Midwest include assets in Minnesota, Iowa, Kansas, Missouri, Nebraska, South Dakota and North Dakota. Other properties within East include assets in Maryland, Connecticut, West Virginia, New Hampshire and Maine. Other properties within West include assets in Colorado, Oregon, Nevada, Washington, Hawaii, Idaho, Montana, Wyoming and New Mexico.
(c)$46.8 million (92%) of ABR from properties in Canada is denominated in U.S. dollars, with the balance denominated in Canadian dollars.
(d)Includes assets in Mexico, Belgium, Finland, Hungary, Norway, Mauritius, Slovakia, Portugal, the Czech Republic, Austria, Sweden, Latvia, Japan and Estonia.
| | | | | | | | |
| | Investing for the Long Run® | 28 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
| | | | | |
Contractual Rent Increases |
In thousands, except percentages. Pro rata. As of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
Rent Adjustment Measure | | ABR | | ABR % | | Square Footage | | Square Footage % |
Uncapped CPI | | $ | 510,136 | | | 38.1 | % | | 51,838 | | | 30.0 | % |
Capped CPI | | 241,878 | | | 18.1 | % | | 35,222 | | | 20.4 | % |
CPI-linked | | 752,014 | | | 56.2 | % | | 87,060 | | | 50.4 | % |
Fixed | | 545,411 | | | 40.7 | % | | 79,632 | | | 46.1 | % |
Other (a) | | 36,345 | | | 2.7 | % | | 2,454 | | | 1.4 | % |
None | | 5,582 | | | 0.4 | % | | 284 | | | 0.2 | % |
Vacant | | — | | | — | % | | 3,238 | | | 1.9 | % |
Total (b) | | $ | 1,339,352 | | | 100.0 | % | | 172,668 | | | 100.0 | % |
________
(a)Represents leases attributable to percentage rent.
| | | | | | | | |
| | Investing for the Long Run® | 29 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
Dollars in thousands. Pro rata.
Contractual Same-Store Growth
Same-store portfolio includes leases that were continuously in place during the period from December 31, 2022 to December 31, 2023. Excludes leases for properties that were acquired, sold or vacated, or were subject to lease renewals, extensions or modifications at any time that affected ABR during that period. For purposes of comparability, ABR is presented on a constant currency basis using exchange rates as of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | |
| ABR |
| As of | | | | |
| Dec. 31, 2023 | | Dec. 31, 2022 | | Increase | | % Increase |
Property Type | | | | | | | |
Industrial | $ | 344,948 | | | $ | 333,861 | | | $ | 11,087 | | | 3.3 | % |
Warehouse | 333,107 | | | 321,553 | | | 11,554 | | | 3.6 | % |
Retail (a) | 262,288 | | | 248,062 | | | 14,226 | | | 5.7 | % |
Office | 71,235 | | | 67,485 | | | 3,750 | | | 5.6 | % |
Self Storage (net lease) | 63,786 | | | 61,708 | | | 2,078 | | | 3.4 | % |
Other (b) | 122,353 | | | 117,769 | | | 4,584 | | | 3.9 | % |
Total | $ | 1,197,717 | | | $ | 1,150,438 | | | $ | 47,279 | | | 4.1 | % |
| | | | | | | |
Rent Adjustment Measure | | | | | | | |
Uncapped CPI | $ | 490,405 | | | $ | 460,126 | | | $ | 30,279 | | | 6.6 | % |
Capped CPI | 221,950 | | | 215,848 | | | 6,102 | | | 2.8 | % |
CPI-linked | 712,355 | | | 675,974 | | | 36,381 | | | 5.4 | % |
Fixed | 444,746 | | | 435,952 | | | 8,794 | | | 2.0 | % |
Other (c) | 35,820 | | | 33,716 | | | 2,104 | | | 6.2 | % |
None | 4,796 | | | 4,796 | | | — | | | — | % |
Total | $ | 1,197,717 | | | $ | 1,150,438 | | | $ | 47,279 | | | 4.1 | % |
| | | | | | | |
Geography | | | | | | | |
U.S. | $ | 697,243 | | | $ | 678,683 | | | $ | 18,560 | | | 2.7 | % |
Europe | 466,032 | | | 437,994 | | | 28,038 | | | 6.4 | % |
Other International (d) | 34,442 | | | 33,761 | | | 681 | | | 2.0 | % |
Total | $ | 1,197,717 | | | $ | 1,150,438 | | | $ | 47,279 | | | 4.1 | % |
| | | | | | | |
Same-Store Portfolio Summary | | | | | | | |
Number of properties | 1,242 | | | | | | | |
Square footage (in thousands) | 152,368 | | | | | | | |
| | | | | | | | |
| | Investing for the Long Run® | 30 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
Comprehensive Same-Store Growth
Same-store portfolio includes leased properties that were continuously owned and in place during the quarter ended December 31, 2022 through December 31, 2023 (including properties that were subject to lease renewals, extensions or modifications at any time during that period). Excludes properties that were acquired, sold or listed as capital investments and commitments (see Investment Activity – Capital Investments and Commitments section) during that period. For purposes of comparability, same-store pro rata rental income is presented on a constant currency basis using average exchange rates for the three months ended December 31, 2023. Same-store pro rata rental income is a non-GAAP measure. See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of same-store pro rata rental income and for details on how it is calculated. | | | | | | | | | | | | | | | | | | | | | | | |
| Same-Store Pro Rata Rental Income |
| Three Months Ended | | | | |
| Dec. 31, 2023 | | Dec. 31, 2022 | | Increase | | % Increase |
Property Type | | | | | | | |
Industrial | $ | 89,223 | | | $ | 86,041 | | | $ | 3,182 | | | 3.7 | % |
Warehouse | 83,473 | | | 81,769 | | | 1,704 | | | 2.1 | % |
Retail (a) | 65,182 | | | 63,211 | | | 1,971 | | | 3.1 | % |
Office | 17,409 | | | 16,236 | | | 1,173 | | | 7.2 | % |
Self Storage (net lease) | 15,899 | | | 15,401 | | | 498 | | | 3.2 | % |
Other (b) | 28,938 | | | 30,685 | | | (1,747) | | | (5.7) | % |
Total | $ | 300,124 | | | $ | 293,343 | | | $ | 6,781 | | | 2.3 | % |
| | | | | | | |
Rent Adjustment Measure | | | | | | | |
Uncapped CPI | $ | 122,679 | | | $ | 115,427 | | | $ | 7,252 | | | 6.3 | % |
Capped CPI | 54,880 | | | 53,503 | | | 1,377 | | | 2.6 | % |
CPI-linked | 177,559 | | | 168,930 | | | 8,629 | | | 5.1 | % |
Fixed | 112,391 | | | 114,213 | | | (1,822) | | | (1.6) | % |
Other (c) | 8,849 | | | 8,609 | | | 240 | | | 2.8 | % |
None | 1,325 | | | 1,591 | | | (266) | | | (16.7) | % |
Total | $ | 300,124 | | | $ | 293,343 | | | $ | 6,781 | | | 2.3 | % |
| | | | | | | |
Geography | | | | | | | |
U.S. | $ | 178,524 | | | $ | 175,540 | | | $ | 2,984 | | | 1.7 | % |
Europe | 113,095 | | | 109,546 | | | 3,549 | | | 3.2 | % |
Other International (d) | 8,505 | | | 8,257 | | | 248 | | | 3.0 | % |
Total | $ | 300,124 | | | $ | 293,343 | | | $ | 6,781 | | | 2.3 | % |
| | | | | | | |
Same-Store Portfolio Summary | | | | | | | |
Number of properties | 1,306 | | | | | | | |
Square footage (in thousands) | 158,321 | | | | | | | |
| | | | | | | | |
| | Investing for the Long Run® | 31 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
The following table presents a reconciliation from lease revenues to same-store pro rata rental income:
| | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2023 | | Dec. 31, 2022 |
Consolidated Lease Revenues | | | |
Total lease revenues – as reported | $ | 336,757 | | | $ | 347,636 | |
Income from finance leases and loans receivable | 31,532 | | | 17,472 | |
Less: Reimbursable tenant costs – as reported | (18,942) | | | (21,084) | |
Less: Income from secured loans receivable | (475) | | | (1,191) | |
| 348,872 | | | 342,833 | |
| | | |
Adjustments for Pro Rata Ownership of Real Estate Joint Ventures: | | | |
Add: Pro rata share of adjustments from equity method investments | 4,042 | | | 5,448 | |
Less: Pro rata share of adjustments for noncontrolling interests | (225) | | | (395) | |
| 3,817 | | | 5,053 | |
| | | |
Adjustments for Pro Rata Non-Cash Items: | | | |
Less: Straight-line and other leasing and financing adjustments | (19,071) | | | (14,766) | |
Add: Above- and below-market rent intangible lease amortization | 6,644 | | | 8,652 | |
Less: Adjustments for pro rata ownership | (1,617) | | | (2,464) | |
| (14,044) | | | (8,578) | |
| | | |
Adjustment to normalize for (i) properties not continuously owned since October 1, 2022 and (ii) constant currency presentation for prior year quarter (e) | (38,521) | | | (45,965) | |
| | | |
Same-Store Pro Rata Rental Income | $ | 300,124 | | | $ | 293,343 | |
________
(a)Includes automotive dealerships.
(b)Includes ABR or same-store pro rata rental income from tenants with the following property types: education facility, specialty, laboratory, hotel (net lease), research and development, and land.
(c)Represents leases attributable to percentage rent.
(d)Includes assets in Canada, Mexico, Mauritius and Japan.
(e)This adjustment excludes amounts attributable to properties that were acquired, sold or listed as capital investments and commitments (see Investment Activity – Capital Investments and Commitments section) that were not continuously owned and in place during the quarter ended December 31, 2022 through December 31, 2023. In addition, for the three months ended December 31, 2022, an adjustment is made to reflect average exchange rates for the three months ended December 31, 2023 for purposes of comparability, since same-store pro rata rental income is presented on a constant currency basis. | | | | | | | | |
| | Investing for the Long Run® | 32 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
For the three months ended December 31, 2023, except ABR. Pro rata.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Lease Renewals and Extensions (a) | | | | | | | | Expected Tenant Improvements ($000s) | | Leasing Commissions ($000s) | | |
| | | | | | ABR | | | | |
Property Type | | Square Feet | | Number of Leases | | Prior Lease ($000s) | | New Lease ($000s) (b) | | Rent Recapture | | | | Incremental Lease Term |
Industrial | | 1,511,964 | | | 7 | | | $ | 10,069 | | | $ | 10,552 | | | 104.8 | % | | $ | 3,200 | | | $ | 1,310 | | | 6.9 years |
Warehouse | | 2,348,738 | | | 5 | | | 12,263 | | | 11,535 | | | 94.1 | % | | 3,812 | | | 50 | | | 7.1 years |
Retail | | 24,490 | | | 1 | | | 222 | | | 222 | | | 100.0 | % | | — | | | — | | | 5.0 years |
Office | | — | | | — | | | — | | | — | | | — | % | | — | | | — | | | N/A |
Self Storage (net lease) | | — | | | — | | | — | | | — | | | — | % | | — | | | — | | | N/A |
Other | | — | | | — | | | — | | | — | | | — | % | | — | | | — | | | N/A |
Total / Weighted Average (c) | | 3,885,192 | | | 13 | | | $ | 22,554 | | | $ | 22,309 | | | 98.9 | % | | $ | 7,012 | | | $ | 1,360 | | | 7.2 years |
| | | | | | | | | | | | | | | | |
Q4 Summary | | | | | | | | | | | | | | | | |
Prior Lease ABR (% of Total Portfolio) | | 1.7 | % | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
New Leases | | | | | | | | Expected Tenant Improvements ($000s) | | Leasing Commissions ($000s) | | |
| | | | | | ABR | | | | |
Property Type | | Square Feet | | Number of Leases | | New Lease ($000s) (b) | | | | New Lease Term |
Industrial | | 210,428 | | | 3 | | | $ | 1,242 | | | $ | 1,106 | | | $ | 90 | | | 10.0 years |
Warehouse | | — | | | — | | | — | | | — | | | — | | | N/A |
Retail | | — | | | — | | | — | | | — | | | — | | | N/A |
Office | | — | | | — | | | — | | | — | | | — | | | N/A |
Self Storage (net lease) | | — | | | — | | | — | | | — | | | — | | | N/A |
Other | | 30,000 | | | 1 | | | 774 | | | 3,860 | | | 494 | | | 10.7 years |
Total / Weighted Average (d) | | 240,428 | | | 4 | | | $ | 2,016 | | | $ | 4,966 | | | $ | 584 | | | 10.3 years |
_______
(a)Excludes lease extensions for a period of one year or less.
(b)New lease amounts are based on in-place rents at time of lease commencement and exclude any free rent periods.
(c)Weighted average refers to the incremental lease term.
(d)Weighted average refers to the new lease term.
| | | | | | | | |
| | Investing for the Long Run® | 33 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
Dollars and square footage in thousands. Pro rata. As of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year of Lease Expiration (a) | | Number of Leases Expiring | | Number of Tenants with Leases Expiring | | ABR | | ABR % | | Square Footage | | Square Footage % |
2024 (b) | | 29 | | | 23 | | | $ | 60,324 | | | 4.5 | % | | 7,886 | | | 4.6 | % |
2025 | | 36 | | | 17 | | | 45,090 | | | 3.4 | % | | 5,767 | | | 3.3 | % |
2026 | | 37 | | | 28 | | | 59,834 | | | 4.5 | % | | 8,502 | | | 4.9 | % |
2027 | | 43 | | | 26 | | | 62,571 | | | 4.7 | % | | 7,149 | | | 4.1 | % |
2028 | | 41 | | | 25 | | | 57,892 | | | 4.3 | % | | 4,669 | | | 2.7 | % |
2029 | | 56 | | | 29 | | | 75,809 | | | 5.7 | % | | 9,218 | | | 5.3 | % |
2030 | | 29 | | | 26 | | | 36,051 | | | 2.7 | % | | 3,941 | | | 2.3 | % |
2031 | | 35 | | | 19 | | | 66,987 | | | 5.0 | % | | 8,345 | | | 4.8 | % |
2032 | | 38 | | | 19 | | | 41,613 | | | 3.1 | % | | 5,799 | | | 3.4 | % |
2033 | | 30 | | | 23 | | | 76,477 | | | 5.7 | % | | 10,797 | | | 6.3 | % |
2034 (c) | | 50 | | | 19 | | | 94,644 | | | 7.1 | % | | 9,188 | | | 5.3 | % |
2035 | | 19 | | | 16 | | | 35,500 | | | 2.6 | % | | 5,885 | | | 3.4 | % |
2036 | | 45 | | | 19 | | | 71,427 | | | 5.3 | % | | 10,958 | | | 6.4 | % |
2037 | | 26 | | | 13 | | | 61,555 | | | 4.6 | % | | 6,441 | | | 3.7 | % |
Thereafter (>2037) | | 259 | | | 108 | | | 493,578 | | | 36.8 | % | | 64,885 | | | 37.6 | % |
Vacant | | — | | | — | | | — | | | — | % | | 3,238 | | | 1.9 | % |
Total (d) | | 773 | | | | | $ | 1,339,352 | | | 100.0 | % | | 172,668 | | | 100.0 | % |
________
(a)Assumes tenants do not exercise any renewal options or purchase options.
(b)Includes ABR of $38.8 million from Mercury Partners, LP (a related party of U-Haul Moving Partners, Inc.) that provided notice of its intention to exercise its option to repurchase the 78 properties it is leasing during the first quarter of 2024.
(c)Includes ABR of $32.5 million from a portfolio of 70 properties leased to State of Andalusia that was sold in January 2024.
| | | | | | | | |
| | Investing for the Long Run® | 34 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2023
| | | | | |
Self Storage Operating Properties Portfolio |
Square footage in thousands. Pro rata. As of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
State / District | | Number of Properties | | Number of Units | | Square Footage | | Square Footage % | | Period End Occupancy |
Florida | | 22 | | | 15,793 | | | 1,844 | | | 28.4 | % | | 91.5 | % |
Texas | | 14 | | | 8,128 | | | 995 | | | 15.3 | % | | 89.1 | % |
California | | 10 | | | 6,585 | | | 860 | | | 13.2 | % | | 93.1 | % |
Illinois | | 10 | | | 4,826 | | | 665 | | | 10.3 | % | | 89.3 | % |
South Carolina | | 6 | | | 3,710 | | | 377 | | | 5.8 | % | | 87.6 | % |
Georgia | | 5 | | | 2,057 | | | 250 | | | 3.9 | % | | 89.0 | % |
North Carolina | | 4 | | | 2,827 | | | 301 | | | 4.6 | % | | 88.7 | % |
Nevada | | 3 | | | 2,420 | | | 243 | | | 3.7 | % | | 91.0 | % |
Delaware | | 3 | | | 1,678 | | | 241 | | | 3.7 | % | | 93.0 | % |
Hawaii | | 2 | | | 953 | | | 95 | | | 1.5 | % | | 91.0 | % |
Tennessee | | 2 | | | 888 | | | 122 | | | 1.9 | % | | 84.2 | % |
Washington, DC | | 1 | | | 880 | | | 67 | | | 1.0 | % | | 94.1 | % |
New York | | 1 | | | 792 | | | 61 | | | 0.9 | % | | 81.2 | % |
Kentucky | | 1 | | | 764 | | | 121 | | | 1.9 | % | | 93.8 | % |
Arkansas | | 1 | | | 587 | | | 56 | | | 0.9 | % | | 90.5 | % |
Louisiana | | 1 | | | 541 | | | 59 | | | 0.9 | % | | 76.2 | % |
Massachusetts | | 1 | | | 482 | | | 58 | | | 0.9 | % | | 91.6 | % |
Oregon | | 1 | | | 442 | | | 40 | | | 0.6 | % | | 97.5 | % |
Missouri | | 1 | | | 328 | | | 41 | | | 0.6 | % | | 73.5 | % |
Total (a) | | 89 | | | 54,681 | | | 6,496 | | | 100.0 | % | | 90.3 | % |
________
| | | | | | | | |
| | Investing for the Long Run® | 35 |
W. P. Carey Inc.
Appendix
Fourth Quarter 2023
| | | | | | | | |
| | Investing for the Long Run® | 36 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2023
| | | | | |
Normalized Pro Rata Cash NOI |
In thousands. From real estate.
| | | | | |
| Three Months Ended Dec. 31, 2023 |
Consolidated Lease Revenues | |
Total lease revenues – as reported | $ | 336,757 | |
Income from finance leases and loans receivable | 31,532 | |
Less: Income from secured loans receivable | (475) | |
| |
Less: Consolidated Reimbursable and Non-Reimbursable Property Expenses | |
Reimbursable property expenses – as reported | 18,942 | |
Non-reimbursable property expenses – as reported | 13,287 | |
| 335,585 | |
| |
Plus: NOI from Operating Properties | |
Self-storage revenues | 23,194 | |
Self-storage expenses | (8,093) | |
| 15,101 | |
| |
Hotel revenues | 12,865 | |
Hotel expenses | (10,835) | |
| 2,030 | |
| |
Student housing and other revenues | 3,418 | |
Student housing and other expenses | (1,475) | |
| 1,943 | |
| |
| 354,659 | |
| |
Adjustments for Pro Rata Ownership of Real Estate Joint Ventures: | |
Add: Pro rata share of NOI from equity method investments (a) | 3,854 | |
Less: Pro rata share of NOI attributable to noncontrolling interests | (236) | |
| 3,618 | |
| |
| 358,277 | |
| |
Adjustments for Pro Rata Non-Cash Items: | |
Less: Straight-line and other leasing and financing adjustments | (19,071) | |
Add: Above- and below-market rent intangible lease amortization | 6,644 | |
Add: Other non-cash items | 427 | |
| (12,000) | |
| |
Pro Rata Cash NOI (b) | 346,277 | |
| |
Adjustment to normalize for intra-period acquisition volume and dispositions (c) | 3,065 | |
| |
Normalized Pro Rata Cash NOI (b) | $ | 349,342 | |
| | | | | | | | |
| | Investing for the Long Run® | 37 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2023
The following table presents a reconciliation from Net income from Real Estate attributable to W. P. Carey to Normalized pro rata cash NOI:
| | | | | |
| Three Months Ended Dec. 31, 2023 |
Net Income from Real Estate Attributable to W. P. Carey | |
Net income from Real Estate attributable to W. P. Carey – as reported | $ | 142,753 | |
Adjustments for Consolidated Operating Expenses | |
Add: Operating expenses – as reported | 282,939 | |
Less: Property expenses, excluding reimbursable tenant costs – as reported | (13,287) | |
Less: Operating property expenses – as reported | (20,403) | |
| 249,249 | |
| |
Adjustments for Other Consolidated Revenues and Expenses: | |
Less: Other lease-related income – as reported | (2,610) | |
Less: Reimbursable property expenses – as reported | (18,942) | |
Add: Other income and (expenses) | (28,980) | |
Add: Provision for income taxes | 13,714 | |
| (36,818) | |
| |
Other Adjustments: | |
Less: Straight-line and other leasing and financing adjustments | (19,071) | |
Add: Above- and below-market rent intangible lease amortization | 6,644 | |
Add: Adjustments for pro rata ownership | 3,593 | |
Less: Income from secured loans receivable | (475) | |
Adjustment to normalize for intra-period acquisition volume and dispositions (c) | 3,065 | |
Add: Property expenses, excluding reimbursable tenant costs, non-cash | 402 | |
| (5,842) | |
| |
Normalized Pro Rata Cash NOI (b) | $ | 349,342 | |
________
(a)Includes $1.6 million from equity method investments in self-storage operating properties.
(b)Pro rata cash NOI and normalized pro rata cash NOI are non-GAAP measures. See the Disclosures Regarding Non-GAAP and Other Metrics section that follows for a description of our non-GAAP measures and for details on how pro rata cash NOI and normalized pro rata cash NOI are calculated. (c)For properties acquired and capital investments and commitments completed during the three months ended December 31, 2023, the adjustment modifies our pro rata share of cash NOI for the partial period with an amount estimated to be equivalent to the additional pro rata share of cash NOI necessary to reflect ownership for the full quarter. For properties disposed of during the three months ended December 31, 2023, the adjustment eliminates our pro rata share of cash NOI for the period.
| | | | | | | | |
| | Investing for the Long Run® | 38 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2023
| | | | | |
Adjusted EBITDA, Consolidated – Last Five Quarters |
In thousands.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2023 | | Sep. 30, 2023 | | Jun. 30, 2023 | | Mar. 31, 2023 | | Dec. 31, 2022 |
Net income | $ | 144,244 | | | $ | 124,999 | | | $ | 144,580 | | | $ | 294,441 | | | $ | 209,503 | |
| | | | | | | | | |
Adjustments to Derive Adjusted EBITDA (a) | | | | | | | | | |
Gain on sale of real estate, net (b) | (134,026) | | | (2,401) | | | (1,808) | | | (177,749) | | | (5,845) | |
Depreciation and amortization | 129,484 | | | 144,771 | | | 143,548 | | | 156,409 | | | 140,749 | |
Interest expense | 72,194 | | | 76,974 | | | 75,488 | | | 67,196 | | | 67,668 | |
Impairment charges — real estate (c) | 71,238 | | | 15,173 | | | — | | | — | | | 12,734 | |
Other (gains) and losses (d) | 45,777 | | | (2,859) | | | 1,366 | | | (8,100) | | | (97,059) | |
Straight-line and other leasing and financing adjustments (e) | (19,071) | | | (18,662) | | | (19,086) | | | (15,050) | | | (14,766) | |
Provision for income taxes | 13,714 | | | 5,090 | | | 10,129 | | | 15,119 | | | 6,126 | |
Stock-based compensation expense | 8,693 | | | 9,050 | | | 8,995 | | | 7,766 | | | 9,739 | |
Above- and below-market rent intangible lease amortization | 6,644 | | | 7,835 | | | 8,824 | | | 10,861 | | | 8,652 | |
Merger and other expenses (f) | (641) | | | 4,152 | | | 1,419 | | | 24 | | | 2,058 | |
Other amortization and non-cash charges | 21 | | | 457 | | | 411 | | | 404 | | | 399 | |
| 194,027 | | | 239,580 | | | 229,286 | | | 56,880 | | | 130,455 | |
| | | | | | | | | |
Adjustments for Pro Rata Ownership | | | | | | | | | |
Real Estate Joint Ventures: | | | | | | | | | |
Add: Pro rata share of adjustments for equity method investments | 2,664 | | | 2,656 | | | 3,013 | | | 2,050 | | | 2,076 | |
Less: Pro rata share of adjustments for amounts attributable to noncontrolling interests | (267) | | | (400) | | | (347) | | | (443) | | | (511) | |
| 2,397 | | | 2,256 | | | 2,666 | | | 1,607 | | | 1,565 | |
| | | | | | | | | |
Adjusted EBITDA (g) | $ | 340,668 | | | $ | 366,835 | | | $ | 376,532 | | | $ | 352,928 | | | $ | 341,523 | |
________
(a)Comprised of items that we do not consider to be part of our core operating business plan or representative of our overall long-term operating performance, based on a number of factors, including the nature of the item and/or the frequency with which it occurs. We believe that these adjustments provide a more representative view of EBITDA from our core operating business and allow for more meaningful comparisons.
(b)Amount for the three months ended December 31, 2023 includes a gain on sale of real estate of $59.1 million recognized upon entering into an agreement to sell our portfolio of 70 office properties located in Spain to the tenant occupying the properties and the reclassification of the investment to net investments in sales-type leases. Amount for the three months ended March 31, 2023 includes a gain on sale of real estate of $176.2 million recognized upon receiving notice of the exercise of a purchase option for a portfolio of 78 net-lease self-storage properties and the reclassification of the investment to net investments in sales-type leases.
(c)Amount for the three months ended December 31, 2023 includes an impairment charge of $47.3 million recognized on the 59 properties contributed to NLOP in connection with the Spin-Off.
(d)Primarily comprised of gains and losses on extinguishment of debt, the mark-to-market fair value of equity securities, and foreign currency exchange rate movements, as well as non-cash allowance for credit losses on loans receivable and finance leases. Amounts from period to period will not be comparable due to unpredictable fluctuations in these gains and losses.
(e)Straight-line rent adjustments relate to our net-leased properties subject to operating leases.
(f)Amount for the three months ended September 30, 2023 is primarily comprised of costs incurred in connection with the Spin-Off.
| | | | | | | | |
| | Investing for the Long Run® | 39 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2023
| | | | | |
Adjusted EBITDA, Real Estate – Last Five Quarters |
In thousands.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2023 | | Sep. 30, 2023 | | Jun. 30, 2023 | | Mar. 31, 2023 | | Dec. 31, 2022 |
Net income from Real Estate | $ | 142,703 | | | $ | 124,126 | | | $ | 144,646 | | | $ | 293,292 | | | $ | 210,107 | |
| | | | | | | | | |
Adjustments to Derive Adjusted EBITDA (a) | | | | | | | | | |
Gain on sale of real estate, net (b) | (134,026) | | | (2,401) | | | (1,808) | | | (177,749) | | | (5,845) | |
Depreciation and amortization | 129,484 | | | 144,771 | | | 143,548 | | | 156,409 | | | 140,749 | |
Interest expense | 72,194 | | | 76,974 | | | 75,488 | | | 67,196 | | | 67,668 | |
Impairment charges — real estate (c) | 71,238 | | | 15,173 | | | — | | | — | | | 12,734 | |
Other (gains) and losses (d) | 45,303 | | | (2,180) | | | 890 | | | (7,586) | | | (96,846) | |
Straight-line and other leasing and financing adjustments (e) | (19,071) | | | (18,662) | | | (19,086) | | | (15,050) | | | (14,766) | |
Provision for income taxes | 13,714 | | | 5,090 | | | 10,236 | | | 15,402 | | | 4,908 | |
Stock-based compensation expense | 8,693 | | | 9,050 | | | 8,995 | | | 7,766 | | | 9,739 | |
Above- and below-market rent intangible lease amortization | 6,644 | | | 7,835 | | | 8,824 | | | 10,861 | | | 8,652 | |
Merger and other expenses (f) | (641) | | | 4,152 | | | 1,419 | | | 24 | | | 2,058 | |
Other amortization and non-cash charges | 21 | | | 457 | | | 411 | | | 404 | | | 399 | |
| 193,553 | | | 240,259 | | | 228,917 | | | 57,677 | | | 129,450 | |
| | | | | | | | | |
Adjustments for Pro Rata Ownership | | | | | | | | | |
Real Estate Joint Ventures: | | | | | | | | | |
Add: Pro rata share of adjustments for equity method investments | 2,664 | | | 2,656 | | | 3,013 | | | 2,050 | | | 2,076 | |
Less: Pro rata share of adjustments for amounts attributable to noncontrolling interests | (267) | | | (400) | | | (347) | | | (443) | | | (511) | |
| 2,397 | | | 2,256 | | | 2,666 | | | 1,607 | | | 1,565 | |
| | | | | | | | | |
Adjusted EBITDA – Real Estate (g) | $ | 338,653 | | | $ | 366,641 | | | $ | 376,229 | | | $ | 352,576 | | | $ | 341,122 | |
________
(a)Comprised of items that we do not consider to be part of our core operating business plan or representative of our overall long-term operating performance, based on a number of factors, including the nature of the item and/or the frequency with which it occurs. We believe that these adjustments provide a more representative view of EBITDA from our core operating business and allow for more meaningful comparisons.
(b)Amount for the three months ended December 31, 2023 includes a gain on sale of real estate of $59.1 million recognized upon entering into an agreement to sell our portfolio of 70 office properties located in Spain to the tenant occupying the properties and the reclassification of the investment to net investments in sales-type leases. Amount for the three months ended March 31, 2023 includes a gain on sale of real estate of $176.2 million recognized upon receiving notice of the exercise of a purchase option for a portfolio of 78 net-lease self-storage properties and the reclassification of the investment to net investments in sales-type leases.
(c)Amount for the three months ended December 31, 2023 includes an impairment charge of $47.3 million recognized on the 59 properties contributed to NLOP in connection with the Spin-Off.
(d)Primarily comprised of gains and losses on extinguishment of debt, the mark-to-market fair value of equity securities, and foreign currency exchange rate movements, as well as non-cash allowance for credit losses on loans receivable and finance leases. Amounts from period to period will not be comparable due to unpredictable fluctuations in these gains and losses.
(e)Straight-line rent adjustments relate to our net-leased properties subject to operating leases.
(f)Amount for the three months ended September 30, 2023 is primarily comprised of costs incurred in connection with the Spin-Off.
| | | | | | | | |
| | Investing for the Long Run® | 40 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2023
| | | | | |
Adjusted EBITDA, Investment Management – Last Five Quarters |
In thousands.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2023 | | Sep. 30, 2023 | | Jun. 30, 2023 | | Mar. 31, 2023 | | Dec. 31, 2022 |
Net income (loss) from Investment Management | $ | 1,541 | | | $ | 873 | | | $ | (66) | | | $ | 1,149 | | | $ | (604) | |
| | | | | | | | | |
Adjustments to Derive Adjusted EBITDA (a) | | | | | | | | | |
Other (gains) and losses (b) | 474 | | | (679) | | | 476 | | | (514) | | | (213) | |
(Benefit from) provision for income taxes | — | | | — | | | (107) | | | (283) | | | 1,218 | |
| 474 | | | (679) | | | 369 | | | (797) | | | 1,005 | |
| | | | | | | | | |
Adjusted EBITDA – Investment Management (c) | $ | 2,015 | | | $ | 194 | | | $ | 303 | | | $ | 352 | | | $ | 401 | |
________
(a)Comprised of items that we do not consider to be part of our core operating business plan or representative of our overall long-term operating performance, based on a number of factors, including the nature of the item and/or the frequency with which it occurs. We believe that these adjustments provide a more representative view of EBITDA from our core operating business and allow for more meaningful comparisons.
(b)Primarily comprised of gains and losses from foreign currency exchange rate movements and marketable securities. Amounts from period to period will not be comparable due to unpredictable fluctuations in these gains and losses.
| | | | | | | | |
| | Investing for the Long Run® | 41 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2023
| | | | | |
Disclosures Regarding Non-GAAP and Other Metrics |
Non-GAAP Financial Disclosures
FFO and AFFO
Due to certain unique operating characteristics of real estate companies, as discussed below, NAREIT, an industry trade group, has promulgated a non-GAAP measure known as FFO, which we believe to be an appropriate supplemental measure, when used in addition to and in conjunction with results presented in accordance with GAAP, to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to, nor a substitute for, net income or loss as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as restated in December 2018. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from the sale of certain real estate, impairment charges on real estate or other assets incidental to the company’s main business, gains or losses on changes in control of interests in real estate and depreciation and amortization from real estate assets; and after adjustments for unconsolidated partnerships and jointly owned investments. Adjustments for unconsolidated partnerships and jointly owned investments are calculated to reflect FFO on the same basis.
We also modify the NAREIT computation of FFO to adjust GAAP net income for certain non-cash charges, such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rent and related reserves, other non-cash rent adjustments, non-cash allowance for credit losses on loans receivable and finance leases, stock-based compensation, non-cash environmental accretion expense, amortization of discounts and premiums on debt and amortization of deferred financing costs. Our assessment of our operations is focused on long-term sustainability and not on such non-cash items, which may cause short-term fluctuations in net income but have no impact on cash flows. Additionally, we exclude non-core income and expenses, such as gains or losses from extinguishment of debt, merger and acquisition expenses, and spin-off expenses. We also exclude realized and unrealized gains/losses on foreign currency exchange rate movements (other than those realized on the settlement of foreign currency derivatives), which are not considered fundamental attributes of our business plan and do not affect our overall long-term operating performance. We refer to our modified definition of FFO as AFFO. We exclude these items from GAAP net income to arrive at AFFO as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs that are currently not engaged in acquisitions, mergers and restructuring, which are not part of our normal business operations. AFFO also reflects adjustments for unconsolidated partnerships and jointly owned investments. We use AFFO as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies and determine executive compensation.
We believe that AFFO is a useful supplemental measure for investors to consider as we believe it will help them to better assess the sustainability of our operating performance without the potentially distorting impact of these short-term fluctuations. However, there are limits on the usefulness of AFFO to investors. For example, impairment charges and unrealized foreign currency exchange rate 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.
Same-Store Pro Rata Rental Income
Same-store pro rata rental income is a non-GAAP financial measure that is intended to reflect the performance of our net leased properties. We define this as contractual rents from our leased properties. Same-store rental income excludes reimbursable tenant costs, amortization of intangibles and straight-line rent adjustments that are included in GAAP lease revenues. We present same-store rental income on a pro rata basis to account for our share of income related to unconsolidated joint ventures and noncontrolling interests. We believe that same-store pro rata rental income is a helpful measure that both investors and management can use to evaluate the financial performance of our leased properties. Same-store pro rata rental income should not be considered as an alternative to lease revenues as an indication of our financial performance or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present same-store rental income and/or same-store pro rata rental income may not be directly comparable to the way other REITs present such metrics.
Pro Rata Cash NOI
Cash net operating income (“cash NOI”) is a non-GAAP financial measure that is intended to reflect the performance of our net leased and operating properties. We define cash NOI as cash rents from our leased and operating properties less non-reimbursable property expenses. Cash NOI excludes amortization of intangibles and straight-line rent adjustments that are included in GAAP lease revenues. We present cash NOI on a pro rata basis (“pro rata cash NOI”) to account for our share of income related to unconsolidated joint ventures and noncontrolling interests. We believe that pro rata cash NOI is a helpful measure that both investors and management can use to evaluate the financial performance of our leased and operating properties and it allows for comparison of our operating performance between periods and to other REITs. Pro rata cash NOI should not be considered as an alternative to net income as an indication of our financial performance or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present cash NOI and/or pro rata cash NOI may not be directly comparable to the way other REITs present such metrics.
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W. P. Carey Inc.
Appendix – Fourth Quarter 2023
Normalized Pro Rata Cash NOI
Normalized pro rata cash NOI is pro rata cash NOI as defined above adjusted primarily to exclude our pro rata share of cash NOI from properties disposed of during the most recent quarter and to include a full quarter of pro rata cash NOI related to properties acquired or capital investments and commitments completed during the period, as applicable. We believe this measure provides a helpful representation of our net operating income from our in-place leased and operating properties.
Adjusted EBITDA
We believe that EBITDA is a useful supplemental measure to investors and analysts for assessing the performance of our business segments because (i) it removes the impact of our capital structure from our operating results and (ii) it is helpful when comparing our operating performance to that of companies in our industry without regard to such items, which can vary substantially from company to company. Adjusted EBITDA as disclosed represents EBITDA, modified to include other adjustments to GAAP net income for certain non-cash charges, such as impairments, non-cash rent adjustments and unrealized gains and losses from our hedging activity. Additionally, we exclude gains and losses on sale of real estate, which are not considered fundamental attributes of our business plans and do not affect our overall long-term operating performance. We exclude these items from adjusted EBITDA as they are not the primary drivers in our decision-making process. Adjusted EBITDA reflects adjustments for unconsolidated partnerships and jointly owned investments. Our assessment of our operations is focused on long-term sustainability and not on such non-cash and non-core items, which may cause short-term fluctuations in net income but have no impact on cash flows. We believe that adjusted EBITDA is a useful supplemental measure to investors and analysts, although it does not represent net income that is computed in accordance with GAAP. Accordingly, adjusted EBITDA should not be considered as an alternative to net income or as an indicator of our financial performance. EBITDA and adjusted EBITDA as calculated by us may not be comparable to similarly titled measures of other companies.
Cash Interest Expense
Cash interest expense is a non-GAAP financial measure equal to interest expense calculated in accordance with GAAP, plus capitalized interest and other non-cash amortization expense, less amortization of deferred financing costs and debt premiums/discounts, adjusted for pro rata ownership. See the definition of cash interest expense coverage ratio below for a reconciliation of cash interest expense to its most directly compared GAAP measure, interest expense.
Cash Interest Expense Coverage Ratio
Cash interest expense coverage ratio is a non-GAAP financial measure representing the ratio of Adjusted EBITDA to cash interest expense on a trailing 12 months basis. We believe this ratio is useful to investors as a supplemental measure of our ability to satisfy fixed interest expense obligations. Cash interest expense for the trailing 12 months as of December 31, 2023 is equal to $273.1 million, comprised of interest expense calculated in accordance with GAAP ($291.9 million), plus capitalized interest ($0.6 million) and other non-cash amortization expense ($0.1 million), less amortization of deferred financing costs and debt premiums/discounts ($20.5 million), adjusted for pro rata ownership ($1.3 million).
Other Metrics
Pro Rata Metrics
This supplemental package contains certain metrics prepared on a pro rata basis. We refer to these metrics as pro rata metrics. We have certain investments in which our economic ownership is less than 100%. On a full consolidation basis, we report 100% of the assets, liabilities, revenues and expenses of those investments that are deemed to be under our control or for which we are deemed to be the primary beneficiary, even if our ownership is less than 100%. Also, for all other jointly owned investments, which we do not control, we report our net investment and our net income or loss from that investment. On a pro rata basis, we generally present our proportionate share, based on our economic ownership of these jointly owned investments, of the assets, liabilities, revenues and expenses of those investments. Multiplying each of our jointly owned investments’ financial statement line items by our percentage ownership and adding or subtracting those amounts from our totals, as applicable, may not accurately depict the legal and economic implications of holding an ownership interest of less than 100% in our jointly owned investments.
ABR
ABR represents contractual minimum annualized base rent for our net-leased properties and reflects exchange rates as of December 31, 2023. If there is a rent abatement, we annualize the first monthly contractual base rent following the free rent period. ABR is not applicable to operating properties and is presented on a pro rata basis.
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| | Investing for the Long Run® | 43 |
50+ Years of Investing for the Long Run® 4Q23 W. P. Carey Inc. Investor Presentation Exhibit 99.3
Table of Contents Unless otherwise noted, all data in this presentation is as of December 31, 2023. Amounts may not sum to totals due to rounding. Overview Real Estate Portfolio Balance Sheet ESG 3 7 18 22
3 Overview
4 Size One of the largest owners of net lease real estate and among the top 25 REITs in the MSCI US REIT Index Diversification Highly diversified portfolio by geography, tenant, property type and tenant industry Track Record Successful track record of investing and operating through multiple economic cycles since 1973 led by an experienced management team Proactive Asset Management U.S. and Europe-based asset management teams Balance Sheet Investment grade balance sheet with access to multiple forms of capital Real Estate Earnings Stable cash flows derived from long-term leases that contain strong contractual rent bumps W. P. Carey (NYSE: WPC) is a REIT that specializes in investing in single-tenant net lease commercial real estate, primarily in the U.S. and Northern and Western Europe Company Highlights Orgill | Warehouse | Inwood, WV Turkey Hill | Industrial | Conestoga, PA
5 • Generate attractive risk-adjusted returns by investing in net lease commercial real estate, primarily in the U.S. and Northern and Western Europe • Protect downside by combining credit and real estate underwriting with sophisticated structuring and direct origination • Acquire “mission-critical” assets essential to a tenant’s operations • Create upside through rent escalations, credit improvements and real estate appreciation • Capitalize on existing tenant relationships through accretive expansions, renovations and follow-on deals • Hallmarks of our approach: • Diversification by tenant, industry, property type and geography • Disciplined • Opportunistic • Proactive asset management • Conservative capital structure Investment Strategy Transactions Evaluated on Four Key Factors Creditworthiness of Tenant • Industry drivers and trends • Competitor analysis • Company history • Financial wherewithal Criticality of Asset • Key distribution facility or profitable manufacturing plant • Critical R&D or data-center • Top performing retail stores Fundamental Value of the Underlying Real Estate • Local market analysis • Property condition • 3rd party valuation / replacement cost • Downside analysis / cost to re-lease Transaction Structure and Pricing • Lease terms – rent growth and maturity • Financial covenants • Security deposits / letters of credit
6 • Asset management offices in New York and Amsterdam • W. P. Carey has proven experience repositioning assets through re-leasing, restructuring and strategic disposition • Generates value creation opportunities within our existing portfolio • Five-point internal rating scale used to assess and monitor tenant credit and the quality, location and criticality of each asset Domestic and international asset management capabilities to address lease expirations, changing tenant credit profiles and asset repositioning or dispositions Proactive Asset Management Asset Management Risk AnalysisAsset Management Expertise Bankruptcy Watch List Implied IG Investment Grade StableTenant Credit Obsolete Residual Risk Stable Class B Class AAsset Quality Not Critical Non- Renewal Possible Renewal Critical- Renewal Likely Highly CriticalAsset Criticality Asset Location No Tenant Demand Limited Tenant Demand / Challenging Location Alternative Tenant Demand Good Location / Active Market Prime Location / High Tenant Demand Operational • Lease compliance • Insurance • Property inspections • Non-triple net lease administration • Real estate tax • Projections and portfolio valuation Transaction • Leasing • Dispositions • Lease modifications • Credit and real estate risk analysis • Building expansions and redevelopment • Tenant distress and restructuring Risk Management Scale
7 Real Estate Portfolio
8 1. Portfolio information reflects pro rata ownership of real estate assets (excluding operating properties) as of December 31, 2023. 2. Portfolio metrics do not reflect the sale of the State of Andalusia, a portfolio of 70 office properties that was sold in January 2024, representing 2.4% of ABR. 3. Other includes leases with percentage rent (i.e., participation in the gross revenues of the tenant above a stated level) and other increases, as well as leases with no escalations. 4. Metrics shown for operating self-storage portfolio only; excludes net-lease self-storage assets which are captured in net-lease portfolio metrics. Large Diversified Portfolio (1)(2) N et -L ea se P or tfo lio Number of Properties 1,424 Number of Tenants 336 Square Footage 172.7 million ABR $1.34 billion North America / Europe / Other (% of ABR) 63% / 37% / 1% Contractual Rent Escalation: CPI-linked / Fixed / Other (3) 56% / 41% / 3% WALT 11.7 years Occupancy 98.1% Investment Grade Tenants (% of ABR) 23.9% Top 10 Tenant Concentration (% of ABR) 21.1% Se lf St or ag e (4 ) Number of Properties 89 Number of Units 54,681 Average Occupancy 90.3%
9 1. Portfolio information reflects pro rata ownership of real estate assets (excluding operating properties) as of December 31, 2023. 2. The Company received notice during the 2023 first quarter from a related party of U-Haul of its intention to exercise its repurchase option on the properties in the U-Haul net lease self-storage portfolio. 3. The State of Andalusia office portfolio was sold in January 2024 as part of the Company’s strategy to exit the office assets in its portfolio. 4. ABR from these properties is denominated in U.S. dollars. 5. Of the 23 properties leased to the tenant, nine are located in Canada, eight are located in the United States and six are located in Mexico. One of the lowest Top 10 concentrations among the net lease peer group Top Ten Net Lease Tenants (1) Tenant Description Number of Properties ABR ($ millions) WALT (years) % of Total Net lease self-storage properties in the U.S. (2) 78 $39 0.2 2.9% Government office properties in Spain (3) 70 33 11.0 2.4% Pharmaceutical R&D and advanced manufacturing properties in Canada (4) 11 32 19.2 2.3% Business-to-business wholesale stores in Italy and Germany 20 30 4.5 2.3% Do-it-yourself retail properties in Germany 35 30 13.2 2.2% Net lease self-storage properties in the U.S. 27 25 20.3 1.9% Do-it-yourself retail properties in Poland 26 25 7.4 1.9% Automotive component manufacturing properties in North America (4)(5) 23 24 19.3 1.8% Grocery stores and warehouses in Croatia 19 22 10.3 1.7% K-12 private schools in the U.S. 3 22 19.7 1.7% Top 10 312 $282 11.8 yrs 21.1% State of Andalusia
10 32% 26% 21% 5% 5% 10% 1. Portfolio information reflects pro rata ownership of real estate assets (excluding operating properties) as of December 31, 2023. 2. Portfolio metrics do not reflect the sale of the State of Andalusia, a portfolio of 70 office properties that was sold in January 2024, representing 2.4% of ABR. 3. Includes automotive dealerships. 4. Includes education facility, specialty, laboratory, hotel (net lease), research and development and land. 5. Includes tenants in the following industries: business services; high tech industries; metals; telecommunications; wholesale; aerospace and defense; insurance; banking; environmental industries; oil and gas; media: advertising, printing and publishing; consumer transportation; forest products and paper; and electricity. Property and Industry Diversification (1)(2) Tenant Industry Diversification (% of ABR) Property Type Diversification (% of ABR) 59% Industrial / Warehouse Industrial 32% Warehouse 26% Retail (3) 21% Office 5% Self-storage (Net Lease) 5% Other (4) 10% 23% 10% 8% 7% 6% 5% 5% 4% 4% 4% 4% 3% 3% 2% 2% 10% Retail Stores (3) 23% Consumer Services 10% Beverage and Food 8% Automotive 7% Grocery 6% Healthcare and Pharmaceuticals 5% Cargo Transportation 5% Containers, Packaging and Glass 4% Capital Equipment 4% Durable Consumer Goods 4% Construction and Building 4% Sovereign and Public Finance 3% Hotels and Leisure 3% Chemicals, Plastics and Rubber 2% Non-Durable Consumer Goods 2% Other (5) 10%
11 North America, 63% $838MM United States, 58% $774MM Canada (3), 4% $51MM Mexico (4), 1% $13MM Europe, 37% $493MM Other (5), 1% $8MM 1. Portfolio information reflects pro rata ownership of real estate assets (excluding operating properties) as of December 31, 2023. 2. Portfolio metrics do not reflect the sale of the State of Andalusia, a portfolio of 70 office properties that was sold in January 2024, representing 2.4% of ABR. 3. $47MM (92%) of ABR from Canada-based properties denominated in USD with the balance in CAD. 4. All ABR from Mexico-based properties denominated in USD. 5. Includes Mauritius (0.4%) and Japan (0.2%). W. P. Carey has been investing internationally for approximately 25 years, primarily in Northern and Western Europe Geographic Diversification (1)(2) Through our financing and hedging strategies, we’ve significantly mitigated currency risk through a combination of over- weighting our debt in foreign currencies and utilizing contractual cash flow hedges.
12 Uncapped CPI 38% Fixed 41% Capped CPI 18% Other (3) 3% CPI-linked 56% None 0.4% 1. Portfolio information reflects pro rata ownership of real estate assets (excluding operating properties) as of December 31, 2023. 2. Portfolio metrics do not reflect the sale of the State of Andalusia, a portfolio of 70 office properties that was sold in January 2024, representing 2.4% of ABR. 3. Represents leases with percentage rent (i.e., participation in the gross revenues of the tenant above a stated level) and other increases. Over 99% of ABR comes from leases with contractual rent increases, including 56% linked to CPI Internal Growth from Contractual Rent Increases (1)(2)
13 1.6% 1.5% 1.6% 1.8% 2.7% 3.0% 3.4% 3.4% 4.3% 4.3% 4.2% 4.1% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1. Portfolio metrics do not reflect the sale of the State of Andalusia, a portfolio of 70 office properties that was sold in January 2024, representing 2.4% of ABR. 2. Contractual same store portfolio includes leases that were continuously in place during the period from December 31, 2022 to December 31, 2023. Excludes leases for properties that were acquired, sold or vacated, or were subject to lease renewals, extensions or modifications at any time that affected ABR during that period. For purposes of comparability, ABR is presented on a constant currency basis using exchange rates as of December 31, 2023. Contractual same store growth of 4.1% (2) Same Store ABR Growth (1)
14 4.5% 3.4% 4.5% 4.7% 4.3% 5.7% 2.7% 5.0% 3.1% 5.7% 7.1% 49.3% 0% 10% 20% 30% 40% 50% 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Thereafter 1. Portfolio information reflects pro rata ownership of real estate assets (excluding operating properties) as of December 31, 2023. 2. Assumes tenants do not exercise any renewal or purchase options. 3. Includes ABR of $38.8 million from the U-Haul net lease self-storage portfolio. The Company received notice during the 2023 first quarter from a related party of U-Haul of its intention to exercise its repurchase option on the properties in this portfolio. 4. Includes ABR of $32.5 million from a portfolio of 70 properties leased to State of Andalusia that was sold in January 2024. Weighted-average lease term of 11.7 years Lease Expirations and Average Lease Term (1) Lease Expirations (% ABR) (2) (3) (4)
15 Historical Occupancy (1)(2) 1. Historical data through 2021 includes W. P. Carey and the following CPA REITs: Corporate Property Associates 12 Incorporated, Corporate Property Associates 14 Incorporated, Corporate Property Associates 15 Incorporated, Corporate Property Associates 16 – Global Incorporated, Corporate Property Associates 17 – Global Incorporated (CPA:17) and Corporate Property Associates 18 – Global Incorporated (CPA:18). Portfolio information excludes operating properties. 2. Portfolio metrics do not reflect the sale of the State of Andalusia, a portfolio of 70 office properties that was sold in January 2024, representing 2.4% of ABR. 3. Represents occupancy for each completed year at December 31. Otherwise, occupancy shown is for the most recent quarter. Stable occupancy maintained during the aftermath of the global financial crisis and throughout the COVID-19 pandemic 96.6% 97.3% 98.4% 98.8% 99.0% 99.2% 99.3% 99.8% 98.3% 98.9% 98.5% 98.5% 98.8% 98.1% 0% 20% 40% 60% 80% 100% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Occupancy (% Square Feet) (3)
16 Recent investment activity has been focused primarily on mission critical industrial and warehouse properties and essential retail Recent Acquisitions Purchase Price: $122 million Transaction Type: Sale-leaseback Facility Type: Retail (Grocery) Location: Various, Denmark Size: 479,444 square feet Lease Term: 15-year lease Rent Escalation: Danish CPI Coop February - November 2022 (30 properties) Purchase Price: $468 million Transaction Type: Sale-leaseback Facility Type: Industrial / Warehouse Location: Various, Canada Size: 2,268,417 square feet Lease Term: 20-year lease Rent Escalation: Fixed (with all rent paid in USD) Apotex April 2023 (11 properties) Fedrigoni November 2023 / January 2024 (16 properties) Purchase Price: $305 million * Transaction Type: Sale-leaseback Facility Type: Industrial / Warehouse Location: Various, Italy (12) / Spain (3) / Germany (1) Size: 4,458,514 square feet Lease Term: 20-year lease Rent Escalation: Country CPI Recent Acquisitions – Case Studies * Completed in 2 tranches - $157 million in November 2023 / $148 million in January 2024
17 Capital investments have become a more meaningful part of our investment activity and allow us to pursue follow-on opportunities with existing tenants Recent Capital Investments Investment: $25 million build-to-suit Facility Type: Research and Development Location: Wageningen, The Netherlands Size: 63,762 square feet Lease Term: 20-year lease Rent Escalation: Dutch CPI Upfield Group Completed July 2022 Investment: $20 million renovation Facility Type: Industrial Location: Evansville, IN and Lawrence, KS Size: N/A Lease Term: 17-year lease Rent Escalation: U.S. CPI Berry Plastics Completed March 2023 Investment: $14 million redevelopment Facility Type: Laboratory Location: Pleasanton, CA Size: N/A Lease Term: 16-year lease Rent Escalation: Fixed Unchained Labs Completed August 2023 Capital Investments – Case Studies
18 Balance Sheet
19 Capitalization ($MM) (1) 12/31/23 Total Equity (2) $14,172 Pro Rata Net Debt Senior Unsecured Notes USD 2,900 Senior Unsecured Notes EUR 3,177 Mortgage Debt, pro rata USD 418 Mortgage Debt, pro rata (EUR $208 / Other $48) 256 Unsecured Revolving Credit Facility USD 0 Unsecured Revolving Credit Facility (EUR $387 / Other $17) 404 Unsecured Term Loans (EUR $790 / GBP $343) 1,133 Total Pro Rata Debt $8,288 Less: Cash and Cash Equivalents (634) Total Pro Rata Net Debt $7,654 Enterprise Value $21,826 Total Capitalization $22,460 Leverage Metrics Pro Rata Net Debt / Adjusted EBITDA (3)(4) 5.6x Pro Rata Net Debt / Enterprise Value (2)(3) 35.1% Total Consolidated Debt / Gross Assets (5) 41.6% Weighted Average Interest Rate (pro rata) 3.2% Weighted Average Debt Maturity (pro rata) 3.9 years Capitalization (%) • Size: Large, well-capitalized balance sheet with $21.8B in total enterprise value – Credit Rating: Investment grade balance sheet rated Baa1 by Moody’s and BBB+ by S&P • Liquidity: Ample liquidity of $2.2B at year end • Forward Equity: Settled all outstanding forward sale agreements for net proceeds of approximately $384MM in October 2023 • NLOP Financing: Approximately $344MM of proceeds, net of transaction expenses, transferred to WPC in November 2023 • Leverage: Maintain conservative leverage targets (mid-to-high 5s Net Debt to EBITDA) • Capital Markets: Demonstrated strong access to capital markets – Credit Facility: Recast $2.6B credit facility in December 2023, consisting of a $2.0B revolver and £270MM and €215MM in term loans – Term Loan: €500MM term loan swapped to 4.34% due April 2026 in April 2023 – ATM: Issued an aggregate $852MM of net ATM equity in 2022 / 2023 – Private Placement: €150MM of 3.41% Senior Unsecured Notes due 2029 and €200MM of 3.70% Senior Unsecured Notes due 2032 issued in September 2022 – Green Bonds: $350MM, 2.45% Notes due 2032 issued in 2021 Balance Sheet Highlights 63% 27% 7% 3% Equity (2) Senior Unsecured Notes Unsecured Revolving Credit Facility / Term Loans Mortgage Debt (pro rata) Balance Sheet Overview 1. Amounts may not sum to totals due to rounding. 2. Based on a closing stock price of $64.81 on December 31, 2023 and 218,671,874 common shares outstanding as of December 31, 2023. 3. Pro rata net debt to enterprise value and pro rata net debt to Adjusted EBITDA are based on pro rata debt less consolidated cash and cash equivalents. 4. Adjusted EBITDA represents 4Q23 annualized Adjusted EBITDA, as reported in the Form 8-K filed with the SEC on February 9, 2024. 5. Gross assets represent consolidated total assets before accumulated depreciation on real estate. Gross assets are net of accumulated amortization on in-place lease and above-market rent intangible assets.
20 % of Total (4) 16.2% 8.5% 18.8% 6.9% 13.7% 10.8% 7.0% 6.1% 6.9% 5.2% Interest Rate (4) 3.5% 4.1% 3.6% 2.2% 3.5% 4.1% 1.0% 2.4% 2.9% 2.3% $M M 1. Reflects amount due at maturity, excluding unamortized discount and unamortized deferred financing costs. 2. Reflects pro rata balloon payments due at maturity. W. P. Carey has two fully amortizing mortgages due in 2031 ($3MM) and 2039 ($3MM). 3. Includes amounts drawn under the credit facility as of December 31, 2023. 4. Reflects the weighted average percentage of debt outstanding and the weighted average interest rate for each year based on the total outstanding balance. 287 244 90 21 2 553 553 553 553 166 580 221 500 450 350 325 500 350 425 553 581 404 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Mortgage Debt Unsecured Bonds (EUR) Unsecured Bonds (USD) Unsecured Term Loans Unsecured Revolving Credit Facility (2) (3) Debt Maturity Schedule Principal at Maturity (1)
21 Metric Covenant December 31, 2023 Total Leverage Total Debt / Total Assets ≤ 60% 42.3% Secured Debt Leverage Secured Debt / Total Assets ≤ 40% 3.1% Fixed Charge Coverage Consolidated EBITDA / Annual Debt Service Charge ≥ 1.5x 4.7x Maintenance of Unencumbered Asset Value Unencumbered Assets / Total Unsecured Debt ≥ 150% 225.8% 1. This is a summary of the key financial covenants for our Senior Unsecured Notes, along with estimated calculations of our compliance with those covenants at the end of the period presented. These ratios are not measures of our liquidity or performance and serve only to demonstrate our ability to incur additional debt, as permitted by the covenants governing the Senior Unsecured Notes. 2. As of December 31, 2023, our Senior Unsecured Notes consisted of the following note issuances: (i) $500 million 4.60% senior unsecured notes due 2024, (ii) €500 million 2.25% senior unsecured notes due 2024, (iii) $450 million 4.00% senior unsecured notes due 2025, (iv) $350 million 4.25% senior unsecured notes due 2026, (v) €500 million 2.25% senior unsecured notes due 2026, (vi) €500 million 2.125% senior unsecured notes due 2027, (vii) €500 million 1.35% senior unsecured notes due 2028, (viii) $325 million 3.85% senior unsecured notes due 2029, (ix) €525 million 0.95% senior unsecured notes due 2030, (x) $500 million 2.40% senior unsecured notes due 2031, (xi) $350 million 2.45% senior unsecured notes due 2032 and (xii) $425 million 2.25% senior unsecured notes due 2033. Excludes the €150MM 3.41% senior unsecured notes due 2029 and €200MM 3.70% senior unsecured notes due 2032 issued in the September 2022 private placement offering. Investment grade balance sheet rated Baa1 (stable) by Moody’s and BBB+ (stable) by S&P Senior Unsecured Notes (2) Unsecured Bond Covenants (1)
22 ESG
23 • Prioritize our employees and maintain a safe and inclusive work environment, where we can attract and retain a high- caliber workforce • Promote employee volunteer efforts and foster productive relationships with the communities in which we operate through our Carey Forward program • Strive to create a diverse, challenging and positive work environment where hard work and dedication are recognized and rewarded – Achieved U.S. certification as a Great Place to Work® for second consecutive year (4) and included in the Bloomberg Gender-Equality Index for a third consecutive year – Signed both the UN Women’s Empowerment Principles (WEPs) and CEO Action for Diversity and Inclusion™ • Our workforce (5): • Employees who identify as women represent(5): • Collect tenant energy usage data in an effort to quantify and reduce our portfolio’s global carbon footprint and integrate with benchmarking organizations • Evaluate and target new sustainability-linked investment opportunities, with the goal of growing ABR and portfolio prominence from green certified buildings (1) • Continue to identify and evaluate property level sustainability opportunities within our portfolio, which we believe can reduce carbon footprints, support our tenants’ own sustainability goals and also represent attractive investments – Launched CareySolar™, a turnkey solution providing tenants with on-site renewable energy via rooftop and carport solar installations • Achieved Gold level recognition as a Green Lease Leader for the second consecutive year (2) • Fully allocated proceeds from inaugural $350 million green bond to new and existing eligible green projects (3) • Established a Climate Disclosure Working Group to focus on preparations for anticipated climate disclosure reporting requirements 1. For a building to be considered “green certified” under our investment criteria, it must at a minimum be certified by LEED, BREEAM or a similarly recognized organization or certification process. 2. In 2022 and 2023 we were recognized as a Green Lease Leader at the Gold level by the Institute for Market Transformation (IMT) and the U.S. Department of Energy's (DOE) Better Buildings Alliance. 3. Eligible Green Projects are defined in WPC’s Green Financing Framework, available on our website. 4. In 2022 and 2023 we were Certified™ by Great Place to Work® based on a survey of U.S. employees. 5. As of December 31, 2023. 6. Data is collected by our Human Resources Department and is only for our U.S.-based employees. Environmental Social Governance 190+ Global Employees 48% of Global Workforce 39 Average Employee Age 33% of Executive Team 37% Racial / Ethnic Diversity (6) 42% of Managers • Committed to managing risk, providing transparent disclosure and being accountable to our stakeholders • Maintained the highest QualityScore rating of “1” from ISS in Governance • Key Governance Highlights – 9 out of 10 independent Directors, including a separate independent chair – Women represent 30% of our Board – No related-party transactions – Independence of Directors reviewed annually – Limitation on over-boarding – Proxy access with “3/3/20/20” market standard – Opted out of Maryland staggered board provisions; all Directors elected annually – No poison pill – Human Rights Policy, in addition to our Code of Business Conduct and Ethics • We remain committed to our founder’s dedication to Investing for the Long Run® and Doing Good While Doing Well® and his ongoing commitment to making a positive difference within our business, local communities and beyond • Our cross-functional ESG Committee serves to support our ongoing commitment to environmental and sustainability initiatives, corporate social responsibility and corporate governance ESG Strategy
24 Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Securities Act of 1933 (as amended, the “Securities Act”) and the Securities Exchange Act of 1934 (as amended, the “Exchange Act”), both as amended by the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, among other things, statements regarding the intent, belief or expectations of the Company and can be identified by the use of words such as “may,” “will,” “should,” “would,” “will be,” “will continue,” “will likely result,” “believe,” “project,” “expect,” “anticipate,” “intend,” “estimate” “opportunities,” “possibility,” “strategy,” “maintain” or the negative version of these words and other comparable terms. These forward- looking statements include, but are not limited to, statements that are not historical facts. These statements are based on the current expectations of our management, and it is important to note that our actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Other unknown or unpredictable risks or uncertainties, like the risks related to fluctuating interest rates, the impact of inflation on our tenants and us, the effects of pandemics and global outbreaks of contagious diseases and domestic or geopolitical crises, such as terrorism, military conflict, war or the perception that hostilities may be imminent, political instability or civil unrest, or other conflict, and those additional risk factors discussed in reports that we have filed with the SEC, could also have material adverse effects on our future results, performance or achievements. Discussions of some of these other important factors and assumptions are contained in W. P. Carey’s filings with the SEC and are available at the SEC’s website at http://www.sec.gov, including Part I, Item 1A. Risk Factors in W. P. Carey’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication, unless noted otherwise. Except as required under the federal securities laws and the rules and regulations of the SEC, W. P. Carey does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this communication or to reflect the occurrence of unanticipated events. All data presented herein is as of December 31, 2023 unless otherwise noted. Amounts may not sum to totals due to rounding. Past performance does not guarantee future results. Cautionary Statement Concerning Forward-Looking Statements
25 EBITDA and Adjusted EBITDA We believe that EBITDA is a useful supplemental measure to investors and analysts for assessing the performance of our business segments because (i) it removes the impact of our capital structure from our operating results and (ii) it is helpful when comparing our operating performance to that of companies in our industry without regard to such items, which can vary substantially from company to company. Adjusted EBITDA as disclosed represents EBITDA, modified to include other adjustments to GAAP net income for certain non-cash charges, such as impairments, non-cash rent adjustments and unrealized gains and losses from our hedging activity. Additionally, we exclude gains and losses on sale of real estate, which are not considered fundamental attributes of our business plans and do not affect our overall long-term operating performance. We exclude these items from adjusted EBITDA as they are not the primary drivers in our decision-making process. Adjusted EBITDA reflects adjustments for unconsolidated partnerships and jointly owned investments. Our assessment of our operations is focused on long-term sustainability and not on such non-cash and noncore items, which may cause short-term fluctuations in net income but have no impact on cash flows. We believe that adjusted EBITDA is a useful supplemental measure to investors and analysts, although it does not represent net income that is computed in accordance with GAAP. Accordingly, adjusted EBITDA should not be considered as an alternative to net income or as an indicator of our financial performance. EBITDA and adjusted EBITDA as calculated by us may not be comparable to similarly titled measures of other companies. Other Metrics Pro Rata Metrics This presentation contains certain metrics prepared on a pro rata basis. We refer to these metrics as pro rata metrics. We have certain investments in which our economic ownership is less than 100%. On a full consolidation basis, we report 100% of the assets, liabilities, revenues and expenses of those investments that are deemed to be under our control or for which we are deemed to be the primary beneficiary, even if our ownership is less than 100%. Also, for all other jointly owned investments, which we do not control, we report our net investment and our net income or loss from that investment. On a pro rata basis, we generally present our proportionate share, based on our economic ownership of these jointly owned investments, of the assets, liabilities, revenues and expenses of those investments. Multiplying each of our jointly owned investments’ financial statement line items by our percentage ownership and adding or subtracting those amounts from our totals, as applicable, may not accurately depict the legal and economic implications of holding an ownership interest of less than 100% in our jointly owned investments. ABR ABR represents contractual minimum annualized base rent for our net-leased properties and reflects exchange rates as of December 31, 2023. If there is a rent abatement, we annualize the first monthly contractual base rent following the free rent period. ABR is not applicable to operating properties and is presented on a pro rata basis. Disclosures The following non-GAAP financial measures are used in this presentation
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