EX-99.1 2 wpc2023q38-kerexh991.htm EX-99.1 Document

Exhibit 99.1

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W. P. Carey Announces Third Quarter 2023 Financial Results

New York, NY – November 3, 2023 – W. P. Carey Inc. (NYSE: WPC) (W. P. Carey or the Company), a net lease real estate investment trust, today reported its financial results for the third quarter ended September 30, 2023.

Financial Highlights
2023 Third Quarter
Net income attributable to W. P. Carey (millions)$125.0 
Diluted earnings per share$0.58 
AFFO (millions)$284.4 
AFFO per diluted share$1.32 

•2023 AFFO guidance range lowered and narrowed to between $5.17 and $5.23 per diluted share, primarily reflecting execution of the Company’s strategic plan to exit office and anticipated full year investment volume of between $1.3 billion and $1.5 billion
•Preliminary 2024 AFFO guidance of between $4.60 and $4.80 per diluted share announced, based primarily on completion of the Company’s strategic plan to exit office, assumed full year investment volume of $1.5 billion and capital inflows totaling an estimated $2 billion over the near term
•Third quarter cash dividend of $1.071 per share (declared and paid prior to the NLOP spin-off)

Strategic Plan to Exit Office
•Announced a strategic plan to exit office, comprising spinning-off NLOP and implementing an on-balance sheet Office Sale Program
•NLOP spin-off completed on November 1, 2023
•Office Sale Program
◦Four properties sold to date under the program for gross proceeds of $142.5 million, including one disposition for $87.9 million during the third quarter
◦Approximately $500 million of dispositions under signed contracts, including the Company’s largest office portfolio, with all sales under the program targeted to be completed in early 2024

Real Estate Portfolio
•Investment volume of $978.4 million completed during the nine months ended September 30, 2023, including $39.9 million during the third quarter
•Gross disposition proceeds of $196.3 million for the nine months ended September 30, 2023, including $148.1 million during the third quarter
•Contractual same-store rent growth of 4.2%

W. P. Carey Inc. 9/30/2023 Earnings Release 8-K – 1

Balance Sheet and Capitalization
•Subsequent to quarter end, settled all outstanding forward sale agreements, issuing approximately 4.7 million shares of common stock for net proceeds of $384 million
•Subsequent to quarter end, received approximately $350 million, net of transaction expenses, from NLOP in connection with the Spin-Off

MANAGEMENT COMMENTARY

“Having completed the spin-off of NLOP and making strong progress selling the remaining office assets on our balance sheet, we’re confident we will have effectively exited our office exposure by early 2024, better positioning us for growth,” said Jason Fox, Chief Executive Officer of W. P. Carey.

“We are actively exerting our pricing power on new investments, pushing cap rates to better reflect interest rates that moved sharply higher late in the third quarter, after steadily rising over the summer. Deals are therefore taking longer to negotiate and close — translating to a very slow third quarter — although many are now back on track and heading towards closing. And with anticipated capital inflows totaling approximately $2 billion over the coming months, we believe we're exceptionally well positioned to continue investing through 2024, in an environment where we expect to see cap rates move higher and capital market conditions to remain challenging.”


QUARTERLY FINANCIAL RESULTS

Revenues

•Total Company: Revenues, including reimbursable costs, for the 2023 third quarter totaled $448.6 million, up 16.9% from $383.6 million for the 2022 third quarter.

•Real Estate: Real Estate revenues, including reimbursable costs, for the 2023 third quarter were $448.3 million, up 17.3% from $382.1 million for the 2022 third quarter.

◦Lease revenues increased primarily as a result of net investment activity, rent escalations and net lease properties acquired in the CPA:18 Merger.

◦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 during the 2023 first quarter (three of which were sold during the 2023 third quarter).

◦Income from finance leases and loans receivable increased primarily as a result of the reclassification of lease revenues after receiving notice during the 2023 first quarter of the purchase option exercise on the portfolio of 78 U-Haul properties. The reclassification had no impact on total Real Estate revenues and the properties are expected to be sold during the first quarter of 2024.

Net Income Attributable to W. P. Carey

•Net income attributable to W. P. Carey for the 2023 third quarter was $125.0 million, up 19.2% from $104.9 million for the 2022 third quarter. Net income from Real Estate attributable to W. P. Carey was $124.2 million, which increased due primarily to the impact of net investment activity (including properties acquired in the CPA:18 Merger) and rent escalations, partly offset by higher interest expense and impairment charges recognized during the current year period. Net income from Investment Management attributable to W. P. Carey was $0.9 million, compared to a net loss of $6.4 million for the 2022 third quarter, reflecting a $29.3 million impairment charge recognized on goodwill within that segment during the prior year period since Investment Management revenues are expected to be minimal going forward following the CPA:18 Merger. The Company also recognized a $33.9 million gain on change in control of interests in connection with the CPA:18 Merger during the 2022 third quarter.

W. P. Carey Inc. 9/30/2023 Earnings Release 8-K – 2

Adjusted Funds from Operations (AFFO)

•AFFO for the 2023 third quarter was $1.32 per diluted share, down 2.9% from $1.36 per diluted share for the 2022 third quarter, driven by the Company’s Real Estate segment, which generated AFFO of $1.32 per diluted share, down 1.5% from $1.34 per diluted share for the 2022 third quarter, primarily reflecting higher interest expense and lower other lease-related income, which more than offset the impact of net investment activity, rent escalations and the accretive impact of the CPA:18 Merger. AFFO from the Company's Investment Management segment declined due primarily to the cessation of Investment Management revenues and distributions as a result of the CPA:18 Merger.

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

•On September 14, 2023, the Company reported that its Board of Directors declared a quarterly cash dividend of $1.071 per share, which was paid on October 16, 2023 to shareholders of record as of September 29, 2023.


AFFO GUIDANCE

2023 AFFO Guidance

•For the 2023 full year, the Company has lowered and narrowed its guidance range for total AFFO to between $5.17 and $5.23 per diluted share, primarily reflecting execution of the Company’s strategic plan to exit office, including the completion of the Spin-Off, and based on the following key assumptions:

(i)    investment volume of between $1.3 billion and $1.5 billion, which has been revised lower;

(ii)    disposition volume of between $450 million and $550 million, which has been revised higher and includes anticipated asset sales under the Office Sale Program totaling approximately $300 million; and

(iii)    total general and administrative expenses of between $96 million and $98 million, which has been revised lower.

Preliminary 2024 AFFO Guidance

•For the 2024 full year, the Company preliminarily expects to report total AFFO of between $4.60 and $4.80 per diluted share, based on the following:

(i)    investment volume of $1.5 billion;

(ii)    completion of the Company’s strategic plan to exit office, including anticipated asset sales under the Office Sale Program totaling approximately $500 million early in 2024;

(iii)    exercise of the U-Haul purchase option during the 2024 first quarter, generating approximately $470 million in gross proceeds;

(iv)    operating property dispositions of up to $100 million; and

(v)    other dispositions totaling between $100 million and $300 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. 9/30/2023 Earnings Release 8-K – 3

STRATEGIC PLAN TO EXIT OFFICE

•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 into Net Lease Office Properties (“NLOP”), a separate publicly-traded REIT (the “Spin-Off”), which closed 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 early 2024.


REAL ESTATE

Investments

•The Company completed investments totaling $978.4 million during the nine months ended September 30, 2023, including $39.9 million during the 2023 third quarter.

•The Company currently has two capital investments and commitments totaling $35.2 million scheduled to be completed during the fourth quarter.

Dispositions

•During the 2023 third quarter, the Company disposed of six properties for gross proceeds of $148.1 million, bringing total disposition proceeds for the nine months ended September 30, 2023 to $196.3 million.

•During the 2023 third quarter, disposition activity included the sales of three Marriott hotel operating properties for gross proceeds of $48.7 million. Subsequent to quarter end, the Company sold three additional Marriott hotel operating properties for gross proceeds of $45.8 million.

•The Company has disposed of four properties to date under the Office Sale Program for gross proceeds of $142.5 million, including one property disposed of during the 2023 third quarter for gross proceeds of $87.9 million and three properties subsequent to quarter end, for gross proceeds of $54.6 million.

◦The Company currently has office assets within the Office Sale Program totaling approximately $500 million under signed contracts, including the Company’s largest office portfolio net leased to the State of Andalusia in a sale back to the tenant, with all sales under the program targeted to be completed in early 2024.

Contractual Same-Store Rent Growth

•The Company’s net lease portfolio generated contractual same-store rent growth of 4.2% on a constant currency basis.

Composition

•As of September 30, 2023, the Company’s net lease portfolio consisted of 1,472 properties, comprising 179 million square feet leased to 395 tenants, with a weighted-average lease term of 11.0 years and an occupancy rate of 98.9%. In addition, the Company owned 86 self-storage operating properties, ten hotel operating properties and two student housing operating properties, totaling approximately 7.5 million square feet.


BALANCE SHEET AND CAPITALIZATION

Forward Equity

•Subsequent to quarter end, the Company settled all of its outstanding forward sale agreements, issuing 4,744,973 shares of common stock for net proceeds of $384 million.

W. P. Carey Inc. 9/30/2023 Earnings Release 8-K – 4

Spin-Off Distribution

•Subsequent to quarter end, the Company received a distribution of approximately $350 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.


* * * * *


Supplemental Information

The Company has provided supplemental unaudited financial and operating information regarding the 2023 third quarter and certain prior quarters, including a description of non-GAAP financial measures and reconciliations to GAAP measures, in a Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on November 3, 2023, 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, November 3, 2023 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.

Celebrating its 50th anniversary, 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 1,413 net lease properties covering approximately 171 million square feet and a portfolio of 86 self-storage operating properties, pro forma for the Spin-Off of NLOP, as of September 30, 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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W. P. Carey Inc. 9/30/2023 Earnings Release 8-K – 5

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 W. P. Carey’s strategic plan to exit office, anticipated capital inflows, and expectations regarding W. P. Carey’s ability to continue investing and the transaction and capital markets through 2024. 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 inflation and increased interest rates, the effects of pandemics and global outbreaks of contagious diseases (such as the COVID-19 pandemic) 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, 2022 and in Part II, Item 1A, Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended September 30, 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. 9/30/2023 Earnings Release 8-K – 6

W. P. CAREY INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share amounts)
September 30, 2023December 31, 2022
Assets
Investments in real estate:
Land, buildings and improvements — net lease and other$13,390,692 $13,338,857 
Land, buildings and improvements — operating properties1,222,062 1,095,892 
Net investments in finance leases and loans receivable1,172,671 771,761 
In-place lease intangible assets and other
2,696,403 2,659,750 
Above-market rent intangible assets
771,071 833,751 
Investments in real estate19,252,899 18,700,011 
Accumulated depreciation and amortization (a)
(3,438,183)(3,269,057)
Assets held for sale, net102,015 57,944 
Net investments in real estate15,916,731 15,488,898 
Equity method investments351,537 327,502 
Cash and cash equivalents136,438 167,996 
Other assets, net1,191,350 1,080,227 
Goodwill1,034,183 1,037,412 
Total assets$18,630,239 $18,102,035 
Liabilities and Equity
Debt:
Senior unsecured notes, net$5,902,854 $5,916,400 
Unsecured term loans, net1,083,597 552,539 
Unsecured revolving credit facility516,513 276,392 
Non-recourse mortgages, net784,750 1,132,417 
Debt, net8,287,714 7,877,748 
Accounts payable, accrued expenses and other liabilities638,965 623,843 
Below-market rent and other intangible liabilities, net
153,049 184,584 
Deferred income taxes171,929 178,959 
Dividends payable233,331 228,257 
Total liabilities9,484,988 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; 213,925,817 and 210,620,949 shares, respectively, issued and outstanding
214 211 
Additional paid-in capital11,970,559 11,706,836 
Distributions in excess of accumulated earnings(2,616,638)(2,486,633)
Deferred compensation obligation62,046 57,012 
Accumulated other comprehensive loss(281,820)(283,780)
Total stockholders’ equity9,134,361 8,993,646 
Noncontrolling interests10,890 14,998 
Total equity9,145,251 9,008,644 
Total liabilities and equity$18,630,239 $18,102,035 
________
(a)Includes $1.8 billion and $1.7 billion of accumulated depreciation on buildings and improvements as of September 30, 2023 and December 31, 2022, respectively, and $1.6 billion of accumulated amortization on lease intangibles as of both September 30, 2023 and December 31, 2022.



W. P. Carey Inc. 9/30/2023 Earnings Release 8-K – 7

W. P. CAREY INC.
Quarterly Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)
Three Months Ended
September 30, 2023June 30, 2023September 30, 2022
Revenues
Real Estate:
Lease revenues$369,159 $369,124 $331,902 
Income from finance leases and loans receivable27,575 27,311 20,637 
Operating property revenues49,218 50,676 21,350 
Other lease-related income2,310 5,040 8,192 
448,262 452,151 382,081 
Investment Management:
Asset management revenue194 303 1,197 
Reimbursable costs from affiliates97 124 344 
291 427 1,541 
448,553 452,578 383,622 
Operating Expenses  
Depreciation and amortization144,771 143,548 132,181 
Operating property expenses26,570 26,919 9,357 
General and administrative23,258 24,788 22,299 
Reimbursable tenant costs20,498 20,523 18,874 
Impairment charges — real estate15,173 — — 
Property expenses, excluding reimbursable tenant costs13,021 5,371 11,244 
Stock-based compensation expense9,050 8,995 5,511 
Merger and other expenses (a)
4,152 1,419 17,667 
Reimbursable costs from affiliates97 124 344 
Impairment charges — Investment Management goodwill (b)
— — 29,334 
256,590 231,687 246,811 
Other Income and Expenses  
Interest expense(76,974)(75,488)(59,022)
Earnings from equity method investments4,978 4,355 11,304 
Non-operating income (c)
4,862 4,509 9,263 
Other gains and (losses) (d)
2,859 (1,366)(15,020)
Gain (loss) on sale of real estate, net2,401 1,808 (4,736)
Gain on change in control of interests (e)
— — 33,931 
(61,874)(66,182)(24,280)
Income before income taxes130,089 154,709 112,531 
Provision for income taxes(5,090)(10,129)(8,263)
Net Income124,999 144,580 104,268 
Net loss (income) attributable to noncontrolling interests41 40 660 
Net Income Attributable to W. P. Carey$125,040 $144,620 $104,928 
Basic Earnings Per Share$0.58 $0.67 $0.52 
Diluted Earnings Per Share$0.58 $0.67 $0.51 
Weighted-Average Shares Outstanding  
Basic215,097,114 215,075,114 203,093,553 
Diluted215,252,969 215,184,485 204,098,116 
Dividends Declared Per Share$1.071 $1.069 $1.061 



W. P. Carey Inc. 9/30/2023 Earnings Release 8-K – 8

W. P. CAREY INC.
Year-to-Date Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)
Nine Months Ended September 30,
20232022
Revenues
Real Estate:
Lease revenues$1,090,619 $953,981 
Income from finance leases and loans receivable75,641 56,794 
Operating property revenues140,780 30,279 
Other lease-related income20,723 24,905 
1,327,763 1,065,959 
Investment Management:
Asset management and other revenue836 8,084 
Reimbursable costs from affiliates322 2,414 
1,158 10,498 
1,328,921 1,076,457 
Operating Expenses  
Depreciation and amortization444,728 362,654 
Operating property expenses74,738 15,335 
General and administrative74,494 66,224 
Reimbursable tenant costs62,997 52,538 
Property expenses, excluding reimbursable tenant costs31,164 36,874 
Stock-based compensation expense25,811 23,102 
Impairment charges — real estate15,173 26,385 
Merger and other expenses5,595 17,329 
Reimbursable costs from affiliates322 2,414 
Impairment charges — Investment Management goodwill— 29,334 
735,022 632,189 
Other Income and Expenses  
Interest expense(219,658)(151,492)
Gain on sale of real estate, net181,958 37,631 
Earnings from equity method investments14,569 23,477 
Non-operating income13,997 23,783 
Other gains and (losses)9,593 (1,021)
Gain on change in control of interests— 33,931 
459 (33,691)
Income before income taxes594,358 410,577 
Provision for income taxes(30,338)(21,598)
Net Income564,020 388,979 
Net loss attributable to noncontrolling interests20 622 
Net Income Attributable to W. P. Carey$564,040 $389,601 
Basic Earnings Per Share$2.64 $1.98 
Diluted Earnings Per Share$2.63 $1.98 
Weighted-Average Shares Outstanding  
Basic214,052,907 196,382,433 
Diluted214,427,425 197,264,509 
Dividends Declared Per Share$3.207 $3.177 
__________
(a)Amount for the three months ended September 30, 2023 is primarily comprised of costs incurred in connection with the NLOP Spin-Off. Amount for the three months ended September 30, 2022 is primarily comprised of costs incurred in connection with the CPA:18 Merger.
(b)Amount for the three months ended September 30, 2022 represents an impairment charge recognized on goodwill within our Investment Management segment, since future Investment Management cash flows are expected to be minimal.
(c)Amount for the three months ended September 30, 2023 is comprised of realized gains on foreign currency exchange derivatives of $3.7 million and interest income on deposits of $1.1 million.
(d)Amount for the three months ended September 30, 2023 is primarily comprised of a release of a non-cash allowance for credit losses of $2.5 million.
(e)Amount for the three months ended September 30, 2022 represents gains recognized on (i) the remaining interests in four investments acquired in the CPA:18 Merger, which we had previously accounted for under the equity method, and (ii) our previously held interest in shares of CPA:18 – Global common stock in connection with the CPA:18 Merger.
W. P. Carey Inc. 9/30/2023 Earnings Release 8-K – 9

W. P. CAREY INC.
Quarterly Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
Three Months Ended
September 30, 2023June 30, 2023September 30, 2022
Net income attributable to W. P. Carey$125,040 $144,620 $104,928 
Adjustments:
Depreciation and amortization of real property144,111 142,932 131,628 
Impairment charges — real estate15,173 — — 
(Gain) loss on sale of real estate, net(2,401)(1,808)4,736 
Gain on change in control of interests (a) (b)
— — (33,931)
Impairment charges — Investment Management goodwill (c)
— — 29,334 
Proportionate share of adjustments to earnings from equity method investments (d)
2,950 2,883 2,242 
Proportionate share of adjustments for noncontrolling interests (e)
34 (268)(189)
Total adjustments159,867 143,739 133,820 
FFO (as defined by NAREIT) Attributable to W. P. Carey (f)
284,907 288,359 238,748 
Adjustments:
Straight-line and other leasing and financing adjustments(18,662)(19,086)(14,326)
Stock-based compensation9,050 8,995 5,511 
Above- and below-market rent intangible lease amortization, net7,835 8,824 11,186 
Amortization of deferred financing costs4,805 5,904 5,223 
Tax (benefit) expense – deferred and other(4,349)(2,723)1,163 
Merger and other expenses (g)
4,152 1,419 17,667 
Other (gains) and losses (h)
(2,859)1,366 15,020 
Other amortization and non-cash items584 527 359 
Proportionate share of adjustments to earnings from equity method investments (d)
(691)(255)(2,156)
Proportionate share of adjustments for noncontrolling interests (e)
(380)(24)(673)
Total adjustments(515)4,947 38,974 
AFFO Attributable to W. P. Carey (f)
$284,392 $293,306 $277,722 
Summary
FFO (as defined by NAREIT) attributable to W. P. Carey (f)
$284,907 $288,359 $238,748 
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (f)
$1.32 $1.34 $1.17 
AFFO attributable to W. P. Carey (f)
$284,392 $293,306 $277,722 
AFFO attributable to W. P. Carey per diluted share (f)
$1.32 $1.36 $1.36 
Diluted weighted-average shares outstanding215,252,969 215,184,485 204,098,116 



W. P. Carey Inc. 9/30/2023 Earnings Release 8-K – 10

W. P. CAREY INC.
Quarterly Reconciliation of Net Income from Real Estate to Adjusted Funds from Operations (AFFO) from Real Estate (Unaudited)
(in thousands, except share and per share amounts)
Three Months Ended
September 30, 2023June 30, 2023September 30, 2022
Net income from Real Estate attributable to W. P. Carey$124,167 $144,686 $111,375 
Adjustments:
Depreciation and amortization of real property144,111 142,932 131,628 
Impairment charges — real estate15,173 — — 
(Gain) loss on sale of real estate, net(2,401)(1,808)4,736 
Gain on change in control of interests (a)
— — (11,405)
Proportionate share of adjustments to earnings from equity method investments (d)
2,950 2,883 2,242 
Proportionate share of adjustments for noncontrolling interests (e)
34 (268)(189)
Total adjustments159,867 143,739 127,012 
FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (f)
284,034 288,425 238,387 
Adjustments:
Straight-line and other leasing and financing adjustments(18,662)(19,086)(14,326)
Stock-based compensation9,050 8,995 5,511 
Above- and below-market rent intangible lease amortization, net7,835 8,824 11,186 
Amortization of deferred financing costs4,805 5,904 5,223 
Tax benefit – deferred and other(4,349)(2,723)(2,789)
Merger and other expenses (g)
4,152 1,419 17,667 
Other (gains) and losses (h)
(2,180)890 13,960 
Other amortization and non-cash items584 527 359 
Proportionate share of adjustments to earnings from equity method investments (d)
(691)(255)(938)
Proportionate share of adjustments for noncontrolling interests (e)
(380)(24)(673)
Total adjustments164 4,471 35,180 
AFFO Attributable to W. P. Carey – Real Estate (f)
$284,198 $292,896 $273,567 
Summary
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (f)
$284,034 $288,425 $238,387 
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (f)
$1.32 $1.34 $1.17 
AFFO attributable to W. P. Carey – Real Estate (f)
$284,198 $292,896 $273,567 
AFFO attributable to W. P. Carey per diluted share – Real Estate (f)
$1.32 $1.36 $1.34 
Diluted weighted-average shares outstanding215,252,969 215,184,485 204,098,116 



W. P. Carey Inc. 9/30/2023 Earnings Release 8-K – 11

W. P. CAREY INC.
Year-to-Date Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
Nine Months Ended September 30,
20232022
Net income attributable to W. P. Carey$564,040 $389,601 
Adjustments:
Depreciation and amortization of real property442,911 360,607 
Gain on sale of real estate, net(181,958)(37,631)
Impairment charges — real estate15,173 26,385 
Gain on change in control of interests (a) (b)
— (33,931)
Impairment charges — Investment Management goodwill (c)
— 29,334 
Proportionate share of adjustments to earnings from equity method investments (d)
8,439 12,859 
Proportionate share of adjustments for noncontrolling interests (e)
(533)(197)
Total adjustments284,032 357,426 
FFO (as defined by NAREIT) Attributable to W. P. Carey (f)
848,072 747,027 
Adjustments:
Straight-line and other leasing and financing adjustments(52,798)(39,665)
Above- and below-market rent intangible lease amortization, net27,520 32,738 
Stock-based compensation25,811 23,102 
Amortization of deferred financing costs15,649 11,498 
Other (gains) and losses(9,593)1,021 
Merger and other expenses (g)
5,595 17,329 
Tax benefit – deferred and other(2,706)(434)
Other amortization and non-cash items1,583 1,441 
Proportionate share of adjustments to earnings from equity method investments (d)
(1,872)(2,451)
Proportionate share of adjustments for noncontrolling interests (e)
(344)(684)
Total adjustments8,845 43,895 
AFFO Attributable to W. P. Carey (f)
$856,917 $790,922 
Summary
FFO (as defined by NAREIT) attributable to W. P. Carey (f)
$848,072 $747,027 
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (f)
$3.96 $3.79 
AFFO attributable to W. P. Carey (f)
$856,917 $790,922 
AFFO attributable to W. P. Carey per diluted share (f)
$4.00 $4.01 
Diluted weighted-average shares outstanding214,427,425 197,264,509 



W. P. Carey Inc. 9/30/2023 Earnings Release 8-K – 12

W. P. CAREY INC.
Year-to-Date Reconciliation of Net Income from Real Estate to Adjusted Funds from Operations (AFFO) from Real Estate (Unaudited)
(in thousands, except share and per share amounts)
Nine Months Ended September 30,
20232022
Net income from Real Estate attributable to W. P. Carey$562,084 $381,461 
Adjustments:
Depreciation and amortization of real property442,911 360,607 
Gain on sale of real estate, net(181,958)(37,631)
Impairment charges — real estate15,173 26,385 
Gain on change in control of interests (a)
— (11,405)
Proportionate share of adjustments to earnings from equity method investments (d)
8,439 12,859 
Proportionate share of adjustments for noncontrolling interests (e)
(533)(197)
Total adjustments284,032 350,618 
FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (f)
846,116 732,079 
Adjustments:
Straight-line and other leasing and financing adjustments(52,798)(39,665)
Above- and below-market rent intangible lease amortization, net27,520 32,738 
Stock-based compensation25,811 23,102 
Amortization of deferred financing costs15,649 11,498 
Other (gains) and losses(8,876)(303)
Merger and other expenses (g)
5,595 17,326 
Tax benefit – deferred and other(2,706)(4,302)
Other amortization and non-cash items1,583 1,441 
Proportionate share of adjustments to earnings from equity method investments (d)
(1,872)(403)
Proportionate share of adjustments for noncontrolling interests (e)
(344)(684)
Total adjustments9,562 40,748 
AFFO Attributable to W. P. Carey – Real Estate (f)
$855,678 $772,827 
Summary
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (f)
$846,116 $732,079 
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (f)
$3.95 $3.71 
AFFO attributable to W. P. Carey – Real Estate (f)
$855,678 $772,827 
AFFO attributable to W. P. Carey per diluted share – Real Estate (f)
$3.99 $3.92 
Diluted weighted-average shares outstanding214,427,425 197,264,509 
__________
(a)Amount for the three and nine months ended September 30, 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.
(b)Amount for the three and nine months ended September 30, 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
(c)Amount for the three and nine months ended September 30, 2022 represents an impairment charge recognized on goodwill within our Investment Management segment, since future Investment Management cash flows are expected to be minimal.
(d)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.
(e)Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
(f)FFO and AFFO are non-GAAP measures. See below for a description of FFO and AFFO.
(g)Amounts for the three and nine months ended September 30, 2023 are primarily comprised of costs incurred in connection with the NLOP Spin-Off. Amounts for the three and nine months ended September 30, 2022 are primarily comprised of costs incurred in connection with the CPA:18 Merger.
(h)AFFO and Real Estate AFFO adjustment amounts for the three months ended September 30, 2023 are primarily comprised of a release of a non-cash allowance for credit losses of $2.5 million.



W. P. Carey Inc. 9/30/2023 Earnings Release 8-K – 13

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 sales of property, 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.

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 and merger and acquisition 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. 9/30/2023 Earnings Release 8-K – 14