Equity

Distributions

Distributions paid to stockholders consist of ordinary income, capital gains, return of capital or a combination thereof for income tax purposes. The following table presents distributions per share, declared and paid during the year ended December 31, 2013 and in October 2012, reported for federal tax purposes and serves as a designation of capital gain distributions, if applicable, pursuant to Internal Revenue Code Section 857(b)(3)(C) and Treasury Regulation § 1.857-6(e):



	Distributions Paid
	During the Year Ended December 31, 2013		On October 16, 2012
Ordinary income	$	3.1701	$	0.6228
Return of capital	0.0099		0.0272
Total distributions paid	$	3.1800	$	0.6500

We declared a quarterly distribution of $0.8700 per share and a special distribution of $0.1100 per share in December 2013, which were paid in January 2014 to stockholders of record at December 31, 2013.

Redeemable Noncontrolling Interest

On June 30, 2003, WPCI granted an incentive award to two officers of WPCI consisting of 1,500,000 restricted units, representing an approximate 13% interest in WPCI, and 1,500,000 options for WPCI units with a combined fair value of $2.5 million at that date. Both the options and restricted units vested ratably over five years, with full vesting occurring December 31, 2007. During 2008, the officers exercised all of their 1,500,000 options to purchase 1,500,000 units of WPCI at $1.00 per unit. Upon the exercise of the WPCI options, the officers had a total interest of approximately 23% in WPCI. The terms of the vested restricted units and units received in connection with the exercise of options of WPCI by noncontrolling interest holders provided that the units could be redeemed, commencing December 31, 2012 and thereafter, solely in exchange for our shares and that any redemption would be subject to a third-party valuation of WPCI.

In December 2009, one of those officers resigned from W. P. Carey, WPCI and all affiliated entities pursuant to a mutually agreed separation. In October 2012, the remaining officer’s employment with W. P. Carey, WPCI and all affiliated entities was terminated. At December 31, 2012, this former employee had a total interest of approximately 7.7% in each of WPCI and the related entities. We account for the noncontrolling interest in WPCI held by the former employee as a redeemable noncontrolling interest, as we could have an obligation to redeem the interest at fair value, subject to certain conditions. This redemption is required to be settled in shares of our common stock. The former employee’s interest is reflected at estimated redemption value for all periods presented. On October 1, 2013, we received a notice from the former employee regarding the exercise of the put option, pursuant to which we are required to redeem the
7.7% interest in WPCI and affiliated entities. Pursuant to the terms of the related put agreement, the redemption price is to be determined based on a third-party valuation as of October 31, 2013, which is the end of the month that the put option was exercised. The agreement also requires that we and the former employee agree on both the valuation firm and the valuation methodology, although to date no such agreement has been reached. We cannot currently estimate when the redemption will occur.

The following table presents a reconciliation of redeemable noncontrolling interest (in thousands):



	Years Ended December 31,
	2013			2012			2011
Beginning balance	$	7,531		$	7,700		$	7,546
Redemption value adjustment	—			840			(455		)
Net income	353			40			1,923
Distributions	(435		)	(1,055		)	(1,309		)
Change in other comprehensive income (loss)	(13		)	6			(5		)
Ending balance	$	7,436		$	7,531		$	7,700

Transfers to Noncontrolling Interest

The following table presents a reconciliation of the effect of transfers in noncontrolling interest (in thousands):



	Years Ended December 31,
	2013		2012			2011
Net income attributable to W. P. Carey	$	98,876	$	62,132		$	139,079
Transfers to noncontrolling interest
Decrease in W. P. Carey’s additional paid-in capital for purchase of 50 Rock	—		(154		)	—
Decrease in W. P. Carey’s additional paid-in capital for purchase of CheckFree Holdings, Inc.	—		—			(5,879		)
Net transfers to noncontrolling interest	—		(154		)	(5,879		)
Change from net income attributable to W. P. Carey and transfers to noncontrolling interest	$	98,876	$	61,978		$	133,200

Accumulated Other Comprehensive Income (Loss)

The following table presents the components of Accumulated other comprehensive income (loss) reflected in equity, net of tax. Amounts include our proportionate share of other comprehensive income or loss from our unconsolidated investments (in thousands):



	December 31,
	2013			2012
Unrealized appreciation on marketable securities	$	31		$	31
Realized and unrealized loss on derivative instruments	(7,488		)	(7,508		)
Foreign currency translation adjustments	22,793			2,828
Accumulated other comprehensive income (loss)	$	15,336		$	(4,649	)

Reclassifications Out of Accumulated Other Comprehensive Income (Loss)

The following tables present a reconciliation of changes in accumulated other comprehensive income (loss) by component for the periods presented (in thousands):



	Year Ended December 31, 2013
	Realized and Unrealized Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Unrealized Appreciation (Depreciation) on Marketable Securities		Total
Beginning balance	$	(7,508	)	$	2,828		$	31	$	(4,649	)
Other comprehensive (loss) income before reclassifications	(2,793		)	21,835			—		19,042
Amounts reclassified from accumulated other comprehensive income (loss) to:
Interest expense	1,745			—			—		1,745
Other income and (expenses)	537			—			—		537
Net income from equity investments in real estate and the Managed REITs	531			—			—		531
Total	2,813			—			—		2,813
Net current period other comprehensive (loss) income	20			21,835			—		21,855
Net current period other comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interests	—			(1,870		)	—		(1,870		)
Ending balance	$	(7,488	)	$	22,793		$	31	$	15,336



	Year Ended December 31, 2012
	Realized and Unrealized Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Unrealized Appreciation (Depreciation) on Marketable Securities			Total
Beginning balance	$	(5,246	)	$	(3,299	)	$	38		$	(8,507	)
Other comprehensive (loss) income before reclassifications	(4,394		)	7,809			(7		)	3,408
Amounts reclassified from accumulated other comprehensive income (loss) to:
Interest expense	1,539			—			—			1,539
Other income and (expenses)	239			—			—			239
Net income from equity investments in real estate and the Managed REITs	354			—			—			354
Total	2,132			—			—			2,132
Net current period other comprehensive (loss) income	(2,262		)	7,809			(7		)	5,540
Net current period other comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interests	—			(1,682		)	—			(1,682		)
Ending balance	$	(7,508	)	$	2,828		$	31		$	(4,649	)



	Year Ended December 31, 2011
	Realized and Unrealized Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Unrealized Appreciation (Depreciation) on Marketable Securities			Total
Beginning balance	$	(1,658	)	$	(1,854	)	$	49		$	(3,463	)
Other comprehensive loss before reclassifications	(4,120		)	(1,796		)	(11		)	(5,927		)
Amounts reclassified from accumulated other comprehensive income (loss) to:
Interest expense	344			—			—			344
Net income from equity investments in real estate and the Managed REITs	188			—			—			188
Total	532			—			—			532
Net current period other comprehensive loss	(3,588		)	(1,796		)	(11		)	(5,395		)
Net current period other comprehensive loss attributable to noncontrolling interests and redeemable noncontrolling interests	—			351			—			351
Ending balance	$	(5,246	)	$	(3,299	)	$	38		$	(8,507	)

Earnings Per Share

Under current authoritative guidance for determining earnings per share, all unvested share-based payment awards that contain non-forfeitable rights to distributions are considered to be participating securities and therefore are included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Our unvested RSUs and restricted stocks awards, or RSAs, contain rights to receive non-forfeitable distribution equivalents, and therefore we apply the two-class method of computing earnings per share. The calculation of earnings per share below excludes the income attributable to the unvested RSUs and RSAs from the numerator. The following table summarizes basic and diluted earnings (in thousands, except share amounts):



	Years Ended December 31,
	2013			2012			2011
Net income attributable to W. P. Carey	$	98,876		$	62,132		$	139,079
Allocation of distribution equivalents paid on unvested RSUs and RSAs in excess of income	(743		)	(535		)	(2,130		)
Net income – basic	98,133			61,597			136,949
Income effect of dilutive securities, net of taxes	187			23			1,076
Net income – diluted	$	98,320		$	61,620		$	138,025

Weighted average shares outstanding – basic	68,691,046			47,389,460			39,819,475
Effect of dilutive securities	1,016,962			689,014			278,620
Weighted average shares outstanding – diluted	69,708,008			48,078,474			40,098,095

Securities totaling 114,919 and 207,258 shares for the years ended December 31, 2013 and 2011, respectively, were excluded from the earnings per share computations above as their effect would have been anti-dilutive. There were no such anti-dilutive securities for the year ended December 31, 2012. For information on long-term incentive plan awards issued to key employees subsequent to December 31, 2013 and the shares issued to the CPA^®:16 – Global stockholders in connection with the CPA^®:16 Merger that could have a dilutive impact on our earnings per share calculation, please see Note 20.

Sale of Common Shares

On October 19, 2012, we entered into an agreement to sell 937,500 shares of our common stock to an institutional investor, which were issued pursuant to our existing shelf registration statement. The shares were issued in a privately negotiated transaction at a purchase price of $48.00 per share. The proceeds to us from the sale of these shares were $45.0 million. We delivered the shares to the institutional investor on October 19, 2012.