EX-99.1 2 a13-11607_2ex99d1.htm EX-99.1

Exhibit 99.1

 

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W. P. CAREY INC.

Supplemental Unaudited Operating and Financial Data

 

As of March 31, 2013

 

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Important Disclosures About this Supplemental Package

 

As used in this supplemental package, the terms “W. P. Carey,” “WPC” “the Company,” “we,” “us” and “our” include W. P. Carey Inc., its consolidated subsidiaries, and predecessors, unless otherwise indicated. “WPC LLC” means W. P. Carey & Co. LLC, our predecessor company. The “Merger” means our merger with Corporate Property Associates 15 Incorporated (“CPA®:15”) on September 28, 2012. “GAAP” means generally accepted accounting principles in the United States (“U.S.”). “CPA® REITs” means CPA®:15, Corporate Property Associates 16 – Global Incorporated (“CPA®:16 – Global”), and Corporate Property Associates 17 – Global Incorporated (“CPA®:17 – Global”). The “Managed REITs” means the CPA® REITs and Carey Watermark Investors Incorporated (“CWI”). “W. P. Carey Group” means W. P. Carey, together with the Managed REITs.

 

Important Note Regarding Non-GAAP Financial Measures

 

This supplemental package includes certain “non-GAAP” supplemental metrics that are not defined by generally accepted accounting principles (“GAAP”), including earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, funds from operations (“FFO”), funds from operations - as adjusted (“AFFO”), pro rata net operating income (“NOI”), pro rata debt, total adjusted real estate revenue, adjusted general and administrative expense (“Adjusted G&A”) and adjusted revenue. A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures are provided in this supplemental package. FFO is non-GAAP measure defined by the National Association of Real Estate Investments Trusts (“NAREIT”).

 

Cautionary Statement Concerning Forward-Looking Statements:

 

Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Federal securities laws. The forward-looking statements include, among other things, statements regarding the intent, belief or expectations of W. P. Carey and can be identified by the use of words such as “may,” “will,” “should,” “would,” “assume,” “outlook,” “seek,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast” and other comparable terms. These statements are based on the current expectations of the management of W. P. Carey.  It is important to note that W. P. Carey’s actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results, performance or achievements of W. P. Carey. Discussions of some of these other important factors and assumptions are contained in W. P. Carey’s filings and the filings of its predecessor W. P. Carey & Co. LLC with the Securities and Exchange Commission (“SEC”) and are available at the SEC’s website at http://www.sec.gov, including the Annual Report on Form 10-K for the year ended December 31, 2012 as filed with the SEC on February 26, 2013.  In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this communication may not occur. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication. 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.

 


 

 

 

 

 

 

 

 

Earnings Release and Supplemental

Financial Information

 

Unaudited, First Quarter 2013

May 7, 2013

 


 

W. P. CAREY INC.

Supplemental Unaudited Operating and Financial Data

As of March 31, 2013

 

 

Overview

 

 

Press Release

1

 

 

 

Highlights

 

 

Company Overview

4

 

Financial and Operational Statistics

5

 

 

 

Financial Information

 

 

Consolidated Balance Sheets

6

 

Consolidated Statements of Income

7

 

Reconciliation of Net Income to Funds from Operations - as Adjusted (AFFO)

8

 

Reconciliation of Consolidated Statement of Income to AFFO

10

 

Reconciliation of GAAP Net Income to Adjusted EBITDA

12

 

Adjusted Revenue Analysis

13

 

Total Adjusted Real Estate Revenue - W. P. Carey Group

15

 

Adjusted G&A

16

 

Business Segment and Financial Information

17

 

Pro Rata NOI

18

 

 

 

Debt and Other Information

 

 

Portfolio Debt Overview

19

 

Detailed Debt Summary

21

 

Selected Data for the Managed REITs

24

 

Joint Venture Information

25

 

 

 

WPC Portfolio Information

 

 

Portfolio Information - Diversification by Rent and Historical Occupancy

26

 

Portfolio Information - Diversification by Property Type

27

 

Portfolio Information - Diversification by Tenant Industry

28

 

Portfolio Information - Diversification by Geography

29

 

Portfolio Information - Lease Maturities

30

 

 

 

2013 Investment Activity

 

 

Owned Portfolio - Acquisitions and Dispositions

31

 

Managed REITs - Acquisitions

32

 

Managed REITs - Dispositions

34

 

 

Tenants by Annualized Contractual Minimum Base Rent

35

 

 

Terms and Definitions

39

 


 

Press Release

 

W. P. Carey Announces First Quarter 2013 Financial Results

 

New York, NY – May 7, 2013 – W. P. Carey Inc. (NYSE: WPC), a real estate investment trust (“REIT”), today reported financial results for the first quarter ended March 31, 2013.

 

During the first quarter of 2013, the Company:

 

·                  Reported Funds from operations - as adjusted (“AFFO”) of $1.03 per diluted share

 

·                  Structured $193 million of investments on behalf of the managed REITs

 

·                  Completed a $72 million sale-leaseback with Kraft Foods Group

 

·                  Raised annualized dividend rate to $3.28 per share, an increase of 24% versus the fourth quarter of 2012 and WPC’s 48th consecutive quarterly increase

 

·                  Generated total shareholder return of approximately 31%

 

Subsequent to the first quarter:

 

·                  WPC acquired the main European distribution center of the Tommy Hilfiger Group for approximately $39 million

 

QUARTERLY RESULTS

 

·                  AFFO for the first quarter of 2013 was $72.3 million or $1.03 per diluted share, compared to $40.1 million or $0.99 per diluted share for the first quarter of 2012. The increased AFFO in the first quarter of 2013 as compared to the same quarter in 2012 was primarily due to income from the properties we acquired in our Merger with CPA®:15 on September 28, 2012, partially offset by the cessation of asset management revenue received from CPA®:15 after the Merger was completed. Per share data for the 2013 period also reflects the issuance of 28.2 million shares in connection with the Merger to the stockholders of CPA®:15. Further information concerning AFFO, a non-GAAP supplemental performance metric, is presented in the accompanying tables and related notes.

 

·                  Total revenues net of reimbursed expenses for the first quarter of 2013 were $101.4 million, compared to $49.6 million for the first quarter of 2012. Reimbursed expenses are excluded from total revenues because they have no impact on net income.

 

·                  Net Income for the first quarter of 2013 was $14.2 million, compared to $12.3 million for the same period in 2012.

 

·                  For the quarter ended March 31, 2013, we received approximately $14.7 million in cash distributions from our equity ownership in the CPA® REITs including $7.9 million in Available Cash distributions related to our special general partnership interests in the CPA® REITs.

 

W. P. CAREY OWNED PORTFOLIO UPDATE

 

·                  In January 2013, W. P. Carey completed a $72 million sale-leaseback with Kraft Foods Group for its corporate headquarters, located in Northfield, Illinois.

 

·                  In April 2013, W. P. Carey acquired the main European distribution center of the Tommy Hilfiger Group for approximately EUR 30 million ($39 million). The facility is located in Vanlo, Netherlands and  is subject to an existing net lease with Tommy Hilfiger Europe B.V., which has been owned since 2010 by PVH Corp, one of the world’s largest apparel companies.

 

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Press Release

(Continued)

 

·                  The W. P. Carey owned portfolio currently consists of 422 leased properties comprising 39 million square feet leased to approximately 124 corporate tenants. The average lease term of the portfolio is 8.8 years and the occupancy rate is approximately 98.8%.

 

W. P. CAREY MANAGED PORTFOLIO UPDATE

 

·                  W. P. Carey is the advisor to the CPA® REITs and CWI, which had aggregate real estate assets of $7.9 billion, cash of approximately $800 million and total assets of $8.6 billion as of March 31, 2013. The average occupancy rate for the 83.2 million square feet owned by the CPA® REITs was approximately 98.5%.

 

CPA®:17 – GLOBAL ACTIVITY

 

·                  We completed three transactions on behalf of CPA®:17 – Global during the first quarter of 2013, including two sale-leaseback transactions totaling $26 million and, separately, a $39 million build-to-suit transaction for an existing tenant, Harbor Freight Tools.

 

CAREY WATERMARK INVESTORS ACTIVITY

 

·                  From the beginning of its initial public offering through April 30, 2013, our lodging-focused non-traded REIT offering has raised approximately $265 million.

·                  During the first quarter of 2013, Carey Watermark invested in six hotels for a total of approximately $125 million.

 

DIVIDENDS

 

·                  The W. P. Carey Board of Directors raised the quarterly cash dividend to $0.82 per share for the first quarter of 2013. This represents a 24% increase from the fourth quarter of 2012. The dividend—our 48th consecutive quarterly increase—was paid on April 15, 2013 to stockholders of record as of March 28, 2013.

 

W. P. Carey President and CEO Trevor Bond, noted, “We are very pleased with our first quarter results, which continue to demonstrate the benefits of our merger with CPA®:15 and conversion to a REIT. The significant increase in our real estate under ownership and resulting AFFO growth enabled us to raise our dividend by 24%, as compared with the previous quarter. As we have for four decades, we will continue to focus our activities on identifying net lease assets that support our strategy of generating stable cash flows for investors.”

 

Conference Call and Audio Webcast Scheduled for 11:00 AM (ET)

 

Please call at least 10 minutes prior to call to register.

 

Time: Tuesday, May 7, 2013 at 11:00 AM (ET)

Call-in Number: 800-860-2442

(International) +1-412-858-4600

Webcast: www.wpcarey.com/earnings

Podcast: www.wpcarey.com/podcast

Available after 2:00 PM (ET)

Replay Number: 877-344-7529

(International) + 1-412-317-0088

Replay Passcode: 10027451

Replay available until June 15, 2013 at 9:00 AM (ET).

 

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Press Release

(Continued)

 

W. P. Carey Inc.
Celebrating its 40th anniversary, W. P. Carey Inc. is a publicly traded REIT (NYSE: WPC) that provides long-term sale-leaseback and build-to-suit financing for companies worldwide and owns and manages an investment portfolio totaling approximately $15.2 billion. The largest owner/manager of net lease assets, WPC’s corporate finance-focused credit and real estate underwriting process is a constant that has been successfully leveraged across a wide variety of industries and property types. Our portfolio of long-term leases with creditworthy tenants has an established history of generating stable cash flows that have enabled the Company to deliver consistent dividend income to investors for nearly four decades. www.wpcarey.com

 

This press release contains forward-looking statements within the meaning of the Federal securities laws. Examples of such forward-looking statements include, but are not limited to, the statements made by Mr. Bond. A number of factors could cause W. P. Carey’s actual results, performance or achievement to differ materially from those anticipated. Among those risks, trends and uncertainties are the general economic climate; the supply of and demand for office and industrial properties; interest rate levels; the availability of financing; and other risks associated with the acquisition and ownership of properties, including risks that the tenants will not pay rent, or that costs may be greater than anticipated. For further information on factors that could impact W. P. Carey, reference is made to W. P. Carey’s filings with the Securities and Exchange Commission.

 

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Company Overview

 

 

Key Company Contacts

 

Executive Offices

Trevor P. Bond

President, Chief Executive Officer and Director

50 Rockefeller Plaza

Catherine D. Rice

Chief Financial Officer and Managing Director

New York, NY 10020

Thomas E. Zacharias

Chief Operating Officer and Managing Director

Tel: 1-800-WPCAREY or (212) 492-1100

Kristin A. Brown

Vice President, Investor Relations

Fax: (212) 492-8922

 

 

Web Site Address: www.wpcarey.com

Banks

 

 

Bank of America, N.A.

Administrative and Documentation Agent

 

The Bank of New York Mellon

Syndication Agent

 

JPMorgan Chase Bank, N.A.

Syndication Agent

 

PNC Bank, N.A.

Syndication Agent

 

Wells Fargo Bank, N.A.

Syndication Agent

 

RBS Citizens, N.A.

Syndication Agent

 

Regions Bank

Syndication Agent

 

U.S. Bank N.A.

Syndication Agent

 

Fifth Third Bank

Syndication Agent

 

Comerica Bank

Syndication Agent

 

 

 

 

Analyst Coverage

 

 

Daniel P. Donlan

Ladenburg Thalmann & Co., Inc.

 

Sheila McGrath

Evercore Partners Inc.

 

 

Stock Data (NYSE: WPC)

 

First Quarter
2013

 

 

Fourth Quarter
2012

 

 

Third Quarter
2012

 

 

Second Quarter
2012

 

 

First Quarter
2012

 

High Price

$

68.45

 

$

54.70

 

$

53.85

 

$

48.39

 

$

49.70

 

Low Price

 

51.89

 

 

45.94

 

 

43.25

 

 

39.66

 

 

41.28

 

Closing Price

 

67.40

 

 

52.15

 

 

49.00

 

 

46.03

 

 

46.52

 

Distributions declared per share - annualized

$

3.28

 

$

2.64

 

$

2.60

 

$

2.27

 

$

2.26

 

Distribution yield (annualized distribution / closing stock price)

 

4.87%

 

 

5.06%

 

 

5.31%

 

 

4.93%

 

 

4.86%

 

Shares outstanding at quarter end

 

68,762,259

 

 

68,901,933

 

 

68,566,888

 

 

40,358,186

 

 

40,312,460

 

Market value of outstanding shares at quarter end ($’000)

$

4,634,576

 

$

3,593,236

 

$

3,359,778

 

$

1,857,687

 

$

1,875,336

 

 

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Financial and Operational Statistics (Unaudited)

 

 

As of and for the Three Months Ended March 31, 2013

 

Market Capitalization

 

 

 

 

 

WPC

 

Shares outstanding

 

 

 

 

 

68,762,259

 

Stock price at end of period

 

 

 

 

 

$

67.40

 

Market capitalization (equity capitalization) ($’000)

 

 

 

 

 

$

4,634,576

 

Total capitalization ($’000) (a)

 

 

 

 

 

$

6,627,911

 

Enterprise value ($’000) (b)

 

 

 

 

 

$

6,516,347

 

High stock close price

 

 

 

 

 

$

68.45

 

Low stock close price

 

 

 

 

 

$

51.89

 

Financial Ratios

 

 

 

 

 

WPC

 

Debt to total capitalization

 

 

 

 

 

30.1%

 

Net debt to total capitalization (c)

 

 

 

 

 

28.4%

 

Net debt to enterprise value (c)

 

 

 

 

 

28.9%

 

Adjusted EBITDA ($’000) (d)

 

 

 

 

 

$

382,648

 

Net debt to adjusted EBITDA (c)

 

 

 

 

 

4.9

 

Total debt to gross assets (e)

 

 

 

 

 

45.0%

 

Unsecured debt to gross assets

 

 

 

 

 

6.7%

 

Interest coverage (f)

 

 

 

 

 

3.56

 

Adjusted G&A / Total Adjusted Real Estate Revenue (g)

 

 

 

 

 

8.8%

 

Dividend (h)

 

 

 

 

 

$

3.28

 

Dividend payout (i)

 

 

 

 

 

79.4%

 

Weighted-average cost of debt

 

 

 

 

 

4.7%

 

Property Information

 

CPA®:16 – Global

 

CPA®:17 – Global

 

WPC

 

Number of properties (j)

 

496

 

398

 

422

 

Number of tenants (j)

 

142

 

83

 

124

 

Total square feet (millions) (k)

 

46.8

 

36.4

 

39.0

 

Occupancy

 

97.4%

 

100.0%

 

98.8%

 

Weighted-average lease term (years)

 

10.1

 

15.8

 

8.8

 

Percent of investment grade tenants (l)

 

12.8%

 

18.8%

 

31.1%

 

 


 

(a)          Represents market capitalization plus total debt.

 

(b)          Represents total capitalization less cash.

 

(c)          Net debt represents total GAAP-basis debt less cash.

 

(d)            Adjusted EBITDA includes the annualized three months ended March 31, 2013. Adjusted EBITDA is a non-GAAP measure. See the Terms and Definitions section that begins on page 39 for a description of our non-GAAP measures.

 

(e)          Gross assets represent total assets, excluding goodwill, before accumulated depreciation.

 

(f)             Computed by dividing Adjusted EBITDA by interest expense.

 

(g)            Adjusted G&A represents general and administrative expenses excluding Merger-related costs, dealer manager fee-related expenses and stock-based compensation expense. Total Adjusted Real Estate Revenue represents total pro rata real estate revenues for WPC and the Managed REITs, as presented on page 15. Adjusted G&A and Total Adjusted Real Estate Revenue are non-GAAP measures. See the Terms and Definitions section that begins on page 39 for a description of our non-GAAP measures.

 

(h)         Represents the annualized dividend per share based on the declared first quarter distribution. The annualized rate is not guaranteed.

 

(i)             Computed by dividing annualized dividend per share by annualized AFFO per share.

 

(j)             Property count for WPC excludes all operating properties.

 

(k)          Total square footage for WPC excludes all operating properties.

 

(l)                Investment grade tenants are defined as having a BBB- rating or above.  Percentage of portfolio is calculated based on annualized contractual minimum base rent.

 

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Consolidated Balance Sheets

 

(in thousands) (unaudited)

 

 

 

March 31, 2013

 

 

December 31, 2012

 

Assets

 

 

 

 

 

 

Investments in real estate:

 

 

 

 

 

 

Real estate, at cost

 

$

2,373,912

 

 

$

2,334,488

 

Operating real estate, at cost

 

98,690

 

 

99,703

 

Accumulated depreciation

 

(150,207

)

 

(136,068

)

Net investments in properties

 

2,322,395

 

 

2,298,123

 

Net investments in direct financing leases

 

364,078

 

 

376,005

 

Assets held for sale

 

1,505

 

 

1,445

 

Equity investments in real estate and the Managed REITs

 

564,092

 

 

565,626

 

Net investments in real estate

 

3,252,070

 

 

3,241,199

 

Cash

 

111,564

 

 

123,904

 

Due from affiliates

 

34,625

 

 

36,002

 

Goodwill

 

328,474

 

 

329,132

 

In-place lease, net

 

468,132

 

 

447,278

 

Above-market rent, net

 

267,845

 

 

279,885

 

Other intangible assets, net

 

10,484

 

 

10,200

 

Other assets, net

 

136,420

 

 

141,442

 

Total Assets

 

$

4,609,614

 

 

$

4,609,042

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Non-recourse debt

 

$

1,695,335

 

 

$

1,715,397

 

Senior credit facility

 

298,000

 

 

253,000

 

Accounts payable, accrued expenses and other liabilities

 

317,520

 

 

265,132

 

Income taxes, net

 

20,847

 

 

24,959

 

Distributions payable

 

57,128

 

 

45,700

 

Total liabilities

 

2,388,830

 

 

2,304,188

 

Redeemable noncontrolling interest

 

7,404

 

 

7,531

 

Redeemable securities - related party

 

-

 

 

40,000

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

W. P. Carey stockholders equity:

 

 

 

 

 

 

Common stock

 

69

 

 

69

 

Preferred Stock; None Issued

 

-

 

 

-

 

Additional paid-in capital

 

2,184,387

 

 

2,175,820

 

Distributions in excess of accumulated earnings

 

(218,191

)

 

(172,182

)

Deferred compensation obligation

 

13,411

 

 

8,358

 

Accumulated other comprehensive loss

 

(9,414

)

 

(4,649

)

Less: treasury stock, at cost

 

(20,270

)

 

(20,270

)

Total W. P. Carey stockholders’ equity

 

1,949,992

 

 

1,987,146

 

Noncontrolling interests

 

263,388

 

 

270,177

 

Total equity

 

2,213,380

 

 

2,257,323

 

Total Liabilities and Equity

 

$

4,609,614

 

 

$

4,609,042

 

 

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Consolidated Statements of Income

 

(in thousands, except share and per share amounts) (unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2013

 

 

2012

 

Revenues

 

 

 

 

 

 

Total lease revenues

 

$

75,297

 

 

$

16,778

 

Asset management revenue from affiliates

 

10,015

 

 

15,602

 

Structuring revenue from affiliates

 

6,342

 

 

7,638

 

Dealer manager fees

 

1,223

 

 

3,787

 

Reimbursed costs from affiliates

 

11,968

 

 

18,737

 

Other real estate income

 

8,541

 

 

5,772

 

 

 

113,386

 

 

68,314

 

Operating Expenses

 

 

 

 

 

 

General and administrative

 

28,973

 

 

26,909

 

Reimbursable costs

 

11,968

 

 

18,737

 

Depreciation and amortization

 

30,876

 

 

6,463

 

Property expenses

 

5,152

 

 

2,072

 

Other real estate expenses

 

2,734

 

 

2,499

 

Impairment charge

 

3,279

 

 

-

 

 

 

82,982

 

 

56,680

 

Other Income and Expenses

 

 

 

 

 

 

Other interest income

 

370

 

 

503

 

Net income from equity investments in real estate and the Managed REITs (a)

 

10,656

 

 

13,986

 

Other income and (expenses)

 

1,091

 

 

306

 

Interest expense

 

(26,906

)

 

(7,280

)

 

 

(14,789

)

 

7,515

 

Income from continuing operations before income taxes

 

15,615

 

 

19,149

 

Benefit from (provision for) income taxes

 

1,233

 

 

(1,695

)

Income from continuing operations

 

16,848

 

 

17,454

 

Discontinued Operations

 

 

 

 

 

 

(Loss) income from operations of discontinued properties

 

(148

)

 

120

 

Loss on sale of real estate

 

(931

)

 

(181

)

Gain on extinguishment of debt

 

70

 

 

-

 

Impairment charges

 

-

 

 

(5,724

)

Loss from discontinued operations, net of tax

 

(1,009

)

 

(5,785

)

Net Income

 

15,839

 

 

11,669

 

Net (income) loss attributable to noncontrolling interests

 

(1,708

)

 

578

 

Add: Net loss attributable to redeemable noncontrolling interest

 

50

 

 

43

 

Net Income Attributable to W. P. Carey

 

$

14,181

 

 

$

12,290

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

 

 

 

 

 

Income from continuing operations attributable to W. P. Carey

 

$

0.21

 

 

$

0.44

 

Loss from discontinued operations attributable to W. P. Carey

 

(0.01

)

 

(0.14

)

Net Income Attributable to W. P. Carey

 

$

0.20

 

 

$

0.30

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

Income from continuing operations attributable to W. P. Carey

 

$

0.21

 

 

$

0.44

 

Loss from discontinued operations attributable to W. P. Carey

 

(0.01

)

 

(0.14

)

Net Income Attributable to W. P. Carey

 

$

0.20

 

 

$

0.30

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

Basic

 

68,967,209

 

 

40,037,496

 

Diluted

 

69,975,293

 

 

40,487,652

 

 

 

 

 

 

 

 

Amounts Attributable to W. P. Carey

 

 

 

 

 

 

Income from continuing operations, net of tax

 

$

15,190

 

 

$

18,075

 

Loss from discontinued operations, net of tax

 

(1,009

)

 

(5,785

)

Net Income Attributable to W. P. Carey

 

$

14,181

 

 

$

12,290

 

 

 

 

 

 

 

 

 

 

Distributions Declared Per Share

 

$

0.820

 

 

$

0.565

 

 


(a)          Net income from equity investments in real estate and the Managed REITs includes net income from our equity investments in real estate of $3.1 million, income from our ownership in the Managed REITs of $7.3 million and income from our special general partnership interests in the Managed REITs of less than $0.1 million.

 

GRAPHIC

Investing for the long runTM | 7

 

 


 

Reconciliation of Net Income to Funds from Operations – As Adjusted (AFFO)

 

(in thousands, except share and per share amounts) (unaudited)

 

 

 

Three Months Ended

Real Estate Ownership

 

 

March 31, 2013

 

December 31, 2012

 

September 30, 2012

 

June 30, 2012

 

March 31, 2012

 

Net income from real estate ownership attributable to

 

 

 

 

 

 

 

 

 

 

 

 

W. P. Carey

 

 

$

16,692

 

$

5,507

 

$

1,927

 

$

28,367

 

$

9,093

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization of real property

 

 

29,687

 

28,652

 

5,510

 

5,673

 

6,147

 

Impairment charges

 

 

3,279

 

10,700

 

5,534

 

1,003

 

5,724

 

Loss (gain) on sale of real estate, net

 

 

931

 

4,240

 

(59

)

(1,686

)

181

 

Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO

 

 

3,154

 

3,211

 

888

 

(14,827

)(a)

1,040

 

Proportionate share of adjustments for noncontrolling interests to arrive at FFO

 

 

(4,267

)

(4,236

)

(400

)

(434

)

(434

)

Total adjustments:

 

 

32,784

 

42,567

 

11,473

 

(10,271

)

12,658

 

FFO (as defined by NAREIT) - Real Estate Ownership (b)

 

 

49,476

 

48,074

 

13,400

 

18,096

 

21,751

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Loss (gain) on change in control if interest (c)

 

 

-

 

60

 

(20,794

)

-

 

-

 

Loss on extinguishment of debt

 

 

74

 

10

 

-

 

-

 

-

 

Other gains, net

 

 

(270

)

(12

)

-

 

-

 

-

 

Other depreciation, amortization and non-cash charges

 

 

800

 

(1,556

)

(130

)

235

 

(211

)

Stock based compensation

 

 

174

 

211

 

-

 

-

 

-

 

Deferred tax expense

 

 

(1,025

)

(644

)

(917

)

(532

)

(652

)

Realized losses on foreign currency, derivatives and other

 

 

52

 

171

 

115

 

542

 

-

 

Amortization of deferred financing costs

 

 

511

 

468

 

509

 

402

 

464

 

Straight-line and other rent adjustments

 

 

(2,169

)

(2,248

)

(200

)

(883

)

(1,115

)

Above- and below -market rent intangible lease amortization, net

 

 

7,256

 

7,534

 

51

 

111

 

-

 

Merger expenses (d)

 

 

111

 

1,049

 

35,570

 

2,616

 

2,103

 

Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO

 

 

278

 

123

 

(25

)

(366

)

(413

)

AFFO adjustment for interests in CPA® REITs

 

 

9,249

 

11,971

 

10,650

 

7,687

 

6,926

 

Proportionate share of adjustments for noncontrolling interests to arrive at AFFO

 

 

(1,561

)

(506

)

(141

)

(25

)

(20

)

Total adjustments:

 

 

13,480

 

16,631

 

24,688

 

9,787

 

7,082

 

AFFO - Real Estate Ownership (b)

 

 

$

62,956

 

$

64,705

 

$

38,088

 

$

27,883

 

$

28,833

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Management

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income from investment management attributable to

 

 

 

 

 

 

 

 

 

 

 

 

W. P. Carey

 

 

$

(2,511

)

$

9,971

 

$

661

 

$

3,410

 

$

3,197

 

FFO (as defined by NAREIT) - Investment Management (b)

 

 

(2,511

)

9,971

 

661

 

3,410

 

3,197

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Other depreciation, amortization and non-cash charges

 

 

262

 

226

 

247

 

230

 

258

 

Stock-based compensation

 

 

8,975

 

6,281

 

9,805

 

4,495

 

5,260

 

Deferred tax expense

 

 

2,253

 

(2,625

)

(15,207

)

(8,459

)

2,236

 

Realized losses (gains) on foreign currency, derivatives and other

 

 

2

 

(55

)

17

 

(23

)

-

 

Amortization of deferred financing costs

 

 

318

 

318

 

308

 

286

 

285

 

Total adjustments:

 

 

11,810

 

4,145

 

(4,830

)

(3,471

)

8,039

 

AFFO - Investment Management (b)

 

 

$

9,299

 

$

14,116

 

$

(4,169

)

$

(61

)

$

11,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

 

 

 

 

 

 

 

 

 

 

 

FFO (as defined by NAREIT) (b)

 

 

$

46,965

 

$

58,045

 

$

14,061

 

$

21,506

 

$

24,948

 

FFO (as defined by NAREIT) per diluted share (b)

 

 

$

0.67

 

$

0.84

 

$

0.34

 

$

0.53

 

$

0.62

 

AFFO (b)

 

 

$

72,255

 

$

78,821

 

$

33,919

 

$

27,822

 

$

40,069

 

AFFO per diluted share (b)

 

 

$

1.03

 

$

1.13

 

$

0.82

 

$

0.68

 

$

0.99

 

Diluted weighted average shares outstanding

 

 

69,975,293

 

69,505,871

 

41,127,404

 

40,757,055

 

40,487,652

 

 

GRAPHIC

 

Investing for the long runTM | 8

 


 

Reconciliation of Net Income to Funds from Operations - As Adjusted (AFFO) - Notes

 


(a)          Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO for the three months ended June 30, 2012 includes a $15.6 million gain on sale of equity investments.

 

(b)          FFO and AFFO are non-GAAP measures. See the Terms and Definitions section that begins on page 39 for a description of our non-GAAP measures.

 

(c)          Gain on change in control of interests for the three months ended September 30, 2012 represents a gain of $14.6 million recognized on our previously-held interest in shares of CPA®:15 common stock, and a gain of $6.1 million recognized on the purchase of the remaining interests in five investments from CPA®:15, which we had previously accounted for under the equity method.  We recognized a gain of $20.7 million to adjust the carrying value of our existing interests in these investments to their estimated fair values in connection with the Merger.

 

(d)         For the three months ended September 30, 2012, includes current tax expense of $9.7 million relating to the conversion of CPA®:15 shares held by us before the Merger.

 

GRAPHIC

 

Investing for the long runTM | 9

 


 

Reconciliation of Consolidated Statement of Income to AFFO

 

(in thousands) (unaudited)

 

 

 

Three Months Ended March 31, 2013

 

 

 

GAAP - Basis (a)

 

Add: Equity
Investments (b)

 

Less: Noncontrolling
Interests (c)

 

WPC’s
Pro Rata Share (d)

 

AFFO
Adjustments

 

AFFO

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Total lease revenues (e)

 

 $

75,297 

 

 $

10,434 

 

 $

(10,729)

 

 $

75,002 

 

 $

4,357

(f)

 $

79,359 

 

Asset management revenue from affiliates

 

10,015 

 

 

(151)

 

9,864 

 

 

9,864 

 

Structuring revenue from affiliates

 

6,342 

 

 

 

6,342 

 

 

6,342 

 

Dealer manager fees

 

1,223 

 

 

 

1,223 

 

 

1,223 

 

Reimbursed costs from affiliates

 

11,968 

 

 

(104)

 

11,864 

 

 

11,864 

 

Other real estate income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Self-storage revenues

 

3,389 

 

 

(2,025)

 

1,364 

 

 

1,364 

 

Hotel revenues

 

900 

 

 

 

900 

 

 

900 

 

Pass-through income

 

3,830 

 

193 

 

(478)

 

3,545 

 

 

3,545 

 

Other property and tenant income

 

422 

 

28 

 

(11)

 

439 

 

 

439 

 

Total other real estate income

 

8,541 

 

221 

 

(2,514)

 

6,248 

 

 

6,248 

 

Total Revenues

 

113,386 

 

10,655 

 

(13,498)

 

110,543 

 

4,357 

 

114,900 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

28,973 

 

14 

 

(965)

 

28,022 

 

(9,225)

 

18,797 

 

Reimbursable costs

 

11,968 

 

 

 

11,970 

 

 

11,970 

 

Depreciation and amortization

 

30,876 

 

3,199 

 

(4,273)

 

29,802 

 

(28,746)

 

1,056 

 

Property expenses

 

5,152 

 

462 

 

(779)

 

4,835 

 

 

4,835 

 

Other real estate expenses

 

2,734 

 

 

(1,007)

 

1,727 

 

 

1,727 

 

Impairment charges

 

3,279 

 

 

 

3,279 

 

(3,279)

 

 

Total Operating Expenses

 

82,982 

 

3,675 

 

(7,022)

 

79,635 

 

(41,250)

 

38,385 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Other interest income

 

370 

 

196 

 

(39)

 

527 

 

 

527 

 

Net income from equity investments in real estate and the Managed REITs:

 

 

 

 

 

 

 

 

 

 

 

 

 

Joint ventures (g)

 

3,304 

 

(3,304)

 

 

 

 

 

Income related to our ownership in the Managed REITs

 

22 

 

 

 

22 

 

8,688 

 

8,710 

 

Income related to our general partnership interests

 

7,330 

 

 

 

7,330 

 

561 

 

7,891 

 

Total net income from equity investments in real estate and the Managed REITs

 

10,656 

 

(3,304)

 

 

7,352 

 

9,249 

 

16,601 

 

Other income and (expenses)

 

1,091 

 

(156)

 

(163)

 

772 

 

(889)

 

(117)

 

Interest expense

 

(26,906)

 

(3,234)

 

4,775 

 

(25,365)

 

1,905 

 

(23,460)

 

Total Other Income and Expenses

 

(14,789)

 

(6,498)

 

4,573 

 

(16,714)

 

10,265 

 

(6,449)

 

Income from Continuing Operations before Income Taxes

 

15,615 

 

482 

 

(1,903)

 

14,194 

 

55,872 

 

70,066 

 

Provision for income taxes

 

1,233 

 

(482)

 

245 

 

996 

 

1,234 

 

2,230 

 

Income from Continuing Operations

 

16,848 

 

 

(1,658)

 

15,190 

 

57,106 

 

72,296 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations of discontinued properties

 

(148)

 

 

 

(148)

 

107

(h)

(41)

 

Loss on the sale of real estate

 

(931)

 

 

 

(931)

 

931 

 

 

Loss (gain) on extinguishment of debt

 

70 

 

 

 

70 

 

(70)

 

 

Impairment charges

 

 

 

 

 

 

 

Loss from Discontinued Operations, Net of Taxes

 

(1,009)

 

 

 

(1,009)

 

968 

 

(41)

 

Net Income

 

15,839 

 

 

(1,658)

 

14,181 

 

58,074 

 

72,255 

 

Net loss attributable to noncontrolling interests

 

(1,708)

 

 

1,708 

 

 

 

 

Net loss attributable to redeemable noncontrolling interests

 

50 

 

 

(50)

 

 

 

 

Income / AFFO Attributable to W. P. Carey

 

 $

14,181 

 

 $

 

 $

 

 $

14,181 

 

 $

58,074 

 

 $

72,255 

 

 

GRAPHIC

 

Investing for the long runTM | 10

 


 

Reconciliation of Consolidated Statement of Income to AFFO

(Continued)

(in thousands) (unaudited)

 

 

The following table presents the components of our General and Administrative Expenses:

 

 

Three Months Ended March 31, 2013

 

 

 

GAAP - Basis(a)

 

Add: Equity
Investments (b)

 

Less: Noncontrolling
Interests(c)

 

WPC’s
Pro Rata Share(d)

 

AFFO
Adjustments

 

AFFO

 

General and Administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation expense

 

  $

25,975

 

$

-

 

$

(127

)

$

25,848

 

$

(9,113)

 (i)

$

16,735

 

Business development expenses

 

1,755

 

-

 

(24

)

1,731

 

(111)

 (j)

1,620

 

Organization and offering expenses

 

1,963

 

-

 

-

 

1,963

 

-

 

1,963

 

General and administrative professional fees

 

3,121

 

14

 

(98

)

3,037

 

-

 

3,037

 

Reimbursable expenses

 

(6,105

)

-

 

-

 

(6,105

)

-

 

(6,105

)

Office expenses

 

1,843

 

-

 

(714

)

1,129

 

-

 

1,129

 

Other general and administrative

 

421

 

-

 

(2

)

419

 

(1

)

418

 

Total General and Administrative

 

  $

28,973

 

$

14

 

$

(965

)

$

28,022

 

$

(9,225

)

$

18,797

 

 

The following table presents the components of Other Income and (Expenses):

 

 

Three Months Ended March 31, 2013

 

 

 

GAAP - Basis(a)

 

Add: Equity
Investments (b)

 

Less: Noncontrolling
Interests(c)

 

WPC’s
Pro Rata Share(d)

 

AFFO Adjustments

 

AFFO

 

Other Income and (Expenses)

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain/losses foreign currency

 

  $

(1,097

)

$

-

 

$

253

 

$

(844

)

$

844

 

$

-

 

Gain/losses derivatives

 

2,022

 

-

 

(424

)

1,598

 

(1,598

)

-

 

Gain/losses extinguishment

 

(144

)

-

 

(2

)

(146

)

146

 

-

 

Other gain/losses

 

310

 

(156

)

10

 

164

 

(281

)

(117

)

Total Other Income and (Expenses)

 

  $

1,091

 

$

(156

)

$

(163

)

$

772

 

$

(889

)

$

(117

)

 


 

(a)

Consolidated amounts shown represent WPC’s Consolidated Statement of Income for the three months ended March 31, 2013.

 

 

(b)

Represents the break-out by line item of amounts recorded in net income from equity investments in real estate and the Managed REITs – Joint ventures.

 

 

(c)

Represents the break-out by line item of amounts recorded in noncontrolling interest and redeemable noncontrolling interest.

 

 

(d)

Represents our share in fully owned entities and co-owned entities. Pro rata basis amounts are non-GAAP measures. See the Terms and Conditions section that begins on page 39 for a description of our non-GAAP measures.

 

 

(e)

Lease revenues on a pro rata basis in this schedule reflect only revenues from continuing operations. Lease revenues from discontinued operations for the three months ended March 31, 2013 were $0.2 million.

 

 

(f)

Represents adjustments for straight line and above/below market lease intangible amortization.

 

 

(g)

To calculate the pro rata amounts, equity investments under joint ventures have been reclassified to allocate their impact on each line item.

 

 

(h)

Represents depreciation and amortization related to discontinued operations.

 

 

(i)

Represents add back of stock-based compensation expense, less the pro rata share attributable to noncontrolling interests.

 

 

(j)

Represents Merger expenses included in general and administrative expense.

 

GRAPHIC

 

Investing for the long runTM | 11

 

 


 

Reconciliation of GAAP Net Income to Adjusted EBITDA

 

(in thousands, except share and per share amounts) (unaudited)

 

 

 

 

Three Months Ended

 

 

 

March 31, 2013

 

 

December 31, 2012

 

 

September 30, 2012

 

 

June 30, 2012

 

 

March 31, 2012

 

Net Income Attributable to W. P. Carey

 

$

14,181

 

 

$

15,478

 

 

$

2,588

 

 

$

31,777

 

 

$

12,290

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

30,983

 

 

30,108

 

 

6,761

 

 

6,833

 

 

7,303

 

Interest expense

 

26,979

 

 

28,250

 

 

7,869

 

 

7,245

 

 

7,345

 

(Benefit from) provision for income taxes

 

(1,233

)

 

6,591

 

 

379

 

 

(1,881

)

 

1,701

 

EBITDA (a)

 

70,910

 

 

80,427

 

 

17,597

 

 

43,974

 

 

28,639

 

Proportionate share of adjustments from equity method investments (b)

 

17,011

 

 

14,831

 

 

9,103

 

 

19,394

 

 

15,102

 

Proportionate share of adjustments for noncontrolling interests (b)

 

(9,290

)

 

(9,313

)

 

928

 

 

(324

)

 

(1,035

)

 

 

78,631

 

 

85,945

 

 

27,628

 

 

63,044

 

 

42,706

 

Management Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment charge

 

3,279

 

 

10,700

 

 

5,535

 

 

1,003

 

 

5,723

 

Loss (gain) on sale of real estate

 

931

 

 

1,081

 

 

(59

)

 

(1,686

)

 

181

 

Loss on extinguishment of debt

 

74

 

 

10

 

 

-

 

 

-

 

 

-

 

Stock-based compensation

 

9,149

 

 

6,492

 

 

9,805

 

 

4,495

 

 

5,260

 

Merger expenses

 

111

 

 

1,049

 

 

25,895

 

 

2,617

 

 

2,102

 

Losses (gains) on investment due to Merger

 

-

 

 

49

 

 

(20,794

)

 

-

 

 

-

 

Realized and unrealized loss (gain) on foreign currency (net)

 

1,097

 

 

(1,106

)

 

(46

)

 

853

 

 

(280

)

Realized and unrealized (gain) loss on derivatives (net)

 

(2,022

)

 

(370

)

 

49

 

 

(30

)

 

-

 

Proportionate share of adjustments from equity method investments (c)

 

4,010

 

 

5,941

 

 

7,632

 

 

(17,513

)

 

943

 

Proportionate share of adjustments for noncontrolling interests (c)

 

402

 

 

71

 

 

(176

)

 

97

 

 

(97

)

Total adjustments

 

17,031

 

 

23,917

 

 

27,841

 

 

(10,164

)

 

13,832

 

Adjusted EBITDA (a)

 

$

95,662

 

 

$

109,862

 

 

$

55,469

 

 

$

52,880

 

 

$

56,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA per diluted share (a)

 

$

1.01

 

 

$

1.16

 

 

$

0.43

 

 

$

1.08

 

 

$

0.71

 

Adjusted EBITDA per diluted share (a)

 

$

1.37

 

 

$

1.58

 

 

$

1.35

 

 

$

1.30

 

 

$

1.40

 

Diluted weighted average shares outstanding

 

69,975,293

 

 

69,505,871

 

 

41,127,404

 

 

40,757,055

 

 

40,487,652

 

 


 

(a)

EBITDA and Adjusted EBITDA are non-GAAP measures. See the Terms and Definition section that begins on page 39 for a description of our non-GAAP measures.

 

 

(b)

Incorporates the pro rata share of depreciation, interest expense and tax provision adjustments for unconsolidated subsidiaries and joint ventures.

 

 

(c)

Incorporates the pro rata share of impairments, loss on the sale of real estate, stock-based compensation, Merger-related adjustments as well as the losses (gains) related to foreign exchange and derivative positions for unconsolidated subsidiaries and joint ventures.

 

GRAPHIC

 

Investing for the long runTM | 12

 

 


 

Adjusted Revenue Analysis (Pro Rata-Basis)

 

(in thousands) (unaudited)

 

 

 

Three Months Ended

 

Reconciliation of Adjusted Revenue

 

March 31, 2013

 

 

December 31, 2012

 

 

September 30, 2012

 

 

June 30, 2012

 

 

March 31, 2012

 

Real Estate Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total lease revenue – as reported

 

  $

75,297

 

 

  $

74,773

 

 

  $

16,160

 

 

  $

16,489

 

 

  $

16,778

 

Lease revenue – discontinued operations

 

163

 

 

935

 

 

613

 

 

784

 

 

1,601

 

Total consolidated lease revenue

 

75,460

 

 

75,708

 

 

16,773

 

 

17,273

 

 

18,379

 

Add: Pro rata share of revenue from equity investments

 

9,977

 

 

9,911

 

 

5,313

 

 

5,738

 

 

6,412

 

Less: Pro rata share of revenue due to noncontrolling interests

 

(10,176

)

 

(10,289

)

 

(411

)

 

(422

)

 

(428

)

Total pro rata net lease revenue

 

75,261

 

 

75,330

 

 

21,675

 

 

22,589

 

 

24,363

 

Add: Share of pro rata lease revenue - CPA® REITs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CPA®:15 (a)

 

-

 

 

-

 

 

4,234

 

 

4,206

 

 

4,286

 

CPA®:16 – Global

 

14,062

 

 

13,955

 

 

13,817

 

 

14,325

 

 

14,265

 

CPA®:17 – Global

 

1,058

 

 

883

 

 

809

 

 

732

 

 

646

 

Total share of pro rata lease revenue - CPA® REITs

 

15,120

 

 

14,838

 

 

18,860

 

 

19,263

 

 

19,197

 

Add: share of lease revenue from special general partnership interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CPA®:16 – Global operating partnership

 

3,614

 

 

3,825

 

 

3,685

 

 

3,598

 

 

4,281

 

CPA®:17 – Global operating partnership

 

4,277

 

 

4,395

 

 

3,667

 

 

3,865

 

 

2,693

 

Total share of lease revenue from special general partnership interest

 

7,891

 

 

8,220

 

 

7,352

 

 

7,463

 

 

6,974

 

Add: Other real estate income - as reported (b)

 

8,541

 

 

7,549

 

 

6,162

 

 

6,830

 

 

5,771

 

Less: Pro rata share of other real estate income to noncontrolling interests

 

(2,025

)

 

(1,972

)

 

(2,050

)

 

(1,878