EX-99.1 2 c08160exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(CPA:14 LOGO)
Corporate Property Associates 14 Incorporated
Supplemental Information
As of September 30, 2010
As used in this supplemental package, the terms “the Company,” “we,” “us” and “our” include Corporate Property Associates 14 Incorporated (“CPA®:14”), its consolidated subsidiaries and predecessors, unless otherwise indicated.
Important Note Regarding Non-GAAP Financial Measures
This supplemental package includes non-GAAP measures, including funds from operations (“FFO”), funds from operations — as adjusted (“AFFO”) and adjusted cash flow from operating activities. A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measures are provided in this supplemental package.
Forward-Looking Statements
This supplemental package contains forward-looking statements within the meaning of the Federal securities laws. It is important to note that our actual results could be materially different from those projected in such forward-looking statements. You should exercise caution in relying on forward-looking statements as they involve known and unknown risks, uncertainties and other factors that may materially affect our future results, performance, achievements or transactions. Information on factors which could impact actual results and forward-looking statements contained herein is included in our filings with the SEC, including but not limited to our Annual Report on Form 10-K for the year ended December 31, 2009. We do not undertake to revise or update any forward-looking statements.
     
Executive Offices
  Investor Relations
50 Rockefeller Plaza
  Susan C. Hyde
New York, NY 10020
  Managing Director & Director of Investor Relations
Tel: 1-800-WPCAREY or (212) 492-1100
  W. P. Carey & Co. LLC
Fax: (212) 492-8922
  Phone: (212) 492-8920
Web Site Address: www.CPA14.com
   

 

 


 

Corporate Property Associates 14 Incorporated
Reconciliation of Net Income Attributable to CPA
®:14 Shareholders to Funds From Operations — as adjusted (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
                                 
    Three months ended September 30,     Nine months ended September 30,  
    2010     2009     2010     2009  
Net income (loss) attributable to CPA®:14 shareholders
  $ 2,708     $ (12,133 )   $ 40,888     $ 12,435  
Adjustments:
                               
Depreciation and amortization of real property
    7,538       11,218       23,168       27,037  
(Gain) loss on sale of real estate
    (351 )           5       (8,611 )
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO:
                               
Depreciation and amortization of real property
    4,352       2,990       10,900       13,211  
Loss (gain) on sale of real estate
    2             (219 )      
Proportionate share of adjustments for noncontrolling interests to arrive at FFO
    (530 )     (295 )     (1,587 )     (1,148 )
 
                       
Total adjustments
    11,011       13,913       32,267       30,489  
 
                       
FFO — as defined by NAREIT
    13,719       1,780       73,155       42,924  
 
                       
Adjustments:
                               
Gain on extinguishment of debt
                (11,376 )      
Gain on deconsolidation of subsidiary
                (12,870 )      
Other depreciation, amortization, and non-cash charges
    (288 )     (166 )     (46 )     (98 )
Straight-line and other rent adjustments
    (1,484 )     (1,741 )     (5,175 )     857  
Impairment charges
    4,452       20,879       9,402       20,879  
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at AFFO:
                               
Other depreciation, amortization, and non-cash charges
    456       335       219       58  
Straight-line and other rent adjustments
    (143 )     (378 )     (166 )     (721 )
Impairment charges
    4,736             4,736        
Proportionate share of adjustments for noncontrolling interests to arrive at AFFO
    78       (747 )     256       (695 )
 
                       
Total adjustments
    7,807       18,182       (15,020 )     20,280  
 
                       
AFFO
  $ 21,526     $ 19,962     $ 58,135     $ 63,204  
 
                       
AFFO per share (a)
  $ 0.27     $ 0.25     $ 0.74     $ 0.80  
 
                       
Weighted average shares outstanding
    86,936,565       86,893,294       86,610,442       87,442,533  
 
                       
 
(a) Numerator for AFFO per share calculation:
                               
AFFO
  $ 21,526     $ 19,962     $ 58,135     $ 63,204  
Add: Issuance of shares to an affiliate in satisfaction of fees due
    2,004       2,184       6,049       6,598  
 
                       
AFFO numerator in determination of AFFO per share
  $ 23,530     $ 22,146     $ 64,184     $ 69,802  
 
                       
Non-GAAP Financial Disclosure
Funds from Operations (“FFO”) is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as net income or loss (as computed in accordance with GAAP) excluding: depreciation and amortization expense from real estate assets, gains or losses from sales of depreciated real estate assets and extraordinary items; however, FFO related to assets held for sale, sold or otherwise transferred and included in the results of discontinued operations are to be included. These adjustments also incorporate the pro rata share of unconsolidated subsidiaries. FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers. Although NAREIT has published this definition of FFO, real estate companies often modify this definition as they seek to provide financial measures that meaningfully reflect their distinctive operations.
We modify the NAREIT computation of FFO to include other adjustments to GAAP net income for certain non-cash charges, where applicable, such as gains or losses from extinguishment of debt and deconsolidation of subsidiaries, amortization of intangibles, straight-line rents, impairment charges on real estate and unrealized foreign currency exchange gains and losses. We refer to our modified definition of FFO as “Funds from Operations — as Adjusted,” or AFFO, and we employ it as one measure of our operating performance when we formulate corporate goals and evaluate the effectiveness of our strategies. We exclude these items from GAAP net income, as they are not the primary drivers in our decision-making process. 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. As a result, we believe that AFFO and AFFO per share are useful supplemental measures for investors to consider because it will help them to better understand and measure the performance of our business over time without the potentially distorting impact of these short-term fluctuations.

 


 

Corporate Property Associates 14 Incorporated
Adjusted Cash Flow from Operating Activities (Unaudited)

(in thousands, except share and per share amounts)
                 
    Nine months ended September 30,  
    2010     2009  
Cash flow provided by operating activities — as reported
  $ 68,205     $ 64,565  
Adjustments:
               
Distributions received from equity investments in real estate in excess of equity income, net (a)
    5,033       6,727  
Distributions paid to noncontrolling interests, net (b)
    (2,718 )     (931 )
Changes in working capital (c)
    (2,307 )     388  
 
           
Adjusted cash flow from operating activities
  $ 68,213     $ 70,749  
 
           
Adjusted cash flow per share
  $ 0.79     $ 0.81  
 
           
 
               
Distributions declared per share
  $ 0.5998     $ 0.5943  
 
           
Payout ratio (distributions per share/adjusted cash flow per share)
    76 %     73 %
 
           
 
               
Weighted average shares outstanding
    86,610,442       87,442,533  
 
           
     
(a)   To the extent we receive distributions in excess of the equity income that we recognize, we include such amounts in our evaluation of cash flow from core operations.
 
(b)   Represents noncontrolling interests’ share of distributions made by ventures that we consolidate in our financial statements.
 
(c)   Timing differences arising from the payment of certain liabilities and the receipt of certain receivables in a period other than that in which the item is recognized in determining net income may distort the actual cash flow that our core operations generate. We adjust our GAAP cash flow provided by operating activities to record such amounts in the period in which the item was actually recognized. We also exclude the impact of escrow funds, as more often than not these funds are released to the lender.
Non-GAAP Financial Disclosure
Adjusted cash flow from operating activities refers to our cash flow from operating activities (as computed in accordance with GAAP) adjusted, where applicable, primarily to: add cash distributions that we receive from our investments in unconsolidated real estate joint ventures in excess of our equity income; subtract cash distributions that we make to our noncontrolling partners in real estate joint ventures that we consolidate; and eliminate changes in working capital. We hold a number of interests in real estate joint ventures, and we believe that adjusting our GAAP cash flow provided by operating activities to reflect these actual cash receipts and cash payments, as well as eliminating the effect of timing differences between the payment of certain liabilities and the receipt of certain receivables in a period other than that in which the item is recognized, may give investors additional information about our actual cash flow that is not incorporated in cash flow from operating activities as defined by GAAP.
We believe that adjusted cash flow from operating activities is a useful supplemental measure for assessing the cash flow generated from our core operations as it gives investors important information about our liquidity that is not provided within cash flow from operating activities as defined by GAAP, and we use this measure when evaluating distributions to shareholders.

 


 

Corporate Property Associates 14 Incorporated
Portfolio Diversification as of September 30, 2010 (Unaudited)
Top Ten Tenants by Rent (Pro Rata Basis)

(in thousands)
                 
            Percentage of Total  
Tenant/Lease Guarantor   Annualized Rent     Annualized Rent  
Carrefour France, SAS (a)
  $ 19,894       11 %
Hellweg Die Profi-Baumärkte GmbH & Co. KG (a)
    11,722       6 %
Advanced Micro Devices, Inc.
    7,448       4 %
Dick’s Sporting Goods, Inc.
    7,293       4 %
True Value Company
    6,825       4 %
Petsmart, Inc.
    5,357       3 %
Life Time Fitness, Inc.
    5,202       3 %
Katun Corporation (a)
    4,637       3 %
Tower Automotive Products Co., Inc.
    4,629       2 %
Perkin Elmer, Inc. (a)
    4,542       2 %
 
           
Total
  $ 77,549       42 %
 
           
 
               
Weighted Average Lease Term for Portfolio: 9.3 years
(BAR CHART)
 
     
(a)   Rent amounts are subject to fluctuations in foreign currency exchange rates.
 
(b)   Percentage of the portfolio’s total pro rata square footage that was subject to lease.

 


 

Corporate Property Associates 14 Incorporated
Portfolio Diversification as of September 30, 2010 (Unaudited)
by Geography and Property Type (Pro Rata Basis)

(in thousands)
                 
Region   Annualized Rent     Percent  
U.S.
               
East
  $ 42,753       23 %
West
    35,890       19 %
Midwest
    35,358       19 %
South
    34,902       19 %
 
           
U.S. Total
    148,903       80 %
 
           
International
               
France
    19,893       11 %
Germany
    11,722       6 %
Finland
    4,542       2 %
The Netherlands
    1,097       1 %
United Kingdom
    474       0 %
 
           
International Total
    37,728       20 %
 
           
Total
  $ 186,631       100 %
 
           
                 
Property Type   Annualized Rent     Percent  
Industrial
  $ 57,602       31 %
Warehouse/Distribution
    52,480       28 %
Office
    29,528       16 %
Retail
    25,451       14 %
Other Properties (a)
    21,570       11 %
 
           
Total
  $ 186,631       100 %
 
           

(PIE CHART)
     
(a)   Includes revenue from tenants with the following property types: sports (5.2%), theater (2.6%), self-storage/trucking (2.0%), education (1.6%), and land (0.04%).

 


 

Corporate Property Associates 14 Incorporated
Portfolio Diversification as of September 30, 2010 (Unaudited)
by Tenant Industry (Pro Rata Basis)

(in thousands)
                 
    Annualized        
Industry Type (a)   Rent     Percent  
Retail Trade
  $ 53,553       29 %
Electronics
    28,222       15 %
Construction and Building
    16,034       9 %
Leisure, Amusement, Entertainment
    14,897       8 %
Automobile
    10,970       6 %
Transportation — Cargo
    9,313       5 %
Business and Commercial Services
    8,994       5 %
Beverages, Food, and Tobacco
    8,056       4 %
Chemicals, Plastics, Rubber, and Glass
    5,645       3 %
Consumer Non-durable Goods
    5,413       3 %
Healthcare, Education and Childcare
    4,495       3 %
Machinery
    4,491       2 %
Media: Printing and Publishing
    3,882       2 %
Mining, Metals, and Primary Metal Industries
    2,502       1 %
Buildings and Real Estate
    2,437       1 %
Consumer and Durable Goods
    1,921       1 %
Aerospace and Defense
    1,904       1 %
Forest Products and Paper
    1,418       1 %
Other (b)
    2,484       1 %
 
           
Total
  $ 186,631       100 %
 
           
     
(a)   Based on the Moody’s Investors Service, Inc. classification system and information provided by the tenant.
 
(b)   Includes revenue from tenants in the following industries: transportation — personal (0.7%), grocery (0.5%), and banking (0.1%).