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Section 1: 8-K (8-K)

Document
false0001025378 0001025378 2020-02-21 2020-02-21


 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): February 21, 2020
402920147_wpchighreslogoa22.jpg
W. P. Carey Inc.
(Exact Name of Registrant as Specified in its Charter)

Maryland
001-13779
45-4549771
(State of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
 
 
 
 
50 Rockefeller Plaza,
 
 
New York,
New York
 
10020
(Address of principal executive offices)
 
(Zip Code)
 

Registrant’s telephone number, including area code: (212) 492-1100

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $0.001 Par Value
 
WPC
 
New York Stock Exchange

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 





Item 2.02 Results of Operations and Financial Condition.

On February 21, 2020, W. P. Carey Inc. (together with its predecessors, the “Company”) issued an earnings release announcing its financial results for the quarter ended December 31, 2019. A copy of the earnings release is attached as Exhibit 99.1.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that Section, and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.

Item 7.01 Regulation FD Disclosure.

On February 21, 2020, the Company made available certain unaudited supplemental financial information at December 31, 2019. A copy of this supplemental information is attached as Exhibit 99.2.

The information furnished pursuant to this Item 7.01, including Exhibit 99.2, shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that Section, and shall not be incorporated by reference into any filing under the Securities Act or the Exchange Act.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.
 
Description
99.1
 
 
 
 
99.2
 
 
 
 
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document).






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
 
 
W. P. Carey Inc.
 
 
 
 
Date:
February 21, 2020
By:
/s/ ToniAnn Sanzone
 
 
 
ToniAnn Sanzone
 
 
 
Chief Financial Officer


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1

FOR IMMEDIATE RELEASE

Institutional Investors:
Peter Sands
W. P. Carey Inc.
212-492-1110
[email protected]

Individual Investors:
W. P. Carey Inc.
212-492-8920
[email protected]

Press Contact:
Guy Lawrence
Ross & Lawrence
212-308-3333
[email protected]

W. P. Carey Inc. Announces Fourth Quarter and Full Year 2019 Financial Results


New York, NY – February 21, 2020 – W. P. Carey Inc. (NYSE: WPC) (W. P. Carey or the Company), a net lease real estate investment trust, today reported its financial results for the fourth quarter and full year ended December 31, 2019.

Total Company
Net income attributable to W. P. Carey of $129.4 million, or $0.75 per diluted share, for the fourth quarter and $305.2 million, or $1.78 per diluted share, for 2019
AFFO of $222.0 million, or $1.28 per diluted share, for the fourth quarter and $856.5 million, or $5.00 per diluted share, for 2019
Quarterly cash dividend raised to $1.038 per share, equivalent to an annualized dividend rate of $4.152 per share
2020 full year AFFO guidance range of $4.86 to $5.01 per diluted share announced, including Real Estate AFFO of between $4.74 and $4.89 per diluted share

Business Segments

Real Estate
Segment net income attributable to W. P. Carey of $124.3 million for the fourth quarter and $272.1 million for 2019
Segment AFFO of $210.2 million, or $1.21 per diluted share, for the fourth quarter and $811.2 million, or $4.74 per diluted share, for 2019
Investment volume of $411.7 million during the fourth quarter, bringing total investment volume for 2019 to $868.1 million
Active capital investment projects of $371.2 million outstanding at year end, including $242.6 million expected to be completed in 2020
Gross disposition proceeds of $347.8 million during the fourth quarter, bringing total dispositions for 2019 to $383.9 million
Portfolio occupancy of 98.8%

W. P. Carey Inc. 12/31/2019 Earnings Release 8-K – 1


Weighted-average lease term increased to 10.7 years

Investment Management
Segment net income attributable to W. P. Carey of $5.0 million for the fourth quarter and $33.2 million for 2019
Segment AFFO of $11.8 million, or $0.07 per diluted share, for the fourth quarter and $45.3 million, or $0.26 per diluted share, for 2019
CWI 1 and CWI 2 proposed merger further progressed and is expected to close toward the end of the 2020 first quarter

Balance Sheet and Capitalization
Reduced secured debt outstanding by $1.29 billion during 2019, including $324.3 million during the fourth quarter, lowering the Company’s consolidated secured debt to gross assets ratio to 9.7%
Amended and restated existing unsecured credit facility in February 2020, increasing capacity to $2.1 billion


MANAGEMENT COMMENTARY

“During 2019, we continued to execute on our strategy, growing and enhancing the quality of our earnings, our real estate portfolio and our balance sheet,” said Jason Fox, Chief Executive Officer of W. P. Carey. “Real Estate AFFO per diluted share increased 8% even as we reduced leverage, driven by the full-year impact of our merger with CPA:17 and our 2019 net investment activity. Within our portfolio, we increased the proportion of rent from industrial and warehouse properties as well as from investment grade tenants, lowered our top 10 tenant concentration and extended our weighted-average lease term. We have ample liquidity, low leverage and established access to various forms of capital, all of which support our ability to execute on our investment pipeline. And we’re off to a good start in 2020, reflecting a continuation of the momentum we saw in the fourth quarter, and have a healthy number of capital projects scheduled for completion this year.”


QUARTERLY FINANCIAL RESULTS

Revenues

Total Company: Revenues, including reimbursable costs, for the 2019 fourth quarter totaled $311.2 million, up 13.8% from $273.4 million for the 2018 fourth quarter.

Real Estate: Real Estate revenues, including reimbursable costs, for the 2019 fourth quarter were $296.4 million, up 19.4% from $248.3 million for the 2018 fourth quarter, due primarily to additional lease revenues from properties acquired in the Company’s merger with CPA:17 on October 31, 2018 (the CPA:17 Merger) and net acquisitions.

Note: While it has no impact on net income or AFFO, in accordance with Accounting Standards Update 2016-02, Leases (Topic 842), which the Company has adopted effective as of January 1, 2019, operating expenses reimbursed by tenants are included within lease revenues on the consolidated statements of income (for both current and prior year periods). Prior to that date the Company presented revenues excluding reimbursable costs.

Investment Management: Investment Management revenues, including reimbursable costs, for the 2019 fourth quarter were $14.9 million, down 40.6% from $25.1 million for the 2018 fourth quarter, due primarily to lower structuring and other advisory revenues, as well as the cessation of asset management revenue previously earned from CPA:17.

Net Income Attributable to W. P. Carey

Net income attributable to W. P. Carey for the 2019 fourth quarter was $129.4 million, down 33.1% from $193.3 million for the 2018 fourth quarter. Net income from Investment Management attributable to W. P. Carey decreased, due primarily to a gain on change in control of interests recognized during the prior year period in connection with the CPA:17 Merger, as well as the cessation of revenues and distributions previously earned from CPA:17. Net income from Real Estate attributable to W. P. Carey also decreased, due primarily to a lower aggregate gain on sale

W. P. Carey Inc. 12/31/2019 Earnings Release 8-K – 2


of real estate and a gain on change in control of interests recognized during the prior year period in connection with the CPA:17 Merger, partly offset by merger expenses related to the CPA:17 Merger recognized during the prior year period, a mark-to-market gain of $36.1 million for the Company’s investment in shares of a cold storage operator and the impact of properties acquired in the CPA:17 Merger and net acquisitions. The increase in revenues from properties acquired in the CPA:17 Merger and acquisitions was partly offset by corresponding increases in depreciation and amortization, interest expense and property expenses.

Adjusted Funds from Operations (AFFO)

AFFO for the 2019 fourth quarter was $1.28 per diluted share, down 3.8% from $1.33 per diluted share for the 2018 fourth quarter. AFFO from the Company’s Real Estate segment (Real Estate AFFO) increased, due primarily to the accretive impact of properties acquired in the CPA:17 Merger and net acquisitions, partly offset by the dilutive impact of shares issued through the Company’s ATM program. AFFO from the Company’s Investment Management segment declined, due primarily to the cessation of revenues and distributions previously earned from CPA:17, as well as lower structuring and other advisory revenues.

Note: Further information concerning AFFO and Real Estate AFFO, which are both non-GAAP supplemental performance metrics, is presented in the accompanying tables and related notes.

Dividend

As previously announced, on December 18, 2019 the Company’s Board of Directors declared a quarterly cash dividend of $1.038 per share, equivalent to an annualized dividend rate of $4.152 per share. The dividend was paid on January 15, 2020 to stockholders of record as of December 31, 2019.


FULL YEAR FINANCIAL RESULTS

Revenues

Total Company: Revenues, including reimbursable costs, for the 2019 full year totaled $1.23 billion, up 39.2% from $885.7 million for the 2018 full year.

Real Estate: Real Estate revenues, including reimbursable costs, for the 2019 full year totaled $1.17 billion, up 50.5% from $779.1 million for the 2018 full year, due primarily to additional lease revenues from properties acquired in the CPA:17 Merger and net acquisitions, as well as higher lease termination and other income.

Investment Management: Investment Management revenues, including reimbursable costs, for the 2019 full year totaled $59.9 million, down 43.8% from $106.6 million for the 2018 full year, due primarily to the cessation of asset management revenue previously earned from CPA:17, as well as lower structuring and other advisory revenues.

Net Income Attributable to W. P. Carey

Net income attributable to W. P. Carey for the 2019 full year totaled $305.2 million, down 25.9% from $411.6 million for the 2018 full year. Net income from Investment Management attributable to W. P. Carey decreased, due primarily to the cessation of revenues and distributions previously earned from CPA:17, as well as a gain on change in control of interests recognized during the prior year in connection with the CPA:17 Merger. Net income from Real Estate attributable to W. P. Carey also decreased, due primarily to a lower aggregate gain on sale of real estate, higher impairment charges and a loss on change in control of interests recognized during the current year in connection with the CPA:17 Merger (as compared to a gain on change in control of interests recognized during the prior year), partly offset by the impact of properties acquired in the CPA:17 Merger and net acquisitions, merger expenses related to the CPA:17 Merger recognized during the prior year and a mark-to-market gain of $32.9 million for the Company’s investment in shares of a cold storage operator. The increase in revenues from properties acquired in the CPA:17 Merger and acquisitions was partly offset by corresponding increases in depreciation and amortization, interest expense and property expenses.


W. P. Carey Inc. 12/31/2019 Earnings Release 8-K – 3


AFFO

AFFO for the 2019 full year was $5.00 per diluted share, down 7.2% compared to $5.39 per diluted share for the 2018 full year. Real Estate AFFO increased, due primarily to the accretive impact of properties acquired in the CPA:17 Merger and net acquisitions, partly offset by the dilutive impact of shares issued through the Company’s ATM program. Investment Management AFFO declined, due primarily to the cessation of revenues and distributions previously earned from CPA:17, as well as lower structuring and other advisory revenues.

Note: Further information concerning AFFO and Real Estate AFFO, which are both non-GAAP supplemental performance metrics, is presented in the accompanying tables and related notes.

Dividend

Dividends declared during 2019 totaled $4.14 per share, an increase of 1.2% compared to total dividends declared during 2018 of $4.09 per share.


AFFO GUIDANCE

For the 2020 full year, the Company expects to report total AFFO of between $4.86 and $5.01 per diluted share, including Real Estate AFFO of between $4.74 and $4.89 per diluted share, based on the following key assumptions:

(i)
investments for the Company’s Real Estate portfolio of between $750 million and $1.25 billion;

(ii)
dispositions from the Company’s Real Estate portfolio of between $300 million and $500 million; and

(iii)
total general and administrative expenses of between $80 million and $84 million.

Note: The Company does not provide guidance on net income. The Company only provides guidance on total AFFO (and Real Estate 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.


BALANCE SHEET AND CAPITALIZATION

Mortgage / Secured Debt Repayment

During 2019, the Company reduced secured debt outstanding by $1.29 billion, with a weighted-average interest rate of approximately 4.8%, including $324.3 million during the 2019 fourth quarter, with a weighted-average interest rate of approximately 4.5%, primarily through mortgage prepayments and repayments at maturity, lowering its consolidated secured debt to gross assets ratio to 9.7%.

Senior Unsecured Credit Facility – Subsequent to Year End

As previously announced, on February 20, 2020, the Company amended and restated its senior unsecured credit facility, increasing the capacity under the facility to $2.1 billion. The facility comprises a $1.8 billion multi-currency revolving line of credit, a £150 million term loan and a $105 million delayed draw term loan, in each case maturing in five years. The delayed draw term loan may be drawn within one year and allows for borrowing in U.S. dollars, euros and British pounds sterling.


REAL ESTATE

Investments

During the 2019 fourth quarter, the Company completed investments totaling $411.7 million, consisting of 11 acquisitions for $367.8 million in aggregate and three completed capital investment projects at a total cost of $43.9 million, bringing total investment volume for the year ended December 31, 2019 to $868.1 million.

W. P. Carey Inc. 12/31/2019 Earnings Release 8-K – 4



As of December 31, 2019, the Company had 12 capital investment projects outstanding for an expected total investment of approximately $371.2 million, of which nine projects totaling $242.6 million are currently expected to be completed during 2020, including the three projects completed year-to-date 2020 discussed below.

Year-to-date 2020, the Company has completed five investments totaling $206.1 million, consisting of two acquisitions for $139.3 million in aggregate and three completed capital investment projects at a total cost of $66.8 million.

Dispositions

During the 2019 fourth quarter, the Company disposed of 12 properties for gross proceeds of $347.8 million, bringing total disposition proceeds for the year ended December 31, 2019 to $383.9 million.

Year-to-date 2020, the Company has completed four dispositions totaling $116.3 million, including one of its two hotel operating properties for gross proceeds of $114.5 million.


Composition

As of December 31, 2019, the Company’s net lease portfolio consisted of 1,214 properties, comprising 140.0 million square feet leased to 345 tenants, with a weighted-average lease term of 10.7 years and an occupancy rate of 98.8%. In addition, the Company owned 19 self-storage and two hotel operating properties, totaling approximately 1.6 million square feet.


INVESTMENT MANAGEMENT

W. P. Carey is the advisor to CPA:18 – Global (CPA:18), Carey Watermark Investors Incorporated (CWI 1), Carey Watermark Investors 2 Incorporated (CWI 2) and Carey European Student Housing Fund I, L.P. (CESH) (collectively, the Managed Programs). As of December 31, 2019, the Managed Programs had total assets under management of approximately $7.5 billion.

Proposed Merger of CWI 1 and CWI 2

On January 13, 2020, the joint proxy statement / prospectus on Form S-4 previously filed with the Securities and Exchange Commission by CWI 1 and CWI 2 was declared effective. Each of CWI 1 and CWI 2 has scheduled a special meeting of stockholders for March 26, 2020, and, if approved, the merger is expected to close shortly thereafter.


* * * * *


Supplemental Information

The Company has provided supplemental unaudited financial and operating information regarding the 2019 fourth quarter and certain prior quarters, including a description of non-GAAP financial measures and reconciliations to GAAP measures, in a Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on February 21, 2020.


* * * * *



W. P. Carey Inc. 12/31/2019 Earnings Release 8-K – 5


Live Conference Call and Audio Webcast Scheduled for 10:00 a.m. Eastern Time
Please dial in at least 10 minutes prior to the start time.

Date/Time: Friday, February 21, 2020 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


* * * * *


W. P. Carey Inc.

W. P. Carey ranks among the largest net lease REITs with an enterprise value of approximately $20 billion and a diversified portfolio of operationally-critical commercial real estate that includes 1,214 net lease properties covering approximately 140 million square feet. For over four decades, the company has invested in high-quality single-tenant industrial, warehouse, office, retail and self-storage properties subject to long-term net leases with built-in rent escalators. Its portfolio is located primarily in the U.S. and Northern and Western Europe and is well-diversified by tenant, property type, geographic location and tenant industry. 

www.wpcarey.com


* * * * *


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 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,” “assume,” “outlook,” “seek,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast” and other comparable terms. These forward-looking statements include, but are not limited to, statements made by Mr. Fox with regard to our investment pipeline. 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 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 year ended December 31, 2019. 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, 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.


* * * * *

W. P. Carey Inc. 12/31/2019 Earnings Release 8-K – 6


W. P. CAREY INC.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
 
December 31,
 
2019
 
2018
Assets
 
 
 
Investments in real estate:
 
 
 
Land, buildings and improvements (a)
$
9,856,191

 
$
9,251,396

Net investments in direct financing leases
896,549

 
1,306,215

In-place lease intangible assets and other
2,186,851

 
2,009,628

Above-market rent intangible assets
909,139

 
925,797

Investments in real estate
13,848,730

 
13,493,036

Accumulated depreciation and amortization (b)
(2,035,995
)
 
(1,564,182
)
Assets held for sale, net (c)
104,010

 

Net investments in real estate
11,916,745

 
11,928,854

Equity investments in the Managed Programs and real estate (d)
324,004

 
329,248

Cash and cash equivalents
196,028

 
217,644

Due from affiliates
57,816

 
74,842

Other assets, net
631,637

 
711,507

Goodwill
934,688

 
920,944

Total assets
$
14,060,918

 
$
14,183,039

 
 
 
 
Liabilities and Equity
 
 
 
Debt:
 
 
 
Senior unsecured notes, net
$
4,390,189

 
$
3,554,470

Unsecured revolving credit facility
201,267

 
91,563

Non-recourse mortgages, net
1,462,487

 
2,732,658

Debt, net
6,053,943

 
6,378,691

Accounts payable, accrued expenses and other liabilities
487,405

 
403,896

Below-market rent and other intangible liabilities, net
210,742

 
225,128

Deferred income taxes
179,309

 
173,115

Dividends payable
181,346

 
172,154

Total liabilities
7,112,745

 
7,352,984

 
 
 
 
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued

 

Common stock, $0.001 par value, 450,000,000 shares authorized; 172,278,242 and 165,279,642 shares, respectively, issued and outstanding
172

 
165

Additional paid-in capital
8,717,535

 
8,187,335

Distributions in excess of accumulated earnings
(1,557,374
)
 
(1,143,992
)
Deferred compensation obligation
37,263

 
35,766

Accumulated other comprehensive loss
(255,667
)
 
(254,996
)
Total stockholders’ equity
6,941,929

 
6,824,278

Noncontrolling interests
6,244

 
5,777

Total equity
6,948,173

 
6,830,055

Total liabilities and equity
$
14,060,918

 
$
14,183,039

________
(a)
Includes $83.1 million and $470.7 million of amounts attributable to operating properties as of December 31, 2019 and 2018, respectively.
(b)
Includes $961.7 million and $734.8 million of accumulated depreciation on buildings and improvements as of December 31, 2019 and 2018, respectively, and $1,074.3 million and $829.4 million of accumulated amortization on lease intangibles as of December 31, 2019 and 2018, respectively.
(c)
At December 31, 2019, we had one hotel operating property classified as Assets held for sale, net, which was sold in January 2020.
(d)
Our equity investments in real estate joint ventures totaled $194.4 million and $221.7 million as of December 31, 2019 and 2018, respectively. Our equity investments in the Managed Programs totaled $129.6 million and $107.6 million as of December 31, 2019 and 2018, respectively.


W. P. Carey Inc. 12/31/2019 Earnings Release 8-K – 7


W. P. CAREY INC.
Quarterly Consolidated Statements of Income
(in thousands, except share and per share amounts)
 
Three Months Ended
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
Revenues
 
 
 
 
 
Real Estate:
 
 
 
 
 
Lease revenues
$
274,795

 
$
278,839

 
$
233,632

Lease termination income and other
12,317

 
14,377

 
2,952

Operating property revenues
9,250

 
9,538

 
11,707

 
296,362

 
302,754

 
248,291

Investment Management:
 
 
 
 
 
Asset management revenue
9,732

 
9,878

 
11,954

Reimbursable costs from affiliates
4,072

 
4,786

 
5,042

Structuring and other advisory revenue
1,061

 
587

 
8,108

 
14,865

 
15,251

 
25,104

 
311,227

 
318,005

 
273,395

Operating Expenses
 

 
 
 
 

Depreciation and amortization
111,607

 
109,517

 
93,321

General and administrative
17,069

 
17,210

 
17,449

Reimbursable tenant costs
12,877

 
15,611

 
10,145

Property expenses, excluding reimbursable tenant costs
9,341

 
10,377

 
8,319

Operating property expenses
8,000

 
8,547

 
7,844

Impairment charges
6,758

 
25,781

 

Stock-based compensation expense
4,939

 
4,747

 
3,902

Reimbursable costs from affiliates
4,072

 
4,786

 
5,042

Subadvisor fees (a)
1,964

 
1,763

 
2,226

Merger and other expenses (b)
(811
)
 
70

 
37,098

 
175,816

 
198,409

 
185,346

Other Income and Expenses
 

 
 
 
 

Interest expense
(53,667
)
 
(58,626
)
 
(57,250
)
Other gains and (losses) (c)
43,593

 
(12,402
)
 
13,215

Gain on sale of real estate, net
17,501

 
71

 
99,618

Equity in earnings of equity method investments in the Managed Programs
   and real estate
8,018

 
5,769

 
15,268

(Loss) gain on change in control of interests (d) (e)

 
(8,416
)
 
47,814

 
15,445

 
(73,604
)
 
118,665

Income before income taxes
150,856

 
45,992

 
206,714

Provision for income taxes
(21,064
)
 
(4,157
)
 
(11,436
)
Net Income
129,792

 
41,835

 
195,278

Net income attributable to noncontrolling interests
(420
)
 
(496
)
 
(2,015
)
Net Income Attributable to W. P. Carey
$
129,372

 
$
41,339

 
$
193,263

 
 
 
 
 
 
Basic Earnings Per Share
$
0.75

 
$
0.24

 
$
1.33

Diluted Earnings Per Share
$
0.75

 
$
0.24

 
$
1.33

Weighted-Average Shares Outstanding
 

 
 
 
 

Basic
173,153,811

 
172,235,066

 
145,480,858

Diluted
173,442,101

 
172,486,506

 
145,716,583

 
 
 
 
 
 
Dividends Declared Per Share
$
1.038

 
$
1.036

 
$
1.030



W. P. Carey Inc. 12/31/2019 Earnings Release 8-K – 8


W. P. CAREY INC.
Full Year Consolidated Statements of Income
(in thousands, except share and per share amounts)
 
Years Ended December 31,
 
2019
 
2018
Revenues
 
 
 
Real Estate:
 
 
 
Lease revenues
$
1,086,375

 
$
744,498

Operating property revenues
50,220

 
28,072

Lease termination income and other
36,268

 
6,555

 
1,172,863

 
779,125

Investment Management:
 
 
 
Asset management revenue
39,132

 
63,556

Reimbursable costs from affiliates
16,547

 
21,925

Structuring and other advisory revenue
4,224

 
21,126

 
59,903

 
106,607

 
1,232,766

 
885,732

Operating Expenses
 

 
 

Depreciation and amortization
447,135

 
291,440

General and administrative
75,293

 
68,337

Reimbursable tenant costs
55,576

 
28,076

Property expenses, excluding reimbursable tenant costs
39,545

 
22,773

Operating property expenses
38,015

 
20,150

Impairment charges
32,539

 
4,790

Stock-based compensation expense
18,787

 
18,294

Reimbursable costs from affiliates
16,547

 
21,925

Subadvisor fees (a)
7,579

 
9,240

Merger and other expenses (b)
101

 
41,426

 
731,117

 
526,451

Other Income and Expenses
 

 
 

Interest expense
(233,325
)
 
(178,375
)
Other gains and (losses)
31,475

 
29,913

Equity in earnings of equity method investments in the Managed Programs
   and real estate
23,229

 
61,514

Gain on sale of real estate, net
18,143

 
118,605

(Loss) gain on change in control of interests (d) (e)
(8,416
)
 
47,814

 
(168,894
)
 
79,471

Income before income taxes
332,755

 
438,752

Provision for income taxes
(26,211
)
 
(14,411
)
Net Income
306,544

 
424,341

Net income attributable to noncontrolling interests
(1,301
)
 
(12,775
)
Net Income Attributable to W. P. Carey
$
305,243

 
$
411,566

 
 
 
 
Basic Earnings Per Share
$
1.78

 
$
3.50

Diluted Earnings Per Share
$
1.78

 
$
3.49

Weighted-Average Shares Outstanding
 

 
 

Basic
171,001,430

 
117,494,969

Diluted
171,299,414

 
117,706,445

 
 
 
 
Dividends Declared Per Share
$
4.140

 
$
4.090

__________
(a)
Primarily comprised of fees paid to subadvisors for CWI 1 and CWI 2. Refer to the Managed Programs Fee Summary section in Exhibit 99.2 of the Current Report on Form 8-K filed on February 21, 2020 for further information.
(b)
Amounts for the three months and year ended December 31, 2018 are primarily comprised of costs incurred in connection with the CPA:17 Merger.
(c)
Amount for the three months ended December 31, 2019 is primarily comprised of mark-to-market adjustment for our investment in shares of a cold storage operator of $36.1 million, realized gains on foreign currency exchange derivatives of $4.2 million and net gains on foreign currency transactions of $3.6 million.
(d)
Amounts for the three months ended September 30, 2019 and year ended December 31, 2019 represent a loss recognized on the purchase of the remaining interest in an investment from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. We recognized this loss because we identified certain measurement period adjustments during the third quarter of 2019 that impacted the provisional accounting for this investment.
(e)
Amounts for the three months and year ended December 31, 2018 include a gain of $18.8 million recognized on the purchase of the remaining interests in six investments from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. Amounts for the three months and year ended December 31, 2018 also include a gain of $29.0 million recognized on our previously held interest in shares of CPA:17 common stock in connection with the CPA:17 Merger.

W. P. Carey Inc. 12/31/2019 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
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
Net income attributable to W. P. Carey
$
129,372

 
$
41,339

 
$
193,263

Adjustments:
 
 
 
 
 
Depreciation and amortization of real property
110,354

 
108,279

 
92,018

Gain on sale of real estate, net
(17,501
)
 
(71
)
 
(99,618
)
Impairment charges
6,758

 
25,781

 

Loss (gain) on change in control of interests (a) (b)

 
8,416

 
(47,814
)
Proportionate share of adjustments to equity in net income of partially owned entities (c)
2,703

 
4,210

 
3,225

Proportionate share of adjustments for noncontrolling interests (d)
(4
)
 
(4
)
 
(762
)
Total adjustments
102,310

 
146,611

 
(52,951
)
FFO (as defined by NAREIT) Attributable to W. P. Carey (e)
231,682

 
187,950

 
140,312

Adjustments:
 
 
 
 
 
Other (gains) and losses (f)
(38,196
)
 
18,618

 
(9,001
)
Above- and below-market rent intangible lease amortization, net
17,037

 
14,969

 
14,985

Tax expense (benefit) – deferred and other (g) (h)
12,874

 
(1,039
)
 
6,288

Straight-line and other rent adjustments (i)
(11,184
)
 
(6,370
)
 
(6,096
)
Stock-based compensation
4,939

 
4,747

 
3,902

Amortization of deferred financing costs
3,225

 
2,991

 
2,572

Merger and other expenses (j)
(811
)
 
70

 
37,098

Other amortization and non-cash items
546

 
379

 
468

Proportionate share of adjustments to equity in net income of partially owned entities (c)
1,908

 
1,920

 
3,192

Proportionate share of adjustments for noncontrolling interests (d)
(5
)
 
(12
)
 
140

Total adjustments
(9,667
)
 
36,273

 
53,548

AFFO Attributable to W. P. Carey (e)
$
222,015

 
$
224,223

 
$
193,860

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (e)
$
231,682

 
$
187,950

 
$
140,312

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (e)
$
1.34

 
$
1.09

 
$
0.96

AFFO attributable to W. P. Carey (e)
$
222,015

 
$
224,223

 
$
193,860

AFFO attributable to W. P. Carey per diluted share (e)
$
1.28

 
$
1.30

 
$
1.33

Diluted weighted-average shares outstanding
173,442,101

 
172,486,506

 
145,716,583























W. P. Carey Inc. 12/31/2019 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
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
Net income from Real Estate attributable to W. P. Carey
$
124,333

 
$
33,556

 
$
151,611

Adjustments:
 
 
 
 
 
Depreciation and amortization of real property
110,354

 
108,279

 
92,018

Gain on sale of real estate, net
(17,501
)
 
(71
)
 
(99,618
)
Impairment charges
6,758

 
25,781

 

Loss (gain) on change in control of interests (a) (b)

 
8,416

 
(18,792
)
Proportionate share of adjustments to equity in net income of partially owned entities (c)
2,703

 
4,210

 
3,225

Proportionate share of adjustments for noncontrolling interests (d)
(4
)
 
(4
)
 
(762
)
Total adjustments
102,310

 
146,611

 
(23,929
)
FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (e)
226,643

 
180,167

 
127,682

Adjustments:
 
 
 
 
 
Other (gains) and losses (f)
(38,546
)
 
18,956

 
(11,269
)
Above- and below-market rent intangible lease amortization, net
17,037

 
14,969

 
14,985

Straight-line and other rent adjustments (i)
(11,184
)
 
(6,370
)
 
(6,096
)
Tax expense (benefit) – deferred and other
9,748

 
(1,414
)
 
(3,949
)
Stock-based compensation
3,531

 
3,435

 
2,774

Amortization of deferred financing costs
3,225

 
2,991

 
2,572

Merger and other expenses (j)
(811
)
 
70

 
37,098

Other amortization and non-cash items
348

 
180

 
260

Proportionate share of adjustments to equity in net income of partially owned entities (c)
202

 
(113
)
 
(260
)
Proportionate share of adjustments for noncontrolling interests (d)
(5
)
 
(12
)
 
140

Total adjustments
(16,455
)
 
32,692

 
36,255

AFFO Attributable to W. P. Carey – Real Estate (e)
$
210,188

 
$
212,859

 
$
163,937

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (e)
$
226,643

 
$
180,167

 
$
127,682

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (e)
$
1.31

 
$
1.04

 
$
0.87

AFFO attributable to W. P. Carey – Real Estate (e)
$
210,188

 
$
212,859

 
$
163,937

AFFO attributable to W. P. Carey per diluted share – Real Estate (e)
$
1.21

 
$
1.23

 
$
1.12

Diluted weighted-average shares outstanding
173,442,101

 
172,486,506

 
145,716,583



W. P. Carey Inc. 12/31/2019 Earnings Release 8-K – 11


W. P. CAREY INC.
Full Year Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
 
Years Ended December 31,
 
2019
 
2018
Net income attributable to W. P. Carey
$
305,243

 
$
411,566

Adjustments:
 
 
 
Depreciation and amortization of real property
442,096

 
286,164

Impairment charges
32,539

 
4,790

Gain on sale of real estate, net
(18,143
)
 
(118,605
)
Loss (gain) on change in control of interests (a) (b)
8,416

 
(47,814
)
Proportionate share of adjustments to equity in net income of partially owned entities (c)
15,826

 
4,728

Proportionate share of adjustments for noncontrolling interests (d)
(69
)
 
(8,966
)
Total adjustments
480,665

 
120,297

FFO (as defined by NAREIT) Attributable to W. P. Carey (e)
785,908

 
531,863

Adjustments:
 
 
 
Above- and below-market rent intangible lease amortization, net
64,383

 
52,314

Straight-line and other rent adjustments (i)
(31,787
)
 
(14,460
)
Stock-based compensation
18,787

 
18,294

Amortization of deferred financing costs
11,714

 
6,184

Other (gains) and losses (f)
(8,924
)
 
(15,704
)
Tax expense – deferred and other (g) (h)
5,974

 
1,079

Other amortization and non-cash items
3,198

 
920

Merger and other expenses (j)
101

 
41,426

Proportionate share of adjustments to equity in net income of partially owned entities (c)
7,165

 
12,439

Proportionate share of adjustments for noncontrolling interests (d)
(49
)
 
231

Total adjustments
70,562

 
102,723

AFFO Attributable to W. P. Carey (e)
$
856,470

 
$
634,586

 
 
 
 
Summary
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (e)
$
785,908

 
$
531,863

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (e)
$
4.59

 
$
4.52

AFFO attributable to W. P. Carey (e)
$
856,470

 
$
634,586

AFFO attributable to W. P. Carey per diluted share (e)
$
5.00

 
$
5.39

Diluted weighted-average shares outstanding
171,299,414

 
117,706,445





























W. P. Carey Inc. 12/31/2019 Earnings Release 8-K – 12


W. P. CAREY INC.
Full Year Reconciliation of Net Income from Real Estate to Adjusted Funds from Operations (AFFO) from Real Estate (Unaudited)
(in thousands, except share and per share amounts)
 
Years Ended December 31,
 
2019
 
2018
Net income from Real Estate attributable to W. P. Carey
$
272,065

 
$
307,236

Adjustments:
 
 
 
Depreciation and amortization of real property
442,096

 
286,164

Impairment charges
32,539

 
4,790

Gain on sale of real estate, net
(18,143
)
 
(118,605
)
Loss (gain) on change in control of interests (a) (b)
8,416

 
(18,792
)
Proportionate share of adjustments to equity in net income of partially owned entities (c)
15,826

 
4,728

Proportionate share of adjustments for noncontrolling interests (d)
(69
)
 
(8,966
)
Total adjustments
480,665

 
149,319

FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (e)
752,730

 
456,555

Adjustments:
 
 
 
Above- and below-market rent intangible lease amortization, net
64,383

 
52,314

Straight-line and other rent adjustments (i)
(31,787
)
 
(14,460
)
Stock-based compensation
13,248

 
10,450

Amortization of deferred financing costs
11,714

 
6,184

Other (gains) and losses (f)
(9,773
)
 
(18,025
)
Tax expense (benefit) – deferred and other
7,971

 
(18,790
)
Other amortization and non-cash items
2,540

 
330

Merger and other expenses (j)
101

 
41,426

Proportionate share of adjustments to equity in net income of partially owned entities (c)
115

 
287

Proportionate share of adjustments for noncontrolling interests (d)
(49
)
 
231

Total adjustments
58,463

 
59,947

AFFO Attributable to W. P. Carey – Real Estate (e)
$
811,193

 
$
516,502

 
 
 
 
Summary
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (e)
$
752,730

 
$
456,555

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (e)
$
4.39

 
$
3.88

AFFO attributable to W. P. Carey – Real Estate (e)
$
811,193

 
$
516,502

AFFO attributable to W. P. Carey per diluted share – Real Estate (e)
$
4.74

 
$
4.39

Diluted weighted-average shares outstanding
171,299,414

 
117,706,445

__________
(a)
Amounts for the three months ended September 30, 2019 and year ended December 31, 2019 represent a loss recognized on the purchase of the remaining interest in a real estate investment from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. We recognized this loss because we identified certain measurement period adjustments during the third quarter of 2019 that impacted the provisional accounting for this investment.
(b)
AFFO and Real Estate AFFO amounts for the three months and year ended December 31, 2018 include a gain recognized on the purchase of the remaining interests in six investments from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. AFFO amounts for the three months and year ended December 31, 2018 include a gain recognized on our previously held interest in shares of CPA:17 common stock in connection with the CPA:17 Merger.
(c)
Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Equity in earnings of equity method investments in the Managed Programs and real estate on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis.
(d)
Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
(e)
FFO and AFFO are non-GAAP measures. See below for a description of FFO and AFFO.
(f)
AFFO amount for the three months ended December 31, 2019 is primarily comprised of gain on marketable securities of $35.4 million and gains from foreign currency movements of $3.6 million. Real Estate AFFO amount for the three months ended December 31, 2019 is primarily comprised of mark-to-market adjustment for our investment in shares of a cold storage operator of $36.1 million and gains from foreign currency movements of $3.6 million. Beginning in the second quarter of 2019, we aggregated (gain) loss on extinguishment of debt and realized (gains) losses on foreign currency (both of which were previously disclosed as separate AFFO adjustment line items), as well as certain other adjustments, within this line item, which is comprised of adjustments related to Other gains and (losses) on our consolidated statements of income. Prior period amounts have been reclassified to conform to the current period presentation.
(g)
Amount for the year ended December 31, 2019 includes a current tax benefit, which is excluded from AFFO as it was incurred as a result of the CPA:17 Merger.
(h)
Amounts for the three months and year ended December 31, 2018 include one-time taxes incurred upon the recognition of taxable income associated with the accelerated vesting of shares previously issued by CPA:17 – Global to us for asset management services performed, in connection with the CPA:17 Merger.
(i)
Amounts for the three months and year ended December 31, 2019 include an adjustment to exclude $6.2 million of non-cash lease termination revenue, which will be collected and reflected within AFFO over the remaining master lease term.
(j)
Amounts for the three months and year ended December 31, 2018 are primarily comprised of costs incurred in connection with the CPA:17 Merger.

W. P. Carey Inc. 12/31/2019 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, Inc. (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, 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 and other non-cash rent adjustments, stock-based compensation, non-cash environmental accretion expense 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, restructuring and related compensation expenses and merger and acquisition expenses. We also exclude realized and unrealized gains/losses on foreign currency exchange transactions (other than those realized on the settlement of foreign currency derivatives), which are not considered fundamental attributes of our business plan and do not affect our overall long-term operating performance. We refer to our modified definition of FFO as AFFO. We exclude these items from GAAP net income to arrive at AFFO as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs that are currently not engaged in acquisitions, mergers and restructuring, which are not part of our normal business operations. AFFO also reflects adjustments for unconsolidated partnerships and jointly owned investments. We use AFFO as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies and determine executive compensation.

We believe that AFFO is a useful supplemental measure for investors to consider as we believe it will help them to better assess the sustainability of our operating performance without the potentially distorting impact of these short-term fluctuations. However, there are limits on the usefulness of AFFO to investors. For example, impairment charges and unrealized foreign currency losses that we exclude may become actual realized losses upon the ultimate disposition of the properties in the form of lower cash proceeds or other considerations. We use our FFO and AFFO measures as supplemental financial measures of operating performance. We do not use our FFO and AFFO measures as, nor should they be considered to be, alternatives to net income computed under GAAP, or as alternatives to net cash provided by operating activities computed under GAAP, or as indicators of our ability to fund our cash needs.


W. P. Carey Inc. 12/31/2019 Earnings Release 8-K – 14
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2

W. P. Carey Inc.
Supplemental Information
Fourth Quarter 2019


402920147_wpcsuppimage201904102a03.jpg



Important Disclosures About This Supplemental Package

As used in this supplemental package, the terms “W. P. Carey,” “WPC,” “we,” “us” and “our” include W. P. Carey Inc., its consolidated subsidiaries and its predecessors, unless otherwise indicated. “REIT” means real estate investment trust. “CPA:17 – Global” means Corporate Property Associates 17 – Global Incorporated. “CPA:18 – Global” means Corporate Property Associates 18 – Global Incorporated. “CWI REITs” means Carey Watermark Investors Incorporated (“CWI 1”) and Carey Watermark Investors 2 Incorporated (“CWI 2”). “Managed REITs” means CPA:18 – Global and the CWI REITs. “Managed Programs” means the Managed REITs and Carey European Student Housing Fund I, L.P. (“CESH”). “CPA:17 Merger” means our merger with CPA:17 – Global, which was completed on October 31, 2018. CPA:17 – Global was included in the Managed REITs prior to the CPA:17 Merger. “U.S.” means United States. “AUM” means assets under management. “ABR” means contractual minimum annualized base rent. “SEC” means Securities and Exchange Commission.

Amounts may not sum to totals due to rounding.

Important Note Regarding Non-GAAP Financial Measures

This supplemental package includes certain “non-GAAP” supplemental measures that are not defined by generally accepted accounting principles (“GAAP”), including funds from operations (“FFO”); adjusted funds from operations (“AFFO”); earnings before interest, taxes, depreciation and amortization (“EBITDA”); adjusted EBITDA; pro rata cash net operating income (“pro rata cash NOI”); and normalized pro rata cash NOI. A description of these non-GAAP financial measures and reconciliations to their most directly comparable GAAP measures, as well as a description of other metrics presented, are provided within the Appendix to this supplemental package. FFO is a non-GAAP measure defined by the National Association of Real Estate Investments Trusts, Inc. (“NAREIT”), an industry trade group.




W. P. Carey Inc.
Supplemental Information – Fourth Quarter 2019
Table of Contents
Overview
 
 
 
Financial Results
 
Statements of Income – Last Five Quarters
 
FFO and AFFO – Last Five Quarters
 
 
 
Balance Sheets and Capitalization
 
 
 
Real Estate
 
Investment Activity
 
 
 
Investment Management
 
 
 
Appendix
 
Adjusted EBITDA  Last Five Quarters
 



W. P. Carey Inc.
Overview – Fourth Quarter 2019
Summary Metrics
As of or for the three months ended December 31, 2019.
Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment
 
 
 
 
 
 
 
Owned
Real Estate
 
Investment Management
 
Total
Revenues, including reimbursable costs – consolidated ($000s)
 
$
296,362

 
$
14,865

 
$
311,227

Net income attributable to W. P. Carey ($000s)
 
124,333

 
5,039

 
129,372

Net income attributable to W. P. Carey per diluted share
 
0.72

 
0.03

 
0.75

Normalized pro rata cash NOI from real estate ($000s) (a) (b)
 
271,117

 
N/A

 
271,117

Adjusted EBITDA ($000s) (a) (b)
 
270,272

 
13,405

 
283,677

AFFO attributable to W. P. Carey ($000s) (a) (b)
 
210,188

 
11,827

 
222,015

AFFO attributable to W. P. Carey per diluted share (a) (b)
 
1.21

 
0.07

 
1.28

 
 
 
 
 
 
 
 
 
 
Dividends declared per share – fourth quarter
 
 
 
 
 
1.038

Dividends declared per share – fourth quarter annualized
 
 
 
 
 
4.152

Dividend yield – annualized, based on quarter end share price of $80.04
 
 
 
 
 
5.2
%
Dividend payout ratio – for the year ended December 31, 2019 (c)
 
 
 
 
 
82.8
%
 
 
 
 
 
 
 
 
 
 
Balance Sheet and Capitalization
 
 
 
 
 
 
 
 
 
Equity market capitalization – based on quarter end share price of $80.04 ($000s)
 
 
 
 
 
$
13,789,150

Pro rata net debt ($000s) (d)
 
 
 
 
 
 
 
 
6,102,032

Enterprise value ($000s)
 
 
 
 
 
 
 
 
19,891,182

 
 
 
 
 
 
 
 
 
 
Total consolidated debt ($000s)
 
 
 
 
 
 
 
 
6,053,943

Gross assets ($000s) (e)
 
 
 
 
 
 
 
 
15,022,611

Liquidity ($000s) (f)
 
 
 
 
 
 
 
 
1,494,761

 
 
 
 
 
 
 
 
 
 
Pro rata net debt to enterprise value (b)
 
 
 
 
 
 
 
 
30.7
%
Pro rata net debt to adjusted EBITDA (annualized) (a) (b)
 
 
 
 
 
5.4x

Total consolidated debt to gross assets
 
 
 
 
 
 
 
 
40.3
%
Total consolidated secured debt to gross assets
 
 
 
 
 
 
 
 
9.7
%
 
 
 
 
 
 
 
 
 
 
Weighted-average interest rate (b)
 
 
 
 
 
 
 
 
3.2
%
Weighted-average debt maturity (years) (b)
 
 
 
 
 
 
 
 
5.1

 
 
 
 
 
 
 
 
 
 
Moody's Investors Service – corporate rating
 
 
 
 
 
 
 
 
Baa2 (stable)

Standard & Poor's Ratings Services – issuer rating
 
 
 
 
 
 
 
 
BBB (positive)

 
 
 
 
 
 
 
 
 
 
Real Estate Portfolio (Pro Rata)
 
 
 
 
 
 
 
 
 
ABR – total portfolio ($000s) (g)
 
 
 
 
 
 
 
 
$
1,118,519

ABR – unencumbered portfolio ($000s) (g) (h)
 
 
 
 
 
 
 
 
$
817,034

Number of net-leased properties
 
 
 
 
 
 
 
 
1,214

Number of operating properties (i)
 
 
 
 
 
 
 
 
21

Number of tenants – net-leased properties
 
 
 
 
 
 
 
 
345

 
 
 
 
 
 
 
 
 
 
ABR from investment grade tenants as a % of total ABR – net-leased properties (j)
 
 
 
 
 
30.1
%
 
 
 
 
 
 
 
 
 
 
Net-leased properties – square footage (millions)
 
 
 
 
 
 
 
 
140.0

 
 
 
 
 
 
 
 
 
 
Occupancy – net-leased properties
 
 
 
 
 
 
 
 
98.8
%
Weighted-average lease term (years)
 
 
 
 
 
 
 
 
10.7

 
 
 
 
 
 
 
 
 
 
Maximum commitment for capital investment projects expected to be completed during 2020 ($000s)
 
 
 
$
242,567

Acquisitions and completed capital investment projects – fourth quarter ($000s)
 
 
 
411,700

Dispositions – fourth quarter ($000s)
 
 
 
 
 
 
 
 
347,833

________
(a)
Normalized pro rata cash NOI, adjusted EBITDA and AFFO are non-GAAP measures. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures and for details on how certain non-GAAP measures are calculated.
(b)
Presented on a pro rata basis. See the Terms and Definitions section in the Appendix for a description of pro rata.
(c)
Represents dividends declared per share divided by AFFO per diluted share on a year-to-date basis.
(d)
Represents total pro rata debt outstanding less consolidated cash and cash equivalents. See the Terms and Definitions section in the Appendix for a description of pro rata.

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Investing for the long runTM | 1


W. P. Carey Inc.
Overview – Fourth Quarter 2019

(e)
Gross assets represent consolidated total assets before accumulated depreciation on buildings and improvements. Gross assets are net of accumulated amortization on in-place lease intangible assets of $676.0 million and above-market rent intangible assets of $398.3 million.
(f)
Represents availability on our Senior Unsecured Credit Facility plus consolidated cash and cash equivalents.
(g)
See the Terms and Definitions section in the Appendix for a description of ABR.
(h)
Represents ABR from properties unencumbered by non-recourse mortgage debt
(i)
Comprised of 19 self-storage properties and two hotels, one of which was sold in January 2020.
(j)
Percentage of portfolio is based on ABR, as of December 31, 2019. Includes tenants or guarantors with investment grade ratings (22.0%) and subsidiaries of non-guarantor parent companies with investment grade ratings (8.1%). Investment grade refers to an entity with a rating of BBB- or higher from Standard & Poor’s Ratings Services or Baa3 or higher from Moody’s Investors Service. See the Terms and Definitions section in the Appendix for a description of ABR.

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Investing for the long runTM | 2


W. P. Carey Inc.
Overview – Fourth Quarter 2019
Components of Net Asset Value
Dollars in thousands, except per share amounts.
Real Estate
 
 
Three Months Ended
Dec. 31, 2019
 
Annualized
Normalized pro rata cash NOI (a) (b)
 
 
$
271,117

 
$
1,084,468

 
 
 
 
 
 
Investment Management
 
 
 
 
 
Adjusted EBITDA (a) (b)
 
 
13,405

 
53,620

Selected Components of Adjusted EBITDA:
 
 
 
 
 
Asset management revenue (c)
 
 
9,732

 
38,928

Structuring and other advisory revenue (c)
 
 
1,061

 
N/A

Operating partnership interests in real estate cash flow of Managed REITs (d)
 
5,669

 
22,676

Back-end fees and interests associated with the Managed Programs
 
 
 
 
 
 
 
 
Balance Sheet – Selected Information (Consolidated Unless Otherwise Stated)
 
As of Dec. 31, 2019
Assets
 
 
 
 
 
Book value of real estate excluded from normalized pro rata cash NOI (e)
 
 
 
$
186,454

Cash and cash equivalents
 
 
 
 
196,028

Due from affiliates
 
 
 
 
57,816

Other assets, net:
 
 
 
 
 
Investment in shares of a cold storage operator
 
 
 
 
$
146,190

Straight-line rent adjustments
 
 
 
 
137,428

Restricted cash, including escrow
 
 
 
 
55,490

Loans receivable
 
 
 
 
47,737

Accounts receivable
 
 
 
 
46,481

Taxes receivable
 
 
 
 
45,268

Deferred charges
 
 
 
 
40,119

Deposits for construction
 
 
 
 
36,472

Securities and derivatives
 
 
 
 
29,423

Investment in shares of Guggenheim Credit Income Fund
 
 
 
 
12,177

Deferred income taxes
 
 
 
 
8,901

Other intangible assets, net
 
 
 
 
8,075

Prepaid expenses
 
 
 
 
7,741

Office lease right-of-use assets, net (f)
 
 
 
 
7,519

Leasehold improvements, furniture and fixtures
 
 
 
1,580

Other
 
 
 
 
1,036

Total other assets, net
 
 
 
 
$
631,637

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Total pro rata debt outstanding (b) (g)
 
 
 
 
$
6,298,060

Dividends payable
 
 
 
 
181,346

Deferred income taxes
 
 
 
 
179,309

Accounts payable, accrued expenses and other liabilities:
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
$
160,360

Prepaid and deferred rents
 
 
 
 
118,121

Operating lease liabilities (f)
 
 
 
 
87,658

Accrued taxes payable
 
 
 
 
44,255

Tenant security deposits
 
 
 
 
41,171

Securities and derivatives
 
 
 
 
6,174

Other
 
 
 
 
29,666

Total accounts payable, accrued expenses and other liabilities
 
 
 
 
$
487,405


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Investing for the long runTM | 3


W. P. Carey Inc.
Overview – Fourth Quarter 2019
Other
Ownership %
 
Number of Shares / Units Owned
 
NAV
 
Implied Value
 
 
 
A
 
B
 
A x B
Ownership in Managed Programs: (h)
 
 
 
 
 
 


CPA:18 – Global
3.9
%
 
5,753,883

 
$
8.67

(i) 
$
49,886

CWI 1
3.9
%
 
5,632,897

 
10.39

(i) 
58,526

CWI 2
3.8
%
 
3,506,798

 
11.41

(i) 
40,013

CESH
2.4
%
 
3,492

 
1,000.00

(j) 
3,492

 
 
 
 
 
 
 
$
151,917

________
(a)
Normalized pro rata cash NOI and adjusted EBITDA are non-GAAP measures. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures and for details on how they are calculated.
(b)
Presented on a pro rata basis. See the Terms and Definitions section in the Appendix for a description of pro rata.
(c)
Amounts are gross of fees paid to the respective subadvisors of CWI 1 and CWI 2.
(d)
We are entitled to receive distributions of up to 10% of the Available Cash of each of the Managed REITs, as defined in their respective operating partnership agreements. Pursuant to the terms of their subadvisory agreements, however, 20% of the distributions of Available Cash we receive from CWI 1 and 25% of the distributions of Available Cash we receive from CWI 2 are paid to their respective subadvisors. Amounts for CWI 1 and CWI 2 are net of fees paid to their respective subadvisors.
(e)
Represents the value of real estate not included in normalized pro rata cash NOI, such as vacant assets, in-progress build-to-suit properties, a common equity interest in a Las Vegas retail center and an unstabilized hotel operating property, which was classified as held for sale as of December 31, 2019 and sold in January 2020.
(f)
We adopted Accounting Standards Update 2016-02, Leases (Topic 842) for our interim and annual periods beginning January 1, 2019, whereby the rights and obligations of lessees under substantially all leases, existing and new, are capitalized and recorded on the balance sheet. As a result, we recognized $114.2 million of land lease right-of-use assets included in In-place lease intangible assets and other, $7.5 million of office lease right-of-use assets in Other assets, net, and $87.7 million of corresponding operating lease liabilities for certain operating office and land lease arrangements in Accounts payable, accrued expenses and other liabilities as of December 31, 2019.
(g)
Excludes unamortized discount, net totaling $26.8 million and unamortized deferred financing costs totaling $23.6 million as of December 31, 2019.
(h)
Separate from operating partnership interests in the Managed REITs and our interests in unconsolidated real estate joint ventures with our affiliate, CPA:18 Global.
(i)
We calculated the estimated net asset values per share (“NAVs”) by relying in part on an estimate of the fair market values of the respective real estate portfolios adjusted to give effect to mortgage loans, both provided by third parties, as well as other adjustments. Refer to the SEC filings of the Managed REITs for the calculation methodologies of the respective NAVs.
(j)
We own limited partnership units of CESH at its private placement price of $1,000 per unit; we do not intend to calculate a NAV for CESH.

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Investing for the long runTM | 4




W. P. Carey Inc.
Financial Results
Fourth Quarter 2019












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Investing for the long runTM | 5


W. P. Carey Inc.
Financial Results – Fourth Quarter 2019
Consolidated Statements of Income – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Dec. 31, 2019
 
Sep. 30, 2019
 
Jun. 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
Revenues
 
 
 
 
 
 
 
 
 
Real Estate:
 
 
 
 
 
 
 
 
 
Lease revenues
$
274,795

 
$
278,839

 
$
269,802

 
$
262,939

 
$
233,632

Lease termination income and other
12,317

 
14,377

 
6,304

 
3,270

 
2,952

Operating property revenues
9,250

 
9,538

 
15,436

 
15,996

 
11,707

 
296,362

 
302,754

 
291,542

 
282,205

 
248,291

Investment Management:
 
 
 
 
 
 
 
 
 
Asset management revenue
9,732

 
9,878

 
9,790

 
9,732

 
11,954

Reimbursable costs from affiliates
4,072

 
4,786

 
3,821

 
3,868

 
5,042

Structuring and other advisory revenue
1,061

 
587

 
58

 
2,518

 
8,108

 
14,865

 
15,251

 
13,669

 
16,118

 
25,104

 
311,227

 
318,005

 
305,211

 
298,323

 
273,395

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
111,607

 
109,517

 
113,632

 
112,379

 
93,321

General and administrative
17,069

 
17,210

 
19,729

 
21,285

 
17,449

Reimbursable tenant costs
12,877

 
15,611

 
13,917

 
13,171

 
10,145

Property expenses, excluding reimbursable tenant costs
9,341

 
10,377

 
9,915

 
9,912

 
8,319

Operating property expenses
8,000

 
8,547

 
10,874

 
10,594

 
7,844

Impairment charges
6,758

 
25,781

 

 

 

Stock-based compensation expense
4,939

 
4,747

 
4,936

 
4,165

 
3,902

Reimbursable costs from affiliates
4,072

 
4,786

 
3,821

 
3,868

 
5,042

Subadvisor fees (a)
1,964

 
1,763

 
1,650

 
2,202

 
2,226

Merger and other expenses (b)
(811
)
 
70

 
696

 
146

 
37,098

 
175,816

 
198,409

 
179,170

 
177,722

 
185,346

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(53,667
)
 
(58,626
)
 
(59,719
)
 
(61,313
)
 
(57,250
)
Other gains and (losses) (c)
43,593

 
(12,402
)
 
(671
)
 
955

 
13,215

Gain (loss) on sale of real estate, net
17,501

 
71

 
(362
)
 
933

 
99,618

Equity in earnings of equity method investments in the Managed Programs and real estate
8,018

 
5,769

 
3,951

 
5,491

 
15,268

(Loss) gain on change in control of interests (d) (e)

 
(8,416
)
 

 

 
47,814

 
15,445

 
(73,604
)
 
(56,801
)
 
(53,934
)
 
118,665

Income before income taxes
150,856

 
45,992

 
69,240

 
66,667

 
206,714

(Provision for) benefit from income taxes
(21,064
)
 
(4,157
)
 
(3,119
)
 
2,129

 
(11,436
)
Net Income
129,792

 
41,835

 
66,121

 
68,796

 
195,278

Net income attributable to noncontrolling interests
(420
)