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Section 1: 8-K (8-K)

Document


 

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): May 4, 2018
393343685_wpchighreslogoa13.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, NY
 
10020
(Address of principal executive offices)
 
(Zip Code)
 

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

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 May 4, 2018, W. P. Carey Inc. (together with its predecessors, the “Company”) issued an earnings release announcing its financial results for the quarter ended March 31, 2018. 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 May 4, 2018, the Company made available certain unaudited supplemental financial information at March 31, 2018. 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 99.1 Earnings release of the Company for the quarter ended March 31, 2018.

Exhibit 99.2 Supplemental financial information of the Company at March 31, 2018.







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:
May 4, 2018
By:
/s/ ToniAnn Sanzone
 
 
 
ToniAnn Sanzone
 
 
 
Chief Financial Officer


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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
institutionalir@wpcarey.com

Individual Investors:
W. P. Carey Inc.
212-492-8920
ir@wpcarey.com

Press Contact:
Guy Lawrence
Ross & Lawrence
212-308-3333
gblawrence@rosslawpr.com

W. P. Carey Inc. Announces First Quarter 2018 Financial Results


New York, NY – May 4, 2018 – 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 first quarter ended March 31, 2018.

Total Company
Net income attributable to W. P. Carey of $65.3 million, or $0.60 per diluted share
AFFO of $138.4 million, or $1.28 per diluted share
Quarterly cash dividend raised to $1.015 per share, equivalent to an annualized dividend rate of $4.06 per share
Affirm 2018 AFFO guidance range of $5.30 to $5.50 per diluted share

Business Segments

Owned Real Estate
Segment net income attributable to W. P. Carey of $45.3 million
Segment AFFO of $114.9 million, or $1.06 per diluted share
Acquisitions and completed capital investment projects totaling $106.2 million
Ten active capital investment projects for a total commitment of $139.3 million at quarter end
Gross disposition proceeds totaling $35.5 million
Portfolio occupancy of 99.7%
Weighted-average lease term of 9.7 years

Investment Management
Segment net income attributable to W. P. Carey of $20.0 million
Segment AFFO of $23.4 million, or $0.22 per diluted share


W. P. Carey Inc. 3/31/2018 Earnings Release 8-K – 1


Balance Sheet and Capitalization
Issued €500 million of 2.125% Unsecured Senior Notes due 2027


MANAGEMENT COMMENTARY

"For the 2018 first quarter, we generated AFFO per diluted share of $1.28, up 2.4% from the same period last year, and we are affirming our full year guidance range of between $5.30 and $5.50 per diluted share based on the current strength of our pipeline and the breadth of opportunities available to us," said Jason Fox, Chief Executive Officer of W. P. Carey. “We also continued to make progress executing on our strategy to create long-term shareholder value by maximizing recurring revenue streams, continuing to improve the overall quality of our portfolio, simplifying our business and managing our balance sheet to reduce risk and enhance our cost of capital.”
 

QUARTERLY FINANCIAL RESULTS

As previously announced, as a result of its decision to exit non-traded retail fundraising activities in June 2017, the Company revised its segment presentation recognizing equity income earned through its ownership interests in the Managed REITs and its special member interests in the operating partnerships of the Managed REITs within its Investment Management segment. Prior to the 2017 second quarter, these items were recognized within its Owned Real Estate segment. For purposes of comparability, segment financial statements for all periods presented have been revised to reflect this change.

Revenues

Total Company: Revenues excluding reimbursable costs (net revenues) for the 2018 first quarter totaled $190.3 million, up 1.2% from $188.1 million for the 2017 first quarter.

Owned Real Estate: Owned Real Estate net revenues for the 2018 first quarter were $171.4 million, up 4.8% from $163.5 million for the 2017 first quarter, due to higher lease revenues resulting primarily from a stronger euro relative to the U.S. dollar and rent escalations, partially offset by the impact of planned dispositions.

Investment Management: Investment Management net revenues for the 2018 first quarter were $18.9 million, down 23.2% from $24.6 million for the 2017 first quarter, due primarily to the cessation of dealer manager fees resulting from the Company’s exit from non-traded retail fundraising and lower structuring revenues.

Net Income Attributable to W. P. Carey

Net income attributable to W. P. Carey for the 2018 first quarter was $65.3 million, up 13.6% compared to $57.5 million for the 2017 first quarter, due primarily to a higher aggregate gain on sale of real estate.

Adjusted Funds from Operations (AFFO)

AFFO for the 2018 first quarter was $1.28 per diluted share, up 2.4% from $1.25 per diluted share for the 2017 first quarter, due primarily to rent escalations, lower interest expense and a stronger euro relative to the U.S. dollar, partially offset by lower structuring revenues.

Note: Further information concerning AFFO, a non-GAAP supplemental performance metric, is presented in the accompanying tables and related notes.

Dividend

As previously announced, on March 15, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $1.015 per share, equivalent to an annualized dividend rate of $4.06 per share. The dividend was paid on April 16, 2018 to stockholders of record as of March 29, 2018.



W. P. Carey Inc. 3/31/2018 Earnings Release 8-K – 2


AFFO GUIDANCE

For the 2018 full year, the Company affirms that it expects to report AFFO of between $5.30 and $5.50 per diluted share, based on the following key assumptions:

(i)
investments for the Company’s Owned Real Estate portfolio of between $500 million and $1 billion;

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

(iii)
total general and administrative expenses of between $65 million and $70 million.

Note: The Company does not provide guidance on net income. The Company only provides guidance on 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

Euro-Denominated Bond Issuance

As previously announced, on March 6, 2018, the Company completed an underwritten public offering of €500 million aggregate principal amount of 2.125% Senior Notes due April 15, 2027. The Company used the net proceeds from this offering to repay its term loans, reduce secured mortgage debt and reduce amounts outstanding under its unsecured revolving credit facility.


OWNED REAL ESTATE

Investments

During the 2018 first quarter, the Company completed total investments of $106.2 million, comprised of two acquisitions totaling $85.2 million and one build-to-suit project placed into service at a total cost of $21.0 million, including transaction-related costs and fees.

As of March 31, 2018, the Company had ten active capital investment projects for an expected total investment of approximately $139.3 million, of which $88.5 million is currently expected to be completed during 2018.

Dispositions

During the 2018 first quarter, the Company disposed of five properties for total gross proceeds of $35.5 million.

Composition

As of March 31, 2018, the Company’s Owned Real Estate portfolio consisted of 886 net lease properties, comprising 85.4 million square feet leased to 208 tenants, and two hotel operating properties. As of that date, the weighted-average lease term of the net lease portfolio was 9.7 years and the occupancy rate was 99.7%.


INVESTMENT MANAGEMENT

W. P. Carey is the advisor to CPA:17 – Global and CPA:18 – Global (the CPA® REITs), Carey Watermark Investors Incorporated (CWI 1) and Carey Watermark Investors 2 Incorporated (CWI 2) (the CWI® REITs, and together with the CPA REITs, the Managed REITs), and Carey European Student Housing Fund I, L.P. (CESH I, and together with the Managed REITs, the Managed Programs).


W. P. Carey Inc. 3/31/2018 Earnings Release 8-K – 3


Acquisitions

During the 2018 first quarter, the Company structured one new student housing investment on behalf of the Managed Programs totaling $28.5 million.

Assets Under Management

As of March 31, 2018, the Managed Programs had total assets under management of approximately $13.3 billion.


* * * * *


Supplemental Information

The Company has provided supplemental unaudited financial and operating information regarding the 2018 first quarter, 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 May 4, 2018.


* * * * *


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

Date/Time: Friday, May 4, 2018 at 10:00 a.m. Eastern Time
Call-in Number: 1-877-465-1289 (U.S.) or +1-201-689-8762 (international)

Audio Webcast: www.wpcarey.com/earnings

Audio Webcast Replay

An audio replay of the call will be available at www.wpcarey.com/earnings.


* * * * *


W. P. Carey Inc.

Celebrating its 45th anniversary, W. P. Carey ranks among the largest diversified net lease REITs with an enterprise value of over $10 billion and a portfolio of operationally-critical commercial real estate totaling 886 properties covering approximately 85 million square feet. For over four decades the Company has invested in high-quality single-tenant industrial, warehouse, office and retail properties subject to long-term leases with built-in rent escalators. Its portfolio is located primarily in North America and Northern and Western Europe and is well-diversified by tenant, property type, geographic location and tenant industry.
www.wpcarey.com


* * * * *



W. P. Carey Inc. 3/31/2018 Earnings Release 8-K – 4


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, the statements made by Mr. Fox, including with regard to our investment pipeline and opportunities; weighted-average lease term, criticality, yields and occupancy rate of our owned real estate and other portfolio characteristics, including improvements to its quality; annualized dividends and payout ratio; disposition and capital recycling plans, and the intended results thereof; our access to capital markets, as well as our financing activities, cost of debt and interest expense levels, including the management of our balance sheet to reduce risk and improve our cost of capital; adjusted funds from operations coverage and guidance, including underlying assumptions, such as the timing of acquisitions, our level of general and administrative expense, and dispositions and the impact thereof, and current trends; our revenue mix and the stability and recurring nature of our income streams, as well as the benefits and results of our strategic shift towards focusing exclusively on net lease investing for our Owned Portfolio, such as simplifying our business; and anticipated future financial and operating performance and results, including underlying assumptions and estimates of growth, and our ability to execute on our strategy to create long-term shareholder value, including by maximizing recurring revenue streams. 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 Item 1A. Risk Factors in W. P. Carey’s Annual Report on Form 10-K for the year ended December 31, 2017. 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. 3/31/2018 Earnings Release 8-K – 5


W. P. CAREY INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share amounts)
 
March 31, 2018
 
December 31, 2017
Assets
 
 
 
Investments in real estate:
 
 
 
Land, buildings and improvements (a)
$
5,523,209

 
$
5,457,265

Net investments in direct financing leases
725,676

 
721,607

In-place lease and other intangible assets
1,235,828

 
1,213,976

Above-market rent intangible assets
639,057

 
640,480

Assets held for sale, net (b)
33,182

 

Investments in real estate
8,156,952

 
8,033,328

Accumulated depreciation and amortization (c)
(1,399,810
)
 
(1,329,613
)
Net investments in real estate
6,757,142

 
6,703,715

Equity investments in the Managed Programs and real estate (d)
358,068

 
341,457

Cash and cash equivalents
171,331

 
162,312

Due from affiliates
75,540

 
105,308

Other assets, net
280,054

 
274,650

Goodwill
645,736

 
643,960

Total assets
$
8,287,871

 
$
8,231,402

 
 
 
 
Liabilities and Equity
 
 
 
Debt:
 
 
 
Unsecured senior notes, net
$
3,115,839

 
$
2,474,661

Unsecured revolving credit facility
267,424

 
216,775

Unsecured term loans, net

 
388,354

Non-recourse mortgages, net
1,005,868

 
1,185,477

Debt, net
4,389,131

 
4,265,267

Accounts payable, accrued expenses and other liabilities
247,138

 
263,053

Below-market rent and other intangible liabilities, net
111,801

 
113,957

Deferred income taxes
59,022

 
67,009

Distributions payable
110,309

 
109,766

Total liabilities
4,917,401

 
4,819,052

Redeemable noncontrolling interest
965

 
965

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

 

Common stock, $0.001 par value, 450,000,000 shares authorized; 107,194,440 and 106,922,616 shares, respectively, issued and outstanding
107

 
107

Additional paid-in capital
4,439,433

 
4,433,573

Distributions in excess of accumulated earnings
(1,097,415
)
 
(1,052,064
)
Deferred compensation obligation
36,147

 
46,656

Accumulated other comprehensive loss
(229,238
)
 
(236,011
)
Total stockholders’ equity
3,149,034

 
3,192,261

Noncontrolling interests
220,471

 
219,124

Total equity
3,369,505

 
3,411,385

Total liabilities and equity
$
8,287,871

 
$
8,231,402

________
(a)
Includes $40.2 million and $83.0 million of amounts attributable to operating properties as of March 31, 2018 and December 31, 2017, respectively.
(b)
At March 31, 2018, we had one property (an operating property) classified as Assets held for sale, net, which was subsequently sold in April 2018.
(c)
Includes $658.8 million and $630.0 million of accumulated depreciation on buildings and improvements as of March 31, 2018 and December 31, 2017, respectively, and $741.0 million and $699.7 million of accumulated amortization on lease intangibles as of March 31, 2018 and December 31, 2017, respectively.
(d)
Our equity investments in the Managed Programs totaled $217.6 million and $201.4 million as of March 31, 2018 and December 31, 2017, respectively. Our equity investments in real estate joint ventures totaled $140.5 million and $140.0 million as of March 31, 2018 and December 31, 2017, respectively.



W. P. Carey Inc. 3/31/2018 Earnings Release 8-K – 6


W. P. CAREY INC.
Quarterly Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)
 
Three Months Ended
 
March 31, 2018
 
December 31, 2017
 
March 31, 2017
Revenues
 
 
 
 
 
Owned Real Estate:
 
 
 
 
 
Lease revenues
$
163,213

 
$
154,826

 
$
155,781

Operating property revenues
7,218

 
6,910

 
6,980

Reimbursable tenant costs
6,219

 
5,584

 
5,221

Lease termination income and other
942

 
515

 
760

 
177,592

 
167,835

 
168,742

Investment Management:
 
 
 
 
 
Asset management revenue
16,985

 
16,854

 
17,367

Reimbursable costs from affiliates
5,304

 
6,055

 
25,700

Structuring revenue
1,739

 
6,217

 
3,834

Other advisory revenue
190

 

 
91

Dealer manager fees

 

 
3,325

 
24,218

 
29,126

 
50,317

 
201,810

 
196,961

 
219,059

Operating Expenses
 

 
 
 
 

Depreciation and amortization
65,957

 
64,015

 
62,430

General and administrative
18,583

 
17,702

 
18,424

Reimbursable tenant and affiliate costs
11,523

 
11,639

 
30,921

Property expenses, excluding reimbursable tenant costs (a)
9,899

 
9,560

 
10,110

Stock-based compensation expense
8,219

 
4,268

 
6,910

Impairment charges
4,790

 
2,769

 

Subadvisor fees (b)
2,032

 
2,002

 
2,720

Other expenses
(37
)
 
(533
)
 
73

Restructuring and other compensation (c)

 
289

 

Dealer manager fees and expenses

 

 
3,294

 
120,966

 
111,711

 
134,882

Other Income and Expenses
 

 
 
 
 

Interest expense
(38,074
)
 
(40,401
)
 
(41,957
)
Equity in earnings of equity method investments in the Managed Programs
   and real estate
15,325

 
16,930

 
15,774

Other gains and (losses)
(2,763
)
 
1,356

 
516

 
(25,512
)
 
(22,115
)
 
(25,667
)
Income before income taxes and gain on sale of real estate
55,332

 
63,135

 
58,510

Benefit from income taxes
6,002

 
192

 
1,305

Income before gain on sale of real estate
61,334

 
63,327

 
59,815

Gain on sale of real estate, net of tax
6,732

 
11,146

 
10

Net Income
68,066

 
74,473

 
59,825

Net (income) loss attributable to noncontrolling interests
(2,792
)
 
736

 
(2,341
)
Net Income Attributable to W. P. Carey
$
65,274

 
$
75,209

 
$
57,484

 
 
 
 
 
 
Basic Earnings Per Share
$
0.60

 
$
0.69

 
$
0.53

Diluted Earnings Per Share
$
0.60

 
$
0.69

 
$
0.53

Weighted-Average Shares Outstanding
 

 
 
 
 

Basic
108,057,940

 
108,041,556

 
107,562,484

Diluted
108,211,936

 
108,208,918

 
107,764,279

 
 
 
 
 
 
Distributions Declared Per Share
$
1.015

 
$
1.010

 
$
0.995

__________
(a)
Amount for the three months ended March 31, 2018 includes $5.7 million of property expenses related to two hotel operating properties.
(b)
We earn investment management revenue from CWI 1 and CWI 2 in our role as their advisor. Pursuant to the terms of their subadvisory agreements, however, 20% of the fees we receive from CWI 1 and 25% of the fees we receive from CWI 2 are paid to their respective subadvisors. In connection with the acquisitions of multi-family properties on behalf of CPA:18 – Global, we entered into agreements with third-party advisors for the day-to-day management of the properties for which we pay 100% of asset management fees paid to us by CPA:18 – Global. Pursuant to the terms of the subadvisory agreement we had with Carey Credit Income Fund’s (CCIF) subadvisor (prior to our resignation as the advisor to CCIF in the third quarter of 2017), we paid a subadvisory fee equal to 50% of the asset management fees and organization and offering costs paid to us by CCIF.
(c)
Amount for the three months ended December 31, 2017 represents restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.

W. P. Carey Inc. 3/31/2018 Earnings Release 8-K – 7


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
 
March 31, 2018
 
December 31, 2017
 
March 31, 2017
Net income attributable to W. P. Carey
$
65,274

 
$
75,209

 
$
57,484

Adjustments:
 
 
 
 
 
Depreciation and amortization of real property
64,580

 
62,603

 
61,182

Gain on sale of real estate, net
(6,732
)
 
(11,146
)
 
(10
)
Impairment charges
4,790

 
2,769

 

Proportionate share of adjustments for noncontrolling interests
(2,782
)
 
(2,696
)
 
(2,541
)
Proportionate share of adjustments to equity in net income of partially owned entities
1,252

 
877

 
2,717

Total adjustments
61,108

 
52,407

 
61,348

FFO (as defined by NAREIT) Attributable to W. P. Carey (a)
126,382

 
127,616

 
118,832

Adjustments:
 
 
 
 
 
Tax benefit – deferred
(12,155
)
 
(10,497
)
 
(5,551
)
Above- and below-market rent intangible lease amortization, net (b)
11,802

 
17,922

 
12,491

Stock-based compensation
8,219

 
4,268

 
6,910

Other amortization and non-cash items (c)
5,146

 
2,198

 
2,094

Straight-line and other rent adjustments
(2,296
)
 
(2,002
)
 
(3,500
)
Loss (gain) on extinguishment of debt
1,609

 
(81
)
 
912

Realized (gains) losses on foreign currency
(1,515
)
 
(472
)
 
403

Amortization of deferred financing costs
(194
)
 
2,043

 
1,400

Other expenses
(37
)
 
(533
)
 
73

Restructuring and other compensation (d)

 
289

 

Proportionate share of adjustments to equity in net income of partially owned entities
1,752

 
2,884

 
550

Proportionate share of adjustments for noncontrolling interests
(343
)
 
(1,573
)
 
(376
)
Total adjustments
11,988

 
14,446

 
15,406

AFFO Attributable to W. P. Carey (a)
$
138,370

 
$
142,062

 
$
134,238

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (a)
$
126,382

 
$
127,616

 
$
118,832

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (a)
$
1.16

 
$
1.18

 
$
1.10

AFFO attributable to W. P. Carey (a)
$
138,370

 
$
142,062

 
$
134,238

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

 
$
1.31

 
$
1.25

Diluted weighted-average shares outstanding
108,211,936

 
108,208,918

 
107,764,279

__________
(a)
FFO and AFFO are non-GAAP measures. See below for a description of FFO and AFFO.
(b)
Amount for the three months ended December 31, 2017 includes an adjustment of $5.7 million related to the accelerated amortization of an above-market rent intangible in connection with a lease restructuring.
(c)
Primarily represents unrealized gains and losses from foreign exchange movements and derivatives.
(d)
Amount for the three months ended December 31, 2017 represents restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.



W. P. Carey Inc. 3/31/2018 Earnings Release 8-K – 8


Non-GAAP Financial Disclosure

Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc., or 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 revised in February 2004. 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 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. Our FFO calculation complies with NAREIT’s policy described above.

We modify the NAREIT computation of FFO to include other adjustments to GAAP net income to adjust for certain non-cash charges such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rents, 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 certain lease termination income, 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 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 which 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 earnings computed under GAAP or as alternatives to cash from operating activities computed under GAAP or as indicators of our ability to fund our cash needs.


W. P. Carey Inc. 3/31/2018 Earnings Release 8-K – 9
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2

W. P. Carey Inc.
Supplemental Information
First Quarter 2018








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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. “CPA® REITs” means Corporate Property Associates 17 – Global Incorporated, or CPA:17 – Global, and Corporate Property Associates 18 – Global Incorporated, or CPA:18 – Global. “CWI® REITs” means Carey Watermark Investors Incorporated, or CWI 1, and Carey Watermark Investors 2 Incorporated, or CWI 2. “Managed REITs” means the CPA REITs and the CWI REITs. “Managed Programs” means the Managed REITs and Carey European Student Housing Fund I, L.P., or CESH I. “CCIF” means Carey Credit Income Fund (now known as Guggenheim Credit Income Fund, or GCIF), which was included in the Managed Programs prior to our resignation as its advisor during the third quarter of 2017. “U.S.” means United States. “AUM” means assets under management. “ABR” means contractual minimum annualized base rent.

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, or GAAP, including funds from operations, or FFO; adjusted funds from operations, or AFFO; earnings before interest, taxes, depreciation and amortization, or EBITDA; adjusted EBITDA; pro rata cash net operating income, or 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., or NAREIT, an industry trade group.

Amounts may not sum to totals due to rounding.


W. P. Carey Inc.
Supplemental Information – First Quarter 2018
Table of Contents
Overview
 
 
 
Financial Results
 
Statements of Income – Last Five Quarters
 
FFO and AFFO – Last Five Quarters
 
 
 
Balance Sheets and Capitalization
 
 
 
Owned Real Estate
 
Investment Activity
 
 
 
Investment Management
 
 
 
Appendix
 
Adjusted EBITDA  Last Five Quarters
 



W. P. Carey Inc.
Overview – First Quarter 2018
Summary Metrics
As of or for the three months ended March 31, 2018.
Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment
 
 
 
 
 
 
 
Owned
Real Estate
 
Investment Management
 
Total
Revenues, excluding reimbursable costs – consolidated ($'000)
 
$
171,373

 
$
18,914

 
$
190,287

Net income attributable to W. P. Carey ($'000)
 
45,300

 
19,974

 
65,274

Net income attributable to W. P. Carey per diluted share
 
0.42

 
0.18

 
0.60

Normalized pro rata cash NOI from real estate ($'000) (a) (b)
 
169,101

 
N/A

 
169,101

Adjusted EBITDA ($'000) (a) (b)
 
159,154

 
24,768

 
183,922

AFFO attributable to W. P. Carey ($'000) (a) (b)
 
114,934

 
23,436

 
138,370

AFFO attributable to W. P. Carey per diluted share (a) (b)
 
1.06

 
0.22

 
1.28

 
 
 
 
 
 
 
 
 
 
Distributions declared per share – first quarter
 
 
 
 
 
1.015

Distributions declared per share – first quarter annualized
 
 
 
 
 
4.06

Dividend yield – annualized, based on quarter end share price of $61.99
 
 
 
 
 
6.5
%
Dividend payout ratio – for the three months ended March 31, 2018 (c)
 
 
 
 
 
79.3
%
 
 
 
 
 
 
 
 
 
 
Balance Sheet and Capitalization
 
 
 
 
 
 
 
 
 
Equity market capitalization – based on quarter end share price of $61.99 ($'000)
 
 
 
 
 
$
6,644,983

Pro rata net debt ($'000) (d)
 
 
 
 
 
 
 
 
4,271,443

Enterprise value ($'000)
 
 
 
 
 
 
 
 
10,916,426

 
 
 
 
 
 
 
 
 
 
Total capitalization ($'000) (e)
 
 
 
 
 
 
 
 
11,087,757

 
 
 
 
 
 
 
 
 
 
Total consolidated debt ($'000)
 
 
 
 
 
 
 
 
4,389,131

Gross assets ($'000) (f)
 
 
 
 
 
 
 
 
8,946,702

Liquidity ($'000) (g)
 
 
 
 
 
 
 
 
1,403,805

 
 
 
 
 
 
 
 
 
 
Pro rata net debt to enterprise value (b)
 
 
 
 
 
 
 
 
39.1
%
Pro rata net debt to adjusted EBITDA (annualized) (a) (b)
 
 
 
 
 
5.8x

Total consolidated debt to gross assets
 
 
 
 
 
 
 
 
49.1
%
 
 
 
 
 
 
 
 
 
 
Weighted-average interest rate (b)
 
 
 
 
 
 
 
 
3.5
%
Weighted-average debt maturity (years) (b)
 
 
 
 
 
 
 
 
6.0

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

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

 
 
 
 
 
 
 
 
 
 
Owned Real Estate Portfolio (Pro Rata)
 
 
 
 
 
 
 
 
 
ABR ($’000) (h)
 
 
 
 
 
 
 
 
$
689,486

Number of net-leased properties
 
 
 
 
 
 
 
 
886

Number of operating properties
 
 
 
 
 
 
 
 
2

Number of tenants – net-leased properties
 
 
 
 
 
 
 
 
208

 
 
 
 
 
 
 
 
 
 
ABR from investment grade tenants as a % of total ABR – net-leased properties (i)
 
 
 
 
 
27.6
%
 
 
 
 
 
 
 
 
 
 
Net-leased properties – square footage (millions)
 
 
 
 
 
 
 
 
85.4

 
 
 
 
 
 
 
 
 
 
Occupancy – net-leased properties
 
 
 
 
 
 
 
 
99.7
%
Weighted-average lease term (years)
 
 
 
 
 
 
 
 
9.7

 
 
 
 
 
 
 
 
 
 
Acquisitions and completed capital investment projects – first quarter ($'000)
 
 
 
$
106,194

Dispositions – first quarter ($'000)
 
 
 
 
 
 
 
 
35,486

________
(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 distributions 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.
(e)
Represents equity market capitalization plus total pro rata debt outstanding. 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 – First Quarter 2018

(f)
Gross assets represent consolidated total assets before accumulated depreciation on buildings and improvements. Gross assets are net of accumulated amortization on in-place lease and other intangible assets of $450.8 million and above-market rent intangible assets of $290.2 million.
(g)
Represents availability on our Senior Unsecured Credit Facility plus consolidated cash and cash equivalents.
(h)
See the Terms and Definitions section in the Appendix for a description of ABR.
(i)
Percentage of portfolio is based on ABR, as of March 31, 2018. Includes tenants or guarantors with investment grade ratings (19.2%) and subsidiaries of non-guarantor parent companies with investment grade ratings (8.4%). 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 – First Quarter 2018
Components of Net Asset Value
Dollars in thousands, except per share amounts.
Owned Real Estate
 
 
Three Months Ended
Mar. 31, 2018
 
Annualized
Normalized pro rata cash NOI (a) (b)
 
 
$
169,101

 
$
676,404

 
 
 
 
 
 
Investment Management
 
 
Three Months Ended
Mar. 31, 2018
 
Twelve Months Ended
Mar. 31, 2018
Adjusted EBITDA (a) (b)
 
 
$
24,768

 
$
120,018

Selected Components of Adjusted EBITDA:
 
 
 
 
 
Asset management revenue (c)
 
 
16,985

 
69,743

Structuring revenue (c)
 
 
1,739

 
32,103

Operating partnership interests in real estate cash flow of Managed REITs (d)
 
9,944

 
43,994

Back-end fees and interests associated with the Managed Programs
 
 
 
 
 
 
 
 
Balance Sheet – Selected Information (Consolidated Unless Otherwise Stated)
 
As of Mar. 31, 2018
Assets
 
 
 
 
 
Book value of real estate excluded from NOI (e)
 
 
 
 
$
43,548

Cash and cash equivalents
 
 
 
 
171,331

Due from affiliates
 
 
 
 
75,540

Other assets, net:
 
 
 
 
 
Straight-line rent adjustments
 
 
 
 
$
75,870

Deferred charges
 
 
 
 
47,998

Restricted cash, including escrow
 
 
 
 
44,052

Investment in GCIF securities
 
 
 
 
23,244

Securities and derivatives
 
 
 
 
18,636

Accounts receivable
 
 
 
 
18,369

Other intangible assets, net
 
 
 
 
13,473

Taxes receivable
 
 
 
 
12,458

Prepaid expenses
 
 
 
 
12,424

Note receivable
 
 
 
 
9,867

Leasehold improvements, furniture and fixtures
 
 
 
3,451

Other
 
 
 
 
212

Total other assets, net
 
 
 
 
$
280,054

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Total pro rata debt outstanding (b)
 
 
 
 
$
4,442,774

Distributions payable
 
 
 
 
110,309

Deferred income taxes
 
 
 
 
59,022

Accounts payable, accrued expenses and other liabilities:
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
$
81,445

Prepaid and deferred rents
 
 
 
 
78,543

Accrued taxes payable
 
 
 
 
30,928

Tenant security deposits
 
 
 
 
29,445

Securities and derivatives
 
 
 
 
11,804

Straight-line rent adjustments
 
 
 
 
2,055

Other
 
 
 
 
12,918

Total accounts payable, accrued expenses and other liabilities
 
 
 
 
$
247,138


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Investing for the long runTM | 3


W. P. Carey Inc.
Overview – First Quarter 2018
Other
Number of Shares / Units Owned
 
NAV
 
Implied Value
 
A
 
B
 
A x B
Ownership in Managed Programs: (f)
 
 
 
 


CPA:17 – Global (4.4% ownership)
15,385,683

 
$
10.04

(g) 
$
154,472

CPA:18 – Global (2.8% ownership)
3,961,878

 
8.36

(g) 
33,121

CWI 1 (2.3% ownership)
3,257,297

 
10.41

(g) 
33,908

CWI 2 (2.0% ownership)
1,799,545

 
11.11

(g) 
19,993

CESH I (2.4% ownership)
3,492

 
1,000.00

(h) 
3,492

 
 
 
 
 
$
244,986

________
(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, CWI 2, CPA:18 Global (for multi-family properties) and CCIF (prior to our resignation as the advisor to CCIF in the third quarter of 2017).
(d)
We are entitled to receive distributions of our share of earnings 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 net operating income, such as vacant assets and in-progress build-to-suit properties.
(f)
Separate from operating partnership interests in the Managed REITs and our interests in unconsolidated real estate joint ventures with our affiliate, CPA:17 Global.
(g)
We calculated the estimated net asset values per share, or 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.
(h)
We own limited partnership units of CESH I at its private placement price of $1,000 per share; a NAV for CESH I has not yet been calculated.

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Investing for the long runTM | 4




W. P. Carey Inc.
Financial Results
First Quarter 2018





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Investing for the long runTM | 5


W. P. Carey Inc.
Financial Results – First Quarter 2018
Consolidated Statements of Income – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Mar. 31, 2018
 
Dec. 31, 2017
 
Sep. 30, 2017
 
Jun. 30, 2017
 
Mar. 31, 2017
Revenues
 
 
 
 
 
 
 
 
 
Owned Real Estate:
 
 
 
 
 
 
 
 
 
Lease revenues
$
163,213

 
$
154,826

 
$
161,511

 
$
158,255

 
$
155,781

Operating property revenues
7,218

 
6,910

 
8,449

 
8,223

 
6,980

Reimbursable tenant costs
6,219

 
5,584

 
5,397

 
5,322

 
5,221

Lease termination income and other
942

 
515

 
1,227

 
2,247

 
760

 
177,592

 
167,835

 
176,584

 
174,047

 
168,742

Investment Management:
 
 
 
 
 
 
 
 
 
Asset management revenue
16,985

 
16,854

 
17,938

 
17,966

 
17,367

Reimbursable costs from affiliates
5,304

 
6,055

 
6,211

 
13,479

 
25,700

Structuring revenue
1,739

 
6,217

 
9,817

 
14,330

 
3,834

Other advisory revenue
190

 

 
99

 
706

 
91

Dealer manager fees

 

 
105

 
1,000

 
3,325

 
24,218

 
29,126

 
34,170

 
47,481

 
50,317

 
201,810

 
196,961

 
210,754

 
221,528

 
219,059

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
65,957

 
64,015

 
64,040

 
62,849

 
62,430

General and administrative
18,583

 
17,702

 
17,236

 
17,529

 
18,424

Reimbursable tenant and affiliate costs
11,523

 
11,639

 
11,608

 
18,801

 
30,921

Property expenses, excluding reimbursable tenant costs (a)
9,899

 
9,560

 
10,556

 
10,530

 
10,110

Stock-based compensation expense
8,219

 
4,268

 
4,635

 
3,104

 
6,910

Impairment charges
4,790

 
2,769

 

 

 

Subadvisor fees (b)
2,032

 
2,002

 
5,206

 
3,672

 
2,720

Other expenses (c)
(37
)
 
(533
)
 
65

 
1,000

 
73

Restructuring and other compensation (d)

 
289

 
1,356

 
7,718

 

Dealer manager fees and expenses

 

 
462

 
2,788

 
3,294

 
120,966

 
111,711

 
115,164

 
127,991

 
134,882

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(38,074
)
 
(40,401
)
 
(41,182
)
 
(42,235
)
 
(41,957
)
Equity in earnings of equity method investments in the Managed Programs and real estate
15,325

 
16,930

 
16,318

 
15,728

 
15,774

Other gains and (losses)
(2,763
)
 
1,356

 
(4,569
)
 
(916
)
 
516

 
(25,512
)
 
(22,115
)
 
(29,433
)
 
(27,423
)
 
(25,667
)
Income before income taxes and gain on sale of real estate
55,332

 
63,135

 
66,157

 
66,114

 
58,510

Benefit from (provision for) income taxes
6,002

 
192

 
(1,760
)
 
(2,448
)
 
1,305

Income before gain on sale of real estate
61,334

 
63,327

 
64,397

 
63,666

 
59,815

Gain on sale of real estate, net of tax
6,732

 
11,146

 
19,257

 
3,465

 
10

Net Income
68,066

 
74,473

 
83,654

 
67,131

 
59,825

Net (income) loss attributable to noncontrolling interests
(2,792
)
 
736

 
(3,376
)
 
(2,813
)
 
(2,341
)
Net Income Attributable to W. P. Carey
$
65,274

 
$
75,209

 
$
80,278

 
$
64,318

 
$
57,484

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
0.60

 
$
0.69

 
$
0.74

 
$
0.60

 
$
0.53

Diluted Earnings Per Share
$
0.60

 
$
0.69

 
$
0.74

 
$
0.59

 
$
0.53

Weighted-Average Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
108,057,940

 
108,041,556

 
108,019,292

 
107,668,218

 
107,562,484

Diluted
108,211,936

 
108,208,918

 
108,143,694

 
107,783,204

 
107,764,279

 
 
 
 
 
 
 
 
 
 
Distributions Declared Per Share
$
1.015

 
$
1.010

 
$
1.005

 
$
1.000

 
$
0.995

________
(a)
Amounts for the three and twelve months ended March 31, 2018 include $5.7 million and $23.7 million, respectively, of property expenses related to two hotel operating properties, one of which we sold in April 2018.
(b)
The subadvisors for CWI 1, CWI 2 and CPA:18 Global earn a percentage of gross fees recorded, which we account for as an expense and are recorded as Subadvisor fees in our consolidated statements of income. The amounts paid to the subadvisors are the differences between gross and net fees. Pursuant to the terms of the subadvisory agreement we had with CCIF’s subadvisor (prior to our resignation as the advisor to CCIF in the third quarter of 2017), we paid a subadvisory fee equal to 50% of the asset management fees and organization and offering costs paid to us by CCIF.
(c)
Amount for the three months ended June 30, 2017 is comprised of an accrual for estimated one-time legal settlement expenses.
(d)
Amounts for the three months ended December 31, 2017, September 30, 2017 and June 30, 2017 represent restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.

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Investing for the long runTM | 6


W. P. Carey Inc.
Financial Results – First Quarter 2018
Statements of Income, Owned Real Estate – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Mar. 31, 2018
 
Dec. 31, 2017
 
Sep. 30, 2017
 
Jun. 30, 2017
 
Mar. 31, 2017
Revenues
 
 
 
 
 
 
 
 
 
Lease revenues
$
163,213

 
$
154,826

 
$
161,511

 
$
158,255

 
$
155,781

Operating property revenues
7,218

 
6,910

 
8,449

 
8,223

 
6,980

Reimbursable tenant costs
6,219

 
5,584

 
5,397

 
5,322

 
5,221

Lease termination income and other
942

 
515

 
1,227

 
2,247

 
760

 
177,592

 
167,835

 
176,584

 
174,047

 
168,742

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
64,920

 
62,951

 
62,970

 
61,989

 
61,522

General and administrative
12,065

 
11,691

 
11,234

 
7,803

 
8,274

Property expenses, excluding reimbursable tenant costs (a)
9,899

 
9,560

 
10,556

 
10,530

 
10,110

Reimbursable tenant costs
6,219

 
5,584

 
5,397

 
5,322

 
5,221

Impairment charges
4,790

 
2,769

 

 

 

Stock-based compensation expense
4,306

 
2,227

 
1,880

 
899

 
1,954

Other expenses (b)
(37
)
 
(533
)
 
65

 
1,000

 
73

 
102,162

 
94,249

 
92,102

 
87,543

 
87,154

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(38,074
)
 
(40,401
)
 
(41,182
)
 
(42,235
)
 
(41,957
)
Equity in earnings of equity method investments in real estate
3,358

 
3,535

 
3,740

 
3,721

 
2,072

Other gains and (losses)
(2,887
)
 
594

 
(4,918
)
 
(1,371
)
 
40

 
(37,603
)
 
(36,272
)
 
(42,360
)
 
(39,885
)
 
(39,845
)
Income before income taxes and gain on sale of real estate
37,827

 
37,314

 
42,122

 
46,619

 
41,743

Benefit from (provision for) income taxes
3,533

 
4,953

 
(1,511
)
 
(3,731
)
 
(1,454
)
Income before gain on sale of real estate
41,360

 
42,267

 
40,611

 
42,888

 
40,289

Gain on sale of real estate, net of tax
6,732

 
11,146

 
19,257

 
3,465

 
10

Net Income from Owned Real Estate
48,092

 
53,413

 
59,868

 
46,353

 
40,299

Net (income) loss attributable to noncontrolling interests
(2,792
)
 
736

 
(3,376
)
 
(2,813
)
 
(2,341
)
Net Income from Owned Real Estate Attributable to W. P. Carey
$
45,300

 
$
54,149

 
$
56,492

 
$
43,540

 
$
37,958

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
0.42

 
$
0.50

 
$
0.52

 
$
0.41

 
$
0.35

Diluted Earnings Per Share
$
0.42

 
$
0.50

 
$
0.52

 
$
0.40

 
$
0.35

Weighted-Average Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
108,057,940

 
108,041,556

 
108,019,292

 
107,668,218

 
107,562,484

Diluted
108,211,936

 
108,208,918

 
108,143,694

 
107,783,204

 
107,764,279

________
(a)
Amounts for the three and twelve months ended March 31, 2018 include $5.7 million and $23.7 million, respectively, of property expenses related to two hotel operating properties, one of which we sold in April 2018.
(b)
Amount for the three months ended June 30, 2017 is comprised of an accrual for estimated one-time legal settlement expenses.

393343685_wpclogoa01a01a26.jpg 
 
Investing for the long runTM | 7


W. P. Carey Inc.
Financial Results – First Quarter 2018
Statements of Income, Investment Management – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Mar. 31, 2018
 
Dec. 31, 2017
 
Sep. 30, 2017
 
Jun. 30, 2017
 
Mar. 31, 2017
Revenues
 
 
 
 
 
 
 
 
 
Asset management revenue
$
16,985

 
$
16,854

 
$
17,938

 
$
17,966

 
$
17,367

Reimbursable costs from affiliates
5,304

 
6,055

 
6,211

 
13,479

 
25,700

Structuring revenue
1,739

 
6,217

 
9,817

 
14,330

 
3,834

Other advisory revenue
190

 

 
99

 
706

 
91

Dealer manager fees

 

 
105

 
1,000

 
3,325

 
24,218

 
29,126

 
34,170

 
47,481

 
50,317

Operating Expenses
 
 
 
 
 
 
 
 
 
General and administrative
6,518

 
6,011

 
6,002

 
9,726

 
10,150

Reimbursable costs from affiliates
5,304

 
6,055

 
6,211

 
13,479

 
25,700

Stock-based compensation expense
3,913

 
2,041

 
2,755

 
2,205

 
4,956

Subadvisor fees (a)
2,032

 
2,002

 
5,206

 
3,672

 
2,720

Depreciation and amortization
1,037

 
1,064

 
1,070

 
860

 
908

Restructuring and other compensation (b)

 
289

 
1,356

 
7,718

 

Dealer manager fees and expenses

 

 
462

 
2,788

 
3,294

 
18,804

 
17,462

 
23,062

 
40,448

 
47,728

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Equity in earnings of equity method investments in the Managed Programs
11,967

 
13,395

 
12,578

 
12,007

 
13,702

Other gains and (losses)
124

 
762

 
349

 
455

 
476

 
12,091

 
14,157

 
12,927

 
12,462

 
14,178

Income before income taxes
17,505

 
25,821

 
24,035

 
19,495

 
16,767

Benefit from (provision for) income taxes
2,469

 
(4,761
)
 
(249
)
 
1,283

 
2,759

Net Income from Investment Management Attributable to W. P. Carey
$
19,974

 
$
21,060

 
$
23,786

 
$
20,778

 
$
19,526

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
0.18

 
$
0.19

 
$
0.22

 
$
0.19

 
$
0.18

Diluted Earnings Per Share
$
0.18

 
$
0.19

 
$
0.22

 
$
0.19

 
$
0.18

Weighted-Average Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
108,057,940

 
108,041,556

 
108,019,292

 
107,668,218

 
107,562,484

Diluted
108,211,936

 
108,208,918

 
108,143,694

 
107,783,204

 
107,764,279

________
(a)
The subadvisors for CWI 1, CWI 2 and CPA:18 Global earn a percentage of gross fees recorded, which we account for as an expense and are recorded as Subadvisor fees in our consolidated statements of income. The amounts paid to the subadvisors are the differences between gross and net fees. Pursuant to the terms of the subadvisory agreement we had with CCIF’s subadvisor (prior to our resignation as the advisor to CCIF in the third quarter of 2017), we paid a subadvisory fee equal to 50% of the asset management fees and organization and offering costs paid to us by CCIF.
(b)
Amounts for the three months ended December 31, 2017, September 30, 2017 and June 30, 2017 represent restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.



393343685_wpclogoa01a01a26.jpg 
 
Investing for the long runTM | 8


W. P. Carey Inc.
Financial Results – First Quarter 2018
FFO and AFFO, Consolidated – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Mar. 31, 2018
 
Dec. 31, 2017
 
Sep. 30, 2017
 
Jun. 30, 2017
 
Mar. 31, 2017
Net income attributable to W. P. Carey
$
65,274

 
$
75,209

 
$
80,278

 
$
64,318

 
$
57,484

Adjustments: