Toggle SGML Header (+)


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): August 3, 2018
394502793_wpchighreslogoa14.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):
þ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
þ 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 August 3, 2018, W. P. Carey Inc. (together with its predecessors, the “Company”) issued an earnings release announcing its financial results for the quarter ended June 30, 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 August 3, 2018, the Company made available certain unaudited supplemental financial information at June 30, 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 June 30, 2018.

Exhibit 99.2 Supplemental financial information of the Company at June 30, 2018.

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 Securities 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 the Company and can be identified by the use of words such as “may,” “will,” “should,” “would,” “will be,” “will continue,” “will likely result,” “believe,” “project,” “expect,” “anticipate,” “intend,” “estimate” and other comparable terms. These forward-looking statements include, but are not limited to, statements regarding: the anticipated benefits of the proposed merger with Corporate Property Associates 17 – Global Incorporated (“CPA®:17 – Global”), including the statements made by Mr. Jason Fox; our ability to close the proposed merger; the impact of the proposed merger on our earnings and on our credit profile; the strategic rational and transaction benefits; our ability to refinance mortgage debt with unsecured bonds; capital markets; our ability to sell shares under our “at-the-market” program and the use of proceeds from that program; tenant credit quality; the general economic outlook; our expected range of Adjusted funds from operations, or AFFO, including the impact on AFFO as a result of the proposed merger; our corporate strategy; our capital structure; our portfolio lease terms; our international exposure and acquisition volume; our expectations about tenant bankruptcies and interest coverage; statements regarding estimated or future economic performance and results, including our underlying assumptions, occupancy rate, credit ratings, and possible new acquisitions and dispositions; the outlook for the investment programs that we manage, including their earnings, as well as possible liquidity events for those programs; statements that we make regarding our ability to remain qualified for taxation as a real estate investment trust, or REIT; the impact of recently issued accounting pronouncements, the Tax Cuts and Jobs Act in the United States adopted in 2017, and other regulatory activity; the amount and timing of any future quarterly dividends; our existing or future leverage and debt service obligations; our estimated future growth; our projected assets under management; our future capital expenditure levels; our future financing transactions; and our plans to fund our future liquidity needs.
 
These statements are based on the current expectations of our management. It is important to note that our 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 these forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on our business, financial condition, liquidity, results of operations, AFFO, and prospects. You should exercise caution in relying on forward-looking statements as they involve known and unknown risks, uncertainties, and other factors that may materially affect our future results, performance, achievements, or transactions. Information on factors that could impact actual results and cause them to differ from what is anticipated in the forward-looking statements contained herein is included in our filings with the Securities and Exchange Commission, or the SEC from time to time, including, but not limited to those described in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC on February 23, 2018, and in Part II, Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for





the quarter ended June 30, 2018, as filed with SEC on August 3, 2018. Moreover, because we operate in a very competitive and rapidly changing environment, new risks are likely to emerge from time to time. Given these risks and uncertainties, potential investors are cautioned not to place undue reliance on these forward-looking statements as a prediction of future results, which speak only as of the date of this presentation, unless noted otherwise. Except as required by federal securities laws and the rules and regulations of the SEC, we do not undertake to revise or update any forward-looking statements.

Additional Information and Where to Find It:

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of the federal securities laws. W. P. Carey filed a Registration Statement on Form S-4 on July 27, 2018, and intends to mail the Joint Proxy Statement/Prospectus and other relevant documents to its security holders in connection with the proposed Merger.
 
WE URGE INVESTORS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED BY W. P. CAREY AND CPA:17 – GLOBAL IN CONNECTION WITH THE PROPOSED MERGER WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT W. P. CAREY, CPA:17 – GLOBAL AND THE PROPOSED MERGER. INVESTORS ARE URGED TO READ THESE DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY.
 
Investors will be able to obtain these materials and other documents filed with the SEC free of charge at the SEC’s website (http://www.sec.gov). In addition, these materials will also be available free of charge by accessing W. P. Carey’s website (http://www.wpcarey.com) or by accessing CPA:17 – Global’s website (http://www.cpa17global.com). Investors may also read and copy any reports, statements and other information filed by W. P. Carey or CPA:17 – Global with the SEC, at the SEC public reference room at 100 F Street, N.E., Washington, D C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room.

Participants in the Proxy Solicitation:

Information regarding W. P. Carey’s directors and executive officers is available in its proxy statement filed with the SEC by W. P. Carey on April 3, 2018 in connection with its 2018 annual meeting of stockholders, and information regarding CPA:17 – Global’s directors and executive officers is available in its proxy statement filed with the SEC by CPA:17 – Global on April 20, 2018 in connection with its 2018 annual meeting of stockholders. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Joint Proxy Statement/Prospectus and other relevant materials filed with the SEC when they become available.






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:
August 3, 2018
By:
/s/ ToniAnn Sanzone
 
 
 
ToniAnn Sanzone
 
 
 
Chief Financial Officer


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1
Filed pursuant to Rule 425 under the Securities Act of 1933, as amended,
and deemed filed pursuant to 14a-12 under the
Securities Exchange Act of 1934, as amended
Filing Person: W. P. Carey Inc.
Subject Company: Corporate Property Associates 17 – Global Incorporated
Commission File No.: 000-52891


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 Second Quarter 2018 Financial Results


New York, NY – August 3, 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 second quarter ended June 30, 2018.

Total Company
Net income attributable to W. P. Carey of $75.7 million, or $0.70 per diluted share
AFFO of $142.6 million, or $1.32 per diluted share
2018 AFFO guidance range narrowed to $5.40 to $5.50 per diluted share by raising the lower end of the range
Quarterly cash dividend raised to $1.02 per share, equivalent to an annualized dividend rate of $4.08 per share
Announced proposed merger with CPA®:17 in a $6 billion stock-for-stock transaction

Business Segments

Owned Real Estate
Segment net income attributable to W. P. Carey of $59.3 million
Segment AFFO of $116.5 million, or $1.08 per diluted share
Year-to-date total investment volume of $604.9 million, including $289.2 million of investments completed during the second quarter and an additional $209.5 million subsequent to quarter end
Gross disposition proceeds totaling $128.3 million
Portfolio occupancy of 99.6%
Weighted-average lease term increased to 10.0 years


W. P. Carey Inc. 6/30/2018 Earnings Release 8-K – 1


Investment Management
Segment net income attributable to W. P. Carey of $16.4 million
Segment AFFO of $26.1 million, or $0.24 per diluted share


MANAGEMENT COMMENTARY

“Supported by the strength of our investment volume year-to-date we are narrowing our full-year AFFO guidance to between $5.40 and $5.50 per diluted share by raising the lower end of the range,” said Jason Fox, Chief Executive Officer of W. P. Carey. “We also remain on track to close the proposed merger with CPA:17 around the end of the year in a transformational transaction that we believe will create immediate and enduring value for our stakeholders.”


QUARTERLY FINANCIAL RESULTS

Revenues

Total Company: Revenues excluding reimbursable costs (net revenues) for the 2018 second quarter totaled $189.9 million, down 6.3% from $202.7 million for the 2017 second quarter.

Owned Real Estate: Owned Real Estate net revenues for the 2018 second quarter were $168.2 million, substantially unchanged from $168.7 million for the 2017 second quarter, due primarily to lower operating property revenues resulting from the disposition of a hotel operating property in April 2018, substantially offset by higher lease revenues, which increased primarily as a result of a stronger euro relative to the U.S. dollar and rent escalations.

Investment Management: Investment Management net revenues for the 2018 second quarter were $21.7 million, down 36.2% from $34.0 million for the 2017 second quarter, due primarily to lower structuring revenues resulting from the fully-invested status of the Managed Programs (as defined below) and the Company’s strategic decision to exit non-traded retail fundraising during 2017.

Net Income Attributable to W. P. Carey

Net income attributable to W. P. Carey for the 2018 second quarter was $75.7 million, up 17.7% compared to $64.3 million for the 2017 second quarter, due primarily to a higher aggregate gain on sale of real estate.

Adjusted Funds from Operations (AFFO)

AFFO for the 2018 second quarter was $1.32 per diluted share, down 4.3% from $1.38 per diluted share for the 2017 second quarter, due primarily to lower structuring revenues within Investment Management, which more than offset higher lease revenues from the Company’s Owned Real Estate portfolio.

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 June 14, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $1.02 per share, equivalent to an annualized dividend rate of $4.08 per share. The dividend was paid on July 16, 2018 to stockholders of record as of June 29, 2018.



W. P. Carey Inc. 6/30/2018 Earnings Release 8-K – 2


AFFO GUIDANCE

For the 2018 full year, the Company has narrowed its AFFO guidance range to between $5.40 and $5.50 per diluted share by raising the lower end of the range from $5.30, based on the following key assumptions:

(i)
investments for the Company’s Owned Real Estate portfolio of between $700 million and $1 billion, raising the lower end of the range from $500 million;

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

(iii)
total general and administrative expenses of between $65 million and $70 million, which is unchanged.

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.


OWNED REAL ESTATE

Investments

During the 2018 second quarter, the Company completed investments totaling $289.2 million, consisting of an acquisition for $186.6 million, a property swap transaction in which a property with a fair value of $85.5 million was acquired in exchange for 23 properties transferred back to the same tenant and three completed capital investment projects at a total cost of $17.1 million. This investment activity brought total investment volume for the first half of 2018 to $395.4 million, including transaction-related costs and fees.

Subsequent to quarter end, the Company completed three additional acquisitions totaling $209.5 million, bringing total investment volume year-to-date to $604.9 million, including transaction-related costs and fees.

As of June 30, 2018, the Company had eight capital investment projects outstanding for an expected total investment of approximately $144.9 million, of which five projects totaling $70.1 million are currently expected to be completed during 2018.

Dispositions

During the 2018 second quarter, the Company disposed of 25 properties for total gross proceeds of $128.3 million, including the $85.5 million property swap transaction (described above) and the sale of a hotel operating property for $39.0 million, bringing total dispositions for the first half of 2018 to $163.8 million.

Composition

As of June 30, 2018, the Company’s Owned Real Estate portfolio consisted of 878 net lease properties, comprising 86.6 million square feet leased to 208 tenants, and one hotel operating property. As of that date, the weighted-average lease term of the net lease portfolio was 10.0 years and the occupancy rate was 99.6%.


INVESTMENT MANAGEMENT

W. P. Carey is the advisor to CPA:17 – Global (CPA:17) and CPA:18 – Global (CPA:18) (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. 6/30/2018 Earnings Release 8-K – 3


Acquisitions

During the 2018 second quarter, the Company structured three new student housing investments on behalf of CPA:18 totaling $94.7 million, bringing total investment volume on behalf of the Managed Programs for the first half of 2018 to $123.2 million.

Assets Under Management

As of June 30, 2018, the Managed Programs had total assets under management of approximately $13.4 billion.


PROPOSED MERGER WITH CPA:17

On June 17, 2018, the Company announced that its Board of Directors had unanimously approved a definitive merger agreement pursuant to which CPA:17 will merge with and into a subsidiary of W. P. Carey in a stock for-stock transaction valued at approximately $6 billion. The transaction was also approved by CPA:17’s Board of Directors upon the unanimous recommendation of a Special Committee of CPA:17’s independent directors.

The proposed merger and related transactions are subject to the satisfaction of a number of closing conditions set forth in the merger agreement, including approvals by stockholders of each of W. P. Carey and CPA:17. If these approvals are obtained and the other closing conditions are met, the Company currently expects the proposed merger to be completed at or around December 31, 2018, although there can be no assurance that it will occur at such time or at all.


* * * * *


Supplemental Information

The Company has provided supplemental unaudited financial and operating information regarding the 2018 second 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 August 3, 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, August 3, 2018 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. 6/30/2018 Earnings Release 8-K – 4


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 $11 billion and a portfolio of operationally-critical commercial real estate totaling 878 properties covering approximately 87 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


* * * * *


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 the anticipated benefits and characteristics of the proposed merger with CPA:17, including the timing thereof, and statements 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; 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; 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 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 Part I, Item 1A. Risk Factors in W. P. Carey’s Annual Report on Form 10-K for the year ended December 31, 2017 and in Part II, Item 1A. Risk Factors in W. P. Carey’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018. 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.

Additional Information and Where to Find It
 
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of the federal securities laws. W. P. Carey filed a Registration Statement on Form S-4 on July 27, 2018, and intends to mail the Joint Proxy Statement/Prospectus and other relevant documents to its security holders in connection with the proposed Merger.
 
WE URGE INVESTORS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED BY W. P. CAREY AND CPA:17 IN CONNECTION WITH THE PROPOSED MERGER WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT W. P. CAREY, CPA:17 AND THE PROPOSED MERGER. INVESTORS ARE URGED TO READ THESE DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY.
 

W. P. Carey Inc. 6/30/2018 Earnings Release 8-K – 5


Investors will be able to obtain these materials and other documents filed with the SEC free of charge at the SEC’s website (http://www.sec.gov). In addition, these materials will also be available free of charge by accessing W. P. Carey’s website (http://www.wpcarey.com) or by accessing CPA:17’s website (http://www.cpa17global.com). Investors may also read and copy any reports, statements and other information filed by W. P. Carey or CPA:17 with the SEC, at the SEC public reference room at 100 F Street, N.E., Washington, D C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room.
 
Participants in the Proxy Solicitation
 
Information regarding W. P. Carey’s directors and executive officers is available in its proxy statement filed with the SEC by W. P. Carey on April 3, 2018 in connection with its 2018 annual meeting of stockholders, and information regarding CPA:17’s directors and executive officers is available in its proxy statement filed with the SEC by CPA:17 on April 20, 2018 in connection with its 2018 annual meeting of stockholders. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Joint Proxy Statement/Prospectus and other relevant materials filed with the SEC when they become available.


* * * * *

W. P. Carey Inc. 6/30/2018 Earnings Release 8-K – 6


W. P. CAREY INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share amounts)
 
June 30, 2018
 
December 31, 2017
Assets
 
 
 
Investments in real estate:
 
 
 
Land, buildings and improvements (a)
$
5,651,906

 
$
5,457,265

Net investments in direct financing leases
705,588

 
721,607

In-place lease and other intangible assets
1,228,241

 
1,213,976

Above-market rent intangible assets
631,977

 
640,480

Investments in real estate
8,217,712

 
8,033,328

Accumulated depreciation and amortization (b)
(1,445,397
)
 
(1,329,613
)
Net investments in real estate
6,772,315

 
6,703,715

Equity investments in the Managed Programs and real estate (c)
363,622

 
341,457

Cash and cash equivalents
122,430

 
162,312

Due from affiliates
78,100

 
105,308

Other assets, net
288,173

 
274,650

Goodwill
642,060

 
643,960

Total assets
$
8,266,700

 
$
8,231,402

 
 
 
 
Liabilities and Equity
 
 
 
Debt:
 
 
 
Senior unsecured notes, net
$
3,018,475

 
$
2,474,661

Unsecured revolving credit facility
396,917

 
216,775

Unsecured term loans, net

 
388,354

Non-recourse mortgages, net
985,666

 
1,185,477

Debt, net
4,401,058

 
4,265,267

Accounts payable, accrued expenses and other liabilities
245,288

 
263,053

Below-market rent and other intangible liabilities, net
107,542

 
113,957

Deferred income taxes
88,871

 
67,009

Distributions payable
110,972

 
109,766

Total liabilities
4,953,731

 
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; 107,200,687 and 106,922,616 shares, respectively, issued and outstanding
107

 
107

Additional paid-in capital
4,443,374

 
4,433,573

Distributions in excess of accumulated earnings
(1,132,182
)
 
(1,052,064
)
Deferred compensation obligation
36,007

 
46,656

Accumulated other comprehensive loss
(247,402
)
 
(236,011
)
Total stockholders’ equity
3,099,904

 
3,192,261

Noncontrolling interests
212,100

 
219,124

Total equity
3,312,004

 
3,411,385

Total liabilities and equity
$
8,266,700

 
$
8,231,402

________
(a)
Includes $42.3 million and $83.0 million of amounts attributable to operating properties as of June 30, 2018 and December 31, 2017, respectively. We sold one hotel operating property in April 2018.
(b)
Includes $679.0 million and $630.0 million of accumulated depreciation on buildings and improvements as of June 30, 2018 and December 31, 2017, respectively, and $766.4 million and $699.7 million of accumulated amortization on lease intangibles as of June 30, 2018 and December 31, 2017, respectively.
(c)
Our equity investments in the Managed Programs totaled $225.3 million and $201.4 million as of June 30, 2018 and December 31, 2017, respectively. Our equity investments in real estate joint ventures totaled $138.3 million and $140.0 million as of June 30, 2018 and December 31, 2017, respectively.



W. P. Carey Inc. 6/30/2018 Earnings Release 8-K – 7


W. P. CAREY INC.
Quarterly Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)
 
Three Months Ended
 
June 30, 2018
 
March 31, 2018
 
June 30, 2017
Revenues
 
 
 
 
 
Owned Real Estate:
 
 
 
 
 
Lease revenues
$
162,634

 
$
163,213

 
$
158,255

Reimbursable tenant costs
5,733

 
6,219

 
5,322

Operating property revenues
4,865

 
7,218

 
8,223

Lease termination income and other
680

 
942

 
2,247

 
173,912

 
177,592

 
174,047

Investment Management:
 
 
 
 
 
Asset management revenue
17,268

 
16,985

 
17,966

Reimbursable costs from affiliates
5,537

 
5,304

 
13,479

Structuring revenue
4,426

 
1,739

 
14,330

Other advisory revenue

 
190

 
706

Dealer manager fees

 

 
1,000

 
27,231

 
24,218

 
47,481

 
201,143

 
201,810

 
221,528

Operating Expenses
 

 
 
 
 

Depreciation and amortization
64,337

 
65,957

 
62,849

General and administrative
16,442

 
18,583

 
17,529

Reimbursable tenant and affiliate costs
11,270

 
11,523

 
18,801

Property expenses, excluding reimbursable tenant costs (a)
8,908

 
9,899

 
10,530

Stock-based compensation expense
3,698

 
8,219

 
3,104

Merger and other expenses (b)
2,692

 
(37
)
 
1,000

Subadvisor fees (c)
1,855

 
2,032

 
3,672

Impairment charges

 
4,790

 

Restructuring and other compensation (d)

 

 
7,718

Dealer manager fees and expenses

 

 
2,788

 
109,202

 
120,966

 
127,991

Other Income and Expenses
 

 
 
 
 

Interest expense
(41,311
)
 
(38,074
)
 
(42,235
)
Equity in earnings of equity method investments in the Managed Programs
   and real estate
12,558

 
15,325

 
15,728

Other gains and (losses)
10,586

 
(2,763
)
 
(916
)
 
(18,167
)
 
(25,512
)
 
(27,423
)
Income before income taxes and gain on sale of real estate
73,774

 
55,332

 
66,114

(Provision for) benefit from income taxes
(6,262
)
 
6,002

 
(2,448
)
Income before gain on sale of real estate
67,512

 
61,334

 
63,666

Gain on sale of real estate, net of tax
11,912

 
6,732

 
3,465

Net Income
79,424

 
68,066

 
67,131

Net income attributable to noncontrolling interests
(3,743
)
 
(2,792
)
 
(2,813
)
Net Income Attributable to W. P. Carey
$
75,681

 
$
65,274

 
$
64,318

 
 
 
 
 
 
Basic Earnings Per Share
$
0.70

 
$
0.60

 
$
0.60

Diluted Earnings Per Share
$
0.70

 
$
0.60

 
$
0.59

Weighted-Average Shares Outstanding
 

 
 
 
 

Basic
108,059,394

 
108,057,940

 
107,668,218

Diluted
108,234,934

 
108,211,936

 
107,783,204

 
 
 
 
 
 
Distributions Declared Per Share
$
1.020

 
$
1.015

 
$
1.000







W. P. Carey Inc. 6/30/2018 Earnings Release 8-K – 8


W. P. CAREY INC.
Year-to-Date Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)
 
Six Months Ended June 30,
 
2018
 
2017
Revenues
 
 
 
Owned Real Estate:
 
 
 
Lease revenues
$
325,847

 
$
314,036

Operating property revenues
12,083

 
15,203

Reimbursable tenant costs
11,952

 
10,543

Lease termination income and other
1,622

 
3,007

 
351,504

 
342,789

Investment Management:
 
 
 
Asset management revenue
34,253

 
35,333

Reimbursable costs from affiliates
10,841

 
39,179

Structuring revenue
6,165

 
18,164

Other advisory revenue
190

 
797

Dealer manager fees

 
4,325

 
51,449

 
97,798

 
402,953

 
440,587

Operating Expenses
 

 
 

Depreciation and amortization
130,294

 
125,279

General and administrative
35,025

 
35,953

Reimbursable tenant and affiliate costs
22,793

 
49,722

Property expenses, excluding reimbursable tenant costs (a)
18,807

 
20,640

Stock-based compensation expense
11,917

 
10,014

Impairment charges
4,790

 

Subadvisor fees (c)
3,887

 
6,392

Merger and other expenses (b)
2,655

 
1,073

Restructuring and other compensation (d)

 
7,718

Dealer manager fees and expenses

 
6,082

 
230,168

 
262,873

Other Income and Expenses
 

 
 

Interest expense
(79,385
)
 
(84,192
)
Equity in earnings of equity method investments in the Managed Programs and real estate
27,883

 
31,502

Other gains and (losses)
7,823

 
(400
)
 
(43,679
)
 
(53,090
)
Income before income taxes and gain on sale of real estate
129,106

 
124,624

Provision for income taxes
(260
)
 
(1,143
)
Income before gain on sale of real estate
128,846

 
123,481

Gain on sale of real estate, net of tax
18,644

 
3,475

Net Income
147,490

 
126,956

Net income attributable to noncontrolling interests
(6,535
)
 
(5,154
)
Net Income Attributable to W. P. Carey
$
140,955

 
$
121,802

 
 
 
 
Basic Earnings Per Share
$
1.30

 
$
1.13

Diluted Earnings Per Share
$
1.30

 
$
1.13

Weighted-Average Shares Outstanding
 

 
 

Basic
108,058,671

 
107,615,644

Diluted
108,243,063

 
107,801,318

 
 
 
 
Distributions Declared Per Share
$
2.035

 
$
1.995

__________
(a)
Amounts for the three and six months ended June 30, 2018 include $3.6 million and $9.3 million, respectively, of property expenses related to two hotel operating properties, one of which we sold in April 2018.
(b)
Amounts for the three and six months ended June 30, 2018 are primarily comprised of costs incurred in connection with our proposed merger with CPA:17. Amounts for the three and six months ended June 30, 2017 are primarily comprised of accruals for estimated one-time legal settlement expenses.
(c)
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.
(d)
Amounts for the three and six months ended June 30, 2017 represent restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.


W. P. Carey Inc. 6/30/2018 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
 
June 30, 2018
 
March 31, 2018
 
June 30, 2017
Net income attributable to W. P. Carey
$
75,681

 
$
65,274

 
$
64,318

Adjustments:
 
 
 
 
 
Depreciation and amortization of real property
63,073

 
64,580

 
61,636

Gain on sale of real estate, net
(11,912
)
 
(6,732
)
 
(3,465
)
Impairment charges

 
4,790

 

Proportionate share of adjustments for noncontrolling interests
(2,729
)
 
(2,782
)
 
(2,562
)
Proportionate share of adjustments to equity in net income of partially owned entities
902

 
1,252

 
833

Total adjustments
49,334

 
61,108

 
56,442

FFO (as defined by NAREIT) Attributable to W. P. Carey (a)
125,015

 
126,382

 
120,760

Adjustments:
 
 
 
 
 
Above- and below-market rent intangible lease amortization, net
12,303

 
11,802

 
12,323

Other amortization and non-cash items (b)
(7,437
)
 
5,146

 
6,693

Stock-based compensation
3,698

 
8,219

 
3,104

Tax expense (benefit) – deferred
3,028

 
(12,155
)
 
(1,382
)
Merger and other expenses (c)
2,692

 
(37
)
 
1,000

Straight-line and other rent adjustments
(2,637
)
 
(2,296
)
 
(2,965
)
Amortization of deferred financing costs
1,905

 
(194
)
 
2,542

Realized losses (gains) on foreign currency
627

 
(1,515
)
 
(378
)
Loss (gain) on extinguishment of debt

 
1,609

 
(2,443
)
Restructuring and other compensation (d)

 

 
7,718

Proportionate share of adjustments to equity in net income of partially owned entities
3,635

 
1,752

 
1,978

Proportionate share of adjustments for noncontrolling interests
(230
)
 
(343
)
 
(513
)
Total adjustments
17,584

 
11,988

 
27,677

AFFO Attributable to W. P. Carey (a)
$
142,599

 
$
138,370

 
$
148,437

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (a)
$
125,015

 
$
126,382

 
$
120,760

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

 
$
1.16

 
$
1.12

AFFO attributable to W. P. Carey (a)
$
142,599

 
$
138,370

 
$
148,437

AFFO attributable to W. P. Carey per diluted share (a)
$
1.32

 
$
1.28

 
$
1.38

Diluted weighted-average shares outstanding
108,234,934

 
108,211,936

 
107,783,204



















W. P. Carey Inc. 6/30/2018 Earnings Release 8-K – 10


W. P. CAREY INC.
Year-to-Date Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
 
Six Months Ended June 30,
 
2018
 
2017
Net income attributable to W. P. Carey
$
140,955

 
$
121,802

Adjustments:
 
 
 
Depreciation and amortization of real property
127,653

 
122,818

Gain on sale of real estate, net
(18,644
)
 
(3,475
)
Impairment charges
4,790

 

Proportionate share of adjustments for noncontrolling interests to arrive at FFO
(5,511
)
 
(5,103
)
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO
2,154

 
3,550

Total adjustments
110,442

 
117,790

FFO (as defined by NAREIT) Attributable to W. P. Carey (a)
251,397

 
239,592

Adjustments:
 
 
 
Above- and below-market rent intangible lease amortization, net
24,105

 
24,814

Stock-based compensation
11,917

 
10,014

Tax benefit – deferred
(9,127
)
 
(6,933
)
Straight-line and other rent adjustments
(4,933
)
 
(6,465
)
Merger and other expenses (c)
2,655

 
1,073

Other amortization and non-cash items (b)
(2,291
)
 
8,787

Amortization of deferred financing costs
1,711

 
3,942

Loss (gain) on extinguishment of debt
1,609

 
(1,531
)
Realized (gains) losses on foreign currency
(888
)
 
25

Restructuring and other compensation (d)

 
7,718

Proportionate share of adjustments to equity in net income of partially owned entities
5,387

 
2,528

Proportionate share of adjustments for noncontrolling interests
(573
)
 
(889
)
Total adjustments
29,572

 
43,083

AFFO Attributable to W. P. Carey (a)
$
280,969

 
$
282,675

 
 
 
 
Summary
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (a)
$
251,397

 
$
239,592

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (a)
$
2.32

 
$
2.22

AFFO attributable to W. P. Carey (a)
$
280,969

 
$
282,675

AFFO attributable to W. P. Carey per diluted share (a)
$
2.60

 
$
2.62

Diluted weighted-average shares outstanding
108,243,063

 
107,801,318

__________
(a)
FFO and AFFO are non-GAAP measures. See below for a description of FFO and AFFO.
(b)
Primarily represents unrealized gains and losses from foreign exchange movements and derivatives.
(c)
Amounts for the three and six months ended June 30, 2018 are primarily comprised of costs incurred in connection with our proposed merger with CPA:17. Amounts for the three and six months ended June 30, 2017 are primarily comprised of accruals for estimated one-time legal settlement expenses.
(d)
Amounts for the three and six months ended June 30, 2017 represent restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.




W. P. Carey Inc. 6/30/2018 Earnings Release 8-K – 11


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 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. 6/30/2018 Earnings Release 8-K – 12
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2
Filed pursuant to Rule 425 under the Securities Act of 1933, as amended,
and deemed filed pursuant to 14a-12 under the
Securities Exchange Act of 1934, as amended
Filing Person: W. P. Carey Inc.
Subject Company: Corporate Property Associates 17 – Global Incorporated
Commission File No.: 000-52891


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




394502793_wpcsuppcover45yearsa02.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. “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. “Proposed Merger” means our proposed merger with CPA:17 – Global, pursuant to a merger agreement that we entered into on June 17, 2018, which was filed as Exhibit 2.1 to a Current Report on Form 8-K that we filed with the Securities and Exchange Commission (“SEC”) on June 18, 2018.

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 – Second 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 – Second Quarter 2018
Summary Metrics
As of or for the three months ended June 30, 2018.
Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment
 
 
 
 
 
 
 
Owned
Real Estate
 
Investment Management
 
Total
Revenues, excluding reimbursable costs – consolidated ($'000)
 
$
168,179

 
$
21,694

 
$
189,873

Net income attributable to W. P. Carey ($'000)
 
59,316

 
16,365

 
75,681

Net income attributable to W. P. Carey per diluted share
 
0.55

 
0.15

 
0.70

Normalized pro rata cash NOI from real estate ($'000) (a) (b)
 
169,731

 
N/A

 
169,731

Adjusted EBITDA ($'000) (a) (b)
 
159,541

 
27,607

 
187,148

AFFO attributable to W. P. Carey ($'000) (a) (b)
 
116,462

 
26,137

 
142,599

AFFO attributable to W. P. Carey per diluted share (a) (b)
 
1.08

 
0.24

 
1.32

 
 
 
 
 
 
 
 
 
 
Distributions declared per share – second quarter
 
 
 
 
 
1.02

Distributions declared per share – second quarter annualized
 
 
 
 
 
4.08

Dividend yield – annualized, based on quarter end share price of $66.35
 
 
 
 
 
6.1
%
Dividend payout ratio – for the six months ended June 30, 2018 (c)
 
 
 
 
 
78.3
%
 
 
 
 
 
 
 
 
 
 
Balance Sheet and Capitalization
 
 
 
 
 
 
 
 
 
Equity market capitalization – based on quarter end share price of $66.35 ($'000)
 
 
 
 
 
$
7,112,766

Pro rata net debt ($'000) (d)
 
 
 
 
 
 
 
 
4,330,253

Enterprise value ($'000)
 
 
 
 
 
 
 
 
11,443,019

 
 
 
 
 
 
 
 
 
 
Total capitalization ($'000) (e)
 
 
 
 
 
 
 
 
11,565,449

 
 
 
 
 
 
 
 
 
 
Total consolidated debt ($'000)
 
 
 
 
 
 
 
 
4,401,058

Gross assets ($'000) (f)
 
 
 
 
 
 
 
 
8,945,697

Liquidity ($'000) (g)
 
 
 
 
 
 
 
 
1,225,411

 
 
 
 
 
 
 
 
 
 
Pro rata net debt to enterprise value (b)
 
 
 
 
 
 
 
 
37.8
%
Pro rata net debt to adjusted EBITDA (annualized) (a) (b)
 
 
 
 
 
5.8x

Total consolidated debt to gross assets
 
 
 
 
 
 
 
 
49.2
%
 
 
 
 
 
 
 
 
 
 
Weighted-average interest rate (b)
 
 
 
 
 
 
 
 
3.5
%
Weighted-average debt maturity (years) (b)
 
 
 
 
 
 
 
 
5.6

 
 
 
 
 
 
 
 
 
 
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)
 
 
 
 
 
 
 
 
$
693,482

Number of net-leased properties
 
 
 
 
 
 
 
 
878

Number of operating properties
 
 
 
 
 
 
 
 
1

Number of tenants – net-leased properties
 
 
 
 
 
 
 
 
208

 
 
 
 
 
 
 
 
 
 
ABR from investment grade tenants as a % of total ABR – net-leased properties (i)
 
 
 
 
 
27.5
%
 
 
 
 
 
 
 
 
 
 
Net-leased properties – square footage (millions)
 
 
 
 
 
 
 
 
86.6

 
 
 
 
 
 
 
 
 
 
Occupancy – net-leased properties
 
 
 
 
 
 
 
 
99.6
%
Weighted-average lease term (years)
 
 
 
 
 
 
 
 
10.0

 
 
 
 
 
 
 
 
 
 
Maximum commitment for capital investment projects expected to be completed during 2018 ($’000)
 
 
 
$
70,067

Acquisitions and completed capital investment projects – second quarter ($'000)
 
 
 
289,193

Dispositions – second quarter ($'000)
 
 
 
 
 
 
 
 
128,277

________
(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.

394502793_wpclogoa01a01a27.jpg 
 
Investing for the long runTM | 1


W. P. Carey Inc.
Overview – Second Quarter 2018

(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.
(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 $464.2 million and above-market rent intangible assets of $302.2 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 June 30, 2018. Includes tenants or guarantors with investment grade ratings (18.7%) and subsidiaries of non-guarantor parent companies with investment grade ratings (8.8%). 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.

394502793_wpclogoa01a01a27.jpg 
 
Investing for the long runTM | 2


W. P. Carey Inc.
Overview – Second Quarter 2018
Components of Net Asset Value
Dollars in thousands, except per share amounts.
Owned Real Estate
 
 
Three Months Ended
Jun. 30, 2018
 
Annualized
Normalized pro rata cash NOI (a) (b)
 
 
$
169,731

 
$
678,924

 
 
 
 
 
 
Investment Management
 
 
Three Months Ended
Jun. 30, 2018
 
Twelve Months Ended
Jun. 30, 2018
Adjusted EBITDA (a) (b)
 
 
$
27,607

 
$
115,987

Selected Components of Adjusted EBITDA:
 
 
 
 
 
Asset management revenue (c)
 
 
17,268

 
69,045

Structuring revenue (c)
 
 
4,426

 
22,199

Operating partnership interests in real estate cash flow of Managed REITs (d)
 
8,586

 
42,168

Back-end fees and interests associated with the Managed Programs
 
 
 
 
 
 
 
 
Balance Sheet – Selected Information (Consolidated Unless Otherwise Stated)
 
As of Jun. 30, 2018
Assets
 
 
 
 
 
Book value of real estate excluded from NOI (e)
 
 
 
 
$
51,447

Cash and cash equivalents
 
 
 
 
122,430

Due from affiliates
 
 
 
 
78,100

Other assets, net:
 
 
 
 
 
Straight-line rent adjustments
 
 
 
 
$
77,988

Deferred charges
 
 
 
 
42,705

Restricted cash, including escrow
 
 
 
 
41,388

Securities and derivatives
 
 
 
 
26,475

Investment in GCIF securities
 
 
 
 
23,806

Accounts receivable
 
 
 
 
20,098

Taxes receivable
 
 
 
 
17,671

Other intangible assets, net
 
 
 
 
12,667

Prepaid expenses
 
 
 
 
12,390

Note receivable
 
 
 
 
9,637

Leasehold improvements, furniture and fixtures
 
 
 
3,179

Other
 
 
 
 
169

Total other assets, net
 
 
 
 
$
288,173

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Total pro rata debt outstanding (b)
 
 
 
 
$
4,452,683

Distributions payable
 
 
 
 
110,972

Deferred income taxes
 
 
 
 
88,871

Accounts payable, accrued expenses and other liabilities:
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
$
90,552

Prepaid and deferred rents
 
 
 
 
77,142

Tenant security deposits
 
 
 
 
31,651

Accrued taxes payable
 
 
 
 
27,392

Securities and derivatives
 
 
 
 
4,244

Straight-line rent adjustments
 
 
 
 
1,878

Other
 
 
 
 
12,429

Total accounts payable, accrued expenses and other liabilities
 
 
 
 
$
245,288


394502793_wpclogoa01a01a27.jpg 
 
Investing for the long runTM | 3


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


CPA:17 – Global
4.6
%
 
16,131,967

 
$
10.04

(g) 
$
161,965

CPA:18 – Global
3.0
%
 
4,327,814

 
8.57

(g) 
37,089

CWI 1
2.6
%
 
3,597,692

 
10.41

(g) 
37,452

CWI 2
2.3
%
 
2,045,049

 
11.11

(g) 
22,720

CESH I
2.4
%
 
3,492

 
1,000.00

(h) 
3,492

 
 
 
 
 
 
 
$
262,718

________
(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.

394502793_wpclogoa01a01a27.jpg 
 
Investing for the long runTM | 4




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





394502793_wpc8ksupplementaldividera15.jpg



394502793_wpclogoa01a01a27.jpg 
 
Investing for the long runTM | 5


W. P. Carey Inc.
Financial Results – Second Quarter 2018
Consolidated Statements of Income – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Jun. 30, 2018
 
Mar. 31, 2018
 
Dec. 31, 2017
 
Sep. 30, 2017
 
Jun. 30, 2017
Revenues
 
 
 
 
 
 
 
 
 
Owned Real Estate:
 
 
 
 
 
 
 
 
 
Lease revenues
$
162,634

 
$
163,213

 
$
154,826

 
$
161,511

 
$
158,255

Reimbursable tenant costs
5,733

 
6,219

 
5,584

 
5,397

 
5,322

Operating property revenues
4,865

 
7,218

 
6,910

 
8,449

 
8,223

Lease termination income and other
680

 
942

 
515

 
1,227

 
2,247

 
173,912

 
177,592

 
167,835

 
176,584

 
174,047

Investment Management:
 
 
 
 
 
 
 
 
 
Asset management revenue
17,268

 
16,985

 
16,854

 
17,938

 
17,966

Reimbursable costs from affiliates
5,537

 
5,304

 
6,055

 
6,211

 
13,479

Structuring revenue
4,426

 
1,739

 
6,217

 
9,817

 
14,330

Other advisory revenue

 
190

 

 
99

 
706

Dealer manager fees

 

 

 
105

 
1,000

 
27,231

 
24,218

 
29,126

 
34,170

 
47,481

 
201,143

 
201,810

 
196,961

 
210,754

 
221,528

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
64,337

 
65,957

 
64,015

 
64,040

 
62,849

General and administrative
16,442

 
18,583

 
17,702

 
17,236

 
17,529

Reimbursable tenant and affiliate costs
11,270

 
11,523

 
11,639

 
11,608

 
18,801

Property expenses, excluding reimbursable tenant costs (a)
8,908

 
9,899

 
9,560

 
10,556

 
10,530

Stock-based compensation expense
3,698

 
8,219

 
4,268

 
4,635

 
3,104

Merger and other expenses (b)
2,692

 
(37
)
 
(533
)
 
65

 
1,000

Subadvisor fees (c)
1,855

 
2,032

 
2,002

 
5,206

 
3,672

Impairment charges

 
4,790

 
2,769

 

 

Restructuring and other compensation (d)

 

 
289

 
1,356

 
7,718

Dealer manager fees and expenses

 

 

 
462

 
2,788

 
109,202

 
120,966

 
111,711

 
115,164

 
127,991

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(41,311
)
 
(38,074
)
 
(40,401
)
 
(41,182
)
 
(42,235
)
Equity in earnings of equity method investments in the Managed Programs and real estate
12,558

 
15,325

 
16,930

 
16,318

 
15,728

Other gains and (losses)
10,586

 
(2,763
)
 
1,356

 
(4,569
)
 
(916
)
 
(18,167
)
 
(25,512
)
 
(22,115
)
 
(29,433
)
 
(27,423
)
Income before income taxes and gain on sale of real estate
73,774

 
55,332

 
63,135

 
66,157

 
66,114

(Provision for) benefit from income taxes
(6,262
)
 
6,002

 
192

 
(1,760
)
 
(2,448
)
Income before gain on sale of real estate
67,512

 
61,334

 
63,327

 
64,397

 
63,666

Gain on sale of real estate, net of tax
11,912

 
6,732

 
11,146

 
19,257

 
3,465

Net Income
79,424

 
68,066

 
74,473

 
83,654

 
67,131

Net (income) loss attributable to noncontrolling interests
(3,743
)
 
(2,792
)
 
736

 
(3,376
)
 
(2,813
)
Net Income Attributable to W. P. Carey
$
75,681

 
$
65,274

 
$
75,209

 
$
80,278

 
$
64,318

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
0.70

 
$
0.60

 
$
0.69

 
$
0.74

 
$
0.60

Diluted Earnings Per Share
$
0.70

 
$
0.60

 
$
0.69

 
$
0.74

 
$
0.59

Weighted-Average Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
108,059,394

 
108,057,940

 
108,041,556

 
108,019,292

 
107,668,218

Diluted
108,234,934

 
108,211,936

 
108,208,918

 
108,143,694

 
107,783,204

 
 
 
 
 
 
 
 
 
 
Distributions Declared Per Share
$
1.020

 
$
1.015

 
$
1.010

 
$
1.005

 
$
1.000

________
(a)
Amounts for the three and twelve months ended June 30, 2018 include $3.6 million and $21.0 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, 2018 is primarily comprised of costs incurred in connection with the Proposed Merger. Amount for the three months ended June 30, 2017 is comprised of an accrual for estimated one-time legal settlement expenses.
(c)
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.
(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.

394502793_wpclogoa01a01a27.jpg 
 
Investing for the long runTM | 6


W. P. Carey Inc.
Financial Results – Second Quarter 2018
Statements of Income, Owned Real Estate – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Jun. 30, 2018
 
Mar. 31, 2018
 
Dec. 31, 2017
 
Sep. 30, 2017
 
Jun. 30, 2017
Revenues
 
 
 
 
 
 
 
 
 
Lease revenues
$
162,634

 
$
163,213

 
$
154,826

 
$
161,511

 
$
158,255

Reimbursable tenant costs
5,733

 
6,219

 
5,584

 
5,397

 
5,322

Operating property revenues
4,865

 
7,218

 
6,910

 
8,449

 
8,223

Lease termination income and other
680

 
942

 
515

 
1,227

 
2,247

 
173,912

 
177,592

 
167,835

 
176,584

 
174,047

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
63,374

 
64,920

 
62,951

 
62,970

 
61,989

General and administrative
10,599

 
12,065

 
11,691

 
11,234

 
7,803

Property expenses, excluding reimbursable tenant costs (a)
8,908

 
9,899

 
9,560

 
10,556

 
10,530

Reimbursable tenant costs
5,733

 
6,219

 
5,584

 
5,397

 
5,322

Merger and other expenses (b)
2,692

 
(37
)
 
(533
)
 
65

 
1,000

Stock-based compensation expense
1,990

 
4,306

 
2,227

 
1,880

 
899

Impairment charges

 
4,790

 
2,769

 

 

 
93,296

 
102,162

 
94,249

 
92,102

 
87,543

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(41,311
)
 
(38,074
)
 
(40,401
)
 
(41,182
)
 
(42,235
)
Equity in earnings of equity method investments in real estate
3,529

 
3,358

 
3,535

 
3,740

 
3,721

Other gains and (losses)
9,630

 
(2,887
)
 
594

 
(4,918
)
 
(1,371
)
 
(28,152
)
 
(37,603
)
 
(36,272
)
 
(42,360
)
 
(39,885
)
Income before income taxes and gain on sale of real estate
52,464

 
37,827

 
37,314

 
42,122

 
46,619

(Provision for) benefit from income taxes
(1,317
)
 
3,533

 
4,953

 
(1,511
)
 
(3,731
)
Income before gain on sale of real estate
51,147

 
41,360

 
42,267

 
40,611

 
42,888

Gain on sale of real estate, net of tax
11,912

 
6,732

 
11,146

 
19,257

 
3,465

Net Income from Owned Real Estate
63,059

 
48,092

 
53,413

 
59,868

 
46,353

Net (income) loss attributable to noncontrolling interests
(3,743
)
 
(2,792
)
 
736

 
(3,376
)
 
(2,813
)
Net Income from Owned Real Estate Attributable to W. P. Carey
$
59,316

 
$
45,300