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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): November 2, 2018
395613736_wpchighreslogoa15.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 November 2, 2018, W. P. Carey Inc. (together with its predecessors, the “Company”) issued an earnings release announcing its financial results for the quarter ended September 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 November 2, 2018, the Company made available certain unaudited supplemental financial information at September 30, 2018. A copy of this supplemental information is attached as Exhibit 99.2.

On November 2, 2018, the Company posted its third quarter investor presentation on its website at http://www.wpcarey.com. A copy of the investor presentation is also attached as Exhibit 99.3.

The information furnished pursuant to this Item 7.01, including Exhibits 99.2 and 99.3, 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 September 30, 2018.

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

Exhibit 99.3 Investor presentation by the Company.






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:
November 2, 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

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 Third Quarter 2018 Financial Results


New York, NY – November 2, 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 third quarter ended September 30, 2018.

Total Company
Net income attributable to W. P. Carey of $77.3 million, or $0.71 per diluted share
AFFO of $159.8 million, or $1.48 per diluted share
2018 AFFO guidance range adjusted to between $5.34 and $5.44 per diluted share, reflecting the earlier-than-anticipated completion of the Company’s merger with CPA:17
Quarterly cash dividend raised to $1.025 per share, equivalent to an annualized dividend rate of $4.10 per share
Completed merger with CPA:17 in a $5.9 billion stock-for-stock transaction on October 31, 2018

Business Segments

Real Estate
Segment net income attributable to W. P. Carey of $51.0 million
Segment AFFO of $121.2 million, or $1.12 per diluted share
Investment volume of $296.3 million during the third quarter, bringing total investment volume for the first nine months to $691.7 million
Gross disposition proceeds of $20.9 million during the third quarter, bringing total dispositions for the first nine months to $184.7 million
Portfolio occupancy of 98.7% at quarter end (98.3% pro forma for the merger with CPA:17)
Weighted-average lease term increased to 10.2 years at quarter end (10.5 years pro forma for the merger with CPA:17)


W. P. Carey Inc. 9/30/2018 Earnings Release 8-K – 1


Investment Management
Segment net income attributable to W. P. Carey of $26.3 million
Segment AFFO of $38.6 million, or $0.36 per diluted share

Balance Sheet and Capitalization – Subsequent to Quarter End
Issued €500 million of 2.250% Senior Unsecured Notes due 2026


MANAGEMENT COMMENTARY

“Through a combination of single-asset and portfolio acquisitions, as well as discretionary investments with existing tenants, we remain on track with our expectations for full-year investment volume, despite competitive market conditions,” said Jason Fox, Chief Executive Officer of W. P. Carey. “Strong same-store rent growth flowed through to our earnings and we remain well-positioned for a continued inflationary environment. Furthermore, with the closing of our merger, we have enhanced both our portfolio and strategic position.”


QUARTERLY FINANCIAL RESULTS

Revenues

Total Company: Revenues excluding reimbursable costs (net revenues) for the 2018 third quarter totaled $197.4 million, down 0.9% from $199.1 million for the 2017 third quarter.

Real Estate: Real Estate net revenues for the 2018 third quarter were $173.4 million, up 1.3% from $171.2 million for the 2017 third quarter, due primarily to additional lease revenues from acquisitions and rent escalations, partially offset by lower operating property revenues resulting from the disposition of a hotel operating property during the 2018 second quarter.

Investment Management: Investment Management net revenues for the 2018 third quarter were $24.0 million, down 14.3% from $28.0 million for the 2017 third quarter, due primarily to lower structuring revenues resulting from the fully-invested status of the Managed Programs (as defined below).

Net Income Attributable to W. P. Carey

Net income attributable to W. P. Carey for the 2018 third quarter was $77.3 million, down 3.7% from $80.3 million for the 2017 third quarter, due primarily to a lower aggregate gain on sale of real estate, which more than offset gains recognized on foreign currency transactions during the current year period as compared to losses recognized on foreign currency transactions during the prior year period.

Adjusted Funds from Operations (AFFO)

AFFO for the 2018 third quarter was $1.48 per diluted share, up 8.0% from $1.37 per diluted share for the 2017 third quarter, due primarily to additional lease revenues from acquisitions and rent escalations within the Company’s Real Estate portfolio and a tax benefit within its Investment Management business.

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 September 19, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $1.025 per share, equivalent to an annualized dividend rate of $4.10 per share. The dividend was paid on October 15, 2018 to stockholders of record as of October 1, 2018.



W. P. Carey Inc. 9/30/2018 Earnings Release 8-K – 2


AFFO GUIDANCE

For the 2018 full year, the Company has adjusted its AFFO guidance range to between $5.34 and $5.44 per diluted share, reflecting the earlier-than-anticipated completion of the Company’s merger with CPA:17, based on the following key assumptions, which are unchanged:

(i)
investments for the Company’s Real Estate portfolio of between $700 million and $1 billion;

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

(iii)
total general and administrative expenses of between $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 – Subsequent to Quarter End

As previously announced, on October 9, 2018, the Company completed an underwritten public offering of €500 million aggregate principal amount of 2.250% Senior Notes due April 9, 2026. Net proceeds from the offering were used to reduce amounts outstanding under the Company’s unsecured revolving credit facility.


REAL ESTATE

Investments

During the 2018 third quarter, the Company completed investments totaling $296.3 million, consisting of four acquisitions for $259.7 million and three completed capital investment projects at a total cost of $36.6 million, bringing total investment volume for the nine months ended September 30, 2018 to $691.7 million, including transaction-related costs and fees.

As of September 30, 2018, the Company had six capital investment projects outstanding for an expected total investment of approximately $113.5 million.

The Company currently expects to complete three capital investment projects totaling $73.0 million during the 2018 fourth quarter, consisting of two projects totaling $28.0 million outstanding as of September 30, 2018, and one project totaling $45.0 million resulting from its merger with CPA:17.

Dispositions

During the 2018 third quarter, the Company disposed of four properties for total gross proceeds of $20.9 million, bringing total dispositions for the nine months ended September 30, 2018 to $184.7 million.

Composition

As of September 30, 2018, the Company’s Real Estate portfolio consisted of 913 net lease properties, comprising 89.3 million square feet leased to 210 tenants, and one hotel operating property. As of that date, the weighted-average lease term of the net lease portfolio was 10.2 years and the occupancy rate was 98.7%.

As of September 30, 2018, pro forma for the Company’s merger with CPA:17, the Company’s Real Estate portfolio consisted of 1,186 net lease properties, comprising 132.9 million square feet leased to 304 tenants, 44 self-storage operating properties and two hotel operating properties. As of that date, on a pro forma basis, the weighted-average lease term of the combined net lease portfolio was 10.5 years and the occupancy rate was 98.3%.


W. P. Carey Inc. 9/30/2018 Earnings Release 8-K – 3



INVESTMENT MANAGEMENT

W. P. Carey was formerly the advisor to CPA®:17 – Global (CPA:17) until the merger on October 31, 2018, and is currently the advisor to CPA:18 – Global (CPA:18, and together with CPA:17, the CPA REITs), Carey Watermark Investors Incorporated (CWI® 1) and Carey Watermark Investors 2 Incorporated (CWI 2, and together with CWI 1, the CWI REITs, and collectively 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).

Acquisitions

During the 2018 third quarter, the Company structured investments on behalf of the Managed Programs totaling $178.0 million, bringing total investment volume on behalf of the Managed Programs for the nine months ended September 30, 2018 to $301.2 million.

Assets Under Management

As of September 30, 2018, the Managed Programs had total assets under management of approximately $13.4 billion, including $5.9 billion within CPA:17.


MERGER WITH CPA:17 – SUBSEQUENT TO QUARTER END

As previously announced, on October 31, 2018, the Company completed its merger with CPA:17 in a transaction valued at approximately $5.9 billion, including the assumption of debt.

As a result of the merger, which included the issuance of approximately 54 million shares of W. P. Carey common stock in a stock-for-stock transaction, the Company’s equity market capitalization increased to approximately $11 billion, positioning it as one of the largest net lease REITs and among the top 25 publicly traded REITs in the MSCI US REIT Index.


* * * * *


Supplemental Information

The Company has provided supplemental unaudited financial and operating information regarding the 2018 third 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 November 2, 2018.


* * * * *


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

Date/Time: Friday, November 2, 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. 9/30/2018 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 approximately $17 billion and a portfolio of operationally-critical commercial real estate that includes 1,186 net lease properties covering approximately 133 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 the U.S. and Northern and Western Europe and is well-diversified by tenant, property type, geographic location and tenant industry. 
www.wpcarey.com


* * * * *


Cautionary Statement Concerning Forward-Looking Statements

Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, among other things, statements regarding the intent, belief or expectations of W. P. Carey and can be identified by the use of words such as “may,” “will,” “should,” “would,” “assume,” “outlook,” “seek,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast” and other comparable terms. These forward-looking statements include, but are not limited to, statements made by Mr. Fox with regard to the anticipated benefits and characteristics of the recently completed merger with CPA:17, including with regard to its enhancement of our portfolio and strategic position, and statements with regard to: our acquisitions, discretionary investments, and investment volume, pipeline and opportunities; weighted-average lease term, rent growth, criticality, yields and occupancy rate of our real estate and other portfolio characteristics, as well as with regard to its positioning in an inflationary environment; 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.


* * * * *

W. P. Carey Inc. 9/30/2018 Earnings Release 8-K – 5


W. P. CAREY INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share amounts)
 
September 30, 2018
 
December 31, 2017
Assets
 
 
 
Investments in real estate:
 
 
 
Land, buildings and improvements (a)
$
5,794,494

 
$
5,457,265

Net investments in direct financing leases
702,151

 
721,607

In-place lease and other intangible assets
1,199,785

 
1,213,976

Above-market rent intangible assets
626,390

 
640,480

Investments in real estate
8,322,820

 
8,033,328

Accumulated depreciation and amortization (b)
(1,485,056
)
 
(1,329,613
)
Assets held for sale, net (c)
108,730

 

Net investments in real estate
6,946,494

 
6,703,715

Equity investments in the Managed Programs and real estate (d)
366,306

 
341,457

Cash and cash equivalents
176,612

 
162,312

Due from affiliates
82,547

 
105,308

Other assets, net
305,295

 
274,650

Goodwill
641,734

 
643,960

Total assets
$
8,518,988

 
$
8,231,402

 
 
 
 
Liabilities and Equity
 
 
 
Debt:
 
 
 
Senior unsecured notes, net
$
3,007,453

 
$
2,474,661

Unsecured revolving credit facility
696,380

 
216,775

Unsecured term loans, net

 
388,354

Non-recourse mortgages, net
959,951

 
1,185,477

Debt, net
4,663,784

 
4,265,267

Accounts payable, accrued expenses and other liabilities
265,676

 
263,053

Below-market rent and other intangible liabilities, net
105,898

 
113,957

Deferred income taxes
98,933

 
67,009

Dividends payable
111,688

 
109,766

Total liabilities
5,245,979

 
4,819,052

Redeemable noncontrolling interest
1,300

 
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; 107,214,394 and 106,922,616 shares, respectively, issued and outstanding
107

 
107

Additional paid-in capital
4,445,426

 
4,433,573

Distributions in excess of accumulated earnings
(1,165,914
)
 
(1,052,064
)
Deferred compensation obligation
36,159

 
46,656

Accumulated other comprehensive loss
(254,055
)
 
(236,011
)
Total stockholders’ equity
3,061,723

 
3,192,261

Noncontrolling interests
209,986

 
219,124

Total equity
3,271,709

 
3,411,385

Total liabilities and equity
$
8,518,988

 
$
8,231,402

________
(a)
Includes $42.4 million and $83.0 million of amounts attributable to operating properties as of September 30, 2018 and December 31, 2017, respectively. We sold one hotel operating property in April 2018.
(b)
Includes $707.6 million and $630.0 million of accumulated depreciation on buildings and improvements as of September 30, 2018 and December 31, 2017, respectively, and $777.4 million and $699.7 million of accumulated amortization on lease intangibles as of September 30, 2018 and December 31, 2017, respectively.
(c)
At September 30, 2018, we had nine properties leased to the same tenant classified as Assets held for sale, net.
(d)
Our equity investments in the Managed Programs totaled $230.3 million and $201.4 million as of September 30, 2018 and December 31, 2017, respectively. Our equity investments in real estate joint ventures totaled $136.0 million and $140.0 million as of September 30, 2018 and December 31, 2017, respectively.



W. P. Carey Inc. 9/30/2018 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
 
September 30, 2018
 
June 30, 2018
 
September 30, 2017
Revenues
 
 
 
 
 
Real Estate:
 
 
 
 
 
Lease revenues
$
167,088

 
$
162,634

 
$
161,511

Reimbursable tenant costs
5,979

 
5,733

 
5,397

Operating property revenues
4,282

 
4,865

 
8,449

Lease termination income and other
1,981

 
680

 
1,227

 
179,330

 
173,912

 
176,584

Investment Management:
 
 
 
 
 
Asset management revenue
17,349

 
17,268

 
17,938

Structuring revenue
6,553

 
4,426

 
9,817

Reimbursable costs from affiliates
6,042

 
5,537

 
6,211

Other advisory revenue
110

 

 
99

Dealer manager fees

 

 
105

 
30,054

 
27,231

 
34,170

 
209,384

 
201,143

 
210,754

Operating Expenses
 

 
 
 
 

Depreciation and amortization
67,825

 
64,337

 
64,040

General and administrative
15,863

 
16,442

 
17,236

Reimbursable tenant and affiliate costs
12,021

 
11,270

 
11,608

Property expenses, excluding reimbursable tenant costs (a)
7,953

 
8,908

 
10,556

Subadvisor fees (b)
3,127

 
1,855

 
5,206

Stock-based compensation expense
2,475

 
3,698

 
4,635

Merger and other expenses (c)
1,673

 
2,692

 
65

Restructuring and other compensation (d)

 

 
1,356

Dealer manager fees and expenses

 

 
462

 
110,937

 
109,202

 
115,164

Other Income and Expenses
 

 
 
 
 

Interest expense
(41,740
)
 
(41,311
)
 
(41,182
)
Equity in earnings of equity method investments in the Managed Programs
   and real estate
18,363

 
12,558

 
16,318

Other gains and (losses)
8,875

 
10,586

 
(4,569
)
 
(14,502
)
 
(18,167
)
 
(29,433
)
Income before income taxes and gain on sale of real estate
83,945

 
73,774

 
66,157

Provision for income taxes
(2,715
)
 
(6,262
)
 
(1,760
)
Income before gain on sale of real estate
81,230

 
67,512

 
64,397

Gain on sale of real estate, net of tax
343

 
11,912

 
19,257

Net Income
81,573

 
79,424

 
83,654

Net income attributable to noncontrolling interests
(4,225
)
 
(3,743
)
 
(3,376
)
Net Income Attributable to W. P. Carey
$
77,348

 
$
75,681

 
$
80,278

 
 
 
 
 
 
Basic Earnings Per Share
$
0.71

 
$
0.70

 
$
0.74

Diluted Earnings Per Share
$
0.71

 
$
0.70

 
$
0.74

Weighted-Average Shares Outstanding
 

 
 
 
 

Basic
108,073,969

 
108,059,394

 
108,019,292

Diluted
108,283,666

 
108,234,934

 
108,143,694

 
 
 
 
 
 
Dividends Declared Per Share
$
1.025

 
$
1.020

 
$
1.005







W. P. Carey Inc. 9/30/2018 Earnings Release 8-K – 7


W. P. CAREY INC.
Year-to-Date Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)
 
Nine Months Ended September 30,
 
2018
 
2017
Revenues
 
 
 
Real Estate:
 
 
 
Lease revenues
$
492,935

 
$
475,547

Reimbursable tenant costs
17,931

 
15,940

Operating property revenues
16,365

 
23,652

Lease termination income and other
3,603

 
4,234

 
530,834

 
519,373

Investment Management:
 
 
 
Asset management revenue
51,602

 
53,271

Reimbursable costs from affiliates
16,883

 
45,390

Structuring revenue
12,718

 
27,981

Other advisory revenue
300

 
896

Dealer manager fees

 
4,430

 
81,503

 
131,968

 
612,337

 
651,341

Operating Expenses
 

 
 

Depreciation and amortization
198,119

 
189,319

General and administrative
50,888

 
53,189

Reimbursable tenant and affiliate costs
34,814

 
61,330

Property expenses, excluding reimbursable tenant costs (a)
26,760

 
31,196

Stock-based compensation expense
14,392

 
14,649

Subadvisor fees (b)
7,014

 
11,598

Impairment charges
4,790

 

Merger and other expenses (c)
4,328

 
1,138

Restructuring and other compensation (d)

 
9,074

Dealer manager fees and expenses

 
6,544

 
341,105

 
378,037

Other Income and Expenses
 

 
 

Interest expense
(121,125
)
 
(125,374
)
Equity in earnings of equity method investments in the Managed Programs and real estate
46,246

 
47,820

Other gains and (losses)
16,698

 
(4,969
)
 
(58,181
)
 
(82,523
)
Income before income taxes and gain on sale of real estate
213,051

 
190,781

Provision for income taxes
(2,975
)
 
(2,903
)
Income before gain on sale of real estate
210,076

 
187,878

Gain on sale of real estate, net of tax
18,987

 
22,732

Net Income
229,063

 
210,610

Net income attributable to noncontrolling interests
(10,760
)
 
(8,530
)
Net Income Attributable to W. P. Carey
$
218,303

 
$
202,080

 
 
 
 
Basic Earnings Per Share
$
2.02

 
$
1.87

Diluted Earnings Per Share
$
2.01

 
$
1.87

Weighted-Average Shares Outstanding
 

 
 

Basic
108,063,826

 
107,751,672

Diluted
108,253,841

 
107,947,490

 
 
 
 
Dividends Declared Per Share
$
3.060

 
$
3.000

__________
(a)
Amounts for the three and nine months ended September 30, 2018 include $3.1 million and $12.3 million, respectively, of property expenses related to two hotel operating properties, one of which we sold in April 2018.
(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. In September 2018, CPA:18 – Global sold four of its six multi-family properties. 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)
Amounts for the three and nine months ended September 30, 2018 are primarily comprised of costs incurred in connection with our merger with CPA:17. Amount for the nine months ended September 30, 2017 is primarily comprised of accruals for estimated one-time legal settlement expenses.
(d)
Amounts for the three and nine months ended September 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. 9/30/2018 Earnings Release 8-K – 8


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
 
September 30, 2018
 
June 30, 2018
 
September 30, 2017
Net income attributable to W. P. Carey
$
77,348

 
$
75,681

 
$
80,278

Adjustments:
 
 
 
 
 
Depreciation and amortization of real property
66,493

 
63,073

 
62,621

Gain on sale of real estate, net
(343
)
 
(11,912
)
 
(19,257
)
Proportionate share of adjustments for noncontrolling interests
(2,693
)
 
(2,729
)
 
(2,692
)
Proportionate share of adjustments to equity in net income of partially owned entities
(651
)
 
902

 
866

Total adjustments
62,806

 
49,334

 
41,538

FFO (as defined by NAREIT) Attributable to W. P. Carey (a)
140,154

 
125,015

 
121,816

Adjustments:
 
 
 
 
 
Above- and below-market rent intangible lease amortization, net
13,224

 
12,303

 
12,459

Other amortization and non-cash items (b)
(4,829
)
 
(7,437
)
 
6,208

Tax expense (benefit) – deferred
3,918

 
3,028

 
(1,234
)
Straight-line and other rent adjustments
(3,431
)
 
(2,637
)
 
(3,212
)
Stock-based compensation
2,475

 
3,698

 
4,635

Amortization of deferred financing costs
1,901

 
1,905

 
2,184

Merger and other expenses (c)
1,673

 
2,692

 
65

Realized losses (gains) on foreign currency
191

 
627

 
(449
)
(Gain) loss on extinguishment of debt
(43
)
 

 
1,566

Restructuring and other compensation (d)

 

 
1,356

Proportionate share of adjustments to equity in net income of partially owned entities
3,860

 
3,635

 
3,064

Proportionate share of adjustments for noncontrolling interests
664

 
(230
)
 
(216
)
Total adjustments
19,603

 
17,584

 
26,426

AFFO Attributable to W. P. Carey (a)
$
159,757

 
$
142,599

 
$
148,242

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (a)
$
140,154

 
$
125,015

 
$
121,816

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (a)
$
1.29

 
$
1.16

 
$
1.13

AFFO attributable to W. P. Carey (a)
$
159,757

 
$
142,599

 
$
148,242

AFFO attributable to W. P. Carey per diluted share (a)
$
1.48

 
$
1.32

 
$
1.37

Diluted weighted-average shares outstanding
108,283,666

 
108,234,934

 
108,143,694



















W. P. Carey Inc. 9/30/2018 Earnings Release 8-K – 9


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)
 
Nine Months Ended September 30,
 
2018
 
2017
Net income attributable to W. P. Carey
$
218,303

 
$
202,080

Adjustments:
 
 
 
Depreciation and amortization of real property
194,146

 
185,439

Gain on sale of real estate, net
(18,987
)
 
(22,732
)
Impairment charges
4,790

 

Proportionate share of adjustments for noncontrolling interests
(8,204
)
 
(7,795
)
Proportionate share of adjustments to equity in net income of partially owned entities
1,503

 
4,416

Total adjustments
173,248

 
159,328

FFO (as defined by NAREIT) Attributable to W. P. Carey (a)
391,551

 
361,408

Adjustments:
 
 
 
Above- and below-market rent intangible lease amortization, net
37,329

 
37,273

Stock-based compensation
14,392

 
14,649

Straight-line and other rent adjustments
(8,364
)
 
(9,677
)
Other amortization and non-cash items (b)
(7,120
)
 
14,995

Tax benefit – deferred
(5,209
)
 
(8,167
)
Merger and other expenses (c)
4,328

 
1,138

Amortization of deferred financing costs
3,612

 
6,126

Loss on extinguishment of debt
1,566

 
35

Realized gains on foreign currency
(697
)
 
(424
)
Restructuring and other compensation (d)

 
9,074

Proportionate share of adjustments to equity in net income of partially owned entities
9,247

 
5,592

Proportionate share of adjustments for noncontrolling interests
91

 
(1,105
)
Total adjustments
49,175

 
69,509

AFFO Attributable to W. P. Carey (a)
$
440,726

 
$
430,917

 
 
 
 
Summary
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (a)
$
391,551

 
$
361,408

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (a)
$
3.62

 
$
3.35

AFFO attributable to W. P. Carey (a)
$
440,726

 
$
430,917

AFFO attributable to W. P. Carey per diluted share (a)
$
4.07

 
$
3.99

Diluted weighted-average shares outstanding
108,253,841

 
107,947,490

__________
(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 nine months ended September 30, 2018 are primarily comprised of costs incurred in connection with our merger with CPA:17. Amount for the nine months ended September 30, 2017 is primarily comprised of accruals for estimated one-time legal settlement expenses.
(d)
Amounts for the three and nine months ended September 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. 9/30/2018 Earnings Release 8-K – 10


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. 9/30/2018 Earnings Release 8-K – 11
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2


W. P. Carey Inc.
Supplemental Information
Third 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. “SEC” means Securities and Exchange Commission. “CPA:17 Merger” means our merger with CPA:17 – Global, which was completed on October 31, 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 – Third Quarter 2018
Table of Contents
Overview
 
 
 
Financial Results
 
Statements of Income – Last Five Quarters
 
FFO and AFFO – Last Five Quarters
 
 
 
Balance Sheets and Capitalization
 
 
 
Real Estate
 
Investment Activity
 
 
 
Investment Management
 
 
 
Appendix
 
Adjusted EBITDA  Last Five Quarters
 



W. P. Carey Inc.
Overview – Third Quarter 2018
Summary Metrics
As of or for the three months ended September 30, 2018.
Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment
 
 
 
 
 
 
 
Owned
Real Estate
 
Investment Management
 
Total
Revenues, excluding reimbursable costs – consolidated ($'000)
 
$
173,351

 
$
24,012

 
$
197,363

Net income attributable to W. P. Carey ($'000)
 
51,009

 
26,339

 
77,348

Net income attributable to W. P. Carey per diluted share
 
0.47

 
0.24

 
0.71

Normalized pro rata cash NOI from real estate ($'000) (a) (b)
 
172,587

 
N/A

 
172,587

Adjusted EBITDA ($'000) (a) (b)
 
164,908

 
33,967

 
198,875

AFFO attributable to W. P. Carey ($'000) (a) (b)
 
121,169

 
38,588

 
159,757

AFFO attributable to W. P. Carey per diluted share (a) (b)
 
1.12

 
0.36

 
1.48

 
 
 
 
 
 
 
 
 
 
Dividends declared per share – third quarter
 
 
 
 
 
1.025

Dividends declared per share – third quarter annualized
 
 
 
 
 
4.10

Dividend yield – annualized, based on quarter end share price of $64.31
 
 
 
 
 
6.4
%
Dividend payout ratio – for the nine months ended September 30, 2018 (c)
 
 
 
 
 
75.2
%
 
 
 
 
 
 
 
 
 
 
Balance Sheet and Capitalization
 
 
 
 
 
 
 
 
 
Equity market capitalization – based on quarter end share price of $64.31 ($'000)
 
 
 
 
 
$
6,894,958

Pro rata net debt ($'000) (d)
 
 
 
 
 
 
 
 
4,537,369

Enterprise value ($'000)
 
 
 
 
 
 
 
 
11,432,327

 
 
 
 
 
 
 
 
 
 
Total capitalization ($'000) (e)
 
 
 
 
 
 
 
 
11,608,939

 
 
 
 
 
 
 
 
 
 
Total consolidated debt ($'000)
 
 
 
 
 
 
 
 
4,663,784

Gross assets ($'000) (f)
 
 
 
 
 
 
 
 
9,226,611

Liquidity ($'000) (g)
 
 
 
 
 
 
 
 
980,232

 
 
 
 
 
 
 
 
 
 
Pro rata net debt to enterprise value (b)
 
 
 
 
 
 
 
 
39.7
%
Pro rata net debt to adjusted EBITDA (annualized) (a) (b)
 
 
 
 
 
5.7x

Total consolidated debt to gross assets
 
 
 
 
 
 
 
 
50.5
%
 
 
 
 
 
 
 
 
 
 
Weighted-average interest rate (b)
 
 
 
 
 
 
 
 
3.3
%
Weighted-average debt maturity (years) (b)
 
 
 
 
 
 
 
 
5.2

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

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

 
 
 
 
 
 
 
 
 
 
Real Estate Portfolio (Pro Rata)
 
 
 
 
 
 
 
 
 
ABR ($’000) (h)
 
 
 
 
 
 
 
 
$
713,844

Number of net-leased properties
 
 
 
 
 
 
 
 
913

Number of operating properties
 
 
 
 
 
 
 
 
1

Number of tenants – net-leased properties
 
 
 
 
 
 
 
 
210

 
 
 
 
 
 
 
 
 
 
ABR from investment grade tenants as a % of total ABR – net-leased properties (i)
 
 
 
 
 
26.1
%
 
 
 
 
 
 
 
 
 
 
Net-leased properties – square footage (millions)
 
 
 
 
 
 
 
 
89.3

 
 
 
 
 
 
 
 
 
 
Occupancy – net-leased properties
 
 
 
 
 
 
 
 
98.7
%
Weighted-average lease term (years)
 
 
 
 
 
 
 
 
10.2

 
 
 
 
 
 
 
 
 
 
Maximum commitment for capital investment projects expected to be completed during 2018 ($’000)
 
 
 
$
27,950

Acquisitions and completed capital investment projects – third quarter ($'000)
 
 
 
296,317

Dispositions – third quarter ($'000)
 
 
 
 
 
 
 
 
20,930

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

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Investing for the long runTM | 1


W. P. Carey Inc.
Overview – Third 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 $462.9 million and above-market rent intangible assets of $314.5 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 September 30, 2018. Includes tenants or guarantors with investment grade ratings (18.1%) and subsidiaries of non-guarantor parent companies with investment grade ratings (8.0%). 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 – Third Quarter 2018
Components of Net Asset Value
Dollars in thousands, except per share amounts.
Real Estate
 
 
Three Months Ended
Sep. 30, 2018
 
Annualized
Normalized pro rata cash NOI (a) (b)
 
 
$
172,587

 
$
690,348

 
 
 
 
 
 
Investment Management
 
 
Three Months Ended
Sep. 30, 2018
 
Twelve Months Ended
Sep. 30, 2018
Adjusted EBITDA (a) (b)
 
 
$
33,967

 
$
118,502

Selected Components of Adjusted EBITDA:
 
 
 
 
 
Asset management revenue (c)
 
 
17,349

 
68,456

Structuring revenue (c)
 
 
6,553

 
18,935

Operating partnership interests in real estate cash flow of Managed REITs (d)
 
12,216

 
43,310

Back-end fees and interests associated with the Managed Programs
 
 
 
 
 
 
 
 
Balance Sheet – Selected Information (Consolidated Unless Otherwise Stated)
 
As of Sep. 30, 2018
Assets
 
 
 
 
 
Book value of real estate excluded from NOI (e)
 
 
 
 
$
91,646

Cash and cash equivalents
 
 
 
 
176,612

Due from affiliates
 
 
 
 
82,547

Other assets, net:
 
 
 
 
 
Straight-line rent adjustments
 
 
 
 
$
82,282

Restricted cash, including escrow
 
 
 
 
38,188

Deferred charges
 
 
 
 
33,844

Securities and derivatives
 
 
 
 
27,535

Investment in GCIF securities
 
 
 
 
23,722

Taxes receivable
 
 
 
 
20,527

Deposits
 
 
 
 
19,161

Accounts receivable
 
 
 
 
18,712

Other intangible assets, net
 
 
 
 
11,820

Prepaid expenses
 
 
 
 
10,252

Note receivable
 
 
 
 
9,651

Deferred income taxes
 
 
 
 
6,605

Leasehold improvements, furniture and fixtures
 
 
 
2,848

Other
 
 
 
 
148

Total other assets, net
 
 
 
 
$
305,295

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Total pro rata debt outstanding (b)
 
 
 
 
$
4,713,981

Dividends payable
 
 
 
 
111,688

Deferred income taxes
 
 
 
 
98,933

Accounts payable, accrued expenses and other liabilities:
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
$
97,259

Prepaid and deferred rents
 
 
 
 
88,941

Tenant security deposits
 
 
 
 
30,269

Accrued taxes payable
 
 
 
 
26,267

Securities and derivatives
 
 
 
 
3,331

Straight-line rent adjustments
 
 
 
 
1,702

Other
 
 
 
 
17,907

Total accounts payable, accrued expenses and other liabilities
 
 
 
 
$
265,676


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Investing for the long runTM | 3


W. P. Carey Inc.
Overview – Third 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
3.2
%
 
4,690,225

 
8.57

(g) 
40,195

CWI 1
2.8
%
 
3,937,243

 
10.41

(g) 
40,987

CWI 2
2.6
%
 
2,285,933

 
11.11

(g) 
25,397

CESH I
2.4
%
 
3,492

 
1,000.00

(h) 
3,492

 
 
 
 
 
 
 
$
272,036

________
(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, and CPA:18 Global (for multi-family properties).
(d)
We are entitled to receive distributions of up to 10% of the Available Cash of each of the Managed REITs, as defined in their respective operating partnership agreements. Pursuant to the terms of their subadvisory agreements, however, 20% of the distributions of Available Cash we receive from CWI 1 and 25% of the distributions of Available Cash we receive from CWI 2 are paid to their respective subadvisors. Amounts for CWI 1 and CWI 2 are net of fees paid to their respective subadvisors.
(e)
Represents the value of real estate not included in 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 unit; we do not intend to calculate a NAV for CESH I.

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Investing for the long runTM | 4




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





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Investing for the long runTM | 5


W. P. Carey Inc.
Financial Results – Third Quarter 2018
Consolidated Statements of Income – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Sep. 30, 2018
 
Jun. 30, 2018
 
Mar. 31, 2018
 
Dec. 31, 2017
 
Sep. 30, 2017
Revenues
 
 
 
 
 
 
 
 
 
Real Estate:
 
 
 
 
 
 
 
 
 
Lease revenues
$
167,088

 
$
162,634

 
$
163,213

 
$
154,826

 
$
161,511

Reimbursable tenant costs
5,979

 
5,733

 
6,219

 
5,584

 
5,397

Operating property revenues
4,282

 
4,865

 
7,218

 
6,910

 
8,449

Lease termination income and other
1,981

 
680

 
942

 
515

 
1,227

 
179,330

 
173,912

 
177,592

 
167,835

 
176,584

Investment Management:
 
 
 
 
 
 
 
 
 
Asset management revenue
17,349

 
17,268

 
16,985

 
16,854

 
17,938

Structuring revenue
6,553

 
4,426

 
1,739

 
6,217

 
9,817

Reimbursable costs from affiliates
6,042

 
5,537

 
5,304

 
6,055

 
6,211

Other advisory revenue
110

 

 
190

 

 
99

Dealer manager fees

 

 

 

 
105

 
30,054

 
27,231

 
24,218

 
29,126

 
34,170

 
209,384

 
201,143

 
201,810

 
196,961

 
210,754

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
67,825

 
64,337

 
65,957

 
64,015

 
64,040

General and administrative
15,863

 
16,442

 
18,583

 
17,702

 
17,236

Reimbursable tenant and affiliate costs
12,021

 
11,270

 
11,523

 
11,639

 
11,608

Property expenses, excluding reimbursable tenant costs (a)
7,953

 
8,908

 
9,899

 
9,560

 
10,556

Subadvisor fees (b)
3,127

 
1,855

 
2,032

 
2,002

 
5,206

Stock-based compensation expense
2,475

 
3,698

 
8,219

 
4,268

 
4,635

Merger and other expenses (c)
1,673

 
2,692

 
(37
)
 
(533
)
 
65

Impairment charges

 

 
4,790

 
2,769

 

Restructuring and other compensation (d)

 

 

 
289

 
1,356

Dealer manager fees and expenses

 

 

 

 
462

 
110,937

 
109,202

 
120,966

 
111,711

 
115,164

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(41,740
)
 
(41,311
)
 
(38,074
)
 
(40,401
)
 
(41,182
)
Equity in earnings of equity method investments in the Managed Programs and real estate
18,363

 
12,558

 
15,325

 
16,930

 
16,318

Other gains and (losses)
8,875

 
10,586

 
(2,763
)
 
1,356

 
(4,569
)
 
(14,502
)
 
(18,167
)
 
(25,512
)
 
(22,115
)
 
(29,433
)
Income before income taxes and gain on sale of real estate
83,945

 
73,774

 
55,332

 
63,135

 
66,157

(Provision for) benefit from income taxes
(2,715
)
 
(6,262
)
 
6,002

 
192

 
(1,760
)
Income before gain on sale of real estate
81,230

 
67,512

 
61,334

 
63,327

 
64,397

Gain on sale of real estate, net of tax
343

 
11,912

 
6,732

 
11,146

 
19,257

Net Income
81,573

 
79,424

 
68,066

 
74,473

 
83,654

Net (income) loss attributable to noncontrolling interests
(4,225
)
 
(3,743
)
 
(2,792
)
 
736

 
(3,376
)
Net Income Attributable to W. P. Carey
$
77,348

 
$
75,681

 
$
65,274

 
$
75,209

 
$
80,278

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
0.71

 
$
0.70

 
$
0.60

 
$
0.69

 
$
0.74

Diluted Earnings Per Share
$
0.71

 
$
0.70

 
$
0.60

 
$
0.69

 
$
0.74

Weighted-Average Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
108,073,969

 
108,059,394

 
108,057,940

 
108,041,556

 
108,019,292

Diluted
108,283,666

 
108,234,934

 
108,211,936

 
108,208,918

 
108,143,694

 
 
 
 
 
 
 
 
 
 
Dividends Declared Per Share
$
1.025

 
$
1.020

 
$
1.015

 
$
1.010

 
$
1.005

________
(a)
Amounts for the three and twelve months ended September 30, 2018 include $3.1 million and $17.9 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)
Amounts for the three months ended September 30, 2018 and June 30, 2018 are primarily comprised of costs incurred in connection with the CPA:17 Merger.
(d)
Amounts for the three months ended December 31, 2017 and September 30, 2017 represent restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.

395613736_wpclogoa01a01a28.jpg 
 
Investing for the long runTM | 6


W. P. Carey Inc.
Financial Results – Third Quarter 2018
Statements of Income, Real Estate – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Sep. 30, 2018
 
Jun. 30, 2018
 
Mar. 31, 2018
 
Dec. 31, 2017
 
Sep. 30, 2017
Revenues
 
 
 
 
 
 
 
 
 
Lease revenues
$
167,088

 
$
162,634

 
$
163,213

 
$
154,826

 
$
161,511

Reimbursable tenant costs
5,979

 
5,733

 
6,219

 
5,584

 
5,397

Operating property revenues
4,282

 
4,865

 
7,218

 
6,910

 
8,449

Lease termination income and other
1,981

 
680

 
942

 
515

 
1,227

 
179,330

 
173,912

 
177,592

 
167,835

 
176,584

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
66,837

 
63,374

 
64,920

 
62,951

 
62,970

General and administrative
11,349

 
10,599

 
12,065

 
11,691

 
11,234

Property expenses, excluding reimbursable tenant costs (a)
7,953

 
8,908

 
9,899

 
9,560

 
10,556

Reimbursable tenant costs
5,979

 
5,733

 
6,219

 
5,584

 
5,397

Merger and other expenses (b)
1,673

 
2,692

 
(37
)
 
(533
)
 
65

Stock-based compensation expense
1,380

 
1,990

 
4,306

 
2,227

 
1,880

Impairment charges

 

 
4,790

 
2,769

 

 
95,171

 
93,296

 
102,162

 
94,249

 
92,102

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(41,740
)
 
(41,311
)
 
(38,074
)
 
(40,401
)
 
(41,182
)
Equity in earnings of equity method investments in real estate
4,699

 
3,529

 
3,358

 
3,535

 
3,740

Other gains and (losses)
8,197

 
9,630

 
(2,887
)
 
594

 
(4,918
)
 
(28,844
)
 
(28,152
)
 
(37,603
)
 
(36,272
)
 
(42,360
)
Income before income taxes and gain on sale of real estate
55,315

 
52,464

 
37,827

 
37,314

 
42,122

(Provision for) benefit from income taxes
(424
)
 
(1,317
)
 
3,533

 
4,953

 
(1,511
)
Income before gain on sale of real estate
54,891

 
51,147

 
41,360

 
42,267

 
40,611

Gain on sale of real estate, net of tax
343

 
11,912

 
6,732

 
11,146

 
19,257

Net Income from Real Estate
55,234

 
63,059

 
48,092

 
53,413

 
59,868

Net (income) loss attributable to noncontrolling interests
(4,225
)
 
(3,743
)
 
(2,792
)
 
736

 
(3,376
)
Net Income from Real Estate Attributable to W. P. Carey
$
51,009

 
$
59,316

 
$
45,300

 
$
54,149

 
$
56,492

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
0.47

 
$
0.55

 
$
0.42

 
$
0.50

 
$
0.52

Diluted Earnings Per Share
$
0.47