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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): February 22, 2019
396843333_wpchighreslogoa16.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 February 22, 2019, W. P. Carey Inc. (together with its predecessors, the “Company”) issued an earnings release announcing its financial results for the quarter ended December 31, 2018. A copy of the earnings release is attached as Exhibit 99.1.

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

Item 7.01 Regulation FD Disclosure.

On February 22, 2019, the Company made available certain unaudited supplemental financial information at December 31, 2018. A copy of this supplemental information is attached as Exhibit 99.2.

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

Item 9.01 Financial Statements and Exhibits.

Exhibit No.
 
Description
99.1
 
 
 
 
99.2
 






SIGNATURES

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

 
 
 
W. P. Carey Inc.
 
 
 
 
Date:
February 22, 2019
By:
/s/ ToniAnn Sanzone
 
 
 
ToniAnn Sanzone
 
 
 
Chief Financial Officer


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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1

FOR IMMEDIATE RELEASE

Institutional Investors:
Peter Sands
W. P. Carey Inc.
212-492-1110
institutionalir@wpcarey.com

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

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

W. P. Carey Inc. Announces Fourth Quarter and Full Year 2018 Financial Results


New York, NY – February 22, 2019 – W. P. Carey Inc. (NYSE: WPC) (W. P. Carey or the Company), a net lease real estate investment trust, today reported its financial results for the fourth quarter and full year ended December 31, 2018.

Total Company
Net income attributable to W. P. Carey of $193.3 million, or $1.33 per diluted share, for the fourth quarter and $411.6 million, or $3.49 per diluted share, for 2018
AFFO of $193.9 million, or $1.33 per diluted share, for the fourth quarter and $634.6 million, or $5.39 per diluted share, for 2018
Quarterly cash dividend raised to $1.03 per share, equivalent to an annualized dividend rate of $4.12 per share
Completed merger with CPA:17 in a $5.9 billion stock-for-stock transaction
2019 full year AFFO guidance range of $4.95 to $5.15 per diluted share announced, including Real Estate AFFO of between $4.70 and $4.90 per diluted share

Business Segments

Real Estate
Segment net income attributable to W. P. Carey of $151.6 million for the fourth quarter and $307.2 million for 2018
Segment AFFO of $163.9 million, or $1.12 per diluted share, for the fourth quarter and $516.5 million, or $4.39 per diluted share, for 2018
Investment volume of $248.0 million during the fourth quarter, bringing total investment volume for 2018 to $939.7 million
Gross disposition proceeds of $339.8 million during the fourth quarter, bringing total dispositions for 2018 to $524.5 million
Portfolio occupancy of 98.3%
Weighted-average lease term of 10.2 years

W. P. Carey Inc. 12/31/2018 Earnings Release 8-K – 1



Investment Management
Segment net income attributable to W. P. Carey of $41.7 million for the fourth quarter and $104.3 million for 2018
Segment AFFO of $29.9 million, or $0.21 per diluted share, for the fourth quarter and $118.1 million, or $1.00 per diluted share, for 2018

Balance Sheet and Capitalization – Fourth Quarter 2018
Issued €500 million of 2.250% Senior Unsecured Notes due 2026
Utilized ATM offering program to raise $287.5 million in net proceeds


MANAGEMENT COMMENTARY

“For the fourth quarter and full year, growth in Real Estate AFFO was driven primarily by the accretive impact of both new acquisitions and the assets we acquired in our recent merger with CPA:17,” said Jason Fox, Chief Executive Officer of W. P. Carey. “During 2018, we added flexibility to our balance sheet and reduced leverage, and we believe the improved quality of our earnings is being reflected in our cost of capital. All of this puts us in a strong position to support our 2019 investment activity and continue to grow Real Estate AFFO per share.”


QUARTERLY FINANCIAL RESULTS

Revenues

Total Company: Revenues excluding reimbursable costs (net revenues) for the 2018 fourth quarter totaled $258.2 million, up 39.3% from $185.3 million for the 2017 fourth quarter.

Real Estate: Real Estate net revenues for the 2018 fourth quarter were $238.1 million, up 46.7% from $162.3 million for the 2017 fourth quarter, due primarily to additional lease revenues from properties acquired in the CPA:17 Merger.

Investment Management: Investment Management net revenues for the 2018 fourth quarter were $20.1 million, down 13.0% from $23.1 million for the 2017 fourth quarter, due primarily to the cessation of asset management revenue previously earned from CPA:17.

Net Income Attributable to W. P. Carey

Net income attributable to W. P. Carey for the 2018 fourth quarter was $193.3 million, up 157.0% from $75.2 million for the 2017 fourth quarter, due primarily to a higher aggregate gain on sale of real estate and a gain on change in control of interests recognized in connection with the CPA:17 Merger, which more than offset higher interest expense related to mortgage loans on properties acquired in the CPA:17 Merger.

Adjusted Funds from Operations (AFFO)

AFFO for the 2018 fourth quarter was $1.33 per diluted share, up 1.5% from $1.31 per diluted share for the 2017 fourth quarter. AFFO from the Company’s Real Estate segment (Real Estate AFFO) increased, due primarily to the accretive impact of both net acquisitions and properties acquired in the CPA:17 Merger, which closed during the 2018 fourth quarter. AFFO from the Company’s Investment Management segment (Investment Management AFFO) declined, due primarily to the cessation of asset management fees previously earned from CPA:17.

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


W. P. Carey Inc. 12/31/2018 Earnings Release 8-K – 2


Dividend

As previously announced, on December 5, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $1.03 per share, equivalent to an annualized dividend rate of $4.12 per share. The dividend was paid on January 15, 2019 to stockholders of record as of December 31, 2018.


FULL YEAR FINANCIAL RESULTS

Revenues

Total Company: Net revenues for the 2018 full year totaled $835.7 million, up 7.8% from $775.3 million for the 2017 full year.

Real Estate: Real Estate net revenues for the 2018 full year totaled $751.0 million, up 12.8% from $665.7 million for the 2017 full year, due primarily to additional lease revenues from properties acquired in the CPA:17 Merger and other property acquisitions.

Investment Management: Investment Management net revenues for the 2018 full year totaled $84.7 million, down 22.7% from $109.6 million for the 2017 full year, due primarily to lower structuring revenues resulting from the fully-invested status of the Managed Programs (as defined below), as well as the cessation of asset management revenue previously earned from CPA:17.

Net Income Attributable to W. P. Carey

Net income attributable to W. P. Carey for the 2018 full year totaled $411.6 million, up 48.4% compared to $277.3 million for the 2017 full year, due primarily to a higher aggregate gain on sale of real estate and a gain on change in control of interests recognized in connection with the CPA:17 Merger, which more than offset higher interest expense related to mortgage loans on properties acquired in the CPA:17 Merger.

AFFO

AFFO for the 2018 full year totaled $5.39 per diluted share, up 1.7% compared to $5.30 per diluted share for the 2017 full year. Real Estate AFFO increased, due primarily to the accretive impact of both net acquisitions and properties acquired in the CPA:17 Merger, which closed during the 2018 fourth quarter. Investment Management AFFO declined, due primarily to the cessation of asset management fees previously earned from CPA:17.

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

Dividends

Dividends declared during 2018 totaled $4.09 per share, an increase of 2.0% compared to total dividends declared during 2017 of $4.01 per share.


W. P. Carey Inc. 12/31/2018 Earnings Release 8-K – 3



AFFO GUIDANCE

For the 2019 full year, the Company expects to report total AFFO of between $4.95 and $5.15 per diluted share, including Real Estate AFFO of between $4.70 and $4.90 per diluted share, based on the following key assumptions:

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

(ii)
dispositions from the Company’s Real Estate portfolio of between $500 million and $700 million; and

(iii)
total general and administrative expenses of between $75 million and $80 million.

Note: The Company does not provide guidance on net income. The Company only provides guidance on total AFFO (and Real Estate AFFO) and does not provide a reconciliation of this forward-looking non-GAAP guidance to net income due to the inherent difficulty in quantifying certain items necessary to provide such reconciliation as a result of their unknown effect, timing and potential significance. Examples of such items include impairments of assets, gains and losses from sales of assets and depreciation and amortization from new acquisitions.


BALANCE SHEET AND CAPITALIZATION

Euro-Denominated Bond Issuance

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.

“At-The-Market” (ATM) Offering Program

During the 2018 fourth quarter, the Company issued 4,229,285 shares of common stock under its ATM offering program at a weighted-average price of $69.03 per share, for net proceeds of $287.5 million.

Subsequent to the 2018 fourth quarter, the Company issued 772,858 shares of common stock under its ATM offering program at a weighted-average price of $74.50 per share, for net proceeds of approximately $56.7 million.


CPA:17 MERGER

On October 31, 2018, the Company completed its merger with CPA:17 (the CPA:17 Merger) in a transaction valued at approximately $5.9 billion, including the assumption of debt.

As a result of the CPA:17 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.


REAL ESTATE

Investments

During the 2018 fourth quarter, the Company completed investments totaling $248.0 million, consisting of eight acquisitions for $210.9 million in aggregate and three completed capital investment projects at a total cost of $37.1 million, bringing total investment volume for the year ended December 31, 2018 to $939.7 million, including transaction-related costs.

As of December 31, 2018, the Company had nine capital investment projects outstanding for an expected total investment of approximately $234.7 million, of which eight projects totaling $159.7 million are currently expected to be completed during 2019.

W. P. Carey Inc. 12/31/2018 Earnings Release 8-K – 4



Dispositions

During the 2018 fourth quarter, the Company disposed of 39 properties for total gross proceeds of $339.8 million, bringing total dispositions for the year ended December 31, 2018 to $524.5 million.

Composition

As of December 31, 2018, the Company’s net lease portfolio consisted of 1,163 properties, comprising 131.0 million square feet leased to 304 tenants, with a weighted-average lease term of 10.2 years and an occupancy rate of 98.3%. In addition, primarily as a result of the CPA:17 Merger, the Company owned 46 self-storage and two hotel operating properties, totaling approximately 3.4 million square feet.


INVESTMENT MANAGEMENT

W. P. Carey was formerly the advisor to CPA:17 – Global (CPA:17) until the CPA:17 Merger, 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 together with the CPA REITs, the Managed REITs), and Carey European Student Housing Fund I, L.P. (CESH, and together with the Managed REITs, the Managed Programs).

Acquisitions

During the 2018 fourth quarter, the Company structured investments on behalf of the Managed Programs totaling $126.1 million, including transaction-related costs and fees, comprised wholly of student housing projects for CPA:18, bringing total investment volume on behalf of the Managed Programs for the year ended December 31, 2018 to $427.3 million, comprised almost entirely of student housing projects for CPA:18.

Assets Under Management

As of December 31, 2018, the existing Managed Programs had total assets under management of approximately $7.6 billion, down 42.0% from approximately $13.1 billion as of December 31, 2017, substantially due to the CPA:17 Merger.


* * * * *


Supplemental Information

The Company has provided supplemental unaudited financial and operating information regarding the 2018 fourth quarter and certain prior quarters, including a description of non-GAAP financial measures and reconciliations to GAAP measures, in a Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on February 22, 2019.


* * * * *


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

Date/Time: Friday, February 22, 2019 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. 12/31/2018 Earnings Release 8-K – 5




W. P. Carey Inc.

W. P. Carey ranks among the largest net lease REITs with an enterprise value of approximately $17 billion and a diversified portfolio of operationally-critical commercial real estate that includes 1,163 net lease properties covering approximately 131 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 quality of our earnings, our cost of capital, our 2019 investment activity, and the potential growth of our real estate adjusted funds from operations (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, 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. 12/31/2018 Earnings Release 8-K – 6


W. P. CAREY INC.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
 
December 31,
 
2018
 
2017
Assets
 
 
 
Investments in real estate:
 
 
 
Land, buildings and improvements (a)
$
9,251,396

 
$
5,457,265

Net investments in direct financing leases
1,306,215

 
721,607

In-place lease and other intangible assets
2,009,628

 
1,213,976

Above-market rent intangible assets
925,797

 
640,480

Investments in real estate
13,493,036

 
8,033,328

Accumulated depreciation and amortization (b)
(1,564,182
)
 
(1,329,613
)
Net investments in real estate
11,928,854

 
6,703,715

Equity investments in the Managed Programs and real estate (c)
329,248

 
341,457

Cash and cash equivalents
217,644

 
162,312

Due from affiliates
74,842

 
105,308

Other assets, net
711,507

 
274,650

Goodwill
920,944

 
643,960

Total assets
$
14,183,039

 
$
8,231,402

 
 
 
 
Liabilities and Equity
 
 
 
Debt:
 
 
 
Senior unsecured notes, net
$
3,554,470

 
$
2,474,661

Unsecured revolving credit facility
91,563

 
216,775

Unsecured term loans, net

 
388,354

Non-recourse mortgages, net
2,732,658

 
1,185,477

Debt, net
6,378,691

 
4,265,267

Accounts payable, accrued expenses and other liabilities
403,896

 
263,053

Below-market rent and other intangible liabilities, net
225,128

 
113,957

Deferred income taxes
173,115

 
67,009

Dividends payable
172,154

 
109,766

Total liabilities
7,352,984

 
4,819,052

Redeemable noncontrolling interest

 
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; 165,279,642 and 106,922,616 shares, respectively, issued and outstanding
165

 
107

Additional paid-in capital
8,187,335

 
4,433,573

Distributions in excess of accumulated earnings
(1,143,992
)
 
(1,052,064
)
Deferred compensation obligation
35,766

 
46,656

Accumulated other comprehensive loss
(254,996
)
 
(236,011
)
Total stockholders’ equity
6,824,278

 
3,192,261

Noncontrolling interests
5,777

 
219,124

Total equity
6,830,055

 
3,411,385

Total liabilities and equity
$
14,183,039

 
$
8,231,402

________
(a)
Includes $470.7 million and $83.0 million of amounts attributable to operating properties as of December 31, 2018 and 2017, respectively. We sold one hotel operating property in April 2018. We acquired 37 self-storage properties and one hotel operating property in the CPA:17 Merger.
(b)
Includes $734.8 million and $630.0 million of accumulated depreciation on buildings and improvements as of December 31, 2018 and 2017, respectively, and $829.4 million and $699.7 million of accumulated amortization on lease intangibles as of December 31, 2018 and 2017, respectively.
(c)
Our equity investments in the Managed Programs totaled $107.6 million and $201.4 million as of December 31, 2018 and 2017, respectively. Our equity investments in real estate joint ventures totaled $221.7 million and $140.0 million as of December 31, 2018 and 2017, respectively.



W. P. Carey Inc. 12/31/2018 Earnings Release 8-K – 7


W. P. CAREY INC.
Quarterly Consolidated Statements of Income
(in thousands, except share and per share amounts)
 
Three Months Ended
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
Revenues
 
 
 
 
 
Real Estate:
 
 
 
 
 
Lease revenues
$
223,487

 
$
167,088

 
$
154,826

Operating property revenues
11,707

 
4,282

 
6,910

Reimbursable tenant costs
10,145

 
5,979

 
5,584

Lease termination income and other
2,952

 
1,981

 
515

 
248,291

 
179,330

 
167,835

Investment Management:
 
 
 
 
 
Asset management revenue
11,954

 
17,349

 
16,854

Structuring revenue
8,108

 
6,553

 
6,217

Reimbursable costs from affiliates
5,042

 
6,042

 
6,055

Other advisory revenue

 
110

 

 
25,104

 
30,054

 
29,126

 
273,395

 
209,384

 
196,961

Operating Expenses
 

 
 
 
 

Depreciation and amortization
93,321

 
67,825

 
64,015

Merger and other expenses (a)
37,098

 
1,673

 
(533
)
General and administrative
17,449

 
15,863

 
17,702

Reimbursable tenant and affiliate costs
15,187

 
12,021

 
11,639

Property expenses, excluding reimbursable tenant costs
8,319

 
4,898

 
3,993

Operating property expenses
7,844

 
3,055

 
5,567

Stock-based compensation expense
3,902

 
2,475

 
4,268

Subadvisor fees (b)
2,226

 
3,127

 
2,002

Impairment charges

 

 
2,769

Restructuring and other compensation (c)

 

 
289

 
185,346

 
110,937

 
111,711

Other Income and Expenses
 

 
 
 
 

Gain on sale of real estate, net
99,618

 
343

 
11,146

Interest expense
(57,250
)
 
(41,740
)
 
(40,401
)
Gain on change in control of interests (d)
47,814

 

 

Equity in earnings of equity method investments in the Managed Programs
   and real estate
15,268

 
18,363

 
16,930

Other gains and (losses)
13,215

 
8,875

 
1,356

 
118,665

 
(14,159
)
 
(10,969
)
Income before income taxes
206,714

 
84,288

 
74,281

(Provision for) benefit from income taxes
(11,436
)
 
(2,715
)
 
192

Net Income
195,278

 
81,573

 
74,473

Net (income) loss attributable to noncontrolling interests
(2,015
)
 
(4,225
)
 
736

Net Income Attributable to W. P. Carey
$
193,263

 
$
77,348

 
$
75,209

 
 
 
 
 
 
Basic Earnings Per Share
$
1.33

 
$
0.71

 
$
0.69

Diluted Earnings Per Share
$
1.33

 
$
0.71

 
$
0.69

Weighted-Average Shares Outstanding
 

 
 
 
 

Basic
145,480,858

 
108,073,969

 
108,041,556

Diluted
145,716,583

 
108,283,666

 
108,208,918

 
 
 
 
 
 
Dividends Declared Per Share
$
1.030

 
$
1.025

 
$
1.010







W. P. Carey Inc. 12/31/2018 Earnings Release 8-K – 8


W. P. CAREY INC.
Full Year Consolidated Statements of Income
(in thousands, except share and per share amounts)
 
Years Ended December 31,
 
2018
 
2017
Revenues
 
 
 
Real Estate:
 
 
 
Lease revenues
$
716,422

 
$
630,373

Reimbursable tenant costs
28,076

 
21,524

Operating property revenues
28,072

 
30,562

Lease termination income and other
6,555

 
4,749

 
779,125

 
687,208

Investment Management:
 
 
 
Asset management revenue
63,556

 
70,125

Reimbursable costs from affiliates
21,925

 
51,445

Structuring revenue
20,826

 
34,198

Other advisory revenue
300

 
896

Dealer manager fees

 
4,430

 
106,607

 
161,094

 
885,732

 
848,302

Operating Expenses
 

 
 

Depreciation and amortization
291,440

 
253,334

General and administrative
68,337

 
70,891

Reimbursable tenant and affiliate costs
50,001

 
72,969

Merger and other expenses (a)
41,426

 
605

Property expenses, excluding reimbursable tenant costs
22,773

 
17,330

Operating property expenses
20,150

 
23,426

Stock-based compensation expense
18,294

 
18,917

Subadvisor fees (b)
9,240

 
13,600

Impairment charges
4,790

 
2,769

Restructuring and other compensation (c)

 
9,363

Dealer manager fees and expenses

 
6,544

 
526,451

 
489,748

Other Income and Expenses
 

 
 

Interest expense
(178,375
)
 
(165,775
)
Gain on sale of real estate, net
118,605

 
33,878

Equity in earnings of equity method investments in the Managed Programs and real estate
61,514

 
64,750

Gain on change in control of interests (d)
47,814

 

Other gains and (losses)
29,913

 
(3,613
)
 
79,471

 
(70,760
)
Income before income taxes
438,752

 
287,794

Provision for income taxes
(14,411
)
 
(2,711
)
Net Income
424,341

 
285,083

Net income attributable to noncontrolling interests
(12,775
)
 
(7,794
)
Net Income Attributable to W. P. Carey
$
411,566

 
$
277,289

 
 
 
 
Basic Earnings Per Share
$
3.50

 
$
2.56

Diluted Earnings Per Share
$
3.49

 
$
2.56

Weighted-Average Shares Outstanding
 

 
 

Basic
117,494,969

 
107,824,738

Diluted
117,706,445

 
108,035,971

 
 
 
 
Dividends Declared Per Share
$
4.090

 
$
4.010

__________
(a)
Amounts for the three months ended December 31, 2018 and September 30, 2018, and the year ended December 31, 2018 are primarily comprised of costs incurred in connection with the CPA:17 Merger. Amount for the year ended December 31, 2017 is primarily comprised of accruals for estimated one-time legal settlement expenses.
(b)
The subadvisors for CWI 1, CWI 2, CPA:18 Global, and Carey Credit Income Fund (prior to our resignation as the advisor to that fund in the third quarter of 2017) 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. Refer to the Managed Programs Fee Summary section in Exhibit 99.2 of the Current Report on Form 8-K filed on February 22, 2019 for further information.
(c)
Amounts for the three months and year ended December 31, 2017 represent restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.
(d)
Amounts for the three months and year ended December 31, 2018 include a gain of $18.8 million recognized on the purchase of the remaining interests in six investments from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. Amounts for the three months and year ended December 31, 2018 also include a gain of $29.0 million recognized on our previously held interest in shares of CPA:17 common stock in connection with the CPA:17 Merger.

W. P. Carey Inc. 12/31/2018 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
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
Net income attributable to W. P. Carey
$
193,263

 
$
77,348

 
$
75,209

Adjustments:
 
 
 
 
 
Gain on sale of real estate, net
(99,618
)
 
(343
)
 
(11,146
)
Depreciation and amortization of real property
92,018

 
66,493

 
62,603

Gain on change in control of interests (a)
(47,814
)
 

 

Impairment charges

 

 
2,769

Proportionate share of adjustments for noncontrolling interests
(762
)
 
(2,693
)
 
(2,696
)
Proportionate share of adjustments to equity in net income of partially owned entities
3,225

 
(651
)
 
877

Total adjustments
(52,951
)
 
62,806

 
52,407

FFO (as defined by NAREIT) Attributable to W. P. Carey (b)
140,312

 
140,154

 
127,616

Adjustments:
 
 
 
 
 
Merger and other expenses (c)
37,098

 
1,673

 
(533
)
Above- and below-market rent intangible lease amortization, net (d)
14,985

 
13,224

 
17,922

Other amortization and non-cash items (e)
(10,206
)
 
(4,829
)
 
2,198

Tax expense (benefit) – deferred and other (f)
6,288

 
3,918

 
(10,497
)
Straight-line and other rent adjustments
(6,096
)
 
(3,431
)
 
(2,002
)
Stock-based compensation
3,902

 
2,475

 
4,268

Amortization of deferred financing costs
2,572

 
1,901

 
2,043

Loss (gain) on extinguishment of debt
1,744

 
(43
)
 
(81
)
Realized (gains) losses on foreign currency
(71
)
 
191

 
(472
)
Restructuring and other compensation (g)

 

 
289

Proportionate share of adjustments to equity in net income of partially owned entities
3,192

 
3,860

 
2,884

Proportionate share of adjustments for noncontrolling interests
140

 
664

 
(1,573
)
Total adjustments
53,548

 
19,603

 
14,446

AFFO Attributable to W. P. Carey (b)
$
193,860

 
$
159,757

 
$
142,062

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (b)
$
140,312

 
$
140,154

 
$
127,616

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (b)
$
0.96

 
$
1.29

 
$
1.18

AFFO attributable to W. P. Carey (b)
$
193,860

 
$
159,757

 
$
142,062

AFFO attributable to W. P. Carey per diluted share (b)
$
1.33

 
$
1.48

 
$
1.31

Diluted weighted-average shares outstanding
145,716,583

 
108,283,666

 
108,208,918






















W. P. Carey Inc. 12/31/2018 Earnings Release 8-K – 10


W. P. CAREY INC.
Quarterly Reconciliation of Net Income from Real Estate to Adjusted Funds from Operations (AFFO) from Real Estate (Unaudited)
(in thousands, except share and per share amounts)
 
Three Months Ended
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
Net income from Real Estate attributable to W. P. Carey
$
151,611

 
$
51,009

 
$
54,149

Adjustments:
 
 
 
 
 
Gain on sale of real estate, net
(99,618
)
 
(343
)
 
(11,146
)
Depreciation and amortization of real property
92,018

 
66,493

 
62,603

Gain on change in control of interests (a)
(18,792
)
 

 

Impairment charges

 

 
2,769

Proportionate share of adjustments for noncontrolling interests
(762
)
 
(2,693
)
 
(2,696
)
Proportionate share of adjustments to equity in net income of partially owned entities
3,225

 
(651
)
 
877

Total adjustments
(23,929
)
 
62,806

 
52,407

FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (b)
127,682

 
113,815

 
106,556

Adjustments:
 
 
 
 
 
Merger and other expenses (c)
37,098

 
1,673

 
(533
)
Above- and below-market rent intangible lease amortization, net (d)
14,985

 
13,224

 
17,922

Other amortization and non-cash items (e)
(12,692
)
 
(5,174
)
 
2,260

Straight-line and other rent adjustments
(6,096
)
 
(3,431
)
 
(2,002
)
Tax benefit – deferred and other
(3,949
)
 
(3,556
)
 
(15,047
)
Stock-based compensation
2,774

 
1,380

 
2,227

Amortization of deferred financing costs
2,572

 
1,901

 
2,043

Loss (gain) on extinguishment of debt
1,744

 
(43
)
 
(81
)
Realized (gains) losses on foreign currency
(61
)
 
197

 
(477
)
Proportionate share of adjustments to equity in net income of partially owned entities
(260
)
 
519

 
41

Proportionate share of adjustments for noncontrolling interests
140

 
664

 
(1,573
)
Total adjustments
36,255

 
7,354

 
4,780

AFFO Attributable to W. P. Carey – Real Estate (b)
$
163,937

 
$
121,169

 
$
111,336

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (b)
$
127,682

 
$
113,815

 
$
106,556

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (b)
$
0.87

 
$
1.05

 
$
0.99

AFFO attributable to W. P. Carey – Real Estate (b)
$
163,937

 
$
121,169

 
$
111,336

AFFO attributable to W. P. Carey per diluted share – Real Estate (b)
$
1.12

 
$
1.12

 
$
1.03

Diluted weighted-average shares outstanding
145,716,583

 
108,283,666

 
108,208,918










W. P. Carey Inc. 12/31/2018 Earnings Release 8-K – 11


W. P. CAREY INC.
Full Year Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
 
Years Ended December 31,
 
2018
 
2017
Net income attributable to W. P. Carey
$
411,566

 
$
277,289

Adjustments:
 
 
 
Depreciation and amortization of real property
286,164

 
248,042

Gain on sale of real estate, net
(118,605
)
 
(33,878
)
Gain on change in control of interests (a)
(47,814
)
 

Impairment charges
4,790

 
2,769

Proportionate share of adjustments for noncontrolling interests
(8,966
)
 
(10,491
)
Proportionate share of adjustments to equity in net income of partially owned entities
4,728

 
5,293

Total adjustments
120,297

 
211,735

FFO (as defined by NAREIT) Attributable to W. P. Carey (b)
531,863

 
489,024

Adjustments:
 
 
 
Above- and below-market rent intangible lease amortization, net (d)
52,314

 
55,195

Merger and other expenses (c)
41,426

 
605

Stock-based compensation
18,294

 
18,917

Other amortization and non-cash items (e)
(17,326
)
 
17,193

Straight-line and other rent adjustments
(14,460
)
 
(11,679
)
Amortization of deferred financing costs
6,184

 
8,169

Loss (gain) on extinguishment of debt
3,310

 
(46
)
Tax expense (benefit) – deferred and other (f)
1,079

 
(18,664
)
Realized gains on foreign currency
(768
)
 
(896
)
Restructuring and other compensation (g)

 
9,363

Proportionate share of adjustments to equity in net income of partially owned entities
12,439

 
8,476

Proportionate share of adjustments for noncontrolling interests
231

 
(2,678
)
Total adjustments
102,723

 
83,955

AFFO Attributable to W. P. Carey (b)
$
634,586

 
$
572,979

 
 
 
 
Summary
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (b)
$
531,863

 
$
489,024

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (b)
$
4.52

 
$
4.53

AFFO attributable to W. P. Carey (b)
$
634,586

 
$
572,979

AFFO attributable to W. P. Carey per diluted share (b)
$
5.39

 
$
5.30

Diluted weighted-average shares outstanding
117,706,445

 
108,035,971



W. P. Carey Inc. 12/31/2018 Earnings Release 8-K – 12


W. P. CAREY INC.
Full Year Reconciliation of Net Income from Real Estate to Adjusted Funds from Operations (AFFO) from Real Estate (Unaudited)
(in thousands, except share and per share amounts)
 
Years Ended December 31,
 
2018
 
2017
Net income from Real Estate attributable to W. P. Carey
$
307,236

 
$
192,139

Adjustments:
 
 
 
Depreciation and amortization of real property
286,164

 
248,042

Gain on sale of real estate, net
(118,605
)
 
(33,878
)
Gain on change in control of interests (a)
(18,792
)
 

Impairment charges
4,790

 
2,769

Proportionate share of adjustments for noncontrolling interests
(8,966
)
 
(10,491
)
Proportionate share of adjustments to equity in net income of partially owned entities
4,728

 
5,293

Total adjustments
149,319

 
211,735

FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (b)
456,555

 
403,874

Adjustments:
 
 
 
Above- and below-market rent intangible lease amortization, net (d)
52,314

 
55,195

Merger and other expenses (c)
41,426

 
605

Other amortization and non-cash items (e)
(20,216
)
 
18,115

Tax benefit – deferred and other
(18,790
)
 
(20,168
)
Straight-line and other rent adjustments
(14,460
)
 
(11,679
)
Stock-based compensation
10,450

 
6,960

Amortization of deferred financing costs
6,184

 
8,169

Loss (gain) on extinguishment of debt
3,310

 
(46
)
Realized gains on foreign currency
(789
)
 
(918
)
Proportionate share of adjustments to equity in net income of partially owned entities
287

 
(564
)
Proportionate share of adjustments for noncontrolling interests
231

 
(2,678
)
Total adjustments
59,947

 
52,991

AFFO Attributable to W. P. Carey – Real Estate (b)
$
516,502

 
$
456,865

 
 
 
 
Summary
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (b)
$
456,555

 
$
403,874

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (b)
$
3.88

 
$
3.74

AFFO attributable to W. P. Carey – Real Estate (b)
$
516,502

 
$
456,865

AFFO attributable to W. P. Carey per diluted share – Real Estate (b)
$
4.39

 
$
4.23

Diluted weighted-average shares outstanding
117,706,445

 
108,035,971

__________
(a)
AFFO and Real Estate AFFO amounts for the three months and year ended December 31, 2018 include a gain recognized on the purchase of the remaining interests in six investments from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. AFFO amounts for the three months and year ended December 31, 2018 include a gain recognized on our previously held interest in shares of CPA:17 common stock in connection with the CPA:17 Merger.
(b)
FFO and AFFO are non-GAAP measures. See below for a description of FFO and AFFO.
(c)
Amounts for the three months ended December 31, 2018 and September 30, 2018, and the year ended December 31, 2018 are primarily comprised of costs incurred in connection with the CPA:17 Merger. Amount for the year ended December 31, 2017 is primarily comprised of accruals for estimated one-time legal settlement expenses.
(d)
Amounts for the three months and year ended December 31, 2017 include an adjustment of $5.7 million related to accelerated amortization of an above-market rent intangible in connection with a lease restructuring.
(e)
Primarily represents unrealized gains and losses from foreign currency exchange movements and derivatives.
(f)
Amounts for the three months and year ended December 31, 2018 include one-time taxes incurred upon the recognition of taxable income associated with the accelerated vesting of shares previously issued by CPA:17 – Global to us for asset management services performed, in connection with the CPA:17 Merger.
(g)
Amounts for the three months and year ended December 31, 2017 represent restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.




W. P. Carey Inc. 12/31/2018 Earnings Release 8-K – 13


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. (“NAREIT”), an industry trade group, has promulgated a non-GAAP measure known as FFO, which we believe to be an appropriate supplemental measure, when used in addition to and in conjunction with results presented in accordance with GAAP, to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to nor a substitute for net income or loss as determined under GAAP.

We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as restated in December 2018. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property, impairment charges on real estate, gains or losses on changes in control of interests in real estate and depreciation and amortization from real estate assets; and after adjustments for unconsolidated partnerships and jointly owned investments. Adjustments for unconsolidated partnerships and jointly owned investments are calculated to reflect FFO. 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 currency exchange transactions (other than those realized on the settlement of foreign currency derivatives), which are not considered fundamental attributes of our business plan and do not affect our overall long-term operating performance. We refer to our modified definition of FFO as AFFO. We exclude these items from GAAP net income to arrive at AFFO as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs 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. 12/31/2018 Earnings Release 8-K – 14
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2


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








396843333_wpcsuppcover45yearsa04.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 (“CPA:17 – Global”) and Corporate Property Associates 18 – Global Incorporated (“CPA:18 – Global”). “CWI® REITs” means Carey Watermark Investors Incorporated (“CWI 1”) and Carey Watermark Investors 2 Incorporated (“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. (“CESH”). “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 (“GAAP”), including funds from operations (“FFO”); adjusted funds from operations (“AFFO”); earnings before interest, taxes, depreciation and amortization (“EBITDA”); adjusted EBITDA; pro rata cash net operating income (“pro rata cash NOI”); and normalized pro rata cash NOI. A description of these non-GAAP financial measures and reconciliations to their most directly comparable GAAP measures, as well as a description of other metrics presented, are provided within the Appendix to this supplemental package. FFO is a non-GAAP measure defined by the National Association of Real Estate Investments Trusts, Inc (“NAREIT”), an industry trade group.

Amounts may not sum to totals due to rounding.


W. P. Carey Inc.
Supplemental Information – Fourth 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 – Fourth Quarter 2018
Summary Metrics
As of or for the three months ended December 31, 2018.
Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment
 
 
 
 
 
 
 
Owned
Real Estate
 
Investment Management
 
Total
Revenues, excluding reimbursable costs – consolidated ($'000)
 
$
238,146

 
$
20,062

 
$
258,208

Net income attributable to W. P. Carey ($'000)
 
151,611

 
41,652

 
193,263

Net income attributable to W. P. Carey per diluted share
 
1.04

 
0.29

 
1.33

Normalized pro rata cash NOI from real estate ($'000) (a) (b)
 
261,655

 
N/A

 
261,655

Adjusted EBITDA ($'000) (a) (b)
 
256,031

 
22,230

 
278,261

AFFO attributable to W. P. Carey ($'000) (a) (b)
 
163,937

 
29,923

 
193,860

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

 
0.21

 
1.33

 
 
 
 
 
 
 
 
 
 
Dividends declared per share – fourth quarter
 
 
 
 
 
1.03

Dividends declared per share – fourth quarter annualized
 
 
 
 
 
4.12

Dividend yield – annualized, based on quarter end share price of $65.34
 
 
 
 
 
6.3
%
Dividend payout ratio – for the year ended December 31, 2018 (c)
 
 
 
 
 
75.9
%
 
 
 
 
 
 
 
 
 
 
Balance Sheet and Capitalization
 
 
 
 
 
 
 
 
 
Equity market capitalization – based on quarter end share price of $65.34 ($'000)
 
 
 
 
 
$
10,799,372

Pro rata net debt ($'000) (d)
 
 
 
 
 
 
 
 
6,419,861

Enterprise value ($'000)
 
 
 
 
 
 
 
 
17,219,233

 
 
 
 
 
 
 
 
 
 
Total consolidated debt ($'000)
 
 
 
 
 
 
 
 
6,378,691

Gross assets ($'000) (e)
 
 
 
 
 
 
 
 
14,917,823

Liquidity ($'000) (f)
 
 
 
 
 
 
 
 
1,626,081

 
 
 
 
 
 
 
 
 
 
Pro rata net debt to enterprise value (b)
 
 
 
 
 
 
 
 
37.3
%
Pro rata net debt to adjusted EBITDA (annualized) (a) (b)
 
 
 
 
 
5.8x

Total consolidated debt to gross assets
 
 
 
 
 
 
 
 
42.8
%
 
 
 
 
 
 
 
 
 
 
Weighted-average interest rate (b)
 
 
 
 
 
 
 
 
3.6
%
Weighted-average debt maturity (years) (b)
 
 
 
 
 
 
 
 
5.0

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

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

 
 
 
 
 
 
 
 
 
 
Real Estate Portfolio (Pro Rata)
 
 
 
 
 
 
 
 
 
ABR ($’000) (g)
 
 
 
 
 
 
 
 
$
1,066,285

Number of net-leased properties
 
 
 
 
 
 
 
 
1,163

Number of operating properties (h)
 
 
 
 
 
 
 
 
48

Number of tenants – net-leased properties
 
 
 
 
 
 
 
 
304

 
 
 
 
 
 
 
 
 
 
ABR from investment grade tenants as a % of total ABR – net-leased properties (i)
 
 
 
 
 
28.8
%
 
 
 
 
 
 
 
 
 
 
Net-leased properties – square footage (millions)
 
 
 
 
 
 
 
 
131.0

 
 
 
 
 
 
 
 
 
 
Occupancy – net-leased properties
 
 
 
 
 
 
 
 
98.3
%
Weighted-average lease term (years)
 
 
 
 
 
 
 
 
10.2

 
 
 
 
 
 
 
 
 
 
Maximum commitment for capital investment projects expected to be completed during 2019 ($’000)
 
 
 
$
159,749

Acquisitions and completed capital investment projects – fourth quarter ($'000)
 
 
 
248,018

Dispositions – fourth quarter ($'000)
 
 
 
 
 
 
 
 
339,840

________
(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.
(e)
Gross assets represent consolidated total assets before accumulated depreciation on buildings and improvements. Gross assets are net of accumulated amortization on in-place lease and other intangible assets of $498.5 million and above-market rent intangible assets of $330.9 million.

396843333_wpclogoa01a01a29.jpg 
 
Investing for the long runTM | 1


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

(f)
Represents availability on our Senior Unsecured Credit Facility plus consolidated cash and cash equivalents.
(g)
See the Terms and Definitions section in the Appendix for a description of ABR.
(h)
Comprised of 46 self-storage properties and two hotels.
(i)
Percentage of portfolio is based on ABR, as of December 31, 2018. Includes tenants or guarantors with investment grade ratings (20.2%) and subsidiaries of non-guarantor parent companies with investment grade ratings (8.6%). 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.

396843333_wpclogoa01a01a29.jpg 
 
Investing for the long runTM | 2


W. P. Carey Inc.
Overview – Fourth Quarter 2018
Components of Net Asset Value
Dollars in thousands, except per share amounts.
Real Estate
 
 
Three Months Ended
Dec. 31, 2018
 
Annualized
Normalized pro rata cash NOI (a) (b)
 
 
$
261,655

 
$
1,046,620

 
 
 
 
 
 
Investment Management
 
 
Three Months Ended
Dec. 31, 2018
 
Twelve Months Ended
Dec. 31, 2018
Adjusted EBITDA (a) (b)
 
 
$
22,230

 
$
108,572

Selected Components of Adjusted EBITDA:
 
 
 
 
 
Asset management revenue (c)
 
 
11,954

 
63,556

Structuring revenue (c)
 
 
8,108

 
20,826

Operating partnership interests in real estate cash flow of Managed REITs (d)
 
13,468

 
44,214

Back-end fees and interests associated with the Managed Programs
 
 
 
 
 
 
 
 
Balance Sheet – Selected Information (Consolidated Unless Otherwise Stated)
 
As of Dec. 31, 2018
Assets
 
 
 
 
 
Book value of real estate excluded from NOI (e)
 
 
 
 
$
268,565

Cash and cash equivalents
 
 
 
 
217,644

Due from affiliates
 
 
 
 
74,842

Other assets, net:
 
 
 
 
 
Restricted cash, including escrow
 
 
 
 
$
206,419

Investment in shares of a cold storage operator
 
 
 
 
116,282

Straight-line rent adjustments
 
 
 
 
91,453

Loans receivable
 
 
 
 
67,277

Securities and derivatives
 
 
 
 
46,456

Deferred charges
 
 
 
 
42,102

Accounts receivable
 
 
 
 
41,606

Taxes receivable
 
 
 
 
32,522

Investment in shares of Guggenheim Credit Income Fund
 
 
 
 
23,556

Other intangible assets, net
 
 
 
 
11,031

Deposits
 
 
 
 
10,738

Prepaid expenses
 
 
 
 
9,204

Deferred income taxes
 
 
 
 
7,853

Leasehold improvements, furniture and fixtures
 
 
 
2,542

Other
 
 
 
 
2,466

Total other assets, net
 
 
 
 
$
711,507

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Total pro rata debt outstanding (b)
 
 
 
 
$
6,637,505

Dividends payable
 
 
 
 
172,154

Deferred income taxes
 
 
 
 
173,115

Accounts payable, accrued expenses and other liabilities:
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
$
164,250

Prepaid and deferred rents
 
 
 
 
100,765

Accrued taxes payable
 
 
 
 
59,789

Tenant security deposits
 
 
 
 
36,931

Securities and derivatives
 
 
 
 
5,409

Straight-line rent adjustments
 
 
 
 
1,586

Other
 
 
 
 
35,166

Total accounts payable, accrued expenses and other liabilities
 
 
 
 
$
403,896


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Investing for the long runTM | 3


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


CPA:18 – Global
3.4
%
 
5,039,285

 
$
8.73

(g) 
$
43,993

CWI 1
3.1
%
 
4,274,969

 
10.41

(g) 
44,502

CWI 2
2.8
%
 
2,527,551

 
11.11

(g) 
28,081

CESH
2.4
%
 
3,492

 
1,000.00

(h) 
3,492

 
 
 
 
 
 
 
$
120,068

________
(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). Asset management revenue for both the three and twelve months ended December 31, 2018 includes $2.3 million from CPA:17 Global prior to the CPA:17 Merger on October 31, 2018.
(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. Amounts for the three and twelve months ended December 31, 2018 include $7.7 million from CPA:17 Global prior to the CPA:17 Merger on October 31, 2018.
(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:18 Global.
(g)
We calculated the estimated net asset values per share (“NAVs”) by relying in part on an estimate of the fair market values of the respective real estate portfolios adjusted to give effect to mortgage loans, both provided by third parties, as well as other adjustments. Refer to the SEC filings of the Managed REITs for the calculation methodologies of the respective NAVs.
(h)
We own limited partnership units of CESH at its private placement price of $1,000 per unit; we do not intend to calculate a NAV for CESH.

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Investing for the long runTM | 4




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





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Investing for the long runTM | 5


W. P. Carey Inc.
Financial Results – Fourth Quarter 2018
Consolidated Statements of Income – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Dec. 31, 2018
 
Sep. 30, 2018
 
Jun. 30, 2018
 
Mar. 31, 2018
 
Dec. 31, 2017
Revenues
 
 
 
 
 
 
 
 
 
Real Estate:
 
 
 
 
 
 
 
 
 
Lease revenues
$
223,487

 
$
167,088

 
$
162,634

 
$
163,213

 
$
154,826

Operating property revenues
11,707

 
4,282

 
4,865

 
7,218

 
6,910

Reimbursable tenant costs
10,145

 
5,979

 
5,733

 
6,219

 
5,584

Lease termination income and other
2,952

 
1,981

 
680

 
942

 
515

 
248,291

 
179,330

 
173,912

 
177,592

 
167,835

Investment Management:
 
 
 
 
 
 
 
 
 
Asset management revenue
11,954

 
17,349

 
17,268

 
16,985

 
16,854

Structuring revenue
8,108

 
6,553

 
4,426

 
1,739

 
6,217

Reimbursable costs from affiliates
5,042

 
6,042

 
5,537

 
5,304

 
6,055

Other advisory revenue

 
110

 

 
190

 

 
25,104

 
30,054

 
27,231

 
24,218

 
29,126

 
273,395

 
209,384

 
201,143

 
201,810

 
196,961

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
93,321

 
67,825

 
64,337

 
65,957

 
64,015

Merger and other expenses (b)
37,098

 
1,673

 
2,692

 
(37
)
 
(533
)
General and administrative
17,449

 
15,863

 
16,442

 
18,583

 
17,702

Reimbursable tenant and affiliate costs
15,187

 
12,021

 
11,270

 
11,523

 
11,639

Property expenses, excluding reimbursable tenant costs
8,319

 
4,898

 
5,327

 
4,229

 
3,993

Operating property expenses
7,844

 
3,055

 
3,581

 
5,670

 
5,567

Stock-based compensation expense
3,902

 
2,475

 
3,698

 
8,219

 
4,268

Subadvisor fees (a)
2,226

 
3,127

 
1,855

 
2,032

 
2,002

Impairment charges

 

 

 
4,790

 
2,769

Restructuring and other compensation (c)

 

 

 

 
289

 
185,346

 
110,937

 
109,202

 
120,966

 
111,711

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Gain on sale of real estate, net
99,618

 
343

 
11,912

 
6,732

 
11,146

Interest expense
(57,250
)
 
(41,740
)
 
(41,311
)
 
(38,074
)
 
(40,401
)
Gain on change in control of interests (d)
47,814

 

 

 

 

Equity in earnings of equity method investments in the Managed Programs and real estate
15,268

 
18,363

 
12,558

 
15,325

 
16,930

Other gains and (losses)
13,215

 
8,875

 
10,586

 
(2,763
)
 
1,356

 
118,665

 
(14,159
)
 
(6,255
)
 
(18,780
)
 
(10,969
)
Income before income taxes
206,714

 
84,288

 
85,686

 
62,064

 
74,281

(Provision for) benefit from income taxes
(11,436
)
 
(2,715
)
 
(6,262
)
 
6,002

 
192

Net Income
195,278

 
81,573

 
79,424

 
68,066

 
74,473

Net (income) loss attributable to noncontrolling interests
(2,015
)
 
(4,225
)
 
(3,743
)
 
(2,792
)
 
736

Net Income Attributable to W. P. Carey
$
193,263

 
$
77,348

 
$
75,681

 
$
65,274

 
$
75,209

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
1.33

 
$
0.71

 
$
0.70

 
$
0.60

 
$
0.69