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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): August 2, 2019
399024145_wpchighreslogoa20.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

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

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

 





Item 2.02 Results of Operations and Financial Condition.

On August 2, 2019, W. P. Carey Inc. (together with its predecessors, the “Company”) issued an earnings release announcing its financial results for the quarter ended June 30, 2019. A copy of the earnings release is attached as Exhibit 99.1.

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

Item 7.01 Regulation FD Disclosure.

On August 2, 2019, the Company made available certain unaudited supplemental financial information at June 30, 2019. A copy of this supplemental information is attached as Exhibit 99.2.

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

Item 9.01 Financial Statements and Exhibits.

Exhibit No.
 
Description
99.1
 
 
 
 
99.2
 






SIGNATURES

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

 
 
 
W. P. Carey Inc.
 
 
 
 
Date:
August 2, 2019
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 Second Quarter 2019 Financial Results


New York, NY – August 2, 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 second quarter ended June 30, 2019.

Total Company
Net income attributable to W. P. Carey of $66.0 million, or $0.38 per diluted share
AFFO of $208.5 million, or $1.22 per diluted share
2019 AFFO guidance range narrowed to $4.95 to $5.05 per diluted share, including Real Estate AFFO of $4.70 to $4.80 per diluted share
Quarterly cash dividend raised to $1.034 per share, equivalent to an annualized dividend rate of $4.136 per share

Business Segments

Real Estate
Segment net income attributable to W. P. Carey of $60.8 million
Segment AFFO of $199.8 million, or $1.17 per diluted share
Investment volume of $439.9 million year to date, including $394.7 million completed during the first half of 2019 and $45.2 million subsequent to quarter end
Active capital investment projects totaling $183.7 million at quarter end, including $95.9 million expected to be completed in 2019
Entered into agreements to convert 36 existing self-storage operating properties to net leases
Gross disposition proceeds of $21.9 million during the first half of 2019
Portfolio occupancy of 98.2%
Weighted-average lease term increased to 10.4 years


W. P. Carey Inc. 6/30/2019 Earnings Release 8-K – 1


Investment Management
Segment net income attributable to W. P. Carey of $5.3 million
Segment AFFO of $8.6 million, or $0.05 per diluted share

Balance Sheet and Capitalization
Issued $325 million of 3.850% Senior Unsecured Notes due 2029
Utilized ATM program to raise $88.3 million in net proceeds during the second quarter, bringing net proceeds raised during the first half of 2019 to $392.1 million
Prepaid mortgage debt totaling $293.7 million during the second quarter, bringing mortgage debt prepaid during the first half of 2019 to $493.3 million


MANAGEMENT COMMENTARY

“Our business continues to gather momentum. During the second quarter, we added several high-quality industrial sale-leasebacks to our portfolio, creatively converted the bulk of our self-storage operating assets to net leases, further accessed the capital markets and prepaid additional mortgage debt,” said Jason Fox, Chief Executive Officer of W. P. Carey. “We have revised our AFFO guidance to reflect our current expectations for investment timing, along with the deleveraging we’ve done this year. Looking ahead, our investment opportunity set remains broad and our cost of capital enables us to pursue a wide range of opportunities.”


QUARTERLY FINANCIAL RESULTS

Revenues

Total Company: Revenues, including reimbursable costs, for the 2019 second quarter totaled $305.2 million, up 51.8% from $201.1 million for the 2018 second quarter.

Real Estate: Real Estate revenues, including reimbursable costs, for the 2019 second quarter were $291.5 million, up 67.6% from $173.9 million for the 2018 second quarter, due primarily to additional lease revenues from properties acquired in the Company’s merger with CPA:17 on October 31, 2018 (the CPA:17 Merger) and net acquisitions.

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

Investment Management: Investment Management revenues, including reimbursable costs, for the 2019 second quarter were $13.7 million, down 49.6% from $27.2 million for the 2018 second 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 2019 second quarter was $66.0 million, down 12.8% from $75.7 million for the 2018 second quarter. Net income from Investment Management attributable to W. P. Carey decreased, due primarily to the cessation of Investment Management revenues and distributions previously earned from CPA:17. Net income from Real Estate attributable to W. P. Carey increased, due primarily to properties acquired in the CPA:17 Merger and net acquisitions. The increase in revenues from properties acquired in the CPA:17 Merger and acquisitions was partly offset by corresponding increases in depreciation and amortization, interest expense and property expenses.


W. P. Carey Inc. 6/30/2019 Earnings Release 8-K – 2


Adjusted Funds from Operations (AFFO)

AFFO for the 2019 second quarter was $1.22 per diluted share, down 7.6% from $1.32 per diluted share for the 2018 second quarter. AFFO from the Company’s Real Estate segment (Real Estate AFFO) increased, due primarily to the accretive impact of properties acquired in the CPA:17 Merger and net acquisitions. AFFO from the Company’s Investment Management segment declined, due primarily to the cessation of Investment Management revenues and distributions previously earned from CPA:17.

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

Dividend

As previously announced, on June 13, 2019 the Company’s Board of Directors declared a quarterly cash dividend of $1.034 per share, equivalent to an annualized dividend rate of $4.136 per share. The dividend was paid on July 15, 2019 to stockholders of record as of June 28, 2019.


AFFO GUIDANCE

For the 2019 full year, the Company has narrowed its AFFO guidance range and currently expects to report total AFFO of between $4.95 and $5.05 per diluted share, including Real Estate AFFO of between $4.70 and $4.80 per diluted share, based on the following key assumptions, which are unchanged:

(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

Bond Issuance

On June 14, 2019, the Company completed an underwritten public offering of $325 million aggregate principal amount of 3.850% Senior Unsecured Notes due July 15, 2029. Net proceeds from the offering were used primarily to reduce amounts outstanding under the Company’s unsecured revolving credit facility.

“At-The-Market” (ATM) Program

During the 2019 second quarter, the Company issued 1,116,217 shares of common stock under its ATM program at a weighted-average price of $80.33 per share, for net proceeds of $88.3 million.

This activity brought issuances under the Company’s ATM program during the first half of 2019 to 5,169,840 shares of common stock, at a weighted-average price of $77.06 per share, for net proceeds of $392.1 million.


W. P. Carey Inc. 6/30/2019 Earnings Release 8-K – 3


Mortgage / Secured Debt Prepayment

During the 2019 second quarter, the Company prepaid mortgage debt totaling $293.7 million, with a weighted-average interest rate of approximately 5.2%.

This activity brought mortgage debt prepaid during the first half of 2019 to $493.3 million, with a weighted-average interest rate of approximately 5.1%.


REAL ESTATE

Investments

During the 2019 second quarter, the Company completed investments totaling $155.2 million, consisting of four acquisitions for $123.5 million in aggregate and three completed capital investment projects at a total cost of $31.7 million, bringing total investment volume for the first half of 2019 to $394.7 million, including transaction-related costs.

Subsequent to quarter end, the Company completed two additional investments totaling $45.2 million, bringing total investment volume year to date to $439.9 million, including transaction-related costs.

As of June 30, 2019, the Company had six capital investment projects outstanding for an expected total investment of approximately $183.7 million, of which four projects totaling $95.9 million are currently expected to be completed during 2019.

Conversion of Self-Storage Operating Properties to Net Leases

During the 2019 second quarter, the Company entered into net lease agreements with Extra Space Storage Inc. for 36 self-storage operating properties, the vast majority of which the Company acquired in the CPA:17 Merger.

Pursuant to these agreements, 22 self-storage operating properties were converted to net leases on June 1, 2019, at which time we began recognizing lease revenues on the properties and ceased recognizing operating property revenues and expenses.

Subsequent to quarter end, on August 1, 2019, an additional five self-storage operating properties were converted to net leases. The remaining nine self-storage operating properties included in this transaction, which were non-stabilized, are expected to convert to net leases upon stabilization over the next three years.

Dispositions

During the 2019 second quarter, the Company disposed of five properties for gross proceeds of $17.0 million, bringing total disposition proceeds for the first half of 2019 to $21.9 million.

Composition

As of June 30, 2019, the Company’s net lease portfolio consisted of 1,198 properties, comprising 136.6 million square feet leased to 320 tenants, with a weighted-average lease term of 10.4 years and an occupancy rate of 98.2%. In addition, the Company owned 24 self-storage and two hotel operating properties, totaling approximately 2.0 million square feet.


INVESTMENT MANAGEMENT

W. P. Carey is the advisor to CPA:18 – Global (CPA:18), Carey Watermark Investors Incorporated (CWI 1), Carey Watermark Investors 2 Incorporated (CWI 2) and Carey European Student Housing Fund I, L.P. (CESH) (collectively, the Managed Programs). As of June 30, 2019, the Managed Programs had total assets under management of approximately $7.6 billion.



W. P. Carey Inc. 6/30/2019 Earnings Release 8-K – 4


* * * * *


Supplemental Information

The Company has provided supplemental unaudited financial and operating information regarding the 2019 second 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 August 2, 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, August 2, 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.

W. P. Carey ranks among the largest net lease REITs with an enterprise value of approximately $20 billion and a diversified portfolio of operationally-critical commercial real estate that includes 1,198 net lease properties covering approximately 137 million square feet. For over four decades, the company has invested in high-quality single-tenant industrial, warehouse, office, retail and self-storage properties subject to long-term net leases with built-in rent escalators. Its portfolio is located primarily in the U.S. and Northern and Western Europe and is well-diversified by tenant, property type, geographic location and tenant industry. 

www.wpcarey.com


* * * * *



W. P. Carey Inc. 6/30/2019 Earnings Release 8-K – 5


Cautionary Statement Concerning Forward-Looking Statements

Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, among other things, statements regarding the intent, belief or expectations of W. P. Carey and can be identified by the use of words such as “may,” “will,” “should,” “would,” “assume,” “outlook,” “seek,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast” and other comparable terms. These forward-looking statements include, but are not limited to, statements made by Mr. Fox with regard to our investment opportunities and cost of capital. 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. 6/30/2019 Earnings Release 8-K – 6


W. P. CAREY INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share amounts)
 
June 30, 2019
 
December 31, 2018
Assets
 
 
 
Investments in real estate:
 
 
 
Land, buildings and improvements (a)
$
9,480,306

 
$
9,251,396

Net investments in direct financing leases
1,263,319

 
1,306,215

In-place lease intangible assets and other
2,134,786

 
2,009,628

Above-market rent intangible assets
921,998

 
925,797

Investments in real estate
13,800,409

 
13,493,036

Accumulated depreciation and amortization (b)
(1,812,628
)
 
(1,564,182
)
Assets held for sale, net (c)
102,777

 

Net investments in real estate
12,090,558

 
11,928,854

Equity investments in the Managed Programs and real estate (d)
317,159

 
329,248

Cash and cash equivalents
202,279

 
217,644

Due from affiliates
81,523

 
74,842

Other assets, net
580,270

 
711,507

Goodwill
920,218

 
920,944

Total assets
$
14,192,007

 
$
14,183,039

 
 
 
 
Liabilities and Equity
 
 
 
Debt:
 
 
 
Senior unsecured notes, net
$
3,861,931

 
$
3,554,470

Unsecured revolving credit facility
111,227

 
91,563

Non-recourse mortgages, net
2,203,853

 
2,732,658

Debt, net
6,177,011

 
6,378,691

Accounts payable, accrued expenses and other liabilities
463,417

 
403,896

Below-market rent and other intangible liabilities, net
213,279

 
225,128

Deferred income taxes
168,841

 
173,115

Dividends payable
178,665

 
172,154

Total liabilities
7,201,213

 
7,352,984

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

 

Common stock, $0.001 par value, 450,000,000 shares authorized; 170,756,507 and 165,279,642 shares, respectively, issued and outstanding
171

 
165

Additional paid-in capital
8,576,245

 
8,187,335

Distributions in excess of accumulated earnings
(1,368,457
)
 
(1,143,992
)
Deferred compensation obligation
37,263

 
35,766

Accumulated other comprehensive loss
(260,817
)
 
(254,996
)
Total stockholders’ equity
6,984,405

 
6,824,278

Noncontrolling interests
6,389

 
5,777

Total equity
6,990,794

 
6,830,055

Total liabilities and equity
$
14,192,007

 
$
14,183,039

________
(a)
Includes $189.3 million and $470.7 million of amounts attributable to operating properties as of June 30, 2019 and December 31, 2018, respectively.
(b)
Includes $847.5 million and $734.8 million of accumulated depreciation on buildings and improvements as of June 30, 2019 and December 31, 2018, respectively, and $965.1 million and $829.4 million of accumulated amortization on lease intangibles as of June 30, 2019 and December 31, 2018, respectively.
(c)
At June 30, 2019, we had two properties classified as Assets held for sale, net, including one hotel operating property.
(d)
Our equity investments in real estate joint ventures totaled $197.9 million and $221.7 million as of June 30, 2019 and December 31, 2018, respectively. Our equity investments in the Managed Programs totaled $119.2 million and $107.6 million as of June 30, 2019 and December 31, 2018, respectively.


W. P. Carey Inc. 6/30/2019 Earnings Release 8-K – 7


W. P. CAREY INC.
Quarterly Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)
 
Three Months Ended
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
Revenues
 
 
 
 
 
Real Estate:
 
 
 
 
 
Lease revenues
$
269,802

 
$
262,939

 
$
168,367

Operating property revenues
15,436

 
15,996

 
4,865

Lease termination income and other
6,304

 
3,270

 
680

 
291,542

 
282,205

 
173,912

Investment Management:
 
 
 
 
 
Asset management revenue
9,790

 
9,732

 
17,268

Reimbursable costs from affiliates
3,821

 
3,868

 
5,537

Structuring and other advisory revenue
58

 
2,518

 
4,426

 
13,669

 
16,118

 
27,231

 
305,211

 
298,323

 
201,143

Operating Expenses
 

 
 
 
 

Depreciation and amortization
113,632

 
112,379

 
64,337

General and administrative
19,729

 
21,285

 
16,442

Reimbursable tenant costs
13,917

 
13,171

 
5,733

Operating property expenses
10,874

 
10,594

 
3,581

Property expenses, excluding reimbursable tenant costs
9,915

 
9,912

 
5,327

Stock-based compensation expense
4,936

 
4,165

 
3,698

Reimbursable costs from affiliates
3,821

 
3,868

 
5,537

Subadvisor fees (a)
1,650

 
2,202

 
1,855

Merger and other expenses (b)
696

 
146

 
2,692

 
179,170

 
177,722

 
109,202

Other Income and Expenses
 

 
 
 
 

Interest expense
(59,719
)
 
(61,313
)
 
(41,311
)
Equity in earnings of equity method investments in the Managed Programs
   and real estate
3,951

 
5,491

 
12,558

Other gains and (losses) (c)
(671
)
 
955

 
10,586

(Loss) gain on sale of real estate, net
(362
)
 
933

 
11,912

 
(56,801
)
 
(53,934
)
 
(6,255
)
Income before income taxes
69,240

 
66,667

 
85,686

(Provision for) benefit from income taxes
(3,119
)
 
2,129

 
(6,262
)
Net Income
66,121

 
68,796

 
79,424

Net income attributable to noncontrolling interests
(83
)
 
(302
)
 
(3,743
)
Net Income Attributable to W. P. Carey
$
66,038

 
$
68,494

 
$
75,681

 
 
 
 
 
 
Basic Earnings Per Share
$
0.39

 
$
0.41

 
$
0.70

Diluted Earnings Per Share
$
0.38

 
$
0.41

 
$
0.70

Weighted-Average Shares Outstanding
 

 
 
 
 

Basic
171,304,112

 
167,234,121

 
108,059,394

Diluted
171,490,625

 
167,434,740

 
108,234,934

 
 
 
 
 
 
Dividends Declared Per Share
$
1.034

 
$
1.032

 
$
1.020



W. P. Carey Inc. 6/30/2019 Earnings Release 8-K – 8


W. P. CAREY INC.
Year-to-Date Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)
 
Six Months Ended June 30,
 
2019
 
2018
Revenues
 
 
 
Real Estate:
 
 
 
Lease revenues
$
532,741

 
$
337,799

Operating property revenues
31,432

 
12,083

Lease termination income and other
9,574

 
1,622

 
573,747

 
351,504

Investment Management:
 
 
 
Asset management revenue
19,522

 
34,253

Reimbursable costs from affiliates
7,689

 
10,841

Structuring and other advisory revenue
2,576

 
6,355

 
29,787

 
51,449

 
603,534

 
402,953

Operating Expenses
 

 
 

Depreciation and amortization
226,011

 
130,294

General and administrative
41,014

 
35,025

Reimbursable tenant costs
27,088

 
11,952

Operating property expenses
21,468

 
9,251

Property expenses, excluding reimbursable tenant costs
19,827

 
9,556

Stock-based compensation expense
9,101

 
11,917

Reimbursable costs from affiliates
7,689

 
10,841

Subadvisor fees (a)
3,852

 
3,887

Merger and other expenses (b)
842

 
2,655

Impairment charges

 
4,790

 
356,892

 
230,168

Other Income and Expenses
 

 
 

Interest expense
(121,032
)
 
(79,385
)
Equity in earnings of equity method investments in the Managed Programs
   and real estate
9,442

 
27,883

Gain on sale of real estate, net
571

 
18,644

Other gains and (losses)
284

 
7,823

 
(110,735
)
 
(25,035
)
Income before income taxes
135,907

 
147,750

Provision for income taxes
(990
)
 
(260
)
Net Income
134,917

 
147,490

Net income attributable to noncontrolling interests
(385
)
 
(6,535
)
Net Income Attributable to W. P. Carey
$
134,532

 
$
140,955

 
 
 
 
Basic Earnings Per Share
$
0.79

 
$
1.30

Diluted Earnings Per Share
$
0.79

 
$
1.30

Weighted-Average Shares Outstanding
 

 
 

Basic
169,280,360

 
108,058,671

Diluted
169,520,508

 
108,243,063

 
 
 
 
Dividends Declared Per Share
$
2.066

 
$
2.035

__________
(a)
The subadvisors for CWI 1, CWI 2 and CPA:18 (for multi-family properties) 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. During 2018, CPA:18 sold five of its six multi-family properties (it sold the remaining multi-family property in January 2019 and we terminated the related subadvisory agreements). Refer to the Managed Programs Fee Summary section in Exhibit 99.2 of the Current Report on Form 8-K filed on August 2, 2019 for further information.
(b)
Amounts are primarily comprised of costs incurred in connection with the CPA:17 Merger.
(c)
Amount for the three months ended June 30, 2019 is primarily comprised of realized gains on foreign currency exchange derivatives of $3.5 million, mark-to-market adjustment for our investment in shares of a cold storage operator of $(3.3) million, loss on extinguishment of debt of $(3.0) million, interest earned from cash in bank and on loans to affiliates of $1.1 million, net gains on foreign currency transactions of $0.7 million, and dividend income from our investment in shares of Guggenheim Credit Income Fund of $0.5 million.

W. P. Carey Inc. 6/30/2019 Earnings Release 8-K – 9


W. P. CAREY INC.
Quarterly Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
 
Three Months Ended
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
Net income attributable to W. P. Carey
$
66,038

 
$
68,494

 
$
75,681

Adjustments:
 
 
 
 
 
Depreciation and amortization of real property
112,360

 
111,103

 
63,073

Loss (gain) on sale of real estate, net
362

 
(933
)
 
(11,912
)
Proportionate share of adjustments to equity in net income of partially owned entities
4,489

 
4,424

 
902

Proportionate share of adjustments for noncontrolling interests
(31
)
 
(30
)
 
(2,729
)
Total adjustments
117,180

 
114,564

 
49,334

FFO (as defined by NAREIT) Attributable to W. P. Carey (a)
183,218

 
183,058

 
125,015

Adjustments:
 
 
 
 
 
Above- and below-market rent intangible lease amortization, net
16,450

 
15,927

 
12,303

Straight-line and other rent adjustments
(7,975
)
 
(6,258
)
 
(2,637
)
Other (gains) and losses (b)
5,724

 
4,930

 
(6,845
)
Stock-based compensation
4,936

 
4,165

 
3,698

Amortization of deferred financing costs
2,774

 
2,724

 
1,905

Other amortization and non-cash items
1,706

 
567

 
35

Tax (benefit) expense – deferred and other (c)
(933
)
 
(4,928
)
 
3,028

Merger and other expenses (d)
696

 
146

 
2,692

Proportionate share of adjustments to equity in net income of partially owned entities
1,876

 
1,461

 
3,635

Proportionate share of adjustments for noncontrolling interests
(7
)
 
(25
)
 
(230
)
Total adjustments
25,247

 
18,709

 
17,584

AFFO Attributable to W. P. Carey (a)
$
208,465

 
$
201,767

 
$
142,599

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (a)
$
183,218

 
$
183,058

 
$
125,015

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (a)
$
1.07

 
$
1.09

 
$
1.16

AFFO attributable to W. P. Carey (a)
$
208,465

 
$
201,767

 
$
142,599

AFFO attributable to W. P. Carey per diluted share (a)
$
1.22

 
$
1.21

 
$
1.32

Diluted weighted-average shares outstanding
171,490,625

 
167,434,740

 
108,234,934
























W. P. Carey Inc. 6/30/2019 Earnings Release 8-K – 10


W. P. CAREY INC.
Quarterly Reconciliation of Net Income from Real Estate to Adjusted Funds from Operations (AFFO) from Real Estate (Unaudited)
(in thousands, except share and per share amounts)
 
Three Months Ended
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
Net income from Real Estate attributable to W. P. Carey
$
60,768

 
$
53,408

 
$
59,316

Adjustments:
 
 
 
 
 
Depreciation and amortization of real property
112,360

 
111,103

 
63,073

Loss (gain) on sale of real estate, net
362

 
(933
)
 
(11,912
)
Proportionate share of adjustments to equity in net income of partially owned entities
4,489

 
4,424

 
902

Proportionate share of adjustments for noncontrolling interests
(31
)
 
(30
)
 
(2,729
)
Total adjustments
117,180

 
114,564

 
49,334

FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (a)
177,948

 
167,972

 
108,650

Adjustments:
 
 
 
 
 
Above- and below-market rent intangible lease amortization, net
16,450

 
15,927

 
12,303

Straight-line and other rent adjustments
(7,975
)
 
(6,258
)
 
(2,637
)
Other (gains) and losses (b)
5,888

 
3,929

 
(6,599
)
Stock-based compensation
3,482

 
2,800

 
1,990

Amortization of deferred financing costs
2,774

 
2,724

 
1,905

Other amortization and non-cash items
1,510

 
502

 
56

Tax (benefit) expense – deferred and other
(853
)
 
490

 
(1,767
)
Merger and other expenses (d)
696

 
146

 
2,692

Proportionate share of adjustments to equity in net income of partially owned entities
(89
)
 
115

 
99

Proportionate share of adjustments for noncontrolling interests
(7
)
 
(25
)
 
(230
)
Total adjustments
21,876

 
20,350

 
7,812

AFFO Attributable to W. P. Carey – Real Estate (a)
$
199,824

 
$
188,322

 
$
116,462

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (a)
$
177,948

 
$
167,972

 
$
108,650

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (a)
$
1.04

 
$
1.00

 
$
1.01

AFFO attributable to W. P. Carey – Real Estate (a)
$
199,824

 
$
188,322

 
$
116,462

AFFO attributable to W. P. Carey per diluted share – Real Estate (a)
$
1.17

 
$
1.13

 
$
1.08

Diluted weighted-average shares outstanding
171,490,625

 
167,434,740

 
108,234,934



W. P. Carey Inc. 6/30/2019 Earnings Release 8-K – 11


W. P. CAREY INC.
Year-to-Date Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
 
Six Months Ended June 30,
 
2019
 
2018
Net income attributable to W. P. Carey
$
134,532

 
$
140,955

Adjustments:
 
 
 
Depreciation and amortization of real property
223,463

 
127,653

Gain on sale of real estate, net
(571
)
 
(18,644
)
Impairment charges

 
4,790

Proportionate share of adjustments to equity in net income of partially owned entities
8,913

 
2,154

Proportionate share of adjustments for noncontrolling interests
(61
)
 
(5,511
)
Total adjustments
231,744

 
110,442

FFO (as defined by NAREIT) Attributable to W. P. Carey (a)
366,276

 
251,397

Adjustments:
 
 
 
Above- and below-market rent intangible lease amortization, net
32,377

 
24,105

Straight-line and other rent adjustments
(14,233
)
 
(4,933
)
Other (gains) and losses (b)
10,654

 
(1,556
)
Stock-based compensation
9,101

 
11,917

Tax benefit – deferred and other (c)
(5,861
)
 
(9,127
)
Amortization of deferred financing costs
5,498

 
1,711

Other amortization and non-cash items
2,273

 
(14
)
Merger and other expenses (d)
842

 
2,655

Proportionate share of adjustments to equity in net income of partially owned entities
3,337

 
5,387

Proportionate share of adjustments for noncontrolling interests
(32
)
 
(573
)
Total adjustments
43,956

 
29,572

AFFO Attributable to W. P. Carey (a)
$
410,232

 
$
280,969

 
 
 
 
Summary
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (a)
$
366,276

 
$
251,397

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (a)
$
2.16

 
$
2.32

AFFO attributable to W. P. Carey (a)
$
410,232

 
$
280,969

AFFO attributable to W. P. Carey per diluted share (a)
$
2.42

 
$
2.60

Diluted weighted-average shares outstanding
169,520,508

 
108,243,063





























W. P. Carey Inc. 6/30/2019 Earnings Release 8-K – 12


W. P. CAREY INC.
Year-to-Date 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)
 
Six Months Ended June 30,
 
2019
 
2018
Net income from Real Estate attributable to W. P. Carey
$
114,176

 
$
104,616

Adjustments:
 
 
 
Depreciation and amortization of real property
223,463

 
127,653

Gain on sale of real estate, net
(571
)
 
(18,644
)
Impairment charges

 
4,790

Proportionate share of adjustments to equity in net income of partially owned entities
8,913

 
2,154

Proportionate share of adjustments for noncontrolling interests
(61
)
 
(5,511
)
Total adjustments
231,744

 
110,442

FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (a)
345,920

 
215,058

Adjustments:
 
 
 
Above- and below-market rent intangible lease amortization, net
32,377

 
24,105

Straight-line and other rent adjustments
(14,233
)
 
(4,933
)
Other (gains) and losses (b)
9,817

 
(1,673
)
Stock-based compensation
6,282

 
6,296

Amortization of deferred financing costs
5,498

 
1,711

Other amortization and non-cash items
2,012

 
7

Merger and other expenses (d)
842

 
2,655

Tax benefit – deferred and other
(363
)
 
(11,285
)
Proportionate share of adjustments to equity in net income of partially owned entities
26

 
28

Proportionate share of adjustments for noncontrolling interests
(32
)
 
(573
)
Total adjustments
42,226

 
16,338

AFFO Attributable to W. P. Carey – Real Estate (a)
$
388,146

 
$
231,396

 
 
 
 
Summary
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (a)
$
345,920

 
$
215,058

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (a)
$
2.04

 
$
1.99

AFFO attributable to W. P. Carey – Real Estate (a)
$
388,146

 
$
231,396

AFFO attributable to W. P. Carey per diluted share – Real Estate (a)
$
2.29

 
$
2.14

Diluted weighted-average shares outstanding
169,520,508

 
108,243,063

__________
(a)
FFO and AFFO are non-GAAP measures. See below for a description of FFO and AFFO.
(b)
AFFO amount for the three months ended June 30, 2019 is primarily comprised of unrealized losses on derivatives of $(0.3) million, gains from foreign currency movements of $0.7 million, loss on extinguishment of debt of $(3.0) million and loss on marketable securities of $(3.1) million. Real Estate AFFO amount for the three months ended June 30, 2019 is primarily comprised of unrealized losses on derivatives of $(0.3) million, gains from foreign currency movements of $0.7 million, loss on extinguishment of debt of $(3.0) million and loss on marketable securities of $(3.3) million. Beginning in the second quarter of 2019, we aggregated (gain) loss on extinguishment of debt and realized (gains) losses on foreign currency (both of which were previously disclosed as separate AFFO adjustment line items), as well as certain other adjustments, within this line item, which is comprised of adjustments related to Other gains and (losses) on our consolidated statements of income. Prior period amounts have been reclassified to conform to the current period presentation.
(c)
Amounts for the three months ended March 31, 2019 and six months ended June 30, 2019 include a current tax benefit, which is excluded from AFFO as it was incurred as a result of the CPA:17 Merger.
(d)
Amounts are primarily comprised of costs incurred in connection with the CPA:17 Merger.

W. P. Carey Inc. 6/30/2019 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 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. 6/30/2019 Earnings Release 8-K – 14
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2

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


399024145_wpcsuppimage201904102a01.jpg



Important Disclosures About This Supplemental Package

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

Amounts may not sum to totals due to rounding.

Important Note Regarding Non-GAAP Financial Measures

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




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



W. P. Carey Inc.
Overview – Second Quarter 2019
Summary Metrics
As of or for the three months ended June 30, 2019.
Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment
 
 
 
 
 
 
 
Owned
Real Estate
 
Investment Management
 
Total
Revenues, including reimbursable costs – consolidated ($000s)
 
$
291,542

 
$
13,669

 
$
305,211

Net income attributable to W. P. Carey ($000s)
 
60,768

 
5,270

 
66,038

Net income attributable to W. P. Carey per diluted share
 
0.35

 
0.03

 
0.38

Normalized pro rata cash NOI from real estate ($000s) (a) (b)
 
267,784

 
N/A

 
267,784

Adjusted EBITDA ($000s) (a) (b)
 
261,100

 
9,633

 
270,733

AFFO attributable to W. P. Carey ($000s) (a) (b)
 
199,824

 
8,641

 
208,465

AFFO attributable to W. P. Carey per diluted share (a) (b)
 
1.17

 
0.05

 
1.22

 
 
 
 
 
 
 
 
 
 
Dividends declared per share – second quarter
 
 
 
 
 
1.034

Dividends declared per share – second quarter annualized
 
 
 
 
 
4.136

Dividend yield – annualized, based on quarter end share price of $81.18
 
 
 
 
 
5.1
%
Dividend payout ratio – for the six months ended June 30, 2019 (c)
 
 
 
 
 
85.4
%
 
 
 
 
 
 
 
 
 
 
Balance Sheet and Capitalization
 
 
 
 
 
 
 
 
 
Equity market capitalization – based on quarter end share price of $81.18 ($000s)
 
 
 
 
 
$
13,862,013

Pro rata net debt ($000s) (d)
 
 
 
 
 
 
 
 
6,232,432

Enterprise value ($000s)
 
 
 
 
 
 
 
 
20,094,445

 
 
 
 
 
 
 
 
 
 
Total consolidated debt ($000s)
 
 
 
 
 
 
 
 
6,177,011

Gross assets ($000s) (e)
 
 
 
 
 
 
 
 
15,039,546

Liquidity ($000s) (f)
 
 
 
 
 
 
 
 
1,591,052

 
 
 
 
 
 
 
 
 
 
Pro rata net debt to enterprise value (b)
 
 
 
 
 
 
 
 
31.0
%
Pro rata net debt to adjusted EBITDA (annualized) (a) (b)
 
 
 
 
 
5.8x

Total consolidated debt to gross assets
 
 
 
 
 
 
 
 
41.1
%
 
 
 
 
 
 
 
 
 
 
Weighted-average interest rate (b)
 
 
 
 
 
 
 
 
3.5
%
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 ($000s) (g)
 
 
 
 
 
 
 
 
$
1,115,821

Number of net-leased properties
 
 
 
 
 
 
 
 
1,198

Number of operating properties (h)
 
 
 
 
 
 
 
 
26

Number of tenants – net-leased properties
 
 
 
 
 
 
 
 
320

 
 
 
 
 
 
 
 
 
 
ABR from investment grade tenants as a % of total ABR – net-leased properties (i)
 
 
 
 
 
28.8
%
 
 
 
 
 
 
 
 
 
 
Net-leased properties – square footage (millions)
 
 
 
 
 
 
 
 
136.6

 
 
 
 
 
 
 
 
 
 
Occupancy – net-leased properties
 
 
 
 
 
 
 
 
98.2
%
Weighted-average lease term (years)
 
 
 
 
 
 
 
 
10.4

 
 
 
 
 
 
 
 
 
 
Maximum commitment for capital investment projects expected to be completed during 2019 ($000s)
 
 
 
$
95,874

Acquisitions and completed capital investment projects – second quarter ($000s)
 
 
 
155,169

Dispositions – second quarter ($000s)
 
 
 
 
 
 
 
 
16,954

________
(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 intangible assets of $595.5 million and above-market rent intangible assets of $369.5 million.

399024145_wpclogoa01a01a32.jpg 
 
Investing for the long runTM | 1


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

(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 24 self-storage properties and two hotels.
(i)
Percentage of portfolio is based on ABR, as of June 30, 2019. Includes tenants or guarantors with investment grade ratings (19.6%) and subsidiaries of non-guarantor parent companies with investment grade ratings (9.2%). 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.

399024145_wpclogoa01a01a32.jpg 
 
Investing for the long runTM | 2


W. P. Carey Inc.
Overview – Second Quarter 2019
Components of Net Asset Value
Dollars in thousands, except per share amounts.
Real Estate
 
 
Three Months Ended
Jun. 30, 2019
 
Annualized
Normalized pro rata cash NOI (a) (b)
 
 
$
267,784

 
$
1,071,136

 
 
 
 
 
 
Investment Management
 
 
 
 
 
Adjusted EBITDA (a) (b)
 
 
9,633

 
38,532

Selected Components of Adjusted EBITDA:
 
 
 
 
 
Asset management revenue (c)
 
 
9,790

 
39,160

Structuring and other advisory revenue (c)
 
 
58

 
N/A

Operating partnership interests in real estate cash flow of Managed REITs (d)
 
3,373

 
13,492

Back-end fees and interests associated with the Managed Programs
 
 
 
 
 
 
 
 
Balance Sheet – Selected Information (Consolidated Unless Otherwise Stated)
 
As of Jun. 30, 2019
Assets
 
 
 
 
 
Book value of real estate excluded from normalized pro rata cash NOI (e)
 
 
 
$
281,792

Cash and cash equivalents
 
 
 
 
202,279

Due from affiliates
 
 
 
 
81,523

Other assets, net:
 
 
 
 
 
Straight-line rent adjustments
 
 
 
 
$
115,709

Investment in shares of a cold storage operator
 
 
 
 
110,046

Restricted cash, including escrow
 
 
 
 
59,332

Loans receivable
 
 
 
 
57,737

Taxes receivable
 
 
 
 
44,273

Deferred charges
 
 
 
 
38,980

Accounts receivable
 
 
 
 
38,892

Securities and derivatives
 
 
 
 
34,744

Investment in shares of Guggenheim Credit Income Fund
 
 
 
 
19,111

Prepaid expenses
 
 
 
 
16,263

Deposits for construction and dispositions
 
 
 
 
14,722

Office lease right-of-use assets, net (f)
 
 
 
 
10,110

Other intangible assets, net
 
 
 
 
9,504

Deferred income taxes
 
 
 
 
6,927

Leasehold improvements, furniture and fixtures
 
 
 
1,979

Other
 
 
 
 
1,941

Total other assets, net
 
 
 
 
$
580,270

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Total pro rata debt outstanding (b)
 
 
 
 
$
6,434,711

Dividends payable
 
 
 
 
178,665

Deferred income taxes
 
 
 
 
168,841

Accounts payable, accrued expenses and other liabilities:
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
$
150,187

Prepaid and deferred rents
 
 
 
 
99,486

Operating lease liabilities (f)
 
 
 
 
90,580

Accrued taxes payable
 
 
 
 
44,857

Tenant security deposits
 
 
 
 
36,920

Securities and derivatives
 
 
 
 
6,272

Other
 
 
 
 
35,115

Total accounts payable, accrued expenses and other liabilities
 
 
 
 
$
463,417


399024145_wpclogoa01a01a32.jpg 
 
Investing for the long runTM | 3


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


CPA:18 – Global
3.7
%
 
5,424,232

 
$
8.73

(h) 
$
47,354

CWI 1
3.5
%
 
4,958,385

 
10.39

(h) 
51,518

CWI 2
3.3
%
 
3,017,784

 
11.41

(h) 
34,433

CESH
2.4
%
 
3,492

 
1,000.00

(i) 
3,492

 
 
 
 
 
 
 
$
136,797

________
(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). During 2018, CPA:18 – Global sold five of its six multi-family properties (it sold the remaining multi-family property in January 2019 and we terminated the related subadvisory agreements).
(d)
We are entitled to receive distributions of up to 10% of the Available Cash of each of the Managed REITs, as defined in their respective operating partnership agreements. Pursuant to the terms of their subadvisory agreements, however, 20% of the distributions of Available Cash we receive from CWI 1 and 25% of the distributions of Available Cash we receive from CWI 2 are paid to their respective subadvisors. Amounts for CWI 1 and CWI 2 are net of fees paid to their respective subadvisors.
(e)
Represents the value of real estate not included in normalized pro rata cash NOI, such as vacant assets, in-progress build-to-suit properties, a common equity interest in a Las Vegas retail center and an unstabilized hotel operating property, which was classified as held for sale as of June 30, 2019.
(f)
We adopted Accounting Standards Update 2016-02, Leases (Topic 842) for our interim and annual periods beginning January 1, 2019, whereby the rights and obligations of lessees under substantially all leases, existing and new, are capitalized and recorded on the balance sheet. As a result, we recognized $114.5 million of land lease right-of-use assets included in In-place lease intangible assets and other, $10.1 million of office lease right-of-use assets in Other assets, net, and $90.6 million of corresponding operating lease liabilities for certain operating office and land lease arrangements in Accounts payable, accrued expenses and other liabilities as of June 30, 2019.
(g)
Separate from operating partnership interests in the Managed REITs and our interests in unconsolidated real estate joint ventures with our affiliate, CPA:18 Global.
(h)
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.
(i)
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
Second Quarter 2019












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Investing for the long runTM | 5


W. P. Carey Inc.
Financial Results – Second Quarter 2019
Consolidated Statements of Income – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Jun. 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
 
Sep. 30, 2018
 
Jun. 30, 2018
Revenues
 
 
 
 
 
 
 
 
 
Real Estate:
 
 
 
 
 
 
 
 
 
Lease revenues
$
269,802

 
$
262,939

 
$
233,632

 
$
173,067

 
$
168,367

Operating property revenues
15,436

 
15,996

 
11,707

 
4,282

 
4,865

Lease termination income and other
6,304

 
3,270

 
2,952

 
1,981

 
680

 
291,542

 
282,205

 
248,291

 
179,330

 
173,912

Investment Management:
 
 
 
 
 
 
 
 
 
Asset management revenue
9,790

 
9,732

 
11,954

 
17,349

 
17,268

Reimbursable costs from affiliates
3,821

 
3,868

 
5,042

 
6,042

 
5,537

Structuring and other advisory revenue
58

 
2,518

 
8,108

 
6,663

 
4,426

 
13,669

 
16,118

 
25,104

 
30,054

 
27,231

 
305,211

 
298,323

 
273,395

 
209,384

 
201,143

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
113,632

 
112,379

 
93,321

 
67,825

 
64,337

General and administrative
19,729

 
21,285

 
17,449

 
15,863

 
16,442

Reimbursable tenant costs
13,917

 
13,171

 
10,145

 
5,979

 
5,733

Operating property expenses
10,874

 
10,594

 
7,844

 
3,055

 
3,581

Property expenses, excluding reimbursable tenant costs
9,915

 
9,912

 
8,319

 
4,898

 
5,327

Stock-based compensation expense
4,936

 
4,165

 
3,902

 
2,475

 
3,698

Reimbursable costs from affiliates
3,821

 
3,868

 
5,042

 
6,042

 
5,537

Subadvisor fees (a)
1,650

 
2,202

 
2,226

 
3,127

 
1,855

Merger and other expenses (b)
696

 
146

 
37,098

 
1,673

 
2,692

 
179,170

 
177,722

 
185,346

 
110,937

 
109,202

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(59,719
)
 
(61,313
)
 
(57,250
)
 
(41,740
)
 
(41,311
)
Equity in earnings of equity method investments in the Managed Programs and real estate
3,951

 
5,491

 
15,268

 
18,363

 
12,558

Other gains and (losses) (c)
(671
)
 
955

 
13,215

 
8,875

 
10,586

(Loss) gain on sale of real estate, net
(362
)
 
933

 
99,618

 
343

 
11,912

Gain on change in control of interests (d)

 

 
47,814

 

 

 
(56,801
)
 
(53,934
)
 
118,665

 
(14,159
)
 
(6,255
)
Income before income taxes
69,240

 
66,667

 
206,714

 
84,288

 
85,686

(Provision for) benefit from income taxes
(3,119
)
 
2,129

 
(11,436
)
 
(2,715
)
 
(6,262
)
Net Income
66,121

 
68,796

 
195,278

 
81,573

 
79,424

Net income attributable to noncontrolling interests
(83
)
 
(302
)
 
(2,015
)
 
(4,225
)
 
(3,743
)
Net Income Attributable to W. P. Carey
$
66,038

 
$
68,494

 
$
193,263

 
$
77,348

 
$
75,681

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
0.39

 
$
0.41

 
$
1.33

 
$
0.71

 
$
0.70

Diluted Earnings Per Share
$
0.38

 
$
0.41

 
$
1.33

 
$
0.71

 
$
0.70

Weighted-Average Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
171,304,112

 
167,234,121

 
145,480,858

 
108,073,969

 
108,059,394

Diluted
171,490,625

 
167,434,740

 
145,716,583

 
108,283,666

 
108,234,934

 
 
 
 
 
 
 
 
 
 
Dividends Declared Per Share
$
1.034

 
$
1.032

 
$
1.030

 
$
1.025

 
$
1.020

________
(a)
The subadvisors for CWI 1, CWI 2 and CPA:18 Global (for multi-family properties) 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. During 2018, CPA:18 – Global sold five of its six multi-family properties (it sold the remaining multi-family property in January 2019 and we terminated the related subadvisory agreements).
(b)
Amounts are primarily comprised of costs incurred in connection with the CPA:17 Merger.
(c)
Amount for the three months ended June 30, 2019 is primarily comprised of realized gains on foreign currency exchange derivatives of $3.5 million, mark-to-market adjustment for our investment in shares of a cold storage operator of $(3.3) million, loss on extinguishment of debt of $(3.0) million, interest earned from cash in bank and on loans to affiliates of $1.1 million, net gains on foreign currency transactions of $0.7 million, and dividend income from our investment in shares of Guggenheim Credit Income Fund of $0.5 million.
(d)
Amount for the three months ended December 31, 2018 includes a gain of $18.8 million recognized on the purchase of the remaining interests in six investments from CPA:17 – Global in the CPA:17 Merger, which we had previously accounted for under the equity method. Amount for the three months ended December 31, 2018 also includes a gain of $29.0 million recognized on our previously held interest in shares of CPA:17 – Global common stock in connection with the CPA:17 Merger.

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Investing for the long runTM | 6


W. P. Carey Inc.
Financial Results – Second Quarter 2019
Statements of Income, Real Estate – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Jun. 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
 
Sep. 30, 2018
 
Jun. 30, 2018
Revenues
 
 
 
 
 
 
 
 
 
Lease revenues
$
269,802

 
$
262,939

 
$
233,632

 
$
173,067

 
$
168,367

Operating property revenues
15,436

 
15,996

 
11,707

 
4,282

 
4,865

Lease termination income and other
6,304

 
3,270

 
2,952

 
1,981

 
680

 
291,542

 
282,205

 
248,291

 
179,330

 
173,912

Operating Expenses