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Section 1: 8-K (8-K)

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false0001025378 0001025378 2019-11-01 2019-11-01


 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): November 1, 2019
400764239_wpchighreslogoa21.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,
New York
 
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 November 1, 2019, W. P. Carey Inc. (together with its predecessors, the “Company”) issued an earnings release announcing its financial results for the quarter ended September 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 November 1, 2019, the Company made available certain unaudited supplemental financial information at September 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:
November 1, 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
[email protected]

Individual Investors:
W. P. Carey Inc.
212-492-8920
[email protected]

Press Contact:
Guy Lawrence
Ross & Lawrence
212-308-3333
[email protected]

W. P. Carey Inc. Announces Third Quarter 2019 Financial Results


New York, NY – November 1, 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 third quarter ended September 30, 2019.

Total Company
Net income attributable to W. P. Carey of $41.3 million, or $0.24 per diluted share
AFFO of $224.2 million, or $1.30 per diluted share
2019 AFFO guidance range lowered and narrowed to $4.95 to $5.01 per diluted share, including Real Estate AFFO of $4.70 to $4.76 per diluted share
Quarterly cash dividend raised to $1.036 per share, equivalent to an annualized dividend rate of $4.144 per share

Business Segments

Real Estate
Segment net income attributable to W. P. Carey of $33.6 million
Segment AFFO of $212.9 million, or $1.23 per diluted share
Investment volume of $519.5 million year to date, including $456.4 million completed during the first nine months of 2019 and $63.1 million subsequent to quarter end
Active capital investment projects of $406.7 million, including $281.8 million committed at quarter end and $124.9 million sourced subsequent to quarter end
Capital investment projects totaling $114.4 million expected to be completed in the fourth quarter of 2019
Gross disposition proceeds of $95.7 million year to date, including $36.0 million completed during the first nine months of 2019
Portfolio occupancy of 98.4%
Weighted-average lease term of 10.3 years


W. P. Carey Inc. 9/30/2019 Earnings Release 8-K – 1


Investment Management
Segment net income attributable to W. P. Carey of $7.8 million
Segment AFFO of $11.4 million, or $0.07 per diluted share
CWI 1 and CWI 2 announced subsequent to quarter end their proposed merger and intention to internalize management

Balance Sheet and Capitalization
Issued €500 million of 1.350% Senior Unsecured Notes due 2028
Utilized ATM program to raise $131.4 million in net proceeds during the third quarter, bringing net proceeds raised during the first nine months of 2019 to $523.5 million
Prepaid mortgage debt totaling $379.5 million during the third quarter, bringing mortgage debt prepaid during the first nine months of 2019 to $872.8 million


MANAGEMENT COMMENTARY

“In addition to our recent industrial sale-leaseback activity, we’ve been focused on building our pipeline of capital investment projects and further strengthening our balance sheet,” said Jason Fox, Chief Executive Officer of W. P. Carey. “By efficiently raising equity through our ATM, issuing unsecured debt and pro-actively pulling forward debt maturities, we’ve enhanced our credit profile and ensured we’re well-positioned for growth in a range of economic environments.”


QUARTERLY FINANCIAL RESULTS

Revenues

Total Company: Revenues, including reimbursable costs, for the 2019 third quarter totaled $318.0 million, up 51.9% from $209.4 million for the 2018 third quarter.

Real Estate: Real Estate revenues, including reimbursable costs, for the 2019 third quarter were $302.8 million, up 68.9% from $179.3 million for the 2018 third 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. Lease termination income and other revenue for the 2019 third quarter included $8.3 million in proceeds from a bankruptcy claim on a prior tenant and the collection of $3.3 million in past-due rents resulting from the restructuring of certain leases on properties acquired in the CPA:17 Merger.

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 third quarter were $15.3 million, down 49.2% from $30.1 million for the 2018 third quarter, due primarily to the cessation of asset management revenue previously earned from CPA:17, as well as lower structuring and other advisory revenues.


W. P. Carey Inc. 9/30/2019 Earnings Release 8-K – 2


Net Income Attributable to W. P. Carey

Net income attributable to W. P. Carey for the 2019 third quarter was $41.3 million, down 46.6% from $77.3 million for the 2018 third 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 also decreased, due primarily to impairment charges totaling $25.8 million and loss on extinguishment of debt totaling $10.6 million recognized during the current period, partly offset by the impact of properties acquired in the CPA:17 Merger and net acquisitions, as well as proceeds recognized during the 2019 third quarter from a bankruptcy claim on a prior tenant. 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.

Adjusted Funds from Operations (AFFO)

AFFO for the 2019 third quarter was $1.30 per diluted share, down 12.2% from $1.48 per diluted share for the 2018 third 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, as well as higher lease termination income and other revenue, partly offset by the dilutive impact of shares issued through our ATM program. 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 September 19, 2019 the Company’s Board of Directors declared a quarterly cash dividend of $1.036 per share, equivalent to an annualized dividend rate of $4.144 per share. The dividend was paid on October 15, 2019 to stockholders of record as of September 30, 2019.


AFFO GUIDANCE

For the 2019 full year, the Company has lowered and narrowed its AFFO guidance range and currently expects to report total AFFO of between $4.95 and $5.01 per diluted share, including Real Estate AFFO of between $4.70 and $4.76 per diluted share, based on the following revised key assumptions:

(i)
investments for the Company’s Real Estate portfolio of between $750 million and $1 billion;

(ii)
dispositions from the Company’s Real Estate portfolio of between $375 million and $550 million; and

(iii)
total general and administrative expenses of between $76 million and $79 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 September 19, 2019, the Company completed an underwritten public offering of €500 million aggregate principal amount of 1.350% Senior Unsecured Notes due April 15, 2028. Net proceeds from the offering were used primarily to reduce amounts outstanding under the Company’s unsecured revolving credit facility and to repay mortgage debt.



W. P. Carey Inc. 9/30/2019 Earnings Release 8-K – 3


“At-The-Market” (ATM) Programs

During the 2019 third quarter, the Company issued 1,502,572 shares of common stock under its ATM programs at a weighted-average price of $88.76 per share, for net proceeds of $131.4 million.

This activity brought issuances under the Company’s ATM programs during the first nine months of 2019 to 6,672,412 shares of common stock, at a weighted-average price of $79.70 per share, for net proceeds of $523.5 million.

Mortgage / Secured Debt Prepayment

During the 2019 third quarter, the Company prepaid mortgage debt totaling $379.5 million, with a weighted-average interest rate of approximately 4.6%.

This activity brought mortgage debt prepaid during the first nine months of 2019 to $872.8 million, with a weighted-average interest rate of approximately 4.9%.


REAL ESTATE

Investments

During the 2019 third quarter, the Company completed investments totaling $61.7 million, consisting of three acquisitions, bringing total investment volume for the nine months ended September 30, 2019 to $456.4 million.

Subsequent to quarter end, the Company completed two additional investments totaling $63.1 million, bringing total investment volume year to date to $519.5 million.

As of September 30, 2019, the Company had 11 capital investment projects outstanding for an expected total investment of approximately $281.8 million.

Subsequent to quarter end, the Company added two additional capital investment projects totaling $124.9 million, bringing total capital investment projects outstanding to $406.7 million, of which six projects totaling $114.4 million are currently expected to be completed during 2019.


Dispositions

During the 2019 third quarter, the Company disposed of four properties for gross proceeds of $14.1 million, bringing total disposition proceeds for the nine months ended September 30, 2019 to $36.0 million.

Subsequent to quarter end, the Company disposed of seven additional properties for gross proceeds of $59.7 million, bringing total dispositions year to date to $95.7 million.

Composition

As of September 30, 2019, the Company’s net lease portfolio consisted of 1,204 properties, comprising 137.5 million square feet leased to 324 tenants, with a weighted-average lease term of 10.3 years and an occupancy rate of 98.4%. In addition, the Company owned 19 self-storage and two hotel operating properties, totaling approximately 1.6 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 September 30, 2019, the Managed Programs had total assets under management of approximately $7.6 billion.


W. P. Carey Inc. 9/30/2019 Earnings Release 8-K – 4


Proposed Merger of CWI 1 and CWI 2 and Management Internalization

On October 22, 2019, CWI 1 and CWI 2 announced that they have entered into a definitive merger agreement under which the two companies intend to merge in an all-stock transaction with CWI 2 as the surviving entity. The transaction is expected to close in the first quarter of 2020, subject to the approval of stockholders of each of CWI 1 and CWI 2, among other conditions.

In connection with the merger, W. P. Carey has entered into an internalization agreement and transition services agreement with CWI 1 and CWI 2. Immediately following the closing of the merger:

(i)
the advisory agreements between a subsidiary of W. P. Carey and each of CWI 1 and CWI 2 and each of their respective operating partnerships will terminate;

(ii)
the operating partnerships of each of CWI 1 and CWI 2 will redeem the special general partnership interest that certain subsidiaries of W. P. Carey currently hold, for which W. P. Carey will receive approximately $97 million in consideration, comprised of $65 million in shares of CWI 2 preferred stock and 2,840,549 shares in CWI 2 common stock valued at approximately $32 million;
 
(iii)
CWI 2 will internalize the management services currently provided by a subsidiary of W. P. Carey; and
 
(iv)
W. P. Carey and its affiliates will provide certain transition services to CWI 2 at cost for, what is currently expected to be, a period of approximately 12 months from the closing of the proposed merger between CWI 1 and CWI 2.

Upon completion of the proposed merger, the Company expects the contribution from its Investment Management segment to be reduced to approximately 2% of total AFFO on an annualized basis.


* * * * *


Supplemental Information

The Company has provided supplemental unaudited financial and operating information regarding the 2019 third 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 November 1, 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, November 1, 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. 9/30/2019 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 $21 billion and a diversified portfolio of operationally-critical commercial real estate that includes 1,204 net lease properties covering approximately 138 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


* * * * *


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 future growth. 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. 9/30/2019 Earnings Release 8-K – 6


W. P. CAREY INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share amounts)
 
September 30, 2019
 
December 31, 2018
Assets
 
 
 
Investments in real estate:
 
 
 
Land, buildings and improvements (a)
$
9,439,301

 
$
9,251,396

Net investments in direct financing leases
1,176,301

 
1,306,215

In-place lease intangible assets and other
2,111,601

 
2,009,628

Above-market rent intangible assets
911,940

 
925,797

Investments in real estate
13,639,143

 
13,493,036

Accumulated depreciation and amortization (b)
(1,914,233
)
 
(1,564,182
)
Assets held for sale, net (c)
104,013

 

Net investments in real estate
11,828,923

 
11,928,854

Equity investments in the Managed Programs and real estate (d)
315,641

 
329,248

Cash and cash equivalents
331,687

 
217,644

Due from affiliates
86,400

 
74,842

Other assets, net
590,124

 
711,507

Goodwill
930,864

 
920,944

Total assets
$
14,083,639

 
$
14,183,039

 
 
 
 
Liabilities and Equity
 
 
 
Debt:
 
 
 
Senior unsecured notes, net
$
4,302,892

 
$
3,554,470

Unsecured revolving credit facility
22,410

 
91,563

Non-recourse mortgages, net
1,771,887

 
2,732,658

Debt, net
6,097,189

 
6,378,691

Accounts payable, accrued expenses and other liabilities
470,540

 
403,896

Below-market rent and other intangible liabilities, net
207,655

 
225,128

Deferred income taxes
163,036

 
173,115

Dividends payable
180,797

 
172,154

Total liabilities
7,119,217

 
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; 172,276,402 and 165,279,642 shares, respectively, issued and outstanding
172

 
165

Additional paid-in capital
8,712,441

 
8,187,335

Distributions in excess of accumulated earnings
(1,506,795
)
 
(1,143,992
)
Deferred compensation obligation
37,263

 
35,766

Accumulated other comprehensive loss
(284,975
)
 
(254,996
)
Total stockholders’ equity
6,958,106

 
6,824,278

Noncontrolling interests
6,316

 
5,777

Total equity
6,964,422

 
6,830,055

Total liabilities and equity
$
14,083,639

 
$
14,183,039

________
(a)
Includes $83.0 million and $470.7 million of amounts attributable to operating properties as of September 30, 2019 and December 31, 2018, respectively.
(b)
Includes $895.4 million and $734.8 million of accumulated depreciation on buildings and improvements as of September 30, 2019 and December 31, 2018, respectively, and $1,018.9 million and $829.4 million of accumulated amortization on lease intangibles as of September 30, 2019 and December 31, 2018, respectively.
(c)
At September 30, 2019, we had one hotel operating property classified as Assets held for sale, net.
(d)
Our equity investments in real estate joint ventures totaled $191.7 million and $221.7 million as of September 30, 2019 and December 31, 2018, respectively. Our equity investments in the Managed Programs totaled $124.0 million and $107.6 million as of September 30, 2019 and December 31, 2018, respectively.


W. P. Carey Inc. 9/30/2019 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
 
September 30, 2019
 
June 30, 2019
 
September 30, 2018
Revenues
 
 
 
 
 
Real Estate:
 
 
 
 
 
Lease revenues
$
278,839

 
$
269,802

 
$
173,067

Lease termination income and other
14,377

 
6,304

 
1,981

Operating property revenues
9,538

 
15,436

 
4,282

 
302,754

 
291,542

 
179,330

Investment Management:
 
 
 
 
 
Asset management revenue
9,878

 
9,790

 
17,349

Reimbursable costs from affiliates
4,786

 
3,821

 
6,042

Structuring and other advisory revenue
587

 
58

 
6,663

 
15,251

 
13,669

 
30,054

 
318,005

 
305,211

 
209,384

Operating Expenses
 

 
 
 
 

Depreciation and amortization
109,517

 
113,632

 
67,825

Impairment charges
25,781

 

 

General and administrative
17,210

 
19,729

 
15,863

Reimbursable tenant costs
15,611

 
13,917

 
5,979

Property expenses, excluding reimbursable tenant costs
10,377

 
9,915

 
4,898

Operating property expenses
8,547

 
10,874

 
3,055

Reimbursable costs from affiliates
4,786

 
3,821

 
6,042

Stock-based compensation expense
4,747

 
4,936

 
2,475

Subadvisor fees (a)
1,763

 
1,650

 
3,127

Merger and other expenses (b)
70

 
696

 
1,673

 
198,409

 
179,170

 
110,937

Other Income and Expenses
 

 
 
 
 

Interest expense
(58,626
)
 
(59,719
)
 
(41,740
)
Other gains and (losses) (c)
(12,402
)
 
(671
)
 
8,875

Loss on change in control of interests (d)
(8,416
)
 

 

Equity in earnings of equity method investments in the Managed Programs
   and real estate
5,769

 
3,951

 
18,363

Gain (loss) on sale of real estate, net
71

 
(362
)
 
343

 
(73,604
)
 
(56,801
)
 
(14,159
)
Income before income taxes
45,992

 
69,240

 
84,288

Provision for income taxes
(4,157
)
 
(3,119
)
 
(2,715
)
Net Income
41,835

 
66,121

 
81,573

Net income attributable to noncontrolling interests
(496
)
 
(83
)
 
(4,225
)
Net Income Attributable to W. P. Carey
$
41,339

 
$
66,038

 
$
77,348

 
 
 
 
 
 
Basic Earnings Per Share
$
0.24

 
$
0.39

 
$
0.71

Diluted Earnings Per Share
$
0.24

 
$
0.38

 
$
0.71

Weighted-Average Shares Outstanding
 

 
 
 
 

Basic
172,235,066

 
171,304,112

 
108,073,969

Diluted
172,486,506

 
171,490,625

 
108,283,666

 
 
 
 
 
 
Dividends Declared Per Share
$
1.036

 
$
1.034

 
$
1.025



W. P. Carey Inc. 9/30/2019 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)
 
Nine Months Ended September 30,
 
2019
 
2018
Revenues
 
 
 
Real Estate:
 
 
 
Lease revenues
$
811,580

 
$
510,866

Operating property revenues
40,970

 
16,365

Lease termination income and other
23,951

 
3,603

 
876,501

 
530,834

Investment Management:
 
 
 
Asset management revenue
29,400

 
51,602

Reimbursable costs from affiliates
12,475

 
16,883

Structuring and other advisory revenue
3,163

 
13,018

 
45,038

 
81,503

 
921,539

 
612,337

Operating Expenses
 

 
 

Depreciation and amortization
335,528

 
198,119

General and administrative
58,224

 
50,888

Reimbursable tenant costs
42,699

 
17,931

Property expenses, excluding reimbursable tenant costs
30,204

 
14,454

Operating property expenses
30,015

 
12,306

Impairment charges
25,781

 
4,790

Stock-based compensation expense
13,848

 
14,392

Reimbursable costs from affiliates
12,475

 
16,883

Subadvisor fees (a)
5,615

 
7,014

Merger and other expenses (b)
912

 
4,328

 
555,301

 
341,105

Other Income and Expenses
 

 
 

Interest expense
(179,658
)
 
(121,125
)
Equity in earnings of equity method investments in the Managed Programs
   and real estate
15,211

 
46,246

Other gains and (losses)
(12,118
)
 
16,698

Loss on change in control of interests (d)
(8,416
)
 

Gain on sale of real estate, net
642

 
18,987

 
(184,339
)
 
(39,194
)
Income before income taxes
181,899

 
232,038

Provision for income taxes
(5,147
)
 
(2,975
)
Net Income
176,752

 
229,063

Net income attributable to noncontrolling interests
(881
)
 
(10,760
)
Net Income Attributable to W. P. Carey
$
175,871

 
$
218,303

 
 
 
 
Basic Earnings Per Share
$
1.03

 
$
2.02

Diluted Earnings Per Share
$
1.03

 
$
2.01

Weighted-Average Shares Outstanding
 

 
 

Basic
170,276,085

 
108,063,826

Diluted
170,545,665

 
108,253,841

 
 
 
 
Dividends Declared Per Share
$
3.102

 
$
3.060

__________
(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 November 1, 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 September 30, 2019 is primarily comprised of realized gains on foreign currency exchange derivatives of $4.9 million, loss on extinguishment of debt of $(10.6) million, interest earned from cash in bank and on loans to affiliates of $1.1 million and net losses on foreign currency transactions of $(7.6) million.
(d)
Amounts for the three and nine months ended September 30, 2019 represent a loss recognized on the purchase of the remaining interest in an investment from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. We recognized this loss because we identified certain measurement period adjustments during the third quarter of 2019 that impacted the provisional accounting for this investment.

W. P. Carey Inc. 9/30/2019 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
 
September 30, 2019
 
June 30, 2019
 
September 30, 2018
Net income attributable to W. P. Carey
$
41,339

 
$
66,038

 
$
77,348

Adjustments:
 
 
 
 
 
Depreciation and amortization of real property
108,279

 
112,360

 
66,493

Impairment charges
25,781

 

 

Loss on change in control of interests (a)
8,416

 

 

(Gain) loss on sale of real estate, net
(71
)
 
362

 
(343
)
Proportionate share of adjustments to equity in net income of partially owned entities (b)
4,210

 
4,489

 
(651
)
Proportionate share of adjustments for noncontrolling interests (c)
(4
)
 
(31
)
 
(2,693
)
Total adjustments
146,611

 
117,180

 
62,806

FFO (as defined by NAREIT) Attributable to W. P. Carey (d)
187,950

 
183,218

 
140,154

Adjustments:
 
 
 
 
 
Other (gains) and losses (e)
18,618

 
5,724

 
(5,148
)
Above- and below-market rent intangible lease amortization, net
14,969

 
16,450

 
13,224

Straight-line and other rent adjustments
(6,370
)
 
(7,975
)
 
(3,431
)
Stock-based compensation
4,747

 
4,936

 
2,475

Amortization of deferred financing costs
2,991

 
2,774

 
1,901

Tax (benefit) expense – deferred and other (f)
(1,039
)
 
(933
)
 
3,918

Other amortization and non-cash items
379

 
1,706

 
467

Merger and other expenses (g)
70

 
696

 
1,673

Proportionate share of adjustments to equity in net income of partially owned entities (b)
1,920

 
1,876

 
3,860

Proportionate share of adjustments for noncontrolling interests (c)
(12
)
 
(7
)
 
664

Total adjustments
36,273

 
25,247

 
19,603

AFFO Attributable to W. P. Carey (d)
$
224,223

 
$
208,465

 
$
159,757

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (d)
$
187,950

 
$
183,218

 
$
140,154

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (d)
$
1.09

 
$
1.07

 
$
1.29

AFFO attributable to W. P. Carey (d)
$
224,223

 
$
208,465

 
$
159,757

AFFO attributable to W. P. Carey per diluted share (d)
$
1.30

 
$
1.22

 
$
1.48

Diluted weighted-average shares outstanding
172,486,506

 
171,490,625

 
108,283,666























W. P. Carey Inc. 9/30/2019 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
 
September 30, 2019
 
June 30, 2019
 
September 30, 2018
Net income from Real Estate attributable to W. P. Carey
$
33,556

 
$
60,768

 
$
51,009

Adjustments:
 
 
 
 
 
Depreciation and amortization of real property
108,279

 
112,360

 
66,493

Impairment charges
25,781

 

 

Loss on change in control of interests (a)
8,416

 

 

(Gain) loss on sale of real estate, net
(71
)
 
362

 
(343
)
Proportionate share of adjustments to equity in net income of partially owned entities (b)
4,210

 
4,489

 
(651
)
Proportionate share of adjustments for noncontrolling interests (c)
(4
)
 
(31
)
 
(2,693
)
Total adjustments
146,611

 
117,180

 
62,806

FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (d)
180,167

 
177,948

 
113,815

Adjustments:
 
 
 
 
 
Other (gains) and losses (e)
18,956

 
5,888

 
(5,084
)
Above- and below-market rent intangible lease amortization, net
14,969

 
16,450

 
13,224

Straight-line and other rent adjustments
(6,370
)
 
(7,975
)
 
(3,431
)
Stock-based compensation
3,435

 
3,482

 
1,380

Amortization of deferred financing costs
2,991

 
2,774

 
1,901

Tax benefit – deferred and other
(1,414
)
 
(853
)
 
(3,556
)
Other amortization and non-cash items
180

 
1,510

 
64

Merger and other expenses (g)
70

 
696

 
1,673

Proportionate share of adjustments to equity in net income of partially owned entities (b)
(113
)
 
(89
)
 
519

Proportionate share of adjustments for noncontrolling interests (c)
(12
)
 
(7
)
 
664

Total adjustments
32,692

 
21,876

 
7,354

AFFO Attributable to W. P. Carey – Real Estate (d)
$
212,859

 
$
199,824

 
$
121,169

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (d)
$
180,167

 
$
177,948

 
$
113,815

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

 
$
1.04

 
$
1.05

AFFO attributable to W. P. Carey – Real Estate (d)
$
212,859

 
$
199,824

 
$
121,169

AFFO attributable to W. P. Carey per diluted share – Real Estate (d)
$
1.23

 
$
1.17

 
$
1.12

Diluted weighted-average shares outstanding
172,486,506

 
171,490,625

 
108,283,666



W. P. Carey Inc. 9/30/2019 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)
 
Nine Months Ended September 30,
 
2019
 
2018
Net income attributable to W. P. Carey
$
175,871

 
$
218,303

Adjustments:
 
 
 
Depreciation and amortization of real property
331,742

 
194,146

Impairment charges
25,781

 
4,790

Loss on change in control of interests (a)
8,416

 

Gain on sale of real estate, net
(642
)
 
(18,987
)
Proportionate share of adjustments to equity in net income of partially owned entities (b)
13,123

 
1,503

Proportionate share of adjustments for noncontrolling interests (c)
(65
)
 
(8,204
)
Total adjustments
378,355

 
173,248

FFO (as defined by NAREIT) Attributable to W. P. Carey (d)
554,226

 
391,551

Adjustments:
 
 
 
Above- and below-market rent intangible lease amortization, net
47,346

 
37,329

Other (gains) and losses (e)
29,272

 
(6,704
)
Straight-line and other rent adjustments
(20,603
)
 
(8,364
)
Stock-based compensation
13,848

 
14,392

Amortization of deferred financing costs
8,489

 
3,612

Tax benefit – deferred and other (f)
(6,900
)
 
(5,209
)
Other amortization and non-cash items
2,652

 
453

Merger and other expenses (g)
912

 
4,328

Proportionate share of adjustments to equity in net income of partially owned entities (b)
5,257

 
9,247

Proportionate share of adjustments for noncontrolling interests (c)
(44
)
 
91

Total adjustments
80,229

 
49,175

AFFO Attributable to W. P. Carey (d)
$
634,455

 
$
440,726

 
 
 
 
Summary
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (d)
$
554,226

 
$
391,551

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (d)
$
3.25

 
$
3.62

AFFO attributable to W. P. Carey (d)
$
634,455

 
$
440,726

AFFO attributable to W. P. Carey per diluted share (d)
$
3.72

 
$
4.07

Diluted weighted-average shares outstanding
170,545,665

 
108,253,841





























W. P. Carey Inc. 9/30/2019 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)
 
Nine Months Ended September 30,
 
2019
 
2018
Net income from Real Estate attributable to W. P. Carey
$
147,732

 
$
155,625

Adjustments:
 
 
 
Depreciation and amortization of real property
331,742

 
194,146

Impairment charges
25,781

 
4,790

Loss on change in control of interests (a)
8,416

 

Gain on sale of real estate, net
(642
)
 
(18,987
)
Proportionate share of adjustments to equity in net income of partially owned entities (b)
13,123

 
1,503

Proportionate share of adjustments for noncontrolling interests (c)
(65
)
 
(8,204
)
Total adjustments
378,355

 
173,248

FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (d)
526,087

 
328,873

Adjustments:
 
 
 
Above- and below-market rent intangible lease amortization, net
47,346

 
37,329

Other (gains) and losses (e)
28,773

 
(6,758
)
Straight-line and other rent adjustments
(20,603
)
 
(8,364
)
Stock-based compensation
9,717

 
7,676

Amortization of deferred financing costs
8,489

 
3,612

Other amortization and non-cash items
2,192

 
72

Tax benefit – deferred and other
(1,777
)
 
(14,841
)
Merger and other expenses (g)
912

 
4,328

Proportionate share of adjustments to equity in net income of partially owned entities (b)
(87
)
 
547

Proportionate share of adjustments for noncontrolling interests (c)
(44
)
 
91

Total adjustments
74,918

 
23,692

AFFO Attributable to W. P. Carey – Real Estate (d)
$
601,005

 
$
352,565

 
 
 
 
Summary
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (d)
$
526,087

 
$
328,873

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (d)
$
3.08

 
$
3.04

AFFO attributable to W. P. Carey – Real Estate (d)
$
601,005

 
$
352,565

AFFO attributable to W. P. Carey per diluted share – Real Estate (d)
$
3.52

 
$
3.26

Diluted weighted-average shares outstanding
170,545,665

 
108,253,841

__________
(a)
Amounts for the three and nine months ended September 30, 2019 represent a loss recognized on the purchase of the remaining interest in a real estate investment from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. We recognized this loss because we identified certain measurement period adjustments during the third quarter of 2019 that impacted the provisional accounting for this investment.
(b)
Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Equity in earnings of equity method investments in the Managed Programs and real estate on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis.
(c)
Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
(d)
FFO and AFFO are non-GAAP measures. See below for a description of FFO and AFFO.
(e)
AFFO amount for the three months ended September 30, 2019 is primarily comprised of unrealized losses on derivatives of $(0.4) million, losses from foreign currency movements of $(7.6) million and loss on extinguishment of debt of $(10.6) million. Real Estate AFFO amount for the three months ended September 30, 2019 is primarily comprised of unrealized losses on derivatives of $(0.4) million, losses from foreign currency movements of $(7.5) million and loss on extinguishment of debt of $(10.6) 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.
(f)
Amount for the nine months ended September 30, 2019 includes a current tax benefit, which is excluded from AFFO as it was incurred as a result of the CPA:17 Merger.
(g)
Amounts are primarily comprised of costs incurred in connection with the CPA:17 Merger.

W. P. Carey Inc. 9/30/2019 Earnings Release 8-K – 13


Non-GAAP Financial Disclosure

Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)

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.

We also modify the NAREIT computation of FFO to adjust GAAP net income 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 that are currently not engaged in acquisitions, mergers and restructuring, which are not part of our normal business operations. AFFO also reflects adjustments for unconsolidated partnerships and jointly owned investments. We use AFFO as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies and determine executive compensation.

We believe that AFFO is a useful supplemental measure for investors to consider as we believe it will help them to better assess the sustainability of our operating performance without the potentially distorting impact of these short-term fluctuations. However, there are limits on the usefulness of AFFO to investors. For example, impairment charges and unrealized foreign currency losses that we exclude may become actual realized losses upon the ultimate disposition of the properties in the form of lower cash proceeds or other considerations. We use our FFO and AFFO measures as supplemental financial measures of operating performance. We do not use our FFO and AFFO measures as, nor should they be considered to be, alternatives to net income computed under GAAP, or as alternatives to net cash provided by operating activities computed under GAAP, or as indicators of our ability to fund our cash needs.


W. P. Carey Inc. 9/30/2019 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
Third Quarter 2019


400764239_wpcsuppimage201904102a02.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 – Third 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 – Third Quarter 2019
Summary Metrics
As of or for the three months ended September 30, 2019.
Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment
 
 
 
 
 
 
 
Owned
Real Estate
 
Investment Management
 
Total
Revenues, including reimbursable costs – consolidated ($000s)
 
$
302,754

 
$
15,251

 
$
318,005

Net income attributable to W. P. Carey ($000s)
 
33,556

 
7,783

 
41,339

Net income attributable to W. P. Carey per diluted share
 
0.19

 
0.05

 
0.24

Normalized pro rata cash NOI from real estate ($000s) (a) (b)
 
271,132

 
N/A

 
271,132

Adjusted EBITDA ($000s) (a) (b)
 
274,796

 
13,122

 
287,918

AFFO attributable to W. P. Carey ($000s) (a) (b)
 
212,859

 
11,364

 
224,223

AFFO attributable to W. P. Carey per diluted share (a) (b)
 
1.23

 
0.07

 
1.30

 
 
 
 
 
 
 
 
 
 
Dividends declared per share – third quarter
 
 
 
 
 
1.036

Dividends declared per share – third quarter annualized
 
 
 
 
 
4.144

Dividend yield – annualized, based on quarter end share price of $89.50
 
 
 
 
 
4.6
%
Dividend payout ratio – for the nine months ended September 30, 2019 (c)
 
 
 
 
 
83.4
%
 
 
 
 
 
 
 
 
 
 
Balance Sheet and Capitalization
 
 
 
 
 
 
 
 
 
Equity market capitalization – based on quarter end share price of $89.50 ($000s)
 
 
 
 
 
$
15,418,738

Pro rata net debt ($000s) (d)
 
 
 
 
 
 
 
 
6,021,841

Enterprise value ($000s)
 
 
 
 
 
 
 
 
21,440,579

 
 
 
 
 
 
 
 
 
 
Total consolidated debt ($000s)
 
 
 
 
 
 
 
 
6,097,189

Gross assets ($000s) (e)
 
 
 
 
 
 
 
 
14,978,989

Liquidity ($000s) (f)
 
 
 
 
 
 
 
 
1,809,277

 
 
 
 
 
 
 
 
 
 
Pro rata net debt to enterprise value (b)
 
 
 
 
 
 
 
 
28.1
%
Pro rata net debt to adjusted EBITDA (annualized) (a) (b)
 
 
 
 
 
5.2x

Total consolidated debt to gross assets
 
 
 
 
 
 
 
 
40.7
%
 
 
 
 
 
 
 
 
 
 
Weighted-average interest rate (b)
 
 
 
 
 
 
 
 
3.3
%
Weighted-average debt maturity (years) (b)
 
 
 
 
 
 
 
 
5.3

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

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

 
 
 
 
 
 
 
 
 
 
Real Estate Portfolio (Pro Rata)
 
 
 
 
 
 
 
 
 
ABR ($000s) (g)
 
 
 
 
 
 
 
 
$
1,117,381

Number of net-leased properties
 
 
 
 
 
 
 
 
1,204

Number of operating properties (h)
 
 
 
 
 
 
 
 
21

Number of tenants – net-leased properties
 
 
 
 
 
 
 
 
324

 
 
 
 
 
 
 
 
 
 
ABR from investment grade tenants as a % of total ABR – net-leased properties (i)
 
 
 
 
 
29.7
%
 
 
 
 
 
 
 
 
 
 
Net-leased properties – square footage (millions)
 
 
 
 
 
 
 
 
137.5

 
 
 
 
 
 
 
 
 
 
Occupancy – net-leased properties
 
 
 
 
 
 
 
 
98.4
%
Weighted-average lease term (years)
 
 
 
 
 
 
 
 
10.3

 
 
 
 
 
 
 
 
 
 
Maximum commitment for capital investment projects expected to be completed during 2019 ($000s)
 
 
 
$
114,409

Acquisitions and completed capital investment projects – third quarter ($000s)
 
 
 
61,689

Dispositions – third quarter ($000s)
 
 
 
 
 
 
 
 
14,132

________
(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 $632.8 million and above-market rent intangible assets of $386.1 million.

400764239_wpclogoa01a01a33.jpg 
 
Investing for the long runTM | 1


W. P. Carey Inc.
Overview – Third 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 19 self-storage properties and two hotels.
(i)
Percentage of portfolio is based on ABR, as of September 30, 2019. Includes tenants or guarantors with investment grade ratings (20.9%) and subsidiaries of non-guarantor parent companies with investment grade ratings (8.8%). Investment grade refers to an entity with a rating of BBB- or higher from Standard & Poor’s Ratings Services or Baa3 or higher from Moody’s Investors Service. See the Terms and Definitions section in the Appendix for a description of ABR.

400764239_wpclogoa01a01a33.jpg 
 
Investing for the long runTM | 2


W. P. Carey Inc.
Overview – Third Quarter 2019
Components of Net Asset Value
Dollars in thousands, except per share amounts.
Real Estate
 
 
Three Months Ended
Sep. 30, 2019
 
Annualized
Normalized pro rata cash NOI (a) (b)
 
 
$
271,132

 
$
1,084,528

 
 
 
 
 
 
Investment Management
 
 
 
 
 
Adjusted EBITDA (a) (b)
 
 
13,122

 
52,488

Selected Components of Adjusted EBITDA:
 
 
 
 
 
Asset management revenue (c)
 
 
9,878

 
39,512

Structuring and other advisory revenue (c)
 
 
587

 
N/A

Operating partnership interests in real estate cash flow of Managed REITs (d)
 
4,642

 
18,568

Back-end fees and interests associated with the Managed Programs
 
 
 
 
 
 
 
 
Balance Sheet – Selected Information (Consolidated Unless Otherwise Stated)
 
As of Sep. 30, 2019
Assets
 
 
 
 
 
Book value of real estate excluded from normalized pro rata cash NOI (e)
 
 
 
$
232,589

Cash and cash equivalents
 
 
 
 
331,687

Due from affiliates
 
 
 
 
86,400

Other assets, net:
 
 
 
 
 
Straight-line rent adjustments
 
 
 
 
$
125,814

Investment in shares of a cold storage operator
 
 
 
 
110,046

Loans receivable
 
 
 
 
57,737

Restricted cash, including escrow
 
 
 
 
57,042

Securities and derivatives
 
 
 
 
45,012

Deferred charges
 
 
 
 
39,860

Accounts receivable
 
 
 
 
38,761

Taxes receivable
 
 
 
 
37,110

Investment in shares of Guggenheim Credit Income Fund
 
 
 
 
19,087

Deposits for construction and dispositions
 
 
 
 
16,075

Prepaid expenses
 
 
 
 
12,842

Deferred income taxes
 
 
 
 
10,192

Office lease right-of-use assets, net (f)
 
 
 
 
8,868

Other intangible assets, net
 
 
 
 
8,767

Leasehold improvements, furniture and fixtures
 
 
 
1,733

Other
 
 
 
 
1,178

Total other assets, net
 
 
 
 
$
590,124

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Total pro rata debt outstanding (b)
 
 
 
 
$
6,353,528

Dividends payable
 
 
 
 
180,797

Deferred income taxes
 
 
 
 
163,036

Accounts payable, accrued expenses and other liabilities:
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
$
156,203

Prepaid and deferred rents
 
 
 
 
104,645

Operating lease liabilities (f)
 
 
 
 
87,985

Accrued taxes payable
 
 
 
 
41,366

Tenant security deposits
 
 
 
 
40,148

Securities and derivatives
 
 
 
 
5,734

Other
 
 
 
 
34,459

Total accounts payable, accrued expenses and other liabilities
 
 
 
 
$
470,540


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Investing for the long runTM | 3


W. P. Carey Inc.
Overview – Third 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
3.8
%
 
5,588,693

 
$
8.91

(h) 
$
49,795

CWI 1
3.7
%
 
5,301,305

 
10.39

(h) 
55,081

CWI 2
3.5
%
 
3,261,928

 
11.41

(h) 
37,219

CESH
2.4
%
 
3,492

 
1,000.00

(i) 
3,492

 
 
 
 
 
 
 
$
145,587

________
(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 and CWI 2.
(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 September 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 $112.2 million of land lease right-of-use assets included in In-place lease intangible assets and other, $8.9 million of office lease right-of-use assets in Other assets, net, and $88.0 million of corresponding operating lease liabilities for certain operating office and land lease arrangements in Accounts payable, accrued expenses and other liabilities as of September 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
Third Quarter 2019












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Investing for the long runTM | 5


W. P. Carey Inc.
Financial Results – Third Quarter 2019
Consolidated Statements of Income – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Sep. 30, 2019
 
Jun. 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
 
Sep. 30, 2018
Revenues
 
 
 
 
 
 
 
 
 
Real Estate:
 
 
 
 
 
 
 
 
 
Lease revenues
$
278,839

 
$
269,802

 
$
262,939

 
$
233,632

 
$
173,067

Lease termination income and other
14,377

 
6,304

 
3,270

 
2,952

 
1,981

Operating property revenues
9,538

 
15,436

 
15,996

 
11,707

 
4,282

 
302,754

 
291,542

 
282,205

 
248,291

 
179,330

Investment Management:
 
 
 
 
 
 
 
 
 
Asset management revenue
9,878

 
9,790

 
9,732

 
11,954

 
17,349

Reimbursable costs from affiliates
4,786

 
3,821

 
3,868

 
5,042

 
6,042

Structuring and other advisory revenue
587

 
58

 
2,518

 
8,108

 
6,663

 
15,251

 
13,669

 
16,118

 
25,104

 
30,054

 
318,005

 
305,211

 
298,323

 
273,395

 
209,384

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
109,517

 
113,632

 
112,379

 
93,321

 
67,825

Impairment charges
25,781

 

 

 

 

General and administrative
17,210

 
19,729

 
21,285

 
17,449

 
15,863

Reimbursable tenant costs
15,611

 
13,917

 
13,171

 
10,145

 
5,979

Property expenses, excluding reimbursable tenant costs
10,377

 
9,915

 
9,912

 
8,319

 
4,898

Operating property expenses
8,547

 
10,874

 
10,594

 
7,844

 
3,055

Reimbursable costs from affiliates
4,786

 
3,821

 
3,868

 
5,042

 
6,042

Stock-based compensation expense
4,747

 
4,936

 
4,165

 
3,902

 
2,475

Subadvisor fees (a)
1,763

 
1,650

 
2,202

 
2,226

 
3,127

Merger and other expenses (b)
70

 
696

 
146

 
37,098

 
1,673

 
198,409

 
179,170

 
177,722

 
185,346

 
110,937

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(58,626
)
 
(59,719
)
 
(61,313
)
 
(57,250
)
 
(41,740
)
Other gains and (losses) (c)
(12,402
)
 
(671
)
 
955

 
13,215

 
8,875

(Loss) gain on change in control of interests (d) (e)
(8,416
)
 

 

 
47,814

 

Equity in earnings of equity method investments in the Managed Programs and real estate
5,769

 
3,951

 
5,491

 
15,268

 
18,363

Gain (loss) on sale of real estate, net
71

 
(362
)
 
933

 
99,618

 
343

 
(73,604
)
 
(56,801
)
 
(53,934
)
 
118,665

 
(14,159
)
Income before income taxes
45,992

 
69,240

 
66,667

 
206,714

 
84,288

(Provision for) benefit from income taxes
(4,157
)
 
(3,119
)
 
2,129

 
(11,436
)
 
(2,715
)
Net Income
41,835

 
66,121

 
68,796

 
195,278

 
81,573

Net income attributable to noncontrolling interests
(496
)
 
(83
)
 
(302
)
 
(2,015
)
 
(4,225
)
Net Income Attributable to W. P. Carey
$
41,339

 
$
66,038

 
$
68,494

 
$
193,263

 
$
77,348

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
0.24

 
$
0.39

 
$
0.41

 
$
1.33

 
$
0.71

Diluted Earnings Per Share
$
0.24

 
$
0.38