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Section 1: 8-K (8-K)

Document
false0001025378 0001025378 2020-07-31 2020-07-31


 

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): July 31, 2020
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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 July 31, 2020, W. P. Carey Inc. (together with its predecessors, the “Company”) issued an earnings release announcing its financial results for the quarter ended June 30, 2020. 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 July 31, 2020, the Company made available certain unaudited supplemental financial information at June 30, 2020. Copies of this supplemental information are attached as Exhibits 99.2 and 99.3.

The information furnished pursuant to this Item 7.01, including Exhibits 99.2 and 99.3, shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that Section, and shall not be incorporated by reference into any filing under the Securities Act or the Exchange Act.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.
 
Description
99.1
 
 
 
 
99.2
 
 
 
 
99.3
 
 
 
 
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document).






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:
July 31, 2020
By:
/s/ ToniAnn Sanzone
 
 
 
ToniAnn Sanzone
 
 
 
Chief Financial Officer


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1

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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 Second Quarter 2020 Financial Results


New York, NY – July 31, 2020 – 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, 2020.

Total Company
Net income attributable to W. P. Carey of $105.3 million, or $0.61 per diluted share
AFFO of $197.9 million, or $1.14 per diluted share
Quarterly cash dividend raised to $1.042 per share, equivalent to an annualized dividend rate of $4.168 per share
2020 AFFO guidance remains withdrawn

Business Segments

Real Estate
Overall collection rate of 96% for 2020 second quarter rent due and 98% for July rent due
Segment net income attributable to W. P. Carey of $81.8 million
Segment AFFO of $191.7 million, or $1.10 per diluted share
Investment volume of $148.2 million, bringing investment volume for the first half of 2020 to $403.9 million
Active capital investment projects of $42.4 million expected to be completed in 2020, of which $30.3 million remains to be funded
Portfolio occupancy of 98.9%
Weighted-average lease term of 10.7 years


W. P. Carey Inc. 6/30/2020 Earnings Release 8-K – 1


Investment Management
Segment net income attributable to W. P. Carey of $23.5 million
Segment AFFO of $6.2 million, or $0.04 per diluted share
CWI 1 and CWI 2 merger and management internalization closed in April 2020

Balance Sheet and Capitalization
Completed an underwritten public offering of common stock under forward sale agreements for gross proceeds of approximately $382 million, of which $100 million was settled during the second quarter
Well-positioned balance sheet, with significant liquidity, limited near-term debt maturities and minimal funding commitments remaining on the Company’s capital investment projects


MANAGEMENT COMMENTARY

“Our second quarter results reflect the consistently strong rent collections we achieved throughout the period, which have continued into July, and are a direct result of our disciplined investment process and diversified approach,” said Jason Fox, Chief Executive Officer of W. P. Carey. “With substantial liquidity, enhanced by the equity forward we successfully completed in June, we’re ideally positioned and motivated to dial up investment activity in the second half of the year.”


QUARTERLY FINANCIAL RESULTS

Revenues

Total Company: Revenues, including reimbursable costs, for the 2020 second quarter totaled $290.5 million, down 4.8% from $305.2 million for the 2019 second quarter.

Real Estate: Real Estate revenues, including reimbursable costs, for the 2020 second quarter were $283.6 million, down 2.7% from $291.5 million for the 2019 second quarter. Lease revenues increased, primarily through the combined impact of net acquisitions, rent escalations and the conversion of certain self-storage operating properties to net leases commencing June 1, 2019, which was partly offset by the impact of the COVID-19 pandemic on rent collections during the 2020 second quarter. In addition to the conversion of self-storage properties to net leases, operating revenues also reflected the disposition of a hotel operating property in the 2020 first quarter. Lease termination and other income included an elevated level of lease-related settlements in the 2019 second quarter.

Investment Management: Investment Management revenues, including reimbursable costs, for the 2020 second quarter were $6.9 million, down 49.6% from $13.7 million for the 2019 second quarter, due primarily to lower asset management revenues resulting from the management internalization by CWI 1 and CWI 2.

Net Income Attributable to W. P. Carey

Net income attributable to W. P. Carey for the 2020 second quarter was $105.3 million, up 59.5% from $66.0 million for the 2019 second quarter. Net income from Investment Management attributable to W. P. Carey increased, due primarily to a non-cash net gain of $33.0 million recognized within equity earnings during the current year period upon the redemption of the Company’s special general partner interests in CWI 1 and CWI 2 in connection with the CWI 1 and CWI 2 merger. Net income from Real Estate attributable to W. P. Carey increased, due primarily to the impact of net acquisitions and lower interest expense.


W. P. Carey Inc. 6/30/2020 Earnings Release 8-K – 2


Adjusted Funds from Operations (AFFO)

AFFO for the 2020 second quarter was $1.14 per diluted share, down 6.6% from $1.22 per diluted share for the 2019 second quarter. AFFO from the Company’s Real Estate segment (Real Estate AFFO) decreased due primarily to the impact of COVID-19 on rent collections during the 2020 second quarter, partly offset by the accretive impact of net investment activity and rent escalations. AFFO from the Company’s Investment Management segment reflected the Company’s continued move out of Investment Management through the management internalization by CWI 1 and CWI 2, resulting in lower asset management fees and distributions from the Company’s special general partner interests, which was substantially offset by the reallocation of general and administrative expenses to the Company’s Real Estate segment.

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 11, 2020 the Company’s Board of Directors declared a quarterly cash dividend of $1.042 per share, equivalent to an annualized dividend rate of $4.168 per share. The dividend was paid on July 15, 2020 to stockholders of record as of June 30, 2020.


AFFO GUIDANCE

The Company’s previous 2020 AFFO guidance remains withdrawn.


BALANCE SHEET AND CAPITALIZATION

Forward Equity Offering

As previously announced, on June 22, 2020, the Company completed an underwritten public offering of an aggregate of 5,462,500 shares of common stock under forward sale agreements (which included the full exercise of the underwriters' option to purchase additional shares) at a gross offering price of $70.00 per share, which was sold on a forward basis at an initial forward sale price of $68.35 per share in connection with certain forward sale agreements, for gross proceeds of approximately $382 million (anticipated net proceeds of approximately $373 million at closing).

During the 2020 second quarter, the Company settled a portion of the forward sale agreements, issuing 1,463,500 shares for net proceeds of $100 million. The Company has the ability to settle the remaining 3,999,000 shares under the forward sale agreements by December 17, 2021, for anticipated net proceeds of approximately $269 million as of June 30, 2020.

Balance Sheet Positioning

The Company’s balance sheet remained well-positioned at the end of the 2020 second quarter, with significant liquidity, limited near-term debt maturities and minimal funding commitments remaining on its capital investment projects, as follows:

approximately $2.2 billion of total liquidity, including $1.8 billion of capacity available on the Company’s Senior Unsecured Credit Facility, available net proceeds under the forward sale agreements of $269 million and cash and cash equivalents of $137 million;

$110 million of non-recourse (mortgage) debt due in 2020 and $241 million due in 2021;

no unsecured debt maturities until 2023; and

$30.3 million remaining to be funded on active capital investment projects expected to be completed in 2020.



W. P. Carey Inc. 6/30/2020 Earnings Release 8-K – 3


REAL ESTATE

COVID-19 Update on Rent Collections

The Company received 96% of contractual base rent that was due in the 2020 second quarter and 98% of contractual base rent that was due in July.

2020 second quarter collection rates by property type were:
Industrial
98%
Warehouse
94%
Office
99%
Retail
98%
Fitness, movie theaters and restaurants
37%
Self Storage (net lease)
100%
Other
98%

2020 second quarter collection rates by geography were:
U.S.
96%
Europe
97%
Other
100%

Note: Given the significant uncertainty regarding the duration and severity of the impact of COVID-19, the Company is unable to predict the impact COVID-19 will have on its tenants’ continued ability to pay rent. Therefore, information provided regarding historical rent collections should not serve as an indication of expected future rent collections. Additional details regarding the Company’s update relating to COVID-19 can be found in a presentation furnished as Exhibit 99.3 of the Current Report on Form 8-K filed on July 31, 2020.

Investments

During the 2020 second quarter, the Company completed three capital investment projects at a total cost of $148.2 million, bringing total investment volume for the six months ended June 30, 2020 to $403.9 million.

As of June 30, 2020, the Company had six capital investment projects outstanding for an expected total investment of approximately $170.9 million, of which three projects totaling $42.4 million (with $30.3 million remaining to be funded) are currently expected to be completed during 2020.

Dispositions

During the 2020 second quarter, the Company did not dispose of any properties. Total disposition proceeds for the six months ended June 30, 2020 were $116.3 million.

Composition

As of June 30, 2020, the Company’s net lease portfolio consisted of 1,216 properties, comprising 142 million square feet leased to 352 tenants, with a weighted-average lease term of 10.7 years and an occupancy rate of 98.9%. In addition, the Company owned 19 self-storage operating properties and one hotel operating property, totaling approximately 1.4 million square feet.



W. P. Carey Inc. 6/30/2020 Earnings Release 8-K – 4


INVESTMENT MANAGEMENT

Merger and Internalization of CWI 1 and CWI 2

The Carey Watermark Investors Incorporated (CWI 1) and Carey Watermark Investors 2 Incorporated (CWI 2) merger was approved by their stockholders on April 8, 2020 and closed on April 13, 2020, with CWI 2 as the surviving entity. In connection with the merger, the Company entered into an internalization agreement and a transition services agreement. Following the close of the merger, CWI 2 was renamed Watermark Lodging Trust, Inc., and the Company received 1,300,000 shares of CWI 2 preferred stock with a fair value of $46.3 million and 2,840,549 shares in CWI 2 common stock with a fair value of $11.6 million.


* * * * *


Supplemental Information

The Company has provided supplemental unaudited financial and operating information regarding the 2020 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 July 31, 2020.


* * * * *


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, July 31, 2020 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 $18 billion and a diversified portfolio of operationally-critical commercial real estate that includes 1,216 net lease properties covering approximately 142 million square feet as of June 30, 2020. 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. 6/30/2020 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 regarding W. P. Carey’s potential investment activity in the second half of 2020. These statements are based on the current expectations of our management and it is important to note that our actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Other unknown or unpredictable risks or uncertainties, like the risks related to the effects of pandemics and global outbreaks of contagious diseases or the fear of such outbreaks (such as the current COVID-19 pandemic) and those additional risk factors discussed in reports that we have filed with the SEC could also have material adverse effects on our future results, performance or achievements. 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 II, Item 1A. Risk Factors in W. P. Carey’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 and Part I, Item 1A. Risk Factors in W. P. Carey’s Annual Report on Form 10-K for the year ended December 31, 2019. 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. 6/30/2020 Earnings Release 8-K – 6


W. P. CAREY INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share amounts)
 
June 30, 2020
 
December 31, 2019
Assets
 
 
 
Investments in real estate:
 
 
 
Land, buildings and improvements (a)
$
10,287,575

 
$
9,856,191

Net investments in direct financing leases
752,630

 
896,549

In-place lease intangible assets and other
2,197,714

 
2,186,851

Above-market rent intangible assets
896,051

 
909,139

Investments in real estate
14,133,970

 
13,848,730

Accumulated depreciation and amortization (b)
(2,257,551
)
 
(2,035,995
)
Assets held for sale, net (c)

 
104,010

Net investments in real estate
11,876,419

 
11,916,745

Equity investments in the Managed Programs and real estate (d)
284,643

 
324,004

Cash and cash equivalents
137,157

 
196,028

Due from affiliates
11,074

 
57,816

Other assets, net
747,878

 
631,637

Goodwill
898,842

 
934,688

Total assets
$
13,956,013

 
$
14,060,918

 
 
 
 
Liabilities and Equity
 
 
 
Debt:
 
 
 
Senior unsecured notes, net
$
4,384,879

 
$
4,390,189

Unsecured term loans, net
290,827

 

Unsecured revolving credit facility
22,366

 
201,267

Non-recourse mortgages, net
1,424,195

 
1,462,487

Debt, net
6,122,267

 
6,053,943

Accounts payable, accrued expenses and other liabilities
515,811

 
487,405

Below-market rent and other intangible liabilities, net
197,223

 
210,742

Deferred income taxes
134,519

 
179,309

Dividends payable
183,738

 
181,346

Total liabilities
7,153,558

 
7,112,745

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

 

Common stock, $0.001 par value, 450,000,000 shares authorized; 173,890,427 and 172,278,242 shares, respectively, issued and outstanding
174

 
172

Additional paid-in capital
8,815,108

 
8,717,535

Distributions in excess of accumulated earnings
(1,765,892
)
 
(1,557,374
)
Deferred compensation obligation
42,014

 
37,263

Accumulated other comprehensive loss
(290,613
)
 
(255,667
)
Total stockholders’ equity
6,800,791

 
6,941,929

Noncontrolling interests
1,664

 
6,244

Total equity
6,802,455

 
6,948,173

Total liabilities and equity
$
13,956,013

 
$
14,060,918

________
(a)
Includes $83.3 million and $83.1 million of amounts attributable to operating properties as of June 30, 2020 and December 31, 2019, respectively.
(b)
Includes $1.1 billion and $1.0 billion of accumulated depreciation on buildings and improvements as of June 30, 2020 and December 31, 2019, respectively, and $1.2 billion and $1.1 billion of accumulated amortization on lease intangibles as of June 30, 2020 and December 31, 2019, respectively.
(c)
At December 31, 2019, we had one hotel operating property classified as Assets held for sale, net, which was sold in January 2020.
(d)
Our equity investments in real estate totaled $235.7 million and $194.4 million as of June 30, 2020 and December 31, 2019, respectively. Our equity investments in the Managed Programs totaled $48.9 million and $129.6 million as of June 30, 2020 and December 31, 2019, respectively.


W. P. Carey Inc. 6/30/2020 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, 2020
 
March 31, 2020
 
June 30, 2019
Revenues
 
 
 
 
 
Real Estate:
 
 
 
 
 
Lease revenues
$
280,303

 
$
282,110

 
$
269,802

Lease termination income and other
1,917

 
6,509

 
6,304

Operating property revenues
1,427

 
5,967

 
15,436

 
283,647

 
294,586

 
291,542

Investment Management:
 
 
 
 
 
Asset management revenue
4,472

 
9,889

 
9,790

Reimbursable costs from affiliates
2,411

 
4,030

 
3,821

Structuring and other advisory revenue

 
494

 
58

 
6,883

 
14,413

 
13,669

 
290,530

 
308,999

 
305,211

Operating Expenses
 

 
 
 
 

Depreciation and amortization
107,477

 
116,194

 
113,632

General and administrative
17,472

 
20,745

 
19,729

Reimbursable tenant costs
13,796

 
13,175

 
13,917

Property expenses, excluding reimbursable tenant costs
11,651

 
10,075

 
9,915

Stock-based compensation expense
2,918

 
2,661

 
4,936

Reimbursable costs from affiliates
2,411

 
4,030

 
3,821

Operating property expenses
1,388

 
5,223

 
10,874

Merger and other expenses
1,074

 
187

 
696

Subadvisor fees
192

 
1,277

 
1,650

Impairment charges

 
19,420

 

 
158,379

 
192,987

 
179,170

Other Income and Expenses
 

 
 
 
 

Interest expense
(52,182
)
 
(52,540
)
 
(59,719
)
Equity in earnings (losses) of equity method investments in the Managed
   Programs and real estate (a)
33,983

 
(45,790
)
 
3,951

Other gains and (losses) (b)
8,847

 
(4,423
)
 
(671
)
Gain (loss) on sale of real estate, net

 
11,751

 
(362
)
 
(9,352
)
 
(91,002
)
 
(56,801
)
Income before income taxes
122,799

 
25,010

 
69,240

(Provision for) benefit from income taxes
(7,595
)
 
41,692

 
(3,119
)
Net Income
115,204

 
66,702

 
66,121

Net income attributable to noncontrolling interests (a)
(9,904
)
 
(612
)
 
(83
)
Net Income Attributable to W. P. Carey
$
105,300

 
$
66,090

 
$
66,038

 
 
 
 
 
 
Basic Earnings Per Share
$
0.61

 
$
0.38

 
$
0.39

Diluted Earnings Per Share
$
0.61

 
$
0.38

 
$
0.38

Weighted-Average Shares Outstanding
 

 
 
 
 

Basic
173,401,749

 
173,249,236

 
171,304,112

Diluted
173,472,755

 
173,460,053

 
171,490,625

 
 
 
 
 
 
Dividends Declared Per Share
$
1.042

 
$
1.040

 
$
1.034


W. P. Carey Inc. 6/30/2020 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,
 
2020
 
2019
Revenues
 
 
 
Real Estate:
 
 
 
Lease revenues
$
562,413

 
$
532,741

Lease termination income and other
8,426

 
9,574

Operating property revenues
7,394

 
31,432

 
578,233

 
573,747

Investment Management:
 
 
 
Asset management revenue
14,361

 
19,522

Reimbursable costs from affiliates
6,441

 
7,689

Structuring and other advisory revenue
494

 
2,576

 
21,296

 
29,787

 
599,529

 
603,534

Operating Expenses
 

 
 

Depreciation and amortization
223,671

 
226,011

General and administrative
38,217

 
41,014

Reimbursable tenant costs
26,971

 
27,088

Property expenses, excluding reimbursable tenant costs
21,726

 
19,827

Impairment charges
19,420

 

Operating property expenses
6,611

 
21,468

Reimbursable costs from affiliates
6,441

 
7,689

Stock-based compensation expense
5,579

 
9,101

Subadvisor fees
1,469

 
3,852

Merger and other expenses
1,261

 
842

 
351,366

 
356,892

Other Income and Expenses
 

 
 

Interest expense
(104,722
)
 
(121,032
)
Equity in (losses) earnings of equity method investments in the Managed Programs
   and real estate (a)
(11,807
)
 
9,442

Gain on sale of real estate, net
11,751

 
571

Other gains and (losses)
4,424

 
284

 
(100,354
)
 
(110,735
)
Income before income taxes
147,809

 
135,907

Benefit from (provision for) income taxes
34,097

 
(990
)
Net Income
181,906

 
134,917

Net income attributable to noncontrolling interests (a)
(10,516
)
 
(385
)
Net Income Attributable to W. P. Carey
$
171,390

 
$
134,532

 
 
 
 
Basic Earnings Per Share
$
0.99

 
$
0.79

Diluted Earnings Per Share
$
0.99

 
$
0.79

Weighted-Average Shares Outstanding
 

 
 

Basic
173,325,493

 
169,280,360

Diluted
173,514,894

 
169,520,508

 
 
 
 
Dividends Declared Per Share
$
2.082

 
$
2.066

__________
(a)
Amounts for the three and six months ended June 30, 2020 include a non-cash net gain of $33.0 million (inclusive of $9.9 million attributable to the redemption of a noncontrolling interest that the former subadvisors for CWI 1 and CWI 2 held in the special general partner interests) recognized in connection with consideration received at closing of the CWI 1 and CWI 2 merger, which reflects the allocation of $34.3 million of goodwill within our Investment Management segment.
(b)
Amount for the three months ended June 30, 2020 is primarily comprised of realized gains on foreign currency exchange derivatives of $4.4 million and a net release of our allowance for credit losses reserve of $3.6 million.

W. P. Carey Inc. 6/30/2020 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, 2020
 
March 31, 2020
 
June 30, 2019
Net income attributable to W. P. Carey
$
105,300

 
$
66,090

 
$
66,038

Adjustments:
 
 
 
 
 
Depreciation and amortization of real property
106,264

 
114,913

 
112,360

Impairment charges

 
19,420

 

(Gain) loss on sale of real estate, net

 
(11,751
)
 
362

Proportionate share of adjustments to equity in net income of partially owned entities (a) (b) (c)
(19,117
)
 
50,477

 
4,489

Proportionate share of adjustments for noncontrolling interests (d)
(588
)
 
578

 
(31
)
Total adjustments
86,559

 
173,637

 
117,180

FFO (as defined by NAREIT) Attributable to W. P. Carey (e)
191,859

 
239,727

 
183,218

Adjustments:
 
 
 
 
 
Above- and below-market rent intangible lease amortization, net
12,956

 
11,780

 
16,450

Straight-line and other rent adjustments (f)
(11,720
)
 
(7,092
)
 
(7,975
)
Other (gains) and losses (g)
(4,259
)
 
9,815

 
5,724

Amortization of deferred financing costs
2,993

 
3,089

 
2,774

Stock-based compensation
2,918

 
2,661

 
4,936

Merger and other expenses
1,074

 
187

 
696

Other amortization and non-cash items
488

 
408

 
1,706

Tax benefit – deferred and other (h) (i) (j)
(229
)
 
(47,923
)
 
(933
)
Proportionate share of adjustments to equity in net income of partially owned entities (b) (k)
1,251

 
3,895

 
1,876

Proportionate share of adjustments for noncontrolling interests (d)
579

 
(7
)
 
(7
)
Total adjustments
6,051

 
(23,187
)
 
25,247

AFFO Attributable to W. P. Carey (e)
$
197,910

 
$
216,540

 
$
208,465

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (e)
$
191,859

 
$
239,727

 
$
183,218

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (e)
$
1.11

 
$
1.38

 
$
1.07

AFFO attributable to W. P. Carey (e)
$
197,910

 
$
216,540

 
$
208,465

AFFO attributable to W. P. Carey per diluted share (e)
$
1.14

 
$
1.25

 
$
1.22

Diluted weighted-average shares outstanding
173,472,755

 
173,460,053

 
171,490,625























W. P. Carey Inc. 6/30/2020 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, 2020
 
March 31, 2020
 
June 30, 2019
Net income from Real Estate attributable to W. P. Carey
$
81,825

 
$
100,914

 
$
60,768

Adjustments:
 
 
 
 
 
Depreciation and amortization of real property
106,264

 
114,913

 
112,360

Impairment charges

 
19,420

 

(Gain) loss on sale of real estate, net

 
(11,751
)
 
362

Proportionate share of adjustments to equity in net income of partially owned entities (b)
3,352

 
3,365

 
4,489

Proportionate share of adjustments for noncontrolling interests (d)
(588
)
 
578

 
(31
)
Total adjustments
109,028

 
126,525

 
117,180

FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (e)
190,853

 
227,439

 
177,948

Adjustments:
 
 
 
 
 
Above- and below-market rent intangible lease amortization, net
12,956

 
11,780

 
16,450

Straight-line and other rent adjustments (f)
(11,720
)
 
(7,092
)
 
(7,975
)
Other (gains) and losses (g)
(5,437
)
 
10,973

 
5,888

Tax benefit – deferred and other (i)
(3,051
)
 
(37,956
)
 
(853
)
Amortization of deferred financing costs
2,993

 
3,089

 
2,774

Stock-based compensation
2,918

 
1,970

 
3,482

Merger and other expenses
935

 
(132
)
 
696

Other amortization and non-cash items
488

 
209

 
1,510

Proportionate share of adjustments to equity in net income (loss) of partially owned entities (c) (k)
166

 
(274
)
 
(89
)
Proportionate share of adjustments for noncontrolling interests (d)
579

 
(7
)
 
(7
)
Total adjustments
827

 
(17,440
)
 
21,876

AFFO Attributable to W. P. Carey – Real Estate (e)
$
191,680

 
$
209,999

 
$
199,824

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (e)
$
190,853

 
$
227,439

 
$
177,948

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (e)
$
1.10

 
$
1.31

 
$
1.04

AFFO attributable to W. P. Carey – Real Estate (e)
$
191,680

 
$
209,999

 
$
199,824

AFFO attributable to W. P. Carey per diluted share – Real Estate (e)
$
1.10

 
$
1.21

 
$
1.17

Diluted weighted-average shares outstanding
173,472,755

 
173,460,053

 
171,490,625


W. P. Carey Inc. 6/30/2020 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,
 
2020
 
2019
Net income attributable to W. P. Carey
$
171,390

 
$
134,532

Adjustments:
 
 
 
Depreciation and amortization of real property
221,177

 
223,463

Impairment charges
19,420

 

Gain on sale of real estate, net
(11,751
)
 
(571
)
Proportionate share of adjustments to equity in net income of partially owned entities (a) (b) (c)
31,360

 
8,913

Proportionate share of adjustments for noncontrolling interests (d)
(10
)
 
(61
)
Total adjustments
260,196

 
231,744

FFO (as defined by NAREIT) Attributable to W. P. Carey (e)
431,586

 
366,276

Adjustments:
 
 
 
Tax benefit – deferred and other (h) (i) (j) (l)
(48,152
)
 
(5,861
)
Above- and below-market rent intangible lease amortization, net
24,736

 
32,377

Straight-line and other rent adjustments (f)
(18,812
)
 
(14,233
)
Amortization of deferred financing costs
6,082

 
5,498

Stock-based compensation
5,579

 
9,101

Other (gains) and losses
5,556

 
10,654

Merger and other expenses
1,261

 
842

Other amortization and non-cash items
896

 
2,273

Proportionate share of adjustments to equity in net income of partially owned entities (b) (k)
5,146

 
3,337

Proportionate share of adjustments for noncontrolling interests (d)
572

 
(32
)
Total adjustments
(17,136
)
 
43,956

AFFO Attributable to W. P. Carey (e)
$
414,450

 
$
410,232

 
 
 
 
Summary
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (e)
$
431,586

 
$
366,276

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (e)
$
2.49

 
$
2.16

AFFO attributable to W. P. Carey (e)
$
414,450

 
$
410,232

AFFO attributable to W. P. Carey per diluted share (e)
$
2.39

 
$
2.42

Diluted weighted-average shares outstanding
173,514,894

 
169,520,508


W. P. Carey Inc. 6/30/2020 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,
 
2020
 
2019
Net income from Real Estate attributable to W. P. Carey
$
182,739

 
$
114,176

Adjustments:
 
 
 
Depreciation and amortization of real property
221,177

 
223,463

Impairment charges
19,420

 

Gain on sale of real estate, net
(11,751
)
 
(571
)
Proportionate share of adjustments to equity in net income of partially owned entities (b)
6,717

 
8,913

Proportionate share of adjustments for noncontrolling interests (d)
(10
)
 
(61
)
Total adjustments
235,553

 
231,744

FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (e)
418,292

 
345,920

Adjustments:
 
 
 
Tax benefit – deferred and other (i)
(41,007
)
 
(363
)
Above- and below-market rent intangible lease amortization, net
24,736

 
32,377

Straight-line and other rent adjustments (f)
(18,812
)
 
(14,233
)
Amortization of deferred financing costs
6,082

 
5,498

Other (gains) and losses
5,536

 
9,817

Stock-based compensation
4,888

 
6,282

Merger and other expenses
803

 
842

Other amortization and non-cash items
697

 
2,012

Proportionate share of adjustments to equity in net income of partially owned entities (b) (k)
(108
)
 
26

Proportionate share of adjustments for noncontrolling interests (d)
572

 
(32
)
Total adjustments
(16,613
)
 
42,226

AFFO Attributable to W. P. Carey – Real Estate (e)
$
401,679

 
$
388,146

 
 
 
 
Summary
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (e)
$
418,292

 
$
345,920

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (e)
$
2.41

 
$
2.04

AFFO attributable to W. P. Carey – Real Estate (e)
$
401,679

 
$
388,146

AFFO attributable to W. P. Carey per diluted share – Real Estate (e)
$
2.31

 
$
2.29

Diluted weighted-average shares outstanding
173,514,894

 
169,520,508

__________
(a)
Amounts for the three and six months ended June 30, 2020 include a non-cash net gain of $33.0 million (inclusive of $9.9 million attributable to the redemption of a noncontrolling interest that the former subadvisors for CWI 1 and CWI 2 held in the special general partner interests) recognized in connection with consideration received at closing of the CWI 1 and CWI 2 merger, which reflects the allocation of $34.3 million of goodwill within our Investment Management segment.
(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)
Amounts for the three months ended March 31, 2020 and six months ended June 30, 2020 include non-cash other-than-temporary impairment charges totaling $47.1 million recognized on our equity investments in CWI 1 and CWI 2.
(d)
Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
(e)
FFO and AFFO are non-GAAP measures. See below for a description of FFO and AFFO.
(f)
Amounts for the three months ended March 31, 2020 and six months ended June 30, 2020 include straight-line rent write-offs totaling $3.1 million, based on a collectibility analysis.
(g)
AFFO amount for the three months ended June 30, 2020 is primarily comprised of a net release of our allowance for credit losses reserve of $3.6 million, gains from foreign currency movements of $3.4 million, unrealized loss on derivatives of $(1.4) million and loss on marketable securities of $(1.2) million. Real Estate AFFO amount for the three months ended June 30, 2020 is primarily comprised of a net release of allowance for credit losses reserve of $3.6 million, losses from foreign currency movements of $3.3 million and unrealized loss on derivatives of $(1.4) million. Amounts from period to period will not be comparable due to unpredictable fluctuations in these gains and losses.
(h)
Amounts for the three and six months ended June 30, 2020 include one-time taxes incurred upon the recognition of taxable income associated with the accelerated vesting of shares previously issued by CWI 1 and CWI 2 to us for asset management services performed, in connection with the CWI 1 and CWI 2 merger.
(i)
Amounts for the three months ended March 31, 2020 and six months ended June 30, 2020 include a non-cash deferred tax benefit of $37.2 million as a result of the release of a deferred tax liability relating to our investment in shares of a cold storage operator, which converted to a REIT during that period and is therefore no longer subject to federal income taxes.
(j)
Amounts for the three months ended March 31, 2020 and six months ended June 30, 2020 include a one-time tax benefit of $7.2 million as a result of carrying back certain net operating losses in accordance with the CARES Act, which was enacted on March 27, 2020.
(k)
Beginning with the first quarter of 2020, this adjustment includes dividends received from CWI 1 and CWI 2 for AFFO (through April 13, 2020, the closing date of the CWI 1 and CWI 2 merger) and from WLT for both AFFO and Real Estate AFFO (after April 13, 2020) in place of our pro rata share of net income from our ownership of shares of CWI 1, CWI 2, and WLT, as applicable. We did not receive any such dividends during the second quarter of 2020, due to the adverse effect of COVID-19.
(l)
Amount for the six months ended June 30, 2019 includes a current tax benefit, which is excluded from AFFO as it was incurred as a result of the CPA:17 Merger.

W. P. Carey Inc. 6/30/2020 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 rent and related reserves, other non-cash rent adjustments, allowance for credit losses, 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 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. 6/30/2020 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 2020




404818258_supplementalcoverpage2020a01.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 1” means Carey Watermark Investors Incorporated and “CWI 2” means Carey Watermark Investors 2 Incorporated. “Managed Programs” means CPA:18 – Global 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 Programs prior to the CPA:17 Merger. “CWI 1 and CWI 2 Merger” means the merger between CWI 1 and CWI 2, which closed on April 13, 2020. Subsequently, the combined company was renamed Watermark Lodging Trust, Inc. (“WLT”). CWI 1 and CWI 2 were included in the Managed Programs prior to the CWI 1 and CWI 2 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”); normalized pro rata cash NOI; and same store pro rata rental income. 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 2020
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 2020
Summary Metrics
As of or for the three months ended June 30, 2020.
Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment
 
 
 
 
 
 
 
Owned
Real Estate
 
Investment Management
 
Total
Revenues, including reimbursable costs – consolidated ($000s)
 
$
283,647

 
$
6,883

 
$
290,530

Net income attributable to W. P. Carey ($000s)
 
81,825

 
23,475

 
105,300

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

 
0.14

 
0.61

Normalized pro rata cash NOI from real estate ($000s) (a) (b)
 
263,624

 
N/A

 
263,624

Adjusted EBITDA ($000s) (a) (b)
 
250,536

 
7,318

 
257,854

AFFO attributable to W. P. Carey ($000s) (a) (b)
 
191,680

 
6,230

 
197,910

AFFO attributable to W. P. Carey per diluted share (a) (b)
 
1.10

 
0.04

 
1.14

 
 
 
 
 
 
 
 
 
 
Dividends declared per share – current quarter
 
 
 
 
 
1.042

Dividends declared per share – current quarter annualized
 
 
 
 
 
4.168

Dividend yield – annualized, based on quarter end share price of $67.65
 
 
 
 
 
6.2
%
Dividend payout ratio – for the six months ended June 30, 2020 (c)
 
 
 
 
 
87.1
%
 
 
 
 
 
 
 
 
 
 
Balance Sheet and Capitalization
 
 
 
 
 
 
 
 
 
Equity market capitalization – based on quarter end share price of $67.65 ($000s)
 
 
 
 
 
$
11,763,687

Pro rata net debt ($000s) (d)
 
 
 
 
 
 
 
 
6,221,613

Enterprise value ($000s)
 
 
 
 
 
 
 
 
17,985,300

 
 
 
 
 
 
 
 
 
 
Total consolidated debt ($000s)
 
 
 
 
 
 
 
 
6,122,267

Gross assets ($000s) (e)
 
 
 
 
 
 
 
 
15,041,075

Liquidity ($000s) (f)
 
 
 
 
 
 
 
 
2,183,920

 
 
 
 
 
 
 
 
 
 
Pro rata net debt to enterprise value (b)
 
 
 
 
 
 
 
 
34.6
%
Pro rata net debt to adjusted EBITDA (annualized) (a) (b)
 
 
 
 
 
6.0x

Total consolidated debt to gross assets
 
 
 
 
 
 
 
 
40.7
%
Total consolidated secured debt to gross assets
 
 
 
 
 
 
 
 
9.5
%
 
 
 
 
 
 
 
 
 
 
Weighted-average interest rate (b)
 
 
 
 
 
 
 
 
3.2
%
Weighted-average debt maturity (years) (b)
 
 
 
 
 
 
 
 
4.7

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

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

 
 
 
 
 
 
 
 
 
 
Real Estate Portfolio (Pro Rata)
 
 
 
 
 
 
 
 
 
ABR – total portfolio ($000s) (g) (h)
 
 
 
 
 
 
 
 
$
1,134,356

ABR – unencumbered portfolio ($000s) (g) (i)
 
 
 
 
 
 
 
 
$
835,544

Number of net-leased properties
 
 
 
 
 
 
 
 
1,216

Number of operating properties (j)
 
 
 
 
 
 
 
 
20

Number of tenants – net-leased properties
 
 
 
 
 
 
 
 
352

 
 
 
 
 
 
 
 
 
 
ABR from investment grade tenants as a % of total ABR – net-leased properties (k)
 
 
 
 
 
29.7
%
 
 
 
 
 
 
 
 
 
 
Net-leased properties – square footage (millions)
 
 
 
 
 
 
 
 
141.9

 
 
 
 
 
 
 
 
 
 
Occupancy – net-leased properties
 
 
 
 
 
 
 
 
98.9
%
Weighted-average lease term (years)
 
 
 
 
 
 
 
 
10.7

 
 
 
 
 
 
 
 
 
 
Maximum commitment for capital investment projects expected to be completed during 2020 ($000s)
 
 
 
$
42,417

Acquisitions and completed capital investment projects – current quarter ($000s)
 
 
 
148,180

Dispositions – current quarter ($000s)
 
 
 
 
 
 
 
 

________
(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.

404818258_wpclogoa01a01a36.jpg 
 
Investing for the long runTM | 1


W. P. Carey Inc.
Overview – Second Quarter 2020

(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 $752.5 million and above-market rent intangible assets of $420.0 million.
(f)
Represents (i) availability under our Senior Unsecured Credit Facility, (ii) consolidated cash and cash equivalents, and (iii) available proceeds under our forward sale agreements (based on 3,999,000 remaining shares and a net offering price of $67.30 as of June 30, 2020, which will be updated at each quarter end).
(g)
See the Terms and Definitions section in the Appendix for a description of ABR.
(h)
On an annualized basis, contractual rental income for the current quarter from leases totaling (i) less than 0.1% of ABR was deemed collectible but unpaid as of July 31, 2020, (ii) 1.7% of ABR was deferred and/or in a free rent period as of June 30, 2020, and (iii) 1.6% of ABR was unpaid and does not meet the requirements for collectibility under US GAAP.
(i)
Represents ABR from properties unencumbered by non-recourse mortgage debt.
(j)
Comprised of 19 self-storage properties and one hotel.
(k)
Percentage of portfolio is based on ABR, as of June 30, 2020. Includes tenants or guarantors with investment grade ratings (22.2%) and subsidiaries of non-guarantor parent companies with investment grade ratings (7.5%). 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.


404818258_wpclogoa01a01a36.jpg 
 
Investing for the long runTM | 2


W. P. Carey Inc.
Overview – Second Quarter 2020
Components of Net Asset Value
Dollars in thousands, except per share amounts.
Real Estate
 
 
Three Months Ended
Jun. 30, 2020
 
Annualized
Normalized pro rata cash NOI (a) (b)
 
 
$
263,624

 
$
1,054,496

 
 
 
 
 
 
Investment Management
 
 
 
 
 
Adjusted EBITDA (a) (b)
 
 
7,318

 
29,272

Selected Components of Adjusted EBITDA:
 
 
 
 
 
Asset management revenue (c)
 
 
3,605

 
14,420

Operating partnership interest in real estate cash flow of CPA:18 – Global (d)

 
2,029

 
8,116

Back-end fees and interests associated with the Managed Programs
 
 
 
 
 
 
 
 
Balance Sheet – Selected Information (Consolidated Unless Otherwise Stated)
 
As of Jun. 30, 2020
Assets
 
 
 
 
 
Book value of real estate excluded from normalized pro rata cash NOI (e)
 
 
 
$
150,958

Cash and cash equivalents
 
 
 
 
137,157

Due from affiliates
 
 
 
 
11,074

Other assets, net:
 
 
 
 
 
Straight-line rent adjustments
 
 
 
 
$
158,336

Investment in shares of a cold storage operator
 
 
 
 
146,190

Restricted cash, including escrow
 
 
 
 
66,835

Office lease right-of-use assets, net
 
 
 
 
65,352

Deferred charges
 
 
 
 
48,339

Taxes receivable
 
 
 
 
42,707

Non-rent tenant and other receivables
 
 
 
 
41,404

Loans receivable
 
 
 
 
36,737

Securities and derivatives
 
 
 
 
28,742

Deposits for construction
 
 
 
 
20,942

Prepaid expenses
 
 
 
 
13,982

Deferred income taxes
 
 
 
 
9,486

Investment in shares of Guggenheim Credit Income Fund
 
 
 
 
7,570

Other intangible assets, net
 
 
 
 
6,293

Rent receivables
 
 
 
 
4,538

Leasehold improvements, furniture and fixtures
 
 
 
3,408

Other
 
 
 
 
705

Total other assets, net (excluding investment in preferred shares of WLT, as disclosed below)
 
$
701,566

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Total pro rata debt outstanding (b) (f)
 
 
 
 
$
6,358,770

Dividends payable
 
 
 
 
183,738

Deferred income taxes
 
 
 
 
134,519

Accounts payable, accrued expenses and other liabilities:
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
$
154,799

Operating lease liabilities
 
 
 
 
144,078

Prepaid and deferred rents
 
 
 
 
87,481

Tenant security deposits
 
 
 
 
49,325

Accrued taxes payable
 
 
 
 
39,048

Securities and derivatives
 
 
 
 
7,112

Other
 
 
 
 
33,968

Total accounts payable, accrued expenses and other liabilities
 
 
 
 
$
515,811


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Investing for the long runTM | 3


W. P. Carey Inc.
Overview – Second Quarter 2020
Other
Ownership %
 
Estimated Value / Carrying Value
Ownership in Managed Programs: (g)
 
 


CPA:18 – Global (h)
4.1
%
 
$
51,494

CESH (i)
2.4
%
 
3,492

 
 
 
54,986

Ownership in WLT: (j)
 
 
 
Investment in common shares of WLT
5.3
%
 
49,210

Investment in preferred shares of WLT
N/A

 
46,312

 
 
 
95,522

 
 
 
$
150,508

________
(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)
Asset management revenue in this table for the three months ended June 30, 2020 excludes $0.5 million and $0.4 million from CWI 1 and CWI 2, respectively, which were recognized prior to the CWI 1 and CWI 2 Merger on April 13, 2020.
(d)
We are entitled to receive distributions of up to 10% of the Available Cash of CPA:18 – Global, as defined in its operating partnership agreement.
(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, real estate under construction for certain expansion projects at existing properties and a common equity interest in a Las Vegas retail center.
(f)
Excludes unamortized discount, net totaling $25.3 million and unamortized deferred financing costs totaling $21.5 million as of June 30, 2020.
(g)
Separate from operating partnership interest in our affiliate, CPA:18 – Global, and our interests in unconsolidated real estate joint ventures with CPA:18 Global.
(h)
The estimated value of CPA:18 Global is based on its net asset value per share (“NAV”) of $8.29 as of March 31, 2020, which was calculated by relying in part on an estimate of the fair market value of the real estate portfolio adjusted to give effect to mortgage loans, both provided by third parties, as well as other adjustments. Refer to the SEC filings of CPA:18 Global for the calculation methodology of its NAV.
(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.
(j)
In connection with the CWI 1 and CWI 2 Merger, the operating partnerships of each of CWI 1 and CWI 2 redeemed the special general partner interests that we previously held, for which we received 1,300,000 shares of CWI 2 preferred stock and 2,840,549 shares in CWI 2 common stock. In addition, our 6,074,046 shares in CWI 1 common stock were exchanged for 5,531,025 shares in WLT common stock at the time of the merger, and prior to merger, we owned 3,836,669 shares in CWI 2 common stock. Our total investment in 12,208,243 common shares of WLT is included in Equity investments in the Managed Programs and real estate (as an equity investment in real estate) on our consolidated balance sheets. Our investment in 1,300,000 preferred shares of WLT is included in Other assets, net on our consolidated balance sheets as available-for-sale debt securities. Both investments are included within our Real Estate segment.

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Investing for the long runTM | 4




W. P. Carey Inc.
Financial Results
Second Quarter 2020






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Investing for the long runTM | 5


W. P. Carey Inc.
Financial Results – Second Quarter 2020
Consolidated Statements of Income – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Jun. 30, 2020
 
Mar. 31, 2020
 
Dec. 31, 2019
 
Sep. 30, 2019
 
Jun. 30, 2019
Revenues
 
 
 
 
 
 
 
 
 
Real Estate:
 
 
 
 
 
 
 
 
 
Lease revenues
$
280,303

 
$
282,110

 
$
274,795

 
$
278,839

 
$
269,802

Lease termination income and other
1,917

 
6,509

 
12,317

 
14,377

 
6,304

Operating property revenues
1,427

 
5,967

 
9,250

 
9,538

 
15,436

 
283,647

 
294,586

 
296,362

 
302,754

 
291,542

Investment Management:
 
 
 
 
 
 
 
 
 
Asset management revenue
4,472

 
9,889

 
9,732

 
9,878

 
9,790

Reimbursable costs from affiliates
2,411

 
4,030

 
4,072

 
4,786

 
3,821

Structuring and other advisory revenue

 
494

 
1,061

 
587

 
58

 
6,883

 
14,413

 
14,865

 
15,251

 
13,669

 
290,530

 
308,999

 
311,227

 
318,005

 
305,211

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
107,477

 
116,194

 
111,607

 
109,517

 
113,632

General and administrative
17,472

 
20,745

 
17,069

 
17,210

 
19,729

Reimbursable tenant costs
13,796

 
13,175

 
12,877

 
15,611

 
13,917

Property expenses, excluding reimbursable tenant costs
11,651

 
10,075

 
9,341

 
10,377

 
9,915

Stock-based compensation expense
2,918

 
2,661

 
4,939

 
4,747

 
4,936

Reimbursable costs from affiliates
2,411

 
4,030

 
4,072

 
4,786

 
3,821

Operating property expenses
1,388

 
5,223

 
8,000

 
8,547

 
10,874

Merger and other expenses
1,074

 
187

 
(811
)
 
70

 
696

Subadvisor fees
192

 
1,277

 
1,964

 
1,763

 
1,650

Impairment charges

 
19,420

 
6,758

 
25,781

 

 
158,379

 
192,987

 
175,816

 
198,409

 
179,170

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(52,182
)
 
(52,540
)
 
(53,667
)
 
(58,626
)
 
(59,719
)
Equity in earnings (losses) of equity method investments in the Managed Programs and real estate (a)
33,983

 
(45,790
)
 
8,018

 
5,769

 
3,951

Other gains and (losses) (b)
8,847

 
(4,423
)
 
43,593

 
(12,402
)
 
(671
)
Gain (loss) on sale of real estate, net

 
11,751

 
17,501

 
71

 
(362
)
Loss on change in control of interests (c)

 

 

 
(8,416
)
 

 
(9,352
)
 
(91,002
)
 
15,445

 
(73,604
)
 
(56,801
)
Income before income taxes
122,799

 
25,010

 
150,856

 
45,992

 
69,240

(Provision for) benefit from income taxes
(7,595
)
 
41,692

 
(21,064
)
 
(4,157
)
 
(3,119
)
Net Income
115,204

 
66,702

 
129,792

 
41,835

 
66,121

Net income attributable to noncontrolling interests (a)
(9,904
)
 
(612
)
 
(420
)
 
(496
)
 
(83
)
Net Income Attributable to W. P. Carey
$
105,300

 
$
66,090

 
$
129,372

 
$
41,339

 
$
66,038

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
0.61

 
$
0.38

 
$
0.75

 
$
0.24

 
$
0.39

Diluted Earnings Per Share
$
0.61

 
$
0.38

 
$
0.75

 
$
0.24

 
$
0.38

Weighted-Average Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
173,401,749

 
173,249,236

 
173,153,811

 
172,235,066