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Section 1: 8-K (8-K)

Document
false0001025378 0001025378 2020-05-01 2020-05-01


 

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): May 1, 2020
403829072_wpchighreslogoa24.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 May 1, 2020, W. P. Carey Inc. (together with its predecessors, the “Company”) issued an earnings release announcing its financial results for the quarter ended March 31, 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 May 1, 2020, the Company made available certain unaudited supplemental financial information at March 31, 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:
May 1, 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

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 First Quarter 2020 Financial Results


New York, NY – May 1, 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 first quarter ended March 31, 2020.

Total Company
Net income attributable to W. P. Carey of $66.1 million, or $0.38 per diluted share
AFFO of $216.5 million, or $1.25 per diluted share
Quarterly cash dividend raised to $1.04 per share, equivalent to an annualized dividend rate of $4.16 per share
2020 AFFO guidance withdrawn due to uncertainties related to COVID-19

Business Segments

Real Estate
Segment net income attributable to W. P. Carey of $100.9 million
Segment AFFO of $210.0 million, or $1.21 per diluted share
Investment volume of $255.8 million
Active capital investment projects of $192.7 million expected to be completed in 2020, of which $142.9 million remains to be funded
Gross disposition proceeds of $116.3 million
Portfolio occupancy of 98.8%
Weighted-average lease term of 10.7 years

Investment Management
Segment net loss attributable to W. P. Carey of $34.8 million
Segment AFFO of $6.5 million, or $0.04 per diluted share
CWI 1 and CWI 2 merger closed in April 2020


W. P. Carey Inc. 3/31/2020 Earnings Release 8-K – 1


Balance Sheet and Capitalization
Amended and restated existing unsecured credit facility, increasing capacity to $2.1 billion

COVID-19 Update Summary
Overall collection rate of 95% for April rent due
Well-diversified portfolio with underweight exposure to retail (17% of ABR) and minimal exposure to fitness, movie theaters and restaurants (2% of ABR) at quarter end
Tenant base almost entirely comprises tenants that generated over $100 million in annual revenue or were government entities at quarter end
Over $1.7 billion of capacity available on the Company’s Senior Unsecured Credit Facility, limited near-term mortgage maturities through the end of 2021 and no unsecured debt maturities until 2023, at quarter end
The Company was well within its key financial covenants at quarter end

Note: Additional details regarding the Company’s update on COVID-19 can be found in the COVID-19 Update section of this press release as well as in a COVID-19 Update presentation furnished as Exhibit 99.3 of the Current Report on Form 8-K filed on May 1, 2020.


MANAGEMENT COMMENTARY

“While our first quarter results were largely unaffected by COVID-19 and our April rent collections were strong, we are cautious about the pandemic’s impact on the global economy,” said Jason Fox, Chief Executive Officer of W. P. Carey. “Where necessary, we’re proactively working with tenants to minimize rent disruptions, targeting value-creating opportunities whenever possible, supported by our cycle-tested asset management capabilities. We believe we're well-positioned for a range of environments ahead, given our balance sheet strength and the diversification within our portfolio.”


QUARTERLY FINANCIAL RESULTS

Revenues

Total Company: Revenues, including reimbursable costs, for the 2020 first quarter totaled $309.0 million, up 3.6% from $298.3 million for the 2019 first quarter.

Real Estate: Real Estate revenues, including reimbursable costs, for the 2020 first quarter were $294.6 million, up 4.4% from $282.2 million for the 2019 first quarter, due primarily to additional lease revenues from net acquisitions and rent escalations. Lease revenues and operating property revenues reflect the impact of the conversion of certain self-storage operating properties to net leases commencing June 1, 2019.

Investment Management: Investment Management revenues, including reimbursable costs, for the 2020 first quarter were $14.4 million, down 10.6% from $16.1 million for the 2019 first quarter, due primarily to lower structuring and other advisory revenues.


W. P. Carey Inc. 3/31/2020 Earnings Release 8-K – 2


Net Income Attributable to W. P. Carey

Net income attributable to W. P. Carey for the 2020 first quarter was $66.1 million, down 3.5% from $68.5 million for the 2019 first quarter. The Company recognized a net loss from Investment Management attributable to W. P. Carey during the 2020 first quarter, as compared to net income from Investment Management attributable to W. P. Carey during the 2019 first quarter, due primarily to impairment charges totaling $47.1 million recognized on the Company’s equity investments in CWI 1 and CWI 2 during the current year period. Net income from Real Estate attributable to W. P. Carey increased, due primarily to a deferred tax benefit of $37.2 million related to the Company’s investment in shares of a cold storage operator recognized during the current year period, the impact of net acquisitions, a higher aggregate gain on sale of real estate and lower interest expense, partly offset by impairment charges recognized during the current year period.

Adjusted Funds from Operations (AFFO)

AFFO for the 2020 first quarter was $1.25 per diluted share, up 3.3% from $1.21 per diluted share for the 2019 first quarter. AFFO from the Company’s Real Estate segment (Real Estate AFFO) increased, due primarily to the accretive impact of net acquisitions, rent escalations and lower interest expense, partly offset by the dilutive impact of shares issued through the Company’s ATM program in 2019. AFFO from the Company’s Investment Management segment declined, due primarily to receiving no distributions under the Company’s partnership interests in CWI 1 and CWI 2 during the 2020 first quarter as a result of the impact of COVID-19 on their operations, and lower structuring and other advisory revenues.

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 March 12, 2020 the Company’s Board of Directors declared a quarterly cash dividend of $1.04 per share, equivalent to an annualized dividend rate of $4.16 per share. The dividend was paid on April 15, 2020 to stockholders of record as of March 31, 2020.


COVID-19 UPDATE

Guidance

The Company has withdrawn its previous 2020 AFFO guidance due to significant uncertainty and economic disruption related to COVID-19.

Portfolio

The Company received substantially all contractual base rent that was due in March and 95% of contractual base rent that was due in April.

April collection rates by property type were:
Industrial
98%
Warehouse
93%
Office
96%
Retail
96%
Fitness, movie theaters and restaurants
1%
Self Storage (net lease)
100%
Other
97%


W. P. Carey Inc. 3/31/2020 Earnings Release 8-K – 3


April collection rates by geography were:
U.S.
96%
Europe
92%
Other
100%

The Company has a well-diversified portfolio with underweight exposure to retail properties, which represented 17% of ABR at quarter end, primarily from do-it-yourself stores and grocery, convenience or wholesale stores. Furthermore, the Company has minimal exposure to the most immediately impacted property types, with fitness centers, movie theaters and restaurants, in aggregate, representing 2% of ABR, and lodging (net lease) representing 2% of ABR.

97% of ABR at quarter end came from tenants that generate over $100 million in annual revenue or were government entities.

COVID-19 has created significant uncertainty and economic disruption, both in the near-term and potentially longer-term. The Company is closely monitoring the impact of COVID-19 on all aspects of its business, including how it will impact its tenants and properties. The Company continues to actively engage in discussions with its tenants regarding the impact of COVID-19 on their business operations, liquidity and financial position.

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.

Balance Sheet

The Company had $75 million outstanding on its $1.8 billion multi-currency revolving line of credit, at quarter end, which matures in 2025.

At quarter end, the Company had $111 million of non-recourse (mortgage) debt due in 2020 and $239 million due in 2021.

The Company’s next unsecured debt maturity is in 2023.

At quarter end, the Company had $143 million remaining to be funded for six capital investment projects currently expected to be completed during 2020.

The Company was well within the key financial covenants for both its senior unsecured notes and its senior unsecured credit facility, at quarter end.

Note: Additional details regarding the Company’s update on COVID-19 can be found in a COVID-19 Update presentation furnished as Exhibit 99.3 of the Current Report on Form 8-K filed on May 1, 2020.


BALANCE SHEET AND CAPITALIZATION

Senior Unsecured Credit Facility

As previously announced, on February 20, 2020, the Company amended and restated its senior unsecured credit facility, increasing the capacity under the facility to $2.1 billion. The facility comprises a $1.8 billion multi-currency revolving line of credit, a £150 million term loan and a €97 million delayed draw term loan, in each case maturing in five years.



W. P. Carey Inc. 3/31/2020 Earnings Release 8-K – 4


REAL ESTATE

Investments

During the 2020 first quarter, the Company completed investments totaling $255.8 million, consisting of three acquisitions for $189.0 million in aggregate and three completed capital investment projects at a total cost of $66.8 million.

As of March 31, 2020, the Company had nine capital investment projects outstanding for an expected total investment of approximately $319.9 million, of which six projects totaling $192.7 million are currently expected to be completed during 2020.

Dispositions

During the 2020 first quarter, the Company disposed of four properties for gross proceeds of $116.3 million, including one of its two hotel operating properties for gross proceeds of $114.5 million.

Composition

As of March 31, 2020, the Company’s net lease portfolio consisted of 1,215 properties, comprising 141.1 million square feet leased to 352 tenants, with a weighted-average lease term of 10.7 years and an occupancy rate of 98.8%. In addition, the Company owned 19 self-storage operating properties and one hotel operating property, totaling approximately 1.4 million square feet.


INVESTMENT MANAGEMENT

Merger 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 liquidation preference of $50.00 per share and 2,840,549 shares in CWI 2 common stock.


* * * * *


Supplemental Information

The Company has provided supplemental unaudited financial and operating information regarding the 2020 first 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 May 1, 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, May 1, 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. 3/31/2020 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 $16 billion and a diversified portfolio of operationally-critical commercial real estate that includes 1,215 net lease properties covering approximately 141 million square feet as of March 31, 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


* * * * *


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 the impact on our business, tenants and prospects in light of the outbreak of the novel coronavirus (“COVID-19”). 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 risks or uncertainties, like the risks related to effects of pandemics and global outbreaks of contagious diseases or the fear of such outbreaks, like the current COVID-19 pandemic and those additional factors discussed in reports filed with the SEC by us under the heading “Risk 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 II, Item 1A. Risk Factors in W. P. Carey’s Quarterly Report on Form 10-Q for the quarter ended March 31, 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. 3/31/2020 Earnings Release 8-K – 6


W. P. CAREY INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share amounts)
 
March 31, 2020
 
December 31, 2019
Assets
 
 
 
Investments in real estate:
 
 
 
Land, buildings and improvements (a)
$
10,019,597

 
$
9,856,191

Net investments in direct financing leases
844,945

 
896,549

In-place lease intangible assets and other
2,182,896

 
2,186,851

Above-market rent intangible assets
897,965

 
909,139

Investments in real estate
13,945,403

 
13,848,730

Accumulated depreciation and amortization (b)
(2,144,252
)
 
(2,035,995
)
Assets held for sale, net (c)

 
104,010

Net investments in real estate
11,801,151

 
11,916,745

Equity investments in the Managed Programs and real estate (d)
276,109

 
324,004

Cash and cash equivalents
220,929

 
196,028

Due from affiliates
39,051

 
57,816

Other assets, net
623,181

 
631,637

Goodwill
929,887

 
934,688

Total assets
$
13,890,308

 
$
14,060,918

 
 
 
 
Liabilities and Equity
 
 
 
Debt:
 
 
 
Senior unsecured notes, net
$
4,323,063

 
$
4,390,189

Unsecured term loans, net
289,725

 

Unsecured revolving credit facility
75,483

 
201,267

Non-recourse mortgages, net
1,433,372

 
1,462,487

Debt, net
6,121,643

 
6,053,943

Accounts payable, accrued expenses and other liabilities
479,408

 
487,405

Below-market rent and other intangible liabilities, net
202,508

 
210,742

Deferred income taxes
132,041

 
179,309

Dividends payable
181,632

 
181,346

Total liabilities
7,117,232

 
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; 172,402,516 and 172,278,242 shares, respectively, issued and outstanding
172

 
172

Additional paid-in capital
8,712,244

 
8,717,535

Distributions in excess of accumulated earnings
(1,688,744
)
 
(1,557,374
)
Deferred compensation obligation
42,291

 
37,263

Accumulated other comprehensive loss
(295,018
)
 
(255,667
)
Total stockholders’ equity
6,770,945

 
6,941,929

Noncontrolling interests
2,131

 
6,244

Total equity
6,773,076

 
6,948,173

Total liabilities and equity
$
13,890,308

 
$
14,060,918

________
(a)
Includes $83.1 million of amounts attributable to operating properties as of both March 31, 2020 and December 31, 2019.
(b)
Includes $1.0 billion of accumulated depreciation on buildings and improvements as of both March 31, 2020 and December 31, 2019, and $1.1 billion of accumulated amortization on lease intangibles as of both March 31, 2020 and December 31, 2019.
(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 joint ventures totaled $190.7 million and $194.4 million as of March 31, 2020 and December 31, 2019, respectively. Our equity investments in the Managed Programs totaled $85.4 million and $129.6 million as of March 31, 2020 and December 31, 2019, respectively.


W. P. Carey Inc. 3/31/2020 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
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Revenues
 
 
 
 
 
Real Estate:
 
 
 
 
 
Lease revenues
$
282,110

 
$
274,795

 
$
262,939

Lease termination income and other
6,509

 
12,317

 
3,270

Operating property revenues
5,967

 
9,250

 
15,996

 
294,586

 
296,362

 
282,205

Investment Management:
 
 
 
 
 
Asset management revenue
9,889

 
9,732

 
9,732

Reimbursable costs from affiliates
4,030

 
4,072

 
3,868

Structuring and other advisory revenue
494

 
1,061

 
2,518

 
14,413

 
14,865

 
16,118

 
308,999

 
311,227

 
298,323

Operating Expenses
 

 
 
 
 

Depreciation and amortization
116,194

 
111,607

 
112,379

General and administrative
20,745

 
17,069

 
21,285

Impairment charges
19,420

 
6,758

 

Reimbursable tenant costs
13,175

 
12,877

 
13,171

Property expenses, excluding reimbursable tenant costs
10,075

 
9,341

 
9,912

Operating property expenses
5,223

 
8,000

 
10,594

Reimbursable costs from affiliates
4,030

 
4,072

 
3,868

Stock-based compensation expense
2,661

 
4,939

 
4,165

Subadvisor fees (a)
1,277

 
1,964

 
2,202

Merger and other expenses
187

 
(811
)
 
146

 
192,987

 
175,816

 
177,722

Other Income and Expenses
 

 
 
 
 

Interest expense
(52,540
)
 
(53,667
)
 
(61,313
)
Equity in (losses) earnings of equity method investments in the Managed
   Programs and real estate
(45,790
)
 
8,018

 
5,491

Gain on sale of real estate, net
11,751

 
17,501

 
933

Other gains and (losses) (b)
(4,423
)
 
43,593

 
955

 
(91,002
)
 
15,445

 
(53,934
)
Income before income taxes
25,010

 
150,856

 
66,667

Benefit from (provision for) income taxes
41,692

 
(21,064
)
 
2,129

Net Income
66,702

 
129,792

 
68,796

Net income attributable to noncontrolling interests
(612
)
 
(420
)
 
(302
)
Net Income Attributable to W. P. Carey
$
66,090

 
$
129,372

 
$
68,494

 
 
 
 
 
 
Basic Earnings Per Share
$
0.38

 
$
0.75

 
$
0.41

Diluted Earnings Per Share
$
0.38

 
$
0.75

 
$
0.41

Weighted-Average Shares Outstanding
 

 
 
 
 

Basic
173,249,236

 
173,153,811

 
167,234,121

Diluted
173,460,053

 
173,442,101

 
167,434,740

 
 
 
 
 
 
Dividends Declared Per Share
$
1.040

 
$
1.038

 
$
1.032

__________
(a)
Primarily comprised of fees paid to subadvisors for CWI 1 and CWI 2 prior to the close of the CWI 1 and CWI 2 merger on April 13, 2020. Refer to the Managed Programs Fee Summary section in Exhibit 99.2 of the Current Report on Form 8-K filed on May 1, 2020 for further information.
(b)
Amount for the three months ended March 31, 2020 is primarily comprised of net losses on foreign currency transactions of $(5.9) million, allowance for credit losses of $(5.5) million, realized gains on foreign currency exchange derivatives of $4.7 million, unrealized gains on our equity investment in CESH of $1.4 million and interest earned from bank deposits and on loans to affiliates of $0.5 million.
 
 
 
 


W. P. Carey Inc. 3/31/2020 Earnings Release 8-K – 8


W. P. CAREY INC.
Quarterly Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
 
Three Months Ended
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Net income attributable to W. P. Carey
$
66,090

 
$
129,372

 
$
68,494

Adjustments:
 
 
 
 
 
Depreciation and amortization of real property
114,913

 
110,354

 
111,103

Impairment charges
19,420

 
6,758

 

Gain on sale of real estate, net
(11,751
)
 
(17,501
)
 
(933
)
Proportionate share of adjustments to equity in net income of partially owned entities (a) (b)
50,477

 
2,703

 
4,424

Proportionate share of adjustments for noncontrolling interests (c)
578

 
(4
)
 
(30
)
Total adjustments
173,637

 
102,310

 
114,564

FFO (as defined by NAREIT) Attributable to W. P. Carey (d)
239,727

 
231,682

 
183,058

Adjustments:
 
 
 
 
 
Tax (benefit) expense – deferred and other (e) (f) (g)
(47,923
)
 
12,874

 
(4,928
)
Above- and below-market rent intangible lease amortization, net
11,780

 
17,037

 
15,927

Other (gains) and losses (h)
9,815

 
(38,196
)
 
4,930

Straight-line and other rent adjustments (i)
(7,092
)
 
(11,184
)
 
(6,258
)
Amortization of deferred financing costs
3,089

 
3,225

 
2,724

Stock-based compensation
2,661

 
4,939

 
4,165

Other amortization and non-cash items
408

 
546

 
567

Merger and other expenses
187

 
(811
)
 
146

Proportionate share of adjustments to equity in net income of partially owned entities (a) (j)
3,895

 
1,908

 
1,461

Proportionate share of adjustments for noncontrolling interests (c)
(7
)
 
(5
)
 
(25
)
Total adjustments
(23,187
)
 
(9,667
)
 
18,709

AFFO Attributable to W. P. Carey (d) (k)
$
216,540

 
$
222,015

 
$
201,767

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (d)
$
239,727

 
$
231,682

 
$
183,058

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (d)
$
1.38

 
$
1.34

 
$
1.09

AFFO attributable to W. P. Carey (d)
$
216,540

 
$
222,015

 
$
201,767

AFFO attributable to W. P. Carey per diluted share (d)
$
1.25

 
$
1.28

 
$
1.21

Diluted weighted-average shares outstanding
173,460,053

 
173,442,101

 
167,434,740























W. P. Carey Inc. 3/31/2020 Earnings Release 8-K – 9


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
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Net income from Real Estate attributable to W. P. Carey
$
100,914

 
$
124,333

 
$
53,408

Adjustments:
 
 
 
 
 
Depreciation and amortization of real property
114,913

 
110,354

 
111,103

Impairment charges
19,420

 
6,758

 

Gain on sale of real estate, net
(11,751
)
 
(17,501
)
 
(933
)
Proportionate share of adjustments to equity in net income of partially owned entities (a)
3,365

 
2,703

 
4,424

Proportionate share of adjustments for noncontrolling interests (c)
578

 
(4
)
 
(30
)
Total adjustments
126,525

 
102,310

 
114,564

FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (d)
227,439

 
226,643

 
167,972

Adjustments:
 
 
 
 
 
Tax (benefit) expense – deferred and other (e)
(37,956
)
 
9,748

 
490

Above- and below-market rent intangible lease amortization, net
11,780

 
17,037

 
15,927

Other (gains) and losses (h)
10,973

 
(38,546
)
 
3,929

Straight-line and other rent adjustments (i)
(7,092
)
 
(11,184
)
 
(6,258
)
Amortization of deferred financing costs
3,089

 
3,225

 
2,724

Stock-based compensation
1,970

 
3,531

 
2,800

Other amortization and non-cash items
209

 
348

 
502

Merger and other expenses
(132
)
 
(811
)
 
146

Proportionate share of adjustments to equity in net (loss) income of partially owned entities (a)
(274
)
 
202

 
115

Proportionate share of adjustments for noncontrolling interests (c)
(7
)
 
(5
)
 
(25
)
Total adjustments
(17,440
)
 
(16,455
)
 
20,350

AFFO Attributable to W. P. Carey – Real Estate (d) (k)
$
209,999

 
$
210,188

 
$
188,322

 
 
 
 
 
 
Summary
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (d)
$
227,439

 
$
226,643

 
$
167,972

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (d)
$
1.31

 
$
1.31

 
$
1.00

AFFO attributable to W. P. Carey – Real Estate (d)
$
209,999

 
$
210,188

 
$
188,322

AFFO attributable to W. P. Carey per diluted share – Real Estate (d)
$
1.21

 
$
1.21

 
$
1.13

Diluted weighted-average shares outstanding
173,460,053

 
173,442,101

 
167,434,740

__________
(a)
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.
(b)
Amount for the three months ended March 31, 2020 includes non-cash other-than-temporary impairment charges totaling $47.1 million recognized on our equity investments in CWI 1 and CWI 2.
(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)
Amount for the three months ended March 31, 2020 includes 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.
(f)
Amount for the three months ended March 31, 2020 includes 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.
(g)
Amount for the three months ended March 31, 2019 includes a current tax benefit, which is excluded from AFFO as it was incurred as a result of the CPA:17 Merger.
(h)
AFFO amount for the three months ended March 31, 2020 is primarily comprised of losses from foreign currency movements of $(5.9) million, allowance for credit losses of $(5.5) million and gain on marketable securities of $1.1 million. Real Estate AFFO amount for the three months ended March 31, 2020 is primarily comprised of losses from foreign currency movements of $(5.9) million and allowance for credit losses of $(5.5) million.
(i)
Amount for the three months ended March 31, 2020 includes straight-line rent write-offs totaling $3.1 million, based on a collectibility analysis. Amount for the three months ended December 31, 2019 includes an adjustment to exclude $6.2 million of non-cash lease termination revenue, which will be collected and reflected within AFFO over the remaining master lease term.
(j)
For the first quarter of 2020, this adjustment includes dividends received from CWI 1 and CWI 2 in place of our pro rata share of net income from our ownership of shares of CWI 1 and CWI 2.
(k)
Substantially all contractual base rent recognized within AFFO during the three months ended March 31, 2020 has been collected as of May 1, 2020.
 
 
 
 
 
 
 
 

W. P. Carey Inc. 3/31/2020 Earnings Release 8-K – 10


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. 3/31/2020 Earnings Release 8-K – 11
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2

W. P. Carey Inc.
Supplemental Information
First Quarter 2020




403829072_supplementalcoverpage2020.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. “CWI 1 and CWI 2 Merger” means the merger between CWI 1 and CWI 2, which closed on April 13, 2020. “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 – First 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 – First Quarter 2020
Summary Metrics
As of or for the three months ended March 31, 2020.
Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment
 
 
 
 
 
 
 
Owned
Real Estate
 
Investment Management
 
Total
Revenues, including reimbursable costs – consolidated ($000s)
 
$
294,586

 
$
14,413

 
$
308,999

Net income (loss) attributable to W. P. Carey ($000s)
 
100,914

 
(34,824
)
 
66,090

Net income (loss) attributable to W. P. Carey per diluted share
 
0.58

 
(0.20
)
 
0.38

Normalized pro rata cash NOI from real estate ($000s) (a) (b)
 
270,964

 
N/A

 
270,964

Adjusted EBITDA ($000s) (a) (b)
 
267,390

 
7,590

 
274,980

AFFO attributable to W. P. Carey ($000s) (a) (b)
 
209,999

 
6,541

 
216,540

AFFO attributable to W. P. Carey per diluted share (a) (b)
 
1.21

 
0.04

 
1.25

 
 
 
 
 
 
 
 
 
 
Dividends declared per share – first quarter
 
 
 
 
 
1.04

Dividends declared per share – first quarter annualized
 
 
 
 
 
4.16

Dividend yield – annualized, based on quarter end share price of $58.08
 
 
 
 
 
7.2
%
Dividend payout ratio – for the three months ended March 31, 2020 (c)
 
 
 
 
 
83.2
%
 
 
 
 
 
 
 
 
 
 
Balance Sheet and Capitalization
 
 
 
 
 
 
 
 
 
Equity market capitalization – based on quarter end share price of $58.08 ($000s)
 
 
 
 
 
$
10,013,138

Pro rata net debt ($000s) (d)
 
 
 
 
 
 
 
 
6,135,938

Enterprise value ($000s)
 
 
 
 
 
 
 
 
16,149,076

 
 
 
 
 
 
 
 
 
 
Total consolidated debt ($000s)
 
 
 
 
 
 
 
 
6,121,643

Gross assets ($000s) (e)
 
 
 
 
 
 
 
 
14,907,335

Liquidity ($000s) (f)
 
 
 
 
 
 
 
 
1,945,446

 
 
 
 
 
 
 
 
 
 
Pro rata net debt to enterprise value (b)
 
 
 
 
 
 
 
 
38.0
%
Pro rata net debt to adjusted EBITDA (annualized) (a) (b)
 
 
 
 
 
5.6x

Total consolidated debt to gross assets
 
 
 
 
 
 
 
 
41.1
%
Total consolidated secured debt to gross assets
 
 
 
 
 
 
 
 
9.6
%
 
 
 
 
 
 
 
 
 
 
Weighted-average interest rate (b)
 
 
 
 
 
 
 
 
3.2
%
Weighted-average debt maturity (years) (b)
 
 
 
 
 
 
 
 
5.0

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

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

 
 
 
 
 
 
 
 
 
 
Real Estate Portfolio (Pro Rata)
 
 
 
 
 
 
 
 
 
ABR – total portfolio ($000s) (h)
 
 
 
 
 
 
 
 
$
1,120,453

ABR – unencumbered portfolio ($000s) (h) (i)
 
 
 
 
 
 
 
 
$
821,640

Number of net-leased properties
 
 
 
 
 
 
 
 
1,215

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)
 
 
 
 
 
29.4
%
 
 
 
 
 
 
 
 
 
 
Net-leased properties – square footage (millions)
 
 
 
 
 
 
 
 
141.1

 
 
 
 
 
 
 
 
 
 
Occupancy – net-leased properties
 
 
 
 
 
 
 
 
98.8
%
Weighted-average lease term (years)
 
 
 
 
 
 
 
 
10.7

 
 
 
 
 
 
 
 
 
 
Maximum commitment for capital investment projects expected to be completed during 2020 ($000s)
 
 
 
$
192,660

Acquisitions and completed capital investment projects – first quarter ($000s)
 
 
 
255,750

Dispositions – first quarter ($000s)
 
 
 
 
 
 
 
 
116,319

________
(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.

403829072_wpclogoa01a01a35.jpg 
 
Investing for the long runTM | 1


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

(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 $714.7 million and above-market rent intangible assets of $412.5 million.
(f)
Represents availability on our Senior Unsecured Credit Facility plus consolidated cash and cash equivalents.
(g)
In April 2020, Standard & Poor’s Ratings Services revised our issuer outlook from “positive” to “stable.”
(h)
See the Terms and Definitions section in the Appendix for a description of ABR.
(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 March 31, 2020. Includes tenants or guarantors with investment grade ratings (22.0%) and subsidiaries of non-guarantor parent companies with investment grade ratings (7.4%). 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.

403829072_wpclogoa01a01a35.jpg 
 
Investing for the long runTM | 2


W. P. Carey Inc.
Overview – First Quarter 2020
Components of Net Asset Value
Dollars in thousands, except per share amounts.
Real Estate
 
 
Three Months Ended
Mar. 31, 2020
 
Annualized
Normalized pro rata cash NOI (a) (b)
 
 
$
270,964

 
$
1,083,856

 
 
 
 
 
 
Investment Management
 
 
 
 
 
Adjusted EBITDA (a) (b)
 
 
7,590

 
30,360

Selected Components of Adjusted EBITDA:
 
 
 
 
 
Asset management revenue (c)
 
 
9,889

 
39,556

Structuring and other advisory revenue (c)
 
 
494

 
N/A

Operating partnership interests in real estate cash flow of Managed REITs (d)
 
1,916

 
7,664

Back-end fees and interests associated with the Managed Programs
 
 
 
 
 
 
 
 
Balance Sheet – Selected Information (Consolidated Unless Otherwise Stated)
 
As of Mar. 31, 2020
Assets
 
 
 
 
 
Book value of real estate excluded from normalized pro rata cash NOI (e)
 
 
 
$
144,704

Cash and cash equivalents
 
 
 
 
220,929

Due from affiliates
 
 
 
 
39,051

Other assets, net:
 
 
 
 
 
Investment in shares of a cold storage operator
 
 
 
 
$
146,190

Straight-line rent adjustments
 
 
 
 
144,209

Restricted cash, including escrow
 
 
 
 
63,361

Deferred charges
 
 
 
 
49,913

Taxes receivable
 
 
 
 
48,137

Accounts receivable
 
 
 
 
47,336

Securities and derivatives
 
 
 
 
40,809

Loans receivable
 
 
 
 
36,737

Prepaid expenses
 
 
 
 
11,801

Investment in shares of Guggenheim Credit Income Fund
 
 
 
 
8,712

Deferred income taxes
 
 
 
 
7,204

Other intangible assets, net
 
 
 
 
7,184

Office lease right-of-use assets, net
 
 
 
 
6,136

Leasehold improvements, furniture and fixtures
 
 
 
1,283

Other
 
 
 
 
4,169

Total other assets, net
 
 
 
 
$
623,181

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Total pro rata debt outstanding (b) (f)
 
 
 
 
$
6,356,867

Dividends payable
 
 
 
 
181,632

Deferred income taxes
 
 
 
 
132,041

Accounts payable, accrued expenses and other liabilities:
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
$
169,816

Prepaid and deferred rents
 
 
 
 
98,202

Operating lease liabilities
 
 
 
 
84,550

Tenant security deposits
 
 
 
 
47,627

Accrued taxes payable
 
 
 
 
43,853

Securities and derivatives
 
 
 
 
6,683

Other
 
 
 
 
28,677

Total accounts payable, accrued expenses and other liabilities
 
 
 
 
$
479,408


403829072_wpclogoa01a01a35.jpg 
 
Investing for the long runTM | 3


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


CPA:18 – Global (h)
4.0
%
 
$
52,951

CWI 1 (i)
4.2
%
 
21,899

CWI 2 (i)
4.0
%
 
15,497

CESH (j)
2.4
%
 
3,492

 
 
 
$
93,839

________
(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 and a common equity interest in a Las Vegas retail center.
(f)
Excludes unamortized discount, net totaling $26.5 million and unamortized deferred financing costs totaling $22.4 million as of March 31, 2020.
(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)
The estimated value of CPA:18 Global is based on its net asset value per share (“NAV”) of $8.94 as of December 31, 2019, 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)
The estimated values of CWI 1 and CWI 2 were determined using third-party lodging-industry market data.
(j)
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.

403829072_wpclogoa01a01a35.jpg 
 
Investing for the long runTM | 4




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






403829072_supplementaldividerpage2020.jpg



403829072_wpclogoa01a01a35.jpg 
 
Investing for the long runTM | 5


W. P. Carey Inc.
Financial Results – First Quarter 2020
Consolidated Statements of Income – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Mar. 31, 2020
 
Dec. 31, 2019
 
Sep. 30, 2019
 
Jun. 30, 2019
 
Mar. 31, 2019
Revenues
 
 
 
 
 
 
 
 
 
Real Estate:
 
 
 
 
 
 
 
 
 
Lease revenues
$
282,110

 
$
274,795

 
$
278,839

 
$
269,802

 
$
262,939

Lease termination income and other
6,509

 
12,317

 
14,377

 
6,304

 
3,270

Operating property revenues
5,967

 
9,250

 
9,538

 
15,436

 
15,996

 
294,586

 
296,362

 
302,754

 
291,542

 
282,205

Investment Management:
 
 
 
 
 
 
 
 
 
Asset management revenue
9,889

 
9,732

 
9,878

 
9,790

 
9,732

Reimbursable costs from affiliates
4,030

 
4,072

 
4,786

 
3,821

 
3,868

Structuring and other advisory revenue
494

 
1,061

 
587

 
58

 
2,518

 
14,413

 
14,865

 
15,251

 
13,669

 
16,118

 
308,999

 
311,227

 
318,005

 
305,211

 
298,323

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
116,194

 
111,607

 
109,517

 
113,632

 
112,379

General and administrative
20,745

 
17,069

 
17,210

 
19,729

 
21,285

Impairment charges
19,420

 
6,758

 
25,781

 

 

Reimbursable tenant costs
13,175

 
12,877

 
15,611

 
13,917

 
13,171

Property expenses, excluding reimbursable tenant costs
10,075

 
9,341

 
10,377

 
9,915

 
9,912

Operating property expenses
5,223

 
8,000

 
8,547

 
10,874

 
10,594

Reimbursable costs from affiliates
4,030

 
4,072

 
4,786

 
3,821

 
3,868

Stock-based compensation expense
2,661

 
4,939

 
4,747

 
4,936

 
4,165

Subadvisor fees (a)
1,277

 
1,964

 
1,763

 
1,650

 
2,202

Merger and other expenses
187

 
(811
)
 
70

 
696

 
146

 
192,987

 
175,816

 
198,409

 
179,170

 
177,722

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(52,540
)
 
(53,667
)
 
(58,626
)
 
(59,719
)
 
(61,313
)
Equity in (losses) earnings of equity method investments in the Managed Programs and real estate
(45,790
)
 
8,018

 
5,769

 
3,951

 
5,491

Gain (loss) on sale of real estate, net
11,751

 
17,501

 
71

 
(362
)
 
933

Other gains and (losses) (b)
(4,423
)
 
43,593

 
(12,402
)
 
(671
)
 
955

Loss on change in control of interests (c)

 

 
(8,416
)
 

 

 
(91,002
)
 
15,445

 
(73,604
)
 
(56,801
)
 
(53,934
)
Income before income taxes
25,010

 
150,856

 
45,992

 
69,240

 
66,667

Benefit from (provision for) income taxes
41,692

 
(21,064
)
 
(4,157
)
 
(3,119
)
 
2,129

Net Income
66,702

 
129,792

 
41,835

 
66,121

 
68,796

Net income attributable to noncontrolling interests
(612
)
 
(420
)
 
(496
)
 
(83
)
 
(302
)
Net Income Attributable to W. P. Carey
$
66,090

 
$
129,372

 
$
41,339

 
$
66,038

 
$
68,494

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
0.38

 
$
0.75

 
$
0.24

 
$
0.39

 
$
0.41

Diluted Earnings Per Share
$
0.38

 
$
0.75

 
$
0.24

 
$
0.38

 
$
0.41

Weighted-Average Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
173,249,236

 
173,153,811

 
172,235,066

 
171,304,112

 
167,234,121

Diluted
173,460,053

 
173,442,101

 
172,486,506

 
171,490,625

 
167,434,740

 
 
 
 
 
 
 
 
 
 
Dividends Declared Per Share
$
1.040

 
$
1.038

 
$
1.036

 
$
1.034

 
$
1.032

________
(a)
Primarily comprised of fees paid to subadvisors for CWI 1 and CWI 2 prior to the close of the CWI 1 and CWI 2 Merger on April 13, 2020. Refer to the Managed Programs Fee Summary section for further information.
(b)
Amount for the three months ended March 31, 2020 is primarily comprised of net losses on foreign currency transactions of $(5.9) million, allowance for credit losses of $(5.5) million, realized gains on foreign currency exchange derivatives of $4.7 million, unrealized gains on our equity investment in CESH of $1.4 million and interest earned from bank deposits and on loans to affiliates of $0.5 million.
(c)
Amount for the three months ended September 30, 2019 represents 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.

403829072_wpclogoa01a01a35.jpg 
 
Investing for the long runTM | 6


W. P. Carey Inc.
Financial Results – First Quarter 2020
Statements of Income, Real Estate – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Mar. 31, 2020
 
Dec. 31, 2019
 
Sep. 30, 2019
 
Jun. 30, 2019
 
Mar. 31, 2019
Revenues
 
 
 
 
 
 
 
 
 
Lease revenues
$
282,110

 
$
274,795

 
$
278,839

 
$
269,802

 
$
262,939

Lease termination income and other
6,509

 
12,317

 
14,377

 
6,304

 
3,270

Operating property revenues
5,967

 
9,250

 
9,538

 
15,436

 
15,996

 
294,586

 
296,362

 
302,754

 
291,542

 
282,205

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
115,207

 
110,648

 
108,573

 
112,666

 
111,413

Impairment charges
19,420

 
6,758

 
25,781

 

 

General and administrative
14,922

 
12,634

 
13,973

 
15,001

 
15,188

Reimbursable tenant costs
13,175

 
12,877

 
15,611

 
13,917

 
13,171

Property expenses, excluding reimbursable tenant costs
10,075

 
9,341

 
10,377

 
9,915

 
9,912

Operating property expenses
5,223

 
8,000

 
8,547

 
10,874

 
10,594

Stock-based compensation expense
1,970

 
3,531

 
3,435

 
3,482

 
2,800

Merger and other expenses
(132
)
 
(811
)
 
70

 
696

 
146

 
179,860

 
162,978

 
186,367

 
166,551

 
163,224

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(52,540
)
 
(53,667
)
 
(58,626
)
 
(59,719
)
 
(61,313
)
Gain (loss) on sale of real estate, net
11,751

 
17,501

 
71

 
(362
)
 
933

Other gains and (losses)
(5,776
)
 
43,581

 
(12,938
)
 
(1,362
)
 
970

Equity in earnings (losses) of equity method investments in real estate
1,565

 
1,631

 
578

 
230

 
(78
)
Loss on change in control of interests (a)

 

 
(8,416
)
 

 

 
(45,000
)
 
9,046

 
(79,331
)
 
(61,213
)
 
(59,488
)
Income before income taxes
69,726

 
142,430

 
37,056

 
63,778

 
59,493

Benefit from (provision for) income taxes
31,800

 
(18,113
)
 
(3,511
)
 
(3,019
)
 
(6,159
)
Net Income from Real Estate
101,526


124,317


33,545


60,759


53,334

Net (income) loss attributable to noncontrolling interests
(612
)

16


11


9


74

Net Income from Real Estate Attributable to W. P. Carey
$
100,914

 
$
124,333

 
$
33,556

 
$
60,768

 
$
53,408

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
0.58

 
$
0.72

 
$
0.19

 
$
0.36

 
$
0.32

Diluted Earnings Per Share
$
0.58

 
$
0.72

 
$
0.19

 
$
0.35

 
$
0.32

Weighted-Average Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
173,249,236

 
173,153,811

 
172,235,066

 
171,304,112

 
167,234,121

Diluted
173,460,053

 
173,442,101

 
172,486,506

 
171,490,625

 
167,434,740

________
(a)
Amount for the three months ended September 30, 2019 represents 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.

403829072_wpclogoa01a01a35.jpg 
 
Investing for the long runTM | 7


W. P. Carey Inc.
Financial Results – First Quarter 2020
Statements of Income, Investment Management – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Mar. 31, 2020
 
Dec. 31, 2019
 
Sep. 30, 2019
 
Jun. 30, 2019
 
Mar. 31, 2019
Revenues
 
 
 
 
 
 
 
 
 
Asset management revenue
$
9,889

 
$
9,732

 
$
9,878

 
$
9,790

 
$
9,732

Reimbursable costs from affiliates
4,030

 
4,072

 
4,786

 
3,821

 
3,868

Structuring and other advisory revenue
494

 
1,061

 
587

 
58

 
2,518

 
14,413

 
14,865

 
15,251