W. P. CAREY INC. NEW YORK, Aug. 4, 2015 /PRNewswire/ -- W. P. Carey Inc. (NYSE: WPC) (W. P. Carey or the Company), a global net lease real estate investment trust, today reported its financial results for the second quarter ended June 30, 2015.
Financial Update - Second Quarter 2015
-- Net revenues of $224.3 million, comprised of net revenues from real
estate ownership of $174.1 million and net revenues from the Managed
Programs of $50.2 million
-- AFFO of $139.0 million, equivalent to $1.31 per diluted share
-- Reaffirm 2015 AFFO guidance range of $4.76 to $5.02 per diluted share
-- Quarterly dividend raised to $0.954 per share, equivalent to an
annualized dividend rate of $3.82 per share
Business Update - Second Quarter 2015
Owned Real Estate
-- Completed two investments totaling $51.4 million
-- Disposed of two properties for total proceeds of $11.3 million
-- Net lease portfolio occupancy of 98.6%
Investment Management
-- Structured $1.1 billion of investments on behalf of the Managed REITs
-- CWI 2 exceeded its required minimum offering amount and began admitting
new stockholders
-- Subsequent to quarter end, the Company commenced capital raising on
behalf of its first non-traded BDC
Balance Sheet and Capitalization
-- Established an "at-the-market" offering program under which the Company
may issue up to $400.0 million of common stock. To date, no shares have
been issued pursuant to this program.
MANAGEMENT COMMENTARY
"During the second quarter, we completed two acquisitions for our owned real estate portfolio totaling $51.4 million, bringing total investment volume for the first half of 2015 to $445.6 million," said Trevor Bond, Chief Executive Officer of W. P. Carey. "All of our first half investments were in Europe -- specifically, in the UK, the Netherlands, Austria and Sweden -- reflecting the continued favorable market conditions there for net lease deals, as well as our ability to successfully source and close transactions throughout the region. We also completed acquisitions totaling $1.1 billion on behalf of our Managed REITs, primarily comprised of operating properties for our lodging REITs.
"Elsewhere, we continue to make progress with our strategy of diversifying and expanding the product offerings within our investment management business. In May, our second non-traded REIT focused on lodging, Carey Watermark Investors 2 Incorporated, broke escrow for its initial public offering of up to $1.4 billion. And I'm pleased to announce that since quarter end, we have launched our first non-traded BDC, Carey Credit Income Fund."
FINANCIAL RESULTS
Revenues
-- Total Company: Revenues excluding reimbursable costs (net revenues) for
the 2015 second quarter totaled $224.3 million, up 9.0% from $205.7
million for the 2014 second quarter, due primarily to additional lease
revenues from properties acquired during and subsequent to the 2014
second quarter, as well as higher net revenues from the Managed
Programs.
-- Real Estate Ownership: Real estate revenues excluding reimbursable
tenant costs (net revenues from real estate ownership) for the 2015
second quarter were $174.1 million, up 1.5% from $171.5 million for the
2014 second quarter, due primarily to additional lease revenues from
properties acquired during and subsequent to the 2014 second quarter.
-- Investment Management: Revenues from the Managed Programs excluding
reimbursable costs (net revenues from the Managed Programs) for the 2015
second quarter were $50.2 million, up 46.8% from $34.2 million for the
2014 second quarter, due primarily to higher structuring revenue
resulting from increased acquisition activity on behalf of the Managed
REITs.
Adjusted Funds from Operations (AFFO)
-- AFFO for the 2015 second quarter was $1.31 per diluted share, up 8.3%
compared to $1.21 per diluted share for the 2014 second quarter, due
primarily to (i) higher assets under management within our investment
management business, resulting in increases to both asset management
fees and distributions of available cash from the Company's interests in
the operating partnerships of the Managed REITs; (ii) higher structuring
revenue due to increased acquisition activity on behalf of the Managed
REITs; and (iii) the positive net impact of properties acquired for our
owned real estate portfolio since the beginning of the 2014 second
quarter. These were partly offset by a stronger U.S. dollar, primarily
relative to the euro, net of realized hedging gains.
-- Note: Further information concerning AFFO, a non-GAAP supplemental
performance metric, is presented in the accompanying tables and related
notes.
Dividend
-- As previously announced, on June 18, 2015 the Company's Board of
Directors declared a quarterly cash dividend of $0.954 per share,
equivalent to an annualized dividend rate of $3.82 per share. Paid on
July 15, 2015 to stockholders of record as of June 30, 2015, it
represented the Company's 57(th) consecutive quarterly dividend
increase.
AFFO GUIDANCE
-- For the 2015 full year, the Company reaffirms that it expects to report
AFFO of between $4.76 and $5.02 per diluted share, based on assumed
total acquisition volume of between approximately $2.4 billion and $3.1
billion, comprised of approximately $400 million to $600 million for the
Company's owned real estate portfolio and approximately $2.0 billion to
$2.5 billion on behalf of the Managed REITs. It also assumes
dispositions from the Company's owned real estate portfolio of between
approximately $100 million and $200 million.
-- Note: The Company expects to update its 2015 AFFO guidance in connection
with the release of subsequent quarterly earnings.
BALANCE SHEET AND CAPITALIZATION
"At-The-Market" Offering Program
-- As previously announced, on June 3, 2015 the Company filed a prospectus
supplement with the Securities and Exchange Commission (SEC) under which
it may sell shares of its common stock having an aggregate gross sales
price of up to $400 million, through an "at-the-market" (ATM) offering
program. To date, the Company has not issued any shares pursuant to this
ATM offering program.
OWNED REAL ESTATE PORTFOLIO
Acquisitions and Dispositions
-- During the 2015 second quarter, the Company completed two investments
totaling $51.4 million, bringing total investment volume for the first
half of 2015 to $445.6 million, including acquisition related-costs and
fees.
-- During the 2015 second quarter, the Company disposed of two properties
for a total of $11.3 million, bringing total dispositions for the first
half of 2015 to $25.1 million, including transaction related-costs and
fees, as part of its active capital recycling program.
Composition
-- As of June 30, 2015, the Company's owned real estate portfolio consisted
of 852 net lease properties, comprising 89.3 million square feet leased
to 217 tenants, and four operating properties. As of that date, the
weighted-average lease term of the net lease portfolio was 9.1 years and
the occupancy rate was 98.6%.
INVESTMENT MANAGEMENT
-- W. P. Carey is the advisor to CPA(®):17 - Global, CPA(®):18 - Global
(together the CPA(® )REITs), Carey Watermark Investors Incorporated
(CWI), Carey Watermark Investors 2 Incorporated (CWI 2) (together the
CWI REITs, and together with the CPA(® )REITs, the Managed REITs) and
Carey Credit Income Fund (CCIF) (together with the Managed REITs, the
Managed Programs). At June 30, 2015, the Managed Programs, in aggregate,
had total assets under management of approximately $10.4 billion.
Acquisitions
-- During the 2015 second quarter, the Company structured investments
totaling $1.1 billion on behalf of the Managed REITs, comprised of
investments totaling $520.4 million on behalf of the CPA(® )REITs and
investments totaling $550.2 million on behalf of the CWI REITs, in each
case including acquisition-related costs and fees.
Investor Capital
-- On May 15, 2015, CWI 2 exceeded its required minimum offering amount,
enabling it to began admitting new stockholders in its initial public
offering of up to $1.4 billion. During the remainder of the 2015 second
quarter, the Company raised approximately $17.0 million on behalf of CWI
2.
-- Subsequent to quarter end, the registration statements for Carey Credit
Income Fund 2016 T and Carey Credit Income Fund-I were declared
effective by the SEC, enabling the Company to commence capital raising
on their behalf as feeder funds for CCIF, the Company's first business
development company (BDC).
* * * * *
Supplemental Information
The Company has provided supplemental unaudited financial and operating information regarding the 2015 second quarter, including a description of non-GAAP financial measures and reconciliations to GAAP measures, in a Current Report on Form 8-K filed with the SEC on August 4, 2015.
* * * * *
Live Conference Call and Audio Webcast Scheduled for 11:00 a.m. Eastern Time
Please call to register at least 10 minutes prior to the start time.
Date/Time: Tuesday, August 4, 2015 at 11:00 a.m. Eastern Time
Call-in Number: +1-844-691-1119 (US) or +1-925-392-0263 (international)
Conference ID: 79328224
Audio Webcast: www.wpcarey.com/earnings
Audio Webcast Replay
An audio replay of the call will be available at www.wpcarey.com/earnings.
* * * * *
W. P. Carey Inc.
W. P. Carey Inc. is a leading global net lease REIT that provides long-term sale-leaseback and build-to-suit financing solutions for companies worldwide. At June 30, 2015, the Company had an enterprise value of approximately $10.4 billion. In addition to its owned portfolio of diversified global real estate, W. P. Carey manages a series of non-traded publicly registered investment programs with assets under management of approximately $10.4 billion. Its corporate finance-focused credit and real estate underwriting process is a constant that has been successfully leveraged across a wide variety of industries and property types. Furthermore, its portfolio of long-term leases with creditworthy tenants has an established history of generating stable cash flows, enabling it to deliver consistent and rising dividend income to investors for over four decades.
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, the statements made by Mr. Bond, such as his statement about the continued favorable market conditions in Europe, as well as statements regarding annualized dividends, funds from operations coverage and guidance, including underlying assumptions, and with regard to its capital recycling and intended results thereof, the ability of the Company to sell its shares under the ATM program, and anticipated future financial and operating performance and results, including estimates of growth. These statements are based on the current expectations of the management of W. P. Carey. It is important to note that W. P. Carey's actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results, performance, or achievements of W. P. Carey. Discussions of some of these other important factors and assumptions are contained in W. P. Carey's filings with the SEC and are available at the SEC's website at http://www.sec.gov, including Item 1A. Risk Factors in W. P. Carey's Annual Report on Form 10-K for the year ended December 31, 2014 as filed with the SEC on March 2, 2015, as amended by a Form 10-K/A filed with the SEC on March 17, 2015, and Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 as filed with the SEC on May 18, 2015. 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.
Consolidated Balance Sheets (Unaudited)
(in thousands)
June 30, 2015 December 31, 2014
------------- -----------------
Assets
Investments in real estate:
Real estate, at cost $5,296,054 $5,006,682
Operating real estate,
at cost 85,237 84,885
Accumulated depreciation (324,136) (258,493)
-------- --------
Net investments in
properties 5,057,155 4,833,074
Net investments in
direct financing leases 783,832 816,226
Assets held for sale - 7,255
--- -----
Net investments in real
estate 5,840,987 5,656,555
Cash and cash
equivalents 233,629 198,683
Equity investments in
the Managed Programs
and real estate 263,418 249,403
Due from affiliates 176,796 34,477
Goodwill 687,084 692,415
In-place lease and
tenant relationship
intangible assets, net 948,547 993,819
Above-market rent
intangible assets, net 498,746 522,797
Other assets, net 318,397 300,330
------- -------
Total Assets $8,967,604 $8,648,479
========== ==========
Liabilities and Equity
Liabilities:
Non-recourse debt, net $2,443,212 $2,532,683
Senior Unsecured Credit
Facility -Revolver 350,234 807,518
Senior Unsecured Credit
Facility -Term Loan 250,000 250,000
Senior Unsecured Notes,
net 1,501,061 498,345
Below-market rent and
other intangible
liabilities, net 171,544 175,070
Accounts payable,
accrued expenses and
other liabilities 312,521 293,846
Deferred income taxes 89,036 94,133
Distributions payable 101,517 100,078
Total liabilities 5,219,125 4,751,673
--------- ---------
Redeemable
noncontrolling interest 13,374 6,071
------ -----
Equity:
W. P. Carey stockholders' equity:
Preferred stock (none
issued) - -
Common stock 105 105
Additional paid-in
capital 4,298,574 4,322,273
Distributions in excess
of accumulated earnings (575,404) (465,606)
Deferred compensation
obligation 57,395 30,624
Accumulated other
comprehensive loss (120,777) (75,559)
Less: treasury stock at
cost (60,948) (60,948)
------- -------
Total W. P. Carey
stockholders' equity 3,598,945 3,750,889
Noncontrolling interests 136,160 139,846
------- -------
Total equity 3,735,105 3,890,735
--------- ---------
Total Liabilities and
Equity $8,967,604 $8,648,479
========== ==========
W. P. CAREY INC.
Quarterly Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)
Three Months Ended
------------------
June 30, 2015 March 31, 2015 June 30, 2014
------------- -------------- -------------
Revenues
Real estate revenues:
Lease revenues $162,574 $160,165 $148,253
Operating property revenues (a) 8,426 7,112 8,251
Reimbursable tenant costs 6,130 5,939 5,749
Lease termination income and other 3,122 3,209 14,988
-----
180,252 176,425 177,241
------- ------- -------
Revenues from the Managed Programs:
Structuring revenue 37,808 21,720 17,254
Asset management revenue 12,073 11,159 9,045
Reimbursable costs 7,639 9,607 41,925
Dealer manager fees 307 1,274 7,949
Incentive, termination and subordinated disposition revenue - 203 -
--- --- ---
57,827 43,963 76,173
------ ------ ------
238,079 220,388 253,414
------- ------- -------
Operating Expenses
Depreciation and amortization 65,166 65,400 63,445
General and administrative 26,376 29,768 19,134
Reimbursable tenant and affiliate costs 13,769 15,546 47,674
Property expenses, excluding reimbursable tenant costs 11,020 9,364 11,211
Stock-based compensation expense 5,089 7,009 7,957
Subadvisor fees (b) 4,147 2,661 2,451
Dealer manager fees and expenses 2,327 2,372 6,285
Acquisition expenses 1,897 5,676 1,137
Impairment charges 591 2,683 2,066
--- ----- -----
130,382 140,479 161,360
------- ------- -------
Other Income and Expenses
Interest expense (47,693) (47,949) (47,733)
Equity in earnings of equity method investments in the Managed Programs 14,272 11,723 9,452
and real estate
Other income and (expenses) 7,641 (4,306) (1,378)
----- ------ ------
(25,780) (40,532) (39,659)
------- ------- -------
Income from continuing operations before income taxes and gain (loss) on sale of real estate 81,917 39,377 52,395
Provision for income taxes (15,010) (1,980) (8,021)
------- ------ ------
Income from continuing operations before gain (loss) on sale of real estate 66,907 37,397 44,374
Income from discontinued operations, net of tax - - 26,421
Gain (loss) on sale of real estate, net of tax 16 1,185 (3,823)
Net Income 66,923 38,582 66,972
Net income attributable to noncontrolling interests (3,575) (2,466) (2,344)
Net loss attributable to redeemable noncontrolling interest - - 111
Net Income Attributable to W. P. Carey $63,348 $36,116 $64,739
======= ======= =======
Basic Earnings Per Share
Income from continuing operations attributable to W. P. Carey $0.60 $0.34 $0.38
Income from discontinued operations attributable to W. P. Carey - - 0.26
Net Income Attributable to W. P. Carey $0.60 $0.34 $0.64
===== ===== =====
Diluted Earnings Per Share
Income from continuing operations attributable to W. P. Carey $0.59 $0.34 $0.38
Income from discontinued operations attributable to W. P. Carey - - 0.26
Net Income Attributable to W. P. Carey $0.59 $0.34 $0.64
===== ===== =====
Weighted-Average Shares Outstanding
Basic 105,764,032 105,303,679 100,236,362
Diluted 106,281,983 106,109,877 100,995,225
Amounts Attributable to W. P. Carey
Income from continuing operations, net of tax $63,348 $36,116 $38,275
Income from discontinued operations, net of tax - - 26,464
Net Income $63,348 $36,116 $64,739
======= ======= =======
Distributions Declared Per Share $0.9540 $0.9525 $0.9000
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,
-------------------------
2015 2014
---- ----
Revenues
Real estate revenues:
Lease revenues $322,739 $271,320
Operating property revenues (a) 15,538 13,244
Reimbursable tenant costs 12,069 11,763
Lease termination income and other 6,331 16,175
-----
356,677 312,502
------- -------
Revenues from the Managed REITs:
Structuring revenue 59,528 35,005
Asset management revenue 23,232 18,822
Reimbursable costs 17,246 81,657
Dealer manager fees 1,581 14,626
Incentive, termination and subordinated disposition revenue 203 -
--- ---
101,790 150,110
------- -------
458,467 462,612
------- -------
Operating Expenses
Depreciation and amortization 130,566 116,118
General and administrative 56,144 41,804
Reimbursable tenant and affiliate costs 29,315 93,420
Property expenses, excluding reimbursable tenant costs 20,384 19,630
Stock-based compensation expense 12,098 15,000
Merger and property acquisition expenses 7,573 30,751
Subadvisor fees (b) 6,808 2,469
Dealer manager fees and expenses 4,699 11,710
Impairment charges 3,274 2,066
----- -----
270,861 332,968
------- -------
Other Income and Expenses
Interest expense (95,642) (86,808)
Equity in earnings of equity method investments in the Managed Programs and real estate 25,995 23,714
Other income and (expenses) 3,335 (7,019)
Gain on change in control of interests (c) - 105,947
--- -------
(66,312) 35,834
------- ------
Income from continuing operations before income taxes and gain (loss) loss on sale of real estate 121,294 165,478
Provision for income taxes (16,990) (10,274)
------- -------
Income from continuing operations before gain (loss) on sale of real estate 104,304 155,204
Income from discontinued operations, net of tax - 32,828
Gain (loss) on sale of real estate, net of tax 1,201 (3,743)
Net Income 105,505 184,289
Net income attributable to noncontrolling interests (6,041) (3,921)
Net income attributable to redeemable noncontrolling interest - (151)
Net Income Attributable to W. P. Carey $99,464 $180,217
======= ========
Basic Earnings Per Share
Income from continuing operations attributable to W. P. Carey $0.94 $1.55
Income from discontinued operations attributable to W. P. Carey - 0.34
Net Income Attributable to W. P. Carey $0.94 $1.89
===== =====
Diluted Earnings Per Share
Income from continuing operations attributable to W. P. Carey $0.93 $1.53
Income from discontinued operations attributable to W. P. Carey - 0.34
Net Income Attributable to W. P. Carey $0.93 $1.87
===== =====
Weighted-Average Shares Outstanding
Basic 105,532,976 94,855,067
Diluted 106,355,402 95,857,916
Amounts Attributable to W. P. Carey
Income from continuing operations, net of tax $99,464 $147,211
Income from discontinued operations, net of tax - 33,006
--- ------
Net Income $99,464 $180,217
======= ========
Distributions Declared Per Share $1.9065 $1.7950
__________
(a) Comprised of revenues of $8.1 million
from two hotels and revenues of $0.3
million from two self-storage
facilities for the three months ended
June 30, 2015, and $15.0 million and
$0.6 million, respectively, for the six
months ended June 30, 2015.
(b) We earn investment management revenue
from CWI and CWI 2 in our role as their
advisor. Pursuant to the terms of the
subadvisory agreements, however, 20% of
the fees we receive from CWI and 25% of
the fees we receive from CWI 2 are paid
to their respective subadvisors. We
also pay the subadvisors 20% and 25% of
the net proceeds from any sale,
financing, or recapitalization of CWI
and CWI 2 securities, respectively.
(c) Gain on change in control of interests
for the six months ended June 30, 2014
represents a gain of $75.7 million
recognized on our previously-held
interest in shares of CPA(R):16 -
Global common stock, and a gain of
$30.2 million recognized on the
purchase of the remaining interests in
nine investments
from CPA(R):16 - Global, which we had
previously accounted for under the
equity method.
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, 2015 March 31, 2015 June 30, 2014
------------- -------------- -------------
Net income attributable to W. P. Carey $63,348 $36,116 $64,739
Adjustments:
Depreciation and amortization of real property 63,688 63,891 62,354
Impairment charges 591 2,683 2,066
Gain on sale of real estate, net (16) (1,185) (25,582)
Proportionate share of adjustments for noncontrolling interests to arrive at (2,640) (2,653) (2,586)
FFO
Proportionate share of adjustments to equity in net income of partially-owned 1,296 1,278 533
entities to arrive at FFO
Total adjustments 62,919 64,014 36,785
------ ------ ------
FFO Attributable to W. P. Carey (as defined by NAREIT) 126,267 100,130 101,524
------- ------- -------
Adjustments:
Above- and below-market rent intangible lease amortization, net 13,220 13,750 17,124
Other amortization and non-cash items (a) (6,574) 6,690 1,719
Stock-based compensation 5,089 7,009 7,957
Straight-line and other rent adjustments (3,070) (2,937) (8,999)
Acquisition expenses 1,897 5,676 1,139
Amortization of deferred financing costs 1,489 1,165 999
AFFO adjustments to equity earnings from equity investments 1,426 1,137 935
Tax benefit - deferred and other non-cash charges (1,372) (1,745) (1,246)
Realized losses (gains) on foreign currency, derivatives, and other (b) 415 (554) 159
Loss on extinguishment of debt - - 721
Other, net - - (13)
Proportionate share of adjustments for noncontrolling interests to arrive at 15 (214) 259
AFFO
Proportionate share of adjustments to equity in net income of partially-owned 234 (137) (32)
entities to arrive at AFFO
Total adjustments 12,769 29,840 20,722
------ ------ ------
AFFO Attributable to W. P. Carey $139,036 $129,970 $122,246
======== ======== ========
Summary
FFO attributable to W. P. Carey (as defined by NAREIT) $126,267 $100,130 $101,524
FFO attributable to W. P. Carey (as defined by NAREIT) per diluted share $1.19 $0.94 $1.01
AFFO attributable to W. P. Carey $139,036 $129,970 $122,246
AFFO attributable to W. P. Carey per diluted share $1.31 $1.22 $1.21
Diluted weighted-average shares outstanding 106,281,983 106,109,877 100,995,225
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,
-------------------------
2015 2014
---- ----
Net income attributable to W. P. Carey $99,464 $180,217
Adjustments:
Depreciation and amortization of real property 127,579 113,974
Impairment charges 3,274 2,066
Gain on sale of real estate, net (1,201) (28,758)
Proportionate share of adjustments for noncontrolling interests to arrive at (5,293) (6,078)
FFO
Proportionate share of adjustments to equity in net income of partially-owned 2,574 1,798
entities to arrive at FFO
Total adjustments 126,933 83,002
------- ------
FFO Attributable to W. P. Carey (as defined by NAREIT) 226,397 263,219
------- -------
Adjustments:
Above- and below-market rent intangible lease amortization, net 26,970 30,610
Stock-based compensation 12,098 15,000
Merger and property acquisition expenses (c) 7,573 44,618
Straight-line and other rent adjustments (6,007) (11,668)
Tax benefit - deferred and other non-cash charges (3,118) (12,176)
Amortization of deferred financing costs 2,654 2,024
AFFO adjustments to equity earnings from equity investments 2,563 3,871
Realized (gains) losses on foreign currency, derivatives, and other (139) 820
Other amortization and non-cash items (a) 115 2,574
Gain on change in control of interests (d) - (105,947)
Loss on extinguishment of debt - 8,713
Other, net (e) - 21
Proportionate share of adjustments for noncontrolling interests to arrive at AFFO (199) (1,158)
Proportionate share of adjustments to equity in net income of partially-owned 96 (27)
entities to arrive at AFFO
Total adjustments 42,606 (22,725)
------ -------
AFFO Attributable to W. P. Carey $269,003 $240,494
======== ========
Summary
FFO attributable to W. P. Carey (as defined by NAREIT) $226,397 $263,219
FFO attributable to W. P. Carey (as defined by NAREIT) per diluted share $2.13 $2.75
AFFO attributable to W. P. Carey $269,003 $240,494
AFFO attributable to W. P. Carey per diluted share $2.53 $2.51
Diluted weighted-average shares outstanding 106,355,402 95,857,916
_________
(a) Represents primarily unrealized
gains and losses from foreign
exchange and derivatives, as well
as amounts for the amortization of
contracts.
(b) Effective prospectively on January
1, 2015, we no longer adjust for
realized gains or losses on
foreign exchange derivatives.
Realized gain on derivatives was
$0.3 million for the three months
ended June 30, 2014, there were no
such gain for the six months ended
June 30, 2014.
(c) Amount for the six months ended
June 30, 2014 includes reported
merger costs as well as income tax
expense incurred in connection
with the CPA(R):16 Merger. Income
tax expense incurred in connection
with the CPA(R):16 Merger
represents the current portion of
income tax expense, including the
permanent difference incurred upon
recognition of deferred revenue
associated with the accelerated
vesting of shares previously
issued by CPA(R):16 - Global for
asset management and performance
fees.
(d) Gain on change in control of
interests for the six months ended
June 30, 2014 represents a gain of
$75.7 million recognized on our
previously-held interest in
shares of CPA(R):16 - Global
common stock, and a gain of $30.2
million recognized on the purchase
of the remaining interests in nine
investments
from CPA(R):16 - Global, which we
had previously accounted for under
the equity method.
(e) Other, net for the six months ended
June 30, 2014 primarily consists
of proceeds from a bankruptcy
settlement claim with U.S.
Aluminum of Canada, a former
CPA(R):16 - Global tenant that was
acquired as part of the CPA(R):16
Merger on January 31, 2014, and
under GAAP was accounted for in
purchase accounting.
Non-GAAP Financial Disclosure
Funds from Operations, or FFO, is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as net income or loss (as computed in accordance with GAAP) excluding: depreciation and amortization expense from real estate assets, impairment charges on real estate, gains or losses from sales of depreciated real estate assets, and extraordinary items; however, FFO related to assets held for sale, sold, or otherwise transferred and included in the results of discontinued operations are included. These adjustments also incorporate the pro rata share of unconsolidated subsidiaries. FFO is used by management, investors, and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers. Although NAREIT has published this definition of FFO, companies often modify this definition as they seek to provide financial measures that meaningfully reflect their distinctive operations.
We modify the NAREIT computation of FFO to include other adjustments to GAAP net income to adjust for certain non-cash charges such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rents, stock compensation, gains or losses from extinguishment of debt and deconsolidation of subsidiaries, and unrealized foreign currency exchange gains and losses. 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 acquisition expenses and non-core expenses such as merger expenses. Merger expenses are related to the CPA(®):16 Merger. We also exclude realized gains or losses on foreign exchange 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 as they are not the primary drivers in our decision making process and excluding those items provides investors a view of our portfolio performance over time and make it more comparable to other REITs not currently engaged in acquisitions, mergers, and restructuring, which are not part of our normal business operations. 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 because 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 earnings computed under GAAP or as alternatives to cash from operating activities computed under GAAP or as indicators of our ability to fund our cash needs.
Institutional Investors:
Peter Sands
W. P. Carey Inc.
212-492-1110
institutionalir@wpcarey.com
Individual Investors:
W. P. Carey Inc.
212-492-8920
ir@wpcarey.com
Press Contact:
Guy Lawrence
Ross & Lawrence
212-308-3333
gblawrence@rosslawpr.com
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SOURCE W. P. Carey Inc.
