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• | Net income attributable to W. P. Carey of $65.3 million, or $0.60 per diluted share |
• | AFFO of $138.4 million, or $1.28 per diluted share |
• | Quarterly cash dividend raised to $1.015 per share, equivalent to an annualized dividend rate of $4.06 per share |
• | Affirm 2018 AFFO guidance range of $5.30 to $5.50 per diluted share |
• | Segment net income attributable to W. P. Carey of $45.3 million |
• | Segment AFFO of $114.9 million, or $1.06 per diluted share |
• | Acquisitions and completed capital investment projects totaling $106.2 million |
• | Ten active capital investment projects for a total commitment of $139.3 million at quarter end |
• | Gross disposition proceeds totaling $35.5 million |
• | Portfolio occupancy of 99.7% |
• | Weighted-average lease term of 9.7 years |
• | Segment net income attributable to W. P. Carey of $20.0 million |
• | Segment AFFO of $23.4 million, or $0.22 per diluted share |
• | Issued €500 million of 2.125% Unsecured Senior Notes due 2027 |
• | Total Company: Revenues excluding reimbursable costs (net revenues) for the 2018 first quarter totaled $190.3 million, up 1.2% from $188.1 million for the 2017 first quarter. |
• | Owned Real Estate: Owned Real Estate net revenues for the 2018 first quarter were $171.4 million, up 4.8% from $163.5 million for the 2017 first quarter, due to higher lease revenues resulting primarily from a stronger euro relative to the U.S. dollar and rent escalations, partially offset by the impact of planned dispositions. |
• | Investment Management: Investment Management net revenues for the 2018 first quarter were $18.9 million, down 23.2% from $24.6 million for the 2017 first quarter, due primarily to the cessation of dealer manager fees resulting from the Company’s exit from non-traded retail fundraising and lower structuring revenues. |
• | Net income attributable to W. P. Carey for the 2018 first quarter was $65.3 million, up 13.6% compared to $57.5 million for the 2017 first quarter, due primarily to a higher aggregate gain on sale of real estate. |
• | AFFO for the 2018 first quarter was $1.28 per diluted share, up 2.4% from $1.25 per diluted share for the 2017 first quarter, due primarily to rent escalations, lower interest expense and a stronger euro relative to the U.S. dollar, partially offset by lower structuring revenues. |
• | As previously announced, on March 15, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $1.015 per share, equivalent to an annualized dividend rate of $4.06 per share. The dividend was paid on April 16, 2018 to stockholders of record as of March 29, 2018. |
• | For the 2018 full year, the Company affirms that it expects to report AFFO of between $5.30 and $5.50 per diluted share, based on the following key assumptions: |
(i) | investments for the Company’s Owned Real Estate portfolio of between $500 million and $1 billion; |
(ii) | dispositions from the Company’s Owned Real Estate portfolio of between $300 million and $500 million; and |
(iii) | total general and administrative expenses of between $65 million and $70 million. |
• | As previously announced, on March 6, 2018, the Company completed an underwritten public offering of €500 million aggregate principal amount of 2.125% Senior Notes due April 15, 2027. The Company used the net proceeds from this offering to repay its term loans, reduce secured mortgage debt and reduce amounts outstanding under its unsecured revolving credit facility. |
• | During the 2018 first quarter, the Company completed total investments of $106.2 million, comprised of two acquisitions totaling $85.2 million and one build-to-suit project placed into service at a total cost of $21.0 million, including transaction-related costs and fees. |
• | As of March 31, 2018, the Company had ten active capital investment projects for an expected total investment of approximately $139.3 million, of which $88.5 million is currently expected to be completed during 2018. |
• | During the 2018 first quarter, the Company disposed of five properties for total gross proceeds of $35.5 million. |
• | As of March 31, 2018, the Company’s Owned Real Estate portfolio consisted of 886 net lease properties, comprising 85.4 million square feet leased to 208 tenants, and two hotel operating properties. As of that date, the weighted-average lease term of the net lease portfolio was 9.7 years and the occupancy rate was 99.7%. |
• | W. P. Carey is the advisor to CPA:17 – Global and CPA:18 – Global (the CPA® REITs), Carey Watermark Investors Incorporated (CWI 1) and Carey Watermark Investors 2 Incorporated (CWI 2) (the CWI® REITs, and together with the CPA REITs, the Managed REITs), and Carey European Student Housing Fund I, L.P. (CESH I, and together with the Managed REITs, the Managed Programs). |
• | During the 2018 first quarter, the Company structured one new student housing investment on behalf of the Managed Programs totaling $28.5 million. |
• | As of March 31, 2018, the Managed Programs had total assets under management of approximately $13.3 billion. |
March 31, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Investments in real estate: | |||||||
Land, buildings and improvements (a) | $ | 5,523,209 | $ | 5,457,265 | |||
Net investments in direct financing leases | 725,676 | 721,607 | |||||
In-place lease and other intangible assets | 1,235,828 | 1,213,976 | |||||
Above-market rent intangible assets | 639,057 | 640,480 | |||||
Assets held for sale, net (b) | 33,182 | — | |||||
Investments in real estate | 8,156,952 | 8,033,328 | |||||
Accumulated depreciation and amortization (c) | (1,399,810 | ) | (1,329,613 | ) | |||
Net investments in real estate | 6,757,142 | 6,703,715 | |||||
Equity investments in the Managed Programs and real estate (d) | 358,068 | 341,457 | |||||
Cash and cash equivalents | 171,331 | 162,312 | |||||
Due from affiliates | 75,540 | 105,308 | |||||
Other assets, net | 280,054 | 274,650 | |||||
Goodwill | 645,736 | 643,960 | |||||
Total assets | $ | 8,287,871 | $ | 8,231,402 | |||
Liabilities and Equity | |||||||
Debt: | |||||||
Unsecured senior notes, net | $ | 3,115,839 | $ | 2,474,661 | |||
Unsecured revolving credit facility | 267,424 | 216,775 | |||||
Unsecured term loans, net | — | 388,354 | |||||
Non-recourse mortgages, net | 1,005,868 | 1,185,477 | |||||
Debt, net | 4,389,131 | 4,265,267 | |||||
Accounts payable, accrued expenses and other liabilities | 247,138 | 263,053 | |||||
Below-market rent and other intangible liabilities, net | 111,801 | 113,957 | |||||
Deferred income taxes | 59,022 | 67,009 | |||||
Distributions payable | 110,309 | 109,766 | |||||
Total liabilities | 4,917,401 | 4,819,052 | |||||
Redeemable noncontrolling interest | 965 | 965 | |||||
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued | — | — | |||||
Common stock, $0.001 par value, 450,000,000 shares authorized; 107,194,440 and 106,922,616 shares, respectively, issued and outstanding | 107 | 107 | |||||
Additional paid-in capital | 4,439,433 | 4,433,573 | |||||
Distributions in excess of accumulated earnings | (1,097,415 | ) | (1,052,064 | ) | |||
Deferred compensation obligation | 36,147 | 46,656 | |||||
Accumulated other comprehensive loss | (229,238 | ) | (236,011 | ) | |||
Total stockholders’ equity | 3,149,034 | 3,192,261 | |||||
Noncontrolling interests | 220,471 | 219,124 | |||||
Total equity | 3,369,505 | 3,411,385 | |||||
Total liabilities and equity | $ | 8,287,871 | $ | 8,231,402 |
(a) | Includes $40.2 million and $83.0 million of amounts attributable to operating properties as of March 31, 2018 and December 31, 2017, respectively. |
(b) | At March 31, 2018, we had one property (an operating property) classified as Assets held for sale, net, which was subsequently sold in April 2018. |
(c) | Includes $658.8 million and $630.0 million of accumulated depreciation on buildings and improvements as of March 31, 2018 and December 31, 2017, respectively, and $741.0 million and $699.7 million of accumulated amortization on lease intangibles as of March 31, 2018 and December 31, 2017, respectively. |
(d) | Our equity investments in the Managed Programs totaled $217.6 million and $201.4 million as of March 31, 2018 and December 31, 2017, respectively. Our equity investments in real estate joint ventures totaled $140.5 million and $140.0 million as of March 31, 2018 and December 31, 2017, respectively. |
Three Months Ended | |||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||||
Revenues | |||||||||||
Owned Real Estate: | |||||||||||
Lease revenues | $ | 163,213 | $ | 154,826 | $ | 155,781 | |||||
Operating property revenues | 7,218 | 6,910 | 6,980 | ||||||||
Reimbursable tenant costs | 6,219 | 5,584 | 5,221 | ||||||||
Lease termination income and other | 942 | 515 | 760 | ||||||||
177,592 | 167,835 | 168,742 | |||||||||
Investment Management: | |||||||||||
Asset management revenue | 16,985 | 16,854 | 17,367 | ||||||||
Reimbursable costs from affiliates | 5,304 | 6,055 | 25,700 | ||||||||
Structuring revenue | 1,739 | 6,217 | 3,834 | ||||||||
Other advisory revenue | 190 | — | 91 | ||||||||
Dealer manager fees | — | — | 3,325 | ||||||||
24,218 | 29,126 | 50,317 | |||||||||
201,810 | 196,961 | 219,059 | |||||||||
Operating Expenses | |||||||||||
Depreciation and amortization | 65,957 | 64,015 | 62,430 | ||||||||
General and administrative | 18,583 | 17,702 | 18,424 | ||||||||
Reimbursable tenant and affiliate costs | 11,523 | 11,639 | 30,921 | ||||||||
Property expenses, excluding reimbursable tenant costs (a) | 9,899 | 9,560 | 10,110 | ||||||||
Stock-based compensation expense | 8,219 | 4,268 | 6,910 | ||||||||
Impairment charges | 4,790 | 2,769 | — | ||||||||
Subadvisor fees (b) | 2,032 | 2,002 | 2,720 | ||||||||
Other expenses | (37 | ) | (533 | ) | 73 | ||||||
Restructuring and other compensation (c) | — | 289 | — | ||||||||
Dealer manager fees and expenses | — | — | 3,294 | ||||||||
120,966 | 111,711 | 134,882 | |||||||||
Other Income and Expenses | |||||||||||
Interest expense | (38,074 | ) | (40,401 | ) | (41,957 | ) | |||||
Equity in earnings of equity method investments in the Managed Programs and real estate | 15,325 | 16,930 | 15,774 | ||||||||
Other gains and (losses) | (2,763 | ) | 1,356 | 516 | |||||||
(25,512 | ) | (22,115 | ) | (25,667 | ) | ||||||
Income before income taxes and gain on sale of real estate | 55,332 | 63,135 | 58,510 | ||||||||
Benefit from income taxes | 6,002 | 192 | 1,305 | ||||||||
Income before gain on sale of real estate | 61,334 | 63,327 | 59,815 | ||||||||
Gain on sale of real estate, net of tax | 6,732 | 11,146 | 10 | ||||||||
Net Income | 68,066 | 74,473 | 59,825 | ||||||||
Net (income) loss attributable to noncontrolling interests | (2,792 | ) | 736 | (2,341 | ) | ||||||
Net Income Attributable to W. P. Carey | $ | 65,274 | $ | 75,209 | $ | 57,484 | |||||
Basic Earnings Per Share | $ | 0.60 | $ | 0.69 | $ | 0.53 | |||||
Diluted Earnings Per Share | $ | 0.60 | $ | 0.69 | $ | 0.53 | |||||
Weighted-Average Shares Outstanding | |||||||||||
Basic | 108,057,940 | 108,041,556 | 107,562,484 | ||||||||
Diluted | 108,211,936 | 108,208,918 | 107,764,279 | ||||||||
Distributions Declared Per Share | $ | 1.015 | $ | 1.010 | $ | 0.995 |
(a) | Amount for the three months ended March 31, 2018 includes $5.7 million of property expenses related to two hotel operating properties. |
(b) | We earn investment management revenue from CWI 1 and CWI 2 in our role as their advisor. Pursuant to the terms of their subadvisory agreements, however, 20% of the fees we receive from CWI 1 and 25% of the fees we receive from CWI 2 are paid to their respective subadvisors. In connection with the acquisitions of multi-family properties on behalf of CPA:18 – Global, we entered into agreements with third-party advisors for the day-to-day management of the properties for which we pay 100% of asset management fees paid to us by CPA:18 – Global. Pursuant to the terms of the subadvisory agreement we had with Carey Credit Income Fund’s (CCIF) subadvisor (prior to our resignation as the advisor to CCIF in the third quarter of 2017), we paid a subadvisory fee equal to 50% of the asset management fees and organization and offering costs paid to us by CCIF. |
(c) | Amount for the three months ended December 31, 2017 represents restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017. |
Three Months Ended | |||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||||
Net income attributable to W. P. Carey | $ | 65,274 | $ | 75,209 | $ | 57,484 | |||||
Adjustments: | |||||||||||
Depreciation and amortization of real property | 64,580 | 62,603 | 61,182 | ||||||||
Gain on sale of real estate, net | (6,732 | ) | (11,146 | ) | (10 | ) | |||||
Impairment charges | 4,790 | 2,769 | — | ||||||||
Proportionate share of adjustments for noncontrolling interests | (2,782 | ) | (2,696 | ) | (2,541 | ) | |||||
Proportionate share of adjustments to equity in net income of partially owned entities | 1,252 | 877 | 2,717 | ||||||||
Total adjustments | 61,108 | 52,407 | 61,348 | ||||||||
FFO (as defined by NAREIT) Attributable to W. P. Carey (a) | 126,382 | 127,616 | 118,832 | ||||||||
Adjustments: | |||||||||||
Tax benefit – deferred | (12,155 | ) | (10,497 | ) | (5,551 | ) | |||||
Above- and below-market rent intangible lease amortization, net (b) | 11,802 | 17,922 | 12,491 | ||||||||
Stock-based compensation | 8,219 | 4,268 | 6,910 | ||||||||
Other amortization and non-cash items (c) | 5,146 | 2,198 | 2,094 | ||||||||
Straight-line and other rent adjustments | (2,296 | ) | (2,002 | ) | (3,500 | ) | |||||
Loss (gain) on extinguishment of debt | 1,609 | (81 | ) | 912 | |||||||
Realized (gains) losses on foreign currency | (1,515 | ) | (472 | ) | 403 | ||||||
Amortization of deferred financing costs | (194 | ) | 2,043 | 1,400 | |||||||
Other expenses | (37 | ) | (533 | ) | 73 | ||||||
Restructuring and other compensation (d) | — | 289 | — | ||||||||
Proportionate share of adjustments to equity in net income of partially owned entities | 1,752 | 2,884 | 550 | ||||||||
Proportionate share of adjustments for noncontrolling interests | (343 | ) | (1,573 | ) | (376 | ) | |||||
Total adjustments | 11,988 | 14,446 | 15,406 | ||||||||
AFFO Attributable to W. P. Carey (a) | $ | 138,370 | $ | 142,062 | $ | 134,238 | |||||
Summary | |||||||||||
FFO (as defined by NAREIT) attributable to W. P. Carey (a) | $ | 126,382 | $ | 127,616 | $ | 118,832 | |||||
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (a) | $ | 1.16 | $ | 1.18 | $ | 1.10 | |||||
AFFO attributable to W. P. Carey (a) | $ | 138,370 | $ | 142,062 | $ | 134,238 | |||||
AFFO attributable to W. P. Carey per diluted share (a) | $ | 1.28 | $ | 1.31 | $ | 1.25 | |||||
Diluted weighted-average shares outstanding | 108,211,936 | 108,208,918 | 107,764,279 |
(a) | FFO and AFFO are non-GAAP measures. See below for a description of FFO and AFFO. |
(b) | Amount for the three months ended December 31, 2017 includes an adjustment of $5.7 million related to the accelerated amortization of an above-market rent intangible in connection with a lease restructuring. |
(c) | Primarily represents unrealized gains and losses from foreign exchange movements and derivatives. |
(d) | Amount for the three months ended December 31, 2017 represents restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017. |
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