Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

 

W. P. Carey Announces Fourth Quarter and Year-End 2012 Financial Results

 

New York, NY – February 26, 2013 – W. P. Carey Inc. (NYSE: WPC), a real estate investment trust (“REIT”), today reported financial results for the fourth quarter and year-ended December 31, 2012.

 

2012 HIGHLIGHTS

 

During 2012, the Company:

 

Reported AFFO of $1.13 per diluted share for the fourth quarter and $3.76 per diluted share for the year ended December 31, 2012

 

 

Completed merger with CPA®:15 and commenced trading as a REIT on October 1, 2012

 

 

Structured $618 million of investments on behalf of CPA®:17 – Global in the fourth quarter and $1.0 billion for the full year

 

 

Increased assets under ownership and management by 17% to $14.1 billion for the full year

 

 

Raised annualized dividend rate to $2.64 per share in the fourth quarter, an increase of 17% versus the fourth quarter of 2011 and WPC’s 47th consecutive quarterly increase

 

 

Generated a total shareholder return of approximately 34% for the year ended December 31, 2012

 

 

QUARTERLY AND YEAR-END RESULTS

 

·

Funds from operations—as adjusted (AFFO) for the fourth quarter of 2012 was $78.8 million or $1.13 per diluted share, compared to $35.2 million or $0.88 per diluted share for the fourth quarter of 2011. AFFO for the year ended December 31, 2012 was $180.6 million or $3.76 per diluted share, compared to $188.9 million or $4.71 per diluted share for 2011. The year-over-year decrease was due to non-recurring fee revenue we earned from the merger of two of our managed CPA® REITs in May 2011. Per share data for the 2012 periods reflects the issuance of 28.2 million shares in connection with our merger with CPA®:15.

·

Cash flow from operating activities for the year ended December 31, 2012 was $80.6 million, compared to $80.1 million for 2011.

·

Total revenues net of reimbursed expenses for the fourth quarter of 2012 were $128.9 million, compared to $45.6 million for the fourth quarter of 2011. Total revenues net of reimbursed expenses for the year ended December 31, 2012 were $275.8 million, compared to $263.0 million in 2011. Reimbursed expenses are excluded from total revenues because they have no impact on net income.

·

Net Income for the fourth quarter of 2012 was $15.5 million, compared to $9.1 million for the same period in 2011. For the year ended December 31, 2012, net income was $62.1 million, compared to $139.1 million for 2011.

·

For the year ended December 31, 2012, we received approximately $31.5 million in cash distributions from our equity ownership in the CPA® REITs. We also received $30 million in cash distributions for our special general partnership interest in the CPA® REITs.

·

Further information concerning AFFO, a non-GAAP supplemental performance metric, is presented in the accompanying tables and related notes.

 

 

W. P. Carey Inc. 2012 Earnings Release 8-K — 1

 


 

CONVERSION TO A REIT AND MERGER WITH CPA®:15

 

·

W. P. Carey’s conversion to a REIT and merger with CPA®:15 closed on September 28, 2012 and W. P. Carey Inc. commenced trading on the New York Stock Exchange as a REIT on October 1, 2012.

·

These transactions are part of a larger transformation to implement our overall business strategy of expanding real estate assets under ownership, which in turn is expected to provide a platform for future growth.

 

W. P. CAREY OWNED PORTFOLIO UPDATE

 

·

Through our merger with CPA®:15, we acquired a portfolio of 305 diversified net lease assets for $2.6 billion.

·

During the year we completed acquisitions totaling approximately $152 million, including the remaining interest in an existing portfolio of 12 Marriott Courtyard hotels and five Walgreens retail stores.

·

In January 2013, W. P. Carey completed a sale-leaseback with Kraft Foods Group for their Northfield, Illinois campus. The 679,000 square foot facility is home to Kraft’s corporate headquarters.

·

The W. P. Carey owned portfolio currently consists of 423 properties comprising 38.5 million square feet leased to more than 120 corporate tenants. The average lease term of the portfolio is 8.9 years and the occupancy rate is approximately 98.7%.

 

INVESTMENT MANAGEMENT UPDATE

 

·

W. P. Carey is the advisor to the CPA® REITs and CWI, which had aggregate real estate assets of $7.9 billion, cash of approximately $750 million and total assets of $8.5 billion as of December 31, 2012.

·

The average occupancy rate for the 83 million square feet owned by the CPA® REITs was approximately 98.2%.

 

 

 

CPA®:17 – GLOBAL ACTIVITY

 

 

 

 

·

In December 2012, CPA®:17 – Global closed to new investments, having raised $2.9 billion since its initial public offering, which commenced in 2007.

 

 

·

Investment volume for CPA®:17 – Global in the fourth quarter of 2012 was approximately $618 million and $1.0 billion for the year.

 

 

·

We completed our first transaction in Japan through a $47 million acquisition of assets leased to Wanbishi Archives Co., Ltd., the largest information/document management company in Japan.

 

 

 

 

 

CAREY WATERMARK INVESTORS ACTIVITY

 

 

 

 

 

 

·

From the beginning of its initial public offering through February 22, 2013, our lodging-focused non-traded REIT offering has raised approximately $194 million.

 

 

·

During 2012 we invested in five hotels for a total of approximately $170 million.

 

 

 

 

DIVIDENDS

 

 

 

·

The W. P. Carey Board of Directors raised the quarterly cash dividend to $0.66 per share for the fourth quarter of 2012. The dividend—our 47th consecutive quarterly increase—was paid on January 15, 2013 to stockholders of record as of December 31, 2012. Over the course of the year, we increased our dividend by 17%, to an annualized rate of $2.64 per share.

 

W. P. Carey President and CEO Trevor Bond, noted, “2012 was a landmark year for us in many ways. We completed our conversion to REIT status and our merger with CPA®:15 in September. We announced record acquisitions volume of $1.4 billion, and assets under management grew from $12.1 billion to $14.1 billion over the course of the year. As we enter our 40th year as a leader in the net lease sector, we’re well-positioned to build on the accomplishments of 2012, continuing to adhere to our proven investment strategy of Investing for the Long Run.”

 

 

W. P. Carey Inc. 2012 Earnings Release 8-K — 2

 


 

CONFERENCE CALL & WEBCAST

 

Please call at least 10 minutes prior to call to register.

 

Time: Tuesday, February 26, 2013 at 11:00 AM (ET)

 

Call-in Number: 800-860-2442

 

(International) +1-412-858-4600

 

Webcast: www.wpcarey.com/earnings

 

Podcast: www.wpcarey.com/podcast

 

Available after 2:00 PM (ET)

 

Replay Number: 877-344-7529

 

(International) + 1-412-317-0088

 

Replay Passcode: 10023829

 

Replay available until March 22, 2013 at 9:00 AM (ET).

 

W. P. Carey Inc.

Celebrating its 40th anniversary, W. P. Carey Inc. is a publicly traded REIT (NYSE: WPC) that provides long-term sale-leaseback and build-to-suit financing for companies worldwide and owns and manages an investment portfolio totaling approximately $14.1 billion. The largest owner/manager of net lease assets, WPC’s 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. Our portfolio of long-term leases with creditworthy tenants has an established history of generating stable cash flows that have enabled the Company to deliver consistent and rising dividend income to investors for nearly four decades. www.wpcarey.com

 

This press release contains forward-looking statements within the meaning of the Federal securities laws. Examples of such forward-looking statements include, but are not limited to, the statements made by Mr. Bond. A number of factors could cause W. P. Carey’s actual results, performance or achievement to differ materially from those anticipated. Among those risks, trends and uncertainties are the general economic climate; the supply of and demand for office and industrial properties; interest rate levels; the availability of financing; and other risks associated with the acquisition and ownership of properties, including risks that the tenants will not pay rent, or that costs may be greater than anticipated. For further information on factors that could impact W. P. Carey, reference is made to W. P. Carey’s filings with the Securities and Exchange Commission.

 

 

COMPANY CONTACT:

 

PRESS CONTACTS:

 

 

Kristin Brown

 

Cheryl Sanclemente

 

Guy Lawrence

W. P. Carey Inc.

 

W. P. Carey Inc.

 

Ross & Lawrence

212-492-8989

 

212-492-8995

 

212-308-3333

kbrown@wpcarey.com

 

csanclemente@wpcarey.com

 

gblawrence@rosslawpr.com

 

 

W. P. Carey Inc. 2012 Earnings Release 8-K — 3

 


 

W. P. CAREY INC.

 

CONSOLIDATED STATEMENTS OF INCOME

 

(in thousands, except share and per share amounts)

 

 

 

Years Ended December 31,

 

 

2012

 

2011

 

2010

Revenues

 

 

 

 

 

 

Lease revenues:

 

 

 

 

 

 

Rental income

 

 $

 108,707

 

 $

 52,360

 

 $

 41,940

Interest income from direct financing leases

 

 

15,796

 

 

10,278

 

 

9,542

Total lease revenues

 

124,503

 

62,638

 

51,482

Asset management revenue from affiliates

 

56,666

 

66,808

 

76,246

Structuring revenue from affiliates

 

48,355

 

46,831

 

44,525

Incentive, termination and subordinated disposition revenue from affiliates

 

-

 

52,515

 

-

Wholesaling revenue

 

19,914

 

11,664

 

11,096

Reimbursed costs from affiliates

 

98,245

 

64,829

 

60,023

Other real estate income

 

26,312

 

22,499

 

17,273

 

 

373,995

 

327,784

 

260,645

Operating Expenses

 

 

 

 

 

 

General and administrative

 

(144,809)

 

(93,733)

 

(73,427)

Reimbursable costs

 

(98,245)

 

(64,829)

 

(60,023)

Depreciation and amortization

 

(48,790)

 

(24,347)

 

(18,309)

Property expenses

 

(13,041)

 

(10,145)

 

(8,009)

Other real estate expenses

 

(9,850)

 

(10,784)

 

(8,121)

Impairment charges

 

(10,467)

 

1,365

 

(1,140)

 

 

(325,202)

 

(202,473)

 

(169,029)

Other Income and Expenses

 

 

 

 

 

 

Other interest income

 

1,396

 

2,001

 

1,269

Income from equity investments in real estate and the Managed REITs

 

62,392

 

51,228

 

30,992

Gain on change in control of interests

 

20,744

 

27,859

 

781

Other income and (expenses)

 

3,402

 

4,578

 

627

Interest expense

 

(50,573)

 

(21,770)

 

(15,636)

 

 

37,361

 

63,896

 

18,033

Income from continuing operations before income taxes

 

86,154

 

189,207

 

109,649

Provision for income taxes

 

(6,783)

 

(37,214)

 

(25,814)

Income from continuing operations

 

79,371

 

151,993

 

83,835

Discontinued Operations

 

 

 

 

 

 

Income from operations of discontinued properties

 

922

 

1,366

 

4,897

Gain on deconsolidation of a subsidiary

 

-

 

1,008

 

-

(Loss) gain on sale of real estate

 

(5,019)

 

(3,391)

 

460

Impairment charges

 

(12,495)

 

(11,838)

 

(14,241)

Loss from discontinued operations, net of tax

 

(16,592)

 

(12,855)

 

(8,884)

Net Income

 

62,779

 

139,138

 

74,951

Net (income) loss attributable to noncontrolling interests

 

(607)

 

1,864

 

314

Less: Net income attributable to redeemable noncontrolling interest

 

(40)

 

(1,923)

 

(1,293)

Net Income Attributable to W. P. Carey

 

 $

 62,132

 

 $

139,079

 

 $

 73,972

 

 

 

 

 

 

 

Basic Earnings Per Share

 

 

 

 

 

 

Income from continuing operations attributable to W. P. Carey

 

 $

 1.65

 

 $

3.76

 

 $

 2.08

Loss from discontinued operations attributable to W. P. Carey

 

(0.35)

 

(0.32)

 

(0.22)

Net income attributable to W. P. Carey

 

 $

 1.30

 

 $

3.44

 

 $

 1.86

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

Income from continuing operations attributable to W. P. Carey

 

 $

 1.62

 

 $

3.74

 

 $

 2.08

Loss from discontinued operations attributable to W. P. Carey

 

(0.34)

 

(0.32)

 

(0.22)

Net income attributable to W. P. Carey

 

 $

 1.28

 

 $

3.42

 

 $

 1.86

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

Basic

 

47,389,460

 

39,819,475

 

39,514,746

Diluted

 

48,078,474

 

40,098,095

 

40,007,894

 

 

 

 

 

 

 

Amounts Attributable to W. P. Carey

 

 

 

 

 

 

Income from continuing operations, net of tax

 

 $

 78,724

 

 $

151,934

 

 $

 82,856

Loss from discontinued operations, net of tax

 

(16,592)

 

(12,855)

 

(8,884)

Net income attributable to W. P. Carey

 

 $

 62,132

 

 $

139,079

 

 $

 73,972

 

W. P. Carey Inc. 2012 Earnings Release 8-K — 4

 


 

W. P. CAREY INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands)

 

 

 

Years Ended December 31,

 

 

2012

 

2011

 

2010

Cash Flows — Operating Activities

 

 

 

 

 

 

Net income

 

$

 62,779

 

$

 139,138

 

$

 74,951

Adjustments to net income:

 

 

 

 

 

 

Depreciation and amortization, including intangible assets and deferred financing costs

 

55,114

 

29,616

 

24,443

(Income) loss from equity investments in real estate and the Managed REITs in excess of distributions received

 

(17,271)

 

310

 

(4,920)

Straight-line rent, financing lease adjustments and amortization of rent-related intangibles

 

2,831

 

(3,698)

 

286

Amortization of deferred revenue

 

(9,436)

 

(6,291)

 

-

Gain on deconsolidation of a subsidiary

 

-

 

(1,008)

 

-

Loss (gain) on sale of real estate

 

2,773

 

3,391

 

(460)

Unrealized (gain) loss on foreign currency transactions and others

 

(1,861)

 

138

 

300

Realized loss (gain) on foreign currency transactions and others

 

610

 

(965)

 

(731)

Allocation of loss to profit-sharing interest

 

-

 

-

 

(781)

Management and disposition income received in shares of Managed REITs

 

(28,477)

 

(73,936)

 

(35,235)

Gain on conversion of shares

 

(15)

 

(3,806)

 

-

Gain on change in control of interests

 

(20,794)

 

(27,859)

 

-

Impairment charges

 

22,962

 

10,473

 

15,381

Stock-based compensation expense

 

26,038

 

17,716

 

7,082

Deferred acquisition revenue received

 

21,059

 

21,546

 

21,204

Increase in structuring revenue receivable

 

(20,304)

 

(19,537)

 

(20,237)

(Decrease) increase in income taxes, net

 

(18,277)

 

244

 

(1,288)

Net changes in other operating assets and liabilities

 

2,912

 

(5,356)

 

6,422

Net Cash Provided by Operating Activities

 

80,643

 

80,116

 

86,417

 

 

 

 

 

 

 

Cash Flows — Investing Activities

 

 

 

 

 

 

Cash paid to stockholders of CPA®:15 in the Merger

 

(152,356)

 

-

 

-

Cash acquired in connection with the Merger

 

178,945

 

-

 

-

Distributions received from equity investments in real estate and the Managed REITs in excess of equity income

 

46,294

 

20,807

 

18,758

Capital contributions to equity investments

 

(726)

 

(2,297)

 

-

Purchase of interests in CPA®:16 — Global

 

-

 

(121,315)

 

-

Purchases of real estate and equity investments in real estate

 

(3,944)

 

(24,315)

 

(96,884)

Value added taxes (“VAT”) paid in connection with acquisition of real estate

 

-

 

-

 

(4,222)

VAT refunded in connection with acquisitions of real estate

 

-

 

5,035

 

-

Capital expenditures

 

(6,204)

 

(13,239)

 

(5,135)

Cash acquired on acquisition of subsidiaries

 

-

 

57

 

-

Proceeds from sale of real estate

 

73,204

 

12,516

 

14,591

Proceeds from sale of securities

 

372

 

818

 

-

Funding of short-term loans to affiliates

 

-

 

(96,000)

 

-

Proceeds from repayment of short-term loans to affiliates

 

-

 

96,000

 

-

Funds placed in escrow

 

(46,951)

 

(6,735)

 

(1,571)

Funds released from escrow

 

37,832

 

2,584

 

36,620

Net Cash Provided by (Used in) Investing Activities

 

126,466

 

(126,084)

 

(37,843)

 

 

 

 

 

 

 

Cash Flows — Financing Activities

 

 

 

 

 

 

Distributions paid

 

(113,867)

 

(85,814)

 

(92,591)

Contributions from noncontrolling interests

 

3,291

 

3,223

 

14,261

Distributions paid to noncontrolling interests

 

(7,314)

 

(7,258)

 

(4,360)

Contributions from profit-sharing interest

 

-

 

-

 

3,694

Distributions to profit-sharing interest

 

-

 

-

 

(693)

Purchase of noncontrolling interest

 

-

 

(7,502)

 

-

Purchase of treasury stock from related party

 

(45,270)

 

-

 

-

Scheduled payments of mortgage principal

 

(54,964)

 

(25,327)

 

(14,324)

Proceeds from mortgage financing

 

23,750

 

45,491

 

56,841

Proceeds from senior credit facility

 

300,000

 

251,410

 

83,250

Repayments of senior credit facility

 

(280,160)

 

(160,000)

 

(52,500)

Payment of financing costs

 

(2,557)

 

(7,778)

 

(1,204)

Funds placed in escrow

 

1,970

 

-

 

-

Proceeds from issuance of shares

 

51,644

 

1,488

 

3,724

Windfall tax benefit associated with stock-based compensation awards

 

10,185

 

2,569

 

2,354

Net Cash (Used in) Provided by Financing Activities

 

(113,292)

 

10,502

 

(1,548)

 

 

 

 

 

 

 

Change in Cash and Cash Equivalents During the Year

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

790

 

70

 

(783)

Net increase (decrease) in cash and cash equivalents

 

94,607

 

(35,396)

 

46,243

Cash and cash equivalents, beginning of year

 

29,297

 

64,693

 

18,450

Cash and cash equivalents, end of year

 

$

 123,904

 

$

 29,297

 

$

 64,693

 

W. P. Carey Inc. 2012 Earnings Release 8-K — 5


 

W. P. CAREY INC.

 

Financial Highlights (Unaudited)

(in thousands, except per share amounts)

 

These financial highlights include non-GAAP financial measures, including earnings before interest, taxes, depreciation and amortization (“EBITDA”) and funds from operations – as adjusted (“AFFO”). A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures is provided on the following pages.

 

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

 

2012

 

2011

 

2012

 

2011

EBITDA (a)

 

 

 

 

 

 

 

 

Investment management

 

 $

15,824

 

 $

1,141

 

 $

23,752

 

 $

91,234

Real estate ownership

 

64,603

 

22,487

 

146,885

 

137,106

Total

 

 $

80,427

 

 $

23,628

 

 $

170,637

 

 $

228,340

 

 

 

 

 

 

 

 

 

AFFO (a)

 

 

 

 

 

 

 

 

Investment management

 

 $

14,116

 

 $

7,002

 

 $

21,120

 

 $

86,105

Real estate ownership

 

64,705

 

28,207

 

159,511

 

102,748

Total

 

 $

78,821

 

 $

35,209

 

 $

180,631

 

 $

188,853

 

 

 

 

 

 

 

 

 

EBITDA Per Share (Diluted) (a)

 

 

 

 

 

 

 

 

Investment management

 

 $

0.23

 

 $

0.03

 

 $

0.49

 

 $

2.28

Real estate ownership

 

0.93

 

0.56

 

3.06

 

3.41

Total

 

 $

1.16

 

 $

0.59

 

 $

3.55

 

 $

5.69

 

 

 

 

 

 

 

 

 

AFFO Per Share (Diluted) (a)

 

 

 

 

 

 

 

 

Investment management

 

 $

0.20

 

 $

0.17

 

 $

0.44

 

 $

2.15

Real estate ownership

 

0.93

 

0.71

 

3.32

 

2.56

Total

 

 $

1.13

 

 $

0.88

 

 $

3.76

 

 $

4.71

 

__________

 

(a)         Effective April 1, 2012, we include cash distributions and deferred revenue received and earned from the operating partnerships of CPA®:16 – Global, CPA®:17 – Global and CWI in our Real Estate Ownership segment. Results of operations for the prior year periods have been reclassified to conform to the current period presentation.

 

W. P. Carey Inc. 2012 Earnings Release 8-K — 6

 


 

W. P. CAREY INC.

 

Reconciliation of Net Income to EBITDA (Unaudited)

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

 

2012

 

2011

 

2012

 

2011

Investment Management

 

 

 

 

 

 

 

 

Net income from investment management attributable to W.P. Carey (a)

 

$

9,971

 

$

3,705

 

$

17,237

 

$

52,799

Adjustments:

 

 

 

 

 

 

 

 

Provision for income taxes

 

4,926

 

(3,540)

 

2,771

 

34,971

Depreciation and amortization

 

927

 

976

 

3,744

 

3,464

EBITDA — investment management

 

$

15,824

 

$

1,141

 

$

23,752

 

$

91,234

EBITDA per share (diluted)

 

$

0.23

 

$

0.03

 

$

0.49

 

$

2.28

 

 

 

 

 

 

 

 

 

Real Estate Ownership

 

 

 

 

 

 

 

 

Net income from real estate ownership attributable to W. P. Carey (a)

 

$

5,507

 

$

5,386

 

$

44,895

 

$

86,280

Adjustments:

 

 

 

 

 

 

 

 

Interest expense

 

28,250

 

6,219

 

50,573

 

21,770

Provision for income taxes

 

1,665

 

2,227

 

4,012

 

2,243

Depreciation and amortization

 

28,587

 

7,352

 

45,046

 

20,883

Reconciling items attributable to discontinued operations

 

594

 

1,303

 

2,359

 

5,930

EBITDA — real estate ownership

 

$

64,603

 

$

22,487

 

$

146,885

 

$

137,106

EBITDA per share (diluted)

 

$

0.93

 

$

0.56

 

$

3.06

 

$

3.41

 

 

 

 

 

 

 

 

 

Total Company

 

 

 

 

 

 

 

 

EBITDA

 

$

80,427

 

$

23,628

 

$

170,637

 

$

228,340

EBITDA per share (diluted)

 

$

1.16

 

$

0.59

 

$

3.55

 

$

5.69

Diluted weighted average shares outstanding

 

69,505,871

 

40,152,444

 

48,078,474

 

40,098,095

 

__________

 

(a)         Effective April 1, 2012, we include cash distributions and deferred revenue received and earned from the operating partnerships of CPA®:16 – Global, CPA®:17 – Global and CWI in our Real Estate Ownership segment. Results of operations for the prior year periods have been reclassified to conform to the current period presentation.

 

Non-GAAP Financial Disclosure

 

EBITDA as disclosed represents earnings before interest, taxes, depreciation and amortization. We believe that EBITDA is a useful supplemental measure to investors and analysts for assessing the performance of our business segments, although it does not represent net income that is computed in accordance with GAAP, because it removes the impact of our capital structure and asset base from our operating results and because it is helpful when comparing our operating performance to that of companies in our industry without regard to such items, which can vary substantially from company to company. Accordingly, EBITDA should not be considered as an alternative to net income as an indicator of our financial performance. EBITDA may not be comparable to similarly titled measures of other companies. Therefore, we use EBITDA as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies, and determine executive compensation.

 

 

W. P. Carey Inc. 2012 Earnings Release 8-K — 7


 

W. P. CAREY INC.

 

Reconciliation of Net Income to Funds From Operations — as adjusted (AFFO) (Unaudited)

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

 

2012

 

2011

 

2012

 

2011

Real Estate Ownership

 

 

 

 

 

 

 

 

Net income from real estate ownership attributable to - W. P. Carey (a)

 

 $

 5,507

 

 $

 5,386

 

 $

 44,895

 

 $

 86,280

Adjustments:

 

 

 

 

 

 

 

 

Depreciation and amortization of real property

 

28,652

 

8,415

 

45,982

 

25,324

Impairment charges

 

10,700

 

5,498

 

22,962

 

10,473

Loss on sale of real estate, net

 

4,240

 

3,655

 

2,676

 

3,391

Proportionate share of adjustments to equity in net income of - partially owned entities to arrive at FFO:

 

 

 

 

 

 

 

 

Depreciation and amortization of real property

 

3,210

 

1,208

 

5,545

 

5,257

Impairment charges

 

-

 

-

 

-

 

1,090

Loss (gain) on sale of real estate, net

 

1

 

-

 

(15,233)

 

34

Proportionate share of adjustments for noncontrolling interests to arrive at FFO

 

(4,236)

 

(508)

 

(5,504)

 

(1,984)

Total adjustments:

 

42,567

 

18,268

 

56,428

 

43,585

FFO - as defined by NAREIT

 

48,074

 

23,654

 

101,323

 

129,865

Adjustments:

 

 

 

 

 

 

 

 

Loss (gain) on change in control of interests (b)(c)

 

60

 

-

 

(20,734)

 

(27,859)

Gain on deconsolidation of a subsidiary

 

-

 

-

 

-

 

(1,008)

Other gains, net

 

(2)

 

(1,118)

 

(2)

 

25

Other depreciation, amortization and non-cash charges

 

(1,556)

 

3,398

 

(1,662)

 

176

Stock based compensation

 

211

 

57

 

211

 

220

Deferred tax expense

 

(644)

 

(2,602)

 

(2,745)

 

(3,184)

Realized losses on foreign currency, derivatives and other (d)

 

171

 

-

 

828

 

-

Amortization of deferred financing costs (d)

 

468

 

-

 

1,843

 

-

Straight-line and other rent adjustments

 

(2,248)

 

(1,804)

 

(4,446)

 

(4,255)

Above/below market rent intangible lease amortization, net (d)

 

7,534

 

-

 

7,696

 

-

Merger expense (e)

 

1,049

 

-

 

41,338

 

-

Proportionate share of adjustments to equity in net income of partially owned entities to arrive at AFFO:

 

 

 

 

 

 

 

 

Other depreciation, amortization and non-cash charges

 

624

 

-

 

624

 

-

Straight-line and other rent adjustments

 

(667)

 

(414)

 

(1,468)

 

(1,641)

Above/below market rent intangible lease amortization, net

 

166

 

-

 

163

 

-

AFFO adjustment for interests in CPA® REITs

 

11,971

 

6,982

 

37,234

 

10,137

Proportionate share of adjustments for noncontrolling interests to arrive at AFFO

 

(506)

 

54

 

(692)

 

272

Total adjustments:

 

16,631

 

4,553

 

58,188

 

(27,117)

AFFO - Real Estate Ownership

 

 $

 64,705

 

 $

 28,207

 

 $

 159,511

 

 $

 102,748

 

 

 

 

 

 

 

 

 

Investment Management

 

 

 

 

 

 

 

 

Net income from investment management attributable to W. P. Carey (a)

 

 $

 9,971

 

 $

 3,705

 

 $

 17,237

 

 $

 52,799

FFO - as defined by NAREIT

 

9,971

 

3,705

 

17,237

 

52,799

Adjustments:

 

 

 

 

 

 

 

 

Amortization, deferred taxes and non-cash charges

 

226

 

(1,256)

 

961

 

3,791

Stock based compensation

 

6,281

 

4,633

 

25,841

 

17,496

Deferred tax expense

 

(2,625)

 

(80)

 

(24,055)

 

12,019

Realized gains on foreign currency, derivatives and other (d)

 

(55)

 

-

 

(61)

 

-

Amortization of deferred financing costs (d)

 

318

 

-

 

1,197

 

-

Total Adjustments

 

4,145

 

3,297

 

3,883

 

33,306

AFFO - Investment Management

 

 $

 14,116

 

 $

 7,002

 

 $

 21,120

 

 $

 86,105

 

 

 

 

 

 

 

 

 

Total Company

 

 

 

 

 

 

 

 

FFO - as defined by NAREIT

 

 $

 58,045

 

 $

 27,539

 

 $

 118,560

 

 $

 182,664

FFO - as defined by NAREIT per share (diluted)

 

 $

 0.84

 

 $

 0.68

 

 $

 2.47

 

 $

 4.56

AFFO

 

 $

 78,821

 

 $

 35,209

 

 $

 180,631

 

 $

 188,853

AFFO per share (diluted)

 

 $

 1.13

 

 $

 0.88

 

 $

 3.76

 

 $

 4.71

Diluted weighted average shares outstanding

 

69,505,871

 

40,152,444

 

48,078,474

 

40,098,095

 

W. P. Carey Inc. 2012 Earnings Release 8-K — 8

 


 

___________

 

(a)         Effective April 1, 2012, we include cash distributions and deferred revenue received and earned from the operating partnerships of CPA®:16 – Global, CPA®:17 – Global and CWI in our Real Estate Ownership segment. Results of operations for the prior year periods have been reclassified to conform to the current period presentation.

(b)         Gain on change in control of interests for the year ended December 31, 2011 represents gain recognized on purchase of the remaining interests in two investments from CPA®:14, which we had previously accounted for under the equity method. In connection with purchasing these properties, we recognized a net gain of $27.9 million during the year ended December 31, 2011 to adjust the carrying value of our existing interests in these investments to their estimated fair values.

(c)          Gain on change in control of interests for the year ended December 31, 2012 represents a gain of $14.6 million recognized on our previously held interest in shares of CPA®:15 common stock, and a gain of $6.1 million recognized on the purchase of the remaining interests in five investments from CPA®:15, which we had previously accounted for under the equity method. We recognized a net gain of $20.7 million to adjust the carrying value of our existing interests in these investments to their estimated fair values.

(d)         These adjustments are significant and recurring post Merger and were not included in the AFFO calculation in 2011.

(e)          Amount for the year ended December 31, 2012 included $31.7 million of general and administrative expenses and $9.6 million of income tax expenses incurred in connection with the Merger.

 

Non-GAAP Financial Disclosure

 

FFO is a non-GAAP measure defined by 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. Additionally, we exclude expenses related to the merger which are considered non-recurring, and realized gains/losses on foreign exchange and 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 as they are not the primary drivers in our decision making process. 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, and we therefore 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.

 

W. P. Carey Inc. 2012 Earnings Release 8-K — 9


 

W. P. CAREY INC.

 

Total Adjusted Revenue (Pro rata Basis) (Unaudited)

 

(in thousands, except percentages)

 

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

 

2012

 

2011

 

2012

 

2011

Asset management revenue

 

 $

 9,578

 

 $

 15,530

 

 $

 56,666

 

 $

 66,808

Structuring revenue (a)

 

28,779

 

3,930

 

48,355

 

46,831

Investment management revenue

 

38,357

 

19,460

 

105,021

 

113,639

Real estate revenue

 

103,965

 

56,582

 

264,707

 

197,339

Total Adjusted Revenue

 

 $

 142,322

 

 $

 76,042

 

 $

 369,728

 

 $

 310,978

 

 

 

 

 

 

 

 

 

Reconciliation of Total Adjusted Revenue

 

 

 

 

 

 

 

 

Total revenue — as reported

 

 $

 168,058

 

 $

 60,971

 

 $

 373,995

 

 $

 327,784

Less: Incentive, termination and subordinated disposition revenue (b)

 

-

 

-

 

-

 

(52,515)

Less: Wholesaling revenue (c)

 

(8,036)

 

(2,876)

 

(19,914)

 

(11,664)

Less: Reimbursed costs from affiliates (c)

 

(39,146)

 

(15,345)

 

(98,245)

 

(64,829)

Add: Lease revenue – discontinued operations

 

738

 

1,908

 

3,630

 

9,452

Add: Pro rata share of revenue from equity investments

 

9,911

 

6,601

 

27,374

 

28,269

Less: Pro rata share of revenue due to noncontrolling interests

 

(10,289)

 

(436)

 

(11,550)

 

(2,629)

Add: Pro rata share of revenue from CPA® REITs

 

14,838

 

19,793

 

72,158

 

68,833

Add: Total distributions of available cash - GP interest

 

8,220

 

7,267

 

30,009

 

15,535

Less: Pro rata share of other real estate income to noncontrolling interests

 

(1,972)

 

(1,841)

 

(7,729)

 

(7,258)

Total Adjusted Revenue

 

 $

 142,322

 

 $

 76,042

 

 $

 369,728

 

 $

 310,978

 

 

 

 

 

 

 

 

 

Reconciliation of Real Estate Revenue

 

 

 

 

 

 

 

 

Lease revenue – as reported

 

 $

 74,970

 

 $

 17,474

 

 $

 124,503

 

 $

 62,638

Lease revenue – discontinued operations

 

738

 

1,908

 

3,630

 

9,452

Total consolidated lease revenue

 

75,708

 

19,382

 

128,133

 

72,090

Add: Pro rata share of revenue from equity investments

 

9,911

 

6,601

 

27,374

 

28,269

Less: Pro rata share of revenue due to noncontrolling interests

 

(10,289)

 

(436)

 

(11,550)

 

(2,629)

Total pro rata net lease revenue

 

75,330

 

25,547

 

143,957

 

97,730

 

 

 

 

 

 

 

 

 

Add: Pro rata share of revenues from CPA® REITs

 

 

 

 

 

 

 

 

CPA®:14

 

-

 

-

 

-

 

4,841

CPA®:15 (d)

 

-

 

4,294

 

12,726

 

17,517

CPA®:16 – Global

 

13,955

 

14,973

 

56,362

 

44,965

CPA®:17 – Global

 

883

 

526

 

3,070

 

1,510

Total pro rata share of revenues from CPA® REITs

 

14,838

 

19,793

 

72,158

 

68,833

Add: share of lease revenue from GP interest

 

 

 

 

 

 

 

 

CPA®:16 – Global

 

3,825

 

3,658

 

15,389

 

6,157

CPA®:17 – Global

 

4,395

 

3,609

 

14,620

 

9,378

Total Share of lease revenue from GP Interest

 

8,220

 

7,267

 

30,009

 

15,535

Add: Other real estate income (e)

 

7,549

 

5,816

 

26,312

 

22,499

Less: Pro rata share of other real estate income to noncontrolling interests (f)

(1,972)

 

(1,841)

 

(7,729)

 

(7,258)

Total Real Estate Revenue

 

 $

 103,965

 

 $

 56,582

 

 $

 264,707

 

 $

 197,339

 

__________

 

(a)         We earn structuring revenue on acquisitions structured on behalf of the Managed REITS and expect significant period-to-period variation in such revenue based on changes in investment volume. Investments structured on behalf of the Managed REITS totaled approximately $775 million and $139 million for the three months ended December 31, 2012 and 2011, respectively, and $1.3 billion and $1.2 billion for the year ended December 31, 2012 and 2011, respectively.

(b)         In connection with providing a liquidity event for CPA®:14 stockholders, in May 2011, we earned termination revenue of $31.2 million and subordinated disposition revenue of $21.3 million, which we received in shares of CPA®:14 and cash, respectively. These CPA®:14 shares were subsequently converted to shares of CPA®:16 – Global in connection with the CPA®:14/16 Merger.

 

W. P. Carey Inc. 2012 Earnings Release 8-K — 10


 

(c)          Total adjusted revenue excludes reimbursements of costs received from the Managed REITs as they have no impact on net income. Also excluded is wholesaling revenue earned in connection with CPA®:17 – Global’s and CWI’s public offerings, which is substantially offset by underwriting costs incurred in connection with the offerings.

(d)         For the year ended December 31, 2012, represents pro rata lease revenue from CPA®:15 through September 28, 2012, the date of the Merger.

(e)         Other real estate income generally consists of revenue from Carey Storage Management LLC (“Carey Storage”), a subsidiary that invests in domestic self-storage properties and Livho, Inc., a subsidiary that operates a hotel franchise. Other real estate income also includes lease termination payments and other non-rents related revenues from real estate ownership, and as a result, we expect other real estate income to fluctuate period to period.

(f)           Effective December 31, 2012, we deduct the non-controllable interest of self storage revenues to reflect our pro rata ownership in this segment. Prior periods have been revised to reflect this change.

 

W. P. Carey Inc. 2012 Earnings Release 8-K — 11

 


 

W. P. CAREY INC.

 

Selected Investment Management Fees and Distributions (Unaudited)

 

(in thousands)

 

 

 

Three Months Ended December 31, 2012

 

Years Ended December 31, 2012

 

 

Asset Management Revenue

 

 

 

 

 

Asset Management Revenue

 

 

 

 

 

 

Base Asset

 

 

 

Distributions

 

 

 

Base Asset

 

 

 

Distributions

 

 

 

 

Management

 

Performance

 

of Available

 

 

 

Management

 

Performance

 

of Available

 

 

 

 

Revenue

 

Revenue

 

Cash

 

Total

 

Revenue

 

Revenue

 

Cash

 

Total

CPA®:15

 

 $

 -

 

 $

 -

 

 $

 -

 

 $

 -

 

 $

 9,272

 

 $

 9,272

 

 $

 -

 

$

 18,544

CPA®:16 - Global

 

4,624

 

-

 

3,825

 

8,449

 

18,553

 

-

 

15,389

 

33,942

CPA®:17 - Global

 

4,696

 

-

 

4,395

 

9,091

 

18,919

 

-

 

14,620

 

33,539

CWI/Other

 

258

 

-

 

-

 

258

 

649

 

-

 

-

 

649

Total

 

 $

 9,578

 

 $

 -

 

 $

 8,220

 

 $

 17,798

 

 $

 47,393

 

 $

 9,272

 

 $

 30,009

 

 $

 86,674

 

 

 

Three Months Ended December 31, 2011

 

Years Ended December 31, 2011

 

 

Asset Management Revenue

 

 

 

 

 

Asset Management Revenue

 

 

 

 

 

 

Base Asset

 

 

 

Distributions

 

 

 

Base Asset

 

 

 

Distributions

 

 

 

 

Management

 

Performance

 

of Available

 

 

 

Management

 

Performance

 

of Available

 

 

 

 

Revenue

 

Revenue

 

Cash

 

Total

 

Revenue

 

Revenue

 

Cash

 

Total

Total

 

 $

 12,311

 

 $

 3,219

 

 $

 7,267

 

 $

 22,797

 

 $

 46,770

 

 $

 20,038

 

 $

 15,535

 

 $

 82,343

 

 

W. P. Carey Inc. 2012 Earnings Release 8-K — 12


The following information was filed by W. P. Carey Inc. (WPC) on Tuesday, February 26, 2013 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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