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Press Release

W. P. Carey Inc. Announces Third Quarter 2018 Financial Results

Company Release - 11/2/2018 7:30 AM ET

NEW YORK, Nov. 2, 2018 /PRNewswire/ -- 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 third quarter ended September 30, 2018.

Total Company

  • Net income attributable to W. P. Carey of $77.3 million, or $0.71 per diluted share
  • AFFO of $159.8 million, or $1.48 per diluted share
  • 2018 AFFO guidance range adjusted to between $5.34 and $5.44 per diluted share, reflecting the earlier-than-anticipated completion of the Company's merger with CPA:17
  • Quarterly cash dividend raised to $1.025 per share, equivalent to an annualized dividend rate of $4.10 per share
  • Completed merger with CPA:17 in a $5.9 billion stock-for-stock transaction on October 31, 2018

Business Segments

Real Estate

  • Segment net income attributable to W. P. Carey of $51.0 million
  • Segment AFFO of $121.2 million, or $1.12 per diluted share
  • Investment volume of $296.3 million during the third quarter, bringing total investment volume for the first nine months to $691.7 million
  • Gross disposition proceeds of $20.9 million during the third quarter, bringing total dispositions for the first nine months to $184.7 million
  • Portfolio occupancy of 98.7% at quarter end (98.3% pro forma for the merger with CPA:17)
  • Weighted-average lease term increased to 10.2 years at quarter end (10.5 years pro forma for the merger with CPA:17)

Investment Management

  • Segment net income attributable to W. P. Carey of $26.3 million
  • Segment AFFO of $38.6 million, or $0.36 per diluted share

Balance Sheet and Capitalization – Subsequent to Quarter End

  • Issued €500 million of 2.250% Senior Unsecured Notes due 2026

 

MANAGEMENT COMMENTARY

"Through a combination of single-asset and portfolio acquisitions, as well as discretionary investments with existing tenants, we remain on track with our expectations for full-year investment volume, despite competitive market conditions," said Jason Fox, Chief Executive Officer of W. P. Carey. "Strong same-store rent growth flowed through to our earnings and we remain well-positioned for a continued inflationary environment. Furthermore, with the closing of our merger, we have enhanced both our portfolio and strategic position."

 

QUARTERLY FINANCIAL RESULTS

Revenues

  • Total Company: Revenues excluding reimbursable costs (net revenues) for the 2018 third quarter totaled $197.4 million, down 0.9% from $199.1 million for the 2017 third quarter.
  • Real Estate: Real Estate net revenues for the 2018 third quarter were $173.4 million, up 1.3% from $171.2 million for the 2017 third quarter, due primarily to additional lease revenues from acquisitions and rent escalations, partially offset by lower operating property revenues resulting from the disposition of a hotel operating property during the 2018 second quarter.
  • Investment Management: Investment Management net revenues for the 2018 third quarter were $24.0 million, down 14.3% from $28.0 million for the 2017 third quarter, due primarily to lower structuring revenues resulting from the fully-invested status of the Managed Programs (as defined below).

Net Income Attributable to W. P. Carey

  • Net income attributable to W. P. Carey for the 2018 third quarter was $77.3 million, down 3.7% from $80.3 million for the 2017 third quarter, due primarily to a lower aggregate gain on sale of real estate, which more than offset gains recognized on foreign currency transactions during the current year period as compared to losses recognized on foreign currency transactions during the prior year period.

Adjusted Funds from Operations (AFFO)

  • AFFO for the 2018 third quarter was $1.48 per diluted share, up 8.0% from $1.37 per diluted share for the 2017 third quarter, due primarily to additional lease revenues from acquisitions and rent escalations within the Company's Real Estate portfolio and a tax benefit within its Investment Management business.

    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 September 19, 2018, the Company's Board of Directors declared a quarterly cash dividend of $1.025 per share, equivalent to an annualized dividend rate of $4.10 per share. The dividend was paid on October 15, 2018 to stockholders of record as of October 1, 2018.

 

AFFO GUIDANCE

  • For the 2018 full year, the Company has adjusted its AFFO guidance range to between $5.34 and $5.44 per diluted share, reflecting the earlier-than-anticipated completion of the Company's merger with CPA:17, based on the following key assumptions, which are unchanged:

    (i)   investments for the Company's Real Estate portfolio of between $700 million and $1 billion;

    (ii)   dispositions from the Company's Real Estate portfolio of between $300 million and $500 million; and

    (iii)  total general and administrative expenses of between $65 million and $70 million.

    Note: The Company does not provide guidance on net income. The Company only provides guidance on AFFO and does not provide a reconciliation of this forward-looking non-GAAP guidance to net income due to the inherent difficulty in quantifying certain items necessary to provide such reconciliation as a result of their unknown effect, timing and potential significance. Examples of such items include impairments of assets, gains and losses from sales of assets and depreciation and amortization from new acquisitions.

 

BALANCE SHEET AND CAPITALIZATION

Euro-Denominated Bond Issuance – Subsequent to Quarter End

  • As previously announced, on October 9, 2018, the Company completed an underwritten public offering of €500 million aggregate principal amount of 2.250% Senior Notes due April 9, 2026. Net proceeds from the offering were used to reduce amounts outstanding under the Company's unsecured revolving credit facility.

 

REAL ESTATE

Investments

  • During the 2018 third quarter, the Company completed investments totaling $296.3 million, consisting of four acquisitions for $259.7 million and three completed capital investment projects at a total cost of $36.6 million, bringing total investment volume for the nine months ended September 30, 2018 to $691.7 million, including transaction-related costs and fees.
  • As of September 30, 2018, the Company had six capital investment projects outstanding for an expected total investment of approximately $113.5 million.
  • The Company currently expects to complete three capital investment projects totaling $73.0 million during the 2018 fourth quarter, consisting of two projects totaling $28.0 million outstanding as of September 30, 2018, and one project totaling $45.0 million resulting from its merger with CPA:17.

Dispositions

  • During the 2018 third quarter, the Company disposed of four properties for total gross proceeds of $20.9 million, bringing total dispositions for the nine months ended September 30, 2018 to $184.7 million.

Composition

  • As of September 30, 2018, the Company's Real Estate portfolio consisted of 913 net lease properties, comprising 89.3 million square feet leased to 210 tenants, and one hotel operating property. As of that date, the weighted-average lease term of the net lease portfolio was 10.2 years and the occupancy rate was 98.7%.
  • As of September 30, 2018, pro forma for the Company's merger with CPA:17, the Company's Real Estate portfolio consisted of 1,186 net lease properties, comprising 132.9 million square feet leased to 304 tenants, 44 self-storage operating properties and two hotel operating properties. As of that date, on a pro forma basis, the weighted-average lease term of the combined net lease portfolio was 10.5 years and the occupancy rate was 98.3%.

 

INVESTMENT MANAGEMENT

  • W. P. Carey was formerly the advisor to CPA®:17 – Global (CPA:17) until the merger on October 31, 2018, and is currently the advisor to CPA:18 – Global (CPA:18, and together with CPA:17, the CPA REITs), Carey Watermark Investors Incorporated (CWI® 1) and Carey Watermark Investors 2 Incorporated (CWI 2, and together with CWI 1, the CWI REITs, and collectively 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).

Acquisitions

  • During the 2018 third quarter, the Company structured investments on behalf of the Managed Programs totaling $178.0 million, bringing total investment volume on behalf of the Managed Programs for the nine months ended September 30, 2018 to $301.2 million.

Assets Under Management

  • As of September 30, 2018, the Managed Programs had total assets under management of approximately $13.4 billion, including $5.9 billion within CPA:17.

 

MERGER WITH CPA:17 – SUBSEQUENT TO QUARTER END

  • As previously announced, on October 31, 2018, the Company completed its merger with CPA:17 in a transaction valued at approximately $5.9 billion, including the assumption of debt.
  • As a result of the merger, which included the issuance of approximately 54 million shares of W. P. Carey common stock in a stock-for-stock transaction, the Company's equity market capitalization increased to approximately $11 billion, positioning it as one of the largest net lease REITs and among the top 25 publicly traded REITs in the MSCI US REIT Index.

*     *     *     *     *

Supplemental Information

The Company has provided supplemental unaudited financial and operating information regarding the 2018 third 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 Securities and Exchange Commission (SEC) on November 2, 2018.

*     *     *     *     *

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, November 2, 2018 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.

Celebrating its 45th anniversary, W. P. Carey ranks among the largest diversified net lease REITs with an enterprise value of approximately $17 billion and a portfolio of operationally-critical commercial real estate that includes 1,186 net lease properties covering approximately 133 million square feet. For over four decades the company has invested in high-quality single-tenant industrial, warehouse, office and retail properties subject to long-term 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 with regard to the anticipated benefits and characteristics of the recently completed merger with CPA:17, including with regard to its enhancement of our portfolio and strategic position, and statements with regard to: our acquisitions, discretionary investments, and investment volume, pipeline and opportunities; weighted-average lease term, rent growth, criticality, yields and occupancy rate of our real estate and other portfolio characteristics, as well as with regard to its positioning in an inflationary environment; annualized dividends and payout ratio; disposition and capital recycling plans, and the intended results thereof; our access to capital markets, as well as our financing activities; adjusted funds from operations coverage and guidance, including underlying assumptions, such as the timing of acquisitions, our level of general and administrative expense, and dispositions and the impact thereof, and our ability to execute on our strategy to create long-term shareholder value, including by maximizing recurring revenue streams. 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 Part I, Item 1A. Risk Factors in W. P. Carey's Annual Report on Form 10-K for the year ended December 31, 2017 and in Part II, Item 1A. Risk Factors in W. P. Carey's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018. 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, except share and per share amounts)



September 30, 2018


December 31, 2017

Assets




Investments in real estate:




Land, buildings and improvements (a)

$

5,794,494



$

5,457,265


Net investments in direct financing leases

702,151



721,607


In-place lease and other intangible assets

1,199,785



1,213,976


Above-market rent intangible assets

626,390



640,480


Investments in real estate

8,322,820



8,033,328


Accumulated depreciation and amortization (b)

(1,485,056)



(1,329,613)


Assets held for sale, net (c)

108,730




Net investments in real estate

6,946,494



6,703,715


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

366,306



341,457


Cash and cash equivalents

176,612



162,312


Due from affiliates

82,547



105,308


Other assets, net

305,295



274,650


Goodwill

641,734



643,960


Total assets

$

8,518,988



$

8,231,402






Liabilities and Equity




Debt:




Senior unsecured notes, net

$

3,007,453



$

2,474,661


Unsecured revolving credit facility

696,380



216,775


Unsecured term loans, net



388,354


Non-recourse mortgages, net

959,951



1,185,477


Debt, net

4,663,784



4,265,267


Accounts payable, accrued expenses and other liabilities

265,676



263,053


Below-market rent and other intangible liabilities, net

105,898



113,957


Deferred income taxes

98,933



67,009


Dividends payable

111,688



109,766


Total liabilities

5,245,979



4,819,052


Redeemable noncontrolling interest

1,300



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; 107,214,394 and 106,922,616
shares, respectively, issued and outstanding

107



107


Additional paid-in capital

4,445,426



4,433,573


Distributions in excess of accumulated earnings

(1,165,914)



(1,052,064)


Deferred compensation obligation

36,159



46,656


Accumulated other comprehensive loss

(254,055)



(236,011)


Total stockholders' equity

3,061,723



3,192,261


Noncontrolling interests

209,986



219,124


Total equity

3,271,709



3,411,385


Total liabilities and equity

$

8,518,988



$

8,231,402


_________



(a)    

Includes $42.4 million and $83.0 million of amounts attributable to operating properties as of September 30, 2018 and December 31, 2017, respectively. We sold one hotel operating property in April 2018.

(b)    

Includes $707.6 million and $630.0 million of accumulated depreciation on buildings and improvements as of September 30, 2018 and December 31, 2017, respectively, and $777.4 million and $699.7 million of accumulated amortization on lease intangibles as of September 30, 2018 and December 31, 2017, respectively.

(c)    

At September 30, 2018, we had nine properties leased to the same tenant classified as Assets held for sale, net.

(d)    

Our equity investments in the Managed Programs totaled $230.3 million and $201.4 million as of September 30, 2018 and December 31, 2017, respectively. Our equity investments in real estate joint ventures totaled $136.0 million and $140.0 million as of September 30, 2018 and December 31, 2017, respectively.

 

 

W. P. CAREY INC.

Quarterly Consolidated Statements of Income (Unaudited)

  (in thousands, except share and per share amounts)



Three Months Ended


September 30, 2018


June 30, 2018


September 30, 2017

Revenues






Real Estate:






Lease revenues

$

167,088



$

162,634



$

161,511


Reimbursable tenant costs

5,979



5,733



5,397


Operating property revenues

4,282



4,865



8,449


Lease termination income and other

1,981



680



1,227



179,330



173,912



176,584


Investment Management:






Asset management revenue

17,349



17,268



17,938


Structuring revenue

6,553



4,426



9,817


Reimbursable costs from affiliates

6,042



5,537



6,211


Other advisory revenue

110





99


Dealer manager fees





105



30,054



27,231



34,170



209,384



201,143



210,754


Operating Expenses






Depreciation and amortization

67,825



64,337



64,040


General and administrative

15,863



16,442



17,236


Reimbursable tenant and affiliate costs

12,021



11,270



11,608


Property expenses, excluding reimbursable tenant costs (a)

7,953



8,908



10,556


Subadvisor fees (b)

3,127



1,855



5,206


Stock-based compensation expense

2,475



3,698



4,635


Merger and other expenses (c)

1,673



2,692



65


Restructuring and other compensation (d)





1,356


Dealer manager fees and expenses





462



110,937



109,202



115,164


Other Income and Expenses






Interest expense

(41,740)



(41,311)



(41,182)


Equity in earnings of equity method investments in the Managed Programs

   and real estate

18,363



12,558



16,318


Other gains and (losses)

8,875



10,586



(4,569)



(14,502)



(18,167)



(29,433)


Income before income taxes and gain on sale of real estate

83,945



73,774



66,157


Provision for income taxes

(2,715)



(6,262)



(1,760)


Income before gain on sale of real estate

81,230



67,512



64,397


Gain on sale of real estate, net of tax

343



11,912



19,257


Net Income

81,573



79,424



83,654


Net income attributable to noncontrolling interests

(4,225)



(3,743)



(3,376)


Net Income Attributable to W. P. Carey

$

77,348



$

75,681



$

80,278








Basic Earnings Per Share

$

0.71



$

0.70



$

0.74


Diluted Earnings Per Share

$

0.71



$

0.70



$

0.74


Weighted-Average Shares Outstanding






Basic

108,073,969



108,059,394



108,019,292


Diluted

108,283,666



108,234,934



108,143,694








Dividends Declared Per Share

$

1.025



$

1.020



$

1.005


 

 

W. P. CAREY INC.

Year-to-Date Consolidated Statements of Income (Unaudited)

(in thousands, except share and per share amounts)



Nine Months Ended September 30,


2018


2017

Revenues




Real Estate:




Lease revenues

$

492,935



$

475,547


Reimbursable tenant costs

17,931



15,940


Operating property revenues

16,365



23,652


Lease termination income and other

3,603



4,234



530,834



519,373


Investment Management:




Asset management revenue

51,602



53,271


Reimbursable costs from affiliates

16,883



45,390


Structuring revenue

12,718



27,981


Other advisory revenue

300



896


Dealer manager fees



4,430



81,503



131,968



612,337



651,341


Operating Expenses




Depreciation and amortization

198,119



189,319


General and administrative

50,888



53,189


Reimbursable tenant and affiliate costs

34,814



61,330


Property expenses, excluding reimbursable tenant costs (a)

26,760



31,196


Stock-based compensation expense

14,392



14,649


Subadvisor fees (b)

7,014



11,598


Impairment charges

4,790




Merger and other expenses (c)

4,328



1,138


Restructuring and other compensation (d)



9,074


Dealer manager fees and expenses



6,544



341,105



378,037


Other Income and Expenses




Interest expense

(121,125)



(125,374)


Equity in earnings of equity method investments in the Managed Programs
and real estate

46,246



47,820


Other gains and (losses)

16,698



(4,969)



(58,181)



(82,523)


Income before income taxes and gain on sale of real estate

213,051



190,781


Provision for income taxes

(2,975)



(2,903)


Income before gain on sale of real estate

210,076



187,878


Gain on sale of real estate, net of tax

18,987



22,732


Net Income

229,063



210,610


Net income attributable to noncontrolling interests

(10,760)



(8,530)


Net Income Attributable to W. P. Carey

$

218,303



$

202,080






Basic Earnings Per Share

$

2.02



$

1.87


Diluted Earnings Per Share

$

2.01



$

1.87


Weighted-Average Shares Outstanding




Basic

108,063,826



107,751,672


Diluted

108,253,841



107,947,490






Dividends Declared Per Share

$

3.060



$

3.000


____________



(a)    

Amounts for the three and nine months ended September 30, 2018 include $3.1 million and $12.3 million, respectively,
of property expenses related to two hotel operating properties, one of which we sold in April 2018.

(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. In September 2018, CPA:18 – Global sold four of its six multi-family properties. 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)    

Amounts for the three and nine months ended September 30, 2018 are primarily comprised of costs incurred in connection with our merger with CPA:17. Amount for the nine months ended September 30, 2017 is primarily comprised of accruals for estimated one-time legal settlement expenses.

(d)    

Amounts for the three and nine months ended September 30, 2017 represent restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.

 

 

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


September 30, 2018


June 30, 2018


September 30, 2017

Net income attributable to W. P. Carey

$

77,348



$

75,681



$

80,278


Adjustments:






Depreciation and amortization of real property

66,493



63,073



62,621


Gain on sale of real estate, net

(343)



(11,912)



(19,257)


Proportionate share of adjustments for noncontrolling interests

(2,693)



(2,729)



(2,692)


Proportionate share of adjustments to equity in net income of partially owned
   entities

(651)



902



866


Total adjustments

62,806



49,334



41,538


FFO (as defined by NAREIT) Attributable to W. P. Carey (a)

140,154



125,015



121,816


Adjustments:






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

13,224



12,303



12,459


Other amortization and non-cash items (b)

(4,829)



(7,437)



6,208


Tax expense (benefit) – deferred

3,918



3,028



(1,234)


Straight-line and other rent adjustments

(3,431)



(2,637)



(3,212)


Stock-based compensation

2,475



3,698



4,635


Amortization of deferred financing costs

1,901



1,905



2,184


Merger and other expenses (c)

1,673



2,692



65


Realized losses (gains) on foreign currency

191



627



(449)


(Gain) loss on extinguishment of debt

(43)





1,566


Restructuring and other compensation (d)





1,356


Proportionate share of adjustments to equity in net income of partially owned
   entities

3,860



3,635



3,064


Proportionate share of adjustments for noncontrolling interests

664



(230)



(216)


Total adjustments

19,603



17,584



26,426


AFFO Attributable to W. P. Carey (a)

$

159,757



$

142,599



$

148,242








Summary






FFO (as defined by NAREIT) attributable to W. P. Carey (a)

$

140,154



$

125,015



$

121,816


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

$

1.29



$

1.16



$

1.13


AFFO attributable to W. P. Carey (a)

$

159,757



$

142,599



$

148,242


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

$

1.48



$

1.32



$

1.37


Diluted weighted-average shares outstanding

108,283,666



108,234,934



108,143,694



 

 

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)



Nine Months Ended September 30,


2018


2017

Net income attributable to W. P. Carey

$

218,303



$

202,080


Adjustments:




Depreciation and amortization of real property

194,146



185,439


Gain on sale of real estate, net

(18,987)



(22,732)


Impairment charges

4,790




Proportionate share of adjustments for noncontrolling interests

(8,204)



(7,795)


Proportionate share of adjustments to equity in net income of partially owned entities

1,503



4,416


Total adjustments

173,248



159,328


FFO (as defined by NAREIT) Attributable to W. P. Carey (a)

391,551



361,408


Adjustments:




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

37,329



37,273


Stock-based compensation

14,392



14,649


Straight-line and other rent adjustments

(8,364)



(9,677)


Other amortization and non-cash items (b)

(7,120)



14,995


Tax benefit – deferred

(5,209)



(8,167)


Merger and other expenses (c)

4,328



1,138


Amortization of deferred financing costs

3,612



6,126


Loss on extinguishment of debt

1,566



35


Realized gains on foreign currency

(697)



(424)


Restructuring and other compensation (d)



9,074


Proportionate share of adjustments to equity in net income of partially owned entities

9,247



5,592


Proportionate share of adjustments for noncontrolling interests

91



(1,105)


Total adjustments

49,175



69,509


AFFO Attributable to W. P. Carey (a)

$

440,726



$

430,917






Summary




FFO (as defined by NAREIT) attributable to W. P. Carey (a)

$

391,551



$

361,408


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

$

3.62



$

3.35


AFFO attributable to W. P. Carey (a)

$

440,726



$

430,917


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

$

4.07



$

3.99


Diluted weighted-average shares outstanding

108,253,841



107,947,490


________



(a)    

FFO and AFFO are non-GAAP measures. See below for a description of FFO and AFFO.

(b)    

Primarily represents unrealized gains and losses from foreign exchange movements and derivatives.

(c)    

Amounts for the three and nine months ended September 30, 2018 are primarily comprised of costs incurred in connection with our merger with CPA:17. Amount for the nine months ended September 30, 2017 is primarily comprised of accruals for estimated one-time legal settlement expenses.

(d)    

Amounts for the three and nine months ended September 30, 2017 represent restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.

Non-GAAP Financial Disclosure

Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc., or 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 revised in February 2004. 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 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. Our FFO calculation complies with NAREIT's policy described above.

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-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 certain lease termination income, gains or losses from extinguishment of debt, restructuring and related compensation expenses and merger and acquisition expenses. We also exclude realized and unrealized gains/losses on foreign 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 which 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.

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

W. P. Carey Inc. Logo. (PRNewsFoto/W. P. Carey Inc.)

 

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SOURCE W. P. Carey Inc.

 

Investor Contacts

Institutional Investors

Peter Sands
Director of Institutional IR
W. P. Carey Inc.
1 (212) 492-1110
Email

Individual Investors

Investor Relations Department
1 (800) WP CAREY (972-2739)
Email

Transfer Agent

Computershare
W. P. Carey Inc.
Shareowner Services
PO Box 505000
Louisville, KY 40233-5000
1 (888) 200-8690

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