• Close

back to top
 

Press Release

W. P. Carey Inc. Announces Fourth Quarter and Full Year 2018 Financial Results

Company Release - 2/22/2019 7:30 AM ET

NEW YORK, Feb. 22, 2019 /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 fourth quarter and full year ended December 31, 2018.

Total Company

  • Net income attributable to W. P. Carey of $193.3 million, or $1.33 per diluted share, for the fourth quarter and $411.6 million, or $3.49 per diluted share, for 2018

  • AFFO of $193.9 million, or $1.33 per diluted share, for the fourth quarter and $634.6 million, or $5.39 per diluted share, for 2018

  • Quarterly cash dividend raised to $1.03 per share, equivalent to an annualized dividend rate of $4.12 per share

  • Completed merger with CPA:17 in a $5.9 billion stock-for-stock transaction

  • 2019 full year AFFO guidance range of $4.95 to $5.15 per diluted share announced, including Real Estate AFFO of between $4.70 and $4.90 per diluted share

Business Segments

Real Estate

  • Segment net income attributable to W. P. Carey of $151.6 million for the fourth quarter and $307.2 million for 2018

  • Segment AFFO of $163.9 million, or $1.12 per diluted share, for the fourth quarter and $516.5 million, or $4.39 per diluted share, for 2018

  • Investment volume of $248.0 million during the fourth quarter, bringing total investment volume for 2018 to $939.7 million

  • Gross disposition proceeds of $339.8 million during the fourth quarter, bringing total dispositions for 2018 to $524.5 million

  • Portfolio occupancy of 98.3%

  • Weighted-average lease term of 10.2 years

Investment Management

  • Segment net income attributable to W. P. Carey of $41.7 million for the fourth quarter and $104.3 million for 2018

  • Segment AFFO of $29.9 million, or $0.21 per diluted share, for the fourth quarter and $118.1 million, or $1.00 per diluted share, for 2018

Balance Sheet and Capitalization – Fourth Quarter 2018

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

  • Utilized ATM offering program to raise $287.5 million in net proceeds

 

MANAGEMENT COMMENTARY

"For the fourth quarter and full year, growth in Real Estate AFFO was driven primarily by the accretive impact of both new acquisitions and the assets we acquired in our recent merger with CPA:17," said Jason Fox, Chief Executive Officer of W. P. Carey. "During 2018, we added flexibility to our balance sheet and reduced leverage, and we believe the improved quality of our earnings is being reflected in our cost of capital. All of this puts us in a strong position to support our 2019 investment activity and continue to grow Real Estate AFFO per share."

 

QUARTERLY FINANCIAL RESULTS

Revenues

  • Total Company: Revenues excluding reimbursable costs (net revenues) for the 2018 fourth quarter totaled $258.2 million, up 39.3% from $185.3 million for the 2017 fourth quarter.

  • Real Estate: Real Estate net revenues for the 2018 fourth quarter were $238.1 million, up 46.7% from $162.3 million for the 2017 fourth quarter, due primarily to additional lease revenues from properties acquired in the CPA:17 Merger.

  • Investment Management: Investment Management net revenues for the 2018 fourth quarter were $20.1 million, down 13.0% from $23.1 million for the 2017 fourth quarter, due primarily to the cessation of asset management revenue previously earned from CPA:17.

Net Income Attributable to W. P. Carey

  • Net income attributable to W. P. Carey for the 2018 fourth quarter was $193.3 million, up 157.0% from $75.2 million for the 2017 fourth quarter, due primarily to a higher aggregate gain on sale of real estate and a gain on change in control of interests recognized in connection with the CPA:17 Merger, which more than offset higher interest expense related to mortgage loans on properties acquired in the CPA:17 Merger.

Adjusted Funds from Operations (AFFO)

  • AFFO for the 2018 fourth quarter was $1.33 per diluted share, up 1.5% from $1.31 per diluted share for the 2017 fourth quarter. AFFO from the Company's Real Estate segment (Real Estate AFFO) increased, due primarily to the accretive impact of both net acquisitions and properties acquired in the CPA:17 Merger, which closed during the 2018 fourth quarter. AFFO from the Company's Investment Management segment (Investment Management AFFO) declined, due primarily to the cessation of asset management fees previously earned from CPA:17.

    Note: Further information concerning AFFO and Real Estate AFFO, non-GAAP supplemental performance metrics, is presented in the accompanying tables and related notes.

Dividend

  • As previously announced, on December 5, 2018, the Company's Board of Directors declared a quarterly cash dividend of $1.03 per share, equivalent to an annualized dividend rate of $4.12 per share. The dividend was paid on January 15, 2019 to stockholders of record as of December 31, 2018.

 

FULL YEAR FINANCIAL RESULTS

Revenues

  • Total Company: Net revenues for the 2018 full year totaled $835.7 million, up 7.8% from $775.3 million for the 2017 full year.

  • Real Estate: Real Estate net revenues for the 2018 full year totaled $751.0 million, up 12.8% from $665.7 million for the 2017 full year, due primarily to additional lease revenues from properties acquired in the CPA:17 Merger and other property acquisitions.

  • Investment Management: Investment Management net revenues for the 2018 full year totaled $84.7 million, down 22.7% from $109.6 million for the 2017 full year, due primarily to lower structuring revenues resulting from the fully-invested status of the Managed Programs (as defined below), as well as the cessation of asset management revenue previously earned from CPA:17.

Net Income Attributable to W. P. Carey

  • Net income attributable to W. P. Carey for the 2018 full year totaled $411.6 million, up 48.4% compared to $277.3 million for the 2017 full year, due primarily to a higher aggregate gain on sale of real estate and a gain on change in control of interests recognized in connection with the CPA:17 Merger, which more than offset higher interest expense related to mortgage loans on properties acquired in the CPA:17 Merger.

AFFO

  • AFFO for the 2018 full year totaled $5.39 per diluted share, up 1.7% compared to $5.30 per diluted share for the 2017 full year. Real Estate AFFO increased, due primarily to the accretive impact of both net acquisitions and properties acquired in the CPA:17 Merger, which closed during the 2018 fourth quarter. Investment Management AFFO declined, due primarily to the cessation of asset management fees previously earned from CPA:17.

    Note: Further information concerning AFFO and Real Estate AFFO, non-GAAP supplemental performance metrics, is presented in the accompanying tables and related notes.

Dividends

  • Dividends declared during 2018 totaled $4.09 per share, an increase of 2.0% compared to total dividends declared during 2017 of $4.01 per share.

 

AFFO GUIDANCE

  • For the 2019 full year, the Company expects to report total AFFO of between $4.95 and $5.15 per diluted share, including Real Estate AFFO of between $4.70 and $4.90 per diluted share, based on the following key assumptions:

(i)   investments for the Company's Real Estate portfolio of between $750 million and $1.25 billion;

(ii)   dispositions from the Company's Real Estate portfolio of between $500 million and $700 million; and

(iii)  total general and administrative expenses of between $75 million and $80 million.

Note: The Company does not provide guidance on net income. The Company only provides guidance on total AFFO (and Real Estate 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

  • 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.

"At-The-Market" (ATM) Offering Program

  • During the 2018 fourth quarter, the Company issued 4,229,285 shares of common stock under its ATM offering program at a weighted-average price of $69.03 per share, for net proceeds of $287.5 million.

  • Subsequent to the 2018 fourth quarter, the Company issued 772,858 shares of common stock under its ATM offering program at a weighted-average price of $74.50 per share, for net proceeds of approximately $56.7 million.

CPA:17 MERGER

  • On October 31, 2018, the Company completed its merger with CPA:17 (the CPA:17 Merger) in a transaction valued at approximately $5.9 billion, including the assumption of debt.

  • As a result of the CPA:17 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.

 

REAL ESTATE

Investments

  • During the 2018 fourth quarter, the Company completed investments totaling $248.0 million, consisting of eight acquisitions for $210.9 million in aggregate and three completed capital investment projects at a total cost of $37.1 million, bringing total investment volume for the year ended December 31, 2018 to $939.7 million, including transaction-related costs.

  • As of December 31, 2018, the Company had nine capital investment projects outstanding for an expected total investment of approximately $234.7 million, of which eight projects totaling $159.7 million are currently expected to be completed during 2019.

Dispositions

  • During the 2018 fourth quarter, the Company disposed of 39 properties for total gross proceeds of $339.8 million, bringing total dispositions for the year ended December 31, 2018 to $524.5 million.

Composition

  • As of December 31, 2018, the Company's net lease portfolio consisted of 1,163 properties, comprising 131.0 million square feet leased to 304 tenants, with a weighted-average lease term of 10.2 years and an occupancy rate of 98.3%. In addition, primarily as a result of the CPA:17 Merger, the Company owned 46 self-storage and two hotel operating properties, totaling approximately 3.4 million square feet.

 

INVESTMENT MANAGEMENT

  • W. P. Carey was formerly the advisor to CPA:17 – Global (CPA:17) until the CPA:17 Merger, 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 together with the CPA REITs, the Managed REITs), and Carey European Student Housing Fund I, L.P. (CESH, and together with the Managed REITs, the Managed Programs).

Acquisitions

  • During the 2018 fourth quarter, the Company structured investments on behalf of the Managed Programs totaling $126.1 million, including transaction-related costs and fees, comprised wholly of student housing projects for CPA:18, bringing total investment volume on behalf of the Managed Programs for the year ended December 31, 2018 to $427.3 million, comprised almost entirely of student housing projects for CPA:18.

Assets Under Management

  • As of December 31, 2018, the existing Managed Programs had total assets under management of approximately $7.6 billion, down 42.0% from approximately $13.1 billion as of December 31, 2017, substantially due to the CPA:17 Merger.

*     *     *     *     *

Supplemental Information

The Company has provided supplemental unaudited financial and operating information regarding the 2018 fourth quarter and certain prior quarters, including a description of non-GAAP financial measures and reconciliations to GAAP measures, in a Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on February 22, 2019.

*     *     *     *     *

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, February 22, 2019 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.

W. P. Carey ranks among the largest net lease REITs with an enterprise value of approximately $17 billion and a diversified portfolio of operationally-critical commercial real estate that includes 1,163 net lease properties covering approximately 131 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 quality of our earnings, our cost of capital, our 2019 investment activity, and the potential growth of our real estate adjusted funds from operations (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, 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

(in thousands, except share and per share amounts)



December 31,


2018


2017

Assets




Investments in real estate:




Land, buildings and improvements (a)

$

9,251,396



$

5,457,265


Net investments in direct financing leases

1,306,215



721,607


In-place lease and other intangible assets

2,009,628



1,213,976


Above-market rent intangible assets

925,797



640,480


Investments in real estate

13,493,036



8,033,328


Accumulated depreciation and amortization (b)

(1,564,182)



(1,329,613)


Net investments in real estate

11,928,854



6,703,715


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

329,248



341,457


Cash and cash equivalents

217,644



162,312


Due from affiliates

74,842



105,308


Other assets, net

711,507



274,650


Goodwill

920,944



643,960


Total assets

$

14,183,039



$

8,231,402






Liabilities and Equity




Debt:




Senior unsecured notes, net

$

3,554,470



$

2,474,661


Unsecured revolving credit facility

91,563



216,775


Unsecured term loans, net



388,354


Non-recourse mortgages, net

2,732,658



1,185,477


Debt, net

6,378,691



4,265,267


Accounts payable, accrued expenses and other liabilities

403,896



263,053


Below-market rent and other intangible liabilities, net

225,128



113,957


Deferred income taxes

173,115



67,009


Dividends payable

172,154



109,766


Total liabilities

7,352,984



4,819,052


Redeemable noncontrolling interest



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; 165,279,642 and 106,922,616
   shares, respectively, issued and outstanding

165



107


Additional paid-in capital

8,187,335



4,433,573


Distributions in excess of accumulated earnings

(1,143,992)



(1,052,064)


Deferred compensation obligation

35,766



46,656


Accumulated other comprehensive loss

(254,996)



(236,011)


Total stockholders' equity

6,824,278



3,192,261


Noncontrolling interests

5,777



219,124


Total equity

6,830,055



3,411,385


Total liabilities and equity

$

14,183,039



$

8,231,402


________

(a)   

Includes $470.7 million and $83.0 million of amounts attributable to operating properties as of December 31, 2018 and 2017, respectively. We sold one hotel operating property in April 2018. We acquired 37 self-storage properties and one hotel operating property in the CPA:17 Merger.

(b)   

Includes $734.8 million and $630.0 million of accumulated depreciation on buildings and improvements as of December 31, 2018 and 2017, respectively, and $829.4 million and $699.7 million of accumulated amortization on lease intangibles as of December 31, 2018 and 2017, respectively.

(c)  

Our equity investments in the Managed Programs totaled $107.6 million and $201.4 million as of December 31, 2018 and 2017, respectively. Our equity investments in real estate joint ventures totaled $221.7 million and $140.0 million as of December 31, 2018 and 2017, respectively.

 

 

W. P. CAREY INC.

Quarterly Consolidated Statements of Income

(in thousands, except share and per share amounts)



Three Months Ended


December 31, 2018


September 30, 2018


December 31, 2017

Revenues






Real Estate:






Lease revenues

$

223,487



$

167,088



$

154,826


Operating property revenues

11,707



4,282



6,910


Reimbursable tenant costs

10,145



5,979



5,584


Lease termination income and other

2,952



1,981



515



248,291



179,330



167,835


Investment Management:






Asset management revenue

11,954



17,349



16,854


Structuring revenue

8,108



6,553



6,217


Reimbursable costs from affiliates

5,042



6,042



6,055


Other advisory revenue



110





25,104



30,054



29,126



273,395



209,384



196,961


Operating Expenses






Depreciation and amortization

93,321



67,825



64,015


Merger and other expenses (a)

37,098



1,673



(533)


General and administrative

17,449



15,863



17,702


Reimbursable tenant and affiliate costs

15,187



12,021



11,639


Property expenses, excluding reimbursable tenant costs

8,319



4,898



3,993


Operating property expenses

7,844



3,055



5,567


Stock-based compensation expense

3,902



2,475



4,268


Subadvisor fees (b)

2,226



3,127



2,002


Impairment charges





2,769


Restructuring and other compensation (c)





289



185,346



110,937



111,711


Other Income and Expenses






Gain on sale of real estate, net

99,618



343



11,146


Interest expense

(57,250)



(41,740)



(40,401)


Gain on change in control of interests (d)

47,814






Equity in earnings of equity method investments in the Managed Programs

   and real estate

15,268



18,363



16,930


Other gains and (losses)

13,215



8,875



1,356



118,665



(14,159)



(10,969)


Income before income taxes

206,714



84,288



74,281


(Provision for) benefit from income taxes

(11,436)



(2,715)



192


Net Income

195,278



81,573



74,473


Net (income) loss attributable to noncontrolling interests

(2,015)



(4,225)



736


Net Income Attributable to W. P. Carey

$

193,263



$

77,348



$

75,209








Basic Earnings Per Share

$

1.33



$

0.71



$

0.69


Diluted Earnings Per Share

$

1.33



$

0.71



$

0.69


Weighted-Average Shares Outstanding






Basic

145,480,858



108,073,969



108,041,556


Diluted

145,716,583



108,283,666



108,208,918








Dividends Declared Per Share

$

1.030



$

1.025



$

1.010


 

 

W. P. CAREY INC.

Full Year Consolidated Statements of Income

(in thousands, except share and per share amounts)



Years Ended December 31,


2018


2017

Revenues




Real Estate:




Lease revenues

$

716,422



$

630,373


Reimbursable tenant costs

28,076



21,524


Operating property revenues

28,072



30,562


Lease termination income and other

6,555



4,749



779,125



687,208


Investment Management:




Asset management revenue

63,556



70,125


Reimbursable costs from affiliates

21,925



51,445


Structuring revenue

20,826



34,198


Other advisory revenue

300



896


Dealer manager fees



4,430



106,607



161,094



885,732



848,302


Operating Expenses




Depreciation and amortization

291,440



253,334


General and administrative

68,337



70,891


Reimbursable tenant and affiliate costs

50,001



72,969


Merger and other expenses (a)

41,426



605


Property expenses, excluding reimbursable tenant costs

22,773



17,330


Operating property expenses

20,150



23,426


Stock-based compensation expense

18,294



18,917


Subadvisor fees (b)

9,240



13,600


Impairment charges

4,790



2,769


Restructuring and other compensation (c)



9,363


Dealer manager fees and expenses



6,544



526,451



489,748


Other Income and Expenses




Interest expense

(178,375)



(165,775)


Gain on sale of real estate, net

118,605



33,878


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

61,514



64,750


Gain on change in control of interests (d)

47,814




Other gains and (losses)

29,913



(3,613)



79,471



(70,760)


Income before income taxes

438,752



287,794


Provision for income taxes

(14,411)



(2,711)


Net Income

424,341



285,083


Net income attributable to noncontrolling interests

(12,775)



(7,794)


Net Income Attributable to W. P. Carey

$

411,566



$

277,289






Basic Earnings Per Share

$

3.50



$

2.56


Diluted Earnings Per Share

$

3.49



$

2.56


Weighted-Average Shares Outstanding




Basic

117,494,969



107,824,738


Diluted

117,706,445



108,035,971






Dividends Declared Per Share

$

4.090



$

4.010


__________

(a)  

Amounts for the three months ended December 31, 2018 and September 30, 2018, and the year ended December 31, 2018 are primarily comprised of costs incurred in connection with the CPA:17 Merger. Amount for the year ended December 31, 2017 is primarily comprised of accruals for estimated one-time legal settlement expenses.

(b)  

The subadvisors for CWI 1, CWI 2, CPA:18 Global, and Carey Credit Income Fund (prior to our resignation as the advisor to that fund in the third quarter of 2017) earn a percentage of gross fees recorded, which we account for as an expense and are recorded as Subadvisor fees in our consolidated statements of income. The amounts paid to the subadvisors are the differences between gross and net fees. Refer to the Managed Programs Fee Summary section in Exhibit 99.2 of the Current Report on Form 8-K filed on February 22, 2019 for further information.

(c)  

Amounts for the three months and year ended December 31, 2017 represent restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.

(d)  

Amounts for the three months and year ended December 31, 2018 include a gain of $18.8 million recognized on the purchase of the remaining interests in six investments from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. Amounts for the three months and year ended December 31, 2018 also include a gain of $29.0 million recognized on our previously held interest in shares of CPA:17 common stock in connection with the CPA:17 Merger.

 

 

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


December 31, 2018


September 30, 2018


December 31, 2017

Net income attributable to W. P. Carey

$

193,263



$

77,348



$

75,209


Adjustments:






Gain on sale of real estate, net

(99,618)



(343)



(11,146)


Depreciation and amortization of real property

92,018



66,493



62,603


Gain on change in control of interests (a)

(47,814)






Impairment charges





2,769


Proportionate share of adjustments for noncontrolling interests

(762)



(2,693)



(2,696)


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

3,225



(651)



877


Total adjustments

(52,951)



62,806



52,407


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

140,312



140,154



127,616


Adjustments:






Merger and other expenses (c)

37,098



1,673



(533)


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

14,985



13,224



17,922


Other amortization and non-cash items (e)

(10,206)



(4,829)



2,198


Tax expense (benefit) – deferred and other (f)

6,288



3,918



(10,497)


Straight-line and other rent adjustments

(6,096)



(3,431)



(2,002)


Stock-based compensation

3,902



2,475



4,268


Amortization of deferred financing costs

2,572



1,901



2,043


Loss (gain) on extinguishment of debt

1,744



(43)



(81)


Realized (gains) losses on foreign currency

(71)



191



(472)


Restructuring and other compensation (g)





289


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

3,192



3,860



2,884


Proportionate share of adjustments for noncontrolling interests

140



664



(1,573)


Total adjustments

53,548



19,603



14,446


AFFO Attributable to W. P. Carey (b)

$

193,860



$

159,757



$

142,062








Summary






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

$

140,312



$

140,154



$

127,616


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

$

0.96



$

1.29



$

1.18


AFFO attributable to W. P. Carey (b)

$

193,860



$

159,757



$

142,062


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

$

1.33



$

1.48



$

1.31


Diluted weighted-average shares outstanding

145,716,583



108,283,666



108,208,918


 

 

W. P. CAREY INC.

Quarterly Reconciliation of Net Income from Real Estate to Adjusted Funds from Operations (AFFO) from Real Estate (Unaudited)

(in thousands, except share and per share amounts)



Three Months Ended


December 31, 2018


September 30, 2018


December 31, 2017

Net income from Real Estate attributable to W. P. Carey

$

151,611



$

51,009



$

54,149


Adjustments:






Gain on sale of real estate, net

(99,618)



(343)



(11,146)


Depreciation and amortization of real property

92,018



66,493



62,603


Gain on change in control of interests (a)

(18,792)






Impairment charges





2,769


Proportionate share of adjustments for noncontrolling interests

(762)



(2,693)



(2,696)


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

3,225



(651)



877


Total adjustments

(23,929)



62,806



52,407


FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (b)

127,682



113,815



106,556


Adjustments:






Merger and other expenses (c)

37,098



1,673



(533)


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

14,985



13,224



17,922


Other amortization and non-cash items (e)

(12,692)



(5,174)



2,260


Straight-line and other rent adjustments

(6,096)



(3,431)



(2,002)


Tax benefit – deferred and other

(3,949)



(3,556)



(15,047)


Stock-based compensation

2,774



1,380



2,227


Amortization of deferred financing costs

2,572



1,901



2,043


Loss (gain) on extinguishment of debt

1,744



(43)



(81)


Realized (gains) losses on foreign currency

(61)



197



(477)


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

(260)



519



41


Proportionate share of adjustments for noncontrolling interests

140



664



(1,573)


Total adjustments

36,255



7,354



4,780


AFFO Attributable to W. P. Carey – Real Estate (b)

$

163,937



$

121,169



$

111,336








Summary






FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (b)

$

127,682



$

113,815



$

106,556


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

$

0.87



$

1.05



$

0.99


AFFO attributable to W. P. Carey – Real Estate (b)

$

163,937



$

121,169



$

111,336


AFFO attributable to W. P. Carey per diluted share – Real Estate (b)

$

1.12



$

1.12



$

1.03


Diluted weighted-average shares outstanding

145,716,583



108,283,666



108,208,918


 

 

W. P. CAREY INC.

Full Year Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited)

(in thousands, except share and per share amounts)



Years Ended December 31,


2018


2017

Net income attributable to W. P. Carey

$

411,566



$

277,289


Adjustments:




Depreciation and amortization of real property

286,164



248,042


Gain on sale of real estate, net

(118,605)



(33,878)


Gain on change in control of interests (a)

(47,814)




Impairment charges

4,790



2,769


Proportionate share of adjustments for noncontrolling interests

(8,966)



(10,491)


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

4,728



5,293


Total adjustments

120,297



211,735


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

531,863



489,024


Adjustments:




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

52,314



55,195


Merger and other expenses (c)

41,426



605


Stock-based compensation

18,294



18,917


Other amortization and non-cash items (e)

(17,326)



17,193


Straight-line and other rent adjustments

(14,460)



(11,679)


Amortization of deferred financing costs

6,184



8,169


Loss (gain) on extinguishment of debt

3,310



(46)


Tax expense (benefit) – deferred and other (f)

1,079



(18,664)


Realized gains on foreign currency

(768)



(896)


Restructuring and other compensation (g)



9,363


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

12,439



8,476


Proportionate share of adjustments for noncontrolling interests

231



(2,678)


Total adjustments

102,723



83,955


AFFO Attributable to W. P. Carey (b)

$

634,586



$

572,979






Summary




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

$

531,863



$

489,024


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

$

4.52



$

4.53


AFFO attributable to W. P. Carey (b)

$

634,586



$

572,979


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

$

5.39



$

5.30


Diluted weighted-average shares outstanding

117,706,445



108,035,971


 

 

W. P. CAREY INC.

Full Year Reconciliation of Net Income from Real Estate to Adjusted Funds from Operations (AFFO) from Real Estate (Unaudited)

(in thousands, except share and per share amounts)



Years Ended December 31,


2018


2017

Net income from Real Estate attributable to W. P. Carey

$

307,236



$

192,139


Adjustments:




Depreciation and amortization of real property

286,164



248,042


Gain on sale of real estate, net

(118,605)



(33,878)


Gain on change in control of interests (a)

(18,792)




Impairment charges

4,790



2,769


Proportionate share of adjustments for noncontrolling interests

(8,966)



(10,491)


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

4,728



5,293


Total adjustments

149,319



211,735


FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (b)

456,555



403,874


Adjustments:




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

52,314



55,195


Merger and other expenses (c)

41,426



605


Other amortization and non-cash items (e)

(20,216)



18,115


Tax benefit – deferred and other

(18,790)



(20,168)


Straight-line and other rent adjustments

(14,460)



(11,679)


Stock-based compensation

10,450



6,960


Amortization of deferred financing costs

6,184



8,169


Loss (gain) on extinguishment of debt

3,310



(46)


Realized gains on foreign currency

(789)



(918)


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

287



(564)


Proportionate share of adjustments for noncontrolling interests

231



(2,678)


Total adjustments

59,947



52,991


AFFO Attributable to W. P. Carey – Real Estate (b)

$

516,502



$

456,865






Summary




FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (b)

$

456,555



$

403,874


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

$

3.88



$

3.74


AFFO attributable to W. P. Carey – Real Estate (b)

$

516,502



$

456,865


AFFO attributable to W. P. Carey per diluted share – Real Estate (b)

$

4.39



$

4.23


Diluted weighted-average shares outstanding

117,706,445



108,035,971


__________

(a) 

AFFO and Real Estate AFFO amounts for the three months and year ended December 31, 2018 include a gain recognized on the purchase of the remaining interests in six investments from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. AFFO amounts for the three months and year ended December 31, 2018 include a gain recognized on our previously held interest in shares of CPA:17 common stock in connection with the CPA:17 Merger.

(b)   

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

(c)   

Amounts for the three months ended December 31, 2018 and September 30, 2018, and the year ended December 31, 2018 are primarily comprised of costs incurred in connection with the CPA:17 Merger. Amount for the year ended December 31, 2017 is primarily comprised of accruals for estimated one-time legal settlement expenses.

(d)  

Amounts for the three months and year ended December 31, 2017 include an adjustment of $5.7 million related to accelerated amortization of an above-market rent intangible in connection with a lease restructuring.

(e)  

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

(f)  

Amounts for the three months and year ended December 31, 2018 include one-time taxes incurred upon the recognition of taxable income associated with the accelerated vesting of shares previously issued by CPA:17 – Global to us for asset management services performed, in connection with the CPA:17 Merger.

(g)   

Amounts for the three months and year ended December 31, 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. ("NAREIT"), an industry trade group, has promulgated a non-GAAP measure known as FFO, which we believe to be an appropriate supplemental measure, when used in addition to and in conjunction with results presented in accordance with GAAP, to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to nor a substitute for net income or loss as determined under GAAP.

We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as restated in December 2018. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property, impairment charges on real estate, gains or losses on changes in control of interests in real estate and depreciation and amortization from real estate assets; and after adjustments for unconsolidated partnerships and jointly owned investments. Adjustments for unconsolidated partnerships and jointly owned investments are calculated to reflect FFO. 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 currency exchange transactions (other than those realized on the settlement of foreign currency derivatives), which are not considered fundamental attributes of our business plan and do not affect our overall long-term operating performance. We refer to our modified definition of FFO as AFFO. We exclude these items from GAAP net income to arrive at AFFO as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs 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.)

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/w-p-carey-inc-announces-fourth-quarter-and-full-year-2018-financial-results-300800205.html

SOURCE W. P. Carey Inc.

 

Investor Contacts

Institutional Investors

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

Capital Markets

Jeremiah Gregory
Head of Capital Markets
W. P. Carey Inc.
1 (212) 492-1135
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

Copyright 2019, © S&P Global Market Intelligence  Terms of Use