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Press Release

W. P. Carey Inc. Announces Second Quarter 2019 Financial Results

Company Release - 8/2/2019 7:30 AM ET

NEW YORK, Aug. 2, 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 second quarter ended June 30, 2019.

Total Company

  • Net income attributable to W. P. Carey of $66.0 million, or $0.38 per diluted share

  • AFFO of $208.5 million, or $1.22 per diluted share

  • 2019 AFFO guidance range narrowed to $4.95 to $5.05 per diluted share, including Real Estate AFFO of $4.70 to $4.80 per diluted share

  • Quarterly cash dividend raised to $1.034 per share, equivalent to an annualized dividend rate of $4.136 per share

Business Segments

Real Estate

  • Segment net income attributable to W. P. Carey of $60.8 million

  • Segment AFFO of $199.8 million, or $1.17 per diluted share

  • Investment volume of $439.9 million year to date, including $394.7 million completed during the first half of 2019 and $45.2 million subsequent to quarter end

  • Active capital investment projects totaling $183.7 million at quarter end, including $95.9 million expected to be completed in 2019

  • Entered into agreements to convert 36 existing self-storage operating properties to net leases

  • Gross disposition proceeds of $21.9 million during the first half of 2019

  • Portfolio occupancy of 98.2%

  • Weighted-average lease term increased to 10.4 years

Investment Management

  • Segment net income attributable to W. P. Carey of $5.3 million

  • Segment AFFO of $8.6 million, or $0.05 per diluted share

Balance Sheet and Capitalization

  • Issued $325 million of 3.850% Senior Unsecured Notes due 2029

  • Utilized ATM program to raise $88.3 million in net proceeds during the second quarter, bringing net proceeds raised during the first half of 2019 to $392.1 million

  • Prepaid mortgage debt totaling $293.7 million during the second quarter, bringing mortgage debt prepaid during the first half of 2019 to $493.3 million

 

MANAGEMENT COMMENTARY

"Our business continues to gather momentum. During the second quarter, we added several high-quality industrial sale-leasebacks to our portfolio, creatively converted the bulk of our self-storage operating assets to net leases, further accessed the capital markets and prepaid additional mortgage debt," said Jason Fox, Chief Executive Officer of W. P. Carey. "We have revised our AFFO guidance to reflect our current expectations for investment timing, along with the deleveraging we've done this year. Looking ahead, our investment opportunity set remains broad and our cost of capital enables us to pursue a wide range of opportunities."

 

QUARTERLY FINANCIAL RESULTS

Revenues

  • Total Company: Revenues, including reimbursable costs, for the 2019 second quarter totaled $305.2 million, up 51.8% from $201.1 million for the 2018 second quarter.

  • Real Estate: Real Estate revenues, including reimbursable costs, for the 2019 second quarter were $291.5 million, up 67.6% from $173.9 million for the 2018 second quarter, due primarily to additional lease revenues from properties acquired in the Company's merger with CPA:17 on October 31, 2018 (the CPA:17 Merger) and net acquisitions.

    Note: While it has no impact on net income or AFFO, in accordance with Accounting Standards Update 2016-02, Leases (Topic 842), which the Company has adopted effective as of January 1, 2019, operating expenses reimbursed by tenants are included within lease revenues on the consolidated statements of income (for both current and prior year periods). Prior to that date the Company presented revenues excluding reimbursable costs.

  • Investment Management: Investment Management revenues, including reimbursable costs, for the 2019 second quarter were $13.7 million, down 49.6% from $27.2 million for the 2018 second 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 2019 second quarter was $66.0 million, down 12.8% from $75.7 million for the 2018 second quarter. Net income from Investment Management attributable to W. P. Carey decreased, due primarily to the cessation of Investment Management revenues and distributions previously earned from CPA:17. Net income from Real Estate attributable to W. P. Carey increased, due primarily to properties acquired in the CPA:17 Merger and net acquisitions. The increase in revenues from properties acquired in the CPA:17 Merger and acquisitions was partly offset by corresponding increases in depreciation and amortization, interest expense and property expenses.

Adjusted Funds from Operations (AFFO)

  • AFFO for the 2019 second quarter was $1.22 per diluted share, down 7.6% from $1.32 per diluted share for the 2018 second quarter. AFFO from the Company's Real Estate segment (Real Estate AFFO) increased, due primarily to the accretive impact of properties acquired in the CPA:17 Merger and net acquisitions. AFFO from the Company's Investment Management segment declined, due primarily to the cessation of Investment Management revenues and distributions previously earned from CPA:17.

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

Dividend

  • As previously announced, on June 13, 2019 the Company's Board of Directors declared a quarterly cash dividend of $1.034 per share, equivalent to an annualized dividend rate of $4.136 per share. The dividend was paid on July 15, 2019 to stockholders of record as of June 28, 2019.

 

AFFO GUIDANCE

  • For the 2019 full year, the Company has narrowed its AFFO guidance range and currently expects to report total AFFO of between $4.95 and $5.05 per diluted share, including Real Estate AFFO of between $4.70 and $4.80 per diluted share, based on the following key assumptions, which are unchanged:

(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

Bond Issuance

  • On June 14, 2019, the Company completed an underwritten public offering of $325 million aggregate principal amount of 3.850% Senior Unsecured Notes due July 15, 2029. Net proceeds from the offering were used primarily to reduce amounts outstanding under the Company's unsecured revolving credit facility.

"At-The-Market" (ATM) Program

  • During the 2019 second quarter, the Company issued 1,116,217 shares of common stock under its ATM program at a weighted-average price of $80.33 per share, for net proceeds of $88.3 million.

  • This activity brought issuances under the Company's ATM program during the first half of 2019 to 5,169,840 shares of common stock, at a weighted-average price of $77.06 per share, for net proceeds of $392.1 million.

Mortgage / Secured Debt Prepayment

  • During the 2019 second quarter, the Company prepaid mortgage debt totaling $293.7 million, with a weighted-average interest rate of approximately 5.2%.

  • This activity brought mortgage debt prepaid during the first half of 2019 to $493.3 million, with a weighted-average interest rate of approximately 5.1%.

 

REAL ESTATE

Investments

  • During the 2019 second quarter, the Company completed investments totaling $155.2 million, consisting of four acquisitions for $123.5 million in aggregate and three completed capital investment projects at a total cost of $31.7 million, bringing total investment volume for the first half of 2019 to $394.7 million, including transaction-related costs.

  • Subsequent to quarter end, the Company completed two additional investments totaling $45.2 million, bringing total investment volume year to date to $439.9 million, including transaction-related costs.

  • As of June 30, 2019, the Company had six capital investment projects outstanding for an expected total investment of approximately $183.7 million, of which four projects totaling $95.9 million are currently expected to be completed during 2019.

Conversion of Self-Storage Operating Properties to Net Leases

  • During the 2019 second quarter, the Company entered into net lease agreements with Extra Space Storage Inc. for 36 self-storage operating properties, the vast majority of which the Company acquired in the CPA:17 Merger.

  • Pursuant to these agreements, 22 self-storage operating properties were converted to net leases on June 1, 2019, at which time we began recognizing lease revenues on the properties and ceased recognizing operating property revenues and expenses.

  • Subsequent to quarter end, on August 1, 2019, an additional five self-storage operating properties were converted to net leases. The remaining nine self-storage operating properties included in this transaction, which were non-stabilized, are expected to convert to net leases upon stabilization over the next three years.

Dispositions

  • During the 2019 second quarter, the Company disposed of five properties for gross proceeds of $17.0 million, bringing total disposition proceeds for the first half of 2019 to $21.9 million.

Composition

  • As of June 30, 2019, the Company's net lease portfolio consisted of 1,198 properties, comprising 136.6 million square feet leased to 320 tenants, with a weighted-average lease term of 10.4 years and an occupancy rate of 98.2%. In addition, the Company owned 24 self-storage and two hotel operating properties, totaling approximately 2.0 million square feet.

 

INVESTMENT MANAGEMENT

  • W. P. Carey is the advisor to CPA:18 – Global (CPA:18), Carey Watermark Investors Incorporated (CWI 1), Carey Watermark Investors 2 Incorporated (CWI 2) and Carey European Student Housing Fund I, L.P. (CESH) (collectively, the Managed Programs). As of June 30, 2019, the Managed Programs had total assets under management of approximately $7.6 billion.

 

*     *     *     *     *

 

Supplemental Information

The Company has provided supplemental unaudited financial and operating information regarding the 2019 second 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 August 2, 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, August 2, 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 $20 billion and a diversified portfolio of operationally-critical commercial real estate that includes 1,198 net lease properties covering approximately 137 million square feet. For over four decades, the company has invested in high-quality single-tenant industrial, warehouse, office, retail and self-storage properties subject to long-term net 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 our investment opportunities and cost of capital. 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 (Unaudited)

(in thousands, except share and per share amounts)



June 30, 2019


December 31, 2018

Assets




Investments in real estate:




Land, buildings and improvements (a)

$

9,480,306



$

9,251,396


Net investments in direct financing leases

1,263,319



1,306,215


In-place lease intangible assets and other

2,134,786



2,009,628


Above-market rent intangible assets

921,998



925,797


Investments in real estate

13,800,409



13,493,036


Accumulated depreciation and amortization (b)

(1,812,628)



(1,564,182)


Assets held for sale, net (c)

102,777




Net investments in real estate

12,090,558



11,928,854


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

317,159



329,248


Cash and cash equivalents

202,279



217,644


Due from affiliates

81,523



74,842


Other assets, net

580,270



711,507


Goodwill

920,218



920,944


Total assets

$

14,192,007



$

14,183,039






Liabilities and Equity




Debt:




Senior unsecured notes, net

$

3,861,931



$

3,554,470


Unsecured revolving credit facility

111,227



91,563


Non-recourse mortgages, net

2,203,853



2,732,658


Debt, net

6,177,011



6,378,691


Accounts payable, accrued expenses and other liabilities

463,417



403,896


Below-market rent and other intangible liabilities, net

213,279



225,128


Deferred income taxes

168,841



173,115


Dividends payable

178,665



172,154


Total liabilities

7,201,213



7,352,984






Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued




Common stock, $0.001 par value, 450,000,000 shares authorized; 170,756,507 and 165,279,642
   shares, respectively, issued and outstanding

171



165


Additional paid-in capital

8,576,245



8,187,335


Distributions in excess of accumulated earnings

(1,368,457)



(1,143,992)


Deferred compensation obligation

37,263



35,766


Accumulated other comprehensive loss

(260,817)



(254,996)


Total stockholders' equity

6,984,405



6,824,278


Noncontrolling interests

6,389



5,777


Total equity

6,990,794



6,830,055


Total liabilities and equity

$

14,192,007



$

14,183,039


________

(a)

Includes $189.3 million and $470.7 million of amounts attributable to operating properties as of June 30, 2019 and December 31, 2018, respectively.

(b)

Includes $847.5 million and $734.8 million of accumulated depreciation on buildings and improvements as of June 30, 2019 and December 31, 2018, respectively, and $965.1 million and $829.4 million of accumulated amortization on lease intangibles as of June 30, 2019 and December 31, 2018, respectively.

(c)

At June 30, 2019, we had two properties classified as Assets held for sale, net, including one hotel operating property.

(d)

Our equity investments in real estate joint ventures totaled $197.9 million and $221.7 million as of June 30, 2019 and December 31, 2018, respectively. Our equity investments in the Managed Programs totaled $119.2 million and $107.6 million as of June 30, 2019 and December 31, 2018, respectively.

 

 

W. P. CAREY INC.

Quarterly Consolidated Statements of Income (Unaudited)

(in thousands, except share and per share amounts)



Three Months Ended


June 30, 2019


March 31, 2019


June 30, 2018

Revenues






Real Estate:






Lease revenues

$

269,802



$

262,939



$

168,367


Operating property revenues

15,436



15,996



4,865


Lease termination income and other

6,304



3,270



680



291,542



282,205



173,912


Investment Management:






Asset management revenue

9,790



9,732



17,268


Reimbursable costs from affiliates

3,821



3,868



5,537


Structuring and other advisory revenue

58



2,518



4,426



13,669



16,118



27,231



305,211



298,323



201,143


Operating Expenses






Depreciation and amortization

113,632



112,379



64,337


General and administrative

19,729



21,285



16,442


Reimbursable tenant costs

13,917



13,171



5,733


Operating property expenses

10,874



10,594



3,581


Property expenses, excluding reimbursable tenant costs

9,915



9,912



5,327


Stock-based compensation expense

4,936



4,165



3,698


Reimbursable costs from affiliates

3,821



3,868



5,537


Subadvisor fees (a)

1,650



2,202



1,855


Merger and other expenses (b)

696



146



2,692



179,170



177,722



109,202


Other Income and Expenses






Interest expense

(59,719)



(61,313)



(41,311)


Equity in earnings of equity method investments in the Managed Programs

   and real estate

3,951



5,491



12,558


Other gains and (losses) (c)

(671)



955



10,586


(Loss) gain on sale of real estate, net

(362)



933



11,912



(56,801)



(53,934)



(6,255)


Income before income taxes

69,240



66,667



85,686


(Provision for) benefit from income taxes

(3,119)



2,129



(6,262)


Net Income

66,121



68,796



79,424


Net income attributable to noncontrolling interests

(83)



(302)



(3,743)


Net Income Attributable to W. P. Carey

$

66,038



$

68,494



$

75,681








Basic Earnings Per Share

$

0.39



$

0.41



$

0.70


Diluted Earnings Per Share

$

0.38



$

0.41



$

0.70


Weighted-Average Shares Outstanding






Basic

171,304,112



167,234,121



108,059,394


Diluted

171,490,625



167,434,740



108,234,934








Dividends Declared Per Share

$

1.034



$

1.032



$

1.020


 

 

W. P. CAREY INC.

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

(in thousands, except share and per share amounts)



Six Months Ended June 30,


2019


2018

Revenues




Real Estate:




Lease revenues

$

532,741



$

337,799


Operating property revenues

31,432



12,083


Lease termination income and other

9,574



1,622



573,747



351,504


Investment Management:




Asset management revenue

19,522



34,253


Reimbursable costs from affiliates

7,689



10,841


Structuring and other advisory revenue

2,576



6,355



29,787



51,449



603,534



402,953


Operating Expenses




Depreciation and amortization

226,011



130,294


General and administrative

41,014



35,025


Reimbursable tenant costs

27,088



11,952


Operating property expenses

21,468



9,251


Property expenses, excluding reimbursable tenant costs

19,827



9,556


Stock-based compensation expense

9,101



11,917


Reimbursable costs from affiliates

7,689



10,841


Subadvisor fees (a)

3,852



3,887


Merger and other expenses (b)

842



2,655


Impairment charges



4,790



356,892



230,168


Other Income and Expenses




Interest expense

(121,032)



(79,385)


Equity in earnings of equity method investments in the Managed Programs

   and real estate

9,442



27,883


Gain on sale of real estate, net

571



18,644


Other gains and (losses)

284



7,823



(110,735)



(25,035)


Income before income taxes

135,907



147,750


Provision for income taxes

(990)



(260)


Net Income

134,917



147,490


Net income attributable to noncontrolling interests

(385)



(6,535)


Net Income Attributable to W. P. Carey

$

134,532



$

140,955






Basic Earnings Per Share

$

0.79



$

1.30


Diluted Earnings Per Share

$

0.79



$

1.30


Weighted-Average Shares Outstanding




Basic

169,280,360



108,058,671


Diluted

169,520,508



108,243,063






Dividends Declared Per Share

$

2.066



$

2.035


__________

(a)

The subadvisors for CWI 1, CWI 2 and CPA:18 (for multi-family properties) 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. During 2018, CPA:18 sold five of its six multi-family properties (it sold the remaining multi-family property in January 2019 and we terminated the related subadvisory agreements). Refer to the Managed Programs Fee Summary section in Exhibit 99.2 of the Current Report on Form 8-K filed on August 2, 2019 for further information.

(b)

Amounts are primarily comprised of costs incurred in connection with the CPA:17 Merger.

(c)

Amount for the three months ended June 30, 2019 is primarily comprised of realized gains on foreign currency exchange derivatives of $3.5 million, mark-to-market adjustment for our investment in shares of a cold storage operator of $(3.3) million, loss on extinguishment of debt of $(3.0) million, interest earned from cash in bank and on loans to affiliates of $1.1 million, net gains on foreign currency transactions of $0.7 million, and dividend income from our investment in shares of Guggenheim Credit Income Fund of $0.5 million.


 

 

W. P. CAREY INC.

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

(in thousands, except share and per share amounts)



Three Months Ended


June 30, 2019


March 31, 2019


June 30, 2018

Net income attributable to W. P. Carey

$

66,038



$

68,494



$

75,681


Adjustments:






Depreciation and amortization of real property

112,360



111,103



63,073


Loss (gain) on sale of real estate, net

362



(933)



(11,912)


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

4,489



4,424



902


Proportionate share of adjustments for noncontrolling interests

(31)



(30)



(2,729)


Total adjustments

117,180



114,564



49,334


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

183,218



183,058



125,015


Adjustments:






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

16,450



15,927



12,303


Straight-line and other rent adjustments

(7,975)



(6,258)



(2,637)


Other (gains) and losses (b)

5,724



4,930



(6,845)


Stock-based compensation

4,936



4,165



3,698


Amortization of deferred financing costs

2,774



2,724



1,905


Other amortization and non-cash items

1,706



567



35


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

(933)



(4,928)



3,028


Merger and other expenses (d)

696



146



2,692


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

1,876



1,461



3,635


Proportionate share of adjustments for noncontrolling interests

(7)



(25)



(230)


Total adjustments

25,247



18,709



17,584


AFFO Attributable to W. P. Carey (a)

$

208,465



$

201,767



$

142,599








Summary






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

$

183,218



$

183,058



$

125,015


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

$

1.07



$

1.09



$

1.16


AFFO attributable to W. P. Carey (a)

$

208,465



$

201,767



$

142,599


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

$

1.22



$

1.21



$

1.32


Diluted weighted-average shares outstanding

171,490,625



167,434,740



108,234,934


 

 

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


June 30, 2019


March 31, 2019


June 30, 2018

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

$

60,768



$

53,408



$

59,316


Adjustments:






Depreciation and amortization of real property

112,360



111,103



63,073


Loss (gain) on sale of real estate, net

362



(933)



(11,912)


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

4,489



4,424



902


Proportionate share of adjustments for noncontrolling interests

(31)



(30)



(2,729)


Total adjustments

117,180



114,564



49,334


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

177,948



167,972



108,650


Adjustments:






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

16,450



15,927



12,303


Straight-line and other rent adjustments

(7,975)



(6,258)



(2,637)


Other (gains) and losses (b)

5,888



3,929



(6,599)


Stock-based compensation

3,482



2,800



1,990


Amortization of deferred financing costs

2,774



2,724



1,905


Other amortization and non-cash items

1,510



502



56


Tax (benefit) expense – deferred and other

(853)



490



(1,767)


Merger and other expenses (d)

696



146



2,692


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

(89)



115



99


Proportionate share of adjustments for noncontrolling interests

(7)



(25)



(230)


Total adjustments

21,876



20,350



7,812


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

$

199,824



$

188,322



$

116,462








Summary






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

$

177,948



$

167,972



$

108,650


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

$

1.04



$

1.00



$

1.01


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

$

199,824



$

188,322



$

116,462


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

$

1.17



$

1.13



$

1.08


Diluted weighted-average shares outstanding

171,490,625



167,434,740



108,234,934


 

 

W. P. CAREY INC.

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

(in thousands, except share and per share amounts)



Six Months Ended June 30,


2019


2018

Net income attributable to W. P. Carey

$

134,532



$

140,955


Adjustments:




Depreciation and amortization of real property

223,463



127,653


Gain on sale of real estate, net

(571)



(18,644)


Impairment charges



4,790


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

8,913



2,154


Proportionate share of adjustments for noncontrolling interests

(61)



(5,511)


Total adjustments

231,744



110,442


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

366,276



251,397


Adjustments:




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

32,377



24,105


Straight-line and other rent adjustments

(14,233)



(4,933)


Other (gains) and losses (b)

10,654



(1,556)


Stock-based compensation

9,101



11,917


Tax benefit – deferred and other (c)

(5,861)



(9,127)


Amortization of deferred financing costs

5,498



1,711


Other amortization and non-cash items

2,273



(14)


Merger and other expenses (d)

842



2,655


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

3,337



5,387


Proportionate share of adjustments for noncontrolling interests

(32)



(573)


Total adjustments

43,956



29,572


AFFO Attributable to W. P. Carey (a)

$

410,232



$

280,969






Summary




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

$

366,276



$

251,397


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

$

2.16



$

2.32


AFFO attributable to W. P. Carey (a)

$

410,232



$

280,969


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

$

2.42



$

2.60


Diluted weighted-average shares outstanding

169,520,508



108,243,063


 

 

W. P. CAREY INC.

Year-to-Date 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)



Six Months Ended June 30,


2019


2018

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

$

114,176



$

104,616


Adjustments:




Depreciation and amortization of real property

223,463



127,653


Gain on sale of real estate, net

(571)



(18,644)


Impairment charges



4,790


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

8,913



2,154


Proportionate share of adjustments for noncontrolling interests

(61)



(5,511)


Total adjustments

231,744



110,442


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

345,920



215,058


Adjustments:




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

32,377



24,105


Straight-line and other rent adjustments

(14,233)



(4,933)


Other (gains) and losses (b)

9,817



(1,673)


Stock-based compensation

6,282



6,296


Amortization of deferred financing costs

5,498



1,711


Other amortization and non-cash items

2,012



7


Merger and other expenses (d)

842



2,655


Tax benefit – deferred and other

(363)



(11,285)


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

26



28


Proportionate share of adjustments for noncontrolling interests

(32)



(573)


Total adjustments

42,226



16,338


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

$

388,146



$

231,396






Summary




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

$

345,920



$

215,058


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

$

2.04



$

1.99


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

$

388,146



$

231,396


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

$

2.29



$

2.14


Diluted weighted-average shares outstanding

169,520,508



108,243,063


__________

(a)

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

(b)

AFFO amount for the three months ended June 30, 2019 is primarily comprised of unrealized losses on derivatives of $(0.3) million, gains from foreign currency movements of $0.7 million, loss on extinguishment of debt of $(3.0) million and loss on marketable securities of $(3.1) million. Real Estate AFFO amount for the three months ended June 30, 2019 is primarily comprised of unrealized losses on derivatives of $(0.3) million, gains from foreign currency movements of $0.7 million, loss on extinguishment of debt of $(3.0) million and loss on marketable securities of $(3.3) million. Beginning in the second quarter of 2019, we aggregated (gain) loss on extinguishment of debt and realized (gains) losses on foreign currency (both of which were previously disclosed as separate AFFO adjustment line items), as well as certain other adjustments, within this line item, which is comprised of adjustments related to Other gains and (losses) on our consolidated statements of income. Prior period amounts have been reclassified to conform to the current period presentation.

(c)

Amounts for the three months ended March 31, 2019 and six months ended June 30, 2019 include a current tax benefit, which is excluded from AFFO as it was incurred as a result of the CPA:17 Merger.

(d)

Amounts are primarily comprised of costs incurred in connection with the CPA:17 Merger.

 

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 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.)

 

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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

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

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