NEW YORK, NY, August 8, 2006 – Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today reported financial results for the three and six-month periods ended June 30, 2006.
QUARTERLY AND SIX-MONTH RESULTS
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Income from continuing operations for the three-month period increased 40% to $18 million, as compared to $12.9 million for the same period in 2005. Income from continuing operations for the six-month period increased 27% to $33.1 million, as compared to $26.1 million for the same period in 2005.
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Net income for the three-month period increased 2% to $17.3 million, as compared to $16.9 million for the same period in 2005. Net income for the six-month period increased 24% to $28.4 million, as compared to $22.8 million for the same period in 2005. Net income for the second quarter was positively affected by a $6.1 million reduction in impairment charges and a $4.8 million gain on the sale of securities. This was partially offset by a decrease in structuring revenue from lower investment volume. There were no impairment charges recorded for the second quarter and net impairment charges totaled $3.3 million for the six-month period, as compared to $6.1 million and $15.8 million for the same periods in 2005.
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Diluted earnings per share (EPS) for the three-month period increased 2% to $0.44 as compared to $0.43 for the same period in 2005. Diluted EPS for the six-month period increased 26% to $0.73 as compared to $0.58 for the same period in 2005.
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Funds from Operations (FFO) for the three-month period, as per the attached schedule, which are calculated consistently with the Company’s prior FFO reporting, increased 15% to $28.4 million, or $0.72 per diluted share, as compared to $24.8 million, or $0.64 per diluted share, for the comparable period in 2005. FFO for the six-month period increased 3% to $50.4 million, or $1.30 per diluted share, as compared to $48.7 million, or $1.24 per diluted share, for the comparable period in 2005.
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Cash flows from operating activities for the six-month period increased 18% to $35.6 million, as compared to $30.3 million for the comparable period in 2005, paralleling the increase in net income.
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The Board of Directors raised the quarterly cash distribution to $0.454 per share, which was paid on July 14, 2006 to shareholders of record on June 30, 2006.
INVESTMENT ACTIVITY
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For the three-month period ended June 30, 2006, the Company completed three investments totaling $83 million, on behalf of CPA®:16 – Global, as compared to nine investments totaling $262 million, on behalf of CPA®:15 and CPA®:16 – Global, for the comparable period in 2005. For the six-month period ended June 30, 2006, the Company completed eight investments totaling $338 million, on behalf of CPA®:15 and CPA®:16 – Global, as compared to 14 investments totaling $627 million, on behalf of CPA®:15 and CPA®:16 – Global, for the comparable period in 2005.
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For the six months ended June 30, 2006, international investments accounted for 61% of total investments, as compared to 48% of total investments for the comparable period in 2005.
GROWTH IN ASSETS UNDER MANAGEMENT
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The CPA® series of non-traded REITs had assets valued at approximately $6.7 billion on June 30, 2006, which represents a 12% increase as compared to June 30, 2005.
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Since 2000, the Company’s assets under management more than tripled, reflecting an annual compound growth rate of 27%.
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As of June 30, 2006, the occupancy rate of W. P. Carey’s 16 million square foot portfolio was approximately 97%. In addition, the occupancy rate of the W. P. Carey Group’s 93 million square foot portfolio – which includes both the CPA® series of funds as well as W. P. Carey’s directly-owned assets – was approximately 99%.
PROPOSED MERGER
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On June 29, 2006, two of the CPA® REITs that the Company manages, CPA®:12 and CPA®:14, entered into a definitive agreement pursuant to which CPA®:12 will merge with and into CPA®:14, subject to the approval of the shareholders of CPA®:12 and CPA®:14. Prior to the proposed merger, CPA®:12 will sell certain properties or interests in properties, valued at approximately $199.2 million, to the Company for $120.5 million in cash and the assumption of approximately $78.7 million in limited recourse mortgage notes payable. The Company will receive $48.8 million from CPA®:12 in incentive and termination compensation in connection with the transactions contemplated by the merger. A joint proxy/registration statement was filed with the SEC on July 25, 2006 relating to the merger. CPA®:12 and CPA®:14 are currently awaiting comments from the SEC. The closing of the merger is subject to customary closing conditions, as well as the receipt of shareholder approval and the SEC declaring the registration statement effective. The Company currently expects that the closing will occur late in the fourth quarter of 2006 at the earliest, although there can be no assurance of such timing.
CPA®:16 – GLOBAL OFFERING
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Since commencing its second public offering to raise up to $550 million on March 27, 2006, CPA®:16 – Global has raised $201 million through July 31, 2006.
Gordon F. DuGan, President and Chief Executive Officer of W. P. Carey & Co. LLC, said, “We are pleased with our results this quarter in light of our reduced investment activity and our continued deferral of revenue from CPA®:16 – Global. Our results illustrate the continued strength of our business despite the fluctuation of investment activity. If the CPA®:12/CPA®:14 merger is approved, we will acquire additional properties that will further diversify our portfolio. We continue to see intense competition in both the domestic and international markets for triple-net leased properties as increased capital continues to flow into real estate. Notwithstanding, we continue to remain disciplined in our selection of high quality investment opportunities while we continue to build upon our consistent growth and solid track record."
CONFERENCE CALL & WEBCAST
Please call at least 10 minutes prior to register for call.
Time: Tuesday, August 8, 2006 11:00 am (ET)
Call-in number: 1-877-407-0782 (International) +201-689-8567
Webcast: www.wpcarey.com/earnings
Podcast: www.wpcarey.com/podcast – Available after 2:00 PM (ET)
Replay: 1-877-660-6853 (International) +201-612-7415
Replay Access codes: Account# 286 and Conference ID# 208312. Please note that both access codes are required for playback. Replay Available through August 15, 2006 at midnight ET.
W. P. CAREY & CO. LLC
Founded in 1973, W. P. Carey & Co. LLC is a leading global real estate investment firm. The Company provides asset management services to its CPA® series of income generating real estate funds. With over $4 billion in equity capital, the W. P. Carey Group is one of the largest providers of net lease financing for corporations worldwide. The Group owns more than 700 commercial and industrial properties in 13 countries, representing approximately 93 million square feet, valued at approximately $8 billion. www.wpcarey.com
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This press release contains forward-looking statements within the meaning of the Federal securities laws. A number of factors could cause the company’s actual results, performance or achievement to differ materially from those anticipated. Among those risks, trends and uncertainties are the general economic climate; the supply of and demand for commercial properties; interest rate levels; the availability of financing; and other risks associated with the acquisition and ownership of properties, including risks that the tenants will not pay rent, or that costs may be greater than anticipated. For further information on factors that could impact the company, reference is made to the company’s filings with the Securities and Exchange Commission.