NEW YORK, NY -- (MARKET WIRE) -- 08/06/09 --
Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today reported financial results for the second quarter ended June 30,
2009.
QUARTERLY AND SIX-MONTH RESULTS
-- Total revenues net of reimbursed expenses for the second quarter of
2009 were $44.3 million, compared to $47.3 million for the second quarter
of 2008. Total revenues net of reimbursed expenses for the six months
ended June 30, 2009 were $96.5 million, compared to $94.2 million for the
comparable period in 2008. Reimbursed expenses are excluded from total
revenues because they have no impact on net income.
-- Net income for the second quarter of 2009 was $15.0 million, compared
to $19.8 million for the same period in 2008. For the six months ended
June 30, 2009, net income was $32.7 million, compared to $36.9 million for
the comparable period in 2008.
-- Cash flows from operating activities for six months ended June 30,
2009 increased to $34.7 million from $27.2 million for the prior year
period.
-- Adjusted cash flow from operating activities for the six months ended
June 30, 2009 was $50.0 million, compared to $53.8 million for the
comparable period in 2008.
-- Funds from operations (FFO) for the second quarter of 2009 were $30.1
million or $0.75 per diluted share, compared to $35.6 million or $0.88 per
diluted share for the comparable period in 2008. FFO for the six months
ended June 30, 2009 was $59.0 million or $1.48 per diluted share, compared
to $57.1 million or $1.42 per diluted share for the comparable period in
2008.
-- For the six months ended June 30, 2009, we incurred impairment charges
of $2.3 million and our CPA® REITs incurred impairment charges
aggregating approximately $54.6 million, which reduced the amount of income
we recognize from these equity investments by approximately $2.8 million.
We received approximately $6.8 million in cash distributions from our
equity ownership in the CPA® REITs for the same period.
-- Further information concerning FFO and adjusted cash flow from
operating activities, non-GAAP supplemental performance metrics, is
presented in the accompanying tables.
INVESTMENT, FUNDRAISING AND FINANCING ACTIVITY
-- Investment volume, for our own portfolio and on behalf of the CPA®
REITs, for the six months ended June 30, 2009 was $273.8 million, an
increase over the prior year as a result of two significant transactions --
The New York Times Company and Kronos Foods -- closing in the first
quarter.
-- In July, on behalf of our CPA® REITs, we structured a $93.6 million
sale-leaseback and our first Hungarian transaction with UK retailer, Tesco
plc.
-- We continue to raise investor capital through our latest non-traded
REIT offering, CPA®:17 - Global, so that we may take advantage of
attractive investment opportunities that we believe are afforded by the
current market environment. Through July 31, 2009, CPA®:17 - Global has
raised more than $550 million of its up-to $2 billion offering. For the
second quarter of 2009, we raised $100.3 million, compared to $71.5 million
in the first quarter of this year.
-- Since the beginning of the credit crunch in September 2008, W. P.
Carey and our CPA® REITs have completed refinancings of maturing debt
totaling more than $120 million secured by seven properties, of which $44.2
million closed in the first half of 2009.
ASSETS UNDER MANAGEMENT
-- W. P. Carey is the advisor to the CPA® REITs, which had real estate
assets of $7.9 billion and total assets of $8.2 billion as of June 30,
2009.
-- As of June 30, 2009, the occupancy rate of our 17 million square foot
owned portfolio was approximately 94%. In addition, for the 92 million
square feet owned by the CPA® REITs, the occupancy rate was approximately
98%.
DISTRIBUTIONS
-- The Board of Directors raised the quarterly cash distribution to
$0.498 per share for the second quarter of 2009. The distribution was paid
on July 15, 2009 to shareholders of record as of June 30, 2009. This was
our 33rd consecutive quarterly dividend increase.
-- Over the past 36 years, W. P. Carey and the CPA® programs have paid
approximately $2.9 billion to investors over 800 cash distributions.
"While the second quarter was largely uneventful from a financial results
standpoint, we believe we are very well poised to take advantage of
opportunities in the
sale-leaseback market," said Gordon F. DuGan, President and Chief Executive
Officer. "Specifically, we have been quite pleased at the access to
capital that we have in terms of increased equity fundraising and our
continued access to mortgage financing. Our existing funds continue to
perform as expected, although we will remain cautious about corporate
defaults until we see a meaningful economic recovery. Lastly, having
access to capital and significantly fewer legacy challenges is allowing us
to play offense in the sale-leaseback market at a time when others have to
take a more defensive posture."
CONFERENCE CALL & WEBCAST
Please call at least 10 minutes prior to call to register
Time: Thursday, August 6, 2009 at 11:00 AM (ET)
Call-in Number: 877-591-4953
(International) +1-719-325-4898
Passcode: 3545166
Webcast: www.wpcarey.com/earnings
Podcast: www.wpcarey.com/podcast
Available after 2:00 PM (ET)
Replay Number: 888-203-1112
(International) +1-719-457-0820
Replay Passcode: 3545166
Replay Available until August 20, 2009 at midnight ET.
W. P. Carey & Co. LLC
W. P. Carey & Co. LLC is an investment firm that provides long-term
sale-leaseback and build-to-suit financing for companies worldwide and
manages a global investment portfolio approaching $10 billion. Publicly
traded on the New York Stock Exchange (WPC), W. P. Carey and its CPA®
series of income-generating, non-traded REITs help companies and private
equity firms release capital tied up in real estate assets. The W. P.
Carey Group's investments are highly diversified, comprising contractual
agreements with approximately 300 long-term corporate obligors spanning 28
industries and 15 countries. http://www.wpcarey.com
Individuals interested in receiving future updates on W. P. Carey via
e-mail can register at www.wpcarey.com/alerts.
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 office and
industrial properties; interest rate levels; the availability of financing;
and other risks associated with the acquisition and ownership of
properties, including risks that the tenants will not pay rent, or that
costs may be greater than anticipated. For further information on factors
that could impact the Company, reference is made to the Company's filings
with the Securities and Exchange Commission.
W. P. CAREY & CO. LLC
Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenues
Asset management revenue $ 19,227 $ 20,039 $ 38,335 $ 40,165
Structuring revenue 365 3,169 10,774 6,585
Wholesaling revenue 1,597 1,488 2,690 2,628
Reimbursed costs from
affiliates 11,115 11,080 20,111 21,446
Lease revenues 18,473 19,296 36,828 38,371
Other real estate income 4,649 3,305 7,904 6,427
---------- ---------- ---------- ----------
55,426 58,377 116,642 115,622
---------- ---------- ---------- ----------
Operating Expenses
General and administrative (14,310) (15,816) (33,409) (31,229)
Reimbursable costs (11,115) (11,080) (20,111) (21,446)
Depreciation and
amortization (7,120) (6,178) (12,749) (12,167)
Property expenses (2,180) (1,245) (4,026) (3,532)
Impairment charges (1,700) - (1,700) -
Other real estate expenses (1,707) (2,146) (3,838) (4,215)
---------- ---------- ---------- ----------
(38,132) (36,465) (75,833) (72,589)
---------- ---------- ---------- ----------
Other Income and Expenses
Other interest income 401 679 808 1,440
Income from equity
investments in real
estate and CPA(R) REITs 4,875 3,934 6,262 8,645
Other income and expenses 127 1,848 3,281 4,659
Interest expense (3,923) (4,532) (8,252) (9,575)
---------- ---------- ---------- ----------
1,480 1,929 2,099 5,169
---------- ---------- ---------- ----------
Income from continuing
operations before income
taxes 18,774 23,841 42,908 48,202
Provision for income taxes (3,720) (7,422) (9,920) (14,566)
---------- ---------- ---------- ----------
Income from continuing
operations 15,054 16,419 32,988 33,636
---------- ---------- ---------- ----------
Discontinued Operations
(Loss) income from
operations of
discontinued properties (75) 3,733 (100) 3,706
Gain on sale of real
estate 478 - 343 -
Impairment charge (580) - (580) -
---------- ---------- ---------- ----------
(Loss) income from
discontinued operations (177) 3,733 (337) 3,706
---------- ---------- ---------- ----------
Net Income 14,877 20,152 32,651 37,342
Add: Net loss attributable
to noncontrolling
interests 203 168 373 340
Less: Net income
attributable to
redeemable noncontrolling
interests (103) (472) (338) (733)
---------- ---------- ---------- ----------
Net Income Attributable to
W. P. Carey Members $ 14,977 $ 19,848 $ 32,686 $ 36,949
========== ========== ========== ==========
Basic Earnings Per Share
Income from continuing
operations attributable
to W. P. Carey members $ 0.37 $ 0.41 $ 0.83 $ 0.85
(Loss) income from
discontinued operations
attributable to W. P.
Carey members - 0.10 (0.01) 0.09
---------- ---------- ---------- ----------
Net income attributable
to W. P. Carey members $ 0.37 $ 0.51 $ 0.82 $ 0.94
========== ========== ========== ==========
Diluted Earnings Per Share
Income from continuing
operations attributable
to W. P. Carey members $ 0.37 $ 0.41 $ 0.82 $ 0.83
(Loss) income from
discontinued operations
attributable to W. P.
Carey members - 0.09 (0.01) 0.09
---------- ---------- ---------- ----------
Net income attributable
to W. P. Carey members $ 0.37 $ 0.50 $ 0.81 $ 0.92
========== ========== ========== ==========
Weighted Average Shares
Outstanding
Basic 39,350,684 39,204,221 39,067,391 39,039,617
========== ========== ========== ==========
Diluted 40,065,495 40,256,658 39,780,708 40,271,185
========== ========== ========== ==========
Amounts Attributable to W.
P. Carey Members
Income from continuing
operations, net of tax $ 15,154 $ 16,115 $ 33,023 $ 33,243
(Loss) income from
discontinued operations,
net of tax (177) 3,733 (337) 3,706
---------- ---------- ---------- ----------
Net income $ 14,977 $ 19,848 $ 32,686 $ 36,949
========== ========== ========== ==========
Distributions Declared Per
Share $ 0.498 $ 0.487 $ 0.994 $ 0.969
========== ========== ========== ==========
W. P. CAREY & CO. LLC
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Six months ended
June 30,
------------------
2009 2008
-------- --------
Cash Flows -- Operating Activities
Net income $ 32,651 $ 37,342
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization including intangible
assets and deferred financing costs 12,757 13,506
Income from equity investments in real estate and
CPA(R) REITs in excess of distributions received (3,157) (1,924)
Straight-line rent adjustments 967 1,252
Management income received in shares of affiliates (15,414) (20,053)
Gain on sale of real estate (343) -
Gain on extinguishment of debt (6,991) -
Allocation of income to profit sharing interest 3,875 -
Impairment charges 2,280 -
Unrealized gain on foreign currency transactions,
warrants and securities (39) (1,203)
Realized gain on foreign currency transactions and
other (126) (1,565)
Stock-based compensation expense 5,260 3,922
Decrease in deferred acquisition revenue received 22,877 46,695
Increase in structuring revenue receivable (5,416) (3,538)
Decrease in income taxes, net (8,454) (3,963)
Decrease in settlement provision - (29,979)
Net changes in other operating assets and liabilities (6,044) (13,273)
-------- --------
Net cash provided by operating activities 34,683 27,219
-------- --------
Cash Flows -- Investing Activities
Distributions received from equity investments in real
estate and CPA(R) REITs in excess of equity income 7,606 3,425
Capital contributions to equity investments - (837)
Purchases of real estate and equity investments in
real estate (39,677) (184)
Capital expenditures (6,929) (6,455)
VAT refunded on purchase of real estate - 3,189
Proceeds from sale of real estate 3,835 -
Proceeds from transfer of profit sharing interest 21,928 -
Funds released from escrow in connection with the sale
of property - 636
Payment of deferred acquisition revenue to affiliate - (120)
-------- --------
Net cash used in investing activities (13,237) (346)
-------- --------
Cash Flows -- Financing Activities
Distributions paid (39,060) (48,668)
Contributions from noncontrolling interests 1,583 1,320
Distributions to noncontrolling interests (3,474) (1,329)
Distributions to profit sharing interest (3,434) -
Scheduled payments of mortgage principal (5,241) (4,698)
Proceeds from mortgages and credit facilities 127,500 101,937
Prepayments of mortgage principal and credit
facilities (83,936) (73,729)
Proceeds from loan from affiliates 1,624 -
Repayment of loan from affiliates - (7,569)
Payment of financing costs, net of deposits refunded (806) (370)
Proceeds from issuance of shares 874 12,743
Windfall tax benefits associated with stock-based
compensation awards 242 608
Repurchase and retirement of shares (10,686) (5,134)
-------- --------
Net cash used in financing activities (14,814) (24,889)
-------- --------
Change in Cash and Cash Equivalents During the Period
Effect of exchange rate changes on cash 38 298
-------- --------
Net increase in cash and cash equivalents 6,670 2,282
Cash and cash equivalents, beginning of period 16,799 12,137
-------- --------
Cash and cash equivalents, end of period $ 23,469 $ 14,419
======== ========
W. P. CAREY & CO. LLC
Financial Highlights (Unaudited)
(in thousands, except share and per share amounts)
These financial highlights include non-GAAP financial measures, including
earnings before interest, taxes, depreciation and amortization ("EBITDA"),
funds from operations ("FFO") and adjusted cash flow from operating
activities. A description of these non-GAAP financial measures and
reconciliations to the most directly comparable GAAP measures is provided
on the following pages.
Three months ended Six months ended
June 30, June 30,
------------------- ------------------
2009 2008 2009 2008
--------- --------- -------- --------
EBITDA
Investment management $ 10,430 $ 15,774 $ 23,498 $ 30,519
Real estate ownership 19,365 22,307 40,257 42,941
--------- --------- -------- --------
Total $ 29,795 $ 38,081 $ 63,755 $ 73,460
========= ========= ======== ========
FFO
Investment management $ 11,627 $ 14,664 $ 25,960 $ 20,125
Real estate ownership 18,486 20,887 33,010 36,956
--------- --------- -------- --------
Total $ 30,113 $ 35,551 $ 58,970 $ 57,081
========= ========= ======== ========
EBITDA Per Share (Diluted)
Investment management $ 0.26 $ 0.39 $ 0.59 $ 0.76
Real estate ownership 0.48 0.56 1.01 1.06
--------- --------- -------- --------
Total $ 0.74 $ 0.95 $ 1.60 $ 1.82
========= ========= ======== ========
FFO Per Share (Diluted)
Investment management $ 0.29 $ 0.36 $ 0.65 $ 0.50
Real estate ownership 0.46 0.52 0.83 0.92
--------- --------- -------- --------
Total $ 0.75 $ 0.88 $ 1.48 $ 1.42
========= ========= ======== ========
Adjusted Cash Flow From Operating
Activities
Adjusted cash flow $ 50,019 $ 53,789
======== ========
Adjusted cash flow per share
(diluted) $ 1.26 $ 1.34
======== ========
Distributions declared per share $ 0.994 $ 0.969
======== ========
Payout ratio (distributions per
share/adjusted cash flow per
share) 79% 72%
======== ========
W. P. CAREY & CO. LLC
Reconciliation of Net Income to EBITDA (Unaudited)
(in thousands, except share and per share amounts)
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
2009 2008 2009 2008
----------- ---------- ----------- -----------
Investment Management
Net income from investment
management attributable to
W. P. Carey members $ 5,954 $ 7,123 $ 12,659 $ 14,054
Adjustments:
Provision for income taxes 3,440 7,556 9,205 14,340
Depreciation and
amortization 1,036 1,095 1,634 2,125
----------- ---------- ----------- -----------
EBITDA - investment
management $ 10,430 $ 15,774 $ 23,498 $ 30,519
=========== ========== =========== ===========
EBITDA per share (diluted) $ 0.26 $ 0.39 $ 0.59 $ 0.76
=========== ========== =========== ===========
Real Estate Ownership
Net income from real estate
ownership attributable to
W. P. Carey members $ 9,023 $ 12,725 $ 20,027 $ 22,895
Adjustments:
Interest expense 3,923 4,532 8,252 9,575
Provision for income taxes 280 (134) 715 226
Depreciation and
amortization 6,084 5,083 11,115 10,042
Reconciling items
attributable to
discontinued operations 55 101 148 203
----------- ---------- ----------- -----------
EBITDA - real estate
ownership $ 19,365 $ 22,307 $ 40,257 $ 42,941
=========== ========== =========== ===========
EBITDA per share (diluted) $ 0.48 $ 0.56 $ 1.01 $ 1.06
=========== ========== =========== ===========
Total Company
EBITDA $ 29,795 $ 38,081 $ 63,755 $ 73,460
=========== ========== =========== ===========
EBITDA per share (diluted) $ 0.74 $ 0.95 $ 1.60 $ 1.82
=========== ========== =========== ===========
Diluted weighted average
shares outstanding 40,065,495 40,256,658 39,780,708 40,271,185
=========== ========== =========== ===========
Non-GAAP Financial Disclosure
EBITDA as disclosed represents earnings before interest, taxes,
depreciation and amortization. We believe that EBITDA is a useful
supplemental measure for assessing the performance of our business
segments, although it does not represent net income that is
computed in accordance with GAAP. Accordingly, EBITDA should not be
considered an alternative for net income as an indicator of our financial
performance. EBITDA may not be comparable to similarly titled measures of
other companies.
W. P. CAREY & CO. LLC
Reconciliation of Net Income to Funds From Operations (FFO) (Unaudited)
(in thousands, except share and per share amounts)
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Investment Management
Net income from investment
management attributable
to W. P. Carey members $ 5,954 $ 7,123 $ 12,659 $ 14,054
Amortization, deferred
taxes and other non-cash
charges 2,607 4,041 3,919 1,487
FFO from equity investments 3,066 3,500 9,382 4,584
---------- ---------- ---------- ----------
FFO -- investment
management $ 11,627 $ 14,664 $ 25,960 $ 20,125
========== ========== ========== ==========
FFO per share (diluted) $ 0.29 $ 0.36 $ 0.65 $ 0.50
========== ========== ========== ==========
Real Estate Ownership
Net income from real estate
ownership attributable to
W. P. Carey members $ 9,023 $ 12,725 $ 20,027 $ 22,895
Loss on sale of real
estate, net (478) - (343) -
Gain on extinguishment of
debt, net (a) - - (2,796) -
Depreciation, amortization
and other non-cash charges 5,174 5,389 10,348 8,950
Straight-line and other
rent adjustments 232 659 412 1,328
Impairment charges 2,280 - 2,280 -
FFO from equity investments 2,411 2,287 3,413 4,128
Noncontrolling interests'
share of FFO (156) (173) (331) (345)
---------- ---------- ---------- ----------
FFO -- real estate
ownership $ 18,486 $ 20,887 $ 33,010 $ 36,956
========== ========== ========== ==========
FFO per share (diluted) $ 0.46 $ 0.52 $ 0.83 $ 0.92
========== ========== ========== ==========
Total Company
FFO $ 30,113 $ 35,551 $ 58,970 $ 57,081
========== ========== ========== ==========
FFO per share (diluted) $ 0.75 $ 0.88 $ 1.48 $ 1.42
========== ========== ========== ==========
Diluted weighted average
shares outstanding 40,065,495 40,256,658 39,780,708 40,271,185
========== ========== ========== ==========
Non-GAAP Financial Disclosure
Funds from operations (FFO) is a non-GAAP
financial measure that is commonly used in evaluating real estate
companies. Although the National Association of Real Estate Investment
Trusts (NAREIT) has published a definition of FFO, real estate companies
often modify this definition as they seek to provide financial measures
that meaningfully reflect their operations. FFO should not be considered as
an alternative to net income as an indication of a company's operating
performance or to cash flow from operating activities as a measure of its
liquidity. It should be used in conjunction with GAAP net income. FFO
disclosed by other REITs may not be comparable to our FFO calculation.
NAREIT's definition of FFO adjusts GAAP net income to exclude depreciation
and gains/losses from the sales of properties and adjusts for FFO
applicable to unconsolidated partnerships and joint ventures. We calculate
FFO in accordance with this definition and then include other adjustments
to GAAP net income to adjust for certain non-cash charges such as
amortization of intangibles, deferred income tax benefits and expenses,
straight-line rents, stock compensation, impairment charges on real estate
and unrealized foreign currency exchange gains and losses. We exclude these
items from GAAP net income as they are not the primary drivers in our
decision making process. Our assessment of our operations is focused on
long term sustainability and not on such non-cash items which may cause
short-term fluctuations in net income but that have no impact on cash
flows.
(a) In January 2009, Carey Storage repaid, in full, the $35 million
outstanding balance on its secured credit facility for $28 million and
recognized a gain of $7 million on the repayment of this debt at a
discount, inclusive of profit sharing interest of $4.2 million.
W. P. CAREY & CO. LLC
Adjusted Cash Flow from Operating Activities (Unaudited)
(in thousands, except share and per share amounts)
Six months ended
June 30,
----------------------
2009 2008
---------- ----------
Cash flow from operating activities -- as reported $ 34,683 $ 27,219
Adjustments:
Distributions received from equity investments in
real estate in excess of equity income (a) 9,040 3,223
Contributions received from noncontrolling
interests, net (b) 252 -
Changes in working capital (c) 6,044 14,626
CPA(R):16 - Global performance adjustment, net (d) - (12,291)
Settlement payment (e) - 21,012
---------- ----------
Adjusted cash flow from operating activities $ 50,019 $ 53,789
========== ==========
Adjusted cash flow per share (diluted) $ 1.26 $ 1.34
========== ==========
Distributions declared per share $ 0.994 $ 0.969
========== ==========
Payout ratio (distributions per share/adjusted cash
flow per share) 79% 72%
========== ==========
Diluted weighted average shares outstanding 39,780,708 40,271,185
========== ==========
Non-GAAP Financial Disclosure
Adjusted cash flow from operating activities
is a non-GAAP financial measure that represents cash flow from operating
activities on a GAAP basis adjusted for certain timing differences and
deferrals as described below. We believe that adjusted cash flow from
operating activities is a useful supplemental measure for assessing the
cash flow generated from our core operations and is used in evaluating
distributions to shareholders. Adjusted cash flow from operating activities
should not be considered as an alternative for cash flow from operating
activities computed on a GAAP basis as a measure of our liquidity. Adjusted
cash flow from operating activities may not be comparable to similarly
titled measures of other companies.
(a) We take a substantial portion of our asset management revenue in shares
of the CPA® REIT funds. To the extent we receive distributions in excess
of the equity income that we recognize, we include such amounts in our
evaluation of cash flow from core operations.
(b) Represents noncontrolling interests' share of
contributions/distributions made by ventures that we consolidate in our
financial statements. This adjustment in the calculation of adjusted
cash flow from operating activities was introduced during the fourth
quarter of 2008 because we believe that it results in a more accurate
presentation of this supplemental measure.
(c) Timing differences arising from the payment of certain liabilities in a
period other than that in which the expense is recognized in determining
net income may distort the actual cash flow that our core operations
generate. We adjust our GAAP cash flow from operating activities to record
such amounts in the period in which the liability was actually incurred. We
believe this is a fairer measure of determining our cash flow from core
operations.
(d) Amounts deferred in lieu of CPA®:16 - Global achieving its
performance criterion, net of a 45% tax provision. In determining cash flow
generated from our core operations, we believe it is more appropriate to
normalize cash flow for the impact of CPA®:16 - Global achieving its
performance criterion, rather than recognizing the entire deferred amount
in the quarter in which the performance criterion was met (second quarter
of 2007), as this revenue was actually earned over a three year period.
(e) In March 2008, we entered into a settlement with the SEC with respect
to all matters relating to their investigation. As a result, we paid $30
million in the first quarter of 2008, and recognized an offsetting $9
million tax benefit in the same period.
COMPANY CONTACT:
Kristina McMenamin
W. P. Carey & Co. LLC
212-492-8995
Email Contact
PRESS CONTACT:
Guy Lawrence
Ross & Lawrence
212-308-3333
Email Contact