NEW YORK, NY -- (MARKET WIRE) -- 05/06/10 --
Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today reported financial results for the first quarter ended March 31,
2010.
QUARTERLY RESULTS
- Funds from operations -- as adjusted (AFFO) for the first quarter of
2010 remained relatively flat compared to the first quarter of 2009: $28.1
million or $0.71 per diluted share compared to $28.9 million or $0.72 per
diluted share, respectively.
- Cash flow from operating activities for the three months ended March
31, 2010 was $13.6 million compared to $24.3 million for the prior year
period, while adjusted cash flow from operating activities was $27.7
million in the first quarter of 2010 compared to $39 million in the first
quarter last year. The decreases were due in part to the timing of the
recognition of deferred acquisitions fees paid by our newest managed fund,
CPA®:17 - Global, which pays such fees to us on a quarterly basis rather
than annually, as is the case with our other managed funds.
- Total revenues net of reimbursed expenses for the first quarter of 2010
were $48 million, compared to $50.6 million for the first quarter of 2009.
Reimbursed expenses are excluded from total revenues because they have no
impact on net income.
- Net Income for the first quarter of 2010 was $14.4 million, compared to
$17.7 million for the same period in 2009. The decrease was substantially
due to impairment charges of $7.2 million in the first quarter.
- We received approximately $3.9 million in cash distributions from our
equity ownership in the CPA® REITs for the quarter ended March 31,
2010.
- Further information concerning AFFO and adjusted cash flow from
operating activities -- non-GAAP supplemental performance metrics -- is
presented in the accompanying tables.
INVESTMENT AND FUNDRAISING ACTIVITY
- Investment volume, for our own portfolio and on behalf of the CPA®
REITs, for the first quarter was approximately $197 million, compared to
$271 million for the first quarter of 2009, which was approximately 50% of
the total $548 million investment volume for all of 2009.
- First quarter transactions included the $49 million second tranche of a
total $105 million sale-leaseback with Spanish grocery retailer Eroski and
the $14 million acquisition of two Curtiss-Wright Ohio manufacturing
facilities on behalf of our REITs, as well as our acquisition of JP Morgan
Chase's Operations Center office building in Dallas/Fort Worth.
- In the second quarter, we have completed two international transactions
on behalf of the CPA® REITs: a $34 million sale-leaseback with UK
logistics and supply chain management company TDG and a $101 million
transaction with Agrokor, the largest private company and food retailer in
Croatia.
- We continue to raise investor capital through our latest 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. CPA®:17 - Global raised $140 million in the first quarter of
2010, compared with $71.6 million in the first quarter of 2009. To date,
CPA®:17 - Global has raised more than $975 million of its up-to $2 billion
offering.
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 $8.4 billion as of March 31,
2010.
- As of March 31, 2010, the occupancy rate of our 14 million square foot
owned portfolio was approximately 94%. In addition, for the 93 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 $0.504
per share for the first quarter of 2010. The distribution -- our 36th
consecutive quarterly increase -- was paid on April 15, 2010 to
shareholders of record as of March 31, 2010.
Gordon DuGan, President and CEO of W. P. Carey, said, "We are pleased with
the investment volume that we have generated so far this year, as well as
the strong capital flows by our managed funds. We believe we are very well
positioned with access to both debt and equity capital to take advantage of
growth opportunities in 2010 and beyond."
CONFERENCE CALL & WEBCAST
Please call at least 10 minutes prior to call to register.
Time:Thursday, May 6, 2010 at 11:00 AM (ET)
Call-in Number: 800-860-2442
(International) +1-412-858-4600
Webcast:www.wpcarey.com/earnings
Podcast:www.wpcarey.com/podcast
Available after 2:00 PM (ET)
Replay Number: 877-344-7529
(International) +1-412-317-0088
Replay Passcode: 439691#
Replay Available until May 20, 2010 at midnight ET.
W. P. Carey & Co. LLC
W. P. Carey & Co. LLC (NYSE: WPC) is an investment management company that
provides long-term sale-leaseback and build-to-suit financing for companies
worldwide and manages a global investment portfolio approaching $10
billion. Through its CPA® series of income-generating, non-traded REITs,
W. P. Carey helps companies and private equity firms unlock capital tied up
in real estate assets. The W. P. Carey Group's investments are highly
diversified, comprising contractual agreements with approximately 275
long-term corporate obligors spanning 28 industries and 16 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
March 31,
----------------------
2010 2009
---------- ----------
Revenues
Asset management revenue $ 18,820 $ 19,108
Structuring revenue 6,834 10,409
Wholesaling revenue 2,103 1,093
Reimbursed costs from affiliates 15,048 9,874
Lease revenues 16,465 16,785
Other real estate income 3,821 3,213
---------- ----------
63,091 60,482
---------- ----------
Operating Expenses
General and administrative (17,601) (19,099)
Reimbursable costs (15,048) (9,874)
Depreciation and amortization (6,369) (5,350)
Property expenses (2,435) (1,667)
Other real estate expenses (1,815) (2,131)
Impairment charges (7,152) -
---------- ----------
(50,420) (38,121)
---------- ----------
Other Income and Expenses
Other interest income 273 407
Income from equity investments in real estate and
CPA(R) REITs 9,142 1,387
Other income and (expenses) (664) 3,154
Interest expense (3,711) (4,195)
---------- ----------
5,040 753
---------- ----------
Income from continuing operations before income
taxes 17,711 23,114
Provision for income taxes (4,112) (6,200)
---------- ----------
Income from continuing operations 13,599 16,914
---------- ----------
Discontinued Operations
Income from operations of discontinued properties 299 995
Gain (loss) on sale of real estate 404 (135)
---------- ----------
Income from discontinued operations 703 860
---------- ----------
Net Income 14,302 17,774
Add: Net loss attributable to noncontrolling
interests 286 170
Less: Net income attributable to redeemable
noncontrolling interests (175) (235)
---------- ----------
Net Income Attributable to W. P. Carey Members $ 14,413 $ 17,709
========== ==========
Basic Earnings Per Share
Income from continuing operations attributable to
W. P. Carey members $ 0.35 $ 0.43
Income from discontinued operations attributable
to W. P. Carey members 0.01 0.02
---------- ----------
Net income attributable to W. P. Carey members $ 0.36 $ 0.45
========== ==========
Diluted Earnings Per Share
Income from continuing operations attributable to
W. P. Carey members $ 0.35 $ 0.42
Income from discontinued operations attributable
to W. P. Carey members 0.01 0.02
---------- ----------
Net income attributable to W. P. Carey members $ 0.36 $ 0.44
========== ==========
Weighted Average Shares Outstanding
Basic 39,088,114 39,175,020
========== ==========
Diluted 39,495,845 39,927,886
========== ==========
Amounts Attributable to W. P. Carey Members
Income from continuing operations, net of tax $ 13,710 $ 16,849
Income from discontinued operations, net of tax 703 860
---------- ----------
Net income $ 14,413 $ 17,709
========== ==========
Distributions Declared Per Share $ 0.504 $ 0.496
========== ==========
W. P. CAREY & CO. LLC
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Three months ended
March 31,
----------------------
2010 2009
---------- ----------
Cash Flows -- Operating Activities
Net income $ 14,302 $ 17,774
Adjustments to net income:
Depreciation and amortization including intangible
assets and deferred financing costs 6,403 5,523
Income from equity investments in real estate and
CPA(R) REITs in excess of distributions received (4,530) (1,760)
Straight-line rent adjustments 251 494
(Gain) loss on sale of real estate (404) 135
Gain on extinguishment of debt - (6,991)
Allocation of (loss) earnings to profit sharing
interest (171) 3,698
Management income received in shares of affiliates (8,532) (6,896)
Unrealized loss on foreign currency transactions
and others 608 208
Realized loss (gain) on foreign currency
transactions and other 221 (69)
Impairment charges 7,152 -
Stock-based compensation expense 2,461 1,725
Deferred acquisition revenue received 14,851 21,794
Increase in structuring revenue receivable (3,244) (4,985)
(Decrease) increase in income taxes, net (6,682) 971
Net changes in other operating assets and
liabilities (9,063) (7,339)
---------- ----------
Net cash provided by operating activities 13,623 24,282
---------- ----------
Cash Flows -- Investing Activities
Distributions received from equity investments in
real estate and CPA® REITs in excess of equity
income 5,556 5,661
Purchases of real estate and equity investments in
real estate (47,583) (39,651)
Capital expenditures (620) (4,038)
Proceeds from sale of real estate 6,632 1,925
Funds released from escrow in connection with the
sale of property 36,132 -
Proceeds from transfer of profit sharing interest - 21,928
---------- ----------
Net cash provided by (used in) investing activities 117 (14,175)
---------- ----------
Cash Flows -- Financing Activities
Distributions paid (32,482) (19,587)
Contributions from noncontrolling interests 620 1,024
Distributions to noncontrolling interests (792) (2,973)
Distributions to profit sharing interest - (3,434)
Scheduled payments of mortgage principal (4,059) (2,593)
Proceeds from credit facility 51,500 65,000
Prepayments of credit facility (12,500) -
Proceeds from mortgage financing - 25,000
Proceeds from loans from affiliates - 1,624
Payment of financing costs, net of deposits
refunded (195) -
Windfall tax provision associated with stock-based
compensation awards (523) (832)
Repurchase and retirement of shares - (10,486)
---------- ----------
Net cash provided by financing activities 1,569 52,743
---------- ----------
Change in Cash and Cash Equivalents During the
Period
Effect of exchange rate changes on cash (663) (546)
---------- ----------
Net increase in cash and cash equivalents 14,646 62,304
Cash and cash equivalents, beginning of period 18,450 16,799
---------- ----------
Cash and cash equivalents, end of period $ 33,096 $ 79,103
========== ==========
W. P. CAREY & CO. LLC
Financial Highlights (Unaudited)
(in thousands, except per share amounts)
These financial highlights include non-GAAP financial measures, including
earnings before interest, taxes, depreciation and amortization ("EBITDA"),
funds from operations - as adjusted ("AFFO") 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
March 31,
----------------------
2010 2009
---------- ----------
EBITDA
Investment management $ 14,899 $ 13,669
Real estate ownership 13,813 20,291
---------- ----------
Total $ 28,712 $ 33,960
========== ==========
AFFO
Investment management $ 12,089 $ 13,679
Real estate ownership 15,977 15,178
---------- ----------
Total $ 28,066 $ 28,857
========== ==========
EBITDA Per Share (Diluted)
Investment management $ 0.38 $ 0.34
Real estate ownership 0.35 0.51
---------- ----------
Total $ 0.73 $ 0.85
========== ==========
AFFO Per Share (Diluted)
Investment management $ 0.31 $ 0.34
Real estate ownership 0.40 0.38
---------- ----------
Total $ 0.71 $ 0.72
========== ==========
Adjusted Cash Flow From Operating Activities
Adjusted cash flow $ 27,675 $ 39,038
========== ==========
Adjusted cash flow per share (diluted) $ 0.70 $ 0.98
========== ==========
Distributions declared per share $ 0.504 $ 0.496
========== ==========
Payout ratio (distributions per share/adjusted cash
flow per share) 72% 51%
========== ==========
W. P. CAREY & CO. LLC
Reconciliation of Net Income to EBITDA (Unaudited)
(in thousands, except share and per share amounts)
Three months ended
March 31,
-----------------------
2010 2009
----------- -----------
Investment Management
Net income from investment management attributable
to W. P. Carey members $ 9,850 $ 7,306
Adjustments:
Provision for income taxes 3,878 5,765
Depreciation and amortization 1,171 598
----------- -----------
EBITDA - investment management $ 14,899 $ 13,669
=========== ===========
EBITDA per share (diluted) $ 0.38 $ 0.34
=========== ===========
Real Estate Ownership
Net income from real estate ownership attributable
to W. P. Carey members $ 4,563 $ 10,403
Adjustments:
Interest expense 3,711 4,195
Provision for income taxes 234 435
Depreciation and amortization 5,198 4,752
Reconciling items attributable to discontinued
operations 107 506
----------- -----------
EBITDA - real estate ownership $ 13,813 $ 20,291
=========== ===========
EBITDA per share (diluted) $ 0.35 $ 0.51
=========== ===========
Total Company
EBITDA $ 28,712 $ 33,960
=========== ===========
EBITDA per share (diluted) $ 0.73 $ 0.85
=========== ===========
Diluted weighted average shares outstanding 39,495,845 39,927,886
=========== ===========
Non-GAAP Financial Disclosure
EBITDA as disclosed represents earnings before interest, taxes,
depreciation and amortization. We believe that EBITDA is a useful
supplemental measure to investors and analysts for assessing the
performance of our business segments, although it does not represent net
income that is computed in accordance with GAAP, because it removes the
impact of our capital structure and asset base from our operating results
and because it is helpful when comparing our operating performance to that
of companies in our industry without regard to such items, which can vary
substantially from company to company. Accordingly, EBITDA should not be
considered as an alternative to net income as an indicator of our
financial performance. EBITDA may not be comparable to similarly titled
measures of other companies. Therefore, we use EBITDA as one measure of
our operating performance when we formulate corporate goals, evaluate the
effectiveness of our strategies, and determine executive compensation.
W. P. CAREY & CO. LLC
Reconciliation of Net Income to Funds From Operations -- as adjusted (AFFO)
(Unaudited)
(in thousands, except share and per share amounts)
Three months ended
March 31,
----------------------
2010 2009
---------- ----------
Investment Management
Net income from investment management attributable
to W. P. Carey members $ 9,850 $ 7,306
Amortization, deferred taxes and other non-cash
charges 1,278 1,312
AFFO from equity investments 961 5,061
---------- ----------
AFFO - investment management $ 12,089 $ 13,679
========== ==========
AFFO per share (diluted) $ 0.31 $ 0.34
========== ==========
Real Estate Ownership
Net income from real estate ownership attributable
to W. P. Carey members $ 4,563 $ 10,403
(Gain) loss on sale of real estate, net (404) 135
Gain on extinguishment of debt, net (a) - (2,796)
Depreciation, amortization and other non-cash
charges 5,818 5,174
Straight-line and other rent adjustments (80) 180
Impairment charges 7,152 -
AFFO from equity investments (904) 2,257
Noncontrolling interests' share of AFFO (168) (175)
---------- ----------
AFFO - real estate ownership $ 15,977 $ 15,178
========== ==========
AFFO per share (diluted) $ 0.40 $ 0.38
========== ==========
Total Company
AFFO $ 28,066 $ 28,857
========== ==========
AFFO per share (diluted) $ 0.71 $ 0.72
========== ==========
Diluted weighted average shares outstanding 39,495,845 39,927,886
========== ==========
(a) In January 2009, Carey Storage repaid, in full, the $35.0 million
outstanding balance on its secured credit facility for $28.0 million
and recognized a gain of $7.0 million on the repayment of this debt at
a discount, inclusive of the profit sharing interest of $4.2 million.
Non-GAAP Financial Disclosure
Funds from operations (FFO) is a non-GAAP financial measure that is
commonly used by investors and analysts 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 or funds from
operations - as adjusted (AFFO) 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 and
should be used in conjunction with GAAP net income. FFO or AFFO disclosed
by other REITs may not be comparable to our AFFO 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
AFFO 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, and we therefore use AFFO as one measure of our operating
performance when we formulate corporate goals, evaluate the effectiveness
of our strategies, and determine executive compensation. As a result,
we believe that AFFO is a useful supplemental measure for investors to
consider because it will help them to better understand and measure the
performance of our business over time without the potentially distorting
impact of these short-term fluctuations.
W. P. CAREY & CO. LLC
Adjusted Cash Flow from Operating Activities (Unaudited)
(in thousands, except share and per share amounts)
Three months ended
March 31,
----------------------
2010 2009
---------- ----------
Cash flow from operating activities $ 13,623 $ 24,282
Adjustments:
Distributions received from equity investments in
real estate in excess of equity income (a) 1,881 7,195
(Distributions paid to) contributions received from
noncontrolling interests, net (b) (177) 222
Changes in working capital (c) 12,348 7,339
---------- ----------
Adjusted cash flow from operating activities $ 27,675 $ 39,038
========== ==========
Adjusted cash flow per share (diluted) $ 0.70 $ 0.98
========== ==========
Distributions declared per share $ 0.504 $ 0.496
========== ==========
Payout ratio (distributions per share/adjusted cash
flow per share) 72% 51%
========== ==========
Diluted weighted average shares outstanding 39,495,845 39,927,886
========== ==========
(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.
(c) Timing differences arising from the payment of certain liabilities and
the receipt of certain receivables in a period other than that in which
the item 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 item was actually incurred. We believe this is a fairer
measure of determining our cash flow from core operations.
Non-GAAP Financial Disclosure
Adjusted cash flow from operating activities refers to our cash provided
by operating activities, as determined in accordance with GAAP, adjusted
primarily to reflect timing differences between the period an expense is
incurred and paid, to add cash distributions that we receive from our
investments in unconsolidated real estate joint ventures in excess of our
equity investment in the joint ventures, and to subtract cash
distributions that we make to our noncontrolling partners in real estate
joint ventures that we consolidate. We hold a number of interests in real
estate joint ventures, and we believe that adjusting our GAAP cash
provided by operating activities to reflect these actual cash receipts
and cash payments may give investors a more accurate picture of our
actual cash flow than GAAP cash provided by operating activities alone
and that it is a useful supplemental measure for investors to consider.
We also believe that adjusted cash flow from operating activities is a
useful supplemental measure for assessing the cash flow generated from
our core operations, and we use this measure when evaluating
distributions to shareholders and as one measure of our operating
performance when we determine executive compensation. Adjusted cash flow
from operating activities should not be considered as an alternative to
cash provided by 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.
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