NEW YORK, NY -- (MARKET WIRE) -- 02/24/11 --
Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today reported financial results for the fourth quarter and year-ended
December 31, 2010.
QUARTERLY AND YEAR-END RESULTS
-- Funds from operations -- as adjusted (AFFO) for the fourth quarter of
2010 was $36.3 million or $0.90 per diluted share, compared to $33.7
million or $0.83 per diluted share for the fourth quarter of 2009.
AFFO for the year ended December 31, 2010 was $130.9 million or $3.27
per diluted share, compared to $122.9 million or $3.09 per diluted
share for 2009.
-- Cash flow from operating activities for the year ended December 31,
2010 was $86.4 million, compared to $74.5 million for 2009, while
adjusted cash flow from operating activities was $88.6 million for
2010, compared to $93.9 million for 2009.
-- Total revenues net of reimbursed expenses for the fourth quarter of
2010 were $68.3 million, compared to $48.5 million for the fourth
quarter of 2009. Total revenues net of reimbursed expenses for the
year ended December 31, 2010 were $213.9 million, compared to $184.8
million in 2009. Reimbursed expenses are excluded from total revenues
because they have no impact on net income.
-- Net Income for the fourth quarter of 2010 was $19.8 million, compared
to $23 million for the same period in 2009. For the year ended
December 31, 2010, net income was $74 million, compared to $69 million
for 2009. Results from operations in our investment management segment
were significantly higher in 2010, primarily due to a higher volume of
investments structured on behalf of the CPA® REITs and lower
impairment charges recognized by the CPA® REITs.
-- For the year ended December 31, 2010, we received approximately $16.6
million in cash distributions from our equity ownership in the CPA®
REITs.
-- Further information concerning AFFO and adjusted cash flow from
operating activities -- non-GAAP supplemental performance metrics -- is
presented in the accompanying tables and related notes.
INVESTMENT ACTIVITY
-- Investment volume for the year ended December 31, 2010 on behalf of the
CPA® REITs and for our own portfolio totaled approximately $1.1
billion, or double last year's volume of approximately $548 million.
International investments comprised 43% of total investments during
2010, compared to 36% in 2009, and we expect that international
transactions will continue to form a significant portion of the
investments we structure.
-- We closed approximately $593 million in investments on behalf of the
CPA® REITs in the fourth quarter of 2010. These investments involved
forty-seven facilities containing approximately five million square
feet in the U.S., Canada, Croatia, China and Spain.
FUNDRAISING ACTIVITY
-- We continue to raise investor capital through our latest CPA® 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. To date, CPA®:17 -- Global has raised
more than $1.4 billion in its initial offering. CPA®:17 -- Global
has filed a registration statement with the SEC for a follow-on
offering of up to an additional $1 billion of common stock.
-- Carey Watermark Investors commenced its initial public offering of up
to $1 billion of common stock, the proceeds of which will be used to
acquire interests in lodging and lodging-related properties.
ASSETS UNDER MANAGEMENT
-- W. P. Carey is the advisor to the CPA® REITs, which had real estate
assets of $8.5 billion and total assets of $8.8 billion as of December
31, 2010.
-- As of December 31, 2010, the occupancy rate of W. P. Carey's 14 million
square foot owned portfolio was approximately 89%. In addition, for
the 99 million square feet owned by the CPA® REITs, the average
occupancy rate was approximately 97%.
PROPOSED MERGER OF CPA®:14 AND CPA®:16 -- GLOBAL
-- As previously disclosed, on December 13, 2010 two of the CPA® REITs
we manage, CPA®:14 and CPA®:16 -- Global, entered into a definitive
agreement pursuant to which CPA®:14 will merge with and into a
subsidiary of CPA®:16 -- Global, subject to shareholder approval and
other closing conditions. If the merger is approved and the other
closing conditions are satisfied, we currently expect that the closing
will occur in the second quarter of 2011, although there can be no
assurance of such timing.
DISTRIBUTIONS
-- The Board of Directors raised the quarterly cash distribution to $0.510
per share for the fourth quarter of 2010. The distribution -- our 39th
consecutive quarterly increase -- was paid on January 14, 2011 to
shareholders of record as of December 31, 2010.
Commenting on the 2010 results, W. P. Carey President and CEO, Trevor Bond
noted, "With more than $1 billion in transactions completed and record
fundraising of nearly $600 million, 2010 was one of our most successful
years. These acquisitions have added to the geographic and industry
diversity of our portfolios, and we believe we can build on this momentum
in 2011. Although we're seeing new competitors entering the net lease
market, we believe that our leading position in the sector combined with
our seasoned acquisitions, asset management and capital-raising teams will
allow us to source and execute on opportunities and maintain the
risk-return profile that has been the hallmark of our CPA® programs. As
global economics improve, we believe the demand for long-term capital to
fund corporate growth and expansion will continue and that we are well
positioned to grow and expand our own business in this environment."
CONFERENCE CALL & WEBCAST
Please call at least 10 minutes prior to call to register.
Time: Thursday, February 24, 2011 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: 448255#
Replay Available until March 11, 2011 at 9:00 AM (ET).
W. P. Carey & Co. LLC
W. P. Carey & Co. LLC (NYSE: WPC) is an investment management company that
provides long-term financing to companies worldwide via sale leaseback and
build to suit transactions and manages a global investment portfolio of
approximately $10.5 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 17 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
(in thousands, except share and per share amounts)
Years ended December 31,
----------------------------------
2010 2009 2008
---------- ---------- ----------
Revenues
Asset management revenue $ 76,246 $ 76,621 $ 80,714
Structuring revenue 44,525 23,273 20,236
Wholesaling revenue 11,096 7,691 5,208
Reimbursed costs from affiliates 60,023 47,534 41,100
Lease revenues 63,450 62,324 66,784
Other real estate income 18,570 14,907 20,658
---------- ---------- ----------
273,910 232,350 234,700
---------- ---------- ----------
Operating Expenses
General and administrative (73,429) (63,819) (62,669)
Reimbursable costs (60,023) (47,534) (41,100)
Depreciation and amortization (23,969) (22,438) (23,082)
Property expenses (10,888) (7,113) (6,496)
Other real estate expenses (8,121) (7,308) (8,196)
Impairment charges (9,512) (3,516) (473)
---------- ---------- ----------
(185,942) (151,728) (142,016)
---------- ---------- ----------
Other Income and Expenses
Other interest income 1,268 1,713 2,883
Income from equity investments in real
estate and CPA(R) REITs 30,992 13,425 14,198
Gain on sale of investment in direct
financing lease - - 1,103
Other income and (expenses) 1,407 7,357 1,444
Interest expense (16,234) (14,979) (18,598)
---------- ---------- ----------
17,433 7,516 1,030
---------- ---------- ----------
Income from continuing operations
before income taxes 105,401 88,138 93,714
Provision for income taxes (25,822) (22,793) (23,521)
---------- ---------- ----------
Income from continuing operations 79,579 65,345 70,193
---------- ---------- ----------
Discontinued Operations
Income from operations of discontinued
properties 781 4,430 8,950
Gains on sale of real estate, net 460 7,701 -
Impairment charges (5,869) (6,908) (538)
---------- ---------- ----------
(Loss) income from discontinued
operations (4,628) 5,223 8,412
---------- ---------- ----------
Net Income 74,951 70,568 78,605
Add: Net loss attributable to
noncontrolling interests 314 713 950
Less: Net income attributable to
redeemable noncontrolling interests (1,293) (2,258) (1,508)
---------- ---------- ----------
Net Income Attributable to W. P. Carey
Members $ 73,972 $ 69,023 $ 78,047
========== ========== ==========
Basic Earnings Per Share
Income from continuing operations
attributable to W. P. Carey members $ 1.98 $ 1.61 $ 1.77
(Loss) income from discontinued
operations attributable to W. P. Carey
members (0.12) 0.13 0.21
---------- ---------- ----------
Net income attributable to W. P. Carey
members $ 1.86 $ 1.74 $ 1.98
========== ========== ==========
Diluted Earnings Per Share
Income from continuing operations
attributable to W. P. Carey members $ 1.98 $ 1.61 $ 1.74
(Loss) income from discontinued
operations attributable to W. P. Carey
members (0.12) 0.13 0.21
---------- ---------- ----------
Net income attributable to W. P. Carey
members $ 1.86 $ 1.74 $ 1.95
========== ========== ==========
Weighted Average Shares Outstanding
Basic 39,514,746 39,019,709 39,202,520
========== ========== ==========
Diluted 40,007,894 39,712,735 40,221,112
========== ========== ==========
Amounts Attributable to W. P. Carey
Members
Income from continuing operations, net
of tax $ 78,600 $ 63,800 $ 69,635
(Loss) income from discontinued
operations, net of tax (4,628) 5,223 8,412
---------- ---------- ----------
Net income $ 73,972 $ 69,023 $ 78,047
========== ========== ==========
W. P. CAREY & CO. LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years ended December 31,
----------------------------------
2010 2009 2008
---------- ---------- ----------
Cash Flows -- Operating Activities
Net income $ 74,951 $ 70,568 $ 78,605
Adjustments to net income:
Depreciation and amortization
including intangible assets and
deferred financing costs 24,443 24,476 27,197
(Income) loss from equity investments
in real estate and CPA® REITs in
excess of distributions received (4,920) (2,258) 1,866
Straight-line rent and financing lease
adjustments 286 2,223 2,227
Gain on sale of real estate and
investment in direct financing lease (460) (7,701) (1,103)
Gain on extinguishment of debt - (6,991) -
Gain on lease termination - - (4,998)
Allocation of (loss) earnings to
profit-sharing interest (781) 3,900 -
Management income received in shares
of affiliates (35,235) (31,721) (40,717)
Unrealized loss (gain) on foreign
currency transactions and others 300 (174) 2,656
Realized gain on foreign currency
transactions and others (731) (257) (2,250)
Impairment charges 15,381 10,424 1,011
Stock-based compensation expense 7,082 9,336 7,278
Deferred acquisition revenue received 21,204 25,068 48,266
Increase in structuring revenue
receivable (20,237) (11,672) (10,512)
Decrease in income taxes, net (1,288) (9,276) (8,079)
Decrease in settlement provision - - (29,979)
Net changes in other operating assets
and liabilities 6,422 (1,401) (8,221)
---------- ---------- ----------
Net cash provided by operating
activities 86,417 74,544 63,247
---------- ---------- ----------
Cash Flows -- Investing Activities
Distributions received from equity
investments in real estate and CPA®
REITs in excess of equity income 18,758 39,102 19,852
Capital contributions to equity
investments - (2,872) (1,769)
Purchases of real estate and equity
investments in real estate (96,884) (39,632) (201)
VAT paid in connection with
acquisition of real estate (4,222) - -
VAT refunded in connection with
acquisition of real estate - - 3,189
Capital expenditures (5,135) (7,775) (14,051)
Proceeds from sale of real estate, net
investment in direct financing lease
and securities 14,591 43,487 5,062
Funds placed in escrow in connection
with the sale of property (1,571) (36,132) -
Funds released from escrow in
connection with the sale of property 36,620 - 636
Proceeds from transfer of
profit-sharing interest - 21,928 -
Payment of deferred acquisition
revenue to affiliate - - (120)
---------- ---------- ----------
Net cash (used in) provided by
investing activities (37,843) 18,106 12,598
---------- ---------- ----------
Cash Flows -- Financing Activities
Distributions paid (92,591) (78,618) (87,700)
Contributions from noncontrolling
interests 14,261 2,947 2,582
Distributions to noncontrolling
interests (4,360) (5,505) (5,607)
Contributions from profit-sharing
interest 3,694 - -
Distributions to profit-sharing
interest (693) (5,645) -
Purchase of noncontrolling interest - (15,380) -
Scheduled payments of non-recourse
debt (14,324) (9,534) (9,678)
Prepayments of non-recourse debt - (13,974) -
Proceeds from non-recourse debt
financing 56,841 42,495 10,137
Proceeds from line of credit 83,250 150,500 129,300
Prepayments of line of credit (52,500) (148,518) (111,572)
Proceeds from loans from affiliates - 1,625 -
Repayments of loans from affiliates - (1,770) (7,569)
Payment of financing costs (1,204) (862) (375)
Funds placed in escrow in connection
with financing - - (400)
Proceeds from issuance of shares 3,724 1,507 23,350
Windfall tax benefits associated with
stock-based compensation awards 2,354 143 2,156
Repurchase and retirement of shares - (10,686) (15,413)
---------- ---------- ----------
Net cash used in financing activities (1,548) (91,275) (70,789)
---------- ---------- ----------
Change in Cash and Cash Equivalents
During the Year
Effect of exchange rate changes on
cash (783) 276 (394)
---------- ---------- ----------
Net increase in cash and cash
equivalents 46,243 1,651 4,662
Cash and cash equivalents, beginning
of year 18,450 16,799 12,137
---------- ---------- ----------
Cash and cash equivalents, end of
year $ 64,693 $ 18,450 $ 16,799
========== ========== ==========
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 -- 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 Years ended
December 31, December 31,
-------------------------- -------------------------------
2010 2009 2008 2010 2009 2008
-------- -------- -------- --------- --------- ---------
EBITDA
Investment
management $ 31,055 $ 18,892 $ 13,079 $ 80,366 $ 54,179 $ 61,805
Real estate
ownership 10,679 20,883 23,238 60,123 77,674 84,408
-------- -------- -------- --------- --------- ---------
Total $ 41,734 $ 39,775 $ 36,317 $ 140,489 $ 131,853 $ 146,213
======== ======== ======== ========= ========= =========
AFFO
Investment
management $ 23,511 $ 16,802 $ 11,415 $ 68,663 $ 55,550 $ 49,119
Real estate
ownership 12,766 16,871 22,412 62,207 67,326 75,331
-------- -------- -------- --------- --------- ---------
Total $ 36,277 $ 33,673 $ 33,827 $ 130,870 $ 122,876 $ 124,450
======== ======== ======== ========= ========= =========
EBITDA Per
Share
(Diluted)
Investment
management $ 0.77 $ 0.47 $ 0.32 $ 2.01 $ 1.36 $ 1.54
Real estate
ownership 0.27 0.52 0.58 1.50 1.96 2.10
-------- -------- -------- --------- --------- ---------
Total $ 1.04 $ 0.99 $ 0.90 $ 3.51 $ 3.32 $ 3.64
======== ======== ======== ========= ========= =========
AFFO Per Share
(Diluted)
Investment
management $ 0.58 $ 0.41 $ 0.28 $ 1.72 $ 1.39 $ 1.22
Real estate
ownership 0.32 0.42 0.56 1.55 1.70 1.87
-------- -------- -------- --------- --------- ---------
Total $ 0.90 $ 0.83 $ 0.84 $ 3.27 $ 3.09 $ 3.09
======== ======== ======== ========= ========= =========
Adjusted Cash
Flow From
Operating
Activities
Adjusted cash
flow $ 88,634 $ 93,880 $ 89,385
========= ========= =========
Adjusted cash
flow per share
(diluted) $ 2.22 $ 2.36 $ 2.22
========= ========= =========
Distributions
declared per
share $ 2.028 $ 1.996 $ 1.955
========= ========= =========
Payout ratio
(distributions
per
share/adjusted
cash flow per
share) 91% 85% 88%
W. P. CAREY & CO. LLC
Reconciliation of Net Income to EBITDA (Unaudited)
(in thousands, except share and per share amounts)
Three months ended December 31,
-----------------------------------
2010 2009 2008
----------- ----------- -----------
Investment Management
Net income from investment management
attributable to W. P. Carey members $ 18,751 $ 11,616 $ 9,603
Adjustments:
Provision for income taxes 11,141 6,227 2,246
Depreciation and amortization 1,163 1,049 1,230
----------- ----------- -----------
EBITDA - investment management $ 31,055 $ 18,892 $ 13,079
=========== =========== ===========
EBITDA per share (diluted) $ 0.77 $ 0.47 $ 0.32
=========== =========== ===========
Real Estate Ownership
Net income from real estate ownership
attributable to W. P. Carey members $ 1,030 $ 11,370 $ 12,297
Adjustments:
Interest expense 4,460 3,734 4,019
Provision for income taxes 441 628 870
Depreciation and amortization 4,748 4,594 3,392
Reconciling items attributable to
discontinued operations - 557 2,660
----------- ----------- -----------
EBITDA - real estate ownership $ 10,679 $ 20,883 $ 23,238
=========== =========== ===========
EBITDA per share (diluted) $ 0.27 $ 0.52 $ 0.58
=========== =========== ===========
Total Company
EBITDA $ 41,734 $ 39,775 $ 36,317
=========== =========== ===========
EBITDA per share (diluted) $ 1.04 $ 0.99 $ 0.90
=========== =========== ===========
Diluted weighted average shares
outstanding 40,104,715 40,390,393 40,466,930
=========== =========== ===========
Years ended December 31,
-----------------------------------
2010 2009 2008
----------- ----------- -----------
Investment Management
Net income from investment management
attributable to W. P. Carey members $ 50,662 $ 29,334 $ 34,858
Adjustments:
Provision for income taxes 25,052 21,038 22,432
Depreciation and amortization 4,652 3,807 4,515
----------- ----------- -----------
EBITDA - investment management $ 80,366 $ 54,179 $ 61,805
=========== =========== ===========
EBITDA per share (diluted) $ 2.01 $ 1.36 $ 1.54
=========== =========== ===========
Real Estate Ownership
Net income from real estate ownership
attributable to W. P. Carey members $ 23,310 $ 39,689 $ 43,189
Adjustments:
Interest expense 16,234 14,979 18,598
Provision for income taxes 770 1,755 1,089
Depreciation and amortization 19,317 18,631 18,567
Reconciling items attributable to
discontinued operations 492 2,620 2,965
----------- ----------- -----------
EBITDA - real estate ownership $ 60,123 $ 77,674 $ 84,408
=========== =========== ===========
EBITDA per share (diluted) $ 1.50 $ 1.96 $ 2.10
=========== =========== ===========
Total Company
EBITDA $ 140,489 $ 131,853 $ 146,213
=========== =========== ===========
EBITDA per share (diluted) $ 3.51 $ 3.32 $ 3.64
=========== =========== ===========
Diluted weighted average shares
outstanding 40,007,894 39,712,735 40,221,112
=========== =========== ===========
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 December 31,
----------------------------------
2010 2009 2008
---------- ---------- ----------
Investment Management
Net income from investment management
attributable to W. P. Carey members $ 18,751 $ 11,616 $ 9,603
Amortization, deferred taxes and other
non-cash charges 2,275 (3,370) (1,283)
AFFO from equity investments 2,485 8,556 3,095
---------- ---------- ----------
AFFO -- investment management $ 23,511 $ 16,802 $ 11,415
========== ========== ==========
AFFO per share (diluted) $ 0.58 $ 0.41 $ 0.28
========== ========== ==========
Real Estate Ownership
Net income from real estate ownership
attributable to W. P. Carey members $ 1,030 $ 11,370 $ 12,297
Gain on sale of direct financing lease - - -
Gain on sale of real estate, net - (7,358) -
Gain on extinguishment of debt, net (a) - - -
Other gains (losses), net (755) - -
Depreciation, amortization and other
non-cash charges 4,739 4,976 7,594
Straight-line and other rent
adjustments 128 465 172
Impairment charges 6,763 5,754 473
AFFO from equity investments 1,018 1,818 2,039
Noncontrolling interests' share of AFFO (157) (154) (163)
---------- ---------- ----------
AFFO -- real estate ownership $ 12,766 $ 16,871 $ 22,412
========== ========== ==========
AFFO per share (diluted) $ 0.32 $ 0.42 $ 0.56
========== ========== ==========
Total Company
AFFO $ 36,277 $ 33,673 $ 33,827
========== ========== ==========
AFFO per share (diluted) $ 0.90 $ 0.83 $ 0.84
========== ========== ==========
Diluted weighted average shares
outstanding 40,104,715 40,390,393 40,466,930
========== ========== ==========
Years ended December 31,
----------------------------------
2010 2009 2008
---------- ---------- ----------
Investment Management
Net income from investment management
attributable to W. P. Carey members $ 50,662 $ 29,334 $ 34,858
Amortization, deferred taxes and other
non-cash charges 7,305 1,796 2,494
AFFO from equity investments 10,696 24,420 11,767
---------- ---------- ----------
AFFO -- investment management $ 68,663 $ 55,550 $ 49,119
========== ========== ==========
AFFO per share (diluted) $ 1.72 $ 1.39 $ 1.22
========== ========== ==========
Real Estate Ownership
Net income from real estate ownership
attributable to W. P. Carey members $ 23,310 $ 39,689 $ 43,189
Gain on sale of direct financing lease - - (1,103)
Gain on sale of real estate, net (460) (7,701) -
Gain on extinguishment of debt, net (a) - (2,796) -
Other gains (losses), net (755) - -
Depreciation, amortization and other
non-cash charges 19,449 19,513 23,308
Straight-line and other rent
adjustments 295 1,273 887
Impairment charges 15,381 10,424 1,011
AFFO from equity investments 5,598 7,505 8,718
Noncontrolling interests' share of AFFO (611) (581) (679)
---------- ---------- ----------
AFFO -- real estate ownership $ 62,207 $ 67,326 $ 75,331
========== ========== ==========
AFFO per share (diluted) $ 1.55 $ 1.70 $ 1.87
========== ========== ==========
Total Company
AFFO $ 130,870 $ 122,876 $ 124,450
========== ========== ==========
AFFO per share (diluted) $ 3.27 $ 3.09 $ 3.09
========== ========== ==========
Diluted weighted average shares
outstanding 40,007,894 39,712,735 40,221,112
========== ========== ==========
(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 but 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)
Years ended December 31,
----------------------------------
2010 2009 2008
---------- ---------- ----------
Cash flow from operating activities $ 86,417 $ 74,544 $ 63,247
Adjustments:
Distributions received from equity
investments in real estate in excess
of equity income (a) 9,253 18,503 10,868
Distributions paid to noncontrolling
interests, net (b) (614) (568) (3,025)
Changes in working capital (c) (6,422) 1,401 9,574
Settlement payment (d) - - 21,012
CPA®:16 -- Global performance
adjustment, net (e) - - (12,291)
---------- ---------- ----------
Adjusted cash flow from operating
activities $ 88,634 $ 93,880 $ 89,385
========== ========== ==========
Adjusted cash flow per share (diluted) $ 2.22 $ 2.36 $ 2.22
========== ========== ==========
Distributions declared per share $ 2.028 $ 1.996 $ 1.955
========== ========== ==========
Payout ratio (distributions per
share/adjusted cash flow per share) 91% 85% 88%
Diluted weighted average shares
outstanding 40,007,894 39,712,735 40,221,112
========== ========== ==========
(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 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 recognized.
(d) In March 2008, we entered into a settlement with the SEC with respect
to all matters relating to a previously disclosed investigation. In
connection with this settlement, we paid $30.0 million in the first quarter
of 2008 and recognized an offsetting $9.0 million tax benefit in the same
period.
(e) 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.
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
Source: W. P. Carey & Co. LLC