Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - W. P. Carey Inc. | wpc2015q28-ksupplementalex.htm |
| 8-K - 8-K - W. P. Carey Inc. | wpc2015q28-ksupplemental.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
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. Announces Second Quarter 2015 Financial Results
New York, NY – August 4, 2015 – W. P. Carey Inc. (NYSE: WPC) (W. P. Carey or the Company), a global net lease real estate investment trust, today reported its financial results for the second quarter ended June 30, 2015.
Financial Update – Second Quarter 2015
• | Net revenues of $224.3 million, comprised of net revenues from real estate ownership of $174.1 million and net revenues from the Managed Programs of $50.2 million |
• | AFFO of $139.0 million, equivalent to $1.31 per diluted share |
• | Reaffirm 2015 AFFO guidance range of $4.76 to $5.02 per diluted share |
• | Quarterly dividend raised to $0.954 per share, equivalent to an annualized dividend rate of $3.82 per share |
Business Update – Second Quarter 2015
Owned Real Estate
• | Completed two investments totaling $51.4 million |
• | Disposed of two properties for total proceeds of $11.3 million |
• | Net lease portfolio occupancy of 98.6% |
Investment Management
• | Structured $1.1 billion of investments on behalf of the Managed REITs |
• | CWI 2 exceeded its required minimum offering amount and began admitting new stockholders |
• | Subsequent to quarter end, the Company commenced capital raising on behalf of its first non-traded BDC |
W. P. Carey Inc. 6/30/2015 Earnings Release 8-K – 1
Balance Sheet and Capitalization
• | Established an “at-the-market” offering program under which the Company may issue up to $400.0 million of common stock. To date, no shares have been issued pursuant to this program. |
MANAGEMENT COMMENTARY
“During the second quarter, we completed two acquisitions for our owned real estate portfolio totaling $51.4 million, bringing total investment volume for the first half of 2015 to $445.6 million,” said Trevor Bond, Chief Executive Officer of W. P. Carey. “All of our first half investments were in Europe — specifically, in the UK, the Netherlands, Austria and Sweden — reflecting the continued favorable market conditions there for net lease deals, as well as our ability to successfully source and close transactions throughout the region. We also completed acquisitions totaling $1.1 billion on behalf of our Managed REITs, primarily comprised of operating properties for our lodging REITs.
“Elsewhere, we continue to make progress with our strategy of diversifying and expanding the product offerings within our investment management business. In May, our second non-traded REIT focused on lodging, Carey Watermark Investors 2 Incorporated, broke escrow for its initial public offering of up to $1.4 billion. And I’m pleased to announce that since quarter end, we have launched our first non-traded BDC, Carey Credit Income Fund.”
FINANCIAL RESULTS
Revenues
• | Total Company: Revenues excluding reimbursable costs (net revenues) for the 2015 second quarter totaled $224.3 million, up 9.0% from $205.7 million for the 2014 second quarter, due primarily to additional lease revenues from properties acquired during and subsequent to the 2014 second quarter, as well as higher net revenues from the Managed Programs. |
• | Real Estate Ownership: Real estate revenues excluding reimbursable tenant costs (net revenues from real estate ownership) for the 2015 second quarter were $174.1 million, up 1.5% from $171.5 million for the 2014 second quarter, due primarily to additional lease revenues from properties acquired during and subsequent to the 2014 second quarter. |
• | Investment Management: Revenues from the Managed Programs excluding reimbursable costs (net revenues from the Managed Programs) for the 2015 second quarter were $50.2 million, up 46.8% from $34.2 million for the 2014 second quarter, due primarily to higher structuring revenue resulting from increased acquisition activity on behalf of the Managed REITs. |
Adjusted Funds from Operations (AFFO)
• | AFFO for the 2015 second quarter was $1.31 per diluted share, up 8.3% compared to $1.21 per diluted share for the 2014 second quarter, due primarily to (i) higher assets under management within our investment management business, resulting in increases to both asset management fees and distributions of available cash from the Company’s interests in the operating partnerships of the Managed REITs; (ii) higher structuring revenue due to increased acquisition activity on behalf of the Managed REITs; and (iii) the positive net impact of properties acquired for our owned real estate portfolio since the beginning of the 2014 second quarter. These were partly offset by a stronger U.S. dollar, primarily relative to the euro, net of realized hedging gains. |
• | Note: Further information concerning AFFO, a non-GAAP supplemental performance metric, is presented in the accompanying tables and related notes. |
W. P. Carey Inc. 6/30/2015 Earnings Release 8-K – 2
Dividend
• | As previously announced, on June 18, 2015 the Company’s Board of Directors declared a quarterly cash dividend of $0.954 per share, equivalent to an annualized dividend rate of $3.82 per share. Paid on July 15, 2015 to stockholders of record as of June 30, 2015, it represented the Company’s 57th consecutive quarterly dividend increase. |
AFFO GUIDANCE
• | For the 2015 full year, the Company reaffirms that it expects to report AFFO of between $4.76 and $5.02 per diluted share, based on assumed total acquisition volume of between approximately $2.4 billion and $3.1 billion, comprised of approximately $400 million to $600 million for the Company’s owned real estate portfolio and approximately $2.0 billion to $2.5 billion on behalf of the Managed REITs. It also assumes dispositions from the Company’s owned real estate portfolio of between approximately $100 million and $200 million. |
• | Note: The Company expects to update its 2015 AFFO guidance in connection with the release of subsequent quarterly earnings. |
BALANCE SHEET AND CAPITALIZATION
“At-The-Market” Offering Program
• | As previously announced, on June 3, 2015 the Company filed a prospectus supplement with the Securities and Exchange Commission (SEC) under which it may sell shares of its common stock having an aggregate gross sales price of up to $400 million, through an "at-the-market" (ATM) offering program. To date, the Company has not issued any shares pursuant to this ATM offering program. |
OWNED REAL ESTATE PORTFOLIO
Acquisitions and Dispositions
• | During the 2015 second quarter, the Company completed two investments totaling $51.4 million, bringing total investment volume for the first half of 2015 to $445.6 million, including acquisition related-costs and fees. |
• | During the 2015 second quarter, the Company disposed of two properties for a total of $11.3 million, bringing total dispositions for the first half of 2015 to $25.1 million, including transaction related-costs and fees, as part of its active capital recycling program. |
Composition
• | As of June 30, 2015, the Company’s owned real estate portfolio consisted of 852 net lease properties, comprising 89.3 million square feet leased to 217 tenants, and four operating properties. As of that date, the weighted-average lease term of the net lease portfolio was 9.1 years and the occupancy rate was 98.6%. |
INVESTMENT MANAGEMENT
• | W. P. Carey is the advisor to CPA®:17 – Global, CPA®:18 – Global (together the CPA® REITs), Carey Watermark Investors Incorporated (CWI), Carey Watermark Investors 2 Incorporated (CWI 2) (together the CWI REITs, and together with the CPA® REITs, the Managed REITs) and Carey Credit Income Fund (CCIF) (together with the Managed REITs, the Managed Programs). At June 30, 2015, the Managed Programs, in aggregate, had total assets under management of approximately $10.4 billion. |
W. P. Carey Inc. 6/30/2015 Earnings Release 8-K – 3
Acquisitions
• | During the 2015 second quarter, the Company structured investments totaling $1.1 billion on behalf of the Managed REITs, comprised of investments totaling $520.4 million on behalf of the CPA® REITs and investments totaling $550.2 million on behalf of the CWI REITs, in each case including acquisition-related costs and fees. |
Investor Capital
• | On May 15, 2015, CWI 2 exceeded its required minimum offering amount, enabling it to began admitting new stockholders in its initial public offering of up to $1.4 billion. During the remainder of the 2015 second quarter, the Company raised approximately $17.0 million on behalf of CWI 2. |
• | Subsequent to quarter end, the registration statements for Carey Credit Income Fund 2016 T and Carey Credit Income Fund-I were declared effective by the SEC, enabling the Company to commence capital raising on their behalf as feeder funds for CCIF, the Company’s first business development company (BDC). |
* * * * *
Supplemental Information
The Company has provided supplemental unaudited financial and operating information regarding the 2015 second quarter, including a description of non-GAAP financial measures and reconciliations to GAAP measures, in a Current Report on Form 8-K filed with the SEC on August 4, 2015.
* * * * *
Live Conference Call and Audio Webcast Scheduled for 11:00 a.m. Eastern Time
Please call to register at least 10 minutes prior to the start time.
Date/Time: Tuesday, August 4, 2015 at 11:00 a.m. Eastern Time
Call-in Number: +1-844-691-1119 (US) or +1-925-392-0263 (international)
Conference ID: 79328224
Audio Webcast: www.wpcarey.com/earnings
Audio Webcast Replay
An audio replay of the call will be available at www.wpcarey.com/earnings.
* * * * *
W. P. Carey Inc.
W. P. Carey Inc. is a leading global net lease REIT that provides long-term sale-leaseback and build-to-suit financing solutions for companies worldwide. At June 30, 2015, the Company had an enterprise value of approximately $10.4 billion. In addition to its owned portfolio of diversified global real estate, W. P. Carey manages a series of non-traded publicly registered investment programs with assets under management of approximately $10.4 billion. Its corporate finance-focused credit and real estate underwriting process is a constant that has been successfully leveraged across a wide variety of industries and property types. Furthermore, its portfolio of long-term leases with creditworthy tenants has an established history of generating stable cash flows, enabling it to deliver consistent and rising dividend income to investors for over four decades.
www.wpcarey.com
* * * * *
W. P. Carey Inc. 6/30/2015 Earnings Release 8-K – 4
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, the statements made by Mr. Bond, such as his statement about the continued favorable market conditions in Europe, as well as statements regarding annualized dividends, funds from operations coverage and guidance, including underlying assumptions, and with regard to its capital recycling and intended results thereof, the ability of the Company to sell its shares under the ATM program, and anticipated future financial and operating performance and results, including estimates of growth. 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 Item 1A. Risk Factors in W. P. Carey’s Annual Report on Form 10-K for the year ended December 31, 2014 as filed with the SEC on March 2, 2015, as amended by a Form 10-K/A filed with the SEC on March 17, 2015, and Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 as filed with the SEC on May 18, 2015. 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. 6/30/2015 Earnings Release 8-K – 5
W. P. CAREY INC. | |||||||
Consolidated Balance Sheets (Unaudited) | |||||||
(in thousands) | |||||||
June 30, 2015 | December 31, 2014 | ||||||
Assets | |||||||
Investments in real estate: | |||||||
Real estate, at cost | $ | 5,296,054 | $ | 5,006,682 | |||
Operating real estate, at cost | 85,237 | 84,885 | |||||
Accumulated depreciation | (324,136 | ) | (258,493 | ) | |||
Net investments in properties | 5,057,155 | 4,833,074 | |||||
Net investments in direct financing leases | 783,832 | 816,226 | |||||
Assets held for sale | — | 7,255 | |||||
Net investments in real estate | 5,840,987 | 5,656,555 | |||||
Cash and cash equivalents | 233,629 | 198,683 | |||||
Equity investments in the Managed Programs and real estate | 263,418 | 249,403 | |||||
Due from affiliates | 176,796 | 34,477 | |||||
Goodwill | 687,084 | 692,415 | |||||
In-place lease and tenant relationship intangible assets, net | 948,547 | 993,819 | |||||
Above-market rent intangible assets, net | 498,746 | 522,797 | |||||
Other assets, net | 318,397 | 300,330 | |||||
Total Assets | $ | 8,967,604 | $ | 8,648,479 | |||
Liabilities and Equity | |||||||
Liabilities: | |||||||
Non-recourse debt, net | $ | 2,443,212 | $ | 2,532,683 | |||
Senior Unsecured Credit Facility - Revolver | 350,234 | 807,518 | |||||
Senior Unsecured Credit Facility - Term Loan | 250,000 | 250,000 | |||||
Senior Unsecured Notes, net | 1,501,061 | 498,345 | |||||
Below-market rent and other intangible liabilities, net | 171,544 | 175,070 | |||||
Accounts payable, accrued expenses and other liabilities | 312,521 | 293,846 | |||||
Deferred income taxes | 89,036 | 94,133 | |||||
Distributions payable | 101,517 | 100,078 | |||||
Total liabilities | 5,219,125 | 4,751,673 | |||||
Redeemable noncontrolling interest | 13,374 | 6,071 | |||||
Equity: | |||||||
W. P. Carey stockholders’ equity: | |||||||
Preferred stock (none issued) | — | — | |||||
Common stock | 105 | 105 | |||||
Additional paid-in capital | 4,298,574 | 4,322,273 | |||||
Distributions in excess of accumulated earnings | (575,404 | ) | (465,606 | ) | |||
Deferred compensation obligation | 57,395 | 30,624 | |||||
Accumulated other comprehensive loss | (120,777 | ) | (75,559 | ) | |||
Less: treasury stock at cost | (60,948 | ) | (60,948 | ) | |||
Total W. P. Carey stockholders’ equity | 3,598,945 | 3,750,889 | |||||
Noncontrolling interests | 136,160 | 139,846 | |||||
Total equity | 3,735,105 | 3,890,735 | |||||
Total Liabilities and Equity | $ | 8,967,604 | $ | 8,648,479 | |||
W. P. Carey Inc. 6/30/2015 Earnings Release 8-K – 6
W. P. CAREY INC. | |||||||||||
Quarterly Consolidated Statements of Income (Unaudited) | |||||||||||
(in thousands, except share and per share amounts) | |||||||||||
Three Months Ended | |||||||||||
June 30, 2015 | March 31, 2015 | June 30, 2014 | |||||||||
Revenues | |||||||||||
Real estate revenues: | |||||||||||
Lease revenues | $ | 162,574 | $ | 160,165 | $ | 148,253 | |||||
Operating property revenues (a) | 8,426 | 7,112 | 8,251 | ||||||||
Reimbursable tenant costs | 6,130 | 5,939 | 5,749 | ||||||||
Lease termination income and other | 3,122 | 3,209 | 14,988 | ||||||||
180,252 | 176,425 | 177,241 | |||||||||
Revenues from the Managed Programs: | |||||||||||
Structuring revenue | 37,808 | 21,720 | 17,254 | ||||||||
Asset management revenue | 12,073 | 11,159 | 9,045 | ||||||||
Reimbursable costs | 7,639 | 9,607 | 41,925 | ||||||||
Dealer manager fees | 307 | 1,274 | 7,949 | ||||||||
Incentive, termination and subordinated disposition revenue | — | 203 | — | ||||||||
57,827 | 43,963 | 76,173 | |||||||||
238,079 | 220,388 | 253,414 | |||||||||
Operating Expenses | |||||||||||
Depreciation and amortization | 65,166 | 65,400 | 63,445 | ||||||||
General and administrative | 26,376 | 29,768 | 19,134 | ||||||||
Reimbursable tenant and affiliate costs | 13,769 | 15,546 | 47,674 | ||||||||
Property expenses, excluding reimbursable tenant costs | 11,020 | 9,364 | 11,211 | ||||||||
Stock-based compensation expense | 5,089 | 7,009 | 7,957 | ||||||||
Subadvisor fees (b) | 4,147 | 2,661 | 2,451 | ||||||||
Dealer manager fees and expenses | 2,327 | 2,372 | 6,285 | ||||||||
Acquisition expenses | 1,897 | 5,676 | 1,137 | ||||||||
Impairment charges | 591 | 2,683 | 2,066 | ||||||||
130,382 | 140,479 | 161,360 | |||||||||
Other Income and Expenses | |||||||||||
Interest expense | (47,693 | ) | (47,949 | ) | (47,733 | ) | |||||
Equity in earnings of equity method investments in the Managed Programs and real estate | 14,272 | 11,723 | 9,452 | ||||||||
Other income and (expenses) | 7,641 | (4,306 | ) | (1,378 | ) | ||||||
(25,780 | ) | (40,532 | ) | (39,659 | ) | ||||||
Income from continuing operations before income taxes and gain (loss) on sale of real estate | 81,917 | 39,377 | 52,395 | ||||||||
Provision for income taxes | (15,010 | ) | (1,980 | ) | (8,021 | ) | |||||
Income from continuing operations before gain (loss) on sale of real estate | 66,907 | 37,397 | 44,374 | ||||||||
Income from discontinued operations, net of tax | — | — | 26,421 | ||||||||
Gain (loss) on sale of real estate, net of tax | 16 | 1,185 | (3,823 | ) | |||||||
Net Income | 66,923 | 38,582 | 66,972 | ||||||||
Net income attributable to noncontrolling interests | (3,575 | ) | (2,466 | ) | (2,344 | ) | |||||
Net loss attributable to redeemable noncontrolling interest | — | — | 111 | ||||||||
Net Income Attributable to W. P. Carey | $ | 63,348 | $ | 36,116 | $ | 64,739 | |||||
Basic Earnings Per Share | |||||||||||
Income from continuing operations attributable to W. P. Carey | $ | 0.60 | $ | 0.34 | $ | 0.38 | |||||
Income from discontinued operations attributable to W. P. Carey | — | — | 0.26 | ||||||||
Net Income Attributable to W. P. Carey | $ | 0.60 | $ | 0.34 | $ | 0.64 | |||||
Diluted Earnings Per Share | |||||||||||
Income from continuing operations attributable to W. P. Carey | $ | 0.59 | $ | 0.34 | $ | 0.38 | |||||
Income from discontinued operations attributable to W. P. Carey | — | — | 0.26 | ||||||||
Net Income Attributable to W. P. Carey | $ | 0.59 | $ | 0.34 | $ | 0.64 | |||||
Weighted-Average Shares Outstanding | |||||||||||
Basic | 105,764,032 | 105,303,679 | 100,236,362 | ||||||||
Diluted | 106,281,983 | 106,109,877 | 100,995,225 | ||||||||
Amounts Attributable to W. P. Carey | |||||||||||
Income from continuing operations, net of tax | $ | 63,348 | $ | 36,116 | $ | 38,275 | |||||
Income from discontinued operations, net of tax | — | — | 26,464 | ||||||||
Net Income | $ | 63,348 | $ | 36,116 | $ | 64,739 | |||||
Distributions Declared Per Share | $ | 0.9540 | $ | 0.9525 | $ | 0.9000 | |||||
W. P. Carey Inc. 6/30/2015 Earnings Release 8-K – 7
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, | |||||||
2015 | 2014 | ||||||
Revenues | |||||||
Real estate revenues: | |||||||
Lease revenues | $ | 322,739 | $ | 271,320 | |||
Operating property revenues (a) | 15,538 | 13,244 | |||||
Reimbursable tenant costs | 12,069 | 11,763 | |||||
Lease termination income and other | 6,331 | 16,175 | |||||
356,677 | 312,502 | ||||||
Revenues from the Managed REITs: | |||||||
Structuring revenue | 59,528 | 35,005 | |||||
Asset management revenue | 23,232 | 18,822 | |||||
Reimbursable costs | 17,246 | 81,657 | |||||
Dealer manager fees | 1,581 | 14,626 | |||||
Incentive, termination and subordinated disposition revenue | 203 | — | |||||
101,790 | 150,110 | ||||||
458,467 | 462,612 | ||||||
Operating Expenses | |||||||
Depreciation and amortization | 130,566 | 116,118 | |||||
General and administrative | 56,144 | 41,804 | |||||
Reimbursable tenant and affiliate costs | 29,315 | 93,420 | |||||
Property expenses, excluding reimbursable tenant costs | 20,384 | 19,630 | |||||
Stock-based compensation expense | 12,098 | 15,000 | |||||
Merger and property acquisition expenses | 7,573 | 30,751 | |||||
Subadvisor fees (b) | 6,808 | 2,469 | |||||
Dealer manager fees and expenses | 4,699 | 11,710 | |||||
Impairment charges | 3,274 | 2,066 | |||||
270,861 | 332,968 | ||||||
Other Income and Expenses | |||||||
Interest expense | (95,642 | ) | (86,808 | ) | |||
Equity in earnings of equity method investments in the Managed Programs and real estate | 25,995 | 23,714 | |||||
Other income and (expenses) | 3,335 | (7,019 | ) | ||||
Gain on change in control of interests (c) | — | 105,947 | |||||
(66,312 | ) | 35,834 | |||||
Income from continuing operations before income taxes and gain (loss) loss on sale of real estate | 121,294 | 165,478 | |||||
Provision for income taxes | (16,990 | ) | (10,274 | ) | |||
Income from continuing operations before gain (loss) on sale of real estate | 104,304 | 155,204 | |||||
Income from discontinued operations, net of tax | — | 32,828 | |||||
Gain (loss) on sale of real estate, net of tax | 1,201 | (3,743 | ) | ||||
Net Income | 105,505 | 184,289 | |||||
Net income attributable to noncontrolling interests | (6,041 | ) | (3,921 | ) | |||
Net income attributable to redeemable noncontrolling interest | — | (151 | ) | ||||
Net Income Attributable to W. P. Carey | $ | 99,464 | $ | 180,217 | |||
Basic Earnings Per Share | |||||||
Income from continuing operations attributable to W. P. Carey | $ | 0.94 | $ | 1.55 | |||
Income from discontinued operations attributable to W. P. Carey | — | 0.34 | |||||
Net Income Attributable to W. P. Carey | $ | 0.94 | $ | 1.89 | |||
Diluted Earnings Per Share | |||||||
Income from continuing operations attributable to W. P. Carey | $ | 0.93 | $ | 1.53 | |||
Income from discontinued operations attributable to W. P. Carey | — | 0.34 | |||||
Net Income Attributable to W. P. Carey | $ | 0.93 | $ | 1.87 | |||
Weighted-Average Shares Outstanding | |||||||
Basic | 105,532,976 | 94,855,067 | |||||
Diluted | 106,355,402 | 95,857,916 | |||||
Amounts Attributable to W. P. Carey | |||||||
Income from continuing operations, net of tax | $ | 99,464 | $ | 147,211 | |||
Income from discontinued operations, net of tax | — | 33,006 | |||||
Net Income | $ | 99,464 | $ | 180,217 | |||
Distributions Declared Per Share | $ | 1.9065 | $ | 1.7950 | |||
W. P. Carey Inc. 6/30/2015 Earnings Release 8-K – 8
__________
(a) | Comprised of revenues of $8.1 million from two hotels and revenues of $0.3 million from two self-storage facilities for the three months ended June 30, 2015, and $15.0 million and $0.6 million, respectively, for the six months ended June 30, 2015. |
(b) | We earn investment management revenue from CWI and CWI 2 in our role as their advisor. Pursuant to the terms of the subadvisory agreements, however, 20% of the fees we receive from CWI and 25% of the fees we receive from CWI 2 are paid to their respective subadvisors. We also pay the subadvisors 20% and 25% of the net proceeds from any sale, financing, or recapitalization of CWI and CWI 2 securities, respectively. |
(c) | Gain on change in control of interests for the six months ended June 30, 2014 represents a gain of $75.7 million recognized on our previously-held interest in shares of CPA®:16 – Global common stock, and a gain of $30.2 million recognized on the purchase of the remaining interests in nine investments from CPA®:16 – Global, which we had previously accounted for under the equity method. |
W. P. Carey Inc. 6/30/2015 Earnings Release 8-K – 9
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, 2015 | March 31, 2015 | June 30, 2014 | |||||||||
Net income attributable to W. P. Carey | $ | 63,348 | $ | 36,116 | $ | 64,739 | |||||
Adjustments: | |||||||||||
Depreciation and amortization of real property | 63,688 | 63,891 | 62,354 | ||||||||
Impairment charges | 591 | 2,683 | 2,066 | ||||||||
Gain on sale of real estate, net | (16 | ) | (1,185 | ) | (25,582 | ) | |||||
Proportionate share of adjustments for noncontrolling interests to arrive at FFO | (2,640 | ) | (2,653 | ) | (2,586 | ) | |||||
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO | 1,296 | 1,278 | 533 | ||||||||
Total adjustments | 62,919 | 64,014 | 36,785 | ||||||||
FFO Attributable to W. P. Carey (as defined by NAREIT) | 126,267 | 100,130 | 101,524 | ||||||||
Adjustments: | |||||||||||
Above- and below-market rent intangible lease amortization, net | 13,220 | 13,750 | 17,124 | ||||||||
Other amortization and non-cash items (a) | (6,574 | ) | 6,690 | 1,719 | |||||||
Stock-based compensation | 5,089 | 7,009 | 7,957 | ||||||||
Straight-line and other rent adjustments | (3,070 | ) | (2,937 | ) | (8,999 | ) | |||||
Acquisition expenses | 1,897 | 5,676 | 1,139 | ||||||||
Amortization of deferred financing costs | 1,489 | 1,165 | 999 | ||||||||
AFFO adjustments to equity earnings from equity investments | 1,426 | 1,137 | 935 | ||||||||
Tax benefit – deferred and other non-cash charges | (1,372 | ) | (1,745 | ) | (1,246 | ) | |||||
Realized losses (gains) on foreign currency, derivatives, and other (b) | 415 | (554 | ) | 159 | |||||||
Loss on extinguishment of debt | — | — | 721 | ||||||||
Other, net | — | — | (13 | ) | |||||||
Proportionate share of adjustments for noncontrolling interests to arrive at AFFO | 15 | (214 | ) | 259 | |||||||
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO | 234 | (137 | ) | (32 | ) | ||||||
Total adjustments | 12,769 | 29,840 | 20,722 | ||||||||
AFFO Attributable to W. P. Carey | $ | 139,036 | $ | 129,970 | $ | 122,246 | |||||
Summary | |||||||||||
FFO attributable to W. P. Carey (as defined by NAREIT) | $ | 126,267 | $ | 100,130 | $ | 101,524 | |||||
FFO attributable to W. P. Carey (as defined by NAREIT) per diluted share | $ | 1.19 | $ | 0.94 | $ | 1.01 | |||||
AFFO attributable to W. P. Carey | $ | 139,036 | $ | 129,970 | $ | 122,246 | |||||
AFFO attributable to W. P. Carey per diluted share | $ | 1.31 | $ | 1.22 | $ | 1.21 | |||||
Diluted weighted-average shares outstanding | 106,281,983 | 106,109,877 | 100,995,225 | ||||||||
W. P. Carey Inc. 6/30/2015 Earnings Release 8-K – 10
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, | |||||||
2015 | 2014 | ||||||
Net income attributable to W. P. Carey | $ | 99,464 | $ | 180,217 | |||
Adjustments: | |||||||
Depreciation and amortization of real property | 127,579 | 113,974 | |||||
Impairment charges | 3,274 | 2,066 | |||||
Gain on sale of real estate, net | (1,201 | ) | (28,758 | ) | |||
Proportionate share of adjustments for noncontrolling interests to arrive at FFO | (5,293 | ) | (6,078 | ) | |||
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO | 2,574 | 1,798 | |||||
Total adjustments | 126,933 | 83,002 | |||||
FFO Attributable to W. P. Carey (as defined by NAREIT) | 226,397 | 263,219 | |||||
Adjustments: | |||||||
Above- and below-market rent intangible lease amortization, net | 26,970 | 30,610 | |||||
Stock-based compensation | 12,098 | 15,000 | |||||
Merger and property acquisition expenses (c) | 7,573 | 44,618 | |||||
Straight-line and other rent adjustments | (6,007 | ) | (11,668 | ) | |||
Tax benefit – deferred and other non-cash charges | (3,118 | ) | (12,176 | ) | |||
Amortization of deferred financing costs | 2,654 | 2,024 | |||||
AFFO adjustments to equity earnings from equity investments | 2,563 | 3,871 | |||||
Realized (gains) losses on foreign currency, derivatives, and other | (139 | ) | 820 | ||||
Other amortization and non-cash items (a) | 115 | 2,574 | |||||
Gain on change in control of interests (d) | — | (105,947 | ) | ||||
Loss on extinguishment of debt | — | 8,713 | |||||
Other, net (e) | — | 21 | |||||
Proportionate share of adjustments for noncontrolling interests to arrive at AFFO | (199 | ) | (1,158 | ) | |||
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO | 96 | (27 | ) | ||||
Total adjustments | 42,606 | (22,725 | ) | ||||
AFFO Attributable to W. P. Carey | $ | 269,003 | $ | 240,494 | |||
Summary | |||||||
FFO attributable to W. P. Carey (as defined by NAREIT) | $ | 226,397 | $ | 263,219 | |||
FFO attributable to W. P. Carey (as defined by NAREIT) per diluted share | $ | 2.13 | $ | 2.75 | |||
AFFO attributable to W. P. Carey | $ | 269,003 | $ | 240,494 | |||
AFFO attributable to W. P. Carey per diluted share | $ | 2.53 | $ | 2.51 | |||
Diluted weighted-average shares outstanding | 106,355,402 | 95,857,916 | |||||
_________
(a) | Represents primarily unrealized gains and losses from foreign exchange and derivatives, as well as amounts for the amortization of contracts. |
(b) | Effective prospectively on January 1, 2015, we no longer adjust for realized gains or losses on foreign exchange derivatives. Realized gain on derivatives was $0.3 million for the three months ended June 30, 2014, there were no such gain for the six months ended June 30, 2014. |
(c) | Amount for the six months ended June 30, 2014 includes reported merger costs as well as income tax expense incurred in connection with the CPA®:16 Merger. Income tax expense incurred in connection with the CPA®:16 Merger represents the current portion of income tax expense, including the permanent difference incurred upon recognition of deferred revenue associated with the accelerated vesting of shares previously issued by CPA®:16 – Global for asset management and performance fees. |
(d) | Gain on change in control of interests for the six months ended June 30, 2014 represents a gain of $75.7 million recognized on our previously-held interest in shares of CPA®:16 – Global common stock, and a gain of $30.2 million recognized on the purchase of the remaining interests in nine investments from CPA®:16 – Global, which we had previously accounted for under the equity method. |
(e) | Other, net for the six months ended June 30, 2014 primarily consists of proceeds from a bankruptcy settlement claim with U.S. Aluminum of Canada, a former CPA®:16 – Global tenant that was acquired as part of the CPA®:16 Merger on January 31, 2014, and under GAAP was accounted for in purchase accounting. |
W. P. Carey Inc. 6/30/2015 Earnings Release 8-K – 11
Non-GAAP Financial Disclosure
Funds from Operations, or FFO, is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as net income or loss (as computed in accordance with GAAP) excluding: depreciation and amortization expense from real estate assets, impairment charges on real estate, gains or losses from sales of depreciated real estate assets, and extraordinary items; however, FFO related to assets held for sale, sold, or otherwise transferred and included in the results of discontinued operations are included. These adjustments also incorporate the pro rata share of unconsolidated subsidiaries. FFO is used by management, investors, and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers. Although NAREIT has published this definition of FFO, companies often modify this definition as they seek to provide financial measures that meaningfully reflect their distinctive operations.
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 compensation, gains or losses from extinguishment of debt and deconsolidation of subsidiaries, and unrealized foreign currency exchange gains and losses. 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 acquisition expenses and non-core expenses such as merger expenses. Merger expenses are related to the CPA®:16 Merger. We also exclude realized gains or losses on foreign exchange 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 as they are not the primary drivers in our decision making process and excluding those items provides investors a view of our portfolio performance over time and make it more comparable to other REITs not currently engaged in acquisitions, mergers, and restructuring, which are not part of our normal business operations. 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 because 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 earnings computed under GAAP or as alternatives to cash from operating activities computed under GAAP or as indicators of our ability to fund our cash needs.
W. P. Carey Inc. 6/30/2015 Earnings Release 8-K – 12