W. P. Carey Announces First Quarter 2013 Financial Results

W. P. Carey Announces First Quarter 2013 Financial Results 
NEW YORK, NY -- (Marketwired) -- 05/07/13 --  W. P. Carey Inc. (NYSE:
WPC), a real estate investment trust ("REIT"), today reported
financial results for the first quarter ended March 31, 2013. 
During the first quarter of 2013, the Company: 


 
--  Reported Funds from operations -- as adjusted ("AFFO") of $1.03 per
    diluted share
--  Structured $193 million of investments on behalf of the managed REITs
--  Completed a $72 million sale-leaseback with Kraft Foods Group
--  Raised annualized dividend rate to $3.28 per share, an increase of 24%
    versus the fourth quarter of 2012 and WPC's 48th consecutive quarterly
    increase
--  Generated total shareholder return of approximately 31%

  
Subsequent to the first quarter: 


 
--  WPC acquired the main European distribution center of the Tommy
    Hilfiger Group for approximately $39 million

  
QUARTERLY RESULTS 


 
--  AFFO for the first quarter of 2013 was $72.3 million or $1.03 per
    diluted share, compared to $40.1 million or $0.99 per diluted share
    for the first quarter of 2012. The increased AFFO in the first quarter
    of 2013 as compared to the same quarter in 2012 was primarily due to
    income from the properties we acquired in our Merger with CPA(R):15
    on September 28, 2012, partially offset by the cessation of asset
    management revenue received from CPA(R):15 after the Merger was
    completed. Per share data for the 2013 period also reflects the
    issuance of 28.2 million shares in connection with the Merger to the
    stockholders of CPA(R):15. Further information concerning AFFO, a
    non-GAAP supplemental performance metric, is presented in the
    accompanying tables and related notes.
    
    
--  Total revenues net of reimbursed expenses for the first quarter of
    2013 were $101.4 million, compared to $49.6 million for the first
    quarter of 2012. Reimbursed expenses are excluded from total revenues
    because they have no impact on net income.
    
    
--  Net Income for the first quarter of 2013 was $14.2 million, compared
    to $12.3 million for the same period in 2012.
    
    
--  For the quarter ended March 31, 2013, we received approximately $14.7
    million in cash distributions from our equity ownership in the
    CPA(R) REITs including $7.9 million in Available Cash distributions
    related to our special general partnership interests in the CPA(R)
    REITs.

  
W. P. CAREY OWNED PORTFOLIO UPDATE 


 
--  In January 2013, W. P. Carey completed a $72 million sale-leaseback
    with Kraft Foods Group for its corporate headquarters, located in
    Northfield, Illinois.
    
    
--  In April 2013, W. P. Carey acquired the main European distribution
    center of the Tommy Hilfiger Group for approximately EUR 30 million
    ($39 million). The facility is located in Vanlo, Netherlands and is
    subject to an existing net lease with Tommy Hilfiger Europe B.V.,
    which has been owned since 2010 by PVH Corp, one of the world's
    largest apparel companies.
    
    
--  The W. P. Carey owned portfolio currently consists of 422 leased
    properties comprising 39 million square feet leased to approximately
    124 corporate tenants. The average lease term of the portfolio is 8.8
    years and the occupancy rate is approximately 98.8%.

  
W. P. CAREY MANAGED PORTFOLIO UPDATE 


 
--  W. P. Carey is the advisor to the CPA(R) REITs and CWI, which had
    aggregate real estate assets of $7.9 billion, cash of approximately
    $800 million and total assets of $8.6 billion as of March 31, 2013.
    The average occupancy rate for the 83.2 million square feet owned by
    the CPA(R) REITs was approximately 98.5%.

  
CPA(R):17 - GLOBAL ACTIVITY  


 
--  We completed three transactions on behalf of CPA(R):17 - Global
    during the first quarter of 2013, including two sale-leaseback
    transactions totaling $26 million and, separately, a $39 million
    build-to-suit transaction for an existing tenant, Harbor Freight
    Tools.

  
CAREY WATERMARK INVESTORS ACTIVITY  


 
--  From the beginning of its initial public offering through April 30,
    2013, our lodging-focused non-traded REIT offering has raised
    approximately $265 million.
    
--  During the first quarter of 2013, Carey Watermark invested in six
    hotels for a total of approximately $125 million.

  
DIVIDENDS 


 
--  The W. P. Carey Board of Directors raised the quarterly cash dividend
    to $0.82 per share for the first quarter of 2013. This represents a
    24% increase from the fourth quarter of 2012. The dividend -- our 48th
    consecutive quarterly increase -- was paid on April 15, 2013 to
    stockholders of record as of March 28, 2013.

  
W. P. Carey President and CEO Trevor Bond, noted, "We are very pleased
with our first quarter results, which continue to demonstrate the
benefits of our merger with CPA(R):15 and conversion to a REIT. The
significant increase in our real estate under ownership and resulting
AFFO growth enabled us to raise our dividend by 24%, as compared with
the previous quarter. As we have for four decades, we will continue
to focus our activities on identifying net lease assets that support
our strategy of generating stable cash flows for investors." 
Conference Call and Audio Webcast Scheduled for 11:00 AM (ET) 
Please call at least 10 minutes prior to call to register. 
Time: Tuesday, May 7, 2013 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: 10027451
 Replay available until June
15, 2013 at 9:00 AM (ET). 
W. P. Carey Inc.
 Celebrating its 40th anniversary, W. P. Carey Inc.
is a publicly traded REIT (NYSE: WPC) that provides long-term
sale-leaseback and build-to-suit financing for companies worldwide
and owns and manages an investment portfolio totaling approximately
$15.2 billion. The largest owner/manager of net lease assets, WPC's
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. Our portfolio of long-term
leases with creditworthy tenants has an established history of
generating stable cash flows that have enabled the Company to deliver
consistent dividend income to investors for nearly four decades.
www.wpcarey.com 
This press release contains forward-looking statements within the
meaning of the Federal securities laws. Examples of such
forward-looking statements include, but are not limited to, the
statements made by Mr. Bond. A number of factors could cause W. P.
Carey'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 W.
P. Carey, reference is made to W. P. Carey's filings with the
Securities and Exchange Commission. 


 
                                                                            
                              W. P. CAREY INC.                              
                                                                            
                      Financial Highlights (Unaudited)                      
                  (in thousands, except per share amounts)                  

 
These financial highlights include the non-GAAP financial measure,
funds from operations -- as adjusted ("AFFO"). A description of this
non-GAAP financial measure and a reconciliation to the most directly
comparable GAAP measure is provided on the following pages. 


 
                                                                            
                                                       Three Months Ended   
                                                           March 31,        
                                                   -------------------------
                                                       2013         2012    
                                                   ------------ ------------
Net income                                         $     14,181 $     12,290
                                                   ============ ============
                                                                            
AFFO from real estate ownership (a)                $     62,956 $     28,833
AFFO from investment management                           9,299       11,236
                                                   ------------ ------------
Total AFFO                                         $     72,255 $     40,069
                                                   ============ ============
                                                                            
Per Share (Diluted)                                                         
  Net income                                       $       0.20 $       0.30
                                                   ============ ============
                                                                            
  AFFO from real estate ownership (a)              $       0.90 $       0.71
  AFFO from investment management                          0.13         0.28
                                                   ------------ ------------
  Total AFFO                                       $       1.03 $       0.99
                                                   ============ ============
                                                                            
(a) Effective April 1, 2012, we include distributions of Available Cash     
received from the operating partnerships of the Managed REITs and deferred  
revenue earned from our special member interest in CPA(R):16 - Global's       
operating partnership in our Real Estate Ownership segment. Results of      
operations for the prior period have been reclassified to conform to the    
current period presentation.                                                
                                                                            

 
                                                                            
                              W. P. CAREY INC.                              
                                                                            
                  Consolidated Balance Sheets (Unaudited)                   
                               (in thousands)                               
                                                                            
                                                 March 31,     December 31, 
                                                    2013           2012     
                                               -------------  ------------- 
Assets                                                                      
Investments in real estate:                                                 
  Real estate, at cost                         $   2,373,912  $   2,334,488 
  Operating real estate, at cost                      98,690         99,703 
  Accumulated depreciation                          (150,207)      (136,068)
                                               -------------  ------------- 
Net investments in properties                      2,322,395      2,298,123 
Net investments in direct financing leases           364,078        376,005 
Assets held for sale                                   1,505          1,445 
Equity investments in real estate and the                                   
 Managed REITs                                       564,092        565,626 
                                               -------------  ------------- 
Net investments in real estate                     3,252,070      3,241,199 
Cash                                                 111,564        123,904 
Due from affiliates                                   34,625         36,002 
Goodwill                                             328,474        329,132 
In place lease, net                                  468,132        447,278 
Above-market rent, net                               267,845        279,885 
Other intangible assets, net                          10,484         10,200 
Other assets, net                                    136,420        141,442 
                                               -------------  ------------- 
    Total assets                               $   4,609,614  $   4,609,042 
                                               =============  ============= 
                                                                            
Liabilities and Equity                                                      
Liabilities:                                                                
Non-recourse debt                              $   1,695,335  $   1,715,397 
Senior credit facility                               298,000        253,000 
Accounts payable, accrued expenses and other                                
 liabilities                                         317,520        265,132 
Income taxes, net                                     20,847         24,959 
Distributions payable                                 57,128         45,700 
                                               -------------  ------------- 
    Total liabilities                              2,388,830      2,304,188 
                                               -------------  ------------- 
Redeemable noncontrolling interest                     7,404          7,531 
                                               -------------  ------------- 
Redeemable securities - related party                      -         40,000 
                                               -------------  ------------- 
                                                                            
Equity:                                                                     
W. P. Carey stockholders' equity:                                           
Common stock                                              69             69 
Preferred stock (None issued)                              -              - 
Additional paid-in capital                         2,184,387      2,175,820 
Distributions in excess of accumulated                                      
 earnings                                           (218,191)      (172,182)
Deferred compensation obligation                      13,411          8,358 
Accumulated other comprehensive loss                  (9,414)        (4,649)
Less, treasury stock at cost                         (20,270)       (20,270)
                                               -------------  ------------- 
    Total W. P. Carey stockholders' equity         1,949,992      1,987,146 
Noncontrolling interests                             263,388        270,177 
                                               -------------  ------------- 
    Total equity                                   2,213,380      2,257,323 
                                               -------------  ------------- 
    Total liabilities and equity               $   4,609,614  $   4,609,042 
                                               =============  ============= 
                                                                            
                                                                            
                              W. P. CAREY INC.                              
                                                                            
               Consolidated Statements of Income (Unaudited)                
             (in thousands, except share and per share amounts)             
                                                                            
                                                     Three Months Ended     
                                                          March 31,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
Revenues                                                                    
  Lease revenues:                                                           
    Rental income                                $     65,785  $     14,652 
    Interest income from direct financing leases        9,512         2,126 
                                                 ------------  ------------ 
  Total lease revenues                                 75,297        16,778 
  Asset management revenue from affiliates             10,015        15,602 
  Structuring revenue from affiliates                   6,342         7,638 
  Dealer manager fees                                   1,223         3,787 
  Reimbursed costs from affiliates                     11,968        18,737 
  Other real estate income                              8,541         5,772 
                                                 ------------  ------------ 
                                                      113,386        68,314 
                                                 ------------  ------------ 
Operating Expenses                                                          
  General and administrative                           28,973        26,909 
  Reimbursable costs                                   11,968        18,737 
  Depreciation and amortization                        30,876         6,463 
  Property expenses                                     5,152         2,072 
  Other real estate expenses                            2,734         2,499 
  Impairment charge                                     3,279             - 
                                                 ------------  ------------ 
                                                       82,982        56,680 
                                                 ------------  ------------ 
Other Income and Expenses                                                   
  Other interest income                                   370           503 
  Net income from equity investments in real                                
   estate and the Managed REITs                        10,656        13,986 
  Other income and (expenses)                           1,091           306 
  Interest expense                                    (26,906)       (7,280)
                                                 ------------  ------------ 
                                                      (14,789)        7,515 
                                                 ------------  ------------ 
  Income from continuing operations before                                  
   income taxes                                        15,615        19,149 
  Benefit from (provision for) income taxes             1,233        (1,695)
                                                 ------------  ------------ 
  Income from continuing operations                    16,848        17,454 
                                                 ------------  ------------ 
Discontinued Operations                                                     
  (Loss) income from operations of discontinued                             
   properties                                            (148)          120 
  Loss on sale of real estate                            (931)         (181)
  Gain on extinguishment of debt                           70             - 
  Impairment charge                                         -        (5,724)
                                                 ------------  ------------ 
  Loss from discontinued operations, net of tax        (1,009)       (5,785)
                                                 ------------  ------------ 
Net Income                                             15,839        11,669 
  Net (income) loss attributable to                                         
   noncontrolling interests                            (1,708)          578 
  Less: Net income attributable to redeemable                               
   noncontrolling interest                                 50            43 
                                                 ------------  ------------ 
Net Income Attributable to W. P. Carey           $     14,181  $     12,290 
                                                 ============  ============ 
                                                                            
Basic Earnings Per Share                                                    
  Income from continuing operations attributable                            
   to W. P. Carey                                $       0.21  $       0.44 
  Loss from discontinued operations attributable                            
   to W. P. Carey                                       (0.01)        (0.14)
                                                 ------------  ------------ 
  Net income attributable to W. P. Carey         $       0.20  $       0.30 
                                                 ============  ============ 
                                                                            
Diluted Earnings Per Share                                                  
  Income from continuing operations attributable                            
   to W. P. Carey                                $       0.21  $       0.44 
  Loss from discontinued operations attributable                            
   to W. P. Carey                                       (0.01)        (0.14)
                                                 ------------  ------------ 
  Net income attributable to W. P. Carey         $       0.20  $       0.30 
                                                 ============  ============ 
                                                                            
Weighted Average Shares Outstanding                                         
  Basic                                            68,967,209    40,037,496 
                                                 ============  ============ 
  Diluted                                          69,975,293    40,487,652 
                                                 ============  ============ 
                                                                            
Amounts Attributable to W. P. Carey                                         
  Income from continuing operations, net of tax  $     15,190  $     18,075 
  Loss from discontinued operations, net of tax        (1,009)       (5,785)
                                                 ------------  ------------ 
  Net income attributable to W. P. Carey         $     14,181  $     12,290 
                                                 ============  ============ 
                                                                            
                              W. P. CAREY INC.                              
                                                                            
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,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
Real Estate Ownership                                                       
Net income from real estate ownership                                       
 attributable to W. P. Carey (a)                 $     16,692  $      9,093 
                                                 ------------  ------------ 
  Adjustments:                                                              
    Depreciation and amortization of real                                   
     property                                          29,687         6,147 
    Impairment charges                                  3,279         5,724 
    Loss (gain) on sale of real estate, net               931           181 
    Proportionate share of adjustments to equity                            
     in net income of partially-owned entities                              
     to arrive at FFO                                   3,154         1,040 
    Proportionate share of adjustments for                                  
     noncontrolling interests to arrive at FFO         (4,267)         (434)
                                                 ------------  ------------ 
  Total adjustments                                    32,784        12,658 
                                                 ------------  ------------ 
FFO (as defined by NAREIT) - Real Estate                                    
 Ownership                                             49,476        21,751 
                                                 ------------  ------------ 
  Adjustments:                                                              
    Loss on extinguishment of debt                         74             - 
    Other gains, net                                     (270)            - 
    Other depreciation, amortization and non-                               
     cash charges                                         800          (211)
    Stock-based compensation                              174             - 
    Deferred tax expense                               (1,025)         (652)
    Realized losses on foreign currency,                                    
     derivatives and other (b)                             52             - 
    Amortization of deferred financing costs              511           464 
    Straight-line and other rent adjustments           (2,169)       (1,115)
    Above- and below-market rent intangible                                 
     lease amortization, net (b)                        7,256             - 
    Merger expenses                                       111         2,103 
    Proportionate share of adjustments to equity                            
     in net income of partially-owned entities                              
     to arrive at AFFO                                    278          (413)
    AFFO adjustments to equity earnings from                                
     equity investments                                 9,249         6,926 
    Proportionate share of adjustments for                                  
     noncontrolling interests to arrive at AFFO        (1,561)          (20)
                                                 ------------  ------------ 
  Total adjustments                                    13,480         7,082 
                                                 ------------  ------------ 
AFFO - Real Estate Ownership                     $     62,956  $     28,833 
                                                 ============  ============ 
                                                                            
Investment Management                                                       
Net (loss) income from investment management                                
 attributable to W. P. Carey (a)                 $     (2,511) $      3,197 
                                                 ------------  ------------ 
FFO (as defined by NAREIT) - Investment                                     
 Management                                      $     (2,511) $      3,197 
                                                 ------------  ------------ 
  Adjustments:                                                              
    Other depreciation, amortization and non-                               
     cash charges                                         262           258 
    Stock-based compensation                            8,975         5,260 
    Deferred tax expense                                2,253         2,236 
    Realized gains on foreign currency                      2             - 
    Amortization of deferred financing costs              318           285 
                                                 ------------  ------------ 
  Total adjustments                                    11,810         8,039 
                                                 ------------  ------------ 
AFFO - Investment Management                     $      9,299  $     11,236 
                                                 ============  ============ 
                                                                            
Total Company                                                               
FFO (as defined by NAREIT)                       $     46,965  $     24,948 
                                                 ============  ============ 
FFO (as defined by NAREIT) per diluted share     $       0.67  $       0.62 
                                                 ============  ============ 
AFFO                                             $     72,255  $     40,069 
                                                 ============  ============ 
AFFO per diluted share                           $       1.03  $       0.99 
                                                 ============  ============ 
Diluted weighted average shares outstanding        69,975,293    40,487,652 
                                                 ============  ============ 
                                                                            
(a) Effective April 1, 2012, we include distributions of Available Cash     
received from the operating partnerships of the Managed REITs and deferred  
revenue earned from our special member interest in CPA(R):16 - Global's       
operating partnership in our Real Estate Ownership segment. Results of      
operations for the prior period have been reclassified to conform to the    
current period presentation.                                                
(b) These adjustments are significant and recurring subsequent to the Merger
and were not included in the AFFO calculation for the three months ended    
March 31, 2012.                                                             

 
Non-GAAP Financial Disclosures 
Funds from Operations ("FFO") is a non-GAAP measure defined by the
National Association of Real Estate Investment Trusts ("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. Additionally, we exclude expenses related to the Merger which
are considered non-recurring, and realized gains/losses on foreign
exchange and derivatives, 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. 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, 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. 
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. 
COMPANY CONTACT: 
Kristin Brown 
W. P. Carey Inc. 
212-492-8989 
kbrown@wpcarey.com  
PRESS CONTACTS:
Cheryl Sanclemente 
W. P. Carey Inc. 
212-492-8995 
csanclemente@wpcarey.com  
Guy Lawrence
Ross & Lawrence
212-308-3333
gblawrence@rosslawpr.com