W. P. Carey Announces Second Quarter 2013 Financial Results

         W. P. Carey Announces Second Quarter 2013 Financial Results

PR Newswire

NEW YORK, Aug. 6, 2013

NEW YORK, Aug. 6, 2013 /PRNewswire/ --W.P. Carey Inc. (NYSE: WPC), a real
estate investment trust ("REIT"), today reported financial results for the
second quarter ended June30, 2013.

(Logo: http://photos.prnewswire.com/prnh/20130604/NY25517LOGO-b)

During the second quarter of 2013, the Company:

  oReported Funds from operations—as adjusted ("AFFO") of $1.05 per diluted
    share
  oAcquired three properties for approximately $113 million
  oStructured $305 million of investments on behalf of the Managed REITs
  oRaised its annualized dividend rate to $3.36 per share, WPC's 49^th
    consecutive quarterly increase

Subsequent to the second quarter, the Company:

  oAnnounced a merger agreement with Corporate Property Associates 16 –
    Global Incorporated ("CPA^®:16 – Global")
  oStructured $196 million of investments on behalf of the Managed REITs
    through August 1, 2013
  oEntered into a new unsecured term loan agreement of $300 million and used
    the proceeds primarily to repay the $250 million outstanding on its
    existing Revolving Credit Facility on July 31, 2013

QUARTERLY RESULTS

  oAFFO for the second quarter of 2013 was $72.6 million or $1.05 per diluted
    share, compared to $27.8 million or $0.68 per diluted share for the second
    quarter of 2012. AFFO for the six months ended June30, 2013 was $144.9
    million or $2.07 per diluted share, compared to $67.9 million or $1.66 per
    diluted share for the comparable period in 2012. The increased AFFO in the
    three and six months ended June30, 2013 as compared to the same periods
    in 2012 was primarily due to income from the properties we acquired in our
    merger with CPA^®:15 on September 28, 2012 (the "CPA^®:15 Merger")
    partially offset by the cessation of asset management revenue received
    from CPA^®:15 after the CPA^®:15 Merger was completed. Per share data for
    the 2013 periods also reflects the issuance of 28.2 million shares in
    connection with the CPA^®:15 Merger to the stockholders of CPA^®:15.
    Further information concerning AFFO, a non-GAAP supplemental performance
    metric, is presented in the accompanying tables and related notes.
  oTotal revenues net of reimbursed expenses for the second quarter of 2013
    were $103.6 million, compared to $46.6 million for the second quarter of
    2012. Total revenues net of reimbursed expenses for the six months ended
    June30, 2013 were $204.1 million, compared to $96.2 million for the
    comparable period in 2012. Reimbursed expenses are excluded from total
    revenues because they have no impact on net income.
  oNet Income for the second quarter of 2013 was $43.2 million, compared to
    $31.8 million for the same period in 2012. Net Income for the six months
    ended June30, 2013 was $57.3 million, compared to $44.1 million for the
    prior year period.
  oFor the quarter ended June30, 2013, we received approximately $15.6
    million in cash distributions from our equity ownership in the CPA^® REITs
    including $8.7 million in Available Cash distributions related to our
    special general partnership interests in the CPA^® REITs.

Proposed Merger with CPA^®:16 ^ – GLOBAL

  oOn July 25, 2013, we announced that our Board of Directors and the Board
    of Directors of our publicly held, non-traded REIT affiliate CPA^®:16 –
    Global, had each unanimously approved a merger agreement pursuant to which
    CPA^®:16 – Global will merge with and into a subsidiary of W. P. Carey in
    a transaction valued at approximately $4.0 billion, including debt.
  oFollowing the proposed merger, the combined company is expected to have an
    equity market capitalization of approximately $6.5 billion and a total
    enterprise value of approximately $10.1 billion. The combined portfolio
    will consist of more than 700 properties with 86 million square feet of
    corporate real estate leased to 231 companies around the world.
  oThe proposed merger is subject to SEC review and the approvals of the
    stockholders of each of W. P. Carey and CPA^®:16 – Global. CPA^®:16 –
    Global has a 30-day go-shop period. We currently expect that the closing
    will occur in the first quarter of 2014, although there can be no
    assurance that the transaction will close at such time, if at all.

W.P. CAREY OWNED PORTFOLIO UPDATE

  oIn April 2013, W.P. Carey acquired the main European distribution center
    of the Tommy Hilfiger Group for approximately €27 million ($35 million).
    The 473,437 square foot facility is located in Venlo, 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.
  oIn June 2013, W.P. Carey acquired the research and development ("R&D")
    and class-A office facilities of Cargotec Corporation for approximately
    €40 million ($52 million). The 183,567 square foot facility is located in
    Tampere, Finland and is subject to a 20-year net lease with Cargotec.
    Cargotec is a Finnish public company that develops and manufactures
    cargo-handling machinery for ships, ports, terminals and local
    distribution. It operates in 120 countries, employs approximately 10,000
    personnel globally and generated more than €3.3 billion ($4.3 billion) in
    revenues in 2012.
  oIn June 2013, W.P. Carey acquired the corporate headquarters of the
    Arbella Insurance Group for approximately $26 million. Located in Quincy,
    Massachusetts, the 132,160 square foot office facility is subject to an
    existing 14-year net lease with the company.
  oDuring the second quarter of 2013, W. P. Carey disposed of four properties
    for total proceeds of $38 million.
  oThe W.P. Carey owned portfolio currently consists of 423 leased
    properties comprising 39.5 million square feet ^ leased to approximately
    123 corporate tenants. The average lease term of the portfolio is 8.8
    years and the occupancy rate is approximately 98.9%.

W.P. CAREY MANAGED PORTFOLIO UPDATE

  oW.P. Carey is the advisor to the CPA^® REITs and Carey Watermark
    Investors Incorporated ("CWI"), which had aggregate real estate assets of
    $6.4 billion, cash of approximately $0.8 billion and total assets of $8.8
    billion as of June30, 2013. The average occupancy rate for the 77.3
    million square feet owned by the CPA^® REITs was approximately 98.8%.

  CPA^®:17 – GLOBAL ACTIVITY

     oDuring the second quarter of 2013, we structured $113 million of new
       investments on behalf of CPA^®:17 – Global, including two self-storage
       transactions totaling $87 million.
     oIn July 2013, we completed two sale-leaseback transactions totaling €95
       million ($123 million) on behalf of CPA^®:17 – Global, including an H&M
       Hennes & Mauritz AB logistics facility in Poznan, Poland for €64
       million ($83 million) and the new European R&D center for Royal
       FreislandCampina NV in Wageningen, the Netherlands for €31 million ($40
       million).

  CPA^®:18 – GLOBAL ACTIVITY

     oIn May 2013, we announced that the registration statement for CPA^®:18
       – Global had been declared effective by the Securities and Exchange
       Commission ("SEC") and that CPA^®:18 - Global had commenced a capital
       raise of up to $1 billion.

  CAREY WATERMARK INVESTORS ACTIVITY

     oFrom the beginning of its initial public offering through June 30,
       2013, CWI, our lodging-focused non-traded REIT offering, has raised
       approximately $366 million.
     oDuring the second quarter of 2013, CWI invested in two hotels for a
       total of approximately $198 million. Investments included the 247-room
       Hutton Hotel in Nashville, TN for a total investment of $77 million,
       which includes $4 million of planned capital improvements, and the
       226-room Holiday Inn^® Manhattan 6^th Avenue for a total investment of
       $121 million, which includes $8 million of planned capital
       improvements.
     oIn July 2013, CWI acquired a joint venture interest in the 226-room
       Fairmont Sonoma Mission Inn & Spa from Fairmont Hotels & Resorts. CWI's
       interest in the joint venture, which represents a total investment of
       $97 million, is 75% percent while Fairmont will retain a 25% ownership
       interest. Also in July 2013, CWI sold its 49% interest in a joint
       venture owning two hotels located in Long Beach, CA for approximately
       $23 million.

DIVIDENDS

  oThe W.P. Carey Board of Directors raised the quarterly cash dividend to
    $0.84 per share for the second quarter of 2013. This represents a 2.4%
    increase from the first quarter of 2013 and a 48% increase over the second
    quarter of 2012. The dividend—our 49^th consecutive quarterly increase—was
    paid on July 15, 2013 to stockholders of record as of July 1, 2013.

W. P. Carey President and CEO Trevor Bond, noted, "We are very pleased with
both our second quarter results and the announcement of our proposed merger
with CPA^®:16 – Global, another milestone transaction which will significantly
increase our real estate assets under ownership and reinforce our status as a
leading global net-lease REIT. As we have for four decades, we will continue
to focus on our strategy of disciplined investing in order to generate stable
and growing cash flows and dividend income for our 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, August 6, 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: 10031287
Replay available until September 22, 2013 at 9:00 AM (ET).

W.P. Carey Inc.
Celebrating its 40^th 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 $15.4 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. Its 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.

COMPANY CONTACT:    PRESS CONTACTS:
Kristin Brown       Cheryl Sanclemente        Guy Lawrence
W. P. Carey Inc.    W. P. Carey Inc.          Ross & Lawrence
212-492-8989        212-492-8995              212-308-3333
kbrown@wpcarey.com csanclemente@wpcarey.com gblawrence@rosslawpr.com



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 June30,        Six Months Ended June30,
                 2013               2012            2013            2012
Net Income       $    43,167        $    31,777     $    57,348     $  44,067
AFFO from real   $    72,302        $    27,883     $    135,258    $  56,717
estate ownership
AFFO from
investment            336                (62)            9,635         11,175
management
Total AFFO       $    72,638        $    27,821     $    144,893    $  67,892
Per Share
(Diluted)
 Net Income    $    0.62          $    0.77       $    0.81       $  1.06
 AFFO from
real estate      $    1.05          $    0.69       $    1.93       $  1.40
ownership
 AFFO from
investment            -                  (0.01)          0.14          0.26
management
 Total AFFO    $    1.05          $    0.68       $    2.07       $  1.66





W.P. CAREY INC.
Consolidated Balance Sheets (Unaudited)
(in thousands)
                                              June30, 2013  December 31, 2012
Assets
Investments in real estate:
        Real estate, at cost                  $  2,450,868   $    2,334,488
        Operating real estate, at cost           98,756           99,703
        Accumulated depreciation                 (165,009)        (136,068)
Net investments in properties                    2,384,615        2,298,123
Net investments in direct financing leases       360,701          376,005
Assets held for sale                             21,256           1,445
Equity investments in real estate and the        559,361          565,626
Managed REITs
Net investments in real estate                   3,325,933        3,241,199
Cash                                             62,765           123,904
Due from affiliates                              28,670           36,002
Goodwill                                         328,011          329,132
In place lease, net                              465,931          447,278
Above-market rent, net                           269,355          279,885
Other intangible assets, net                     12,256           10,200
Other assets, net                                142,439          141,442
              Total assets                    $  4,635,360   $    4,609,042
Liabilities and Equity
Liabilities:
Non-recourse debt                             $  1,686,155   $    1,715,397
Senior credit facility                           385,000          253,000
Accounts payable, accrued expenses and other     272,595          265,132
liabilities
Income taxes, net                                13,458           24,959
Distributions payable                            58,036           45,700
              Total liabilities                  2,415,244        2,304,188
Redeemable noncontrolling interest               7,082            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                       2,234,450        2,175,820
Distributions in excess of accumulated           (233,107)        (172,182)
earnings
Deferred compensation obligation                 13,411           8,358
Accumulated other comprehensive loss             (2,984)          (4,649)
Less, treasury stock at cost                     (60,270)         (20,270)
              Total W. P. Carey stockholders'    1,951,569        1,987,146
              equity
Noncontrolling interests                         261,465          270,177
              Total equity                       2,213,034        2,257,323
                                                             
              Total liabilities and equity    $  4,635,360        4,609,042
                                                             $





W. P. CAREY INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except share and per share amounts)
                        Three Months Ended June30,  Six Months Ended June30,
                        2013           2012          2013           2012
Revenues
 Lease revenues:
      Rental income     $  66,498      $   14,554    $  131,417     $ 29,188
      Interest income
      from direct          9,412           1,913        18,924        4,038
      financing leases
 Total lease revenues      75,910          16,467       150,341       33,226
 Asset management
 revenue from              10,355          15,636       20,369        31,238
 affiliates
 Structuring revenue       6,422           3,622        12,764        11,260
 from affiliates
 Dealer manager fees       2,320           4,080        3,542         7,867
 Reimbursed costs from     15,467          20,484       27,435        39,221
 affiliates
 Other real estate         8,582           6,810        17,110        12,569
 income
                           119,056         67,099       231,561       135,381
Operating Expenses
 General and               30,250          26,581       59,223        53,491
 administrative
 Reimbursable costs        15,467          20,484       27,435        39,221
 Depreciation and          30,927          6,424        61,454        12,881
 amortization
 Property expenses         5,531           3,025        10,602        5,055
 Other real estate         2,782           2,431        5,515         4,930
 expenses
 Impairment charges        -               -            1,071         -
                           84,957          58,945       165,300       115,578
Other Income and
Expenses
 Other interest income     316             155          686           658
 Net income from equity
 investments in real       32,541          28,345       43,197        42,331
 estate and the Managed
 REITs
 Other income and          1,877           1,216        2,969         1,524
 (expenses)
 Interest expense          (26,912)        (7,128)      (53,706)      (14,408)
                           7,822           22,588       (6,854)       30,105
 Income from continuing
 operations before         41,921          30,742       59,407        49,908
 income taxes
 Benefit from income       1,122           1,882        2,355         187
 taxes
 Income from continuing    43,043          32,624       61,762        50,095
 operations
Discontinued Operations
 Income (loss) from
 operations of             3,118           (93)         3,306         11
 discontinued
 properties
 Gain (loss) on sale of    1,313           (298)        382           (479)
 real estate
 Gain on extinguishment    13              -            84            -
 of debt
 Impairment charges        (1,671)         (1,003)      (3,879)       (6,728)
 Income (loss) from
 discontinued              2,773           (1,394)      (107)         (7,196)
 operations, net of tax
Net Income                 45,816          31,230       61,655        42,899
 Net (income) loss
 attributable to           (2,692)         480          (4,400)       1,058
 noncontrolling
 interests
 Add: Net loss
 attributable to
 redeemable                43              67           93            110
 noncontrolling
 interest
Net Income Attributable                             
to W. P. Carey          $  43,167          31,777       57,348      $ 44,067
                                       $             $
Basic Earnings Per
Share
 Income from continuing
 operations             $  0.59        $   0.82      $  0.83        $ 1.26
 attributable to W. P.
 Carey
 Income (loss) from
 discontinued
 operations                0.04            (0.04)       -             (0.18)
 attributable to W. P.
 Carey
 Net income
 attributable to W. P.  $  0.63        $   0.78      $  0.83        $ 1.08
 Carey
Diluted Earnings Per
Share
 Income from continuing
 operations             $  0.58        $   0.80      $  0.82        $ 1.23
 attributable to
 W.P.Carey
 Income (loss) from
 discontinued
 operations                0.04            (0.03)       (0.01)        (0.17)
 attributable to W. P.
 Carey
 Net income
 attributable to W. P.  $  0.62        $   0.77      $  0.81        $ 1.06
 Carey
Weighted Average Shares
Outstanding
 Basic                  68,406,771     40,047,220    68,776,108     40,218,677
 Diluted                69,493,902     40,757,055    69,870,849     40,828,646
Amounts Attributable to
W. P. Carey
 Income from continuing $  40,419      $   33,171    $  57,506      $ 51,263
 operations, net of tax
 Income (loss) from
 discontinued              2,748           (1,394)      (158)         (7,196)
 operations, net of tax
 Net income
 attributable to W. P.  $  43,167      $   31,777    $  57,348      $ 44,067
 Carey





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 June30,  Six Months Ended June30,
                      2013           2012          2013          2012
Real Estate Ownership
Net income from real
estate ownership      $  43,107      $ 28,367      $ 59,799      $ 37,460
attributable to W. P.
Carey
 Adjustments:
  Depreciation and
  amortization of        30,170        5,673         59,857        11,820
  real property
  Impairment charges     1,671         1,003         4,950         6,728
  Gain on sale of        (981)         (1,686)       (50)          (1,505)
  real estate, net
  Proportionate share
  of adjustments to
  equity in net
  income of              (16,304)      (14,827)      (13,150)      (13,787)

   partially-owned
  entities to arrive
  at FFO
  Proportionate share
  of adjustments for
  noncontrolling         (4,247)       (434)         (8,514)       (868)
  interests

   to arrive at FFO
       Total             10,309        (10,271)      43,093        2,388
       adjustments
FFO (as defined by
NAREIT) - Real Estate    53,416        18,096        102,892       39,848
Ownership
 Adjustments:
  Loss on
  extinguishment of      (141)         -             (67)          -
  debt
  Other gains, net       -             -             (270)         -
  Other depreciation,
  amortization and       (515)         235           285           24
  non-cash charges
  Stock-based            911           -             1,085         -
  compensation
  Deferred tax           (21)          (532)         (1,046)       (1,184)
  expense
  Acquisition            2,909         -             2,909         -
  expenses ^ (a)
  Realized losses on
  foreign currency,      102           542           154           542
  derivatives and
  other ^ (b)
  Amortization of
  deferred financing     549           402           1,060         866
  costs
  Straight-line and
  other rent             (2,277)       (883)         (4,446)       (1,998)
  adjustments
  Above- and
  below-market rent
  intangible lease      7,237         111           14,493        111
  amortization,
  net ^(b)
  Merger expenses        218           2,616         329           4,719
  Proportionate share
  of adjustments to
  equity in net
  income of              279           (366)         557           (779)

   partially-owned
  entities to arrive
  at AFFO
  AFFO adjustments
  to equity earnings     10,718        7,687         19,967        14,613
  from equity
  investments
  Proportionate share
  of adjustments for
  noncontrolling         (1,083)       (25)          (2,644)       (45)
  interests to

   arrive at AFFO
       Total             18,886        9,787         32,366        16,869
       adjustments
AFFO - Real Estate    $  72,302      $ 27,883      $ 135,258     $ 56,717
Ownership
Investment Management
Net income (loss)
from investment
management            $  60          $ 3,410       $ (2,451)     $ 6,607
attributable to
W. P. Carey
FFO (as defined by
NAREIT) - Investment  $  60          $ 3,410       $ (2,451)     $ 6,607
Management
 Adjustments:
  Other depreciation,
  amortization and       253           229           515           488
  other non-cash
  charges
  Stock-based            7,518         4,495         16,493        9,755
  compensation
  Deferred tax           (7,815)       (8,459)       (5,562)       (6,223)
  expense
  Realized gains
  (losses) on foreign    2             (23)          4             (23)
  currency ^ (b)
  Amortization of
  deferred financing     318           286           636           571
  costs
       Total             276           (3,472)       12,086        4,568
       adjustments
AFFO - Investment     $  336         $ (62)        $ 9,635       $ 11,175
Management
Total Company
FFO (as defined by    $  53,476      $ 21,506      $ 100,441     $ 46,455
NAREIT)
FFO (as defined by
NAREIT) per diluted      0.77          0.53          1.44          1.14
share
AFFO                  $  72,638      $ 27,821      $ 144,893     $ 67,892
AFFO per diluted         1.05          0.68          2.07          1.66
share
Diluted weighted
average shares           69,493,902    40,757,055    69,870,849    40,828,646
outstanding

__________

(a)  Prior to the second quarter of 2013, this amount was insignificant and
       therefore not included in the AFFO calculation.
       These adjustments are significant and recurring subsequent to the
(b) Merger and were not included in the AFFO calculation for the three and
       six months ended June 30, 2012.

Non-GAAP Financial Disclosure

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 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 expenses related to the
CPA^®:15 Merger and realized gain/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 and
excluding those items provides investors a view of our portfolio performance
over time and make it more comparable to other REITs which are currently not
engaged in acquisitions and mergers. 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 potentially distorting the 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.

SOURCE W. P. Carey Inc.

Website: http://www.wpcarey.com
 
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