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 email@example.com firstname.lastname@example.org email@example.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
W. P. Carey Announces Second Quarter 2013 Financial Results
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