2012-11-08 15:29:15 -
NEW YORK, NY -- (Marketwire) -- 11/08/12 -- W. P. Carey Inc. (NYSE: WPC), a real estate investment trust ("REIT"), today reported financial results for the third quarter ended September 30, 2012. Results do not fully reflect the impact of the merger with its affiliate, Corporate Property Associates 15 Incorporated ("CPA®:15"), which closed on September 28, 2012. Results for the combined companies can be accessed at http://ir.wpcarey.com/Cache/c15118855.html :
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QUARTERLY RESULTS
- Funds from operations -- as adjusted (AFFO) for the third quarter of 2012 decreased compared to the third quarter of 2011, to $33.9 million or $0.82 per diluted share from $41.6 million or $1.03 per diluted share, respectively. AFFO for the nine months ended September 30, 2012 was $101.8 million or $2.48 per diluted share, compared to $153.6 million or $3.80 per diluted share for the comparable period in 2011. The higher levels in the 2011 periods were primarily due to $52.5 million of revenues earned from the merger of two of our managed CPA® REITS in May 2011.
- Cash flow from operating activities for the nine months ended September 30, 2012 was $31.7 million compared to $62.7 million for the prior year period.
- Total revenues net of reimbursed expenses for the third quarter of 2012 was $51.2 million compared to $62.0 million for the third quarter of 2011. Total revenues net of reimbursed expenses for the nine months ended September 30, 2012 was $148.9 million compared to $219.4 million for the prior year period. Reimbursed expenses are excluded from total revenues because they have no impact on net income.
- Total adjusted revenue, or revenue on a pro-rata basis, for the nine months ended September 30, 2012 was $233.5 million compared to $243.9 million for the prior year period.
- Net income attributable to W. P. Carey common stockholders for the third quarter of 2012 was $2.6 million, compared to $25.2 million for the same period in 2011. For the nine months ended September 30, 2012, net income was $46.7 million compared to $130.0 million for the comparable period in 2011.
- We received approximately $8.5 million in cash distributions from our equity ownership in the CPA® REITs for the quarter ended September 30, 2012 compared with $6.1 million for the comparable period in 2011.
- Further information concerning AFFO and total adjusted revenue -- non-GAAP supplemental performance metrics -- is presented in the accompanying tables.
Commenting on the Company's quarterly results, Trevor Bond, President and Chief Executive Officer, noted, "The merger and REIT conversion were the strategic highlights of our third quarter and positively impacted the liquidity in our stock and interest from institutional and individual investors as expected. From a results perspective, underscoring the cyclicality of the incentive fees we earn through fund liquidations and the structuring revenues we earn through new investments, our headline numbers are off from last year, primarily because we earned a $52 million fee in 2011 following the merger of CPA®:14 and CPA®:16 - Global and because investment volume has been lighter so far this year compared to the same period last year. That said, the pipeline going into the fourth quarter is strong, although we know that we can't count on a deal until it's closed, of course. More importantly, the figures by which we measure the performance of our core business, which are set forth in the supplemental information package that we filed today, demonstrate continued stability and remain in line with growth expectations, especially when one looks at the pro forma year-to-date performance of the combined companies. We look forward to breaking those numbers down in more detail for our investors on today's earnings call."
CONVERSION TO REIT AND MERGER WITH CPA®:15
- W. P. Carey's conversion to a REIT and merger with CPA®:15 closed on September 28, 2012 and W. P. Carey Inc. commenced trading on the New York Stock Exchange as a REIT effective October 1, 2012.
- As a result of our conversion to REIT status, W. P. Carey was immediately eligible for inclusion in the FTSE NAREIT All REITs index and was added to the MSCI US REIT and MSCI Mid Cap 450 Indices on October 15, 2012.
- Unaudited combined company AFFO for the nine months ended September 30, 2012 would have been $2.78 per share.
W. P. CAREY OWNED PORTFOLIO UPDATE
- In the third quarter of 2012, W. P. Carey acquired five retail stores leased to Walgreen Co. The properties, comprising a total of approximately 74,000 square feet, are located in Virginia Beach, Virginia; Florence, Alabama; Snellville, Georgia; Concord, North Carolina; and Rockport, Texas. The purchase price was approximately $25 million.
- During the third quarter, W. P. Carey secured approximately $42 million represented refinancing of maturing debt on three properties; interest rates on these re-financings averaged more than 190 basis points below the rates on existing financings. Additionally, financing of properties used primarily to acquire a joint venture interest from an unrelated third party was $140 million.
- The W. P. Carey owned portfolio currently consists of 430 properties comprising 39 million square feet leased to more than 130 corporate tenants. The average lease term of the portfolio has increased to 9.1 years and the occupancy rate is approximately 98.4%.
ASSET MANAGEMENT UPDATE
- W. P. Carey is the advisor to the CPA® REITs and CWI, which had aggregate real estate assets of $7.3 billion and total assets of $7.8 billion as of September 30, 2012.
- The average occupancy rate for the 81 million square feet owned by the CPA® REITs was approximately 97.9%.
- The W. P. Carey Group's assets under ownership and management total approximately $13.3 billion as of September 30, 2012.
CPA®:17 - GLOBAL ACTIVITY
- We have raised more than $2.6 billion on behalf of CPA®:17 - Global since beginning fundraising in December 2007.
- Investment volume for CPA®:17 - Global in the third quarter of 2012 was approximately $173.7 million. This includes acquisitions of an automotive dealership portfolio of $66 million, an industrial headquarters facility located in Avon, Ohio leased to Bearing Technologies, LLC, two for-profit education facilities located in Savannah, Georgia and Montgomery, Alabama, and a corporate headquarters building in Warrenville, Illinois, as well as financing for the construction of an industrial warehouse located in Zary, Poland.
CAREY WATERMARK INVESTORS ACTIVITY
- From the beginning of its initial public offering through November 6, 2012, we have raised approximately $130 million on behalf of Carey Watermark Investors ("CWI"), our lodging-focused non-traded REIT offering and invested approximately $128 million.
DISTRIBUTIONS
- Our Board of Directors raised the quarterly cash distribution to $0.650 per share for the third quarter of 2012. The distribution -- our 46th consecutive quarterly increase -- represented a 15% increase and was paid on October 16, 2012 to shareholders of record as of October 2, 2012.
CONFERENCE CALL & WEBCAST
Please call at least 10 minutes prior to call to register.
Time: Thursday, November 8, 2012 at 11:00 AM (ET)
Call-in Number: 800-860-2442
(International) +1-412-858-4600
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Replay Available until November 22, 2012 at 9:00 AM (ET).
W. P. Carey Inc.
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 manages an investment portfolio of approximately $13.3 billion. W. P. Carey Inc. is the successor to W. P. Carey & Co. LLC, which had its origins in 1973. 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 and rising dividend income to investors for nearly four decades. www.wpcarey.com :
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Individuals interested in receiving future updates on W. P. Carey via e-mail can register at www.wpcarey.com/alerts :
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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 the Company's actual results, performance or achievement to differ materially from those anticipated. Among those risks, trends and uncertainties are the general economic climate; the supply of and demand for office and industrial properties; interest rate levels; the availability of financing; and other risks associated with the acquisition and ownership of properties, including risks that the tenants will not pay rent, or that costs may be greater than anticipated. For further information on factors that could impact the Company, reference is made to the Company's filings with the Securities and Exchange Commission.
W. P. CAREY INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except share and per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
Revenues
Asset management
revenue $ 15,850 $ 14,840 $ 47,088 $ 51,279
Structuring revenue 8,316 21,221 19,576 42,901
Incentive, termination
and subordinated
disposition revenue - - - 52,515
Wholesaling revenue 4,012 2,586 11,878 8,788
Reimbursed costs from
affiliates 19,879 14,707 59,100 49,485
Lease revenues 16,714 17,001 51,265 46,682
Other real estate
income 6,265 6,303 19,089 17,212
----------- ----------- ----------- -----------
71,036 76,658 207,996 268,862
----------- ----------- ----------- -----------
Operating Expenses
General and
administrative (54,826) (25,187) (108,317) (71,095)
Reimbursable costs (19,879) (14,707) (59,100) (49,485)
Depreciation and
amortization (6,571) (6,323) (19,928) (16,552)
Property expenses (2,426) (3,231) (7,863) (8,547)
Other real estate
expenses (2,600) (2,725) (7,530) (8,224)
Impairment charges (5,535) - (5,535) -
----------- ----------- ----------- -----------
(91,837) (52,173) (208,273) (153,903)
----------- ----------- ----------- -----------
Other Income and
Expenses
Other interest income 252 323 910 1,558
Income from equity
investments in real
estate and the REITs 10,477 16,068 52,808 37,356
Gain on change in
control of interests 20,794 - 20,794 27,859
Other income and
(expenses) 502 (294) 2,026 4,945
Interest expense (7,868) (5,989) (22,459) (15,660)
----------- ----------- ----------- -----------
24,157 10,108 54,079 56,058
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes 3,356 34,593 53,802 171,017
Provision for income
taxes (379) (5,929) (192) (38,526)
----------- ----------- ----------- -----------
Income from continuing
operations 2,977 28,664 53,610 132,491
----------- ----------- ----------- -----------
Discontinued Operations
(Loss) income from
operations of
discontinued
properties (342) 916 (870) 1,146
(Loss) gain on sale of
real estate (409) 612 (888) 1,272
Impairment charges - (4,934) (6,727) (4,975)
----------- ----------- ----------- -----------
Loss from discontinued
operations, net of
tax (751) (3,406) (8,485) (2,557)
----------- ----------- ----------- -----------
Net Income 2,226 25,258 45,125 129,934
Add: Net loss
attributable to
noncontrolling
interests 325 581 1,383 1,295
Less: Net loss
(income) attributable
to redeemable
noncontrolling
interest 37 (637) 146 (1,241)
----------- ----------- ----------- -----------
Net Income Attributable
to W. P. Carey Common
Stockholders $ 2,588 $ 25,202 $ 46,654 $ 129,988
=========== =========== =========== ===========
Basic Earnings Per Share
Income from continuing
operations
attributable to W. P.
Carey common
stockholders $ 0.08 $ 0.70 $ 1.35 $ 3.28
Loss from discontinued
operations
attributable to W. P.
Carey common
stockholders (0.02) (0.08) (0.21) (0.06)
----------- ----------- ----------- -----------
Net income
attributable to W. P.
Carey common
stockholders $ 0.06 $ 0.62 $ 1.14 $ 3.22
=========== =========== =========== ===========
Diluted Earnings Per
Share
Income from continuing
operations
attributable to W. P.
Carey common
stockholders $ 0.08 $ 0.70 $ 1.33 $ 3.25
Loss from discontinued
operations
attributable to W. P.
Carey common
stockholders (0.02) (0.08) (0.21) (0.06)
----------- ----------- ----------- -----------
Net income
attributable to W. P.
Carey common
stockholders $ 0.06 $ 0.62 $ 1.12 $ 3.19
=========== =========== =========== ===========
Weighted Average Shares
Outstanding
Basic 40,366,298 39,861,064 40,398,433 39,794,506
=========== =========== =========== ===========
Diluted 41,127,404 40,404,520 41,029,578 40,424,316
=========== =========== =========== ===========
Amounts Attributable to
W. P. Carey Common
Stockholders
Income from continuing
operations, net of
tax $ 3,339 $ 28,608 $ 55,139 $ 132,545
Loss from discontinued
operations, net of
tax (751) (3,406) (8,485) (2,557)
----------- ----------- ----------- -----------
Net income $ 2,588 $ 25,202 $ 46,654 $ 129,988
=========== =========== =========== ===========
Distributions Declared
Per Common Share $ 0.650 $ 0.560 $ 1.782 $ 1.622
=========== =========== =========== ===========
W. P. CAREY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended
September 30,
--------------------------
2012 2011
------------ ------------
Cash Flows - Operating Activities
Net income $ 45,125 $ 129,934
Adjustments to net income:
Depreciation and amortization, including
intangible assets and deferred financing
costs 22,532 20,160
Income from equity investments in real estate
and the REITs in excess of distributions
received (18,557) (835)
Straight-line rent and financing lease
adjustments (2,229) (2,039)
Amortization of deferred revenue (7,077) (3,932)
Gain on deconsolidation of a subsidiary - (1,008)
Gain on sale of real estate (1,564) (264)
Unrealized gain on foreign currency
transactions and others (17) (79)
Realized loss (gain) on foreign currency
transactions and others 594 (1,134)
Management and disposition income received in
shares of affiliates (21,272) (62,493)
Gain on conversion of shares (15) (3,834)
Gain on change in control of interests (20,794) (27,859)
Impairment charges 12,262 4,975
Stock-based compensation expense 19,560 13,026
Deferred acquisition revenue received 17,017 18,128
Increase in structuring revenue receivable (8,502) (17,732)
(Decrease) increase in income taxes, net (14,885) 5,907
Net changes in other operating assets and
liabilities 9,561 (8,269)
------------ ------------
Net cash provided by operating activities 31,739 62,652
------------ ------------
Cash Flows - Investing Activities
Cash paid to shareholders of CPA®:15 in
connection with the Merger (152,356) -
Cash acquired in connection with the Merger 178,945 -
Distributions received from equity investments
in real estate and the REITs in excess of
equity income 27,241 13,870
Capital contributions to equity investments (377) (2,297)
Purchase of interests in CPA®:16 - Global - (121,315)
Purchases of real estate and equity
investments in real estate (2,679) (24,323)
VAT refunded in connection with acquisitions
of real estate - 5,035
Capital expenditures (2,930) (6,731)
Cash acquired on acquisition of subsidiaries - 57
Proceeds from sale of real estate 32,586 10,998
Proceeds from sale of securities 314 777
Funding of short-term loans to affiliates - (96,000)
Proceeds from repayment of short-term loans to
affiliates - 95,000
Funds placed in escrow (11,716) (5,282)
Funds released from escrow 13,540 2,326
------------ ------------
Net cash provided by (used in) investing
activities 82,568 (127,885)
------------ ------------
Cash Flows - Financing Activities
Distributions paid (69,180) (63,060)
Contributions from noncontrolling interests 2,319 2,341
Distributions paid to noncontrolling interests (1,866) (5,310)
Purchase of noncontrolling interest - (7,502)
Purchase of treasury stock from related party (25,000) -
Scheduled payments of mortgage principal (12,455) (22,893)
Proceeds from mortgage financing 1,250 20,848
Proceeds from senior credit facility 215,000 251,410
Repayments of senior credit facility (30,000) (140,000)
Payment of financing costs (1,687) (1,562)
Proceeds from issuance of shares 5,964 1,034
Windfall tax benefit associated with stock-
based compensation awards 8,865 2,051
------------ ------------
Net cash provided by financing activities 93,210 37,357
------------ ------------
Change in Cash and Cash Equivalents During the
Period
Effect of exchange rate changes on cash (70) 278
------------ ------------
Net increase (decrease) in cash and cash
equivalents 207,447 (27,598)
Cash and cash equivalents, beginning of period 29,297 64,693
------------ ------------
Cash and cash equivalents, end of period $ 236,744 $ 37,095
============ ============
W. P. CAREY INC.
Financial Highlights (Unaudited)
(in thousands, except per share amounts)
These financial highlights include non-GAAP financial measures, including earnings before interest, taxes, depreciation and amortization ("EBITDA") and funds from operations -- as adjusted ("AFFO"). A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures is provided on the following pages.
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2012 2011 2012 2011
---------- ---------- ---------- ----------
EBITDA (a)
Investment management $ 1,465 $ 15,006 $ 7,928 $ 90,074
Real estate ownership 16,132 29,646 82,282 114,644
---------- ---------- ---------- ----------
Total $ 17,597 $ 44,652 $ 90,210 $ 204,718
========== ========== ========== ==========
AFFO (a)
Investment management $ (4,513) $ 14,065 $ 6,257 $ 79,084
Real estate ownership 38,432 27,485 95,553 74,559
---------- ---------- ---------- ----------
Total $ 33,919 $ 41,550 $ 101,810 $ 153,643
========== ========== ========== ==========
EBITDA Per Share (Diluted)
(a)
Investment management $ 0.04 $ 0.37 $ 0.19 $ 2.23
Real estate ownership 0.39 0.73 2.01 2.83
---------- ---------- ---------- ----------
Total $ 0.43 $ 1.10 $ 2.20 $ 5.06
========== ========== ========== ==========
AFFO Per Share (Diluted) (a)
Investment management $ (0.11) $ 0.35 $ 0.15 $ 1.96
Real estate ownership 0.93 0.68 2.33 1.84
---------- ---------- ---------- ----------
Total $ 0.82 $ 1.03 $ 2.48 $ 3.80
========== ========== ========== ==========
Distributions declared $ 92,856 $ 42,561
========== ==========
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Non-GAAP Financial Disclosure
EBITDA as disclosed represents earnings before interest, taxes, depreciation and amortization. We believe that EBITDA is a useful supplemental measure to investors and analysts for assessing the performance of our business segments, although it does not represent net income that is computed in accordance with GAAP, because it removes the impact of our capital structure and asset base from our operating results and because it is helpful when comparing our operating performance to that of companies in our industry without regard to such items, which can vary substantially from company to company. Accordingly, EBITDA should not be considered as an alternative to net income as an indicator of our financial performance. EBITDA may not be comparable to similarly titled measures of other companies. Therefore, we use EBITDA as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies, and determine executive compensation.
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Non-GAAP Financial Disclosure
FFO is a non-GAAP measure defined by 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. 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.
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COMPANY CONTACT:
Cheryl Sanclemente
W. P. Carey Inc.
212-492-8995
Email Contact :
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PRESS CONTACT:
Guy Lawrence
Ross & Lawrence
212-308-3333
Email Contact :
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