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8-K - FORM 8-K - CORPORATE PROPERTY ASSOCIATES 16 GLOBAL INCc16842e8vk.htm
Exhibit 99.1
(CPA GLOBAL LOGO)
Corporate Property Associates 16 — Global Incorporated
Supplemental Information
As of March 31, 2011
As used in this supplemental package, the terms “the Company,” “we,” “us” and “our” include Corporate Property Associates 16 — Global Incorporated (“CPA®:16”), its consolidated subsidiaries and predecessors, unless otherwise indicated.
Important Note Regarding Non-GAAP Financial Measures
This supplemental package includes non-GAAP measures, including funds from operations (“FFO”), funds from operations — as adjusted (“AFFO”) and adjusted cash flow from operating activities. A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measures are provided in this supplemental package.
Forward-Looking Statements
This supplemental package contains forward-looking statements within the meaning of the Federal securities laws. It is important to note that our actual results could be materially different from those projected in such forward-looking statements. You should exercise caution in relying on forward-looking statements as they involve known and unknown risks, uncertainties and other factors that may materially affect our future results, performance, achievements or transactions. Information on factors which could impact actual results and forward-looking statements contained herein is included in our filings with the Securities and Exchange Commission, including but not limited to our Annual Report on Form 10-K for the year ended December 31, 2010. We do not undertake to revise or update any forward-looking statements.
     
Executive Offices
  Investor Relations
50 Rockefeller Plaza
  Susan C. Hyde
New York, NY 10020
  Managing Director & Director of Investor Relations
Tel: 1-800-WPCAREY or (212) 492-1100
  W. P. Carey & Co. LLC
Fax: (212) 492-8922
  Phone: (212) 492-1151
Web Site Address: www.CPA16GLOBAL.com
   

 

 


 

Corporate Property Associates 16 — Global Incorporated
Reconciliation of Net Income Attributable to CPA
®:16 — Global Shareholders to Funds From Operations — as adjusted (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
                 
    Three months ended March 31,  
    2011     2010  
Net income attributable to CPA®:16 — Global shareholders
  $ 5,402     $ 5,960  
Adjustments:
               
Depreciation and amortization of real property
    15,138       12,126  
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO:
               
Depreciation and amortization of real property
    2,368       2,212  
Loss on sale of real estate
    1        
Proportionate share of adjustments for noncontrolling interests to arrive at FFO
    (5,875 )     (2,790 )
 
           
Total adjustments
    11,632       11,548  
 
           
FFO — as defined by NAREIT
    17,034       17,508  
 
           
Adjustments:
               
Gain on deconsolidation of subsidiary
          (7,082 )
Other depreciation, amortization and non-cash charges
    (845 )     548  
Straight-line and other rent adjustments
    (735 )     337  
Impairment charges
          8,030  
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at AFFO:
               
Other depreciation, amortization and non-cash charges
    32        
Straight-line and other rent adjustments
    (182 )     (114 )
Proportionate share of adjustments for noncontrolling interests to arrive at AFFO
    914       1,037  
 
           
Total adjustments
    (816 )     2,756  
 
           
AFFO (inclusive of Merger costs totaling $2.9 million in 2011) (a)(b)
  $ 16,218     $ 20,264  
 
           
AFFO per share (c)
  $ 0.15     $ 0.19  
 
           
Weighted average shares outstanding
    126,546,584       123,608,911  
 
           
     
(a)   AFFO for the three months ended March 31, 2011 includes a reduction of $2.9 million as a result of charges incurred in connection with the definitive agreement to merge Corporate Associates 14 Incorporated (“CPA®:14”) with and into us (“the Merger”). Management does not consider these costs to be an ongoing expense of our business when evaluating our operating performance using this supplemental financial measure.
 
(b)   The amount previously furnished for the three months ended March 31, 2010 of $19.9 million have been revised in the table above to correct an inadvertent calculation error.
 
(c)   Numerator for AFFO per share calculation:
                 
AFFO
  $ 16,218     $ 20,264  
Add: Issuance of shares to an affiliate in satisfaction of fees due
    3,031       2,931  
 
           
AFFO numerator in determination of AFFO per share
  $ 19,249     $ 23,195  
 
           

 

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Non-GAAP Financial Disclosure
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, 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 to be 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, real estate 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 for certain non-cash charges, where applicable, such as gains or losses from extinguishment of debt and deconsolidation of subsidiaries, amortization of intangibles, straight-line rents, impairment charges on real estate, allowances for credit losses and unrealized foreign currency exchange gains and losses. We refer to our modified definition of FFO as “Funds from Operations — as Adjusted,” or AFFO, and we employ it as one measure of our operating performance when we formulate corporate goals and evaluate the effectiveness of our strategies. 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.
We believe that AFFO and AFFO per share are useful supplemental measures 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. FFO or AFFO should not be considered as an alternative to net income as an indication of a company’s operating performance or to cash flow from operating activities as a measure of its liquidity, but should be used in conjunction with GAAP net income.

 

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Corporate Property Associates 16 — Global Incorporated
Adjusted Cash Flow from Operating Activities (Unaudited)

(in thousands, except share and per share amounts)
                 
    Three months ended March 31,  
    2011     2010  
Cash flow from operating activities — as reported
  $ 27,399     $ 33,104  
Adjustments:
               
Distributions received from equity investments in real estate in excess of equity income, net (a)
    768       383  
Distributions paid to noncontrolling interests, net (b)
    (2,225 )     (2,042 )
Changes in working capital (c)
    (2,678 )     (1,719 )
 
           
Adjusted cash flow from operating activities (inclusive of Merger costs totaling $2.9 million in 2011) (d) (e)
  $ 23,264     $ 29,726  
 
           
Adjusted cash flow per share
  $ 0.18     $ 0.24  
 
           
 
               
Distributions declared per share
  $ 0.1656     $ 0.1656  
 
           
Payout ratio (distributions per share/adjusted cash flow per share)
    92 %     69 %
 
           
 
               
Weighted average shares outstanding
    126,546,584       123,608,911  
 
           
     
(a)   To the extent we receive distributions in excess of the equity income that we recognize, we include such amounts in our evaluation of cash flow from core operations.
 
(b)   Represents noncontrolling interests’ share of distributions made by ventures that we consolidate in our financial statements.
 
(c)   Timing differences arising from the payment of certain liabilities and the receipt of certain receivables in a period other than that in which the item is recognized in determining net income may distort the actual cash flow that our core operations generate. We adjust our GAAP cash flow provided by operating activities to record such amounts in the period in which the item was actually recognized.
 
(d)   Adjusted cash flow from operating activities for the three months ended March 31, 2011 included a reduction of $2.9 million as a result of charges incurred in connection with the Merger. Management does not consider these costs to be an ongoing cash outflow when evaluating cash flow generated from our core operations using this supplemental financial measure.
 
(e)   During the first quarter of 2011, we made an adjustment to exclude the impact of escrow funds from Adjusted cash flow from operating activities as, more often than not, these funds represent investing and/or financing activities. The amount previously furnished for Adjusted cash flow from operating activities for the three months ended March 31, 2010 of $28.8 million has been revised in the table above to reflect this reclassification.
Non-GAAP Financial Disclosure
Adjusted cash flow from operating activities refers to our cash flow from operating activities (as computed in accordance with GAAP) adjusted, where applicable, primarily to: add cash distributions that we receive from our investments in unconsolidated real estate joint ventures in excess of our equity income; subtract cash distributions that we make to our noncontrolling partners in real estate joint ventures that we consolidate; and eliminate changes in working capital. We hold a number of interests in real estate joint ventures, and we believe that adjusting our GAAP cash flow provided by operating activities to reflect these actual cash receipts and cash payments, as well as eliminating the effect of timing differences between the payment of certain liabilities and the receipt of certain receivables in a period other than that in which the item is recognized may give investors additional information about our actual cash flow that is not incorporated in cash flow from operating activities as defined by GAAP.
We believe that adjusted cash flow from operating activities is a useful supplemental measure for assessing the cash flow generated from our core operations as it gives investors important information about our liquidity that is not provided within cash flow from operating activities as defined by GAAP, and we use this measure when evaluating distributions to shareholders. Adjusted cash flow from operating activities should not be considered as an alternative to cash provided by operating activities computed on a GAAP basis as a measure of our liquidity.

 

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Corporate Property Associates 16 — Global Incorporated
Portfolio Diversification as of March 31, 2011 (Unaudited)
Top Ten Tenants by Rent (Pro Rata Basis)

(in thousands)
                 
    Annualized Contractual        
Tenant/Lease Guarantor   Minimum Base Rent     Percent  
Hellweg Die Profi-Baumärkte GmbH & Co. KG (a)
  $ 10,363       5 %
Telcordia Technologies, Inc.
    10,085       5 %
U-Haul Moving Partners, Inc. and Mercury Partners, L.P.
    9,996       5 %
Nordic Cold Storage, LLC
    6,916       4 %
The New York Times Company
    6,690       4 %
Fraikin SAS (a)
    6,587       3 %
Prefecture de Police (a)
    4,696       2 %
International Management Services Group (b)
    4,669       2 %
MetoKote Corporation (a)
    4,464       2 %
MJB Acquisition Corporation
    4,402       2 %
 
           
Total
  $ 68,868       34 %
 
           
Weighted Average Lease Term for Portfolio: 13.8 years
(PERFORMANCE GRAPH)
 
     
(a)   Rent amounts are subject to fluctuations in foreign currency exchange rates.
 
(b)   In May 2011, this tenant filed for bankruptcy protection.
 
(c)   Percentage of the portfolio’s total pro rata square footage that was subject to lease.

 

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Corporate Property Associates 16 — Global Incorporated
Portfolio Diversification as of March 31, 2011 (Unaudited)
by Geography and Property Type (Pro Rata Basis)

(in thousands)
                 
    Annualized Contractual        
Region   Minimum Base Rent     Percent  
U.S.
               
East
  $ 43,162       21 %
South
    34,477       17 %
West
    23,147       12 %
Midwest
    22,380       11 %
 
           
U.S. Total
    123,166       61 %
 
           
 
               
International
               
Germany
    32,012       16 %
France
    14,324       7 %
Finland
    12,690       6 %
United Kingdom
    4,911       2 %
Poland
    4,297       2 %
Asia (a)
    4,269       2 %
Hungary
    3,690       2 %
Other (b)
    3,945       2 %
 
           
International Total
    80,138       39 %
 
           
Total
  $ 203,304       100 %
 
           
                 
    Annualized Contractual        
Property Type   Minimum Base Rent     Percent  
Industrial
  $ 76,445       38 %
Office
    44,655       22 %
Warehouse/Distribution
    33,147       16 %
Retail
    27,077       13 %
Self-Storage
    9,996       5 %
Hospitality
    6,549       3 %
Other Properties (c)
    5,435       3 %
 
           
Total
  $ 203,304       100 %
 
           
     
(a)   Includes rent from tenants in Malaysia and Thailand.
 
(b)   Includes rent from tenants in Canada, Mexico and Sweden.
 
(c)   Includes rent from tenants with the following property types: residential (2.2%), education (0.5%), and land (0.04%).
     
(PIE CHART)

 

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Corporate Property Associates 16 — Global Incorporated
Portfolio Diversification as of March 31, 2011 (Unaudited)
by Tenant Industry (Pro Rata Basis)

(in thousands)
                 
    Annualized Contractual        
Industry Type (a)   Minimum Base Rent     Percent  
Retail Trade
  $ 31,521       16 %
Chemicals, Plastics, Rubber, and Glass
    16,516       8 %
Automobile
    14,420       7 %
Electronics
    14,393       7 %
Healthcare, Education and Childcare
    11,969       6 %
Transportation — Cargo
    10,859       5 %
Telecommunications
    10,135       5 %
Consumer Non-durable Goods
    9,774       5 %
Construction and Building
    9,629       5 %
Media: Printing and Publishing
    8,938       4 %
Beverages, Food, and Tobacco
    8,645       4 %
Business and Commercial Services
    6,916       3 %
Hotels and Gaming
    6,549       3 %
Buildings and Real Estate
    6,497       3 %
Machinery
    6,400       3 %
Insurance
    5,158       3 %
Federal, State and Local Government
    4,696       2 %
Textiles, Leather, and Apparel
    3,879       2 %
Grocery
    3,653       2 %
Transportation — Personal
    3,499       2 %
Other (b)
    9,258       5 %
 
           
Total
  $ 203,304       100 %
 
           
     
(a)   Based on the Moody’s Investors Service, Inc. classification system and information provided by the tenant.
 
(b)   Includes rent from tenants in the following industries: aerospace & defense (1.5%), mining, metals and primary metal industries (1.4%), consumer services (1.2%), and utilities (0.5%).

 

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