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8-K - FORM 8-K - Corporate Property Associates 17 - Global INCc21358e8vk.htm
Exhibit 99.1
(CPA: 17 GLOBAL LOGO)
Corporate Property Associates 17 — Global Incorporated
Supplemental Information
As of June 30, 2011
As used in this supplemental package, the terms “the Company,” “we,” “us” and “our” include Corporate Property Associates 17 — Global Incorporated (“CPA®:17”), 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.CPA17GLOBAL.com
   

 

 


 

Corporate Property Associates 17 — Global Incorporated
Reconciliation of Net Income Attributable to CPA
®:17 — Global Shareholders
to Funds From Operations — as adjusted (AFFO) (Unaudited)

(in thousands, except share and per share amounts)
                                 
    Three months ended June 30,     Six months ended June 30,  
    2011     2010     2011     2010  
Net income attributable to CPA®:17 — Global shareholders
  $ 12,847     $ 6,655     $ 25,278     $ 12,778  
Adjustments:
                               
Depreciation and amortization of real property
    8,829       3,333       16,830       5,588  
Gain on sale of real estate, net
    (787 )           (787 )      
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO:
                               
Depreciation and amortization of real property
    3,225       761       5,264       1,547  
(Gain) loss on sale of real estate, net
    (3 )     38       (3 )     38  
Proportionate share of adjustments for noncontrolling interests to arrive at FFO
    (167 )     (148 )     (326 )     (309 )
 
                       
Total adjustments
    11,097       3,984       20,978       6,864  
 
                       
FFO — as defined by NAREIT
    23,944       10,639       46,256       19,642  
 
                       
Adjustments:
                               
Other depreciation, amortization and non-cash charges
    (159 )     19       465       84  
Straight-line and other rent adjustments
    (3,077 )     (1,263 )     (6,127 )     (2,624 )
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at AFFO:
                               
Other depreciation, amortization, and other non-cash charges
    10             1        
Straight-line and other rent adjustments
    (57 )     (71 )     (184 )     (132 )
Proportionate share of adjustments for noncontrolling interests to arrive at AFFO
    197       225       646       498  
 
                       
Total adjustments
    (3,086 )     (1,090 )     (5,199 )     (2,174 )
 
                       
AFFO (a)
  $ 20,858     $ 9,549     $ 41,057     $ 17,468  
 
                       
AFFO per share (b)
  $ 0.14     $ 0.10     $ 0.30     $ 0.21  
 
                       
Weighted average shares outstanding
    165,796,441       103,065,554       158,736,669       95,206,876  
 
                       
     
(a)   The amounts previously furnished for the three and six months ended June 30, 2010 of $9.3 million and $17.1 million, respectively, have been revised in the table above to reflect reclassifications made to conform to current year presentation.
 
(b)   Numerator for AFFO per share calculation :
                                 
AFFO
  $ 20,858     $ 9,549     $ 41,057     $ 17,468  
Issuance of shares to an affiliate in satisfaction of fees due
    3,081       1,251       5,930       2,190  
 
                       
AFFO numerator in determination of AFFO per share
  $ 23,939     $ 10,800     $ 46,987     $ 19,658  
 
                       

 

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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. 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.
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.

 

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Corporate Property Associates 17 — Global Incorporated
Adjusted Cash Flow from Operating Activities (Unaudited)

(in thousands, except share and per share amounts)
                 
    Six months ended June 30,  
    2011     2010  
Cash flow provided by operating activities — as reported
  $ 45,713     $ 34,476  
Adjustments:
               
Distributions received from equity investments in real estate in excess of equity income, net (a)
    6,566       1,504  
Distributions paid to noncontrolling interests, net (b)
    (9,581 )     (5,669 )
Changes in working capital (c)
    359       (9,188 )
 
           
 
               
Adjusted cash flow from operating activities (d)
  $ 43,057     $ 21,123  
 
           
 
               
Adjusted cash flow per share
  $ 0.27     $ 0.22  
 
           
 
               
Distributions declared per share
  $ 0.3225     $ 0.3183  
 
           
Payout ratio (distributions per share/adjusted cash flow per share)
    119 %     145 %
 
           
 
               
Weighted average shares outstanding
    158,736,669       95,206,876  
 
           
 
     
(a)   To the extent we receive distributions in excess of 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)   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 six months ended June 30, 2010 of $21.4 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. As we are still in our offering and investment stage, we also consider our expectations as to the yields that may be generated on existing investments and our acquisition pipeline when evaluating distributions to shareholders.

 

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Corporate Property Associates 17 — Global Incorporated
Portfolio Diversification as of June 30, 2011 (Unaudited)
Top Ten Tenants by Rent (Pro Rata Basis)

(in thousands)
                 
    Annualized Contractual        
Tenant/Lease Guarantor   Minimum Base Rent     Percent  
General Parts Inc. (Carquest) (a)
  $ 17,472       9 %
Agrokor d.d. (a)
    16,639       9 %
C1000 B.V. (a)
    13,737       7 %
The New York Times Company
    13,705       7 %
Hellweg Die Profi-Baumärkte GmbH & Co KG (a)
    12,617       7 %
Eroski Sociedad Cooperativa (a)
    11,880       6 %
DTS Distribuidora de Television Digital S.A. (a)
    9,498       5 %
Terminal Freezers, LLC
    8,395       4 %
A-American Self Storage
    7,022       4 %
LifeTime Fitness, Inc.
    5,887       3 %
 
           
Total
  $ 116,852       61 %
 
           
 
               
Weighted Average Lease Term for Portfolio:
  16.6 years          
 
     
(a)   Rent amounts are subject to fluctuations in foreign currency exchange rates.

 

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Corporate Property Associates 17 — Global Incorporated
Portfolio Diversification as of June 30, 2011 (Unaudited)
by Geography and Property Type (Pro Rata Basis)

(in thousands)
                 
    Annualized Contractual        
Region   Minimum Base Rent     Percent  
U.S.
               
East
  $ 29,463       16 %
West
    27,295       14 %
Midwest
    25,719       14 %
South
    24,783       13 %
 
           
U.S. Total
    107,260       57 %
 
           
 
               
International
               
Spain
    21,378       11 %
Germany
    18,144       10 %
Croatia
    16,639       9 %
Netherlands
    13,737       7 %
United Kingdom
    5,577       3 %
Hungary
    3,619       2 %
Poland
    1,221       1 %
 
           
International Total
    80,315       43 %
 
           
 
               
Total
  $ 187,575       100 %
 
           
                 
    Annualized Contractual        
Property Type   Minimum Base Rent     Percent  
Warehouse/Distribution
  $ 74,064       39 %
Office
    39,981       21 %
Retail
    34,925       19 %
Industrial
    24,065       13 %
Self-Storage
    11,029       6 %
Other (a)
    2,511       1 %
Hospitality
    1,000       1 %
 
           
Total
  $ 187,575       100 %
 
           
     
(a)   Includes rent from tenants with the following property types: education (1%) and residential (0.01%).
(PIE CHART)

 

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Corporate Property Associates 17 — Global Incorporated
Portfolio Diversification as of June 30, 2011 (Unaudited)
by Tenant Industry (Pro Rata Basis)

(in thousands)
                 
    Annualized Contractual        
Industry Type (a)   Minimum Base Rent     Percent  
Retail Trade
  $ 71,841       38 %
Media: Printing and Publishing
    23,203       12 %
Beverages, Food, and Tobacco
    13,697       7 %
Transportation — Cargo
    11,711       6 %
Buildings and Real Estate
    9,717       5 %
Machinery
    8,681       5 %
Chemicals, Plastics, Rubber, and Glass
    6,614       4 %
Electronics
    6,535       4 %
Healthcare, Education and Childcare
    6,119       3 %
Leisure, Amusement, Entertainment
    5,887       3 %
Consumer Services
    5,197       3 %
Business and Commercial Services
    4,000       2 %
Banking
    3,821       2 %
Transportation — Personal
    3,573       2 %
Textiles, Leather, and Apparel
    2,887       2 %
Automobile
    2,465       1 %
Other (b)
    1,627       1 %
 
           
Total
  $ 187,575       100 %
 
           
 
     
(a)   Based on the Moody’s Investors Service, Inc. classification system and information provided by the tenant.
 
(b)   Includes tenants in hotels and gaming (0.5%), consumer and durable goods (0.2%) and mining, metals, and primary metal industries (0.1%).

 

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