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8-K - 8-K - W. P. Carey Inc.a13-23467_28k.htm

Exhibit 99.1

Filed pursuant to Rule 425 under the Securities Act of 1933, as amended, and deemed filed pursuant to Rule14a-12 under the Securities Exchange Act of 1934, as amended

Filing Person: W. P. Carey Inc.

Subject Company: Corporate Property Associates 16 – Global Incorporated

Commission File No.: 001-32162

 

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W. P. CAREY INC.

Supplemental Unaudited Operating and Financial Data

 

As of September 30, 2013

 

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Important Disclosures About this Supplemental Package

 

As used in this supplemental package, the terms “W. P. Carey,” “WPC” “the Company,” “we,” “us” and “our” include W. P. Carey Inc., its consolidated subsidiaries, and predecessors, unless otherwise indicated. “WPC LLC” means W. P. Carey & Co. LLC, our predecessor company. The “CPA®:15 Merger” means our merger with Corporate Property Associates 15 Incorporated (“CPA®:15”), which was completed on September 28, 2012. The “Proposed Merger” means our proposed merger with Corporate Property Associates 16 – Global Incorporated (“CPA®:16 – Global”), which was announced on July 25, 2013. “CPA® REITs” means CPA®:15 (through the date of the CPA®:15 Merger), CPA®:16 – Global, Corporate Property Associates 17 – Global Incorporated (“CPA®:17 – Global”), and Corporate Property Associates 18 – Global Incorporated (“CPA®:18 – Global”). The “Managed REITs” means the CPA® REITs and Carey Watermark Investors Incorporated (“CWI”). “W. P. Carey Group” means W. P. Carey, together with the Managed REITs.

 

Important Note Regarding Non-GAAP Financial Measures

 

This supplemental package includes certain “non-GAAP” supplemental metrics that are not defined by generally accepted accounting principles (“GAAP”), including earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, funds from operations (“FFO”), funds from operations - as adjusted (“AFFO”), pro rata net operating income (“NOI”), pro rata debt, total adjusted real estate revenue, total adjusted general and administrative expense (“Adjusted G&A”) and adjusted revenue. A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures are provided on page 42 within this supplemental package. FFO is non-GAAP measure defined by the National Association of Real Estate Investments Trusts (“NAREIT”).

 

Cautionary Statement Concerning Forward-Looking Statements:

 

Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Federal securities laws. The forward-looking statements include, among other things, statements regarding the intent, belief or expectations of W. P. Carey and can be identified by the use of words such as “may,” “will,” “should,” “would,” “assume,” “outlook,” “seek,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast” and other comparable terms. These statements are based on the current expectations of the management of W. P. Carey.  It is important to note that W. P. Carey’s actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results, performance or achievements of W. P. Carey. Discussions of some of these other important factors and assumptions are contained in W. P. Carey’s filings, and the filings of its predecessor, W. P. Carey & Co. LLC, with the Securities and Exchange Commission (“SEC”) and are available at the SEC’s website at http://www.sec.gov, including the Annual Report on Form 10-K for the year ended December 31, 2012 as filed with the SEC on February 26, 2013.  In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this communication may not occur. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication. Except as required under the Federal securities laws and the rules and regulations of the SEC, W. P. Carey does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this communication or to reflect the occurrence of unanticipated events.

 


 

 

 

 

 

 

Earnings Release and Supplemental

Financial Information

 

 

Unaudited, Third Quarter 2013

November 5, 2013

 

 


 

W. P. CAREY INC.

Supplemental Unaudited Operating and Financial Data

As of September 30, 2013

 

 

Overview

 

Press Release

1

 

 

Highlights

 

Company Overview

4

Financial and Operational Statistics

5

 

 

Financial Information

 

Consolidated Balance Sheets

6

Consolidated Statements of Income

7

Reconciliation of Net Income to Funds from Operations - as Adjusted (AFFO)

8

Reconciliation of Consolidated Statement of Income to AFFO - Current Quarter

10

Reconciliation of Consolidated Statement of Income to AFFO - Year-to-Date

12

Reconciliation of GAAP Net Income to Adjusted EBITDA

14

Adjusted Revenue Analysis

15

Total Adjusted Real Estate Revenue - W. P. Carey Group

17

Adjusted G&A

18

Business Segment and Financial Information

19

Pro Rata NOI

20

 

 

Debt and Other Information

 

Portfolio Debt Overview

21

Detailed Debt Summary

23

Selected Data for the Managed REITs

26

Joint Venture Information

27

 

 

WPC Portfolio Information

 

Portfolio Information - Diversification of Top Ten Tenants by Rent and Historical Occupancy

28

Portfolio Information - Diversification by Property Type

29

Portfolio Information - Diversification by Tenant Industry

30

Portfolio Information - Diversification by Geography

31

Portfolio Information - Lease Maturities

32

 

 

2013 Investment Activity

 

Owned Portfolio - Acquisitions and Dispositions

33

Managed REITs - Acquisitions

34

Managed REITs - Dispositions

37

 

 

Tenants by Annualized Contractual Minimum Base Rent

38

 

 

Terms and Definitions

42

 

 

 


 

Press Release

 

W. P. Carey Announces Third Quarter 2013 Financial Results

 

 

 

New York, NY – November 5, 2013 – W. P. Carey Inc. (NYSE: WPC), a real estate investment trust (“REIT”), today reported financial results for the third quarter ended September 30, 2013.

 

During the third quarter of 2013, the Company:

 

·                  Reported Funds from operations—as adjusted (“AFFO”) of $1.03 per diluted share

 

·                  Announced a merger agreement with Corporate Property Associates 16 – Global Incorporated (“CPA®:16 – Global”)

 

·                  Structured $428.9 million of investments on behalf of the Managed REITs

 

·                  Raised its annualized dividend rate to $3.44 per share, WPC’s 50th consecutive quarterly increase

 

QUARTERLY RESULTS

 

·                  AFFO for the third quarter of 2013 was $71.1 million or $1.03 per diluted share, compared to $33.9 million or $0.82 per diluted share for the third quarter of 2012. AFFO for the nine months ended September 30, 2013 was $216.0 million or $3.09 per diluted share, compared to $101.8 million or $2.48 per diluted share for the comparable period in 2012. The increased AFFO in the three and nine months ended September 30, 2013 as compared to the same periods in 2012 was primarily due to income from the properties we acquired in our merger with Corporate Property Associates 15 – Incorporated (“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.

 

·                  Total revenues net of reimbursed expenses for the third quarter of 2013 were $114.7 million, compared to $49.4 million for the third quarter of 2012. Total revenues net of reimbursed expenses for the nine months ended September 30, 2013 were $316.7 million, compared to $143.8 million for the comparable period in 2012. Reimbursed expenses are excluded from total revenues because they have no impact on net income.

 

·                  Net Income for the third quarter of 2013 was $18.5 million, compared to $2.6 million for the same period in 2012. Net Income for the nine months ended September 30, 2013 was $75.9 million, compared to $46.7 million for the prior year period.

 

·                  For the quarter ended September 30, 2013, we received approximately $14.5 million in cash distributions from our equity ownership in the Managed REITs including $7.3 million in Available Cash distributions related to our special general partnership interests in the Managed® REITs.

 

W. P. CAREY OWNED PORTFOLIO UPDATE

 

·                  In September 2013, W. P. Carey acquired an office facility of the Department of State for Communities and Local Government, a department of the UK Government, located in Manchester, UK. The total acquisition cost of the facility was approximately $63.3 million (GBP40.0 million/EUR47.0 million). Year to date, W. P. Carey has completed five transactions for a total investment of $248.5 million.

 

·                  During the third quarter of 2013, W. P. Carey disposed of three properties for total proceeds of $7.6 million.

 

 

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Press Release

(Continued)

 

·                  The W. P. Carey owned portfolio currently consists primarily of 421 leased properties comprising 39.4 million square feet leased to 125 corporate tenants. The average lease term of the portfolio is 8.7 years and the occupancy rate is 99.0%.

 

W. P. CAREY MANAGED PORTFOLIO UPDATE

 

·                  W. P. Carey is the advisor to the CPA® REITs and Carey Watermark Investors Incorporated (“CWI”), which had aggregate real estate assets of $8.6 billion, cash of approximately $0.8 billion and total assets of $9.3 billion as of September 30, 2013. The average occupancy rate for the 78.6 million square feet owned by the CPA® REITs was 98.8%.

 

·                  CPA®:17 – GLOBAL: During the third quarter of 2013, we structured eight new investment transactions totaling $209.3 million on behalf of CPA®:17 – Global. Year to date, through October 31, 2013, we have structured $437.6 million of new investments on behalf of CPA®:17 – Global.

 

·                  CPA®:18 – GLOBAL: Year to date, through October 31, 2013, CPA®:18 – Global, our newest publicly-registered non-traded REIT offering, has raised approximately $65.6 million.

 

·                  CWI: Through the closing of its initial public offering on September 15, 2013, CWI, our lodging-focused non-traded REIT offering, raised approximately $582.4 million, inclusive of reinvested distributions through the distribution reinvestment plan. Year to date, through October 31, 2013, CWI has invested in 11 hotels for a total of $606.7 million, inclusive of two hotels during the third quarter of 2013 for $161.8 million.

 

On October 25, 2013, CWI filed a registration statement with the SEC for a possible public offering of up to an additional $350 million of its common stock. There can be no assurance that CWI will actually commence the follow-on offering or successfully sell the full number of shares registered, if any.

 

PROPOSED MERGER WITH CPA®:16 – GLOBAL

 

·                  On 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. Following 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 $10.0 billion.

 

·                  The proposed merger is subject to the approvals of the stockholders of both W. P. Carey and CPA®:16 – Global and other customary closing conditions. If the proposed merger is approved and the other closing conditions are satisfied, we currently expect that the closing will occur during the first quarter of 2014, although there can be no assurance that the transaction will close at such time, if at all.

 

DIVIDENDS

 

·                  As previously announced, the W. P. Carey Board of Directors raised the quarterly cash dividend to $0.86 per share for the third quarter of 2013. This represents a 2.4% increase from the second quarter of 2013 and a 32.3% increase over the third quarter of 2012. The dividend—our 50th consecutive quarterly increase—was paid on October 15, 2013 to stockholders of record as of September 30, 2013.

 

·                  W. P. Carey President and CEO Trevor Bond, noted, “The third quarter marks the conclusion of our first full year as a REIT and also included another significant milestone for the company with the announcement of our proposed merger with CPA®:16 – Global. This transaction will further increase our real estate assets under ownership and reinforce our status as a leading global net-lease REIT. While we continue to closely monitor the current economic environment, we believe that the strength our business model and adhering to our established, conservative investment criteria will enable us to continue providing steady income to both our stockholders and investors in our Managed REITs.”

 

 

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Press Release

(Continued)

 

Conference Call and Audio Webcast Scheduled for 11:00 AM (ET)

 

Please call at least 10 minutes prior to call to register.

Time: Tuesday, November 5, 2013 at 11:00 AM (ET)

Call-in Number: 800-860-2442

(International) +1-412-858-4600

Webcast: www.wpcarey.com/Q3earnings

Podcast: www.wpcarey.com/podcast

Available after 2:00 PM (ET)

Replay Number: 877-344-7529

(International) + 1-412-317-0088

Replay Passcode: 10033805

Replay available until November 15, 2013 at 9:00 AM (ET).

 

W. P. Carey Inc.

Celebrating its 40th 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 $15.8 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, statements regarding the proposed merger and 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 or the combined company after the proposed merger, reference is made to W. P. Carey’s filings with the Securities and Exchange Commission.

 

 

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Company Overview

 

 

Key Company Contacts

 

Executive Offices

Trevor P. Bond

President, Chief Executive Officer and Director

50 Rockefeller Plaza

Catherine D. Rice

Chief Financial Officer and Managing Director

New York, NY 10020

Thomas E. Zacharias

Chief Operating Officer and Managing Director

Tel: 1-800-WPCAREY or (212) 492-1100

Kristin A. Brown

Vice President, Investor Relations

Fax:  (212) 492-8922

 

 

Web Site Address: www.wpcarey.com

Banks

 

 

Bank of America, N.A.

Administrative and Documentation Agent

 

The Bank of New York Mellon

Syndication Agent

 

JPMorgan Chase Bank, N.A.

Syndication Agent

 

PNC Bank, N.A.

Syndication Agent

 

Wells Fargo Bank, N.A.

Syndication Agent

 

RBS Citizens, N.A.

Syndication Agent

 

Regions Bank

Syndication Agent

 

U.S. Bank N.A.

Syndication Agent

 

Fifth Third Bank

Syndication Agent

 

Comerica Bank

Syndication Agent

 

 

 

 

Analyst Coverage

 

 

Daniel P. Donlan

Ladenburg Thalmann & Co., Inc.

 

Sheila McGrath

Evercore Partners Inc.

 

Paul Adornato

BMO Capital Markets

 

 

Stock Data (NYSE: WPC)

 

Third Quarter
2013

 

 

Second Quarter
2013

 

 

First Quarter
2013

 

 

Fourth Quarter
2012

 

 

Third Quarter
2012

 

High Price

$

70.89

 

$

78.58

 

$

68.45

 

$

54.70

 

$

53.85

 

Low Price

 

64.32

 

 

63.66

 

 

51.89

 

 

45.94

 

 

43.25

 

Closing Price

 

64.70

 

 

66.17

 

 

67.40

 

 

52.15

 

 

49.00

 

Distributions declared per share - annualized

$

3.44

 

$

3.36

 

$

3.28

 

$

2.64

 

$

2.60

 

Distribution yield

(annualized distribution / closing stock price)

 

5.32%

 

 

5.08%

 

 

4.87%

 

 

5.06%

 

 

5.31%

 

Shares outstanding at quarter end

 

68,253,736

 

 

68,217,189

 

 

68,762,259

 

 

68,485,525

 

 

68,005,470

 

Market value of outstanding shares at quarter end ($’000)

$

4,416,017

 

$

4,513,931

 

$

4,634,576

 

$

3,571,520

 

$

3,332,268

 

 

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Financial and Operational Statistics (Unaudited)

 

As of and for the Nine Months Ended September 30, 2013

Market Capitalization

 

WPC

Shares outstanding

 

68,253,736

Stock price at end of period

 

64.70

Market capitalization (equity capitalization) ($’000)

 

4,416,017

Total capitalization ($’000) (a)

 

6,337,116

Enterprise value ($’000) (b)

 

6,243,496

High stock close price

 

70.89

Low stock close price

 

64.32

Financial Ratios

 

WPC

Debt to total capitalization

 

30.3%

Net debt to total capitalization (c)

 

28.8%

Net debt to enterprise value (c)

 

29.3%

Adjusted EBITDA ($’000) (d)

 

400,176

Net debt to adjusted EBITDA (c)

 

4.6

Total debt to gross assets (e)

 

42.1%

Unsecured debt to gross assets

 

6.6%

Interest coverage (f)

 

3.70

Adjusted G&A / Total Adjusted Real Estate Revenue (g)

 

7.1%

Dividend (h)

 

3.44

Dividend payout (i)

 

83.4%

Weighted-average cost of debt

 

4.4%

Property Information

 

CPA®:16 – Global

 

CPA®:17 – Global

 

CPA®:18 – Global

 

WPC

Number of leased properties

 

477

 

343

 

1

 

421

Number of operating properties (j)

 

2

 

73

 

-

 

22

Total properties

 

479

 

416

 

1

 

443

Total square feet - leased properties (millions)

 

45.6

 

32.8

 

0.2

 

39.4

Total square feet - operating properties (millions)

 

0.2

 

5.6

 

-

 

0.7

Total square feet (millions)

 

45.8

 

38.4

 

0.2

 

40.1

Number of tenants (k)

 

140

 

88

 

1

 

125

Occupancy (k)

 

98.0%

 

100.0%

 

100.0%

 

99.0%

Weighted-average lease term (years)

 

9.6

 

15.2

 

14.9

 

8.7

Percent of investment grade tenants (l)

 

13.3%

 

21.1%

 

100.0%

 

31.1%

 

 

 

 

 

 

(a)

 

Represents market capitalization plus total pro rata debt. Pro rata debt is a non-GAAP measure. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

 

 

(b)

 

Represents total capitalization less cash.

 

 

 

(c)

 

Net debt represents pro rata debt less cash. Pro rata debt is a non-GAAP measure. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

 

 

(d)

 

Adjusted EBITDA reflects the annualized nine months ended September 30, 2013. Adjusted EBITDA is a non-GAAP measure. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

 

 

(e)

 

Gross assets represent total assets, excluding goodwill, before accumulated depreciation.

 

 

 

(f)

 

Computed by dividing Adjusted EBITDA by annualized interest expense.

 

 

 

(g)

 

Adjusted G&A represents general and administrative expenses excluding CPA®:15 Merger and Proposed Merger-related costs, dealer manager fee-related expenses and stock-based compensation expense. Total Adjusted Real Estate Revenue represents total pro rata real estate revenues for WPC and the Managed REITs, as presented on page 17. Adjusted G&A and Total Adjusted Real Estate Revenue are non-GAAP measures. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

 

 

(h)

 

Represents the annualized dividend per share based on the declared third quarter distribution. The annualized rate is not guaranteed.

 

 

 

(i)

 

Computed by dividing annualized dividend per share by annualized AFFO per share.

 

 

 

(j)

 

During the fourth quarter of 2013, we sold 19 self-storage properties and one hotel.

 

 

 

(k)

 

Excludes all operating properties.

 

 

 

(l)

 

Investment grade tenants are defined as having a BBB- rating or above. Percentage of portfolio is calculated based on annualized contractual minimum base rent.

 

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Consolidated Balance Sheets

 

(in thousands) (unaudited)

 

 

 

 

September 30, 2013

 

 

December 31, 2012

Assets

 

 

 

 

 

 

Investments in real estate:

 

 

 

 

 

 

Real estate, at cost

 

$

2,515,475

 

$

2,334,488

Operating real estate, at cost

 

 

83,896

 

 

99,703

Accumulated depreciation

 

 

(170,085)

 

 

(136,068)

Net investments in properties

 

 

2,429,286

 

 

2,298,123

Net investments in direct financing leases

 

 

360,240

 

 

376,005

Assets held for sale

 

 

17,975

 

 

1,445

Equity investments in real estate and the Managed REITs

 

 

557,513

 

 

565,626

Net investments in real estate

 

 

3,365,014

 

 

3,241,199

Cash and cash equivalents

 

 

93,620

 

 

123,904

Due from affiliates

 

 

42,249

 

 

36,002

Goodwill

 

 

327,973

 

 

329,132

In-place lease intangible assets, net

 

 

487,527

 

 

447,278

Above-market rent intangible assets, net

 

 

261,900

 

 

279,885

Other intangible assets, net

 

 

15,519

 

 

10,200

Other assets, net

 

 

132,558

 

 

141,442

Total Assets

 

  $

4,726,360

 

  $

4,609,042

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Non-recourse debt

 

$

1,685,556

 

$

1,715,397

Senior credit facility

 

 

490,000

 

 

253,000

Accounts payable, accrued expenses and other liabilities

 

 

282,489

 

 

265,132

Income taxes, net

 

 

11,232

 

 

24,959

Distributions payable

 

 

59,439

 

 

45,700

Total liabilities

 

 

2,528,716

 

 

2,304,188

Redeemable noncontrolling interest

 

 

7,316

 

 

7,531

Redeemable securities - related party

 

 

-

 

 

40,000

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

W. P. Carey stockholders’ equity:

 

 

 

 

 

 

Common stock

 

 

69

 

 

69

Additional paid-in capital

 

 

2,243,186

 

 

2,175,820

Distributions in excess of accumulated earnings

 

 

(273,850)

 

 

(172,182)

Deferred compensation obligation

 

 

11,354

 

 

8,358

Accumulated other comprehensive income (loss)

 

 

8,626

 

 

(4,649)

Less: treasury stock, at cost

 

 

(60,270)

 

 

(20,270)

Total W. P. Carey stockholders’ equity

 

 

1,929,115

 

 

1,987,146

Noncontrolling interests

 

 

261,213

 

 

270,177

Total equity

 

 

2,190,328

 

 

2,257,323

Total Liabilities and Equity

 

  $

4,726,360

 

  $

4,609,042

 

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Consolidated Statements of Income

 

(in thousands, except share and per share amounts) (unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2013

 

2012

 

2013

 

2012

Revenues

 

 

 

 

 

 

 

 

Total lease revenues

 

$

77,626

 

$

16,126

 

$

227,936

 

$ 

49,320

Asset management revenue from affiliates

 

10,961

 

15,850

 

31,330

 

47,088

Structuring revenue from affiliates

 

14,775

 

8,316

 

27,539

 

19,576

Dealer manager fees from affiliates

 

3,787

 

4,012

 

7,329

 

11,878

Reimbursed costs from affiliates

 

23,259

 

19,879

 

50,694

 

59,100

Other real estate income

 

7,506

 

5,095

 

22,547

 

15,977

 

 

137,914

 

69,278

 

367,375

 

202,939

Operating Expenses

 

 

 

 

 

 

 

 

General and administrative

 

28,761

 

28,930

 

84,733

 

77,701

Merger and acquisition expenses

 

3,630

 

25,897

 

6,879

 

30,616

Reimbursable costs

 

23,259

 

19,879

 

50,694

 

59,100

Depreciation and amortization

 

31,560

 

6,120

 

92,741

 

18,549

Property expenses

 

5,746

 

2,069

 

16,307

 

7,112

Other real estate expenses

 

1,654

 

1,557

 

5,064

 

4,619

Impairment charges

 

1,416

 

-

 

1,416

 

-

 

 

96,026

 

84,452

 

257,834

 

197,697

Other Income and Expenses

 

 

 

 

 

 

 

 

Other interest income

 

367

 

252

 

1,053

 

910

Net income from equity investments in real estate and the Managed REITs (a)

 

9,180

 

10,477

 

52,377

 

52,808

Gain on change in control of interests

 

-

 

20,794

 

-

 

20,794

Other income and (expenses)

 

2,484

 

503

 

5,453

 

2,026

Interest expense

 

(27,482)

 

(7,845)

 

(81,187)

 

(22,253)

 

 

(15,451)

 

24,181

 

(22,304)

 

54,285

Income from continuing operations before income taxes

 

26,437

 

9,007

 

87,237

 

59,527

Provision for income taxes

 

(5,375)

 

(379)

 

(3,020)

 

(192)

Income from continuing operations

 

21,062

 

8,628

 

84,217

 

59,335

Discontinued Operations

 

 

 

 

 

 

 

 

Income (loss) from operations of discontinued properties

 

349

 

(458)

 

3,332

 

(1,060)

Gain (loss) on sale of real estate

 

239

 

(409)

 

622

 

(888)

Gain on extinguishment of debt

 

-

 

-

 

84

 

-

Impairment charges

 

-

 

(5,535)

 

(4,950)

 

(12,262)

Income (loss) from discontinued operations, net of tax

 

588

 

(6,402)

 

(912)

 

(14,210)

Net Income

 

21,650

 

2,226

 

83,305

 

45,125

Net (income) loss attributable to noncontrolling interests

 

(2,912)

 

325

 

(7,312)

 

1,383

Net (income) loss attributable to redeemable noncontrolling interest

 

(232)

 

37

 

(139)

 

146

Net Income Attributable to W. P. Carey

 

$

18,506

 

$

2,588

 

$

75,854

 

$ 

46,654

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

 

 

 

 

 

 

 

Income from continuing operations attributable to W. P. Carey

 

$

0.26

 

$

0.22

 

$

1.11

 

$ 

1.49

Income (loss) from discontinued operations attributable to W. P. Carey

 

0.01

 

(0.16)

 

(0.01)

 

(0.35)

Net Income Attributable to W. P. Carey

 

$

0.27

 

$

0.06

 

$

1.10

 

$ 

1.14

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

 

Income from continuing operations attributable to W. P. Carey

 

$

0.26

 

$

0.21

 

$

1.09

 

$ 

1.47

Income (loss) from discontinued operations attributable to W. P. Carey

 

0.01

 

(0.15)

 

(0.01)

 

(0.35)

Net Income Attributable to W. P. Carey

 

$

0.27

 

$

0.06

 

$

1.08

 

$ 

1.12

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

 

 

Basic

 

68,397,176

 

40,366,298

 

68,719,264

 

40,398,433

Diluted

 

69,400,825

 

41,127,404

 

69,846,320

 

41,029,578

 

 

 

 

 

 

 

 

 

Amounts Attributable to W. P. Carey

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

$

18,021

 

$

8,990

 

$

76,920

 

$ 

60,864

Income (loss) from discontinued operations, net of tax

 

485

 

(6,402)

 

(1,066)

 

(14,210)

Net Income Attributable to W. P. Carey

 

$

18,506

 

$

2,588

 

$

75,854

 

$ 

46,654

 

 

 

 

 

 

 

 

 

Distributions Declared Per Share

 

$

0.860

 

$

0.650

 

$

2.520

 

$ 

1.782

 

 

 

 

(a)          Net income from equity investments in real estate and the Managed REITs for the nine months ended September 30, 2013, includes net income from our equity investments in real estate of $30.5 million, income from our ownership in the Managed REITs of $3.7 million and income from our special general partnership interests in the Managed REITs of $18.2 million.

 

GRAPHIC

Investing for the long runTM | 7

 

 


 

Reconciliation of Net Income to Funds from Operations – As Adjusted (AFFO)

 

(in thousands, except share and per share amounts) (unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

Real Estate Ownership

 

September 30, 2013

 

June 30, 2013

 

March 31, 2013

 

December 31, 2012

 

September 30, 2012

 

September 30, 2013

 

September 30, 2012

 

Net income from real estate ownership attributable to W. P. Carey

 

$

13,695

 

$

43,107

 

$

16,692

 

$

5,507

 

$

1,927

 

 

$

73,494

 

$

39,388

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization of real property

 

30,483

 

30,170

 

29,687

 

28,652

 

5,510

 

 

90,340

 

17,330

 

 

Impairment charges

 

1,416

 

1,671

 

3,279

 

10,700

 

5,534

 

 

6,366

 

12,262

 

 

(Gain) loss on sale of real estate

 

(239

)

(981

)

931

 

4,240

 

(59

)

 

(289

)

(1,564

)

 

Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO (a)

 

2,365

 

(16,304

)

3,154

 

3,211

 

888

 

 

(10,785

)

(12,899

)

 

Proportionate share of adjustments for noncontrolling interests to arrive at FFO

 

(4,252

)

(4,247

)

(4,267

)

(4,236

)

(400

)

 

(12,766

)

(1,268

)

 

Total adjustments:

 

29,773

 

10,309

 

32,784

 

42,567

 

11,473

 

 

72,866

 

13,861

 

 

FFO (as defined by NAREIT) - Real Estate Ownership (b)

 

43,468

 

53,416

 

49,476

 

48,074

 

13,400

 

 

146,360

 

53,249

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss (gain) on change in control of interest (c)

 

-

 

-

 

-

 

60

 

(20,794

)

 

-

 

(20,794

)

 

(Gain) loss on extinguishment of debt

 

(143

)

(141

)

74

 

10

 

-

 

 

(210

)

-

 

 

Other gains, net

 

(32

)

-

 

(270

)

(12

)

-

 

 

(302

)

-

 

 

Other depreciation, amortization and non-cash charges

 

(707

)

(515

)

800

 

(1,556

)

(130

)

 

(422

)

(106

)

 

Stock based compensation

 

259

 

911

 

174

 

211

 

-

 

 

1,344

 

-

 

 

Deferred tax expense

 

(732

)

(21

)

(1,025

)

(644

)

(917

)

 

(1,778

)

(2,101

)

 

Acquisition expense

 

1,076

 

2,909

 

-

 

-

 

-

 

 

3,985

 

-

 

 

Realized losses on foreign currency, derivatives, and other

 

67

 

102

 

52

 

171

 

115

 

 

221

 

657

 

 

Amortization of deferred financing costs

 

713

 

549

 

511

 

468

 

509

 

 

1,773

 

1,375

 

 

Straight-line and other rent adjustments

 

(1,930

)

(2,277

)

(2,169

)

(2,248

)

(200

)

 

(6,376

)

(2,198

)

 

Above- and below -market rent intangible lease amortization, net

 

7,330

 

7,237

 

7,256

 

7,534

 

51

 

 

21,823

 

162

 

 

CPA®:15 Merger and Proposed Merger expenses (d)

 

2,463

 

218

 

111

 

1,049

 

35,570

 

 

2,792

 

40,289

 

 

Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO

 

306

 

279

 

278

 

123

 

(25

)

 

863

 

(804

)

 

AFFO adjustment for interests in CPA® REITs

 

10,961

 

10,718

 

9,249

 

11,971

 

10,650

 

 

30,928

 

25,263

 

 

Proportionate share of adjustments for noncontrolling interests to arrive at AFFO

 

(1,470

)

(1,083

)

(1,561

)

(506

)

(141

)

 

(4,114

)

(186

)

 

Total adjustments:

 

18,161

 

18,886

 

13,480

 

16,631

 

24,688

 

 

50,527

 

41,557

 

 

AFFO - Real Estate Ownership (b)

 

$

61,629

 

$

72,302

 

$

62,956

 

$

64,705

 

$

38,088

 

 

$

196,887

 

$

94,806

 

 

Investment Management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) from investment management attributable to W. P. Carey

 

$

4,811

 

$

60

 

$

(2,511

)

$

9,971

 

$

661

 

 

$

2,360

 

$

7,266

 

 

FFO (as defined by NAREIT) - Investment Management (b)

 

4,811

 

60

 

(2,511

)

9,971

 

661

 

 

2,360

 

7,266

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other depreciation, amortization and non-cash charges

 

264

 

253

 

262

 

226

 

247

 

 

779

 

735

 

 

Stock based compensation

 

7,594

 

7,518

 

8,975

 

6,281

 

9,805

 

 

24,087

 

19,560

 

 

Deferred tax expense

 

(3,550

)

(7,815

)

2,253

 

(2,625

)

(15,207

)

 

(9,112

)

(21,430

)

 

Realized (gains) losses on foreign currency, derivatives, and other

 

(7

)

2

 

2

 

(55

)

17

 

 

(3

)

(6

)

 

Amortization of deferred financing costs

 

404

 

318

 

318

 

318

 

308

 

 

1,040

 

879

 

 

Total adjustments:

 

4,705

 

276

 

11,810

 

4,145

 

(4,830

)

 

16,791

 

(262

)

 

AFFO - Investment Management (b)

 

$

9,516

 

$

336

 

$

9,299

 

$

14,116

 

$

(4,169

)

 

$

19,151

 

$

7,004

 

 

Total Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO (as defined by NAREIT) (b)

 

$

48,279

 

$

53,476

 

$

46,965

 

$

58,045

 

$

14,061

 

 

$

148,720

 

$

60,515

 

 

FFO (as defined by NAREIT) per diluted share (b)

 

$

0.70

 

$

0.77

 

$

0.67

 

$

0.84

 

$

0.34

 

 

$

2.13

 

$

1.47

 

 

AFFO (b)

 

$

71,145

 

$

72,638

 

$

72,255

 

$

78,821

 

$

33,919

 

 

$

216,038

 

$

101,810

 

 

AFFO per diluted share (b)

 

$

1.03

 

$

1.05

 

$

1.03

 

$

1.13

 

$

0.82

 

 

$

3.09

 

$

2.48

 

 

Diluted weighted average shares outstanding

 

69,400,825

 

69,493,902

 

69,975,293

 

69,505,871

 

41,127,404

 

 

69,846,320

 

41,029,578

 

 

 

GRAPHIC

Investing for the long runTM | 8

 


 

Reconciliation of Net Income to Funds from Operations - As Adjusted (AFFO) - Notes

(Continued)

 

_________

 

(a)

Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO for the three months ended June 30, 2013 and nine months ended September 30, 2013, respectively, includes a $19.5 million gain on sale of our equity investments in U.S. Airways. During the nine months ended September 30, 2012 we recognized a $15.1 million gain on sale of our equity investments in Médica.

 

 

(b)

FFO and AFFO are non-GAAP measures. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

 

(c)

Gain on change in control of interests for the three months ended September 30, 2012 represents a gain of $14.6 million recognized on our previously-held interest in shares of CPA®:15 common stock, and a gain of $6.1 million recognized on the purchase of the remaining interests in five investments from CPA®:15, which we had previously accounted for under the equity method. We recognized a gain of $20.7 million to adjust the carrying value of our existing interests in these investments to their estimated fair values in connection with the CPA®:15 Merger.

 

 

(d)

The three months ended September 30, 2012 includes current tax expense of $9.6 million relating to the conversion of CPA®:15 shares held by us before the CPA®:15 Merger.

 

GRAPHIC

Investing for the long runTM | 9

 


 

Reconciliation of Consolidated Statement of Income to AFFO – Current Quarter

 

(in thousands) (unaudited)

 

 

 

Three Months Ended September 30, 2013

 

 

GAAP - Basis (a)

 

Add: Equity 
Investments 
(b)

 

Less: Noncontrolling 
Interests 
(c)

 

WPC’s 
Pro Rata Share 
(d)

 

AFFO 
Adjustments

 

AFFO

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Total lease revenues (e)

 

 $

  77,626

 

 $

  9,282

 

 $

  (10,374)

 

 $

  76,534

 

 $

  4,720

  (f)

 $

 81,254

Asset management revenue from affiliates

 

10,961

 

-

 

(142)

 

10,819

 

-

 

10,819

Structuring revenue from affiliates

 

14,775

 

-

 

(430)

 

14,345

 

-

 

14,345

Dealer manager fees

 

3,787

 

-

 

-

 

3,787

 

-

 

3,787

Reimbursed costs from affiliates

 

23,259

 

-

 

(1)

 

23,258

 

-

 

23,258

Other real estate income:

 

 

 

 

 

 

 

 

 

 

 

 

Self-storage revenues

 

3,680

 

-

 

(2,201)

 

1,479

 

-

 

1,479

Hotel revenues

 

-

 

-

 

-

 

-

 

-

 

-

Pass-through income

 

3,478

 

217

 

(470)

 

3,225

 

-

 

3,225

Other property and tenant income

 

348

 

102

 

-

 

450

 

-

 

450

Total other real estate income

 

7,506

 

319

 

(2,671)

 

5,154

 

-

 

5,154

Total Revenues

 

137,914

 

9,601

 

(13,618)

 

133,897

 

4,720

 

138,617

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

28,761

 

2

 

(502)

 

28,261

 

(7,823)

 

20,438

Merger and acquisition expenses

 

3,630

 

-

 

-

 

3,630

 

(3,540)

 

90

Reimbursable costs

 

23,259

 

-

 

-

 

23,259

 

-

 

23,259

Depreciation and amortization

 

31,560

 

3,089

 

(4,186)

 

30,463

 

(28,833)

 

1,630

Property expenses

 

5,746

 

350

 

(813)

 

5,283

 

-

 

5,283

Other real estate expenses

 

1,654

 

-

 

(983)

 

671

 

-

 

671

Impairment charges

 

1,416

 

-

 

(71)

 

1,345

 

(1,345)

 

-

Total Operating Expenses

 

96,026

 

3,441

 

(6,555)

 

92,912

 

(41,541)

 

51,371

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Other interest income

 

367

 

200

 

(31)

 

536

 

-

 

536

Net income from equity investments in real estate and the Managed REITs:

 

 

 

 

 

 

 

 

 

 

 

 

Joint ventures (g)

 

3,704

 

(3,704)

 

-

 

-

 

-

 

-

Income related to our ownership in the Managed REITs

 

2,584

 

-

 

-

 

2,584

 

6,530

 

9,114

Income related to our general partnership interests

 

2,892

 

-

 

-

 

2,892

 

4,431

 

7,323

Total net income from equity investments in real estate and the Managed REITs

 

9,180

 

(3,704)

 

-

 

5,476

 

10,961

 

16,437

Other income and (expenses)

 

2,484

 

907

 

(1,232)

 

2,159

 

(2,214)

 

(55)

Interest expense

 

(27,482)

 

(2,997)

 

4,753

 

(25,726)

 

2,035

 

(23,691)

Total Other Income and Expenses

 

(15,451)

 

(5,594)

 

3,490

 

(17,555)

 

10,782

 

(6,773)

Income from Continuing Operations before Income Taxes

 

26,437

 

566

 

(3,573)

 

23,430

 

57,043

 

80,473

Benefit from(provision for) income taxes

 

(5,375)

 

(566)

 

429

 

(5,512)

 

(4,279)

 

(9,791)

Income from Continuing Operations

 

21,062

 

-

 

(3,144)

 

17,918

 

52,764

 

70,682

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations of discontinued properties

 

349

 

-

 

-

 

349

 

114

 (h)

463

Gain on the sale of real estate

 

239

 

-

 

-

 

239

 

(239)

 

-

Impairment charges

 

-

 

-

 

-

 

-

 

-

 

-

Income from Discontinued Operations, Net of Taxes

 

588

 

-

 

-

 

588

 

(125)

 

463

Net Income

 

21,650

 

-

 

(3,144)

 

18,506

 

52,639

 

71,145

Net (income) attributable to noncontrolling interests

 

(2,912)

 

-

 

2,912

 

-

 

-

 

-

Net loss attributable to redeemable noncontrolling interests

 

(232)

 

-

 

232

 

-

 

-

 

-

Income / AFFO Attributable to W. P. Carey

 

 $

  18,506

 

 $

  -

 

 $

  -

 

 $

  18,506

 

 $

 52,639

 

 $

 71,145

 

GRAPHIC

Investing for the long runTM | 10

 

 

 


 

Reconciliation of Consolidated Statement of Income to AFFO – Current Quarter

(Continued)

(in thousands) (unaudited)

 

 

The following table presents the components of our General and Administrative Expenses:

 

Three Months Ended September 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP - Basis (a)

 

Add: Equity
Investments 
(b)

 

Less: Noncontrolling
Interests 
(c)

 

WPC’s
Pro Rata Share 
(d)

 

AFFO 
Adjustments

 

AFFO

General and Administrative

 

 

 

 

 

 

 

 

 

 

 

 

Compensation expense

 

 $

 23,419

 

 $

 -

 

 $

 (189)

 

 $

 23,230

 

 $

 (7,823)

 (i)

 $

15,407

Organization and offering expenses

 

4,296

 

-

 

-

 

4,296

 

-

 

4,296

General and administrative professional fees

 

2,158

 

(3)

 

(60)

 

2,095

 

-

 

2,095

Reimbursable expenses

 

(5,358)

 

-

 

-

 

(5,358)

 

-

 

(5,358)

Office expenses

 

2,097

 

-

 

(240)

 

1,857

 

-

 

1,857

Other general and administrative

 

2,149

 

5

 

(13)

 

2,141

 

-

 

2,141

Total General and Administrative

 

 $

 28,761

 

 $

 2

 

 $

 (502)

 

 $

 28,261

 

 $

 (7,823)

 

 $

20,438

 

The following table presents the components of Other Income and (Expenses):

 

Three Months Ended September 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP - Basis (a)

 

Add: Equity
Investments 
(b)

 

Less: Noncontrolling
Interests 
(c)

 

WPC’s
Pro Rata Share 
(d)

 

AFFO 
Adjustments

 

AFFO

Other Income and (Expenses)

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on foreign currency

 

 $

 1,624

 

 $

 -

 

 $

 (74)

 

 $

 1,550

 

 $

 (1,549)

 

 $

 1

Gain (loss) on derivatives

 

671

 

-

 

(192)

 

479

 

(479)

 

-

Gain (loss) on extinguishment of debt

 

143

 

-

 

-

 

143

 

(143)

 

-

Other gain (loss) (j)

 

46

 

907

 

(966)

 

(13)

 

(43)

 

(56)

Total Other Income and (Expenses)

 

 $

 2,484

 

 $

 907

 

 $

 (1,232)

 

 $

 2,159

 

 $

 (2,214)

 

 $

 (55)

 

__________

 

(a)

Consolidated amounts shown represent WPC’s Consolidated Statement of Income for the three months ended September 30, 2013.

(b)

Represents the break-out by line item of amounts recorded in net income from equity investments in real estate and the Managed REITs – Joint ventures.

(c)

Represents the break-out by line item of amounts recorded in noncontrolling interest and redeemable noncontrolling interest.

(d)

Represents our share in fully-owned entities and co-owned entities. Pro rata basis amounts are non-GAAP measures. See the Terms and Conditions section that begins on page 42 for a description of our non-GAAP measures.

(e)

Lease revenues on a pro rata basis in this schedule reflect only revenues from continuing operations. Lease revenues from discontinued operations for the three months ended September 30, 2013 were $0.3 million.

(f)

Represents adjustments for straight line and above/below market lease intangible amortization.

(g)

To calculate the pro rata amounts, equity investments under joint ventures have been reclassified to allocate their impact on each line item.

(h)

Represents depreciation and amortization related to discontinued operations.

(i)

Represents add-back of stock-based compensation expense, less the pro rata share attributable to noncontrolling interests.

(j)

Represents income in equity investments and noncontrolling interests that could not be broken-out by line item.

 

GRAPHIC

Investing for the long runTM | 11

 


 

Reconciliation of Consolidated Statement of Income to AFFO – Year-to-Date

 

(in thousands) (unaudited)

 

 

 

 

Nine Months Ended September 30, 2013

 

 

GAAP - Basis (a)

 

Add: Equity
Investments
(b)

 

Less: Noncontrolling
Interests
(c)

 

WPC’s
Pro Rata Share
(d)

 

AFFO
Adjustments

 

AFFO

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Total lease revenues (e)

 

 $

 227,936

 

 $

 29,010

 

 $

 (30,823)

 

 $

 226,123

 

 $

 13,292

(f)

 $

 239,415

Asset management revenue from affiliates

 

31,330

 

-

 

(445)

 

30,885

 

-

 

30,885

Structuring revenue from affiliates

 

27,539

 

-

 

(430)

 

27,109

 

-

 

27,109

Dealer manager fees

 

7,329

 

-

 

-

 

7,329

 

-

 

7,329

Reimbursed costs from affiliates

 

50,694

 

-

 

(108)

 

50,586

 

-

 

50,586

Other real estate income:

 

 

 

 

 

 

 

 

 

 

 

 

Self-storage revenues

 

10,622

 

-

 

(6,353)

 

4,269

 

-

 

4,269

Hotel revenues

 

-

 

-

 

-

 

-

 

-

 

-

Pass-through income

 

10,863

 

605

 

(1,366)

 

10,102

 

-

 

10,102

Other property and tenant income

 

1,062

 

214

 

(11)

 

1,265

 

-

 

1,265

Total other real estate income

 

22,547

 

819

 

(7,730)

 

15,636

 

-

 

15,636

Total Revenues

 

367,375

 

29,829

 

(39,536)

 

357,668

 

13,292

 

370,960

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

84,733

 

48

 

(1,696)

 

83,085

 

(25,337)

 

57,748

Merger and acquisition expenses

 

6,879

 

-

 

-

 

6,879

 

(6,778)

 

101

Reimbursable costs

 

50,694

 

-

 

2

 

50,696

 

-

 

50,696

Depreciation and amortization

 

92,741

 

9,383

 

(12,712)

 

89,412

 

(86,151)

 

3,261

Property expenses

 

16,307

 

855

 

(2,200)

 

14,962

 

-

 

14,962

Other real estate expenses

 

5,064

 

-

 

(3,016)

 

2,048

 

-

 

2,048

Impairment charges

 

1,416

 

-

 

(71)

 

1,345

 

(1,345)

 

-

Total Operating Expenses

 

257,834

 

10,286

 

(19,693)

 

248,427

 

(119,611)

 

128,816

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Other interest income

 

1,053

 

594

 

(100)

 

1,547

 

-

 

1,547

Net income from equity investments in real estate and the Managed REITs:

 

 

 

 

 

 

 

 

 

 

 

 

Joint ventures (g)

 

30,531

 

(30,531)

 

-

 

-

 

-

 

-

Income related to our ownership in the Managed REITs

 

3,668

 

-

 

-

 

3,668

 

25,215

 

28,883

Income related to our general partnership interests

 

18,178

 

-

 

-

 

18,178

 

5,713

 

23,891

Total net income from equity investments in real estate and the Managed REITs

 

52,377

 

(30,531)

 

-

 

21,846

 

30,928

 

52,774

Other income and (expenses)

 

5,453

 

21,483

 

(2,853)

 

24,083

 

(23,748)

 

335

Interest expense

 

(81,187)

 

(9,486)

 

14,318

 

(76,355)

 

5,728

 

(70,627)

Total Other Income and Expenses

 

(22,304)

 

(17,940)

 

11,365

 

(28,879)

 

12,908

 

(15,971)

Income from Continuing Operations before Income Taxes

 

87,237

 

1,603

 

(8,478)

 

80,362

 

145,811

 

226,173

Benefit from (provision for) income taxes

 

(3,020)

 

(1,603)

 

1,027

 

(3,596)

 

(10,876)

 

(14,472)

Income from Continuing Operations

 

84,217

 

-

 

(7,451)

 

76,766

 

134,935

 

211,701

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations of discontinued properties

 

3,332

 

-

 

-

 

3,332

 

1,005

(h)

4,337

Gain on the sale of real estate

 

622

 

-

 

-

 

622

 

(622)

 

-

Gain on extinguishment of debt

 

84

 

-

 

-

 

84

 

(84)

 

-

Impairment charges

 

(4,950)

 

-

 

-

 

(4,950)

 

4,950

 

-

(Loss) income from Discontinued Operations, Net of Taxes

 

(912)

 

-

 

-

 

(912)

 

5,249

 

4,337

Net Income

 

83,305

 

-

 

(7,451)

 

75,854

 

140,184

 

216,038

Net income attributable to noncontrolling interests

 

(7,312)

 

-

 

7,312

 

-

 

-

 

-

Net loss attributable to redeemable noncontrolling interests

 

(139)

 

-

 

139

 

-

 

-

 

-

Income / AFFO Attributable to W. P. Carey

 

 $

 75,854

 

 $

 -

 

 $

 -

 

 $

 75,854

 

 $

 140,184

 

 $

 216,038

 

GRAPHIC

 

Investing for the long runTM | 12

 


 

Reconciliation of Consolidated Statement of Income to AFFO – Year-to-Date

(Continued)

(in thousands) (unaudited)

 

 

The following table presents the components of our General and Administrative Expenses:

 

 

Nine Months Ended September 30, 2013 

 

 

GAAP - Basis  (a)

 

Add: Equity
Investments  
(b)

 

Less: Noncontrolling
Interests  
(c)

 

WPC’s
Pro Rata Share  
(d)

 

AFFO
Adjustments

 

AFFO

General and Administrative

 

 

 

 

 

 

 

 

 

 

 

 

Compensation expense

 

  $

 71,387

 

$

 -

 

$

 (470)

 

$

 70,917

 

$

 (25,337)

(i)

$

 45,580

Organization and offering expenses

 

9,421

 

-

 

-

 

9,421

 

-

 

9,421

General and administrative professional fees

 

7,384

 

37

 

(214)

 

7,207

 

-

 

7,207

Reimbursable expenses

 

(15,838)

 

-

 

-

 

(15,838)

 

-

 

(15,838)

Office expenses

 

6,115

 

-

 

(972)

 

5,143

 

-

 

5,143

Other general and administrative

 

6,264

 

11

 

(40)

 

6,235

 

-

 

6,235

Total General and Administrative

 

  $

 84,733

 

$

 48

 

$

 (1,696)

 

$

 83,085

 

$

 (25,337)

 

$

 57,748

 

The following table presents the components of Other Income and (Expenses):

 

 

Nine Months Ended September 30, 2013

 

 

GAAP - Basis  (a)

 

Add: Equity
Investments  
(b)

 

Less: Noncontrolling
Interests  
(c)

 

WPC’s
Pro Rata Share  
(d)

 

AFFO
Adjustments

 

AFFO

Other Income and (Expenses)

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on sale of real estate

 

  $

 (332)

 

$

 19,461

 

$

 -

 

$

 19,129

 

$

 (19,129)

 

$

 -

Gain (loss) on foreign currency

 

893

 

-

 

(76)

 

817

 

(817)

 

-

Gain (loss) on derivatives

 

4,383

 

-

 

(1,052)

 

3,331

 

(3,331)

 

-

Gain (loss) on extinguishment of debt

 

126

 

-

 

(2)

 

124

 

(124)

 

-

Other gain (loss)   (j)

 

383

 

2,022

 

(1,723)

 

682

 

(347)

 

335

Total Other Income and (Expenses)

 

  $

 5,453

 

$

 21,483

 

$

 (2,853)

 

$

 24,083

 

$

 (23,748)

 

$

 335

__________

 

(a)          Consolidated amounts shown represent WPC’s Consolidated Statement of Income for the nine months ended September 30, 2013.

(b)          Represents the break-out by line item of amounts recorded in net income from equity investments in real estate and the Managed REITs – Joint ventures.

(c)          Represents the break-out by line item of amounts recorded in noncontrolling interest and redeemable noncontrolling interest.

(d)         Represents our share in fully-owned entities and co-owned entities. Pro rata basis amounts are non-GAAP measures. See the Terms and Conditions section that begins on page 42 for a description of our non-GAAP measures.

(e)          Lease revenues on a pro rata basis in this schedule reflect only revenues from continuing operations. Lease revenues from discontinued operations for the nine months ended September 30, 2013 were $2.1 million.

(f)             Represents adjustments for straight line and above/below market lease intangible amortization.

(g)         To calculate the pro rata amounts, equity investments under joint ventures have been reclassified to allocate their impact on each line item.

(h)         Represents depreciation and amortization related to discontinued operations.

(i)             Represents add-back of stock-based compensation expense, less the pro rata share attributable to noncontrolling interests.

(j)             Represents income in equity investments and noncontrolling interests that could not be broken-out by line item.

 

GRAPHIC

 

Investing for the long runTM | 13

 


 

Reconciliation of GAAP Net Income to Adjusted EBITDA

 

 

(in thousands, except share and per share amounts) (unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,
2013

 

June 30,
2013

 

March 31,
2013

 

December 31,
2012

 

September 30,
2012

 

September 30,
2013

 

September 30,
2012

Net Income Attributable to W. P. Carey

 

 $

 18,506

 

 $

 43,167

 

 $

 14,181

 

 $

 15,478

 

 $

 2,588

 

 $

 75,854

 

 $

 46,654

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

31,673

 

31,157

 

30,983

 

30,108

 

6,761

 

93,813

 

20,897

Interest expense

 

27,586

 

27,023

 

26,979

 

28,250

 

7,869

 

81,588

 

22,459

(Benefit from) provision for income taxes

 

5,375

 

(1,122)

 

(1,233)

 

6,591

 

379

 

3,020

 

199

EBITDA (a)

 

83,140

 

100,225

 

70,910

 

80,427

 

17,597

 

254,275

 

90,209

Proportionate share of adjustments from equity method investments (b)

 

15,926

 

16,060

 

17,011

 

14,831

 

9,103

 

48,997

 

43,599

Proportionate share of adjustments for noncontrolling interests (b)

 

(9,369)

 

(9,391)

 

(9,290)

 

(9,313)

 

928

 

(28,050)

 

(431)

 

 

89,697

 

106,894

 

78,631

 

85,945

 

27,628

 

275,222

 

133,377

Management Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment charges

 

1,416

 

1,671

 

3,279

 

10,700

 

5,535

 

6,366

 

12,261

(Gain) loss on sale of real estate

 

(239)

 

(981)

 

931

 

1,081

 

(59)

 

(289)

 

(1,564)

(Gain) loss on extinguishment of debt

 

(143)

 

(141)

 

74

 

10

 

-

 

(210)

 

-

Stock based compensation

 

7,853

 

8,429

 

9,149

 

6,492

 

9,805

 

25,431

 

19,560

Merger expenses

 

2,463

 

218

 

111

 

1,049

 

25,895

 

2,792

 

30,614

Losses (gains) on investment due to merger

 

-

 

-

 

-

 

49

 

(20,794)

 

-

 

(20,794)

Realized and unrealized (gain) loss on foreign currency (net)

 

(1,624)

 

(365)

 

1,097

 

(1,106)

 

(46)

 

(892)

 

527

Realized and unrealized (gain) loss on derivatives (net)

 

(671)

 

(1,691)

 

(2,022)

 

(370)

 

49

 

(4,384)

 

19

Proportionate share of adjustments from equity method investments (c)

 

5,735

 

(14,611)

 

4,010

 

5,941

 

7,632

 

(4,866)

 

(8,938)

Proportionate share of adjustments for noncontrolling interests (c)

 

166

 

394

 

402

 

71

 

(176)

 

962

 

(176)

Total adjustments

 

14,956

 

(7,077)

 

17,031

 

23,917

 

27,841

 

24,910

 

31,509

Adjusted EBITDA (a)

 

 $

 104,653

 

 $

 99,817

 

 $

 95,662

 

 $

 109,862

 

 $

 55,469

 

 $

 300,132

 

 $

 164,886

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA per diluted share (a)

 

 $

 1.20

 

 $

 1.44

 

 $

 1.01

 

 $

 1.16

 

 $

 0.43

 

 $

 3.64

 

 $

 2.20

Adjusted EBITDA per diluted share (a)

 

 $

 1.51

 

 $

 1.44

 

 $

 1.37

 

 $

 1.58

 

 $

 1.35

 

 $

 4.30

 

 $

 4.02

Diluted weighted average shares outstanding

 

69,400,825

 

69,493,902

 

69,975,293

 

69,505,871

 

41,127,404

 

69,846,320

 

41,029,578

__________

 

(a)          EBITDA and Adjusted EBITDA are non-GAAP measures. See the Terms and Definition section that begins on page 42 for a description of our non-GAAP measures.

 

(b)          Incorporates the pro rata share of depreciation, interest expense and tax provision adjustments for unconsolidated subsidiaries and joint ventures.

 

(c)          Incorporates the pro rata share of impairments, loss on the sale of real estate, stock-based compensation, merger-related adjustments as well as the losses (gains) related to foreign exchange and derivative positions for unconsolidated subsidiaries and joint ventures.

 

GRAPHIC

 

Investing for the long runTM | 14

 


 

Adjusted Revenue Analysis (Pro Rata-Basis)

 

(in thousands) (unaudited)

 

 

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

Reconciliation of Adjusted Revenue

 

September 30,
2013

 

June 30,
2013

 

March 31,
2013

 

December 31,
2012

 

September 30,
2012

 

September 30,
2013

 

September 30,
2012

Real Estate Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total lease revenue – as reported

 

  $

 77,626

 

  $

 75,895

 

  $

 74,415

 

  $

 73,882

 

  $

 16,126

 

  $

 227,936

 

  $

 49,320

Lease revenue – discontinued operations

 

270

 

826

 

1,044

 

1,826

 

646

 

2,140

 

3,104

Total consolidated lease revenue

 

77,896

 

76,721

 

75,459

 

75,708

 

16,772

 

230,076

 

52,424

Add: Pro rata share of revenue from equity investments

 

9,288

 

9,751

 

9,976

 

9,910

 

5,313

 

29,015

 

17,463

Less: Pro rata share of revenue due to noncontrolling interests

 

(10,373)

 

(10,272)

 

(10,175)

 

(10,289)

 

(410)

 

(30,820)

 

(1,260)

Total pro rata net lease revenue

 

76,811

 

76,200

 

75,260

 

75,329

 

21,675

 

228,271

 

68,627

Add: Share of pro rata lease revenue – CPA® REITs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CPA®:15 (a)

 

-

 

-

 

-

 

-

 

4,234

 

-

 

12,726

CPA®:16 – Global

 

14,071

 

14,109

 

14,062

 

13,954

 

13,785

 

42,242

 

42,340

CPA®:17 – Global

 

1,367

 

1,190

 

1,058

 

883

 

809

 

3,615

 

2,187

CPA®:18 – Global

 

32

 

-

 

-

 

-

 

-

 

32

 

-

Total share of pro rata lease revenue - CPA® REITs

 

15,470

 

15,299

 

15,120

 

14,837

 

18,828

 

45,889

 

57,253

Add: share of lease revenue from special general partnership interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CPA®:16 – Global operating partnership

 

3,766

 

3,830

 

3,614

 

3,825

 

3,685

 

11,210

 

11,564

CPA®:17 – Global operating partnership

 

3,557

 

4,847

 

4,277

 

4,395

 

3,667

 

12,681

 

10,225

Total share of lease revenue from special general partnership interest

 

7,323

 

8,677

 

7,891

 

8,220

 

7,352

 

23,891

 

21,789

Add: Other real estate income - as reported (b)

 

7,506

 

7,412

 

7,629

 

6,504

 

5,095

 

22,547

 

15,977

Less: Pro rata share of other real estate income to noncontrolling interests

 

(2,201)

 

(2,127)

 

(2,025)

 

(1,972)

 

(2,050)

 

(6,353)

 

(5,757)

Total Real Estate Revenue

 

104,909

 

105,461

 

103,875

 

102,918

 

50,900

 

314,245

 

157,889

Investment Management Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CPA®:15

 

-

 

-

 

-

 

-

 

6,126

 

-

 

18,545

CPA®:16 – Global

 

4,426

 

4,465

 

4,498

 

4,624

 

4,631

 

13,389

 

13,929

CPA®:17 – Global

 

5,636

 

5,311

 

5,111

 

4,696

 

4,906

 

16,058

 

14,224

CPA®:18 – Global

 

32

 

-

 

-

 

-

 

-

 

32

 

-

CWI & Other

 

867

 

579

 

405

 

258

 

187

 

1,851

 

389

Asset management revenue - as reported

 

10,961

 

10,355

 

10,014

 

9,578

 

15,850

 

31,330

 

47,087

Structuring revenue - as reported (c)

 

14,775

 

6,422

 

6,342

 

28,779

 

8,316

 

27,539

 

19,576

Total Investment Management Revenue

 

25,736

 

16,777

 

16,356

 

38,357

 

24,166

 

58,869

 

66,663

Total Adjusted Revenue (d)

 

  $

 130,645

 

  $

 122,238

 

  $

 120,231

 

  $

 141,275

 

  $

 75,066

 

  $

 373,114

 

  $

 224,552

 

GRAPHIC

 

Investing for the long runTM | 15

 


 

Adjusted Revenue Analysis (Pro Rata-Basis) - Notes

(Continued)

 

__________

 

(a)          Represents pro rata lease revenue from CPA®:15 through September 28, 2012, the date of the CPA®:15 Merger.

 

(b)          Other real estate income generally consists of revenue from Carey Storage Management LLC (“Carey Storage”), a subsidiary that invests in domestic self-storage properties, and Livho, Inc., a subsidiary that operates a hotel franchise. Other real estate income also includes lease termination payments and other non-rents related revenues from real estate ownership, and as a result, we expect Other real estate income to fluctuate period to period.

 

(c)          We earn structuring revenue on acquisitions structured on behalf of the Managed REITS and expect significant period-to-period variation in such revenue based on changes in investment volume. Investments structured on behalf of the Managed REITS totaled approximately $429 million, $305 million, $193 million, $736 million, and $202 million for the three months ended September 30, 2013, June 30, 2013, March 31, 2013, December 31, 2012, and September 30, 2012, respectively. For the nine months ended September 30, 2013 and 2012, investments structured on behalf of the Managed REITs totaled approximately $927 million and $470 million, respectively.

 

(d)         Total adjusted revenue excludes reimbursements of costs received from the Managed REITs as they have no impact on net income. Also excluded are dealer manager fees earned in connection with the public offerings of CPA®:18 – Global (initial public offering commenced on May 7, 2013), CPA®:17 – Global (which terminated on January 31, 2013) and CWI (which terminated on September 15, 2013), which are substantially offset by underwriting costs incurred in connection with the offerings. Adjusted revenue is a non-GAAP measure. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

GRAPHIC

 

Investing for the long runTM | 16

 


 

Total Adjusted Real Estate Revenue – W. P. Carey Group

 

(in thousands) (unaudited)

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,
2013

 

 

June 30,
2013

 

 

March 31,
2013

 

 

December 31,
2012

 

 

September 30,
2012

 

 

September 30,
2013

 

 

September 30,
2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W. P. Carey Pro Rata Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W. P. Carey pro rata lease revenue

 

$

 76,811

 

$

 76,200

 

$

 75,260

 

$

 75,329

 

$

 21,675

 

$

 228,271

 

$

 68,627

W. P. Carey other real estate income (a)

 

5,305

 

5,285

 

5,604

 

4,532

 

3,045

 

16,194

 

10,220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CPA® REITs Pro Rata Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CPA®:15 pro rata lease revenue (b)

 

-

 

-

 

-

 

-

 

53,592

 

-

 

161,153

CPA®:15 other income (b)

 

-

 

-

 

-

 

-

 

2,120

 

-

 

10,253

CPA®:16 – Global pro rata lease revenue

 

75,937

 

76,058

 

76,176

 

76,129

 

75,537

 

228,171

 

233,258

CPA®:16 – Global other income

 

12,592

 

18,733

 

9,817

 

9,947

 

10,055

 

41,142

 

30,989

CPA®:17 – Global pro rata lease revenue

 

78,114

 

74,836

 

73,973

 

68,446

 

62,259

 

226,923

 

181,976

CPA®:17 – Global other income

 

20,000

 

20,468

 

19,062

 

26,681

 

11,869

 

59,530

 

36,582

CPA®:18 – Global pro rata lease revenue

 

470

 

-

 

-

 

-

 

-

 

470

 

-

CPA®:18 – Global other income

 

3

 

-

 

-

 

-

 

-

 

3

 

-

CWI hotel revenue

 

40,804

 

20,939

 

11,296

 

6,256

 

5,868

 

73,039

 

6,714

CWI other income

 

117

 

350

 

132

 

266

 

928

 

599

 

1,345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Adjusted Real Estate Revenue (c)

 

$

 310,153

 

$

 292,869

 

$

 271,320

 

$

 267,586

 

$

 246,948

 

$

 874,342

 

$

 741,117

 

__________

 

(a)          Other real estate income generally consists of revenue from Carey Storage, a subsidiary that invests in domestic self-storage properties, and Livho, Inc., a subsidiary that operates a hotel franchise. Other real estate income also includes lease termination payments and other non-rent related revenues from real estate ownership, and as a result, we expect Other real estate income to fluctuate period to period. The hotel owned by Livho was sold in October 2013.

 

(b)          Represents pro rata lease revenue from CPA®:15 through September 28, 2012, the date of the CPA®:15 Merger, for the three and nine months ended September 30, 2012.

 

(c)          Total Adjusted Real Estate Revenue is a non-GAAP measure. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

GRAPHIC

Investing for the long runTM | 17

 

 


 

Adjusted G&A

 

(in thousands, except percentages) (unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,
2013

 

June 30,
2013

 

March 31,
2013

 

December 31,
2012

 

September 30,
2012

 

September 30,
2013

 

September 30,
2012

General and administrative, as reported

 

  $

 28,761 

 

  $

 27,122 

 

  $

 28,850 

 

  $

 35,439 

 

  $

 28,930 

 

  $

 84,733 

 

  $

 77,701 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dealer manager fee-related expenses (a)

 

(4,296)

 

(3,163)

 

(1,963)

 

(6,913)

 

(4,046)

 

(9,422) 

 

(10,874) 

Stock-based compensation expense (b)

 

(7,853)

 

(8,429)

 

(9,149)

 

(6,492)

 

(9,805)

 

(25,431) 

 

(19,560) 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reimbursable expenses (c)

 

5,358 

 

4,375 

 

6,105 

 

4,533 

 

3,920 

 

15,838 

 

11,776 

Adjusted G&A (d)

 

  $

 21,970 

 

  $

 19,905 

 

  $

 23,843 

 

  $

 26,567 

 

  $

18,999 

 

  $

 65,718 

 

  $

 59,043 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Adjusted Real Estate Revenue

 

  $

 310,153 

 

  $

 292,869 

 

  $

 271,320 

 

  $

 267,586 

 

  $

 246,948 

 

  $

 874,342 

 

  $

 741,117 

As a % of Total Adjusted Real Estate Revenue

 

7.1% 

 

6.8% 

 

8.8% 

 

9.9% 

 

7.7% 

 

7.5% 

 

8.0% 

 

__________

 

(a)          Represents a reimbursement of dealer manager fee-related expenses, which substantially offsets Dealer manager revenues. Dealer manager revenues are not included in the calculation of Total Adjusted Real Estate Revenue; therefore, the offsetting expense is excluded from the calculation of Adjusted G&A expense.

 

(b)          Represents a non-cash expense, this is reflected in the diluted share count.

 

(c)          Effective January 1, 2013, we have included reimbursable expenses in the Adjusted G&A presentation. Results for the prior periods have been adjusted to conform to the current period.

 

(d)         Adjusted G&A and Total Adjusted Real Estate Revenue are non-GAAP measures. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

GRAPHIC

Investing for the long runTM | 18

 

 


 

Business Segment and Financial Information (Pro Rata-Basis)

 

(in thousands, except share and per share amounts, and percentages) (unaudited)

 

REAL ESTATE OWNERSHIP

 

Three Months Ended
September 30, 2013

 

Annualized

Pro Rata NOI (Includes JVs) (a) (b)

 

 

 

 

Pro Rata NOI

 

  $

 79,359 

 

 $

 317,436 

 

 

 

 

 

 

 

 

 

 

 

Special General Partnership Interest in Cash Flow (Managed REITs)

 

Nine Months Ended
September 30, 2013

 

Annualized

CPA®:16 – Global operating partnership

 

  $

 11,210 

 

 $

14,947 

CPA®:17 – Global operating partnership

 

12,681 

 

16,908 

Total

 

  $

 23,891 

 

 $

31,855 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2013

 

 

Other Real Estate Income

 

Revenues

 

Expenses

 

Net Income

 

Annualized

Storage income

 

$

 1,479 

 

 $

 671 

 

  $

 808 

 

 $

 3,232 

 

 

 

 

 

 

 

 

 

 

 

Managed REITs - Shares Owned(c)

 

Current
Annualized
Distribution

 

Distributions
Received by WPC
for the Nine
Months Ended
September 30,
2013

 

Most Recent NAV
/ Offering Price
per Share
(d)

 

Shares Owned

 

Total Value

CPA®:16 – Global (18.5% ownership)

 

6.7%

 

 $

 18,919 

 

 $

 8.70 

 

38,229,294 

 

 $

 332,595 

CPA®:17 – Global (1.7% ownership)

 

6.5%

 

2,057 

 

 $

 10.00 

 

5,495,057 

 

54,951 

CPA®:18 – Global (1.1% ownership)

 

8.4%

 

 

 $

 9.89 

 

24,057 

 

241 

CWI (0.4% ownership)

 

6.0%

 

 

 $

 10.00 

 

231,245 

 

2,312 

Total

 

 

 

 $

 20,985 

 

 

 

43,979,653 

 

 $

 390,099 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENT MANAGEMENT (e)

 

 

 

 

 

Trailing Twelve
Months Ended
September 30,
2013

 

Three Months Ended
September 30, 2013

 

Annualized

Asset management revenue

 

 

 

 

 

 $

 40,908 

 

  $

 10,961 

 

 $

 43,844 

Structuring revenue

 

 

 

 

 

56,318 

 

14,775 

 

59,100 

Dealer manager fees

 

 

 

 

 

15,365 

 

3,787 

 

15,148 

Total

 

 

 

 

 

 $

 112,591 

 

  $

 29,523 

 

 $

 118,092 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEET INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Liabilities

 

 

Cash

 

 

 

 $

  93,620 

 

 

 

Pro rata debt (Includes JVs) (b)

 

 $

 1,621,099 

Due from affiliates

 

 

 

42,249 

 

 

 

Line of Credit

 

490,000 

Other assets, net

 

 

 

132,558 

 

 

 

Accounts Payable

 

282,489 

 

 

 

 

 

 

 

 

Income Taxes, net

 

11,232 

Shares Outstanding

 

 

 

68,253,736 

 

 

 

Distributions Payable

 

59,439 

 

 

__________

 

(a)          Refer to schedule on the following page for a reconciliation from reported lease revenues and property expenses to pro rata lease revenues and pro rata non-reimbursable property expenses that includes our joint venture (“JV”) interests.

 

(b)          Pro rata NOI and pro rata debt are non-GAAP measures. See page 20 for the detailed reconciliation of Pro Rata NOI. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

(c)          Excludes investments in the operating partnerships of the Managed REITs.

 

(d)         The estimated net asset value per share (“NAV”) of CPA®:16 – Global is as of December 31, 2012. NAVs have not been determined for CPA®:17 – Global, CPA®:18 – Global, and CWI; therefore, their offering prices have been presented in the table above. CPA®:18 – Global’s offering price is calculated by using a weighted-average of the Class A and Class C common shares outstanding at September 30, 2013 at their initial offering price of $10.00 and $9.35 per share, respectively.

 

(e)          Excludes the asset management revenue related to CPA®:15, which ceased upon the completion of the CPA®:15 Merger on September 28, 2012.

 

GRAPHIC

Investing for the long runTM | 19

 

 


 

Pro Rata NOI

 

(in thousands) (unaudited)

Reconciliation of Pro Rata NOI

 

 

Three Months Ended
September 30, 2013

 

Annualized

Pro Rata Lease Revenue

 

 

 

 

Total lease revenue – as reported

 

 $

 77,626 

 

 $

 310,504 

Total lease revenue – discontinued operations

 

270 

 

1,080 

Total consolidated lease revenue

 

77,896 

 

311,584 

Add: Pro rata share of revenue from equity investments

 

9,288 

 

37,152 

Less: Pro rata share of revenue due to noncontrolling interests

 

(10,373)

 

(41,492)

Total pro rata lease revenue (a)

 

76,811 

 

307,244 

Less: Straight line rent amortization

 

(1,820)

 

(7,280)

Less: Above-and below -market rent intangible lease amortization

 

6,284 

 

25,136 

Total Pro Rata Cash Lease Revenues

 

81,275 

 

325,100 

Pro Rata Non-Reimbursable Property Expenses:

 

 

 

 

Property expenses – as reported

 

5,746 

 

22,984 

Property expenses – discontinued operations

 

(38)

 

(152)

Total consolidated property expenses

 

5,708 

 

22,832 

Less: Reimbursable property expenses (b)

 

(3,597)

 

(14,388)

Total non-reimbursable property expenses

 

2,111 

 

8,444 

Add: Pro rata share of non-reimbursable property expenses from equity investments

 

125 

 

500 

Less: Pro rata share of non-reimbursable property expenses due to noncontrolling interests

 

(320)

 

(1,280)

Total Pro Rata Non-Reimbursable Property Expenses

 

1,916 

 

7,664 

Pro Rata NOI (c)

 

 $

 79,359 

 

 $

 317,436 

 

__________

 

(a)          Total pro rata lease revenues differ from the amount presented in the reconciliation of Consolidated Statement of Income to AFFO due to the inclusion of discontinued operations.

 

(b)          Reimbursable property expenses are entirely offset by revenues recorded in Other real estate income; therefore, these reimbursements are not included in lease revenue.

 

(c)          Pro rata NOI is a non-GAAP measure. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP financial measures.

 

GRAPHIC

Investing for the long runTM | 20

 

 


 

Portfolio Debt Overview (Pro Rata-Basis)

 

(in thousands, except percentages) (unaudited)

 

 

As of September 30, 2013

 

Portfolio Debt Maturity

 

Year of Maturity

 

Balloon Payments

 

Other Principal
Payments

 

Debt Maturity(a)

Remaining 2013

 

  $

 273

 

  $

 67

 

  $

 340

2014 (b)

 

750,654

 

12,835

 

763,489

2015

 

160,681

 

5,274

 

165,955

2016

 

59,383

 

10,920

 

70,303

2017

 

241,799

 

9,722

 

251,521

2018

 

160,395

 

24,365

 

184,760

2019

 

28,106

 

10,318

 

38,424

2020

 

125,861

 

27,724

 

153,585

2021

 

28,776

 

9,611

 

38,387

2022

 

159,420

 

42,531

 

201,951

2023

 

71,832

 

57,056

 

128,888

Thereafter

 

34,473

 

79,023

 

113,496

Total

 

  $

 1,821,653

 

  $

 289,446

 

  $

 2,111,099

 

 

 

Debt Maturity Analysis (a)  (in thousands)

 

 

___________

 

(a)             Debt maturity data is presented on a pro rata basis. Pro rata amounts are non-GAAP measures. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

(b)             Amount includes outstanding recourse debt under the senior credit facility and the Unsecured Term Loan (see below) of $190.0 million and $300.0 million, respectively. On July 31, 2013, we entered into a new credit agreement with our existing lenders (the “Term Loan Credit Agreement”) for an unsecured term loan of up to $300.0 million (“Unsecured Term Loan”), which we drew down in full primarily to repay the then outstanding balance on our existing revolving credit facility. The Term Loan Credit Agreement has substantially the same terms as the Amended and Restated Credit Agreement and is scheduled to mature in July 2014 unless elected pursuant to the terms.

 

GRAPHIC

 

Investing for the long runTM | 21

 


 

Portfolio Debt Overview (Pro Rata-Basis)

(Continued)

(in thousands, except percentages) (unaudited)

 

 

As of September 30, 2013

 

Fixed- and Variable-Rate Pro Rata Debt

 

Non-Recourse Debt

 

Total Outstanding
Balance

 

Percent of Total

Fixed

 

  $

 1,264,042

 

59.9%

Variable – Swapped

 

207,493

 

9.8%

Variable – Capped

 

110,067

 

5.2%

Variable – Future Rate Reset

 

22,410

 

1.1%

Variable – Floating

 

17,087

 

0.8%

 

 

1,621,099

 

76.8%

Recourse Debt

 

 

 

 

Variable – Unsecured Term Loan

 

300,000

 

14.2%

Variable – Senior Credit Facility

 

190,000

 

9.0%

Total Debt Pro Rata Outstanding (a)

 

  $

 2,111,099

 

100.0%

 

__________

 

(a)          Pro rata debt is a non-GAAP measure. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP financial measures.

 

GRAPHIC

 

Investing for the long runTM | 22

 


 

Detailed Debt Summary (Pro Rata-Basis)

 

(in thousands, except percentages) (unaudited)

 

 

As of September 30, 2013

 

Detailed Debt Summary

 

 

Tenant/Lease Guarantor

 

Maturity Date

 

Interest Rate

 

Rate Type

 

Percent
Ownership

 

Pro Rata Outstanding
Balance
 (a)

EDS Customer Relationship Mgmt. Inc.

 

Dec-13

 

10.00%

 

Fixed

 

100%

 

$

340

U-Haul Moving Partners Inc. & Mercury Partners, LP

 

May-14

 

6.45%

 

Fixed

 

58%

 

86,002

Actuant Corporation & GB Tools & Supplies, Inc.

 

May-14

 

6.82%

 

Fixed

 

50%

 

5,186

TietoEnator Plc

 

Jul-14

 

5.16%

 

Fixed

 

60%

 

35,871

Multiple Tenants

 

Jul-14

 

3.73%

 

Variable – Floating

 

65%

 

14,039

LTF Real Estate Company, Inc.

 

Jul-14

 

6.43%

 

Fixed

 

100%

 

21,500

Northrop Grumman Systems Corporation & Overland Storage Inc.

 

Aug-14

 

6.18%

 

Fixed

 

100%

 

16,949

Plexus Corporation

 

Aug-14

 

7.25%

 

Fixed

 

100%

 

4,543

Carrefour France SAS

 

Dec-14

 

1.22%

 

Variable – Capped

 

100%

 

89,399

Sports Wholesale, Inc.

 

May-15

 

6.45%

 

Variable – Swapped

 

100%

 

4,320

Hellweg Die Profi-Baumarkte GmbH Und Co.

 

May-15

 

4.50%

 

Fixed

 

75%

 

65,322

Pohjola Non-Life Insurance Company LTD

 

May-15

 

4.59%

 

Fixed

 

60%

 

39,049

Wagon Automotive Nagold GmbH & Waldaschaff Automotive

 

Aug-15

 

6.64%

 

Fixed

 

33%

 

6,390

Lowes Home Improvement Warehouse

 

Sep-15

 

4.87%

 

Fixed

 

100%

 

8,062

Bouygues Telecom and Caisse Centrale d’Activites Sociales

 

Oct-15

 

3.07%

 

Fixed

 

95%

 

4,344

The American Bottling Company

 

Nov-15

 

5.13%

 

Fixed

 

100%

 

27,720

Tata Steel UK Limited

 

Nov-15

 

6.17%

 

Fixed

 

100%

 

10,748

Humco Holding Group, Inc.

 

Feb-16

 

4.75%

 

Fixed

 

100%

 

2,561

World Color Printing (USA) Corp.

 

May-16

 

5.30%

 

Fixed

 

100%

 

4,773

Fiserv, Inc.

 

Jun-16

 

6.18%

 

Fixed

 

100%

 

28,024

Various self-storage facilities

 

Jul-16

 

6.27%

 

Variable – Future Rate Reset

 

40%

 

5,806

Sprint Spectrum Realty Company, L. P.

 

Aug-16

 

4.85%

 

Fixed

 

100%

 

7,962

Del Monte Corporation

 

Aug-16

 

4.80%

 

Fixed

 

50%

 

5,314

Multiple Tenants

 

Oct-16

 

5.01%

 

Variable – Future Rate Reset

 

75%

 

9,353

Consolidated Systems, Inc.

 

Nov-16

 

5.87%

 

Fixed

 

60%

 

6,510

Hellweg Die Profi-Baumärkte GmbH & Co KG

 

Jan-17

 

5.49%

 

Fixed

 

43%

 

8,200

Hellweg Die Profi-Baumärkte GmbH & Co KG

 

Jan-17

 

5.49%

 

Fixed

 

40%

 

137,379

Hellweg Die Profi-Baumarkte GmbH Und Co.

 

Jan-17

 

6.74%

 

Fixed

 

40%

 

(12,215)

SaarOTEC

 

Jan-17

 

5.32%

 

Fixed

 

50%

 

4,569

Rave Motion Pictures Baton Rouge LLC

 

Feb-17

 

5.60%

 

Fixed

 

100%

 

9,910

Qwest Communications, Inc.

 

Feb-17

 

4.50%

 

Fixed

 

100%

 

1,199

TSI Newton, LLC

 

May-17

 

5.59%

 

Fixed

 

44%

 

3,308

24 Hour Fitness USA, Inc.

 

Jun-17

 

5.50%

 

Variable – Floating

 

100%

 

3,048

Amylin Pharmaceuticals, Inc.

 

Jul-17

 

6.20%

 

Fixed

 

100%

 

33,337

Walgreens Co.

 

Jul-17

 

5.67%

 

Fixed

 

100%

 

22,000

Advanced Micro Devices

 

Sep-17

 

5.80%

 

Fixed

 

33%

 

18,075

Arch Chemicals, Inc.

 

Oct-17

 

4.83%

 

Fixed

 

100%

 

7,581

PETsMART, Inc.

 

Nov-17

 

5.75%

 

Fixed

 

100%

 

2,544

 

GRAPHIC

 

Investing for the long runTM | 23

 


 

Detailed Debt Summary (Pro Rata-Basis)

(Continued)

 

(in thousands, except percentages) (unaudited)

 

 

As of September 30, 2013

 

Detailed Debt Summary

 

 

Tenant/Lease Guarantor

 

Maturity Date

 

Interest Rate

 

Rate Type

 

Percent
Ownership

 

Pro Rata Outstanding
Balance
 (a)

The United States Playing Card Company & Alstom Power

 

Dec-17

 

4.02%

 

Fixed

 

100%

 

5,624

The United States Playing Card Company & Alstom Power

 

Dec-17

 

4.02%

 

Fixed

 

100%

 

6,169

Wanbishi Archives Co. Ltd.

 

Dec-17

 

2.00%

 

Fixed

 

3%

 

793

OBI Group

 

Mar-18

 

5.10%

 

Variable – Swapped

 

75%

 

112,180

The New York Times Company

 

Apr-18

 

2.77%

 

Variable – Capped

 

18%

 

20,668

MediMedia USA, Inc.

 

Apr-18

 

5.90%

 

Fixed

 

100%

 

10,566

OBI Group

 

Mar-18

 

5.48%

 

Variable – Swapped

 

100%

 

8,419

Kerr Corporation

 

Oct-18

 

7.23%

 

Fixed

 

100%

 

7,190

Omnicom Group, Inc.

 

Oct-18

 

6.77%

 

Fixed

 

100%

 

25,737

Various self-storage facilities

 

Feb-19

 

7.03%

 

Variable  – Future Rate Reset

 

40%

 

12,270

Barnes & Noble, Inc.

 

Feb-19

 

3.70%

 

Variable – Swapped

 

100%

 

3,411

Orbital Sciences Corporation

 

Jul-19

 

7.75%

 

Fixed

 

100%

 

11,568

Universal Technical Inst. of CA, Inc.

 

Nov-19

 

6.27%

 

Variable  – Future Rate Reset

 

100%

 

11,175

24 Hour Fitness USA, Inc.

 

Jan-20

 

6.10%

 

Fixed

 

100%

 

3,023

C1000 Logistiek Vastgoed B.V.

 

Mar-20

 

3.75%

 

Variable – Swapped

 

15%

 

11,188

C1000 Logistiek Vastgoed B.V.

 

Mar-20

 

8.49%

 

Variable – Swapped

 

15%

 

2,972

Merit Medical Systems, Inc.

 

Apr-20

 

6.50%

 

Fixed

 

100%

 

12,881

JPMorgan Chas Bank, National Assoc.

 

Jul-20

 

5.47%

 

Variable – Swapped

 

100%

 

33,191

Prefecture de Police (Paris, France)

 

Aug-20

 

4.36%

 

Fixed

 

50%

 

37,429

Self-Storage Facility in Pensacola, FL

 

Nov-20

 

6.25%

 

Variable  – Future Rate Reset

 

100%

 

1,772

Federal Express Corporation

 

Dec-20

 

5.48%

 

Fixed

 

100%

 

51,129

Universal Technical Inst. of Penn., Inc.

 

Jan-21

 

6.15%

 

Fixed

 

100%

 

12,730

SymphonyIRI Group, Inc.

 

Feb-21

 

5.96%

 

Variable  – Future Rate Reset

 

100%

 

15,195

Datalogic Scanning, Inc.

 

Feb-21

 

5.80%

 

Fixed

 

100%

 

4,663

PETsMART, Inc.

 

Sep-21

 

6.50%

 

Fixed

 

30%

 

5,799

Integracolor, Ltd.

 

Mar-22

 

4.37%

 

Variable – Swapped

 

100%

 

6,763

24 Hour Fitness USA, Inc.

 

Apr-22

 

6.29%

 

Fixed

 

100%

 

3,895

Belgium Government

 

May-22

 

6.23%

 

Fixed

 

100%

 

10,969

EADS North America Defense Test  & Services

 

Jun-22

 

4.70%

 

Fixed

 

100%

 

8,363

Anthony’s Manufacturing Company

 

Jun-22

 

4.65%

 

Fixed

 

100%

 

6,912

Foster Wheeler Realty Services

 

Aug-22

 

3.89%

 

Variable – Swapped

 

100%

 

25,049

Marriott Courtyard

 

Oct-22

 

5.04%

 

Fixed

 

100%

 

140,000

Pactiv Corporation

 

Mar-23

 

6.32%

 

Fixed

 

100%

 

6,179

Benchmark Electronics Manufacturing, Inc.

 

Apr-23

 

6.36%

 

Fixed

 

100%

 

4,947

True Value Company

 

Jan-23

 

4.26%

 

Fixed

 

50%

 

16,009

True Value Company

 

Feb-23

 

4.25%

 

Fixed

 

50%

 

14,801

Kraft Foods Group, Inc.

 

Feb-23

 

4.05%

 

Fixed

 

100%

 

36,500

 

GRAPHIC

 

Investing for the long runTM | 24

 


 

Detailed Debt Summary (Pro Rata-Basis)

(Continued)

(in thousands, except percentages) (unaudited)

 

 

As of September 30, 2013

 

Detailed Debt Summary

 

 

Tenant/Lease Guarantor

 

Maturity Date

 

Interest Rate

 

Rate Type

 

Percent
Ownership

 

Pro Rata Outstanding
Balance
 (a)

 

 

 

 

 

 

 

 

 

 

 

Hologic, Inc.

 

May-23

 

6.40%

 

Fixed

 

100%

 

12,313

Galyan’s Trading Company

 

Sep-23

 

6.95%

 

Fixed

 

100%

 

2,928

Grande Communications Networks, Inc.

 

Sep-23

 

6.72%

 

Fixed

 

100%

 

5,066

Rexam Consumer Plastics, Inc.

 

Oct-23

 

6.30%

 

Fixed

 

100%

 

12,291

Galyan’s Trading Company

 

Oct-23

 

5.23%

 

Fixed

 

100%

 

8,300

EDS Customer Relationship Mgmt. Inc.

 

Dec-23

 

6.20%

 

Fixed

 

100%

 

9,554

Galyan’s Trading Company

 

Jan-24

 

5.07%

 

Fixed

 

100%

 

5,691

World Airways, Inc.

 

Jun-24

 

6.76%

 

Fixed

 

100%

 

3,802

Dick’s Sporting Goods

 

Oct-24

 

7.46%

 

Fixed

 

100%

 

4,030

Shaklee Corporation

 

Oct-24

 

5.54%

 

Fixed

 

100%

 

12,306

Berry Plastics Corporation

 

Nov-24

 

5.54%

 

Fixed

 

100%

 

14,504

Plumbmaster, Inc.

 

Nov-24

 

5.54%

 

Fixed

 

100%

 

4,310

Universal Technical Institute of Arizona

 

Dec-24

 

5.82%

 

Fixed

 

100%

 

12,767

24 Hour Fitness USA, Inc.

 

Jan-25

 

7.63%

 

Variable – Future Rate Reset

 

100%

 

2,561

The Talaria Company, LLC

 

Jun-25

 

6.26%

 

Variable – Future Rate Reset

 

30%

 

7,747

Google, Inc.

 

Nov-25

 

5.15%

 

Fixed

 

100%

 

23,714

Oriental Trading Company, Inc.

 

Sep-26

 

6.56%

 

Fixed

 

100%

 

 

22,064

Total Non-Recourse Debt

 

 

 

 

 

 

 

 

 

 

$

1,621,099

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured - Term Loan

 

Jul-14

 

1.78%

 

Variable – Floating

 

100%

 

 

300,000

Unsecured - Senior Credit Facility

 

Dec-14

 

1.94%

 

Variable – Floating

 

100%

 

 

190,000

 

 

 

 

 

 

 

 

 

 

 

 

Total Pro Rata Debt (b)

 

 

 

 

 

 

 

 

 

 

$

2,111,099

 

__________

 

(a)          Based upon applicable exchange rates at September 30, 2013.

 

(b)          Pro rata debt is a non-GAAP measure. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP financial measures.

 

 

GRAPHIC

 

Investing for the long runTM | 25

 


 

Selected Data for the Managed REITs

 

(in thousands, except share amounts, per share amounts and percentages) (unaudited)

 

As of September 30, 2013

Selected Data for the Managed REITs

 

Ownership

 

Shares
Outstanding

 

Most Recent
Offering
Price/NAV
  (a)

 

Current
Annualized
Distribution
(b)

 

 

Distributions
Received by WPC
 

 

Asset Management
Revenue
(c)

 

Structuring
Revenue
(d)

 

Special
General Partnership
Distributions

CPA®:16 Global

18.5%

 

206,300,331 

$

 8.70 

 

6.7%

 

$

18,919 

 

 

0.50%

 

 

4.5%

 

 

10.0%

CPA®:17 Global

1.7%

 

314,648,689 

 

 10.00 

 

6.5%

 

 

2,057 

 

 

0.50%

 

 

4.5%

 

 

10.0%

CPA®:18 Global

1.1%

 

2,113,617 (e)

 

 9.89 

 

8.4%

 

 

 

 

0.50%

 

 

4.5%

 

 

10.0%

CWI

0.4%

 

58,907,811 

 

 10.00 

 

6.0%

 

 

 

 

0.50%

 

 

2.5%

 

 

10.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inception
Date

 

Square Feet

 

 

Total
Domestic
AUM

 

 

Total
International
AUM
 

 

Total
AUM

 

Total
Debt
 

CPA®:16 Global

 

 

 

 

2003 

 

45,583 

 

$

2,493,465 

 

$

1,038,597 

 

$

3,532,062 

 

$

1,690,241 

CPA®:17 Global

 

 

 

 

2007 

 

32,846 

 

 

2,575,626 

 

 

1,699,348 

 

 

4,274,974 

 

 

1,795,336 

CPA®:18 Global

 

 

 

 

2012 

 

240 

 

 

56,536 

 

 

 - 

 

 

56,536 

 

 

72,800 (f)

CWI

 

 

 

 

2010 

 

N/A

 

 

719,577 

 

 

 - 

 

 

719,577 

 

 

297,372 

Total

 

 

 

 

 

 

78,669 

 

$

5,845,204 

 

$

2,737,945 

 

$

8,583,149 

 

$

3,855,749 

 

__________________

 

(a)             WPC generally calculates the NAV for each of the Managed REITs, relying in part on an estimate of the fair market value of each of the Managed REITs’ real estate portfolio provided by a third party, adjusted to give effect to the estimated fair value of mortgages encumbering the Managed REITs’ assets as well as other adjustments. The NAVs are based on a number of variables, including individual tenant credits, lease terms, lending credit spreads, foreign currency exchange rates and tenant defaults, among others. The NAV of CPA®:16 – Global is as of December 31, 2012. NAVs have not been determined for CPA®:17 – Global, CPA®:18 – Global, and CWI. CPA®:18 – Global’s offering price is calculated by using a weighted-average of the Class A and Class C common shares outstanding at September 30, 2013 at their initial offering price of $10.00 and $9.35 per share, respectively.

(b)             The current annualized distribution rate is based on quarterly distribution rate for the third quarter of 2013 (rate is not guaranteed). For CWI, approximately 83% of its third quarter distribution was paid in cash, with the remaining 17% paid in shares of its common stock.

(c)             We generally earn asset management revenue of 0.5% per annum of average invested assets. For CPA®:17 – Global, we earn asset management revenue ranging from 0.5% per annum of average market value for long-term net leases and certain other types of real estate investments up to 1.75% per annum of the average equity value for certain types of securities. For CPA®:18 – Global, we earn asset management revenue ranging from 0.5% per annum of average market value of certain investments up to 1.5% per annum of the average equity value of certain investments. For 2013, we have elected to receive all base asset management revenue in shares of each of the Managed REITs common stock (except that, for CPA®:16 – Global, which on July 31, 2013, we elected to start receiving cash in lieu of shares at the request of the Special Committee of its Board of Directors in light of our proposed Merger with CPA®:16 – Global).

(d)             We generally receive structuring revenue of up to an average of 4.5% of the total cost of all investments made by each CPA® REIT. For certain types of non-long term net lease investments acquired on behalf of CPA®:17 – Global, structuring revenue may range from 0% to 1.75% of the equity invested plus the related structuring revenue. For CWI, we earn structuring revenue of 2.5% of the total investment cost of the properties acquired.

(e)             Represents the combined shares outstanding for the Class A and, Class C shares of CPA®:18–Global common stock.

(f)               This amount excludes the $15.0 million loan borrowed from WPC, which was paid in full on October 3, 2013.

 

GRAPHIC

 

Investing for the long runTM | 26

 


Joint Venture Information

 

(in thousands, except percentages) (unaudited)

 

As of September 30, 2013

Joint Venture Information

Joint Venture or JV

WPC %
Interest

Remaining

 

Total JV

 

WPC
Pro Rata Share of Total JV
(a)

(Principal Tenant)

in JV

Interest in JV

 

Assets

 

Liabilities

 

Equity

 

Assets

 

Liabilities

 

Equity

Actuant Corporation

50.00%

CPA®:16 – Global - 50%

$

16,434 

$

11,291 

$

5,143 

$

8,225 

$

5,651 

$

2,574 

Advanced Micro Devices, Inc.

67.00%

CPA®:16 – Global - 33%

 

84,597 

 

65,304 

 

19,293 

 

56,392 

 

43,532 

 

12,860 

Builders FirstSource, Inc.

40.00%

CPA®:16 – Global - 60%

 

9,925 

 

 423 

 

9,502 

 

3,970 

 

 169 

 

3,801 

C1000 Logistiek Vastgoed B.V.

15.00%

CPA®:17 – Global - 85%

 

191,035 

 

 95,732 

 

95,303 

 

28,655 

 

 14,360 

 

14,295 

Consolidated Systems, Inc.

60.00%

CPA®:16 – Global - 40%

 

16,018 

 

11,084 

 

4,934 

 

9,610 

 

6,650 

 

2,960 

Del Monte Corporation

50.00%

CPA®:16 – Global - 50%

 

12,409 

 

10,778 

 

1,631 

 

6,204 

 

5,389 

 

815 

Eroski Sociedad Cooperativa

70.00%

CPA®:17 – Global - 30%

 

31,954 

 

194 

 

31,760 

 

22,368 

 

136 

 

22,232 

Hellweg Die Profi-Baumärkte GmbH & Co. KG (Hellweg 1)

75.00%

CPA®:16 – Global - 25%

 

183,364 

 

94,029 

 

89,335 

 

137,522 

 

70,521 

 

67,001 

Hellweg Die Profi-Baumärkte GmbH & Co. KG (Hellweg 2)

40.00%

CPA®:16 – Global - 27%; CPA®:17 – Global -33%

 

407,042 

 

352,644 

 

54,398 

 

163,766 

 

140,082 

 

23,684 

PetSmart, Inc.

30.00%

CPA®:16 – Global - 70%

 

21,315 

 

 19,539 

 

1,776 

 

6,395 

 

5,862 

 

533 

Barth Europa Transporte e.K/MSR Technologies GmbH

67.00%

CPA®:16 – Global - 33%

 

12,849 

 

1,097 

 

11,752 

 

8,566 

 

731 

 

7,835 

Arelis Broadcast, Veolia Transport, and Marchal Levage

65.00%

CPA®:16 – Global - 35%

 

23,989 

 

23,634 

 

355 

 

15,593 

 

15,362 

 

231 

Multi-tenant property in Illkirch-Graffens, France

 

75.00%

Third party - 25%

 

21,082 

 

13,408 

 

7,674 

 

15,812 

 

10,056 

 

5,756 

Multi-tenant property in Tours, France

95.00%

Third party - 5%

 

12,035 

 

8,321 

 

3,714 

 

11,433 

 

7,905 

 

3,528 

The New York Times Company

18.00%

CPA®:16 – Global - 27%; CPA®:17 – Global -55%

 

249,378 

 

120,597 

 

128,781 

 

44,265 

 

21,406 

 

22,859 

OBI A.G.

75.00%

CPA®:16 – Global - 25%

 

158,699 

 

150,444 

 

8,255 

 

119,025 

 

112,833 

 

6,192 

Pohjola Non-Life Insurance Company

 

60.00%

CPA®:16 – Global - 40%

 

89,880 

 

77,222 

 

12,658 

 

53,928 

 

46,333 

 

7,595 

Police Prefecture, French Government

50.00%

CPA®:16 – Global - 50%

 

90,967 

 

82,873 

 

8,094 

 

45,484 

 

41,437 

 

4,047 

SaarOTEC

50.00%

CPA®:16 – Global - 50%

 

6,131 

 

9,481 

 

(3,350)

 

3,065 

 

4,740 

 

(1,675)

Schuler A.G.

67.00%

CPA®:16 – Global - 33%

 

67,841 

 

3,415 

 

64,426 

 

45,228 

 

2,277 

 

42,951 

Carey Storage

37.00%

Third parties - 63%

 

75,724 

 

 47,154 

 

28,570 

 

27,715 

 

 17,258 

 

10,457 

TietoEnator Plc

60.00%

CPA®:16 – Global - 40%

 

82,991 

 

63,248 

 

19,743 

 

49,795 

 

37,949 

 

11,846 

The Talaria Company

30.00%

CPA®:16 – Global - 70%

 

41,315 

 

26,367 

 

14,948 

 

12,394 

 

7,910 

 

4,484 

Town Sports International Holdings, Inc.

 

44.00%

CPA®:16 – Global - 56%

 

7,071 

 

7,385 

 

(314)

 

3,111 

 

3,249 

 

(138)

True Value Company

50.00%

CPA®:16 – Global - 50%

 

114,951 

 

63,728 

 

51,223 

 

57,476 

 

31,864 

 

25,612 

U-Haul Moving Partners, Inc. and Mercury Partners, L.P.

 

57.00%

CPA®:16 – Global - 31%; CPA®:17 – Global - 12%

 

 

268,558 

 

170,044 

 

98,514 

 

154,932 

 

98,099 

 

56,833 

The Upper Deck Company

50.00%

CPA®:16 – Global - 50%

 

21,763 

 

82 

 

21,681 

 

10,881 

 

41 

 

10,840 

Waldaschaff Automotive GmbH and Wagon Automotive Nagold GmbH

33.00%

CPA®:17 – Global - 67%

 

43,967 

 

 20,592 

 

23,375 

 

14,654 

 

 6,863 

 

7,791 

Wanbishi Archives Co. Ltd

3.00%

CPA®:17 – Global - 97%

 

42,957 

 

 29,095 

 

13,862 

 

1,289 

 

 873 

 

416 

 

 

 

$

2,406,241 

$

1,579,205 

$

827,036 

$

1,137,753 

$

759,538 

$

378,215 

 

______________

(a)          Pro rata amounts are non-GAAP measures. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP financial measures.

 

 

GRAPHIC

 

Investing for the long runTM | 27

 


 

Portfolio Information – Diversification of Top Ten Tenants by Rent and Historical Occupancy (Pro Rata-Basis)

(in thousands, except percentages) (unaudited)

 

 

As of September 30, 2013

 

Tenant / Lease Guarantor

 

Annualized Contractual
Minimum Base Rent

 

Percent

Hellweg Die Profi-Baumärkte GmbH & Co. KG (a)

 

  $

27,417

 

8.3%

U-Haul Moving Partners Inc. and Mercury Partners, LP

 

18,741

 

5.7%

Carrefour France SAS (a)

 

17,274

 

5.2%

Marcourt Investments Inc.

 

16,100

 

4.9%

OBI Group (a)

 

13,959

 

4.2%

UTI Holdings, Inc.

 

9,044

 

2.7%

Federal Express Corporation

 

7,593

 

2.3%

True Value Company

 

7,243

 

2.2%

Foster Wheeler AG

 

6,510

 

2.0%

Pohjola Non-Life Insurance Company LTD (a)

 

5,742

 

1.7%

Total (b)

 

  $

129,623

 

39.2%

 

 

 

 

 

Weighted-Average Lease Term for Portfolio

 

8.7

years

 

 

Historical Occupancy (c)

 

__________

 

(a)

Rent amounts are subject to fluctuations in foreign currency exchange rates.

 

 

(b)

Pro rata amounts are non-GAAP measures. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

 

(c)

Pre- CPA®:15 Merger periods include pro forma combined occupancy rates for WPC and CPA®:15.

 

GRAPHIC

 

Investing for the long runTM | 28

 


 

Portfolio Information – Diversification by Property Type (Pro Rata-Basis)

 

(in thousands, except percentages) (unaudited)

 

 

As of September 30, 2013

 

Property Type

 

Square Footage

 

Percent

Industrial

 

13,152

 

33.4%

Warehouse/Distribution

 

9,684

 

24.6%

Office

 

6,000

 

15.2%

Retail

 

4,856

 

12.3%

Self Storage

 

3,354

 

8.4%

Other Properties (a)

 

2,390

 

6.1%

Total (b) (c)

 

39,436

 

100.0%

 

Property Type

 

Annualized Contractual
Minimum Base Rent

 

Percent

Office

 

  $

101,820

 

30.7%

Industrial

 

70,409

 

21.2%

Retail

 

52,112

 

15.7%

Warehouse/Distribution

 

50,729

 

15.3%

Other Properties (a)

 

37,858

 

11.4%

Self Storage

 

18,741

 

5.7%

Total (b) (c)

 

  $

331,669

 

100.0%

 

Portfolio Diversification by Property Type (b) (c)

(based on square footage)

Portfolio Diversification by Property Type (b) (c)

(based on annualized contractual minimum base rent)

__________

 

(a)

Other properties include hospitality, education, health & fitness, theaters, and unoccupied land.

 

 

(b)

Excludes all operating properties.

 

 

(c)

Pro rata amounts are non-GAAP measures. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

GRAPHIC

 

Investing for the long runTM | 29

 


 

Portfolio Information – Diversification by Tenant Industry (Pro Rata-Basis)

 

 

(in thousands, except percentages) (unaudited)

 

 

As of September 30, 2013

 

Industry Type (a)

 

Square Footage

 

Percent

 

Annualized Contractual 
Minimum Base Rent

 

Percent

Retail Trade

 

8,459

 

21.4%

 

  $

 72,001

 

21.7%

Electronics

 

2,266

 

5.7%

 

27,832

 

8.4%

Business and Commercial Services

 

1,167

 

3.0%

 

25,831

 

7.8%

Healthcare, Education and Childcare

 

1,588

 

4.0%

 

19,460

 

5.9%

Hotels and Gaming

 

1,036

 

2.6%

 

16,100

 

4.9%

Chemicals, Plastics, Rubber, and Glass

 

3,110

 

7.9%

 

14,416

 

4.3%

Beverages, Food, and Tobacco

 

2,357

 

6.0%

 

14,357

 

4.3%

Media: Printing and Publishing

 

1,911

 

4.9%

 

12,941

 

3.9%

Telecommunications

 

922

 

2.4%

 

12,487

 

3.8%

Buildings and Real Estate

 

2,180

 

5.5%

 

12,182

 

3.7%

Federal, State and Local Government

 

480

 

1.2%

 

11,027

 

3.3%

Leisure, Amusement, Entertainment

 

564

 

1.5%

 

10,823

 

3.3%

Machinery

 

1,196

 

3.0%

 

10,237

 

3.1%

Transportation - Cargo

 

612

 

1.6%

 

9,571

 

2.9%

Automobile

 

2,091

 

5.3%

 

9,090

 

2.7%

Construction and Building

 

2,200

 

5.6%

 

9,006

 

2.7%

Insurance

 

643

 

1.6%

 

7,625

 

2.3%

Transportation - Personal

 

1,199

 

3.0%

 

6,767

 

2.0%

Consumer and Durable Goods

 

877

 

2.2%

 

5,141

 

1.6%

Aerospace and Defense

 

760

 

1.9%

 

5,076

 

1.5%

Other (b)

 

3,405

 

8.7%

 

19,699

 

5.9%

Vacant

 

413

 

1.0%

 

-

 

0.0%

Total (c) (d)

 

39,436

 

100.0%

 

  $

 331,669

 

100.0%

 

__________

 

Portfolio Revenues – Contractual Increases (d) (e)

(based on annualized contractual minimum base rent)

 

(a)          Based on the Moody’s Classification System and information provided by the tenant.

(b)          Includes rent from tenants in the following industries: grocery; textiles, leather, and apparel; banking; forest products and paper; mining, metals, and primary metal industries; consumer non-durable goods; and multi-tenant properties.

(c)          Excludes all operating properties.

(d)         Pro rata amounts are non-GAAP measures. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

(e)          Pro rata rents and applicable exchange rates as of September 30, 2013.

 

GRAPHIC

 

Investing for the long runTM | 30

 


 

Portfolio Information – Diversification by Geography (Pro Rata-Basis)

 

(in thousands, except percentages) (unaudited)

 

As of September 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

Property
Type

 

Square 
Footage

 

Percent

 

 

Property 
Type

 

Annualized Contractual 
Minimum Base Rent

 

Percent

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

 

U.S.

 

 

 

 

South

 

10,225

 

25.9%

 

 

South

 

$

 69,656

 

21.0%

West

 

6,713

 

17.0%

 

 

West

 

67,358

 

20.3%

Midwest

 

6,166

 

15.6%

 

 

East

 

49,792

 

15.0%

East

 

5,672

 

14.4%

 

 

Midwest

 

40,158

 

12.1%

U.S. Total

 

28,776

 

72.9%

 

 

U.S. Total

 

226,964

 

68.4%

 

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

International

 

 

 

 

Germany

 

3,453

 

8.8%

 

 

Germany

 

35,749

 

10.8%

France

 

3,421

 

8.7%

 

 

France

 

24,705

 

7.4%

Poland

 

1,399

 

3.5%

 

 

Finland

 

15,156

 

4.6%

Finland

 

974

 

2.5%

 

 

Poland

 

13,959

 

4.2%

Other (a)

 

1,413

 

3.6%

 

 

Other (a)

 

15,136

 

4.6%

International Total

 

10,660

 

27.1%

 

 

International Total

 

104,705

 

31.6%

Total (b) (c)

 

39,436

 

100.0%

 

 

Total (b) (c)

 

$

 331,669

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio Diversification by Geography (b) (c)

(based on square footage)

 

 

Portfolio Diversification by Geography (b) (c)

(based on annualized contractual minimum base rent)

 

 

 

 

 

 

_________

 

(a)          Includes assets in the United Kingdom, the Netherlands, Spain, Belgium and Japan.

 

(b)          Excludes all operating properties.

 

(c)          Pro rata amounts are non-GAAP measures. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

GRAPHIC

 

Investing for the long runTM | 31

 


 

Portfolio Information – Lease Maturities (Pro Rata-Basis)

 

(in thousands, except percentages and number of leases) (unaudited)

 

 

As of September 30, 2013

 

Year of Lease Expiration (a)

 

Number of Leases
Expiring

 

Square Feet

 

As % of 
Total Portfolio

 

Annualized Contractual 
Minimum Base Rent

 

As % of 
Total Portfolio

Remaining 2013 (b)

 

1

 

15

 

0.0%

 

  $

 27

 

0.0%

2014 

 

12

 

1,093

 

2.8%

 

10,204

 

3.1%

2015 

 

20

 

3,876

 

9.8%

 

30,842

 

9.3%

2016 

 

16

 

1,732

 

4.4%

 

16,415

 

5.0%

2017 

 

11

 

2,021

 

5.1%

 

11,379

 

3.4%

2018 

 

19

 

2,511

 

6.4%

 

23,216

 

7.0%

2019 

 

12

 

1,927

 

4.9%

 

27,478

 

8.3%

2020 

 

8

 

2,135

 

5.4%

 

12,024

 

3.6%

2021 

 

9

 

1,720

 

4.4%

 

11,973

 

3.6%

2022 

 

15

 

3,500

 

8.9%

 

25,667

 

7.7%

2023 

 

11

 

4,906

 

12.4%

 

41,038

 

12.4%

2024 

 

28

 

6,248

 

15.9%

 

47,114

 

14.2%

2025 

 

6

 

462

 

1.2%

 

6,069

 

1.8%

2026 

 

7

 

646

 

1.6%

 

3,447

 

1.0%

Thereafter

 

20

 

6,231

 

15.8%

 

64,776

 

19.6%

Vacant

 

-

 

413

 

1.0%

 

-

 

0.0%

Total (c) (d)

 

195

 

39,436

 

100.0%

 

  $

 331,669

 

100.0%

 

Lease Revenue as a Percentage of Expiring Leases

 

 

__________

 

(a)          Assumes tenant does not exercise renewal option.

(b)          Month-to-month properties are counted in 2013 revenue stream.

(c)          Excludes all operating properties.

(d)         Pro rata amounts are non-GAAP measures. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

GRAPHIC

 

Investing for the long runTM | 32

 


 

Investment Activity – Owned Portfolio – Acquisitions and Dispositions

 

(in thousands, except square footage) (unaudited)

 

 

For the Nine Months Ended September 30, 2013

 

Acquisitions - Owned Portfolio

 

Portfolio(s)

 

Tenant/Lease Guarantor

 

Property Location(s)

 

Purchase Price (a)

 

Closing Date

 

Property Type(s)

 

Gross Square
Footage

WPC

 

Kraft Foods Group, Inc.

 

Northfield, IL

 

  $

 72,360

 

Jan-13

 

Office

 

679,109

WPC

 

Tommy Hilfiger Europe B.V. (b)

 

Venlo, Netherlands

 

35,316

 

Apr-13

 

Warehouse/Distribution

 

473,611

WPC

 

Cargotec Corporation (b)

 

Tampere, Finland

 

52,084

 

Jun-13

 

Industrial, Office

 

183,568

WPC

 

Arbella Capital Corporation

 

Quincy, MA

 

25,500

 

Jun-13

 

Office

 

132,160

WPC

 

UK Government (b)

 

Manchester, United Kingdom

 

63,251

 

Sep-13

 

Office

 

211,367

Total Owned Portfolio Acquisitions

 

 

 

 

 

  $

 248,511

 

 

 

 

 

1,679,815

 

Dispositions - Owned Portfolio

 

Portfolio(s)

 

Tenant/Lease Guarantor

 

Property Location(s)

 

Gross Sale Price

 

Date

 

Property Type(s)

 

Gross Square
Footage

WPC

 

Childtime Childcare, Inc. (c)

 

Naperville, IL

 

  $

 1,445

 

Jan-13

 

Education

 

7,893

WPC

 

Garden Ridge, L.P. (c)

 

Oklahoma City, OK

 

9,790

 

Mar-13

 

Retail

 

141,585

WPC

 

US Airways Group, Inc.   

 

Tempe, AZ

 

28,420

 

Jun-13

 

Office

 

167,890

WPC

 

Custom Food Products, LLC   (c)

 

Owingsville, KY

 

5,500

 

Jun-13

 

Industrial

 

37,094

WPC

 

Anthony, Inc. and Anthony Holdings, Inc.

 

San Fernando, CA

 

3,122

 

Jun-13

 

Industrial

 

40,306

WPC

 

Broomfield Properties Corp.

 

Broomfield, CO

 

1,300

 

Jun-13

 

Office

 

41,281

WPC

 

A. Duie Pyle

 

Westfield, MA

 

3,350

 

Jul-13

 

Warehouse/Distribution

 

169,102

WPC

 

UTI Holdings, Inc.        

 

Glendale Heights, IL

 

3,975

 

Jul-13

 

Education

 

101,194

WPC

 

Federal Express Corporation

 

College Station, TX

 

700

 

Jul-13

 

Warehouse/Distribution

 

12,080

Total Owned Portfolio Dispositions

 

 

 

 

 

  $

 57,602

 

 

 

 

 

718,425

 

__________

 

(a)          Includes capitalized transaction costs, where applicable.

 

(b)          Amounts are based on the applicable exchange rate on the date of acquisition.

 

(c)          Properties were acquired in the CPA®:15 Merger.

 

GRAPHIC

 

Investing for the long runTM | 33

 


 

Investment Activity – Managed REITs – Acquisitions

 

(in thousands, except square footage) (unaudited)

 

For the Nine Months Ended September 30, 2013

 

Acquisitions - Leased Properties

 

Portfolio(s)

 

Tenant/Lease Guarantor

 

Property Location(s)

 

Purchase
Price
 (a)

 

Closing Date

 

Property Type(s)

 

Gross Square
Footage

CPA®:17 – Global

 

Penda Corporation

 

Portage, WI

 

  $

10,871

 

Jan-13

 

 

Industrial

 

270,500

CPA®:17 – Global

 

Live Nation Entertainment, Inc.

 

Dallas, TX

 

15,700

 

Feb-13

 

 

Retail

 

61,876

CPA®:17 – Global

 

Harbor Freight Tools USA, Inc. (b)

 

Dillon, SC

 

39,004

 

Mar-13

 

 

Warehouse/Distribution

 

BTS

CPA®:17 – Global

 

GEMS Chicago, Inc.

 

Chicago, IL

 

18,188

 

Apr-13

 

 

Land

 

324,176

CPA®:17 – Global

 

Multi-Tenant

 

Northbrook, IL

 

7,934

 

May-13

 

 

Retail

 

6,006

CPA®:16 – Global

 

Advanced Circuits, Inc.

 

Aurora, CO

 

4,869

 

May-13

 

 

Industrial

 

50,664

CPA®:17 – Global

 

FrieslandCampina Nederland B.V. (c)

 

Wageningen, Netherlands

 

38,569

 

Jul-13

 

 

Industrial

 

185,957

CPA®:17 – Global

 

H&M Hennes & Mauritz AB (c)

 

Poznan, Poland

 

78,063

 

Jul-13

 

 

Warehouse/Distribution

 

897,951

CPA®:17 – Global (50%); CPA®:18 – Global (50%)

 

State Farm Mutual Automobile Company

 

Austin, TX

 

115,604

 

Aug-13

 

 

Office

 

239,706

CPA®:17 – Global

 

RLJ-McLarty-Landers Automotive Holdings, LLC

 

Lewisville, TX

 

15,310

 

Aug-13

 

 

Retail

 

74,640

Total Acquisitions - Leased Properties

 

 

 

 

 

344,112

 

 

 

 

 

2,111,476

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions - Self-Storage

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio(s)

 

Property Type

 

Property Location(s)

 

Purchase
Price
(a)

 

Closing Date

 

 

 

 

CPA®:17 – Global

 

Self-Storage Facility

 

Cathedral City, CA

 

2,755

 

Mar-13

 

 

 

 

 

CPA®:17 – Global

 

Self-Storage Facility

 

Hilo, HI

 

6,100

 

Jun-13

 

 

 

 

 

CPA®:17 – Global

 

Self-Storage Facility (Equity investment)

 

New York, NY

 

81,237

 

Jun-13

 

 

 

 

 

CPA®:17 – Global

 

Self-Storage Facilities (2 Facilities)

 

Tampa, FL

 

4,430

 

Jul-13

 

 

 

 

 

CPA®:17 – Global

 

Self-Storage Facility

 

Winder, GA

 

2,700

 

Jul-13

 

 

 

 

 

CPA®:17 – Global

 

Self-Storage Facility

 

Orlando, FL

 

6,700

 

Aug-13

 

 

 

 

 

CPA®:17 – Global

 

Self-Storage Facility

 

Palm Coast, FL

 

5,700

 

Sep-13

 

 

 

 

 

Total Acquisitions - Self-Storage Properties

 

 

 

 

 

109,622

 

 

 

 

 

 

 

 

GRAPHIC

Investing for the long runTM | 34

 


 

Investment Activity – Managed REITs – Acquisitions (Unaudited)

(Continued)

(in thousands, except square footage)

 

 

For the Nine Months Ended September 30, 2013

 

Acquisitions - Hospitality

 

Portfolio(s)

 

Property Type

 

Property Location(s)

 

Purchase
Price
 (a)

 

Closing Date

 

CWI

 

Hospitality

 

Memphis, TN; Atlanta, GA;
Frisco, TX; Birmingham, AL;
Baton Rouge, LA

 

94,600

 

Feb-13

 

CWI

 

Hospitality

 

Pittsburgh, PA

 

29,900

 

Mar-13

 

CWI

 

Hospitality

 

Nashville, TN

 

73,600

 

May-13

 

CWI

 

Hospitality

 

New York, NY

 

113,000

 

Jun-13

 

CWI

 

Hospitality

 

Sonoma, CA

 

78,948

(d)

Jul-13

 

CWI

 

Hospitality

 

Raleigh, NC

 

82,872

 

Aug-13

 

 

 

 

 

 

 

 

 

 

 

Total Acquisitions - Hospitality Properties

 

 

 

472,920

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Acquisitions

 

 

 

 

 

  $

926,654

 

 

 

 

GRAPHIC

Investing for the long runTM | 35

 


 

Investment Activity – Managed REITs – Acquisitions - Notes

(Continued)

 

__________

 

(a)

Includes capitalized transaction costs, where applicable. For equity investments, the purchase price represents the Managed REIT’s pro rata share of the jointly-owned investment estimated total asset value, excluding debt, plus capitalized transactions costs.

 

 

(b)

Acquisition includes a build-to-suit (“BTS”) transaction. Purchase price represents total commitment for BTS funding. Gross square footage amounts cannot be determined at this time.

 

 

(c)

Acquisition price reflects applicable foreign exchange rate.

 

 

(d)

Represents the joint venture’s, purchase price to acquire the hotel less the noncontrolling interest contributed by the joint venture partner.

 

GRAPHIC

Investing for the long runTM | 36

 


 

Investment Activity – Managed REITs – Dispositions

 

(in thousands, except square footage) (unaudited)

 

 

For the Nine Months Ended September 30, 2013

 

Portfolio(s)

 

Tenant/Lease Guarantor

 

Property Location(s)

 

Gross Sale
Price

 

Date

 

Property Type

 

Gross Square
Footage

CPA®:16 – Global

 

Vacant (formerly Barjan LLC)

 

Rock Island, IL

 

  $

 7,410

 

Feb-13

 

Warehouse/Distribution

 

241,950

CPA®:16 – Global

 

Childtime Childcare, Inc.

 

Chandler, AZ; Hauppauge and Patchogue, NY; Silverdale, WAS; and Sugar Land, TX

 

7,761

 

Mar-13; Jul-13; Aug-13; Sep-13

 

Education

 

40,695

CPA®:16 – Global

 

Vacant (formerly Metagenics, Inc.)

 

San Clemente, CA

 

11,263

 

Mar-13

 

Industrial

 

88,070

CPA®:16 – Global

 

Garden Ridge, L.P.

 

Tulsa, OK

 

9,810

 

Mar-13

 

Retail

 

141,659

CPA®:16 – Global

 

RR Donnelley & Sons Company

 

Waterloo, WI

 

-

 

Apr-13

 

Industrial, Office, Warehouse/Distribution

 

466,192

CPA®:16 – Global

 

Waddington North America, Inc.

 

Florence, KY

 

1,775

 

Jun-13

 

Industrial

 

166,849

CPA®:16 – Global

 

BA Kitchen Components Limited (a)

 

Doncaster, United Kingdom

 

1,527

 

Jun-13

 

Industrial

 

225,998

CWI

 

Hotel Maya, a Doubletree Hotel and Residence Inn Long Beach (49% Equity investment)

 

Long Beach, CA

 

22,640

 

Jul-13

 

Hospitality

 

N/A

CPA®:16 – Global

 

Fraikin SAS (a)

 

Créteil, Marseille, Vaulx en Velin, and Wasquehal, France

 

4,589

 

Jul-13

 

Industrial

 

43,550

CPA®:16 – Global

 

Tower Automotive Products Co., Inc.

 

Upper Sandusky, OH

 

875

 

Aug-13

 

Industrial

 

80,212

CPA®:16 – Global

 

Southwest Convenience Stores

 

Socorro, TX

 

447

 

Aug-13

 

Retail

 

4,114

CPA®:16 – Global

 

Gerber Scientific, Inc.

 

South Windsor, CT

 

4,200

 

Sep-13

 

Industrial

 

60,000

Total Dispositions

 

 

 

 

 

  $

72,297

 

 

 

 

 

1,559,289

 

____________

 

(a)          Disposition price reflects applicable foreign exchange rate.

 

GRAPHIC

 

Investing for the long runTM | 37

 


 

Tenants by Annualized Contractual Minimum Base Rent (Pro Rata-Basis)

 

(in thousands, except number of locations and percentages) (unaudited)

 

As of September 30, 2013

 

Tenant

 

 

Location(s)

 

 

Number
of
Locations

 

 

Square
Feet

 

 

Annualized
Rent

 

 

Annualized
Rent as a
% of Total

 

 

Increase
Factor

 

 

Property Type

 

 

Industry

 

Hellweg Die Profi-Baumärkte GmbH Und Co. KG

 

 

Germany

 

 

53

 

 

2,308

 

 

$

 27,417

 

 

8.3%

 

 

CPI

 

 

Retail

 

 

Retail Stores

 

Mercury Partners, LP/U-Haul Moving Partners Inc.

 

 

AL; AZ; CO; FL; GA; IL; IN; KS; LA; MA; MD; MN; MO; MS; NC; NJ; NM; NV; NY; OH; OK; TN; TX; VA

 

 

 

78

 

 

3,354

 

 

18,741

 

 

5.7%

 

 

CPI

 

 

Self-Storage

 

 

Buildings and Real Estate; Transportation-Personal

 

Carrefour France SAS

 

 

France

 

 

 

8

 

 

2,940

 

 

17,274

 

 

5.2%

 

 

CPI; FIXED

 

 

Warehouse/Distribution

 

 

Retail Stores

 

Marriott Corporation

 

 

CA; FL; IL; IN; KY; MD; NJ; NM; WA

 

 

 

12

 

 

1,036

 

 

16,100

 

 

4.9%

 

 

OTHER

 

 

Other Properties

 

 

Hotels and Gaming

 

OBI Group

 

 

Poland

 

 

 

18

 

 

1,398

 

 

13,959

 

 

4.2%

 

 

CPI

 

 

Office; Retail

 

 

Retail Stores

 

UTI Holdings, Inc.

 

 

Rancho Cucamonga, CA; Exton, PA; Avondale, AZ; Glendale Heights, IL

 

 

 

4

 

 

706

 

 

9,044

 

 

2.7%

 

 

CPI; FIXED

 

 

Other Properties

 

 

Healthcare, Education and Childcare

 

Federal Express Corporation

 

 

Collierville, TN; Corpus Christi, TX

 

 

 

 

2

 

 

421

 

 

7,593

 

 

2.3%

 

 

CPI; FIXED

 

 

Office; Warehouse/Distribution

 

 

Transportation - Cargo

 

True Value Company

 

 

Corsicana, TX; Fogelsville, PA; Jonesboro, GA; Kansas City, MO; Kingman, AZ; Springfield, OR; Woodland, CA

 

 

 

7

 

 

1,814

 

 

7,243

 

 

2.2%

 

 

FIXED

 

 

Warehouse/Distribution

 

 

Construction and Building

 

Foster Wheeler Realty Services

 

 

Clinton, NJ

 

 

 

1

 

 

292

 

 

6,510

 

 

2.0%

 

 

CPI

 

 

Office

 

 

Business and Commercial Services

 

 

Pohjola Non-Life Insurance Company LTD

 

 

Finland

 

 

 

1

 

 

511

 

 

5,742

 

 

1.7%

 

 

CPI

 

 

Office

 

 

Insurance

 

Fiserv, Inc.

 

 

Norcross, GA

 

 

 

1

 

 

221

 

 

5,472

 

 

1.6%

 

 

CPI; FIXED

 

 

Land; Office

 

 

Business and Commercial Services

 

 

Tieto OYJ

 

 

Finland

 

 

2

 

 

280

 

 

5,432

 

 

1.6%

 

 

CPI

 

 

Office

 

 

Electronics

 

Kraft Foods Group, Inc.

 

 

Northfield, IL

 

 

 

1

 

 

679

 

 

5,000

 

 

1.5%

 

 

NONE

 

 

Office

 

 

Beverages, Food, and Tobacco

 

 

Schuler AG

 

 

Germany

 

 

 

1

 

 

498

 

 

4,837

 

 

1.5%

 

 

CPI

 

 

Industrial

 

 

Machinery

 

Life Time Fitness, Inc.

 

 

Canton, MI; Rochester Hills, MI

 

 

2

 

 

279

 

 

4,672

 

 

1.4%

 

 

FIXED

 

 

Other Properties

 

 

Leisure, Amusement, Entertainment

 

 

Prefecture de Police

 

 

France

 

 

1

 

 

121

 

 

4,649

 

 

1.4%

 

 

CPI

 

 

Office

 

 

Federal, State and Local Government

 

 

 

GRAPHIC

 

Investing for the long runTM | 38

 


 

Tenants by Annualized Contractual Minimum Base Rent (Pro Rata Basis)

(Continued)

(in thousands, except number of locations and percentages) (unaudited)

 

 

As of September 30, 2013

 

Tenant

 

 

Location(s)

 

 

Number
of
Locations

 

 

Square
Feet

 

 

Annualized
Rent

 

 

Annualized
Rent as a
% of Total

 

 

Increase
Factor

 

 

Property Type

 

 

Industry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The New York Times Company

 

 

New York, NY

 

 

1

 

 

126

 

 

4,557

 

 

1.4%

 

 

FIXED

 

 

Office

 

 

Media: Printing and Publishing

 

 

Dr. Pepper Snapple Group, Inc.

 

 

Houston, TX; Irving, TX

 

 

2

 

 

722

 

 

4,464

 

 

1.4%

 

 

CPI

 

 

Industrial

 

 

Beverages, Food, and Tobacco

 

 

UK Government

 

 

United Kingdom

 

 

1

 

 

211

 

 

4,407

 

 

1.3%

 

 

OTHER

 

 

Office

 

 

Federal, State and Local Government

 

 

Omnicom Group, Inc.

 

 

Playa Vista, CA

 

 

1

 

 

120

 

 

4,346

 

 

1.3%

 

 

CPI

 

 

Office

 

 

Business and Commercial Services

 

 

Oriental Trading Company, Inc.

 

 

La Vista, NE

 

 

1

 

 

736

 

 

4,305

 

 

1.3%

 

 

CPI

 

 

Warehouse/Distribution

 

 

Consumer and Durable Goods

 

 

HP Enterprise Services, LLC

 

 

Louisville, CO

 

 

1

 

 

404

 

 

4,185

 

 

1.3%

 

 

CPI

 

 

Industrial

 

 

Telecommunications

 

 

Hologic, Inc.

 

 

Bedford, MA; Danbury, CT

 

 

2

 

 

269

 

 

4,068

 

 

1.2%

 

 

CPI

 

 

Industrial

 

 

Electronics

 

 

24 Hour Fitness USA, Inc.

 

 

Austin, TX; Bedford, TX; Englewood, CO; Memphis, TN

 

 

4

 

 

181

 

 

4,008

 

 

1.2%

 

 

CPI; FIXED

 

 

Other Properties

 

 

Leisure, Amusement, Entertainment

 

 

JPMorgan Chase Bank, National Assoc.

 

 

Fort Worth, TX

 

 

1

 

 

384

 

 

4,000

 

 

1.2%

 

 

CPI

 

 

Office

 

 

Banking

 

 

Berry Plastics Corporation

 

 

Alsip, IL; Solvay, NY; Tolleson, AZ

 

 

4

 

 

941

 

 

3,992

 

 

1.2%

 

 

CPI

 

 

Industrial

 

 

Chemicals, Plastics, Rubber, and Glass

 

 

Cargotec Finland OY

 

 

Finland

 

 

1

 

 

184

 

 

3,983

 

 

1.2%

 

 

CPI

 

 

Industrial; Office

 

 

Machinery

 

 

Advanced Micro Devices

 

 

Sunnyvale, CA

 

 

1

 

 

121

 

 

3,981

 

 

1.2%

 

 

CPI

 

 

Office

 

 

Electronics

 

 

Amylin Pharmaceuticals, Inc.

 

 

San Diego, CA

 

 

2

 

 

144

 

 

3,950

 

 

1.2%

 

 

FIXED

 

 

Office

 

 

Business and Commercial Services

 

 

Konica Minolta Business Solutions U.S.A., Inc.

 

 

St. Petersburg, FL

 

 

2

 

 

338

 

 

3,815

 

 

1.2%

 

 

CPI

 

 

Office

 

 

Electronics

 

Dick’ Sporting Goods, Inc.

 

 

Greenwood, IN (2); Freehold, NJ; Buffalo, NY

 

 

 

4

 

 

341

 

 

3,519

 

 

1.1%

 

 

CPI; FIXED

 

 

Retail

 

 

Retail Stores

 

Orbital Sciences Corporation

 

 

Chandler, AZ

 

 

1

 

 

355

 

 

3,307

 

 

1.0%

 

 

CPI

 

 

Industrial

 

 

Aerospace and Defense

 

Rexam Healthcare Packaging Inc.

 

 

Buffalo Grove, IL; Excelsior Springs, MO; North Versailles, PA; St. Petersburg, FL; West Lafayette, IN

 

 

 

5

 

 

616

 

 

3,243

 

 

1.0%

 

 

CPI

 

 

Industrial

 

 

Chemicals, Plastics, Rubber, and Glass

 

Shaklee Corporation

 

 

Pleasanton, CA

 

 

1

 

 

112

 

 

3,101

 

 

0.9%

 

 

FIXED

 

 

Office

 

 

Healthcare, Education and Childcare

 

 

 

GRAPHIC

 

Investing for the long runTM | 39

 


 

Tenants by Annualized Contractual Minimum Base Rent (Pro Rata Basis)

(Continued)

(in thousands, except number of locations and percentages) (unaudited)

 

As of September 30, 2013

 

Tenant

 

 

Location(s)

 

 

Number
of
Locations

 

 

Square
Feet

 

 

Annualized
Rent

 

 

Annualized
Rent as a
% of Total

 

 

Increase
Factor

 

 

Property Type

 

 

Industry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tommy Hilfiger Europe B.V.

 

 

Netherlands

 

 

2

 

 

474

 

 

3,100

 

 

0.9%

 

 

CPI

 

 

Warehouse/Distribution

 

 

Textiles, Leather, and Apparel

 

 

MBM-Beef

 

 

Lewisville, TX; Orlando, FL; Rocky Mount, NC

 

 

4

 

 

556

 

 

3,076

 

 

0.9%

 

 

FIXED

 

 

Industrial

 

 

Beverages, Food, and Tobacco

 

 

Tower Automotive Operations USA I, LLC

 

 

Auburn, IN; Bluffton, OH; Milan, TN

 

 

 

3

 

 

844

 

 

2,919

 

 

0.9%

 

 

CPI

 

 

Industrial

 

 

Automobile

 

MediMedia USA, Inc.

 

 

Lower Makefield, PA

 

 

1

 

 

107

 

 

2,574

 

 

0.8%

 

 

FIXED

 

 

Office

 

 

Media: Printing and Publishing

 

 

Information Resources, Inc.

 

 

Chicago, IL

 

 

1

 

 

160

 

 

2,521

 

 

0.8%

 

 

CPI

 

 

Office

 

 

Business and Commercial Services

 

 

C1000 Logistiek Vastgoed B.V.

 

 

Netherlands

 

 

6

 

 

307

 

 

2,405

 

 

0.7%

 

 

CPI

 

 

Warehouse/Distribution

 

 

Grocery

 

 

AutoZone, Inc.

 

 

AL; FL; GA; IL; LA; MO; NC; NM; SC; TN; TX

 

 

 

54

 

 

302

 

 

2,219

 

 

0.7%

 

 

FIXED; NONE

 

 

Retail

 

 

Retail Stores

 

Google Inc.

 

 

Venice, CA

 

 

1

 

 

68

 

 

2,117

 

 

0.6%

 

 

FIXED

 

 

Office

 

 

Telecommunications

 

 

Gestamp Alabama LLC

 

 

McCalla, AL

 

 

1

 

 

390

 

 

2,016

 

 

0.6%

 

 

CPI

 

 

Industrial

 

 

Automobile

 

 

Sybron Dental Specialties

 

 

Romulus, MI; Glendora, CA

 

 

2

 

 

245

 

 

2,009

 

 

0.6%

 

 

CPI

 

 

Industrial

 

 

Healthcare, Education and Childcare

 

 

Overland Storage Inc.

 

 

San Diego, CA

 

 

1

 

 

91

 

 

1,981

 

 

0.6%

 

 

FIXED

 

 

Office

 

 

Electronics

 

 

Unisource Worldwide, Inc.

 

 

Anchorage, AK; Commerce, CA

 

 

2

 

 

456

 

 

1,926

 

 

0.6%

 

 

FIXED

 

 

Warehouse/Distribution

 

 

Forest Products and Paper

 

 

Grande Communications Networks, Inc.

 

 

Corpus Christi, TX; Odessa, TX; San Marcos, TX; Waco, TX

 

 

 

5

 

 

134

 

 

1,893

 

 

0.6%

 

 

CPI

 

 

Office

 

 

Telecommunications

 

Arbella Service Company, Inc.

 

 

Quincy, MA

 

 

1

 

 

132

 

 

1,883

 

 

0.6%

 

 

FIXED

 

 

Office

 

 

Insurance

 

 

Merit Medical Systems, Inc.

 

 

South Jordan, UT

 

 

1

 

 

193

 

 

1,877

 

 

0.6%

 

 

CPI

 

 

Industrial

 

 

Healthcare, Education and Childcare

 

 

Eroski Sociedad Cooperativa

 

 

Spain

 

 

1

 

 

138

 

 

1,868

 

 

0.6%

 

 

CPI

 

 

Warehouse/Distribution

 

 

Grocery

 

 

Quad/Graphics, Inc.

 

 

Doraville, GA

 

 

1

 

 

433

 

 

1,801

 

 

0.5%

 

 

CPI

 

 

Industrial

 

 

Media: Printing and Publishing

 

 

Reynolds Group Holdings LTD

 

 

Mooresville, NC

 

 

1

 

 

385

 

 

1,800

 

 

0.5%

 

 

CPI

 

 

Industrial

 

 

Chemicals, Plastics, Rubber, and Glass

 

 

Kerr Corporation

 

 

Bowling Green, KY; Jackson, TN

 

 

2

 

 

368

 

 

1,788

 

 

0.5%

 

 

FIXED

 

 

Industrial

 

 

Chemicals, Plastics, Rubber, and Glass

 

 

BE Aerospace, Inc.

 

 

Lenexa, KS; Winston-Salem, NC

 

 

2

 

 

404

 

 

1,769

 

 

0.5%

 

 

FIXED

 

 

Industrial

 

 

Aerospace and Defense

 

 

 

GRAPHIC

 

Investing for the long runTM | 40

 


 

Tenants by Annualized Contractual Minimum Base Rent (Pro Rata Basis)

(Continued)

(in thousands, except number of locations and percentages) (unaudited)

 

As of September 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenant

 

Location(s)

 

Number
of
Locations

 

Square
 Feet

 

Annualized
Rent

 

Annualized
Rent as a
% of Total

 

Increase
Factor

 

Property Type

 

Industry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Del Monte Corporation

 

Mendota, IL; Plover, WI; Toppenish, WA; Yakima, WA

 

 

368 

 

1,763 

 

0.5%

 

CPI

 

Warehouse/Distribution

 

Beverages, Food, and Tobacco

 

 

EADS North America, Inc.

 

Irvine, CA

 

 

99 

 

1,755 

 

0.5%

 

FIXED

 

Office

 

Electronics

 

 

Walgreens Co.

 

Concord, NC; Florence, AL; Rockport, TX; Snellville, GA; Virginia Beach, VA

 

 

 

74 

 

1,741 

 

0.5%

 

NONE

 

Retail

 

Retail Stores

 

Childtime Childcare, Inc.

 

AZ; CA; MI; TX

 

12 

 

84 

 

1,731 

 

0.5%

 

CPI

 

Other Properties

 

Healthcare, Education and Childcare

 

 

The United States Playing Card Company

 

Erlanger, KY

 

 

770 

 

1,720 

 

0.5%

 

FIXED

 

Industrial

 

Media: Printing and Publishing

 

 

Belgium Government

 

Belgium

 

 

122 

 

1,700 

 

0.5%

 

CPI

 

Office

 

Federal, State and Local Government

 

 

Plexus Corp.

 

Neenah, WI

 

 

179 

 

1,699 

 

0.5%

 

CPI

 

Industrial

 

Electronics

 

 

Integracolor, Ltd.

 

Mesquite, TX

 

 

359 

 

1,647 

 

0.5%

 

CPI

 

Warehouse/Distribution; Industrial

 

Media: Printing and Publishing

 

 

Others(a)

 

 

 

 

75 

 

8,031 

 

43,455 

 

13.1%

 

 

 

 

 

 

 

Total(b) (c)

 

 

 

421 

 

39,436 

 

$

331,669 

 

100.0%

 

 

 

 

 

 

 

 

 

__________

 

(a)          Number of locations includes properties that are partially vacant.

 

(b)          Excludes all operating properties.

 

(c)          Pro rata amounts are non-GAAP measures. See the Terms and Definitions section that begins on page 42 for a description of our non-GAAP measures.

 

GRAPHIC

 

Investing for the long runTM | 41

 


 

Terms and Definitions

 

Non-GAAP Financial Disclosures

 

AFFO

 

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 Proposed 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 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. We use our FFO and AFFO measures as supplemental financial measures of operating performance. We do not use our FFO and AFFO measures as, nor should they be considered to be, alternatives to net earnings computed under GAAP, as alternatives to cash from operating activities computed under GAAP or as indicators of our ability to fund our cash needs.

 

Adjusted EBITDA

 

We believe that earnings before interest, taxes, depreciation and amortization (“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.  Adjusted EBITDA as disclosed represents EBITDA, modified to include other adjustments to GAAP net income for certain non-cash charges such as impairments and stock compensation.  Additionally, we exclude merger expenses related to the CPA®:15 Merger and the proposed merger with CPA®:16 - Global which are considered non-recurring and gain/losses in real estate, foreign exchange and derivatives which are not considered fundamental attributes of our business plans and do not affect our overall long-term operating performance.  We exclude these items from Adjusted EBITDA 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 Adjusted 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. Accordingly, Adjusted EBITDA should not be considered as an alternative to net income or as an indicator of our financial performance. EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Therefore, we use EBITDA and Adjusted EBITDA as two of the measures of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies, and determine executive compensation.  Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

 

Adjusted Revenue

 

Adjusted revenue is a non-GAAP financial measure that represents revenues on a GAAP basis adjusted for our pro rata share of revenues from equity investments as well as the pro rata share of revenues due to noncontrolling interests. We believe that adjusted revenue is useful to investors and analysts as a supplemental measure of revenues from our core operations, and we use it to evaluate

 

GRAPHIC

 

Investing for the long runTM | 42

 


 

Terms and Definitions

(Continued)

 

the stability of our underlying revenue streams. Adjusted revenue should not be considered as an alternative to revenues computed on a GAAP basis as a measure of our profitability. Adjusted revenue may not be comparable to similarly titled measures of other companies.

 

Adjusted G&A

 

Total Adjusted G&A is a non-GAAP financial measure that represents WPC’s general and administrative expense on a GAAP basis adjusted for both non-recurring items including merger costs and recurring items including Dealer manager fee-related expense and non-cash stock compensation expense. We believe that Adjusted G&A is useful to investors and analysts as a supplemental measure of expenses related to Total Adjusted Real Estate Revenue, and we use it to evaluate the profitability of our overall operations. Total Adjusted G&A should not be considered as an alternative to general and administrative expense computed on a GAAP basis as a measure of our profitability. Adjusted G&A may not be comparable to similarly titled measures of other companies.

 

Pro Rata Amounts

 

This supplemental package contains certain measures prepared under the pro rata consolidation method, which is not in accordance with GAAP. We refer to these non-GAAP measures as pro rata measures. We believe that these pro rata measures, including primarily “pro rata debt” and “pro rata NOI,” are useful to investors as they provide supplemental information on the nature and performance of our investments that is not easily discernible in the equivalent GAAP measures. Consistent with industry practice and as a means of procuring opportunities and sharing risk, we have a number of investments, usually with our affiliates, in which our economic ownership is less than 100%. Under the full consolidation method required under GAAP, we report 100% of the assets, liabilities, revenues and expenses of those investments that are deemed to be under our control or for which we are deemed to be the primary beneficiary, even if our ownership is less than 100%. Also, under GAAP, for all other jointly-owned investments, we report our net investment and our net income or loss from that investment. Under the pro rata consolidation method, we generally present our proportionate share, based on our economic ownership of these jointly-owned investments, of the assets, liabilities, revenues and expenses of those investments, as we use this information to evaluate our financial performance without including any ownership of the other investors. Our non-GAAP measures are not intended to be performance measures that should be regarded as alternatives to or more meaningful than, our GAAP measures.

 

Total Adjusted Real Estate Revenue

 

Total Adjusted Real Estate Revenue represents WPC and the Managed REITs, as well as Corporate Property Associates 14 Incorporated (“CPA®:14”) prior to the CPA®:14 merger with CPA®:16 - Global in 2011. We believe that presenting Total Adjusted Real Estate Revenue is useful to investors and analysts as a supplemental measure of our Real Estate segment in relation to the aggregate amount of revenues that we manage. We use this non-GAAP measure because it allows for the evaluation of revenue stability of our owned and managed investment portfolios. Total Adjusted Real Estate Revenue should not be considered as an alternative to revenues computed on a GAAP basis or as a measure of our profitability. Total Adjusted Real Estate Revenue may not be comparable to similarly titled measures of other companies.

 

GRAPHIC

 

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