Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT - W. P. Carey Inc. | wpc2014q18-kerexh991.htm |
| 8-K - 8-K - W. P. Carey Inc. | wpc2014q18-ksupplemental.htm |
Exhibit 99.2
W. P. Carey Inc.
Supplemental Information
First Quarter 2014
W. P. Carey Inc. unaudited supplemental financial and operating information.
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. The “CPA®:16 Merger” means our merger with Corporate Property Associates 16 – Global Incorporated, or CPA®:16 – Global, which was completed on January 31, 2014. “CPA® REITs” means CPA®:16 – Global (through the date of the CPA®:16 Merger), Corporate Property Associates 17 – Global Incorporated, or CPA®:17 – Global, and Corporate Property Associates 18 – Global Incorporated, or CPA®:18 – Global. The “Managed REITs” means the CPA® REITs and Carey Watermark Investors Incorporated, or 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 measures that are not defined by generally accepted accounting principles, or GAAP, including funds from operations, or FFO, adjusted funds from operations, previously referred to as funds from operations – as adjusted, or AFFO, total adjusted real estate revenue, and pro rata net operating income, or NOI. A description of these non-GAAP financial measures and reconciliations to their most directly comparable GAAP measures as well as a description of other metrics presented are provided within the Appendix to this supplemental package. FFO is a non-GAAP measure defined by the National Association of Real Estate Investments Trusts, or NAREIT.
Cautionary Statement Concerning Forward-Looking Statements:
Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Securities Act of 1933, as amended, or the Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act, both as amended by the Private Securities Litigation Reform Act of 1995. 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 forward-looking statements include, but are not limited to, statements regarding the benefits of the CPA®:16 Merger, annualized dividends, funds from operations coverage, integration plans and expected synergies, and anticipated future financial and operating performance and results, including estimates of growth. 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 with the Securities and Exchange Commission, or the SEC, and are available at the SEC’s website at http://www.sec.gov, including Item 1A. Risk Factors in W. P. Carey's Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the SEC on March 3, 2014. 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, unless noted otherwise. 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.
W. P. Carey Inc.
Supplemental Information – First Quarter 2014
Table of Contents | |
Overview | |
Financial Results | |
Balance Sheet and Capitalization | |
Owned Real Estate Portfolio | |
Managed REITs | |
Appendix | |
W. P. Carey Inc.
Overview – First Quarter 2014
Summary Metrics | |
As of or for the three months ended March 31, 2014.
Financial Results | ||||||||||
Real estate revenues, excluding reimbursable tenant costs ($'000) | $ | 129,206 | ||||||||
Revenues from affiliates, excluding reimbursable costs ($'000) | 34,203 | |||||||||
Total revenues, excluding reimbursable costs ($'000) | 163,409 | |||||||||
Net income attributable to W. P. Carey ($'000) | 112,892 | |||||||||
Net income attributable to W. P. Carey per diluted share | 1.25 | |||||||||
AFFO ($'000) (a) | 118,246 | |||||||||
AFFO per diluted share (a) | 1.31 | |||||||||
Pro rata NOI from leased properties ($'000) (b) | 129,581 | |||||||||
Distributions declared per share – current quarter | 0.895 | |||||||||
Distributions declared per share – current quarter annualized | 3.58 | |||||||||
Dividend yield (annualized, based on end of period share price) | 6.0 | % | ||||||||
Dividend payout (annualized) (c) | 68.4 | % | ||||||||
Balance Sheet and Capitalization | ||||||||||
Shares outstanding | 99,348,295 | |||||||||
Stock price – at quarter end | $ | 60.07 | ||||||||
Market capitalization (equity) ($'000) | 5,967,852 | |||||||||
Total pro rata debt outstanding ($'000) (d) | 3,741,828 | |||||||||
Total capitalization ($'000) (e) | 9,709,680 | |||||||||
Cash and cash equivalents ($'000) | 198,947 | |||||||||
Enterprise value ($'000) (f) | 9,510,733 | |||||||||
Liquidity ($'000) (g) | 1,082,669 | |||||||||
Net debt to enterprise value (h) | 37.3 | % | ||||||||
Net debt to total capitalization (h) | 36.5 | % | ||||||||
Total debt to gross assets (i) | 43.9 | % | ||||||||
Unsecured debt to gross assets (i) | 10.1 | % | ||||||||
Weighted average interest rate (d) | 4.8 | % | ||||||||
Weighted average debt maturity (years) (d) | 5.3 | |||||||||
Standard & Poor's Rating Services (January 2014) | BBB (stable) | |||||||||
Moody's Investors Service (January 2014) | Baa2 (stable) | |||||||||
Owned Real Estate Portfolio | ||||||||||
Number of net leased properties | 700 | |||||||||
Number of operating properties | 4 | |||||||||
Number of tenants (net leased properties) | 230 | |||||||||
Total square feet – net leased properties (millions) | 82.8 | |||||||||
Total square feet – operating properties (millions) | 0.3 | |||||||||
Total square feet (millions) | 83.1 | |||||||||
Occupancy % | 98.3 | % | ||||||||
Weighted average lease term (years) | 8.7 | |||||||||
Investment grade tenants (% of total) (j) | 24.2 | % | ||||||||
Acquisitions ($'000) | $ | 43,100 | ||||||||
Dispositions ($'000) | 127,656 | |||||||||
Managed REITs | CPA® REITs | CWI | ||||||||
AUM ($'000) (k) | $ | 6,069,381 | $ | 1,203,753 | ||||||
Acquisitions ($'000) | 374,688 | — | ||||||||
Dispositions ($'000) | — | — | ||||||||
 | Investing for the long runTM | 1 | |
W. P. Carey Inc.
Overview – First Quarter 2014
________
(a) | AFFO is a non-GAAP measure. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures and for a reconciliation of net income to AFFO. |
(b) | Pro rata NOI is a non-GAAP measure. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures. |
(c) | Computed by dividing annualized dividend per share by annualized AFFO per share. |
(d) | Presented on a pro rata basis. See the Terms and Definitions section in the Appendix for a description of our pro rata metrics. |
(e) | Represents market capitalization plus total pro rata debt. See the Terms and Definitions section in the Appendix for a description of our pro rata metrics. |
(f) | Represents market capitalization plus total pro rata debt, less cash and cash equivalents. See the Terms and Definitions section in the Appendix for a description of our pro rata metrics. |
(g) | Represents availability on Senior Unsecured Credit Facility – Revolver plus cash and cash equivalents. |
(h) | Net debt represents pro rata debt less cash. See the Terms and Definitions section in the Appendix for a description of our pro rata metrics. |
(i) | Gross assets represent total assets before accumulated depreciation. |
(j) | Investment grade tenants are defined as having a BBB- rating or above. Percentage of portfolio is calculated based on contractual minimum annualized base rent, or ABR, as of March 31, 2014. |
(k) | Represents estimated value of real estate assets plus cash and cash equivalents, less distributions payable. |
| | Investing for the long runTM | 2 | |
W. P. Carey Inc.
Financial Results
First Quarter 2014
| | Investing for the long runTM | 3 | |
W. P. Carey Inc.
Financial Results – First Quarter 2014
Consolidated Statements of Income | |
In thousands, except share and per share amounts. Unaudited.
Three Months Ended | |||||||
Mar. 31, 2014 | Dec. 31, 2013 | ||||||
Revenues | |||||||
Real estate revenues: | |||||||
Lease revenues | $ | 123,213 | $ | 77,479 | |||
Reimbursable tenant costs | 6,030 | 3,532 | |||||
Operating property revenues | 4,993 | 250 | |||||
Other | 1,000 | 753 | |||||
135,236 | 82,014 | ||||||
Revenues from affiliates (Investment Management): | |||||||
Reimbursable costs | 39,732 | 22,878 | |||||
Structuring revenue | 17,750 | 19,050 | |||||
Asset management revenue | 9,777 | 11,341 | |||||
Dealer manager fees | 6,676 | 3,526 | |||||
Incentive, termination and subordinated disposition revenue | — | 199 | |||||
73,935 | 56,994 | ||||||
209,171 | 139,008 | ||||||
Operating Expenses | |||||||
Depreciation and amortization | 52,782 | 32,141 | |||||
Reimbursable tenant and affiliate costs | 45,762 | 26,410 | |||||
Merger and acquisition expenses | 29,613 | 2,351 | |||||
General and administrative | 28,111 | 24,903 | |||||
Property expenses, excluding reimbursable tenant costs | 8,429 | 2,212 | |||||
Stock-based compensation expenses | 7,045 | 11,765 | |||||
Impairment charges | — | 5,294 | |||||
171,742 | 105,076 | ||||||
Other Income and Expenses | |||||||
Gain on change in control of interests | 103,574 | — | |||||
Net income from equity investments in real estate and the Managed REITs | 14,262 | 354 | |||||
Interest expense | (39,075 | ) | (26,132 | ) | |||
Other income and (expenses) | (5,372 | ) | 2,795 | ||||
73,389 | (22,983 | ) | |||||
Income from continuing operations before income taxes | 110,818 | 10,949 | |||||
(Provision for) benefit from income taxes | (2,221 | ) | 1,798 | ||||
Income from continuing operations | 108,597 | 12,747 | |||||
Income from discontinued operations, net of tax | 6,135 | 36,113 | |||||
Net Income | 114,732 | 48,860 | |||||
Net income attributable to noncontrolling interests | (1,578 | ) | (25,624 | ) | |||
Net income attributable to redeemable noncontrolling interest | (262 | ) | (214 | ) | |||
Net Income Attributable to W. P. Carey | $ | 112,892 | $ | 23,022 | |||
Basic Earnings Per Share | |||||||
Income from continuing operations attributable to W. P. Carey | $ | 1.19 | $ | 0.14 | |||
Income from discontinued operations attributable to W. P. Carey | 0.07 | 0.19 | |||||
Net Income Attributable to W. P. Carey | $ | 1.26 | $ | 0.33 | |||
Diluted Earnings Per Share | |||||||
Income from continuing operations attributable to W. P. Carey | $ | 1.18 | $ | 0.14 | |||
Income from discontinued operations attributable to W. P. Carey | 0.07 | 0.19 | |||||
Net Income Attributable to W. P. Carey | $ | 1.25 | $ | 0.33 | |||
Weighted Average Shares Outstanding | |||||||
Basic | 89,366,055 | 68,607,619 | |||||
Diluted | 90,375,311 | 69,628,498 | |||||
Amounts Attributable to W. P. Carey | |||||||
Income from continuing operations, net of tax | $ | 106,609 | $ | 9,830 | |||
Income from discontinued operations, net of tax | 6,283 | 13,192 | |||||
Net Income | $ | 112,892 | $ | 23,022 | |||
Distributions Declared Per Share | $ | 0.895 | $ | 0.980 | |||
| | Investing for the long runTM | 4 | |
W. P. Carey Inc.
Financial Results – First Quarter 2014
Reconciliation of Consolidated Statement of Income to AFFO | |
In thousands, except per share amounts. Unaudited. Three months ended March 31, 2014.
We believe that the table below is useful for investors to help them better understand the complexities of our business by illustrating the impact of each of our AFFO adjustments on our GAAP statement of income. This presentation is not an alternative to the GAAP statement of income, nor is AFFO an alternative to net income as determined by GAAP. The reconciliation of GAAP net income to AFFO required by SEC Regulation G, as well as other important disclosures regarding our calculation of AFFO and the limitations on its usefulness to investors, are presented in the Appendix.
GAAP - Basis (a) | Add: Equity Investments (b) | Less: Noncontrolling Interests (c) | WPC's Pro Rata Share (d) | AFFO Adjustments | AFFO | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Real estate revenues: | |||||||||||||||||||||||
Lease revenues (e) | $ | 123,213 | $ | 6,149 | $ | (7,866 | ) | $ | 121,496 | $ | 10,050 | (f) | $ | 131,546 | |||||||||
Reimbursable tenant costs | 6,030 | 29 | (269 | ) | 5,790 | — | 5,790 | ||||||||||||||||
Operating property revenues: | |||||||||||||||||||||||
Hotel revenues | 4,748 | — | — | 4,748 | — | 4,748 | |||||||||||||||||
Self-storage revenues | 245 | — | (83 | ) | 162 | — | 162 | ||||||||||||||||
Other | 1,000 | 29 | (5 | ) | 1,024 | — | 1,024 | ||||||||||||||||
135,236 | 6,207 | (8,223 | ) | 133,220 | 10,050 | 143,270 | |||||||||||||||||
Investment management revenues from affiliates: | |||||||||||||||||||||||
Reimbursable costs | 39,732 | — | (52 | ) | 39,680 | — | 39,680 | ||||||||||||||||
Structuring revenue | 17,750 | — | (845 | ) | 16,905 | — | 16,905 | ||||||||||||||||
Asset management revenue | 9,777 | — | (121 | ) | 9,656 | — | 9,656 | ||||||||||||||||
Dealer manager fees | 6,676 | — | — | 6,676 | — | 6,676 | |||||||||||||||||
73,935 | — | (1,018 | ) | 72,917 | — | 72,917 | |||||||||||||||||
209,171 | 6,207 | (9,241 | ) | 206,137 | 10,050 | 216,187 | |||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Depreciation and amortization | 52,782 | 1,296 | (3,333 | ) | 50,745 | (49,463 | ) | 1,282 | |||||||||||||||
Reimbursable tenant and affiliate costs | 45,762 | — | (282 | ) | 45,480 | — | 45,480 | ||||||||||||||||
Merger and acquisition expenses | 29,613 | — | — | 29,613 | (29,611 | ) | 2 | ||||||||||||||||
General and administrative | 28,111 | 9 | (716 | ) | 27,404 | — | 27,404 | ||||||||||||||||
Property expenses, excluding reimbursable tenant costs: | |||||||||||||||||||||||
Non-reimbursable property expenses | 4,832 | 98 | (333 | ) | 4,597 | — | 4,597 | ||||||||||||||||
Hotel expenses | 3,454 | — | — | 3,454 | — | 3,454 | |||||||||||||||||
Self-storage expenses | 143 | — | (57 | ) | 86 | — | 86 | ||||||||||||||||
Stock-based compensation expenses | 7,045 | — | (27 | ) | 7,018 | (7,016 | ) | 2 | |||||||||||||||
171,742 | 1,403 | (4,748 | ) | 168,397 | (86,090 | ) | 82,307 | ||||||||||||||||
Other Income and Expenses | |||||||||||||||||||||||
Gain on change in control of interests | 103,574 | — | — | 103,574 | (103,574 | ) | — | ||||||||||||||||
Net income from equity investments in real estate and the Managed REITs: | |||||||||||||||||||||||
Joint ventures (g) | 3,374 | (3,374 | ) | — | — | — | — | ||||||||||||||||
Income related to our ownership in the Managed REITs | 470 | — | — | 470 | 2,909 | 3,379 | |||||||||||||||||
Income related to our general partnership interests | 10,418 | — | (189 | ) | 10,229 | 28 | 10,257 | ||||||||||||||||
Total net income from equity investments in real estate and the Managed REITs | 14,262 | (3,374 | ) | (189 | ) | 10,699 | 2,937 | 13,636 | |||||||||||||||
Interest expense | (39,075 | ) | (1,700 | ) | 2,774 | (38,001 | ) | 2,565 | (35,436 | ) | |||||||||||||
Other income and (expenses) | (5,372 | ) | 412 | 190 | (4,770 | ) | 5,607 | 837 | |||||||||||||||
73,389 | (4,662 | ) | 2,775 | 71,502 | (92,465 | ) | (20,963 | ) | |||||||||||||||
Income from continuing operations before income taxes | 110,818 | 142 | (1,718 | ) | 109,242 | 3,675 | 112,917 | ||||||||||||||||
Provision for income taxes | (2,221 | ) | (142 | ) | (122 | ) | (2,485 | ) | 2,580 | 95 | |||||||||||||
Income from continuing operations | 108,597 | — | (1,840 | ) | 106,757 | 6,255 | 113,012 | ||||||||||||||||
Discontinued Operations | |||||||||||||||||||||||
Income from operations of discontinued properties | 4,771 | — | — | 4,771 | 463 | (h) | 5,234 | ||||||||||||||||
Loss on extinguishment of debt | (1,520 | ) | — | — | (1,520 | ) | 1,520 | — | |||||||||||||||
Gain on the sale of real estate | 2,884 | — | — | 2,884 | (2,884 | ) | — | ||||||||||||||||
Income from Discontinued Operations, Net of Tax | 6,135 | — | — | 6,135 | (901 | ) | 5,234 | ||||||||||||||||
Net Income | 114,732 | — | (1,840 | ) | 112,892 | 5,354 | 118,246 | ||||||||||||||||
Net income attributable to noncontrolling interests | (1,578 | ) | — | 1,578 | — | — | — | ||||||||||||||||
Net income attributable to redeemable noncontrolling interests | (262 | ) | — | 262 | — | — | — | ||||||||||||||||
Income / AFFO Attributable to W. P. Carey | $ | 112,892 | $ | — | $ | — | $ | 112,892 | $ | 5,354 | $ | 118,246 | |||||||||||
Diluted Earnings Per Share / AFFO Per Diluted Share | $ | 1.25 | $ | 1.31 | |||||||||||||||||||
| | Investing for the long runTM | 5 | |
W. P. Carey Inc.
Financial Results – First Quarter 2014
________
(a) | Consolidated amounts shown represent WPC's Consolidated Statement of Income for the three months ended March 31, 2014. |
(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. See the Terms and Definitions section that follows for a description of our pro rata metrics. |
(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 March 31, 2014 were $3.1 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. |
| | Investing for the long runTM | 6 | |
W. P. Carey Inc.
Balance Sheet and Capitalization
First Quarter 2014
| | Investing for the long runTM | 7 | |
W. P. Carey Inc.
Balance Sheet and Capitalization – First Quarter 2014
Debt Overview | |
In thousands, except percentages and years. As of March 31, 2014.
Non-Recourse Debt | Weighted Average Debt Maturity (Years) | Weighted Average Interest Rate | Total Outstanding Balance | Percent | |||||||||
Fixed | 5.1 | 5.6 | % | $ | 2,312,859 | 61.8 | % | ||||||
Variable – Swapped | 5.0 | 5.0 | % | 303,460 | 8.1 | % | |||||||
Variable – Capped | 2.3 | 1.7 | % | 202,847 | 5.4 | % | |||||||
Variable – Floating | 1.1 | 3.9 | % | 43,622 | 1.2 | % | |||||||
Variable – Future Rate Reset | 10.7 | 6.2 | % | 14,552 | 0.4 | % | |||||||
4.9 | 5.2 | % | 2,877,340 | 76.9 | % | ||||||||
Recourse Debt | |||||||||||||
Fixed – Senior Unsecured Notes | 10.0 | 4.6 | % | 498,210 | 13.3 | % | |||||||
Variable – Senior Unsecured Credit Facility – Term Loan | 1.8 | 1.4 | % | 250,000 | 6.7 | % | |||||||
Variable – Senior Unsecured Credit Facility – Revolver | 3.8 | 1.3 | % | 116,278 | 3.1 | % | |||||||
Total Pro Rata Debt Outstanding (a) | 5.3 | 4.8 | % | $ | 3,741,828 | 100.0 | % | ||||||
________
(a) | Debt data is presented on a pro rata basis. See the Terms and Definitions section in the Appendix for a description of our pro rata metrics. |
| | Investing for the long runTM | 8 | |
W. P. Carey Inc.
Balance Sheet and Capitalization – First Quarter 2014
Debt Maturity | |
In thousands, except number of properties. As of March 31, 2014.
Number of | Principal | ||||||||||||||||||
Year of Maturity | Properties (a) | ABR (a) | Balloon | Other | Debt Maturity (b) | ||||||||||||||
Remaining 2014 | 22 | $ | 44,989 | $ | 250,745 | $ | 11,014 | $ | 261,759 | ||||||||||
2015 | 23 | 27,871 | 182,095 | 512 | 182,607 | ||||||||||||||
2016 | 106 | 41,724 | 249,440 | 19,922 | 269,361 | ||||||||||||||
2017 | 94 | 103,784 | 636,115 | 64,239 | 700,355 | ||||||||||||||
2018 | 37 | 55,478 | 293,439 | 48,146 | 341,585 | ||||||||||||||
2019 | 11 | 16,383 | 51,450 | 17,071 | 68,521 | ||||||||||||||
2020 | 23 | 39,215 | 202,309 | 48,855 | 251,163 | ||||||||||||||
2021 | 11 | 20,380 | 89,920 | 27,922 | 117,842 | ||||||||||||||
2022 | 30 | 42,291 | 210,833 | 52,242 | 263,075 | ||||||||||||||
2023 | 28 | 43,354 | 123,300 | 78,320 | 201,620 | ||||||||||||||
2024 | 24 | 21,111 | 7,936 | 77,268 | 85,205 | ||||||||||||||
Thereafter | 24 | 27,889 | 46,246 | 88,001 | 134,247 | ||||||||||||||
Non-Recourse Debt | 433 | $ | 484,469 | $ | 2,343,828 | $ | 533,512 | $ | 2,877,340 | ||||||||||
Recourse Debt | |||||||||||||||||||
Senior Unsecured Notes | 498,210 | ||||||||||||||||||
Senior Unsecured Credit Facility – Term Loan | 250,000 | ||||||||||||||||||
Senior Unsecured Credit Facility – Revolver (c) | 116,278 | ||||||||||||||||||
Total Pro Rata Debt Outstanding | $ | 3,741,828 | |||||||||||||||||
________
(a) | Represents the number of properties and ABR associated with the debt that is maturing in each respective year. |
(b) | Debt maturity data is presented on a pro rata basis. See the Terms and Definitions section in the Appendix for a description of our pro rata metrics. |
(c) | Availability under our Senior Unsecured Credit Facility – Revolver was $883.7 million as of March 31, 2014. |
| | Investing for the long runTM | 9 | |
W. P. Carey Inc.
Balance Sheet and Capitalization – First Quarter 2014
Senior Unsecured Notes | |
As of March 31, 2014.
Ratings
Issuer / Corporate | Senior Unsecured Notes | |||||||
Ratings Agency | Rating | Outlook | Rating | Outlook | ||||
Standard and Poor's (January 2014) | BBB | Stable | BBB- | Stable | ||||
Moody's (January 2014) | Baa2 | Stable | Baa2 | Stable | ||||
Senior Unsecured Note Covenants
In March 2014, we issued $500.0 million of senior unsecured notes with an interest rate of 4.6% due in 2024, or the Senior Unsecured Notes. The following is a summary of the key financial covenants for the Senior Unsecured Notes, as defined per the terms in the prospectus supplement filed with the SEC on March 13, 2014, along with our estimated calculations of our compliance with those covenants at the end of the period presented. These ratios are not measures of our liquidity or performance and serve only to demonstrate our ability to incur additional debt, as permitted by the covenants for the Senior Unsecured Notes.
Covenant | Metric | Required | As of Mar. 31, 2014 | |||
Limitation on the incurrence of debt | "Total Debt" / "Total Assets" | ≤ 60% | 41.5% | |||
Limitation on the incurrence of secured debt | "Secured Debt" / "Total Assets" | ≤ 40% | 32.1% | |||
Limitation on the incurrence of debt based on consolidated EBITDA to annual debt service charge | "Consolidated EBITDA" / "Annual Debt Service Charge" | ≥ 1.5x | 3.5x | |||
Maintenance of unencumbered asset value | "Unencumbered Assets" / "Total Unsecured Debt" | ≥ 150% | 251.4% | |||
| | Investing for the long runTM | 10 | |
W. P. Carey Inc.
Balance Sheet and Capitalization – First Quarter 2014
Consolidated Balance Sheets | |
In thousands. Unaudited.
Mar. 31, 2014 | Dec. 31, 2013 | ||||||
Assets | |||||||
Investments in real estate: | |||||||
Real estate, at cost | $ | 4,487,928 | $ | 2,516,325 | |||
Operating real estate, at cost | 84,494 | 6,024 | |||||
Accumulated depreciation | (193,370 | ) | (168,958 | ) | |||
Net investments in properties | 4,379,052 | 2,353,391 | |||||
Net investments in direct financing leases | 898,335 | 363,420 | |||||
Assets held for sale | 95,209 | 86,823 | |||||
Equity investments in real estate and the Managed REITs | 186,965 | 530,020 | |||||
Net investments in real estate | 5,559,561 | 3,333,654 | |||||
Cash and cash equivalents | 198,947 | 117,519 | |||||
Due from affiliates | 32,497 | 32,034 | |||||
Goodwill | 700,024 | 350,208 | |||||
In-place lease intangible assets, net | 997,520 | 467,127 | |||||
Above-market rent intangible assets, net | 595,430 | 241,975 | |||||
Other assets, net | 255,489 | 136,433 | |||||
Total Assets | $ | 8,339,468 | $ | 4,678,950 | |||
Liabilities and Equity | |||||||
Liabilities: | |||||||
Non-recourse debt | $ | 2,961,999 | $ | 1,492,410 | |||
Senior credit facility and unsecured term loan | 366,278 | 575,000 | |||||
Senior unsecured notes | 498,210 | — | |||||
Below-market rent and other intangible liabilities, net | 182,741 | 128,202 | |||||
Accounts payable, accrued expenses and other liabilities | 291,038 | 166,385 | |||||
Deferred income taxes | 89,250 | 39,040 | |||||
Distributions payable | 90,079 | 67,746 | |||||
Total liabilities | 4,479,595 | 2,468,783 | |||||
Redeemable noncontrolling interest | 7,303 | 7,436 | |||||
Equity: | |||||||
W. P. Carey stockholders' equity: | |||||||
Preferred stock (None issued) | — | — | |||||
Common stock | 100 | 69 | |||||
Additional paid-in capital | 4,016,019 | 2,256,503 | |||||
Distributions in excess of accumulated earnings | (302,799 | ) | (318,577 | ) | |||
Deferred compensation obligation | 29,342 | 11,354 | |||||
Accumulated other comprehensive income | 17,443 | 15,336 | |||||
Less: treasury stock at cost | (60,948 | ) | (60,270 | ) | |||
Total W. P. Carey stockholders' equity | 3,699,157 | 1,904,415 | |||||
Noncontrolling interests | 153,413 | 298,316 | |||||
Total equity | 3,852,570 | 2,202,731 | |||||
Total Liabilities and Equity | $ | 8,339,468 | $ | 4,678,950 | |||
| | Investing for the long runTM | 11 | |
W. P. Carey Inc.
Owned Real Estate Portfolio
First Quarter 2014
| | Investing for the long runTM | 12 | |
W. P. Carey Inc.
Owned Real Estate Portfolio – First Quarter 2014
Investment Activity | |
In thousands, except square footage. For the three months ended March 31, 2014.
Acquisitions | |||||||||||||||
Portfolio(s) | Tenant / Lease Guarantor | Property Location(s) | Purchase Price | Closing Date | Property Type(s) | Gross Square Footage | |||||||||
WPC | QBE Holdings Inc. | Chandler, AZ | $ | 43,100 | Mar-14 | Office | 183,000 | ||||||||
Total Acquisitions | $ | 43,100 | 183,000 | ||||||||||||
Dispositions | |||||||||||||||
Portfolio(s) | Tenant / Lease Guarantor | Property Location(s) | Gross Sale Price | Closing Date | Property Type(s) | Gross Square Footage | |||||||||
WPC | Juniper Networks, Inc. | Sunnyvale, CA | $ | 10,200 | Jan-14 | Office | 50,311 | ||||||||
WPC | American Pad & Paper, LLC (2 properties) | Mattoon, IL; Morristown, TN | 6,900 | Jan-14 | Industrial | 486,507 | |||||||||
WPC | Bell South Corporation | Fort Lauderdale, FL | 4,900 | Jan-14 | Warehouse/Distribution | 80,450 | |||||||||
WPC | Barnes & Noble, Inc. | Farmington, CT | 3,600 | Jan-14 | Retail | 21,600 | |||||||||
WPC | Bouygues Telecom (a) | Tours, France | 9,497 | Jan-14 | Office | 96,204 | |||||||||
WPC | Brown Machine LLC and Capital Equipment Group | Beaverton, MI | 4,040 | Mar-14 | Industrial | 142,770 | |||||||||
WPC | SOHO House Beach House, LLC | Miami Beach, FL | 81,529 | Mar-14 | Hospitality | 52,902 | |||||||||
WPC | BA Kitchen Components Limited (a) | Doncaster, United Kingdom | 6,990 | Mar-14 | Industrial | 177,604 | |||||||||
Total Dispositions | $ | 127,656 | 1,108,348 | ||||||||||||
________
(a) | Amounts are based on the applicable exchange rate on the date of disposition. |
| | Investing for the long runTM | 13 | |
W. P. Carey Inc.
Owned Real Estate Portfolio – First Quarter 2014
Joint Venture Information | |
In thousands, except percentages. As of March 31, 2014.
Joint Venture or JV | WPC % Interest | Total JV | WPC Pro Rata Share of Total JV (a) | ||||||||||||||||||||||||||
(Principal Tenant) | in JV | JV Partner % | Assets | Liabilities | Equity | Assets | Liabilities | Equity | |||||||||||||||||||||
Equity Method Joint Ventures | |||||||||||||||||||||||||||||
Wanbishi Archives Co. Ltd. | 3.00% | CPA®:17 – Global - 97.00% | $ | 40,558 | $ | 27,769 | $ | 12,789 | $ | 1,217 | $ | 833 | $ | 384 | |||||||||||||||
C1000 Logistiek Vastgoed B.V. | 15.00% | CPA®:17 – Global - 85.00% | 193,311 | 95,870 | 97,441 | 28,997 | 14,381 | 14,616 | |||||||||||||||||||||
Actebis Peacock GmbH | 30.00% | CPA®:17 – Global - 70.00% | 44,303 | 29,138 | 15,165 | 13,291 | 8,741 | 4,550 | |||||||||||||||||||||
Waldaschaff Automotive GmbH and Wagon Automotive Nagold GmbH | 33.33% | CPA®:17 – Global - 67.00% | 45,544 | 20,515 | 25,029 | 15,180 | 6,838 | 8,342 | |||||||||||||||||||||
Frontier Spinning Mills, Inc. | 40.00% | CPA®:17 – Global - 60.00% | 37,693 | 21,917 | 15,776 | 15,077 | 8,767 | 6,310 | |||||||||||||||||||||
The New York Times Company | 45.00% | CPA®:17 – Global - 55.00% | 250,141 | 118,610 | 131,531 | 112,563 | 53,375 | 59,188 | |||||||||||||||||||||
Total Equity Method Joint Ventures | 611,550 | 313,819 | 297,731 | 186,325 | 92,935 | 93,390 | |||||||||||||||||||||||
Consolidated Joint Ventures | |||||||||||||||||||||||||||||
Carey Storage | 38.30% | Third parties - 61.70% | 4,492 | 2,963 | 1,529 | 1,720 | 1,135 | 585 | |||||||||||||||||||||
Berry Plastics Corporation | 50.00% | CPA®:17 – Global - 50.00% | 70,268 | 27,594 | 42,674 | 35,134 | 13,797 | 21,337 | |||||||||||||||||||||
Tesco PLC | 51.00% | CPA®:17 – Global - 49.00% | 83,109 | 48,686 | 34,423 | 42,386 | 24,830 | 17,556 | |||||||||||||||||||||
Dick’s Sporting Goods, Inc. | 55.00% | CPA®:17 – Global - 45.00% | 25,190 | 21,546 | 3,644 | 13,855 | 11,850 | 2,005 | |||||||||||||||||||||
Hellweg Die Profi-Baumärkte GmbH & Co. KG (Hellweg 2) | 63.50% | CPA®:17 – Global - 36.50% | 407,908 | 376,023 | 31,885 | 259,022 | 238,775 | 20,247 | |||||||||||||||||||||
Eroski Sociedad Cooperativa | 70.00% | CPA®:17 – Global - 30.00% | 32,950 | 992 | 31,958 | 23,065 | 694 | 22,371 | |||||||||||||||||||||
Multi-tenant property in Illkirch-Graffens, France | 75.00% | Third party - 25.00% | 21,180 | 15,224 | 5,956 | 15,885 | 11,418 | 4,467 | |||||||||||||||||||||
Gibson Guitar | 82.50% | Third party - 17.50% | 15,402 | 9,640 | 5,762 | 12,707 | 7,953 | 4,754 | |||||||||||||||||||||
U-Haul Moving Partners, Inc. and Mercury Partners, LP | 88.46% | CPA®:17 – Global - 11.54% | 249,727 | 15,764 | 233,963 | 220,909 | 13,945 | 206,964 | |||||||||||||||||||||
Continental Airlines, Inc. | 90.00% | Third party - 10.00% | 5,251 | 4,265 | 986 | 4,726 | 3,839 | 887 | |||||||||||||||||||||
Total Consolidated Joint Ventures | 915,477 | 522,697 | 392,780 | 629,409 | 328,236 | 301,173 | |||||||||||||||||||||||
Total Less Than Wholly-Owned Joint Ventures | $ | 1,527,027 | $ | 836,516 | $ | 690,511 | $ | 815,734 | $ | 421,171 | $ | 394,563 | |||||||||||||||||
________
(a) | See the Terms and Definitions section in the Appendix for a description of our pro rata metrics. |
| | Investing for the long runTM | 14 | |
W. P. Carey Inc.
Owned Real Estate Portfolio – First Quarter 2014
Diversification of Top Ten Tenants by Rent | |
In thousands, except percentages. Pro rata. As of March 31, 2014.
Tenant / Lease Guarantor | Property Type | Tenant Industry | Geography | ABR | Percent of Total ABR | ||||||||
Hellweg Die Profi-Baumärkte GmbH & Co. KG (a) | Retail | Retail Trade | Germany | $ | 42,674 | 6.5 | % | ||||||
Carrefour France SAS (a) | Warehouse/Distribution | Retail Trade | France | 33,399 | 5.1 | % | |||||||
U-Haul Moving Partners Inc. and Mercury Partners, LP | Self Storage | Transportation - Personal | Various U.S. | 28,738 | 4.4 | % | |||||||
OBI Group (a) | Retail | Retail Trade | Poland | 18,716 | 2.9 | % | |||||||
Marcourt Investments Inc. (Marriott Corporation) | Hospitality | Hotels and Gaming | Various U.S. | 16,100 | 2.5 | % | |||||||
True Value Company | Warehouse/Distribution | Construction and Building | Various U.S. | 14,775 | 2.3 | % | |||||||
UTI Holdings, Inc. | Education | Healthcare, Education and Childcare | Various U.S. | 14,514 | 2.2 | % | |||||||
Advanced Micro Devices, Inc. | Office | Electronics | West U.S. | 12,769 | 2.0 | % | |||||||
The New York Times Company | Office | Media: Printing and Publishing | East U.S. | 11,552 | 1.8 | % | |||||||
Dick's Sporting Goods, Inc. | Retail | Retail Trade | Various U.S. | 11,550 | 1.8 | % | |||||||
Total (b) (c) | $ | 204,787 | 31.5 | % | |||||||||
________
(a) | Rent amounts are subject to fluctuations in foreign currency exchange rates. |
(b) | Represents our net-leased portfolio and, accordingly, excludes all operating properties. |
(c) | See the Terms and Definitions section in the Appendix for a description of our pro rata metrics. |
| | Investing for the long runTM | 15 | |
W. P. Carey Inc.
Owned Real Estate Portfolio – First Quarter 2014
Diversification by Property Type | |
In thousands, except percentages. Pro rata. As of March 31, 2014.
Total Portfolio | Unencumbered Portfolio (a) | ||||||||||||||||||||||||||
Property Type | ABR | Percent | Square Footage | Percent | ABR | Percent | Square Footage | Percent | |||||||||||||||||||
Office | $ | 179,611 | 27.5 | % | 10,679 | 12.9 | % | $ | 37,617 | 17.0 | % | 2,661 | 10.9 | % | |||||||||||||
Industrial | 169,603 | 26.0 | % | 31,080 | 37.5 | % | 52,003 | 30.8 | % | 9,947 | 40.6 | % | |||||||||||||||
Warehouse/Distribution | 125,496 | 19.2 | % | 24,360 | 29.4 | % | 19,963 | 22.3 | % | 4,154 | 16.9 | % | |||||||||||||||
Retail | 90,452 | 13.8 | % | 7,718 | 9.3 | % | 19,750 | 11.7 | % | 1,968 | 8.0 | % | |||||||||||||||
Self Storage | 28,738 | 4.4 | % | 5,143 | 6.2 | % | 28,738 | 11.8 | % | 5,143 | 21.0 | % | |||||||||||||||
Other Properties (b) | 59,515 | 9.1 | % | 3,829 | 4.7 | % | 10,874 | 6.4 | % | 652 | 2.6 | % | |||||||||||||||
Total (c) (d) | $ | 653,415 | 100.0 | % | 82,809 | 100.0 | % | $ | 168,945 | 100.0 | % | 24,525 | 100.0 | % | |||||||||||||
________
(a) | Represents properties unencumbered by non-recourse mortgage debt. |
(b) | Other properties include hospitality, education, sports, theater, residential, and unoccupied land. |
(c) | Represents our net-leased portfolio and, accordingly, excludes all operating properties. |
(d) | See the Terms and Definitions section in the Appendix for a description of our pro rata metrics. |
| | Investing for the long runTM | 16 | |
W. P. Carey Inc.
Owned Real Estate Portfolio – First Quarter 2014
Diversification by Tenant Industry | |
In thousands, except percentages. Pro rata. As of March 31, 2014.
Total Portfolio | Unencumbered Portfolio (b) | ||||||||||||||||||||||||||
Industry Type (a) | ABR | Percent | Square Footage | Percent | ABR | Percent | Square Footage | Percent | |||||||||||||||||||
Retail Trade | $ | 132,437 | 20.3 | % | 16,921 | 20.4 | % | $ | 20,116 | 11.9 | % | 2,026 | 8.3 | % | |||||||||||||
Electronics | 66,543 | 10.2 | % | 4,916 | 5.9 | % | 10,732 | 6.4 | % | 1,119 | 4.6 | % | |||||||||||||||
Chemicals, Plastics, Rubber, and Glass | 36,982 | 5.7 | % | 6,428 | 7.8 | % | 8,647 | 5.1 | % | 1,437 | 5.9 | % | |||||||||||||||
Automobile | 34,793 | 5.3 | % | 6,270 | 7.6 | % | 12,079 | 7.2 | % | 2,348 | 9.6 | % | |||||||||||||||
Business and Commercial Services | 34,503 | 5.3 | % | 2,542 | 3.1 | % | 3,611 | 2.1 | % | 274 | 1.1 | % | |||||||||||||||
Healthcare, Education and Childcare | 34,196 | 5.2 | % | 2,757 | 3.3 | % | 8,110 | 4.8 | % | 852 | 3.5 | % | |||||||||||||||
Construction and Building | 30,272 | 4.6 | % | 8,077 | 9.8 | % | 11,122 | 6.6 | % | 2,655 | 10.8 | % | |||||||||||||||
Beverages, Food, and Tobacco | 27,436 | 4.2 | % | 4,298 | 5.2 | % | 4,079 | 2.4 | % | 784 | 3.2 | % | |||||||||||||||
Media: Printing and Publishing | 25,112 | 3.8 | % | 2,759 | 3.3 | % | 2,943 | 1.7 | % | 511 | 2.1 | % | |||||||||||||||
Leisure, Amusement, Entertainment | 20,963 | 3.2 | % | 1,116 | 1.3 | % | 8,235 | 4.9 | % | 501 | 2.0 | % | |||||||||||||||
Machinery | 20,725 | 3.2 | % | 2,742 | 3.3 | % | 16,283 | 9.6 | % | 1,953 | 8.0 | % | |||||||||||||||
Transportation - Cargo | 20,012 | 3.1 | % | 2,197 | 2.6 | % | 1,928 | 1.1 | % | 426 | 1.7 | % | |||||||||||||||
Telecommunications | 19,723 | 3.0 | % | 1,343 | 1.6 | % | 7,146 | 4.2 | % | 537 | 2.2 | % | |||||||||||||||
Buildings and Real Estate | 18,679 | 2.9 | % | 3,343 | 4.0 | % | 18,679 | 11.1 | % | 3,343 | 13.6 | % | |||||||||||||||
Insurance | 16,675 | 2.5 | % | 972 | 1.2 | % | 5,328 | 3.2 | % | 315 | 1.3 | % | |||||||||||||||
Federal, State and Local Government | 16,188 | 2.5 | % | 620 | 0.7 | % | 4,897 | 2.9 | % | 254 | 1.0 | % | |||||||||||||||
Hotels and Gaming | 16,100 | 2.5 | % | 1,036 | 1.3 | % | — | 0.0 | % | — | 0.0 | % | |||||||||||||||
Consumer Non-Durable Goods | 15,827 | 2.4 | % | 2,865 | 3.5 | % | 1,074 | 0.6 | % | 131 | 0.5 | % | |||||||||||||||
Grocery | 12,416 | 1.9 | % | 1,198 | 1.4 | % | 2,200 | 1.3 | % | 246 | 1.0 | % | |||||||||||||||
Transportation - Personal | 10,266 | 1.6 | % | 1,825 | 2.2 | % | 10,266 | 6.1 | % | 1,825 | 7.4 | % | |||||||||||||||
Aerospace and Defense | 8,658 | 1.3 | % | 1,119 | 1.4 | % | 2,340 | 1.4 | % | 448 | 1.8 | % | |||||||||||||||
Textiles, Leather, and Apparel | 8,193 | 1.2 | % | 2,006 | 2.4 | % | 4,069 | 2.4 | % | 707 | 2.9 | % | |||||||||||||||
Mining, Metals, and Primary Metal Industries | 7,910 | 1.2 | % | 1,455 | 1.8 | % | 1,308 | 0.8 | % | 344 | 1.4 | % | |||||||||||||||
Other (c) | 18,806 | 2.9 | % | 4,004 | 4.9 | % | 3,753 | 2.2 | % | 1,489 | 6.1 | % | |||||||||||||||
Total (d) (e) | $ | 653,415 | 100.0 | % | 82,809 | 100.0 | % | $ | 168,945 | 100.0 | % | 24,525 | 100.0 | % | |||||||||||||
________
(a) | Based on the Moody’s Classification System and information provided by the tenant. |
(b) | Represents properties unencumbered by non-recourse mortgage debt. |
(c) | Includes rent from tenants in the following industries: consumer and durable goods; forest products and paper; banking; consumer services; and utilities. |
(d) | Represents our net-leased portfolio and, accordingly, excludes all operating properties. |
(e) | See the Terms and Definitions section in the Appendix for a description of our pro rata metrics. |
| | Investing for the long runTM | 17 | |
W. P. Carey Inc.
Owned Real Estate Portfolio – First Quarter 2014
Diversification by Geography | |
In thousands, except percentages. Pro rata. As of March 31, 2014.
Total Portfolio | Unencumbered Portfolio (a) | ||||||||||||||||||||||||||
Region | ABR | Percent | Square Footage | Percent | ABR | Percent | Square Footage | Percent | |||||||||||||||||||
U.S. | |||||||||||||||||||||||||||
West | $ | 122,867 | 18.8 | % | 12,190 | 14.7 | % | $ | 26,781 | 15.8 | % | 4,000 | 16.3 | % | |||||||||||||
East | 120,689 | 18.5 | % | 17,097 | 20.7 | % | 34,425 | 20.4 | % | 5,202 | 21.2 | % | |||||||||||||||
South | 117,236 | 17.9 | % | 17,085 | 20.6 | % | 36,331 | 21.5 | % | 7,372 | 30.1 | % | |||||||||||||||
Midwest | 82,433 | 12.6 | % | 12,601 | 15.2 | % | 24,095 | 14.3 | % | 3,703 | 15.1 | % | |||||||||||||||
U.S. Total | 443,225 | 67.8 | % | 58,973 | 71.2 | % | 121,632 | 72.0 | % | 20,277 | 82.7 | % | |||||||||||||||
International | |||||||||||||||||||||||||||
Germany | 69,955 | 10.7 | % | 7,009 | 8.5 | % | 31,445 | 18.6 | % | 2,914 | 11.9 | % | |||||||||||||||
France | 53,285 | 8.2 | % | 8,461 | 10.2 | % | 1,810 | 1.1 | % | 242 | 1.0 | % | |||||||||||||||
Finland | 33,927 | 5.2 | % | 2,133 | 2.6 | % | 4,050 | 2.4 | % | 183 | 0.7 | % | |||||||||||||||
Poland | 18,716 | 2.9 | % | 1,827 | 2.2 | % | — | 0.0 | % | — | 0.0 | % | |||||||||||||||
Other (b) | 34,307 | 5.2 | % | 4,406 | 5.3 | % | 10,008 | 5.9 | % | 909 | 3.7 | % | |||||||||||||||
International Total | 210,190 | 32.2 | % | 23,836 | 28.8 | % | 47,313 | 28.0 | % | 4,248 | 17.3 | % | |||||||||||||||
Total (c) (d) | $ | 653,415 | 100.0 | % | 82,809 | 100.0 | % | $ | 168,945 | 100.0 | % | 24,525 | 100.0 | % | |||||||||||||
________
(a) | Represents properties unencumbered by non-recourse mortgage debt. |
(b) | Includes assets in the United Kingdom, the Netherlands, Hungary, Spain, Belgium, Sweden, Canada, Mexico, Thailand, Malaysia, and Japan. |
(c) | Represents our net-leased portfolio and, accordingly, excludes all operating properties. |
(d) | See the Terms and Definitions section in the Appendix for a description of our pro rata metrics. |
| | Investing for the long runTM | 18 | |
W. P. Carey Inc.
Owned Real Estate Portfolio – First Quarter 2014
Lease Expirations – Total Portfolio | |
In thousands, except percentages and number of leases. Pro rata. As of March 31, 2014.
Year of Lease Expiration (a) | Number of Leases Expiring | ABR | Percent | Square Footage | Percent | |||||||||||
Remaining 2014 (b) | 15 | $ | 12,006 | 1.8 | % | 1,282 | 1.5 | % | ||||||||
2015 | 33 | 53,952 | 8.3 | % | 7,620 | 9.2 | % | |||||||||
2016 | 25 | 27,179 | 4.2 | % | 3,058 | 3.7 | % | |||||||||
2017 | 21 | 19,767 | 3.0 | % | 3,209 | 3.9 | % | |||||||||
2018 | 17 | 31,555 | 4.8 | % | 2,720 | 3.3 | % | |||||||||
2019 | 22 | 45,118 | 6.9 | % | 4,112 | 5.0 | % | |||||||||
2020 | 24 | 36,538 | 5.6 | % | 4,380 | 5.3 | % | |||||||||
2021 | 80 | 48,525 | 7.4 | % | 7,608 | 9.2 | % | |||||||||
2022 | 37 | 62,324 | 9.5 | % | 8,694 | 10.5 | % | |||||||||
2023 | 16 | 50,663 | 7.8 | % | 5,149 | 6.2 | % | |||||||||
2024 | 38 | 86,641 | 13.3 | % | 12,529 | 15.1 | % | |||||||||
2025 | 14 | 16,455 | 2.5 | % | 2,034 | 2.5 | % | |||||||||
2026 | 22 | 19,927 | 3.0 | % | 2,690 | 3.1 | % | |||||||||
2027 | 16 | 37,552 | 5.8 | % | 5,380 | 6.5 | % | |||||||||
Thereafter (>2027) | 32 | 105,213 | 16.1 | % | 10,973 | 13.3 | % | |||||||||
Vacant | — | — | 0.0 | % | 1,371 | 1.7 | % | |||||||||
Total (c) (d) | 412 | $ | 653,415 | 100.0 | % | 82,809 | 100.0 | % | ||||||||
________
(a) | Assumes tenant does not exercise renewal option. |
(b) | Month-to-month properties are counted in 2014 ABR. |
(c) | Represents our net-leased portfolio and, accordingly, excludes all operating properties. |
(d) | See the Terms and Definitions section in the Appendix for a description of our pro rata metrics. |
| | Investing for the long runTM | 19 | |
W. P. Carey Inc.
Owned Real Estate Portfolio – First Quarter 2014
Lease Expirations – Unencumbered Portfolio | |
In thousands, except percentages and number of leases. Pro rata. As of March 31, 2014.
Year of Lease Expiration (a) | Number of Leases Expiring | ABR | Percent | Square Footage | Percent | |||||||||||
Remaining 2014 (b) | 7 | $ | 1,782 | 1.1 | % | 219 | 0.9 | % | ||||||||
2015 | 6 | 3,321 | 2.0 | % | 501 | 2.0 | % | |||||||||
2016 | 16 | 9,110 | 5.4 | % | 1,207 | 4.9 | % | |||||||||
2017 | 8 | 5,810 | 3.4 | % | 1,083 | 4.4 | % | |||||||||
2018 | 14 | 12,901 | 7.6 | % | 2,095 | 8.6 | % | |||||||||
2019 | 6 | 4,561 | 2.7 | % | 669 | 2.7 | % | |||||||||
2020 | 7 | 8,771 | 5.2 | % | 1,930 | 7.9 | % | |||||||||
2021 | 7 | 11,338 | 6.7 | % | 2,022 | 8.2 | % | |||||||||
2022 | 10 | 11,807 | 7.0 | % | 2,205 | 9.0 | % | |||||||||
2023 | 5 | 12,208 | 7.2 | % | 847 | 3.5 | % | |||||||||
2024 | 6 | 31,158 | 18.5 | % | 5,942 | 24.2 | % | |||||||||
2025 | 3 | 1,248 | 0.7 | % | 165 | 0.7 | % | |||||||||
2026 | 2 | 2,046 | 1.2 | % | 317 | 1.3 | % | |||||||||
2027 | 5 | 14,014 | 8.3 | % | 1,452 | 5.9 | % | |||||||||
Thereafter (>2027) | 9 | 38,870 | 23.0 | % | 3,262 | 13.3 | % | |||||||||
Vacant | — | — | 0.0 | % | 609 | 2.5 | % | |||||||||
Total (c) (d) (e) | 111 | $ | 168,945 | 100.0 | % | 24,525 | 100.0 | % | ||||||||
________
(a) | Assumes tenant does not exercise renewal option. |
(b) | Month-to-month properties are counted in 2014 ABR. |
(c) | Represents our net-leased portfolio and, accordingly, excludes all operating properties. |
(d) | See the Terms and Definitions section in the Appendix for a description of our pro rata metrics. |
(e) | Represents properties unencumbered by non-recourse mortgage debt. |
| | Investing for the long runTM | 20 | |
W. P. Carey Inc.
Managed REITs
First Quarter 2014
| | Investing for the long runTM | 21 | |
W. P. Carey Inc.
Managed REITs – First Quarter 2014
Selected Data | |
In thousands, except properties, share amounts, and percentages. As of or for the three months ended March 31, 2014.
Managed REITs | |||||||||||
CPA®:17 – Global | CPA®:18 – Global | CWI | |||||||||
Number of properties (a) | 354 | 16 | 18 | ||||||||
Square footage | 34,226 | 3,710 | N/A | ||||||||
Total AUM | $ | 5,293,252 | $ | 776,129 | $ | 1,203,753 | |||||
Acquisitions | 92,927 | 281,761 | — | ||||||||
Dispositions | — | — | — | ||||||||
Gross offering proceeds (b) | N/A | 398,971 | 17,641 | ||||||||
W. P. Carey Ownership of Managed REITs | |||||||||||
Ownership | 2.1 | % | 0.1 | % | 0.7 | % | |||||
Shares outstanding | 320,249,834 | 64,309,251 | 70,192,040 | ||||||||
________
(a) | For CPA®:17 – Global, number of properties excludes 75 operating properties. For CPA®:18 – Global, number of properties excludes two operating properties. CWI properties are hotels. |
(b) | For CPA®:18 – Global, total gross offering proceeds is comprised of $378.2 million of Class A common stock and $20.8 million of Class C common stock. |
| | Investing for the long runTM | 22 | |
W. P. Carey Inc.
Managed REITs – First Quarter 2014
Investment Activity | |
In thousands, except square footage. For the three months ended March 31, 2014.
Acquisitions – Leased Properties | |||||||||||||||
Portfolio(s) | Tenant / Lease Guarantor | Property Location(s) | Purchase Price | Closing Date | Property Type(s) | Gross Square Footage | |||||||||
CPA®:18 – Global | Air Enterprises Acquisition, LLC | Streetsboro, OH | $ | 5,901 | Jan-14 | Industrial | 178,180 | ||||||||
CPA®:18 – Global | Solo Cup Company | University Park, IL | 80,650 | Feb-14 | Warehouse/Distribution | 1,552,475 | |||||||||
CPA®:17 – Global | Raytheon Company | Tucson, AZ | 18,975 | Feb-14 | Office | 143,650 | |||||||||
CPA®:18 – Global | Automobile Protection Corporation | Norcross, GA | 5,822 | Feb-14 | Office | 50,600 | |||||||||
CPA®:18 – Global | Siemens AS (a) | Oslo, Norway | 84,109 | Feb-14 | Office | 165,905 | |||||||||
CPA®:18 – Global | Crowne Group, LLC (2 properties) | Fraser and Warren, MI | 8,042 | Mar-14 | Industrial | 212,152 | |||||||||
CPA®:18 – Global (50%); CPA®:17 – Global (50%) | Bank Pekao S.A. (a) | Warsaw, Poland | 147,904 | Mar-14 | Office | 423,822 | |||||||||
Total Acquisitions – Leased Properties | 351,403 | 2,726,784 | |||||||||||||
Acquisitions – Self-Storage | |||||||||
Portfolio(s) | Property Type | Property Location(s) | Purchase Price | Closing Date | |||||
CPA®:18 – Global | Self-Storage Facility | Kissimmee, FL | 11,735 | Jan-14 | |||||
CPA®:18 – Global | Self-Storage Facility | St. Petersburg, FL | 11,550 | Jan-14 | |||||
Total Acquisitions – Self-Storage Properties | 23,285 | ||||||||
Total Acquisitions | $ | 374,688 | ||||||||
________
(a) | Acquisition price reflects applicable foreign exchange rate. |
| | Investing for the long runTM | 23 | |
W. P. Carey Inc.
Appendix
First Quarter 2014
| | Investing for the long runTM | 24 | |
W. P. Carey Inc.
Appendix – First Quarter 2014
Reconciliation of Net Income to AFFO | |
In thousands, except share and per share amounts.
Three Months Ended | |||||||
Real Estate Ownership | Mar. 31, 2014 | Dec. 31, 2013 | |||||
Net income from Real Estate Ownership attributable to W. P. Carey | $ | 110,407 | $ | 21,021 | |||
Adjustments: | |||||||
Depreciation and amortization of real property | 51,620 | 31,390 | |||||
Impairment charges | — | 6,790 | |||||
Gain on sale of real estate, net (a) | (3,176 | ) | (39,422 | ) | |||
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO | 1,265 | 4,917 | |||||
Proportionate share of adjustments for noncontrolling interests to arrive at FFO | (3,492 | ) | 18,549 | ||||
Total adjustments | 46,217 | 22,224 | |||||
FFO (as defined by NAREIT) - Real Estate Ownership (b) | 156,624 | 43,245 | |||||
Adjustments: | |||||||
Gain on change in control of interests (c) | (103,361 | ) | — | ||||
Merger and acquisition expenses (d) | 29,511 | 2,238 | |||||
Loss on extinguishment of debt | 7,463 | 1,399 | |||||
Other gains, net | (3 | ) | (97 | ) | |||
Other depreciation, amortization, and non-cash charges | 483 | 88 | |||||
Stock-based compensation | 220 | (997 | ) | ||||
Deferred tax benefit | (5,944 | ) | (3,777 | ) | |||
Acquisition expenses | 100 | 89 | |||||
Realized losses on foreign currency, derivatives, and other | 655 | 503 | |||||
Amortization of deferred financing costs | 873 | 792 | |||||
Straight-line and other rent adjustments | (2,669 | ) | (1,643 | ) | |||
Above- and below-market rent intangible lease amortization, net | 13,486 | 7,374 | |||||
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO | 5 | 398 | |||||
AFFO adjustments to equity earnings from equity investments | 2,936 | 10,659 | |||||
Hellweg 2 restructuring (e) | — | 8,357 | |||||
Proportionate share of adjustments for noncontrolling interests to arrive at AFFO | (1,417 | ) | (1,858 | ) | |||
Total adjustments | (57,662 | ) | 23,525 | ||||
AFFO - Real Estate Ownership (b) | $ | 98,962 | $ | 66,770 | |||
Investment Management | |||||||
Net income from Investment Management attributable to W. P. Carey | $ | 2,485 | $ | 2,001 | |||
FFO (as defined by NAREIT) - Investment Management (b) | 2,485 | 2,001 | |||||
Adjustments: | |||||||
Merger-related income tax expense (d) | 13,867 | — | |||||
Other depreciation, amortization, and non-cash charges | 937 | 271 | |||||
Stock-based compensation | 6,823 | 12,761 | |||||
Deferred tax benefit | (4,986 | ) | (4,703 | ) | |||
Impairment charge on marketable security | — | 553 | |||||
Realized losses (gains) on foreign currency | 6 | (4 | ) | ||||
Amortization of deferred financing costs | 152 | 464 | |||||
Total adjustments | 16,799 | 9,342 | |||||
AFFO - Investment Management (b) | $ | 19,284 | $ | 11,343 | |||
Total Company | |||||||
FFO (as defined by NAREIT) (b) | $ | 159,109 | $ | 45,246 | |||
FFO (as defined by NAREIT) per diluted share (b) | $ | 1.76 | $ | 0.65 | |||
AFFO (b) | $ | 118,246 | $ | 78,113 | |||
AFFO per diluted share (b) | $ | 1.31 | $ | 1.12 | |||
Diluted weighted average shares outstanding | 90,375,311 | 69,628,498 | |||||
| | Investing for the long runTM | 25 | |
W. P. Carey Inc.
Appendix – First Quarter 2014
________
(a) | Gain on sale of real estate for the three months ended December 31, 2013 primarily relates to an aggregate gain of $43.9 million recognized on the sale of 19 self-storage properties, of which $27.1 million is attributable to noncontrolling interest. |
(b) | FFO and AFFO are non-GAAP measures. See the Terms and Definitions section that follows for a description of our non-GAAP measures. |
(c) | Gain on change in control of interests for the three months ended March 31, 2014 represents a gain of $73.1 million recognized on our previously-held interest in shares of CPA®:16 – Global common stock, and a gain of $30.5 million recognized on the purchase of the remaining interests in nine investments from CPA®:16 – Global, which we had previously accounted for under the equity method. |
(d) | Amount for the three months ended March 31, 2014 included $29.5 million of merger expenses for the Real Estate Ownership segment and $13.9 million of merger-related income tax expense for Investment Management segment incurred in connection with the CPA®:16 Merger. |
(e) | In connection with the Hellweg 2 restructuring in October 2013, our share of the German real estate transfer tax incurred by Hellweg 2 during the three months ended December 31, 2013 was $8.4 million. |
| | Investing for the long runTM | 26 | |
W. P. Carey Inc.
Appendix – First Quarter 2014
Reconciliation of General and Administrative Expenses to AFFO | |
In thousands. Three months ended March 31, 2014.
GAAP - Basis (a) | Add: Equity Investments (b) | Less: Noncontrolling Interests (c) | WPC's Pro Rata Share (d) | AFFO Adjustments | AFFO (e) | ||||||||||||||||||
General and Administrative | |||||||||||||||||||||||
Compensation expense | $ | 19,888 | $ | — | $ | (271 | ) | $ | 19,617 | $ | — | $ | 19,617 | ||||||||||
Organization and offering expenses | 5,424 | — | — | 5,424 | — | 5,424 | |||||||||||||||||
General and administrative professional fees | 4,563 | 9 | (50 | ) | 4,522 | — | 4,522 | ||||||||||||||||
Reimbursable expenses | (5,444 | ) | — | — | (5,444 | ) | — | (5,444 | ) | ||||||||||||||
Office expenses | 2,247 | — | (395 | ) | 1,852 | — | 1,852 | ||||||||||||||||
Other general and administrative | 1,433 | — | — | 1,433 | — | 1,433 | |||||||||||||||||
Total General and Administrative | $ | 28,111 | $ | 9 | $ | (716 | ) | $ | 27,404 | $ | — | $ | 27,404 | ||||||||||
________
(a) | Consolidated amounts shown represent WPC's Consolidated Statement of Income for the three months ended March 31, 2014. |
(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. See the Terms and Definitions section that follows for a description of our pro rata metrics. |
(e) | AFFO is a non-GAAP measure. See the Terms and Definitions section that follows for a description of our non-GAAP measures. |
| | Investing for the long runTM | 27 | |
W. P. Carey Inc.
Appendix – First Quarter 2014
Total Adjusted Real Estate Revenue – W. P. Carey Group | |
In thousands.
Three Months Ended | |||||||
Mar. 31, 2014 | Dec. 31, 2013 | ||||||
W. P. Carey Pro Rata Real Estate Revenue: | |||||||
Total lease revenue – as reported | $ | 123,213 | $ | 77,479 | |||
Lease revenue – discontinued operations | 3,101 | 2,228 | |||||
Total consolidated lease revenue | 126,314 | 79,707 | |||||
Add: Pro rata share of revenue from equity investments | 6,204 | 9,165 | |||||
Less: Pro rata share of revenue attributable to noncontrolling interests | (7,812 | ) | (10,542 | ) | |||
W. P. Carey pro rata lease revenue | 124,706 | 78,330 | |||||
Other real estate income – as reported | 12,023 | 4,535 | |||||
Other real estate income – discontinued operations | 2,956 | 1,617 | |||||
Less: Pro rata share of other real estate income attributable to noncontrolling interests | (478 | ) | (1,216 | ) | |||
W. P. Carey other real estate income (a) | 14,501 | 4,936 | |||||
W. P. Carey pro rata real estate revenue | 139,207 | 83,266 | |||||
Managed REITs Pro Rata Real Estate Revenue: | |||||||
CPA®:16 – Global: | |||||||
Total lease revenue – as reported | 22,748 | 67,830 | |||||
Lease revenue – discontinued operations | — | 1,581 | |||||
Total consolidated lease revenue | 22,748 | 69,411 | |||||
Add: Pro rata share of revenue from equity investments | 5,385 | 15,893 | |||||
Less: Pro rata share of revenue attributable to noncontrolling interests | (3,129 | ) | (9,690 | ) | |||
CPA®:16 – Global pro rata lease revenue | 25,004 | 75,614 | |||||
CPA®:16 – Global other income | 3,555 | 10,672 | |||||
CPA®:16 − Global pro rata real estate revenue | 28,559 | 86,286 | |||||
CPA®:17 – Global: | |||||||
Total lease revenue – as reported | 76,643 | 74,463 | |||||
Add: Pro rata share of revenue from equity investments | 11,335 | 10,679 | |||||
Less: Pro rata share of revenue attributable to noncontrolling interests | (4,217 | ) | (4,227 | ) | |||
CPA®:17 – Global pro rata lease revenue | 83,761 | 80,915 | |||||
CPA®:17 – Global other income | 24,444 | 21,205 | |||||
CPA®:17 – Global pro rata real estate revenue | 108,205 | 102,120 | |||||
CPA®:18 – Global: | |||||||
Total lease revenue – as reported | 6,211 | 2,331 | |||||
Less: Pro rata share of revenue attributable to noncontrolling interests | (1,404 | ) | (1,075 | ) | |||
CPA®:18 – Global pro rata lease revenue | 4,807 | 1,256 | |||||
CPA®:18 – Global other income | 471 | 6 | |||||
CPA®:18 – Global pro rata real estate revenue | 5,278 | 1,262 | |||||
CWI: | |||||||
Hotel revenue – as reported | 53,877 | 48,895 | |||||
CWI other income | 151 | (624 | ) | ||||
CWI pro rata real estate revenue | 54,028 | 48,271 | |||||
Managed REITs pro rata real estate revenue | 196,070 | 237,939 | |||||
Total Adjusted Real Estate Revenue (b) – W. P. Carey Group | $ | 335,277 | $ | 321,205 | |||
________
(a) | Other real estate income generally consists of revenue from self-storage properties and hotels. It 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. |
(b) | Total adjusted real estate revenue is a non-GAAP measure. See the Terms and Definitions section that follows for a description of our non-GAAP measures. |
| | Investing for the long runTM | 28 | |
W. P. Carey Inc.
Appendix – First Quarter 2014
Net Operating Income (NOI) from Real Estate | |
In thousands.
Three Months Ended Mar. 31, 2014 | ||||
Pro Rata Lease Revenue | ||||
Total lease revenue – as reported | $ | 123,213 | ||
Total lease revenue – discontinued operations | 3,101 | |||
Total consolidated lease revenue | 126,314 | |||
Add: Pro rata share of revenue from equity investments | 6,204 | |||
Less: Pro rata share of revenue attributable to noncontrolling interests | (7,812 | ) | ||
Total pro rata lease revenue (a) | 124,706 | |||
Less: Straight line rent amortization | (2,668 | ) | ||
Less: Above- and below- market rent intangible lease amortization | 12,730 | |||
Total Pro Rata Cash Lease Revenues | 134,768 | |||
Pro Rata Non-Reimbursable Property Expenses: | ||||
Property expenses – as reported, plus reimbursable tenant costs | 10,862 | |||
Property expenses – discontinued operations | 619 | |||
Total consolidated property expenses | 11,481 | |||
Less: Reimbursable property expenses (b) | (6,059 | ) | ||
Total non-reimbursable property expenses | 5,422 | |||
Add: Pro rata share of non-reimbursable property expenses from equity investments | 98 | |||
Less: Pro rata share of non-reimbursable property expenses attributable to noncontrolling interests | (333 | ) | ||
Total Pro Rata Non-Reimbursable Property Expenses | 5,187 | |||
Pro Rata NOI from leased properties (c) (d) | $ | 129,581 | ||
Hotels NOI | 1,294 | |||
Self-storage properties NOI | 70 | |||
Pro Rata NOI including other real estate income | $ | 130,945 | ||
________
(a) | Total pro rata lease revenue differs from the amount presented in the Reconciliation of Consolidated Statement of Income to AFFO due to the inclusion of revenues from 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 follows for a description of our non-GAAP measures. |
(d) | Pro rata NOI from leased properties excludes the results of operations of our hotels and self-storage properties. |
| | Investing for the long runTM | 29 | |
W. P. Carey Inc.
Appendix – First Quarter 2014
Terms and Definitions | |
Non-GAAP Financial Disclosures
AFFO
FFO is a non-GAAP measure defined by NAREIT. NAREIT defines FFO as net income or loss (as computed in accordance with GAAP) excluding: depreciation and amortization expense from real estate assets, impairment charges on real estate, gains or losses from sales of depreciated real estate assets, and extraordinary items; however, FFO related to assets held for sale, sold, or otherwise transferred and included in the results of discontinued operations are included. These adjustments also incorporate the pro rata share of unconsolidated subsidiaries. FFO is used by management, investors, and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers. Although NAREIT has published this definition of FFO, companies often modify this definition as they seek to provide financial measures that meaningfully reflect their distinctive operations.
We modify the NAREIT computation of FFO to include other adjustments to GAAP net income to adjust for certain non-cash charges such as amortization of intangibles, deferred income tax benefits and expenses, straight-line rents, stock compensation, gains or losses from extinguishment of debt and deconsolidation of subsidiaries, and unrealized foreign currency exchange gains and losses. 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 acquisition expenses and non-core expenses, such as merger and restructuring expenses. Merger expenses are related to the CPA®:16 Merger and restructuring expenses are related to the restructuring of Hellweg 2. We also exclude realized gains/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 that are currently not engaged in acquisitions, mergers, and restructurings, which are not part of our normal business operations. 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.
NOI
NOI represents income from our net lease portfolio after operating expenses (excluding depreciation and amortization) are deducted from revenue. Further deductions for straight line and other non-cash rents are made to calculate NOI. We believe that presenting this measure provides supplemental information on the nature and performance of our investments that is not easily discernible in the equivalent GAAP measure.
Total Adjusted Real Estate Revenue
Total adjusted real estate revenue represents WPC and the Managed REITs. 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.
| | Investing for the long runTM | 30 | |
W. P. Carey Inc.
Appendix – First Quarter 2014
Other Metrics
Pro Rata Amounts
This supplemental package contains certain measures prepared under the pro rata consolidation method. We refer to these measures as pro rata measures. We have a number of investments, usually with our affiliates, in which our economic ownership is less than 100%. Under the full consolidation method, 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, 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.
ABR
ABR represents contractual minimum annualized base rent for our net-leased properties. ABR is not applicable to operating properties.
| | Investing for the long runTM | 31 | |