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EX-99.1 - EXHIBIT 99.1 - W. P. Carey Inc.wpc2017q48-kerexh991.htm
8-K - 8-K - W. P. Carey Inc.wpc2017q48-ksupplemental.htm
Exhibit 99.2

W. P. Carey Inc.
Supplemental Information
Fourth Quarter 2017








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Important Disclosures About This Supplemental Package

As used in this supplemental package, the terms “W. P. Carey,” “WPC®,” “we,” “us” and “our” include W. P. Carey Inc., its consolidated subsidiaries and its predecessors, unless otherwise indicated. “CPA® REITs” means Corporate Property Associates 17 – Global Incorporated, or CPA:17 – Global, and Corporate Property Associates 18 – Global Incorporated, or CPA:18 – Global. “CWI® REITs” means Carey Watermark Investors Incorporated, or CWI 1, and Carey Watermark Investors 2 Incorporated, or CWI 2. “Managed REITs” means the CPA REITs and the CWI REITs. “Managed Programs” means the Managed REITs and Carey European Student Housing Fund I, L.P., or CESH I. “CCIF” means Carey Credit Income Fund (now known as Guggenheim Credit Income Fund), which was included in the Managed Programs prior to our resignation as its advisor during the third quarter of 2017. “U.S.” means United States. “AUM” means assets under management.

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, or AFFO; earnings before interest, taxes, depreciation and amortization, or EBITDA; adjusted EBITDA; pro rata cash net operating income, or pro rata cash NOI; and normalized pro rata cash 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, Inc., or NAREIT, an industry trade group.

Amounts may not sum to totals due to rounding.


W. P. Carey Inc.
Supplemental Information – Fourth Quarter 2017
Table of Contents
Overview
 
 
 
Financial Results
 
Statements of Income – Last Five Quarters
 
FFO and AFFO – Last Five Quarters
 
 
 
Balance Sheets and Capitalization
 
 
 
Owned Real Estate
 
Investment Activity
 
 
 
Investment Management
 
 
 
Appendix
 
Adjusted EBITDA  Last Five Quarters
 



W. P. Carey Inc.
Overview – Fourth Quarter 2017
Summary Metrics
As of or for the three months ended December 31, 2017.
Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment
 
 
 
 
 
 
 
Owned
Real Estate
 
Investment Management
 
Total
Revenues, excluding reimbursable costs – consolidated ($'000)
 
$
162,251

 
$
23,071

 
$
185,322

Net income attributable to W. P. Carey ($'000)
 
54,149

 
21,060

 
75,209

Net income attributable to W. P. Carey per diluted share
 
0.50

 
0.19

 
0.69

Normalized pro rata cash NOI from real estate ($'000) (a) (b)
 
165,931

 
N/A

 
165,931

Adjusted EBITDA ($'000) (a) (b)
 
157,744

 
32,160

 
189,904

AFFO attributable to W. P. Carey ($'000) (a) (b)
 
111,336

 
30,726

 
142,062

AFFO attributable to W. P. Carey per diluted share (a) (b)
 
1.03

 
0.28

 
1.31

 
 
 
 
 
 
 
 
 
 
Distributions declared per share – fourth quarter
 
 
 
 
 
1.01

Distributions declared per share – fourth quarter annualized
 
 
 
 
 
4.04

Dividend yield – annualized, based on quarter end share price of $68.90
 
 
 
 
 
5.9
%
Dividend payout ratio – for the year ended December 31, 2017 (c)
 
 
 
 
 
75.7
%
 
 
 
 
 
 
 
 
 
 
Balance Sheet and Capitalization
 
 
 
 
 
 
 
 
 
Equity market capitalization – based on quarter end share price of $68.90 ($'000)
 
 
 
 
 
$
7,366,968

Pro rata net debt ($'000) (d)
 
 
 
 
 
 
 
 
4,150,197

Enterprise value ($'000)
 
 
 
 
 
 
 
 
11,517,165

 
 
 
 
 
 
 
 
 
 
Total capitalization ($'000) (e)
 
 
 
 
 
 
 
 
11,679,477

 
 
 
 
 
 
 
 
 
 
Total consolidated debt ($'000)
 
 
 
 
 
 
 
 
4,265,267

Gross assets ($'000) (f)
 
 
 
 
 
 
 
 
8,861,364

Liquidity ($'000) (g)
 
 
 
 
 
 
 
 
1,445,435

 
 
 
 
 
 
 
 
 
 
Pro rata net debt to enterprise value (b)
 
 
 
 
 
 
 
 
36.0
%
Pro rata net debt to adjusted EBITDA (annualized) (a) (b)
 
 
 
 
 
5.5x

Total consolidated debt to gross assets
 
 
 
 
 
 
 
 
48.1
%
 
 
 
 
 
 
 
 
 
 
Weighted-average interest rate (b)
 
 
 
 
 
 
 
 
3.4
%
Weighted-average debt maturity (years) (b)
 
 
 
 
 
 
 
 
5.4

 
 
 
 
 
 
 
 
 
 
Moody's Investors Service – corporate rating
 
 
 
 
 
 
 
 
Baa2 (stable)

Standard & Poor's Ratings Services – issuer rating
 
 
 
 
 
 
 
 
BBB (stable)

 
 
 
 
 
 
 
 
 
 
Owned Real Estate Portfolio (Pro Rata)
 
 
 
 
 
 
 
 
 
Number of net-leased properties
 
 
 
 
 
 
 
 
887

Number of operating properties
 
 
 
 
 
 
 
 
2

Number of tenants – net-leased properties
 
 
 
 
 
 
 
 
210

 
 
 
 
 
 
 
 
 
 
ABR from Investment Grade tenants as a % of total ABR – net-leased properties (h)
 
 
 
 
 
27.2
%
 
 
 
 
 
 
 
 
 
 
Net-leased properties – square footage (millions)
 
 
 
 
 
 
 
 
84.9

 
 
 
 
 
 
 
 
 
 
Occupancy – net-leased properties
 
 
 
 
 
 
 
 
99.8
%
Weighted-average lease term (years)
 
 
 
 
 
 
 
 
9.6

 
 
 
 
 
 
 
 
 
 
Acquisitions and completed capital projects – fourth quarter ($'000)
 
 
 
$
32,267

Dispositions – fourth quarter ($'000)
 
 
 
 
 
 
 
 
59,067

 
 
 
 
 
 
 
 
 
 
Managed Programs
CPA:17  Global
 
CPA:18 – Global
 
CWI REITs
 
CESH I
 
Total
AUM ($'000) (i)
$
5,702,445

 
$
2,387,349

 
$
4,880,132

 
$
155,126

 
$
13,125,052

Acquisitions – fourth quarter ($'000)
52,571

 
94,586

 

 

 
147,157

Dispositions – fourth quarter ($'000)

 
64,847

 
85,500

 

 
150,347

________

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Investing for the long runTM | 1


W. P. Carey Inc.
Overview – Fourth Quarter 2017

(a)
Normalized pro rata cash NOI, Adjusted EBITDA and AFFO are non-GAAP measures. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures and for details on how certain non-GAAP measures are calculated.
(b)
Presented on a pro rata basis. See the Terms and Definitions section in the Appendix for a description of pro rata.
(c)
Represents distributions declared per share divided by AFFO per diluted share on a year-to-date basis.
(d)
Represents total pro rata debt outstanding less consolidated cash and cash equivalents. See the Terms and Definitions section in the Appendix for a description of pro rata.
(e)
Represents equity market capitalization plus total pro rata debt outstanding. See the Terms and Definitions section in the Appendix for a description of pro rata.
(f)
Gross assets represent consolidated total assets before accumulated depreciation on buildings and improvements. Gross assets are net of accumulated amortization on in-place lease and other intangible assets of $423.5 million and above-market rent intangible assets of $276.1 million.
(g)
Represents availability on our Senior Unsecured Credit Facility plus consolidated cash and cash equivalents.
(h)
Percentage of portfolio is based on ABR, as of December 31, 2017. Includes tenants or guarantors with investment grade ratings (19.2%) and subsidiaries of non-guarantor parent companies with investment grade ratings (8.0%). Investment grade refers to an entity with a rating of BBB- or higher from Standard & Poor’s Ratings Services or Baa3 or higher from Moody’s Investors Service. See the Terms and Definitions section in the Appendix for a description of ABR.
(i)
Represents estimated value of real estate assets plus cash and cash equivalents, less distributions payable for the Managed REITs and fair value of investments plus cash for CESH I.


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W. P. Carey Inc.
Overview – Fourth Quarter 2017
Components of Net Asset Value
Dollars in thousands, except per share amounts.
Owned Real Estate
 
 
Three Months Ended
Dec. 31, 2017
 
Annualized
Normalized pro rata cash NOI (a) (b)
 
 
$
165,931

 
$
663,724

 
 
 
 
 
 
Investment Management
 
 
Three Months Ended
Dec. 31, 2017
 
Twelve Months Ended
Dec. 31, 2017
Adjusted EBITDA (a) (b) (c)
 
 
$
32,160

 
$
118,657

Selected Components of Adjusted EBITDA:
 
 
 
 
 
Asset management revenue (d)
 
 
16,854

 
70,125

Structuring revenue (d)
 
 
6,217

 
34,198

Operating partnership interests in real estate cash flow of Managed REITs (c) (e)
 
12,564

 
45,101

Back-end fees and interests associated with the Managed Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet – Selected Information (Consolidated Unless Otherwise Stated)
 
As of Dec. 31, 2017
Assets
 
 
 
 
 
Book value of real estate excluded from NOI (f)
 
 
 
 
$
40,560

Cash and cash equivalents
 
 
 
 
162,312

Due from affiliates
 
 
 
 
105,308

Other assets, net:
 
 
 
 
 
Straight-line rent adjustments
 
 
 
 
$
71,955

Restricted cash, including escrow
 
 
 
 
47,364

Deferred charges
 
 
 
 
44,370

Investment in CCIF (g)
 
 
 
 
23,329

Securities and derivatives
 
 
 
 
22,186

Accounts receivable
 
 
 
 
17,770

Other intangible assets, net
 
 
 
 
14,361

Taxes receivable
 
 
 
 
11,137

Note receivable
 
 
 
 
9,971

Prepaid expenses
 
 
 
 
8,137

Leasehold improvements, furniture and fixtures
 
 
 
3,859

Other
 
 
 
 
211

Total other assets, net
 
 
 
 
$
274,650

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Total pro rata debt outstanding (b)
 
 
 
 
$
4,312,509

Distributions payable
 
 
 
 
109,766

Deferred income taxes
 
 
 
 
67,009

Accounts payable, accrued expenses and other liabilities:
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
$
101,615

Prepaid and deferred rents
 
 
 
 
79,483

Tenant security deposits
 
 
 
 
29,050

Accrued taxes payable
 
 
 
 
28,861

Securities and derivatives
 
 
 
 
7,913

Straight-line rent adjustments
 
 
 
 
2,230

Other
 
 
 
 
13,901

Total accounts payable, accrued expenses and other liabilities
 
 
 
 
$
263,053


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W. P. Carey Inc.
Overview – Fourth Quarter 2017
Other
Number of Shares / Units Owned
 
NAV / Offering Price Per Share
 
Implied Value
 
A
 
B
 
A x B
Ownership in Managed Programs: (h)
 
 
 
 


CPA:17 – Global (4.2% ownership)
14,647,412

 
$
10.11

(i) 
$
148,085

CPA:18 – Global (2.5% ownership)
3,616,657

 
8.36

(j) 
30,235

CWI 1 (2.1% ownership)
2,920,268

 
10.80

(k) 
31,539

CWI 2 (1.8% ownership)
1,560,648

 
10.74

(l) 
16,761

CESH I (2.4% ownership)
3,492

 
1,000.00

(m) 
3,492

 
 
 
 
 
$
230,112

________
(a)
Normalized pro rata cash NOI and Adjusted EBITDA are non-GAAP measures. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures and for details on how they are calculated.
(b)
Presented on a pro rata basis. See the Terms and Definitions section in the Appendix for a description of pro rata.
(c)
In connection with our decision to exit non-traded retail fundraising activities, which we announced in June 2017, during the second quarter of 2017 we revised how we view and present our two business segments. As such, equity in earnings of equity method investments in the Managed Programs is now recognized within our Investment Management segment. Earnings from our investment in CCIF continue to be included in our Investment Management segment. Prior periods have been revised to reflect this change.
(d)
Amounts are gross of fees paid to the respective subadvisors of CWI 1, CWI 2, CPA:18 Global (for multi-family properties) and CCIF (prior to our resignation as the advisor to CCIF in the third quarter of 2017).
(e)
We are entitled to receive distributions of our share of earnings up to 10% of the Available Cash of each of the Managed REITs, as defined in their respective operating partnership agreements. Pursuant to the terms of their subadvisory agreements, however, 20% of the distributions of Available Cash we receive from CWI 1 and 25% of the distributions of Available Cash we receive from CWI 2 are paid to their respective subadvisors. Amounts for CWI 1 and CWI 2 are net of fees paid to their respective subadvisors.
(f)
Represents the value of real estate not included in net operating income, such as vacant assets and in-progress build-to-suit properties.
(g)
In August 2017, we resigned as the advisor to CCIF, effective as of September 11, 2017. As such, we reclassified our investment in CCIF from Equity investments in the Managed Programs and real estate to Other assets, net in our consolidated balance sheets, since we no longer share decision-making responsibilities with the third-party investment partner.
(h)
Separate from operating partnership interests and our interests in unconsolidated real estate joint ventures with our affiliate, CPA:17 Global.
(i)
The estimated net asset value per share, or NAV, for CPA:17 Global was determined as of December 31, 2016. We calculated CPA:17 Global’s NAV by relying in part on an estimate of the fair market value of CPA:17 Global’s real estate portfolio and debt provided by third parties, adjusted to give effect to the estimated fair value of mortgage loans encumbering its assets (also provided by a third party) as well as other adjustments.
(j)
We own shares of CPA:18 Global’s Class A common stock. The quarterly NAV for CPA:18 Global’s Class A common stock was determined as of September 30, 2017. We calculated the quarterly NAV for CPA:18 Global’s Class A common stock by relying in part on an estimate of the fair market value of approximately 25% of CPA:18 Global’s real estate portfolio and debt provided by third parties, adjusted to give effect to the estimated fair value of mortgage loans encumbering its assets (also provided by a third party), as well as other adjustments.
(k)
The NAV for CWI 1 was based on shares of common stock outstanding at December 31, 2016. We calculated CWI 1’s NAV relying in part on appraisals of the fair market value of CWI 1’s real estate portfolio and mortgage debt provided by third parties. The net amount was then adjusted for estimated disposition costs (including estimates of expenses, commissions and fees payable to us) and CWI 1’s other net assets and liabilities at the same date.
(l)
We own shares of CWI 2’s Class A common stock. The NAV for CWI 2’s Class A common stock was determined as of December 31, 2016. We calculated the NAV for CWI 2’s Class A common stock by relying in part on an appraisal of the fair market value of CWI 2’s real estate portfolio and estimates of the fair market value of CWI 2’s mortgage debt at December 31, 2016. The net amount was then adjusted for other net assets and liabilities and our interest in disposition proceeds at December 31, 2016.
(m)
We own limited partnership units of CESH I at its private placement price of $1,000 per share; a NAV for CESH I has not yet been calculated.

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Investing for the long runTM | 4




W. P. Carey Inc.
Financial Results
Fourth Quarter 2017





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Investing for the long runTM | 5


W. P. Carey Inc.
Financial Results – Fourth Quarter 2017
Consolidated Statements of Income – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Dec. 31, 2017
 
Sep. 30, 2017
 
Jun. 30, 2017
 
Mar. 31, 2017
 
Dec. 31, 2016
Revenues
 
 
 
 
 
 
 
 
 
Owned Real Estate:
 
 
 
 
 
 
 
 
 
Lease revenues
$
154,826

 
$
161,511

 
$
158,255

 
$
155,781

 
$
157,105

Operating property revenues
6,910

 
8,449

 
8,223

 
6,980

 
7,071

Reimbursable tenant costs
5,584

 
5,397

 
5,322

 
5,221

 
6,201

Lease termination income and other
515

 
1,227

 
2,247

 
760

 
1,093

 
167,835

 
176,584

 
174,047

 
168,742

 
171,470

Investment Management:
 
 
 
 
 
 
 
 
 
Asset management revenue
16,854

 
17,938

 
17,966

 
17,367

 
16,375

Structuring revenue
6,217

 
9,817

 
14,330

 
3,834

 
16,338

Reimbursable costs from affiliates
6,055

 
6,211

 
13,479

 
25,700

 
20,061

Dealer manager fees

 
105

 
1,000

 
3,325

 
2,623

Other advisory revenue

 
99

 
706

 
91

 
1,913

 
29,126

 
34,170

 
47,481

 
50,317

 
57,310

 
196,961

 
210,754

 
221,528

 
219,059

 
228,780

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
64,015

 
64,040

 
62,849

 
62,430

 
62,675

General and administrative
17,702

 
17,236

 
17,529

 
18,424

 
24,230

Reimbursable tenant and affiliate costs
11,639

 
11,608

 
18,801

 
30,921

 
26,262

Property expenses, excluding reimbursable tenant costs
9,560

 
10,556

 
10,530

 
10,110

 
10,956

Stock-based compensation expense
4,268

 
4,635

 
3,104

 
6,910

 
3,051

Impairment charges
2,769

 

 

 

 
9,433

Subadvisor fees (a)
2,002

 
5,206

 
3,672

 
2,720

 
4,131

Other expenses (b)
(533
)
 
65

 
1,000

 
73

 
18

Restructuring and other compensation (c)
289

 
1,356

 
7,718

 

 

Dealer manager fees and expenses

 
462

 
2,788

 
3,294

 
3,808

 
111,711

 
115,164

 
127,991

 
134,882

 
144,564

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(40,401
)
 
(41,182
)
 
(42,235
)
 
(41,957
)
 
(43,913
)
Equity in earnings of equity method investments in the Managed Programs and real estate
16,930

 
16,318

 
15,728

 
15,774

 
16,476

Other income and (expenses)
1,356

 
(4,569
)
 
(916
)
 
516

 
(3,731
)
 
(22,115
)
 
(29,433
)
 
(27,423
)
 
(25,667
)
 
(31,168
)
Income before income taxes and gain on sale of real estate
63,135

 
66,157

 
66,114

 
58,510

 
53,048

Benefit from (provision for) income taxes
192

 
(1,760
)
 
(2,448
)
 
1,305

 
(7,826
)
Income before gain on sale of real estate
63,327

 
64,397

 
63,666

 
59,815

 
45,222

Gain on sale of real estate, net of tax
11,146

 
19,257

 
3,465

 
10

 
3,248

Net Income
74,473

 
83,654

 
67,131

 
59,825

 
48,470

Net loss (income) attributable to noncontrolling interests
736

 
(3,376
)
 
(2,813
)
 
(2,341
)
 
(766
)
Net Income Attributable to W. P. Carey
$
75,209

 
$
80,278

 
$
64,318

 
$
57,484

 
$
47,704

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
0.69

 
$
0.74

 
$
0.60

 
$
0.53

 
$
0.44

Diluted Earnings Per Share
$
0.69

 
$
0.74

 
$
0.59

 
$
0.53

 
$
0.44

Weighted-Average Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
108,041,556

 
108,019,292

 
107,668,218

 
107,562,484

 
107,487,181

Diluted
108,208,918

 
108,143,694

 
107,783,204

 
107,764,279

 
107,715,965

________
(a)
The subadvisors for CWI 1, CWI 2 and CPA:18 Global earn a percentage of gross fees recorded, which we account for as an expense and which are recorded as Subadvisor fees in our consolidated statements of income. The amounts paid to the subadvisors are the differences between gross and net fees. Pursuant to the terms of the subadvisory agreement we had with the subadvisor in connection with CCIF (prior to our resignation as the advisor to CCIF in the third quarter of 2017), we paid a subadvisory fee equal to 50% of the asset management fees and organization and offering costs paid to us by CCIF.
(b)
Amount for the three months ended June 30, 2017 is comprised of an accrual for estimated one-time legal settlement expenses.
(c)
Amounts for the three months ended December 31, 2017, September 30, 2017 and June 30, 2017 represent restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.

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Investing for the long runTM | 6


W. P. Carey Inc.
Financial Results – Fourth Quarter 2017
Statements of Income, Owned Real Estate – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Dec. 31, 2017
 
Sep. 30, 2017
 
Jun. 30, 2017
 
Mar. 31, 2017
 
Dec. 31, 2016
Revenues
 
 
 
 
 
 
 
 
 
Lease revenues
$
154,826

 
$
161,511

 
$
158,255

 
$
155,781

 
$
157,105

Operating property revenues
6,910

 
8,449

 
8,223

 
6,980

 
7,071

Reimbursable tenant costs
5,584

 
5,397

 
5,322

 
5,221

 
6,201

Lease termination income and other
515

 
1,227

 
2,247

 
760

 
1,093

 
167,835

 
176,584

 
174,047

 
168,742

 
171,470

Operating Expenses
 
 
 
 
 
 
 
 
 
Depreciation and amortization
62,951

 
62,970

 
61,989

 
61,522

 
61,717

General and administrative
11,691

 
11,234

 
7,803

 
8,274

 
8,938

Property expenses, excluding reimbursable tenant costs
9,560

 
10,556

 
10,530

 
10,110

 
10,956

Reimbursable tenant costs
5,584

 
5,397

 
5,322

 
5,221

 
6,201

Impairment charges
2,769

 

 

 

 
9,433

Stock-based compensation expense
2,227

 
1,880

 
899

 
1,954

 
908

Other expenses (a)
(533
)
 
65

 
1,000

 
73

 
18

 
94,249

 
92,102

 
87,543

 
87,154

 
98,171

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Interest expense
(40,401
)
 
(41,182
)
 
(42,235
)
 
(41,957
)
 
(43,913
)
Equity in earnings of equity method investments in real estate (b)
3,535

 
3,740

 
3,721

 
2,072

 
3,343

Other income and (expenses)
594

 
(4,918
)
 
(1,371
)
 
40

 
(4,016
)
 
(36,272
)
 
(42,360
)
 
(39,885
)
 
(39,845
)
 
(44,586
)
Income before income taxes and gain on sale of real estate
37,314

 
42,122

 
46,619

 
41,743

 
28,713

Benefit from (provision for) income taxes
4,953

 
(1,511
)
 
(3,731
)
 
(1,454
)
 
(3,374
)
Income before gain on sale of real estate
42,267

 
40,611

 
42,888

 
40,289

 
25,339

Gain on sale of real estate, net of tax
11,146

 
19,257

 
3,465

 
10

 
3,248

Net Income from Owned Real Estate
53,413

 
59,868

 
46,353

 
40,299

 
28,587

Net loss (income) attributable to noncontrolling interests
736

 
(3,376
)
 
(2,813
)
 
(2,341
)
 
(766
)
Net Income from Owned Real Estate Attributable to
   W. P. Carey (b)
$
54,149

 
$
56,492

 
$
43,540

 
$
37,958

 
$
27,821

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share (b)
$
0.50

 
$
0.52

 
$
0.41

 
$
0.35

 
$
0.26

Diluted Earnings Per Share (b)
$
0.50

 
$
0.52

 
$
0.40

 
$
0.35

 
$
0.26

Weighted-Average Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
108,041,556

 
108,019,292

 
107,668,218

 
107,562,484

 
107,487,181

Diluted
108,208,918

 
108,143,694

 
107,783,204

 
107,764,279

 
107,715,965

________
(a)
Amount for the three months ended June 30, 2017 is comprised of an accrual for estimated one-time legal settlement expenses.
(b)
In connection with our decision to exit non-traded retail fundraising activities, which we announced in June 2017, during the second quarter of 2017 we revised how we view and present our two business segments. As such, equity in earnings of equity method investments in the Managed Programs is now recognized within our Investment Management segment. Earnings from our investment in CCIF continue to be included in our Investment Management segment. Prior periods have been revised to reflect this change.

wpclogoa01a01a25.jpg 
 
Investing for the long runTM | 7


W. P. Carey Inc.
Financial Results – Fourth Quarter 2017
Statements of Income, Investment Management – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Dec. 31, 2017
 
Sep. 30, 2017
 
Jun. 30, 2017
 
Mar. 31, 2017
 
Dec. 31, 2016
Revenues
 
 
 
 
 
 
 
 
 
Asset management revenue
$
16,854

 
$
17,938

 
$
17,966

 
$
17,367

 
$
16,375

Structuring revenue
6,217

 
9,817

 
14,330

 
3,834

 
16,338

Reimbursable costs from affiliates
6,055

 
6,211

 
13,479

 
25,700

 
20,061

Dealer manager fees

 
105

 
1,000

 
3,325

 
2,623

Other advisory revenue

 
99

 
706

 
91

 
1,913

 
29,126

 
34,170

 
47,481

 
50,317

 
57,310

Operating Expenses
 
 
 
 
 
 
 
 
 
Reimbursable costs from affiliates
6,055

 
6,211

 
13,479

 
25,700

 
20,061

General and administrative
6,011

 
6,002

 
9,726

 
10,150

 
15,292

Stock-based compensation expense
2,041

 
2,755

 
2,205

 
4,956

 
2,143

Subadvisor fees (a)
2,002

 
5,206

 
3,672

 
2,720

 
4,131

Depreciation and amortization
1,064

 
1,070

 
860

 
908

 
958

Restructuring and other compensation (b)
289

 
1,356

 
7,718

 

 

Dealer manager fees and expenses

 
462

 
2,788

 
3,294

 
3,808

 
17,462

 
23,062

 
40,448

 
47,728

 
46,393

Other Income and Expenses
 
 
 
 
 
 
 
 
 
Equity in earnings of equity method investments in the Managed Programs (c)
13,395

 
12,578

 
12,007

 
13,702

 
13,133

Other income and (expenses)
762

 
349

 
455

 
476

 
285

 
14,157

 
12,927

 
12,462

 
14,178

 
13,418

Income before income taxes
25,821

 
24,035

 
19,495

 
16,767

 
24,335

(Provision for) benefit from income taxes
(4,761
)
 
(249
)
 
1,283

 
2,759

 
(4,452
)
Net Income from Investment Management Attributable to
   W. P. Carey (c)
$
21,060

 
$
23,786

 
$
20,778

 
$
19,526

 
$
19,883

 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Share (c)
$
0.19

 
$
0.22

 
$
0.19

 
$
0.18

 
$
0.18

Diluted Earnings Per Share (c)
$
0.19

 
$
0.22

 
$
0.19

 
$
0.18

 
$
0.18

Weighted-Average Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
108,041,556

 
108,019,292

 
107,668,218

 
107,562,484

 
107,487,181

Diluted
108,208,918

 
108,143,694

 
107,783,204

 
107,764,279

 
107,715,965

________
(a)
The subadvisors for CWI 1, CWI 2 and CPA:18 Global earn a percentage of gross fees recorded, which we account for as an expense and which are recorded as Subadvisor fees in our consolidated statements of income. The amounts paid to the subadvisors are the differences between gross and net fees. Pursuant to the terms of the subadvisory agreement we had with the subadvisor in connection with CCIF (prior to our resignation as the advisor to CCIF in the third quarter of 2017), we paid a subadvisory fee equal to 50% of the asset management fees and organization and offering costs paid to us by CCIF.
(b)
Amounts for the three months ended December 31, 2017, September 30, 2017 and June 30, 2017 represent restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.
(c)
In connection with our previously announced decision to exit non-traded retail fundraising activities, during the second quarter of 2017 we revised how we view and present our two business segments. As such, equity in earnings of equity method investments in the Managed Programs is now recognized within our Investment Management segment. Earnings from our investment in CCIF continue to be included in our Investment Management segment. Prior periods have been revised to reflect this change.



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Investing for the long runTM | 8


W. P. Carey Inc.
Financial Results – Fourth Quarter 2017
FFO and AFFO, Consolidated – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Dec. 31, 2017
 
Sep. 30, 2017
 
Jun. 30, 2017
 
Mar. 31, 2017
 
Dec. 31, 2016
Net income attributable to W. P. Carey
$
75,209

 
$
80,278

 
$
64,318

 
$
57,484

 
$
47,704

Adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization of real property
62,603

 
62,621

 
61,636

 
61,182

 
61,373

Gain on sale of real estate, net
(11,146
)
 
(19,257
)
 
(3,465
)
 
(10
)
 
(3,248
)
Impairment charges
2,769

 

 

 

 
9,433

Proportionate share of adjustments for noncontrolling interests
(2,696
)
 
(2,692
)
 
(2,562
)
 
(2,541
)
 
(3,184
)
Proportionate share of adjustments to equity in net income of partially owned entities
877

 
866

 
833

 
2,717

 
1,059

Total adjustments
52,407

 
41,538

 
56,442

 
61,348

 
65,433

FFO (as defined by NAREIT) Attributable to W. P. Carey (a)
127,616

 
121,816

 
120,760

 
118,832

 
113,137

Adjustments:
 
 
 
 
 
 
 
 
 
Above- and below-market rent intangible lease amortization, net (b)
17,922

 
12,459

 
12,323

 
12,491

 
12,653

Tax benefit – deferred
(10,497
)
 
(1,234
)
 
(1,382
)
 
(5,551
)
 
(2,433
)
Stock-based compensation
4,268

 
4,635

 
3,104

 
6,910

 
3,051

Other amortization and non-cash items (c)
2,198

 
6,208

 
6,693

 
2,094

 
5,584

Amortization of deferred financing costs
2,043

 
2,184

 
2,542

 
1,400

 
926

Straight-line and other rent adjustments
(2,002
)
 
(3,212
)
 
(2,965
)
 
(3,500
)
 
(4,953
)
Other expenses (d)
(533
)
 
65

 
1,000

 
73

 
18

Realized (gains) losses on foreign currency
(472
)
 
(449
)
 
(378
)
 
403

 
1,102

Restructuring and other compensation (e)
289

 
1,356

 
7,718

 

 

(Gain) loss on extinguishment of debt
(81
)
 
1,566

 
(2,443
)
 
912

 
224

Proportionate share of adjustments to equity in net income of partially owned entities
2,884

 
3,064

 
1,978

 
550

 
2,810

Proportionate share of adjustments for noncontrolling interests
(1,573
)
 
(216
)
 
(513
)
 
(376
)
 
(595
)
Total adjustments
14,446

 
26,426

 
27,677

 
15,406

 
18,387

AFFO Attributable to W. P. Carey (a)
$
142,062

 
$
148,242

 
$
148,437

 
$
134,238

 
$
131,524

 
 
 
 
 
 
 
 
 
 
Summary
 
 
 
 
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey (a)
$
127,616

 
$
121,816

 
$
120,760

 
$
118,832

 
$
113,137

FFO (as defined by NAREIT) attributable to W. P. Carey
   per diluted share (a)
$
1.18

 
$
1.13

 
$
1.12

 
$
1.10

 
$
1.05

AFFO attributable to W. P. Carey (a)
$
142,062

 
$
148,242

 
$
148,437

 
$
134,238

 
$
131,524

AFFO attributable to W. P. Carey per diluted share (a)
$
1.31

 
$
1.37

 
$
1.38

 
$
1.25

 
$
1.22

Diluted weighted-average shares outstanding
108,208,918

 
108,143,694

 
107,783,204

 
107,764,279

 
107,715,965

________
(a)
FFO and AFFO are non-GAAP measures. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures.
(b)
Amount for the three months ended December 31, 2017 includes an adjustment of $5.7 million related to accelerated amortization of an above-market rent intangible in connection with a lease restructuring.
(c)
Represents primarily unrealized gains and losses from foreign exchange and derivatives.
(d)
Amount for the three months ended June 30, 2017 is comprised of an accrual for estimated one-time legal settlement expenses.
(e)
Amounts for the three months ended December 31, 2017, September 30, 2017 and June 30, 2017 represent restructuring expenses resulting from our exit from non-traded retail fundraising activities, which we announced in June 2017.


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Investing for the long runTM | 9


W. P. Carey Inc.
Financial Results – Fourth Quarter 2017
FFO and AFFO, Owned Real Estate – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Dec. 31, 2017
 
Sep. 30, 2017
 
Jun. 30, 2017
 
Mar. 31, 2017
 
Dec. 31, 2016
Net income from Owned Real Estate attributable to W. P. Carey (a)
$
54,149

 
$
56,492

 
$
43,540

 
$
37,958

 
$
27,821

Adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization of real property
62,603

 
62,621

 
61,636

 
61,182

 
61,373

Gain on sale of real estate, net
(11,146
)
 
(19,257
)
 
(3,465
)
 
(10
)
 
(3,248
)
Impairment charges
2,769

 

 

 

 
9,433

Proportionate share of adjustments for noncontrolling interests
(2,696
)
 
(2,692
)
 
(2,562
)
 
(2,541
)
 
(3,184
)
Proportionate share of adjustments to equity in net income of partially owned entities
877

 
866

 
833

 
2,717

 
1,059

Total adjustments
52,407

 
41,538

 
56,442

 
61,348

 
65,433

FFO (as defined by NAREIT) Attributable to W. P. Carey – Owned Real Estate (a) (b)
106,556

 
98,030

 
99,982

 
99,306

 
93,254

Adjustments:
 
 
 
 
 
 
 
 
 
Above- and below-market rent intangible lease amortization, net (c)
17,922

 
12,459

 
12,323

 
12,491

 
12,653

Tax (benefit) expense – deferred
(15,047
)
 
(2,694
)
 
33

 
(2,460
)
 
2,273

Other amortization and non-cash items (d)
2,260

 
6,808

 
7,038

 
2,009

 
5,698

Stock-based compensation
2,227

 
1,880

 
899

 
1,954

 
908

Amortization of deferred financing costs
2,043

 
2,184

 
2,542

 
1,400

 
926

Straight-line and other rent adjustments
(2,002
)
 
(3,212
)
 
(2,965
)
 
(3,500
)
 
(4,953
)
Other expenses (e)
(533
)
 
65

 
1,000

 
73

 
18

Realized (gains) losses on foreign currency
(477
)
 
(454
)
 
(382
)
 
395

 
1,136

(Gain) loss on extinguishment of debt
(81
)
 
1,566

 
(2,443
)
 
912

 
224

Proportionate share of adjustments to equity in net income of partially owned entities (a)
41

 
(79
)
 
(92
)
 
(434
)
 
(189
)
Proportionate share of adjustments for noncontrolling interests
(1,573
)
 
(216
)
 
(513
)
 
(376
)
 
(595
)
Total adjustments
4,780

 
18,307

 
17,440

 
12,464

 
18,099

AFFO Attributable to W. P. Carey – Owned Real Estate (a) (b)
$
111,336

 
$
116,337

 
$
117,422

 
$
111,770

 
$
111,353

 
 
 
 
 
 
 
 
 
 
Summary
 
 
 
 
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey – Owned Real Estate (a) (b)
$
106,556

 
$
98,030

 
$
99,982

 
$
99,306

 
$
93,254

FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Owned Real Estate (a) (b)
$
0.99

 
$
0.91

 
$
0.93

 
$
0.92

 
$
0.87

AFFO attributable to W. P. Carey – Owned Real Estate (a) (b)
$
111,336

 
$
116,337

 
$
117,422

 
$
111,770

 
$
111,353

AFFO attributable to W. P. Carey per diluted share – Owned Real Estate (a) (b)
$
1.03

 
$
1.07

 
$
1.09

 
$
1.04

 
$
1.03

Diluted weighted-average shares outstanding
108,208,918

 
108,143,694

 
107,783,204

 
107,764,279

 
107,715,965

________
(a)
In connection with our decision to exit non-traded retail fundraising activities, which we announced in June 2017, during the second quarter of 2017 we revised how we view and present our two business segments. As such, equity in earnings of equity method investments in the Managed Programs is now recognized within our Investment Management segment. Earnings from our investment in CCIF continue to be included in our Investment Management segment. Prior periods have been revised to reflect this change.
(b)
FFO and AFFO are non-GAAP measures. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures.
(c)
Amount for the three months ended December 31, 2017 includes an adjustment of $5.7 million related to accelerated amortization of an above-market rent intangible in connection with a lease restructuring.
(d)
Represents primarily unrealized gains and losses from foreign exchange and derivatives.
(e)
Amount for the three months ended June 30, 2017 is comprised of an accrual for estimated one-time legal settlement expenses.

wpclogoa01a01a25.jpg 
 
Investing for the long runTM | 10


W. P. Carey Inc.
Financial Results – Fourth Quarter 2017
FFO and AFFO, Investment Management – Last Five Quarters
In thousands, except share and per share amounts.
 
Three Months Ended
 
Dec. 31, 2017
 
Sep. 30, 2017
 
Jun. 30, 2017
 
Mar. 31, 2017
 
Dec. 31, 2016
Net income from Investment Management attributable to
   W. P. Carey (a)
$
21,060

 
$
23,786

 
$
20,778

 
$
19,526

 
$
19,883

FFO (as defined by NAREIT) Attributable to W. P. Carey – Investment Management (a) (b)
21,060

 
23,786

 
20,778

 
19,526

 
19,883

Adjustments:
 
 
 
 
 
 
 
 
 
Tax expense (benefit) – deferred
4,550

 
1,460

 
(1,415
)
 
(3,091
)
 
(4,706
)
Stock-based compensation
2,041

 
2,755

 
2,205

 
4,956

 
2,143

Restructuring and other compensation (c)
289

 
1,356

 
7,718

 

 

Other amortization and non-cash items (d)
(62
)
 
(600
)
 
(345
)
 
85

 
(114
)
Realized losses (gains) on foreign currency
5

 
5

 
4

 
8

 
(34
)
Proportionate share of adjustments to equity in net income of partially owned entities (a)
2,843

 
3,143

 
2,070

 
984

 
2,999

Total adjustments
9,666

 
8,119

 
10,237

 
2,942

 
288

AFFO Attributable to W. P. Carey – Investment Management (a) (b)
$
30,726

 
$
31,905

 
$
31,015

 
$
22,468

 
$
20,171

 
 
 
 
 
 
 
 
 
 
Summary
 
 
 
 
 
 
 
 
 
FFO (as defined by NAREIT) attributable to W. P. Carey – Investment Management (a) (b)
$
21,060

 
$
23,786

 
$
20,778

 
$
19,526

 
$
19,883

FFO (as defined by NAREIT) attributable to W. P. Carey
   per diluted share – Investment Management (a) (b)
$
0.19

 
$
0.22

 
$
0.19

 
$
0.18

 
$
0.18

AFFO attributable to W. P. Carey – Investment Management (a) (b)
$
30,726

 
$
31,905

 
$
31,015

 
$
22,468

 
$
20,171

AFFO attributable to W. P. Carey per diluted share – Investment Management (a) (b)
$
0.28

 
$
0.30

 
$
0.29

 
$
0.21

 
$
0.19

Diluted weighted-average shares outstanding
108,208,918

 
108,143,694

 
107,783,204

 
107,764,279

 
107,715,965

________
(a)
In connection with our decision to exit non-traded retail fun