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W. P. Carey Announces First Quarter 2013 Financial Results

May 7 2013 12:00AM

Marketwire

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NEW YORK, NY -- (Marketwired) -- 05/07/13 -- W. P. Carey Inc. (NYSE: WPC), a real estate investment trust ("REIT"), today reported financial results for the first quarter ended March 31, 2013.

During the first quarter of 2013, the Company:

•Reported Funds from operations -- as adjusted ("AFFO") of $1.03 per diluted share •Structured $193 million of investments on behalf of the managed REITs •Completed a $72 million sale-leaseback with Kraft Foods Group •Raised annualized dividend rate to $3.28 per share, an increase of 24% versus the fourth quarter of 2012 and WPC's 48th consecutive quarterly increase •Generated total shareholder return of approximately 31%

Subsequent to the first quarter:

•WPC acquired the main European distribution center of the Tommy Hilfiger Group for approximately $39 million

QUARTERLY RESULTS

•AFFO for the first quarter of 2013 was $72.3 million or $1.03 per diluted share, compared to $40.1 million or $0.99 per diluted share for the first quarter of 2012. The increased AFFO in the first quarter of 2013 as compared to the same quarter in 2012 was primarily due to income from the properties we acquired in our Merger with CPA®:15 on September 28, 2012, partially offset by the cessation of asset management revenue received from CPA®:15 after the Merger was completed. Per share data for the 2013 period also reflects the issuance of 28.2 million shares in connection with the Merger to the stockholders of CPA®:15. Further information concerning AFFO, a non-GAAP supplemental performance metric, is presented in the accompanying tables and related notes.

•Total revenues net of reimbursed expenses for the first quarter of 2013 were $101.4 million, compared to $49.6 million for the first quarter of 2012. Reimbursed expenses are excluded from total revenues because they have no impact on net income.

•Net Income for the first quarter of 2013 was $14.2 million, compared to $12.3 million for the same period in 2012.

•For the quarter ended March 31, 2013, we received approximately $14.7 million in cash distributions from our equity ownership in the CPA® REITs including $7.9 million in Available Cash distributions related to our special general partnership interests in the CPA® REITs.



W. P. CAREY OWNED PORTFOLIO UPDATE

•In January 2013, W. P. Carey completed a $72 million sale-leaseback with Kraft Foods Group for its corporate headquarters, located in Northfield, Illinois.

•In April 2013, W. P. Carey acquired the main European distribution center of the Tommy Hilfiger Group for approximately EUR 30 million ($39 million). The facility is located in Vanlo, Netherlands and is subject to an existing net lease with Tommy Hilfiger Europe B.V., which has been owned since 2010 by PVH Corp, one of the world's largest apparel companies.

•The W. P. Carey owned portfolio currently consists of 422 leased properties comprising 39 million square feet leased to approximately 124 corporate tenants. The average lease term of the portfolio is 8.8 years and the occupancy rate is approximately 98.8%.



W. P. CAREY MANAGED PORTFOLIO UPDATE

•W. P. Carey is the advisor to the CPA® REITs and CWI, which had aggregate real estate assets of $7.9 billion, cash of approximately $800 million and total assets of $8.6 billion as of March 31, 2013. The average occupancy rate for the 83.2 million square feet owned by the CPA® REITs was approximately 98.5%.

CPA®:17 - GLOBAL ACTIVITY

•We completed three transactions on behalf of CPA®:17 - Global during the first quarter of 2013, including two sale-leaseback transactions totaling $26 million and, separately, a $39 million build-to-suit transaction for an existing tenant, Harbor Freight Tools.

CAREY WATERMARK INVESTORS ACTIVITY

•From the beginning of its initial public offering through April 30, 2013, our lodging-focused non-traded REIT offering has raised approximately $265 million.
•During the first quarter of 2013, Carey Watermark invested in six hotels for a total of approximately $125 million.

DIVIDENDS

•The W. P. Carey Board of Directors raised the quarterly cash dividend to $0.82 per share for the first quarter of 2013. This represents a 24% increase from the fourth quarter of 2012. The dividend -- our 48th consecutive quarterly increase -- was paid on April 15, 2013 to stockholders of record as of March 28, 2013.

W. P. Carey President and CEO Trevor Bond, noted, "We are very pleased with our first quarter results, which continue to demonstrate the benefits of our merger with CPA®:15 and conversion to a REIT. The significant increase in our real estate under ownership and resulting AFFO growth enabled us to raise our dividend by 24%, as compared with the previous quarter. As we have for four decades, we will continue to focus our activities on identifying net lease assets that support our strategy of generating stable cash flows for investors."

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

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

Time: Tuesday, May 7, 2013 at 11:00 AM (ET)
Call-in Number: 800-860-2442
(International) +1-412-858-4600
Webcast: www.wpcarey.com/earnings
Podcast: www.wpcarey.com/podcast
Available after 2:00 PM (ET)
Replay Number: 877-344-7529
(International) + 1-412-317-0088
Replay Passcode: 10027451
Replay available until June 15, 2013 at 9:00 AM (ET).

W. P. Carey Inc.
Celebrating its 40th anniversary, W. P. Carey Inc. is a publicly traded REIT (NYSE: WPC) that provides long-term sale-leaseback and build-to-suit financing for companies worldwide and owns and manages an investment portfolio totaling approximately $15.2 billion. The largest owner/manager of net lease assets, WPC's corporate finance-focused credit and real estate underwriting process is a constant that has been successfully leveraged across a wide variety of industries and property types. Our portfolio of long-term leases with creditworthy tenants has an established history of generating stable cash flows that have enabled the Company to deliver consistent dividend income to investors for nearly four decades. www.wpcarey.com

This press release contains forward-looking statements within the meaning of the Federal securities laws. Examples of such forward-looking statements include, but are not limited to, the statements made by Mr. Bond. A number of factors could cause W. P. Carey's actual results, performance or achievement to differ materially from those anticipated. Among those risks, trends and uncertainties are the general economic climate; the supply of and demand for office and industrial properties; interest rate levels; the availability of financing; and other risks associated with the acquisition and ownership of properties, including risks that the tenants will not pay rent, or that costs may be greater than anticipated. For further information on factors that could impact W. P. Carey, reference is made to W. P. Carey's filings with the Securities and Exchange Commission.


W. P. CAREY INC. Financial Highlights (Unaudited) (in thousands, except per share amounts)




These financial highlights include the non-GAAP financial measure, funds from operations -- as adjusted ("AFFO"). A description of this non-GAAP financial measure and a reconciliation to the most directly comparable GAAP measure is provided on the following pages.


Three Months Ended March 31, ------------------------- 2013 2012 ------------ ------------Net income $ 14,181 $ 12,290 ============ ============AFFO from real estate ownership (a) $ 62,956 $ 28,833AFFO from investment management 9,299 11,236 ------------ ------------Total AFFO $ 72,255 $ 40,069 ============ ============Per Share (Diluted) Net income $ 0.20 $ 0.30 ============ ============ AFFO from real estate ownership (a) $ 0.90 $ 0.71 AFFO from investment management 0.13 0.28 ------------ ------------ Total AFFO $ 1.03 $ 0.99 ============ ============(a) Effective April 1, 2012, we include distributions of Available Cashreceived from the operating partnerships of the Managed REITs and deferredrevenue earned from our special member interest in CPA®:16 - Global'soperating partnership in our Real Estate Ownership segment. Results ofoperations for the prior period have been reclassified to conform to thecurrent period presentation.




W. P. CAREY INC. Consolidated Balance Sheets (Unaudited) (in thousands) March 31, December 31, 2013 2012 ------------- -------------AssetsInvestments in real estate: Real estate, at cost $ 2,373,912 $ 2,334,488 Operating real estate, at cost 98,690 99,703 Accumulated depreciation (150,207) (136,068) ------------- -------------Net investments in properties 2,322,395 2,298,123Net investments in direct financing leases 364,078 376,005Assets held for sale 1,505 1,445Equity investments in real estate and the Managed REITs 564,092 565,626 ------------- -------------Net investments in real estate 3,252,070 3,241,199Cash 111,564 123,904Due from affiliates 34,625 36,002Goodwill 328,474 329,132In place lease, net 468,132 447,278Above-market rent, net 267,845 279,885Other intangible assets, net 10,484 10,200Other assets, net 136,420 141,442 ------------- ------------- Total assets $ 4,609,614 $ 4,609,042 ============= =============Liabilities and EquityLiabilities:Non-recourse debt $ 1,695,335 $ 1,715,397Senior credit facility 298,000 253,000Accounts payable, accrued expenses and other liabilities 317,520 265,132Income taxes, net 20,847 24,959Distributions payable 57,128 45,700 ------------- ------------- Total liabilities 2,388,830 2,304,188 ------------- -------------Redeemable noncontrolling interest 7,404 7,531 ------------- -------------Redeemable securities - related party - 40,000 ------------- -------------Equity:W. P. Carey stockholders' equity:Common stock 69 69Preferred stock (None issued) - -Additional paid-in capital 2,184,387 2,175,820Distributions in excess of accumulated earnings (218,191) (172,182)Deferred compensation obligation 13,411 8,358Accumulated other comprehensive loss (9,414) (4,649)Less, treasury stock at cost (20,270) (20,270) ------------- ------------- Total W. P. Carey stockholders' equity 1,949,992 1,987,146Noncontrolling interests 263,388 270,177 ------------- ------------- Total equity 2,213,380 2,257,323 ------------- ------------- Total liabilities and equity $ 4,609,614 $ 4,609,042 ============= ============= W. P. CAREY INC. Consolidated Statements of Income (Unaudited) (in thousands, except share and per share amounts) Three Months Ended March 31, -------------------------- 2013 2012 ------------ ------------Revenues Lease revenues: Rental income $ 65,785 $ 14,652 Interest income from direct financing leases 9,512 2,126 ------------ ------------ Total lease revenues 75,297 16,778 Asset management revenue from affiliates 10,015 15,602 Structuring revenue from affiliates 6,342 7,638 Dealer manager fees 1,223 3,787 Reimbursed costs from affiliates 11,968 18,737 Other real estate income 8,541 5,772 ------------ ------------ 113,386 68,314 ------------ ------------Operating Expenses General and administrative 28,973 26,909 Reimbursable costs 11,968 18,737 Depreciation and amortization 30,876 6,463 Property expenses 5,152 2,072 Other real estate expenses 2,734 2,499 Impairment charge 3,279 - ------------ ------------ 82,982 56,680 ------------ ------------Other Income and Expenses Other interest income 370 503 Net income from equity investments in real estate and the Managed REITs 10,656 13,986 Other income and (expenses) 1,091 306 Interest expense (26,906) (7,280) ------------ ------------ (14,789) 7,515 ------------ ------------ Income from continuing operations before income taxes 15,615 19,149 Benefit from (provision for) income taxes 1,233 (1,695) ------------ ------------ Income from continuing operations 16,848 17,454 ------------ ------------Discontinued Operations (Loss) income from operations of discontinued properties (148) 120 Loss on sale of real estate (931) (181) Gain on extinguishment of debt 70 - Impairment charge - (5,724) ------------ ------------ Loss from discontinued operations, net of tax (1,009) (5,785) ------------ ------------Net Income 15,839 11,669 Net (income) loss attributable to noncontrolling interests (1,708) 578 Less: Net income attributable to redeemable noncontrolling interest 50 43 ------------ ------------Net Income Attributable to W. P. Carey $ 14,181 $ 12,290 ============ ============Basic Earnings Per Share Income from continuing operations attributable to W. P. Carey $ 0.21 $ 0.44 Loss from discontinued operations attributable to W. P. Carey (0.01) (0.14) ------------ ------------ Net income attributable to W. P. Carey $ 0.20 $ 0.30 ============ ============Diluted Earnings Per Share Income from continuing operations attributable to W. P. Carey $ 0.21 $ 0.44 Loss from discontinued operations attributable to W. P. Carey (0.01) (0.14) ------------ ------------ Net income attributable to W. P. Carey $ 0.20 $ 0.30 ============ ============Weighted Average Shares Outstanding Basic 68,967,209 40,037,496 ============ ============ Diluted 69,975,293 40,487,652 ============ ============Amounts Attributable to W. P. Carey Income from continuing operations, net of tax $ 15,190 $ 18,075 Loss from discontinued operations, net of tax (1,009) (5,785) ------------ ------------ Net income attributable to W. P. Carey $ 14,181 $ 12,290 ============ ============ W. P. CAREY INC.Reconciliation of Net Income to Funds From Operations -- as adjusted (AFFO) (Unaudited) (in thousands, except share and per share amounts) Three Months Ended March 31, -------------------------- 2013 2012 ------------ ------------Real Estate OwnershipNet income from real estate ownership attributable to W. P. Carey (a) $ 16,692 $ 9,093 ------------ ------------ Adjustments: Depreciation and amortization of real property 29,687 6,147 Impairment charges 3,279 5,724 Loss (gain) on sale of real estate, net 931 181 Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO 3,154 1,040 Proportionate share of adjustments for noncontrolling interests to arrive at FFO (4,267) (434) ------------ ------------ Total adjustments 32,784 12,658 ------------ ------------FFO (as defined by NAREIT) - Real Estate Ownership 49,476 21,751 ------------ ------------ Adjustments: Loss on extinguishment of debt 74 - Other gains, net (270) - Other depreciation, amortization and non- cash charges 800 (211) Stock-based compensation 174 - Deferred tax expense (1,025) (652) Realized losses on foreign currency, derivatives and other (b) 52 - Amortization of deferred financing costs 511 464 Straight-line and other rent adjustments (2,169) (1,115) Above- and below-market rent intangible lease amortization, net (b) 7,256 - Merger expenses 111 2,103 Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO 278 (413) AFFO adjustments to equity earnings from equity investments 9,249 6,926 Proportionate share of adjustments for noncontrolling interests to arrive at AFFO (1,561) (20) ------------ ------------ Total adjustments 13,480 7,082 ------------ ------------AFFO - Real Estate Ownership $ 62,956 $ 28,833 ============ ============Investment ManagementNet (loss) income from investment management attributable to W. P. Carey (a) $ (2,511) $ 3,197 ------------ ------------FFO (as defined by NAREIT) - Investment Management $ (2,511) $ 3,197 ------------ ------------ Adjustments: Other depreciation, amortization and non- cash charges 262 258 Stock-based compensation 8,975 5,260 Deferred tax expense 2,253 2,236 Realized gains on foreign currency 2 - Amortization of deferred financing costs 318 285 ------------ ------------ Total adjustments 11,810 8,039 ------------ ------------AFFO - Investment Management $ 9,299 $ 11,236 ============ ============Total CompanyFFO (as defined by NAREIT) $ 46,965 $ 24,948 ============ ============FFO (as defined by NAREIT) per diluted share $ 0.67 $ 0.62 ============ ============AFFO $ 72,255 $ 40,069 ============ ============AFFO per diluted share $ 1.03 $ 0.99 ============ ============Diluted weighted average shares outstanding 69,975,293 40,487,652 ============ ============(a) Effective April 1, 2012, we include distributions of Available Cashreceived from the operating partnerships of the Managed REITs and deferredrevenue earned from our special member interest in CPA®:16 - Global'soperating partnership in our Real Estate Ownership segment. Results ofoperations for the prior period have been reclassified to conform to thecurrent period presentation.(b) These adjustments are significant and recurring subsequent to the Mergerand were not included in the AFFO calculation for the three months endedMarch 31, 2012.




Non-GAAP Financial Disclosures

Funds from Operations ("FFO") is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts ("NAREIT"). NAREIT defines FFO as net income or loss (as computed in accordance with GAAP) excluding: depreciation and amortization expense from real estate assets, impairment charges on real estate, gains or losses from sales of depreciated real estate assets and extraordinary items; however, FFO related to assets held for sale, sold or otherwise transferred and included in the results of discontinued operations are included. These adjustments also incorporate the pro rata share of unconsolidated subsidiaries. FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers. Although NAREIT has published this definition of FFO, companies often modify this definition as they seek to provide financial measures that meaningfully reflect their distinctive operations.

We modify the NAREIT computation of FFO to include other adjustments to GAAP net income to adjust for certain non-cash charges such as amortization of real estate-related 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. Additionally, we exclude expenses related to the Merger which are considered non-recurring, and 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. 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, and we therefore 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 or as alternatives to cash from operating activities computed under GAAP or as indicators of our ability to fund our cash needs.



COMPANY CONTACT:
Kristin Brown
W. P. Carey Inc.
212-492-8989
Email Contact

PRESS CONTACTS:
Cheryl Sanclemente
W. P. Carey Inc.
212-492-8995
Email Contact

Guy Lawrence
Ross & Lawrence
212-308-3333
Email Contact





Source: Marketwire


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