Exhibit 99.1
FOR IMMEDIATE RELEASE
Institutional Investors:
Peter Sands
1 (212) 492-1110
Individual Investors:
W. P. Carey Inc.
1 (212) 492-8920
Press Contact:
Anna McGrath
1 (212) 492-1166
W. P. Carey Inc. Announces Fourth Quarter and Full Year 2021 Financial Results
New York, NY – February 11, 2022 – W. P. Carey Inc. (NYSE: WPC) (W. P. Carey or the Company), a net lease real estate investment trust, today reported its financial results for the fourth quarter and full year ended December 31, 2021.
Financial Highlights
| | | | | | | | | | | |
| 2021 |
| Fourth Quarter | | Full
Year |
| Net income attributable to W. P. Carey (millions) | $99.6 | | | $410.0 | |
| Diluted earnings per share | $0.53 | | | $2.24 | |
| Net income from Real Estate attributable to W. P. Carey (millions) | $94.6 | | | $384.8 | |
| Diluted earnings per share from Real Estate | $0.50 | | | $2.09 | |
| | | |
| AFFO (millions) | $245.6 | | | $921.5 | |
| AFFO per diluted share | $1.30 | | | $5.03 | |
| Real Estate segment AFFO (millions) | $239.0 | | | $896.1 | |
| Real Estate segment AFFO per diluted share | $1.27 | | | $4.89 | |
•2022 AFFO guidance range of between $5.18 and $5.30 per diluted share announced, including Real Estate AFFO of between $5.03 and $5.15 per diluted share, based on full-year investment volume of between $1.5 billion and $2.0 billion
•Quarterly cash dividend raised to $1.055 per share, equivalent to an annualized dividend rate of $4.220 per share
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 1
Real Estate Portfolio
•Investment volume of $531.8 million during the fourth quarter, bringing total investment volume for 2021 to a record $1.72 billion
•Investment volume of $166.3 million completed year to date in 2022
•Active capital investment projects of $153.8 million and construction loan funding of $121.2 million scheduled to be completed in 2022
•Gross disposition proceeds of $41.2 million during the fourth quarter, bringing total dispositions for 2021 to $170.7 million
•Overall collection rate of over 99.8% for fourth quarter rent due
•Portfolio occupancy of 98.5%
•Weighted-average lease term increased to 10.8 years
Balance Sheet and Capitalization
•Issued $350 million of 2.450% Senior Unsecured Notes due 2032 in the Company’s inaugural green bond offering
•Settled forward sale agreements for total net proceeds of approximately $240 million during the fourth quarter
•Utilized its ATM program to raise approximately $37 million in net proceeds during the fourth quarter
•Subsequent to quarter end, the Company utilized its ATM program to raise approximately $47 million in net proceeds
MANAGEMENT COMMENTARY
“I’m pleased to say that in addition to providing an attractive dividend yield, averaging over 5%, we generated AFFO per share growth of 6.1% for 2021, primarily reflecting higher lease revenues from record investment volume and rent escalations, and lower interest costs from refinancing debt,” said Jason Fox, Chief Executive Officer of W. P. Carey. “Factoring in the strength of our rent collections and lower-than-expected expenses for the fourth quarter, AFFO for the year came in above the midpoint of our guidance, with higher-than-anticipated lease termination income taking it just above the top end of the range.
“Looking ahead to 2022, we expect to maintain the positive deal momentum we established in 2021, which is reflected in our guidance and supported by the current strength of our pipeline. In addition, having constructed a net lease portfolio uniquely positioned to benefit from inflation, we expect our CPI-linked leases to provide a meaningful tailwind to our growth.”
QUARTERLY FINANCIAL RESULTS
Revenues
•Total Company: Revenues, including reimbursable costs, for the 2021 fourth quarter totaled $374.9 million, up 22.0% from $307.4 million for the 2020 fourth quarter.
•Real Estate: Real Estate revenues, including reimbursable costs, for the 2021 fourth quarter were $370.3 million, up 22.5% from $302.4 million for the 2020 fourth quarter, due primarily to lease termination income and other revenues totaling $45.6 million recognized during the 2021 fourth quarter (of which $37.8 million was excluded from AFFO) and higher lease revenues resulting from net acquisitions and rent escalations.
Note: Starting with the 2021 fourth quarter, income from direct financing leases and loans receivable are presented on a separate line item on the consolidated statements of income (for both current and prior year periods). Prior to the 2021 fourth quarter, the Company presented income from direct financing leases within lease revenues and income from loans receivable within lease termination income and other.
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 2
Net Income Attributable to W. P. Carey
•Net income attributable to W. P. Carey for the 2021 fourth quarter was $99.6 million, down 26.0% from $134.6 million for the 2020 fourth quarter. Net income from Real Estate attributable to W. P. Carey was $94.6 million, which decreased due primarily to a lower aggregate gain on sale of real estate and a higher loss on extinguishment of debt, partially offset by higher lease termination income and other revenues, the impact of net acquisitions and lower interest expense as a result of debt refinancings in prior quarters.
Adjusted Funds from Operations (AFFO)
•AFFO for the 2021 fourth quarter was $1.30 per diluted share, up 8.3% from $1.20 per diluted share for the 2020 fourth quarter, driven by the company’s Real Estate segment, which generated AFFO of $1.27 per diluted share, primarily reflecting higher lease revenues resulting from net investment activity and rent escalations, lower interest expense and higher lease termination income.
Note: Further information concerning AFFO and Real Estate AFFO, which are both non-GAAP supplemental performance metrics, is presented in the accompanying tables and related notes.
Dividend
•As previously announced, on December 8, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $1.055 per share, equivalent to an annualized dividend rate of $4.220 per share. The dividend was paid on January 14, 2022 to stockholders of record as of December 31, 2021.
FULL YEAR FINANCIAL RESULTS
Revenues
•Total Company: Revenues, including reimbursable costs, for the 2021 full year totaled $1.33 billion, up 10.1% from $1.21 billion for the 2020 full year.
•Real Estate: Real Estate revenues, including reimbursable costs, for the 2021 full year totaled $1.31 billion, up 11.4% from $1.18 billion for the 2020 full year, due primarily to higher lease revenues from net acquisitions and rent escalations, a stronger euro relative to the U.S. dollar and higher rent collections, in addition to higher lease termination income and other revenues.
•Investment Management: Investment Management revenues, including reimbursable costs, for the 2021 full year totaled $19.4 million, down 38.0% from $31.3 million for the 2020 full year, due primarily to lower asset management revenues and reimbursable costs resulting from the management internalization by CWI 1 and CWI 2.
Net Income Attributable to W. P. Carey
•Net income attributable to W. P. Carey for the 2021 full year totaled $410.0 million, down 10.0% from $455.4 million for the 2020 full year, due primarily to a higher loss on extinguishment of debt, a lower aggregate gain on sale of real estate and lower Investment Management revenues (as described above), partially offset by the impact of net acquisitions and lower interest expense. The Company also recorded mark-to-market gains on its shares of Lineage Logistics totaling $76.3 million and $48.3 million during the current and prior year, respectively.
Adjusted Funds from Operations (AFFO)
•AFFO for the 2021 full year was $5.03 per diluted share, up 6.1% from $4.74 per diluted share for the 2020 full year, driven by the Company’s Real Estate segment, which generated AFFO of $4.89 per diluted share, primarily reflecting higher lease revenues resulting from net investment activity and rent escalations, and lower interest expense.
Note: Further information concerning AFFO and Real Estate AFFO, which are both non-GAAP supplemental performance metrics, is presented in the accompanying tables and related notes.
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 3
Dividend
•Dividends declared during 2021 totaled $4.205 per share, an increase of 0.8% compared to total dividends declared during 2020 of $4.172 per share.
AFFO GUIDANCE
•For the 2022 full year, the Company expects to report total AFFO of between $5.18 and $5.30 per diluted share, including Real Estate AFFO of between $5.03 and $5.15 per diluted share, based on the following key assumptions:
(i) investments for the Company's Real Estate portfolio of between $1.5 billion and $2.0 billion;
(ii) dispositions from the Company's Real Estate portfolio of between $250 million and $350 million; and
(iii) total general and administrative expenses of between $86 million and $89 million.
Note: The Company does not provide guidance on net income. The Company only provides guidance on total AFFO (and Real Estate AFFO) and does not provide a reconciliation of this forward-looking non-GAAP guidance to net income due to the inherent difficulty in quantifying certain items necessary to provide such reconciliation as a result of their unknown effect, timing and potential significance. Examples of such items include impairments of assets, gains and losses from sales of assets, and depreciation and amortization from new acquisitions.
REAL ESTATE
Investments
•During the 2021 fourth quarter, the Company completed investments totaling $531.8 million, bringing total investment volume for the year ended December 31, 2021 to $1.72 billion.
•Year to date through February 10, 2022, the Company has completed two investments totaling $166.3 million.
•As of December 31, 2021, the Company had eight capital investments and commitments outstanding for an expected total investment of approximately $155.9 million, of which seven investments and commitments totaling $153.8 million are currently scheduled to be completed during 2022. In addition, as of December 31, 2021, the Company was scheduled to complete $121.2 million of construction loan funding during 2022.
Dispositions
•During the 2021 fourth quarter, the Company disposed of eight properties for gross proceeds of $41.2 million, bringing total disposition proceeds for the year ended December 31, 2021 to $170.7 million.
Preferred Shares Redemption
•Subsequent to the 2021 fourth quarter, the Company received a final cash dividend of $0.9 million on its investment in 1,300,000 preferred shares of Watermark Lodging Trust (the surviving entity from the CWI lodging funds that the Company previously managed), which were redeemed at par in January 2022, for gross proceeds of $65.0 million.
COVID-19 Update on Rent Collections
•The Company received over 99.8% of contractual base rent that was due in the 2021 fourth quarter.
Composition
•As of December 31, 2021, the Company’s net lease portfolio consisted of 1,304 properties, comprising 156 million square feet leased to 352 tenants, with a weighted-average lease term of 10.8 years and an occupancy rate of 98.5%. In addition, the Company owned 19 self-storage operating properties and one hotel operating property, totaling approximately 1.4 million square feet.
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 4
BALANCE SHEET AND CAPITALIZATION
Green Bond Issuance
•As previously announced, on October 15, 2021, the Company completed an underwritten public offering of $350 million aggregate principal amount of 2.450% Senior Notes due February 1, 2032 in its inaugural green bond offering, bringing total offerings of Senior Notes during 2021 to a total of $1.4 billion aggregate principal amount, at a weighted-average interest rate of 1.7%.
Forward Equity Offerings
•During the 2021 fourth quarter, the Company settled a portion of its outstanding forward sale agreements, issuing 3,262,500 shares of common stock for net proceeds of $240 million, bringing net proceeds from the settlement of forward sale agreements during 2021 to $697 million.
•As of December 31, 2021, the Company had 3,925,000 shares available for settlement under forward sale agreements, for anticipated net proceeds of approximately $294 million.
“At-The-Market” (ATM) Program
•During the 2021 fourth quarter, the Company issued 464,449 shares of common stock under its ATM program at a weighted-average price of $81.77 per share, for net proceeds of $37 million, bringing net proceeds raised during 2021 to $340 million.
•Subsequent to the 2021 fourth quarter, the Company issued 593,060 shares of common stock under its ATM program at a weighted-average price of $81.29 per share, for net proceeds of approximately $47 million.
Mortgage Debt Repayments
•During the 2021 fourth quarter, the Company prepaid or repaid at maturity mortgages totaling $322.9 million, which had a weighted-average interest rate of 4.5%, bringing total repayments during 2021 to $777.8 million, which had a weighted-average interest rate of 4.8%.
* * * * *
Supplemental Information
The Company has provided supplemental unaudited financial and operating information regarding the 2021 fourth quarter and certain prior quarters, including a description of non-GAAP financial measures and reconciliations to GAAP measures, in a Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on February 11, 2022, and made available on the Company’s website at ir.wpcarey.com/investor-relations.
* * * * *
Live Conference Call and Audio Webcast Scheduled for 10:00 a.m. Eastern Time
Please dial in at least 10 minutes prior to the start time.
Date/Time: Friday, February 11, 2022 at 10:00 a.m. Eastern Time
Call-in Number: 1 (877) 465-1289 (U.S.) or +1 (201) 689-8762 (international)
Live Audio Webcast and Replay: www.wpcarey.com/earnings
* * * * *
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 5
W. P. Carey Inc.
W. P. Carey ranks among the largest net lease REITs with an enterprise value of approximately $22 billion and a diversified portfolio of operationally-critical commercial real estate that includes 1,304 net lease properties covering approximately 156 million square feet as of December 31, 2021. For nearly five decades, the company has invested in high-quality single-tenant industrial, warehouse, office, retail and self-storage properties subject to long-term net leases with built-in rent escalators. Its portfolio is located primarily in the U.S. and Northern and Western Europe and is well-diversified by tenant, property type, geographic location and tenant industry.
www.wpcarey.com
* * * * *
Cautionary Statement Concerning Forward-Looking Statements and COVID-19 Update on Rent Collections
Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Exchange Act of 1934, 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 made by Mr. Fox regarding our investment momentum and the potential benefits of an inflationary environment. These statements are based on the current expectations of our management and it is important to note that our 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 risks or uncertainties, like the risks related to the effects of pandemics and global outbreaks of contagious diseases or the fear of such outbreaks (such as the current COVID-19 pandemic) and those additional risk factors discussed in reports that we have filed with the SEC could also have material adverse effects on our future results, performance or achievements. Discussions of some of these other important factors and assumptions are contained in W. P. Carey’s filings with the SEC and are available at the SEC’s website at http://www.sec.gov, including Part I, Item 1A. Risk Factors in W. P. Carey’s Annual Report on Form 10-K for the year ended December 31, 2021. 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.
In addition, given the significant uncertainty regarding the duration and severity of the impact of the COVID-19 pandemic, the Company is unable to predict its tenants’ continued ability to pay rent. Therefore, information provided regarding historical rent collections should not serve as an indication of expected future rent collections.
* * * * *
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 6
W. P. CAREY INC.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
| | | | | | | | | | | |
| December 31, |
| 2021 | | 2020 |
| Assets | | | |
| Investments in real estate: | | | |
Land, buildings and improvements (a) | $ | 11,875,407 | | | $ | 10,939,619 | |
| Net investments in direct financing leases and loans receivable | 813,577 | | | 736,117 | |
In-place lease intangible assets and other | 2,386,000 | | | 2,301,174 | |
Above-market rent intangible assets | 843,410 | | | 881,159 | |
| Investments in real estate | 15,918,394 | | | 14,858,069 | |
Accumulated depreciation and amortization (b) | (2,889,294) | | | (2,490,087) | |
Assets held for sale, net (c) | 8,269 | | | 18,590 | |
| Net investments in real estate | 13,037,369 | | | 12,386,572 | |
Equity method investments (d) | 356,637 | | | 283,446 | |
| Cash and cash equivalents | 165,427 | | | 248,662 | |
| Due from affiliates | 1,826 | | | 26,257 | |
| Other assets, net | 1,017,842 | | | 851,881 | |
| Goodwill | 901,529 | | | 910,818 | |
| Total assets | $ | 15,480,630 | | | $ | 14,707,636 | |
| | | |
| Liabilities and Equity | | | |
| Debt: | | | |
| Senior unsecured notes, net | $ | 5,701,913 | | | $ | 5,146,192 | |
| Unsecured revolving credit facility | 410,596 | | | 82,281 | |
| Unsecured term loans, net | 310,583 | | | 321,971 | |
| Non-recourse mortgages, net | 368,524 | | | 1,145,554 | |
| Debt, net | 6,791,616 | | | 6,695,998 | |
| Accounts payable, accrued expenses and other liabilities | 572,846 | | | 603,663 | |
Below-market rent and other intangible liabilities, net | 183,286 | | | 197,248 | |
| Deferred income taxes | 145,572 | | | 145,844 | |
| Dividends payable | 203,859 | | | 186,514 | |
| Total liabilities | 7,897,179 | | | 7,829,267 | |
| | | |
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued | — | | | — | |
Common stock, $0.001 par value, 450,000,000 shares authorized; 190,013,751 and 175,401,757 shares, respectively, issued and outstanding | 190 | | | 175 | |
| Additional paid-in capital | 9,977,686 | | | 8,925,365 | |
| Distributions in excess of accumulated earnings | (2,224,231) | | | (1,850,935) | |
| Deferred compensation obligation | 49,810 | | | 42,014 | |
| Accumulated other comprehensive loss | (221,670) | | | (239,906) | |
| Total stockholders’ equity | 7,581,785 | | | 6,876,713 | |
| Noncontrolling interests | 1,666 | | | 1,656 | |
| Total equity | 7,583,451 | | | 6,878,369 | |
| Total liabilities and equity | $ | 15,480,630 | | | $ | 14,707,636 | |
________
(a)Includes $83.7 million and $83.5 million of amounts attributable to operating properties as of December 31, 2021 and 2020, respectively.
(b)Includes $1.5 billion and $1.2 billion of accumulated depreciation on buildings and improvements as of December 31, 2021 and 2020, respectively, and $1.4 billion and $1.3 billion of accumulated amortization on lease intangibles as of December 31, 2021 and 2020, respectively.
(c)At December 31, 2021, we had two properties classified as Assets held for sale, net, which were sold in January and February 2022. At December 31, 2020, we had four properties classified as Assets held for sale, net, all of which were sold in 2021.
(d)Our equity method investments in real estate totaled $291.9 million and $226.9 million as of December 31, 2021 and 2020, respectively. Our equity method investments in the Managed Programs totaled $64.7 million and $56.6 million as of December 31, 2021 and 2020, respectively.
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 7
W. P. CAREY INC.
Quarterly Consolidated Statements of Income
(in thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
| December 31, 2021 | | September 30, 2021 | | December 31, 2020 |
| Revenues | | | | | |
| Real Estate: | | | | | |
| Lease revenues | $ | 305,093 | | | $ | 298,616 | | | $ | 280,878 | |
| Income from direct financing leases and loans receivable | 15,637 | | | 16,754 | | | 17,357 | |
Lease termination income and other (a) | 45,590 | | | 1,421 | | | 2,103 | |
| Operating property revenues | 4,004 | | | 4,050 | | | 2,031 | |
| 370,324 | | | 320,841 | | | 302,369 | |
| Investment Management: | | | | | |
| Asset management and other revenue | 3,571 | | | 3,872 | | | 3,864 | |
| Reimbursable costs from affiliates | 985 | | | 1,041 | | | 1,138 | |
| 4,556 | | | 4,913 | | | 5,002 | |
| 374,880 | | | 325,754 | | | 307,371 | |
| Operating Expenses | | | | | |
| Depreciation and amortization | 135,662 | | | 115,657 | | | 110,913 | |
| General and administrative | 19,591 | | | 19,750 | | | 18,334 | |
| Reimbursable tenant costs | 16,475 | | | 15,092 | | | 13,710 | |
| Property expenses, excluding reimbursable tenant costs | 11,466 | | | 13,734 | | | 10,418 | |
| Impairment charges | 7,945 | | | 16,301 | | | 16,410 | |
| Stock-based compensation expense | 6,091 | | | 4,361 | | | 5,795 | |
| Operating property expenses | 2,887 | | | 3,001 | | | 1,696 | |
| Reimbursable costs from affiliates | 985 | | | 1,041 | | | 1,138 | |
| Merger and other expenses | (563) | | | (908) | | | (418) | |
| 200,539 | | | 188,029 | | | 177,996 | |
| Other Income and Expenses | | | | | |
| Interest expense | (47,208) | | | (48,731) | | | (52,828) | |
Other gains and (losses) (b) | (28,461) | | | 49,219 | | | (1,927) | |
| Gain on sale of real estate, net | 9,511 | | | 1,702 | | | 76,686 | |
(Losses) earnings from equity method investments (c) | (6,675) | | | 5,735 | | | (8,470) | |
Non-operating income (d) | 3,156 | | | 1,283 | | | (858) | |
| (69,677) | | | 9,208 | | | 12,603 | |
| Income before income taxes | 104,664 | | | 146,933 | | | 141,978 | |
| Provision for income taxes | (5,052) | | | (8,347) | | | (7,363) | |
| Net Income | 99,612 | | | 138,586 | | | 134,615 | |
| Net income attributable to noncontrolling interests | (50) | | | (39) | | | (43) | |
| Net Income Attributable to W. P. Carey | $ | 99,562 | | | $ | 138,547 | | | $ | 134,572 | |
| | | | | |
| Basic Earnings Per Share | $ | 0.53 | | | $ | 0.75 | | | $ | 0.76 | |
| Diluted Earnings Per Share | $ | 0.53 | | | $ | 0.74 | | | $ | 0.76 | |
| Weighted-Average Shares Outstanding | | | | | |
| Basic | 187,630,036 | | | 185,422,639 | | | 176,366,824 | |
| Diluted | 188,317,117 | | | 186,012,478 | | | 176,683,474 | |
| | | | | |
| Dividends Declared Per Share | $ | 1.055 | | | $ | 1.052 | | | $ | 1.046 | |
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 8
W. P. CAREY INC.
Full Year Consolidated Statements of Income
(in thousands, except share and per share amounts)
| | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 |
| Revenues | | | |
| Real Estate: | | | |
| Lease revenues | $ | 1,177,438 | | | $ | 1,080,623 | |
| Income from direct financing leases and loans receivable | 67,555 | | | 74,893 | |
| Lease termination income and other | 53,655 | | | 11,082 | |
| Operating property revenues | 13,478 | | | 11,399 | |
| 1,312,126 | | | 1,177,997 | |
| Investment Management: | | | |
| Asset management and other revenue | 15,363 | | | 22,467 | |
| Reimbursable costs from affiliates | 4,035 | | | 8,855 | |
| 19,398 | | | 31,322 | |
| 1,331,524 | | | 1,209,319 | |
| Operating Expenses | | | |
| Depreciation and amortization | 475,989 | | | 442,935 | |
| General and administrative | 81,888 | | | 75,950 | |
| Reimbursable tenant costs | 62,417 | | | 56,409 | |
| Property expenses, excluding reimbursable tenant costs | 47,898 | | | 44,067 | |
| Stock-based compensation expense | 24,881 | | | 15,938 | |
| Impairment charges | 24,246 | | | 35,830 | |
| Operating property expenses | 9,848 | | | 9,901 | |
| Merger and other expenses | (4,546) | | | 247 | |
| Reimbursable costs from affiliates | 4,035 | | | 8,855 | |
| Subadvisor fees | — | | | 1,469 | |
| 726,656 | | | 691,601 | |
| Other Income and Expenses | | | |
| Interest expense | (196,831) | | | (210,087) | |
| Gain on sale of real estate, net | 40,425 | | | 109,370 | |
| Non-operating income | 13,860 | | | 9,587 | |
| Other gains and (losses) | (12,885) | | | 37,165 | |
Losses from equity method investments (e) | (10,829) | | | (18,557) | |
| (166,260) | | | (72,522) | |
| Income before income taxes | 438,608 | | | 445,196 | |
| (Provision for) benefit from income taxes | (28,486) | | | 20,759 | |
| Net Income | 410,122 | | | 465,955 | |
Net income attributable to noncontrolling interests (e) | (134) | | | (10,596) | |
| Net Income Attributable to W. P. Carey | $ | 409,988 | | | $ | 455,359 | |
| | | |
| Basic Earnings Per Share | $ | 2.25 | | | $ | 2.61 | |
| Diluted Earnings Per Share | $ | 2.24 | | | $ | 2.60 | |
| Weighted-Average Shares Outstanding | | | |
| Basic | 182,486,476 | | | 174,504,406 | |
| Diluted | 183,127,098 | | | 174,839,428 | |
| | | |
| Dividends Declared Per Share | $ | 4.205 | | | $ | 4.172 | |
__________
(a)Amount for the three months ended December 31, 2021 includes $37.8 million of lease termination fees that was determined to be non-core income and thus excluded from AFFO.
(b)Amount for the three months ended December 31, 2021 is primarily comprised of loss on extinguishment of debt of $(15.2) million, a non-cash allowance for credit losses of $(7.0) million and net loss on foreign currency transactions of $(4.4) million. Amount for the three months ended September 30, 2021 includes a mark-to-market unrealized gain for our investment in shares of Lineage Logistics of $52.9 million.
(c)Amounts for the three months ended December 31, 2021 and 2020 include non-cash impairment charges of $13.2 million and $8.3 million, respectively, recognized on certain equity method investments in real estate.
(d)Amount for the three months ended December 31, 2021 is comprised of realized gains on foreign currency exchange derivatives of $2.4 million and a cash dividend of $0.8 million from our investment in preferred shares of Watermark Lodging Trust.
(e)Amount for the year ended December 31, 2020 includes non-cash other-than-temporary impairment charges totaling $47.1 million recognized on our former equity method investments in CWI 1 and CWI 2 and a non-cash net gain of $33.0 million (inclusive of $9.9 million attributable to the redemption of a noncontrolling interest that the former subadvisors for CWI 1 and CWI 2 held in the special general partner interests) recognized in connection with consideration received at closing of the CWI 1 and CWI 2 merger.
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 9
W. P. CAREY INC.
Quarterly Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
| December 31, 2021 | | September 30, 2021 | | December 31, 2020 |
| Net income attributable to W. P. Carey | $ | 99,562 | | | $ | 138,547 | | | $ | 134,572 | |
| Adjustments: | | | | | |
| Depreciation and amortization of real property | 134,149 | | | 114,204 | | | 109,538 | |
| Gain on sale of real estate, net | (9,511) | | | (1,702) | | | (76,686) | |
| Impairment charges | 7,945 | | | 16,301 | | | 16,410 | |
Proportionate share of adjustments to earnings from equity method investments (a) (b) (c) | 15,183 | | | 3,290 | | | 11,819 | |
Proportionate share of adjustments for noncontrolling interests (d) | (4) | | | (4) | | | (4) | |
| Total adjustments | 147,762 | | | 132,089 | | | 61,077 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey (e) | 247,324 | | | 270,636 | | | 195,649 | |
| Adjustments: | | | | | |
Straight-line and other leasing and financing adjustments (f) | (53,380) | | | (10,823) | | | (9,571) | |
Other (gains) and losses (g) | 28,461 | | | (49,219) | | | 1,927 | |
| Above- and below-market rent intangible lease amortization, net | 15,082 | | | 12,004 | | | 11,504 | |
| Stock-based compensation | 6,091 | | | 4,361 | | | 5,795 | |
| Amortization of deferred financing costs | 3,239 | | | 3,424 | | | 3,209 | |
| Tax (benefit) expense – deferred and other | (2,507) | | | (290) | | | 32 | |
Merger and other expenses (h) | (563) | | | (908) | | | (418) | |
| Other amortization and non-cash items | 560 | | | 557 | | | 460 | |
Proportionate share of adjustments to earnings from equity method investments (b) | 1,303 | | | 988 | | | 4,246 | |
Proportionate share of adjustments for noncontrolling interests (d) | (5) | | | (6) | | | (152) | |
| Total adjustments | (1,719) | | | (39,912) | | | 17,032 | |
AFFO Attributable to W. P. Carey (e) | $ | 245,605 | | | $ | 230,724 | | | $ | 212,681 | |
| | | | | |
| Summary | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey (e) | $ | 247,324 | | | $ | 270,636 | | | $ | 195,649 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (e) | $ | 1.31 | | | $ | 1.45 | | | $ | 1.11 | |
AFFO attributable to W. P. Carey (e) | $ | 245,605 | | | $ | 230,724 | | | $ | 212,681 | |
AFFO attributable to W. P. Carey per diluted share (e) | $ | 1.30 | | | $ | 1.24 | | | $ | 1.20 | |
| Diluted weighted-average shares outstanding | 188,317,117 | | | 186,012,478 | | | 176,683,474 | |
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 10
W. P. CAREY INC.
Quarterly Reconciliation of Net Income from Real Estate to Adjusted Funds from Operations (AFFO) from Real Estate (Unaudited)
(in thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
| December 31, 2021 | | September 30, 2021 | | December 31, 2020 |
| Net income from Real Estate attributable to W. P. Carey | $ | 94,634 | | | $ | 130,858 | | | $ | 129,790 | |
| Adjustments: | | | | | |
| Depreciation and amortization of real property | 134,149 | | | 114,204 | | | 109,538 | |
| Gain on sale of real estate, net | (9,511) | | | (1,702) | | | (76,686) | |
| Impairment charges | 7,945 | | | 16,301 | | | 16,410 | |
Proportionate share of adjustments to earnings from equity method investments (a) (b) | 15,183 | | | 3,290 | | | 11,819 | |
Proportionate share of adjustments for noncontrolling interests (d) | (4) | | | (4) | | | (4) | |
| Total adjustments | 147,762 | | | 132,089 | | | 61,077 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (e) | 242,396 | | | 262,947 | | | 190,867 | |
| Adjustments: | | | | | |
Straight-line and other leasing and financing adjustments (f) | (53,380) | | | (10,823) | | | (9,571) | |
Other (gains) and losses (g) | 27,131 | | | (48,172) | | | 1,475 | |
| Above- and below-market rent intangible lease amortization, net | 15,082 | | | 12,004 | | | 11,504 | |
| Stock-based compensation | 6,091 | | | 4,361 | | | 5,795 | |
| Amortization of deferred financing costs | 3,239 | | | 3,424 | | | 3,209 | |
| Tax (benefit) expense – deferred and other | (1,851) | | | (700) | | | (1,595) | |
Merger and other expenses (h) | (599) | | | (908) | | | (724) | |
| Other amortization and non-cash items | 560 | | | 557 | | | 460 | |
Proportionate share of adjustments to earnings from equity method investments (b) | 325 | | | 1,761 | | | 4,458 | |
Proportionate share of adjustments for noncontrolling interests (d) | (5) | | | (6) | | | (152) | |
| Total adjustments | (3,407) | | | (38,502) | | | 14,859 | |
AFFO Attributable to W. P. Carey – Real Estate (e) | $ | 238,989 | | | $ | 224,445 | | | $ | 205,726 | |
| | | | | |
| Summary | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (e) | $ | 242,396 | | | $ | 262,947 | | | $ | 190,867 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (e) | $ | 1.29 | | | $ | 1.41 | | | $ | 1.08 | |
AFFO attributable to W. P. Carey – Real Estate (e) | $ | 238,989 | | | $ | 224,445 | | | $ | 205,726 | |
AFFO attributable to W. P. Carey per diluted share – Real Estate (e) | $ | 1.27 | | | $ | 1.21 | | | $ | 1.16 | |
| Diluted weighted-average shares outstanding | 188,317,117 | | | 186,012,478 | | | 176,683,474 | |
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 11
W. P. CAREY INC.
Full Year Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
| | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 |
| Net income attributable to W. P. Carey | $ | 409,988 | | | $ | 455,359 | |
| Adjustments: | | | |
| Depreciation and amortization of real property | 470,554 | | | 437,885 | |
| Gain on sale of real estate, net | (40,425) | | | (109,370) | |
Impairment charges | 24,246 | | | 35,830 | |
Proportionate share of adjustments to earnings from equity method investments (a) (b) (c) (j) | 32,213 | | | 46,679 | |
Proportionate share of adjustments for noncontrolling interests (d) | (16) | | | (18) | |
| Total adjustments | 486,572 | | | 411,006 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey (e) | 896,560 | | | 866,365 | |
| Adjustments: | | | |
Straight-line and other leasing and financing adjustments (f) | (83,267) | | | (41,498) | |
| Above- and below-market rent intangible lease amortization, net | 53,585 | | | 48,712 | |
| Stock-based compensation | 24,881 | | | 15,938 | |
| Amortization of deferred financing costs | 13,523 | | | 12,223 | |
| Other (gains) and losses | 12,885 | | | (37,165) | |
Tax benefit – deferred and other (i) (k) (l) | (5,967) | | | (48,835) | |
Merger and other expenses (h) | (4,546) | | | 247 | |
| Other amortization and non-cash items | 1,709 | | | 1,864 | |
Proportionate share of adjustments to earnings from equity method investments (b) | 12,152 | | | 10,821 | |
Proportionate share of adjustments for noncontrolling interests (d) | (24) | | | 414 | |
| Total adjustments | 24,931 | | | (37,279) | |
AFFO Attributable to W. P. Carey (e) | $ | 921,491 | | | $ | 829,086 | |
| | | |
| Summary | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey (e) | $ | 896,560 | | | $ | 866,365 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (e) | $ | 4.90 | | | $ | 4.96 | |
AFFO attributable to W. P. Carey (e) | $ | 921,491 | | | $ | 829,086 | |
AFFO attributable to W. P. Carey per diluted share (e) | $ | 5.03 | | | $ | 4.74 | |
| Diluted weighted-average shares outstanding | 183,127,098 | | | 174,839,428 | |
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 12
W. P. CAREY INC.
Full Year Reconciliation of Net Income from Real Estate to Adjusted Funds from Operations (AFFO) from Real Estate (Unaudited)
(in thousands, except share and per share amounts)
| | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 |
| Net income from Real Estate attributable to W. P. Carey | $ | 384,766 | | | $ | 459,512 | |
| Adjustments: | | | |
| Depreciation and amortization of real property | 470,554 | | | 437,885 | |
| Gain on sale of real estate, net | (40,425) | | | (109,370) | |
Impairment charges | 24,246 | | | 35,830 | |
Proportionate share of adjustments to earnings from equity method investments (a) (b) | 32,213 | | | 22,036 | |
Proportionate share of adjustments for noncontrolling interests (d) | (16) | | | (18) | |
| Total adjustments | 486,572 | | | 386,363 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (e) | 871,338 | | | 845,875 | |
| Adjustments: | | | |
Straight-line and other leasing and financing adjustments (f) | (83,267) | | | (41,498) | |
| Above- and below-market rent intangible lease amortization, net | 53,585 | | | 48,712 | |
| Stock-based compensation | 24,881 | | | 15,247 | |
| Other (gains) and losses | 13,676 | | | (37,104) | |
| Amortization of deferred financing costs | 13,523 | | | 12,223 | |
Tax benefit – deferred and other (k) | (4,938) | | | (45,511) | |
Merger and other expenses (h) | (4,597) | | | (937) | |
| Other amortization and non-cash items | 1,709 | | | 1,665 | |
Proportionate share of adjustments to earnings from equity method investments (b) | 10,253 | | | 5,089 | |
Proportionate share of adjustments for noncontrolling interests (d) | (24) | | | 414 | |
| Total adjustments | 24,801 | | | (41,700) | |
AFFO Attributable to W. P. Carey – Real Estate (e) | $ | 896,139 | | | $ | 804,175 | |
| | | |
| Summary | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (e) | $ | 871,338 | | | $ | 845,875 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (e) | $ | 4.76 | | | $ | 4.84 | |
AFFO attributable to W. P. Carey – Real Estate (e) | $ | 896,139 | | | $ | 804,175 | |
AFFO attributable to W. P. Carey per diluted share – Real Estate (e) | $ | 4.89 | | | $ | 4.60 | |
| Diluted weighted-average shares outstanding | 183,127,098 | | | 174,839,428 | |
__________
(a)Amounts for the three months ended December 31, 2021 and 2020 include non-cash impairment charges of $13.2 million and $8.3 million, respectively, recognized on certain equity method investments in real estate. Amounts for the years ended December 31, 2021 and 2020 include non-cash impairment charges of $20.0 million and $8.3 million, respectively, recognized on certain equity method investments in real estate.
(b)Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Earnings from equity method investments on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis.
(c)Amount for the year ended December 31, 2020 includes a non-cash net gain of $33.0 million (inclusive of $9.9 million attributable to the redemption of a noncontrolling interest that the former subadvisors for CWI 1 and CWI 2 held in the special general partner interests) recognized in connection with consideration received at closing of the CWI 1 and CWI 2 merger.
(d)Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
(e)FFO and AFFO are non-GAAP measures. See below for a description of FFO and AFFO.
(f)Amounts for the three months and year ended December 31, 2021 include an adjustment to exclude $37.8 million of lease termination fees received from a tenant, as such amount was determined to be non-core income.
(g)Adjustment amounts for the three months ended December 31, 2021 are primarily comprised of loss on extinguishment of debt of $(15.2) million, a non-cash allowance for credit losses of $(7.0) million and net loss on foreign currency transactions of $(4.4) million. Adjustment amounts for the three months ended September 30, 2021 include a mark-to-market unrealized gain for our investment in shares of Lineage Logistics of $52.9 million.
(h)Amounts for the three months ended September 30, 2021 and the year ended December 31, 2021 are primarily comprised of reversals of estimated liabilities for German real estate transfer taxes that were previously recorded in connection with business combinations in prior years.
(i)Amount for the year ended December 31, 2020 includes one-time taxes incurred upon the recognition of taxable income associated with the accelerated vesting of shares (previously issued by CWI 1 and CWI 2 to us for asset management services performed) in connection with the CWI 1 and CWI 2 merger.
(j)Amount for the year ended December 31, 2020 includes non-cash other-than-temporary impairment charges totaling $47.1 million recognized on our former equity method investments in CWI 1 and CWI 2.
(k)Amount for the year ended December 31, 2020 includes a non-cash deferred tax benefit of $37.2 million as a result of the release of a deferred tax liability relating to our investment in shares of Lineage Logistics, which converted to a REIT during that period and is therefore no longer subject to federal and state income taxes.
(l)Amount for the year ended December 31, 2020 includes a one-time tax benefit of $4.7 million as a result of carrying back certain net operating losses in accordance with the CARES Act, which was enacted on March 27, 2020.
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 13
Non-GAAP Financial Disclosure
Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc. (NAREIT), an industry trade group, has promulgated a non-GAAP measure known as FFO, which we believe to be an appropriate supplemental measure, when used in addition to and in conjunction with results presented in accordance with GAAP, to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to, nor a substitute for, net income or loss as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as restated in December 2018. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property, impairment charges on real estate, gains or losses on changes in control of interests in real estate and depreciation and amortization from real estate assets; and after adjustments for unconsolidated partnerships and jointly owned investments. Adjustments for unconsolidated partnerships and jointly owned investments are calculated to reflect FFO.
We also modify the NAREIT computation of FFO to adjust GAAP net income for certain non-cash charges, such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rent and related reserves, other non-cash rent adjustments, non-cash allowance for credit losses on loans receivable and direct financing leases, stock-based compensation, non-cash environmental accretion expense, amortization of discounts and premiums on debt and amortization of deferred financing costs. 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 non-core income and expenses, such as gains or losses from extinguishment of debt and merger and acquisition expenses. We also exclude realized and unrealized gains/losses on foreign currency exchange transactions (other than those realized on the settlement of foreign currency 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 to arrive at AFFO as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs that are currently not engaged in acquisitions, mergers and restructuring, which are not part of our normal business operations. AFFO also reflects adjustments for unconsolidated partnerships and jointly owned investments. 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 as we believe 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 income computed under GAAP, or as alternatives to net cash provided by operating activities computed under GAAP, or as indicators of our ability to fund our cash needs.
W. P. Carey Inc. 12/31/2021 Earnings Release 8-K – 14
Exhibit 99.2
W. P. Carey Inc.
Supplemental Information
Fourth Quarter 2021
Terms and Definitions
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. Other terms and definitions are as follows:
| | | | | |
| REIT | Real estate investment trust |
| CPA:18 – Global | Corporate Property Associates 18 – Global Incorporated |
| CWI 1 | Carey Watermark Investors Incorporated |
| CWI 2 | Carey Watermark Investors 2 Incorporated |
| CESH | Carey European Student Housing Fund I, L.P. |
| CWI 1 and CWI 2 Merger | Merger between CWI 1 and CWI 2, which closed on April 13, 2020 |
| WLT | Watermark Lodging Trust, Inc., the renamed combined company resulting from the CWI 1 and CWI 2 Merger |
| Managed Programs | CPA:18 – Global and CESH (CWI 1 and CWI 2 were included in the Managed Programs prior to the CWI 1 and CWI 2 Merger) |
| U.S. | United States |
| AUM | Assets under management |
| ABR | Contractual minimum annualized base rent |
| NAV | Net asset value per share |
| SEC | Securities and Exchange Commission |
| ASC | Accounting Standards Codification |
| EUR | Euro |
| GBP | British pound sterling |
| JPY | Japanese yen |
| EURIBOR | Euro Interbank Offered Rate |
| SONIA | Sterling Overnight Index Average |
| TIBOR | Tokyo Interbank Offered Rate |
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 (“GAAP”), including funds from operations (“FFO”); adjusted funds from operations (“AFFO”); earnings before interest, taxes, depreciation and amortization (“EBITDA”); adjusted EBITDA; pro rata cash net operating income (“pro rata cash NOI”); normalized pro rata cash NOI; same store pro rata rental income; cash interest expense; and cash interest expense coverage ratio. FFO is a non-GAAP measure defined by the National Association of Real Estate Investments Trusts, Inc. (“NAREIT”), an industry trade group. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures are provided within this supplemental package. In addition, refer to the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of these non-GAAP financial measures and other metrics.
Amounts may not sum to totals due to rounding.
W. P. Carey Inc.
Supplemental Information – Fourth Quarter 2021
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| Overview | |
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| Financial Results | |
| Statements of Income – Last Five Quarters | |
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| FFO and AFFO – Last Five Quarters | |
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| Balance Sheets and Capitalization | |
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| Real Estate | |
| Investment Activity | |
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| Investment Management | |
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| Appendix | |
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Adjusted EBITDA – Last Five Quarters | |
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W. P. Carey Inc.
Overview – Fourth Quarter 2021
As of or for the three months ended December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Financial Results | | | | | | | | | |
| | | | | Segment | | |
| | | | | Owned Real Estate | | Investment Management | | Total |
| Revenues, including reimbursable costs – consolidated ($000s) | | $ | 370,324 | | | $ | 4,556 | | | $ | 374,880 | |
| Net income attributable to W. P. Carey ($000s) | | 94,634 | | | 4,928 | | | 99,562 | |
| Net income attributable to W. P. Carey per diluted share | | 0.50 | | | 0.03 | | | 0.53 | |
Normalized pro rata cash NOI from real estate ($000s) (a) (b) | | 305,734 | | | N/A | | 305,734 | |
Adjusted EBITDA ($000s) (a) (b) | | 293,068 | | | 8,107 | | | 301,175 | |
AFFO attributable to W. P. Carey ($000s) (a) (b) | | 238,989 | | | 6,616 | | | 245,605 | |
AFFO attributable to W. P. Carey per diluted share (a) (b) | | 1.27 | | | 0.03 | | | 1.30 | |
| | | | | | | | | |
| Dividends declared per share – current quarter | | | | | | 1.055 | |
| Dividends declared per share – current quarter annualized | | | | | | 4.220 | |
| Dividend yield – annualized, based on quarter end share price of $82.05 | | | | | | 5.1 | % |
Dividend payout ratio – for the year ended December 31, 2021 (c) | | | | | | 83.6 | % |
| | | | | | | | | |
| Balance Sheet and Capitalization | | | | | | | | | |
| Equity market capitalization – based on quarter end share price of $82.05 ($000s) | | | | | | $ | 15,590,628 | |
Pro rata net debt ($000s) (d) | | | | | | | | | 6,873,715 | |
| Enterprise value ($000s) | | | | | | | | | 22,464,343 | |
| | | | | | | | | |
| Total consolidated debt ($000s) | | | | | | | | | 6,791,616 | |
Gross assets ($000s) (e) | | | | | | | | | 16,945,400 | |
Liquidity ($000s) (f) | | | | | | | | | 1,847,414 | |
| | | | | | | | | |
Pro rata net debt to enterprise value (b) | | | | | | | | | 30.6 | % |
Pro rata net debt to adjusted EBITDA (annualized) (a) (b) | | | | | | 5.7x |
| Total consolidated debt to gross assets | | | | | | | | | 40.1 | % |
| Total consolidated secured debt to gross assets | | | | | | | | | 2.2 | % |
Cash interest expense coverage ratio (a) | | | | | | | | | 6.0x |
| | | | | | | | | |
Weighted-average interest rate (b) | | | | | | | | | 2.5 | % |
Weighted-average debt maturity (years) (b) | | | | | | | | | 5.5 | |
| | | | | | | | | |
| Moody's Investors Service – issuer rating | | | | | | | | | Baa2 (positive) |
| Standard & Poor's Ratings Services – issuer rating | | | | | | | | | BBB (stable) |
| | | | | | | | | |
| Real Estate Portfolio (Pro Rata) | | | | | | | | | |
ABR – total portfolio ($000s) (g) | | | | | | | | | $ | 1,247,764 | |
ABR – unencumbered portfolio (% / $000s) (g) (h) | | | | | | | 92.0% / | | $ | 1,147,881 | |
| Number of net-leased properties | | | | | | | | | 1,304 | |
Number of operating properties (i) | | | | | | | | | 20 | |
Number of tenants – net-leased properties | | | | | | | | | 352 | |
| | | | | | | | | |
ABR from investment grade tenants as a % of total ABR – net-leased properties (j) | | | | | | 29.3 | % |
| | | | | | | | | |
| Net-leased properties – square footage (millions) | | | | | | | | | 155.7 | |
| | | | | | | | | |
| Occupancy – net-leased properties | | | | | | | | | 98.5 | % |
| Weighted-average lease term (years) | | | | | | | | | 10.8 | |
| | | | | | | | | |
| Maximum commitment for capital investments and commitments expected to be completed during 2022 ($000s) | | | | $ | 153,759 | |
| Investment volume – current quarter ($000s) | | | | 531,791 | |
| Dispositions – current quarter ($000s) | | | | | | | | | 41,236 | |
________
(a)Normalized pro rata cash NOI, adjusted EBITDA, AFFO and cash interest expense coverage ratio are non-GAAP measures. See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of our non-GAAP measures and for details on how certain non-GAAP measures are calculated. (c)Represents dividends declared per share divided by AFFO per diluted share on a year-to-date basis.
| | | | | | | | |
| | Investing for the long runTM | 1 |
W. P. Carey Inc.
Overview – Fourth Quarter 2021
(e)Gross assets represent consolidated total assets before accumulated depreciation on buildings and improvements. Gross assets are net of accumulated amortization on in-place lease intangible assets of $934.7 million and above-market rent intangible assets of $489.9 million.
(f)Represents (i) availability under our Senior Unsecured Credit Facility (net of amounts reserved for standby letters of credit), (ii) consolidated cash and cash equivalents, and (iii) available proceeds under our forward sale agreements (based on 3,925,000 remaining shares and a net offering price of $74.84 per share as of December 31, 2021, which will be updated at each quarter end).
(h)Represents ABR from properties unencumbered by non-recourse mortgage debt.
(i)Comprised of 19 self-storage properties and one hotel.
(j)Percentage of portfolio is based on ABR, as of December 31, 2021. Includes tenants or guarantors with investment grade ratings (21.7%) and subsidiaries of non-guarantor parent companies with investment grade ratings (7.6%). 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 Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of ABR.
| | | | | | | | |
| | Investing for the long runTM | 2 |
W. P. Carey Inc.
Overview – Fourth Quarter 2021
| | | | | |
| Components of Net Asset Value |
Dollars in thousands, except per share amounts.
| | | | | | | | | | | | | | | | | |
| Real Estate | | | Three Months Ended Dec. 31, 2021 | | Annualized |
Normalized pro rata cash NOI (a) (b) | | | $ | 305,734 | | | $ | 1,222,936 | |
| | | | | |
| Investment Management | | | | | |
Adjusted EBITDA (a) (b) | | | 8,107 | | | 32,428 | |
| Selected Components of Adjusted EBITDA: | | | | | |
| Asset management revenue | | | 3,571 | | | 14,284 | |
Operating partnership interest in real estate cash flow of CPA:18 – Global (c) | | | 2,396 | | | 9,584 | |
| Back-end fees and interests associated with the Managed Programs | | | |
| | | | | |
| Balance Sheet – Selected Information (Consolidated Unless Otherwise Stated) | | As of Dec. 31, 2021 |
| Assets | | | | | |
Book value of real estate excluded from normalized pro rata cash NOI (d) | | | | $ | 240,501 | |
| Cash and cash equivalents | | | | | 165,427 | |
Las Vegas retail complex construction loan (e) | | | | | 104,114 | |
| Other secured loans receivable, net | | | | | 24,143 | |
| Due from affiliates | | | | | 1,826 | |
| Other assets, net: | | | | | |
| Investment in shares of Lineage Logistics (a cold storage REIT) | | | | | $ | 366,339 | |
| Straight-line rent adjustments | | | | | 234,158 | |
| Office lease right-of-use assets, net | | | | | 59,902 | |
| Taxes receivable | | | | | 59,749 | |
| Deferred charges | | | | | 55,022 | |
| Restricted cash, including escrow | | | | | 52,523 | |
| Non-rent tenant and other receivables | | | | | 41,542 | |
| Securities and derivatives | | | | | 24,085 | |
| Deferred income taxes | | | | | 16,277 | |
| Leasehold improvements, furniture and fixtures | | | | 15,964 | |
| Prepaid expenses | | | | | 9,424 | |
| Investment in shares of Guggenheim Credit Income Fund | | | | | 4,322 | |
Rent receivables (f) | | | | | 3,717 | |
| Other intangible assets, net | | | | | 1,265 | |
| Other | | | | | 8,553 | |
| Total other assets, net (excluding investment in preferred shares of WLT, as disclosed in the “Other” section below) | | $ | 952,842 | |
| | | | | |
| Liabilities | | | | | |
Total pro rata debt outstanding (b) (g) | | | | | $ | 7,039,142 | |
| Dividends payable | | | | | 203,859 | |
| Deferred income taxes | | | | | 145,572 | |
| Accounts payable, accrued expenses and other liabilities: | | | | | |
| Operating lease liabilities | | | | | $ | 146,437 | |
| Accounts payable and accrued expenses | | | | | 145,558 | |
| Prepaid and deferred rents | | | | | 128,466 | |
| Tenant security deposits | | | | | 56,934 | |
| Accrued taxes payable | | | | | 43,960 | |
| Securities and derivatives | | | | | 2,218 | |
| Other | | | | | 49,273 | |
| Total accounts payable, accrued expenses and other liabilities | | | | | $ | 572,846 | |
| | | | | | | | |
| | Investing for the long runTM | 3 |
W. P. Carey Inc.
Overview – Fourth Quarter 2021
| | | | | | | | | | | |
| Other | Ownership % | | Estimated Value / Carrying Value |
Ownership in Managed Programs: (h) | | | |
CPA:18 – Global (i) | 5.6 | % | | $ | 75,523 | |
CESH (j) | 2.4 | % | | 2,228 | |
| | | 77,751 | |
Ownership in WLT: (k) | | | |
Investment in preferred shares of WLT (l) | N/A | | 65,000 | |
Investment in common shares of WLT | 5.3 | % | | 33,392 | |
| | | 98,392 | |
| | | $ | 176,143 | |
________
(a)Normalized pro rata cash NOI and adjusted EBITDA are non-GAAP measures. See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of our non-GAAP measures and for details on how they are calculated. (c)We are entitled to receive distributions of up to 10% of the Available Cash of CPA:18 – Global, as defined in its operating partnership agreement.
(d)Represents the value of real estate not included in normalized pro rata cash NOI, such as vacant assets, in-progress build-to-suit properties, real estate under construction for certain expansion projects at existing properties and a common equity interest in the Harmon Retail Corner in Las Vegas.
(e)Represents a construction loan for a retail complex in Las Vegas, Nevada, which was entered into in June 2021 and is included in Equity method investments (as an equity method investment in real estate) on our consolidated balance sheets. See the Investment Activity – Investment Volume section for additional information about this investment. (f)Comprised of rent receivables that were subsequently collected as of the date of this report.
(g)Excludes unamortized discount, net totaling $31.0 million and unamortized deferred financing costs totaling $28.9 million as of December 31, 2021.
(h)Separate from operating partnership interest in our affiliate, CPA:18 – Global, and our interests in unconsolidated real estate joint ventures with CPA:18 – Global.
(i)The estimated value of CPA:18 – Global is based on the estimated NAV of its Class A common stock of $9.07 as of September 30, 2021, which was calculated by relying in part on an estimate of the fair market value of the real estate portfolio adjusted to give effect to mortgage loans, both provided by third parties, as well as other adjustments. Refer to the SEC filings of CPA:18 – Global for the calculation methodology of its NAVs.
(j)We own limited partnership units of CESH. The value above reflects its private placement price, net of cash distributions. We do not intend to calculate a NAV for CESH.
(k)The carrying value of our investment in 12,208,243 common shares of WLT is included in Equity method investments (as an equity method investment in real estate) on our consolidated balance sheets. The carrying value of our investment in 1,300,000 preferred shares of WLT is included in Other assets, net on our consolidated balance sheets as available-for-sale debt securities.
(l)In January 2022, WLT redeemed our shares of its preferred stock at the liquidation preference of $50.00 per share. We received gross proceeds of $65.0 million.
| | | | | | | | |
| | Investing for the long runTM | 4 |
W. P. Carey Inc.
Financial Results
Fourth Quarter 2021
| | | | | | | | |
| | Investing for the long runTM | 5 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2021
| | | | | |
| Consolidated Statements of Income – Last Five Quarters |
In thousands, except share and per share amounts.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2021 | | Sep. 30, 2021 | | Jun. 30, 2021 | | Mar. 31, 2021 | | Dec. 31, 2020 |
| Revenues | | | | | | | | | |
| Real Estate: | | | | | | | | | |
| Lease revenues | $ | 305,093 | | | $ | 298,616 | | | $ | 289,064 | | | $ | 284,665 | | | $ | 280,878 | |
| Income from direct financing leases and loans receivable | 15,637 | | | 16,754 | | | 17,422 | | | 17,742 | | | 17,357 | |
Lease termination income and other (a) | 45,590 | | | 1,421 | | | 5,059 | | | 1,585 | | | 2,103 | |
| Operating property revenues | 4,004 | | | 4,050 | | | 3,245 | | | 2,179 | | | 2,031 | |
| 370,324 | | | 320,841 | | | 314,790 | | | 306,171 | | | 302,369 | |
| Investment Management: | | | | | | | | | |
| Asset management and other revenue | 3,571 | | | 3,872 | | | 3,966 | | | 3,954 | | | 3,864 | |
| Reimbursable costs from affiliates | 985 | | | 1,041 | | | 968 | | | 1,041 | | | 1,138 | |
| 4,556 | | | 4,913 | | | 4,934 | | | 4,995 | | | 5,002 | |
| 374,880 | | | 325,754 | | | 319,724 | | | 311,166 | | | 307,371 | |
| Operating Expenses | | | | | | | | | |
| Depreciation and amortization | 135,662 | | | 115,657 | | | 114,348 | | | 110,322 | | | 110,913 | |
| General and administrative | 19,591 | | | 19,750 | | | 20,464 | | | 22,083 | | | 18,334 | |
| Reimbursable tenant costs | 16,475 | | | 15,092 | | | 15,092 | | | 15,758 | | | 13,710 | |
| Property expenses, excluding reimbursable tenant costs | 11,466 | | | 13,734 | | | 11,815 | | | 10,883 | | | 10,418 | |
| Impairment charges | 7,945 | | | 16,301 | | | — | | | — | | | 16,410 | |
| Stock-based compensation expense | 6,091 | | | 4,361 | | | 9,048 | | | 5,381 | | | 5,795 | |
| Operating property expenses | 2,887 | | | 3,001 | | | 2,049 | | | 1,911 | | | 1,696 | |
| Reimbursable costs from affiliates | 985 | | | 1,041 | | | 968 | | | 1,041 | | | 1,138 | |
| Merger and other expenses | (563) | | | (908) | | | (2,599) | | | (476) | | | (418) | |
| 200,539 | | | 188,029 | | | 171,185 | | | 166,903 | | | 177,996 | |
| Other Income and Expenses | | | | | | | | | |
| Interest expense | (47,208) | | | (48,731) | | | (49,252) | | | (51,640) | | | (52,828) | |
Other gains and (losses) (b) | (28,461) | | | 49,219 | | | 7,545 | | | (41,188) | | | (1,927) | |
| Gain on sale of real estate, net | 9,511 | | | 1,702 | | | 19,840 | | | 9,372 | | | 76,686 | |
(Losses) earnings from equity method investments (c) | (6,675) | | | 5,735 | | | (156) | | | (9,733) | | | (8,470) | |
Non-operating income (loss) (d) | 3,156 | | | 1,283 | | | 3,065 | | | 6,356 | | | (858) | |
| (69,677) | | | 9,208 | | | (18,958) | | | (86,833) | | | 12,603 | |
| Income before income taxes | 104,664 | | | 146,933 | | | 129,581 | | | 57,430 | | | 141,978 | |
| Provision for income taxes | (5,052) | | | (8,347) | | | (9,298) | | | (5,789) | | | (7,363) | |
| Net Income | 99,612 | | | 138,586 | | | 120,283 | | | 51,641 | | | 134,615 | |
| Net income attributable to noncontrolling interests | (50) | | | (39) | | | (38) | | | (7) | | | (43) | |
| Net Income Attributable to W. P. Carey | $ | 99,562 | | | $ | 138,547 | | | $ | 120,245 | | | $ | 51,634 | | | $ | 134,572 | |
| | | | | | | | | |
| Basic Earnings Per Share | $ | 0.53 | | | $ | 0.75 | | | $ | 0.67 | | | $ | 0.29 | | | $ | 0.76 | |
| Diluted Earnings Per Share | $ | 0.53 | | | $ | 0.74 | | | $ | 0.67 | | | $ | 0.29 | | | $ | 0.76 | |
| Weighted-Average Shares Outstanding | | | | | | | | | |
| Basic | 187,630,036 | | | 185,422,639 | | | 180,099,370 | | | 176,640,861 | | | 176,366,824 | |
| Diluted | 188,317,117 | | | 186,012,478 | | | 180,668,732 | | | 176,965,510 | | | 176,683,474 | |
| | | | | | | | | |
| Dividends Declared Per Share | $ | 1.055 | | | $ | 1.052 | | | $ | 1.050 | | | $ | 1.048 | | | $ | 1.046 | |
________
(a)Amount for the three months ended December 31, 2021 includes $37.8 million of lease termination fees that was determined to be non-core income and thus excluded from AFFO.
(b)Amount for the three months ended December 31, 2021 is primarily comprised of loss on extinguishment of debt of $(15.2) million, a non-cash allowance for credit losses of $(7.0) million and net loss on foreign currency transactions of $(4.4) million. Amount for the three months ended September 30, 2021 includes a mark-to-market unrealized gain for our investment in shares of Lineage Logistics of $52.9 million. Amount for the three months ended March 31, 2021 includes a loss on extinguishment of debt of $(59.9) million (of which $(31.7) million mainly comprised fees for the prepayment of certain non-recourse mortgage loans and $(28.2) million mainly comprised a “make-whole” amount paid in connection with the redemption of €500 million of 2.0% Senior Unsecured Notes due 2023 in March 2021).
(c)Amounts for the three months ended December 31, 2021, March 31, 2021 and December 31, 2020 include non-cash impairment charges of $13.2 million, $6.8 million and $8.3 million, respectively, recognized on certain equity method investments in real estate.
(d)Amount for the three months ended December 31, 2021 is comprised of realized gains on foreign currency exchange derivatives of $2.4 million and a cash dividend of $0.8 million from our investment in preferred shares of Watermark Lodging Trust
| | | | | | | | |
| | Investing for the long runTM | 6 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2021
| | | | | |
| Statements of Income, Real Estate – Last Five Quarters |
In thousands, except share and per share amounts.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2021 | | Sep. 30, 2021 | | Jun. 30, 2021 | | Mar. 31, 2021 | | Dec. 31, 2020 |
| Revenues | | | | | | | | | |
| Lease revenues | $ | 305,093 | | | $ | 298,616 | | | $ | 289,064 | | | $ | 284,665 | | | $ | 280,878 | |
| Income from direct financing leases and loans receivable | 15,637 | | | 16,754 | | | 17,422 | | | 17,742 | | | 17,357 | |
Lease termination income and other (a) | 45,590 | | | 1,421 | | | 5,059 | | | 1,585 | | | 2,103 | |
| Operating property revenues | 4,004 | | | 4,050 | | | 3,245 | | | 2,179 | | | 2,031 | |
| 370,324 | | | 320,841 | | | 314,790 | | | 306,171 | | | 302,369 | |
| Operating Expenses | | | | | | | | | |
| Depreciation and amortization | 135,662 | | | 115,657 | | | 114,348 | | | 110,322 | | | 110,913 | |
| General and administrative | 19,591 | | | 19,750 | | | 20,464 | | | 22,083 | | | 18,334 | |
| Reimbursable tenant costs | 16,475 | | | 15,092 | | | 15,092 | | | 15,758 | | | 13,710 | |
| Property expenses, excluding reimbursable tenant costs | 11,466 | | | 13,734 | | | 11,815 | | | 10,883 | | | 10,418 | |
| Impairment charges | 7,945 | | | 16,301 | | | — | | | — | | | 16,410 | |
| Stock-based compensation expense | 6,091 | | | 4,361 | | | 9,048 | | | 5,381 | | | 5,795 | |
| Operating property expenses | 2,887 | | | 3,001 | | | 2,049 | | | 1,911 | | | 1,696 | |
| Merger and other expenses | (599) | | | (908) | | | (2,599) | | | (491) | | | (724) | |
| 199,518 | | | 186,988 | | | 170,217 | | | 165,847 | | | 176,552 | |
| Other Income and Expenses | | | | | | | | | |
| Interest expense | (47,208) | | | (48,731) | | | (49,252) | | | (51,640) | | | (52,828) | |
Other gains and (losses) (b) | (27,131) | | | 48,172 | | | 7,472 | | | (42,189) | | | (1,475) | |
| Gain on sale of real estate, net | 9,511 | | | 1,702 | | | 19,840 | | | 9,372 | | | 76,686 | |
(Losses) earnings from equity method investments in real estate (c) | (9,121) | | | 2,445 | | | (1,854) | | | (11,119) | | | (11,424) | |
| Non-operating income (loss) | 3,158 | | | 1,283 | | | 3,065 | | | 6,272 | | | (1,394) | |
| (70,791) | | | 4,871 | | | (20,729) | | | (89,304) | | | 9,565 | |
| Income before income taxes | 100,015 | | | 138,724 | | | 123,844 | | | 51,020 | | | 135,382 | |
| Provision for income taxes | (5,331) | | | (7,827) | | | (9,119) | | | (6,426) | | | (5,549) | |
| Net Income from Real Estate | 94,684 | | | 130,897 | | | 114,725 | | | 44,594 | | | 129,833 | |
| Net income attributable to noncontrolling interests | (50) | | | (39) | | | (38) | | | (7) | | | (43) | |
| Net Income from Real Estate Attributable to W. P. Carey | $ | 94,634 | | | $ | 130,858 | | | $ | 114,687 | | | $ | 44,587 | | | $ | 129,790 | |
| | | | | | | | | |
| Basic Earnings Per Share | $ | 0.50 | | | $ | 0.71 | | | $ | 0.64 | | | $ | 0.25 | | | $ | 0.73 | |
| Diluted Earnings Per Share | $ | 0.50 | | | $ | 0.70 | | | $ | 0.64 | | | $ | 0.25 | | | $ | 0.73 | |
| Weighted-Average Shares Outstanding | | | | | | | | | |
| Basic | 187,630,036 | | | 185,422,639 | | | 180,099,370 | | | 176,640,861 | | | 176,366,824 | |
| Diluted | 188,317,117 | | | 186,012,478 | | | 180,668,732 | | | 176,965,510 | | | 176,683,474 | |
________.
(a)Amount for the three months ended December 31, 2021 includes $37.8 million of lease termination fees that was determined to be non-core income and thus excluded from AFFO.
(b)Amount for the three months ended December 31, 2021 is primarily comprised of loss on extinguishment of debt of $(15.2) million, a non-cash allowance for credit losses of $(7.0) million and net loss on foreign currency transactions of $(4.4) million. Amount for the three months ended September 30, 2021 includes a mark-to-market unrealized gain for our investment in shares of Lineage Logistics of $52.9 million. Amount for the three months ended March 31, 2021 includes a loss on extinguishment of debt of $(59.9) million (of which $(31.7) million mainly comprised fees for the prepayment of certain non-recourse mortgage loans and $(28.2) million mainly comprised a “make-whole” amount paid in connection with the redemption of €500 million of 2.0% Senior Unsecured Notes due 2023 in March 2021).
(c)Amounts for the three months ended December 31, 2021, March 31, 2021 and December 31, 2020 include non-cash impairment charges of $13.2 million, $6.8 million and $8.3 million, respectively, recognized on certain equity method investments in real estate.
| | | | | | | | |
| | Investing for the long runTM | 7 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2021
| | | | | |
| Statements of Income, Investment Management – Last Five Quarters |
In thousands, except share and per share amounts.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2021 | | Sep. 30, 2021 | | Jun. 30, 2021 | | Mar. 31, 2021 | | Dec. 31, 2020 |
| Revenues | | | | | | | | | |
| Asset management and other revenue | $ | 3,571 | | | $ | 3,872 | | | $ | 3,966 | | | $ | 3,954 | | | $ | 3,864 | |
| Reimbursable costs from affiliates | 985 | | | 1,041 | | | 968 | | | 1,041 | | | 1,138 | |
| 4,556 | | | 4,913 | | | 4,934 | | | 4,995 | | | 5,002 | |
| Operating Expenses | | | | | | | | | |
| Reimbursable costs from affiliates | 985 | | | 1,041 | | | 968 | | | 1,041 | | | 1,138 | |
| Merger and other expenses | 36 | | | — | | | — | | | 15 | | | 306 | |
| 1,021 | | | 1,041 | | | 968 | | | 1,056 | | | 1,444 | |
| Other Income and Expenses | | | | | | | | | |
| Earnings from equity method investments in the Managed Programs | 2,446 | | | 3,290 | | | 1,698 | | | 1,386 | | | 2,954 | |
| Other gains and (losses) | (1,330) | | | 1,047 | | | 73 | | | 1,001 | | | (452) | |
| Non-operating (loss) income | (2) | | | — | | | — | | | 84 | | | 536 | |
| 1,114 | | | 4,337 | | | 1,771 | | | 2,471 | | | 3,038 | |
| Income before income taxes | 4,649 | | | 8,209 | | | 5,737 | | | 6,410 | | | 6,596 | |
| Benefit from (provision for) income taxes | 279 | | | (520) | | | (179) | | | 637 | | | (1,814) | |
| Net Income from Investment Management Attributable to W. P. Carey | $ | 4,928 | | | $ | 7,689 | | | $ | 5,558 | | | $ | 7,047 | | | $ | 4,782 | |
| | | | | | | | | |
| Basic Earnings Per Share | $ | 0.03 | | | $ | 0.04 | | | $ | 0.03 | | | $ | 0.04 | | | $ | 0.03 | |
| Diluted Earnings Per Share | $ | 0.03 | | | $ | 0.04 | | | $ | 0.03 | | | $ | 0.04 | | | $ | 0.03 | |
| Weighted-Average Shares Outstanding | | | | | | | | | |
| Basic | 187,630,036 | | | 185,422,639 | | | 180,099,370 | | | 176,640,861 | | | 176,366,824 | |
| Diluted | 188,317,117 | | | 186,012,478 | | | 180,668,732 | | | 176,965,510 | | | 176,683,474 | |
| | | | | | | | |
| | Investing for the long runTM | 8 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2021
| | | | | |
| FFO and AFFO, Consolidated – Last Five Quarters |
In thousands, except share and per share amounts.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2021 | | Sep. 30, 2021 | | Jun. 30, 2021 | | Mar. 31, 2021 | | Dec. 31, 2020 |
| Net income attributable to W. P. Carey | $ | 99,562 | | | $ | 138,547 | | | $ | 120,245 | | | $ | 51,634 | | | $ | 134,572 | |
| Adjustments: | | | | | | | | | |
| Depreciation and amortization of real property | 134,149 | | | 114,204 | | | 112,997 | | | 109,204 | | | 109,538 | |
| Gain on sale of real estate, net | (9,511) | | | (1,702) | | | (19,840) | | | (9,372) | | | (76,686) | |
| Impairment charges | 7,945 | | | 16,301 | | | — | | | — | | | 16,410 | |
Proportionate share of adjustments to earnings from equity method investments (a) (b) | 15,183 | | | 3,290 | | | 3,434 | | | 10,306 | | | 11,819 | |
Proportionate share of adjustments for noncontrolling interests (c) | (4) | | | (4) | | | (4) | | | (4) | | | (4) | |
| Total adjustments | 147,762 | | | 132,089 | | | 96,587 | | | 110,134 | | | 61,077 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey (d) | 247,324 | | | 270,636 | | | 216,832 | | | 161,768 | | | 195,649 | |
| Adjustments: | | | | | | | | | |
Straight-line and other leasing and financing adjustments (e) | (53,380) | | | (10,823) | | | (10,313) | | | (8,751) | | | (9,571) | |
Other (gains) and losses (f) | 28,461 | | | (49,219) | | | (7,545) | | | 41,188 | | | 1,927 | |
Above- and below-market rent intangible lease amortization, net | 15,082 | | | 12,004 | | | 14,384 | | | 12,115 | | | 11,504 | |
| Stock-based compensation | 6,091 | | | 4,361 | | | 9,048 | | | 5,381 | | | 5,795 | |
| Amortization of deferred financing costs | 3,239 | | | 3,424 | | | 3,447 | | | 3,413 | | | 3,209 | |
| Tax (benefit) expense – deferred and other | (2,507) | | | (290) | | | 217 | | | (3,387) | | | 32 | |
Merger and other expenses (g) | (563) | | | (908) | | | (2,599) | | | (476) | | | (418) | |
| Other amortization and non-cash items | 560 | | | 557 | | | 563 | | | 29 | | | 460 | |
Proportionate share of adjustments to earnings from equity method investments (b) | 1,303 | | | 988 | | | 4,650 | | | 5,211 | | | 4,246 | |
| Proportionate share of adjustments for noncontrolling interests | (5) | | | (6) | | | (8) | | | (5) | | | (152) | |
| Total adjustments | (1,719) | | | (39,912) | | | 11,844 | | | 54,718 | | | 17,032 | |
AFFO Attributable to W. P. Carey (d) | $ | 245,605 | | | $ | 230,724 | | | $ | 228,676 | | | $ | 216,486 | | | $ | 212,681 | |
| | | | | | | | | |
| Summary | | | | | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey (d) | $ | 247,324 | | | $ | 270,636 | | | $ | 216,832 | | | $ | 161,768 | | | $ | 195,649 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (d) | $ | 1.31 | | | $ | 1.45 | | | $ | 1.20 | | | $ | 0.91 | | | $ | 1.11 | |
AFFO attributable to W. P. Carey (d) | $ | 245,605 | | | $ | 230,724 | | | $ | 228,676 | | | $ | 216,486 | | | $ | 212,681 | |
AFFO attributable to W. P. Carey per diluted share (d) | $ | 1.30 | | | $ | 1.24 | | | $ | 1.27 | | | $ | 1.22 | | | $ | 1.20 | |
| Diluted weighted-average shares outstanding | 188,317,117 | | | 186,012,478 | | | 180,668,732 | | | 176,965,510 | | | 176,683,474 | |
________
(a)Amounts for the three months ended December 31, 2021, March 31, 2021 and December 31, 2020 include non-cash impairment charges of $13.2 million, $6.8 million and $8.3 million, respectively, recognized on certain equity method investments in real estate.
(b)Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Earnings from equity method investments on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis.
(c)Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
(e)Amount for the three months ended December 31, 2021 includes an adjustment to exclude $37.8 million of lease termination fees received from a tenant. as such amount was determined to be non-core income.
(f)Amount for the three months ended December 31, 2021 is primarily comprised of loss on extinguishment of debt of $(15.2) million, a non-cash allowance for credit losses of $(7.0) million and net loss on foreign currency transactions of $(4.4) million.
(g)Amounts for the three months ended September 30, 2021 and June 30, 2021 are primarily comprised of reversals of estimated liabilities for German real estate transfer taxes that were previously recorded in connection with business combinations in prior years.
| | | | | | | | |
| | Investing for the long runTM | 9 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2021
| | | | | |
| FFO and AFFO, Real Estate – Last Five Quarters |
In thousands, except share and per share amounts.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2021 | | Sep. 30, 2021 | | Jun. 30, 2021 | | Mar. 31, 2021 | | Dec. 31, 2020 |
| Net income from Real Estate attributable to W. P. Carey | $ | 94,634 | | | $ | 130,858 | | | $ | 114,687 | | | $ | 44,587 | | | $ | 129,790 | |
| Adjustments: | | | | | | | | | |
| Depreciation and amortization of real property | 134,149 | | | 114,204 | | | 112,997 | | | 109,204 | | | 109,538 | |
| Gain on sale of real estate, net | (9,511) | | | (1,702) | | | (19,840) | | | (9,372) | | | (76,686) | |
| Impairment charges | 7,945 | | | 16,301 | | | — | | | — | | | 16,410 | |
Proportionate share of adjustments to earnings from equity method investments (a) (b) | 15,183 | | | 3,290 | | | 3,434 | | | 10,306 | | | 11,819 | |
Proportionate share of adjustments for noncontrolling interests (c) | (4) | | | (4) | | | (4) | | | (4) | | | (4) | |
| Total adjustments | 147,762 | | | 132,089 | | | 96,587 | | | 110,134 | | | 61,077 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (d) | 242,396 | | | 262,947 | | | 211,274 | | | 154,721 | | | 190,867 | |
| Adjustments: | | | | | | | | | |
Straight-line and other leasing and financing adjustments (e) | (53,380) | | | (10,823) | | | (10,313) | | | (8,751) | | | (9,571) | |
Other (gains) and losses (f) | 27,131 | | | (48,172) | | | (7,472) | | | 42,189 | | | 1,475 | |
Above- and below-market rent intangible lease amortization, net | 15,082 | | | 12,004 | | | 14,384 | | | 12,115 | | | 11,504 | |
| Stock-based compensation | 6,091 | | | 4,361 | | | 9,048 | | | 5,381 | | | 5,795 | |
| Amortization of deferred financing costs | 3,239 | | | 3,424 | | | 3,447 | | | 3,413 | | | 3,209 | |
| Tax (benefit) expense – deferred and other | (1,851) | | | (700) | | | 208 | | | (2,595) | | | (1,595) | |
Merger and other expenses (g) | (599) | | | (908) | | | (2,599) | | | (491) | | | (724) | |
| Other amortization and non-cash items | 560 | | | 557 | | | 563 | | | 29 | | | 460 | |
Proportionate share of adjustments to earnings from equity method investments (b) | 325 | | | 1,761 | | | 3,845 | | | 4,322 | | | 4,458 | |
Proportionate share of adjustments for noncontrolling interests (c) | (5) | | | (6) | | | (8) | | | (5) | | | (152) | |
| Total adjustments | (3,407) | | | (38,502) | | | 11,103 | | | 55,607 | | | 14,859 | |
AFFO Attributable to W. P. Carey – Real Estate (d) | $ | 238,989 | | | $ | 224,445 | | | $ | 222,377 | | | $ | 210,328 | | | $ | 205,726 | |
| | | | | | | | | |
| Summary | | | | | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (d) | $ | 242,396 | | | $ | 262,947 | | | $ | 211,274 | | | $ | 154,721 | | | $ | 190,867 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (d) | $ | 1.29 | | | $ | 1.41 | | | $ | 1.17 | | | $ | 0.88 | | | $ | 1.08 | |
AFFO attributable to W. P. Carey – Real Estate (d) | $ | 238,989 | | | $ | 224,445 | | | $ | 222,377 | | | $ | 210,328 | | | $ | 205,726 | |
AFFO attributable to W. P. Carey per diluted share – Real Estate (d) | $ | 1.27 | | | $ | 1.21 | | | $ | 1.23 | | | $ | 1.19 | | | $ | 1.16 | |
| Diluted weighted-average shares outstanding | 188,317,117 | | | 186,012,478 | | | 180,668,732 | | | 176,965,510 | | | 176,683,474 | |
________
(a)Amounts for the three months ended December 31, 2021, March 31, 2021 and December 31, 2020 include non-cash impairment charges of $13.2 million, $6.8 million and $8.3 million, respectively, recognized on certain equity method investments in real estate.
(b)Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Earnings from equity method investments on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis.
(c)Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
(e)Amount for the three months ended December 31, 2021 includes an adjustment to exclude $37.8 million of lease termination fees received from a tenant. as such amount was determined to be non-core income.
(f)Amount for the three months ended December 31, 2021 is primarily comprised of loss on extinguishment of debt of $(15.2) million, a non-cash allowance for credit losses of $(7.0) million and net loss on foreign currency transactions of $(4.4) million.
(g)Amounts for the three months ended September 30, 2021 and June 30, 2021 are primarily comprised of reversals of estimated liabilities for German real estate transfer taxes that were previously recorded in connection with business combinations in prior years.
| | | | | | | | |
| | Investing for the long runTM | 10 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2021
| | | | | |
| FFO and AFFO, Investment Management – Last Five Quarters |
In thousands, except share and per share amounts.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2021 | | Sep. 30, 2021 | | Jun. 30, 2021 | | Mar. 31, 2021 | | Dec. 31, 2020 |
| Net income from Investment Management attributable to W. P. Carey | $ | 4,928 | | | $ | 7,689 | | | $ | 5,558 | | | $ | 7,047 | | | $ | 4,782 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey – Investment Management (a) | 4,928 | | | 7,689 | | | 5,558 | | | 7,047 | | | 4,782 | |
| Adjustments: | | | | | | | | | |
| Other (gains) and losses | 1,330 | | | (1,047) | | | (73) | | | (1,001) | | | 452 | |
| Tax expense (benefit) – deferred and other | (656) | | | 410 | | | 9 | | | (792) | | | 1,627 | |
Merger and other expenses | 36 | | | — | | | — | | | 15 | | | 306 | |
Proportionate share of adjustments to earnings from equity method investments (b) | 978 | | | (773) | | | 805 | | | 889 | | | (212) | |
| Total adjustments | 1,688 | | | (1,410) | | | 741 | | | (889) | | | 2,173 | |
AFFO Attributable to W. P. Carey – Investment Management (a) | $ | 6,616 | | | $ | 6,279 | | | $ | 6,299 | | | $ | 6,158 | | | $ | 6,955 | |
| | | | | | | | | |
| Summary | | | | | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey – Investment Management (a) | $ | 4,928 | | | $ | 7,689 | | | $ | 5,558 | | | $ | 7,047 | | | $ | 4,782 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Investment Management (a) | $ | 0.02 | | | $ | 0.04 | | | $ | 0.03 | | | $ | 0.03 | | | $ | 0.03 | |
AFFO attributable to W. P. Carey – Investment Management (a) | $ | 6,616 | | | $ | 6,279 | | | $ | 6,299 | | | $ | 6,158 | | | $ | 6,955 | |
AFFO attributable to W. P. Carey per diluted share – Investment Management (a) | $ | 0.03 | | | $ | 0.03 | | | $ | 0.04 | | | $ | 0.03 | | | $ | 0.04 | |
| Diluted weighted-average shares outstanding | 188,317,117 | | | 186,012,478 | | | 180,668,732 | | | 176,965,510 | | | 176,683,474 | |
________
(b)Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Earnings from equity method investments on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis.
| | | | | | | | |
| | Investing for the long runTM | 11 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2021
| | | | | |
| Elements of Pro Rata Statement of Income and AFFO Adjustments |
In thousands. For the three months ended December 31, 2021.
We believe that the table below is useful for investors to help them better understand our business by illustrating the impact of each of our AFFO adjustments on our GAAP statement of income line items. This presentation is not an alternative to the GAAP statement of income, nor is AFFO an alternative to net income as determined by GAAP.
| | | | | | | | | | | | | | | | | | | | |
| Equity Method Investments (a) | | Noncontrolling Interests (b) | | AFFO Adjustments | |
| Revenues | | | | | | |
| Real Estate: | | | | | | |
Lease revenues | $ | 5,916 | | | $ | (27) | | | $ | (981) | | (c) |
| Lease termination income and other | 7 | | | — | | | (37,775) | | (d) |
| Income from direct financing leases and loans receivable | — | | | — | | | 489 | | |
| Operating property revenues: | | | | | | |
| Hotel revenues | — | | | — | | | — | | |
| Self-storage revenues | 2,060 | | | — | | | — | | |
| | | | | | |
Investment Management: | | | | | | |
| Asset management and other revenue | — | | | — | | | — | | |
| Reimbursable costs from affiliates | — | | | — | | | — | | |
| | | | | | |
| Operating Expenses | | | | | | |
| Depreciation and amortization | 3,195 | | | (4) | | | (137,539) | | (e) |
| General and administrative | 9 | | | — | | | — | | |
Reimbursable tenant costs | 638 | | | (4) | | | — | |
|
Property expenses, excluding reimbursable tenant costs | 499 | | | — | | | (403) | | (f) |
| Impairment charges | 13,220 | | | — | | | (21,165) | | (f) |
Stock-based compensation expense | — | | | — | | | (6,091) | | (f) |
| Operating property expenses: | — | | | | | | |
| Hotel expenses | — | | | — | | | — | | |
| Self-storage expenses | 723 | | | — | | | (27) | | |
Reimbursable costs from affiliates | — | | | — | | | — | | |
| Merger and other expenses | — | | | — | | | 563 | | |
| | | | | | |
| Other Income and Expenses | | | | | | |
| Interest expense | (1,023) | | | — | | | 3,224 | | (g) |
| Other gains and (losses) | (2) | | | 6 | | | 28,457 | | (h) |
| Gain on sale of real estate, net | 410 | | | — | | | (9,921) | | |
| Non-operating income | (7) | | | — | | | — | | |
| Losses from equity method investments: | | | | | |
| Losses related to joint ventures | 11,833 | | | — | | | (1,832) | | (i) |
Income related to our general partnership interest in CPA:18 – Global | — | | | — | | | — | | |
| Loss related to our ownership in WLT | — | | | — | | | 926 | |
|
| Income related to our ownership in the Managed Programs | — | | | — | | | 977 | | |
| | | | | | |
| Provision for income taxes | (910) | | | — | | | (2,183) | | (j) |
| Net income attributable to noncontrolling interests | — | | | 13 | | | — | | |
________
(a)Represents the break-out by line item of amounts recorded in Earnings from equity method investments.
(b)Represents the break-out by line item of amounts recorded in Net income attributable to noncontrolling interests.
(c)Represents the reversal of amortization of above- or below-market lease intangibles of $15.1 million and the elimination of non-cash amounts related to straight-line rent and other of $16.1 million.
(d)Adjustment to exclude $37.8 million of lease termination fees received from a tenant, as such amount was determined to be non-core income.
(e)Adjustment is a non-cash adjustment excluding corporate depreciation and amortization.
(f)Adjustment to exclude a non-cash item.
(g)Represents the elimination of non-cash components of interest expense, such as deferred financing costs, debt premiums and discounts.
(h)Represents eliminations of gains (losses) related to the extinguishment of debt, unrealized foreign currency gains (losses), gains (losses) on marketable securities, non-cash allowance for credit losses on loans receivable and direct financing leases, and other items.
(i)Adjustments to include our pro rata share of AFFO adjustments from equity method investments.
(j)Primarily represents the elimination of deferred taxes.
| | | | | | | | |
| | Investing for the long runTM | 12 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2021
In thousands. For the three months ended December 31, 2021.
| | | | | |
| Tenant Improvements and Leasing Costs | |
| Tenant improvements | $ | 2,574 | |
| Leasing costs | 2,166 | |
| Tenant Improvements and Leasing Costs | 4,740 | |
| |
| Maintenance Capital Expenditures | |
| Net-lease properties | 2,990 | |
| Operating properties | — | |
| Maintenance Capital Expenditures | 2,990 | |
| |
| Total: Tenant Improvements and Leasing Costs, and Maintenance Capital Expenditures | $ | 7,730 | |
| |
| Non-Maintenance Capital Expenditures | |
| Net-lease properties | $ | 41 | |
| Operating properties | — | |
| Non-Maintenance Capital Expenditures | $ | 41 | |
| |
| Pre-Development Capital Expenditures | |
| Net-lease properties | $ | 828 | |
| Operating properties | — | |
| Pre-Development Capital Expenditures | $ | 828 | |
| | | | | | | | |
| | Investing for the long runTM | 13 |
W. P. Carey Inc.
Balance Sheets and Capitalization
Fourth Quarter 2021
| | | | | | | | |
| | Investing for the long runTM | 14 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2021
| | | | | |
| Consolidated Balance Sheets |
In thousands, except share and per share amounts.
| | | | | | | | | | | |
| December 31, |
| 2021 | | 2020 |
| Assets | | | |
| Investments in real estate: | | | |
Land, buildings and improvements (a) | $ | 11,875,407 | | | $ | 10,939,619 | |
| Net investments in direct financing leases and loans receivable | 813,577 | | | 736,117 | |
In-place lease intangible assets and other | 2,386,000 | | | 2,301,174 | |
Above-market rent intangible assets | 843,410 | | | 881,159 | |
| Investments in real estate | 15,918,394 | | | 14,858,069 | |
Accumulated depreciation and amortization (b) | (2,889,294) | | | (2,490,087) | |
Assets held for sale, net (c) | 8,269 | | | 18,590 | |
| Net investments in real estate | 13,037,369 | | | 12,386,572 | |
Equity method investments (d) | 356,637 | | | 283,446 | |
| Cash and cash equivalents | 165,427 | | | 248,662 | |
| Due from affiliates | 1,826 | | | 26,257 | |
| Other assets, net | 1,017,842 | | | 851,881 | |
| Goodwill | 901,529 | | | 910,818 | |
| Total assets | $ | 15,480,630 | | | $ | 14,707,636 | |
| | | |
| Liabilities and Equity | | | |
| Debt: | | | |
| Senior unsecured notes, net | $ | 5,701,913 | | | $ | 5,146,192 | |
| Unsecured revolving credit facility | 410,596 | | | 82,281 | |
| Unsecured term loans, net | 310,583 | | | 321,971 | |
| Non-recourse mortgages, net | 368,524 | | | 1,145,554 | |
| Debt, net | 6,791,616 | | | 6,695,998 | |
| Accounts payable, accrued expenses and other liabilities | 572,846 | | | 603,663 | |
Below-market rent and other intangible liabilities, net | 183,286 | | | 197,248 | |
| Deferred income taxes | 145,572 | | | 145,844 | |
| Dividends payable | 203,859 | | | 186,514 | |
| Total liabilities | 7,897,179 | | | 7,829,267 | |
| | | |
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued | — | | | — | |
Common stock, $0.001 par value, 450,000,000 shares authorized; 190,013,751 and 175,401,757 shares, respectively, issued and outstanding | 190 | | | 175 | |
| Additional paid-in capital | 9,977,686 | | | 8,925,365 | |
| Distributions in excess of accumulated earnings | (2,224,231) | | | (1,850,935) | |
| Deferred compensation obligation | 49,810 | | | 42,014 | |
| Accumulated other comprehensive loss | (221,670) | | | (239,906) | |
| Total stockholders' equity | 7,581,785 | | | 6,876,713 | |
| Noncontrolling interests | 1,666 | | | 1,656 | |
| Total equity | 7,583,451 | | | 6,878,369 | |
| Total liabilities and equity | $ | 15,480,630 | | | $ | 14,707,636 | |
________
(a)Includes $83.7 million and $83.5 million of amounts attributable to operating properties as of December 31, 2021 and 2020, respectively.
(b)Includes $1.5 billion and $1.2 billion of accumulated depreciation on buildings and improvements as of December 31, 2021 and 2020, respectively, and $1.4 billion and $1.3 billion of accumulated amortization on lease intangibles as of December 31, 2021 and 2020, respectively.
(c)At December 31, 2021, we had two properties classified as Assets held for sale, net, which were sold in January and February 2022. At December 31, 2020, we had four properties classified as Assets held for sale, net, all of which were sold in 2021.
(d)Our equity method investments in real estate totaled $291.9 million and $226.9 million as of December 31, 2021 and 2020, respectively. Our equity method investments in the Managed Programs totaled $64.7 million and $56.6 million as of December 31, 2021 and 2020, respectively.
| | | | | | | | |
| | Investing for the long runTM | 15 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2021
In thousands, except share and per share amounts. As of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Description | | Shares | | Share Price | | Market Value |
| Equity | | | | | | | |
| Common equity | | | | 190,013,751 | | | $ | 82.05 | | | $ | 15,590,628 | |
| Preferred equity | | | | | | | | — | |
| Total Equity Market Capitalization | | | | | | 15,590,628 | |
| | | | | | | | |
| | | | | | | | Outstanding Balance (a) |
| Pro Rata Debt | | | | | | | |
| Non-recourse mortgages | | | | | | | | 557,252 | |
| Unsecured revolving credit facility (due February 20, 2025) | | | | | | | 410,596 | |
| Unsecured term loans (due February 20, 2025) | | | | | | | 311,479 | |
| Senior unsecured notes: | | | | | | | |
| Due April 1, 2024 (USD) | | | | | | 500,000 | |
| Due July 19, 2024 (EUR) | | | | | | 566,300 | |
| Due February 1, 2025 (USD) | | | | | | 450,000 | |
| Due April 9, 2026 (EUR) | | | | | | 566,300 | |
| Due October 1, 2026 (USD) | | | | | | 350,000 | |
| Due April 15, 2027 (EUR) | | | | | | 566,300 | |
| Due April 15, 2028 (EUR) | | | | | | 566,300 | |
| Due July 15, 2029 (USD) | | | | | | 325,000 | |
| Due June 1, 2030 (EUR) | | | | | | 594,615 | |
| Due February 1, 2031 (USD) | | | | | | 500,000 | |
| Due February 1, 2032 (USD) | | | | | | 350,000 | |
| Due April 1, 2033 (USD) | | | | | | 425,000 | |
| Total Pro Rata Debt | | | | | | 7,039,142 | |
| | | | | | | | |
| Total Capitalization | | | | | | $ | 22,629,770 | |
________
(a)Excludes unamortized discount, net totaling $31.0 million and unamortized deferred financing costs totaling $28.9 million as of December 31, 2021.
| | | | | | | | |
| | Investing for the long runTM | 16 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2021
Dollars in thousands. Pro rata. As of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| USD-Denominated | | | EUR-Denominated | | | Other Currencies (a) | | | Total |
| | | | | | | | | | | | | | | | Outstanding Balance | | | | |
| Out-standing Balance
(in USD) | | Weigh-ted
Avg. Interest
Rate | | | Out-standing Balance
(in USD) | | Weigh-ted
Avg. Interest
Rate | | | Out-standing Balance
(in USD) | | Weigh-ted
Avg. Interest
Rate | | | Amount
(in USD) | | % of Total | | Weigh-ted
Avg. Interest
Rate | | Weigh-ted
Avg. Maturity (Years) |
Non-Recourse Debt (b) (c) | | | | | | | | | | | | | | | | | | | | | | |
| Fixed | $ | 209,326 | | | 5.3 | % | | | $ | 75,418 | | | 3.0 | % | | | $ | 29,524 | | | 4.8 | % | | | $ | 314,268 | | | 4.4 | % | | 4.7 | % | | 2.8 | |
| Variable: | | | | | | | | | | | | | | | | | | | | | | |
| Swapped | 13,360 | | | 3.9 | % | | | 133,906 | | | 2.2 | % | | | — | | | — | % | | | 147,266 | | | 2.1 | % | | 2.3 | % | | 2.0 | |
| Floating | — | | | — | % | | | 83,528 | | | 1.7 | % | | | — | | | — | % | | | 83,528 | | | 1.2 | % | | 1.7 | % | | 0.9 | |
| Capped | — | | | — | % | | | 12,190 | | | 1.6 | % | | | — | | | — | % | | | 12,190 | | | 0.2 | % | | 1.6 | % | | 1.6 | |
Total Pro Rata Non-Recourse Debt | 222,686 | | | 5.3 | % | | | 305,042 | | | 2.2 | % | | | 29,524 | | | 4.8 | % | | | 557,252 | | | 7.9 | % | | 3.6 | % | | 2.3 | |
| | | | | | | | | | | | | | | | | | | | | | |
Recourse Debt (b) (c) | | | | | | | | | | | | | | | | | | | | | | |
| Fixed – Senior unsecured notes: | | | | | | | | | | | | | | | | | | | | | |
| Due April 1, 2024 | 500,000 | | | 4.6 | % | | | — | | | — | % | | | — | | | — | % | | | 500,000 | | | 7.1 | % | | 4.6 | % | | 2.3 | |
| Due July 19, 2024 | — | | | — | % | | | 566,300 | | | 2.3 | % | | | — | | | — | % | | | 566,300 | | | 8.0 | % | | 2.3 | % | | 2.6 | |
| Due February 1, 2025 | 450,000 | | | 4.0 | % | | | — | | | — | % | | | — | | | — | % | | | 450,000 | | | 6.4 | % | | 4.0 | % | | 3.1 | |
| Due April 9, 2026 | — | | | — | % | | | 566,300 | | | 2.3 | % | | | — | | | — | % | | | 566,300 | | | 8.0 | % | | 2.3 | % | | 4.3 | |
| Due October 1, 2026 | 350,000 | | | 4.3 | % | | | — | | | — | % | | | — | | | — | % | | | 350,000 | | | 5.0 | % | | 4.3 | % | | 4.8 | |
| Due April 15, 2027 | — | | | — | % | | | 566,300 | | | 2.1 | % | | | — | | | — | % | | | 566,300 | | | 8.0 | % | | 2.1 | % | | 5.3 | |
| Due April 15, 2028 | — | | | — | % | | | 566,300 | | | 1.4 | % | | | — | | | — | % | | | 566,300 | | | 8.0 | % | | 1.4 | % | | 6.3 | |
| Due July 15, 2029 | 325,000 | | | 3.9 | % | | | — | | | — | % | | | — | | | — | % | | | 325,000 | | | 4.6 | % | | 3.9 | % | | 7.5 | |
| Due June 1, 2030 | — | | | — | % | | | 594,615 | | | 1.0 | % | | | — | | | — | % | | | 594,615 | | | 8.5 | % | | 1.0 | % | | 8.4 | |
| Due February 1, 2031 | 500,000 | | | 2.4 | % | | | — | | | — | % | | | — | | | — | % | | | 500,000 | | | 7.1 | % | | 2.4 | % | | 9.1 | |
| Due February 1, 2032 | 350,000 | | | 2.5 | % | | | — | | | — | % | | | — | | | — | % | | | 350,000 | | | 5.0 | % | | 2.5 | % | | 5.3 | |
| Due April 1, 2033 | 425,000 | | | 2.3 | % | | | — | | | — | % | | | — | | | — | % | | | 425,000 | | | 6.1 | % | | 2.3 | % | | 11.3 | |
Total Senior Unsecured Notes | 2,900,000 | | | 3.4 | % | | | 2,859,815 | | | 1.8 | % | | | — | | | — | % | | | 5,759,815 | | | 81.8 | % | | 2.6 | % | | 5.8 | |
Variable: | | | | | | | | | | | | | | | | | | | | | | |
Unsecured revolving credit facility (due February 20, 2025) (d) | — | | | — | % | | | 205,001 | | | 0.9 | % | | | 205,595 | | | 0.9 | % | | | 410,596 | | | 5.8 | % | | 0.9 | % | | 3.1 | |
Unsecured term loans (due February 20, 2025) (e) | — | | | — | % | | | 109,296 | | | 1.0 | % | | | 202,183 | | | 1.0 | % | | | 311,479 | | | 4.5 | % | | 1.0 | % | | 3.1 | |
| Total Recourse Debt | 2,900,000 | | | 3.4 | % | | | 3,174,112 | | | 1.7 | % | | | 407,778 | | | 1.0 | % | | | 6,481,890 | | | 92.1 | % | | 2.4 | % | | 5.5 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Pro Rata Debt Outstanding | $ | 3,122,686 | | | 3.5 | % | | | $ | 3,479,154 | | | 1.7 | % | | | $ | 437,302 | | | 1.2 | % | | | $ | 7,039,142 | | | 100.0 | % | | 2.5 | % | | 5.5 | |
________
(a)Other currencies include debt denominated in British pound sterling, Norwegian krone and Japanese yen.
(c)Excludes unamortized discount, net totaling $31.0 million and unamortized deferred financing costs totaling $28.9 million as of December 31, 2021.
(d)Depending on the currency, we incurred interest on our Unsecured revolving credit facility at EURIBOR plus 0.85%, SONIA plus 0.8826% or TIBOR plus 0.85%. Each has a floor of 0.00% under the terms of our credit agreement. Availability under our Unsecured revolving credit facility (net of amounts reserved for standby letters of credit) was approximately $1.4 billion as of December 31, 2021.
(e)We incurred interest at SONIA plus 0.9826% or EURIBOR plus 0.95% on our Unsecured term loans.
| | | | | | | | |
| | Investing for the long runTM | 17 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2021
Dollars in thousands. Pro rata. As of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Real Estate | | Debt |
| | Number of Properties (a) | | | | Weighted-Average Interest Rate | | | | Total Outstanding Balance (b) (c) | | % of Total Outstanding Balance |
| Year of Maturity | | | ABR (a) | | | Balloon | | |
| Non-Recourse Debt | | | | | | | | | | | | |
| 2022 | | 6 | | | $ | 17,731 | | | 3.8 | % | | $ | 71,544 | | | $ | 75,574 | | | 1.1 | % |
| 2023 | | 19 | | | 38,293 | | | 3.0 | % | | 221,079 | | | 230,492 | | | 3.3 | % |
| 2024 | | 30 | | | 20,164 | | | 2.8 | % | | 108,024 | | | 118,227 | | | 1.7 | % |
| 2025 | | 10 | | | 13,819 | | | 4.9 | % | | 54,311 | | | 69,727 | | | 1.0 | % |
| 2026 | | 4 | | | 8,872 | | | 6.0 | % | | 30,638 | | | 38,615 | | | 0.5 | % |
| 2027 | | 1 | | | — | | | 4.3 | % | | 21,450 | | | 21,450 | | | 0.3 | % |
| 2031 | | 1 | | | 1,004 | | | 6.0 | % | | — | | | 3,167 | | | — | % |
Total Pro Rata Non-Recourse Debt | | 71 | | | $ | 99,883 | | | 3.6 | % | | $ | 507,046 | | | 557,252 | | | 7.9 | % |
| | | | | | | | | | | | |
| Recourse Debt | | | | | | | | | | | | |
| Fixed – Senior unsecured notes: | | | | | | | | | | | | |
| Due April 1, 2024 (USD) | | 4.6 | % | | | | 500,000 | | | 7.1 | % |
| Due July 19, 2024 (EUR) | | 2.3 | % | | | | 566,300 | | | 8.0 | % |
| Due February 1, 2025 (USD) | | 4.0 | % | | | | 450,000 | | | 6.4 | % |
| Due April 9, 2026 (EUR) | | 2.3 | % | | | | 566,300 | | | 8.0 | % |
| Due October 1, 2026 (USD) | | 4.3 | % | | | | 350,000 | | | 5.0 | % |
| Due April 15, 2027 (EUR) | | 2.1 | % | | | | 566,300 | | | 8.0 | % |
| Due April 15, 2028 (EUR) | | 1.4 | % | | | | 566,300 | | | 8.0 | % |
| Due July 15, 2029 (USD) | | 3.9 | % | | | | 325,000 | | | 4.6 | % |
| Due June 1, 2030 (EUR) | | 1.0 | % | | | | 594,615 | | | 8.5 | % |
| Due February 1, 2031 (USD) | | 2.4 | % | | | | 500,000 | | | 7.1 | % |
| Due February 1, 2032 (USD) | | 2.5 | % | | | | 350,000 | | | 5.0 | % |
| Due April 1, 2033 (USD) | | 2.3 | % | | | | 425,000 | | | 6.1 | % |
| Total Senior Unsecured Notes | | 2.6 | % | | | | 5,759,815 | | | 81.8 | % |
Variable: | | | | | | | | | | | | |
Unsecured revolving credit facility (due February 20, 2025) (d) | | 0.9 | % | | | | 410,596 | | | 5.8 | % |
Unsecured term loans (due February 20, 2025) (e) | | 1.0 | % | | | | 311,479 | | | 4.5 | % |
| Total Recourse Debt | | 2.4 | % | | | | 6,481,890 | | | 92.1 | % |
| | | | | | | | |
| Total Pro Rata Debt Outstanding | | 2.5 | % | | | | 7,039,142 | | | 100.0 | % |
________
(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 Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of pro rata. Total outstanding balance includes balloon payments and scheduled amortization for our non-recourse debt. (c)Excludes unamortized discount, net totaling $31.0 million and unamortized deferred financing costs totaling $28.9 million as of December 31, 2021.
(d)Depending on the currency, we incurred interest on our Unsecured revolving credit facility at EURIBOR plus 0.85%, SONIA plus 0.8826% or TIBOR plus 0.85%. Each has a floor of 0.00% under the terms of our credit agreement. Availability under our Unsecured revolving credit facility (net of amounts reserved for standby letters of credit) was approximately $1.4 billion as of December 31, 2021.
(e)We incurred interest at SONIA plus 0.9826% or EURIBOR plus 0.95% on our Unsecured term loans.
| | | | | | | | |
| | Investing for the long runTM | 18 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2021
As of December 31, 2021.
Ratings
| | | | | | | | | | | | | | | | | | | | |
| | Issuer | | Senior Unsecured Notes |
| Ratings Agency | | Rating | | Outlook | | Rating |
| Moody's | | Baa2 | | Positive | | Baa2 |
| Standard & Poor's | | BBB | | Stable | | BBB |
Senior Unsecured Note Covenants
The following is a summary of the key financial covenants for the Senior Unsecured Notes, 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 Dec. 31, 2021 |
| Limitation on the incurrence of debt | | "Total Debt" /
"Total Assets" | | ≤ 60% | | 39.0% |
| Limitation on the incurrence of secured debt | | "Secured Debt" /
"Total Assets" | | ≤ 40% | | 2.1% |
Limitation on the incurrence of debt based on consolidated EBITDA to annual debt service charge | | "Consolidated EBITDA" /
"Annual Debt Service Charge" | | ≥ 1.5x | | 6.5x |
| Maintenance of unencumbered asset value | | "Unencumbered Assets" / "Total Unsecured Debt" | | ≥ 150% | | 241.2% |
| | | | | | | | |
| | Investing for the long runTM | 19 |
W. P. Carey Inc.
Real Estate
Fourth Quarter 2021
| | | | | | | | |
| | Investing for the long runTM | 20 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
| | | | | |
Investment Activity – Capital Investments and Commitments (a) |
Dollars in thousands. Pro rata.
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| | | | Primary Transaction Type | | Property Type | | Expected Completion / Closing Date | | Gross Square Footage | | Lease Term (Years) (b) | | Funded During Three Months Ended Dec. 31, 2021 | | Total Funded Through Dec. 31, 2021 | | Maximum Commitment / Gross Investment Amount |
| Tenant | | Location | | | | | | | | | Remaining | | Total |
| Henkel AG & Co. | | Bowling Green, KY | | Renovation | | Warehouse | | Q1 2022 | | N/A | | 15 | | | $ | 775 | | | $ | 60,925 | | | $ | 9,075 | | | $ | 70,000 | |
| Orgill, Inc. | | Hurricane, UT | | Expansion | | Warehouse | | Q1 2022 | | 427,518 | | | 20 | | | 12,674 | | | 12,674 | | | 7,326 | | | 20,000 | |
Jumbo Food Groep B.V. (c) | | Breda, The Netherlands | | Expansion | | Warehouse | | Q1 2022 | | 41,893 | | | 15 | | | — | | | — | | | 4,787 | | | 4,787 | |
Upfield Group B.V. (c) | | Wageningen, The Netherlands | | Build-to-Suit | | Laboratory | | Q2 2022 | | 65,734 | | | 20 | | | 2,305 | | | 22,784 | | | 5,684 | | | 28,468 | |
Ontex BVBA (c) | | Radomsko, Poland | | Expansion | | Industrial | | Q3 2022 | | 463,817 | | | 20 | | | 277 | | | 277 | | | 25,637 | | | 25,914 | |
Hellweg Die Profi-Baumärkte GmbH & Co. KG (c) | | Various, Germany | | Renovation | | Retail | | Q3 2022 | | N/A | | 15 | | | — | | | — | | | 2,378 | | | 2,378 | |
| Outfront Media, LLC | | Various, NJ | | Build-to-Suit | | Outdoor Advertising | | Various | | N/A | | 30 | | | 2,076 | | | 2,076 | | | 136 | | | 2,212 | |
| Expected Completion Date 2022 Total | | | | | | 998,962 | | | 17 | | | 18,107 | | | 98,736 | | | 55,023 | | | 153,759 | |
| | | | | | | | | | | | | | | | | | | | |
| National Coatings & Supplies, Inc. | | Nashville, TN | | Expansion | | Warehouse | | Q2 2023 | | 13,500 | | | 17 | | | — | | | — | | | 2,100 | | | 2,100 | |
| Expected Completion Date 2023 Total | | | | | | 13,500 | | | 17 | | | — | | | — | | | 2,100 | | | 2,100 | |
| | | | | | | | | | | | | | | | | | | | |
| Capital Investments and Commitments Total | | | | | | 1,012,462 | | | 17 | | | $ | 18,107 | | | $ | 98,736 | | | $ | 57,123 | | | $ | 155,859 | |
________
(a)This schedule includes future estimates for which we can give no assurance as to timing or amounts. Completed capital investments and commitments are included in the Investment Activity – Investment Volume section. Funding amounts exclude capitalized construction interest. (b)Total lease terms are based on weighted-average ABR for the investments expected upon completion.
(c)Commitment amounts are based on the applicable exchange rate at period end.
| | | | | | | | |
| | Investing for the long runTM | 21 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
| | | | | |
| Investment Activity – Investment Volume |
Dollars in thousands. Pro rata. For the year ended December 31, 2021.
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| | | | Property Type(s) | | Closing Date / Asset Completion Date | | Gross Investment Amount | | Investment Type | | Lease Term (Years) (a) | | Gross Square Footage |
| Tenant / Lease Guarantor | | Property Location(s) | | | | | | |
| 1Q21 | | | | | | | | | | | | | | |
| Stress Engineering Services, Inc. | | Mason, OH | | Office | | Jan-21 | | $ | 2,428 | | | Expansion | | 20 | | | 6,810 | |
Nexeo Plastics, LLC (2 properties) | | Grove City, OH; Anderson, SC | | Warehouse | | Feb-21 | | 19,129 | | | Sale-leaseback | | 20 | | | 269,286 | |
American Axle & Manufacturing, Inc. (b) | | Langen, Germany | | Industrial | | Feb-21 | | 51,566 | | | Build-to-Suit | | 20 | | | 162,373 | |
| Auto Lenders (10 properties) | | Various, NJ and PA | | Retail; Office | | Feb-21 | | 55,115 | | | Sale-leaseback | | 25 | | | 169,956 | |
| Prima Wawona Packing Co., LLC (2 properties and 2 land parcels) | | Central Valley, CA | | Warehouse; Land | | Feb-21 | | 75,008 | | | Sale-leaseback | | 25 | | | 1,031,600 | |
Hellweg Die Profi-Baumärkte GmbH & Co. KG (b) | | Various, Germany | | Retail | | Various | | 10,510 | | | Renovation | | 16 | | | N/A |
| 1Q21 Total | | | | | | | | 213,756 | | | | | 23 | | | 1,640,025 | |
| | | | | | | | | | | | | | |
| 2Q21 | | | | | | | | | | | | | | |
Casino Guichard-Perrachon (3 properties) (b) | | Various, France | | Retail | | Apr-21 | | 119,341 | | | Sale-leaseback | | 20 | | | 424,798 | |
| Turkey Hill LLC | | Searcy, AR | | Industrial | | Apr-21 | | 14,038 | | | Sale-leaseback | | 25 | | | 92,961 | |
| Comprehensive Logistics Co., Inc. | | Detroit, MI | | Warehouse | | Apr-21 | | 52,810 | | | Acquisition | | 10 | | | 487,603 | |
Jaguar Land Rover Limited (b) | | Solihull, United Kingdom | | Warehouse | | May-21 | | 194,954 | | | Acquisition | | 30 | | | 1,063,424 | |
| Monroe College, LTD | | New Rochelle, NY | | Student Housing (Net Lease) | | May-21 | | 26,109 | | | Acquisition | | 12 | | | 49,494 | |
| KDC US Holdings, Inc. | | Groveport, OH | | Industrial | | May-21 | | 27,133 | | | Acquisition | | 15 | | | 566,981 | |
| Berner Food & Beverage, LLC | | Dakota, IL | | Industrial | | May-21 | | 65,043 | | | Sale-leaseback | | 25 | | | 316,300 | |
| Velodyne Lidar, Inc. | | San Jose, CA | | Industrial | | May-21 | | 51,949 | | | Acquisition | | 7 | | | 203,807 | |
| Jo-Ann Stores, LLC | | Opelika, AL | | Warehouse | | Jun-21 | | 48,897 | | | Sale-leaseback | | 20 | | | 702,623 | |
| GHP Group, Inc. (3 properties) | | Niles and Elk Grove Village, IL; and Guelph, Canada | | Warehouse | | Jun-21 | | 42,829 | | | Sale-leaseback | | 15 | | | 496,744 | |
| Orgill, Inc. | | Rome, NY | | Warehouse | | Jun-21 | | 44,781 | | | Sale-leaseback | | 26 | | | 779,400 | |
Metro Cash & Carry Italia S.p.A (b) | | San Donato Milanese, Italy | | Retail; Office | | Jun-21 | | 7,244 | | | Renovation | | 20 | | | N/A |
| 2Q21 Total | | | | | | | | 695,128 | | | | | 21 | | | 5,184,135 | |
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(Continued)
| | | | | | | | |
| | Investing for the long runTM | 22 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
| | | | | |
| Investment Activity – Investment Volume (continued) |
Dollars in thousands. Pro rata. For the year ended December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Property Type(s) | | Closing Date / Asset Completion Date | | Gross Investment Amount | | Investment Type | | Lease Term (Years) (a) | | Gross Square Footage |
| Tenant / Lease Guarantor | | Property Location(s) | | | | | | |
| 3Q21 | | | | | | | | | | | | | | |
| Clayco, Inc. | | St. Louis, MO | | Office | | Aug-21 | | 7,924 | | | Sale-leaseback | | 15 | | | 45,461 | |
| Loctek Ergonomic Technology Corp. | | Whitehall, PA | | Warehouse | | Aug-21 | | 25,044 | | | Redevelopment | | 5 | | | 504,900 | |
| Conagra Foods Packaged Foods, LLC | | Frankfort, IN | | Warehouse | | Aug-21 | | 113,544 | | | Acquisition | | 12 | | | 1,536,412 | |
Marriott International, Inc. (6 land parcels) (c) | | Various, United States | | Hospitality | | Sep-21 | | 17,396 | | | Acquisition | | 5 | | | N/A |
| Capitol Beverage Sales, L.P. | | Rogers, MN | | Warehouse | | Sep-21 | | 26,531 | | | Sale-leaseback | | 15 | | | 187,243 | |
| 3Q21 Total | | | | | | | | 190,439 | | | | | 10 | | | 2,274,016 | |
| | | | | | | | | | | | | | |
| 4Q21 | | | | | | | | | | | | | | |
| TAG Manufacturing, Inc. (2 properties) | | Chattanooga, TN | | Industrial | | Oct-21 | | 40,728 | | | Sale-leaseback | | 20 | | | 416,425 | |
| True Value Company, LLC | | Mankato, MN | | Warehouse | | Nov-21 | | 17,665 | | | Sale-leaseback | | 20 | | | 309,507 | |
Coop Denmark A/S (11 properties) (b) | | Various, Denmark | | Retail | | Dec-21 | | 46,129 | | | Sale-leaseback | | 15 | | | 151,148 | |
| Pretzels, LLC | | Lawrence, KS | | Industrial | | Dec-21 | | 25,728 | | | Acquisition | | 25 | | | 150,330 | |
OBI Group (7 properties) (b) | | Various, Poland | | Retail | | Dec-21 | | 74,345 | | | Acquisition | | 15 | | | 744,648 | |
Wecubex GmbH (4 properties) (b) (d) | | Various, Germany and Czech Republic | | Industrial | | Dec-21 | | 29,166 | | | Sale-leaseback | | 20 | | | 537,291 | |
| True Value Company, LLC | | Cary, IL | | Industrial | | Dec-21 | | 44,399 | | | Sale-leaseback | | 20 | | | 571,465 | |
Van Mossel Automotive Groep (14 properties) (b) (d) | | Various, Netherlands | | Retail | | Dec-21 | | 95,367 | | | Sale-leaseback | | 17 | | | 559,583 | |
Amy’s Kitchen, Inc. (3 properties) (d) | | Santa Rosa, CA; Pocatello, ID; and White City, OR | | Industrial | | Dec-21 | | 144,103 | | | Sale-leaseback | | 30 | | | 936,540 | |
| Outfront Media, LLC (5 properties) | | Various, NJ and PA | | Outdoor Advertising | | Various | | 3,989 | | | Acquisition | | 30 | | | N/A |
| 4Q21 Total | | | | | | | | 521,619 | | | | | 21 | | | 4,376,937 | |
| | | | | | | | | | | | | | |
| Year-to-Date Total | | | | | | | | 1,620,942 | | | | | 20 | | | 13,475,113 | |
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| | | | Property Type(s) | | Funded During Current Quarter | | Funded Year to Date | | Expected Funding Completion Date | | Total Funded | | Maximum Commitment |
| Description | | Property Location(s) | | | | | | |
| Construction Loan | | | | | | | | | | | | | | |
Southwest Corner of Las Vegas Boulevard & Harmon Avenue Retail Complex (e) | | Las Vegas, NV | | Retail | | $ | 10,172 | | | $ | 103,714 | | | Q4 2022 | | $ | 103,714 | | | $ | 224,914 | |
| Total | | | | | | | | 103,714 | | | | | | | |
| | | | | | | | | | | | | | |
| Year-to-Date Total Investment Volume | | | | | | $ | 1,724,656 | | | | | | | |
________
(a)Total lease terms are based on weighted-average ABR for the investments as of the respective period ends.
(b)Amount reflects the applicable exchange rate on the date of the transaction.
(c)Comprised of the land under buildings that we already own.
(d)All or a portion of these investments are accounted for as loans receivable within Net investments in direct financing leases and loans receivable on our consolidated balance sheets, in accordance with ASC 310, Receivables and ASC 842, Leases.
(e)This construction loan is accounted for as an equity method investment on our consolidated balance sheets, in accordance with U.S. GAAP. The interest rate is 6.0% and interest income is recognized within Earnings from equity method investments on our consolidated statements of income.
| | | | | | | | |
| | Investing for the long runTM | 23 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
| | | | | |
| Investment Activity – Dispositions |
Dollars in thousands. Pro rata. For the year ended December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Tenant / Lease Guarantor | | Property Location(s) | | Gross Sale Price | | Closing Date | | Property Type(s) | | Gross Square Footage |
| 1Q21 | | | | | | | | | | |
| Vacant | | Salt Lake City, UT | | $ | 12,500 | | | Jan-21 | | Fitness Facility | | 36,851 | |
Fraikin SAS (a) | | Aulnay Sous Bois, France | | 1,203 | | | Feb-21 | | Industrial | | 9,414 | |
| 1Q21 Total | | | | 13,703 | | | | | | | 46,265 | |
| | | | | | | | | | |
| 2Q21 | | | | | | | | | | |
Hellweg Die Profi-Baumärkte GmbH & Co. KG (7 properties) (a) | | Various, Germany | | 74,660 | | | Apr-21 | | Retail | | 578,594 | |
| Vacant | | York, PA | | 4,800 | | | Apr-21 | | Retail | | 131,915 | |
| Walgreens Co. | | Snellville, GA | | 5,887 | | | Jun-21 | | Retail | | 14,820 | |
Vacant (a) | | Kotka, Finland | | 657 | | | Jun-21 | | Warehouse | | 71,764 | |
| 2Q21 Total | | | | 86,004 | | | | | | | 797,093 | |
| | | | | | | | | | |
| 3Q21 | | | | | | | | | | |
| Vacant | | Greenville, SC | | 7,525 | | | Jul-21 | | Warehouse | | 235,215 | |
| Vacant | | Maplewood, NJ | | 2,415 | | | Jul-21 | | Retail | | 7,300 | |
| Vacant | | Englewood, CO | | 4,800 | | | Jul-21 | | Fitness Facility | | 47,441 | |
| Vacant | | Greenville, SC | | 5,600 | | | Sep-21 | | Office | | 124,836 | |
| Vacant | | Allen, TX | | 9,413 | | | Sep-21 | | Industrial | | 160,120 | |
| 3Q21 Total | | | | 29,753 | | | | | | | 574,912 | |
| | | | | | | | | | |
| 4Q21 | | | | | | | | | | |
| Walgreens Co. | | Virginia Beach, VA | | 6,029 | | | Oct-21 | | Retail | | 14,820 | |
Multi-tenant (sold 20% interest) (a) | | Zadar, Croatia | | 2,875 | | | Oct-21 | | Retail | | 14,102 | |
Multi-tenant (a) | | Krizevci, Croatia | | 4,885 | | | Oct-21 | | Retail | | 43,697 | |
Carl Leipold GmbH (2 properties) (a) | | Wolfach and Dransfeld, Germany | | 10,511 | | | Nov-21 | | Industrial, Office | | 182,580 | |
| Vacant | | Solon, OH | | 1,500 | | | Dec-21 | | Industrial | | 67,000 | |
Belgium Government (a) | | Mons, Belgium | | 12,964 | | | Dec-21 | | Office | | 122,335 | |
| Vacant | | Murrysville, PA | | 2,472 | | | Dec-21 | | Industrial | | 165,222 | |
| 4Q21 Total | | | | 41,236 | | | | | | | 609,756 | |
| | | | | | | | | | |
| Year-to-Date Total Dispositions | | $ | 170,696 | | | | | | | 2,028,026 | |
________
(a)Amount reflects the applicable exchange rate on the date of the transaction.
| | | | | | | | |
| | Investing for the long runTM | 24 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
Dollars in thousands. As of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Joint Venture or JV (Principal Tenant) | | JV Partnership | | Consolidated | | Pro Rata (a) |
| Partner | | WPC % | | Debt Outstanding (b) | | ABR | | Debt Outstanding (c) | | ABR |
Unconsolidated Joint Ventures (Equity Method Investments) (d) | | | | | | | | |
Kesko Senukai (e) | | Third party | | 70.00% | | $ | 114,929 | | | $ | 14,140 | | | $ | 80,450 | | | $ | 9,898 | |
| State Farm Mutual Automobile Insurance Co. | | CPA:18 – Global | | 50.00% | | 72,800 | | | 8,152 | | | 36,400 | | | 4,076 | |
Bank Pekao (e) | | CPA:18 – Global | | 50.00% | | 52,622 | | | 9,103 | | | 26,311 | | | 4,552 | |
Apply Sørco AS (e) | | CPA:18 – Global | | 49.00% | | 40,593 | | | 4,253 | | | 19,891 | | | 2,084 | |
Fortenova Grupa d.d. (e) | | CPA:18 – Global | | 20.00% | | 16,524 | | | 3,418 | | | 3,305 | | | 684 | |
| Total Unconsolidated Joint Ventures | | | | 297,468 | | | 39,066 | | | 166,357 | | | 21,294 | |
| | | | | | | | | | | | |
Consolidated Joint Ventures | | | | | | | | | | | |
| McCoy-Rockford, Inc. | | Third party | | 90.00% | | — | | | 917 | | | — | | | 826 | |
| Total Consolidated Joint Ventures | | | | — | | | 917 | | | — | | | 826 | |
Total Unconsolidated and Consolidated Joint Ventures | | $ | 297,468 | | | $ | 39,983 | | | $ | 166,357 | | | $ | 22,120 | |
________
(b)Excludes unamortized deferred financing costs totaling less than $0.1 million and unamortized discount, net totaling $0.2 million as of December 31, 2021.
(c)Excludes unamortized deferred financing costs totaling less than $0.1 million and unamortized discount, net totaling $0.1 million as of December 31, 2021.
(d)Excludes (i) a 90.00% equity position in a jointly owned investment, Johnson Self Storage (comprised of nine self-storage operating properties), which did not have debt outstanding as of December 31, 2021, (ii) a 15.00% common equity interest in a jointly owned investment, the Harmon Retail Corner in Las Vegas, (iii) our equity method investment in common shares of WLT, as described in the Components of Net Asset Value section, and (iv) a construction loan for a retail complex in Las Vegas, Nevada, accounted for as an equity method investment in real estate, as described in the Components of Net Asset Value section. (e)Amounts are based on the applicable exchange rate at the end of the period.
| | | | | | | | |
| | Investing for the long runTM | 25 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
Dollars in thousands. Pro rata. As of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Tenant / Lease Guarantor | | Description | | Number of Properties | | ABR | | ABR % | | Weighted-Average Lease Term (Years) |
| U-Haul Moving Partners Inc. and Mercury Partners, LP | | Net lease self-storage properties in the U.S. | | 78 | | | $ | 38,751 | | | 3.1 | % | | 2.3 | |
State of Andalucía (a) | | Government office properties in Spain | | 70 | | | 29,490 | | | 2.4 | % | | 13.0 | |
Hellweg Die Profi-Baumärkte GmbH & Co. KG (a) | | Do-it-yourself retail properties in Germany | | 35 | | | 28,388 | | | 2.3 | % | | 15.2 | |
Metro Cash & Carry Italia S.p.A. (a) | | Business-to-business wholesale stores in Italy and Germany | | 20 | | | 28,087 | | | 2.2 | % | | 6.8 | |
Pendragon PLC (a) | | Automotive dealerships in the United Kingdom | | 69 | | | 23,852 | | | 1.9 | % | | 8.4 | |
OBI Group (a) | | Do-it-yourself retail properties in Poland | | 26 | | | 22,635 | | | 1.8 | % | | 8.4 | |
| Marriott Corporation | | Net lease hotel properties in the U.S. | | 18 | | | 21,100 | | | 1.7 | % | | 2.0 | |
| Extra Space Storage, Inc. | | Net lease self-storage properties in the U.S. | | 27 | | | 20,688 | | | 1.6 | % | | 22.3 | |
| Advance Auto Parts, Inc. | | Distribution facilities in the U.S. | | 29 | | | 19,851 | | | 1.6 | % | | 11.1 | |
| Nord Anglia Education, Inc. | | K-12 private schools in the U.S. | | 3 | | | 19,473 | | | 1.6 | % | | 21.7 | |
Total (b) | | | | 375 | | | $ | 252,315 | | | 20.2 | % | | 10.4 | |
________
(a)ABR amounts are subject to fluctuations in foreign currency exchange rates.
| | | | | | | | |
| | Investing for the long runTM | 26 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
| | | | | |
| Diversification by Property Type |
In thousands, except percentages. Pro rata. As of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
| Property Type | | ABR | | ABR % | | Square Footage (a) | | Square Footage % |
| U.S. | | | | | | | | |
| Industrial | | $ | 250,339 | | | 20.0 | % | | 44,124 | | | 28.3 | % |
| Warehouse | | 176,362 | | | 14.1 | % | | 36,483 | | | 23.4 | % |
| Office | | 152,040 | | | 12.2 | % | | 9,802 | | | 6.3 | % |
Retail (b) | | 45,538 | | | 3.6 | % | | 2,884 | | | 1.9 | % |
| Self Storage (net lease) | | 59,438 | | | 4.8 | % | | 5,810 | | | 3.7 | % |
Other (c) | | 104,075 | | | 8.4 | % | | 5,560 | | | 3.6 | % |
| U.S. Total | | 787,792 | | | 63.1 | % | | 104,663 | | | 67.2 | % |
| | | | | | | | |
| International | | | | | | | | |
| Industrial | | 71,945 | | | 5.8 | % | | 10,097 | | | 6.5 | % |
| Warehouse | | 121,580 | | | 9.8 | % | | 18,310 | | | 11.8 | % |
| Office | | 91,701 | | | 7.3 | % | | 6,349 | | | 4.1 | % |
Retail (b) | | 174,478 | | | 14.0 | % | | 16,255 | | | 10.4 | % |
| Self Storage (net lease) | | — | | | — | % | | — | | | — | % |
Other (c) | | 268 | | | — | % | | — | | | — | % |
| International Total | | 459,972 | | | 36.9 | % | | 51,011 | | | 32.8 | % |
| | | | | | | | |
| Total | | | | | | | | |
| Industrial | | 322,284 | | | 25.8 | % | | 54,221 | | | 34.8 | % |
| Warehouse | | 297,942 | | | 23.9 | % | | 54,793 | | | 35.2 | % |
| Office | | 243,741 | | | 19.5 | % | | 16,151 | | | 10.4 | % |
Retail (b) | | 220,016 | | | 17.6 | % | | 19,139 | | | 12.3 | % |
| Self Storage (net lease) | | 59,438 | | | 4.8 | % | | 5,810 | | | 3.7 | % |
Other (c) | | 104,343 | | | 8.4 | % | | 5,560 | | | 3.6 | % |
Total (d) | | $ | 1,247,764 | | | 100.0 | % | | 155,674 | | | 100.0 | % |
________
(a)Includes square footage for vacant properties.
(b)Includes automotive dealerships.
(c)Includes ABR from tenants with the following property types: education facility, hotel (net lease), laboratory, fitness facility, theater, student housing (net lease), restaurant and land.
| | | | | | | | |
| | Investing for the long runTM | 27 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
| | | | | |
| Diversification by Tenant Industry |
In thousands, except percentages. Pro rata. As of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
Industry Type | | ABR | | ABR % | | Square Footage | | Square Footage % |
Retail Stores (a) | | $ | 272,627 | | | 21.9 | % | | 34,040 | | | 21.9 | % |
| Consumer Services | | 102,202 | | | 8.2 | % | | 7,850 | | | 5.0 | % |
| Automotive | | 81,158 | | | 6.5 | % | | 12,310 | | | 7.9 | % |
| Beverage and Food | | 78,613 | | | 6.3 | % | | 10,182 | | | 6.5 | % |
| Grocery | | 72,546 | | | 5.8 | % | | 7,714 | | | 5.0 | % |
| Cargo Transportation | | 63,845 | | | 5.1 | % | | 9,491 | | | 6.1 | % |
| Healthcare and Pharmaceuticals | | 60,465 | | | 4.8 | % | | 5,372 | | | 3.5 | % |
| Construction and Building | | 50,279 | | | 4.0 | % | | 9,005 | | | 5.8 | % |
| Business Services | | 47,045 | | | 3.8 | % | | 4,018 | | | 2.6 | % |
| Capital Equipment | | 44,766 | | | 3.6 | % | | 7,387 | | | 4.7 | % |
| Durable Consumer Goods | | 44,001 | | | 3.5 | % | | 9,951 | | | 6.4 | % |
| Hotel and Leisure | | 41,141 | | | 3.3 | % | | 2,214 | | | 1.4 | % |
| Sovereign and Public Finance | | 39,327 | | | 3.2 | % | | 3,241 | | | 2.1 | % |
| Containers, Packaging, and Glass | | 38,627 | | | 3.1 | % | | 6,538 | | | 4.2 | % |
| High Tech Industries | | 31,197 | | | 2.5 | % | | 3,315 | | | 2.1 | % |
| Insurance | | 25,764 | | | 2.1 | % | | 1,749 | | | 1.1 | % |
| Banking | | 19,935 | | | 1.6 | % | | 1,247 | | | 0.8 | % |
| Metals | | 16,203 | | | 1.3 | % | | 3,119 | | | 2.0 | % |
| Non-Durable Consumer Goods | | 15,696 | | | 1.3 | % | | 5,250 | | | 3.4 | % |
| Aerospace and Defense | | 15,459 | | | 1.2 | % | | 1,357 | | | 0.9 | % |
| Telecommunications | | 15,274 | | | 1.2 | % | | 1,479 | | | 0.9 | % |
| Chemicals, Plastics, and Rubber | | 14,282 | | | 1.1 | % | | 1,853 | | | 1.2 | % |
| Media: Broadcasting and Subscription | | 13,120 | | | 1.1 | % | | 784 | | | 0.5 | % |
| Wholesale | | 12,758 | | | 1.0 | % | | 2,005 | | | 1.3 | % |
Other (b) | | 31,434 | | | 2.5 | % | | 4,203 | | | 2.7 | % |
Total (c) | | $ | 1,247,764 | | | 100.0 | % | | 155,674 | | | 100.0 | % |
________
(a)Includes automotive dealerships.
(b)Includes ABR from tenants in the following industries: media: advertising, printing, and publishing, oil and gas, environmental industries, consumer transportation, forest products and paper, real estate and electricity. Also includes square footage for vacant properties.
| | | | | | | | |
| | Investing for the long runTM | 28 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
| | | | | |
| Diversification by Geography |
In thousands, except percentages. Pro rata. As of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
| Region | | ABR | | ABR % | | Square Footage (a) | | Square Footage % |
| U.S. | | | | | | | | |
| South | | | | | | | | |
| Texas | | $ | 103,805 | | | 8.3 | % | | 11,869 | | | 7.6 | % |
| Florida | | 51,231 | | | 4.1 | % | | 4,460 | | | 2.9 | % |
| Georgia | | 23,875 | | | 1.9 | % | | 3,512 | | | 2.3 | % |
| Tennessee | | 22,057 | | | 1.8 | % | | 3,291 | | | 2.1 | % |
| Alabama | | 18,456 | | | 1.5 | % | | 3,085 | | | 2.0 | % |
Other (b) | | 15,675 | | | 1.2 | % | | 2,356 | | | 1.5 | % |
| Total South | | 235,099 | | | 18.8 | % | | 28,573 | | | 18.4 | % |
| Midwest | | | | | | | | |
| Illinois | | 59,840 | | | 4.8 | % | | 8,328 | | | 5.3 | % |
| Minnesota | | 32,138 | | | 2.6 | % | | 3,225 | | | 2.1 | % |
| Indiana | | 26,940 | | | 2.1 | % | | 4,734 | | | 3.0 | % |
| Ohio | | 18,306 | | | 1.5 | % | | 3,921 | | | 2.5 | % |
| Michigan | | 16,086 | | | 1.3 | % | | 3,245 | | | 2.1 | % |
| Wisconsin | | 15,076 | | | 1.2 | % | | 2,599 | | | 1.7 | % |
Other (b) | | 32,401 | | | 2.6 | % | | 5,073 | | | 3.3 | % |
| Total Midwest | | 200,787 | | | 16.1 | % | | 31,125 | | | 20.0 | % |
| East | | | | | | | | |
| North Carolina | | 35,813 | | | 2.9 | % | | 8,098 | | | 5.2 | % |
| Pennsylvania | | 30,790 | | | 2.4 | % | | 3,673 | | | 2.4 | % |
| New Jersey | | 22,809 | | | 1.8 | % | | 1,235 | | | 0.8 | % |
| Massachusetts | | 22,187 | | | 1.8 | % | | 1,407 | | | 0.9 | % |
| New York | | 17,630 | | | 1.4 | % | | 2,221 | | | 1.4 | % |
| South Carolina | | 14,840 | | | 1.2 | % | | 4,087 | | | 2.6 | % |
Other (b) | | 47,109 | | | 3.8 | % | | 8,009 | | | 5.1 | % |
| Total East | | 191,178 | | | 15.3 | % | | 28,730 | | | 18.4 | % |
| West | | | | | | | | |
| California | | 70,052 | | | 5.6 | % | | 6,537 | | | 4.2 | % |
| Arizona | | 29,784 | | | 2.4 | % | | 3,365 | | | 2.1 | % |
Other (b) | | 60,892 | | | 4.9 | % | | 6,333 | | | 4.1 | % |
| Total West | | 160,728 | | | 12.9 | % | | 16,235 | | | 10.4 | % |
| U.S. Total | | 787,792 | | | 63.1 | % | | 104,663 | | | 67.2 | % |
| International | | | | | | | | |
| United Kingdom | | 61,843 | | | 5.0 | % | | 5,099 | | | 3.3 | % |
| Germany | | 61,465 | | | 4.9 | % | | 6,440 | | | 4.1 | % |
| Poland | | 58,799 | | | 4.7 | % | | 7,959 | | | 5.1 | % |
| Spain | | 56,099 | | | 4.5 | % | | 4,708 | | | 3.0 | % |
| The Netherlands | | 56,044 | | | 4.5 | % | | 6,948 | | | 4.5 | % |
| Italy | | 26,364 | | | 2.1 | % | | 2,386 | | | 1.5 | % |
| France | | 20,328 | | | 1.6 | % | | 1,685 | | | 1.1 | % |
| Denmark | | 17,724 | | | 1.4 | % | | 2,559 | | | 1.7 | % |
| Croatia | | 16,901 | | | 1.4 | % | | 1,726 | | | 1.1 | % |
| Canada | | 14,084 | | | 1.1 | % | | 2,213 | | | 1.4 | % |
Other (c) | | 70,321 | | | 5.7 | % | | 9,288 | | | 6.0 | % |
| International Total | | 459,972 | | | 36.9 | % | | 51,011 | | | 32.8 | % |
Total (d) | | $ | 1,247,764 | | | 100.0 | % | | 155,674 | | | 100.0 | % |
________
(a)Includes square footage for vacant properties.
(b)Other properties within South include assets in Louisiana, Arkansas, Oklahoma and Mississippi. Other properties within Midwest include assets in Missouri, Kansas, Nebraska, Iowa, North Dakota and South Dakota. Other properties within East include assets in Virginia, Kentucky, Maryland, Connecticut, West Virginia, New Hampshire and Maine. Other properties within West include assets in Oregon, Colorado, Utah, Washington, Nevada, Hawaii, New Mexico, Idaho, Wyoming, Montana and Alaska.
(c)Includes assets in Lithuania, Finland, Norway, Mexico, Hungary, Portugal, the Czech Republic, Austria, Sweden, Slovakia, Japan, Latvia and Estonia.
| | | | | | | | |
| | Investing for the long runTM | 29 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
| | | | | |
| Contractual Rent Increases |
In thousands, except percentages. Pro rata. As of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
| Rent Adjustment Measure | | ABR | | ABR % | | Square Footage | | Square Footage % |
| (Uncapped) CPI | | $ | 479,202 | | | 38.4 | % | | 53,784 | | | 34.5 | % |
| CPI-based | | 252,703 | | | 20.3 | % | | 33,031 | | | 21.2 | % |
| CPI-linked | | 731,905 | | | 58.7 | % | | 86,815 | | | 55.7 | % |
| Fixed | | 460,607 | | | 36.9 | % | | 62,728 | | | 40.3 | % |
Other (a) | | 47,180 | | | 3.8 | % | | 3,373 | | | 2.2 | % |
| None | | 8,072 | | | 0.6 | % | | 471 | | | 0.3 | % |
| Vacant | | — | | | — | % | | 2,287 | | | 1.5 | % |
Total (b) | | $ | 1,247,764 | | | 100.0 | % | | 155,674 | | | 100.0 | % |
________
(a)Represents leases attributable to percentage rent.
| | | | | | | | |
| | Investing for the long runTM | 30 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
Dollars in thousands. Pro rata.
Contractual Same Store Growth
Same store portfolio includes leases that were continuously in place during the period from December 31, 2020 to December 31, 2021. Excludes leases for properties that were acquired, sold or vacated, or were subject to lease renewals, extensions or modifications at any time that affected ABR during that period. For purposes of comparability, ABR is presented on a constant currency basis using exchange rates as of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | |
| ABR |
| As of | | | | |
| Dec. 31, 2021 | | Dec. 31, 2020 | | Increase | | % Increase |
| Property Type | | | | | | | |
| Industrial | $ | 282,600 | | | $ | 276,518 | | | $ | 6,082 | | | 2.2 | % |
| Warehouse | 258,048 | | | 251,632 | | | 6,416 | | | 2.5 | % |
| Office | 234,516 | | | 230,937 | | | 3,579 | | | 1.5 | % |
Retail (a) | 191,037 | | | 188,586 | | | 2,451 | | | 1.3 | % |
| Self Storage (net lease) | 59,438 | | | 59,083 | | | 355 | | | 0.6 | % |
Other (b) | 90,929 | | | 89,551 | | | 1,378 | | | 1.5 | % |
| Total | $ | 1,116,568 | | | $ | 1,096,307 | | | $ | 20,261 | | | 1.8 | % |
| | | | | | | |
| Rent Adjustment Measure | | | | | | | |
| (Uncapped) CPI | $ | 453,033 | | | $ | 445,908 | | | $ | 7,125 | | | 1.6 | % |
| CPI-based | 227,950 | | | 224,218 | | | 3,732 | | | 1.7 | % |
| CPI-linked | 680,983 | | | 670,126 | | | 10,857 | | | 1.6 | % |
| Fixed | 381,645 | | | 372,597 | | | 9,048 | | | 2.4 | % |
Other (c) | 46,145 | | | 45,789 | | | 356 | | | 0.8 | % |
| None | 7,795 | | | 7,795 | | | — | | | — | % |
| Total | $ | 1,116,568 | | | $ | 1,096,307 | | | $ | 20,261 | | | 1.8 | % |
| | | | | | | |
| Geography | | | | | | | |
| U.S. | $ | 699,285 | | | $ | 685,421 | | | $ | 13,864 | | | 2.0 | % |
| Europe | 393,005 | | | 387,281 | | | 5,724 | | | 1.5 | % |
Other International (d) | 24,278 | | | 23,605 | | | 673 | | | 2.9 | % |
| Total | $ | 1,116,568 | | | $ | 1,096,307 | | | $ | 20,261 | | | 1.8 | % |
| | | | | | | |
| Same Store Portfolio Summary | | | | | | | |
| Number of properties | 1,175 | | | | | | | |
| Square footage (in thousands) | 134,900 | | | | | | | |
| | | | | | | | |
| | Investing for the long runTM | 31 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
Comprehensive Same Store Growth
Same store portfolio includes leased properties that were continuously owned and in place during the quarter ended December 31, 2020 through December 31, 2021. Excludes properties that were acquired, sold or listed as capital investments and commitments (see Investment Activity – Capital Investments and Commitments section) during that period. For purposes of comparability, same store pro rata rental income is presented on a constant currency basis using average exchange rates for the three months ended December 31, 2021. Same store pro rata rental income is a non-GAAP measure. See the Disclosures Regarding Non-GAAP and Other Metrics section in the Appendix for a description of same store pro rata rental income and for details on how it is calculated. | | | | | | | | | | | | | | | | | | | | | | | |
| Same Store Pro Rata Rental Income |
| Three Months Ended | | | | |
| Dec. 31, 2021 | | Dec. 31, 2020 | | Increase | | % Increase |
| Property Type | | | | | | | |
| Industrial | $ | 69,427 | | | $ | 68,754 | | | $ | 673 | | | 1.0 | % |
| Warehouse | 62,780 | | | 60,245 | | | 2,535 | | | 4.2 | % |
| Office | 61,184 | | | 62,109 | | | (925) | | | (1.5) | % |
Retail (a) | 48,400 | | | 46,724 | | | 1,676 | | | 3.6 | % |
| Self Storage (net lease) | 14,834 | | | 14,749 | | | 85 | | | 0.6 | % |
Other (b) | 25,390 | | | 23,968 | | | 1,422 | | | 5.9 | % |
| Total | $ | 282,015 | | | $ | 276,549 | | | $ | 5,466 | | | 2.0 | % |
| | | | | | | |
| Rent Adjustment Measure | | | | | | | |
| (Uncapped) CPI | $ | 116,378 | | | $ | 114,149 | | | $ | 2,229 | | | 2.0 | % |
| CPI-based | 56,411 | | | 56,159 | | | 252 | | | 0.4 | % |
| CPI-linked | 172,789 | | | 170,308 | | | 2,481 | | | 1.5 | % |
| Fixed | 95,870 | | | 93,045 | | | 2,825 | | | 3.0 | % |
Other (c) | 11,555 | | | 11,395 | | | 160 | | | 1.4 | % |
| None | 1,801 | | | 1,801 | | | — | | | — | % |
| Total | $ | 282,015 | | | $ | 276,549 | | | $ | 5,466 | | | 2.0 | % |
| | | | | | | |
| Geography | | | | | | | |
| U.S. | $ | 177,656 | | | $ | 175,169 | | | $ | 2,487 | | | 1.4 | % |
| Europe | 98,345 | | | 95,478 | | | 2,867 | | | 3.0 | % |
Other International (d) | 6,014 | | | 5,902 | | | 112 | | | 1.9 | % |
| Total | $ | 282,015 | | | $ | 276,549 | | | $ | 5,466 | | | 2.0 | % |
| | | | | | | |
| Same Store Portfolio Summary | | | | | | | |
| Number of properties | 1,162 | | | | | | | |
| Square footage (in thousands) | 137,177 | | | | | | | |
| | | | | | | | |
| | Investing for the long runTM | 32 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
The following table presents a reconciliation from lease revenues to same store pro rata rental income:
| | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2021 | | Dec. 31, 2020 |
| Consolidated Lease Revenues | | | |
| Total lease revenues – as reported | $ | 305,093 | | | $ | 280,878 | |
| Income from direct financing leases and loans receivable | 15,637 | | | 17,357 | |
| Less: Reimbursable tenant costs – as reported | (16,475) | | | (13,710) | |
| Less: Income from secured loans receivable | (1,163) | | | — | |
| 303,092 | | | 284,525 | |
| | | |
| Adjustments for Pro Rata Ownership of Real Estate Joint Ventures: | | | |
| Add: Pro rata share of adjustments from equity method investments | 5,322 | | | 5,325 | |
| Less: Pro rata share of adjustments for noncontrolling interests | (22) | | | (22) | |
| 5,300 | | | 5,303 | |
| | | |
| Adjustments for Pro Rata Non-Cash Items: | | | |
| Add: Above- and below-market rent intangible lease amortization | 15,082 | | | 11,504 | |
| Less: Straight-line and other leasing and financing adjustments | (15,605) | | | (9,571) | |
| Less: Adjustments for pro rata ownership | 30 | | | 13 | |
| (493) | | | 1,946 | |
| | | |
Adjustment to normalize for (i) properties not continuously owned since October 1, 2020 and (ii) constant currency presentation for prior year quarter (e) | (25,884) | | | (15,225) | |
| | | |
| Same Store Pro Rata Rental Income | $ | 282,015 | | | $ | 276,549 | |
________
(a)Includes automotive dealerships.
(b)Includes ABR or same store pro rata rental income from tenants with the following property types: education facility, hotel (net lease), laboratory, fitness facility, theater, student housing (net lease), restaurant and land.
(c)Represents leases attributable to percentage rent.
(d)Includes assets in Canada, Mexico and Japan.
(e)This adjustment excludes amounts attributable to properties that were acquired, sold or listed as capital investments and commitments (see Investment Activity – Capital Investments and Commitments section) that were not continuously owned and in place during the quarter ended December 31, 2020 through December 31, 2021. In addition, for the three months ended December 31, 2020, an adjustment is made to reflect average exchange rates for the three months ended December 31, 2021 for purposes of comparability, since same store pro rata rental income is presented on a constant currency basis. | | | | | | | | |
| | Investing for the long runTM | 33 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
For the three months ended December 31, 2021, except ABR. Pro rata.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Lease Renewals and Extensions (a) | | | | | | | | Expected Tenant Improvements ($000s) | | Leasing Commissions ($000s) | | |
| | | | | | ABR | | | | |
| Property Type | | Square Feet | | Number of Leases | | Prior Lease ($000s) | | New Lease ($000s) (b) | | Rent Recapture | | | | Incremental Lease Term |
| Industrial | | 3,416,628 | | | 6 | | | $ | 11,410 | | | $ | 11,917 | | | 104.4 | % | | $ | 1,700 | | | $ | 728 | | | 5.1 years |
| Warehouse | | 173,990 | | | 3 | | | 6,463 | | | 6,231 | | | 96.4 | % | | — | | | — | | | 10.1 years |
| Office | | — | | | — | | | — | | | — | | | — | % | | — | | | — | | | N/A |
| Retail | | 201,339 | | | 1 | | | 2,715 | | | 2,715 | | | 100.0 | % | | — | | | — | | | 3.2 years |
| Self Storage (net lease) | | — | | | — | | | — | | | — | | | — | % | | — | | | — | | | N/A |
| Other | | — | | | — | | | — | | | — | | | — | % | | — | | | — | | | N/A |
Total / Weighted Average (c) | | 3,791,957 | | | 10 | | | $ | 20,588 | | | $ | 20,863 | | | 101.3 | % | | $ | 1,700 | | | $ | 728 | | | 6.4 years |
| | | | | | | | | | | | | | | | |
| Q4 Summary | | | | | | | | | | | | | | | | |
Prior Lease ABR (% of Total Portfolio) | | 1.7 | % | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| New Leases | | | | | | | | Expected Tenant Improvements ($000s) | | Leasing Commissions ($000s) | | |
| | | | | | ABR | | | | |
| Property Type | | Square Feet | | Number of Leases | | New Lease ($000s) (b) | | | | New Lease Term |
| Industrial | | 84,376 | | | 1 | | | $ | 430 | | | $ | — | | | $ | 161 | | | 5.3 years |
| Warehouse | | 81,599 | | | 1 | | | 330 | | | — | | | — | | | 17.1 years |
| Office | | — | | | — | | | — | | | — | | | — | | | N/A |
| Retail | | 2,706 | | | 1 | | | 61 | | | 95 | | | 42 | | | 10.0 years |
| Self Storage (net lease) | | — | | | — | | | — | | | — | | | — | | | N/A |
| Other | | 17,700 | | | 1 | | | 1,000 | | | — | | | 630 | | | 10.3 years |
Total / Weighted Average (d) | | 186,381 | | | 4 | | | $ | 1,821 | | | $ | 95 | | | $ | 833 | | | 10.3 years |
_______
(a)Excludes lease extensions for a period of one year or less.
(b)New lease amounts are based on in-place rents at time of lease commencement and exclude any free rent periods.
(c)Weighted average refers to the incremental lease term.
(d)Weighted average refers to the new lease term.
| | | | | | | | |
| | Investing for the long runTM | 34 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2021
Dollars and square footage in thousands. Pro rata. As of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year of Lease Expiration (a) | | Number of Leases Expiring | | Number of Tenants with Leases Expiring | | ABR | | ABR % | | Square Footage | | Square Footage % |
| 2022 | | 25 | | | 25 | | | $ | 29,669 | | | 2.4 | % | | 1,982 | | | 1.3 | % |
| 2023 | | 31 | | | 28 | | | 46,810 | | | 3.8 | % | | 5,405 | | | 3.5 | % |
2024 (b) | | 45 | | | 39 | | | 96,501 | | | 7.7 | % | | 12,403 | | | 8.0 | % |
| 2025 | | 60 | | | 29 | | | 63,961 | | | 5.1 | % | | 7,417 | | | 4.8 | % |
| 2026 | | 40 | | | 29 | | | 57,615 | | | 4.6 | % | | 8,219 | | | 5.3 | % |
| 2027 | | 56 | | | 32 | | | 83,964 | | | 6.7 | % | | 8,847 | | | 5.7 | % |
| 2028 | | 40 | | | 22 | | | 60,495 | | | 4.8 | % | | 4,568 | | | 2.9 | % |
| 2029 | | 50 | | | 23 | | | 55,310 | | | 4.4 | % | | 6,702 | | | 4.3 | % |
| 2030 | | 27 | | | 23 | | | 65,876 | | | 5.3 | % | | 5,642 | | | 3.6 | % |
| 2031 | | 66 | | | 16 | | | 73,930 | | | 5.9 | % | | 8,642 | | | 5.5 | % |
| 2032 | | 38 | | | 18 | | | 53,114 | | | 4.3 | % | | 7,098 | | | 4.6 | % |
| 2033 | | 28 | | | 22 | | | 77,386 | | | 6.2 | % | | 10,159 | | | 6.5 | % |
| 2034 | | 47 | | | 15 | | | 74,503 | | | 6.0 | % | | 7,765 | | | 5.0 | % |
| 2035 | | 14 | | | 14 | | | 26,944 | | | 2.2 | % | | 4,906 | | | 3.1 | % |
| Thereafter (>2035) | | 223 | | | 97 | | | 381,686 | | | 30.6 | % | | 53,632 | | | 34.4 | % |
| Vacant | | — | | | — | | | — | | | — | % | | 2,287 | | | 1.5 | % |
Total (c) | | 790 | | | | | $ | 1,247,764 | | | 100.0 | % | | 155,674 | | | 100.0 | % |
________
(a)Assumes tenants do not exercise any renewal options or purchase options.
(b)Includes ABR of $38.8 million from a tenant (U-Haul Moving Partners, Inc. and Mercury Partners, LP) that holds an option to repurchase the 78 properties it is leasing in April 2024. There can be no assurance that such repurchase will be completed.
| | | | | | | | |
| | Investing for the long runTM | 35 |
W. P. Carey Inc.
Investment Management
Fourth Quarter 2021
| | | | | | | | |
| | Investing for the long runTM | 36 |
W. P. Carey Inc.
Investment Management – Fourth Quarter 2021
| | | | | |
| Selected Information and Fee Summary – Managed Programs |
Dollars and square footage in thousands. As of or for the three months ended December 31, 2021.
| | | | | | | | | | | | | | | | | |
| CPA:18 – Global | | CESH | | Total |
| Selected Information | | | | | |
| General | | | | | |
| Year established | 2013 | | 2016 | | |
AUM – current quarter (a) | $ | 2,507,793 | | | $ | 229,184 | | | $ | 2,736,977 | |
| Net-lease AUM – current quarter | $ | 1,597,403 | | | $ | 115,806 | | | $ | 1,713,209 | |
Fundraising status | Closed | | Closed | | |
| | | | | |
| Portfolio | | | | | |
| Investment type | Net lease / Diversified REIT | | Student Housing | | |
| Number of operating properties | 66 | | | — | | | |
| Number of net-leased properties | 53 | | | 3 | | | |
Number of active build-to-suit projects | 3 | | | 1 | | | |
Number of tenants – net-leased properties | 50 | | | 1 | | | |
| Square footage – net-leased properties | 10,448 | | | 367 | | | |
Occupancy (b) | 98.3 | % | | 100.0 | % | | |
| | | | | |
| Balance Sheet (Book Value) | | | | | |
| Total assets | $ | 2,142,375 | | | $ | 240,896 | | | |
| Total debt | $ | 1,253,045 | | | $ | 71,001 | | | |
| Total debt / total assets | 58.5 | % | | 29.5 | % | | |
| | | | | |
| Fee Summary | | | | | |
| Asset Management Fees | | | | | |
| Asset management fee (% of average AUM, per annum) | 0.50% (c) | | 1.00% (d) | | |
| Average AUM (of current quarter and prior quarter) | $ | 2,507,542 | | | $ | 227,912 | | | $ | 2,735,454 | |
| Asset management revenue – current quarter | $ | 3,076 | | | $ | 495 | | | $ | 3,571 | |
| | | | | |
Operating Partnership Interests (e) | | | | | |
| Operating partnership interests (% of Available Cash) | 10.00% | | N/A | | |
| Earnings from equity method investments in the Managed Programs (profits interest) – current quarter | $ | 2,396 | | | N/A | | $ | 2,396 | |
________
(a)Represents appraised value of real estate assets as of September 30, 2021 (plus cash and cash equivalents, less distributions payable as of December 31, 2021) for CPA:18 – Global. Represents appraised value of real estate assets as of December 31, 2020 (plus cash and cash equivalents as of December 31, 2021) for CESH. These values were used to calculate asset management fees during the three months ended December 31, 2021 in accordance with the respective advisory agreements.
(b)Represents occupancy for single-tenant net-leased properties.
(c)Based on average market value of assets. CPA:18 – Global has an option to pay asset management fees in cash or shares, under the terms of the advisory agreement with CPA:18 – Global. Asset management fees are recorded in Asset management and other revenue in our consolidated financial statements.
(d)Based on gross assets at fair value. In February and July 2020, CESH sold two student housing properties located in Lisbon, Portugal, and Madrid, Spain, for gross proceeds of $49.3 million and $30.4 million, respectively. In January, September and December 2021, CESH sold three student housing properties located in Valencia, Spain; Norwich, United Kingdom; and Porto, Portugal, for gross proceeds of $40.8 million, $126.8 million and $50.4 million, respectively (amounts reflect the applicable exchange rate on the date of the transaction).
(e)Available Cash means cash generated by operating partnership operations and investments, excluding cash from sales and refinancings, after the payment of debt service and other operating expenses, but before distributions to partners. Amounts are recorded in Earnings from equity method investments in our consolidated financial statements.
| | | | | | | | |
| | Investing for the long runTM | 37 |
W. P. Carey Inc.
Investment Management – Fourth Quarter 2021
| | | | | |
| Summary of Future Liquidity Considerations for the Managed Programs |
As of December 31, 2021.
Future Liquidity Strategies for the Managed Programs
The timeframes in the table below are based on general liquidation guidelines set forth in CPA:18 – Global’s and CESH’s respective offering documents. Ultimately, the liquidation of CPA:18 – Global is approved by its board of directors and the liquidation of CESH is determined by its general partner.
| | | | | | | | | | | |
| General Liquidation Guideline |
| CPA:18 – Global | | CESH |
| Timeframe | Beginning after the seventh anniversary of the closing of the initial public offering in 2015 (a) | | Beginning five years after raising the minimum offering amount in 2016 |
Back-End Fees for / Interest in the Managed Programs
The overview below is intended to provide a summary of current disclosures regarding various back-end fees and interests that we may be entitled to upon each Managed Program’s liquidity event. Such a liquidity event for CPA:18 – Global is at the discretion of CPA:18 – Global’s board of directors and there is no assurance that any of the fees or interests described below will be realized. Please refer to CPA:18 – Global’s filings with the SEC for a complete description of its liquidity strategy.
| | | | | | | | | | | |
| Back-End Fees and Interests |
| CPA:18 – Global | | CESH |
| Disposition Fees | Equal to the lesser of (i) 50% of the brokerage commission paid or (ii) 3% of the contract sales price of a property. (b) | | N/A |
| Interest in Disposition Proceeds | Special general partner interest entitled to receive distributions of up to 15% of the net proceeds from the sale, exchange or other disposition of operating partnership assets remaining after the corporation has received a return of 100% of its initial investment in the operating partnership, through certain liquidity events or distributions, plus the 6% preferred return rate. | | Available Cash (as defined in In “Principal Terms”), subject to any other limitations provided for herein, will be initially apportioned among the Limited Partners in proportion to their respective capital contributions and the General Partner as provided in connection with its Carried Interest and distributed. (c)
|
| Purchase of Special GP Interest | Lesser of (i) 5.0x the distributions of the last completed fiscal year and (ii) the discounted value of expected future distributions from point of valuation to March 2025 using a discount rate used by the independent third-party valuation firm to determine the most recent appraisal. | | N/A |
| Distribution Related to Ownership of Shares | 5.6% ownership as of 12/31/2021 | | 2.4% ownership as of 12/31/2021 |
________
(a)On August 31, 2021, CPA:18 – Global reported that its independent directors intended to begin the process of evaluating possible liquidity alternatives for its shareholders, including a transaction involving us or one of our subsidiaries. There can be no assurance that any such liquidity transaction will occur in the near future or at all.
(b)Not applicable to dispositions of individual assets.
(c)Order of distributions are as follows: (1) First, to a Limited Partner until it has received an amount equal to its total capital contributions or deemed capital contribution with respect to the Advisor Units in the case of the Advisor (or a wholly owned subsidiary of the Advisor); (2) Second, to a Limited Partner until such Limited Partner has received a cumulative, non-compounding, annual 10% return on its unreturned capital contributions (the “Preferred Return”); (3) Third, to the General Partner until the General Partner has received 20% of the aggregate amounts distributed pursuant to clause (2) and this clause (3); (4) Thereafter, 80% to such Limited Partner and 20% to the General Partner (together with the amounts received under clause (3), the General Partner’s “Carried Interest”). The Advisor’s capital contribution for purposes of the Partnership Agreement will be deemed to be the value of the Advisor Units upon their issuance.
| | | | | | | | |
| | Investing for the long runTM | 38 |
W. P. Carey Inc.
Appendix
Fourth Quarter 2021
| | | | | | | | |
| | Investing for the long runTM | 39 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2021
| | | | | |
| Normalized Pro Rata Cash NOI |
In thousands. From real estate.
| | | | | |
| Three Months Ended Dec. 31, 2021 |
| Consolidated Lease Revenues | |
| Total lease revenues – as reported | $ | 305,093 | |
| Income from direct financing leases and loans receivable | 15,637 | |
| Less: Income from secured loans receivable | (1,163) | |
| |
| Less: Consolidated Reimbursable and Non-Reimbursable Property Expenses | |
| Reimbursable property expenses – as reported | 16,475 | |
| Non-reimbursable property expenses – as reported | 11,466 | |
| 291,626 | |
| |
| Plus: NOI from Operating Properties | |
| Hotel revenues | 2,317 | |
| Hotel expenses | (2,278) | |
| 39 | |
| |
| Self-storage revenues | 1,687 | |
| Self-storage expenses | (609) | |
| 1,078 | |
| |
| 292,743 | |
| |
| Adjustments for Pro Rata Ownership of Real Estate Joint Ventures: | |
| Add: Pro rata share of NOI from equity method investments | 6,190 | |
| Less: Pro rata share of NOI attributable to noncontrolling interests | (22) | |
| 6,168 | |
| |
| 298,911 | |
| |
| Adjustments for Pro Rata Non-Cash Items: | |
| Add: Above- and below-market rent intangible lease amortization | 15,082 | |
| Less: Straight-line and other leasing and financing adjustments | (15,605) | |
| Add: Other non-cash items | 441 | |
| (82) | |
| |
Pro Rata Cash NOI (a) | 298,829 | |
| |
Adjustment to normalize for intra-period acquisition volume and dispositions (b) | 6,905 | |
| |
Normalized Pro Rata Cash NOI (a) | $ | 305,734 | |
| | | | | | | | |
| | Investing for the long runTM | 40 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2021
The following table presents a reconciliation from Net income from Real Estate attributable to W. P. Carey to Normalized pro rata cash NOI:
| | | | | |
| Three Months Ended Dec. 31, 2021 |
| Net Income from Real Estate Attributable to W. P. Carey | |
| Net income from Real Estate attributable to W. P. Carey – as reported | $ | 94,634 | |
| Adjustments for Consolidated Operating Expenses | |
| Add: Operating expenses – as reported | 199,518 | |
| Less: Property expenses, excluding reimbursable tenant costs – as reported | (11,466) | |
| Less: Operating property expenses – as reported | (2,887) | |
| 185,165 | |
| |
| Adjustments for Other Consolidated Revenues and Expenses: | |
| Less: Lease termination income and other – as reported | (45,590) | |
| Less: Reimbursable property expenses – as reported | (16,475) | |
| Add: Other income and (expenses) | 70,791 | |
| Add: Provision for income taxes | 5,331 | |
| 14,057 | |
| |
| Other Adjustments: | |
| Add: Above- and below-market rent intangible lease amortization | 15,082 | |
| Less: Straight-line and other leasing and financing adjustments | (15,605) | |
| Add: Adjustments for pro rata ownership | 6,262 | |
Adjustment to normalize for intra-period acquisition volume and dispositions (b) | 6,905 | |
| Less: Income from secured loans receivable | (1,163) | |
| Add: Property expenses, excluding reimbursable tenant costs, non-cash | 397 | |
| 11,878 | |
| |
Normalized Pro Rata Cash NOI (a) | $ | 305,734 | |
________
(a)Pro rata cash NOI and normalized pro rata cash NOI are non-GAAP measures. See the Disclosures Regarding Non-GAAP and Other Metrics section that follows for a description of our non-GAAP measures and for details on how pro rata cash NOI and normalized pro rata cash NOI are calculated. (b)For properties acquired and capital investments and commitments completed during the three months ended December 31, 2021, the adjustment modifies our pro rata share of cash NOI for the partial period with an amount estimated to be equivalent to the additional pro rata share of cash NOI necessary to reflect ownership for the full quarter. For properties disposed of during the three months ended December 31, 2021, the adjustment eliminates our pro rata share of cash NOI for the period.
| | | | | | | | |
| | Investing for the long runTM | 41 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2021
| | | | | |
| Adjusted EBITDA, Consolidated – Last Five Quarters |
In thousands.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2021 | | Sep. 30, 2021 | | Jun. 30, 2021 | | Mar. 31, 2021 | | Dec. 31, 2020 |
| Net income | $ | 99,612 | | | $ | 138,586 | | | $ | 120,283 | | | $ | 51,641 | | | $ | 134,615 | |
| | | | | | | | | |
Adjustments to Derive Adjusted EBITDA (a) | | | | | | | | | |
| Depreciation and amortization | 135,662 | | | 115,657 | | | 114,348 | | | 110,322 | | | 110,913 | |
Straight-line and other leasing and financing adjustments (b) (c) | (53,380) | | | (10,823) | | | (10,313) | | | (8,751) | | | (9,571) | |
| Interest expense | 47,208 | | | 48,731 | | | 49,252 | | | 51,640 | | | 52,828 | |
Other (gains) and losses (d) | 28,461 | | | (49,219) | | | (7,545) | | | 41,188 | | | 1,927 | |
| Above- and below-market rent intangible lease amortization | 15,082 | | | 12,004 | | | 14,384 | | | 12,115 | | | 11,504 | |
| Gain on sale of real estate, net | (9,511) | | | (1,702) | | | (19,840) | | | (9,372) | | | (76,686) | |
| Impairment charges | 7,945 | | | 16,301 | | | — | | | — | | | 16,410 | |
| Stock-based compensation expense | 6,091 | | | 4,361 | | | 9,048 | | | 5,381 | | | 5,795 | |
| Provision for income taxes | 5,052 | | | 8,347 | | | 9,298 | | | 5,789 | | | 7,363 | |
Merger and other expenses (e) | (563) | | | (908) | | | (2,599) | | | (476) | | | (418) | |
| Other amortization and non-cash charges | 385 | | | 386 | | | 391 | | | 411 | | | 403 | |
| 182,432 | | | 143,135 | | | 156,424 | | | 208,247 | | | 120,468 | |
| | | | | | | | | |
| Adjustments for Pro Rata Ownership | | | | | | | | | |
| Real Estate Joint Ventures: | | | | | | | | | |
Add: Pro rata share of adjustments for equity method investments (f) | 16,136 | | | 5,144 | | | 4,923 | | | 11,445 | | | 13,342 | |
Less: Pro rata share of adjustments for amounts attributable to noncontrolling interests | (23) | | | (23) | | | (22) | | | (22) | | | (21) | |
| 16,113 | | | 5,121 | | | 4,901 | | | 11,423 | | | 13,321 | |
Equity Method Investment in WLT: (g) | | | | | | | | | |
| Less: Loss from equity method investment in WLT | 926 | | | 1,376 | | | 4,005 | | | 4,483 | | | 4,180 | |
| Add: Distributions received from equity method investment in WLT | — | | | — | | | — | | | — | | | — | |
| 926 | | | 1,376 | | | 4,005 | | | 4,483 | | | 4,180 | |
Equity Method Investments in the Managed Programs: (h) | | | | | | | | | |
| Add: Distributions received from equity method investments in the Managed Programs | 2,142 | | | 477 | | | 454 | | | 432 | | | 409 | |
| Less: (Income) loss from equity method investments in the Managed Programs | (50) | | | (1,667) | | | 90 | | | 153 | | | (842) | |
| 2,092 | | | (1,190) | | | 544 | | | 585 | | | (433) | |
Adjusted EBITDA (i) | $ | 301,175 | | | $ | 287,028 | | | $ | 286,157 | | | $ | 276,379 | | | $ | 272,151 | |
________
(a)Comprised of items that we do not consider to be part of our core operating business plan or representative of our overall long-term operating performance, based on a number of factors, including the nature of the item and/or the frequency with which it occurs. We believe that these adjustments provide a more representative view of EBITDA from our core operating business and allow for more meaningful comparisons.
(b)Straight-line rent adjustments relate to our net-leased properties subject to operating leases.
(c)Amount for the three months ended December 31, 2021 includes an adjustment to exclude $37.8 million of lease termination fees received from a tenant, as such amount was determined to be non-core income.
(d)Primarily comprised of gains and losses on extinguishment of debt, the mark-to-market fair value of equity securities, and foreign currency transactions, as well as non-cash allowance for credit losses on loans receivable and direct financing leases. Amounts from period to period will not be comparable due to unpredictable fluctuations in these gains and losses.
(e)Amounts for the three months ended September 30, 2021 and June 30, 2021 are primarily comprised of reversals of estimated liabilities for German real estate transfer taxes that were previously recorded in connection with business combinations in prior years.
(f)Amounts for the three months ended December 31, 2021, March 31, 2021 and December 31, 2020 include non-cash impairment charges of $13.2 million, $6.8 million and $8.3 million, respectively, recognized on certain equity method investments in real estate.
(g)We record income and distributions from our equity method investment in WLT on a one quarter lag.
(h)Adjustments to include cash distributions received from the Managed Programs in place of our pro rata share of net income from our ownership in the Managed Programs.
| | | | | | | | |
| | Investing for the long runTM | 42 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2021
| | | | | |
| Adjusted EBITDA, Real Estate – Last Five Quarters |
In thousands.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2021 | | Sep. 30, 2021 | | Jun. 30, 2021 | | Mar. 31, 2021 | | Dec. 31, 2020 |
Net income from Real Estate | $ | 94,684 | | | $ | 130,897 | | | $ | 114,725 | | | $ | 44,594 | | | $ | 129,833 | |
| | | | | | | | | |
Adjustments to Derive Adjusted EBITDA (a) | | | | | | | | | |
| Depreciation and amortization | 135,662 | | | 115,657 | | | 114,348 | | | 110,322 | | | 110,913 | |
Straight-line and other leasing and financing adjustments (b) (c) | (53,380) | | | (10,823) | | | (10,313) | | | (8,751) | | | (9,571) | |
| Interest expense | 47,208 | | | 48,731 | | | 49,252 | | | 51,640 | | | 52,828 | |
Other (gains) and losses (d) | 27,131 | | | (48,172) | | | (7,472) | | | 42,189 | | | 1,475 | |
| Above- and below-market rent intangible lease amortization | 15,082 | | | 12,004 | | | 14,384 | | | 12,115 | | | 11,504 | |
| Gain on sale of real estate, net | (9,511) | | | (1,702) | | | (19,840) | | | (9,372) | | | (76,686) | |
Impairment charges | 7,945 | | | 16,301 | | | — | | | — | | | 16,410 | |
| Stock-based compensation expense | 6,091 | | | 4,361 | | | 9,048 | | | 5,381 | | | 5,795 | |
| Provision for income taxes | 5,331 | | | 7,827 | | | 9,119 | | | 6,426 | | | 5,549 | |
Merger and other expenses (e) | (599) | | | (908) | | | (2,599) | | | (491) | | | (724) | |
| Other amortization and non-cash charges | 385 | | | 386 | | | 391 | | | 411 | | | 403 | |
| 181,345 | | | 143,662 | | | 156,318 | | | 209,870 | | | 117,896 | |
| | | | | | | | | |
| Adjustments for Pro Rata Ownership | | | | | | | | | |
| Real Estate Joint Ventures: | | | | | | | | | |
Add: Pro rata share of adjustments for equity method investments (f) | 16,136 | | | 5,144 | | | 4,923 | | | 11,445 | | | 13,342 | |
Less: Pro rata share of adjustments for amounts attributable to noncontrolling interests | (23) | | | (23) | | | (22) | | | (22) | | | (21) | |
| 16,113 | | | 5,121 | | | 4,901 | | | 11,423 | | | 13,321 | |
Equity Method Investment in WLT: (g) | | | | | | | | | |
| Less: Loss from equity method investment in WLT | 926 | | | 1,376 | | | 4,005 | | | 4,483 | | | 4,180 | |
| Add: Distributions received from equity method investment in WLT | — | | | — | | | — | | | — | | | — | |
| 926 | | | 1,376 | | | 4,005 | | | 4,483 | | | 4,180 | |
Adjusted EBITDA – Real Estate (h) | $ | 293,068 | | | $ | 281,056 | | | $ | 279,949 | | | $ | 270,370 | | | $ | 265,230 | |
________
(a)Comprised of items that we do not consider to be part of our core operating business plan or representative of our overall long-term operating performance, based on a number of factors, including the nature of the item and/or the frequency with which it occurs. We believe that these adjustments provide a more representative view of EBITDA from our core operating business and allow for more meaningful comparisons.
(b)Straight-line rent adjustments relate to our net-leased properties subject to operating leases.
(c)Amount for the three months ended December 31, 2021 includes an adjustment to exclude $37.8 million of lease termination fees received from a tenant, as such amount was determined to be non-core income.
(d)Primarily comprised of gains and losses on extinguishment of debt, the mark-to-market fair value of equity securities, and foreign currency transactions, as well as non-cash allowance for credit losses on loans receivable and direct financing leases. Amounts from period to period will not be comparable due to unpredictable fluctuations in these gains and losses.
(e)Amounts for the three months ended September 30, 2021 and June 30, 2021 are primarily comprised of reversals of estimated liabilities for German real estate transfer taxes that were previously recorded in connection with business combinations in prior years.
(f)Amounts for the three months ended December 31, 2021, March 31, 2021 and December 31, 2020 include non-cash impairment charges of $13.2 million, $6.8 million and $8.3 million, respectively, recognized on certain equity method investments in real estate.
(g)We record income and distributions from our equity method investment in WLT on a one quarter lag.
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W. P. Carey Inc.
Appendix – Fourth Quarter 2021
| | | | | |
| Adjusted EBITDA, Investment Management – Last Five Quarters |
In thousands.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2021 | | Sep. 30, 2021 | | Jun. 30, 2021 | | Mar. 31, 2021 | | Dec. 31, 2020 |
| Net income from Investment Management | $ | 4,928 | | | $ | 7,689 | | | $ | 5,558 | | | $ | 7,047 | | | $ | 4,782 | |
| | | | | | | | | |
Adjustments to Derive Adjusted EBITDA (a) | | | | | | | | | |
Other (gains) and losses (b) | 1,330 | | | (1,047) | | | (73) | | | (1,001) | | | 452 | |
| (Benefit from) provision for income taxes | (279) | | | 520 | | | 179 | | | (637) | | | 1,814 | |
| Merger and other expenses | 36 | | | — | | | — | | | 15 | | | 306 | |
| 1,087 | | | (527) | | | 106 | | | (1,623) | | | 2,572 | |
| | | | | | | | | |
Adjustments for Pro Rata Ownership | | | | | | | | | |
Equity Method Investments in the Managed Programs: (c) | | | | | | | | | |
| Add: Distributions received from equity method investments in the Managed Programs | 2,142 | | | 477 | | | 454 | | | 432 | | | 409 | |
| Less: (Income) loss from equity method investments in the Managed Programs | (50) | | | (1,667) | | | 90 | | | 153 | | | (842) | |
| 2,092 | | | (1,190) | | | 544 | | | 585 | | | (433) | |
Adjusted EBITDA – Investment Management (d) | $ | 8,107 | | | $ | 5,972 | | | $ | 6,208 | | | $ | 6,009 | | | $ | 6,921 | |
________
(a)Comprised of items that we do not consider to be part of our core operating business plan or representative of our overall long-term operating performance, based on a number of factors, including the nature of the item and/or the frequency with which it occurs. We believe that these adjustments provide a more representative view of EBITDA from our core operating business and allow for more meaningful comparisons.
(b)Primarily comprised of gains and losses from foreign currency movements and marketable securities. Amounts from period to period will not be comparable due to unpredictable fluctuations in these gains and losses.
(c)Adjustments to include cash distributions received from the Managed Programs in place of our pro rata share of net income from our ownership in the Managed Programs.
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W. P. Carey Inc.
Appendix – Fourth Quarter 2021
| | | | | |
| Disclosures Regarding Non-GAAP and Other Metrics |
Non-GAAP Financial Disclosures
FFO and AFFO
Due to certain unique operating characteristics of real estate companies, as discussed below, NAREIT, an industry trade group, has promulgated a non-GAAP measure known as FFO, which we believe to be an appropriate supplemental measure, when used in addition to and in conjunction with results presented in accordance with GAAP, to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to, nor a substitute for, net income or loss as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as restated in December 2018. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property, impairment charges on real estate, gains or losses on changes in control of interests in real estate and depreciation and amortization from real estate assets; and after adjustments for unconsolidated partnerships and jointly owned investments. Adjustments for unconsolidated partnerships and jointly owned investments are calculated to reflect FFO.
We also modify the NAREIT computation of FFO to adjust GAAP net income for certain non-cash charges, such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rent and related reserves, other non-cash rent adjustments, non-cash allowance for credit losses on loans receivable and direct financing leases, stock-based compensation, non-cash environmental accretion expense, amortization of discounts and premiums on debt and amortization of deferred financing costs. 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 non-core income and expenses, such as gains or losses from extinguishment of debt and merger and acquisition expenses. We also exclude realized and unrealized gains/losses on foreign currency exchange transactions (other than those realized on the settlement of foreign currency 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 to arrive at AFFO as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs that are currently not engaged in acquisitions, mergers and restructuring, which are not part of our normal business operations. AFFO also reflects adjustments for unconsolidated partnerships and jointly owned investments. 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 as we believe 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 income computed under GAAP, or as alternatives to net cash provided by operating activities computed under GAAP, or as indicators of our ability to fund our cash needs.
Same Store Pro Rata Rental Income
Same store pro rata rental income is a non-GAAP financial measure that is intended to reflect the performance of our net leased properties. We define this as contractual rents from our leased properties. Same store rental income excludes reimbursable tenant costs, amortization of intangibles and straight-line rent adjustments that are included in GAAP lease revenues. We present same store rental income on a pro rata basis to account for our share of income related to unconsolidated joint ventures and noncontrolling interests. We believe that same store pro rata rental income is a helpful measure that both investors and management can use to evaluate the financial performance of our leased properties. Same store pro rata rental income should not be considered as an alternative to lease revenues as an indication of our financial performance or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present same store rental income and/or same store pro rata rental income may not be directly comparable to the way other REITs present such metrics.
Pro Rata Cash NOI
Cash net operating income (“cash NOI”) is a non-GAAP financial measure that is intended to reflect the performance of our net leased and operating properties. We define cash NOI as cash rents from our leased and operating properties less non-reimbursable property expenses. Cash NOI excludes amortization of intangibles and straight-line rent adjustments that are included in GAAP lease revenues. We present cash NOI on a pro rata basis (“pro rata cash NOI”) to account for our share of income related to unconsolidated joint ventures and noncontrolling interests. We believe that pro rata cash NOI is a helpful measure that both investors and management can use to evaluate the financial performance of our leased and operating properties and it allows for comparison of our operating performance between periods and to other REITs. Pro rata cash NOI should not be considered as an alternative to net income as an indication of our financial performance or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present cash NOI and/or pro rata cash NOI may not be directly comparable to the way other REITs present such metrics.
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W. P. Carey Inc.
Appendix – Fourth Quarter 2021
Normalized Pro Rata Cash NOI
Normalized pro rata cash NOI is pro rata cash NOI as defined above adjusted primarily to exclude our pro rata share of cash NOI from properties disposed of during the most recent quarter and to include a full quarter of pro rata cash NOI related to properties acquired or capital investments and commitments completed during the period, as applicable. We believe this measure provides a helpful representation of our net operating income from our in-place leased and operating properties.
Adjusted EBITDA
We believe that EBITDA is a useful supplemental measure to investors and analysts for assessing the performance of our business segments because (i) it removes the impact of our capital structure from our operating results and (ii) it is helpful when comparing our operating performance to that of companies in our industry without regard to such items, which can vary substantially from company to company. Adjusted EBITDA as disclosed represents EBITDA, modified to include other adjustments to GAAP net income for certain non-cash charges, such as impairments, non-cash rent adjustments and unrealized gains and losses from our hedging activity. Additionally, we exclude gains and losses on sale of real estate, which are not considered fundamental attributes of our business plans and do not affect our overall long-term operating performance. We exclude these items from adjusted EBITDA as they are not the primary drivers in our decision-making process. Adjusted EBITDA reflects adjustments for unconsolidated partnerships and jointly owned investments. Our assessment of our operations is focused on long-term sustainability and not on such non-cash and non-core items, which may cause short-term fluctuations in net income but have no impact on cash flows. We believe that adjusted EBITDA is a useful supplemental measure to investors and analysts, although it does not represent net income that is computed in accordance with GAAP. Accordingly, adjusted EBITDA should not be considered as an alternative to net income or as an indicator of our financial performance. EBITDA and adjusted EBITDA as calculated by us may not be comparable to similarly titled measures of other companies.
Cash Interest Expense
Cash interest expense is a non-GAAP financial measure equal to interest expense calculated in accordance with GAAP, plus capitalized interest and other non-cash amortization expense, less amortization of deferred financing costs and debt premiums/discounts, adjusted for pro rata ownership. See the definition of cash interest expense coverage ratio below for a reconciliation of cash interest expense to its most directly compared GAAP measure, interest expense.
Cash Interest Expense Coverage Ratio
Cash interest expense coverage ratio is a non-GAAP financial measure representing the ratio of Adjusted EBITDA to cash interest expense on a trailing 12 months basis. We believe this ratio is useful to investors as a supplemental measure of our ability to satisfy fixed interest expense obligations. Cash interest expense for the trailing 12 months as of December 31, 2021 is equal to $192.0 million, comprised of interest expense calculated in accordance with GAAP ($196.8 million), plus capitalized interest ($2.5 million) and other non-cash amortization expense ($0.7 million), less amortization of deferred financing costs and debt premiums/discounts ($13.5 million), adjusted for pro rata ownership ($5.5 million).
Other Metrics
Pro Rata Metrics
This supplemental package contains certain metrics prepared on a pro rata basis. We refer to these metrics as pro rata metrics. We have a number of investments, usually with our affiliates, in which our economic ownership is less than 100%. On a full consolidation basis, 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, which we do not control, we report our net investment and our net income or loss from that investment. On a pro rata basis, we present our proportionate share, based on our economic ownership of these jointly owned investments, of the assets, liabilities, revenues and expenses of those investments. Multiplying each of our jointly owned investments’ financial statement line items by our percentage ownership and adding or subtracting those amounts from our totals, as applicable, may not accurately depict the legal and economic implications of holding an ownership interest of less than 100% in our jointly owned investments.
ABR
ABR represents contractual minimum annualized base rent for our net-leased properties and reflects exchange rates as of December 31, 2021. If there is a rent abatement, we annualize the first monthly contractual base rent following the free rent period. ABR is not applicable to operating properties and is presented on a pro rata basis.
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| | Investing for the long runTM | 46 |
