Exhibit 99.2
W. P. Carey Inc.
Supplemental Information
Fourth Quarter 2019
Important Disclosures About This Supplemental Package
As used in this supplemental package, the terms “W. P. Carey,” “WPC,” “we,” “us” and “our” include W. P. Carey Inc., its consolidated subsidiaries and its predecessors, unless otherwise indicated. “REIT” means real estate investment trust. “CPA:17 – Global” means Corporate Property Associates 17 – Global Incorporated. “CPA:18 – Global” means Corporate Property Associates 18 – Global Incorporated. “CWI REITs” means Carey Watermark Investors Incorporated (“CWI 1”) and Carey Watermark Investors 2 Incorporated (“CWI 2”). “Managed REITs” means CPA:18 – Global and the CWI REITs. “Managed Programs” means the Managed REITs and Carey European Student Housing Fund I, L.P. (“CESH”). “CPA:17 Merger” means our merger with CPA:17 – Global, which was completed on October 31, 2018. CPA:17 – Global was included in the Managed REITs prior to the CPA:17 Merger. “U.S.” means United States. “AUM” means assets under management. “ABR” means contractual minimum annualized base rent. “SEC” means Securities and Exchange Commission.
Amounts may not sum to totals due to rounding.
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”); and normalized pro rata cash NOI. A description of these non-GAAP financial measures and reconciliations to their most directly comparable GAAP measures, as well as a description of other metrics presented, are provided within the Appendix to this supplemental package. FFO is a non-GAAP measure defined by the National Association of Real Estate Investments Trusts, Inc. (“NAREIT”), an industry trade group.
W. P. Carey Inc.
Supplemental Information – Fourth Quarter 2019
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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 2019
As of or for the three months ended December 31, 2019.
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Financial Results | | | | | | | | | |
| | | | | Segment | | |
| | | | | Owned Real Estate | | Investment Management | | Total |
Revenues, including reimbursable costs – consolidated ($000s) | | $ | 296,362 |
| | $ | 14,865 |
| | $ | 311,227 |
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Net income attributable to W. P. Carey ($000s) | | 124,333 |
| | 5,039 |
| | 129,372 |
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Net income attributable to W. P. Carey per diluted share | | 0.72 |
| | 0.03 |
| | 0.75 |
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Normalized pro rata cash NOI from real estate ($000s) (a) (b) | | 271,117 |
| | N/A |
| | 271,117 |
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Adjusted EBITDA ($000s) (a) (b) | | 270,272 |
| | 13,405 |
| | 283,677 |
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AFFO attributable to W. P. Carey ($000s) (a) (b) | | 210,188 |
| | 11,827 |
| | 222,015 |
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AFFO attributable to W. P. Carey per diluted share (a) (b) | | 1.21 |
| | 0.07 |
| | 1.28 |
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Dividends declared per share – fourth quarter | | | | | | 1.038 |
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Dividends declared per share – fourth quarter annualized | | | | | | 4.152 |
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Dividend yield – annualized, based on quarter end share price of $80.04 | | | | | | 5.2 | % |
Dividend payout ratio – for the year ended December 31, 2019 (c) | | | | | | 82.8 | % |
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Balance Sheet and Capitalization | | | | | | | | | |
Equity market capitalization – based on quarter end share price of $80.04 ($000s) | | | | | | $ | 13,789,150 |
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Pro rata net debt ($000s) (d) | | | | | | | | | 6,102,032 |
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Enterprise value ($000s) | | | | | | | | | 19,891,182 |
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Total consolidated debt ($000s) | | | | | | | | | 6,053,943 |
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Gross assets ($000s) (e) | | | | | | | | | 15,022,611 |
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Liquidity ($000s) (f) | | | | | | | | | 1,494,761 |
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Pro rata net debt to enterprise value (b) | | | | | | | | | 30.7 | % |
Pro rata net debt to adjusted EBITDA (annualized) (a) (b) | | | | | | 5.4x |
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Total consolidated debt to gross assets | | | | | | | | | 40.3 | % |
Total consolidated secured debt to gross assets | | | | | | | | | 9.7 | % |
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Weighted-average interest rate (b) | | | | | | | | | 3.2 | % |
Weighted-average debt maturity (years) (b) | | | | | | | | | 5.1 |
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Moody's Investors Service – corporate rating | | | | | | | | | Baa2 (stable) |
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Standard & Poor's Ratings Services – issuer rating | | | | | | | | | BBB (positive) |
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Real Estate Portfolio (Pro Rata) | | | | | | | | | |
ABR – total portfolio ($000s) (g) | | | | | | | | | $ | 1,118,519 |
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ABR – unencumbered portfolio ($000s) (g) (h) | | | | | | | | | $ | 817,034 |
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Number of net-leased properties | | | | | | | | | 1,214 |
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Number of operating properties (i) | | | | | | | | | 21 |
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Number of tenants – net-leased properties | | | | | | | | | 345 |
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ABR from investment grade tenants as a % of total ABR – net-leased properties (j) | | | | | | 30.1 | % |
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Net-leased properties – square footage (millions) | | | | | | | | | 140.0 |
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Occupancy – net-leased properties | | | | | | | | | 98.8 | % |
Weighted-average lease term (years) | | | | | | | | | 10.7 |
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Maximum commitment for capital investment projects expected to be completed during 2020 ($000s) | | | | $ | 242,567 |
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Acquisitions and completed capital investment projects – fourth quarter ($000s) | | | | 411,700 |
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Dispositions – fourth quarter ($000s) | | | | | | | | | 347,833 |
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(a) | Normalized pro rata cash NOI, adjusted EBITDA and AFFO are non-GAAP measures. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures and for details on how certain non-GAAP measures are calculated. |
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(b) | Presented on a pro rata basis. See the Terms and Definitions section in the Appendix for a description of pro rata. |
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(c) | Represents dividends declared per share divided by AFFO per diluted share on a year-to-date basis. |
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(d) | Represents total pro rata debt outstanding less consolidated cash and cash equivalents. See the Terms and Definitions section in the Appendix for a description of pro rata. |
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| | Investing for the long runTM | 1 |
W. P. Carey Inc.
Overview – Fourth Quarter 2019
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(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 $676.0 million and above-market rent intangible assets of $398.3 million. |
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(f) | Represents availability on our Senior Unsecured Credit Facility plus consolidated cash and cash equivalents. |
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(h) | Represents ABR from properties unencumbered by non-recourse mortgage debt |
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(i) | Comprised of 19 self-storage properties and two hotels, one of which was sold in January 2020. |
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(j) | Percentage of portfolio is based on ABR, as of December 31, 2019. Includes tenants or guarantors with investment grade ratings (22.0%) and subsidiaries of non-guarantor parent companies with investment grade ratings (8.1%). Investment grade refers to an entity with a rating of BBB- or higher from Standard & Poor’s Ratings Services or Baa3 or higher from Moody’s Investors Service. See the Terms and Definitions section in the Appendix for a description of ABR. |
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| | Investing for the long runTM | 2 |
W. P. Carey Inc.
Overview – Fourth Quarter 2019
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Components of Net Asset Value |
Dollars in thousands, except per share amounts.
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Real Estate | | | Three Months Ended
Dec. 31, 2019 | | Annualized |
Normalized pro rata cash NOI (a) (b) | | | $ | 271,117 |
| | $ | 1,084,468 |
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Investment Management | | | | | |
Adjusted EBITDA (a) (b) | | | 13,405 |
| | 53,620 |
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Selected Components of Adjusted EBITDA: | | | | | |
Asset management revenue (c) | | | 9,732 |
| | 38,928 |
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Structuring and other advisory revenue (c) | | | 1,061 |
| | N/A |
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Operating partnership interests in real estate cash flow of Managed REITs (d) | | 5,669 |
| | 22,676 |
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Back-end fees and interests associated with the Managed Programs | | | |
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Balance Sheet – Selected Information (Consolidated Unless Otherwise Stated) | | As of Dec. 31, 2019 |
Assets | | | | | |
Book value of real estate excluded from normalized pro rata cash NOI (e) | | | | $ | 186,454 |
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Cash and cash equivalents | | | | | 196,028 |
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Due from affiliates | | | | | 57,816 |
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Other assets, net: | | | | | |
Investment in shares of a cold storage operator | | | | | $ | 146,190 |
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Straight-line rent adjustments | | | | | 137,428 |
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Restricted cash, including escrow | | | | | 55,490 |
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Loans receivable | | | | | 47,737 |
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Accounts receivable | | | | | 46,481 |
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Taxes receivable | | | | | 45,268 |
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Deferred charges | | | | | 40,119 |
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Deposits for construction | | | | | 36,472 |
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Securities and derivatives | | | | | 29,423 |
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Investment in shares of Guggenheim Credit Income Fund | | | | | 12,177 |
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Deferred income taxes | | | | | 8,901 |
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Other intangible assets, net | | | | | 8,075 |
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Prepaid expenses | | | | | 7,741 |
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Office lease right-of-use assets, net (f) | | | | | 7,519 |
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Leasehold improvements, furniture and fixtures | | | | 1,580 |
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Other | | | | | 1,036 |
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Total other assets, net | | | | | $ | 631,637 |
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Liabilities | | | | | |
Total pro rata debt outstanding (b) (g) | | | | | $ | 6,298,060 |
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Dividends payable | | | | | 181,346 |
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Deferred income taxes | | | | | 179,309 |
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Accounts payable, accrued expenses and other liabilities: | | | | | |
Accounts payable and accrued expenses | | | | | $ | 160,360 |
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Prepaid and deferred rents | | | | | 118,121 |
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Operating lease liabilities (f) | | | | | 87,658 |
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Accrued taxes payable | | | | | 44,255 |
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Tenant security deposits | | | | | 41,171 |
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Securities and derivatives | | | | | 6,174 |
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Other | | | | | 29,666 |
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Total accounts payable, accrued expenses and other liabilities | | | | | $ | 487,405 |
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| | Investing for the long runTM | 3 |
W. P. Carey Inc.
Overview – Fourth Quarter 2019
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Other | Ownership % | | Number of Shares / Units Owned | | NAV | | Implied Value |
| | | A | | B | | A x B |
Ownership in Managed Programs: (h) | | | | | | |
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CPA:18 – Global | 3.9 | % | | 5,753,883 |
| | $ | 8.67 |
| (i) | $ | 49,886 |
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CWI 1 | 3.9 | % | | 5,632,897 |
| | 10.39 |
| (i) | 58,526 |
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CWI 2 | 3.8 | % | | 3,506,798 |
| | 11.41 |
| (i) | 40,013 |
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CESH | 2.4 | % | | 3,492 |
| | 1,000.00 |
| (j) | 3,492 |
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| | | | | | | $ | 151,917 |
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________
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(a) | Normalized pro rata cash NOI and adjusted EBITDA are non-GAAP measures. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures and for details on how they are calculated. |
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(b) | Presented on a pro rata basis. See the Terms and Definitions section in the Appendix for a description of pro rata. |
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(c) | Amounts are gross of fees paid to the respective subadvisors of CWI 1 and CWI 2. |
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(d) | We are entitled to receive distributions of up to 10% of the Available Cash of each of the Managed REITs, as defined in their respective operating partnership agreements. Pursuant to the terms of their subadvisory agreements, however, 20% of the distributions of Available Cash we receive from CWI 1 and 25% of the distributions of Available Cash we receive from CWI 2 are paid to their respective subadvisors. Amounts for CWI 1 and CWI 2 are net of fees paid to their respective subadvisors. |
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(e) | Represents the value of real estate not included in normalized pro rata cash NOI, such as vacant assets, in-progress build-to-suit properties, a common equity interest in a Las Vegas retail center and an unstabilized hotel operating property, which was classified as held for sale as of December 31, 2019 and sold in January 2020. |
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(f) | We adopted Accounting Standards Update 2016-02, Leases (Topic 842) for our interim and annual periods beginning January 1, 2019, whereby the rights and obligations of lessees under substantially all leases, existing and new, are capitalized and recorded on the balance sheet. As a result, we recognized $114.2 million of land lease right-of-use assets included in In-place lease intangible assets and other, $7.5 million of office lease right-of-use assets in Other assets, net, and $87.7 million of corresponding operating lease liabilities for certain operating office and land lease arrangements in Accounts payable, accrued expenses and other liabilities as of December 31, 2019. |
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(g) | Excludes unamortized discount, net totaling $26.8 million and unamortized deferred financing costs totaling $23.6 million as of December 31, 2019. |
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(h) | Separate from operating partnership interests in the Managed REITs and our interests in unconsolidated real estate joint ventures with our affiliate, CPA:18 – Global. |
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(i) | We calculated the estimated net asset values per share (“NAVs”) by relying in part on an estimate of the fair market values of the respective real estate portfolios adjusted to give effect to mortgage loans, both provided by third parties, as well as other adjustments. Refer to the SEC filings of the Managed REITs for the calculation methodologies of the respective NAVs. |
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(j) | We own limited partnership units of CESH at its private placement price of $1,000 per unit; we do not intend to calculate a NAV for CESH. |
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| | Investing for the long runTM | 4 |
W. P. Carey Inc.
Financial Results
Fourth Quarter 2019
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| | Investing for the long runTM | 5 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2019 |
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Consolidated Statements of Income – Last Five Quarters |
In thousands, except share and per share amounts.
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| Three Months Ended |
| Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 | | Mar. 31, 2019 | | Dec. 31, 2018 |
Revenues | | | | | | | | | |
Real Estate: | | | | | | | | | |
Lease revenues | $ | 274,795 |
| | $ | 278,839 |
| | $ | 269,802 |
| | $ | 262,939 |
| | $ | 233,632 |
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Lease termination income and other | 12,317 |
| | 14,377 |
| | 6,304 |
| | 3,270 |
| | 2,952 |
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Operating property revenues | 9,250 |
| | 9,538 |
| | 15,436 |
| | 15,996 |
| | 11,707 |
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| 296,362 |
| | 302,754 |
| | 291,542 |
| | 282,205 |
| | 248,291 |
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Investment Management: | | | | | | | | | |
Asset management revenue | 9,732 |
| | 9,878 |
| | 9,790 |
| | 9,732 |
| | 11,954 |
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Reimbursable costs from affiliates | 4,072 |
| | 4,786 |
| | 3,821 |
| | 3,868 |
| | 5,042 |
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Structuring and other advisory revenue | 1,061 |
| | 587 |
| | 58 |
| | 2,518 |
| | 8,108 |
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| 14,865 |
| | 15,251 |
| | 13,669 |
| | 16,118 |
| | 25,104 |
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| 311,227 |
| | 318,005 |
| | 305,211 |
| | 298,323 |
| | 273,395 |
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Operating Expenses | | | | | | | | | |
Depreciation and amortization | 111,607 |
| | 109,517 |
| | 113,632 |
| | 112,379 |
| | 93,321 |
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General and administrative | 17,069 |
| | 17,210 |
| | 19,729 |
| | 21,285 |
| | 17,449 |
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Reimbursable tenant costs | 12,877 |
| | 15,611 |
| | 13,917 |
| | 13,171 |
| | 10,145 |
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Property expenses, excluding reimbursable tenant costs | 9,341 |
| | 10,377 |
| | 9,915 |
| | 9,912 |
| | 8,319 |
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Operating property expenses | 8,000 |
| | 8,547 |
| | 10,874 |
| | 10,594 |
| | 7,844 |
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Impairment charges | 6,758 |
| | 25,781 |
| | — |
| | — |
| | — |
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Stock-based compensation expense | 4,939 |
| | 4,747 |
| | 4,936 |
| | 4,165 |
| | 3,902 |
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Reimbursable costs from affiliates | 4,072 |
| | 4,786 |
| | 3,821 |
| | 3,868 |
| | 5,042 |
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Subadvisor fees (a) | 1,964 |
| | 1,763 |
| | 1,650 |
| | 2,202 |
| | 2,226 |
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Merger and other expenses (b) | (811 | ) | | 70 |
| | 696 |
| | 146 |
| | 37,098 |
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| 175,816 |
| | 198,409 |
| | 179,170 |
| | 177,722 |
| | 185,346 |
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Other Income and Expenses | | | | | | | | | |
Interest expense | (53,667 | ) | | (58,626 | ) | | (59,719 | ) | | (61,313 | ) | | (57,250 | ) |
Other gains and (losses) (c) | 43,593 |
| | (12,402 | ) | | (671 | ) | | 955 |
| | 13,215 |
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Gain (loss) on sale of real estate, net | 17,501 |
| | 71 |
| | (362 | ) | | 933 |
| | 99,618 |
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Equity in earnings of equity method investments in the Managed Programs and real estate | 8,018 |
| | 5,769 |
| | 3,951 |
| | 5,491 |
| | 15,268 |
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(Loss) gain on change in control of interests (d) (e) | — |
| | (8,416 | ) | | — |
| | — |
| | 47,814 |
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| 15,445 |
| | (73,604 | ) | | (56,801 | ) | | (53,934 | ) | | 118,665 |
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Income before income taxes | 150,856 |
| | 45,992 |
| | 69,240 |
| | 66,667 |
| | 206,714 |
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(Provision for) benefit from income taxes | (21,064 | ) | | (4,157 | ) | | (3,119 | ) | | 2,129 |
| | (11,436 | ) |
Net Income | 129,792 |
| | 41,835 |
| | 66,121 |
| | 68,796 |
| | 195,278 |
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Net income attributable to noncontrolling interests | (420 | ) | | (496 | ) | | (83 | ) | | (302 | ) | | (2,015 | ) |
Net Income Attributable to W. P. Carey | $ | 129,372 |
| | $ | 41,339 |
| | $ | 66,038 |
| | $ | 68,494 |
| | $ | 193,263 |
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Basic Earnings Per Share | $ | 0.75 |
| | $ | 0.24 |
| | $ | 0.39 |
| | $ | 0.41 |
| | $ | 1.33 |
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Diluted Earnings Per Share | $ | 0.75 |
| | $ | 0.24 |
| | $ | 0.38 |
| | $ | 0.41 |
| | $ | 1.33 |
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Weighted-Average Shares Outstanding | | | | | | | | | |
Basic | 173,153,811 |
| | 172,235,066 |
| | 171,304,112 |
| | 167,234,121 |
| | 145,480,858 |
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Diluted | 173,442,101 |
| | 172,486,506 |
| | 171,490,625 |
| | 167,434,740 |
| | 145,716,583 |
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Dividends Declared Per Share | $ | 1.038 |
| | $ | 1.036 |
| | $ | 1.034 |
| | $ | 1.032 |
| | $ | 1.030 |
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(a) | Primarily comprised of fees paid to subadvisors for CWI 1 and CWI 2. Refer to the Managed Programs Fee Summary section for further information. |
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(b) | Amount for the three months ended December 31, 2018 is primarily comprised of costs incurred in connection with the CPA:17 Merger. |
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(c) | Amount for the three months ended December 31, 2019 is primarily comprised of mark-to-market adjustment for our investment in shares of a cold storage operator of $36.1 million, realized gains on foreign currency exchange derivatives of $4.2 million and net gains on foreign currency transactions of $3.6 million. |
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(d) | Amount for the three months ended September 30, 2019 represents a loss recognized on the purchase of the remaining interest in an investment from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. We recognized this loss because we identified certain measurement period adjustments during the third quarter of 2019 that impacted the provisional accounting for this investment. |
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(e) | Amount for the three months ended December 31, 2018 includes a gain of $18.8 million recognized on the purchase of the remaining interests in six investments from CPA:17 – Global in the CPA:17 Merger, which we had previously accounted for under the equity method. Amount for the three months ended December 31, 2018 also includes a gain of $29.0 million recognized on our previously held interest in shares of CPA:17 – Global common stock in connection with the CPA:17 Merger. |
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| | Investing for the long runTM | 6 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2019 |
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Statements of Income, Real Estate – Last Five Quarters |
In thousands, except share and per share amounts.
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| Three Months Ended |
| Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 | | Mar. 31, 2019 | | Dec. 31, 2018 |
Revenues | | | | | | | | | |
Lease revenues | $ | 274,795 |
| | $ | 278,839 |
| | $ | 269,802 |
| | $ | 262,939 |
| | $ | 233,632 |
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Lease termination income and other | 12,317 |
| | 14,377 |
| | 6,304 |
| | 3,270 |
| | 2,952 |
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Operating property revenues | 9,250 |
| | 9,538 |
| | 15,436 |
| | 15,996 |
| | 11,707 |
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| 296,362 |
| | 302,754 |
| | 291,542 |
| | 282,205 |
| | 248,291 |
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Operating Expenses | | | | | | | | | |
Depreciation and amortization | 110,648 |
| | 108,573 |
| | 112,666 |
| | 111,413 |
| | 92,330 |
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Reimbursable tenant costs | 12,877 |
| | 15,611 |
| | 13,917 |
| | 13,171 |
| | 10,145 |
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General and administrative | 12,634 |
| | 13,973 |
| | 15,001 |
| | 15,188 |
| | 13,197 |
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Property expenses, excluding reimbursable tenant costs | 9,341 |
| | 10,377 |
| | 9,915 |
| | 9,912 |
| | 8,319 |
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Operating property expenses | 8,000 |
| | 8,547 |
| | 10,874 |
| | 10,594 |
| | 7,844 |
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Impairment charges | 6,758 |
| | 25,781 |
| | — |
| | — |
| | — |
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Stock-based compensation expense | 3,531 |
| | 3,435 |
| | 3,482 |
| | 2,800 |
| | 2,774 |
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Merger and other expenses (a) | (811 | ) | | 70 |
| | 696 |
| | 146 |
| | 37,098 |
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| 162,978 |
| | 186,367 |
| | 166,551 |
| | 163,224 |
| | 171,707 |
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Other Income and Expenses | | | | | | | | | |
Interest expense | (53,667 | ) | | (58,626 | ) | | (59,719 | ) | | (61,313 | ) | | (57,250 | ) |
Other gains and (losses) | 43,581 |
| | (12,938 | ) | | (1,362 | ) | | 970 |
| | 15,075 |
|
Gain (loss) on sale of real estate, net | 17,501 |
| | 71 |
| | (362 | ) | | 933 |
| | 99,618 |
|
Equity in earnings (losses) of equity method investments in real estate | 1,631 |
| | 578 |
| | 230 |
| | (78 | ) | | 1,755 |
|
(Loss) gain on change in control of interests (b) (c) | — |
| | (8,416 | ) | | — |
| | — |
| | 18,792 |
|
| 9,046 |
| | (79,331 | ) | | (61,213 | ) | | (59,488 | ) | | 77,990 |
|
Income before income taxes | 142,430 |
| | 37,056 |
| | 63,778 |
| | 59,493 |
| | 154,574 |
|
Provision for income taxes | (18,113 | ) | | (3,511 | ) | | (3,019 | ) | | (6,159 | ) | | (948 | ) |
Net Income from Real Estate | 124,317 |
|
| 33,545 |
|
| 60,759 |
|
| 53,334 |
|
| 153,626 |
|
Net loss (income) attributable to noncontrolling interests | 16 |
|
| 11 |
|
| 9 |
|
| 74 |
|
| (2,015 | ) |
Net Income from Real Estate Attributable to W. P. Carey | $ | 124,333 |
| | $ | 33,556 |
| | $ | 60,768 |
| | $ | 53,408 |
| | $ | 151,611 |
|
| | | | | | | | | |
Basic Earnings Per Share | $ | 0.72 |
| | $ | 0.19 |
| | $ | 0.36 |
| | $ | 0.32 |
| | $ | 1.04 |
|
Diluted Earnings Per Share | $ | 0.72 |
| | $ | 0.19 |
| | $ | 0.35 |
| | $ | 0.32 |
| | $ | 1.04 |
|
Weighted-Average Shares Outstanding | | | | | | | | | |
Basic | 173,153,811 |
| | 172,235,066 |
| | 171,304,112 |
| | 167,234,121 |
| | 145,480,858 |
|
Diluted | 173,442,101 |
| | 172,486,506 |
| | 171,490,625 |
| | 167,434,740 |
| | 145,716,583 |
|
________
| |
(a) | Amount for the three months ended December 31, 2018 is primarily comprised of costs incurred in connection with the CPA:17 Merger. |
| |
(b) | Amount for the three months ended September 30, 2019 represents a loss recognized on the purchase of the remaining interest in an investment from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. We recognized this loss because we identified certain measurement period adjustments during the third quarter of 2019 that impacted the provisional accounting for this investment. |
| |
(c) | Amount for the three months ended December 31, 2018 represents a gain recognized on the purchase of the remaining interests in six investments from CPA:17 – Global in the CPA:17 Merger, which we had previously accounted for under the equity method. |
|
| | |
| | Investing for the long runTM | 7 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2019 |
| |
Statements of Income, Investment Management – Last Five Quarters |
In thousands, except share and per share amounts.
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 | | Mar. 31, 2019 | | Dec. 31, 2018 |
Revenues | | | | | | | | | |
Asset management revenue | $ | 9,732 |
| | $ | 9,878 |
| | $ | 9,790 |
| | $ | 9,732 |
| | $ | 11,954 |
|
Reimbursable costs from affiliates | 4,072 |
| | 4,786 |
| | 3,821 |
| | 3,868 |
| | 5,042 |
|
Structuring and other advisory revenue | 1,061 |
| | 587 |
| | 58 |
| | 2,518 |
| | 8,108 |
|
| 14,865 |
| | 15,251 |
| | 13,669 |
| | 16,118 |
| | 25,104 |
|
Operating Expenses | | | | | | | | | |
General and administrative | 4,435 |
| | 3,237 |
| | 4,728 |
| | 6,097 |
| | 4,252 |
|
Reimbursable costs from affiliates | 4,072 |
| | 4,786 |
| | 3,821 |
| | 3,868 |
| | 5,042 |
|
Subadvisor fees (a) | 1,964 |
| | 1,763 |
| | 1,650 |
| | 2,202 |
| | 2,226 |
|
Stock-based compensation expense | 1,408 |
| | 1,312 |
| | 1,454 |
| | 1,365 |
| | 1,128 |
|
Depreciation and amortization | 959 |
| | 944 |
| | 966 |
| | 966 |
| | 991 |
|
| 12,838 |
| | 12,042 |
| | 12,619 |
| | 14,498 |
| | 13,639 |
|
Other Income and Expenses | | | | | | | | | |
Equity in earnings of equity method investments in the Managed Programs | 6,387 |
| | 5,191 |
| | 3,721 |
| | 5,569 |
| | 13,513 |
|
Other gains and (losses) | 12 |
| | 536 |
| | 691 |
| | (15 | ) | | (1,860 | ) |
Gain on change in control of interests (b) | — |
| | — |
| | — |
| | — |
| | 29,022 |
|
| 6,399 |
| | 5,727 |
| | 4,412 |
| | 5,554 |
| | 40,675 |
|
Income before income taxes | 8,426 |
| | 8,936 |
| | 5,462 |
| | 7,174 |
| | 52,140 |
|
(Provision for) benefit from income taxes | (2,951 | ) | | (646 | ) | | (100 | ) | | 8,288 |
| | (10,488 | ) |
Net Income from Investment Management | 5,475 |
| | 8,290 |
| | 5,362 |
| | 15,462 |
| | 41,652 |
|
Net income attributable to noncontrolling interests | (436 | ) | | (507 | ) | | (92 | ) | | (376 | ) | | — |
|
Net Income from Investment Management Attributable to W. P. Carey | $ | 5,039 |
| | $ | 7,783 |
| | $ | 5,270 |
| | $ | 15,086 |
| | $ | 41,652 |
|
| | | | | | | | | |
Basic Earnings Per Share | $ | 0.03 |
| | $ | 0.05 |
| | $ | 0.03 |
| | $ | 0.09 |
| | $ | 0.29 |
|
Diluted Earnings Per Share | $ | 0.03 |
| | $ | 0.05 |
| | $ | 0.03 |
| | $ | 0.09 |
| | $ | 0.29 |
|
Weighted-Average Shares Outstanding | | | | | | | | | |
Basic | 173,153,811 |
| | 172,235,066 |
| | 171,304,112 |
| | 167,234,121 |
| | 145,480,858 |
|
Diluted | 173,442,101 |
| | 172,486,506 |
| | 171,490,625 |
| | 167,434,740 |
| | 145,716,583 |
|
________
| |
(a) | Primarily comprised of fees paid to subadvisors for CWI 1 and CWI 2. Refer to the Managed Programs Fee Summary section for further information. |
| |
(b) | Amount for the three months ended December 31, 2018 represents a gain recognized on our previously held interest in shares of CPA:17 – Global common stock in connection with the CPA:17 Merger. |
|
| | |
| | Investing for the long runTM | 8 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2019
|
| |
FFO and AFFO, Consolidated – Last Five Quarters |
In thousands, except share and per share amounts. |
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 | | Mar. 31, 2019 | | Dec. 31, 2018 |
Net income attributable to W. P. Carey | $ | 129,372 |
| | $ | 41,339 |
| | $ | 66,038 |
| | $ | 68,494 |
| | $ | 193,263 |
|
Adjustments: | | | | | | | | | |
Depreciation and amortization of real property | 110,354 |
| | 108,279 |
| | 112,360 |
| | 111,103 |
| | 92,018 |
|
(Gain) loss on sale of real estate, net | (17,501 | ) | | (71 | ) | | 362 |
| | (933 | ) | | (99,618 | ) |
Impairment charges | 6,758 |
| | 25,781 |
| | — |
| | — |
| | — |
|
Loss (gain) on change in control of interests (a) (b) | — |
| | 8,416 |
| | — |
| | — |
| | (47,814 | ) |
Proportionate share of adjustments to equity in net income of partially owned entities (c) | 2,703 |
| | 4,210 |
| | 4,489 |
| | 4,424 |
| | 3,225 |
|
Proportionate share of adjustments for noncontrolling interests (d) | (4 | ) | | (4 | ) | | (31 | ) | | (30 | ) | | (762 | ) |
Total adjustments | 102,310 |
| | 146,611 |
| | 117,180 |
| | 114,564 |
| | (52,951 | ) |
FFO (as defined by NAREIT) Attributable to W. P. Carey (e) | 231,682 |
| | 187,950 |
| | 183,218 |
| | 183,058 |
| | 140,312 |
|
Adjustments: | | | | | | | | | |
Other (gains) and losses (f) | (38,196 | ) | | 18,618 |
| | 5,724 |
| | 4,930 |
| | (9,001 | ) |
Above- and below-market rent intangible lease amortization, net | 17,037 |
| | 14,969 |
| | 16,450 |
| | 15,927 |
| | 14,985 |
|
Tax expense (benefit) – deferred and other (g) | 12,874 |
| | (1,039 | ) | | (933 | ) | | (4,928 | ) | | 6,288 |
|
Straight-line and other rent adjustments (h) | (11,184 | ) | | (6,370 | ) | | (7,975 | ) | | (6,258 | ) | | (6,096 | ) |
Stock-based compensation | 4,939 |
| | 4,747 |
| | 4,936 |
| | 4,165 |
| | 3,902 |
|
Amortization of deferred financing costs | 3,225 |
| | 2,991 |
| | 2,774 |
| | 2,724 |
| | 2,572 |
|
Merger and other expenses (i) | (811 | ) | | 70 |
| | 696 |
| | 146 |
| | 37,098 |
|
Other amortization and non-cash items | 546 |
| | 379 |
| | 1,706 |
| | 567 |
| | 468 |
|
Proportionate share of adjustments to equity in net income of partially owned entities (c) | 1,908 |
| | 1,920 |
| | 1,876 |
| | 1,461 |
| | 3,192 |
|
Proportionate share of adjustments for noncontrolling interests (d) | (5 | ) | | (12 | ) | | (7 | ) | | (25 | ) | | 140 |
|
Total adjustments | (9,667 | ) | | 36,273 |
| | 25,247 |
| | 18,709 |
| | 53,548 |
|
AFFO Attributable to W. P. Carey (e) | $ | 222,015 |
| | $ | 224,223 |
| | $ | 208,465 |
| | $ | 201,767 |
| | $ | 193,860 |
|
| | | | | | | | | |
Summary | | | | | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey (e) | $ | 231,682 |
| | $ | 187,950 |
| | $ | 183,218 |
| | $ | 183,058 |
| | $ | 140,312 |
|
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (e) | $ | 1.34 |
| | $ | 1.09 |
| | $ | 1.07 |
| | $ | 1.09 |
| | $ | 0.96 |
|
AFFO attributable to W. P. Carey (e) | $ | 222,015 |
| | $ | 224,223 |
| | $ | 208,465 |
| | $ | 201,767 |
| | $ | 193,860 |
|
AFFO attributable to W. P. Carey per diluted share (e) | $ | 1.28 |
| | $ | 1.30 |
| | $ | 1.22 |
| | $ | 1.21 |
| | $ | 1.33 |
|
Diluted weighted-average shares outstanding | 173,442,101 |
| | 172,486,506 |
| | 171,490,625 |
| | 167,434,740 |
| | 145,716,583 |
|
________
| |
(a) | Amount for the three months ended September 30, 2019 represents a loss recognized on the purchase of the remaining interest in a real estate investment from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. We recognized this loss because we identified certain measurement period adjustments during the third quarter of 2019 that impacted the provisional accounting for this investment. |
| |
(b) | Amount for the three months ended December 31, 2018 includes a gain recognized on the purchase of the remaining interests in six investments from CPA:17 – Global in the CPA:17 Merger, which we had previously accounted for under the equity method. Amount for the three months ended December 31, 2018 also includes a gain recognized on our previously held interest in shares of CPA:17 – Global common stock in connection with the CPA:17 Merger. |
| |
(c) | Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Equity in earnings of equity method investments in the Managed Programs and real estate on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis. |
| |
(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 the Terms and Definitions section in the Appendix for a description of our non-GAAP measures. |
| |
(f) | Amount for the three months ended December 31, 2019 is primarily comprised of gain on marketable securities of $35.4 million and gains from foreign currency movements of $3.6 million. Beginning in the second quarter of 2019, we aggregated (gain) loss on extinguishment of debt and realized (gains) losses on foreign currency (both of which were previously disclosed as separate AFFO adjustment line items), as well as certain other adjustments, within this line item, which is comprised of adjustments related to Other gains and (losses) on our consolidated statements of income. Prior period amounts have been reclassified to conform to the current period presentation. |
| |
(g) | Amount for the three months ended March 31, 2019 includes a current tax benefit and amount for the three months ended December 31, 2018 includes a current tax expense, both of which are excluded from AFFO as they were incurred as a result of the CPA:17 Merger. |
| |
(h) | Amount for the three months ended December 31, 2019 includes an adjustment to exclude $6.2 million of non-cash lease termination revenue, which will be collected and reflected within AFFO over the remaining master lease term. |
| |
(i) | Amount for the three months ended December 31, 2018 is primarily comprised of costs incurred in connection with the CPA:17 Merger. |
|
| | |
| | Investing for the long runTM | 9 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2019
|
| |
FFO and AFFO, Real Estate – Last Five Quarters |
In thousands, except share and per share amounts. |
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 | | Mar. 31, 2019 | | Dec. 31, 2018 |
Net income from Real Estate attributable to W. P. Carey | $ | 124,333 |
| | $ | 33,556 |
| | $ | 60,768 |
| | $ | 53,408 |
| | $ | 151,611 |
|
Adjustments: | | | | | | | | | |
Depreciation and amortization of real property | 110,354 |
| | 108,279 |
| | 112,360 |
| | 111,103 |
| | 92,018 |
|
(Gain) loss on sale of real estate, net | (17,501 | ) | | (71 | ) | | 362 |
| | (933 | ) | | (99,618 | ) |
Impairment charges | 6,758 |
| | 25,781 |
| | — |
| | — |
| | — |
|
Loss (gain) on change in control of interests (a) (b) | — |
| | 8,416 |
| | — |
| | — |
| | (18,792 | ) |
Proportionate share of adjustments to equity in net income of partially owned entities (c) | 2,703 |
| | 4,210 |
| | 4,489 |
| | 4,424 |
| | 3,225 |
|
Proportionate share of adjustments for noncontrolling interests (d) | (4 | ) | | (4 | ) | | (31 | ) | | (30 | ) | | (762 | ) |
Total adjustments | 102,310 |
| | 146,611 |
| | 117,180 |
| | 114,564 |
| | (23,929 | ) |
FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (e) | 226,643 |
| | 180,167 |
| | 177,948 |
| | 167,972 |
| | 127,682 |
|
Adjustments: | | | | | | | | | |
Other (gains) and losses (f) | (38,546 | ) | | 18,956 |
| | 5,888 |
| | 3,929 |
| | (11,269 | ) |
Above- and below-market rent intangible lease amortization, net | 17,037 |
| | 14,969 |
| | 16,450 |
| | 15,927 |
| | 14,985 |
|
Straight-line and other rent adjustments (g) | (11,184 | ) | | (6,370 | ) | | (7,975 | ) | | (6,258 | ) | | (6,096 | ) |
Tax expense (benefit) – deferred and other | 9,748 |
| | (1,414 | ) | | (853 | ) | | 490 |
| | (3,949 | ) |
Stock-based compensation | 3,531 |
| | 3,435 |
| | 3,482 |
| | 2,800 |
| | 2,774 |
|
Amortization of deferred financing costs | 3,225 |
| | 2,991 |
| | 2,774 |
| | 2,724 |
| | 2,572 |
|
Merger and other expenses (h) | (811 | ) | | 70 |
| | 696 |
| | 146 |
| | 37,098 |
|
Other amortization and non-cash items | 348 |
| | 180 |
| | 1,510 |
| | 502 |
| | 260 |
|
Proportionate share of adjustments to equity in net income of partially owned entities (c) | 202 |
| | (113 | ) | | (89 | ) | | 115 |
| | (260 | ) |
Proportionate share of adjustments for noncontrolling interests (d) | (5 | ) | | (12 | ) | | (7 | ) | | (25 | ) | | 140 |
|
Total adjustments | (16,455 | ) | | 32,692 |
| | 21,876 |
| | 20,350 |
| | 36,255 |
|
AFFO Attributable to W. P. Carey – Real Estate (e) | $ | 210,188 |
| | $ | 212,859 |
| | $ | 199,824 |
| | $ | 188,322 |
| | $ | 163,937 |
|
| | | | | | | | | |
Summary | | | | | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (e) | $ | 226,643 |
| | $ | 180,167 |
| | $ | 177,948 |
| | $ | 167,972 |
| | $ | 127,682 |
|
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (e) | $ | 1.31 |
| | $ | 1.04 |
| | $ | 1.04 |
| | $ | 1.00 |
| | $ | 0.87 |
|
AFFO attributable to W. P. Carey – Real Estate (e) | $ | 210,188 |
| | $ | 212,859 |
| | $ | 199,824 |
| | $ | 188,322 |
| | $ | 163,937 |
|
AFFO attributable to W. P. Carey per diluted share – Real Estate (e) | $ | 1.21 |
| | $ | 1.23 |
| | $ | 1.17 |
| | $ | 1.13 |
| | $ | 1.12 |
|
Diluted weighted-average shares outstanding | 173,442,101 |
| | 172,486,506 |
| | 171,490,625 |
| | 167,434,740 |
| | 145,716,583 |
|
________
| |
(a) | Amount for the three months ended September 30, 2019 represents a loss recognized on the purchase of the remaining interest in a real estate investment from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. We recognized this loss because we identified certain measurement period adjustments during the third quarter of 2019 that impacted the provisional accounting for this investment. |
| |
(b) | Amount for the three months December 31, 2018 represents a gain recognized on the purchase of the remaining interests in six investments from CPA:17 – Global in the CPA:17 Merger, which we had previously accounted for under the equity method. |
| |
(c) | Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Equity in earnings of equity method investments in the Managed Programs and real estate on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis. |
| |
(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 the Terms and Definitions section in the Appendix for a description of our non-GAAP measures. |
| |
(f) | Amount for the three months ended December 31, 2019 is primarily comprised of gain on marketable securities of $36.1 million and gains from foreign currency movements of $3.6 million. Beginning in the second quarter of 2019, we aggregated (gain) loss on extinguishment of debt and realized (gains) losses on foreign currency (both of which were previously disclosed as separate AFFO adjustment line items), as well as certain other adjustments, within this line item, which is comprised of adjustments related to Other gains and (losses) on our consolidated statements of income. Prior period amounts have been reclassified to conform to the current period presentation. |
| |
(g) | Amount for the three months ended December 31, 2019 includes an adjustment to exclude $6.2 million of non-cash lease termination revenue, which will be collected and reflected within AFFO over the remaining master lease term. |
| |
(h) | Amount for the three months ended December 31, 2018 is primarily comprised of costs incurred in connection with the CPA:17 Merger. |
|
| | |
| | Investing for the long runTM | 10 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2019
|
| |
FFO and AFFO, Investment Management – Last Five Quarters |
In thousands, except share and per share amounts. |
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 | | Mar. 31, 2019 | | Dec. 31, 2018 |
Net income from Investment Management attributable to W. P. Carey | $ | 5,039 |
| | $ | 7,783 |
| | $ | 5,270 |
| | $ | 15,086 |
| | $ | 41,652 |
|
Adjustments: | | | | | | | | | |
Gain on change in control of interests (a) | — |
| | — |
| | — |
| | — |
| | (29,022 | ) |
Total adjustments | — |
| | — |
| | — |
| | — |
| | (29,022 | ) |
FFO (as defined by NAREIT) Attributable to W. P. Carey – Investment Management (b) | 5,039 |
| | 7,783 |
| | 5,270 |
| | 15,086 |
| | 12,630 |
|
Adjustments: | | | | | | | | | |
Tax expense (benefit) – deferred and other (c) | 3,126 |
| | 375 |
| | (80 | ) | | (5,418 | ) | | 10,237 |
|
Stock-based compensation | 1,408 |
| | 1,312 |
| | 1,454 |
| | 1,365 |
| | 1,128 |
|
Other (gains) and losses (d) | 350 |
| | (338 | ) | | (164 | ) | | 1,001 |
| | 2,268 |
|
Other amortization and non-cash items | 198 |
| | 199 |
| | 196 |
| | 65 |
| | 208 |
|
Proportionate share of adjustments to equity in net income of partially owned entities (e) | 1,706 |
| | 2,033 |
| | 1,965 |
| | 1,346 |
| | 3,452 |
|
Total adjustments | 6,788 |
| | 3,581 |
| | 3,371 |
| | (1,641 | ) | | 17,293 |
|
AFFO Attributable to W. P. Carey – Investment Management (b) | $ | 11,827 |
| | $ | 11,364 |
| | $ | 8,641 |
| | $ | 13,445 |
| | $ | 29,923 |
|
| | | | | | | | | |
Summary | | | | | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey – Investment Management (b) | $ | 5,039 |
| | $ | 7,783 |
| | $ | 5,270 |
| | $ | 15,086 |
| | $ | 12,630 |
|
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Investment Management (b) | $ | 0.03 |
| | $ | 0.05 |
| | $ | 0.03 |
| | $ | 0.09 |
| | $ | 0.09 |
|
AFFO attributable to W. P. Carey – Investment Management (b) | $ | 11,827 |
| | $ | 11,364 |
| | $ | 8,641 |
| | $ | 13,445 |
| | $ | 29,923 |
|
AFFO attributable to W. P. Carey per diluted share – Investment Management (b) | $ | 0.07 |
| | $ | 0.07 |
| | $ | 0.05 |
| | $ | 0.08 |
| | $ | 0.21 |
|
Diluted weighted-average shares outstanding | 173,442,101 |
| | 172,486,506 |
| | 171,490,625 |
| | 167,434,740 |
| | 145,716,583 |
|
________
| |
(a) | Amount for the three months ended December 31, 2018 represents a gain recognized on our previously held interest in shares of CPA:17 – Global common stock in connection with the CPA:17 Merger. |
| |
(b) | FFO and AFFO are non-GAAP measures. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures. |
| |
(c) | Amount for the three months ended March 31, 2019 includes a current tax benefit and amount for the three months ended December 31, 2018 includes a current tax expense, both of which are excluded from AFFO as they were incurred as a result of the CPA:17 Merger. |
| |
(d) | Beginning in the second quarter of 2019, we aggregated realized (gains) losses on foreign currency (which was previously disclosed as a separate AFFO adjustment line item) and certain other adjustments within this line item, which is comprised of adjustments related to Other gains and (losses) on our consolidated statements of income. Prior period amounts have been reclassified to conform to the current period presentation. |
| |
(e) | Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Equity in earnings of equity method investments in the Managed Programs and real estate 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 2019
|
| |
Elements of Pro Rata Statement of Income and AFFO Adjustments |
In thousands. For the three months ended December 31, 2019.
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 Investments (a) | | Noncontrolling Interests (b) | | AFFO Adjustments | |
Revenues | | | | | | |
Real Estate: | | | | | | |
Lease revenues | $ | 5,698 |
| | $ | (23 | ) | | $ | 11,874 |
| (c) |
Lease termination income and other | 171 |
| | (1 | ) | | (6,200 | ) | (d) |
Operating property revenues: | | | | | | |
Hotel revenues | — |
| | — |
| | — |
| |
Self-storage revenues | 1,243 |
| | — |
| | — |
| |
|
| |
| |
| |
Investment Management: | | | | | | |
Asset management revenue | — |
| | — |
| | — |
| |
Reimbursable costs from affiliates | — |
| | — |
| | — |
| |
Structuring and other advisory revenue | — |
| | — |
| | — |
| |
|
| |
| |
| |
Operating Expenses | | | | | | |
Depreciation and amortization | 3,127 |
| | (4 | ) | | (113,674 | ) | (e) |
General and administrative | 6 |
| | (2 | ) | | — |
| |
Reimbursable tenant costs | 452 |
| | (1 | ) | | (170 | ) | |
Property expenses, excluding reimbursable tenant costs | 232 |
| | — |
| | (473 | ) | (f) |
Operating property expenses: | | | | | | |
Hotel expenses | — |
| | — |
| | — |
| |
Self-storage expenses | 791 |
| | — |
| | 21 |
| |
Impairment charges | — |
| | — |
| | (6,758 | ) | (f) |
Stock-based compensation expense | — |
| | — |
| | (4,939 | ) | (f) |
Reimbursable costs from affiliates | — |
| | — |
| | — |
| |
Subadvisor fees | — |
| | — |
| | — |
| |
Merger and other expenses | — |
| | — |
| | 811 |
| |
|
| |
| |
| |
Other Income and Expenses | | | | | | |
Interest expense | (1,383 | ) | | — |
| | 3,170 |
| (g) |
Other gains and (losses) | 33 |
| | 5 |
| | (38,199 | ) | (h) |
Gain on sale of real estate, net | — |
| | — |
| | (17,501 | ) | |
Equity in earnings of equity method investments in the Managed Programs and real estate: | | | | | | |
Income related to our general partnership interests in the Managed REITs | — |
| | (438 | ) | | — |
| |
Joint ventures | (1,063 | ) | | — |
| | (257 | ) | (i) |
Income related to our ownership in the Managed Programs | — |
| | — |
| | 1,705 |
| (j) |
|
| |
| |
| |
Provision for income taxes | (91 | ) | | — |
| | 12,869 |
| (k) |
Net income attributable to noncontrolling interests | — |
| | 450 |
| | — |
| |
________
| |
(a) | Represents the break-out by line item of amounts recorded in Equity in earnings of equity method investments in the Managed Programs and real estate. |
| |
(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 $17.0 million and the elimination of non-cash amounts related to straight-line rent and other of $5.1 million. |
| |
(d) | Adjustment to exclude $6.2 million of non-cash lease termination revenue, which will be collected and reflected within AFFO over the remaining master lease term. |
| |
(e) | Adjustment is a non-cash adjustment excluding corporate depreciation and amortization. |
| |
(f) | Adjustment to exclude a non-cash item. |
|
| | |
| | Investing for the long runTM | 12 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2019
| |
(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), unrealized gains (losses) on derivatives, gains (losses) on marketable securities and other items. |
| |
(i) | Adjustments to include our pro rata share of AFFO adjustments from equity investments. |
| |
(j) | Represents modified funds from operations (“MFFO”) or Adjusted MFFO from the Managed Programs (as applicable) in place of our pro rata share of net income from our ownership in the Managed Programs. Adjusted MFFO is defined as MFFO adjusted for deferred taxes and excluding the adjustment for realized gains and losses on hedges. |
| |
(k) | Primarily represents the elimination of deferred taxes. |
|
| | |
| | Investing for the long runTM | 13 |
W. P. Carey Inc.
Financial Results – Fourth Quarter 2019
In thousands. For the three months ended December 31, 2019. |
| | | |
Tenant Improvements and Leasing Costs | |
Tenant improvements | $ | 1,907 |
|
Leasing costs | 1,873 |
|
Tenant Improvements and Leasing Costs | 3,780 |
|
| |
Maintenance Capital Expenditures | |
Net-lease properties | 1,482 |
|
Operating properties | 104 |
|
Maintenance Capital Expenditures | 1,586 |
|
| |
Total: Tenant Improvements and Leasing Costs, and Maintenance Capital Expenditures | $ | 5,366 |
|
| |
Non-Maintenance Capital Expenditures | |
Net-lease properties | $ | 1,975 |
|
Operating properties | — |
|
Non-Maintenance Capital Expenditures | $ | 1,975 |
|
| |
Pre-Development Capital Expenditures | |
Net-lease properties | $ | — |
|
Operating properties | 1,187 |
|
Pre-Development Capital Expenditures | $ | 1,187 |
|
|
| | |
| | Investing for the long runTM | 14 |
W. P. Carey Inc.
Balance Sheets and Capitalization
Fourth Quarter 2019
|
| | |
| | Investing for the long runTM | 15 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2019 |
| |
Consolidated Balance Sheets |
In thousands, except share and per share amounts.
|
| | | | | | | |
| December 31, |
| 2019 | | 2018 |
Assets | | | |
Investments in real estate: | | | |
Land, buildings and improvements (a) | $ | 9,856,191 |
| | $ | 9,251,396 |
|
Net investments in direct financing leases | 896,549 |
| | 1,306,215 |
|
In-place lease intangible assets and other | 2,186,851 |
| | 2,009,628 |
|
Above-market rent intangible assets | 909,139 |
| | 925,797 |
|
Investments in real estate | 13,848,730 |
| | 13,493,036 |
|
Accumulated depreciation and amortization (b) | (2,035,995 | ) | | (1,564,182 | ) |
Assets held for sale, net (c) | 104,010 |
| | — |
|
Net investments in real estate | 11,916,745 |
| | 11,928,854 |
|
Equity investments in the Managed Programs and real estate (d) | 324,004 |
| | 329,248 |
|
Cash and cash equivalents | 196,028 |
| | 217,644 |
|
Due from affiliates | 57,816 |
| | 74,842 |
|
Other assets, net | 631,637 |
| | 711,507 |
|
Goodwill | 934,688 |
| | 920,944 |
|
Total assets | $ | 14,060,918 |
| | $ | 14,183,039 |
|
| | | |
Liabilities and Equity | | | |
Debt: | | | |
Senior unsecured notes, net | $ | 4,390,189 |
| | $ | 3,554,470 |
|
Unsecured revolving credit facility | 201,267 |
| | 91,563 |
|
Non-recourse mortgages, net | 1,462,487 |
| | 2,732,658 |
|
Debt, net | 6,053,943 |
| | 6,378,691 |
|
Accounts payable, accrued expenses and other liabilities | 487,405 |
| | 403,896 |
|
Below-market rent and other intangible liabilities, net | 210,742 |
| | 225,128 |
|
Deferred income taxes | 179,309 |
| | 173,115 |
|
Dividends payable | 181,346 |
| | 172,154 |
|
Total liabilities | 7,112,745 |
| | 7,352,984 |
|
| | | |
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued | — |
| | — |
|
Common stock, $0.001 par value, 450,000,000 shares authorized; 172,278,242 and 165,279,642 shares, respectively, issued and outstanding | 172 |
| | 165 |
|
Additional paid-in capital | 8,717,535 |
| | 8,187,335 |
|
Distributions in excess of accumulated earnings | (1,557,374 | ) | | (1,143,992 | ) |
Deferred compensation obligation | 37,263 |
| | 35,766 |
|
Accumulated other comprehensive loss | (255,667 | ) | | (254,996 | ) |
Total stockholders' equity | 6,941,929 |
| | 6,824,278 |
|
Noncontrolling interests | 6,244 |
| | 5,777 |
|
Total equity | 6,948,173 |
| | 6,830,055 |
|
Total liabilities and equity | $ | 14,060,918 |
| | $ | 14,183,039 |
|
| |
(a) | Includes $83.1 million and $470.7 million of amounts attributable to operating properties as of December 31, 2019 and 2018, respectively. |
| |
(b) | Includes $961.7 million and $734.8 million of accumulated depreciation on buildings and improvements as of December 31, 2019 and 2018, respectively, and $1,074.3 million and $829.4 million of accumulated amortization on lease intangibles as of December 31, 2019 and 2018, respectively. |
| |
(c) | At December 31, 2019, we had one hotel operating property classified as Assets held for sale, net, which was sold in January 2020. |
| |
(d) | Our equity investments in real estate joint ventures totaled $194.4 million and $221.7 million as of December 31, 2019 and 2018, respectively. Our equity investments in the Managed Programs totaled $129.6 million and $107.6 million as of December 31, 2019 and 2018, respectively. |
|
| | |
| | Investing for the long runTM | 16 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2019
In thousands, except share and per share amounts. As of December 31, 2019.
|
| | | | | | | | | | | | | |
Description | | Shares | | Share Price | | Market Value |
Equity | | | | | | | |
Common equity | | | | 172,278,242 |
| | $ | 80.04 |
| | $ | 13,789,150 |
|
Preferred equity | | | | | | | | — |
|
Total Equity Market Capitalization | | | | | | 13,789,150 |
|
| | | | | | | | |
| | | | | | | | Outstanding Balance (a) |
Pro Rata Debt | | | | | | | |
Non-recourse mortgages | | | | | | | | 1,663,293 |
|
Unsecured revolving credit facility (due February 22, 2021) | | | | | | | 201,267 |
|
Senior unsecured notes: | | | | | | | |
Due January 20, 2023 (EUR) | | | | | | 561,700 |
|
Due April 1, 2024 (USD) | | | | | | 500,000 |
|
Due July 19, 2024 (EUR) | | | | | | 561,700 |
|
Due February 1, 2025 (USD) | | | | | | 450,000 |
|
Due April 9, 2026 (EUR) | | | | | | 561,700 |
|
Due October 1, 2026 (USD) | | | | | | 350,000 |
|
Due April 15, 2027 (EUR) | | | | | | 561,700 |
|
Due April 15, 2028 (EUR) | | | | | | 561,700 |
|
Due July 15, 2029 (USD) | | | | | | 325,000 |
|
Total Pro Rata Debt | | | | | | 6,298,060 |
|
| | | | | | | | |
Total Capitalization | | | | | | $ | 20,087,210 |
|
________
| |
(a) | Excludes unamortized discount, net totaling $26.8 million and unamortized deferred financing costs totaling $23.6 million as of December 31, 2019. |
|
| | |
| | Investing for the long runTM | 17 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2019
Dollars in thousands. Pro rata. As of December 31, 2019.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | $ | 1,135,893 |
| | 5.1 | % | | | $ | 183,383 |
| | 3.7 | % | | | $ | 29,973 |
| | 4.8 | % | | | $ | 1,349,249 |
| | 21.4 | % | | 4.9 | % | | 3.2 |
|
Variable: | | | | | | | | | | | | | | | | | | | | | | |
Swapped | 83,915 |
| | 4.7 | % | | | 144,282 |
| | 2.2 | % | | | — |
| | — | % | | | 228,197 |
| | 3.6 | % | | 3.1 | % | | 3.6 |
|
Floating | — |
| | — | % | | | 56,171 |
| | 1.3 | % | | | 16,883 |
| | 2.7 | % | | | 73,054 |
| | 1.2 | % | | 1.6 | % | | 2.7 |
|
Capped | — |
| | — | % | | | 12,793 |
| | 1.6 | % | | | — |
| | — | % | | | 12,793 |
| | 0.2 | % | | 1.6 | % | | 3.6 |
|
Total Pro Rata Non-Recourse Debt | 1,219,808 |
| | 5.1 | % | | | 396,629 |
| | 2.7 | % | | | 46,856 |
| | 4.0 | % | | | 1,663,293 |
| | 26.4 | % | | 4.5 | % | | 3.2 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Recourse Debt (b) (c) | | | | | | | | | | | | | | | | | | | | | | |
Fixed – Senior unsecured notes: | | | | | | | | | | | | | | | | | | | | | |
Due January 20, 2023 | — |
| | — | % | | | 561,700 |
| | 2.0 | % | | | — |
| | — | % | | | 561,700 |
| | 8.9 | % | | 2.0 | % | | 3.1 |
|
Due April 1, 2024 | 500,000 |
| | 4.6 | % | | | — |
| | — | % | | | — |
| | — | % | | | 500,000 |
| | 7.9 | % | | 4.6 | % | | 4.3 |
|
Due July 19, 2024 | — |
| | — | % | | | 561,700 |
| | 2.3 | % | | | — |
| | — | % | | | 561,700 |
| | 8.9 | % | | 2.3 | % | | 4.6 |
|
Due February 1, 2025 | 450,000 |
| | 4.0 | % | | | — |
| | — | % | | | — |
| | — | % | | | 450,000 |
| | 7.2 | % | | 4.0 | % | | 5.1 |
|
Due April 9, 2026 | — |
| | — | % | | | 561,700 |
| | 2.3 | % | | | — |
| | — | % | | | 561,700 |
| | 8.9 | % | | 2.3 | % | | 6.3 |
|
Due October 1, 2026 | 350,000 |
| | 4.3 | % | | | — |
| | — | % | | | — |
| | — | % | | | 350,000 |
| | 5.6 | % | | 4.3 | % | | 6.8 |
|
Due April 15, 2027 | — |
| | — | % | | | 561,700 |
| | 2.1 | % | | | — |
| | — | % | | | 561,700 |
| | 8.9 | % | | 2.1 | % | | 7.3 |
|
Due April 15, 2028 | — |
| | — | % | | | 561,700 |
| | 1.4 | % | | | — |
| | — | % | | | 561,700 |
| | 8.9 | % | | 1.4 | % | | 8.3 |
|
Due July 15, 2029 | 325,000 |
| | 3.9 | % | | | — |
| | — | % | | | — |
| | — | % | | | 325,000 |
| | 5.2 | % | | 3.9 | % | | 9.5 |
|
Total Senior Unsecured Notes | 1,625,000 |
| | 4.2 | % | | | 2,808,500 |
| | 2.0 | % | | | — |
| | — | % | | | 4,433,500 |
| | 70.4 | % | | 2.8 | % | | 6.0 |
|
Variable: | | | | | | | | | | | | | | | | | | | | | | |
Unsecured revolving credit facility (due February 22, 2021) (d) | — |
| | — | % | | | 131,438 |
| | 1.0 | % | | | 69,829 |
| | 1.5 | % | | | 201,267 |
| | 3.2 | % | | 1.2 | % | | 1.1 |
|
Total Recourse Debt | 1,625,000 |
| | 4.2 | % | | | 2,939,938 |
| | 2.0 | % | | | 69,829 |
| | 1.5 | % | | | 4,634,767 |
| | 73.6 | % | | 2.8 | % | | 5.8 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Total Pro Rata Debt Outstanding | $ | 2,844,808 |
| | 4.6 | % | | | $ | 3,336,567 |
| | 2.1 | % | | | $ | 116,685 |
| | 2.5 | % | | | $ | 6,298,060 |
| | 100.0 | % | | 3.2 | % | | 5.1 |
|
________
| |
(a) | Other currencies include debt denominated in British pound sterling, Norwegian krone and Japanese yen. |
| |
(b) | Debt data is presented on a pro rata basis. See the Terms and Definitions section in the Appendix for a description of pro rata. |
| |
(c) | Excludes unamortized discount, net totaling $26.8 million and unamortized deferred financing costs totaling $23.6 million as of December 31, 2019. |
| |
(d) | Depending on the currency, we incurred interest at either London Interbank Offered Rate (“LIBOR”), Euro Interbank Offered Rate (“EURIBOR”), or Japanese yen (“JPY”) LIBOR plus 1.00% on our Unsecured revolving credit facility. EURIBOR and JPY LIBOR have a floor of 0.00% under the terms of our credit agreement. Availability under our Unsecured revolving credit facility was $1.3 billion as of December 31, 2019. On February 20, 2020, we amended and restated our existing $1.85 billion unsecured credit facility to be comprised of a $1.8 billion revolving credit facility, a £150.0 million term loan and a $105.0 million delayed draw term loan, all maturing in five years. The aggregate principal amount (of revolving and term loans) available under our amended credit agreement may be increased up to an amount not to exceed the U.S. dollar equivalent of $2.75 billion. |
|
| | |
| | Investing for the long runTM | 18 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2019
Dollars in thousands. Pro rata. As of December 31, 2019.
|
| | | | | | | | | | | | | | | | | | | | | |
| | 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 | | | | | | | | | | | | |
2020 | | 11 |
| | $ | 17,224 |
| | 4.9 | % | | $ | 119,911 |
| | $ | 124,506 |
| | 2.0 | % |
2021 | | 53 |
| | 46,156 |
| | 5.0 | % | | 245,045 |
| | 253,718 |
| | 4.0 | % |
2022 | | 37 |
| | 79,005 |
| | 4.8 | % | | 418,370 |
| | 446,047 |
| | 7.1 | % |
2023 | | 39 |
| | 72,862 |
| | 3.6 | % | | 348,185 |
| | 393,429 |
| | 6.2 | % |
2024 | | 48 |
| | 44,730 |
| | 4.0 | % | | 178,896 |
| | 227,544 |
| | 3.6 | % |
2025 | | 17 |
| | 21,021 |
| | 4.7 | % | | 86,727 |
| | 120,219 |
| | 1.9 | % |
2026 | | 9 |
| | 12,413 |
| | 6.1 | % | | 31,535 |
| | 53,576 |
| | 0.8 | % |
2027 | | 2 |
| | 4,094 |
| | 4.7 | % | | 21,450 |
| | 30,401 |
| | 0.5 | % |
2028 | | 1 |
| | 3,042 |
| | 7.0 | % | | — |
| | 10,235 |
| | 0.2 | % |
2031 | | 1 |
| | 938 |
| | 6.0 | % | | — |
| | 3,618 |
| | 0.1 | % |
Total Pro Rata Non-Recourse Debt | | 218 |
| | $ | 301,485 |
| | 4.5 | % | | $ | 1,450,119 |
| | 1,663,293 |
| | 26.4 | % |
| | | | | | | | | | | | |
Recourse Debt | | | | | | | | | | | | |
Fixed – Senior unsecured notes: | | | | | | | | | | | | |
Due January 20, 2023 (EUR) | | 2.0 | % | | | | 561,700 |
| | 8.9 | % |
Due April 1, 2024 (USD) | | 4.6 | % | | | | 500,000 |
| | 7.9 | % |
Due July 19, 2024 (EUR) | | 2.3 | % | | | | 561,700 |
| | 8.9 | % |
Due February 1, 2025 (USD) | | 4.0 | % | | | | 450,000 |
| | 7.2 | % |
Due April 9, 2026 (EUR) | | 2.3 | % | | | | 561,700 |
| | 8.9 | % |
Due October 1, 2026 (USD) | | 4.3 | % | | | | 350,000 |
| | 5.6 | % |
Due April 15, 2027 (EUR) | | 2.1 | % | | | | 561,700 |
| | 8.9 | % |
Due April 15, 2028 (EUR) | | 1.4 | % | | | | 561,700 |
| | 8.9 | % |
Due July 15, 2029 (USD) | | 3.9 | % | | | | 325,000 |
| | 5.2 | % |
Total Senior Unsecured Notes | | 2.8 | % | | | | 4,433,500 |
| | 70.4 | % |
Variable: | | | | | | | | | | | | |
Unsecured revolving credit facility (due February 22, 2021) (d) | | 1.2 | % | | | | 201,267 |
| | 3.2 | % |
Total Recourse Debt | | 2.8 | % | | | | 4,634,767 |
| | 73.6 | % |
| | | | | | | | |
Total Pro Rata Debt Outstanding | | 3.2 | % | | | | $ | 6,298,060 |
| | 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 Terms and Definitions 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 $26.8 million and unamortized deferred financing costs totaling $23.6 million as of December 31, 2019. |
| |
(d) | Depending on the currency, we incurred interest at either LIBOR, EURIBOR, or JPY LIBOR plus 1.00% on our Unsecured revolving credit facility. EURIBOR and JPY LIBOR have a floor of 0.00% under the terms of our credit agreement. Availability under our Unsecured revolving credit facility was $1.3 billion as of December 31, 2019. On February 20, 2020, we amended and restated our existing $1.85 billion unsecured credit facility to be comprised of a $1.8 billion revolving credit facility, a £150.0 million term loan and a $105.0 million delayed draw term loan, all maturing in five years. The aggregate principal amount (of revolving and term loans) available under our amended credit agreement may be increased up to an amount not to exceed the U.S. dollar equivalent of $2.75 billion. |
|
| | |
| | Investing for the long runTM | 19 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Fourth Quarter 2019
As of December 31, 2019.
Ratings
|
| | | | | | |
| | Issuer / Corporate | | Senior Unsecured Notes |
Ratings Agency | | Rating | | Outlook | | Rating |
Moody's | | Baa2 | | Stable | | Baa2 |
Standard & Poor's | | BBB | | Positive | | 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, 2019 |
Limitation on the incurrence of debt | | "Total Debt" / "Total Assets" | | ≤ 60% | | 40.0% |
Limitation on the incurrence of secured debt | | "Secured Debt" / "Total Assets" | | ≤ 40% | | 9.6% |
Limitation on the incurrence of debt based on consolidated EBITDA to annual debt service charge | | "Consolidated EBITDA" / "Annual Debt Service Charge" | | ≥ 1.5x | | 5.3x |
Maintenance of unencumbered asset value | | "Unencumbered Assets" / "Total Unsecured Debt" | | ≥ 150% | | 242.9% |
|
| | |
| | Investing for the long runTM | 20 |
W. P. Carey Inc.
Real Estate
Fourth Quarter 2019
|
| | |
| | Investing for the long runTM | 21 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2019
|
| |
Investment Activity – Capital Investment Projects (a) |
Dollars in thousands. Pro rata.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Primary Transaction Type | | Property Type | | Expected Completion Date | | Estimated Change in Square Footage | | Lease Term (Years) | | Funded During Three Months Ended Dec. 31, 2019 | | Total Funded Through Dec. 31, 2019 | | Maximum Commitment |
Tenant | | Location | | | | | | | | | Remaining | | Total |
Danske Fragtmænd
A/S (b) (c) | | Hillerod, Denmark | | Build-to-Suit | | Warehouse | | Q1 2020 | | 53,282 |
| | 20 |
| | $ | — |
| | $ | — |
| | $ | 9,182 |
| | $ | 9,182 |
|
Danske Fragtmænd
A/S (b) (d) | | Hammelev, Denmark | | Build-to-Suit | | Warehouse | | Q1 2020 | | 88,620 |
| | 20 |
| | — |
| | — |
| | 10,714 |
| | 10,714 |
|
Clayco, Inc. (e) (f) | | St. Louis, MO | | Renovation | | Office | | Q1 2020 | | N/A |
| | 15 |
| | 3,315 |
| | 3,315 |
| | 685 |
| | 4,000 |
|
Astellas US Holding, Inc. (e) (f) (g) | | Westborough, MA | | Redevelopment | | Laboratory | | Q1 2020 | | 10,063 |
| | 17 |
| | 3,136 |
| | 43,184 |
| | 8,493 |
| | 51,677 |
|
Fresenius Medical Care
Holdings, Inc. (c) | | Knoxville, TN | | Build-to-Suit | | Warehouse | | Q2 2020 | | 614,069 |
| | 20 |
| | — |
| | — |
| | 68,008 |
| | 68,008 |
|
Hilite Europe GmbH (b) | | Marktheidenfeld, Germany | | Expansion | | Warehouse | | Q2 2020 | | 71,710 |
| | 15 |
| | 1,479 |
| | 1,479 |
| | 6,813 |
| | 8,292 |
|
Hellweg Die Profi-Baumärkte GmbH
& Co. KG (b) (e) | | Various, Germany | | Renovation | | Retail | | Q3 2020 | | N/A |
| | 17 |
| | — |
| | 10,510 |
| | 2,184 |
| | 12,694 |
|
Boot Barn Holdings, Inc. | | Wichita, KS | | Expansion | | Warehouse | | Q3 2020 | | 43,248 |
| | 15 |
| | — |
| | — |
| | 3,000 |
| | 3,000 |
|
Cuisine Solutions, Inc. | | San Antonio, TX | | Build-to-Suit | | Industrial | | Q4 2020 | | 310,000 |
| | 25 |
| | — |
| | 12,913 |
| | 62,087 |
| | 75,000 |
|
Expected Completion Date 2020 Total | | | | | | 1,190,992 |
| | | | 7,930 |
| | 71,401 |
| | 171,166 |
| | 242,567 |
|
| | | | | | | | | | | | | | | | | | | | |
American Axle & Manufacturing, Inc. (b) | | Langen, Germany | | Build-to-Suit | | Industrial | | Q1 2021 | | 168,000 |
| | 20 |
| | 7,380 |
| | 7,380 |
| | 48,790 |
| | 56,170 |
|
Stress Engineering Services, Inc. | | Mason, OH | | Expansion | | Office | | Q2 2021 | | 6,810 |
| | 20 |
| | — |
| | — |
| | 2,500 |
| | 2,500 |
|
Henkel AG & Co. | | Bowling Green, KY | | Renovation | | Warehouse | | Q4 2021 | | N/A |
| | 15 |
| | 23,563 |
| | 23,563 |
| | 46,437 |
| | 70,000 |
|
Expected Completion Date 2021 Total | | | | | | 174,810 |
| | | | 30,943 |
| | 30,943 |
| | 97,727 |
| | 128,670 |
|
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | 1,365,802 |
| | | | $ | 38,873 |
| | $ | 102,344 |
| | $ | 268,893 |
| | $ | 371,237 |
|
________
| |
(b) | Commitment amounts are based on the applicable exchange rate at period end. |
| |
(c) | Projects will be funded upon completion and are contingent on buildings being constructed according to our standards. |
| |
(d) | Project was funded upon completion in January 2020. |
| |
(e) | We started receiving full or partial rent for these projects prior to December 31, 2019. |
| |
(f) | Projects were completed in January 2020. |
| |
(g) | This redevelopment project also includes renovations to the existing 250,813 square foot property. |
|
| | |
| | Investing for the long runTM | 22 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2019
|
| |
Investment Activity – Acquisitions and Completed Capital Investment Projects |
Dollars in thousands. Pro rata. For the year ended December 31, 2019.
|
| | | | | | | | | | | | | |
| | | | Gross Investment Amount | | Closing Date / Asset Completion Date | | Property Type(s) | | Gross Square Footage |
Tenant / Lease Guarantor | | Property Location(s) | | | | |
Acquisitions | | | | | | | | | | |
1Q19 | | | | | | | | | | |
University of Western States | | Portland, OR | | $ | 36,178 |
| | Feb-19 | | Education Facility | | 152,642 |
|
PPD Development, L.P. | | Morrisville, NC | | 48,305 |
| | Mar-19 | | Office | | 219,812 |
|
Orgill, Inc. | | Inwood, WV | | 37,565 |
| | Mar-19 | | Warehouse | | 763,371 |
|
Litehouse, Inc. | | Hurricane, UT | | 49,283 |
| | Mar-19 | | Industrial | | 268,009 |
|
Amerifreight Systems, LLC | | Bensenville, IL | | 16,642 |
| | Mar-19 | | Industrial | | 58,000 |
|
1Q19 Total | | | | 187,973 |
| | | | | | 1,461,834 |
|
| | | | | | | | | | |
2Q19 | | | | | | | | | | |
Integrated Warehouse Solutions (2 properties) | | Westerville, OH and North Wales, PA | | 10,237 |
| | May-19 | | Industrial | | 143,092 |
|
Electrical Components International, Inc. (8 properties) (a) | | United States (5 properties) and Mexico (3 properties) | | 24,487 |
| | May-19 | | Industrial | | 525,484 |
|
Badger Sportswear, LLC | | Statesville, NC | | 18,755 |
| | Jun-19 | | Warehouse | | 300,910 |
|
Turkey Hill, LLC | | Conestoga, PA | | 70,057 |
| | Jun-19 | | Industrial | | 412,428 |
|
2Q19 Total | | | | 123,536 |
| | | | | | 1,381,914 |
|
| | | |
|
| | | | | |
|
|
3Q19 | | | |
|
| | | | | | |
Wendorff (3 properties) | | Hartford and Milwaukee, WI | | 30,132 |
| | Jul-19 | | Industrial | | 618,500 |
|
Trillium Holdings, Inc. (2 properties) (a) | | Brockville and Prescott, Canada | | 15,128 |
| | Jul-19 | | Industrial | | 286,000 |
|
Selecta Group B.V. (b) | | Dordrecht, The Netherlands | | 16,429 |
| | Sep-19 | | Industrial | | 203,072 |
|
3Q19 Total | | | | 61,689 |
| | | | | | 1,107,572 |
|
| | | | | | | | | | |
4Q19 | | | |
|
| | | | | | |
Apex Tool Group, LLC (3 properties) (a) | | York, PA; Lexington, SC; and Queretaro, Mexico | | 53,244 |
| | Oct-19 | | Industrial | | 990,292 |
|
Carhartt, Inc. | | Dearborn, MI | | 9,932 |
| | Oct-19 | | Office | | 58,722 |
|
Stress Engineering Services, Inc. (6 properties) (c) | | Houston, TX (4 properties); Metairie, LA; and Mason, OH | | 39,108 |
| | Nov-19 | | Office and Industrial | | 196,371 |
|
Faurecia S.A. (b) | | Pardubice, Czech Republic | | 12,218 |
| | Nov-19 | | Industrial | | 177,132 |
|
Stark Group A/S (2 properties) (b) | | Brabrand, Denmark and Arlandastad, Sweden | | 37,978 |
| | Nov-19 | | Warehouse | | 495,585 |
|
Lakeshore Recycling Systems (3 properties) | | Cortland, IL; and Madison and Monona, WI | | 1,831 |
| | Dec-19 | | Industrial | | 15,040 |
|
Bass Pro Group LLC | | Hamburg, PA | | 55,878 |
| | Dec-19 | | Retail | | 243,217 |
|
Stanley Black & Decker, Inc. | | Charlotte, NC (d) | | 94,137 |
| | Dec-19 | | Warehouse | | 1,226,000 |
|
Safco Dental Supply LLC | | Buffalo Grove, IL | | 16,842 |
| | Dec-19 | | Warehouse | | 161,976 |
|
MAN Truck & Bus (b) | | Hvidovre, Denmark | | 7,805 |
| | Dec-19 | | Industrial | | 30,010 |
|
Poundstretcher Ltd. (b) | | Huddersfield, United Kingdom | | 38,854 |
| | Dec-19 | | Warehouse | | 385,481 |
|
4Q19 Total | | | | 367,827 |
| | | | | | 3,979,826 |
|
| | | | | | | | | | |
Year-to-Date Total | | | | 741,025 |
| | | | | | 7,931,146 |
|
|
| | |
| | Investing for the long runTM | 23 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2019
|
| |
Investment Activity – Acquisitions and Completed Capital Investment Projects (continued) |
Dollars in thousands. Pro rata. For the year ended December 31, 2019.
|
| | | | | | | | | | | | | |
| | | | Gross Investment Amount | | Closing Date / Asset Completion Date | | Property Type(s) | | Gross Square Footage |
Tenant / Lease Guarantor | | Property Location(s) | | | | |
Completed Capital Investment Projects | | | | | | |
1Q19 | | | | | | | | | | |
Greenyard Foods NV (b) (e) | | Zabia Wola, Poland | | 5,580 |
| | Mar-19 | | Warehouse | | 72,154 |
|
Harbor Freight Tools USA, Inc. (e) | | Dillon, SC | | 46,023 |
| | Mar-19 | | Warehouse | | 1,000,000 |
|
1Q19 Total | | | | 51,603 |
| | | | | | 1,072,154 |
|
| | | | | | | | | | |
2Q19 | | | | | | | | | | |
Nippon Express Co., Ltd. (b) | | Rotterdam, The Netherlands | | 20,051 |
| | May-19 | | Warehouse | | 353,368 |
|
Hellweg Die Profi-Baumärkte GmbH & Co. KG (4 properties) (b) | | Various, Germany | | 5,582 |
| | May-19 | | Retail | | N/A |
|
Faurecia Legnica S. A. (b) | | Legnica, Poland | | 6,000 |
| | Jun-19 | | Industrial | | 72,119 |
|
2Q19 Total | | | | 31,633 |
| | | | | | 425,487 |
|
| | | | | | | | | | |
3Q19 (N/A) | | | |
|
| | | | | | |
| | | | | | | | | | |
4Q19 | | | | | | | | | | |
Orgill, Inc. | | Kilgore, TX | | 14,008 |
| | Oct-19 | | Warehouse | | 328,707 |
|
Rockwell Automation (b) | | Katowice, Poland | | 16,365 |
| | Nov-19 | | Industrial | | 121,320 |
|
Gestamp Automocion, S.L. | | McCalla, AL | | 13,500 |
| | Dec-19 | | Industrial | | 137,620 |
|
| | | | 43,873 |
| | | | | | 587,647 |
|
| | | | | | | | | | |
Year-to-Date Total | | | | 127,109 |
| | | | | | 2,085,288 |
|
| | | | | | | | | | |
Year-to-Date Total Acquisitions and Completed Capital Investment Projects | | $ | 868,134 |
| | | | | | 10,016,434 |
|
________
| |
(a) | Purchase price for international properties is denominated in U.S. dollars. |
| |
(b) | Amount reflects the applicable exchange rate on the date of the transaction. |
| |
(c) | We also committed to fund an additional $2.5 million for an expansion at the facility in Mason, Ohio, which is expected to be completed in the second quarter of 2021. |
| |
(d) | Property is located on the border of Charlotte, North Carolina, and Fort Mill, South Carolina. |
| |
(e) | These capital investment projects were acquired in the CPA:17 Merger on October 31, 2018. The gross investment amount includes amounts funded prior to the completion of the CPA:17 Merger. |
|
| | |
| | Investing for the long runTM | 24 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2019
|
| |
Investment Activity – Dispositions |
Dollars in thousands. Pro rata. For the year ended December 31, 2019.
|
| | | | | | | | | | | | | |
Tenant / Lease Guarantor | | Property Location(s) | | Gross Sale Price | | Closing Date | | Property Type(s) | | Gross Square Footage |
1Q19 | | | | | | | | | | |
Walgreens Co. | | Concord, NC | | $ | 4,961 |
| | Jan-19 | | Retail | | 14,560 |
|
1Q19 Total | | | | 4,961 |
| | | | | | 14,560 |
|
| | | | | | | | | | |
2Q19 | | | | | | | | | | |
Civitas Media, LLC (4 properties) | | Sedalia, MO; Lumberton and Mount Airy, NC; and Wilkes-Barre, PA | | 7,669 |
| | Apr-19 | | Industrial | | 144,918 |
|
Production Resource Group, Inc. | | Las Vegas, NV | | 9,285 |
| | Jun-19 | | Warehouse | | 126,916 |
|
2Q19 Total | | | | 16,954 |
| | | | | | 271,834 |
|
| | | | | | | | | | |
3Q19 | | | | | | | | | | |
Vacant | | Rocky Mount, NC | | 3,225 |
| | Jul-19 | | Industrial | | 190,820 |
|
Vacant | | Johnstown, PA | | 500 |
| | Aug-19 | | Retail | | 80,884 |
|
Vacant (a) | | Slavonski Brod, Croatia | | 2,407 |
| | Aug-19 | | Retail | | 58,147 |
|
JGC Food Co., LLC | | Nashville, TN | | 8,000 |
| | Sep-19 | | Industrial | | 184,727 |
|
3Q19 Total | | | | 14,132 |
| | | | | | 514,578 |
|
| | | | | | | | | | |
4Q19 | | | | | | | | | | |
Qwest Corporation | | Scottsdale, AZ | | 2,500 |
| | Oct-19 | | Industrial | | 4,460 |
|
Vacant (6 properties) (b) | | Various, Midwest United States | | 56,410 |
| | Oct-19 | | Retail | | 1,002,731 |
|
The New York Times Company | | New York City, NY | | 245,339 |
| | Dec-19 | | Office | | 712,228 |
|
Vacant (b) | | Eagan, MN | | 8,653 |
| | Dec-19 | | Education Facility | | 88,165 |
|
Hellweg Die Profi-Baumärkte GmbH & Co. KG (2 properties) (a) | | Essen Borbeck and Geltow, Germany | | 31,007 |
| | Dec-19 | | Retail | | 200,662 |
|
Fraikin SAS (a) | | Gennevilliers, France | | 3,924 |
| | Dec-19 | | Industrial | | 70,277 |
|
4Q19 Total | | | | 347,833 |
| | | | | | 2,078,523 |
|
| | | | | | | | | | |
Year-to-Date Total Dispositions | | $ | 383,880 |
| | | | | | 2,879,495 |
|
________
| |
(a) | Amount reflects the applicable exchange rate on the date of the transaction. |
| |
(b) | We transferred ownership of these properties and the related non-recourse mortgage loans to the respective mortgage lenders. Amounts represent the outstanding principal balance of the mortgage loans on dates of foreclosure. |
|
| | |
| | Investing for the long runTM | 25 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2019
Dollars in thousands. As of December 31, 2019. |
| | | | | | | | | | | | | | | | | | | | |
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% | | $ | 119,033 |
| | $ | 13,889 |
| | $ | 83,323 |
| | $ | 9,722 |
|
State Farm Mutual Automobile Insurance Co. | | CPA:18 – Global | | 50.00% | | 72,800 |
| | 7,836 |
| | 36,400 |
| | 3,918 |
|
Bank Pekao (e) | | CPA:18 – Global | | 50.00% | | 55,357 |
| | 8,897 |
| | 27,679 |
| | 4,448 |
|
Apply Sørco AS (e) | | CPA:18 – Global | | 49.00% | | 40,773 |
| | 4,170 |
| | 19,979 |
| | 2,044 |
|
Fortenova Grupa d.d. (formerly Konzum d.d.) (e) | | CPA:18 – Global | | 20.00% | | 26,200 |
| | 4,128 |
| | 5,240 |
| | 826 |
|
Total Unconsolidated Joint Ventures | | | | 314,163 |
| | 38,920 |
| | 172,621 |
| | 20,958 |
|
| | | | | | | | | | | | |
Consolidated Joint Ventures (f) | | | | | | | | | | | |
McCoy-Rockford, Inc. | | Third party | | 90.00% | | — |
| | 886 |
| | — |
| | 798 |
|
Total Consolidated Joint Ventures | | | | — |
| | 886 |
| | — |
| | 798 |
|
Total Unconsolidated and Consolidated Joint Ventures | | $ | 314,163 |
| | $ | 39,806 |
| | $ | 172,621 |
| | $ | 21,756 |
|
________
| |
(b) | Excludes unamortized deferred financing costs totaling $0.4 million and unamortized discount, net totaling $0.2 million as of December 31, 2019. |
| |
(c) | Excludes unamortized deferred financing costs totaling $0.2 million and unamortized discount, net totaling $0.1 million as of December 31, 2019. |
| |
(d) | Excludes 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, 2019. Excludes a 15.00% common equity interest in a jointly owned investment, BPS Nevada, LLC. |
| |
(e) | Amounts are based on the applicable exchange rate at the end of the period. |
| |
(f) | Excludes a jointly owned investment, Shelborne Hotel, which we consolidate with a 95.45% ownership interest and which did not have debt outstanding as of December 31, 2019. Shelborne Hotel was classified as held for sale as of December 31, 2019 and was sold in January 2020. |
|
| | |
| | Investing for the long runTM | 26 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2019
Dollars in thousands. Pro rata. As of December 31, 2019.
|
| | | | | | | | | | | | | | | |
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 |
| | 3.5 | % | | 4.3 |
|
Hellweg Die Profi-Baumärkte GmbH & Co. KG (a) | | Do-it-yourself retail properties in Germany | | 42 |
| | 33,338 |
| | 3.0 | % | | 17.2 |
|
State of Andalucía (a) | | Government office properties in Spain | | 70 |
| | 28,393 |
| | 2.5 | % | | 15.0 |
|
Metro Cash & Carry Italia S.p.A. (a) | | Business-to-business wholesale stores in Italy and Germany | | 20 |
| | 27,119 |
| | 2.4 | % | | 7.3 |
|
Pendragon PLC (a) | | Automotive dealerships in the United Kingdom | | 69 |
| | 22,449 |
| | 2.0 | % | | 10.4 |
|
Marriott Corporation | | Net lease hotel properties in the U.S. | | 18 |
| | 20,065 |
| | 1.8 | % | | 3.9 |
|
Extra Space Storage, Inc. | | Net lease self-storage properties in the U.S. | | 27 |
| | 19,519 |
| | 1.7 | % | | 24.3 |
|
Nord Anglia Education, Inc. | | K-12 private schools in the U.S. | | 3 |
| | 18,734 |
| | 1.7 | % | | 23.7 |
|
Forterra, Inc. (a) (b) | | Industrial properties in the U.S. and Canada | | 27 |
| | 18,394 |
| | 1.7 | % | | 23.5 |
|
Advance Auto Parts, Inc. | | Distribution facilities in the U.S. | | 30 |
| | 18,345 |
| | 1.6 | % | | 13.1 |
|
Total (c) | | | | 384 |
| | $ | 245,107 |
| | 21.9 | % | | 13.3 |
|
________
| |
(a) | ABR amounts are subject to fluctuations in foreign currency exchange rates. |
| |
(b) | Of the 27 properties leased to Forterra, Inc., 25 are located in the United States and two are located in Canada. |
|
| | |
| | Investing for the long runTM | 27 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2019
|
| |
Diversification by Property Type |
In thousands, except percentages. Pro rata. As of December 31, 2019.
|
| | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
Property Type | | ABR | | ABR % | | Square Footage (a) | | Sq. ft. % |
U.S. | | | | | | | | |
Industrial | | $ | 197,481 |
| | 17.7 | % | | 37,408 |
| | 26.7 | % |
Office | | 163,271 |
| | 14.6 | % | | 10,623 |
| | 7.6 | % |
Warehouse | | 141,153 |
| | 12.6 | % | | 30,170 |
| | 21.6 | % |
Retail (b) | | 48,970 |
| | 4.3 | % | | 3,015 |
| | 2.1 | % |
Self Storage (net lease) | | 58,270 |
| | 5.2 | % | | 5,810 |
| | 4.1 | % |
Other (c) | | 101,400 |
| | 9.1 | % | | 5,557 |
| | 4.0 | % |
U.S. Total | | 710,545 |
| | 63.5 | % | | 92,583 |
| | 66.1 | % |
| | | | | | | | |
International | | | | | | | | |
Industrial | | 70,953 |
| | 6.3 | % | | 10,588 |
| | 7.6 | % |
Office | | 88,248 |
| | 7.9 | % | | 6,271 |
| | 4.5 | % |
Warehouse | | 99,047 |
| | 8.9 | % | | 15,999 |
| | 11.4 | % |
Retail (b) | | 149,716 |
| | 13.4 | % | | 14,541 |
| | 10.4 | % |
Self Storage (net lease) | | — |
| | — | % | | — |
| | — | % |
Other (c) | | 10 |
| | — | % | | — |
| | — | % |
International Total | | 407,974 |
| | 36.5 | % | | 47,399 |
| | 33.9 | % |
| | | | | | | | |
Total | | | | | | | | |
Industrial | | 268,434 |
| | 24.0 | % | | 47,996 |
| | 34.3 | % |
Office | | 251,519 |
| | 22.5 | % | | 16,894 |
| | 12.1 | % |
Warehouse | | 240,200 |
| | 21.5 | % | | 46,169 |
| | 33.0 | % |
Retail (b) | | 198,686 |
| | 17.7 | % | | 17,556 |
| | 12.5 | % |
Self Storage (net lease) | | 58,270 |
| | 5.2 | % | | 5,810 |
| | 4.1 | % |
Other (c) | | 101,410 |
| | 9.1 | % | | 5,557 |
| | 4.0 | % |
Total (d) | | $ | 1,118,519 |
| | 100.0 | % | | 139,982 |
| | 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), fitness facility, laboratory, theater and student housing (net lease). |
|
| | |
| | Investing for the long runTM | 28 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2019
|
| |
Diversification by Tenant Industry |
In thousands, except percentages. Pro rata. As of December 31, 2019.
|
| | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
Industry Type | | ABR | | ABR % | | Square Footage | | Sq. ft. % |
Retail Stores (a) | | $ | 233,346 |
| | 20.9 | % | | 30,993 |
| | 22.1 | % |
Consumer Services | | 113,588 |
| | 10.1 | % | | 8,429 |
| | 6.0 | % |
Automotive | | 72,679 |
| | 6.5 | % | | 12,166 |
| | 8.7 | % |
Cargo Transportation | | 60,211 |
| | 5.4 | % | | 9,345 |
| | 6.7 | % |
Business Services | | 60,073 |
| | 5.4 | % | | 5,272 |
| | 3.8 | % |
Grocery | | 56,574 |
| | 5.1 | % | | 6,549 |
| | 4.7 | % |
Healthcare and Pharmaceuticals | | 51,010 |
| | 4.6 | % | | 4,281 |
| | 3.1 | % |
Hotel, Gaming, and Leisure | | 43,663 |
| | 3.9 | % | | 2,423 |
| | 1.7 | % |
Construction and Building | | 42,290 |
| | 3.8 | % | | 7,673 |
| | 5.5 | % |
Capital Equipment | | 39,686 |
| | 3.5 | % | | 6,550 |
| | 4.7 | % |
Sovereign and Public Finance | | 39,259 |
| | 3.5 | % | | 3,364 |
| | 2.4 | % |
Beverage, Food, and Tobacco | | 37,825 |
| | 3.4 | % | | 4,862 |
| | 3.5 | % |
Containers, Packaging, and Glass | | 35,718 |
| | 3.2 | % | | 6,186 |
| | 4.4 | % |
High Tech Industries | | 30,444 |
| | 2.7 | % | | 3,384 |
| | 2.4 | % |
Durable Consumer Goods | | 30,214 |
| | 2.7 | % | | 6,870 |
| | 4.9 | % |
Insurance | | 24,875 |
| | 2.2 | % | | 1,759 |
| | 1.3 | % |
Banking | | 19,239 |
| | 1.7 | % | | 1,247 |
| | 0.9 | % |
Telecommunications | | 18,803 |
| | 1.7 | % | | 1,732 |
| | 1.2 | % |
Non-Durable Consumer Goods | | 15,088 |
| | 1.3 | % | | 5,194 |
| | 3.7 | % |
Media: Advertising, Printing, and Publishing | | 14,785 |
| | 1.3 | % | | 1,435 |
| | 1.0 | % |
Aerospace and Defense | | 13,539 |
| | 1.2 | % | | 1,279 |
| | 0.9 | % |
Media: Broadcasting and Subscription | | 12,787 |
| | 1.1 | % | | 784 |
| | 0.6 | % |
Wholesale | | 12,206 |
| | 1.1 | % | | 2,005 |
| | 1.4 | % |
Chemicals, Plastics, and Rubber | | 12,037 |
| | 1.1 | % | | 1,403 |
| | 1.0 | % |
Other (b) | | 28,580 |
| | 2.6 | % | | 4,797 |
| | 3.4 | % |
Total (c) | | $ | 1,118,519 |
|
| 100.0 | % |
| 139,982 |
| | 100.0 | % |
________
| |
(a) | Includes automotive dealerships. |
| |
(b) | Includes ABR from tenants in the following industries: metals and mining, oil and gas, environmental industries, electricity, consumer transportation, forest products and paper, real estate and finance. Also includes square footage for vacant properties. |
|
| | |
| | Investing for the long runTM | 29 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2019
|
| |
Diversification by Geography |
In thousands, except percentages. Pro rata. As of December 31, 2019.
|
| | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
Region | | ABR | | ABR % | | Square Footage (a) | | Sq. ft. % |
U.S. | | | | | | | | |
South | | | | | | | | |
Texas | | $ | 99,611 |
| | 8.9 | % | | 11,411 |
| | 8.2 | % |
Florida | | 47,079 |
| | 4.2 | % | | 4,060 |
| | 2.9 | % |
Georgia | | 28,197 |
| | 2.5 | % | | 4,024 |
| | 2.9 | % |
Tennessee | | 15,721 |
| | 1.4 | % | | 2,260 |
| | 1.6 | % |
Alabama | | 15,273 |
| | 1.4 | % | | 2,397 |
| | 1.7 | % |
Other (b) | | 12,622 |
| | 1.1 | % | | 2,263 |
| | 1.6 | % |
Total South | | 218,503 |
| | 19.5 | % | | 26,415 |
| | 18.9 | % |
East | | | | | | | | |
North Carolina | | 32,648 |
| | 2.9 | % | | 8,052 |
| | 5.7 | % |
Pennsylvania | | 25,079 |
| | 2.3 | % | | 3,609 |
| | 2.6 | % |
Massachusetts | | 21,395 |
| | 1.9 | % | | 1,397 |
| | 1.0 | % |
New Jersey | | 19,330 |
| | 1.7 | % | | 1,100 |
| | 0.8 | % |
South Carolina | | 15,570 |
| | 1.4 | % | | 4,437 |
| | 3.2 | % |
Virginia | | 13,449 |
| | 1.2 | % | | 1,430 |
| | 1.0 | % |
New York | | 12,919 |
| | 1.2 | % | | 1,392 |
| | 1.0 | % |
Kentucky | | 11,220 |
| | 1.0 | % | | 3,063 |
| | 2.2 | % |
Other (b) | | 22,818 |
| | 2.0 | % | | 3,531 |
| | 2.5 | % |
Total East | | 174,428 |
| | 15.6 | % | | 28,011 |
| | 20.0 | % |
Midwest | | | | | | | | |
Illinois | | 51,385 |
| | 4.6 | % | | 5,974 |
| | 4.3 | % |
Minnesota | | 25,652 |
| | 2.3 | % | | 2,362 |
| | 1.7 | % |
Indiana | | 18,002 |
| | 1.6 | % | | 2,827 |
| | 2.0 | % |
Wisconsin | | 15,874 |
| | 1.4 | % | | 2,984 |
| | 2.1 | % |
Ohio | | 15,125 |
| | 1.4 | % | | 3,153 |
| | 2.2 | % |
Michigan | | 13,898 |
| | 1.2 | % | | 2,132 |
| | 1.5 | % |
Other (b) | | 27,471 |
| | 2.5 | % | | 4,697 |
| | 3.4 | % |
Total Midwest | | 167,407 |
| | 15.0 | % | | 24,129 |
| | 17.2 | % |
West | | | | | | | | |
California | | 60,393 |
| | 5.4 | % | | 5,162 |
| | 3.7 | % |
Arizona | | 33,826 |
| | 3.0 | % | | 3,648 |
| | 2.6 | % |
Colorado | | 11,413 |
| | 1.0 | % | | 1,008 |
| | 0.7 | % |
Other (b) | | 44,575 |
| | 4.0 | % | | 4,210 |
| | 3.0 | % |
Total West | | 150,207 |
| | 13.4 | % | | 14,028 |
| | 10.0 | % |
U.S. Total | | 710,545 |
| | 63.5 | % | | 92,583 |
| | 66.1 | % |
International | | | | | | | | |
Germany | | 62,653 |
| | 5.6 | % | | 6,769 |
| | 4.8 | % |
Poland | | 52,066 |
| | 4.6 | % | | 7,215 |
| | 5.1 | % |
The Netherlands | | 50,698 |
| | 4.5 | % | | 6,862 |
| | 4.9 | % |
Spain | | 49,089 |
| | 4.4 | % | | 4,226 |
| | 3.0 | % |
United Kingdom | | 42,592 |
| | 3.8 | % | | 3,309 |
| | 2.4 | % |
Italy | | 25,513 |
| | 2.3 | % | | 2,386 |
| | 1.7 | % |
Croatia | | 16,513 |
| | 1.5 | % | | 1,794 |
| | 1.3 | % |
Denmark | | 13,991 |
| | 1.3 | % | | 2,320 |
| | 1.7 | % |
France | | 13,336 |
| | 1.2 | % | | 1,359 |
| | 1.0 | % |
Canada | | 12,867 |
| | 1.2 | % | | 2,103 |
| | 1.5 | % |
Finland | | 11,376 |
| | 1.0 | % | | 949 |
| | 0.7 | % |
Other (c) | | 57,280 |
| | 5.1 | % | | 8,107 |
| | 5.8 | % |
International Total | | 407,974 |
| | 36.5 | % | | 47,399 |
| | 33.9 | % |
Total (d) | | $ | 1,118,519 |
| | 100.0 | % | | 139,982 |
| | 100.0 | % |
________
| |
(a) | Includes square footage for vacant properties. |
| |
(b) | Other properties within South include assets in Louisiana, Oklahoma, Arkansas and Mississippi. Other properties within East include assets in Maryland, Connecticut, West Virginia, New Hampshire and Maine. Other properties within Midwest include assets in Missouri, Kansas, Nebraska, Iowa, North Dakota and South Dakota. Other properties within West include assets in Utah, Nevada, Oregon, Washington, Hawaii, New Mexico, Wyoming, Montana and Alaska. |
| |
(c) | Includes assets in Lithuania, Norway, Mexico, Hungary, the Czech Republic, Austria, Portugal, Sweden, Japan, Slovakia, Latvia, Belgium and Estonia. |
|
| | |
| | Investing for the long runTM | 30 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2019
|
| |
Contractual Rent Increases |
In thousands, except percentages. Pro rata. As of December 31, 2019.
|
| | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
Rent Adjustment Measure | | ABR | | ABR % | | Square Footage | | Sq. ft. % |
(Uncapped) CPI | | $ | 432,469 |
| | 38.7 | % | | 50,651 |
| | 36.2 | % |
Fixed | | 358,058 |
| | 32.0 | % | | 50,330 |
| | 35.9 | % |
CPI-based | | 267,915 |
| | 23.9 | % | | 33,149 |
| | 23.7 | % |
Other (a) | | 51,442 |
| | 4.6 | % | | 3,679 |
| | 2.6 | % |
None | | 8,635 |
| | 0.8 | % | | 543 |
| | 0.4 | % |
Vacant | | — |
| | — | % | | 1,630 |
| | 1.2 | % |
Total (b) | | $ | 1,118,519 |
| | 100.0 | % | | 139,982 |
| | 100.0 | % |
________
| |
(a) | Represents leases attributable to percentage rent. |
|
| | |
| | Investing for the long runTM | 31 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2019
Dollars in thousands. Pro rata.
Same store portfolio includes leases that were continuously in place during the period from December 31, 2018 to December 31, 2019. 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, 2019. |
| | | | | | | | | | | | | | | |
| | ABR |
Property Type | | As of
Dec. 31, 2019 | | As of
Dec. 31, 2018 | | Increase | | % Increase |
Office | | $ | 234,696 |
| | $ | 230,477 |
| | $ | 4,219 |
| | 1.8 | % |
Industrial | | 226,918 |
| | 222,388 |
| | 4,530 |
| | 2.0 | % |
Warehouse | | 195,312 |
| | 192,338 |
| | 2,974 |
| | 1.5 | % |
Retail (a) | | 177,340 |
| | 174,655 |
| | 2,685 |
| | 1.5 | % |
Self Storage (net lease) | | 38,751 |
| | 36,008 |
| | 2,743 |
| | 7.6 | % |
Other (b) | | 96,118 |
| | 94,647 |
| | 1,471 |
| | 1.6 | % |
Total | | $ | 969,135 |
| | $ | 950,513 |
| | $ | 18,622 |
| | 2.0 | % |
| | | | | | | | |
Rent Adjustment Measure | | | | | | | | |
(Uncapped) CPI | | $ | 384,656 |
| | $ | 375,964 |
| | 8,692 |
| | 2.3 | % |
Fixed | | 295,693 |
| | 290,940 |
| | 4,753 |
| | 1.6 | % |
CPI-based | | 252,277 |
| | 247,115 |
| | 5,162 |
| | 2.1 | % |
Other (c) | | 29,941 |
| | 29,927 |
| | 14 |
| | — | % |
None | | 6,568 |
| | 6,567 |
| | 1 |
| | — | % |
Total | | $ | 969,135 |
| | $ | 950,513 |
| | $ | 18,622 |
| | 2.0 | % |
| | | | | | | | |
Geography | | | | | | | | |
U.S. | | $ | 606,428 |
| | $ | 594,300 |
| | 12,128 |
| | 2.0 | % |
Europe | | 343,325 |
| | 337,177 |
| | 6,148 |
| | 1.8 | % |
Other International (d) | | 19,382 |
| | 19,036 |
| | 346 |
| | 1.8 | % |
Total | | $ | 969,135 |
| | $ | 950,513 |
| | $ | 18,622 |
| | 2.0 | % |
| | | | | | | | |
Same Store Portfolio Summary | | | | | | | | |
Number of properties | | 1,077 |
| | | | | | |
Square footage (in thousands) | | 114,523 |
| | | | | | |
| |
(a) | Includes automotive dealerships. |
| |
(b) | Includes ABR from tenants with the following property types: education facility, hotel (net lease), theater, fitness facility and student housing (net lease). |
| |
(c) | Represents leases attributable to percentage rent. |
| |
(d) | Includes assets in Canada, Mexico and Japan. |
|
| | |
| | Investing for the long runTM | 32 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2019
For the three months ended December 31, 2019, 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) | | Releasing Spread | | | | Incremental Lease Term |
Industrial | | 3,092,922 |
| | 4 |
| | $ | 9,947 |
| | $ | 7,232 |
| | (27.3 | )% | | $ | — |
| | $ | — |
| | 4.6 years |
Office | | 21,364 |
| | 3 |
| | 377 |
| | 456 |
| | 21.0 | % | | — |
| | — |
| | 7.3 years |
Warehouse | | 2,396,035 |
| | 5 |
| | 9,822 |
| | 10,041 |
| | 2.2 | % | | 1,160 |
| | 1,148 |
| | 8.8 years |
Retail | | 173,446 |
| | 2 |
| | 841 |
| | 841 |
| | 0.1 | % | | — |
| | — |
| | 8.0 years |
Self Storage (net lease) | | — |
| | — |
| | — |
| | — |
| | — | % | | — |
| | — |
| | N/A |
Other | | 36,851 |
| | 1 |
| | 823 |
| | 823 |
| | — | % | | — |
| | — |
| | 5.0 years |
Total / Weighted Average (c) | | 5,720,618 |
| | 15 |
| | $ | 21,810 |
| | $ | 19,393 |
| | (11.1 | )% | | $ | 1,160 |
| | $ | 1,148 |
| | 7.0 years |
| | | | | | | | | | | | | | | | |
Q4 Summary | | | | | | | | | | | | | | | | |
Prior Lease ABR (% of Total Portfolio) | | 2.0 | % | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | |
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 | | 341,425 |
| | 1 |
| | $ | 1,597 |
| | $ | 3,300 |
| | $ | 735 |
| | 18.9 years |
Office | | — |
| | — |
| | — |
| | — |
| | — |
| | N/A |
Warehouse (d) | | — |
| | 1 |
| | 222 |
| | — |
| | — |
| | 16.0 years |
Retail | | 46,397 |
| | 9 |
| | 625 |
| | — |
| | 1 |
| | 11.0 years |
Self Storage (net lease) | | — |
| | — |
| | — |
| | — |
| | — |
| | N/A |
Other | | — |
| | — |
| | — |
| | — |
| | — |
| | N/A |
Total / Weighted Average (e) | | 387,822 |
| | 11 |
| | $ | 2,444 |
| | $ | 3,300 |
| | $ | 736 |
| | 16.6 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) | Reflects lease of 1,013,580 square feet of roof space for the installation of solar panels. |
| |
(e) | Weighted average refers to the new lease term. |
|
| | |
| | Investing for the long runTM | 33 |
W. P. Carey Inc.
Real Estate – Fourth Quarter 2019
In thousands, except percentages and number of leases. Pro rata. As of December 31, 2019.
|
| | | | | | | | | | | | | | | | | | | |
Year of Lease Expiration (a) | | Number of Leases Expiring | | Number of Tenants with Leases Expiring | | ABR | | ABR % | | Square Footage | | Sq. ft. % |
2020 | | 25 |
| | 22 |
| | $ | 19,294 |
| | 1.7 | % | | 2,050 |
| | 1.5 | % |
2021 | | 77 |
| | 23 |
| | 33,967 |
| | 3.0 | % | | 3,899 |
| | 2.8 | % |
2022 | | 41 |
| | 32 |
| | 58,261 |
| | 5.2 | % | | 5,377 |
| | 3.8 | % |
2023 | | 31 |
| | 28 |
| | 46,954 |
| | 4.2 | % | | 5,919 |
| | 4.2 | % |
2024 | | 76 |
| | 49 |
| | 111,646 |
| | 10.0 | % | | 13,961 |
| | 10.0 | % |
2025 | | 61 |
| | 30 |
| | 58,023 |
| | 5.2 | % | | 7,194 |
| | 5.1 | % |
2026 | | 32 |
| | 20 |
| | 49,824 |
| | 4.5 | % | | 7,354 |
| | 5.2 | % |
2027 | | 45 |
| | 27 |
| | 71,604 |
| | 6.4 | % | | 8,237 |
| | 5.9 | % |
2028 | | 43 |
| | 25 |
| | 61,774 |
| | 5.5 | % | | 4,867 |
| | 3.5 | % |
2029 | | 31 |
| | 18 |
| | 36,289 |
| | 3.2 | % | | 4,561 |
| | 3.3 | % |
2030 | | 28 |
| | 22 |
| | 73,580 |
| | 6.6 | % | | 6,638 |
| | 4.7 | % |
2031 | | 66 |
| | 16 |
| | 68,973 |
| | 6.2 | % | | 8,155 |
| | 5.8 | % |
2032 | | 35 |
| | 14 |
| | 43,105 |
| | 3.9 | % | | 5,914 |
| | 4.2 | % |
2033 | | 19 |
| | 13 |
| | 48,275 |
| | 4.3 | % | | 6,672 |
| | 4.8 | % |
Thereafter (>2033) | | 172 |
| | 84 |
| | 336,950 |
| | 30.1 | % | | 47,554 |
| | 34.0 | % |
Vacant | | — |
| | — |
| | — |
| | — | % | | 1,630 |
| | 1.2 | % |
Total (b) | | 782 |
| |
|
| | $ | 1,118,519 |
| | 100.0 | % | | 139,982 |
| | 100.0 | % |
________
| |
(a) | Assumes tenants do not exercise any renewal options or purchase options. |
|
| | |
| | Investing for the long runTM | 34 |
W. P. Carey Inc.
Investment Management
Fourth Quarter 2019
|
| | |
| | Investing for the long runTM | 35 |
W. P. Carey Inc.
Investment Management – Fourth Quarter 2019
|
| |
Selected Information – Managed Programs |
Dollars and square footage in thousands, except per share amounts. As of or for the three months ended December 31, 2019.
|
| | | | | | | | | | | | | | | |
| Managed Programs |
| CPA:18 – Global | | CWI 1 | | CWI 2 | | CESH |
General | | | | | | | |
Year established | 2013 |
| | 2010 |
| | 2015 |
| | 2016 |
|
AUM (a) | $ | 2,427,805 |
| | $ | 2,703,098 |
| | $ | 2,021,647 |
| | $ | 329,479 |
|
Net-lease AUM (b) | 1,362,813 |
| | N/A |
| | N/A |
| | 63,670 |
|
NAV (c) | 8.67 |
| | 10.39 |
| | 11.41 |
| | 1,000.00 |
|
Fundraising status | Closed |
| | Closed |
| | Closed |
| | Closed |
|
| | | | | | | |
Portfolio | | | | | | | |
Investment type | Net lease / Diversified REIT |
| | Lodging REIT |
| | Lodging REIT |
| | Student Housing |
|
Number of operating properties | 82 |
| | 24 |
| | 12 |
| | 7 |
|
Number of net-leased properties (b) (d) | 47 |
| | N/A |
| | N/A |
| | 2 |
|
Number of tenants – net-leased properties | 61 |
| | N/A |
| | N/A |
| | 1 |
|
Square footage (e) (f) | 9,637 |
| | 5,662 |
| | 3,468 |
| | 191 |
|
Occupancy (g) | 99.4 | % | | 70.8 | % | | 71.3 | % | | 100.0 | % |
Acquisitions – fourth quarter | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
Dispositions – fourth quarter | — |
| | 111,470 |
| | — |
| | — |
|
| | | | | | | |
Balance Sheet (Book Value) | | | | | | | |
Total assets | $ | 2,234,803 |
| | $ | 2,094,691 |
| | $ | 1,576,982 |
| | $ | 341,782 |
|
Total debt | 1,201,913 |
| | 1,206,067 |
| | 840,465 |
| | 114,471 |
|
Total debt / total assets | 53.8 | % | | 57.6 | % | | 53.3 | % | | 33.5 | % |
________
| |
(a) | Represents estimated fair value of real estate assets plus cash and cash equivalents, less distributions payable for the Managed REITs and estimated fair value of real estate assets plus cash for CESH. |
| |
(b) | During the fourth quarter of 2019, CESH entered into a framework agreement to net lease eight of its nine student housing projects upon construction completion (four of which are active build-to-suit projects). Pursuant to these agreements, two student housing operating properties were converted to net leases in December 2019. |
| |
(c) | The estimated NAVs for CWI 1 and CWI 2 were determined as of December 31, 2018. The estimated NAV for CPA:18 – Global was determined as of September 30, 2019. We own limited partnership units of CESH at its private placement price of $1,000 per unit; we do not intend to calculate a NAV for CESH. |
| |
(d) | During the fourth quarter of 2019, CPA 18 entered into a framework agreement to net lease 11 of its 12 international student housing projects upon construction completion. Pursuant to these agreements, one student housing operating property was converted to a net lease in December 2019. |
| |
(e) | For CPA:18 – Global and CESH, excludes operating properties. |
| |
(f) | For CESH, four net-leased properties have been placed into service as of December 31, 2019. |
| |
(g) | Represents occupancy for single-tenant net-leased properties for CPA:18 – Global and CESH. Represents occupancy for hotels owned by CWI 1 and CWI 2 for the three months ended December 31, 2019. Occupancy for in-service operating properties for CESH was 84.1% as of December 31, 2019. |
|
| | |
| | Investing for the long runTM | 36 |
W. P. Carey Inc.
Investment Management – Fourth Quarter 2019
|
| |
Managed Programs Fee Summary |
Dollars in thousands. For the three months ended December 31, 2019, unless otherwise noted.
|
| | | | | | | | | | | | | | | | | | | |
| Managed Programs | | |
| CPA:18 – Global | | CWI 1 | | CWI 2 | | CESH (a) | | Total |
Year established | 2013 | | 2010 | | 2015 | | 2016 | | |
Fundraising status | Closed | | Closed | | Closed | | Closed | | |
| | | | | | | | | |
1. Structuring and Other Advisory Fees (b) | | | | | | | | | |
Structuring fee, gross (% of total aggregate cost) | 4.50% (c) | | 2.50% | | 2.50% | | 2.00% | | |
Net of subadvisor fees (d) | 4.50% | | 2.00% | | 1.875% | | 2.00% | | |
Gross acquisition volume – fourth quarter | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
Gross disposition volume – fourth quarter | $ | — |
| | $ | 111,470 |
| | $ | — |
| | $ | — |
| | $ | 111,470 |
|
Structuring and other advisory revenue – fourth quarter (e) | $ | — |
| | $ | 836 |
| | $ | 225 |
| | $ | — |
| | $ | 1,061 |
|
| | | | | | | | | |
2. Asset Management Fees | | | | | | | | | |
Asset management fee, gross (% of average AUM, per annum) | 0.50% (f) | | 0.50% (f) | | 0.55% (f) | | 1.00% (g) | | |
Net of subadvisor fees (d) | 0.50% | | 0.40% | | 0.41% | | 1.00% | | |
AUM – current quarter | $ | 2,427,805 |
| | $ | 2,703,098 |
| | $ | 2,021,647 |
| | $ | 329,479 |
| | $ | 7,482,029 |
|
AUM – prior quarter | $ | 2,470,249 |
| | $ | 2,826,346 |
| | $ | 2,014,511 |
| | $ | 305,236 |
| | $ | 7,616,342 |
|
Average AUM | $ | 2,449,027 |
|
| $ | 2,764,722 |
|
| $ | 2,018,079 |
|
| $ | 317,358 |
| | $ | 7,549,186 |
|
Asset management revenue – fourth quarter (h) | $ | 2,884 |
| | $ | 3,379 |
| | $ | 2,683 |
| | $ | 786 |
| | $ | 9,732 |
|
| | | | | | | | | |
3. Operating Partnership Interests (i) | | | | | | | | | |
Operating partnership interests, gross (% of Available Cash) | 10.00% | | 10.00% | | 10.00% | | N/A | | |
Net of subadvisor fees (d) | 10.00% | | 8.00% | | 7.50% | | N/A | | |
Equity in earnings of equity method investments in the Managed Programs and real estate (profits interest) – fourth quarter (j) | $ | 2,560 |
| | $ | 1,752 |
| | $ | 1,357 |
| | N/A | | $ | 5,669 |
|
________
| |
(a) | In addition to the fees shown, we may also receive distributions from CESH upon liquidation of the fund in an amount potentially equal to 20% of available cash after the limited partners have received certain cumulative distributions. |
| |
(b) | Other advisory fees primarily include disposition fees earned for completing dispositions on behalf of the Managed Programs. Structuring and other advisory fees are recorded in Structuring and other advisory revenue in our consolidated financial statements. |
| |
(c) | Comprised of an initial acquisition fee (generally 2.50% of the total aggregate cost of net-leased properties) paid when the transaction is completed and a subordinated acquisition fee (generally 2.00% of the total aggregate cost of net-leased properties) paid in annual installments over three years, provided certain performance criterion are met. The acquisition fee for other properties is generally 1.75% of the total aggregate cost. |
| |
(d) | We earn investment management revenue from CWI 1 and CWI 2 in our role as their advisor. Pursuant to the terms of their subadvisory agreements, however, 20% of the fees we receive from CWI 1 and 25% of the fees we receive from CWI 2 are paid to their respective subadvisors. |
| |
(e) | Amount for CWI 1 is related to mortgage loan refinancings and a disposition. Amount for CWI 2 is related to a mortgage loan refinancing. |
| |
(f) | Based on average market value of assets. Under the terms of the respective advisory agreements of the Managed REITs, we may elect to receive cash or shares of CWI 1 and CWI 2’s stock for asset management fees due, while CPA:18 – Global has an option to pay asset management fees in cash or shares upon our recommendation. Asset management fees are recorded in Asset management revenue in our consolidated financial statements. |
| |
(g) | Based on gross assets at fair value. |
| |
(h) | Amounts for CWI 1 and CWI 2 are gross of fees paid to their respective subadvisors. |
| |
(i) | 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 Equity in earnings of equity method investments in the Managed Programs and real estate in our consolidated financial statements. |
| |
(j) | Amounts for CWI 1 and CWI 2 are net of fees paid to their respective subadvisors. |
|
| | |
| | Investing for the long runTM | 37 |
W. P. Carey Inc.
Investment Management – Fourth Quarter 2019
|
| |
Investment Activity – Managed Programs |
Dollars in thousands. Pro rata. For the year ended December 31, 2019.
|
| | | | | | | | | | | | | | | | | | |
Acquisitions | | | | Gross Investment Amount | | | | | | Gross Square Footage | | |
Fund | | Developer | | Property Location(s) | | | Closing Date | | Property Type(s) | | | Ownership |
1Q19 | | | | | | | | | | | | | | |
CPA:18 – Global (a) (b) | | Grupo Moraval | | Pamplona, Spain | | $ | 29,736 |
| | Feb-19 | | Student Housing | | 91,363 |
| | 100.0 | % |
1Q19 Total | | | | | | 29,736 |
| | | | | | 91,363 |
| | |
| | | | | | | | | | | | | | |
2Q19 (N/A) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
3Q19 (N/A) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
4Q19 (N/A) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Year-to-Date Total Acquisitions | | $ | 29,736 |
| | | | | | 91,363 |
| | |
|
| | | | | | | | | | | | | | | | | | |
Dispositions | | | | | | | | | | Gross Square Footage | | |
Portfolio(s) | | Tenant / Operator | | Property Location(s) | | Gross Sale Price | | Closing Date | | Property
Type(s) | | | Ownership |
1Q19 | | | | | | | | | | | | | | |
CPA:18 – Global | | Cayo Grande | | Fort Walton Beach, FL | | $ | 39,750 |
| | Jan-19 | | Multi-family | | 237,582 |
| | 97.0 | % |
CPA:18 – Global (a) | | Craigentinny | | Edinburgh, United Kingdom | | 4,408 |
| | Mar-19 | | Industrial | | 24,788 |
| | 100.0 | % |
1Q19 Total | | | | | | 44,158 |
| | | | | | 262,370 |
| | |
| | | | | | | | | | | | | | |
2Q19 | | | | | |
|
| | | | | | | | |
CPA:18 – Global (a) | | Inverbreakie | | Invergordon, United Kingdom | | 797 |
| | Apr-19 | | Industrial | | 10,045 |
| | 100.0 | % |
CPA:18 – Global (a) | | UK Automotive | | Durham, United Kingdom | | 2,288 |
| | Jun-19 | | Industrial | | 10,809 |
| | 100.0 | % |
2Q19 Total | | | | | | 3,085 |
| | | | | | 20,854 |
| | |
| | | | | | | | | | | | | | |
3Q19 | | | | | | | | | | | | | | |
CPA:18 – Global (8 properties) (a) | | Truffle | | Various, United Kingdom | | 32,634 |
| | Aug-19 | | Industrial | | 409,112 |
| | 100.0 | % |
CPA:18 – Global (a) | | Jane Street Self Storage | | Vaughan, Canada | | 4,508 |
| | Aug-19 | | Self Storage | | N/A |
| | 100.0 | % |
CWI 1 | | Marriott | | San Diego, CA | | 79,000 |
| | Sep-19 | | Hotel | | 178,020 |
| | 100.0 | % |
3Q19 Total | | | | | | 116,142 |
| | | | | | 587,132 |
| | |
| | | | | | | | | | | | | | |
4Q19 | | | | | | | | | | | | | | |
CWI 1 | | Hilton | | New Orleans, LA | | 26,000 |
| | Oct-19 | | Hotel | | 119,638 |
| | 87.6 | % |
CWI 1 | | Hampton Inn and Homewood Suites | | Denver, CO | | 85,470 |
| | Nov-19 | | Hotel | | 287,739 |
| | 100.0 | % |
4Q19 Total | | | | | | 111,470 |
| | | | | | 407,377 |
| | |
| | | | | | | | | | | | | | |
Year-to-Date Total Dispositions | | | | $ | 274,855 |
| | | | | | 1,277,733 |
| | |
________
| |
(a) | Amount reflects the applicable exchange rate on the date of the transaction. |
| |
(b) | Acquisition includes a build-to-suit transaction. Gross investment amount represents total commitment for build-to-suit funding. |
|
| | |
| | Investing for the long runTM | 38 |
W. P. Carey Inc.
Investment Management – Fourth Quarter 2019
|
| |
Summary of Future Liquidity Strategies for the Managed Programs |
As of December 31, 2019.
Liquidity events for the Managed REITs must be approved by each Managed REIT’s board of directors. A liquidity transaction could include sales of assets, either on a portfolio basis or individually; a listing of each Managed REIT’s shares on a national securities exchange; or a merger or other transaction(s) approved by the respective board of directors. Market conditions and other factors could cause the delay of a liquidity transaction or the commencement of liquidation. Even if a Managed REIT’s board of directors decides to liquidate, the Managed REIT is under no obligation to conclude a liquidation within a set timeframe because the precise timing of any transaction(s) will depend on the then-prevailing real estate and financial markets, the economic conditions of the areas in which properties are located and the federal income tax consequences to the Managed REIT’s stockholders.
|
| | | | | | |
General Liquidation Guideline (a) |
CPA:18 – Global | | CWI 1 (b) | | CWI 2 (b) | | CESH |
Beginning after the seventh anniversary of the closing of the initial public offering in 2015 | | Beginning six years following the termination of the initial public offering in 2013 | | Beginning six years following the termination of the initial public offering in 2017 | | Beginning five years after raising the minimum offering amount in 2016 |
________
| |
(a) | Based on general liquidation guidelines set forth in the respective prospectuses for the timeframes that each board of directors is required to consider liquidity; ultimately, liquidation is approved by the independent directors of each program (except for CESH, which is determined by its General Partner). |
| |
(b) | On October 22, 2019, CWI 1 and CWI 2 announced that they have entered into a definitive merger agreement under which the two companies intend to merge in an all-stock transaction. The transaction is expected to close in the first quarter of 2020, subject to the approval of stockholders of each of CWI 1 and CWI 2, among other conditions. The special stockholder meetings for CWI 1 and CWI 2 are currently scheduled for March 26, 2020. Following the close of the merger, the combined company will complete an internalization transaction with us and its subadvisor Watermark Capital Partners, LLC, as a result of which the combined company will become self-managed. Following the completion of the merger, we would cease earning advisory fees and distributions of available cash from CWI 1 and CWI 2. |
|
| | |
| | Investing for the long runTM | 39 |
W. P. Carey Inc.
Investment Management – Fourth Quarter 2019
|
| |
Summary of Back-End Fees for / Interests 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 liquidity events are at the discretion of each Managed REIT’s board of directors and there is no assurance that any of the fees or interests described below will be realized. Please refer to each Managed REIT’s filings with the SEC for complete descriptions of each Managed REIT’s liquidity strategy.
|
| | | | | | | |
| Back-End Fees and Interests |
| CPA:18 – Global | | CWI 1 (a) | | CWI 2 (a) | | CESH |
Disposition Fees | Investments other than those described below — equal to the lesser of (i) 50% of the brokerage commission paid or (ii) 3% of the contract sales price of a property.
Readily marketable real estate securities — none. | | Equal to the lesser of: (i) 50% of the competitive real estate commission and (ii) 1.5% of the contract sales price of a property. | | Equal to the lesser of: (i) 50% of the competitive real estate commission and (ii) 1.5% of the contract sales price of a property. | | 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. | | Special general partner interest receives 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 transactions or distributions) plus the six percent preferred return rate. A listing will not trigger the payment of this distribution. | | Special general partner interest receives 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 transactions or distributions) plus the six percent preferred return rate. A listing will not trigger the payment of this distribution. | | 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. (b)
|
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. | | Fair market value as determined by appraisal. | | Fair market value as determined by appraisal. | | N/A |
Distribution Related to Ownership of Shares | 3.9% ownership as of 12/31/2019 | | 3.9% ownership as of 12/31/2019 | | 3.8% ownership as of 12/31/2019 | | 2.4% ownership as of 12/31/2019 |
________
| |
(a) | On October 22, 2019, CWI 1 and CWI 2 announced that they have entered into a definitive merger agreement under which the two companies intend to merge in an all-stock transaction with CWI 2 as the surviving entity. The transaction is expected to close in the first quarter of 2020, subject to the approval of stockholders of each of CWI 1 and CWI 2, among other conditions. The special stockholder meetings for CWI 1 and CWI 2 are currently scheduled for March 26, 2020. In connection with the merger, we have entered into an internalization agreement with CWI 1 and CWI 2. Immediately following the closing of the merger, the operating partnerships of each of CWI 1 and CWI 2 will redeem the special general partner interests that we hold, for which we will receive approximately $97 million in consideration, comprised of $65 million in shares of CWI 2 preferred stock (which are anticipated to carry an initial dividend of 5.0%) and 2,840,549 shares of CWI 2 common stock valued at approximately $32 million. See our Form 8-K filed on October 22, 2019 for more details. |
| |
(b) | 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 | 40 |
W. P. Carey Inc.
Appendix
Fourth Quarter 2019
|
| | |
| | Investing for the long runTM | 41 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2019
|
| |
Normalized Pro Rata Cash NOI |
In thousands. From real estate.
|
| | | |
| Three Months Ended
Dec. 31, 2019 |
Consolidated Lease Revenues |
|
Total lease revenues – as reported | $ | 274,795 |
|
Less: Consolidated Reimbursable and Non-Reimbursable Property Expenses |
|
Reimbursable property expenses – as reported | 12,877 |
|
Non-reimbursable property expenses – as reported | 9,341 |
|
| 252,577 |
|
|
|
Plus: NOI from Operating Properties |
|
Hotel revenues (a) | 3,554 |
|
Hotel expenses (a) | (2,833 | ) |
| 721 |
|
| |
Self-storage revenues | 1,348 |
|
Self-storage expenses | (184 | ) |
| 1,164 |
|
| |
| 254,462 |
|
|
|
Adjustments for Pro Rata Ownership of Real Estate Joint Ventures: |
|
Add: Pro rata share of NOI from equity investments | 5,460 |
|
Less: Pro rata share of NOI attributable to noncontrolling interests | (22 | ) |
| 5,438 |
|
|
|
| 259,900 |
|
|
|
Adjustments for Pro Rata Non-Cash Items: |
|
Add: Above- and below-market rent intangible lease amortization | 17,036 |
|
Less: Straight-line rent amortization | (5,001 | ) |
Add: Other non-cash items | 473 |
|
| 12,508 |
|
|
|
Pro Rata Cash NOI (b) | 272,408 |
|
|
|
Adjustment to normalize for intra-period acquisitions, completed capital investment projects and dispositions (c) | (1,291 | ) |
|
|
Normalized Pro Rata Cash NOI (b) | $ | 271,117 |
|
|
| | |
| | Investing for the long runTM | 42 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2019
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, 2019 |
Net Income from Real Estate Attributable to W. P. Carey | |
Net income from Real Estate attributable to W. P. Carey – as reported | $ | 124,333 |
|
Adjustments for Consolidated Operating Expenses | |
Add: Operating expenses – as reported | 162,978 |
|
Less: Property expenses, excluding reimbursable tenant costs – as reported | (9,341 | ) |
Less: Operating property expenses – as reported | (8,000 | ) |
| 145,637 |
|
| |
Adjustments for Other Consolidated Revenues and Expenses: | |
Less: Lease termination income and other – as reported | (12,317 | ) |
Less: Reimbursable property expenses – as reported | (12,877 | ) |
Less: Other income and (expenses) | (9,046 | ) |
Add: Provision for income taxes | 18,113 |
|
| (16,127 | ) |
| |
Other Adjustments: | |
Add: Above- and below-market rent intangible lease amortization | 17,037 |
|
Add: Adjustments for pro rata ownership | 5,454 |
|
Less: Straight-line rent amortization | (4,991 | ) |
Adjustment to normalize for intra-period acquisitions, completed capital investment projects and dispositions (c) | (1,291 | ) |
Adjustment to normalize for unstabilized hotel (a) | 635 |
|
Add: Property expenses, excluding reimbursable tenant costs, non-cash | 430 |
|
| 17,274 |
|
| |
Normalized Pro Rata Cash NOI (b) | $ | 271,117 |
|
________
| |
(a) | We exclude an unstabilized hotel’s NOI since it is currently being renovated. This hotel was classified as held for sale as of December 31, 2019 and was sold in January 2020. |
| |
(b) | Pro rata cash NOI and normalized pro rata cash NOI are non-GAAP measures. See the Terms and Definitions 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. |
| |
(c) | For properties acquired and capital investment projects completed during the three months ended December 31, 2019, 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, 2019, the adjustment eliminates our pro rata share of cash NOI for the period. |
|
| | |
| | Investing for the long runTM | 43 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2019
|
| |
Adjusted EBITDA, Consolidated – Last Five Quarters |
In thousands.
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 | | Mar. 31, 2019 | | Dec. 31, 2018 |
Net income | $ | 129,792 |
| | $ | 41,835 |
| | $ | 66,121 |
| | $ | 68,796 |
| | $ | 195,278 |
|
| | | | | | | | | |
Adjustments to Derive Consolidated EBITDA | | | | | | | | | |
Depreciation and amortization | 111,607 |
| | 109,517 |
| | 113,632 |
| | 112,379 |
| | 93,321 |
|
Interest expense | 53,667 |
| | 58,626 |
| | 59,719 |
| | 61,313 |
| | 57,250 |
|
Provision for (benefit from) income taxes | 21,064 |
| | 4,157 |
| | 3,119 |
| | (2,129 | ) | | 11,436 |
|
Consolidated EBITDA (a) | 316,130 |
| | 214,135 |
| | 242,591 |
| | 240,359 |
| | 357,285 |
|
| | | | | | | | | |
Adjustments to Derive Adjusted EBITDA (b) | | | | | | | | | |
Other (gains) and losses (c) | (38,196 | ) | | 18,618 |
| | 5,724 |
| | 4,930 |
| | (9,001 | ) |
(Gain) loss on sale of real estate, net | (17,501 | ) | | (71 | ) | | 362 |
| | (933 | ) | | (99,618 | ) |
Above- and below-market rent intangible and straight-line rent adjustments (d) | 12,046 |
| | 8,591 |
| | 8,467 |
| | 9,660 |
| | 8,888 |
|
Impairment charges | 6,758 |
| | 25,781 |
| | — |
| | — |
| | — |
|
Other amortization and non-cash charges (e) | (5,791 | ) | | 422 |
| | 415 |
| | (327 | ) | | (408 | ) |
Stock-based compensation expense | 4,939 |
| | 4,747 |
| | 4,936 |
| | 4,165 |
| | 3,902 |
|
Merger and other expenses (f) | (811 | ) | | 70 |
| | 696 |
| | 146 |
| | 37,098 |
|
Loss (gain) on change in control of interests (g) (h) | — |
| | 8,416 |
| | — |
| | — |
| | (47,814 | ) |
| (38,556 | ) | | 66,574 |
| | 20,600 |
| | 17,641 |
| | (106,953 | ) |
| | | | | | | | | |
Adjustments for Pro Rata Ownership | | | | | | | | | |
Real Estate Joint Ventures: | | | | | | | | | |
Add: Pro rata share of adjustments for equity investments | 4,300 |
| | 5,471 |
| | 5,744 |
| | 6,106 |
| | 4,143 |
|
Less: Pro rata share of adjustments for amounts attributable to noncontrolling interests | (459 | ) | | (530 | ) | | (117 | ) | | (399 | ) | | (2,662 | ) |
| 3,841 |
| | 4,941 |
| | 5,627 |
| | 5,707 |
| | 1,481 |
|
Equity Investments in the Managed Programs: (i) | | | | | | | | | |
Add: Distributions received from equity investments in the Managed Programs | 2,089 |
| | 1,980 |
| | 1,870 |
| | 1,753 |
| | 4,238 |
|
Less: Loss from equity investments in the Managed Programs | 173 |
| | 288 |
| | 45 |
| | 116 |
| | 682 |
|
| 2,262 |
| | 2,268 |
| | 1,915 |
| | 1,869 |
| | 4,920 |
|
Add: Intra-period normalization of CPA:17 Merger (closed October 31, 2018) (j) | — |
| | — |
| | — |
| | — |
| | 21,528 |
|
Adjusted EBITDA (a) | $ | 283,677 |
| | $ | 287,918 |
| | $ | 270,733 |
| | $ | 265,576 |
| | $ | 278,261 |
|
________
| |
(a) | EBITDA and adjusted EBITDA are non-GAAP measures. See the Terms and Definitions section that follows for a description of our non-GAAP measures. |
| |
(b) | 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. |
| |
(c) | Primarily comprised of unrealized gains and losses on derivatives, and gains and losses from foreign currency movements, extinguishment of debt and marketable securities. |
| |
(d) | Straight-line rent adjustments relate to our net-leased properties subject to operating leases. |
| |
(e) | Amount for the three months ended December 31, 2019 includes an adjustment to exclude $6.2 million of non-cash lease termination revenue, which will be collected and reflected within adjusted EBITDA over the remaining master lease term. |
| |
(f) | Amount for the three months ended December 31, 2018 is primarily comprised of costs incurred in connection with the CPA:17 Merger. |
| |
(g) | Amount for the three months ended September 30, 2019 represents a loss recognized on the purchase of the remaining interest in an investment from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. We recognized this loss because we identified certain measurement period adjustments during the third quarter of 2019 that impacted the provisional accounting for this investment. |
| |
(h) | Amount for the three months ended December 31, 2018 includes a gain of $18.8 million recognized on the purchase of the remaining interests in six investments from CPA:17 – Global in the CPA:17 Merger, which we had previously accounted for under the equity method. Amount for the three months ended December 31, 2018 also includes a gain of $29.0 million recognized on our previously held interest in shares of CPA:17 – Global common stock in connection with the CPA:17 Merger. |
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(i) | 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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(j) | The adjustment modifies adjusted EBITDA for the 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. The adjustment is reduced for advisory fees received from CPA:17 – Global during the three months ended December 31, 2018. |
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| | Investing for the long runTM | 44 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2019
|
| |
Adjusted EBITDA, Real Estate – Last Five Quarters |
In thousands.
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 | | Mar. 31, 2019 | | Dec. 31, 2018 |
Net income from Real Estate | $ | 124,317 |
| | $ | 33,545 |
| | $ | 60,759 |
| | $ | 53,334 |
| | $ | 153,626 |
|
| | | | | | | | | |
Adjustments to Derive Consolidated EBITDA | | | | | | | | | |
Depreciation and amortization | 110,648 |
| | 108,573 |
| | 112,666 |
| | 111,413 |
| | 92,330 |
|
Interest expense | 53,667 |
| | 58,626 |
| | 59,719 |
| | 61,313 |
| | 57,250 |
|
Provision for income taxes | 18,113 |
| | 3,511 |
| | 3,019 |
| | 6,159 |
| | 948 |
|
Consolidated EBITDA – Real Estate (a) | 306,745 |
| | 204,255 |
| | 236,163 |
| | 232,219 |
| | 304,154 |
|
| | | | | | | | | |
Adjustments to Derive Adjusted EBITDA (b) | | | | | | | | | |
Other (gains) and losses (c) | (38,546 | ) | | 18,956 |
| | 5,888 |
| | 3,929 |
| | (11,269 | ) |
(Gain) loss on sale of real estate, net | (17,501 | ) | | (71 | ) | | 362 |
| | (933 | ) | | (99,618 | ) |
Above- and below-market rent intangible and straight-line rent adjustments (d) | 12,046 |
| | 8,591 |
| | 8,467 |
| | 9,660 |
| | 8,888 |
|
Impairment charges | 6,758 |
| | 25,781 |
| | — |
| | — |
| | — |
|
Other amortization and non-cash charges (e) | (5,791 | ) | | 422 |
| | 415 |
| | (326 | ) | | (240 | ) |
Stock-based compensation expense | 3,531 |
| | 3,435 |
| | 3,482 |
| | 2,800 |
| | 2,774 |
|
Merger and other expenses (f) | (811 | ) | | 70 |
| | 696 |
| | 146 |
| | 37,098 |
|
Loss (gain) on change in control of interests (g) (h) | — |
| | 8,416 |
| | — |
| | — |
| | (18,792 | ) |
| (40,314 | ) | | 65,600 |
| | 19,310 |
| | 15,276 |
| | (81,159 | ) |
| | | | | | | | | |
Adjustments for Pro Rata Ownership | | | | | | | | | |
Real Estate Joint Ventures: | | | | | | | | | |
Add: Pro rata share of adjustments for equity investments | 4,300 |
| | 5,471 |
| | 5,744 |
| | 6,106 |
| | 4,143 |
|
Less: Pro rata share of adjustments for amounts attributable to noncontrolling interests | (459 | ) | | (530 | ) | | (117 | ) | | (399 | ) | | (2,662 | ) |
| 3,841 |
| | 4,941 |
| | 5,627 |
| | 5,707 |
| | 1,481 |
|
Add: Intra-period normalization of CPA:17 Merger (closed October 31, 2018) (i) | — |
| | — |
| | — |
| | — |
| | 31,555 |
|
Adjusted EBITDA – Real Estate (a) | $ | 270,272 |
| | $ | 274,796 |
| | $ | 261,100 |
| | $ | 253,202 |
| | $ | 256,031 |
|
________
| |
(a) | EBITDA and adjusted EBITDA are non-GAAP measures. See the Terms and Definitions section that follows for a description of our non-GAAP measures. |
| |
(b) | 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. |
| |
(c) | Primarily comprised of unrealized gains and losses on derivatives, and gains and losses from foreign currency movements, extinguishment of debt and marketable securities. |
| |
(d) | Straight-line rent adjustments relate to our net-leased properties subject to operating leases. |
| |
(e) | Amount for the three months ended December 31, 2019 includes an adjustment to exclude $6.2 million of non-cash lease termination revenue, which will be collected and reflected within adjusted EBITDA over the remaining master lease term. |
| |
(f) | Amount for the three months ended December 31, 2018 is primarily comprised of costs incurred in connection with the CPA:17 Merger. |
| |
(g) | Amount for the three months ended September 30, 2019 represents a loss recognized on the purchase of the remaining interest in an investment from CPA:17 in the CPA:17 Merger, which we had previously accounted for under the equity method. We recognized this loss because we identified certain measurement period adjustments during the third quarter of 2019 that impacted the provisional accounting for this investment. |
| |
(h) | Amount for the three months ended December 31, 2018 represents a gain recognized on the purchase of the remaining interests in six investments from CPA:17 – Global in the CPA:17 Merger, which we had previously accounted for under the equity method. |
| |
(i) | The adjustment modifies adjusted EBITDA for the 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. |
|
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| | Investing for the long runTM | 45 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2019
|
| |
Adjusted EBITDA, Investment Management – Last Five Quarters |
In thousands.
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 | | Mar. 31, 2019 | | Dec. 31, 2018 |
Net income from Investment Management | $ | 5,475 |
| | $ | 8,290 |
| | $ | 5,362 |
| | $ | 15,462 |
| | $ | 41,652 |
|
| | | | | | | | | |
Adjustments to Derive Consolidated EBITDA | | | | | | | | | |
Provision for (benefit from) income taxes | 2,951 |
| | 646 |
| | 100 |
| | (8,288 | ) | | 10,488 |
|
Depreciation and amortization | 959 |
| | 944 |
| | 966 |
| | 966 |
| | 991 |
|
Consolidated EBITDA – Investment Management (a) | 9,385 |
| | 9,880 |
| | 6,428 |
| | 8,140 |
| | 53,131 |
|
| | | | | | | | | |
Adjustments to Derive Adjusted EBITDA (b) | | | | | | | | | |
Stock-based compensation expense | 1,408 |
| | 1,312 |
| | 1,454 |
| | 1,365 |
| | 1,128 |
|
Other (gains) and losses (c) | 350 |
| | (338 | ) | | (164 | ) | | 1,001 |
| | 2,268 |
|
Other amortization and non-cash charges | — |
| | — |
| | — |
| | (1 | ) | | (168 | ) |
Gain on change in control of interests (d) | — |
| | — |
| | — |
| | — |
| | (29,022 | ) |
| 1,758 |
| | 974 |
| | 1,290 |
| | 2,365 |
| | (25,794 | ) |
| | | | | | | | | |
Adjustments for Pro Rata Ownership | | | | | | | | | |
Equity Investments in the Managed Programs: (e) | | | | | | | | | |
Add: Distributions received from equity investments in the Managed Programs | 2,089 |
| | 1,980 |
| | 1,870 |
| | 1,753 |
| | 4,238 |
|
Less: Loss from equity investments in the Managed Programs | 173 |
| | 288 |
| | 45 |
| | 116 |
| | 682 |
|
| 2,262 |
| | 2,268 |
| | 1,915 |
| | 1,869 |
| | 4,920 |
|
Add: Intra-period normalization of CPA:17 Merger (closed October 31, 2018) (f) | — |
| | — |
| | — |
| | — |
| | (10,027 | ) |
Adjusted EBITDA – Investment Management (a) | $ | 13,405 |
| | $ | 13,122 |
| | $ | 9,633 |
| | $ | 12,374 |
| | $ | 22,230 |
|
________
| |
(a) | EBITDA and adjusted EBITDA are non-GAAP measures. See the Terms and Definitions section that follows for a description of our non-GAAP measures. |
| |
(b) | 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. |
| |
(c) | Primarily comprised of gains and losses from foreign currency movements and marketable securities. |
| |
(d) | Amount for the three months ended December 31, 2018 represents a gain recognized on our previously held interest in shares of CPA:17 – Global common stock in connection with the CPA:17 Merger. |
| |
(e) | 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. |
| |
(f) | The adjustment reduces adjusted EBITDA for advisory fees received from CPA:17 – Global during the three months ended December 31, 2018. |
|
| | |
| | Investing for the long runTM | 46 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2019
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 and other non-cash rent adjustments, stock-based compensation, non-cash environmental accretion expense 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, restructuring and related compensation expenses 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.
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.
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 investment projects completed during the period, as applicable. We also excluded an unstabilized hotel’s NOI since it was being renovated; this hotel was sold in January 2020. We believe this measure provides a helpful representation of our net operating income from our in-place leased and operating properties.
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| | Investing for the long runTM | 47 |
W. P. Carey Inc.
Appendix – Fourth Quarter 2019
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) because it is helpful when comparing our operating performance to that of companies in our industry without regard to such items, which can vary substantially from company to company. Adjusted EBITDA as disclosed represents EBITDA, modified to include other adjustments to GAAP net income for certain non-cash charges, such as impairments, 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. For the three months ended December 31, 2018, we also modified adjusted EBITDA for the 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 of properties acquired in the CPA:17 Merger for the full quarter; we also reduced adjusted EBITDA for advisory fees received from CPA:17 – Global during that quarter. 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.
Other Metrics
Pro Rata Metrics
This supplemental package contains certain metrics prepared under the pro rata consolidation method. 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%. Under the full consolidation method, we report 100% of the assets, liabilities, revenues and expenses of those investments that are deemed to be under our control or for which we are deemed to be the primary beneficiary, even if our ownership is less than 100%. Also, for all other jointly owned investments, which we do not control, we report our net investment and our net income or loss from that investment. Under the pro rata consolidation method, 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, net of receivable reserves as determined by GAAP, and reflects exchange rates as of December 31, 2019. 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 | 48 |
