Exhibit 99.2
W. P. Carey Inc.
Supplemental Information
Second Quarter 2020
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 1” means Carey Watermark Investors Incorporated and “CWI 2” means Carey Watermark Investors 2 Incorporated. “Managed Programs” means CPA:18 – Global 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 Programs prior to the CPA:17 Merger. “CWI 1 and CWI 2 Merger” means the merger between CWI 1 and CWI 2, which closed on April 13, 2020. Subsequently, the combined company was renamed Watermark Lodging Trust, Inc. (“WLT”). CWI 1 and CWI 2 were included in the Managed Programs prior to the CWI 1 and CWI 2 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”); normalized pro rata cash NOI; and same store pro rata rental income. 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 – Second Quarter 2020
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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 – Second Quarter 2020
As of or for the three months ended June 30, 2020.
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Financial Results | | | | | | | | | |
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| | | | | Owned Real Estate | | Investment Management | | Total |
Revenues, including reimbursable costs – consolidated ($000s) | | $ | 283,647 |
| | $ | 6,883 |
| | $ | 290,530 |
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Net income attributable to W. P. Carey ($000s) | | 81,825 |
| | 23,475 |
| | 105,300 |
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Net income attributable to W. P. Carey per diluted share | | 0.47 |
| | 0.14 |
| | 0.61 |
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Normalized pro rata cash NOI from real estate ($000s) (a) (b) | | 263,624 |
| | N/A |
| | 263,624 |
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Adjusted EBITDA ($000s) (a) (b) | | 250,536 |
| | 7,318 |
| | 257,854 |
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AFFO attributable to W. P. Carey ($000s) (a) (b) | | 191,680 |
| | 6,230 |
| | 197,910 |
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AFFO attributable to W. P. Carey per diluted share (a) (b) | | 1.10 |
| | 0.04 |
| | 1.14 |
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Dividends declared per share – current quarter | | | | | | 1.042 |
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Dividends declared per share – current quarter annualized | | | | | | 4.168 |
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Dividend yield – annualized, based on quarter end share price of $67.65 | | | | | | 6.2 | % |
Dividend payout ratio – for the six months ended June 30, 2020 (c) | | | | | | 87.1 | % |
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Balance Sheet and Capitalization | | | | | | | | | |
Equity market capitalization – based on quarter end share price of $67.65 ($000s) | | | | | | $ | 11,763,687 |
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Pro rata net debt ($000s) (d) | | | | | | | | | 6,221,613 |
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Enterprise value ($000s) | | | | | | | | | 17,985,300 |
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Total consolidated debt ($000s) | | | | | | | | | 6,122,267 |
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Gross assets ($000s) (e) | | | | | | | | | 15,041,075 |
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Liquidity ($000s) (f) | | | | | | | | | 2,183,920 |
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Pro rata net debt to enterprise value (b) | | | | | | | | | 34.6 | % |
Pro rata net debt to adjusted EBITDA (annualized) (a) (b) | | | | | | 6.0x |
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Total consolidated debt to gross assets | | | | | | | | | 40.7 | % |
Total consolidated secured debt to gross assets | | | | | | | | | 9.5 | % |
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Weighted-average interest rate (b) | | | | | | | | | 3.2 | % |
Weighted-average debt maturity (years) (b) | | | | | | | | | 4.7 |
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Moody's Investors Service – corporate rating | | | | | | | | | Baa2 (stable) |
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Standard & Poor's Ratings Services – issuer rating | | | | | | | | | BBB (stable) |
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Real Estate Portfolio (Pro Rata) | | | | | | | | | |
ABR – total portfolio ($000s) (g) (h) | | | | | | | | | $ | 1,134,356 |
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ABR – unencumbered portfolio ($000s) (g) (i) | | | | | | | | | $ | 835,544 |
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Number of net-leased properties | | | | | | | | | 1,216 |
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Number of operating properties (j) | | | | | | | | | 20 |
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Number of tenants – net-leased properties | | | | | | | | | 352 |
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ABR from investment grade tenants as a % of total ABR – net-leased properties (k) | | | | | | 29.7 | % |
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Net-leased properties – square footage (millions) | | | | | | | | | 141.9 |
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Occupancy – net-leased properties | | | | | | | | | 98.9 | % |
Weighted-average lease term (years) | | | | | | | | | 10.7 |
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Maximum commitment for capital investment projects expected to be completed during 2020 ($000s) | | | | $ | 42,417 |
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Acquisitions and completed capital investment projects – current quarter ($000s) | | | | 148,180 |
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Dispositions – current quarter ($000s) | | | | | | | | | — |
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________
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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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| | Investing for the long runTM | 1 |
W. P. Carey Inc.
Overview – Second Quarter 2020
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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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(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 $752.5 million and above-market rent intangible assets of $420.0 million. |
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(f) | Represents (i) availability under our Senior Unsecured Credit Facility, (ii) consolidated cash and cash equivalents, and (iii) available proceeds under our forward sale agreements (based on 3,999,000 remaining shares and a net offering price of $67.30 as of June 30, 2020, which will be updated at each quarter end). |
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(h) | On an annualized basis, contractual rental income for the current quarter from leases totaling (i) less than 0.1% of ABR was deemed collectible but unpaid as of July 31, 2020, (ii) 1.7% of ABR was deferred and/or in a free rent period as of June 30, 2020, and (iii) 1.6% of ABR was unpaid and does not meet the requirements for collectibility under US GAAP. |
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(i) | Represents ABR from properties unencumbered by non-recourse mortgage debt. |
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(j) | Comprised of 19 self-storage properties and one hotel. |
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(k) | Percentage of portfolio is based on ABR, as of June 30, 2020. Includes tenants or guarantors with investment grade ratings (22.2%) and subsidiaries of non-guarantor parent companies with investment grade ratings (7.5%). 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 – Second Quarter 2020
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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
Jun. 30, 2020 | | Annualized |
Normalized pro rata cash NOI (a) (b) | | | $ | 263,624 |
| | $ | 1,054,496 |
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Investment Management | | | | | |
Adjusted EBITDA (a) (b) | | | 7,318 |
| | 29,272 |
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Selected Components of Adjusted EBITDA: | | | | | |
Asset management revenue (c) | | | 3,605 |
| | 14,420 |
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Operating partnership interest in real estate cash flow of CPA:18 – Global (d) |
| | 2,029 |
| | 8,116 |
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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 Jun. 30, 2020 |
Assets | | | | | |
Book value of real estate excluded from normalized pro rata cash NOI (e) | | | | $ | 150,958 |
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Cash and cash equivalents | | | | | 137,157 |
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Due from affiliates | | | | | 11,074 |
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Other assets, net: | | | | | |
Straight-line rent adjustments | | | | | $ | 158,336 |
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Investment in shares of a cold storage operator | | | | | 146,190 |
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Restricted cash, including escrow | | | | | 66,835 |
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Office lease right-of-use assets, net | | | | | 65,352 |
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Deferred charges | | | | | 48,339 |
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Taxes receivable | | | | | 42,707 |
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Non-rent tenant and other receivables | | | | | 41,404 |
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Loans receivable | | | | | 36,737 |
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Securities and derivatives | | | | | 28,742 |
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Deposits for construction | | | | | 20,942 |
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Prepaid expenses | | | | | 13,982 |
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Deferred income taxes | | | | | 9,486 |
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Investment in shares of Guggenheim Credit Income Fund | | | | | 7,570 |
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Other intangible assets, net | | | | | 6,293 |
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Rent receivables | | | | | 4,538 |
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Leasehold improvements, furniture and fixtures | | | | 3,408 |
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Other | | | | | 705 |
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Total other assets, net (excluding investment in preferred shares of WLT, as disclosed below) | | $ | 701,566 |
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Liabilities | | | | | |
Total pro rata debt outstanding (b) (f) | | | | | $ | 6,358,770 |
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Dividends payable | | | | | 183,738 |
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Deferred income taxes | | | | | 134,519 |
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Accounts payable, accrued expenses and other liabilities: | | | | | |
Accounts payable and accrued expenses | | | | | $ | 154,799 |
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Operating lease liabilities | | | | | 144,078 |
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Prepaid and deferred rents | | | | | 87,481 |
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Tenant security deposits | | | | | 49,325 |
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Accrued taxes payable | | | | | 39,048 |
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Securities and derivatives | | | | | 7,112 |
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Other | | | | | 33,968 |
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Total accounts payable, accrued expenses and other liabilities | | | | | $ | 515,811 |
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| | Investing for the long runTM | 3 |
W. P. Carey Inc.
Overview – Second Quarter 2020
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Other | Ownership % | | Estimated Value / Carrying Value |
Ownership in Managed Programs: (g) | | |
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CPA:18 – Global (h) | 4.1 | % | | $ | 51,494 |
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CESH (i) | 2.4 | % | | 3,492 |
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| | | 54,986 |
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Ownership in WLT: (j) | | | |
Investment in common shares of WLT | 5.3 | % | | 49,210 |
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Investment in preferred shares of WLT | N/A |
| | 46,312 |
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| | | 95,522 |
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| | | $ | 150,508 |
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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) | Asset management revenue in this table for the three months ended June 30, 2020 excludes $0.5 million and $0.4 million from CWI 1 and CWI 2, respectively, which were recognized prior to the CWI 1 and CWI 2 Merger on April 13, 2020. |
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(d) | We are entitled to receive distributions of up to 10% of the Available Cash of CPA:18 – Global, as defined in its operating partnership agreement. |
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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, real estate under construction for certain expansion projects at existing properties and a common equity interest in a Las Vegas retail center. |
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(f) | Excludes unamortized discount, net totaling $25.3 million and unamortized deferred financing costs totaling $21.5 million as of June 30, 2020. |
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(g) | Separate from operating partnership interest in our affiliate, CPA:18 – Global, and our interests in unconsolidated real estate joint ventures with CPA:18 – Global. |
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(h) | The estimated value of CPA:18 – Global is based on its net asset value per share (“NAV”) of $8.29 as of March 31, 2020, which was calculated by relying in part on an estimate of the fair market value of the real estate portfolio adjusted to give effect to mortgage loans, both provided by third parties, as well as other adjustments. Refer to the SEC filings of CPA:18 – Global for the calculation methodology of its NAV. |
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(i) | 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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(j) | In connection with the CWI 1 and CWI 2 Merger, the operating partnerships of each of CWI 1 and CWI 2 redeemed the special general partner interests that we previously held, for which we received 1,300,000 shares of CWI 2 preferred stock and 2,840,549 shares in CWI 2 common stock. In addition, our 6,074,046 shares in CWI 1 common stock were exchanged for 5,531,025 shares in WLT common stock at the time of the merger, and prior to merger, we owned 3,836,669 shares in CWI 2 common stock. Our total investment in 12,208,243 common shares of WLT is included in Equity investments in the Managed Programs and real estate (as an equity investment in real estate) on our consolidated balance sheets. Our investment in 1,300,000 preferred shares of WLT is included in Other assets, net on our consolidated balance sheets as available-for-sale debt securities. Both investments are included within our Real Estate segment. |
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| | Investing for the long runTM | 4 |
W. P. Carey Inc.
Financial Results
Second Quarter 2020
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| | Investing for the long runTM | 5 |
W. P. Carey Inc.
Financial Results – Second Quarter 2020 |
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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 |
| Jun. 30, 2020 | | Mar. 31, 2020 | | Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 |
Revenues | | | | | | | | | |
Real Estate: | | | | | | | | | |
Lease revenues | $ | 280,303 |
| | $ | 282,110 |
| | $ | 274,795 |
| | $ | 278,839 |
| | $ | 269,802 |
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Lease termination income and other | 1,917 |
| | 6,509 |
| | 12,317 |
| | 14,377 |
| | 6,304 |
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Operating property revenues | 1,427 |
| | 5,967 |
| | 9,250 |
| | 9,538 |
| | 15,436 |
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| 283,647 |
| | 294,586 |
| | 296,362 |
| | 302,754 |
| | 291,542 |
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Investment Management: | | | | | | | | | |
Asset management revenue | 4,472 |
| | 9,889 |
| | 9,732 |
| | 9,878 |
| | 9,790 |
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Reimbursable costs from affiliates | 2,411 |
| | 4,030 |
| | 4,072 |
| | 4,786 |
| | 3,821 |
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Structuring and other advisory revenue | — |
| | 494 |
| | 1,061 |
| | 587 |
| | 58 |
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| 6,883 |
| | 14,413 |
| | 14,865 |
| | 15,251 |
| | 13,669 |
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| 290,530 |
| | 308,999 |
| | 311,227 |
| | 318,005 |
| | 305,211 |
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Operating Expenses | | | | | | | | | |
Depreciation and amortization | 107,477 |
| | 116,194 |
| | 111,607 |
| | 109,517 |
| | 113,632 |
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General and administrative | 17,472 |
| | 20,745 |
| | 17,069 |
| | 17,210 |
| | 19,729 |
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Reimbursable tenant costs | 13,796 |
| | 13,175 |
| | 12,877 |
| | 15,611 |
| | 13,917 |
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Property expenses, excluding reimbursable tenant costs | 11,651 |
| | 10,075 |
| | 9,341 |
| | 10,377 |
| | 9,915 |
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Stock-based compensation expense | 2,918 |
| | 2,661 |
| | 4,939 |
| | 4,747 |
| | 4,936 |
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Reimbursable costs from affiliates | 2,411 |
| | 4,030 |
| | 4,072 |
| | 4,786 |
| | 3,821 |
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Operating property expenses | 1,388 |
| | 5,223 |
| | 8,000 |
| | 8,547 |
| | 10,874 |
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Merger and other expenses | 1,074 |
| | 187 |
| | (811 | ) | | 70 |
| | 696 |
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Subadvisor fees | 192 |
| | 1,277 |
| | 1,964 |
| | 1,763 |
| | 1,650 |
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Impairment charges | — |
| | 19,420 |
| | 6,758 |
| | 25,781 |
| | — |
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| 158,379 |
| | 192,987 |
| | 175,816 |
| | 198,409 |
| | 179,170 |
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Other Income and Expenses | | | | | | | | | |
Interest expense | (52,182 | ) | | (52,540 | ) | | (53,667 | ) | | (58,626 | ) | | (59,719 | ) |
Equity in earnings (losses) of equity method investments in the Managed Programs and real estate (a) | 33,983 |
| | (45,790 | ) | | 8,018 |
| | 5,769 |
| | 3,951 |
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Other gains and (losses) (b) | 8,847 |
| | (4,423 | ) | | 43,593 |
| | (12,402 | ) | | (671 | ) |
Gain (loss) on sale of real estate, net | — |
| | 11,751 |
| | 17,501 |
| | 71 |
| | (362 | ) |
Loss on change in control of interests (c) | — |
| | — |
| | — |
| | (8,416 | ) | | — |
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| (9,352 | ) | | (91,002 | ) | | 15,445 |
| | (73,604 | ) | | (56,801 | ) |
Income before income taxes | 122,799 |
| | 25,010 |
| | 150,856 |
| | 45,992 |
| | 69,240 |
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(Provision for) benefit from income taxes | (7,595 | ) | | 41,692 |
| | (21,064 | ) | | (4,157 | ) | | (3,119 | ) |
Net Income | 115,204 |
| | 66,702 |
| | 129,792 |
| | 41,835 |
| | 66,121 |
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Net income attributable to noncontrolling interests (a) | (9,904 | ) | | (612 | ) | | (420 | ) | | (496 | ) | | (83 | ) |
Net Income Attributable to W. P. Carey | $ | 105,300 |
| | $ | 66,090 |
| | $ | 129,372 |
| | $ | 41,339 |
| | $ | 66,038 |
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Basic Earnings Per Share | $ | 0.61 |
| | $ | 0.38 |
| | $ | 0.75 |
| | $ | 0.24 |
| | $ | 0.39 |
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Diluted Earnings Per Share | $ | 0.61 |
| | $ | 0.38 |
| | $ | 0.75 |
| | $ | 0.24 |
| | $ | 0.38 |
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Weighted-Average Shares Outstanding | | | | | | | | | |
Basic | 173,401,749 |
| | 173,249,236 |
| | 173,153,811 |
| | 172,235,066 |
| | 171,304,112 |
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Diluted | 173,472,755 |
| | 173,460,053 |
| | 173,442,101 |
| | 172,486,506 |
| | 171,490,625 |
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Dividends Declared Per Share | $ | 1.042 |
| | $ | 1.040 |
| | $ | 1.038 |
| | $ | 1.036 |
| | $ | 1.034 |
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________
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(a) | Amount for the three months ended June 30, 2020 includes a non-cash net gain of $33.0 million (inclusive of $9.9 million attributable to the redemption of a noncontrolling interest that the former subadvisors for CWI 1 and CWI 2 held in the special general partner interests) recognized in connection with consideration received at closing of the CWI 1 and CWI 2 Merger, which reflects the allocation of $34.3 million of goodwill within our Investment Management segment. |
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(b) | Amount for the three months ended June 30, 2020 is primarily comprised of realized gains on foreign currency exchange derivatives of $4.4 million and a net release of our allowance for credit losses reserve of $3.6 million. |
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(c) | 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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| | Investing for the long runTM | 6 |
W. P. Carey Inc.
Financial Results – Second Quarter 2020 |
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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 |
| Jun. 30, 2020 | | Mar. 31, 2020 | | Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 |
Revenues | | | | | | | | | |
Lease revenues | $ | 280,303 |
| | $ | 282,110 |
| | $ | 274,795 |
| | $ | 278,839 |
| | $ | 269,802 |
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Lease termination income and other | 1,917 |
| | 6,509 |
| | 12,317 |
| | 14,377 |
| | 6,304 |
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Operating property revenues | 1,427 |
| | 5,967 |
| | 9,250 |
| | 9,538 |
| | 15,436 |
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| 283,647 |
| | 294,586 |
| | 296,362 |
| | 302,754 |
| | 291,542 |
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Operating Expenses | | | | | | | | | |
Depreciation and amortization (a) | 107,477 |
| | 115,207 |
| | 110,648 |
| | 108,573 |
| | 112,666 |
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General and administrative (a) | 17,472 |
| | 14,922 |
| | 12,634 |
| | 13,973 |
| | 15,001 |
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Reimbursable tenant costs | 13,796 |
| | 13,175 |
| | 12,877 |
| | 15,611 |
| | 13,917 |
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Property expenses, excluding reimbursable tenant costs | 11,651 |
| | 10,075 |
| | 9,341 |
| | 10,377 |
| | 9,915 |
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Stock-based compensation expense (a) | 2,918 |
| | 1,970 |
| | 3,531 |
| | 3,435 |
| | 3,482 |
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Operating property expenses | 1,388 |
| | 5,223 |
| | 8,000 |
| | 8,547 |
| | 10,874 |
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Merger and other expenses | 935 |
| | (132 | ) | | (811 | ) | | 70 |
| | 696 |
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Impairment charges | — |
| | 19,420 |
| | 6,758 |
| | 25,781 |
| | — |
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| 155,637 |
| | 179,860 |
| | 162,978 |
| | 186,367 |
| | 166,551 |
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Other Income and Expenses | | | | | | | | | |
Interest expense | (52,182 | ) | | (52,540 | ) | | (53,667 | ) | | (58,626 | ) | | (59,719 | ) |
Other gains and (losses) | 9,942 |
| | (5,776 | ) | | 43,581 |
| | (12,938 | ) | | (1,362 | ) |
Equity in earnings of equity method investments in real estate | 211 |
| | 1,565 |
| | 1,631 |
| | 578 |
| | 230 |
|
Gain (loss) on sale of real estate, net | — |
| | 11,751 |
| | 17,501 |
| | 71 |
| | (362 | ) |
Loss on change in control of interests (b) | — |
| | — |
| | — |
| | (8,416 | ) | | — |
|
| (42,029 | ) | | (45,000 | ) | | 9,046 |
| | (79,331 | ) | | (61,213 | ) |
Income before income taxes | 85,981 |
| | 69,726 |
| | 142,430 |
| | 37,056 |
| | 63,778 |
|
(Provision for) benefit from income taxes | (4,117 | ) | | 31,800 |
| | (18,113 | ) | | (3,511 | ) | | (3,019 | ) |
Net Income from Real Estate | 81,864 |
|
| 101,526 |
|
| 124,317 |
|
| 33,545 |
|
| 60,759 |
|
Net (income) loss attributable to noncontrolling interests | (39 | ) |
| (612 | ) |
| 16 |
|
| 11 |
|
| 9 |
|
Net Income from Real Estate Attributable to W. P. Carey | $ | 81,825 |
| | $ | 100,914 |
| | $ | 124,333 |
| | $ | 33,556 |
| | $ | 60,768 |
|
| | | | | | | | | |
Basic Earnings Per Share | $ | 0.47 |
| | $ | 0.58 |
| | $ | 0.72 |
| | $ | 0.19 |
| | $ | 0.36 |
|
Diluted Earnings Per Share | $ | 0.47 |
| | $ | 0.58 |
| | $ | 0.72 |
| | $ | 0.19 |
| | $ | 0.35 |
|
Weighted-Average Shares Outstanding | | | | | | | | | |
Basic | 173,401,749 |
| | 173,249,236 |
| | 173,153,811 |
| | 172,235,066 |
| | 171,304,112 |
|
Diluted | 173,472,755 |
| | 173,460,053 |
| | 173,442,101 |
| | 172,486,506 |
| | 171,490,625 |
|
________
| |
(a) | Beginning with the second quarter of 2020, general and administrative expenses attributed to our Investment Management segment are comprised of the incremental costs of providing services to the Managed Programs, which are fully reimbursed by those funds (resulting in no net expense for us). All other general and administrative expenses are attributed to our Real Estate segment. In addition, beginning with the second quarter of 2020, stock-based compensation expense and depreciation and amortization expense are fully recognized within our Real Estate segment. In light of the termination of the advisory agreements with CWI 1 and CWI 2 in connection with the WLT management internalization, we now view essentially all assets, liabilities and operational expenses as part of our Real Estate segment, other than incremental activities that are expected to wind down as we manage CPA:18 – Global and CESH through the end of their respective life cycles. |
| |
(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. |
|
| | |
| | Investing for the long runTM | 7 |
W. P. Carey Inc.
Financial Results – Second Quarter 2020 |
| |
Statements of Income, Investment Management – Last Five Quarters |
In thousands, except share and per share amounts.
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Jun. 30, 2020 | | Mar. 31, 2020 | | Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 |
Revenues | | | | | | | | | |
Asset management revenue | $ | 4,472 |
| | $ | 9,889 |
| | $ | 9,732 |
| | $ | 9,878 |
| | $ | 9,790 |
|
Reimbursable costs from affiliates | 2,411 |
| | 4,030 |
| | 4,072 |
| | 4,786 |
| | 3,821 |
|
Structuring and other advisory revenue | — |
| | 494 |
| | 1,061 |
| | 587 |
| | 58 |
|
| 6,883 |
| | 14,413 |
| | 14,865 |
| | 15,251 |
| | 13,669 |
|
Operating Expenses | | | | | | | | | |
Reimbursable costs from affiliates | 2,411 |
| | 4,030 |
| | 4,072 |
| | 4,786 |
| | 3,821 |
|
Subadvisor fees | 192 |
| | 1,277 |
| | 1,964 |
| | 1,763 |
| | 1,650 |
|
Merger and other expenses | 139 |
| | 319 |
| | — |
| | — |
| | — |
|
General and administrative (a) | — |
| | 5,823 |
| | 4,435 |
| | 3,237 |
| | 4,728 |
|
Depreciation and amortization (a) | — |
| | 987 |
| | 959 |
| | 944 |
| | 966 |
|
Stock-based compensation expense (a) | — |
| | 691 |
| | 1,408 |
| | 1,312 |
| | 1,454 |
|
| 2,742 |
| | 13,127 |
| | 12,838 |
| | 12,042 |
| | 12,619 |
|
Other Income and Expenses | | | | | | | | | |
Equity in earnings (losses) of equity method investments in the Managed Programs (b) | 33,772 |
| | (47,355 | ) | | 6,387 |
| | 5,191 |
| | 3,721 |
|
Other gains and (losses) | (1,095 | ) | | 1,353 |
| | 12 |
| | 536 |
| | 691 |
|
| 32,677 |
| | (46,002 | ) | | 6,399 |
| | 5,727 |
| | 4,412 |
|
Income (loss) before income taxes | 36,818 |
| | (44,716 | ) | | 8,426 |
| | 8,936 |
| | 5,462 |
|
(Provision for) benefit from income taxes | (3,478 | ) | | 9,892 |
| | (2,951 | ) | | (646 | ) | | (100 | ) |
Net Income (Loss) from Investment Management | 33,340 |
| | (34,824 | ) | | 5,475 |
| | 8,290 |
| | 5,362 |
|
Net income attributable to noncontrolling interests (b) | (9,865 | ) | | — |
| | (436 | ) | | (507 | ) | | (92 | ) |
Net Income (Loss) from Investment Management Attributable to W. P. Carey | $ | 23,475 |
| | $ | (34,824 | ) | | $ | 5,039 |
| | $ | 7,783 |
| | $ | 5,270 |
|
| | | | | | | | | |
Basic Earnings (Loss) Per Share | $ | 0.14 |
| | $ | (0.20 | ) | | $ | 0.03 |
| | $ | 0.05 |
| | $ | 0.03 |
|
Diluted Earnings (Loss) Per Share | $ | 0.14 |
| | $ | (0.20 | ) | | $ | 0.03 |
| | $ | 0.05 |
| | $ | 0.03 |
|
Weighted-Average Shares Outstanding | | | | | | | | | |
Basic | 173,401,749 |
| | 173,249,236 |
| | 173,153,811 |
| | 172,235,066 |
| | 171,304,112 |
|
Diluted | 173,472,755 |
| | 173,460,053 |
| | 173,442,101 |
| | 172,486,506 |
| | 171,490,625 |
|
________
| |
(a) | Beginning with the second quarter of 2020, general and administrative expenses attributed to our Investment Management segment are comprised of the incremental costs of providing services to the Managed Programs, which are fully reimbursed by those funds (resulting in no net expense for us). All other general and administrative expenses are attributed to our Real Estate segment. In addition, beginning with the second quarter of 2020, stock-based compensation expense and depreciation and amortization expense are fully recognized within our Real Estate segment. In light of the termination of the advisory agreements with CWI 1 and CWI 2 in connection with the WLT management internalization, we now view essentially all assets, liabilities and operational expenses as part of our Real Estate segment, other than incremental activities that are expected to wind down as we manage CPA:18 – Global and CESH through the end of their respective life cycles. |
| |
(b) | Amount for the three months ended June 30, 2020 includes a non-cash net gain of $33.0 million (inclusive of $9.9 million attributable to the redemption of a noncontrolling interest that the former subadvisors for CWI 1 and CWI 2 held in the special general partner interests) recognized in connection with consideration received at closing of the CWI 1 and CWI 2 Merger, which reflects the allocation of $34.3 million of goodwill within our Investment Management segment. |
|
| | |
| | Investing for the long runTM | 8 |
W. P. Carey Inc.
Financial Results – Second Quarter 2020
|
| |
FFO and AFFO, Consolidated – Last Five Quarters |
In thousands, except share and per share amounts. |
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Jun. 30, 2020 | | Mar. 31, 2020 | | Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 |
Net income attributable to W. P. Carey | $ | 105,300 |
| | $ | 66,090 |
| | $ | 129,372 |
| | $ | 41,339 |
| | $ | 66,038 |
|
Adjustments: | | | | | | | | | |
Depreciation and amortization of real property | 106,264 |
| | 114,913 |
| | 110,354 |
| | 108,279 |
| | 112,360 |
|
Impairment charges | — |
| | 19,420 |
| | 6,758 |
| | 25,781 |
| | — |
|
(Gain) loss on sale of real estate, net | — |
| | (11,751 | ) | | (17,501 | ) | | (71 | ) | | 362 |
|
Loss on change in control of interests (a) | — |
| | — |
| | — |
| | 8,416 |
| | — |
|
Proportionate share of adjustments to equity in net income of partially owned entities (b) (c) (d) | (19,117 | ) | | 50,477 |
| | 2,703 |
| | 4,210 |
| | 4,489 |
|
Proportionate share of adjustments for noncontrolling interests (e) | (588 | ) | | 578 |
| | (4 | ) | | (4 | ) | | (31 | ) |
Total adjustments | 86,559 |
| | 173,637 |
| | 102,310 |
| | 146,611 |
| | 117,180 |
|
FFO (as defined by NAREIT) Attributable to W. P. Carey (f) | 191,859 |
| | 239,727 |
| | 231,682 |
| | 187,950 |
| | 183,218 |
|
Adjustments: | | | | | | | | | |
Above- and below-market rent intangible lease amortization, net | 12,956 |
| | 11,780 |
| | 17,037 |
| | 14,969 |
| | 16,450 |
|
Straight-line and other rent adjustments (g) | (11,720 | ) | | (7,092 | ) | | (11,184 | ) | | (6,370 | ) | | (7,975 | ) |
Other (gains) and losses (h) | (4,259 | ) | | 9,815 |
| | (38,196 | ) | | 18,618 |
| | 5,724 |
|
Amortization of deferred financing costs | 2,993 |
| | 3,089 |
| | 3,225 |
| | 2,991 |
| | 2,774 |
|
Stock-based compensation | 2,918 |
| | 2,661 |
| | 4,939 |
| | 4,747 |
| | 4,936 |
|
Merger and other expenses | 1,074 |
| | 187 |
| | (811 | ) | | 70 |
| | 696 |
|
Other amortization and non-cash items | 488 |
| | 408 |
| | 546 |
| | 379 |
| | 1,706 |
|
Tax (benefit) expense – deferred and other (i) (j) (k) | (229 | ) | | (47,923 | ) | | 12,874 |
| | (1,039 | ) | | (933 | ) |
Proportionate share of adjustments to equity in net income of partially owned entities (d) (l) | 1,251 |
| | 3,895 |
| | 1,908 |
| | 1,920 |
| | 1,876 |
|
Proportionate share of adjustments for noncontrolling interests (c) | 579 |
| | (7 | ) | | (5 | ) | | (12 | ) | | (7 | ) |
Total adjustments | 6,051 |
| | (23,187 | ) | | (9,667 | ) | | 36,273 |
| | 25,247 |
|
AFFO Attributable to W. P. Carey (f) | $ | 197,910 |
| | $ | 216,540 |
| | $ | 222,015 |
| | $ | 224,223 |
| | $ | 208,465 |
|
| | | | | | | | | |
Summary | | | | | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey (f) | $ | 191,859 |
| | $ | 239,727 |
| | $ | 231,682 |
| | $ | 187,950 |
| | $ | 183,218 |
|
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (f) | $ | 1.11 |
| | $ | 1.38 |
| | $ | 1.34 |
| | $ | 1.09 |
| | $ | 1.07 |
|
AFFO attributable to W. P. Carey (f) | $ | 197,910 |
| | $ | 216,540 |
| | $ | 222,015 |
| | $ | 224,223 |
| | $ | 208,465 |
|
AFFO attributable to W. P. Carey per diluted share (f) | $ | 1.14 |
| | $ | 1.25 |
| | $ | 1.28 |
| | $ | 1.30 |
| | $ | 1.22 |
|
Diluted weighted-average shares outstanding | 173,472,755 |
| | 173,460,053 |
| | 173,442,101 |
| | 172,486,506 |
| | 171,490,625 |
|
________
| |
(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 June 30, 2020 includes a non-cash net gain of $33.0 million (inclusive of $9.9 million attributable to the redemption of a noncontrolling interest that the former subadvisors for CWI 1 and CWI 2 held in the special general partner interests) recognized in connection with consideration received at closing of the CWI 1 and CWI 2 Merger, which reflects the allocation of $34.3 million of goodwill within our Investment Management segment. |
| |
(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) | Amount for the three months ended March 31, 2020 includes non-cash other-than-temporary impairment charges totaling $47.1 million recognized on our equity investments in CWI 1 and CWI 2. |
| |
(e) | Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis. |
| |
(f) | FFO and AFFO are non-GAAP measures. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures. |
| |
(g) | Amount for the three months ended March 31, 2020 includes straight-line rent write-offs totaling $3.1 million, based on a collectibility analysis. 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 June 30, 2020 is primarily comprised of a net release of our allowance for credit losses reserve of $3.6 million, gains from foreign currency movements of $3.4 million, unrealized loss on derivatives of $(1.4) million and loss on marketable securities of $(1.2) million. Amounts from period to period will not be comparable due to unpredictable fluctuations in these gains and losses. |
| |
(i) | Amount for the three months ended June 30, 2020 includes one-time taxes incurred upon the recognition of taxable income associated with the accelerated vesting of shares previously issued by CWI 1 and CWI 2 to us for asset management services performed, in connection with the CWI 1 and CWI 2 Merger. |
|
| | |
| | Investing for the long runTM | 9 |
W. P. Carey Inc.
Financial Results – Second Quarter 2020
| |
(j) | Amount for the three months ended March 31, 2020 includes a non-cash deferred tax benefit of $37.2 million as a result of the release of a deferred tax liability relating to our investment in shares of a cold storage operator, which converted to a REIT during that period and is therefore no longer subject to federal income taxes. |
| |
(k) | Amount for the three months ended March 31, 2020 includes a one-time tax benefit of $7.2 million as a result of carrying back certain net operating losses in accordance with the CARES Act, which was enacted on March 27, 2020. |
| |
(l) | Beginning with the first quarter of 2020, this adjustment includes dividends received from CWI 1 and CWI 2 (through April 13, 2020, the date of the CWI 1 and CWI 2 Merger) and from WLT (after April 13, 2020) in place of our pro rata share of net income from our ownership of shares of CWI 1, CWI 2, and WLT, as applicable. We did not receive any such dividends during the second quarter of 2020, due to the adverse effect of COVID-19. |
|
| | |
| | Investing for the long runTM | 10 |
W. P. Carey Inc.
Financial Results – Second Quarter 2020
|
| |
FFO and AFFO, Real Estate – Last Five Quarters |
In thousands, except share and per share amounts. |
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Jun. 30, 2020 | | Mar. 31, 2020 | | Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 |
Net income from Real Estate attributable to W. P. Carey | $ | 81,825 |
| | $ | 100,914 |
| | $ | 124,333 |
| | $ | 33,556 |
| | $ | 60,768 |
|
Adjustments: | | | | | | | | | |
Depreciation and amortization of real property | 106,264 |
| | 114,913 |
| | 110,354 |
| | 108,279 |
| | 112,360 |
|
Impairment charges | — |
| | 19,420 |
| | 6,758 |
| | 25,781 |
| | — |
|
(Gain) loss on sale of real estate, net | — |
| | (11,751 | ) | | (17,501 | ) | | (71 | ) | | 362 |
|
Loss on change in control of interests (a) | — |
| | — |
| | — |
| | 8,416 |
| | — |
|
Proportionate share of adjustments to equity in net income of partially owned entities (b) | 3,352 |
| | 3,365 |
| | 2,703 |
| | 4,210 |
| | 4,489 |
|
Proportionate share of adjustments for noncontrolling interests (c) | (588 | ) | | 578 |
| | (4 | ) | | (4 | ) | | (31 | ) |
Total adjustments | 109,028 |
| | 126,525 |
| | 102,310 |
| | 146,611 |
| | 117,180 |
|
FFO (as defined by NAREIT) Attributable to W. P. Carey – Real Estate (d) | 190,853 |
| | 227,439 |
| | 226,643 |
| | 180,167 |
| | 177,948 |
|
Adjustments: | | | | | | | | | |
Above- and below-market rent intangible lease amortization, net | 12,956 |
| | 11,780 |
| | 17,037 |
| | 14,969 |
| | 16,450 |
|
Straight-line and other rent adjustments (e) | (11,720 | ) | | (7,092 | ) | | (11,184 | ) | | (6,370 | ) | | (7,975 | ) |
Other (gains) and losses (f) | (5,437 | ) | | 10,973 |
| | (38,546 | ) | | 18,956 |
| | 5,888 |
|
Tax (benefit) expense – deferred and other (g) | (3,051 | ) | | (37,956 | ) | | 9,748 |
| | (1,414 | ) | | (853 | ) |
Amortization of deferred financing costs | 2,993 |
| | 3,089 |
| | 3,225 |
| | 2,991 |
| | 2,774 |
|
Stock-based compensation | 2,918 |
| | 1,970 |
| | 3,531 |
| | 3,435 |
| | 3,482 |
|
Merger and other expenses | 935 |
| | (132 | ) | | (811 | ) | | 70 |
| | 696 |
|
Other amortization and non-cash items | 488 |
| | 209 |
| | 348 |
| | 180 |
| | 1,510 |
|
Proportionate share of adjustments to equity in net income of partially owned entities (b) (h) | 166 |
| | (274 | ) | | 202 |
| | (113 | ) | | (89 | ) |
Proportionate share of adjustments for noncontrolling interests (c) | 579 |
| | (7 | ) | | (5 | ) | | (12 | ) | | (7 | ) |
Total adjustments | 827 |
| | (17,440 | ) | | (16,455 | ) | | 32,692 |
| | 21,876 |
|
AFFO Attributable to W. P. Carey – Real Estate (d) | $ | 191,680 |
| | $ | 209,999 |
| | $ | 210,188 |
| | $ | 212,859 |
| | $ | 199,824 |
|
| | | | | | | | | |
Summary | | | | | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey – Real Estate (d) | $ | 190,853 |
| | $ | 227,439 |
| | $ | 226,643 |
| | $ | 180,167 |
| | $ | 177,948 |
|
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Real Estate (d) | $ | 1.10 |
| | $ | 1.31 |
| | $ | 1.31 |
| | $ | 1.04 |
| | $ | 1.04 |
|
AFFO attributable to W. P. Carey – Real Estate (d) | $ | 191,680 |
| | $ | 209,999 |
| | $ | 210,188 |
| | $ | 212,859 |
| | $ | 199,824 |
|
AFFO attributable to W. P. Carey per diluted share – Real Estate (d) | $ | 1.10 |
| | $ | 1.21 |
| | $ | 1.21 |
| | $ | 1.23 |
| | $ | 1.17 |
|
Diluted weighted-average shares outstanding | 173,472,755 |
| | 173,460,053 |
| | 173,442,101 |
| | 172,486,506 |
| | 171,490,625 |
|
________
| |
(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) | 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. |
| |
(c) | Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis. |
| |
(d) | FFO and AFFO are non-GAAP measures. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures. |
| |
(e) | Amount for the three months ended March 31, 2020 includes straight-line rent write-offs totaling $3.1 million, based on a collectibility analysis. 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. |
| |
(f) | Amount for the three months ended June 30, 2020 is primarily comprised of a net release of our allowance for credit losses reserve of $3.6 million, losses from foreign currency movements of $3.3 million and unrealized loss on derivatives of $(1.4) million. Amounts from period to period will not be comparable due to unpredictable fluctuations in these gains and losses. |
| |
(g) | Amount for the three months ended March 31, 2020 includes a non-cash deferred tax benefit of $37.2 million as a result of the release of a deferred tax liability relating to our investment in shares of a cold storage operator, which converted to a REIT during that period and is therefore no longer subject to federal income taxes. |
| |
(h) | Subsequent to the CWI 1 and CWI 2 Merger on April 13, 2020, this adjustment includes dividends received from WLT in place of our pro rata share of net income from our ownership of shares of WLT. We did not receive any such dividends during the second quarter of 2020, due to the adverse effect of COVID-19. |
|
| | |
| | Investing for the long runTM | 11 |
W. P. Carey Inc.
Financial Results – Second Quarter 2020
|
| |
FFO and AFFO, Investment Management – Last Five Quarters |
In thousands, except share and per share amounts. |
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Jun. 30, 2020 | | Mar. 31, 2020 | | Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 |
Net income (loss) from Investment Management attributable to W. P. Carey | $ | 23,475 |
| | $ | (34,824 | ) | | $ | 5,039 |
| | $ | 7,783 |
| | $ | 5,270 |
|
Adjustments: | | | | | | | | | |
Proportionate share of adjustments to equity in net income of partially owned entities (a) (b) (c) | (22,469 | ) | | 47,112 |
| | — |
| | — |
| | — |
|
Total adjustments | (22,469 | ) | | 47,112 |
| | — |
| | — |
| | — |
|
FFO (as defined by NAREIT) Attributable to W. P. Carey – Investment Management (d) | 1,006 |
| | 12,288 |
| | 5,039 |
| | 7,783 |
| | 5,270 |
|
Adjustments: | | | | | | | | | |
Tax expense (benefit) – deferred and other (e) (f) | 2,822 |
| | (9,967 | ) | | 3,126 |
| | 375 |
| | (80 | ) |
Other (gains) and losses (g) | 1,178 |
| | (1,158 | ) | | 350 |
| | (338 | ) | | (164 | ) |
Merger and other expenses | 139 |
| | 319 |
| | — |
| | — |
| | — |
|
Stock-based compensation | — |
| | 691 |
| | 1,408 |
| | 1,312 |
| | 1,454 |
|
Other amortization and non-cash items | — |
| | 199 |
| | 198 |
| | 199 |
| | 196 |
|
Proportionate share of adjustments to equity in net income of partially owned entities (b) (h) | 1,085 |
| | 4,169 |
| | 1,706 |
| | 2,033 |
| | 1,965 |
|
Total adjustments | 5,224 |
| | (5,747 | ) | | 6,788 |
| | 3,581 |
| | 3,371 |
|
AFFO Attributable to W. P. Carey – Investment Management (d) | $ | 6,230 |
| | $ | 6,541 |
| | $ | 11,827 |
| | $ | 11,364 |
| | $ | 8,641 |
|
| | | | | | | | | |
Summary | | | | | | | | | |
FFO (as defined by NAREIT) attributable to W. P. Carey – Investment Management (d) | $ | 1,006 |
| | $ | 12,288 |
| | $ | 5,039 |
| | $ | 7,783 |
| | $ | 5,270 |
|
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share – Investment Management (d) | $ | 0.01 |
| | $ | 0.07 |
| | $ | 0.03 |
| | $ | 0.05 |
| | $ | 0.03 |
|
AFFO attributable to W. P. Carey – Investment Management (d) | $ | 6,230 |
| | $ | 6,541 |
| | $ | 11,827 |
| | $ | 11,364 |
| | $ | 8,641 |
|
AFFO attributable to W. P. Carey per diluted share – Investment Management (d) | $ | 0.04 |
| | $ | 0.04 |
| | $ | 0.07 |
| | $ | 0.07 |
| | $ | 0.05 |
|
Diluted weighted-average shares outstanding | 173,472,755 |
| | 173,460,053 |
| | 173,442,101 |
| | 172,486,506 |
| | 171,490,625 |
|
________
| |
(a) | Amount for the three months ended June 30, 2020 includes a non-cash net gain of $33.0 million (inclusive of $9.9 million attributable to the redemption of a noncontrolling interest that the former subadvisors for CWI 1 and CWI 2 held in the special general partner interests) recognized in connection with consideration received at closing of the CWI 1 and CWI 2 Merger, which reflects the allocation of $34.3 million of goodwill within our Investment Management segment. |
| |
(b) | 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. |
| |
(c) | Amount for the three months ended March 31, 2020 represents non-cash other-than-temporary impairment charges recognized on our equity investments in CWI 1 and CWI 2. |
| |
(d) | FFO and AFFO are non-GAAP measures. See the Terms and Definitions section in the Appendix for a description of our non-GAAP measures. |
| |
(e) | Amount for the three months ended June 30, 2020 includes one-time taxes incurred upon the recognition of taxable income associated with the accelerated vesting of shares previously issued by CWI 1 and CWI 2 to us for asset management services performed, in connection with the CWI 1 and CWI 2 Merger. |
| |
(f) | Amount for the three months ended March 31, 2020 includes a one-time tax benefit of $7.2 million as a result of carrying back certain net operating losses in accordance with the CARES Act, which was enacted on March 27, 2020. |
| |
(g) | Amount for the three months ended June 30, 2020 is primarily comprised of loss on marketable securities of $(1.2) million. Amounts from period to period will not be comparable due to unpredictable fluctuations in these gains and losses. |
| |
(h) | For the first quarter of 2020, and through April 13, 2020 (the date of the CWI 1 and CWI 2 Merger), this adjustment includes dividends received from CWI 1 and CWI 2 in place of our pro rata share of net income from our ownership of shares of CWI 1 and CWI 2. |
|
| | |
| | Investing for the long runTM | 12 |
W. P. Carey Inc.
Financial Results – Second Quarter 2020
|
| |
Elements of Pro Rata Statement of Income and AFFO Adjustments |
In thousands. For the three months ended June 30, 2020.
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 | $ | 4,950 |
| | $ | (30 | ) | | $ | 1,400 |
| (c) |
Lease termination income and other | 65 |
| | — |
| | — |
| |
Operating property revenues: | | | | | | |
Hotel revenues | — |
| | — |
| | — |
| |
Self-storage revenues | 1,247 |
| | — |
| | — |
| |
|
| |
| |
| |
Investment Management: | | | | | | |
Asset management revenue | — |
| | — |
| | — |
| |
Reimbursable costs from affiliates | — |
| | — |
| | — |
| |
Structuring and other advisory revenue | — |
| | — |
| | — |
| |
|
| |
| |
| |
Operating Expenses | | | | | | |
Depreciation and amortization | 3,090 |
| | (4 | ) | | (109,550 | ) | (d) |
General and administrative | 7 |
| | — |
| | — |
| |
Reimbursable tenant costs | 513 |
| | (7 | ) | | 170 |
| |
Property expenses, excluding reimbursable tenant costs | 201 |
| | — |
| | (399 | ) | (e) |
Stock-based compensation expense | — |
| | — |
| | (2,918 | ) | (e) |
Reimbursable costs from affiliates | — |
| | — |
| | — |
| |
Operating property expenses: | | | | | | |
Hotel expenses | — |
| | — |
| | — |
| |
Self-storage expenses | 760 |
| | — |
| | (25 | ) | |
Merger and other expenses | — |
| | — |
| | (1,075 | ) | |
Subadvisor fees | — |
| | — |
| | — |
| |
|
| |
| |
| |
Other Income and Expenses | | | | | | |
Interest expense | (1,343 | ) | | — |
| | 2,906 |
| (f) |
Equity in earnings of equity method investments in the Managed Programs and real estate: | | | | | |
Income related to our ownership in the Managed Programs | — |
| | (9,865 | ) | | (21,384 | ) | (g) |
Income related to our general partnership interest in CPA:18 – Global | — |
| | — |
| | — |
| |
Income related to our ownership in WLT | — |
| | — |
| | — |
| (h) |
Income related to joint ventures | (358 | ) | | — |
| | 456 |
| (i) |
Other gains and (losses) | 17 |
| | 6 |
| | (4,272 | ) | (j) |
|
| |
| |
| |
Provision for income taxes | (7 | ) | | — |
| | (293 | ) | (k) |
Net income attributable to noncontrolling interests | — |
| | 9,878 |
| | — |
| |
________
| |
(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 $13.0 million and the elimination of non-cash amounts related to straight-line rent and other of $11.6 million. |
| |
(d) | Adjustment is a non-cash adjustment excluding corporate depreciation and amortization. |
| |
(e) | Adjustment to exclude a non-cash item. |
| |
(f) | Represents the elimination of non-cash components of interest expense, such as deferred financing costs, debt premiums and discounts. |
|
| | |
| | Investing for the long runTM | 13 |
W. P. Carey Inc.
Financial Results – Second Quarter 2020
| |
(g) | Includes adjustment to exclude a non-cash net gain of $33.0 million (inclusive of $9.9 million attributable to the redemption of a noncontrolling interest that the former subadvisors for CWI 1 and CWI 2 held in the special general partner interests) recognized in connection with consideration received at closing of the CWI 1 and CWI 2 Merger, which reflects the allocation of $34.3 million of goodwill within our Investment Management segment. Also represents adjusted modified funds from operations (“Adjusted MFFO”) from CPA:18 – Global in place of our pro rata share of net income from our ownership in CPA:18 – Global. Adjusted MFFO is defined as MFFO adjusted for deferred taxes and excluding the adjustment for realized gains and losses on hedges. |
| |
(h) | Represents dividends received from WLT in place of our pro rata share of net income from our ownership of shares of WLT. We did not receive any such dividends during the second quarter of 2020, due to the adverse effect of COVID-19. |
| |
(i) | Adjustments to include our pro rata share of AFFO adjustments from equity investments. |
| |
(j) | 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, allowance for credit losses and other items. |
| |
(k) | Primarily represents the elimination of deferred taxes. Adjustment also includes one-time taxes incurred upon the recognition of taxable income associated with the accelerated vesting of shares previously issued by CWI 1 and CWI 2 to us for asset management services performed, in connection with the CWI 1 and CWI 2 Merger. |
|
| | |
| | Investing for the long runTM | 14 |
W. P. Carey Inc.
Financial Results – Second Quarter 2020
In thousands. For the three months ended June 30, 2020. |
| | | |
Tenant Improvements and Leasing Costs | |
Tenant improvements | $ | 2,749 |
|
Leasing costs | 107 |
|
Tenant Improvements and Leasing Costs | 2,856 |
|
| |
Maintenance Capital Expenditures | |
Net-lease properties | 542 |
|
Operating properties | 206 |
|
Maintenance Capital Expenditures | 748 |
|
| |
Total: Tenant Improvements and Leasing Costs, and Maintenance Capital Expenditures | $ | 3,604 |
|
| |
Non-Maintenance Capital Expenditures | |
Net-lease properties | $ | 3,364 |
|
Operating properties | — |
|
Non-Maintenance Capital Expenditures | $ | 3,364 |
|
| |
Pre-Development Capital Expenditures | |
Net-lease properties | $ | 1,038 |
|
Operating properties | — |
|
Pre-Development Capital Expenditures | $ | 1,038 |
|
|
| | |
| | Investing for the long runTM | 15 |
W. P. Carey Inc.
Balance Sheets and Capitalization
Second Quarter 2020
|
| | |
| | Investing for the long runTM | 16 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Second Quarter 2020 |
| |
Consolidated Balance Sheets |
In thousands, except share and per share amounts.
|
| | | | | | | |
| Jun. 30, 2020 | | Dec. 31, 2019 |
Assets | | | |
Investments in real estate: | | | |
Land, buildings and improvements (a) | $ | 10,287,575 |
| | $ | 9,856,191 |
|
Net investments in direct financing leases | 752,630 |
| | 896,549 |
|
In-place lease intangible assets and other | 2,197,714 |
| | 2,186,851 |
|
Above-market rent intangible assets | 896,051 |
| | 909,139 |
|
Investments in real estate | 14,133,970 |
| | 13,848,730 |
|
Accumulated depreciation and amortization (b) | (2,257,551 | ) | | (2,035,995 | ) |
Assets held for sale, net (c) | — |
| | 104,010 |
|
Net investments in real estate | 11,876,419 |
| | 11,916,745 |
|
Equity investments in the Managed Programs and real estate (d) | 284,643 |
| | 324,004 |
|
Cash and cash equivalents | 137,157 |
| | 196,028 |
|
Due from affiliates | 11,074 |
| | 57,816 |
|
Other assets, net | 747,878 |
| | 631,637 |
|
Goodwill | 898,842 |
| | 934,688 |
|
Total assets | $ | 13,956,013 |
| | $ | 14,060,918 |
|
| | | |
Liabilities and Equity | | | |
Debt: | | | |
Senior unsecured notes, net | $ | 4,384,879 |
| | $ | 4,390,189 |
|
Unsecured term loans, net | 290,827 |
| | — |
|
Unsecured revolving credit facility | 22,366 |
| | 201,267 |
|
Non-recourse mortgages, net | 1,424,195 |
| | 1,462,487 |
|
Debt, net | 6,122,267 |
| | 6,053,943 |
|
Accounts payable, accrued expenses and other liabilities | 515,811 |
| | 487,405 |
|
Below-market rent and other intangible liabilities, net | 197,223 |
| | 210,742 |
|
Deferred income taxes | 134,519 |
| | 179,309 |
|
Dividends payable | 183,738 |
| | 181,346 |
|
Total liabilities | 7,153,558 |
| | 7,112,745 |
|
| | | |
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued | — |
| | — |
|
Common stock, $0.001 par value, 450,000,000 shares authorized; 173,890,427 and 172,278,242 shares, respectively, issued and outstanding | 174 |
| | 172 |
|
Additional paid-in capital | 8,815,108 |
| | 8,717,535 |
|
Distributions in excess of accumulated earnings | (1,765,892 | ) | | (1,557,374 | ) |
Deferred compensation obligation | 42,014 |
| | 37,263 |
|
Accumulated other comprehensive loss | (290,613 | ) | | (255,667 | ) |
Total stockholders' equity | 6,800,791 |
| | 6,941,929 |
|
Noncontrolling interests | 1,664 |
| | 6,244 |
|
Total equity | 6,802,455 |
| | 6,948,173 |
|
Total liabilities and equity | $ | 13,956,013 |
| | $ | 14,060,918 |
|
| |
(a) | Includes $83.3 million and $83.1 million of amounts attributable to operating properties as of June 30, 2020 and December 31, 2019, respectively. |
| |
(b) | Includes $1.1 billion and $1.0 billion of accumulated depreciation on buildings and improvements as of June 30, 2020 and December 31, 2019, respectively, and $1.2 billion and $1.1 billion of accumulated amortization on lease intangibles as of June 30, 2020 and December 31, 2019, 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 totaled $235.7 million and $194.4 million as of June 30, 2020 and December 31, 2019, respectively. Our equity investments in the Managed Programs totaled $48.9 million and $129.6 million as of June 30, 2020 and December 31, 2019, respectively. |
|
| | |
| | Investing for the long runTM | 17 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Second Quarter 2020
In thousands, except share and per share amounts. As of June 30, 2020.
|
| | | | | | | | | | | | | |
Description | | Shares | | Share Price | | Market Value |
Equity | | | | | | | |
Common equity | | | | 173,890,427 |
| | $ | 67.65 |
| | $ | 11,763,687 |
|
Preferred equity | | | | | | | | — |
|
Total Equity Market Capitalization | | | | | | 11,763,687 |
|
| | | | | | | | |
| | | | | | | | Outstanding Balance (a) |
Pro Rata Debt | | | | | | | |
Non-recourse mortgages | | | | | | | | 1,619,752 |
|
Unsecured term loans (due February 20, 2025) | | | | | | | 292,152 |
|
Unsecured revolving credit facility (due February 20, 2025) | | | | | | | 22,366 |
|
Senior unsecured notes: | | | | | | | |
Due January 20, 2023 (EUR) | | | | | | 559,900 |
|
Due April 1, 2024 (USD) | | | | | | 500,000 |
|
Due July 19, 2024 (EUR) | | | | | | 559,900 |
|
Due February 1, 2025 (USD) | | | | | | 450,000 |
|
Due April 9, 2026 (EUR) | | | | | | 559,900 |
|
Due October 1, 2026 (USD) | | | | | | 350,000 |
|
Due April 15, 2027 (EUR) | | | | | | 559,900 |
|
Due April 15, 2028 (EUR) | | | | | | 559,900 |
|
Due July 15, 2029 (USD) | | | | | | 325,000 |
|
Total Pro Rata Debt | | | | | | 6,358,770 |
|
| | | | | | | | |
Total Capitalization | | | | | | $ | 18,122,457 |
|
________
| |
(a) | Excludes unamortized discount, net totaling $25.3 million and unamortized deferred financing costs totaling $21.5 million as of June 30, 2020. |
|
| | |
| | Investing for the long runTM | 18 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Second Quarter 2020
Dollars in thousands. Pro rata. As of June 30, 2020.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | $ | 1,113,647 |
| | 5.1 | % | | | $ | 177,324 |
| | 3.7 | % | | | $ | 27,166 |
| | 4.8 | % | | | $ | 1,318,137 |
| | 20.7 | % | | 4.9 | % | | 2.7 |
|
Variable: | | | | | | | | | | | | | | | | | | | | | | |
Swapped | 75,167 |
| | 4.8 | % | | | 142,187 |
| | 2.2 | % | | | — |
| | — | % | | | 217,354 |
| | 3.5 | % | | 3.1 | % | | 3.2 |
|
Floating | — |
| | — | % | | | 55,990 |
| | 1.3 | % | | | 15,693 |
| | 2.7 | % | | | 71,683 |
| | 1.1 | % | | 1.6 | % | | 2.2 |
|
Capped | — |
| | — | % | | | 12,578 |
| | 1.6 | % | | | — |
| | — | % | | | 12,578 |
| | 0.2 | % | | 1.6 | % | | 3.1 |
|
Total Pro Rata Non-Recourse Debt | 1,188,814 |
| | 5.1 | % | | | 388,079 |
| | 2.7 | % | | | 42,859 |
| | 4.0 | % | | | 1,619,752 |
| | 25.5 | % | | 4.5 | % | | 2.7 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Recourse Debt (b) (c) | | | | | | | | | | | | | | | | | | | | | | |
Fixed – Senior unsecured notes: | | | | | | | | | | | | | | | | | | | | | |
Due January 20, 2023 | — |
| | — | % | | | 559,900 |
| | 2.0 | % | | | — |
| | — | % | | | 559,900 |
| | 8.8 | % | | 2.0 | % | | 2.6 |
|
Due April 1, 2024 | 500,000 |
| | 4.6 | % | | | — |
| | — | % | | | — |
| | — | % | | | 500,000 |
| | 7.9 | % | | 4.6 | % | | 3.8 |
|
Due July 19, 2024 | — |
| | — | % | | | 559,900 |
| | 2.3 | % | | | — |
| | — | % | | | 559,900 |
| | 8.8 | % | | 2.3 | % | | 4.1 |
|
Due February 1, 2025 | 450,000 |
| | 4.0 | % | | | — |
| | — | % | | | — |
| | — | % | | | 450,000 |
| | 7.1 | % | | 4.0 | % | | 4.6 |
|
Due April 9, 2026 | — |
| | — | % | | | 559,900 |
| | 2.3 | % | | | — |
| | — | % | | | 559,900 |
| | 8.8 | % | | 2.3 | % | | 5.8 |
|
Due October 1, 2026 | 350,000 |
| | 4.3 | % | | | — |
| | — | % | | | — |
| | — | % | | | 350,000 |
| | 5.4 | % | | 4.3 | % | | 6.3 |
|
Due April 15, 2027 | — |
| | — | % | | | 559,900 |
| | 2.1 | % | | | — |
| | — | % | | | 559,900 |
| | 8.8 | % | | 2.1 | % | | 6.8 |
|
Due April 15, 2028 | — |
| | — | % | | | 559,900 |
| | 1.4 | % | | | — |
| | — | % | | | 559,900 |
| | 8.8 | % | | 1.4 | % | | 7.8 |
|
Due July 15, 2029 | 325,000 |
| | 3.9 | % | | | — |
| | — | % | | | — |
| | — | % | | | 325,000 |
| | 5.1 | % | | 3.9 | % | | 9.0 |
|
Total Senior Unsecured Notes | 1,625,000 |
| | 4.2 | % | | | 2,799,500 |
| | 2.0 | % | | | — |
| | — | % | | | 4,424,500 |
| | 69.5 | % | | 2.8 | % | | 5.5 |
|
Variable: | | | | | | | | | | | | | | | | | | | | | | |
Unsecured term loans (due February 20, 2025) (d) | — |
| | — | % | | | 108,061 |
| | 1.0 | % | | | 184,091 |
| | 1.4 | % | | | 292,152 |
| | 4.6 | % | | 1.3 | % | | 4.6 |
|
Unsecured revolving credit facility (due February 20, 2025) (e) | — |
| | — | % | | | — |
| | — | % | | | 22,366 |
| | 0.9 | % | | | 22,366 |
| | 0.4 | % | | 0.9 | % | | 4.6 |
|
Total Recourse Debt | 1,625,000 |
| | 4.2 | % | | | 2,907,561 |
| | 2.0 | % | | | 206,457 |
| | 1.4 | % | | | 4,739,018 |
| | 74.5 | % | | 2.7 | % | | 5.4 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Total Pro Rata Debt Outstanding | $ | 2,813,814 |
| | 4.6 | % | | | $ | 3,295,640 |
| | 2.1 | % | | | $ | 249,316 |
| | 1.8 | % | | | $ | 6,358,770 |
| | 100.0 | % | | 3.2 | % | | 4.7 |
|
________
| |
(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 $25.3 million and unamortized deferred financing costs totaling $21.5 million as of June 30, 2020. |
| |
(d) | We incurred interest at Euro Interbank Offered Rate (“EURIBOR”) plus 0.95% or British pound sterling (“GBP”) London Interbank Offered Rate (“LIBOR”) plus 0.95% on our Unsecured term loans. |
| |
(e) | We incurred interest at Japanese yen (“JPY”) LIBOR plus 0.85% on our Unsecured revolving credit facility. JPY LIBOR has a floor of 0.00% under the terms of our credit agreement. Availability under our Unsecured revolving credit facility was approximately $1.8 billion as of June 30, 2020. |
|
| | |
| | Investing for the long runTM | 19 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Second Quarter 2020
Dollars in thousands. Pro rata. As of June 30, 2020.
|
| | | | | | | | | | | | | | | | | | | | | |
| | 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 | | | | | | | | | | | | |
Remaining 2020 | | 9 |
| | $ | 15,218 |
| | 4.9 | % | | $ | 109,784 |
| | $ | 110,569 |
| | 1.7 | % |
2021 | | 53 |
| | 46,012 |
| | 5.0 | % | | 241,082 |
| | 246,619 |
| | 3.9 | % |
2022 | | 37 |
| | 78,065 |
| | 4.8 | % | | 418,349 |
| | 440,827 |
| | 6.9 | % |
2023 | | 39 |
| | 74,336 |
| | 3.6 | % | | 345,910 |
| | 386,881 |
| | 6.1 | % |
2024 | | 48 |
| | 45,057 |
| | 4.0 | % | | 178,606 |
| | 222,442 |
| | 3.5 | % |
2025 | | 17 |
| | 21,161 |
| | 4.7 | % | | 86,075 |
| | 116,936 |
| | 1.8 | % |
2026 | | 9 |
| | 12,476 |
| | 6.1 | % | | 31,535 |
| | 52,249 |
| | 0.8 | % |
2027 | | 2 |
| | 2,507 |
| | 4.7 | % | | 21,450 |
| | 29,922 |
| | 0.5 | % |
2028 | | 1 |
| | 3,042 |
| | 7.0 | % | | — |
| | 9,797 |
| | 0.2 | % |
2031 | | 1 |
| | 938 |
| | 6.0 | % | | — |
| | 3,510 |
| | 0.1 | % |
Total Pro Rata Non-Recourse Debt | | 216 |
| | $ | 298,812 |
| | 4.5 | % | | $ | 1,432,791 |
| | 1,619,752 |
| | 25.5 | % |
| | | | | | | | | | | | |
Recourse Debt | | | | | | | | | | | | |
Fixed – Senior unsecured notes: | | | | | | | | | | | | |
Due January 20, 2023 (EUR) | | 2.0 | % | | | | 559,900 |
| | 8.8 | % |
Due April 1, 2024 (USD) | | 4.6 | % | | | | 500,000 |
| | 7.9 | % |
Due July 19, 2024 (EUR) | | 2.3 | % | | | | 559,900 |
| | 8.8 | % |
Due February 1, 2025 (USD) | | 4.0 | % | | | | 450,000 |
| | 7.1 | % |
Due April 9, 2026 (EUR) | | 2.3 | % | | | | 559,900 |
| | 8.8 | % |
Due October 1, 2026 (USD) | | 4.3 | % | | | | 350,000 |
| | 5.4 | % |
Due April 15, 2027 (EUR) | | 2.1 | % | | | | 559,900 |
| | 8.8 | % |
Due April 15, 2028 (EUR) | | 1.4 | % | | | | 559,900 |
| | 8.8 | % |
Due July 15, 2029 (USD) | | 3.9 | % | | | | 325,000 |
| | 5.1 | % |
Total Senior Unsecured Notes | | 2.8 | % | | | | 4,424,500 |
| | 69.5 | % |
Variable: | | | | | | | | | | | | |
Unsecured term loans (due February 20, 2025) (d) | | 1.3 | % | | | | 292,152 |
| | 4.6 | % |
Unsecured revolving credit facility (due February 20, 2025) (e) | | 0.9 | % | | | | 22,366 |
| | 0.4 | % |
Total Recourse Debt | | 2.7 | % | | | | 4,739,018 |
| | 74.5 | % |
| | | | | | | | |
Total Pro Rata Debt Outstanding | | 3.2 | % | | | | $ | 6,358,770 |
| | 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 $25.3 million and unamortized deferred financing costs totaling $21.5 million as of June 30, 2020. |
| |
(d) | We incurred interest at EURIBOR plus 0.95% or GBP LIBOR plus 0.95% on our Unsecured term loans. |
| |
(e) | We incurred interest at JPY LIBOR plus 0.85% on our Unsecured revolving credit facility. JPY LIBOR have a floor of 0.00% under the terms of our credit agreement. Availability under our Unsecured revolving credit facility was approximately $1.8 billion as of June 30, 2020. |
|
| | |
| | Investing for the long runTM | 20 |
W. P. Carey Inc.
Balance Sheets and Capitalization – Second Quarter 2020
As of June 30, 2020.
Ratings
|
| | | | | | |
| | Issuer / Corporate | | Senior Unsecured Notes |
Ratings Agency | | Rating | | Outlook | | Rating |
Moody's | | Baa2 | | Stable | | Baa2 |
Standard & Poor's | | BBB | | Stable | | BBB |
Senior Unsecured Note Covenants
The following is a summary of the key financial covenants for the Senior Unsecured Notes, along with our estimated calculations of our compliance with those covenants at the end of the period presented. These ratios are not measures of our liquidity or performance and serve only to demonstrate our ability to incur additional debt, as permitted by the covenants for the Senior Unsecured Notes.
|
| | | | | | |
Covenant | | Metric | | Required | | As of
Jun. 30, 2020 |
Limitation on the incurrence of debt | | "Total Debt" / "Total Assets" | | ≤ 60% | | 40.9% |
Limitation on the incurrence of secured debt | | "Secured Debt" / "Total Assets" | | ≤ 40% | | 9.5% |
Limitation on the incurrence of debt based on consolidated EBITDA to annual debt service charge | | "Consolidated EBITDA" / "Annual Debt Service Charge" | | ≥ 1.5x | | 5.1x |
Maintenance of unencumbered asset value | | "Unencumbered Assets" / "Total Unsecured Debt" | | ≥ 150% | | 241.3% |
|
| | |
| | Investing for the long runTM | 21 |
W. P. Carey Inc.
Real Estate
Second Quarter 2020
|
| | |
| | Investing for the long runTM | 22 |
W. P. Carey Inc.
Real Estate – Second Quarter 2020
|
| |
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 Jun. 30, 2020 | | Total Funded Through Jun. 30, 2020 | | Maximum Commitment |
Tenant | | Location | | | | | | | | | Remaining | | Total |
Sonae MC (b) | | Azambuja, Portugal | | Expansion | | Warehouse | | Q3 2020 | | 303,940 |
| | 20 |
| | $ | 1,620 |
| | $ | 1,620 |
| | $ | 25,143 |
| | $ | 26,763 |
|
Boot Barn Holdings, Inc. | | Wichita, KS | | Expansion | | Warehouse | | Q3 2020 | | 43,248 |
| | 15 |
| | — |
| | — |
| | 3,000 |
| | 3,000 |
|
Hellweg Die Profi-Baumärkte GmbH
& Co. KG (b) (c) | | Various, Germany | | Renovation | | Retail | | Q4 2020 | | N/A |
| | 17 |
| | — |
| | 10,510 |
| | 2,144 |
| | 12,654 |
|
Expected Completion Date 2020 Total | | | | | | 347,188 |
| | | | 1,620 |
| | 12,130 |
| | 30,287 |
| | 42,417 |
|
| | | | | | | | | | | | | | | | | | | | |
American Axle & Manufacturing, Inc. (b) (d) | | Langen, Germany | | Build-to-Suit | | Industrial | | Q1 2021 | | 168,000 |
| | 20 |
| | 7,113 |
| | 28,245 |
| | 26,954 |
| | 55,990 |
|
Stress Engineering Services, Inc. (d) | | Mason, OH | | Expansion | | Office | | Q1 2021 | | 6,810 |
| | 20 |
| | 85 |
| | 88 |
| | 2,411 |
| | 2,500 |
|
Henkel AG & Co. | | Bowling Green, KY | | Renovation | | Warehouse | | Q4 2021 | | N/A |
| | 15 |
| | 2,275 |
| | 28,132 |
| | 41,868 |
| | 70,000 |
|
Expected Completion Date 2021 Total | | | | | | 174,810 |
| | | | 9,473 |
| | 56,465 |
| | 71,233 |
| | 128,490 |
|
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | 521,998 |
| | | | $ | 11,093 |
| | $ | 68,595 |
| | $ | 101,520 |
| | $ | 170,907 |
|
________
| |
(b) | Commitment amounts are based on the applicable exchange rate at period end. |
| |
(c) | We started receiving partial rent for this project prior to June 30, 2020. |
| |
(d) | We earn interest from this tenant, which is accrued through the construction period and deducted from the remaining commitment. |
|
| | |
| | Investing for the long runTM | 23 |
W. P. Carey Inc.
Real Estate – Second Quarter 2020
|
| |
Investment Activity – Acquisitions and Completed Capital Investment Projects |
Dollars in thousands. Pro rata. For the six months ended June 30, 2020.
|
| | | | | | | | | | | | | |
| | | | Gross Investment Amount | | Closing Date / Asset Completion Date | | Property Type(s) | | Gross Square Footage |
Tenant / Lease Guarantor | | Property Location(s) | | | | |
Acquisitions | | | | | | | | | | |
1Q20 | | | | | | | | | | |
DSG International PLC (a) | | Newark, United Kingdom | | $ | 111,546 |
| | Jan-20 | | Warehouse | | 726,216 |
|
Columbia Helicopters, Inc. (b) | | Aurora, OR | | 23,755 |
| | Jan-20 | | Industrial | | 187,016 |
|
Leoni AG (a) | | Kitzingen, Germany | | 53,666 |
| | Mar-20 | | Office | | 272,286 |
|
1Q20 Total | | | | 188,967 |
| | | | | | 1,185,518 |
|
| | | | | | | | | | |
2Q20 (N/A) | | | | | | | | | | |
| | | | | | | | | | |
Year-to-Date Total | | | | 188,967 |
| | | | | | 1,185,518 |
|
|
| | | | | | | | | | | | | |
Completed Capital Investment Projects | | | | | | |
1Q20 | | | | | | | | | | |
Clayco, Inc. | | St. Louis, MO | | 4,000 |
| | Jan-20 | | Office | | N/A |
|
Astellas US Holding, Inc. | | Westborough, MA | | 52,172 |
| | Jan-20 | | Laboratory | | 10,063 |
|
Danske Fragtmænd A/S (a) | | Vojens, Denmark | | 10,611 |
| | Jan-20 | | Warehouse | | 88,620 |
|
1Q20 Total | | | | 66,783 |
| | | | | | 98,683 |
|
| | | | | | | | | | |
2Q20 | | | | | | | | | | |
Fresenius Medical Care Holdings, Inc. | | Knoxville, TN | | 66,045 |
| | Jun-20 | | Warehouse | | 614,069 |
|
Cuisine Solutions, Inc. (c) | | San Antonio, TX | | 73,951 |
| | Jun-20 | | Industrial | | 312,303 |
|
Hilite Europe GmbH (a) | | Marktheidenfeld, Germany | | 8,184 |
| | Jun-20 | | Warehouse | | 71,607 |
|
2Q20 Total | | | | 148,180 |
| | | | | | 997,979 |
|
| | | | | | | | | | |
Year-to-Date Total | | | | 214,963 |
| | | | | | 1,096,662 |
|
| | | | | | | | | | |
Year-to-Date Total Acquisitions and Completed Capital Investment Projects | | $ | 403,930 |
| | | | | | 2,282,180 |
|
________
| |
(a) | Amount reflects the applicable exchange rate on the date of the transaction. |
| |
(b) | Amount excludes approximately $5.0 million in contingent consideration that will be released to the tenant/seller upon the tenant securing an easement on the property. |
| |
(c) | Amount excludes $4.0 million related to a purchase option for land at the property that we have not yet exercised. |
|
| | |
| | Investing for the long runTM | 24 |
W. P. Carey Inc.
Real Estate – Second Quarter 2020
|
| |
Investment Activity – Dispositions |
Dollars in thousands. Pro rata. For the six months ended June 30, 2020.
|
| | | | | | | | | | | | | |
Tenant / Lease Guarantor | | Property Location(s) | | Gross Sale Price | | Closing Date | | Property Type(s) | | Gross Square Footage |
1Q20 | | | | | | | | | | |
Blue Cross and Blue Shield of Minnesota, Inc. | | Aurora, MN | | $ | 150 |
| | Jan-20 | | Office | | 10,263 |
|
Shelborne Hotel (sold 95.45% controlling interest) | | Miami, FL | | 114,540 |
| | Jan-20 | | Operating Hotel | | N/A |
|
Vacant | | Greenville, SC | | 1,050 |
| | Feb-20 | | Warehouse | | 108,524 |
|
Fraikin SAS (a) | | Chambray-les-Tours, France | | 579 |
| | Feb-20 | | Industrial | | 11,405 |
|
1Q20 Total | | | | 116,319 |
| | | | | | 130,192 |
|
| | | | | | | | | | |
2Q20 (N/A) | | | |
|
| | | | | | |
| | | | | | | | | | |
Year-to-Date Total Dispositions | | $ | 116,319 |
| | | | | | 130,192 |
|
________
| |
(a) | Amount reflects the applicable exchange rate on the date of the transaction. |
|
| | |
| | Investing for the long runTM | 25 |
W. P. Carey Inc.
Real Estate – Second Quarter 2020
Dollars in thousands. As of June 30, 2020. |
| | | | | | | | | | | | | | | | | | | | |
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% | | $ | 117,396 |
| | $ | 13,983 |
| | $ | 82,177 |
| | $ | 9,788 |
|
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% | | 53,649 |
| | 8,877 |
| | 26,825 |
| | 4,438 |
|
Apply Sørco AS (e) | | CPA:18 – Global | | 49.00% | | 36,738 |
| | 3,819 |
| | 18,002 |
| | 1,872 |
|
Fortenova Grupa d.d. (formerly Konzum d.d.) (e) | | CPA:18 – Global | | 20.00% | | 25,591 |
| | 4,299 |
| | 5,118 |
| | 860 |
|
Total Unconsolidated Joint Ventures | | | | 306,174 |
| | 38,814 |
| | 168,522 |
| | 20,876 |
|
| | | | | | | | | | | | |
Consolidated Joint Ventures | | | | | | | | | | | |
McCoy-Rockford, Inc. | | Third party | | 90.00% | | — |
| | 886 |
| | — |
| | 798 |
|
Total Consolidated Joint Ventures | | | | — |
| | 886 |
| | — |
| | 798 |
|
Total Unconsolidated and Consolidated Joint Ventures | | $ | 306,174 |
| | $ | 39,700 |
| | $ | 168,522 |
| | $ | 21,674 |
|
________
| |
(b) | Excludes unamortized deferred financing costs totaling $0.2 million and unamortized discount, net totaling $0.2 million as of June 30, 2020. |
| |
(c) | Excludes unamortized deferred financing costs totaling $0.1 million and unamortized discount, net totaling $0.1 million as of June 30, 2020. |
| |
(d) | Excludes (i) a 90.00% equity position in a jointly owned investment, Johnson Self Storage (comprised of nine self-storage operating properties), which did not have debt outstanding as of June 30, 2020, (ii) a 15.00% common equity interest in a jointly owned investment, BPS Nevada, LLC, and (iii) our equity investment in common shares of WLT, as described in the Components of Net Asset Value section. |
| |
(e) | Amounts are based on the applicable exchange rate at the end of the period. |
|
| | |
| | Investing for the long runTM | 26 |
W. P. Carey Inc.
Real Estate – Second Quarter 2020
Dollars in thousands. Pro rata. As of June 30, 2020.
|
| | | | | | | | | | | | | | | |
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 |
| | 3.4 | % | | 3.8 |
|
Hellweg Die Profi-Baumärkte GmbH & Co. KG (a) | | Do-it-yourself retail properties in Germany | | 42 |
| | 33,381 |
| | 2.9 | % | | 16.7 |
|
State of Andalucía (a) | | Government office properties in Spain | | 70 |
| | 28,726 |
| | 2.5 | % | | 14.5 |
|
Metro Cash & Carry Italia S.p.A. (a) | | Business-to-business wholesale stores in Italy and Germany | | 20 |
| | 27,124 |
| | 2.4 | % | | 6.8 |
|
Pendragon PLC (a) | | Automotive dealerships in the United Kingdom | | 69 |
| | 20,866 |
| | 1.8 | % | | 9.9 |
|
Extra Space Storage, Inc. | | Net lease self-storage properties in the U.S. | | 27 |
| | 20,332 |
| | 1.8 | % | | 23.8 |
|
Marriott Corporation | | Net lease hotel properties in the U.S. | | 18 |
| | 20,065 |
| | 1.8 | % | | 3.4 |
|
Nord Anglia Education, Inc. | | K-12 private schools in the U.S. | | 3 |
| | 19,138 |
| | 1.7 | % | | 23.2 |
|
Forterra, Inc. (a) (b) | | Industrial properties in the U.S. and Canada | | 27 |
| | 18,713 |
| | 1.7 | % | | 23.0 |
|
Advance Auto Parts, Inc. | | Distribution facilities in the U.S. | | 30 |
| | 18,345 |
| | 1.6 | % | | 12.6 |
|
Total (c) | | | | 384 |
| | $ | 245,441 |
| | 21.6 | % | | 12.9 |
|
________
| |
(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 – Second Quarter 2020
|
| |
Diversification by Property Type |
In thousands, except percentages. Pro rata. As of June 30, 2020.
|
| | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
Property Type | | ABR | | ABR % | | Square Footage (a) | | Sq. ft. % |
U.S. | | | | | | | | |
Industrial | | $ | 202,945 |
| | 17.9 | % | | 38,087 |
| | 26.8 | % |
Office | | 165,681 |
| | 14.6 | % | | 10,585 |
| | 7.5 | % |
Warehouse | | 146,151 |
| | 12.9 | % | | 30,268 |
| | 21.3 | % |
Retail (b) | | 47,099 |
| | 4.2 | % | | 3,016 |
| | 2.2 | % |
Self Storage (net lease) | | 59,083 |
| | 5.2 | % | | 5,810 |
| | 4.1 | % |
Other (c) | | 97,805 |
| | 8.6 | % | | 5,588 |
| | 3.9 | % |
U.S. Total | | 718,764 |
| | 63.4 | % | | 93,354 |
| | 65.8 | % |
| | | | | | | | |
International | | | | | | | | |
Industrial | | 71,503 |
| | 6.3 | % | | 10,577 |
| | 7.5 | % |
Office | | 90,703 |
| | 8.0 | % | | 6,614 |
| | 4.6 | % |
Warehouse | | 104,857 |
| | 9.2 | % | | 16,805 |
| | 11.9 | % |
Retail (b) | | 148,519 |
| | 13.1 | % | | 14,530 |
| | 10.2 | % |
Self Storage (net lease) | | — |
| | — | % | | — |
| | — | % |
Other (c) | | 10 |
| | — | % | | — |
| | — | % |
International Total | | 415,592 |
| | 36.6 | % | | 48,526 |
| | 34.2 | % |
| | | | | | | | |
Total | | | | | | | | |
Industrial | | 274,448 |
| | 24.2 | % | | 48,664 |
| | 34.3 | % |
Office | | 256,384 |
| | 22.6 | % | | 17,199 |
| | 12.1 | % |
Warehouse | | 251,008 |
| | 22.1 | % | | 47,073 |
| | 33.2 | % |
Retail (b) | | 195,618 |
| | 17.3 | % | | 17,546 |
| | 12.4 | % |
Self Storage (net lease) | | 59,083 |
| | 5.2 | % | | 5,810 |
| | 4.1 | % |
Other (c) | | 97,815 |
| | 8.6 | % | | 5,588 |
| | 3.9 | % |
Total (d) | | $ | 1,134,356 |
| | 100.0 | % | | 141,880 |
| | 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 – Second Quarter 2020
|
| |
Diversification by Tenant Industry |
In thousands, except percentages. Pro rata. As of June 30, 2020.
|
| | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
Industry Type | | ABR | | ABR % | | Square Footage | | Sq. ft. % |
Retail Stores (a) | | $ | 253,684 |
| | 22.4 | % | | 32,667 |
| | 23.0 | % |
Consumer Services | | 98,538 |
| | 8.7 | % | | 7,482 |
| | 5.3 | % |
Automotive | | 76,936 |
| | 6.8 | % | | 12,579 |
| | 8.9 | % |
Cargo Transportation | | 61,076 |
| | 5.4 | % | | 9,313 |
| | 6.6 | % |
Business Services | | 60,938 |
| | 5.4 | % | | 5,312 |
| | 3.7 | % |
Grocery | | 57,243 |
| | 5.0 | % | | 6,549 |
| | 4.6 | % |
Healthcare and Pharmaceuticals | | 55,579 |
| | 4.9 | % | | 4,905 |
| | 3.5 | % |
Construction and Building | | 42,642 |
| | 3.8 | % | | 7,673 |
| | 5.4 | % |
Beverage, Food, and Tobacco | | 42,034 |
| | 3.7 | % | | 5,175 |
| | 3.6 | % |
Capital Equipment | | 40,064 |
| | 3.5 | % | | 6,550 |
| | 4.6 | % |
Hotel and Leisure | | 39,861 |
| | 3.5 | % | | 2,254 |
| | 1.6 | % |
Sovereign and Public Finance | | 39,394 |
| | 3.5 | % | | 3,364 |
| | 2.4 | % |
Containers, Packaging, and Glass | | 36,007 |
| | 3.2 | % | | 6,186 |
| | 4.4 | % |
High Tech Industries | | 29,696 |
| | 2.6 | % | | 3,347 |
| | 2.4 | % |
Durable Consumer Goods | | 28,987 |
| | 2.5 | % | | 6,657 |
| | 4.7 | % |
Insurance | | 25,032 |
| | 2.2 | % | | 1,749 |
| | 1.2 | % |
Banking | | 19,442 |
| | 1.7 | % | | 1,247 |
| | 0.9 | % |
Telecommunications | | 16,771 |
| | 1.5 | % | | 1,571 |
| | 1.1 | % |
Aerospace and Defense | | 16,493 |
| | 1.4 | % | | 1,504 |
| | 1.1 | % |
Media: Advertising, Printing, and Publishing | | 14,782 |
| | 1.3 | % | | 1,615 |
| | 1.1 | % |
Non-Durable Consumer Goods | | 14,356 |
| | 1.3 | % | | 5,235 |
| | 3.7 | % |
Media: Broadcasting and Subscription | | 12,878 |
| | 1.1 | % | | 784 |
| | 0.5 | % |
Wholesale | | 12,420 |
| | 1.1 | % | | 2,005 |
| | 1.4 | % |
Chemicals, Plastics, and Rubber | | 12,235 |
| | 1.1 | % | | 1,403 |
| | 1.0 | % |
Other (b) | | 27,268 |
| | 2.4 | % | | 4,754 |
| | 3.3 | % |
Total (c) | | $ | 1,134,356 |
|
| 100.0 | % |
| 141,880 |
| | 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 – Second Quarter 2020
|
| |
Diversification by Geography |
In thousands, except percentages. Pro rata. As of June 30, 2020.
|
| | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
Region | | ABR | | ABR % | | Square Footage (a) | | Sq. ft. % |
U.S. | | | | | | | | |
South | | | | | | | | |
Texas | | $ | 102,877 |
| | 9.1 | % | | 11,723 |
| | 8.3 | % |
Florida | | 47,753 |
| | 4.2 | % | | 4,033 |
| | 2.8 | % |
Georgia | | 29,005 |
| | 2.6 | % | | 4,024 |
| | 2.8 | % |
Tennessee | | 19,330 |
| | 1.7 | % | | 2,874 |
| | 2.0 | % |
Alabama | | 15,382 |
| | 1.4 | % | | 2,397 |
| | 1.7 | % |
Other (b) | | 12,855 |
| | 1.1 | % | | 2,263 |
| | 1.6 | % |
Total South | | 227,202 |
| | 20.1 | % | | 27,314 |
| | 19.2 | % |
East | | | | | | | | |
North Carolina | | 32,902 |
| | 2.9 | % | | 8,052 |
| | 5.7 | % |
Pennsylvania | | 26,503 |
| | 2.3 | % | | 3,210 |
| | 2.3 | % |
Massachusetts | | 21,309 |
| | 1.9 | % | | 1,407 |
| | 1.0 | % |
New Jersey | | 19,554 |
| | 1.7 | % | | 1,100 |
| | 0.8 | % |
South Carolina | | 15,383 |
| | 1.4 | % | | 4,321 |
| | 3.0 | % |
Virginia | | 13,567 |
| | 1.2 | % | | 1,430 |
| | 1.0 | % |
New York | | 13,347 |
| | 1.2 | % | | 1,392 |
| | 1.0 | % |
Other (b) | | 34,095 |
| | 3.0 | % | | 6,594 |
| | 4.6 | % |
Total East | | 176,660 |
| | 15.6 | % | | 27,506 |
| | 19.4 | % |
Midwest | | | | | | | | |
Illinois | | 49,906 |
| | 4.4 | % | | 5,973 |
| | 4.2 | % |
Minnesota | | 25,964 |
| | 2.3 | % | | 2,352 |
| | 1.7 | % |
Indiana | | 18,308 |
| | 1.6 | % | | 2,827 |
| | 2.0 | % |
Wisconsin | | 15,920 |
| | 1.4 | % | | 3,164 |
| | 2.2 | % |
Ohio | | 14,866 |
| | 1.3 | % | | 3,153 |
| | 2.2 | % |
Michigan | | 14,171 |
| | 1.2 | % | | 2,132 |
| | 1.5 | % |
Other (b) | | 27,088 |
| | 2.4 | % | | 4,697 |
| | 3.3 | % |
Total Midwest | | 166,223 |
| | 14.6 | % | | 24,298 |
| | 17.1 | % |
West | | | | | | | | |
California | | 60,906 |
| | 5.4 | % | | 5,183 |
| | 3.7 | % |
Arizona | | 34,123 |
| | 3.0 | % | | 3,648 |
| | 2.6 | % |
Other (b) | | 53,650 |
| | 4.7 | % | | 5,405 |
| | 3.8 | % |
Total West | | 148,679 |
| | 13.1 | % | | 14,236 |
| | 10.1 | % |
U.S. Total | | 718,764 |
| | 63.4 | % | | 93,354 |
| | 65.8 | % |
International | | | | | | | | |
Germany | | 66,504 |
| | 5.9 | % | | 7,113 |
| | 5.0 | % |
Poland | | 52,303 |
| | 4.6 | % | | 7,215 |
| | 5.1 | % |
The Netherlands | | 50,388 |
| | 4.4 | % | | 6,853 |
| | 4.8 | % |
Spain | | 49,458 |
| | 4.4 | % | | 4,226 |
| | 3.0 | % |
United Kingdom | | 45,260 |
| | 4.0 | % | | 4,035 |
| | 2.8 | % |
Italy | | 25,523 |
| | 2.2 | % | | 2,386 |
| | 1.7 | % |
Croatia | | 16,745 |
| | 1.5 | % | | 1,784 |
| | 1.3 | % |
Denmark | | 14,862 |
| | 1.3 | % | | 2,408 |
| | 1.7 | % |
France | | 13,487 |
| | 1.2 | % | | 1,347 |
| | 0.9 | % |
Canada | | 12,769 |
| | 1.1 | % | | 2,103 |
| | 1.5 | % |
Finland | | 11,404 |
| | 1.0 | % | | 949 |
| | 0.7 | % |
Other (c) | | 56,889 |
| | 5.0 | % | | 8,107 |
| | 5.7 | % |
International Total | | 415,592 |
| | 36.6 | % | | 48,526 |
| | 34.2 | % |
Total (d) | | $ | 1,134,356 |
| | 100.0 | % | | 141,880 |
| | 100.0 | % |
________
| |
(a) | Includes square footage for vacant properties. |
| |
(b) | Other properties within South include assets in Louisiana, Arkansas, Oklahoma and Mississippi. Other properties within East include assets in Kentucky, 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 Colorado, Utah, Oregon, Washington, Nevada, Hawaii, New Mexico, Wyoming, Montana and Alaska. |
| |
(c) | Includes assets in Lithuania, Mexico, Norway, 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 – Second Quarter 2020
|
| |
Contractual Rent Increases |
In thousands, except percentages. Pro rata. As of June 30, 2020.
|
| | | | | | | | | | | | | |
| | Total Net-Lease Portfolio |
Rent Adjustment Measure | | ABR | | ABR % | | Square Footage | | Sq. ft. % |
(Uncapped) CPI | | $ | 441,929 |
| | 39.0 | % | | 51,371 |
| | 36.2 | % |
Fixed | | 372,387 |
| | 32.8 | % | | 51,801 |
| | 36.5 | % |
CPI-based | | 260,556 |
| | 23.0 | % | | 32,769 |
| | 23.1 | % |
Other (a) | | 50,056 |
| | 4.4 | % | | 3,677 |
| | 2.6 | % |
None | | 9,428 |
| | 0.8 | % | | 634 |
| | 0.4 | % |
Vacant | | — |
| | — | % | | 1,628 |
| | 1.2 | % |
Total (b) | | $ | 1,134,356 |
| | 100.0 | % | | 141,880 |
| | 100.0 | % |
________
| |
(a) | Represents leases attributable to percentage rent. |
|
| | |
| | Investing for the long runTM | 31 |
W. P. Carey Inc.
Real Estate – Second Quarter 2020
Dollars in thousands. Pro rata.
Contractual Same Store Growth
Same store portfolio includes leases that were continuously in place during the period from June 30, 2019 to June 30, 2020. 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 June 30, 2020. |
| | | | | | | | | | | | | | |
| ABR |
| As of
Jun. 30, 2020 | | As of
Jun. 30, 2019 | | Increase | | % Increase |
Property Type | | | | | | | |
Office | $ | 236,097 |
| | $ | 232,509 |
| | $ | 3,588 |
| | 1.5 | % |
Industrial | 231,055 |
| | 226,508 |
| | 4,547 |
| | 2.0 | % |
Warehouse | 201,006 |
| | 197,669 |
| | 3,337 |
| | 1.7 | % |
Retail (a) | 188,914 |
| | 186,587 |
| | 2,327 |
| | 1.2 | % |
Self Storage (net lease) | 52,868 |
| | 49,627 |
| | 3,241 |
| | 6.5 | % |
Other (b) | 95,312 |
| | 94,054 |
| | 1,258 |
| | 1.3 | % |
Total | $ | 1,005,252 |
| | $ | 986,954 |
| | $ | 18,298 |
| | 1.9 | % |
| | | | | | | |
Rent Adjustment Measure | | | | | | | |
(Uncapped) CPI | $ | 402,817 |
| | $ | 394,751 |
| | $ | 8,066 |
| | 2.0 | % |
Fixed | 306,746 |
| | 301,857 |
| | 4,889 |
| | 1.6 | % |
CPI-based | 244,254 |
| | 239,509 |
| | 4,745 |
| | 2.0 | % |
Other (c) | 45,122 |
| | 44,524 |
| | 598 |
| | 1.3 | % |
None | 6,313 |
| | 6,313 |
| | — |
| | — | % |
Total | $ | 1,005,252 |
| | $ | 986,954 |
| | $ | 18,298 |
| | 1.9 | % |
| | | | | | | |
Geography | | | | | | | |
U.S. | $ | 631,716 |
| | $ | 618,868 |
| | $ | 12,848 |
| | 2.1 | % |
Europe | 352,938 |
| | 347,822 |
| | 5,116 |
| | 1.5 | % |
Other International (d) | 20,598 |
| | 20,264 |
| | 334 |
| | 1.6 | % |
Total | $ | 1,005,252 |
| | $ | 986,954 |
| | $ | 18,298 |
| | 1.9 | % |
| | | | | | | |
Same Store Portfolio Summary | | | | | | | |
Number of properties | 1,110 |
| | | | | | |
Square footage (in thousands) | 119,105 |
| | | | | | |
|
| | |
| | Investing for the long runTM | 32 |
W. P. Carey Inc.
Real Estate – Second Quarter 2020
Comprehensive Same Store Growth
Same store portfolio includes leased properties that were continuously owned and in place during the quarter ended June 30, 2019 through June 30, 2020. Excludes properties that were acquired, sold or listed as capital investment projects (see Investment Activity – Capital Investment Projects section) during that period. For purposes of comparability, same store pro rata rental income is presented on a constant currency basis using average exchange rates for the three months ended June 30, 2020. Same store pro rata rental income is a non-GAAP measure. See the Terms and Definitions section in the Appendix for a description of same store pro rata rental income and for details on how it is calculated. |
| | | | | | | | | | | | | | |
| Same Store Pro Rata Rental Income |
| Three Months Ended Jun. 30, 2020 | | Three Months Ended Jun. 30, 2019 | | Increase | | % Increase |
Property Type | | | | | | | |
Office | $ | 61,772 |
| | $ | 61,433 |
| | $ | 339 |
| | 0.6 | % |
Industrial | 57,840 |
| | 59,240 |
| | (1,400 | ) | | (2.4 | )% |
Warehouse | 49,893 |
| | 51,561 |
| | (1,668 | ) | | (3.2 | )% |
Retail (a) | 44,772 |
| | 45,065 |
| | (293 | ) | | (0.7 | )% |
Self Storage (net lease) | 9,688 |
| | 9,002 |
| | 686 |
| | 7.6 | % |
Other (b) | 19,729 |
| | 23,771 |
| | (4,042 | ) | | (17.0 | )% |
Total (e) | $ | 243,694 |
| | $ | 250,072 |
| | $ | (6,378 | ) | | (2.6 | )% |
| | | | | | | |
Rent Adjustment Measure | | | | | | | |
(Uncapped) CPI | $ | 98,243 |
| | $ | 101,537 |
| | $ | (3,294 | ) | | (3.2 | )% |
Fixed | 75,363 |
| | 78,244 |
| | (2,881 | ) | | (3.7 | )% |
CPI-based | 60,674 |
| | 60,426 |
| | 248 |
| | 0.4 | % |
Other (c) | 7,595 |
| | 7,368 |
| | 227 |
| | 3.1 | % |
None | 1,819 |
| | 2,497 |
| | (678 | ) | | (27.2 | )% |
Total (e) | $ | 243,694 |
| | $ | 250,072 |
| | $ | (6,378 | ) | | (2.6 | )% |
| | | | | | | |
Geography | | | | | | | |
U.S. | $ | 153,915 |
| | $ | 159,151 |
| | $ | (5,236 | ) | | (3.3 | )% |
Europe | 84,939 |
| | 86,166 |
| | (1,227 | ) | | (1.4 | )% |
Other International (d) | 4,840 |
| | 4,755 |
| | 85 |
| | 1.8 | % |
Total (e) | $ | 243,694 |
| | $ | 250,072 |
| | $ | (6,378 | ) | | (2.6 | )% |
| | | | | | | |
Same Store Portfolio Summary | | | | | | | |
Number of properties | 1,121 |
| | | | | | |
Square footage (in thousands) | 124,418 |
| | | | | | |
|
| | |
| | Investing for the long runTM | 33 |
W. P. Carey Inc.
Real Estate – Second Quarter 2020
The following table presents a reconciliation from lease revenues to same store pro rata rental income:
|
| | | | | | | |
| Three Months Ended
Jun. 30, 2020 | | Three Months Ended Jun. 30, 2019 |
Consolidated Lease Revenues | | | |
Total lease revenues – as reported (f) | $ | 280,303 |
| | $ | 269,802 |
|
Less: Reimbursable tenant costs – as reported | (13,796 | ) | | (13,917 | ) |
| 266,507 |
| | 255,885 |
|
| | | |
Adjustments for Pro Rata Ownership of Real Estate Joint Ventures: | | | |
Add: Pro rata share of adjustments from equity investments | 4,424 |
| | 5,360 |
|
Less: Pro rata share of adjustments for noncontrolling interests | (22 | ) | | (22 | ) |
| 4,402 |
| | 5,338 |
|
| | | |
Adjustments for Pro Rata Non-Cash Items: | | | |
Add: Above- and below-market rent intangible lease amortization | 12,956 |
| | 16,450 |
|
Less: Straight-line and other rent adjustments | (11,720 | ) | | (7,975 | ) |
Less: Adjustments for pro rata ownership | (6 | ) | | (38 | ) |
| 1,230 |
| | 8,437 |
|
| | | |
Adjustment to normalize for (i) properties not continuously owned since April 1, 2019 and (ii) constant currency presentation for prior year quarter (g) | (28,445 | ) | | (19,588 | ) |
| | | |
Same Store Pro Rata Rental Income (e) | $ | 243,694 |
| | $ | 250,072 |
|
________
| |
(a) | Includes automotive dealerships. |
| |
(b) | Includes ABR or same store pro rata rental income from tenants with the following property types: education facility, hotel (net lease), fitness facility, laboratory, theater and student housing (net lease). |
| |
(c) | Represents leases attributable to percentage rent. |
| |
(d) | Includes assets in Canada, Mexico and Japan. |
| |
(e) | For the three months ended June 30, 2020, approximately $0.5 million of same store pro rata rental income (0.2% of the total) has been deferred and is expected to be collected within one year. Remaining same store pro rata rental income for that period has been collected as of July 31, 2020. |
| |
(f) | Lease revenue (including straight-line lease revenue) is only recognized when deemed probable of collection. Collectibility is assessed for each tenant receivable using various criteria, including credit ratings, guarantees, past collection issues and the current economic and business environment affecting the tenant. If collectibility of the contractual rent stream is not deemed probable, revenue will only be recognized upon receipt of cash from the tenant. |
| |
(g) | This adjustment excludes amounts attributable to properties that were acquired, sold or listed as capital investment projects (see Investment Activity – Capital Investment Projects section) that were not continuously owned and in place during the quarter ended June 30, 2019 through June 30, 2020. In addition, for the three months ended June 30, 2019, an adjustment is made to reflect average exchange rates for the three months ended June 30, 2020 for purposes of comparability, since same store pro rata rental income is presented on a constant currency basis. |
|
| | |
| | Investing for the long runTM | 34 |
W. P. Carey Inc.
Real Estate – Second Quarter 2020
For the three months ended June 30, 2020, 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) (c) | | Releasing Spread | | | | Incremental Lease Term |
Industrial | | — |
| | — |
| | $ | — |
| | $ | — |
| | — | % | | $ | — |
| | $ | — |
| | N/A |
Office | | — |
| | — |
| | — |
| | — |
| | — | % | | — |
| | — |
| | N/A |
Warehouse | | 3,813,524 |
| | 3 |
| | 14,650 |
| | 13,979 |
| | (4.6 | )% | | 2,176 |
| | 1,295 |
| | 4.1 years |
Retail | | — |
| | — |
| | — |
| | — |
| | — | % | | — |
| | — |
| | N/A |
Self Storage (net lease) | | — |
| | — |
| | — |
| | — |
| | — | % | | — |
| | — |
| | N/A |
Other | | — |
| | — |
| | — |
| | — |
| | — | % | | — |
| | — |
| | N/A |
Total / Weighted Average (d) | | 3,813,524 |
| | 3 |
| | $ | 14,650 |
| | $ | 13,979 |
| | (4.6 | )% | | $ | 2,176 |
| | $ | 1,295 |
| | 4.1 years |
| | | | | | | | | | | | | | | | |
Q2 Summary | | | | | | | | | | | | | | | | |
Prior Lease ABR (% of Total Portfolio) | | 1.3 | % | | | | | | | | | | |
_______
| |
(a) | Excludes lease extensions for a period of one year or less. |
| |
(b) | Excludes a rent deferral that was negotiated as part of a lease extension on a portfolio of properties. The deferred rent will be paid back over a five-year period starting in the fourth quarter of 2020. ABR on this portfolio increased from $11.0 million to $12.1 million as a result of the deferral. |
| |
(c) | New lease amounts are based on in-place rents at time of lease commencement and exclude any free rent periods. |
| |
(d) | Weighted average refers to the incremental lease term. |
|
| | |
| | Investing for the long runTM | 35 |
W. P. Carey Inc.
Real Estate – Second Quarter 2020
In thousands, except percentages and number of leases. Pro rata. As of June 30, 2020.
|
| | | | | | | | | | | | | | | | | | | |
Year of Lease Expiration (a) | | Number of Leases Expiring | | Number of Tenants with Leases Expiring | | ABR | | ABR % | | Square Footage | | Sq. ft. % |
Remaining 2020 | | 18 |
| | 16 |
| | $ | 8,683 |
| | 0.8 | % | | 1,221 |
| | 0.9 | % |
2021 | | 33 |
| | 23 |
| | 29,631 |
| | 2.6 | % | | 3,011 |
| | 2.1 | % |
2022 | | 31 |
| | 29 |
| | 48,085 |
| | 4.2 | % | | 4,048 |
| | 2.9 | % |
2023 | | 36 |
| | 30 |
| | 48,033 |
| | 4.2 | % | | 6,046 |
| | 4.3 | % |
2024 | | 78 |
| | 52 |
| | 112,555 |
| | 9.9 | % | | 14,295 |
| | 10.1 | % |
2025 | | 64 |
| | 32 |
| | 60,023 |
| | 5.3 | % | | 7,411 |
| | 5.2 | % |
2026 | | 36 |
| | 23 |
| | 52,611 |
| | 4.6 | % | | 7,837 |
| | 5.5 | % |
2027 | | 44 |
| | 27 |
| | 72,039 |
| | 6.4 | % | | 8,226 |
| | 5.8 | % |
2028 | | 42 |
| | 24 |
| | 61,233 |
| | 5.4 | % | | 4,829 |
| | 3.4 | % |
2029 | | 31 |
| | 18 |
| | 36,554 |
| | 3.2 | % | | 4,561 |
| | 3.2 | % |
2030 | | 27 |
| | 21 |
| | 68,852 |
| | 6.1 | % | | 6,104 |
| | 4.3 | % |
2031 | | 66 |
| | 16 |
| | 67,927 |
| | 6.0 | % | | 8,154 |
| | 5.7 | % |
2032 | | 36 |
| | 15 |
| | 46,866 |
| | 4.1 | % | | 6,640 |
| | 4.7 | % |
2033 | | 21 |
| | 15 |
| | 57,661 |
| | 5.1 | % | | 7,707 |
| | 5.4 | % |
Thereafter (>2033) | | 222 |
| | 90 |
| | 363,603 |
| | 32.1 | % | | 50,162 |
| | 35.4 | % |
Vacant | | — |
| | — |
| | — |
| | — | % | | 1,628 |
| | 1.1 | % |
Total (b) | | 785 |
| |
|
| | $ | 1,134,356 |
| | 100.0 | % | | 141,880 |
| | 100.0 | % |
________
| |
(a) | Assumes tenants do not exercise any renewal options or purchase options. |
|
| | |
| | Investing for the long runTM | 36 |
W. P. Carey Inc.
Investment Management
Second Quarter 2020
|
| | |
| | Investing for the long runTM | 37 |
W. P. Carey Inc.
Investment Management – Second Quarter 2020
|
| |
Selected Information and Fee Summary – Managed Programs |
Dollars and square footage in thousands. As of or for the three months ended June 30, 2020.
|
| | | | | | | | | | | |
| CPA:18 – Global | | CESH | | Total |
Selected Information | | | | | |
General | | | | | |
Year established | 2013 |
| | 2016 |
| | |
AUM – current quarter (a) | $ | 2,362,611 |
| | $ | 325,393 |
| | $ | 2,688,004 |
|
Net-lease AUM – current quarter | $ | 1,258,514 |
| | $ | 115,664 |
| | $ | 1,374,178 |
|
Fundraising status | Closed |
| | Closed |
| | |
| | | | | |
Portfolio | | | | | |
Investment type | Net lease / Diversified REIT |
| | Student Housing |
| | |
Number of operating properties | 70 |
| | 1 |
| | |
Number of net-leased properties | 47 |
| | 3 |
| | |
Number of active build-to-suit projects | 12 |
| | 4 |
| | |
Number of tenants – net-leased properties | 65 |
| | 1 |
| | |
Square footage – net-leased properties | 9,623 |
| | 415 |
| | |
Occupancy (b) | 98.7 | % | | 100.0 | % | | |
| | | | | |
Balance Sheet (Book Value) | | | | | |
Total assets | $ | 2,173,708 |
| | $ | 340,916 |
| | |
Total debt | $ | 1,207,475 |
| | $ | 131,609 |
| | |
Total debt / total assets | 55.5 | % | | 38.6 | % | | |
| | | | | |
Fee Summary | | | | | |
Asset Management Fees | | | | | |
Asset management fee, gross (% of average AUM, per annum) | 0.50% (c) | | 1.00% (d) | | |
Average AUM (of current quarter and prior quarter) | $ | 2,423,351 |
| | $ | 332,055 |
| | $ | 2,755,406 |
|
Asset management revenue – current quarter (e) | $ | 2,877 |
| | $ | 728 |
| | $ | 3,605 |
|
| | | | | |
Operating Partnership Interests (f) | | | | | |
Operating partnership interests, gross (% of Available Cash) | 10.00% | | N/A | | |
Equity in earnings of equity method investments in the Managed Programs (profits interest) – current quarter | $ | 2,029 |
| | N/A | | $ | 2,029 |
|
________
| |
(a) | Represents appraised value of real estate assets as of March 31, 2020 (plus cash and cash equivalents, less distributions payable as of June 30, 2020) for CPA:18 – Global. Represents appraised value of real estate assets as of December 31, 2019 (plus cash and cash equivalents as of June 30, 2020) for CESH. These values were used to calculate asset management fees during the three months ended June 30, 2020 in accordance with the respective advisory agreements. |
| |
(b) | Represents occupancy for single-tenant net-leased properties. |
| |
(c) | Based on average market value of assets. CPA:18 – Global has an option to pay asset management fees in cash or shares upon our recommendation, under the terms of the advisory agreement with CPA:18 – Global. Asset management fees are recorded in Asset management revenue in our consolidated financial statements. |
| |
(d) | Based on gross assets at fair value. |
| |
(e) | Total amount excludes $0.5 million and $0.4 million of asset management revenues from CWI 1 and CWI 2, respectively, prior to the CWI 1 and CWI 2 Merger on April 13, 2020. |
| |
(f) | 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. |
|
| | |
| | Investing for the long runTM | 38 |
W. P. Carey Inc.
Investment Management – Second Quarter 2020
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Summary of Future Liquidity Considerations for the Managed Programs |
As of June 30, 2020.
Future Liquidity Strategies for the Managed Programs
The timeframes in the table below are based on general liquidation guidelines set forth in CPA:18 – Global’s and CESH’s respective offering documents. Ultimately, the liquidation of CPA:18 – Global is approved by its board of directors and the liquidation of CESH is determined by its general partner.
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| | | |
| General Liquidation Guideline |
| CPA:18 – Global | | CESH |
Timeframe | Beginning after the seventh anniversary of the closing of the initial public offering in 2015 | | Beginning five years after raising the minimum offering amount in 2016 |
Back-End Fees for / Interest in the Managed Programs
The overview below is intended to provide a summary of current disclosures regarding various back-end fees and interests that we may be entitled to upon each Managed Program’s liquidity event. Such a liquidity event for CPA:18 – Global is at the discretion of CPA:18 – Global’s board of directors and there is no assurance that any of the fees or interests described below will be realized. Please refer to CPA:18 – Global’s filings with the SEC for a complete description of its liquidity strategy.
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| Back-End Fees and Interests |
| CPA:18 – Global | | CESH |
Disposition Fees | Equal to the lesser of (i) 50% of the brokerage commission paid or (ii) 3% of the contract sales price of a property. (a) | | N/A |
Interest in Disposition Proceeds | Special general partner interest entitled to receive distributions of up to 15% of the net proceeds from the sale, exchange or other disposition of operating partnership assets remaining after the corporation has received a return of 100% of its initial investment in the operating partnership, through certain liquidity events or distributions, plus the 6% preferred return rate. | | Available Cash (as defined in In “Principal Terms”), subject to any other limitations provided for herein, will be initially apportioned among the Limited Partners in proportion to their respective capital contributions and the General Partner as provided in connection with its Carried Interest and distributed. (b)
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Purchase of Special GP Interest | Lesser of (i) 5.0x the distributions of the last completed fiscal year and (ii) the discounted value of expected future distributions from point of valuation to March 2025 using a discount rate used by the independent third-party valuation firm to determine the most recent appraisal. | | N/A |
Distribution Related to Ownership of Shares | 4.1% ownership as of 6/30/2020 | | 2.4% ownership as of 6/30/2020 |
________
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(a) | Not applicable to dispositions of individual assets. |
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(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. |
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| | Investing for the long runTM | 39 |
W. P. Carey Inc.
Appendix
Second Quarter 2020
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| | Investing for the long runTM | 40 |
W. P. Carey Inc.
Appendix – Second Quarter 2020
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Normalized Pro Rata Cash NOI |
In thousands. From real estate.
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| | | |
| Three Months Ended
Jun. 30, 2020 |
Consolidated Lease Revenues |
|
Total lease revenues – as reported | $ | 280,303 |
|
Less: Consolidated Reimbursable and Non-Reimbursable Property Expenses |
|
Reimbursable property expenses – as reported | 13,796 |
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Non-reimbursable property expenses – as reported | 11,651 |
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| 254,856 |
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|
|
Plus: NOI from Operating Properties |
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Hotel revenues | 58 |
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Hotel expenses | (839 | ) |
| (781 | ) |
| |
Self-storage revenues | 1,369 |
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Self-storage expenses | (549 | ) |
| 820 |
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| |
| 254,895 |
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|
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Adjustments for Pro Rata Ownership of Real Estate Joint Ventures: |
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Add: Pro rata share of NOI from equity investments | 4,714 |
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Less: Pro rata share of NOI attributable to noncontrolling interests | (22 | ) |
| 4,692 |
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|
|
| 259,587 |
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|
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Adjustments for Pro Rata Non-Cash Items: |
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Add: Above- and below-market rent intangible lease amortization | 12,956 |
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Less: Straight-line rent amortization | (11,720 | ) |
Add: Other non-cash items | 399 |
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| 1,635 |
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|
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Pro Rata Cash NOI (a) | 261,222 |
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|
|
Adjustment to normalize for intra-period completed capital investment projects (b) | 2,402 |
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Normalized Pro Rata Cash NOI (a) | $ | 263,624 |
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| | Investing for the long runTM | 41 |
W. P. Carey Inc.
Appendix – Second Quarter 2020
The following table presents a reconciliation from Net income from Real Estate attributable to W. P. Carey to Normalized pro rata cash NOI:
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| | | |
| Three Months Ended
Jun. 30, 2020 |
Net Income from Real Estate Attributable to W. P. Carey | |
Net income from Real Estate attributable to W. P. Carey – as reported | $ | 81,825 |
|
Adjustments for Consolidated Operating Expenses | |
Add: Operating expenses – as reported | 155,637 |
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Less: Property expenses, excluding reimbursable tenant costs – as reported | (11,651 | ) |
Less: Operating property expenses – as reported | (1,388 | ) |
| 142,598 |
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Adjustments for Other Consolidated Revenues and Expenses: | |
Less: Lease termination income and other – as reported | (1,917 | ) |
Less: Reimbursable property expenses – as reported | (13,796 | ) |
Add: Other income and (expenses) | 42,029 |
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Add: Provision for income taxes | 4,117 |
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| 30,433 |
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Other Adjustments: | |
Add: Above- and below-market rent intangible lease amortization | 12,956 |
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Less: Straight-line rent amortization | (11,720 | ) |
Add: Adjustments for pro rata ownership | 4,774 |
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Adjustment to normalize for intra-period completed capital investment projects (b) | 2,402 |
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Add: Property expenses, excluding reimbursable tenant costs, non-cash | 356 |
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| 8,768 |
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Normalized Pro Rata Cash NOI (a) | $ | 263,624 |
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________
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(a) | 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. |
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(b) | For capital investment projects completed during the three months ended June 30, 2020, 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. |
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| | Investing for the long runTM | 42 |
W. P. Carey Inc.
Appendix – Second Quarter 2020
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Adjusted EBITDA, Consolidated – Last Five Quarters |
In thousands.
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| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Jun. 30, 2020 | | Mar. 31, 2020 | | Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 |
Net income | $ | 115,204 |
| | $ | 66,702 |
| | $ | 129,792 |
| | $ | 41,835 |
| | $ | 66,121 |
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| | | | | | | | | |
Adjustments to Derive Consolidated EBITDA | | | | | | | | | |
Depreciation and amortization | 107,477 |
| | 116,194 |
| | 111,607 |
| | 109,517 |
| | 113,632 |
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Interest expense | 52,182 |
| | 52,540 |
| | 53,667 |
| | 58,626 |
| | 59,719 |
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Provision for (benefit from) income taxes | 7,595 |
| | (41,692 | ) | | 21,064 |
| | 4,157 |
| | 3,119 |
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Consolidated EBITDA (a) | 282,458 |
| | 193,744 |
| | 316,130 |
| | 214,135 |
| | 242,591 |
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| | | | | | | | | |
Adjustments to Derive Adjusted EBITDA (b) | | | | | | | | | |
Other (gains) and losses (c) | (4,259 | ) | | 9,815 |
| | (38,196 | ) | | 18,618 |
| | 5,724 |
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Stock-based compensation expense | 2,918 |
| | 2,661 |
| | 4,939 |
| | 4,747 |
| | 4,936 |
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Above- and below-market rent intangible and straight-line rent adjustments (d) | 1,236 |
| | 4,680 |
| | 12,046 |
| | 8,591 |
| | 8,467 |
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Merger and other expenses | 1,074 |
| | 187 |
| | (811 | ) | | 70 |
| | 696 |
|
Other amortization and non-cash charges (e) | 382 |
| | 304 |
| | (5,791 | ) | | 422 |
| | 415 |
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Impairment charges | — |
| | 19,420 |
| | 6,758 |
| | 25,781 |
| | — |
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(Gain) loss on sale of real estate, net | — |
| | (11,751 | ) | | (17,501 | ) | | (71 | ) | | 362 |
|
Loss on change in control of interests (f) | — |
| | — |
| | — |
| | 8,416 |
| | — |
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| 1,351 |
| | 25,316 |
| | (38,556 | ) | | 66,574 |
| | 20,600 |
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| | | | | | | | | |
Adjustments for Pro Rata Ownership | | | | | | | | | |
Real Estate Joint Ventures: | | | | | | | | | |
Add: Pro rata share of adjustments for equity investments | 4,884 |
| | 4,475 |
| | 4,300 |
| | 5,471 |
| | 5,744 |
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Less: Pro rata share of adjustments for amounts attributable to noncontrolling interests | (22 | ) | | (22 | ) | | (459 | ) | | (530 | ) | | (117 | ) |
| 4,862 |
| | 4,453 |
| | 3,841 |
| | 4,941 |
| | 5,627 |
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Equity Investments in the Managed Programs: (g) | | | | | | | | | |
Less: (Income) loss from equity investments in the Managed Programs (h) (i) | (31,743 | ) | | 49,271 |
| | 173 |
| | 288 |
| | 45 |
|
Add: Distributions received from equity investments in the Managed Programs | 926 |
| | 2,196 |
| | 2,089 |
| | 1,980 |
| | 1,870 |
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| (30,817 | ) | | 51,467 |
| | 2,262 |
| | 2,268 |
| | 1,915 |
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Adjusted EBITDA (a) | $ | 257,854 |
| | $ | 274,980 |
| | $ | 283,677 |
| | $ | 287,918 |
| | $ | 270,733 |
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________
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(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. |
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(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. |
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(c) | Primarily comprised of unrealized gains and losses on derivatives, allowance for credit losses and gains and losses from foreign currency movements, extinguishment of debt and marketable securities. Amounts from period to period will not be comparable due to unpredictable fluctuations in these gains and losses. |
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(d) | Straight-line rent adjustments relate to our net-leased properties subject to operating leases. Amount for the three months ended March 31, 2020 includes straight-line rent write-offs totaling $3.1 million, based on a collectibility analysis. |
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(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. |
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(f) | 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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(g) | 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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(h) | Amount for the three months ended June 30, 2020 includes a non-cash net gain of $33.0 million (inclusive of $9.9 million attributable to the redemption of a noncontrolling interest that the former subadvisors for CWI 1 and CWI 2 held in the special general partner interests) recognized in connection with consideration received at closing of the CWI 1 and CWI 2 Merger, which reflects the allocation of $34.3 million of goodwill within our Investment Management segment. |
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(i) | Amount for the three months ended March 31, 2020 includes non-cash other-than-temporary impairment charges totaling $47.1 million recognized on our equity investments in CWI 1 and CWI 2. |
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| | Investing for the long runTM | 43 |
W. P. Carey Inc.
Appendix – Second Quarter 2020
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| |
Adjusted EBITDA, Real Estate – Last Five Quarters |
In thousands.
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| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Jun. 30, 2020 | | Mar. 31, 2020 | | Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 |
Net income from Real Estate | $ | 81,864 |
| | $ | 101,526 |
| | $ | 124,317 |
| | $ | 33,545 |
| | $ | 60,759 |
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| | | | | | | | | |
Adjustments to Derive Consolidated EBITDA | | | | | | | | | |
Depreciation and amortization | 107,477 |
| | 115,207 |
| | 110,648 |
| | 108,573 |
| | 112,666 |
|
Interest expense | 52,182 |
| | 52,540 |
| | 53,667 |
| | 58,626 |
| | 59,719 |
|
Provision for (benefit from) income taxes | 4,117 |
| | (31,800 | ) | | 18,113 |
| | 3,511 |
| | 3,019 |
|
Consolidated EBITDA – Real Estate (a) | 245,640 |
| | 237,473 |
| | 306,745 |
| | 204,255 |
| | 236,163 |
|
| | | | | | | | | |
Adjustments to Derive Adjusted EBITDA (b) | | | | | | | | | |
Other (gains) and losses (c) | (5,437 | ) | | 10,973 |
| | (38,546 | ) | | 18,956 |
| | 5,888 |
|
Stock-based compensation expense | 2,918 |
| | 1,970 |
| | 3,531 |
| | 3,435 |
| | 3,482 |
|
Above- and below-market rent intangible and straight-line rent adjustments (d) | 1,236 |
| | 4,680 |
| | 12,046 |
| | 8,591 |
| | 8,467 |
|
Merger and other expenses | 935 |
| | (132 | ) | | (811 | ) | | 70 |
| | 696 |
|
Other amortization and non-cash charges (e) | 382 |
| | 304 |
| | (5,791 | ) | | 422 |
| | 415 |
|
Impairment charges | — |
| | 19,420 |
| | 6,758 |
| | 25,781 |
| | — |
|
(Gain) loss on sale of real estate, net | — |
| | (11,751 | ) | | (17,501 | ) | | (71 | ) | | 362 |
|
Loss on change in control of interests (f) | — |
| | — |
| | — |
| | 8,416 |
| | — |
|
| 34 |
| | 25,464 |
| | (40,314 | ) | | 65,600 |
| | 19,310 |
|
| | | | | | | | | |
Adjustments for Pro Rata Ownership | | | | | | | | | |
Real Estate Joint Ventures: | | | | | | | | | |
Add: Pro rata share of adjustments for equity investments | 4,884 |
| | 4,475 |
| | 4,300 |
| | 5,471 |
| | 5,744 |
|
Less: Pro rata share of adjustments for amounts attributable to noncontrolling interests | (22 | ) | | (22 | ) | | (459 | ) | | (530 | ) | | (117 | ) |
| 4,862 |
| | 4,453 |
| | 3,841 |
| | 4,941 |
| | 5,627 |
|
Adjusted EBITDA – Real Estate (a) | $ | 250,536 |
| | $ | 267,390 |
| | $ | 270,272 |
| | $ | 274,796 |
| | $ | 261,100 |
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________
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(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. |
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(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. |
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(c) | Primarily comprised of unrealized gains and losses on derivatives, allowance for credit losses and gains and losses from foreign currency movements, extinguishment of debt and marketable securities. Amounts from period to period will not be comparable due to unpredictable fluctuations in these gains and losses. |
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(d) | Straight-line rent adjustments relate to our net-leased properties subject to operating leases. Amount for the three months ended March 31, 2020 includes straight-line rent write-offs totaling $3.1 million, based on a collectibility analysis. |
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(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. |
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(f) | 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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| | Investing for the long runTM | 44 |
W. P. Carey Inc.
Appendix – Second Quarter 2020
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Adjusted EBITDA, Investment Management – Last Five Quarters |
In thousands.
|
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| Three Months Ended |
| Jun. 30, 2020 | | Mar. 31, 2020 | | Dec. 31, 2019 | | Sep. 30, 2019 | | Jun. 30, 2019 |
Net income (loss) from Investment Management | $ | 33,340 |
| | $ | (34,824 | ) | | $ | 5,475 |
| | $ | 8,290 |
| | $ | 5,362 |
|
| | | | | | | | | |
Adjustments to Derive Consolidated EBITDA | | | | | | | | | |
Provision for (benefit from) income taxes | 3,478 |
| | (9,892 | ) | | 2,951 |
| | 646 |
| | 100 |
|
Depreciation and amortization | — |
| | 987 |
| | 959 |
| | 944 |
| | 966 |
|
Consolidated EBITDA – Investment Management (a) | 36,818 |
| | (43,729 | ) | | 9,385 |
| | 9,880 |
| | 6,428 |
|
| | | | | | | | | |
Adjustments to Derive Adjusted EBITDA (b) | | | | | | | | | |
Other (gains) and losses (c) | 1,178 |
| | (1,158 | ) | | 350 |
| | (338 | ) | | (164 | ) |
Merger and other expenses | 139 |
| | 319 |
| | — |
| | — |
| | — |
|
Stock-based compensation expense | — |
| | 691 |
| | 1,408 |
| | 1,312 |
| | 1,454 |
|
| 1,317 |
| | (148 | ) | | 1,758 |
| | 974 |
| | 1,290 |
|
| | | | | | | | | |
Adjustments for Pro Rata Ownership | | | | | | | | | |
Equity Investments in the Managed Programs: (d) | | | | | | | | | |
Less: (Income) loss from equity investments in the Managed Programs (e) (f) | (31,743 | ) | | 49,271 |
| | 173 |
| | 288 |
| | 45 |
|
Add: Distributions received from equity investments in the Managed Programs | 926 |
| | 2,196 |
| | 2,089 |
| | 1,980 |
| | 1,870 |
|
| (30,817 | ) | | 51,467 |
| | 2,262 |
| | 2,268 |
| | 1,915 |
|
Adjusted EBITDA – Investment Management (a) | $ | 7,318 |
| | $ | 7,590 |
| | $ | 13,405 |
| | $ | 13,122 |
| | $ | 9,633 |
|
________
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(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. |
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(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. Amounts from period to period will not be comparable due to unpredictable fluctuations in these gains and losses. |
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(d) | 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. |
| |
(e) | Amount for the three months ended June 30, 2020 includes a non-cash net gain of $33.0 million (inclusive of $9.9 million attributable to the redemption of a noncontrolling interest that the former subadvisors for CWI 1 and CWI 2 held in the special general partner interests) recognized in connection with consideration received at closing of the CWI 1 and CWI 2 Merger, which reflects the allocation of $34.3 million of goodwill within our Investment Management segment. |
| |
(f) | Amount for the three months ended March 31, 2020 includes non-cash other-than-temporary impairment charges totaling $47.1 million recognized on our equity investments in CWI 1 and CWI 2. |
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| | |
| | Investing for the long runTM | 45 |
W. P. Carey Inc.
Appendix – Second Quarter 2020
Non-GAAP Financial Disclosures
FFO and AFFO
Due to certain unique operating characteristics of real estate companies, as discussed below, NAREIT, an industry trade group, has promulgated a non-GAAP measure known as FFO, which we believe to be an appropriate supplemental measure, when used in addition to and in conjunction with results presented in accordance with GAAP, to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to, nor a substitute for, net income or loss as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as restated in December 2018. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property, impairment charges on real estate, gains or losses on changes in control of interests in real estate and depreciation and amortization from real estate assets; and after adjustments for unconsolidated partnerships and jointly owned investments. Adjustments for unconsolidated partnerships and jointly owned investments are calculated to reflect FFO.
We also modify the NAREIT computation of FFO to adjust GAAP net income for certain non-cash charges, such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rent and related reserves, other non-cash rent adjustments, allowance for credit losses, 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 and merger and acquisition expenses. We also exclude realized and unrealized gains/losses on foreign currency exchange transactions (other than those realized on the settlement of foreign currency derivatives), which are not considered fundamental attributes of our business plan and do not affect our overall long-term operating performance. We refer to our modified definition of FFO as AFFO. We exclude these items from GAAP net income to arrive at AFFO as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs that are currently not engaged in acquisitions, mergers and restructuring, which are not part of our normal business operations. AFFO also reflects adjustments for unconsolidated partnerships and jointly owned investments. We use AFFO as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies and determine executive compensation.
We believe that AFFO is a useful supplemental measure for investors to consider as we believe it will help them to better assess the sustainability of our operating performance without the potentially distorting impact of these short-term fluctuations. However, there are limits on the usefulness of AFFO to investors. For example, impairment charges and unrealized foreign currency losses that we exclude may become actual realized losses upon the ultimate disposition of the properties in the form of lower cash proceeds or other considerations. We use our FFO and AFFO measures as supplemental financial measures of operating performance. We do not use our FFO and AFFO measures as, nor should they be considered to be, alternatives to net income computed under GAAP, or as alternatives to net cash provided by operating activities computed under GAAP, or as indicators of our ability to fund our cash needs.
Same Store Pro Rata Rental Income
Same store pro rata rental income is a non-GAAP financial measure that is intended to reflect the performance of our net leased properties. We define this as contractual rents from our leased properties. Same store rental income excludes reimbursable tenant costs, amortization of intangibles and straight-line rent adjustments that are included in GAAP lease revenues. We present same store rental income on a pro rata basis to account for our share of income related to unconsolidated joint ventures and noncontrolling interests. We believe that same store pro rata rental income is a helpful measure that both investors and management can use to evaluate the financial performance of our leased properties. Same store pro rata rental income should not be considered as an alternative to lease revenues as an indication of our financial performance or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present same store rental income and/or same store pro rata rental income may not be directly comparable to the way other REITs present such metrics.
Pro Rata Cash NOI
Cash net operating income (“cash NOI”) is a non-GAAP financial measure that is intended to reflect the performance of our net leased and operating properties. We define cash NOI as cash rents from our leased and operating properties less non-reimbursable property expenses. Cash NOI excludes amortization of intangibles and straight-line rent adjustments that are included in GAAP lease revenues. We present cash NOI on a pro rata basis (“pro rata cash NOI”) to account for our share of income related to unconsolidated joint ventures and noncontrolling interests. We believe that pro rata cash NOI is a helpful measure that both investors and management can use to evaluate the financial performance of our leased and operating properties and it allows for comparison of our operating performance between periods and to other REITs. Pro rata cash NOI should not be considered as an alternative to net income as an indication of our financial performance or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present cash NOI and/or pro rata cash NOI may not be directly comparable to the way other REITs present such metrics.
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W. P. Carey Inc.
Appendix – Second Quarter 2020
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 believe this measure provides a helpful representation of our net operating income from our in-place leased and operating properties.
Adjusted EBITDA
We believe that EBITDA is a useful supplemental measure to investors and analysts for assessing the performance of our business segments because (i) it removes the impact of our capital structure from our operating results and (ii) it is helpful when comparing our operating performance to that of companies in our industry without regard to such items, which can vary substantially from company to company. Adjusted EBITDA as disclosed represents EBITDA, modified to include other adjustments to GAAP net income for certain non-cash charges, such as impairments, non-cash rent adjustments and unrealized gains and losses from our hedging activity. Additionally, we exclude gains and losses on sale of real estate, which are not considered fundamental attributes of our business plans and do not affect our overall long-term operating performance. We exclude these items from adjusted EBITDA as they are not the primary drivers in our decision-making process. Adjusted EBITDA reflects adjustments for unconsolidated partnerships and jointly owned investments. Our assessment of our operations is focused on long-term sustainability and not on such non-cash and non-core items, which may cause short-term fluctuations in net income but have no impact on cash flows. We believe that adjusted EBITDA is a useful supplemental measure to investors and analysts, although it does not represent net income that is computed in accordance with GAAP. Accordingly, adjusted EBITDA should not be considered as an alternative to net income or as an indicator of our financial performance. EBITDA and adjusted EBITDA as calculated by us may not be comparable to similarly titled measures of other companies.
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 and reflects exchange rates as of June 30, 2020. 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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