NEW YORK, Oct. 29, 2021 /PRNewswire/ -- W. P.
Carey Inc. (NYSE: WPC) (W. P. Carey or the Company), a net lease
real estate investment trust, today reported its financial results
for the third quarter ended September 30, 2021.
Financial Highlights
|
2021 Third
Quarter
|
Net income
attributable to W. P. Carey (millions)
|
$138.5
|
|
Diluted earnings
per share
|
$0.74
|
|
Net income from
Real Estate attributable to W. P. Carey (millions)
|
$130.9
|
|
Diluted earnings
per share from Real Estate
|
$0.70
|
|
|
|
AFFO
(millions)
|
$230.7
|
|
AFFO per diluted
share
|
$1.24
|
|
Real Estate
segment AFFO (millions)
|
$224.4
|
|
Real Estate
segment AFFO per diluted share
|
$1.21
|
|
- Affirm 2021 AFFO guidance range of between $4.94 and $5.02 per
diluted share, including Real Estate AFFO of between $4.82 and $4.90 per
diluted, based on full-year investment volume of between
$1.5 billion and $2.0 billion
- Quarterly cash dividend raised to $1.052 per share, equivalent to an annualized
dividend rate of $4.208 per
share
Real Estate Portfolio
- Investment volume of $1.23
billion year to date, including $1.19
billion during the first nine months and $40.7 million subsequent to quarter end
- Gross disposition proceeds of $29.8
million during the third quarter, bringing total
dispositions for the first nine months to $129.5 million
- Overall collection rate of over 99.5% for 2021 third quarter
rent due
- Portfolio occupancy of 98.4%
- Weighted-average lease term of 10.6 years
Balance Sheet and Capitalization
- Completed an underwritten public offering under which
approximately 5 million shares of common stock were sold through
forward sale agreements at a gross offering price of $78.00 per share
- Settled forward sale agreements for total net proceeds of
approximately $147 million
- Subsequent to quarter end, the Company completed its
inaugural green bond offering, issuing $350
million of 2.450% Senior Unsecured Notes due 2032
MANAGEMENT COMMENTARY
"Our third quarter results keep us on pace to deliver strong
AFFO per share growth for the year, driven primarily by our
accelerated pace of investment activity, which is already a record
for annual investment volume," said Jason
Fox, Chief Executive Officer of W. P. Carey. "We believe
2021 has established a new chapter of externally-driven growth for
W. P. Carey, supported by our access to well-priced capital. And
I'm proud to say our capital sources have expanded to include
ESG-focused investors with our inaugural green bond offering
earlier this month — an important milestone demonstrating our
commitment to sustainability.
"We also remain uniquely poised to benefit from inflation, with
the vast majority of our CPI-linked leases scheduled for rent
increases over the next few quarters. Consequently, we believe W.
P. Carey currently offers one of the best combinations of external
and internal growth across the net lease sector, in addition to an
attractive dividend yield."
QUARTERLY FINANCIAL RESULTS
Revenues
- Total Company: Revenues, including reimbursable costs,
for the 2021 third quarter totaled $325.8
million, up 7.7% from $302.4
million for the 2020 third quarter.
- Real Estate: Real Estate revenues, including
reimbursable costs, for the 2021 third quarter were $320.8 million, up 7.9% from $297.4 million for the 2020 third quarter, due
primarily to higher lease revenues resulting from net acquisitions
and the positive impact on rent collections as businesses recover
from the initial effects of the COVID-19 pandemic. Higher operating
property revenues reflected increased occupancy at the Company's
remaining hotel operating property as its business recovers from
the initial effects of the COVID-19 pandemic.
- Investment Management: Investment Management revenues,
including reimbursable costs, for the 2021 third quarter were
$4.9 million, substantially unchanged
compared to the 2020 third quarter.
Net Income Attributable to W. P. Carey
- Net income attributable to W. P. Carey for the 2021 third
quarter was $138.5 million, down 7.3%
from $149.4 million for the 2020
third quarter. Net income from Real Estate attributable to W. P.
Carey was $130.9 million, which
decreased due primarily to a lower aggregate gain on sale of real
estate and an impairment charge of $16.3
million recognized in the current year period, partially
offset by the impact of net acquisitions, the positive impact on
rent collections as businesses recover from the initial effects of
the COVID-19 pandemic and lower interest expense as a result of
debt refinancings in prior quarters. The Company also recorded
mark-to-market gains on its shares of Lineage Logistics totaling
$52.9 million and $48.8 million, respectively, during the current
and prior-year periods.
Adjusted Funds from Operations (AFFO)
- AFFO for the 2021 third quarter was $1.24 per diluted share, up 7.8% from
$1.15 per diluted share for the 2020
third quarter. The Real Estate segment generated AFFO (Real Estate
AFFO) of $1.21 per diluted share,
primarily reflecting higher lease revenues resulting from net
investment activity, the positive impact on rent collections as
businesses recover from the initial effects of the COVID-19
pandemic and lower interest expense.
Note: Further information concerning AFFO and Real Estate
AFFO, which are both non-GAAP supplemental performance metrics, is
presented in the accompanying tables and related notes.
Dividend
- As previously announced, on September
16, 2021 the Company's Board of Directors declared a
quarterly cash dividend of $1.052 per
share, equivalent to an annualized dividend rate of $4.208 per share. The dividend was paid on
October 15, 2021 to stockholders of
record as of September 30, 2021.
AFFO GUIDANCE
- The Company has affirmed its guidance range for the 2021 full
year and currently expects to report total AFFO of between
$4.94 and $5.02 per diluted share, including Real Estate
AFFO of between $4.82 and
$4.90 per diluted share, based on the
following key assumptions:
(i) investments for
the Company's Real Estate portfolio of between $1.5 billion and $2.0
billion, which is unchanged;
(ii) dispositions from the
Company's Real Estate portfolio of between $150 million and $250
million, which is unchanged; and
(iii) total general and
administrative expenses of between $82
million and $84 million, which
is unchanged.
Note: The Company does not provide guidance on net income.
The Company only provides guidance on total AFFO (and Real Estate
AFFO) and does not provide a reconciliation of this forward-looking
non-GAAP guidance to net income due to the inherent difficulty in
quantifying certain items necessary to provide such reconciliation
as a result of their unknown effect, timing and potential
significance. Examples of such items include impairments of assets,
gains and losses from sales of assets, and depreciation and
amortization from new acquisitions.
REAL ESTATE
Investments
- During the 2021 third quarter, the Company completed
investments totaling $199.1 million,
bringing total investment volume for the nine months ended
September 30, 2021 to $1.19 billion.
- Subsequent to quarter end, the Company completed one additional
investment for $40.7 million,
bringing total investment volume year to date to $1.23 billion.
- As of September 30, 2021, the
Company had five capital investments and commitments outstanding
for an expected total investment of approximately $148.9 million, of which two investments and
commitments totaling $97.3 million
are currently scheduled to be completed during the 2021 fourth
quarter.
Dividends Received
- During the 2021 third quarter, the Company received a quarterly
$0.8 million cash dividend from its
investment in preferred shares of Watermark Lodging Trust, the
surviving entity from the CWI lodging funds it previously
managed.
Dispositions
- During the 2021 third quarter, the Company disposed of five
properties for gross proceeds of $29.8
million, bringing total disposition proceeds for the nine
months ended September 30, 2021 to
$129.5 million.
COVID-19 Update on Rent Collections
- The Company received over 99.5% of contractual base rent that
was due in the 2021 third quarter.
Composition
- As of September 30, 2021, the
Company's net lease portfolio consisted of 1,264 properties,
comprising 152 million square feet leased to 358 tenants, with a
weighted-average lease term of 10.6 years and an occupancy rate of
98.4%. In addition, the Company owned 19 self-storage operating
properties and one hotel operating property, totaling approximately
1.4 million square feet.
BALANCE SHEET AND CAPITALIZATION
Forward Equity Offerings
- As previously announced, on August 9,
2021, the Company completed an underwritten public offering
of 5,175,000 shares of common stock under forward sale agreements
(which included the full exercise of the underwriters' option to
purchase additional shares) at a gross offering price of
$78.00 per share, which was sold on a
forward basis at an initial sale price of $77.15 per share, for gross proceeds of
approximately $404 million.
- During the 2021 third quarter, the Company settled a portion of
its outstanding forward sale agreements, issuing 2,012,500 shares
of common stock for net proceeds of $147
million. As of September 30,
2021, the Company had 7,187,500 shares available for
settlement under forward sale agreements, for anticipated net
proceeds of approximately $539
million.
Green Bond Issuance – Subsequent to Quarter End
- As previously announced, on October 15,
2021, the Company completed an underwritten public offering
of $350 million aggregate principal
amount of 2.450% Senior Notes due February
1, 2032 in its inaugural green bond offering. The Company
intends to fully allocate an amount equal to the net proceeds from
this offering to recently completed or future eligible green
projects.
Mortgage Debt Repayments – Subsequent to Quarter End
- During October 2021, the Company
prepaid or repaid at maturity mortgages totaling $297.6 million, which had a weighted-average
interest rate of 4.4%.
*
* *
* *
Supplemental Information
The Company has provided supplemental unaudited financial and
operating information regarding the 2021 third quarter and
certain prior quarters, including a description of non-GAAP
financial measures and reconciliations to GAAP measures, in a
Current Report on Form 8-K filed with the Securities and Exchange
Commission (SEC) on October 29, 2021, and made available on
the Company's website at ir.wpcarey.com/investor-relations.
*
* *
* *
Live Conference Call and Audio Webcast Scheduled for
10:00 a.m. Eastern Time
Please dial in at least 10 minutes prior to the start
time.
Date/Time: Friday, October 29, 2021 at
10:00 a.m. Eastern Time
Call-in Number: 1 (877) 465-1289 (U.S.) or +1 (201) 689-8762
(international)
Live Audio Webcast and Replay:
www.wpcarey.com/earnings
*
* *
* *
W. P. Carey Inc.
W. P. Carey ranks among the largest net lease REITs with an
enterprise value of approximately $20
billion and a diversified portfolio of
operationally-critical commercial real estate that includes 1,264
net lease properties covering approximately 152 million square feet
as of September 30, 2021. For nearly five decades, the company
has invested in high-quality single-tenant industrial, warehouse,
office, retail and self-storage properties subject to long-term net
leases with built-in rent escalators. Its portfolio is located
primarily in the U.S. and Northern and Western Europe and is well-diversified by
tenant, property type, geographic location and tenant
industry.
www.wpcarey.com
*
* *
* *
Cautionary Statement Concerning Forward-Looking Statements
and COVID-19 Update on Rent Collections
Certain of the matters discussed in this communication
constitute forward-looking statements within the meaning of the
Securities Act of 1933 and the Exchange Act of 1934, both as
amended by the Private Securities Litigation Reform Act of
1995. The forward-looking statements include, among other
things, statements regarding the intent, belief or expectations of
W. P. Carey and can be identified by the use of words
such as "may," "will," "should," "would," "assume," "outlook,"
"seek," "plan," "believe," "expect," "anticipate," "intend,"
"estimate," "forecast" and other comparable terms. These
forward-looking statements include, but are not limited to,
statements made by Mr. Fox regarding our AFFO per share growth for
the year, future externally-driven growth, and the potential
benefits of an inflationary environment. These statements are based
on the current expectations of our management and it is important
to note that our actual results could be materially different from
those projected in such forward-looking statements. There are a
number of risks and uncertainties that could cause actual results
to differ materially from the forward-looking
statements. Other unknown or unpredictable risks or
uncertainties, like the risks related to the effects of pandemics
and global outbreaks of contagious diseases or the fear of such
outbreaks (such as the current COVID-19 pandemic) and those
additional risk factors discussed in reports that we have filed
with the SEC could also have material adverse effects on our future
results, performance or achievements. Discussions of some of these
other important factors and assumptions are contained in
W. P. Carey's filings with the SEC and are available at
the SEC's website at http://www.sec.gov, including Part I,
Item 1A. Risk Factors in W. P. Carey's Annual
Report on Form 10-K for the year ended December 31, 2020.
In light of these risks, uncertainties, assumptions and factors,
the forward-looking events discussed in this communication may not
occur. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
communication, unless noted otherwise. Except as required
under the federal securities laws and the rules and regulations of
the SEC, W. P. Carey does not undertake any obligation to
release publicly any revisions to the forward-looking statements to
reflect events or circumstances after the date of this
communication or to reflect the occurrence of unanticipated
events.
In addition, given the significant uncertainty regarding the
duration and severity of the impact of the COVID-19 pandemic, the
Company is unable to predict its tenants' continued ability to pay
rent. Therefore, information provided regarding historical rent
collections should not serve as an indication of expected future
rent collections.
*
* *
* *
W. P. CAREY
INC.
|
Consolidated
Balance Sheets (Unaudited)
|
(in thousands,
except share and per share amounts)
|
|
|
September 30,
2021
|
|
December 31,
2020
|
Assets
|
|
|
|
Investments in real
estate:
|
|
|
|
Land, buildings and
improvements (a)
|
$
|
11,644,851
|
|
|
$
|
10,939,619
|
|
Net investments in
direct financing leases
|
633,190
|
|
|
711,974
|
|
In-place lease
intangible assets and other
|
2,384,575
|
|
|
2,301,174
|
|
Above-market rent
intangible assets
|
859,386
|
|
|
881,159
|
|
Investments in real
estate
|
15,522,002
|
|
|
14,833,926
|
|
Accumulated
depreciation and amortization (b)
|
(2,793,347)
|
|
|
(2,490,087)
|
|
Assets held for sale,
net (c)
|
11,672
|
|
|
18,590
|
|
Net investments in
real estate
|
12,740,327
|
|
|
12,362,429
|
|
Equity method
investments (d)
|
361,835
|
|
|
283,446
|
|
Cash and cash
equivalents
|
129,686
|
|
|
248,662
|
|
Due from
affiliates
|
1,992
|
|
|
26,257
|
|
Other assets,
net
|
997,318
|
|
|
876,024
|
|
Goodwill
|
903,976
|
|
|
910,818
|
|
Total
assets
|
$
|
15,135,134
|
|
|
$
|
14,707,636
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Debt:
|
|
|
|
Senior unsecured
notes, net
|
$
|
5,419,419
|
|
|
$
|
5,146,192
|
|
Unsecured term loans,
net
|
312,605
|
|
|
321,971
|
|
Unsecured revolving
credit facility
|
254,463
|
|
|
82,281
|
|
Non-recourse
mortgages, net
|
688,430
|
|
|
1,145,554
|
|
Debt, net
|
6,674,917
|
|
|
6,695,998
|
|
Accounts payable,
accrued expenses and other liabilities
|
536,242
|
|
|
603,663
|
|
Below-market rent and
other intangible liabilities, net
|
191,128
|
|
|
197,248
|
|
Deferred income
taxes
|
147,107
|
|
|
145,844
|
|
Dividends
payable
|
199,043
|
|
|
186,514
|
|
Total
liabilities
|
7,748,437
|
|
|
7,829,267
|
|
|
|
|
|
Preferred stock,
$0.001 par value, 50,000,000 shares authorized; none
issued
|
—
|
|
|
—
|
|
Common stock, $0.001
par value, 450,000,000 shares authorized; 186,284,955 and
175,401,757 shares,
respectively, issued and
outstanding
|
186
|
|
|
175
|
|
Additional paid-in
capital
|
9,694,226
|
|
|
8,925,365
|
|
Distributions in
excess of accumulated earnings
|
(2,121,936)
|
|
|
(1,850,935)
|
|
Deferred compensation
obligation
|
49,810
|
|
|
42,014
|
|
Accumulated other
comprehensive loss
|
(237,246)
|
|
|
(239,906)
|
|
Total stockholders'
equity
|
7,385,040
|
|
|
6,876,713
|
|
Noncontrolling
interests
|
1,657
|
|
|
1,656
|
|
Total
equity
|
7,386,697
|
|
|
6,878,369
|
|
Total liabilities
and equity
|
$
|
15,135,134
|
|
|
$
|
14,707,636
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes $83.7
million and $83.5 million of amounts attributable to operating
properties as of September 30, 2021 and December 31,
2020, respectively.
|
(b)
|
Includes $1.4
billion and $1.2 billion of accumulated depreciation on buildings
and improvements as of September 30, 2021 and
December 31, 2020, respectively, and $1.4 billion and $1.3
billion of accumulated amortization on lease intangibles as of
September 30, 2021 and December 31, 2020,
respectively.
|
(c)
|
At
September 30, 2021, we had three properties classified as
Assets held for sale, net. At December 31, 2020, we had
four properties classified as Assets held for sale, net, all of
which were sold in 2021.
|
(d)
|
Our equity method
investments in real estate totaled $296.4 million and $226.9
million as of September 30, 2021 and December 31, 2020,
respectively. Our equity method investments in the Managed Programs
totaled $65.4 million and $56.6 million as of September 30,
2021 and December 31, 2020, respectively.
|
W. P. CAREY
INC.
|
Quarterly
Consolidated Statements of Income (Unaudited)
|
(in thousands,
except share and per share amounts)
|
|
|
Three Months
Ended
|
|
September 30,
2021
|
|
June 30,
2021
|
|
September 30,
2020
|
Revenues
|
|
|
|
|
|
Real
Estate:
|
|
|
|
|
|
Lease
revenues
|
$
|
314,194
|
|
|
$
|
305,310
|
|
|
$
|
293,856
|
|
Operating property
revenues
|
4,050
|
|
|
3,245
|
|
|
1,974
|
|
Lease termination
income and other
|
2,597
|
|
|
6,235
|
|
|
1,565
|
|
|
320,841
|
|
|
314,790
|
|
|
297,395
|
|
Investment
Management:
|
|
|
|
|
|
Asset management and
other revenue
|
3,872
|
|
|
3,966
|
|
|
3,748
|
|
Reimbursable costs
from affiliates
|
1,041
|
|
|
968
|
|
|
1,276
|
|
|
4,913
|
|
|
4,934
|
|
|
5,024
|
|
|
325,754
|
|
|
319,724
|
|
|
302,419
|
|
Operating
Expenses
|
|
|
|
|
|
Depreciation and
amortization
|
115,657
|
|
|
114,348
|
|
|
108,351
|
|
General and
administrative
|
19,750
|
|
|
20,464
|
|
|
19,399
|
|
Impairment
charges
|
16,301
|
|
|
—
|
|
|
—
|
|
Reimbursable tenant
costs
|
15,092
|
|
|
15,092
|
|
|
15,728
|
|
Property expenses,
excluding reimbursable tenant costs
|
13,734
|
|
|
11,815
|
|
|
11,923
|
|
Stock-based
compensation expense
|
4,361
|
|
|
9,048
|
|
|
4,564
|
|
Operating property
expenses
|
3,001
|
|
|
2,049
|
|
|
1,594
|
|
Reimbursable costs
from affiliates
|
1,041
|
|
|
968
|
|
|
1,276
|
|
Merger and other
expenses
|
(908)
|
|
|
(2,599)
|
|
|
(596)
|
|
|
188,029
|
|
|
171,185
|
|
|
162,239
|
|
Other Income and
Expenses
|
|
|
|
|
|
Other gains and
(losses) (a)
|
49,219
|
|
|
7,545
|
|
|
44,648
|
|
Interest
expense
|
(48,731)
|
|
|
(49,252)
|
|
|
(52,537)
|
|
Earnings (losses) from
equity method investments
|
5,735
|
|
|
(156)
|
|
|
1,720
|
|
Gain on sale of real
estate, net
|
1,702
|
|
|
19,840
|
|
|
20,933
|
|
Non-operating income
(b)
|
1,283
|
|
|
3,065
|
|
|
465
|
|
|
9,208
|
|
|
(18,958)
|
|
|
15,229
|
|
Income before income
taxes
|
146,933
|
|
|
129,581
|
|
|
155,409
|
|
Provision for income
taxes
|
(8,347)
|
|
|
(9,298)
|
|
|
(5,975)
|
|
Net
Income
|
138,586
|
|
|
120,283
|
|
|
149,434
|
|
Net income
attributable to noncontrolling interests
|
(39)
|
|
|
(38)
|
|
|
(37)
|
|
Net Income
Attributable to W. P. Carey
|
$
|
138,547
|
|
|
$
|
120,245
|
|
|
$
|
149,397
|
|
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
|
0.75
|
|
|
$
|
0.67
|
|
|
$
|
0.85
|
|
Diluted Earnings
Per Share
|
$
|
0.74
|
|
|
$
|
0.67
|
|
|
$
|
0.85
|
|
Weighted-Average
Shares Outstanding
|
|
|
|
|
|
Basic
|
185,422,639
|
|
|
180,099,370
|
|
|
174,974,185
|
|
Diluted
|
186,012,478
|
|
|
180,668,732
|
|
|
175,261,812
|
|
|
|
|
|
|
|
Dividends Declared
Per Share
|
$
|
1.052
|
|
|
$
|
1.050
|
|
|
$
|
1.044
|
|
W. P. CAREY
INC.
|
Year-to-Date
Consolidated Statements of Income (Unaudited)
|
(in thousands,
except share and per share amounts)
|
|
|
Nine Months Ended
September 30,
|
|
2021
|
|
2020
|
Revenues
|
|
|
|
Real
Estate:
|
|
|
|
Lease
revenues
|
$
|
921,269
|
|
|
$
|
856,269
|
|
Lease termination
income and other
|
11,059
|
|
|
9,991
|
|
Operating property
revenues
|
9,474
|
|
|
9,368
|
|
|
941,802
|
|
|
875,628
|
|
Investment
Management:
|
|
|
|
Asset management and
other revenue
|
11,792
|
|
|
18,603
|
|
Reimbursable costs
from affiliates
|
3,050
|
|
|
7,717
|
|
|
14,842
|
|
|
26,320
|
|
|
956,644
|
|
|
901,948
|
|
Operating
Expenses
|
|
|
|
Depreciation and
amortization
|
340,327
|
|
|
332,022
|
|
General and
administrative
|
62,297
|
|
|
57,616
|
|
Reimbursable tenant
costs
|
45,942
|
|
|
42,699
|
|
Property expenses,
excluding reimbursable tenant costs
|
36,432
|
|
|
33,649
|
|
Stock-based
compensation expense
|
18,790
|
|
|
10,143
|
|
Impairment
charges
|
16,301
|
|
|
19,420
|
|
Operating property
expenses
|
6,961
|
|
|
8,205
|
|
Merger and other
expenses
|
(3,983)
|
|
|
665
|
|
Reimbursable costs
from affiliates
|
3,050
|
|
|
7,717
|
|
Subadvisor
fees
|
—
|
|
|
1,469
|
|
|
526,117
|
|
|
513,605
|
|
Other Income and
Expenses
|
|
|
|
Interest
expense
|
(149,623)
|
|
|
(157,259)
|
|
Gain on sale of real
estate, net
|
30,914
|
|
|
32,684
|
|
Other gains and
(losses)
|
15,576
|
|
|
39,092
|
|
Non-operating
income
|
10,704
|
|
|
10,445
|
|
Losses from equity
method investments (c)
|
(4,154)
|
|
|
(10,087)
|
|
|
(96,583)
|
|
|
(85,125)
|
|
Income before income
taxes
|
333,944
|
|
|
303,218
|
|
(Provision for)
benefit from income taxes
|
(23,434)
|
|
|
28,122
|
|
Net
Income
|
310,510
|
|
|
331,340
|
|
Net income
attributable to noncontrolling interests (c)
|
(84)
|
|
|
(10,553)
|
|
Net Income
Attributable to W. P. Carey
|
$
|
310,426
|
|
|
$
|
320,787
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
|
1.72
|
|
|
$
|
1.84
|
|
Diluted Earnings
Per Share
|
$
|
1.71
|
|
|
$
|
1.84
|
|
Weighted-Average
Shares Outstanding
|
|
|
|
Basic
|
180,753,115
|
|
|
173,879,068
|
|
Diluted
|
181,323,128
|
|
|
174,144,038
|
|
|
|
|
|
Dividends Declared
Per Share
|
$
|
3.150
|
|
|
$
|
3.126
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Amount for the
three months ended September 30, 2021 is primarily comprised of a
mark-to-market unrealized gain for our investment in shares of
Lineage Logistics of $52.9 million and net loss on foreign currency
transactions of $(7.1) million. Amount for the three months ended
September 30, 2020 includes a mark-to-market unrealized gain for
our investment in shares of Lineage Logistics of $48.8
million.
|
(b)
|
Amount for the
three months ended September 30, 2021 is comprised of a cash
dividend of $0.8 million from our investment in preferred shares of
Watermark Lodging Trust, realized gains on foreign currency
exchange derivatives of $0.4 million and interest income on
deposits and loans to affiliates of $0.1 million.
|
(c)
|
Amount for the
nine months ended September 30, 2020 includes non-cash
other-than-temporary impairment charges totaling $47.1 million
recognized on our former equity method investments in CWI 1 and CWI
2. and a non-cash net gain of $33.0 million (inclusive of $9.9
million attributable to the redemption of a noncontrolling interest
that the former subadvisors for CWI 1 and CWI 2 held in the special
general partner interests) recognized in connection with
consideration received at closing of the CWI 1 and CWI 2
merger.
|
W. P. CAREY
INC.
|
Quarterly
Reconciliation of Net Income to Adjusted Funds from Operations
(AFFO) (Unaudited)
|
(in thousands,
except share and per share amounts)
|
|
|
Three Months
Ended
|
|
September 30,
2021
|
|
June 30,
2021
|
|
September 30,
2020
|
Net income
attributable to W. P. Carey
|
$
|
138,547
|
|
|
$
|
120,245
|
|
|
$
|
149,397
|
|
Adjustments:
|
|
|
|
|
|
Depreciation and
amortization of real property
|
114,204
|
|
|
112,997
|
|
|
107,170
|
|
Impairment
charges
|
16,301
|
|
|
—
|
|
|
—
|
|
Gain on sale of real
estate, net
|
(1,702)
|
|
|
(19,840)
|
|
|
(20,933)
|
|
Proportionate share of
adjustments to earnings from equity method
investments (a) (b)
(c)
|
3,290
|
|
|
3,434
|
|
|
3,500
|
|
Proportionate share of
adjustments for noncontrolling interests (d)
|
(4)
|
|
|
(4)
|
|
|
(4)
|
|
Total
adjustments
|
132,089
|
|
|
96,587
|
|
|
89,733
|
|
FFO (as defined by
NAREIT) Attributable to W. P. Carey (e)
|
270,636
|
|
|
216,832
|
|
|
239,130
|
|
Adjustments:
|
|
|
|
|
|
Other (gains) and
losses (f)
|
(49,219)
|
|
|
(7,545)
|
|
|
(44,648)
|
|
Above- and
below-market rent intangible lease amortization, net
|
12,004
|
|
|
14,384
|
|
|
12,472
|
|
Straight-line and
other rent adjustments
|
(10,823)
|
|
|
(10,313)
|
|
|
(13,115)
|
|
Stock-based
compensation
|
4,361
|
|
|
9,048
|
|
|
4,564
|
|
Amortization of
deferred financing costs
|
3,424
|
|
|
3,447
|
|
|
2,932
|
|
Merger and other
expenses (g)
|
(908)
|
|
|
(2,599)
|
|
|
(596)
|
|
Other amortization and
non-cash items
|
557
|
|
|
563
|
|
|
508
|
|
Tax (benefit) expense
– deferred and other (h)
|
(290)
|
|
|
217
|
|
|
(715)
|
|
Proportionate share of
adjustments to earnings from equity method
investments (b)
|
988
|
|
|
4,650
|
|
|
1,429
|
|
Proportionate share of
adjustments for noncontrolling interests (d)
|
(6)
|
|
|
(8)
|
|
|
(6)
|
|
Total
adjustments
|
(39,912)
|
|
|
11,844
|
|
|
(37,175)
|
|
AFFO Attributable
to W. P. Carey (e)
|
$
|
230,724
|
|
|
$
|
228,676
|
|
|
$
|
201,955
|
|
|
|
|
|
|
|
Summary
|
|
|
|
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey (e)
|
$
|
270,636
|
|
|
$
|
216,832
|
|
|
$
|
239,130
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey per diluted share
(e)
|
$
|
1.45
|
|
|
$
|
1.20
|
|
|
$
|
1.36
|
|
AFFO attributable to
W. P. Carey (e)
|
$
|
230,724
|
|
|
$
|
228,676
|
|
|
$
|
201,955
|
|
AFFO attributable to
W. P. Carey per diluted share (e)
|
$
|
1.24
|
|
|
$
|
1.27
|
|
|
$
|
1.15
|
|
Diluted
weighted-average shares outstanding
|
186,012,478
|
|
|
180,668,732
|
|
|
175,261,812
|
|
W. P. CAREY
INC.
|
Quarterly
Reconciliation of Net Income from Real Estate to Adjusted Funds
from Operations (AFFO) from Real Estate (Unaudited)
|
(in thousands,
except share and per share amounts)
|
|
|
Three Months
Ended
|
|
September 30,
2021
|
|
June 30,
2021
|
|
September 30,
2020
|
Net income from Real
Estate attributable to W. P. Carey
|
$
|
130,858
|
|
|
$
|
114,687
|
|
|
$
|
146,983
|
|
Adjustments:
|
|
|
|
|
|
Depreciation and
amortization of real property
|
114,204
|
|
|
112,997
|
|
|
107,170
|
|
Impairment
charges
|
16,301
|
|
|
—
|
|
|
—
|
|
Gain on sale of real
estate, net
|
(1,702)
|
|
|
(19,840)
|
|
|
(20,933)
|
|
Proportionate share of
adjustments to earnings from equity method
investments (a)
(b)
|
3,290
|
|
|
3,434
|
|
|
3,500
|
|
Proportionate share of
adjustments for noncontrolling interests (d)
|
(4)
|
|
|
(4)
|
|
|
(4)
|
|
Total
adjustments
|
132,089
|
|
|
96,587
|
|
|
89,733
|
|
FFO (as defined by
NAREIT) Attributable to W. P. Carey – Real Estate
(e)
|
262,947
|
|
|
211,274
|
|
|
236,716
|
|
Adjustments:
|
|
|
|
|
|
Other (gains) and
losses (f)
|
(48,172)
|
|
|
(7,472)
|
|
|
(44,115)
|
|
Above- and
below-market rent intangible lease amortization, net
|
12,004
|
|
|
14,384
|
|
|
12,472
|
|
Straight-line and
other rent adjustments
|
(10,823)
|
|
|
(10,313)
|
|
|
(13,115)
|
|
Stock-based
compensation
|
4,361
|
|
|
9,048
|
|
|
4,564
|
|
Amortization of
deferred financing costs
|
3,424
|
|
|
3,447
|
|
|
2,932
|
|
Merger and other
expenses (g)
|
(908)
|
|
|
(2,599)
|
|
|
(1,016)
|
|
Tax (benefit) expense
– deferred and other
|
(700)
|
|
|
208
|
|
|
(2,909)
|
|
Other amortization and
non-cash items
|
557
|
|
|
563
|
|
|
508
|
|
Proportionate share of
adjustments to earnings from equity method
investments (b)
|
1,761
|
|
|
3,845
|
|
|
739
|
|
Proportionate share of
adjustments for noncontrolling interests (d)
|
(6)
|
|
|
(8)
|
|
|
(6)
|
|
Total
adjustments
|
(38,502)
|
|
|
11,103
|
|
|
(39,946)
|
|
AFFO Attributable
to W. P. Carey – Real Estate (e)
|
$
|
224,445
|
|
|
$
|
222,377
|
|
|
$
|
196,770
|
|
|
|
|
|
|
|
Summary
|
|
|
|
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey – Real Estate
(e)
|
$
|
262,947
|
|
|
$
|
211,274
|
|
|
$
|
236,716
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey per diluted share –
Real
Estate (e)
|
$
|
1.41
|
|
|
$
|
1.17
|
|
|
$
|
1.35
|
|
AFFO attributable to
W. P. Carey – Real Estate (e)
|
$
|
224,445
|
|
|
$
|
222,377
|
|
|
$
|
196,770
|
|
AFFO attributable to
W. P. Carey per diluted share – Real Estate
(e)
|
$
|
1.21
|
|
|
$
|
1.23
|
|
|
$
|
1.12
|
|
Diluted
weighted-average shares outstanding
|
186,012,478
|
|
|
180,668,732
|
|
|
175,261,812
|
|
W. P. CAREY
INC.
|
Year-to-Date
Reconciliation of Net Income to Adjusted Funds from Operations
(AFFO) (Unaudited)
|
(in thousands,
except share and per share amounts)
|
|
|
Nine Months Ended
September 30,
|
|
2021
|
|
2020
|
Net income
attributable to W. P. Carey
|
$
|
310,426
|
|
|
$
|
320,787
|
|
Adjustments:
|
|
|
|
Depreciation and
amortization of real property
|
336,405
|
|
|
328,347
|
|
Gain on sale of real
estate, net
|
(30,914)
|
|
|
(32,684)
|
|
Impairment
charges
|
16,301
|
|
|
19,420
|
|
Proportionate share of
adjustments to earnings from equity method investments (a) (b)
(c) (i)
|
17,030
|
|
|
34,860
|
|
Proportionate share of
adjustments for noncontrolling interests (d)
|
(12)
|
|
|
(14)
|
|
Total
adjustments
|
338,810
|
|
|
349,929
|
|
FFO (as defined by
NAREIT) Attributable to W. P. Carey (e)
|
649,236
|
|
|
670,716
|
|
Adjustments:
|
|
|
|
Above- and
below-market rent intangible lease amortization, net
|
38,503
|
|
|
37,208
|
|
Straight-line and
other rent adjustments
|
(29,887)
|
|
|
(31,927)
|
|
Stock-based
compensation
|
18,790
|
|
|
10,143
|
|
Other (gains) and
losses
|
(15,576)
|
|
|
(39,092)
|
|
Amortization of
deferred financing costs
|
10,284
|
|
|
9,014
|
|
Merger and other
expenses (g)
|
(3,983)
|
|
|
665
|
|
Tax benefit – deferred
and other (h) (j) (k)
|
(3,460)
|
|
|
(48,867)
|
|
Other amortization and
non-cash items
|
1,149
|
|
|
1,404
|
|
Proportionate share of
adjustments to earnings from equity method investments
(b)
|
10,849
|
|
|
6,575
|
|
Proportionate share of
adjustments for noncontrolling interests (d)
|
(19)
|
|
|
566
|
|
Total
adjustments
|
26,650
|
|
|
(54,311)
|
|
AFFO Attributable
to W. P. Carey (e)
|
$
|
675,886
|
|
|
$
|
616,405
|
|
|
|
|
|
Summary
|
|
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey (e)
|
$
|
649,236
|
|
|
$
|
670,716
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey per diluted share
(e)
|
$
|
3.58
|
|
|
$
|
3.85
|
|
AFFO attributable to
W. P. Carey (e)
|
$
|
675,886
|
|
|
$
|
616,405
|
|
AFFO attributable to
W. P. Carey per diluted share (e)
|
$
|
3.73
|
|
|
$
|
3.54
|
|
Diluted
weighted-average shares outstanding
|
181,323,128
|
|
|
174,144,038
|
|
W. P. CAREY
INC.
|
Year-to-Date
Reconciliation of Net Income from Real Estate to Adjusted Funds
from Operations (AFFO) from Real Estate (Unaudited)
|
(in thousands,
except share and per share amounts)
|
|
|
Nine Months Ended
September 30,
|
|
2021
|
|
2020
|
Net income from Real
Estate attributable to W. P. Carey
|
$
|
290,132
|
|
|
$
|
329,722
|
|
Adjustments:
|
|
|
|
Depreciation and
amortization of real property
|
336,405
|
|
|
328,347
|
|
Gain on sale of real
estate, net
|
(30,914)
|
|
|
(32,684)
|
|
Impairment
charges
|
16,301
|
|
|
19,420
|
|
Proportionate share of
adjustments to earnings from equity method investments (a)
(b)
|
17,030
|
|
|
10,217
|
|
Proportionate share of
adjustments for noncontrolling interests (d)
|
(12)
|
|
|
(14)
|
|
Total
adjustments
|
338,810
|
|
|
325,286
|
|
FFO (as defined by
NAREIT) Attributable to W. P. Carey – Real Estate
(e)
|
628,942
|
|
|
655,008
|
|
Adjustments:
|
|
|
|
Above- and
below-market rent intangible lease amortization, net
|
38,503
|
|
|
37,208
|
|
Straight-line and
other rent adjustments
|
(29,887)
|
|
|
(31,927)
|
|
Stock-based
compensation
|
18,790
|
|
|
9,452
|
|
Other (gains) and
losses
|
(13,455)
|
|
|
(38,579)
|
|
Amortization of
deferred financing costs
|
10,284
|
|
|
9,014
|
|
Merger and other
expenses (g)
|
(3,998)
|
|
|
(213)
|
|
Tax benefit – deferred
and other (j)
|
(3,087)
|
|
|
(43,916)
|
|
Other amortization and
non-cash items
|
1,149
|
|
|
1,205
|
|
Proportionate share of
adjustments to earnings from equity method investments
(b)
|
9,928
|
|
|
631
|
|
Proportionate share of
adjustments for noncontrolling interests (d)
|
(19)
|
|
|
566
|
|
Total
adjustments
|
28,208
|
|
|
(56,559)
|
|
AFFO Attributable
to W. P. Carey – Real Estate (e)
|
$
|
657,150
|
|
|
$
|
598,449
|
|
|
|
|
|
Summary
|
|
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey – Real Estate
(e)
|
$
|
628,942
|
|
|
$
|
655,008
|
|
FFO (as defined by
NAREIT) attributable to W. P. Carey per diluted share –
Real Estate (e)
|
$
|
3.47
|
|
|
$
|
3.76
|
|
AFFO attributable to
W. P. Carey – Real Estate (e)
|
$
|
657,150
|
|
|
$
|
598,449
|
|
AFFO attributable to
W. P. Carey per diluted share – Real Estate
(e)
|
$
|
3.62
|
|
|
$
|
3.44
|
|
Diluted
weighted-average shares outstanding
|
181,323,128
|
|
|
174,144,038
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Amount for the
nine months ended September 30, 2021 includes a non-cash
other-than-temporary impairment charge of $6.8 million recognized
on an equity method investment in real estate.
|
(b)
|
Equity income,
including amounts that are not typically recognized for FFO and
AFFO, is recognized within Earnings from equity method investments
on the consolidated statements of income. This represents
adjustments to equity income to reflect FFO and AFFO on a pro rata
basis.
|
(c)
|
Amount for the
nine months ended September 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.
|
(d)
|
Adjustments
disclosed elsewhere in this reconciliation are on a consolidated
basis. This adjustment reflects our FFO or AFFO on a pro rata
basis.
|
(e)
|
FFO and AFFO are
non-GAAP measures. See below for a description of FFO and
AFFO.
|
(f)
|
Adjustment amounts
for the three months ended September 30, 2021 are primarily
comprised of a mark-to-market unrealized gain for our investment in
shares of Lineage Logistics of $52.9 million and net loss on
foreign currency transactions of $(7.1) million. Adjustment amounts
for the three months ended September 30, 2020 include a
mark-to-market unrealized gain for our investment in shares of
Lineage Logistics of $48.8 million.
|
(g)
|
Amounts for the
three months ended September 30, 2021 and June 30, 2021, and the
nine months ended September 30, 2021, are primarily comprised of
reversals of estimated liabilities for German real estate transfer
taxes that were previously recorded in connection with business
combinations in prior years.
|
(h)
|
Amount for the
nine months ended September 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.
|
(i)
|
Amount for the
nine months ended September 30, 2020 includes non-cash
other-than-temporary impairment charges totaling $47.1 million
recognized on our former equity method investments in CWI 1 and CWI
2.
|
(j)
|
Amount for the
nine months ended September 30, 2020 includes a non-cash deferred
tax benefit of $37.2 million as a result of the release of a
deferred tax liability relating to our investment in shares of
Lineage Logistics, which converted to a REIT during that period and
is therefore no longer subject to federal and state income
taxes.
|
(k)
|
Amount for the
nine months ended September 30, 2020 includes a one-time tax
benefit of $6.0 million as a result of carrying back certain net
operating losses in accordance with the CARES Act, which was
enacted on March 27, 2020.
|
Non-GAAP Financial Disclosure
Funds from Operations (FFO) and Adjusted Funds from
Operations (AFFO)
Due to certain unique operating characteristics of real
estate companies, as discussed below, the National Association of
Real Estate Investment Trusts, Inc. (NAREIT), an industry
trade group, has promulgated a non-GAAP measure known as FFO, which
we believe to be an appropriate supplemental measure, when used in
addition to and in conjunction with results presented in accordance
with GAAP, to reflect the operating performance of a REIT. The use
of FFO is recommended by the REIT industry as a supplemental
non-GAAP measure. FFO is not equivalent to, nor a substitute for,
net income or loss as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the
standards established by the White Paper on FFO approved by the
Board of Governors of NAREIT, as restated in December 2018.
The White Paper defines FFO as net income or loss computed in
accordance with GAAP, excluding gains or losses from sales of
property, impairment charges on real estate, gains or losses on
changes in control of interests in real estate and depreciation and
amortization from real estate assets; and after adjustments for
unconsolidated partnerships and jointly owned investments.
Adjustments for unconsolidated partnerships and jointly owned
investments are calculated to reflect FFO.
We also modify the NAREIT computation of FFO to adjust GAAP
net income for certain non-cash charges, such as amortization of
real estate-related intangibles, deferred income tax benefits and
expenses, straight-line rent and related reserves, other non-cash
rent adjustments, non-cash allowance for credit losses on loans
receivable and direct financing leases, stock-based compensation,
non-cash environmental accretion expense, amortization of discounts
and premiums on debt and amortization of deferred financing costs.
Our assessment of our operations is focused on long-term
sustainability and not on such non-cash items, which may cause
short-term fluctuations in net income but have no impact on cash
flows. Additionally, we exclude non-core income and expenses, such
as gains or losses from extinguishment of debt and merger and
acquisition expenses. We also exclude realized and unrealized
gains/losses on foreign currency exchange transactions (other than
those realized on the settlement of foreign currency derivatives),
which are not considered fundamental attributes of our business
plan and do not affect our overall long-term operating performance.
We refer to our modified definition of FFO as AFFO. We exclude
these items from GAAP net income to arrive at AFFO as they are not
the primary drivers in our decision-making process and excluding
these items provides investors a view of our portfolio performance
over time and makes it more comparable to other REITs that are
currently not engaged in acquisitions, mergers and restructuring,
which are not part of our normal business operations. AFFO also
reflects adjustments for unconsolidated partnerships and jointly
owned investments. We use AFFO as one measure of our operating
performance when we formulate corporate goals, evaluate the
effectiveness of our strategies and determine executive
compensation.
We believe that AFFO is a useful supplemental measure for
investors to consider as we believe it will help them to better
assess the sustainability of our operating performance without the
potentially distorting impact of these short-term fluctuations.
However, there are limits on the usefulness of AFFO to investors.
For example, impairment charges and unrealized foreign currency
losses that we exclude may become actual realized losses upon the
ultimate disposition of the properties in the form of lower cash
proceeds or other considerations. We use our FFO and AFFO measures
as supplemental financial measures of operating performance. We do
not use our FFO and AFFO measures as, nor should they be considered
to be, alternatives to net income computed under GAAP, or as
alternatives to net cash provided by operating activities computed
under GAAP, or as indicators of our ability to fund our cash
needs.
Institutional Investors:
Peter Sands
1 (212) 492-1110
institutionalir@wpcarey.com
Individual Investors:
W. P. Carey Inc.
1 (212) 492-8920
ir@wpcarey.com
Press Contact:
Anna McGrath
1 (212) 492-1166
amcgrath@wpcarey.com
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SOURCE W. P. Carey Inc.