EX-99.1 2 c04303exv99w1.htm EXHIBIT 99.1 Exhibit 99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

     
COMPANY CONTACT:
  PRESS CONTACT:
Kristina McMenamin
  Guy Lawrence
W. P. Carey & Co. LLC
  Ross & Lawrence
212-492-8995
  212-308-3333
kmcmenamin@wpcarey.com
  gblawrence@rosslawpr.com

W. P. Carey Announces Second Quarter Financial Results

New York, NY – August 5, 2010 – Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today reported financial results for the second quarter ended June 30, 2010.

QUARTERLY AND SIX-MONTH RESULTS

•   Funds from operations—as adjusted (AFFO) for the second quarter of 2010 increased compared to the second quarter of 2009: $38.9 million or $0.98 per diluted share compared to $30.1 million or $0.75 per diluted share, respectively. AFFO for the six months ended June 30, 2010 was $67 million or $1.69 per diluted share, compared to $59 million or $1.48 per diluted share for the comparable period in 2009.

•   Cash flow from operating activities for the six months ended June 30, 2010 was $36.3 million compared to $34.7 million for the prior year period, while adjusted cash flow from operating activities was $48.2 million in the current year period compared to $50 million in the same period last year.

•   Total revenues net of reimbursed expenses for the second quarter of 2010 increased to $55 million from $42.1 million for the second quarter of 2009. Total revenues net of reimbursed expenses for the six months ended June 30, 2010 were $102.6 million, compared to $92.3 million for the comparable period in 2009. Reimbursed expenses are excluded from total revenues because they have no impact on net income.

•   Net Income for the second quarter of 2010 was $23.4 million, compared to $15 million for the same period in 2009. For the six months ended June 30, 2010, net income was $37.8 million, compared to $32.7 million for the comparable period in 2009. Results from operations in our investment management segment were significantly higher in the current year periods primarily due to a higher volume of investments structured on behalf of the CPA® REITs and lower impairment charges recognized by the CPA® REITs in the current year periods.

•   For the six months ended June 30, 2010, we received approximately $8 million in cash distributions from our equity ownership in the CPA® REITs.

•   Further information concerning AFFO and adjusted cash flow from operating activities—non-GAAP supplemental performance metrics—is presented in the accompanying tables and related notes.

INVESTMENT AND FUNDRAISING ACTIVITY

•   We structured 11 investments totaling $440 million for the six months ended June 30, 2010 on behalf of the CPA® REITs, compared to two investments totaling $234 million for the comparable period in 2009.

•   Transactions in the second quarter of 2010 on behalf of the CPA® REITs included: a $101 million transaction with Agrokor, the largest private company and food retailer in Croatia; a $57 million acquisition of JPMorgan Chase’s Tampa office facility; and a $43 million build-to-suit financing transaction with Sun Products Corporation.

•   We continue to raise investor capital through our latest REIT offering, CPA®:17 – Global, so that we may take advantage of attractive investment opportunities that we believe are afforded by the current market environment. To date, CPA®:17 – Global has raised more than $1.1 billion of its up-to $2 billion offering.

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ASSETS UNDER MANAGEMENT

•   W. P. Carey is the advisor to the CPA® REITs, which had real estate assets of $8.2 billion and total assets of $8.6 billion as of June 30, 2010.

•   As of June 30, 2010, the occupancy rate of W. P. Carey’s 14 million square foot owned portfolio was approximately 92%. In addition, for the 95 million square feet owned by the CPA® REITs, the occupancy rate was approximately 98%.

DISTRIBUTIONS

•   The Board of Directors raised the quarterly cash distribution to $0.506 per share for the second quarter of 2010. The distribution—our 37th consecutive quarterly increase—was paid on July 15, 2010 to shareholders of record as of June 30, 2010.

Trevor Bond, interim Chief Executive Officer, said, “The continued strength of our capital raising activities and our ability to source, negotiate, finance and close long-term, income-generating acquisitions has provided the basis for solid financial results during the first six months of 2010.  Being on the ground in Europe as well as the U.S. has enabled us to access a diverse set of opportunities that are consistent with our established investment parameters.  Consequently, our ability to grow assets under management has favorably impacted funds from operations—as adjusted, a primary metric in determining distributions.”

CONFERENCE CALL & WEBCAST

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

Time: Thursday, August 5, 2010 at 11:00 AM (ET)

Call-in Number: 800-860-2442
(International) +1-412-858-4600

Webcast: www.wpcarey.com/earnings

Podcast: www.wpcarey.com/podcast
Available after 2:00 PM (ET)

Replay Number: 877-344-7529
(International) +1-412-317-0088

Replay Passcode: 442766#
Replay Available until August 20, 2010 at 9:00 AM (ET).

W. P. Carey & Co. LLC
W. P. Carey & Co. LLC (NYSE: WPC) is an investment management company that provides long-term financing to companies worldwide via sale leaseback and build to suit transactions and manages a global investment portfolio of approximately $10 billion. Through its CPA® series of income-generating, non-traded REITs, W. P. Carey helps companies and private equity firms unlock capital tied up in real estate assets. The W. P. Carey Group’s investments are highly diversified, comprising contractual agreements with approximately 275 long-term corporate obligors spanning 28 industries and 16 countries. http://www.wpcarey.com

Individuals interested in receiving future updates on W. P. Carey via e-mail can register at www.wpcarey.com/alerts.

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

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W. P. CAREY & CO. LLC
Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)
                                 
    Three months ended June 30,     Six months ended June 30,  
    2010     2009     2010     2009  
Revenues
                                
Asset management revenue
   $ 19,080     $ 19,227     $ 37,900     $ 38,335  
Structuring revenue
     13,102       365       19,936       10,774  
Wholesaling revenue
     2,230       1,597       4,333       2,690  
Reimbursed costs from affiliates
     15,354       11,115       30,402       20,111  
Lease revenues
     15,833       16,374       31,844       32,745  
Other real estate income
     4,797       4,557       8,572       7,770  
 
                        
 
     70,396       53,235       132,987       112,425  
 
                        
Operating Expenses
                                
General and administrative
     (18,131 )     (14,334 )     (35,732 )     (33,433 )
Reimbursable costs
     (15,354 )     (11,115 )     (30,402 )     (20,111 )
Depreciation and amortization
     (5,815 )     (6,574 )     (11,991 )     (11,694 )
Property expenses
     (2,379 )     (1,921 )     (4,628 )     (3,371 )
Other real estate expenses
     (1,773 )     (1,707 )     (3,588 )     (3,838 )
Impairment charges
     —       (900 )     (2,268 )     (900 )
 
                        
 
     (43,452 )     (36,551 )     (88,609 )     (73,347 )
 
                        
Other Income and Expenses
                                
Other interest income
     336       416       609       823  
Income from equity investments in real estate and CPA® REITs
     7,638       4,875       16,780       6,262  
Other income and (expenses)
     42       127       (622 )     3,281  
Interest expense
     (3,765 )     (3,805 )     (7,476 )     (8,000 )
 
                        
 
     4,251       1,613       9,291       2,366  
 
                        
Income from continuing operations before income taxes
     31,195       18,297       53,669       41,444  
Provision for income taxes
     (6,751 )     (3,720 )     (10,863 )     (9,920 )
 
                        
Income from continuing operations
     24,444       14,577       42,806       31,524  
 
                        
Discontinued Operations
                                
Income from operations of discontinued properties
     206       1,202       626       2,164  
Gain on sale of real estate
     56       478       460       343  
Impairment charges
     (985 )     (1,380 )     (5,869 )     (1,380 )
 
                        
(Loss) income from discontinued operations
     (723 )     300       (4,783 )     1,127  
 
                        
Net Income
     23,721       14,877       38,023       32,651  
Add: Net loss attributable to noncontrolling interests
     128       203       414       373  
Less: Net income attributable to redeemable noncontrolling interests
     (417 )     (103 )     (592 )     (338 )
 
                        
Net Income Attributable to W. P. Carey Members
   $ 23,432     $ 14,977     $ 37,845     $ 32,686  
 
                        
Basic Earnings Per Share
                                
Income from continuing operations attributable to
W. P. Carey members
   $ 0.62     $ 0.36     $ 1.08     $ 0.79  
(Loss) income from discontinued operations attributable to W. P. Carey members
     (0.03 )     0.01       (0.12 )     0.03  
 
                        
Net income attributable to W. P. Carey members
   $ 0.59     $ 0.37     $ 0.96     $ 0.82  
 
                        
Diluted Earnings Per Share
                                
Income from continuing operations attributable to
W. P. Carey members
   $ 0.62     $ 0.36     $ 1.06     $ 0.78  
(Loss) income from discontinued operations attributable to W. P. Carey members
     (0.03 )     0.01       (0.12 )     0.03  
 
                        
Net income attributable to W. P. Carey members
   $ 0.59     $ 0.37     $ 0.94     $ 0.81  
 
                        
 
                                
Weighted Average Shares Outstanding
                                
Basic
     39,081,064       39,350,684       39,116,126       39,067,391  
 
                        
Diluted
     39,510,231       40,065,495       39,567,583       39,780,708  
 
                        
 
                                
Amounts Attributable to W. P. Carey Members
                                
Income from continuing operations, net of tax
   $ 24,155     $ 14,677     $ 42,628     $ 31,559  
(Loss) income from discontinued operations, net of tax
     (723 )     300       (4,783 )     1,127  
 
                        
Net income
   $ 23,432     $ 14,977     $ 37,845     $ 32,686  
 
                        
 
                                
Distributions Declared Per Share
   $ 0.506     $ 0.498     $ 1.010     $ 0.994  
 
                        

 

 

 

W. P. CAREY & CO. LLC
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
                 
    Six months ended June 30,  
    2010     2009  
Cash Flows — Operating Activities
                
Net income
   $ 38,023     $ 32,651  
Adjustments to net income:
                
Depreciation and amortization including intangible assets and deferred financing costs
     12,377       12,757  
Income from equity investments in real estate and CPA® REITs in excess of distributions received
     (5,942 )     (3,157 )
Straight-line rent and financing lease adjustments
     429       967  
Gain on sale of real estate
     (460 )     (343 )
Gain on extinguishment of debt
     —       (6,991 )
Allocation of (loss) earnings to profit sharing interest
     (373 )     3,875  
Management income received in shares of affiliates
     (17,344 )     (15,414 )
Unrealized loss (gain) on foreign currency transactions and others
     860       (39 )
Realized loss (gain) on foreign currency transactions and others
     143       (126 )
Impairment charges
     8,137       2,280  
Stock-based compensation expense
     4,936       5,260  
Deferred acquisition revenue received
     17,048       22,877  
Increase in structuring revenue receivable
     (9,352 )     (5,416 )
Decrease in income taxes, net
     (6,116 )     (8,454 )
Net changes in other operating assets and liabilities
     (6,075 )     (6,044 )
 
            
Net cash provided by operating activities
     36,291       34,683  
 
            
 
  
Cash Flows — Investing Activities
                
Distributions received from equity investments in real estate and CPA® REITs in excess of equity income
     7,762       7,606  
Purchases of real estate and equity investments in real estate
     (74,904 )     (39,677 )
VAT paid in connection with acquisition of real estate
     (4,222 )     —  
Capital expenditures
     (1,652 )     (6,929 )
Proceeds from sale of real estate
     9,200       3,835  
Funds released from escrow in connection with the sale of property
     36,132       —  
Proceeds from transfer of profit sharing interest
     —       21,928  
 
            
Net cash used in investing activities
     (27,684 )     (13,237 )
 
            
 
  
Cash Flows — Financing Activities
                
Distributions paid
     (52,490 )     (39,060 )
Contributions from noncontrolling interests
     11,180       1,583  
Distributions to noncontrolling interests
     (1,444 )     (3,474 )
Distributions to profit sharing interest
     (693 )     (3,434 )
Scheduled payments of mortgage principal
     (10,322 )     (5,241 )
Prepayments of mortgage principal
     —       (11,918 )
Proceeds from mortgage financing
     6,315       39,000  
Proceeds from line of credit
     83,250       88,500  
Prepayments of line of credit
     (22,500 )     (72,018 )
Proceeds from loans from affiliates
     —       1,624  
Payment of financing costs
     (301 )     (806 )
Proceeds from issuance of shares
     799       874  
Windfall tax (provision) benefits associated with stock-based compensation awards
     (159 )     242  
Repurchase and retirement of shares
     —       (10,686 )
 
            
Net cash provided by (used in) financing activities
     13,635       (14,814 )
 
            
 
  
Change in Cash and Cash Equivalents During the Period
                
Effect of exchange rate changes on cash
     (1,243 )     38  
 
            
Net increase in cash and cash equivalents
     20,999       6,670  
Cash and cash equivalents, beginning of period
     18,450       16,799  
 
            
Cash and cash equivalents, end of period
   $ 39,449     $ 23,469  
 
            

 

 

 

W. P. CAREY & CO. LLC
Financial Highlights (Unaudited)
(in thousands, except per share amounts)
These financial highlights include non-GAAP financial measures, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), funds from operations — as adjusted (“AFFO”) and adjusted cash flow from operating activities. A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures is provided on the following pages.
                                 
    Three months ended June 30,     Six months ended June 30,  
    2010     2009     2010     2009  
EBITDA
                                
Investment management
   $ 22,273     $ 10,430     $ 37,172     $ 23,498  
Real estate ownership
     17,637       19,365       31,450       40,257  
 
                        
Total
   $ 39,910     $ 29,795     $ 68,622     $ 63,755  
 
                        
 
                                
AFFO
                                
Investment management
   $ 22,670     $ 11,627     $ 34,759     $ 25,960  
Real estate ownership
     16,250       18,486       32,227       33,010  
 
                        
Total
   $ 38,920     $ 30,113     $ 66,986     $ 58,970  
 
                        
 
                                
EBITDA Per Share (Diluted)
                                
Investment management
   $ 0.56     $ 0.26     $ 0.94     $ 0.59  
Real estate ownership
     0.45       0.48       0.79       1.01  
 
                        
Total
   $ 1.01     $ 0.74     $ 1.73     $ 1.60  
 
                        
 
                                
AFFO Per Share (Diluted)
                                
Investment management
   $ 0.57     $ 0.29     $ 0.88     $ 0.65  
Real estate ownership
     0.41       0.46       0.81       0.83  
 
                        
Total
   $ 0.98     $ 0.75     $ 1.69     $ 1.48  
 
                        
 
                                
Adjusted Cash Flow From Operating Activities
                                
Adjusted cash flow
                   $ 48,193     $ 50,019  
 
                            
Adjusted cash flow per share (diluted)
                   $ 1.22     $ 1.26  
 
                            
 
                                
Distributions declared per share
                   $ 1.010     $ 0.994  
 
                            
Payout ratio (distributions per share/adjusted cash flow per share)
                     83 %     79 %
 
                            

 

 

 

W. P. CAREY & CO. LLC
Reconciliation of Net Income to EBITDA (Unaudited)
(in thousands, except share and per share amounts)
                                 
    Three months ended June 30,     Six months ended June 30,  
    2010     2009     2010     2009  
Investment Management
                                
Net income from investment management attributable to W. P. Carey members
   $ 14,331     $ 5,954     $ 24,181     $ 12,659  
Adjustments:
                                
Provision for income taxes
     6,780       3,440       10,658       9,205  
Depreciation and amortization
     1,162       1,036       2,333       1,634  
 
                        
EBITDA — investment management
   $ 22,273     $ 10,430     $ 37,172     $ 23,498  
 
                        
EBITDA per share (diluted)
   $ 0.56     $ 0.26     $ 0.94     $ 0.59  
 
                        
 
                                
Real Estate Ownership
                                
Net income from real estate ownership attributable to W. P. Carey members
   $ 9,101     $ 9,023     $ 13,664     $ 20,027  
Adjustments:
                                
Interest expense
     3,765       3,805       7,476       8,000  
Provision for income taxes
     (29 )     280       205       715  
Depreciation and amortization
     4,653       5,538       9,658       10,060  
Reconciling items attributable to discontinued operations
     147       719       447       1,455  
 
                        
EBITDA — real estate ownership
   $ 17,637     $ 19,365     $ 31,450     $ 40,257  
 
                        
EBITDA per share (diluted)
   $ 0.45     $ 0.48     $ 0.79     $ 1.01  
 
                        
 
                                
Total Company
                                
EBITDA
   $ 39,910     $ 29,795     $ 68,622     $ 63,755  
 
                        
EBITDA per share (diluted)
   $ 1.01     $ 0.74     $ 1.73     $ 1.60  
 
                        
Diluted weighted average shares outstanding
     39,510,231       40,065,495       39,567,583       39,780,708  
 
                        
Non-GAAP Financial Disclosure
EBITDA as disclosed represents earnings before interest, taxes, depreciation and amortization. We believe that EBITDA is a useful supplemental measure to investors and analysts for assessing the performance of our business segments, although it does not represent net income that is computed in accordance with GAAP, because it removes the impact of our capital structure and asset base from our operating results and because it is helpful when comparing our operating performance to that of companies in our industry without regard to such items, which can vary substantially from company to company. Accordingly, EBITDA should not be considered as an alternative to net income as an indicator of our financial performance. EBITDA may not be comparable to similarly titled measures of other companies. Therefore, we use EBITDA as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies, and determine executive compensation.

 

 

 

W. P. CAREY & CO. LLC
Reconciliation of Net Income to Funds From Operations — as adjusted (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
                                 
    Three months ended June 30,     Six months ended June 30,  
    2010     2009     2010     2009  
Investment Management
                                
Net income from investment management attributable to W. P. Carey members
   $ 14,331     $ 5,954     $ 24,181     $ 12,659  
Amortization, deferred taxes and other non-cash charges
     3,095       2,607       4,373       3,919  
AFFO from equity investments
     5,244       3,066       6,205       9,382  
 
                        
AFFO — investment management
   $ 22,670     $ 11,627     $ 34,759     $ 25,960  
 
                        
AFFO per share (diluted)
   $ 0.57     $ 0.29     $ 0.88     $ 0.65  
 
                        
 
                                
Real Estate Ownership
                                
Net income from real estate ownership attributable to W. P. Carey members
   $ 9,101     $ 9,023     $ 13,664     $ 20,027  
Gain on sale of real estate, net
     (56 )     (478 )     (460 )     (343 )
Gain on extinguishment of debt, net (a)
     —       —       —       (2,796 )
Depreciation, amortization and other non-cash charges
     4,887       5,174       10,705       10,348  
Straight-line and other rent adjustments
     99       232       19       412  
Impairment charges
     985       2,280       8,137       2,280  
AFFO from equity investments
     1,448       2,411       544       3,413  
Noncontrolling interests’ share of AFFO
     (214 )     (156 )     (382 )     (331 )
 
                        
AFFO — real estate ownership
   $ 16,250     $ 18,486     $ 32,227     $ 33,010  
 
                        
AFFO per share (diluted)
   $ 0.41     $ 0.46     $ 0.81     $ 0.83  
 
                        
 
                                
Total Company
                                
AFFO
   $ 38,920     $ 30,113     $ 66,986     $ 58,970  
 
                        
AFFO per share (diluted)
   $ 0.98     $ 0.75     $ 1.69     $ 1.48  
 
                        
Diluted weighted average shares outstanding
     39,510,231       40,065,495       39,567,583       39,780,708  
 
                        
 
     
(a)   In January 2009, Carey Storage repaid, in full, the $35.0 million outstanding balance on its secured credit facility for $28.0 million and recognized a gain of $7.0 million on the repayment of this debt at a discount, inclusive of the profit sharing interest of $4.2 million.
Non-GAAP Financial Disclosure
Funds from operations (FFO) is a non-GAAP financial measure that is commonly used by investors and analysts in evaluating real estate companies. Although the National Association of Real Estate Investment Trusts (NAREIT) has published a definition of FFO, real estate companies often modify this definition as they seek to provide financial measures that meaningfully reflect their operations. FFO or funds from operations — as adjusted (AFFO) should not be considered as an alternative to net income as an indication of a company’s operating performance or to cash flow from operating activities as a measure of its liquidity but should be used in conjunction with GAAP net income. FFO or AFFO disclosed by other REITs may not be comparable to our AFFO calculation.
NAREIT’s definition of FFO adjusts GAAP net income to exclude depreciation and gains/losses from the sales of properties and adjusts for FFO applicable to unconsolidated partnerships and joint ventures. We calculate AFFO in accordance with this definition and then include other adjustments to GAAP net income to adjust for certain non-cash charges such as amortization of intangibles, deferred income tax benefits and expenses, straight-line rents, stock compensation, impairment charges on real estate and unrealized foreign currency exchange gains and losses. We exclude these items from GAAP net income as they are not the primary drivers in our decision making process. Our assessment of our operations is focused on long-term sustainability and not on such non-cash items, which may cause short-term fluctuations in net income but that have no impact on cash flows, and we therefore use AFFO as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies, and determine executive compensation. As a result, we believe that AFFO is a useful supplemental measure for investors to consider because it will help them to better understand and measure the performance of our business over time without the potentially distorting impact of these short-term fluctuations.

 

 

 

W. P. CAREY & CO. LLC
Adjusted Cash Flow from Operating Activities (Unaudited)
(in thousands, except share and per share amounts)
                 
    Six months ended June 30,  
    2010     2009  
Cash flow from operating activities
   $ 36,291     $ 34,683  
Adjustments:
                
Distributions received from equity investments in real estate in excess of equity income (a)
     4,004       9,040  
(Distributions to) contributions received from noncontrolling interests, net (b)
     (161 )     252  
Changes in working capital (c)
     8,059       6,044  
 
            
Adjusted cash flow from operating activities
   $ 48,193     $ 50,019  
 
            
Adjusted cash flow per share (diluted)
   $ 1.22     $ 1.26  
 
            
 
                
Distributions declared per share
   $ 1.010     $ 0.994  
 
            
Payout ratio (distributions per share/adjusted cash flow per share)
     83 %     79 %
 
            
 
                
Diluted weighted average shares outstanding
     39,567,583       39,780,708  
 
            
 
     
(a)   We take a substantial portion of our asset management revenue in shares of the CPA® REIT funds. To the extent we receive distributions in excess of the equity income that we recognize, we include such amounts in our evaluation of cash flow from core operations.
 
(b)   Represents noncontrolling interests’ share of contributions/distributions made by ventures that we consolidate in our financial statements.
 
(c)   Timing differences arising from the payment of certain liabilities and the receipt of certain receivables in a period other than that in which the item is recognized in determining net income may distort the actual cash flow that our core operations generate. We adjust our GAAP cash flow from operating activities to record such amounts in the period in which the liability was actually incurred.
Non-GAAP Financial Disclosure
Adjusted cash flow from operating activities refers to our cash provided by operating activities, as determined in accordance with GAAP, adjusted primarily to reflect timing differences between the period an expense is incurred and paid, to add cash distributions that we receive from our investments in unconsolidated real estate joint ventures in excess of our equity investment in the joint ventures, and to subtract cash distributions that we make to our noncontrolling partners in real estate joint ventures that we consolidate. We hold a number of interests in real estate joint ventures, and we believe that adjusting our GAAP cash provided by operating activities to reflect these actual cash receipts and cash payments may give investors a more accurate picture of our actual cash flow than GAAP cash provided by operating activities alone and that it is a useful supplemental measure for investors to consider. We also believe that adjusted cash flow from operating activities is a useful supplemental measure for assessing the cash flow generated from our core operations, and we use this measure when evaluating distributions to shareholders and as one measure of our operating performance when we determine executive compensation. Adjusted cash flow from operating activities should not be considered as an alternative to cash provided by operating activities computed on a GAAP basis as a measure of our liquidity. Adjusted cash flow from operating activities may not be comparable to similarly titled measures of other companies.