þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 13-3912578 | |
(State of incorporation) | (I.R.S. Employer Identification No.) | |
50 Rockefeller Plaza | ||
New York, New York | 10020 | |
(Address of principal executive office) | (Zip Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
W. P. Carey 9/30/2011 10-Q 1
September 30, 2011 | December 31, 2010 | |||||||
Assets |
||||||||
Investments in real estate: |
||||||||
Real estate, at cost (inclusive of amounts attributable to consolidated variable
interest entities (VIEs) of $41,018 and $39,718, respectively) |
$ | 631,496 | $ | 560,592 | ||||
Operating real estate, at cost (inclusive of amounts attributable to consolidated
VIEs of $26,306 and $25,665, respectively) |
109,824 | 109,851 | ||||||
Accumulated depreciation (inclusive of amounts attributable to consolidated VIEs of
$21,861 and $20,431, respectively) |
(131,725 | ) | (122,312 | ) | ||||
Net investments in properties |
609,595 | 548,131 | ||||||
Net investments in direct financing leases |
75,886 | 76,550 | ||||||
Equity investments in real estate and the REITs |
537,384 | 322,294 | ||||||
Net investments in real estate |
1,222,865 | 946,975 | ||||||
Cash and cash equivalents (inclusive of amounts attributable to consolidated
VIEs of $366 and $86, respectively) |
37,095 | 64,693 | ||||||
Due from affiliates |
39,659 | 38,793 | ||||||
Intangible assets and goodwill, net |
128,249 | 87,768 | ||||||
Other assets, net (inclusive of amounts attributable to consolidated VIEs of
$2,914 and $1,845, respectively) |
41,021 | 34,097 | ||||||
Total assets |
$ | 1,468,889 | $ | 1,172,326 | ||||
Liabilities and Equity |
||||||||
Liabilities: |
||||||||
Non-recourse debt (inclusive of amounts attributable to consolidated VIEs of
$14,360 and $9,593, respectively) |
$ | 335,354 | $ | 255,232 | ||||
Lines of credit |
253,160 | 141,750 | ||||||
Accounts payable, accrued expenses and other liabilities (inclusive of amounts
attributable to consolidated VIEs of $1,775 and $2,275, respectively) |
71,708 | 40,808 | ||||||
Income taxes, net |
48,710 | 41,443 | ||||||
Distributions payable |
22,186 | 20,073 | ||||||
Total liabilities |
731,118 | 499,306 | ||||||
Redeemable noncontrolling interest |
6,631 | 7,546 | ||||||
Commitments and contingencies (Note 10) |
||||||||
Equity: |
||||||||
W. P. Carey members equity: |
||||||||
Listed shares, no par value, 100,000,000 shares authorized; 39,717,286 and 39,454,847
shares issued and outstanding, respectively |
770,246 | 763,734 | ||||||
Distributions in excess of accumulated earnings |
(80,954 | ) | (145,769 | ) | ||||
Deferred compensation obligation |
11,211 | 10,511 | ||||||
Accumulated other comprehensive loss |
(4,639 | ) | (3,463 | ) | ||||
Total W. P. Carey members equity |
695,864 | 625,013 | ||||||
Noncontrolling interests |
35,276 | 40,461 | ||||||
Total equity |
731,140 | 665,474 | ||||||
Total liabilities and equity |
$ | 1,468,889 | $ | 1,172,326 | ||||
W. P. Carey 9/30/2011 10-Q 2
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
||||||||||||||||
Asset management revenue |
$ | 14,840 | $ | 19,219 | $ | 51,279 | $ | 57,119 | ||||||||
Structuring revenue |
21,221 | 708 | 42,901 | 20,644 | ||||||||||||
Incentive, termination and subordinated disposition revenue |
| | 52,515 | | ||||||||||||
Wholesaling revenue |
2,586 | 2,906 | 8,788 | 8,189 | ||||||||||||
Reimbursed costs from affiliates |
14,707 | 15,256 | 49,485 | 44,696 | ||||||||||||
Lease revenues |
18,609 | 15,356 | 50,846 | 45,586 | ||||||||||||
Other real estate income |
6,409 | 4,656 | 17,426 | 13,228 | ||||||||||||
78,372 | 58,101 | 273,240 | 189,462 | |||||||||||||
Operating Expenses |
||||||||||||||||
General and administrative |
(25,187 | ) | (15,480 | ) | (71,095 | ) | (52,174 | ) | ||||||||
Reimbursable costs |
(14,707 | ) | (15,256 | ) | (49,485 | ) | (44,696 | ) | ||||||||
Depreciation and amortization |
(7,180 | ) | (5,796 | ) | (19,126 | ) | (17,231 | ) | ||||||||
Property expenses |
(3,672 | ) | (3,152 | ) | (9,827 | ) | (7,631 | ) | ||||||||
Other real estate expenses |
(2,725 | ) | (1,987 | ) | (8,224 | ) | (5,575 | ) | ||||||||
Impairment charge |
(4,934 | ) | | (4,934 | ) | | ||||||||||
(58,405 | ) | (41,671 | ) | (162,691 | ) | (127,307 | ) | |||||||||
Other Income and Expenses |
||||||||||||||||
Other interest income |
323 | 329 | 1,558 | 938 | ||||||||||||
Income from equity investments in real estate and the REITs |
16,068 | 6,066 | 37,356 | 22,846 | ||||||||||||
Gain on change in control of interests |
| | 27,859 | | ||||||||||||
Other income and (expenses) |
(296 | ) | 1,190 | 4,943 | 580 | |||||||||||
Interest expense |
(5,989 | ) | (4,169 | ) | (15,660 | ) | (11,391 | ) | ||||||||
10,106 | 3,416 | 56,056 | 12,973 | |||||||||||||
Income from continuing operations before income taxes |
30,073 | 19,846 | 166,605 | 75,128 | ||||||||||||
Provision for income taxes |
(5,931 | ) | (3,377 | ) | (38,541 | ) | (14,240 | ) | ||||||||
Income from continuing operations |
24,142 | 16,469 | 128,064 | 60,888 | ||||||||||||
Discontinued Operations |
||||||||||||||||
Income from operations of discontinued properties |
504 | 383 | 639 | 1,664 | ||||||||||||
Gain on deconsolidation of a subsidiary |
1,008 | | 1,008 | | ||||||||||||
(Loss) gain on sale of real estate |
(396 | ) | | 264 | 460 | |||||||||||
Impairment charges |
| (481 | ) | (41 | ) | (8,618 | ) | |||||||||
Income (loss) from discontinued operations |
1,116 | (98 | ) | 1,870 | (6,494 | ) | ||||||||||
Net Income |
25,258 | 16,371 | 129,934 | 54,394 | ||||||||||||
Add: Net loss attributable to noncontrolling interests |
581 | 81 | 1,295 | 495 | ||||||||||||
Less: Net income attributable to redeemable noncontrolling interest |
(637 | ) | (106 | ) | (1,241 | ) | (698 | ) | ||||||||
Net Income Attributable to W. P. Carey Members |
$ | 25,202 | $ | 16,346 | $ | 129,988 | $ | 54,191 | ||||||||
Basic Earnings Per Share |
||||||||||||||||
Income from continuing operations attributable to W. P. Carey members |
$ | 0.59 | $ | 0.41 | $ | 3.17 | $ | 1.54 | ||||||||
Income
(loss) from discontinued operations attributable to W. P. Carey members |
0.03 | | 0.05 | (0.16 | ) | |||||||||||
Net income attributable to W. P. Carey members |
$ | 0.62 | $ | 0.41 | $ | 3.22 | $ | 1.38 | ||||||||
Diluted Earnings Per Share |
||||||||||||||||
Income from continuing operations attributable to W. P. Carey members |
$ | 0.59 | $ | 0.41 | $ | 3.14 | $ | 1.53 | ||||||||
Income
(loss) from discontinued operations attributable to W. P. Carey members |
0.03 | | 0.05 | (0.17 | ) | |||||||||||
Net income attributable to W. P. Carey members |
$ | 0.62 | $ | 0.41 | $ | 3.19 | $ | 1.36 | ||||||||
Weighted Average Shares Outstanding |
||||||||||||||||
Basic |
39,861,064 | 39,180,719 | 39,794,506 | 39,161,086 | ||||||||||||
Diluted |
40,404,520 | 39,717,931 | 40,424,316 | 39,774,122 | ||||||||||||
Amounts Attributable to W. P. Carey Members |
||||||||||||||||
Income from continuing operations, net of tax |
$ | 24,086 | $ | 16,444 | $ | 128,118 | $ | 60,685 | ||||||||
Income (loss) from discontinued operations, net of tax |
1,116 | (98 | ) | 1,870 | (6,494 | ) | ||||||||||
Net income |
$ | 25,202 | $ | 16,346 | $ | 129,988 | $ | 54,191 | ||||||||
Distributions Declared Per Share |
$ | 0.560 | $ | 0.508 | $ | 1.622 | $ | 1.518 | ||||||||
W. P. Carey 9/30/2011 10-Q 3
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net Income |
$ | 25,258 | $ | 16,371 | $ | 129,934 | $ | 54,394 | ||||||||
Other Comprehensive (Loss) Income: |
||||||||||||||||
Foreign currency translation adjustments |
(5,380 | ) | 9,359 | 2,291 | 1,326 | |||||||||||
Unrealized loss on derivative instruments |
(3,032 | ) | (1,808 | ) | (3,271 | ) | (3,103 | ) | ||||||||
Change in unrealized appreciation on marketable securities |
(5 | ) | 17 | (8 | ) | 5 | ||||||||||
(8,417 | ) | 7,568 | (988 | ) | (1,772 | ) | ||||||||||
Comprehensive Income |
16,841 | 23,939 | 128,946 | 52,622 | ||||||||||||
Amounts Attributable to Noncontrolling Interests: |
||||||||||||||||
Net loss |
581 | 81 | 1,295 | 495 | ||||||||||||
Foreign currency translation adjustments |
866 | (1,291 | ) | (187 | ) | (1,146 | ) | |||||||||
Comprehensive loss (income) attributable to noncontrolling interests |
1,447 | (1,210 | ) | 1,108 | (651 | ) | ||||||||||
Amounts Attributable to Redeemable Noncontrolling Interest: |
||||||||||||||||
Net income |
(637 | ) | (106 | ) | (1,241 | ) | (698 | ) | ||||||||
Foreign currency translation adjustments |
8 | (10 | ) | (1 | ) | 7 | ||||||||||
Comprehensive income attributable to redeemable
noncontrolling interest |
(629 | ) | (116 | ) | (1,242 | ) | (691 | ) | ||||||||
Comprehensive Income Attributable to W. P. Carey Members |
$ | 17,659 | $ | 22,613 | $ | 128,812 | $ | 51,280 | ||||||||
W. P. Carey 9/30/2011 10-Q 4
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Cash Flows Operating Activities |
||||||||
Net income |
$ | 129,934 | $ | 54,394 | ||||
Adjustments to net income: |
||||||||
Depreciation and amortization, including intangible assets and deferred financing costs |
20,160 | 18,496 | ||||||
Income from equity investments in real estate and the REITs in excess of distributions received |
(835 | ) | (5,373 | ) | ||||
Straight-line rent and financing lease adjustments |
(2,039 | ) | 144 | |||||
Amortization of deferred revenue |
(3,932 | ) | | |||||
Gain on deconsolidation of a subsidiary |
(1,008 | ) | | |||||
Gain on sale of real estate |
(264 | ) | (460 | ) | ||||
Unrealized (gain) loss on foreign currency transactions and others |
(79 | ) | 143 | |||||
Realized (gain) loss on foreign currency transactions and others |
(1,134 | ) | 176 | |||||
Allocation of loss to profit-sharing interest |
| (781 | ) | |||||
Management and disposition income received in shares of affiliates |
(62,493 | ) | (26,262 | ) | ||||
Gain on conversion of shares |
(3,834 | ) | | |||||
Gain on change in control of interests |
(27,859 | ) | | |||||
Impairment charges |
4,975 | 8,618 | ||||||
Stock-based compensation expense |
13,026 | 6,695 | ||||||
Deferred acquisition revenue received |
18,128 | 19,248 | ||||||
Increase in structuring revenue receivable |
(17,732 | ) | (9,900 | ) | ||||
Increase (decrease) in income taxes, net |
5,907 | (9,461 | ) | |||||
Net changes in other operating assets and liabilities |
(8,269 | ) | (3,409 | ) | ||||
Net cash provided by operating activities |
62,652 | 52,268 | ||||||
Cash Flows Investing Activities |
||||||||
Distributions received from equity investments in real estate and the REITs in excess of equity income |
13,870 | 9,964 | ||||||
Capital contributions to equity investments |
(2,297 | ) | | |||||
Purchase of interests in CPA®:16 Global |
(121,315 | ) | | |||||
Purchases of real estate and equity investments in real estate |
(24,323 | ) | (93,059 | ) | ||||
Value added taxes (VAT) paid in connection with acquisition of real estate |
| (4,222 | ) | |||||
VAT refunded in connection with acquisitions of real estate |
5,035 | | ||||||
Capital expenditures |
(6,731 | ) | (2,008 | ) | ||||
Cash acquired on acquisition of subsidiaries |
57 | | ||||||
Proceeds from sale of real estate |
10,998 | 14,591 | ||||||
Proceeds from sale of securities |
777 | | ||||||
Funding of short-term loans to affiliates |
(96,000 | ) | | |||||
Proceeds from repayment of short-term loans to affiliates |
95,000 | | ||||||
Funds placed in escrow |
(5,282 | ) | | |||||
Funds released from escrow |
2,326 | 36,132 | ||||||
Net cash used in investing activities |
(127,885 | ) | (38,602 | ) | ||||
Cash Flows Financing Activities |
||||||||
Distributions paid |
(63,060 | ) | (72,625 | ) | ||||
Contributions from noncontrolling interests |
2,341 | 11,403 | ||||||
Distributions to noncontrolling interests |
(5,310 | ) | (2,022 | ) | ||||
Contributions from profit-sharing interest |
| 3,694 | ||||||
Distributions to profit-sharing interest |
| (693 | ) | |||||
Purchase of noncontrolling interest |
(7,502 | ) | | |||||
Scheduled payments of mortgage principal |
(22,893 | ) | (12,218 | ) | ||||
Proceeds from mortgage financing |
20,848 | 52,816 | ||||||
Proceeds from lines of credit |
251,410 | 83,250 | ||||||
Repayments of lines of credit |
(140,000 | ) | (52,500 | ) | ||||
Payment of financing costs |
(1,562 | ) | (1,083 | ) | ||||
Proceeds from issuance of shares |
1,034 | 3,537 | ||||||
Windfall tax benefit associated with stock-based compensation awards |
2,051 | 1,226 | ||||||
Net cash provided by financing activities |
37,357 | 14,785 | ||||||
Change in Cash and Cash Equivalents During the Period |
||||||||
Effect of exchange rate changes on cash |
278 | (651 | ) | |||||
Net (decrease) increase in cash and cash equivalents |
(27,598 | ) | 27,800 | |||||
Cash and cash equivalents, beginning of period |
64,693 | 18,450 | ||||||
Cash and cash equivalents, end of period |
$ | 37,095 | $ | 46,250 | ||||
W. P. Carey 9/30/2011 10-Q 5
Assets |
||||
Net investments in properties |
$ | 5,340 | ||
Intangible assets and goodwill, net |
(15 | ) | ||
Total |
$ | 5,325 | ||
Liabilities: |
||||
Non-recourse debt |
$ | (6,311 | ) | |
Accounts payable, accrued expenses and other liabilities |
(22 | ) | ||
Total |
$ | (6,333 | ) | |
W. P. Carey 9/30/2011 10-Q 6
W. P. Carey 9/30/2011 10-Q 7
W. P. Carey 9/30/2011 10-Q 8
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Asset management revenue(a) |
$ | 14,840 | $ | 19,219 | $ | 51,279 | $ | 57,119 | ||||||||
Structuring revenue(b) |
21,221 | 708 | 42,901 | 20,644 | ||||||||||||
Incentive, termination and subordinated
disposition revenue(c) |
| | 52,515 | | ||||||||||||
Wholesaling revenue |
2,586 | 2,906 | 8,788 | 8,189 | ||||||||||||
Reimbursed costs from affiliates(d) |
14,707 | 15,256 | 49,485 | 44,696 | ||||||||||||
Distributions of available cash(e) |
4,480 | 1,720 | 8,268 | 3,413 | ||||||||||||
Deferred revenue earned(f) |
2,123 | | 3,538 | | ||||||||||||
$ | 59,957 | $ | 39,809 | $ | 216,774 | $ | 134,061 | |||||||||
(a) | We earn asset management revenue from each REIT, which is based on average invested assets and is calculated according to the advisory agreement for each REIT. For CPA®:16 Global prior to the CPA®:14/16 Merger and for CPA®:15, this revenue generally totals 1% per annum, with a portion of this revenue, or 0.5%, contingent upon the achievement of specific performance criteria. For CPA®:16 Global subsequent to the CPA®:14/16 Merger, we earn asset management revenue of 0.5% of average invested assets. For CPA®:17 Global, we earn asset management revenue ranging from 0.5% of average market value for long-term net leases and certain other types of real estate investments up to 1.75% of average equity value for certain type of securities. For CWI, we earn asset management revenue of 0.5% of the average market value of lodging-related investments. We do not earn performance revenue from CPA®:17 Global, CWI and, subsequent to the CPA®:14/16 Merger, from CPA®:16 Global (see footnote e below). In 2011, we elected to receive all asset management revenue from CWI in cash and, subsequent to the CPA®:14/16 Merger, from CPA®:16 Global in shares. | |
(b) | We earn revenue in connection with structuring and negotiating investments and related mortgage financing for the REITs. We may receive acquisition revenue of up to an average of 4.5% of the total cost of all investments made by each CPA® REIT. A portion of this revenue (generally 2.5%) is paid when the transaction is completed, while the remainder (generally 2%) is payable in annual installments. For CWI, we earn initial acquisition revenue of 2.5% of the total investment cost of the properties acquired and loans originated by us not to exceed 6% of the aggregate contract purchase price of all investments and loans with no deferred acquisition revenue being earned. |
W. P. Carey 9/30/2011 10-Q 9
At September 30, 2011 | At December 31, 2010 | |||||||
Unpaid deferred acquisition fees |
$ | 31,022 | $ | 31,419 | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Interest
earned on unpaid
deferred
acquisition fees |
$ | 294 | $ | 297 | $ | 936 | $ | 835 | ||||||||
(c) | In connection with providing a liquidity event for CPA®:14 shareholders in the form of the CPA®:14/16 Merger, we earned termination revenue of $31.2 million and subordinated disposition revenue of $21.3 million, which we elected to receive in shares of CPA®:14 and were subsequently converted into shares of CPA®:16 Global, and cash, respectively, as described below. | |
(d) | The REITs reimburse us for certain costs, primarily broker/dealer commissions paid on behalf of the REITs and marketing and personnel costs. In addition, we earn a selling commission of up to $0.65 per share sold, and a dealer manager fee of up to $0.35 per share sold from CPA®:17 Global. Effective September 15, 2010, we entered into a dealer manager agreement with CWI, whereby we receive a selling commission of up to $0.70 per share sold and a dealer manager fee of up to $0.30 per share sold. Pursuant to the advisory agreement, upon reaching the minimum offering amount of $10.0 million on March 3, 2011, CWI became obligated to reimburse us for all organization costs and a portion of offering costs incurred in connection with its offering, up to a maximum amount (excluding selling commissions and the dealer manager fee) of 2% of the gross proceeds of its offering and distribution reinvestment plan. Through September 30, 2011, we have incurred organization and offering costs on behalf of CWI of approximately $4.6 million. However, at September 30, 2011, CWI was only obligated to reimburse us $0.8 million of these costs because of the 2% limitation described above, and no such costs had been reimbursed as of that date. | |
(e) | We receive up to 10% of distributions of available cash, as defined in the respective advisory agreements, from the operating partnerships of CPA®:17 Global, CWI and, subsequent to the CPA®:14/16 Merger in May 2011, CPA®:16 Global. Amounts in the table above relate to CPA®:16 Global and CPA®:17 Global only. We have not yet received any cash distributions of available cash from CWIs operating partnership because CWI had no available cash through September 30, 2011. | |
(f) | As discussed under CPA®:16 Global UPREIT Reorganization below, we acquired the Special Interest in CPA®:16 Globals Operating Partnership for $0.3 million during the second quarter of 2011. We recorded the Special Interest at its fair value of $28.3 million to be amortized into earnings over the expected period of performance. |
W. P. Carey 9/30/2011 10-Q 10
W. P. Carey 9/30/2011 10-Q 11
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Income from noncontrolling interest partners |
$ | 680 | $ | 564 | $ | 1,876 | $ | 1,778 | ||||||||
September 30, 2011 | December 31, 2010 | |||||||
Deferred rent due to affiliates |
$ | 819 | $ | 854 | ||||
W. P. Carey 9/30/2011 10-Q 12
September 30, 2011 | December 31, 2010 | |||||||
Land |
$ | 111,793 | $ | 111,660 | ||||
Buildings |
519,703 | 448,932 | ||||||
Less: Accumulated depreciation |
(115,319 | ) | (108,032 | ) | ||||
$ | 516,177 | $ | 452,560 | |||||
September 30, 2011 | December 31, 2010 | |||||||
Land |
$ | 24,030 | $ | 24,030 | ||||
Buildings |
85,794 | 85,821 | ||||||
Less: Accumulated depreciation |
(16,406 | ) | (14,280 | ) | ||||
$ | 93,418 | $ | 95,571 | |||||
W. P. Carey 9/30/2011 10-Q 13
Number of Tenants at | Net Investments in Direct Financing Leases at | |||||||||||||||
Internal Credit Quality Indicator | September 30, 2011 | December 31, 2010 | September 30, 2011 | December 31, 2010 | ||||||||||||
1 |
8 | 9 | $ | 44,877 | $ | 49,533 | ||||||||||
2 |
6 | 5 | 28,447 | 24,447 | ||||||||||||
3 |
1 | | 2,562 | | ||||||||||||
4 |
| 1 | | 2,570 | ||||||||||||
5 |
| | | | ||||||||||||
$ | 75,886 | $ | 76,550 | |||||||||||||
W. P. Carey 9/30/2011 10-Q 14
% of Outstanding Shares at | Carrying Amount of Investment at | |||||||||||||||
Fund | September 30, 2011 | December 31, 2010 | September 30, 2011(a) | December 31, 2010(a) | ||||||||||||
CPA®:14 (b) |
0.0 | % | 9.2 | % | $ | | $ | 87,209 | ||||||||
CPA®:15 |
7.6 | % | 7.1 | % | 91,932 | 87,008 | ||||||||||
CPA®:16 Global (c) |
17.7 | % | 5.6 | % | 340,563 | 62,682 | ||||||||||
CPA®:17 Global |
0.8 | % | 0.6 | % | 17,081 | 8,156 | ||||||||||
CWI (d) |
0.6 | % | 100.0 | % | 127 | | ||||||||||
$ | 449,703 | $ | 245,055 | |||||||||||||
(a) | Includes asset management fees receivable, for which shares will be issued during the subsequent period. | |
(b) | In connection with the CPA®:14/16 Merger, we earned termination fees of $31.2 million, which were received in shares of CPA®:14. Upon closing of the CPA®:14/16 Merger (Note 3), our shares of CPA®:14 were exchanged into 13,260,091 shares of CPA®:16 Global with a fair value of $118.0 million. In connection with this share exchange, we recognized a gain of $2.8 million, which is the difference between the carrying value of our investment in CPA®:14 and the estimated fair value of consideration received in shares of CPA®:16 Global. This gain is included in Other income and (expenses) within our Investment Management segment. | |
(c) | In addition to normal operating activities, the increase in carrying value was due to several factors, including (i) our purchase of 13,750,000 shares of CPA®:16 Global for $121.0 million; (ii) an increase of $118.0 million as a result of the exchange of our shares of CPA®:14 into shares of CPA®:16 Global in the CPA®:14/16 Merger; (iii) a $0.3 million contribution to acquire the Special Interest in CPA®:16 Globals Operating Partnership; and (iv) $28.3 million to reflect the receipt of the Special Interest in CPA®:16 Globals Operating Partnership (Note 3). | |
(d) | Prior to 2011, the operating results of CWI, which had no significant assets, liabilities or operations, were included in our consolidated financial statements, as we owned all of CWIs outstanding common stock. |
W. P. Carey 9/30/2011 10-Q 15
At September 30, 2011 | At December 31, 2010 | |||||||
Assets |
$ | 9,265,711 | $ | 8,533,899 | ||||
Liabilities |
(5,011,581 | ) | (4,632,709 | ) | ||||
Shareholders equity |
$ | 4,254,130 | $ | 3,901,190 | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
$ | 206,380 | $ | 193,116 | $ | 612,383 | $ | 571,019 | ||||||||
Expenses (a) |
(143,196 | ) | (114,869 | ) | (437,119 | ) | (410,950 | ) | ||||||||
Impairment charges (b) |
(14,341 | ) | (16,557 | ) | (48,955 | ) | (27,698 | ) | ||||||||
Net income |
$ | 48,843 | $ | 61,690 | $ | 126,309 | $ | 132,371 | ||||||||
(a) | Total net expenses recognized by the REITs during the nine months ended September 30, 2011 included the following items related to the CPA®:14/16 Merger: (i) $78.8 million of net gains recognized by CPA®:14 in connection with the CPA®:14 Asset Sales, of which our share was approximately $7.4 million; (ii) a net bargain purchase gain of $28.5 million recognized by CPA®:16 Global in connection with the CPA®:14/16 Merger as a result of the fair value of CPA®:14 exceeding the total merger consideration, of which our share was approximately $5.0 million (see below for further discussion involving certain measurement period adjustments that were excluded from the three months ended September 30, 2011); (iii) approximately $13.0 million of expenses incurred by CPA®:16 Global related to the CPA®:14/16 Merger, of which our share was approximately $2.4 million; and (iv) a $2.8 million net loss recognized by CPA®:16 Global in connection with the prepayment of certain non-recourse mortgages, of which our share was approximately $0.5 million. | |
(b) | As a result of the impairment charges recognized by the REITs, our income earned from these investments was reduced by $1.1 and $1.3 million during the three months ended September 30, 2011 and 2010, respectively, and by $6.2 million and $2.1 million during the nine months ended September 30, 2011 and 2010, respectively. |
W. P. Carey 9/30/2011 10-Q 16
Ownership Interest | Carrying Value at | |||||||||||
Lessee | at September 30, 2011 | September 30, 2011 | December 31, 2010 | |||||||||
Schuler A.G. (a) (b) |
33 | % | $ | 22,601 | $ | 20,493 | ||||||
Carrefour France, SAS (a) |
46 | % | 20,446 | 18,274 | ||||||||
The New York Times Company |
18 | % | 19,392 | 20,191 | ||||||||
U.S. Airways Group, Inc. (b) |
75 | % | 7,505 | 7,934 | ||||||||
Medica France, S.A. (a) (c) |
46 | % | 4,490 | 5,232 | ||||||||
Hologic, Inc. (b) |
36 | % | 4,399 | 4,383 | ||||||||
Childtime Childcare, Inc. (d) |
34 | % | 4,278 | 1,862 | ||||||||
Consolidated Systems, Inc. (b) |
60 | % | 3,507 | 3,388 | ||||||||
Hellweg Die Profi-Baumarkte GmbH & Co. KG (a) |
5 | % | 1,063 | 1,086 | ||||||||
Symphony IRI Group, Inc. (e) |
0 | % | | 3,375 | ||||||||
Federal Express Corporation (f) (g) (h) |
100 | % | | (4,272 | ) | |||||||
Amylin Pharmaceuticals, Inc. (g) (h) (i) |
100 | % | | (4,707 | ) | |||||||
$ | 87,681 | $ | 77,239 | |||||||||
(a) | The carrying value of the investment is affected by the impact of fluctuations in the exchange rate of the Euro. | |
(b) | Represents tenant-in-common interest. | |
(c) | The decrease in carrying value was due to cash distributions made to us by the venture. | |
(d) | In January 2011, we made a contribution of $2.1 million to the venture to pay off our share of its maturing mortgage loan. | |
(e) | In June 2011, this venture sold its property and distributed the proceeds to the venture partners. We have no further economic interest in this venture. | |
(f) | In 2010, this venture refinanced its maturing non-recourse mortgage debt with new non-recourse financing and distributed the net proceeds to the venture partners. Our share of the distribution was $5.5 million, which exceeded our total investment in the venture at that time. | |
(g) | At December 31, 2010, we intended to fund our share of the ventures future operating deficits if the need arose. However, we had no legal obligation to pay for any of the ventures liabilities nor did we have any legal obligation to fund operating deficits. | |
(h) | In connection with the CPA®:14/16 Merger in May 2011, we purchased the remaining interest in this investment from CPA®:14. Subsequent to the acquisition, we consolidate this investment as our ownership interest in the investment is now 100% (Note 4). | |
(i) | In 2007, this venture refinanced its existing non-recourse mortgage debt with new non-recourse financing based on the appraised value of its underlying real estate and distributed the proceeds to the venture partners. Our share of the distribution was $17.6 million, which exceeded our total investment in the venture at that time. |
September 30, 2011 | December 31, 2010 | |||||||
Assets |
$ | 1,041,239 | $ | 1,151,859 | ||||
Liabilities |
(715,365 | ) | (818,238 | ) | ||||
Partners/members equity |
$ | 325,874 | $ | 333,621 | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
$ | 28,463 | $ | 35,086 | $ | 89,381 | $ | 111,144 | ||||||||
Expenses |
(16,386 | ) | (19,292 | ) | (57,125 | ) | (58,949 | ) | ||||||||
Impairment charge(a) |
| | (8,602 | ) | | |||||||||||
Net income |
$ | 12,077 | $ | 15,794 | $ | 23,654 | $ | 52,195 | ||||||||
W. P. Carey 9/30/2011 10-Q 17
(a) | Represents an impairment charge incurred by a venture that leases property to the Symphony IRI Group, Inc. in connection with a potential sale of the property, of which our share was approximately $0.4 million. The venture completed the sale in June 2011. |
W. P. Carey 9/30/2011 10-Q 18
Fair Value Measurements at September 30, 2011 Using: | ||||||||||||||||
Quoted Prices in | ||||||||||||||||
Active Markets for | Significant Other | Unobservable | ||||||||||||||
Identical Assets | Observable Inputs | Inputs | ||||||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Assets: |
||||||||||||||||
Money market funds |
$ | 35 | $ | 35 | $ | | $ | | ||||||||
Other securities |
1,599 | | | 1,599 | ||||||||||||
Total |
$ | 1,634 | $ | 35 | $ | | $ | 1,599 | ||||||||
Liabilities: |
||||||||||||||||
Derivative liabilities |
$ | 3,846 | $ | | $ | 3,846 | $ | | ||||||||
Redeemable noncontrolling interest |
6,631 | | | 6,631 | ||||||||||||
Total |
$ | 10,477 | $ | | $ | 3,846 | $ | 6,631 | ||||||||
Fair Value Measurements at December 31, 2010 Using: | ||||||||||||||||
Quoted Prices in | ||||||||||||||||
Active Markets for | Significant Other | Unobservable | ||||||||||||||
Identical Assets | Observable Inputs | Inputs | ||||||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Assets: |
||||||||||||||||
Money market funds |
$ | 37,154 | $ | 37,154 | $ | | $ | | ||||||||
Other securities |
1,726 | | | 1,726 | ||||||||||||
Derivative assets |
312 | | 312 | | ||||||||||||
Total |
$ | 39,192 | $ | 37,154 | $ | 312 | $ | 1,726 | ||||||||
Liabilities: |
||||||||||||||||
Derivative liabilities |
$ | 969 | $ | | $ | 969 | $ | | ||||||||
Redeemable noncontrolling interest |
7,546 | | | 7,546 | ||||||||||||
Total |
$ | 8,515 | $ | | $ | 969 | $ | 7,546 | ||||||||
W. P. Carey 9/30/2011 10-Q 19
Fair Value Measurements Using | ||||||||||||||||
Significant Unobservable Inputs (Level 3 Only) | ||||||||||||||||
Three Months Ended September 30, 2011 | Three Months Ended September 30, 2010 | |||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
Redeemable | Redeemable | |||||||||||||||
Other | Noncontrolling | Other | Noncontrolling | |||||||||||||
Securities | Interest | Securities | Interest | |||||||||||||
Beginning balance |
$ | 1,601 | $ | 6,792 | $ | 1,717 | $ | 7,119 | ||||||||
Total gains or losses (realized and unrealized): |
||||||||||||||||
Included in earnings |
3 | 637 | 2 | 106 | ||||||||||||
Included in other
comprehensive (loss)
income |
(5 | ) | (8 | ) | 4 | 10 | ||||||||||
Distributions paid |
| (199 | ) | | (200 | ) | ||||||||||
Redemption value adjustment |
| (591 | ) | | (148 | ) | ||||||||||
Ending balance |
$ | 1,599 | $ | 6,631 | $ | 1,723 | $ | 6,887 | ||||||||
The amount of total gains or losses for the period included in
earnings attributable to the change in unrealized gains or losses
relating to assets still held at the reporting date |
$ | 3 | $ | | $ | 2 | $ | | ||||||||
Fair Value Measurements Using | ||||||||||||||||
Significant Unobservable Inputs (Level 3 Only) | ||||||||||||||||
Nine Months Ended September 30, 2011 | Nine Months Ended September 30, 2010 | |||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
Redeemable | Redeemable | |||||||||||||||
Other | Noncontrolling | Other | Noncontrolling | |||||||||||||
Securities | Interest | Securities | Interest | |||||||||||||
Beginning balance |
$ | 1,726 | $ | 7,546 | $ | 1,687 | $ | 7,692 | ||||||||
Total gains or losses (realized and unrealized): |
||||||||||||||||
Included in earnings |
1 | 1,241 | 2 | 698 | ||||||||||||
Included in other
comprehensive (loss)
income |
(8 | ) | 1 | 11 | (7 | ) | ||||||||||
Purchases |
53 | | 23 | | ||||||||||||
Settlements |
(173 | ) | | | | |||||||||||
Distributions paid |
| (875 | ) | | (810 | ) | ||||||||||
Redemption value adjustment |
| (1,282 | ) | | (686 | ) | ||||||||||
Ending balance |
$ | 1,599 | $ | 6,631 | $ | 1,723 | $ | 6,887 | ||||||||
The amount of total gains or losses for the period included in
earnings attributable to the change in unrealized gains or losses
relating to assets still held at the reporting date |
$ | 1 | $ | | $ | 2 | $ | | ||||||||
W. P. Carey 9/30/2011 10-Q 20
At September 30, 2011 | At December 31, 2010 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Deferred acquisition fees receivable |
$ | 31,022 | $ | 30,414 | $ | 31,419 | $ | 32,485 | ||||||||
Non-recourse debt |
335,354 | 327,937 | 255,232 | 255,460 | ||||||||||||
Line of credit |
253,160 | 250,800 | 141,750 | 140,600 |
Three Months Ended September 30, 2011 | Three Months Ended September 30, 2010 | |||||||||||||||
Total Fair Value | Total Impairment | Total Fair Value | Total Impairment | |||||||||||||
Measurements | Charges | Measurements | Charges | |||||||||||||
Impairment Charges From Continuing
Operations: |
||||||||||||||||
Real estate |
$ | 4,473 | $ | 4,934 | $ | | $ | | ||||||||
Equity investments in real estate |
| | 22,846 | 1,394 | ||||||||||||
4,473 | 4,934 | 22,846 | 1,394 | |||||||||||||
Impairment Charges From Discontinued
Operations: |
||||||||||||||||
Real estate |
| | 521 | 481 | ||||||||||||
$ | 4,473 | $ | 4,934 | $ | 23,367 | $ | 1,875 | |||||||||
Nine Months Ended September 30, 2011 | Nine Months Ended September 30, 2010 | |||||||||||||||
Total Fair Value | Total Impairment | Total Fair Value | Total Impairment | |||||||||||||
Measurements | Charges | Measurements | Charges | |||||||||||||
Impairment Charges From Continuing Operations: |
||||||||||||||||
Real estate |
$ | 4,473 | $ | 4,934 | $ | | $ | | ||||||||
Equity investments in real estate |
1,554 | 206 | 22,846 | 1,394 | ||||||||||||
6,027 | 5,140 | 22,846 | 1,394 | |||||||||||||
Impairment Charges From Discontinued
Operations: |
||||||||||||||||
Real estate |
350 | 41 | 6,923 | 8,618 | ||||||||||||
$ | 6,377 | $ | 5,181 | $ | 29,769 | $ | 10,012 | |||||||||
W. P. Carey 9/30/2011 10-Q 21
Region: | At September 30, 2011 | |||
Texas |
18 | % | ||
California |
17 | % | ||
Tennessee |
12 | % | ||
Georgia |
10 | % | ||
Other U.S. |
32 | % | ||
Total U.S. |
89 | % | ||
Total Europe |
11 | % | ||
Total |
100 | % | ||
Asset Type: |
||||
Office |
44 | % | ||
Industrial |
31 | % | ||
Warehouse/Distribution |
16 | % | ||
Other |
9 | % | ||
Total |
100 | % | ||
Tenant Industry: |
||||
Business and commercial services |
19 | % | ||
Transportation Cargo |
11 | % | ||
Other |
70 | % | ||
Total |
100 | % | ||
W. P. Carey 9/30/2011 10-Q 22
W. P. Carey 9/30/2011 10-Q 23
Total | ||||
2011 (remainder) |
$ | 2,352 | ||
2012 (a) |
290,825 | |||
2013 |
8,875 | |||
2014 |
12,651 | |||
2015 |
49,017 | |||
Thereafter through 2020 |
225,885 | |||
589,605 | ||||
Fair market value adjustments |
(1,091 | ) | ||
Total |
$ | 588,514 | ||
(a) | Includes $243.2 million and $10.0 million outstanding under our unsecured and secured lines of credit, respectively, at September 30, 2011. |
W. P. Carey 9/30/2011 10-Q 24
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income attributable to W. P. Carey members |
$ | 25,202 | $ | 16,346 | $ | 129,988 | $ | 54,191 | ||||||||
Allocation of distribution equivalents paid on unvested
restricted stock units in excess of net income |
(371 | ) | (116 | ) | (1,914 | ) | (348 | ) | ||||||||
Net income basic |
24,831 | 16,230 | 128,074 | 53,843 | ||||||||||||
Income effect of dilutive securities, net of taxes |
355 | 66 | 695 | 398 | ||||||||||||
Net income diluted |
$ | 25,186 | $ | 16,296 | $ | 128,769 | $ | 54,241 | ||||||||
Weighted average shares outstanding basic |
39,861,064 | 39,180,719 | 39,794,506 | 39,161,086 | ||||||||||||
Effect of dilutive securities |
543,456 | 537,212 | 629,810 | 613,036 | ||||||||||||
Weighted average shares outstanding diluted |
40,404,520 | 39,717,931 | 40,424,316 | 39,774,122 | ||||||||||||
W. P. Carey 9/30/2011 10-Q 25
Nine Months Ended September 30, 2011 | ||||||||||||
W. P. Carey | Noncontrolling | |||||||||||
Total Equity | Members | Interests | ||||||||||
Balance at January 1 |
$ | 665,474 | $ | 625,013 | $ | 40,461 | ||||||
Shares issued |
1,034 | 1,034 | | |||||||||
Contributions |
2,341 | | 2,341 | |||||||||
Redemption value adjustment |
1,282 | 1,282 | | |||||||||
Purchase of noncontrolling interest (a) |
(7,491 | ) | (5,879 | ) | (1,612 | ) | ||||||
Net income (loss) |
128,693 | 129,988 | (1,295 | ) | ||||||||
Stock-based compensation expense |
13,026 | 13,026 | | |||||||||
Windfall tax benefit share incentive plans |
2,051 | 2,051 | | |||||||||
Distributions |
(69,648 | ) | (65,174 | ) | (4,474 | ) | ||||||
Change in other comprehensive loss |
(1,321 | ) | (1,176 | ) | (145 | ) | ||||||
Shares repurchased |
(4,301 | ) | (4,301 | ) | | |||||||
Balance at September 30 |
$ | 731,140 | $ | 695,864 | $ | 35,276 | ||||||
Nine Months Ended September 30, 2010 | ||||||||||||
W. P. Carey | Noncontrolling | |||||||||||
Total Equity | Members | Interests | ||||||||||
Balance at January 1 |
$ | 632,408 | $ | 625,633 | $ | 6,775 | ||||||
Shares issued |
3,537 | 3,537 | | |||||||||
Contributions |
11,403 | | 11,403 | |||||||||
Redemption value adjustment |
686 | 686 | | |||||||||
Tax impact of purchase of WPCI interest |
(1,637 | ) | (1,637 | ) | | |||||||
Net income (loss) |
53,696 | 54,191 | (495 | ) | ||||||||
Stock-based compensation expense |
6,695 | 6,695 | | |||||||||
Reclassification of the noncontrolling interest in Carey Storage (b) |
22,402 | | 22,402 | |||||||||
Windfall tax benefit share incentive plans |
1,226 | 1,226 | | |||||||||
Distributions |
(62,479 | ) | (61,267 | ) | (1,212 | ) | ||||||
Change in other comprehensive (loss) income |
(1,882 | ) | (2,911 | ) | 1,029 | |||||||
Shares repurchased |
(2,060 | ) | (2,060 | ) | | |||||||
Balance at September 30 |
$ | 663,995 | $ | 624,093 | $ | 39,902 | ||||||
(a) | In May 2011, we purchased the noncontrolling interest in the Checkfree venture from CPA®:14 at a total cost of $7.5 million as part of the CPA®:14 Asset Sales. In connection with the purchase, we recorded a $5.9 million reduction in Listed shares, which represents the excess of the fair value of the noncontrolling interest over its carrying value. | |
(b) | During the third quarter of 2010, Carey Storage amended its agreement with a third-party investor, which, among other things, removed a contingent option held by Carey Storage. However, Carey Storage retained a controlling interest in the entity that owns the self-storage properties. As a result, we reclassified the third-party investors interest from Accounts payable, accrued expenses and other liabilities to Noncontrolling interests on our consolidated balance sheet. |
W. P. Carey 9/30/2011 10-Q 26
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Balance at January 1, |
$ | 7,546 | $ | 7,692 | ||||
Redemption value adjustment |
(1,282 | ) | (686 | ) | ||||
Net income |
1,241 | 698 | ||||||
Distributions |
(875 | ) | (810 | ) | ||||
Change in other comprehensive income (loss) |
1 | (7 | ) | |||||
Balance at September 30, |
$ | 6,631 | $ | 6,887 | ||||
W. P. Carey 9/30/2011 10-Q 27
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Investment Management |
||||||||||||||||
Revenues (a)
|
$ | 53,354 | $ | 38,089 | $ | 204,968 | $ | 130,648 | ||||||||
Operating expenses (a)
|
(39,542 | ) | (31,492 | ) | (119,780 | ) | (97,244 | ) | ||||||||
Other, net (b)
|
7,000 | 2,542 | 14,226 | 5,431 | ||||||||||||
Provision for income taxes
|
(5,075 | ) | (3,045 | ) | (38,511 | ) | (12,993 | ) | ||||||||
Income from continuing operations attributable to W. P. Carey members |
$ | 15,737 | $ | 6,094 | $ | 60,903 | $ | 25,842 | ||||||||
Real Estate Ownership (c) |
||||||||||||||||
Revenues
|
$ | 25,018 | $ | 20,012 | $ | 68,272 | $ | 58,814 | ||||||||
Operating expenses
|
(18,863 | ) | (10,179 | ) | (42,911 | ) | (30,063 | ) | ||||||||
Interest expense
|
(5,989 | ) | (4,169 | ) | (15,660 | ) | (11,391 | ) | ||||||||
Other, net (b)
|
9,039 | 5,018 | 57,544 | 18,730 | ||||||||||||
Provision for income taxes
|
(856 | ) | (332 | ) | (30 | ) | (1,247 | ) | ||||||||
Income from continuing operations attributable to W. P. Carey members |
$ | 8,349 | $ | 10,350 | $ | 67,215 | $ | 34,843 | ||||||||
Total Company |
||||||||||||||||
Revenues (a)
|
$ | 78,372 | $ | 58,101 | $ | 273,240 | $ | 189,462 | ||||||||
Operating expenses (a)
|
(58,405 | ) | (41,671 | ) | (162,691 | ) | (127,307 | ) | ||||||||
Interest expense
|
(5,989 | ) | (4,169 | ) | (15,660 | ) | (11,391 | ) | ||||||||
Other, net (b)
|
16,039 | 7,560 | 71,770 | 24,161 | ||||||||||||
Provision for income taxes
|
(5,931 | ) | (3,377 | ) | (38,541 | ) | (14,240 | ) | ||||||||
Income from continuing operations attributable to W. P. Carey members |
$ | 24,086 | $ | 16,444 | $ | 128,118 | $ | 60,685 | ||||||||
Total Long-Lived Assets at(d) | Total Assets at | |||||||||||||||
September 30, 2011 | December 31, 2010 | September 30, 2011 | December 31, 2010 | |||||||||||||
Investment Management |
$ | 2,871 | $ | 3,729 | $ | 137,775 | $ | 123,921 | ||||||||
Real Estate Ownership |
1,222,865 | 946,976 | 1,331,114 | 1,048,405 | ||||||||||||
Total Company |
$ | 1,225,736 | $ | 950,705 | $ | 1,468,889 | $ | 1,172,326 | ||||||||
(a) | Included in revenues and operating expenses are reimbursable costs from affiliates totaling $14.7 million and $15.3 million for the three months ended September 30, 2011 and 2010, respectively, and $49.5 million and $44.7 million for the nine months ended September 30, 2011 and 2010, respectively. | |
(b) | Includes Interest income, Income from equity investments in real estate and the REITs, Gain on change in control of interests, Income (loss) attributable to noncontrolling interests and Other income and (expenses). | |
(c) | Included within the Real Estate Ownership segment is our total investment in shares of CPA®:16 Global, which represents approximately 23% of our total assets at September 30, 2011 (Note 6). | |
(d) | Long-lived assets include Net investments in real estate and intangible assets related to management contracts. |
W. P. Carey 9/30/2011 10-Q 28
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Lease revenues |
$ | 2,115 | $ | 1,809 | $ | 6,248 | $ | 4,645 | ||||||||
Income from equity investments in real estate |
1,570 | 185 | 4,719 | 3,161 | ||||||||||||
$ | 3,685 | $ | 1,994 | $ | 10,967 | $ | 7,806 | |||||||||
September 30, 2011 | December 31, 2010 | |||||||
Long-lived assets |
$ | 69,777 | $ | 69,126 | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
$ | 965 | $ | 988 | $ | 2,249 | $ | 4,021 | ||||||||
Expenses |
(461 | ) | (605 | ) | (1,610 | ) | (2,357 | ) | ||||||||
Gain on deconsolidation of a subsidiary |
1,008 | | 1,008 | | ||||||||||||
(Loss) gain on sale of real estate |
(396 | ) | | 264 | 460 | |||||||||||
Impairment charges |
| (481 | ) | (41 | ) | (8,618 | ) | |||||||||
Income (loss) from discontinued operations |
$ | 1,116 | $ | (98 | ) | $ | 1,870 | $ | (6,494 | ) | ||||||
W. P. Carey 9/30/2011 10-Q 29
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Total revenues (excluding reimbursed
costs from affiliates) |
$ | 63,665 | $ | 42,845 | $ | 223,755 | $ | 144,766 | ||||||||
Net income attributable to W. P. Carey members |
25,202 | 16,346 | 129,988 | 54,191 | ||||||||||||
Cash flow from operating activities |
62,652 | 52,268 | ||||||||||||||
Distributions paid |
22,211 | 20,135 | 63,060 | 72,625 | ||||||||||||
Supplemental financial measures: |
||||||||||||||||
Funds from operations as adjusted (AFFO) |
41,550 | 27,607 | 153,644 | 94,593 | ||||||||||||
Adjusted cash flow from operating activities |
74,478 | 64,933 |
W. P. Carey 9/30/2011 10-Q 30
W. P. Carey 9/30/2011 10-Q 31
W. P. Carey 9/30/2011 10-Q 32
W. P. Carey 9/30/2011 10-Q 33
CPA®:15 | CPA®:16Global | |||||||
September 30, 2010 |
N/A | $ | 8.80 | |||||
December 31, 2010 |
$ | 10.40 | N/A | |||||
June 30, 2011 |
N/A | 8.90 |
W. P. Carey 9/30/2011 10-Q 34
W. P. Carey 9/30/2011 10-Q 35
W. P. Carey 9/30/2011 10-Q 36
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||
Revenues |
||||||||||||||||||||||||
Asset management revenue |
$ | 14,840 | $ | 19,219 | $ | (4,379 | ) | $ | 51,279 | $ | 57,119 | $ | (5,840 | ) | ||||||||||
Structuring revenue |
21,221 | 708 | 20,513 | 42,901 | 20,644 | 22,257 | ||||||||||||||||||
Incentive, termination and subordinated
disposition revenue |
| | | 52,515 | | 52,515 | ||||||||||||||||||
Wholesaling revenue |
2,586 | 2,906 | (320 | ) | 8,788 | 8,189 | 599 | |||||||||||||||||
Reimbursed costs from affiliates |
14,707 | 15,256 | (549 | ) | 49,485 | 44,696 | 4,789 | |||||||||||||||||
53,354 | 38,089 | 15,265 | 204,968 | 130,648 | 74,320 | |||||||||||||||||||
Operating Expenses |
||||||||||||||||||||||||
General and administrative |
(24,016 | ) | (15,080 | ) | (8,936 | ) | (67,807 | ) | (49,059 | ) | (18,748 | ) | ||||||||||||
Reimbursable costs |
(14,707 | ) | (15,256 | ) | 549 | (49,485 | ) | (44,696 | ) | (4,789 | ) | |||||||||||||
Depreciation and amortization |
(819 | ) | (1,156 | ) | 337 | (2,488 | ) | (3,489 | ) | 1,001 | ||||||||||||||
(39,542 | ) | (31,492 | ) | (8,050 | ) | (119,780 | ) | (97,244 | ) | (22,536 | ) | |||||||||||||
Other Income and Expenses |
||||||||||||||||||||||||
Other interest income |
297 | 301 | (4 | ) | 1,493 | 840 | 653 | |||||||||||||||||
Income from equity investments in the REITs |
6,625 | 1,720 | 4,905 | 11,828 | 3,413 | 8,415 | ||||||||||||||||||
Other income and (expenses) |
35 | 63 | (28 | ) | 270 | 98 | 172 | |||||||||||||||||
6,957 | 2,084 | 4,873 | 13,591 | 4,351 | 9,240 | |||||||||||||||||||
Income from continuing operations before
income taxes |
20,769 | 8,681 | 12,088 | 98,779 | 37,755 | 61,024 | ||||||||||||||||||
Provision for income taxes |
(5,075 | ) | (3,045 | ) | (2,030 | ) | (38,511 | ) | (12,993 | ) | (25,518 | ) | ||||||||||||
Net income from investment management |
15,694 | 5,636 | 10,058 | 60,268 | 24,762 | 35,506 | ||||||||||||||||||
Add: Net loss
attributable to
noncontrolling
interests |
680 | 564 | 116 | 1,876 | 1,778 | 98 | ||||||||||||||||||
Less: Net income
attributable to
redeemable
noncontrolling interest |
(637 | ) | (106 | ) | (531 | ) | (1,241 | ) | (698 | ) | (543 | ) | ||||||||||||
Net income from investment management
attributable to W. P. Carey members |
$ | 15,737 | $ | 6,094 | $ | 9,643 | $ | 60,903 | $ | 25,842 | $ | 35,061 | ||||||||||||
W. P. Carey 9/30/2011 10-Q 37
W. P. Carey 9/30/2011 10-Q 38
W. P. Carey 9/30/2011 10-Q 39
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||
Revenues |
||||||||||||||||||||||||
Lease revenues |
$ | 18,609 | $ | 15,356 | $ | 3,253 | $ | 50,846 | $ | 45,586 | $ | 5,260 | ||||||||||||
Other real estate income |
6,409 | 4,656 | 1,753 | 17,426 | 13,228 | 4,198 | ||||||||||||||||||
25,018 | 20,012 | 5,006 | 68,272 | 58,814 | 9,458 | |||||||||||||||||||
Operating Expenses |
||||||||||||||||||||||||
Depreciation and amortization |
(6,361 | ) | (4,640 | ) | (1,721 | ) | (16,638 | ) | (13,742 | ) | (2,896 | ) | ||||||||||||
Property expenses |
(3,672 | ) | (3,152 | ) | (520 | ) | (9,827 | ) | (7,631 | ) | (2,196 | ) | ||||||||||||
General and administrative |
(1,171 | ) | (400 | ) | (771 | ) | (3,288 | ) | (3,115 | ) | (173 | ) | ||||||||||||
Other real estate expenses |
(2,725 | ) | (1,987 | ) | (738 | ) | (8,224 | ) | (5,575 | ) | (2,649 | ) | ||||||||||||
Impairment charge |
(4,934 | ) | | (4,934 | ) | (4,934 | ) | | (4,934 | ) | ||||||||||||||
(18,863 | ) | (10,179 | ) | (8,684 | ) | (42,911 | ) | (30,063 | ) | (12,848 | ) | |||||||||||||
Other Income and Expenses |
||||||||||||||||||||||||
Income from equity investments in real estate
and the REITs |
9,443 | 4,346 | 5,097 | 25,528 | 19,433 | 6,095 | ||||||||||||||||||
Gain on change in control of interests |
| | | 27,859 | | 27,859 | ||||||||||||||||||
Other income and (expenses) |
(305 | ) | 1,155 | (1,460 | ) | 4,738 | 580 | 4,158 | ||||||||||||||||
Interest expense |
(5,989 | ) | (4,169 | ) | (1,820 | ) | (15,660 | ) | (11,391 | ) | (4,269 | ) | ||||||||||||
3,149 | 1,332 | 1,817 | 42,465 | 8,622 | 33,843 | |||||||||||||||||||
Income from continuing operations before
income taxes |
9,304 | 11,165 | (1,861 | ) | 67,826 | 37,373 | 30,453 | |||||||||||||||||
Provision for income taxes |
(856 | ) | (332 | ) | (524 | ) | (30 | ) | (1,247 | ) | 1,217 | |||||||||||||
Income from continuing operations |
8,448 | 10,833 | (2,385 | ) | 67,796 | 36,126 | 31,670 | |||||||||||||||||
Income (loss) from discontinued operations |
1,116 | (98 | ) | 1,214 | 1,870 | (6,494 | ) | 8,364 | ||||||||||||||||
Net income from real estate ownership |
9,564 | 10,735 | (1,171 | ) | 69,666 | 29,632 | 40,034 | |||||||||||||||||
Less: Net income attributable to
noncontrolling interests |
(99 | ) | (483 | ) | 384 | (581 | ) | (1,283 | ) | 702 | ||||||||||||||
Net income from real estate ownership attributable
to W. P. Carey members |
$ | 9,465 | $ | 10,252 | $ | (787 | ) | $ | 69,085 | $ | 28,349 | $ | 40,736 | |||||||||||
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Rental income |
$ | 43,496 | $ | 37,941 | ||||
Interest income from direct financing leases |
7,350 | 7,645 | ||||||
$ | 50,846 | $ | 45,586 | |||||
W. P. Carey 9/30/2011 10-Q 40
Nine Months Ended September 30, | ||||||||
Lessee | 2011 | 2010 | ||||||
CheckFree Holdings, Inc. (a) |
$ | 3,898 | $ | 3,813 | ||||
The American Bottling Company |
3,288 | 3,292 | ||||||
Federal Express Corporation(b) |
3,101 | | ||||||
Bouygues Telecom, S.A. (a) (c) |
3,001 | 2,985 | ||||||
JP Morgan Chase Bank, N.A.(d) |
2,896 | 2,482 | ||||||
Orbital Sciences Corporation(e) |
2,484 | 2,783 | ||||||
Eroski Sociedad Cooperativa (a) (c) (f) |
2,452 | 931 | ||||||
Titan Corporation |
2,185 | 2,185 | ||||||
Amylin Pharmaceuticals, Inc.(b) |
1,817 | | ||||||
AutoZone, Inc. |
1,680 | 1,666 | ||||||
Google, Inc.(g) |
1,510 | 1,518 | ||||||
Quebecor Printing, Inc. |
1,452 | 1,437 | ||||||
Unisource Worldwide, Inc. |
1,445 | 1,442 | ||||||
CSS Industries, Inc. (h) |
1,342 | 1,177 | ||||||
Sybron Dental Specialties Inc. |
1,324 | 1,364 | ||||||
Jarden Corporation |
1,210 | 1,210 | ||||||
BE Aerospace, Inc. |
1,181 | 1,181 | ||||||
Eagle Hardware & Garden, a subsidiary of Lowes Companies |
1,127 | 1,169 | ||||||
Sprint Spectrum, L.P. |
1,104 | 1,068 | ||||||
Enviro Works, Inc. |
912 | 948 | ||||||
Other (c) |
11,437 | 12,935 | ||||||
$ | 50,846 | $ | 45,586 | |||||
(a) | These revenues are generated in consolidated ventures, generally with our affiliates, and on a combined basis, include lease revenues applicable to noncontrolling interests totaling $2.2 million and $2.8 million for the nine months ended September 30, 2011 and 2010, respectively. | |
(b) | In connection with the CPA®:14 Asset Sales, we purchased the remaining interest in this investment from CPA®:14 (Note 3). Subsequent to the acquisition, we consolidate this investment. We had previously accounted for this investment under the equity method. | |
(c) | Amounts are subject to fluctuations in foreign currency exchange rates. The average rate for the U.S. dollar in relation to the Euro during the nine months ended September 30, 2011 increased by approximately 7% in comparison to the same period in 2010, resulting in a positive impact on lease revenues for our Euro-denominated investments in the current year period. | |
(d) | We acquired this investment in February 2010. | |
(e) | We completed an expansion at this facility in January 2010, at which time we recognized deferred rental income of $0.3 million. | |
(f) | We acquired this investment in June 2010. | |
(g) | In January 2011, we signed a new 15-year lease with Google, Inc. The lease with the former tenant, Omnicom Group Inc., expired in September 2010. | |
(h) | A tenant-funded improvement at this facility was completed in 2011, at which time we recognized deferred rental income of $0.3 million. |
W. P. Carey 9/30/2011 10-Q 41
Ownership Interest | Nine Months Ended September 30, | |||||||||||
Lessee | at September 30, 2011 | 2011 | 2010 | |||||||||
The New York Times Company |
18 | % | $ | 20,868 | $ | 19,985 | ||||||
Carrefour France, SAS(a) |
46 | % | 15,335 | 14,823 | ||||||||
Medica France, S.A.(a) |
46 | % | 5,144 | 4,811 | ||||||||
Schuler A.G.(a) |
33 | % | 4,931 | 4,602 | ||||||||
U. S. Airways Group, Inc. |
75 | % | 3,316 | 3,316 | ||||||||
Hologic, Inc. |
36 | % | 2,669 | 2,646 | ||||||||
Federal Express Corporation(b) |
100 | % | 2,391 | 5,328 | ||||||||
Consolidated Systems, Inc. |
60 | % | 1,373 | 1,373 | ||||||||
Amylin Pharmaceuticals, Inc. (b) |
100 | % | 1,342 | 3,020 | ||||||||
Symphony IRI
Group, Inc.(c) |
0 | % | 1,108 | 3,389 | ||||||||
Childtime Childcare, Inc. |
34 | % | 948 | 981 | ||||||||
The Retail Distribution Group(d) |
0 | % | | 206 | ||||||||
$ | 59,425 | $ | 64,480 | |||||||||
(a) | Amounts are subject to fluctuations in foreign currency exchange rates. The average conversion rate for the U.S. dollar in relation to the Euro during the nine months ended September 30, 2011 increased by approximately 7% in comparison to the same period in 2010, resulting in a positive impact on lease revenues for our Euro-denominated investments in the current year period. | |
(b) | In connection with the CPA®:14 Asset Sales, we purchased the remaining interest in this investment from CPA®:14 (Note 3). Subsequent to the acquisition, we consolidate this investment. | |
(c) | The decrease was due to the tenant vacating a building in January 2011. In June 2011, this venture sold its property and distributed the proceeds to the venture partners. As a result, we have no further economic interest in this venture. | |
(d) | In March 2010, the venture completed the sale of this property, and as a result, we have no further economic interest in this venture. |
W. P. Carey 9/30/2011 10-Q 42
W. P. Carey 9/30/2011 10-Q 43
W. P. Carey 9/30/2011 10-Q 44
| In May 2011, we received $21.3 million of subordinated disposition revenues from CPA®:14 upon the completion of the CPA®:14/16 Merger; | ||
| During the current year period, we received revenue of $26.1 million in connection with structuring investments and debt refinancing on behalf of the REITs as compared to $11.6 million in the comparable prior year period; | ||
| Cash distributions received from CPA®:17 Globals operating partnership increased by $2.4 million as a result of investments that it entered into during 2011 and 2010; and |
W. P. Carey 9/30/2011 10-Q 45
| During the nine months ended September 30, 2011, we received $2.5 million of cash distributions from CPA®:16 Globals Operating Partnership. |
| In September 2011, we made income tax payments totaling $11.4 million primarily related to the subordinated disposition revenues and the $1.00 per share special cash distribution earned in connection with CPA®:14/16 Merger; | ||
| During the nine months ended September 30, 2011, we received revenue of $19.4 million in cash for providing asset-based management services to the REITs as compared to $30.3 million in the prior year period. This amount does not include revenue received from the REITs in the form of shares of their restricted common stock rather than cash (see below); | ||
| Deferred acquisition revenue received was $1.1 million lower during the nine months ended September 30, 2011 as compared to the same period in 2010, primarily due to a shift in the timing of when deferred acquisition revenue is received and lower investment volume by the CPA® REITs in prior year periods; and | ||
| During the nine months ended September 30, 2011, our real estate ownership segment provided cash flows (contractual lease revenues, net of property-level debt service) of approximately $30.2 million, a decrease of $2.1 million from the 2010 period, as a result of several tenants vacating properties. |
W. P. Carey 9/30/2011 10-Q 46
September 30, 2011 | December 31, 2010 | |||||||
Balance |
||||||||
Fixed rate |
$ | 222,656 | $ | 147,872 | ||||
Variable rate (a) |
365,858 | 249,110 | ||||||
Total |
$ | 588,514 | $ | 396,982 | ||||
Percent of total debt |
||||||||
Fixed rate |
38 | % | 37 | % | ||||
Variable rate (a) |
62 | % | 63 | % | ||||
100 | % | 100 | % | |||||
Weighted average interest rate at end of period |
||||||||
Fixed rate |
5.7 | % | 6.0 | % | ||||
Variable rate (a) |
2.6 | % | 2.5 | % |
(a) | Variable-rate debt at September 30, 2011 included (i) $253.2 million outstanding under our lines of credit, (ii) $47.6 million that has been effectively converted to fixed rates through interest rate swap derivative instruments and (iii) $57.3 million in mortgage loan obligations that bore interest at fixed rates but have interest rate reset features that may change the interest rates to then-prevailing market fixed rates (subject to specified caps) at certain points during their term. |
| Cash and cash equivalents totaling $37.1 million. Of this amount, $2.8 million, at then-current exchange rates, was held by foreign subsidiaries, but we could be subject to restrictions or significant costs should we decide to repatriate these amounts; | ||
| Two lines of credit with unused capacity totaling $20.0 million. The lines of credit are available to us and may also be used to loan funds to our affiliates. Our lender has issued letters of credit totaling $6.8 million on our behalf in connection with certain contractual obligations, which reduce amounts that may be drawn under the unsecured line of credit; and | ||
| We also had unleveraged properties that had an aggregate carrying value of $195.1 million at September 30, 2011, although there can be no assurance that we would be able to obtain financing for these properties. |
W. P. Carey 9/30/2011 10-Q 47
September 30, 2011 | December 31, 2010 | |||||||||||||||
Outstanding | Maximum | Outstanding | Maximum | |||||||||||||
Balance | Available | Balance | Available | |||||||||||||
Unsecured line of credit |
$ | 243,160 | $ | 250,000 | $ | 141,750 | $ | 250,000 | ||||||||
Secured line of credit |
10,000 | 30,000 | N/A | N/A |
| An increase in dividends of approximately $11.3 million associated with our incremental investment in CPA®:16 Global resulting in projected net cash flow after tax of $10.3 million; | ||
| An increase in lease revenues and cash flow totaling approximately $8.8 million and $4.0 million, respectively, related to the properties acquired from CPA®:14 in the CPA®:14 Asset Sales; | ||
| A tax benefit of approximately $6.4 million related to the change in our advisory fee arrangement with CPA®:16 Global in connection with its UPREIT reorganization; | ||
| A reduction in asset management revenue from CPA®:16 Global of approximately $5.5 million as a result of the modification of our advisory agreement with CPA®:16 Global in connection with its UPREIT reorganization; | ||
| A reduction in asset management revenue approximating $2.1 million related to assets sold by CPA®:14 to us and to third parties in the CPA®:14 Asset Sales; | ||
| A reduction in annual equity income of approximately $0.9 million related to the consolidation of the two ventures acquired from CPA®:14 in the CPA®:14 Asset Sales; and | ||
| An increase in interest expense of approximately $5.9 million related to interest payments on the existing non-recourse mortgages relating to the properties we acquired in the CPA®:14 Asset Sales and incremental borrowings under our unsecured credit facility to finance the CPA®:14/16 Merger. |
W. P. Carey 9/30/2011 10-Q 48
Less than | More than | |||||||||||||||||||
Total | 1 year | 1-3 years | 3-5 years | 5 years | ||||||||||||||||
Non-recourse debt Principal (a) |
$ | 336,445 | $ | 10,763 | $ | 48,541 | $ | 96,718 | $ | 180,423 | ||||||||||
Lines of credit Principal (b) |
253,160 | 253,160 | | | | |||||||||||||||
Interest on borrowings (c) |
115,366 | 23,853 | 34,062 | 29,206 | 28,245 | |||||||||||||||
Operating and other lease commitments (d) |
9,773 | 980 | 1,932 | 1,901 | 4,960 | |||||||||||||||
Property improvement commitments |
6,760 | 6,760 | | | | |||||||||||||||
$ | 721,504 | $ | 295,516 | $ | 84,535 | $ | 127,825 | $ | 213,628 | |||||||||||
(a) | Excludes $1.1 million of purchase accounting adjustments required in connection with the CPA®:14/16 Merger, which are included in Non-recourse debt at September 30, 2011. | |
(b) | Each of our lines of credit matures in June 2012. | |
(c) | Interest on unhedged variable-rate debt obligations was calculated using the applicable annual variable interest rates and balances outstanding at September 30, 2011. | |
(d) | Operating and other lease commitments consist primarily of the future minimum rents payable on the lease for our principal offices. We are reimbursed by affiliates for their share of the future minimum rents under an office cost-sharing agreement. These amounts are allocated among the entities based on gross revenues and are adjusted quarterly. The table above excludes the rental obligation of a venture in which we own a 46% interest. Our share of this obligation totals approximately $2.9 million over the lease term through January 2063. |
Ownership Interest | Total Third- | |||||||||||||||
Lessee | at September 30, 2011 | Total Assets | Party Debt | Maturity Date | ||||||||||||
U. S. Airways Group, Inc. |
75 | % | $ | 29,851 | $ | 17,922 | 4/2014 | |||||||||
The New York Times Company |
18 | % | 246,391 | 123,554 | 9/2014 | |||||||||||
Carrefour France, SAS (a) |
46 | % | 139,635 | 102,291 | 12/2014 | |||||||||||
Consolidated Systems, Inc. |
60 | % | 16,857 | 11,236 | 11/2016 | |||||||||||
Medica France, S.A.(a) |
46 | % | 45,975 | 36,156 | 10/2017 | |||||||||||
Hologic, Inc. |
36 | % | 26,207 | 13,585 | 5/2023 | |||||||||||
Schuler A.G.(a) |
33 | % | 69,431 | | N/A | |||||||||||
Childtime Childcare, Inc. (b) |
34 | % | 9,040 | | N/A | |||||||||||
$ | 583,387 | $ | 304,744 | |||||||||||||
(a) | Dollar amounts shown are based on the exchange rate of the Euro at September 30, 2011. | |
(b) | In January 2011, this venture repaid its maturing non-recourse mortgage loan. |
W. P. Carey 9/30/2011 10-Q 49
W. P. Carey 9/30/2011 10-Q 50
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Investment Management |
||||||||||||||||
Net Income from investment management attributable to
W. P. Carey members |
$ | 15,737 | $ | 6,094 | $ | 60,903 | $ | 25,842 | ||||||||
FFO as defined by NAREIT(a) |
15,737 | 6,094 | 60,903 | 25,842 | ||||||||||||
Adjustments: |
||||||||||||||||
Amortization and other non-cash charges |
4,953 | 1,135 | 30,009 | 6,203 | ||||||||||||
Proportionate share of adjustments to equity in net
income of partially owned entities to arrive at
AFFO: |
||||||||||||||||
AFFO adjustments to equity
earnings from equity investments |
(2,144 | ) | | (3,559 | ) | | ||||||||||
Total adjustments |
2,809 | 1,135 | 26,450 | 6,203 | ||||||||||||
AFFO Investment Management |
$ | 18,546 | $ | 7,229 | $ | 87,353 | $ | 32,045 | ||||||||
Real Estate Ownership |
||||||||||||||||
Net Income from real estate ownership attributable to
W. P. Carey members |
$ | 9,465 | $ | 10,252 | $ | 69,085 | $ | 28,349 | ||||||||
Adjustments: |
||||||||||||||||
Depreciation and amortization of real property |
6,194 | 4,757 | 16,909 | 14,457 | ||||||||||||
Loss (gain) on sale of real estate, net |
396 | | (264 | ) | (460 | ) | ||||||||||
Proportionate share of adjustments to equity in net income
of partially owned entities to arrive at FFO: |
||||||||||||||||
Depreciation and amortization of real property |
1,173 | 463 | 4,049 | 4,927 | ||||||||||||
Loss (gain) on sale of real estate, net |
| | 34 | (38 | ) | |||||||||||
Proportionate share of adjustments for noncontrolling
interests to arrive at FFO |
(1,157 | ) | (193 | ) | (1,476 | ) | (532 | ) | ||||||||
Total adjustments |
6,606 | 5,027 | 19,252 | 18,354 | ||||||||||||
FFO as defined by NAREIT(a) |
16,071 | 15,279 | 88,337 | 46,703 | ||||||||||||
Adjustments: |
||||||||||||||||
Gain on change in control of interests (b) |
| | (27,859 | ) | | |||||||||||
Gain on deconsolidation of a subsidiary |
(1,008 | ) | | (1,008 | ) | | ||||||||||
Other depreciation, amortization and non-cash charges |
303 | (1,230 | ) | (2,498 | ) | (920 | ) | |||||||||
Straight-line and other rent adjustments |
(1,014 | ) | 148 | (2,451 | ) | 167 | ||||||||||
Impairment charges |
4,934 | 481 | 4,975 | 8,618 | ||||||||||||
Proportionate share of adjustments to equity in net income
of partially owned entities to arrive at AFFO: |
||||||||||||||||
Other depreciation, amortization and
other non-cash
charges |
| 1,728 | | 25 | ||||||||||||
Straight-line and other rent adjustments |
(463 | ) | (539 | ) | (1,227 | ) | (1,728 | ) | ||||||||
Impairment charges |
| 1,394 | 1,090 | 1,394 | ||||||||||||
AFFO adjustments to equity earnings from equity
investments |
4,122 | 2,995 | 6,714 | 8,211 | ||||||||||||
Proportionate share of adjustments for noncontrolling
interests to arrive at AFFO |
59 | 122 | 218 | 78 | ||||||||||||
Total adjustments |
6,933 | 5,099 | (22,046 | ) | 15,845 | |||||||||||
AFFO Real Estate Ownership |
$ | 23,004 | $ | 20,378 | $ | 66,291 | $ | 62,548 | ||||||||
Total Company |
||||||||||||||||
FFO as defined by NAREIT |
$ | 31,808 | $ | 21,373 | $ | 149,240 | $ | 72,545 | ||||||||
AFFO |
$ | 41,550 | $ | 27,607 | $ | 153,644 | $ | 94,593 | ||||||||
Distributions declared for the applicable period (c) |
$ | 22,236 | $ | 20,053 | $ | 64,348 | $ | 59,709 | ||||||||
W. P. Carey 9/30/2011 10-Q 51
(a) | The SEC Staff has recently advised that they take no position on the inclusion or exclusion of impairment write-downs in arriving at FFO. Since 2003, NAREIT has taken the position that the exclusion of impairment charges is consistent with its definition of FFO. Accordingly, in future presentations we will revise our computation of FFO to exclude impairment charges, if any, in arriving at FFO. | |
(b) | Represents gains recognized on purchase of the remaining interests in two ventures from CPA®:14, which we had previously accounted for under the equity method. In connection with purchasing these interests, we recognized a net gain of $27.9 million during the nine months ended September 30, 2011 to adjust the carrying value of our existing interest in these ventures to their estimated fair values. | |
(c) | Distribution data is presented for comparability; however, management utilizes our Adjusted Cash Flow from Operating Activities measure to analyze our dividend coverage. |
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Cash flow provided by operating activities |
$ | 62,652 | $ | 52,268 | ||||
Adjustments: |
||||||||
Distributions received from equity investments in real estate in
excess of equity income (a) |
10,187 | 6,046 | ||||||
Distributions paid to noncontrolling interests, net (b) |
(732 | ) | (213 | ) | ||||
Changes in working capital (c) |
14,079 | 6,832 | ||||||
CPA®:14/16 Merger revenue net of taxes (d) |
(11,708 | ) | | |||||
Adjusted cash flow from operating activities |
$ | 74,478 | $ | 64,933 | ||||
Distributions declared |
$ | 64,348 | $ | 59,709 | ||||
(a) | We take a substantial portion of our asset management revenue in shares of the CPA® REITs. 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 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 item was actually recognized. | |
(d) | Amounts represent termination and subordinated disposition revenue, net of costs and a 45% tax provision, earned in connection with the CPA®:14/16 Merger. This revenue is generally earned in connection with events that provide liquidity alternatives to the CPA® REIT shareholders. In determining cash flow generated from our core operations, we believe it was more appropriate to normalize cash flow for the impact of the net revenue that we earned in connection with the CPA®:14/16 Merger. |
W. P. Carey 9/30/2011 10-Q 52
2011 | 2012 | 2013 | 2014 | 2015 | Thereafter | Total | Fair value | |||||||||||||||||||||||||
Fixed rate debt |
$ | 1,551 | $ | 34,394 | $ | 5,424 | $ | 5,350 | $ | 41,419 | $ | 134,518 | $ | 222,656 | $ | 217,536 | ||||||||||||||||
Variable rate debt |
$ | 801 | $ | 256,431 | $ | 3,451 | $ | 7,301 | $ | 7,598 | $ | 90,276 | $ | 365,858 | $ | 361,201 |
W. P. Carey 9/30/2011 10-Q 53
W. P. Carey 9/30/2011 10-Q 54
Exhibit No. | Description | |
31.1
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101
|
The following materials from W. P. Carey & Co. LLCs Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, 2011 and December 31, 2010, (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2011, and 2010, (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2011 and 2010, (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2011, and 2010, and (v) Notes to Consolidated Financial Statements.* |
* | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
W. P. Carey 9/30/2011 10-Q 55
W. P. Carey & Co. LLC |
||||
Date: November 8, 2011 | By: | /s/ Mark J. DeCesaris | ||
Mark J. DeCesaris | ||||
Chief Financial Officer
(Principal Financial Officer) |
||||
Date: November 8, 2011 | By: | /s/ Thomas J. Ridings, Jr. | ||
Thomas J. Ridings, Jr. | ||||
Chief Accounting Officer
(Principal Accounting Officer) |
W. P. Carey 9/30/2011 10-Q 56
Exhibit No. | Description | |
31.1
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101
|
The following materials from W. P. Carey & Co. LLCs Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, 2011 and December 31, 2010, (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2011, and 2010, (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2011 and 2010, (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2011, and 2010, and (v) Notes to Consolidated Financial Statements.* |
* | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
W. P. Carey 9/30/2011 10-Q 57
1. | I have reviewed this Quarterly Report on Form 10-Q of W. P. Carey & Co. LLC; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls over financial reporting. |
/s/ Trevor P. Bond | ||||
Trevor P. Bond | ||||
Chief Executive Officer |
W. P. Carey 9/30/2011 10-Q 58
1. | I have reviewed this Quarterly Report on Form 10-Q of W. P. Carey & Co. LLC; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls over financial reporting. |
/s/ Mark J. DeCesaris | ||||
Mark J. DeCesaris | ||||
Chief Financial Officer |
W. P. Carey 9/30/2011 10-Q 59
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of W. P. Carey & Co. LLC. |
/s/ Trevor P. Bond | ||||
Trevor P. Bond | ||||
Chief Executive Officer | ||||
/s/ Mark J. DeCesaris | ||||
Mark J. DeCesaris | ||||
Chief Financial Officer | ||||
W. P. Carey 9/30/2011 10-Q 60
Agreements and Transactions with Related Parties (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Revenue Earned Cash Received Table [Text Block] |
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Schedule Of Unpaid Deferred Acquisition Fees And Interest Earned [Table Text Block] |
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Schedule Of Income From Noncontrolling Interest Partners [Table Text Block] |
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Deferred Rent Due To Affiliates |
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Document and Entity Information | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Nov. 01, 2011 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | W P CAREY & CO LLC | |
Entity Central Index Key | 0001025378 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2011 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 39,717,286 |
Segment Reporting (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | Dec. 31, 2010 | |
Segment Reporting Information Profit Loss [Abstract] | |||||
Revenues | $ 78,372,000 | $ 58,101,000 | $ 273,240,000 | $ 189,462,000 | |
Costs and Expenses | 58,405,000 | 41,671,000 | 162,691,000 | 127,307,000 | |
Interest Expense | 5,989,000 | 4,169,000 | 15,660,000 | 11,391,000 | |
Other, net | 16,039,000 | 7,560,000 | 71,770,000 | 24,161,000 | |
Benefit from (provision for) income taxes | 5,931,000 | 3,377,000 | 38,541,000 | 14,240,000 | |
Income (Loss) from Continuing Operations Attributable to Parent, Total | 24,086,000 | 16,444,000 | 128,118,000 | 60,685,000 | |
Segment Reporting Asset Balances [Abstract] | |||||
Total Long-Lived Assets | 1,225,736,000 | 1,225,736,000 | 950,705,000 | ||
Total Assets | 1,468,889,000 | 1,468,889,000 | 1,172,326,000 | ||
Revenues From International Investments [Line Items] | |||||
Lease Revenues | 18,609,000 | 15,356,000 | 50,846,000 | 45,586,000 | |
Income (Loss) from Equity Method Investments | 16,068,000 | 6,066,000 | 37,356,000 | 22,846,000 | |
Income from continuing operations before income taxes | 30,073,000 | 19,846,000 | 166,605,000 | 75,128,000 | |
Reimbursable Costs From Affiliates | 14,700 | 15,300 | 49,500 | 44,700 | |
Percentage Of Total Investment In Reit | 23.00% | ||||
Asset Management [Member] | |||||
Segment Reporting Information Profit Loss [Abstract] | |||||
Revenues | 53,354,000 | 38,089,000 | 204,968,000 | 130,648,000 | |
Costs and Expenses | 39,542,000 | 31,492,000 | 119,780,000 | 97,244,000 | |
Other, net | 7,000,000 | 2,542,000 | 14,226,000 | 5,431,000 | |
Benefit from (provision for) income taxes | 5,075,000 | 3,045,000 | 38,511,000 | 12,993,000 | |
Income (Loss) from Continuing Operations Attributable to Parent, Total | 15,737,000 | 6,094,000 | 60,903,000 | 25,842,000 | |
Segment Reporting Asset Balances [Abstract] | |||||
Total Long-Lived Assets | 2,871,000 | 2,871,000 | 3,729,000 | ||
Total Assets | 137,775,000 | 137,775,000 | 123,921,000 | ||
Real Estate Investment [Member] | |||||
Segment Reporting Information Profit Loss [Abstract] | |||||
Revenues | 25,018,000 | 20,012,000 | 68,272,000 | 58,814,000 | |
Costs and Expenses | 18,863,000 | 10,179,000 | 42,911,000 | 30,063,000 | |
Interest Expense | 5,989,000 | 4,169,000 | 15,660,000 | 11,391,000 | |
Other, net | 9,039,000 | 5,018,000 | 57,544,000 | 18,730,000 | |
Benefit from (provision for) income taxes | 856,000 | 332,000 | 30,000 | 1,247,000 | |
Income (Loss) from Continuing Operations Attributable to Parent, Total | 8,349,000 | 10,350,000 | 67,215,000 | 34,843,000 | |
Segment Reporting Asset Balances [Abstract] | |||||
Total Long-Lived Assets | 1,222,865,000 | 1,222,865,000 | 946,976,000 | ||
Total Assets | 1,331,114,000 | 1,331,114,000 | 1,048,405,000 | ||
Segment Geographical Groups Of Countries Group One Member | |||||
Revenues From International Investments [Line Items] | |||||
Lease Revenues | 2,115,000 | 1,809,000 | 6,248,000 | 4,645,000 | |
Income (Loss) from Equity Method Investments | 1,570,000 | 185,000 | 4,719,000 | 3,161,000 | |
Income from continuing operations before income taxes | 3,685,000 | 1,994,000 | 10,967,000 | 7,806,000 | |
Total Long Lived Assets International | $ 69,777,000 | $ 69,777,000 | $ 69,126,000 |
Equity Investments in Real Estate and the REITs (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments And Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amount Of Investment In Funds |
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Schedule Of Financial Information Of Investment [Table Text Block] |
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Ownership Interests and Carrying Values in Equity Investments |
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Financial Information of Venture Properties |
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Income Taxes (Details) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Income Taxes [Abstract] | ||||
Provision for income taxes | $ 5,931 | $ 3,377 | $ 38,541 | $ 14,240 |
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Equity Investment in Real Estate and the REITs | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity Investments in Real Estate and REITs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Investments in Real Estate and REITs | Note 6. Equity Investments in Real Estate and the REITs
We own interests in the REITs and unconsolidated real estate investments. We account for our interests in these investments under the equity method of accounting (i.e., at cost, increased or decreased by our share of earnings or losses, less distributions, plus contributions and other adjustments required by equity method accounting, such as basis differences from other-than-temporary impairments). These investments are summarized below.
REITs
We own interests in the REITs and account for these interests under the equity method because, as their advisor and through our ownership in their common shares, we do not exert control over, but have the ability to exercise significant influence on, the REITs. Shares of the REITs are publicly registered and the REITs file periodic reports with the SEC, but the shares are not listed on any exchange and are not actively traded. We earn asset management and performance revenue from the REITs and have elected, in certain cases, to receive a portion of this revenue in the form of restricted common stock of the REITs rather than cash.
The following table sets forth certain information about our investments in the REITs (dollars in thousands):
__________
The following tables present combined summarized financial information for the REITs. Amounts provided are expected total amounts attributable to the REITs and do not represent our proportionate share (in thousands):
_________
As disclosed in its financial statements, CPA®:16 – Global had not completed the initial accounting for the May 2, 2011 CPA®:14/16 Merger by the end of the reporting period in which the business combination had occurred. During the third quarter of 2011, CPA®:16 – Global identified certain measurement period adjustments that impacted its provisional acquisition accounting (the “CPA®:16 – Global Measurement Period Adjustments”). Our proportionate share of the CPA®:16 – Global Measurement Period Adjustments was approximately $2.6 million, which is reflected in the nine months ended September 30, 2011. In accordance with ASC 805-10-25, we have not recorded our proportionate share of the CPA®:16 – Global Measurement Period Adjustments during the three months ended September 30, 2011. Rather, such amounts will be reflected in all future financial statements which include the three months ended June 30, 2011.
We recognized income from our equity investments in the REITs of $6.0 million and $1.9 million for the three months ended September 30, 2011 and 2010, respectively, and $15.9 million and $7.0 million for the nine months ended September 30, 2011 and 2010, respectively. In addition, we received distributions of available cash from the CPA®:16 – Global and CPA®:17 – Global operating partnerships totaling $4.5 million and $1.7 million during the three months ended September 30, 2011 and 2010, respectively, and $8.3 million and $3.4 million for the nine months ended September 30, 2011 and 2010, respectively, which we recorded as Income from equity investments in the REITs within the Investment Management segment. We also earned deferred revenue from our Special Interest in the Operating Partnership of CPA®:16 – Global of $2.1 million and $3.5 million during the three and nine months ended September 30, 2011, respectively. Our proportionate share of income or loss recognized from our equity investments in the REITs is impacted by several factors, including impairment charges recorded by the REITs.
Interests in Unconsolidated Real Estate Investments
We own interests in single-tenant net leased properties that are leased to corporations through noncontrolling interests (i) in partnerships and limited liability companies that we do not control but over which we exercise significant influence or (ii) as tenants-in-common subject to common control. Generally, the underlying investments are jointly-owned with affiliates. We account for these investments under the equity method of accounting.
The following table sets forth our ownership interests in our equity investments in real estate and their respective carrying values. The carrying value of these ventures is affected by the timing and nature of distributions (dollars in thousands):
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The following tables present combined summarized financial information of our venture properties. Amounts provided are the total amounts attributable to the venture properties and do not represent our proportionate share (in thousands):
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We recognized income from equity investments in real estate of $3.4 million and $2.5 million for the three months ended September 30, 2011 and 2010, respectively, and $9.6 million and $12.4 million for the nine months ended September 30, 2011 and 2010, respectively. Income from equity investments in real estate represents our proportionate share of the income or losses of these ventures as well as certain depreciation and amortization adjustments related to other-than-temporary impairment charges. |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] |
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Schedule Of Fair Value Measurement With Unobservable Inputs Reconciliation Recurring Basis [Table Text Block] |
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Schedule Of Other Financial Instruments In Carrying Values And Fair Values [Table Text Block] |
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Schedule Of Fair Value Impairment Charges Using Unobservable Inputs Nonrecurring Basis [Table Text Block] |
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Finance Receivables (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule Of Tenant Receivables By Internal Credit Quality Rating [Table Text Block] |
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Equity and Stock-Based and Other Compensation | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity and Stock-Based and Other Compensation | Note 11. Equity and Stock-Based and Other Compensation
Stock-Based Compensation
The total compensation expense (net of forfeitures) for our stock-based compensation plans was $4.4 million and $1.8 million for the three months ended September 30, 2011 and 2010, respectively, and $13.1 million and $6.7 million for the nine months ended September 30, 2011 and 2010, respectively, all of which are included in General and administrative expenses in the consolidated financial statements. Total stock-based compensation expense for the nine months ended September 30, 2011 included an additional $2.4 million of compensation expense as a result of revising the expected vesting of the performance share units (“PSUs”) granted in 2009 and 2010. The tax benefit recognized by us related to these plans totaled $1.9 million and $0.8 million for the three months ended September 30, 2011 and 2010, respectively, and $5.8 million and $2.9 million for the nine months ended September 30, 2011 and 2010, respectively.
There has been no significant activity or changes to the terms and conditions of any of our stock-based compensation plans or arrangements during 2011, other than as described below.
2009 Share Incentive Plan
In January 2011, the compensation committee of our board of directors approved long-term incentive (“LTIP”) awards to key employees consisting of 178,550 restricted stock units (“RSUs”), which represent the right to receive shares of our common stock based on established restrictions, and 191,600 PSUs, which represent the right to receive shares of our common stock based on the level of achievement during a specified performance period of one or more performance goals set by the compensation committee. The RSUs are scheduled to vest over three years. Vesting of the PSUs is conditioned upon certain performance goals being met by us during the performance period from January 1, 2011 through December 31, 2013. The ultimate number of shares to be issued upon vesting of PSUs will depend on the extent to which we meet the performance goals and can range from zero to three times the original “target” awards noted above. In March 2011, the compensation committee approved additional LTIP awards to key employees consisting of 160,000 RSUs with a vesting period of four years and 120,000 PSUs with a vesting period of three years from January 1, 2011 to December 31, 2013. In June 2011, the compensation committee approved 60,000 RSUs with vesting periods ranging from one to five years and 86,000 RSUs that are scheduled to vest over three years to key employees. Based in part on our results through September 30, 2011 and expectations at that date regarding our future performance, we currently anticipate that the performance goals for the PSUs granted in 2011 will be met at target level, which is equal to the amount of the award at the grant date. As a result of the 2011 awards, we currently expect to recognize compensation expense totaling approximately $29.6 million over the vesting period, of which $2.6 million and $5.7 million was recognized during the three and nine months ended September 30, 2011, respectively. During the second quarter of 2011, in connection with a review of our current and expected performance versus the performance goals on the PSUs that were issued in 2009 and 2010, we revised our estimate of the ultimate number of certain of the PSUs to be vested. As a result, we recorded an additional $2.4 million of stock-based compensation expense to reflect the number of shares expected to be issued when these PSUs vest in 2012 and 2013. We review our performance against these goals on an ongoing basis and update expectations as warranted.
2009 Non-Employee Directors Incentive Plan
The 2009 non-employee directors' incentive plan authorizes the issuance of 325,000 shares of our common stock in the aggregate and initially provided for the automatic annual grant of RSUs with a total value of $50,000 to each director. In January 2011, the compensation committee of our board of directors approved an increase in the value of the annual grant to $70,000 per director, effective as of July 1, 2011. In July 2011, a total of 17,335 RSUs were granted to 10 independent directors, all of which were fully vested upon grant, although the actual delivery of the underlying shares is deferred until the date that the director leaves the board. As a result of the 2011 awards, we recognized compensation expense of $0.7 million during the third quarter of 2011.
Earnings Per Share
Under current authoritative guidance for determining earnings per share, all unvested share-based payment awards that contain non-forfeitable rights to distributions are considered to be participating securities and therefore are included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Our unvested RSUs contain rights to receive non-forfeitable distribution equivalents, and therefore we apply the two-class method of computing earnings per share. The calculation of earnings per share below excludes the income attributable to the unvested RSUs from the numerator. The following table summarizes basic and diluted earnings for the periods indicated (in thousands, except share amounts):
Securities included in our diluted earnings per share determination consist of stock options and restricted stock awards. Securities totaling 1,045,700 shares and 920,273 shares for the three and nine months ended September 30, 2010, respectively, were excluded from the earnings per share computations above as their effect would have been anti-dilutive. These securities did not have any anti-dilutive effect during the current year periods. |
Basis of Presentation | 9 Months Ended |
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Sep. 30, 2011 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 2. Basis of Presentation
Our interim consolidated financial statements have been prepared, without audit, in accordance with the instructions to Form 10-Q and, therefore, do not necessarily include all information and footnotes necessary for a fair statement of our consolidated financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the U.S. (“GAAP”).
In the opinion of management, the unaudited financial information for the interim periods presented in this Report reflects all normal and recurring adjustments necessary for a fair statement of results of operations, financial position and cash flows. Our interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for the year ended December 31, 2010, which are included in our 2010 Annual Report, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this Report. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year presentation.
Basis of Consolidation
The consolidated financial statements reflect all of our accounts, including those of our majority-owned and/or controlled subsidiaries. The portion of equity in a subsidiary that is not attributable, directly or indirectly, to us is presented as noncontrolling interests. All significant intercompany accounts and transactions have been eliminated.
In April 2010, CWI filed a registration statement with the SEC to sell up to $1.0 billion of its common stock in an initial public offering plus up to an additional $237.5 million of its common stock under a dividend reinvestment plan. This registration statement was declared effective by the SEC in September 2010. Through December 31, 2010, the financial statements of CWI, which had no significant assets, liabilities or operations, were included in our consolidated financial statements, as we owned all of CWI's outstanding common stock. Beginning in 2011, we have accounted for our interest in CWI under the equity method of accounting because, as the advisor, we do not exert control over, but we have the ability to exercise significant influence on, CWI.
Future Accounting Requirements
The following Accounting Standards Updates (“ASUs”) promulgated by the Financial Accounting Standards Board (“FASB”) are applicable to us in current or future reports, as indicated:
ASU 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations — In December 2010, the FASB issued an update to Accounting Standards Codification Topic (“ASC”) 805, Business Combinations. The amendments in the update clarify that the pro forma disclosures required under ASC 805 should depict revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. Additionally, the amendments expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination(s) included in the reported pro forma revenue and earnings. These amendments impact the form of our disclosures only, are applicable to us prospectively and are effective for our business combinations for which the acquisition date is on or after December 15, 2010.
ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs — In May 2011, the FASB issued an update to ASC 820, Fair Value Measurements. The amendments in the update explain how to measure fair value and do not require additional fair value measurements, nor are they intended to establish valuation standards or affect valuation practices outside of financial reporting. These new amendments will impact the level of information we provide, particularly for level 3 fair value measurements and the measurement's sensitivity to changes in unobservable inputs, our use of a nonfinancial asset in a way that differs from that asset's highest and best use, and the categorization by level of the fair value hierarchy for items that are not measured at fair value in the balance sheet but for which the fair value is required to be disclosed. These amendments are expected to impact the form of our disclosures only, are applicable to us prospectively and are effective for our interim and annual periods beginning in 2012.
ASU 2011-05, Presentation of Comprehensive Income — In June 2011, the FASB issued an update to ASC 220, Comprehensive Income. The amendments in the update change the reporting options applicable to the presentation of other comprehensive income and its components in the financial statements. This update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. Additionally, the update requires the consecutive presentation of the statement of net income and other comprehensive income. Finally, the update requires an entity to present reclassification adjustments on the face of the financial statements from other comprehensive income to net income. These amendments impact the form of our disclosures only, are applicable to us retrospectively and are effective for our interim and annual periods beginning in 2012.
ASU 2011-08, Testing Goodwill for Impairment — In September 2011, the FASB issued an update to ASC 350, Intangibles – Goodwill and Other. The objective of this ASU is to simplify how entities test goodwill for impairment. The amendments in the ASU permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. Previous guidance under Topic 350 required an entity to test goodwill for impairment, on at least an annual basis, by comparing the fair value of a reporting unit with its carrying amount, including goodwill (step one). If the fair value of a reporting unit is less than its carrying amount, then the second step of the test must be performed to measure the amount of the impairment loss, if any. Under the amendments in this ASU, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. We are currently assessing the potential impact that the adoption of the new guidance will have on our financial position and results of operations. |
Basis of Presentation (Details) (USD $) | Sep. 30, 2011 |
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Basis of Presentation [Abstract] | |
Common Stock Value To Be Issued | $ 1,000,000,000 |
Stock Value To Be Issued Dividend Reinvestment Plan | $ 237,500,000 |
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Risk Management | Note 8. Risk Management
In the normal course of our ongoing business operations, we encounter economic risk. There are three main components of economic risk: interest rate risk, credit risk and market risk. We are primarily subject to interest rate risk on our interest-bearing liabilities. Credit risk is the risk of default on our operations and tenants' inability or unwillingness to make contractually required payments. Market risk includes changes in the value of our properties and related loans, as well as changes in the value of our other securities and the shares we hold in the REITs due to changes in interest rates or other market factors. In addition, we own investments in the European Union and are subject to the risks associated with changing foreign currency exchange rates. Portfolio Concentration Risk
Concentrations of credit risk arise when a group of tenants is engaged in similar business activities or is subject to similar economic risks or conditions that could cause them to default on their lease obligations to us. We regularly monitor our portfolio to assess potential concentrations of credit risk. While we believe our portfolio is reasonably well diversified, it does contain concentrations in excess of 10%, based on the percentage of our annualized contractual minimum base rent for the third quarter of 2011, in certain areas, as shown in the table below. The percentages in the table below represent our directly-owned real estate properties and do not include our pro rata share of equity investments.
Except for our investment in CPA®:16 – Global, there were no significant concentrations, individually or in the aggregate, related to our unconsolidated ventures. At September 30, 2011 we owned 17.7% of CPA®:16 – Global, which has total assets of approximately $3.7 billion consisting of a portfolio comprised of full or partial ownership interests in 528 properties substantially all of which were triple-net leased to 148 tenants, and has certain concentrations within its portfolio, which are outlined in its periodic filings. |
Income Taxes | 9 Months Ended |
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Sep. 30, 2011 | |
Income Taxes [Abstract] | |
Income Taxes | Note 13. Income Taxes
Income tax provision for the three months ended September 30, 2011 and 2010 was $5.9 million and $3.4 million, respectively, while the income tax provision for the nine months ended September 30, 2011 and 2010 was $38.5 million and $14.2 million, respectively. The difference in the provision for income taxes reflected in the consolidated statements of income as compared to the provision calculated at the statutory federal income tax rate is primarily attributable to state and foreign income taxes, the tax classification of entities in the consolidated group and various permanent differences between pre-tax GAAP income and taxable income.
We have elected to be treated as a partnership for U.S. federal income tax purposes. As partnerships, we and our partnership subsidiaries are generally not directly subject to tax. We conduct our investment management services primarily through taxable subsidiaries. These operations are subject to federal, state, local and foreign taxes, as applicable. We conduct business in the U.S. and the European Union, and as a result, we or one or more of our subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and certain foreign jurisdictions. Certain of our inter-company transactions that have been eliminated in consolidation for financial accounting purposes are also subject to taxation. Periodically, shares in the CPA® REITs that are payable to our taxable subsidiaries in consideration for services rendered are distributed from these subsidiaries to us.
Our tax returns are subject to audit by taxing authorities. Such audits can often take years to complete and settle. The tax years 2008 through 2011 remain open to examination by the major taxing jurisdictions to which we are subject.
Our wholly-owned subsidiary, Carey REIT II, Inc. (“Carey REIT II”), owns our real estate assets and has elected to be taxed as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code. In connection with the CPA®:14/16 Merger in May 2011, we formed a wholly-owned subsidiary, Carey REIT III, Inc. (“Carey REIT III”), to hold a special membership interest in the newly formed operating partnership of CPA®:16 – Global (Note 3). Carey REIT III has also elected to be taxed as a real estate investment trust under the Internal Revenue Code. We believe we have operated, and we intend to continue to operate, in a manner that allows Carey REIT II and Carey REIT III to continue to qualify as real estate investment trusts. Under the real estate investment trust operating structure, Carey REIT II and Carey REIT III are permitted to deduct distributions paid to our shareholders and generally will not be required to pay U.S. federal income taxes. Accordingly, no provision has been made for U.S. federal income taxes in the consolidated financial statements related to either Carey REIT II or Carey REIT III.
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Debt Disclosure [Text Block] | Note 9. Debt Lines of Credit
We have a $250.0 million unsecured revolving line of credit with various lenders that matures in June 2012. This unsecured line of credit provides for an annual interest rate, at our election, of either (i) LIBOR plus a spread that ranges from 75 to 120 basis points depending on our leverage, or (ii) the greater of the lender's prime rate and the federal funds effective rate, plus 50 basis points. In addition, we pay an annual fee ranging between 12.5 and 20 basis points on the unused portion of the unsecured line of credit, depending on our leverage ratio. Based on our leverage ratio at September 30, 2011, we pay interest at LIBOR, or 0.25% at that date, plus 90 basis points and pay 15 basis points on the unused portion of the unsecured line of credit. At September 30, 2011, the outstanding balance on the unsecured line of credit was $243.2 million, an increase of $101.4 million since December 31, 2010. Net borrowings under our unsecured line of credit were primarily used to fund the purchase of CPA®:16 – Global shares from CPA®:16 – Global in order to facilitate the CPA®:14/16 Merger (Note 3). In addition, as of September 30, 2011, our lender had issued letters of credit totaling $6.8 million on our behalf in connection with certain contractual obligations. When issued, letters of credit reduce amounts that may be drawn under the unsecured line of credit.
On May 2, 2011, we obtained a $30.0 million secured revolving line of credit from Bank of America. The secured line of credit provides for an annual interest rate (as defined in the credit facility agreement) of either: (i) the “Adjusted LIBO Rate” plus 2.5%, or (ii) the “Alternative Base Rate” plus 3.50%. In addition, we paid a commitment fee of 0.25%, or $0.1 million, and are required to pay a 0.5% annual fee on the unused portion of the line of credit. This new line of credit is collateralized by five properties with a carrying value of approximately $51.0 million at September 30, 2011, and is coterminous with the unsecured line of credit, expiring in June 2012. At September 30, 2011, the outstanding balance on this line of credit was $10.0 million with an annual interest rate of Adjusted LIBO Rate plus 2.5%, or 2.8%. Borrowing under this line of credit was used to fund tax payments primarily related to the cash receipts from the CPA®:14/16 Merger.
The secured line of credit facility agreement stipulates six financial covenants that are similar to those of our unsecured revolving line of credit, as discussed in our 2010 Annual Report, which require us to maintain certain ratios and benchmarks at the end of each quarter. We were in compliance with the covenants on both our secured and unsecured lines of credit at September 30, 2011.
Non-Recourse Debt
Non-recourse debt consists of mortgage notes payable, which are collateralized by the assignment of real property, and direct financing leases, with an aggregate carrying value of $439.4 million at September 30, 2011. Our mortgage notes payable had fixed annual interest rates ranging from 3.1% to 7.8% and variable annual interest rates ranging from 1.2% to 7.3% with maturity dates ranging from 2012 to 2020 at September 30, 2011.
In connection with our acquisition of three properties from CPA®:14 in May 2011 as part of the CPA®:14 Asset Sales (Note 4), we assumed two non-recourse mortgages with an aggregate fair value of $87.6 million (and a carrying value of $88.7 million) on the date of acquisition and recorded a net fair market value adjustment of $1.1 million. The fair market value adjustment will be amortized to interest expense over the remaining lives of the loans. These mortgages have a weighted-average annual fixed interest rate and remaining term of 5.8% and 8.3 years, respectively.
During the nine months ended September 30, 2011, we refinanced two maturing non-recourse mortgages totaling $10.5 million with new financing totaling $11.9 million and obtained new financing on an unencumbered property of $5.0 million at a weighted-average annual interest rate and term of 5.1% and 5.2 years, respectively. Additionally, during the nine months ended September 30, 2011, Carey Storage borrowed a total of $4.0 million that is secured by individual mortgages on, and cross-collateralized by, ten properties in the Carey Storage portfolio. These borrowings have a weighted-average annual interest rate and term of 6.8% and 8.2 years, respectively.
Scheduled Debt Principal Payments
Scheduled debt principal payments during each of the next five calendar years following September 30, 2011 and thereafter are as follows (in thousands):
___________
Certain amounts in the table above are based on the applicable foreign currency exchange rate at September 30, 2011.
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Segment Reporting (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting Table [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation Of Assets From Segment To Consolidated Text Block |
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Schedule of Segment Long Lived Assets to Consolidated Assets |
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Schedule Of International Investment By Segment [Table Text Block] |
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Fair Value Measurements | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Note 7. Fair Value Measurements
Under current authoritative accounting guidance for fair value measurements, the fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps and swaps; and Level 3, for which little or no market data exists, therefore requiring us to develop our own assumptions, such as certain securities.
Items Measured at Fair Value on a Recurring Basis
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Money Market Funds — Our money market funds consisted of government securities and U.S. Treasury bills. These funds were classified as Level 1 as we used quoted prices from active markets to determine their fair values. Derivative Assets and Liabilities — Our derivative assets and liabilities are primarily comprised of interest rate swaps or caps. These derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates. These derivative instruments were classified as Level 2 because they are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market.
Other Securities — Our other securities are primarily comprised of our investment in an India growth fund and our interest in a commercial mortgage loan securitization. These funds are not traded in an active market. We estimated the fair value of these securities using internal valuation models that incorporate market inputs and our own assumptions about future cash flows. We classified these assets as Level 3.
Redeemable Noncontrolling Interest — We account for our noncontrolling interest in WPCI as a redeemable noncontrolling interest. We determined the valuation of the redeemable noncontrolling interest using widely accepted valuation techniques, including expected discounted cash flows of the investment as well as the income capitalization approach, which considers prevailing market capitalization rates. We classified this liability as Level 3. The following tables set forth our assets and liabilities that were accounted for at fair value on a recurring basis. Assets and liabilities presented below exclude assets and liabilities owned by unconsolidated ventures (in thousands):
We did not have any transfers into or out of Level 1, Level 2 and Level 3 measurements during the three and nine months ended September 30, 2011 and 2010. Gains and losses (realized and unrealized) included in earnings for other securities are reported in Other income and (expenses) in the consolidated financial statements.
Our other financial instruments had the following carrying values and fair values as of the dates shown (in thousands):
We determined the estimated fair value of our debt instruments using a discounted cash flow model with rates that take into account the credit of the tenants and interest rate risk. We estimated that our other financial assets and liabilities (excluding net investments in direct financing leases) had fair values that approximated their carrying values at both September 30, 2011 and December 31, 2010.
Items Measured at Fair Value on a Non-Recurring Basis
We perform an assessment, when required, of the value of certain of our real estate investments in accordance with current authoritative accounting guidance. As part of that assessment, we determine the valuation of these assets using widely accepted valuation techniques, including expected discounted cash flows or an income capitalization approach, which considers prevailing market capitalization rates. We review each investment based on the highest and best use of the investment and market participation assumptions. We determined that the significant inputs used to value these investments fall within Level 3. As a result of our assessments, we calculated impairment charges, which were based on market conditions and assumptions that existed at the time. The valuation of real estate is subject to significant judgment and actual results may differ materially if market conditions or the underlying assumptions change. The following table presents information about our other assets that were measured on a fair value basis for the periods presented. All of the impairment charges were measured using unobservable inputs (Level 3) and were recorded based on market conditions and assumptions that existed at the time (in thousands):
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Agreements and Transactions with Related Parties | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Agreements and Transactions with Related Parties | Note 3. Agreements and Transactions with Related Parties
Advisory Agreements with the REITs
We have advisory agreements with each of the REITs pursuant to which we earn certain fees or are entitled to receive distributions of cash flow. The terms of the advisory agreements are outlined in our 2010 Annual Report except as otherwise stated below. In connection with CPA®:16 – Global's internal reorganization on May 2, 2011 following the CPA®:14/16 Merger, we entered into an amended and restated advisory agreement with CPA®:16 – Global (see “CPA®:16 – Global UPREIT Reorganization” below). In the third quarter of 2011, the CPA® REIT advisory agreements, which were scheduled to expire on September 30, 2011, were renewed for a three-month period effective October 1, 2011. In the third quarter of 2011, the CWI advisory agreement, which was also scheduled to expire on September 30, 2011, was renewed for an additional year pursuant to its terms, effective as of October 1, 2011. The following table presents a summary of revenue earned and/or cash received from the REITs in connection with providing services as the advisor to the REITs (in thousands):
__________
Unpaid transaction fees, including accrued interest, are included in Due from affiliates in the consolidated financial statements. Unpaid transaction fees bear interest at annual rates ranging from 5% to 7%. The following tables present the amount of unpaid transaction fees and interest earned on these fees (in thousands):
Other Transactions with Affiliates
CPA®:14/16 Merger
On May 2, 2011, CPA®:14 merged with and into a subsidiary of CPA®:16 – Global. In connection with the CPA®:14/16 Merger, on May 2, 2011, we purchased three properties from CPA®:14, in which we already had a partial ownership interest, for an aggregate purchase price of $31.8 million, plus the assumption of $87.6 million of indebtedness (Note 4). The purchase price was based on the appraised values of the properties and debt. Together with the three properties sold by CPA®:14 to CPA®:17 – Global on that date, as well as certain other properties sold to third parties in anticipation of the CPA®:14/16 Merger, these sales are referred to herein as the CPA®:14 Asset Sales.
In the CPA®:14/16 Merger, CPA®:14 shareholders were entitled to receive $11.50 per share, which was equal to the estimated net asset value (“NAV”) per share of CPA®:14 as of September 30, 2010. For each share of CPA®:14 stock owned, each CPA®:14 shareholder received a $1.00 per share special cash dividend and a choice of either (i) $10.50 in cash or (ii) 1.1932 shares of CPA®:16 – Global. The merger consideration of $954.5 million was paid by CPA®:16 – Global, including payment of $444.0 million to liquidating shareholders and issuing 57,365,145 shares of common stock with a fair value of $510.5 million on the date of closing to shareholders of CPA®:14 in exchange for 48,076,723 shares of CPA®:14 common stock. The $1.00 per share special cash distribution, totaling $90.4 million in the aggregate, was funded from the proceeds of the CPA®:14 Asset Sales. In connection with the CPA®:14/16 Merger, we agreed to purchase a sufficient number of shares of CPA®:16 – Global common stock from CPA®:16 – Global to enable it to pay the merger consideration if the cash on hand and available to CPA®:14 and CPA®:16 – Global, including the proceeds of the CPA®:14 Asset Sales and a new $320.0 million senior credit facility of CPA®:16 – Global, were not sufficient. Accordingly, we purchased 13,750,000 shares of CPA®:16 – Global on May 2, 2011 for $121.0 million, which we funded, along with other obligations, with cash on hand and $121.4 million drawn on our unsecured line of credit.
Upon consummation of the CPA®:14/16 Merger, we earned revenues of $31.2 million in connection with the termination of the advisory agreement with CPA®:14 and $21.3 million of subordinated disposition revenues. We elected to receive our termination revenue in 2,717,138 shares of CPA®:14, which were exchanged into 3,242,089 shares of CPA®:16 – Global. In addition, we received $11.1 million in cash as a result of the $1.00 per share special cash distribution paid by CPA®:14 to its shareholders. Upon closing of the CPA®:14/16 Merger, we received 13,260,091 shares of common stock of CPA®:16 – Global in respect of our shares of CPA®:14.
Carey Asset Management Corp. (“CAM”), our subsidiary that acts as the advisor to the CPA® REITs, waived any acquisition fees payable by CPA®:16 – Global under its advisory agreement with CAM in respect of the properties acquired in the CPA®:14/16 Merger and also waived any disposition fees that may subsequently be payable by CPA®:16 – Global upon a sale of such assets. As the advisor to CPA®:14, CAM earned acquisition fees related to those properties acquired by CPA®:14 and disposition fees on those properties upon the liquidation of CPA®:14 and, as a result, CAM and CPA®:16 – Global agreed that CAM should not receive fees upon the acquisition or disposition of the same properties by CPA®:16 – Global.
CPA®:16 – Global UPREIT Reorganization
Immediately following the CPA®:14/16 Merger on May 2, 2011, CPA®:16 – Global completed an internal reorganization whereby CPA®:16 – Global formed an umbrella partnership real estate investment trust, or UPREIT which was approved by CPA®:16 – Global shareholders in connection with the CPA®:14/16 Merger. In connection with the formation of the UPREIT, CPA®:16 – Global contributed substantially all of its assets and liabilities to an “Operating Partnership” in exchange for a managing member interest and units of membership interest in the Operating Partnership, which together represent a 99.985% capital interest of the “Managing Member” (representing the CPA®:16 – Global shareholders' interest). Through our subsidiary, Carey REIT III, Inc. (the “Special General Partner”), we acquired a special membership interest (“Special Interest”) of 0.015% in the Operating Partnership for $0.3 million, entitling us to receive certain profit allocations and distributions of cash.
As consideration for the Special Interest, we amended our advisory agreement with CPA®:16 – Global to give effect to this UPREIT reorganization and to reflect a revised fee structure whereby (i) our asset management fees are prospectively reduced to 0.5% from 1.0% of the asset value of a property under management, (ii) the former 15% subordinated incentive fee and termination fees have been eliminated and replaced by (iii) a 10% Special General Partner Available Cash Distribution and (iv) the 15% Final Distribution, each defined below. The sum of the new 0.5% asset management fee and the Available Cash Distribution is expected to be lower than the original 1.0% asset management fee; accordingly, the Available Cash Distribution is contractually limited to 0.5% of the value of CPA®:16 – Global's assets under management. However, as a result of income tax savings, the amount of after-tax cash that we expect to receive pursuant to this revised structure is anticipated to be greater than the amount we received under the previous arrangement. The fee structure related to initial acquisition fees, subordinated acquisition fees and subordinated disposition fees for CPA®:16 – Global remains unchanged.
As Special General Partner, we are entitled to 10% of the Operating Partnership's available cash (the “Available Cash Distribution”), which is defined as the Operating Partnership's cash generated from operations, excluding capital proceeds, as reduced by operating expenses and debt service, excluding prepayments and balloon payments. We may elect to receive our Available Cash Distribution in shares of CPA®:16 – Global's common stock. In the event of a capital transaction such as a sale, exchange, disposition or refinancing of CPA®:16 – Global's assets, we are also entitled to receive a “Final Distribution” equal to 15% of residual returns after giving effect to a 100% return of the Managing Member's invested capital plus a 6% priority return.
We recorded the Special Interest as an equity investment at its fair value of $28.3 million and an equal amount of deferred revenues (Note 6), which is net of approximately $6.0 million related to our ownership interest of approximately 17.5% in CPA®:16 – Global that was eliminated in our consolidated financial statements. We will recognize the deferred revenue earned from our Special Interest in the Operating Partnership into earnings on a straight-line basis over the expected period of performance, which is currently estimated at three years based on the stated intended life of CPA®:16 – Global as described in its offering documents. The amount of deferred revenue recognized during the three and nine months ended September 30, 2011 was $2.1 million and $3.5 million, respectively, which is net of $0.2 million and $0.4 million in amortization, respectively, associated with the basis differential generated by the Special Interest in the Operating Partnership and our underlying claim on the net assets of CPA®:16 – Global. We determined the fair value of the Special Interest based upon a discounted cash flow model, which included assumptions related to estimated future cash flows of CPA®:16 – Global and the estimated duration of the fee stream of three years.
Other
We are the general partner in a limited partnership (which we consolidate for financial statement purposes) that leases our home office space and participates in an agreement with certain affiliates, including the REITs, for the purpose of leasing office space used for the administration of our operations and the operations of our affiliates and for sharing the associated costs. This limited partnership does not have any significant assets, liabilities or operations other than its interest in the office lease. The average estimated minimum lease payments for the office lease, inclusive of noncontrolling interests, at September 30, 2011 approximates $3.0 million annually through 2016. The table below presents income from noncontrolling interest partners related to reimbursements from these affiliates (in thousands):
The following table presents deferred rent due to affiliates related to this limited partnership, which are included in Accounts payable, accrued expenses and other liabilities in the consolidated balance sheets (in thousands):
We own interests in entities ranging from 5% to 95%, as well as jointly-controlled tenant-in-common interests in properties, with the remaining interests generally held by affiliates, and own common stock in each of the REITs. We consolidate certain of these investments and account for the remainder under the equity method of accounting.
One of our directors and officers is the sole shareholder of Livho, Inc. (“Livho”), a subsidiary that operates a hotel investment. We consolidate the accounts of Livho in our consolidated financial statements because it is a variable interest entity and we are its primary beneficiary.
Family members of one of our directors have an ownership interest in certain companies that own noncontrolling interests in one of our French majority-owned subsidiaries. These ownership interests are subject to substantially the same terms as all other ownership interests in the subsidiary companies.
An employee owns a redeemable noncontrolling interest (Note 12) in W. P. Carey International LLC (“WPCI”), a subsidiary company that structures net lease transactions on behalf of the CPA® REITs outside of the U.S., as well as certain related entities.
In February 2011, we loaned $90.0 million at an annual interest rate of 1.15% to CPA®:17 – Global, which was repaid on April 8, 2011, its maturity date. In May 2011, we loaned $4.0 million at an annual interest rate equal to the 30-day London inter-bank offered rate (“LIBOR”) plus 2.5% to CWI, which was repaid on June 6, 2011, its maturity date. In September 2011, we loaned $2.0 million at an annual interest rate equal to LIBOR plus 0.9% to CWI, of which $1.0 million was repaid on September 13, 2011 and the remaining $1.0 million was repaid on October 6, 2011. In connection with these loans, we received interest income from CPA®:17 – Global and CWI totaling less than $0.1 million and $0.2 million during the three and nine months ended September 30, 2011, respectively. |
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Redeemable Noncontrolling Interest Rollforward |
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Net Investments in Properties | Note 4. Net Investments in Properties
Real Estate
Real estate, which consists of land and buildings leased to others, at cost, and which are subject to operating leases, is summarized as follows (in thousands):
Operating Real Estate
Operating real estate, which consists primarily of our investments in 21 self-storage properties through Carey Storage and our Livho hotel subsidiary, at cost, is summarized as follows (in thousands):
Real Estate Acquired
As discussed in Note 3, in connection with the CPA®:14/16 Merger in May 2011, we purchased the remaining interests in certain properties, in which we already had a joint interest, from CPA®:14 as part of the CPA®:14 Asset Sales. These three properties, which were leased to Checkfree, Federal Express and Amylin, had an aggregate fair value of $174.8 million at the date of acquisition. Prior to this purchase, we had consolidated the Checkfree property and accounted for the Federal Express and Amylin properties under the equity method. As part of the transaction, we assumed the related non-recourse mortgages on the Federal Express and Amylin properties. These two mortgages and the mortgage on the Checkfree property had an aggregate fair value of $117.1 million at the date of acquisition (Note 9). Amounts provided are the total amounts attributable to the venture properties and do not represent the proportionate share that we purchased. Upon acquiring the remaining interests in the properties leased to Federal Express and Amylin, we owned 100% of these entities and accounted for these acquisitions as step acquisitions utilizing the purchase method of accounting. Due to the change in control of the ventures that occurred, and in accordance with ASC 810 involving a step acquisition where control is obtained and there is a previously held equity interest, we recorded an aggregate gain of approximately $27.9 million related to the difference between our respective carrying values and the fair values of our previously held interests on the acquisition date. Subsequent to our acquisition, we consolidate all of these wholly-owned properties. The consolidation of these properties resulted in an increase of $90.2 million and $40.8 million to Real estate, net and net lease intangibles, respectively, in May 2011.
Impairment Charges
We periodically assess whether there are any indicators that the value of our real estate investments may be impaired or that their carrying value may not be recoverable. For investments in real estate in which an impairment indicator is identified, we follow a two-step process to determine whether the investment is impaired and to determine the amount of the charge. First, we compare the carrying value of the real estate to the future net undiscounted cash flow that we expect the real estate will generate, including any estimated proceeds from the eventual sale of the real estate. If this amount is less than the carrying value, the real estate is considered to be impaired, and we then measure the loss as the excess of the carrying value of the real estate over the estimated fair value of the real estate, which is primarily determined using market information such as recent comparable sales or broker quotes. If relevant market information is not available or is not deemed appropriate, we perform a future net cash flow analysis discounted for inherent risk associated with each investment.
During the third quarter of 2011, we recognized an impairment charge of $4.9 million to reduce the carrying value of a multi-tenant property to its estimated fair value, which reflected the estimated selling price. As of the date of this report, this property is being marketed for lease or sale as a result of the tenants vacating the property.
Other
In connection with our prior acquisitions of properties, we have recorded net lease intangibles of $77.1 million, which are being amortized over periods ranging from one year to 40 years. In-place lease, tenant relationship and above-market rent intangibles are included in Intangible assets and goodwill, net in the consolidated financial statements. Below-market rent intangibles are included in Accounts payable, accrued expenses and other liabilities in the consolidated financial statements. Amortization of below-market and above-market rent intangibles is recorded as an adjustment to Lease revenues, while amortization of in-place lease and tenant relationship intangibles is included in Depreciation and amortization. Net amortization of intangibles, including the effect of foreign currency translation, was $1.3 million and $1.2 million for the three months ended September 30, 2011 and 2010, respectively, and $3.5 million and $4.3 million for the nine months ended September 30, 2011 and 2010, respectively. |
Fair Value Measurements (Details 1) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | |||||||||||||||||||||||
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Estimate Of Fair Value Fair Value Disclosure [Member] | Sep. 30, 2011
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Real Estate [Member]
Segment Continuing Operations [Member] | Sep. 30, 2011
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Real Estate [Member]
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Real Estate Investment [Member]
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Deferred acquisition fees receivable | $ 31,022 | $ 31,419 | $ 30,414 | $ 32,485 | ||||||||||||||||||||||||||||||||||||
Non-recourse debt | 335,354 | 255,232 | 327,937 | 255,460 | ||||||||||||||||||||||||||||||||||||
Line Of Credit | 253,160 | 141,750 | 250,800 | 140,600 | ||||||||||||||||||||||||||||||||||||
Fair Value Assets And Liabilities Measured On Non-Recurring Basis [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Impairment Charges From Continuing Operations | $ 4,473 | $ 6,377 | $ 29,769 | $ 4,473 | $ 0 | $ 4,473 | $ 0 | $ 0 | $ 521 | $ 350 | $ 6,923 | $ 0 | $ 22,846,000 | $ 1,554 | $ 22,846 | $ 6,027 | $ 22,846 | $ 23,367 | $ 4,934 | $ 5,181 | $ 10,012 | $ 4,934 | $ 0 | $ 4,934 | $ 0 | $ 0 | $ 481 | $ 41 | $ 8,618 | $ 0 | $ 1,394,000 | $ 206 | $ 1,394 | $ 5,140 | $ 1,394 | $ 1,875 |
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Schedule Of Disposal Groups Including Discontinued Operations Income Statement Balance Sheet And Additional Disclosures [Text Block] |
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Quoted Prices in Active Markets for Indentical Assets (Level 1) [Member] | Sep. 30, 2011
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Money Market Funds [Member] | Sep. 30, 2011
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Other Debt Securities [Member] | Dec. 31, 2010
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Other Debt Securities [Member] | Sep. 30, 2011
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Derivative Financial Instruments Assets [Member] | Sep. 30, 2011
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Derivative Financial Instruments Liabilities [Member] | Dec. 31, 2010
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Derivative Financial Instruments Liabilities [Member] | Sep. 30, 2011
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Redeemable Noncontrolling Interest [Member] | Dec. 31, 2010
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Redeemable Noncontrolling Interest [Member] | Sep. 30, 2011
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Money Market Funds [Member] | Sep. 30, 2011
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Other Debt Securities [Member] | Dec. 31, 2010
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Other Debt Securities [Member] | Sep. 30, 2011
Fair Value Measurements Recurring [Member]
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Derivative Financial Instruments Assets [Member] | Dec. 31, 2010
Fair Value Measurements Recurring [Member]
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Derivative Financial Instruments Assets [Member] | Sep. 30, 2011
Fair Value Measurements Recurring [Member]
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Derivative Financial Instruments Liabilities [Member] | Dec. 31, 2010
Fair Value Measurements Recurring [Member]
Significant Other Observable Inputs (Level 2) [Member]
Derivative Financial Instruments Liabilities [Member] | Sep. 30, 2011
Fair Value Measurements Recurring [Member]
Significant Other Observable Inputs (Level 2) [Member]
Redeemable Noncontrolling Interest [Member] | Dec. 31, 2010
Fair Value Measurements Recurring [Member]
Significant Other Observable Inputs (Level 2) [Member]
Redeemable Noncontrolling Interest [Member] | Sep. 30, 2011
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Unobservable Inputs (Level 3) [Member] | Dec. 31, 2010
Fair Value Measurements Recurring [Member]
Unobservable Inputs (Level 3) [Member] | Sep. 30, 2011
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Money Market Funds [Member] | Dec. 31, 2010
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Money Market Funds [Member] | Sep. 30, 2011
Fair Value Measurements Recurring [Member]
Unobservable Inputs (Level 3) [Member]
Other Debt Securities [Member] | Dec. 31, 2010
Fair Value Measurements Recurring [Member]
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Other Debt Securities [Member] | Sep. 30, 2011
Fair Value Measurements Recurring [Member]
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Derivative Financial Instruments Assets [Member] | Dec. 31, 2010
Fair Value Measurements Recurring [Member]
Unobservable Inputs (Level 3) [Member]
Derivative Financial Instruments Assets [Member] | Sep. 30, 2011
Fair Value Measurements Recurring [Member]
Unobservable Inputs (Level 3) [Member]
Derivative Financial Instruments Liabilities [Member] | Dec. 31, 2010
Fair Value Measurements Recurring [Member]
Unobservable Inputs (Level 3) [Member]
Derivative Financial Instruments Liabilities [Member] | Sep. 30, 2011
Fair Value Measurements Recurring [Member]
Unobservable Inputs (Level 3) [Member]
Redeemable Noncontrolling Interest [Member] | Dec. 31, 2010
Fair Value Measurements Recurring [Member]
Unobservable Inputs (Level 3) [Member]
Redeemable Noncontrolling Interest [Member] | Sep. 30, 2011
Fair Value Measurements Recurring [Member]
Money Market Funds [Member] | Dec. 31, 2010
Fair Value Measurements Recurring [Member]
Money Market Funds [Member] | Sep. 30, 2011
Fair Value Measurements Recurring [Member]
Other Debt Securities [Member] | Dec. 31, 2010
Fair Value Measurements Recurring [Member]
Other Debt Securities [Member] | Sep. 30, 2011
Fair Value Measurements Recurring [Member]
Derivative Financial Instruments Assets [Member] | Dec. 31, 2010
Fair Value Measurements Recurring [Member]
Derivative Financial Instruments Assets [Member] | Sep. 30, 2011
Fair Value Measurements Recurring [Member]
Derivative Financial Instruments Liabilities [Member] | Dec. 31, 2010
Fair Value Measurements Recurring [Member]
Derivative Financial Instruments Liabilities [Member] | Sep. 30, 2011
Fair Value Measurements Recurring [Member]
Redeemable Noncontrolling Interest [Member] | Dec. 31, 2010
Fair Value Measurements Recurring [Member]
Redeemable Noncontrolling Interest [Member] | Sep. 30, 2011
Other Debt Securities [Member] | Sep. 30, 2010
Other Debt Securities [Member] | Sep. 30, 2011
Other Debt Securities [Member] | Sep. 30, 2010
Other Debt Securities [Member] | Sep. 30, 2011
Redeemable Noncontrolling Interest [Member] | Sep. 30, 2010
Redeemable Noncontrolling Interest [Member] | Sep. 30, 2011
Redeemable Noncontrolling Interest [Member] | Sep. 30, 2010
Redeemable Noncontrolling Interest [Member] | |
Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ 1,634 | $ 39,192 | $ 35 | $ 37,154 | $ 35 | $ 37,154 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 312 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 312 | $ 1,599 | $ 1,726 | $ 0 | $ 0 | $ 1,599 | $ 1,726 | $ 0 | $ 0 | $ 35 | $ 37,154 | $ 1,599 | $ 1,726 | $ 0 | $ 312 | ||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 10,477 | 8,515 | 0 | 0 | 0 | 0 | 0 | 0 | 3,846 | 969 | 3,846 | 969 | 0 | 0 | 6,631 | 7,546 | 0 | 0 | 6,631 | 7,546 | 3,846 | 969 | 6,631 | 7,546 | ||||||||||||||||||||||||||||||||
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation Calculation [Roll Forward] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance | 1,601 | 1,717 | 1,726 | 1,687 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Included in earnings | 3 | 2 | 1 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurement With Unobservable Inputs Reconciliation Recurring Basis Asset Gain Loss Included In Other Comprehensive Income | (5) | 4 | (8) | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases | 0 | 0 | 53 | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlements | 0 | 0 | (173) | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Distribution Paid | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption value adjustment | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Ending balance | 1,599 | 1,723 | 1,599 | 1,723 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date | 3 | 2 | 1 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation Calculation [Roll Forward] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance | 6,792 | 7,119 | 7,546 | 7,692 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Included in earnings | 637 | 106 | 1,241 | 698 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Included in other comprehensive income (loss) | (8) | 10 | 1 | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlements | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions paid | (199) | (200) | (875) | (810) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption value adjustment | (591) | (148) | (1,282) | (686) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Ending balance | 6,631 | 6,887 | 6,631 | 6,887 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date | $ 0 | $ 0 | $ 0 | $ 0 |
Stock-Based Compensation and Equity (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share Reconciliation Abstract | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Earnings Per Share Reconciliation [Table Text Block] |
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Noncontrolling Interests | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interests [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interests | Note 12. Noncontrolling Interests
Noncontrolling interest is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. Other than our acquisition of the noncontrolling interest in a property from CPA®:14 in connection with the CPA®:14 Asset Sales (Note 4), there were no changes in our ownership interest in any of our consolidated subsidiaries for the nine months ended September 30, 2011.
The following tables present a reconciliation of total equity, the equity attributable to our shareholders and the equity attributable to noncontrolling interests (in thousands):
____________
Redeemable Noncontrolling Interest
We account for the noncontrolling interest in WPCI held by one of our officers (Note 3) as a redeemable noncontrolling interest, as we have an obligation to repurchase the interest from that officer, subject to certain conditions. The officer's interest is reflected at estimated redemption value for all periods presented. Redeemable noncontrolling interest, as presented on the consolidated balance sheets, reflects an adjustment of $1.3 million and $0.5 million at September 30, 2011 and December 31, 2010, respectively, to present the noncontrolling interest at redemption value.
The following table presents a reconciliation of redeemable noncontrolling interest (in thousands):
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Finance Receivables | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance Receivables | Note 5. Finance Receivables
Assets representing rights to receive money on demand or at fixed or determinable dates are referred to as finance receivables. Our finance receivable portfolios consist of our Net investments in direct financing leases and deferred acquisition fees. Operating leases are not included in finance receivables as such amounts are not recognized as an asset in the consolidated balance sheets.
Deferred Acquisition Fees Receivable
As described in Note 3, we earn revenue in connection with structuring and negotiating investments and related mortgage financing for the REITs. A portion of this revenue is due in equal annual installments ranging from three to four years, provided the relevant CPA® REIT meets its performance criterion. Unpaid deferred installments, including accrued interest, from all of the CPA® REITs were included in Due from affiliates in the consolidated financial statements.
Credit Quality of Finance Receivables
We generally seek investments in facilities that we believe are critical to a tenant's business and that we believe have a low risk of tenant defaults. At September 30, 2011 and December 31, 2010, none of the balances of our finance receivables were past due and we had not established any allowances for credit losses. Additionally, there have been no modifications of finance receivables. We evaluate the credit quality of our tenant receivables utilizing an internal 5-point credit rating scale, with 1 representing the highest credit quality and 5 representing the lowest. The credit quality evaluation of our tenant receivables was last updated in the third quarter of 2011. We believe the credit quality of our deferred acquisition fees receivable falls under category 1, as all of the CPA® REITs are expected to have the available cash to make such payments.
A summary of our finance receivables by internal credit quality rating for the periods presented is as follows (dollars in thousands):
At both September 30, 2011 and December 31, 2010, Other assets, net included $0.3 million of accounts receivable related to amounts billed under these direct financing leases.
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Discontinued Operations | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Note 15. Discontinued Operations
From time to time, tenants may vacate space due to lease buy-outs, elections not to renew their leases, insolvency or lease rejection in the bankruptcy process. In these cases, we assess whether we can obtain the highest value from the property by re-leasing or selling it. In addition, in certain cases, we may try to sell a property that is occupied. When it is appropriate to do so under current accounting guidance for the disposal of long-lived assets, we classify the property as an asset held for sale on our consolidated balance sheet and the current and prior period results of operations of the property are reclassified as discontinued operations.
The results of operations for properties that are held for sale or have been sold are reflected in the consolidated financial statements as discontinued operations for all periods presented and are summarized as follows (in thousands):
2011 — During the nine months ended September 30, 2011, we sold six domestic properties for $11.0 million, net of selling costs, and recognized a net gain on these sales of $0.3 million, excluding impairment charges of $2.7 million previously recognized during the nine months ended September 30, 2010. (Loss) gain on sale of real estate recognized during the nine months ended September 30, 2011 included a net loss of $0.4 million related to properties sold during the third quarter of 2011.
In September 2011, one of our subsidiaries consented to a court order appointing a receiver when it stopped making payments on the non-recourse debt obligation on a property after the tenant, Career Education Institute, vacated it. As we no longer have control over the activities that most significantly impact the economic performance of this subsidiary following possession of the property by the receiver, we deconsolidated the subsidiary during the third quarter of 2011. As of the date of deconsolidation, the property had a carrying value of $5.3 million, reflecting the impact of impairment charges totaling $5.6 million recognized during the fourth quarter of 2010, and the related non-recourse mortgage loan had an outstanding balance of $6.3 million. In connection with the deconsolidation, we recognized a gain of $1.0 million during the third quarter of 2011. We believe that our retained interest in this deconsolidated entity had no value at the date of deconsolidation.
2010 — During the nine months ended September 30, 2010, we sold six domestic properties for $14.6 million, net of selling costs, and recognized a net gain on these sales of $0.5 million, excluding impairment charges of $5.6 million and $5.1 million that were previously recognized in 2010 and 2009, respectively. In addition, in April 2010, we entered into an agreement to sell a property. In connection with the proposed sale, we recorded impairment charges totaling $0.3 million during the nine months ended September 30, 2010 to reduce the carrying value of the property to its contracted selling price. We completed this sale in November 2010.
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Equity Investment in Real Estate and the REITs (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | Dec. 31, 2007 | Dec. 31, 2010 | Sep. 30, 2011
CPA 14 [Member]
REITs [Member] | Dec. 31, 2010
CPA 14 [Member]
REITs [Member] | Sep. 30, 2011
CPA 15 [Member]
REITs [Member] | Dec. 31, 2010
CPA 15 [Member]
REITs [Member] | Sep. 30, 2011
CPA 16 [Member]
REITs [Member] | Dec. 31, 2010
CPA 16 [Member]
REITs [Member] | Sep. 30, 2011
CPA 17 [Member]
REITs [Member] | Sep. 30, 2010
CPA 17 [Member]
REITs [Member] | Sep. 30, 2011
CPA 17 [Member]
REITs [Member] | Sep. 30, 2010
CPA 17 [Member]
REITs [Member] | Dec. 31, 2010
CPA 17 [Member]
REITs [Member] | Sep. 30, 2011
CWI [Member]
REITs [Member] | Dec. 31, 2010
CWI [Member]
REITs [Member] | Sep. 30, 2011
REITs [Member] | Sep. 30, 2010
REITs [Member] | Sep. 30, 2011
REITs [Member] | Sep. 30, 2010
REITs [Member] | Dec. 31, 2010
REITs [Member] | Sep. 30, 2011
Real Estate [Member] | Sep. 30, 2010
Real Estate [Member] | Sep. 30, 2011
Real Estate [Member] | Sep. 30, 2010
Real Estate [Member] | Dec. 31, 2010
Real Estate [Member] | Sep. 30, 2011
Real Estate [Member]
SchulerAG [Member] | Dec. 31, 2010
Real Estate [Member]
SchulerAG [Member] | Sep. 30, 2011
Real Estate [Member]
Carrefour France SAS [Member] | Dec. 31, 2010
Real Estate [Member]
Carrefour France SAS [Member] | Sep. 30, 2011
Real Estate [Member]
New York Times Company [Member] | Dec. 31, 2010
Real Estate [Member]
New York Times Company [Member] | Sep. 30, 2011
Real Estate [Member]
US Airways Group Inc [Member] | Dec. 31, 2010
Real Estate [Member]
US Airways Group Inc [Member] | Sep. 30, 2011
Real Estate [Member]
Medica France SA [Member] | Dec. 31, 2010
Real Estate [Member]
Medica France SA [Member] | Sep. 30, 2011
Real Estate [Member]
HologicInc [Member] | Dec. 31, 2010
Real Estate [Member]
HologicInc [Member] | Jan. 31, 2011
Real Estate [Member]
Childtime Childcare Inc [Member] | Sep. 30, 2011
Real Estate [Member]
Childtime Childcare Inc [Member] | Dec. 31, 2010
Real Estate [Member]
Childtime Childcare Inc [Member] | Sep. 30, 2011
Real Estate [Member]
Consolidated Systems Inc [Member] | Dec. 31, 2010
Real Estate [Member]
Consolidated Systems Inc [Member] | Sep. 30, 2011
Real Estate [Member]
Symphony IRI Group Inc [Member] | Dec. 31, 2010
Real Estate [Member]
Symphony IRI Group Inc [Member] | Sep. 30, 2011
Real Estate [Member]
Hellweg Die Profi Baumarkte GmbH Co Kg [Member] | Dec. 31, 2010
Real Estate [Member]
Hellweg Die Profi Baumarkte GmbH Co Kg [Member] | Dec. 31, 2010
Real Estate [Member]
Federal Express Corporation [Member] | Sep. 30, 2011
Real Estate [Member]
Federal Express Corporation [Member] | Sep. 30, 2011
Real Estate [Member]
Amylin Pharmaceuticals Inc [Member] | Dec. 31, 2010
Real Estate [Member]
Amylin Pharmaceuticals Inc [Member] | |
Schedule Of Equity Method Investments [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investment, Ownership Percentage | 0.00% | 9.20% | 7.60% | 7.10% | 17.70% | 5.60% | 0.80% | 0.80% | 0.60% | 0.60% | 100.00% | 33.00% | 46.00% | 18.00% | 75.00% | 46.00% | 36.00% | 34.00% | 60.00% | 0.00% | 5.00% | 100.00% | 100.00% | |||||||||||||||||||||||||||||||
Equity investments in real estate and the REITs | $ 537,384,000 | $ 537,384,000 | $ 322,294,000 | $ 0 | $ 87,209,000 | $ 91,932,000 | $ 87,008,000 | $ 340,563,000 | $ 62,682,000 | $ 17,081,000 | $ 17,081,000 | $ 8,156,000 | $ 127,000 | $ 0 | $ 449,703,000 | $ 449,703,000 | $ 245,055,000 | $ 87,681,000 | $ 87,681,000 | $ 77,239,000 | $ 22,601,000 | $ 20,493,000 | $ 20,446,000 | $ 18,274,000 | $ 19,392,000 | $ 20,191,000 | $ 7,505,000 | $ 7,934,000 | $ 4,490,000 | $ 5,232,000 | $ 4,399,000 | $ 4,383,000 | $ 4,278,000 | $ 1,862,000 | $ 3,507,000 | $ 3,388,000 | $ 0 | $ 3,375,000 | $ 1,063,000 | $ 1,086,000 | $ (4,272,000) | $ 0 | $ 0 | $ (4,707,000) | ||||||||||
Contribution to the venture | 2,100,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment charges | (14,341,000) | (16,557,000) | (48,955,000) | (27,698,000) | 0 | 0 | (8,602,000) | 0 | ||||||||||||||||||||||||||||||||||||||||||||||
Distributions received from equity investment | 4,480,000 | 1,720,000 | 8,268,000 | 3,413,000 | 17,600,000 | 4,500,000 | 1,700,000 | 8,300,000 | 3,400,000 | 5,500,000 | ||||||||||||||||||||||||||||||||||||||||||||
Net Gains Recognized As Result of Asset Sales | 78,800,000 | 7,400,000 | 7,400,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net Gain Of Reit Fair Value | 28,500,000 | 5,000,000 | 5,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Merger Expenses Incurred By Reit | 13,000,000 | 2,400,000 | 2,400,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Resulting From Prepayment Of Nonrecourse Mortgages | $ 2,800,000 | $ 500,000 | $ 500,000 |
Debt (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Debt [Table Text Block] |
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Significant Accounting Policies (Policies) | 9 Months Ended |
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Sep. 30, 2011 | |
Accounting Policies [Abstract] | |
Consolidation [Policy Text Block] | The consolidated financial statements reflect all of our accounts, including those of our majority-owned and/or controlled subsidiaries. The portion of equity in a subsidiary that is not attributable, directly or indirectly, to us is presented as noncontrolling interests. All significant intercompany accounts and transactions have been eliminated. |
Finance, Loans and Leases Receivable, Policy [Policy Text Block] | Assets representing rights to receive money on demand or at fixed or determinable dates are referred to as finance receivables. Our finance receivable portfolios consist of our Net investments in direct financing leases and deferred acquisition fees. Operating leases are not included in finance receivables as such amounts are not recognized as an asset in the consolidated balance sheets |
Fair Value of Financial Instruments, Policy [Policy Text Block] | Under current authoritative accounting guidance for fair value measurements, the fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps and swaps; and Level 3, for which little or no market data exists, therefore requiring us to develop our own assumptions, such as certain securities. Items Measured at Fair Value on a Recurring Basis The following methods and assumptions were used to estimate the fair value of each class of financial instrument: Money Market Funds — Our money market funds consisted of government securities and U.S. Treasury bills. These funds were classified as Level 1 as we used quoted prices from active markets to determine their fair values Derivative Assets and Liabilities — Our derivative assets and liabilities are primarily comprised of interest rate swaps or caps. These derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates. These derivative instruments were classified as Level 2 because they are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. Other Securities — Our other securities are primarily comprised of our investment in an India growth fund and our interest in a commercial mortgage loan securitization. These funds are not traded in an active market. We estimated the fair value of these securities using internal valuation models that incorporate market inputs and our own assumptions about future cash flows. We classified these assets as Level 3. Redeemable Noncontrolling Interest — We account for our noncontrolling interest in WPCI as a redeemable noncontrolling interest. We determined the valuation of the redeemable noncontrolling interest using widely accepted valuation techniques, including expected discounted cash flows of the investment as well as the income capitalization approach, which considers prevailing market capitalization rates. We classified this liability as Level 3 |
Shares Subject to Mandatory Redemption, Changes in Redemption Value, Policy [Policy Text Block] | We account for the noncontrolling interest in WPCI held by one of our officers (Note 3) as a redeemable noncontrolling interest, as we have an obligation to repurchase the interest from that officer, subject to certain conditions. The officer's interest is reflected at estimated redemption value for all periods presented. |
Discontinued Operations, Policy [Policy Text Block] | From time to time, tenants may vacate space due to lease buy-outs, elections not to renew their leases, insolvency or lease rejection in the bankruptcy process. In these cases, we assess whether we can obtain the highest value from the property by re-leasing or selling it. In addition, in certain cases, we may try to sell a property that is occupied. When it is appropriate to do so under current accounting guidance for the disposal of long-lived assets, we classify the property as an asset held for sale on our consolidated balance sheet and the current and prior period results of operations of the property are reclassified as discontinued operations. |
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Net Investments in Real Estate Properties |
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Net Investments in Operating Real Estate Properties |
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Business | 9 Months Ended |
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Sep. 30, 2011 | |
Business [Abstract] | |
Business | Note 1. Business W. P. Carey & Co. LLC (“W. P. Carey” and, together with its consolidated subsidiaries and predecessors, “we”, “us” or “our”) provides long-term financing via sale-leaseback and build-to-suit transactions for companies worldwide and manages a global investment portfolio. We invest primarily in commercial properties domestically and internationally that are generally triple-net leased to single corporate tenants, which requires each tenant to pay substantially all of the costs associated with operating and maintaining the property. We also earn revenue as the advisor to publicly-owned, non-listed real estate investment trusts, which are sponsored by us under the Corporate Property Associates brand name (the “CPA® REITs”) and invest in similar properties. At September 30, 2011, we were the advisor to the following CPA® REITs: Corporate Property Associates 15 Incorporated (“CPA®:15”), CPA®:16 – Global and Corporate Property Associates 17 – Global Incorporated (“CPA®:17 – Global”), and we were the advisor to CPA®:14 until its merger with a subsidiary of CPA®:16 – Global on May 2, 2011 (the “CPA®:14/16 Merger”). We are also the advisor to Carey Watermark Investors Incorporated (“CWI” and, together with the CPA® REITs, the “REITs”), which we formed in March 2008 for the purpose of acquiring interests in lodging and lodging-related properties. At September 30, 2011, we owned and/or managed more than 990 properties domestically and internationally. Our owned portfolio was comprised of our full or partial ownership interest in 158 properties, substantially all of which were net leased to 74 tenants, and totaled approximately 14 million square feet (on a pro rata basis) with an occupancy rate of approximately 91%. In addition, through one of our consolidated subsidiaries, Carey Storage Management LLC (“Carey Storage”), we had interests in 21 self-storage properties at September 30, 2011.
Primary Business Segments
Investment Management — We structure and negotiate investments and debt placement transactions for the REITs, for which we earn structuring revenue, and manage their portfolios of real estate investments, for which we earn asset-based management and performance revenue. We earn asset-based management and performance revenue from the REITs based on the value of their real estate-related and lodging-related assets under management. As funds available to the REITs are invested, the asset base from which we earn revenue increases. In addition, we also receive a percentage of distributions of available cash from the operating partnerships of CPA®:17 – Global and CWI, as well as from the operating partnership of CPA®:16 – Global after the CPA®:14/16 Merger (Note 3). We may also earn incentive and disposition revenue and receive other compensation in connection with providing liquidity alternatives to the REIT shareholders.
Real Estate Ownership — We own and invest in commercial properties in the United States of America (“U.S.”) and the European Union that are then leased to companies, primarily on a triple-net lease basis. We may also invest in other properties if opportunities arise. Effective as of January 1, 2011, we include our equity investments in the REITs in our Real Estate Ownership segment. The equity income or loss from the REITs that is now included in our Real Estate Ownership segment represents our proportionate share of the revenue less expenses of the net-leased properties held by the REITs. This treatment is consistent with that of our directly-owned properties.
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Commitments and Contingencies | 9 Months Ended |
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Sep. 30, 2011 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 10. Commitments and Contingencies At September 30, 2011, we were not involved in any material litigation. Various claims and lawsuits arising in the normal course of business are pending against us. The results of these proceedings are not expected to have a material adverse effect on our consolidated financial position or results of operations. |
Business (Details) | Sep. 30, 2011
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tenant
sqft |
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Business [Abstract] | |
Number Of Real Estate Properties Owned And Managed | 990 |
Number Of Real Estate Properties | 158 |
Number Of Tenants | 74 |
Square Footage Of All Real Estate Properties | 14,000,000 |
Occupancy Rate | 91.00% |
Number Of Self Storage Properties | 21 |
Segment Reporting | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Note 14. Segment Reporting
We evaluate our results from operations by our two major business segments — Investment Management and Real Estate Ownership (Note 1). Effective January 1, 2011, we include our equity investments in the REITs in our Real Estate Ownership segment. The equity income or loss from the REITs that is now included in our Real Estate Ownership segment represents our proportionate share of the revenue less expenses of the net-leased properties held by the REITs. This treatment is consistent with that of our directly-owned properties. Results for the three and nine months ended September 30, 2010 have been reclassified to conform to the current period presentation. The following table presents a summary of comparative results of these business segments (in thousands):
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At September 30, 2011, our international investments within our Real Estate Ownership segment were comprised of investments in France, Poland, Germany and Spain. The following tables present information about these investments (in thousands):
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