Maryland | 45-4549771 |
(State of incorporation) | (I.R.S. Employer Identification No.) |
50 Rockefeller Plaza | |
New York, New York | 10020 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
(Do not check if a smaller reporting company) |
Page No. |
PART I − FINANCIAL INFORMATION | ||
Item 1. Financial Statements (Unaudited) | ||
Item 4. Controls and Procedures | ||
PART II − OTHER INFORMATION | ||
Item 1A. Risk Factors | ||
Item 6. Exhibits | ||
W. P. Carey 6/30/2016 10-Q – 1 |
W. P. Carey 6/30/2016 10-Q – 2 |
June 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Investments in real estate: | |||||||
Real estate, at cost | $ | 5,231,806 | $ | 5,309,925 | |||
Operating real estate | 81,508 | 82,749 | |||||
Accumulated depreciation | (420,420 | ) | (381,529 | ) | |||
Net investments in properties | 4,892,894 | 5,011,145 | |||||
Net investments in direct financing leases | 741,185 | 756,353 | |||||
Assets held for sale, net | 276,336 | 59,046 | |||||
Net investments in real estate | 5,910,415 | 5,826,544 | |||||
Equity investments in the Managed Programs and real estate | 286,775 | 275,473 | |||||
Cash and cash equivalents | 173,305 | 157,227 | |||||
Due from affiliates | 57,353 | 62,218 | |||||
In-place lease and tenant relationship intangible assets, net | 843,154 | 902,848 | |||||
Goodwill | 640,588 | 681,809 | |||||
Above-market rent intangible assets, net | 422,748 | 475,072 | |||||
Other assets, net | 348,233 | 360,898 | |||||
Total assets | $ | 8,682,571 | $ | 8,742,089 | |||
Liabilities and Equity | |||||||
Liabilities: | |||||||
Non-recourse debt, net | $ | 2,110,441 | $ | 2,269,421 | |||
Senior Unsecured Notes, net | 1,487,864 | 1,476,084 | |||||
Senior Unsecured Credit Facility - Revolver | 793,770 | 485,021 | |||||
Senior Unsecured Credit Facility - Term Loan, net | 249,853 | 249,683 | |||||
Accounts payable, accrued expenses and other liabilities | 270,602 | 342,374 | |||||
Below-market rent and other intangible liabilities, net | 128,466 | 154,315 | |||||
Deferred income taxes | 72,699 | 86,104 | |||||
Distributions payable | 104,911 | 102,715 | |||||
Total liabilities | 5,218,606 | 5,165,717 | |||||
Redeemable noncontrolling interest | 965 | 14,944 | |||||
Commitments and contingencies (Note 11) | |||||||
Equity: | |||||||
W. P. Carey stockholders’ equity: | |||||||
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued | — | — | |||||
Common stock, $0.001 par value, 450,000,000 shares authorized; 105,167,537 and 104,448,777 shares, respectively, issued and outstanding | 105 | 104 | |||||
Additional paid-in capital | 4,316,732 | 4,282,042 | |||||
Distributions in excess of accumulated earnings | (839,162 | ) | (738,652 | ) | |||
Deferred compensation obligation | 60,789 | 56,040 | |||||
Accumulated other comprehensive loss | (206,201 | ) | (172,291 | ) | |||
Total W. P. Carey stockholders’ equity | 3,332,263 | 3,427,243 | |||||
Noncontrolling interests | 130,737 | 134,185 | |||||
Total equity | 3,463,000 | 3,561,428 | |||||
Total liabilities and equity | $ | 8,682,571 | $ | 8,742,089 |
W. P. Carey 6/30/2016 10-Q – 3 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | |||||||||||||||
Owned Real Estate: | |||||||||||||||
Lease revenues | $ | 167,328 | $ | 162,574 | $ | 342,572 | $ | 322,739 | |||||||
Operating property revenues | 8,270 | 8,426 | 15,172 | 15,538 | |||||||||||
Reimbursable tenant costs | 6,391 | 6,130 | 12,700 | 12,069 | |||||||||||
Lease termination income and other | 838 | 3,122 | 33,379 | 6,331 | |||||||||||
182,827 | 180,252 | 403,823 | 356,677 | ||||||||||||
Investment Management: | |||||||||||||||
Asset management revenue | 15,005 | 12,073 | 29,618 | 23,232 | |||||||||||
Reimbursable costs | 12,094 | 7,639 | 31,832 | 17,246 | |||||||||||
Structuring revenue | 5,968 | 37,808 | 18,689 | 59,528 | |||||||||||
Dealer manager fees | 1,372 | 307 | 3,544 | 1,581 | |||||||||||
Other advisory revenue | — | — | — | 203 | |||||||||||
34,439 | 57,827 | 83,683 | 101,790 | ||||||||||||
217,266 | 238,079 | 487,506 | 458,467 | ||||||||||||
Operating Expenses | |||||||||||||||
Depreciation and amortization | 66,581 | 65,166 | 151,033 | 130,566 | |||||||||||
Impairment charges | 35,429 | 591 | 35,429 | 3,274 | |||||||||||
General and administrative | 20,951 | 26,376 | 42,389 | 56,144 | |||||||||||
Reimbursable tenant and affiliate costs | 18,485 | 13,769 | 44,532 | 29,315 | |||||||||||
Property expenses, excluding reimbursable tenant costs | 10,510 | 11,020 | 28,282 | 20,384 | |||||||||||
Stock-based compensation expense | 4,001 | 5,089 | 10,608 | 12,098 | |||||||||||
Dealer manager fees and expenses | 2,620 | 2,327 | 5,972 | 4,699 | |||||||||||
Subadvisor fees | 1,875 | 4,147 | 5,168 | 6,808 | |||||||||||
Restructuring and other compensation | 452 | — | 11,925 | — | |||||||||||
Property acquisition and other expenses | (207 | ) | 1,897 | 5,359 | 7,573 | ||||||||||
160,697 | 130,382 | 340,697 | 270,861 | ||||||||||||
Other Income and Expenses | |||||||||||||||
Interest expense | (46,752 | ) | (47,693 | ) | (95,147 | ) | (95,642 | ) | |||||||
Equity in earnings of equity method investments in the Managed Programs and real estate | 16,429 | 14,272 | 31,440 | 25,995 | |||||||||||
Other income and (expenses) | 426 | 7,641 | 4,297 | 3,335 | |||||||||||
(29,897 | ) | (25,780 | ) | (59,410 | ) | (66,312 | ) | ||||||||
Income before income taxes and gain on sale of real estate | 26,672 | 81,917 | 87,399 | 121,294 | |||||||||||
Benefit from (provision for) income taxes | 8,217 | (15,010 | ) | 7,692 | (16,990 | ) | |||||||||
Income before gain on sale of real estate | 34,889 | 66,907 | 95,091 | 104,304 | |||||||||||
Gain on sale of real estate, net of tax | 18,282 | 16 | 18,944 | 1,201 | |||||||||||
Net Income | 53,171 | 66,923 | 114,035 | 105,505 | |||||||||||
Net income attributable to noncontrolling interests | (1,510 | ) | (3,575 | ) | (4,935 | ) | (6,041 | ) | |||||||
Net Income Attributable to W. P. Carey | $ | 51,661 | $ | 63,348 | $ | 109,100 | $ | 99,464 | |||||||
Basic Earnings Per Share | $ | 0.48 | $ | 0.60 | $ | 1.02 | $ | 0.94 | |||||||
Diluted Earnings Per Share | $ | 0.48 | $ | 0.59 | $ | 1.02 | $ | 0.93 | |||||||
Weighted-Average Shares Outstanding | |||||||||||||||
Basic | 106,310,362 | 105,764,032 | 106,124,881 | 105,532,976 | |||||||||||
Diluted | 106,530,036 | 106,281,983 | 106,504,226 | 106,355,402 | |||||||||||
Distributions Declared Per Share | $ | 0.9800 | $ | 0.9540 | $ | 1.9542 | $ | 1.9065 |
W. P. Carey 6/30/2016 10-Q – 4 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net Income | $ | 53,171 | $ | 66,923 | $ | 114,035 | $ | 105,505 | |||||||
Other Comprehensive (Loss) Income | |||||||||||||||
Foreign currency translation adjustments | (44,208 | ) | 48,090 | (30,175 | ) | (65,989 | ) | ||||||||
Realized and unrealized gain (loss) on derivative instruments | 8,869 | (9,619 | ) | (2,906 | ) | 17,199 | |||||||||
Change in unrealized gain on marketable securities | 4 | — | 4 | 14 | |||||||||||
(35,335 | ) | 38,471 | (33,077 | ) | (48,776 | ) | |||||||||
Comprehensive Income | 17,836 | 105,394 | 80,958 | 56,729 | |||||||||||
Amounts Attributable to Noncontrolling Interests | |||||||||||||||
Net income | (1,510 | ) | (3,575 | ) | (4,935 | ) | (6,041 | ) | |||||||
Foreign currency translation adjustments | 1,037 | (1,585 | ) | (833 | ) | 3,558 | |||||||||
Comprehensive income attributable to noncontrolling interests | (473 | ) | (5,160 | ) | (5,768 | ) | (2,483 | ) | |||||||
Comprehensive Income Attributable to W. P. Carey | $ | 17,363 | $ | 100,234 | $ | 75,190 | $ | 54,246 |
W. P. Carey 6/30/2016 10-Q – 5 |
W. P. Carey Stockholders | ||||||||||||||||||||||||||||||||||
Distributions | Accumulated | |||||||||||||||||||||||||||||||||
Common Stock | Additional | in Excess of | Deferred | Other | Total | |||||||||||||||||||||||||||||
$0.001 Par Value | Paid-in | Accumulated | Compensation | Comprehensive | W. P. Carey | Noncontrolling | ||||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Obligation | Loss | Stockholders | Interests | Total | ||||||||||||||||||||||||||
Balance at January 1, 2016 | 104,448,777 | $ | 104 | $ | 4,282,042 | $ | (738,652 | ) | $ | 56,040 | $ | (172,291 | ) | $ | 3,427,243 | $ | 134,185 | $ | 3,561,428 | |||||||||||||||
Shares issued under “at-the-market” offering, net | 281,301 | 1 | 18,609 | 18,610 | 18,610 | |||||||||||||||||||||||||||||
Shares issued to a third party in connection with the redemption of a redeemable noncontrolling interest | 217,011 | — | 13,418 | 13,418 | 13,418 | |||||||||||||||||||||||||||||
Contributions from noncontrolling interests | — | 112 | 112 | |||||||||||||||||||||||||||||||
Shares issued upon delivery of vested restricted stock awards | 191,266 | — | (7,059 | ) | (7,059 | ) | (7,059 | ) | ||||||||||||||||||||||||||
Shares issued upon exercise of stock options and purchases under employee share purchase plan | 29,182 | — | (1,397 | ) | (1,397 | ) | (1,397 | ) | ||||||||||||||||||||||||||
Deferral of vested shares | (4,501 | ) | 4,501 | — | — | |||||||||||||||||||||||||||||
Amortization of stock-based compensation expense | 13,815 | 13,815 | 13,815 | |||||||||||||||||||||||||||||||
Redemption value adjustment | 561 | 561 | 561 | |||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | (9,328 | ) | (9,328 | ) | |||||||||||||||||||||||||||||
Distributions declared ($1.9542 per share) | 1,244 | (209,610 | ) | 248 | (208,118 | ) | (208,118 | ) | ||||||||||||||||||||||||||
Net income | 109,100 | 109,100 | 4,935 | 114,035 | ||||||||||||||||||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | (31,008 | ) | (31,008 | ) | 833 | (30,175 | ) | |||||||||||||||||||||||||||
Realized and unrealized loss on derivative instruments | (2,906 | ) | (2,906 | ) | (2,906 | ) | ||||||||||||||||||||||||||||
Change in unrealized gain on marketable securities | 4 | 4 | 4 | |||||||||||||||||||||||||||||||
Balance at June 30, 2016 | 105,167,537 | $ | 105 | $ | 4,316,732 | $ | (839,162 | ) | $ | 60,789 | $ | (206,201 | ) | $ | 3,332,263 | $ | 130,737 | $ | 3,463,000 |
W. P. Carey 6/30/2016 10-Q – 6 |
W. P. Carey Stockholders | ||||||||||||||||||||||||||||||||||
Distributions | Accumulated | |||||||||||||||||||||||||||||||||
Common Stock | Additional | in Excess of | Deferred | Other | Total | |||||||||||||||||||||||||||||
$0.001 Par Value | Paid-in | Accumulated | Compensation | Comprehensive | W. P. Carey | Noncontrolling | ||||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Obligation | Loss | Stockholders | Interests | Total | ||||||||||||||||||||||||||
Balance at January 1, 2015 | 104,040,653 | $ | 104 | $ | 4,293,450 | $ | (497,730 | ) | $ | 30,624 | $ | (75,559 | ) | $ | 3,750,889 | $ | 139,846 | $ | 3,890,735 | |||||||||||||||
Contributions from noncontrolling interests | — | 483 | 483 | |||||||||||||||||||||||||||||||
Shares issued upon delivery of vested restricted stock awards | 288,142 | — | (14,533 | ) | (14,533 | ) | (14,533 | ) | ||||||||||||||||||||||||||
Shares issued upon exercise of stock options and purchases under employee share purchase plan | 48,415 | — | (614 | ) | (614 | ) | (614 | ) | ||||||||||||||||||||||||||
Deferral of vested shares | (24,935 | ) | 24,935 | — | — | |||||||||||||||||||||||||||||
Windfall tax benefits - share incentive plans | 6,524 | 6,524 | 6,524 | |||||||||||||||||||||||||||||||
Amortization of stock-based compensation expense | 12,098 | 12,098 | 12,098 | |||||||||||||||||||||||||||||||
Redemption value adjustment | (7,303 | ) | (7,303 | ) | (7,303 | ) | ||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | (6,652 | ) | (6,652 | ) | |||||||||||||||||||||||||||||
Distributions declared ($1.9065 per share) | 5,064 | (209,262 | ) | 1,836 | (202,362 | ) | (202,362 | ) | ||||||||||||||||||||||||||
Net income | 99,464 | 99,464 | 6,041 | 105,505 | ||||||||||||||||||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | (62,431 | ) | (62,431 | ) | (3,558 | ) | (65,989 | ) | ||||||||||||||||||||||||||
Realized and unrealized gain on derivative instruments | 17,199 | 17,199 | 17,199 | |||||||||||||||||||||||||||||||
Change in unrealized gain on marketable securities | 14 | 14 | 14 | |||||||||||||||||||||||||||||||
Balance at June 30, 2015 | 104,377,210 | $ | 104 | $ | 4,269,751 | $ | (607,528 | ) | $ | 57,395 | $ | (120,777 | ) | $ | 3,598,945 | $ | 136,160 | $ | 3,735,105 |
W. P. Carey 6/30/2016 10-Q – 7 |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Cash Flows — Operating Activities | |||||||
Net income | $ | 114,035 | $ | 105,505 | |||
Adjustments to net income: | |||||||
Depreciation and amortization, including intangible assets and deferred financing costs | 152,136 | 134,129 | |||||
Impairment charges | 35,429 | 3,274 | |||||
Distributions of earnings from equity investments | 32,365 | 24,578 | |||||
Equity in earnings of equity method investments in the Managed Programs and real estate | (31,440 | ) | (25,995 | ) | |||
Straight-line rent, amortization of rent-related intangibles, and deferred rental revenue | (27,381 | ) | 19,793 | ||||
Gain on sale of real estate | (18,944 | ) | (1,201 | ) | |||
Deferred income taxes | (17,549 | ) | (3,464 | ) | |||
Management income received in shares of Managed REITs and other | (13,973 | ) | (10,699 | ) | |||
Stock-based compensation expense | 13,815 | 12,098 | |||||
Allowance for credit losses | 7,064 | — | |||||
Realized and unrealized (gain) loss on foreign currency transactions, derivatives, extinguishment of debt, and other | (2,202 | ) | 1,452 | ||||
Changes in assets and liabilities: | |||||||
Deferred acquisition revenue received | 11,833 | 14,084 | |||||
Payments for withholding taxes upon delivery of equity-based awards and exercises of stock options | (8,450 | ) | (15,402 | ) | |||
Increase in structuring revenue receivable | (4,298 | ) | (17,896 | ) | |||
Net changes in other operating assets and liabilities | (6,226 | ) | (24,204 | ) | |||
Net Cash Provided by Operating Activities | 236,214 | 216,052 | |||||
Cash Flows — Investing Activities | |||||||
Purchases of real estate | (385,835 | ) | (435,915 | ) | |||
Proceeds from sale of real estate | 200,575 | 24,016 | |||||
Funding of short-term loans to affiliates | (20,000 | ) | (122,447 | ) | |||
Proceeds from repayment of short-term loans to affiliates | 20,000 | — | |||||
Funding for real estate construction and expansion | (18,430 | ) | (21,638 | ) | |||
Investment in assets of affiliate (Note 2) | (14,861 | ) | — | ||||
Change in investing restricted cash | 6,343 | 31,692 | |||||
Capital expenditures on owned real estate | (4,553 | ) | (2,026 | ) | |||
Return of capital from equity investments | 2,174 | 3,383 | |||||
Capital expenditures on corporate assets | (803 | ) | (2,312 | ) | |||
Other investing activities, net | 475 | 977 | |||||
Proceeds from repayments of note receivable | 293 | 9,964 | |||||
Capital contributions to equity investments in real estate | (6 | ) | (8,643 | ) | |||
Net Cash Used in Investing Activities | (214,628 | ) | (522,949 | ) | |||
Cash Flows — Financing Activities | |||||||
Proceeds from Senior Unsecured Credit Facility | 575,568 | 484,122 | |||||
Repayments of Senior Unsecured Credit Facility | (274,967 | ) | (913,868 | ) | |||
Distributions paid | (205,922 | ) | (200,915 | ) | |||
Prepayments of mortgage principal | (67,496 | ) | — | ||||
Scheduled payments of mortgage principal | (43,905 | ) | (36,095 | ) | |||
Proceeds from shares issued under “at-the-market” offering, net of selling costs | 18,890 | — | |||||
Distributions paid to noncontrolling interests | (9,328 | ) | (6,652 | ) | |||
Change in financing restricted cash | 807 | (342 | ) | ||||
Payment of financing costs | (255 | ) | (10,886 | ) | |||
Proceeds from exercise of stock options and employee purchases under the employee share purchase plan | 136 | 256 | |||||
Contributions from noncontrolling interests | 112 | 483 | |||||
Proceeds from issuance of Senior Unsecured Notes | — | 1,022,303 | |||||
Proceeds from mortgage financing | — | 17,778 | |||||
Windfall tax benefit associated with stock-based compensation awards | — | 6,524 | |||||
Net Cash (Used in) Provided by Financing Activities | (6,360 | ) | 362,708 | ||||
Change in Cash and Cash Equivalents During the Period | |||||||
Effect of exchange rate changes on cash | 852 | (20,865 | ) | ||||
Net increase in cash and cash equivalents | 16,078 | 34,946 | |||||
Cash and cash equivalents, beginning of period | 157,227 | 198,683 | |||||
Cash and cash equivalents, end of period | $ | 173,305 | $ | 233,629 |
W. P. Carey 6/30/2016 10-Q – 8 |
W. P. Carey 6/30/2016 10-Q – 9 |
W. P. Carey 6/30/2016 10-Q – 10 |
June 30, 2016 | December 31, 2015 | ||||||
Net investments in properties | $ | 1,024,341 | $ | 890,454 | |||
Net investments in direct financing leases | 61,664 | 61,454 | |||||
In-place lease and tenant relationship intangible assets, net | 243,101 | 214,924 | |||||
Above-market rent intangible assets, net | 77,451 | 80,901 | |||||
Total assets | 1,456,920 | 1,297,276 | |||||
Non-recourse debt, net | $ | 438,669 | $ | 439,285 | |||
Total liabilities | 590,995 | 590,596 |
W. P. Carey 6/30/2016 10-Q – 11 |
W. P. Carey 6/30/2016 10-Q – 12 |
W. P. Carey 6/30/2016 10-Q – 13 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Asset management revenue | $ | 14,990 | $ | 12,073 | $ | 29,580 | $ | 23,185 | |||||||
Reimbursable costs from affiliates | 12,094 | 7,639 | 31,832 | 17,246 | |||||||||||
Distributions of Available Cash | 10,161 | 9,256 | 21,142 | 18,062 | |||||||||||
Structuring revenue | 5,968 | 37,808 | 18,689 | 59,528 | |||||||||||
Dealer manager fees | 1,372 | 307 | 3,544 | 1,581 | |||||||||||
Interest income on deferred acquisition fees and loans to affiliates | 168 | 442 | 362 | 596 | |||||||||||
Other advisory revenue | — | — | — | 203 | |||||||||||
$ | 44,753 | $ | 67,525 | $ | 105,149 | $ | 120,401 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
CPA®:17 – Global | $ | 17,012 | $ | 20,484 | $ | 35,204 | $ | 42,161 | |||||||
CPA®:18 – Global | 9,051 | 24,725 | 17,592 | 43,666 | |||||||||||
CWI 1 | 7,233 | 16,897 | 18,682 | 29,155 | |||||||||||
CWI 2 | 8,775 | 5,419 | 29,309 | 5,419 | |||||||||||
CCIF | 2,682 | — | 4,362 | — | |||||||||||
$ | 44,753 | $ | 67,525 | $ | 105,149 | $ | 120,401 |
W. P. Carey 6/30/2016 10-Q – 14 |
June 30, 2016 | December 31, 2015 | ||||||
Deferred acquisition fees receivable | $ | 25,912 | $ | 33,386 | |||
Accounts receivable | 21,994 | 15,711 | |||||
Reimbursable costs | 3,813 | 5,579 | |||||
Asset management fees receivable | 2,378 | 2,172 | |||||
Organization and offering costs | 1,860 | 461 | |||||
Current acquisition fees receivable | 1,396 | 4,909 | |||||
$ | 57,353 | $ | 62,218 |
Managed Program | Rate | Payable | Description | |||
CPA®:17 – Global | 0.5% - 1.75% | 50% in cash and 50% in shares of its common stock | Rate depends on the type of investment and is based on the average market or average equity value, as applicable | |||
CPA®:18 – Global | 0.5% - 1.5% | In shares of its class A common stock | Rate depends on the type of investment and is based on the average market or average equity value, as applicable | |||
CWI 1 | 0.5% | In cash | Rate is based on the average market value of the investment; we are required to pay 20% of the asset management revenue we receive to the subadvisor | |||
CWI 2 | 0.55% | In shares of its class A common stock | Rate is based on the average market value of the investment; we are required to pay 25% of the asset management revenue we receive to the subadvisor | |||
CCIF | 1.75% - 2.00% | In cash | Based on the average of gross assets at fair value; we are required to pay 50% of the asset management revenue we receive to the subadvisor |
W. P. Carey 6/30/2016 10-Q – 15 |
Managed Program | Rate | Payable | Description | |||
CPA®:17 – Global | 1% - 1.75%, 4.5% | In cash; for non net-lease investments, 1% - 1.75% upon completion; for net-lease investments, 2.5% upon completion, with 2% deferred and payable in three interest-bearing annual installments | Based on the total aggregate cost of the net-lease investments made; also based on the total aggregate cost of the non net-lease investments made; total limited to 6% of the contract prices in aggregate | |||
CPA®:18 – Global | 4.5% | In cash; for all investments, other than readily marketable real estate securities for which we will not receive any acquisition fees, 2.5% upon completion, with 2% deferred and payable in three interest-bearing annual installments | Based on the total aggregate cost of the investments made; total limited to 6% of the contract prices in aggregate | |||
CWI REITs | 2.5% | In cash upon completion | Based on the total aggregate cost of the lodging investments made; loan refinancing transactions up to 1% of the principal amount; we are required to pay 20% and 25% to the subadvisor of CWI 1 and CWI 2, respectively; total limited to 6% of the contract prices in aggregate |
Managed Program | Rate | Payable | Description | |||
CWI 2 Class A Shares | $0.70 | In cash upon share settlement; 100% re-allowed to broker-dealers | Per share sold | |||
CPA®:18 – Global Class C Shares | $0.14 | In cash upon share settlement; 100% re-allowed to broker-dealers | Per share sold; this offering closed in April 2015 | |||
CWI 2 Class T Shares | $0.19 | In cash upon share settlement; 100% re-allowed to broker-dealers | Per share sold | |||
CCIF Feeder Funds | 0% - 3% | In cash upon share settlement; 100% re-allowed to broker-dealers | Based on the selling price of each share sold |
W. P. Carey 6/30/2016 10-Q – 16 |
Managed Program | Rate | Payable | Description | |||
CWI 2 Class A Shares | $0.30 | Per share sold | In cash upon share settlement; a portion may be re-allowed to broker-dealers | |||
CPA®:18 – Global Class C Shares | $0.21 | Per share sold | In cash upon share settlement; a portion may be re-allowed to broker-dealers; this offering closed in April 2015 | |||
CWI 2 Class T Shares | $0.26 | Per share sold | In cash upon share settlement; a portion may be re-allowed to broker-dealers | |||
CCIF Feeder Funds | 2.75% - 3.0% | Based on the selling price of each share sold | In cash upon share settlement; a portion may be re-allowed to broker-dealers |
Managed Program | Rate | Payable | Description | |||
CPA®:18 – Global Class C Shares | 1.0% | Accrued daily and payable quarterly in arrears in cash; a portion may be re-allowed to selected dealers | Based on the purchase price per share sold or, once it was reported, the net asset value per share; cease paying when underwriting compensation from all sources equals 10% of gross offering proceeds | |||
CWI 2 Class T Shares | 1.0% | Accrued daily and payable quarterly in arrears in cash; a portion may be re-allowed to selected dealers | Based on the purchase price per share sold or, once it was reported, the net asset value per share; cease paying on the earlier of six years or when underwriting compensation from all sources equals 10% of gross offering proceeds |
Managed Program | Payable | Description | ||
CPA®:17 – Global and CPA®:18 – Global | In cash | Personnel and overhead costs, excluding those related to our legal transactions group, our senior management, and our investments team, are charged to the CPA® REITs based on the average of the trailing 12-month aggregate reported revenues of the Managed Programs and us, and are capped at 2.2% and 2.4% of each CPA® REIT’s pro rata lease revenues for 2016 and 2015, respectively; for the legal transactions group, costs are charged according to a fee schedule | ||
CWI 1 | In cash | Actual expenses incurred; allocated between the CWI REITs based on the percentage of their total pro rata hotel revenues for the most recently completed quarter | ||
CWI 2 | In cash | Actual expenses incurred; allocated between the CWI REITs based on the percentage of their total pro rata hotel revenues for the most recently completed quarter | ||
CCIF and CCIF Feeder Funds | In cash | Actual expenses incurred |
Managed Program | Payable | Description | ||
CWI 2 | In cash; within 60 days after the end of the quarter in which the offering terminates | Actual costs incurred from 1.5% through 4.0% of the gross offering proceeds, depending on the amount raised | ||
CCIF and CCIF Feeder Funds | In cash; payable monthly | Up to 1.5% of the gross offering proceeds |
W. P. Carey 6/30/2016 10-Q – 17 |
W. P. Carey 6/30/2016 10-Q – 18 |
June 30, 2016 | December 31, 2015 | ||||||
Land | $ | 1,125,899 | $ | 1,160,567 | |||
Buildings | 4,076,944 | 4,147,644 | |||||
Real estate under construction | 28,963 | 1,714 | |||||
Less: Accumulated depreciation | (410,416 | ) | (372,735 | ) | |||
$ | 4,821,390 | $ | 4,937,190 |
• | an investment of $167.7 million for three private school campuses in Coconut Creek, Florida on April 1, 2016 and in Windermere, Florida and Houston, Texas on May 31, 2016. We also committed to fund an additional $128.1 million of build-to-suit financing over the next four years in order to fund expansions of the existing facilities; |
• | an investment of $218.2 million for 43 manufacturing facilities in various locations in the United States and six manufacturing facilities in various locations in Canada on April 5 and 14, 2016. |
W. P. Carey 6/30/2016 10-Q – 19 |
June 30, 2016 | December 31, 2015 | ||||||
Land | $ | 6,041 | $ | 6,578 | |||
Buildings | 75,467 | 76,171 | |||||
Less: Accumulated depreciation | (10,004 | ) | (8,794 | ) | |||
$ | 71,504 | $ | 73,955 |
June 30, 2016 | December 31, 2015 | ||||||
Real estate, net | $ | 238,587 | $ | 59,046 | |||
Intangible assets and liabilities, net | 19,409 | — | |||||
Goodwill | 18,340 | — | |||||
Assets held for sale, net | $ | 276,336 | $ | 59,046 |
• | a domestic property with a carrying value of $135.1 million. This property was sold subsequent to June 30, 2016, on August 2, 2016 (Note 17); |
• | a portfolio of 14 international properties with a carrying value of $120.3 million; and |
• | three international properties with an aggregate carrying value of $20.9 million. |
W. P. Carey 6/30/2016 10-Q – 20 |
Number of Tenants / Obligors at | Carrying Value at | |||||||||||
Internal Credit Quality Indicator | June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | ||||||||
1 - 3 | 28 | 28 | $ | 650,521 | $ | 657,034 | ||||||
4 | 5 | 6 | 99,293 | 110,002 | ||||||||
5 | 1 | — | 1,794 | — | ||||||||
$ | 751,608 | $ | 767,036 |
W. P. Carey 6/30/2016 10-Q – 21 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Distributions of Available Cash (Note 3) | $ | 10,161 | $ | 9,256 | $ | 21,142 | $ | 18,062 | |||||||
Proportionate share of earnings from equity investments in the Managed Programs | 3,322 | 686 | 4,434 | 994 | |||||||||||
Amortization of basis differences on equity investments in the Managed Programs | (252 | ) | (190 | ) | (491 | ) | (375 | ) | |||||||
Total equity earnings from the Managed Programs | 13,231 | 9,752 | 25,085 | 18,681 | |||||||||||
Equity earnings from other equity investments | 4,157 | 5,449 | 8,259 | 9,158 | |||||||||||
Amortization of basis differences on other equity investments | (959 | ) | (929 | ) | (1,904 | ) | (1,844 | ) | |||||||
Equity in earnings of equity method investments in the Managed Programs and real estate | $ | 16,429 | $ | 14,272 | $ | 31,440 | $ | 25,995 |
% of Outstanding Shares Owned at | Carrying Amount of Investment at | |||||||||||||
Fund | June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | ||||||||||
CPA®:17 – Global | 3.268 | % | 3.087 | % | $ | 95,080 | $ | 87,912 | ||||||
CPA®:17 – Global operating partnership | 0.009 | % | 0.009 | % | — | — | ||||||||
CPA®:18 – Global | 1.165 | % | 0.735 | % | 14,020 | 9,279 | ||||||||
CPA®:18 – Global operating partnership | 0.034 | % | 0.034 | % | 209 | 209 | ||||||||
CWI 1 | 1.120 | % | 1.131 | % | 11,935 | 12,619 | ||||||||
CWI 1 operating partnership | 0.015 | % | 0.015 | % | — | — | ||||||||
CWI 2 | 0.501 | % | 0.379 | % | 2,506 | 949 | ||||||||
CWI 2 operating partnership | 0.015 | % | 0.015 | % | 300 | 300 | ||||||||
CCIF | 22.863 | % | 47.882 | % | 22,460 | 22,214 | ||||||||
$ | 146,510 | $ | 133,482 |
W. P. Carey 6/30/2016 10-Q – 22 |
Carrying Value at | ||||||||||||
Lessee | Co-owner | Ownership Interest | June 30, 2016 | December 31, 2015 | ||||||||
The New York Times Company | CPA®:17 – Global | 45% | $ | 70,206 | $ | 70,976 | ||||||
Frontier Spinning Mills, Inc. | CPA®:17 – Global | 40% | 24,156 | 24,288 | ||||||||
Beach House JV, LLC (a) | Third Party | N/A | 15,105 | 15,318 | ||||||||
Actebis Peacock GmbH (b) | CPA®:17 – Global | 30% | 12,116 | 12,186 | ||||||||
C1000 Logistiek Vastgoed B.V. (b) (c) | CPA®:17 – Global | 15% | 9,247 | 9,381 | ||||||||
Waldaschaff Automotive GmbH and Wagon Automotive Nagold GmbH (b) | CPA®:17 – Global | 33% | 9,063 | 9,507 | ||||||||
Wanbishi Archives Co. Ltd. (d) | CPA®:17 – Global | 3% | 372 | 335 | ||||||||
$ | 140,265 | $ | 141,991 |
(a) | This investment is a preferred equity position. |
(b) | The carrying value of this investment is affected by fluctuations in the exchange rate of the euro. |
(c) | This investment represents a tenancy-in-common interest, whereby the property is encumbered by the debt for which we are jointly and severally liable. The co-obligor is CPA®:17 – Global and the amount due under the arrangement was approximately $72.7 million at June 30, 2016. Of this amount, $10.9 million represents the amount we agreed to pay and is included within the carrying value of the investment at June 30, 2016. |
W. P. Carey 6/30/2016 10-Q – 23 |
(d) | The carrying value of this investment is affected by fluctuations in the exchange rate of the yen. |
Weighted-Average Life | Amount | ||||
Amortizable Intangible Assets | |||||
In-place lease | 22.2 | $ | 68,996 |
Owned Real Estate | Investment Management | Total | |||||||||
Balance at January 1, 2016 | $ | 618,202 | $ | 63,607 | $ | 681,809 | |||||
Allocation of goodwill to the cost basis of properties sold or classified as held for sale | (33,244 | ) | — | (33,244 | ) | ||||||
Impairment charges (Note 8) | (10,191 | ) | — | (10,191 | ) | ||||||
Foreign currency translation adjustments | 2,214 | — | 2,214 | ||||||||
Balance at June 30, 2016 | $ | 576,981 | $ | 63,607 | $ | 640,588 |
W. P. Carey 6/30/2016 10-Q – 24 |
June 30, 2016 | December 31, 2015 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Amortizable Intangible Assets | |||||||||||||||||||||||
Management contracts | $ | 24,571 | $ | (24,571 | ) | $ | — | $ | 32,765 | $ | (32,765 | ) | $ | — | |||||||||
Internal-use software development costs | 18,518 | (3,530 | ) | 14,988 | 18,188 | (2,038 | ) | 16,150 | |||||||||||||||
43,089 | (28,101 | ) | 14,988 | 50,953 | (34,803 | ) | 16,150 | ||||||||||||||||
Lease Intangibles: | |||||||||||||||||||||||
In-place lease and tenant relationship | 1,135,167 | (292,013 | ) | 843,154 | 1,205,585 | (302,737 | ) | 902,848 | |||||||||||||||
Above-market rent | 607,911 | (185,163 | ) | 422,748 | 649,035 | (173,963 | ) | 475,072 | |||||||||||||||
Below-market ground lease | 25,091 | (1,186 | ) | 23,905 | 25,403 | (889 | ) | 24,514 | |||||||||||||||
1,768,169 | (478,362 | ) | 1,289,807 | 1,880,023 | (477,589 | ) | 1,402,434 | ||||||||||||||||
Unamortizable Goodwill and Indefinite-Lived Intangible Assets | |||||||||||||||||||||||
Goodwill | 640,588 | — | 640,588 | 681,809 | — | 681,809 | |||||||||||||||||
Trade name | 3,975 | — | 3,975 | 3,975 | — | 3,975 | |||||||||||||||||
Below-market ground lease | 912 | — | 912 | 895 | — | 895 | |||||||||||||||||
645,475 | — | 645,475 | 686,679 | — | 686,679 | ||||||||||||||||||
Total intangible assets | $ | 2,456,733 | $ | (506,463 | ) | $ | 1,950,270 | $ | 2,617,655 | $ | (512,392 | ) | $ | 2,105,263 | |||||||||
Amortizable Intangible Liabilities | |||||||||||||||||||||||
Below-market rent | $ | (136,331 | ) | $ | 35,575 | $ | (100,756 | ) | $ | (171,199 | ) | $ | 44,873 | $ | (126,326 | ) | |||||||
Above-market ground lease | (13,063 | ) | 2,064 | (10,999 | ) | (13,052 | ) | 1,774 | (11,278 | ) | |||||||||||||
(149,394 | ) | 37,639 | (111,755 | ) | (184,251 | ) | 46,647 | (137,604 | ) | ||||||||||||||
Unamortizable Intangible Liabilities | |||||||||||||||||||||||
Below-market purchase option | (16,711 | ) | — | (16,711 | ) | (16,711 | ) | — | (16,711 | ) | |||||||||||||
Total intangible liabilities | $ | (166,105 | ) | $ | 37,639 | $ | (128,466 | ) | $ | (200,962 | ) | $ | 46,647 | $ | (154,315 | ) |
W. P. Carey 6/30/2016 10-Q – 25 |
June 30, 2016 | December 31, 2015 | ||||||||||||||||
Level | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Non-recourse debt, net (a) (b) | 3 | $ | 2,110,441 | $ | 2,133,032 | $ | 2,269,421 | $ | 2,293,542 | ||||||||
Senior Unsecured Notes, net (a) (c) | 2 | 1,487,864 | 1,508,685 | 1,476,084 | 1,459,544 | ||||||||||||
Note receivable (b) | 3 | 10,424 | 10,135 | 10,689 | 10,610 |
(a) | In accordance with ASU 2015-03, we reclassified deferred financing costs from Other assets, net to Non-recourse debt, net and Senior Unsecured Notes, net as of December 31, 2015 (Note 2). |
(b) | We determined the estimated fair value of these financial instruments using a discounted cash flow model that estimates the present value of the future loan payments by discounting such payments at current estimated market interest rates. The estimated market interest rates take into account interest rate risk and the value of the underlying collateral, which includes quality of the collateral, the credit quality of the tenant/obligor, and the time until maturity. |
(c) | We determined the estimated fair value of the Senior Unsecured Notes (Note 10) using quoted market prices in an open market with limited trading volume where available. In cases where there was no trading volume, we determined the estimated fair value using a discounted cash flow model using a rate that reflects the average yield of similar market participants. |
W. P. Carey 6/30/2016 10-Q – 26 |
Three Months Ended June 30, 2016 | Three Months Ended June 30, 2015 | ||||||||||||||
Fair Value Measurements | Total Impairment Charges | Fair Value Measurements | Total Impairment Charges | ||||||||||||
Impairment Charges | |||||||||||||||
Real estate | $ | 120,290 | $ | 35,429 | $ | 782 | $ | 591 | |||||||
$ | 35,429 | $ | 591 |
Six Months Ended June 30, 2016 | Six Months Ended June 30, 2015 | ||||||||||||||
Fair Value Measurements | Total Impairment Charges | Fair Value Measurements | Total Impairment Charges | ||||||||||||
Impairment Charges | |||||||||||||||
Real estate | $ | 120,290 | $ | 35,429 | $ | 6,076 | $ | 3,274 | |||||||
$ | 35,429 | $ | 3,274 |
W. P. Carey 6/30/2016 10-Q – 27 |
W. P. Carey 6/30/2016 10-Q – 28 |
Derivatives Designated as Hedging Instruments | Balance Sheet Location | Asset Derivatives Fair Value at | Liability Derivatives Fair Value at | |||||||||||||||
June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | |||||||||||||||
Foreign currency forward contracts | Other assets, net | $ | 33,759 | $ | 38,975 | $ | — | $ | — | |||||||||
Foreign currency collars | Other assets, net | 11,836 | 7,718 | — | — | |||||||||||||
Interest rate cap | Other assets, net | — | — | — | — | |||||||||||||
Interest rate swaps | Accounts payable, accrued expenses and other liabilities | — | — | (7,006 | ) | (4,762 | ) | |||||||||||
Foreign currency collars | Accounts payable, accrued expenses and other liabilities | — | — | (28 | ) | — | ||||||||||||
Derivatives Not Designated as Hedging Instruments | ||||||||||||||||||
Stock warrants | Other assets, net | 3,417 | 3,618 | — | — | |||||||||||||
Interest rate swaps (a) | Other assets, net | — | 9 | — | — | |||||||||||||
Interest rate swaps (a) | Accounts payable, accrued expenses and other liabilities | — | — | (415 | ) | (2,612 | ) | |||||||||||
Total derivatives | $ | 49,012 | $ | 50,320 | $ | (7,449 | ) | $ | (7,374 | ) |
(a) | These interest rate swaps do not qualify for hedge accounting; however, they do protect against fluctuations in interest rates related to the underlying variable-rate debt. |
Amount of Gain (Loss) Recognized on Derivatives in Other Comprehensive (Loss) Income (Effective Portion) (a) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
Derivatives in Cash Flow Hedging Relationships | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Foreign currency collars | $ | 6,443 | $ | (4,044 | ) | $ | 4,057 | $ | 2,066 | |||||||
Foreign currency forward contracts | 2,966 | (7,536 | ) | (4,208 | ) | 14,053 | ||||||||||
Interest rate swaps | (526 | ) | 1,338 | (2,497 | ) | 157 | ||||||||||
Interest rate cap | 5 | 2 | 8 | 1 | ||||||||||||
Derivatives in Net Investment Hedging Relationships (b) | ||||||||||||||||
Foreign currency forward contracts | 1,104 | (350 | ) | (1,157 | ) | 3,306 | ||||||||||
Total | $ | 9,992 | $ | (10,590 | ) | $ | (3,797 | ) | $ | 19,583 |
W. P. Carey 6/30/2016 10-Q – 29 |
Amount of Gain (Loss) on Derivatives Reclassified from Other Comprehensive Income (Loss) (Effective Portion) | ||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Location of Gain (Loss) Recognized in Income | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Foreign currency forward contracts | Other income and (expenses) | $ | 1,780 | $ | 1,876 | $ | 3,390 | $ | 3,730 | |||||||||
Interest rate swaps and cap | Interest expense | (531 | ) | (609 | ) | (1,066 | ) | (1,218 | ) | |||||||||
Foreign currency collars | Other income and (expenses) | 173 | 357 | 605 | 357 | |||||||||||||
Total | $ | 1,422 | $ | 1,624 | $ | 2,929 | $ | 2,869 |
(a) | Excludes net losses of less than $0.1 million and net gains of $0.6 million recognized on unconsolidated jointly-owned investments for the three months ended June 30, 2016 and 2015, respectively, and net losses of $0.3 million and net gains of $0.9 million for the six months ended June 30, 2016 and 2015, respectively. |
(b) | The effective portion of the change in fair value and the settlement of these contracts are reported in the foreign currency translation adjustment section of Other comprehensive (loss) income until the underlying investment is sold, at which time we reclassify the gain or loss to earnings. |
Amount of Gain (Loss) on Derivatives Recognized in Income | ||||||||||||||||||
Derivatives Not in Cash Flow Hedging Relationships | Location of Gain (Loss) Recognized in Income | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Interest rate swaps | Other income and (expenses) | $ | 1,181 | $ | 1,112 | $ | 2,255 | $ | 2,085 | |||||||||
Foreign currency collars | Other income and (expenses) | 454 | (357 | ) | 179 | 5 | ||||||||||||
Stock warrants | Other income and (expenses) | (201 | ) | 469 | (201 | ) | 134 | |||||||||||
Foreign currency forward contracts | Other income and (expenses) | — | (347 | ) | — | (347 | ) | |||||||||||
Derivatives in Cash Flow Hedging Relationships | ||||||||||||||||||
Foreign currency forward contracts | Other income and (expenses) | 163 | (1 | ) | 141 | 4 | ||||||||||||
Interest rate swaps (a) | Interest expense | 148 | 187 | 263 | 335 | |||||||||||||
Foreign currency collars | Other income and (expenses) | 14 | 11 | 38 | 23 | |||||||||||||
Total | $ | 1,759 | $ | 1,074 | $ | 2,675 | $ | 2,239 |
(a) | Relates to the ineffective portion of the hedging relationship. |
W. P. Carey 6/30/2016 10-Q – 30 |
Number of Instruments | Notional Amount | Fair Value at June 30, 2016 (a) | ||||||||
Interest Rate Derivatives | ||||||||||
Designated as Cash Flow Hedging Instruments | ||||||||||
Interest rate swaps | 13 | 120,164 | USD | $ | (6,506 | ) | ||||
Interest rate swaps | 1 | 5,957 | EUR | (500 | ) | |||||
Interest rate cap (b) | 1 | 39,008 | EUR | — | ||||||
Not Designated as Cash Flow Hedging Instruments | ||||||||||
Interest rate swaps (c) | 2 | 105,046 | EUR | (386 | ) | |||||
Interest rate swaps (c) | 1 | 3,061 | USD | (29 | ) | |||||
$ | (7,421 | ) |
(a) | Fair value amounts are based on the exchange rate of the euro at June 30, 2016, as applicable. |
(b) | The applicable interest rate of the related debt was 0.7%, which was below the strike price of the cap of 3.0% at June 30, 2016. |
(c) | These interest rate swaps do not qualify for hedge accounting; however, they do protect against fluctuations in interest rates related to the underlying variable-rate debt. |
Number of Instruments | Notional Amount | Fair Value at June 30, 2016 | ||||||||
Foreign Currency Derivatives | ||||||||||
Designated as Cash Flow Hedging Instruments | ||||||||||
Foreign currency forward contracts | 44 | 113,293 | EUR | $ | 24,120 | |||||
Foreign currency collars | 18 | 43,400 | GBP | 8,635 | ||||||
Foreign currency collars | 19 | 75,550 | EUR | 3,173 | ||||||
Foreign currency forward contracts | 14 | 17,616 | AUD | 1,614 | ||||||
Foreign currency forward contracts | 10 | 5,350 | GBP | 1,215 | ||||||
Designated as Net Investment Hedging Instruments | ||||||||||
Foreign currency forward contracts | 4 | 79,658 | AUD | 6,810 | ||||||
$ | 45,567 |
W. P. Carey 6/30/2016 10-Q – 31 |
W. P. Carey 6/30/2016 10-Q – 32 |
Interest Rate at June 30, 2016 (a) | Principal Outstanding Balance at | |||||||||||
Senior Unsecured Credit Facility | Maturity Date | June 30, 2016 | December 31, 2015 | |||||||||
Revolver: | ||||||||||||
Revolver - borrowing in euros | LIBOR + 1.10% | 1/31/2018 | $ | 415.8 | $ | 393.0 | ||||||
Revolver - borrowing in U.S. dollars (b) | LIBOR + 1.10%; EURIBOR + 1.10% | 1/31/2018 | 378.0 | 92.0 | ||||||||
793.8 | 485.0 | |||||||||||
Term Loan Facility (c) | LIBOR + 1.25% | 1/31/2017 | 250.0 | 250.0 | ||||||||
$ | 1,043.8 | $ | 735.0 |
(a) | Interest rate at June 30, 2016 is based on our credit rating of BBB/Baa2. |
(b) | EURIBOR means Euro Interbank Offered Rate. |
(c) | Balance excludes deferred financing costs of $0.2 million and $0.3 million at June 30, 2016 and December 31, 2015, respectively (Note 2). |
Original Issue Discount | Principal Outstanding Balance at | ||||||||||||||||||||||||||||
Senior Unsecured Notes, net (a) | Issue Date | Principal Amount | Price of Par Value | Effective Interest Rate | Coupon Rate | Maturity Date | June 30, 2016 | December 31, 2015 | |||||||||||||||||||||
2.0% Senior Euro Notes | 1/21/2015 | € | 500.0 | 99.220 | % | $ | 4.6 | 2.107 | % | 2.0 | % | 1/20/2023 | $ | 555.1 | $ | 544.4 | |||||||||||||
4.6% Senior Notes | 3/14/2014 | $ | 500.0 | 99.639 | % | $ | 1.8 | 4.645 | % | 4.6 | % | 4/1/2024 | 500.0 | 500.0 | |||||||||||||||
4.0% Senior Notes | 1/26/2015 | $ | 450.0 | 99.372 | % | $ | 2.8 | 4.077 | % | 4.0 | % | 2/1/2025 | 450.0 | 450.0 | |||||||||||||||
$ | 1,505.1 | $ | 1,494.4 |
(a) | Aggregate balance excludes unamortized deferred financing costs totaling $9.9 million and $10.5 million (Note 2), and unamortized discount totaling $7.4 million and $7.8 million, at June 30, 2016 and December 31, 2015, respectively. |
W. P. Carey 6/30/2016 10-Q – 33 |
Years Ending December 31, | Total (a) | |||
2016 (remainder) | $ | 262,527 | ||
2017 | 922,333 | |||
2018 | 1,062,407 | |||
2019 | 99,882 | |||
2020 | 222,553 | |||
Thereafter through 2027 | 2,088,518 | |||
4,658,220 | ||||
Deferred financing costs (b) | (11,537 | ) | ||
Unamortized discount, net (c) | (4,755 | ) | ||
Total | $ | 4,641,928 |
(a) | Certain amounts are based on the applicable foreign currency exchange rate at June 30, 2016. |
(b) | In accordance with ASU 2015-03, we reclassified deferred financing costs from Other assets, net to Non-recourse debt, net, Senior Unsecured Notes, net, and Senior Unsecured Credit Facility - Term Loan, net as of December 31, 2015 (Note 2). |
(c) | Represents the unamortized discount on the Senior Unsecured Notes of $7.4 million, partially offset by unamortized premium of $2.6 million in the aggregate resulting from the assumption of property-level debt in connection with the CPA®:15 Merger and CPA®:16 Merger (Note 1). |
W. P. Carey 6/30/2016 10-Q – 34 |
RSA and RSU Awards | PSU Awards | ||||||||||||
Shares | Weighted-Average Grant Date Fair Value | Shares | Weighted-Average Grant Date Fair Value | ||||||||||
Nonvested at January 1, 2016 | 356,771 | $ | 64.09 | 340,358 | $ | 52.26 | |||||||
Granted (a) | 242,074 | 56.84 | 200,005 | 73.18 | |||||||||
Vested (b) | (195,091 | ) | 61.23 | (175,657 | ) | 80.52 | |||||||
Forfeited | (42,568 | ) | 62.03 | (35,241 | ) | 75.33 | |||||||
Adjustment (c) | — | — | 33,596 | 95.91 | |||||||||
Nonvested at June 30, 2016 (d) | 361,186 | $ | 61.02 | 363,061 | $ | 72.66 |
W. P. Carey 6/30/2016 10-Q – 35 |
(a) | The grant date fair value of RSAs and RSUs reflect our stock price on the date of grant. The grant date fair value of PSUs were determined utilizing a Monte Carlo simulation model to generate a range of possible future stock prices for both us and the plan defined peer index over the three-year performance period. To estimate the fair value of PSUs granted during the six months ended June 30, 2016, we used risk-free interest rates ranging from 0.9% - 1.1% and expected volatility rates ranging from 18.2% - 19.1% (the plan defined peer index assumes a range of 15.0% - 15.6%) and assumed a dividend yield of zero. |
(b) | The total fair value of shares vested during the six months ended June 30, 2016 was $26.1 million. Employees have the option to take immediate delivery of the shares upon vesting or defer receipt to a future date, pursuant to previously-made deferral elections. At June 30, 2016 and December 31, 2015, we had an obligation to issue 1,441,242 and 1,395,907 shares, respectively, of our common stock underlying such deferred awards, which is recorded within W. P. Carey stockholders’ equity as a Deferred compensation obligation of $60.8 million and $56.0 million, respectively. |
(c) | Vesting and payment of the PSUs is conditioned upon certain company and/or market performance goals being met during the relevant three-year performance period. The ultimate number of PSUs to be vested will depend on the extent to which the performance goals are met and can range from zero to three times the original awards. As a result, we recorded adjustments to reflect the number of shares expected to be issued when the PSUs vest. |
(d) | At June 30, 2016, total unrecognized compensation expense related to these awards was approximately $29.3 million, with an aggregate weighted-average remaining term of 2.2 years. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income attributable to W. P. Carey | $ | 51,661 | $ | 63,348 | $ | 109,100 | $ | 99,464 | |||||||
Allocation of distribution equivalents paid on nonvested RSUs and RSAs in excess of income | (174 | ) | (218 | ) | (368 | ) | (342 | ) | |||||||
Net income – basic and diluted | $ | 51,487 | $ | 63,130 | $ | 108,732 | $ | 99,122 | |||||||
Weighted-average shares outstanding – basic | 106,310,362 | 105,764,032 | 106,124,881 | 105,532,976 | |||||||||||
Effect of dilutive securities | 219,674 | 517,951 | 379,345 | 822,426 | |||||||||||
Weighted-average shares outstanding – diluted | 106,530,036 | 106,281,983 | 106,504,226 | 106,355,402 |
W. P. Carey 6/30/2016 10-Q – 36 |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Beginning balance | $ | 14,944 | $ | 6,071 | |||
Distributions | (13,418 | ) | — | ||||
Redemption value adjustment | (561 | ) | 7,303 | ||||
Ending balance | $ | 965 | $ | 13,374 |
Three Months Ended June 30, 2016 | |||||||||||||||
Gains and Losses on Derivative Instruments | Foreign Currency Translation Adjustments | Gains and Losses on Marketable Securities | Total | ||||||||||||
Beginning balance | $ | 25,875 | $ | (197,814 | ) | $ | 36 | $ | (171,903 | ) | |||||
Other comprehensive loss before reclassifications | 10,291 | (44,208 | ) | 4 | (33,913 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss to: | |||||||||||||||
Interest expense | 531 | — | — | 531 | |||||||||||
Other income and (expenses) | (1,953 | ) | — | — | (1,953 | ) | |||||||||
Total | (1,422 | ) | — | — | (1,422 | ) | |||||||||
Net current period other comprehensive loss | 8,869 | (44,208 | ) | 4 | (35,335 | ) | |||||||||
Net current period other comprehensive loss attributable to noncontrolling interests | — | 1,037 | — | 1,037 | |||||||||||
Ending balance | $ | 34,744 | $ | (240,985 | ) | $ | 40 | $ | (206,201 | ) |
W. P. Carey 6/30/2016 10-Q – 37 |
Three Months Ended June 30, 2015 | |||||||||||||||
Gains and Losses on Derivative Instruments | Foreign Currency Translation Adjustments | Gains and Losses on Marketable Securities | Total | ||||||||||||
Beginning balance | $ | 40,415 | $ | (198,113 | ) | $ | 35 | $ | (157,663 | ) | |||||
Other comprehensive income before reclassifications | (7,995 | ) | 48,090 | — | 40,095 | ||||||||||
Amounts reclassified from accumulated other comprehensive loss to: | |||||||||||||||
Interest expense | 609 | — | — | 609 | |||||||||||
Other income and (expenses) | (2,233 | ) | — | — | (2,233 | ) | |||||||||
Total | (1,624 | ) | — | — | (1,624 | ) | |||||||||
Net current period other comprehensive income | (9,619 | ) | 48,090 | — | 38,471 | ||||||||||
Net current period other comprehensive gain attributable to noncontrolling interests | — | (1,585 | ) | — | (1,585 | ) | |||||||||
Ending balance | $ | 30,796 | $ | (151,608 | ) | $ | 35 | $ | (120,777 | ) |
Six Months Ended June 30, 2016 | |||||||||||||||
Gains and Losses on Derivative Instruments | Foreign Currency Translation Adjustments | Gains and Losses on Marketable Securities | Total | ||||||||||||
Beginning balance | $ | 37,650 | $ | (209,977 | ) | $ | 36 | $ | (172,291 | ) | |||||
Other comprehensive loss before reclassifications | 23 | (30,175 | ) | 4 | (30,148 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss to: | |||||||||||||||
Interest expense | 1,066 | — | — | 1,066 | |||||||||||
Other income and (expenses) | (3,995 | ) | — | — | (3,995 | ) | |||||||||
Total | (2,929 | ) | — | — | (2,929 | ) | |||||||||
Net current period other comprehensive loss | (2,906 | ) | (30,175 | ) | 4 | (33,077 | ) | ||||||||
Net current period other comprehensive gain attributable to noncontrolling interests | — | (833 | ) | — | (833 | ) | |||||||||
Ending balance | $ | 34,744 | $ | (240,985 | ) | $ | 40 | $ | (206,201 | ) |
Six Months Ended June 30, 2015 | |||||||||||||||
Gains and Losses on Derivative Instruments | Foreign Currency Translation Adjustments | Gains and Losses on Marketable Securities | Total | ||||||||||||
Beginning balance | $ | 13,597 | $ | (89,177 | ) | $ | 21 | $ | (75,559 | ) | |||||
Other comprehensive loss before reclassifications | 20,068 | (65,989 | ) | 14 | (45,907 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss to: | |||||||||||||||
Interest expense | 1,218 | — | — | 1,218 | |||||||||||
Other income and (expenses) | (4,087 | ) | — | — | (4,087 | ) | |||||||||
Total | (2,869 | ) | — | — | (2,869 | ) | |||||||||
Net current period other comprehensive loss | 17,199 | (65,989 | ) | 14 | (48,776 | ) | |||||||||
Net current period other comprehensive loss attributable to noncontrolling interests | — | 3,558 | — | 3,558 | |||||||||||
Ending balance | $ | 30,796 | $ | (151,608 | ) | $ | 35 | $ | (120,777 | ) |
W. P. Carey 6/30/2016 10-Q – 38 |
W. P. Carey 6/30/2016 10-Q – 39 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | $ | 12,116 | $ | 19,753 | $ | 73,896 | $ | 39,060 | |||||||
Expenses | (6,586 | ) | (10,783 | ) | (37,008 | ) | (23,799 | ) | |||||||
Gain on sale of real estate, net of tax | 18,282 | 16 | 18,944 | 1,201 | |||||||||||
Impairment charges | (35,429 | ) | — | (35,429 | ) | (2,683 | ) | ||||||||
Loss on extinguishment of debt | — | — | (1,940 | ) | — | ||||||||||
Benefit from (provision for) income taxes | 11,689 | (1,280 | ) | 10,716 | (2,070 | ) | |||||||||
Income from properties sold or classified as held for sale, net of income taxes (a) | $ | 72 | $ | 7,706 | $ | 29,179 | $ | 11,709 |
(a) | Amounts included net income attributable to noncontrolling interests of $2.0 million for the three months ended June 30, 2015, and $1.5 million and $2.0 million for the six months ended June 30, 2016 and 2015, respectively. We did not recognize net income attributable to noncontrolling interests for the three months ended June 30, 2016. |
W. P. Carey 6/30/2016 10-Q – 40 |
W. P. Carey 6/30/2016 10-Q – 41 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | |||||||||||||||
Lease revenues | $ | 167,328 | $ | 162,574 | $ | 342,572 | $ | 322,739 | |||||||
Operating property revenues | 8,270 | 8,426 | 15,172 | 15,538 | |||||||||||
Reimbursable tenant costs | 6,391 | 6,130 | 12,700 | 12,069 | |||||||||||
Lease termination income and other | 838 | 3,122 | 33,379 | 6,331 | |||||||||||
182,827 | 180,252 | 403,823 | 356,677 | ||||||||||||
Operating Expenses | |||||||||||||||
Depreciation and amortization | 65,457 | 64,150 | 148,817 | 128,518 | |||||||||||
Impairment charges | 35,429 | 591 | 35,429 | 3,274 | |||||||||||
Property expenses, excluding reimbursable tenant costs | 10,510 | 11,020 | 28,282 | 20,384 | |||||||||||
General and administrative | 8,656 | 11,772 | 18,200 | 26,884 | |||||||||||
Reimbursable tenant costs | 6,391 | 6,130 | 12,700 | 12,069 | |||||||||||
Stock-based compensation expense | 907 | 2,021 | 2,744 | 4,476 | |||||||||||
Property acquisition and other expenses | 78 | 1,897 | 2,975 | 7,573 | |||||||||||
Restructuring and other compensation | (13 | ) | — | 4,413 | — | ||||||||||
127,415 | 97,581 | 253,560 | 203,178 | ||||||||||||
Other Income and Expenses | |||||||||||||||
Interest expense | (46,752 | ) | (47,693 | ) | (95,147 | ) | (95,642 | ) | |||||||
Equity in earnings of equity method investments in the Managed REITs and real estate | 15,900 | 14,110 | 31,066 | 25,833 | |||||||||||
Other income and (expenses) | 662 | 7,442 | 4,437 | 2,956 | |||||||||||
(30,190 | ) | (26,141 | ) | (59,644 | ) | (66,853 | ) | ||||||||
Income before income taxes and gain on sale of real estate | 25,222 | 56,530 | 90,619 | 86,646 | |||||||||||
Benefit from (provision for) income taxes | 9,410 | (3,845 | ) | 7,322 | (2,571 | ) | |||||||||
Income before gain on sale of real estate | 34,632 | 52,685 | 97,941 | 84,075 | |||||||||||
Gain on sale of real estate, net of tax | 18,282 | 16 | 18,944 | 1,201 | |||||||||||
Net Income from Owned Real Estate | 52,914 | 52,701 | 116,885 | 85,276 | |||||||||||
Net income attributable to noncontrolling interests | (1,510 | ) | (1,591 | ) | (4,935 | ) | (4,057 | ) | |||||||
Net Income from Owned Real Estate Attributable to W. P. Carey | $ | 51,404 | $ | 51,110 | $ | 111,950 | $ | 81,219 |
W. P. Carey 6/30/2016 10-Q – 42 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | |||||||||||||||
Asset management revenue | $ | 15,005 | $ | 12,073 | $ | 29,618 | $ | 23,232 | |||||||
Reimbursable costs | 12,094 | 7,639 | 31,832 | 17,246 | |||||||||||
Structuring revenue | 5,968 | 37,808 | 18,689 | 59,528 | |||||||||||
Dealer manager fees | 1,372 | 307 | 3,544 | 1,581 | |||||||||||
Other advisory revenue | — | — | — | 203 | |||||||||||
34,439 | 57,827 | 83,683 | 101,790 | ||||||||||||
Operating Expenses | |||||||||||||||
General and administrative | 12,295 | 14,604 | 24,189 | 29,260 | |||||||||||
Reimbursable costs from affiliates | 12,094 | 7,639 | 31,832 | 17,246 | |||||||||||
Stock-based compensation expense | 3,094 | 3,068 | 7,864 | 7,622 | |||||||||||
Dealer manager fees and expenses | 2,620 | 2,327 | 5,972 | 4,699 | |||||||||||
Subadvisor fees | 1,875 | 4,147 | 5,168 | 6,808 | |||||||||||
Depreciation and amortization | 1,124 | 1,016 | 2,216 | 2,048 | |||||||||||
Restructuring and other compensation | 465 | — | 7,512 | — | |||||||||||
Property acquisition and other expenses | (285 | ) | — | 2,384 | — | ||||||||||
33,282 | 32,801 | 87,137 | 67,683 | ||||||||||||
Other Income and Expenses | |||||||||||||||
Equity in earnings of equity method investment in Carey Credit Income Fund | 529 | 162 | 374 | 162 | |||||||||||
Other income and (expenses) | (236 | ) | 199 | (140 | ) | 379 | |||||||||
293 | 361 | 234 | 541 | ||||||||||||
Income (loss) before income taxes | 1,450 | 25,387 | (3,220 | ) | 34,648 | ||||||||||
(Provision for) benefit from income taxes | (1,193 | ) | (11,165 | ) | 370 | (14,419 | ) | ||||||||
Net Income (Loss) from Investment Management | 257 | 14,222 | (2,850 | ) | 20,229 | ||||||||||
Net income attributable to noncontrolling interests | — | (1,984 | ) | — | (1,984 | ) | |||||||||
Net Income (Loss) from Investment Management Attributable to W. P. Carey | $ | 257 | $ | 12,238 | $ | (2,850 | ) | $ | 18,245 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | $ | 217,266 | $ | 238,079 | $ | 487,506 | $ | 458,467 | |||||||
Operating expenses | 160,697 | 130,382 | 340,697 | 270,861 | |||||||||||
Other income and (expenses) | (29,897 | ) | (25,780 | ) | (59,410 | ) | (66,312 | ) | |||||||
Benefit from (provision for) income taxes | 8,217 | (15,010 | ) | 7,692 | (16,990 | ) | |||||||||
Gain on sale of real estate, net of tax | 18,282 | 16 | 18,944 | 1,201 | |||||||||||
Net income attributable to noncontrolling interests | (1,510 | ) | (3,575 | ) | (4,935 | ) | (6,041 | ) | |||||||
Net income attributable to W. P. Carey | $ | 51,661 | $ | 63,348 | $ | 109,100 | $ | 99,464 |
W. P. Carey 6/30/2016 10-Q – 43 |
Total Long-Lived Assets at (a) | Total Assets at | ||||||||||||||
June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 (b) | ||||||||||||
Owned Real Estate | $ | 6,174,730 | $ | 6,079,803 | $ | 8,491,492 | $ | 8,537,544 | |||||||
Investment Management | 22,460 | 22,214 | 191,079 | 204,545 | |||||||||||
Total Company | $ | 6,197,190 | $ | 6,102,017 | $ | 8,682,571 | $ | 8,742,089 |
(a) | Consists of Net investments in real estate and Equity investments in the Managed Programs and real estate. Total long-lived assets for our Investment Management segment consists of our equity investment in CCIF (Note 6). |
(b) | In accordance with ASU 2015-03, we reclassified deferred financing costs from Other assets, net to Non-recourse debt, net, Senior Unsecured Notes, net, and Senior Unsecured Credit Facility - Term Loan, net as of December 31, 2015 (Note 2). |
W. P. Carey 6/30/2016 10-Q – 44 |
W. P. Carey 6/30/2016 10-Q – 45 |
• | Properties acquired or placed into service in 2015 and 2016 generated increases in lease revenues and Property level contribution of $11.9 million and $6.2 million, respectively, for the three months ended June 30, 2016 as compared to the same period in 2015, and by $19.7 million and $10.0 million, respectively, for the six months ended June 30, 2016 as compared to the same period in 2015; |
• | We recognized lease termination income of $32.2 million related to a property sold during the six months ended June 30, 2016 (Note 15); |
• | Structuring revenue decreased by $31.8 million and $40.8 million for the three and six months ended June 30, 2016, respectively, as compared to the same periods in 2015, due to lower investment volume for the Managed REITs during the current year periods; |
• | Asset management revenue increased by $2.9 million and $6.4 million for the three and six months ended June 30, 2016, respectively, as compared to the same periods in 2015, primarily as a result of the growth in assets under management due to investment volume for the Managed Programs; |
• | We incurred $11.9 million of Restructuring and other compensation expenses during the six months ended June 30, 2016 resulting from the RIF (Note 12); |
• | We incurred $5.3 million in professional fees and expenses in connection with our formal strategic review, which was recorded in Property acquisition and other expenses on our consolidated financial statements, during the six months ended June 30, 2016; |
• | General and administrative expenses decreased by $5.4 million and $13.8 million for the three and six months ended June 30, 2016, respectively, as compared to the same periods in 2015, due to lower commissions to investment officers resulting from lower investment volume and lower compensation and professional fees resulting from the RIF and other cost savings initiatives; |
• | We recognized impairment charges totaling $35.4 million on a portfolio of 14 properties held for sale during the three and six months ended June 30, 2016 (Note 8); and |
• | We provided an allowance for credit losses of $7.1 million on a direct financing lease during the six months ended June 30, 2016 (Note 5). |
W. P. Carey 6/30/2016 10-Q – 46 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Real estate revenues | $ | 182,827 | $ | 180,252 | $ | 403,823 | $ | 356,677 | |||||||
Reimbursable tenant costs | 6,391 | 6,130 | 12,700 | 12,069 | |||||||||||
Real estate revenues (excluding reimbursable tenant costs) | 176,436 | 174,122 | 391,123 | 344,608 | |||||||||||
Investment management revenues | 34,439 | 57,827 | 83,683 | 101,790 | |||||||||||
Reimbursable costs | 12,094 | 7,639 | 31,832 | 17,246 | |||||||||||
Investment management revenues (excluding reimbursable costs from affiliates) | 22,345 | 50,188 | 51,851 | 84,544 | |||||||||||
Total revenues | 217,266 | 238,079 | 487,506 | 458,467 | |||||||||||
Total reimbursable costs | 18,485 | 13,769 | 44,532 | 29,315 | |||||||||||
Total revenues (excluding reimbursable costs) | 198,781 | 224,310 | 442,974 | 429,152 | |||||||||||
Net income from Owned Real Estate attributable to W. P. Carey | 51,404 | 51,110 | 111,950 | 81,219 | |||||||||||
Net income (loss) from Investment Management attributable to W. P. Carey | 257 | 12,238 | (2,850 | ) | 18,245 | ||||||||||
Net income attributable to W. P. Carey | 51,661 | 63,348 | 109,100 | 99,464 | |||||||||||
Cash distributions paid | 103,683 | 101,055 | 205,922 | 200,915 | |||||||||||
Net cash provided by operating activities | 236,214 | 216,052 | |||||||||||||
Net cash used in by investing activities | (214,628 | ) | (522,949 | ) | |||||||||||
Net cash (used in) provided by financing activities | (6,360 | ) | 362,708 | ||||||||||||
Supplemental financial measures: | |||||||||||||||
Adjusted funds from operations attributable to W. P. Carey (AFFO) — Owned Real Estate (a) | 130,538 | 123,288 | 259,752 | 242,532 | |||||||||||
Adjusted funds from operations attributable to W. P. Carey (AFFO) — Investment Management (a) | 1,700 | 15,748 | 11,950 | 26,471 | |||||||||||
Adjusted funds from operations attributable to W. P. Carey (AFFO) (a) | 132,238 | 139,036 | 271,702 | 269,003 | |||||||||||
Diluted weighted-average shares outstanding | 106,530,036 | 106,281,983 | 106,504,226 | 106,355,402 |
(a) | We consider the performance metrics listed above, including Adjusted funds from operations, or AFFO, a supplemental measure that is not defined by GAAP, referred to as a non-GAAP measure, to be important measures in the evaluation of our results of operations and capital resources. We evaluate our results of operations with a primary focus on the ability to generate cash flow necessary to meet our objective of funding distributions to stockholders. See Supplemental Financial Measures below for our definition of this non-GAAP measure and a reconciliation to its most directly comparable GAAP measure. |
W. P. Carey 6/30/2016 10-Q – 47 |
W. P. Carey 6/30/2016 10-Q – 48 |
• | one investment of $167.7 million in three private school campuses in Coconut Creek and Windermere, Florida and Houston, Texas, with a commitment to fund $128.1 million of build-to-suit financing over the next four years in order to fund expansions of the existing facilities; and |
• | one investment of $218.2 million in 43 manufacturing facilities in various locations in the United States and six manufacturing facilities in various locations in Canada. |
• | We structured investments in two domestic hotels for $246.5 million, inclusive of acquisition-related costs, on behalf of CWI 2. |
• | We structured investments in nine properties for an aggregate of $165.3 million, inclusive of acquisition-related costs, on behalf of CPA®:18 – Global. Approximately $89.6 million was invested internationally and $75.7 million was invested in the United States. |
• | We structured investments in two domestic hotels for an aggregate of $107.4 million, inclusive of acquisition-related costs, on behalf of CWI 1. |
• | We structured investments in thirteen properties and a build-to-suit expansion on an existing property for an aggregate of $74.3 million, inclusive of acquisition-related costs, on behalf of CPA®:17 – Global. Approximately $64.7 million was invested in the United States and $9.6 million was invested internationally. |
W. P. Carey 6/30/2016 10-Q – 49 |
• | CWI 2 commenced its initial public offering in the first quarter of 2015 and began to admit new stockholders on May 15, 2015. Through June 30, 2016, CWI 2 had raised approximately $470.4 million through its offering, of which $223.4 million was raised during the six months ended June 30, 2016. We earned $2.8 million in Dealer manager fees during the six months ended June 30, 2016 related to this offering. |
• | The two CCIF Feeder Funds commenced their respective initial public offerings in the third quarter of 2015 and invest the proceeds that they raise in the master fund, CCIF. Through June 30, 2016, the Feeder Funds have invested $52.6 million in CCIF, of which $50.6 million was invested during the six months ended June 30, 2016. We earned $0.7 million in Dealer manager fees during the six months ended June 30, 2016 related to this offering. |
W. P. Carey 6/30/2016 10-Q – 50 |
June 30, 2016 | December 31, 2015 | ||||||
Number of net-leased properties | 914 | 869 | |||||
Number of operating properties (a) | 2 | 3 | |||||
Number of tenants (net-leased properties) | 221 | 222 | |||||
Total square footage (net-leased properties, in thousands) | 92,849 | 90,120 | |||||
Occupancy (net-leased properties) | 98.8 | % | 98.8 | % | |||
Weighted-average lease term (net-leased properties, in years) | 9.4 | 9.0 | |||||
Number of countries | 19 | 19 | |||||
Total assets (consolidated basis, in thousands) | $ | 8,682,571 | $ | 8,742,089 | |||
Net investments in real estate (consolidated basis, in thousands) | 5,910,415 | 5,826,544 |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Financing obtained (in millions, pro rata amount equals consolidated amount) (b) | $ | — | $ | 1,541.7 | |||
Acquisition volume (in millions, pro rata amount equals consolidated amount) (c) | 385.8 | 445.6 | |||||
Average U.S. dollar/euro exchange rate | 1.1158 | 1.1162 | |||||
Average U.S. dollar/British pound sterling exchange rate (d) | 1.4335 | 1.5238 | |||||
Change in the U.S. CPI (e) | 1.9 | % | 1.6 | % | |||
Change in the German CPI (e) | 0.3 | % | 0.3 | % | |||
Change in the French CPI (e) | 0.6 | % | 0.6 | % | |||
Change in the Finnish CPI (e) | 0.4 | % | (0.2 | )% | |||
Change in the Spanish CPI (e) | 0.1 | % | 0.9 | % |
(a) | At June 30, 2016, operating properties consisted of two hotel properties with an average occupancy of 83.3% for the six months ended June 30, 2016. During the six months ended June 30, 2016, we sold one self-storage property (Note 15). |
(b) | The amount for the six months ended June 30, 2015 represents the exercise of the accordion feature under our Senior Unsecured Credit Facility in January 2015, which increased our borrowing capacity under our Revolver by $500.0 million, and the issuances of the €500.0 million 2.0% Senior Euro Notes and $450.0 million 4.0% Senior Notes in January 2015 (Note 10). |
(c) | For the six months ended June 30, 2016, amount excludes a commitment for $128.1 million of build-to-suit financing (Note 4). For the six months ended June 30, 2015, amount includes acquisition-related costs for business combinations, which were expensed in the consolidated financial statements. |
(d) | The average exchange rate for the U.S. dollar in relation to the British pound sterling decreased by 5.9% during the six months ended June 30, 2016 as compared to the same period in 2015, resulting in a negative impact on earnings in 2016 from our British pound sterling-denominated investments. |
(e) | Many of our lease agreements include contractual increases indexed to changes in the U.S. Consumer Price Index, or CPI, or similar indices in the jurisdictions in which the properties are located. |
W. P. Carey 6/30/2016 10-Q – 51 |
Tenant/Lease Guarantor | Property Type | Tenant Industry | Location | Number of Properties | ABR | ABR Percent | ||||||||||
Hellweg Die Profi-Baumärkte GmbH & Co. KG (a) | Retail | Retail Stores | Germany | 53 | $ | 33,723 | 4.8 | % | ||||||||
U-Haul Moving Partners Inc. and Mercury Partners, LP | Self Storage | Cargo Transportation, Consumer Services | Various U.S. | 78 | 31,853 | 4.6 | % | |||||||||
Carrefour France SAS (a) (b) | Retail, Warehouse | Retail Stores | France | 16 | 27,505 | 3.9 | % | |||||||||
State of Andalucia (a) | Office | Sovereign and Public Finance | Spain | 70 | 26,597 | 3.8 | % | |||||||||
Pendragon Plc (a) | Retail | Retail Stores, Consumer Services | United Kingdom | 73 | 22,100 | 3.2 | % | |||||||||
Marriott Corporation | Hotel | Hotel, Gaming and Leisure | Various U.S. | 18 | 19,774 | 2.8 | % | |||||||||
Forterra Building Products (a) (c) | Industrial | Construction and Building | Various U.S. and Canada | 49 | 17,077 | 2.5 | % | |||||||||
True Value Company | Warehouse | Retail Stores | Various U.S. | 7 | 15,372 | 2.2 | % | |||||||||
OBI Group (a) | Office, Retail | Retail Stores | Poland | 18 | 15,140 | 2.2 | % | |||||||||
UTI Holdings, Inc. | Education Facility | Consumer Services | Various U.S. | 5 | 14,080 | 2.0 | % | |||||||||
Total | 387 | $ | 223,221 | 32.0 | % |
(a) | ABR amounts are subject to fluctuations in foreign currency exchange rates. |
(b) | At June 30, 2016, all 16 properties were classified as held for sale, 14 of which were being marketed for sale as one portfolio and two of which were under individual contracts to sell. |
(c) | Of the 49 properties leased to Forterra Building Products, 43 are located in the United States and six are located in Canada. |
W. P. Carey 6/30/2016 10-Q – 52 |
Region | ABR | Percent | Square Footage | Percent | |||||||||
United States | |||||||||||||
South | |||||||||||||
Texas | $ | 56,420 | 8.1 | % | 8,321 | 9.0 | % | ||||||
Florida | 27,934 | 4.0 | % | 2,600 | 2.8 | % | |||||||
Georgia | 19,032 | 2.7 | % | 3,148 | 3.4 | % | |||||||
Tennessee | 11,630 | 1.7 | % | 1,915 | 2.1 | % | |||||||
Other (a) | 9,585 | 1.4 | % | 1,988 | 2.1 | % | |||||||
Total South | 124,601 | 17.9 | % | 17,972 | 19.4 | % | |||||||
East | |||||||||||||
North Carolina | 19,601 | 2.8 | % | 4,518 | 4.9 | % | |||||||
New Jersey | 19,106 | 2.7 | % | 1,232 | 1.3 | % | |||||||
Pennsylvania | 18,383 | 2.6 | % | 2,526 | 2.7 | % | |||||||
New York | 17,956 | 2.6 | % | 1,178 | 1.3 | % | |||||||
Massachusetts | 14,723 | 2.1 | % | 1,390 | 1.5 | % | |||||||
Virginia | 8,018 | 1.2 | % | 1,093 | 1.2 | % | |||||||
Other (a) | 23,115 | 3.3 | % | 4,742 | 5.1 | % | |||||||
Total East | 120,902 | 17.3 | % | 16,679 | 18.0 | % | |||||||
West | |||||||||||||
California | 54,111 | 7.8 | % | 3,665 | 3.9 | % | |||||||
Arizona | 26,446 | 3.8 | % | 3,049 | 3.3 | % | |||||||
Colorado | 10,524 | 1.5 | % | 1,268 | 1.4 | % | |||||||
Other (a) | 25,489 | 3.7 | % | 3,282 | 3.5 | % | |||||||
Total West | 116,570 | 16.8 | % | 11,264 | 12.1 | % | |||||||
Midwest | |||||||||||||
Illinois | 21,336 | 3.1 | % | 3,246 | 3.5 | % | |||||||
Michigan | 11,743 | 1.7 | % | 1,380 | 1.5 | % | |||||||
Indiana | 9,163 | 1.3 | % | 1,418 | 1.5 | % | |||||||
Ohio | 8,376 | 1.2 | % | 1,911 | 2.0 | % | |||||||
Missouri | 7,091 | 1.0 | % | 1,305 | 1.4 | % | |||||||
Other (a) | 23,916 | 3.4 | % | 4,042 | 4.4 | % | |||||||
Total Midwest | 81,625 | 11.7 | % | 13,302 | 14.3 | % | |||||||
United States Total | 443,698 | 63.7 | % | 59,217 | 63.8 | % | |||||||
International | |||||||||||||
Germany | 59,668 | 8.6 | % | 7,131 | 7.7 | % | |||||||
France | 42,826 | 6.1 | % | 7,836 | 8.4 | % | |||||||
United Kingdom | 34,607 | 5.0 | % | 2,681 | 2.9 | % | |||||||
Spain | 28,130 | 4.0 | % | 2,927 | 3.1 | % | |||||||
Finland | 19,702 | 2.8 | % | 1,588 | 1.7 | % | |||||||
Poland | 17,020 | 2.4 | % | 2,189 | 2.4 | % | |||||||
The Netherlands | 14,389 | 2.1 | % | 2,233 | 2.4 | % | |||||||
Australia | 11,231 | 1.6 | % | 3,160 | 3.4 | % | |||||||
Other (b) | 25,522 | 3.7 | % | 3,887 | 4.2 | % | |||||||
International Total | 253,095 | 36.3 | % | 33,632 | 36.2 | % | |||||||
Total | $ | 696,793 | 100.0 | % | 92,849 | 100.0 | % |
W. P. Carey 6/30/2016 10-Q – 53 |
Property Type | ABR | Percent | Square Footage | Percent | |||||||||
Industrial | $ | 188,723 | 27.1 | % | 38,242 | 41.2 | % | ||||||
Office | 182,080 | 26.1 | % | 12,207 | 13.1 | % | |||||||
Warehouse | 121,585 | 17.5 | % | 24,615 | 26.5 | % | |||||||
Retail | 107,077 | 15.3 | % | 9,907 | 10.7 | % | |||||||
Self Storage | 31,853 | 4.6 | % | 3,535 | 3.8 | % | |||||||
Other (c) | 65,475 | 9.4 | % | 4,343 | 4.7 | % | |||||||
Total | $ | 696,793 | 100.0 | % | 92,849 | 100.0 | % |
(a) | Other properties within South include assets in Louisiana, Alabama, Arkansas, Mississippi, and Oklahoma. Other properties within East include assets in Connecticut, South Carolina, Kentucky, Maryland, New Hampshire, and West Virginia. Other properties within West include assets in Alaska, Montana, New Mexico, Nevada, Oregon, Utah, Washington, and Wyoming. Other properties within Midwest include assets in Minnesota, Kansas, Wisconsin, Nebraska, Iowa, North Dakota, and South Dakota. |
(b) | Includes assets in Norway, Austria, Hungary, Thailand, Sweden, Canada, Belgium, Malaysia, Mexico, and Japan. |
(c) | Includes ABR from tenants with the following property types: education facility, hotel, theater, sports facility, and residential. |
W. P. Carey 6/30/2016 10-Q – 54 |
Industry Type | ABR | Percent | Square Footage | Percent | |||||||||
Retail Stores (a) | $ | 140,901 | 20.2 | % | 20,847 | 22.5 | % | ||||||
Consumer Services | 69,108 | 9.9 | % | 5,565 | 6.0 | % | |||||||
High Tech Industries | 45,460 | 6.5 | % | 3,267 | 3.5 | % | |||||||
Automotive | 39,488 | 5.7 | % | 6,599 | 7.1 | % | |||||||
Sovereign and Public Finance | 39,239 | 5.6 | % | 3,408 | 3.7 | % | |||||||
Construction and Building | 36,970 | 5.3 | % | 8,294 | 8.9 | % | |||||||
Hotel, Gaming and Leisure | 33,844 | 4.9 | % | 2,254 | 2.4 | % | |||||||
Beverage, Food and Tobacco | 30,179 | 4.3 | % | 6,691 | 7.2 | % | |||||||
Cargo Transportation | 29,277 | 4.2 | % | 4,229 | 4.6 | % | |||||||
Media: Advertising, Printing and Publishing | 27,727 | 4.0 | % | 1,695 | 1.8 | % | |||||||
Healthcare and Pharmaceuticals | 27,658 | 4.0 | % | 1,988 | 2.1 | % | |||||||
Capital Equipment | 26,781 | 3.8 | % | 4,932 | 5.3 | % | |||||||
Containers, Packaging and Glass | 26,647 | 3.8 | % | 5,325 | 5.7 | % | |||||||
Wholesale | 14,561 | 2.1 | % | 2,806 | 3.0 | % | |||||||
Business Services | 12,067 | 1.7 | % | 1,628 | 1.8 | % | |||||||
Durable Consumer Goods | 11,042 | 1.6 | % | 2,485 | 2.7 | % | |||||||
Grocery | 10,783 | 1.5 | % | 1,260 | 1.4 | % | |||||||
Aerospace and Defense | 10,620 | 1.5 | % | 1,183 | 1.3 | % | |||||||
Chemicals, Plastics and Rubber | 9,481 | 1.4 | % | 1,088 | 1.2 | % | |||||||
Metals and Mining | 9,473 | 1.4 | % | 1,413 | 1.5 | % | |||||||
Oil and Gas | 8,153 | 1.2 | % | 368 | 0.4 | % | |||||||
Telecommunications | 8,000 | 1.1 | % | 582 | 0.6 | % | |||||||
Non-Durable Consumer Goods | 7,768 | 1.1 | % | 1,883 | 2.0 | % | |||||||
Banking | 7,314 | 1.1 | % | 597 | 0.6 | % | |||||||
Other (b) | 14,252 | 2.1 | % | 2,462 | 2.7 | % | |||||||
Total | $ | 696,793 | 100.0 | % | 92,849 | 100.0 | % |
(a) | Includes automotive dealerships. |
(b) | Includes ABR from tenants in the following industries: insurance; electricity; media: broadcasting and subscription; forest products and paper; environmental industries; and consumer transportation. Also includes square footage for vacant properties. |
W. P. Carey 6/30/2016 10-Q – 55 |
Year of Lease Expiration (a) | Number of Leases Expiring | ABR | Percent | Square Footage | Percent | |||||||||||
June 30, 2016 (b) | 1 | $ | 291 | — | % | 11 | — | % | ||||||||
Remaining 2016 (c) | 6 | 8,706 | 1.3 | % | 749 | 0.8 | % | |||||||||
2017 (d) | 15 | 25,990 | 3.7 | % | 2,877 | 3.1 | % | |||||||||
2018 | 26 | 38,021 | 5.6 | % | 7,481 | 8.1 | % | |||||||||
2019 | 25 | 32,941 | 4.7 | % | 3,893 | 4.2 | % | |||||||||
2020 | 25 | 36,330 | 5.2 | % | 3,552 | 3.8 | % | |||||||||
2021 | 81 | 43,140 | 6.2 | % | 6,846 | 7.4 | % | |||||||||
2022 | 37 | 63,486 | 9.1 | % | 8,487 | 9.1 | % | |||||||||
2023 | 16 | 38,260 | 5.5 | % | 4,924 | 5.3 | % | |||||||||
2024 | 44 | 93,013 | 13.3 | % | 11,719 | 12.6 | % | |||||||||
2025 | 44 | 33,404 | 4.8 | % | 3,645 | 3.9 | % | |||||||||
2026 | 23 | 21,376 | 3.1 | % | 3,118 | 3.4 | % | |||||||||
2027 | 25 | 42,013 | 6.0 | % | 6,277 | 6.8 | % | |||||||||
2028 | 9 | 20,391 | 2.9 | % | 2,598 | 2.8 | % | |||||||||
2029 | 11 | 19,400 | 2.8 | % | 2,897 | 3.1 | % | |||||||||
Thereafter | 92 | 180,031 | 25.8 | % | 22,659 | 24.4 | % | |||||||||
Vacant | — | — | — | % | 1,116 | 1.2 | % | |||||||||
Total | 480 | $ | 696,793 | 100.0 | % | 92,849 | 100.0 | % |
(a) | Assumes tenant does not exercise renewal option. |
(b) | Reflects ABR for a lease that expired on June 30, 2016. |
(c) | A month-to-month lease with ABR of $0.1 million is included in 2016 ABR. |
(d) | Includes ABR of $12.8 million from a tenant in a property that was classified as held for sale as of June 30, 2016. The property was sold subsequent to June 30, 2016 (Note 17). |
W. P. Carey 6/30/2016 10-Q – 56 |
W. P. Carey 6/30/2016 10-Q – 57 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Lease revenues | $ | 167,328 | $ | 162,574 | $ | 4,754 | $ | 342,572 | $ | 322,739 | $ | 19,833 | |||||||||||
Operating property revenues | 8,270 | 8,426 | (156 | ) | 15,172 | 15,538 | (366 | ) | |||||||||||||||
Reimbursable tenant costs | 6,391 | 6,130 | 261 | 12,700 | 12,069 | 631 | |||||||||||||||||
Lease termination income and other | 838 | 3,122 | (2,284 | ) | 33,379 | 6,331 | 27,048 | ||||||||||||||||
182,827 | 180,252 | 2,575 | 403,823 | 356,677 | 47,146 | ||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Depreciation and amortization: | |||||||||||||||||||||||
Net-leased properties | 64,389 | 63,088 | 1,301 | 146,714 | 126,407 | 20,307 | |||||||||||||||||
Operating properties | 1,068 | 1,062 | 6 | 2,103 | 2,111 | (8 | ) | ||||||||||||||||
65,457 | 64,150 | 1,307 | 148,817 | 128,518 | 20,299 | ||||||||||||||||||
Property expenses: | |||||||||||||||||||||||
Reimbursable tenant costs | 6,391 | 6,130 | 261 | 12,700 | 12,069 | 631 | |||||||||||||||||
Operating property expenses | 5,794 | 6,168 | (374 | ) | 11,506 | 11,539 | (33 | ) | |||||||||||||||
Net-leased properties | 4,716 | 4,852 | (136 | ) | 16,776 | 8,845 | 7,931 | ||||||||||||||||
16,901 | 17,150 | (249 | ) | 40,982 | 32,453 | 8,529 | |||||||||||||||||
Impairment charges | 35,429 | 591 | 34,838 | 35,429 | 3,274 | 32,155 | |||||||||||||||||
General and administrative | 8,656 | 11,772 | (3,116 | ) | 18,200 | 26,884 | (8,684 | ) | |||||||||||||||
Stock-based compensation expense | 907 | 2,021 | (1,114 | ) | 2,744 | 4,476 | (1,732 | ) | |||||||||||||||
Property acquisition and other expenses | 78 | 1,897 | (1,819 | ) | 2,975 | 7,573 | (4,598 | ) | |||||||||||||||
Restructuring and other compensation | (13 | ) | — | (13 | ) | 4,413 | — | 4,413 | |||||||||||||||
127,415 | 97,581 | 29,834 | 253,560 | 203,178 | 50,382 | ||||||||||||||||||
Other Income and Expenses | |||||||||||||||||||||||
Interest expense | (46,752 | ) | (47,693 | ) | 941 | (95,147 | ) | (95,642 | ) | 495 | |||||||||||||
Equity in earnings of equity method investments in the Managed REITs and real estate | 15,900 | 14,110 | 1,790 | 31,066 | 25,833 | 5,233 | |||||||||||||||||
Other income and (expenses) | 662 | 7,442 | (6,780 | ) | 4,437 | 2,956 | 1,481 | ||||||||||||||||
(30,190 | ) | (26,141 | ) | (4,049 | ) | (59,644 | ) | (66,853 | ) | 7,209 | |||||||||||||
Income before income taxes and gain on sale of real estate | 25,222 | 56,530 | (31,308 | ) | 90,619 | 86,646 | 3,973 | ||||||||||||||||
Benefit from (provision for) income taxes | 9,410 | (3,845 | ) | 13,255 | 7,322 | (2,571 | ) | 9,893 | |||||||||||||||
Income before gain on sale of real estate | 34,632 | 52,685 | (18,053 | ) | 97,941 | 84,075 | 13,866 | ||||||||||||||||
Gain on sale of real estate, net of tax | 18,282 | 16 | 18,266 | 18,944 | 1,201 | 17,743 | |||||||||||||||||
Net Income from Owned Real Estate | 52,914 | 52,701 | 213 | 116,885 | 85,276 | 31,609 | |||||||||||||||||
Net income attributable to noncontrolling interests | (1,510 | ) | (1,591 | ) | 81 | (4,935 | ) | (4,057 | ) | (878 | ) | ||||||||||||
Net Income from Owned Real Estate Attributable to W. P. Carey | $ | 51,404 | $ | 51,110 | $ | 294 | $ | 111,950 | $ | 81,219 | $ | 30,731 |
W. P. Carey 6/30/2016 10-Q – 58 |
W. P. Carey 6/30/2016 10-Q – 59 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||
Existing Net-Leased Properties | |||||||||||||||||||||||
Lease revenues | $ | 136,758 | $ | 139,156 | $ | (2,398 | ) | $ | 270,843 | $ | 277,956 | $ | (7,113 | ) | |||||||||
Property expenses | (3,535 | ) | (3,586 | ) | 51 | (13,976 | ) | (6,537 | ) | (7,439 | ) | ||||||||||||
Depreciation and amortization | (52,166 | ) | (53,394 | ) | 1,228 | (103,729 | ) | (107,774 | ) | 4,045 | |||||||||||||
Property level contribution | 81,057 | 82,176 | (1,119 | ) | 153,138 | 163,645 | (10,507 | ) | |||||||||||||||
Recently Acquired Net-Leased Properties | |||||||||||||||||||||||
Lease revenues | 19,557 | 7,662 | 11,895 | 32,235 | 12,564 | 19,671 | |||||||||||||||||
Property expenses | (642 | ) | (484 | ) | (158 | ) | (1,342 | ) | (718 | ) | (624 | ) | |||||||||||
Depreciation and amortization | (8,605 | ) | (3,108 | ) | (5,497 | ) | (14,091 | ) | (5,029 | ) | (9,062 | ) | |||||||||||
Property level contribution | 10,310 | 4,070 | 6,240 | 16,802 | 6,817 | 9,985 | |||||||||||||||||
Properties Sold or Held for Sale | |||||||||||||||||||||||
Lease revenues | 11,013 | 15,756 | (4,743 | ) | 39,494 | 32,219 | 7,275 | ||||||||||||||||
Operating revenues | 7 | 282 | (275 | ) | 61 | 555 | (494 | ) | |||||||||||||||
Property expenses | (541 | ) | (916 | ) | 375 | (1,561 | ) | (1,881 | ) | 320 | |||||||||||||
Depreciation and amortization | (3,622 | ) | (6,632 | ) | 3,010 | (28,907 | ) | (13,697 | ) | (15,210 | ) | ||||||||||||
Property level contribution | 6,857 | 8,490 | (1,633 | ) | 9,087 | 17,196 | (8,109 | ) | |||||||||||||||
Operating Properties | |||||||||||||||||||||||
Revenues | 8,263 | 8,144 | 119 | 15,111 | 14,983 | 128 | |||||||||||||||||
Property expenses | (5,792 | ) | (6,034 | ) | 242 | (11,403 | ) | (11,248 | ) | (155 | ) | ||||||||||||
Depreciation and amortization | (1,064 | ) | (1,016 | ) | (48 | ) | (2,090 | ) | (2,018 | ) | (72 | ) | |||||||||||
Property level contribution | 1,407 | 1,094 | 313 | 1,618 | 1,717 | (99 | ) | ||||||||||||||||
Property Level Contribution | 99,631 | 95,830 | 3,801 | 180,645 | 189,375 | (8,730 | ) | ||||||||||||||||
Add: Lease termination income and other | 838 | 3,122 | (2,284 | ) | 33,379 | 6,331 | 27,048 | ||||||||||||||||
Less other expenses: | |||||||||||||||||||||||
Impairment charges | (35,429 | ) | (591 | ) | (34,838 | ) | (35,429 | ) | (3,274 | ) | (32,155 | ) | |||||||||||
General and administrative | (8,656 | ) | (11,772 | ) | 3,116 | (18,200 | ) | (26,884 | ) | 8,684 | |||||||||||||
Stock-based compensation expense | (907 | ) | (2,021 | ) | 1,114 | (2,744 | ) | (4,476 | ) | 1,732 | |||||||||||||
Property acquisition and other expenses | (78 | ) | (1,897 | ) | 1,819 | (2,975 | ) | (7,573 | ) | 4,598 | |||||||||||||
Restructuring and other compensation | 13 | — | 13 | (4,413 | ) | — | (4,413 | ) | |||||||||||||||
Other Income and Expenses | |||||||||||||||||||||||
Interest expense | (46,752 | ) | (47,693 | ) | 941 | (95,147 | ) | (95,642 | ) | 495 | |||||||||||||
Equity in earnings of equity method investments in the Managed REITs and real estate | 15,900 | 14,110 | 1,790 | 31,066 | 25,833 | 5,233 | |||||||||||||||||
Other income and (expenses) | 662 | 7,442 | (6,780 | ) | 4,437 | 2,956 | 1,481 | ||||||||||||||||
(30,190 | ) | (26,141 | ) | (4,049 | ) | (59,644 | ) | (66,853 | ) | 7,209 | |||||||||||||
Income before income taxes and gain on sale of real estate | 25,222 | 56,530 | (31,308 | ) | 90,619 | 86,646 | 3,973 | ||||||||||||||||
Benefit from (provision for) income taxes | 9,410 | (3,845 | ) | 13,255 | 7,322 | (2,571 | ) | 9,893 | |||||||||||||||
Income before gain on sale of real estate | 34,632 | 52,685 | (18,053 | ) | 97,941 | 84,075 | 13,866 | ||||||||||||||||
Gain on sale of real estate, net of tax | 18,282 | 16 | 18,266 | 18,944 | 1,201 | 17,743 | |||||||||||||||||
Net Income from Owned Real Estate | 52,914 | 52,701 | 213 | 116,885 | 85,276 | 31,609 | |||||||||||||||||
Net income attributable to noncontrolling interests | (1,510 | ) | (1,591 | ) | 81 | (4,935 | ) | (4,057 | ) | (878 | ) | ||||||||||||
Net Income from Owned Real Estate Attributable to W. P. Carey | $ | 51,404 | $ | 51,110 | $ | 294 | $ | 111,950 | $ | 81,219 | $ | 30,731 |
W. P. Carey 6/30/2016 10-Q – 60 |
W. P. Carey 6/30/2016 10-Q – 61 |
W. P. Carey 6/30/2016 10-Q – 62 |
W. P. Carey 6/30/2016 10-Q – 63 |
W. P. Carey 6/30/2016 10-Q – 64 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Equity in earnings of equity method investments in the Managed REITs: | |||||||||||||||
Equity in earnings of equity method investments in the Managed REITs | $ | 2,541 | $ | 334 | $ | 3,569 | $ | 457 | |||||||
Distributions of Available Cash: (a) | |||||||||||||||
CPA®:17 – Global | 5,859 | 5,789 | 12,527 | 11,854 | |||||||||||
CPA®:18 – Global | 2,380 | 1,422 | 3,657 | 2,316 | |||||||||||
CWI 1 | 1,586 | 2,045 | 4,093 | 3,892 | |||||||||||
CWI 2 | 336 | — | 865 | — | |||||||||||
Total equity in earnings of equity method investments in the Managed REITs | 12,702 | 9,590 | 24,711 | 18,519 | |||||||||||
Equity in earnings of other equity method investments in real estate: | |||||||||||||||
Total equity in earnings of other equity method investments in real estate | 3,198 | 4,520 | 6,355 | 7,314 | |||||||||||
Total equity in earnings of equity method investments in the Managed REITs and real estate | $ | 15,900 | $ | 14,110 | $ | 31,066 | $ | 25,833 |
(a) | We are entitled to receive distributions of our share of earnings up to 10% of the Available Cash from the operating partnerships of each of the Managed REITs, as defined in their respective operating partnership agreements. Distributions of Available Cash received and earned from the Managed REITs increased, primarily as a result of new investments that they entered into during 2016 and 2015. |
W. P. Carey 6/30/2016 10-Q – 65 |
W. P. Carey 6/30/2016 10-Q – 66 |
June 30, 2016 | December 31, 2015 | ||||||
Total properties — Managed REITs | 611 | 602 | |||||
Assets under management — Managed Programs (a) | $ | 11,709.2 | $ | 11,045.3 | |||
Cumulative funds raised — CPA®:18 – Global offering (b) (c) | 1,243.5 | 1,243.5 | |||||
Cumulative funds raised — CWI 2 offering (b) (d) | 470.4 | 247.0 | |||||
Cumulative funds raised — CCIF offering (b) (e) | 52.6 | 2.0 |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Financings structured — Managed REITs | $ | 575.4 | $ | 759.6 | |||
Investments structured — Managed REITs (f) | 593.5 | 1,691.2 | |||||
Funds raised — CPA®:18 – Global offering (b) (c) | — | 100.4 | |||||
Funds raised — CWI 2 offering (b) (d) | 223.4 | 17.0 | |||||
Funds raised — CCIF offering (b) (e) | 50.6 | — |
(a) | Represents the estimated fair value of the real estate assets owned by the Managed REITs, which was calculated by us as the advisor to the Managed REITs based in part upon third-party appraisals, plus cash and cash equivalents, less distributions payable. Amounts also include the fair value of the investment assets, plus cash and cash equivalents, owned by CCIF. |
(b) | Excludes reinvested distributions through each entity’s distribution reinvestment plan. |
(c) | Reflects funds raised from CPA®:18 – Global’s initial public offering, which commenced in May 2013 and closed on April 2, 2015 (Note 3). |
(d) | Reflects funds raised from CWI 2’s initial public offering, which commenced in February 2015. |
(e) | We began to raise funds on behalf of the CCIF Feeder Funds in the fourth quarter of 2015. Amount represents funding from the Feeder Funds to CCIF. |
(f) | Includes acquisition-related costs. |
W. P. Carey 6/30/2016 10-Q – 67 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Asset management revenue | $ | 15,005 | $ | 12,073 | $ | 2,932 | $ | 29,618 | $ | 23,232 | $ | 6,386 | |||||||||||
Reimbursable costs | 12,094 | 7,639 | 4,455 | 31,832 | 17,246 | 14,586 | |||||||||||||||||
Structuring revenue | 5,968 | 37,808 | (31,840 | ) | 18,689 | 59,528 | (40,839 | ) | |||||||||||||||
Dealer manager fees | 1,372 | 307 | 1,065 | 3,544 | 1,581 | 1,963 | |||||||||||||||||
Other advisory revenue | — | — | — | — | 203 | (203 | ) | ||||||||||||||||
34,439 | 57,827 | (23,388 | ) | 83,683 | 101,790 | (18,107 | ) | ||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
General and administrative | 12,295 | 14,604 | (2,309 | ) | 24,189 | 29,260 | (5,071 | ) | |||||||||||||||
Reimbursable costs from affiliates | 12,094 | 7,639 | 4,455 | 31,832 | 17,246 | 14,586 | |||||||||||||||||
Stock-based compensation expense | 3,094 | 3,068 | 26 | 7,864 | 7,622 | 242 | |||||||||||||||||
Dealer manager fees and expenses | 2,620 | 2,327 | 293 | 5,972 | 4,699 | 1,273 | |||||||||||||||||
Subadvisor fees | 1,875 | 4,147 | (2,272 | ) | 5,168 | 6,808 | (1,640 | ) | |||||||||||||||
Depreciation and amortization | 1,124 | 1,016 | 108 | 2,216 | 2,048 | 168 | |||||||||||||||||
Restructuring and other compensation | 465 | — | 465 | 7,512 | — | 7,512 | |||||||||||||||||
Property acquisition and other expenses | (285 | ) | — | (285 | ) | 2,384 | — | 2,384 | |||||||||||||||
33,282 | 32,801 | 481 | 87,137 | 67,683 | 19,454 | ||||||||||||||||||
Other Income and Expenses | |||||||||||||||||||||||
Equity in earnings of equity method investment in Carey Credit Income Fund | 529 | 162 | 367 | 374 | 162 | 212 | |||||||||||||||||
Other income and (expenses) | (236 | ) | 199 | (435 | ) | (140 | ) | 379 | (519 | ) | |||||||||||||
293 | 361 | (68 | ) | 234 | 541 | (307 | ) | ||||||||||||||||
Income (loss) before income taxes | 1,450 | 25,387 | (23,937 | ) | (3,220 | ) | 34,648 | (37,868 | ) | ||||||||||||||
(Provision for) benefit from income taxes | (1,193 | ) | (11,165 | ) | 9,972 | 370 | (14,419 | ) | 14,789 | ||||||||||||||
Net Income (Loss) from Investment Management | 257 | 14,222 | (13,965 | ) | (2,850 | ) | 20,229 | (23,079 | ) | ||||||||||||||
Net income attributable to noncontrolling interests | — | (1,984 | ) | 1,984 | — | (1,984 | ) | 1,984 | |||||||||||||||
Net Income (Loss) from Investment Management Attributable to W. P. Carey | $ | 257 | $ | 12,238 | $ | (11,981 | ) | $ | (2,850 | ) | $ | 18,245 | $ | (21,095 | ) |
W. P. Carey 6/30/2016 10-Q – 68 |
W. P. Carey 6/30/2016 10-Q – 69 |
W. P. Carey 6/30/2016 10-Q – 70 |
W. P. Carey 6/30/2016 10-Q – 71 |
June 30, 2016 | December 31, 2015 | ||||||
Carrying Value | |||||||
Fixed rate: | |||||||
Non-recourse mortgages (a) | $ | 1,756,513 | $ | 1,903,094 | |||
Senior Unsecured Notes (a) | 1,487,864 | 1,476,084 | |||||
3,244,377 | 3,379,178 | ||||||
Variable rate: | |||||||
Revolver | 793,770 | 485,021 | |||||
Term Loan Facility (a) | 249,853 | 249,683 | |||||
Non-recourse debt (a): | |||||||
Amount subject to interest rate swaps and cap | 280,853 | 283,441 | |||||
Amount of fixed-rate debt subject to interest rate reset features | 36,980 | 39,434 | |||||
Non-recourse mortgages | 36,095 | 43,452 | |||||
1,397,551 | 1,101,031 | ||||||
$ | 4,641,928 | $ | 4,480,209 | ||||
Percent of Total Debt | |||||||
Fixed rate | 70 | % | 75 | % | |||
Variable rate | 30 | % | 25 | % | |||
100 | % | 100 | % | ||||
Weighted-Average Interest Rate at End of Period | |||||||
Fixed rate | 4.6 | % | 4.8 | % | |||
Variable rate (b) | 2.0 | % | 2.2 | % |
(a) | In accordance with ASU 2015-03, we reclassified deferred financing costs from Other assets, net to Non-recourse debt, net, Senior Unsecured Notes, net, and Senior Unsecured Credit Facility - Term Loan, net as of December 31, 2015 (Note 2). Aggregate debt balance includes unamortized deferred financing costs totaling $11.5 million and $12.6 million as of June 30, 2016 and December 31, 2015, respectively. |
(b) | The impact of our derivative instruments is reflected in the weighted-average interest rates. |
W. P. Carey 6/30/2016 10-Q – 72 |
• | Cash and cash equivalents totaling $173.3 million. Of this amount, $73.3 million, at then-current exchange rates, was held in foreign subsidiaries, and we could be subject to restrictions or significant costs should we decide to repatriate these amounts; |
• | Our Revolver, with unused capacity of $706.2 million, excluding amounts reserved for outstanding letters of credit; and |
• | Unleveraged properties that had an aggregate carrying value of $2.9 billion at June 30, 2016, although there can be no assurance that we would be able to obtain financing for these properties. |
June 30, 2016 | December 31, 2015 | ||||||||||||||
Outstanding Balance | Maximum Available | Outstanding Balance | Maximum Available | ||||||||||||
Revolver | $ | 793,770 | $ | 1,500,000 | $ | 485,021 | $ | 1,500,000 | |||||||
Term Loan Facility | 250,000 | 250,000 | 250,000 | 250,000 |
W. P. Carey 6/30/2016 10-Q – 73 |
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Non-recourse debt — principal (a) | $ | 2,109,350 | $ | 727,211 | $ | 508,774 | $ | 346,948 | $ | 526,417 | |||||||||
Senior Unsecured Notes — principal (a) (b) | 1,505,100 | — | — | — | 1,505,100 | ||||||||||||||
Senior Unsecured Credit Facility — principal (a) (c) | 1,043,770 | 250,000 | 793,770 | — | — | ||||||||||||||
Interest on borrowings (d) | 779,836 | 165,429 | 236,308 | 181,726 | 196,373 | ||||||||||||||
Operating and other lease commitments (e) | 171,946 | 7,642 | 16,581 | 14,564 | 133,159 | ||||||||||||||
Capital commitments and tenant expansion allowances (f) | 140,939 | 62,396 | 36,115 | 38,915 | 3,513 | ||||||||||||||
Restructuring and other compensation commitments (g) | 6,362 | 4,603 | 1,759 | — | — | ||||||||||||||
5,757,303 | $ | 1,217,281 | $ | 1,593,307 | $ | 582,153 | $ | 2,364,562 |
(a) | Excludes unamortized deferred financing costs totaling $11.5 million, the unamortized discount on the Senior Unsecured Notes of $7.4 million, and the unamortized fair market value adjustment of $2.6 million resulting from the assumption of property-level debt in connection with the CPA®:15 Merger and CPA®:16 Merger (Note 10). |
(b) | Our Senior Unsecured Notes are scheduled to mature from 2023 through 2025. |
(c) | Our Revolver is scheduled to mature on January 31, 2018 and our Term Loan Facility is scheduled to mature on January 31, 2017 unless otherwise extended pursuant to their terms. |
(d) | Interest on unhedged variable-rate debt obligations was calculated using the applicable annual variable interest rates and balances outstanding at June 30, 2016. |
(e) | Operating and other lease commitments consist primarily of rental obligations under ground leases and the future minimum rents payable on the leases for our principal offices. Pursuant to their respective advisory agreements with us, we are reimbursed by the Managed REITs for their share of overhead costs, which includes a portion of those future minimum rent amounts. Our operating lease commitments are presented net of $7.2 million, based on the allocation percentages as of June 30, 2016, which we estimate the Managed REITs will reimburse us for in full. |
(f) | Capital commitments include (i) $123.7 million related to build-to-suit expansions, (ii) $11.4 million related to unfunded tenant improvements, including certain discretionary commitments, and (iii) $5.9 million related to other construction commitments. |
(g) | Represents severance-related obligations to our former Chief Executive Officer and other former employees (Note 12). |
W. P. Carey 6/30/2016 10-Q – 74 |
W. P. Carey 6/30/2016 10-Q – 75 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income attributable to W. P. Carey | $ | 51,661 | $ | 63,348 | $ | 109,100 | $ | 99,464 | |||||||
Adjustments: | |||||||||||||||
Depreciation and amortization of real property | 65,096 | 63,688 | 148,053 | 127,579 | |||||||||||
Impairment charges | 35,429 | 591 | 35,429 | 3,274 | |||||||||||
Gain on sale of real estate, net | (18,282 | ) | (16 | ) | (18,944 | ) | (1,201 | ) | |||||||
Proportionate share of adjustments for noncontrolling interests to arrive at FFO | (2,662 | ) | (2,640 | ) | (5,287 | ) | (5,293 | ) | |||||||
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO | 1,331 | 1,296 | 2,640 | 2,574 | |||||||||||
Total adjustments | 80,912 | 62,919 | 161,891 | 126,933 | |||||||||||
FFO attributable to W. P. Carey — as defined by NAREIT | 132,573 | 126,267 | 270,991 | 226,397 | |||||||||||
Adjustments: | |||||||||||||||
Tax benefit – deferred | (16,535 | ) | (1,372 | ) | (19,523 | ) | (3,118 | ) | |||||||
Above- and below-market rent intangible lease amortization, net (a) | 13,105 | 13,220 | 11,287 | 26,970 | |||||||||||
Stock-based compensation | 4,001 | 5,089 | 10,608 | 12,098 | |||||||||||
Straight-line and other rent adjustments (b) | (2,234 | ) | (3,070 | ) | (29,146 | ) | (6,007 | ) | |||||||
Amortization of deferred financing costs | 1,305 | 1,489 | 2,659 | 2,654 | |||||||||||
Realized losses (gains) on foreign currency | 1,222 | 415 | 1,010 | (139 | ) | ||||||||||
Restructuring and other compensation (c) | 452 | — | 11,925 | — | |||||||||||
Other amortization and non-cash items (d) | (360 | ) | (6,574 | ) | (4,193 | ) | 115 | ||||||||
Property acquisition and other expenses (e) | (207 | ) | 1,897 | 5,359 | 7,573 | ||||||||||
(Gain) loss on extinguishment of debt | (112 | ) | — | 1,813 | — | ||||||||||
Allowance for credit losses | — | — | 7,064 | — | |||||||||||
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO | (841 | ) | 1,660 | 480 | 2,659 | ||||||||||
Proportionate share of adjustments for noncontrolling interests to arrive at AFFO | (131 | ) | 15 | 1,368 | (199 | ) | |||||||||
Total adjustments | (335 | ) | 12,769 | 711 | 42,606 | ||||||||||
AFFO attributable to W. P. Carey | $ | 132,238 | $ | 139,036 | $ | 271,702 | $ | 269,003 | |||||||
Summary | |||||||||||||||
FFO attributable to W. P. Carey — as defined by NAREIT | $ | 132,573 | $ | 126,267 | $ | 270,991 | $ | 226,397 | |||||||
AFFO attributable to W. P. Carey | $ | 132,238 | $ | 139,036 | $ | 271,702 | $ | 269,003 |
W. P. Carey 6/30/2016 10-Q – 76 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income from Owned Real Estate attributable to W. P. Carey | $ | 51,404 | $ | 51,110 | $ | 111,950 | $ | 81,219 | |||||||
Adjustments: | |||||||||||||||
Depreciation and amortization of real property | 65,096 | 63,688 | 148,053 | 127,579 | |||||||||||
Impairment charges | 35,429 | 591 | 35,429 | 3,274 | |||||||||||
Gain on sale of real estate, net | (18,282 | ) | (16 | ) | (18,944 | ) | (1,201 | ) | |||||||
Proportionate share of adjustments for noncontrolling interests to arrive at FFO | (2,662 | ) | (2,640 | ) | (5,287 | ) | (5,293 | ) | |||||||
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO | 1,331 | 1,296 | 2,640 | 2,574 | |||||||||||
Total adjustments | 80,912 | 62,919 | 161,891 | 126,933 | |||||||||||
FFO attributable to W. P. Carey — as defined by NAREIT — Owned Real Estate | 132,316 | 114,029 | 273,841 | 208,152 | |||||||||||
Adjustments: | |||||||||||||||
Tax benefit – deferred | (14,826 | ) | (1,856 | ) | (16,325 | ) | (3,794 | ) | |||||||
Above- and below-market rent intangible lease amortization, net (a) | 13,105 | 13,220 | 11,287 | 26,970 | |||||||||||
Straight-line and other rent adjustments (b) | (2,234 | ) | (3,070 | ) | (29,146 | ) | (6,007 | ) | |||||||
Amortization of deferred financing costs | 1,305 | 1,489 | 2,659 | 2,654 | |||||||||||
Realized losses (gains) on foreign currency | 1,204 | 390 | 959 | (157 | ) | ||||||||||
Stock-based compensation | 907 | 2,021 | 2,744 | 4,476 | |||||||||||
Other amortization and non-cash items (d) | (749 | ) | (6,507 | ) | (4,626 | ) | 205 | ||||||||
(Gain) loss on extinguishment of debt | (112 | ) | — | 1,813 | — | ||||||||||
Property acquisition and other expenses (e) | 78 | 1,897 | 2,975 | 7,573 | |||||||||||
Restructuring and other compensation (c) | (13 | ) | — | 4,413 | — | ||||||||||
Allowance for credit losses | — | — | 7,064 | — | |||||||||||
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO | (312 | ) | 1,660 | 726 | 2,659 | ||||||||||
Proportionate share of adjustments for noncontrolling interests to arrive at AFFO | (131 | ) | 15 | 1,368 | (199 | ) | |||||||||
Total adjustments | (1,778 | ) | 9,259 | (14,089 | ) | 34,380 | |||||||||
AFFO attributable to W. P. Carey — Owned Real Estate | $ | 130,538 | $ | 123,288 | $ | 259,752 | $ | 242,532 | |||||||
Summary | |||||||||||||||
FFO attributable to W. P. Carey — as defined by NAREIT — Owned Real Estate | $ | 132,316 | $ | 114,029 | $ | 273,841 | $ | 208,152 | |||||||
AFFO attributable to W. P. Carey — Owned Real Estate | $ | 130,538 | $ | 123,288 | $ | 259,752 | $ | 242,532 |
W. P. Carey 6/30/2016 10-Q – 77 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) from Investment Management attributable to W. P. Carey | $ | 257 | $ | 12,238 | $ | (2,850 | ) | $ | 18,245 | ||||||
FFO attributable to W. P. Carey — as defined by NAREIT — Investment Management | 257 | 12,238 | (2,850 | ) | 18,245 | ||||||||||
Adjustments: | |||||||||||||||
Stock-based compensation | 3,094 | 3,068 | 7,864 | 7,622 | |||||||||||
Tax (benefit) expense – deferred | (1,709 | ) | 484 | (3,198 | ) | 676 | |||||||||
Restructuring and other compensation (c) | 465 | — | 7,512 | — | |||||||||||
Other amortization and non-cash items (d) | 389 | (67 | ) | 433 | (90 | ) | |||||||||
Property acquisition and other expenses (e) | (285 | ) | — | 2,384 | — | ||||||||||
Realized losses on foreign currency | 18 | 25 | 51 | 18 | |||||||||||
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO | (529 | ) | — | (246 | ) | — | |||||||||
Total adjustments | 1,443 | 3,510 | 14,800 | 8,226 | |||||||||||
AFFO attributable to W. P. Carey — Investment Management | $ | 1,700 | $ | 15,748 | $ | 11,950 | $ | 26,471 | |||||||
Summary | |||||||||||||||
FFO attributable to W. P. Carey — as defined by NAREIT — Investment Management | $ | 257 | $ | 12,238 | $ | (2,850 | ) | $ | 18,245 | ||||||
AFFO attributable to W. P. Carey — Investment Management | $ | 1,700 | $ | 15,748 | $ | 11,950 | $ | 26,471 |
(a) | Amount for the six months ended June 30, 2016 includes an adjustment of $15.6 million related to the acceleration of a below-market lease from a tenant of a domestic property that was sold during the period. |
(b) | Amount for the six months ended June 30, 2016 includes an adjustment to exclude $27.2 million of the $32.2 million of lease termination income recognized in connection with a domestic property that was sold during the period, as such amount was determined to be non-core income (Note 15). Amount for the six months ended June 30, 2016 also reflects an adjustment to include $1.8 million of lease termination income received in December 2015 that represented core income for the six months ended June 30, 2016. |
(c) | Amount represents restructuring and other compensation-related expenses resulting from a reduction in headcount and employment severance arrangements (Note 12). |
(d) | Represents primarily unrealized gains and losses from foreign exchange and derivatives. |
(e) | Amounts for the three and six months ended June 30, 2016 are comprised of expenses related to our formal strategic review. |
W. P. Carey 6/30/2016 10-Q – 78 |
2016 (Remainder) | 2017 | 2018 | 2019 | 2020 | Thereafter | Total | Fair value | ||||||||||||||||||||||||
Fixed-rate debt (a) | $ | 222,018 | $ | 616,363 | $ | 132,614 | $ | 85,930 | $ | 175,624 | $ | 2,026,874 | $ | 3,259,423 | $ | 3,287,571 | |||||||||||||||
Variable-rate debt (a) | $ | 40,509 | $ | 305,970 | $ | 929,793 | $ | 13,952 | $ | 46,929 | $ | 61,644 | $ | 1,398,797 | $ | 1,397,769 |
(a) | Amounts are based on the exchange rate at June 30, 2016, as applicable. |
W. P. Carey 6/30/2016 10-Q – 79 |
W. P. Carey 6/30/2016 10-Q – 80 |
Lease Revenues (a) | 2016 (Remainder) | 2017 | 2018 | 2019 | 2020 | Thereafter | Total | |||||||||||||||||||||
Euro (b) | $ | 99,548 | $ | 190,451 | $ | 178,995 | $ | 162,643 | $ | 158,333 | $ | 1,337,392 | $ | 2,127,362 | ||||||||||||||
British pound sterling (c) | 17,426 | 34,585 | 34,629 | 34,757 | 34,843 | 312,189 | 468,429 | |||||||||||||||||||||
Australian dollar (d) | 5,133 | 10,183 | 10,183 | 10,183 | 10,211 | 140,944 | 186,837 | |||||||||||||||||||||
Other foreign currencies (e) | 8,618 | 17,350 | 17,575 | 18,055 | 16,409 | 185,521 | 263,528 | |||||||||||||||||||||
$ | 130,725 | $ | 252,569 | $ | 241,382 | $ | 225,638 | $ | 219,796 | $ | 1,976,046 | $ | 3,046,156 |
Debt service (a) (f) | 2016 (Remainder) | 2017 | 2018 | 2019 | 2020 | Thereafter | Total | |||||||||||||||||||||
Euro (b) | $ | 140,552 | $ | 377,877 | $ | 563,131 | $ | 21,280 | $ | 62,152 | $ | 617,004 | $ | 1,781,996 | ||||||||||||||
British pound sterling (c) | 5,436 | 843 | 843 | 843 | 843 | 12,475 | 21,283 | |||||||||||||||||||||
Other foreign currencies (e) | 1,432 | 7,286 | 9,478 | 709 | 3,645 | — | 22,550 | |||||||||||||||||||||
$ | 147,420 | $ | 386,006 | $ | 573,452 | $ | 22,832 | $ | 66,640 | $ | 629,479 | $ | 1,825,829 |
(a) | Amounts are based on the applicable exchange rates at June 30, 2016. Contractual rents and debt obligations are denominated in the functional currency of the country of each property. |
(b) | We estimate that, for a 1% increase or decrease in the exchange rate between the euro and the U.S. dollar, there would be a corresponding change in the projected estimated property level cash flow at June 30, 2016 of $3.5 million. Amounts included the equivalent of $415.8 million borrowed in euro under our Revolver, which is scheduled to mature on January 31, 2018 unless extended pursuant to its terms (Note 10), and the equivalent of $555.1 million of 2.0% Senior Euro Notes outstanding maturing in January 2023 (Note 10). |
(c) | We estimate that, for a 1% increase or decrease in the exchange rate between the British pound sterling and the U.S. dollar, there would be a corresponding change in the projected estimated property level cash flow at June 30, 2016 of $4.5 million. |
(d) | We estimate that, for a 1% increase or decrease in the exchange rate between the Australian dollar and the U.S. dollar, there would be a corresponding change in the projected estimated property level cash flow at June 30, 2016 of $1.9 million. There is no related mortgage loan on this investment. |
(e) | Other foreign currencies consist of the Canadian dollar, the Malaysian ringgit, the Swedish krona, the Norwegian krone, and the Thai baht. |
(f) | Interest on unhedged variable-rate debt obligations was calculated using the applicable annual interest rates and balances outstanding at June 30, 2016. |
W. P. Carey 6/30/2016 10-Q – 81 |
• | 70% related to domestic properties; and |
• | 30% related to international properties. |
• | 64% related to domestic properties; |
• | 36% related to international properties; |
• | 27% related to industrial facilities, 26% related to office facilities, 18% related to warehouse facilities, and 15% related to retail facilities; and |
• | 20% related to the retail stores industry. |
W. P. Carey 6/30/2016 10-Q – 82 |
W. P. Carey 6/30/2016 10-Q – 83 |
W. P. Carey 6/30/2016 10-Q – 84 |
Exhibit No. | Description | Method of Filing | |||
12 | Computation of Ratios of Earnings to Fixed Charges for the six months ended June 30, 2016 and for the years ended December 31, 2015, 2014, 2013, 2012, and 2011 | Filed herewith | |||
31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |||
31.2 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |||
32 | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |||
101 | The following materials from W. P. Carey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at June 30, 2016 and December 31, 2015, (ii) Consolidated Statements of Income for the three and six months ended June 30, 2016 and 2015, (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and 2015, (iv) Consolidated Statements of Equity for the six months ended June 30, 2016 and 2015, (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015, and (vi) Notes to Consolidated Financial Statements. | Filed herewith |
W. P. Carey 6/30/2016 10-Q – 85 |
W. P. Carey Inc. | |||
Date: | August 4, 2016 | ||
By: | /s/ Hisham A. Kader | ||
Hisham A. Kader | |||
Chief Financial Officer | |||
(Principal Financial Officer) | |||
Date: | August 4, 2016 | ||
By: | /s/ ToniAnn Sanzone | ||
ToniAnn Sanzone | |||
Chief Accounting Officer | |||
(Principal Accounting Officer) |
W. P. Carey 6/30/2016 10-Q – 86 |
Exhibit No. | Description | Method of Filing | |||
12 | Computation of Ratios of Earnings to Fixed Charges for the six months ended June 30, 2016 and for the years ended December 31, 2015, 2014, 2013, 2012, and 2011 | Filed herewith | |||
31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |||
31.2 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |||
32 | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |||
101 | The following materials from W. P. Carey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at June 30, 2016 and December 31, 2015, (ii) Consolidated Statements of Income for the three and six months ended June 30, 2016 and 2015, (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and 2015, (iv) Consolidated Statements of Equity for the six months ended June 30, 2016 and 2015, (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015, and (vi) Notes to Consolidated Financial Statements. | Filed herewith |
Six Months Ended June 30, | Years Ended December 31, | ||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||
Income from continuing operations before income taxes | $ | 106,343 | $ | 222,848 | $ | 230,360 | $ | 95,237 | $ | 94,286 | 190,255 | ||||||||||||
Fixed charges | 96,278 | 196,991 | 180,689 | 110,179 | 52,193 | 23,625 | |||||||||||||||||
Less: Equity in earnings of equity method investments | (31,440 | ) | (51,020 | ) | (44,116 | ) | (52,731 | ) | (62,392 | ) | (51,228 | ) | |||||||||||
Distributed income of equity investments | 32,365 | 51,435 | 42,809 | 42,554 | 45,121 | 51,538 | |||||||||||||||||
Amortization of capitalized interest | 6 | — | — | — | — | — | |||||||||||||||||
Net income attributable to noncontrolling interests that have not incurred fixed charges | (3,821 | ) | (6,235 | ) | (4,619 | ) | (3,847 | ) | (1,319 | ) | (2,735 | ) | |||||||||||
Earnings | $ | 199,731 | $ | 414,019 | $ | 405,123 | $ | 191,392 | $ | 127,889 | $ | 211,455 | |||||||||||
Interest expense | $ | 95,147 | $ | 194,326 | $ | 178,462 | $ | 108,193 | $ | 50,709 | $ | 22,366 | |||||||||||
Capitalized interest | — | 329 | 163 | — | — | — | |||||||||||||||||
1/3 of rental expense - interest factor | 1,131 | 2,336 | 2,064 | 1,986 | 1,484 | 1,259 | |||||||||||||||||
Fixed Charges | $ | 96,278 | $ | 196,991 | $ | 180,689 | $ | 110,179 | $ | 52,193 | $ | 23,625 | |||||||||||
Ratio of Earnings to Fixed Charges | 2.07 | 2.10 | 2.24 | 1.74 | 2.45 | 8.95 |
(a) | Includes adjustments to correct amounts previously reported, related primarily to the inclusion of distributed income of equity investments. The corrections resulted in increases/(decreases) to the Ratio of Earnings to Fixed Charges of 0.20, 0.14, (0.14), (0.02), and 1.31 for the years ended December 31, 2015, 2014, 2013, 2012, and 2011, respectively. |
1. | I have reviewed this Quarterly Report on Form 10-Q of W. P. Carey Inc.; |
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 registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting. |
1. | I have reviewed this Quarterly Report on Form 10-Q of W. P. Carey Inc.; |
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 registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting. |
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 Inc. |
Document and Entity Information - shares |
6 Months Ended | |
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Jun. 30, 2016 |
Jul. 29, 2016 |
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Document and Entity Information [Abstract] | ||
Entity Registrant Name | W. P. Carey Inc. | |
Entity Central Index Key | 0001025378 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 105,733,727 |
Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
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W. P. Carey stockholders’ equity: | ||
Preferred stock, par share value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, per share value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares outstanding | 105,167,537 | 104,448,777 |
Consolidated Statement of Equity (Unaudited) (Parentheticals) - $ / shares |
3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2016 |
Mar. 31, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Statement of Stockholders' Equity [Abstract] | |||||
Per shares distributions declared | $ 0.98 | $ 0.9742 | $ 0.954 | $ 1.9542 | $ 1.9065 |
Business and Organization |
6 Months Ended |
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Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | Business and Organization W. P. Carey Inc., or W. P. Carey, is, together with its consolidated subsidiaries, a REIT that 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. We earn revenue principally by leasing the properties we own to single corporate tenants, primarily on a triple-net lease basis, which generally requires each tenant to pay substantially all of the costs associated with operating and maintaining the property. Originally founded in 1973, we reorganized as a REIT in September 2012 in connection with our merger with Corporate Property Associates 15 Incorporated. We refer to that merger as the CPA®:15 Merger. On January 31, 2014, Corporate Property Associates 16 – Global Incorporated, or CPA®:16 – Global, merged with and into us, which we refer to as the CPA®:16 Merger. Our shares of common stock are listed on the New York Stock Exchange under the symbol “WPC.” We have elected to be taxed as a REIT under Section 856 through 860 of the Internal Revenue Code. As a REIT, we are not generally subject to United States federal income taxation other than from our taxable REIT subsidiaries, or TRSs, as long as we satisfy certain requirements, principally relating to the nature of our income and the level of our distributions, as well as other factors. We hold all of our real estate assets attributable to our Owned Real Estate segment under the REIT structure, while the activities conducted by our Investment Management segment subsidiaries have been organized under TRSs. Through our TRSs, we also earn revenue as the advisor to publicly-owned, non-listed REITs, which are sponsored by us under the Corporate Property Associates, or CPA®, brand name and invest in similar properties. At June 30, 2016, we were the advisor to Corporate Property Associates 17 – Global Incorporated, or CPA®:17 – Global, and Corporate Property Associates 18 – Global Incorporated, or CPA®:18 – Global. We refer to CPA®:17 – Global and CPA®:18 – Global together as the CPA® REITs. At June 30, 2016, we were also the advisor to Carey Watermark Investors Incorporated, referred to as CWI 1, and Carey Watermark Investors 2 Incorporated, or CWI 2, two publicly-owned, non-listed REITs that invest in lodging and lodging-related properties. We refer to CWI 1 and CWI 2 together as the CWI REITs and, together with the CPA® REITs, as the Managed REITs (Note 3). At June 30, 2016, we also served as the advisor to Carey Credit Income Fund, or CCIF, a business development company, or BDC (Note 6). We refer to CCIF and the two feeder funds of CCIF, or the CCIF Feeder Funds, collectively as the Managed BDCs and, together with the Managed REITs, as the Managed Programs. On April 20, 2016, we formed a limited partnership, Carey European Student Housing Fund I, L.P., or CESH I, for the purpose of developing, owning, and operating student housing properties and similar investments in Europe. CESH I commenced fundraising in July 2016 through a private placement offering with an initial aggregate offering of $100.0 million and a maximum offering of $150.0 million. The financial results and balances of CESH I were included in our consolidated financial statements during the three and six months ended June 30, 2016. We will continue to consolidate the financial activity of CESH I until the point at which it has sufficient equity to finance its operations. On May 4, 2016, we filed a registration statement with the SEC for Corporate Property Associates 19 – Global Incorporated, or CPA®:19 – Global, a diversified non-traded REIT, for a capital raise of up to $2.0 billion, which includes $500.0 million of shares allocated to CPA®:19 – Global’s distribution reinvestment plan. CPA®:19 – Global’s registration statement remains subject to review by the SEC and state securities regulators, so there can be no assurances as to whether or when the related offering will commence. Through June 30, 2016, the financial activity of CPA®:19 – Global, which has no significant assets, liabilities, or operations, was included in our consolidated financial statements. We will continue to consolidate the financial activity of CPA®:19 – Global until the point at which it has sufficient equity to finance its operations. Reportable Segments Owned Real Estate — We own and invest in commercial properties principally in the United States, Europe, Australia, and Asia that are then leased to companies, primarily on a triple-net lease basis. We have also invested in several operating properties, such as lodging and self-storage properties. We earn lease revenues from our wholly-owned and co-owned real estate investments that we control. In addition, we generate equity income through co-owned real estate investments that we do not control and through our ownership of shares of the Managed Programs (Note 6). Through our special member interests in the operating partnerships of the Managed REITs, we also participate in their cash flows (Note 3). At June 30, 2016, our owned portfolio was comprised of our full or partial ownership interests in 914 properties, totaling approximately 92.8 million square feet, substantially all of which were net leased to 221 tenants, with an occupancy rate of 98.8%. Investment Management — Through our TRSs, we structure and negotiate investments and debt placement transactions for the Managed REITs, for which we earn structuring revenue, and manage their portfolios of real estate investments, for which we earn asset management revenue. We also earn asset management revenue from CCIF based on the average of its gross assets at fair value. We may earn disposition revenue when we negotiate and structure the sale of properties on behalf of the Managed REITs, and we may also earn incentive revenue and receive other compensation through our advisory agreements with certain of the Managed Programs, including in connection with providing liquidity events for the Managed REITs’ stockholders. At June 30, 2016, CPA®:17 – Global and CPA®:18 – Global collectively owned all or a portion of 437 properties, including certain properties in which we have an ownership interest. Substantially all of these properties, totaling approximately 49.5 million square feet, were net leased to 206 tenants, with an average occupancy rate of approximately 99.8%. The Managed REITs also had interests in 174 operating properties, totaling approximately 20.0 million square feet. We continue to explore alternatives for expanding our investment management operations beyond advising the existing Managed Programs. Any such expansion could involve the purchase of properties or other investments as principal, either for our owned portfolio or with the intention of transferring such investments to a newly-created fund. These new funds could invest primarily in assets other than net-lease real estate and could include funds raised through private placements, such as CESH I, or publicly-traded vehicles, either in the United States or internationally. |
Basis of Presentation |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation Basis of Presentation Our interim consolidated financial statements have been prepared 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 generally accepted accounting principles in the United States, or 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 financial position, results of operations, 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, 2015, which are included in the 2015 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 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. Basis of Consolidation Our consolidated financial statements reflect all of our accounts, including those of our controlled subsidiaries and our tenancy-in-common interest as described below. The portion of equity in a consolidated subsidiary that is not attributable, directly or indirectly, to us is presented as noncontrolling interests. All significant intercompany accounts and transactions have been eliminated. On January 1, 2016, we adopted the Financial Accounting Standards Board’s, or FASB’s, Accounting Standards Update, or ASU, 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, as described in the Recent Accounting Pronouncements section below, which amends the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities. When we obtain an economic interest in an entity, we evaluate the entity to determine if it should be deemed a variable interest entity, or VIE, and, if so, whether we are the primary beneficiary and are therefore required to consolidate the entity. We apply accounting guidance for consolidation of VIEs to certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Fixed price purchase and renewal options within a lease, as well as certain decision-making rights within a loan or joint-venture agreement, can cause us to consider an entity a VIE. Limited partnerships and other similar entities which operate as a partnership will be considered a VIE unless the limited partners hold substantive kick-out rights or participation rights. Significant judgment is required to determine whether a VIE should be consolidated. We review the contractual arrangements provided for in the partnership agreement or other related contracts to determine whether the entity is considered a VIE, and to establish whether we have any variable interests in the VIE. We then compare our variable interests, if any, to those of the other variable interest holders to determine which party is the primary beneficiary of the VIE based on whether the entity (i) has the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. We performed this analysis on all of our subsidiary entities following the guidance in ASU 2015-02 to determine whether they qualify as VIEs and whether they should be consolidated or accounted for as equity investments in an unconsolidated venture. As a result of this change in guidance, we determined that 13 entities that were previously classified as voting interest entities should now be classified as VIEs as of January 1, 2016 and therefore included in our VIE disclosures. However, there was no change in determining whether or not we consolidate these entities as a result of the new guidance. We elected to retrospectively adopt ASU 2015-02, which resulted in changes to our VIE disclosures within the consolidated balance sheets. There were no other changes to our consolidated balance sheets or results of operations for the periods presented. At June 30, 2016, we considered 36 entities VIEs, 29 of which we consolidated as we are considered the primary beneficiary. The following table presents a summary of selected financial data of the consolidated VIEs included in the consolidated balance sheets (in thousands):
At June 30, 2016 and December 31, 2015, our seven unconsolidated VIEs included our interests in six unconsolidated real estate investments and one unconsolidated entity among our interests in the Managed Programs, all of which we account for under the equity method of accounting. We do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities allows us to exercise significant influence but does not give us power over decisions that significantly affect the economic performance of these entities. As of June 30, 2016 and December 31, 2015, the net carrying amount of our investments in these entities was $153.5 million and $154.8 million, respectively, and our maximum exposure to loss in these entities was limited to our investments. At June 30, 2016, we had an investment in a tenancy-in-common interest in various underlying international properties. Consolidation of this investment is not required as such interest does not qualify as a VIE and does not meet the control requirement for consolidation. Accordingly, we account for this investment using the equity method of accounting. We use the equity method of accounting because the shared decision-making involved in a tenancy-in-common interest investment provides us with significant influence on the operating and financial decisions of this investment. At times, the carrying value of our equity investments may fall below zero for certain investments. We intend to fund our share of the jointly-owned investments’ future operating deficits should the need arise. However, we have no legal obligation to pay for any of the liabilities of such investments nor do we have any legal obligation to fund operating deficits. At June 30, 2016, none of our equity investments had carrying values below zero. As of June 30, 2016, CESH I and CPA®:19 – Global had not yet commenced fundraising through their respective offerings. Therefore, we included the financial activity of both entities in our consolidated financial statements and eliminated all intercompany accounts and transactions in consolidation. For the three and six months ended June 30, 2016, the consolidated results of operations from CESH I and CPA®:19 – Global were insignificant. As of June 30, 2016, CESH I had assets totaling $17.0 million on the consolidated balance sheet, including $14.9 million in Other assets, net and $2.1 million in Cash and cash equivalents. All other assets and liabilities of CESH I and CPA®:19 – Global were insignificant as of June 30, 2016. CESH I is a VIE, as we are considered the primary beneficiary. Out-of-Period Adjustments During the second quarter of 2016, we identified and recorded out-of-period adjustments related to adjustments to prior period income tax returns. We concluded that these adjustments were not material to our consolidated financial statements for any of the current or prior periods presented. The net adjustment is reflected as a $3.0 million reduction of our Benefit from income taxes in the consolidated statements of income for the three and six months ended June 30, 2016 with a net increase to Accounts payable, accrued expenses and other liabilities and Accumulated other comprehensive loss in the consolidated balance sheet as of June 30, 2016. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. During the year ended December 31, 2015, we determined that our presentation of common shares repurchased should be classified as a reduction to Common stock, for the par amount of the common shares repurchased, Additional paid-in capital, and Distributions in excess of accumulated earnings, and included as shares unissued within the consolidated financial statements. We previously classified common shares repurchased as Treasury stock in the consolidated financial statements. We evaluated the impact of this correction on previously-issued financial statements and concluded that they were not materially misstated. In order to conform previously-issued financial statements to the current period, we elected to revise previously-issued financial statements the next time such financial statements are filed to include the elimination of Treasury stock of $60.9 million, with corresponding reductions of Common stock and Additional paid-in capital of $28.8 million, and Distributions in excess of accumulated earnings of $32.1 million as of June 30, 2015. These revisions resulted in no change in Total equity within the consolidated balance sheet as of June 30, 2015 and the consolidated statement of equity for the six months ended June 30, 2015. The accompanying consolidated statement of equity for the six months ended June 30, 2015 has been revised accordingly. In addition, we will revise the consolidated statement of equity for the period ended September 30, 2015, as this financial statement is presented in a future filing. The misclassification had no impact on the previously-reported consolidated statements of income, consolidated statements of comprehensive income, or consolidated statements of cash flows. On January 1, 2016, we adopted ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30) as described in the Recent Accounting Pronouncements section below. ASU 2015-03 changes the presentation of debt issuance costs, which were previously recognized as an asset and requires that they be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. As a result of adopting this guidance, we reclassified $12.6 million of deferred financing costs, net from Other assets, net to Non-recourse debt, net, Senior Unsecured Notes, net, and Senior Unsecured Credit Facility - Term Loan, net as of December 31, 2015. Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 does not apply to our lease revenues, but will apply to reimbursed tenant costs and revenues generated from our operating properties and our Investment Management business. Additionally, this guidance modifies disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 for all entities by one year, until years beginning in 2018, with early adoption permitted but not before 2017, the original public company effective date. We are currently evaluating the impact of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard. In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810). ASU 2015-02 amends the current consolidation guidance, including modification of the guidance for evaluating whether limited partnerships and similar legal entities are VIEs or voting interest entities. The guidance does not amend the existing disclosure requirements for VIEs or voting interest model entities. The guidance, however, modified the requirements to qualify under the voting interest model. Under the revised guidance, ASU 2015-02 requires an entity to classify a limited liability company or a limited partnership as a VIE unless the partnership provides partners with either substantive kick-out rights or substantive participating rights over the managing member or general partner. Refer to the discussion in the Basis of Consolidation section above. In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30). ASU 2015-03 changes the presentation of debt issuance costs, which were previously recognized as an asset, and requires that they be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 does not affect the recognition and measurement guidance for debt issuance costs. ASU 2015-03 is effective for periods beginning after December 15, 2015, and retrospective application is required. We adopted ASU 2015-03 on January 1, 2016 and have disclosed the reclassification of our debt issuance costs in the Reclassifications section above. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805). ASU 2015-16 eliminates the requirement that an acquirer in a business combination account for measurement period adjustments retrospectively. Instead, an acquirer will recognize a measurement period adjustment during the period in which it determines the amount of the adjustment, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had been completed at the acquisition date. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years, early adoption is permitted and prospective application is required for adjustments that are identified after the effective date of this update. We elected to early adopt ASU 2015-16 and implemented the standard prospectively beginning July 1, 2015. The adoption and implementation of the standard did not have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 outlines a new model for accounting by lessees, whereby their rights and obligations under substantially all leases, existing and new, would be capitalized and recorded on the balance sheet. For lessors, however, the accounting remains largely unchanged from the current model, with the distinction between operating and financing leases retained, but updated to align with certain changes to the lessee model and the new revenue recognition standard. The new standard also replaces existing sale-leaseback guidance with a new model applicable to both lessees and lessors. Additionally, the new standard requires extensive quantitative and qualitative disclosures. ASU 2016-02 is effective for U.S. GAAP public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years; for all other entities, the final lease standard will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application will be permitted for all entities. The new standard must be adopted using a modified retrospective transition of the new guidance and provides for certain practical expedients. Transition will require application of the new model at the beginning of the earliest comparative period presented. We are evaluating the impact of the new standard and have not yet determined if it will have a material impact on our business or our consolidated financial statements. In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815): Effect of derivative contract novations on existing hedge accounting relationships. ASU 2016-05 clarifies that a change in counterparty to a derivative contract, in and of itself, does not require the dedesignation of a hedging relationship. ASU 2016-05 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. Early adoption is permitted and entities have the option of adopting this guidance on a prospective basis to new derivative contracts or on a modified retrospective basis. We elected to early adopt ASU 2016-05 on January 1, 2016 on a prospective basis, and there was no impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, Investments - Equity Method and Joint Ventures (Topic 323). ASU 2016-07 simplifies the transition to the equity method of accounting. ASU 2016-07 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. Instead the equity method of accounting will be applied prospectively from the date significant influence is obtained. The new standard should be applied prospectively for investments that qualify for the equity method of accounting in interim and annual periods beginning after December 15, 2016. Early adoption is permitted, and we elected to early adopt this standard as of January 1, 2016. The adoption of this standard had no impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 amends Accounting Standards Codification Topic 718, Compensation-Stock Based Compensation to simplify various aspects of how share-based payments are accounted for and presented in the financial statements including (i) reflecting income tax effects of share-based payments through the income statement, (ii) allowing statutory tax withholding requirements at the employees’ maximum individual tax rate without requiring awards to be classified as liabilities and (iii) permitting an entity to make an accounting policy election for the impact of forfeitures on the recognition of expense. ASU 2016-09 is effective for public business entities for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period, with early adoption permitted. We are in the process of evaluating the impact of adopting ASU 2016-09 on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 introduces a new model for estimating credit losses for certain types of financial instruments, including loans receivable, held-to-maturity debt securities, and net investments in direct financing leases, amongst other financial instruments. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for losses. ASU 2016-13 will be effective for public business entities in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early application of the guidance permitted. We are in the process of evaluating the impact of adopting ASU 2016-13 on our consolidated financial statements. |
Agreements and Transactions with Related Parties |
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Agreements and Transactions with Related Parties | Agreements and Transactions with Related Parties Advisory Agreements with the Managed Programs We have advisory agreements with each of the Managed Programs, pursuant to which we earn fees and are entitled to receive reimbursement for fund management expenses, as well as cash distributions. We also earn fees for serving as the dealer-manager of the public offerings of the Managed Programs. The advisory agreements with each of the Managed REITs have terms of one year, may be renewed for successive one-year periods, and are scheduled to expire on December 31, 2016. The advisory agreement with CCIF, which commenced February 27, 2015, is subject to renewal on or before February 26, 2017. The following tables present a summary of revenue earned and/or cash received from the Managed Programs for the periods indicated, included in the consolidated financial statements. Asset management revenue excludes amounts received from third parties (in thousands):
The following table presents a summary of amounts included in Due from affiliates in the consolidated financial statements (in thousands):
Asset Management Revenue Under the advisory agreements with the Managed Programs, we earn asset management revenue for managing their investment portfolios. The following table presents a summary of our asset management fee arrangements with the Managed Programs:
Incentive Fees We are entitled to receive a quarterly incentive fee on income from CCIF equal to 100% of quarterly net investment income, before incentive fee payments, in excess of 1.875% of CCIF’s average adjusted capital up to a limit of 2.344%, plus 20% of net investment income, before incentive fee payments, in excess of 2.344% of average adjusted capital. We are also entitled to receive from CCIF an incentive fee on realized capital gains of 20%, net of (i) all realized capital losses and unrealized depreciation on a cumulative basis, and (ii) the aggregate amount, if any, of previously paid incentive fees on capital gains since inception. Structuring Revenue Under the terms of the advisory agreements with the Managed REITs, we earn revenue for structuring and negotiating investments and related financing. We do not earn any structuring revenue from the Managed BDCs. The following table presents a summary of our structuring fee arrangements with the Managed REITs:
Reimbursable Costs from Affiliates The Managed Programs reimburse us for certain costs that we incur on their behalf, which consist primarily of broker-dealer commissions, marketing costs, an annual distribution and shareholder servicing fee, or Shareholder Servicing Fee, and certain personnel and overhead costs, as applicable. The following tables present summaries of such fee arrangements: Broker-Dealer Selling Commissions
Dealer Manager Fees
Annual Distribution and Shareholder Servicing Fee
Personnel and Overhead Costs
Organization and Offering Costs
For CCIF, total reimbursements to us for personnel and overhead costs and organization and offering costs may not exceed 18% of total Front End Fees, as defined in its Declaration of Trust, so that total funds available for investment may not be lower than 82% of total gross proceeds. Expense Support and Conditional Reimbursements Under the expense support and conditional reimbursement agreement we have with each of the CCIF Feeder Funds, we and the CCIF subadvisor are obligated to reimburse the CCIF Feeder Funds for 50% of the excess of the cumulative distributions paid to the CCIF Feeder Funds’ shareholders over the available operating funds on a monthly basis. Following any month in which the available operating funds exceed the cumulative distributions paid to its shareholders, the excess operating funds are used to reimburse us and the CCIF subadvisor for any expense payment we made within three years prior to the last business day of such months that have not been previously reimbursed by the CCIF Feeder Fund, up to the lesser of (i) 1.75% of each CCIF Feeder Fund’s average net assets or (ii) the percentage of each CCIF Feeder Fund’s average net assets attributable to its common shares represented by other operating expenses during the fiscal year in which such expense support payment from us and the CCIF’s subadvisor was made, provided that the effective rate of distributions per share at the time of reimbursement is not less than such rate at the time of expense payment. Distributions of Available Cash We are entitled to receive distributions of up to 10% of the Available Cash (as defined in the respective advisory agreements) from the operating partnerships of each of the Managed REITs, as described in their respective operating partnership agreements, payable quarterly in arrears. Other Transactions with Affiliates Loans to Affiliates During 2015 and 2014, our board of directors approved unsecured loans from us to CPA®:17 – Global of up to $75.0 million, CPA®:18 – Global of up to $100.0 million, CWI 1 and CWI 2 of up to $110.0 million in the aggregate, and CCIF of up to $50.0 million, at our sole discretion, with each loan at a rate equal to the rate at which we are able to borrow funds under our senior credit facility (Note 10), for the purpose of facilitating acquisitions approved by their respective investment committees that they would not otherwise have had sufficient available funds to complete. In April 2016, our board of directors approved unsecured loans from us to CESH I of up to $35.0 million, under the same terms and for the same purpose. During 2015, various loans aggregating $185.4 million were made to the Managed Programs, all of which were repaid during 2015. All of the loans were made at an interest rate equal to the London Interbank Offered Rate, or LIBOR, as of the issue date, plus 1.1%. During 2015, we arranged credit agreements for each of CPA®:17 – Global, CWI 1, and CCIF, and our board of directors terminated its previous authorizations to provide loans to CPA®:17 – Global and CWI 1. During the six months ended June 30, 2016, our board of directors terminated its previous authorizations to provide loans to CPA®:18 – Global and CCIF. See Note 17, Subsequent Events. On January 20, 2016, we made a $20.0 million loan to CWI 2, which was repaid in full on February 20, 2016. In May 2016, we made $17.1 million in loans to CESH I, at an annual interest rate of LIBOR plus 1.1% and a scheduled maturity date of December 31, 2016, to fund its investing activities. As of June 30, 2016, we consolidated the assets and liabilities of CESH I and therefore, the loan receivable is eliminated in consolidation (Note 2). Other On February 2, 2016, an entity in which we, one of our employees, and third parties owned 38.3%, 0.5%, and 61.2%, respectively, and which we consolidated, sold a self-storage property (Note 15). In connection with the sale, we made a distribution of $0.1 million to the employee, representing the employee’s share of the net proceeds from the sale. At June 30, 2016, we owned interests ranging from 3% to 90% in jointly-owned investments, including a jointly-controlled tenancy-in-common interest in several properties, with the remaining interests generally held by affiliates, and stock of each of the Managed REITs and CCIF. We consolidate certain of these investments and account for the remainder under the equity method of accounting (Note 6). |
Net Investments in Properties |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Investments in Properties | 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, and real estate under construction, is summarized as follows (in thousands):
During the six months ended June 30, 2016, the U.S. dollar strengthened against the British pound sterling, as the end-of-period rate for the U.S. dollar in relation to the British pound sterling at June 30, 2016 decreased by 9.4% to $1.3433 from $1.4833 at December 31, 2015. Additionally, during the same period the U.S. dollar weakened against the euro, as the end-of-period rate for the U.S. dollar in relation to the euro increased by 2.0% to $1.1102 from $1.0887. As a result of these fluctuations in foreign exchange rates, the carrying value of our Real estate decreased by $0.5 million from December 31, 2015 to June 30, 2016, with the impact of the U.S. dollar strengthening against the British pound sterling more than offsetting the impact of the weakening of the U.S. dollar against the euro. Acquisitions of Real Estate During the six months ended June 30, 2016, we entered into the following investments, which were deemed to be real estate asset acquisitions because we acquired the sellers’ properties and simultaneously entered into new leases in connection with the acquisitions, at a total cost of $385.8 million, including land of $103.7 million, buildings of $213.1 million (including acquisition-related costs of $1.8 million, which were capitalized), and net lease intangibles of $69.0 million (Note 7):
Real Estate Under Construction During the six months ended June 30, 2016, we capitalized funds in real estate under construction totaling $28.8 million, primarily related to construction projects on our properties. As of June 30, 2016, we had five construction projects in progress. As of December 31, 2015, we had an outstanding commitment related to a tenant expansion allowance, for which construction had not yet commenced, and no other open construction projects. Aggregate unfunded commitments totaled approximately $129.6 million and $12.2 million as of June 30, 2016 and December 31, 2015, respectively. Dispositions of Real Estate During the six months ended June 30, 2016, we sold five properties and a parcel of vacant land, excluding the sale of a property that was classified as held for sale as of December 31, 2015, and transferred ownership of another property to the related mortgage lender (Note 15). As a result, the carrying value of our Real estate decreased by $142.3 million from December 31, 2015 to June 30, 2016. Operating Real Estate At June 30, 2016, Operating real estate consisted of our investments in two hotels. At December 31, 2015, Operating real estate consisted of our investments in two hotels and one self-storage property. During the first quarter of 2016, we sold our remaining self-storage property, and as a result, the carrying value of our Operating real estate decreased by $2.3 million from December 31, 2015 to June 30, 2016 (Note 15). Below is a summary of our Operating real estate (in thousands):
Assets Held for Sale, Net Below is a summary of our properties held for sale (in thousands):
At June 30, 2016, we had 18 properties classified as Assets held for sale, net, including:
At December 31, 2015, we had two properties classified as Assets held for sale, net, one of which was sold during the six months ended June 30, 2016 (Note 15). |
Finance Receivables |
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Finance Receivables | Finance Receivables Assets representing rights to receive money on demand or at fixed or determinable dates are referred to as finance receivables. Our finance receivables portfolio consists of our Net investments in direct financing leases, notes receivable, and deferred acquisition fees. Operating leases are not included in finance receivables as such amounts are not recognized as an asset in the consolidated financial statements. Net Investments in Direct Financing Leases Interest income from direct financing leases, which was included in Lease revenues in the consolidated financial statements, was $18.0 million and $18.7 million for the three months ended June 30, 2016 and 2015, respectively, and $36.3 million and $37.4 million for the six months ended June 30, 2016 and 2015, respectively. During the six months ended June 30, 2016, the U.S. dollar weakened against the euro and strengthened against the British pound sterling, resulting in a $2.8 million increase in the carrying value of Net investments in direct financing leases from December 31, 2015 to June 30, 2016, with the impact of the weakening of the U.S. dollar against the euro more than offsetting the impact of the U.S. dollar strengthening against the British pound sterling. During the six months ended June 30, 2016, we reclassified 31 properties with a carrying value of $9.7 million from Net investments in direct financing leases to Real estate, at cost, in connection with the extensions of the underlying leases. Note Receivable At June 30, 2016 and December 31, 2015, we had a note receivable with an outstanding balance of $10.4 million and $10.7 million, respectively, representing the expected future payments under a sales type lease, which was included in Other assets, net in the consolidated financial statements. Earnings from our note receivable are included in Lease termination income and other in the consolidated financial statements. 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 CPA® REITs. A portion of this revenue is due in equal annual installments over three years, provided the CPA® REITs meet their respective performance criteria. Unpaid deferred installments, including accrued interest, from 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 default. As of June 30, 2016 and December 31, 2015, we had allowances for credit losses of $15.8 million and $8.7 million, respectively, on a single direct financing lease. During the six months ended June 30, 2016, we increased the allowance by $7.1 million, which was recorded in Property expenses, excluding reimbursable tenant costs in the consolidated financial statements, due to a decline in the estimated amount of future payments we will receive from the tenant, including the possible early termination of the direct financing lease. At both June 30, 2016 and December 31, 2015, none of the balances of our finance receivables were past due. Other than the lease extensions noted under Net Investments in Direct Financing Leases above and the allowance for credit losses discussed above, there were no modifications of finance receivables during the six months ended June 30, 2016 or the year ended December 31, 2015. We evaluate the credit quality of our finance receivables utilizing an internal five-point credit rating scale, with one representing the highest credit quality and five representing the lowest. A credit quality of one through three indicates a range of investment grade to stable. A credit quality of four through five indicates a range of watch list to risk of default. The credit quality evaluation of our finance receivables was last updated in the second quarter of 2016. We believe the credit quality of our deferred acquisition fees receivable falls under category one, as 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, excluding our deferred acquisition fees receivable, is as follows (dollars in thousands):
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Equity Investment in Real Estate and the Managed Programs |
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Equity Investments in Real Estate and the Managed REITs | Equity Investments in the Managed Programs and Real Estate We own interests in certain unconsolidated real estate investments with the Managed Programs and also own interests in the Managed Programs. 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). The following table presents Equity in earnings of equity method investments in the Managed Programs and real estate, which represents our proportionate share of the income or losses of these investments, as well as certain adjustments related to amortization of basis differences related to purchase accounting adjustments (in thousands):
Managed Programs We own interests in the Managed Programs and account for these interests under the equity method because, as their advisor and through our ownership of their common stock, we do not exert control over, but we do have the ability to exercise significant influence on, the Managed Programs. Operating results of the Managed REITs are included in the Owned Real Estate segment and operating results of CCIF are included in the Investment Management segment. The following table sets forth certain information about our investments in the Managed Programs (dollars in thousands):
CPA®:17 – Global — The carrying value of our investment in CPA®:17 – Global at June 30, 2016 includes asset management fees receivable, for which 121,967 shares of CPA®:17 – Global common stock were issued during the third quarter of 2016. We received distributions from this investment during the six months ended June 30, 2016 and 2015 of $3.7 million and $2.9 million, respectively. We received distributions from our investment in the CPA®:17 – Global operating partnership during the six months ended June 30, 2016 and 2015 of $12.5 million and $11.9 million, respectively. CPA®:18 – Global — The carrying value of our investment in CPA®:18 – Global at June 30, 2016 includes asset management fees receivable, for which 99,300 shares of CPA®:18 – Global class A common stock were issued during the third quarter of 2016. We received distributions from this investment during the six months ended June 30, 2016 and 2015 of $0.4 million and $0.1 million, respectively. We received distributions from our investment in the CPA®:18 – Global operating partnership during the six months ended June 30, 2016 and 2015 of $3.7 million and $2.3 million, respectively. CWI 1 — We received distributions from this investment during the six months ended June 30, 2016 and 2015 of $0.4 million and $0.4 million, respectively. We received distributions from our investment in the CWI 1 operating partnership during the six months ended June 30, 2016 and 2015 of $4.1 million and $3.9 million, respectively. CWI 2 — The carrying value of our investment in CWI 2 at June 30, 2016 includes asset management fees receivable, for which 26,718 shares of CWI 2 class A common stock were issued during the third quarter of 2016. We received distributions from this investment during the six months ended June 30, 2016 of less than $0.1 million. On March 27, 2015, we purchased a 0.015% special general partnership interest in the CWI 2 operating partnership for $0.3 million. This special general partnership interest entitles us to receive distributions of our proportionate share of earnings up to 10% of the Available Cash from the CWI 2 operating partnership (Note 3). We received $0.9 million of distributions from our investment in the CWI 2 operating partnership during the six months ended June 30, 2016. We did not receive distributions from this investment during the six months ended June 30, 2015. CCIF — We received $0.1 million of distributions from our investment in CCIF during the six months ended June 30, 2016. We did not receive distributions from this investment during the six months ended June 30, 2015. At June 30, 2016 and December 31, 2015, the aggregate unamortized basis differences on our equity investments in the Managed Programs were $29.8 million and $27.4 million, respectively. Interests in Other Unconsolidated Real Estate Investments We own equity interests in single-tenant net-leased properties that are generally leased to companies 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. Earnings for each investment are recognized in accordance with each respective investment agreement. The following table sets forth our ownership interests in our equity investments in real estate, excluding the Managed Programs, and their respective carrying values (dollars in thousands):
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We received aggregate distributions of $8.7 million and $6.5 million from our other unconsolidated real estate investments for the six months ended June 30, 2016 and 2015, respectively. At both June 30, 2016 and December 31, 2015, the aggregate unamortized basis differences on our unconsolidated real estate investments were $5.7 million. |
Goodwill and Other Intangibles |
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Goodwill And Intangible Assets Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangibles | Goodwill and Other Intangibles We have recorded net lease and internal-use software development intangibles that are being amortized over periods ranging from one year to 40 years. In addition, we have several ground lease intangibles that are being amortized over periods of up to 99 years. In-place lease and tenant relationship intangibles are included in In-place lease and tenant relationship intangible assets, net in the consolidated financial statements. Above-market rent intangibles are included in Above-market rent intangible assets, net in the consolidated financial statements. Below-market ground lease (as lessee), trade name, management contracts, and internal-use software development intangibles are included in Other assets, net in the consolidated financial statements. Below-market rent, above-market ground lease (as lessee), and below-market purchase option intangibles are included in Below-market rent and other intangible liabilities, net in the consolidated financial statements. In connection with our investment activity during the six months ended June 30, 2016, we recorded net lease intangibles comprised as follows (life in years, dollars in thousands):
The following table presents a reconciliation of our goodwill (in thousands):
Intangible assets, intangible liabilities, and goodwill are summarized as follows (in thousands):
Net amortization of intangibles, including the effect of foreign currency translation, was $41.2 million and $42.3 million for the three months ended June 30, 2016 and 2015, respectively, and $87.5 million and $86.3 million for the six months ended June 30, 2016 and 2015, respectively. Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Lease revenues; amortization of internal-use software development and in-place lease and tenant relationship intangibles is included in Depreciation and amortization; and amortization of above-market ground lease and below-market ground lease intangibles is included in Property expenses, excluding reimbursable tenant costs. |
Fair Value Measurements |
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Fair Value Measurements | 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, interest rate swaps, foreign currency forward contracts, and foreign currency collars; and Level 3, for securities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring us to develop our own assumptions. Items Measured at Fair Value on a Recurring Basis The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, we have also provided the unobservable inputs along with their weighted-average ranges. Money Market Funds — Our money market funds, which are included in Cash and cash equivalents in the consolidated financial statements, are comprised 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 — Our derivative assets, which are included in Other assets, net in the consolidated financial statements, are comprised of an interest rate cap, stock warrants, foreign currency forward contracts, and foreign currency collars (Note 9). The interest rate cap, foreign currency forward contracts, and foreign currency collars were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. The stock warrants were measured at fair value using valuation models that incorporate market inputs and our own assumptions about future cash flows. We classified these assets as Level 3 because these assets are not traded in an active market. Derivative Liabilities — Our derivative liabilities, which are included in Accounts payable, accrued expenses and other liabilities in the consolidated financial statements, are comprised of interest rate swaps and foreign currency collars (Note 9). These derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and 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. Redeemable Noncontrolling Interest — We account for the noncontrolling interest in W. P. Carey International, LLC, or WPCI, held by a third party as a redeemable noncontrolling interest (Note 13). We determined the valuation of redeemable noncontrolling interest using widely accepted valuation techniques, including comparable transaction analysis, comparable public company analysis, and discounted cash flow analysis. We classified this liability as Level 3. We did not have any transfers into or out of Level 1, Level 2, and Level 3 category of measurements during either the three or six months ended June 30, 2016 or 2015. Our other financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands):
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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 June 30, 2016 and December 31, 2015. Items Measured at Fair Value on a Non-Recurring Basis (Including 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 held for use for 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 property’s asset group to the future undiscounted net cash flows that we expect the property’s asset group will generate, including any estimated proceeds from the eventual sale of the property’s asset group. If this amount is less than the carrying value, the property’s asset group is considered to be not recoverable. We then measure the impairment charge as the excess of the carrying value of the property’s asset group over the estimated fair value of the property’s asset group, which is primarily determined using market information such as recent comparable sales, broker quotes, or third-party appraisals. 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. We determined that the significant inputs used to value these investments fall within Level 3 for fair value reporting. As a result of our assessments, we calculated impairment charges 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 assets for which we recorded an impairment charge that were measured at fair value on a non-recurring basis (in thousands):
During both the three and six months ended June 30, 2016, we recognized impairment charges totaling $35.4 million, including $10.2 million allocated to goodwill, on a portfolio of 14 properties in order to reduce the carrying values of the properties to their estimated fair values. The fair value measurements for the properties approximated their estimated selling prices, less estimated costs to sell. We used available information, including third-party broker information and internal discounted cash flow models (Level 3 inputs), in determining the fair value of these properties. At June 30, 2016, the properties were classified as held for sale (Note 4). During the three months ended June 30, 2015, we recognized an impairment charge of $0.6 million on a parcel of vacant land in order to reduce the carrying value of the parcel of vacant land to its estimated fair value. During the six months ended June 30, 2015, we recognized impairment charges totaling $3.3 million, including $0.6 million on a parcel of vacant land, as described above, and $2.7 million on two properties in order to reduce the carrying values of the two properties and the parcel of vacant land to their estimated fair values. The fair value measurements for the two properties and the parcel of vacant land approximated their estimated selling prices. The two properties were sold during 2015, and the parcel of vacant land was sold during the six months ended June 30, 2016. |
Risk Management and Use of Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Management and Use of Derivative Financial Instruments | Risk Management and Use of Derivative Financial Instruments Risk Management In the normal course of our ongoing business operations, we encounter economic risk. There are four main components of economic risk that impact us: interest rate risk, credit risk, market risk, and foreign currency risk. We are primarily subject to interest rate risk on our interest-bearing liabilities, including our Senior Unsecured Credit Facility and Senior Unsecured Notes (Note 10), at June 30, 2016. Credit risk is the risk of default on our operations and our 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 Managed Programs due to changes in interest rates or other market factors. We own investments in Europe, Asia, Australia, Canada, and Mexico and are subject to risks associated with fluctuating foreign currency exchange rates. Derivative Financial Instruments When we use derivative instruments, it is generally to reduce our exposure to fluctuations in interest rates and foreign currency exchange rate movements. We have not entered into, and do not plan to enter into, financial instruments for trading or speculative purposes. In addition to entering into derivative instruments on our own behalf, we may also be a party to derivative instruments that are embedded in other contracts, and we may be granted common stock warrants by lessees when structuring lease transactions, which are considered to be derivative instruments. The primary risks related to our use of derivative instruments include a counterparty to a hedging arrangement defaulting on its obligation and a downgrade in the credit quality of a counterparty to such an extent that our ability to sell or assign our side of the hedging transaction is impaired. While we seek to mitigate these risks by entering into hedging arrangements with large financial institutions that we deem to be creditworthy, it is possible that our hedging transactions, which are intended to limit losses, could adversely affect our earnings. Furthermore, if we terminate a hedging arrangement, we may be obligated to pay certain costs, such as transaction or breakage fees. We have established policies and procedures for risk assessment and the approval, reporting, and monitoring of derivative financial instrument activities. We measure derivative instruments at fair value and record them as assets or liabilities, depending on our rights or obligations under the applicable derivative contract. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. For a derivative designated, and that qualified, as a cash flow hedge, the effective portion of the change in fair value of the derivative is recognized in Other comprehensive (loss) income until the hedged item is recognized in earnings. For a derivative designated, and that qualified, as a net investment hedge, the effective portion of the change in the fair value and/or the net settlement of the derivative is reported in Other comprehensive (loss) income as part of the cumulative foreign currency translation adjustment. Amounts are reclassified out of Other comprehensive (loss) income into earnings when the hedged investment is either sold or substantially liquidated. The ineffective portion of the change in fair value of any derivative is immediately recognized in earnings. The following table sets forth certain information regarding our derivative instruments (in thousands):
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All derivative transactions with an individual counterparty are governed by a master International Swap and Derivatives Association agreement, which can be considered as a master netting arrangement; however, we report all our derivative instruments on a gross basis on our consolidated financial statements. At both June 30, 2016 and December 31, 2015, no cash collateral had been posted nor received for any of our derivative positions. The following tables present the impact of our derivative instruments in the consolidated financial statements (in thousands):
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Amounts reported in Other comprehensive (loss) income related to interest rate swaps will be reclassified to Interest expense as interest payments are made on our variable-rate debt. Amounts reported in Other comprehensive (loss) income related to foreign currency derivative contracts will be reclassified to Other income and (expenses) when the hedged foreign currency contracts are settled. As of June 30, 2016, we estimate that an additional $2.0 million and $9.9 million will be reclassified as interest expense and other income, respectively, during the next 12 months.
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See below for information on our purposes for entering into derivative instruments and for information on derivative instruments owned by unconsolidated investments, which are excluded from the tables above. Interest Rate Swaps and Cap We are exposed to the impact of interest rate changes primarily through our borrowing activities. To limit this exposure, we attempt to obtain mortgage financing on a long-term, fixed-rate basis. However, from time to time, we or our investment partners may obtain variable-rate, non-recourse mortgage loans and, as a result, we have entered into, and may continue to enter into, interest rate swap agreements or interest rate cap agreements with counterparties. Interest rate swaps, which effectively convert the variable-rate debt service obligations of a loan to a fixed rate, are agreements in which one party exchanges a stream of interest payments for a counterparty’s stream of cash flow over a specific period. The notional, or face, amount on which the swaps are based is not exchanged. Interest rate caps limit the effective borrowing rate of variable-rate debt obligations while allowing participants to share in downward shifts in interest rates. Our objective in using these derivatives is to limit our exposure to interest rate movements. The interest rate swaps and cap that our consolidated subsidiaries had outstanding at June 30, 2016 are summarized as follows (currency in thousands):
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Foreign Currency Contracts and Collars We are exposed to foreign currency exchange rate movements, primarily in the euro and, to a lesser extent, the British pound sterling, the Australian dollar, and certain other currencies. We manage foreign currency exchange rate movements by generally placing our debt service obligation on an investment in the same currency as the tenant’s rental obligation to us. This reduces our overall exposure to the net cash flow from that investment. However, we are subject to foreign currency exchange rate movements to the extent that there is a difference in the timing and amount of the rental obligation and the debt service. Realized and unrealized gains and losses recognized in earnings related to foreign currency transactions are included in Other income and (expenses) in the consolidated financial statements. In order to hedge certain of our foreign currency cash flow exposures, we enter into foreign currency forward contracts and collars. A foreign currency forward contract is a commitment to deliver a certain amount of currency at a certain price on a specific date in the future. A foreign currency collar consists of a written call option and a purchased put option to sell the foreign currency at a range of predetermined exchange rates. By entering into forward contracts and holding them to maturity, we are locked into a future currency exchange rate for the term of the contract. A foreign currency collar guarantees that the exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices. Our foreign currency forward contracts and foreign currency collars have maturities of 78 months or less. The following table presents the foreign currency derivative contracts we had outstanding at June 30, 2016, which were designated as cash flow hedges (currency in thousands):
Credit Risk-Related Contingent Features We measure our credit exposure on a counterparty basis as the net positive aggregate estimated fair value of our derivatives, net of any collateral received. No collateral was received as of June 30, 2016. At June 30, 2016, our total credit exposure and the maximum exposure to any single counterparty was $43.8 million and $25.7 million, respectively. Some of the agreements we have with our derivative counterparties contain cross-default provisions that could trigger a declaration of default on our derivative obligations if we default, or are capable of being declared in default, on certain of our indebtedness. At June 30, 2016, we had not been declared in default on any of our derivative obligations. The estimated fair value of our derivatives in a net liability position was $8.4 million and $8.2 million at June 30, 2016 and December 31, 2015, respectively, which included accrued interest and any nonperformance risk adjustments. If we had breached any of these provisions at June 30, 2016 or December 31, 2015, we could have been required to settle our obligations under these agreements at their aggregate termination value of $8.8 million and $8.3 million, respectively. Net Investment Hedges At June 30, 2016 and December 31, 2015, the amounts borrowed in euro outstanding under our Revolver (Note 10) were €374.5 million and €361.0 million, respectively. Additionally, we have issued euro-denominated senior notes with a principal amount of €500.0 million (Note 10), which we refer to as the 2% Senior Euro Notes. These borrowings are designated as, and are effective as, economic hedges of our net investments in foreign entities. Variability in the exchange rates of the foreign currencies with respect to the U.S. dollar impacts our financial results as the financial results of our foreign subsidiaries are translated to U.S. dollars each period, with the effect of changes in the foreign currencies to U.S. dollar exchange rates being recorded in Other comprehensive (loss) income as part of the cumulative foreign currency translation adjustment. As a result, the borrowings in euro under our Revolver are recorded at cost in the consolidated financial statements and all changes in the value related to changes in the spot rates will be reported in the same manner as a translation adjustment, which is recorded in Other comprehensive (loss) income as part of the cumulative foreign currency translation adjustment. At June 30, 2016, we had foreign currency forward contracts that were designated as net investment hedges, as discussed in “Derivative Financial Instruments” above. |
Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Senior Unsecured Credit Facility As of June 30, 2016, we had a senior credit facility that provided for a $1.5 billion unsecured revolving credit facility, or our Revolver, and a $250.0 million term loan facility, or our Term Loan Facility, which we refer to collectively as the Senior Unsecured Credit Facility. The Senior Unsecured Credit Facility also contains a $500.0 million accordion feature that, if exercised, subject to lender commitments, would allow us to increase our maximum borrowing capacity under our Revolver from $1.5 billion to $2.0 billion and under the Senior Unsecured Credit Facility in the aggregate to $2.25 billion. At June 30, 2016, the Senior Unsecured Credit Facility also permitted (i) up to $750.0 million under our Revolver to be borrowed in certain currencies other than the U.S. dollar, (ii) swing line loans up to $50.0 million under our Revolver, and (iii) the issuance of letters of credit under our Revolver in an aggregate amount not to exceed $50.0 million. The Senior Unsecured Credit Facility is being used for working capital needs, to refinance our existing indebtedness, for new investments, and for other general corporate purposes. We exercised a prior accordion feature for the Senior Unsecured Credit Facility on January 15, 2015, which allowed us to increase the maximum borrowing capacity of our Revolver from $1.0 billion to $1.5 billion. In connection with the exercise of this accordion feature, we incurred financing costs totaling $3.1 million, which are being amortized to Interest expense in the consolidated financial statements over the remaining terms of the facility. At June 30, 2016, our Revolver had unused capacity of $706.2 million, excluding amounts reserved for outstanding letters of credit. As of June 30, 2016, our lenders had issued letters of credit totaling $0.6 million on our behalf in connection with certain contractual obligations, which reduce amounts that may be drawn under our Revolver by the same amount. We also incurred a facility fee of 0.20% of the total commitment on our Revolver during the six months ended June 30, 2016. On January 29, 2016, we exercised an option to extend our Term Loan Facility by an additional year to January 31, 2017. We have options to extend the maturity dates of the Revolver and Term Loan Facility by another year, subject to the conditions provided in the Second Amended and Restated Credit Agreement dated January 31, 2014, as amended, or the Credit Agreement. The following table presents a summary of our Senior Unsecured Credit Facility (dollars in millions):
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Senior Unsecured Notes As of June 30, 2016, we have senior unsecured notes outstanding, with an aggregate principal balance of $1.5 billion. We refer to these notes collectively as the Senior Unsecured Notes. Interest on the Senior Unsecured Notes is payable annually in arrears for our euro-denominated notes and semi-annually for U.S. dollar-denominated notes. The Senior Unsecured Notes can be redeemed at par within three months of their respective maturities, or we can call the notes at any time for the principal, accrued interest, and a make-whole amount based upon the applicable government bond yield plus 30 to 35 basis points. The following table presents a summary of our Senior Unsecured Notes (currency in millions):
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Proceeds from the issuances of these notes were used primarily to partially pay down the amounts then outstanding under our Revolver. In connection with the offerings of the 2.0% Senior Euro Notes and 4.0% Senior Notes, we incurred financing costs totaling $7.8 million during the six months ended June 30, 2015, which are included in Senior unsecured notes, net in the consolidated financial statements in accordance with our adoption of ASU 2015-03 (Note 2), and are being amortized to Interest expense over the respective terms of the Senior Unsecured Notes. Covenants The Senior Unsecured Credit Facility and the Senior Unsecured Notes include customary financial maintenance covenants that require us to maintain certain ratios and benchmarks at the end of each quarter. The Senior Unsecured Credit Facility also contains various customary affirmative and negative covenants applicable to us and our subsidiaries, subject to materiality and other qualifications, baskets, and exceptions as outlined in the Credit Agreement. We are required to ensure that the total Restricted Payments (as defined in the Credit Agreement) in an aggregate amount in any fiscal year does not exceed the greater of (i) 95% of Adjusted Funds from Operations (as defined in the Credit Agreement) and (ii) the amount of Restricted Payments required in order for us to maintain our REIT status. Restricted Payments include quarterly dividends and the total amount of shares repurchased by us, if any, in excess of $100.0 million per year. Obligations under the Senior Unsecured Credit Facility may be declared immediately due and payable upon the occurrence of certain events of default as defined in the Credit Agreement, including failure to pay any principal when due and payable, failure to pay interest within five business days after becoming due, failure to comply with any covenant, representation or condition of any loan document, any change of control, cross-defaults, and certain other events as set forth in the Credit Agreement, with grace periods in some cases. The Credit Agreement stipulates several financial covenants that require us to maintain certain ratios and benchmarks at the end of each quarter, as defined in the Credit Agreement. We were in compliance with all of these covenants at June 30, 2016. Non-Recourse Debt At June 30, 2016, our mortgage notes payable bore interest at fixed annual rates ranging from 2.0% to 7.8% and variable contractual annual rates ranging from 0.7% to 7.6%, with maturity dates ranging from July 2016 to June 2027. During the six months ended June 30, 2016, we prepaid seven non-recourse mortgage loans totaling $67.5 million. In connection with the prepayments, during the six months ended June 30, 2016 we recognized a loss on extinguishment of debt of $1.8 million, which was included in Other income and (expenses) in the consolidated financial statements. Foreign Currency Exchange Rate Impact During the six months ended June 30, 2016, the U.S. dollar weakened against the euro and strengthened against the British pound sterling, resulting in an aggregate increase of $34.1 million in the aggregate carrying values of our Non-recourse debt, net, Senior Unsecured Credit Facility - Revolver, and Senior unsecured notes, net from December 31, 2015 to June 30, 2016, with the impact of the weakening of the U.S. dollar against the euro more than offsetting the impact of the U.S. dollar strengthening against the British pound sterling. Scheduled Debt Principal Payments Scheduled debt principal payments during the remainder of 2016, each of the next four calendar years following December 31, 2016, and thereafter through 2027 are as follows (in thousands):
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Commitments and Contingencies |
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Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies At June 30, 2016, 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. |
Restructuring and Other Compensation |
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Jun. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Compensation | Restructuring and Other Compensation In connection with the resignation of our then-Chief Executive Officer, Trevor P. Bond, we and Mr. Bond entered into a letter agreement, dated February 10, 2016. Under the terms of the agreement, subject to certain conditions, Mr. Bond will be entitled to receive the severance benefits provided for in his employment agreement and, subject to satisfaction of applicable performance conditions and proration, vesting of his outstanding unvested performance stock units, or PSUs, in accordance with their terms. In addition, the portion of his previously-granted restricted stock units, or RSUs, that were scheduled to vest on February 15, 2016, which would have been forfeited upon separation pursuant to their terms, were allowed to vest on that date. In connection with the separation agreement, we recorded $5.1 million of severance-related expenses during the six months ended June 30, 2016, which are included in Restructuring and other compensation in the consolidated financial statements. In February 2016, we entered into an agreement with Catherine D. Rice, our former Chief Financial Officer, in connection with the termination of her employment, which provides for the continued vesting of her outstanding RSUs and PSUs pursuant to their terms as though her employment had continued through their respective vesting dates. In connection with the modification of these award terms, we recorded incremental stock-based compensation expense of $2.4 million during the six months ended June 30, 2016, which is included in Restructuring and other compensation in the consolidated financial statements. In March 2016, as part of a cost savings initiative, we undertook a reduction in force, or RIF, and realigned and consolidated certain positions within the company, resulting in employee headcount reductions. As a result of these reductions in headcount and the separations described above, during the six months ended June 30, 2016, we recorded $8.2 million of severance and benefits, $3.2 million of stock-based compensation, and $0.5 million of other related costs, which are all included in Restructuring and other compensation in the consolidated financial statements. As of June 30, 2016, the accrued liability for these severance obligations was $6.5 million and is included within Accounts payable, accrued expenses and other liabilities in the consolidated financial statements. |
Stock-Based Compensation and Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation and Equity | Stock-Based Compensation and Equity Stock-Based Compensation We maintain several stock-based compensation plans, which are more fully described in the 2015 Annual Report. There have been no significant changes to the terms and conditions of any of our stock-based compensation plans or arrangements during the six months ended June 30, 2016. During the six months ended June 30, 2016 and 2015, we recorded stock-based compensation expense of $13.8 million and $12.1 million, respectively, of which $3.2 million was included in Restructuring and other compensation for the six months ended June 30, 2016 (Note 12). Restricted and Conditional Awards Nonvested restricted stock awards, or RSAs, RSUs, and PSUs at June 30, 2016 and changes during the six months ended June 30, 2016 were as follows:
__________
During the six months ended June 30, 2016, 54,336 stock options were exercised with an aggregate intrinsic value of $1.9 million. At June 30, 2016, there were 161,227 stock options outstanding, of which 150,969 were exercisable. Earnings Per Share Under current authoritative guidance for determining earnings per share, all nonvested 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 nonvested RSUs and RSAs contain rights to receive non-forfeitable distribution equivalents or distributions, respectively, 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 nonvested RSUs and RSAs from the numerator and such nonvested shares in the denominator. The following table summarizes basic and diluted earnings (in thousands, except share amounts):
For the three and six months ended June 30, 2016 and 2015, there were no potentially dilutive securities excluded from the computation of diluted earnings per share. At-The-Market Equity Offering Program On June 3, 2015, we filed a prospectus supplement with the SEC pursuant to which we may offer and sell shares of our common stock, up to an aggregate gross sales price of $400.0 million, through an “at-the-market,” or ATM, offering program with a consortium of banks as sales agents. During the three and six months ended June 30, 2016, we issued 281,301 shares of our common stock under the ATM program at a weighted-average price of $68.47 per share, for net proceeds of $19.0 million. As of June 30, 2016, $380.7 million remained available for issuance under our ATM offering program. For information about additional shares issued through the ATM program in the third quarter of 2016, see Note 17. Redeemable Noncontrolling Interest We account for the noncontrolling interest in WPCI held by a third party as a redeemable noncontrolling interest, because, pursuant to a put option held by the third party, we had an obligation to redeem the interest at fair value, subject to certain conditions. This obligation was required to be settled in shares of our common stock. On October 1, 2013, we received a notice from the holder of the noncontrolling interest in WPCI regarding the exercise of the put option, pursuant to which we were required to purchase the third party’s 7.7% interest in WPCI. Pursuant to the terms of the related put agreement, the value of that interest was determined based on a third-party valuation as of October 31, 2013, which is the end of the month that the put option was exercised. In March 2016, we issued 217,011 shares of our common stock to the holder of the redeemable noncontrolling interest, which had a value of $13.4 million at the date of issuance pursuant to a formula set forth in the put agreement. Through the date of this Report, the third party has not transferred his interests in WPCI to us pursuant to the put agreement because of a dispute regarding any amounts that may still be owed to him. The following table presents a reconciliation of redeemable noncontrolling interest (in thousands):
Reclassifications Out of Accumulated Other Comprehensive Loss The following tables present a reconciliation of changes in Accumulated other comprehensive loss by component for the periods presented (in thousands):
Distributions Declared During the first quarter of 2016, we declared a quarterly distribution of $0.9742 per share, which was paid on April 15, 2016 to stockholders of record on March 31, 2016, in the aggregate amount of $104.0 million. During the second quarter of 2016, we declared a quarterly distribution of $0.9800 per share, which was paid on July 15, 2016 to stockholders of record on June 30, 2016, in the aggregate amount of $104.9 million. |
Income Taxes |
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Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We elected to be treated as a REIT and believe that we have been organized and have operated in such a manner to maintain our qualification as a REIT for federal and state income tax purposes. As a REIT, we are generally not subject to corporate level federal income taxes on earnings distributed to our stockholders. Since inception, we have distributed at least 100% of our taxable income annually and intend to do so for the tax year ending December 31, 2016. Accordingly, we have not included any provisions for federal income taxes related to the REIT in the accompanying consolidated financial statements for the three and six months ended June 30, 2016 and 2015. Certain of our subsidiaries have elected TRS status. A TRS may provide certain services considered impermissible for REITs and may hold assets that REITs may not hold directly. We also own real property in jurisdictions outside the United States through foreign subsidiaries and are subject to income taxes on our pre-tax income earned from properties in such countries. The accompanying consolidated financial statements include an interim tax provision for our TRSs and foreign subsidiaries, as necessary, for the three and six months ended June 30, 2016 and 2015. Current income tax expense was $6.4 million and $16.4 million for the three months ended June 30, 2016 and 2015, respectively, and $9.9 million and $20.1 million for the six months ended June 30, 2016 and 2015, respectively. During the second quarter of 2016, we identified and recorded out-of-period adjustments related to adjustments to prior period income tax returns. This adjustment is reflected as a $3.0 million reduction of our Benefit from income taxes in the consolidated statements of income for the three and six months ended June 30, 2016 (Note 2). Our TRSs and foreign subsidiaries are subject to U.S. federal, state, and foreign income taxes. As such, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance for deferred tax assets is provided if we believe that more likely than not we will not realize the deferred tax asset based on available evidence at the time the determination is made. A change in circumstances may cause us to change our judgment about whether a deferred tax asset will more likely than not be realized. We generally report any change in the valuation allowance through our income statement in the period in which such changes in circumstances occur. Deferred tax assets (net of valuation allowance) and liabilities for our TRSs and foreign subsidiaries were recorded, as necessary, as of June 30, 2016 and December 31, 2015. The majority of our deferred tax assets relate to the timing difference between the financial reporting basis and tax basis for stock based compensation expense. The majority of our deferred tax liabilities relate to differences between the tax basis and financial reporting basis of the assets acquired in acquisitions treated as business combinations under GAAP and in which the tax basis of such assets was not stepped up to fair value for income tax purposes. Provision for income taxes included deferred income tax benefits of $14.6 million and $1.4 million for the three months ended June 30, 2016 and 2015, respectively, and $17.6 million and $3.1 million for the six months ended June 30, 2016 and 2015, respectively. |
Property Dispositions |
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Property Dispositions | Property Dispositions From time to time, we may decide to sell a property. We have an active capital recycling program, with a goal of extending the average lease term through reinvestment, improving portfolio credit quality through dispositions and acquisitions of assets, increasing the asset criticality factor in our portfolio, and/or executing strategic dispositions of assets. We may make a decision to dispose of a property when it is vacant as a result of tenants vacating space, tenants electing not to renew their leases, tenant insolvency, or lease rejection in the bankruptcy process. In such cases, we assess whether we can obtain the highest value from the property by selling it, as opposed to re-leasing it. We may also sell a property when we receive an unsolicited offer or negotiate a price for an investment that is consistent with our strategy for that investment. When it is appropriate to do so, we classify the property as an asset held for sale on our consolidated balance sheet. All property dispositions are recorded within our Owned Real Estate segment. The results of operations for properties that have been sold or classified as held for sale are included in the consolidated financial statements and are summarized as follows (in thousands):
__________
2016 — During the six months ended June 30, 2016, we sold seven properties and a parcel of vacant land for total proceeds of $200.6 million, net of selling costs, and recognized a net gain on these sales of $2.5 million, inclusive of amounts attributable to noncontrolling interests of $0.9 million. In addition, in April 2016, we transferred ownership of a vacant international property and the related non-recourse mortgage loan to the mortgage lender. As of the date of the transfer, the property had a carrying value of $39.8 million and the related non-recourse mortgage loan had an outstanding balance of $60.9 million. In connection with the transfer, we recognized a net gain of $16.4 million. In connection with those sales that constituted businesses, during the six months ended June 30, 2016 we allocated goodwill totaling $14.9 million to the cost basis of the properties for our Owned Real Estate segment based on the relative fair value at the time of the sale (Note 7). At June 30, 2016, we had 18 properties classified as assets held for sale (Note 4). During the three and six months ended June 30, 2016, we recognized impairment charges totaling $35.4 million on a portfolio of 14 of these properties (Note 8). In the fourth quarter of 2015, we executed a lease amendment with a tenant in a domestic office building. The amendment extended the lease term an additional 15 years to January 31, 2037 and provided a one-time rent payment of $25.0 million, which was paid to us on December 18, 2015. The lease amendment also provided an option to terminate the lease effective February 29, 2016, with additional lease termination fees of $22.2 million to be paid to us on or five days before February 29, 2016 upon exercise of the option. The tenant exercised the option on January 1, 2016. The aggregate of the additional rent payment of $25.0 million and the lease termination fees of $22.2 million were amortized to lease termination income from the lease amendment date on December 4, 2015 through the end of the non-cancelable lease term on February 29, 2016, resulting in $15.0 million recognized during the year ended December 31, 2015 and $32.2 million recognized during the three months ended March 31, 2016 within Lease termination income and other in the consolidated financial statements. In connection with the lease amendment, we defeased the mortgage loan encumbering the property with a principal balance of $36.5 million and recognized a loss on extinguishment of debt of $5.3 million, which was included in Other income and (expenses) in the consolidated financial statements for the year ended December 31, 2015. In addition, during the fourth quarter of 2015, we entered into an agreement to sell the property to a third party and the buyer placed a deposit of $12.7 million for the purchase of the property that was held in escrow. At December 31, 2015, this property was classified as held for sale (Note 4). During the three months ended March 31, 2016, we sold the property for proceeds of $44.4 million, net of selling costs, and recognized a loss on the sale of $10.7 million. 2015 — During the six months ended June 30, 2015, we sold nine properties for total proceeds of $23.8 million, net of selling costs, and we recognized a net gain on these sales of $1.2 million. In connection with those sales that constituted a business, during the six months ended June 30, 2015 we allocated goodwill totaling $0.7 million to the cost basis of the properties, for our Owned Real Estate segment, based on the relative fair value at the time of the sale (Note 7). |
Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting We evaluate our results from operations through our two major business segments — Owned Real Estate and Investment Management (Note 1). The following tables present a summary of comparative results and assets for these business segments (in thousands): Owned Real Estate
Investment Management
Total Company
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Subsequent Events |
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Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events ATM Offering Program Activity In July 2016, we issued 548,918 additional shares of our common stock under the ATM program (Note 13) at a weighted-average price of $68.87, for net proceeds of $37.2 million. Through the date of this Report, we have issued 830,219 shares of our common stock under the ATM program at a weighted-average price of $68.74, for net proceeds of $56.2 million. Through the date of this Report, $342.9 million remained available for issuance. Loans to Affiliates In July 2016, our board of directors approved unsecured loans from us to CPA®:18 – Global of up to $50.0 million, at our sole discretion, with a rate equal to the rate at which we are able to borrow funds under our senior credit facility (Note 10), for the purpose of providing CPA®:18 – Global with financial flexibility as it executes its capital plan (Note 3). No such loans have been made through the date of this Report. Mortgage Loan Repayments In July 2016, we repaid six non-recourse mortgage loans with an aggregate principal balance of $108.0 million, including a mortgage loan with a principal balance of $50.8 million encumbering a property held for sale as of June 30, 2016. This property was sold on August 2, 2016, as described below. Dispositions On July 5, 2016, a vacant domestic property with an asset carrying value of $13.7 million and encumbered by a $27.0 million mortgage balance was foreclosed upon. On August 2, 2016, we sold a domestic property that was classified as held for sale at June 30, 2016 (Note 4) for gross proceeds of $175.0 million. For the three and six months ended June 30, 2016, lease revenues from this property were $3.0 million and $5.9 million, respectively. As described above, in July 2016, we repaid the mortgage loan encumbering the property with a principal balance of $50.8 million. |
Basis of Presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation Our interim consolidated financial statements have been prepared 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 generally accepted accounting principles in the United States, or GAAP. |
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Basis of Consolidation | Basis of Consolidation Our consolidated financial statements reflect all of our accounts, including those of our controlled subsidiaries and our tenancy-in-common interest as described below. The portion of equity in a consolidated subsidiary that is not attributable, directly or indirectly, to us is presented as noncontrolling interests. All significant intercompany accounts and transactions have been eliminated. On January 1, 2016, we adopted the Financial Accounting Standards Board’s, or FASB’s, Accounting Standards Update, or ASU, 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, as described in the Recent Accounting Pronouncements section below, which amends the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities. When we obtain an economic interest in an entity, we evaluate the entity to determine if it should be deemed a variable interest entity, or VIE, and, if so, whether we are the primary beneficiary and are therefore required to consolidate the entity. We apply accounting guidance for consolidation of VIEs to certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Fixed price purchase and renewal options within a lease, as well as certain decision-making rights within a loan or joint-venture agreement, can cause us to consider an entity a VIE. Limited partnerships and other similar entities which operate as a partnership will be considered a VIE unless the limited partners hold substantive kick-out rights or participation rights. Significant judgment is required to determine whether a VIE should be consolidated. We review the contractual arrangements provided for in the partnership agreement or other related contracts to determine whether the entity is considered a VIE, and to establish whether we have any variable interests in the VIE. We then compare our variable interests, if any, to those of the other variable interest holders to determine which party is the primary beneficiary of the VIE based on whether the entity (i) has the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. We performed this analysis on all of our subsidiary entities following the guidance in ASU 2015-02 to determine whether they qualify as VIEs and whether they should be consolidated or accounted for as equity investments in an unconsolidated venture. As a result of this change in guidance, we determined that 13 entities that were previously classified as voting interest entities should now be classified as VIEs as of January 1, 2016 and therefore included in our VIE disclosures. However, there was no change in determining whether or not we consolidate these entities as a result of the new guidance. We elected to retrospectively adopt ASU 2015-02, which resulted in changes to our VIE disclosures within the consolidated balance sheets. There were no other changes to our consolidated balance sheets or results of operations for the periods presented. At June 30, 2016, we considered 36 entities VIEs, 29 of which we consolidated as we are considered the primary beneficiary. The following table presents a summary of selected financial data of the consolidated VIEs included in the consolidated balance sheets (in thousands):
At June 30, 2016 and December 31, 2015, our seven unconsolidated VIEs included our interests in six unconsolidated real estate investments and one unconsolidated entity among our interests in the Managed Programs, all of which we account for under the equity method of accounting. We do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities allows us to exercise significant influence but does not give us power over decisions that significantly affect the economic performance of these entities. As of June 30, 2016 and December 31, 2015, the net carrying amount of our investments in these entities was $153.5 million and $154.8 million, respectively, and our maximum exposure to loss in these entities was limited to our investments. At June 30, 2016, we had an investment in a tenancy-in-common interest in various underlying international properties. Consolidation of this investment is not required as such interest does not qualify as a VIE and does not meet the control requirement for consolidation. Accordingly, we account for this investment using the equity method of accounting. We use the equity method of accounting because the shared decision-making involved in a tenancy-in-common interest investment provides us with significant influence on the operating and financial decisions of this investment. At times, the carrying value of our equity investments may fall below zero for certain investments. We intend to fund our share of the jointly-owned investments’ future operating deficits should the need arise. However, we have no legal obligation to pay for any of the liabilities of such investments nor do we have any legal obligation to fund operating deficits. |
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Recent Accounting Requirements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 does not apply to our lease revenues, but will apply to reimbursed tenant costs and revenues generated from our operating properties and our Investment Management business. Additionally, this guidance modifies disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 for all entities by one year, until years beginning in 2018, with early adoption permitted but not before 2017, the original public company effective date. We are currently evaluating the impact of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard. In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810). ASU 2015-02 amends the current consolidation guidance, including modification of the guidance for evaluating whether limited partnerships and similar legal entities are VIEs or voting interest entities. The guidance does not amend the existing disclosure requirements for VIEs or voting interest model entities. The guidance, however, modified the requirements to qualify under the voting interest model. Under the revised guidance, ASU 2015-02 requires an entity to classify a limited liability company or a limited partnership as a VIE unless the partnership provides partners with either substantive kick-out rights or substantive participating rights over the managing member or general partner. Refer to the discussion in the Basis of Consolidation section above. In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30). ASU 2015-03 changes the presentation of debt issuance costs, which were previously recognized as an asset, and requires that they be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 does not affect the recognition and measurement guidance for debt issuance costs. ASU 2015-03 is effective for periods beginning after December 15, 2015, and retrospective application is required. We adopted ASU 2015-03 on January 1, 2016 and have disclosed the reclassification of our debt issuance costs in the Reclassifications section above. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805). ASU 2015-16 eliminates the requirement that an acquirer in a business combination account for measurement period adjustments retrospectively. Instead, an acquirer will recognize a measurement period adjustment during the period in which it determines the amount of the adjustment, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had been completed at the acquisition date. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years, early adoption is permitted and prospective application is required for adjustments that are identified after the effective date of this update. We elected to early adopt ASU 2015-16 and implemented the standard prospectively beginning July 1, 2015. The adoption and implementation of the standard did not have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 outlines a new model for accounting by lessees, whereby their rights and obligations under substantially all leases, existing and new, would be capitalized and recorded on the balance sheet. For lessors, however, the accounting remains largely unchanged from the current model, with the distinction between operating and financing leases retained, but updated to align with certain changes to the lessee model and the new revenue recognition standard. The new standard also replaces existing sale-leaseback guidance with a new model applicable to both lessees and lessors. Additionally, the new standard requires extensive quantitative and qualitative disclosures. ASU 2016-02 is effective for U.S. GAAP public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years; for all other entities, the final lease standard will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application will be permitted for all entities. The new standard must be adopted using a modified retrospective transition of the new guidance and provides for certain practical expedients. Transition will require application of the new model at the beginning of the earliest comparative period presented. We are evaluating the impact of the new standard and have not yet determined if it will have a material impact on our business or our consolidated financial statements. In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815): Effect of derivative contract novations on existing hedge accounting relationships. ASU 2016-05 clarifies that a change in counterparty to a derivative contract, in and of itself, does not require the dedesignation of a hedging relationship. ASU 2016-05 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. Early adoption is permitted and entities have the option of adopting this guidance on a prospective basis to new derivative contracts or on a modified retrospective basis. We elected to early adopt ASU 2016-05 on January 1, 2016 on a prospective basis, and there was no impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, Investments - Equity Method and Joint Ventures (Topic 323). ASU 2016-07 simplifies the transition to the equity method of accounting. ASU 2016-07 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. Instead the equity method of accounting will be applied prospectively from the date significant influence is obtained. The new standard should be applied prospectively for investments that qualify for the equity method of accounting in interim and annual periods beginning after December 15, 2016. Early adoption is permitted, and we elected to early adopt this standard as of January 1, 2016. The adoption of this standard had no impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 amends Accounting Standards Codification Topic 718, Compensation-Stock Based Compensation to simplify various aspects of how share-based payments are accounted for and presented in the financial statements including (i) reflecting income tax effects of share-based payments through the income statement, (ii) allowing statutory tax withholding requirements at the employees’ maximum individual tax rate without requiring awards to be classified as liabilities and (iii) permitting an entity to make an accounting policy election for the impact of forfeitures on the recognition of expense. ASU 2016-09 is effective for public business entities for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period, with early adoption permitted. We are in the process of evaluating the impact of adopting ASU 2016-09 on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 introduces a new model for estimating credit losses for certain types of financial instruments, including loans receivable, held-to-maturity debt securities, and net investments in direct financing leases, amongst other financial instruments. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for losses. ASU 2016-13 will be effective for public business entities in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early application of the guidance permitted. We are in the process of evaluating the impact of adopting ASU 2016-13 on our consolidated financial statements. |
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Intangible Assets and Liabilities and Goodwill | We have recorded net lease and internal-use software development intangibles that are being amortized over periods ranging from one year to 40 years. In addition, we have several ground lease intangibles that are being amortized over periods of up to 99 years. In-place lease and tenant relationship intangibles are included in In-place lease and tenant relationship intangible assets, net in the consolidated financial statements. Above-market rent intangibles are included in Above-market rent intangible assets, net in the consolidated financial statements. Below-market ground lease (as lessee), trade name, management contracts, and internal-use software development intangibles are included in Other assets, net in the consolidated financial statements. Below-market rent, above-market ground lease (as lessee), and below-market purchase option intangibles are included in Below-market rent and other intangible liabilities, net in the consolidated financial statements. Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Lease revenues; amortization of internal-use software development and in-place lease and tenant relationship intangibles is included in Depreciation and amortization; and amortization of above-market ground lease and below-market ground lease intangibles is included in Property expenses, excluding reimbursable tenant costs. |
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Fair Value Measurement | 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, interest rate swaps, foreign currency forward contracts, and foreign currency collars; and Level 3, for securities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring us to develop our own assumptions. |
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Redeemable Noncontrolling Interest | Redeemable Noncontrolling Interest — We account for the noncontrolling interest in W. P. Carey International, LLC, or WPCI, held by a third party as a redeemable noncontrolling interest (Note 13). We determined the valuation of redeemable noncontrolling interest using widely accepted valuation techniques, including comparable transaction analysis, comparable public company analysis, and discounted cash flow analysis. We account for the noncontrolling interest in WPCI held by a third party as a redeemable noncontrolling interest, because, pursuant to a put option held by the third party, we had an obligation to redeem the interest at fair value, subject to certain conditions. This obligation was required to be settled in shares of our common stock. |
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Impairment | For investments in real estate held for use for 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 property’s asset group to the future undiscounted net cash flows that we expect the property’s asset group will generate, including any estimated proceeds from the eventual sale of the property’s asset group. If this amount is less than the carrying value, the property’s asset group is considered to be not recoverable. We then measure the impairment charge as the excess of the carrying value of the property’s asset group over the estimated fair value of the property’s asset group, which is primarily determined using market information such as recent comparable sales, broker quotes, or third-party appraisals. 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. |
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Earnings Per Share | Under current authoritative guidance for determining earnings per share, all nonvested 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 nonvested RSUs and RSAs contain rights to receive non-forfeitable distribution equivalents or distributions, respectively, 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 nonvested RSUs and RSAs from the numerator and such nonvested shares in the denominator. |
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Discontinued Operations | From time to time, we may decide to sell a property. We have an active capital recycling program, with a goal of extending the average lease term through reinvestment, improving portfolio credit quality through dispositions and acquisitions of assets, increasing the asset criticality factor in our portfolio, and/or executing strategic dispositions of assets. We may make a decision to dispose of a property when it is vacant as a result of tenants vacating space, tenants electing not to renew their leases, tenant insolvency, or lease rejection in the bankruptcy process. In such cases, we assess whether we can obtain the highest value from the property by selling it, as opposed to re-leasing it. We may also sell a property when we receive an unsolicited offer or negotiate a price for an investment that is consistent with our strategy for that investment. When it is appropriate to do so, we classify the property as an asset held for sale on our consolidated balance sheet. All property dispositions are recorded within our Owned Real Estate segment. |
Basis of Presentation (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities | The following table presents a summary of selected financial data of the consolidated VIEs included in the consolidated balance sheets (in thousands):
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Agreements and Transactions with Related Parties (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Related Party Transactions | The following tables present a summary of revenue earned and/or cash received from the Managed Programs for the periods indicated, included in the consolidated financial statements. Asset management revenue excludes amounts received from third parties (in thousands):
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Schedule of Balances Due to and From Related Party | The following table presents a summary of amounts included in Due from affiliates in the consolidated financial statements (in thousands):
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Schedule of Related Party Fees | Asset Management Revenue Under the advisory agreements with the Managed Programs, we earn asset management revenue for managing their investment portfolios. The following table presents a summary of our asset management fee arrangements with the Managed Programs:
Structuring Revenue Under the terms of the advisory agreements with the Managed REITs, we earn revenue for structuring and negotiating investments and related financing. We do not earn any structuring revenue from the Managed BDCs. The following table presents a summary of our structuring fee arrangements with the Managed REITs:
Reimbursable Costs from Affiliates The Managed Programs reimburse us for certain costs that we incur on their behalf, which consist primarily of broker-dealer commissions, marketing costs, an annual distribution and shareholder servicing fee, or Shareholder Servicing Fee, and certain personnel and overhead costs, as applicable. The following tables present summaries of such fee arrangements: Broker-Dealer Selling Commissions
Dealer Manager Fees
Annual Distribution and Shareholder Servicing Fee
Personnel and Overhead Costs
Organization and Offering Costs
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Net Investments in Properties (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Investments in Real Estate Properties | Real estate, which consists of land and buildings leased to others, at cost, and which are subject to operating leases, and real estate under construction, is summarized as follows (in thousands):
Below is a summary of our Operating real estate (in thousands):
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Disclosure of Long Lived Assets Held-for-sale | Below is a summary of our properties held for sale (in thousands):
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Finance Receivables (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance Receivables Credit Quality Indicators | A summary of our finance receivables by internal credit quality rating, excluding our deferred acquisition fees receivable, is as follows (dollars in thousands):
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Equity Investment in Real Estate and the Managed Programs (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments | The following table presents Equity in earnings of equity method investments in the Managed Programs and real estate, which represents our proportionate share of the income or losses of these investments, as well as certain adjustments related to amortization of basis differences related to purchase accounting adjustments (in thousands):
The following table sets forth our ownership interests in our equity investments in real estate, excluding the Managed Programs, and their respective carrying values (dollars in thousands):
__________
The following table sets forth certain information about our investments in the Managed Programs (dollars in thousands):
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Goodwill and Other Intangibles (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill And Intangible Assets Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | In connection with our investment activity during the six months ended June 30, 2016, we recorded net lease intangibles comprised as follows (life in years, dollars in thousands):
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Schedule Of Goodwill | The following table presents a reconciliation of our goodwill (in thousands):
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Schedule Of Intangible Assets And Goodwill | Intangible assets, intangible liabilities, and goodwill are summarized as follows (in thousands):
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Other Financial Instruments In Carrying Values And Fair Values | Our other financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands):
__________
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Schedule Of Fair Value Impairment Charges Using Unobservable Inputs Nonrecurring Basis | The following table presents information about our assets for which we recorded an impairment charge that were measured at fair value on a non-recurring basis (in thousands):
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Risk Management and Use of Derivative Financial Instruments (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table sets forth certain information regarding our derivative instruments (in thousands):
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Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | The following tables present the impact of our derivative instruments in the consolidated financial statements (in thousands):
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance |
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Schedule of Derivative Instruments | The interest rate swaps and cap that our consolidated subsidiaries had outstanding at June 30, 2016 are summarized as follows (currency in thousands):
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The following table presents the foreign currency derivative contracts we had outstanding at June 30, 2016, which were designated as cash flow hedges (currency in thousands):
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Line of Credit Facilities | The following table presents a summary of our Senior Unsecured Credit Facility (dollars in millions):
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Schedule of Debt | Scheduled debt principal payments during the remainder of 2016, each of the next four calendar years following December 31, 2016, and thereafter through 2027 are as follows (in thousands):
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The following table presents a summary of our Senior Unsecured Notes (currency in millions):
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Stock-Based Compensation and Equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share Based Compensation Stock Option Activity | Nonvested restricted stock awards, or RSAs, RSUs, and PSUs at June 30, 2016 and changes during the six months ended June 30, 2016 were as follows:
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Earnings Per Share Reconciliation | The following table summarizes basic and diluted earnings (in thousands, except share amounts):
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Redeemable Noncontrolling Interest | The following table presents a reconciliation of redeemable noncontrolling interest (in thousands):
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Reclassification Out of Accumulated Other Comprehensive Income | The following tables present a reconciliation of changes in Accumulated other comprehensive loss by component for the periods presented (in thousands):
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Property Dispositions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | The results of operations for properties that have been sold or classified as held for sale are included in the consolidated financial statements and are summarized as follows (in thousands):
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Segment Reporting (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Operating Profit (Loss) from Segments to Consolidated | The following tables present a summary of comparative results and assets for these business segments (in thousands): Owned Real Estate
Investment Management
Total Company
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Reconciliation Of Assets From Segment To Consolidated |
__________
|
Basis of Presentation (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Assets | ||
Real estate, at cost | $ 5,910,415 | $ 5,826,544 |
Net investments in direct financing leases | 741,185 | 756,353 |
In-place lease and tenant relationship intangible assets, net | 843,154 | 902,848 |
Above-market rent intangible assets, net | 422,748 | 475,072 |
Total assets | 8,682,571 | 8,742,089 |
Liabilities | ||
Non-recourse debt, net | 2,110,441 | 2,269,421 |
Total liabilities | 5,218,606 | 5,165,717 |
Variable Interest Entity | ||
Assets | ||
Real estate, at cost | 1,024,341 | 890,454 |
Net investments in direct financing leases | 61,664 | 61,454 |
In-place lease and tenant relationship intangible assets, net | 243,101 | 214,924 |
Above-market rent intangible assets, net | 77,451 | 80,901 |
Total assets | 1,456,920 | 1,297,276 |
Liabilities | ||
Non-recourse debt, net | 438,669 | 439,285 |
Total liabilities | $ 590,995 | $ 590,596 |
Agreements and Transactions with Related Parties (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Revenue from related parties: | ||||
Asset management revenue | $ 14,990 | $ 12,073 | $ 29,580 | $ 23,185 |
Reimbursable costs from affiliates | 12,094 | 7,639 | 31,832 | 17,246 |
Distributions of Available Cash | 10,161 | 9,256 | 21,142 | 18,062 |
Structuring revenue | 5,968 | 37,808 | 18,689 | 59,528 |
Dealer manager fees | 1,372 | 307 | 3,544 | 1,581 |
Interest income on deferred acquisition fees and loans to affiliates | 168 | 442 | 362 | 596 |
Other advisory revenue | 0 | 0 | 0 | 203 |
Total deferred revenue earned | $ 44,753 | $ 67,525 | $ 105,149 | $ 120,401 |
Agreements and Transactions with Related Parties (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Related Party Transaction | ||||
Revenue from related parties | $ 44,753 | $ 67,525 | $ 105,149 | $ 120,401 |
CPA: 17 - Global | ||||
Related Party Transaction | ||||
Revenue from related parties | 17,012 | 20,484 | 35,204 | 42,161 |
CPA:18 - Global | ||||
Related Party Transaction | ||||
Revenue from related parties | 9,051 | 24,725 | 17,592 | 43,666 |
CWI | ||||
Related Party Transaction | ||||
Revenue from related parties | 7,233 | 16,897 | 18,682 | 29,155 |
CWI 2 | ||||
Related Party Transaction | ||||
Revenue from related parties | 8,775 | 5,419 | 29,309 | 5,419 |
CCIF | ||||
Related Party Transaction | ||||
Revenue from related parties | $ 2,682 | $ 0 | $ 4,362 | $ 0 |
Agreements and Transactions with Related Parties (Details 3) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Due from affiliates | ||
Deferred acquisition fees receivable | $ 25,912 | $ 33,386 |
Accounts receivable | 21,994 | 15,711 |
Reimbursable costs | 3,813 | 5,579 |
Asset management fees receivable | 2,378 | 2,172 |
Organization and offering costs | 1,860 | 461 |
Current acquisition fees receivable | 1,396 | 4,909 |
Due from affiliates | $ 57,353 | $ 62,218 |
Agreements and Transactions with Related Parties (Details 6) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Managed Programs | ||
Reimbursed Costs | ||
Maximum personnel and overhead reimbursement, percentage | 2.20% | 2.40% |
CWI 2 | ||
Reimbursed Costs | ||
Aggregate gross proceeds threshold | 1.50% | |
Maximum percentage of follow-on offering proceeds | 4.00% | |
CCIF | ||
Reimbursed Costs | ||
Maximum percent of offering proceeds | 1.50% |
Net Investments in Properties (Details 1) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Real Estate Investment Property At Cost | ||
Less: Accumulated depreciation | $ (420,420) | $ (381,529) |
Net investments in properties | 4,892,894 | 5,011,145 |
Real estate | ||
Real Estate Investment Property At Cost | ||
Land | 1,125,899 | 1,160,567 |
Buildings | 4,076,944 | 4,147,644 |
Real estate under construction | 28,963 | 1,714 |
Less: Accumulated depreciation | (410,416) | (372,735) |
Net investments in properties | 4,821,390 | 4,937,190 |
Operating real estate | ||
Real Estate Investment Property At Cost | ||
Land | 6,041 | 6,578 |
Buildings | 75,467 | 76,171 |
Less: Accumulated depreciation | (10,004) | (8,794) |
Net investments in properties | $ 71,504 | $ 73,955 |
Net investments in Properties (Details 2) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Long Lived Assets Held-for-sale | ||
Assets held for sale, net | $ 276,336 | $ 59,046 |
Real Estate | ||
Long Lived Assets Held-for-sale | ||
Assets held for sale, net | 238,587 | 59,046 |
Intangible assets and liabilities, net | ||
Long Lived Assets Held-for-sale | ||
Assets held for sale, net | 19,409 | 0 |
Goodwill | ||
Long Lived Assets Held-for-sale | ||
Assets held for sale, net | $ 18,340 | $ 0 |
Finance Receivables (Details 1) $ in Thousands |
Jun. 30, 2016
USD ($)
tenant
|
Dec. 31, 2015
USD ($)
tenant
|
---|---|---|
Credit Quality Of Finance Receivables | ||
Net investments in direct financing leases | $ 751,608 | $ 767,036 |
Internally Assigned Grade1-3 | ||
Credit Quality Of Finance Receivables | ||
Number of tenants | tenant | 28 | 28 |
Net investments in direct financing leases | $ 650,521 | $ 657,034 |
Internally Assigned Grade 4 | ||
Credit Quality Of Finance Receivables | ||
Number of tenants | tenant | 5 | 6 |
Net investments in direct financing leases | $ 99,293 | $ 110,002 |
Internally Assigned Grade 5 | ||
Credit Quality Of Finance Receivables | ||
Number of tenants | tenant | 1 | 0 |
Net investments in direct financing leases | $ 1,794 | $ 0 |
Equity Investment in Real Estate and the Managed Programs (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Schedule Of Equity Method Investments | ||||
Distributions of Available Cash (Note 3) | $ 31,440 | $ 25,995 | ||
Income from equity method investments | $ 16,429 | $ 14,272 | 31,440 | 25,995 |
Managed Programs | ||||
Schedule Of Equity Method Investments | ||||
Distributions of Available Cash (Note 3) | 10,161 | 9,256 | 21,142 | 18,062 |
Income from equity method investments | 3,322 | 686 | 4,434 | 994 |
Amortization of basis differences on equity investments | (252) | (190) | (491) | (375) |
Total equity earnings from the Managed Programs | 13,231 | 9,752 | 25,085 | 18,681 |
Jointly Owned Investments | ||||
Schedule Of Equity Method Investments | ||||
Income from equity method investments | 4,157 | 5,449 | 8,259 | 9,158 |
Amortization of basis differences on equity investments | $ (959) | $ (929) | $ (1,904) | $ (1,844) |
Goodwill and Other Intangibles (Narratives) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Finite-Lived Intangible Assets, Net | ||||
Amortization of intangible assets | $ 41.2 | $ 42.3 | $ 87.5 | $ 86.3 |
Maximum | ||||
Finite-Lived Intangible Assets, Net | ||||
Finite lived intangible assets useful life | 40 years | |||
Maximum | Below-market ground lease | ||||
Finite-Lived Intangible Assets, Net | ||||
Finite lived intangible assets useful life | 99 years | |||
Minimum | ||||
Finite-Lived Intangible Assets, Net | ||||
Finite lived intangible assets useful life | 1 year |
Goodwill and Other Intangibles (Details 1) - In-place lease $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Acquired Finite-Lived Intangible Assets | |
Finite lived intangible assets useful life | 22 years 2 months 13 days |
Finite-lived Intangible Assets Acquired | $ 68,996 |
Goodwill and Other Intangibles (Details 2) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Goodwill | |
Balance - beginning of period | $ 681,809 |
Allocation of goodwill to the cost basis of properties sold or classified as held for sale | (33,244) |
Impairment charges (Note 8) | (10,191) |
Foreign currency translation adjustments | 2,214 |
Balance - end of period | 640,588 |
Owned Real Estate | |
Goodwill | |
Balance - beginning of period | 618,202 |
Allocation of goodwill to the cost basis of properties sold or classified as held for sale | (33,244) |
Impairment charges (Note 8) | (10,191) |
Foreign currency translation adjustments | 2,214 |
Balance - end of period | 576,981 |
Investment Management | |
Goodwill | |
Balance - beginning of period | 63,607 |
Allocation of goodwill to the cost basis of properties sold or classified as held for sale | 0 |
Impairment charges (Note 8) | 0 |
Foreign currency translation adjustments | 0 |
Balance - end of period | $ 63,607 |
Fair Value Measurements (Narratives) (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016
USD ($)
property
|
Jun. 30, 2015
USD ($)
property
|
Jun. 30, 2016
USD ($)
property
|
Jun. 30, 2015
USD ($)
|
|
Fair value inputs | ||||
Goodwill, impairment loss | $ 10,191 | |||
Fair Value, Measurements, Nonrecurring | Level 3 | ||||
Fair value inputs | ||||
Impairment charges on properties | $ 35,429 | $ 591 | 35,429 | $ 3,274 |
Goodwill, impairment loss | $ 10,200 | $ 10,200 | ||
Number of real estate properties | property | 14 | 14 | ||
Fair Value, Measurements, Nonrecurring | Level 3 | Real Estate | ||||
Fair value inputs | ||||
Impairment charges on properties | $ 35,429 | 591 | $ 35,429 | $ 3,274 |
Fair Value, Measurements, Nonrecurring | Level 3 | Real Estate | Properties sold | ||||
Fair value inputs | ||||
Impairment charges on properties | $ 2,700 | |||
Number of properties sold | property | 2 |
Fair Value Measurements (Details 1) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Level 3 | Carrying Value | ||
Liabilities: | ||
Non-recourse debt | $ 2,110,441 | $ 2,269,421 |
Level 3 | Fair Value | ||
Liabilities: | ||
Non-recourse debt | 2,133,032 | 2,293,542 |
Level 3 | Notes Receivable | Carrying Value | ||
Assets: | ||
Receivable, fair value | 10,424 | 10,689 |
Level 3 | Notes Receivable | Fair Value | ||
Assets: | ||
Receivable, fair value | 10,135 | 10,610 |
Level 2 | Senior Unsecured Notes | Carrying Value | ||
Liabilities: | ||
Non-recourse debt | 1,487,864 | 1,476,084 |
Level 2 | Senior Unsecured Notes | Fair Value | ||
Liabilities: | ||
Non-recourse debt | $ 1,508,685 | $ 1,459,544 |
Fair Value Measurements (Details 2) - Fair Value, Measurements, Nonrecurring - Level 3 - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Impairment Disclosure | ||||
Impairment charges on properties | $ 35,429 | $ 591 | $ 35,429 | $ 3,274 |
Real Estate | ||||
Impairment Disclosure | ||||
Total fair value measurements | 120,290 | 782 | 120,290 | 6,076 |
Impairment charges on properties | $ 35,429 | $ 591 | $ 35,429 | $ 3,274 |
Debt (Details 3) $ in Thousands |
Jun. 30, 2016
USD ($)
|
---|---|
Long-term Debt, by Maturity | |
2016 (remainder) | $ 262,527 |
2017 | 922,333 |
2018 | 1,062,407 |
2019 | 99,882 |
2020 | 222,553 |
Thereafter through 2027 | 2,088,518 |
Long term debt before unamortized discount | 4,658,220 |
Deferred financing costs | (11,537) |
Unamortized discount, net | (4,755) |
Total scheduled debt principal payments | $ 4,641,928 |
Restructuring and Other Compensation (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Restructuring Cost and Reserve | |
Accrued severance liability | $ 6.5 |
Chief Executive Officer | |
Restructuring Cost and Reserve | |
Severance costs | 5.1 |
Employee Severance | |
Restructuring Cost and Reserve | |
Severance costs | 8.2 |
Other restructuring costs | 0.5 |
Employee Severance | Stock compensation plan | |
Restructuring Cost and Reserve | |
Severance costs | 3.2 |
Employee Severance | Chief Financial Officer | RSU and PSU | |
Restructuring Cost and Reserve | |
Severance costs | $ 2.4 |
Stock-Based Compensation and Equity (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Earnings Per Share Reconciliation | ||||
Net Income Attributable to W. P. Carey | $ 51,661 | $ 63,348 | $ 109,100 | $ 99,464 |
Allocation of distribution equivalents paid on nonvested RSUs and RSAs in excess of income | (174) | (218) | (368) | (342) |
Net income – basic and diluted | $ 51,487 | $ 63,130 | $ 108,732 | $ 99,122 |
Weighted-average shares outstanding – basic | 106,310,362 | 105,764,032 | 106,124,881 | 105,532,976 |
Effect of dilutive securities | 219,674 | 517,951 | 379,345 | 822,426 |
Weighted-average shares outstanding – diluted | 106,530,036 | 106,281,983 | 106,504,226 | 106,355,402 |
Anti-dilutive shares, (shares) | 0 | 0 | 0 | 0 |
Stock-Based Compensation and Equity (Details 3) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Redeemable Noncontrolling Interest, Equity, Carrying Amount | ||
Balance - beginning of period | $ 14,944 | |
Distributions | (9,328) | $ (6,652) |
Balance - end of period | 965 | |
Redeemable Noncontrolling Interest | ||
Redeemable Noncontrolling Interest, Equity, Carrying Amount | ||
Balance - beginning of period | 14,944 | 6,071 |
Distributions | (13,418) | 0 |
Redemption value adjustment | (561) | 7,303 |
Balance - end of period | $ 965 | $ 13,374 |
Income Taxes (Narratives) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Taxes | ||||
Current income tax expense | $ 6.4 | $ 16.4 | $ 9.9 | $ 20.1 |
Deferred income tax benefit | 14.6 | $ 1.4 | 17.6 | $ 3.1 |
Income tax expense | ||||
Income Taxes | ||||
Prior period reclassification adjustment | $ (3.0) | $ (3.0) |
Property Dispositions (Details 1) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Disposal Group, Including Discontinued Operation, Income Statement Disclosures | ||||
Revenues | $ 217,266,000 | $ 238,079,000 | $ 487,506,000 | $ 458,467,000 |
Expenses | (160,697,000) | (130,382,000) | (340,697,000) | (270,861,000) |
Gain on sale of real estate, net of tax | 18,282,000 | 16,000 | 18,944,000 | 1,201,000 |
Impairment charges | (35,429,000) | (591,000) | (35,429,000) | (3,274,000) |
Benefit from (provision for) income taxes | 8,217,000 | (15,010,000) | 7,692,000 | (16,990,000) |
Net Income | 53,171,000 | 66,923,000 | 114,035,000 | 105,505,000 |
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | ||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures | ||||
Revenues | 12,116,000 | 19,753,000 | 73,896,000 | 39,060,000 |
Expenses | (6,586,000) | (10,783,000) | (37,008,000) | (23,799,000) |
Gain on sale of real estate, net of tax | 18,282,000 | 16,000 | 18,944,000 | 1,201,000 |
Impairment charges | (35,429,000) | 0 | (35,429,000) | (2,683,000) |
Loss on extinguishment of debt | 0 | 0 | (1,940,000) | 0 |
Benefit from (provision for) income taxes | 11,689,000 | (1,280,000) | 10,716,000 | (2,070,000) |
Net Income | 72,000 | 7,706,000 | 29,179,000 | 11,709,000 |
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | Noncontrolling interest | ||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures | ||||
Net Income | $ 0 | $ 2,000,000 | $ 1,500,000 | $ 2,000,000 |
Segment Reporting (Narratives) (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2015
USD ($)
|
Jun. 30, 2016
USD ($)
segment
|
Jun. 30, 2015
USD ($)
|
|
Segment Reporting Information | ||||
Number of business segments | segment | 2 | |||
Segment Reporting Information Profit Loss | ||||
Reimbursable tenant and affiliate costs | $ 18,485 | $ 13,769 | $ 44,532 | $ 29,315 |
Stock-based compensation expense | 4,001 | 5,089 | 10,608 | 12,098 |
Restructuring and other compensation | 452 | 0 | 11,925 | 0 |
Operating Segments | Owned Real Estate | ||||
Segment Reporting Information Profit Loss | ||||
Reimbursable tenant and affiliate costs | 6,391 | 6,130 | 12,700 | 12,069 |
Stock-based compensation expense | 907 | 2,021 | 2,744 | 4,476 |
Restructuring and other compensation | (13) | 0 | 4,413 | 0 |
Operating Segments | Investment Management | ||||
Segment Reporting Information Profit Loss | ||||
Stock-based compensation expense | 3,094 | 3,068 | 7,864 | 7,622 |
Restructuring and other compensation | $ 465 | $ 0 | $ 7,512 | $ 0 |
Segment Reporting (Details 4) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Assets | ||
Long-lived assets | $ 6,197,190 | $ 6,102,017 |
Total assets | 8,682,571 | 8,742,089 |
Operating Segments | Owned Real Estate | ||
Assets | ||
Long-lived assets | 6,174,730 | 6,079,803 |
Total assets | 8,491,492 | 8,537,544 |
Operating Segments | Investment Management | ||
Assets | ||
Long-lived assets | 22,460 | 22,214 |
Total assets | $ 191,079 | $ 204,545 |
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