Segment Reporting

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

We evaluate our results from operations through our two major business segments: Real Estate and Investment Management. The following tables present a summary of comparative results and assets for these business segments (in thousands):

Real Estate

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenues
Lease revenues	$	280,303		$	269,802		$	562,413		$	532,741
Lease termination income and other	1,917			6,304			8,426			9,574
Operating property revenues (a)	1,427			15,436			7,394			31,432
	283,647			291,542			578,233			573,747
Operating Expenses
Depreciation and amortization (b)	107,477			112,666			222,684			224,079
General and administrative (b)	17,472			15,001			32,394			30,189
Reimbursable tenant costs	13,796			13,917			26,971			27,088
Property expenses, excluding reimbursable tenant costs	11,651			9,915			21,726			19,827
Stock-based compensation expense (b)	2,918			3,482			4,888			6,282
Operating property expenses	1,388			10,874			6,611			21,468
Merger and other expenses	935			696			803			842
Impairment charges	—			—			19,420			—
	155,637			166,551			335,497			329,775
Other Income and Expenses
Interest expense	(52,182		)	(59,719		)	(104,722		)	(121,032		)
Other gains and (losses)	9,942			(1,362		)	4,166			(392		)
Equity in earnings of equity method investments in real estate	211			230			1,776			152
(Loss) gain on sale of real estate, net	—			(362		)	11,751			571
	(42,029		)	(61,213		)	(87,029		)	(120,701		)
Income before income taxes	85,981			63,778			155,707			123,271
(Provision for) benefit from income taxes	(4,117		)	(3,019		)	27,683			(9,178		)
Net Income from Real Estate	81,864			60,759			183,390			114,093
Net (income) loss attributable to noncontrolling interests	(39		)	9			(651		)	83
Net Income from Real Estate Attributable to W. P. Carey	$	81,825		$	60,768		$	182,739		$	114,176

Investment Management

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenues
Asset management revenue	$	4,472		$	9,790		$	14,361		$	19,522
Reimbursable costs from affiliates	2,411			3,821			6,441			7,689
Structuring and other advisory revenue	—			58			494			2,576
	6,883			13,669			21,296			29,787
Operating Expenses
Reimbursable costs from affiliates	2,411			3,821			6,441			7,689
Subadvisor fees	192			1,650			1,469			3,852
Merger and other expenses	139			—			458			—
General and administrative (b)	—			4,728			5,823			10,825
Stock-based compensation expense (b)	—			1,454			691			2,819
Depreciation and amortization (b)	—			966			987			1,932
	2,742			12,619			15,869			27,117
Other Income and Expenses
Equity in earnings (losses) of equity method investments in the Managed Programs	33,772			3,721			(13,583		)	9,290
Other gains and (losses)	(1,095		)	691			258			676
	32,677			4,412			(13,325		)	9,966
Income (loss) before income taxes	36,818			5,462			(7,898		)	12,636
(Provision for) benefit from income taxes	(3,478		)	(100		)	6,414			8,188
Net Income (Loss) from Investment Management	33,340			5,362			(1,484		)	20,824
Net income attributable to noncontrolling interests	(9,865		)	(92		)	(9,865		)	(468		)
Net Income (Loss) from Investment Management Attributable to W. P. Carey	$	23,475		$	5,270		$	(11,349	)	$	20,356

Total Company

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenues	$	290,530		$	305,211		$	599,529		$	603,534
Operating expenses	158,379			179,170			351,366			356,892
Other income and (expenses)	(9,352		)	(56,801		)	(100,354		)	(110,735		)
(Provision for) benefit from income taxes	(7,595		)	(3,119		)	34,097			(990		)
Net income attributable to noncontrolling interests	(9,904		)	(83		)	(10,516		)	(385		)
Net income attributable to W. P. Carey	$	105,300		$	66,038		$	171,390		$	134,532

	Total Assets at
	June 30, 2020		December 31, 2019
Real Estate	$	13,837,831	$	13,811,403
Investment Management (c)	118,182		249,515
Total Company	$	13,956,013	$	14,060,918

__________

(a) Operating property revenues from our hotels include (i) less than $0.1 million and $4.1 million for the three months ended June 30, 2020 and 2019, respectively, and $2.8 million and $7.5 million for the six months ended June 30, 2020 and 2019, respectively, generated from a hotel in Bloomington, Minnesota (revenues decreased due to the adverse effect of COVID-19 on the hotel’s operations), and (ii) $3.7 million for the three months ended June 30, 2019, and $1.9 million and $6.6 million for the six months ended June 30, 2020 and 2019, respectively, generated from a hotel in Miami, Florida, which was sold in January 2020 (Note 14).

(b) Beginning with the second quarter of 2020, general and administrative expenses attributed to our Investment Management segment are comprised of the incremental costs of providing services to the Managed Programs, which are fully reimbursed by those funds (resulting in no net expense for us). All other general and administrative expenses are attributed to our Real Estate segment. Previously, general and administrative expenses were allocated based on time incurred by our personnel for the Real Estate and Investment Management segments. In addition, beginning with the second quarter of 2020, stock-based compensation expense and depreciation and amortization expense are fully recognized within our Real Estate segment. In light of the termination of the advisory agreements with CWI 1 and CWI 2 in connection with the WLT management internalization (Note 3), we now view essentially all assets, liabilities, and operational expenses as part of our Real Estate segment, other than incremental activities that are expected to wind down as we manage CPA:18 – Global and CESH through the end of their respective life cycles (Note 2). These changes within the segments had no impact on our consolidated financial statements.

(c)

Following the WLT management internalization and redemption of the special general partner interests in CWI 1 and CWI 2 on April 13, 2020, we no longer own equity investments in those funds, which were previously included within our Investment Management segment (Note 2, Note 3, Note 7). Our investment in shares of common stock of WLT is included within our Real Estate segment (as an equity method investment in real estate) (Note 7). In addition, we allocated $34.3 million of goodwill within our Investment Management segment during the six months ended June 30, 2020, since the WLT management internalization resulted in a sale of a portion of our Investment Management business (Note 3, Note 6).