UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 7, 2012
W. P. CAREY & CO. LLC
(Exact Name of Registrant as Specified in Charter)
Delaware | 001-13779 | 13-3912578 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
50 Rockefeller Plaza, New York, NY | 10020 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrants telephone number, including area code: (212) 492-1100
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
x Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 Results of Operations and Financial Condition.
On August 7, 2012, the registrant issued an earnings release announcing its financial results for the quarter ended June 30, 2012. A copy of the earnings release is attached as Exhibit 99.1.
The information furnished pursuant to this Item 2.02 Results of Operations and Financial Condition, including Exhibit 99.1, shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act) or otherwise subject to the liability of that Section, and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended (the Act) or the Exchange Act.
ITEM 9.01 Financial Statements and Exhibits.
Exhibit 99.1 Earnings release of the registrant for the quarter ended June 30, 2012.
Cautionary Statement Concerning Forward-Looking Statements:
On February 21, 2012, W. P. Carey & Co. LLC (W. P. Carey or the Company) filed a Form 8-K announcing that its Board of Directors had approved a plan to reorganize the Company in order to qualify as a real estate investment trust (REIT) for U.S. federal income tax purposes. As part of the plan, on February 17, 2012, W. P. Carey entered into (i) an Agreement and Plan of Merger with W. P. Carey REIT, Inc., subsequently renamed W.P. Carey, Inc., a newly formed Maryland corporation and wholly-owned subsidiary of the Company (W. P. Carey Inc.) providing for, among other things, the merger of the Company with and into W.P. Carey Inc. (the REIT Conversion), with W.P. Carey Inc. succeeding to and continuing to operate the existing business of the Company, and (ii) an Agreement and Plan of Merger with Corporate Property Associates 15 Incorporated (CPA®:15), a Maryland corporation, pursuant to which CPA®:15, through a series of steps, will become an indirect subsidiary of W.P. Carey Inc. (the Merger, and together with the REIT Conversion, the Transactions). CPA®:15 is a publicly-owned, non-listed REIT, which was sponsored by W.P. Carey and for which W.P. Carey and its affiliates serve as advisor. The consummation of the Transactions is subject to certain conditions, including among other things, effectiveness of a registration statement on Form S-4 (the Form S-4), as amended from time to time relating to the shares of W.P. Carey Inc. common stock to be issued in the proposed Transactions which can be found on the website of the Securities and Exchange Commission (the SEC) at http://www.sec.gov.htm.
The Form S-4 was declared effective by the SEC on July 30, 2012. On August 6, 2012 the Company and CPA®:15 began mailing the underlying Joint Proxy Statement / Prospectus to the shareholders of W. P. Carey (the W. P. Carey Shareholders) and the stockholders of CPA®:15, which contains important information about W. P. Carey, CPA®:15, W. P. Carey Inc. and the proposed Transactions. W. P. Carey Shareholders are urged to read these documents carefully and in their entirety.
Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Act and the Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, among other things, statements regarding the intent, belief or expectations of W. P. Carey and can be identified by the use of words such as may, will, should, would, assume, outlook, seek, plan, believe, expect, anticipate, intend, estimate, forecast and other comparable terms. These forward-looking statements include, but are not limited to, statements regarding the benefits of the proposed Transactions, integration plans and expected synergies, the expected benefits of the REIT Conversion, anticipated future financial and operating performance and results, including estimates of growth, and the expected timing of completion of the proposed Transactions. These statements are based on the current expectations of the management of W. P Carey. It is important to note that W. P. Careys actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results, performance or achievements of the combined company. Discussions of some of these other important factors and assumptions are contained in W. P. Careys filings with the SEC and are available at the SECs website at http://www.sec.gov, including Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2011 as filed with the SEC on February 29, 2012. These risks, as well as other risks associated with the proposed Transactions, are more fully discussed in the Form S-4 and in the Joint Proxy Statement / Prospectus. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this communication may not occur. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication. Except as required under the federal securities laws and the rules and regulations of the SEC, W. P. Carey does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this communication or to reflect the occurrence of unanticipated events.
Additional Information and Where to find it:
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. W. P. Carey intends to mail its Joint Proxy Statement /
Prospectus and other relevant documents to its security holders in connection with the proposed Transactions. W. P. CAREY URGES INVESTORS TO READ THE JOINT PROXY STATEMENT / PROSPECTUS (AND ANY OTHER RELEVANT DOCUMENTS), BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT W. P. CAREY, CPA®:15, W. P. CAREY INC. AND THE PROPOSED TRANSACTIONS. INVESTORS ARE URGED TO READ THESE DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY. Investors will be able to obtain these materials and other documents filed with the SEC free of charge at the SECs website (http://www.sec.gov). In addition, these materials are also available free of charge by accessing W. P. Careys website (http://www.wpcarey.com) or by accessing CPA®:15s website (http:www.cpa15.com). Investors may also read and copy any reports, statements and other information filed by W. P. Carey Inc., W. P. Carey or CPA®:15, with the SEC, at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SECs website for further information on its public reference room.
Participants in the Proxy Solicitation:
Information regarding W. P. Careys directors and executive officers is available in its proxy statement filed with the SEC by W. P. Carey on April 30, 2012 in connection with its 2012 annual meeting of shareholders, and information regarding CPA®:15s directors and executive officers is available in its 2011 Annual Report on Form 10-K filed with the SEC by CPA®:15 on March 5, 2012. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests is included in the Joint Proxy Statement / Prospectus.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
W. P. Carey & Co. LLC | ||||||||
Date: August 7, 2012 |
By: | /s/ Mark J. DeCesaris |
||||||
Mark J. DeCesaris | ||||||||
Chief Financial Officer |
Exhibit 99.1
Filed by W. P. Carey & Co. LLC
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934
Subject Company: W. P. Carey & Co. LLC
(Commission File Number: 001-13779)
FOR IMMEDIATE RELEASE
COMPANY CONTACT: | PRESS CONTACT: | |||
Cheryl Sanclemente | Guy Lawrence | |||
W. P. Carey & Co. LLC | Ross & Lawrence | |||
212-492-8995 | 212-308-3333 | |||
csanclemente@wpcarey.com | gblawrence@rosslawpr.com |
W. P. Carey Announces Second Quarter Financial Results
New York, NY August 7, 2012 Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today reported financial results for the second quarter ended June 30, 2012.
QUARTERLY RESULTS
| Funds from operationsas adjusted (AFFO) for the second quarter of 2012 decreased compared to the second quarter of 2011, to $27.8 million or $0.68 per diluted share from $73.0 million or $1.82 per diluted share, respectively. AFFO for the six months ended June 30, 2012 was $67.9 million or $1.66 per diluted share, compared to $112.2 million or $2.79 per diluted share for the comparable period in 2011. The higher levels in the 2011 periods were due to revenues earned from the merger of two of our managed CPA® REITS in May 2011 as discussed further below. |
| Cash flow from operating activities for the six months ended June 30, 2012 was $11.8 million compared to $48.6 million for the prior year period, while adjusted cash flow from operating activities was $58.3 million for the six months ended June 30, 2012 compared to $55.9 million for the prior year period. |
| Total revenues net of reimbursed expenses for the second quarter of 2012 was $47.5 million compared to $99.7 million for the second quarter of 2011. Total revenues net of reimbursed expenses for the six months ended June 30, 2012 decreased to $98.2 million compared to $157.9 million for the prior year period. Reimbursed expenses are excluded from total revenues because they have no impact on net income. |
| Total adjusted revenue, or revenue on a pro-rata basis, for the six months ended June 30, 2012 increased to $157.1 million compared to $149.0 million for the prior year period. |
| Net Income for the second quarter of 2012 was $31.8 million, compared to $81.4 million for the same period in 2011. For the six months ended June 30, 2012, net income was $44.1 million compared to $104.8 million for the comparable period in 2011. |
| We received approximately $8.3 million in cash distributions from our equity ownership in the CPA® REITs for the quarter ended June 30, 2012. |
| Further information concerning AFFO, adjusted cash flow from operating activities and total adjusted revenuenon-GAAP supplemental performance metricsis presented in the accompanying tables. |
PROPOSED CONVERSION TO REIT AND MERGER WITH CPA®:15
| On February 21, 2012, we announced that our Board of Directors had approved our conversion to a real estate investment trust (REIT) and that our Board of Directors and the Board of Directors of our publicly held, non-traded REIT affiliate Corporate Property Associates 15 Incorporated (CPA®:15) had unanimously approved a definitive merger agreement pursuant to which W. P. Carey and CPA®:15 will merge immediately following the REIT conversion. |
| On July 30, 2012 the Securities and Exchange Commission declared effective the Registration Statement on Form S-4 related to the proposed REIT conversion and merger. The conversion to a REIT is subject to the approval of W. P. Carey shareholders and the merger with CPA®:15 is subject to approval of both the shareholders of W. P. Carey and the stockholders of CPA®:15. The special meetings for each company are expected to take place on September 13, 2012. Additionally, as previously disclosed, on July 23, 2012 the Company entered into a voting agreement with the Estate of William Polk Carey and W. P. Carey & Co., Inc., a wholly-owned corporation of the Estate, pursuant to which they have agreed to vote their shares in favor of the approval of the REIT conversion and the merger with CPA®:15. These transactions are also subject to customary closing conditions. |
| If the proposed merger is approved and the other closing conditions are satisfied, we currently expect that the closing will occur in the third quarter of 2012, although there can be no assurance of such timing. |
W. P. Carey 6/30/2012 Earnings Release 8-K 1
CPA®:17 GLOBAL ACTIVITY
| CPA®:17 Globals follow-on offering was declared effective by the SEC in April 2011, which ended its initial public offering. We have raised more than $2.3 billion on behalf of CPA®:17 Global since beginning fundraising in December 2007. The follow-on offering is for up to an additional $1 billion of CPA®:17 Globals common stock. |
| Investment volume for CPA®:17 Global in the second quarter of 2012 was approximately $70.5 million. |
| In the second quarter of 2012, we acquired five self storage facilities, comprising a total of approximately 385,000 square feet and located in Louisiana, Mississippi and Alabama. The total purchase price was approximately $17 million. |
| In addition, we provided approximately $18 million of build-to-suit financing to Sabre Industries, Inc. for the construction of an approximately 300,000 square foot industrial facility in Sioux City, Iowa. Upon completion, the facility will be leased on a long term, triple-net basis to Sabre Communications Corporation. |
CAREY WATERMARK INVESTORS ACTIVITY
| From the beginning of its initial public offering, Carey Watermark Investors (CWI), our lodging-focused non-traded REIT offering, has raised $84.0 million. |
| In the second quarter of 2012, CWI completed two investments: the Hampton Inn Boston/Braintree and the Hilton Garden Inn New Orleans French Quarter/CBD. |
| In July of 2012, CWI completed an investment in Lake Arrowhead Resort & Spa located in Lake Arrowhead, California. |
ASSET MANAGEMENT ACTIVITY
| As of June 30, 2012, W. P. Carey and our CPA® REITs secured approximately $220 million in debt financings. Approximately $77 million represented refinancing of maturing debt on thirteen properties; interest rates on these refinancings averaged more than 240 basis points below the rates on original financings. Approximately $143 million represented financing of new acquisitions or properties that had initially been acquired on an all equity basis. |
ASSETS UNDER OWNERSHIP AND MANAGEMENT AS OF JUNE 30, 2012
| W. P. Carey is the advisor to the CPA® REITs and CWI, which had aggregate real estate assets of $9.5 billion and total assets of $10.2 billion. |
| The occupancy rate of W. P. Careys 11 million square foot owned portfolio was approximately 94%. In addition, for the 106 million square feet owned by the CPA® REITs, the average occupancy rate was approximately 99%. |
| The W. P. Carey Groups assets under ownership and management total approximately $12.7 billion. |
DISTRIBUTIONS
The Board of Directors raised the quarterly cash distribution to $0.567 per share for the second quarter of 2012. The distributionour 45th consecutive quarterly increasewas paid on July 16, 2012 to shareholders of record as of July 2, 2012.
Commenting on the Companys quarterly results, Trevor Bond, President and Chief Executive Officer, noted, Last years liquidation of CPA®:14 skewed our first half 2011 results such that a comparison with the same period in 2012 is less meaningful. For example, we recognized $52.5 million in termination and subordination disposition revenues in the second quarter of 2011 in connection with that liquidation, which took place via a merger of CPA®:14 and CPA®:16 Global. This impacted AFFO by $1.01 per diluted share for the first half of 2011. Without that transaction, the core business would have generated AFFO of $1.78 per share during the
W. P. Carey 6/30/2012 Earnings Release 8-K 2
first six months of 2011 as compared to $1.66 per share during the same period in 2012. Most of the remaining difference in AFFO is due to lower structuring revenues resulting from lower deal volume for the first half of this year. Deal volume has historically been a more widely variable source of revenues as compared to rental income and asset management fees. As a result of recent acquisitions, structuring revenues have decreased as a percentage of total revenues. Our proposed merger with CPA®:15 will further improve the stability of our revenues by shifting the revenue mix significantly in favor of rental income from owned assets. Dividend growth and coverage remains our paramount goal, and the increase in Adjusted Cash Flow from Operations year to date demonstrates our continued ability to cover the dividend notwithstanding periodic swings in investment volume.
CONFERENCE CALL & WEBCAST
Please call at least 10 minutes prior to call to register.
Time: Tuesday, August 7, 2012 at 11:00 AM (ET)
Call-in Number: 800-860-2442
(International) +1-412-858-4600
Webcast: www.wpcarey.com/earnings
Podcast: www.wpcarey.com/podcast
Available after 2:00 PM (ET)
Replay Number: 877-344-7529
(International) +1-412-317-0088
Replay Passcode: 10016503
Replay Available until August 22, 2012 at 9:00 AM (ET).
W. P. Carey & Co. LLC
W. P. Carey & Co. LLC (NYSE: WPC) is an investment company that provides long term sale leaseback and build to suit financing for companies worldwide and manages a global investment portfolio of approximately $12.7 billion. Publicly traded on the New York Stock Exchange, W. P. Carey and its CPA® series of non-traded REITs help companies and private equity firms unlock capital tied up in real estate assets. The W. P. Carey Groups investments are highly diversified, comprising contractual agreements with approximately 284 long term corporate tenants spanning 28 industries and 18 countries. http://www.wpcarey.com
Individuals interested in receiving future updates on W. P. Carey via e-mail can register at www.wpcarey.com/alerts.
This press release contains forward-looking statements within the meaning of the Federal securities laws. A number of factors could cause the Companys actual results, performance or achievement to differ materially from those anticipated. Among those risks, trends and uncertainties are the general economic climate; the supply of and demand for office and industrial properties; interest rate levels; the availability of financing; and other risks associated with the acquisition and ownership of properties, including risks that the tenants will not pay rent, or that costs may be greater than anticipated. For further information on factors that could impact the Company, reference is made to the Companys filings with the Securities and Exchange Commission.
W. P. Carey 6/30/2012 Earnings Release 8-K 3
W. P. CAREY & CO. LLC
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except share and per share amounts)
Three Months Ended June 30, |
Six Months Ended June 30, |
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2012 | 2011 | 2012 | 2011 | |||||||||||||
Revenues |
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Asset management revenue |
$ | 15,636 | $ | 16,619 | $ | 31,238 | $ | 36,439 | ||||||||
Structuring revenue |
3,622 | 5,735 | 11,260 | 21,680 | ||||||||||||
Incentive, termination and subordinated disposition revenue |
| 52,515 | | 52,515 | ||||||||||||
Wholesaling revenue |
4,080 | 2,922 | 7,867 | 6,202 | ||||||||||||
Reimbursed costs from affiliates |
20,484 | 17,059 | 39,221 | 34,778 | ||||||||||||
Lease revenues |
17,228 | 16,217 | 34,859 | 30,089 | ||||||||||||
Other real estate income |
6,992 | 5,709 | 12,984 | 10,992 | ||||||||||||
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68,042 | 116,776 | 137,429 | 192,695 | |||||||||||||
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Operating Expenses |
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General and administrative |
(26,582 | ) | (24,585 | ) | (53,491 | ) | (45,908 | ) | ||||||||
Reimbursable costs |
(20,484 | ) | (17,059 | ) | (39,221 | ) | (34,778 | ) | ||||||||
Depreciation and amortization |
(6,733 | ) | (5,891 | ) | (13,528 | ) | (10,501 | ) | ||||||||
Property expenses |
(3,404 | ) | (2,819 | ) | (5,989 | ) | (5,708 | ) | ||||||||
Other real estate expenses |
(2,431 | ) | (2,942 | ) | (4,930 | ) | (5,499 | ) | ||||||||
Impairment charges |
(1,003 | ) | | (3,660 | ) | | ||||||||||
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(60,637 | ) | (53,296 | ) | (120,819 | ) | (102,394 | ) | |||||||||
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Other Income and Expenses |
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Other interest income |
155 | 560 | 658 | 1,235 | ||||||||||||
Income from equity investments in real estate and the REITs |
28,345 | 15,072 | 42,331 | 21,288 | ||||||||||||
Gain on change in control of interests |
| 27,859 | | 27,859 | ||||||||||||
Other income and (expenses) |
1,218 | 4,758 | 1,524 | 5,239 | ||||||||||||
Interest expense |
(7,246 | ) | (5,355 | ) | (14,591 | ) | (9,671 | ) | ||||||||
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22,472 | 42,894 | 29,922 | 45,950 | |||||||||||||
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Income from continuing operations before income taxes |
29,877 | 106,374 | 46,532 | 136,251 | ||||||||||||
Benefit from (provision for) income taxes |
1,882 | (25,030 | ) | 187 | (32,597 | ) | ||||||||||
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Income from continuing operations |
31,759 | 81,344 | 46,719 | 103,654 | ||||||||||||
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Discontinued Operations |
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(Loss) income from operations of discontinued properties |
(231 | ) | (122 | ) | (273 | ) | 403 | |||||||||
(Loss) gain on sale of real estate |
(298 | ) | (121 | ) | (479 | ) | 660 | |||||||||
Impairment charges |
| (41 | ) | (3,068 | ) | (41 | ) | |||||||||
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(Loss) income from discontinued operations |
(529 | ) | (284 | ) | (3,820 | ) | 1,022 | |||||||||
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Net Income |
31,230 | 81,060 | 42,899 | 104,676 | ||||||||||||
Add: Net loss attributable to noncontrolling interests |
480 | 384 | 1,058 | 714 | ||||||||||||
Less: Net loss (income) attributable to redeemable noncontrolling interest |
67 | (1 | ) | 110 | (604 | ) | ||||||||||
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Net Income Attributable to W. P. Carey Members |
$ | 31,777 | $ | 81,443 | $ | 44,067 | $ | 104,786 | ||||||||
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Basic Earnings Per Share |
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Income from continuing operations attributable to W. P. Carey members |
$ | 0.79 | $ | 2.03 | $ | 1.17 | $ | 2.57 | ||||||||
(Loss) income from discontinued operations attributable to W. P. Carey members |
(0.01 | ) | (0.01 | ) | (0.09 | ) | 0.03 | |||||||||
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Net income attributable to W. P. Carey members |
$ | 0.78 | $ | 2.02 | $ | 1.08 | $ | 2.60 | ||||||||
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Diluted Earnings Per Share |
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Income from continuing operations attributable to W. P. Carey members |
$ | 0.78 | $ | 2.00 | $ | 1.15 | $ | 2.55 | ||||||||
(Loss) income from discontinued operations attributable to W. P. Carey members |
(0.01 | ) | (0.01 | ) | (0.09 | ) | 0.03 | |||||||||
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Net income attributable to W. P. Carey members |
$ | 0.77 | $ | 1.99 | $ | 1.06 | $ | 2.58 | ||||||||
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Weighted Average Shares Outstanding |
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Basic |
40,047,220 | 39,782,796 | 40,218,677 | 39,760,676 | ||||||||||||
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Diluted |
40,757,055 | 40,243,548 | 40,828,646 | 40,192,418 | ||||||||||||
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Amounts Attributable to W. P. Carey Members |
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Income from continuing operations, net of tax |
$ | 32,306 | 81,727 | 47,887 | 103,764 | |||||||||||
(Loss) income from discontinued operations, net of tax |
(529 | ) | (284 | ) | (3,820 | ) | 1,022 | |||||||||
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Net income |
$ | 31,777 | $ | 81,443 | $ | 44,067 | $ | 104,786 | ||||||||
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Distributions Declared Per Share |
$ | 0.567 | 0.550 | 1.132 | 1.062 | |||||||||||
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W. P. Carey 6/30/2012 Earnings Release 8-K 4
W. P. CAREY & CO. LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Six Months Ended June 30, | ||||||||
2012 | 2011 | |||||||
Cash Flows Operating Activities |
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Net income |
$ | 42,899 | $ | 104,676 | ||||
Adjustments to net income: |
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Depreciation and amortization, including intangible assets and deferred financing costs |
15,054 | 12,782 | ||||||
Income from equity investments in real estate and the REITs (in excess of) less than distributions received |
(17,013 | ) | 223 | |||||
Straight-line rent and financing lease adjustments |
(2,016 | ) | (1,386 | ) | ||||
Amortization of deferred revenue |
(4,718 | ) | (1,573 | ) | ||||
Gain on sale of real estate |
(1,505 | ) | (660 | ) | ||||
Unrealized loss (gain) on foreign currency transactions and others |
23 | (371 | ) | |||||
Realized loss (gain) on foreign currency transactions and others |
535 | (1,188 | ) | |||||
Management income received in shares of affiliates |
(14,005 | ) | (52,142 | ) | ||||
Gain on conversion of shares |
| (3,806 | ) | |||||
Gain on change in control of interests |
| (27,859 | ) | |||||
Impairment charges |
6,728 | 41 | ||||||
Stock-based compensation expense |
9,755 | 8,628 | ||||||
Deferred acquisition revenue received |
13,322 | 15,462 | ||||||
Increase in structuring revenue receivable |
(4,906 | ) | (9,222 | ) | ||||
(Decrease) increase in income taxes, net |
(12,206 | ) | 16,532 | |||||
Net changes in other operating assets and liabilities |
(20,142 | ) | (11,543 | ) | ||||
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Net cash provided by operating activities |
11,805 | 48,594 | ||||||
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Cash Flows Investing Activities |
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Distributions received from equity investments in real estate and the REITs in excess of equity income |
15,909 | 11,891 | ||||||
Capital contributions to equity investments |
(180 | ) | (2,297 | ) | ||||
Purchase of interests in CPA®:16 Global |
| (121,315 | ) | |||||
Purchases of real estate and equity investments in real estate |
| (24,323 | ) | |||||
Capital expenditures |
(1,812 | ) | (1,375 | ) | ||||
Cash acquired on acquisition of subsidiaries |
| 57 | ||||||
Proceeds from sale of real estate |
25,195 | 10,643 | ||||||
Proceeds from sale of securities |
198 | 777 | ||||||
Funding of short-term loans to affiliates |
| (94,000 | ) | |||||
Proceeds from repayment of short-term loans to affiliates |
| 94,000 | ||||||
Funds placed in escrow |
(5,577 | ) | (3,899 | ) | ||||
Funds released from escrow |
7,647 | 2,030 | ||||||
|
|
|
|
|||||
Net cash provided by (used in) investing activities |
41,380 | (127,811 | ) | |||||
|
|
|
|
|||||
Cash Flows Financing Activities |
||||||||
Distributions paid |
(46,013 | ) | (40,849 | ) | ||||
Contributions from noncontrolling interests |
1,480 | 1,459 | ||||||
Distributions paid to noncontrolling interests |
(1,165 | ) | (2,822 | ) | ||||
Purchase of noncontrolling interest |
| (7,502 | ) | |||||
Scheduled payments of mortgage principal |
(10,262 | ) | (9,897 | ) | ||||
Proceeds from mortgage financing |
1,250 | 7,438 | ||||||
Proceeds from line of credit |
15,000 | 231,410 | ||||||
Repayments of line of credit |
(15,000 | ) | (140,000 | ) | ||||
Payment of financing costs |
(123 | ) | (831 | ) | ||||
Proceeds from issuance of shares |
5,692 | 1,018 | ||||||
Windfall tax benefit associated with stock-based compensation awards |
6,607 | 872 | ||||||
|
|
|
|
|||||
Net cash (used in) provided by financing activities |
(42,534 | ) | 40,296 | |||||
|
|
|
|
|||||
Change in Cash and Cash Equivalents During the Period |
||||||||
Effect of exchange rate changes on cash |
(148 | ) | 689 | |||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents |
10,503 | (38,232 | ) | |||||
Cash and cash equivalents, beginning of period |
29,297 | 64,693 | ||||||
|
|
|
|
|||||
Cash and cash equivalents, end of period |
$ | 39,800 | $ | 26,461 | ||||
|
|
|
|
W. P. Carey 6/30/2012 Earnings Release 8-K 5
W. P. CAREY & CO. LLC
Financial Highlights (Unaudited)
(in thousands, except per share amounts)
These financial highlights include non-GAAP financial measures, including earnings before interest, taxes, depreciation and amortization (EBITDA), funds from operationsas adjusted (AFFO) and adjusted cash flow from operating activities. A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures is provided on the following pages.
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
EBITDA(a) |
||||||||||||||||
Investment management |
$ | 451 | $ | 55,524 | $ | 4,371 | $ | 75,068 | ||||||||
Real estate ownership |
43,524 | 63,669 | 68,243 | 84,997 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 43,975 | $ | 119,193 | $ | 72,614 | $ | 160,065 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
AFFO (a) |
||||||||||||||||
Investment management |
$ | (271 | ) | $ | 46,184 | $ | 10,771 | $ | 65,019 | |||||||
Real estate ownership |
28,092 | 26,860 | 57,121 | 47,167 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 27,821 | $ | 73,044 | $ | 67,892 | $ | 112,186 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
EBITDA Per Share (Diluted)(a) |
||||||||||||||||
Investment management |
$ | 0.01 | $ | 1.38 | $ | 0.11 | $ | 1.87 | ||||||||
Real estate ownership |
1.07 | 1.58 | 1.67 | 2.11 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 1.08 | $ | 2.96 | $ | 1.78 | $ | 3.98 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
AFFO Per Share (Diluted)(a) |
||||||||||||||||
Investment management |
$ | (0.01 | ) | $ | 1.15 | $ | 0.26 | $ | 1.62 | |||||||
Real estate ownership |
0.69 | 0.67 | 1.40 | 1.17 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 0.68 | $ | 1.82 | $ | 1.66 | $ | 2.79 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted Cash Flow From Operating Activities |
||||||||||||||||
Adjusted cash flow |
$ | 58,323 | $ | 55,916 | ||||||||||||
|
|
|
|
|||||||||||||
Distributions declared |
$ | 46,659 | $ | 42,561 | ||||||||||||
|
|
|
|
(a) | Effective April 1, 2012, we include cash distributions and deferred revenue received and earned from the operating partnerships of CPA®:16 Global, CPA®:17 Global and CWI in our Real Estate Ownership segment. Results of operations for the prior year periods have been reclassified to conform to the current period presentation. Additionally, during the third quarter of 2011, CPA®:16 Global finalized its assessment of the fair values of the assets acquired and liabilities assumed in connection with the CPA®:14/16 merger and made certain adjustments during that quarter. Our proportionate share of the adjustments before income taxes was approximately $2.6 million. In accordance with current accounting guidance, we have retrospectively adjusted our results of operations in our Real Estate Ownership segment for the three and six months ended June 30, 2011 to include such adjustments. |
W. P. Carey 6/30/2012 Earnings Release 8-K 6
W. P. CAREY & CO. LLC
Reconciliation of Net Income to EBITDA (Unaudited)
(in thousands, except share and per share amounts)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Investment Management |
||||||||||||||||
Net income from investment management attributable to W. P. Carey members(a) |
$ | 2,153 | $ | 28,601 | $ | 4,513 | $ | 39,963 | ||||||||
Adjustments: |
||||||||||||||||
(Benefit from) provision for income taxes |
(2,644 | ) | 26,056 | (2,022 | ) | 33,436 | ||||||||||
Depreciation and amortization |
942 | 867 | 1,880 | 1,669 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
EBITDA investment management |
$ | 451 | $ | 55,524 | $ | 4,371 | $ | 75,068 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
EBITDA per share (diluted) |
$ | 0.01 | $ | 1.38 | $ | 0.11 | $ | 1.87 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Real Estate Ownership |
||||||||||||||||
Net income from real estate ownership attributable to W. P. Carey members(a) |
$ | 29,624 | $ | 52,842 | $ | 39,554 | $ | 64,823 | ||||||||
Adjustments: |
||||||||||||||||
Interest expense |
7,246 | 5,355 | 14,591 | 9,671 | ||||||||||||
Provision for (benefit from) income taxes |
762 | (1,026 | ) | 1,835 | (839 | ) | ||||||||||
Depreciation and amortization |
5,791 | 5,024 | 11,648 | 8,832 | ||||||||||||
Reconciling items attributable to discontinued operations |
101 | 1,474 | 615 | 2,510 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
EBITDA real estate ownership |
$ | 43,524 | $ | 63,669 | $ | 68,243 | $ | 84,997 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
EBITDA per share (diluted) |
$ | 1.07 | $ | 1.58 | $ | 1.67 | $ | 2.11 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Company |
||||||||||||||||
EBITDA |
$ | 43,975 | $ | 119,193 | $ | 72,614 | $ | 160,065 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
EBITDA per share (diluted) |
$ | 1.08 | $ | 2.96 | $ | 1.78 | $ | 3.98 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted weighted average shares outstanding |
40,757,055 | 40,243,548 | 40,828,646 | 40,192,418 | ||||||||||||
|
|
|
|
|
|
|
|
(a) | Effective April 1, 2012, we include cash distributions and deferred revenue received and earned from the operating partnerships of CPA®:16 Global, CPA®:17 Global and CWI in our Real Estate Ownership segment. Results of operations for the prior year periods have been reclassified to conform to the current period presentation. Additionally, during the third quarter of 2011, CPA®:16 Global finalized its assessment of the fair values of the assets acquired and liabilities assumed in connection with the CPA®:14/16 merger and made certain adjustments during that quarter. Our proportionate share of the adjustments before income taxes was approximately $2.6 million. In accordance with current accounting guidance, we have retrospectively adjusted our results of operations in our Real Estate Ownership segment for the three and six months ended June 30, 2011 to include such adjustments. |
Non-GAAP Financial Disclosure
EBITDA as disclosed represents earnings before interest, taxes, depreciation and amortization. We believe that EBITDA is a useful supplemental measure to investors and analysts for assessing the performance of our business segments, although it does not represent net income that is computed in accordance with GAAP, because it removes the impact of our capital structure and asset base from our operating results and because it is helpful when comparing our operating performance to that of companies in our industry without regard to such items, which can vary substantially from company to company. Accordingly, EBITDA should not be considered as an alternative to net income as an indicator of our financial performance. EBITDA may not be comparable to similarly titled measures of other companies. Therefore, we use EBITDA as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies, and determine executive compensation.
W. P. Carey 6/30/2012 Earnings Release 8-K 7
W. P. CAREY & CO. LLC
Reconciliation of Net Income to Funds From Operations as adjusted (AFFO) (Unaudited)
(in thousands, except share and per share amounts)
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Investment Management |
||||||||||||||||
Net Income from investment management attributable to W. P. Carey members (a) |
$ | 2,153 | $ | 28,601 | $ | 4,513 | $ | 39,963 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
FFO as defined by NAREIT (b) |
2,153 | 28,601 | 4,513 | 39,963 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjustments: |
||||||||||||||||
Amortization and other non-cash charges |
(3,944 | ) | 17,583 | 3,617 | 25,056 | |||||||||||
Realized gains on foreign currency, derivatives and other |
(23 | ) | | (23 | ) | | ||||||||||
Amortization of deferred financing costs |
286 | | 570 | | ||||||||||||
Merger expenses |
1,257 | | 2,094 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total adjustments |
(2,424 | ) | 17,583 | 6,258 | 25,056 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
AFFO Investment Management |
$ | (271 | ) | $ | 46,184 | $ | 10,771 | $ | 65,019 | |||||||
|
|
|
|
|
|
|
|
|||||||||
Real Estate Ownership |
||||||||||||||||
Net Income from real estate ownership attributable to W. P. Carey members (a) |
$ | 29,624 | $ | 52,842 | $ | 39,554 | $ | 64,823 | ||||||||
Adjustments: |
||||||||||||||||
Depreciation and amortization of real property |
5,673 | 6,240 | 11,820 | 10,715 | ||||||||||||
Impairment charges (b) |
1,003 | 41 | 6,728 | 41 | ||||||||||||
(Gain) loss on sale of real estate, net |
(1,686 | ) | 121 | (1,505 | ) | (660 | ) | |||||||||
Proportionate share of adjustments to equity in net income of partially owned entities |
||||||||||||||||
Depreciation and amortization of real property |
730 | 1,328 | 1,628 | 2,876 | ||||||||||||
Impairment charges (b) |
| | | 1,090 | ||||||||||||
(Gain) loss on sale of real estate, net |
(15,557 | ) | 34 | (15,415 | ) | 34 | ||||||||||
Proportionate share of adjustments for noncontrolling interests to arrive at FFO |
(434 | ) | (123 | ) | (868 | ) | (319 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total adjustments |
(10,271 | ) | 7,641 | 2,388 | 13,777 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
FFO as defined by NAREIT (b) |
19,353 | 60,483 | 41,942 | 78,600 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjustments: |
||||||||||||||||
Gain on change in control of interests (c) |
| (27,859 | ) | | (27,859 | ) | ||||||||||
Other depreciation, amortization and non-cash charges |
(88 | ) | (2,167 | ) | (757 | ) | (2,802 | ) | ||||||||
Realized losses on foreign currency, derivatives and other |
542 | | 542 | | ||||||||||||
Amortization of deferred financing costs |
402 | | 866 | | ||||||||||||
Straight-line and other rent adjustments |
(883 | ) | (1,020 | ) | (1,998 | ) | (1,437 | ) | ||||||||
Above-market rent intangible lease amortization, net |
111 | | 111 | | ||||||||||||
Merger expenses |
1,359 | | 2,625 | | ||||||||||||
Proportionate share of adjustments to equity in net income of partially owned entities |
||||||||||||||||
Straight-line and other rent adjustments |
(363 | ) | (142 | ) | (776 | ) | (764 | ) | ||||||||
Below-market rent intangible lease amortization, net |
(3 | ) | | (3 | ) | | ||||||||||
AFFO adjustments to equity earnings from equity investments |
7,687 | (2,508 | ) | 14,613 | 1,270 | |||||||||||
Proportionate share of adjustments for noncontrolling interests to arrive at AFFO |
(25 | ) | 73 | (44 | ) | 159 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total adjustments |
8,739 | (33,623 | ) | 15,179 | (31,433 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
AFFO Real Estate Ownership |
$ | 28,092 | $ | 26,860 | $ | 57,121 | $ | 47,167 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Company |
||||||||||||||||
FFO as defined by NAREIT |
$ | 21,506 | $ | 89,084 | $ | 46,455 | $ | 118,563 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
FFO as defined by NAREIT per share (diluted) |
$ | 0.53 | $ | 2.21 | $ | 1.14 | $ | 2.95 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
AFFO |
$ | 27,821 | $ | 73,044 | $ | 67,892 | $ | 112,186 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
AFFO per share (diluted) |
$ | 0.68 | $ | 1.82 | $ | 1.66 | $ | 2.79 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted weighted average shares outstanding |
40,757,055 | 40,243,548 | 40,828,646 | 40,192,418 | ||||||||||||
|
|
|
|
|
|
|
|
W. P. Carey 6/30/2012 Earnings Release 8-K 8
(a) | Effective April 1, 2012, we include cash distributions and deferred revenue received and earned from the operating partnerships of CPA®:16 Global, CPA®:17 Global and CWI in our Real Estate Ownership segment. Results of operations for the prior year periods have been reclassified to conform to the current period presentation. Additionally, during the third quarter of 2011, CPA®:16 Global finalized its assessment of the fair values of the assets acquired and liabilities assumed in connection with the CPA®:14/16 merger and made certain adjustments during that quarter. Our proportionate share of the adjustments before income taxes was approximately $2.6 million. In accordance with current accounting guidance, we have retrospectively adjusted our results of operations in our Real Estate Ownership segment for the three and six months ended June 30, 2011 to include such adjustments. |
(b) | The SEC Staff has recently advised that they take no position on the inclusion or exclusion of impairment write-downs in arriving at Funds From Operations (FFO). Since 2003, the National Association of Real Estate Investment Trusts (NAREIT) has taken the position that the exclusion of impairment charges is consistent with its definition of FFO. Accordingly, we have revised our computation of FFO to exclude impairment charges, if any, in arriving at FFO for all periods presented. |
(c) | Represents gain recognized on purchase of the remaining interests in two investments from CPA®:14, which we had previously accounted for under the equity method. In connection with purchasing these properties, we recognized a net gain of $27.9 million during the three and six months ended June 30, 2011 to adjust the carrying value of our existing interests in these investments to their estimated fair values. |
Non-GAAP Financial Disclosure
FFO is a non-GAAP measure defined by NAREIT. NAREIT defines FFO as net income or loss (as computed in accordance with GAAP) excluding: depreciation and amortization expense from real estate assets, impairment charges on real estate, gains or losses from sales of depreciated real estate assets and extraordinary items; however, FFO related to assets held for sale, sold or otherwise transferred and included in the results of discontinued operations are included. These adjustments also incorporate the pro rata share of unconsolidated subsidiaries. FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers. Although NAREIT has published this definition of FFO, companies often modify this definition as they seek to provide financial measures that meaningfully reflect their distinctive operations.
We modify the NAREIT computation of FFO to include other adjustments to GAAP net income to adjust for certain non-cash charges such as amortization of intangibles, deferred income tax benefits and expenses, straight-line rents, stock compensation, gains or losses from extinguishment of debt and deconsolidation of subsidiaries and unrealized foreign currency exchange gains and losses. We refer to our modified definition of FFO as AFFO. We exclude these items from GAAP net income as they are not the primary drivers in our decision making process. Our assessment of our operations is focused on long-term sustainability and not on such non-cash items, which may cause short-term fluctuations in net income but have no impact on cash flows, and we therefore use AFFO as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies, and determine executive compensation.
We believe that AFFO is a useful supplemental measure for investors to consider because it will help them to better assess the sustainability of our operating performance without the potentially distorting impact of these short-term fluctuations. However, there are limits on the usefulness of AFFO to investors. For example, impairment charges and unrealized foreign currency losses that we exclude may become actual realized losses upon the ultimate disposition of the properties in the form of lower cash proceeds or other considerations.
W. P. Carey 6/30/2012 Earnings Release 8-K 9
W. P. CAREY & CO. LLC
Adjusted Cash Flow from Operating Activities (Unaudited)
(in thousands, except per share amounts)
Summarized Cash Flow Information:
Six Months Ended June 30, |
||||||||
2012 | 2011 | |||||||
Cash flow provided by operating activities |
$ | 11,805 | $ | 48,594 | ||||
|
|
|
|
|||||
Cash flow provided by (used in) investing activities |
$ | 41,380 | $ | (127,811 | ) | |||
|
|
|
|
|||||
Cash flow (used in) provided by financing activities |
$ | (42,534 | ) | $ | 40,296 | |||
|
|
|
|
|||||
Reconciliation of Adjusted Cash Flow from Operating Activities: |
||||||||
Cash flow provided by operating activities |
$ | 11,805 | $ | 48,594 | ||||
Adjustments related to equity method investments: |
||||||||
Add: Distributions received from equity investments in real estate in excess of equity income |
15,909 | 11,891 | ||||||
Less: Distributions received from equity investments in real estate in excess of equity income attributable to financing activities |
| (2,115 | ) | |||||
|
|
|
|
|||||
Distributions received from equity investments in real estate in excess of equity income attributable to operating activities (a) |
15,909 | 9,776 | ||||||
|
|
|
|
|||||
Adjustments related to noncontrolling interests: |
||||||||
Less: Distributions (paid to) net of contributions received from noncontrolling interests |
315 | (1,363 | ) | |||||
Add: Distributions paid to (received from) noncontrolling interests, net not attributable to operating activities |
| 1,300 | ||||||
|
|
|
|
|||||
Distributions received from (paid to) noncontrolling interests, attributable to operating activities (b) |
315 | (63 | ) | |||||
|
|
|
|
|||||
Adjustments related to changes in working capital: (c) |
||||||||
Net changes in other assets and liabilities |
20,142 | 11,543 | ||||||
Net prepayment of income taxes at end of period |
10,152 | 9,500 | ||||||
|
|
|
|
|||||
30,294 | 21,043 | |||||||
|
|
|
|
|||||
CPA®:14/16 Merger revenue, net of taxes on special distribution (d) |
| (23,434 | ) | |||||
|
|
|
|
|||||
Adjusted cash flow from operating activities (inclusive of merger costs totaling $4.7 million in 2012) (e) |
$ | 58,323 | $ | 55,916 | ||||
|
|
|
|
|||||
Distributions declared |
$ | 46,659 | $ | 42,561 | ||||
|
|
|
|
(a) | Cash flow provided by operating activities on a GAAP basis does not include distributions that we receive from equity investments in excess of our equity income. All such excess distributions, including our share of distributions of property-level cash flows in excess of operating income, are reported as cash flows provided by investing activities in our statement of cash flows. In calculating adjusted cash flow from operating activities, we make an adjustment to our reported cash flow provided by operating activities to add such distributions to the extent they relate to our pro rata share of property-level operating income, after deducting any portion of such distributions attributable to the financing or investment activities of the underlying jointly-owned investment. |
(b) | Cash flow provided by operating activities on a GAAP basis does not include contributions that we receive from noncontrolling interests and distributions that we pay to noncontrolling interests in our consolidated jointly-owned investments. All such contributions and distributions, including contributions to and distributions of property-level operating cash flows, are reported as cash flows used in or provided by financing activities in our statement of cash flows. In calculating adjusted cash flow from operating activities, we make adjustments to our reported cash flow provided by operating activities to add contributions received from noncontrolling interests and subtract distributions paid to noncontrolling interests to the extent these contributions or distributions relate to operating activities of the underlying property jointly-owned investments. |
W. P. Carey 6/30/2012 Earnings Release 8-K 10
(c) | Cash flow provided by operating activities on a GAAP basis includes adjustments to reflect the impact of the net changes in other operating assets and liabilities as well as the change in income taxes, net. We make adjustments to cash flow provided by operating activities to incorporate changes between reporting periods in other assets and liabilities, including accrued and prepaid income taxes, as we believe that these adjustments better reflect cash generated from core operations. |
(d) | Amount represents subordinated disposition revenue of $21.3 million earned in connection with the CPA®:14/16 merger, and taxes of $2.2 million on a special distribution made in connection with the CPA®:14/16 merger. We make an adjustment to deduct this revenue because it is generally earned in connection with one-time liquidity events as opposed to cash flow generated from our core operations. |
(e) | Adjusted cash flow from operating activities for the six months ended June 30, 2012 includes a reduction of $4.7 million as a result of charges incurred in connection with the Merger. Management does not consider these costs to be an ongoing cash outflow when evaluating cash flow generated from our core operations using this supplemental financial measure. |
Non-GAAP Financial Disclosure
Adjusted cash flow from operating activities refers to our cash flow from operating activities (as computed in accordance with GAAP) adjusted, where applicable, primarily to: add cash distributions of property-level operating cash flows that we receive from our investments in unconsolidated real estate jointly-owned investments in excess of our equity income; subtract cash distributions of property-level operating cash flows that we make to our noncontrolling partners in real estate jointly-owned investments that we consolidate net of such partners contributions to our share of property-level operating cash flows; and eliminate changes in working capital. We hold a number of interests in real estate jointly-owned investments, and we believe that adjusting our GAAP cash flow provided by operating activities to reflect these actual cash receipts and cash payments that are attributable to the property-level operating cash flows of the underlying jointly-owned investments, as well as eliminating the effect of timing differences between the payment of certain liabilities and the receipt of certain receivables in a period other than that in which the item is recognized, may give investors additional information about our actual cash flow that is not incorporated in cash flow from operating activities as defined by GAAP. The jointly-owned investments are property-owning entities and their activities are generally limited to receiving rental income, financing the property and ultimately disposing of the property. Distributions and contributions related to these activities are based on the ownership percentages of the partners in each jointly-owned investment. In accordance with each jointly-owned investments operating agreement, the jointly-owned investment partners generally participate in the investments operating cash flow, debt financing and proceeds from property distributions. Distributions of cash to the jointly-owned investment partners are typically made on a monthly basis.
We believe that adjusted cash flow from operating activities is a useful supplemental measure for assessing the cash flow generated from our core operations as it gives investors important information about our liquidity that is not provided within cash flow from operating activities as defined by GAAP, and we use this measure when evaluating distributions to shareholders. Adjusted cash flow from operating activities should not be considered as an alternative to cash provided by operating activities computed on a GAAP basis as a measure of our liquidity.
W. P. Carey 6/30/2012 Earnings Release 8-K 11
W. P. CAREY & CO. LLC
Total Adjusted Revenue (Pro rata Basis) (Unaudited)
(in thousands, except percentages)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
2012 | 2011 (e) | 2012 | 2011 (e) | |||||||||||||||||||||||||||||
Revenue | % | Revenue | % | Revenue | % | Revenue | % | |||||||||||||||||||||||||
Asset management revenue |
$ | 15,636 | 20 | % | $ | 16,619 | 23 | % | $ | 31,238 | 20 | % | $ | 36,439 | 24 | % | ||||||||||||||||
Structuring revenue (a) |
3,622 | 5 | % | 5,735 | 8 | % | 11,260 | 7 | % | 21,680 | 15 | % | ||||||||||||||||||||
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Investment management revenues |
19,258 | 25 | % | 22,354 | 31 | % | 42,498 | 27 | % | 58,119 | 39 | % | ||||||||||||||||||||
Real estate revenues |
57,205 | 75 | % | 50,078 | 69 | % | 114,586 | 73 | % | 90,872 | 61 | % | ||||||||||||||||||||
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Total Adjusted Revenue |
$ | 76,463 | 100 | % | $ | 72,432 | 100 | % | $ | 157,084 | 100 | % | $ | 148,991 | 100 | % | ||||||||||||||||
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Reconciliation of Total Adjusted Revenue |
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Total revenue as reported |
$ | 68,042 | $ | 116,776 | $ | 137,429 | $ | 192,695 | ||||||||||||||||||||||||
Less: Reimbursed costs from affiliates (b) |
(20,484 | ) | (17,059 | ) | (39,221 | ) | (34,778 | ) | ||||||||||||||||||||||||
Less: Wholesaling revenue (b) |
(4,080 | ) | (2,922 | ) | (7,867 | ) | (6,202 | ) | ||||||||||||||||||||||||
Less: Incentive, termination and subordinated disposition revenue (c) |
| (52,515 | ) | | (52,515 | ) | ||||||||||||||||||||||||||
Add: Lease revenues discontinued operations |
45 | 1,622 | 793 | 3,430 | ||||||||||||||||||||||||||||
Add: Pro rata share of revenues from equity investments |
5,738 | 7,129 | 12,150 | 14,980 | ||||||||||||||||||||||||||||
Less: Pro rata share of revenues due to noncontrolling interests |
(422 | ) | (666 | ) | (850 | ) | (1,741 | ) | ||||||||||||||||||||||||
Add: Pro rata share of revenues from CPA® REITs |
20,161 | 18,094 | 40,213 | 29,334 | ||||||||||||||||||||||||||||
Add: Total distributions of available cash CPA® REITs |
7,463 | 1,973 | 14,437 | 3,788 | ||||||||||||||||||||||||||||
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Total Adjusted Revenue |
$ | 76,463 | $ | 72,432 | $ | 157,084 | $ | 148,991 | ||||||||||||||||||||||||
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Reconciliation of Real Estate Revenues |
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Lease revenues as reported |
$ | 17,228 | $ | 16,217 | $ | 34,859 | $ | 30,089 | ||||||||||||||||||||||||
Lease revenues discontinued operations |
45 | 1,622 | 793 | 3,430 | ||||||||||||||||||||||||||||
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Total consolidated lease revenues |
17,273 | 17,839 | 35,652 | 33,519 | ||||||||||||||||||||||||||||
Add: Pro rata share of revenues from equity investments |
5,738 | 7,129 | 12,150 | 14,980 | ||||||||||||||||||||||||||||
Less: Pro rata share of revenues due to noncontrolling interests |
(422 | ) | (666 | ) | (850 | ) | (1,741 | ) | ||||||||||||||||||||||||
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Total pro rata net lease revenues |
22,589 | 24,302 | 46,952 | 46,758 | ||||||||||||||||||||||||||||
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Add: Pro rata share of revenues from CPA® REITs: |
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CPA®:14 |
| 860 | | 4,484 | ||||||||||||||||||||||||||||
CPA®:15 |
3,947 | 4,152 | 7,978 | 8,040 | ||||||||||||||||||||||||||||
CPA®:16 Global |
15,514 | 12,734 | 30,919 | 16,226 | ||||||||||||||||||||||||||||
CPA®:17 Global |
700 | 348 | 1,316 | 584 | ||||||||||||||||||||||||||||
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Total pro rata share of revenues from CPA® REITs |
20,161 | 18,094 | 40,213 | 29,334 | ||||||||||||||||||||||||||||
Add: Distributions of available cash CPA® REITs |
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CPA®:16 Global |
3,598 | | 7,879 | | ||||||||||||||||||||||||||||
CPA®:17 Global |
3,865 | 1,973 | 6,558 | 3,788 | ||||||||||||||||||||||||||||
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Total distributions of available cash CPA® REITs |
7,463 | 1,973 | 14,437 | 3,788 | ||||||||||||||||||||||||||||
Add: Other real estate income (d) |
6,992 | 5,709 | 12,984 | 10,992 | ||||||||||||||||||||||||||||
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Total Real Estate Revenues |
$ | 57,205 | $ | 50,078 | $ | 114,586 | $ | 90,872 | ||||||||||||||||||||||||
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(a) | We earn structuring revenue on acquisitions structured on behalf of the CPA® REITS and CWI that we manage and expect significant period-to-period variation in such revenue based on changes in investment volume. Investments structured on behalf of the CPA® REITS and CWI totaled approximately $98 million and $249 million for the three months ended June 30, 2012 and 2011, respectively, and approximately $270 million and $594 million for the six months ended June 30, 2012 and 2011, respectively. |
(b) | Total adjusted revenue excludes reimbursements of costs received from the affiliated CPA® REITs and CWI as they have no impact on net income. Also excluded is wholesaling revenue earned in connection with CPA®:17 Globals and CWIs public offerings, which is substantially offset by underwriting costs incurred in connection with the offering. |
(c) | In connection with providing a liquidity event for CPA®:14 shareholders, in May 2011, we earned termination revenue of $31.2 million and subordinated disposition revenue of $21.3 million, which we received in shares of CPA®:14 and cash, respectively. These CPA®:14 shares were subsequently converted to shares of CPA®:16 Global in connection with the CPA®:14/16 merger. |
(d) | Other real estate income generally consists of revenue from Carey Storage Management LLC, a subsidiary that invests in domestic self-storage properties and Livho, Inc., a subsidiary that operates a hotel franchise. Other real estate income also includes lease termination payments and other non-rent related revenues from real estate ownership, and as a result, we expect Other real estate income to fluctuate period to period. |
(e) | Amounts presented for prior year periods do not reflect adjustments to prior period amounts for assets reclassified as held for sale or sold in the current period and reflected as discontinued operations. |
W. P. Carey 6/30/2012 Earnings Release 8-K 12
W. P. CAREY & CO. LLC
Selected Investment Management Fees and Distributions (Unaudited)
(in thousands)
Asset Management Revenue | Asset Management Revenue | |||||||||||||||||||||||||||||||
Base Asset Management Revenue |
Performance Revenue |
Distributions of Available Cash |
Total | Base Asset Management Revenue |
Performance Revenue |
Distributions of Available Cash |
Total | |||||||||||||||||||||||||
Three Months Ended June 30, 2012 | Six Months Ended June 30, 2012 | |||||||||||||||||||||||||||||||
CPA®:15 |
$ | 3,072 | $ | | $ | | $ | 3,072 | $ | 6,210 | $ | | $ | | $ | 6,210 | ||||||||||||||||
CPA®:16 Global |
4,597 | 3,072 | 3,598 | 11,267 | 9,298 | 6,209 | 7,879 | 23,386 | ||||||||||||||||||||||||
CPA®:17 Global |
4,765 | | 3,865 | 8,630 | 9,318 | | 6,558 | 15,876 | ||||||||||||||||||||||||
CWI/Other |
130 | | | 130 | 203 | | | 203 | ||||||||||||||||||||||||
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Total |
$ | 12,564 | $ | 3,072 | $ | 7,463 | $ | 23,099 | $ | 25,029 | $ | 6,209 | $ | 14,437 | $ | 45,675 | ||||||||||||||||
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Three Months Ended June 30, 2011 | Six Months Ended June 30, 2011 | |||||||||||||||||||||||||||||||
Total |
$ | 11,532 | $ | 5,087 | $ | 1,973 | $ | 18,592 | $ | 22,878 | $ | 13,561 | $ | 3,788 | $ | 40,227 | ||||||||||||||||
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W. P. Carey 6/30/2012 Earnings Release 8-K 13