SOURCE: W. P. Carey & Co. LLC

W. P. Carey & Co. LLC

May 06, 2010 09:15 ET

W. P. Carey Announces First Quarter Financial Results

NEW YORK, NY--(Marketwire - May 6, 2010) - Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today reported financial results for the first quarter ended March 31, 2010.

QUARTERLY RESULTS

  • Funds from operations -- as adjusted (AFFO) for the first quarter of 2010 remained relatively flat compared to the first quarter of 2009: $28.1 million or $0.71 per diluted share compared to $28.9 million or $0.72 per diluted share, respectively.
  • Cash flow from operating activities for the three months ended March 31, 2010 was $13.6 million compared to $24.3 million for the prior year period, while adjusted cash flow from operating activities was $27.7 million in the first quarter of 2010 compared to $39 million in the first quarter last year. The decreases were due in part to the timing of the recognition of deferred acquisitions fees paid by our newest managed fund, CPA®:17 - Global, which pays such fees to us on a quarterly basis rather than annually, as is the case with our other managed funds.
  • Total revenues net of reimbursed expenses for the first quarter of 2010 were $48 million, compared to $50.6 million for the first quarter of 2009. Reimbursed expenses are excluded from total revenues because they have no impact on net income.
  • Net Income for the first quarter of 2010 was $14.4 million, compared to $17.7 million for the same period in 2009. The decrease was substantially due to impairment charges of $7.2 million in the first quarter.
  • We received approximately $3.9 million in cash distributions from our equity ownership in the CPA® REITs for the quarter ended March 31, 2010.
  • Further information concerning AFFO and adjusted cash flow from operating activities -- non-GAAP supplemental performance metrics -- is presented in the accompanying tables.

INVESTMENT AND FUNDRAISING ACTIVITY

  • Investment volume, for our own portfolio and on behalf of the CPA® REITs, for the first quarter was approximately $197 million, compared to $271 million for the first quarter of 2009, which was approximately 50% of the total $548 million investment volume for all of 2009.
  • First quarter transactions included the $49 million second tranche of a total $105 million sale-leaseback with Spanish grocery retailer Eroski and the $14 million acquisition of two Curtiss-Wright Ohio manufacturing facilities on behalf of our REITs, as well as our acquisition of JP Morgan Chase's Operations Center office building in Dallas/Fort Worth.
  • In the second quarter, we have completed two international transactions on behalf of the CPA® REITs: a $34 million sale-leaseback with UK logistics and supply chain management company TDG and a $101 million transaction with Agrokor, the largest private company and food retailer in Croatia.
  • We continue to raise investor capital through our latest REIT offering, CPA®:17 - Global, so that we may take advantage of attractive investment opportunities that we believe are afforded by the current market environment. CPA®:17 - Global raised $140 million in the first quarter of 2010, compared with $71.6 million in the first quarter of 2009. To date, CPA®:17 - Global has raised more than $975 million of its up-to $2 billion offering.

ASSETS UNDER MANAGEMENT

  • W. P. Carey is the advisor to the CPA® REITs, which had real estate assets of $7.9 billion and total assets of $8.4 billion as of March 31, 2010.
  • As of March 31, 2010, the occupancy rate of our 14 million square foot owned portfolio was approximately 94%. In addition, for the 93 million square feet owned by the CPA® REITs, the occupancy rate was approximately 98%.

DISTRIBUTIONS

  • The Board of Directors raised the quarterly cash distribution to $0.504 per share for the first quarter of 2010. The distribution -- our 36th consecutive quarterly increase -- was paid on April 15, 2010 to shareholders of record as of March 31, 2010.

Gordon DuGan, President and CEO of W. P. Carey, said, "We are pleased with the investment volume that we have generated so far this year, as well as the strong capital flows by our managed funds. We believe we are very well positioned with access to both debt and equity capital to take advantage of growth opportunities in 2010 and beyond."

CONFERENCE CALL & WEBCAST

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

Time: Thursday, May 6, 2010 at 11:00 AM (ET)

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

Webcast: www.wpcarey.com/earnings

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

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

Replay Passcode: 439691#
Replay Available until May 20, 2010 at midnight ET.

W. P. Carey & Co. LLC

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

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

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

                          W. P. CAREY & CO. LLC

              Consolidated Statements of Income (Unaudited)
            (in thousands, except share and per share amounts)


                                                      Three months ended
                                                          March 31,
                                                    ----------------------
                                                       2010        2009
                                                    ----------  ----------
Revenues
  Asset management revenue                          $   18,820  $   19,108
  Structuring revenue                                    6,834      10,409
  Wholesaling revenue                                    2,103       1,093
  Reimbursed costs from affiliates                      15,048       9,874
  Lease revenues                                        16,465      16,785
  Other real estate income                               3,821       3,213
                                                    ----------  ----------
                                                        63,091      60,482
                                                    ----------  ----------

Operating Expenses
  General and administrative                           (17,601)    (19,099)
  Reimbursable costs                                   (15,048)     (9,874)
  Depreciation and amortization                         (6,369)     (5,350)
  Property expenses                                     (2,435)     (1,667)
  Other real estate expenses                            (1,815)     (2,131)
  Impairment charges                                    (7,152)          -
                                                    ----------  ----------
                                                       (50,420)    (38,121)
                                                    ----------  ----------

Other Income and Expenses
  Other interest income                                    273         407
  Income from equity investments in real estate and
   CPA(R) REITs                                          9,142       1,387
  Other income and (expenses)                             (664)      3,154
  Interest expense                                      (3,711)     (4,195)
                                                    ----------  ----------
                                                         5,040         753
                                                    ----------  ----------
  Income from continuing operations before income
   taxes                                                17,711      23,114
  Provision for income taxes                            (4,112)     (6,200)
                                                    ----------  ----------
  Income from continuing operations                     13,599      16,914
                                                    ----------  ----------
Discontinued Operations
  Income from operations of discontinued properties        299         995
  Gain (loss) on sale of real estate                       404        (135)
                                                    ----------  ----------
  Income from discontinued operations                      703         860
                                                    ----------  ----------
Net Income                                              14,302      17,774
  Add: Net loss attributable to noncontrolling
   interests                                               286         170
  Less: Net income attributable to redeemable
   noncontrolling interests                               (175)       (235)
                                                    ----------  ----------
Net Income Attributable to W. P. Carey Members      $   14,413  $   17,709
                                                    ==========  ========== 
Basic Earnings Per Share
  Income from continuing operations attributable to
   W. P. Carey members                              $     0.35  $     0.43
  Income from discontinued operations attributable
   to W. P. Carey members                                 0.01        0.02
                                                    ----------  ----------
  Net income attributable to W. P. Carey members    $     0.36  $     0.45
                                                    ==========  ==========
Diluted Earnings Per Share
  Income from continuing operations attributable to
   W. P. Carey members                              $     0.35  $     0.42
  Income from discontinued operations attributable
   to W. P. Carey members                                 0.01        0.02
                                                    ----------  ----------
  Net income attributable to W. P. Carey members    $     0.36  $     0.44
                                                    ==========  ==========

Weighted Average Shares Outstanding
  Basic                                             39,088,114  39,175,020
                                                    ==========  ==========
  Diluted                                           39,495,845  39,927,886
                                                    ==========  ==========

Amounts Attributable to W. P. Carey Members
  Income from continuing operations, net of tax     $   13,710  $   16,849
  Income from discontinued operations, net of tax          703         860
                                                    ----------  ----------
  Net income                                        $   14,413  $   17,709
                                                    ==========  ==========

Distributions Declared Per Share                    $    0.504  $    0.496
                                                    ==========  ==========






                          W. P. CAREY & CO. LLC

            Consolidated Statements of Cash Flows (Unaudited)
                              (in thousands)


                                                      Three months ended
                                                          March 31,
                                                    ----------------------
                                                       2010        2009
                                                    ----------  ----------
Cash Flows -- Operating Activities
Net income                                          $   14,302  $   17,774
Adjustments to net income:
  Depreciation and amortization including intangible
   assets and deferred financing costs                   6,403       5,523
  Income from equity investments in real estate and
   CPA(R) REITs in excess of distributions received     (4,530)     (1,760)
  Straight-line rent adjustments                           251         494
  (Gain) loss on sale of real estate                      (404)        135
  Gain on extinguishment of debt                             -      (6,991)
  Allocation of (loss) earnings to profit sharing
   interest                                               (171)      3,698
  Management income received in shares of affiliates    (8,532)     (6,896)
  Unrealized loss on foreign currency transactions
   and others                                              608         208
  Realized loss (gain) on foreign currency
   transactions and other                                  221         (69)
  Impairment charges                                     7,152           -
  Stock-based compensation expense                       2,461       1,725
  Deferred acquisition revenue received                 14,851      21,794
  Increase in structuring revenue receivable            (3,244)     (4,985)
  (Decrease) increase in income taxes, net              (6,682)        971
  Net changes in other operating assets and
   liabilities                                          (9,063)     (7,339)
                                                    ----------  ----------
Net cash provided by operating activities               13,623      24,282
                                                    ----------  ----------

Cash Flows -- Investing Activities
  Distributions received from equity investments in
   real estate and CPA® REITs in excess of equity
   income                                                5,556       5,661
  Purchases of real estate and equity investments in
   real estate                                         (47,583)    (39,651)
  Capital expenditures                                    (620)     (4,038)
  Proceeds from sale of real estate                      6,632       1,925
  Funds released from escrow in connection with the
   sale of property                                     36,132           -
  Proceeds from transfer of profit sharing interest          -      21,928
                                                    ----------  ----------
Net cash provided by (used in) investing activities        117     (14,175)
                                                    ----------  ----------

Cash Flows -- Financing Activities
  Distributions paid                                   (32,482)    (19,587)
  Contributions from noncontrolling interests              620       1,024
  Distributions to noncontrolling interests               (792)     (2,973)
  Distributions to profit sharing interest                   -      (3,434)
  Scheduled payments of mortgage principal              (4,059)     (2,593)
  Proceeds from credit facility                         51,500      65,000
  Prepayments of credit facility                       (12,500)          -
  Proceeds from mortgage financing                           -      25,000
  Proceeds from loans from affiliates                        -       1,624
  Payment of financing costs, net of deposits
   refunded                                               (195)          -
  Windfall tax provision associated with stock-based
   compensation awards                                    (523)       (832)
  Repurchase and retirement of shares                        -     (10,486)
                                                    ----------  ----------
Net cash provided by financing activities                1,569      52,743
                                                    ----------  ----------

Change in Cash and Cash Equivalents During the
 Period
    Effect of exchange rate changes on cash               (663)       (546)
                                                    ----------  ----------
    Net increase in cash and cash equivalents           14,646      62,304
  Cash and cash equivalents, beginning of period        18,450      16,799
                                                    ----------  ----------
  Cash and cash equivalents, end of period          $   33,096  $   79,103
                                                    ==========  ==========






                          W. P. CAREY & CO. LLC

                     Financial Highlights (Unaudited)
                 (in thousands, except per share amounts)


These financial highlights include non-GAAP financial measures, including
earnings before interest, taxes, depreciation and amortization ("EBITDA"),
funds from operations - as adjusted ("AFFO") and adjusted cash flow from
operating activities. A description of these non-GAAP financial measures
and reconciliations to the most directly comparable GAAP measures is
provided on the following pages.



                                                      Three months ended
                                                          March 31,
                                                    ----------------------
                                                       2010        2009
                                                    ----------  ----------
EBITDA
Investment management                               $   14,899  $   13,669
Real estate ownership                                   13,813      20,291
                                                    ----------  ----------
Total                                               $   28,712  $   33,960
                                                    ==========  ==========

AFFO
Investment management                               $   12,089  $   13,679
Real estate ownership                                   15,977      15,178
                                                    ----------  ----------
Total                                               $   28,066  $   28,857
                                                    ==========  ==========

EBITDA Per Share (Diluted)
Investment management                               $     0.38  $     0.34
Real estate ownership                                     0.35        0.51
                                                    ----------  ----------
Total                                               $     0.73  $     0.85
                                                    ==========  ==========

AFFO Per Share (Diluted)
Investment management                               $     0.31  $     0.34
Real estate ownership                                     0.40        0.38
                                                    ----------  ----------
Total                                               $     0.71  $     0.72
                                                    ==========  ==========

Adjusted Cash Flow From Operating Activities
Adjusted cash flow                                  $   27,675  $   39,038
                                                    ==========  ==========
Adjusted cash flow per share (diluted)              $     0.70  $     0.98
                                                    ==========  ==========

Distributions declared per share                    $    0.504  $    0.496
                                                    ==========  ==========
Payout ratio (distributions per share/adjusted cash
 flow per share)                                            72%         51%
                                                    ==========  ==========






                          W. P. CAREY & CO. LLC

            Reconciliation of Net Income to EBITDA (Unaudited)
            (in thousands, except share and per share amounts)


                                                      Three months ended
                                                          March 31,
                                                    -----------------------
                                                       2010        2009
                                                    ----------- -----------
Investment Management
Net income from investment management attributable
 to W. P. Carey members                             $     9,850 $     7,306
Adjustments:
  Provision for income taxes                              3,878       5,765
  Depreciation and amortization                           1,171         598
                                                    ----------- -----------
EBITDA - investment management                      $    14,899 $    13,669
                                                    =========== ===========
EBITDA per share (diluted)                          $      0.38 $      0.34
                                                    =========== ===========

Real Estate Ownership
Net income from real estate ownership attributable
 to W. P. Carey members                             $     4,563 $    10,403
Adjustments:
  Interest expense                                        3,711       4,195
  Provision for income taxes                                234         435
  Depreciation and amortization                           5,198       4,752
  Reconciling items attributable to discontinued
   operations                                               107         506
                                                    ----------- -----------
EBITDA - real estate ownership                      $    13,813 $    20,291
                                                    =========== ===========
EBITDA per share (diluted)                          $      0.35 $      0.51
                                                    =========== ===========

Total Company
EBITDA                                              $    28,712 $    33,960
                                                    =========== ===========
EBITDA per share (diluted)                          $      0.73 $      0.85
                                                    =========== ===========
Diluted weighted average shares outstanding          39,495,845  39,927,886
                                                    =========== ===========

Non-GAAP Financial Disclosure
EBITDA as disclosed represents earnings before interest, taxes,
depreciation and amortization. We believe that EBITDA is a useful
supplemental measure to investors and analysts for assessing the
performance of our business segments, although it does not represent net
income that is computed in accordance with GAAP, because it removes the
impact of our capital structure and asset base from our operating results
and because it is helpful when comparing our operating performance to that
of companies in our industry without regard to such items, which can vary
substantially from company to company. Accordingly, EBITDA should not be
considered as an alternative to net income as an indicator of our
financial performance. EBITDA may not be comparable to similarly titled
measures of other companies. Therefore, we use EBITDA as one measure of
our operating performance when we formulate corporate goals, evaluate the
effectiveness of our strategies, and determine executive compensation.





 
                          W. P. CAREY & CO. LLC

Reconciliation of Net Income to Funds From Operations -- as adjusted (AFFO)
                                (Unaudited)
            (in thousands, except share and per share amounts)


                                                      Three months ended
                                                          March 31,
                                                    ----------------------
                                                       2010        2009
                                                    ----------  ----------
Investment Management
Net income from investment management attributable
 to W. P. Carey members                             $    9,850  $    7,306
Amortization, deferred taxes and other non-cash
 charges                                                 1,278       1,312
AFFO from equity investments                               961       5,061
                                                    ----------  ----------
AFFO - investment management                        $   12,089  $   13,679
                                                    ==========  ==========
AFFO per share (diluted)                            $     0.31  $     0.34
                                                    ==========  ==========

Real Estate Ownership
Net income from real estate ownership attributable
 to W. P. Carey members                             $    4,563  $   10,403
(Gain) loss on sale of real estate, net                   (404)        135
Gain on extinguishment of debt, net (a)                      -      (2,796)
Depreciation, amortization and other non-cash
 charges                                                 5,818       5,174
Straight-line and other rent adjustments                   (80)        180
Impairment charges                                       7,152           -
AFFO from equity investments                              (904)      2,257
Noncontrolling interests' share of AFFO                   (168)       (175)
                                                    ----------  ----------
AFFO - real estate ownership                        $   15,977  $   15,178
                                                    ==========  ==========
AFFO per share (diluted)                            $     0.40  $     0.38
                                                    ==========  ==========

Total Company
AFFO                                                $   28,066  $   28,857
                                                    ==========  ==========
AFFO per share (diluted)                            $     0.71  $     0.72
                                                    ==========  ==========
Diluted weighted average shares outstanding         39,495,845  39,927,886
                                                    ==========  ==========

(a) In January 2009, Carey Storage repaid, in full, the $35.0 million
    outstanding balance on its secured credit facility for $28.0 million
    and recognized a gain of $7.0 million on the repayment of this debt at
    a discount, inclusive of the profit sharing interest of $4.2 million.


Non-GAAP Financial Disclosure
Funds from operations (FFO) is a non-GAAP financial measure that is
commonly used by investors and analysts in evaluating real estate
companies. Although the National Association of Real Estate Investment
Trusts (NAREIT) has published a definition of FFO, real estate companies
often modify this definition as they seek to provide financial measures
that meaningfully reflect their operations. FFO or funds from
operations - as adjusted (AFFO) should not be considered as an alternative
to net income as an indication of a company's operating performance or to
cash flow from operating activities as a measure of its liquidity and
should be used in conjunction with GAAP net income. FFO or AFFO disclosed
by other REITs may not be comparable to our AFFO calculation.


NAREIT's definition of FFO adjusts GAAP net income to exclude depreciation
and gains/losses from the sales of properties and adjusts for FFO
applicable to unconsolidated partnerships and joint ventures. We calculate
AFFO in accordance with this definition and then include other adjustments
to GAAP net income to adjust for certain non-cash charges such as
amortization of intangibles, deferred income tax benefits and expenses,
straight-line rents, stock compensation, impairment charges on real estate
and unrealized foreign currency exchange gains and losses. We exclude
these items from GAAP net income as they are not the primary drivers in
our decision making process. Our assessment of our operations is focused
on long-term sustainability and not on such non-cash items, which may
cause short-term fluctuations in net income but that have no impact on
cash flows, and we therefore use AFFO as one measure of our operating
performance when we formulate corporate goals, evaluate the effectiveness
of our strategies, and determine executive compensation. As a result,
we believe that AFFO is a useful supplemental measure for investors to
consider because it will help them to better understand and measure the
performance of our business over time without the potentially distorting
impact of these short-term fluctuations.






                          W. P. CAREY & CO. LLC

         Adjusted Cash Flow from Operating Activities (Unaudited)
            (in thousands, except share and per share amounts)


                                                      Three months ended
                                                          March 31,
                                                    ----------------------
                                                       2010        2009
                                                    ----------  ----------
Cash flow from operating activities                 $   13,623  $   24,282
Adjustments:
Distributions received from equity investments in
 real estate in excess of equity income (a)              1,881       7,195
(Distributions paid to) contributions received from
 noncontrolling interests, net (b)                        (177)        222
Changes in working capital (c)                          12,348       7,339
                                                    ----------  ----------
Adjusted cash flow from operating activities        $   27,675  $   39,038
                                                    ==========  ==========
Adjusted cash flow per share (diluted)              $     0.70  $     0.98
                                                    ==========  ==========

Distributions declared per share                    $    0.504  $    0.496
                                                    ==========  ==========
Payout ratio (distributions per share/adjusted cash
 flow per share)                                            72%         51%
                                                    ==========  ==========

Diluted weighted average shares outstanding         39,495,845  39,927,886
                                                    ==========  ==========

(a) We take a substantial portion of our asset management revenue in shares
    of the CPA® REIT funds. To the extent we receive distributions in
    excess of the equity income that we recognize, we include such amounts
    in our evaluation of cash flow from core operations.
(b) Represents noncontrolling interests' share of
    contributions/distributions made by ventures that we consolidate in our
    financial statements.
(c) Timing differences arising from the payment of certain liabilities and
    the receipt of certain receivables in a period other than that in which
    the item is recognized in determining net income may distort the actual
    cash flow that our core operations generate. We adjust our GAAP cash
    flow from operating activities to record such amounts in the period in
    which the item was actually incurred. We believe this is a fairer
    measure of determining our cash flow from core operations.

Non-GAAP Financial Disclosure
Adjusted cash flow from operating activities refers to our cash provided
by operating activities, as determined in accordance with GAAP, adjusted
primarily to reflect timing differences between the period an expense is
incurred and paid, to add cash distributions that we receive from our
investments in unconsolidated real estate joint ventures in excess of our
equity investment in the joint ventures, and to subtract cash
distributions that we make to our noncontrolling partners in real estate
joint ventures that we consolidate. We hold a number of interests in real
estate joint ventures, and we believe that adjusting our GAAP cash
provided by operating activities to reflect these actual cash receipts
and cash payments may give investors a more accurate picture of our
actual cash flow than GAAP cash provided by operating activities alone
and that it is a useful supplemental measure for investors to consider.
We also believe that adjusted cash flow from operating activities is a
useful supplemental measure for assessing the cash flow generated from
our core operations, and we use this measure when evaluating
distributions to shareholders and as one measure of our operating
performance when we determine executive compensation. Adjusted cash flow
from operating activities should not be considered as an alternative to
cash provided by operating activities computed on a GAAP basis as a
measure of our liquidity. Adjusted cash flow from operating activities
may not be comparable to similarly titled measures of other companies.

Contact Information

  • COMPANY CONTACT:

    Kristina McMenamin
    W. P. Carey & Co. LLC
    212-492-8995
    Email Contact

    PRESS CONTACT:
    Guy Lawrence
    Ross & Lawrence
    212-308-3333
    Email Contact