SOURCE: W. P. Carey & Co. LLC

W. P. Carey & Co. LLC

May 10, 2011 09:00 ET

W. P. Carey Announces First Quarter Financial Results

NEW YORK, NY--(Marketwire - May 10, 2011) - Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today reported financial results for the first quarter ended March 31, 2011.

QUARTERLY RESULTS

  • Funds from operations -- as adjusted (AFFO) for the first quarter of 2011 increased compared to the first quarter of 2010, to $39.1 million or $0.97 per diluted share from $28.1 million or $0.71 per diluted share, respectively.
  • Cash flow from operating activities for the three months ended March 31, 2011 was $6.7 million compared to $13.6 million for the prior year period, while adjusted cash flow from operating activities was $24.2 million in the first quarter of 2011 compared to $27.7 million in the first quarter last year.
  • Total revenues net of reimbursed expenses for the first quarter of 2011 increased to $59.8 million from $47.7 million for the first quarter of 2010. Reimbursed expenses are excluded from total revenues because they have no impact on net income.
  • Net Income for the first quarter of 2011 was $23.3 million, compared to $14.4 million for the same period in 2010.
  • We received approximately $4.5 million in cash distributions from our equity ownership in the CPA® REITs for the quarter ended March 31, 2011.
  • Further information concerning AFFO and adjusted cash flow from operating activities -- non-GAAP supplemental performance metrics -- is presented in the accompanying tables.

CPA®:17 - GLOBAL ACTIVITY

  • On April 7, 2011, CPA®:17 - Global's follow-on offering was declared effective by the SEC, and its initial public offering was terminated. The follow-on offering is for up to an additional $1 billion of CPA®:17 - Global's common stock. To date, CPA®:17 - Global has raised more than $1.5 billion in investor capital.
  • Investment volume for our CPA® REITs in the first quarter of 2011 -- the majority of which was on behalf of CPA®:17 - Global -- was approximately $345 million.
  • First quarter transactions included a $207 million sale-leaseback with a leading Dutch supermarket company C1000, and a $32 million transaction with Harbor Freight Tools, a brand-name, discount tool retailer, involving its East Coast distribution facility.
  • In the second quarter of 2011, we completed a $51 million acquisition of four industrial facilities leased to Flanders Corporation, and a $3 million acquisition of a self-storage asset in Fort Worth, Texas, which will be managed by Metro Storage.

CAREY WATERMARK INVESTORS ACTIVITY

  • To date, CWI has raised more than $19 million in its initial public offering and closed its first transaction on May 5, 2011. The transaction is an $88 million joint venture with Ensemble Hotel Partners, LLC for two hotel properties located on the waterfront in Long Beach, California. CWI's investment is approximately $43.6 million, of which $20.8 million is equity.

MERGER OF CPA®:14 and CPA®:16 - GLOBAL

  • The merger of CPA®:14 with and into a subsidiary of CPA®:16 - Global closed on May 2, 2011. The transaction represents the thirteenth successful liquidation of a W. P. Carey fund since 1998 and provided CPA®:14 investors with an average annual return at liquidation of 8.96%.
  • This merger also provides CPA®:16 - Global investors with a more diversified portfolio and an opportunity for increased cash flow.

ASSET MANAGEMENT ACTIVITY

  • In the first quarter of 2011, we re-leased our iconic Frank Gehry-designed Binoculars Building to Google Inc., which is making significant improvements to the building and combining it with two adjacent buildings to create a large, unique campus environment.
  • As of March 31, 2011, the occupancy rate of our 14 million square foot owned portfolio was approximately 90%. In addition, for the 103 million square feet owned by the CPA® REITs, the occupancy rate was approximately 98%.

ASSETS UNDER OWNERSHIP AND MANAGEMENT

  • W. P. Carey is the advisor to the CPA® REITs, which had total assets of $9.2 billion as of March 31, 2011.
  • The W. P. Carey Group's assets under ownership and management total approximately $11.2 billion as of March 31, 2011 -- a 41% increase over the past five years.

DISTRIBUTIONS

  • The Board of Directors raised the quarterly cash distribution to $0.512 per share for the first quarter of 2011. The distribution -- our 40th consecutive quarterly increase -- was paid on April 15, 2011 to shareholders of record as of March 31, 2011.

Trevor Bond, President and Chief Executive Officer, noted, "We have experienced significant accomplishments year-to-date in terms of fundraising, acquisitions and asset management, and we achieved positive financial results in the first quarter. The successful closing of the merger of CPA®:14 with CPA®:16 - Global shows our continuing ability and commitment to providing solid returns to our CPA® investors over the long term. The completion of the initial public offering of CPA®:17 - Global and the launch of its follow-on offering are a testament to our fundraising capabilities. We continue to source attractive long term, income-generating investments on behalf of CPA®:17 - Global. Our lease with Google is an example of how our asset management team maintains and enhances portfolio property values for us as well as our CPA® funds. And finally, the closing of our first hotel investment on behalf of Carey Watermark Investors demonstrates our ability to identify, structure and execute on hospitality investments that draw on our strength and history as a capital source.

"None of this could have been accomplished without the talent embedded in all areas of our organization. The W. P. Carey team is committed to growing our asset base and generating consistent cash flow to meet the needs and objectives of our investors and shareholders."

CONFERENCE CALL & WEBCAST

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

Time: Tuesday, May 10, 2011 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: 450676#
Replay Available until May 24, 2011 at 9:00 AM (ET).

W. P. Carey & Co. LLC

W. P. Carey & Co. LLC (NYSE: WPC) is an investment management company that provides long term financing to companies worldwide via sale leaseback and build to suit transactions and manages a global investment portfolio of approximately $11 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 280 long-term corporate obligors spanning 28 industries and 17 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,
                                                    ----------------------
                                                       2011        2010
                                                    ----------  ----------
Revenues
  Asset management revenue                          $   19,820  $   18,820
  Structuring revenue                                   15,945       6,834
  Wholesaling revenue                                    3,280       2,542
  Reimbursed costs from affiliates                      17,719      14,602
  Lease revenues                                        15,460      15,691
  Other real estate income                               5,308       3,776
                                                    ----------  ----------
                                                        77,532      62,265
                                                    ----------  ----------
Operating Expenses
  General and administrative                           (21,323)    (18,047)
  Reimbursable costs                                   (17,719)    (14,602)
  Depreciation and amortization                         (5,450)     (6,098)
  Property expenses                                     (3,155)     (2,203)
  Other real estate expenses                            (2,557)     (1,815)
                                                    ----------  ----------
                                                       (50,204)    (42,765)
                                                    ----------  ----------
Other Income and Expenses
  Other interest income                                    675         273
  Income from equity investments in real estate and
   the REITs                                             6,216       9,142
  Other income and (expenses)                              481        (657)
  Interest expense                                      (4,440)     (3,711)
                                                    ----------  ----------
                                                         2,932       5,047
                                                    ----------  ----------
  Income from continuing operations before income
   taxes                                                30,260      24,547
  Provision for income taxes                            (7,574)     (4,112)
                                                    ----------  ----------
  Income from continuing operations                     22,686      20,435
                                                    ----------  ----------
Discontinued Operations
  Income from operations of discontinued properties        149         615
  Gain on sale of real estate                              781         404
  Impairment charges                                         -      (7,152)
                                                    ----------  ----------
  Income (loss) from discontinued operations               930      (6,133)
                                                    ----------  ----------
Net Income                                              23,616      14,302
  Add: Net loss attributable to noncontrolling
   interests                                               330         286
  Less: Net income attributable to redeemable
   noncontrolling interests                               (603)       (175)
                                                    ----------  ----------
Net Income Attributable to W. P. Carey Members      $   23,343  $   14,413
                                                    ==========  ==========
Basic Earnings Per Share
  Income from continuing operations attributable to
   W. P. Carey members                              $     0.56  $     0.51
  Income (loss) from discontinued operations
   attributable to W. P. Carey members                    0.02       (0.15)
                                                    ----------  ----------
  Net income attributable to W. P. Carey members    $     0.58  $     0.36
                                                    ==========  ==========
Diluted Earnings Per Share
  Income from continuing operations attributable to
   W. P. Carey members                              $     0.56  $     0.52
  Income (loss) from discontinued operations
   attributable to W. P. Carey members                    0.02       (0.16)
                                                    ----------  ----------
  Net income attributable to W. P. Carey members    $     0.58  $     0.36
                                                    ==========  ==========

Weighted Average Shares Outstanding
  Basic                                             39,738,207  39,088,114
                                                    ==========  ==========
  Diluted                                           40,242,706  39,495,845
                                                    ==========  ==========

Amounts Attributable to W. P. Carey Members
  Income from continuing operations, net of tax     $   22,413  $   20,546
  Income (loss) from discontinued operations, net
   of tax                                                  930      (6,133)
                                                    ----------  ----------
  Net income                                        $   23,343  $   14,413
                                                    ==========  ==========
Distributions Declared Per Share                    $    0.512  $    0.504
                                                    ==========  ==========






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


                                                        Three Months Ended
                                                            March 31,
                                                        ------------------
                                                          2011      2010
                                                        --------  --------
Cash Flows -- Operating Activities
Net income                                              $ 23,616  $ 14,302
Adjustments to net income:
  Depreciation and amortization including intangible
   assets and deferred financing costs                     5,457     6,403
  Income from equity investments in real estate and the
   REITs in excess of distributions received                 265    (4,530)
  Straight-line rent and financing lease adjustments        (373)      251
  Gain on sale of real estate                               (781)     (404)
  Allocation of loss to profit-sharing interest                -      (171)
  Management income received in shares of affiliates     (10,083)   (8,532)
  Unrealized (gain) loss on foreign currency
   transactions and others                                  (210)      608
  Realized (gain) loss on foreign currency transactions
   and others                                               (213)      221
  Impairment charges                                           -     7,152
  Stock-based compensation expense                         2,451     2,461
  Deferred acquisition revenue received                   11,103    14,851
  Increase in structuring revenue receivable              (7,305)   (3,244)
  Decrease in income taxes, net                           (1,956)   (6,682)
  Net changes in other operating assets and liabilities  (15,285)   (9,063)
                                                        --------  --------
Net cash provided by operating activities                  6,686    13,623
                                                        --------  --------

Cash Flows -- Investing Activities
  Distributions received from equity investments in real
   estate and the REITs in excess of equity income         2,795     5,556
  Capital contributions to equity investments             (2,297)        -
  Purchases of real estate and equity investments in
   real estate                                                 -   (47,583)
  Capital expenditures                                      (880)     (620)
  Proceeds from sale of real estate                        9,187     6,632
  Proceeds from sale of securities                           120         -
  Funds released from escrow                                (148)   36,132
  Funds placed in escrow                                     363         -
                                                        --------  --------
Net cash provided by investing activities                  9,140       117
                                                        --------  --------

Cash Flows -- Financing Activities
  Distributions paid                                     (20,259)  (32,482)
  Contributions from noncontrolling interests                617       620
  Distributions to noncontrolling interests               (1,425)     (792)
  Scheduled payments of mortgage principal                (7,294)   (4,059)
  Proceeds from mortgage financing                         1,135         -
  Proceeds from line of credit                            90,000    51,500
  Prepayments of line of credit                         (110,000)  (12,500)
  Refund (payment) of financing costs and mortgage
   deposits                                                   53      (195)
  Windfall tax benefits (provision) associated with
   stock-based compensation awards                           293      (523)
                                                        --------  --------
Net cash (used in) provided by financing activities      (46,880)    1,569
                                                        --------  --------

Change in Cash and Cash Equivalents During the Period
    Effect of exchange rate changes on cash                  439      (663)
                                                        --------  --------
    Net (decrease) increase in cash and cash equivalents (30,615)   14,646
  Cash and cash equivalents, beginning of period          64,693    18,450
                                                        --------  --------
  Cash and cash equivalents, end of period              $ 34,078  $ 33,096
                                                        ========  ========





                          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,
                                                    ----------------------
                                                       2011        2010
                                                    ----------  ----------
EBITDA
Investment management                               $   21,359  $   12,526
Real estate ownership                                   19,513      16,186
                                                    ----------  ----------
Total                                               $   40,872  $   28,712
                                                    ==========  ==========

AFFO
Investment management                               $   20,650  $    9,471
Real estate ownership                                   18,492      18,595
                                                    ----------  ----------
Total                                               $   39,142  $   28,066
                                                    ==========  ==========

EBITDA Per Share (Diluted)
Investment management                               $     0.53  $     0.32
Real estate ownership                                     0.49        0.41
                                                    ----------  ----------
Total                                               $     1.02  $     0.73
                                                    ==========  ==========

AFFO Per Share (Diluted)
Investment management                               $     0.51  $     0.24
Real estate ownership                                     0.46        0.47
                                                    ----------  ----------
Total                                               $     0.97  $     0.71
                                                    ==========  ==========

Adjusted Cash Flow From Operating Activities
Adjusted cash flow                                  $   24,226  $   27,675
                                                    ==========  ==========
Adjusted cash flow per share (diluted)              $     0.60  $     0.70
                                                    ==========  ==========

Distributions declared per share                    $    0.512  $    0.504
                                                    ==========  ==========
Payout ratio (distributions per share/adjusted cash
 flow per share)                                            85%         72%
                                                    ==========  ==========





                          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,
                                                      ---------------------
                                                        2011       2010
                                                      ---------- ----------
Investment Management
Net income from investment management attributable
 to W. P. Carey members  (a)                          $   13,177 $    7,780
Adjustments:
Provision for income taxes                                 7,380      3,575
Depreciation and amortization                                802      1,171
                                                      ---------- ----------
EBITDA - investment management                        $   21,359 $   12,526
                                                      ========== ==========
EBITDA per share (diluted)                            $     0.53 $     0.32
                                                      ========== ==========

Real Estate Ownership
Net income from real estate ownership attributable to
 W. P. Carey members  (a)                             $   10,166 $    6,633
Adjustments:
Interest expense                                           4,440      3,711
Provision for income taxes                                   194        537
Depreciation and amortization                              4,648      4,927
Reconciling items attributable to discontinued
 operations                                                   65        378
                                                      ---------- ----------
EBITDA - real estate ownership                        $   19,513 $   16,186
                                                      ========== ==========
EBITDA per share (diluted)                            $     0.49 $     0.41
                                                      ========== ==========

Total Company
EBITDA                                                $   40,872 $   28,712
                                                      ========== ==========
EBITDA per share (diluted)                            $     1.02 $     0.73
                                                      ========== ==========
Diluted weighted average shares outstanding           40,242,706 39,495,845
                                                      ========== ==========


(a) Effective January 1, 2011, we include our equity investments in the
REITs in our real estate ownership segment. The equity income (loss) from
the REITs that is now included in our real estate ownership segment
represents our proportionate share of the revenue less expenses of the
net-leased properties held by the REITs. This treatment is consistent with
that of our directly-owned properties.  Results for the three months ended
March 31, 2010 have been adjusted to reflect this reclassification.

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,
                                                    ----------------------
                                                       2011        2010
                                                    ----------  ----------
Investment Management
Net income from investment management attributable
 to W. P. Carey members (a)                         $   13,177  $    7,780
Amortization, deferred taxes and other non-cash
 charges                                                 7,473       1,691
                                                    ----------  ----------
AFFO - investment management                        $   20,650  $    9,471
                                                    ==========  ==========
AFFO per share (diluted)                            $     0.51  $     0.24
                                                    ==========  ==========

Real Estate Ownership
Net income from real estate ownership attributable
 to W. P. Carey members (a)                         $   10,166  $    6,633
Gain on sale of real estate, net                          (781)       (404)
Depreciation, amortization and other non-cash
 charges                                                 3,840       5,405
Straight-line and other rent adjustments                  (417)        (80)
Impairment charges                                           -       7,152
AFFO from equity investments                             5,794          57
Noncontrolling interests' share of AFFO                   (110)       (168)
                                                    ----------  ----------
AFFO - real estate ownership                        $   18,492  $   18,595
                                                    ==========  ==========
AFFO per share (diluted)                            $     0.46  $     0.47
                                                    ==========  ==========

Total Company
AFFO                                                $   39,142  $   28,066
                                                    ==========  ==========
AFFO per share (diluted)                            $     0.97  $     0.71
                                                    ==========  ==========
Diluted weighted average shares outstanding         40,242,706  39,495,845
                                                    ==========  ==========


(a) Effective January 1, 2011, we include our equity investments in the
REITs in our real estate ownership segment. The equity income (loss) from
the REITs that is now included in our real estate ownership segment
represents our proportionate share of the revenue less expenses of the
net-leased properties held by the REITs. This treatment is consistent with
that of our directly-owned properties.  Results for the three months ended
March 31, 2010 have been adjusted to reflect this reclassification.

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 but 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,
                                                    ----------------------
                                                       2011        2010
                                                    ----------  ----------
Cash flow from operating activities                 $    6,686  $   13,623
Adjustments:
Distributions received from equity investments in
 real estate in excess of equity income (a)              1,888       1,881
Distributions paid to noncontrolling interests, net
 (b)                                                      (815)       (177)
Changes in working capital (c)                          16,467      12,348
                                                    ----------  ----------
Adjusted cash flow from operating activities        $   24,226  $   27,675
                                                    ==========  ==========
Adjusted cash flow per share (diluted)              $     0.60  $     0.70
                                                    ==========  ==========

Distributions declared per share                    $    0.512  $    0.504
                                                    ==========  ==========
Payout ratio (distributions per share/adjusted cash
 flow per share)                                            85%         72%
                                                    ==========  ==========

Diluted weighted average shares outstanding         40,242,706  39,495,845
                                                    ==========  ==========

(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 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 liability was actually recognized.

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