SOURCE: W. P. Carey & Co. LLC

May 08, 2008 09:15 ET

W. P. Carey Announces First Quarter Financial Results

NEW YORK, NY--(Marketwire - May 8, 2008) - Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today reported financial results for the first quarter ended March 31, 2008.

QUARTERLY RESULTS

--  Total revenues net of reimbursed expenses for the first quarter of
    2008 were $47 million, compared to $41.2 million for the first quarter of
    2007. Reimbursed expenses are excluded from total revenues because they
    have no impact on net income.
--  Net income for the first quarter of 2008 increased to $17.1 million,
    as compared to $10.8 million for the same period in 2007.
--  Diluted earnings per share (EPS) for the first quarter of 2008
    increased to $0.43, as compared to $0.27 for the same period in 2007.
--  Funds from operations (FFO) for the first quarter of 2008, as per the
    attached table, increased to $0.54 per diluted share, or $21.5 million, as
    compared to $0.47 per diluted share, or $18.6 million, for the comparable
    period in 2007.
--  Cash flows from operating activities for the three months increased to
    $10.8 million from $(0.3) million in 2007.
--  The Board of Directors raised the quarterly cash distribution to
    $0.482 per share for the first quarter, which was paid on April 15, 2008 to
    shareholders of record as of March 31, 2008.
    

SUPPLEMENTAL PERFORMANCE METRICS

--  Earnings before interest, taxes, depreciation and amortization
    (EBITDA) from our investment management segment totaled $0.37 per diluted
    share, or $14.7 million this quarter, an increase over EBITDA of $0.29 per
    diluted share, or $11.6 million, in the first quarter of 2007.
--  FFO from our real estate ownership segment in the first quarter of
    2008 increased to $0.40 per diluted share, or $16.1 million, from $0.37 per
    diluted share, or $14.7 million in the first quarter of 2007.
--  For the three months ended March 31, 2008, adjusted cash flow from
    operations totaled $38.7 million, as compared to $37.4 million for the
    previous period.
--  Further information concerning these non-GAAP supplemental performance
    metrics is presented in the accompanying tables.
    

INVESTMENT AND FUNDRAISING ACTIVITY

--  In the first quarter of 2008, we structured investments totaling
    approximately $57 million on behalf of our CPA® REITs -- all domestic --
    compared to $167 million for the first quarter of 2007. During April 2008,
    we closed an additional $31 million in transactions in Finland and Germany.
--  Our newest offering, CPA®:17 - Global, began fundraising this year.
    Through May 7, 2008, we have raised more than $110 million on CPA®:17 -
    Global's behalf.
    

GROWTH IN ASSETS UNDER MANAGEMENT

--  W. P. Carey is the advisor to the CPA® REITs, which had assets
    valued at approximately $8.6 billion as of March 31, 2008 -- a 14.2%
    increase as compared to March 31, 2007.
--  Since 2001, the Company's assets under management on behalf of the
    CPA® REITs have more than tripled.
--  As of March 31, 2008, the occupancy rate of our 17 million square foot
    owned portfolio was approximately 96%. In addition, for the 88 million
    square feet owned by the CPA® REITs, the occupancy rate was more than
    99%.
    

CAREY WATERMARK

--  In March 2008, we formed Carey Watermark Investors Incorporated in
    March 2008 for the purpose of acquiring interests in lodging and lodging
    related properties. We currently expect to launch this $1 billion offering
    later this year.
    

"We are pleased with the results that we have generated for the first quarter of 2008," said Gordon F. DuGan, President and Chief Executive Officer. "Revenues increased in both our owned real estate and investment advisory segments and contributed to a strong quarter; although we should note that some of the increase was due to full recognition of our structuring and asset management revenue in Q1 2008 which was not the case in Q1 2007. While investment volume tends to be unpredictable quarter-to-quarter, we are currently experiencing a period of lower investment origination relative to last year that may reflect, in part, a period of pricing adjustment in the sale-leaseback market. We believe that the adjustment that we are experiencing is short-term in nature and that there should be a large number of attractive investment opportunities during the remainder of 2008. We are continuing to raise CPA®:17 - Global with those opportunities in mind. Overall, we believe we are well-positioned for today's environment with a strong balance sheet and an opportunistic investment approach."

CONFERENCE CALL & WEBCAST

Please call at least 10 minutes prior to call to register

Time: Thursday, May 8, 2008 at 11:00 AM (ET)

Call-in Number: 1-877-407-0782
(International) +1-201-689-8567

Webcast: www.wpcarey.com/earnings

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

Replay Number: 1-877-660-6853
(International) +1-201-612-7415

Replay Access Codes: Account # 286 and Conference ID # 280515. Please note that both access codes are required for playback. Replay available until May 23, 2008 at midnight ET.

W. P. Carey & Co. LLC

W. P. Carey & Co. LLC provides long-term sale-leaseback and build-to-suit transactions for companies worldwide and manages a global investment portfolio worth more than $10 billion. Publicly traded on the New York Stock Exchange (WPC), W. P. Carey and its CPA® series of income-generating, non-traded REITs help companies and private equity firms release capital tied up in real estate assets. Now in our 35th year, the W. P. Carey Group's real estate holdings are highly diversified, comprised of more than 850 commercial and industrial assets spanning 28 industries and 14 countries. 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,
                                                    ----------------------
                                                       2008        2007
                                                    ----------  ----------
Revenues
  Asset management revenue                          $   20,126  $   15,034
  Structuring revenue                                    3,416       4,583
  Wholesaling revenue                                    1,140           -
  Reimbursed costs from affiliates                      10,366       3,475
  Lease revenues                                        19,202      18,587
  Other real estate income                               3,122       3,002
                                                    ----------  ----------
                                                        57,372      44,681
                                                    ----------  ----------
Operating Expenses
  General and administrative                           (15,413)    (12,168)
  Reimbursable costs                                   (10,366)     (3,475)
  Depreciation and amortization                         (6,091)     (6,735)
  Property expenses                                     (2,378)     (1,118)
  Other real estate expenses                            (2,069)     (2,524)
                                                    ----------  ----------
                                                       (36,317)    (26,020)
                                                    ----------  ----------
Other Income and Expenses
  Other interest income                                    761         598
  Income from equity investments in real estate and
   CPA® REITs                                            4,711       2,438
  Minority interest in income                              (89)       (277)
  Gain on sale of securities, foreign currency
   transactions and other, net                           2,811         186
  Interest expense                                      (5,043)     (4,613)
                                                    ----------  ----------
                                                         3,151      (1,668)
                                                    ----------  ----------
  Income from continuing operations before income
   taxes                                                24,206      16,993
  Provision for income taxes                            (7,144)     (6,379)
                                                    ----------  ----------
  Income from continuing operations                     17,062      10,614
                                                    ----------  ----------
Discontinued Operations
  Income from operations of discontinued properties         39         240
  Minority interest in income                                -         (54)
                                                    ----------  ----------
  Income from discontinued operations                       39         186
                                                    ----------  ----------

Net Income                                          $   17,101  $   10,800
                                                    ==========  ==========
Basic Earnings Per Share
  Income from continuing operations                 $     0.44  $     0.28
  Income from discontinued operations                        -           -
                                                    ----------  ----------
  Net income                                        $     0.44  $     0.28
                                                    ==========  ==========

Diluted Earnings Per Share
  Income from continuing operations                 $     0.43  $     0.27
  Income from discontinued operations                        -           -
                                                    ----------  ----------
  Net income                                        $     0.43  $     0.27
                                                    ==========  ==========

Weighted Average Shares Outstanding
  Basic                                             38,876,136  37,930,777
                                                    ==========  ==========
  Diluted                                           40,202,798  39,851,353
                                                    ==========  ==========

Distributions Declared Per Share                    $    0.482  $    0.462
                                                    ==========  ==========





                          W. P. CAREY & CO. LLC

            CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                              (in thousands)


                                                        Three months ended
                                                             March 31,
                                                        ------------------
                                                          2008      2007
                                                        --------  --------
Cash Flows -- Operating Activities
Net income                                              $ 17,101  $ 10,800
Adjustments to reconcile net income to net cash
 provided by (used in) operating activities
  Depreciation and amortization including intangible
   assets and deferred financing costs                     6,588     7,308
  Income from equity investments in real estate and
   CPA® REITs in excess of distributions received         (1,321)      (32)
  Minority interest in income                                 89       331
  Straight-line rent adjustments                             631       850
  Management income received in shares of affiliates     (10,063)   (8,467)
  Unrealized gain on foreign currency transactions,
   warrants and securities                                (1,488)     (160)
  Realized gain on foreign currency transactions          (1,323)      (26)
  Stock-based compensation expense                         2,106       923
  Decrease in deferred acquisition revenue received       46,695    13,882
  Increase in structuring revenue receivable              (1,672)     (158)
  Decrease in income taxes, net                             (608)  (17,786)
  Decrease in settlement provision                       (29,979)        -
  Net changes in other operating assets and liabilities  (15,997)   (7,744)
                                                        --------  --------
Net cash provided by (used in) operating activities       10,759      (279)
                                                        --------  --------
Cash Flows -- Investing Activities
  Distributions received from equity investments in
   real estate and CPA® REITs in excess of equity 
   income                                                  1,826     1,093
  Capital contributions to equity investments               (513)        -
  Purchases of real estate and equity investments in
   real estate                                              (184)  (27,710)
  Capital expenditures                                    (2,648)   (3,881)
  VAT refunded on purchase of real estate                  3,189         -
  Funds released from escrow in connection with the
   sale of property                                          636       465
  Payment of deferred acquisition revenue to affiliate         -      (536)
                                                        --------  --------
Net cash provided by (used in) investing activities        2,306   (30,569)
                                                        --------  --------
Cash Flows -- Financing Activities
  Distributions paid                                     (29,581)  (17,484)
  Contributions from minority interests                      558       206
  Distributions to minority interests                       (965)     (577)
  Scheduled payments of mortgage principal                (2,295)   (2,618)
  Proceeds from mortgages and credit facilities           81,937    54,059
  Prepayments of mortgage principal and credit
   facilities                                            (55,763)  (13,000)
  Repayment of loan from affiliates                       (7,569)        -
  Payment of financing costs                                (369)      (69)
  Proceeds from issuance of shares                        10,910     1,000
  Excess tax benefits associated with stock-based
   compensation awards                                       466       487
  Repurchase and retirement of shares                     (5,134)        -
                                                        --------  --------
Net cash (used in) provided by financing activities       (7,805)   22,004
                                                        --------  --------
Change in Cash and Cash Equivalents During the Period
    Effect of exchange rate changes on cash                  228        36
                                                        --------  --------
    Net increase (decrease) in cash and cash
     equivalents                                           5,488    (8,808)
  Cash and cash equivalents, beginning of period          12,137    22,108
                                                        --------  --------
  Cash and cash equivalents, end of period              $ 17,625  $ 13,300
                                                        ========  ========




                          W. P. CAREY & CO. LLC

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

These financial highlights include non-GAAP financial measures, including
earnings before interest, taxes, depreciation and amortization ("EBITDA"),
funds from operations ("FFO") 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,
                                                        ------------------
                                                          2008      2007
                                                        --------  --------
EBITDA
Investment management                                   $ 14,745  $ 11,573
Real estate ownership                                     20,634    17,437
                                                        --------  --------
Total                                                   $ 35,379  $ 29,010
                                                        ========  ========

FFO
Investment management                                   $  5,461  $  3,849
Real estate ownership                                     16,069    14,718
                                                        --------  --------
Total                                                   $ 21,530  $ 18,567
                                                        ========  ========

EBITDA Per Share (Diluted)
Investment management                                   $   0.37  $   0.29
Real estate ownership                                       0.51      0.44
                                                        --------  --------
Total                                                   $   0.88  $   0.73
                                                        ========  ========

FFO Per Share (Diluted)
Investment management                                   $   0.14  $   0.10
Real estate ownership                                       0.40      0.37
                                                        --------  --------
Total                                                   $   0.54  $   0.47
                                                        ========  ========

Adjusted Cash Flow From Operating Activities
Adjusted cash flow                                      $ 38,655  $ 37,389
                                                        ========  ========
Adjusted cash flow per share (diluted)                  $   0.96  $   0.94
                                                        ========  ========

Distributions declared per share                        $  0.482  $  0.462
                                                        ========  ========
Payout ratio (distributions per share/adjusted cash
 flow per share)                                              50%       49%
                                                        ========  ========





                          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,
                                                      ---------------------
                                                         2008       2007
                                                      ---------- ----------
Investment Management
Net income                                            $    6,931 $    4,389
Adjustments:
  Provision for income taxes                               6,784      6,138
  Depreciation and amortization                            1,030      1,046
                                                      ---------- ----------
EBITDA - investment management                        $   14,745 $   11,573
                                                      ========== ==========
EBITDA per share (diluted)                            $     0.37 $     0.29
                                                      ========== ==========

Real Estate Ownership
Net income                                            $   10,170 $    6,411
Adjustments:
  Interest expense                                         5,043      4,613
  Provision for income taxes                                 360        241
  Depreciation and amortization                            5,061      5,689
  Reconciling items attributable to discontinued
   operations                                                  -        483
                                                      ---------- ----------
EBITDA - real estate ownership                        $   20,634 $   17,437
                                                      ========== ==========
EBITDA per share (diluted)                            $     0.51 $     0.44
                                                      ========== ==========

Total Company
EBITDA                                                $   35,379 $   29,010
                                                      ========== ==========
EBITDA per share (diluted)                            $     0.88 $     0.73
                                                      ========== ==========
Diluted weighted average shares outstanding           40,202,798 39,851,353
                                                      ========== ==========

Non-GAAP Financial Disclosure

EBITDA as disclosed represents earnings before interest, taxes,
depreciation and amortization. We believe that EBITDA is a useful
supplemental measure for assessing the performance of our business
segments, although it does not represent net income that is computed in
accordance with GAAP. Accordingly, EBITDA should not be considered an
alternative for net income as an indicator of our financial performance.
EBITDA may not be comparable to similarly titled measures of other
companies.






                          W. P. CAREY & CO. LLC

  Reconciliation of Net Income to Funds From Operations (FFO) (Unaudited)
            (in thousands, except share and per share amounts)


                                                      Three months ended
                                                          March 31,
                                                    ----------------------
                                                       2008        2007
                                                    ----------  ----------
Investment Management
Net income                                          $    6,931  $    4,389
Amortization, deferred taxes and other non-cash
 charges                                                (2,554)     (2,715)
FFO from equity investments                              1,084       2,175
                                                    ----------  ----------
FFO -- investment management                        $    5,461  $    3,849
                                                    ==========  ==========
FFO per share (diluted)                             $     0.14  $     0.10
                                                    ==========  ==========

Real Estate Ownership
Net income                                          $   10,170  $    6,411
Depreciation, amortization and other non-cash
 charges                                                 3,561       5,462
Straight-line and other rent adjustments                   669         833
FFO from equity investments                              1,841       2,215
Minority investees share of FFO                           (172)       (203)
                                                    ----------  ----------
FFO -- real estate ownership                        $   16,069  $   14,718
                                                    ==========  ==========
FFO per share (diluted)                             $     0.40  $     0.37
                                                    ==========  ==========

Total Company
FFO                                                 $   21,530  $   18,567
                                                    ==========  ==========
FFO per share (diluted)                             $     0.54  $     0.47
                                                    ==========  ==========
Diluted weighted average shares outstanding         40,202,798  39,851,353
                                                    ==========  ==========

Non-GAAP Financial Disclosure

Funds from operations (FFO) is a non-GAAP financial measure that is
commonly used 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 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. It should be used in
conjunction with GAAP net income. FFO disclosed by other REITs may not be
comparable to our FFO 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
FFO 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.





                          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,
                                                    ----------------------
                                                       2008        2007
                                                    ----------  ----------
Cash flow from operating activities -- as reported  $   10,759  $     (279)
Adjustments:
CPA®:16 - Global performance adjustment, net (a)       (12,291)      5,611
Settlement payment (b)                                  21,012           -
CPA®:12/14 Merger -- payment of taxes (c)                    -      20,708
Distributions received from equity investments in
 real estate in excess of equity income (d)              1,825        (374)
Changes in working capital (c)                          17,350      11,723
                                                    ----------  ----------
Adjusted cash flow from operating activities        $   38,655  $   37,389
                                                    ==========  ==========
Adjusted cash flow per share (diluted)              $     0.96  $     0.94
                                                    ==========  ==========

Distributions declared per share                    $    0.482  $    0.462
                                                    ==========  ==========
Payout ratio (distributions per share/adjusted cash
 flow per share)                                            50%         49%

Diluted weighted average shares outstanding         40,202,798  39,851,353
                                                    ==========  ==========

Non-GAAP Financial Disclosure

Adjusted cash flow from operating activities is a non-GAAP financial
measure that represents cash flow from operating activities on a GAAP basis
adjusted for certain timing differences and deferrals as described below.
We believe that adjusted cash flow from operating activities is a useful
supplemental measure for assessing the cash flow generated from our core
operations and is used in evaluating distributions to shareholders.
Adjusted cash flow from operating activities should not be considered as an
alternative for cash flow from 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.

(a) Amounts (paid)/deferred in lieu of CPA®:16 - Global achieving its
performance criterion, net of a 45% tax provision. In determining cash flow
generated from our core operations, we believe it is more appropriate to
normalize cash flow for the impact of CPA®:16 - Global achieving its
performance criterion, rather than recognizing the entire deferred amount
in the quarter in which the performance criterion was met as this revenue
was actually earned over a three year period.

(b) In March 2008, we entered into a settlement with the SEC with respect
to all matters relating to their investigation. As a result, we paid
$29,979 in the first quarter of 2008, and recognized an offsetting $8,967
tax benefit in the same period.

(c) Timing differences arising from the payment of certain liabilities in a
period other than that in which the expense is recognized in determining
net income may distort the actual cash flow that our core operations
generate. We adjust our GAAP cash flow from operations to record such
amounts in the period in which the liability was actually incurred. We
believe this is a fairer measure of determining our cash flow from core
operations.

(d) 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.

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