SOURCE: W. P. Carey & Co. LLC

August 02, 2005 09:15 ET

W. P. Carey Reports Second Quarter 2005 Results

Net Income Increases 9%, EPS Up 7.5%

NEW YORK, NY -- (MARKET WIRE) -- August 2, 2005 -- Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today reported financial results for the three and six-month periods ended June 30, 2005.

QUARTERLY AND SIX-MONTH RESULTS

--  Net income for the three-month period increased 9% to $16.9 million,
    up from $15.5 million during the similar period in 2004.  Net income for
    the six-month period decreased to $22.8 million, as compared to $26.6
    million during the similar period in 2004.  Diluted earnings per share
    (EPS) for the three-month period increased 7.5% to $0.43, as compared to
    $0.40 during the same period in 2004.  EPS for the six-month period
    decreased to $0.58, versus $0.69 for the same period in 2004.  The increase
    in net income for the three-month period was largely due to a gain of
    approximately $9.1 million on the sale of real estate during the quarter.
    The decreases in net income and EPS for the six-month period were
    predominantly due to the shift in acquisitions volume to CPA®:16 -
    Global, resulting in deferral of a portion of fees until the preferred
    return is achieved; a significant decrease in other operating income; and
    additional impairment charges of $7.9 million.  These declines were
    partially offset by increased rental income from properties the Company
    acquired from its affiliate, Carey Institutional Properties, in September
    2004 and the gain of approximately $9.1 million on the sale of real estate
    in 2005.
    
--  Income from Continuing Operations for the three-month period was $13.2
    million, as compared to $19.3 million during the same period in 2004. Total
    revenues for the three-month period were $42.5 million, as compared to
    $49.9 million for the same period in 2004.  The decline in Income from
    Continuing Operations for the three-month period was due in large part to a
    decrease of $7.8 million in fees from the Company's affiliates resulting
    primarily from a lower volume of investments on behalf of its CPA® series
    of income generating real estate funds in the second quarter of 2005, as
    compared with the prior year period.   For the six-month period Income from
    Continuing Operations was $27.7 million, as compared to $29.5 million for
    the similar period in 2004.  The decline in income for the six-month period
    was due to the recognition of other operating income of $4.5 million in
    2004, versus $972,000 in 2005.  This was partially offset by impairment
    charges of $2.8 million recorded in 2004.  Total revenues for the six-month
    period increased to $86.5 million, up from $83.7 million during the similar
    period in 2004.
    
--  Funds from Operations (FFO), as per the attached schedule, which are
    calculated consistently with the Company's prior FFO reporting, for the
    three-month period were $0.64 per diluted share, or $24.8 million, as
    compared to $0.86 per diluted share, or $33.1 million for the comparable
    period in 2004. FFO for the six-month period were $1.24 per diluted share,
    or $48.7 million, down from $1.41 per diluted share, or $54.5 million for
    the similar period a year ago.  These declines were due primarily to the
    reduction in fees from the Company's affiliates as described above.
    
--  Cash Flows from Operating Activities for the six-month period were
    $30.3 million, as compared to $40.9 million during the similar period in
    2004.  This decline was due in large part to the prepayment of estimated
    tax liabilities, as well as an increase in the amount of management fees
    taken by the Company in stock of its CPA® funds.
    
--  Total investments for the three-month period by the Company, on behalf
    of its CPA® funds, were $262 million, as compared to $430 million during
    the similar period in 2004  (in April 2004, the Company completed a $312
    million transaction involving 78 U-Haul self-storage and truck rental
    facilities). For the three-month period, international transactions
    accounted for $164 million of the total investment volume, as compared to
    $32 million during the same period in 2004. Total investments for the six-
    month period were $627 million, as compared to $494 million in 2004.  For
    the six-month period, international investments accounted for $301 million
    of the volume in 2005, as compared to $44 million for the similar period in
    2004.
    
--  The Board of Directors raised the cash dividend to $.446 per common
    share, from $.444 per common share, which was paid on July 15, 2005 to
    shareholders of record on June 30, 2005.
    
MANAGEMENT
--  Robert C. Kehoe was appointed Treasurer.  Mr. Kehoe has served in W.
    P. Carey's Finance Department for the past 18 years and received his MBA in
    Finance from Pace University.
--  The Company is continuing its search for a new Chief Financial
    Officer.
    
Gordon F. DuGan, President and Chief Executive Officer of W. P. Carey & Co. LLC, said, "We are pleased to report that our net income increased nine percent and our earnings per share increased 7.5 percent this quarter. In the face of a competitive environment, we are pleased with the investment volume for the six-months to date. It is worth noting that an increased portion of this volume is taking place outside the United States, specifically Europe. International investment volume for the six-month period rose to $301 million from $44 million in 2004.

"We believe that our market presence in the U.S. and our ability to underwrite investments internationally will allow us to continue to find attractive yield investments for our investors. At the same time, we invest for the long-term and will remain disciplined in seeking such opportunities."

UPCOMING EVENT

--  President and CEO Gordon DuGan will speak at The Wall Street
    Transcript's Investing in the REIT Industry Conference at the Harvard Club
    in New York City at 11:10 AM on Tuesday, August 23, 2005.  A live webcast
    of his presentation, as well as an archived version, will be available at
    www.wpcarey.com.
    
CONFERENCE CALL & WEBCAST
Please call at least 10 minutes prior to register for call.

Time:              Tuesday, August 2, 2005 11:00 am (ET)
Call-in number:    1-800-946-0786     (International) 719-457-2662
Webcast:           www.wpcarey.com
Replay:            Available after 1:00 PM. Call 1-888-203-1112
                  (International) 719-457-0820 with the access code
                   5787456
W. P. CAREY & CO. LLC

Founded in 1973, W. P. Carey & Co. LLC is a global investment firm concerned with assisting corporations with various forms of long-term financing. The Company also provides asset management services to the Corporate Property Associates (CPA®) series of income generating real estate funds. With $3.5 billion in equity capital, the W. P. Carey Group is one of the leading providers of net lease financing for corporate properties worldwide. The Group owns more than 650 commercial and industrial properties worldwide, representing over 90 million square feet, valued at more than $7.2 billion. 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 commercial 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         Six Months Ended
                                June 30,                  June 30,
                           2005         2004         2005         2004
                        ----------   ----------   ----------   ----------
Revenues:
  Management income
   from affiliates      $   24,713   $   32,535   $   50,851   $   49,787
  Rental income             13,507       10,673       26,936       21,375
  Interest income from
   direct financing
   leases                    3,867        3,849        7,703        7,634
  Other operating
   income                      413        2,637          972        4,452
  Revenue of other
   business operations          21          263           55          431
                        ----------   ----------   ----------   ----------
                            42,521       49,957       86,517       83,679
                        ----------   ----------   ----------   ----------
Expenses:
  Depreciation               2,916        2,379        5,817        4,756
  Amortization               2,203        1,692        4,406        3,385
  General and
   administrative           14,218       14,382       28,029       25,121
  Property expenses          1,632        1,455        3,295        3,238
  Impairment charges
   and loan losses               -          550            -        2,800
                        ----------   ----------   ----------   ----------
                            20,969       20,458       41,547       39,300
                        ----------   ----------   ----------   ----------

    Income from
     continuing
     operations before
     other interest
     income, minority
     interest, equity
     investments, gains
     and losses,
     interest expense
     and income taxes       21,552       29,499       44,970       44,379

Other interest income          824          713        1,666        1,393
Minority interest in
 income                       (767)         (97)      (1,399)        (165)
Income from equity
 investments                 1,197        1,295        2,565        2,631
(Loss) gain on foreign
 currency transactions
 and other gains, net         (313)         (42)        (663)         407
Interest expense            (4,195)      (3,370)      (8,508)      (6,968)
                        ----------   ----------   ----------   ----------

    Income from
     continuing
     operations before
     income taxes           18,298       27,998       38,631       41,677

Provision for income
 taxes                      (5,099)      (8,732)     (10,952)     (12,137)
                        ----------   ----------   ----------   ----------

    Income from
     continuing
     operations             13,199       19,266       27,679       29,540
                        ----------   ----------   ----------   ----------

Discontinued operations:
  Income from operations
   of discontinued
   properties                  744        1,314        1,811        2,132
  Impairment charges
   on properties held
   for sale                 (6,149)      (5,100)     (15,821)      (5,100)
  Gain on sale of real
   estate                    9,139            -        9,119            -
                        ----------   ----------   ----------   ----------
    Income (loss) from
     discontinued
     operations              3,734       (3,786)      (4,891)      (2,968)
                        ----------   ----------   ----------   ----------

      Net income        $   16,933   $   15,480   $   22,788   $   26,572
                        ==========   ==========   ==========   ==========

Basic earnings per
 share:
  Earnings from
   continuing
   operations           $     0.35   $     0.51   $     0.74   $     0.79
  Income (loss) from
   discontinued
   operations                 0.10        (0.10)       (0.13)       (0.08)
                        ----------   ----------   ----------   ----------
  Net income            $     0.45   $     0.41   $     0.61   $     0.71
                        ==========   ==========   ==========   ==========

Diluted earnings per
 share:
  Earnings from
   continuing
   operations           $     0.34   $     0.50   $     0.71   $     0.76
  Income (loss) from
   discontinued
   operations                 0.09        (0.10)       (0.13)       (0.07)
  Net income            $     0.43   $     0.40   $     0.58   $     0.69
                        ==========   ==========   ==========   ==========

Weighted average
 shares outstanding:
  Basic                 37,670,305   37,404,485   37,631,539   37,359,638
                        ==========   ==========   ==========   ==========
  Diluted               39,017,636   38,595,391   39,185,907   38,681,413
                        ==========   ==========   ==========   ==========



                              W. P. CAREY & CO. LLC

                              Funds From Operations
                    (in thousands except per share amounts)

                                   Three Months            Six Months
                                  Ended June 30,          Ended June 30,
                                 2005        2004       2005         2004
                            ----------  ----------  ----------  ----------

Net income                     $16,933     $15,480     $22,788     $26,572
Gain on sale of real estate     (9,139)          -      (9,119)          -
Funds from operations
 of equity investees
 in excess of equity
 income                          2,608       1,593       4,835       3,095

Depreciation, amortization,
 deferred taxes and
 other noncash charges           7,400      10,255      12,741      16,600
Funds from operations
 applicable to minority
 investees in excess of
 minority income                  (108)       (170)       (226)       (284)
Straight-line rents                964         305       1,878         601
Impairment charges and
 loan losses                     6,149       5,650      15,821       7,900
                            ----------  ----------  ----------  ----------
  Funds from operations        $24,807     $33,113     $48,718     $54,484
                            ----------  ----------  ----------  ----------

Per Share Reconciliation :

Diluted net income per share   $  0.43     $  0.40     $  0.58     $  0.69
Plus:  Gain on sale of
 real estate                     (0.23)          -       (0.23)          -
Plus:  Funds from operations
 of equity investees in excess
 of equity income, net of
 minority interest                0.07        0.04        0.12        0.07
Plus:  Depreciation and
 amortization, deferred taxes,
 straight-line rents and
 other noncash charges            0.21        0.27        0.37        0.45
Plus:  Impairment charges
 and loan losses                  0.16        0.15        0.40        0.20
                            ----------  ----------  ----------  ----------
Diluted funds from
 operations per share          $  0.64      $ 0.86     $  1.24    $   1.41
                            ----------  ----------  ----------  ----------


                            ==========  ==========  ==========  ==========
Diluted weighted
 average
 shares
 outstanding                39,017,636  38,595,391  39,185,907  38,681,413
                            ==========  ==========  ==========  ==========


NON-GAAP FINANCIAL DISCLOSURE

W. P. Carey's second quarter 2005 earnings press release and the
aforementioned financials contain references to W. P. Carey's definition
of funds from operations (FFO), which is a non-GAAP financial measure.
The National Association of Real Estate Investment Trusts (NAREIT) defines
funds from operations as net income computed in accordance with generally
accepted accounting principles (GAAP), excluding gains or losses from
sales of property, plus real estate depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures.
W. P. Carey calculates its FFO in accordance with this definition and then
makes adjustments to add back certain non-cash charges to earnings, such
as the amortization of intangibles, stock compensation and impairment
charges on real estate, resulting in its FFO. W. P. Carey considers its
definition of FFO to be an appropriate supplemental measure of operating
performance because, by excluding these non-cash charges, it can be a
helpful tool to assist in the comparison of the operating performance
of W. P. Carey's real estate between periods, or as compared to different
companies. W. P. Carey's definition of FFO should not be considered as an
alternative to net income, as an indication of its operating performance
or to net cash provided by operating activities as a measure of its
liquidity. FFO and adjusted FFO disclosed by other REITs may not be
comparable to W. P. Carey's FFO calculation. Please see the following
tables for a reconciliation of W. P. Carey's FFO to net income.


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


                                                 SIX MONTHS ENDED JUNE 30,
                                                     2005        2004
                                                  ---------   ---------
Cash flows from operating activities:
  Net income                                      $  22,788   $  26,572
  Adjustments to reconcile net income to
   net cash provided by continuing
   operating activities:
   Loss from discontinued operations,
    including impairment charges and
    gain/loss on sale                                 4,891       2,968
   Depreciation and amortization of
    intangible assets and deferred
    financing costs                                  10,502       8,528
   Unrealized loss (gain) on foreign
    currency transactions and warrants                  754         (68)
   Minority interest in income                        1,399         165
   Straight-line rent adjustments and
    amortization of deferred income and
    rent related intangibles                          1,676         491
   Equity income in excess of distributions            (100)       (328)
   Gain on sale of investments                          (96)          -
   Realized loss (gain) on foreign
    currency transactions                                11        (339)
   Management income received in
    shares of affiliates                            (14,769)    (10,941)
   Costs paid by issuance of shares                      96          81
   Amortization of unearned compensation              1,696       2,154
   Impairment charges and loan losses                     -       2,800
   Tax charge - share incentive plans                   360       1,589
   Deferred income taxes                               (554)      3,452
  (Decrease) increase in accrued taxes payable       (2,830)      3,402
   Increase in structuring fees receivable           (4,234)     (6,970)
   Deferred acquisition fees received                 8,961       5,978
   Net change in other operating assets
    and liabilities                                  (2,738)     (1,285)
                                                  ---------   ---------
   Net cash provided by continuing operations        27,813      38,249
   Net cash provided by discontinued operations       2,438       2,707
                                                  ---------   ---------
     Net cash provided by operating activities       30,251      40,956
                                                  ---------   ---------
Cash flows from investing activities:
  Distributions received from equity investments
   in excess of equity income                         3,049       1,695
  Purchases of real estate and equity investments         -      (4,290)
  Proceeds from sale of property and investments     32,604           -
  Release of funds from escrow in connection with
   the sale of a property                                 -       7,185
  Capital expenditures                                 (976)     (1,332)
  Payment of deferred acquisition
   fees to affiliate                                   (524)       (524)
                                                  ---------   ---------
    Net cash provided by investing activities        34,153       2,734
                                                  ---------   ---------
Cash flows from financing activities:
  Proceeds from credit facility                      41,000      42,000
  Scheduled payments of mortgage principal           (4,616)     (4,642)
  Prepayments of mortgage principal
   and credit facility                              (70,893)    (55,000)
  Payment of financing costs                              -      (1,185)
  Distributions to minority interests                  (356)     (1,101)
  Dividends paid                                    (33,294)    (32,265)
  Proceeds from issuance of shares                    2,420       2,238
  Retirement of shares                                    -      (2,543)
                                                  ---------   ---------
    Net cash used in financing activities           (65,739)    (52,498)
                                                  ---------   ---------
Effect of exchange rate changes on cash                (268)       (351)
                                                  ---------   ---------
    Net decrease in cash and cash equivalents        (1,603)     (9,159)
Cash and cash equivalents, beginning of period       16,715      24,359
                                                  ---------   ---------
Cash and cash equivalents, end of period          $  15,112   $  15,200
                                                  =========   =========

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