SOURCE:
W. P. Carey & Co. LLC
2008-08-07 08:15:00
W. P. Carey Announces Second Quarter Financial Results
NEW YORK, NY–(EMWNews – August 7, 2008) – Investment firm W. P. Carey & Co. LLC (
2008. The Company noted that results of operations for the same period in
2007 had benefitted from the recognition of previously deferred revenue
totaling $45.9 million as a result of CPA®:16 – Global meeting its
performance hurdle in June 2007, which contributed $21.6 million to net
income.
QUARTERLY AND SIX-MONTH RESULTS
-- Total revenues net of reimbursed costs for the three and six months
ended June 30, 2008 were $47.4 million and $94.4 million, respectively.
Total revenues were $105.8 million and $147 million for the comparable
periods in 2007, each of which included the $45.9 million in revenues from
the hurdle. Reimbursed costs are excluded from total revenues because they
have no impact on net income.
-- Net income for the three and six months ended June 30, 2008 was $19.8
million and $36.9 million, respectively. Net income was $42 million and
$52.8 million for the comparable periods in 2007, each of which reflected
the $21.6 million of net income attributed to the hurdle.
-- Diluted earnings per share (EPS) for the second quarter of 2008 was
$0.50, as compared to $1.10 for the same period in 2007. Diluted EPS for
the six months ended June 30, 2008 was $0.93, compared to $1.37 for the
same period in 2007.
-- Funds from operations (FFO) for the second quarter of 2008, as per the
attached table, was $35.5 million or $0.88 per diluted share, as compared
to $79.6 million or $1.99 per diluted share for the comparable period in
2007. FFO for the six months ended June 30, 2008 was $57.1 million, or
$1.42 per diluted share, as compared to $98.1 million or $2.46 per diluted
share for the comparable period in 2007.
-- Cash flows from operating activities for the six months ended June 30,
2008 were $27.2 million, as compared to $11.6 million in the prior year
period.
-- The Board of Directors raised the quarterly cash distribution to
$0.487 per share for the second quarter, which was paid on July 15, 2008 to
shareholders of record as of June 30, 2008.
SUPPLEMENTAL PERFORMANCE METRICS
-- Earnings before interest, taxes, depreciation and amortization
(EBITDA) from our investment management segment totaled $15.8 million this
quarter or $0.39 per diluted share, compared to EBITDA in the second
quarter of 2007 of $63.5 million or $1.59 per diluted share. For the six
months ended June 30, 2008, EBITDA from this segment was $30.5 million, or
$0.76 per diluted share, compared to $75.1 million, or $1.88 per diluted
share, for the comparable period in 2007.
-- FFO from our real estate ownership segment in the second quarter of
2008 was $20.9 million or $0.52 per diluted share, compared to $17 million
or $0.43 per diluted share in the second quarter of 2007. For the six
months ended June 30, 2008, FFO from this segment was $37 million, or $0.92
per diluted share, compared to $31.7 million, or $0.80 per diluted share,
for the comparable period in 2007.
-- For the six months ended June 30, 2008, adjusted cash flow from
operations totaled $53.8 million, as compared to $54.9 million for the
comparable period in 2007.
-- Further information concerning these non-GAAP supplemental performance
metrics is presented in the accompanying tables.
INVESTMENT AND FUNDRAISING ACTIVITY
-- Through June 30, 2008, we have structured investments totaling $145
million, 51% of which were international. For the comparable period in
2007, investment volume was $660 million and included the $446 million
Hellweg Die Profi-Baumärkte GmbH & Co. KG investment.
-- CPA®:17 - Global began fundraising this year. Through August 5,
2008, we have raised more than $200 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 June 30, 2008 -- an 8% increase
as compared to June 30, 2007.
-- Since 2001, the Company's assets under management on behalf of the
CPA® REITs have more than tripled.
-- As of June 30, 2008, the occupancy rate of our 18 million square foot
owned portfolio was approximately 95%. In addition, for the 89 million
square feet owned by the CPA® REITs, the occupancy rate was more than
99%.
AMSTERDAM OFFICE OPEN
-- In July 2008, we opened an office in Amsterdam to establish a European
base for the management of our CPA® REITs' growing portfolio of
international assets. Our European assets under management currently span
nine countries and are approaching $3 billion.
“Obviously, a period-to-period comparison is made difficult by the
significant revenue recognized in 2007 when CPA®:16 – Global met its
hurdle return,” said Gordon F. DuGan, President and Chief Executive
Officer. “However, on a comparable basis, we are pleased with our
performance as reflected in our adjusted cash flow from operations. This
solid performance was all the more significant because of the drop in
investment volume we experienced in the second quarter, which reflected
both unusually high investment volume in the second quarter of last year
and an unusually low investment volume of $88 million for the second
quarter of this year. We are already seeing a pickup in investment volume,
and have closed investments of $127 million thus far this quarter. In
addition, we continue to benefit from strong occupancies across our
portfolios, a terrific balance sheet and an ability to grow our business
without reliance on the public capital markets. In times of tighter credit
markets, we believe there are attractive investment opportunities for
sale-leaseback investors and we are very well-positioned today to take
advantage of them.”
UPCOMING EVENTS
-- Gordon F. DuGan will be speaking on the "Structure for Stability"
panel at the BMO Capital Markets 2008 North American Real Estate Conference
in Chicago on September 11, 2008.
-- Benjamin P. Harris will be speaking on the "Investment & the Capital
Connection" panel at the CPN Net Lease Summit in New York on September 22,
2008.
CONFERENCE CALL & WEBCAST
Please call at least 10 minutes prior to call to register
Time: Thursday, August 7, 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 # 291647. Please note that both access codes are required for playback. Replay Available until August 22, 2008 at midnight ET.
W. P. Carey & Co. LLC
W. P. Carey & Co. LLC provides long-term sale-leaseback and build-to-suit
financing 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 Six months ended
June 30, June 30,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Revenues
Asset management revenue $ 20,039 $ 30,204 $ 40,165 $ 45,238
Structuring revenue 3,169 53,448 6,585 58,031
Wholesaling revenue 1,488 - 2,628 -
Reimbursed costs from
affiliates 11,080 3,244 21,446 6,719
Lease revenues 19,422 19,031 38,624 37,618
Other real estate income 3,305 3,113 6,427 6,115
---------- ---------- ---------- ----------
58,503 109,040 115,875 153,721
---------- ---------- ---------- ----------
Operating Expenses
General and administrative (15,816) (23,133) (31,229) (35,301)
Reimbursable costs (11,080) (3,244) (21,446) (6,719)
Depreciation and
amortization (6,279) (6,737) (12,370) (13,472)
Property expenses (1,362) (1,669) (3,740) (2,787)
Other real estate expenses (2,146) (1,301) (4,215) (3,825)
---------- ---------- ---------- ----------
(36,683) (36,084) (73,000) (62,104)
---------- ---------- ---------- ----------
Other Income and Expenses
Other interest income 679 3,644 1,440 4,242
Income from equity
investments in real estate
and CPA(R) REITs 3,934 1,929 8,645 4,367
Minority interest in income (304) (3,129) (393) (3,406)
Gain on sale of securities,
foreign currency
transactions and other, net 1,848 169 4,659 355
Interest expense (4,532) (5,389) (9,575) (10,002)
---------- ---------- ---------- ----------
1,625 (2,776) 4,776 (4,444)
---------- ---------- ---------- ----------
Income from continuing
operations before income
taxes 23,445 70,180 47,651 87,173
Provision for income taxes (7,422) (31,038) (14,566) (37,417)
---------- ---------- ---------- ----------
Income from continuing
operations 16,023 39,142 33,085 49,756
---------- ---------- ---------- ----------
Discontinued Operations
Income from operations of
discontinued properties 3,825 1,926 3,864 2,112
Gain on sale of real
estate, net - 962 - 962
---------- ---------- ---------- ----------
Income from discontinued
operations 3,825 2,888 3,864 3,074
---------- ---------- ---------- ----------
Net Income $ 19,848 $ 42,030 $ 36,949 $ 52,830
========== ========== ========== ==========
Basic Earnings Per Share
Income from continuing
operations $ 0.41 $ 1.02 $ 0.85 $ 1.31
Income from discontinued
operations 0.10 0.08 0.10 0.08
---------- ---------- ---------- ----------
Net income $ 0.51 $ 1.10 $ 0.95 $ 1.39
========== ========== ========== ==========
Diluted Earnings Per Share
Income from continuing
operations $ 0.40 $ 1.03 $ 0.83 $ 1.29
Income from discontinued
operations 0.10 0.07 0.10 0.08
---------- ---------- ---------- ----------
Net income $ 0.50 $ 1.10 $ 0.93 $ 1.37
========== ========== ========== ==========
Weighted Average Shares
Outstanding
Basic 39,204,221 38,308,202 39,039,617 38,120,532
========== ========== ========== ==========
Diluted 40,256,658 40,004,379 40,271,185 39,894,412
========== ========== ========== ==========
Distributions Declared Per
Share $ 0.487 $ 0.467 $ 0.969 $ 0.929
========== ========== ========== ==========
W. P. CAREY & CO. LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Six months ended June 30,
------------------------
2008 2007
----------- -----------
Cash Flows -- Operating Activities
Net income $ 36,949 $ 52,830
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization including
intangible assets and deferred financing
costs 13,506 14,509
Income from equity investments in real estate
and CPA(R) REITs in excess of distributions
received (1,924) (1,628)
Gain on sale of real estate, net - (962)
Minority interest in income 393 3,472
Straight-line rent adjustments 1,252 1,421
Management income received in shares of
affiliates (20,053) (31,728)
Unrealized gain on foreign currency
transactions, warrants and securities (1,203) (313)
Realized gain on foreign currency transactions (1,565) (42)
Stock-based compensation expense 3,922 2,328
(Increase) decrease in deferred acquisition
revenue received (3,538) 16,164
Decrease (increase) in structuring revenue
receivable 46,695 (44,956)
(Decrease) increase in income taxes, net (3,963) 2,802
Decrease in settlement provision (29,979) -
Net changes in other operating assets and
liabilities (13,273) (2,249)
----------- -----------
Net cash provided by operating activities 27,219 11,648
----------- -----------
Cash Flows -- Investing Activities
Distributions received from equity investments
in real estate and CPA(R) REITs in
excess of equity income 3,425 21,716
Capital contributions to equity investments (837) -
Purchases of real estate and equity
investments in real estate (184) (40,381)
Capital expenditures (6,455) (7,361)
VAT refunded on purchase of real estate 3,189 -
Proceeds from sales of real estate - 6,014
Funds placed in escrow in connection with the
sale of property - (3,340)
Funds released from escrow in connection with
the sale of property 636 -
Payment of deferred acquisition revenue to
affiliate (120) (524)
----------- -----------
Net cash used in investing activities (346) (23,876)
----------- -----------
Cash Flows -- Financing Activities
Distributions paid (48,668) (35,202)
Contributions from minority interests 1,320 688
Distributions to minority interests (1,329) (942)
Scheduled payments of mortgage principal (4,698) (7,719)
Proceeds from mortgages and credit facilities 101,937 118,617
Prepayments of mortgage principal and credit
facilities (73,729) (68,257)
Repayment of loan from affiliates (7,569) -
Payment of financing costs (370) (1,303)
Proceeds from issuance of shares 12,743 3,917
Excess tax benefits associated with
stock-based compensation awards 608 1,335
Repurchase and retirement of shares (5,134) (2,038)
----------- -----------
Net cash (used in) provided by financing
activities (24,889) 9,096
----------- -----------
Change in Cash and Cash Equivalents During the
Period
Effect of exchange rate changes on cash 298 74
----------- -----------
Net increase (decrease) in cash and cash
equivalents 2,282 (3,058)
Cash and cash equivalents, beginning of period 12,137 22,108
----------- -----------
Cash and cash equivalents, end of period $ 14,419 $ 19,050
=========== ===========
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 Six months ended
June 30, June 30,
---------------------- ----------------------
2008 2007 2008 2007
----------- ----------- ---------- ----------
EBITDA
Investment management $ 15,774 $ 63,517 $ 30,519 $ 75,090
Real estate ownership 22,307 22,318 42,941 39,756
----------- ----------- ---------- ----------
Total $ 38,081 $ 85,835 $ 73,460 $ 114,846
=========== =========== ========== ==========
FFO
Investment management $ 14,664 $ 62,561 $ 20,125 $ 66,410
Real estate ownership 20,887 17,004 36,956 31,721
----------- ----------- ---------- ----------
Total $ 35,551 $ 79,565 $ 57,081 $ 98,131
=========== =========== ========== ==========
EBITDA Per Share (Diluted)
Investment management $ 0.39 $ 1.59 $ 0.76 $ 1.88
Real estate ownership 0.56 0.56 1.06 1.00
----------- ----------- ---------- ----------
Total $ 0.95 $ 2.15 $ 1.82 $ 2.88
=========== =========== ========== ==========
FFO Per Share (Diluted)
Investment management $ 0.36 $ 1.56 $ 0.50 $ 1.66
Real estate ownership 0.52 0.43 0.92 0.80
----------- ----------- ---------- ----------
Total $ 0.88 $ 1.99 $ 1.42 $ 2.46
=========== =========== ========== ==========
Adjusted Cash Flow From
Operating Activities
Adjusted cash flow $ 53,789 $ 54,946
========== ==========
Adjusted cash flow per
share (diluted) $ 1.34 $ 1.38
========== ==========
Distributions declared per
share $ 0.969 $ 0.929
========== ==========
Payout ratio (distributions
per share/adjusted cash
flow per share) 72% 67%
========== ==========
W. P. CAREY & CO. LLC
RECONCILIATION OF NET INCOME TO EBITDA (UNAUDITED)
(in thousands, except share and per share amounts)
Three months ended Six months ended
June 30, June 30,
---------------------- -----------------------
2008 2007 2008 2007
---------- ----------- ----------- -----------
Investment Management
Net income $ 7,123 $ 32,100 $ 14,054 $ 36,489
Adjustments:
Provision for income
taxes 7,556 30,376 14,340 36,514
Depreciation and
amortization 1,095 1,041 2,125 2,087
---------- ----------- ----------- -----------
EBITDA - investment
management $ 15,774 $ 63,517 $ 30,519 $ 75,090
========== =========== =========== ===========
EBITDA per share (diluted) $ 0.39 $ 1.59 $ 0.76 $ 1.88
========== =========== =========== ===========
Real Estate Ownership
Net income $ 12,725 $ 9,930 $ 22,895 $ 16,341
Adjustments:
Interest expense 4,532 5,389 9,575 10,002
(Benefit from) provision
for income taxes (134) 662 226 903
Depreciation and
amortization 5,184 5,696 10,245 11,385
Reconciling items
attributable to
discontinued operations - 641 - 1,125
---------- ----------- ----------- -----------
EBITDA - real estate
ownership $ 22,307 $ 22,318 $ 42,941 $ 39,756
========== =========== =========== ===========
EBITDA per share (diluted) $ 0.56 $ 0.56 $ 1.06 $ 1.00
========== =========== =========== ===========
Total Company
EBITDA $ 38,081 $ 85,835 $ 73,460 $ 114,846
========== =========== =========== ===========
EBITDA per share (diluted) $ 0.95 $ 2.15 $ 1.82 $ 2.88
========== =========== =========== ===========
Diluted weighted average
shares outstanding 40,256,658 40,004,379 40,271,185 39,894,412
========== =========== =========== ===========
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 Six months ended
June 30, June 30,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Investment Management
Net income $ 7,123 $ 32,100 $ 14,054 $ 36,489
Amortization, deferred
taxes and other non-cash
charges 4,041 28,261 1,487 25,546
FFO adjustment to earnings
from equity investments 3,500 2,200 4,584 4,375
---------- ---------- ---------- ----------
FFO -- investment
management $ 14,664 $ 62,561 $ 20,125 $ 66,410
========== ========== ========== ==========
FFO per share (diluted) $ 0.36 $ 1.56 $ 0.50 $ 1.66
========== ========== ========== ==========
Real Estate Ownership
Net income $ 12,725 $ 9,930 $ 22,895 $ 16,341
Gain on sale of real
estate, net - (962) - (962)
Depreciation, amortization
and other non-cash charges 5,389 5,653 8,950 11,115
Straight-line and other
rent adjustments 659 623 1,328 1,456
FFO adjustment to earnings
from equity investments 2,287 1,972 4,128 4,186
FFO adjustment to minority
investees' share of
earnings (173) (212) (345) (415)
---------- ---------- ---------- ----------
FFO -- real estate
ownership $ 20,887 $ 17,004 $ 36,956 $ 31,721
========== ========== ========== ==========
FFO per share (diluted) $ 0.52 $ 0.43 $ 0.92 $ 0.80
========== ========== ========== ==========
Total Company
FFO $ 35,551 $ 79,565 $ 57,081 $ 98,131
========== ========== ========== ==========
FFO per share (diluted) $ 0.88 $ 1.99 $ 1.42 $ 2.46
========== ========== ========== ==========
Diluted weighted average
shares outstanding 40,256,658 40,004,379 40,271,185 39,894,412
========== ========== ========== ==========
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)
Six months ended June 30,
------------------------
2008 2007
----------- -----------
Cash flow from operating activities -- as
reported $ 27,219 $ 11,648
Adjustments:
CPA(R):16 - Global performance adjustment, net
(a) (12,291) 17,763
Settlement payment (b) 21,012 -
CPA(R):12/14 Merger -- payment of taxes (c) - 20,708
Distributions received from equity investments in
real estate in excess of equity income (d) 3,223 5,435
Changes in working capital (c) 14,626 (608)
----------- -----------
Adjusted cash flow from operating activities $ 53,789 $ 54,946
=========== ===========
Adjusted cash flow per share (diluted) $ 1.34 $ 1.38
=========== ===========
Distributions declared per share $ 0.969 $ 0.929
=========== ===========
Payout ratio (distributions per share/adjusted
cash flow per share) 72% 67%
Diluted weighted average shares outstanding 40,271,185 39,894,412
=========== ===========
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.
| COMPANY CONTACT: Kristina McMenamin W. P. Carey & Co. LLC 212-492-8995 PRESS CONTACT: |
|
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