W. P. Carey Announces Third Quarter 2024 Financial Results
W. P. Carey reported Q3 2024 financial results with net income of $111.7 million ($0.51 per share) and AFFO of $259.3 million ($1.18 per diluted share). The company narrowed its 2024 AFFO guidance to $4.65-$4.71 per share. Investment volume reached $971.4 million year-to-date, with $167.0 million during Q3. Gross dispositions totaled $1.2 billion year-to-date. The quarterly dividend was set at $0.875 per share. Revenue decreased 11.4% year-over-year to $397.4 million, primarily due to strategic office asset exits.
W. P. Carey ha riportato i risultati finanziari del terzo trimestre 2024, con un reddito netto di 111,7 milioni di dollari (0,51 dollari per azione) e un AFFO di 259,3 milioni di dollari (1,18 dollari per azione diluita). L'azienda ha ristretto le previsioni AFFO per il 2024 a 4,65-4,71 dollari per azione. Il volume degli investimenti ha raggiunto 971,4 milioni di dollari dall'inizio dell'anno, con 167 milioni di dollari nel terzo trimestre. Le dismissioni lorde hanno totalizzato 1,2 miliardi di dollari dall'inizio dell'anno. Il dividendo trimestrale è stato fissato a 0,875 dollari per azione. I ricavi sono diminuiti dell'11,4% rispetto all'anno precedente, arrivando a 397,4 milioni di dollari, principalmente a causa delle uscite strategiche da beni immobiliari per uffici.
W. P. Carey reportó los resultados financieros del tercer trimestre de 2024, con un ingreso neto de 111,7 millones de dólares (0,51 dólares por acción) y un AFFO de 259,3 millones de dólares (1,18 dólares por acción diluida). La compañía ajustó su guía de AFFO para 2024 a 4,65-4,71 dólares por acción. El volumen de inversión alcanzó 971,4 millones de dólares en lo que va del año, con 167 millones de dólares durante el tercer trimestre. Las disposiciones brutas totalizaron 1,2 mil millones de dólares en lo que va del año. El dividendo trimestral se fijó en 0,875 dólares por acción. Los ingresos disminuyeron un 11,4% interanual, alcanzando 397,4 millones de dólares, principalmente debido a la salida estratégica de activos de oficinas.
W. P. Carey는 2024년 3분기 재무 결과를 보고하면서 순이익 1억 1,170만 달러 (주당 0.51 달러) 및 AFFO 2억 5,930만 달러 (희석주당 1.18 달러)를 발표했습니다. 회사는 2024년 AFFO 가이던스를 주당 4.65-4.71 달러로 조정했습니다. 투자량은 연초부터 9억 7,140만 달러에 도달했으며, 3분기 동안 1억 6,700만 달러였습니다. 총 매각액은 연초부터 12억 달러에 이릅니다. 분기 배당금은 주당 0.875 달러로 설정되었습니다. 수익은 전년 대비 11.4% 감소하여 3억 9,740만 달러에 이르렀으며, 주로 전략적 사무실 자산 매각으로 인한 것입니다.
W. P. Carey a annoncé les résultats financiers pour le troisième trimestre 2024, avec un revenu net de 111,7 millions de dollars (0,51 dollar par action) et un AFFO de 259,3 millions de dollars (1,18 dollar par action diluée). La société a révisé ses prévisions d'AFFO pour 2024 à 4,65-4,71 dollars par action. Le volume d'investissement a atteint 971,4 millions de dollars depuis le début de l'année, dont 167 millions de dollars au troisième trimestre. Les cessions brutes totalisaient 1,2 milliard de dollars depuis le début de l'année. Le dividende trimestriel a été fixé à 0,875 dollar par action. Les revenus ont diminué de 11,4 % par rapport à l'année précédente, atteignant 397,4 millions de dollars, principalement en raison des sorties stratégiques d'actifs de bureaux.
W. P. Carey hat die finanziellen Ergebnisse des dritten Quartals 2024 veröffentlicht, mit einem Nettogewinn von 111,7 Millionen Dollar (0,51 Dollar pro Aktie) und AFFO von 259,3 Millionen Dollar (1,18 Dollar pro verwässerter Aktie). Das Unternehmen hat seine AFFO-Prognose für 2024 auf 4,65-4,71 Dollar pro Aktie eingegrenzt. Das Investitionsvolumen erreichte bis heute 971,4 Millionen Dollar, davon 167 Millionen Dollar im dritten Quartal. Die Bruttodispoktionen beliefen sich bis heute auf 1,2 Milliarden Dollar. Die Quartalsdividende wurde mit 0,875 Dollar pro Aktie festgelegt. Der Umsatz ging im Jahresvergleich um 11,4% auf 397,4 Millionen Dollar zurück, hauptsächlich aufgrund strategischer Verkäufe von Büroimmobilien.
- Investment volume of $971.4 million YTD with additional pipeline exceeding $500 million
- Contractual same-store rent growth of 2.8%
- Strategic progress in exiting office assets and converting self-storage properties to net leases
- AFFO per share decreased 10.6% YoY to $1.18
- Revenue declined 11.4% YoY to $397.4 million
- Net income decreased 10.6% YoY to $111.7 million
Insights
The Q3 results reveal mixed signals for WPC. AFFO per share of
The narrowed 2024 AFFO guidance of
The strategic transformation through office exits and portfolio repositioning is progressing well. The
The
Financial Highlights
2024 Third Quarter | |
Net income attributable to W. P. Carey (millions) | |
Diluted earnings per share | |
AFFO (millions) | |
AFFO per diluted share |
- 2024 AFFO guidance range narrowed to between
and$4.65 per diluted share based on anticipated full year investment volume of between$4.71 and$1.25 billion $1.75 billion - Third quarter cash dividend of
per share, equivalent to an annualized dividend rate of$0.87 5 per share$3.50
Real Estate Portfolio
- Investment volume of
completed year to date, including$971.4 million during the third quarter and$167.0 million subsequent to quarter end$230.8 million - Active capital investments and commitments of
scheduled to be completed in the fourth quarter$38.0 million - Gross disposition proceeds of
completed year to date, including$1.2 billion during the third quarter and$81.8 million subsequent to quarter end$79.8 million - Entered into agreements to convert 16 existing self-storage operating properties to net leases
- Contractual same-store rent growth of
2.8%
Balance Sheet and Capitalization
- Repaid
€500 million of2.25% Senior Unsecured Notes due July 2024 - Credit facility and term loans amended to incorporate a sustainability-linked feature
MANAGEMENT COMMENTARY
"With close to
"We generally expect to fund our investments in the fourth quarter with the cash we've built up. We also believe the alternative sources of capital available to us — primarily through operating asset sales — will enable us to continue to make accretive investments throughout 2025, without the need to issue equity. These factors, along with a constructive investment backdrop, the completion of our exit from office and the strength our rent growth, all support AFFO growth in 2025, despite the potential impacts of certain tenant-related issues."
QUARTERLY FINANCIAL RESULTS
Note: Effective January 1, 2024, the Company no longer separately analyzes its business between real estate operations and investment management operations, and instead views the business as one reportable segment. As a result of this change, the Company has conformed prior period segment information to reflect how it currently views its business.
Revenues
- Revenues, including reimbursable costs, for the 2024 third quarter totaled
, down$397.4 million 11.4% from for the 2023 third quarter.$448.6 million - Lease revenues decreased primarily as a result of executing the Company's strategic plan to exit the office assets within its portfolio, including the NLOP Spin-Off in November 2023 and dispositions under the Office Sale Program during 2023 and 2024.
- Income from finance leases and loans receivable decreased primarily as a result of the disposition of the U-Haul portfolio during the 2024 first quarter.
- Operating property revenues decreased primarily as a result of the sale of eight hotel operating properties during 2023 and one during the 2024 second quarter (out of 12 hotel properties that converted from net lease to operating upon lease expiration during the 2023 first quarter).
- Lease revenues decreased primarily as a result of executing the Company's strategic plan to exit the office assets within its portfolio, including the NLOP Spin-Off in November 2023 and dispositions under the Office Sale Program during 2023 and 2024.
Net Income Attributable to W. P. Carey
- Net income attributable to W. P. Carey for the 2024 third quarter was
, down$111.7 million 10.6% from for the 2023 third quarter, due primarily to a mark-to-market loss recognized on the Company's shares of Lineage of$125.0 million during the current-year period and the impact of the NLOP Spin-Off and dispositions under the Office Sale Program. These declines were partly offset by a$43.6 million gain on change in control of interests recognized in connection with our acquisition of a third party joint venture partner's interest in nine self-storage operating properties (see Self-Storage Transaction).$31.8 million
Adjusted Funds from Operations (AFFO)
- AFFO for the 2024 third quarter was
per diluted share, down$1.18 10.6% from per diluted share for the 2023 third quarter, primarily reflecting the impact of the NLOP Spin-Off and dispositions under the Office Sale Program.$1.32
Note: Further information concerning AFFO, which is a non-GAAP supplemental performance metric, is presented in the accompanying tables and related notes.
Dividend
- On September 19, 2024, the Company reported that its Board of Directors declared a quarterly cash dividend of
per share, equivalent to an annualized dividend rate of$0.87 5 per share. The dividend was paid on October 15, 2024 to shareholders of record as of September 30, 2024.$3.50
AFFO GUIDANCE
- The Company has narrowed its guidance range for the 2024 full year and currently expects to report AFFO of between
and$4.65 per diluted share based on the following key assumptions:$4.71
(i) investment volume of between
(ii) disposition volume of between
(a) completion of the Company's strategic plan to exit office, including asset sales under the Office Sale Program totaling approximately
(b) completion of the U-Haul purchase option during the 2024 first quarter, which generated gross proceeds of
(c) other dispositions totaling between
(iii) total general and administrative expenses of between
Note: The Company does not provide guidance on net income. The Company only provides guidance on AFFO and does not provide a reconciliation of this forward-looking non-GAAP guidance to net income due to the inherent difficulty in quantifying certain items necessary to provide such reconciliation as a result of their unknown effect, timing and potential significance. Examples of such items include impairments of assets, gains and losses from sales of assets, and depreciation and amortization from new acquisitions.
REAL ESTATE
Investments
- Year to date, the Company completed investments totaling
, including$971.4 million during the 2024 third quarter and$167.0 million subsequent to quarter end.$230.8 million - The Company currently has two capital investments and commitments totaling
scheduled to be completed during 2024.$38.0 million
Dispositions
- Year to date, the Company completed dispositions totaling
, including seven properties for gross proceeds totaling$1.2 billion during the 2024 third quarter (comprising two properties under the Office Sale Program for gross proceeds totaling$81.8 million and five non-Office Sale Program properties for gross proceeds totaling$50.9 million ), and one property for gross proceeds of$30.9 million subsequent to quarter end.$79.8 million - The Company has effectively completed the strategic plan it announced on September 21, 2023 to exit the office assets within its portfolio through (i) the spin-off of 59 office properties into Net Lease Office Properties, a separate publicly-traded REIT, which was completed on November 1, 2023 (the NLOP Spin-Off), and (ii) the disposition of 85 properties retained by W. P. Carey under a sale program (the Office Sale Program).
Contractual Same-Store Rent Growth
- As of September 30, 2024, contractual same store rent growth was
2.8% year over year, on a constant currency basis.
Conversion of Self-Storage Operating Properties to Net Leases and Joint Venture Buyout (Self-Storage Transaction)
- On September 1, 2024, the Company entered into agreements with Extra Space Storage Inc. (Extra Space) to convert 16 self-storage operating properties to net leases, each with a term of 25 years and fixed annual rent escalations plus a variable component based on revenue growth. Twelve self-storage operating properties converted to net leases on September 1, 2024, with the remaining four properties expected to convert in 2025.
- In connection with the agreements, the Company also amended the terms of its existing net lease agreements with Extra Space on 27 properties, extending the term to 25 years and resetting base rents higher to a total of
annually commencing on September 1, 2024, and further to a total of$26.2 million annually commencing on March 1, 2025, with fixed annual rent escalations plus a variable component based on revenue growth.$28.0 million - Also effective on September 1, 2024, the Company completed the buyout of its joint venture partner's
10% interest in nine of the self-storage operating properties being converted to net leases for .$10.5 million - As a result of these transactions, Extra Space became the Company's largest tenant by ABR, with 39 properties under net leases generating ABR totaling
, or$35.6 million 2.7% of total ABR, and a remaining lease term of 24.9 years, as of September 30, 2024.
True Value Bankruptcy
- As previously announced, on October 14, 2024, the Company's tenant, True Value Company, L.L.C. (True Value), announced that it had initiated voluntary Chapter 11 proceedings in the
U.S. Bankruptcy Court for the District ofDelaware and that it had entered into an agreement to sell substantially all of its business operations to Do it Best Corp. - As of September 30, 2024, the Company net leased nine properties to True Value through two master leases and three individual leases that in aggregate generated
, or$18.8 million 1.4% , of the Company's ABR (ranking it as the 15th largest tenant) and had a weighted-average lease term of 13.8 years. - True Value remains current on rent, having paid substantially all rent owed through the end of the year.
Composition
- As of September 30, 2024, the Company's net lease portfolio consisted of 1,430 properties, comprising 172 million square feet leased to 346 tenants, with a weighted-average lease term of 12.2 years and an occupancy rate of
98.8% . In addition, the Company owned 78 self-storage operating properties, four hotel operating properties and two student housing operating properties, totaling approximately 6.4 million square feet.
BALANCE SHEET AND CAPITALIZATION
Liquidity
- As of September 30, 2024, the Company had total liquidity of
, including approximately$2.6 billion of available capacity under its Senior Unsecured Credit Facility (net of amounts reserved for standby letters of credit) and$1.8 billion of cash and cash equivalents.$818.2 million
Senior Unsecured Notes
- On July 19, 2024, the Company repaid
€500 million of2.25% Senior Unsecured Notes due July 2024.
Sustainability-Linked Amendment to Credit Facility and Term Loans
- During the 2024 third quarter, the Company executed amendments to its credit facility and term loans to incorporate a sustainability-linked feature that provides for interest rate and facility fee adjustments if certain key performance indicators, primarily related to emissions reduction targets, are met.
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Supplemental Information
The Company has provided supplemental unaudited financial and operating information regarding the 2024 third quarter and certain prior quarters, including a description of non-GAAP financial measures and reconciliations to GAAP measures, in a Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on October 29, 2024, and made available on the Company's website at ir.wpcarey.com/investor-relations.
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Live Conference Call and Audio Webcast Scheduled for Wednesday, October 30, 2024 at 11:00 a.m. Eastern Time
Please dial in at least 10 minutes prior to the start time.
Date/Time: Wednesday, October 30, 2024 at 11:00 a.m. Eastern Time
Call-in Number: 1 (877) 465-1289 (
Live Audio Webcast and Replay: www.wpcarey.com/earnings
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W. P. Carey Inc.
W. P. Carey ranks among the largest net lease REITs with a well-diversified portfolio of high-quality, operationally critical commercial real estate, which includes 1,430 net lease properties covering approximately 172 million square feet and a portfolio of 78 self-storage operating properties as of September 30, 2024. With offices in
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Cautionary Statement Concerning Forward-Looking Statements
Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, among other things, statements regarding the intent, belief or expectations of W. P. Carey and can be identified by the use of words such as "may," "will," "should," "would," "will be," "goals," "believe," "project," "expect," "anticipate," "intend," "estimate" "opportunities," "possibility," "strategy," "maintain" or the negative version of these words and other comparable terms. These forward-looking statements include, but are not limited to, statements made by Mr. Jason Fox regarding deal volume, sources of capital, and expectations for future AFFO growth. These statements are based on the current expectations of our management, and it is important to note that our actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Other unknown or unpredictable risks or uncertainties, like the risks related to fluctuating interest rates, the impact of inflation on our tenants and us, the effects of pandemics and global outbreaks of contagious diseases, and domestic or geopolitical crises, such as terrorism, military conflict, war or the perception that hostilities may be imminent, political instability or civil unrest, or other conflict, and those additional risk factors discussed in reports that we have filed with the SEC, could also have material adverse effects on our future results, performance or achievements. Discussions of some of these other important factors and assumptions are contained in W. P. Carey's filings with the SEC and are available at the SEC's website at http://www.sec.gov, including Part I, Item 1A. Risk Factors in W. P. Carey's Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication, unless noted otherwise. Except as required under the federal securities laws and the rules and regulations of the SEC, W. P. Carey does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this communication or to reflect the occurrence of unanticipated events.
Institutional Investors:
Peter Sands
1 (212) 492-1110
institutionalir@wpcarey.com
Individual Investors:
W. P. Carey Inc.
1 (212) 492-8920
ir@wpcarey.com
Press Contact:
Anna McGrath
1 (212) 492-1166
amcgrath@wpcarey.com
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W. P. CAREY INC. Consolidated Balance Sheets (Unaudited) (in thousands, except share and per share amounts) | |||
September 30, 2024 | December 31, 2023 | ||
Assets | |||
Investments in real estate: | |||
Land, buildings and improvements — net lease and other | $ 12,745,926 | $ 12,095,458 | |
Land, buildings and improvements — operating properties | 1,204,351 | 1,256,249 | |
Net investments in finance leases and loans receivable | 657,054 | 1,514,923 | |
In-place lease intangible assets and other | 2,287,824 | 2,308,853 | |
Above-market rent intangible assets | 682,345 | 706,773 | |
Investments in real estate | 17,577,500 | 17,882,256 | |
Accumulated depreciation and amortization (a) | (3,195,204) | (3,005,479) | |
Assets held for sale, net | 29,785 | 37,122 | |
Net investments in real estate | 14,412,081 | 14,913,899 | |
Equity method investments | 299,465 | 354,261 | |
Cash and cash equivalents | 818,194 | 633,860 | |
Other assets, net | 1,122,571 | 1,096,474 | |
Goodwill | 979,265 | 978,289 | |
Total assets | $ 17,631,576 | $ 17,976,783 | |
Liabilities and Equity | |||
Debt: | |||
Senior unsecured notes, net | $ 6,134,810 | $ 6,035,686 | |
Unsecured term loans, net | 1,156,442 | 1,125,564 | |
Unsecured revolving credit facility | 229,607 | 403,785 | |
Non-recourse mortgages, net | 451,962 | 579,147 | |
Debt, net | 7,972,821 | 8,144,182 | |
Accounts payable, accrued expenses and other liabilities | 590,347 | 615,750 | |
Below-market rent and other intangible liabilities, net | 125,934 | 136,872 | |
Deferred income taxes | 160,503 | 180,650 | |
Dividends payable | 196,025 | 192,332 | |
Total liabilities | 9,045,630 | 9,269,786 | |
Preferred stock, | — | — | |
Common stock, | 219 | 219 | |
Additional paid-in capital | 11,795,514 | 11,784,461 | |
Distributions in excess of accumulated earnings | (3,056,708) | (2,891,424) | |
Deferred compensation obligation | 78,420 | 62,046 | |
Accumulated other comprehensive loss | (237,987) | (254,867) | |
Total stockholders' equity | 8,579,458 | 8,700,435 | |
Noncontrolling interests | 6,488 | 6,562 | |
Total equity | 8,585,946 | 8,706,997 | |
Total liabilities and equity | $ 17,631,576 | $ 17,976,783 |
(a) | Includes |
W. P. CAREY INC. Quarterly Consolidated Statements of Income (Unaudited) (in thousands, except share and per share amounts) | |||||
Three Months Ended | |||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||
Revenues | |||||
Real Estate: | |||||
Lease revenues | $ 334,039 | $ 324,104 | $ 369,159 | ||
Income from finance leases and loans receivable | 15,712 | 14,961 | 27,575 | ||
Operating property revenues | 37,323 | 38,715 | 49,218 | ||
Other lease-related income | 7,701 | 9,149 | 2,310 | ||
394,775 | 386,929 | 448,262 | |||
Investment Management: | |||||
Asset management revenue (a) | 1,557 | 1,686 | 194 | ||
Other advisory income and reimbursements (b) | 1,051 | 1,057 | 97 | ||
2,608 | 2,743 | 291 | |||
397,383 | 389,672 | 448,553 | |||
Operating Expenses | |||||
Depreciation and amortization | 115,705 | 137,481 | 144,771 | ||
General and administrative | 22,679 | 24,168 | 23,355 | ||
Operating property expenses | 17,765 | 18,565 | 26,570 | ||
Stock-based compensation expense | 13,468 | 8,903 | 9,050 | ||
Reimbursable tenant costs | 13,337 | 14,004 | 20,498 | ||
Property expenses, excluding reimbursable tenant costs | 10,993 | 13,931 | 13,021 | ||
Merger and other expenses | 283 | 206 | 4,152 | ||
Impairment charges — real estate | — | 15,752 | 15,173 | ||
194,230 | 233,010 | 256,590 | |||
Other Income and Expenses | |||||
Other gains and (losses) (c) | (77,107) | 2,504 | 2,859 | ||
Interest expense | (72,526) | (65,307) | (76,974) | ||
Gain on change in control of interests (d) | 31,849 | — | — | ||
Gain on sale of real estate, net | 15,534 | 39,363 | 2,401 | ||
Non-operating income (e) | 13,669 | 9,215 | 4,862 | ||
Earnings from equity method investments | 6,124 | 6,636 | 4,978 | ||
(82,457) | (7,589) | (61,874) | |||
Income before income taxes | 120,696 | 149,073 | 130,089 | ||
Provision for income taxes | (9,044) | (6,219) | (5,090) | ||
Net Income | 111,652 | 142,854 | 124,999 | ||
Net loss attributable to noncontrolling interests | 46 | 41 | 41 | ||
Net Income Attributable to W. P. Carey | $ 111,698 | $ 142,895 | $ 125,040 | ||
Basic Earnings Per Share | $ 0.51 | $ 0.65 | $ 0.58 | ||
Diluted Earnings Per Share | $ 0.51 | $ 0.65 | $ 0.58 | ||
Weighted-Average Shares Outstanding | |||||
Basic | 220,221,366 | 220,195,910 | 215,097,114 | ||
Diluted | 220,404,149 | 220,214,118 | 215,252,969 | ||
Dividends Declared Per Share | $ 0.875 | $ 0.870 | $ 1.071 |
(a) | Amount for the three months ended September 30, 2024 is comprised of | |||||||
(b) | Amount for the three months ended September 30, 2024 is comprised of (i) | |||||||
(c) | Amount for the three months ended September 30, 2024 is primarily comprised of a mark-to-market unrealized loss for our investment in shares of Lineage of | |||||||
(d) | Amount for the three months ended September 30, 2024 represents a gain recognized on the remaining interest in an investment acquired during the third quarter of 2024, which we had previously accounted for under the equity method. | |||||||
(e) | Amount for the three months ended September 30, 2024 is comprised of interest income on deposits of |
W. P. CAREY INC. Year-to-Date Consolidated Statements of Income (Unaudited) (in thousands, except share and per share amounts) | |||
Nine Months Ended September 30, | |||
2024 | 2023 | ||
Revenues | |||
Real Estate: | |||
Lease revenues | $ 980,394 | $ 1,090,619 | |
Income from finance leases and loans receivable | 56,466 | 75,641 | |
Operating property revenues | 112,681 | 140,780 | |
Other lease-related income | 19,005 | 20,723 | |
1,168,546 | 1,327,763 | ||
Investment Management: | |||
Asset management and other revenue | 5,136 | 836 | |
Other advisory income and reimbursements | 3,171 | 322 | |
8,307 | 1,158 | ||
1,176,853 | 1,328,921 | ||
Operating Expenses | |||
Depreciation and amortization | 371,954 | 444,728 | |
General and administrative | 74,715 | 74,816 | |
Operating property expenses | 54,280 | 74,738 | |
Reimbursable tenant costs | 40,314 | 62,997 | |
Property expenses, excluding reimbursable tenant costs | 37,097 | 31,164 | |
Stock-based compensation expense | 31,227 | 25,811 | |
Impairment charges — real estate | 15,752 | 15,173 | |
Merger and other expenses | 4,941 | 5,595 | |
630,280 | 735,022 | ||
Other Income and Expenses | |||
Interest expense | (206,484) | (219,658) | |
Gain on sale of real estate, net | 70,342 | 181,958 | |
Other gains and (losses) | (60,764) | 9,593 | |
Non-operating income | 38,389 | 13,997 | |
Gain on change in control of interests | 31,849 | — | |
Earnings from equity method investments | 17,624 | 14,569 | |
(109,044) | 459 | ||
Income before income taxes | 437,529 | 594,358 | |
Provision for income taxes | (23,937) | (30,338) | |
Net Income | 413,592 | 564,020 | |
Net loss attributable to noncontrolling interests | 224 | 20 | |
Net Income Attributable to W. P. Carey | $ 413,816 | $ 564,040 | |
Basic Earnings Per Share | $ 1.88 | $ 2.64 | |
Diluted Earnings Per Share | $ 1.88 | $ 2.63 | |
Weighted-Average Shares Outstanding | |||
Basic | 220,149,886 | 214,052,907 | |
Diluted | 220,425,244 | 214,427,425 | |
Dividends Declared Per Share | $ 2.610 | $ 3.207 |
W. P. CAREY INC. Quarterly Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited) (in thousands, except share and per share amounts) | |||||
Three Months Ended | |||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||
Net income attributable to W. P. Carey | $ 111,698 | $ 142,895 | $ 125,040 | ||
Adjustments: | |||||
Depreciation and amortization of real property | 115,028 | 136,840 | 144,111 | ||
Gain on change in control of interests (a) | (31,849) | — | — | ||
Gain on sale of real estate, net | (15,534) | (39,363) | (2,401) | ||
Impairment charges | — | 15,752 | 15,173 | ||
Proportionate share of adjustments to earnings from equity method investments (b) | 3,028 | 3,015 | 2,950 | ||
Proportionate share of adjustments for noncontrolling interests (c) | (96) | (101) | 34 | ||
Total adjustments | 70,577 | 116,143 | 159,867 | ||
FFO (as defined by NAREIT) Attributable to W. P. Carey (d) | 182,275 | 259,038 | 284,907 | ||
Adjustments: | |||||
Other (gains) and losses (e) | 77,107 | (2,504) | (2,859) | ||
Straight-line and other leasing and financing adjustments | (21,187) | (15,310) | (18,662) | ||
Stock-based compensation | 13,468 | 8,903 | 9,050 | ||
Above- and below-market rent intangible lease amortization, net | 6,263 | 5,766 | 7,835 | ||
Amortization of deferred financing costs | 4,851 | 4,555 | 4,805 | ||
Tax benefit – deferred and other | (1,576) | (1,392) | (4,349) | ||
Other amortization and non-cash items | 587 | 580 | 584 | ||
Merger and other expenses | 283 | 206 | 4,152 | ||
Proportionate share of adjustments to earnings from equity method investments (b) | (2,632) | (2,646) | (691) | ||
Proportionate share of adjustments for noncontrolling interests (c) | (91) | (97) | (380) | ||
Total adjustments | 77,073 | (1,939) | (515) | ||
AFFO Attributable to W. P. Carey (d) | $ 259,348 | $ 257,099 | $ 284,392 | ||
Summary | |||||
FFO (as defined by NAREIT) attributable to W. P. Carey (d) | $ 182,275 | $ 259,038 | $ 284,907 | ||
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (d) | $ 0.83 | $ 1.18 | $ 1.32 | ||
AFFO attributable to W. P. Carey (d) | $ 259,348 | $ 257,099 | $ 284,392 | ||
AFFO attributable to W. P. Carey per diluted share (d) | $ 1.18 | $ 1.17 | $ 1.32 | ||
Diluted weighted-average shares outstanding | 220,404,149 | 220,214,118 | 215,252,969 |
W. P. CAREY INC. Year-to-Date Reconciliation of Net Income to Adjusted Funds from Operations (AFFO) (Unaudited) (in thousands, except share and per share amounts) | |||
Nine Months Ended September 30, | |||
2024 | 2023 | ||
Net income attributable to W. P. Carey | $ 413,816 | $ 564,040 | |
Adjustments: | |||
Depreciation and amortization of real property | 369,981 | 442,911 | |
Gain on sale of real estate, net | (70,342) | (181,958) | |
Gain on change in control of interests (a) | (31,849) | — | |
Impairment charges | 15,752 | 15,173 | |
Proportionate share of adjustments to earnings from equity method investments (b) | 8,992 | 8,439 | |
Proportionate share of adjustments for noncontrolling interests (c) | (300) | (533) | |
Total adjustments | 292,234 | 284,032 | |
FFO (as defined by NAREIT) Attributable to W. P. Carey (d) | 706,050 | 848,072 | |
Adjustments: | |||
Other (gains) and losses | 60,764 | (9,593) | |
Straight-line and other leasing and financing adjustments | (56,050) | (52,798) | |
Stock-based compensation | 31,227 | 25,811 | |
Above- and below-market rent intangible lease amortization, net | 16,097 | 27,520 | |
Amortization of deferred financing costs | 13,994 | 15,649 | |
Merger and other expenses | 4,941 | 5,595 | |
Tax benefit – deferred and other | (4,341) | (2,706) | |
Other amortization and non-cash items | 1,746 | 1,583 | |
Proportionate share of adjustments to earnings from equity method investments (b) | (5,797) | (1,872) | |
Proportionate share of adjustments for noncontrolling interests (c) | (292) | (344) | |
Total adjustments | 62,289 | 8,845 | |
AFFO Attributable to W. P. Carey (d) | $ 768,339 | $ 856,917 | |
Summary | |||
FFO (as defined by NAREIT) attributable to W. P. Carey (d) | $ 706,050 | $ 848,072 | |
FFO (as defined by NAREIT) attributable to W. P. Carey per diluted share (d) | $ 3.20 | $ 3.96 | |
AFFO attributable to W. P. Carey (d) | $ 768,339 | $ 856,917 | |
AFFO attributable to W. P. Carey per diluted share (d) | $ 3.49 | $ 4.00 | |
Diluted weighted-average shares outstanding | 220,425,244 | 214,427,425 |
(a) | Amount for the three months ended September 30, 2024 represents a gain recognized on the remaining interest in an investment acquired during the third quarter of 2024, which we had previously accounted for under the equity method. | |||||||
(b) | Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Earnings from equity method investments on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis. | |||||||
(c) | Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis. | |||||||
(d) | FFO and AFFO are non-GAAP measures. See below for a description of FFO and AFFO. | |||||||
(e) | Amount for the three months ended September 30, 2024 is primarily comprised of a mark-to-market unrealized loss for our investment in shares of Lineage of |
Non-GAAP Financial Disclosure
Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts (NAREIT), an industry trade group, has promulgated a non-GAAP measure known as FFO, which we believe to be an appropriate supplemental measure, when used in addition to and in conjunction with results presented in accordance with GAAP, to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to, nor a substitute for, net income or loss as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as restated in December 2018. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from the sale of certain real estate, impairment charges on real estate or other assets incidental to the company's main business, gains or losses on changes in control of interests in real estate and depreciation and amortization from real estate assets; and after adjustments for unconsolidated partnerships and jointly owned investments. Adjustments for unconsolidated partnerships and jointly owned investments are calculated to reflect FFO on the same basis.
We also modify the NAREIT computation of FFO to adjust GAAP net income for certain non-cash charges, such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rent and related reserves, other non-cash rent adjustments, non-cash allowance for credit losses on loans receivable and finance leases, stock-based compensation, non-cash environmental accretion expense, amortization of discounts and premiums on debt and amortization of deferred financing costs. 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 have no impact on cash flows. Additionally, we exclude non-core income and expenses, such as gains or losses from extinguishment of debt, merger and acquisition expenses, and spin-off expenses. We also exclude realized and unrealized gains/losses on foreign currency exchange rate movements (other than those realized on the settlement of foreign currency derivatives), which are not considered fundamental attributes of our business plan and do not affect our overall long-term operating performance. We refer to our modified definition of FFO as AFFO. We exclude these items from GAAP net income to arrive at AFFO as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs that are currently not engaged in acquisitions, mergers and restructuring, which are not part of our normal business operations. AFFO also reflects adjustments for unconsolidated partnerships and jointly owned investments. We use AFFO as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies and determine executive compensation.
We believe that AFFO is a useful supplemental measure for investors to consider as we believe it will help them to better assess the sustainability of our operating performance without the potentially distorting impact of these short-term fluctuations. However, there are limits on the usefulness of AFFO to investors. For example, impairment charges and unrealized foreign currency losses that we exclude may become actual realized losses upon the ultimate disposition of the properties in the form of lower cash proceeds or other considerations. We use our FFO and AFFO measures as supplemental financial measures of operating performance. We do not use our FFO and AFFO measures as, nor should they be considered to be, alternatives to net income computed under GAAP, or as alternatives to net cash provided by operating activities computed under GAAP, or as indicators of our ability to fund our cash needs.
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SOURCE W. P. Carey Inc.
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