W. P. Carey Reports Third Quarter Financial Results
WPC Third Quarter 2006 Financial Results
NEW YORK - November 7, 2006 – Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today reported financial results for the three and nine-month periods ended September 30, 2006.
QUARTERLY AND NINE-MONTH RESULTS
Income from continuing operations for the three-month period in 2006 increased 7% to $14.4 million, as compared to $13.5 million for the same period in 2005. Income from continuing operations for the nine-month period in 2006 increased 20% to $47.5 million, as compared to $39.7 million for the same period in 2005.
Net income for the three-month period remained unchanged at $14.3 million, as compared to the same period in 2005. Net income for the nine-month period in 2006 increased 15% to $42.7 million, as compared to $37.1 million for the same period in 2005. Among the factors affecting net income for the first nine months of 2006 were reduced impairment charges and increased asset management revenues, as our assets under management continued to grow. These were partially offset by a decrease in structuring revenue due to lower investment volume and the deferral of an increased percentage of structuring revenues. No impairment charges were recorded for the third quarter of the current and prior year. Net impairment charges totaled $3.4 million for the current nine-month period, as compared to $15.8 million for the same period in 2005.
We have deferred recognition of approximately $4.0 million in performance and structuring revenues in the third quarter and approximately $10.7 million year-to-date due to the performance hurdle for CPA®:16 – Global. To date we have deferred $33.8 million and currently expect to meet the hurdle and recognize the revenues in the first half of 2007.
Diluted earnings per share (EPS) for the three-month period in 2006 remained unchanged at $0.37 as compared to the same period in 2005. Diluted EPS for the nine-month period increased 16% to $1.10 as compared to $0.95 for the same period in 2005.
Funds from Operations (FFO) for the three-month period in 2006, as per the attached schedule, which are calculated consistently with our prior FFO reporting, decreased 9% to $23.3 million, or $0.59 per diluted share, as compared to $25.6 million, or $0.66 per diluted share, for the comparable period in 2005. FFO for the nine-month period decreased 1% to $73.7 million, or $1.89 per diluted share, as compared to $74.3 million, or $1.90 per diluted share, for the comparable period in 2005.
Cash flows from operating activities for the nine-month period in 2006 increased 7% to $48.9 million, as compared to $45.9 million for the comparable period in 2005.
The Board of Directors raised the quarterly cash distribution to $0.456 per share, which was paid on October 13, 2006 to shareholders of record on September 30, 2006.
INVESTMENT ACTIVITY
For the three-month period ended September 30, 2006, the Company structured five investments totaling $113 million, on behalf of CPA®:16 – Global, as compared to six investments totaling $153 million, on behalf of CPA®:14, CPA®:15 and CPA®:16 – Global, for the comparable period in 2005. For the nine-month period ended September 30, 2006, the Company completed 13 investments totaling $451 million, on behalf of CPA®:15 and CPA®:16 – Global, as compared to 23 investments totaling $780 million, on behalf of CPA®:14, CPA®:15 and CPA®:16 – Global, for the comparable period in 2005.
For the nine months ended September 30, 2006, international investments accounted for 48% of total investments, as compared to 55% of total investments for the comparable period in 2005.
GROWTH IN ASSETS UNDER MANAGEMENT
The CPA® series of non-traded REITs had assets valued at approximately $6.8 billion on September 30, 2006, which represents a 11% increase as compared to September 30, 2005.
Since 2000, the Company’s assets under management more than tripled, reflecting an annual compound growth rate of 26%.
As of September 30, 2006, the occupancy rate of our 16 million square foot portfolio was approximately 97%. In addition, the occupancy rate of the W. P. Carey Group’s 94 million square foot portfolio – which includes both the CPA® series of funds as well as our directly-owned assets – was approximately 99%.
PROPOSED MERGER
On June 29, 2006, two of the CPA® REITs that the Company manages, CPA®:12 and CPA®:14, entered into a definitive agreement pursuant to which CPA®:12 will merge with and into CPA®:14, subject to the approval of the shareholders of CPA®:12 and CPA®:14. Prior to the proposed merger, the Company expects to purchase from CPA®:12 certain properties or interests in properties, valued at approximately $130.5 million, for $74.8 million in cash and the assumption of approximately $55.7 million in limited recourse mortgage notes payable. The Company will receive $49.8 million from CPA®:12 in incentive and termination compensation in connection with the transactions contemplated by the merger. In addition, it will receive approximately $6.5 million as a result of a special distribution made to all CPA®:12 shareholders. A joint proxy/registration statement was filed with the S.E.C. and was declared effective by the S.E.C. in October 2006. Special shareholder meetings for both CPA®:12 and CPA®:14 have been scheduled for November 30, 2006 to obtain shareholder approval for the merger and related asset sale. The closing of the merger is subject to customary closing conditions, as well as the receipt of shareholder approval. The Company currently expects that the closing will occur in the fourth quarter of 2006, although there can be no assurance of such timing.
CPA®:16 – GLOBAL OFFERING
Since commencing its second public offering to raise up to $550 million on March 27, 2006, CPA®:16 – Global has raised $346.5 million through November 1, 2006.
Gordon F. DuGan, President and Chief Executive Officer of W. P. Carey & Co. LLC, said, “Despite our deferral of $4 million in revenues which we currently expect to earn back in the first half of 2007, we had a solid quarter in terms of asset management revenues, income from continuing operations and FFO. If the CPA®:12/CPA®:14 merger is approved, we will receive both revenues related to the strong performance of CPA®:12 as well as acquire additional properties that will further diversify our portfolio. We remain focused on our strategy of a disciplined investment approach to the selection and structuring of investments. While the domestic and international markets for net lease investments remain quite competitive, we believe we are well positioned for meeting the challenges and capitalizing on the opportunities ahead of us."
CONFERENCE CALL & WEBCAST
Please call at least 10 minutes prior to register for call.
Time: Tuesday, November 7, 2006 11:00 am (ET)
Call-in number: 1-877-407-0782 (International) +201-689-8567
Webcast: www.wpcarey.com/earnings
Podcast: www.wpcarey.com/podcast – Available after 2:00 PM (ET)
Replay: 1-877-660-6853 (International) +201-612-7415
Replay Access codes: Account# 286 and Conference ID# 0216680. Please note that both access codes are required for playback. Replay Available through November 14, 2006 at midnight ET.
W. P. CAREY & CO. LLC
Founded in 1973, W. P. Carey & Co. LLC is a leading global real estate investment firm. The Company provides asset management services to its CPA® series of income generating real estate funds. With over $4 billion in equity capital, the W. P. Carey Group is one of the largest providers of net lease financing for corporations worldwide. The Group owns more than 700 commercial and industrial properties in 13 countries, representing approximately 94 million square feet, valued at approximately $8 billion. www.wpcarey.com
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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.
