|
|
Maryland
|
001-13779
|
45-4549771
|
(State of incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
|
|
|
50 Rockefeller Plaza, New York, NY
|
|
10020
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
Exhibit No.
|
|
Description
|
|
|
|
23.1
|
|
|
|
|
|
99.1
|
|
|
|
|
|
99.2
|
|
|
|
|
|
99.3
|
|
|
|
W. P. Carey Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
November 19, 2018
|
By:
|
/s/ ToniAnn Sanzone
|
|
|
|
ToniAnn Sanzone
|
|
|
|
Chief Financial Officer
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
||||
Investments in real estate:
|
|
|
|
||||
Real estate — Land, buildings and improvements
|
$
|
2,760,122
|
|
|
$
|
2,772,611
|
|
Operating real estate — Land, buildings and improvements
|
351,007
|
|
|
340,772
|
|
||
Net investments in direct financing leases
|
487,347
|
|
|
509,228
|
|
||
In-place lease intangible assets
|
607,171
|
|
|
629,961
|
|
||
Other intangible assets
|
108,928
|
|
|
111,004
|
|
||
Investments in real estate
|
4,314,575
|
|
|
4,363,576
|
|
||
Accumulated depreciation and amortization
|
(696,927
|
)
|
|
(626,655
|
)
|
||
Net investments in real estate
|
3,617,648
|
|
|
3,736,921
|
|
||
Equity investments in real estate
|
451,517
|
|
|
409,254
|
|
||
Cash and cash equivalents
|
84,563
|
|
|
119,094
|
|
||
Accounts receivable and other assets, net
|
272,114
|
|
|
322,201
|
|
||
Total assets
|
$
|
4,425,842
|
|
|
$
|
4,587,470
|
|
Liabilities and Equity
|
|
|
|
||||
Debt:
|
|
|
|
||||
Mortgage debt, net
|
$
|
1,802,163
|
|
|
$
|
1,849,459
|
|
Senior credit facility, net
|
130,294
|
|
|
101,931
|
|
||
Debt, net
|
1,932,457
|
|
|
1,951,390
|
|
||
Accounts payable, accrued expenses and other liabilities
|
132,328
|
|
|
132,751
|
|
||
Below-market rent and other intangible liabilities, net
|
57,917
|
|
|
61,222
|
|
||
Deferred income taxes
|
26,361
|
|
|
30,524
|
|
||
Due to affiliates
|
12,598
|
|
|
11,467
|
|
||
Distributions payable
|
57,339
|
|
|
56,859
|
|
||
Total liabilities
|
2,219,000
|
|
|
2,244,213
|
|
||
Commitments and contingencies (
Note 11
)
|
|
|
|
|
|
||
|
|
|
|
||||
Preferred stock, $0.001 par value; 50,000,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 900,000,000 shares authorized; and 352,853,616 and 349,899,827 shares, respectively, issued and outstanding
|
353
|
|
|
349
|
|
||
Additional paid-in capital
|
3,206,608
|
|
|
3,174,786
|
|
||
Distributions in excess of accumulated earnings
|
(994,352
|
)
|
|
(861,319
|
)
|
||
Accumulated other comprehensive loss
|
(109,282
|
)
|
|
(78,420
|
)
|
||
Total stockholders’ equity
|
2,103,327
|
|
|
2,235,396
|
|
||
Noncontrolling interests
|
103,515
|
|
|
107,861
|
|
||
Total equity
|
2,206,842
|
|
|
2,343,257
|
|
||
Total liabilities and equity
|
$
|
4,425,842
|
|
|
$
|
4,587,470
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Revenues
|
|
|
|
||||
Lease revenues:
|
|
|
|
||||
Rental income
|
$
|
219,293
|
|
|
$
|
235,921
|
|
Interest income from direct financing leases
|
42,694
|
|
|
43,831
|
|
||
Total lease revenues
|
261,987
|
|
|
279,752
|
|
||
Operating real estate income
|
35,917
|
|
|
28,543
|
|
||
Other operating income
|
18,633
|
|
|
20,484
|
|
||
Other interest income
|
13,846
|
|
|
8,135
|
|
||
|
330,383
|
|
|
336,914
|
|
||
Operating Expenses
|
|
|
|
||||
Depreciation and amortization
|
96,070
|
|
|
87,519
|
|
||
Property expenses
|
72,980
|
|
|
54,361
|
|
||
Impairment charges and other credit losses
|
34,373
|
|
|
4,795
|
|
||
Operating real estate expenses
|
23,627
|
|
|
9,893
|
|
||
General and administrative
|
9,951
|
|
|
11,225
|
|
||
Merger and other expenses
|
4,528
|
|
|
716
|
|
||
|
241,529
|
|
|
168,509
|
|
||
Other Income and Expenses
|
|
|
|
||||
Interest expense
|
(62,689
|
)
|
|
(66,619
|
)
|
||
Equity in earnings of equity method investments in real estate
|
20,745
|
|
|
349
|
|
||
Other gains and (losses)
|
7,912
|
|
|
22,385
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
(1,980
|
)
|
||
|
(34,032
|
)
|
|
(45,865
|
)
|
||
Income before income taxes and gain on sale of real estate
|
54,822
|
|
|
122,540
|
|
||
Provision for income taxes
|
(1,273
|
)
|
|
(2,730
|
)
|
||
Income before gain on sale of real estate, net of tax
|
53,549
|
|
|
119,810
|
|
||
Gain on sale of real estate, net of tax
|
4,370
|
|
|
2,871
|
|
||
Net Income
|
57,919
|
|
|
122,681
|
|
||
Net income attributable to noncontrolling interests (inclusive of Available Cash Distributions to a related party of $18,611 and $19,240, respectively)
|
(27,210
|
)
|
|
(29,135
|
)
|
||
Net Income Attributable to CPA:17 – Global
|
$
|
30,709
|
|
|
$
|
93,546
|
|
Basic and Diluted Earnings Per Share
|
$
|
0.09
|
|
|
$
|
0.27
|
|
Basic and Diluted Weighted-Average Shares Outstanding
|
352,952,199
|
|
|
347,641,667
|
|
||
|
|
|
|
||||
Distributions Declared Per Share
|
$
|
0.4875
|
|
|
$
|
0.4875
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Net Income
|
$
|
57,919
|
|
|
$
|
122,681
|
|
Other Comprehensive (Loss) Income
|
|
|
|
||||
Foreign currency translation adjustments
|
(34,884
|
)
|
|
87,898
|
|
||
Change in net unrealized gain (loss) on derivative instruments
|
3,396
|
|
|
(19,485
|
)
|
||
Change in unrealized gain on marketable investments
|
—
|
|
|
32
|
|
||
|
(31,488
|
)
|
|
68,445
|
|
||
Comprehensive Income
|
26,431
|
|
|
191,126
|
|
||
|
|
|
|
||||
Amounts Attributable to Noncontrolling Interests
|
|
|
|
||||
Net income
|
(27,210
|
)
|
|
(29,135
|
)
|
||
Foreign currency translation adjustments
|
626
|
|
|
(1,989
|
)
|
||
Comprehensive income attributable to noncontrolling interests
|
(26,584
|
)
|
|
(31,124
|
)
|
||
Comprehensive (Loss) Income Attributable to CPA:17 – Global
|
$
|
(153
|
)
|
|
$
|
160,002
|
|
|
CPA:17 – Global
|
|
|
|
|
|||||||||||||||||||||||||
|
Total Outstanding Shares
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Distributions in Excess of Accumulated Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total CPA:17
– Global Stockholders |
|
Noncontrolling Interests
|
|
Total
|
|||||||||||||||
Balance at January 1, 2018
|
349,899,827
|
|
|
$
|
349
|
|
|
$
|
3,174,786
|
|
|
$
|
(861,319
|
)
|
|
$
|
(78,420
|
)
|
|
$
|
2,235,396
|
|
|
$
|
107,861
|
|
|
$
|
2,343,257
|
|
Cumulative-effect adjustment for the adoption of new accounting pronouncement (
Note 2
)
|
|
|
|
|
|
|
8,068
|
|
|
|
|
8,068
|
|
|
|
|
8,068
|
|
||||||||||||
Shares issued
|
4,980,676
|
|
|
5
|
|
|
50,175
|
|
|
|
|
|
|
50,180
|
|
|
|
|
50,180
|
|
||||||||||
Shares issued to affiliates
|
1,484,554
|
|
|
1
|
|
|
14,920
|
|
|
|
|
|
|
14,921
|
|
|
|
|
14,921
|
|
||||||||||
Shares issued to directors
|
7,470
|
|
|
1
|
|
|
75
|
|
|
|
|
|
|
76
|
|
|
|
|
76
|
|
||||||||||
Distributions declared ($0.4875 per share)
|
|
|
|
|
|
|
(171,810
|
)
|
|
|
|
(171,810
|
)
|
|
|
|
(171,810
|
)
|
||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(31,636
|
)
|
|
(31,636
|
)
|
||||||||||||
Contributions from noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
706
|
|
|
706
|
|
||||||||||||
Net income
|
|
|
|
|
|
|
30,709
|
|
|
|
|
30,709
|
|
|
27,210
|
|
|
57,919
|
|
|||||||||||
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
(34,258
|
)
|
|
(34,258
|
)
|
|
(626
|
)
|
|
(34,884
|
)
|
|||||||||||
Realized and unrealized gain on derivative instruments
|
|
|
|
|
|
|
|
|
3,396
|
|
|
3,396
|
|
|
|
|
3,396
|
|
||||||||||||
Repurchase of shares
|
(3,518,911
|
)
|
|
(3
|
)
|
|
(33,348
|
)
|
|
|
|
|
|
(33,351
|
)
|
|
|
|
(33,351
|
)
|
||||||||||
Balance at September 30, 2018
|
352,853,616
|
|
|
$
|
353
|
|
|
$
|
3,206,608
|
|
|
$
|
(994,352
|
)
|
|
$
|
(109,282
|
)
|
|
$
|
2,103,327
|
|
|
$
|
103,515
|
|
|
$
|
2,206,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at January 1, 2017
|
343,575,840
|
|
|
$
|
343
|
|
|
$
|
3,106,456
|
|
|
$
|
(732,613
|
)
|
|
$
|
(156,676
|
)
|
|
$
|
2,217,510
|
|
|
$
|
97,494
|
|
|
$
|
2,315,004
|
|
Shares issued
|
7,570,420
|
|
|
8
|
|
|
76,853
|
|
|
|
|
|
|
76,861
|
|
|
|
|
76,861
|
|
||||||||||
Shares issued to affiliates
|
2,045,220
|
|
|
2
|
|
|
20,691
|
|
|
|
|
|
|
20,693
|
|
|
|
|
20,693
|
|
||||||||||
Shares issued to directors
|
9,891
|
|
|
—
|
|
|
100
|
|
|
|
|
|
|
100
|
|
|
|
|
100
|
|
||||||||||
Distributions declared ($0.4875 per share)
|
|
|
|
|
|
|
(169,133
|
)
|
|
|
|
(169,133
|
)
|
|
|
|
(169,133
|
)
|
||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(29,244
|
)
|
|
(29,244
|
)
|
||||||||||||
Contributions from noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||||||||
Net income
|
|
|
|
|
|
|
93,546
|
|
|
|
|
93,546
|
|
|
29,135
|
|
|
122,681
|
|
|||||||||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
85,909
|
|
|
85,909
|
|
|
1,989
|
|
|
87,898
|
|
|||||||||||
Realized and unrealized loss on derivative instruments
|
|
|
|
|
|
|
|
|
(19,485
|
)
|
|
(19,485
|
)
|
|
|
|
(19,485
|
)
|
||||||||||||
Change in unrealized gain on marketable investments
|
|
|
|
|
|
|
|
|
32
|
|
|
32
|
|
|
|
|
32
|
|
||||||||||||
Repurchase of shares
|
(4,882,760
|
)
|
|
(5
|
)
|
|
(46,298
|
)
|
|
|
|
|
|
(46,303
|
)
|
|
|
|
(46,303
|
)
|
||||||||||
Balance at September 30, 2017
|
348,318,611
|
|
|
$
|
348
|
|
|
$
|
3,157,802
|
|
|
$
|
(808,200
|
)
|
|
$
|
(90,220
|
)
|
|
$
|
2,259,730
|
|
|
$
|
99,375
|
|
|
$
|
2,359,105
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash Flows — Operating Activities
|
|
|
|
||||
Net Cash Provided by Operating Activities
|
$
|
200,787
|
|
|
$
|
196,142
|
|
Cash Flows — Investing Activities
|
|
|
|
||||
Capital contributions to equity investments in real estate
|
(64,888
|
)
|
|
(151,554
|
)
|
||
Funding for build-to-suit projects and expansions
|
(35,418
|
)
|
|
(10,153
|
)
|
||
Proceeds from repayment of loan receivable
|
33,000
|
|
|
—
|
|
||
Return of capital from equity investments in real estate
|
17,834
|
|
|
32,351
|
|
||
Proceeds from sale of real estate
|
7,776
|
|
|
111,222
|
|
||
Capital expenditures on owned real estate
|
(2,856
|
)
|
|
(2,526
|
)
|
||
Payment of deferred acquisition fees to an affiliate
|
(2,694
|
)
|
|
(3,826
|
)
|
||
Proceeds from insurance settlements
|
1,874
|
|
|
—
|
|
||
Acquisitions of real estate and direct financing leases
|
(1,862
|
)
|
|
(11,331
|
)
|
||
Value added taxes paid in connection with acquisition of real estate
|
(1,316
|
)
|
|
(1,884
|
)
|
||
Other investing activities, net
|
1,315
|
|
|
1,646
|
|
||
Proceeds from repayment of preferred equity interest
|
—
|
|
|
27,000
|
|
||
Value added taxes refunded in connection with acquisition of real estate
|
—
|
|
|
7,334
|
|
||
Net Cash Used in Investing Activities
|
(47,235
|
)
|
|
(1,721
|
)
|
||
Cash Flows — Financing Activities
|
|
|
|
||||
Distributions paid
|
(171,330
|
)
|
|
(168,358
|
)
|
||
Proceeds from Senior Credit Facility
|
95,590
|
|
|
67,261
|
|
||
Repayments of Senior Credit Facility
|
(66,378
|
)
|
|
(68,990
|
)
|
||
Proceeds from issuance of shares
|
50,180
|
|
|
76,861
|
|
||
Repurchase of shares
|
(33,351
|
)
|
|
(46,303
|
)
|
||
Distributions to noncontrolling interests
|
(31,636
|
)
|
|
(29,244
|
)
|
||
Scheduled payments and prepayments of mortgage principal
|
(30,628
|
)
|
|
(350,303
|
)
|
||
Contributions from noncontrolling interests
|
706
|
|
|
1
|
|
||
Payment of financing costs and mortgage deposits, net of deposits refunded
|
(98
|
)
|
|
(1,026
|
)
|
||
Proceeds from mortgage financing
|
—
|
|
|
203,478
|
|
||
Other financing activities, net
|
—
|
|
|
(614
|
)
|
||
Net Cash Used in Financing Activities
|
(186,945
|
)
|
|
(317,237
|
)
|
||
Change in Cash and Cash Equivalents and Restricted Cash During the Period
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash
|
(2,426
|
)
|
|
8,219
|
|
||
Net decrease in cash and cash equivalents and restricted cash
|
(35,819
|
)
|
|
(114,597
|
)
|
||
Cash and cash equivalents and restricted cash, beginning of period
|
145,108
|
|
|
300,153
|
|
||
Cash and cash equivalents and restricted cash, end of period
|
$
|
109,289
|
|
|
$
|
185,556
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Real estate — Land, buildings and improvements
|
$
|
97,562
|
|
|
$
|
109,426
|
|
Operating real estate — Land, buildings and improvements
|
90,330
|
|
|
80,658
|
|
||
Net investments in direct financing leases
|
311,165
|
|
|
312,234
|
|
||
In-place lease intangible assets
|
8,407
|
|
|
8,650
|
|
||
Accumulated depreciation and amortization
|
(23,968
|
)
|
|
(26,395
|
)
|
||
Accounts receivable and other assets, net
|
30,357
|
|
|
73,620
|
|
||
Total assets
|
517,322
|
|
|
567,929
|
|
||
|
|
|
|
||||
Mortgage debt, net
|
$
|
102,390
|
|
|
$
|
104,213
|
|
Accounts payable, accrued expenses and other liabilities
|
11,566
|
|
|
12,693
|
|
||
Deferred income taxes
|
10,621
|
|
|
12,374
|
|
||
Total liabilities
|
124,933
|
|
|
129,662
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
84,563
|
|
|
$
|
119,094
|
|
Restricted cash
(a)
|
24,726
|
|
|
26,014
|
|
||
Total cash and cash equivalents and restricted cash
|
$
|
109,289
|
|
|
$
|
145,108
|
|
(a)
|
Restricted cash was included within Accounts receivable and other assets, net on our consolidated balance sheets.
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Amounts Included in the Consolidated Statements of Income
|
|
|
|
||||
Asset management fees
|
$
|
22,554
|
|
|
$
|
22,026
|
|
Available Cash Distributions
|
18,611
|
|
|
19,240
|
|
||
Personnel and overhead reimbursements
|
5,397
|
|
|
6,735
|
|
||
Director compensation
|
195
|
|
|
259
|
|
||
Interest expense on deferred acquisition fees
|
167
|
|
|
199
|
|
||
|
$
|
46,924
|
|
|
$
|
48,459
|
|
Advisor Fees Capitalized
|
|
|
|
||||
Current acquisition fees
|
$
|
1,134
|
|
|
$
|
3,972
|
|
Personnel and overhead reimbursements
|
193
|
|
|
563
|
|
||
Deferred acquisition fees
|
104
|
|
|
3,177
|
|
||
|
$
|
1,431
|
|
|
$
|
7,712
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Due to Affiliates
|
|
|
|
||||
Asset management fees payable
|
$
|
5,055
|
|
|
$
|
2,435
|
|
Deferred acquisition fees, including interest
|
3,689
|
|
|
6,564
|
|
||
Reimbursable costs
|
2,056
|
|
|
2,162
|
|
||
Current acquisition fees
|
1,003
|
|
|
131
|
|
||
Accounts payable
|
795
|
|
|
175
|
|
||
|
$
|
12,598
|
|
|
$
|
11,467
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Land
|
$
|
555,133
|
|
|
$
|
567,113
|
|
Buildings and improvements
|
2,159,151
|
|
|
2,200,901
|
|
||
Real estate under construction
(a)
|
45,838
|
|
|
4,597
|
|
||
Less: Accumulated depreciation
|
(393,058
|
)
|
|
(354,668
|
)
|
||
|
$
|
2,367,064
|
|
|
$
|
2,417,943
|
|
(a)
|
Amount as of
September 30, 2018
includes accrued capitalized costs of
$12.2 million
.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Land
|
$
|
90,560
|
|
|
$
|
90,042
|
|
Buildings and improvements
|
256,276
|
|
|
250,730
|
|
||
Real estate under construction
(a)
|
4,171
|
|
|
—
|
|
||
Less: Accumulated depreciation
|
(32,237
|
)
|
|
(26,087
|
)
|
||
|
$
|
318,770
|
|
|
$
|
314,685
|
|
(a)
|
Primarily represented restoration costs on our hotel property, which was impacted by Hurricane Irma as noted below.
|
|
|
Number of Tenants / Obligors at
|
|
Carrying Value at
|
||||||||
Internal Credit Quality Indicator
|
|
September 30, 2018
|
|
December 31, 2017
|
|
September 30, 2018
(a)
|
|
December 31, 2017
|
||||
1
|
|
—
|
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
2
|
|
2
|
|
2
|
|
63,257
|
|
|
62,744
|
|
||
3
|
|
9
|
|
8
|
|
358,999
|
|
|
379,621
|
|
||
4
|
|
5
|
|
8
|
|
129,631
|
|
|
165,413
|
|
||
5
|
|
1
|
|
1
|
|
11,494
|
|
|
11,950
|
|
||
|
|
|
|
|
|
$
|
563,381
|
|
|
$
|
619,728
|
|
(a)
|
During the
nine months ended September 30, 2018
, we recognized an allowance for credit losses totaling
$14.6 million
on two of our net-lease properties that were classified as direct financing leases due to the Bon-Ton tenant informing us that it had filed for bankruptcy (
Note 8
). On August 31, 2018, this tenant vacated the aforementioned properties and, as a result, these two properties were reclassified to Real estate — Land, buildings and improvements on our consolidated financial statements for an aggregate amount of
$4.0 million
.
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Equity Earnings from Equity Investments:
|
|
|
|
||||
Net Lease
|
$
|
22,438
|
|
|
$
|
7,016
|
|
Self Storage
(a)
|
(523
|
)
|
|
—
|
|
||
All Other
(b) (c) (d)
|
648
|
|
|
(4,405
|
)
|
||
|
22,563
|
|
|
2,611
|
|
||
Amortization of Basis Differences on Equity Investments:
|
|
|
|
||||
Net Lease
|
(1,587
|
)
|
|
(1,775
|
)
|
||
All Other
(b) (c) (d)
|
(231
|
)
|
|
(487
|
)
|
||
|
(1,818
|
)
|
|
(2,262
|
)
|
||
Equity in earnings of equity method investments in real estate
|
$
|
20,745
|
|
|
$
|
349
|
|
(a)
|
On July 12, 2018, we entered into a joint venture investment to acquire a 90% interest in a self-storage portfolio of seven properties for an aggregate amount of
$63.8 million
, of which our proportionate share was
$57.4 million
(including
$1.1 million
of acquisition fees payable to our Advisor); five of the properties are located in South Carolina, one is located in North Carolina, and one is located in Florida. This transaction was accounted for as an equity method investment as we have significant influence over this investment. All major decisions that significantly impact the economic performance of the entity require a unanimous decision vote from all of the shareholders; therefore, we did not have control over this investment.
|
(b)
|
On October 3, 2017 we restructured our Shelborne Hotel investment. All equity interests in the investment were transferred to us in satisfaction of the underlying loan. Simultaneously, we transferred a
4.5%
minority interest back to one of the original equity partners in exchange for a cash contribution of
$4.0 million
. As a result of the restructuring, we became the managing member with controlling financial interest in the investment. The minority interests have no decision-making control. Since the original build-to-suit construction is now complete and the loan has been satisfied, we determined that this investment should no longer be accounted for as an ADC Arrangement and, as a result, consolidated this investment as of the restructure date. As a result, the
nine months ended September 30, 2018
in the table above did not include any activity related to this investment.
|
(c)
|
On May 19, 2017, we received the full repayment of our preferred equity interest in BPS Nevada LLC; therefore, the preferred equity interest was retired as of that date. As a result, the
nine months ended September 30, 2018
in the table above did not include any activity related to this investment.
|
(d)
|
On March 17, 2017, we restructured our investment in IDL Wheel Tenant, LLC (
Note 13
). As a result of the restructuring, this investment did not qualify as an ADC Arrangement under the equity method of accounting and was accounted for as a loan receivable, included in Accounts receivable and other assets, net in the consolidated financial statements. As a result, the
nine months ended September 30, 2018
in the table above did not include any activity related to this investment.
|
|
|
|
|
Ownership Interest at
|
|
Carrying Value at
|
||||||
Lessee/Equity Investee
|
|
Co-owner
|
|
September 30, 2018
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Net Lease:
|
|
|
|
|
|
|
|
|
||||
Hellweg Die Profi-Baumärkte GmbH & Co. KG (referred to as Hellweg 2)
(a) (b) (c)
|
|
WPC
|
|
37%
|
|
$
|
106,415
|
|
|
$
|
109,933
|
|
Kesko Senukai
(a)
|
|
Third Party
|
|
70%
|
|
56,384
|
|
|
58,136
|
|
||
Jumbo Logistiek Vastgoed B.V.
(a) (d)
|
|
WPC
|
|
85%
|
|
52,101
|
|
|
55,162
|
|
||
U-Haul Moving Partners, Inc. and Mercury Partners, LP
(b)
|
|
WPC
|
|
12%
|
|
34,627
|
|
|
35,897
|
|
||
BPS Nevada, LLC
(b) (e)
|
|
Third Party
|
|
15%
|
|
23,448
|
|
|
23,455
|
|
||
Bank Pekao S.A.
(a) (b)
|
|
CPA:18 – Global
|
|
50%
|
|
23,213
|
|
|
25,582
|
|
||
State Farm Automobile Co.
(b)
|
|
CPA:18 – Global
|
|
50%
|
|
14,898
|
|
|
16,072
|
|
||
Berry Global Inc.
(b)
|
|
WPC
|
|
50%
|
|
13,638
|
|
|
14,476
|
|
||
Tesco Global Aruhazak Zrt.
(a) (b)
|
|
WPC
|
|
49%
|
|
9,682
|
|
|
10,707
|
|
||
Eroski Sociedad Cooperativa — Mallorca
(a)
|
|
WPC
|
|
30%
|
|
7,301
|
|
|
7,629
|
|
||
Apply Sørco AS (referred to as Apply)
(a)
|
|
CPA:18 – Global
|
|
49%
|
|
7,257
|
|
|
6,298
|
|
||
Dick’s Sporting Goods, Inc.
(b)
|
|
WPC
|
|
45%
|
|
3,175
|
|
|
3,750
|
|
||
Konzum d.d. (referred to as Agrokor)
(a) (b)
|
|
CPA:18 – Global
|
|
20%
|
|
3,065
|
|
|
3,433
|
|
||
|
|
|
|
|
|
355,204
|
|
|
370,530
|
|
||
Self Storage:
|
|
|
|
|
|
|
|
|
||||
Alan Jathoo JV (Multi) LLC
(b)
|
|
Third Party
|
|
90%
|
|
56,701
|
|
|
—
|
|
||
|
|
|
|
|
|
56,701
|
|
|
—
|
|
||
All Other:
|
|
|
|
|
|
|
|
|
||||
BG LLH, LLC
(b) (e)
|
|
Third Party
|
|
6%
|
|
39,612
|
|
|
38,724
|
|
||
|
|
|
|
|
|
39,612
|
|
|
38,724
|
|
||
|
|
|
|
|
|
$
|
451,517
|
|
|
$
|
409,254
|
|
(a)
|
Carrying value of investment was impacted by fluctuations in the exchange rate of the applicable foreign currency.
|
(b)
|
This investment was a VIE.
|
(c)
|
In September 2018, WPC entered into an agreement with a third party to sell
nine
of the
37
Hellweg 2 properties for a net sales price of
$183.8 million
. These properties had an aggregate asset carrying value of
$108.7 million
, of which
$35.9 million
represented our proportionate interest at
September 30, 2018
(amounts were based on the euro exchange rate at that date).
|
(d)
|
This investment represented a tenancy-in-common interest, whereby the property was encumbered by debt for which we were jointly and severally liable. The co-obligor was WPC and the amount due under the arrangement was approximately
$72.5 million
at
September 30, 2018
. Of this amount,
$61.6 million
represented the amount we were liable for and was included within the carrying value of this investment at
September 30, 2018
.
|
(e)
|
This investment was reported using the hypothetical liquidation at book value model, which may have been different than pro rata ownership percentages, primarily due to the complex capital structure of the partnership agreement.
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Amortization Period (Years)
|
|
Gross Carrying Amount
|
|
Accumulated
Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated
Amortization
|
|
Net Carrying Amount
|
||||||||||||
Finite-Lived Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
In-place lease
|
4 – 53
|
|
$
|
607,171
|
|
|
$
|
(235,930
|
)
|
|
$
|
371,241
|
|
|
$
|
629,961
|
|
|
$
|
(213,641
|
)
|
|
$
|
416,320
|
|
Above-market rent
|
7 – 40
|
|
96,280
|
|
|
(34,801
|
)
|
|
61,479
|
|
|
98,162
|
|
|
(31,533
|
)
|
|
66,629
|
|
||||||
Below-market ground leases and other
|
55 – 94
|
|
12,648
|
|
|
(901
|
)
|
|
11,747
|
|
|
12,842
|
|
|
(726
|
)
|
|
12,116
|
|
||||||
|
|
|
716,099
|
|
|
(271,632
|
)
|
|
444,467
|
|
|
740,965
|
|
|
(245,900
|
)
|
|
495,065
|
|
||||||
Indefinite-Lived Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Goodwill
|
|
|
304
|
|
|
—
|
|
|
304
|
|
|
304
|
|
|
—
|
|
|
304
|
|
||||||
Total intangible assets
|
|
|
$
|
716,403
|
|
|
$
|
(271,632
|
)
|
|
$
|
444,771
|
|
|
$
|
741,269
|
|
|
$
|
(245,900
|
)
|
|
$
|
495,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finite-Lived Intangible Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Below-market rent
|
7 – 53
|
|
$
|
(81,621
|
)
|
|
$
|
24,779
|
|
|
$
|
(56,842
|
)
|
|
$
|
(82,259
|
)
|
|
$
|
22,121
|
|
|
$
|
(60,138
|
)
|
Above-market ground lease
|
49 – 88
|
|
(1,145
|
)
|
|
70
|
|
|
(1,075
|
)
|
|
(1,145
|
)
|
|
61
|
|
|
(1,084
|
)
|
||||||
Total intangible liabilities
|
|
|
$
|
(82,766
|
)
|
|
$
|
24,849
|
|
|
$
|
(57,917
|
)
|
|
$
|
(83,404
|
)
|
|
$
|
22,182
|
|
|
$
|
(61,222
|
)
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Level
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Mortgage debt, net
(a) (b)
|
3
|
|
$
|
1,802,163
|
|
|
$
|
1,793,274
|
|
|
$
|
1,849,459
|
|
|
$
|
1,864,043
|
|
Loans receivable
(c) (d)
|
3
|
|
76,034
|
|
|
79,000
|
|
|
110,500
|
|
|
110,500
|
|
||||
CMBS
(e)
|
3
|
|
994
|
|
|
994
|
|
|
6,548
|
|
|
7,237
|
|
(a)
|
The carrying value of Mortgage debt, net included unamortized deferred financing costs of
$6.3 million
and
$7.9 million
at
September 30, 2018
and
December 31, 2017
, respectively.
|
(b)
|
We determined the estimated fair value of our Mortgage debt, net using a discounted cash flow model that estimated the present value of future loan payments by discounting such payments at current estimated market interest rates. The estimated market interest rates took into account interest rate risk and the value of the underlying collateral, which included the quality of the collateral, the credit quality of the tenant/obligor, and the time until maturity.
|
(c)
|
We determined the estimated fair value of our Loans receivable using a discounted cash flow model with rates that took into account the credit of the tenant/obligor, order of payment tranches, and interest rate risk. We also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the tenant/obligor, the time until maturity, and the current market interest rate.
|
(d)
|
Carrying value amount at
September 30, 2018
included the impact of adopting ASU 2017-05 (
Note 2
).
|
(e)
|
At both
September 30, 2018
and
December 31, 2017
, we had
two
separate tranches of CMBS investments. The carrying values of our CMBS investments were inclusive of impairment charges for both periods presented.
|
|
Nine Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2017
|
||||||||||||
|
Fair Value Measurements
|
|
Total Impairment Charges and Other Credit Losses
|
|
Fair Value Measurements
|
|
Total Impairment Charges and Other Credit Losses
|
||||||||
Impairment Charges and Other Credit Losses
|
|
|
|
|
|
|
|
|
|
|
|
||||
Real estate — Land, buildings and improvements
|
$
|
28,740
|
|
|
$
|
14,200
|
|
|
$
|
4,719
|
|
|
$
|
4,519
|
|
Net investments in direct financing leases
|
4,043
|
|
|
14,619
|
|
|
—
|
|
|
—
|
|
||||
CMBS
|
994
|
|
|
5,554
|
|
|
637
|
|
|
276
|
|
||||
Equity investments in real estate
|
—
|
|
|
—
|
|
|
11,589
|
|
|
8,805
|
|
||||
|
|
|
$
|
34,373
|
|
|
|
|
$
|
13,600
|
|
Derivatives Designated
as Hedging Instruments
|
|
|
|
Asset Derivatives Fair Value at
|
|
Liability Derivatives Fair Value at
|
||||||||||||
|
Balance Sheet Location
|
|
September 30, 2018
|
|
December 31, 2017
|
|
September 30, 2018
|
|
December 31, 2017
|
|||||||||
Foreign currency forward contracts
|
|
Accounts receivable and other assets, net
|
|
$
|
12,821
|
|
|
$
|
14,382
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps
|
|
Accounts receivable and other assets, net
|
|
1,587
|
|
|
314
|
|
|
—
|
|
|
—
|
|
||||
Interest rate caps
|
|
Accounts receivable and other assets, net
|
|
121
|
|
|
201
|
|
|
—
|
|
|
—
|
|
||||
Interest rate swaps
|
|
Accounts payable, accrued expenses and other liabilities
|
|
—
|
|
|
—
|
|
|
(1,690
|
)
|
|
(3,852
|
)
|
||||
Foreign currency collars
|
|
Accounts payable, accrued expenses and other liabilities
|
|
—
|
|
|
—
|
|
|
(784
|
)
|
|
(1,431
|
)
|
||||
Derivatives Not Designated
as Hedging Instruments
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stock warrants
|
|
Accounts receivable and other assets, net
|
|
1,914
|
|
|
1,815
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency forward contracts
|
|
Accounts receivable and other assets, net
|
|
348
|
|
|
86
|
|
|
—
|
|
|
—
|
|
||||
Interest rate swap
|
|
Accounts payable, accrued expenses and other liabilities
|
|
—
|
|
|
—
|
|
|
(103
|
)
|
|
(128
|
)
|
||||
Total derivatives
|
|
|
|
$
|
16,791
|
|
|
$
|
16,798
|
|
|
$
|
(2,577
|
)
|
|
$
|
(5,411
|
)
|
|
|
Amount of Gain (Loss) Recognized on Derivatives in Other Comprehensive (Loss) Income (Effective Portion)
(a)
|
||||||
|
|
Nine Months Ended September 30,
|
||||||
Derivatives in Cash Flow Hedging Relationships
|
|
2018
|
|
2017
|
||||
Interest rate swaps
|
|
$
|
3,454
|
|
|
$
|
948
|
|
Foreign currency forward contracts
|
|
(1,505
|
)
|
|
(18,238
|
)
|
||
Foreign currency collars
|
|
661
|
|
|
(1,605
|
)
|
||
Interest rate caps
|
|
(54
|
)
|
|
(473
|
)
|
||
Derivatives in Net Investment Hedging Relationships
(b)
|
|
|
|
|
||||
Foreign currency collar
|
|
(1
|
)
|
|
(23
|
)
|
||
Foreign currency forward contracts
|
|
—
|
|
|
(204
|
)
|
||
Total
|
|
$
|
2,555
|
|
|
$
|
(19,595
|
)
|
|
|
|
|
Amount of Gain (Loss) Reclassified from Other Comprehensive (Loss) Income into Income (Effective Portion)
|
||||||
Derivatives in Cash Flow Hedging Relationships
|
|
Location of Gain (Loss) Reclassified to Income
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
|||||||
Foreign currency forward contracts
|
|
Other gains and (losses)
|
|
$
|
5,287
|
|
|
$
|
5,968
|
|
Interest rate swaps
|
|
Interest expense
|
|
(1,023
|
)
|
|
(1,878
|
)
|
||
Interest rate caps
|
|
Interest expense
|
|
(49
|
)
|
|
—
|
|
||
Total
|
|
|
|
$
|
4,215
|
|
|
$
|
4,090
|
|
(a)
|
Excludes net gains of
$0.9 million
on unconsolidated jointly owned investments for the
nine months ended September 30, 2018
, and net losses of
$0.1 million
for the
nine months ended September 30, 2017
.
|
(b)
|
The effective portion of the change in fair value and the settlement of these contracts were reported in the foreign currency translation adjustment section of
Other comprehensive (loss) income
.
|
Derivatives Not in Cash Flow Hedging Relationships
|
|
Location of Gain (Loss) Recognized in Income
|
|
Amount of Gain (Loss) Recognized in Income on Derivatives
|
||||||
|
|
Nine Months Ended September 30,
|
||||||||
|
|
2018
|
|
2017
|
||||||
Foreign currency forward contracts
|
|
Other gains and (losses)
|
|
$
|
297
|
|
|
$
|
(26
|
)
|
Stock warrants
|
|
Other gains and (losses)
|
|
99
|
|
|
(99
|
)
|
||
Interest rate swap
|
|
Interest expense
|
|
(23
|
)
|
|
8
|
|
||
Swaption
|
|
Other gains and (losses)
|
|
—
|
|
|
(220
|
)
|
||
Derivatives in Cash Flow Hedging Relationships
(a)
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
Interest expense
|
|
22
|
|
|
113
|
|
||
Foreign currency collars
|
|
Other gains and (losses)
|
|
(13
|
)
|
|
(7
|
)
|
||
Total
|
|
|
|
$
|
382
|
|
|
$
|
(231
|
)
|
(a)
|
Related to the ineffective portion of the hedging relationship.
|
Interest Rate Derivatives
|
|
Number of Instruments
|
|
Notional Amount
|
|
Fair Value at
September 30, 2018
(a)
|
||||
Designated as Cash Flow Hedging Instruments
|
|
|
|
|
|
|
|
|||
Interest rate swaps
|
|
3
|
|
65,557
|
|
EUR
|
|
$
|
(353
|
)
|
Interest rate swaps
|
|
12
|
|
122,155
|
|
USD
|
|
250
|
|
|
Interest rate cap
|
|
1
|
|
75,000
|
|
USD
|
|
58
|
|
|
Interest rate caps
|
|
4
|
|
132,536
|
|
EUR
|
|
56
|
|
|
Interest rate cap
|
|
1
|
|
6,394
|
|
GBP
|
|
7
|
|
|
Not Designated as Hedging Instrument
|
|
|
|
|
|
|
|
|||
Interest rate swap
|
|
1
|
|
4,755
|
|
EUR
|
|
(103
|
)
|
|
|
|
|
|
|
|
|
$
|
(85
|
)
|
(a)
|
Fair value amount was based on the exchange rate of the euro or British pound sterling at
September 30, 2018
, as applicable.
|
Foreign Currency Derivatives
|
|
Number of Instruments
|
|
Notional Amount
|
|
Fair Value at
September 30, 2018
|
||||
Designated as Cash Flow Hedging Instruments
|
|
|
|
|
|
|
|
|||
Foreign currency forward contracts
|
|
23
|
|
58,143
|
|
EUR
|
|
$
|
12,789
|
|
Foreign currency collars
|
|
2
|
|
15,100
|
|
EUR
|
|
(746
|
)
|
|
Foreign currency collars
|
|
3
|
|
2,000
|
|
NOK
|
|
(17
|
)
|
|
Not Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|||
Foreign currency forward contracts
|
|
6
|
|
1,455
|
|
EUR
|
|
291
|
|
|
Foreign currency forward contracts
|
|
6
|
|
4,359
|
|
NOK
|
|
57
|
|
|
Designated as Net Investment Hedging Instruments
|
|
|
|
|
|
|
|
|||
Foreign currency forward contracts
|
|
1
|
|
2,468
|
|
NOK
|
|
32
|
|
|
Foreign currency collar
|
|
1
|
|
2,500
|
|
NOK
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
$
|
12,385
|
|
|
|
Interest Rate at
|
|
Outstanding Balance at
|
||||||
Senior Credit Facility, Net
|
|
September 30, 2018
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Term Loan
(a)
|
|
LIBOR + 1.45%
|
|
$
|
50,000
|
|
|
$
|
49,915
|
|
Revolver:
|
|
|
|
|
|
|
||||
Revolver — borrowing in U.S dollars
|
|
3.69%
|
|
60,000
|
|
|
—
|
|
||
Revolver — borrowing in yen
(b)
|
|
1.50%
|
|
20,294
|
|
|
22,047
|
|
||
Revolver — borrowing in euros
|
|
N/A
|
|
—
|
|
|
29,969
|
|
||
|
|
|
|
$
|
130,294
|
|
|
$
|
101,931
|
|
(a)
|
Included unamortized deferred financing costs and discounts.
|
(b)
|
Amounts were based on the exchange rate of the yen at
September 30, 2018
.
|
Years Ending December 31,
|
|
Total
|
||
2018 (remainder)
|
|
$
|
42,096
|
|
2019
(a)
|
|
203,506
|
|
|
2020
|
|
424,531
|
|
|
2021
|
|
446,038
|
|
|
2022
|
|
347,845
|
|
|
Thereafter through 2031
|
|
478,975
|
|
|
Total principal payments
|
|
1,942,991
|
|
|
Deferred financing costs
|
|
(6,306
|
)
|
|
Unamortized discount, net
|
|
(4,228
|
)
|
|
Total
|
|
$
|
1,932,457
|
|
(a)
|
Includes the
$50.0 million
Term Loan and
$80.3 million
Revolver outstanding at
September 30, 2018
under our Senior Credit Facility. On July 24, 2018, we entered into a second amendment to the Credit Agreement to exercise one of our two options to extend the maturity of the Senior Credit Facility for an additional 12-month period, from
August 26, 2018
to
August 26, 2019
. On October 31, 2018, subsequent to the effectiveness of the Merger, WPC fully repaid all obligators under the Senior Credit Facility (
Note 15
).
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||
|
Gains and (Losses)
on Derivative Instruments |
|
Gains and (Losses) on Marketable Investments
|
|
Foreign Currency Translation Adjustments
|
|
Total
|
||||||||
Beginning balance
|
$
|
9,087
|
|
|
$
|
(15
|
)
|
|
$
|
(87,492
|
)
|
|
$
|
(78,420
|
)
|
Other comprehensive loss before reclassifications
|
7,611
|
|
|
—
|
|
|
(34,884
|
)
|
|
(27,273
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss to:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
1,072
|
|
|
—
|
|
|
—
|
|
|
1,072
|
|
||||
Other gains and (losses)
|
(5,287
|
)
|
|
—
|
|
|
—
|
|
|
(5,287
|
)
|
||||
Total
|
(4,215
|
)
|
|
—
|
|
|
—
|
|
|
(4,215
|
)
|
||||
Net current-period Other comprehensive loss
|
3,396
|
|
|
—
|
|
|
(34,884
|
)
|
|
(31,488
|
)
|
||||
Net current-period Other comprehensive loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
626
|
|
|
626
|
|
||||
Ending balance
|
$
|
12,483
|
|
|
$
|
(15
|
)
|
|
$
|
(121,750
|
)
|
|
$
|
(109,282
|
)
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||
|
Gains and (Losses)
on Derivative Instruments |
|
Gains and (Losses) on Marketable Investments
|
|
Foreign Currency Translation Adjustments
|
|
Total
|
||||||||
Beginning balance
|
$
|
29,549
|
|
|
$
|
(48
|
)
|
|
$
|
(186,177
|
)
|
|
$
|
(156,676
|
)
|
Other comprehensive income before reclassifications
|
(15,395
|
)
|
|
32
|
|
|
87,898
|
|
|
72,535
|
|
||||
Amounts reclassified from accumulated other comprehensive loss to:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
1,878
|
|
|
—
|
|
|
—
|
|
|
1,878
|
|
||||
Other gains and (losses)
|
(5,968
|
)
|
|
—
|
|
|
—
|
|
|
(5,968
|
)
|
||||
Total
|
(4,090
|
)
|
|
—
|
|
|
—
|
|
|
(4,090
|
)
|
||||
Net current-period Other comprehensive income
|
(19,485
|
)
|
|
32
|
|
|
87,898
|
|
|
68,445
|
|
||||
Net current-period Other comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1,989
|
)
|
|
(1,989
|
)
|
||||
Ending balance
|
$
|
10,064
|
|
|
$
|
(16
|
)
|
|
$
|
(100,268
|
)
|
|
$
|
(90,220
|
)
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Net Lease
|
|
|
|
||||
Revenues
(a) (b)
|
$
|
282,125
|
|
|
$
|
301,878
|
|
Operating expenses
(c) (d)
|
(168,426
|
)
|
|
(114,260
|
)
|
||
Interest expense
|
(53,457
|
)
|
|
(58,475
|
)
|
||
Other income and (expenses), excluding interest expense
(e)
|
23,639
|
|
|
3,834
|
|
||
Provision for income taxes
|
(2,488
|
)
|
|
(68
|
)
|
||
Gain on sale of real estate, net of tax
|
4,370
|
|
|
2,871
|
|
||
Net income attributable to noncontrolling interests
|
(11,419
|
)
|
|
(9,895
|
)
|
||
Net income attributable to CPA:17 – Global
|
$
|
74,344
|
|
|
$
|
125,885
|
|
Self Storage
|
|
|
|
||||
Revenues
|
$
|
27,982
|
|
|
$
|
26,902
|
|
Operating expenses
|
(15,935
|
)
|
|
(19,998
|
)
|
||
Interest expense
|
(6,063
|
)
|
|
(5,802
|
)
|
||
Other income and (expenses), excluding interest expense
|
(530
|
)
|
|
(260
|
)
|
||
Provision for income taxes
|
(132
|
)
|
|
(90
|
)
|
||
Net income attributable to CPA:17 – Global
|
$
|
5,322
|
|
|
$
|
752
|
|
All Other
|
|
|
|
||||
Revenues
(f)
|
$
|
20,276
|
|
|
$
|
8,134
|
|
Operating expenses
(g) (h)
|
(19,863
|
)
|
|
(335
|
)
|
||
Interest expense
|
21
|
|
|
—
|
|
||
Other income and (expenses), excluding interest expense
|
1,761
|
|
|
(5,065
|
)
|
||
Benefit from (provision for) income taxes
|
2,002
|
|
|
(2,030
|
)
|
||
Net loss attributable to noncontrolling interests
|
2,820
|
|
|
—
|
|
||
Net income attributable to CPA:17 – Global
|
$
|
7,017
|
|
|
$
|
704
|
|
Corporate
|
|
|
|
||||
Unallocated Corporate Overhead
(i)
|
$
|
(37,363
|
)
|
|
$
|
(14,555
|
)
|
Net income attributable to noncontrolling interests — Available Cash Distributions
|
$
|
(18,611
|
)
|
|
$
|
(19,240
|
)
|
Total Company
|
|
|
|
||||
Revenues
|
$
|
330,383
|
|
|
$
|
336,914
|
|
Operating expenses
|
(241,529
|
)
|
|
(168,509
|
)
|
||
Interest expense
|
(62,689
|
)
|
|
(66,619
|
)
|
||
Other income and (expenses), excluding interest expense
|
28,657
|
|
|
20,754
|
|
||
Provision for income taxes
|
(1,273
|
)
|
|
(2,730
|
)
|
||
Gain on sale of real estate, net of tax
|
4,370
|
|
|
2,871
|
|
||
Net income attributable to noncontrolling interests
|
(27,210
|
)
|
|
(29,135
|
)
|
||
Net income attributable to CPA:17 – Global
|
$
|
30,709
|
|
|
$
|
93,546
|
|
|
Total Assets at
|
||||||
|
September 30, 2018
|
|
December 31, 2017
|
||||
Net Lease
|
$
|
3,843,413
|
|
|
$
|
3,980,445
|
|
Self-Storage
(j)
|
295,146
|
|
|
241,438
|
|
||
All Other
|
230,035
|
|
|
277,702
|
|
||
Corporate
|
57,248
|
|
|
87,885
|
|
||
Total Company
|
$
|
4,425,842
|
|
|
$
|
4,587,470
|
|
(a)
|
Included a
$15.7 million
write-off of a below-market rent lease intangible liability pertaining to our KBR, Inc. properties that was recognized in Rental income as a result of a lease modification during the
nine months ended September 30, 2017
. In addition, as a result of a lease termination, we accelerated amortization of the below-market rent lease intangible liabilities of
$3.3 million
that was also recognized in Rental income during the
nine months ended September 30, 2017
(
Note 13
).
|
(b)
|
We recognized straight-line rent adjustments of
$4.2 million
and
$10.6 million
during the
nine months ended September 30, 2018
and
2017
, respectively. The straight-line rent adjustments for the
nine months ended September 30, 2018
were reduced by a write-off of
$2.9 million
related to the Bon-Ton tenant, which informed us that it had filed for bankruptcy and vacated the properties it occupied as of August 31, 2018 (
Note 8
).
|
(c)
|
Amounts during the
nine months ended September 30, 2018
included Impairment charges and other credit losses totaling
$28.8 million
related to the six properties that were occupied by our Bon-Ton tenant, which informed us that it had filed for bankruptcy and vacated the properties it occupied as of August 31, 2018 (
Note 8
). In addition, we recognized an impairment charge of
$4.5 million
related to a net-leased property during the
nine months ended September 30, 2017
(
Note 8
).
|
(d)
|
In April 2017, the Croatian government passed a special law assisting the restructuring of companies considered of systemic significance in Croatia. This law directly impacted our Agrokor tenant, which was experiencing financial distress and received a credit downgrade from both Standard & Poor’s and Moody’s. As a result of the financial difficulties and the uncertainty regarding future rent collections from the tenant, we recorded bad debt expense of
$15.7 million
and
$4.8 million
during the
nine months ended September 30, 2018
and
2017
, respectively. In July 2018, the creditors of Agrokor reached a settlement plan to attempt to restructure the company, but as of the date of this Report, we were unable to assess the potential impact of that plan on our investment.
|
(e)
|
During the
nine months ended September 30, 2017
, we recorded impairment charges on our equity method investments totaling
$8.8 million
(
Note 8
).
|
(f)
|
Amount included the impact of adopting ASU 2017-05 (
Note 2
), which resulted in the recognition of
$7.4 million
of accretion into income during the
nine months ended September 30, 2018
.
|
(g)
|
Included an impairment charge of
$5.6 million
related to our CMBS investments (
Note 8
) recognized during the
nine months ended September 30, 2018
and
$0.3 million
for the
nine months ended September 30, 2017
.
|
(h)
|
Included an allowance for bad debt totaling
$2.0 million
for the
nine months ended September 30, 2018
related to the delay in collecting our outstanding insurance receivables on our Shelborne Hotel investment (
Note 4
).
|
(i)
|
Included in unallocated corporate overhead were asset management fees and general and administrative expenses, as well as interest expense and other charges related to our Senior Credit Facility. These expenses were calculated and reported at the portfolio level and not evaluated as part of any segment’s operating performance.
|
(j)
|
Included the impact of our joint venture investment to acquire a 90% interest in a self-storage portfolio (
Note 6
).
|
(in thousands)
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Historical
|
|
|
|
|
|
W. P. Carey
|
||||||||||
|
|
|
CPA:17 –
|
|
Pro Forma
|
|
|
|
Pro Forma
|
||||||||
|
W. P. Carey
|
|
Global
|
|
Adjustments
|
|
(Notes)
|
|
Consolidated
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||
Investments in real estate:
|
|
|
|
|
|
|
|
|
|
||||||||
Land, buildings and improvements — operating leases
|
$
|
5,752,114
|
|
|
$
|
2,760,122
|
|
|
$
|
193,569
|
|
|
A4
|
|
$
|
8,705,805
|
|
Land, buildings and improvements — operating properties
|
42,380
|
|
|
351,007
|
|
|
58,464
|
|
|
A4
|
|
451,851
|
|
||||
Net investments in direct financing leases
|
702,151
|
|
|
487,347
|
|
|
138,615
|
|
|
A4
|
|
1,328,113
|
|
||||
In-place lease and other intangible assets
|
1,199,785
|
|
|
619,819
|
|
|
181,085
|
|
|
A4
|
|
2,000,689
|
|
||||
Above-market rent intangible assets
|
626,390
|
|
|
96,280
|
|
|
216,026
|
|
|
A4
|
|
938,696
|
|
||||
Investments in real estate
|
8,322,820
|
|
|
4,314,575
|
|
|
787,759
|
|
|
|
|
13,425,154
|
|
||||
Accumulated depreciation and amortization
|
(1,485,056
|
)
|
|
(696,927
|
)
|
|
696,927
|
|
|
A4
|
|
(1,485,056
|
)
|
||||
Assets held for sale, net
|
108,730
|
|
|
—
|
|
|
—
|
|
|
|
|
108,730
|
|
||||
Net investments in real estate
|
6,946,494
|
|
|
3,617,648
|
|
|
1,484,686
|
|
|
|
|
12,048,828
|
|
||||
Equity investments in the Managed Programs and real estate
|
366,306
|
|
|
451,517
|
|
|
(130,145
|
)
|
|
A1
|
|
417,880
|
|
||||
|
|
|
|
|
(121,150
|
)
|
|
A2
|
|
|
|||||||
|
|
|
|
|
(226,861
|
)
|
|
A3
|
|
|
|||||||
|
|
|
|
|
78,213
|
|
|
A4
|
|
|
|||||||
Cash and cash equivalents
|
176,612
|
|
|
84,563
|
|
|
—
|
|
|
A5
|
|
259,494
|
|
||||
|
|
|
|
|
(1,681
|
)
|
|
A
|
|
|
|||||||
Due from affiliates
|
82,547
|
|
|
—
|
|
|
(12,598
|
)
|
|
A8
|
|
69,949
|
|
||||
Other assets, net
|
305,295
|
|
|
271,810
|
|
|
(98,292
|
)
|
|
A6
|
|
469,837
|
|
||||
|
|
|
|
|
(1,792
|
)
|
|
A10
|
|
|
|||||||
|
|
|
|
|
(7,184
|
)
|
|
K
|
|
|
|||||||
Goodwill
|
641,734
|
|
|
304
|
|
|
251,503
|
|
|
A9
|
|
893,541
|
|
||||
Total assets
|
$
|
8,518,988
|
|
|
$
|
4,425,842
|
|
|
$
|
1,214,699
|
|
|
|
|
$
|
14,159,529
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
||||||||
Senior unsecured notes, net
|
$
|
3,007,453
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
3,007,453
|
|
Unsecured revolving credit facility
|
696,380
|
|
|
80,294
|
|
|
—
|
|
|
A5
|
|
826,686
|
|
||||
|
|
|
|
|
50,012
|
|
|
C
|
|
|
|||||||
Unsecured term loans, net
|
—
|
|
|
50,000
|
|
|
—
|
|
|
A5
|
|
—
|
|
||||
|
|
|
|
|
(50,000
|
)
|
|
C
|
|
|
|||||||
Non-recourse mortgages, net
|
959,951
|
|
|
1,802,163
|
|
|
47,011
|
|
|
A4
|
|
2,809,125
|
|
||||
Debt, net
|
4,663,784
|
|
|
1,932,457
|
|
|
47,023
|
|
|
|
|
6,643,264
|
|
||||
Accounts payable, accrued expenses and other liabilities
|
265,676
|
|
|
132,328
|
|
|
(1,622
|
)
|
|
A7
|
|
446,546
|
|
||||
|
|
|
|
|
1,193
|
|
|
J
|
|
|
|||||||
|
|
|
|
|
26,673
|
|
|
K
|
|
|
|||||||
|
|
|
|
|
22,298
|
|
|
M
|
|
|
|||||||
Below-market rent and other intangible liabilities, net
|
105,898
|
|
|
57,917
|
|
|
56,177
|
|
|
A4
|
|
219,992
|
|
||||
Due to affiliates
|
—
|
|
|
12,598
|
|
|
(12,598
|
)
|
|
A8
|
|
—
|
|
||||
Deferred income taxes
|
98,933
|
|
|
26,361
|
|
|
53,771
|
|
|
A10, J
|
|
179,065
|
|
||||
Dividends payable
|
111,688
|
|
|
57,339
|
|
|
—
|
|
|
|
|
169,027
|
|
||||
Total liabilities
|
5,245,979
|
|
|
2,219,000
|
|
|
192,915
|
|
|
|
|
7,657,894
|
|
||||
Redeemable noncontrolling interest
|
1,300
|
|
|
—
|
|
|
—
|
|
|
|
|
1,300
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
||||
Common stock
|
107
|
|
|
353
|
|
|
54
|
|
|
A
|
|
161
|
|
||||
|
|
|
|
|
(353
|
)
|
|
B
|
|
|
|||||||
Additional paid-in capital
|
4,445,426
|
|
|
3,206,608
|
|
|
3,554,524
|
|
|
A
|
|
7,896,835
|
|
||||
|
|
|
|
|
(103,115
|
)
|
|
A3
|
|
|
|||||||
|
|
|
|
|
(3,206,608
|
)
|
|
B
|
|
|
|||||||
Distributions in excess of accumulated earnings
|
(1,165,914
|
)
|
|
(994,352
|
)
|
|
27,486
|
|
|
A1
|
|
(1,184,287
|
)
|
||||
|
|
|
|
|
22,894
|
|
|
A2
|
|
|
|||||||
|
|
|
|
|
(12,598
|
)
|
|
A8
|
|
|
|||||||
|
|
|
|
|
(26,673
|
)
|
|
K
|
|
|
|||||||
|
|
|
|
|
994,352
|
|
|
B
|
|
|
|||||||
|
|
|
|
|
(7,184
|
)
|
|
K
|
|
|
|||||||
|
|
|
|
|
(22,298
|
)
|
|
M
|
|
|
|||||||
Deferred compensation obligation
|
36,159
|
|
|
—
|
|
|
—
|
|
|
|
|
36,159
|
|
||||
Accumulated other comprehensive loss
|
(254,055
|
)
|
|
(109,282
|
)
|
|
109,282
|
|
|
B
|
|
(254,055
|
)
|
||||
Total stockholders’ equity
|
3,061,723
|
|
|
2,103,327
|
|
|
1,329,763
|
|
|
|
|
6,494,813
|
|
||||
Noncontrolling interests
|
209,986
|
|
|
103,515
|
|
|
(209,493
|
)
|
|
A3
|
|
5,522
|
|
||||
|
|
|
|
|
(98,014
|
)
|
|
A3
|
|
|
|||||||
|
|
|
|
|
(472
|
)
|
|
A3
|
|
|
|||||||
Total equity
|
3,271,709
|
|
|
2,206,842
|
|
|
1,021,784
|
|
|
|
|
6,500,335
|
|
||||
Total liabilities and equity
|
$
|
8,518,988
|
|
|
$
|
4,425,842
|
|
|
$
|
1,214,699
|
|
|
|
|
$
|
14,159,529
|
|
(in thousands, except share and per share amounts)
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Historical
|
|
|
|
|
|
W. P. Carey
Pro Forma Consolidated |
||||||||||
|
W. P. Carey
|
|
CPA:17 –
Global |
|
Pro Forma Adjustments
|
|
(Notes)
|
|
|||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||
Real Estate:
|
|
|
|
|
|
|
|
|
|
||||||||
Lease revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
442,211
|
|
|
$
|
219,293
|
|
|
$
|
(10,689
|
)
|
|
D
|
|
$
|
660,339
|
|
|
|
|
|
|
9,524
|
|
|
J
|
|
|
|||||||
Interest income from direct financing leases
|
50,724
|
|
|
42,694
|
|
|
(3,705
|
)
|
|
E
|
|
89,713
|
|
||||
Total lease revenues
|
492,935
|
|
|
261,987
|
|
|
(4,870
|
)
|
|
|
|
750,052
|
|
||||
Lease termination income and other
|
3,603
|
|
|
14,847
|
|
|
—
|
|
|
|
|
18,450
|
|
||||
Operating property revenues
|
16,365
|
|
|
35,917
|
|
|
—
|
|
|
|
|
52,282
|
|
||||
Reimbursable tenant costs
|
17,931
|
|
|
17,632
|
|
|
—
|
|
|
|
|
35,563
|
|
||||
|
530,834
|
|
|
330,383
|
|
|
(4,870
|
)
|
|
|
|
856,347
|
|
||||
Investment Management:
|
|
|
|
|
|
|
|
|
|
||||||||
Reimbursed costs from affiliates
|
16,883
|
|
|
—
|
|
|
(5,614
|
)
|
|
I
|
|
11,269
|
|
||||
Asset management revenue
|
51,602
|
|
|
—
|
|
|
(22,554
|
)
|
|
I
|
|
29,048
|
|
||||
Structuring revenue
|
12,718
|
|
|
—
|
|
|
(1,185
|
)
|
|
I
|
|
11,533
|
|
||||
Other advisory revenue
|
300
|
|
|
—
|
|
|
—
|
|
|
|
|
300
|
|
||||
|
81,503
|
|
|
—
|
|
|
(29,353
|
)
|
|
|
|
52,150
|
|
||||
|
612,337
|
|
|
330,383
|
|
|
(34,223
|
)
|
|
|
|
908,497
|
|
||||
Operating Expenses
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
198,119
|
|
|
96,070
|
|
|
18,123
|
|
|
F
|
|
312,312
|
|
||||
Reimbursable tenant and affiliate costs
|
34,814
|
|
|
17,632
|
|
|
(5,614
|
)
|
|
I
|
|
46,832
|
|
||||
General and administrative
|
50,888
|
|
|
9,951
|
|
|
(2,211
|
)
|
|
I
|
|
58,628
|
|
||||
Impairment charges and other credit losses
|
4,790
|
|
|
34,373
|
|
|
—
|
|
|
|
|
39,163
|
|
||||
Property expenses, excluding reimbursable tenant costs
|
14,454
|
|
|
55,348
|
|
|
299
|
|
|
F
|
|
47,547
|
|
||||
|
|
|
|
|
(22,554
|
)
|
|
I
|
|
|
|||||||
Stock-based compensation expense
|
14,392
|
|
|
—
|
|
|
—
|
|
|
|
|
14,392
|
|
||||
Subadvisor fees
|
7,014
|
|
|
—
|
|
|
—
|
|
|
|
|
7,014
|
|
||||
Merger and other expenses
|
4,328
|
|
|
4,528
|
|
|
(8,694
|
)
|
|
I
|
|
162
|
|
||||
Operating real estate expenses
|
12,306
|
|
|
23,627
|
|
|
—
|
|
|
|
|
35,933
|
|
||||
|
341,105
|
|
|
241,529
|
|
|
(20,651
|
)
|
|
|
|
561,983
|
|
||||
Other Income and Expenses
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(121,125
|
)
|
|
(62,689
|
)
|
|
3,621
|
|
|
G
|
|
(181,840
|
)
|
||||
|
|
|
|
|
167
|
|
|
I
|
|
|
|||||||
|
|
|
|
|
(1,814
|
)
|
|
J
|
|
|
|||||||
Equity in earnings of equity method investments in the Managed Programs and real estate
|
46,246
|
|
|
20,745
|
|
|
(24,690
|
)
|
|
H
|
|
19,760
|
|
||||
|
|
|
|
|
(3,067
|
)
|
|
H
|
|
|
|||||||
|
|
|
|
|
(19,474
|
)
|
|
H
|
|
|
|||||||
Loss on extinguishment of debt
|
(1,566
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(1,566
|
)
|
||||
Other gains and (losses)
|
18,264
|
|
|
7,912
|
|
|
(167
|
)
|
|
I
|
|
26,009
|
|
||||
|
(58,181
|
)
|
|
(34,032
|
)
|
|
(45,424
|
)
|
|
|
|
(137,637
|
)
|
||||
Income before income taxes and gain on sale of real estate
|
213,051
|
|
|
54,822
|
|
|
(58,996
|
)
|
|
|
|
208,877
|
|
||||
(Provision for) benefit from income taxes
|
(2,975
|
)
|
|
(1,273
|
)
|
|
718
|
|
|
J
|
|
3,883
|
|
||||
|
|
|
|
|
644
|
|
|
K
|
|
|
|||||||
|
|
|
|
|
6,769
|
|
|
K
|
|
|
|||||||
Income before gain on sale of real estate
|
210,076
|
|
|
53,549
|
|
|
(50,865
|
)
|
|
|
|
212,760
|
|
||||
Gain on sale of real estate, net of tax
|
18,987
|
|
|
4,370
|
|
|
—
|
|
|
|
|
23,357
|
|
||||
Net Income
|
229,063
|
|
|
57,919
|
|
|
(50,865
|
)
|
|
|
|
236,117
|
|
||||
Net (income) loss attributable to noncontrolling interests
|
(10,760
|
)
|
|
(27,210
|
)
|
|
39,658
|
|
|
L
|
|
1,688
|
|
||||
Net Income Attributable to W. P. Carey
|
$
|
218,303
|
|
|
$
|
30,709
|
|
|
$
|
(11,207
|
)
|
|
|
|
$
|
237,805
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic Earnings Per Share
|
$
|
2.02
|
|
|
$
|
0.09
|
|
|
|
|
|
|
$
|
1.47
|
|
||
Diluted Earnings Per Share
|
$
|
2.01
|
|
|
$
|
0.09
|
|
|
|
|
|
|
$
|
1.47
|
|
||
Weighted Average Shares Outstanding
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
108,063,826
|
|
|
352,952,199
|
|
|
|
|
N
|
|
161,912,913
|
|
|||||
Diluted
|
108,253,841
|
|
|
352,952,199
|
|
|
|
|
N
|
|
162,102,928
|
|
(in thousands, except share and per share amounts)
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Historical
|
|
|
|
|
|
W. P. Carey
Pro Forma Consolidated |
||||||||||
|
W. P. Carey
|
|
CPA:17 –
Global |
|
Pro Forma Adjustments
|
|
(Notes)
|
|
|||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||
Real Estate:
|
|
|
|
|
|
|
|
|
|
||||||||
Lease revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
564,174
|
|
|
$
|
309,233
|
|
|
$
|
(26,440
|
)
|
|
D
|
|
$
|
858,683
|
|
|
|
|
|
|
11,716
|
|
|
J
|
|
|
|||||||
Interest income from direct financing leases
|
66,199
|
|
|
58,399
|
|
|
(4,837
|
)
|
|
E
|
|
119,761
|
|
||||
Total lease revenues
|
630,373
|
|
|
367,632
|
|
|
(19,561
|
)
|
|
|
|
978,444
|
|
||||
Lease termination income and other
|
4,749
|
|
|
13,182
|
|
|
—
|
|
|
|
|
17,931
|
|
||||
Operating property revenues
|
30,562
|
|
|
40,309
|
|
|
—
|
|
|
|
|
70,871
|
|
||||
Reimbursable tenant costs
|
21,524
|
|
|
26,531
|
|
|
—
|
|
|
|
|
48,055
|
|
||||
|
687,208
|
|
|
447,654
|
|
|
(19,561
|
)
|
|
|
|
1,115,301
|
|
||||
Investment Management:
|
|
|
|
|
|
|
|
|
|
||||||||
Reimbursed costs from affiliates
|
51,445
|
|
|
—
|
|
|
(9,775
|
)
|
|
I
|
|
41,670
|
|
||||
Asset management revenue
|
70,125
|
|
|
—
|
|
|
(29,363
|
)
|
|
I
|
|
40,762
|
|
||||
Structuring revenue
|
34,198
|
|
|
—
|
|
|
(9,103
|
)
|
|
I
|
|
25,095
|
|
||||
Dealer manager fees
|
4,430
|
|
|
—
|
|
|
—
|
|
|
|
|
4,430
|
|
||||
Other advisory revenue
|
896
|
|
|
—
|
|
|
—
|
|
|
|
|
896
|
|
||||
|
161,094
|
|
|
—
|
|
|
(48,241
|
)
|
|
|
|
112,853
|
|
||||
|
848,302
|
|
|
447,654
|
|
|
(67,802
|
)
|
|
|
|
1,228,154
|
|
||||
Operating Expenses
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
253,334
|
|
|
115,630
|
|
|
38,632
|
|
|
F
|
|
407,596
|
|
||||
Reimbursable tenant and affiliate costs
|
72,969
|
|
|
26,531
|
|
|
(9,775
|
)
|
|
I
|
|
89,725
|
|
||||
General and administrative
|
70,891
|
|
|
15,358
|
|
|
(3,270
|
)
|
|
I
|
|
82,979
|
|
||||
Impairment charges
|
2,769
|
|
|
8,959
|
|
|
—
|
|
|
|
|
11,728
|
|
||||
Property expenses, excluding reimbursable tenant costs
|
17,330
|
|
|
48,678
|
|
|
398
|
|
|
F
|
|
37,043
|
|
||||
|
|
|
|
|
(29,363
|
)
|
|
I
|
|
|
|||||||
Stock-based compensation expense
|
18,917
|
|
|
—
|
|
|
—
|
|
|
|
|
18,917
|
|
||||
Subadvisor fees
|
13,600
|
|
|
—
|
|
|
—
|
|
|
|
|
13,600
|
|
||||
Dealer manager fees and expenses
|
6,544
|
|
|
—
|
|
|
—
|
|
|
|
|
6,544
|
|
||||
Restructuring and other compensation
|
9,363
|
|
|
—
|
|
|
—
|
|
|
|
|
9,363
|
|
||||
Merger and other expenses
|
605
|
|
|
1,343
|
|
|
(864
|
)
|
|
I
|
|
1,084
|
|
||||
Operating real estate expenses
|
23,426
|
|
|
17,827
|
|
|
—
|
|
|
|
|
41,253
|
|
||||
|
489,748
|
|
|
234,326
|
|
|
(4,242
|
)
|
|
|
|
719,832
|
|
||||
Other Income and Expenses
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(165,775
|
)
|
|
(88,270
|
)
|
|
5,606
|
|
|
G
|
|
(250,447
|
)
|
||||
|
|
|
|
|
273
|
|
|
I
|
|
|
|||||||
|
|
|
|
|
(2,281
|
)
|
|
J
|
|
|
|||||||
Equity in earnings of equity method investments in the Managed Programs and real estate
|
64,750
|
|
|
261
|
|
|
(26,653
|
)
|
|
H
|
|
5,033
|
|
||||
|
|
|
|
|
(4,089
|
)
|
|
H
|
|
|
|||||||
|
|
|
|
|
(29,236
|
)
|
|
H
|
|
|
|||||||
Loss on change in control of interests
|
—
|
|
|
(13,851
|
)
|
|
—
|
|
|
|
|
(13,851
|
)
|
||||
Gain (loss) on extinguishment of debt
|
46
|
|
|
(1,922
|
)
|
|
—
|
|
|
|
|
(1,876
|
)
|
||||
Other gains and (losses)
|
(3,659
|
)
|
|
23,231
|
|
|
(273
|
)
|
|
I
|
|
19,299
|
|
||||
|
(104,638
|
)
|
|
(80,551
|
)
|
|
(56,653
|
)
|
|
|
|
(241,842
|
)
|
||||
Income before income taxes and gain on sale of real estate
|
253,916
|
|
|
132,777
|
|
|
(120,213
|
)
|
|
|
|
266,480
|
|
||||
(Provision for) benefit from income taxes
|
(2,711
|
)
|
|
513
|
|
|
1,046
|
|
|
J
|
|
7,506
|
|
||||
|
|
|
|
|
1,536
|
|
|
K
|
|
|
|||||||
|
|
|
|
|
7,122
|
|
|
K
|
|
|
|||||||
Income before gain on sale of real estate
|
251,205
|
|
|
133,290
|
|
|
(110,509
|
)
|
|
|
|
273,986
|
|
||||
Gain on sale of real estate, net of tax
|
33,878
|
|
|
2,879
|
|
|
—
|
|
|
|
|
36,757
|
|
||||
Net Income
|
285,083
|
|
|
136,169
|
|
|
(110,509
|
)
|
|
|
|
310,743
|
|
||||
Net income attributable to noncontrolling interests
|
(7,794
|
)
|
|
(38,882
|
)
|
|
46,514
|
|
|
L
|
|
(162
|
)
|
||||
Net Income Attributable to W. P. Carey
|
$
|
277,289
|
|
|
$
|
97,287
|
|
|
$
|
(63,995
|
)
|
|
|
|
$
|
310,581
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic Earnings Per Share
|
$
|
2.56
|
|
|
$
|
0.28
|
|
|
|
|
|
|
$
|
1.92
|
|
||
Diluted Earnings Per Share
|
$
|
2.56
|
|
|
$
|
0.28
|
|
|
|
|
|
|
$
|
1.91
|
|
||
Weighted Average Shares Outstanding
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
107,824,738
|
|
|
348,329,966
|
|
|
|
|
N
|
|
161,673,825
|
|
|||||
Diluted
|
108,035,971
|
|
|
348,329,966
|
|
|
|
|
N
|
|
161,885,058
|
|
A.
|
Purchase Price Allocation
|
Total Consideration
|
|
|
||
Fair value of W. P. Carey shares of common stock issued
|
|
$
|
3,554,578
|
|
Cash paid for fractional shares
|
|
1,681
|
|
|
Merger Consideration
|
|
3,556,259
|
|
|
Fair value of W. P. Carey’s equity interest in CPA:17 – Global prior to the Merger
|
(1)
|
157,633
|
|
|
Fair value of W. P. Carey’s equity interest in jointly owned investments with
CPA:17 – Global prior to the Merger
|
(2)
|
144,044
|
|
|
Fair value of noncontrolling interest acquired
|
(3)
|
(312,609
|
)
|
|
Estimate of consideration expected to be transferred
|
|
$
|
3,545,327
|
|
|
|
|
|
|
Fair Value of
|
||||||
|
|
|
|
|
CPA:17 – Global
|
||||||
|
CPA:17 – Global
|
|
Pro Forma
|
|
Assets Acquired and
|
||||||
|
Historical
|
|
Adjustments
|
|
Liabilities Assumed
|
||||||
Assets
|
|
|
|
|
|
||||||
Land, buildings and improvements — operating leases
|
$
|
2,760,122
|
|
|
$
|
193,569
|
|
(4)
|
$
|
2,953,691
|
|
Land, buildings and improvements — operating properties
|
351,007
|
|
|
58,464
|
|
(4)
|
409,471
|
|
|||
Net investments in direct financing leases
|
487,347
|
|
|
138,615
|
|
(4)
|
625,962
|
|
|||
In-place lease and other intangible assets
|
619,819
|
|
|
181,085
|
|
(4)
|
800,904
|
|
|||
Above-market rent intangible assets
|
96,280
|
|
|
216,026
|
|
(4)
|
312,306
|
|
|||
Accumulated depreciation and amortization
|
(696,927
|
)
|
|
696,927
|
|
(4)
|
—
|
|
|||
Equity investments in real estate
|
451,517
|
|
|
(226,861
|
)
|
(3)
|
302,869
|
|
|||
|
|
|
78,213
|
|
(4)
|
|
|||||
Cash and cash equivalents
|
84,563
|
|
|
—
|
|
(5)
|
84,563
|
|
|||
Other assets, net
|
271,810
|
|
|
(100,084
|
)
|
(6)
|
171,726
|
|
|||
Total assets
|
4,425,538
|
|
|
1,235,954
|
|
|
5,661,492
|
|
|||
Liabilities
|
|
|
|
|
|
||||||
Non-recourse mortgages, net
|
1,802,163
|
|
|
47,011
|
|
(4)
|
1,849,174
|
|
|||
Senior Credit Facility, net
|
130,294
|
|
|
12
|
|
(4)
|
130,306
|
|
|||
Accounts payable, accrued expenses and other liabilities
|
132,328
|
|
|
(430
|
)
|
(7)
|
131,898
|
|
|||
Below-market rent and other intangible liabilities, net
|
57,917
|
|
|
56,177
|
|
(4)
|
114,094
|
|
|||
Deferred income taxes
|
26,361
|
|
|
53,771
|
|
(10), J
|
80,132
|
|
|||
Due to affiliates
|
12,598
|
|
|
(12,598
|
)
|
(8)
|
—
|
|
|||
Dividends payable
|
57,339
|
|
|
—
|
|
|
57,339
|
|
|||
Total liabilities
|
2,219,000
|
|
|
143,943
|
|
|
2,362,943
|
|
|||
Total identifiable net assets
|
2,206,538
|
|
|
1,092,011
|
|
|
3,298,549
|
|
|||
Noncontrolling interests
|
(103,515
|
)
|
|
98,486
|
|
(3)
|
(5,029
|
)
|
|||
Goodwill
|
304
|
|
|
251,503
|
|
(9)
|
251,807
|
|
|||
Estimate of consideration expected to be transferred
|
$
|
2,103,327
|
|
|
$
|
1,442,000
|
|
|
$
|
3,545,327
|
|
(1)
|
Prior to the Merger, W. P. Carey held an equity interest in CPA:17 – Global of 4.57% as well as its 0.009% interest in the General Partnership of CPA:17 – Global, which had carrying values of $130.1 million and $0, respectively, on W. P. Carey’s historical balance sheet. The pro forma adjustment reflects the acquisition of a controlling interest resulting in a net gain of $27.5 million.
|
(2)
|
Prior to the Merger, W. P. Carey had noncontrolling interests accounted for as equity method investments in five joint ventures and one tenancy-in-common that were co-owned by CPA:17 – Global. The pro forma adjustment eliminates the historical carrying value of W. P. Carey’s prior interests of $121.2 million, resulting in a net gain of $22.9 million.
|
(3)
|
Prior to the Merger, W. P. Carey had controlling interests accounted for as consolidated investments in six less-than-wholly-owned joint ventures that were co-owned by CPA:17 – Global. The pro forma adjustment eliminates the historical carrying value of CPA:17 – Global’s equity interest in all of its joint ventures with W. P. Carey of $226.9 million. Additionally, the pro forma adjustment eliminates the historical carrying value of the noncontrolling interests related to these wholly-owned investments of $209.5 million, resulting in a reduction of additional paid-in capital of $103.1 million. Prior to the Merger, CPA:17 – Global had controlling interests accounted for as consolidated investments in five less-than-wholly-owned joint ventures that were co-owned by W. P. Carey. The pro forma adjustment eliminates the historical carrying value of the noncontrolling interests related to these wholly-owned investments of $98.0 million. Additionally, the pro forma adjustment reflects adjustments of $0.5 million to reduce the carrying value of CPA:17 – Global’s two remaining noncontrolling interests for joint ventures that are co-owned by third parties to their fair value.
|
(4)
|
The pro forma adjustment reflects adjustments to record assets acquired and liabilities assumed at their estimated fair values. The value of the In-place lease and other intangible assets (including ground lease assets) increased by $181.1 million, which is primarily due to an increase in the estimated costs associated with re-leasing properties, including higher leasing commissions necessary in the market in order to help attract tenants, and generally a longer time period in which to lease/re-lease a property. The value of the Above-market lease intangible assets has increased by $216.0 million. While the majority of CPA:17 – Global’s
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(5)
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The historical carrying value of this item approximates fair value, and therefore, there was no pro forma adjustment required.
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(6)
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The pro forma adjustment of $107.3 million in Other assets, net primarily includes elimination of unamortized straight-line rents of $103.1 million, partially offset by a net increase of $4.8 million related to insignificant fair value adjustments. Additionally, the $1.8 million reduction of deferred income tax assets discussed in (10) below is reflected in Other assets.
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(7)
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The pro forma adjustment in Accounts payable, accrued expenses and other liabilities of $1.6 million represents the elimination of CPA:17 – Global deferred straight-line rent liabilities, offset by the assumption of $1.2 million of accounts payable and deferred rental income discussed below (Note J).
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(8)
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The pro forma adjustment eliminates intercompany amounts between CPA:17 – Global and W. P. Carey, as all such amounts would have been eliminated in consolidation upon consummation of the Merger.
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(9)
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The resulting pro forma Goodwill of $251.8 million reflects the difference between the total consideration and the estimated fair value of the assets acquired and liabilities assumed. The amount of goodwill is subject to change based on the preliminary nature of the fair value estimates for the assets acquired and liabilities assumed.
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(10)
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For those properties subject to income taxes in foreign jurisdictions or in our U.S. taxable REIT subsidiaries, we recognized a reduction of deferred income tax assets of $1.8 million and an increase in our deferred income tax liabilities of $47.8 million, representing the tax effect of the difference between the tax basis carried over and the fair value of the tangible and intangible assets recorded at the date of acquisition. Consolidation of the deferred income tax liability related to the tenancy-in-common is discussed in Note J below.
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B.
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The pro forma adjustment reflects the elimination of CPA:17 – Global’s acquired equity.
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C.
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In connection with the Merger, CPA:17 – Global’s credit facility and unsecured term loan were paid in full and terminated at closing, using funds borrowed under W. P. Carey’s unsecured revolving credit facility. The pro forma adjustment reflects the paydown of CPA:17 – Global outstanding borrowings and new borrowings under the W. P. Carey credit facility. The impact on interest rates of this pay-down is not deemed significant.
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D.
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Rental income
– Reflects a pro forma net decrease in Rental income of $10.7 million and $26.4 million for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively, due to purchase accounting adjustments to reflect the amortization of acquired intangibles, described below, for leases that have rents above or below market rates and the reevaluation of acquired straight-line rents.
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E.
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Interest income from direct financing leases
– Reflects a pro forma adjustment of $3.7 million and $4.8 million for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively, to recognize a reduction of interest income from acquired direct financing leases.
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F.
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Depreciation and amortization
– Reflects a pro forma adjustment of $18.1 million and $38.6 million for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively, for the change in Depreciation and amortization of acquired tangible assets (buildings and site improvements) and in-place leases representing the difference between the estimated fair value and acquired carrying values. Included in these amounts are depreciation and amortization related to operation of the tenancy-in-common interest discussed below (Note J). Buildings and site improvements are depreciated over the remaining useful life ranging from 10 to 40 years. In-place lease values are amortized over the remaining non-cancelable terms of the applicable leases, which range from one to 49 years.
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G.
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Interest expense
– Reflects a pro forma adjustment to record a decrease in Interest expense of $3.6 million and $5.6 million for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively, related to the fair value adjustment of the assumed mortgage notes payable being amortized over the remaining terms of the notes.
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H.
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Equity in earnings of equity method investments in the Managed Programs and real estate
– Reflects pro forma adjustments (i) to reverse equity income recorded in W. P. Carey’s historical statements of income related to real estate investments consolidated in the Merger (including the tenancy-in-common investment described in Note J), as well as equity earnings recorded in CPA:17 – Global’s historical statements related to real estate investments consolidated by W. P. Carey prior to the Merger, totaling $24.7 million and $26.7 million, (ii) to reflect the amortization of basis differences related to the change in fair value of equity method investments formerly held by CPA:17 – Global of $3.1 million and $4.1 million, and (iii) to reflect the reversal of equity income from CPA:17 – Global included in the historical statements of income for W. P. Carey of $19.5 million and $29.2 million, for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively.
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I.
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Reflects adjustments to eliminate activities between W. P. Carey and CPA:17 – Global included in the respective historical financial statements, as all such revenues, expenses and interests would have been eliminated in consolidation had the Merger occurred on January 1, 2017. These pro forma adjustments for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively, comprise (i) the reversal of Asset management fee revenue of $22.6 million and $29.4 million, respectively, Structuring revenues of $1.2 million and $9.1 million, respectively, and related interest on deferred structuring fees of $0.2 million and $0.3 million, respectively earned by W. P. Carey from CPA:17 – Global, (ii) the reversal of Reimbursed costs from affiliates of $5.6 million and $9.8 million, respectively, related to costs formerly charged by W. P. Carey to CPA:17 – Global, (iii) a reversal of Reimbursable costs included in operating expenses corresponding to the prior adjustment in the amounts of $5.6 million and $9.8 million, respectively, and (iv) the reversal of Property expenses of $22.6 million and $29.4 million, respectively, representing the Asset management fees paid by CPA:17 – Global described above.
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J.
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Reflects the operations of a tenancy-in-common interest previously reflected by each of W. P. Carey and CPA:17 – Global as income from equity investments in real estate. The tenancy-in-common will be consolidated by W. P. Carey at the time of merger. The pro forma adjustment comprises primarily (i) increases in Rental income of $9.5 million and $11.7 million for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively, (ii) an increase in Interest expense of $1.8 million and $2.3 million for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively, (iii) an income tax benefit of $0.7 million and $1.0 million for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively and (iv) the consolidation of a $6.0 million deferred income tax liability and $1.2 million of accounts payable and deferred rental income as of September 30, 2018. Depreciation and amortization related to this investment is included in the adjustment above (Note F). Equity in earnings of equity method investments in the Managed Programs and real estate related to this investment is included in the adjustment above (Note H).
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K.
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Benefit from (provision for) income taxes
– As a result of the Merger, Asset management revenue and certain other taxable revenues of W. P. Carey have been eliminated (Note I). The pro forma adjustment for an income tax benefit of $6.8 million and
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L.
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Net income attributable to noncontrolling interests
– Primarily reflects the elimination of income attributable to noncontrolling interests which will be consolidated as a result of the Merger, as well as minor adjustments due to fair value changes of ongoing acquired noncontrolling interests.
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M.
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Subsequent to September 30, 2018, W. P. Carey and CPA:17 – Global incurred a total of approximately $22.3 million in Merger and other expenses, which are reflected in the pro forma financial statements as a reduction of total equity and an increase in Accounts payable, accrued expenses and other liabilities.
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N.
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Earnings per share
– Basic and diluted pro forma earnings per share reflect the additional shares expected to be issued as part of the Merger, which are deemed to be outstanding as of January 1, 2017 for the pro forma basic and diluted earnings per share calculation. Thus, the pro forma outstanding shares are calculated as follows:
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|
Historical
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|
Pro Forma Adjustments
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|
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|||
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W. P. Carey
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|
|
Pro Forma
|
||||
For the nine months ended September 30, 2018
|
|
|
|
|
|
|||
Basic
|
108,063,826
|
|
|
53,849,087
|
|
|
161,912,913
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|
Diluted
|
108,253,841
|
|
|
53,849,087
|
|
|
162,102,928
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|
For the year ended December 31, 2017
|
|
|
|
|
|
|||
Basic
|
107,824,738
|
|
|
53,849,087
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|
|
161,673,825
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|
Diluted
|
108,035,971
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|
|
53,849,087
|
|
|
161,885,058
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