W. P. Carey Inc. Reit · NYSE:WPC
W. P. Carey Inc. Reit — W. P. Carey — Investor Presentation (November 2016)
34 slides from W. P. Carey Inc. Reit's investor presentation, Nov 18, 2016
Slide 1: W. P. Carey Inc. Investor Presentation Third Quarter 2016
W. P. Carey Inc. Investor Presentation Third Quarter 2016
Slide 2: Table of Contents
Table of Contents I. Overview II. Owned Real Estate Portfolio III. Investment Management IV. Balance Sheet V. Appendix – Carrefour, AMD Unless otherwise noted, all data in this presentation is as of September 30, 2016. Amounts may not sum to totals due to rounding.
Slide 3: I. Overview
WP CAREY |. Overview
Slide 4: Company Highlights
Company Highlights W. P. Carey is an internally managed publicly-traded REIT specializing in sale-leaseback investments of commercial real estate worldwide Size One of the largest owners of net lease assets Highly diversified portfolio by geography, tenant, asset type Diversification and tenant indu
Slide 5: Business Model and Structure
Business Model and Structure (1) WPC is a self-managed REIT that also serves as an advisor to non-traded investment programs Public REIT (NYSE: WPC) $10.2 billion of Enterprise Value (2) 92% of AFFO (3) 8% of AFFO (3) Investment Owned Real Estate Portfolio Management $12.2 billion of AUM • 910 net l
Slide 6: Comprehensive Business Plan
Comprehensive Business Plan Focused on Six Key Priorities • Organic growth – through acquisitions for our Owned Real Estate portfolio, as well as new and existing Investment Management products • Diversification – of income, capital sources and within our real estate portfolios • Operational efficie
Slide 7: Recent Evolution
Recent Evolution Obtains $1.0 billion Receives investment grade Completes CPA®:15 Issues inaugural €500 million, Completion of formal review Issues $350 million, Completes CPA®:16 senior unsecured corporate ratings: merger and converts 2.0% senior unsecured notes reaffirms the strategic value of 4.2
Slide 8: Investment Strategy
Investment Strategy Transactions Evaluated on Four Key Factors • Generate attractive risk-adjusted returns by identifying • Industry drivers and trends and investing in commercial real estate, primarily in the U.S. and Western & Northern Europe Creditworthiness • Competitor analysis of Tenant • Comp
Slide 9: Proactive Asset Management
Proactive Asset Management Domestic and international asset management capabilities to address lease expirations, changing tenant credit profiles and asset repositioning or dispositions • Asset management offices in New York and Amsterdam with 13 transaction and 6 operational team members • WPC has
Slide 10: II. Owned Real Estate Portfolio
II. Owned Real Estate Portfolio
Slide 11: W. P. Carey's Portfolio
W. P. Carey’s Portfolio (1) Large diversified portfolio with 910 net-lease properties across 19 countries Total Portfolio Number of Properties 910 Number of Tenants 222 Square Footage 92 million ABR $685 million Countries 19 Weighted Average Remaining Lease Term 9.4 years Occupancy 99.1% Top 10 Tena
Slide 12: Property and Industry Diversification
Property and Industry Diversification (1) By Property Type (% of ABR) Top 10 Tenants Number of ABR % of 10% Properties ($ millions) Total Industrial 28% 5% 28% Office 25% 53 $34 4.9% Warehouse 18% 16% (2) Retail 16% 78 32 4.7% Self-storage (2) 5% Other (4) 18% 25% 70 27 3.9% 10% State of Andalucia (
Slide 13: Geographic Diversification
Geographic Diversification (1) WPC has been investing internationally for 19 years, primarily in Western and Northern Europe ABR Percent Diversification By Geography (1) ($ millions) of Total U.S. 20% 24% South $126 18% East 122 18% 37% 7% West 104 15% 63% 8% 17% Midwest 81 12% 11% 13% Total U.S. $4
Slide 14: Internal Growth from Contractual Rent Increases
Internal Growth from Contractual Rent Increases (1) • Approximately 99% of leases have contractual rent increases • Minimal exposure to operating expenses 1% 4% Uncapped CPI 42% 24% Fixed 29% 42% CPI-based 24% Other (2) 4% None 1% 29% (1) Based on ABR as of September 30, 2016 and reflects pro rata o
Slide 15: Lease Expirations and Average Lease Term
Lease Expirations and Average Lease Term (1) Weighted average lease term of 9.4 years Lease Expirations (% ABR) (2) 50% 42.1% 40% 30% 20% 13.6% 9.7% 10% 5.4% 5.3% 6.1% 5.5% 4.8% 4.8% 1.3% 1.4% 0% Remaining 2017 2018 2019 2020 2021 2022 2023 2024 2025 Thereafter (3) 2016 (1) Portfolio information as
Slide 16: Historical Occupancy
Historical Occupancy (1) Stable occupancy maintained during the credit crisis and economic downturn Occupancy (% Square Feet) 99.1% 98.5% 98.4% 98.8% 99.0% 99.2% 99.3% 100% 96.1% 97.1% 96.6% 97.3% 80% 60% 40% 20% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 September 2016 (1) Includes W. P.
Slide 17: Recent Investment Activity – 2016
Recent Investment Activity – 2016 Completed two on-balance-sheet investments totaling $386 million and entered into an agreement to provide $128 million in build-to-suit financing during the first half of 2016 • Acquisitions in 2016 have been predominantly in the U.S., although WPC continues to see
Slide 18: III. Investment Management
WP CAREY Ill. Investment Management
Slide 19: Investment Management Overview
Investment Management Overview Investment management platform provides strategic and economic benefits to WPC • Asset management revenue, structuring revenue and general partnership interests have generated $120 - $180 million in recent years (1) • Allows WPC to spread costs over a larger asset base
Slide 20: IV. Balance Sheet
WP CAREY IV. Balance Sheet
Slide 21: Balance Sheet Overview
Balance Sheet Overview Capitalization (%) Capitalization ($ millions) September 30, 2016 Equity (1) 58% Total Equity (1) $6,026 2% 4% Senior Unsecured Notes 1,858 Senior Unsecured Notes 18% 18% Mortgage Debt (pro rata) 1,851 Mortgage Debt 18% Unsecured Revolving Credit Facility 378 Unsecured Revolvi
Slide 22: Debt Maturity Schedule
Debt Maturity Schedule Principal at Maturity (1) (2) (2) (3) Mortgage Debt Unsecured Term Loan Unsecured Revolver Unsecured Bonds 700 600 500 $ millions 400 250 558 300 450 478 378 500 200 350 266 100 176 202 75 106 91 19 51 3 48 0 Remaining 2017 2018 2019 2020 2021 2022 2023 2024 2025 Thereafter 20
Slide 23: Unsecured Bond Covenants
Unsecured Bond Covenants • Investment grade balance sheet with Baa2/stable rating from Moody’s and BBB/stable rating from S&P • S&P recently upgraded the Company’s Senior Unsecured Notes from BBB- to BBB Senior Unsecured Notes (1) Metric Covenant Sep 30, 2016 Total Debt / Total Leverage ≤ 60% 42.8%
Slide 24: Dividend per Share
History of Consistent Dividend Growth W. P. Carey has increased its dividend every year since going public in 1998 • Current annualized dividend of $3.94 with a yield of 6.9% (1) • Conservative and stable payout ratio since conversion to a public REIT in September 2012 Dividends per Share & Payout R
Slide 25: V. Appendix
WP CAREY V. Appendix
Slide 26: Carrefour Investment – Executive Summary
Carrefour Investment – Executive Summary • Real Estate: 16 Warehouses, 1 cash-and-carry in various locations in France. • Acquisition: $221 million ($33/SF, 10.0% cap rate on ABR) in 2002. 9 year initial lease term. • Financing: Initial mortgage of ~$197 million (~81% LTV), resulting in initial cash
Slide 27: Carrefour Investment – Transaction Timeline
Carrefour Investment – Transaction Timeline • March, 2002: 1st Tranche (“Car-4”) acquired for $89.7 million. • December, 2002: 2nd Tranche (“Car-Log”) acquired for $131.6 million. • September, 2009: Extended majority of leases to June 2015, ~4 years of incremental term, ~13% rent reduction. • June,
Slide 28: Carrefour Investment – Disposition Detail
Carrefour Investment – Disposition Detail Lieusaint Cholet Portfolio (14) Lagnieu Total/Avg. Close Date 12/21/2015 7/1/2016 10/14/2016 10/28/2016 Properties 1 1 14 1 17 Square Feet 330,189 216,710 5,803,055 454,846 6,804,800 ABR $0.6 million $1.0 million $26.3 million $1.3 million $29.1 million NOI*
Slide 29: AMD Investment – Executive Summary
AMD Investment – Executive Summary • Real Estate: 32 acre, 2-building office campus in Sunnyvale, CA. • Acquisition: $91 million ($251/SF, 10.1% cap rate) in 1998. 20-year initial lease term. • Financing: Initial mortgage of $68.3 million (75% LTV), resulting in initial cash on cash yield of 14.1%.
Slide 30: AMD Investment – Transaction Timeline
AMD Investment – Transaction Timeline • December, 1998: AMD campus acquired in sale-leaseback for $91 million. • December, 2008: Refinanced with a new $43 million, 3-year mortgage, resulting in ~$7.6 million equity infusion. • July, 2009: Additional $8.0 million equity infusion to cure a cash sweep
Slide 31: AMD Investment – Disposition Detail
AMD Investment – Disposition Detail Close Date 8/3/2016 Properties 1 Square Feet 362,000 ABR $12.8 million Sale Price $175.0 million $/SF $483.43 Cap Rate on ABR 7.3% • Leveraged Investment Level IRR: 22.5% • Cash Flow Impact on Leveraged Investment Level IRR: +9.5% • Residual Value Impact on Levera
Slide 32: Cautionary Statement Concerning Forward-Looking Statements
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 Refor
Slide 33: Disclosures
Disclosures The following non-GAAP financial measures are used in this presentation FFO and AFFO Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc., or NAREIT, an industry trade group, has prom
Slide 34: Disclosures (cont'd)
Disclosures (cont’d) The following non-GAAP financial measures are used in this presentation (cont’d) EBITDA and Adjusted EBITDA We believe that EBITDA is a useful supplemental measure to investors and analysts for assessing the performance of our business segments because (i) it removes the impact