W. P. Carey Annual Report 2014

FY2014 Annual Report · W. P. Carey

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W. P. Carey Inc.
W. P. Carey Inc.
50 Rockefeller Plaza
50 Rockefeller Plaza
New York, NY 10020
New York, NY 10020
1-800-WP CAREY
1-800-WP CAREY
www.wpcarey.com
www.wpcarey.com
NYSE: WPC
NYSE: WPC

2014 Annual Report
2014 Annual Report

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7-3/4”

“Carey Forward is a meaningful way for us
“ Carey Forward is a meaningful way for us
to enhance a company culture that places
to enhance a company culture that places
importance on helping others.”
importance on helping others.”

Thomas Zacharias
Thomas Zacharias

“I believe the importance
“I believe the importance
of Carey Forward is for
of Carey Forward is for
W. P. Carey to give back
W. P. Carey to give back
to a city that has allowed
to a city that has allowed
us to grow and prosper
us to grow and prosper
over time.”
over time.”

Rafael Philips
Rafael Philips

“I take pride in
“ I take pride in
representing
representing
W. P. Carey, not
W. P. Carey, not
just in my job,
just in my job,
but also in the
but also in the
community.”
community.”

Chris Slawsky
Chris Slawsky

Building on success
Building on success

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Investing for the long run™
Investing for the long run™

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Income generation for generations of investors

Our strategy to build long-term value and provide our investors with rising income has not wavered during our 40+ year history.
We strive to accomplish these goals by:

Maintaining our
disciplined
investment
approach

Structuring
leases with
contractual
rent increases

Mitigating risk
through
diversification

Recycling capital to
enhance
portfolio quality

W. P. Carey’s Annualized Dividends

$3.81*


$1.65


$1.74


$2.01


1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015*

Past performance is not a guarantee of future results.

*As declared on 3/19/15

Dear Fellow Investors,

2014 was a year of evolution for W. P. Carey as we continued
to build on our 40-year record of success, while at the same
time executing the strategic plan that we set forth upon
becoming a REIT in 2012. We did so by growing and
improving the quality of our portfolio of long-term net
leased assets, positioning the company for enhanced access
to capital markets and continuing to grow and diversify
our investment management business.

We are proud to report that in 2014 we:

• grew total net revenues to $751 million, compared to
$403 million for the prior year, primarily as a result
of our merger with CPA®:16 – Global in January and
acquisitions completed during the year;

• generated Adjusted Funds from Operations of $4.81
per share, representing an increase of 14.0% over the
prior year; and

• raised our quarterly dividend to an annualized rate of

$3.80 per share, marking our 55th consecutive quarterly
increase and a 9.2% increase over the prior year.

In today’s competitive market for high-quality net leased
assets, we continue to adhere to our cycle-tested risk
management-driven investment strategy, focusing on
diversification, tenant creditworthiness and the acquisition
of critical assets for our owned real estate portfolio, which
generated over 80% of our 2014 total net revenues. We grew
our portfolio significantly in 2014 through both our merger
with CPA®:16 – Global, a transaction valued at approximately
$4 billion, and acquisitions totaling $907 million.

Our asset management offices in New York and Amsterdam
continuously evaluate the creditworthiness of our tenants and
the asset quality and operational criticality of our properties,
as well as assess individual markets for attractive disposition

opportunities. Accordingly, we continued to actively recycle
capital in 2014, completing dispositions totaling $304 million
and reinvesting to extend average lease term, improve credit
quality and increase asset criticality within our portfolio.

As a result of these activities, at year-end 2014, our owned real
estate portfolio consisted primarily of 783 properties totaling
87 million square feet, net leased to 219 tenants with an
occupancy rate of 98.6%. With 94.4% of our annualized base
rent coming from leases with built-in rent escalations—
based either on the Consumer Price Index or fixed
percentages—we expect rental revenue to continue to
grow and keep pace with inflation.

During 2014, we took several strategic steps in keeping with
our goal of maintaining a flexible and conservative investment
grade balance sheet. Specifically, we:

• increased the capacity of our unsecured line of credit from

$450 million to $1.0 billion;

• obtained investment grade corporate ratings from both

Moody’s and Standard & Poor’s; and

• accessed the public capital markets, successfully completing
our inaugural $500 million bond issuance in March and our
inaugural $294 million public equity offering in September.

In addition to funding acquisitions, accessing the public
capital markets has enabled us to reduce our secured
indebtedness, which, in combination with the sale of
encumbered assets, allowed us to move closer to our goal
of becoming a primarily unsecured borrower.

We also saw a significant increase in research analyst coverage
in 2014, raising our profile within the investment community.
We believe that this will help us to further broaden our
investor base and enhance our access to the public capital
markets going forward.

2014 Annual Report | 1

Since year-end, we have further expanded the capacity of
our revolving credit facility from $1.0 billion to $1.5 billion,
accessed the European public debt market with an inaugural
€500 million bond issuance and issued a further $450 million
of U.S. dollar-denominated bonds. Our euro-denominated
bonds allow us to better match euro revenues from our
European real estate with euro debt servicing costs, providing
a natural currency hedge, while also taking advantage of
an attractive borrowing rate.

Our investment management business continues to be
a valuable part of our model, generating a proven and
consistent source of fee income—100% of which benefits
our stockholders—thus providing additional support
for our dividend. This business also gives us a means of
fundraising when traditional markets are limited and allows
us to capitalize on new market sectors and products that are
consistent with our skill base and investment philosophy.
We raised $1.5 billion for our Managed REITs in 2014—a
record for us. Our goal is always to balance capital raised with
attractive investment opportunities, and our ability to cast a
wider net within the framework of our established investment
criteria allows us to do just that.

In 2014, our investment management business generated net
revenues of $132.9 million, which represented approximately
18% of total net revenue. Looking forward, we are committed
to continuing to grow and diversify this business and have
taken meaningful steps toward further expanding our product
offerings: Carey Watermark Investors 2, which builds on our
successful track record of raising capital and investing in the
lodging industry, recently commenced its public offering for
up to $1.4 billion. In September 2014, we filed registration
statements with the SEC regarding a new non-traded business
development company (or BDC), our 20th investment

program and inaugural BDC.* This, in partnership with
experienced fixed income investor Guggenheim Partners, will
capitalize on our more than 40-year track record of corporate
credit underwriting.

We anticipate that the year ahead will offer both opportunities
and uncertainties as we assess interest rate trends, their
influence on the financial markets, and the potential impact
of global political and economic developments. We believe
investment conditions will remain favorable in Europe, where
the continued slow-growth environment has generally kept
cap rates higher and debt costs lower than in the United
States. In contrast, the environment here remains competitive
and attractively priced transactions are scarcer. However, we
feel that conditions may improve in 2015, as we expect capital
flows into non-traded net lease funds to abate somewhat,
reducing competition for acquisitions and, therefore, pricing
pressure from the non-traded REIT sector. On the supply
side, if U.S. economic growth continues, we would expect
more companies to explore sale-leaseback transactions as
an attractive alternative to debt, which would increase the
opportunities available to us.

Looking at our key priorities for 2015 and beyond, our
primary goal is to continue to make accretive acquisitions for
our owned real estate portfolio, funded by a conservative mix
of debt and equity. As we did in 2014, we will seek to lower
our overall cost of capital by further accessing the public
capital markets and continuing to move toward becoming
primarily an unsecured borrower. In line with our current
practice, we will also continue to actively recycle capital.

Lastly, over time, we expect to further diversify the products
offered through our investment management platform away
from net leased products, such that once CPA®:18 – Global

* As of the date of printing, none of these registration statements has been declared effective by the
SEC, and there can be no assurance as to whether or when these public offerings will be announced.

2 | W. P. Carey Inc.

Over the course of 2014, we completed a number
of strategic steps designed to deliver long-term
growth for our shareholders and positioned the
company for enhanced access to capital markets.

is fully invested, which we currently expect to happen in
2016, all net lease investments will first be considered for our
owned real estate portfolio, thereby expanding the acquisition
opportunities available to us.

In closing, I wish to thank our Board of Directors for their
guidance and support during the year and am pleased to
have welcomed our two newest board members, Jean
Hoysradt and Meg VanDeWeghe, who bring significant
skills and depth of expertise.

I would also like to take this opportunity to honor and
recognize Director Emeritus Frank Carey, who passed away
in November. Along with our founder Bill Carey, Frank
Carey was one of our “Founding Fathers,” instrumental in

building W. P. Carey into the leading net lease company it is
today. While his day-to-day involvement ended years ago,
his guidance and integrity continue to live on in W. P. Carey’s
values, which are at the core of our corporate culture and
allow us to continue building on success.

Finally, I would like to thank our employees for their
dedication and our investors for your continued trust in
us, which we work to earn every day.

Trevor P. Bond
President and Chief Executive Officer

Cumulative Five-Year Total Return, 2009-2014

$35,000

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

REIT Conversion
9/2012

W. P. CAREY

FTSE NAREIT
Equity REITs
Index

S&P 500
Index

12/31/09

12/31/10

12/31/11

12/31/12

12/31/13

12/31/14

$10,000 invested in W. P. Carey common stock on December 31, 2009, with dividends reinvested, would have appreciated in five years
to $33,651—a 27% average annual return, compared with 15% for the S&P 500 Index and 17% for the FTSE NAREIT Equity REITs Index.

Source: SNL Financial

Past performance is not a guarantee of future results.

2014 Annual Report | 3

Building value for our shareholders
During 2014, we continued to grow our portfolio and
enhance the quality and diversity of our investments in
order to provide our investors with incremental value
and increasing dividends.

$906.9
million of
investments

783
net lease
properties

18
countries

9.1-year
weighted
average
lease term

4 | W. P. Carey Inc.

94.4%
of rental revenue
has built-in increases

98.6%
total occupancy

219
tenants

17
years investing
in Europe

87,300,000
total square footage

27
industries

2014 Annual Report | 5

Building on Success
40+ Years of Active Risk Management

When Wm. Polk Carey founded W. P. Carey in 1973, he did so
with one primary goal: to protect investors’ wealth. Bill Carey
believed that the process began by hiring the right people,
people who would not only underwrite the best investments
for our portfolio, but would do so with our investors’ best
interests in mind. The company supplemented the talent of
the team with a system of checks and balances to evaluate
each acquisition; this system became the backbone of our
investment process.

Over the past four decades, we have built upon this
foundation, improving our risk management in order to help
us protect our investors’ wealth in both good times and bad.

Color Key:

Acquisition Criteria and Investment Process

Geographic Diversification and Global Capabilities

Increased Scale and Access to Capital Markets

2010 Shanghai office established

1998 First European investment office opened

2008 Amsterdam asset management office opened

2009 Currency hedging implemented

1991 Independent Investment Committee established

2001 Quarterly “State of the Assets” review instated

2002 Asset Operating Committee formed

2008 Pricing Committee formalized

1979 First Investment Committee formed

1980 Rent escalations incorporated into leases

1973 W. P. Carey founded to pool net leased assets in securitized form

Acquisition Criteria and Investment Process

1973 In founding W. P. Carey, Bill Carey pioneered the concept of
pooling net leased assets in securitized form, providing a vehicle
for individual investors to manage risk by allocating a portion
of their investment holdings to a diversified portfolio of
commercial real estate assets.

1991 To further ensure each transaction is reviewed without bias,
the Investment Committee was transitioned into a purely
independent committee, consisting of only outside real estate
investment professionals. This meant that no employee, including
Bill Carey, had a vote.

1979 The Investment Committee was established—headed by
George Stoddard, who had a 30-year career managing insurance
investment portfolios with The Equitable Life Assurance Society—
to review proposed transactions based on key investment criteria.

1980 We began incorporating contractual rent escalations—
some tied to increases in the Consumer Price Index and some
fixed—in the wake of the oil crisis and subsequent rising inflation
to help ensure that rental income, cash flow and dividends
would increase in varying market environments.

2001 To complement the ongoing assessment of our assets,
we instituted a quarterly “State of the Assets” in-depth review
of our portfolio activity.

2002 We established an Asset Operating Committee to review
major asset-level decisions not related to new investments.

2008 We formalized an internal Pricing Committee, consisting
of senior leadership from multiple departments, to provide an
additional layer of review to our acquisition process and evaluate
investment opportunities not only on a standalone basis but also
in relation to other investments in our pipeline.

6 | W. P. Carey Inc.

2015 U.S. and euro public debt offerings

2014 Merger with CPA®:16 – Global, investment grade ratings, inaugural public debt and equity offerings

2010 Shanghai office established

2012 REIT conversion, merger with CPA®:15 – Global

1998 First European investment office opened

2008 Amsterdam asset management office opened

2009 Currency hedging implemented

1979 First Investment Committee formed

1980 Rent escalations incorporated into leases

1991 Independent Investment Committee established

2001 Quarterly “State of the Assets” review instated

2002 Asset Operating Committee formed

2008 Pricing Committee formalized

Geographic Diversification and Global Capabilities

Increased Scale and Access to Capital Markets

1998 After two decades of geographic diversification in the
United States and several years of on-the-ground research in the
European market, we made our first international investment
in France. Soon after, we opened our London office to formally
establish a local European presence.

2012 In order to increase our scale and liquidity,
enhance our access to public capital markets and augment
long-term shareholder value, W. P. Carey & Co. LLC merged with
CPA®:15 – Global to form W. P. Carey Inc. and simultaneously
elected REIT status.

2008 With the growth of our European portfolio holdings,
we opened our Amsterdam office to serve as the base for our
European asset management team. Expanding our team has
allowed us to deepen our local knowledge and enhance our
European asset management capabilities.

2009 In order to provide a natural hedge against currency
movements, we secured mortgages in local currencies. As our
European portfolio grew and the potential foreign exchange
exposure increased, we established a more fulsome currency
hedging strategy, entering into our first contracts in 2009.

2010 Having studied opportunities in Asia for a number of years,
we opened our Shanghai office in 2010 to continue evaluating
these complicated markets.

2014 Our merger with CPA®:16 – Global—valued at approxi-
mately $4 billion—further increased our scale. We also received
investment grade ratings from Moody’s and Standard & Poor’s,
which positioned us to access the public debt markets through an
inaugural $500 million U.S. bond issuance. The same year, we
also completed our inaugural $294 million public equity offering.

2015 Our euro-denominated bond offering in January 2015
allowed us to match euro revenues from our European real
estate holdings with euro debt service costs, providing a natural
currency hedge and taking advantage of an attractive
borrowing rate.

2014 Annual Report | 7

A Proven Process

Each of our acquisitions is subject to a thorough
evaluation process based on four key investment criteria:
creditworthiness of the tenant, criticality of the asset,
fundamental value of the real estate and transaction
structure and pricing.

The investment process begins with our investment team, who
prudently assess available opportunities in the marketplace
based on each of these four criteria. A senior investment
officer presents a potential transaction to our internal Pricing
Committee, consisting of senior members of W. P. Carey’s
Investment, Asset Management, Credit, Strategic Planning
and Capital Markets teams. This committee further assesses
each transaction, both as a standalone investment and
in relation to alternative investment opportunities in our
pipeline. Each potential acquisition is evaluated from
multiple standpoints, including valuation, structure and
its potential impact on our balance sheet and income.

Once a transaction is vetted and approved by our Pricing
Committee, only then is it presented to our independent
Investment Committee, composed of experienced real estate
and investment professionals with 200+ years of combined
credit and real estate underwriting experience. This
committee again analyzes each potential acquisition in the
context of our four main investment criteria, as well as its
impact on the overall portfolio, ensuring that we remain
diversified by tenant, geography, property type and
industry concentration.

This system of checks and balances helps us to grow our
portfolio in a consistent, methodical manner and, ultimately,
to provide cash flow and long-term value to our investors.

More than two-thirds of our leases are tied to the
Consumer Price Index, which can be particularly
valuable during periods of inflation.

94.4% of our rental revenue has built-in increases

43.6%

None 2.6%
Other 3.0%

25.2%

25.6%

Rent escalations:

CPI uncapped (43.6%)
CPI-based (25.6%)
Fixed (25.2%)

Based on Annualized Base Rent (ABR); reflects pro rata ownership and excludes
four operating properties.

8 | W. P. Carey Inc.

“ Surround yourself with people better than you. Even if you are the best person in the world, you have
to build a team. In building this team, make sure to attract the best talent imaginable.” Wm. Polk Carey

Every transaction is evaluated on four key criteria:

Creditworthiness of the tenant

Criticality of the asset to the tenant’s business

Industry drivers and trends
Competitor analysis
Company history
Historical financials

Corporate headquarters
Key distribution facility or profitable manufacturing plant
Critical R&D or data center
Top performing retail stores

Creditworthiness
of Tenant

Criticality
of Asset

Fundamental
Value of
Real Estate

Transaction
Structure
and Pricing

Fundamental value of the real estate

Transaction structure and pricing

Local market analysis
Property condition
Third party valuation/replacement cost
Downside analysis/cost to re-lease

Price and length of lease
Inclusion of built-in rent escalations
Financial covenants
Security deposits/letters of credit

2014 Annual Report | 9

Transactions Examined
through Our Four Key Criteria

In 2014, we completed acquisitions totaling $906.9 million,
all of which underwent our stringent underwriting process
to support our strategy of generating income and value
for investors, as well as improving portfolio quality and
lengthening its average lease term. Examples of recent
transactions include the following:

Admiral Group plc
Location: Newport, Wales
Property Type: Office
Acquisition Date: October 2014

Schneider Electric USA, Inc.
Location: Andover, Massachusetts
Property Type: Office and R&D
Acquisition Date: October 2014

Creditworthiness of Tenant: Admiral is a FTSE100

company and one of the United Kingdom’s largest car
insurance providers with a growing international presence.
For the financial year 2014, Admiral reported a profit
before tax of $526 million (£357 million).

Criticality of Asset: The newly constructed facility,

built to Admiral’s specifications, houses more than 500
employees. Admiral has all of its UK offices in South Wales
and therefore has very close ties to the area, which it has
chosen as a key operating site for the long run.

Fundamental Value of Real Estate: Situated in a city-

center location in Newport, directly across from the train
station, the facility forms part of a major redevelopment
of the surrounding area, which has already attracted $370
million (£230 million) of private investments into the city.

Transaction Structure and Pricing: The facility was

acquired from Scarborough Group International, the UK
and international real estate investor and developer, for
approximately $31 million (£20 million) and is leased to
Admiral Group under a 20-year triple-net lease with annual
CPI-based rent escalations.

Creditworthiness of Tenant: Schneider Electric USA, Inc.,
a subsidiary of Schneider Electric S.A., is a global specialist
in energy management and efficiency technologies.

Criticality of Asset: The facility serves as one of Schneider
Electric’s five major R&D facilities—the only such facility
in the United States—as well as the company’s U.S.
corporate headquarters. Schneider Electric relocated
over 800 employees to the facility and made a significant
contribution to tenant improvements.

Fundamental Value of Real Estate: The Class-A office

building is located in a six-building, 900,000 square-foot
business park outside of Boston, with access to major
highways. Schneider Electric’s own energy-efficient
products and solutions have been incorporated into
the facility’s design in order to reduce energy use and
operational costs by an estimated 30%.

Transaction Structure and Pricing: The facility, which

we acquired for $56 million, is leased to Schneider Electric
USA, Inc. for a period of 15 years with built-in annual
rent escalations.

10 | W. P. Carey Inc.

Pratt Industries, Inc.
Location: Lewisburg, Ohio
Property Type: Manufacturing Facility
Acquisition Date: November 2014

Pendragon plc
Location: Multiple Sites, United Kingdom
Property Type: Auto Dealerships
Acquisition Date: January 2015

Creditworthiness of Tenant: Founded nearly 25 years ago,
Pratt has grown to be the fifth largest corrugated packaging
company in the United States, with approximately 4,400
employees across 70 facilities in over 20 states.

Criticality of Asset: The 356,000 square-foot

manufacturing facility was custom-designed to suit the
company’s specific corrugating and box manufacturing
needs. Pratt has invested approximately $35 million
in equipment for the facility, which is located 30 miles
from Dayton, Ohio and is situated close to important
customer locations.

Fundamental Value of Real Estate: The facility has

modern industrial features, such as 30-to 34-foot clear
heights and 50-foot by 50-foot column spacing, and
conforms to current industrial facility standards. It is the
company’s newest and most efficient corrugating facility
nationwide.

Transaction Structure and Pricing: We acquired the Pratt
facility through a $20 million sale-leaseback transaction.
The property will be leased for a period of 18.5 years with
2% annual rent escalations.

Creditworthiness of Tenant: Pendragon is the largest
automotive retailer in the United Kingdom with 225
franchise locations spread across the country. Pendragon’s
portfolio of 26 brands includes the majority of the United
Kingdom’s 20 bestselling car models, as well as a diverse
range of automotive brands like Kia, Ford, Range Rover,
BMW, Mercedes, Aston Martin and Ferrari.

Criticality of Assets: The 73-property, approximately
1.6 million square-foot portfolio, represents almost
one-third of Pendragon’s UK dealership footprint and
is widely spread across the United Kingdom in key
locations, providing a nationwide offering of franchisees.

Fundamental Value of Real Estate: The car dealership

asset class in the United Kingdom is growing in popularity,
but attaining permits for new car dealerships is difficult.
Given that the market is fairly saturated, and we do not
see many new sites being constructed, we believe there
is significant inherent value in the portfolio.

Transaction Structure and Pricing: The triple-net lease
portfolio has a weighted average lease term of 15 years
and includes annual inflation-based rent escalations. The
gross purchase price, including fees, was $355 million
(£230.5 million).

2014 Annual Report | 11

Diversification: A Core Strength

Portfolio diversification is a core strength and a key factor in
W. P. Carey’s long-term risk management strategy. We believe
that diversification by tenant, industry, property type and
geography helps to ensure that our overall performance will
not be materially impacted by the economic downturn of any
one lessee, industry, property type or region. Our consistent
performance over a variety of market cycles is testament to
the combined strength of a diversified portfolio and stringent
underwriting process. Over the past four decades, our
portfolio occupancy has remained strong, even during the
Great Recession, and today it stands at 98.6%.

Property Type Diversification*

4.7%

7.7%

12.3%

18.0%

31.6%

25.7%

4.7%

7.7%

12.3%

18.0%

31.6%

25.7%

Office (31.6%)
Industrial (25.7%)
Warehouse/Distribution (18.0%)
Retail (12.3%)
Self-Storage (4.7%)
Other1 (7.7%)

Other includes tenants within the
following property types: hotels,
learning center, sports facility,
theater and residential.

Office (31.6%)
Industrial (25.7%)
Warehouse/Distribution (18.0%)
Retail (12.3%)
Self-Storage (4.7%)
Other1 (7.7%)

Tenant Industry Diversification Chart*

Other includes tenants within the
following property types: hotels,
learning center, sports facility,
theater and residential.

Aerospace and Defense (2.2%)
Automobile (5.3%)
Beverages, Food and Tobacco (5.0%)
Buildings and Real Estate (3.2%)
Business and Commercial Services (8.5%)
Chemicals, Plastics, Rubber and Glass (5.8%)
Construction and Building (2.3%)
Consumer and Durable Goods (1.6%)
Consumer Non-durable Goods (1.2%)
Electronics (6.4%)
Federal, State and Local Governments (6.3%)
Grocery (1.6%)
Healthcare, Education and Childcare (6.1%)
Hotels and Gaming (2.4%)
Insurance (2.6%)
Leisure, Amusement, Entertainment (2.2%)
Machinery (3.2%)
Media: Printing and Publishing (3.4%)
Oil and Gas (1.3%)
Retail Stores (19.6%)
Telecommunications (2.6%)
Textiles, Leather and Apparel (1.0%)
Transportation—Cargo (2.4%)
Transportation—Personal (1.7%)
Other2 (2.1%)

Other includes tenants in the following industries:
banking; mining, metals and primary metal industries;
and forest products and paper.

*Based on ABR; pro rata as of December 31, 2014.

12 | W. P. Carey Inc.

Global Capabilities: A Key Differentiator

Geographic Diversification*

United States

65.2%

We broadened our investment strategy by making
our first international investment in France in 1998 and
later establishing our European investment office in
London. Since then, we have opportunistically expanded
our international investments to include 18 countries—
primarily in Western and Northern Europe—in our owned
portfolio, and an additional five countries in our managed
investment programs.

Since our first international investment, we have expanded
our on-the-ground presence in Europe and Asia, educating
companies on the benefits of sale-leaseback financing,
developing an understanding of the nuances of various
markets and institutionalizing a wealth of real estate, tax
and legal knowledge.

Today more than 10% of employees work outside the United
States in our three investment and asset management offices—
located in London, Amsterdam and Shanghai. Together,
these teams speak a total of 28 languages and represent
15 countries. We are incredibly proud of the work they do
and the local context and knowledge they provide, which
enables us to grow our business.

International 34.8%

Germany (9.1%)
France (6.9%)
Spain (4.5%)
Finland (4.4%)
Poland (2.7%)
United Kingdom (1.9%)
Australia (1.6%)
Other3 (3.7%)

Other includes assets in
Norway, the Netherlands,
Hungary, Belgium, Sweden,
Canada, Mexico, Thailand,
Malaysia and Japan.

We believe that diversification helps to ensure
that we will continue to perform both in good
times and in bad.

The W. P. Carey Amsterdam office.

*Based on ABR; pro rata as of December 31, 2014.

2014 Annual Report | 13

Asset Management:
Maintaining and Creating Value

It is this talented, multi-lingual, diverse and growing group
of asset managers who work hard on the investors’ behalf to
ensure that as our portfolio grows, we continue to generate
the cash flow and value they have come to expect.

The team works hand-in-hand with our tenants to monitor
their businesses and financial performance and to evaluate
their long-term real estate needs. Asset managers discuss and
implement lease renewals early on or, if necessary, search
for replacement tenants. The vast majority of our long-term
leases are triple-net, meaning that tenants are responsible for
maintenance, taxes and insurance. Our asset managers ensure
that these obligations are being met and that rent is paid on
time. Additionally, the team flags opportunities in markets at
the top of their cycle, where strategic dispositions can allow us
to redeploy capital to acquisitions that help achieve our goals
of improving overall portfolio quality and increasing average
lease term.

Our asset management team works to ensure that:

• Our properties remain occupied and maintained

by our tenants

• Leases are extended, renewed or restructured on

a timely basis

• Disposition analysis is ongoing and properties are sold

if the right opportunity arises

• Capital from dispositions is efficiently recycled to

build an improving portfolio

Though there is ongoing discussion with individual tenants
throughout the year, the assets are given formal oversight with
a quarterly “State of the Assets” review, during which teams
from New York and Amsterdam jointly discuss with senior
management successful renewals, re-leasings and dispositions
from the prior period, as well as properties and tenants that
may present challenges going forward. During these meetings,
the teams evaluate the creditworthiness of our tenants, as well
as asset quality and operational criticality.

This process enables us to plan well in advance, to protect
and enhance asset values for the long run, and support our
efforts to maintain the high portfolio-level occupancy we
have sustained for decades.

14 | W. P. Carey Inc.

Asset Management Case Studies

Successful Renewal: Unisource Alaska
Location: Anchorage, Alaska
Property Type: Warehouse
Acquisition Date: 1979

Opportunistic Disposition: Life Time Detroit Clubs
Location: Detroit, Michigan
Property Type: Fitness Clubs
Date Acquired: 2003

W. P. Carey extended the lease for a 40,000 square-foot
warehouse in Anchorage, Alaska, resulting in a 24% increase
in annual rent versus the prior year. The property was
acquired in 1979 for $3.1 million. It has since been leased
to the same tenant, having been renewed twice with no
brokerage commissions paid or landlord capital invested,
clearly demonstrating that asset criticality is a key aspect of
creating long-term value. Going forward, rent will grow 3%
per year. To date, we have collected rent totaling over 3.9x
our original investment and the current rent represents an
annualized yield of 14.5% on original cost.

We sold two large-format fitness clubs in Detroit for
approximately $66 million (approximately $240 per square
foot) in an off-market deal with the tenant. The properties
were acquired in 2003 for $44 million. The transaction
allowed W. P. Carey to recycle capital into assets with superior
residual risk characteristics while harvesting an approximate
19% investment-level IRR. Cultivating close relationships
with tenant management allows us to opportunistically and
efficiently execute transactions that are not available on
the open market.

The asset management team works with our
tenants to monitor their business and financial
performance in order to protect and enhance asset
values and to maintain the high portfolio-level
occupancy we have sustained for decades.

Capital Recycling
We have an active capital recycling program through which
we seek to extend the average lease term of our owned real
estate portfolio, improve portfolio credit quality and increase
the asset criticality factor within the portfolio.

In 2014, we recycled approximately $304 million of gross
disposition proceeds into assets with better long-term residual
characteristics, higher criticality, substantially longer lease
term and superior tenant credit.

2014 Annual Report | 15

Carey Forward

Our Carey Forward employee volunteer initiative was
launched in 2013 as a tribute to our founder Wm. Polk Carey’s
lifelong commitment of Doing Good While Doing Well. In that
first year, we participated in eight events that supported three
organizations. In 2014, we grew the program to 11 events
in support of five wonderful organizations—City Harvest,
Habitat for Humanity, New York Cares, New York Blood
Center and Volunteers of America—thus demonstrating
our continued commitment to building and fostering a
relationship between our company and our community.

We are proud to report that in 2014,
our Carey Forward participants:

• Spent 200+ hours volunteering

• Provided 55 students with school supply-filled back packs

• Donated 50 coats to New Yorkers in need

• Raised more than $10,000 for City Harvest’s Skip Lunch

Fight Hunger campaign

We take pride in our outreach as good corporate citizens
in supporting these incredible organizations and look
forward to growing our employee volunteer program
and participation.

To learn more about Carey Forward, visit:
www.wpcarey.com/careyforward

“ Doing Good While Doing Well means that when
we are financing properties for companies, we are
also helping the communities those companies
serve. It is important to always ask: ‘What is the
impact of what we are doing? What is good for
society? What is good for the country?’”

Wm. Polk Carey

“ I think Carey Forward is an

important part of Bill Carey’s legacy
…it provides a reminder to us all
that success is more than the bottom
line and that Doing Good While
Doing Well is our responsibility.”

Pamela Gonzalez

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16 | W. P. Carey Inc.

“I wanted to embrace the
opportunity that was presented
to give back to the community
and do something selfless.”

Jessica Erskine

Carey Forward

We are proud to report that in 2014,
our Carey Forward participants:

• Spent 200+ hours volunteering

• Provided 55 students with school supply-filled back packs

• Donated 50 coats to New Yorkers in need

• Raised more than $10,000 for City Harvest’s Skip Lunch

Fight Hunger campaign

We take pride in our outreach as good corporate citizens
in supporting these incredible organizations and look
forward to growing our employee volunteer program
and participation.

To learn more about Carey Forward, visit:
www.wpcarey.com/careyforward

Wm. Polk Carey

“ I think Carey Forward is an

important part of Bill Carey’s legacy
…it provides a reminder to us all
that success is more than the bottom
line and that Doing Good While
Doing Well is our responsibility.”

Pamela Gonzalez

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16 | W. P. Carey Inc.

“I wanted to embrace the
opportunity that was presented
to give back to the community
and do something selfless.”

Jessica Erskine

www.wpcarey.com/facebook

www.wpcarey.com/youtube

www.wpcarey.com/twitter

www.wpcarey.com/linkedin

www.wpcarey.com/google-plus

“ Carey Forward is a meaningful way for us
to enhance a company culture that places
importance on helping others.”

Thomas Zacharias

“I believe the importance
of Carey Forward is for
W. P. Carey to give back
to a city that has allowed
us to grow and prosper
over time.”

Rafael Philips

“ I take pride in
representing
W. P. Carey, not
just in my job,
but also in the
community.”

Chris Slawsky

8-1/2”

8-3/4”

8- 13/16”

OUTSIDE VIEW

3/16”

W. P. Carey Inc.
W. P. Carey Inc.
50 Rockefeller Plaza
50 Rockefeller Plaza
New York, NY 10020
New York, NY 10020
1-800-WP CAREY
1-800-WP CAREY
www.wpcarey.com
www.wpcarey.com
NYSE: WPC
NYSE: WPC

2014 Annual Report
2014 Annual Report

www.wpcarey.com/facebook
www.wpcarey.com/facebook

www.wpcarey.com/youtube
www.wpcarey.com/youtube

www.wpcarey.com/twitter
www.wpcarey.com/twitter

www.wpcarey.com/linkedin
www.wpcarey.com/linkedin

www.wpcarey.com/google-plus
www.wpcarey.com/google-plus

7-3/4”

Thomas Zacharias
Thomas Zacharias

Rafael Philips
Rafael Philips

“I take pride in
“ I take pride in
representing
representing
W. P. Carey, not
W. P. Carey, not
just in my job,
just in my job,
but also in the
but also in the
community.”
community.”

Chris Slawsky
Chris Slawsky

Building on success
Building on success

11-1/4”

Investing for the long run™
Investing for the long run™

1/8” Bleed
Trim Flat Size: 26-1/4” x 13”
Score

1-3/4”

INSIDE VIEW

Corporate Information

Board of Directors

Benjamin H. Griswold, IV
Non-Executive Chairman of the Board and
Chairman of the Executive Committee;
Partner and Chairman of Brown Advisory, Inc.

Trevor P. Bond
President and Chief Executive Officer

Nathaniel S. Coolidge
Former Head of Bond and Corporate
Finance Department, John Hancock Mutual
Life Insurance Company

Mark J. DeCesaris
Chairman of the Technology Committee;
Former Chief Financial Officer of
W. P. Carey Inc.

Eberhard Faber, IV
Chairman of the Nominating and Corporate
Governance Committee; Former Director of
the Federal Reserve Bank of Philadelphia

Axel K.A. Hansing
Partner, Coller Capital, Ltd.

Jean Hoysradt
Chief Investment Officer,
Mousse Partners Limited

Dr. Richard C. Marston
James R.F. Guy Professor of Finance and
Economics at the Wharton School
of the University of Pennsylvania

Robert E. Mittelstaedt, Jr.
Chairman of the Compensation Committee;
Dean Emeritus of Arizona State University’s
W. P. Carey School of Business

Charles E. Parente
Chairman of the Audit Committee; Former
Chief Executive Officer and Managing Partner
of Parente Randolph, LLC

Nick J.M. van Ommen
Former Chief Executive Officer,
European Public Real Estate Association

Mary M. VanDeWeghe
Chief Executive Officer and President,
Forte Consulting Inc.

Dr. Karsten von Köller
Chairman, Lone Star Germany Acquisitions
GmbH

Reginald Winssinger
Chairman of National Portfolio, Inc.

Director Emeritus
Frank J. Hoenemeyer

Investment Committee of
Carey Asset Management Corp.

Auditors

PricewaterhouseCoopers LLP

Nathaniel S. Coolidge
Chairman

Axel K.A. Hansing

Frank J. Hoenemeyer

Jean Hoysradt

Dr. Richard C. Marston

Nick J.M. van Ommen

Dr. Karsten von Köller

Operating Committee

Trevor P. Bond
President and Chief Executive Officer

Jason E. Fox
Managing Director and
Head of Global Investments

Mark M. Goldberg
Managing Director;
President, Investment Management Division;
Chairman of Carey Financial, LLC

Susan C. Hyde
Managing Director, Chief Marketing Officer,
Chief Ethics Officer and Corporate Secretary

John J. Park
Managing Director and Director of
Strategic Planning

Catherine D. Rice
Managing Director and Chief Financial Officer

Thomas E. Zacharias
Managing Director and Chief Operating Officer

Senior Management

Hisham Kader
Executive Director and Chief Accounting Officer

Paul Marcotrigiano
Managing Director and Chief Legal Officer

John D. Miller
Managing Director and Chief Investment Officer

William Popper
Executive Director and Chief Information Officer

Craig Vacharis
Executive Director and Chief Credit Officer

Executive Offices

W. P. Carey Inc.
50 Rockefeller Plaza
New York, NY 10020
1-212-492-1100
1-800-WP CAREY

Transfer Agent

Computershare
Shareowner Services
P.O. Box 43006
Providence, RI 02940-3006
1-888-200-8690

Institutional Investor Relations

Peter Sands
Director of Institutional Investor Relations
1-212-492-1110
institutionalir@wpcarey.com

Individual Investor Relations

1-800-WP CAREY
ir@wpcarey.com

Annual Meeting

June 18, 2015 at 3:00 PM ET
The TimesCenter
242 West 41st Street
New York, NY 11036

Form 10-K

A Copy of our Annual Report on
Form 10-K as filed with the U.S. Securities
and Exchange Commission may be
obtained without charge at www.sec.gov,
by writing the Executive Offices at the
address above, or by visiting our website at
www.wpcarey.com.

Website

www.wpcarey.com

E-delivery

To receive future investor-related
correspondence electronically, go to
www.wpcarey.com/edelivery.

Trading Information

Shares of W. P. Carey Inc. trade on
the New York Stock Exchange under
the symbol “WPC.”