W. P. Carey
Annual Report 2018

Plain-text annual report

2018 Annual Report Investing for the Long Run® Focusing on the Future As one of the leading diversified net lease REITs with more than $17 billion in enterprise value, we are well positioned to continue generating long-term growth and providing rising income for our shareholders. In 2019, we continue to invest for the long run, guided by the following core principles: Net lease focus Diversified investment strategy Proactive asset management Doing Good While Doing Well® Dear Fellow Shareholders, 2018 was a year of continuing progress for W. P. Carey, essentially completing our evolution from our origins as a manager of high- quality net lease real estate funds to a pure-play net lease REIT. Our evolution began with our REIT conversion in 2012 and has advanced steadily through the simplification of our business and the implementation of structural changes that have improved the quality of our earnings and increased our operational efficiency. Driving this evolution has been our belief that the path to higher shareholder value is through higher-quality earnings generated by a diversified portfolio of net lease assets. Our Strategic Focus Our fundamental goal is simple: grow our per share Real Estate AFFO and dividends through a strategy that combines incremental cash flow generated by rising rental income from existing portfolio assets and accretive acqusitions. In line with this strategy, during 2018 we completed $940 million of new investments at an approximate 7% cap rate and a weighted average lease term of 20 years. Over time, we have successfully generated rising rental income from our existing portfolio by strategically investing outside the “commodity” segment of net lease in a diverse portfolio of long-term assets, 99% of which have contractual rent escalations. Growth from our existing portfolio also comes from proactive asset management, which generates discretionary investment opportunities and follow-on transactions with existing tenants. By reinvesting in the repositioning of existing assets to meet the requirements of new tenants, we have the opportunity to further enhance cash flow and portfolio value. At year-end, we had discretionary capital investment projects outstanding with an estimated total of $235 million. These investments often enable us to achieve better spreads and deal terms, as well as adding criticality and incremental value to existing assets. How We Differ from Our Net Lease Peers Now that we have essentially completed our evolution into a pure-play net lease REIT, our business has become more aligned with our net lease peers; however, we remain differentiated in many ways. Our strong internal rent growth through market cycles reflects the long-term strength of incorporating contractual rent increases into our leases tied to either fixed percentages or inflation. In addition, our increased balance sheet flexibility positions us to pursue larger acquisitions and M&A opportunities, while our diversified investment strategy and on-the-ground presence in the U.S. and Europe gives us access to a wider and deeper pool of opportunities. Although our diversified investment strategy enables us to invest across multiple property types, industries and geographies, ours is not a “go-anywhere” approach. We have focused our geographic diversification to build on our organizational strength and experience in the U.S. and Europe, where we benefit from our established reputation and the local presence of our investment and asset management teams. Our concentration on the U.S. and the developed economies of northern and western Europe has enabled us to build scale in those regions as well as in-depth market knowledge and local networks that feed our larger pool of opportunities. A value-add component of our European diversification has been our ability to access the European public debt markets, further diversifying our capital sources. By matching euro-denominated lease revenues with euro-denominated debt, we reduce both the impact of fluctuations in foreign exchange rates and overall balance sheet risk. Rent Escalations* 99% of our leases have contractual rent increases, and 64% are tied to the Consumer Price Index (CPI) CPI-linked (64%) 40% 24% 32% 3% Uncapped CPI (40.0%) CPI-based (23.9%) Fixed (32.3%) Other (3.1%) None (0.7%) * Based on contractual minimum annualized base rent (ABR) as of December 31, 2018. Numbers may not add to 100% due to rounding. 2018 Annual Report | 1 The strength of our investment team and their adherence to our proven investment process honed over nearly five decades further differentiate us from our publicly traded net lease peers. The team’s experience across diverse geographies, industries and asset types positions us well to source, structure and complete transactions that maintain the diversity of our portfolio and meet our established investment criteria. My own experience coming up through our investment team over the past 17 years has afforded me a unique perspective and deep understanding of our real estate and how we have grown our portfolio to where it is today. Going forward, I believe the strength of our team — in combination with the increased strength of our balance sheet — will enable us to execute on our strategy and secure significant accretive transactions in our targeted geographies. Building Long-term Shareholder Value Our merger with CPA®:17 was a major step toward becoming a simpler, more prominent REIT, with higher-quality earnings derived from more-predictable — and therefore more-valuable — long-term lease revenues. The addition of a high-quality pool of assets well aligned with our existing portfolio increased our earnings and overall NAV, enhanced diversification, improved a number of key portfolio metrics and ranks us as one of the largest REITs in the MSCI US REIT Index. Our increased real estate revenues strengthened our credit profile, and our expanded scale allows us to operate more efficiently and will enable us to pursue larger transactions. The improved quality of our earnings has created additional shareholder value and positively impacted our cost of capital. Furthermore, because we assembled and managed the CPA®:17 portfolio for more than a decade, we were able to seamlessly integrate its assets into our portfolio. Total Return Since going public in 1998, W. P. Carey has significantly outpaced key REIT indices and the broader market 1,157% WPC MSCI US REIT Index S&P 500 428% 283% Total return from January 21, 1998, through market close December 31, 2018. Reflects the reinvestment of all dividends. 2 | W. P. Carey Inc. During 2018, we continued to access multiple forms of capital to fund our investment activities. In total, we raised approximately $1.5 billion consisting of long-term debt, through euro-denominated bonds, and equity, through our at-the-market program. This activity included two €500-million eurobond offerings, which helped to hedge our euro currency risk while advancing our unsecured debt strategy. During the fourth quarter of 2018 and through February 22, 2019, we also utilized our at-the-market program to efficiently raise approximately $350 million in equity at an attractive cost of capital relative to the investments we made during 2018. In addition, our merger with CPA®:17 was an all-stock transaction through which we issued 54 million W. P. Carey shares, deleveraging our balance sheet and increasing the liquidity of our stock. For the full year, our AFFO per diluted share increased to $5.39 and dividends declared per share totaled $4.09, reflecting the impact of accretive new acquisitions during the year and increased Real Estate AFFO from our merger with CPA®:17 in October 2018. These results also reflect the impact of reduced Investment Management AFFO as a result of lower CPA®:17 management fees during the last quarter of 2018. A Position of Strength As a result of these successes, we entered 2019 in a position of strength, which we believe will support our long-term growth objectives of increasing earnings through strong same-store rent increases and acquisitions. Our improved cost of capital and increased scale will help enable us to achieve better spreads on deals, increase deal volume and pursue larger transactions, including M&A. Our on-the-ground teams and established presence in the U.S. and Europe provide broad access to deal flow. Furthermore, as a diversified REIT, we are able to cast a wider opportunity set from which to choose the best investments. As a result of our merger, we have a larger base of existing assets for generating discretionary capital investment opportunities and follow-on deals with our tenants. These significant achievements, our recognized reputation and net lease industry experience position us well to continue growing Real Estate AFFO and enhancing portfolio quality. With net lease emerging as a more significant REIT asset class and our evolution into one of the largest pure-play net lease REITs, we are well positioned to help the market redefine certain assumptions that exist about the net lease sector. By helping the market better understand why a company such as ours, with a large, diverse portfolio, is the best way to invest in net lease real estate, we can add further value for our shareholders. Closing Thoughts Since our founding in 1973, W. P. Carey has been guided by two core principles: Investing for the Long Run and Doing Good While Doing Well. These principles are central to every aspect of our business: our office culture, our community outreach, our investment approach and more. They are the root of our corporate responsibility objectives and part of the fabric of W. P. Carey. Investing for the Long Run means all of our decisions are made through a long-term lens. We understand that the ultimate measure of our success will be the shareholder value that we create over the long term rather than short-term gains. Our long-term view is core to our investment strategy and has enabled us to secure superior economics and value for our shareholders. Additionally, in the context of Investing for the Long Run, we continue to develop and integrate environmental, social and governance initiatives into our corporate management, employee programs and acquisition and proactive portfolio management processes. We also recognize that our long-term success is dependent on our employees and our ability to attract and retain the best talent. Our adherence to Doing Good While Doing Well has positioned us to successfully nurture and develop a diverse, talented and cohesive group of employees over the long term. We believe that being a good corporate citizen includes giving back to the communities in which we work and live. We encourage and create opportunities for our employees to contribute to and grow these efforts. Together we support local educational programs, hospitals, museums and other community organizations as a company and through our Carey Forward program, which encourages employees to build upon our philanthropic and charitable activities. Our achievements in 2018 were made possible through the hard work and dedication of our employees and the valuable guidance of our Board of Directors. Our founder, Wm. Polk Carey, always prided himself on being surrounded with “the best and the brightest,” and he would be proud of all that the entire W. P. Carey team has accomplished. Our transformation into a pure-play net lease REIT and the further simplification of our business in 2018 provide a solid platform for future growth. We look forward to building on the strength of our differentiated position in the net lease space as we continue on the path to increased shareholder value through our ongoing initiatives in the years to come. With best regards, Jason E. Fox Chief Executive Officer Annual Dividends W. P. Carey has increased its dividend every year since going public in 1998 and is a member of the NASDAQ Dividend Achievers index $1.65  $1.73  $1.96  $2.44  $4.09  1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Past performance is not a guarantee of future results. Annual dividend per share reflects sum of quarterly dividends declared per share during the respective year. 2018 Annual Report | 3 Portfolio Strategy Our portfolio strategy supports our fundamental goal of growing Real Estate AFFO and dividends per share over the long term. By adhering to our cycle-tested, risk management-driven strategy, we continue to build our portfolio and improve overall quality through the acquisition of long-term net lease real estate and the proactive management of our existing assets. Diversified Acquisition Approach We focus on acquiring critical real estate, net leased on a long-term basis to creditworthy companies that meet our established criteria. Our diversified approach provides access to a vast pool of investment opportunities, enabling us to allocate capital to those with the most-attractive risk-adjusted returns at any given time. Net lease assets provide: • Predictable income • Minimal operational responsibility Transaction types: • Sale-leasebacks • Build-to-suits • Long-term growth • Existing single-tenant net lease properties We apply the same four criteria to each potential investment: Creditworthiness of the tenant Criticality of the asset to the tenant’s business Fundamental value of the real estate Transaction structure and pricing 4 | W. P. Carey Inc. Compared with other types of real estate investments, net lease assets produce predictable income with minimal capital expenditures. This in turn provides our shareholders with a stable, growing source of income. Investment opportunities from within our existing portfolio have become a meaningful source of deal flow for us. Today our increased size provides us with a larger pool of internally sourced opportunities. Proactive Asset Management Proactive asset management is essential to maintaining and enhancing portfolio value. Our asset management teams in New York and Amsterdam regularly review asset quality, operational criticality and tenant creditworthiness. They also evaluate tenants’ ongoing real estate needs, stay ahead of lease renewals, extend lease terms and source additional discretionary investment opportunities from within our existing portfolio. Follow-on transactions: • Improve portfolio quality • Increase asset criticality • Extend original lease term Transaction types: • Expansions and follow-on build-to-suits • Renovations, redevelopments and repositionings • Building efficiency retrofits • Provide above-market cap rates • Strategic dispositions 2018 Annual Report | 5 2018 Featured Portfolio Activity New Acquisition Acquired a 15-property logistics portfolio including five regional distribution hubs, nine last-mile distribution facilities and a corporate headquarters in an off-market transaction. Outcome Leveraged European presence and reputation as a recognized net lease investor to position us as the preferred acquiror of a high-quality logistics portfolio, with a market-leading tenant. At a Glance Tenant: Danske Fragtmænd Closing Date: June 2018 Purchase Price: $187 million Location: Denmark Property Type: Logistics portfolio Lease Term: Triple-net leases with annual rent increases tied to Danish CPI and a remaining term of approximately 18 years Size: 2.0 million square feet Strategic Disposition Capitalized on a market opportunity to exit an industrial/agricultural portfolio in Australia, where assets were no longer aligned with our geographic focus on the U.S. and Europe. Outcome Executed timely marketing process, enabling us to recycle capital into accretive investments, improve portfolio quality and create an approximately 40% premium to our AUD acquisition cost. At a Glance Tenant: Inghams Closing Date: December 2018 Location: Australia Property Type: Industrial/agricultural portfolio Size: 3.2 million square feet New Acquisition Utilized our European presence and sector expertise to further diversify our portfolio with the acquisition of a 36-property portfolio of critical DIY retail assets in proximity to Amsterdam, Rotterdam and The Hague. Outcome Secured a long-term net lease with annual inflation-based rent escalations, with a market- leading tenant in a defensive industry largely insulated from e-commerce disruption. At a Glance Tenant: Intergamma Closing Date: July 2018 Purchase Price: $178 million Location: Netherlands Property Type: “Do-it-yourself” retail portfolio Lease Term: Triple-net lease portfolio with an average lease term of 15 years and annual rent escalations tied to Dutch CPI Size: 1.5 million square feet Danske Fragtmænd Inghams Intergamma 6 | W. P. Carey Inc. In 2018, our investment and asset management teams completed $940 million of new investments and $525 million of dispositions. Our investments included the completion of $112 million in discretionary capital projects, and at year-end we were committed to an additional $235 million. New Acquisition Leveraged our on-the-ground teams in North America and Europe to acquire three high-quality assets in Mexico, France and Poland leased to a leading global automotive parts manufacturer. Outcome Structured three long-term sale-leaseback transactions with annual inflation-based rent escalations. At a Glance Tenant: Faurecia Closing Date: December 2018 Purchase Price: $55 million Locations: Mexico, France and Poland Property Type: Manufacturing, R&D and industrial facilities Lease Term: Ranges from 15-20 years for Mexican, French and Polish sites with annual rent escalations tied to U.S., French and Euro area CPI, respectively Size: 713,000 square feet BREEAM-Certified Expansion Provided tenant with build-to-suit capital for the expansion of a modern BREEAM- and FM-certified logistics facility. The Class-A, state-of-the-art facility will benefit from the planned installation of what will be the largest solar rooftop in the Netherlands. Outcome Supported tenant’s growth needs, while enhancing asset value, improving criticality and furthering our environmental commitment by investing in a sustainable building. At a Glance Tenant: Nippon Express Closing Date: May 2018 Expansion Commitment: $20 million Location: Port of Rotterdam, Netherlands Property Type: BREEAM-Certified logistics facility Lease Term: 10 years with annual CPI-based rent escalations Expansion Size: 353,000 square feet Total Size (upon completion in 2019): 1.1 million square feet New Acquisition and Expansion Acquired an existing industrial/distribution facility and provided build-to-suit capital for the expansion of the facility. Outcome Acquired a long-term net lease for a critical distribution facility with the world’s largest independent hardware distributor and provided funding for an expansion of the building. At a Glance Tenant: Orgill Closing Date: December 2018 Purchase Price and Expansion Commitment: $55 million Location: Texas Property Type: Industrial facility Lease Term: 25-year, triple-net lease Expansion Size: 329,000 square feet Total Size (upon completion in 2019): 879,000 square feet 2018 Annual Report | 7 Faurecia Nippon Express Orgill 2018 Portfolio Overview Our commitment to a diversified portfolio of high-quality real estate and differentiated net lease investment strategy has afforded us greater opportunities to grow our annualized base rent (ABR) while maintaining high occupancy levels and a weighted average lease term of more than 10 years. 1,163 net lease properties $1 billion+ ABR 98.3% occupancy 10.2 years weighted average lease term 8 | W. P. Carey Inc. 131 million total square feet 99% of leases with contractual rent increases 304 tenants 57% year-over-year ABR growth 2018 Annual Report | 9 Focusing on the United States and Europe Our diversified acquisition strategy continues to be a distinguishing characteristic of our investment approach; however, ours is not a “go-anywhere” strategy. Geographically, we focus on the U.S. and the developed economies of northern and western Europe. Our on-the-ground presence on both continents and our expertise in cross-border transactions help us grow and enhance the value of our diverse portfolio by investing where we see the best risk–reward opportunities. U.S. 63% of total ABR Our domestic investment team’s experience across diverse markets, industries and property types positions us well to source, structure and execute on multiasset, multimarket, cross-border transactions. Our domestic asset management team’s market knowledge and awareness of tenant growth needs uncover additional expansion, repositioning and disposition opportunities. As a result of these combined capabilities, our 2018 U.S. investment volume totaled approximately $387 million.** 10 | W. P. Carey Inc. Our 2018 acquisitions and completed capital investment projects spanned 88 properties, net leased to 20 tenants, operating in 12 industries and located in seven countries, thereby enhancing the diversity of our portfolio. In addition, we continued to opportunistically divest investments in noncore markets where we lacked a path to scale. % ABR* 10.1% or more 3.1 – 10.0% 1.1 – 3.0% 1.0% or less W. P. Carey Offices New York (HQ) Amsterdam Dallas London Europe 35% of total ABR Our London-based investment team maintains an active acquisition pipeline across our primary European markets, and our asset management team in Amsterdam identifies investment opportunities with existing tenants and potential dispositions. As a result of these combined capabilities, our 2018 European investment volume totaled approximately $535 million.** *Portfolio map shading is based on ABR and reflects pro rata ownership of net lease real estate assets as of December 31, 2018. ** Total investment volume includes acquisitions and completed discretionary investments. 2018 Annual Report | 11 2018 Portfolio Diversification Diversification has long been a distinguishing characteristic of our investment strategy. We believe a large, diverse portfolio is the best way to invest in net lease real estate. It enables us to expand our opportunity set and direct our investments to the most- attractive risk–reward opportunities. Geographic Diversification* United States (63.4%) United States (63.4%) United States (63.4%) Europe (34.7%) Europe (34.7%) Europe (34.7%) United States (63.4%) Europe (34.7%) Includes assets in Czech Republic, Estonia, Hungary, Latvia, Lithuania and Slovakia. Includes assets in Czech Republic, Estonia, Hungary, Latvia, Lithuania and Slovakia. 1 Includes assets in Canada, Japan and Mexico. Includes assets in Canada, Japan and Mexico. Includes assets in Canada, Japan and Mexico. 2 2 2 United States (63.4%) Germany (6.1%) Poland (4.7%) Spain (4.6%) Netherlands (4.4%) United States (63.4%) United Kingdom (3.6%) Germany (6.1%) Italy (2.4%) Poland (4.7%) France (1.5%) Spain (4.6%) Croatia (1.1%) Netherlands (4.4%) United Kingdom (3.6%) Italy (2.4%) France (1.5%) Croatia (1.1%) Denmark (1.1%) United States (63.4%) United States (63.4%) Finland (1.1%) Germany (6.1%) Germany (6.1%) Norway (0.7%) Poland (4.7%) Poland (4.7%) Austria (0.3%) Spain (4.6%) Spain (4.6%) Portugal (0.3%) Netherlands (4.4%) Netherlands (4.4%) Denmark (1.1%) Sweden (0.2%) United Kingdom (3.6%) United Kingdom (3.6%) Finland (1.1%) Belgium (0.1%) Italy (2.4%) Italy (2.4%) Norway (0.7%) Europe Other1 (2.5%) France (1.5%) France (1.5%) Austria (0.3%) Croatia (1.1%) Croatia (1.1%) Non-U.S. / Non-Europe2 (1.8%) Portugal (0.3%) Sweden (0.2%) Belgium (0.1%) Europe Other1 (2.5%) Non-U.S. / Non-Europe2 (1.8%) 1 1 Includes assets in Czech Republic, Estonia, Hungary, Latvia, Lithuania and Slovakia. Denmark (1.1%) Finland (1.1%) Norway (0.7%) Austria (0.3%) Portugal (0.3%) Sweden (0.2%) Belgium (0.1%) Europe Other1 (2.5%) Non-U.S. / Non-Europe2 (1.8%) Denmark (1.1%) Finland (1.1%) Norway (0.7%) Austria (0.3%) Portugal (0.3%) Sweden (0.2%) Belgium (0.1%) Europe Other1 (2.5%) Non-U.S. / Non-Europe2 (1.8%) 2 1 Includes assets in Czech Republic, Estonia, Hungary, Latvia, Lithuania and Slovakia. Includes assets in Canada, Japan and Mexico. Industrial / Warehouse (43.9%) Industrial / Warehouse (43.9%) Property Type Diversification* Industrial / Warehouse (43.9%) Industrial (23.2%) Warehouse (20.7%) Office (25.5%) Retail (17.8%) Other3 (12.8%) 3 Other includes ABR from tenants within the following property types: education facility, fitness facility, hotel (net lease), laboratory, self-storage (net lease), student housing (net lease) and theater. * Based on contractual minimum ABR as of December 31, 2018. Numbers may not add up to 100% due to rounding. 17% 14% Industrial (23.2%) Warehouse (20.7%) Office (25.5%) Retail (17.8%) Other3 (12.8%) 3 Industrial (23.2%) Warehouse (20.7%) Other includes ABR from tenants within the following property types: education facility, Office (25.5%) fitness facility, hotel (net lease), laboratory, Retail (17.8%) self-storage (net lease), student housing (net lease) and theater. Other3 (12.8%) 12 | W. P. Carey Inc. Other includes ABR from tenants within the following property types: education facility, 30% 25% 3 30% 25% 17% 14% fitness facility, hotel (net lease), laboratory, self-storage (net lease), student housing (net lease) and theater. 30% 25% 17% 14% Tenant Industry Diversification* Retail4 (20.9%) Consumer Services (8.5%) Automotive (6.5%) Business Services (5.3%) Cargo Transportation (5.3%) Grocery (4.9%) Healthcare and Pharmaceuticals (4.4%) Hotel, Gaming and Leisure (4.2%) Media: Advertising, Printing and Publishing (4.0%) Construction and Building (3.9%) Sovereign and Public Finance (3.9%) Capital Equipment (3.4%) Containers, Packaging and Glass (3.3%) Beverage, Food and Tobacco (2.7%) High-tech Industries (2.5%) Insurance (2.3%) Banking (1.8%) Telecommunications (1.8%) Nondurable Consumer Goods (1.6%) Durable Consumer Goods (1.4%) Aerospace and Defense (1.2%) Media: Broadcasting and Subscription (1.2%) Wholesale (1.2%) Chemicals, Plastics and Rubber (1.1%) Other5 (2.7%) 4 5 Includes automotive dealerships. Includes ABR from tenants in the following industries: consumer transportation, electricity, environmental industries, finance, forest products and paper, metals and mining, oil and gas and real estate. Retail4 (20.9%) Consumer Services (8.5%) Automotive (6.5%) Business Services (5.3%) Cargo Transportation (5.3%) Grocery (4.9%) Healthcare and Pharmaceuticals (4.4%) Hotel, Gaming and Leisure (4.2%) Media: Advertising, Printing and Publishing (4.0%) Construction and Building (3.9%) Sovereign and Public Finance (3.9%) Capital Equipment (3.4%) Containers, Packaging and Glass (3.3%) Beverage, Food and Tobacco (2.7%) High-tech Industries (2.5%) Insurance (2.3%) Banking (1.8%) Telecommunications (1.8%) Nondurable Consumer Goods (1.6%) Durable Consumer Goods (1.4%) Aerospace and Defense (1.2%) Media: Broadcasting and Subscription (1.2%) Wholesale (1.2%) Chemicals, Plastics and Rubber (1.1%) Other5 (2.7%) 4 5 Includes automotive dealerships. Includes ABR from tenants in the following industries: consumer transportation, electricity, environmental industries, finance, forest products and paper, metals and mining, oil and gas and real estate. Retail4 (20.9%) Consumer Services (8.5%) Automotive (6.5%) Business Services (5.3%) Cargo Transportation (5.3%) Grocery (4.9%) Healthcare and Pharmaceuticals (4.4%) Hotel, Gaming and Leisure (4.2%) Media: Advertising, Printing and Publishing (4.0%) Construction and Building (3.9%) Sovereign and Public Finance (3.9%) Capital Equipment (3.4%) Containers, Packaging and Glass (3.3%) Beverage, Food and Tobacco (2.7%) High-tech Industries (2.5%) Insurance (2.3%) Banking (1.8%) Telecommunications (1.8%) Nondurable Consumer Goods (1.6%) Durable Consumer Goods (1.4%) Aerospace and Defense (1.2%) Media: Broadcasting and Subscription (1.2%) Wholesale (1.2%) Chemicals, Plastics and Rubber (1.1%) Other5 (2.7%) 4 5 Includes automotive dealerships. Includes ABR from tenants in the following industries: consumer transportation, electricity, environmental industries, finance, forest products and paper, metals and mining, oil and gas and real estate. 2018 Annual Report | 13 Doing Good While Doing Well Since our founding in 1973, we have followed two core principles: Investing for the Long Run and Doing Good While Doing Well. Our founder, Wm. Polk Carey, believed — as we do today — that our business by its very nature promotes prosperity and that our responsibility does not end there. He understood that good corporate citizenship was fundamental to good business and to creating long-term value for our investors. Today his vision and values live on through our corporate responsibility initiatives, focused on our environmental, social and governance objectives. Environmental We invest for the long run through both our acquisitions and our commitment to sustainability. At our corporate offices, we have implemented environmental solutions to address energy efficiency, water conservation and waste management. In 2018, we reduced our energy use by more than 30% and recycled more than 13,000 pounds of technology equipment. In early 2019, we continued this momentum with the launch of our internal Go Green in 2019 campaign to help make our corporate offices more environmentally friendly. Within our portfolio, we have taken steps to involve our tenants in our sustainability initiatives. As a net lease REIT, substantially all of our properties are leased on a triple-net basis, whereby the tenant is responsible for maintaining the building operations, including energy consumption levels and the implementation of environmental sustainability practices. Through our ongoing tenant outreach program, we provide education, ideas and support for property-level sustainability solutions. For new investments, we conduct an environmental assessment of all properties we underwrite as part of our analysis to understand sustainability practices and performance and to ensure our acquired assets meet environmental standards. Social Doing Good While Doing Well underscores the importance of being a good steward not only of our shareholders’ capital but also of our communities and environment. In 2013, we established the Carey Forward program as a tribute to Bill Carey’s generosity, sense of philanthropic duty and passion for building and fostering productive relationships between our company and our communities. Through the program, employees are encouraged to participate in charitable activities, sharing their time, skills and passions with others. In 2018, W. P. Carey and the W. P. Carey Foundation committed to sponsor the tuition for local students living below the poverty line over the next four years. In conjunction with this commitment, employees pledged their time to mentor these students, sharing their skills and helping to position them for greater academic and professional success. In 2018, Carey Forward supported the following organizations: • American Cancer Society • Amsterdam Cares • Central Park Conservancy • City Harvest • Little Village • Student Sponsor Partners • The Dutch Food Bank • Volunteers of America In addition to the time and funding donated by employees, the W. P. Carey Foundation supports these efforts by matching charitable contributions made by our employees and our Board. In 2018, the Foundation introduced its Carey the Torch initiative to recognize and reward employees exemplifying Bill Carey’s motto Doing Good While Doing Well by making a positive impact on their community. Together with the Foundation, we continued to support local parks, educational programs, hospitals and other community organizations during the year, including: “ 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, Founder (1930-2012) • American Museum of Natural History • Hospital for Special Surgery • Memorial Sloan Kettering Cancer Center • Mount Sinai Health System • Museum of the City of New York • NewYork-Presbyterian Hospital • Solomon R. Guggenheim Museum • The Frick Collection • The Metropolitan Museum of Art • The Museum of Modern Art • The New York Botanical Garden • Whitney Museum of American Art • Wildlife Conservation Society The health and wellness of our employees and their families are paramount to W. P. Carey. When we invest for the long run, our employees are at the core of that philosophy. Through our comprehensive benefits program, profit sharing plan and career development opportunities, we invest in the financial, physical and overall well-being of our employees. We not only want to attract and surround ourselves with the best and brightest; we want to enhance their lives in and out of the office as they progress and grow with the company. $250K+ donated to support local museums, parks, hospitals and more $15K+ raised for City Harvest’s Skip Lunch Fight Hunger campaign against childhood hunger $10K+ raised for breast cancer awareness and research $4K+ raised for Volunteers of America’s Operation Backpack Governance We continue to believe that good corporate governance forms the foundation and framework for our long-term success. Our Board of Directors strives to maintain effective corporate governance practices that promote and protect the long-term interests of our shareholders, employees and tenants. A company’s tone is set at the top, and we are proud that many of our Board-level governance provisions are recognized as best practices. Our Directors are elected annually, subject to a majority voting requirement, and are led by an independent chairman. Our Board comprises our CEO and nine independent directors, all of whom are committed to enhancing shareholder value. Our People “ Our achievements in 2018 were made possible through the hard work and dedication of our talented employees. Our founder, Wm. Polk Carey, always prided himself on being surrounded with ‘the best and the brightest,’ and he would be proud of all that the entire W. P. Carey team has accomplished.” Our employees are our most important asset. They shape our company, propel our success and connect us with our communities. They dedicate themselves each day to fulfilling our mission and upholding our founder’s vision of Doing Good While Doing Well. With more than 200 employees around the world, we represent more than 20 countries and speak more than 25 languages. Our diverse backgrounds and experiences create a powerful advantage for our business borne from collaboration and the application of local market expertise within the context of deep global insights. —Jason E. Fox, CEO We strive to create an engaging work environment and to maintain a culture of well-being where hard work and dedication are recognized and rewarded. We understand that by investing in our people, we invest in our future and build on our long-term success. Individual Investor Relations 1-800-WP CAREY (1-800-972-2739) ir@wpcarey.com Auditors PricewaterhouseCoopers LLP Form 10-K A copy of our Annual Report on Form 10-K as filed with the Securities and Exchange Commission may be obtained without charge at www.sec.gov or by writing to our Executive Offices at the above address or by visiting our website at www.wpcarey.com. Trading Information Shares of W. P. Carey Inc. trade on the New York Stock Exchange under the ticker symbol WPC. Corporate Information Board of Directors Benjamin H. Griswold, IV Non-Executive Chairman of the Board & Chairman of the Executive Committee; Partner & Chairman of Brown Advisory, Inc. Christopher J. Niehaus Non-Executive Vice Chairman of the Board, Chairman of the Investment Committee & Chairman of the Nominating and Corporate Governance Committee; Partner, GreenOak Real Estate Jason E. Fox Chief Executive Officer Mark A. Alexander Chairman of the Audit Committee; Managing Member of Landmark Property Group, LLC Peter J. Farrell Chairman of the Compensation Committee; Partner, CityInterests, LLC Robert J. Flanagan President, Clark Enterprises Axel K.A. Hansing Senior Partner, Coller Capital, Ltd. Jean Hoysradt Former Chief Investment Officer of Mousse Partners Limited Margaret G. Lewis Deputy Chair, Federal Reserve Bank of Richmond Nick J.M. van Ommen Former Chief Executive Officer, European Public Real Estate Association Senior Management Jason E. Fox Chief Executive Officer John J. Park President ToniAnn Sanzone Managing Director & Chief Financial Officer Brooks G. Gordon Managing Director & Head of Asset Management Susan C. Hyde Managing Director, Chief Administrative Officer, Chief Ethics Officer & Corporate Secretary Gino Sabatini Managing Director & Head of Investments Executive Offices W. P. Carey Inc. 50 Rockefeller Plaza New York, NY 10020 1-212-492-1100 1-800-WP CAREY (1-800-972-2739) Transfer Agent Computershare PO Box 505000 Louisville, KY 40233-5000 1-888-200-8690 Institutional Investor Relations Peter Sands Director of Institutional Investor Relations 1-212-492-1110 institutionalir@wpcarey.com l r e d n a x e A y d n a S : g n i t n i r P ; i n o s p o J d r a h c R d n a n a y R y d n A , i o h C a n N i , e l t t i K t i K : y h p a r g o t o h P ; y n a p m o C + i s g d O : i n g s e d d n a n o i t c e r i d e v i t a e r C W. P. Carey Inc. 50 Rockefeller Plaza New York, NY 10020 1-800-WP CAREY www.wpcarey.com NYSE: WPC Follow us: The paper and printer used in the production of the W. P. Carey 2018 Annual Report are certified to Forest Stewardship Council® (FSC®) standards, which promote environmentally appropriate, socially beneficial and economically viable management of the world’s forests. 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