WP Carey Inc (WPC) 2009 Q4 法說會逐字稿

Hello, this is the Chorus Call operator, welcome to the WP Carey fourth quarter and year-end 2009 earnings conference call. (Operator Instructions) At this time I would like to turn the conference over to Ms. Susan Hyde, Director of Investor Relations. Ms. Hyde, you may begin.

Thank you. Good afternoon and welcome everyone to our fourth quarter and full-year 2009 earnings conference call. Joining us today are WP Carey's Chairman, Bill Carey, CEO, Gordon DuGan, Acting Chief Financial Officer, Mark DeCesaris, and Chief Operating Officer, Tom Zacharias. Today's call is being simultaneous cast on our website, wpcarey.com, and will be archived for 90 days. Before I turn the call over to Gordon, I need to inform you that statements made in this call that are not historic fact may be deemed forward-looking statements. Factors that could cause actual results to differ materially from our expectations are listed in our SEC filings. Now I'd like to turn the call over to Gordon.

Thank you, Susan. Good morning and thank you all for joining us. As usual, I'm going to touch on a couple of the financial metrics but Mark will get into those in greater detail, and Tom will get into some of the portfolio activity in greater detail as well. And I want to touch on some of the more macro issues relating to both fundraising climate and investment climate. As you see from our press release this morning, we're pleased with our results for the fourth quarter and for the year.

Cash flow, adjusted cash flow was up slightly to $93.9 million, from $89.4 million, and FFO on a quarterly basis was basically flat $33.8 million in '08 to $33.7 million in '09, and down just a tad for the year very steady from $124.5 million to $122.9 million. Included in the net income figures you'll see an impairment of $10.4 million. In our results -- and Mark will spend more time on that -- and overall we had a number of impairments last year totaling about $170 million across all the funds, and WP Carey. I just thought I'd make a couple of points to put that in perspective. That's on an asset base of around $9 billion. So that's the first thing that I would say in terms of perspective. And the second is that at the beginning of last year, we were concerned about corporate defaults. We did, in fact, have a number of corporate defaults in many cases that has resulted in an impairment. So Tom will talk a little bit about that outlook.

But that's the kind of sum total we feel better about the corporate default environment going into 2010, the rating agencies have reduced their views in terms of corporate defaults, and they expect corporate defaults to decline. And so we feel better today than we did a year ago in terms of those issues. In terms of investment volume, investment volume was up $548 million versus $457 million. I would say both of those are years that are lower than with a we'd like this year to be. Our internal goals are internal and not public but we certainly are hoping for a much more active year from an investment standpoint. As part of that, you see a little bit of momentum on the investment side. We are four investments we closed in the fourth quarter. And three investments that we've closed this year.

One of them that bridges both of those is a specific transaction I wanted to spend a few minutes on. Which is a slightly over more than $100 million sale leaseback that we completed in two tranches, one in December, one just recently with the company by the name of Eroski, one of the largest retailers in Spain. It' s a very large company, I want to focus in on that. But to do that, I wanted to step back and give some perspective to our European investment history, and our strategy. We started investing in Europe in 1998, before the Euro had been formed. We started with a Paris office and we -- we started by doing a number of small investments and learning our way through the European environment.

And as we think about Eroski, I think it's very telling we just completed this two tranche sale leaseback in Spain, it's our first investment in Spain. What that means is that from 1998 until December of 2009, we didn't invest any money in Spain. And that wasn't perhaps because there were no investments that we would have liked but certainly over the recent years what we found was there was so much investor demand to invest in Spain, that yields were very compressed. We didn't have attractive investment opportunities until now.

Where we had been investing since 1998 is primarily Germany, France, Poland, the Scandinavian countries, the Benelux countries and we took in large measure avoided in investing in what were the go markets in Europe of Ireland, Spain, very specifically, and so as we look at -- as we look at what's happening today in Europe and in Spain in particular, as we think about Eroski it is some of the headline news that everybody is seeing that is, in fact, creating the opportunity that we're taking advantage of today. We didn't invest in Spain in 2005, 2006, 2007, when it was overly hot, and yet we're finding opportunities to invest there.

Eroski is the leading grocery retailer in the Basque region, I think it's well publicized Spain has an unemployment rate of roughly 20%, in the Basque region it's considerably lower, still high, but considerably lower in the 13% range and Eroski has a 40% market share in this region where we decided to buy the assets we bought. What we decide to concentrate on is the market where Eroski is the leading retailer, which is the Basque market, Eroski itself is leveraged, it's not without risk even though it's a very fine company, it is somewhat levered.

We decided to focus in on what we considered to be the best assets we could find so. We started with, well, let's focus on their market where they're the dominant retailer, which is the Basque area. We decided to focus on their most productive top retail locations. As many of you know, the barriers to entry in terms of retail property in Europe are much much higher than the United States. The United States is arguably over retailed, and Europe has a much much more difficult zoning process for retail. When you think about retail there, it's a very different marketplace than it is here in the United States. We decided to focus on their top stores, their most productive stores. We bought them with the 20-year lease with Eroski. We have an attractive initial yield plus CPI escalations annually.

We bought their, what we identify to be among their most productive top stores, and so as you think about what's happening in Spain, we, in essence, are getting as close to the cash flow as we can. The stores we own, every day people use for their primary shopping, their basic-need shopping. They're coming in and out of our store. So even in a country that's having some economic difficulty, like Spain, of course the US is having its own but Spain is having its economic difficulty, as you think about what we're investing in, we're getting as close to that cash flow as we can. We're owning the most productive stores in the best region where this is the dominant retailer. And these stores are stores that are generating tremendous amounts of revenue and our rent is well covered by that revenue. And we're really getting into where the cash flow is generated.

So as you get very macro and look at Spain or the European Union, that's pretty far removed from the type of underwriting we do, which is to buy very high quality assets. The types of opportunities we're seeing, whether it's our first investment in Hungary or our first investment in Spain, are driven, in fact, by some of what's happening in terms of a lack of capital for those regions. And it gives us a tremendous amount of opportunity. So our belief is we would not have seen these Eroski assets at the pricing we've been able to achieve two or three years ago certainly, and if, in fact, a marketplace where we think there's terrific opportunity to buy very high quality assets, whether they're the logistics properties of Tesco in Hungary where we have a Tesco PLC guarantee, in both Hungary and Spain we have Euro leases, we have Euro borrowings, so we're borrowing in the Euro which is a very good long-term effective hedge.

We're hedged about 60% in those circumstances. And the Euro, we should remember with the headlines that we're all reading, is trading around 135 which is the middle of the range of where it's traded, toward the lower end, but still within the range of where it's traded over the last 18 months. So it's -- there's more stability than some of the headlines imply. We're finding some terrific opportunities to buy high quality assets. Those opportunities come about in times of greater turmoil. So that -- we have to keep that in mind that we're seeing opportunities that we wouldn't have seen two or three years ago. We also closed an investment with a JPMorgan facility that Tom will talk about in an exchange investment. In terms of other areas, fundraising, that's been a bright spot, continues to be a bright spot. In fact, we thank you all for being on our call today at 1:00. Typically we have our earnings calls at 11:00.

We moved to it 1:00 because a number of us are here in Phoenix, we're having a conference for firms that raise capital, broker/dealers that raise capital for us to national conference where we bring in people that are raising capital for us from all around the country. We're actually -- we're having this call from Phoenix, that accounts for the later starting time. We appreciate that people adjusted their schedule for the 1:00 start East Coast, rather than the 11:00. But it continues to be a bright spot from us. As you saw in the fourth quarter, we raised $141 million, that was a significant increase over the prior quarters. Given the investment volume is picking up and the fundraising continues to have positive momentum, we think those are two current trends that are moving in lock step in a positive direction.

In terms of financing availability, at this time last year we were concerned that one of our primary challenges was refinancing existing debt that was coming due across our funds. We had a very only a little bit in WP Carey, we had some in WP Carey and a number across our funds. And we were pleasantly surprised, we put a lot of hard work, did a lot of good things to refinance that debt that came due, in fact, in almost every case we had a lower interest rate on the new loan than on the existing loan. The overall interest rate picture was very good. As we go into 2010, we have a light maturity schedule for 2010. 2011 it does pick up-- it's more significant. We're seeing the availability of financing continue to improve. We have -- we know that a number of the large banks are restarting their CMBS programs, very slowly, very cautiously, but we're seeing an improved trend there.

I wouldn't jump up and down and go crazy about it, but we are seeing an improvement. And the restarting of the CMBS, the CMBS market. As we get into 2010 our goal is aggressive growth in assets under management. We've talked in the past about the -- one of my favorite Warren Buffet quotes that one should be afraid when others are greedy and greedy when others are afraid. I don't love the word greedy, but it's Warren Buffet's quote and that's good enough. But what we found what we shut down fundraising for most of '05, '06, '07, is we were again obviously being afraid at a time when others were being excessively greedy. By doing, so we've given ourselves the ability to be aggressive today by -- because we're dealing with fewer legacy issues. We didn't have a lot of the problems that many others have had by avoiding the pitfalls of the top of the market-- avoiding the pitfalls of the top of the market.

So now we're being more aggressive. We have been, we talked in the last couple calls about being on the offense, being growth minded, that's where we start heading into 2010, trying to put the pedal to the metal on that. We do have some headwinds. We said in the past calls as we have lease renewals in some cases we're seeing a step down in our rents, and there are a number of causes of that. But that's a general trend that we're -- that's impacting us, another headwind is we have some leases maturing this year that we know the tenants won't renew. We're going to have to replace those tenants or sell the properties. And Tom will talk about a very slight decrease in NAV's coming into this year. On the upside we think it's a great time to grow assets under management. The fundraising and investing trends are positive. So that should bode well for us, that's at the top of our list in terms of goals nor this year.

Then adding assets to replace some of the burnoff in lease revenue, last year we had the "New York Times," this year we've added JPMorgan. We have to add assets directly or indirectly into the funds but the key word is adding assets, growing assets either direct ownership or assets under management. That's what we need to do going into this year. As we think about where we are, I think there's a sort of palpable momentum that we feel carrying over from the end of '09 into the beginning of '10, both from an investment backlog standpoint we're seeing good activity and a good backlog, obviously the fundraising trends we've touched on are good. We feel very good about our momentum heading into the beginning of this year. We'd like to get more deals closed.

We are very focused on growing AUM, and that's where -- that's where our focus and my focus is, is finding good investments, getting them closed as we head into 2010 and we feel good about the momentum that's carrying over from the end of '09 and into '10. I don't think that momentum is going to get cut back very much even if we have a reversal in the economy or some other -- because obviously we don't have a crystal ball to the future. But I think there's a good underlying momentum that carries us into this year. And our job is to focus on that and execute on that. So with that, I'll turn it over to Mark to discuss the financials in detail.

Well, thanks Gordon and good afternoon everybody. In this morning's earnings release we reported results where FFO is basically in line with the prior year. And we're slightly ahead on an adjusted cash flow basis. We break FFO out between our net lease segment and our investment management segment, and if you looked at our results, you'll see that in the net lease segment FFO is down approximately $8 million on a year-to-date basis. This variance was primarily due to the recognition of approximately $7.5 million in lease termination revenue that was picked up in December of 2008. On a comparative basis, our lease revenue was even year-over-year.

While we saw a reduction in rents due to lease renewals and amendments, we also acquired an equity ownership in the "New York Times" asset which offset that reduction. During 2009, we sold a total of five assets for a total proceeds of approximately $44 million, recorded a net gain on sale of approximately $7.7 million. In February of 2010 we took those proceeds and reinvested in an asset that we purchased roughly $47.5 million, which generates approximately $4 million in annual rents and has a 20-year lease associated with it. While we continue to focus the growth of the Company on the investment management segment, we also understand the cash flow that's generated out of our portfolio of these net leases and will work towards maintaining that cash flow as we work through the leases coming due over the next several years. In our investment management segment, investment volume for the year totaled approximately $447 million versus $457 million in the prior year.

We structured approximately $507 million in volume on behalf of the CPA REITs, $153 million of that in the fourth quarter of this year, and that accounted for an increase in structuring revenue of approximately $3 million over the prior year. In addition, this year, we began to recognize a benefit of the CPA-17 structure this year and just give me a moment to walk you through that. CPA-17 we modified our structure to replace one half of the annual management fee that we have historically received in other funds with a 10% interest in the cash flow of CPA-17 that benefit is difficult to understand in our GAAP financial statements,, we do recognize 100% of the benefit in both our FFO and adjusted cash flow matrix. In 2009 we received approximately $2.2 million in distributions as a result of this interest, and the primary benefit is that we're able to receive it in a very tax efficient manner.

CPA-17 becomes fully invested, I would not expect our manager revenues reported under GAAP to grow as fast as it has historically, but our after tax cash flow and as a result, both FFO and adjusted cash flow will benefit from this structure. We continue to have strong dividend coverage on this metric with approximately 155% coverage ratio from an FFO standpoint. In our adjusted cash flow, we continue to focus this on a key metric to evaluating our dividend, the primary difference in this metric is it includes distribution that is we receive on our investments accounted for under the equity method of accounting. These investments include the "New York Times" and the CPA funds. To the extent that the distributions received off these investments exceed the income, they are excluded from GAAP cash flow from operations. We included in our adjusted cash flow. Adjusted cash flow from OPS increased about 5% to $93.9 million for a coverage ratio of 119%. The reasons for this include taking a higher percentage of our fees in cash from some of the CPA funds, a more efficient tax structure, and increased investment volume.

As Gordon mentioned, we noted in the press release, we took impairment charges of approximately $170 million which accounts for less than 2% of the total asset base. These charges have had a significant impact on our reported net income. What I would tell you is that we typically see the impact -- what impacts us is the tenant's ability to pay the rent which impacts both our adjusted cash flow and our FFO metric. We typically see that impact before recognizing the impairment charge. So while net income was impacted significantly, we took impairments of roughly $10.5 million on our own portfolio and our share of the impairments taken out of the CPA funds accounted for another $11.5 million. We received approximately $14.2 million in distributions from the equity ownership in the funds. That's an important source of cash for us and we look at the coverage ratios of the CPA funds to determine the stability of that cash flow

At the end of the last quarter, we had coverage ratios from both FFO and adjusted cash flow in the CPA funds ranging from 113% to 136% on the three CPA funds that are fully invested. Just a few points on our balance sheet. Our total debt-to-market cap ratio is roughly 21%. Our unsecured debt-to-market cap ratio is approximately 7%. We have approximately $11.6 million of nonrecourse debt coming due in 2010 so we're positioned very well from a balance sheet standpoint as we move forward here.

In summary, I think our year-to-date results, I'd summarize them by saying relatively flat from an FFO standpoint, slightly increased from an adjusted cash flow standpoint. They were achieved in a very challenging environment, we were able to refinance all of our 2009 nonrecourse mortgage debt that was coming due We were able to replace a lease revenue reduction with a coinvestment in "New York Times" as well as the asset we purchased in early 2010 and capital inflows for CPA17 continue to increase on a quarter-over-quarter basis. And we've had a solid development of new deals in the pipeline. With that, I'd like to turn the call over to Tom Zacharias, our Chief Operating Officer.

Thank you, Mark I would like to provide now a brief portfolio report for the fourth quarter and the year-end for the Public Company, and then for the four CPA funds. As Gordon mentioned, we currently anticipate a slowing of tenant defaults in the portfolio in 2010. Generally, the credit quality of revenues of each portfolio has been improving over the balance of 2009.

While we had 14 tenants enter bankruptcy out of the over 275 tenants we have in 2009, we are fortunate that we have these large diversified portfolios and any negative impacts from a tenant default can be absorbed by the large pool of performing tenants and their continuing rent increases. For the LLC portfolio, at the end of the fourth quarter of 2009, occupancy was approximately 94%. Total lease revenues including our pro rata share of equity investments was essentially flat and $95.5 million in 2009. There were declines of $5.2 million in real estate lease revenue for the 12 months, that ended December 30, 2009, but that was offset by the $5.8 million increase in income from new equity investments in real estate such as our "New York Times" investment.

As Mark mentioned, we just completed the acquisition of the operations tenant leased to JPMorgan, Dallas, Texas, for $47.5 million. We used proceeds from the sale of a large asset in a 1031 exchange. This is was a very tax efficient way to up grade the quality of the real estate revenue in the Public Company and extend the average lease term. We anticipate that we will complete additional such investments on a part of the Public Company as we maintain and improve the quality of the real estate revenue over time. The percentage of lease revenue expiring the LLC portfolio on a pro rata basis is approximately 10% in 2010, 10.5% in 2011 and 8% in 2012. We are working with roughly 20 tenants now to arrange renewals for each of these upcoming lease expirations, as well as replacement tenants or sales to users as necessary. Due to the active lease renewal program over the last two years, we have significantly reduced our lease roll-over exposure.

Historically, we have been achieving renewals of approximately 80 to 85% of our tenants through this aggressive renewal program. However, in 2010 we currently expect that several tenants will not be renewing and will cause a decline in occupancy until the facilities are released or sold. Gordon also mentioned we have a light maturity schedule on our mortgage debt. We completed all the mortgage financings in the Public Company in 2009, in 2010 we're down to about $9.4 million of mortgage debt to refinance and it increases slightly in 2011 to $47 million, in 2012 $20 million We have a very good track record in refinancing these loans. which are generally 50% of the value of the asset and a at a size of 5 to $10 million. On the liability side we're well-positioned as a Company with very little mortgage debt to refinance over the next three years.

In summary, for the LLC portfolio, there are not significant lease expirations or mortgage maturities for the Public Company in 2010, we do not see significant risks in 2011 or '12. For the CPA funds,as of December 31st, 2009, the occupancy rate on the 92 million of owned square footage was approximately 97%. We have a rental increases in CPA funds approximately 2 to 3% over the last 12 months, these serve to mitigate the effects of leases rejected at bankruptcies, or reduced rent from restructured leases and workouts. The CPA funds, the total amount of mortgage debt to refinance in 2010 is $90 million across 17 loans, again, small average size, low, 50% LTV. We have very good track record in doing this. It does increase to approximately $30 million in 2011 but again, as largely small loans and moderate loan to value.

Not significant lease maturities in the CPA funds, the high occupancy of these long lease terms are a contributing factor to the stable valuations for these funds. The third-party appraisal process is nearing completion for CPA 14, CPA 15, and CPA 16. With (inaudible) of these expected to be released in mid March. At this point, the expectations that NAVs will be down slightly, which is a strong outcome in this environment. In summary, 2009 was a very active year for the portfolio -- from a portfolio management side. With a high volume of lease renewals, asset sales, mortgage refinancings, and lease restructuring. We are pleased with what we were able to accomplish. We thank you for your support as our investors. Now, I would like to turn the call over to our Founder and Chairman of the Company, Mr. William Poke Carey

Thank you very much. This is William Carey, we have had an extraordinary record all throughout the economic turmoil now. All of us will keep working hard. Times will change and we will try to adapt to the changes and continue to out perform other investment vehicles and other competitors. Thank you to our investors (inaudible) Thank you very much.

Wonderful, thank you. Now that our presentation this morning has concluded, we'd like to open the call up for a Q&A session.

Thank you. (Operator Instructions) Our first question is from David West from Davenport & Company, please go ahead.

Good afternoon, or I guess good morning in Arizona.

Hey, David.

Just a couple odds and ends, first I was wondering, could you comment at all in terms of fundraising activity and success in Q1 thus far, since we're almost two months into it, you showed nice progress over the course of 2009, just wondering to get some sense is that continuing, in the early months of 2010?

The momentum is continuing very positively into the beginning of 2010.

All right. Very good. And wondered if you could maybe comment a little bit regarding the occupancy levels have dipped a little bit, particularly the on balance sheet number there. Is that increase concentrated in any particular property type or geography?

David, hi, it's Tom Zacharias Interesting enough, it's down by 1% and that's because we sold a large asset, the amount of vacant space is about the same.

The denominator is smaller.

Okay, very well.

We've got some activity on that that we've been working very hard.

Curiously -- be curious on a little more detail, the JPMorgan OP center transaction was very intriguing, you mentioned you used a 1031 exchange process. Did you have to use any financing relative to that deal?

We didn't. It was -- we just used proceeds from the exchange, plus some of our -- the W.P. Carey capital. When I say we didn't, I mean we didn't finance that property right away. It's very financable, as you can imagine, but we did draw down on our line of credit a bit to plug the gap between the 1031 exchange and the purchase price.

And Tom's comments, you mentioned when you say similar type transactions, are you referring specifically to additional 1031-type transactions?

Or any assets that we might buy on our balance sheet. Typically what we've done, a lot of our investments have been in joint venture with the funds where we take a small portion of the -- of a large transaction helps the fund achieve diversification. And then we get to rebuild our lease revenue by investing in that asset. So my anticipate -- if I were to guess, I would say that most of it will be done as a coinvestment with the funds that are investing. And we do that on a pari pa sue basis, heads-up, same economics between the funds and W.P. Carey.

Thanks very much.

(Operator Instructions) Our next question is Andrew DiZio from Janney Montgomery Scott.

Good morning.

Good morning.

Can you give us a little color around the assets that you sold as far as why you sold it?

It was a facility, a very nice building leased to Detroit Diesel out in Michigan, Detroit, which is now Daimler Trucks North America. They make engines there. And it was not a facility that they were going to renew and they were in violation of a covenant that the remedy was that they would -- we could force them to buy back the facility, which is what we did and they were doing a bit of a cleanup at year-end of their issues and we were successful in negotiating this transaction quite quickly. We put the proceeds, which were about $36 million, into a 1031 exchange.

Okay. Thanks. And then can you remind us of, if you have any obligation to show an investment like that to your funds first or because it's a 1031 is that why were able to do it on balance sheet?

Well, there's a suitability issue as to what investment goes where. And we identified three investments as possible replacements, and we have a very active pipeline and this was the one that we ended up closing on.

The, generally speaking, the rule is the funds get right of first refusal on all deals. And the exceptions where W.P. Carey has invested is where we have a 1031 need.

Okay, thanks. Just lastly looking at your acquisitions, you've been pretty active in Europe. Can you comment at all about if that changes the effects of (inaudible) leaving?

We've been very active in Europe over the last five years, we expect to continue to be very active. I think one thing we haven't done a great job of is -- our focus is to build the team in Europe and our presence in Europe. We've been active, we've done a good job, but we'd like to step that up. So our focus today is to -- is going to be on building our presence in Europe. We're very excited about that. We expect that to continue to be a very active area for us.

Okay. And then just lastly, I think I ask you this every quarter, how was your focus on Asia looking?

We haven't made any real substantive progress in Asia as a general rule. So I would keep -- I'll keep my answer the same, which is I keep expectations very low.

Okay, that's fair. Thank you.

Thank you. (Operator Instructions)

Okay. If we have no further questions.

One moment, sir. We have another question. One moment, please

Great.

The next question comes from Michael Beal from Davenport, please go ahead.

Sorry about the shot at the buzzer.

It was like a Colombo move, Mike

Well, we'll make the quick.

You have as much time from us as you want.

You mentioned the debt, for instance, in Spain that you have on the properties themselves, are denominated in Euros, that's sort of a natural hedge. Just out of curiosity, you mentioned the grocery tenant was pretty levered. Do they have their debt in Euros or other currencies?

Most of their debt is in Euros, they have large amount of bank debt, and mostly to Spanish banks.

That's what gets things in trouble sometimes is when they have a currency other than their own where their debt is. That's good to hear.

Yes.

And just a little bit of color on the rate of return you might see on a deal like that one. I know the "New York Times" deal was maybe a once in a lifetime opportunity, and they do have that option back, but just talk a little bit about the rates of return we're seeing out there, and maybe use the Spanish example?

We're seeing cap rates in Europe in the 7.5 to 9.5% range and the Spanish one was in the middle of that, maybe the lower middle. And in the U.S. we're seeing cap rates of 8 to 10%, a little bit higher reflecting a couple of different things. But those returns are higher than where they were two years ago but lower than probably where they were 12 months ago. But not much was happening 12 months ago.

So when you net the debt cost --

And when I say the return, that's just the -- that's a the initial yield, and then you escalate that by the CPI over the -- you get an annual escalation based on the change in the price index.

Okay. That's good.

If you were to straight-line it, approximate, take a guess for the CPI, it's probably -- those are -- those cap rates are 10 to 12 or something like that as a range.

Speaking of the CPI, CPI in escalation aren't necessarily the same. I mean, can you just talk about the impact of having a negative year-over-year CPI and the sensitivity of your portfolio to a period that have sort of price --

Our leases don't adjust down for a drop in the CPI. If we have a cumulative CPI, the one year of negative CPI could hurt us for a three-year period. The leases by their terms don't decrease, with one exception. By law in Germany, they do decrease by CPI. And we've said, I probably should have mentioned a slight headwind is for the next year or so, we're not going to see very big CPI increases. But as Tom mentioned, last year we had 2 to 3%.

Interesting, Mike, we just checked this because we have the January numbers. The January increase over last 12 months was about 2.5%.

Higher than I was expecting.

Which isn't what you would expect, we double-checked it and triple checked it. There was some moderation and it's come back over the last 12 months.

Okay. Well, thank you all very much.

Thanks, Mike

Thank you. This concludes the question-and-answer session for today's conference. We'll now turn the floor back over to Ms. Susan Hyde for any closing remarks.

Thank you so much. We just wanted to remind you all that a replay of the call will be available after 4:00 p.m. today. The number is 877-344-7529, pass code is 437628, we have it available on our website as a pod cast. So thank you again for joining us today and we look forward to speaking with you again next quarter.

Again, the replay information is to dial 1-877-344-7529, enter the code 437628. Thank you for attending today's W.P. Carey fourth quarter and end of-year 2009 earnings conference call. This concludes today's event.