GLOBAL Investment Research Challenge Jorge Barreiro Jesse Cohen - PowerPoint PPT Presentation

GLOBAL Investment Research Challenge Jorge Barreiro Jesse Cohen Elizabeth Moore Sylvie Nappey Benjamin Schmid

Recommendation: Buy at $29.92 Close as of 4/ 29/ 07 • NAV is $48 per share – 57% upside from current price • At 11 times FFO, WPC is priced like a capital intensive REIT • Excellent potential for WPC to expand at a 35% growth rate in Europe • Predictable, recurring fees from retail investors in managed funds • Non-executive chairman holds 30% of the shares. • Price Weighted Target : $38 2

Company Overview W PC Owned Commercial Asset Management Real Estate AUM ($B) •112 tenants •197 properties 3

Tenant Surveys and Market Research • Survey of Regional Commercial Real Estate Brokerage Managers • Analyzed Credit Ratings of All 370 Carey Tenants • Interviews with Carey Tenants • Third Party Market Research - Real Capital Analytics, Cap Rates - NAREIT ReitWatch - Fitch Ratings 2008 REIT Scorecard - King Sturge 2008 European Market Outlook - CB Richard Ellis Global Market Rents - S&P/ GRE Commercial Real Estate Indices Methodology - Jones Lang LaSalle IP 4

Valuation Overview Dividend Net Asset Value Sum-of-Parts Discount Model 5

Deep Discount to NAV • WPC’s stock is substantially undervalued relative to NAV • Based on a 6.6% cap rate, WPC’s properties are worth $48/ share • Comparable REITS are trading at a 16% discount to NAV • Large margin of safety in WPC’s valuation 6 Sources: Real Capital Analytics; Rutgers Business team analysis

Trades like a REIT, but it’s not FFO/Share - $2.87 WPC Multiple - 10.5x Sum-of-the-Parts Real Estate Investment Ownership Management FFO/Share -$1.51 EPS - $1.29 Multiple - 10.7x Multiple - 15.8x $ 3 6 $16.17 $20.34 7 Source: Rutgers Business team analysis

Valuation Overview Dividend Net Asset Value Sum-of-Parts Discount Model $40 $36 $40 25% 50% 25% $ 3 8 8 Source: Rutgers Business team analysis

European Growth Opportunities 2002 – European 2002 – US Commercial Real Estate Commercial Real Estate Owner Occupied Private/Public 9 Source: “European Real Estate Ownership Structures,“ Jones Lang LaSalle, April 2002

Carey’s Investment Volume – Shift to Europe E E 10 Sources: WPC-Annual Reports, Rutgers Business team forecasts

Pending Changes in French Legislation “ Loi Raffarin” • Stimulate new construction and increase demand for real estate financing • Well positioned with strategic partners to capitalize on growth 11

High Return Investment Management Business • Pre-Tax ROE of 37% • $8.4 billion in AUM • Customers (managed fund investors) are locked in for ten years • Historical returns to fund investors of 11.6% • WPC is raising fees 12 Source: WPC Annual Reports

Potential External Catalysts • Wm. P. Carey, Founder – Non-executive chairman • 30% + ownership • Potential acquisition target – Unlocking value – $1.2 billion market cap 13 Source: WPC Annual Reports

Investment Risks – US Credit Crunch Turbulent Credit Markets CMBX – BBB Index • Underleveraged • Low Historical Default Risk • Limited Obligations • Attractive Credit Facility 14 Source: Markit

Investment Risks – Funding New Deals Ability to Raise Capital ? Dry Powder ($500 M) Yield Starved Retail Investors 15 Source: CPA-14, CPA-15 & CPA-16 Annual Reports

Recent Developments • New property acquisitions - Berry Plastics ($87M) - Best Brands ($50M) - Mantsinen Group ($18M) • New Hotel REIT - Watermark Capital partnership - $2-3 per share value over 3 years 16

S umm ary • Deep Discount to NAV • Trades like a REIT, but misunderstood • Growth Opportunity in Europe • Customers locked in for 10 years • Potential to be acquired Compelling Buy 17

Appendices • Slide 19 - Comps- Real Estate Management • Slide 20 - Comps- Investment Management • Slide 21- Sum-of-the-Parts I • Slide 22- Sum of Parts II • Slide 23- DDM • Slide 24- NAV • Slide 25- CPA Fee Increase Impact • Slide 26- Forecasted Acquisitions • Slide 27- Sale-Leaseback Structure • Slide 28- Risk, Currency • Slide 29- Risk, Inflation • Slide 30- Risk, Tenant Defaults • Slide 31- Credit Rating • Slide 32- Geographic & Sector Analysis • Slide 33 - WPC – Industry Positioning – Pie Charts • Slide 34 – Hotel UPREIT- Impact on EPS 18

Comparab le s – Real Estate Management Price as a Multiple of: Price as of 52 Week Market Enterprise Dividend Dividend Funds From Operations FFO FFO Growth Company Ticker 3/11/08 Low High Value Value Yield Payout Ratio 2008E 2009E 2008E 2009E 2008E 2009E REITS & Real Estate Management Boston Properties BXP $ 86.16 $ 79.88 $ 120.51 $ 10,296 $ 15,146 3% 60% 4.63 4.93 18.6x 17.5x 2% 6% Brandywine BDN 15.94 15.16 35.19 1,384 4,657 11% 68% 2.51 2.58 6.3x 6.2x (3%) 3% Duke Realty DRE 21.23 20.50 45.40 3,091 8,410 9% 71% 2.71 2.85 7.8x 7.5x (1%) 5% General Growth GGP 32.73 31.00 67.43 7,983 33,208 6% 57% 3.61 3.93 9.1x 8.3x 3% 9% Kimco KIM 33.22 29.00 51.42 8,398 13,238 5% 62% 2.71 3.01 12.2x 11.0x 5% 11% Prologis PLD 51.66 50.10 73.35 13,334 24,229 4% 46% 4.81 5.23 10.8x 9.9x 6% 9% Simon Property SPG 82.14 74.80 118.25 18,320 37,600 4% 62% 6.44 6.97 12.8x 11.8x 11% 8% Vornado VNO 85.92 77.39 125.47 13,178 26,825 4% 59% 6.03 6.54 14.3x 13.1x (2%) 8% WP Carey WPC 30.73 25.79 36.86 1,208 1,550 6% 56% 2.95 2.97 10.4x 10.4x (12%) 1% Capital Lease LSE 8.81 6.85 12.21 391 2,091 9% 79% 1.08 1.12 8.1x 7.9x 6% 3% Lexington Corp LXP 15.40 12.01 22.73 981 3,952 9% 72% 1.57 1.65 9.8x 9.3x (14%) 6% One Liberty OLP 16.59 16.00 26.13 168 366 9% 77% 1.98 NM 8.4x NM 6% NM National Retail NNN 21.30 19.87 25.95 1,545 2,617 7% 76% 2.00 2.10 10.7x 10.1x 7% 5% Realty Income O 24.13 20.27 30.70 2,444 4,013 7% 87% 1.97 2.07 12.3x 11.7x 4% 5% Amer Finance Rlt AFR 7.40 6.17 12.25 951 2,917 10% 109% 0.75 0.74 9.9x 10.0x 7% (1%) Gladstone Comm GOOD 15.64 14.75 22.90 134 422 10% 108% 1.51 NM 10.4x NM 8% NM Brookfield Asset BAM 28.66 25.20 43.82 17,397 53,056 2% 16% 2.24 2.48 12.8x 11.6x (31%) 11% Average 7% 72% $2.95 $3.33 10.7x 10.4x 2% 6% 19 Source: Company Documents, Yahoo!Finance, Student Estimates

Comparab le s – Investment Management Assets EV/ Price/ Price as of 52 Week Market Enterprise Under Dividend AUM EPS EPS Company Ticker 3/11/08 Low High Value Value Management Yield 2007 2008E 2009E 2008E 2009E Asset Management Cohen&Steers CNS 23.86 21.01 56 950 873 29,800 3% 3% 1.56 1.84 15.3x 13.0x Greenhill & Co. GHL 62.58 47.14 76.98 1,745 1,587 0 3% NM 4.16 4.78 15.0x 13.1x Blackstone Group BX 16.19 15.25 38 4,113 23,190 91,769 2% 25% 1.35 1.93 12.0x 8.4x T. Rowe Price Group, TROW 49.93 44.72 65.46 13,170 12,334 400,000 2% 3% 2.61 3.05 19.1x 16.4x BlackRock, Inc. BLK 188.16 139.2 231.99 24,169 23,503 1,357,000 2% 2% 9.42 10.99 20.0x 17.1x Legg Mason Inc. LM 63.96 63.75 106.36 8,623 9,054 998,000 2% 1% 4.83 5.01 13.2x 12.8x WP Carey WPC 30.73 25.79 36.86 1,208 1,550 8,400 6% 18% 2.08 2.10 14.8x 14.6x Average 2.19% 6.78% $3.72 $4.24 15.8x 13.5x 20 Source: Company Documents, Yahoo!Finance, Student Estimates