Peter Sands - Director, Institutional Investor Relations Trevor Bond - CEO Jason Fox - President & Head, Global Investments Hisham Kader - CFO Katy Rice - Senior Managing Director.

Paul Adornato - BMO Capital Markets Dan Donlan - Ladenburg Thalmann Nick Joseph - Citigroup Chris Lucas - CapitalOne Securities Sheila McGrath - Evercore.

Welcome to the W.P. Carey Second Quarter 2015 Earnings Conference Call. My name is Lauren and I will be your event specialist today. [Operator Instructions]. It is now my pleasure to turn today's program over to Peter Sands, Director of Institutional Investor Relations. Mr. Sands, please go ahead..

Good morning everyone and thank you for joining us on this conference call to review our 2015 second quarter results. An online rebroadcast of this conference call will be made available in the Investor Relation section of our website at wpcarey.com, where it will be archived for approximately 90 days.

I would also like to remind everyone that some of the statements made on this call are not historic facts and may be deemed forward-looking statements. Factors that could cause actual results to differ materially from W.P. Carey’s expectations are provided in our SEC filings. And with that, I will hand the call over to Trevor..

Thank you, Peter. Good morning everyone. As a result of the new management responsibilities we have recently used I'm joined today my several of our senior management team and so I will start with some introductions. We have Jason Fox with us, Jason was recently named President in addition to his role as our Head of Global Investments.

Hisham Kader is here too he was recently appointed CFO and had served as our Chief Accounting Officer since 2012. Katy Rice was promoted to Senior Managing Director in a newly created internal advisory role focused on how we can better delineate between our core businesses with the ultimate objective of remarking shareholder value.

Also with us is Jeremiah Gregory, who many of you will have met in our investor outreach meetings, Jeremiah was Head of Capital Markets.

So it's a larger group than we have had on recent calls, given their considerable experience and important involvement in the company as well as the different perspectives that they provide we thought it would be helpful to happen during the call.

I will now briefly review our owned real estate portfolio before handing off to Jason about the new investments we made during the quarter as well as the market backdrop. Following that I will update you on our investment management business and Hisham will discuss our second quarter financial results and balance sheet.

So I will start with some of the headline numbers. For the 2015 second quarter we generated adjusted funds from operations or AFFO, of $139 million or a $1.31 per diluted share for 2014 second quarter and 7.4% compared to the $1.22 per share generated in the 2015 first quarter.

During the second quarter we raised our quarterly dividend in $0.954 per share marking our 57th consecutive quarter increase and equivalent to an annualized dividend rate of $3.82 per share based on yesterday's closing stock prices represent the dividend of yield of about 6.2%.

Turning to our owned real estate portfolio which is of course our core business, at the end of the second quarter the company's owned real estate portfolio consisted primarily of 852 net properties comprising 89.3 million square feet leased to 217 tenants. At quarter end approximately 64% of annualized base rent came from our U.S.

properties and about 33% from our European properties. Portfolio occupancy remained high in 98.6%, we remain focused on expanding our weighted average lease term that at the end of the second quarter stood at 9.1 years.

This is about six months longer than at the end of the 2014 second quarter as a result of the acquisitions and capital recycling we completed over the last 12 months.

Approximately 95% of our annualized base rent came from leases with contractual rent escalations, have been linked to CTI or through fixed rent increases providing built in revenue growth and since they are a triple net leases, tenants are responsible for their cost associated with operating and maintaining the property so we have virtually no exposure to rise in operating expenses.

As you may recall last quarter I spoke about same store rent growth and releasing activity, I'm pleased to say that as part of our ongoing effort to enhance our disclosure we have added this information in more detail in our supplemental which you will find on pages 27 and 28.

Looking at our same store rent growth, rents were approximately 1.4% higher compared to the year ago quarter. Please note this analysis excludes any properties acquired, sold or vacated or subject to lease modifications during the 12 month period and it's also on a constant currency basis to enable comparability.

Regarding releasing activity, one lease was renewed during the second quarter which had 100% of then prevalent rent, we also entered into one new lease for the lease term of nine years. Please note that in the aggregate as releasing and new leasing activity represented less than half a percent of our portfolios total square footage.

Clearly a very small component of our overall portfolio. We have nine leases expiring in the remainder of 2015 representing about 1.5% of annualized based rent which is factored into our 2015 AFFO guidance and now I will hand over to Jason to talk briefly about our recent acquisitions and the market backdrop..

Thank you, Trevor and good morning everyone. During the second quarter we completed two acquisitions for our owned real estate portfolio totaling approximately $51 million, which brings total on-balance sheet investment volume for the first half of the year to approximately $446 million.

Both transactions were in Europe and both exemplified the types of deals we look for, strategically important real estate, net lease to high quality companies on long term uses built in rent growth. In April, we acquired a retail hypermarket in Garden Center in Austria for approximately $25 million.

It's net leased to a subsidiary [indiscernible] which is a well-known German do it yourself realtor with operations in nine countries and has an excellent track record of growth and profitability.

The facility is well-located on a major highway and has a long term importance to the tenants business underscored by the fact that shortly before we acquired the property the renewed lease for a new 15 year term. The leads also provide a built-in rent growth through annual CPI based rent escalations.

In June we acquired a logistics facility in Sweden for approximately $26 million net leased Scania one of the world's leading manufacturer of commercial vehicles particularly heavy trucks and buses. Again this is the high quality, well-established tenant that also has investment grade ratings from both S&P and Moody's.

It is critical facility for Scania strategically located on a key highway route connecting several major Swedish cities to mainland Europe. The Class A building is purposely built for Scania to provide logistic support for one of it's main manufacturing plants that was currently -- recently underwent an expansion.

The 15 years remaining on the lease the transaction is additive to our rated average lease term and provides built-in rent growth to annual rent escalations based on uncapped CPI.

Acquisition to our own portfolio during the second quarter had a weighted average cap rate of approximately 6.5% and a weighted average lease term of approximately 15 years.

For the first half of the year, acquisitions from our owned portfolio had a weighted average cap of approximately 7% and the weighted average lease term of approximately 14.5 years. Second quarter disposition activity was fairly light totaling approximately $11 million bringing total dispositions for the first half of the year to $25 million.

We expect further capital recycling this year in-line with the $100 million to $200 million target range factored into our AFFO guidance with the focus on extending lease term, improving credit quality and increasing asset criticality within the portfolio.

Turning briefly to the investment environment, in United States it remains very competitive as interest rates have moved up without [indiscernible] flowing through to increased assets level yields. Ultimately however if interest rates continue to rise we would expect that it will be reflected in higher cap rates.

In Europe, the investment conditions remain more favorable given higher cap rates and lower debt cost than here in the U.S. In fact all of our on-balance sheet acquisitions during the first half of the year were in Europe, as were in the UK, the Netherlands, Austria and Sweden, capitalizing on just relative spread.

However competitions for deals in Europe has continued to pick-up through a combination of U.S. capital following into the region and European investors continuing to come off the sidelines. With that I'm going to give it back over to Trevor..

Thanks, Jason. Turning briefly to our investment management business, we do continue to make progress with our strategy of diversifying and expanding the products that we offer through our investment management platform.

In May, our second non-traded REIT focused on lodging which had a carried watermark investors too, broke ESCROW which enabled it begin admitting new shareholders and it's initial public offering of upto 1.4 million.

Our investor inflows to-date was around 34 million, also please note that since quarter end we launched our first non-traded business development company or BDC which is called carry credit income funds. And then I will hand it over to Hisham..

Thank you, Trevor and good morning. Let me briefly review AFFO and our key leverage metrics before turning it back to the operator to take questions.

Let's begin with AFFO, our merger with CPA 16 closed during the first quarter of last year, consequently this is the first quarter for which both periods in the year-over-year comparison includes the properties required in that merger and will be the focus on my remarks.

As Trevor, noted earlier we generated AFFO of $1.31 per diluted share up 8.3% compared to the $1.21 for the 2014 second quarter. This increase was driven by a three key factors.

First within our investment management business growth in assets under management resulted in both higher asset management fees and higher distributions of available cash from our interest and the operating partnerships of the managed REIT. Second, structuring revenue increased due to strong acquisition activities on behalf of the managed REITs.

As early, the asset we acquired for our real estate portfolio since the year ago quarter had a positive net impact on AFFO. These factors were partly offset by the impact of a stronger U.S. dollar relative to the euro, net of gains realized through our currency hedging program.

In addition to the disclosure enhancements that Trevor mentioned, we have also added some details regarding capital expenditure. You will find this on page 11 of our supplemental. In particular it provides a great [indiscernible] REIT.

In particular it provides a great [indiscernible] CapEx with tenant improvements, leasing cost, and maintenance versus non-maintenance CapEx [indiscernible] business project in Germany. We believe that it is helpful them in providing investors with a better sense of CapEx that is recurring in nature versus non-recurring CapEx.

And as you will see recurring CapEx was a relatively small number about $1.6 million for the quarter. Turning to AFFO guidance, first and foremost I want to caution that our second quarter AFFO is not a run-rate for the remainder of the year particularly given the strength of restructuring revenue during the quarter.

For the 2015 full year reaffirming our AFFO guidance range of $4.76 to $5.02 for diluted share. This assumed acquisition for W.P. Carey balance sheet totaling approximately 400 million to 600 million and dispositions of between 100 million and 200 million. It also assumes acquisitions on behalf of the managed REIT of between 2 billion and 2.5 billion.

During our recent earnings call we have spoken about the theoretical impact of the decline in the euro on our AFFO guidance. On our fourth quarter in February we noted that if the euro had gone to parity with the U.S.

dollar on January 1st, and stayed there all year, we would expect our full year 2015 AFFO for diluted share to be reduced by approximately $0.07. Last quarter we updated that analysis, noting that if the euro had moved to parity with the U.S.

dollar at the start of the second quarter and remained there for the rest of the year, we would expect an approximately $0.05 reduction in 2015 AFFO per diluted share. If we roll that analysis forward and assume the euro had gone down to parity with the U.S.

dollar at the start of the third quarter we would expect it to reduce our full year 2015 AFFO per diluted share by about $0.25, as the midpoint of our guidance range which was equivalent to a reduction of about 0.5%. Clearly the potential impact of further euro weakness on our full year AFFO guidance has declined since the first quarter.

This reflects both the actual euro and U.S. dollar exchange rate as the year has progressed and the effectiveness of our hedging strategy. Turning to our balance sheet and leverage metrics, at the end of the second quarter our pro rata net debt to enterprise value stood at 40.9%.

Total consolidated debt to gross assets was 48.9%, and pro rata net debt to adjusted EBITDA was approximately 5.2 times. We continue to view our near term debt maturities as very manageable with approximately $163 million maturing over the remainder of 2015, and $260 million maturing in 2016.

At quarter end the weighted average cost of our pro rata non-repo debt was 5.4%, and our overall weighted average cost of debt was 4.2%, the majority of our debt maturing over the next few years is secure debt at interest rates that we believe are above where we could issue unsecured debt today.

Although interest rates may move higher, we still believe there is a significant cushion between the higher rate that we are currently paying on secured debt, maturing over the next few years and the lower interest rates that we would expect to pay on newly issued unsecured debt.

Lastly as of beginning of June we filed a prospective supplement enabling us to issue upto $400 million of common stock, under an at the market or ATM program. To-date we have not issued any shares under this program.

Like most of the REITs we believe that it's beneficial to have an ATM program in place as it provides us with the flexibility to raise small amounts of equity capital efficiency should the need arrive. And with that I will turn it back to the operator for questions..

[Operator Instructions]. Your first question comes from the line of Paul Adornato from BMO Capital Markets. Your line is open..

Was wondering as you review the lines of business if you considered separating international operations in one way or another and if so was wondering what forms that might take?.

As you know we have -- Katy has assumed a new role which will look at that question within the broader context of each of our core competencies and we do think that we have three primary core competencies one of which is the European platform, the other of course the U.S.

net lease and the third the investment management platform and I think -- why don’t I turn it over to Katy to talk a little bit about what her role is going to be in helping us, rather than do a specific answer with respect to that particular platform..

Let me just step back quickly and just to give some context of this a little bit. We have accomplished a lot over the past 2 or 3 years, as you know Jeremiah and his team have really positioned us to raise capital as a REIT and address the institutional investor market.

And Hisham and his team along with our IT has updated our accounting and financial processes and implemented a new ERP system which was no small task.

So, while many of these initiatives are ongoing I think we have made tremendous progress in the last 80 to 24 months and that’s why I really at this point, Trevor and I felt very comfortable with Hisham Kader and Jeremiah taking over the activities associated with the CFO role.

And this has freed me up to take a look at some broader strategic and operational topic and to get to your point obviously every business evaluates not only the current operating environment but looks forward 3 to 5 years and while we don’t have our crystal ball we do have a senior management team and multi-national board with diverse business experience and as Trevor mentioned and as you guys know we operate in a number of different arenas.

In the real estate investing business, we operate primarily in the U.S. and Europe and we expect very different operating environments in each of those geographic areas in the next three to five years. In addition we run a highly regarded investment management business that caters to U.S. retail investors and that business environment is evolving.

We have been at the forefront of that evolution and we want to be sure that we may see that [indiscernible] share and continue to expand and diversify our product offerings there.

So to sum it up we really want to be sure that we’re properly positioned to take advantage of the growth and opportunities that we see in each of our businesses and geographies with the goal of course of unlocking and maximizing the value for our shareholders.

So specifically with respect to Europe it's a little premature Paul at this point to speculate that exactly what outcomes will come from how we’re looking at this..

I was wondering Katy if you could perhaps give us a timeframe for your review, should we expect some clarity in six months, a year with what can we expect?.

So we just started the review and we would hope to keep you posted certainly before six months or a year as the thinking and the plan evolves..

Your next question comes from the line of Dan Donlan from Ladenburg Thalmann..

Just question on the guidance, if I look at the midpoint relative to what you found [indiscernible] it assumes about 7% decline for the back half of the year so was just curious is that all structuring related revenues? Is there anything else kind of going on there and or are you guys just being a little bit conservative here? Because it looks like you still have another 600 million or 700 million to do at the midpoint to get to your guidance in terms of what you’re going to do for the structured REIT..

We’re comfortable with this guidance range. We’re comfortable with where we’re in the low end of the range.

For the high end it is driven primarily for this year by restructuring revenue, so if you look at our owned balance sheet, the pipeline for our owned balance sheet as well as the pipeline for the managed REIT and if you look at for one for our own balance sheet, you know we’re looking at a lots of deals you know it's a competitive environment and there is no guarantee we can close them in this year or if we do close them this year or next year.

We will be asking if we going to close them in 2015 our AFFO doesn’t get much of our -- 2015 AFFO doesn’t get much of a benefit, we will benefit in 2016 of course. For the managed REIT the portfolio, same thing applies lots of deals but most of them are very, very competitive and there is no guarantee we can close them in this year.

So what we’re seeing I guess conservative to a certain extent but it's really just there are our comfort levels with where the REITs is at the moment. We review the range, we review our guidance at least once quarter is almost recently and then as things develop we will update it..

And Trevor, I think I missed this a little bit in the prepared remarks but could you comment a little bit on the back half I know it's not much in terms of how much is rolling but could you comment a little bit back half of lease enroll -- what type of retention maybe we should expect there and then as we look out to '16 and '16 you know how you feel about retention and are there any big contemplated move outs potentially in either of those years in the back half of the year?.

I would repeat that it's a relatively small number as a percentage, it's a wide variety of outcomes and I don’t think there is anything on toward directionally with respect to bad or good outcomes relative to what we have done in the past but there is a lot that’s under negotiation and several different leases although in aggregate it's not a large number..

Okay, and then any large movements for '16 or '17?.

Nothing. I mean as I said a broad range and nothing really sticks out. We do not have in 2016 the kind of lease roll [ph] that we had to consider a couple of years ago with cost leverage obviously been renewed and that kind of event doesn’t take place until 2018 when we have that..

Okay. And then, just kind of curious as you look at your multiple outfits from the other names, how do you feel about that you guys have been on the business for long time but there seems to be quite a discount placed upon single tenant office and maybe a little bit of less industrial relative to retail.

I'm just kind of curious if you think that there needs to be somewhat of a discount relative to single center retail or do you think that as you look at some of your assets classes and how they perform over the long haul? And how do you feel about the risk rewards of being more levered to office universally freaked out..

It's a good question and the portfolio composition is always going to be influx although your collection point now that we do have a fair amount of office, I think it's in the 30% plus range. We're quite happy with our office portfolio, I think that there are possible reasons why the multiples would be lower.

I think that those reasons related faster misunderstanding of the true CapEx that's required and perhaps a misunderstanding of how critical these assets are and therefore, misunderstanding the high likelihood of which renewal. So there is a variety of factors that we attempt to work on a regular basis and investor meetings.

We tend to have pretty good – and I believe outcomes with these property, they are critical and not always bad and the new impact more difficult in anyways than typical multi-tenant office, status are to move for those tenants.

So we continue to like the category but we certainly understand to do it differently by convestiture from more retail, and I think that can be a cyclical thing in case continued overtime. But that said, we're always – we wanted the good things about being a diversified reach and that we do not see ourselves in office now.

We have strong confidence in the retail sector as well, much of our retail does happen to be in Europe where we believe the value premise is more compelling because there are significant barriers that in European retail as we've noted.

We wanted to have something that's harder to build competition and they are significantly less because portfolio per capital in Europe and in the U.S.

That said, we certainly do look at big retail portfolios all the time, and simply we haven't been able to get there on price, and – but we believe that with continued supply of opportunities like that from corporate users, corporate owners etcetera, we may begin to expand our retail programs as well, it's just we're waiting for the right price..

Okay. And then as upper changed to the first carrier quarter bar fun, how should we think about what your plans are there, in hotel REIT sector down about 9% this year versus flat for the overall REIT index and some folks are getting somewhat nervous about the lodging cycle even though we haven't really seen too much of a decline in fundamentals.

We're just kind of curious if – how you time a potential exit from the First Fund, if that's even contemplated, it's lodging very, very cyclical relative to the net lease business. So just kind of hoping for some commentary on the plans for the first carry one market..

Sure. While the Board of CWI1, it is happy with the progress that we've made today in investing in the capital that was raised. We have good assets, we have overall EMF portfolio from commercial service in the early stages, full service and resort/hotel that have higher RevPARs and which tend to be more high end value by the public markets.

We think we're positioning that portfolio for a very positive outcome when as appropriate. When we went into that business we recognized the cyclicality of the hotel industry, and we recognized also that we were entering and this is some five, six years ago.

And entering into an attractive window and then eventually that would close, we do not believe that window has closed, notwithstanding how the public markets have reacted due the share prices are publicly traded.

But in terms of the fundamentals as a business, it's quite strong in terms of RevPAR growth than it is applied in most markets and etcetera.

So we still see good buying opportunities, however, we do believe that prior to the liquidation event of that fund, it's likely that we would see somewhat of a downturn in the market because that's just natural in the hotel business that you will have, then it will mirror the economic cycle of the economies that these hotels are in.

And that's something that we've anticipated, the funds have conservative leverage which is usually going to be that payment hurts you when you're entering that down cycle. And most of our hotels are market leaders within their submarkets.

So I think we're very confident that notwithstanding in the next year or two there maybe a downturn in the hotel market itself that the fund values will ultimately be strong, and it will continue to grow income for our investors.

Those investors do not focus on deal and liquidity as we would with the public REIT, so I think we're pretty well covered in that regard. So the short answer to your question is, that we're far away from liquidity event where we would need to actually worry about public trading value without this fund..

Okay. Thank you. I appreciate that. And then just maybe lastly, I think with the merger between Craft and Haines, I read some speculation that most of the Craft employees out in the suburbs living on office property, it's leased to them.

We're going to move potentially downtown, so I was just curious about your thoughts for that specific asset and what you've heard, if there is anything that we need to be aware of?.

Good question. I'm going to let Jason fill that one..

Hi Dan, how are you? Yes, we've been monitoring that closely and having a regular contact with Craft. We're currently discussing a lease termination period with them but it's too preliminary to really give any details. There is office area which Craft markets the property for sublease instead.

Either way we are very comfortable with the situation, we still have 7.5 years remaining on the lease with an investment grade tenant. Craft's current rent is about $7 per square foot triple net, which is a significant discount to market. So we go to market, we think we can improve upon that.

We offer the great building into which Craft recently made a $25 million to $30 million investment and really completely renovated it into a modern office building with open floor blades. So we're very comfortable with the situation and we might even see some upside to our base case underwriting at the time we did the original deal..

Okay, thank you. I appreciate it..

Thanks, Dan..

Your next call comes from the line of Nick Joseph from Citigroup. Your line is open..

Thanks. Going back to one of the previous questions on guidance.

If you break down the components driving the assumed back half deceleration, in other words, what is a good run rate used from the second quarter?.

Our assumptions were that we – are you looking for the acquisition volumes or what exactly?.

No, more probably stripping out the investment management structure in fees or anything else that you think let to an higher than – what should be considered a run rate 2Q AFFO?.

In my earlier comments I noted how much – what our key assumptions were and I think with regard to what we expected, what we modeled I guess when we came up with a range. So it was $2.5 billion of acquisitions for the managed fleet dispositions of $100 million to $200 million.

We've done $25 million so far of disposition for the first half of the year.

Of the $400 million and $600 million of acquisitions, we've done about – somewhere intervened, we just don't like – I said earlier, we don't expect the acquisition results on our own balance sheet for the remainder of this year so you generate much in terms of AFFO for this year, because we expect them to close.

If they do in the back half then that may even vary in the fourth quarter of 2015. And something similar both in the event management business, except that we were there. Obviously AFFOs benefit from structuring at a new end. The same – as far as economical factors apply, that it's – can be closed in 2015 or not and if we can, I mean, we get the AFFO..

And just in supplement to the answer there, there is seasonality as you know to the acquisitions and if this was a very active second quarter, some of those could have slipped into the third quarter, and then we would have one common level of performance, but they didn't.

And that said, Europe does slow down a lot in the summer time and typically third quarter is not a very active quarter for us in terms of acquisitions for the managed funds or for the balance sheet and yet the fourth quarter is more of a more active quarters.

I think that we're trying to be conservative as was referenced earlier on the call in light of some of headwinds with the Euro.

We do have the Euro exposure, that's largely hedged and not completely hedged, and so we're also mindful of the volatility of the environment because of interest rate uncertainty and therefore cap rate uncertainty, and we're trying to be cautious and not just chase deals for the sake of building our balance sheet.

We do believe that there could be cap rate adjustments at some point and we want to be ready when that happens to buy the properties at the right price..

Thanks. And then, just in terms of valuation, you're not typically see a lot last quarterly earnings volatility.

You think that your quarterly volatility associated with the investment management business or the multiple applies to that business has the largest impact on the discount?.

Yes. And I think also there is – as I just referenced, the uncertainty with respect to Europe. We believe strong end opportunities, obviously, have been demonstrated by our activity there and our long presence there.

But we recognize that with the headline risks, a headline moves out over the past several months, but that causes some tribulation on the part of some investors. So I believe that those two would have an impact on the multiple..

Thanks..

Thank you..

Your next question comes from the line of Chris Lucas from CapitalOne Securities. Your line is open..

Yes, good morning everyone. Trevor, just a question on the transactions market and I think it was a common about it rates rise, maybe there will be some adjustment in cap rates.

I guess what I would be starting to – what I wonder, before the steady state that the $200 million quarter 10-year sort of rates stay flat where they are, do you see cap rates adjusting or do you think that cap rate environment stays steady going forward?.

That's a good question Chris. Part of the answer because there is usual factors at play, the supply and demand for capital and opportunities, but I think there is also fresh sources of capital, that are adding to the pressure on cap rates. So it is our feeling that cap rates sort of – in the past quarter have levelled off somewhat.

And we're hearing more anecdotally about hick ups in some deals, and we ourselves are being very conservative and steps indicated over trend and others are more conservative.

But at the same time there is quite a lot of dry power raised in the private equity illustrate world, and single tenant lease can be an attractive place to park cash temporarily and I thought you believed that has affected some of the pressure on pricing, so that will be a countervailing trend that would affect the case at which cap rates are widened.

And I think that's something that's likely to be there for several months..

Okay. So if I think about sort of guidance for the back half of the year, it's your flat to net negative between acquisitions and dispositions.

Given the environment, is that something that we should be thinking about for 2016 as well as we look at the transaction volume on balance sheet?.

It's certainly something the we're looking at, and when we're ready to factor all that and including our other lines of business and then also factoring in a different environment in Europe, that's something that we will factor in the next years guidance, one of our peer can really give specifics as of the actual impact of that..

Okay. And then, I guess just between the two markets, the domestic market and the European market, obviously you've done pretty much everything in Europe so far this year. Is that – is there much deal review that you're doing in the U.S.

or is it primarily the time being spend is in Europe is that not changed the system, the deals haven't come in the U.S.

because of pricing?.

We have a fairly wide funnel in U.S. and our teams are quite active in looking at deals. And I'd say that in the past several months we've seen an increase as well in larger portfolios, and certainly the lifetime deal was a high profile large deal that we did look at, as well as other large portfolios that have been available to us.

And we have spent quite a lot of time and have put bids on most of those portfolios. So the answer is that we are actively looking in the United States but we haven't found a compelling investment opportunities..

Okay. And then the last question, some sort of detail question.

On the lease termination fee income that you generated this quarter, can you – is there a ABR that is associated with that?.

There is. I don't have that off hand. And the loss of that ABR factor is into the guidance..

Is it?.

Yes. I don't have the exact number. It's a good question..

Okay. I'll follow-up offline, thank you..

Thank you, Chris..

[Operator Instructions] Your next question comes from the line of Sheila McGrath from Evercore. Your line is open..

Yes, good morning. I'm sorry I missed a little bit of the Q&A, so I apologize if this was asked.

Just on the European acquisitions, I was just wondering, if this focus this year of course is because of pricing but also if it has something to do strategically with your contemplations of spinning off some of the European assets? Just what's the stock price on a potential Europeans for now..

Sure. We have not advanced our process and Katy, I think would agree, we have an advanced in the point where we're making any acquisition decisions that are tied to potential strategic thing that we would do engineering the platform. So it's really more the first part of your question, those are just pure risk adjusted returns.

Our quality tenants could location when detailed these terms, and they were compelling opportunities..

Okay. And then Trevor, you have been pretty active on the self-storage acquisitions this year.

I'm just wondering if this is a separate products that might be considered just like carry water mark for hotels, is self-storage something in the future that could be a separate product for the investment management platform?.

Yes, but it is different than hotels because each average transaction time is so much smaller. And so there is more of a risk if you have a separate fund devoted to self-storage than your rate capital too quickly to deploy it and that can cause problems in terms of over distribution etcetera.

So those – that effort has worked well within the next diversified fund, the CPA funds, and continues to be a good source of deal flow for us. And in the future it's possible that when those funds get to liquidity stage, we would have a portfolio that lends itself to a separate [ph], that's for sure.

We did have a fund, as you may recall, an institutional fund in order to self-storage that, but it's been liquidated a couple of years ago with a very good outcome. So we are looking for ways to continually grow the self-storage business, we do think it's a highly fragmented market.

We've developed a good core competency in that stage with an internal team here, leveraging off of third-party managers who are quite good at what they do. And I think it's the business that has legs, I don't think it lends itself necessarily to our particular dedicated non-traded lease at this time..

Okay. And then on the BTC offering, it looks like the management fees structure and I know you've highlighted this before, it's quite different than the other products that you already have. I was just wondering if you can explain the fee structure for the BTC, and then, just the rational for why it's different, just so we understand..

Sure. And I just know that there is a summary of the fees on the cable in the supplemental, I think it's on Page 33, to the extent that I don't cover all of it. There is an advisory fee which is a slide in scale based on average growth assets. So that – and it's 2% on average gross assets, below $1 billion.

We can reduce it to 1.875%, between $1 billion and $2 billion, and then 1.75% above $2 billion. There is an incentive fee which is 20% of the net investment income above a hurdle rate of 7.5% and that's subject to a catch up.

The point I think – the general point to make is that this fund is representative of a new generation of funds, not just in the fee structure but also in the way that it's sold, so that we are attempting to class funds that have lower commissions to the financial advisors and that's obviously in anticipation of the final regulations, and which is given as the opportunity to move towards this type of products.

And also generally, what is does for WD carry as a manager of these funds is shift the earnings that we derive from them towards the higher quality and more predictable revenue stream, away from the structuring revenues which we've talked about on this call, while it was one word to use, kind of lumpy, and another used, unpredictable is the third word to use.

So that we're shifting our revenue as more towards the predictable ongoing streams..

Okay. Thank you very much..

Thank you..

[Operator Instructions] Your next question comes from the line of Daniel Donlan from Ladenburg Thalmann. Your line is open..

Keeps getting worse, it seems like. [Cross talks].

Just quick question I guess for Katy, and it's unlike Katy you had a pretty robust from all questions but, it is the – is Europe so big that would it be able to spin it off and externally advise it because the fees would be too great from that? Is it something you've even looked at this far? We're just curious can it still be a REIT and potentially spin that off and externally advisor which has been the structure that some of the other – at least one REIT in your space has contemplated?.

Yes, I mean I think as we mentioned earlier, it's a bit early to sort of speculate about exactly what outcomes we're thinking about.

We're looking at everything and trying to look at all of our businesses, both operationally and strategically, and make sure that we're well positioned for what we think the operating environment will look like over the next three to five years.

So we do have a big European operation, I don't know the technical answer to question you're asking about whether we could be a REIT? I assume that we could be, but I think it's a little early to speculate on exactly how that might look or if we would take that path..

Okay, thank you. I appreciate the answer..

There are no further questions at this time. I turn the call back over to the presenters..

That completes the call for today. Thank you for joining. You may now disconnect..

Thank you to all our participants. This concludes today's call. And you may now disconnect..