UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from__________ to __________

Commission File Number: 001-13779

W. P. Carey Inc.

(Exact name of registrant as specified in its charter)


Maryland		45-4549771
(State of incorporation)		(I.R.S. Employer Identification No.)

One Manhattan West, 395 9th Avenue, 58th Floor
New York,	New York	10001
(Address of principal executive offices)		(Zip Code)

Investor Relations (212) 492-8920

(212) 492-1100

(Registrant’s telephone numbers, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 Par Value

WPC

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Registrant has ~~208,032,718~~218,671,874 shares of common stock, $0.001 par value, outstanding at October ~~28, 2022.~~27, 2023.

INDEX


		Page No.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
	Consolidated Balance Sheets as of September 30, ~~2022~~2023 and December 31, ~~2021~~2022	3
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	5
	Consolidated Statements of Equity for the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	8
	Notes to Consolidated Financial Statements	109
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		4742
Item 3. Quantitative and Qualitative Disclosures About Market Risk		7267
Item 4. Controls and Procedures		7469

PART II — OTHER INFORMATION
Item 1A. Risk Factors		70
Item 6. Exhibits		7571
Signatures		7672

W. P. Carey 9/30/~~2022~~2023 10-Q – 1

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Report”), including Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of Part I of this Report, contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements include, but are not limited to, statements regarding: the ~~impact of the CPA:18 Merger~~NLOP Spin-Off (as defined herein);, including the impact thereof; our corporate strategy and estimated or future economic performance and results, including our expectations surrounding the impact of the ~~novel coronavirus (“COVID-19”) pandemic on our business,~~broader macroeconomic environment and the ability of tenants to pay rent, financial condition, liquidity, results of operations, and prospects; our future capital expenditure and leverage levels, debt service obligations, and plans to fund our liquidity needs; prospective statements regarding our access to the capital markets, including our “at-the-market” program (“ATM Program”) and settlement of our Equity Forwards (as defined herein); the outlook for the investment ~~programs~~program that we manage, including possible liquidity events for ~~those programs;~~the program; statements that we make regarding our ability to remain qualified for taxation as a real estate investment trust (“REIT”); and the impact of recently issued accounting pronouncements and regulatory activity.

These statements are based on the current expectations of our management. It is important to note that our actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. Other unknown or unpredictable risks or uncertainties, like the risks related to inflation and increased interest rates, the effects of pandemics and global outbreaks of contagious diseases (such as the ~~current~~ COVID-19 pandemic) and domestic or geopolitical crises, such as terrorism, military conflict, ~~(including the ongoing conflict between Russia and Ukraine and the global response to it),~~ war or the perception that hostilities may be imminent, political instability or civil unrest, or other conflict, could also have material adverse effects on our business, financial condition, liquidity, results of operations, and prospects. You should exercise caution in relying on forward-looking statements as they involve known and unknown risks, uncertainties, and other factors that may materially affect our future results, performance, achievements, or transactions. Information on factors that could impact actual results and cause them to differ from what is anticipated in the forward-looking statements contained herein is included in this Report, as well as in our other filings with the Securities and Exchange Commission (“SEC”), including but not limited to those described in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, as filed with the SEC on February ~~11, 2022~~10, 2023 (the ~~“2021~~“2022 Annual Report”)., and in Part II, Item 1A. Risk Factors herein. Moreover, because we operate in a very competitive and rapidly changing environment, new risks are likely to emerge from time to time. Given these risks and uncertainties, potential investors are cautioned not to place undue reliance on these forward-looking statements as a prediction of future results, which speak only as of the date of this Report, unless noted otherwise. Except as required by federal securities laws and the rules and regulations of the SEC, we do not undertake to revise or update any forward-looking statements.

All references to “Notes” throughout the document refer to the footnotes to the consolidated financial statements of the registrant in Part I, Item 1. Financial Statements (Unaudited).

W. P. Carey 9/30/~~2022~~2023 10-Q – 2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

W. P. CAREY INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share amounts)


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Assets	Assets					Assets
Investments in real estate:	Investments in real estate:					Investments in real estate:
Land, buildings and improvements — net lease and other	Land, buildings and improvements — net lease and other	$	12,862,423	$	11,791,734	Land, buildings and improvements — net lease and other	$	13,390,692	$	13,338,857
Land, buildings and improvements — operating properties	Land, buildings and improvements — operating properties	1,084,524		83,673		Land, buildings and improvements — operating properties	1,222,062		1,095,892
Net investments in direct financing leases and loans receivable		781,345		813,577
Net investments in finance leases and loans receivable						Net investments in finance leases and loans receivable	1,172,671		771,761
In-place lease intangible assets and other	In-place lease intangible assets and other	2,578,236		2,386,000		In-place lease intangible assets and other	2,696,403		2,659,750
Above-market rent intangible assets	Above-market rent intangible assets	840,943		843,410		Above-market rent intangible assets	771,071		833,751
Investments in real estate	Investments in real estate	18,147,471		15,918,394		Investments in real estate	19,252,899		18,700,011
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(3,065,161)		(2,889,294)		Accumulated depreciation and amortization	(3,438,183)		(3,269,057)
Assets held for sale, net	Assets held for sale, net	38,578		8,269		Assets held for sale, net	102,015		57,944
Net investments in real estate	Net investments in real estate	15,120,888		13,037,369		Net investments in real estate	15,916,731		15,488,898
Equity method investments	Equity method investments	297,665		356,637		Equity method investments	351,537		327,502
Cash and cash equivalents	Cash and cash equivalents	186,417		165,427		Cash and cash equivalents	136,438		167,996
Due from affiliates		602		1,826
Other assets, net	Other assets, net	1,146,099		1,017,842		Other assets, net	1,191,350		1,080,227
Goodwill	Goodwill	1,023,171		901,529		Goodwill	1,034,183		1,037,412
Total assets (a)	Total assets (a)	$	17,774,842	$	15,480,630	Total assets (a)	$	18,630,239	$	18,102,035
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Debt:	Debt:					Debt:
Senior unsecured notes, net	Senior unsecured notes, net	$	5,651,865	$	5,701,913	Senior unsecured notes, net	$	5,902,854	$	5,916,400
Unsecured term loans, net	Unsecured term loans, net	506,004		310,583		Unsecured term loans, net	1,083,597		552,539
Unsecured revolving credit facility	Unsecured revolving credit facility	462,660		410,596		Unsecured revolving credit facility	516,513		276,392
Non-recourse mortgages, net	Non-recourse mortgages, net	1,162,814		368,524		Non-recourse mortgages, net	784,750		1,132,417
Debt, net	Debt, net	7,783,343		6,791,616		Debt, net	8,287,714		7,877,748
Accounts payable, accrued expenses and other liabilities	Accounts payable, accrued expenses and other liabilities	594,139		572,846		Accounts payable, accrued expenses and other liabilities	638,965		623,843
Below-market rent and other intangible liabilities, net	Below-market rent and other intangible liabilities, net	184,885		183,286		Below-market rent and other intangible liabilities, net	153,049		184,584
Deferred income taxes	Deferred income taxes	174,276		145,572		Deferred income taxes	171,929		178,959
Dividends payable	Dividends payable	224,302		203,859		Dividends payable	233,331		228,257
Total liabilities (a)	Total liabilities (a)	8,960,945		7,897,179		Total liabilities (a)	9,484,988		9,093,391
Commitments and contingencies (Note 12)	Commitments and contingencies (Note 12)					Commitments and contingencies (Note 12)

Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued	Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued	—		—		Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued	—		—
Common stock, $0.001 par value, 450,000,000 shares authorized; 208,032,718 and 190,013,751 shares, respectively, issued and outstanding		208		190
Common stock, $0.001 par value, 450,000,000 shares authorized; 213,925,817 and 210,620,949 shares, respectively, issued and outstanding						Common stock, $0.001 par value, 450,000,000 shares authorized; 213,925,817 and 210,620,949 shares, respectively, issued and outstanding	214		211
Additional paid-in capital	Additional paid-in capital	11,510,303		9,977,686		Additional paid-in capital	11,970,559		11,706,836
Distributions in excess of accumulated earnings	Distributions in excess of accumulated earnings	(2,470,261)		(2,224,231)		Distributions in excess of accumulated earnings	(2,616,638)		(2,486,633)
Deferred compensation obligation	Deferred compensation obligation	57,012		49,810		Deferred compensation obligation	62,046		57,012
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(298,057)		(221,670)		Accumulated other comprehensive loss	(281,820)		(283,780)
Total stockholders’ equity	Total stockholders’ equity	8,799,205		7,581,785		Total stockholders’ equity	9,134,361		8,993,646
Noncontrolling interests	Noncontrolling interests	14,692		1,666		Noncontrolling interests	10,890		14,998
Total equity	Total equity	8,813,897		7,583,451		Total equity	9,145,251		9,008,644
Total liabilities and equity	Total liabilities and equity	$	17,774,842	$	15,480,630	Total liabilities and equity	$	18,630,239	$	18,102,035

__________

(a)See Note 2 for details related to variable interest entities (“VIEs”).

See Notes to Consolidated Financial Statements.

W. P. Carey 9/30/~~2022~~2023 10-Q – 3

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except share and per share amounts)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues	Revenues									Revenues
Real Estate:	Real Estate:									Real Estate:
Lease revenues	Lease revenues	$	331,902	$	298,616	$	953,981	$	872,345	Lease revenues	$	369,159	$	331,902	$	1,090,619	$	953,981
Income from direct financing leases and loans receivable		20,637		16,754		56,794		51,917
Income from finance leases and loans receivable										Income from finance leases and loans receivable	27,575		20,637		75,641		56,794
Operating property revenues	Operating property revenues	21,350		4,050		30,279		9,474		Operating property revenues	49,218		21,350		140,780		30,279
Lease termination income and other		8,192		1,421		24,905		8,066
Other lease-related income										Other lease-related income	2,310		8,192		20,723		24,905
		382,081		320,841		1,065,959		941,802			448,262		382,081		1,327,763		1,065,959
Investment Management:	Investment Management:									Investment Management:
Asset management and other revenue		1,197		3,872		8,084		11,792
Asset management revenue										Asset management revenue	194		1,197		836		8,084
Reimbursable costs from affiliates	Reimbursable costs from affiliates	344		1,041		2,414		3,050		Reimbursable costs from affiliates	97		344		322		2,414
		1,541		4,913		10,498		14,842			291		1,541		1,158		10,498
		383,622		325,754		1,076,457		956,644			448,553		383,622		1,328,921		1,076,457
Operating Expenses	Operating Expenses									Operating Expenses
Depreciation and amortization	Depreciation and amortization	132,181		115,657		362,654		340,327		Depreciation and amortization	144,771		132,181		444,728		362,654
Impairment charges — Investment Management goodwill		29,334		—		29,334		—
Operating property expenses										Operating property expenses	26,570		9,357		74,738		15,335
General and administrative	General and administrative	22,299		19,750		66,224		62,297		General and administrative	23,258		22,299		74,494		66,224
Reimbursable tenant costs	Reimbursable tenant costs	18,874		15,092		52,538		45,942		Reimbursable tenant costs	20,498		18,874		62,997		52,538
Impairment charges — real estate										Impairment charges — real estate	15,173		—		15,173		26,385
Property expenses, excluding reimbursable tenant costs										Property expenses, excluding reimbursable tenant costs	13,021		11,244		31,164		36,874
Stock-based compensation expense										Stock-based compensation expense	9,050		5,511		25,811		23,102
Merger and other expenses	Merger and other expenses	17,667		(908)		17,329		(3,983)		Merger and other expenses	4,152		17,667		5,595		17,329
Property expenses, excluding reimbursable tenant costs		11,244		13,734		36,874		36,432
Operating property expenses		9,357		3,001		15,335		6,961
Stock-based compensation expense		5,511		4,361		23,102		18,790
Reimbursable costs from affiliates	Reimbursable costs from affiliates	344		1,041		2,414		3,050		Reimbursable costs from affiliates	97		344		322		2,414
Impairment charges — real estate		—		16,301		26,385		16,301
Impairment charges — Investment Management goodwill										Impairment charges — Investment Management goodwill	—		29,334		—		29,334
		246,811		188,029		632,189		526,117			256,590		246,811		735,022		632,189
Other Income and Expenses	Other Income and Expenses									Other Income and Expenses
Interest expense	Interest expense	(59,022)		(48,731)		(151,492)		(149,623)		Interest expense	(76,974)		(59,022)		(219,658)		(151,492)
Earnings from equity method investments										Earnings from equity method investments	4,978		11,304		14,569		23,477
Non-operating income										Non-operating income	4,862		9,263		13,997		23,783
Other gains and (losses)										Other gains and (losses)	2,859		(15,020)		9,593		(1,021)
Gain (loss) on sale of real estate, net										Gain (loss) on sale of real estate, net	2,401		(4,736)		181,958		37,631
Gain on change in control of interests	Gain on change in control of interests	33,931		—		33,931		—		Gain on change in control of interests	—		33,931		—		33,931
Other gains and (losses)		(15,020)		49,219		(1,021)		15,576
Earnings (losses) from equity method investments		11,304		5,735		23,477		(4,154)
Non-operating income		9,263		1,283		23,783		10,704
(Loss) gain on sale of real estate, net		(4,736)		1,702		37,631		30,914
		(24,280)		9,208		(33,691)		(96,583)			(61,874)		(24,280)		459		(33,691)
Income before income taxes	Income before income taxes	112,531		146,933		410,577		333,944		Income before income taxes	130,089		112,531		594,358		410,577
Provision for income taxes	Provision for income taxes	(8,263)		(8,347)		(21,598)		(23,434)		Provision for income taxes	(5,090)		(8,263)		(30,338)		(21,598)
Net Income	Net Income	104,268		138,586		388,979		310,510		Net Income	124,999		104,268		564,020		388,979
Net loss (income) attributable to noncontrolling interests		660		(39)		622		(84)
Net loss attributable to noncontrolling interests										Net loss attributable to noncontrolling interests	41		660		20		622
Net Income Attributable to W. P. Carey	Net Income Attributable to W. P. Carey	$	104,928	$	138,547	$	389,601	$	310,426	Net Income Attributable to W. P. Carey	$	125,040	$	104,928	$	564,040	$	389,601

Basic Earnings Per Share	Basic Earnings Per Share	$	0.52	$	0.75	$	1.98	$	1.72	Basic Earnings Per Share	$	0.58	$	0.52	$	2.64	$	1.98
Diluted Earnings Per Share	Diluted Earnings Per Share	$	0.51	$	0.74	$	1.98	$	1.71	Diluted Earnings Per Share	$	0.58	$	0.51	$	2.63	$	1.98
Weighted-Average Shares Outstanding	Weighted-Average Shares Outstanding									Weighted-Average Shares Outstanding
Basic	Basic	203,093,553		185,422,639		196,382,433		180,753,115		Basic	215,097,114		203,093,553		214,052,907		196,382,433
Diluted	Diluted	204,098,116		186,012,478		197,264,509		181,323,128		Diluted	215,252,969		204,098,116		214,427,425		197,264,509

See Notes to Consolidated Financial Statements.

W. P. Carey 9/30/~~2022~~2023 10-Q – 4

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net Income	Net Income	$	104,268	$	138,586	$	388,979	$	310,510	Net Income	$	124,999	$	104,268	$	564,020	$	388,979
Other Comprehensive (Loss) Income	Other Comprehensive (Loss) Income									Other Comprehensive (Loss) Income
Foreign currency translation adjustments	Foreign currency translation adjustments	(56,053)		(20,400)		(109,198)		(28,329)		Foreign currency translation adjustments	(8,844)		(56,053)		7,092		(109,198)
Unrealized gain on derivative instruments		23,610		13,114		50,956		31,010
Unrealized gain (loss) on derivative instruments										Unrealized gain (loss) on derivative instruments	6,816		23,610		(5,384)		50,956
Reclassification of unrealized gain on investments to net income	Reclassification of unrealized gain on investments to net income	—		—		(18,688)		—		Reclassification of unrealized gain on investments to net income	—		—		—		(18,688)
		(32,443)		(7,286)		(76,930)		2,681			(2,028)		(32,443)		1,708		(76,930)
Comprehensive Income	Comprehensive Income	71,825		131,300		312,049		313,191		Comprehensive Income	122,971		71,825		565,728		312,049

Amounts Attributable to Noncontrolling Interests	Amounts Attributable to Noncontrolling Interests									Amounts Attributable to Noncontrolling Interests
Net loss (income)		660		(39)		622		(84)
Net loss										Net loss	41		660		20		622
Foreign currency translation adjustments	Foreign currency translation adjustments	543		—		543		—		Foreign currency translation adjustments	139		543		252		543
Unrealized gain on derivative instruments		—		—		—		(21)
Comprehensive loss (income) attributable to noncontrolling interests		1,203		(39)		1,165		(105)
Comprehensive loss attributable to noncontrolling interests										Comprehensive loss attributable to noncontrolling interests	180		1,203		272		1,165
Comprehensive Income Attributable to W. P. Carey	Comprehensive Income Attributable to W. P. Carey	$	73,028	$	131,261	$	313,214	$	313,086	Comprehensive Income Attributable to W. P. Carey	$	123,151	$	73,028	$	566,000	$	313,214

See Notes to Consolidated Financial Statements.

W. P. Carey 9/30/~~2022~~2023 10-Q – 5

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(in thousands, except share and per share amounts)


		W. P. Carey Stockholders																		W. P. Carey Stockholders
							Distributions				Accumulated														Distributions				Accumulated
		Common Stock			Additional		in Excess of		Deferred		Other		Total							Common Stock			Additional		in Excess of		Deferred		Other		Total
		$0.001 Par Value			Paid-in		Accumulated		Compensation		Comprehensive		W. P. Carey		Noncontrolling					$0.001 Par Value			Paid-in		Accumulated		Compensation		Comprehensive		W. P. Carey		Noncontrolling
		Shares	Amount		Capital		Earnings		Obligation		Loss		Stockholders		Interests		Total			Shares	Amount		Capital		Earnings		Obligation		Loss		Stockholders		Interests		Total
Balance at July 1, 2022		192,891,792	$	193	$	10,201,614	$	(2,352,839)	$	57,012	$	(266,157)	$	7,639,823	$	1,639	$	7,641,462
Shares issued to stockholders of CPA:18 – Global in connection with CPA:18 Merger		13,786,302	14		1,205,736								1,205,750				1,205,750
Shares issued under Equity Forwards, net		1,337,500	1		97,454								97,455				97,455
Balance at July 1, 2023																			Balance at July 1, 2023	213,901,170	$	214	$	11,959,060	$	(2,510,816)	$	62,046	$	(279,931)	$	9,230,573	$	16,359	$	9,246,932
Shares issued upon delivery of vested restricted share awards	Shares issued upon delivery of vested restricted share awards	17,124	—		(12)								(12)				(12)		Shares issued upon delivery of vested restricted share awards	24,647	—		(61)								(61)				(61)
Amortization of stock-based compensation expense	Amortization of stock-based compensation expense				5,511								5,511				5,511		Amortization of stock-based compensation expense				9,050								9,050				9,050
Acquisition of noncontrolling interests in connection with the CPA:18 Merger													—		14,367		14,367
Acquisition of noncontrolling interest																			Acquisition of noncontrolling interest				2,510								2,510		(2,510)		—
Distributions to noncontrolling interests	Distributions to noncontrolling interests												—		(111)		(111)		Distributions to noncontrolling interests												—		(2,779)		(2,779)
Dividends declared ($1.061 per share)							(222,350)						(222,350)				(222,350)
Dividends declared ($1.071 per share)																			Dividends declared ($1.071 per share)						(230,862)						(230,862)				(230,862)
Net income	Net income						104,928						104,928		(660)		104,268		Net income						125,040						125,040		(41)		124,999
Other comprehensive loss:	Other comprehensive loss:																		Other comprehensive loss:
Foreign currency translation adjustments	Foreign currency translation adjustments										(55,510)		(55,510)		(543)		(56,053)		Foreign currency translation adjustments										(8,705)		(8,705)		(139)		(8,844)
Unrealized gain on derivative instruments	Unrealized gain on derivative instruments										23,610		23,610				23,610		Unrealized gain on derivative instruments										6,816		6,816				6,816
Balance at September 30, 2022		208,032,718	$	208	$	11,510,303	$	(2,470,261)	$	57,012	$	(298,057)	$	8,799,205	$	14,692	$	8,813,897
Balance at September 30, 2023																			Balance at September 30, 2023	213,925,817	$	214	$	11,970,559	$	(2,616,638)	$	62,046	$	(281,820)	$	9,134,361	$	10,890	$	9,145,251


	W. P. Carey Stockholders
						Distributions				Accumulated
	Common Stock			Additional		in Excess of		Deferred		Other		Total
	$0.001 Par Value			Paid-in		Accumulated		Compensation		Comprehensive		W. P. Carey		Noncontrolling
	Shares	Amount		Capital		Earnings		Obligation		Loss		Stockholders		Interests		Total
Balance at July 1, 2022	192,891,792	$	193	$	10,201,614	$	(2,352,839)	$	57,012	$	(266,157)	$	7,639,823	$	1,639	$	7,641,462
Shares issued to stockholders of CPA:18 – Global in connection with CPA:18 Merger	13,786,302	14		1,205,736								1,205,750				1,205,750
Shares issued under forward equity, net	1,337,500	1		97,454								97,455				97,455
Shares issued upon delivery of vested restricted share awards	17,124	—		(12)								(12)				(12)
Amortization of stock-based compensation expense				5,511								5,511				5,511
Acquisition of noncontrolling interests in connection with the CPA:18 Merger												—		14,367		14,367
Distributions to noncontrolling interests												—		(111)		(111)
Dividends declared ($1.061 per share)						(222,350)						(222,350)				(222,350)
Net income						104,928						104,928		(660)		104,268
Other comprehensive loss:
Foreign currency translation adjustments										(55,510)		(55,510)		(543)		(56,053)
Unrealized gain on derivative instruments										23,610		23,610				23,610
Balance at September 30, 2022	208,032,718	$	208	$	11,510,303	$	(2,470,261)	$	57,012	$	(298,057)	$	8,799,205	$	14,692	$	8,813,897

(Continued)

W. P. Carey 9/30/~~2022~~2023 10-Q – 6

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(Continued)

(in thousands, except share and per share amounts)

W. P. Carey Stockholders
Distributions Accumulated
Common Stock Additional in Excess of Deferred Other Total
$0.001 Par Value Paid-in Accumulated Compensation Comprehensive W. P. Carey Noncontrolling
Shares Amount Capital Earnings Obligation Loss Stockholders Interests Total
Balance at January 1, 2022 190,013,751 $ 190 $ 9,977,686 $ (2,224,231) $ 49,810 $ (221,670) $ 7,581,785 $ 1,666 $ 7,583,451
Shares issued to stockholders of CPA:18 – Global in connection with CPA:18 Merger 13,786,302 14 1,205,736 1,205,750 1,205,750
Shares issued under ATM Program, net 2,740,295 3 218,098 218,101 218,101
Shares issued under Equity Forwards, net 1,337,500 1 97,454 97,455 97,455
Shares issued upon delivery of vested restricted share awards 152,830 — (6,612) (6,612) (6,612)
Shares issued upon purchases under employee share purchase plan 2,040 — 155 155 155
Amortization of stock-based compensation expense 23,102 23,102 23,102
Deferral of vested shares, net (6,696) 6,696 — —
Acquisition of noncontrolling interests in connection with the CPA:18 Merger — 14,367 14,367
Distributions to noncontrolling interests — (176) (176)
Dividends declared ($3.177 per share) 1,380 (635,631) 506 (633,745) (633,745)
Net income 389,601 389,601 (622) 388,979
Other comprehensive loss:
Foreign currency translation adjustments (108,655) (108,655) (543) (109,198)
Unrealized gain on derivative instruments 50,956 50,956 50,956
Reclassification of unrealized gain on investments to net income (18,688) (18,688) (18,688)
Balance at September 30, 2022 208,032,718 $ 208 $ 11,510,303 $ (2,470,261) $ 57,012 $ (298,057) $ 8,799,205 $ 14,692 $ 8,813,897


	W. P. Carey Stockholders
						Distributions				Accumulated
	Common Stock			Additional		in Excess of		Deferred		Other		Total
	$0.001 Par Value			Paid-in		Accumulated		Compensation		Comprehensive		W. P. Carey		Noncontrolling
	Shares	Amount		Capital		Earnings		Obligation		Loss		Stockholders		Interests		Total
Balance at January 1, 2023	210,620,949	$	211	$	11,706,836	$	(2,486,633)	$	57,012	$	(283,780)	$	8,993,646	$	14,998	$	9,008,644
Shares issued under forward equity, net	3,081,867	3		249,860								249,863				249,863
Shares issued upon delivery of vested restricted share awards	218,266	—		(13,679)								(13,679)				(13,679)
Shares issued upon purchases under employee share purchase plan	4,735	—		294								294				294
Amortization of stock-based compensation expense				25,811								25,811				25,811
Deferral of vested shares, net				(4,521)				4,521				—				—
Acquisition of noncontrolling interests				3,663								3,663		(3,663)		—
Contributions from noncontrolling interests												—		2,886		2,886
Distributions to noncontrolling interests												—		(3,059)		(3,059)
Dividends declared ($3.207 per share)				2,295		(694,045)		513				(691,237)				(691,237)
Net income						564,040						564,040		(20)		564,020
Other comprehensive income:
Foreign currency translation adjustments										7,344		7,344		(252)		7,092
Unrealized loss on derivative instruments										(5,384)		(5,384)				(5,384)
Balance at September 30, 2023	213,925,817	$	214	$	11,970,559	$	(2,616,638)	$	62,046	$	(281,820)	$	9,134,361	$	10,890	$	9,145,251


		W. P. Carey Stockholders																		W. P. Carey Stockholders
							Distributions				Accumulated														Distributions				Accumulated
		Common Stock			Additional		in Excess of		Deferred		Other		Total							Common Stock			Additional		in Excess of		Deferred		Other		Total
		$0.001 Par Value			Paid-in		Accumulated		Compensation		Comprehensive		W. P. Carey		Noncontrolling					$0.001 Par Value			Paid-in		Accumulated		Compensation		Comprehensive		W. P. Carey		Noncontrolling
		Shares	Amount		Capital		Earnings		Obligation		Loss		Stockholders		Interests		Total			Shares	Amount		Capital		Earnings		Obligation		Loss		Stockholders		Interests		Total
Balance at January 1, 2021		175,401,757	$	175	$	8,925,365	$	(1,850,935)	$	42,014	$	(239,906)	$	6,876,713	$	1,656	$	6,878,369
Shares issued under Equity Forwards, net		6,535,709	7		457,193								457,200				457,200
Shares issued under ATM Program, net		4,225,624	4		302,619								302,623				302,623
Balance at January 1, 2022																			Balance at January 1, 2022	190,013,751	$	190	$	9,977,686	$	(2,224,231)	$	49,810	$	(221,670)	$	7,581,785	$	1,666	$	7,583,451
Shares issued to stockholders of CPA:18 – Global in connection with CPA:18 Merger																			Shares issued to stockholders of CPA:18 – Global in connection with CPA:18 Merger	13,786,302	14		1,205,736								1,205,750				1,205,750
Shares issued under our prior ATM Program, net																			Shares issued under our prior ATM Program, net	2,740,295	3		218,098								218,101				218,101
Shares issued under forward equity, net																			Shares issued under forward equity, net	1,337,500	1		97,454								97,455				97,455
Shares issued upon delivery of vested restricted share awards	Shares issued upon delivery of vested restricted share awards	119,268	—		(3,779)								(3,779)				(3,779)		Shares issued upon delivery of vested restricted share awards	152,830	—		(6,612)								(6,612)				(6,612)
Shares issued upon purchases under employee share purchase plan	Shares issued upon purchases under employee share purchase plan	2,597	—		176								176				176		Shares issued upon purchases under employee share purchase plan	2,040	—		155								155				155
Amortization of stock-based compensation expense	Amortization of stock-based compensation expense				18,790								18,790				18,790		Amortization of stock-based compensation expense				23,102								23,102				23,102
Deferral of vested shares, net	Deferral of vested shares, net				(7,044)				7,044				—				—		Deferral of vested shares, net				(6,696)				6,696				—				—
Acquisition of noncontrolling interests in connection with the CPA:18 Merger																			Acquisition of noncontrolling interests in connection with the CPA:18 Merger												—		14,367		14,367
Distributions to noncontrolling interests	Distributions to noncontrolling interests												—		(104)		(104)		Distributions to noncontrolling interests												—		(176)		(176)
Dividends declared ($3.150 per share)					906		(581,427)		752				(579,769)				(579,769)
Dividends declared ($3.177 per share)																			Dividends declared ($3.177 per share)				1,380		(635,631)		506				(633,745)				(633,745)
Net income	Net income						310,426						310,426		84		310,510		Net income						389,601						389,601		(622)		388,979
Other comprehensive income:
Other comprehensive loss:																			Other comprehensive loss:
Foreign currency translation adjustments																			Foreign currency translation adjustments										(108,655)		(108,655)		(543)		(109,198)
Unrealized gain on derivative instruments	Unrealized gain on derivative instruments										30,989		30,989		21		31,010		Unrealized gain on derivative instruments										50,956		50,956				50,956
Foreign currency translation adjustments											(28,329)		(28,329)				(28,329)
Balance at September 30, 2021		186,284,955	$	186	$	9,694,226	$	(2,121,936)	$	49,810	$	(237,246)	$	7,385,040	$	1,657	$	7,386,697
Reclassification of unrealized gain on investments to net income																			Reclassification of unrealized gain on investments to net income										(18,688)		(18,688)				(18,688)
Balance at September 30, 2022																			Balance at September 30, 2022	208,032,718	$	208	$	11,510,303	$	(2,470,261)	$	57,012	$	(298,057)	$	8,799,205	$	14,692	$	8,813,897

See Notes to Consolidated Financial Statements.

W. P. Carey 9/30/~~2022~~2023 10-Q – 7

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2022		2021			2023		2022
Cash Flows — Operating Activities	Cash Flows — Operating Activities					Cash Flows — Operating Activities
Net income	Net income	$	388,979	$	310,510	Net income	$	564,020	$	388,979
Adjustments to net income:	Adjustments to net income:					Adjustments to net income:
Depreciation and amortization, including intangible assets and deferred financing costs	Depreciation and amortization, including intangible assets and deferred financing costs	374,163		351,503		Depreciation and amortization, including intangible assets and deferred financing costs	459,830		374,163
Gain on sale of real estate, net						Gain on sale of real estate, net	(181,958)		(37,631)
Straight-line rent adjustments	Straight-line rent adjustments	(42,342)		(34,034)		Straight-line rent adjustments	(55,671)		(42,342)
Gain on sale of real estate, net		(37,631)		(30,914)
Gain on change in control of interests		(33,931)		—
Amortization of rent-related intangibles and deferred rental revenue	Amortization of rent-related intangibles and deferred rental revenue	34,378		41,346		Amortization of rent-related intangibles and deferred rental revenue	27,694		34,378
Impairment charges — Investment Management goodwill		29,334		—
Decrease in allowance for credit losses		(27,777)		(6,737)
Stock-based compensation expense						Stock-based compensation expense	25,811		23,102
Impairment charges — real estate	Impairment charges — real estate	26,385		16,301		Impairment charges — real estate	15,173		26,385
Distributions of earnings from equity method investments	Distributions of earnings from equity method investments	26,276		8,816		Distributions of earnings from equity method investments	15,107		26,276
(Earnings) losses from equity method investments		(23,477)		4,154
Stock-based compensation expense		23,102		18,790
Net realized and unrealized losses (gains) on equity securities, extinguishment of debt, foreign currency exchange rate movements, and other		22,322		(5,992)
Earnings from equity method investments						Earnings from equity method investments	(14,569)		(23,477)
Decrease in allowance for credit losses						Decrease in allowance for credit losses	(6,113)		(27,777)
Deferred income tax benefit	Deferred income tax benefit	(1,561)		(3,012)		Deferred income tax benefit	(2,706)		(1,561)
Net realized and unrealized (gains) losses on equity securities, extinguishment of debt, foreign currency exchange rate movements, and other						Net realized and unrealized (gains) losses on equity securities, extinguishment of debt, foreign currency exchange rate movements, and other	(1,837)		22,322
Gain on change in control of interests						Gain on change in control of interests	—		(33,931)
Impairment charges — Investment Management goodwill						Impairment charges — Investment Management goodwill	—		29,334
Asset management revenue received in shares of CPA:18 – Global	Asset management revenue received in shares of CPA:18 – Global	(1,024)		(9,452)		Asset management revenue received in shares of CPA:18 – Global	—		(1,024)
Net changes in other operating assets and liabilities	Net changes in other operating assets and liabilities	(54,668)		(35,883)		Net changes in other operating assets and liabilities	(32,094)		(54,668)
Net Cash Provided by Operating Activities	Net Cash Provided by Operating Activities	702,528		625,396		Net Cash Provided by Operating Activities	812,687		702,528
Cash Flows — Investing Activities	Cash Flows — Investing Activities					Cash Flows — Investing Activities
Purchases of real estate	Purchases of real estate	(1,013,950)		(1,004,433)		Purchases of real estate	(908,271)		(1,013,950)
Cash paid to stockholders of CPA:18 – Global in the CPA:18 Merger		(423,435)		—
Cash and restricted cash acquired in connection with the CPA:18 Merger		331,063		—
Proceeds from sales of real estate	Proceeds from sales of real estate	170,341		126,697		Proceeds from sales of real estate	187,678		170,341
Funding for real estate construction, redevelopments, and other capital expenditures on real estate	Funding for real estate construction, redevelopments, and other capital expenditures on real estate	(83,721)		(87,955)		Funding for real estate construction, redevelopments, and other capital expenditures on real estate	(90,149)		(83,721)
Capital contributions to equity method investments	Capital contributions to equity method investments	(69,127)		(97,380)		Capital contributions to equity method investments	(36,595)		(69,127)
Proceeds from repayment of loans receivable						Proceeds from repayment of loans receivable	28,000		34,000
Tenant-funded escrow for investing activities						Tenant-funded escrow for investing activities	21,717		—
Return of capital from equity method investments						Return of capital from equity method investments	10,081		7,447
Other investing activities, net						Other investing activities, net	(4,987)		(16,945)
Cash paid to stockholders of CPA:18 – Global in the CPA:18 Merger						Cash paid to stockholders of CPA:18 – Global in the CPA:18 Merger	—		(423,435)
Cash and restricted cash acquired in connection with the CPA:18 Merger						Cash and restricted cash acquired in connection with the CPA:18 Merger	—		331,063
Proceeds from redemption of WLT preferred stock (Note 9)	Proceeds from redemption of WLT preferred stock (Note 9)	65,000		—		Proceeds from redemption of WLT preferred stock (Note 9)	—		65,000
Proceeds from repayment of loans receivable		34,000		—
Funding of short-term loans to affiliates						Funding of short-term loans to affiliates	—		(26,000)
Proceeds from repayment of short-term loans to affiliates	Proceeds from repayment of short-term loans to affiliates	26,000		62,048		Proceeds from repayment of short-term loans to affiliates	—		26,000
Funding of short-term loans to affiliates		(26,000)		(41,000)
Investment in loan receivable	Investment in loan receivable	(20,098)		—		Investment in loan receivable	—		(20,098)
Other investing activities, net		(16,945)		(22,854)
Return of capital from equity method investments		7,447		11,611
Net Cash Used in Investing Activities	Net Cash Used in Investing Activities	(1,019,425)		(1,053,266)		Net Cash Used in Investing Activities	(792,526)		(1,019,425)
Cash Flows — Financing Activities	Cash Flows — Financing Activities					Cash Flows — Financing Activities
Proceeds from Unsecured Revolving Credit Facility	Proceeds from Unsecured Revolving Credit Facility	1,460,226		1,360,312		Proceeds from Unsecured Revolving Credit Facility	2,217,896		1,460,226
Repayments of Unsecured Revolving Credit Facility	Repayments of Unsecured Revolving Credit Facility	(1,357,254)		(1,179,552)		Repayments of Unsecured Revolving Credit Facility	(1,977,451)		(1,357,254)
Dividends paid	Dividends paid	(613,302)		(567,240)		Dividends paid	(686,163)		(613,302)
Proceeds from term loans						Proceeds from term loans	546,014		283,139
Scheduled payments of mortgage principal						Scheduled payments of mortgage principal	(251,028)		(51,548)
Proceeds from shares issued under forward equity, net of selling costs						Proceeds from shares issued under forward equity, net of selling costs	249,806		97,456
Prepayments of mortgage principal						Prepayments of mortgage principal	(99,388)		(10,381)
Payment of financing costs						Payment of financing costs	(14,696)		(2,128)
Payments for withholding taxes upon delivery of equity-based awards						Payments for withholding taxes upon delivery of equity-based awards	(13,679)		(6,612)
Distributions to noncontrolling interests						Distributions to noncontrolling interests	(3,059)		(176)
Contributions from noncontrolling interests						Contributions from noncontrolling interests	2,886		—
Other financing activities, net						Other financing activities, net	(558)		11,781
Proceeds from issuance of Senior Unsecured Notes	Proceeds from issuance of Senior Unsecured Notes	334,775		1,038,391		Proceeds from issuance of Senior Unsecured Notes	—		334,775
Proceeds from Unsecured Term Loans		283,139		—
Proceeds from shares issued under ATM Program, net of selling costs		218,081		302,506
Proceeds from shares issued under Equity Forwards, net of selling costs		97,456		457,227
Scheduled payments of mortgage principal		(51,548)		(51,013)
Other financing activities, net		11,781		2,252
Prepayments of mortgage principal		(10,381)		(427,492)
Payments for withholding taxes upon delivery of equity-based awards		(6,612)		(3,779)
Payment of financing costs		(2,128)		(8,201)
Distributions paid to noncontrolling interests		(176)		(104)
Redemption of Senior Unsecured Notes		—		(617,442)
Net Cash Provided by Financing Activities		364,057		305,865
Proceeds from shares issued under our prior ATM Program, net of selling costs						Proceeds from shares issued under our prior ATM Program, net of selling costs	—		218,081
Net Cash (Used in) Provided by Financing Activities						Net Cash (Used in) Provided by Financing Activities	(29,420)		364,057
Change in Cash and Cash Equivalents and Restricted Cash During the Period	Change in Cash and Cash Equivalents and Restricted Cash During the Period					Change in Cash and Cash Equivalents and Restricted Cash During the Period
Effect of exchange rate changes on cash and cash equivalents and restricted cash	Effect of exchange rate changes on cash and cash equivalents and restricted cash	(15,097)		(7,852)		Effect of exchange rate changes on cash and cash equivalents and restricted cash	(958)		(15,097)
Net increase (decrease) in cash and cash equivalents and restricted cash		32,063		(129,857)
Net (decrease) increase in cash and cash equivalents and restricted cash						Net (decrease) increase in cash and cash equivalents and restricted cash	(10,217)		32,063
Cash and cash equivalents and restricted cash, beginning of period	Cash and cash equivalents and restricted cash, beginning of period	217,950		311,779		Cash and cash equivalents and restricted cash, beginning of period	224,141		217,950
Cash and cash equivalents and restricted cash, end of period	Cash and cash equivalents and restricted cash, end of period	$	250,013	$	181,922	Cash and cash equivalents and restricted cash, end of period	$	213,924	$	250,013

See Notes to Consolidated Financial Statements.

W. P. Carey 9/30/~~2022~~2023 10-Q – 8

~~W. P. CAREY INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Continued)~~

~~Supplemental Non-Cash Investing and Financing Activities:~~

~~2022~~ — ~~On August 1, 2022, CPA:18 – Global (as defined herein) merged with and into one of our indirect subsidiaries in the CPA:18 Merger (as defined herein) (Note 3). The following table summarizes estimated fair values of the assets acquired and liabilities assumed in the CPA:18 Merger (in thousands):~~


~~Total Consideration~~
~~Fair value of W. P. Carey shares of common stock issued~~	$	~~1,205,750~~
~~Cash consideration paid~~	~~423,297~~
~~Cash paid for fractional shares~~	~~138~~
~~Fair value of our equity interest in CPA:18 – Global prior to the CPA:18 Merger~~	~~88,299~~
~~Fair value of our equity interest in jointly owned investments with CPA:18 – Global prior to the CPA:18 Merger~~	~~28,574~~
	~~1,746,058~~
~~Assets Acquired at Fair Value~~
~~Land, buildings and improvements — net lease and other~~	~~881,613~~
~~Land, buildings and improvements — operating properties~~	~~1,000,447~~
~~Net investments in direct financing leases and loans receivable~~	~~38,517~~
~~In-place lease and other intangible assets~~	~~224,458~~
~~Above-market rent intangible assets~~	~~61,090~~
~~Assets held for sale~~	~~85,026~~
~~Goodwill~~	~~172,346~~
~~Other assets, net (excluding restricted cash)~~	~~25,229~~
~~Liabilities Assumed at Fair Value~~
~~Non-recourse mortgages, net~~	~~900,173~~
~~Accounts payable, accrued expenses and other liabilities~~	~~90,035~~
~~Below-market rent and other intangible liabilities~~	~~16,836~~
~~Deferred income taxes~~	~~52,320~~
~~Amounts attributable to noncontrolling interests~~	~~14,367~~
~~Net assets acquired excluding cash and restricted cash~~	~~1,414,995~~
~~Cash and cash equivalents and restricted cash acquired~~	$	~~331,063~~

~~See Notes to Consolidated Financial Statements.~~

~~W. P. Carey 9/30/2022 10-Q~~– 9

W. P. CAREY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Business and Organization

W. P. Carey Inc. (“W. P. Carey”) is a REIT that, together with our consolidated subsidiaries, invests primarily in operationally-critical, single-tenant commercial real estate properties located in the United States and Northern and Western Europe on a long-term basis. We earn revenue principally by leasing the properties we own to companies on a triple-net lease basis, which generally requires each tenant to pay the costs associated with operating and maintaining the property.

Founded in 1973, our shares of common stock are listed on the New York Stock Exchange under the symbol “WPC.”

We elected to be taxed as a REIT under Section 856 through 860 of the Internal Revenue Code effective as of February 15, 2012. As a REIT, we are not subject to federal income taxes on income and gains that we distribute to our stockholders as long as we satisfy certain requirements, principally relating to the nature of our income and the level of our distributions, as well as other factors. We also own real property in jurisdictions outside the United States through foreign subsidiaries and are subject to income taxes on our pre-tax income earned from properties in such countries. ~~Through~~

In September 2023, we announced a plan to exit the office assets within our ~~taxable~~portfolio by (i) spinning-off 59 office properties into Net Lease Office Properties (“NLOP”), so that it will become a separate publicly-traded REIT ~~subsidiaries (“TRSs”~~(the “Spin-Off”), and (ii) implementing an asset sale program to dispose of 87 office properties retained by us (the “Office Sale Program”), which is targeted to be substantially completed in early 2024. NLOP was a wholly-owned subsidiary of WPC as of September 30, 2023.

On November 1, 2023, we ~~also earn revenue~~completed the Spin-Off, contributing 59 office properties to NLOP. Following the closing of the Spin-Off, NLOP operates as ~~the advisor~~a separate publicly-traded REIT, which we externally manage pursuant to certain non-traded investment programs. We hold all of our real estate assets attributable to our Real Estate segment under the REIT structure, while the activities conducted by our Investment Management segment subsidiaries have been organized under TRSs.advisory agreements (the “NLOP Advisory Agreements”) (Note 17).

On August 1, 2022, a non-traded REIT that we previously advised, Corporate Property Associates 18 – Global Incorporated (“CPA:18 – Global”) merged with and into one of our indirect subsidiaries (the “CPA:18 Merger”) (~~Note 3~~). At September 30, ~~2022,~~2023, we were the advisor to Carey European Student Housing Fund I, L.P. (“CESH”), a limited partnership formed for the purpose of developing, owning, and operating student housing properties in Europe (Note 4).

We refer to CPA:18 – Global (prior to the CPA:18 Merger) and CESH collectively as the “Managed Programs.” ~~We no longer raise capital for new or existing funds, but currently expect to continue managing CESH through the end of its life cycle (Note 4~~).

Reportable Segments

Real Estate — Lease revenues from our real estate investments generate the vast majority of our earnings. We invest primarily in commercial properties located in the United States and Northern and Western Europe, which are leased to companies on a triple-net lease basis. At September 30, ~~2022,~~2023, our ~~owned~~ portfolio was comprised of our full or partial ownership interests in ~~1,428~~1,472 properties, totaling approximately ~~175~~179 million square feet, substantially all of which were net leased to ~~391~~395 tenants, with a weighted-average lease term of ~~10.9~~11.0 years and an occupancy rate of 98.9%. In addition, at September 30, ~~2022,~~2023, our portfolio was comprised of full or partial ownership interests in 8798 operating properties, including 8486 self-storage properties, ten hotels, and two student housing properties, ~~and one hotel,~~ totaling approximately ~~6.6~~7.5 million square feet.

Investment Management — ~~Through our TRSs, we~~We manage the real estate investment portfolio for CESH, for which we earn asset management revenue. We may also be entitled to receive certain distributions pursuant to our advisory arrangements with CESH. At September 30, ~~2022,~~2023, CESH ~~owned all or a portion of three net-leased properties, totaling approximately 0.4 million square feet, all of which were leased to one tenant, with an occupancy rate of 100.0%. CESH also~~wholly owned one ~~active~~ build-to-suit ~~project at the same date.~~project.

W. P. Carey 9/30/~~2022~~2023 10-Q – 109

Notes to Consolidated Financial Statements (Unaudited)

Note 2. Basis of Presentation

Basis of Presentation

Our interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not necessarily include all information and footnotes necessary for a complete statement of our consolidated financial position, results of operations, and cash flows in accordance with generally accepted accounting principles in the United States (“GAAP”). In the opinion of management, the unaudited financial information for the interim periods presented in this Report reflects all normal and recurring adjustments necessary for a fair presentation of financial position, results of operations, and cash flows. Our interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for the year ended December 31, ~~2021,~~2022, which are included in the ~~2021~~2022 Annual Report, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this Report. Operating results for interim periods are not necessarily indicative of operating results for an entire year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.

Basis of Consolidation

Our consolidated financial statements reflect all of our accounts, including those of our controlled subsidiaries. The portions of equity in consolidated subsidiaries that are not attributable, directly or indirectly, to us are presented as noncontrolling interests. All significant intercompany accounts and transactions have been eliminated.

When we obtain an economic interest in an entity, we evaluate the entity to determine if it should be deemed a VIE and, if so, whether we are the primary beneficiary and are therefore required to consolidate the entity. There have been no significant changes in our VIE policies from what was disclosed in the ~~2021~~2022 Annual Report.

~~Upon the closing of the CPA:18 Merger, we acquired five consolidated VIEs and declassified three entities as VIEs.~~

At September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we considered 15 and 16 ~~and 14~~ entities, respectively, to be VIEs, ~~respectively,~~ of which we consolidated 1110 and ~~six,~~11, respectively, as we are considered the primary beneficiary. The following table presents a summary of selected financial data of the consolidated VIEs included in our consolidated balance sheets (in thousands):


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Land, buildings and improvements — net lease and other	Land, buildings and improvements — net lease and other	$	606,459	$	426,831	Land, buildings and improvements — net lease and other	$	171,802	$	590,390
Land, buildings and improvements — operating properties	Land, buildings and improvements — operating properties	105,883		—		Land, buildings and improvements — operating properties	12,655		143,390
Net investments in direct financing leases and loans receivable		144,103		144,103
Net investments in finance leases and loans receivable						Net investments in finance leases and loans receivable	595,524		144,103
In-place lease intangible assets and other	In-place lease intangible assets and other	71,017		42,884		In-place lease intangible assets and other	24,778		72,070
Above-market rent intangible assets	Above-market rent intangible assets	33,414		26,720		Above-market rent intangible assets	11,067		33,634
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(168,802)		(154,413)		Accumulated depreciation and amortization	(24,281)		(176,379)
Total assets	Total assets	823,378		500,884		Total assets	822,159		843,500

Non-recourse mortgages, net	Non-recourse mortgages, net	$	157,044	$	1,485	Non-recourse mortgages, net	$	57,455	$	132,950
Below-market rent and other intangible liabilities, net	Below-market rent and other intangible liabilities, net	19,318		20,568		Below-market rent and other intangible liabilities, net	32		18,891
Total liabilities	Total liabilities	224,509		46,302		Total liabilities	96,957		199,633

~~W. P. Carey 9/30/2022 10-Q~~– 11

~~Notes to Consolidated Financial Statements (Unaudited)~~

At both September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, our five ~~and eight~~ unconsolidated VIEs included our interests in (i) three ~~and six~~ unconsolidated real estate investments, ~~respectively,~~ which we account for under the equity method of accounting (we do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities allows us to exercise significant influence on, but does not give us power over, decisions that significantly affect the economic performance of these entities), and (ii) two unconsolidated investments in equity securities, which we accounted for as investments in shares of the entities at fair value. As of September 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, the net carrying amount of our investments in these entities was ~~$629.8~~$727.2 million and ~~$581.3~~$693.4 million, respectively, and our maximum exposure to loss in these entities was limited to our investments.

W. P. Carey 9/30/2023 10-Q– 10

Notes to Consolidated Financial Statements (Unaudited)

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

~~We currently present Income~~Amounts due from ~~direct financing leases and loans receivable on its own line item in the consolidated statements of income. Previously, income from direct financing leases was~~affiliates are now included within ~~Lease revenues and income from loans receivable was included within Lease termination income and other in the consolidated statements of income.~~

~~We currently present Land, buildings and improvements —~~Other assets, net ~~lease and other and Land, buildings and improvements — operating properties on separate line items~~ in the consolidated balance sheets. Previously, ~~land, buildings and improvements attributable to net lease properties and operating properties~~such amounts were ~~aggregated~~included within ~~Land, buildings and improvements~~Due from affiliates in the consolidated balance ~~sheets (Note 5~~).sheets.

Revenue Recognition

There have been no significant changes in our policies for revenue from contracts under Accounting Standards Codification (“ASC”) 606 from what was disclosed in the ~~2021~~2022 Annual Report. ASC 606 does not apply to our lease revenues, which constitute a majority of our revenues, but primarily applies to revenues generated from our hotel operating properties and our Investment Management segment. Revenue from contracts for our Real Estate segment primarily represented hotel operating property revenues of ~~$3.7~~$23.2 million and ~~$2.4~~$3.7 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$9.1~~$63.3 million and ~~$4.9~~$9.1 million for the nine months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively, generated from 13 hotels located in the United States (12 of which were reclassified from net leases to operating properties in the first quarter of 2023 (Note 165); three of these properties were sold during the third quarter of 2023 and five are classified as held for sale as of September 30, 2023). Revenue from contracts under ASC 606 from our Investment Management segment is discussed in Note 4.

Lease revenue (including straight-line lease revenue) is only recognized when deemed probable of collection. Collectibility is assessed for each tenant receivable using various criteria including credit ratings (~~Note 6~~), guarantees, past collection issues, and the current economic and business environment affecting the tenant. If collectibility of the contractual rent stream is not deemed probable, revenue will only be recognized upon receipt of cash from the tenant.

Restricted Cash

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the consolidated statements of cash flows (in thousands):


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	186,417	$	165,427	Cash and cash equivalents	$	136,438	$	167,996
Restricted cash (a)	Restricted cash (a)	63,596		52,523		Restricted cash (a)	77,486		56,145
Total cash and cash equivalents and restricted cash	Total cash and cash equivalents and restricted cash	$	250,013	$	217,950	Total cash and cash equivalents and restricted cash	$	213,924	$	224,141

__________

(a)Restricted cash is included within Other assets, net on our consolidated balance sheets.

Reference Rate Reform

~~W. P. Carey 9/30/2022 10-Q~~

During the first quarter of 2023, we applied the guidance in ASC 848, Reference Rate Reform and elected the practical expedient to transition certain contracts that reference London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”), including our Senior Unsecured Credit Facility (– Note 1112) and certain derivative instruments. The application of this guidance did not have a material impact on our consolidated financial statements.

~~Notes to Consolidated Financial Statements (Unaudited)~~

Note 3. Merger with CPA:18 – Global

CPA:18 Merger

On February 27, 2022, we and certain of our subsidiaries entered into a merger agreement with CPA:18 – Global, pursuant to which CPA:18 – Global would merge with and into one of our indirect subsidiaries in exchange for shares of our common stock and cash, subject to approval by the stockholders of CPA:18 – Global. The CPA:18 Merger and related transactions were approved by the stockholders of CPA:18 – Global on July 26, 2022 and completed on August 1, 2022.

At the effective time of the CPA:18 Merger, each share of CPA:18 – Global common stock issued and outstanding immediately prior to the effective time of the CPA:18 Merger was canceled and, in exchange for cancellation of such share, the rights attaching to such share were converted automatically into the right to receive (i) 0.0978 shares of our common stock and (ii) $3.00 in cash, which we refer to herein as the Merger Consideration. Each share of CPA:18 – Global common stock owned by us or any of our subsidiaries immediately prior to the effective time of the CPA:18 Merger was automatically canceled and retired, and ceased to exist, for no Merger Consideration. In exchange for the 141,099,002 shares of CPA:18 – Global common stock that we and our subsidiaries did not previously own, we paid total merger consideration of approximately $1.6 billion, consisting of (i) the issuance of 13,786,302 shares of our common stock with a fair value of $1.2 billion, based on the closing

W. P. Carey 9/30/2023 10-Q– 11

Notes to Consolidated Financial Statements (Unaudited)

price of our common stock on August 1, 2022 of $87.46 per share, (ii) cash consideration of $423.3 million, and (iii) cash of $0.1 million paid in lieu of issuing any fractional shares of our common stock. Pursuant to the terms of the definitive merger agreement, in connection with the closing of the CPA:18 Merger, we waived certain back-end fees that we would have otherwise been entitled to receive from CPA:18 – Global upon its liquidation pursuant to the terms of our pre-closing advisory agreement with CPA:18 – Global.

Immediately prior to the closing of the CPA:18 Merger, CPA:18 – Global’s portfolio was comprised of full or partial ownership interests in 42 leased properties (including seven properties in which we already owned a partial ownership interest), substantially all of which were net leased with a weighted-average lease term of 7.0 years, an occupancy rate of 99.3%, and an estimated contractual minimum annualized base rent (“ABR”) totaling $81.0 million, as well as 65 self-storage operating properties and two student housing operating properties totaling 5.1 million square feet. The related property-level debt was comprised of non-recourse mortgage loans with an aggregate consolidated fair value of approximately $900.2 million with a weighted-average annual interest rate of 5.1% as of August 1, 2022. From the closing of the CPA:18 Merger through September 30, 2022, lease revenues, operating property revenues, and net loss from properties acquired were $16.5 million, $15.4 million, and $0.5 million, respectively.

Two of the net lease properties that we acquired in the CPA:18 Merger were classified as Assets held for sale, with an aggregate fair value of $85.0 million at acquisition (Note 5). From the closing of the CPA:18 Merger through September 30, 2022, lease revenues from these properties totaled $2.1 million. We sold one of these properties in August 2022 for total proceeds, net of selling costs, of $44.5 million, and recognized a loss on sale of $0.2 million (NNote 15). We sold the other property in October 2023 for gross proceeds of approximately $30.4 million (Note 1 ~~ote 15~~7).

Purchase Price Allocation

We accounted for the CPA:18 Merger as a business combination under the acquisition method of accounting. After consideration of all applicable factors pursuant to the business combination accounting rules, we were considered the “accounting acquirer” due to various factors, including the fact that our stockholders held the largest portion of the voting rights in the combined company upon completion of the CPA:18 Merger. There have been no changes to the purchase price allocation for the CPA:18 Merger from what was disclosed in the 2022 Annual Report. Costs related to the CPA:18 Merger have been expensed as incurred and classified within Merger and other expenses in the consolidated statements of income, totaling $17.1 million for the nine months ended September 30, 2022.

The purchase price was allocated to the assets acquired and liabilities assumed, based upon their preliminary fair values at August 1, 2022. The following tables summarize the preliminary consideration and estimated fair values of the assets acquired and liabilities assumed in the acquisition, based on the current best estimate of management. We are in the process of finalizing our assessment of the fair value of the assets acquired and liabilities assumed. Investments in land, buildings and improvements, net investments in direct financing leases, non-recourse mortgages, and noncontrolling interests were based on preliminary valuation data and estimates.

~~W. P. Carey 9/30/2022 10-Q~~– 13

~~Notes to Consolidated Financial Statements (Unaudited)~~


	~~Preliminary Purchase Price Allocation (in thousands)~~
~~Total Consideration~~
~~Fair value of W. P. Carey shares of common stock issued~~	$	~~1,205,750~~
~~Cash consideration paid~~	~~423,297~~
~~Cash paid for fractional shares~~	~~138~~
~~Merger Consideration~~	~~1,629,185~~
~~Fair value of our equity interest in CPA:18 – Global prior to the CPA:18 Merger~~	~~88,299~~
~~Fair value of our equity interest in jointly owned investments with CPA:18 – Global prior to the CPA:18 Merger~~	~~28,574~~
	$	~~1,746,058~~


	~~Preliminary Purchase Price Allocation (in thousands)~~
~~Assets~~
~~Land, buildings and improvements — net lease and other~~	$	~~881,613~~
~~Land, buildings and improvements — operating properties~~	~~1,000,447~~
~~Net investments in direct financing leases and loans receivable~~	~~38,517~~
~~In-place lease and other intangible assets~~	~~224,458~~
~~Above-market rent intangible assets~~	~~61,090~~
~~Assets held for sale~~	~~85,026~~
~~Cash and cash equivalents and restricted cash~~	~~331,063~~
~~Other assets, net (excluding restricted cash)~~	~~25,229~~
~~Total assets~~	~~2,647,443~~
~~Liabilities~~
~~Non-recourse mortgages, net~~	~~900,173~~
~~Accounts payable, accrued expenses and other liabilities~~	~~90,035~~
~~Below-market rent and other intangible liabilities~~	~~16,836~~
~~Deferred income taxes~~	~~52,320~~
~~Total liabilities~~	~~1,059,364~~
~~Total identifiable net assets~~	~~1,588,079~~
~~Noncontrolling interests~~	~~(14,367)~~
~~Goodwill~~	~~172,346~~
	$	~~1,746,058~~

Goodwill

The $172.3 million of goodwill recorded in the CPA:18 Merger was primarily due to the premium we paid over CPA:18 – Global’s estimated fair value. Management believes the premium is supported by several factors, including that the CPA:18 Merger (i) concludes our exit from the non-traded REIT business, (ii) adds a high-quality diversified portfolio of net lease assets that is well-aligned with our existing portfolio, (iii) enhances certain portfolio metrics, and (iv) adds an attractive portfolio of self-storage operating properties.

The fair value of the 13,786,302 shares of our common stock issued in the CPA:18 Merger as part of the consideration paid for CPA:18 – Global of $1.6 billion was derived from the closing market price of our common stock on the acquisition date. As required by GAAP, the fair value related to the assets acquired and liabilities assumed, as well as the shares exchanged, has been computed as of the date we gained control, which was the closing date of the CPA:18 Merger, in a manner consistent with the methodology described above.

Goodwill is not deductible for income tax purposes.

~~W. P. Carey 9/30/2022 10-Q~~– 14

~~Notes to Consolidated Financial Statements (Unaudited)~~

Equity Investments

During the third quarter of 2022, we recognized a gain on change in control of interests of approximately $22.5 million, which was the difference between the carrying value of approximately $65.8 million and the fair value of approximately $88.3 million of our previously held equity interest in 8,556,732 shares of CPA:18 – Global’s common stock.

W. P. Carey 9/30/2023 10-Q– 12

Notes to Consolidated Financial Statements (Unaudited)

The CPA:18 Merger also resulted in our acquisition of the remaining interests in four investments in which we already had a joint interest and accounted for under the equity method. Upon acquiring the remaining interests in these investments, we owned 100% of these investments and thus accounted for the acquisitions of these interests utilizing the purchase method of accounting. Due to the change in control of the four jointly owned investments that occurred, we recorded a gain on change in control of interests of approximately $11.4 million during the third quarter of 2022, which was the difference between our carrying values and the fair values of our previously held equity interests on August 1, 2022 of approximately $17.2 million and approximately $28.6 million, respectively. Subsequent to the CPA:18 Merger, we consolidate these wholly owned investments.

The fair values of our previously held equity interests are based on the estimated fair market values of the underlying real estate and related mortgage debt, both of which were determined by management relying in part on a third party. Real estate valuation requires significant judgment. We determined the significant assumptions to be Level 3 with ranges for our previously held equity interests as follows:

•~~Market rents ranged from $8.65 per square foot to $21.00 per square foot;~~

•~~Discount rates applied to the estimated net operating income of each property ranged from approximately 5.75% to 9.75%;~~

•~~Discount rates applied to the estimated residual value of each property ranged from approximately 6.50% to 8.50%;~~

•~~Residual capitalization rates applied to the properties ranged from approximately 5.75% to 8.00%;~~

•The fair market value of the property level debt was determined based upon available market data for comparable liabilities and by applying selected discount rates to the stream of future debt payments; and

•~~Discount rates applied to the property level debt cash flows ranged from approximately 2.28% to 5.50%.~~

Pro Forma Financial Information

The following consolidated pro forma financial information has been presented as if the CPA:18 Merger had occurred on January 1, 2021 for the three and nine months ended September 30, ~~2022 and 2021.~~2022. The pro forma financial information is not necessarily indicative of what the actual results would have been had the CPA:18 Merger on that date, nor does it purport to represent the results of operations for future periods.

(in thousands)

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Pro forma total revenues $ 397,915 $ 372,498 $ 1,187,887 $ 1,089,031


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022		2022
Pro forma total revenues	$	397,915	$	1,187,887

Note 4. Agreements and Transactions with Related Parties

Advisory Agreements and Partnership Agreements with the Managed Programs

We currently have advisory arrangements with CESH, pursuant to which we earn fees and are entitled to receive reimbursement for certain fund management expenses. Upon completion of the CPA:18 Merger on August 1, 2022 (Note 1, Note 3), our advisory agreements with CPA:18 – Global were terminated, and we ceased earning revenue from CPA:18 – Global. ~~We no longer raise capital for new or existing funds, but we currently expect to continue to manage CESH and earn various fees (as described below) through the end of its life cycle.~~

~~W. P. Carey 9/30/2022 10-Q~~– 15

~~Notes to Consolidated Financial Statements (Unaudited)~~

The merger between Carey Watermark Investors Incorporated (“CWI 1”) and Carey Watermark Investors 2 Incorporated (“CWI 2”), two former affiliates (the “CWI 1 and CWI 2 Merger”), closed on April 13, 2020 and is discussed in detail in the 2021 Annual Report. Subsequently, CWI 2 was renamed Watermark Lodging Trust, Inc. (“WLT”). In connection with the CWI 1 and CWI 2 Merger, we entered into a transition services agreement, under which we provided certain transition services at cost to WLT generally for a period of 12 months from closing. On October 13, 2021, all services provided under the transition services agreement were terminated.

The following tables present a summary of revenue earned, reimbursable costs, and distributions of Available Cash received/accrued from the Managed Programs ~~and WLT~~ for the periods indicated, included in the consolidated financial statements (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Distributions of Available Cash (a)
$ 3,345 $ 1,623 $ 8,746 $ 4,949
Asset management revenue (b) (c)
1,197 3,872 8,084 11,792
Reimbursable costs from affiliates (b)
344 1,041 2,414 3,050
Interest income on deferred acquisition fees and loans to affiliates (d)
4 57 112 121
$ 4,890 $ 6,593 $ 19,356 $ 19,912


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Asset management revenue (a) (b)	$	194	$	1,197	$	836	$	8,084
Reimbursable costs from affiliates (a)	97		344		322		2,414
Distributions of Available Cash (c)	—		3,345		—		8,746
Interest income on loans to affiliates (d)	—		4		—		112
	$	291	$	4,890	$	1,158	$	19,356


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
CESH										CESH	$	291	$	424	$	1,158	$	1,502
CPA:18 – Global	CPA:18 – Global	$	4,466	$	5,608	$	17,854	$	16,578	CPA:18 – Global	—		4,466		—		17,854
CESH		424		909		1,502		3,054
WLT (reimbursed transition services)		—		76		—		280
		$	4,890	$	6,593	$	19,356	$	19,912		$	291	$	4,890	$	1,158	$	19,356

__________

(a)Included within Earnings (losses) from equity method investments in the consolidated statements of income. Amounts for the three and nine months ended September 30, 2022 reflect an additional month of activity as compared to the prior year periods, since the CPA:18 Merger closed on August 1, 2022 and distributions of Available Cash are paid on a quarter lag.

~~(b)~~Amounts represent revenues from contracts under ASC 606.

~~(c)~~(b)Included within Asset management ~~and other~~ revenue in the consolidated statements of income.

(c)Included within Earnings from equity method investments in the consolidated statements of income.

(d)Included within Non-operating income in the consolidated statements of income.

~~The following table presents a summary of amounts included in Due from affiliates in the consolidated financial statements (in thousands):~~

September 30, 2022 December 31, 2021
Asset management fees receivable $ 352 $ 494
Accounts receivable 159 336
Reimbursable costs 91 974
Current acquisition fees receivable — 19
Deferred acquisition fees receivable, including accrued interest — 3
$ 602 $ 1,826

W. P. Carey 9/30/~~2022~~2023 10-Q – 1613

Notes to Consolidated Financial Statements (Unaudited)

The following table presents a summary of amounts due from affiliates, which are included within Other assets, net in the consolidated financial statements (in thousands):


	September 30, 2023		December 31, 2022
Asset management fees receivable	$	191	$	386
Reimbursable costs	122		204
Accounts receivable	69		329
	$	382	$	919

Asset Management Revenue

Under the advisory ~~agreements~~agreement with ~~the Managed Programs,~~CESH, we earn asset management revenue ~~for managing their investment portfolios. The following table presents~~at a ~~summary~~rate of ~~our~~1.0% based on its gross assets at fair value, paid in cash. After completion of the CPA:18 Merger on August 1, 2022, we no longer receive asset management ~~fee arrangements with the Managed Programs:~~

~~Managed Program~~

~~Rate~~

~~Payable~~

~~Description~~

~~CPA:18 – Global~~

~~0.5% – 1.5%~~

In shares of its Class A common stock and/or cash, at the option of CPA:18 – Global; payable in shares of its Class A common stock for 2021 through February 28, 2022; payable in cash from March 1, 2022 to August 1, 2022 (the date of the completion of the CPA:18 Merger)

~~Rate depended on the type of investment and was based on the average market or average equity value, as applicable~~

~~CESH~~

~~1.0%~~

~~In cash~~

~~Based on gross assets at fair value~~

revenue from CPA:18 – Global.

Reimbursable Costs from Affiliates

CESH reimburses us in cash for certain personnel and overhead costs that we incur on its behalf, based on actual expenses incurred.

Distributions of Available Cash

We were entitled to receive distributions of up to 10% of the Available Cash (as defined in CPA:18 – Global’s partnership agreement) from the operating partnership of CPA:18 – Global, payable quarterly in arrears. After completion of the CPA:18 Merger on August 1, 2022 (Note 3), we no longer receive distributions of Available Cash from CPA:18 – Global.

Back-End Fees and Interests in the Managed Programs

Under our advisory arrangements with CESH, we may also receive compensation in connection with providing a liquidity event for its investors. Such back-end fees or interests include ~~or may include~~ interests in disposition proceeds. There can be no assurance as to whether or when any back-end fees or interests will be realized. Pursuant to the terms of the definitive merger agreement, in connection with the closing of the CPA:18 Merger, we waived certain back-end fees that we would have been entitled to receive from CPA:18 – Global upon its liquidation pursuant to the terms of our advisory agreement and partnership agreement with CPA:18 – Global (~~Note 3~~).

Other Transactions with Affiliates

NLOP Advisory Agreements

Upon closing of the Spin-Off on November 1, 2023, we externally manage NLOP pursuant to the NLOP Advisory Agreements (Note 17).

Loans to Affiliates

From time to time, our board of directors has approved the making of secured and unsecured loans or lines of credit from us to certain of the Managed Programs, at our sole discretion, generally for the purpose of facilitating acquisitions or for working capital purposes. The principal outstanding balance on our line of credit to CPA:18 – Global was $16.0 million as of June 30, 2022. No amounts were outstanding as of December 31, 2021. In July 2022, CPA:18 – Global repaid the principal outstanding balance in full. The loan agreement with CPA:18 – Global was terminated upon completion of the CPA:18 Merger on August 1, 2022. No such line of credit with CESH existed during the reporting period.

Other

At September 30, ~~2022,~~2023, we owned interests in ~~ten~~eight jointly owned investments in real estate, with the remaining interests held by third parties. We consolidate ~~six~~four such investments and account for the remaining four investments under the equity method of accounting (Note 8). In addition, we owned limited partnership units of CESH at that date. We elected to account for our investment in CESH under the fair value option (Note 8).

W. P. Carey 9/30/~~2022~~2023 10-Q – 1714

Notes to Consolidated Financial Statements (Unaudited)

Note 5. Land, Buildings and Improvements, and Assets Held for Sale

Land, Buildings and Improvements — Net Lease and Other

Land and buildings leased to others, which are subject to operating leases, and real estate under construction, are summarized as follows (in thousands):

September 30, 2022 December 31, 2021
Land $ 2,320,763 $ 2,151,327
Buildings and improvements 10,525,449 9,525,858
Real estate under construction 16,211 114,549
Less: Accumulated depreciation (1,563,622) (1,448,020)
$ 11,298,801 $ 10,343,714

~~As discussed in~~ ~~Note 3~~, we acquired 39 consolidated properties subject to existing operating leases in the CPA:18 Merger, which increased the carrying value of our Land, buildings and improvements — net lease and other by $881.6 million during the nine months ended September 30, 2022.


	September 30, 2023		December 31, 2022
Land	$	2,385,620	$	2,400,002
Buildings and improvements	10,950,878		10,916,630
Real estate under construction	54,194		22,225
Less: Accumulated depreciation	(1,727,825)		(1,672,091)
	$	11,662,867	$	11,666,766

During the nine months ended September 30, ~~2022,~~2023, the U.S. dollar strengthened against the euro, as the end-of-period rate for the U.S. dollar in relation to the euro decreased by ~~13.9%~~0.7% to ~~$0.9748~~$1.0594 from ~~$1.1326.~~$1.0666. As a result of this fluctuation in foreign currency exchange rates, the carrying value of our Land, buildings and improvements — net lease and other decreased by ~~$601.1~~$28.7 million from December 31, ~~2021~~2022 to September 30, ~~2022.~~2023.

During the nine months ended September 30, 2023, we reclassified a portfolio of 78 properties classified as Land, buildings and improvements — net lease and other to Net investments in finance leases and loans receivable due to the tenant’s notice of intention to exercise a purchase option. As a result, the carrying value of our Land, buildings and improvements — net lease and other decreased by $288.2 million from December 31, 2022 to September 30, 2023 (Note 6).

On January 31, 2023, the master lease expired on certain hotel properties previously classified as net-lease properties, which converted to operating properties. As a result, in February 2023, we reclassified 12 consolidated hotel properties with an aggregate carrying value of $164.6 million from Land, buildings and improvements — net lease and other to Land, buildings and improvements — operating properties. Effective as of that time, we began recognizing operating property revenues and expenses from these properties, whereas previously we recognized lease revenues from these properties.

In connection with changes in lease classifications due to ~~termination~~extensions of the underlying leases, we reclassified ~~two~~five properties with an aggregate carrying value of ~~$30.5~~$25.4 million from Net investments in ~~direct financing~~finance leases and loans receivable to Land, buildings and improvements — net lease and other during the nine months ended September 30, ~~2022~~2023 (Note 6).

Depreciation expense, including the effect of foreign currency translation, on our buildings and improvements subject to operating leases was ~~$76.0~~$80.9 million and ~~$70.8~~$76.0 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$221.0~~$251.9 million and ~~$207.2~~$221.0 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

W. P. Carey 9/30/~~2022~~2023 10-Q – 1815

Notes to Consolidated Financial Statements (Unaudited)

Acquisitions of Real Estate

During the nine months ended September 30, ~~2022,~~2023, we entered into the following investments, which were deemed to be real estate asset acquisitions ~~and which excludes properties acquired in the CPA:18 Merger~~ (dollars in thousands):

Property Location(s) Number of Properties Date of Acquisition Property Type Total Capitalized Costs
Pleasant Prairie, Wisconsin 1 1/10/2022 Industrial $ 20,024
Various, Spain (a)
26 2/3/2022 Funeral Home 146,364
Various, Denmark (a) (b)
8 2/11/2022 Retail 33,976
Laval, Canada (a)
1 2/18/2022 Industrial 21,459
Chattanooga, Tennessee (c)
1 3/4/2022 Warehouse 43,198
Various, United States (4 properties), Canada (1 property, and Mexico (1 property) 6 4/27/2022; 5/9/2022 Industrial 80,595
Various, United States 6 5/16/2022 Industrial; Warehouse 110,381
Various, Denmark (a) (b)
10 6/1/2022; 6/30/2022 Retail 42,635
Medina, Ohio 1 6/17/2022 Industrial 28,913
Bree, Belgium (a)
1 6/30/2022 Warehouse 96,697
Various, Spain (a)
5 7/21/2022 Retail 19,894
Various, United States 18 7/26/2022 Industrial; Warehouse 262,061
Various, Denmark (a) (b)
8 8/1/2022; 9/28/2022 Retail 29,644
Westlake, Ohio 1 8/3/2022 Warehouse 29,517
Hebron and Strongsville, Ohio; and Scarborough, Canada 3 8/10/2022 Industrial; Warehouse 20,111
Clifton Park, New York and West Des Moines, Iowa 2 8/12/2022 Specialty 23,317
Orzinuovi, Italy (a)
1 8/26/2022 Industrial 14,033
99 $ 1,022,819


Property Location(s)	Number of Properties	Date of Acquisition	Property Type	Total Capitalized Costs
Various, United States	6	1/12/2023	Industrial	$	64,861
Various, Italy (5 properties) and Spain (3 properties) (a)	8	3/23/2023	Industrial	79,218
Various, Canada	11	4/1/2023	Industrial, Warehouse	467,811
Various, United States (4 properties), Canada (3 properties), and Mexico (2 properties) (b)	9	4/18/2023	Industrial	97,952
Various, United States (c)	9	5/5/2023; 5/26/2023	Retail (Car Wash)	39,713
Various, United States	4	6/15/2023	Education (Medical School)	139,092
	47			$	888,647

__________

(a)Amount reflects the applicable exchange rate on the date of transaction.

(b)Amount includes $3.1 million for an expansion at a property leased to this tenant that we already own.

(c)We also entered into a purchase ~~agreements~~agreement to acquire ~~five~~two additional retail (car wash) facilities leased to this tenant totaling ~~$17.7~~$8.7 million, ~~(based on the exchange rate of the Danish krone at September 30, 2022),~~ which is expected to be completed ~~in 2022.~~during the fourth quarter of 2023.

~~(c)~~

The aggregate purchase price allocation for investments disclosed above is as follows (dollars in thousands):


	Total Capitalized Costs
Land	$	135,502
Buildings and improvements	604,973
Intangible assets:
In-place lease (weighted-average expected life of 21.9 years)	142,073
Right-of-use assets:
Finance lease (a)	12,981
Prepaid rent liabilities	(6,882)
	$	888,647

__________

(a)Represents consideration paid to acquire a leasehold interest in land, buildings and improvements. The lease was determined to be a finance lease due to our intention to acquire the land, buildings and improvements upon lease expiration. These assets are included in In-place lease intangible assets and other in the consolidated balance sheets.

Real Estate Under Construction — Net Lease and Operating Properties

During the nine months ended September 30, 2023, we capitalized real estate under construction totaling $72.6 million. The number of construction projects in progress with balances included in real estate under construction was 12 and eight as of September 30, 2023 and December 31, 2022, respectively. Aggregate unfunded commitments totaled approximately $94.4 million and $61.1 million as of September 30, 2023 and December 31, 2022, respectively.

W. P. Carey 9/30/2023 10-Q– 16

Notes to Consolidated Financial Statements (Unaudited)

During the nine months ended September 30, 2023, we completed the following construction projects (dollars in thousands):

Property Location(s)

Primary Transaction Type

Number of Properties

Date of Completion

Property Type

Total Capitalized Costs

Evansville, Indiana and Lawrence, Kansas

Renovation

3/23/2023

Industrial

20,637

Pleasanton, California

Redevelopment

8/21/2023

Laboratory

13,905

34,542

During the nine months ended September 30, 2023, we committed to fund three redevelopment projects, for an aggregate amount of $80.6 million. We currently expect to complete the projects in 2024 and 2025.

Capitalized interest incurred during construction was $0.2 million and $0.3 million for the three months ended September 30, 2023 and 2022, respectively, and $0.3 million and $1.3 million for the nine months ended September 30, 2023 and 2022, respectively, which reduces Interest expense in the consolidated statements of income.

Dispositions of Properties

During the nine months ended September 30, 2023, we sold nine properties, which were classified as Land, buildings and improvements — net lease and other. As a result, the carrying value of our Land, buildings and improvements — net lease and other decreased by $93.4 million from December 31, 2022 to September 30, 2023 (Note 15).

Other Lease-Related Income

2023 — For the three and nine months ended September 30, 2023, other lease-related income on our consolidated statements of income included: (i) other lease-related settlements totaling $1.7 million and $7.3 million, respectively and (ii) lease termination income totaling $11.4 million for the nine months ended September 30, 2023, received from two tenants in connection with the sales of the properties they occupied.

2022 — For the three and nine months ended September 30, 2022, other lease-related income on our consolidated statements of income included: (i) lease termination income of $4.2 million received from a tenant during the third quarter of

2022; (ii) other lease-related settlements totaling $3.8 million and $10.0 million, respectively; (iii) income from a parking garage attached to one of our net-leased properties totaling $0.2 million and $1.5 million, respectively; and (iv) lease termination income of $8.2 million received from a tenant during the nine months ended September 30, 2022.

Leases

Operating Lease Income

Lease income related to operating leases recognized and included in the consolidated statements of income is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Lease income — fixed	$	325,481	$	295,433	$	958,015	$	852,843
Lease income — variable (a)	43,678		36,469		132,604		101,138
Total operating lease income	$	369,159	$	331,902	$	1,090,619	$	953,981

__________

(a)Includes (i) rent increases based on changes in the U.S. Consumer Price Index (“CPI”) and other comparable indices and (ii) reimbursements for property taxes, insurance, and common area maintenance services.

W. P. Carey 9/30/2023 10-Q– 17

Notes to Consolidated Financial Statements (Unaudited)

Land, Buildings and Improvements — Operating Properties

At September 30, 2023, Land, buildings and improvements — operating properties consisted of our investments in 77 consolidated self-storage properties, five consolidated hotels, and two consolidated student housing properties. At December 31, 2022, Land, buildings and improvements — operating properties consisted of our investments in 75 consolidated self-storage properties, two consolidated student housing properties, and one consolidated hotel. Below is a summary of our Land, buildings and improvements — operating properties (in thousands):


	September 30, 2023		December 31, 2022
Land	$	141,942	$	122,317
Buildings and improvements	1,080,058		955,009
Real estate under construction	62		18,566
Less: Accumulated depreciation	(72,781)		(28,295)
	$	1,149,281	$	1,067,597

As described above under Land, Buildings and Improvements — Net Lease and Other, on January 31, 2023, the master lease expired on certain hotel properties previously classified as net-lease properties, which converted to operating properties. As a result, in February 2023, we reclassified 12 consolidated hotel properties with an aggregate carrying value of $164.6 million from Land, buildings and improvements — net lease and other to Land, buildings and improvements — operating properties. We sold three of these hotel properties during the third quarter of 2023. As a result, the carrying value of our Land, buildings and improvements — operating properties decreased by $38.7 million from December 31, 2022 to September 30, 2023 (Note 15). In addition, we reclassified five of these hotel properties to Assets held for sale, net, as of September 30, 2023. As a result, the carrying value of our Land, buildings and improvements — operating properties decreased by $50.8 million from December 31, 2022 to September 30, 2023.

During the nine months ended September 30, 2023, the U.S. dollar weakened against the British pound sterling, resulting in an increase of $1.5 million in the carrying value of our Land, buildings and improvements — operating properties from December 31, 2022 to September 30, 2023

During the nine months ended September 30, 2023, we completed a student housing development project and reclassified $24.6 million from real estate under construction to buildings and improvements attributable to operating properties.

During the nine months ended September 30, 2023, we entered into the following self-storage operating property investments, which were deemed to be real estate asset acquisitions (dollars in thousands):


Property Location(s)	Number of Properties	Date of Acquisition	Property Type	Total Capitalized Costs
Little Rock, Arkansas (a)	1	6/22/2023	Self-Storage	$	6,166
Houston, Texas	1	8/25/2023	Self-Storage	13,120
	2			$	19,286

__________

(a)We also committed to fund ~~an additional $21.9~~$3.6 million for an expansion at ~~the~~this facility, which is expected to be completed in the ~~third~~first quarter of ~~2023.~~2024.

W. P. Carey 9/30/~~2022~~2023 10-Q – 1918

Notes to Consolidated Financial Statements (Unaudited)

The aggregate purchase price allocation for investments disclosed above is as follows (dollars in thousands):


	Total Capitalized Costs
Land	$	~~129,005~~5,404
Buildings and improvements	~~751,579~~13,303
Intangible ~~assets and liabilities:~~assets:
In-place lease (weighted-average expected life of ~~21.4~~0.5 years)	~~133,327~~
~~Below-market rent (expected life of 6.8 years)~~	~~(3,379)~~
~~Right-of-use assets:~~
~~Prepaid rent~~ ~~(a)~~	~~12,287~~579
	$	~~1,022,819~~19,286

~~__________~~

~~(a)~~Represents prepaid rent for a land lease. Therefore, there is no future obligation on the land lease asset and no corresponding operating lease liability. This asset is included in In-place lease intangible assets and other in the consolidated balance sheets.

~~Real Estate Under Construction~~

During the nine months ended September 30, 2022, we capitalized real estate under construction totaling $127.3 million (including $78.3 million related to a student housing development project acquired in the CPA:18 Merger, as discussed below under ~~Land, Buildings and Improvements — Operating Properties~~). The number of construction projects in progress with balances included in real estate under construction was four and six as of September 30, 2022 and December 31, 2021, respectively. Aggregate unfunded commitments totaled approximately $38.2 million and $55.3 million as of September 30, 2022 and December 31, 2021, respectively.

~~During the nine months ended September 30, 2022, we completed the following construction projects (dollars in thousands):~~

Property Location(s) Primary Transaction Type Number of Properties Date of Completion Property Type
Total Capitalized Costs (a)
Hurricane, Utah Expansion 1 3/8/2022 Warehouse $ 20,517
Breda, Netherlands (a)
Expansion 1 3/18/2022 Warehouse 4,721
Bowling Green, Kentucky Renovation 1 4/26/2022 Warehouse 72,971
Wageningen, Netherlands (a)
Build-to-Suit 1 7/7/2022 Research and Development 26,054
Radomsko, Poland (a)
Expansion 1 8/1/2022 Industrial 23,042
5 $ 147,305

~~__________~~

~~(a)Amount reflects the applicable exchange rate on the date of transaction.~~

During the nine months ended September 30, 2022, we committed to fund two build-to-suit projects for outdoor advertising structures in New Jersey, for an aggregate amount of $3.6 million. We currently expect to complete the projects in the first quarter of 2023.

Capitalized interest incurred during construction was $0.3 million and $0.6 million for the three months ended September 30, 2022 and 2021, respectively, and $1.3 million and $1.9 million for the nine months ended September 30, 2022 and 2021, respectively, which reduces Interest expense in the consolidated statements of income.

~~Dispositions of Properties~~

During the nine months ended September 30, 2022, we sold 14 properties, which were classified as Land, buildings and improvements — net lease and other. As a result, the carrying value of our Land, buildings and improvements — net lease and other decreased by $74.7 million from December 31, 2021 to September 30, 2022 (~~Note 15~~).

~~W. P. Carey 9/30/2022 10-Q~~– 20

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~Lease Termination Income and Other~~

~~2022~~ — For the three and nine months ended September 30, 2022, lease termination income and other on our consolidated statements of income included: (i) lease termination income of $4.2 million received from a tenant during the third quarter of 2022, (ii) other ~~lease-related settlements~~ ~~totaling $3.8 million and $10.0 million, respectively; (iii) income from a parking garage attached to one of our net-leased properties totaling~~ ~~$0.2 million and $1.5 million, respectively, and (iv) lease termination income of $8.2 million received from a tenant during the nine months ended September 30, 2022.~~

~~2021~~ — For the three and nine months ended September 30, 2021, lease termination income and other on our consolidated statements of income included: (i) lease-related settlements totaling $0.8 million and $6.1 million, respectively; and (ii) income from a parking garage attached to one of our net-leased properties totaling $0.5 million and $1.4 million, respectively.

~~Leases~~

~~Operating Lease Income~~

~~Lease income related to operating leases recognized and included in the consolidated statements of income is as follows (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Lease income — fixed $ 295,433 $ 271,360 $ 852,843 $ 790,391
Lease income — variable (a)
36,469 27,256 101,138 81,954
Total operating lease income $ 331,902 $ 298,616 $ 953,981 $ 872,345

~~__________~~

~~(a)Includes (i) rent increases based on changes in the U.S. Consumer Price Index and other comparable indices and (ii) reimbursements for property taxes, insurance, and common area maintenance services.~~

We assumed seven land lease arrangements in the CPA:18 Merger. As a result, we capitalized (i) right-of-use assets totaling $24.5 million (comprised of below-market ground lease intangibles totaling $17.9 million and land lease right-of-use assets totaling $6.6 million), which are included within In-place lease intangible assets and other on our consolidated balance sheets, and (ii) operating lease liabilities totaling $6.6 million, which are included within Accounts payable, accrued expenses and other liabilities on our consolidated balance sheets.

~~Land, Buildings and Improvements — Operating Properties~~

At September 30, 2022, Land, buildings and improvements — operating properties consisted of our investments in 75 consolidated self-storage properties, two consolidated student housing properties, and one consolidated hotel. We acquired 65 self-storage properties, one student housing property, and one student housing development project with an aggregate fair value of $1.0 billion in the CPA:18 Merger (including $78.3 million within real estate under construction) (~~Note 3~~). In September 2022, we partially placed into service the student housing development project for total capitalized costs of $32.9 million. At December 31, 2021, Land, buildings and improvements — operating properties consisted of our investments in ten consolidated self-storage properties and one consolidated hotel. Below is a summary of our Land, buildings and improvements — operating properties (in thousands):

September 30, 2022 December 31, 2021
Land $ 122,317 $ 10,452
Buildings and improvements 916,866 73,221
Real estate under construction 45,341 —
Less: Accumulated depreciation (22,118) (16,750)
$ 1,062,406 $ 66,923

Depreciation expense on our buildings and improvements attributable to ~~Operating real estate~~operating properties was ~~$4.1~~$7.8 million and ~~$0.7~~$4.1 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$5.4~~$22.7 million and ~~$2.1~~$5.4 million for the nine months ended September 30, ~~2022~~2023 and ~~2021, respectively.~~

~~W. P. Carey 9/30/2022 10-Q~~– 21

~~Notes to Consolidated Financial Statements (Unaudited)~~

2022.

Assets Held for Sale, Net

Below is a summary of our properties held for sale (in thousands):


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Land, buildings and improvements — net lease and other	Land, buildings and improvements — net lease and other	$	31,111	$	10,628	Land, buildings and improvements — net lease and other	$	39,372	$	47,134
Land, buildings and improvements — operating properties						Land, buildings and improvements — operating properties	71,719		—
In-place lease intangible assets and other	In-place lease intangible assets and other	7,296		—		In-place lease intangible assets and other	12,910		10,854
Above-market rent intangible assets	Above-market rent intangible assets	171		—		Above-market rent intangible assets	5,625		3,210
Accumulated depreciation and amortization	Accumulated depreciation and amortization	—		(2,359)		Accumulated depreciation and amortization	(27,611)		(3,254)
Assets held for sale, net	Assets held for sale, net	$	38,578	$	8,269	Assets held for sale, net	$	102,015	$	57,944

At September 30, ~~2022,~~2023, we had ~~one property~~eight properties classified as Assets held for sale, net, with a carrying value of ~~$38.6~~$102.0 million. ~~We acquired two~~Six of these properties ~~classified as Assets held for sale, net, with a fair value of $85.0 million~~were sold in the ~~CPA:18 Merger~~fourth quarter of 2023 (Note 317),. The estimated purchase price for one of ~~which~~these properties was lowered during the third quarter of 2023. As a result, we recognized a loss on sale of real estate of $11.7 million during the three and nine months ended September 30, 2023, reflecting the updated estimated purchase price, in accordance with ASC 360, Property, Plant, and Equipment. This property was sold in ~~August 2022~~the fourth quarter of 2023 (Note 1517).

At December 31, ~~2021~~2022 we had ~~two~~three properties classified as Assets held for sale, net, with an aggregate carrying value of ~~$8.3~~$57.9 million. ~~These~~Two of these properties were sold in the first quarter of ~~2022.~~2023 and one was sold in the fourth quarter of 2023 (Note 17).

Note 6. Finance Receivables

Assets representing rights to receive money on demand or at fixed or determinable dates are referred to as finance receivables. Our finance receivables portfolio consists of our Net investments in ~~direct financing~~finance leases and loans receivable (net of allowance for credit losses)~~, and deferred acquisition fees.~~. Operating leases are not included in finance receivables.

Finance Receivables

Net investments in ~~direct financing~~finance leases and loans receivable are summarized as follows (in thousands):

Maturity Date September 30, 2022 December 31, 2021
Net investments in direct financing leases (a)
2022 – 2036 $ 515,662 $ 572,205
Sale-leaseback transactions accounted for as loans receivable (b)
2038 – 2052 226,433 217,229
Secured loans receivable (c)
2022 – 2024 39,250 24,143
$ 781,345 $ 813,577


	Maturity Date	September 30, 2023		December 31, 2022
Net investments in direct financing leases (a)	2024 – 2036	$	476,410	$	498,313
Net investments in sales-type leases (b)	2024	451,421		—
Sale-leaseback transactions accounted for as loans receivable (b) (c)	2038 – 2052	233,590		234,198
Secured loans receivable (d)	2023	11,250		39,250
		$	1,172,671	$	771,761

__________

(a)Amounts are net of allowance for credit losses, as disclosed below under Net Investments in Direct Financing Leases.

W. P. Carey 9/30/2023 10-Q– 19

Notes to Consolidated Financial Statements (Unaudited)

(b)These investments are assessed for credit loss allowances but no such allowances were recorded as of September 30, 2023 or December 31, 2022.

(c)These investments are accounted for as loans receivable in accordance with ASC 310, Receivables and ASC 842, Leases. Maturity dates reflect the current lease maturity dates.

~~(c)~~(d)Amounts are net of allowance for credit losses of $2.1 million ~~and $12.6 million~~ as of both September 30, ~~2022~~2023 and December 31, ~~2021, respectively.~~2022.

Net Investments in Direct Financing Leases

Net investments in direct financing leases is summarized as follows (in thousands):


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Lease payments receivable	Lease payments receivable	$	338,733	$	414,002	Lease payments receivable	$	293,617	$	332,618
Unguaranteed residual value	Unguaranteed residual value	485,790		545,896		Unguaranteed residual value	444,892		470,839
		824,523		959,898			738,509		803,457
Less: unearned income	Less: unearned income	(302,930)		(370,353)		Less: unearned income	(259,479)		(296,411)
Less: allowance for credit losses (a)	Less: allowance for credit losses (a)	(5,931)		(17,340)		Less: allowance for credit losses (a)	(2,620)		(8,733)
		$	515,662	$	572,205		$	476,410	$	498,313

__________

~~W. P. Carey 9/30/2022 10-Q~~– 22

~~Notes to Consolidated Financial Statements (Unaudited)~~

(a)During ~~both~~ the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, we recorded a net release of allowance for credit losses of $6.1 million and $6.7 million, respectively, on our net investments in direct financing leases due to changes in expected economic conditions and improved credit quality for certain tenants, which was included within Other gains and (losses) in our consolidated statements of income. In addition, during the nine months ended September 30, 2022, we reduced the allowance for credit losses balance by $4.7 million, in connection with the reclassifications of properties from Net investments in direct financing leases and loans receivable to Real estate, as described below.

Income from direct financing leases, which is included in Income from ~~direct financing~~finance leases and loans receivable in the consolidated financial statements, was ~~$13.0~~$12.6 million and ~~$15.6~~$13.0 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$40.2~~$38.1 million and ~~$48.9~~$40.2 million for the nine months ended September 30, ~~2022~~2023 and ~~2021, respectively.~~2022.

~~As discussed in~~ ~~Note 3~~, we acquired one consolidated property subject to a direct financing lease in the CPA:18 Merger, which increased the carrying value of our Net investments in direct financing leases and loans receivable by $10.5 million during the nine months ended September 30, 2022. During the nine months ended September 30, ~~2022,~~2023, we reclassified ~~two~~five properties with an aggregate carrying value of ~~$30.5~~$25.4 million from Net investments in ~~direct financing~~finance leases and loans receivable to ~~Real estate~~Land, buildings and improvements — net lease and other in connection with changes in lease classifications due to ~~termination~~extensions of the underlying leases. During the nine months ended September 30, ~~2022,~~2023, the U.S. dollar strengthened against the euro, resulting in a ~~$53.7~~$1.7 million decrease in the carrying value of Net investments in ~~direct financing~~finance leases and loans receivable from December 31, ~~2021~~2022 to September 30, ~~2022.~~2023.

Net Investments in Sales-Type Leases

On February 28, 2023, the tenant occupying our portfolio of 78 net-lease self-storage properties located in the United States provided notice of its intention to exercise its option to repurchase the properties. The purchase price will be calculated using the U.S. CPI as of the closing date.

In accordance with ASC 842, Leases, we reclassified these net-lease assets to net investments in sales-type leases totaling $451.4 million on our consolidated balance sheets as of September 30, 2023 (based on the present value of remaining rents and estimated purchase price, using the CPI rates as of the exercise notice date), since the tenant provided notice of its intention to exercise its purchase option. In connection with this transaction, we reclassified the following amounts to Net investments in finance leases and loans receivable: (i) $393.7 million from Land, buildings and improvements — net lease and other, (ii) $36.6 million from In-place lease intangible assets and other, (iii) $22.4 million from Above-market rent intangible assets, (iv) $18.5 million from Below-market rent and other intangible liabilities, net, and (v) $159.0 million from Accumulated depreciation and amortization. We recognized an aggregate Gain on sale of real estate, net, of $176.2 million during the nine months ended September 30, 2023 related to this transaction.

Earnings from our net investments in sales-type leases are included in Income from finance leases and loans receivable in the consolidated financial statements, and totaled $9.7 million and $22.6 million for the three and nine months ended September 30, 2023, respectively. Prior to this reclassification to net investments in sales-type leases, earnings from this investment were recognized in Lease revenues in the consolidated financial statements.

W. P. Carey 9/30/2023 10-Q– 20

Notes to Consolidated Financial Statements (Unaudited)

Net investments in sales-type leases is summarized as follows (in thousands):


	September 30, 2023		December 31, 2022
Lease payments receivable (a)	$	470,836	$	—

	470,836		—
Less: unearned income	(19,415)		—

	$	451,421	$	—

__________

(a)Includes estimated purchase price and total rents owed.

Loans Receivable

~~During the nine months ended September 30, 2022, we entered into the following sale-leaseback, which was deemed to be a loan receivable in accordance with ASC 310,~~ ~~Receivables~~ ~~and ASC 842,~~ ~~Leases~~ ~~(dollars in thousands):~~

Property Location(s) Number of Properties Date of Acquisition Property Type Total Investment
Various, Belgium (a)
5 6/22/2022 Retail $ 19,795
5 $ 19,795

~~__________~~

~~(a)Amount reflects the applicable exchange rate on the date of transaction.~~

~~As discussed in~~ ~~Note 3, we acquired one secured loan receivable in the CPA:18 Merger for $28.0 million, which pays interest at 10% per annum with a maturity date of July 2024.~~

In ~~September 2022,~~August 2023, one of our secured loans receivable was repaid to us for ~~$34.0~~$28.0 million. In connection with this repayment, we ~~recorded a release of allowance for credit losses of $10.5~~received an $0.6 million ~~since~~prepayment penalty from the loan principal was fully repaid. In addition, in the first quarter of 2021, we entered into an agreement with the borrowers for certain of our secured loans receivable, who agreed to pay us at maturity a total of $3.7 million of unpaid interest due over the previous year. In connection with the repayment of the secured loan receivable in September 2022, we collected $2.3 million of this interest,borrower, which was included in Income from ~~direct financing~~finance leases and loans receivable onin the consolidated financial statements ~~of income~~ for both the three and nine months ended September 30, 2022. The remaining $1.4 million of unpaid interest is related to a secured loan receivable that we still own, and has not been recognized in the consolidated financial statements due to uncertainty of collectibility.2023.

Earnings from our loans receivable are included in Income from ~~direct financing~~finance leases and loans receivable in the consolidated financial statements, and totaled ~~$7.6~~$5.3 million and ~~$1.2~~$7.6 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$16.6~~$15.0 million and ~~$3.0~~$16.6 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Credit Quality of Finance Receivables

We generally invest in facilities that we believe are critical to a tenant’s business and therefore have a lower risk of tenant default. During the nine months ended September 30, 2023, we reclassified certain assets to net investments in sales-type leases (which are considered finance receivables), as described above under Net Investments in Sales-Type Leases. At both September 30, ~~2022~~2023 and December 31, ~~2021, other than uncollected income from our secured loans receivable (as noted above),~~2022, no material balances of our finance receivables were past due. Other than the lease ~~terminations~~extension noted under Net Investments in Direct Financing Leases above, there were no material modifications of finance receivables during the nine months ended September 30, ~~2022.~~2023.

~~W. P. Carey 9/30/2022 10-Q~~– 23

~~Notes to Consolidated Financial Statements (Unaudited)~~

We evaluate the credit quality of our finance receivables utilizing an internal five-point credit rating scale, with one representing the highest credit quality and five representing the lowest. A credit quality of one through three indicates a range of investment grade to stable. A credit quality of four through five indicates a range of inclusion on the watch list to risk of default. The credit quality evaluation of our finance receivables is updated quarterly.

A summary of our finance receivables by internal credit quality rating, excluding our allowance for credit losses, is as follows (dollars in thousands):


		Number of Tenants / Obligors at		Carrying Value at					Number of Tenants / Obligors at		Carrying Value at
Internal Credit Quality Indicator	Internal Credit Quality Indicator	September 30, 2022	December 31, 2021	September 30, 2022		December 31, 2021		Internal Credit Quality Indicator	September 30, 2023	December 31, 2022	September 30, 2023		December 31, 2022
1 – 3	1 – 3	19	17	$	676,152	$	703,280	1 – 3	19	19	$	1,098,791	$	664,761
4	4	8	9	113,224		140,230		4	6	8	78,600		117,833
5	5	—	—	—		—		5	—	—	—		—
				$	789,376	$	843,510				$	1,177,391	$	782,594

W. P. Carey 9/30/2023 10-Q– 21

Notes to Consolidated Financial Statements (Unaudited)

Note 7. Goodwill and Other Intangibles

We have recorded lease and internal-use software development ~~and trade name~~ intangibles that are being amortized over periods ranging from ~~less than~~ one year to 48 years. In-place lease intangibles, at cost are included in In-place lease intangible assets and other in the consolidated financial statements. Above-market rent intangibles, at cost are included in Above-market rent intangible assets in the consolidated financial statements. Accumulated amortization of in-place lease and above-market rent intangibles is included in Accumulated depreciation and amortization in the consolidated financial statements. Internal-use software development ~~and trade name~~ intangibles are included in Other assets, net in the consolidated financial statements. Below-market rent and below-market purchase option intangibles are included in Below-market rent and other intangible liabilities, net in the consolidated financial statements.

Net lease intangibles recorded in connection with property acquisitions during the nine months ended September 30, ~~2022~~2023 are described in Note 5. ~~In connection with the CPA:18 Merger (Note 3), we recorded net lease intangibles comprised as follows (life in years, dollars in thousands):~~

Weighted-Average Life Amount
Finite-Lived Intangible Assets
In-place lease 7.4 $ 199,913
Above-market rent 11.9 61,090
$ 261,003
Finite-Lived Intangible Liabilities
Below-market rent 8.5 $ (16,836)

~~In connection with certain business combinations, including~~Goodwill decreased by $3.2 million during the ~~CPA:18 Merger (Note 3), we recorded goodwill as a result of consideration exceeding the fair values of the assets acquired~~nine months ended September 30, 2023 due to foreign currency translation adjustments, and ~~liabilities assumed. The goodwill~~ was ~~attributed to~~fully reflected within our Real Estate ~~reporting unit~~segment as ~~it relates to the real estate assets we acquired in such business combinations. The following table presents a reconciliation~~ of ~~our goodwill (in thousands):~~
Real Estate Investment Management Total
Balance at January 1, 2022 $ 872,195 $ 29,334 $ 901,529
Acquisition of CPA:18 – Global (Note 3)
172,346 — 172,346
Foreign currency translation adjustments (21,370) — (21,370)
Impairment charges (Note 9)
— (29,334) (29,334)
Balance at September 30, 2022 $ 1,023,171 $ — $ 1,023,171

~~W. P. Carey 9/30/2022 10-Q~~– 24

~~Notes to Consolidated Financial Statements (Unaudited)~~

Current accounting guidance requires that we test for the recoverability of goodwill at the reporting unit level. The test for recoverability must be conducted at least annually, or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. In connection with the completion of the CPA:18 Merger in August 2022 (~~Note 3), we performed a test for impairment during the third quarter of 2022 for goodwill recorded in~~ both ~~segments~~September 30, 2023 and ~~recognized an impairment charge of $29.3 million on goodwill within our Investment Management segment (Note~~ 9).December 31, 2022.

Intangible assets, intangible liabilities, and goodwill are summarized as follows (in thousands):


		September 30, 2022						December 31, 2021							September 30, 2023						December 31, 2022
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-Lived Intangible Assets	Finite-Lived Intangible Assets													Finite-Lived Intangible Assets
Internal-use software development costs	Internal-use software development costs	$	19,700	$	(19,040)	$	660	$	19,553	$	(18,682)	$	871	Internal-use software development costs	$	20,496	$	(19,463)	$	1,033	$	19,812	$	(19,144)	$	668
Trade name		—		—		—		3,975		(3,581)		394
		19,700		(19,040)		660		23,528		(22,263)		1,265			20,496		(19,463)		1,033		19,812		(19,144)		668
Lease Intangibles:	Lease Intangibles:													Lease Intangibles:
In-place lease	In-place lease	2,449,354		(983,045)		1,466,309		2,279,905		(934,663)		1,345,242		In-place lease	2,549,879		(1,131,197)		1,418,682		2,523,318		(1,061,235)		1,462,083
Above-market rent	Above-market rent	840,943		(496,376)		344,567		843,410		(489,861)		353,549		Above-market rent	771,071		(506,380)		264,691		833,751		(507,436)		326,315
		3,290,297		(1,479,421)		1,810,876		3,123,315		(1,424,524)		1,698,791			3,320,950		(1,637,577)		1,683,373		3,357,069		(1,568,671)		1,788,398
Goodwill	Goodwill													Goodwill
Goodwill	Goodwill	1,023,171		—		1,023,171		901,529		—		901,529		Goodwill	1,034,183		—		1,034,183		1,037,412		—		1,037,412
Total intangible assets	Total intangible assets	$	4,333,168	$	(1,498,461)	$	2,834,707	$	4,048,372	$	(1,446,787)	$	2,601,585	Total intangible assets	$	4,375,629	$	(1,657,040)	$	2,718,589	$	4,414,293	$	(1,587,815)	$	2,826,478

Finite-Lived Intangible Liabilities	Finite-Lived Intangible Liabilities													Finite-Lived Intangible Liabilities
Below-market rent	Below-market rent	$	(286,446)	$	118,272	$	(168,174)	$	(272,483)	$	105,908	$	(166,575)	Below-market rent	$	(233,089)	$	80,040	$	(153,049)	$	(293,160)	$	125,287	$	(167,873)
Indefinite-Lived Intangible Liabilities	Indefinite-Lived Intangible Liabilities													Indefinite-Lived Intangible Liabilities
Below-market purchase option	Below-market purchase option	(16,711)		—		(16,711)		(16,711)		—		(16,711)		Below-market purchase option	—		—		—		(16,711)		—		(16,711)
Total intangible liabilities	Total intangible liabilities	$	(303,157)	$	118,272	$	(184,885)	$	(289,194)	$	105,908	$	(183,286)	Total intangible liabilities	$	(233,089)	$	80,040	$	(153,049)	$	(309,871)	$	125,287	$	(184,584)

During the nine months ended September 30, ~~2022,~~2023, the U.S. dollar strengthened against the euro, resulting in aan decrease of ~~$96.7~~$1.3 million in the carrying value of our net intangible assets from December 31, ~~2021~~2022 to September 30, ~~2022.~~ 2023. See Note 6 for a description of intangible assets and liabilities reclassified to net investments in sales-type leases during the nine months ended September 30, 2023.

Net amortization of intangibles, including the effect of foreign currency translation, was ~~$62.1~~$62.6 million and ~~$55.2~~$62.1 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$165.6~~$193.7 million and ~~$166.9~~$165.6 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Lease revenues and amortization of internal-use software development ~~trade name,~~ and in-place lease intangibles is included in Depreciation and amortization.

W. P. Carey 9/30/2023 10-Q– 22

Notes to Consolidated Financial Statements (Unaudited)

Note 8. Equity Method Investments

We own interests in ~~the Managed Programs and~~ certain unconsolidated real estate investments with third parties. We account for our interests in these investments under the equity method of accounting (i.e., at cost, increased or decreased by our share of earnings or losses, less distributions, plus contributionsparties and ~~other adjustments required by equity method accounting, such as basis differences) or at fair value by electing the equity method fair value option available under GAAP.~~

We classify distributions received from equity method investments using the cumulative earnings approach. In general, distributions received are considered returns on the investment and classified as cash inflows from operating activities. If, however, the investor’s cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earnings recognized, the excess is considered a return of investment and is classified as cash inflows from investing activities.

~~W. P. Carey 9/30/2022 10-Q~~– 25

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~Managed Programs~~

~~We own interests~~ in the Managed ~~Programs and account for these interests under the equity method because, as their advisor, we do not exert control over, but we do~~Programs. There have ~~the ability to exercise~~been no significant ~~influence over, the Managed Programs. Operating results of the Managed Programs are included~~changes in ~~the Investment Management segment.~~

~~The following table sets forth certain information about our investments in the Managed Programs (dollars in thousands):~~

% of Outstanding Interests Owned at Carrying Amount of Investment at
Fund September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021
CPA:18 – Global (a)
100.000 % 5.578 % $ — $ 60,836
CPA:18 – Global operating partnership (a)
100.000 % 0.034 % — 209
CESH (b)
2.430 % 2.430 % 2,334 3,689
$ 2,334 $ 64,734

~~__________~~

~~(a)On August 1, 2022, we acquired all of the remaining interests in CPA:18 – Global and the CPA:18 – Global operating partnership in the CPA:18 Merger (Note 3~~).

~~(b)Investment is accounted for at fair value.~~

~~CPA:18 – Global~~— We received distributions from this investment during the nine months ended September 30, 2022 and 2021 of $1.6 million and $1.4 million, respectively. We received distributions from our investment in the CPA:18 – Global operating partnership during the nine months ended September 30, 2022 and 2021 of $8.7 million and $4.9 million, respectively (~~Note 4~~).

~~CESH~~— We have elected to account for our investment in CESH at fair value by selecting the equity method fair value option available under GAAP. We record our investment in CESH on a one quarter lag; therefore, the balance of our equity method investment ~~in CESH recorded as of September 30, 2022 is based on the estimated fair value of our investment as of June 30, 2022. We received distributions~~policies from ~~this investment during the nine months ended September 30, 2022 and 2021 of $1.2 million and $1.3 million, respectively.~~

~~At December 31, 2021, the aggregate unamortized basis differences on our equity method investments~~what was disclosed in the ~~Managed Programs were $23.3 million. Following the close of the CPA:18 Merger, there are no such unamortized basis differences on our equity method investments in the Managed Programs.~~2022 Annual Report.

Interests in ~~Other~~ Unconsolidated Real Estate Investments ~~and WLT~~

We own equity interests in properties that are generally leased to companies through noncontrolling interests in partnerships and limited liability companies that we do not control but over which we exercise significant influence. The underlying investments are jointly owned with ~~affiliates or~~ third parties. We account for these investments under the equity method of accounting. In addition, we own shares of WLT common stock, which we accounted for under the equity method of accounting as of December 31, 2021, but was reclassified to equity securities at fair value within Other assets, net on our consolidated balance sheets in January 2022, as described in ~~Note 9~~. Operating results of our unconsolidated real estate investments are included in the Real Estate segment.

~~W. P. Carey 9/30/2022 10-Q~~– 26

~~Notes to Consolidated Financial Statements (Unaudited)~~

The following table sets forth our ownership interests in our equity method investments in real estate, excluding the Managed Programs, and their respective carrying values (dollars in thousands):

Carrying Value at
Lessee/Fund/Description Co-owner Ownership Interest September 30, 2022 December 31, 2021
Existing Equity Method Investments
Las Vegas Retail Complex (a)
Third Party N/A $ 169,896 $ 104,114
Johnson Self Storage Third Party 90% 66,137 67,573
Kesko Senukai (b)
Third Party 70% 34,554 41,955
Harmon Retail Corner (c)
Third Party 15% 24,744 24,435
WLT (d)
WLT N/A — 33,392
295,331 271,469
Equity Method Investments Consolidated After the CPA:18 Merger (e)
State Farm Mutual Automobile Insurance Co. CPA:18 – Global 50% — 7,129
Apply Sørco AS (f)
CPA:18 – Global 49% — 5,909
Bank Pekao (b) (g)
CPA:18 – Global 50% — 4,460
Fortenova Grupa d.d. (b)
CPA:18 – Global 20% — 2,936
— 20,434
$ 295,331 $ 291,903


			Carrying Value at
Lessee/Fund/Description	Co-owner	Ownership Interest	September 30, 2023		December 31, 2022
Las Vegas Retail Complex (a)	Third Party	N/A	$	232,941	$	196,352
Johnson Self Storage	Third Party	90%	64,286		65,707
Kesko Senukai (b)	Third Party	70%	28,414		38,569
Harmon Retail Corner (c)	Third Party	15%	24,118		24,649
			$	349,759	$	325,277

__________

(a)On June 10, 2021, we entered into an agreement to fund a construction loan of approximately $261.9 million (as of September 30, ~~2022)~~2023) for a retail complex in Las Vegas, Nevada. Through September 30, ~~2022,~~2023, we funded ~~$168.9~~$229.8 million, including ~~$65.2~~$36.6 million during the nine months ended September 30, ~~2022.~~2023. Equity income from this investment was ~~$6.1~~$9.1 million and ~~$1.6~~$6.2 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, which was recognized within Earnings ~~(losses)~~ from equity method investments in our consolidated statements of income.

(b)The carrying value of this investment is affected by fluctuations in the exchange rate of the euro.

(c)This investment is reported using the hypothetical liquidation at book value model, which may be different than pro rata ownership percentages, primarily due to the capital structure of the partnership agreement.

~~(d)~~At September 30, 2022, we owned 12,208,243 shares of common stock of WLT, which we accounted for as an equity method investment in real estate as of December 31, 2021, but was reclassified to equity securities at fair value within Other assets, net on our consolidated balance sheets in January 2022 (~~Note 9). WLT completed its previously announced sale to private real estate funds in October 2022 (Note 17~~).

~~(e)We acquired the remaining interests in these investments from CPA:18 – Global in the CPA:18 Merger, subsequent to which we now consolidate these wholly owned investments (Note 3~~).

~~(f)The carrying value of this investment is affected by fluctuations in the exchange rate of the Norwegian krone.~~

~~(g)~~We recognized our $4.6 million proportionate share of an impairment charge recorded on this investment during the nine months ended September 30, 2022, which was reflected within Earnings (losses) from equity method investments in our consolidated statements of income. The estimated fair value of the investment is based on the estimated selling price of the international office facility owned by the investment, and the fair value of the non-recourse mortgage encumbering the property also approximates the fair value of the property.

We received aggregate distributions of ~~$24.2~~$25.2 million and ~~$14.1~~$24.2 million from our ~~other~~ unconsolidated real estate investments for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. At September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the aggregate unamortized basis differences on our unconsolidated real estate investments were ~~$19.3~~$18.3 million and ~~$7.9~~$19.1 million, respectively.

Managed Programs

We own interests in the Managed Programs and account for these interests under the equity method because, as their advisor, we do not exert control over, but we do have the ability to exercise significant influence over, the Managed Programs. Operating results of the Managed Programs are included in the Investment Management segment.

CPA:18 – Global— On August 1, 2022, we acquired all of the remaining interests in CPA:18 – Global and the CPA:18 – Global operating partnership in the CPA:18 Merger (Note 1). We received distributions from this investment during the nine months ended September 30, 2022 of $1.6 million. We received distributions from our investment in the CPA:18 – Global operating partnership during the nine months ended September 30, 2022 of $8.7 million (Note 4).

CESH— We have elected to account for our investment in 2.43% of CESH at fair value by selecting the equity method fair value option available under GAAP. We record our investment in CESH on a one quarter lag; therefore, the balance of our equity method investment in CESH recorded as of September 30, 2023 is based on the estimated fair value of our investment as of June 30, 2023. The carrying amount of our investment in CESH was $1.8 million and $2.2 million as of September 30, 2023 and December 31, 2022, respectively. We received distributions from this investment during both the nine months ended September 30, 2023 and 2022 of $1.2 million.

W. P. Carey 9/30/~~2022~~2023 10-Q – 2723

Notes to Consolidated Financial Statements (Unaudited)

Note 9. Fair Value Measurements

The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps, interest rate swaps, and foreign currency collars; and Level 3, for securities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring us to develop our own assumptions.

Items Measured at Fair Value on a Recurring Basis

The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, we have also provided the unobservable inputs.

Derivative Assets and Liabilities — Our derivative assets and liabilities, which are included in Other assets, net and Accounts payable, accrued expenses and other liabilities, respectively, in the consolidated financial statements, are comprised of foreign currency collars, interest rate swaps, interest rate caps, and stock warrants (Note 10).

The valuation of our derivative instruments (excluding stock warrants) is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves, spot and forward rates, and implied volatilities. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative instruments for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. These derivative instruments were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market.

The stock warrants were measured at fair value using valuation models that incorporate market inputs and our own assumptions about future cash flows. We classified these assets as Level 3 because these assets are not traded in an active market.

Equity Method Investment in CESH — We have elected to account for our investment in CESH, which is included in Equity method investments in the consolidated financial statements, at fair value by selecting the equity method fair value option available under GAAP (Note 8). We classified this investment as Level 3 because we primarily used valuation models that incorporate unobservable inputs to determine its fair value.

Investment in Shares of Lineage Logistics — We have elected to apply the measurement alternative under Accounting Standards Update 2016-01, Financial Instruments — Overall (Subtopic 825-10) to account for our investment in shares of Lineage Logistics (a cold storage REIT), which is included in Other assets, net in the consolidated financial statements. Under this alternative, the carrying value is adjusted for any impairments or changes in fair value resulting from observable transactions for similar or identical investments in the issuer. We classified this investment as Level 3 because it is not traded in an active market. We recognized non-cash unrealized gains on our investment in shares of Lineage Logistics of $76.3 million during the nine months ended September 30, 2021, due to a secondary market transaction at a higher price per share, which was recorded within Other gains and (losses) in the consolidated financial statements. In addition, duringDuring the nine months ended September 30, 2022, ~~and 2021,~~ we received cash dividends of $4.3 million ~~and $6.4 million, respectively,~~ from our investment in shares of Lineage Logistics, which was recorded within Non-operating income in the consolidated financial statements. The fair value of this investment was ~~$366.3~~$404.9 million at both September 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

~~W. P. Carey 9/30/2022 10-Q~~– 28

~~Notes to Consolidated Financial Statements (Unaudited)~~

Investment in Shares of GCIF — We account for our investment in shares of Guggenheim Credit Income Fund (“GCIF”), which is included in Other assets, net in the consolidated financial statements, at fair value. We classified this investment as Level 2 because we used a quoted price from an inactive market to determine its fair value. During the nine months ended September 30, ~~2022,~~2023, we received liquidating distributions from our investment in shares of GCIF totaling ~~$1.7~~$0.8 million, which reduced the cost basis of our investment (in March 2021, GCIF announced its intention to liquidate and to distribute substantially all of its assets). The fair value of our investment in shares of GCIF was ~~$2.7~~$0.9 million and ~~$4.3~~$1.7 million at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

W. P. Carey 9/30/2023 10-Q– 24

Notes to Consolidated Financial Statements (Unaudited)

Investment in Preferred Shares of WLT — In January 2022, ~~WLT~~Watermark Lodging Trust, Inc. (“WLT”) redeemed in full our 1,300,000 shares of its preferred stock for gross proceeds of $65.0 million (based on the liquidation preference of $50.00 per share). In connection with this redemption, we reclassified an unrealized gain on this investment of $18.7 million from Accumulated other comprehensive loss to Other gains and (losses) in the consolidated financial statements (Note 13). Prior to this redemption, we accounted for this investment, which was included in Other assets, net in the consolidated financial statements, as available-for-sale debt securities at fair value (Level 3). During the nine months ended September 30, 2022, ~~and 2021,~~ we received cash dividends of $0.9 million ~~and $4.1 million, respectively,~~ from our investment in preferred shares of WLT, which was recorded within Non-operating income in the consolidated financial statements. ~~The fair value of our investment in preferred shares of WLT was $65.0 million as of December 31, 2021.~~

Investment in Common Shares of WLT — In January 2022, we reclassified our investment in 12,208,243 shares of common stock of WLT from equity method investments to equity securities, since we no longer ~~have~~had significant influence over WLT, following the redemption of our investment in preferred shares of WLT, as described above. As a result, we ~~account~~accounted for this investment, which iswas included in Other assets, net in the consolidated financial statements, at fair value. We classified this investment as Level 3 because it iswas not traded in an active market. ~~The carrying value of this investment was $33.4 million as of December 31, 2021, which was included within Equity method investments in the consolidated financial statements.~~ We recognized non-cash unrealized gains of $43.4 million on our investment in shares of common ~~shares~~stock of WLT during the nine months ended September 30, 2022, reflecting the most recently published net asset value of WLT, which was recorded within Other gains and (losses) in the consolidated financial statements. ~~The fair value of our investment in common shares of WLT was $76.8 million as of September 30, 2022.~~ WLT completed its previously announced sale to private real estate funds in October 2022 (~~Note 17~~).and we received $82.6 million in cash proceeds.

We did not have any transfers into or out of Level 1, Level 2, and Level 3 category of measurements during either the nine months ended September 30, ~~2022~~2023 or ~~2021.~~2022. Gains and losses (realized and unrealized) recognized on items measured at fair value on a recurring basis included in earnings are reported within Other gains and (losses) on our consolidated financial statements.

Our other material financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands):


			September 30, 2022				December 31, 2021						September 30, 2023				December 31, 2022
		Level	Carrying Value		Fair Value		Carrying Value		Fair Value			Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Senior Unsecured Notes, net (a) (b) (c)	Senior Unsecured Notes, net (a) (b) (c)	2 and 3	$	5,651,865	$	4,943,242	$	5,701,913	$	5,984,228	Senior Unsecured Notes, net (a) (b) (c)	2 and 3	$	5,902,854	$	5,224,131	$	5,916,400	$	5,238,588
Non-recourse mortgages, net (a) (b) (d)	Non-recourse mortgages, net (a) (b) (d)	3	1,162,814		1,142,390		368,524		369,841		Non-recourse mortgages, net (a) (b) (d)	3	784,750		767,999		1,132,417		1,109,449

__________

(a)The carrying value of Senior Unsecured Notes, net (Note 11) includes unamortized deferred financing costs of ~~$26.3~~$22.1 million and ~~$28.7~~$25.9 million at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The carrying value of Non-recourse mortgages, net includes unamortized deferred financing costs of less than $0.1 million at both September 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

(b)The carrying value of Senior Unsecured Notes, net includes unamortized discount of ~~$24.4~~$20.8 million and ~~$29.2~~$24.1 million at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The carrying value of Non-recourse mortgages, net includes unamortized discount of ~~$11.6~~$6.2 million and ~~$0.8~~$10.3 million at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

(c)For those Senior Unsecured Notes for which there are no observable market prices (specifically, our private placement Senior Unsecured Notes (Note 11)), we used a discounted cash flow model that estimates the present value of future loan payments by discounting such payments at current estimated market interest rates. We consider these notes to be within the Level 3 category. For all other Senior Unsecured Notes, we determined the estimated fair value using observed market prices in an open market, which may experience limited trading volume. We consider these notes to be within the Level 2 category.

~~W. P. Carey 9/30/2022 10-Q~~– 29

~~Notes to Consolidated Financial Statements (Unaudited)~~

(d)We determined the estimated fair value of our non-recourse mortgage loans using a discounted cash flow model that estimates the present value of the future loan payments by discounting such payments at current estimated market interest rates. The estimated market interest rates consider interest rate risk and the value of the underlying collateral, which includes quality of the collateral, the credit quality of the tenant/obligor, and the time until maturity.

We estimated that our other financial assets and liabilities, including amounts outstanding under our Senior Unsecured Credit Facility and Unsecured Term Loan due 2026 (Note 11), but excluding finance receivables (Note 6), had fair values that approximated their carrying values at both September 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

W. P. Carey 9/30/2023 10-Q– 25

Notes to Consolidated Financial Statements (Unaudited)

Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charges)

We periodically assess whether there are any indicators that the value of our real estate investments may be impaired or that their carrying value may not be ~~recoverable.~~recoverable, including investments impacted by the Spin-Off and Office Sale Program (Note 1). There have been no significant changes in our impairment policies from what was disclosed in the ~~2021~~2022 Annual Report.

The following tables present information about assets for which we recorded an impairment charge and that were measured at fair value on a non-recurring basis (in thousands):


		Three Months Ended September 30,									Three Months Ended September 30,
		2022				2021					2023				2022
		Fair Value Measurements		Impairment Charges		Fair Value Measurements		Impairment Charges			Fair Value Measurements		Impairment Charges		Fair Value Measurements		Impairment Charges
Impairment Charges	Impairment Charges									Impairment Charges
Real estate and intangibles										Real estate and intangibles	$	3,213	$	15,173	$	—	$	—
Investment Management goodwill	Investment Management goodwill	$	—	$	29,334	$	—	$	—	Investment Management goodwill	—		—		—		29,334
Real estate and intangibles		—		—		13,912		16,301
Equity method investments		—		—		—		—
				$	29,334			$	16,301				$	15,173			$	29,334


		Nine Months Ended September 30,									Nine Months Ended September 30,
		2022				2021					2023				2022
		Fair Value Measurements		Impairment Charges		Fair Value Measurements		Impairment Charges			Fair Value Measurements		Impairment Charges		Fair Value Measurements		Impairment Charges
Impairment Charges	Impairment Charges									Impairment Charges
Real estate and intangibles										Real estate and intangibles	$	3,213	$	15,173	$	24,497	$	26,385
Investment Management goodwill	Investment Management goodwill	$	—	$	29,334	$	—	$	—	Investment Management goodwill	—		—		—		29,334
Real estate and intangibles		24,497		26,385		13,912		16,301
Equity method investments		—		—		8,175		6,830
				$	55,719			$	23,131				$	15,173			$	55,719

Impairment charges, and their related triggering events and fair value measurements, recognized during the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 were as follows:

~~Investment Management Goodwill~~

~~The impairment charges described below are reflected within Impairment charges — Investment Management goodwill in our consolidated statements of income.~~

During the three and nine months ended September 30, 2022, we recognized an impairment charge of $29.3 million on goodwill within our Investment Management segment in order to reduce its carrying value to its estimated fair value of $0, since future Investment Management cash flows are expected to be minimal following the CPA:18 Merger (~~Note 3~~).

~~W. P. Carey 9/30/2022 10-Q~~– 30

~~Notes to Consolidated Financial Statements (Unaudited)~~

Real Estate and Intangibles

The impairment charges described below are reflected within Impairment charges — real estate in our consolidated statements of income.

During the three and nine months ended September 30, ~~2022,~~2023, we recognized an impairment ~~charges totaling $6.2~~charge of $15.2 million on ~~two properties~~one property in order to reduce ~~their~~its carrying ~~values~~value to ~~their~~its estimated fair ~~values,~~value, which approximated ~~their~~its estimated selling ~~prices.~~price. This property is included in Assets held for sale, net, in our consolidated balance sheets as of September 30, 2023, and was sold in October 2023 (Note 5, Note 17).

During the nine months ended September 30, 2022, we recognized an impairment charge of $10.9 million on a property in order to reduce its carrying value to its estimated fair value, which declined due to changes in expected cash flows related to the existing tenant’s lease expiration in 2023. The fair value measurement was determined by estimating discounted cash flows using two significant unobservable inputs, which were the cash flow discount rate (14.0%) and terminal capitalization rate (11.0%)

In March 2022, we entered into a transaction to restructure certain leases with Pendragon PLC (a tenant at certain automotive dealerships in the United Kingdom). Under this restructuring, we extended the leases on 30 properties by 11 years (no change to rent) and entered into an agreement to dispose of 12 properties, with the tenant continuing to pay rent until the earlier of sale date or certain specified dates over the following 12 months. As a result, during the nine months ended September 30, 2022, we recognized impairment charges totaling $9.3 million on six of these properties in order to reduce the carrying values of the properties to their estimated fair values. The fair value measurements for the properties were determined using a direct capitalization rate analysis; the capitalization rate for the various scenarios ranged from 4.75% to 10.00%. Four of these impaired properties were sold in 2022.

W. P. Carey 9/30/2023 10-Q– 26

Notes to Consolidated Financial Statements (Unaudited)

During the nine months ended September 30, 2022, we recognized impairment charges totaling $6.2 million on two properties in order to reduce their carrying values to their estimated fair values, which approximated their estimated selling prices. We sold one property in August 2022 and one property in March 2023.

Investment Management Goodwill

The impairment charges described below are reflected within Impairment charges — Investment Management goodwill in our consolidated statements of income.

During the three and nine months ended September 30, ~~2021,~~2022, we recognized an impairment charge of ~~$16.3~~$29.3 million on ~~a property~~goodwill within our Investment Management segment in order to reduce ~~the~~its carrying value ~~of the property~~ to its estimated fair value ~~due to the existing tenant’s non-renewal~~ of ~~its lease expiring in 2022. The fair value measurement was determined by estimating discounted~~$0, since future Investment Management cash flows ~~using four significant unobservable inputs, which were~~are expected to be minimal following the cash flow discount rate (range of 7.00% to 9.00%), terminal capitalization rate (range of 6.00% to 7.00%), estimated market rents (range of $10 to $11 per square foot), and estimated capital expenditures ($100 per square foot). We sold this property in September 2022.

CPA:18 Merger (
Note 3

~~Equity Method Investments~~

~~The other-than-temporary impairment charges described below are reflected within Earnings (losses) from equity method investments in our consolidated statements of income.~~

During the nine months ended September 30, 2021, we recognized an other-than-temporary impairment charge of $6.8 million on a jointly owned real estate investment to reduce the carrying value of our investment to its estimated fair value, which declined due to changes in expected cash flows related to the existing tenant’s lease expiration in 2028. The fair value measurement was determined by estimating discounted cash flows using three significant unobservable inputs, which were the cash flow discount rate (5.75%), residual discount rate (7.50%), and residual capitalization rate (6.75%).

Note 10. Risk Management and Use of Derivative Financial Instruments

Risk Management

In the normal course of our ongoing business operations, we encounter economic risk. There are four main components of economic risk that impact us: interest rate risk, credit risk, market risk, and foreign currency risk. We are primarily subject to interest rate risk on our interest-bearing liabilities, including our Senior Unsecured Credit Facility (Note 11) and unhedged variable-rate non-recourse mortgage loans. Credit risk is the risk of default on our operations and our tenants’ inability or unwillingness to make contractually required payments. Market risk includes changes in the value of our properties and related loans, Senior Unsecured Notes, other securities, and the ~~shares or~~ limited partnership units we hold in ~~the Managed Programs,~~CESH, due to changes in interest rates or other market factors. We own investments in North America, Europe, and Japan and are subject to risks associated with fluctuating foreign currency exchange rates.

~~W. P. Carey 9/30/2022 10-Q~~– 31

~~Notes to Consolidated Financial Statements (Unaudited)~~

Derivative Financial Instruments

There have been no significant changes in our derivative financial instrument policies from what was disclosed in the ~~2021~~2022 Annual Report. At both September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, no cash collateral had been posted nor received for any of our derivative positions.

The following table sets forth certain information regarding our derivative instruments (in thousands):

Derivatives Designated as Hedging Instruments Balance Sheet Location Derivative Assets Fair Value at Derivative Liabilities Fair Value at
September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021
Foreign currency collars Other assets, net $ 62,583 $ 19,484 $ — $ —
Interest rate swaps (a)
Other assets, net 2,557 — — —
Interest rate cap Other assets, net 15 1 — —
Foreign currency collars Accounts payable, accrued expenses and other liabilities — — — (1,311)
Interest rate swaps Accounts payable, accrued expenses and other liabilities — — — (908)
65,155 19,485 — (2,219)
Derivatives Not Designated as Hedging Instruments
Stock warrants Other assets, net 4,600 4,600 — —
Foreign currency collars Other assets, net 1,573 — — —
6,173 4,600 — —
Total derivatives $ 71,328 $ 24,085 $ — $ (2,219)

~~__________~~


Derivatives Designated as Hedging Instruments	Balance Sheet Location	Derivative Assets Fair Value at				Derivative Liabilities Fair Value at
		September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Foreign currency collars	Other assets, net	$	27,088	$	32,631	$	—	$	—
Interest rate swaps	Other assets, net	3,288		2,679		—		—
Interest rate cap	Other assets, net	—		14		—		—
Foreign currency collars	Accounts payable, accrued expenses and other liabilities	—		—		(612)		(1,445)
		30,376		35,324		(612)		(1,445)
Derivatives Not Designated as Hedging Instruments
Stock warrants	Other assets, net	3,950		3,950		—		—
Foreign currency collars	Other assets, net	160		—		—		—
Foreign currency collars	Accounts payable, accrued expenses and other liabilities	—		—		—		(248)
		4,110		3,950		—		(248)
Total derivatives		$	34,486	$	39,274	$	(612)	$	(1,693)

~~(a)~~

W. P. Carey 9/30/2023 10-Q~~In connection with the CPA:18 Merger on August 1, 2022, we acquired five interest rate swaps, which had an aggregate fair value of $0.4 million on the date of acquisition.~~– 27

Notes to Consolidated Financial Statements (Unaudited)

The following tables present the impact of our derivative instruments in the consolidated financial statements (in thousands):


		Amount of Gain (Loss) Recognized on Derivatives in Other Comprehensive Income (Loss) (a)									Amount of Gain (Loss) Recognized on Derivatives in Other Comprehensive Income (Loss) (a)
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationships	Derivatives in Cash Flow Hedging Relationships	2022		2021		2022		2021		Derivatives in Cash Flow Hedging Relationships	2023		2022		2023		2022
Foreign currency collars	Foreign currency collars	$	20,756	$	12,666	$	44,410	$	26,294	Foreign currency collars	$	7,928	$	20,756	$	(4,710)	$	44,410
Interest rate swaps	Interest rate swaps	1,663		203		3,019		3,851		Interest rate swaps	(514)		1,663		683		3,019
Interest rate caps		11		1		16		5
Interest rate cap										Interest rate cap	(3)		11		(9)		16
Total	Total	$	22,430	$	12,870	$	47,445	$	30,150	Total	$	7,411	$	22,430	$	(4,036)	$	47,445


				Amount of Gain (Loss) on Derivatives Reclassified from Other Comprehensive Income (Loss)																			Amount of Gain (Loss) on Derivatives Reclassified from Other Comprehensive Income (Loss)
Derivatives in Cash Flow Hedging Relationships	Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income		Three Months Ended September 30,								Nine Months Ended September 30,						Derivatives in Cash Flow Hedging Relationships			Location of Gain (Loss) Recognized in Income		Three Months Ended September 30,				Nine Months Ended September 30,
			2022			2021				2022				2021						2023			2022		2023		2022
Foreign currency collars	Foreign currency collars		Non-operating income			$	4,987			$	14			$	10,450				$	(553)		Foreign currency collars	Non-operating income		$	2,787	$	4,987	$	10,656	$	10,450
Interest rate swaps and caps (b)		Interest expense		(66)				(196)				(352)				(720)
Interest rate swaps and cap																		Interest rate swaps and cap			Interest expense		659		(66)		1,132		(352)
Total	Total			$	4,921			$	(182)			$	10,098			$	(1,273)	Total					$	3,446	$	4,921	$	11,788	$	10,098

__________

(a)Excludes net losses of $0.6 million and net gains of $1.2 ~~million and $0.2~~ million recognized on unconsolidated jointly owned investments for the three months ended September 30, 2023 and 2022, respectively, and ~~2021, respectively,~~net losses of $1.3 million and net gains of $3.5 ~~million and $0.9~~ million for the nine months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.

~~(b)~~Amount for the nine months ended September 30, 2021 excludes other comprehensive income totaling $3.1 million that was released from the consolidated financial statements (along with the related liability balances) upon the termination of interest rate swaps in connection with certain prepayments of non-recourse mortgage loans during the period.

~~W. P. Carey 9/30/2022 10-Q~~– 32

~~Notes to Consolidated Financial Statements (Unaudited)~~

Amounts reported in Other comprehensive (loss) income related to interest rate derivative contracts will be reclassified to Interest expense as interest is incurred on our variable-rate debt. Amounts reported in Other comprehensive (loss) income related to foreign currency derivative contracts will be reclassified to Non-operating income when the hedged foreign currency contracts are settled. As of September 30, ~~2022,~~2023, we estimate that an additional ~~$1.5~~$2.9 million and ~~$26.4~~$13.9 million will be reclassified as Interest expense and Non-operating income, respectively, during the next 12 months.

The following table presents the impact of our derivative instruments in the consolidated financial statements (in thousands):


				Amount of Gain (Loss) on Derivatives Recognized in Income																			Amount of Gain (Loss) on Derivatives Recognized in Income
Derivatives in Cash Flow Hedging Relationships	Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income		Three Months Ended September 30,								Nine Months Ended September 30,						Derivatives in Cash Flow Hedging Relationships			Location of Gain (Loss) Recognized in Income		Three Months Ended September 30,				Nine Months Ended September 30,
			2022			2021				2022				2021						2023			2022		2023		2022
Foreign currency collars	Foreign currency collars		Non-operating income			$	3,737			$	357			$	7,520				$	516		Foreign currency collars	Non-operating income		$	951	$	3,737	$	935	$	7,520
Interest rate swaps	Interest rate swaps	Interest expense		56				223				387				1,354		Interest rate swaps			Interest expense		(683)		56		(1,220)		387
Derivatives Not in Cash Flow Hedging Relationships	Derivatives Not in Cash Flow Hedging Relationships																	Derivatives Not in Cash Flow Hedging Relationships
Foreign currency collars	Foreign currency collars	Other gains and (losses)		447				—				1,573				—		Foreign currency collars			Other gains and (losses)		450		447		409		1,573
Stock warrants		Other gains and (losses)		—				—				—				(500)
Total	Total			$	4,240			$	580			$	9,480			$	1,370	Total					$	718	$	4,240	$	124	$	9,480

See below for information on our purposes for entering into derivative instruments.

Interest Rate Swaps and Caps

We are exposed to the impact of interest rate changes primarily through our borrowing activities. To limit this exposure, we generally seek long-term debt financing on a fixed-rate basis. However, from time to time, we ~~or our investment partners~~ have obtained, and may in the future obtain, variable-rate (i) non-recourse mortgage loans and (ii) unsecured term loans (Note 11) and, as a result, we have entered into, and may continue to enter into, interest rate swap agreements or interest rate cap agreements with counterparties. Interest rate swaps, which effectively convert the variable-rate debt service obligations of a loan to a fixed rate, are agreements in which one party exchanges a stream of interest payments for a counterparty’s stream of cash flow over a specific period. The notional, or face, amount on which the swaps are based is not exchanged. Interest rate caps limit the effective borrowing rate of variable-rate debt obligations while allowing participants to share in downward shifts in interest rates. Our objective in using these derivatives is to limit our exposure to interest rate movements.

W. P. Carey 9/30/2023 10-Q– 28

Notes to Consolidated Financial Statements (Unaudited)

The interest rate swaps and caps that our consolidated subsidiaries had outstanding at September 30, ~~2022~~2023 are summarized as follows (currency in thousands):


Interest Rate Derivatives	Interest Rate Derivatives	Number of Instruments	Notional Amount		Fair Value at September 30, 2022 (a)		Interest Rate Derivatives	Number of Instruments	Notional Amount		Fair Value at September 30, 2023 (a)
Designated as Cash Flow Hedging Instruments	Designated as Cash Flow Hedging Instruments						Designated as Cash Flow Hedging Instruments
Interest rate swaps	Interest rate swaps	5	35,176	USD	$	1,410	Interest rate swaps	4	513,214	EUR	$	2,147
Interest rate swaps	Interest rate swaps	2	46,277	EUR	1,147		Interest rate swaps	4	31,249	USD	1,141
Interest rate cap		1	10,530	EUR	15
					$	2,572					$	3,288

__________

(a)Fair value amounts are based on the exchange rate of the euro at September 30, ~~2022,~~2023, as applicable.

Foreign Currency Collars

We are exposed to foreign currency exchange rate movements, primarily in the euro and, to a lesser extent, the British pound sterling and certain other currencies. In order to hedge certain of our foreign currency cash flow exposures, we enter into foreign currency collars. A foreign currency collar consists of a written call option and a purchased put option to sell the foreign currency at a range of predetermined exchange rates. A foreign currency collar guarantees that the exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices. Our foreign currency collars have maturities of 6259 months or less.

~~W. P. Carey 9/30/2022 10-Q~~– 33

~~Notes to Consolidated Financial Statements (Unaudited)~~

The following table presents the foreign currency collars that we had outstanding at September 30, ~~2022~~2023 (currency in thousands):


Foreign Currency Derivatives	Foreign Currency Derivatives	Number of Instruments	Notional Amount		Fair Value at September 30, 2022		Foreign Currency Derivatives	Number of Instruments	Notional Amount		Fair Value at September 30, 2023
Designated as Cash Flow Hedging Instruments	Designated as Cash Flow Hedging Instruments						Designated as Cash Flow Hedging Instruments
Foreign currency collars	Foreign currency collars	71	280,600	EUR	$	51,271	Foreign currency collars	63	280,000	EUR	$	22,936
Foreign currency collars	Foreign currency collars	77	49,820	GBP	11,312		Foreign currency collars	48	30,740	GBP	3,540
Not Designated as Cash Flow Hedging Instruments	Not Designated as Cash Flow Hedging Instruments						Not Designated as Cash Flow Hedging Instruments
Foreign currency collar	Foreign currency collar	1	10,600	EUR	1,573		Foreign currency collar	1	8,000	EUR	160
					$	64,156					$	26,636

Credit Risk-Related Contingent Features

We measure our credit exposure on a counterparty basis as the net positive aggregate estimated fair value of our derivatives, net of any collateral received. No collateral was received as of September 30, ~~2022.~~2023. At September 30, ~~2022,~~2023, our total credit exposure and the maximum exposure to any single counterparty was ~~$67.3~~$30.1 million and ~~$11.2~~$4.9 million, respectively.

Some of the agreements we have with our derivative counterparties contain cross-default provisions that could trigger a declaration of default on our derivative obligations if we default, or are capable of being declared in default, on certain of our indebtedness. At September 30, ~~2022,~~2023, we had not been declared in default on any of our derivative obligations. The estimated fair value of our derivatives in a net liability position was ~~$2.2~~$0.6 million and $1.7 million at September 30, 2023 and December 31, ~~2021,~~2022, respectively, which included accrued interest and any nonperformance risk ~~adjustments (there was no such liability balance at September 30, 2022).~~adjustments. If we had breached any of these provisions at September 30, 2023 or December 31, ~~2021,~~2022, we could have been required to settle our obligations under these agreements at their aggregate termination value of ~~$2.3 million.~~$0.6 million and $1.7 million, respectively.

W. P. Carey 9/30/2023 10-Q– 29

Notes to Consolidated Financial Statements (Unaudited)

Net Investment Hedges

~~Borrowings~~Certain borrowings under our Senior Unsecured Notes, Unsecured Revolving Credit Facility, and Unsecured Term Loans (all as defined in Note 11) denominated in euro, British pounds sterling, or Japanese yen are designated as, and are effective as, economic hedges of our net investments in foreign entities.

Exchange rate variations impact our financial results because the financial results of our foreign subsidiaries are translated to U.S. dollars each period, with the effect of exchange rate variations being recorded in Other comprehensive (loss) income as part of the cumulative foreign currency translation adjustment. As a result, changes in the value of our borrowings under our euro-denominated senior notes and changes in the value of our euro, Japanese yen, and British pound sterling borrowings under our Senior Unsecured Credit Facility, related to changes in the spot rates, will be reported in the same manner as foreign currency translation adjustments, which are recorded in Other comprehensive (loss) income as part of the cumulative foreign currency translation adjustment. Such gains (losses) related to non-derivative net investment hedges were ~~$215.0~~$108.0 million and ~~$92.6~~$215.0 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$528.4~~$38.6 million and ~~$190.5~~$528.4 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

~~W. P. Carey 9/30/2022 10-Q~~– 34

~~Notes to Consolidated Financial Statements (Unaudited)~~

Note 11. Debt

Senior Unsecured Credit Facility

~~On February 20, 2020,~~As of December 31, 2022, we ~~entered into the Fourth Amended and Restated Credit Facility,~~had a senior credit facility, which had capacity of approximately ~~$2.1~~$2.4 billion, comprised of (i) a $1.8 billion unsecured revolving credit facility for our working capital needs, acquisitions, and other general corporate purposes (our “Unsecured Revolving Credit Facility”), (ii) a ~~£150.0~~£270.0 million term loan (our “Term ~~Loan”~~Loan due 2025”), and (iii) a ~~€96.5~~€215.0 million delayed draw term loan (our “Delayed Draw Term ~~Loan”~~Loan due 2025”). We refer to ~~our Term Loan and Delayed Draw Term Loan collectively as the “Unsecured Term Loans” and~~ the entire facility collectively as our “Senior Unsecured Credit Facility.” As of December 31, 2022, the aggregate principal amount (of revolving and term loans) available under the Senior Unsecured Credit Facility was able to be increased up to an amount not to exceed the U.S. dollar equivalent of $2.75 billion, subject to the conditions to increase set forth in our credit agreement.

In January 2023, we entered into a Third Amendment to the Credit Agreement to transition from LIBOR to SOFR. In connection with this amendment, we also increased the aggregate principal amount (of revolving and term loans) available under the Senior Unsecured Credit Facility to an amount not to exceed the U.S. dollar equivalent of $3.05 billion, subject to the conditions to increase set forth in the credit agreement (Note 2).

The Senior Unsecured Credit Facility includes the ability to borrow in certain currencies other than U.S. dollars and has a maturity date of February 20, 2025. The aggregate principal amount (of revolving and term loans) available under the Senior Unsecured Credit Facility may be increased up to an amount not to exceed the U.S. dollar equivalent of $2.75 billion, subject to the conditions to increase set forth in our Credit Agreement, as described above.

In April 2022, we entered into a Second Amendment to the Credit Agreement to increase the Term Loan to £270.0 million and the Delayed Draw Term Loan to €215.0 million, thereby increasing the total capacity of our Senior Unsecured Credit Facility to approximately $2.4 billion. There were no other changes to the terms of our Credit Agreement. We used the approximately $300 million of proceeds from this increase in the capacity of our Unsecured Term Loans to partially repay amounts outstanding under our Unsecured Revolving Credit Facility.

At September 30, ~~2022,~~2023, our Unsecured Revolving Credit Facility had available capacity of approximately $1.3 billion (net of amounts reserved for standby letters of credit totaling ~~$0.6~~$1.9 million). We incur an annual facility fee of ~~0.20%~~0.15% of the total commitment on our Unsecured Revolving Credit Facility, which is included within Interest expense in our consolidated statements of income.

Term Loan Agreement

On April 24, 2023, we entered into a €500.0 million unsecured term loan maturing on April 24, 2026 (our “Unsecured Term Loan due 2026”), comprised of (i) a €300.0 million term loan (our “Term Loan due 2026”) and (ii) a €200.0 million delayed draw term loan (our “Delayed Draw Term Loan due 2026”), which was drawn in full at closing. The amount available under the Unsecured Term Loan due 2026 may be increased up to an amount not to exceed €750.0 million, subject to the conditions to increase set forth in the related credit agreement.

The Unsecured Term Loan due 2026 borrowing rate pursuant to the credit agreement is 85 basis points over EURIBOR, based on our credit ratings of BBB+ and Baa1. In conjunction with the closing of the Unsecured Term Loan due 2026, we executed variable-to-fixed interest rate swaps that fix the total per annum interest rate at 4.34% through the end of 2024 (Note 10).

We refer to our Term Loan due 2025, Delayed Draw Term Loan due 2025, and Unsecured Term Loan due 2026 collectively as our “Unsecured Term Loans.”

W. P. Carey 9/30/2023 10-Q– 30

Notes to Consolidated Financial Statements (Unaudited)

The following table presents a summary of our ~~Senior~~ Unsecured Term Loans and Unsecured Revolving Credit Facility (dollars in thousands):

Interest Rate at
September 30, 2022 (a)
Maturity Date at September 30, 2022 Principal Outstanding Balance at
Senior Unsecured Credit Facility September 30, 2022 December 31, 2021
Unsecured Term Loans:
Term Loan — borrowing in British pounds sterling (b) (c) (d)
SONIA + 0.85% 2/20/2025 $ 298,070 $ 202,183
Delayed Draw Term Loan — borrowing in euros (e)
EURIBOR + 0.85% 2/20/2025 209,582 109,296
507,652 311,479
Unsecured Revolving Credit Facility:
Borrowing in U.S. dollars (f)
LIBOR + 0.775% 2/20/2025 446,000 —
Borrowing in Japanese yen (g)
TIBOR + 0.775% 2/20/2025 16,660 20,935
Borrowing in euros N/A 2/20/2025 — 205,001
Borrowing in British pounds sterling N/A 2/20/2025 — 184,660
462,660 410,596

$ 970,312 $ 722,075


Unsecured Term Loans and Unsecured Revolving Credit Facility	Interest Rate at September 30, 2023 (a)	Maturity Date at September 30, 2023	Principal Outstanding Balance at
			September 30, 2023		December 31, 2022
Unsecured Term Loans:
Unsecured Term Loan due 2026 — borrowing in euros (b)	4.34%	4/24/2026	$	529,700	$	—
Term Loan due 2025 — borrowing in British pounds sterling (c) (d)	SONIA + 0.85%	2/20/2025	330,840		324,695
Delayed Draw Term Loan due 2025 — borrowing in euros (e)	EURIBOR + 0.85%	2/20/2025	227,771		229,319
			1,088,311		554,014
Unsecured Revolving Credit Facility:
Borrowing in euros (e)	EURIBOR + 0.775%	2/20/2025	345,364		258,117
Borrowing in U.S. dollars (f)	SOFR + 0.775%	2/20/2025	155,000		—
Borrowing in Japanese yen (g)	TIBOR + 0.775%	2/20/2025	16,149		18,275
			516,513		276,392
			$	1,604,824	$	830,406

__________

(a)The applicable interest rate at September 30, ~~2022~~2023 was based on the credit rating for our Senior Unsecured Notes of ~~BBB/~~BBB+/Baa1.

(b)Balance excludes unamortized discount of $3.5 million and unamortized deferred financing costs of $0.3 million at September 30, 2023.

(c)SONIA means Sterling Overnight Index ~~Average.~~

~~(c)Interest rate~~Average and includes ~~both~~ a spread adjustment ~~to the base rate and a credit spread.~~of 0.0326%.

(d)Balance excludes unamortized discount of ~~$1.6~~$1.0 million and ~~$0.9~~$1.5 million at September 30, ~~2022~~2023 and December 31, ~~2021, respectively.~~2022, respectively

(e)EURIBOR means Euro Interbank Offered Rate.

(f)~~LIBOR means London Interbank Offered Rate.~~SOFR includes a spread adjustment of 0.10%.

(g)TIBOR means Tokyo Interbank Offered Rate.

Debt Facility — Net Lease Office Properties

On September 20, 2023, in connection with the proposed Spin-Off (Note 1), NLOP and certain of its wholly-owned direct and indirect subsidiaries entered into financing arrangements for which funding was subject to certain conditions (including the closing of the Spin-Off), including (i) a $335.0 million senior secured mortgage loan maturing on November 9, 2025 (the “NLOP Mortgage Loan”) and (ii) a $120.0 million mezzanine loan facility maturing on November 9, 2028 (the “NLOP Mezzanine Loan” and, together with the NLOP Mortgage Loan, the “NLOP Financing Arrangements”). At that time, NLOP was a wholly-owned subsidiary of WPC.

Upon funding of the borrowing pursuant to the NLOP Mortgage Loan, the NLOP Mortgage Loan will bear interest at an annual rate of one-month Term SOFR rate (subject to a floor of 3.85%) plus 5.0%. In addition, NLOP entered into an interest rate cap agreement at a strike rate of 5.35% under the terms set forth under the NLOP Mortgage Loan. Upon funding of the borrowing pursuant to the NLOP Mezzanine Loan, the NLOP Mezzanine Loan will bear interest at an annual rate of 14.5% (10.0% of which is required to be paid current on a monthly basis, and 4.5% of which will be a payment-in-kind accrual, on a quarterly basis).

Upon the closing of the Spin-Off and funding of the loans on November 1, 2023 (Note 17), the principal balance of the NLOP Financing Arrangements was spun off to NLOP, and approximately $350 million of the balance (net of transaction expenses) was retained by us in connection with the Spin-Off.

In connection with the closing of the NLOP Financing Arrangements, we incurred financing costs totaling $14.4 million as of September 30, 2023, which is included in Other assets, net, on our consolidated financial statements and was reimbursed to us by NLOP in connection with the Spin-Off (Note 17).

W. P. Carey 9/30/~~2022~~2023 10-Q – 3531

Notes to Consolidated Financial Statements (Unaudited)

Senior Unsecured Notes

As set forth in the table below, we have euro and U.S. dollar-denominated senior unsecured notes outstanding with an aggregate principal balance outstanding of ~~$5.7~~$5.9 billion at September 30, ~~2022~~2023 (the “Senior Unsecured Notes”).

On September 28, 2022, we completed a private placement of (i) €150.0 million of 3.41% Senior Notes due 2029, which have a 7-year term and are scheduled to mature on September 28, 2029, and (ii) €200 million of 3.70% Senior Notes due 2032, which have a 10-year term and are scheduled to mature on September 28, 2032.

We redeemed the €500.0 million of 2.0% Senior Notes due 2023 in March 2021. In connection with this redemption, we paid a “make-whole” amount of $26.2 million (based on the exchange rate of the euro as of the date of redemption) and recognized a loss on extinguishment of $28.2 million, which is included within Other gains and (losses) on our consolidated statements of income for the nine months ended September 30, 2021.

Interest on the Senior Unsecured Notes is payable annually or semi-annually in ~~arrears for our euro-denominated senior notes and semi-annually for U.S. dollar-denominated senior notes.~~arrears. The Senior Unsecured Notes can be redeemed at par within three months of their respective maturities, or we can call the notes at any time for the principal, accrued interest, and a make-whole amount based upon the applicable government bond yield plus 20 to 35 basis points. The following table presents a summary of our Senior Unsecured Notes outstanding at September 30, ~~2022~~2023 (currency in thousands):

Principal Amount Coupon Rate Maturity Date Principal Outstanding Balance at
Senior Unsecured Notes, net (a)
Issue Date September 30, 2022 December 31, 2021
4.6% Senior Notes due 2024 3/14/2014 $ 500,000 4.6 % 4/1/2024 $ 500,000 $ 500,000
2.25% Senior Notes due 2024 1/19/2017 € 500,000 2.25 % 7/19/2024 487,400 566,300
4.0% Senior Notes due 2025 1/26/2015 $ 450,000 4.0 % 2/1/2025 450,000 450,000
2.250% Senior Notes due 2026 10/9/2018 € 500,000 2.250 % 4/9/2026 487,400 566,300
4.25% Senior Notes due 2026 9/12/2016 $ 350,000 4.25 % 10/1/2026 350,000 350,000
2.125% Senior Notes due 2027 3/6/2018 € 500,000 2.125 % 4/15/2027 487,400 566,300
1.350% Senior Notes due 2028 9/19/2019 € 500,000 1.350 % 4/15/2028 487,400 566,300
3.850% Senior Notes due 2029 6/14/2019 $ 325,000 3.850 % 7/15/2029 325,000 325,000
3.41% Senior Notes due 2029 9/28/2022 € 150,000 3.41 % 9/28/2029 146,220 —
0.950% Senior Notes due 2030 3/8/2021 € 525,000 0.950 % 6/1/2030 511,770 594,615
2.400% Senior Notes due 2031 10/14/2020 $ 500,000 2.400 % 2/1/2031 500,000 500,000
2.450% Senior Notes due 2032 10/15/2021 $ 350,000 2.450 % 2/1/2032 350,000 350,000
3.70% Senior Notes due 2032 9/28/2022 € 200,000 3.70 % 9/28/2032 194,960 —
2.250% Senior Notes due 2033 2/25/2021 $ 425,000 2.250 % 4/1/2033 425,000 425,000
$ 5,702,550 $ 5,759,815


		Principal Amount		Coupon Rate		Maturity Date	Principal Outstanding Balance at
Senior Unsecured Notes, net (a)	Issue Date						September 30, 2023		December 31, 2022
4.6% Senior Notes due 2024	3/14/2014	$	500,000	4.6	%	4/1/2024	$	500,000	$	500,000
2.25% Senior Notes due 2024	1/19/2017	€	500,000	2.25	%	7/19/2024	529,700		533,300
4.0% Senior Notes due 2025	1/26/2015	$	450,000	4.0	%	2/1/2025	450,000		450,000
2.25% Senior Notes due 2026	10/9/2018	€	500,000	2.25	%	4/9/2026	529,700		533,300
4.25% Senior Notes due 2026	9/12/2016	$	350,000	4.25	%	10/1/2026	350,000		350,000
2.125% Senior Notes due 2027	3/6/2018	€	500,000	2.125	%	4/15/2027	529,700		533,300
1.35% Senior Notes due 2028	9/19/2019	€	500,000	1.35	%	4/15/2028	529,700		533,300
3.85% Senior Notes due 2029	6/14/2019	$	325,000	3.85	%	7/15/2029	325,000		325,000
3.41% Senior Notes due 2029	9/28/2022	€	150,000	3.41	%	9/28/2029	158,910		159,990
0.95% Senior Notes due 2030	3/8/2021	€	525,000	0.95	%	6/1/2030	556,185		559,965
2.4% Senior Notes due 2031	10/14/2020	$	500,000	2.4	%	2/1/2031	500,000		500,000
2.45% Senior Notes due 2032	10/15/2021	$	350,000	2.45	%	2/1/2032	350,000		350,000
3.7% Senior Notes due 2032	9/28/2022	€	200,000	3.7	%	9/28/2032	211,880		213,320
2.25% Senior Notes due 2033	2/25/2021	$	425,000	2.25	%	4/1/2033	425,000		425,000
							$	5,945,775	$	5,966,475

__________

(a)Aggregate balance excludes unamortized deferred financing costs totaling ~~$26.3~~$22.1 million and ~~$28.7~~$25.9 million, and unamortized discount totaling ~~$24.4~~$20.8 million and ~~$29.2~~$24.1 million, at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

In connection with the private placement of the 3.41% Senior Notes due 2029 and the €200 million of 3.70% Senior Notes due 2032 in September 2022, we incurred financing costs totaling $2.3 million during the nine months ended September 30, 2022, which are included in the Senior Unsecured Notes, net in the consolidated financial statements and are being amortized to Interest expense over the term of their respective Senior Notes.

Covenants

The credit agreements for our Senior Unsecured Credit ~~Agreement,~~Facility and Unsecured Term Loan due 2026, each of the Senior Unsecured Notes, and certain of our non-recourse mortgage loan agreements include customary financial maintenance covenants that require us to maintain certain ratios and benchmarks at the end of each quarter. There have been no significant changes in our debt covenants from what was disclosed in the ~~2021~~2022 Annual Report. We were in compliance with all of these covenants at September 30, ~~2022.~~2023.

~~W. P. Carey 9/30/2022 10-Q~~– 36

~~Notes to Consolidated Financial Statements (Unaudited)~~

Non-Recourse Mortgages

At September 30, ~~2022,~~2023, the weighted-average interest rate for our total non-recourse mortgage notes payable was ~~4.3%~~4.7% (fixed-rate and variable-rate non-recourse mortgage notes payable were ~~4.4%~~4.6% and ~~3.9%~~5.2%, respectively), with maturity dates ranging from October ~~2022~~2023 to April 2039.

~~CPA:18 Merger~~

~~In connection with the CPA:18 Merger on August 1, 2022 (Note 3~~), we assumed property-level debt comprised of non-recourse mortgage loans with fair values totaling $900.2 million and recorded an aggregate fair market value net discount of $13.1 million. The fair market value net discount will be amortized to interest expense over the remaining lives of the related loans. These non-recourse mortgage loans had a weighted-average annual interest rate of 5.1% on the merger date.

Repayments

During the nine months ended September 30, ~~2022,~~2023, we (i) ~~prepaid a non-recourse mortgage loan of $10.4 million and (ii)~~ repaid non-recourse mortgage loans at or close to maturity with an aggregate principal balance of approximately ~~$35.6~~$226.9 million and (ii) prepaid non-recourse mortgage loans totaling $99.4 million. We recognized a net gain on extinguishment of debt of ~~$1.3~~$2.4 million on these repayments, which is included within Other gains and (losses) on our consolidated statements of income. The weighted-average interest rate for these non-recourse mortgage loans on their respective dates of repayment was ~~4.6%~~4.8%.

During the nine months ended September 30, 2021, we (i) prepaid non-recourse mortgage loans totaling $427.5 million and (ii) repaid non-recourse mortgage loans at maturity with an aggregate principal balance of approximately $27.5 million. We recognized an aggregate net loss on extinguishment of debt of $32.0 million on these repayments, primarily comprised of prepayment penalties totaling $32.1 million, which is included within Other gains and (losses) on our consolidated statements of income. The weighted-average interest rate for these non-recourse mortgage loans on their respective dates of repayment was 5.1%.

W. P. Carey 9/30/2023 10-Q– 32

Notes to Consolidated Financial Statements (Unaudited)

Foreign Currency Exchange Rate Impact

During the nine months ended September 30, ~~2022,~~2023, the U.S. dollar strengthened against the euro, resulting in ~~an aggregate~~a decrease of ~~$579.1~~$40.6 million in the aggregate carrying values of our Non-recourse mortgages, net, Senior Unsecured Credit Facility, Unsecured Term Loan due 2026, and Senior Unsecured Notes, net from December 31, ~~2021~~2022 to September 30, ~~2022.~~2023.

Scheduled Debt Principal Payments

Scheduled debt principal payments as of September 30, ~~2022~~2023 are as follows (in thousands):


Years Ending December 31,	Years Ending December 31,	Total		Years Ending December 31,	Total
2022 (remainder)		$	96,744
2023		428,242
2023 (remainder)				2023 (remainder)	$	111,174
2024	2024	1,161,427		2024	1,223,399
2025	2025	1,769,956		2025	1,903,802
2026	2026	959,287		2026	1,509,747
2027				2027	530,368
Thereafter through 2039	Thereafter through 2039	3,431,674		Thereafter through 2039	3,063,067
Total principal payments	Total principal payments	7,847,330		Total principal payments	8,341,557
Unamortized discount, net	Unamortized discount, net	(37,597)		Unamortized discount, net	(31,472)
Unamortized deferred financing costs	Unamortized deferred financing costs	(26,390)		Unamortized deferred financing costs	(22,371)
Total	Total	$	7,783,343	Total	$	8,287,714

Certain amounts in the table above are based on the applicable foreign currency exchange rate at September 30, ~~2022.~~2023.

~~W. P. Carey 9/30/2022 10-Q~~– 37

~~Notes to Consolidated Financial Statements (Unaudited)~~

Note 12. Commitments and Contingencies

At September 30, ~~2022,~~2023, we were not involved in any material litigation. Various claims and lawsuits arising in the normal course of business are pending against us. The results of these proceedings are not expected to have a material adverse effect on our consolidated financial position or results of operations.

Note 13. Stock-Based Compensation and Equity

Stock-Based Compensation

We maintain several stock-based compensation plans, which are more fully described in the ~~2021~~2022 Annual Report. There have been no significant changes to the terms and conditions of any of our stock-based compensation plans or arrangements during the nine months ended September 30, ~~2022.~~2023. We recorded stock-based compensation expense of ~~$5.5~~$9.1 million and ~~$4.4~~$5.5 million during the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$23.1~~$25.8 million and ~~$18.8~~$23.1 million during the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, which was included in Stock-based compensation expense in the consolidated financial statements.

W. P. Carey 9/30/2023 10-Q– 33

Notes to Consolidated Financial Statements (Unaudited)

Restricted and Conditional Awards

Nonvested restricted share awards (“RSAs”), restricted share units (“RSUs”), and performance share units (“PSUs”) at September 30, ~~2022~~2023 and changes during the nine months ended September 30, ~~2022~~2023 were as follows:


		RSA and RSU Awards			PSU Awards				RSA and RSU Awards			PSU Awards
		Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value			Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value
Nonvested at January 1, 2022		306,994	$	71.21	398,255	$	86.86
Nonvested at January 1, 2023								Nonvested at January 1, 2023	376,298	$	74.78	531,781	$	89.14
Granted (a)	Granted (a)	229,497	80.35		144,311	104.97		Granted (a)	256,993	82.78		150,989	144.54
Vested (b)	Vested (b)	(154,028)	72.80		(165,615)	92.16		Vested (b)	(171,330)	76.62		(218,147)	104.65
Forfeited	Forfeited	(5,546)	76.44		—	—		Forfeited	(101)	74.81		—	—
Adjustment (c)	Adjustment (c)	—	—		84,248	88.78		Adjustment (c)	—	—		71,443	107.02
Nonvested at September 30, 2022 (d)		376,917	$	76.04	461,199	$	92.00
Nonvested at September 30, 2023 (d)								Nonvested at September 30, 2023 (d)	461,860	$	78.53	536,066	$	103.15

__________

(a)The grant date fair value of RSAs and RSUs reflect our stock price on the date of grant on a one-for-one basis. The grant date fair value of PSUs was determined utilizing ~~(i)~~ a Monte Carlo simulation model to generate an estimate of our future stock price over the three-year performance ~~period and (ii) future financial performance projections.~~period. To estimate the fair value of PSUs granted during the nine months ended September 30, ~~2022,~~2023, we used a risk-free interest rate of ~~1.2%~~3.8%, an expected volatility rate of ~~36.7%~~38.2%, and assumed a dividend yield of zero.

(b)The grant date fair value of shares vested during the nine months ended September 30, ~~2022~~2023 was ~~$26.5~~$36.0 million. Employees have the option to take immediate delivery of the shares upon vesting or defer receipt to a future date pursuant to previously made deferral elections. At September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had an obligation to issue ~~1,181,947~~1,196,955 and ~~1,104,020~~1,181,947 shares, respectively, of our common stock underlying such deferred awards, which is recorded within Total stockholders’ equity as a Deferred compensation obligation of ~~$57.0~~$62.0 million and ~~$49.8~~$57.0 million, respectively.

(c)Vesting and payment of the PSUs is conditioned upon certain company and/or market performance goals being met during the relevant three-year performance period. The ultimate number of PSUs to be vested will depend on the extent to which the performance goals are met and can range from zero to three times the original awards. As a result, we recorded adjustments at September 30, ~~2022~~2023 to reflect the number of shares expected to be issued when the PSUs vest.

(d)At September 30, ~~2022,~~2023, total unrecognized compensation expense related to these awards was approximately ~~$39.2~~$50.2 million, with an aggregate weighted-average remaining term of 2.0 years.

Earnings Per Share

The following table summarizes basic and diluted earnings (dollars in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022


Net income — basic and diluted	$	125,040	$	104,928	$	564,040	$	389,601

Weighted-average shares outstanding — basic	215,097,114		203,093,553		214,052,907		196,382,433
Effect of dilutive securities	155,855		1,004,563		374,518		882,076
Weighted-average shares outstanding — diluted	215,252,969		204,098,116		214,427,425		197,264,509

For the three and nine months ended September 30, 2023 and 2022, potentially dilutive securities excluded from the computation of diluted earnings per share were insignificant.

W. P. Carey 9/30/~~2022~~2023 10-Q – 3834

Notes to Consolidated Financial Statements (Unaudited)

~~Earnings Per Share~~

~~The following table summarizes basic and diluted earnings (dollars in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net income — basic and diluted $ 104,928 $ 138,547 $ 389,601 $ 310,426
Weighted-average shares outstanding — basic 203,093,553 185,422,639 196,382,433 180,753,115
Effect of dilutive securities 1,004,563 589,839 882,076 570,013
Weighted-average shares outstanding — diluted 204,098,116 186,012,478 197,264,509 181,323,128
Acquisitions of Noncontrolling Interests

~~For~~On May 30, 2023, we acquired the remaining 3% interest in an international jointly owned investment (which we already consolidated) from the noncontrolling interest holders for nominal consideration, bringing our ownership interest to 100%. No gain or loss was recognized on the transaction. We recorded an adjustment of approximately $1.2 million to Additional paid-in capital in our consolidated statements of equity for the nine months ended September 30, 2023 related to the difference between the consideration transferred and the carrying value of the noncontrolling interest related to this investment.

On July 18, 2023, we acquired the remaining 10% interest in a domestic jointly owned investment (which we already consolidated) from the noncontrolling interest holders for $2.4 million, bringing our ownership interest to 100%. No gain or loss was recognized on the transaction. We recorded an adjustment of approximately $2.5 million to Additional paid-in capital in our consolidated statements of equity for the three and nine months ended September 30, ~~2022~~2023 related to the difference between the consideration transferred and ~~2021, potentially dilutive securities excluded from~~ the ~~computation~~carrying value of ~~diluted earnings per share were insignificant.~~the noncontrolling interest related to this investment.

ATM Program

On May 2, 2022, we established a continuous “at-the-market” offering program (“ATM Program”) with a syndicate of banks, pursuant to which shares of our common stock having an aggregate gross sales price of up to $1.0 billion may be sold (i) directly through or to the banks acting as sales agents or as principal for their own accounts or (ii) through or to participating banks or their affiliates acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement (our “ATM Forwards”). Effective as of that date, we terminated a prior ATM Program that was established on August 9, 2019.

Our prior ATM Program is discussed in the ~~2021~~2022 Annual Report. The following table sets forth certain information regarding the issuance of shares of our common stock under our prior ATM Program during the periods presented (net proceeds in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Shares of common stock issued	Shares of common stock issued	—		—		2,740,295		4,225,624		Shares of common stock issued	—		—		—		2,740,295
Weighted-average price per share	Weighted-average price per share	$	—	$	—	$	80.79	$	72.50	Weighted-average price per share	$	—	$	—	$	—	$	80.79
Net proceeds	Net proceeds	$	—	$	—	$	218,081	$	302,506	Net proceeds	$	—	$	—	$	—	$	218,081

Forward Equity

We expect to settle the ATM Forwards in full on or prior to the maturity date of each ATM Forward via physical delivery of the outstanding shares of common stock in exchange for cash proceeds. However, subject to certain exceptions, we may also elect to cash settle or net share settle all or any portion of our obligations under any ATM Forwards. The forward sale price that we will receive upon physical settlement of the ATM Forwards will be (i) subject to adjustment on a daily basis based on a floating interest rate factor equal to a specified daily rate less a spread (i.e., if the specified daily rate is less than the spread on any day, the interest rate factor will result in a daily reduction of the applicable forward sale price) and (ii) decreased based on amounts related to expected dividends on shares of our common stock during the term of the ATM Forwards.

We determined that our ATM Forwards meet the criteria for equity classification and are therefore exempt from derivative accounting. We recorded the ATM Forwards at fair value at inception, which we determined to be zero. Subsequent changes to fair value are not required under equity classification.

~~W. P. Carey 9/30/2022 10-Q~~– 39

~~Notes to Consolidated Financial Statements (Unaudited)~~

In addition, we refer to our ~~three~~ forward equity ~~offerings~~offering presented below as the ~~June 2020 Equity Forwards, June 2021 Equity Forwards, and~~ August 2021 Equity Forwards ~~(collectively, the~~(the “Equity Forwards”), which are discussed in the ~~2021~~2022 Annual Report. Our ATM Forwards are also presented below (gross offering proceeds at closing in thousands):

Agreement Date (a)
Shares Offered (b)
Average Gross Offering Price Average Gross Offering Proceeds at Closing Outstanding Shares as of September 30, 2022
June 2020 Equity Forwards (c)
6/17/2020 5,462,500 $ 70.00 $ 382,375 —
June 2021 Equity Forwards (d)
6/7/2021 6,037,500 75.30 454,624 —
August 2021 Equity Forwards 8/9/2021 5,175,000 78.00 403,650 2,587,500
ATM Forwards (e)
5/2/2022 5,538,037 84.81 469,697 5,538,037
8,125,537


	Agreement Date	Shares Offered (a)	Average Gross Offering Price		Average Gross Offering Proceeds at Closing		Outstanding Shares as of September 30, 2023
August 2021 Equity Forwards (b)	8/9/2021	5,175,000	$	78.00	$	403,650	—
ATM Forwards (c)	5/2/2022	7,826,840	83.57		654,086		4,744,973
							4,744,973

__________

W. P. Carey 9/30/2023 10-Q– 35

Notes to Consolidated Financial Statements (Unaudited)

(a)We expect to settle the Equity Forwards in full within 18 months of the respective agreement dates via physical delivery of the outstanding shares of common stock in exchange for cash proceeds, although we may elect cash settlement or net share settlement for all or a portion of our obligations under the Equity Forwards, subject to certain conditions.

~~(b)~~Includes ~~712,500, 787,500, and~~ 675,000 shares of common stock purchased by certain underwriters in connection with the ~~June 2020 Equity Forwards, June 2021 Equity Forwards, and~~ August 2021 Equity Forwards, ~~respectively,~~ upon the exercise of 30-day options to purchase additional shares.

~~(c)All remaining outstanding shares were settled during the three months ended June 30, 2021.~~

~~(d)~~(b)All remaining outstanding shares were settled during the three months ended December 31, ~~2021.~~2022.

~~(e)~~(c)~~We sold~~All remaining outstanding shares ~~under our ATM Forwards during the second and third quarters of 2022. We did not settle any of the shares sold and therefore did not receive any proceeds from such sales.~~were settled in October 2023 (Note 17).

The following table sets forth certain information regarding the settlement of our ~~Equity Forwards~~forward equity during the periods presented (dollars in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Shares of common stock delivered	Shares of common stock delivered	1,337,500		2,012,500		1,337,500		6,535,709		Shares of common stock delivered	—		1,337,500		3,081,867		1,337,500
Net proceeds	Net proceeds	$	97,456	$	147,363	$	97,456	$	457,227	Net proceeds	$	—	$	97,456	$	249,806	$	97,456

~~W. P. Carey 9/30/2022 10-Q~~– 40

~~Notes to Consolidated Financial Statements (Unaudited)~~

Reclassifications Out of Accumulated Other Comprehensive Loss

The following tables present a reconciliation of changes in Accumulated other comprehensive loss by component for the periods presented (in thousands):


		Three Months Ended September 30, 2022									Three Months Ended September 30, 2023
		Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total			Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total
Beginning balance	Beginning balance	$	43,693	$	(309,850)	$	—	$	(266,157)	Beginning balance	$	23,879	$	(303,810)	$	—	$	(279,931)
Other comprehensive loss before reclassifications		28,531		(56,053)		—		(27,522)
Other comprehensive income before reclassifications										Other comprehensive income before reclassifications	10,262		(8,844)		—		1,418
Amounts reclassified from accumulated other comprehensive loss to:	Amounts reclassified from accumulated other comprehensive loss to:									Amounts reclassified from accumulated other comprehensive loss to:
Non-operating income	Non-operating income	(4,987)		—		—		(4,987)		Non-operating income	(2,787)		—		—		(2,787)
Interest expense	Interest expense	66		—		—		66		Interest expense	(659)		—		—		(659)
Total	Total	(4,921)		—		—		(4,921)		Total	(3,446)		—		—		(3,446)
Net current period other comprehensive loss	Net current period other comprehensive loss	23,610		(56,053)		—		(32,443)		Net current period other comprehensive loss	6,816		(8,844)		—		(2,028)
Net current period other comprehensive loss attributable to noncontrolling interests	Net current period other comprehensive loss attributable to noncontrolling interests	—		543		—		543		Net current period other comprehensive loss attributable to noncontrolling interests	—		139		—		139
Ending balance	Ending balance	$	67,303	$	(365,360)	$	—	$	(298,057)	Ending balance	$	30,695	$	(312,515)	$	—	$	(281,820)

Three Months Ended September 30, 2021
Gains and (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Gains and (Losses) on Investments Total
Beginning balance $ (1,062) $ (228,898) $ — $ (229,960)
Other comprehensive loss before reclassifications 12,932 (20,400) — (7,468)
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense 196 — — 196
Non-operating income (14) — — (14)
Total 182 — — 182
Net current period other comprehensive loss 13,114 (20,400) — (7,286)
Ending balance $ 12,052 $ (249,298) $ — $ (237,246)


		Nine Months Ended September 30, 2022									Three Months Ended September 30, 2022
		Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total			Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total
Beginning balance	Beginning balance	$	16,347	$	(256,705)	$	18,688	$	(221,670)	Beginning balance	$	43,693	$	(309,850)	$	—	$	(266,157)
Other comprehensive loss before reclassifications	Other comprehensive loss before reclassifications	61,054		(109,198)		—		(48,144)		Other comprehensive loss before reclassifications	28,531		(56,053)		—		(27,522)
Amounts reclassified from accumulated other comprehensive loss to:	Amounts reclassified from accumulated other comprehensive loss to:									Amounts reclassified from accumulated other comprehensive loss to:
Non-operating income	Non-operating income	(10,450)		—		—		(10,450)		Non-operating income	(4,987)		—		—		(4,987)
Interest expense	Interest expense	352		—		—		352		Interest expense	66		—		—		66
Other gains and (losses) (Note 9)		—		—		(18,688)		(18,688)
Total	Total	(10,098)		—		(18,688)		(28,786)		Total	(4,921)		—		—		(4,921)
Net current period other comprehensive loss	Net current period other comprehensive loss	50,956		(109,198)		(18,688)		(76,930)		Net current period other comprehensive loss	23,610		(56,053)		—		(32,443)
Net current period other comprehensive loss attributable to noncontrolling interests	Net current period other comprehensive loss attributable to noncontrolling interests	—		543		—		543		Net current period other comprehensive loss attributable to noncontrolling interests	—		543		—		543
Ending balance	Ending balance	$	67,303	$	(365,360)	$	—	$	(298,057)	Ending balance	$	67,303	$	(365,360)	$	—	$	(298,057)

W. P. Carey 9/30/~~2022~~2023 10-Q – 4136

Notes to Consolidated Financial Statements (Unaudited)


		Nine Months Ended September 30, 2021									Nine Months Ended September 30, 2023
		Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total			Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total
Beginning balance	Beginning balance	$	(18,937)	$	(220,969)	$	—	$	(239,906)	Beginning balance	$	36,079	$	(319,859)	$	—	$	(283,780)
Other comprehensive income before reclassifications	Other comprehensive income before reclassifications	29,737		(28,329)		—		1,408		Other comprehensive income before reclassifications	6,404		7,092		—		13,496
Amounts reclassified from accumulated other comprehensive loss to:	Amounts reclassified from accumulated other comprehensive loss to:									Amounts reclassified from accumulated other comprehensive loss to:
Non-operating income										Non-operating income	(10,656)		—		—		(10,656)
Interest expense	Interest expense	720		—		—		720		Interest expense	(1,132)		—		—		(1,132)
Non-operating income		553		—		—		553
Total	Total	1,273		—		—		1,273		Total	(11,788)		—		—		(11,788)
Net current period other comprehensive income	Net current period other comprehensive income	31,010		(28,329)		—		2,681		Net current period other comprehensive income	(5,384)		7,092		—		1,708
Net current period other comprehensive income attributable to noncontrolling interests		(21)		—		—		(21)
Net current period other comprehensive loss attributable to noncontrolling interests										Net current period other comprehensive loss attributable to noncontrolling interests	—		252		—		252
Ending balance	Ending balance	$	12,052	$	(249,298)	$	—	$	(237,246)	Ending balance	$	30,695	$	(312,515)	$	—	$	(281,820)


	Nine Months Ended September 30, 2022
	Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total
Beginning balance	$	16,347	$	(256,705)	$	18,688	$	(221,670)
Other comprehensive loss before reclassifications	61,054		(109,198)		—		(48,144)
Amounts reclassified from accumulated other comprehensive loss to:
Non-operating income	(10,450)		—		—		(10,450)
Interest expense	352		—		—		352
Other gains and (losses) (Note 9)	—		—		(18,688)		(18,688)
Total	(10,098)		—		(18,688)		(28,786)
Net current period other comprehensive loss	50,956		(109,198)		(18,688)		(76,930)
Net current period other comprehensive loss attributable to noncontrolling interests	—		543		—		543
Ending balance	$	67,303	$	(365,360)	$	—	$	(298,057)

See Note 10 for additional information on our derivatives activity recognized within Other comprehensive (loss) income for the periods presented.

Dividends Declared

During the third quarter of ~~2022,~~2023, our Board declared a quarterly dividend of ~~$1.061~~$1.071 per share, which was paid on October ~~14, 2022~~16, 2023 to stockholders of record as of September ~~30, 2022.~~29, 2023.

During the nine months ended September 30, ~~2022,~~2023, we declared dividends totaling ~~$3.177~~$3.207 per share.

Note 14. Income Taxes

We elected to be treated as a REIT and believe that we have been organized and have operated in such a manner to maintain our qualification as a REIT for federal and state income tax purposes. As a REIT, we are generally not subject to corporate level federal income taxes on earnings distributed to our stockholders. Since inception, we have distributed at least 100% of our taxable income annually. Accordingly, we have not included any provisions for federal income taxes related to the REIT in the accompanying consolidated financial statements for the three and nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022.

W. P. Carey 9/30/2023 10-Q– 37

Notes to Consolidated Financial Statements (Unaudited)

Certain of our subsidiaries have elected ~~TRS~~taxable REIT subsidiary (“TRS”) status. A TRS may provide certain services considered impermissible for REITs and may hold assets that REITs may not hold directly. We also own real property in jurisdictions outside the United States through foreign subsidiaries and are subject to income taxes on our pre-tax income earned from properties in such countries. The accompanying consolidated financial statements include an interim tax provision for our TRSs and foreign subsidiaries, as necessary, for the three and nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022.

Current income tax expense was ~~$8.2~~$9.4 million and ~~$9.0~~$8.2 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$23.2~~$33.0 million and ~~$26.5~~$23.2 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Deferred income tax benefit (expense) ~~benefit~~ was $4.3 million and less than $(0.1) ~~million and $0.7~~ million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$1.6~~$2.7 million and ~~$3.0~~$1.6 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

~~W. P. Carey 9/30/2022 10-Q~~– 42

~~Notes to Consolidated Financial Statements (Unaudited)~~

Note 15. Property Dispositions

We have an active capital recycling program, with a goal of extending the average lease term through reinvestment, improving portfolio credit quality through dispositions and acquisitions of assets, increasing the asset criticality factor in our portfolio, and/or executing strategic dispositions of assets. We may decide to dispose of a property when it is vacant as a result of tenants vacating space, tenants electing not to renew their leases, tenant insolvency, or lease rejection in the bankruptcy process. In such cases, we assess whether we can obtain the highest value from the property by selling it, as opposed to re-leasing it. We may also sell a property when we receive an unsolicited offer or negotiate a price for an investment that is consistent with our strategy for that investment. When it is appropriate to do so, we classify the property as an asset held for sale on our consolidated balance sheet. All property dispositions are recorded within our Real Estate segment and are also discussed in Note 5.

2023— During the three and nine months ended September 30, 2023, we sold six and 14 properties, respectively, for total proceeds, net of selling costs, of $143.6 million and $187.7 million, respectively, and recognized a net gain on these sales totaling $14.1 million and $17.5 million, respectively (inclusive of income taxes totaling $0.7 million for both the three and nine months ended September 30, 2023, recognized upon sale). Three of the properties sold during the third quarter of 2023 were hotel operating properties.

2022 — During the three and nine months ended September 30, 2022, we sold three and 17 properties, respectively, for total proceeds, net of selling costs, of $55.2 million and $170.3 million, respectively, and recognized a net (loss) gain on these sales totaling $(4.7) million and $37.6 million, respectively (inclusive of income taxes totaling less than $2.8 million and $2.9 million, respectively, for the three and nine months ended September 30, 2022, ~~respectively,~~ recognized upon sale). This disposition activity included one property acquired in the CPA:18 Merger classified as assets held for sale (Note 3, ~~Note 5~~), which was sold in August 2022.

~~2021~~— During the three and nine months ended September 30, 2021, we sold five and 17 properties, respectively, for total proceeds, net of selling costs, of $28.3 million and $126.7 million, respectively, and recognized a net gain on these sales totaling $1.7 million and $30.9 million, respectively (inclusive of income taxes totaling $3.8 million recognized upon sale during the nine months ended September 30, 2021).

W. P. Carey 9/30/~~2022~~2023 10-Q – 4338

Notes to Consolidated Financial Statements (Unaudited)

Note 16. Segment Reporting

We evaluate our results from operations through our two major business segments: Real Estate and Investment Management. The following tables present a summary of comparative results and assets for these business segments (in thousands):

Real Estate


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues	Revenues									Revenues
Lease revenues	Lease revenues	$	331,902	$	298,616	$	953,981	$	872,345	Lease revenues	$	369,159	$	331,902	$	1,090,619	$	953,981
Income from direct financing leases and loans receivable		20,637		16,754		56,794		51,917
Income from finance leases and loans receivable										Income from finance leases and loans receivable	27,575		20,637		75,641		56,794
Operating property revenues ~~(a)~~	Operating property revenues ~~(a)~~	21,350		4,050		30,279		9,474		Operating property revenues ~~(a)~~	49,218		21,350		140,780		30,279
Lease termination income and other		8,192		1,421		24,905		8,066
Other lease-related income										Other lease-related income	2,310		8,192		20,723		24,905
		382,081		320,841		1,065,959		941,802			448,262		382,081		1,327,763		1,065,959

Operating Expenses	Operating Expenses									Operating Expenses
Depreciation and amortization	Depreciation and amortization	132,181		115,657		362,654		340,327		Depreciation and amortization	144,771		132,181		444,728		362,654
Operating property expenses										Operating property expenses	26,570		9,357		74,738		15,335
General and administrative	General and administrative	22,299		19,750		66,224		62,297		General and administrative	23,258		22,299		74,494		66,224
Reimbursable tenant costs	Reimbursable tenant costs	18,874		15,092		52,538		45,942		Reimbursable tenant costs	20,498		18,874		62,997		52,538
Impairment charges — real estate										Impairment charges — real estate	15,173		—		15,173		26,385
Property expenses, excluding reimbursable tenant costs										Property expenses, excluding reimbursable tenant costs	13,021		11,244		31,164		36,874
Stock-based compensation expense										Stock-based compensation expense	9,050		5,511		25,811		23,102
Merger and other expenses	Merger and other expenses	17,667		(908)		17,326		(3,998)		Merger and other expenses	4,152		17,667		5,595		17,326
Property expenses, excluding reimbursable tenant costs		11,244		13,734		36,874		36,432
Operating property expenses		9,357		3,001		15,335		6,961
Stock-based compensation expense		5,511		4,361		23,102		18,790
Impairment charges — real estate		—		16,301		26,385		16,301
		217,133		186,988		600,438		523,052			256,493		217,133		734,700		600,438
Other Income and Expenses	Other Income and Expenses									Other Income and Expenses
Interest expense	Interest expense	(59,022)		(48,731)		(151,492)		(149,623)		Interest expense	(76,974)		(59,022)		(219,658)		(151,492)
Earnings from equity method investments in real estate										Earnings from equity method investments in real estate	4,978		6,447		14,569		10,189
Non-operating income										Non-operating income	4,862		9,264		13,984		23,781
Gain (loss) on sale of real estate, net										Gain (loss) on sale of real estate, net	2,401		(4,736)		181,958		37,631
Other gains and (losses)	Other gains and (losses)	(13,960)		48,172		303		13,455		Other gains and (losses)	2,180		(13,960)		8,876		303
Gain on change in control of interests	Gain on change in control of interests	11,405		—		11,405		—		Gain on change in control of interests	—		11,405		—		11,405
Non-operating income		9,264		1,283		23,781		10,620
Earnings (losses) from equity method investments in real estate		6,447		2,445		10,189		(10,528)
(Loss) gain on sale of real estate, net		(4,736)		1,702		37,631		30,914
		(50,602)		4,871		(68,183)		(105,162)			(62,553)		(50,602)		(271)		(68,183)
Income before income taxes	Income before income taxes	114,346		138,724		397,338		313,588		Income before income taxes	129,216		114,346		592,792		397,338
Provision for income taxes	Provision for income taxes	(3,631)		(7,827)		(16,499)		(23,372)		Provision for income taxes	(5,090)		(3,631)		(30,728)		(16,499)
Net Income from Real Estate	Net Income from Real Estate	110,715		130,897		380,839		290,216		Net Income from Real Estate	124,126		110,715		562,064		380,839
Net loss (income) attributable to noncontrolling interests		660		(39)		622		(84)
Net loss attributable to noncontrolling interests										Net loss attributable to noncontrolling interests	41		660		20		622
Net Income from Real Estate Attributable to W. P. Carey	Net Income from Real Estate Attributable to W. P. Carey	$	111,375	$	130,858	$	381,461	$	290,132	Net Income from Real Estate Attributable to W. P. Carey	$	124,167	$	111,375	$	562,084	$	381,461

W. P. Carey 9/30/~~2022~~2023 10-Q – 4439

Notes to Consolidated Financial Statements (Unaudited)

Investment Management


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues	Revenues									Revenues
Asset management and other revenue		$	1,197	$	3,872	$	8,084	$	11,792
Asset management revenue										Asset management revenue	$	194	$	1,197	$	836	$	8,084
Reimbursable costs from affiliates	Reimbursable costs from affiliates	344		1,041		2,414		3,050		Reimbursable costs from affiliates	97		344		322		2,414
		1,541		4,913		10,498		14,842			291		1,541		1,158		10,498
Operating Expenses	Operating Expenses									Operating Expenses
Reimbursable costs from affiliates										Reimbursable costs from affiliates	97		344		322		2,414
Impairment charges — Investment Management goodwill	Impairment charges — Investment Management goodwill	29,334		—		29,334		—		Impairment charges — Investment Management goodwill	—		29,334		—		29,334
Reimbursable costs from affiliates		344		1,041		2,414		3,050
Merger and other expenses	Merger and other expenses	—		—		3		15		Merger and other expenses	—		—		—		3
		29,678		1,041		31,751		3,065			97		29,678		322		31,751
Other Income and Expenses	Other Income and Expenses									Other Income and Expenses
Other gains and (losses)										Other gains and (losses)	679		(1,060)		717		(1,324)
Gain on change in control of interests	Gain on change in control of interests	22,526		—		22,526		—		Gain on change in control of interests	—		22,526		—		22,526
Earnings from equity method investments in the Managed Programs	Earnings from equity method investments in the Managed Programs	4,857		3,290		13,288		6,374		Earnings from equity method investments in the Managed Programs	—		4,857		—		13,288
Other gains and (losses)		(1,060)		1,047		(1,324)		2,121
Non-operating (loss) income	Non-operating (loss) income	(1)		—		2		84		Non-operating (loss) income	—		(1)		13		2
		26,322		4,337		34,492		8,579			679		26,322		730		34,492
(Loss) income before income taxes		(1,815)		8,209		13,239		20,356
Provision for income taxes		(4,632)		(520)		(5,099)		(62)
Net (Loss) Income from Investment Management Attributable to W. P. Carey		$	(6,447)	$	7,689	$	8,140	$	20,294
Income (loss) before income taxes										Income (loss) before income taxes	873		(1,815)		1,566		13,239
(Provision for) benefit from income taxes										(Provision for) benefit from income taxes	—		(4,632)		390		(5,099)
Net Income (Loss) from Investment Management Attributable to W. P. Carey										Net Income (Loss) from Investment Management Attributable to W. P. Carey	$	873	$	(6,447)	$	1,956	$	8,140

Total Company


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues	Revenues	$	383,622	$	325,754	$	1,076,457	$	956,644	Revenues	$	448,553	$	383,622	$	1,328,921	$	1,076,457
Operating expenses	Operating expenses	246,811		188,029		632,189		526,117		Operating expenses	256,590		246,811		735,022		632,189
Other income and (expenses)	Other income and (expenses)	(24,280)		9,208		(33,691)		(96,583)		Other income and (expenses)	(61,874)		(24,280)		459		(33,691)
Provision for income taxes	Provision for income taxes	(8,263)		(8,347)		(21,598)		(23,434)		Provision for income taxes	(5,090)		(8,263)		(30,338)		(21,598)
Net loss (income) attributable to noncontrolling interests		660		(39)		622		(84)
Net loss attributable to noncontrolling interests										Net loss attributable to noncontrolling interests	41		660		20		622
Net income attributable to W. P. Carey	Net income attributable to W. P. Carey	$	104,928	$	138,547	$	389,601	$	310,426	Net income attributable to W. P. Carey	$	125,040	$	104,928	$	564,040	$	389,601

Total Assets at
September 30, 2022 December 31, 2021
Real Estate $ 17,747,813 $ 15,344,799
Investment Management (b)
27,029 135,831
Total Company $ 17,774,842 $ 15,480,630

~~__________~~

~~(a)~~Operating property revenues from our hotels include $3.7 million and $2.4 million for the three months ended September 30, 2022 and 2021, respectively, and $9.1 million and $4.9 million for the nine months ended September 30, 2022 and 2021, respectively, generated from a hotel in Bloomington, Minnesota (revenues reflect higher occupancy as the hotel’s business recovered from the COVID-19 pandemic).

~~(b)Following the CPA:18 Merger on August 1, 2022, we no longer own an equity investment in CPA:18 – Global, which was previously included within our Investment Management segment (~~N ~~ote 3~~, ~~Note~~ 8~~). In addition, during the nine months ended September 30, 2022, we recorded an impairment charge of $29.3 million on goodwill within our Investment Management segment (Note 7~~, ~~Note 9~~).


	Total Assets at
	September 30, 2023		December 31, 2022
Real Estate	$	18,620,013	$	18,077,155
Investment Management	10,226		24,880
Total Company	$	18,630,239	$	18,102,035

W. P. Carey 9/30/~~2022~~2023 10-Q – 4540

Notes to Consolidated Financial Statements (Unaudited)

Note 17. Subsequent Events

~~Cash Received~~NLOP Spin-Off

On November 1, 2023, we completed the Spin-Off of 59 office properties into NLOP, as described in further detail in Note 1. The Spin-Off was accomplished via a pro rata dividend of one NLOP common share for ~~Shares~~every 15 shares of ~~WLT~~WPC common stock outstanding. Following the closing of the Spin-Off, NLOP operates as a separate publicly-traded REIT, for which we serve as advisor pursuant to the NLOP Advisory Agreements executed in connection with the Spin-Off, as described below in further detail.

Pursuant to the NLOP Advisory Agreements, which we entered into on November 1, 2023, we provide NLOP with strategic management services, including asset management, property disposition support, and various related services. NLOP will pay us an asset management fee of approximately $7.5 million annually, which will be proportionately reduced following the disposition of a portfolio property. In addition, NLOP will reimburse us a base administrative amount of approximately $4.0 million annually, for certain administrative services, including day-to-day management services, investor relations, accounting, tax, legal, and other administrative matters.

On October 31, 2023, we entered into a Separation and Distribution Agreement, which set forth the various individual transactions to be consummated that comprised the Separation and the Distribution, including the assets transferred to and liabilities assumed by NLOP.

On October 31, 2023, we also entered into a Tax Matters Agreement, which governs the respective rights, responsibilities, and obligations of us and NLOP after the Distribution, with respect to tax liabilities and benefits, the preparation and filing of tax returns, the control of audits and other tax proceedings, tax covenants, tax indemnification, cooperation, and information sharing.

In September 2023, NLOP entered into a new $455 million debt facility (Note 11), which was executed by NLOP and funded upon the closing of the Spin-Off on November 1, 2023. Approximately $350 million of this amount (net of transaction expenses) was retained by us in connection with the Spin-Off.

In connection with the Spin-Off, we have incurred approximately $61.6 million in total costs, comprised of (i) $10.0 million of advisory fees, which is included in Merger and other expenses on our consolidated statements of income ($4.9 million of such fees were recognized during 2022 and $5.1 million were recognized during the nine months ended September 30, 2023); and (ii) $51.6 million of additional Spin-Off related costs, which were reimbursed to us by NLOP in connection with the Spin-Off.

As of the date of this Report, we have not completed our accounting for the Spin-Off. The impact of the Spin-Off will be reflected in our consolidated financial statements as of and for the year ended December 31, 2023.

Forward Equity Settlements

In October ~~2022,~~2023, we ~~received $82.6 million in cash proceeds as a result of certain private real estate funds’ acquisition of all outstanding~~settled our remaining ATM Forwards by delivering 4,744,973 shares of ~~WLT~~ common ~~stock. As~~stock at a weighted-average price of $80.95 per share for net proceeds of approximately $384 million. No forward equity remains outstanding as of the date of ~~acquisition, we owned 12,208,243 shares of WLT common stock~~this Report (Note 913). ~~Upon completion of this transaction, we have no remaining interest in WLT.~~

Dispositions

In October 2023, we completed seven dispositions for gross proceeds totaling approximately $101.9 million. Six of these properties were held for sale as of September 30, 2023 (Note 5). In addition, three of these properties were hotel operating properties and three were sold pursuant to the Office Sale Program (Note 1).

Mortgage Loan Repayments

In October 2023, we repaid at maturity two non-recourse mortgage loan for approximately $41.3 million.

W. P. Carey 9/30/~~2022~~2023 10-Q – 4641

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in understanding our financial statements and the reasons for changes in certain key components of our financial statements from period to period. This item also provides our perspective on our financial position and liquidity, as well as certain other factors that may affect our future results. The discussion also breaks down the financial results of our business by segment to provide a better understanding of how these segments and their results affect our financial condition and results of operations. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the ~~2021~~2022 Annual Report and subsequent reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Refer to Item 1 of the ~~2021~~2022 Annual Report for a description of our business.

Significant Developments

~~CPA:18 Merger~~Strategic Plan to Exit Office Portfolio

In September 2023, we announced a plan to exit the office assets within our portfolio by (i) spinning-off 59 office properties into Net Lease Office Properties (“NLOP”), so that it will become a separate publicly-traded REIT (the “Spin-Off”), and (ii) implementing an asset sale program to dispose of 87 office properties retained by us (the “Office Sale Program”), which is targeted to be substantially completed in early 2024.

NLOP Spin-Off

On ~~February 27, 2022,~~November 1, 2023, we ~~CPA:18 – Global, CPA:18 Limited Partnership (a subsidiary~~completed the Spin-Off of ~~CPA:18 – Global), and certain~~59 office properties into NLOP, as described in further detail in Note 17. Following the closing of ~~our subsidiaries entered into~~the Spin-Off, NLOP operates as a ~~merger agreement,~~separate publicly-traded REIT, for which we will serve as advisor pursuant to ~~which CPA:18 – Global would merge~~the NLOP Advisory Agreements executed in connection with ~~and into one of our indirect subsidiaries in exchange for shares of our common stock and cash (Note 3). The CPA:18 Merger and related transactions were approved by~~ the ~~stockholders of CPA:18 – Global on July 26, 2022 and completed on August 1, 2022.~~Spin-Off.

NLOP’s portfolio of 59 office properties totals approximately 9.3 million leasable square feet (including 0.6 million of operating square footage for a parking garage at a domestic property) primarily leased to corporate tenants on a single-tenant net lease basis. The vast majority of the office properties owned by NLOP are located in the United States, with the balance in Europe. NLOP’s portfolio consists of 62 corporate tenants operating in a variety of industries, generating ABR totaling approximately $145 million as of September 30, 2023.

In September 2023, NLOP entered into a new $455 million debt facility, which was executed by NLOP and funded upon the closing of the Spin-Off on November 1, 2023. Approximately $350 million of this amount (net of transaction expenses) was retained by us in connection with the Spin-Off (Note 11, Note 17).

Office Sale Program

In addition to the Spin-Off, 87 of our office properties will be sold under the Office Sale Program, which is targeted to be substantially completed in early 2024. These properties generated ABR totaling approximately $76 million as of September 30, 2023 or June 30, 2023, as applicable (one property was sold in July 2023). Four of the 87 properties have been sold as of the date of this Report, for gross proceeds of approximately $143 million.

W. P. Carey 9/30/2023 10-Q– 42

Financial Highlights

During the nine months ended September 30, ~~2022,~~2023, we completed the following (as further described in the consolidated financial statements):

Real Estate

~~CPA:18 Merger~~

~~On August 1, 2022, we completed the CPA:18 Merger (Note 3~~).

•We acquired full or partial ownership interests in 42 properties in the CPA:18 Merger (including seven properties in which we already owned a partial ownership interest), substantially all of which were triple-net leased with a weighted-average lease term of 7.0 years, an occupancy rate of 99.3%, and an estimated ABR totaling $81.0 million. We also acquired 65 self-storage operating properties and two student housing operating properties totaling 5.1 million square feet. The related property-level debt was comprised of non-recourse mortgage loans with an aggregate consolidated fair value of approximately $900.2 million with a weighted-average annual interest rate of 5.1% as of August 1, 2022.

•We issued the following to CPA:18 – Global stockholders as part of the merger consideration: (i) 13,786,302 shares of our common stock of approximately $1.2 billion, (ii) $3.00 per share of cash consideration totaling approximately $423.3 million, and (iii) cash of $0.1 million paid in lieu of issuing any fractional shares of our common stock.

•Lease revenues and operating property revenues from properties acquired in the CPA:18 Merger were $16.5 million and $15.4 million, respectively, for both the three and nine months ended September 30, 2022.

•We recognized a Gain on change in control of interests of $33.9 million in connection with the CPA:18 Merger during the three and nine months ended September 30, 2022, of which $11.4 million was attributable to our Real Estate segment and $22.5 million was attributable to our Investment Management segment.

Investments

•We acquired 18eight investments totaling ~~$1.0 billion~~$907.9 million (Note 5, ~~Note 6~~).

•We completed ~~five~~two construction projects at a cost totaling ~~$147.3~~$34.5 million (Note 5).

•We funded approximately ~~$65.2~~$36.6 million for a construction loan to build a retail complex in Las Vegas, Nevada, during the nine months ended September 30, ~~2022.~~2023. Through September 30, ~~2022,~~2023, we have funded ~~$168.9~~$229.8 million (Note 8).

•We committed to fund ~~three build-to-suit~~four redevelopment or expansion projects totaling ~~$25.5~~$84.1 million. We currently expect to complete the projects in ~~2023~~2024 and 2025 (Note 5).

~~W. P. Carey 9/30/2022 10-Q~~•– 47We committed to purchase two retail (car wash) facilities in the United States for approximately $8.7 million, which is expected to take place during the fourth quarter of 2023.

Dispositions

•~~As part of our active capital recycling program, we~~We disposed of 1714 properties for total proceeds, net of selling costs, of ~~$170.3~~$187.7 million (Note 15).

•~~In January 2022, WLT redeemed in full our 1,300,000 shares of its preferred stock for gross proceeds of $65.0 million (Note 9~~).

•~~In October 2022, we received $82.6 million in cash proceeds as a result of certain private real estate funds’ acquisition of all outstanding shares of WLT common stock. As~~ Three of the ~~date of acquisition, we owned 12,208,243 shares of WLT common stock (Note 9). Upon completion of this transaction, we have no remaining interest in WLT (Note 17~~).properties sold were hotel operating properties.

Financing and Capital Markets Transactions

•In ~~April 2022,~~January 2023, we entered into a Third Amendment to the Credit Agreement to transition from LIBOR to SOFR. In connection with this amendment, we also increased the ~~Term Loan to £270.0 million~~aggregate principal amount (of revolving and term loans) available under the ~~Delayed Draw Term Loan to €215.0 million, thereby increasing the total capacity of our~~ Senior Unsecured Credit Facility to ~~approximately $2.4 billion. We used~~an amount not to exceed the ~~approximately $300 million~~U.S. dollar equivalent of ~~proceeds from this~~$3.05 billion, subject to the conditions to increase set forth in the ~~capacity of our Unsecured Term Loans to partially repay amounts outstanding under our Unsecured Revolving Credit Facility~~credit agreement (Note 11).

•~~On May 2, 2022,~~In April 2023, we ~~established~~entered into a ~~$1.0 billion ATM Program,~~new €500.0 million unsecured term loan maturing on April 2026, which was drawn in full at closing. The amount available under ~~which~~the term loan may be increased up to an amount not to exceed €750.0 million, subject to the conditions to increase set forth in the related credit agreement. In conjunction with the closing of this new term loan, we ~~may issue shares directly or defer delivery to a later date~~executed variable-to-fixed interest rate swaps that fix the total per annum interest rate at 4.34% through ~~our ATM Forwards. As~~the end of ~~September 30, 2022, we had approximately $455.7 million of available proceeds under our ATM Forwards~~2024 (Note 13).

•~~We issued 2,740,295 shares of our common stock under our prior ATM Program at a weighted-average price of $80.79 per share, for net proceeds of $218.1 million (Note 13~~11).

•We settled portions of our ~~Equity~~ATM Forwards by delivering ~~1,337,500~~3,081,867 shares of common stock for net proceeds of ~~$97.5 million. As of September 30, 2022, 2,587,500 shares remained outstanding under our Equity Forwards for available proceeds of approximately $185.8~~$249.8 million (Note 13). In October 2023, we settled our remaining ATM Forwards (Note 17).

•~~On September 28, 2022, we completed~~We reduced our mortgage debt outstanding by prepaying or repaying at maturity a ~~private placement~~total of ~~(i) €150~~$326.3 million of ~~3.41% Senior Notes due 2029, which have~~non-recourse mortgage loans with a ~~seven-year term and are scheduled to mature on September 28, 2029, and (ii) €200 million~~weighted-average interest rate of ~~3.70% Senior Notes due 2032, which have a ten-year term and are scheduled to mature on September 28, 2032~~4.8% (Note 11).

~~Investment Management~~

~~Assets Under Management~~

•As of September 30, 2022, we managed total assets of approximately $161.5 million on behalf of CESH. The vast majority of our Investment Management earnings are generated from asset management fees. Upon completion of the CPA:18 Merger (~~Note 3~~), we ceased earning advisory fees and other income previously earned when we served as advisor to CPA:18 – Global. During the nine months ended September 30, 2022, through the date of the CPA:18 Merger, such fees and other income from CPA:18 – Global totaled $17.9 million.

Dividends to Stockholders

We declared cash dividends totaling ~~$3.177~~$3.207 per share during the nine months ended September 30, ~~2022,~~2023, comprised of three quarterly dividends per share of ~~$1.057, $1.059,~~$1.067, $1.069, and ~~$1.061~~$1.071 (Note 13).

W. P. Carey 9/30/~~2022~~2023 10-Q – 4843

Consolidated Results

(in thousands, except shares)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues from Real Estate	Revenues from Real Estate	$	382,081	$	320,841	$	1,065,959	$	941,802	Revenues from Real Estate	$	448,262	$	382,081	$	1,327,763	$	1,065,959
Revenues from Investment Management	Revenues from Investment Management	1,541		4,913		10,498		14,842		Revenues from Investment Management	291		1,541		1,158		10,498
Total revenues	Total revenues	383,622		325,754		1,076,457		956,644		Total revenues	448,553		383,622		1,328,921		1,076,457

Net income from Real Estate attributable to W. P. Carey	Net income from Real Estate attributable to W. P. Carey	111,375		130,858		381,461		290,132		Net income from Real Estate attributable to W. P. Carey	124,167		111,375		562,084		381,461
Net (loss) income from Investment Management attributable to W. P. Carey		(6,447)		7,689		8,140		20,294
Net income (loss) from Investment Management attributable to W. P. Carey										Net income (loss) from Investment Management attributable to W. P. Carey	873		(6,447)		1,956		8,140
Net income attributable to W. P. Carey	Net income attributable to W. P. Carey	104,928		138,547		389,601		310,426		Net income attributable to W. P. Carey	125,040		104,928		564,040		389,601

Dividends declared	Dividends declared	222,350		197,374		633,745		579,769		Dividends declared	230,862		222,350		691,237		633,745

Net cash provided by operating activities	Net cash provided by operating activities					702,528		625,396		Net cash provided by operating activities					812,687		702,528
Net cash used in investing activities	Net cash used in investing activities					(1,019,425)		(1,053,266)		Net cash used in investing activities					(792,526)		(1,019,425)
Net cash provided by financing activities						364,057		305,865
Net cash (used in) provided by financing activities										Net cash (used in) provided by financing activities					(29,420)		364,057

Supplemental financial measures (a):	Supplemental financial measures (a):									Supplemental financial measures (a):
Adjusted funds from operations attributable to W. P. Carey (AFFO) — Real Estate	Adjusted funds from operations attributable to W. P. Carey (AFFO) — Real Estate	273,567		224,445		772,827		657,150		Adjusted funds from operations attributable to W. P. Carey (AFFO) — Real Estate	284,198		273,567		855,678		772,827
Adjusted funds from operations attributable to W. P. Carey (AFFO) — Investment Management	Adjusted funds from operations attributable to W. P. Carey (AFFO) — Investment Management	4,155		6,279		18,095		18,736		Adjusted funds from operations attributable to W. P. Carey (AFFO) — Investment Management	194		4,155		1,239		18,095
Adjusted funds from operations attributable to W. P. Carey (AFFO)	Adjusted funds from operations attributable to W. P. Carey (AFFO)	277,722		230,724		790,922		675,886		Adjusted funds from operations attributable to W. P. Carey (AFFO)	284,392		277,722		856,917		790,922

Diluted weighted-average shares outstanding	Diluted weighted-average shares outstanding	204,098,116		186,012,478		197,264,509		181,323,128		Diluted weighted-average shares outstanding	215,252,969		204,098,116		214,427,425		197,264,509

__________

(a)We consider Adjusted funds from operations (“AFFO”), a supplemental measure that is not defined by GAAP (a “non-GAAP measure”), to be an important measure in the evaluation of our operating performance. See Supplemental Financial Measures below for our definition of this non-GAAP measure and a reconciliation to its most directly comparable GAAP measure.

Revenues

Total revenues increased for the three and nine months ended September 30, ~~2022~~2023 as compared to the same periods in ~~2021.~~2022. Real Estate revenue increased primarily due to higher lease revenues (substantially as a result of property acquisition activity and rent escalations, as well as the net-leased properties we acquired in the CPA:18 Merger on August 1, ~~2022 (Note 3), partially offset by the impact of the weakening euro~~2022) and ~~British pound sterling),~~ higher operating property revenues (primarily from the operating properties we acquired in the CPA:18 Merger on August 1, 2022 (~~Note 3)),~~ and ~~higher lease termination and other income (Note 5~~)the 12 hotel properties that converted from net-lease to operating properties during the first quarter of 2023).

Net Income Attributable to W. P. Carey

Net income attributable to W. P. Carey ~~decreased~~increased for the three and nine months ended September 30, ~~2022~~2023 as compared to the same ~~period~~periods in 2021. Net income from Real Estate attributable to W. P. Carey decreased primarily due to a non-cash unrealized gain recognized on our investment in shares of Lineage Logistics during the prior year period (~~Note 9~~) and the weakening euro and British pound sterling, partially offset by the impact of real estate acquisitions. Net income from Investment Management attributable to W. P. Carey was in a loss position during the current year period, primarily due to an impairment charge recognized on goodwill within our Investment Management segment (~~Note 9). In addition, we recognized a gain on change in control of interests during the current year period in connection with the CPA:18 Merger (Note 3~~).

~~W. P. Carey 9/30/2022 10-Q~~– 49

~~Net income attributable to W. P. Carey increased for the nine months ended September 30, 2022 as compared to the same period in 2021.~~2022. Net income from Real Estate attributable to W. P. Carey increased primarily due to the impact of real estate acquisitions (including from properties acquired in the CPA:18 Merger on August 1, 2022), partially offset by higher interest expense. In addition, we recognized a ~~lower loss~~higher gain on ~~extinguishment~~sale of ~~debt~~real estate for the three and nine months ended September 30, 2023 as compared to the same periods in 2022 (Note 116, Note 15)~~, non-cash unrealized gains~~. We recognized a gain on change in control of interests during the prior year periods in connection with the CPA:18 Merger (Note 3). We also recognized an impairment charge on goodwill within our ~~investment in common shares of WLT~~Investment Management segment during the prior year periods (Note 9),.

W. P. Carey 9/30/2023 10-Q– 44

AFFO

AFFO increased for the three and nine months ended September 30, 2023 as compared to the same periods in 2022, primarily due to investment activity and rent escalations, as well as the accretive impact of ~~real estate acquisitions,~~the CPA:18 Merger, partially offset by ~~non-cash unrealized gains recognized~~higher interest expense. AFFO for the nine months ended September 30, 2023 also included certain non-recurring items that resulted in lower non-reimbursed property expenses (due to the reversal of certain property tax accruals) and a higher provision for income taxes (due to the settlement a tax audit on ~~our investment~~a portfolio of properties in ~~shares of Lineage Logistics during the prior year period (Note 9) and the impact of the weakening euro and British pound sterling. Net income~~Europe). In addition, AFFO from Investment Management attributable to W. P. Carey decreased primarily due to ~~an impairment charge recognized on goodwill within our Investment Management segment (Note 9). In addition, we recognized a gain on change in control~~the cessation of ~~interests during the current year period in connection with~~fees and distributions previously earned from CPA:18 – Global prior to the CPA:18 ~~Merger (Note 3~~).

~~AFFO~~

AFFO increased for the three and nine months ended September 30, 2022 as compared to the same periods in 2021, primarily due to higher lease revenues and operating property revenues from net investment activity (including properties acquired in the CPA:18 Merger (~~Note 3)) and rent escalations, as well as higher lease termination income and other, partially offset by the impact of the weakening euro and British pound sterling and higher interest expense.~~Merger.

Portfolio Overview

Our portfolio is comprised of operationally-critical, commercial real estate assets net leased to tenants located primarily in the United States and Northern and Western Europe. We invest in high-quality single tenant industrial, warehouse, ~~office,~~ retail, and self-storage properties subject to long-term net leases with built-in rent escalators. Portfolio information is provided on a pro rata basis, unless otherwise noted below, to better illustrate the economic impact of our various net-leased jointly owned investments. See Terms and Definitions below for a description of pro rata amounts.

Portfolio Summary

September 30, 2022 December 31, 2021
ABR (in thousands) $ 1,333,741 $ 1,247,764
Number of net-leased properties (a)
1,428 1,304
Number of operating properties (b)
87 20
Number of tenants (net-leased properties) 391 352
Total square footage (net-leased properties, in thousands) 174,950 155,674
Occupancy (net-leased properties) 98.9 % 98.5 %
Weighted-average lease term (net-leased properties, in years) 10.9 10.8
Number of countries (c)
26 24
Total assets (in thousands) $ 17,774,842 $ 15,480,630
Net investments in real estate (in thousands) 15,120,888 13,037,369


Net-leased Properties	September 30, 2023			December 31, 2022
ABR (in thousands)	$	1,459,174		$	1,381,899
Number of net-leased properties	1,472			1,449
Number of tenants	395			392
Total square footage (in thousands)	179,232			175,957
Occupancy	98.9		%	98.8		%
Weighted-average lease term (in years)	11.0			10.8

Operating Properties
Number of operating properties:	98			87
Number of self-storage operating properties	86			84
Number of hotel operating properties (a)	10			1
Number of student housing operating properties	2			2
Occupancy (self-storage operating properties)	90.5		%	91.0		%

Number of countries	26			26
Total assets (in thousands)	$	18,630,239		$	18,102,035
Net investments in real estate (in thousands)	15,916,731			15,488,898


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2022		2021			2023		2022
Acquisition volume (in millions) ~~(d)~~(b)	Acquisition volume (in millions) ~~(d)~~(b)	$	1,107.8	$	1,096.2	Acquisition volume (in millions) ~~(d)~~(b)	$	944.5	$	1,107.8
Construction projects completed (in millions)	Construction projects completed (in millions)	147.3		88.2		Construction projects completed (in millions)	34.5		147.3
Average U.S. dollar/euro exchange rate	Average U.S. dollar/euro exchange rate	1.0652		1.1961		Average U.S. dollar/euro exchange rate	1.0830		1.0652
Average U.S. dollar/British pound sterling exchange rate	Average U.S. dollar/British pound sterling exchange rate	1.2589		1.3845		Average U.S. dollar/British pound sterling exchange rate	1.2439		1.2589

__________

(a)~~We acquired 35~~During the first quarter of 2023, the master lease expired on certain hotel properties previously classified as net-leased properties, ~~(in~~ which converted to operating properties. As a result, during the nine months ended September 30, 2023, we ~~did not already have an ownership interest) in the CPA:18 Merger in August 2022~~reclassified 12 consolidated hotel properties from net leases to operating properties (Note 35). We sold three of these hotel properties during the third quarter of 2023 (Note 15).

(b)At September 30, 2022, operating properties consisted of 84 self-storage properties (of which we consolidated 75) with an average occupancy of 91.9% as of September 30, 2022, two student housing properties, and one hotel property with an average occupancy of 65.3%Amounts for the nine months ended September 30, ~~2022. We acquired 65 self-storage properties, one student housing property,~~2023 and ~~one student housing development project in the CPA:18 Merger in August~~ 2022 include $36.6 million and $65.2 million, respectively, of funding for a construction loan (Note 3, ~~Note 5~~8). ~~At December 31, 2021, operating properties consisted of 19 self-storage properties (of which we consolidated ten) and one hotel property.~~

~~W. P. Carey 9/30/2022 10-Q~~– 50

~~(c)We acquired investments in Belgium during the nine months ended September 30, 2022. We acquired an investment in Mauritius in connection with the CPA:18 Merger in August 2022 (Note 3~~).

~~(d)~~Amount for the nine months ended September 30, 2022 excludes properties acquired in the CPA:18 Merger (Note 3). ~~Amounts for the nine months ended September 30, 2022 and 2021 include $65.2 million and $93.5 million, respectively, of funding for a construction loan (~~

W. P. Carey 9/30/2023 10-Q~~Note 8~~).– 45

Net-Leased Portfolio

The tables below represent information about our net-leased portfolio at September 30, ~~2022~~2023 on a pro rata basis and, accordingly, exclude all operating properties. See Terms and Definitions below for a description of pro rata amounts and ABR.

Top Ten Tenants by ABR

(dollars in thousands)


Tenant/Lease Guarantor	Tenant/Lease Guarantor	Description	Number of Properties	ABR		ABR Percent		Weighted-Average Lease Term (Years)	Tenant/Lease Guarantor	Description	Number of Properties	ABR		ABR Percent		Weighted-Average Lease Term (Years)
U-Haul Moving Partners Inc. and Mercury Partners, LP(a)	U-Haul Moving Partners Inc. and Mercury Partners, LP(a)	Net lease self-storage properties in the U.S.	78	$	38,751	2.9	%	1.6	U-Haul Moving Partners Inc. and Mercury Partners, LP(a)	Net lease self-storage properties in the U.S.	78	$	38,751	2.6	%	0.5
State of Andalucía (a)		Government office properties in Spain	70	26,752		2.0	%	12.2
Metro Cash & Carry Italia S.p.A. (a)		Business-to-business wholesale stores in Italy and Germany	20	25,047		1.9	%	6.1
Hellweg Die Profi-Baumärkte GmbH & Co. KG (a)		Do-it-yourself retail properties in Germany	35	24,904		1.9	%	14.4
Apotex Pharmaceutical Holdings Inc. (b)									Apotex Pharmaceutical Holdings Inc. (b)	Pharmaceutical R&D and advanced manufacturing properties in Canada	11	31,528		2.2	%	19.5
State of Andalucía (c)									State of Andalucía (c)	Government office properties in Spain	70	31,196		2.1	%	11.2
Metro Cash & Carry Italia S.p.A. (c)									Metro Cash & Carry Italia S.p.A. (c)	Business-to-business wholesale stores in Italy and Germany	20	29,099		2.0	%	5.0
Hellweg Die Profi-Baumärkte GmbH & Co. KG (c)									Hellweg Die Profi-Baumärkte GmbH & Co. KG (c)	Do-it-yourself retail properties in Germany	35	28,937		2.0	%	13.4
Extra Space Storage, Inc.	Extra Space Storage, Inc.	Net lease self-storage properties in the U.S.	27	22,957		1.7	%	21.6	Extra Space Storage, Inc.	Net lease self-storage properties in the U.S.	27	25,036		1.7	%	20.6
Marriott Corporation		Net lease hotel properties in the U.S.	18	21,350		1.6	%	1.3
ABC Technologies Holdings Inc. (b) (d)									ABC Technologies Holdings Inc. (b) (d)	Automotive component manufacturing properties in North America	23	24,251		1.7	%	19.6
OBI Group ~~(a)~~(c)									OBI Group ~~(a)~~(c)	Do-it-yourself retail properties in Poland	26	23,738		1.6	%	7.7
Nord Anglia Education, Inc.	Nord Anglia Education, Inc.	K-12 private schools in the U.S.	3	20,981		1.6	%	21.0	Nord Anglia Education, Inc.	K-12 private schools in the U.S.	3	22,245		1.5	%	20.0
OBI Group ~~(a)~~(c)		Do-it-yourself retail properties in Poland	26	20,192		1.5	%	7.9
Advance Auto Parts, Inc.		Distribution facilities in the U.S.	29	19,851		1.5	%	10.3
Forterra, Inc. (a) (b)		Industrial properties in the U.S. and Canada	27	19,465		1.4	%	20.7
Fortenova Grupa d.d. (c)									Fortenova Grupa d.d. (c)	Grocery stores and warehouses in Croatia	19	21,444		1.5	%	10.6
Total	Total		333	$	240,250	18.0	%	10.9	Total		312	$	276,225	18.9	%	12.2

__________

(a)As of September 30, 2023, Mercury Partners, LP (a related party of U-Haul Moving Partners Inc.) provided notice that it intends to exercise its option to repurchase the 78 properties it is leasing (Note 6).

(b)ABR from these properties is denominated in U.S. dollars.

(c)ABR amounts are subject to fluctuations in foreign currency exchange rates.

~~(b)~~(d)Of the 2723 properties leased to ~~Forterra,~~ABC Technologies Holdings Inc., 25nine are located in Canada, eight are located in the United States, and ~~two~~six are located in ~~Canada.~~Mexico.

W. P. Carey 9/30/~~2022~~2023 10-Q – 5146

Portfolio Diversification by Geography

(in thousands, except percentages)


Region	Region	ABR		ABR Percent		Square Footage (a)	Square Footage Percent		Region	ABR		ABR Percent		Square Footage (a)	Square Footage Percent
United States	United States								United States
South	South								South
Texas	Texas	$	114,960	8.6	%	12,656	7.2	%	Texas	$	120,554	8.3	%	12,613	7.0	%
Florida	Florida	54,001		4.0	%	4,544	2.6	%	Florida	53,283		3.7	%	4,380	2.4	%
Georgia	Georgia	28,342		2.1	%	4,721	2.7	%	Georgia	28,088		1.9	%	4,385	2.4	%
Tennessee	Tennessee	25,243		1.9	%	4,136	2.4	%	Tennessee	26,912		1.8	%	4,296	2.4	%
Alabama	Alabama	19,882		1.5	%	3,334	1.9	%	Alabama	21,515		1.5	%	3,346	1.9	%
Other (b)	Other (b)	14,377		1.1	%	2,237	1.3	%	Other (b)	16,223		1.1	%	2,402	1.3	%
Total South	Total South	256,805		19.2	%	31,628	18.1	%	Total South	266,575		18.3	%	31,422	17.4	%
Midwest	Midwest								Midwest
Illinois	Illinois	73,872		5.5	%	10,738	6.1	%	Illinois	74,046		5.1	%	10,582	5.9	%
Minnesota	Minnesota	34,766		2.6	%	3,686	2.1	%	Minnesota	34,922		2.4	%	3,405	1.9	%
Ohio									Ohio	33,681		2.3	%	7,008	3.9	%
Indiana	Indiana	29,197		2.2	%	5,222	3.0	%	Indiana	29,814		2.0	%	5,137	2.9	%
Ohio		28,596		2.1	%	6,181	3.5	%
Michigan	Michigan	22,287		1.7	%	3,652	2.1	%	Michigan	28,991		2.0	%	4,595	2.6	%
Wisconsin	Wisconsin	18,056		1.4	%	3,276	1.9	%	Wisconsin	18,942		1.3	%	3,276	1.8	%
Iowa		13,450		1.0	%	1,817	1.0	%
Other (b)	Other (b)	29,446		2.2	%	4,543	2.6	%	Other (b)	43,924		3.0	%	6,204	3.5	%
Total Midwest	Total Midwest	249,670		18.7	%	39,115	22.3	%	Total Midwest	264,320		18.1	%	40,207	22.5	%
East	East								East
North Carolina	North Carolina	36,634		2.7	%	8,098	4.6	%	North Carolina	39,651		2.7	%	8,404	4.7	%
Pennsylvania	Pennsylvania	31,978		2.4	%	3,527	2.0	%	Pennsylvania	33,531		2.3	%	3,569	2.0	%
New York	New York	19,306		1.4	%	2,257	1.3	%	New York	20,200		1.4	%	2,257	1.2	%
Kentucky		18,578		1.4	%	3,063	1.8	%
South Carolina	South Carolina	18,462		1.4	%	4,949	2.8	%	South Carolina	18,739		1.3	%	4,949	2.8	%
Massachusetts	Massachusetts	18,129		1.4	%	1,387	0.8	%	Massachusetts	18,607		1.3	%	1,387	0.8	%
New Jersey		15,735		1.2	%	943	0.5	%
Kentucky									Kentucky	17,740		1.2	%	2,980	1.7	%
Virginia	Virginia	14,580		1.1	%	1,854	1.1	%	Virginia	15,347		1.1	%	1,854	1.0	%
Other (b)	Other (b)	24,841		1.9	%	3,884	2.2	%	Other (b)	38,602		2.6	%	4,662	2.6	%
Total East	Total East	198,243		14.9	%	29,962	17.1	%	Total East	202,417		13.9	%	30,062	16.8	%
West	West								West
California	California	67,528		5.1	%	6,417	3.7	%	California	66,042		4.5	%	6,100	3.4	%
Arizona	Arizona	30,471		2.3	%	3,437	2.0	%	Arizona	30,884		2.1	%	3,437	1.9	%
Utah									Utah	15,155		1.0	%	2,085	1.2	%
Colorado									Colorado	14,793		1.0	%	1,106	0.6	%
Other (b)	Other (b)	64,759		4.9	%	6,994	4.0	%	Other (b)	44,893		3.1	%	4,040	2.3	%
Total West	Total West	162,758		12.3	%	16,848	9.7	%	Total West	171,767		11.7	%	16,768	9.4	%
United States Total	United States Total	867,476		65.1	%	117,553	67.2	%	United States Total	905,079		62.0	%	118,459	66.1	%
International	International								International
Germany	Germany	64,247		4.8	%	7,020	4.0	%	Germany	72,778		5.0	%	6,839	3.8	%
Spain	Spain	58,290		4.4	%	5,187	3.0	%	Spain	61,825		4.2	%	5,179	2.9	%
The Netherlands									The Netherlands	59,680		4.1	%	7,054	3.9	%
Poland	Poland	57,874		4.3	%	8,631	4.9	%	Poland	58,416		4.0	%	8,635	4.8	%
The Netherlands		51,318		3.8	%	7,054	4.0	%
United Kingdom	United Kingdom	46,967		3.5	%	4,804	2.8	%	United Kingdom	51,602		3.5	%	4,742	2.7	%
Canada (c)									Canada (c)	50,807		3.5	%	5,087	2.8	%
Italy	Italy	24,570		1.8	%	2,541	1.5	%	Italy	32,056		2.2	%	3,354	1.9	%
Denmark	Denmark	20,748		1.6	%	2,994	1.7	%	Denmark	24,364		1.7	%	3,039	1.7	%
Croatia									Croatia	22,239		1.5	%	2,063	1.2	%
France	France	18,205		1.4	%	1,685	1.0	%	France	21,111		1.4	%	1,679	0.9	%
Norway	Norway	18,033		1.4	%	953	0.5	%	Norway	15,330		1.1	%	742	0.4	%
Croatia		17,787		1.3	%	2,063	1.2	%
Canada		15,950		1.2	%	2,492	1.4	%
Other ~~(c)~~(d)	Other ~~(c)~~(d)	72,276		5.4	%	11,973	6.8	%	Other ~~(c)~~(d)	83,887		5.8	%	12,360	6.9	%
International Total	International Total	466,265		34.9	%	57,397	32.8	%	International Total	554,095		38.0	%	60,773	33.9	%
Total	Total	$	1,333,741	100.0	%	174,950	100.0	%	Total	$	1,459,174	100.0	%	179,232	100.0	%

W. P. Carey 9/30/~~2022~~2023 10-Q – 5247

Portfolio Diversification by Property Type

(in thousands, except percentages)


Property Type	Property Type	ABR		ABR Percent		Square Footage (a)	Square Footage Percent		Property Type	ABR		ABR Percent		Square Footage (a)	Square Footage Percent
Industrial	Industrial	$	353,348	26.5	%	61,514	35.2	%	Industrial	$	426,720	29.2	%	67,519	37.7	%
Warehouse	Warehouse	320,697		24.1	%	62,692	35.8	%	Warehouse	342,735		23.5	%	62,942	35.1	%
Retail (e)									Retail (e)	244,935		16.8	%	20,256	11.3	%
Office	Office	240,110		18.0	%	17,150	9.8	%	Office	226,567		15.5	%	15,244	8.5	%
Retail (d)		213,357		16.0	%	20,284	11.6	%
Self Storage (net lease)	Self Storage (net lease)	61,708		4.6	%	5,810	3.3	%	Self Storage (net lease)	63,786		4.4	%	5,810	3.2	%
Other ~~(e)~~(f)	Other ~~(e)~~(f)	144,521		10.8	%	7,500	4.3	%	Other ~~(e)~~(f)	154,431		10.6	%	7,461	4.2	%
Total	Total	$	1,333,741	100.0	%	174,950	100.0	%	Total	$	1,459,174	100.0	%	179,232	100.0	%

__________

(a)Includes square footage for any vacant properties.

(b)Other properties within South include assets in Louisiana, Arkansas, Oklahoma, and Mississippi. Other properties within Midwest include assets in Iowa, Missouri, Kansas, Nebraska, South Dakota, and North Dakota. Other properties within East include assets in New Jersey, Maryland, Connecticut, West Virginia, New Hampshire, and Maine. Other properties within West include assets in ~~Utah,~~ Oregon, ~~Colorado,~~Nevada, Washington, ~~Nevada,~~ Hawaii, Idaho, Montana, New Mexico, ~~Wyoming,~~ and ~~Montana.~~Wyoming.

(c)$46.8 million (92%) of ABR from properties in Canada is denominated in U.S. dollars, with the balance denominated in Canadian dollars.

(d)Includes assets in Mexico, Lithuania, Finland, Belgium, Hungary, Mauritius, Slovakia, Portugal, the Czech Republic, Austria, Sweden, Latvia, Japan, ~~Latvia,~~ and Estonia.

~~(d)~~(e)Includes automotive dealerships.

~~(e)~~(f)Includes ABR from tenants within the following property types: education facility, laboratory, hotel (net lease), ~~laboratory,~~research and development, specialty, fitness facility, ~~research and development,~~ student housing (net lease), theater, funeral home, restaurant, land, parking, and ~~parking.~~outdoor advertising.

W. P. Carey 9/30/~~2022~~2023 10-Q – 5348

Portfolio Diversification by Tenant Industry

(in thousands, except percentages)


Industry Type	Industry Type	ABR		ABR Percent		Square Footage	Square Footage Percent		Industry Type	ABR		ABR Percent		Square Footage	Square Footage Percent
Retail Stores (a)	Retail Stores (a)	$	262,384	19.7	%	35,734	20.4	%	Retail Stores (a)	$	290,733	19.9	%	36,172	20.2	%
Consumer Services	Consumer Services	109,943		8.3	%	8,067	4.6	%	Consumer Services	126,851		8.7	%	8,507	4.8	%
Beverage and Food	Beverage and Food	104,493		7.8	%	15,759	9.0	%	Beverage and Food	109,282		7.5	%	15,759	8.8	%
Automotive	Automotive	79,628		6.0	%	13,038	7.4	%	Automotive	95,253		6.5	%	14,648	8.2	%
Healthcare and Pharmaceuticals									Healthcare and Pharmaceuticals	91,104		6.2	%	7,740	4.3	%
Grocery	Grocery	72,984		5.5	%	8,363	4.8	%	Grocery	86,876		6.0	%	8,404	4.7	%
Cargo Transportation	Cargo Transportation	60,119		4.5	%	9,550	5.5	%	Cargo Transportation	65,070		4.5	%	9,550	5.3	%
Hotel and Leisure		55,498		4.2	%	3,060	1.7	%
Healthcare and Pharmaceuticals		55,036		4.1	%	5,557	3.2	%
Capital Equipment	Capital Equipment	52,520		3.9	%	8,255	4.7	%	Capital Equipment	56,457		3.9	%	8,238	4.6	%
Business Services	Business Services	48,089		3.6	%	4,113	2.3	%	Business Services	51,729		3.5	%	4,115	2.3	%
Containers, Packaging, and Glass	Containers, Packaging, and Glass	46,286		3.5	%	8,266	4.7	%	Containers, Packaging, and Glass	49,920		3.4	%	8,266	4.6	%
Construction and Building	Construction and Building	46,021		3.5	%	9,235	5.3	%	Construction and Building	48,434		3.3	%	9,158	5.1	%
Durable Consumer Goods	Durable Consumer Goods	45,725		3.4	%	10,299	5.9	%	Durable Consumer Goods	47,583		3.3	%	10,299	5.7	%
Sovereign and Public Finance	Sovereign and Public Finance	39,257		2.9	%	3,560	2.0	%	Sovereign and Public Finance	44,927		3.1	%	3,560	2.0	%
Hotel and Leisure									Hotel and Leisure	41,443		2.8	%	2,024	1.1	%
High Tech Industries	High Tech Industries	35,043		2.6	%	3,574	2.0	%	High Tech Industries	35,839		2.5	%	3,486	1.9	%
Chemicals, Plastics, and Rubber									Chemicals, Plastics, and Rubber	35,383		2.4	%	6,186	3.5	%
Insurance	Insurance	30,726		2.3	%	2,024	1.2	%	Insurance	30,917		2.1	%	1,961	1.1	%
Chemicals, Plastics, and Rubber		29,898		2.2	%	5,254	3.0	%
Non-Durable Consumer Goods	Non-Durable Consumer Goods	26,085		2.0	%	6,244	3.6	%	Non-Durable Consumer Goods	26,258		1.8	%	5,971	3.3	%
Metals									Metals	25,863		1.8	%	4,515	2.5	%
Telecommunications									Telecommunications	17,615		1.2	%	1,686	0.9	%
Banking	Banking	22,821		1.7	%	1,426	0.8	%	Banking	15,618		1.1	%	1,008	0.6	%
Metals		18,281		1.4	%	3,259	1.9	%
Aerospace and Defense		16,304		1.2	%	1,358	0.8	%
Telecommunications		16,214		1.2	%	1,686	1.0	%
Other (b)	Other (b)	60,386		4.5	%	7,269	4.2	%	Other (b)	66,019		4.5	%	7,979	4.5	%
Total	Total	$	1,333,741	100.0	%	174,950	100.0	%	Total	$	1,459,174	100.0	%	179,232	100.0	%

__________

(a)Includes automotive dealerships.

(b)Includes ABR from tenants in the following industries: ~~media: broadcasting~~aerospace and ~~subscription,~~defense, wholesale, media: advertising, printing, and publishing, ~~wholesale,~~ oil and gas, media: broadcasting and subscription, utilities: electric, environmental industries, consumer transportation, forest products and paper, electricity, finance, and real estate. Also includes square footage for vacant properties.

W. P. Carey 9/30/~~2022~~2023 10-Q – 5449

Lease Expirations

(in thousands, except percentages, number of leases, and number of tenants)


Year of Lease Expiration (a)	Year of Lease Expiration (a)	Number of Leases Expiring	Number of Tenants with Leases Expiring	ABR		ABR Percent		Square Footage	Square Footage Percent		Year of Lease Expiration (a)	Number of Leases Expiring	Number of Tenants with Leases Expiring	ABR		ABR Percent		Square Footage	Square Footage Percent
Remaining 2022		13	12	$	7,642	0.6	%	717	0.4	%
2023 (b)		33	28	57,787		4.3	%	6,939	4.0	%
2024 (c)		42	36	91,852		6.9	%	12,413	7.1	%
Remaining 2023											Remaining 2023	14	12	$	14,883	1.0	%	2,588	1.5	%
2024 (b)											2024 (b)	40	34	89,193		6.1	%	10,927	6.1	%
2025	2025	56	34	61,672		4.6	%	7,325	4.2	%	2025	53	33	64,663		4.4	%	7,101	4.0	%
2026	2026	44	34	57,810		4.3	%	8,185	4.7	%	2026	46	37	67,566		4.6	%	9,089	5.1	%
2027	2027	58	34	82,040		6.2	%	8,986	5.1	%	2027	56	33	83,173		5.7	%	8,639	4.8	%
2028	2028	44	26	65,870		4.9	%	5,423	3.1	%	2028	50	32	71,890		4.9	%	5,425	3.0	%
2029	2029	57	29	65,545		4.9	%	8,341	4.8	%	2029	57	29	70,023		4.8	%	8,470	4.7	%
2030	2030	31	27	69,011		5.2	%	5,844	3.3	%	2030	34	30	69,601		4.8	%	5,719	3.2	%
2031	2031	37	21	68,117		5.1	%	8,749	5.0	%	2031	37	21	72,202		5.0	%	8,749	4.9	%
2032	2032	40	21	41,216		3.1	%	5,715	3.3	%	2032	41	22	46,043		3.2	%	6,200	3.5	%
2033	2033	30	24	76,780		5.8	%	10,907	6.2	%	2033	29	22	79,474		5.5	%	11,115	6.2	%
2034	2034	49	18	77,608		5.8	%	8,639	4.9	%	2034	50	19	91,985		6.3	%	9,023	5.0	%
2035	2035	14	14	28,332		2.1	%	4,957	2.8	%	2035	16	15	31,218		2.1	%	5,059	2.8	%
Thereafter (>2035)		303	122	482,459		36.2	%	69,930	40.0	%
2036											2036	46	19	70,654		4.8	%	10,995	6.1	%
Thereafter (>2036)											Thereafter (>2036)	281	120	536,606		36.8	%	68,173	38.0	%
Vacant	Vacant	—	—	—		—	%	1,880	1.1	%	Vacant	—	—	—		—	%	1,960	1.1	%
Total	Total	851		$	1,333,741	100.0	%	174,950	100.0	%	Total	850		$	1,459,174	100.0	%	179,232	100.0	%

__________

(a)Assumes tenants do not exercise any renewal options or purchase options.

(b)Includes ABR of ~~$16.1 million from a tenant (Marriott Corporation) with a lease expiration in January 2023.~~

~~(c)Includes ABR of~~ $38.8 million from ~~a tenant (U-Haul~~Mercury Partners, LP (a related party of U-Haul Moving Partners Inc. ~~and Mercury Partners, LP)~~) that ~~holds an~~as of September 30, 2023 provided notice of its intention to exercise its option to repurchase the 78 properties it is leasing ~~in April 2024. There can be no assurance that such repurchase will be completed.~~(

Note 6

~~Rent Collections~~

~~Through the date of this Report, we received from tenants over 99.3% of contractual base rent that was due during the third quarter of 2022 (based on contractual minimum ABR as of June 30, 2022).~~

Terms and Definitions

Pro Rata Metrics — The portfolio information above contains certain metrics prepared on a pro rata basis. We refer to these metrics as pro rata metrics. We have ~~a number of~~certain investments ~~usually with our affiliates,~~ in which our economic ownership is less than 100%. On a full consolidation basis, we report 100% of the assets, liabilities, revenues, and expenses of those investments that are deemed to be under our control or for which we are deemed to be the primary beneficiary, even if our ownership is less than 100%. Also, for all other jointly owned investments, which we do not control, we report our net investment and our net income or loss from that investment. On a pro rata basis, we generally present our proportionate share, based on our economic ownership of these jointly owned investments, of the portfolio metrics of those investments. Multiplying each of our jointly owned investments’ financial statement line items by our percentage ownership and adding or subtracting those amounts from our totals, as applicable, may not accurately depict the legal and economic implications of holding an ownership interest of less than 100% in our jointly owned investments.

ABR — ABR represents contractual minimum annualized base rent for our net-leased properties and reflects exchange rates as of September 30, ~~2022.~~2023. If there is a rent abatement, we annualize the first monthly contractual base rent following the free rent period. ABR is not applicable to operating properties.

W. P. Carey 9/30/~~2022~~2023 10-Q – 5550

Results of Operations

We operate in two reportable segments: Real Estate and Investment Management. We evaluate our results of operations with a primary focus on increasing and enhancing the value, quality, and number of properties in our Real Estate segment. We focus our efforts on accretive investing and improving portfolio quality through re-leasing efforts, including negotiation of lease renewals, or selectively selling assets in order to increase value in our real estate portfolio. Through our Investment Management segment, we expect to continue to earn fees and other income from the management of the portfolio of CESH until it reaches the end of its life cycle. Refer to Note 16 for tables presenting the comparative results of our Real Estate and Investment Management segments.

Real Estate

Revenues

The following table presents revenues within our Real Estate segment (in thousands):


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Real Estate Revenues	Real Estate Revenues													Real Estate Revenues
Lease revenues from:	Lease revenues from:													Lease revenues from:
Existing net-leased properties	Existing net-leased properties	$	274,434	$	276,236	$	(1,802)	$	834,410	$	825,285	$	9,125	Existing net-leased properties	$	303,483	$	279,982	$	23,501	$	902,162	$	851,847	$	50,315
Recently acquired net-leased properties	Recently acquired net-leased properties	39,780		18,273		21,507		97,338		33,068		64,270		Recently acquired net-leased properties	43,690		15,964		27,726		106,667		24,237		82,430
Net-leased properties acquired in the CPA:18 Merger	Net-leased properties acquired in the CPA:18 Merger	14,068		—		14,068		14,068		—		14,068		Net-leased properties acquired in the CPA:18 Merger	20,296		13,297		6,999		62,029		13,297		48,732
Net-leased properties sold or held for sale		3,620		4,107		(487)		8,165		13,992		(5,827)
Net-leased properties sold, held for sale, or reclassified to operating properties or sales-type leases														Net-leased properties sold, held for sale, or reclassified to operating properties or sales-type leases	1,690		22,659		(20,969)		19,761		64,600		(44,839)
Total lease revenues (includes reimbursable tenant costs)	Total lease revenues (includes reimbursable tenant costs)	331,902		298,616		33,286		953,981		872,345		81,636		Total lease revenues (includes reimbursable tenant costs)	369,159		331,902		37,257		1,090,619		953,981		136,638
Income from direct financing leases and loans receivable		20,637		16,754		3,883		56,794		51,917		4,877
Income from finance leases and loans receivable														Income from finance leases and loans receivable	27,575		20,637		6,938		75,641		56,794		18,847
Operating property revenues from:	Operating property revenues from:													Operating property revenues from:
Operating properties acquired in the CPA:18 Merger	Operating properties acquired in the CPA:18 Merger	15,415		—		15,415		15,415		—		15,415		Operating properties acquired in the CPA:18 Merger	23,559		15,415		8,144		70,428		15,415		55,013
Operating properties sold or held for sale														Operating properties sold or held for sale	9,750		—		9,750		29,648		—		29,648
Operating properties recently reclassified from net-leased properties or recently acquired														Operating properties recently reclassified from net-leased properties or recently acquired	9,291		—		9,291		22,888		—		22,888
Existing operating properties	Existing operating properties	5,935		4,050		1,885		14,864		9,474		5,390		Existing operating properties	6,618		5,935		683		17,816		14,864		2,952
Total operating property revenues	Total operating property revenues	21,350		4,050		17,300		30,279		9,474		20,805		Total operating property revenues	49,218		21,350		27,868		140,780		30,279		110,501
Lease termination income and other		8,192		1,421		6,771		24,905		8,066		16,839
Other lease-related income														Other lease-related income	2,310		8,192		(5,882)		20,723		24,905		(4,182)
		$	382,081	$	320,841	$	61,240	$	1,065,959	$	941,802	$	124,157		$	448,262	$	382,081	$	66,181	$	1,327,763	$	1,065,959	$	261,804

W. P. Carey 9/30/~~2022~~2023 10-Q – 5651

Lease Revenues

“Existing net-leased properties” are those that we acquired or placed into service prior to January 1, ~~2021~~2022 and that were not sold or held for sale during the periods presented. For the periods presented, there were ~~1,108~~1,079 existing net-leased properties.

For the three and nine months ended September 30, ~~2022~~2023 as compared to the same periods in ~~2021,~~2022, lease revenues from existing net-leased properties increased due to the following items (in millions):

WPC 23Q3 MD&A Chart - Lease Revenues (QTD).jpg

WPC 23Q3 MD&A Chart - Lease Revenues (YTD).jpg

__________

(a)Excludes fixed minimum rent increases, which are reflected as straight-line rent adjustments within lease revenues.

(b)Primarily ~~related to (i) straight-line rent adjustments as a result~~comprised of ~~contractual rental revenue from~~higher reimbursable maintenance costs at certain ~~leases being deemed probable of collection and (ii) write-offs of above/below-market rent intangibles.~~properties.

“Recently acquired net-leased properties” are those that we acquired or placed into service subsequent to December 31, ~~2020~~2021 and that were not sold or held for sale during the periods presented. Since January 1, ~~2021,~~2022, we acquired 4328 investments (comprised of ~~168 properties and six land parcels under buildings that we already own)~~172 properties) and placed two properties into service.

W. P. Carey 9/30/~~2022~~2023 10-Q – 5752

“Net-leased properties acquired in the CPA:18 Merger” on August 1, 2022 (Note 3) consisted of 4037 net-leased properties ~~which contributed two months of lease revenue, depreciation and amortization, and property expenses~~that were not sold or held for sale during the ~~three and nine months ended September 30, 2022.~~periods presented.

“Net-leased properties sold, or held for ~~sale” include (i) 17~~sale, or reclassified to operating properties or sales-type leases” include:

•14 net-leased properties disposed of during the nine months ended September 30, ~~2022, (ii) one~~2023;

•three net-leased ~~property~~properties classified as held for sale at September 30, ~~2022, and (iii) 24~~2023, all of which were sold in October 2023 (Note 17);

•23 net-leased properties disposed of during the year ended December 31, ~~2021.~~ 2022;

•a portfolio of 12 net-leased hotel properties that converted to operating properties in the first quarter of 2023 upon expiration of the master lease with the Marriott Corporation, after which we began recognizing operating property revenues and expenses from these properties (Note 5) (three of these properties were sold during the third quarter of 2023 and five were held for sale as of September 30, 2023); and

•a portfolio of 78 net-leased self-storage properties that were reclassified to net investments in sales-type leases in the first quarter of 2023, since the tenant provided notice of its intention to exercise its option to repurchase the properties; following this transaction, we began recognizing earnings from these properties within Income from finance leases and loans receivable in the consolidated financial statements (Note 6).

Our dispositions are more fully described in Note 15.

W. P. Carey 9/30/~~2022~~2023 10-Q – 5853

Income from ~~Direct Financing~~Finance Leases and Loans Receivable

We currently present Income from direct financing leases and loans receivable on its own line item in the consolidated statements of income. Previously, income from direct financing leases was included within Lease revenues and income from loans receivable was included within Lease termination income and other in the consolidated statements of income. Prior period amounts have been reclassified to conform to the current period presentation.

For the three and nine months ended September 30, ~~2022~~2023 as compared to the same periods in ~~2021,~~2022, income from ~~direct financing~~finance leases and loans receivable increased due to the following items (in millions):

WPC 23Q3 MD&A Chart - DFL and Loan Rec (QTD).jpg

WPC 23Q3 MD&A Chart - DFL and Loan Rec (YTD).jpg

W. P. Carey 9/30/~~2022~~2023 10-Q – 5954

Operating Property Revenues and Expenses

“Operating properties acquired in the CPA:18 Merger” ~~on August 1, 2022 (Note 3~~) consisted of 65 self-storage properties and two student housing properties, which contributed ~~two months of lease revenue,~~operating property revenues, depreciation and amortization, and operating property expenses since August 1, 2022, the date of the CPA:18 Merger (Note 3).

“Operating properties sold or held for sale” are comprised of the three hotel operating properties sold during the three months ended September 30, 2023 and five hotel operating properties classified as held for sale as of September 30, 2023, three of which were sold in October 2023 (Note 17).

“Operating properties recently reclassified from net-leased properties or recently acquired” include (i) four net-leased hotel properties that converted to operating properties in the first quarter of 2023 (after which we began recognizing operating property revenues and expenses from these properties (Note 5)) and (ii) two self-storage operating properties acquired during the nine months ended September 30, ~~2022.~~2023 (Note 5).

“Existing operating properties” are those that we acquired or placed into service prior to January 1, ~~2021~~2022 and that were not sold or held for sale during the periods presented. For the periods presented, we recorded operating property revenues from 11 existing operating properties, comprised of ten self-storage operating properties (which excludes nine self-storage properties accounted for under the equity method) and one hotel operating ~~property.~~property, as well as a parking garage attached to one of our existing net-leased properties. For our existing hotel operating property, revenues and expenses increased by (i) ~~$1.3~~$0.6 million and ~~$0.5~~$0.4 million, respectively, for the three months ended September 30, ~~2022~~2023 as compared to the same period in ~~2021,~~2022, and (ii) ~~$4.2~~$1.9 million and ~~$2.5~~$1.2 million, respectively, for the nine months ended September 30, ~~2022~~2023 as compared to the same period in ~~2021,~~2022, reflecting higher ~~occupancy as the hotel’s business recovers from the ongoing COVID-19 pandemic.~~occupancy.

~~Lease Termination~~Other Lease-Related Income ~~and Other~~

~~Lease termination~~Other lease-related income ~~and other~~ is described in Note 5.

Operating Expenses

Depreciation and Amortization

For the three and nine months ended September 30, ~~2022~~2023 as compared to the same periods in ~~2021,~~2022, depreciation and amortization expense ~~for net-leased properties~~ increased primarily due to the impact of net acquisition activity (including properties acquired in the CPA:18 ~~Merger (Note 3)), partially offset by the weakening of foreign currencies (primarily the euro and British pound sterling) in relation to the U.S. dollar between the periods.~~Merger).

General and Administrative

All general and administrative expenses are attributed to our Real Estate segment.

For the three and nine months ended September 30, 2022 as compared to the same periods in 2021, general and administrative expenses increased by $2.5 million and $3.9 million, respectively, primarily due to higher compensation expense.

~~Merger and Other Expenses~~

For the three and nine months ended September 30, 2023 as compared to the same periods in 2022, general and ~~2021, merger~~administrative expenses increased by $1.0 million and ~~other~~$8.3 million, respectively, primarily due to higher compensation expense, increased employee benefits expense, increased professional fees and expenses ~~are primarily comprised of costs incurred~~resulting from the assets acquired in ~~connection with~~ the CPA:18 Merger (Note 31) ~~and/or reversals of estimated liabilities for German~~, and no longer receiving reimbursements from CPA:18 – Global.

Impairment Charges — Real Estate

Our impairment charges on real estate ~~transfer taxes that were previously recorded~~are more fully described in ~~connection with mergers in prior years.~~Note 9.

Property Expenses, Excluding Reimbursable Tenant Costs

For the three months ended September 30, ~~2022~~2023 as compared to the same periods in 2022, property expenses, excluding reimbursable tenant costs, increased by $1.8 million, primarily due to the recovery of property taxes in the prior year period due to a successful court ruling and higher property expenses related to certain properties acquired in ~~2021,~~the CPA:18 Merger.

W. P. Carey 9/30/2023 10-Q– 55

For the nine months ended September 30, 2023 as compared to the same periods in 2022, property expenses, excluding reimbursable tenant costs, decreased by ~~$2.5~~$5.7 million primarily due to ~~higher~~the reimbursement for previously incurred legal fees and the release of real estate taxes accrued for a cash basis tenant during the current year period. The tenant was previously not current on real estate taxes due, and repaid the outstanding amount in the second quarter of 2023. These decreases were partially offset by the recovery of property ~~tax assessments at certain properties during~~taxes in the prior year ~~period.~~period due to a successful court ruling and higher property expenses related to certain properties acquired in the CPA:18 Merger.

Stock-based Compensation Expense

Stock-based compensation expense is fully recognized within our Real Estate segment.

For the three and nine months ended September 30, ~~2022~~2023 as compared to the same periods in ~~2021,~~2022, stock-based compensation

expense increased by ~~$1.2~~$3.5 million and ~~$4.3~~$2.7 million, respectively, primarily due to changes in the projected payout for ~~PSUs.~~performance share units.

~~Impairment Charges — Real Estate~~Merger and Other Expenses

~~Our impairment charges on real estate~~For the three and nine months ended September 30, 2023, merger and other expenses are ~~more fully described~~primarily comprised of costs incurred in connection with the Spin-Off transaction that was announced in September 2023 and completed in November 2023 (Note 917).

~~W. P. Carey 9/30/2022 10-Q~~– 60

For the three and nine months ended September 30, 2022, merger and other expenses are primarily comprised of costs incurred in connection with the CPA:18 Merger (

Note 3) that was completed in August 2022.

Other Income and (Expenses), and Provision for Income Taxes

Interest Expense

For the three and nine months ended September 30, ~~2022~~2023 as compared to the same periods in ~~2021,~~2022, interest expense increased by ~~$10.3~~$18.0 million and ~~$1.9~~$68.2 million, respectively, primarily due to (i) ~~$8.0~~$8.3 million and $29.1 million of interest expense incurred during ~~August~~the three and nine months ended September ~~2022~~30, 2023, respectively, related to non-recourse mortgage loans assumed in the CPA:18 Merger, (~~Note 3) and~~ (ii) higher outstanding balances and interest rates on our Senior Unsecured Credit Facility, (iii) our Unsecured Term Loan due 2026 that we entered into in April 2023 (Note 11), and (iv) two senior unsecured notes issuances totaling $334.8 million (based on the exchange rate of the euro on the dates of issuance) with a weighted-average interest rate of 3.6% completed in September 2022, partially offset by ~~(i) the weakening of foreign currencies (primarily the euro and British pound sterling) in relation to the U.S. dollar between the periods and (ii)~~ the reduction of our mortgage debt outstanding by prepaying or repaying at or close to maturity a total of ~~$823.8~~$441.4 million of non-recourse mortgage loans with a weighted-average interest rate of ~~4.8%~~4.7% since January 1, ~~2021~~2022 (Note 11).

The following table presents certain information about our outstanding debt (dollars in thousands):


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2022			2021			2022			2021				2023			2022			2023			2022
Average outstanding debt balance	Average outstanding debt balance	$	7,827,346		$	6,936,086		$	7,193,779		$	6,917,578		Average outstanding debt balance	$	8,595,115		$	7,827,346		$	8,473,580		$	7,193,779
Weighted-average interest rate	Weighted-average interest rate	2.6		%	2.5		%	2.5		%	2.6		%	Weighted-average interest rate	3.3		%	2.6		%	3.2		%	2.5		%

W. P. Carey 9/30/2023 10-Q– 56

Earnings from Equity Method Investments in Real Estate

Our equity method investments in real estate are more fully described in Note 8. The following table presents earnings from equity method investments in real estate (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023		2022		Change		2023		2022		Change
Earnings from Equity Method Investments in Real Estate
Existing Equity Method Investments:
Earnings from Las Vegas Retail Complex (a)	$	3,201	$	2,860	$	341	$	9,069	$	6,228	$	2,841
Earnings from Johnson Self Storage	1,204		1,163		41		3,428		3,190		238
Earnings from Kesko Senukai	360		1,902		(1,542)		1,433		3,132		(1,699)
Earnings from Harmon Retail Center	213		258		(45)		639		789		(150)
	4,978		6,183		(1,205)		14,569		13,339		1,230
Equity Method Investments Consolidated after the CPA:18 Merger:
Proportionate share of impairment charge recognized on Bank Pekao	—		—		—		—		(4,610)		4,610
Other	—		264		(264)		—		1,460		(1,460)
	—		264		(264)		—		(3,150)		3,150
	$	4,978	$	6,447	$	(1,469)	$	14,569	$	10,189	$	4,380

__________

(a)Increases for the three and nine months ended September 30, 2023 as compared to the same periods in 2022 are primarily due to funding of this construction loan since January 1, 2022, which has an interest rate of 6.0%.

(b)Decreases for the three and nine months ended September 30, 2023 as compared to the same periods in 2022 are primarily due to higher rent collections at these retail properties during the prior year periods, where certain rents were previously disputed and subsequently collected.

Non-Operating Income

Non-operating income primarily consists of realized gains and losses on derivative instruments, dividends from securities, and interest income on our loans to affiliates and cash deposits.

The following table presents non-operating income within our Real Estate segment (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023		2022		Change		2023		2022		Change
Non-Operating Income
Realized gains on foreign currency collars (Note 10)	$	3,739	$	8,724	$	(4,985)	$	11,591	$	17,970	$	(6,379)
Interest income related to our loans to affiliates and cash deposits	1,123		540		583		2,393		591		1,802
Cash dividends from our investment in Lineage Logistics (Note 9)	—		—		—		—		4,308		(4,308)
Cash dividends from our investment in preferred shares of WLT (Note 9)	—		—		—		—		912		(912)
	$	4,862	$	9,264	$	(4,402)	$	13,984	$	23,781	$	(9,797)

Gain on Sale of Real Estate, Net

Gain on sale of real estate, net, consists of gains and losses on the sale of properties that were (i) disposed of, (ii) subject to a purchase option, or (iii) included in assets held for sale and subject to a revised estimated purchase price, during the reporting period, as more fully described in Note 5, Note 6 and Note 15.

W. P. Carey 9/30/2023 10-Q– 57

Other Gains and (Losses)

Other gains and (losses) primarily consists of gains and losses on (i) the mark-to-market fair value of equity securities, (ii) extinguishment of debt, and (iii) foreign currency exchange rate ~~movements.~~movements, as well as changes in the allowance for credit losses on finance receivables. The timing and amount of such gains or losses cannot always be estimated and are subject to fluctuation. Certain~~All~~ of our foreign currency-denominated unsecured debt instruments were designated as net investment hedges during the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022. Therefore, no gains and losses on foreign currency exchange rate movements were recognized on the remeasurement of such instruments during those periods (Note 10).

The following table presents other gains and (losses) within our Real Estate segment (in thousands):


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Other Gains and (Losses)	Other Gains and (Losses)													Other Gains and (Losses)
Net realized and unrealized losses on foreign currency exchange rate movements (a)		$	(36,288)	$	(7,005)	$	(29,283)	$	(84,392)	$	(11,186)	$	(73,206)
Net release of allowance for credit losses on finance receivables (Note 6)		16,184		488		15,696		17,164		6,737		10,427
Change in allowance for credit losses on finance receivables (Note 6)														Change in allowance for credit losses on finance receivables (Note 6)	$	2,484	$	16,184	$	(13,700)	$	6,113	$	17,164	$	(11,051)
Net realized and unrealized (losses) gains on foreign currency exchange rate movements (a)														Net realized and unrealized (losses) gains on foreign currency exchange rate movements (a)	(364)		(36,288)		35,924		1,010		(84,392)		85,402
(Loss) gain on extinguishment of debt														(Loss) gain on extinguishment of debt	(275)		2,342		(2,617)		2,387		1,301		1,086
Gain on repayment of secured loan receivable (b)	Gain on repayment of secured loan receivable (b)	10,613		—		10,613		10,613		—		10,613		Gain on repayment of secured loan receivable (b)	—		10,613		(10,613)		—		10,613		(10,613)
Write-off of an insurance receivable acquired as part of a prior merger (c)	Write-off of an insurance receivable acquired as part of a prior merger (c)	(9,358)		—		(9,358)		(9,358)		—		(9,358)		Write-off of an insurance receivable acquired as part of a prior merger (c)	—		(9,358)		9,358		—		(9,358)		9,358
Gain (loss) on extinguishment of debt (d)		2,342		(99)		2,441		1,301		(60,167)		61,468
Non-cash unrealized gains related to an increase in the fair value of our investment in shares of Lineage Logistics (Note 9)		—		52,931		(52,931)		—		76,312		(76,312)
Non-cash unrealized gains related to an increase in the fair value of our investment in common shares of WLT (Note 9)	Non-cash unrealized gains related to an increase in the fair value of our investment in common shares of WLT (Note 9)	—		—		—		43,397		—		43,397		Non-cash unrealized gains related to an increase in the fair value of our investment in common shares of WLT (Note 9)	—		—		—		—		43,397		(43,397)
Realized gains in connection with the redemption of our investment in preferred shares of WLT (Note 9)	Realized gains in connection with the redemption of our investment in preferred shares of WLT (Note 9)	—		—		—		18,688		—		18,688		Realized gains in connection with the redemption of our investment in preferred shares of WLT (Note 9)	—		—		—		—		18,688		(18,688)
Other	Other	2,547		1,857		690		2,890		1,759		1,131		Other	335		2,547		(2,212)		(634)		2,890		(3,524)
		$	(13,960)	$	48,172	$	(62,132)	$	303	$	13,455	$	(13,152)		$	2,180	$	(13,960)	$	16,140	$	8,876	$	303	$	8,573

__________

~~W. P. Carey 9/30/2022 10-Q~~– 61

(a)~~We make~~Remeasurement of certain ~~foreign currency-denominated intercompany loans to a number of~~monetary assets and liabilities that are held by our ~~foreign~~ subsidiaries ~~most of which do not have the U.S. dollar as~~in currencies other than their functional ~~currency. Remeasurement of foreign~~ currency ~~intercompany transactions that are scheduled for settlement, consisting primarily of accrued interest and amortizing loans,~~ are included in other gains and (losses). This includes foreign currency-denominated intercompany loans to our foreign subsidiaries that are scheduled for settlement. Beginning in the first quarter of 2023, our intercompany loans subject to remeasurement were hedged by certain of our foreign currency-denominated unsecured debt that we de-designated as net investment hedges.

(b)We acquired a secured loan receivable with a fair value of $23.4 million in our merger with a former affiliate, Corporate Property Associates 17 – Global Incorporated, in October 2018 (“CPA:17 Merger”), for which the outstanding principal of $34.0 million was fully repaid to us in September ~~2022 (Note 6~~).2022. Therefore, we recorded a $10.6 million gain on repayment of this secured loan receivable.

(c)This insurance receivable was acquired in the CPA:17 Merger.

~~(d)~~Amount for the nine months ended September 30, 2021 is related to the prepayment of mortgage loans (primarily comprised of prepayment penalties totaling $32.1 million) and redemption of the €500.0 million of 2.0% Senior Notes due 2023 in March 2021 (primarily comprised of a “make-whole” amount of $26.2 million related to the redemption) (~~Note 11~~).

Gain on Change in Control of Interests

In connection with the CPA:18 Merger, during the three and nine months ended September 30, 2022, we acquired the remaining interests in four investments in which we already had a joint interest and accounted for under the equity method. Due to the change in control of these four jointly owned investments, we recorded a gain on change in control of interests of $11.4 million reflecting the difference between our carrying values and the preliminary estimated fair values of our previously held equity interests on August 1, 2022. Subsequent to the CPA:18 Merger, we consolidated these wholly owned investments (Note 3).

~~Non-Operating Income~~

~~Non-operating income primarily consists of realized gains and losses on derivative instruments, dividends from securities, and interest income on our loans to affiliates and cash deposits.~~

~~The following table presents non-operating income within our Real Estate segment (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
Non-Operating Income
Realized gains (losses) on foreign currency collars (Note 10)
$ 8,724 $ 370 $ 8,354 $ 17,970 $ (38) $ 18,008
Interest income related to our loans to affiliates and cash deposits 540 100 440 591 139 452
Cash dividends from our investment in preferred shares of WLT (Note 9)
— 813 (813) 912 4,081 (3,169)
Cash dividends from our investment in Lineage Logistics (Note 9)
— — — 4,308 6,438 (2,130)
$ 9,264 $ 1,283 $ 7,981 $ 23,781 $ 10,620 $ 13,161

W. P. Carey 9/30/~~2022~~2023 10-Q – 6258

~~Earnings (Losses) from Equity Method Investments in Real Estate~~

~~Our equity method investments in real estate are more fully described in~~ ~~Note 8. The following table presents earnings (losses) from equity method investments in real estate (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
Earnings (Losses) from Equity Method Investments in Real Estate
Existing Equity Method Investments:
Earnings from Las Vegas Retail Complex $ 2,860 $ 1,352 $ 1,508 $ 6,228 $ 1,645 $ 4,583
Earnings from Kesko Senukai (a)
1,902 944 958 3,132 434 2,698
Earnings from Johnson Self Storage (b)
1,163 663 500 3,190 1,556 1,634
Earnings from Harmon Retail Center 258 276 (18) 789 828 (39)
Losses from WLT (c)
— (1,376) 1,376 — (9,864) 9,864
6,183 1,859 4,324 13,339 (5,401) 18,740
Equity Method Investments Consolidated after the CPA:18 Merger (Note 3):
Proportionate share of impairment charge recognized on Bank Pekao (Note 8)
— — — (4,610) — (4,610)
Other-than-temporary impairment charge on State Farm Mutual Automobile Insurance Co. (Note 9)
— — — — (6,830) 6,830
Other 264 586 (322) 1,460 1,703 (243)
264 586 (322) (3,150) (5,127) 1,977
$ 6,447 $ 2,445 $ 4,002 $ 10,189 $ (10,528) $ 20,717

~~__________~~

~~(a)~~Increases for the three and nine months ended September 30, 2022 as compared to the same periods in 2021 are primarily due to higher rent collections at these retail properties, where certain rents were previously disputed and subsequently collected.

~~(b)Increases for the three and nine months ended September 30, 2022 as compared to the same periods in 2021 are primarily due to higher occupancy and unit rates at these self-storage facilities.~~

~~(c)~~Losses for the prior year periods were primarily due to the adverse impact of the COVID-19 pandemic on WLT’s operations. We recorded losses from this investment on a one quarter lag. This investment was reclassified to equity securities at fair value within Other assets, net on our consolidated balance sheets in January 2022 (~~Note 9~~).

~~(Loss) Gain on Sale of Real Estate, Net~~

~~(Loss) gain on sale of real estate, net, consists of losses and gains on the sale of properties that were disposed of during the reporting period. Our dispositions are more fully described in~~ ~~Note 15~~.

Provision for Income Taxes

For the three and nine months ended September 30, ~~2022~~2023 as compared to the same periods in ~~2021,~~2022, provision for income taxes within our Real Estate segment ~~decreased~~increased by ~~$4.2~~$1.5 million and ~~$6.9~~$14.2 million, respectively, primarily due to (i) deferred tax benefits ~~totaling $2.4 million~~ recognized during the ~~current~~prior year periods related to the release of valuation allowances on certain foreign properties, ~~and~~ (ii) ~~trade~~higher current taxes ~~of $1.8 million recognized during the prior year periods~~ as a result of rent increases driven by CPI adjustments at existing international properties, (iii) the ~~completion~~impact of ainternational property acquisitions, and (iv) the release of deferred tax ~~review on a portfolio~~assets in connection with the tax restructuring of ~~properties in Germany. In addition, we recognized tax benefits of $0.7 million on~~ certain ~~foreign~~international properties during the nine months ended September 30, ~~2022 as a result of a tax court ruling.~~2023.

~~W. P. Carey 9/30/2022 10-Q~~– 63

Investment Management

We earn revenue as the advisor to the Managed Programs. For the periods presented, we acted as advisor to the following Managed Programs: CPA:18 – Global (through August 1, 2022) and CESH. Upon completion of the CPA:18 Merger on August 1, 2022, (~~Note 3~~), the advisory agreement with CPA:18 – Global was terminated, and we ceased earning revenue from CPA:18 – Global. ~~The CWI~~

Upon closing of the Spin-Off on November 1, 2023, we externally manage NLOP and ~~CWI 2 Merger closed on April 13, 2020,~~earn revenue for certain asset management, property disposition support, and ~~as a result, CWI 2 was renamed Watermark Lodging Trust, Inc., for which we provided certain~~various related services ~~pursuant to a transition services agreement, which was terminated on October 13, 2021~~ (Note 417).

We no longer raise capital for new or existing funds, but we currently expect to continue managing CESH and earn the various fees described below through the end of its life cycle. As of September 30, 2022, we managed total assets of approximately $161.5 million on behalf of CESH.

Revenues

The following table presents revenues within our Investment Management segment (in thousands):


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Investment Management Revenues	Investment Management Revenues													Investment Management Revenues
Asset management and other revenue
Asset management revenue														Asset management revenue
CESH														CESH	$	194	$	346	$	(152)	$	836	$	1,128	$	(292)
CPA:18 – Global	CPA:18 – Global	$	851	$	3,160	$	(2,309)	$	6,956	$	9,452	$	(2,496)	CPA:18 – Global	—		851		(851)		—		6,956		(6,956)
CESH		346		712		(366)		1,128		2,340		(1,212)
		1,197		3,872		(2,675)		8,084		11,792		(3,708)			194		1,197		(1,003)		836		8,084		(7,248)
Reimbursable costs from affiliates	Reimbursable costs from affiliates													Reimbursable costs from affiliates
CESH														CESH	97		78		19		322		374		(52)
CPA:18 – Global	CPA:18 – Global	266		769		(503)		2,040		2,058		(18)		CPA:18 – Global	—		266		(266)		—		2,040		(2,040)
CESH		78		197		(119)		374		713		(339)
WLT		—		75		(75)		—		279		(279)
		344		1,041		(697)		2,414		3,050		(636)			97		344		(247)		322		2,414		(2,092)
		$	1,541	$	4,913	$	(3,372)	$	10,498	$	14,842	$	(4,344)		$	291	$	1,541	$	(1,250)	$	1,158	$	10,498	$	(9,340)

Asset Management ~~and Other~~ Revenue

~~Asset management and other revenue includes asset management revenue, structuring revenue, and other advisory revenue.~~ During the periods presented, we earned asset management revenue from (i) CPA:18 – Global (prior to the CPA:18 Merger) based on the value of its real estate-related assets under management and (ii) CESH based on its gross assets under management at fair value. ~~Asset~~For 2023, we earned asset management revenue may increase or decrease depending upon changes in the Managed Programs’ asset bases as a result of purchases, sales, or changes in the appraised value of the assets in their investment portfolios. For 2022, we received asset management fees from (i) CPA:18 – Global in shares of its common stock through February 28, 2022; effective as of March 1, 2022, we receive asset management fees from CPA:18 – Global in cash in light of the CPA:18 Merger, which closed on August 1, 2022 (~~Note 3), and (ii)~~ CESH in cash.

~~Operating Expenses~~

~~Impairment Charges — Investment Management Goodwill~~

~~Our impairment charges on Investment Management goodwill~~ Asset management revenues from CESH are ~~more fully described in~~ ~~Note 9~~.expected to decline as assets are sold.

Other Income and ~~Expenses,~~(Expenses) and ~~Provision for~~(Provision for) Benefit from Income Taxes

Gain on Change in Control of Interests

In connection with the CPA:18 Merger, during the three and nine months ended September 30, 2022, we recognized a gain on change in control of interests of $22.5 million within our Investment Management segment related to the difference between the carrying value and the preliminary estimated fair value of our previously held equity interest in shares of CPA:18 – Global’s common stock (Note 3).

W. P. Carey 9/30/~~2022~~2023 10-Q – 6459

Earnings from Equity Method Investments in the Managed Programs

~~Earnings from our equity method investments in the Managed Programs fluctuates based on the timing of transactions, such as new leases and property sales, as well as the level of impairment charges.~~ The following table presents the details of our earnings from equity method investments in the Managed Programs (Note 8) (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Earnings from equity method investments in the Managed Programs:	Earnings from equity method investments in the Managed Programs:									Earnings from equity method investments in the Managed Programs:
Distributions of Available Cash from CPA:18 – Global (a)	Distributions of Available Cash from CPA:18 – Global (a)	$	3,345	$	1,623	$	8,746	$	4,949	Distributions of Available Cash from CPA:18 – Global (a)	$	—	$	3,345	$	—	$	8,746
Earnings from equity method investments in the Managed Programs (a) (b)		1,512		1,667		4,542		1,425
Earnings from equity method investments in the Managed Programs (a)										Earnings from equity method investments in the Managed Programs (a)	—		1,512		—		4,542
Earnings from equity method investments in the Managed Programs	Earnings from equity method investments in the Managed Programs	$	4,857	$	3,290	$	13,288	$	6,374	Earnings from equity method investments in the Managed Programs	$	—	$	4,857	$	—	$	13,288

__________

(a)As a result of the completion of the CPA:18 Merger on August 1, 2022, (~~Note 3~~), we no longer recognize equity income from our investment in shares of common stock of CPA:18 – Global or receive distributions of Available Cash from CPA:18 – Global.

~~(b)Increase for the nine months ended September 30, 2022 as compared to the same period in 2021 was due to an increase of $3.1 million from our investment in shares of CPA:18 – Global.~~

Provision for (Benefit from) Income Taxes

For the three and nine months ended September 30, ~~2022~~2023 as compared to the same periods in ~~2021,~~2022, provision for (benefit from) income taxes within our Investment Management segment ~~increased~~decreased by ~~$4.1~~$4.6 million and ~~$5.0~~$5.5 million, respectively, primarily due to one-time current taxes incurred during the prior year periods upon the recognition of taxable income associated with the accelerated vesting of shares previously issued by CPA:18 – Global to us for asset management services performed, in connection with the CPA:18 Merger.

Liquidity and Capital Resources

Sources and Uses of Cash During the Period

We use the cash flow generated from our investments primarily to meet our operating expenses, service debt, and fund dividends to stockholders. Our cash flows fluctuate periodically due to a number of factors, which may include, among other things: the timing of our equity and debt offerings; the timing of purchases and sales of real estate; the timing of the repayment of mortgage loans and receipt of lease revenues; the timing and amount of other lease-related payments; the timing of settlement of foreign currency transactions; changes in foreign currency exchange rates; and the timing of distributions from equity method investments. We no longer receive certain fees and distributions from CPA:18 – Global following the completion of the CPA:18 Merger on August 1, 2022 (Note 31). Despite these fluctuations, we believe that we will generate sufficient cash from operations to meet our normal recurring short-term and long-term liquidity needs. We may also use existing cash resources, available capacity under our Senior Unsecured Credit Facility, proceeds from term loans or other bank debt, proceeds from dispositions of properties (including expected proceeds from the exercise of purchase options and the Office Sale Program (Note 1)), and the issuance of additional debt or equity securities, such as issuances of common stock through our ~~Equity~~ATM Forwards ~~and ATM Program~~ (Note 13), in order to meet these needs. We assess our ability to access capital on an ongoing basis. Our sources and uses of cash during the period are described below.

Operating Activities — Net cash provided by operating activities increased by ~~$77.1~~$110.2 million during the nine months ended September 30, ~~2022~~2023 as compared to the same period in ~~2021,~~2022, primarily due to an increase in cash flow generated from net investment activity (including properties acquired in the CPA:18 Merger (Note 31)) and scheduled rent increases at existing properties, ~~as well as higher lease termination and other income. These increases were~~ partially offset by ~~merger expenses recognized during the current year period related to the CPA:18 Merger (Note 3~~).higher interest expense.

~~W. P. Carey 9/30/2022 10-Q~~– 65

Investing Activities — Our investing activities are generally comprised of real estate-related transactions (purchases and sales) and funding for build-to-suit activities and other capital expenditures on real estate. In connection with the CPA:18 Merger, we paid $423.4 million in cash consideration and for the fractional shares of CPA:18 – Global, and acquired $331.1 million of cash and restricted cash. In addition, during the nine months ended September 30, 2022, we used $26.0 million to fund short-term loans to the Managed Programs, all of which was repaid during that period (~~Note 4). We also received $7.4 million in distributions from equity method investments.~~

W. P. Carey 9/30/2023 10-Q– 60

Financing Activities — Our financing activities are generally comprised of borrowings and repayments under our Unsecured Revolving Credit Facility and Unsecured Term Loans, issuances of the Senior Unsecured Notes, payments and prepayments of non-recourse mortgage loans, and payments of dividends to stockholders. In addition to these types of transactions, during the nine months ended September 30, ~~2022,~~2023, we received ~~(i) $218.1 million in net proceeds from the issuance of shares under our prior ATM Program (Note 13) and (ii) $97.5~~$249.8 million in net proceeds from the issuance of common stock under our ~~Equity~~ATM Forwards (Note 13).

Summary of Financing

The table below summarizes our Senior Unsecured Notes, our non-recourse mortgages, our Unsecured Revolving Credit Facility, and our ~~Senior~~ Unsecured ~~Credit Facility~~Term Loans (dollars in thousands):


		September 30, 2022			December 31, 2021				September 30, 2023			December 31, 2022
Carrying Value	Carrying Value							Carrying Value
Fixed rate:	Fixed rate:							Fixed rate:
Senior Unsecured Notes (a)	Senior Unsecured Notes (a)	$	5,651,865		$	5,701,913		Senior Unsecured Notes (a)	$	5,902,854		$	5,916,400
Non-recourse mortgages (a)		876,092			235,898
Non-recourse mortgages (a) (b)								Non-recourse mortgages (a) (b)	645,767			907,303
Unsecured Term Loans subject to interest rate swaps (a)								Unsecured Term Loans subject to interest rate swaps (a)	525,943			—
		6,527,957			5,937,811				7,074,564			6,823,703
Variable rate:	Variable rate:							Variable rate:
Unsecured Term Loans (a)	Unsecured Term Loans (a)	506,004			310,583			Unsecured Term Loans (a)	557,654			552,539
Unsecured Revolving Credit Facility	Unsecured Revolving Credit Facility	462,660			410,596			Unsecured Revolving Credit Facility	516,513			276,392
Non-recourse mortgages (a):	Non-recourse mortgages (a):							Non-recourse mortgages (a):
Floating interest rate mortgage loans	Floating interest rate mortgage loans	197,178			53,571			Floating interest rate mortgage loans	138,983			213,958
Amount subject to interest rate swaps and caps		89,544			79,055
Amount subject to interest rate caps								Amount subject to interest rate caps	—			11,156
		1,255,386			853,805				1,213,150			1,054,045
		$	7,783,343		$	6,791,616			$	8,287,714		$	7,877,748

Percent of Total Debt	Percent of Total Debt							Percent of Total Debt
Fixed rate	Fixed rate	84		%	87		%	Fixed rate	85		%	87		%
Variable rate	Variable rate	16		%	13		%	Variable rate	15		%	13		%
		100		%	100		%		100		%	100		%
Weighted-Average Interest Rate at End of Period	Weighted-Average Interest Rate at End of Period							Weighted-Average Interest Rate at End of Period
Fixed rate	Fixed rate	2.9		%	2.7		%	Fixed rate	3.0		%	2.9		%
Variable rate (b)		3.1		%	1.1		%
Variable rate (c)								Variable rate (c)	5.3		%	3.5		%
Total debt	Total debt	3.0		%	2.5		%	Total debt	3.3		%	3.0		%

__________

(a)Aggregate debt balance includes unamortized discount, net, totaling ~~$37.6~~$31.5 million and ~~$30.9~~$35.9 million as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and unamortized deferred financing costs totaling ~~$26.4~~$22.5 million and ~~$28.8~~$26.0 million as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

(b)Includes non-recourse mortgages subject to variable-to-fixed interest rate swaps totaling $44.6 million and $83.0 million as of September 30, 2023 and December 31, 2022, respectively.

(c)The impact of our interest rate ~~swaps and~~ caps is reflected in the weighted-average interest rates.

W. P. Carey 9/30/~~2022~~2023 10-Q – 6661

Cash Resources

At September 30, ~~2022,~~2023, our cash resources consisted of the following:

•cash and cash equivalents totaling ~~$186.4~~$136.4 million. Of this amount, ~~$89.3~~$112.7 million, at then-current exchange rates, was held in foreign subsidiaries, and we could be subject to restrictions or significant costs should we decide to repatriate these amounts;

•our Unsecured Revolving Credit Facility, with available capacity of approximately $1.3 billion (net of amounts reserved for standby letters of credit totaling ~~$0.6~~$1.9 million);

•~~available proceeds under our Equity Forwards of approximately $185.8 million (based on 2,587,500 remaining shares outstanding and a net offering price of $71.81 per share as of September 30, 2022)~~;

•available proceeds under our ATM Forwards of approximately ~~$455.7~~$383.6 million, ~~(based on 5,538,037 shares outstanding and a weighted-average net offering price of $82.29 per share as of September 30, 2022)~~which were fully settled in October 2023 (Note 17); and

•unleveraged properties that had an aggregate asset carrying value of approximately ~~$12.7~~$14.3 billion at September 30, ~~2022,~~2023, although there can be no assurance that we would be able to obtain financing for these properties.

~~Historically, we have~~We may also ~~accessed~~access the capital markets through additional debt (denominated in both U.S. dollars and euros) and equity ~~offerings.~~offerings, as well as term loans and other bank debt.

Our cash resources can be used for working capital needs and other commitments and may be used for future investments.

Cash Requirements and Liquidity

As of September 30, ~~2022,~~2023, we had (i) ~~$186.4~~$136.4 million of cash and cash equivalents, (ii) approximately $1.3 billion of available capacity under our Unsecured Revolving Credit Facility (net of amounts reserved for standby letters of credit totaling ~~$0.6~~$1.9 million), and (iii) available proceeds under our ATM Forwards of approximately ~~$455.7~~$383.6 million, ~~(based~~which were fully settled in October 2023 (Note 17). In addition, in September 2023, NLOP entered into a new $455 million debt facility, which was executed by NLOP and funded upon the closing of the Spin-Off on ~~5,538,037 remaining shares outstanding and a weighted-average net offering price~~November 1, 2023. Approximately $350 million of ~~$82.29 per share as~~this amount (net of ~~that date)~~transaction expenses) was retained by us in connection with the Spin-Off (Note 11, ~~and (iv) available proceeds under our Equity Forwards of approximately $185.8 million (based on 2,587,500 remaining shares outstanding and a net offering price of $71.81 per share as of that date)~~Note 17). Our Senior Unsecured Credit Facility includes a $1.8 billion Unsecured Revolving Credit Facility and Unsecured Term Loans outstanding totaling ~~$506.0~~$557.7 million as of September 30, ~~2022~~2023 (Note 11), and is scheduled to mature on February 20, ~~2025.~~2025 (Note 11). Our Unsecured Term Loan due 2026 had $525.9 million outstanding as of September 30, 2023, and is scheduled to mature on April 24, 2026. As of September 30, ~~2022,~~2023, scheduled debt principal payments total ~~$96.7 million through December 31, 2022 and $525.0~~$111.2 million through December 31, 2023 and ~~our Senior Unsecured Notes do not start to mature until April~~$1.3 billion through December 31, 2024 (Note 11).

During the next 12 months following September 30, ~~2022~~2023 and thereafter, we expect that our significant cash requirements will include:

•~~paying dividends to our stockholders (which we expect to be higher, following the issuance of 13,786,302 shares of our common stock in the CPA:18 Merger (Note 3));~~

•funding acquisitions of new investments (Note 5);

•funding future capital commitments and tenant improvement allowances (Note 5);

•making scheduled principal and balloon payments on our debt obligations, including (i) $500 million of senior notes due in April 2024 and (ii) €500 million of senior notes due in July 2024 (Note 11);

•making scheduled interest payments on our debt obligations (future interest payments total ~~$957.6~~$841.2 million, with ~~$228.5~~$245.8 million due during the next 12 months; interest on unhedged variable-rate debt obligations was calculated using the applicable annual variable interest rates and balances outstanding at September 30, ~~2022)~~2023); and

•other normal recurring operating expenses.

We expect to fund these cash requirements through cash generated from operations, cash received from dispositions of properties, the use of our cash reserves or unused amounts on our Unsecured Revolving Credit Facility (as described above), proceeds from term loans or other bank debt, issuances of common stock through our ~~Equity Forwards and/or~~ ATM Program (Note 13), and potential issuances of additional debt or equity securities. We may also choose to ~~pursue prepayments of~~prepay certain of our non-recourse mortgage loan obligations, depending on our capital needs and market conditions at that time.

~~W. P. Carey 9/30/2022 10-Q~~– 67

Our liquidity could be adversely affected by unanticipated costs and greater-than-anticipated operating ~~expenses, and the adverse impact of the continuing COVID-19 pandemic.~~expenses. To the extent that our working capital reserve is insufficient to satisfy our cash requirements, additional funds may be provided from cash from operations to meet our normal recurring short-term and long-term liquidity needs. We may also use existing cash resources, available capacity under our Unsecured Revolving Credit Facility, mortgage loan proceeds, and the issuance of additional debt or equity securities to meet these needs. The extent to which the COVID-19 pandemic impacts our liquidity and debt covenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence. The potential impact of the COVID-19 pandemic on our tenants and properties could also have a material adverse effect on our liquidity and debt covenants.

W. P. Carey 9/30/2023 10-Q– 62

Certain amounts disclosed above are based on the applicable foreign currency exchange rate at September 30, ~~2022.~~2023.

Supplemental Financial Measures

In the real estate industry, analysts and investors employ certain non-GAAP supplemental financial measures in order to facilitate meaningful comparisons between periods and among peer companies. Additionally, in the formulation of our goals and in the evaluation of the effectiveness of our strategies, we use Funds from Operations (“FFO”) and AFFO, which are non-GAAP measures defined by our management. We believe that these measures are useful to investors to consider because they may assist them to better understand and measure the performance of our business over time and against similar companies. A description of FFO and AFFO and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are provided below.

Funds from Operations and Adjusted Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts ~~Inc.~~ (“NAREIT”), an industry trade group, has promulgated a non-GAAP measure known as FFO, which we believe to be an appropriate supplemental measure, when used in addition to and in conjunction with results presented in accordance with GAAP, to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to, nor a substitute for, net income or loss as determined under GAAP.

We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as restated in December 2018. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property, impairment charges on real estate or other assets incidental to the company’s main business, gains or losses on changes in control of interests in real estate, and depreciation and amortization from real estate assets; and after adjustments for unconsolidated partnerships and jointly owned investments. Adjustments for unconsolidated partnerships and jointly owned investments are calculated to reflect FFO.

We also modify the NAREIT computation of FFO to adjust GAAP net income for certain non-cash charges, such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rent and related reserves, other non-cash rent adjustments, non-cash allowance for credit losses on loans receivable and ~~direct financing~~finance leases, stock-based compensation, non-cash environmental accretion expense, amortization of discounts and premiums on debt, and amortization of deferred financing costs. Our assessment of our operations is focused on long-term sustainability and not on such non-cash items, which may cause short-term fluctuations in net income but have no impact on cash flows. Additionally, we exclude non-core income and expenses, such as gains or losses from extinguishment of debt and merger and acquisition expenses. We also exclude realized and unrealized gains/losses on foreign currency exchange rate movements (other than those realized on the settlement of foreign currency derivatives), which are not considered fundamental attributes of our business plan and do not affect our overall long-term operating performance. We refer to our modified definition of FFO as AFFO. We exclude these items from GAAP net income to arrive at AFFO as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs that are currently not engaged in acquisitions, mergers, and restructuring, which are not part of our normal business operations. AFFO also reflects adjustments for unconsolidated partnerships and jointly owned investments. We use AFFO as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies, and determine executive compensation.

~~W. P. Carey 9/30/2022 10-Q~~– 68

We believe that AFFO is a useful supplemental measure for investors to consider as we believe it will help them to better assess the sustainability of our operating performance without the potentially distorting impact of these short-term fluctuations. However, there are limits on the usefulness of AFFO to investors. For example, impairment charges and unrealized foreign currency losses that we exclude may become actual realized losses upon the ultimate disposition of the properties in the form of lower cash proceeds or other considerations. We use our FFO and AFFO measures as supplemental financial measures of operating performance. We do not use our FFO and AFFO measures as, nor should they be considered to be, alternatives to net income computed under GAAP, or as alternatives to net cash provided by operating activities computed under GAAP, or as indicators of our ability to fund our cash needs.

W. P. Carey 9/30/2023 10-Q– 63

Consolidated FFO and AFFO were as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income attributable to W. P. Carey	Net income attributable to W. P. Carey	$	104,928	$	138,547	$	389,601	$	310,426	Net income attributable to W. P. Carey	$	125,040	$	104,928	$	564,040	$	389,601
Adjustments:	Adjustments:									Adjustments:
Depreciation and amortization of real property	Depreciation and amortization of real property	131,628		114,204		360,607		336,405		Depreciation and amortization of real property	144,111		131,628		442,911		360,607
Gain on change in control of interests (a) (b)		(33,931)		—		(33,931)		—
Impairment charges — Investment Management goodwill (c)		29,334		—		29,334		—
Loss (gain) on sale of real estate, net		4,736		(1,702)		(37,631)		(30,914)
Impairment charges — real estate	Impairment charges — real estate	—		16,301		26,385		16,301		Impairment charges — real estate	15,173		—		15,173		26,385
Proportionate share of adjustments to earnings from equity method investments (d) (e)		2,242		3,290		12,859		17,030
(Gain) loss on sale of real estate, net (a)										(Gain) loss on sale of real estate, net (a)	(2,401)		4,736		(181,958)		(37,631)
Gain on change in control of interests (b) (c)										Gain on change in control of interests (b) (c)	—		(33,931)		—		(33,931)
Impairment charges — Investment Management goodwill (d)										Impairment charges — Investment Management goodwill (d)	—		29,334		—		29,334
Proportionate share of adjustments to earnings from equity method investments (e) (f)										Proportionate share of adjustments to earnings from equity method investments (e) (f)	2,950		2,242		8,439		12,859
Proportionate share of adjustments for noncontrolling interests ~~(f)~~(g)	Proportionate share of adjustments for noncontrolling interests ~~(f)~~(g)	(189)		(4)		(197)		(12)		Proportionate share of adjustments for noncontrolling interests ~~(f)~~(g)	34		(189)		(533)		(197)
Total adjustments	Total adjustments	133,820		132,089		357,426		338,810		Total adjustments	159,867		133,820		284,032		357,426
FFO (as defined by NAREIT) attributable to W. P. Carey	FFO (as defined by NAREIT) attributable to W. P. Carey	238,748		270,636		747,027		649,236		FFO (as defined by NAREIT) attributable to W. P. Carey	284,907		238,748		848,072		747,027
Adjustments:	Adjustments:									Adjustments:
Merger and other expenses (g)		17,667		(908)		17,329		(3,983)
Other (gains) and losses (h)		15,020		(49,219)		1,021		(15,576)
Straight-line and other leasing and financing adjustments	Straight-line and other leasing and financing adjustments	(14,326)		(10,823)		(39,665)		(29,887)		Straight-line and other leasing and financing adjustments	(18,662)		(14,326)		(52,798)		(39,665)
Stock-based compensation										Stock-based compensation	9,050		5,511		25,811		23,102
Above- and below-market rent intangible lease amortization, net	Above- and below-market rent intangible lease amortization, net	11,186		12,004		32,738		38,503		Above- and below-market rent intangible lease amortization, net	7,835		11,186		27,520		32,738
Stock-based compensation		5,511		4,361		23,102		18,790
Amortization of deferred financing costs	Amortization of deferred financing costs	5,223		3,424		11,498		10,284		Amortization of deferred financing costs	4,805		5,223		15,649		11,498
Tax expense (benefit) — deferred and other		1,163		(290)		(434)		(3,460)
Tax (benefit) expense — deferred and other										Tax (benefit) expense — deferred and other	(4,349)		1,163		(2,706)		(434)
Merger and other expenses (h)										Merger and other expenses (h)	4,152		17,667		5,595		17,329
Other (gains) and losses (i)										Other (gains) and losses (i)	(2,859)		15,020		(9,593)		1,021
Other amortization and non-cash items	Other amortization and non-cash items	359		557		1,441		1,149		Other amortization and non-cash items	584		359		1,583		1,441
Proportionate share of adjustments to earnings from equity method investments ~~(e)~~(f)	Proportionate share of adjustments to earnings from equity method investments ~~(e)~~(f)	(2,156)		988		(2,451)		10,849		Proportionate share of adjustments to earnings from equity method investments ~~(e)~~(f)	(691)		(2,156)		(1,872)		(2,451)
Proportionate share of adjustments for noncontrolling interests ~~(f)~~(g)	Proportionate share of adjustments for noncontrolling interests ~~(f)~~(g)	(673)		(6)		(684)		(19)		Proportionate share of adjustments for noncontrolling interests ~~(f)~~(g)	(380)		(673)		(344)		(684)
Total adjustments	Total adjustments	38,974		(39,912)		43,895		26,650		Total adjustments	(515)		38,974		8,845		43,895
AFFO attributable to W. P. Carey	AFFO attributable to W. P. Carey	$	277,722	$	230,724	$	790,922	$	675,886	AFFO attributable to W. P. Carey	$	284,392	$	277,722	$	856,917	$	790,922

Summary	Summary									Summary
FFO (as defined by NAREIT) attributable to W. P. Carey	FFO (as defined by NAREIT) attributable to W. P. Carey	$	238,748	$	270,636	$	747,027	$	649,236	FFO (as defined by NAREIT) attributable to W. P. Carey	$	284,907	$	238,748	$	848,072	$	747,027
AFFO attributable to W. P. Carey	AFFO attributable to W. P. Carey	$	277,722	$	230,724	$	790,922	$	675,886	AFFO attributable to W. P. Carey	$	284,392	$	277,722	$	856,917	$	790,922

W. P. Carey 9/30/~~2022~~2023 10-Q – 6964

FFO and AFFO from Real Estate were as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income from Real Estate attributable to W. P. Carey	Net income from Real Estate attributable to W. P. Carey	$	111,375	$	130,858	$	381,461	$	290,132	Net income from Real Estate attributable to W. P. Carey	$	124,167	$	111,375	$	562,084	$	381,461
Adjustments:	Adjustments:									Adjustments:
Depreciation and amortization of real property	Depreciation and amortization of real property	131,628		114,204		360,607		336,405		Depreciation and amortization of real property	144,111		131,628		442,911		360,607
Gain on change in control of interests (a)		(11,405)		—		(11,405)		—
Loss (gain) on sale of real estate, net		4,736		(1,702)		(37,631)		(30,914)
Impairment charges — real estate	Impairment charges — real estate	—		16,301		26,385		16,301		Impairment charges — real estate	15,173		—		15,173		26,385
Proportionate share of adjustments to earnings from equity method investments (d) (e)		2,242		3,290		12,859		17,030
(Gain) loss on sale of real estate, net (a)										(Gain) loss on sale of real estate, net (a)	(2,401)		4,736		(181,958)		(37,631)
Gain on change in control of interests (b)										Gain on change in control of interests (b)	—		(11,405)		—		(11,405)
Proportionate share of adjustments to earnings from equity method investments (e) (f)										Proportionate share of adjustments to earnings from equity method investments (e) (f)	2,950		2,242		8,439		12,859
Proportionate share of adjustments for noncontrolling interests ~~(f)~~(g)	Proportionate share of adjustments for noncontrolling interests ~~(f)~~(g)	(189)		(4)		(197)		(12)		Proportionate share of adjustments for noncontrolling interests ~~(f)~~(g)	34		(189)		(533)		(197)
Total adjustments	Total adjustments	127,012		132,089		350,618		338,810		Total adjustments	159,867		127,012		284,032		350,618
FFO (as defined by NAREIT) attributable to W. P. Carey — Real Estate	FFO (as defined by NAREIT) attributable to W. P. Carey — Real Estate	238,387		262,947		732,079		628,942		FFO (as defined by NAREIT) attributable to W. P. Carey — Real Estate	284,034		238,387		846,116		732,079
Adjustments:	Adjustments:									Adjustments:
Merger and other expenses (g)		17,667		(908)		17,326		(3,998)
Straight-line and other leasing and financing adjustments	Straight-line and other leasing and financing adjustments	(14,326)		(10,823)		(39,665)		(29,887)		Straight-line and other leasing and financing adjustments	(18,662)		(14,326)		(52,798)		(39,665)
Other (gains) and losses (h)		13,960		(48,172)		(303)		(13,455)
Stock-based compensation										Stock-based compensation	9,050		5,511		25,811		23,102
Above- and below-market rent intangible lease amortization, net	Above- and below-market rent intangible lease amortization, net	11,186		12,004		32,738		38,503		Above- and below-market rent intangible lease amortization, net	7,835		11,186		27,520		32,738
Stock-based compensation		5,511		4,361		23,102		18,790
Amortization of deferred financing costs	Amortization of deferred financing costs	5,223		3,424		11,498		10,284		Amortization of deferred financing costs	4,805		5,223		15,649		11,498
Tax (benefit) — deferred and other		(2,789)		(700)		(4,302)		(3,087)
Tax benefit — deferred and other										Tax benefit — deferred and other	(4,349)		(2,789)		(2,706)		(4,302)
Merger and other expenses (h)										Merger and other expenses (h)	4,152		17,667		5,595		17,326
Other (gains) and losses (i)										Other (gains) and losses (i)	(2,180)		13,960		(8,876)		(303)
Other amortization and non-cash items	Other amortization and non-cash items	359		557		1,441		1,149		Other amortization and non-cash items	584		359		1,583		1,441
Proportionate share of adjustments to earnings from equity method investments ~~(e)~~(f)	Proportionate share of adjustments to earnings from equity method investments ~~(e)~~(f)	(938)		1,761		(403)		9,928		Proportionate share of adjustments to earnings from equity method investments ~~(e)~~(f)	(691)		(938)		(1,872)		(403)
Proportionate share of adjustments for noncontrolling interests ~~(f)~~(g)	Proportionate share of adjustments for noncontrolling interests ~~(f)~~(g)	(673)		(6)		(684)		(19)		Proportionate share of adjustments for noncontrolling interests ~~(f)~~(g)	(380)		(673)		(344)		(684)
Total adjustments	Total adjustments	35,180		(38,502)		40,748		28,208		Total adjustments	164		35,180		9,562		40,748
AFFO attributable to W. P. Carey — Real Estate	AFFO attributable to W. P. Carey — Real Estate	$	273,567	$	224,445	$	772,827	$	657,150	AFFO attributable to W. P. Carey — Real Estate	$	284,198	$	273,567	$	855,678	$	772,827

Summary	Summary									Summary
FFO (as defined by NAREIT) attributable to W. P. Carey — Real Estate	FFO (as defined by NAREIT) attributable to W. P. Carey — Real Estate	$	238,387	$	262,947	$	732,079	$	628,942	FFO (as defined by NAREIT) attributable to W. P. Carey — Real Estate	$	284,034	$	238,387	$	846,116	$	732,079
AFFO attributable to W. P. Carey — Real Estate	AFFO attributable to W. P. Carey — Real Estate	$	273,567	$	224,445	$	772,827	$	657,150	AFFO attributable to W. P. Carey — Real Estate	$	284,198	$	273,567	$	855,678	$	772,827

W. P. Carey 9/30/~~2022~~2023 10-Q – 7065

FFO and AFFO from Investment Management were as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net (loss) income from Investment Management attributable to W. P. Carey		$	(6,447)	$	7,689	$	8,140	$	20,294
Net income (loss) from Investment Management attributable to W. P. Carey										Net income (loss) from Investment Management attributable to W. P. Carey	$	873	$	(6,447)	$	1,956	$	8,140
Adjustments:	Adjustments:									Adjustments:
Impairment charges — Investment Management goodwill ~~(c)~~(d)	Impairment charges — Investment Management goodwill ~~(c)~~(d)	29,334		—		29,334		—		Impairment charges — Investment Management goodwill ~~(c)~~(d)	—		29,334		—		29,334
Gain on change in control of interests ~~(b)~~(c)	Gain on change in control of interests ~~(b)~~(c)	(22,526)		—		(22,526)		—		Gain on change in control of interests ~~(b)~~(c)	—		(22,526)		—		(22,526)
Total adjustments	Total adjustments	6,808		—		6,808		—		Total adjustments	—		6,808		—		6,808
FFO (as defined by NAREIT) attributable to W. P. Carey — Investment Management	FFO (as defined by NAREIT) attributable to W. P. Carey — Investment Management	361		7,689		14,948		20,294		FFO (as defined by NAREIT) attributable to W. P. Carey — Investment Management	873		361		1,956		14,948
Adjustments:	Adjustments:									Adjustments:
Tax expense (benefit) — deferred and other		3,952		410		3,868		(373)
Other (gains) and losses	Other (gains) and losses	1,060		(1,047)		1,324		(2,121)		Other (gains) and losses	(679)		1,060		(717)		1,324
Tax benefit — deferred and other										Tax benefit — deferred and other	—		3,952		—		3,868
Merger and other expenses	Merger and other expenses	—		—		3		15		Merger and other expenses	—		—		—		3
Proportionate share of adjustments to earnings from equity method investments ~~(e)~~(f)	Proportionate share of adjustments to earnings from equity method investments ~~(e)~~(f)	(1,218)		(773)		(2,048)		921		Proportionate share of adjustments to earnings from equity method investments ~~(e)~~(f)	—		(1,218)		—		(2,048)
Total adjustments	Total adjustments	3,794		(1,410)		3,147		(1,558)		Total adjustments	(679)		3,794		(717)		3,147
AFFO attributable to W. P. Carey — Investment Management	AFFO attributable to W. P. Carey — Investment Management	$	4,155	$	6,279	$	18,095	$	18,736	AFFO attributable to W. P. Carey — Investment Management	$	194	$	4,155	$	1,239	$	18,095

Summary	Summary									Summary
FFO (as defined by NAREIT) attributable to W. P. Carey — Investment Management	FFO (as defined by NAREIT) attributable to W. P. Carey — Investment Management	$	361	$	7,689	$	14,948	$	20,294	FFO (as defined by NAREIT) attributable to W. P. Carey — Investment Management	$	873	$	361	$	1,956	$	14,948
AFFO attributable to W. P. Carey — Investment Management	AFFO attributable to W. P. Carey — Investment Management	$	4,155	$	6,279	$	18,095	$	18,736	AFFO attributable to W. P. Carey — Investment Management	$	194	$	4,155	$	1,239	$	18,095

__________

(a)Amount for the nine months ended September 30, 2023 includes a gain on sale of real estate of $176.2 million recognized upon receiving notice of the exercise of a purchase option for a portfolio of 78 net-lease self-storage properties and the reclassification of the investment to net investments in sales-type leases (Note 6).

(b)Amounts for the three and nine months ended September 30, 2022 represent a gain recognized on the remaining interests in four investments acquired in the CPA:18 Merger, which we had previously accounted for under the equity method (Note 3).

~~(b)~~(c)Amounts for the three and nine months ended September 30, 2022 represent a gain recognized on our previously held interest in shares of CPA:18 – Global common stock in connection with the CPA:18 Merger (Note 3).

~~(c)~~(d)Amounts for the three and nine months ended September 30, 2022 represent an impairment charge recognized on goodwill within our Investment Management segment, since future Investment Management cash flows are expected to be minimal (N ~~ote 7~~, Note 9).

~~(d)~~(e)Amount for the nine months ended September 30, 2022 includes our $4.6 million proportionate share of an impairment charge recognized on an equity method investment in real ~~estate (Note 8). Amount for the nine months ended September 30, 2021 includes a non-cash other-than-temporary impairment charge of $6.8 million recognized on an equity method investment in real estate (Note 9~~).estate.

~~(e)~~(f)Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Earnings (losses) from equity method investments on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis.

~~(f)~~(g)Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.

~~(g)~~(h)Amounts for the three and nine months ended September 30, ~~2022~~2023 are primarily comprised of costs incurred in connection with the Spin-Off (Note 1, Note 1 7). Amounts for the three and ~~2021~~nine months ended September 30, 2022 are primarily comprised of costs incurred in connection with the CPA:18 Merger (Note 3) ~~and/or reversals of estimated liabilities for German real estate transfer taxes that were previously recorded in connection with mergers in prior years.~~.

~~(h)~~(i)Primarily comprised of gains and losses on extinguishment of debt, the mark-to-market fair value of equity securities, and foreign currency exchange rate movements, as well as non-cash allowance for credit losses on loans receivable and ~~direct financing~~finance leases.

W. P. Carey 9/30/~~2022~~2023 10-Q – 7166

While we believe that FFO and AFFO are important supplemental measures, they should not be considered as alternatives to net income as an indication of a company’s operating performance. These non-GAAP measures should be used in conjunction with net income as defined by GAAP. FFO and AFFO, or similarly titled measures disclosed by other REITs, may not be comparable to our FFO and AFFO measures.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market Risk

Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, and equity prices. The primary market risks that we are exposed to are interest rate risk and foreign currency exchange risk; however, we do not use derivative instruments to hedge credit/market risks or for speculative purposes. From time to time, we may enter into foreign currency collars to hedge our foreign currency cash flow exposures.

We are also exposed to further market risk as a result of tenant concentrations in certain industries and/or geographic regions, since adverse market factors ~~(such as the COVID-19 pandemic)~~ can affect the ability of tenants in a particular industry/region to meet their respective lease obligations. In order to manage this risk, we view our collective tenant roster as a portfolio and we attempt to diversify such portfolio so that we are not overexposed to a particular industry or geographic region.

Interest Rate Risk

The values of our real estate and related fixed-rate debt obligations, as well as the values of our unsecured debt obligations, are subject to fluctuations based on changes in interest rates. The value of our real estate is also subject to fluctuations based on local and regional economic conditions ~~(including the ongoing impact of the COVID-19 pandemic)~~ and changes in the creditworthiness of lessees, which may affect our ability to refinance property-level mortgage debt when balloon payments are scheduled, if we do not choose to repay the debt when due. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political conditions, and other factors beyond our control. An increase in interest rates would likely cause the fair value of our assets to decrease. Increases in interest rates may also have an impact on the credit profile of certain tenants.

We are exposed to the impact of interest rate changes primarily through our borrowing activities. To limit this exposure, we generally seek long-term debt financing on a fixed-rate basis. However, ~~from time~~we are subject to ~~time, we or~~variable-rate interest on our ~~joint investment partners obtained,~~Unsecured Term Loans, Unsecured Revolving Credit Facility, and ~~may in the future obtain, variable-rate~~certain of our non-recourse mortgage ~~loans and, as a result, we~~debt. We have entered into, and may continue to enter into, interest rate swap agreements or interest rate cap agreements with ~~counterparties.~~counterparties related to certain of our variable-rate debt (Note 11). See Note 10 for additional information on our interest rate swaps and caps.

~~At September 30, 2022, a significant portion (approximately 85.0%) of our long-term debt either bore interest at fixed rates or was swapped or capped to a fixed rate.~~ Our debt obligations are more fully described in Note 11 and Liquidity and Capital Resources — Summary of Financing in Item 2 above. The following table presents principal cash flows based upon expected maturity dates of our debt obligations outstanding at September 30, ~~2022~~2023 (in thousands):


		2022 (Remainder)		2023		2024		2025		2026		Thereafter		Total		Fair Value			2023 (Remainder)		2024		2025		2026		2027		Thereafter		Total		Fair Value
Fixed-rate debt (a) (b)	Fixed-rate debt (a) (b)	$	93,750	$	228,840	$	1,126,491	$	762,259	$	947,997	$	3,431,674	$	6,591,011	$	5,800,996	Fixed-rate debt (a) (b)	$	13,754	$	1,223,399	$	788,492	$	1,509,747	$	530,368	$	3,063,067	$	7,128,827	$	6,380,480
Variable-rate debt (a)	Variable-rate debt (a)	$	2,994	$	199,402	$	34,936	$	1,007,697	$	11,290	$	—	$	1,256,319	$	1,253,300	Variable-rate debt (a)	$	97,420	$	—	$	1,115,310	$	—	$	—	$	—	$	1,212,730	$	1,211,760

__________

(a)Amounts are based on the exchange rate at September 30, ~~2022,~~2023, as applicable.

(b)Amounts include non-recourse mortgages and unsecured term loans subject to variable-to-fixed interest rate swaps. Amounts after 2023 are primarily comprised of principal payments for our Senior Unsecured Notes (Note 11).

The estimated fair value of our fixed-rate debt and our variable-rate debt ~~that currently bears interest at fixed rates or has effectively been converted to a fixed rate through the use of interest rate swaps, or that has been subject to interest rate caps,~~ is affected by changes in interest rates. Annual interest expense on our unhedged variable-rate debt that does not bear interest at fixed rates at September 30, ~~2022~~2023 would increase or decrease by ~~$4.7~~$6.7 million for our ~~U.S. dollar-denominated~~euro-denominated debt, by ~~$3.4~~$3.3 million for our British pound sterling-denominated debt, by ~~$3.0~~$1.6 million for our ~~euro-denominated~~U.S. dollar-denominated debt, by $0.4 million for our Norwegian krone-denominated debt, and by $0.2 million for our Japanese yen-denominated debt, for each respective 1% change in annual interest rates.

W. P. Carey 9/30/~~2022~~2023 10-Q – 7267

Foreign Currency Exchange Rate Risk

We own international investments, primarily in Europe, Canada, and Japan, and as a result are subject to risk from the effects of exchange rate movements in various foreign currencies, primarily the euro, the British pound sterling, the Canadian dollar, the Japanese yen, and certain other currencies which may affect future costs and cash flows. We have obtained, and may in the future obtain, non-recourse mortgage financing in the local currency. We have also completed several offerings of euro-denominated senior notes, and have borrowed under our Senior Unsecured Credit Facility and Unsecured Term Loan due 2026 in foreign currencies, including the euro, British pound sterling, and Japanese yen (Note 11). Volatile market conditions arising from ~~the ongoing effects of the COVID-19 global pandemic, as well as other~~certain macroeconomic factors may result in significant fluctuations in foreign currency exchange rates. To the extent that currency fluctuations increase or decrease rental revenues, as translated to U.S. dollars, the change in debt service (comprised of principal and interest, excluding balloon payments), as translated to U.S. dollars, will partially offset the effect of fluctuations in revenue and, to some extent, mitigate the risk from changes in foreign currency exchange rates. We estimate that, for a 1% increase or decrease in the exchange rate between the euro, British pound sterling, or Japanese yen and the U.S. dollar, there would be a corresponding change in the projected estimated cash flow (scheduled future rental revenues, net of scheduled future debt service payments for the next 12 months) for our consolidated foreign operations at September 30, ~~2022~~2023 of ~~$2.5~~$2.4 million, $0.3 million, and less than $0.1 million, respectively, excluding the impact of our derivative instruments.

In addition, we may use currency hedging to further reduce the exposure to our equity cash flow. We are generally a net receiver of these currencies (we receive more cash than we pay out), and therefore our foreign operations benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar, relative to the foreign currency.

We enter into foreign currency collars to hedge certain of our foreign currency cash flow exposures. See Note 10 for additional information on our foreign currency collars.

Concentration of Credit Risk

Concentrations of credit risk arise when a number of tenants are engaged in similar business activities or have similar economic risks or conditions that could cause them to default on their lease obligations to us. We regularly monitor our portfolio to assess potential concentrations of credit risk. While we believe our portfolio is well-diversified, it does contain concentrations in certain areas. There have been no material changes in our concentration of credit risk from what was disclosed in the ~~2021~~2022 Annual Report.

W. P. Carey 9/30/~~2022~~2023 10-Q – 7368

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our disclosure controls and procedures include internal controls and other procedures designed to provide reasonable assurance that information required to be disclosed in this and other reports filed under the Exchange Act is recorded, processed, summarized, and reported within the required time periods specified in the SEC’s rules and forms; and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures. It should be noted that no system of controls can provide complete assurance of achieving a company’s objectives and that future events may impact the effectiveness of a system of controls.

Our chief executive officer and chief financial officer, after conducting an evaluation, together with members of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, ~~2022,~~2023, have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of September 30, ~~2022~~2023 at a reasonable level of assurance.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

W. P. Carey 9/30/~~2022~~2023 10-Q – 7469

PART II — OTHER INFORMATION

Item 1A. Risk Factors

We are including the following additional risk factor, which should be read in conjunction with our description of risk factors provided in Part I, Item 1A. Risk Factors in our 2022 Annual Report:

We may not achieve some or all the expected benefits of the Spin-Off and the Office Sale Program.

We may not be able to achieve the full strategic and financial benefits expected to result from the Spin-Off and the Office Sale Program, or such benefits may be delayed due to a variety of circumstances, not all of which may be under our control. We may not achieve the anticipated benefits of the Spin-Off or the Office Sale Program for a variety of reasons, including, among others: (i) the transactions may not generate the anticipated improvements in our cost of or access to capital; (ii) we may be subject to unexpected costs related to the Spin-Off, including as a result of our indemnification obligations under the Separation and Distribution Agreement or obligations related to indebtedness associates with transfer of NLOP assets and any guaranties related thereto; and (iii) we may face challenges in completing the Office Sale Program at the prices in the timeframe we expect or at all. Failure to achieve some or all the benefits expected to result from the Spin-Off and the Office Sale Program, or a delay in realizing such benefits, may have a material adverse effect on our business, financial condition and results of operations.

W. P. Carey 9/30/2023 10-Q– 70

Item 6. Exhibits.

The following exhibits are filed with this Report. Documents other than those designated as being filed herewith are incorporated herein by reference.

Exhibit No.

Description

Method of Filing

~~4.1~~

~~Form of Note Representing €150,000,000 Aggregate Principal Amount of 3.41% Senior Notes due 2029~~

~~Filed herewith~~

~~4.2~~

~~Form of Note Representing €200,000,000 Aggregate Principal Amount of 3.70% Senior Notes due 2032~~

~~Filed herewith~~

10.1

~~Note Purchase~~Loan Agreement, dated ~~August 31, 2022,~~September 20, 2023, by and among ~~W. P. Carey Inc.~~JPMorgan Chase Bank, N.A. and the ~~purchasers listed in the purchaser schedule thereto~~borrowers named therein

Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed September 21, 2023

10.2

Mezzanine Loan Agreement, dated September 20, 2023, between NLO Mezzanine Borrower and JPMorgan Chase Bank, N.A.

Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed September 21, 2023

10.3

Separation and Distribution Agreement, dated October 31, 2023, between W. P. Carey Inc. and Net Lease Office Properties.

Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed November 2, 2023

10.4

Tax Matters Agreement, dated October 31, 2023, between W. P. Carey Inc. and Net Lease Office Properties.

Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed November 2, 2023

10.5

Advisory Agreement, dated November 1, ~~2022~~2023, between W. P. Carey Management LLC and Net Lease Office Properties.

Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed November 2, 2023

10.6

Advisory Agreement, dated November 1, 2023, between W. P. Carey & Co. B.V. and Net Lease Office Properties.

Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed November 2, 2023

31.1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

101.INS

XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document

Filed herewith

101.SCH

XBRL Taxonomy Extension Schema Document

Filed herewith

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

Filed herewith

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

Filed herewith

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Filed herewith

W. P. Carey 9/30/~~2022~~2023 10-Q – 7571

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


			W. P. Carey Inc.

Date:	November ~~4, 2022~~3, 2023
		By:	/s/ ToniAnn Sanzone
			ToniAnn Sanzone
			Chief Financial Officer
			(Principal Financial Officer)

Date:	November ~~4, 2022~~3, 2023
		By:	/s/ ~~Arjun Mahalingam~~Brian Zander
			~~Arjun Mahalingam~~Brian Zander
			Chief Accounting Officer
			(Principal Accounting Officer)

W. P. Carey 9/30/~~2022~~2023 10-Q – 7672

EXHIBIT INDEX

The following exhibits are filed with this Report. Documents other than those designated as being filed herewith are incorporated herein by reference.

Exhibit No.

Description

Method of Filing

~~4.1~~

~~Form of Note Representing €150,000,000 Aggregate Principal Amount of 3.41% Senior Notes due 2029~~

~~Filed herewith~~

~~4.2~~

~~Form of Note Representing €200,000,000 Aggregate Principal Amount of 3.70% Senior Notes due 2032~~

~~Filed herewith~~

10.1

Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed September 21, 2023

10.2

Mezzanine Loan Agreement, dated September 20, 2023, between NLO Mezzanine Borrower and JPMorgan Chase Bank, N.A.

Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed September 21, 2023

10.3

Separation and Distribution Agreement, dated October 31, 2023, between W. P. Carey Inc. and Net Lease Office Properties.

Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed November 2, 2023

10.4

Tax Matters Agreement, dated October 31, 2023, between W. P. Carey Inc. and Net Lease Office Properties.

Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed November 2, 2023

10.5

Advisory Agreement, dated November 1, ~~2022~~2023, between W. P. Carey Management LLC and Net Lease Office Properties.

Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed November 2, 2023

10.6

Advisory Agreement, dated November 1, 2023, between W. P. Carey & Co. B.V. and Net Lease Office Properties.

Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed November 2, 2023

31.1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

101.INS

XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document

Filed herewith

101.SCH

XBRL Taxonomy Extension Schema Document

Filed herewith

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

Filed herewith

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

Filed herewith

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Filed herewith


	Weighted-Average Life	Amount
Finite-Lived Intangible Assets
In-place lease	7.4	$	199,913
Above-market rent	11.9	61,090
		$	261,003

Finite-Lived Intangible Liabilities
Below-market rent	8.5	$	(16,836)


	% of Outstanding Interests Owned at				Carrying Amount of Investment at
Fund	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
CPA:18 – Global (a)	100.000	%	5.578	%	$	—	$	60,836
CPA:18 – Global operating partnership (a)	100.000	%	0.034	%	—		209
CESH (b)	2.430	%	2.430	%	2,334		3,689
					$	2,334	$	64,734


	Interest Rate at September 30, 2022 (a)	Maturity Date at September 30, 2022	Principal Outstanding Balance at
Senior Unsecured Credit Facility			September 30, 2022		December 31, 2021
Unsecured Term Loans:
Term Loan — borrowing in British pounds sterling (b) (c) (d)	SONIA + 0.85%	2/20/2025	$	298,070	$	202,183
Delayed Draw Term Loan — borrowing in euros (e)	EURIBOR + 0.85%	2/20/2025	209,582		109,296
			507,652		311,479
Unsecured Revolving Credit Facility:
Borrowing in U.S. dollars (f)	LIBOR + 0.775%	2/20/2025	446,000		—
Borrowing in Japanese yen (g)	TIBOR + 0.775%	2/20/2025	16,660		20,935
Borrowing in euros	N/A	2/20/2025	—		205,001
Borrowing in British pounds sterling	N/A	2/20/2025	—		184,660
			462,660		410,596
			$	970,312	$	722,075


	Agreement Date (a)	Shares Offered (b)	Average Gross Offering Price		Average Gross Offering Proceeds at Closing		Outstanding Shares as of September 30, 2022
June 2020 Equity Forwards (c)	6/17/2020	5,462,500	$	70.00	$	382,375	—
June 2021 Equity Forwards (d)	6/7/2021	6,037,500	75.30		454,624		—
August 2021 Equity Forwards	8/9/2021	5,175,000	78.00		403,650		2,587,500
ATM Forwards (e)	5/2/2022	5,538,037	84.81		469,697		5,538,037
							8,125,537


	Three Months Ended September 30, 2021
	Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total
Beginning balance	$	(1,062)	$	(228,898)	$	—	$	(229,960)
Other comprehensive loss before reclassifications	12,932		(20,400)		—		(7,468)
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	196		—		—		196
Non-operating income	(14)		—		—		(14)
Total	182		—		—		182
Net current period other comprehensive loss	13,114		(20,400)		—		(7,286)

Ending balance	$	12,052	$	(249,298)	$	—	$	(237,246)