UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
or
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021
or
☐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: 000-54970
cpa18-20210331_g1.jpg
CORPORATE PROPERTY ASSOCIATES 18 – GLOBAL INCORPORATED
(Exact name of registrant as specified in its charter)
Maryland90-0885534
(State of incorporation)(I.R.S. Employer Identification No.)
MarylandOne Manhattan West, 395 9th Avenue, 58th Floor90-0885534
(State of incorporation)New York,New York(I.R.S. Employer Identification No.)10001
50 Rockefeller Plaza
New York, New York10020
(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: None


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 þ☑ No o☐


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 and post such files). Yes þ☑ No o☐


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☑
Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ
Smaller reporting companyo
☐
Emerging growth companyo☐

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. o☐


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


Registrant has 118,621,016119,999,176 shares of Class A common stock, $0.001 par value, and 32,549,04332,142,646 shares of Class C common stock, $0.001 par value, outstanding at May 8, 2020.
5, 2021.



INDEX



INDEX
Page No.
Page No.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
32
43
54
65
76
87
2825
5245
5547
PART II — OTHER INFORMATION
Item 1A. Risk Factors
56
Item 2. Unregistered Sales of Equity Securities
5748
Item 6.Exhibits
5849
5950

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: 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, financial condition, liquidity, results of operations, and prospects; the amount and timing of any future liquidity event, underlying assumptions aboutdistributions; our portfolio (e.g. occupancy rate, lease terms, and tenant credit quality, including our expectations about tenant bankruptcies and interest coverage), expectations about tenant rent collections, potential holding periods for our investments (including possible dispositions), our international exposure; ourcapital structure, future capital expenditure levels including(including any plans to fund our future liquidity needs,needs), and future leverage and debt service obligations; the timing of any future liquidity event; statements that we make regarding our ability to remain qualified for taxation as a real estate investment trust (“REIT”); our expectations regarding the impact on our business, tenants, and prospects in light of the outbreak of the novel coronavirus (“COVID-19”) and the various effects in connection therewith, as well as the measures taken to prevent its spread; and the impact of recently issued accounting pronouncements and other regulatory activity.activity; and the general economic outlook, including the continued impact of the COVID-19 pandemic.



CPA:18 – Global 3/31/2020 10-Q– 1


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 the effects of pandemics and global outbreaks of contagious diseases (such as the current COVID-19 pandemic) or the fear of such outbreaks, like the current COVID-19 pandemic and those additional factors discussed in reports filed with the SEC by us under the heading “Risk Factors” could also have material adverse effects on our business, financial condition, liquidity, results of operations, Modified funds from operations (“MFFO”), 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, 2019,2020, as filed with the SEC on February 28, 201925, 2021 (the “2019“2020 Annual Report”). 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, shareholders 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 condensed consolidated financial statements of the registrant in Part I, Item 1. Financial Statements (Unaudited).



CPA:18 – Global 3/31/20202021 10-Q– 21


PART I — FINANCIAL INFORMATION


Item 1. Financial Statements.


CORPORATE PROPERTY ASSOCIATES 18 – GLOBAL INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share amounts)
March 31, 2020 December 31, 2019March 31, 2021December 31, 2020
Assets   Assets
Investments in real estate:   Investments in real estate:
Real estate — Land, buildings and improvements$1,158,497
 $1,200,645
Real estate — Land, buildings and improvements$1,407,220 $1,440,354 
Operating real estate — Land, buildings and improvements505,326
 512,485
Operating real estate — Land, buildings and improvements598,173 596,998 
Real estate under construction267,044
 235,751
Real estate under construction215,128 180,055 
Net investments in direct financing leases30,338
 42,054
Net investments in direct financing leases16,919 16,933 
In-place lease and other intangible assets276,196
 284,097
In-place lease and other intangible assets288,284 293,075 
Investments in real estate2,237,401
 2,275,032
Investments in real estate2,525,724 2,527,415 
Accumulated depreciation and amortization(335,051) (328,312)Accumulated depreciation and amortization(415,006)(403,171)
Net investments in real estate1,902,350
 1,946,720
Net investments in real estate2,110,718 2,124,244 
Cash and cash equivalents104,939
 144,148
Cash and cash equivalents59,788 62,346 
Accounts receivable and other assets, net142,255
 143,935
Accounts receivable and other assets, net144,265 172,328 
Total assets (a)
$2,149,544
 $2,234,803
Total assets (a)
$2,314,771 $2,358,918 
Liabilities and Equity   Liabilities and Equity
Non-recourse secured debt, net$1,183,382
 $1,201,913
Non-recourse secured debt, net$1,330,282 $1,310,378 
Accounts payable, accrued expenses and other liabilities141,899
 147,098
Accounts payable, accrued expenses and other liabilities140,400 155,259 
Due to affiliates9,486
 11,376
Due to affiliates8,421 31,283 
Distributions payable22,844
 22,745
Distributions payable9,470 9,447 
Total liabilities (a)
1,357,611
 1,383,132
Total liabilities (a)
1,488,573 1,506,367 
Commitments and contingencies (Note 10)

 
Commitments and contingencies (Note 10)
00
   
Preferred stock, $0.001 par value; 50,000,000 shares authorized; none issued—
 —
Class A common stock, $0.001 par value; 320,000,000 shares authorized; 117,627,430 and 117,179,578 shares, respectively, issued and outstanding117
 117
Class C common stock, $0.001 par value; 80,000,000 shares authorized; 32,263,611 and 32,238,513 shares, respectively, issued and outstanding32
 32
Preferred stock, $0.001 par value; 50,000,000 shares authorized; NaN issuedPreferred stock, $0.001 par value; 50,000,000 shares authorized; NaN issued0 0 
Class A common stock, $0.001 par value; 320,000,000 shares authorized; 119,506,430 and 119,059,188 shares, respectively, issued and outstandingClass A common stock, $0.001 par value; 320,000,000 shares authorized; 119,506,430 and 119,059,188 shares, respectively, issued and outstanding119 119 
Class C common stock, $0.001 par value; 80,000,000 shares authorized; 32,015,750 and 32,096,796 shares, respectively, issued and outstandingClass C common stock, $0.001 par value; 80,000,000 shares authorized; 32,015,750 and 32,096,796 shares, respectively, issued and outstanding32 32 
Additional paid-in capital1,323,827
 1,319,584
Additional paid-in capital1,334,370 1,331,278 
Distributions and accumulated losses(508,253) (470,326)Distributions and accumulated losses(523,818)(514,859)
Accumulated other comprehensive loss(79,912) (56,535)Accumulated other comprehensive loss(37,399)(19,930)
Total stockholders’ equity735,811
 792,872
Total stockholders’ equity773,304 796,640 
Noncontrolling interests56,122
 58,799
Noncontrolling interests52,894 55,911 
Total equity791,933
 851,671
Total equity826,198 852,551 
Total liabilities and equity$2,149,544
 $2,234,803
Total liabilities and equity$2,314,771 $2,358,918 
__________
(a)
See Note 2 for details related to variable interest entities (“VIEs”).

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

See Notes to Condensed Consolidated Financial Statements.


CPA:18 – Global 3/31/20202021 10-Q– 32


CORPORATE PROPERTY ASSOCIATES 18 – GLOBAL INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share and per share amounts)
Three Months Ended March 31,
20212020
Revenues
Lease revenues — net-leased$28,723 $22,361 
Lease revenues — operating real estate19,347 17,943 
Other operating and interest income299 2,576 
48,369 42,880 
Operating Expenses
Depreciation and amortization16,996 14,530 
Operating real estate expenses7,147 6,724 
Property expenses, excluding reimbursable tenant costs4,695 5,084 
Reimbursable tenant costs3,543 3,128 
General and administrative1,895 1,897 
Allowance for credit losses0 4,865 
34,276 36,228 
Other Income and Expenses
Interest expense(11,747)(10,489)
Other gains and (losses)(969)(2,072)
Equity in losses of equity method investment in real estate0 (54)
(12,716)(12,615)
Income (loss) before income taxes1,377 (5,963)
Benefit from income taxes1,101 394 
Net Income (Loss)2,478 (5,569)
Net income attributable to noncontrolling interests (inclusive of Available Cash Distributions to a related party of $1,539 and $1,916, respectively)(1,967)(2,611)
Net Income (Loss) Attributable to CPA:18 – Global$511 $(8,180)
Class A Common Stock
Net income (loss) attributable to CPA:18 – Global$403 $(6,398)
Basic and diluted weighted-average shares outstanding119,516,815 117,968,262 
Basic and diluted earnings (loss) per share$0 $(0.05)
Class C Common Stock
Net income (loss) attributable to CPA:18 – Global$108 $(1,782)
Basic and diluted weighted-average shares outstanding32,187,435 32,445,640 
Basic and diluted earnings (loss) per share$0 $(0.05)
 Three Months Ended March 31,
 2020
2019
Revenues   
Lease revenues — net-leased$22,361
 $30,914
Lease revenues — operating real estate17,943
 17,265
Other operating and interest income2,576
 2,115
 42,880

50,294
Operating Expenses   
Depreciation and amortization14,530
 15,372
Operating real estate expenses6,724
 6,466
Property expenses, excluding reimbursable tenant costs5,084
 4,651
Allowance for credit losses4,865
 —
Reimbursable tenant costs3,128
 4,024
General and administrative1,897
 1,759
 36,228
 32,272
Other Income and Expenses   
Interest expense(10,489) (12,357)
Other gains and (losses)(2,072) 172
Equity in losses of equity method investment in real estate(54) (648)
Gain on sale of real estate, net—
 15,408
 (12,615) 2,575
(Loss) income before income taxes(5,963) 20,597
Benefit from (provision for) income taxes394
 (924)
Net (Loss) Income(5,569) 19,673
Net income attributable to noncontrolling interests (inclusive of Available Cash Distributions to a related party of $1,916 and $1,848, respectively)(2,611) (4,846)
Net (Loss) Income Attributable to CPA:18 – Global$(8,180)
$14,827
Class A Common Stock   
Net (loss) income attributable to CPA:18 – Global$(6,398) $11,654
Basic and diluted weighted-average shares outstanding117,968,262
 115,497,094
Basic and diluted (loss) earnings per share$(0.05) $0.10
Class C Common Stock   
Net (loss) income attributable to CPA:18 – Global$(1,782) $3,173
Basic and diluted weighted-average shares outstanding32,445,640
 31,879,027
Basic and diluted (loss) earnings per share$(0.05) $0.10


See Notes to Condensed Consolidated Financial Statements.


CPA:18 – Global 3/31/20202021 10-Q– 43


CORPORATE PROPERTY ASSOCIATES 18 – GLOBAL INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOMELOSS (UNAUDITED)
(in thousands)
Three Months Ended March 31,
Three Months Ended March 31,20212020
2020 2019
Net (Loss) Income$(5,569) $19,673
Net Income (Loss)Net Income (Loss)$2,478 $(5,569)
Other Comprehensive Loss   Other Comprehensive Loss
Foreign currency translation adjustments(24,082) (4,242)Foreign currency translation adjustments(20,158)(24,082)
Unrealized loss on derivative instruments(1,823) (238)
Unrealized gain (loss) on derivative instrumentsUnrealized gain (loss) on derivative instruments1,377 (1,823)
(25,905) (4,480) (18,781)(25,905)
Comprehensive (Loss) Income(31,474) 15,193
Comprehensive LossComprehensive Loss(16,303)(31,474)
   
Amounts Attributable to Noncontrolling Interests   Amounts Attributable to Noncontrolling Interests
Net income(2,611) (4,846)Net income(1,967)(2,611)
Foreign currency translation adjustments2,525
 158
Foreign currency translation adjustments1,314 2,525 
Unrealized loss on derivative instruments3
 —
Unrealized (gain) loss on derivative instrumentsUnrealized (gain) loss on derivative instruments(2)3 
Comprehensive income attributable to noncontrolling interests(83) (4,688)Comprehensive income attributable to noncontrolling interests(655)(83)
Comprehensive (Loss) Income Attributable to CPA:18 – Global$(31,557) $10,505
Comprehensive Loss Attributable to CPA:18 – GlobalComprehensive Loss Attributable to CPA:18 – Global$(16,958)$(31,557)
 
See Notes to Condensed Consolidated Financial Statements.




CPA:18 – Global 3/31/20202021 10-Q– 54


CORPORATE PROPERTY ASSOCIATES 18 – GLOBAL INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)
(in thousands, except share and per share amounts) share amounts)
CPA:18 – Global Stockholders
Additional Paid-In CapitalDistributions
and
Accumulated
Losses		Accumulated
Other Comprehensive Loss		Total CPA:18 – Global StockholdersNoncontrolling Interests
Common Stock
Class AClass C
SharesAmountSharesAmountTotal
Balance at January 1, 2021119,059,188 $119 32,096,796 $32 $1,331,278 $(514,859)$(19,930)$796,640 $55,911 $852,551 
Shares issued384,998 — 132,641 — 4,425 4,425 4,425 
Shares issued to affiliate361,448 — 3,092 3,092 3,092 
Distributions to noncontrolling interests— (3,672)(3,672)
Distributions declared ($0.0625 per share to Class A and Class C)(9,470)(9,470)(9,470)
Net income511 511 1,967 2,478 
Other comprehensive loss:
Foreign currency translation adjustments(18,844)(18,844)(1,314)(20,158)
Unrealized gain on derivative instruments1,375 1,375 2 1,377 
Repurchase of shares(299,204)— (213,687)— (4,425)(4,425)(4,425)
Balance at March 31, 2021119,506,430 $119 32,015,750 $32 $1,334,370 $(523,818)$(37,399)$773,304 $52,894 $826,198 
Balance at January 1, 2020117,179,578 $117 32,238,513 $32 $1,319,584 $(470,326)$(56,535)$792,872 $58,799 $851,671 
Cumulative-effect adjustment for the adoption of ASU 2016-13, Financial Instruments — Credit Losses
(6,903)(6,903)(6,903)
Shares issued966,298 1 290,887 — 10,938 10,939 10,939 
Shares issued to affiliate169,045 — 1,481 1,481 1,481 
Contributions from noncontrolling interests— 595 595 
Distributions to noncontrolling interests— (3,355)(3,355)
Distributions declared ($0.1563 and $0.1382 per share to Class A and Class C, respectively)(22,844)(22,844)(22,844)
Net (loss) income(8,180)(8,180)2,611 (5,569)
Other comprehensive loss:
Foreign currency translation adjustments(21,557)(21,557)(2,525)(24,082)
Unrealized loss on derivative instruments(1,820)(1,820)(3)(1,823)
Repurchase of shares(687,491)(1)(265,789)— (8,176)(8,177)(8,177)
Balance at March 31, 2020117,627,430 $117 32,263,611 $32 $1,323,827 $(508,253)$(79,912)$735,811 $56,122 $791,933 
 CPA:18 – Global Stockholders    
         Additional Paid-In Capital Distributions
and
Accumulated
Losses		 Accumulated
Other Comprehensive Loss		 Total CPA:18 – Global Stockholders Noncontrolling Interests  
 Common Stock       
 Class A Class C       
 Shares Amount Shares Amount      Total
Balance at January 1, 2020117,179,578
 $117
 32,238,513
 $32
 $1,319,584
 $(470,326) $(56,535) $792,872
 $58,799
 $851,671
Cumulative-effect adjustment for the adoption of ASU 2016-13, Financial Instruments — Credit Losses (Note 2)
          (6,903)   (6,903)   (6,903)
Shares issued966,298
 1
 290,887
 —
 10,938
     10,939
 
 10,939
Shares issued to affiliate169,045
 —
     1,481
     1,481
 
 1,481
Contributions from noncontrolling interests              —
 595
 595
Distributions to noncontrolling interests              —
 (3,355) (3,355)
Distributions declared ($0.1563 and $0.1382 per share to Class A and Class C, respectively)          (22,844)   (22,844)   (22,844)
Net (loss) income          (8,180)   (8,180) 2,611
 (5,569)
Other comprehensive loss:              
   
Foreign currency translation adjustments            (21,557) (21,557) (2,525) (24,082)
Unrealized loss on derivative instruments            (1,820) (1,820) (3) (1,823)
Repurchase of shares(687,491) (1) (265,789) —
 (8,176)     (8,177)   (8,177)
Balance at March 31, 2020117,627,430
 $117
 32,263,611
 $32
 $1,323,827
 $(508,253) $(79,912) $735,811
 $56,122
 $791,933
                    
Balance at January 1, 2019114,589,333
 $114
 31,641,265
 $32
 $1,290,888
 $(411,464) $(50,593) $828,977
 $66,993
 $895,970
Cumulative-effect adjustment for the adoption of ASU 2016-02, Leases (Topic 842)          (1,108)   (1,108)   (1,108)
Shares issued965,197
 1
 297,063
 —
 11,018
     11,019
   11,019
Shares issued to affiliate220,238
 —
     1,922
     1,922
   1,922
Contributions from noncontrolling interests              —
 2,520
 2,520
Distributions to noncontrolling interests              —
 (8,943) (8,943)
Distributions declared ($0.1563 and $0.1373 per share to Class A and Class C, respectively)          (22,416)   (22,416)   (22,416)
Net income          14,827
   14,827
 4,846
 19,673
Other comprehensive loss:              
   
Foreign currency translation adjustments            (4,084) (4,084) (158) (4,242)
Unrealized loss on derivative instruments            (238) (238)   (238)
Repurchase of shares(330,661) —
 (98,187) —
 (3,605)     (3,605)   (3,605)
Balance at March 31, 2019115,444,107
 $115
 31,840,141
 $32
 $1,300,223
 $(420,161) $(54,915) $825,294
 $65,258
 $890,552


See Notes to Condensed Consolidated Financial Statements.


CPA:18 – Global 3/31/20202021 10-Q– 65


CORPORATE PROPERTY ASSOCIATES 18 – GLOBAL INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Three Months Ended March 31,
20212020
Cash Flows — Operating Activities
Net Cash Provided by Operating Activities$16,652 $22,808 
Cash Flows — Investing Activities
Funding for development projects(46,225)(38,086)
Payment of deferred acquisition fees to an affiliate(1,658)(1,488)
Other investing activities, net(1,538)0 
Value added taxes paid in connection with construction funding(947)(3,641)
Capital expenditures on real estate(814)(3,057)
Value added taxes refunded in connection with construction funding747 325 
Return of capital from equity investment0 1,134 
Capital contributions to equity investment0 (345)
Net Cash Used in Investing Activities(50,435)(45,158)
Cash Flows — Financing Activities
Proceeds from mortgage financing40,214 25,126 
Repayment of notes payable to affiliate(21,050)0 
Distributions paid(9,447)(22,745)
Proceeds from issuance of shares4,427 10,426 
Repurchase of shares(4,425)(8,177)
Distributions to noncontrolling interests(3,672)(3,355)
Scheduled payments and prepayments of mortgage principal(3,194)(7,529)
Other financing activities, net(1,322)(99)
Contributions from noncontrolling interests0 595 
Net Cash Provided by (Used in) Financing Activities1,531 (5,758)
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(849)(3,388)
Net decrease in cash and cash equivalents and restricted cash(33,101)(31,496)
Cash and cash equivalents and restricted cash, beginning of period119,713 163,398 
Cash and cash equivalents and restricted cash, end of period$86,612 $131,902 
 Three Months Ended March 31,
 2020 2019
Cash Flows — Operating Activities
  
Net Cash Provided by Operating Activities$22,808
 $21,859
Cash Flows — Investing Activities   
Funding for development projects(38,086) (32,408)
Value added taxes paid in connection with construction funding(3,641) (2,926)
Capital expenditures on real estate(3,057) (750)
Payment of deferred acquisition fees to an affiliate(1,488) (2,252)
Return of capital from equity investments1,134
 —
Capital contributions to equity investment(345) —
Value added taxes refunded in connection with construction funding325
 1,006
Proceeds from sale of real estate—
 16,404
Net Cash Used in Investing Activities(45,158) (20,926)
Cash Flows — Financing Activities   
Proceeds from mortgage financing25,126
 7,582
Distributions paid(22,745) (22,264)
Proceeds from issuance of shares10,426
 10,487
Repurchase of shares(8,177) (3,605)
Scheduled payments and prepayments of mortgage principal(7,529) (16,423)
Distributions to noncontrolling interests(3,355) (7,112)
Contributions from noncontrolling interests595
 2,520
Other financing activities, net(99) (716)
Net Cash Used in Financing Activities(5,758) (29,531)
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(3,388) (441)
Net decrease in cash and cash equivalents and restricted cash(31,496) (29,039)
Cash and cash equivalents and restricted cash, beginning of period163,398
 190,838
Cash and cash equivalents and restricted cash, end of period$131,902
 $161,799


See Notes to Condensed Consolidated Financial Statements.


CPA:18 – Global 3/31/20202021 10-Q– 76


CORPORATE PROPERTY ASSOCIATES 18 – GLOBAL INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Note 1. Organization


Organization


Corporate Property Associates 18 – Global Incorporated (“CPA:18 – Global”), is a publicly owned, non-traded REIT, that invests primarily in a diversified portfolio of income-producing commercial real estate properties net leased to companies, both domestically and internationally. In addition, our portfolio includes self-storage and student housing investments. We were formed in 2012 and are managed by W. P. Carey Inc. (“WPC”) through one of its subsidiaries (collectively our “Advisor”). As a REIT, we are not subject to U.S. 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, among other factors. We earn revenue primarily by leasing the properties we own to single corporate tenants, predominantly on a triple-net lease basis, which requires the tenant to pay substantially all of the costs associated with operating and maintaining the property. We derive self-storage revenue from rents received from customers who rent storage space primarily under month-to-month leases for personal or business use. We earn student housing revenue primarily from leases of one year or less with individual students. Revenue is subject to fluctuation due to the timing of new lease transactions, lease terminations, lease expirations, contractual rent adjustments, tenant defaults, sales of properties, and changes in foreign currency exchange rates.


Substantially all of our assets and liabilities are held by CPA:18 Limited Partnership (the “Operating Partnership”), and as of March 31, 20202021 we owned 99.97% of general and limited partnership interests in the Operating Partnership. The remaining interest in the Operating Partnership is held by a subsidiary of WPC.


As of March 31, 2020,2021, our net lease portfolio was comprised of full or partial ownership interests in 4750 properties, substantially all of which were fully-occupied and triple-net leased to 65 tenants totaling 9.610.1 million square feet. The remainder of our portfolio was comprised of our full or partial ownership interests in 6865 self-storage properties, 127 student housing development projects (6 of which will become subject to net lease agreements upon their completion) and two3 student housing operating properties, totaling approximately 5.55.3 million square feet.


We operate in three3 reportable business segments: Net Lease, Self Storage, and Other Operating Properties. Our Net Lease segment includes our investments in net-leased properties, whether they are accounted for as operating leases or direct financing leases. Our Self Storage segment is comprised of our investments in self-storage properties. Our Other Operating Properties segment is primarily comprised of our investments in student housing operating properties and multi-family residential properties (our last multi-family residential property was sold in January 2019).properties. In addition, we have an All Other category that includesis comprised of our notes receivable investments, one of which was repaid during the second quarter of 2019.investment. Our reportable business segments and All Other category are the same as our reporting units (Note 12).


We raised aggregate gross proceeds in our initial public offering of approximately $1.2 billion through April 2, 2015, which is the date we closed our offering. We have fully invested the proceeds from our initial public offering. In addition, from inception through March 31, 2020, $192.32021, $210.7 million and $55.1$60.4 million of distributions to our shareholders were reinvested in our ClassA and Class C common stock, respectively, through our Distribution Reinvestment Plan (“DRIP”).




CPA:18 – Global 3/31/2020 10-Q– 8

Notes to Condensed Consolidated Financial Statements (Unaudited)


Note 2. Basis of Presentation


Basis of Presentation


Our interim condensed 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 fair statement of our condensed consolidated financial position, results of operations, and cash flows in accordance with generally accepted accounting principles in the United States (“GAAP”). The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.
 
CPA:18 – Global 3/31/2021 10-Q– 7

Notes to Condensed Consolidated Financial Statements (Unaudited)
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 statement of financial position, results of operations, and cash flows. Our interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for the year ended December 31, 2019,2020, which are included in the 20192020 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 condensed consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.


Basis of Consolidation


Our condensed 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 20192020 Annual Report.


As of both March 31, 20202021 and December 31, 2019,2020, we considered 1914 and 15 entities to be VIEs, 18respectively, all of which we consolidated as we are considered the primary beneficiary. The following table presents a summary of selected financial data of the consolidated VIEs included in the condensed consolidated balance sheets (in thousands):
March 31, 2021December 31, 2020
Real estate — Land, buildings and improvements$369,246 $427,129 
Operating real estate — Land, buildings and improvements78,927 78,927 
Real estate under construction213,971 179,162 
In-place lease intangible assets103,922 106,703 
Accumulated depreciation and amortization(100,146)(98,433)
Total assets695,362 729,611 
Non-recourse secured debt, net$339,203 $331,113 
Total liabilities391,887 390,882 
 March 31, 2020 December 31, 2019
Real estate — Land, buildings and improvements$343,342
 $359,886
Real estate under construction267,044
 233,220
In-place lease intangible assets98,588
 101,198
Accumulated depreciation and amortization(79,634) (78,598)
Total assets661,082
 642,648
    
Non-recourse secured debt, net$287,069
 $276,124
Total liabilities342,183
 330,549

As of both March 31, 2020 and December 31, 2019, we hadone unconsolidated VIE, which we account for under the equity method of accounting. We do not consolidate this entity because we are not the primary beneficiary and the nature of our involvement in the activities of the entity allows us to exercise significant influence on, but does not give us power over, decisions that significantly affect the economic performance of the entity. As of March 31, 2020 and December 31, 2019, the net carrying amount of this equity investment was $13.2 million and $14.9 million, respectively, and our maximum exposure to loss in this entity is limited to our investment. 



CPA:18 – Global 3/31/2020 10-Q– 9

Notes to Condensed Consolidated Financial Statements (Unaudited)



Foreign Currencies


We are subject to fluctuations in exchange rates between foreign currencies and the U.S. dollar (primarily the euro and the Norwegian krone and, to a lesser extent, the British pound sterling). The following table reflects the end-of-period rate of the U.S. dollar in relation to foreign currencies:
March 31, 2021December 31, 2020Percent Change
British Pound Sterling$1.3760 $1.3649 0.8 %
Euro1.1725 1.2271 (4.4)%
Norwegian Krone0.1173 0.1172 0.1 %

CPA:18 – Global 3/31/2021 10-Q– 8
 March 31, 2020 December 31, 2019 Percent Change
British Pound Sterling$1.2360
 $1.3204
 (6.4)%
Euro1.0956
 1.1234
 (2.5)%
Norwegian Krone0.0952
 0.1139
 (16.4)%


Reclassifications

Certain prior period amounts have been reclassifiedNotes to conform to the current period presentation.Condensed Consolidated Financial Statements (Unaudited)

We currently present Reimbursable tenant costs on its own line item in the condensed consolidated statements of operations. Previously, this line item was included within Property expenses (which is now presented as Property expenses, excluding reimbursable tenant costs).

Revenue Recognition


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, 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. During the three months ended March 31, 2021, we did not recognize $3.5 million of uncollected rent within lease revenues due to the adverse impact of the COVID-19 pandemic. During the three months ended March 31, 2020, we wrote off $7.0 million in straight-line rent receivables based on our current assessment of less than a 75% likelihood of collecting all remaining contractual rent on certain net lease hotels.


Restricted Cash


The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the condensed consolidated statements of cash flows (in thousands):
March 31, 2020 December 31, 2019March 31, 2021December 31, 2020
Cash and cash equivalents$104,939
 $144,148
Cash and cash equivalents$59,788 $62,346 
Restricted cash (a)
26,963
 19,250
Restricted cash (a)
26,824 57,367 
Total cash and cash equivalents and restricted cash$131,902
 $163,398
Total cash and cash equivalents and restricted cash$86,612 $119,713 
__________
(a)Restricted cash is included within Accounts receivable and other assets, net on our condensed consolidated balance sheets.

(a)Restricted cash is included within Accounts receivable and other assets, net on our condensed consolidated balance sheets. The amount as of December 31, 2020 included $30.4 million of net proceeds held in escrow relating to the disposition of our equity method investment in real estate (Note 4). These funds were released from escrow in February 2021.

Deferred Income Taxes


Our deferred tax liabilities were $42.9$47.7 million and $48.6$50.2 million at March 31, 20202021 and December 31, 2019,2020, respectively, and are included in Accounts payable, accrued expenses and other liabilities in the condensed consolidated financial statements. Our deferred tax assets, net of valuation allowances, were $1.5was $2.3 million and $1.4$2.4 million at March 31, 20202021 and December 31, 2019,2020, respectively, and are included in Accounts receivable and other assets, net in the condensed consolidated financial statements.


Recent Accounting Pronouncements

Pronouncements Adopted through March 31, 2020

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments — Credit Losses. ASU 2016-13 replaces the “incurred loss” model with an “expected loss” model, resulting in the earlier recognition of credit losses even if the risk of loss is remote. This standard applies to financial assets measured at amortized cost and certain other instruments, including loans receivable and net investments in direct financing leases. This standard does not apply to receivables arising from operating leases, which are within the scope of Topic 842.


CPA:18 – Global 3/31/2020 10-Q– 10

Notes to Condensed Consolidated Financial Statements (Unaudited)



We adopted ASU 2016-13 on January 1, 2020 using the modified retrospective method, which requires applying changes in reserves through a cumulative-effect adjustment to retained earnings. Upon adoption, we recorded a net decrease in retained earnings of $6.9 million, which is reflected within our consolidated statement of equity.

The allowance for credit losses, which is recorded as a reduction to Net investments in direct financing leases on our condensed consolidated balance sheets, was measured using a probability of default method based on the lessees’ respective credit ratings and the expected value of the underlying collateral upon its repossession. Included in our model are factors that incorporate forward-looking information.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 contains practical expedients for reference rate reform-related activities that impact debt, leases, derivatives, and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future London Interbank Offered Rate indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We will continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.



CPA:18 – Global 3/31/2020 10-Q– 11

Notes to Condensed Consolidated Financial Statements (Unaudited)


Note 3. Agreements and Transactions with Related Parties


Transactions with Our Advisor


We have an advisory agreement with our Advisor whereby our Advisor performs certain services for us under a fee arrangement, as discussed in detail in the 2020 Annual Report.

We have an unsecured revolving line of credit with WPC with a borrowing capacity of $50.0 million and a scheduled maturity date of March 31, 2022. The line of credit bears an interest rate equal to London Interbank Offered Rate (“LIBOR”) plus 1.05%, which is the rate that WPC can borrow funds under its senior credit facility (including an annual facility fee of 0.20%). In February 2021, we repaid in full the $21.1 million outstanding balance on the line of credit, including accrued interest, which was the identification, evaluation, negotiation, purchase, day-to-day management, and dispositionamount outstanding at December 31, 2020. As of real estate and related assets and mortgage loans. We also reimburse our Advisor for general and administrative duties performedMarch 31, 2021, we have 0 amounts drawn on our behalf. The advisory agreement hasthe line of credit.

In May 2021, we borrowed a termnet amount of one year and may be renewed for successive one-year periods. We may terminate$15.0 million on the advisory agreement upon 60 days written notice without cause or penalty.line of credit with WPC (Note 13).


Jointly Owned Investments and Other Transactions with our Affiliates


As of both March 31, 2021 and December 31, 2020, we owned interests ranging from 50% to 100%99% in 18 jointly owned investments, with the remaining interests held by affiliatesWPC (4 investments) or by third parties. Since no other parties hold any rights that supersede our control, we consolidate all of these joint ventures,ventures.

CPA:18 – Global 3/31/2021 10-Q– 9

Notes to Condensed Consolidated Financial Statements (Unaudited)
Other Transactions with the exception of our sole equity investment (Note 4), which we account for under the equity method of accounting.Affiliates


The following tables present a summary of fees we paid, expenses we reimbursed, and distributions we made to our Advisor and other affiliates in accordance with the terms of the relevant agreements, as discussed in the 2020 Annual Report (in thousands):
Three Months Ended March 31,
20212020
Amounts Included in the Condensed Consolidated Statements of Operations
Asset management fees$3,138 $3,002 
Available Cash Distributions1,539 1,916 
Personnel and overhead reimbursements630 725 
Interest expense on deferred acquisition fees and external joint-venture loans257 123 
$5,564 $5,766 
Acquisition Fees Capitalized
Capitalized personnel and overhead reimbursements$20 $70 
Current acquisition fees0 110 
Deferred acquisition fees0 88 
$20 $268 
 Three Months Ended March 31,
 2020 2019
Amounts Included in the Condensed Consolidated Statements of Operations   
Asset management fees$3,002
 $2,868
Available Cash Distributions1,916
 1,848
Personnel and overhead reimbursements725
 798
Interest expense on deferred acquisition fees and external joint venture loans123
 127
Disposition fees—
 1,117
 $5,766
 $6,758
    
Acquisition Fees Capitalized   
    
Current acquisition fees$110
 $695
Deferred acquisition fees88
 555
Capitalized personnel and overhead reimbursements70
 89
 $268
 $1,339


The following table presents a summary of amounts included in Due to affiliates in the condensed consolidated financial statements (in thousands):
 March 31, 2020 December 31, 2019
Due to Affiliates   
External joint venture loans, accounts payable, and other (a)
$5,360
 $5,951
Deferred acquisition fees, including accrued interest3,007
 4,456
Asset management fees payable1,001
 961
Current acquisition fees118
 8
 $9,486
 $11,376
March 31, 2021December 31, 2020
Due to Affiliates
External joint-venture loans, accounts payable, and other (a)
$7,087 $6,940 
Asset management fees payable1,129 1,328 
Acquisition fees, including accrued interest205 1,871 
Loan from WPC, including accrued interest0 21,144 
$8,421 $31,283 
___________
(a)Includes loans from our joint venture partners to the jointly owned investments that we consolidate. As of March 31, 2020 and December 31, 2019, loans due to our joint venture partners, including accrued interest, were $4.5 million and $4.6 million, respectively.

(a)Includes loans from our joint-venture partners to the jointly owned investments that we consolidate. As of March 31, 2021 and December 31, 2020, loans due to our joint-venture partners, including accrued interest, were $5.4 million and $5.3 million, respectively.


CPA:18 – Global 3/31/2020 10-Q– 12

Notes to Condensed Consolidated Financial Statements (Unaudited)



Asset Management Fees


Pursuant to the advisory agreement, our Advisor is entitled to an annual asset management fee ranging from 0.5% to 1.5%, depending on the type of investment and based on the average market value or average equity value, as applicable, of our investments. Asset management fees are payable in cash and/or shares of our Class A common stock. For any portion of asset management fees our Advisor receives in shares, the number of shares issued is determined by dividing the dollar amount of fees by our most recently published estimated net asset value per share (“NAV”) per Class A share, which was $8.94$8.91 as of December 31, 2019. Effective2020. From January 1, 2019,2020 through March 31, 2020, at our option our Advisor elected to receivereceived 50% of the asset management fees in shares of our Class A common stock and 50% in cash. Effective April 1, 2020, at our option our Advisor elected to receivereceives all of theits asset management fees in shares of our Class A common stock. As of March 31, 2020,2021, our Advisor owned 5,922,9287,267,360 shares or 4.0%, of our outstanding Class A common stock.stock, or 4.8% of our total Class A and Class C shares outstanding. Asset management fees are included in Property expenses, excluding reimbursable tenant costs in the condensed consolidated financial statements.


CPA:18 – Global 3/31/2021 10-Q– 10

Notes to Condensed Consolidated Financial Statements (Unaudited)
Acquisition and Disposition Fees


Our Advisor receives acquisition fees, a portion of which is payable upon acquisition, while the remaining portion is subordinated to a preferred return of a non-compounded cumulative distribution of 5.0% per annum (based initially on our invested capital). The initial acquisition fee and subordinated acquisition fee are 2.5% and 2.0%, respectively, of the aggregate total cost of our portion of each investment for all investments, other than those in readily marketable real estate securities purchased in the secondary market, for which our Advisor will not receive any acquisition fees. Deferred acquisition fees are scheduled to be paid in three equal annual installments following the quarter in which a property was purchased and are subject to the preferred return described above. The preferred return was achieved as of the periods ended March 31, 20202021 and December 31, 2019. The preferred return will continue to be assessed on a cumulative basis for the remainder of the fiscal year.2020. Unpaid installments of deferred acquisition fees are included in Due to affiliates in the condensed consolidated financial statements and bear interest at an annual rate of 2.0%. The cumulative total acquisition costs, including acquisition fees paid to the advisor, may not exceed 6.0% of the aggregate contract purchase price of all investments, which is measured at the end of each year.


In addition, prior to January 1, 2020, our Advisor was entitled to receive a disposition fee equal to the lesser of (i) 50.0% of the competitive real estate commission (as defined in the advisory agreement) or (ii) 3.0% of the contract sales price of the investment being sold. These fees were paid at the discretion of our board of directors. Effective January 1, 2020, the Advisor has waived its right to disposition fees with respect to sales and dispositions of single investments and portfolios of investments. The Advisor may still be entitled to disposition fees in connection with a transaction or series of transactions related to a merger, liquidation, or other event, at the discretion of our board of directors.


Personnel and Overhead Reimbursements


Under the terms of the advisory agreement, our Advisor allocates a portion of its personnel and overhead expenses to us and the other entities that are managed by WPC and its affiliates, which as of March 31, 2020 included Carey Watermark Investors Incorporated, Carey Watermark Investors 2 Incorporated, and Carey European Student Housing Fund I L.P. (collectively with us, the “Managed Programs”).

We reimburse our Advisor for the allocated costs of personnel and overhead in managing our day-to-day operations, including accounting services, stockholder services, corporate management, and property management and operations. In addition, we reimburse our Advisor for various expenses it incurs in the course of providing services to us. We reimburse certain third-party expenses paid by our Advisor on our behalf, including property-specific costs, professional fees, office expenses, and business development expenses. We do not reimburse our Advisor for salaries and benefits paid to our named executive officers or for the cost of personnel that provide services for transactions for where our Advisor receives a fee (such as for acquisitions and dispositions). Under the advisory agreement, the amount of applicable personnel costs allocated to us is capped at 1.0% of our pro rata total revenues for each of 20202021 and 2019.2020. Our Advisor allocates overhead expenses to us based upon the percentage that ourof the Advisor’s full-time employee equivalents comprised ofthat are attributable to us, to be reviewed annually by us and the Advisor’s total full-time employee equivalents. Costs related to our Advisor’s legal transactions group are based on a schedule of expenses relating to services performed for different types of transactions, such as financing, lease amendments, and dispositions, among other categories, and includes 0.25% of the total investment cost of an acquisition.Advisor. In general, personnel and overhead reimbursements are included in General and administrative expenses in the condensed consolidated financial statements. However, we capitalize certain costs related to our Advisor’s legal transactions group if the costs relate to an asset acquisition or other transactions.



CPA:18 – Global 3/31/2020 10-Q– 13

Notes to Condensed Consolidated Financial Statements (Unaudited)


Excess Operating Expenses
Our Advisor is obligated to reimburse us for the amount by which our operating expenses exceeds the “2%/25% guidelines” (the greater of 2% of average invested assets or 25% of net income) as defined in the advisory agreement for any 12-month period, subject to certain conditions. For the most recent trailing four quarters, our operating expenses were below this threshold.


Available Cash Distributions


WPC’s interest in the Operating Partnership entitles it to receive distributions of up to 10.0% of the available cash generated by the Operating Partnership (“the Available(the “Available Cash Distribution”), which is defined as cash generated from operations, excluding capital proceeds, as reduced by operating expenses and debt service, excluding prepayments and balloon payments. Available Cash Distributions are included in Net income attributable to noncontrolling interests in the condensed consolidated financial statements.


Loan with Affiliate

In August 2020, we entered into a facility agreement with one of our joint-venture student housing partners, Crown Students Limited Liability Partnership (“Crown”), to provide a loan of $1.5 million (based on the exchange rate of the British pound sterling on the date of the loan). Interest accrues at a fixed annual rate of 8.0% and is payable on the loan’s scheduled maturity date of December 31, 2021. The loan is collateralized by Crown’s equity interests in 3 jointly owned student housing investments located in the United Kingdom. The loan is included in Accounts receivable and other assets, net in the condensed consolidated balance sheets. During the three months ended March 31, 2021, we recognized less than $0.1 million in interest income from this loan, which is included in Other gains and (losses) in our condensed consolidated statements of operations.

Note 4. Real Estate, Operating Real Estate, and Real Estate Under Construction and Equity Investment in Real Estate


Real Estate — Land, Buildings and Improvements


Real estate, which consists of land and buildings leased to others, which are subject to operating leases, is summarized as follows (in thousands):
March 31, 2021December 31, 2020
Land$232,064 $235,243 
Buildings and improvements1,175,156 1,205,111 
Less: Accumulated depreciation(177,803)(172,319)
$1,229,417 $1,268,035 
 March 31, 2020 December 31, 2019
Land$185,556
 $196,693
Buildings and improvements972,941
 1,003,952
Less: Accumulated depreciation(138,269) (135,922)
 $1,020,228
 $1,064,723


The carrying value of our Real Estate — Land, buildings and improvements decreased by $41.9$30.5 million from December 31, 20192020 to March 31, 2020,2021, reflecting the impact of exchange rate fluctuations during the same period (Note 2).


Depreciation expense, including the effect of foreign currency translation, on our real estate was $7.1$8.9 million and $7.5$7.1 million for the three months ended March 31, 20202021 and 2019,2020, respectively.


CPA:18 – Global 3/31/2021 10-Q– 11

Notes to Condensed Consolidated Financial Statements (Unaudited)
Operating Real Estate — Land, Buildings and Improvements

Operating real estate, which consists of our self-storage and student housing properties (not subject to net lease agreements), is summarized as follows (in thousands):
 March 31, 2021December 31, 2020
Land$89,218 $89,148 
Buildings and improvements508,955 507,850 
Less: Accumulated depreciation(77,956)(73,569)
 $520,217 $523,429 

The carrying value of our Operating real estate — land, buildings and improvements increased by $0.9 million from December 31, 2020 to March 31, 2021, reflecting the impact of exchange rate fluctuations during the same period (Note 2).

Depreciation expense, including the effect of foreign currency translation, on our operating real estate was $4.3 million and $3.8 million for the three months ended March 31, 2021 and 2020, respectively.

Leases


Operating Lease Income


Lease income related to operating leases recognized and included within Lease revenues — net-leased and Lease revenues — operating real estate in the condensed consolidated statements of operations are as follows (in thousands):
Three Months Ended March 31,Three Months Ended March 31,
2020 201920212020
Lease revenues — net-leased   Lease revenues — net-leased
Lease income — fixed (a)
$17,622
 $25,387
Lease income — fixed (a)
$23,972 $17,622 
Lease income — variable (b)
3,785
 4,561
Lease income — variable (b)
4,381 3,785 
Total operating lease income (c)
$21,407
 $29,948
Total operating lease income (c)
$28,353 $21,407 
   
Lease revenues — operating real estate   Lease revenues — operating real estate
Lease income — fixed$17,302
 $16,641
Lease income — fixed$18,808 $17,302 
Lease income — variable (d)
641
 624
Lease income — variable (d)
539 641 
Total operating lease income$17,943
 $17,265
Total operating lease income$19,347 $17,943 
___________

(a)For the three months ended March 31, 2021, we did not recognize $3.5 million of uncollected rent (primarily relating to certain net lease hotels impacted by the COVID-19 pandemic). Amount for the three months ended March 31, 2020 includes a $7.0 million write-off of straight-line rent receivables based on our assessment of less than a 75% likelihood of collecting all remaining contractual rent on certain net lease hotels (Note 2).
(b)Includes (i) rent increases based on changes in the Consumer Price Index (“CPI”) and other comparable indices and (ii) reimbursements for property taxes, insurance, and common area maintenance services.
(c)Excludes interest income from direct financing leases of $0.4 million and $1.0 million for the three months ended March 31, 2021 and 2020, respectively (Note 5). Interest income from direct financing leases is included in Lease revenues — net-leased in the condensed consolidated statements of operations.
(d)Primarily comprised of late fees and administrative fees revenues.


CPA:18 – Global 3/31/20202021 10-Q– 1412


Notes to Condensed Consolidated Financial Statements (Unaudited)


(a)
Amount for the three months ended March 31, 2020 includes a $7.0 million write-off of straight-line rent receivables based on our current assessment of less than 75% likelihood of collecting all remaining contractual rent on certain net lease hotels (Note 2).
(b)Includes (i) rent increases based on changes in the Consumer Price Index (“CPI”) and other comparable indices and (ii) reimbursements for property taxes, insurance, and common area maintenance services.
(c)Excludes $1.0 million of interest income for both the three months ended March 31, 2020 and 2019, from direct financing leases that is included in Lease revenues — net-leased in the condensed consolidated statements of operations.
(d)Primarily comprised of late fees and administrative fees revenues.

Operating Real Estate — Land, Buildings and Improvements
Operating real estate, which consists of our self-storage and student housing properties, is summarized as follows (in thousands):
 March 31, 2020 December 31, 2019
Land$77,704
 $78,240
Buildings and improvements427,622
 434,245
Less: Accumulated depreciation(60,743) (57,237)
 $444,583
 $455,248

The carrying value of our Operating real estate — land, buildings and improvements decreased by $7.2 million from December 31, 2019 to March 31, 2020, reflecting the impact of exchange rate fluctuations during the same period (Note 2).

Depreciation expense, including the effect of foreign currency translation, on our operating real estate was $3.8 million for both the three months ended March 31, 2020 and 2019.

Real Estate Under Construction


The following table provides the activity of our Real estate under construction (in thousands):
 Three Months Ended March 31, 2020
Beginning balance$235,751
Capitalized funds38,569
Foreign currency translation adjustments(5,217)
Placed into service(4,062)
Capitalized interest2,003
Ending balance$267,044
Three Months Ended March 31, 2021
Beginning balance$180,055 
Capitalized funds39,901 
Foreign currency translation adjustments(6,333)
Capitalized interest1,505 
Ending balance$215,128 


Capitalized Funds


During the three months ended March 31, 2020,2021, total capitalized funds primarily related to construction draws for our student housing development projects, and includes $16.7 million of accrued costs, of $2.5 million, which is a non-cash investing activity.


Capitalized Interest


Capitalized interest includes interest incurred during construction as well as amortization of the mortgage discount and deferred financing costs, which totaled $2.0$1.5 million during the three months ended March 31, 2020, which2021, and is a non-cash investing activity.


Ending Balance


As of March 31, 2020,2021, we had 12 open7 ongoing student housing development projects, withand aggregate unfunded commitments of approximately $237.0$126.2 million, excluding capitalized interest, accrued costs, and capitalized acquisition fees for our Advisor.fees.



CPA:18 – Global 3/31/2020 10-Q– 15

Notes to Condensed Consolidated Financial Statements (Unaudited)


Ghana Settlement Update

During the three months ended March 31, 2020, the collectibility of the value added tax (“VAT”) receivable to be refunded by the Ghanaian government was no longer deemed probable. As such, we recorded a $2.8 million loss to write-off the VAT receivable during the three months ended March 31, 2020, which is included within Other gains and (losses) on our condensed consolidated statements of operations.


Equity Investment in Real Estate


We classify distributions received from equity method investments using the cumulative earnings approach. 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.

We have anOn December 23, 2020 we sold our 100% interest in an unconsolidated investment in our Self Storage segment that relatesrelated to a joint venture for the development of three3 self-storage facilities in Canada. This entity was jointly owned with a third party, which iswas also the general partner of the joint venture. Our ownership and economic interest in the joint venture is 100%. We continue to not consolidate this entity because we are not the primary beneficiary due to shared decision making with the general partner and the nature of our involvement in the activities, which allows us to exercise significant influence, but does not give us power over decisions that significantly affect the economic performance of the entity.

As of both March 31, 20202021 and December 31, 2019, our total2020, we no longer have any equity investment balance for these self-storage properties was $13.2 million and $14.9 million, respectively, which is included in Accounts receivable and other assets, net in the condensed consolidated financial statements. As of March 31, 2020 and December 31, 2019, the joint venture had total third-party recourse debt of $29.3 million and $32.2 million, respectively.method investments.


Note 5. 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 notes receivable (which are included in Accounts receivable and other assets, net in the condensed consolidated financial statements) and our Net investments in direct financing leases (net of allowance for credit losses). Operating leases are not included in finance receivables.


Notes Receivable


As of March 31, 2020,2021, our notes receivable consistedwas comprised of a $28.0 million mezzanine tranche of 10-year commercial mortgage-backed securities on the Cipriani banquet halls in New York, New York, with a maturity date of July 2024. The mezzanine tranche is subordinated to a $60.0 million senior loan on the properties. Interest-only payments at a rate of 10% per annum are due through its maturity date. As of both March 31, 20202021 and December 31, 2019,2020, the balance for this note receivable remained $28.0 million. On July 28, 2020, we were notified that the borrower had defaulted on the mortgage loan senior to our mezzanine tranche, and since that date through March 31, 2021 we have received $1.9 million from the borrower, which is recognized as a liability within Accounts payable, accrued expenses and other liabilities in our condensed consolidated balance sheets. We are currently evaluating our rights and options in connection with the senior loan default and therefore have not recognized these amounts within interest income.


Interest income recognized from our notes receivable was $0.7 million and $1.8 million for the three months ended March 31, 2020, and 2019, respectively, and is included in Other operating and interest income in our condensed consolidated statements of operations.




CPA:18 – Global 3/31/20202021 10-Q– 1613


Notes to Condensed Consolidated Financial Statements (Unaudited)


Net Investments in Direct Financing Leases


Net investments in our direct financing lease investments is summarized as follows (in thousands):
March 31, 2021December 31, 2020
Lease payments receivable$13,982 $14,325 
Unguaranteed residual value15,559 15,559 
29,541 29,884 
Less: unearned income(12,137)(12,466)
Less: allowance for credit losses(485)(485)
$16,919 $16,933 
 March 31, 2020 December 31, 2019
Lease payments receivable$54,419
 $55,278
Unguaranteed residual value39,401
 39,401
 93,820
 94,679
Less: unearned income(51,714) (52,625)
Less: allowance for credit losses (a)
(11,768) —
 $30,338
 $42,054
___________
(a)
Upon our adoption of ASU 2016-13 on January 1, 2020, we applied changes in loss reserves through a cumulative-effect adjustment to retained earnings totaling $6.9 million (Note 2). In addition, during the three months ended March 31, 2020, due to changes in expected economic conditions, we recorded an allowance for credit losses of $4.9 million, which was included in Allowance for credit losses in our condensed consolidated statements of operations.


Interest income from direct financing leases was $0.4 million and $1.0 million for both the three months ended March 31, 2021 and 2020, and 2019,respectively, and is included in Lease revenues — net-leased in our condensed consolidated statements of operations.


During the three months ended March 31, 2020, we recorded an allowance for credit losses of $4.9 million due to changes in expected economic conditions for a net investment in a direct financing lease, which was included in Allowance for credit losses in our condensed consolidated statements of operations. This allowance for credit losses was fully reversed during the fourth quarter of 2020 when the tenant emerged from bankruptcy and the investment was reclassified as an operating lease, and is therefore not reflected in the table above. We did 0t record an additional allowance for credit losses during the three months ended March 31, 2021.

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. As of both March 31, 20202021 and December 31, 2019,2020, we had no significant finance receivable balances that were past due, but as noted above,due; however, we establishedhave an allowance for credit losses during the first quarter of 2020.losses. Additionally, there were no material modifications of finance receivables during the three months ended March 31, 2020.2021.


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 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 is as follows (dollars in thousands):
Number of Tenants/Obligors atCarrying Value at
Internal Credit Quality IndicatorMarch 31, 2021December 31, 2020March 31, 2021December 31, 2020
1 – 333$16,919 $16,933 
41128,000 28,000 
5000 0 
0$44,919 $44,933 

  Number of Tenants/Obligors at Carrying Value at
Internal Credit Quality Indicator March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019
1 – 3 4 4 $44,964
 $45,457
4 1 1 13,374
 24,597
5 — — —
 —
  0   $58,338
 $70,054

Note 6. Intangible Assets and Liabilities


In-place lease and above-market rent intangibles are included in In-place lease and other intangible assets in the condensed consolidated financial statements. Below-market rent intangibles are included in Accounts payable, accrued expenses and other liabilities in the condensed consolidated financial statements.


Goodwill is included in our Net Lease segment and included in Accounts receivable and other assets, net in the condensed consolidated financial statements. As a result of foreign currency translation adjustments, goodwill decreased from $26.0$27.3 million as of December 31, 20192020 to $23.2$26.9 million as of March 31, 2020.2021.




CPA:18 – Global 3/31/20202021 10-Q– 1714


Notes to Condensed Consolidated Financial Statements (Unaudited)


Intangible assets and liabilities are summarized as follows (in thousands):
March 31, 2021December 31, 2020
Amortization Period (Years)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Finite-Lived Intangible Assets
In-place lease6 – 23$241,788 $(153,555)$88,233 $244,963 $(151,613)$93,350 
Above-market rent7 – 3010,521 (5,692)4,829 10,773 (5,670)5,103 
252,309 (159,247)93,062 255,736 (157,283)98,453 
Indefinite-Lived Intangible Assets
Goodwill26,869 — 26,869 27,259 — 27,259 
Total intangible assets$279,178 $(159,247)$119,931 $282,995 $(157,283)$125,712 
Finite-Lived Intangible Liabilities
Below-market rent6 – 30$(14,707)$7,972 $(6,735)$(14,776)$7,755 $(7,021)
Total intangible liabilities$(14,707)$7,972 $(6,735)$(14,776)$7,755 $(7,021)
   March 31, 2020 December 31, 2019
 Amortization Period (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Finite-Lived Intangible Assets             
In-place lease6 – 23 $232,546
 $(131,852) $100,694
 $238,771
 $(131,012) $107,759
Above-market rent7 – 30 9,929
 (4,187) 5,742
 10,257
 (4,141) 6,116
   242,475
 (136,039) 106,436
 249,028
 (135,153) 113,875
Indefinite-Lived Intangible Assets             
Goodwill  23,179
 —
 23,179
 26,024
 —
 26,024
Total intangible assets  $265,654
 $(136,039) $129,615
 $275,052
 $(135,153) $139,899
              
Finite-Lived Intangible Liabilities             
Below-market rent6 – 30 $(14,930) $6,875
 $(8,055) $(14,974) $6,627
 $(8,347)
Total intangible liabilities  $(14,930) $6,875
 $(8,055) $(14,974) $6,627
 $(8,347)


Net amortization of intangibles, including the effect of foreign currency translation, was $3.5$3.6 million and $3.9$3.5 million for the three months ended March 31, 20202021 and 2019, respectively.2020. Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Rentalrental income; and amortization of in-place lease intangibles is included in Depreciation and amortization expense.on our condensed consolidated statements of operations.


Note 7. 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, foreign currency forward contracts 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 Accounts receivable and other assets, net and Accounts payable, accrued expenses and other liabilities, respectively, in the condensed consolidated financial statements, are comprised of foreign currency forward contracts, interest rate swaps, interest rate caps, and foreign currency collars (Note 8).


The valuation of our derivative instruments 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.




CPA:18 – Global 3/31/20202021 10-Q– 1815


Notes to Condensed Consolidated Financial Statements (Unaudited)


We did not have any transfers into or out of Level 1, Level 2, and Level 3 measurements during the three months ended March 31, 20202021 and 2019.2020. 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 condensed consolidated financial statements.
 
Our other financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands):
  March 31, 2020 December 31, 2019  March 31, 2021December 31, 2020
Level Carrying Value Fair Value Carrying Value Fair Value LevelCarrying ValueFair ValueCarrying ValueFair Value
Non-recourse secured debt, net (a) (b)
3 $1,183,382
 $1,196,712
 $1,201,913
 $1,239,004
Non-recourse secured debt, net (a) (b)
3$1,330,282 $1,346,871 $1,310,378 $1,329,482 
Notes receivable (c)
3 28,000
 30,300
 28,000
 30,300
Notes receivable (c)
328,000 28,000 28,000 28,000 
___________
(a)
As of March 31, 2020 and December 31, 2019, the carrying value of Non-recourse secured debt, net includes unamortized deferred financing costs of $6.2 million and $5.8 million, respectively, and unamortized premium, net of $1.3 million and $2.1 million, respectively (Note 9).
(b)We determined the estimated fair value of our Non-recourse secured debt, net 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 take into account 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.
(c)We determined the estimated fair value of our Notes receivable using a discounted cash flow model with rates that take into account the credit of the tenant/obligor, order of payment tranches, and interest rate risk. We also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the tenant/obligor, the time until maturity, and the current market interest rate.

(a)As of March 31, 2021 and December 31, 2020, the carrying value of Non-recourse secured debt, net includes unamortized deferred financing costs of $7.2 million and $6.9 million, respectively, and unamortized premium, net of $2.8 million and $2.5 million, respectively (Note 9).
(b)We determined the estimated fair value of our Non-recourse secured debt, net 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 take into account 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.
(c)We determined the estimated fair value of our Notes receivable using a discounted cash flow model with rates that take into account the credit of the tenant/obligor, order of payment tranches, and interest rate risk. We also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the tenant/obligor, the time until maturity, and the current market interest rate.

We estimated that our other financial assets and liabilities (excluding net investments in direct financing leases) had fair values that approximated their carrying values as of both March 31, 20202021 and December 31, 2019.2020.


Note 8. 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. 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, as well as changes in the value of our other investments due to changes in interest rates or other market factors. We own international investments, primarily in Europe, and are subject to risks associated with fluctuating foreign currency exchange rates.
 
Derivative Financial Instruments
 
There have been no significant changes in our derivative financial instrument policies from what was disclosed in the 20192020 Annual Report. As ofAt both March 31, 20202021 and December 31, 2019, no2020, 0 cash collateral had been posted or received for any of our derivative positions.




CPA:18 – Global 3/31/20202021 10-Q– 1916


Notes to Condensed Consolidated Financial Statements (Unaudited)


The following table sets forth certain information regarding our derivative instruments (in thousands):
Derivatives Designated as Hedging InstrumentsBalance Sheet LocationDerivative Assets Fair Value atDerivative Liabilities Fair Value at
March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Foreign currency collarsAccounts receivable and other assets, net$692 $440 $— $— 
Interest rate capsAccounts receivable and other assets, net43 21 — — 
Interest rate swapsAccounts payable, accrued expenses and other liabilities— — (2,394)(3,350)
Foreign currency collarsAccounts payable, accrued expenses and other liabilities— — (5)(198)
735 461 (2,399)(3,548)
Derivatives Not Designated as Hedging Instruments
Interest rate swapAccounts payable, accrued expenses and other liabilities— — (21)(28)
— — (21)(28)
Total derivatives$735 $461 $(2,420)$(3,576)
Derivatives Designated as Hedging Instruments Balance Sheet Location Derivative Assets Fair Value at Derivative Liabilities Fair Value at
  March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019
Foreign currency collars Accounts receivable and other assets, net $2,518
 $1,444
 $—
 $—
Foreign currency forward contracts Accounts receivable and other assets, net 654
 861
 —
 —
Interest rate caps Accounts receivable and other assets, net 37
 116
 —
 —
Interest rate swaps Accounts receivable and other assets, net —
 53
 —
 —
Interest rate swaps Accounts payable, accrued expenses and other liabilities —
 —
 (4,555) (1,991)
    3,209
 2,474
 (4,555) (1,991)
Derivatives Not Designated as Hedging Instruments          
Interest rate swap Accounts payable, accrued expenses and other liabilities —
 —
 (37) (48)
    —
 —
 (37) (48)
Total derivatives   $3,209
 $2,474
 $(4,592) $(2,039)


The following tables present the impact of our derivative instruments in the condensed consolidated financial statements (in thousands):
 Amount of Loss Recognized on Derivatives in Other Comprehensive LossAmount of Income (Loss) Recognized on Derivatives in Other Comprehensive Loss
 Three Months Ended March 31,Three Months Ended March 31,
Derivatives in Cash Flow Hedging Relationships  2020 2019Derivatives in Cash Flow Hedging Relationships 20212020
Interest rate swaps $(2,617) $(887)Interest rate swaps$956 $(2,617)
Foreign currency collars 1,140
 805
Foreign currency collars445 1,140 
Interest rate capsInterest rate caps(24)(139)
Foreign currency forward contracts (207) (157)Foreign currency forward contracts0 (207)
Interest rate caps (139) 1
Derivatives in Net Investment Hedging Relationship (a)
    
Derivatives in Net Investment Hedging Relationship (a)
Foreign currency collars 149
 1
Foreign currency collars0 149 
Total $(1,674) $(237)Total$1,377 $(1,674)
___________
(a)The changes in fair value and the settlement of these contracts are reported in the foreign currency translation adjustment section of Other comprehensive loss.
(a)The changes in fair value and the settlement of these contracts were reported in the foreign currency translation adjustment section of Other comprehensive loss.
 Amount of Gain on Derivatives Reclassified from Other Comprehensive Loss into IncomeAmount of (Loss) Gain on Derivatives Reclassified from Other Comprehensive Loss into Income
Derivatives in Cash Flow Hedging Relationships  Location of Gain (Loss) Recognized in Income Three Months Ended March 31,Derivatives in Cash Flow Hedging Relationships Location of Gain (Loss) Recognized in IncomeThree Months Ended March 31,
 2020 201920212020
Interest rate swapsInterest rate swapsInterest expense$(499)$(179)
Interest rate capsInterest rate capsInterest expense(28)(17)
Foreign currency collarsForeign currency collarsOther gains and (losses)1 119 
Foreign currency forward contracts Other gains and (losses) $278
 $346
Foreign currency forward contractsOther gains and (losses)0 278 
Interest rate swaps Interest expense (179) 27
Foreign currency collars Other gains and (losses) 119
 11
Interest rate caps Interest expense (17) (3)
Total $201
 $381
Total$(526)$201 




CPA:18 – Global 3/31/20202021 10-Q– 2017


Notes to Condensed Consolidated Financial Statements (Unaudited)


Amounts reported in Other comprehensive loss related to our interest derivative contracts will be reclassified to Interest expense as interest is incurred on our variable-rate debt. Amounts reported in Other comprehensive loss related to foreign currency derivative contracts will be reclassified to Other gains and (losses) when the hedged foreign currency contracts are settled. As of March 31, 2020,2021, we estimated that an additional $1.9$1.2 million and $1.6$0.4 million will be reclassified as Interest expense and Other gains and (losses), respectively, during the next 12 months.


The following table presents the impact of our derivative instruments in the condensed consolidated financial statements (in thousands):
Amount of Gain on Derivatives Recognized in Income
Derivatives Not in Cash Flow Hedging RelationshipsLocation of Gain (Loss) Recognized in IncomeThree Months Ended March 31,
20212020
Foreign currency collarsOther gains and (losses)$45 $81 
Interest rate swapInterest expense6 8 
Foreign currency forward contractsOther gains and (losses)0 7 
Derivatives in Cash Flow Hedging Relationships
Interest rate swapsInterest expense499 179 
Total$550 $275 
    Amount of Gain on Derivatives Recognized in Income
Derivatives Not in Cash Flow Hedging Relationships  Location of Gain (Loss) Recognized in Income Three Months Ended March 31,
  2020 2019
Foreign currency collars Other gains and (losses) $81
 $118
Interest rate swap Interest expense 8
 —
Foreign currency forward contracts Other gains and (losses) 7
 —
Derivatives in Cash Flow Hedging Relationships      
Interest rate swaps Interest expense 179
 (1)
Foreign currency collars Other gains and (losses) —
 7
Total   $275
 $124


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 attempt to obtain mortgage financing on a long-term, fixed-rate basis. However, from time to time, we or our joint investment partners have obtained, and may in the future obtain, variable-rate non-recourse secured debt 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.

The interest rate swaps and caps that our consolidated subsidiaries had outstanding as of March 31, 20202021 are summarized as follows (currency in thousands):
Interest Rate Derivatives Number of Instruments Notional
Amount		 
Fair Value at
March 31, 2020 (a)
Interest Rate DerivativesNumber of InstrumentsNotional
Amount
Fair Value at
March 31, 2021 (a)
Interest rate swaps 9 92,008
USD $(4,555)Interest rate swaps993,139 USD$(2,394)
Interest rate cap 1 12,975
EUR 20
Interest rate caps 2 59,000
GBP 17
Interest rate caps454,852 EUR37 
Interest rate cap 1 5,700
USD —
Interest rate capsInterest rate caps259,000 GBP6 
Derivatives Not Designated as Hedging Instruments    Derivatives Not Designated as Hedging Instruments
Interest rate swap (b)
 1 9,183
EUR (37)
Interest rate swap (b)
18,702 EUR(21)
   $(4,555)$(2,372)
___________
(a)Fair value amount is based on the exchange rate of the respective currencies as of March 31, 2020, as applicable.
(b)This interest rate swap does not qualify for hedge accounting; however, it does protect against fluctuations in interest rates related to the underlying variable-rate debt.

(a)Fair value amount is based on the exchange rate of the respective currencies as of March 31, 2021, as applicable.

(b)This interest rate swap does not qualify for hedge accounting; however, it does protect against fluctuations in interest rates related to the underlying variable-rate debt.


CPA:18 – Global 3/31/20202021 10-Q– 2118


Notes to Condensed Consolidated Financial Statements (Unaudited)


Foreign Currency Contracts
 
We are exposed to foreign currency exchange rate movements, primarily in the euro and, to a lesser extent, the Norwegian krone. We manage foreign currency exchange rate movements by generally placing our debt service obligation on an investment in the same currency as the tenant’s rental obligation to us. This reduces our overall exposure to the net cash flow from that investment. However, we are subject to foreign currency exchange rate movements to the extent that there is a difference in the timing and amount of the rental obligation and the debt service. Realized and unrealized gains and losses recognized in earnings related to foreign currency transactions are included in Other gains and (losses) in the condensed consolidated financial statements.


In order to hedge certain of our foreign currency cash flow exposures, we enter into foreign currency forward contracts and collars. A foreign currency forward contract is a commitment to deliver a certain amount of currency at a certain price on a specific date in the future. By entering into forward contracts and holding them to maturity, we are locked into a future currency exchange rate for the term of the contract. 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 forward contracts and foreign currency collars have maturities of 7262 months or less.


The following table presents the foreign currency derivative contracts we had outstanding and their designations as of March 31, 20202021 (currency in thousands):
Foreign Currency DerivativesNumber of InstrumentsNotional
Amount		Fair Value at
March 31, 2021
Designated as Cash Flow Hedging Instruments
Foreign currency collars128,750 EUR$599 
Foreign currency collars914,000 NOK88 
$687 
Foreign Currency Derivatives Number of Instruments Notional
Amount		 Fair Value at
March 31, 2020
Designated as Cash Flow Hedging Instruments       
Foreign currency collars 20 17,152
EUR $1,665
Foreign currency collars 16 30,660
NOK 801
Foreign currency forward contracts 5 2,006
EUR 654
Designated as Net Investment Hedging Instruments       
Foreign currency collar 1 2,500
NOK 52
       $3,172


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. NoNaN collateral was received as of March 31, 2020.2021. At March 31, 2020,2021, our total credit exposure was $2.4$0.6 million and the maximum exposure to any single counterparty was $1.2$0.4 million.


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. As of March 31, 2020,2021, 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 $4.7$2.6 million and $2.1$3.7 million as of March 31, 20202021 and December 31, 2019,2020, respectively, which included accrued interest and any nonperformance risk adjustments. If we had breached any of these provisions as of March 31, 20202021 or December 31, 2019,2020, we could have been required to settle our obligations under these agreements at their aggregate termination value of $5.0$2.6 million and $2.2$3.8 million, respectively.


Note 9. Non-Recourse Secured Debt, Net


Non-recourse secured debt, net is collateralized by the assignment of real estate properties. As of March 31, 2020,2021, the weighted-average interest ratesrate for our fixed-ratetotal non-recourse secured debt was 3.6% (fixed-rate and variable-rate non-recourse secured debt were 4.0%3.8% and 3.7%3.1%, respectively,respectively), with maturity dates ranging from 2020May 2021 to April 2039. In May 2021, we repaid $39.7 million of non-recourse mortgage loans at maturity (Note 13).



Financing Activity During 2021

During the three months ended March 31, 2021, we obtained a non-recourse mortgage loan of $27.3 million in connection with a net lease student housing property in Malaga, Spain. The loan bears a variable interest rate equal to Euro Interbank Offering Rate (“EURIBOR”) plus 2.5% and is scheduled to mature on December 31, 2023.


CPA:18 – Global 3/31/20202021 10-Q– 2219


Notes to Condensed Consolidated Financial Statements (Unaudited)


Financing Activity During 2020

On March 13, 2020, we obtained a construction loan of $22.5 million (amount based on the exchange rate of the euro at the date of the loan) for a student housing development project in Barcelona, Spain. The loan is comprised of four tranches with a weighted average variable interest rate of 2.1% as of March 31, 2020. Interest only payments are due on outstanding draws through its scheduled maturity date of December 2023. A total of $16.8 million was drawn on the loan as of March 31, 2020.

Scheduled Debt Principal Payments
 
Scheduled debt principal payments during the remainder of 2020,2021, each of the next four calendar years following December 31, 2020,2021, and thereafter are as follows (in thousands):
Years Ending December 31,Total
2021 (remainder)$169,581 
2022204,996 
2023328,395 
2024206,128 
2025326,787 
Thereafter through 203998,785 
Total principal payments1,334,672 
Unamortized deferred financing costs(7,225)
Unamortized premium, net2,835 
Total$1,330,282 
Years Ending December 31, Total
2020 (remainder) $59,686
2021 151,979
2022 189,208
2023 203,916
2024 198,335
Thereafter through 2039 385,187
Total principal payments 1,188,311
Unamortized deferred financing costs (6,244)
Unamortized premium, net 1,315
Total $1,183,382


Certain amounts in the table above are based on the applicable foreign currency exchange rate at March 31, 2020.2021.


The carrying value of our Non-recourse secured debt, net decreased by $35.7$17.2 million in the aggregate from December 31, 20192020 to March 31, 2020,2021, reflecting the impact of exchange rate fluctuations during the same period (Note 2).


Covenants


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. WeOur compliance with such covenants depends on many factors that could be impacted by current or future economic conditions, including the adverse impact of the COVID-19 pandemic. Other than the breaches discussed below, we were in compliance with all of theseour covenants at March 31, 2020.2021.


As of March 31, 2021, we were in breach of a tenant payment covenant on 2 of our non-recourse mortgage loans (principal balance of $65.3 million as of that date) encumbering properties leased to a tenant in the hotel industry. As a result of the breach, the lender has the right to declare a “cash trap” in which any surplus cash in our rent account would be transferred to a reserve account with the lender. We have notified the lender that the tenant occupying the encumbered properties is under financial distress due to the COVID-19 pandemic and is currently not making rental payments. As of March 31, 2021, the lender has declared a cash trap on both of these loans. As the tenant is not currently making rental payments, no surplus cash is available to transfer to the reserve account with the lender.

As of March 31, 2021, we were in breach of a loan-to-value covenant on 1 of our non-recourse mortgage loans (principal balance of $55.9 million as of that date) encumbering one of our net-leased properties. As a result of the breach, the lender has the right to declare a “cash trap” in which any surplus cash in our rent account would be transferred to a reserve account with the lender. To remedy this default, we are required to repay $1.1 million of the principal of the mortgage (based on the exchange rate of the euro as of March 31, 2021). As of the date of this Report, the required amount has not been paid (we are currently in negotiations with the lender) and the lender has not declared a cash trap but has the right to do so until we cure the breach.

As of March 31, 2021, we were in breach of a tenant occupancy covenant on 1 of our non-recourse mortgage loans (principal balance of $6.9 million as of that date) encumbering 2 properties net-leased to the same tenant. As a result of the breach, the lender has declared a “cash trap” for rents paid to be transferred to a reserve account with the lender. Although the tenant is current on rent, they are not currently occupying the property.

CPA:18 – Global 3/31/2021 10-Q– 20

Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 10. Commitments and Contingencies


As of March 31, 2020,2021, 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 expectedexpected to have a material adverse effect on our condensed consolidated financial statements of operations or results of operations.


See Note 4 for unfunded construction commitments.




CPA:18 – Global 3/31/2020 10-Q– 23

Notes to Condensed Consolidated Financial Statements (Unaudited)


Note 11. Earnings (Loss) Earnings Per Share and Equity


Basic and Diluted Earnings (Loss) Earnings Per Share


The following table presents earnings (loss) earnings per share (in thousands, except share and per share amounts):
Three Months Ended March 31,
20212020
Basic and Diluted Weighted-Average
Shares Outstanding		Allocation of Net IncomeBasic and Diluted Earnings Per Share Basic and Diluted Weighted-Average
Shares Outstanding		Allocation of Net LossBasic and Diluted Loss Per Share 
Class A common stock119,516,815 $403 $0 117,968,262 $(6,398)$(0.05)
Class C common stock32,187,435 108 0 32,445,640 (1,782)(0.05)
Net income (loss) attributable to CPA:18 – Global$511 $(8,180)
 Three Months Ended March 31,
 2020 2019
 Basic and Diluted Weighted-Average
Shares Outstanding		 Allocation of Net Loss Basic and Diluted Loss Per Share  Basic and Diluted Weighted-Average
Shares Outstanding		 Allocation of Net Income Basic and Diluted Earnings Per Share 
Class A common stock117,968,262
 $(6,398) $(0.05) 115,497,094
 $11,654
 $0.10
Class C common stock32,445,640
 (1,782) (0.05) 31,879,027
 3,173
 0.10
Net (loss) income attributable to CPA:18 – Global  $(8,180)     $14,827
  


The allocation of Net income (loss) income attributable to CPA:18 – Global is calculated based on the basic and diluted weighted-average shares outstanding for Class A and Class C common stock for each respective period. The Class C common stock allocation includesincluded less than $0.1 million of interest expense during the three months ended March 31, 2020, related to the accretion of interest on the annual distribution and shareholder servicing fee liabilityliability. As of less than $0.1 million for both the three months ended March 31, 20202021, we have no further obligation with respect to the distribution and March 31, 2019, respectively (Note 3shareholder servicing fee as the total underwriting compensation paid in respect to the offering reached the Financial Industry Regulatory Authority (“FINRA”). limit of 10% of the gross offering proceeds. As a result, interest expense related to the accretion of the distribution and shareholder servicing fee no longer impacts the Class C common stock.


Distributions


For the three months ended March 31, 2020,2021, our board of directors declared quarterly distributions of $0.1563$0.0625 per share for both our Class A common stock and $0.1382 per share for ourand Class C common stock, which were paid on April 15, 20202021 to stockholders of record on March 31, 2020,2021, in the amount of $22.8$9.5 million.


CPA:18 – Global 3/31/2021 10-Q– 21

Notes to Condensed 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 March 31, 2021
Gains and (Losses) on Derivative InstrumentsForeign Currency Translation AdjustmentsTotal
Beginning balance$(3,363)$(16,567)$(19,930)
Other comprehensive loss before reclassifications851 (20,158)(19,307)
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense527 0 527 
Other gains and (losses)(1)0 (1)
Net current-period other comprehensive loss1,377 (20,158)(18,781)
Net current-period other comprehensive loss attributable to noncontrolling interests(2)1,314 1,312 
Ending balance$(1,988)$(35,411)$(37,399)
 Three Months Ended March 31, 2020
 Gains and (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total
Beginning balance$138
 $(56,673) $(56,535)
Other comprehensive loss before reclassifications(1,622) (24,082) (25,704)
Amounts reclassified from accumulated other comprehensive loss to:     
Other gains and (losses)(397) —
 (397)
Interest expense196
 —
 196
Net current-period other comprehensive loss(1,823) (24,082) (25,905)
Net current-period other comprehensive loss attributable to noncontrolling interests—
 2,528
 2,528
Ending balance$(1,685) $(78,227) $(79,912)


Three Months Ended March 31, 2020
Gains and (Losses) on Derivative InstrumentsForeign Currency Translation AdjustmentsTotal
Beginning balance$138 $(56,673)$(56,535)
Other comprehensive loss before reclassifications(1,622)(24,082)(25,704)
Amounts reclassified from accumulated other comprehensive loss to:
Other gains and (losses)(397)0 (397)
Interest expense196 0 196 
Net current-period other comprehensive loss(1,823)(24,082)(25,905)
Net current-period other comprehensive loss attributable to noncontrolling interests0 2,528 2,528 
Ending balance$(1,685)$(78,227)$(79,912)



CPA:18 – Global 3/31/2020 10-Q– 24

Notes to Condensed Consolidated Financial Statements (Unaudited)


 Three Months Ended March 31, 2019
 Gains and (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total
Beginning balance$2,215
 $(52,808) $(50,593)
Other comprehensive loss before reclassifications143
 (4,242) (4,099)
Amounts reclassified from accumulated other comprehensive loss to:     
Other gains and (losses)(357) —
 (357)
Interest expense(24) —
 (24)
Net current-period other comprehensive loss(238) (4,242) (4,480)
Net current-period other comprehensive loss attributable to noncontrolling interests—
 158
 158
Ending balance$1,977
 $(56,892) $(54,915)

See Note 8 for additional information on our derivative activity recognized within Other comprehensive loss for the periods presented.




CPA:18 – Global 3/31/20202021 10-Q– 2522


Notes to Condensed Consolidated Financial Statements (Unaudited)


Note 12. Segment Reporting


We operate in three3 reportable business segments: Net Lease, Self Storage, and Other Operating Properties. Our Net Lease segment includes our investments in net-leased properties, whether they are accounted for as operating leases or direct financing leases. Our Self Storage segment is comprised of our investments in self-storage properties. Our Other Operating Properties segment is primarily comprised of our investments in student housing operating properties and multi-family residential properties (our last multi-family residential property was sold in January 2019).properties. In addition, we have an All Other category that includesis comprised of our notes receivable investments, one of which was repaid during the second quarter of 2019.investment. The following tables present a summary of comparative results and assets for these business segments (in thousands):
Three Months Ended March 31,
20212020
Net Lease
Revenues (a)
$28,802 $24,067 
Operating expenses (b)
(17,793)(20,602)
Interest expense(7,877)(6,858)
Other gains and (losses)243 (3,440)
Benefit from income taxes1,210 639 
Net income attributable to noncontrolling interests(473)(700)
Net income (loss) attributable to CPA:18 – Global$4,112 $(6,894)
Self Storage
Revenues$16,268 $15,356 
Operating expenses(9,092)(9,095)
Interest expense(3,266)(3,356)
Other gains and (losses) (c)
(56)(54)
Provision for income taxes(66)(31)
Net income attributable to CPA:18 – Global$3,788 $2,820 
Other Operating Properties
Revenues$3,299 $2,747 
Operating expenses(2,510)(1,485)
Interest expense(570)(252)
Other gains and (losses)(3)15 
Benefit from income taxes35 14 
Net loss attributable to noncontrolling interests45 5 
Net income attributable to CPA:18 – Global$296 $1,044 
All Other
Revenues (d)
$0 $710 
Net income attributable to CPA:18 – Global$0 $710 
Corporate
Unallocated Corporate Overhead (e)
$(6,146)$(3,944)
Net income attributable to noncontrolling interests — Available Cash Distributions$(1,539)$(1,916)
Total Company
Revenues (a) (d)
$48,369 $42,880 
Operating expenses (b)
(34,276)(36,228)
Interest expense(11,747)(10,489)
Other gains and (losses) (c) (e)
(969)(2,126)
Benefit from income taxes1,101 394 
Net income attributable to noncontrolling interests(1,967)(2,611)
Net income (loss) attributable to CPA:18 – Global$511 $(8,180)
 Three Months Ended March 31,
 2020 2019
Net Lease   
Revenues (a)
$24,067
 $30,992
Operating expenses (b)
(20,602) (17,311)
Interest expense(6,858) (8,736)
Other gains and (losses)(3,440) 43
Gain on sale of real estate, net—
 897
Benefit from (provision for) income taxes639
 (360)
Net income attributable to noncontrolling interests(700) (209)
Net (loss) income attributable to CPA:18 – Global$(6,894) $5,316
Self Storage   
Revenues$15,356
 $14,839
Operating expenses(9,095) (8,745)
Interest expense(3,356) (3,426)
Other gains and (losses) (c)
(54) (668)
Provision for income taxes(31) (33)
Net income attributable to CPA:18 – Global$2,820
 $1,967
Other Operating Properties   
Revenues$2,747
 $2,622
Operating expenses(1,485) (1,634)
Interest expense(252) (120)
Other gains and (losses)15
 (39)
Gain on sale of real estate, net—
 14,514
Benefit from (provision for) income taxes14
 (23)
Net loss (income) attributable to noncontrolling interests5
 (2,789)
Net income attributable to CPA:18 – Global$1,044
 $12,531
All Other (d)
   
Revenues$710
 $1,833
Operating expenses—
 (1)
Net income attributable to CPA:18 – Global$710
 $1,832
Corporate   
Unallocated Corporate Overhead (e)
$(3,944) $(4,971)
Net income attributable to noncontrolling interests — Available Cash Distributions$(1,916) $(1,848)
Total Company   
Revenues$42,880
 $50,294
Operating expenses (b)
(36,228) (32,272)
Interest expense(10,489) (12,357)
Other gains and (losses) (c)
(2,126) (476)
Gain on sale of real estate, net—
 15,408
Benefit from (provision for) income taxes394
 (924)
Net income attributable to noncontrolling interests(2,611) (4,846)
Net (loss) income attributable to CPA:18 – Global$(8,180) $14,827



CPA:18 – Global 3/31/20202021 10-Q– 2623


Notes to Condensed Consolidated Financial Statements (Unaudited)


Total AssetsTotal Assets
March 31, 2020 December 31, 2019March 31, 2021December 31, 2020
Net Lease$1,463,826
 $1,517,659
Net Lease$1,672,120 $1,688,259 
Self Storage365,907
 369,883
Self Storage347,143 345,936 
Other Operating Properties215,628
 213,692
Other Operating Properties255,906 258,017 
All OtherAll Other28,000 28,009 
Corporate76,018
 105,407
Corporate11,602 38,697 
All Other28,165
 28,162
Total Company$2,149,544
 $2,234,803
Total Company$2,314,771 $2,358,918 
__________
(a)
The three months ended March 31, 2020 and 2019 includes straight-line rent amortization of $0.7 million and $0.9 million, respectively. The three months ended March 31, 2020 includes a $7.0 million write-off of straight-line rent receivables (Note 2). Straight-line lease revenue is only recognized when deemed probable of collection, and is included within Lease revenues — net-leased within our condensed consolidated financial statements.
(b)
The three months ended March 31, 2020 includes an allowance for credit loss of $4.9 million in connection with our adoption of ASU 2016-13 (Note 2).
(c)Includes Equity in losses of equity method investment in real estate.
(d)Included in the all other category are our notes receivable investments, one of which was repaid during the second quarter of 2019.
(e)
Included in unallocated corporate overhead are expenses and other gains and (losses) that are calculated and reported at the portfolio level and not evaluated as part of any segment’s operating performance. Such items include asset management fees, general and administrative expenses, and gains and losses on foreign currency transactions and derivative instruments. Asset management fees totaled $3.0 million and $2.9 million for the three months ended March 31, 2020 and 2019, respectively (Note 3).

(a)The three months ended March 31, 2021 and 2020 include straight-line rent amortization of $1.1 million and $0.7 million, respectively. The three months ended March 31, 2020 includes a $7.0 million write-off of straight-line rent receivables (Note 2). Straight-line lease revenue is only recognized when deemed probable of collection, and is included within Lease revenues — net-leased within our condensed consolidated financial statements. For the three months ended March 31, 2021, we did not recognize $3.5 million of uncollected rent within lease revenues (Note 2).
(b)The three months ended March 31, 2020 includes an allowance for credit loss of $4.9 million (Note 5).
(c)Includes Equity in losses of equity method investment in real estate for the three months ended March 31, 2020. In December 2020, we sold our sole equity method investment.
(d)On July 28, 2020, we were notified that the borrower had defaulted on the mortgage loan senior to our mezzanine tranche, and since that date we have not recognized interest income (Note 5).
(e)Included in unallocated corporate overhead are expenses and other gains and (losses) that are calculated and reported at the portfolio level and not evaluated as part of any segment’s operating performance. Such items include asset management fees, general and administrative expenses, and gains and losses on foreign currency transactions and derivative instruments. Asset management fees totaled $3.1 million and $3.0 million for the three months ended March 31, 2021 and 2020, respectively (Note 3).

Note 13. Subsequent Events


The global spread of COVID-19 has created significant uncertainty and economic disruption, bothFinancing Obtained

On April 6, 2021, we obtained a construction loan totaling $56.6 million for a student housing development project in Swansea, United Kingdom, which we currently expect to be completed in the near-termthird quarter of 2022. The loan bears a variable interest rate equal to LIBOR plus 6.35%, and potentially longer-term. The extentis scheduled to which this pandemic could affect our financial condition, liquidity, and results of operations is difficult to predict and dependsmature on evolving factors, including: duration, scope, government actions, and other social responses.

Our advisor is closely monitoring the impact of COVID-19 on all aspects of our business, including how it will impact our portfolio and tenant credit health (including our tenants’ ability to pay rent) as well as our liquidity, capital allocation, and balance sheet management. Our advisor continues to actively engage in discussionsOctober 6, 2023, with our tenants and with the third-party managers of our operating properties regarding the impact of COVID-19 on business operations, liquidity, prospects, and financial position.

The extent to which the COVID-19 pandemic impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity, and durationa one-year extension option. As of the pandemic,date of this Report, we have drawn $6.9 million on the actions taken to containconstruction loan. Amounts are based on the pandemic or mitigate its impact, and the direct and indirect economic effectsexchange rate of the pandemicBritish pound sterling on the date of the transactions.

On April 30, 2021, we obtained a non-recourse mortgage loan of $18.1 million (based on the exchange rate of the euro on the date of the transaction) in connection with a net lease student housing property in Porto, Portugal. The loan bears a fixed interest rate of 2.8% and containment measures, among others.is scheduled to mature on April 30, 2025.



Borrowing under Line of Credit with WPC

In May 2021, we borrowed a net amount of $15.0 million under the unsecured revolving line of credit with WPC (Note 3), to partially fund the non-recourse mortgage loan repayments disclosed below.

Mortgage Loan Repayments

On May 3, 2021, we repaid a $5.7 million non-recourse mortgage loan at maturity encumbering 1 self-storage property.

On May 4, 2021, we repaid a $34.0 million non-recourse mortgage loan at maturity encumbering 7 self-storage properties.

CPA:18 – Global 3/31/20202021 10-Q– 2724





Item 2. Management’s Discussion and Analysis of Financial Condition andResults of Operations.
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide the reader with information that will assist in understanding our financial statements and the reasons for changes in certain key components of our financial statements from period to period. Management’s Discussion and Analysis of Financial Condition and Results of Operations also provides the reader with our perspective on our financial position and liquidity, as well as certain other factors that may affect our future results. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the 20192020 Annual Report and subsequent reports filed under the Securities Exchange Act of 1934.

Business Overview

As described in more detail in1934, as amended (“the Exchange Act”). Refer to Item 1 of the 20192020 Annual Report we arefor a publicly owned, non-traded REIT that invests in a diversified portfolio of income-producing commercial properties leased to companies, and other real estate-related assets, both domestically and outside the United States. In addition, our portfolio includes self-storage and student housing properties. As a REIT, we are not subject to U.S. federal income taxation as long as we satisfy certain requirements, principally relating to the naturedescription of our income, the level of our distributions, and other factors. We earn revenue principally by leasing the properties we own to single corporate tenants, primarily on a triple-net lease basis, which requires the tenant to pay substantially all of the costs associated with operating and maintaining the property. We derive self-storage revenue from rents received from customers who rent storage space primarily under month-to-month leases for personal or business use. We earn student housing revenue primarily from leases of one year or less with individual students. Revenue is subject to fluctuation because of the timing of new transactions, completion of build-to-suit and development projects, lease terminations, lease expirations, contractual rent adjustments, tenant defaults, sales of properties, and foreign currency exchange rates. We commenced operations in May 2013 and are managed by our Advisor. We hold substantially all of our assets and conduct substantially all of our business through our Operating Partnership. We are the general partner of, and own 99.97% of the interests in, the Operating Partnership. The remaining interest in the Operating Partnership is held by a subsidiary of WPC.business.


Significant Developments


COVID-19

The global spread of COVID-19, which has been declared a pandemic by the World Health Organization, has created significant uncertainty and economic disruption, both in the near-term and potentially longer-term. The extent to which this pandemic could affect our financial condition, liquidity, and results of operations is difficult to predict and depends on evolving factors, including: duration, scope, government actions, and, other social responses.

The impact of the pandemic both in the United States and globally has been rapidly evolving. It continues to adversely impact commercial activity and cause uncertainty and volatility in financial markets. The outbreak is expected to have a continued adverse impact on economic and market conditions for the foreseeable future and to trigger a period of global economic slowdown with no known duration. The rapid development and fluidity of this situation is without precedent in modern history and the ultimate adverse impact of the COVID-19 pandemic at this time is unknown. Consequently, the COVID-19 pandemic presents material uncertainty and risk with respect to our performance and financial results (such as the potential negative impact to occupancy and our tenants’ ability to meet their financial obligations), results of operations or market values at our properties, increased risk of defaults, decreased availability of financing arrangements, additional potential risks arising from changes in law and/or regulation, and uncertainty regarding government and regulatory policy. Conditions in the bank lending, capital, and other financial markets may continue to deteriorate as a result of the pandemic, and our access to capital and other sources of funding may become constrained, which could adversely affect the availability and terms of future borrowings, renewals, or refinancings. In addition, the deterioration of global economic conditions as a result of the pandemic is likely to negatively impact our tenants.

We are closely monitoring the impact of COVID-19 on all aspects of our business, portfolio, and tenant credit health, as well as our liquidity, capital allocation, and balance sheet management. Our net lease portfolio includes exposure to hotel and leisure and student housing properties (see Item 3. Quantitative and Qualitative Disclosures About Market Risk for concentrations); these sectors have been significantly impacted by the pandemic.



CPA:18 – Global 3/31/2020 10-Q– 28



In response to early reports of the suspected transmission of COVID-19 in both the United States and Europe, in late February and early March, our Advisor initiated steps to prioritize the health and safety of its employees. By mid-March, our Advisor fully transitioned all employees in its four offices — New York, Dallas, London, and Amsterdam — to working remotely and successfully executed its business continuity plan, with all of its core financial, operational, and telecommunication systems operating from a cloud-based environment with no disruption.


Our Advisor continues to actively engage in discussions with our tenants and with the third-party managers of our operating properties regarding the impact of the COVID-19 pandemic on their business operations, liquidity, and financial position. In April, net lease contractual base rent payments representing 90% of the total contractual base rent of our net lease portfolio (weighted by ABR) were due. Through the date of this Report, we received from tenants substantially all net leaseapproximately 87% of contractual base rent that was due in the first quarter and 84% of net lease2021 (based on contractual minimum annualized base rent that was(“ABR”) as of December 31, 2020) and 97% of contractual rents due in April.

at our self-storage properties during the three months ended March 31, 2021. Given the significant uncertainty around the duration and severity of the impact of the COVID-19 pandemic, we are unable to predict the impact it will have on our tenants’ continued ability to pay rent. Therefore, information provided regarding March and April rent collections for the first quarter of 2021 should not serve as an indication of expected future rent collections.


As of March 31, 2020,2021, our debt and interest obligations due within one year totaled $159.3 million. In addition,$272.3 million, and we expect to fund capital commitments of $188.9$90.9 million in the next year, primarily for our 12seven student housing development projects (five(four of which are scheduled to be completed in 2020)2021). We believe that we have sufficient liquidity to meet our liquidity and capital resource requirements, primarily through available cash and cash equivalents, restricted cash, cash received under net lease and operating lease agreements (which includes five student housing properties recently placed into service during 2020), and undrawn capacity under our construction loans. If necessary, we are able to borrow up to $50.0 million under an unsecured revolving line of credit with WPC (with a scheduled maturity date of March 31, 2022) (Note 3). In May 2021, we borrowed a net amount of $15.0 million on this line of credit (Note 13). Additional sources of liquidity, if necessary, includes leveraging our unleveraged properties (which had an aggregate carrying value of $182.6 million as of March 31, 2021), refinancing existing debt obligations, and asset sales, and paying all asset management fees to our Advisor in shares (which effectivesales. To help us preserve cash, since April 1, 2020, at our option our Advisor elected to receivereceives all of the asset management fees in shares of our Class A common stock)stock (Note 3). Our Advisor may also provideIn addition, in order to enable us with a lineto retain cash and preserve financial flexibility, (i) for the 2021 first quarter, we maintained the reduced distribution levels for both our Class A and Class C common stock and (ii) since August 2020, we have limited the amount of credit at its discretion.cash available for our redemption program to the amount reinvested by stockholders in our DRIP.

The extent to which COVID-19 impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak and actions taken to contain COVID-19 or treat its impact, among others. The potential impact of COVID-19 on our tenants and properties could have a material adverse effect on our business, financial condition, NAVs, liquidity, results of operations, and prospects.


Net Asset Values


Our Advisor calculates our NAVs as of each quarter-end by relying in part on rolling update appraisals covering approximately 25% of our real estate portfolio each quarter, adjusted to give effect to the estimated fair value of our debt (all provided by an independent third party) and for other relevant factors. Since our quarterly NAVs are not based on an appraisal of our full portfolio, to the extent any new quarterly NAV adjustments are within 1% of our previously disclosed NAVs, our quarterly NAVs will remain unchanged. We monitor properties not appraised during the quarter to identify any that may have experienced a significant event and obtain updated third-party appraisals for such properties. Our NAVs are based on a number of variables, including individual tenant credits, lease terms, lending credit spreads, foreign currency exchange rates, share counts, tenant defaults, and development projects that are not yet generating income, among others. We do not control all of these variables and, as such, cannot predict how they will change in the future. Costs associated with our development projects (which are not yet generating income) are not appraised quarterly and are carried at cost, which approximates fair value. These costs are included in Real estate under construction in our condensed consolidated financial statements. Our NAVs as of December 31, 20192020 were $8.94$8.91 for both our Class A and Class C common stock. Please see our Current Report on Form 8-K dated March 12,16, 2021 and the 2020 Annual Report for additional information regarding the calculation of our NAVs. Our Advisor currently intends to determine our quarterly NAVs as of March 31, 20202021 during the second quarter of 2020.2021.


The accrued distribution and shareholder servicing fee payable has been valued using a hypothetical liquidation value and, as a result, the NAVs do not reflect any obligation to pay future distribution and shareholder servicing fees. As of March 31, 2020, the liability balance for the distribution and shareholder servicing fee was $1.4 million, which includes $0.5 million related to the first quarter of 2020. We currently expect that we will cease incurring the distribution and shareholder servicing fee during the third quarter of 2020, at which time the total underwriting compensation paid in respect of the offering will reach 10.0% of the gross offering proceeds (Note 3).



CPA:18 – Global 3/31/2020 10-Q– 29

Financial Highlights


During the three months ended March 31, 2020,2021, we completed the following, as further described in the condensed consolidated financial statements.


Financing Activity


OnDuring the three months ended March 13, 2020,31, 2021, we obtained a constructionnon-recourse mortgage loan of $22.5$27.3 million (amount based on the exchange rate of the euro at the date of the loan) forin connection with a net lease student housing development projectproperty in Barcelona,Malaga, Spain. The loan is comprised of four tranches withbears a weighted average variable interest rate of 2.1% as of Marchequal to EURIBOR plus 2.5%, and is scheduled to mature on December 31, 2020. Interest only payments are due on outstanding draws through its scheduled maturity date of December 2023. A total of $16.8 million was drawn on the loan as of March 31, 2020 (Note 9).


CPA:18 – Global 3/31/2021 10-Q– 25

Consolidated Results


(in thousands)
Three Months Ended March 31,Three Months Ended March 31,
2020 201920212020
Total revenues$42,880
 $50,294
Total revenues$48,369 $42,880 
Net (loss) income attributable to CPA:18 – Global(8,180) 14,827
   
Net income (loss) attributable to CPA:18 – GlobalNet income (loss) attributable to CPA:18 – Global511 (8,180)
Distributions declared (a)
Distributions declared (a)
9,470 22,844 
Cash distributions paid22,745
 22,264
Cash distributions paid9,447 22,745 
   
Net cash provided by operating activities22,808
 21,859
Net cash provided by operating activities16,652 22,808 
Net cash used in investing activities(45,158) (20,926)Net cash used in investing activities(50,435)(45,158)
Net cash used in financing activities(5,758) (29,531)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities1,531 (5,758)
   
Supplemental financial measures (a):
   
Supplemental financial measures (b):
Supplemental financial measures (b):
FFO attributable to CPA:18 – Global
5,024
 16,428
FFO attributable to CPA:18 – Global
15,823 5,024 
MFFO attributable to CPA:18 – Global18,520
 15,676
MFFO attributable to CPA:18 – Global16,022 18,520 
Adjusted MFFO attributable to CPA:18 – Global17,641
 16,018
Adjusted MFFO attributable to CPA:18 – Global14,262 17,641 
__________
(a)
We consider the performance metrics listed above, including Funds from operations (“FFO”), MFFO, and Adjusted modified funds from operations (“Adjusted MFFO”), which are supplemental measures that are not defined by GAAP (“non-GAAP measures”), to be important measures in the evaluation of our operating performance. See Supplemental Financial Measures below for our definitions of these non-GAAP measures and reconciliations to their most directly comparable GAAP measures.

(a)Quarterly distributions declared are generally paid in the subsequent quarter. During the first quarter of 2021, our distributions declared for both Class A and Class C common stock were reduced from previous levels to enable us to retain cash and preserve financial flexibility.
(b)We consider the performance metrics listed above, including Funds from operations (“FFO”), Modified funds from operations (“MFFO”), and Adjusted modified funds from operations (“Adjusted MFFO”), which are supplemental measures that are not defined by GAAP (“non-GAAP measures”), to be important measures in the evaluation of our operating performance. See Supplemental Financial Measures below for our definitions of these non-GAAP measures and reconciliations to their most directly comparable GAAP measures.

Revenues and Net (Loss) Income Attributable to CPA:18 – Global


Total revenues decreasedincreased for the three months ended March 31, 20202021 as compared to the same period in 2019,2020, primarily due to the write-off of straight-line rent receivables based on our current assessment of less than 75% likelihood of collecting all remaining contractual rent on certain net lease hotelsin the prior year period (Note 2).

During and the positive impact of the five student housing properties placed into service during 2020, partially offset by the adverse effect of the COVID-19 pandemic on current year period we recognized a revenues.

Net lossIncome (Loss) Attributable to CPA:18 – Global

Net income (loss) attributable to CPA:18 – Global as compared to net income in the prior year period, primarily due to the gains on sale of real estate recognized during the prior year period, the straight-line rent write-offs as noted above, and the losses incurred duringincreased for the three months ended March 31, 2021 as compared to the same period in 2020, relatingprimarily due to the write-off of straight-line rent in the prior year period (Note 2) and the allowance for credit losses recognized in accordance with ASU 2016-13the prior year period (Note 25) and loss as a result of the Ghana VAT receivable write-off (Note 4). These decreases were, partially offset by a decrease in interest expense due to the refinancings and dispositions of encumbered properties subsequent to the three months ended March 31, 2019 and increased capitalized interest on our student housing development projects, the collection of back rentsuncollected rent during the current year period relatingand higher interest expense, primarily due to a lease restructurethe impact of mortgage financings obtained on four of the student housing properties placed into service during the second quarter of 2019 with our tenant, Fortenova (formerly Agrokor), and termination income received for one of our properties during the three months ended March 31, 2020.



CPA:18 – Global 3/31/2020 10-Q– 30


FFO, MFFO and Adjusted MFFO Attributable to CPA:18 – Global


FFOMFFO and Adjusted MFFO both decreased $11.4 million for the three months ended March 31, 20202021 as compared to the same period in 2019,2020, primarily due to the write-offadverse effect of straight-line rent (basedthe COVID-19 pandemic on our current assessment of less than 75% likelihood of collecting all remaining contractual rent on certain net lease hotels)year revenues and the losses incurred relating to the allowance for credit losses and Ghana VAT receivable write-off as noted above. These decreases werehigher interest expense, partially offset by a reduction in interest expense as noted above, an increase in operating property revenues primarily from higher occupancies atthe positive impact of our student housing and self-storage properties and a deferred tax benefit resulting from straight-line rent receivable write-offs.placed into service during 2020 (all as discussed above).

MFFO and Adjusted MFFO increased $2.8 million and $1.6 million, respectively for the three months ended March 31, 2020 as compared to the same period in 2019, primarily due to the decrease in interest expense and increase in operating revenues as noted above, as well as the collection of back rents relating to a lease restructure during the second quarter of 2019, and termination income received for one of our properties during the three months ended March 31, 2020. These increases were partially offset by a decrease in interest income due to the Mills Fleet mezzanine loan repayment in April 2019.



CPA:18 – Global 3/31/20202021 10-Q– 3126





Portfolio Overview


We hold a diversified portfolio of income-producing commercial real estate properties and other real estate-related assets. We make investments both domestically and internationally. In addition, our portfolio includes self-storage and student housing properties for the periods presented below. Portfolio information is provided on a pro rata basis, unless otherwise noted below, to better illustrate the economic impact of our various jointly owned net-leased and operating investments. See Terms and Definitions below for a description of pro rata amounts.


Portfolio Summary
March 31, 2021December 31, 2020
Number of net-leased properties50 50 
Number of operating properties (a)
68 68 
Number of development projects7 7 
Number of tenants (net-leased properties)65 65 
Total portfolio square footage (in thousands)15,415 15,400 
Occupancy (net-leased properties)98.6 %98.6 %
Weighted-average lease term (net-leased properties in years)9.2 9.5 
Number of countries11 11 
Total assets (consolidated basis in thousands)$2,314,771 $2,358,918 
Net investments in real estate (consolidated basis in thousands)2,110,718 2,124,244 
Debt, net — pro rata (in thousands)
1,213,671 1,193,322 
 March 31, 2020 December 31, 2019
Number of net-leased properties47
 47
Number of operating properties (a)
70
 70
Number of development projects12
 12
Number of tenants (net-leased properties)65
 61
Total portfolio square footage (in thousands)15,133
 15,130
Occupancy — (net-leased properties)98.6% 99.4%
Weighted-average lease term (net-leased properties in years)9.4
 9.4
Number of countries12
 12
Total assets (consolidated basis in thousands)$2,149,544
 $2,234,803
Net investments in real estate (consolidated basis in thousands)1,902,350
 1,946,720
Debt, net — pro rata (in thousands)
1,110,028
 1,126,326

Three Months Ended March 31,Three Months Ended March 31,
(dollars in thousands, except exchange rates)2020 2019(dollars in thousands, except exchange rates)20212020
Acquisition volume — consolidated (b)
$—
 $29,736
Acquisition volume — pro rata (c)
—
 29,736
Financing obtained — consolidated24,982
 4,229
Financing obtained — consolidated$40,194 $24,982 
Financing obtained — pro rata
24,164
 6,359
Financing obtained — pro rata
38,813 24,164 
Average U.S. dollar/euro exchange rate1.1020
 1.1356
Average U.S. dollar/euro exchange rate1.2051 1.1020 
Average U.S. dollar/Norwegian krone exchange rate0.1058
 0.1166
Average U.S. dollar/Norwegian krone exchange rate0.1173 0.1058 
Average U.S. dollar/British pound sterling exchange rate1.2808
 1.3013
Average U.S. dollar/British pound sterling exchange rate1.3775 1.2808 
Change in the U.S. CPI (d)
0.4 % 1.2%
Change in the Netherlands CPI (d)
0.1 % 1.3%
Change in the Norwegian CPI (d)
(0.1)% 0.5%
Change in the U.S. CPI (b)
Change in the U.S. CPI (b)
1.7 %0.4 %
Change in the Netherlands CPI (b)
Change in the Netherlands CPI (b)
0.9 %0.1 %
Change in the Norway CPI (b)
Change in the Norway CPI (b)
1.5 %(0.1)%
__________
(a)As of March 31, 2020, our operating portfolio consisted of 68 self-storage properties and two student housing operating properties, all of which are managed by third parties.
(b)Comprised of development project transactions and related budget amendments, which are reflected as the total commitment for the development project funding, and excludes investments in unconsolidated joint ventures.
(c)
Comprised of development project transactions and related budget amendments, which are reflected as the total commitment for the development project funding, and includes investments in unconsolidated joint ventures, which include our equity investment in real estate (Note 4).
(d)Many of our lease agreements include contractual increases indexed to changes in the U.S. CPI, Netherlands CPI, Norwegian CPI, or other similar indices in the jurisdictions where the properties are located.

(a)As of both March 31, 2021 and December 31, 2020, our operating portfolio consisted of 65 self-storage properties and three student housing operating properties, all of which are managed by third parties.

(b)Many of our lease agreements include contractual increases indexed to changes in the U.S. CPI, Netherlands CPI, Norwegian CPI, or other similar indices in the jurisdictions where the properties are located.


CPA:18 – Global 3/31/20202021 10-Q– 3227





The tables below present information about our portfolio on a pro rata basis as of and for the periodthree months ended March 31, 2020.2021. See Terms and Definitions below for a description of Pro Rata Metrics, stabilized net operating income (“Stabilized NOI”), and ABR.


Portfolio Diversification by Property Type
(dollars in thousands)
Property Type
Stabilized NOI (a)
Percent
Net-Leased
Office$10,272 33 %
Warehouse3,299 11 %
Retail2,296 7 %
Industrial2,278 7 %
Residential782 3 %
Hospitality465 1 %
Net-Leased Total19,392 62 %
Operating
Self Storage10,167 33 %
Other operating properties1,414 5 %
Operating Total11,581 38 %
Total$30,973 100 %
__________
(a)For the three months ended March 31, 2021, we did not recognize approximately $3.5 million of contractual base rent that was not collected due to the adverse impact of the COVID-19 pandemic (Note 2), which reduced Stabilized NOI for certain tenants.

CPA:18 – Global 3/31/2021 10-Q– 28
Property Type Stabilized NOI Percent
Net-Leased    
Office $9,646
 30%
Hospitality 3,396
 10%
Warehouse 3,272
 10%
Industrial 2,034
 6%
Retail 1,911
 6%
Residential 279
 1%
Net-Leased Total 20,538
 63%
     
Operating    
Self storage 9,838
 31%
Other operating properties 2,034
 6%
Operating Total 11,872
 37%
Total $32,410
 100%



Portfolio Diversification by Geography
(dollars in thousands)
Region
Stabilized NOI (a)
Percent
United States
South$8,009 26 %
Midwest6,063 20 %
West3,509 11 %
East2,412 8 %
U.S. Total19,993 65 %
International
Norway3,101 10 %
The Netherlands2,104 7 %
United Kingdom1,414 4 %
Poland1,165 4 %
Croatia868 3 %
Spain772 2 %
Slovakia667 2 %
Germany532 2 %
Mauritius347 1 %
Portugal10 — %
International Total10,980 35 %
Total$30,973 100 %
Region Stabilized NOI Percent
United States    
South $7,495
 23%
Midwest 5,463
 17%
West 3,144
 10%
East 2,396
 7%
U.S. Total 18,498
 57%
     
International    
Norway 2,525
 8%
Germany 2,356
 7%
The Netherlands 2,342
 7%
United Kingdom 2,034
 6%
Mauritius 1,244
 4%
Poland 1,082
 3%
Croatia 831
 3%
Canada 629
 2%
Slovakia 590
 2%
Spain 279
 1%
International Total 13,912
 43%
Total $32,410
 100%
__________

(a)For the three months ended March 31, 2021, we did not recognize approximately $3.5 million of contractual base rent that was not collected due to the adverse impact of the COVID-19 pandemic (Note 2), which reduced Stabilized NOI for certain tenants.


CPA:18 – Global 3/31/2020 10-Q– 33




Top Ten Tenants by Total Stabilized NOI
(dollars in thousands)
Tenant/Lease Guarantor Property Type Tenant Industry Location Stabilized NOI Percent
Fentonir Trading & Investments Limited (a)
 Hospitality Hotel and Leisure Munich and Stuttgart, Germany $1,794
 6%
Sweetheart Cup Company, Inc. Warehouse Containers, Packaging and Glass University Park, Illinois 1,553
 5%
Rabobank Groep NV (a)
 Office Banking Eindhoven, Netherlands 1,418
 4%
Albion Resorts (Club Med) (a)
 Hospitality Hotel and Leisure Albion, Mauritius 1,244
 4%
Bank Pekao S.A. (a)
 Office Banking Warsaw, Poland 1,082
 3%
State Farm Automobile Co. Office Insurance Austin, Texas 986
 3%
Siemens AS (a)
 Office Capital Equipment Oslo, Norway 965
 3%
State of Iowa Board of Regents Office Sovereign and Public Finance Coralville and Iowa City, Iowa 873
 3%
Belk, Inc. Warehouse Retail Jonesville, South Carolina 821
 3%
COOP Ost SA(a)
 Retail Grocery Oslo, Norway 745
 2%
Total       $11,481
 36%
Tenant/Lease Guarantor (a)
Property TypeTenant IndustryLocationStabilized NOIPercent
Rabobank Groep NV (b)
OfficeBankingEindhoven, Netherlands$1,581 5 %
Sweetheart Cup Company, Inc.WarehouseContainers, Packaging and GlassUniversity Park, Illinois1,551 5 %
Bank Pekao S.A. (b)
OfficeBankingWarsaw, Poland1,165 4 %
Siemens AS (b)
OfficeCapital EquipmentOslo, Norway1,140 4 %
State Farm Automobile Co.OfficeInsuranceAustin, Texas987 3 %
COOP Ost AS (b)
RetailGroceryOslo, Norway982 3 %
State of Iowa Board of RegentsOfficeSovereign and Public FinanceCoralville and Iowa City, Iowa940 3 %
Orbital ATK, Inc.OfficeMetals and MiningPlymouth, Minnesota900 3 %
Belk, Inc.WarehouseRetailJonesville, South Carolina823 3 %
Brookfield Strategic Real Estate Partners (b)
ResidentialResidentialVarious Spain and Portugal782 3 %
Total$10,851 36 %
__________
(a)Stabilized NOI amounts for these properties are subject to fluctuations in foreign currency exchange rates.



CPA:18 – Global 3/31/20202021 10-Q– 3429





(a)For the three months ended March 31, 2021 we did not recognize $3.2 million of contractual base rent that was not collected from two former top ten tenants (by Stabilized NOI), which has been adversely impacted by the COVID-19 pandemic (Note 2). At March 31, 2021, ABR for these two tenants totaled $13.5 million.
(b)Stabilized NOI amounts for these properties are subject to fluctuations in foreign currency exchange rates.

Net-Leased Portfolio


The tables below represent information about our net-leased portfolio on a pro rata basis and, accordingly, exclude all operating properties as of March 31, 2020.2021. See Terms and Definitions below for a description of Pro Rata Metrics, Stabilized NOI and ABR.


Portfolio Diversification by Tenant Industry
(dollars in thousands)
Industry Type ABR PercentIndustry TypeABRPercent
Hotel and Leisure $14,278
 16%Hotel and Leisure$15,492 16 %
Banking 10,352
 12%Banking11,254 12 %
Grocery 6,250
 7%Grocery7,288 8 %
Containers, Packaging, and Glass 6,213
 7%Containers, Packaging, and Glass6,213 6 %
Capital EquipmentCapital Equipment5,534 6 %
Insurance 4,849
 6%Insurance4,972 5 %
Capital Equipment 4,546
 6%
Utilities: Electric 3,910
 4%Utilities: Electric4,354 5 %
ResidentialResidential3,926 4 %
Retail 3,700
 4%Retail3,921 4 %
Metals and Mining 3,683
 4%Metals and Mining3,765 4 %
Sovereign and Public FinanceSovereign and Public Finance3,761 4 %
Business ServicesBusiness Services3,399 4 %
High Tech IndustriesHigh Tech Industries3,325 3 %
Advertising, Printing, and PublishingAdvertising, Printing, and Publishing3,265 3 %
Oil and Gas 3,666
 4%Oil and Gas3,068 3 %
Sovereign and Public Finance 3,547
 4%
Advertising, Printing, and Publishing 3,440
 4%
High Tech Industries 3,109
 4%
Business Services 2,925
 3%
Healthcare and Pharmaceuticals 2,574
 3%Healthcare and Pharmaceuticals2,796 3 %
Automotive 1,984
 2%Automotive2,028 2 %
Construction and Building 1,521
 2%Construction and Building1,552 2 %
Residential 1,380
 2%
Non-Durable Consumer Goods 1,262
 1%Non-Durable Consumer Goods1,278 1 %
Telecommunications 1,094
 1%Telecommunications1,123 1 %
Electricity 1,073
 1%Electricity1,088 1 %
Wholesale 1,049
 1%Wholesale1,070 1 %
Cargo Transportation 977
 1%Cargo Transportation1,002 1 %
Other (a)
 398
 1%
Other (a)
409 1 %
Total $87,780
 100%Total$95,883 100 %
__________
(a)Includes ABR from tenants in the following industries: environmental industries, durable consumer goods, and consumer services.

(a)Includes ABR from tenants in the durable consumer goods and consumer services industries.



CPA:18 – Global 3/31/20202021 10-Q– 3530





Lease Expirations
(dollars in thousands)
Year of Lease Expiration (a)
 Number of Leases Expiring ABR Percent
Year of Lease Expiration (a)
Number of Leases ExpiringABRPercent
Remaining 2020 1
 $2
 —%
2021 2
 868
 1%
Remaining 2021Remaining 20212 $27 — %
2022 2
 110
 —%20222 120 — %
2023 11
 14,165
 16%202312 15,377 16 %
2024 16
 5,243
 6%202414 4,986 5 %
2025 6
 4,312
 5%20258 5,817 6 %
2026 5
 7,478
 9%20265 7,631 8 %
2027 6
 6,027
 7%20272 2,452 3 %
2028 4
 5,310
 6%20284 6,132 6 %
2029 3
 8,958
 10%20293 9,413 10 %
2030 2
 3,961
 4%20303 4,642 5 %
2031 4
 4,963
 6%20314 5,513 6 %
2032 5
 8,440
 10%20325 9,394 10 %
Thereafter (>2032) 11
 17,943
 20%
20332033— — — %
203420346 5,474 6 %
Thereafter (>2034)Thereafter (>2034)12 18,905 19 %
Total 78
 $87,780
 100%Total82 $95,883 100 %
__________
(a)Assumes tenant does not exercise renewal option.

(a)Assumes tenant does not exercise renewal option.

Lease Composition and Leasing Activities


Substantially all of our leases provide for either scheduled rent increases, periodic rent adjustments based on formulas indexed to changes in the CPI or similar indices, or percentage rents. As of March 31, 2020,2021, approximately 49.4%49.8% of our leases (based on ABR) provided for adjustments based on formulas indexed to changes in the U.S. CPI (or similar indices for the jurisdiction in which the property is located), some of which are subject to caps and/or floors. In addition, 49.0%46.1% of our leases (based on ABR) have fixed rent adjustments, for a scheduled average ABR increase of 1.7%2.2% over the next 12 months. Lease revenues from our international investments are subject to exchange rate fluctuations, primarily from the euro. We recognize rents from percentage rents as reported by the lessees, which is after the level of sales requiring a rental payment to us is reached. Percentage rents are insignificant for the periods presented.




CPA:18 – Global 3/31/20202021 10-Q– 3631





Operating Properties


As of March 31, 2020,2021, our operating portfolio consisted of 6865 self-storage properties and twothree student housing operating properties. As of March 31, 2020,2021, our operating portfolio was comprised as follows (square footage in thousands):
LocationNumber of PropertiesSquare Footage
Florida21 1,779 
Texas13 1,008 
California10 860 
Nevada3 243 
Delaware3 241 
Georgia3 171 
Illinois2 100 
Hawaii2 95 
Kentucky1 121 
North Carolina1 121 
Washington, D.C.1 67 
South Carolina1 63 
New York1 61 
Louisiana1 59 
Massachusetts1 58 
Missouri1 41 
Oregon1 40 
U.S. Total66 5,128 
United Kingdom2 215 
International Total2 215 
Total68 5,343 
Location Number of Properties Square Footage
Florida 21
 1,779
Texas 12
 843
California 10
 860
Nevada 3
 243
Delaware 3
 241
Georgia 3
 171
Illinois 2
 100
Hawaii 2
 95
Kentucky 1
 121
North Carolina 1
 121
Washington, D.C. 1
 67
South Carolina 1
 63
New York 1
 61
Louisiana 1
 59
Massachusetts 1
 58
Missouri 1
 41
Oregon 1
 40
U.S. Total 65
 4,963
Canada 3
 317
United Kingdom 2
 215
International Total 5
 532
Total 70
 5,495



CPA:18 – Global 3/31/2020 10-Q– 37




Development Projects


As of March 31, 2020,2021, we had the following 12seven consolidated student housing development projects, including joint ventures, which remainremained under construction as of that date (dollars in thousands):
Location 
Ownership Percentage (a)
 Number of Buildings Square Footage 
Estimated Project
Totals (b) (c)
 
Amount Funded (b) (c)
 Estimated Completion DateLocation
Ownership Percentage (a)
Number of BuildingsSquare Footage
Estimated Project
Totals (b) (c)
Amount Funded (b) (c)
Estimated Completion Date
Austin, Texas 90.0% 1
 185,720
 $74,469
 $55,807
  Q3 2020
San Sebastian, Spain (d)
 100.0% 1
 126,075
 33,157
 22,846
  Q3 2020
Barcelona, Spain (d)
 100.0% 3
 77,504
 28,744
 22,311
  Q3 2020
Malaga, Spain (d)
 100.0% 2
 230,329
 38,167
 15,707
  Q4 2020
Porto, Portugal (d)
 98.5% 1
 102,112
 22,389
 8,909
  Q4 2020
Coimbra, Portugal (d)
 98.5% 1
 135,076
 24,206
 10,931
  Q1 2021
Coimbra, Portugal (d)
98.5 %1 135,076 $31,865 $29,140  Q2 2021
Bilbao, Spain (d)
 100.0% 1
 179,279
 48,444
 11,135
  Q3 2021
Bilbao, Spain (d)
100.0 %1 179,279 50,399 31,178  Q3 2021
Seville, Spain (d)
 75.0% 1
 163,477
 40,320
 15,690
  Q3 2021
Seville, Spain (d)
75.0 %1 163,477 44,941 31,243  Q3 2021
Pamplona, Spain (d)
 100.0% 1
 91,363
 27,369
 9,811
  Q3 2021
Pamplona, Spain (d)
100.0 %1 91,363 28,968 20,997  Q3 2021
Swansea, United Kingdom (e)
 97.0% 1
 176,496
 62,788
 27,849
  Q3 2022
Swansea, United Kingdom (e)
97.0 %1 176,496 93,757 47,426  Q3 2022
Granada, Spain (d)
Granada, Spain (d)
98.5 %1 75,557 22,610 6,037  Q3 2022
Valencia, Spain (d)
 98.7% 1
 100,423
 24,577
 7,093
  Q3 2022
Valencia, Spain (d)
98.7 %1 100,423 27,447 8,084  Q4 2022
Granada, Spain (d)
 98.5% 1
 75,557
 21,204
 4,448
  Q3 2022
   15
 1,643,411
 $445,834
 212,537
 7 921,671 $299,987 174,105 
Third-party contributions (f)
         (7,101) 
Third-party contributions (f)
(4,982)
Total         $205,436
 Total$169,123 
__________
(a)Represents our expected ownership percentage upon the completion of each respective development project.
(b)Amounts related to our 11 international development projects are denominated in a foreign currency. For these projects, amounts are based on their respective exchange rates as of March 31, 2020.
(c)Amounts exclude capitalized interest, accrued costs, and capitalized acquisition fees paid to our Advisor, which are all included in Real estate under construction on our condensed consolidated balance sheets.
(d)Included as part of an agreement with a third-party to become a net-leased property upon completion of construction.
(e)Amount funded for the project includes a $6.8 million right-of-use land lease asset that is included in In-place lease and other intangible assets on our condensed consolidated balance sheets.
(f)Amount represents the funds contributed from our joint-venture partners.

(a)Represents our expected ownership percentage upon the completion of each respective development project.

(b)Amounts are based on the applicable exchange rate as of March 31, 2021.

CPA:18 – Global 3/31/20202021 10-Q– 3832





(c)Amounts exclude capitalized interest, accrued costs, and capitalized acquisition fees paid to our Advisor, which are all included in Real estate under construction on our condensed consolidated balance sheets.
(d)Included as part of an agreement with a third-party to become a net-leased property upon completion of construction.
(e)Amount funded for this project includes a $7.6 million right-of-use (“ROU”) land lease asset as of March 31, 2021, and is included in In-place lease and other intangible assets on our condensed consolidated balance sheets.
(f)Amount represents the funds contributed from our joint-venture partners.

Terms and Definitions


Pro Rata Metrics— The portfolio informationabovecontains certain metrics prepared under the pro rata consolidation method (“Pro Rata Metrics”). We have a number of investments in which our economic ownership is less than 100%. Under the full consolidation method, 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 (loss) income from that investment. Under the pro rata consolidation method, 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, adjusted for collectibility as determined by GAAP, and reflects exchange rates as of March 31, 2020.2021. 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.


NOI — Net operating income (“NOI”) is a non-GAAP measure intended to reflect the performance of our entire portfolio of properties.properties and investments. We define NOI as rentallease revenues and other operating and interest income less non-reimbursable property and corporate expenses as determined by GAAP. We believe that NOI is a helpful measure that both investors and management can use to evaluate the financial performance of our properties and it allows for comparison of our portfolio performance between periods and to other REITs. While we believe that NOI is a useful supplemental measure, it should not be considered as an alternative to Net income (loss) income as an indication of our operating performance.


Stabilized NOI — We use Stabilized NOI, a non-GAAP measure, as a metric to evaluate the performance of our entire portfolio of properties. Stabilized NOI for development projects and newly acquired operating properties that are not yet substantially leased up are not included in our portfolio information until one year after the project has been substantially completed and placed into service, or the property has been substantially leased up (and the project or property has not been disposed of during or prior to the current period). In addition, any newly acquired stabilized operating property is included in our portfolio of Stabilized NOI information upon acquisition. Stabilized NOI for a net-leased property is included in our portfolio information upon acquisition or in the period when it is placed into service (as the property will already have a lease in place).


Stabilized NOI is adjusted for corporate expenses, such as asset management fees and the Available Cash Distributions to our Advisor (Note 3), as well as other gains and (losses) that are calculated and reported at the corporate level and not evaluated as part of any property’s operating performance. Additionally, non-cash adjustments (such as straight-line rent adjustments) and interest income related to our notes receivable (which is non-property related) are not included in Stabilized NOI. Lastly, non-core income is excluded from Stabilized NOI as this income is generally not recurring in nature.


We believe that Stabilized NOI is a helpful measure that both investors and management can use to evaluate the financial performance of our properties and it allows for comparison of our portfolio performance between periods and to other REITs. While we believe that Stabilized NOI is a useful supplemental measure, it should not be considered as an alternative to Net income (loss) income as an indication of our operating performance.




CPA:18 – Global 3/31/20202021 10-Q– 3933





Reconciliation of Net (Loss) Income (GAAP) to Net Operating Income Attributable to CPA:18 – Global (non-GAAP) (in thousands):
Three Months Ended March 31,
20212020
Net Income (Loss) (GAAP)$2,478 $(5,569)
Adjustments:
Depreciation and amortization16,996 14,530 
Allowance for credit losses— 4,865 
Interest expense11,747 10,489 
Other gains and (losses)969 2,072 
Equity in losses of equity method investment in real estate— 54 
Benefit from income taxes(1,101)(394)
NOI related to noncontrolling interests (1)
(3,222)(2,985)
NOI related to equity method investment in real estate (2)
— 630 
Net Operating Income Attributable to CPA:18 – Global (Non-GAAP)$27,867 $23,692 
(1) NOI related to noncontrolling interests:
Net income attributable to noncontrolling interests (GAAP)$(1,967)$(2,611)
Depreciation and amortization(1,684)(1,534)
Interest expense(1,176)(1,134)
Other gains and (losses)(121)341 
Benefit from income taxes187 37 
Available Cash Distributions to a related party (Note 3)
1,539 1,916 
NOI related to noncontrolling interests$(3,222)$(2,985)
(2) NOI related to equity method investment in real estate:
Equity in losses of equity method investment in real estate (GAAP)$— $(54)
Depreciation and amortization— 208 
Interest expense— 458 
Other gains and (losses)— 5 
Benefit from income taxes— 13 
NOI related to equity method investment in real estate$— $630 
 Three Months Ended March 31,
 2020 2019
Net (Loss) Income (GAAP)$(5,569) $19,673
Adjustments:   
Depreciation and amortization14,530
 15,372
Allowance for credit losses4,865
 —
Interest expense10,489
 12,357
Other gains and (losses)2,072
 (172)
Equity in losses of equity method investment in real estate54
 648
Gain on sale of real estate, net—
 (15,408)
Benefit from (provision for) income taxes(394) 924
NOI related to noncontrolling interests (1)
(2,985) (3,095)
NOI related to equity method investment in real estate (2)
630
 139
Net Operating Income Attributable to CPA:18 – Global (Non-GAAP)$23,692
 $30,438
    
(1) NOI related to noncontrolling interests:   
Net income attributable to noncontrolling interests (GAAP)$(2,611) $(4,846)
Depreciation and amortization(1,534) (1,610)
Interest expense(1,134) (1,256)
Other gains and (losses)341
 (110)
Gain on sale of real estate, net—
 2,874
Benefit from income taxes37
 5
Available Cash Distributions to a related party (Note 3)
1,916
 1,848
NOI related to noncontrolling interests$(2,985) $(3,095)
    
(2) NOI related to equity method investment in real estate:   
Equity in losses of equity method investment in real estate (GAAP)$(54) $(648)
Depreciation and amortization208
 313
Interest expense458
 441
Other gains and (losses)5
 (6)
Benefit from income taxes13
 39
NOI related to equity method investment in real estate$630
 $139




CPA:18 – Global 3/31/20202021 10-Q– 4034





Reconciliation of Stabilized NOI to Net Operating Income Attributable to CPA:18 – Global (Non-GAAP) (pro rata, in thousands):
Three Months Ended March 31,Three Months Ended March 31,
2020 201920212020
Net-leased$20,538
 $21,784
Net-leased$19,392 $20,538 
Self storage9,838
 9,100
Self storage10,167 9,838 
Other operating properties2,034
 —
Other operating properties1,414 2,034 
Stabilized NOI32,410
 30,884
Stabilized NOI30,973 32,410 
Other NOI:   Other NOI:
Corporate (a)
Corporate (a)
(4,959)(5,110)
Straight-line rent adjustments (a)(b)
(5,807) 974
1,307 (5,807)
Corporate (b)
(5,110) (5,111)
Disposed propertiesDisposed properties(115)(22)
Non-core income (c)
1,538
 —
Non-core income (c)
69 1,538 
Notes receivable710
 1,832
Notes receivable— 710 
Disposed properties(22) 303
23,719
 28,882
27,275 23,719 
Build-to-Suit and Development Projects (d)
(27) (94)
Recently-opened operating properties (e)
—
 1,650
Recently-opened operating properties (d)
Recently-opened operating properties (d)
610 — 
Development projects (e)
Development projects (e)
(18)(27)
Net Operating Income Attributable to CPA:18 – Global (Non-GAAP)$23,692
 $30,438
Net Operating Income Attributable to CPA:18 – Global (Non-GAAP)$27,867 $23,692 
_________
(a)
The three months ended March 31, 2020 includes a $7.0 million write-off of straight-line rent receivables (Note 2).
(b)Includes expenses such as asset management fees, the Available Cash Distributions to our Advisor, as well as other gains and (losses) that are calculated and reported at the corporate level and not evaluated as part of any property’s operating performance.
(c)Includes NOI related to back rents collected from tenants that were previously reserved in prior periods as well as termination income received.
(d)The three months ended March 31, 2020 includes NOI for our ongoing student housing development projects. The three months ended March 31, 2019, includes NOI for a student housing development project that was placed into service during the third quarter of 2019. Refer to the Development Projects table above for a listing of all current projects.
(e)The three months ended March 31, 2019 includes NOI for the student housing operating properties located in Portsmouth and Cardiff, United Kingdom, which were completed during the third quarter of 2018, as well as phases of the Canadian self-storage properties that were placed into service during the year ended December 31, 2018.

(a)Includes expenses such as asset management fees, the Available Cash Distributions to our Advisor, and other costs that are calculated and reported at the corporate level and not evaluated as part of any property’s operating performance.

(b)The three months ended March 31, 2020 includes a $7.0 million write-off of straight-line rent receivables (Note 2).

(c)The three months ended March 31, 2020 includes NOI related to lease related settlements collected from tenants that were previously reserved in prior periods, as well as termination income received.
(d)The three months ended March 31, 2021 includes the student housing operating property located in Austin, Texas, which was placed into service during the fourth quarter of 2020.
(e)Includes NOI for our ongoing student housing development projects.


CPA:18 – Global 3/31/20202021 10-Q– 4135





Results of Operations


We evaluate our results of operations with a focus on: (i) our ability to generate the cash flow necessary to meet our objectives of funding distributions to stockholders and (ii) increasing the value of our real estate investments. As a result, our assessment of operating results gives less emphasis to the effect of unrealized gains and losses, which may cause fluctuations in net income (loss) for comparable periods but have no impact on cash flows, and to other non-cash charges, such as depreciation and impairment charges.


Property Level ContributionRevenues


The following table presents the property level contribution for our consolidated net-leased and operating properties, as well as a reconciliation to net (loss) income attributable to CPA:18 – Global (in thousands):
revenues:
 Three Months Ended March 31,
 2020 2019 Change
Existing Net-Leased Properties     
Lease revenues$22,016
 $30,009
 $(7,993)
Depreciation and amortization(10,668) (11,170) 502
Reimbursable tenant costs(3,128) (3,923) 795
Property expenses(2,020) (1,599) (421)
Property level contribution6,200
 13,317
 (7,117)
Recently Net-Leased Student Housing Properties     
Lease revenues345
 —
 345
Depreciation and amortization(68) —
 (68)
Property expenses(62) —
 (62)
Property level contribution215
 —
 215
Existing Operating Properties     
Operating property revenues18,100
 17,106
 994
Operating property expenses(6,724) (6,408) (316)
Depreciation and amortization(3,794) (3,836) 42
Property level contribution7,582
 6,862
 720
Properties Sold, Held for Sale, or Transferred     
Lease revenues—
 905
 (905)
Operating property revenues—
 355
 (355)
Depreciation and amortization—
 (366) 366
Reimbursable tenant costs—
 (101) 101
Property expenses—
 (184) 184
Operating property expenses—
 (58) 58
Property level contribution—
 551
 (551)
Property Level Contribution13,997
 20,730
 (6,733)
Add other income:     
Interest income and other2,419
 1,919
 500
Less other expenses:     
Allowance for credit losses

(4,865) —
 (4,865)
Asset management fees(3,002) (2,868) (134)
General and administrative(1,897) (1,759) (138)
 6,652
 18,022
 (11,370)
Other Income and Expenses     
Interest expense(10,489) (12,357) 1,868
Other gains and (losses)(2,072) 172
 (2,244)
Equity in losses of equity method investment in real estate(54) (648) 594
Gain on sale of real estate, net—
 15,408
 (15,408)
 (12,615) 2,575
 (15,190)
(Loss) income before income taxes(5,963) 20,597
 (26,560)
Benefit from (provision for) income taxes394
 (924) 1,318
Net (Loss) Income(5,569) 19,673
 (25,242)
Net income attributable to noncontrolling interests(2,611) (4,846) 2,235
Net (Loss) Income Attributable to CPA:18 – Global$(8,180) $14,827
 $(23,007)
Three Months Ended March 31,
20212020Change
Revenues
Revenues from:
Existing net-leased properties$27,167 $22,263 $4,904 
Recently net-leased student housing properties1,556 — 1,556 
Net-leased properties sold— 98 (98)
Total net-leased revenues (including reimbursable tenant costs)28,72322,3616,362 
Revenues from:
Existing operating properties18,550 18,103 447 
Recently opened operating properties1,017 — 1,017 
Total operating property revenues19,56718,1031,464 
Interest income and other79 2,416 (2,337)
$48,369 $42,880 $5,489 

Lease Revenues



CPA:18 – Global 3/31/2020 10-Q– 42



Property level contribution is a non-GAAP measure that we believe to be a useful supplemental measure for management and investors in evaluating and analyzing the financial results of our net-leased and operating properties over time. Property level contribution presents the lease and operating property revenues, less property expenses, reimbursable tenant costs, and depreciation and amortization. Reimbursable tenant costs (revenues) are included within Lease revenues in the condensed consolidated statements of operations. We believe that Property level contribution allows for meaningful comparison between periods of the direct costs of owning and operating our net-leased assets and operating properties. When a property is leased on a net lease basis, reimbursable tenant costs are recorded as both income and property expense and, therefore, have no impact on the Property level contribution. While we believe that Property level contribution is a useful supplemental measure, it should not be considered as an alternative to Net (loss) income attributable to CPA:18 – Global as an indication of our operating performance.

Existing Net-Leased Properties

Existing net-leased properties are those we acquired or placed into service prior to January 1, 20192020 and were not sold during the periods presented. For the periods presented, there were 46 existing net-leased properties.


For the three months ended March 31, 20202021 as compared to the same period in 2019, property level contribution2020, lease revenues from existing net-leased properties decreased,increased by $4.9 million, primarily due to a $7.0 million write-off of straight-line rent receivables based on our current assessmentin the prior year period (Note 2), partially offset by approximately $3.5 million of less than 75% likelihood of collecting all remaining contractualuncollected rent on certain net lease hotels during the current year period, which was not recognized due to the adverse impact of the COVID-19 pandemic (Note 2). In addition, lease revenues increased by $1.4 million primarily due to the strengthening of the euro and Norwegian krone in relation the U.S. dollar between the periods.


Recently Net-Leased Student Housing Properties

Recently net-leased student housing properties are those we placed into service subsequent to December 31, 20182019 or remain under construction as a development project.project (and are subject to net leases upon completion of construction). For the periods presented, there were 11ten recently net-leased student housing properties, which is comprised of afour student housing property placed into service during the third quarter of 2019,properties and 10six ongoing student housing development projects.


Existing Net-leased properties sold includes one net lease property sold during the year ended December 31, 2020.

Operating PropertiesProperty Revenues


Existing operating properties are those we acquired or placed into service prior to January 1, 20192020 and were not sold during the periods presented. For the periods presented, there were 67 existing operating properties, which excludescomprised of 65 self-storage properties and two student housing development projects currently under construction.operating properties.


For the three months ended March 31, 20202021 as compared to the same period in 2019,2020, operating property level contributionrevenues from existing operating properties increased by $0.7$0.4 million, primarily due to increasedan increase in occupancy atand unit rates across our self-storage portfolio, partially offset by the adverse effect of the COVID-19 pandemic on the two student housing and self-storage operating properties.


Properties Sold, Held for Sale,
CPA:18 – Global 3/31/2021 10-Q– 36


Recently opened operating properties are student housing operating properties that were placed into service subsequent to December 31, 2019, or Transferredremain under construction as a development project (and are not subject to net leases upon completion of construction). For the periods presented, we had two recent student housing operating properties, comprised of a student housing operating property placed into service during the third quarter of 2020 and an ongoing student housing development project.


During 2019, we sold 11 properties inInterest Income and Other

Interest income and other primarily consists of interest income from our United Kingdom net lease portfolio, as well as our last multi-family residential property located in Fort Walton Beach, Florida. Duringnotes receivable investment (Note 5) and other non-recurring related income. For the three months ended March 31, 2019 we2021 as compared to the same period in 2020, interest income and other decreased by $2.3 million, primarily due to (i) the collection of $0.8 million in lease related settlements in the prior year period as a result of a lease restructuring at one of our properties in 2019; (ii) $0.8 million in termination income recognized gainsin the prior year period; and (iii) a $0.7 million decrease in interest income from our notes receivable as a result of the borrower default on salethe mortgage loan senior to our mezzanine tranche of real estate, as further described below.a mortgage-backed security.


Interest Income
Operating Expenses

Depreciation and OtherAmortization


The following table presents our consolidated depreciation and amortization:
Three Months Ended March 31,
20212020Change
Depreciation and amortization
Net-leased properties$12,670 $10,736 $1,934 
Operating properties4,326 3,794 532 
$16,996 $14,530 $2,466 

For the three months ended March 31, 20202021 as compared to the same period in 2019, interest income2020, depreciation and otheramortization increased $0.5 million, primarily due to $0.8 million in back rents collected in 2020 relating tofor both our net-leased and operating properties as a lease restructuringresult of the five student housing properties placed into service during the second quarter of 2019 with our tenant, Fortenova (formerly Agrokor), and $0.8 million in lease termination income recognized during2020.

Allowance for Credit Losses

During the three months ended March 31, 2020. This was partially offset by a $1.1 million decrease in interest income due to the Mills Fleet mezzanine loan repayment in April 2019.

Allowance for Credit Losses

In accordance with our adoption of ASU 2016-13 (Note 2),2020, we recorded an allowance for credit losses of $4.9 million due to changes in expected economic conditions relating to a net investment in direct financing lease during the three months ended March 31, 2020 (Note 5).




CPA:18 – Global 3/31/2020 10-Q– 43



Asset Management Fees

Our advisor is entitled to an annual asset management fee, which is further described in Note 3.

Other Income and Expenses, and Benefit From Income Taxes


Interest Expense


Our interest expense is directly impacted by the mortgage financings obtained, assumed, or extinguished in connection with our investinginvestment and disposition activity (Note 9).


For the three months ended March 31, 20202021 as compared to the same period in 2019,2020, interest expense decreasedincreased by $1.9$1.3 million, primarily due to refinancing of construction loans during the fourth quarter of 2019, as well as a decrease in total debt primarily related toresult of the salemortgage financings obtained on four of encumberedthe student housing properties placed into service during the year ended 2019. Our average2020.

The following table presents certain information about our outstanding debt balance was $1.1 billion and $1.2 billion during the three months ended March 31, 2020, and 2019 respectively, with a weighted-average annual interest rate of 4.0% and 4.4%, respectively.(dollars in thousands):

Three Months Ended March 31,
20212020
Average outstanding debt balance$1,319,670 $1,140,040 
Weighted-average interest rate3.6 %4.0 %

CPA:18 – Global 3/31/2021 10-Q– 37


Other Gains and (Losses)


Other gains and (losses) primarily consists of gains and losses on foreign currency transactions and derivative instruments. We make intercompany loans to a number of our foreign subsidiaries, most of which do not have the U.S. dollar as their functional currency. Remeasurement of foreign currency intercompany transactions that are scheduled for settlement, consisting primarily of accrued interest and short-term loans, are included in the determination of net income.income (loss). We also recognize gains or losses on foreign currencies held by entities with the U.S. dollar as their functional currency due to fluctuations in foreign exchange rates. The timing and amount of such gains or losses cannot always be estimated and are subject to fluctuation.


2021 — For the three months ended March 31, 2021, net other losses were $1.0 million, which were primarily comprised of net realized and unrealized losses of $1.2 million related to changes in foreign currency exchange rates.

2020 — For the three months ended March 31, 2020, as compared to the same period in 2019, net other gains and (losses) decreased by $2.2losses were $2.1 million, which were primarily due to acomprised of (i) $2.8 million loss recognized for the Ghana VAT receivable write-off as collectibility was no longer deemed probable (Note 4), partially offset by $0.6 million increase due to foreign currency transaction gains being recognized during the three months ended March 31, 2020 (compared toin losses in 2019), relatedrelation to our international investments, primarily related to our short-term intercompany loans as described above.

Equity in Losses of Equity Method Investment in Real Estate

We have an interest in an unconsolidatedpreviously owned investment in Ghana, (ii) $0.4 million in net gains realized upon the settlement of derivatives at maturity, and (iii) $0.2 million in interest income from our Self Storage segment that relates to a joint venture for the development of three self-storage facilities in Canada.cash accounts.

For the three months ended March 31, 2020, as compared to the same period in 2019, equity in losses of equity method investment in real estate increased by $0.6 million primarily due an increase in operating revenues as occupancy rates increased, as well as a reduction to real estate tax expenses during the first quarter 2020.

Gain on Sale of Real Estate, Net

During the three months ended March 31, 2019, we sold our last domestic multi-family residential property, located in Fort Walton Beach, Florida, and a retail building located in Edinburgh, United Kingdom for total proceeds of $17.4 million, net of selling costs, and recorded an aggregate gain on sale of $16.6 million (which includes a $2.9 million gain attributable to noncontrolling interest). The gains on sale of real estate recognized for these dispositions were partially offset by the $1.1 million of disposition fees incurred during the three months ended March 31, 2019 in connection with certain 2018 and 2019 dispositions (Note 3).



CPA:18 – Global 3/31/2020 10-Q– 44




Benefit from (Provision for) Income Taxes


Our net benefit from (provision for) income taxes is primarily related to our international properties.

For the three months ended March 31, 2020, we recorded a benefit from income taxes of $0.4 million, as compared to a provision for income taxes of $0.9 million for the three months ended March 31, 2019. During the three months ended March 31, 2020, the benefit from income taxes recognized is primarily due to a deferred tax benefit of $1.0 million resulting from straight-line rent receivable write-offs based on our current assessment of less than 75% likelihood of collecting all remaining contractual rent on certain net lease hotels (Note 2), offset by a current tax provision of $0.4 million at one of our properties primarily due to termination income received during the current period.

Net Income Attributable to Noncontrolling Interests


For the three months ended March 31, 20202021 as compared to the same period in 2019,2020, our net benefit from income taxes increased by $0.7 million, primarily due to higher interest expense deductions in certain jurisdictions in the current year period, as well as higher current tax expense in the prior year period relating to back rent received from an international tenant.

Net Income Attributable to Noncontrolling Interests

For the three months ended March 31, 2021 as compared to the same period in 2020, net income attributable to noncontrolling interests decreased by $2.2$0.6 million, primarily due to a decrease in the gain on sale ofAvailable Cash Distribution (Note 3), and the losses incurred at our joint venture real estate disposalpreviously owned joint-venture investment in Ghana during the three months ended March 31, 2019.prior year period.


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, fund construction projects, service debt, and fund distributions to stockholders. We currently expect that, for the short-term, the aforementioned cash requirements will be funded by our cash on hand and cash flow from operations. We may also use proceeds from financings and asset sales to fund development projects, build-to-suit investments, and short-term cash requirements.

Our liquidity would be adversely affected by unanticipated costs, greater-than-anticipated operating expenses, and the adverse impact of COVID-19, such as tenants not paying rental obligations. To the extent that our working capital reserve is insufficient to satisfy our cash requirements, additional funds may be provided from cash generated from operations or through short-term borrowings. We may also decide to pay all asset management fees to our Advisor in shares (which effective April 1, 2020, our Advisor elected to receive all of the asset management fees in shares of our Class A common stock). Our Advisor may provide us with a loan facility at its discretion. In addition, we may incur indebtedness by refinancing debt on existing properties, or arrange for the leveraging of any previously unfinanced property.

Sources and Uses of Cash During the Period

Our cash flows will fluctuate periodically due to a number of factors, which may include, among other things: the timing of funding for our build-to-suit and development projects; the timing of the receipt of proceeds from, and the repayment of, non-recourse secured debt and the WPC line of credit, and the receipt of lease revenues; whether our Advisor receives fees in shares of our common stock or cash, which our board of directors must elect after consultation with our Advisor; the timing and characterization of distributions received from equity investments in real estate; the timing of payments of the Available Cash Distributions to our Advisor; and changes in foreign currency exchange rates. Despite these fluctuations, we believe our investments will generate sufficient cash from operations to meet our normal recurring short-term and long-term liquidity needs.needs, as well as the measures noted above. We may also use existing cash resources, the proceeds of non-recourse secured debt, sales of assets, and distributions reinvested in our common stock through our DRIP (as noted below, our board of directors has approved limiting the amount of cash available for our redemption program to the amount reinvested in our DRIP) 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 $0.9decreased by $6.2 million during the three months ended March 31, 20202021 as compared to the same period in 2019,2020, primarily due to the collectionadverse impact of back rents in 2020 related to a lease restructure during the second quarter of 2019COVID-19 pandemic on rent collections and termination income received during the current year period.higher interest expense.


Investing Activities — Our investing activities are generally comprised of funding of development projects, capitalized property-related costs, and payment of deferred acquisition fees to our Advisor for asset acquisitions, and capitalized property-related costs.acquisitions.

Net cash used in investing activities totaled $45.2 million for the three months ended March 31, 2020 primarily due to $38.1 million used to fund construction costs of our development projects (Note 4), $3.6 million of VAT paid in connection with construction funding, and $3.1 million for capital expenditures on our owned real estate.




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Financing Activities — Net cash used inOur financing activities totaled $5.8 million for the three months ended March 31, 2020. This was primarily dueare generally comprised of borrowings, repayments and prepayments of our non-recourse secured debt, and activity relating to cash outflows of $22.7 million related to distributions paid to our stockholders, $8.2 million for the repurchase of shares of our common stock, pursuant to our redemption program described below, $7.5 million for scheduledwhich includes (i) payments and prepayments of mortgage loan principal, and $3.4 million for distributions to noncontrolling interests. These cash outflows were primarily offset by $25.1 million from non-recourse mortgage financings (Note 9), $10.4 million ofstockholders, (ii) distributions that wereare reinvested by stockholders in shares of our common stock through our DRIP, and $0.6 million(iii) repurchases of contributions from noncontrolling interests.shares of our common stock pursuant to our redemption program as described below. In addition, cash paid and received in accordance with our individual agreements with our joint-venture partners are considered financing cash flow activities.


Distributions


Our objectives are to generate sufficient cash flow over time to provide stockholders with distributions. For the three months ended March 31, 2020,2021, we declared distributions to stockholders of $22.8$9.5 million, which were comprised of $11.9$5.1 million of cash distributions and $10.9$4.4 million reinvested by stockholders in shares of our common stock pursuant to our DRIP. From inception through March 31, 2020,2021, we have declared distributions to stockholders totaling $503.6$540.2 million, which were comprised of cash distributions of $245.2$264.7 million and $258.4$275.5 million reinvested by stockholders in shares of our common stock pursuant to our DRIP.


We believe that FFO, a non-GAAP measure, is an appropriate metric to evaluate our ability to fund distributions to stockholders. For a discussion of FFO, see Supplemental Financial Measures below. Since inception, the regular quarterly cash distributions that we pay have principally been covered by FFO or cash flow from operations. However, we have funded a portion of our cash distributions to date using net proceeds from our initial public offering and there can be no assurance that our FFO or cash flow from operations will be sufficient to cover our future distributions. Our distribution coverage using both FFO was approximately 22.0% (which includes a non-cash allowance for credit loss of $4.9 million and straight-line rent write-offs of $7.0 million (Note 2)) of totalnet cash provided by operating activities fully covered our distributions declared for the three months ended March 31, 2020. Our distribution coverage using FFO (excluding the non-cash allowance for credit loss and straight-line rent write-offs) was approximately 73.8% of total distributions declared for the three months ended March 31, 2020. We funded 99.8% of total distributions declared for the three months ended March 31, 2020 from Net cash provided by operating activities, while the remainder was funded from other investing and financing cash flows.2021.


Redemptions


We maintain a quarterly redemption program pursuant to which we may, at the discretion of our board of directors, redeem shares of our common stock from stockholders seeking liquidity. ForOn August 31, 2020, our board of directors approved, effective immediately, limiting the amount of cash available for our redemption program to the amount reinvested by stockholders in our DRIP (as further detailed in the Form 8-K filed with the SEC on September 1, 2020).

The following table illustrates our redemption activity in both shares of common stock and dollars during the three months ended March 31, 2020, we received requests to redeem 682,991 and 264,268 shares of Class A and Class C common stock, respectively, comprised of 138 and 57 redemption requests, respectively, which we fulfilled at an average price of $8.58 per share for the Class A and Class C common stock, respectively. As of the date of this Report, we have fulfilled all of the valid redemption requests that we received for the three months ended March 31, 2020. 2021 (dollars in thousands):
Class AClass CTotals
Shares
Dollars (a)
Shares
Dollars (a)
Shares
Dollars (a)
Redemptions unfulfilled beginning balance (b)
995,407 $8,085 716,392 $5,819 1,711,799 $13,904 
Redemptions requested (c)
432,233 3,731 441,297 3,740 873,530 7,471 
Redemptions processed (d)
(299,204)(2,603)(213,687)(1,813)(512,891)(4,416)
Redemptions unfulfilled ending balance (b)
1,128,436 $9,552 944,002 $7,991 2,072,438 $17,543 
___________
(a)Except for redemptions sought in certain defined special circumstances, the redemption price of the shares listed above was 95% of our most recently published quarterly NAVs.NAVs at the time of redemption was made or processed. For shares redeemed under such special circumstances, the redemption price was the greater of the price paid to acquire the shares from us or 95% of our most recently published quarterly NAVs at the time of redemption. Unfulfilled redemptions are reflected at 95% of our most recently published quarterly NAVs.

(b)Requests not fulfilled in one quarter will automatically be carried forward to the next quarter (unless such request is revoked) and processed with new requests on a pro rata basis, following prioritization of special circumstance redemption requests.

(c)Redemptions requested are comprised of 126 and 80 new redemption requests received during the three months ended March 31, 2021 for our Class A and Class C common stock, respectively.
(d)Redemptions were fulfilled at an average price of $8.70 and $8.49 per share for Class A and Class C common stock, respectively.


CPA:18 – Global 3/31/20202021 10-Q– 4639





Summary of Financing
 
The table below summarizes our non-recourse secured debt, net (dollars in thousands):
March 31, 2020 December 31, 2019 March 31, 2021December 31, 2020
Carrying Value (a)
   
Carrying Value (a)
Fixed rate$921,584
 $951,748
Fixed rate$928,697 $942,378 
Variable rate:   Variable rate:
Amount subject to interest rate swaps and caps192,455
 184,361
Amount subject to interest rate swaps and caps254,793 232,519 
Amount subject to floating interest rate69,343
 65,804
Amount subject to floating interest rate146,792 135,481 
261,798
 250,165
401,585 368,000 
$1,183,382
 $1,201,913
$1,330,282 $1,310,378 
Percent of Total Debt   Percent of Total Debt
Fixed rate78% 79%Fixed rate70 %72 %
Variable rate22% 21%Variable rate30 %28 %
100% 100%100 %100 %
Weighted-Average Interest Rate at End of Period   Weighted-Average Interest Rate at End of Period
Fixed rate4.0% 3.9%Fixed rate3.8 %3.8 %
Variable rate (b)
3.7% 3.8%
Variable rate (b)
3.1 %3.2 %
Total debt3.9% 3.9%Total debt3.6 %3.6 %
___________
(a)
Aggregate debt balance includes unamortized deferred financing costs totaling $6.2 million and $5.8 million as of March 31, 2020 and December 31, 2019, respectively, and unamortized premium, net of $1.3 million and $2.1 million as of March 31, 2020 and December 31, 2019, respectively (Note 9).
(b)The impact of our derivative instruments is reflected in the weighted-average interest rates.

(a)Aggregate debt balance includes unamortized deferred financing costs totaling $7.2 million and $6.9 million as of March 31, 2021 and December 31, 2020, respectively, and unamortized premium, net of $2.8 million and $2.5 million as of March 31, 2021 and December 31, 2020, respectively (Note 9).
(b)The impact of our derivative instruments is reflected in the weighted-average interest rates.

Cash Resources
 
As of March 31, 2020,2021, our cash resources consisted of the following:

•cash and cash equivalents totaling $104.9 million.$59.8 million (Note 2). Of this amount, $15.7$39.3 million (at then-current exchange rates) was held in foreign subsidiaries, which may be subject to restrictions or significant costs should we decide to repatriate these funds. In addition, we had a restricted cash balancefunds;
•ability to borrow up to $50.0 million from the unsecured revolving line of $27.0 million primarily consisting of funds held in escrow per the terms of certain non-recourse mortgage loan agreements as well as the provisions set forth in our lease agreementscredit with certain tenants. As ofWPC, which is scheduled to mature on March 31, 2020,2022 (Note 3). In May 2021, we had $23.8borrowed a net amount of $15.0 million on the line of credit to fund loan repayments (Note 13);
•ability to borrow up to $8.7 million and $8.7$2.2 million available to borrow under our third-party and external joint-venture financing arrangements, respectively, primarily for funding of construction of certain development projects. Our cash resources may be used for future construction costsrespectively; and can be used for working capital needs, other commitments, and distributions to our stockholders. In addition, our
•unleveraged properties that had an aggregate carrying value of $186.8$182.6 million as of March 31, 2020,2021, although there can be no assurance that we would be able to obtain financing for these properties. In April 2021, we obtained (i) a construction loan totaling $56.6 million encumbering a student housing development project in Swansea, United Kingdom (Note 13), which had an aggregate carrying value of $56.8 million as of March 31, 2021, and (ii) a $18.1 million non-recourse mortgage loan encumbering one of our net lease student housing properties in Portugal (Note 13), which had an aggregate carrying value of $28.5 million as of March 31, 2021.


Our cash resources may be used for funding construction costs, working capital needs, other commitments, and to make distributions to our stockholders.

CPA:18 – Global 3/31/2021 10-Q– 40


Cash Requirements and Liquidity
 
During the next 12 months following the date of this Report,March 31, 2021 and thereafter, we expect that our significant cash requirements will include making payments to fund capital commitments such as development projects, include:

•paying distributions to our stockholders and to our affiliates that hold noncontrolling interests in entities we control, control;
•funding future capital commitments such as development projects (Note 4);
•making scheduled principal and balloon payments on our debt obligations (Note 9);
•making scheduled interest payments on our debt obligations (future interest payments total $149.6 million, with $45.5 million due during the next 12 months; interest on unhedged variable-rate debt obligations was calculated using the applicable annual variable interest rates); and
•making share repurchases pursuant to our redemption plan, and making scheduled debt service payments, as well as other normal recurring operating expenses. Total principal payments of $114.1 million, including balloon payments totaling $104.6 million on our consolidated mortgage loan obligations, are due during the next 12 months.plan.



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We believe we have sufficient liquidityuse the cash flow generated from our investments primarily to meet our liquidityoperating expenses, service debt, and capital resourcefund distributions to stockholders. We may also use proceeds from asset sales to fund development projects, build-to-suit investments, and short-term cash requirements. We currently expect that, for the short-term, the aforementioned cash requirements primarilywill be funded through availableour cash resources (as noted above), and our cash equivalents, restricted cash,flow from operations, including the cash received under net lease and operating lease agreements,agreements. During 2020, we placed into service five student housing properties (four of which executed net lease agreements), and undrawn capacity underexpect to place into service four properties throughout 2021. In addition, in order to preserve cash and maintain financial flexibility during the COVID-19 pandemic:

•at our construction loans. Additional sources of liquidity, if necessary, includes leveraging our unleveraged properties, asset sales, and paying all asset management fees tooption our Advisor in shares (which effective April 1, 2020, our Advisor elected to receivereceives all of the asset management fees in shares of our Class A common stock). stock since April 1, 2020;
•we have reduced our distributions declared for both Class A and Class C common stock since the second quarter of 2020;
•we limited the amount of cash available for our redemption program to the amount reinvested by stockholders in our DRIP, since August 2020; and
•we have refinanced certain loans and have the ability to refinance loans coming due.

Our Advisor may also provide us with a line of credit at its discretion. Throughliquidity could be adversely affected by unanticipated costs, greater-than-anticipated operating expenses, and the date of this Report, we received from tenants substantially all net lease contractual base rent that was due in the first quarter and 84% of net lease contractual base rent that was due in April. In addition, we wrote off $7.0 million in straight-line rent receivables based on our current assessment of less than 75% likelihood of collecting all remaining contractual rent on certain net lease hotels. Given the significant uncertainty around the duration and severityadverse impact of the impact of COVID-19 we are unable to predict the impact it will have on our tenants’ continued ability to pay rent.

pandemic, such as tenants not paying rental obligations. 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, including the duration of the outbreak and actions taken to contain COVID-19 or treat its impact, among others. The potential impact of COVID-19 on our tenants and properties could have a material adverse effect on our liquidity and debt covenants. Our liquidity would be adversely affected by unanticipated costs, greater-than-anticipated operating expenses, and the adverse impact of COVID-19.confidence.


Off-Balance Sheet Arrangements and Contractual Obligations

The table below summarizes our debt, off-balance sheet arrangements, and other contractual obligations (primarily our capital commitments) as of March 31, 2020 and the effect that these arrangements and obligations are expected to have on our liquidity and cash flow in the specified future periods (in thousands):
 Total 
Less than
1 year
 1-3 years 3-5 years 
More than
5 years
Debt — principal (a)
$1,188,311
 $114,057
 $304,422
 $512,528
 $257,304
Capital commitments (b)
238,001
 188,888
 49,113
 —
 —
Interest on borrowings178,129
 45,285
 74,913
 45,198
 12,733
External joint venture loans, including interest (c)
6,517
 316
 633
 633
 4,935
Deferred acquisition fees (d)
2,925
 2,730
 195
 —
 —
 $1,613,883
 $351,276
 $429,276
 $558,359
 $274,972
__________
(a)
Represents the non-recourse secured debt, net that we obtained in connection with our investments and excludes $6.2 million of deferred financing costs and $1.3 million of unamortized premium, net (Note 9).
(b)
Capital commitments is comprised of estimated construction funding for our current development projects totaling $233.3 million (Note 4), $3.7 million of outstanding commitments on development projects that have been placed into service, and $1.0 million of tenant improvement allowances at certain properties.
(c)
Comprised of loans and related interest from our joint venture partners to the jointly owned investments that we consolidate (Note 3).
(d)
Represents deferred acquisition fees and related interest due to our Advisor as a result of our acquisitions (Note 3). These fees are scheduled to be paid in three equal annual installments following the quarter in which a property was purchased.

Amounts in the tableCertain amounts disclosed above that relate to our foreign operations are based on the exchange rate of the local currencies as of March 31, 2020,2021, which consisted primarily of the euro and Norwegian krone and, to a lesser extent, the British pound sterling. As of March 31, 2020, we had no material capital lease obligations for which we were the lessee, either individually or in the aggregate.




CPA:18 – Global 3/31/2020 10-Q– 48



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 FFO, MFFO, and Adjusted MFFO, which are non-GAAP measures. 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, MFFO, and Adjusted MFFO and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are provided below.


FFO
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.


CPA:18 – Global 3/31/2021 10-Q– 41


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, 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. Our FFO calculation complies with NAREIT’s policy described above. However, NAREIT’s definition of FFO does not distinguish between the conventional method of equity accounting and the hypothetical liquidation at book value method of accounting for unconsolidated partnerships and jointly owned investments.


The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements. We believe that, since real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment, and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate-related depreciation and amortization, as well as impairment charges of real estate-related assets, provides a more complete understanding of our performance to investors and to management; and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. In particular, we believe it is appropriate to disregard impairment charges, as this is a fair value adjustment that is largely based on market fluctuations and assessments regarding general market conditions, which can change over time.


MFFO


Publicly registered, non-traded REITs typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operation. While other start-up entities may also experience significant acquisition activity during their initial years, we believe that non-traded REITs are unique in that they have a limited life with targeted exit strategies within a relatively limited time frame after acquisition activity ceases. We currently intend to beginconsider alternatives for providing liquidity to our stockholders beginning after the processseventh anniversary of achieving a liquidity event (i.e., listing of our common stock on a national exchange, a merger or sale of our assets, or another similar transaction) beginning in April 2022, which is seven years following the closing of our initial public offering. Due to the above factors and other unique features of publicly registered, non-traded REITs, the Institute for Portfolio Alternatives (the “IPA”), an industry trade group, has standardized a measure known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered non-traded REITs and which we believe to be another appropriate non-GAAP measure to reflect our operations. MFFO is not equivalent to our net income or loss as determined under GAAP and may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate with a limited life and targeted exit strategy (as currently intended). Since MFFO excludes costs that we consider more reflective of investing activities and other non-operating items included in FFO, we believe that it provides an indication of the sustainability of our operating performance after our initial property-acquisition phase. We believe that MFFO allows investors and analysts to better assess the sustainability of our operating performance now that our initial public offering is


CPA:18 – Global 3/31/2020 10-Q– 49



complete and the proceeds are invested. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-traded REIT industry.


We define MFFO, a non-GAAP measure, consistent with the IPA’s Practice Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Traded REITs: Modified Funds from Operations (the “Practice Guideline”), issued in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, included in the determination of GAAP net income, as applicable: acquisition fees and expenses; amounts relating to straight-line rents and amortization of above- and below-market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP basis to a cash accrual basis of disclosing the rent and lease payments); accretion of discounts and amortization of premiums on debt investments; nonrecurring impairments of real estate-related investments (i.e., infrequent or unusual, not reasonably likely to recur in the ordinary course of business); mark-to-market adjustments included in net income; nonrecurring gains or losses included in net income from the extinguishment or sale of debt, foreign exchange, derivatives, or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, and after adjustments for consolidated and unconsolidated partnerships and jointly owned investments, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums on debt investments, unrealized gains and losses on hedges, foreign exchange, securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments, are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses that are unrealized and may not ultimately be realized.


CPA:18 – Global 3/31/2021 10-Q– 42


Our MFFO calculation complies with the IPA’s Practice Guideline described above and is adjusted for certain items, such as accretion of discounts and amortizations of premiums on borrowings (as such adjustments are comparable to the permitted adjustments for debt investments), allowance for credit losses, non-cash accretion of environmental liabilities and amortization of right-of-useROU assets, which management believes is helpful in assessing our operating performance.


Our management uses MFFO in order to evaluate our performance against other non-traded REITs, which also have limited lives with defined acquisition periods and targeted exit strategies. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate in this manner. For example, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gains or losses, we believe MFFO provides useful supplemental information.


Adjusted MFFO


In addition, our management uses Adjusted MFFO as another measure of sustainable operating performance. Adjusted MFFO adjusts MFFO for deferred income tax expenses and benefits, which are non-cash items that may cause short-term fluctuations in net income, but have no impact on current period cash flows. Additionally, we adjust MFFO to reflect the realized gains/losses on the settlement of foreign currency derivatives to arrive at Adjusted MFFO. Foreign currency derivatives are a fundamental part of our operations in that they help us manage the foreign currency exposure we have associated with cash flows from our international investments.


FFO, MFFO, and Adjusted MFFO


Presentation of this information is intended to provide useful information to investors as they compare the operating performance of different REITs, although it should be noted that not all REITs calculate FFO, MFFO, and Adjusted MFFO the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO, MFFO, and Adjusted MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO, MFFO, and Adjusted MFFO should be reviewed in conjunction with other GAAP measurements as an indication of our performance.


Neither the SEC, NAREIT, nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO, MFFO, and Adjusted MFFO. In the future, the SEC, NAREIT, or another regulatory body may decide to standardize the allowable adjustments across the non-traded REIT industry and we would have to adjust our calculation and characterization of FFO, MFFO, or Adjusted MFFO accordingly.




CPA:18 – Global 3/31/20202021 10-Q– 5043





FFO, MFFO, and Adjusted MFFO were as follows (in thousands):
Three Months Ended March 31,
Three Months Ended March 31,20212020
2020 2019
Net (loss) income attributable to CPA:18 – Global$(8,180) $14,827
Net income (loss) attributable to CPA:18 – GlobalNet income (loss) attributable to CPA:18 – Global$511 $(8,180)
Adjustments:   Adjustments:
Depreciation and amortization of real property14,530
 15,456
Depreciation and amortization of real property16,996 14,530 
Gain on sale of real estate, net—
 (15,408)
Proportionate share of adjustments for noncontrolling interests to arrive at FFO (a)
(1,534) 1,240
Proportionate share of adjustments for noncontrolling interests to arrive at FFOProportionate share of adjustments for noncontrolling interests to arrive at FFO(1,684)(1,534)
Proportionate share of adjustments to equity in net income of partially owned entities208
 313
Proportionate share of adjustments to equity in net income of partially owned entities— 208 
Total adjustments13,204
 1,601
Total adjustments15,312 13,204 
FFO (as defined by NAREIT) attributable to CPA:18 – Global5,024
 16,428
FFO (as defined by NAREIT) attributable to CPA:18 – Global15,823 5,024 
Adjustments:   Adjustments:
Straight-line and other rent adjustments (b)
6,183
 (1,047)
Allowance for credit losses (c)
4,865
 —
Other (gains) and losses (d) (e)
2,284
 (17)
Straight-line and other rent adjustments (a)
Straight-line and other rent adjustments (a)
(1,118)6,183 
Other (gains) and losses (b)
Other (gains) and losses (b)
1,009 2,284 
Amortization of premiums and discounts242
 374
Amortization of premiums and discounts513 242 
Above and below market rent intangible lease amortization, net (f)
(175) (85)
Above- and below-market rent intangible lease amortization, net (c)
Above- and below-market rent intangible lease amortization, net (c)
(180)(175)
Other amortization and non-cash items80
 —
Other amortization and non-cash items154 80 
Allowance for credit losses (d)
Allowance for credit losses (d)
— 4,865 
Proportionate share of adjustments for noncontrolling interests12
 23
Proportionate share of adjustments for noncontrolling interests(179)12 
Proportionate share of adjustments for partially owned entities5
 —
Proportionate share of adjustments for partially owned entities— 5 
Total adjustments13,496
 (752)Total adjustments199 13,496 
MFFO attributable to CPA:18 – Global18,520
 15,676
MFFO attributable to CPA:18 – Global16,022 18,520 
Adjustments:   Adjustments:
Tax expense, deferred(1,364) (36)Tax expense, deferred(1,806)(1,364)
Hedging gains485
 378
Hedging gains46 485 
Total adjustments(879) 342
Total adjustments(1,760)(879)
Adjusted MFFO attributable to CPA:18 – Global$17,641
 $16,018
Adjusted MFFO attributable to CPA:18 – Global$14,262 $17,641 
__________
(a)The three months ended March 31, 2019 includes a gain on sale with regard to our joint venture real estate disposal.
(b)
Amount for the three months ended March 31, 2020 includes a $7.0 million write-off of straight-line rent receivables (Note 2). Under GAAP, rental receipts are recorded on a straight-line basis over the life of the lease. This may result in timing of income recognition that is significantly different than on an accrual basis.
(c)
In accordance with our adoption of ASU 2016-13 on January 1, 2020, we recorded an allowance for credit loss during the three months ended March 31, 2020 (Note 5).
(d)Primarily comprised of gains and losses from foreign currency movements, gains and losses on derivatives, and loss on extinguishment of debt. The three months ended March 31, 2020 includes a $2.8 million loss to write-off the VAT receivable at Ghana as collectibility was no longer deemed probable.
(e)At September 30, 2019, we aggregated loss on extinguishment of debt and realized (gains) and losses on foreign currency (both of which were previously disclosed as separate MFFO adjustment line items), as well as certain other adjustments, within this line item, which is comprised of adjustments related to Other gains and (losses) on our condensed consolidated statements of operations. Prior period amounts have been reclassified to conform to current period presentation.
(f)Under GAAP, certain intangibles are accounted for at cost and reviewed at least annually for impairment, and certain intangibles are assumed to diminish predictably in value over time and amortized, similar to depreciation and amortization of other real estate related assets that are excluded from FFO. However, because real estate values and market lease rates historically rise or fall with market conditions, management believes that by excluding charges relating to amortization of these intangibles, MFFO, and Adjusted MFFO provides useful supplemental information on the performance of the real estate.

(a)Amount for the three months ended March 31, 2020 includes a $7.0 million write-off of straight-line rent receivables (Note 2). Under GAAP, rental receipts are recorded on a straight-line basis over the life of the lease. This may result in timing of income recognition that is significantly different than on an accrual basis.

(b)Primarily comprised of gains and losses from foreign currency movements, gains and losses on derivatives, and loss on extinguishment of debt. Amount for the three months ended March 31, 2020 includes a $2.8 million loss to write off the value added taxes receivable related to our previous investment in Ghana, as collectibility was no longer deemed probable.
(c)Under GAAP, certain intangibles are accounted for at cost and reviewed at least annually for impairment, and certain intangibles are assumed to diminish predictably in value over time and amortized, similar to depreciation and amortization of other real estate related assets that are excluded from FFO. However, because real estate values and market lease rates historically rise or fall with market conditions, management believes that by excluding charges relating to amortization of these intangibles, MFFO, and Adjusted MFFO provides useful supplemental information on the performance of the real estate.
(d)During the three months ended March 31, 2020, we recorded an allowance for credit losses due to changes in expected economic conditions (Note 5).


CPA:18 – Global 3/31/20202021 10-Q– 5144





Item 3. Quantitative and Qualitative Disclosures About Market Risk.


Market and Credit Risk


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

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. Aside from the impact of COVID-19, discussed below, there have been no material changes in our concentration of credit risk from what was disclosed in the 2019 Annual Report.


The impact of the COVID-19 pandemic both in the Unites States and globally continues to cause uncertainty and volatility in financial markets, including interest rates and foreign currency exchange rates. The outbreak is expected to have a continued adverse impact on market conditions for the foreseeable future and to trigger a period of global economic slowdown with no known duration. At March 31, 2020,2021, our net-leasenet lease portfolio (which excludes operating properties) had the following concentrations (as a percentage of our ABR) for propertyindustry types with heightened risk as a result of the COVID-19 pandemic, based on the percentage of our ABR as of that date:pandemic:


16.3%•16.2% related to hotel and leisure properties;
5.4%•5.2% related to retail facilities (primarily from convenience and wholesale stores);
4.2% related to oil and gas;
3.9% related to advertising, printing, and publishing;
2.3% related to automotive; and
1.6%•4.1% related to student housing (net lease) properties; and

•3.4% related to advertising, printing, and publishing.

Our operating properties portfolio had a concentration of 6.0%4.6% (based on Stabilized NOI) in student housing properties, which has heightened risk due to the impact of the COVID-19 pandemic on the individual students from which we earn student housing revenue.


There may be an impact across all industries and geographic regions in which our tenants operate as a result of COVID-19.the COVID-19 pandemic. Given the significant uncertainty around the duration and severity of the COVID-19 pandemic, we are unable to predict the impact it will have on our tenants’ continued ability to pay rent.


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, our Advisor views our collective tenant roster as a portfolio and attempts 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, related fixed-rate debt obligations, and notes receivable investment 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 have historically attempted to obtain non-recourse secured debt financing on a long-term, fixed-rate basis. However, from time to time, we or our joint investment partners have obtained, and may in the future obtain, variable-rate non-recourse secured debt, 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. See Note 8 for additional information on our interest rate swaps and caps.




CPA:18 – Global 3/31/20202021 10-Q– 5245





As of March 31, 2020,2021, a significant portion (approximately 94.1%89.5%) of our outstanding 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 9 and Liquidity and Capital Resources — Summary of Financing in Item 2 above. The following table presents principal cash outflows for the remainder of 2020,2021, each of the next four calendar years following December 31, 2020,2021, and thereafter, based upon expected maturity dates of our debt obligations outstanding as of March 31, 20202021 (in thousands):

2020 (Remainder) 2021 2022 2023 2024 Thereafter Total
Fair value2021 (remainder)2022202320242025ThereafterTotalFair Value
Fixed-rate debt (a)
$52,573
 $106,792
 $98,839
 $152,694
 $176,101
 $340,521

$927,520

$927,752
Fixed-rate debt (a)
$118,601 $103,895 $157,554 $183,691 $282,275 $87,495 $933,511 $937,094 
Variable rate debt (a)
$7,113
 $45,187
 $90,369
 $51,222
 $22,234
 $44,666

$260,791

$268,960
Variable rate debt (a)
$50,980 $101,101 $170,841 $22,437 $44,512 $11,290 $401,161 $409,777 
__________
(a)Amounts are based on the exchange rate as of March 31, 2020, as applicable.

(a)Amounts are based on the exchange rate as of March 31, 2021, as applicable.

The estimated fair value of our fixed-rate debt and variable-rate debt (which either have effectively been converted to a fixed rate through the use of interest rate swaps) is marginally affected by changes in interest rates. A decrease or increase in interest rates of 1% would change the estimated fair value of this debt as of March 31, 20202021 by an aggregate increase of $34.7$29.2 million or an aggregate decrease of $39.6$35.6 million, respectively. Annual interest expense on our unhedged variable-rate debt as of March 31, 20202021 would increase or decrease by $0.7$1.5 million for each respective 1% change in annual interest rates.


As more fully described under Liquidity and Capital Resources — Summary of Financing in Item 2 above, a portion of our variable-rate debt in the table above bore interest at fixed rates as of March 31, 2020,2021, but has interest rate reset features that will change the fixed interest rates to then-prevailing market fixed rates at certain points during their term. This debt is generally not subject to short-term fluctuations in interest rates.


Foreign Currency Exchange Rate Risk


We own international investments, primarily in Europe and, as a result, are subject to risk from the effects of exchange rate movements in various foreign currencies, primarily the euro and the Norwegian krone, which may affect future costs and cash flows. Although most of our foreign investments through the first quarter of 2020 were conducted in these currencies, weWe have obtained, and may conduct business in other currencies in the future.future obtain, non-recourse mortgage financing in the local currency. Volatile market conditions arising from the spread of COVID-19 global pandemic may result in significant fluctuations in foreign currency exchange rates. We manageTo 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 movements by generally placing both ourbetween the euro, Norwegian krone, or British pound sterling, and the U.S. dollar, there would be a corresponding change in the annual projected estimated cash flow (scheduled future rental revenues, net of scheduled future debt service obligation topayments for the lendernext 12 months) for our consolidated foreign operations at March 31, 2021 of $0.4 million for the euro, $0.1 million for the Norwegian krone and less than $0.1 million for the tenant’s rental obligation to us inBritish pound sterling, excluding the same currency. This reduces our overall exposure to the actual equity that we have invested and the equity portionimpact of our cash flow. 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), 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.


As noted above,We enter into foreign currency forward contracts and collars to hedge certain of our foreign currency cash flow exposures. See Note 8 for additional information on our foreign currency forward contracts and 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 obtained, and maybeen no material changes in our concentration of credit risk from what was disclosed in the future obtain, non-recourse secured debt financing in local currencies. To the extent that currency fluctuations increase or decrease rental revenues, as translated to U.S. dollars, the change in debt service, 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.2020 Annual Report.

Scheduled future lease payments to be received, exclusive of renewals, under non-cancelable operating leases for our consolidated foreign operations as of March 31, 2020 during the remainder of 2020, each of the next four calendar years following December 31, 2020, and thereafter, are as follows (in thousands): 
Lease Revenues (a) (b) 
 2020 (Remainder) 2021 2022 2023 2024 Thereafter Total
Euro (c)
 $35,421
 $47,322
 $45,100
 $42,253
 $39,163
 $327,858
 $537,117
Norwegian krone (d)
 7,649
 9,683
 9,338
 9,338
 6,702
 26,589
 69,299
  $43,070
 $57,005
 $54,438
 $51,591
 $45,865
 $354,447
 $606,416



CPA:18 – Global 3/31/20202021 10-Q– 5346





Scheduled debt service payments (principal and interest) for mortgage notes for our foreign operations as of March 31, 2020, during the remainder of 2020, each of the next four calendar years following December 31, 2020, and thereafter, are as follows (in thousands):
Debt Service (a) (e)
 2020 (Remainder) 2021 2022 2023 2024 Thereafter Total
Euro (c)
 $55,797
 $72,247
 $49,032
 $82,797
 $71,257
 $11,987
 $343,117
Norwegian krone (d)
 4,893
 38,970
 3,394
 3,394
 3,394
 85,575
 139,620
British pound sterling (b)
 1,614
 2,151
 75,179
 —
 —
 —
 78,944
  $62,304
 $113,368
 $127,605
 $86,191
 $74,651
 $97,562
 $561,681
__________
(a)
Amounts are based on the applicable exchange rates as of March 31, 2020. Contractual rents and debt obligations are denominated in the functional currency of the country where each property is located.
(b)The revenues generated from our student housing operating properties located in the United Kingdom are excluded, as they do not meet the criteria of non-cancelable operating leases. We estimate that, for a 1% increase or decrease in the exchange rate between the British pound sterling and the U.S. dollar, there would be a corresponding change in the projected estimated property-level cash flow as of March 31, 2020 of $0.8 million.
(c)We estimate that, for a 1% increase or decrease in the exchange rate between the euro and the U.S. dollar, there would be a corresponding change in the projected estimated property-level cash flow as of March 31, 2020 of $1.9 million.
(d)We estimate that, for a 1% increase or decrease in the exchange rate between the Norwegian krone and the U.S. dollar, there would be a corresponding change in the projected estimated property-level cash flow as of March 31, 2020 of $0.7 million.
(e)Interest on unhedged variable-rate debt obligations was calculated using the applicable annual interest rates and balances outstanding as of March 31, 2020.



CPA:18 – Global 3/31/2020 10-Q– 54



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 Securities Exchange Act of 1934, as amended, (“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 March 31, 2020,2021, have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of March 31, 20202021 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.




CPA:18 – Global 3/31/20202021 10-Q– 5547





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 2019 Annual Report.

We face risks related to the recent spread of the novel coronavirus (“COVID-19”), which could have a material adverse impact on our business, financial condition, NAVs, liquidity, results of operations, and prospects.

We face risks related to the global spread of COVID-19, which has been declared to be a pandemic by the World Health Organization. Risks related to COVID-19 have begun (and may continue) to adversely affect global, national, and local economies and the global financial markets, including the global debt and equity capital markets, which have begun (and are likely to continue) to experience significant volatility, leading to an economic downturn and record unemployment levels that could adversely affect our and has adversely affected our tenants’ respective businesses, financial condition, liquidity, results of operations, and prospects, as well as our NAVs. We can give no assurance that we will be able to maintain dividend levels or continue our redemption program.

We are closely monitoring the impact of COVID-19 on all aspects of our business, including how it will impact our tenants and properties. Our Advisor continues to actively engage in discussions with our tenants and with the third-party managers of our operating properties regarding the impact of COVID-19 on their business operations, liquidity, ability to pay rent and other payments due to us and other parties, and their financial position. Given the significant uncertainty around the duration and severity of the impact of COVID-19, we are unable to predict the impact it will have on our tenants’ continued ability to pay rent. Therefore, information provided regarding historical rent collections should not serve as an indication of expected future rent collections.

It is likely that the COVID-19 pandemic will continue to cause severe economic, market, and other disruptions worldwide. We cannot assure you that conditions in the bank lending and other financial markets will not continue to deteriorate as a result of the pandemic, or that our access to sources of funding and ability to meet our financial covenants will not become constrained, which could adversely affect the availability and terms of future borrowings, renewals, or refinancings. In addition, the deterioration of global economic conditions as a result of the pandemic is likely to negatively impact our tenants.

The extent to which COVID-19 impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak and actions taken to contain COVID-19 or treat its impact, among others. The potential impact of COVID-19 on our tenants and properties could have a material adverse effect on our business, financial condition (including our ability to maintain dividends and redemption program), NAVs, liquidity, results of operations, and prospects.




CPA:18 – Global 3/31/2020 10-Q– 56



Item 2. Unregistered Sales of Equity Securities.


Unregistered Sales of Equity Securities


During the three months ended March 31, 2020,2021, we issued 169,045361,448 shares of our Class A common stock to our Advisor as consideration for asset management fees, which were issued at our most recently published NAV at the datetime of issuance. The sharesAll share issued for January and February 2020 (110,843 shares)during the three months ended March 31, 2021 were based on the NAV as of September 30, 2019 ($8.67), and the shares issued in March 2020 (58,202 shares) were based on the NAV as of December 31, 2019 ($8.94).$8.55. In acquiring our shares, our Advisor represented that such interests were being acquired by it for investment purposes and not with a view to the distribution thereof. thereof. Since none of these transactions were considered to have involved a “public offering” within the meaning of Section 4(a)(2) of the Securities Act of 1933, the shares issued were deemed to be exempt from registration.


All other prior sales of unregistered securities have been reported in our previously filed quarterly and annual reports on Form 10-Q and Form 10-K, respectively.


Issuer Purchases of Equity Securities


The following table provides information with respect to repurchases of our common stock pursuant to our redemption plan during the three months ended March 31, 2020:2021:
Class AClass C
 Class A Class C 
2020 Period 
Total number of Class A
shares purchased (a)
 Average price
paid per share		 
Total number of Class C
shares purchased (a)
 Average price
paid per share		 
Total number of shares
purchased as part of
publicly announced plans or program (a)
 
Maximum number (or
approximate dollar value)of shares that may yet be
purchased under the plans or program (a)
2021 Period2021 Period
Total number of Class A
shares purchased (a)
Average price
paid per share
Total number of Class C
shares purchased (a)
Average price
paid per share
Total number of shares
purchased as part of
publicly announced plans or program (a)
Maximum number (or
approximate dollar value)of shares that may yet be
purchased under the plans or program (a)
January 1-31 —
 $—
 —
 $—
 N/A N/AJanuary 1-31— $— — $— N/AN/A
February 1-29 —
 —
 —
 —
 N/A N/A
February 1-28February 1-28— — — — N/AN/A
March 1-31 682,991
 8.58
 264,268
 8.58
 N/A N/AMarch 1-31299,204 8.70 213,687 8.49 N/AN/A
Total 682,991
   264,268
   Total299,204 213,687 
___________
(a)Represents shares of our Class A and Class C common stock requested to be repurchased under our redemption plan, pursuant to which we may elect to redeem shares at the request of our stockholders, subject to certain exceptions, conditions, and limitations. The maximum amount of shares purchasable by us in any period depends on a number of factors and is at the discretion of our board of directors. During the three months ended March 31, 2020, we received 138 and 57 redemption requests for Class A and Class C common stock, respectively. As of the date of this Report, we have fulfilled all of the valid redemption requests that we received during the three months ended March 31, 2020. We generally receive fees in connection with share redemptions. The average price paid per share will vary depending on the number of redemption requests that were made during the period, the number of redemption requests that qualify for special circumstances, and the most recently published quarterly NAV. For shares redeemed under such special circumstances, the redemption price was the greater of the price paid to acquire the shares from us or 95% of our most recently published NAVs.

(a)Represents shares of our Class A and Class C common stock requested to be repurchased under our redemption plan, pursuant to which we may elect to redeem shares at the request of our stockholders, subject to certain exceptions, conditions, and limitations. The maximum amount of shares purchasable by us in any period depends on a number of factors and is at the discretion of our board of directors. On August 31, 2020, our board of directors approved, effective as of that date, limiting the amount of cash available for our redemption program to the amount reinvested by stockholders in shares of our common stock pursuant to our DRIP (as further detailed in the Form 8-K filed with the SEC on September 1, 2020). During the three months ended March 31, 2021, we received 126 and 80 redemption requests for Class A and Class C common stock, respectively, which included approximately 317,078 and 356,896 shares for $2.7 million and $3.0 million of Class A and Class C common stock, respectively, which remained unfulfilled as of the date of this Report. We generally receive fees in connection with share redemptions. The average price paid per share will vary depending on the number of redemption requests that were made during the period, the number of redemption requests that qualify for special circumstances, and our most recently published quarterly NAVs. For shares redeemed under such special circumstances, the redemption price was the greater of the price paid to acquire the shares from us or 95% of our most recently published quarterly NAVs.



CPA:18 – Global 3/31/20202021 10-Q– 5748





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.DescriptionMethod of Filing
10.131.1Second Amendment to Amended and Restated Advisory Agreement, dated as of May 11, 2020, among Corporate Property Associates 18 – Global Incorporated, CPA:18 Limited Partnership and Carey Asset Management CorpFiled herewith
31.1Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Filed herewith
31.2Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Filed herewith
32Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002Filed herewith
101.INSXBRL Instance DocumentFiled herewith
101.SCHXBRL Taxonomy Extension Schema DocumentFiled herewith
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentFiled herewith
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentFiled herewith
101.LABXBRL Taxonomy Extension Label Linkbase DocumentFiled herewith
101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentFiled herewith




CPA:18 – Global 3/31/20202021 10-Q– 5849


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.

Corporate Property Associates 18 – Global Incorporated
Date:May 10, 2021
By:/s/ ToniAnn Sanzone
ToniAnn Sanzone
Chief Financial Officer
(Principal Financial Officer)
Date:May 10, 2021Corporate Property Associates 18 – Global Incorporated
Date:May 12, 2020By:
By:/s/ ToniAnn Sanzone
ToniAnn Sanzone
Chief Financial Officer
(Principal Financial Officer)
Date:May 12, 2020
By:/s/ Arjun Mahalingam
Arjun Mahalingam
Chief Accounting Officer
(Principal Accounting Officer)




CPA:18 – Global 3/31/20202021 10-Q– 5950


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.DescriptionMethod of Filing
10.131.1Second Amendment to Amended and Restated Advisory Agreement, dated as of May 11, 2020, among Corporate Property Associates 18 – Global Incorporated, CPA:18 Limited Partnership and Carey Asset Management Corp
Filed herewith
31.1Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INSXBRL Instance DocumentFiled herewith
101.SCHXBRL Taxonomy Extension Schema DocumentFiled herewith
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentFiled herewith
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentFiled herewith
101.LABXBRL Taxonomy Extension Label Linkbase DocumentFiled herewith
101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentFiled herewith