UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, ~~2016~~2017

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

For the transition period from__________ to __________

Commission File Number: 001-13779

W. P. ~~CAREY INC.~~Carey Inc.

(Exact name of registrant as specified in its charter)



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

50 Rockefeller Plaza
New York, New York	10020
(Address of principal executive offices)	(Zip Code)

Investor Relations (212) 492-8920

(212) 492-1100

(Registrant’s telephone numbers, including area code)

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	~~Smaller reporting company~~ o
		(Do not check if a smaller reporting company)

Smaller reporting company o	Emerging growth company o

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 ~~106,280,575~~106,909,474 shares of common stock, $0.001 par value, outstanding at October ~~28, 2016.~~27, 2017.

INDEX



		Page No.



PART I −— FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
	Consolidated Balance Sheets	2
	Consolidated Statements of Income	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Statements of ~~Comprehensive Income (Loss)~~Equity	5
	~~Consolidated Statements of Equity~~	6
	Consolidated Statements of Cash Flows	87
	Notes to Consolidated Financial Statements	98
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		4750
Item 3. Quantitative and Qualitative Disclosures About Market Risk		8185
Item 4. Controls and Procedures		8589

PART II −— OTHER INFORMATION
Item 6. Exhibits		8690
Signatures		8791

Forward-Looking Statements

This Quarterly Report on Form 10-Q, or 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: capital markets; tenant credit quality; the general economic outlook; our expected range of Adjusted funds from operations, or AFFO; our corporate strategy; our capital structure; our portfolio lease terms; our international exposure and acquisition volume, including the effects of the United Kingdom’s ~~referendum~~decision to ~~approve an~~ exit ~~from~~ the European Union; our expectations about tenant bankruptcies and interest coverage; statements regarding estimated or future economic performance and results, including our underlying assumptions, occupancy rate, credit ratings, and possible new acquisitions and dispositions by us and our investment management programs; the Managed Programs discussed herein, including their earnings; statements that we make regarding our ability to remain qualified for taxation as a real estate investment trust, or REIT; the impact of ~~a recently-issued pronouncement regarding~~recently issued accounting ~~for leases;~~pronouncements; the amount and timing of any future dividends; our existing or future leverage and debt service obligations; our ability to sell shares under our “at the market” program and the use of proceeds from that program; our estimated future ~~prospects for~~ growth; our projected assets under management; our future capital expenditure levels; our future financing transactions; ~~our estimates of growth;~~ and our plans to fund our future liquidity needs. 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 factors could also have material adverse effects on our business, financial condition, liquidity, results of operations, AFFO, 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, or the SEC, including but not limited to those described in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2015,~~2016, as filed with the SEC on February ~~26, 2016,~~24, 2017, or the ~~2015~~2016 Annual ~~Report, and in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016, as filed with the SEC on August 4, 2016.~~Report. Moreover, because we operate in a very competitive and ~~rapidly-changing~~rapidly changing environment, new risks are likely to emerge from time to time. Given these risks and uncertainties, potential investors are cautioned not to place undue reliance on these forward-looking statements as a prediction of future results, which speak only as of the date of this Report, unless noted otherwise. Except as required by federal securities laws and the rules and regulations of the SEC, we do not undertake to revise or update any forward-looking statements.



	~~W. P. Carey 9/30/2016 10-Q~~– 1

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



	W. P. Carey 9/30/~~2016~~2017 10-Q – 21

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

W. P. CAREY INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share amounts)


	September 30, 2016			December 31, 2015			September 30, 2017			December 31, 2016
Assets
Investments in real estate:
Real estate, at cost	$	5,221,986		$	5,309,925
Operating real estate	81,665			82,749
Accumulated depreciation	(455,613		)	(381,529		)
Net investments in properties	4,848,038			5,011,145
Land, buildings and improvements							$	5,429,239		$	5,285,837
Net investments in direct financing leases	740,745			756,353			717,184			684,059
Assets held for sale, net	128,462			59,046
In-place lease and other intangible assets							1,204,770			1,172,238
Above-market rent intangible assets							639,140			632,383
Assets held for sale							10,596			26,247
Investments in real estate							8,000,929			7,800,764
Accumulated depreciation and amortization							(1,249,024		)	(1,018,864		)
Net investments in real estate	5,717,245			5,826,544			6,751,905			6,781,900
Equity investments in the Managed Programs and real estate	294,690			275,473			327,598			298,893
Cash and cash equivalents	209,483			157,227			169,770			155,482
Due from affiliates	51,508			62,218			154,336			299,610
In-place lease and tenant relationship intangible assets, net	817,151			902,848
Other assets, net							287,481			282,149
Goodwill	640,305			681,809			643,321			635,920
Above-market rent intangible assets, net	406,245			475,072
Other assets, net	331,658			360,898
Total assets	$	8,468,285		$	8,742,089		$	8,334,411		$	8,453,954
Liabilities and Equity
Liabilities:
Non-recourse debt, net	$	1,926,331		$	2,269,421
Senior Unsecured Notes, net	1,837,216			1,476,084
Senior Unsecured Credit Facility - Revolver	378,358			485,021
Senior Unsecured Credit Facility - Term Loan, net	249,915			249,683
Debt:
Unsecured senior notes, net							$	2,455,383		$	1,807,200
Unsecured term loans, net							382,191			249,978
Unsecured revolving credit facility							224,213			676,715
Non-recourse mortgages, net							1,253,051			1,706,921
Debt, net							4,314,838			4,440,814
Accounts payable, accrued expenses and other liabilities	258,977			342,374			255,911			266,917
Below-market rent and other intangible liabilities, net	125,790			154,315			116,980			122,203
Deferred income taxes	72,107			86,104			86,581			90,825
Distributions payable	106,545			102,715			109,187			107,090
Total liabilities	4,955,239			5,165,717			4,883,497			5,027,849
Redeemable noncontrolling interest	965			14,944			965			965
Commitments and contingencies (Note 11)
Equity:
W. P. Carey stockholders’ equity:

Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued	—			—			—			—
Common stock, $0.001 par value, 450,000,000 shares authorized; 106,274,673 and 104,448,777 shares, respectively, issued and outstanding	106			104
Common stock, $0.001 par value, 450,000,000 shares authorized; 106,897,515 and 106,294,162 shares, respectively, issued and outstanding							107			106
Additional paid-in capital	4,389,363			4,282,042			4,429,240			4,399,961
Distributions in excess of accumulated earnings	(834,868		)	(738,652		)	(1,017,901		)	(894,137		)
Deferred compensation obligation	50,576			56,040			46,711			50,222
Accumulated other comprehensive loss	(221,326		)	(172,291		)	(229,581		)	(254,485		)
Total W. P. Carey stockholders’ equity	3,383,851			3,427,243
Total stockholders’ equity							3,228,576			3,301,667
Noncontrolling interests	128,230			134,185			221,373			123,473
Total equity	3,512,081			3,561,428			3,449,949			3,425,140
Total liabilities and equity	$	8,468,285		$	8,742,089		$	8,334,411		$	8,453,954

See Notes to Consolidated Financial Statements.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 32

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except share and per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Revenues
Owned Real Estate:
Lease revenues	$	163,786		$	164,741		$	506,358		$	487,480		$	161,511		$	163,786		$	475,547		$	506,358
Operating property revenues	8,524			8,107			23,696			23,645			8,449			8,524			23,652			23,696
Reimbursable tenant costs	6,537			5,340			19,237			17,409			5,397			6,537			15,940			19,237
Lease termination income and other	1,224			2,988			34,603			9,319			1,227			1,224			4,234			34,603
	180,071			181,176			583,894			537,853			176,584			180,071			519,373			583,894
Investment Management:
Asset management revenue	15,978			13,004			45,596			36,236			17,938			15,978			53,271			45,596
Structuring revenue													9,817			12,301			27,981			30,990
Reimbursable costs from affiliates	14,540			11,155			46,372			28,401			6,211			14,540			45,390			46,372
Structuring revenue	12,301			8,207			30,990			67,735
Dealer manager fees	1,835			1,124			5,379			2,704			105			1,835			4,430			5,379
Other advisory revenue	522			—			522			203			99			522			896			522
	45,176			33,490			128,859			135,279			34,170			45,176			131,968			128,859
	225,247			214,666			712,753			673,132			210,754			225,247			651,341			712,753
Operating Expenses
Depreciation and amortization	62,802			75,512			213,835			206,079			64,040			62,802			189,319			213,835
General and administrative													17,236			15,733			53,189			58,122
Reimbursable tenant and affiliate costs	21,077			16,495			65,609			45,810			11,608			21,077			61,330			65,609
General and administrative	15,733			22,842			58,122			78,987
Impairment charges	14,441			19,438			49,870			22,711
Property expenses, excluding reimbursable tenant costs	10,193			11,120			38,475			31,504			10,556			10,193			31,196			38,475
Subadvisor fees	4,842			1,748			10,010			8,555			5,206			4,842			11,598			10,010
Stock-based compensation expense	4,356			3,966			14,964			16,063			4,635			4,356			14,649			14,964
Restructuring and other compensation													1,356			—			9,074			11,925
Dealer manager fees and expenses	3,028			3,185			9,000			7,884			462			3,028			6,544			9,000
Property acquisition and other expenses	—			4,760			5,359			12,333
Restructuring and other compensation	—			—			11,925			—
Other expenses													65			—			1,138			5,359
Impairment charges													—			14,441			—			49,870
	136,472			159,066			477,169			429,926			115,164			136,472			378,037			477,169
Other Income and Expenses
Interest expense	(44,349		)	(49,683		)	(139,496		)	(145,325		)	(41,182		)	(44,349		)	(125,374		)	(139,496		)
Equity in earnings of equity method investments in the Managed Programs and real estate	16,803			12,635			48,243			38,630			16,318			16,803			47,820			48,243
Other income and (expenses)	5,101			6,608			9,398			9,944			(4,569		)	5,101			(4,969		)	9,398
	(22,445		)	(30,440		)	(81,855		)	(96,751		)	(29,433		)	(22,445		)	(82,523		)	(81,855		)
Income before income taxes and gain on sale of real estate	66,330			25,160			153,729			146,455			66,157			66,330			190,781			153,729
(Provision for) benefit from income taxes	(3,154		)	(3,361		)	4,538			(20,352		)	(1,760		)	(3,154		)	(2,903		)	4,538
Income before gain on sale of real estate	63,176			21,799			158,267			126,103			64,397			63,176			187,878			158,267
Gain on sale of real estate, net of tax	49,126			1,779			68,070			2,980			19,257			49,126			22,732			68,070
Net Income	112,302			23,578			226,337			129,083			83,654			112,302			210,610			226,337
Net income attributable to noncontrolling interests	(1,359		)	(1,833		)	(6,294		)	(7,874		)	(3,376		)	(1,359		)	(8,530		)	(6,294		)
Net Income Attributable to W. P. Carey	$	110,943		$	21,745		$	220,043		$	121,209		$	80,278		$	110,943		$	202,080		$	220,043

Basic Earnings Per Share	$	1.03		$	0.20		$	2.06		$	1.14		$	0.74		$	1.03		$	1.87		$	2.06
Diluted Earnings Per Share	$	1.03		$	0.20		$	2.05		$	1.13		$	0.74		$	1.03		$	1.87		$	2.05
Weighted-Average Shares Outstanding
Basic	107,221,668			105,813,237			106,493,145			105,627,423			108,019,292			107,221,668			107,751,672			106,493,145
Diluted	107,468,029			106,337,040			106,853,174			106,457,495			108,143,694			107,468,029			107,947,490			106,853,174

Distributions Declared Per Share	$	0.9850		$	0.9550		$	2.9392		$	2.8615		$	1.0050		$	0.9850		$	3.0000		$	2.9392

See Notes to Consolidated Financial Statements.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 43

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~ (UNAUDITED)

(in thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Net Income	$	112,302		$	23,578		$	226,337		$	129,083		$	83,654		$	112,302		$	210,610		$	226,337
Other Comprehensive Loss
Other Comprehensive Income (Loss)
Foreign currency translation adjustments	(11,824		)	(37,138		)	(41,999		)	(103,127		)	28,979			(11,824		)	71,686			(41,999		)
Realized and unrealized (loss) gain on derivative instruments	(3,093		)	1,289			(5,999		)	18,488
Change in unrealized (loss) gain on marketable securities	(7		)	—			(3		)	14
Realized and unrealized loss on derivative instruments													(10,270		)	(3,093		)	(32,574		)	(5,999		)
Change in unrealized gain (loss) on marketable securities													66			(7		)	(260		)	(3		)
	(14,924		)	(35,849		)	(48,001		)	(84,625		)	18,775			(14,924		)	38,852			(48,001		)
Comprehensive Income (Loss)	97,378			(12,271		)	178,336			44,458
Comprehensive Income													102,429			97,378			249,462			178,336

Amounts Attributable to Noncontrolling Interests
Net income	(1,359		)	(1,833		)	(6,294		)	(7,874		)	(3,376		)	(1,359		)	(8,530		)	(6,294		)
Foreign currency translation adjustments	(218		)	(43		)	(1,051		)	3,515			(4,716		)	(218		)	(13,961		)	(1,051		)
Realized and unrealized loss on derivative instruments	17			—			17			—			8			17			13			17
Comprehensive income attributable to noncontrolling interests	(1,560		)	(1,876		)	(7,328		)	(4,359		)	(8,084		)	(1,560		)	(22,478		)	(7,328		)
Comprehensive Income (Loss) Attributable to W. P. Carey	$	95,818		$	(14,147	)	$	171,008		$	40,099
Comprehensive Income Attributable to W. P. Carey													$	94,345		$	95,818		$	226,984		$	171,008

See Notes to Consolidated Financial Statements.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 54

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

Nine Months Ended September 30, ~~2016~~2017 and ~~2015~~2016

(in thousands, except share and per share amounts)

W. P. Carey Stockholders
Distributions Accumulated
Common Stock Additional in Excess of Deferred Other Total
$0.001 Par Value Paid-in Accumulated Compensation Comprehensive W. P. Carey Noncontrolling
Shares Amount Capital Earnings Obligation Loss Stockholders Interests Total
Balance at January 1, 2016 104,448,777
$ 104
$ 4,282,042
$ (738,652 ) $ 56,040
$ (172,291 ) $ 3,427,243
$ 134,185
$ 3,561,428
Shares issued under “at-the-market” offering, net 1,249,836
2
83,784
83,786
83,786
Shares issued to a third party in connection with the redemption of a redeemable noncontrolling interest 217,011
—
13,418
13,418
13,418
Contributions from noncontrolling interests (Note 2)
—
14,319
14,319
Shares issued upon delivery of vested restricted stock awards 326,176
—
(14,505 ) (14,505 ) (14,505 )
Shares issued upon exercise of stock options and purchases under employee share purchase plan 32,873
—
(1,491 ) (1,491 ) (1,491 )
Delivery of vested shares, net 5,712
(5,712 ) —
—
Deconsolidation of affiliate (Note 2)
—
(14,184 ) (14,184 )
Amortization of stock-based compensation expense 18,170
18,170
18,170
Redemption value adjustment 561
561
561
Distributions to noncontrolling interests —
(13,418 ) (13,418 )
Distributions declared ($2.9392 per share) 1,672
(316,259 ) 248
(314,339 ) (314,339 )
Net income 220,043
220,043
6,294
226,337
Other comprehensive loss:

Foreign currency translation adjustments (43,050 ) (43,050 ) 1,051
(41,999 )
Realized and unrealized loss on derivative instruments (5,982 ) (5,982 ) (17 ) (5,999 )
Change in unrealized loss on marketable securities (3 ) (3 ) (3 )
Balance at September 30, 2016 106,274,673
$ 106
$ 4,389,363
$ (834,868 ) $ 50,576
$ (221,326 ) $ 3,383,851
$ 128,230
$ 3,512,081



	W. P. Carey Stockholders
							Distributions						Accumulated
	Common Stock			Additional			in Excess of			Deferred			Other			Total
	$0.001 Par Value			Paid-in			Accumulated			Compensation			Comprehensive			W. P. Carey			Noncontrolling
	Shares	Amount		Capital			Earnings			Obligation			Loss			Stockholders			Interests			Total
Balance at January 1, 2017	106,294,162	$	106	$	4,399,961		$	(894,137	)	$	50,222		$	(254,485	)	$	3,301,667		$	123,473		$	3,425,140
Shares issued under “at-the-market” offering, net	345,253	1		22,856												22,857						22,857
Contributions from noncontrolling interests																—			90,487			90,487
Acquisition of noncontrolling interest				(1,845		)										(1,845		)	1,845			—
Shares issued upon delivery of vested restricted share awards	219,540	—		(9,678		)										(9,678		)				(9,678		)
Shares issued upon exercise of stock options and purchases under employee share purchase plan	38,560	—		(1,595		)										(1,595		)				(1,595		)
Delivery of deferred vested shares, net				3,734						(3,734		)				—						—
Amortization of stock-based compensation expense				14,649												14,649						14,649
Distributions to noncontrolling interests																—			(16,910		)	(16,910		)
Distributions declared ($3.0000 per share)				1,158			(325,844		)	223						(324,463		)				(324,463		)
Net income							202,080									202,080			8,530			210,610
Other comprehensive income:
Foreign currency translation adjustments													57,725			57,725			13,961			71,686
Realized and unrealized loss on derivative instruments													(32,561		)	(32,561		)	(13		)	(32,574		)
Change in unrealized loss on marketable securities													(260		)	(260		)				(260		)
Balance at September 30, 2017	106,897,515	$	107	$	4,429,240		$	(1,017,901	)	$	46,711		$	(229,581	)	$	3,228,576		$	221,373		$	3,449,949



	W. P. Carey 9/30/~~2016~~2017 10-Q – 65

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(Continued)

Nine Months Ended September 30, ~~2016~~2017 and ~~2015~~2016

(in thousands, except share and per share amounts)

W. P. Carey Stockholders
Distributions Accumulated
Common Stock Additional in Excess of Deferred Other Total
$0.001 Par Value Paid-in Accumulated Compensation Comprehensive W. P. Carey Noncontrolling
Shares Amount Capital Earnings Obligation Loss Stockholders Interests Total
Balance at January 1, 2015 104,040,653
$ 104
$ 4,293,450
$ (497,730 ) $ 30,624
$ (75,559 ) $ 3,750,889
$ 139,846
$ 3,890,735
Contributions from noncontrolling interests —
586
586
Shares issued upon delivery of vested restricted stock awards 308,146
—
(14,695 ) (14,695 ) (14,695 )
Shares issued upon exercise of stock options and purchases under employee share purchase plan 53,412
—
(1,388 ) (1,388 ) (1,388 )
Deferral of vested shares, net (24,935 ) 24,935
—
—
Windfall tax benefits - share incentive plans 7,028
7,028
7,028
Amortization of stock-based compensation expense 16,063
16,063
16,063
Redemption value adjustment (8,551 ) (8,551 ) (8,551 )
Distributions to noncontrolling interests —
(10,116 ) (10,116 )
Distributions declared ($2.8615 per share) 5,064
(310,698 ) 1,836
(303,798 ) (303,798 )
Net income 121,209
121,209
7,874
129,083
Other comprehensive loss:
Foreign currency translation adjustments (99,612 ) (99,612 ) (3,515 ) (103,127 )
Realized and unrealized gain on derivative instruments 18,488
18,488
18,488
Change in unrealized gain on marketable securities 14
14
14
Balance at September 30, 2015 104,402,211
$ 104
$ 4,272,036
$ (687,219 ) $ 57,395
$ (156,669 ) $ 3,485,647
$ 134,675
$ 3,620,322



	W. P. Carey Stockholders
							Distributions						Accumulated
	Common Stock			Additional			in Excess of			Deferred			Other			Total
	$0.001 Par Value			Paid-in			Accumulated			Compensation			Comprehensive			W. P. Carey			Noncontrolling
	Shares	Amount		Capital			Earnings			Obligation			Loss			Stockholders			Interests			Total
Balance at January 1, 2016	104,448,777	$	104	$	4,282,042		$	(738,652	)	$	56,040		$	(172,291	)	$	3,427,243		$	134,185		$	3,561,428
Shares issued under “at-the-market” offering, net	1,249,836	2		83,784												83,786						83,786
Shares issued to a third party in connection with the redemption of a redeemable noncontrolling interest	217,011	—		13,418												13,418						13,418
Contributions from noncontrolling interests (Note 2)																—			14,319			14,319
Shares issued upon delivery of vested restricted share awards	326,176	—		(14,505		)										(14,505		)				(14,505		)
Shares issued upon exercise of stock options and purchases under employee share purchase plan	32,873	—		(1,491		)										(1,491		)				(1,491		)
Delivery of deferred vested shares, net				5,712						(5,712		)				—						—
Deconsolidation of affiliate (Note 2)																—			(14,184		)	(14,184		)
Amortization of stock-based compensation expense				18,170												18,170						18,170
Redemption value adjustment				561												561						561
Distributions to noncontrolling interests																—			(13,418		)	(13,418		)
Distributions declared ($2.9392 per share)				1,672			(316,259		)	248						(314,339		)				(314,339		)
Net income							220,043									220,043			6,294			226,337
Other comprehensive loss:
Foreign currency translation adjustments													(43,050		)	(43,050		)	1,051			(41,999		)
Realized and unrealized loss on derivative instruments													(5,982		)	(5,982		)	(17		)	(5,999		)
Change in unrealized loss on marketable securities													(3		)	(3		)				(3		)
Balance at September 30, 2016	106,274,673	$	106	$	4,389,363		$	(834,868	)	$	50,576		$	(221,326	)	$	3,383,851		$	128,230		$	3,512,081

See Notes to Consolidated Financial Statements.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 76

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2017			2016
Cash Flows — Operating Activities
Net income	$	226,337		$	129,083		$	210,610		$	226,337
Adjustments to net income:
Depreciation and amortization, including intangible assets and deferred financing costs	216,002			212,273			195,298			216,002
Gain on sale of real estate	(68,070		)	(2,980		)
Impairment charges	49,870			22,711
Investment Management revenue received in shares of Managed REITs and other							(53,170		)	(22,088		)
Distributions of earnings from equity investments	48,303			35,854			49,365			48,303
Equity in earnings of equity method investments in the Managed Programs and real estate	(48,243		)	(38,630		)	(47,820		)	(48,243		)
Management income received in shares of Managed REITs and other	(22,088		)	(16,808		)
Straight-line rent, amortization of rent-related intangibles, and deferred rental revenue	(20,934		)	27,980
Amortization of rent-related intangibles and deferred rental revenue							37,210			(8,796		)
Gain on sale of real estate							(22,732		)	(68,070		)
Stock-based compensation expense							14,649			18,170
Straight-line rent							(13,511		)	(12,138		)
Realized and unrealized losses (gains) on foreign currency transactions, derivatives, extinguishment of debt, and other							13,112			(6,921		)
Deferred income taxes	(19,094		)	(4,537		)	(8,167		)	(19,094		)
Stock-based compensation expense	18,170			16,063
Impairment charges							—			49,870
Allowance for credit losses	7,064			—			—			7,064
Realized and unrealized gain on foreign currency transactions, derivatives, extinguishment of debt, and other	(6,921		)	(3,368		)
Changes in assets and liabilities:
Deferred acquisition revenue received	18,161			20,105
Payments for withholding taxes upon delivery of equity-based awards and exercises of stock options	(15,943		)	(16,443		)
Increase in structuring revenue receivable	(5,310		)	(21,574		)
Deferred structuring revenue received							15,256			18,161
Net changes in other operating assets and liabilities	(15,771		)	(28,826		)	(4,526		)	(15,771		)
Increase in deferred structuring revenue receivable							(3,697		)	(5,310		)
Net Cash Provided by Operating Activities	361,533			330,903			381,877			377,476
Cash Flows — Investing Activities
Proceeds from sale of real estate	392,867			28,949
Purchases of real estate	(385,835		)	(529,812		)
Funding for real estate construction and expansion	(41,874		)	(27,976		)
Proceeds from repayment of short-term loans to affiliates	37,053			50,000			229,696			37,053
Funding of short-term loans to affiliates	(20,000		)	(155,447		)	(123,492		)	(20,000		)
Proceeds from sale of real estate							102,503			392,867
Funding for real estate construction and expansions							(36,741		)	(41,874		)
Capital expenditures on owned real estate							(10,819		)	(7,104		)
Change in investing restricted cash							9,588			7,775
Return of capital from equity investments							6,482			3,522
Purchases of real estate							(6,000		)	(385,835		)
Other investing activities, net							5,728			2,549
Capital contributions to equity investments in real estate							(1,291		)	(6		)
Capital expenditures on corporate assets							(349		)	(846		)
Deconsolidation of affiliate (Note 2)	(15,408		)	—			—			(15,408		)
Investment in assets of affiliate (Note 2)	(14,861		)	—			—			(14,861		)
Proceeds from limited partnership units issued by affiliate (Note 2)	14,184			—			—			14,184
Change in investing restricted cash	7,775			24,607
Capital expenditures on owned real estate	(7,104		)	(3,416		)
Return of capital from equity investments	3,522			5,798
Other investing activities, net	2,223			1,486
Value added taxes refunded in connection with acquisition of real estate	1,037			—
Value added taxes paid in connection with acquisition and construction of real estate	(1,004		)	(10,263		)
Capital expenditures on corporate assets	(846		)	(3,482		)
Proceeds from repayments of note receivable	293			10,258
Capital contributions to equity investments in real estate	(6		)	(15,903		)
Net Cash Used in Investing Activities	(27,984		)	(625,201		)
Net Cash Provided by (Used in) Investing Activities							175,305			(27,984		)
Cash Flows — Financing Activities
Repayments of Senior Unsecured Credit Facility	(837,575		)	(1,104,522		)	(1,557,814		)	(837,575		)
Proceeds from Senior Unsecured Credit Facility	720,568			758,665			1,189,591			720,568
Proceeds from issuance of Senior Unsecured Notes	348,887			1,022,303
Proceeds from issuance of Unsecured Senior Notes							530,456			348,887
Distributions paid	(310,509		)	(302,205		)	(322,389		)	(310,509		)
Scheduled payments of mortgage principal							(303,538		)	(113,420		)
Prepayments of mortgage principal	(193,030		)	(9,678		)	(157,370		)	(193,030		)
Scheduled payments of mortgage principal	(113,420		)	(54,422		)
Contributions from noncontrolling interests							90,487			135
Proceeds from shares issued under “at-the-market” offering, net of selling costs	84,093			—			22,833			84,093
Proceeds from mortgage financing	33,935			22,667
Distributions paid to noncontrolling interests	(13,418		)	(10,116		)	(16,910		)	(13,418		)
Payment of financing costs	(2,949		)	(10,878		)	(12,672		)	(2,949		)
Payments for withholding taxes upon delivery of equity-based awards and exercises of stock options							(11,423		)	(15,943		)
Change in financing restricted cash	1,051			(10,406		)	(2,097		)	926
Proceeds from exercise of stock options and employee purchases under the employee share purchase plan	204			360
Contributions from noncontrolling interests	135			586
Other financing activities, net	(125		)	—
Windfall tax benefit associated with stock-based compensation awards	—			7,028
Net Cash (Used in) Provided by Financing Activities	(282,153		)	309,382
Proceeds from mortgage financing							969			33,935
Proceeds from exercise of stock options and purchases under the employee share purchase plan							149			204
Net Cash Used in Financing Activities							(549,728		)	(298,096		)
Change in Cash and Cash Equivalents During the Period
Effect of exchange rate changes on cash	860			(22,449		)
Effect of exchange rate changes on cash and cash equivalents							6,834			860
Net increase in cash and cash equivalents	52,256			(7,365		)	14,288			52,256
Cash and cash equivalents, beginning of period	157,227			198,683			155,482			157,227
Cash and cash equivalents, end of period	$	209,483		$	191,318		$	169,770		$	209,483

See Notes to Consolidated Financial Statements.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 87

W. P. CAREY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Business and Organization

W. P. Carey Inc., or W. P. Carey, is, together with its consolidated subsidiaries, a REIT that provides long-term financing via sale-leaseback and build-to-suit transactions for companies worldwide and manages a global investment portfolio. We invest primarily in commercial properties domestically and internationally. We earn revenue principally by leasing the properties we own to single corporate tenants, ~~primarily~~ on a triple-net lease basis, which generally requires each tenant to pay ~~substantially all of~~ the costs associated with operating and maintaining the property.

Originally founded in 1973, we reorganized as a REIT in September 2012 in connection with our merger with Corporate Property Associates 15 Incorporated. We refer to that merger as the CPA^®:15 Merger. On January 31, 2014, Corporate Property Associates 16 – Global Incorporated, or CPA^®:16 – Global, merged with and into us, which we refer to as the CPA^®:16 Merger. Our shares of common stock are listed on the New York Stock Exchange under the symbol “WPC.”

We have elected to be taxed as a REIT under Section 856 through 860 of the Internal Revenue Code. As a REIT, we are not generally subject to United States federal income taxation other than from our taxable REIT subsidiaries, or TRSs, as long as we satisfy certain requirements, principally relating to the nature of our income and the level of our distributions, as well as other factors. We also own real property in jurisdictions outside the United States through foreign subsidiaries and are subject to income taxes on our pre-tax income earned from properties in such countries. We hold all of our real estate assets attributable to our Owned Real Estate segment under the REIT structure, while the activities conducted by our Investment Management segment subsidiaries have been organized under TRSs.

Through our TRSs, we also earn revenue as the advisor to publicly owned, non-listed REITs, which are sponsored by us under the Corporate Property Associates, or CPA^®,brand name and invest in similar properties. At September 30, ~~2016,~~2017, we were the advisor to Corporate Property Associates 17 – Global Incorporated, or CPA^®:17 – Global, and Corporate Property Associates 18 – Global Incorporated, or CPA^®:18 – Global. We refer to CPA^®:17 – Global and CPA^®:18 – Global together as the CPA^® REITs.

At September 30, ~~2016,~~2017, we were also the advisor to Carey Watermark Investors Incorporated, or CWI 1, and Carey Watermark Investors 2 Incorporated, or CWI 2, two publicly owned, non-listed REITs that invest in lodging and lodging-related properties. We refer to CWI 1 and CWI 2 together as the CWI REITs and, together with the CPA^® REITs, as the Managed REITs (Note 3).

At September 30, ~~2016, we also served as the advisor to Carey Credit Income Fund, or CCIF, a business development company, or BDC, and three feeder funds of CCIF, or the CCIF Feeder Funds, which are also BDCs (Note 6). In May 2016, one of the CCIF Feeder Funds, Carey Credit Income Fund~~ 2017, T, filed a registration statement on Form N-2 with the SEC to sell up to 106,382,978 shares of its beneficial interest in an initial public offering, with the proceeds to be invested in shares of CCIF. The registration statement was declared effective by the SEC in October 2016 but fundraising has not yet commenced. We refer to CCIF and the CCIF Feeder Funds collectively as the Managed BDCs. At September 30, 2016, we were also the advisor to Carey European Student Housing Fund I, L.P., or CESH I, a limited partnership we formed for the purpose of developing, owning, and operating student housing properties and similar investments in ~~Europe.~~Europe (Note 3). We refer to the Managed REITs ~~Managed BDCs,~~ and CESH I collectively as the Managed Programs.

On ~~May 4, 2016,~~June 15, 2017, our board of directors, or the Board, approved a plan to exit all non-traded retail fundraising activities carried out by our wholly-owned broker-dealer subsidiary, Carey Financial LLC, or Carey Financial, as of June 30, 2017. We currently expect to continue to manage all existing Managed Programs through the end of their respective natural life cycles (Note 3).

In August 2017, we ~~filed~~resigned as the advisor to Carey Credit Income Fund (known as Guggenheim Credit Income Fund since October 23, 2017), or CCIF, and by extension, its feeder funds, or the CCIF Feeder Funds, each of which is a ~~registration statement with~~business development company, or BDC (Note 3). We refer to CCIF and the ~~SEC for Corporate Property Associates 19 – Global Incorporated,~~CCIF Feeder Funds collectively as the Managed BDCs. The board of trustees of CCIF approved our resignation and appointed CCIF’s subadvisor Guggenheim Partners Investment Management, LLC, or ~~CPA~~^®~~:19 – Global,~~Guggenheim, as the interim sole advisor to CCIF, effective as of September 11, 2017. The shareholders of CCIF approved Guggenheim’s appointment as sole advisor on a ~~diversified non-traded REIT, for a capital raise of up to $2.0 billion, which includes $500.0 million of shares allocated to CPA~~^®~~:19 – Global’s distribution reinvestment plan. CPA~~^®:19 – Global’s registration statement remains subject to review by the SEC and state securities regulators, so there can be no assurances as to whether or when the related offering will commence. Through September 30, 2016, the financial activity of CPA^®~~:19 – Global, which has no significant assets, liabilities, or operations, was~~permanent basis on October 20, 2017. The Managed BDCs were included in the Managed Programs prior to our ~~consolidated financial statements. We will continue~~resignation as their advisor.



	W. P. Carey 9/30/2017 10-Q– 8

Notes to ~~consolidate the financial activity of CPA~~^®~~:19 – Global until the point at which it has sufficient equity to finance its operations.~~Consolidated Financial Statements (Unaudited)

Reportable Segments

As a result of our Board’s decision to exit all non-traded retail fundraising activities, described above, we have revised how we view and present a component of our two reportable segments. As such, beginning with the second quarter of 2017, we include equity income generated through our (i) ownership of shares and limited partnership units of the Managed Programs and (ii) special general partner interests in the operating partnerships of the Managed REITs in our Investment Management segment. Previously, these items were recognized within our Owned Real Estate segment. We also include our equity investments in the Managed Programs in our Investment Management segment. Both (i) earnings from our investment in CCIF and (ii) our investment in CCIF continue to be included in our Investment Management segment. Results of operations and assets by segment for prior periods have been reclassified to conform to the current period presentation.

Owned Real Estate — We own and invest in commercial properties principally in ~~the United States,~~North America, Europe, Australia, and Asia, ~~that~~which are ~~then~~ leased to companies, primarily on a triple-net lease basis. We ~~have~~ also ~~invested in several~~own two hotels, which are considered operating ~~properties, such as lodging and self-storage~~ properties. We earn lease revenues from our wholly-owned and co-owned real estate investments that we control. In addition, we generate equity income through co-owned real estate investments that we do not control ~~and through our ownership of shares of the Managed Programs~~ (Note 6~~). Through our special member interests in the operating partnerships of the Managed REITs, we also participate in their cash flows (Note 3~~7). At September 30, ~~2016,~~2017, our owned portfolio was comprised of our full or partial ownership interests in ~~910~~890 properties, totaling approximately ~~91.8~~85.9 million square feet, substantially all of which were net leased to ~~222~~211 tenants, with an occupancy rate of ~~99.1%~~99.8%.



	~~W. P. Carey 9/30/2016 10-Q~~– 9

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

Investment Management — Through our TRSs, we structure and negotiate investments and debt placement transactions for the Managed ~~REITs,~~Programs, for which we earn structuring revenue, and manage their portfolios of real estate investments, for which we earn asset management revenue. We ~~earn~~also earned asset management revenue from CCIF based on the average of its gross assets at fair ~~value. We also earn asset management revenue from CESH I based on gross assets at fair~~ value through the effective date of our resignation as ~~determined on the last day of each calendar quarter.~~its advisor. We may earn disposition revenue when we negotiate and structure the sale of properties on behalf of the Managed REITs, and we may also earn incentive revenue and receive other compensation through our advisory agreements with certain of the Managed Programs, including in connection with providing liquidity events for the Managed REITs’ stockholders.

In addition, we generate equity income through our ownership of shares and limited partnership units of the Managed Programs (Note 7). Through our special general partner interests in the operating partnerships of the Managed REITs, we also participate in their cash flows (Note 3). Our Board’s decision to exit all non-traded retail fundraising activities through Carey Financial as of June 30, 2017, as discussed above, will not affect the continuation of these current revenue streams. At September 30, ~~2016,~~2017, the CPA^®~~:17 – Global and CPA~~^®~~:18 – Global~~REITs collectively owned all or a portion of ~~439~~461 properties ~~including~~(including certain properties in which we have an ownership ~~interest. Substantially~~interest), totaling approximately 54.1 million square feet, substantially all of ~~these properties, totaling approximately 50.1 million square feet,~~which were net leased to ~~210~~207 tenants, with an ~~average~~ occupancy rate of approximately 99.7%. The Managed ~~REITs and CESH I~~Programs also had interests in ~~156~~166 operating properties, totaling approximately ~~19.6~~20.2 million square feet in the aggregate. We continue to explore alternatives for expanding our investment management operations beyond advising the existing Managed Programs. Any such expansion could involve the purchase of properties or other investments as principal, either for our owned portfolio or with the intention of transferring such investments to a newly-created fund. These new funds could invest primarily in assets other than net-lease real estate and could include funds raised through private placements, such as CESH I, or publicly traded vehicles, either in the United States or internationally.

Note 2. Basis of Presentation

Basis of Presentation

Our interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not necessarily include all information and footnotes necessary for a fair statement of our consolidated financial position, results of operations, and cash flows in accordance with generally accepted accounting principles in the United States, or GAAP.

In the opinion of management, the unaudited financial information for the interim periods presented in this Report reflects all normal and recurring adjustments necessary for a fair statement of financial position, results of operations, and cash flows. Our interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for the year ended December 31, ~~2015,~~2016, which are included in the ~~2015~~2016 Annual Report, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this Report. Operating results for interim periods are not necessarily indicative of operating results for an entire year.

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



	W. P. Carey 9/30/2017 10-Q– 9

Notes to Consolidated Financial Statements (Unaudited)

Basis of Consolidation

Our consolidated financial statements reflect all of our accounts, including those of our controlled subsidiaries and our tenancy-in-common interest as described below. 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.

~~On January 1, 2016, we adopted the Financial Accounting Standards Board’s, or FASB’s, Accounting Standards Update, or ASU, 2015-02,~~ ~~Consolidation (Topic 810): Amendments to the Consolidation Analysis~~, as described in the Recent Accounting Pronouncements section below, which amends the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities. When we obtain an economic interest in an entity, we evaluate the entity to determine if it should be deemed a variable interest entity, or VIE, and, if so, whether we are the primary beneficiary and are therefore required to consolidate the entity. We apply accounting guidance for consolidation of VIEs to certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Fixed price purchase and renewal options within a lease, as well as certain decision-making rights within a loan or joint-venture agreement, can cause us to consider an entity a VIE. Limited partnerships and other similar entities that operate as a partnership will be considered a VIE unless the limited partners hold substantive kick-out rights or participation rights. Significant judgment is required to determine whether a VIE should be consolidated. We review the contractual arrangements provided for in the partnership agreement or other related contracts to determine whether the entity is considered a VIE, and to



	~~W. P. Carey 9/30/2016 10-Q~~– 10

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

establish whether we have any variable interests in the VIE. We then compare our variable interests, if any, to those of the other variable interest holders to determine which party is the primary beneficiary of the VIE based on whether the entity (i) has the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. We performed this analysis on all of our subsidiary entities following the guidance in ASU 2015-02 to determine whether they qualify as VIEs and whether they should be consolidated or accounted for as equity investments in an unconsolidated venture. As a result of this change in guidance, we determined that 13 entities that were previously classified as voting interest entities should now be classified as VIEs as of January 1, 2016 and therefore included in our VIE disclosures. However, there was no change in determining whether or not we consolidate these entities as a result of the new guidance. We elected to retrospectively adopt ASU 2015-02, which resulted in changes to our VIE disclosures within the consolidated balance sheets. There were no other changes to our consolidated balance sheets or results of operations for the periods presented. The liabilities of these VIEs are non-recourse to us and can only be satisfied from each VIE’s respective assets.

At September 30, ~~2016,~~2017, we considered 3328 entities to be VIEs, 2621 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 consolidated balance sheets (in thousands):

September 30, 2016 December 31, 2015
Net investments in properties $ 874,736
$ 890,454
Net investments in direct financing leases 61,672
61,454
In-place lease and tenant relationship intangible assets, net 206,908
214,924
Above-market rent intangible assets, net 75,570
80,901
Total assets 1,268,451
1,297,276

Non-recourse debt, net $ 425,706
$ 439,285
Total liabilities 570,170
590,596



	September 30, 2017			December 31, 2016 ^(a)
Land, buildings and improvements	$	910,495		$	886,148
Net investments in direct financing leases	39,897			60,294
In-place lease and other intangible assets	265,852			245,480
Above-market rent intangible assets	102,432			98,043
Accumulated depreciation and amortization	(231,323		)	(184,710		)
Total assets	1,129,154			1,150,093

Non-recourse mortgages, net	$	128,659		$	406,574
Total liabilities	202,514			548,659

__________


(a)	In 2017, we reclassified certain line items in our consolidated balance sheets, as described below. As a result, prior period amounts for certain line items included within Net investments in real estate have been reclassified to conform to the current period presentation.

At September 30, ~~2016~~2017, our seven unconsolidated VIEs included our interests in six unconsolidated real estate investments, which we account for under the equity method of accounting, and one unconsolidated entity, which we account for under the cost method of accounting and is included within our Investment Management segment. At December 31, ~~2015,~~2016, our seven unconsolidated VIEs included our interests in six unconsolidated real estate investments and one unconsolidated entity among our interests in the Managed Programs, all of which we ~~account~~accounted for under the equity method of accounting. We do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities allows us to exercise significant influence on, but does not give us power over, decisions that significantly affect the economic performance of these entities. As of September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the net carrying amount of our investments in these entities was ~~$153.6~~$152.8 million and ~~$154.8~~$152.9 million, respectively, and our maximum exposure to loss in these entities was limited to our investments.

At September 30, ~~2016,~~2017, we had an investment in a tenancy-in-common interest in various underlying international properties. Consolidation of this investment is not required as such interest does not qualify as a VIE and does not meet the control



	W. P. Carey 9/30/2017 10-Q– 10

Notes to Consolidated Financial Statements (Unaudited)

requirement for consolidation. Accordingly, we account for this investment using the equity method of accounting. We use the equity method of accounting because the shared decision-making involved in a tenancy-in-common interest investment provides us with significant influence on the operating and financial decisions of this investment.

At times, the carrying value of our equity investments may fall below zero for certain investments. We intend to fund our share of the ~~jointly-owned~~jointly owned investments’ future operating deficits should the need arise. However, we have no legal obligation to pay for any of the liabilities of such investments, nor do we have any legal obligation to fund operating deficits. At September 30, ~~2016,~~2017, none of our equity investments had carrying values below zero.

On April 20, 2016, we formed a limited partnership, CESH I, for the purpose of developing, owning, and operating student housing properties and similar investments in Europe. CESH I commenced fundraising in July 2016 through a private placement with an initial offering of $100.0 million and a maximum offering of $150.0 million. ~~Through~~Prior to August 30, 2016, which is the ~~financial results and balances of CESH I were included in our consolidated financial statements, and~~date that we had collected $14.2 million of net proceeds on behalf of CESH I from limited partnership units issued in the private placement ~~offering primarily~~(primarily to independent ~~investors.~~investors), we had included CESH I’s financial results and balances in our consolidated financial statements. On August 31, 2016, we determined that CESH I had sufficient equity to finance its operations and that we were no longer considered the primary beneficiary, and as a result we deconsolidated CESH I and began to account for our interest in it at fair value by electing the equity method fair value option available under ~~U.S.~~ GAAP. As of August 31, 2016, CESH I had assets totaling $30.3 million on our consolidated balance sheet, including ~~$14.9 million in Other assets, net and~~ $15.4 million in Cash and cash ~~equivalents.~~equivalents and $14.9 million in Other assets, net. In connection with the deconsolidation, we recorded offsetting amounts of $14.2 million for the nine months ended September 30, 2016 in



	~~W. P. Carey 9/30/2016 10-Q~~– 11

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

Contributions from noncontrolling interests and Deconsolidation of affiliate in the consolidated statements of equity, and in Proceeds from limited partnership units issued by ~~affiliates~~affiliate and Deconsolidation of affiliate in the consolidated statements of cash flows. We recognized a gain on deconsolidation of $1.9 million, which is included in Other income and (expenses) in the consolidated statements of income for the three and nine months ended September 30, 2016. The deconsolidation did not have a material impact on our financial position or results of operations. Following the deconsolidation, we ~~continued~~continue to serve as the advisor to CESH I (Note 3).

~~As of September 30, 2016, CPA~~^®~~:19 – Global had not yet commenced fundraising through its offering. Therefore, we included the financial activity of CPA~~^®:19 – Global in our consolidated financial statements and eliminated all intercompany accounts and transactions in consolidation. For the three and nine months ended September 30, 2016, the consolidated results of operations from CPA^®~~:19 – Global were insignificant. All assets and liabilities of CPA~~^®~~:19 – Global were insignificant as of September 30, 2016.~~

Out-of-Period Adjustments

During the second quarter of 2016, we identified and recorded out-of-period adjustments related to adjustments to prior period income tax returns. We concluded that these adjustments were not material to our consolidated financial statements for any of the current or prior periods presented. The net adjustment is reflected as a $3.0 million reduction of our Benefit from income taxes in the consolidated statements of income for the nine months ended September 30, ~~2016, with a net increase to Accounts payable, accrued expenses and other liabilities and Accumulated other comprehensive loss in the consolidated balance sheet as of September 30,~~ 2016.

Reclassifications

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

~~During~~In 2017, we reclassified in-place lease intangible assets, net, below-market ground lease intangible assets, net (previously included in Other assets, net), and above-market rent intangible assets, net to be included within Net investments in real estate in our consolidated balance sheets. The accumulated amortization on these assets is now included in Accumulated depreciation and amortization in our consolidated balance sheets. We also retitled the ~~year ended December 31, 2015,~~line item Real estate to Land, buildings and improvements in our consolidated balance sheets. In addition, we ~~determined that~~included the line item Operating real estate, which had previously appeared in our ~~presentation of common shares repurchased should be classified as a reduction~~consolidated balance sheets, within Land, buildings and improvements in our consolidated balance sheets. Prior period balances have been reclassified to Common stock, for the par amount of the common shares repurchased, Additional paid-in capital, and Distributions in excess of accumulated earnings, and included as shares unissued within the consolidated financial statements. We previously classified common shares repurchased as Treasury stock in the consolidated financial statements. We evaluated the impact of this correction on previously-issued financial statements and concluded that they were not materially misstated. In order to conform ~~previously-issued financial statements~~ to the current period presentation.

As a result of our Board’s decision to exit all non-traded retail fundraising activities as of June 30, 2017 (Note 1), we ~~elected to revise previously-issued financial statements~~have revised how we view and present a component of our two reportable segments. As such, effective since the ~~next time such financial statements are filed to~~second quarter of 2017, we include ~~the elimination of Treasury stock of $60.9 million, with corresponding reductions of Common stock and Additional paid-in capital of $28.8 million, and Distributions~~(i) equity in ~~excess of accumulated~~ earnings of ~~$32.1 million~~equity method investments in the Managed Programs and (ii) equity investments in the Managed Programs in our Investment Management segment. Results of operations and assets by segment for prior periods have been reclassified to conform to the current period presentation.

In connection with our adoption of Accounting Standards Update, or ASU, 2016-09, Improvements to Employee Share-Based Payment Accounting, as described below, we retrospectively reclassified Payments for withholding taxes upon delivery of ~~September 30, 2015. These revisions resulted~~equity-based awards and exercises of stock options from Net cash provided by operating activities to Net cash used in ~~no change in Total equity~~financing activities within the consolidated balance sheet as of September 30, 2015 and the consolidated statement of equity for the nine months ended September 30, 2015. The accompanying consolidated statement of equity for the nine months ended September 30, 2015 has been revised accordingly. The misclassification had no impact on the previously-reported consolidated statements of income, consolidated statements of comprehensive income, orour consolidated statements of cash flows.

~~On January 1, 2016, we adopted~~ ~~ASU 2015-03, Interest-Imputation of Interest(Subtopic 835-30)~~ as described in the Recent Accounting Pronouncements section below. ASU 2015-03 changes the presentation of debt issuance costs, which were previously recognized as an asset and requires that they be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. As a result of adopting this guidance, we reclassified $12.6 million of deferred financing costs, net from Other assets, net to Non-recourse debt, net, Senior Unsecured Notes, net, and Senior Unsecured Credit Facility - Term Loan, net as of December 31, 2015.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 1211

Notes to Consolidated Financial Statements (Unaudited)

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 does not apply to our lease revenues, which constitute a majority of our revenues, but will primarily apply to ~~reimbursed tenant costs and~~ revenues generated from our operating properties and our Investment Management business. ~~Additionally,~~We will adopt this guidance ~~modifies disclosures regarding~~for our interim and annual periods beginning January 1, 2018 using one of two methods: retrospective restatement for each reporting period presented at the ~~nature, amount, timing and uncertainty~~time of ~~revenue and cash flows arising from contracts~~adoption, or retrospectively with ~~customers. In August 2015,~~ the ~~FASB issued ASU 2015-14, which defers~~cumulative effect of initially applying this guidance recognized at the ~~effective~~ date of ~~ASU 2014-09 for all entities by one year, beginning in 2018, with early~~initial application. We have not decided which method of adoption ~~permitted but not before 2017, the original public company effective date.~~we will use. We are ~~currently~~ evaluating the impact of ~~ASU 2014-09 on our consolidated financial statements~~the new standard and have not yet determined ~~the method by which we~~if it will ~~adopt the standard.~~

~~In February 2015, the FASB issued~~ ~~ASU 2015-02, Consolidation (Topic 810).~~ ASU 2015-02 amends the current consolidation guidance, including modification of the guidance for evaluating whether limited partnerships and similar legal entities are VIEs or voting interest entities. The guidance does not amend the existing disclosure requirements for VIEs or voting interest model entities. The guidance, however, modified the requirements to qualify under the voting interest model. Under the revised guidance, ASU 2015-02 requires an entity to classify a limited liability company or a limited partnership as a VIE unless the partnership provides partners with either substantive kick-out rights or substantive participating rights over the managing member or general partner. Please refer to the discussion in the Basis of Consolidation section above.

~~In April 2015, the FASB issued~~ ~~ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30)~~. ASU 2015-03 changes the presentation of debt issuance costs, which were previously recognized as an asset, and requires that they be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 does not affect the recognition and measurement guidance for debt issuance costs. ASU 2015-03 is effective for periods beginning after December 15, 2015, and retrospective application is required. We adopted ASU 2015-03 on January 1, 2016 and have disclosed the reclassification of our debt issuance costs in the Reclassifications section above.

~~In September 2015, the FASB issued~~ ~~ASU 2015-16, Business Combinations (Topic 805).~~ ASU 2015-16 eliminates the requirement that an acquirer in a business combination account for measurement period adjustments retrospectively. Instead, an acquirer will recognize a measurement period adjustment during the period in which it determines the amount of the adjustment, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had been completed at the acquisition date. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years, early adoption is permitted and prospective application is required for adjustments that are identified after the effective date of this update. We elected to early adopt ASU 2015-16 and implemented the standard prospectively beginning July 1, 2015. The adoption and implementation of the standard did not have a material impact on our business or our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 outlines a new model for accounting by lessees, whereby their rights and obligations under substantially all leases, existing and new, would be capitalized and recorded on the balance sheet. For lessors, however, the accounting remains largely unchanged from the current model, with the distinction between operating and financing leases retained, but updated to align with certain changes to the lessee model and the new revenue recognition standard. The new standard also replaces existing sale-leaseback guidance with a new model applicable to both lessees and lessors. In addition, it also requires lessors to record gross revenues and expenses associated with activities that do not transfer services to the lessee (such as real estate taxes and insurance). Additionally, the new standard requires extensive quantitative and qualitative disclosures. ASU 2016-02 is effective for U.S. GAAP public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years; for all other entities, the final lease standard will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application will be permitted for all entities. The new standard must be adopted using a modified retrospective transition of the new guidance and provides for certain practical expedients. Transition will require application of the new model at the beginning of the earliest comparative period presented. We will adopt this guidance for our interim and annual periods beginning January 1, 2019. The ASU is expected to impact our consolidated financial statements as we have certain operating office and land lease arrangements for which we are the lessee. We are evaluating the impact of the new standard and have not yet determined if it will have a material impact on our business or our consolidated financial statements.

In March 2016, the FASB issued ASU ~~2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.~~ ASU 2016-05 clarifies that a change in counterparty to a derivative contract, in and of itself, does not require the dedesignation of a hedging relationship. ASU 2016-05 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. Early adoption is permitted and entities have the option of adopting this guidance on a prospective basis to new derivative contracts or on a modified retrospective basis. We elected to



	~~W. P. Carey 9/30/2016 10-Q~~– 13

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

~~early adopt ASU 2016-05 on January 1, 2016 on a prospective basis, and there was no impact on our consolidated financial statements.~~

~~In March 2016, the FASB issued~~ ~~ASU 2016-07, Investments – Equity Method and Joint Ventures (Topic 323).~~ ASU 2016-07 simplifies the transition to the equity method of accounting. ASU 2016-07 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. Instead the equity method of accounting will be applied prospectively from the date significant influence is obtained. The new standard should be applied prospectively for investments that qualify for the equity method of accounting in interim and annual periods beginning after December 15, 2016. Early adoption is permitted, and we elected to early adopt this standard as of January 1, 2016. The adoption of this standard had no impact on our consolidated financial statements.

~~In March 2016, the FASB issued~~ ~~ASU~~ 2016-09, Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 amends Accounting Standards Codification, or ASC, Topic 718, Compensation-Stock Based Compensation to simplify various aspects of how share-based payments are accounted for and presented in the financial statements including (i) reflecting income tax effects of share-based payments through the income statement, (ii) allowing statutory tax withholding requirements at the employees’ maximum individual tax rate without requiring awards to be classified as liabilities, and (iii) permitting an entity to make an accounting policy election for the impact of forfeitures on the recognition of expense. ASU 2016-09 is effective for public business entities for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period, with early adoption permitted.

We ~~are in the process~~adopted ASU 2016-09 as of ~~evaluating the~~January 1, 2017 and elected to account for forfeitures as they occur, rather than to account for them based on an estimate of expected forfeitures. This election was adopted using a modified retrospective transition method, with a cumulative effect adjustment to retained earnings. The related financial statement impact of ~~adopting ASU 2016-09~~this adjustment is not material. Depending on several factors, such as the market price of our common stock, employee stock option exercise behavior, and corporate income tax rates, the excess tax benefits associated with the exercise of stock options and the vesting and delivery of restricted share awards, or RSAs, restricted share units, or RSUs, and performance share units, or PSUs, could generate a significant income tax benefit in a particular interim period, potentially creating volatility in Net income attributable to W. P. Carey and basic and diluted earnings per share between interim periods. Under the former accounting guidance, windfall tax benefits related to stock-based compensation were recognized within Additional paid-in capital in our consolidated financial statements. Under ASU 2016-09, these amounts are reflected as a reduction to Provision for income taxes. For reference, windfall tax benefits related to stock-based compensation recorded in Additional paid-in capital for the years ended December 31, 2016 and 2015 were $6.7 million and $12.5 million, respectively. Windfall tax benefits related to stock-based compensation recorded as a deferred tax benefit for the three and nine months ended September 30, 2017 were $0.6 million and $3.6 million, respectively.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments –— Credit Losses. ASU 2016-13 introduces a new model for estimating credit losses based on current expected credit losses for certain types of financial instruments, including loans receivable, held-to-maturity debt securities, and net investments in direct financing leases, amongst other financial instruments. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for losses. ASU 2016-13 will be effective for public business entities in fiscal years beginning after December 15, 2019, including interim periods within



	W. P. Carey 9/30/2017 10-Q– 12

Notes to Consolidated Financial Statements (Unaudited)

those fiscal years, with early application of the guidance permitted. We are in the process of evaluating the impact of adopting ASU 2016-13 on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 intends to reduce diversity in practice for certain cash flow classifications, including, but not limited to (i) debt prepayment or debt extinguishment costs, (ii) contingent consideration payments made after a business combination, (iii) proceeds from the settlement of insurance claims, and (iv) distributions received from equity method investees. ASU 2016-15 will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early application of the guidance permitted. We are in the process of evaluating the impact of adopting ASU 2016-15 on our consolidated financial ~~statements.~~statements and will retrospectively adopt the standard for the fiscal year beginning January 1, 2018.

In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control. ASU 2016-17 changes how a reporting entity that is a decision maker should consider indirect interests in a VIE held through an entity under common control. If a decision maker must evaluate whether it is the primary beneficiary of a VIE, it will only need to consider its proportionate indirect interest in the VIE held through a common control party. ASU 2016-17 amends ASU 2015-02, which we adopted on January 1, 2016, and which currently directs the decision maker to treat the common control party’s interest in the VIE as if the decision maker held the interest itself. ASU 2016-17 is effective for public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We adopted ASU 2016-17 as of January 1, 2017 on a prospective basis. The adoption of this standard did not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 intends to reduce diversity in practice for the classification and presentation of changes in restricted cash on the statement of cash flows. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 will be effective for public business entities in fiscal years beginning after December 15, ~~2016,~~2017, including interim periods within those fiscal years, with early adoption permitted. We are in the process of evaluating the impact of adopting ASU ~~2016-17~~2016-18 on our consolidated financial statements and will retrospectively adopt the standard for the fiscal year beginning January 1, 2018.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 intends to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the current implementation guidance in Topic 805, there are three elements of a business: inputs, processes, and outputs. While an integrated set of assets and activities, collectively referred to as a “set,” that is a business usually has outputs, outputs are not required to be present. ASU 2017-01 provides a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. ASU 2017-01 will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. We elected to early adopt ASU 2017-01 on January 1, 2017 on a prospective basis. While our acquisitions have historically been classified as either business combinations or asset acquisitions, certain acquisitions that were classified as business combinations by us likely would have been considered asset acquisitions under the new standard. As a result, transaction costs are more likely to be capitalized since we expect most of our future acquisitions to be classified as asset acquisitions under this new standard. In addition, goodwill that was previously allocated to businesses that were sold or held for sale will no longer be allocated and written off upon sale if future sales were deemed to be sales of assets and not businesses.

In January 2017, the FASB issued ASU 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 removes step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. ASU 2017-04 will be effective for public business entities in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years in which a goodwill impairment test is performed, with early adoption permitted. We adopted ASU 2017-04 as of April 1, 2017 on a prospective basis. The adoption of this standard did not have a material impact on our consolidated financial statements.



	W. P. Carey 9/30/2017 10-Q– 13

Notes to Consolidated Financial Statements (Unaudited)

In February 2017, the FASB issued ASU 2017-05, Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20). ASU 2017-05 clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments define the term “in substance nonfinancial asset,” in part, as a financial asset promised to a counterparty in a contract if substantially all of the fair value of the assets (recognized and unrecognized) that are promised to the counterparty in the contract is concentrated in nonfinancial assets. If substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets, then all of the financial assets promised to the counterparty are in substance nonfinancial assets within the scope of Subtopic 610-20. This amendment also clarifies that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent company may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. ASU 2017-05 is effective for periods beginning after December 15, 2017, with early application permitted for fiscal years beginning after December 15, 2016. We are in the process of evaluating the impact of ASU 2017-05 on our consolidated financial statements and will adopt the standard for the fiscal year beginning January 1, 2018.

In May 2017, the FASB issued ASU 2017-09, Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 clarifies when to account for a change to the terms and conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, vesting conditions, or classification of the award (as equity or liability) changes as a result of the change in terms or conditions. ASU 2017-09 will be effective in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. We are in the process of evaluating the impact of adopting ASU 2017-09 on our consolidated financial statements and will adopt the standard for the fiscal year beginning January 1, 2018.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess hedge effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. ASU 2017-12 will be effective in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are in the process of evaluating the impact of adopting ASU 2017-12 on our consolidated financial statements.



	W. P. Carey 9/30/2017 10-Q– 14

Notes to Consolidated Financial Statements (Unaudited)

Note 3. Agreements and Transactions with Related Parties

Advisory Agreements with the Managed Programs

We have advisory agreements with each of the Managed Programs, pursuant to which we earn fees and are entitled to receive reimbursement for fund management expenses, as well as cash distributions. WeThe advisory agreements also ~~earn~~entitled us to fees for serving as the ~~dealer-manager~~dealer manager of the offerings of the Managed Programs. However, as previously noted, as of June 30, 2017, we ceased all active non-traded retail fundraising activities. We facilitated the orderly processing of sales of shares of the common stock and limited partnership units of CWI 2 and CESH I, respectively, through July 31, 2017 and closed their respective offerings on that date, and as a result, stopped receiving dealer manager fees after that date. In addition, in August 2017, we resigned as the advisor to CCIF, and our advisory agreement with CCIF was terminated, effective as of September 11, 2017, and as a result, we no longer earned any fees from CCIF after that date. We currently expect to continue to manage all existing Managed Programs through the end of their respective natural life cycles (Note 1). The advisory agreements with each of the Managed REITs have terms of one year, may be renewed for successive one-year periods, and are currently scheduled to expire on December 31, ~~2016,~~2017, unless otherwise renewed. ~~The advisory agreement with CCIF, which commenced February 27, 2015, is subject to renewal on or before February 26, 2017.~~ The advisory agreement with CESH I, which commenced June 3, 2016, will continue until terminated pursuant to its terms.



	~~W. P. Carey 9/30/2016 10-Q~~– 14

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

The following tables present a summary of revenue earned and/or cash received from the Managed Programs for the periods indicated, included in the consolidated financial statements. Asset management revenue excludes amounts received from third parties (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Asset management revenue	$	15,955	$	12,981	$	45,535	$	36,167	$	17,938	$	15,955	$	53,271	$	45,535
Distributions of Available Cash									12,047		10,876		34,568		32,018
Structuring revenue									9,817		12,301		27,981		30,990
Reimbursable costs from affiliates	14,540		11,155		46,372		28,401		6,211		14,540		45,390		46,372
Structuring revenue	12,301		8,207		30,990		67,735
Distributions of Available Cash	10,876		10,182		32,018		28,244
Interest income on deferred acquisition fees and loans to affiliates									447		130		1,464		492
Dealer manager fees	1,835		1,124		5,379		2,704		105		1,835		4,430		5,379
Other advisory revenue	522		—		522		203		99		522		896		522
Interest income on deferred acquisition fees and loans to affiliates	130		576		492		1,172
	$	56,159	$	44,225	$	161,308	$	164,626	$	46,664	$	56,159	$	168,000	$	161,308


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015		2017		2016		2017		2016
CPA^®:17 – Global	$	16,616	$	17,654	$	51,820	$	59,815	$	15,383	$	16,616	$	55,645	$	51,820
CPA^®:18 – Global	5,259		12,725		22,851		56,392		4,042		5,259		18,361		22,851
CWI 1	7,771		7,581		26,453		36,735		11,940		7,771		26,051		26,453
CWI 2	19,924		6,265		49,233		11,684		11,643		19,924		45,206		49,233
CCIF	3,388		—		7,750		—		1,787		3,388		12,777		7,750
CESH I	3,201		—		3,201		—		1,869		3,201		9,960		3,201
	$	56,159	$	44,225	$	161,308	$	164,626	$	46,664	$	56,159	$	168,000	$	161,308



	W. P. Carey 9/30/2017 10-Q– 15

Notes to Consolidated Financial Statements (Unaudited)

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

September 30, 2016 December 31, 2015
Accounts receivable $ 21,903
$ 15,711
Deferred acquisition fees receivable 20,599
33,386
Reimbursable costs 3,840
5,579
Asset management fees receivable 2,529
2,172
Organization and offering costs 1,809
461
Current acquisition fees receivable 828
4,909
$ 51,508
$ 62,218



	~~W. P. Carey 9/30/2016 10-Q~~– 15

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



	September 30, 2017		December 31, 2016
Short-term loans to affiliates, including accrued interest	$	132,210	$	237,613
Deferred acquisition fees receivable, including accrued interest	10,720		21,967
Accounts receivable	5,358		5,005
Reimbursable costs	3,943		4,427
Current acquisition fees receivable	1,508		8,024
Asset management fees receivable	539		2,449
Organization and offering costs	58		784
Distribution and shareholder servicing fees	—		19,341
	$	154,336	$	299,610

Asset Management Revenue

Under the advisory agreements with the Managed Programs, we earn asset management revenue for managing their investment portfolios. The following table presents a summary of our asset management fee arrangements with the Managed Programs:



Managed Program	Rate	Payable	Description
CPA^®:17 – Global	0.5% -– 1.75%	2016 50% in cash and 50% in shares of its common stock; 2017 in shares of its common stock	Rate depends on the type of investment and is based on the average market or average equity value, as applicable
CPA^®:18 – Global	0.5% -– 1.5%	In shares of its ~~class~~Class A common stock	Rate depends on the type of investment and is based on the average market or average equity value, as applicable
CWI 1	0.5%	~~In cash~~2016 in cash; 2017 in shares of its common stock	Rate is based on the average market value of the investment; we are required to pay 20% of the asset management revenue we receive to the subadvisor
CWI 2	0.55%	In shares of its ~~class~~Class A common stock	Rate is based on the average market value of the investment; we are required to pay 25% of the asset management revenue we receive to the subadvisor
CCIF	1.75% -– 2.00%	In cash, prior to our resignation as the advisor to CCIF, effective September 11, 2017 (Note 1)	Based on the average of gross assets at fair value; we ~~are~~were required to pay 50% of the asset management revenue we ~~receive~~received to the subadvisor
CESH I	1.0%	In cash	Based on gross assets at fair value

~~Incentive Fees~~

We are entitled to receive a quarterly incentive fee on income from CCIF equal to 100% of quarterly net investment income, before incentive fee payments, in excess of 1.875% of CCIF’s average adjusted capital up to a limit of 2.344%, plus 20% of net investment income, before incentive fee payments, in excess of 2.344% of average adjusted capital. We are also entitled to receive from CCIF an incentive fee on realized capital gains of 20%, net of (i) all realized capital losses and unrealized depreciation on a cumulative basis, and (ii) the aggregate amount, if any, of previously paid incentive fees on capital gains since inception.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 16

Notes to Consolidated Financial Statements (Unaudited)

Structuring Revenue

Under the terms of the advisory agreements with the Managed ~~REITs and CESH I,~~Programs, we earn revenue for structuring and negotiating investments and related financing. We dodid not earn any structuring revenue from the Managed BDCs. The following table presents a summary of our structuring fee arrangements with the Managed ~~REITs and CESH I:~~Programs:



Managed Program	Rate	Payable	Description
CPA^®:17 – Global	1% -– 1.75%, 4.5%	In cash; for non net-lease investments, 1% -– 1.75% upon completion; for net-lease investments, 2.5% upon completion, with 2% deferred and payable in three interest-bearing annual installments	Based on the total aggregate cost of the net-lease investments made; also based on the total aggregate cost of the non net-lease investments or commitments made; total limited to 6% of the contract prices in aggregate
CPA^®:18 – Global	4.5%	In cash; for all investments, other than readily marketable real estate securities for which we will not receive any acquisition fees, 2.5% upon completion, with 2% deferred and payable in three interest-bearing annual installments	Based on the total aggregate cost of the investments or commitments made; total limited to 6% of the contract prices in aggregate
CWI REITs	2.5%	In cash upon ~~completion~~completion; however, fees were paid 50% in cash and 50% in shares of CWI 1’s common stock and CWI 2’s Class A common stock for a jointly-owned investment structured on behalf of CWI 1 and CWI 2 in September 2017, with the approval of each CWI REIT’s board of directors	Based on the total aggregate cost of the lodging investments or commitments made; loan refinancing transactions up to 1% of the principal amount; we are required to pay 20% and 25% to the ~~subadvisor~~subadvisors of CWI 1 and CWI 2, respectively; total for each CWI REIT limited to 6% of the contract prices in aggregate
CESH I	2.0%	In cash upon completion	Based on the total aggregate cost of investments or commitments made, including the acquisition, development, construction, or re-development of the investments



	W. P. Carey 9/30/2017 10-Q– 17

Notes to Consolidated Financial Statements (Unaudited)

Reimbursable Costs from Affiliates

~~The~~During their respective offering periods, the Managed Programs ~~reimburse~~reimbursed us for certain costs that we ~~incur~~incurred on their behalf, which ~~consist~~consisted primarily of broker-dealer commissions, marketing costs, and an annual distribution and shareholder servicing fee, ~~or Shareholder Servicing Fee,~~as applicable. The offerings for CWI 2 and CESH I closed on July 31, 2017. The Managed Programs will continue to reimburse us for certain personnel and overhead costs ~~as applicable.~~that we incur on their behalf. The following tables present summaries of such fee arrangements:

Broker-Dealer Selling Commissions



Managed Program	Rate	Payable	Description
CWI 2 Class A Shares	~~$0.70~~ January 1, 2016 through March 31, 2017: $0.70 April 27, 2017 through July 31, 2017: $0.84 ^(a)	In cash upon share settlement; 100% re-allowed to broker-dealers	Per share sold
~~CPA~~^®~~:18 – Global Class C Shares~~	~~$0.14~~	~~In cash upon share settlement; 100% re-allowed to broker-dealers~~	~~Per share sold; this offering closed in April 2015~~
CWI 2 Class T Shares	~~$0.19~~ January 1, 2016 through March 31, 2017: $0.19 April 27, 2017 through July 31, 2017: $0.23^(a)	In cash upon share settlement; 100% re-allowed to broker-dealers	Per share sold
CCIF Feeder Funds	Through September 10, 2017: 0% -– 3%^(b)	In cash upon share settlement; 100% re-allowed to broker-dealers	Based on the selling price of each share ~~sold~~sold; the offering for Carey Credit Income Fund 2016 T (known as Guggenheim Credit Income Fund 2016 T since October 23, 2017), or CCIF 2016 T, closed on April 28, 2017
CESH I	Up to 7.0% of gross offering proceeds^(a)	In cash upon limited partnership unit settlement; 100% re-allowed to broker-dealers	Based on the selling price of each limited partnership unit sold

__________


(a)	After the end of active fundraising by Carey Financial on June 30, 2017, we facilitated the orderly processing of sales in the offerings of CWI 2 and CESH I through July 31, 2017, which then closed their respective offerings on that date.


(b)	In August 2017, we resigned as the advisor to CCIF, and our advisory agreement with CCIF was terminated, effective as of September 11, 2017.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 1718

Notes to Consolidated Financial Statements (Unaudited)

Dealer Manager Fees



Managed Program	Rate	Payable	Description
CWI 2 Class A Shares	~~$0.30~~ January 1, 2016 through March 31, 2017: $0.30 April 27, 2017 through July 31, 2017: $0.36 ^(a)	Per share sold	In cash upon share settlement; a portion may be re-allowed to broker-dealers
~~CPA~~^®~~:18 – Global Class C Shares~~	~~$0.21~~	~~Per share sold~~	~~In cash upon share settlement; a portion may be re-allowed to broker-dealers; this offering closed in April 2015~~
CWI 2 Class T Shares	~~$0.26~~ January 1, 2016 through March 31, 2017: $0.26 April 27, 2017 through July 31, 2017: $0.31 ^(a)	Per share sold	In cash upon share settlement; a portion may be re-allowed to broker-dealers
CCIF Feeder Funds	~~2.75% -~~ Through September 10, 2017: 2.50% – 3.0%^(b)	Based on the selling price of each share sold	In cash upon share settlement; a portion may be re-allowed to ~~broker-dealers~~broker-dealers; CCIF 2016 T’s offering closed on April 28, 2017
CESH I	Up to 3.0% of gross offering proceeds^(a)	Per limited partnership unit sold	In cash upon limited partnership unit settlement; a portion may be re-allowed to broker-dealers

__________


(a)	In connection with the end of active fundraising by Carey Financial on June 30, 2017, CWI 2 and CESH I facilitated the orderly processing of sales through July 31, 2017 and closed their respective offerings on that date.


(b)	In August 2017, we resigned as the advisor to CCIF, and our advisory agreement with CCIF was terminated, effective as of September 11, 2017.

Annual Distribution and Shareholder Servicing Fee



Managed Program	Rate	Payable	Description
CPA^®:18 – Global Class C Shares^(a)	1.0%	Accrued daily and payable quarterly in arrears in cash; a portion may be re-allowed to selected dealers	Based on the purchase price per share sold or, once it was reported, the net asset value per ~~share;~~share, or NAV; cease paying when underwriting compensation from all sources equals 10% of gross offering proceeds
CWI 2 Class T Shares^(a)	1.0%	Accrued daily and payable quarterly in arrears in cash; a portion may be re-allowed to selected dealers	Based on the purchase price per share sold or, once it was reported, the ~~net asset value per share;~~NAV; cease paying on the earlier of six years or when underwriting compensation from all sources equals 10% of gross offering proceeds
CCIF 2016 T ^(b)	0.9%	Payable quarterly in arrears in cash; 100% is re-allowed to selected dealers	Based on the weighted-average net price of shares sold in the public offering; cease paying on the earlier of when underwriting compensation from all sources equals, including this fee, 10% of gross offering proceeds or the date at which a liquidity event occurs

__________

(a)

In connection with our exit from all non-traded retail fundraising activities as of June 30, 2017, beginning with the payment for the third quarter of 2017 (which was made during the fourth quarter of 2017), the distribution and shareholder servicing fee is now paid directly to selected dealers by the respective funds. As a result, our liability to the selected dealers and the corresponding receivable from the funds were removed during the third quarter of 2017.


(b)	In connection with our resignation as advisor to CCIF in August 2017, our dealer manager agreement was assigned to Guggenheim. As a result, our liability to the selected dealers and the corresponding receivable from CCIF was removed.



	W. P. Carey 9/30/2017 10-Q– 19

Notes to Consolidated Financial Statements (Unaudited)

Personnel and Overhead Costs



Managed Program	Payable	Description
CPA^®:17 – Global and CPA^®:18 – Global	In cash	Personnel and overhead costs, excluding those related to our legal transactions group, our senior management, and our investments team, are charged to the CPA^® REITs based on the average of the trailing 12-month aggregate reported revenues of the Managed Programs and us, and are capped at ~~2.2%~~2.0% and ~~2.4%~~2.2% of each CPA^® REIT’s pro rata lease revenues for ~~2016~~2017 and ~~2015,~~2016, respectively; for the legal transactions group, costs are charged according to a fee schedule
CWI 1	In cash	Actual expenses ~~incurred;~~incurred, excluding those related to our senior management; allocated between the CWI REITs based on the percentage of their total pro rata hotel revenues for the most recently completed quarter
CWI 2	In cash	Actual expenses ~~incurred;~~incurred, excluding those related to our senior management; allocated between the CWI REITs based on the percentage of their total pro rata hotel revenues for the most recently completed quarter
CCIF and CCIF Feeder Funds	In cash, prior to our resignation as the advisor to CCIF, effective September 11, 2017 (Note 1)	Actual expenses incurred, excluding those related to their investment management team and senior management team
CESH I	In cash	Actual expenses incurred



	~~W. P. Carey 9/30/2016 10-Q~~– 18

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

Organization and Offering Costs



Managed Program	Payable	Description
CWI 2^(a)	In cash; within 60 days after the end of the quarter in which the offering terminates	Actual costs incurred ~~from~~up to 1.5% ~~through 4.0%~~ of the gross offering proceeds ~~depending on the amount raised~~
CCIF and CCIF Feeder Funds^(b)	In cash; payable monthly, prior to our resignation as the advisor to CCIF, effective September 11, 2017 (Note 1)	Up to 1.5% of the gross offering ~~proceeds~~proceeds; we were required to pay 50% of the organization and offering costs we received to the subadvisor
CESH I^(a)	N/A	In lieu of reimbursing us for organization and offering costs, CESH I ~~will pay~~paid us limited partnership units, as described below under Other Advisory Revenue

__________

For CCIF, total reimbursements to us for personnel and overhead costs and organization and offering costs may not exceed 18% of total Front End Fees, as defined in its Declaration of Trust, so that total funds available for investment may not be lower than 82% of total gross proceeds.


(a)	In connection with the end of active fundraising by Carey Financial on June 30, 2017, CWI 2 and CESH I facilitated the orderly processing of sales through July 31, 2017 and closed their respective offerings on that date.


(b)	In August 2017, we resigned as the advisor to CCIF, and our advisory agreement with CCIF was terminated, effective as of September 11, 2017.

Other Advisory Revenue

Under the limited partnership agreement we have with CESH I, we ~~pay~~paid all organization and offering costs ~~regarding~~on behalf of CESH I, and instead of being reimbursed by CESH I on a dollar-for-dollar basis for those costs, we ~~receive~~received limited partnership units of CESH I equal to 2.5% of its gross offering proceeds. This revenue, which commenced in the third quarter of 2016, is included in Other advisory revenue in the consolidated statements of income and totaled $0.1 million and $0.7 million for the three and nine months ended September 30, 2017, respectively, and $0.5 million for both the three and nine months ended September 30, 2016, ~~representing activity following~~respectively. In connection with the ~~deconsolidation~~end of active non-traded retail fundraising by Carey Financial on June 30, 2017, we facilitated the orderly processing of sales of CESH I through July 31, 2017, which closed its offering on ~~August 31, 2016 (Note 2~~).that date.



	W. P. Carey 9/30/2017 10-Q– 20

Notes to Consolidated Financial Statements (Unaudited)

Expense Support and Conditional Reimbursements

Under the expense support and conditional reimbursement agreement we ~~have~~had with each of the CCIF Feeder Funds, we and the CCIF subadvisor ~~are~~were obligated to reimburse the CCIF Feeder Funds ~~for~~ 50% of the excess of the cumulative distributions paid to the CCIF Feeder Funds’ shareholders over the available operating funds on a monthly basis. Following any month in which the available operating funds ~~exceed~~exceeded the cumulative distributions paid to its shareholders, the excess operating funds ~~are~~were used to reimburse us and the CCIF subadvisor for any expense payment we made within three years prior to the last business day of such ~~months~~month that ~~have~~had not been previously reimbursed by the CCIF Feeder Fund, up to the lesser of (i) 1.75% of each CCIF Feeder Fund’s average net assets or (ii) the percentage of each CCIF Feeder Fund’s average net assets attributable to its common shares represented by other operating expenses during the fiscal year in which such expense support payment from us and the CCIF’s subadvisor was made, provided that the effective rate of distributions per share at the time of reimbursement iswas not less than such rate at the time of expense payment. The expense support and conditional reimbursement agreement we had with each of the CCIF Feeder Funds was terminated in connection with our resignation as the advisor to CCIF effective as of September 11, 2017.

Distributions of Available Cash

We are entitled to receive distributions of up to 10% of the Available Cash (as defined in the respective advisory agreements) from the operating partnerships of each of the Managed REITs, as described in their respective operating partnership agreements, payable quarterly in arrears. We are required to pay 20% and 25% of such distributions to the subadvisors of CWI 1 and CWI 2, respectively.

Back-End Fees and Interests in the Managed Programs

Under our advisory agreements with certain of the Managed Programs, we may also receive compensation in connection with providing liquidity events for their stockholders. For the Managed REITs, the timing and form of such liquidity events are at the discretion of each REIT’s board of directors, and in certain instances, we have waived these fees in connection with the liquidity events of prior programs that we managed. Therefore, there can be no assurance as to whether or when any of these back-end fees or interests will be realized.

Other Transactions with Affiliates

Loans to Affiliates

~~During 2015~~From time to time, our Board has approved the making of secured and ~~2014, our board of directors approved~~ unsecured loans from us to ~~CPA~~^®~~:17 – Global~~certain of ~~up to $75.0 million, CPA~~^®~~:18 – Global of up to $100.0 million, CWI 1 and CWI 2 of up to $110.0 million in~~ the ~~aggregate, and CCIF of up to $50.0 million,~~Managed Programs, at our sole discretion, with each loan at a rate equal to the rate at which we are able to borrow funds under our senior credit facility (Note 10), generally for the purpose of facilitating acquisitions approved by their respective investment committees that they would not otherwise have had sufficient available funds to complete. In April 2016, our board of directors approved unsecured loans from us to CESH I of up to $35.0 million, under the same terms andor for ~~the same purpose.~~working capital purposes.

The following table sets forth certain information regarding our loans to affiliates (dollars in thousands):



	Interest Rate at September 30, 2017	Maturity Date at September 30, 2017	Maximum Loan Amount Authorized at September 30, 2017		Principal Outstanding Balance at ^(a)
Managed Program	Interest Rate at September 30, 2017	Maturity Date at September 30, 2017	Maximum Loan Amount Authorized at September 30, 2017		September 30, 2017		December 31, 2016
CWI 1 ^{(b) (c) (d)}	LIBOR + 1.00%	6/30/2018; 12/31/2018	$	100,000	$	97,835	$	—
CPA^®:18 – Global ^{(b) (e)}	LIBOR + 1.00%	10/31/2017; 5/15/2018	50,000		19,000		27,500
CESH I ^(b)	LIBOR + 1.00%	5/3/2018; 5/9/2018	35,000		14,461		—
CWI 2 ^(f)	N/A	N/A	N/A		—		210,000
					$	131,296	$	237,500

__________


(a)	Amounts exclude accrued interest of $0.9 million and $0.1 million at September 30, 2017 and December 31, 2016, respectively.


(b)	LIBOR means London Interbank Offered Rate.


(c)	We entered into a secured credit facility with CWI 1 in September 2017, comprised of a $75.0 million bridge loan to facilitate an acquisition and a $25.0 million revolving working capital facility.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 1921

Notes to Consolidated Financial Statements (Unaudited)

During 2015, various loans aggregating $185.4 million were made to the Managed Programs, all of which were repaid during 2015. All of the loans were made at an interest rate equal to the London Interbank Offered Rate, or LIBOR, as of the issue date, plus 1.1%. During 2015, we arranged credit agreements for each of CPA^®~~:17 – Global, CWI 1, and CCIF, and our board of directors terminated its previous authorizations to provide loans to CPA~~^®~~:17 – Global and CWI 1. In January 2016, our board of directors terminated its previous authorizations to provide loans to CPA~~^®~~:18 – Global and CCIF. However, in July 2016, our board of directors approved unsecured loans from us to CPA~~^®~~:18 – Global of up to $50.0 million, at our sole discretion, with a rate equal to the rate at which we are able to borrow funds under our senior credit facility~~

(d)

In October 2017, CWI 1 repaid $29.2 million, in aggregate, of the loans outstanding to us at September 30, 2017 (~~Note 10), for the purpose of facilitating investments approved by CPA~~^®~~:18 – Global’s investment committee. See~~ Note 17~~, Subsequent Events.~~

~~On January 20, 2016, we made a $20.0 million loan to CWI 2, which was repaid in full on February 20, 2016.~~

In May 2016, we made a total of $17.1 million in loans to CESH I, at an annual interest rate of LIBOR plus 1.1%, which were repaid in full in September 2016, subsequent to the commencement of CESH I’s private placement offering (~~Note 2~~).


(e)	In October 2017, CPA^®:18 – Global repaid in full the amount outstanding to us at September 30, 2017 (Note 17).


(f)	In October 2017, we entered into a secured $25.0 million revolving working capital facility with CWI 2 (Note 17).

Other

~~On February 2, 2016, an entity in which we, one of our employees, and third parties owned~~ ~~38.3%, 0.5%, and 61.2%, respectively, and which we consolidated, sold a self-storage property (Note 15). In connection with the sale, we made a distribution of~~ ~~$0.1 million~~ ~~to the employee, representing the employee’s share of the net proceeds from the sale.~~

At September 30, ~~2016,~~2017, we owned interests ranging from 3% to 90% in ~~jointly-owned~~jointly owned investments in real estate, including a ~~jointly-controlled~~jointly controlled tenancy-in-common interest in several properties, with the remaining interests generally held by ~~affiliates,~~affiliates. In addition, we owned stock of each of the Managed REITs and CCIF, and limited partnership units of CESH I. We consolidate certain of these investments and account for the remainder either (i) under the equity method of accounting, (ii) under the cost method of accounting, or ~~(ii)~~(iii) at fair value by electing the equity method fair value option available under ~~U.S.~~ GAAP (Note 67).

Note 4. ~~Net Investments in Properties~~Land, Buildings and Improvements and Assets Held for Sale

~~Real Estate~~Land, Buildings and Improvements — Operating Leases

~~Real estate, which consists of land~~Land and buildings leased to others, ~~at cost, and~~ which are subject to operating leases, and real estate under construction, isare summarized as follows (in thousands):


	September 30, 2016			December 31, 2015			September 30, 2017			December 31, 2016
Land	$	1,119,158		$	1,160,567		$	1,132,569		$	1,128,933
Buildings	4,065,395			4,147,644			4,194,213			4,053,334
Real estate under construction	37,433			1,714			20,373			21,859
Less: Accumulated depreciation	(444,538		)	(372,735		)	(578,592		)	(472,294		)
	$	4,777,448		$	4,937,190		$	4,768,563		$	4,731,832

During the nine months ended September 30, 2016, the U.S. dollar strengthened against the British pound sterling, as the end-of-period rate for the U.S. dollar in relation to the British pound sterling at September 30, 2016 decreased by 12.6% to $1.2962 from $1.4833 at December 31, 2015. Additionally, during the same period2017, the U.S. dollar weakened against the euro, as the end-of-period rate for the U.S. dollar in relation to the euro increased by ~~2.5%~~12.0% to ~~$1.1161~~$1.1806 from ~~$1.0887.~~$1.0541. As a result of ~~these fluctuations~~this fluctuation in foreign exchange rates, the carrying value of our ~~real estate decreased~~Land, buildings and improvements subject to operating leases increased by ~~$1.5~~$160.5 million from December 31, ~~2015~~2016 to September 30, ~~2016, with the impact of the U.S. dollar strengthening against the British pound sterling more than offsetting the impact of the weakening of the U.S. dollar against the euro.~~2017.

Depreciation expense, ~~for Net investments in properties~~including the effect of foreign currency translation, on our Land, buildings and improvements subject to operating leases was ~~$36.5~~$36.3 million and ~~$35.7~~$35.4 million for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively, and ~~$110.5~~$107.5 million and ~~$105.5~~$107.3 million for the nine months ended September 30, 2017 and 2016, respectively. Accumulated depreciation of real estate is included in Accumulated depreciation and ~~2015, respectively.~~amortization in the consolidated financial statements.



	~~W. P. Carey 9/30/2016 10-Q~~– 20

~~Notes~~In connection with changes in lease classifications due to ~~Consolidated Financial Statements (Unaudited)~~

extensions of the underlying leases, we reclassified six properties with an aggregate carrying value of $1.6 million from Net investments in direct financing leases to Land, buildings and improvements during the nine months ended September 30, 2017 (Note 5).

~~Acquisitions~~Acquisition of Real Estate

~~During the nine months ended September 30, 2016,~~On June 27, 2017, we ~~entered into the following investments,~~acquired an industrial facility in Chicago, Illinois, which ~~were~~was deemed to be a real estate asset ~~acquisitions because we acquired the sellers’ properties and simultaneously entered into new leases in connection with the acquisitions,~~acquisition, at a total cost of ~~$385.8~~$6.0 million, including land of ~~$103.7~~$2.2 million, ~~buildings~~building of ~~$213.1~~$2.5 million, ~~(including acquisition-related costs~~and an in-place lease intangible asset of ~~$1.8 million, which were capitalized), and net lease intangibles of $69.0~~$1.3 million (Note 76):

~~an investment of $167.7 million for three private school campuses in Coconut Creek, Florida on April 1, 2016 and in Windermere, Florida and Houston, Texas on May 31, 2016.~~. We also committed to fund an additional ~~$128.1~~$3.6 million of ~~build-to-suit financing over the next four years in order to fund expansions of the existing facilities; and~~

~~an investment of $218.2 million for 43 manufacturing facilities in various locations in the United States and six manufacturing facilities in various locations in Canada on April 5 and 14, 2016.~~building improvements at that facility by June 2018.

Real Estate Under Construction

During the nine months ended September 30, ~~2016,~~2017, we capitalized real estate under construction totaling ~~$46.4~~$43.5 million, including ~~accrued costs~~net accrual activity of ~~$8.6~~$6.8 million, primarily related to construction projects on our properties. ~~Of this total, $14.3 million related to an expansion of one of the three private school campuses that we acquired during the nine months ended September 30, 2016.~~ As of September 30, 2017, we had five construction projects in progress, and as of December 31, 2016, we had three construction projects in progress. ~~As of December 31, 2015, we had an outstanding commitment related to a tenant expansion allowance, for which construction had not yet commenced, and no other open construction projects.~~ Aggregate unfunded commitments totaled approximately ~~$119.2~~$109.6 million and ~~$12.2~~$135.2 million as of September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.



	W. P. Carey 9/30/2017 10-Q– 22

Notes to Consolidated Financial Statements (Unaudited)

During the nine months ended September 30, 2017, we capitalized and completed the following construction projects, at a total cost of $59.0 million, of which $35.5 million was capitalized during 2016:

an expansion project at an industrial facility in Windsor, Connecticut in March 2017 at a cost totaling $3.3 million;

an expansion project at an educational facility in Coconut Creek, Florida in May 2017 at a cost totaling $18.2 million;

an expansion project at two industrial facilities in Monarto, Australia in May 2017 at a cost totaling $15.9 million; and

a build-to-suit project for an industrial facility in McCalla, Alabama in June 2017 at a cost totaling $21.6 million.

Dispositions of ~~Real Estate~~Properties

During the nine months ended September 30, ~~2016,~~2017, we sold ~~eight~~nine properties and a parcel of vacant land, excluding the sale of one property that was classified as held for sale as of December 31, ~~2015,~~2016, and transferred ownership of ~~another property~~two properties to the related mortgage lender ~~and disposed of another property through foreclosure~~ (Note 15). As a result, the carrying value of our ~~real estate~~Land, buildings and improvements subject to operating leases decreased by ~~$280.5~~$72.4 million from December 31, ~~2015~~2016 to September 30, ~~2016.~~2017.

Future Dispositions of ~~Real Estate~~Properties

~~During the nine months ended~~As of September 30, ~~2016,~~2017, two tenants ~~each~~ exercised ~~an option~~options to repurchase the properties they are leasing from us in accordance with their ~~respective properties during 2017~~lease agreements for an aggregate of ~~$21.6 million.~~$23.1 million (the amount for one repurchase is based on the exchange rate of the euro as of September 30, 2017), but there can be no assurance that such repurchases will be completed. At September 30, ~~2016, the~~2017, these two properties had an aggregate asset carrying value of ~~$16.6~~$17.5 million. ~~There is no accounting impact during 2016 related to the exercise of these options.~~

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

At both September 30, ~~2016, Operating real estate consisted of our investments in two hotels. At~~2017 and December 31, ~~2015, Operating real estate~~2016, Land, buildings and improvements attributable to operating properties consisted of our investments in two hotels, ~~and one self-storage property. During the first quarter of 2016, we sold our remaining self-storage property, and~~which are summarized as ~~a result, the carrying value of our Operating real estate decreased by $2.3 million from December 31, 2015 to September 30, 2016 (Note 15). Below is a summary of our Operating real estate~~follows (in thousands):


	September 30, 2016			December 31, 2015			September 30, 2017			December 31, 2016
Land	$	6,041		$	6,578		$	6,041		$	6,041
Buildings	75,624			76,171			76,043			75,670
Less: Accumulated depreciation	(11,075		)	(8,794		)	(15,345		)	(12,143		)
	$	70,590		$	73,955		$	66,739		$	69,568



	~~W. P. Carey 9/30/2016 10-Q~~– 21

~~Notes~~Depreciation expense on our Land, buildings and improvements attributable to ~~Consolidated Financial Statements (Unaudited)~~

operating properties was $1.1 million for both the three months ended September 30, 2017 and 2016, and $3.2 million for both the nine months ended September 30, 2017 and 2016. Accumulated depreciation of Land, buildings and improvements attributable to operating properties is included in Accumulated depreciation and amortization in the consolidated financial statements.

Assets Held for Sale ~~Net~~

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

September 30, 2016 December 31, 2015
Real estate, net $ 117,504
$ 59,046
Intangible assets and liabilities, net 9,938
—
Goodwill 1,020
—
Assets held for sale, net $ 128,462
$ 59,046



	September 30, 2017		December 31, 2016
Real estate, net	$	6,146	$	—
Intangible assets, net	4,450		—
Net investments in direct financing leases	—		26,247
Assets held for sale	$	10,596	$	26,247

At September 30, ~~2016,~~2017, we had ~~16 properties~~one property classified as Assets held for sale ~~net, including:~~with a carrying value of $10.6 million.


•	~~a portfolio of 14 international properties with a carrying value of $115.4 million. These properties were disposed of subsequent to September 30, 2016 (Note 17); and~~


•	~~two international properties with an aggregate carrying value of $13.1 million. These properties were disposed of subsequent to September 30, 2016 (Note 17~~).

At December 31, ~~2015,~~2016, we had ~~two properties~~one property classified as Assets held for sale ~~net, one~~with a carrying value of $26.2 million. In addition, there was a deferred tax liability of $2.5 million related to this property as of December 31, 2016, which is included in Deferred income taxes in the consolidated balance sheets. The property was sold during the nine months ended September 30, ~~2016~~2017 (Note 15).



	W. P. Carey 9/30/2017 10-Q– 23

Notes to Consolidated Financial Statements (Unaudited)

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 Net investments in direct financing leases, ~~notes~~note receivable, and deferred acquisition fees. Operating leases are not included in finance receivables as such amounts are not recognized as an asset in the consolidated financial statements.

Net Investments in Direct Financing Leases

Interest income from direct financing leases, which was included in Lease revenues in the consolidated financial statements, was ~~$17.6~~$16.8 million and ~~$18.7~~$17.6 million for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively, and ~~$53.9~~$49.3 million and ~~$56.1~~$53.9 million for the nine months ended September 30, 2017 and 2016, ~~and 2015,~~ respectively.

During the nine months ended September 30, ~~2016,~~2017, the U.S. dollar weakened against the euro, ~~and strengthened against the British pound sterling,~~ resulting in a ~~$3.1~~$38.9 million increase in the carrying value of Net investments in direct financing leases from December 31, ~~2015~~2016 to September 30, ~~2016, with the impact of the weakening of the U.S. dollar against the euro more than offsetting the impact of the U.S. dollar strengthening against the British pound sterling.~~2017. During the nine months ended September 30, ~~2016,~~2017, we sold an international investment accounted for as a direct financing lease that had a net carrying value of $1.7 million. During the nine months ended September 30, 2017, we reclassified 31six properties with a carrying value of ~~$9.7~~$1.6 million from Net investments in direct financing leases to ~~Real estate, at cost,~~Land, buildings and improvements in connection with ~~the~~changes in lease classifications due to extensions of the underlying ~~leases.~~leases (Note 4).

Note Receivable

At September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, we had a note receivable with an outstanding balance of ~~$10.4~~$10.1 million and ~~$10.7~~$10.4 million, respectively, representing the expected future payments under a sales type lease, which was included in Other assets, net in the consolidated financial statements. Earnings from our note receivable are included in Lease termination income and other in the consolidated financial statements.

Deferred Acquisition Fees Receivable

As described in Note 3, we earn revenue in connection with structuring and negotiating investments and related mortgage financing for the CPA^® REITs. A portion of this revenue is due in equal annual installments over three years, provided the CPA^® REITs meet their respective performance criteria. Unpaid deferred installments, including accrued interest, from the CPA^® REITs were included in Due from affiliates in the consolidated financial statements.

Credit Quality of Finance Receivables

We generally seek investments in facilities that we believe are critical to a tenant’s business and that we believe have a low risk of tenant default. As of ~~September 30, 2016 and~~ December 31, ~~2015,~~2016, we had ~~allowances~~an allowance for credit losses of ~~$15.8~~$13.3 million ~~and~~



	~~W. P. Carey 9/30/2016 10-Q~~– 22

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

~~$8.7 million, respectively,~~ on a single direct financing ~~lease.~~lease investment, including the impact of foreign currency translation. This allowance was established in the fourth quarter of 2015. During the nine months ended September 30, 2016, we increased the allowance by $7.1 million, which was recorded in Property expenses, excluding reimbursable tenant costs in the consolidated financial statements, due to a decline in the estimated amount of future payments we ~~will~~would receive from the ~~tenant, including the possible early termination of the~~tenant. We sold this direct financing ~~lease.~~lease investment in August 2017, as described above. At both September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, none of the balances of our finance receivables were past due. ~~Other than the lease extensions noted under Net Investments in Direct Financing Leases above and the allowance for credit losses discussed above, there~~There were no modifications of finance receivables during the nine months ended September 30, ~~2016 or the year ended December 31, 2015.~~ 2017.

We evaluate the credit quality of our finance receivables utilizing an internal five-point credit rating scale, with one representing the highest credit quality and five representing the lowest. A credit quality of one through three indicates a range of investment grade to stable. A credit quality of four through five indicates a range of inclusion on the watch list to risk of default. The credit quality evaluation of our finance receivables was last updated in the third quarter of ~~2016.~~2017. We believe the credit quality of our deferred acquisition fees receivable falls under category one, as the CPA^® REITs are expected to have the available cash to make such payments.



	W. P. Carey 9/30/2017 10-Q– 24

Notes to Consolidated Financial Statements (Unaudited)

A summary of our finance receivables by internal credit quality rating, excluding our deferred acquisition fees receivable, is as follows (dollars in thousands):


	Number of Tenants / Obligors at		Carrying Value at				Number of Tenants / Obligors at		Carrying Value at
Internal Credit Quality Indicator	September 30, 2016	December 31, 2015	September 30, 2016		December 31, 2015		September 30, 2017	December 31, 2016	September 30, 2017		December 31, 2016
1 - 3	27	28	$	640,359	$	657,034	24	27	$	604,081	$	621,955
4	6	6	109,092		110,002		8	5	123,173		70,811
5	1	—	1,731		—		—	1	—		1,644
			$	751,182	$	767,036			$	727,254	$	694,410

Note 6. ~~Equity Investments in the Managed Programs~~Goodwill and ~~Real Estate~~Other Intangibles

We ~~own interests in certain unconsolidated real estate investments with the Managed Programs~~have recorded net lease, internal-use software development, and ~~also own interests in the Managed Programs. We account for our interests in these investments under the equity method~~trade name intangibles that are being amortized over periods ranging from three years to 40 years. In addition, we have several ground lease intangibles that are being amortized over periods of ~~accounting (i.e.,~~up to 99 years. In-place lease and below-market ground lease (as lessee) intangibles, at cost ~~increased or decreased by our share of earnings or losses, less distributions, plus contributions and other adjustments required by equity method accounting, such as basis differences).~~

The following table presents Equity in earnings of equity method investments in the Managed Programs and real estate, which represents our proportionate share of the income or losses of these investments, as well as certain adjustments related to amortization of basis differences related to purchase accounting adjustments (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Distributions of Available Cash (Note 3)
$ 10,876
$ 10,182
$ 32,018
$ 28,244
Proportionate share of earnings (losses) from equity investments in the Managed Programs 2,962
(431 ) 7,396
565
Amortization of basis differences on equity investments in the Managed Programs (265 ) (208 ) (756 ) (582 )
Total equity earnings from the Managed Programs 13,573
9,543
38,658
28,227
Equity earnings from other equity investments 4,197
4,034
12,456
13,188
Amortization of basis differences on other equity investments (967 ) (942 ) (2,871 ) (2,785 )
Equity in earnings of equity method investments in the Managed Programs and real estate $ 16,803
$ 12,635
$ 48,243
$ 38,630

~~Managed Programs~~

We own interests in the Managed Programs and account for these interests under the equity method because, as their advisor and through our ownership of their common stock, we do not exert control over, but we do have the ability to exercise significant influence on, the Managed Programs. Operating results of the Managed REITs and CESH I are included in In-place lease and other intangible assets in the consolidated financial statements. Above-market rent intangibles, at cost are included in Above-market rent intangible assets in the consolidated financial statements. Accumulated amortization of in-place lease, below-market ground lease (as lessee), and above-market rent intangibles is included in Accumulated depreciation and amortization in the consolidated financial statements. Internal-use software development and trade name intangibles are included in Other assets, net in the consolidated financial statements. Below-market rent, above-market ground lease (as lessee), and below-market purchase option intangibles are included in Below-market rent and other intangible liabilities, net in the consolidated financial statements.

In connection with our investment activity during the nine months ended September 30, 2017 (Note 4), we recorded an in-place lease intangible asset of $1.3 million, which has an expected life of 21 years.

Goodwill within our Owned Real Estate segment ~~and operating results~~increased by $7.4 million during the nine months ended September 30, 2017 due to foreign currency translation adjustments, from $572.3 million as of ~~CCIF are included in the~~December 31, 2016 to $579.7 million as of September 30, 2017. Goodwill within our Investment Management ~~segment.~~segment was $63.6 million as of September 30, 2017, unchanged from December 31, 2016. In connection with our Board’s decision to exit all non-traded retail fundraising activities (Note 1), we performed a test for impairment during the second quarter of 2017 on goodwill recorded in our Investment Management segment, and no impairment was indicated.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 2325

Notes to Consolidated Financial Statements (Unaudited)

~~The following table sets forth certain information about our investments in the Managed Programs (dollars in~~Intangible assets, intangible liabilities, and goodwill are summarized as follows (in thousands):

% of Outstanding Interests Owned at Carrying Amount of Investment at
Fund September 30, 2016 December 31, 2015 September 30, 2016 December 31, 2015
CPA^®:17 – Global
3.358 % 3.087 % $ 98,702
$ 87,912
CPA^®:17 – Global operating partnership
0.009 % 0.009 % —
—
CPA^®:18 – Global
1.384 % 0.735 % 16,007
9,279
CPA^®:18 – Global operating partnership
0.034 % 0.034 % 209
209
CWI 1 1.114 % 1.131 % 11,731
12,619
CWI 1 operating partnership 0.015 % 0.015 % —
—
CWI 2 0.633 % 0.379 % 3,771
949
CWI 2 operating partnership 0.015 % 0.015 % 300
300
CCIF 16.514 % 47.882 % 23,083
22,214
CESH I ^(a)
2.121 % — % 908
—
$ 154,711
$ 133,482



	September 30, 2017									December 31, 2016
	Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
Finite-Lived Intangible Assets
Internal-use software development costs	$	18,649		$	(7,159	)	$	11,490		$	18,568		$	(5,068	)	$	13,500
Trade name	3,975			(200		)	3,775			3,975			—			3,975
	22,624			(7,359		)	15,265			22,543			(5,068		)	17,475
Lease Intangibles:
In-place lease	1,185,107			(398,237		)	786,870			1,148,232			(322,119		)	826,113
Above-market rent	639,140			(255,152		)	383,988			632,383			(210,927		)	421,456
Below-market ground lease	18,693			(1,698		)	16,995			23,140			(1,381		)	21,759
	1,842,940			(655,087		)	1,187,853			1,803,755			(534,427		)	1,269,328
Indefinite-Lived Goodwill and Intangible Assets
Goodwill	643,321			—			643,321			635,920			—			635,920
Below-market ground lease	970			—			970			866			—			866
	644,291			—			644,291			636,786			—			636,786
Total intangible assets	$	2,509,855		$	(662,446	)	$	1,847,409		$	2,463,084		$	(539,495	)	$	1,923,589

Finite-Lived Intangible Liabilities
Below-market rent	$	(136,319	)	$	46,377		$	(89,942	)	$	(133,137	)	$	38,231		$	(94,906	)
Above-market ground lease	(13,206		)	2,879			(10,327		)	(12,948		)	2,362			(10,586		)
	(149,525		)	49,256			(100,269		)	(146,085		)	40,593			(105,492		)
Indefinite-Lived Intangible Liabilities
Below-market purchase option	(16,711		)	—			(16,711		)	(16,711		)	—			(16,711		)
Total intangible liabilities	$	(166,236	)	$	49,256		$	(116,980	)	$	(162,796	)	$	40,593		$	(122,203	)

~~__________~~


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

~~CPA~~^®~~:17 – Global— The carrying value~~Net amortization of ~~our investment in CPA~~^®~~:17 – Global at September 30, 2016 includes asset management fees receivable,~~intangibles, including the effect of foreign currency translation, was $38.4 million and $38.1 million for ~~which 119,368 shares of CPA~~^®~~:17 – Global common stock were issued during~~ the ~~fourth quarter of 2016. We received distributions from this investment during the nine~~three months ended September 30, 2017 and 2016, respectively, and ~~2015 of $5.5~~$114.1 million and ~~$4.5~~$125.6 million ~~respectively. We received distributions from our investment in the CPA~~^®~~:17 – Global operating partnership during the nine months ended September 30, 2016 and 2015 of $17.8 million and $17.7 million, respectively.~~

~~CPA~~^®~~:18 – Global— The carrying value of our investment in CPA~~^®~~:18 – Global at September 30, 2016 includes asset management fees receivable, for which 107,154 shares of CPA~~^®:18 – Global class A common stock were issued during the fourth quarter of 2016. We received distributions from this investment during the nine months ended September 30, 2016 and 2015 of $0.6 million and $0.1 million, respectively. We received distributions from our investment in the CPA^®~~:18 – Global operating partnership during the nine months ended September 30, 2016 and 2015 of $5.3 million and $2.3 million, respectively.~~

~~CWI 1~~— We received distributions from this investment during both the nine months ended September 30, 2016 and 2015 of $0.6 million. We received distributions from our investment in the CWI 1 operating partnership during the nine months ended September 30, 2016 and 2015 of $6.9 million and $6.4 million, respectively.

~~CWI 2~~— The carrying value of our investment in CWI 2 at September 30, 2016 includes asset management fees receivable, for which 46,042 shares of CWI 2 class A common stock were issued during the fourth quarter of 2016. We received distributions from this investment during the nine months ended September 30, 2016 of less than $0.1 million. We did not receive distributions from this investment during the nine months ended September 30, 2015. On March 27, 2015, we purchased a 0.015% special general partnership interest in the CWI 2 operating partnership for $0.3 million. This special general partnership interest entitles us to receive distributions of our proportionate share of earnings up to 10% of the Available Cash from the CWI 2 operating partnership (~~Note 3). We received distributions from our investment in the CWI 2 operating partnership during the nine months ended September 30, 2016 and 2015 of $2.0 million and $0.2 million, respectively.~~

~~CCIF— W~~e received $0.6 million of distributions from our investment in CCIF during the nine months ended September 30, 2016. We did not receive distributions from this investment during the nine months ended September 30, 2015.

~~CESH I~~— Under the limited partnership agreement we have with CESH I, we pay all organization and offering costs regarding CESH I, and instead of being reimbursed by CESH I on a dollar-for-dollar basis for those costs, we receive limited partnership units of CESH I equal to 2.5% of its gross offering proceeds (~~Note 3~~). We have elected to account for our investment in CESH I at fair value by selecting the equity method fair value option available under U.S. GAAP. We did not receive distributions from this investment during the nine months ended September 30, 2016 or 2015.



	~~W. P. Carey 9/30/2016 10-Q~~– 24

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

~~At September 30, 2016 and December 31, 2015, the aggregate unamortized basis differences on our equity investments in the Managed Programs were $30.7 million and $27.4 million, respectively.~~

~~Interests in Other Unconsolidated Real Estate Investments~~

We own equity interests in single-tenant net-leased properties that are generally leased to companies through noncontrolling interests (i) in partnerships and limited liability companies that we do not control but over which we exercise significant influence or (ii) as tenants-in-common subject to common control. Generally, the underlying investments are jointly-owned with affiliates. We account for these investments under the equity method of accounting. Earnings for each investment are recognized in accordance with each respective investment agreement.

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

Carrying Value at
Lessee Co-owner Ownership Interest September 30, 2016 December 31, 2015
The New York Times Company
CPA^®:17 – Global
45% $ 69,772
$ 70,976
Frontier Spinning Mills, Inc.
CPA^®:17 – Global
40% 24,149
24,288
Beach House JV, LLC ^(a)
Third Party N/A 15,105
15,318
Actebis Peacock GmbH ^(b)

CPA^®:17 – Global
30% 11,981
12,186
C1000 Logistiek Vastgoed B.V. ^{(b) (c)}

CPA^®:17 – Global
15% 9,481
9,381
Waldaschaff Automotive GmbH and Wagon Automotive Nagold GmbH ^(b)

CPA^®:17 – Global
33% 9,113
9,507
Wanbishi Archives Co. Ltd. ^(d)

CPA^®:17 – Global
3% 378
335
$ 139,979
$ 141,991

~~__________~~


~~(a)~~	~~This investment is a preferred equity position.~~


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

~~(c)~~

~~This investment represents a tenancy-in-common interest, whereby the property is encumbered by the debt for which we are jointly and severally liable. The co-obligor is CPA~~^®:17 – Global and the amount due under the arrangement was approximately $72.8 million at September 30, 2016. Of this amount, $10.9 million represents the amount we agreed to pay and is included within the carrying value of the investment at September 30, 2016.


~~(d)~~	~~The carrying value of this investment is affected by fluctuations in the exchange rate of the yen.~~

~~We received aggregate distributions of $12.4 million and $9.7 million from our other unconsolidated real estate investments~~ for the nine months ended September 30, 2017 and 2016, respectively. Amortization of below-market rent and ~~2015, respectively. At September 30, 2016~~above-market rent intangibles is recorded as an adjustment to Lease revenues; amortization of internal-use software development, trade name, and ~~December 31, 2015, the aggregate unamortized basis differences on our unconsolidated real estate investments were $6.6 million~~in-place lease intangibles is included in Depreciation and ~~$6.7 million, respectively.~~amortization; and amortization of above-market ground lease and below-market ground lease intangibles is included in Property expenses, excluding reimbursable tenant costs.

Note 7.~~Goodwill~~ Equity Investments in the Managed Programs and ~~Other Intangibles~~Real Estate

We ~~have recorded net lease~~own interests in certain unconsolidated real estate investments with the Managed Programs and internal-use software development intangibles that are being amortized over periods ranging from one year to 40 years. In addition, we have several ground lease intangibles that are being amortized over periods of up to 99 years. In-place lease and tenant relationship intangibles are included in In-place lease and tenant relationship intangible assets, netalso own interests in the ~~consolidated financial statements. Above-market rent intangibles are included~~Managed Programs. We account for our interests in ~~Above-market rent intangible assets, net in~~these investments under the ~~consolidated financial statements. Below-market ground lease (as lessee)~~equity method of accounting (i.e., trade name, management contracts, and internal-use software development intangibles are included in Other assets, net in the consolidated financial statements. Below-market rent, above-market ground lease (as lessee), and below-market purchase option intangibles are included in Below-market rentat cost, increased or decreased by our share of earnings or losses, less distributions, plus contributions and other ~~intangible liabilities, net in~~adjustments required by equity method accounting, such as basis differences) or at fair value by electing the ~~consolidated financial statements.~~equity method fair value option available under GAAP.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 2526

Notes to Consolidated Financial Statements (Unaudited)

~~In connection with~~The following table presents Equity in earnings of equity method investments in the Managed Programs and real estate, which represents our ~~investment activity during~~proportionate share of the ~~nine months ended September 30, 2016,~~income or losses of these investments, as well as certain adjustments related to amortization of basis differences related to purchase accounting adjustments (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Distributions of Available Cash (Note 3)	$	12,047		$	10,876		$	34,568		$	32,018
Proportionate share of equity in earnings of equity investments in the Managed Programs	886			2,962			4,688			7,396
Amortization of basis differences on equity method investments in the Managed Programs	(355		)	(265		)	(969		)	(756		)
Total equity in earnings of equity method investments in the Managed Programs	12,578			13,573			38,287			38,658
Equity in earnings of equity method investments in real estate	4,244			4,197			11,404			12,456
Amortization of basis differences on equity method investments in real estate	(504		)	(967		)	(1,871		)	(2,871		)
Total equity in earnings of equity method investments in real estate	3,740			3,230			9,533			9,585
Equity in earnings of equity method investments in the Managed Programs and real estate	$	16,318		$	16,803		$	47,820		$	48,243

Managed Programs

We own interests in the Managed Programs and account for these interests under the equity method because, as their advisor and through our ownership of their common stock, we ~~recorded net lease intangibles comprised as follows (life~~do not exert control over, but we do have the ability to exercise significant influence on, the Managed Programs. Operating results of the Managed Programs are included in ~~years, dollars~~the Investment Management segment.

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

Weighted-Average Life Amount
Amortizable Intangible Assets
In-place lease 22.2 $ 68,996



	% of Outstanding Interests Owned at				Carrying Amount of Investment at
Fund	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
CPA^®:17 – Global	3.996	%	3.456	%	$	120,464	$	99,584
CPA^®:17 – Global operating partnership	0.009	%	0.009	%	—		—
CPA^®:18 – Global	2.298	%	1.616	%	25,812		17,955
CPA^®:18 – Global operating partnership	0.034	%	0.034	%	209		209
CWI 1	1.882	%	1.109	%	23,351		11,449
CWI 1 operating partnership	0.015	%	0.015	%	186		—
CWI 2	1.541	%	0.773	%	14,171		5,091
CWI 2 operating partnership	0.015	%	0.015	%	300		300
CCIF ^(a)	—	%	13.322	%	—		23,528
CESH I ^(b)	2.430	%	2.431	%	3,110		2,701
					$	187,603	$	160,817

__________

~~The following table presents a reconciliation of our goodwill (in thousands):~~

Owned Real Estate Investment Management Total
Balance at January 1, 2016 $ 618,202
$ 63,607
$ 681,809
Allocation of goodwill to the cost basis of properties sold or classified as held for sale (33,981 ) —
(33,981 )
Impairment charges (Note 8)
(10,191 ) —
(10,191 )
Foreign currency translation adjustments 2,668
—
2,668
Balance at September 30, 2016 $ 576,698
$ 63,607
$ 640,305

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

September 30, 2016 December 31, 2015
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Amortizable Intangible Assets
Management contracts $ —
$ —
$ —
$ 32,765
$ (32,765 ) $ —
Internal-use software development costs 18,517
(4,285 ) 14,232
18,188
(2,038 ) 16,150
18,517
(4,285 ) 14,232
50,953
(34,803 ) 16,150
Lease Intangibles:
In-place lease and tenant relationship 1,121,337
(304,186 ) 817,151
1,205,585
(302,737 ) 902,848
Above-market rent 603,900
(197,655 ) 406,245
649,035
(173,963 ) 475,072
Below-market ground lease 24,597
(1,321 ) 23,276
25,403
(889 ) 24,514
1,749,834
(503,162 ) 1,246,672
1,880,023
(477,589 ) 1,402,434
Unamortizable Goodwill and Indefinite-Lived Intangible Assets
Goodwill 640,305
—
640,305
681,809
—
681,809
Trade name 3,975
—
3,975
3,975
—
3,975
Below-market ground lease 917
—
917
895
—
895
645,197
—
645,197
686,679
—
686,679
Total intangible assets $ 2,413,548
$ (507,447 ) $ 1,906,101
$ 2,617,655
$ (512,392 ) $ 2,105,263

Amortizable Intangible Liabilities
Below-market rent $ (134,210 ) $ 35,982
$ (98,228 ) $ (171,199 ) $ 44,873
$ (126,326 )
Above-market ground lease (13,075 ) 2,224
(10,851 ) (13,052 ) 1,774
(11,278 )
(147,285 ) 38,206
(109,079 ) (184,251 ) 46,647
(137,604 )
Unamortizable Intangible Liabilities
Below-market purchase option (16,711 ) —
(16,711 ) (16,711 ) —
(16,711 )
Total intangible liabilities $ (163,996 ) $ 38,206
$ (125,790 ) $ (200,962 ) $ 46,647
$ (154,315 )

(a)

In August 2017, we resigned as the advisor to CCIF, effective as of September 11, 2017 (Note 1). As such, we reclassified our investment in CCIF from Equity investments in the Managed Programs and real estate to Other assets, net in our consolidated balance sheets and account for it under the cost method, since we no longer share decision-making responsibilities with the third-party investment partner. Our cost method investment in CCIF had a carrying value of $23.3 million at September 30, 2017 and is included in our Investment Management segment.


(b)	Investment is accounted for at fair value.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 2627

Notes to Consolidated Financial Statements (Unaudited)

~~Net amortization~~CPA^®:17 – Global— The carrying value of ~~intangibles, including~~our investment in CPA^®:17 – Global at September 30, 2017 includes asset management fees receivable, for which 243,250 shares of CPA^®:17 – Global common stock were issued during the ~~effect~~fourth quarter of ~~foreign currency translation, was $38.1 million and $50.1 million for~~2017. We received distributions from this investment during the ~~three~~nine months ended September 30, 2017 and 2016 ~~and 2015, respectively, and $125.6~~of $6.1 million and ~~$136.4~~$5.5 million, respectively. We received distributions from our investment in the CPA^®:17 – Global operating partnership during the nine months ended September 30, 2017 and 2016 of $19.2 million and $17.8 million, respectively.

CPA^®:18 – Global— The carrying value of our investment in CPA^®:18 – Global at September 30, 2017 includes asset management fees receivable, for which 117,416 shares of CPA^®:18 – Global Class A common stock were issued during the fourth quarter of 2017. We received distributions from this investment during the nine months ended September 30, 2017 and 2016 of $1.2 million and $0.6 million, respectively. We received distributions from our investment in the CPA^®:18 – Global operating partnership during the nine months ended September 30, 2017 and 2016 of $6.1 million and $5.3 million, respectively.

CWI 1— The carrying value of our investment in CWI 1 at September 30, 2017 includes asset management fees receivable, for which 110,715 shares of CWI 1 common stock were issued during the fourth quarter of 2017. We received distributions from this investment during the nine months ended September 30, 2017 and 2016 of $0.8 million and $0.6 million, respectively. We received distributions from our investment in the CWI 1 operating partnership during the nine months ended September 30, 2017 and 2016 of $5.7 million and $6.9 million, respectively.

CWI 2— The carrying value of our investment in CWI 2 at September 30, 2017 includes asset management fees receivable, for which 68,367 shares of CWI 2 Class A common stock were issued during the fourth quarter of 2017. We received distributions from this investment during the nine months ended September 30, 2017 and 2016 of $0.2 million and less than $0.1 million, respectively. We received distributions from our investment in the CWI 2 operating partnership during the nine months ended September 30, 2017 and 2016 of $3.5 million and $2.0 million, respectively.

CCIF— We received distributions from this investment during the nine months ended September 30, 2017 and 2016 of $0.9 million and $0.6 million, respectively. Following our resignation as the advisor to CCIF, effective September 11, 2017 (Note 1), and the reclassification of our investment in CCIF from Equity investments in the Managed Programs and real estate to Other assets, net in our consolidated balance sheets (as described above), distributions of earnings from CCIF are recorded within Other income and (expenses) in the consolidated financial statements.

CESH I— Under the limited partnership agreement we have with CESH I, we paid all organization and offering costs on behalf of CESH I, and instead of being reimbursed by CESH I on a dollar-for-dollar basis for those costs, we received limited partnership units of CESH I equal to 2.5% of its gross offering proceeds. In connection with the end of active fundraising by Carey Financial on June 30, 2017, we facilitated the orderly processing of sales in the CESH I offering through July 31, 2017, which then closed its offering on that date (Note 3). We have elected to account for our investment in CESH I at fair value by selecting the equity method fair value option available under GAAP. We record our investment in CESH I on a one quarter lag; therefore, the balance of our equity method investment in CESH I recorded as of September 30, 2017 is based on the estimated fair value of our equity method investment in CESH I as of June 30, 2017. We did not receive distributions from this investment during the nine months ended September 30, 2017 or 2016.

At September 30, 2017 and December 31, 2016, the aggregate unamortized basis differences on our equity investments in the Managed Programs were $39.5 million and $31.7 million, respectively.

Interests in Other Unconsolidated Real Estate Investments

We own equity interests in single-tenant net-leased properties that are generally leased to companies through noncontrolling interests (i) in partnerships and limited liability companies that we do not control but over which we exercise significant influence or (ii) as tenants-in-common subject to common control. Generally, the underlying investments are jointly owned with affiliates. We account for these investments under the equity method of accounting. Operating results of our unconsolidated real estate investments are included in the Owned Real Estate segment.



	W. P. Carey 9/30/2017 10-Q– 28

Notes to Consolidated Financial Statements (Unaudited)

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



			Carrying Value at
Lessee	Co-owner	Ownership Interest	September 30, 2017		December 31, 2016
The New York Times Company	CPA^®:17 – Global	45%	$	69,510	$	69,668
Frontier Spinning Mills, Inc.	CPA^®:17 – Global	40%	24,147		24,138
Beach House JV, LLC ^(a)	Third Party	N/A	15,105		15,105
ALSO Actebis GmbH ^(b)	CPA^®:17 – Global	30%	12,072		11,205
Jumbo Logistiek Vastgoed B.V. ^{(b) (c)}	CPA^®:17 – Global	15%	10,505		8,739
Wagon Automotive GmbH ^(b)	CPA^®:17 – Global	33%	8,323		8,887
Wanbishi Archives Co. Ltd. ^(d)	CPA^®:17 – Global	3%	333		334
			$	139,995	$	138,076

__________


(a)	This investment is in the form of a preferred equity interest.


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

(c)

This investment represents a tenancy-in-common interest, whereby the property is encumbered by the debt for which we are jointly and severally liable. The co-obligor is CPA^®:17 – Global and the amount due under the arrangement was approximately $75.4 million at September 30, 2017. Of this amount, $11.3 million represents the amount we are liable for and is included within the carrying value of the investment at September 30, 2017.


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

We received aggregate distributions of $12.1 million and $12.4 million from our other unconsolidated real estate investments for the nine months ended September 30, 2017 and 2016, respectively. At September 30, 2017 and ~~2015,~~December 31, 2016, the aggregate unamortized basis differences on our unconsolidated real estate investments were $7.1 million and $6.7 million, respectively. Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Lease revenues; amortization of internal-use software development and in-place lease and tenant relationship intangibles is included in Depreciation and amortization; and amortization of above-market ground lease and below-market ground lease intangibles is included in Property expenses, excluding reimbursable tenant costs.

Note 8. 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 along with their weighted-average ranges.

Money Market Funds — Our money market funds, which are included in Cash and cash equivalents in the consolidated financial statements, are comprised of government securities and U.S. Treasury bills. These funds were classified as Level 1 as we used quoted prices from active markets to determine their fair values.

Derivative Assets — Our derivative assets, which are included in Other assets, net in the consolidated financial statements, are comprised of ~~interest rate caps, stock warrants,~~ foreign currency forward contracts, ~~and~~ foreign currency collars, interest rate swaps, interest rate caps, and stock warrants (Note 9). The ~~interest rate caps,~~ foreign currency forward contracts, ~~and~~ foreign currency collars, interest rate swaps, and interest rate caps were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. The stock warrants were measured at fair value using valuation models that incorporate market inputs and our own assumptions about future cash flows. We classified these assets as Level 3 because these assets are not traded in an active market.



	W. P. Carey 9/30/2017 10-Q– 29

Notes to Consolidated Financial Statements (Unaudited)

Derivative Liabilities — Our derivative liabilities, which are included in Accounts payable, accrued expenses and other liabilities in the consolidated financial statements, are comprised of foreign currency collars and interest rate swaps ~~and foreign currency collars~~ (Note 9). These derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 because they are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market.

~~Redeemable Noncontrolling Interest~~Equity Investment in CESH I— — We have elected to account for our investment in CESH I at fair value by selecting the ~~noncontrolling interest in W. P. Carey International, LLC, or WPCI, held by a third party as a redeemable noncontrolling interest~~equity method fair value option available under GAAP (Note 137). ~~We determined the valuation~~The fair value of ~~redeemable noncontrolling interest using widely accepted valuation techniques, including comparable transaction analysis, comparable public company analysis,~~our equity investment in CESH I approximated its carrying value as of September 30, 2017 and ~~discounted cash flow analysis. We classified this liability as Level 3.~~December 31, 2016.

We did not have any transfers into or out of Level 1, Level 2, and Level 3 category of measurements during either the three or nine months ended September 30, ~~2016~~2017 or ~~2015.~~2016. Gains and losses (realized and unrealized) included in earnings are reported within Other income and (expenses) on our consolidated financial statements.

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

September 30, 2016 December 31, 2015
Level Carrying Value Fair Value Carrying Value Fair Value
Non-recourse debt, net ^{(a) (b) (c)}
3 $ 1,926,331
$ 1,962,315
$ 2,269,421
$ 2,293,542
Senior Unsecured Notes, net ^(a) ^{(b) (d)}
2 1,837,216
1,901,954
1,476,084
1,459,544
Note receivable ^(c)
3 10,437
10,135
10,689
10,610



		September 30, 2017				December 31, 2016
	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Unsecured Senior Notes, net ^{(a) (b) (c)}	2	$	2,455,383	$	2,574,990	$	1,807,200	$	1,828,829
Non-recourse mortgages, net ^{(a) (b) (d)}	3	1,253,051		1,265,075		1,706,921		1,711,364
Note receivable ^(d)	3	10,070		9,740		10,351		10,046

__________



	~~W. P. Carey 9/30/2016 10-Q~~– 27

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

(a)

~~In accordance with ASU 2015-03, we reclassified~~The carrying value of Unsecured Senior Notes, net (Note 10) includes unamortized deferred financing costs ~~from Other assets, net to Non-recourse debt, net~~of $15.0 million and ~~Senior Unsecured Notes, net as of~~$12.1 million at September 30, 2017 and December 31, ~~2015 (Note 2~~).2016, respectively. The carrying value of Non-recourse ~~debt,~~mortgages, net includes unamortized deferred financing costs of ~~$1.2~~$1.0 million and ~~$1.8~~$1.3 million at September 30, ~~2016~~2017 and December 31, ~~2015, respectively. The carrying value of Senior Unsecured Notes, net includes unamortized deferred financing costs of $12.6 million and $10.5 million at September 30,~~ 2016, ~~and December 31, 2015,~~ respectively.

(b)

The carrying value of ~~Non-recourse debt, net includes unamortized premium of $0.1 million and $3.8 million at September 30, 2016 and December 31, 2015, respectively. The carrying value of~~Unsecured Senior ~~Unsecured~~ Notes, net includes unamortized discount of ~~$8.2~~$10.2 million and $7.8 million at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. The carrying value of Non-recourse mortgages, net includes unamortized discount of $1.4 million and $0.2 million at September 30, 2017 and December 31, 2016, respectively.


(c)	We determined the estimated fair value of the Unsecured Senior Notes using quoted market prices in an open market with limited trading volume, where available. In cases where there was no trading volume, we determined the estimated fair value using a discounted cash flow model using a rate that reflects the average yield of similar market participants.

(d)

We determined the estimated fair value of these financial instruments 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.


~~(d)~~	~~We determined the estimated fair value of the Senior Unsecured Notes (Note 10~~) using quoted market prices in an open market with limited trading volume where available. In cases where there was no trading volume, we determined the estimated fair value using a discounted cash flow model using a rate that reflects the average yield of similar market participants.

We estimated that our other financial assets and liabilities (excluding net investments in direct financing leases) had fair values that approximated their carrying values at both September 30, ~~2016~~2017 and December 31, ~~2015.~~2016.



	W. P. Carey 9/30/2017 10-Q– 30

Notes to Consolidated Financial Statements (Unaudited)

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

We periodically assess whether there are any indicators that the value of our real estate investments may be impaired or that their carrying value may not be recoverable. For investments in real estate held for use for which an impairment indicator is identified, we follow a two-step process to determine whether the investment is impaired and to determine the amount of the charge. First, we compare the carrying value of the property’s asset group to the future undiscounted net cash flows that we expect the property’s asset group will generate, including any estimated proceeds from the eventual sale of the property’s asset group. If this amount is less than the carrying value, the property’s asset group is considered to be not recoverable. We then measure the impairment charge as the excess of the carrying value of the property’s asset group over the estimated fair value of the property’s asset group, which is primarily determined using market information such as recent comparable sales, broker quotes, or third-party appraisals. If relevant market information is not available or is not deemed appropriate, we perform a future net cash flow analysis, discounted for inherent risk associated with each investment. We determined that the significant inputs used to value these investments fall within Level 3 for fair value reporting. As a result of our assessments, we calculated impairment charges based on market conditions and assumptions that existed at the time. The valuation of real estate is subject to significant judgment and actual results may differ materially if market conditions or the underlying assumptions change.

~~The following table presents information about our assets for which we recorded an~~We did not recognize any impairment ~~charge that were measured at fair value on a non-recurring basis (in thousands):~~

Three Months Ended September 30, 2016 Three Months Ended September 30, 2015

Fair Value
Measurements

Total Impairment
Charges
Fair Value
Measurements Total Impairment
Charges
Impairment Charges
Real estate $ 158,803
$ 14,441
$ 46,608
$ 19,438
$ 14,441
$ 19,438

Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015

Fair Value
Measurements

Total Impairment
Charges
Fair Value
Measurements Total Impairment
Charges
Impairment Charges
Real estate $ 279,093
$ 49,870
$ 52,684
$ 22,711
$ 49,870
$ 22,711
charges during the three or nine months ended September 30, 2017.



	~~W. P. Carey 9/30/2016 10-Q~~– 28

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

During the three months ended September 30, 2016, we recognized impairment charges totaling $14.4 million, ~~inclusive of~~including an amount attributable to a noncontrolling interest of $0.6 million, on 18 properties, including a portfolio of 14 properties, in order to reduce the carrying values of the properties to their estimated fair values. The impairment charges recognized on the portfolio of 14 properties were in addition to charges recognized on the portfolio during the six months ended June 30, 2016 as(as described ~~below,~~below), based on the purchase and sale agreement for the ~~portfolio received during the current period.~~portfolio. The fair value measurements for the properties, which totaled $158.8 million, approximated their estimated selling prices, less estimated costs to sell. We used available information, including third-party broker information and internal discounted cash flow models (Level 3 inputs), in determining the fair value of these properties. ~~At September 30, 2016, the~~The portfolio of 14 properties was sold in October 2016. Of the other four properties, one was sold in December 2016, two were disposed of in January 2017, and one property, which was classified as held for sale ~~and all were~~as of December 31, 2016, was sold ~~subsequent to September 30, 2016 (Note 4~~, ~~Note 17~~).in January 2017.

During the nine months ended September 30, 2016, we recognized impairment charges totaling $49.9 million, ~~inclusive of~~including an amount attributable to a noncontrolling interest of $0.6 million, on 18 properties in order to reduce the carrying values of the properties to their estimated fair values. In addition to the impairment charges of $14.4 million recognized during the three months ended September 30, 2016, described above, we ~~had~~ recognized impairment charges totaling $35.4 million ~~including $10.2 million allocated to goodwill,~~ on the portfolio of 14 properties during the six months ended June 30, 2016, in order to reduce the carrying values of the properties to their estimated fair values at that time. The fair value measurements for the properties, which totaled $158.8 million, approximated their estimated selling prices, less estimated costs to sell. We used available information, including third-party broker information and internal discounted cash flow models (Level 3 inputs), in determining the fair value of these properties.

During the three months ended September 30, 2015, we recognized impairment charges totaling $19.4 million on four properties in order to reduce the carrying values of the properties to their estimated fair values. The fair value measurements for two of the properties approximated their estimated selling prices; therefore, we recognized impairment charges totaling $3.8 million on these properties. At September 30, 2016, one of these properties was classified as held for sale and disposed of subsequent to September 30, 2016 (~~Note 4~~, ~~Note 17~~). We reduced the estimated holding period for another property due to the expected termination of its related lease within one year after September 30, 2015 and recognized an impairment charge of $8.7 million on the property. The fair value measurement related to the impairment charge was determined by estimating discounted cash flows using three significant unobservable inputs: the cash flow discount rate of 9.25%, the residual discount rate of 9.75%, and the residual capitalization rate 8.5%. Significant increases or decreases to these inputs in isolation would result in a significant change in the fair value measurement. The building located on the remaining property was demolished in connection with the redevelopment of the property, which commenced in December 2015, and the fair value of the building was reduced to zero. We recognized an impairment charge of $6.9 million on this property.

During the nine months ended September 30, 2015, we recognized impairment charges totaling $22.7 million on six properties and a parcel of vacant land in order to reduce the carrying values of the properties to their estimated fair values. In addition to the impairment charges of $19.4 million recognized on four properties during the three months ended September 30, 2015, as described above, we recognized impairment charges totaling $3.3 million on two properties and the parcel of vacant land, since their fair value measurements approximated their estimated selling prices. These two properties were sold during 2015 and the parcel of vacant land was sold during the nine months ended September 30, 2016.

Note 9. Risk Management and Use of Derivative Financial Instruments

Risk Management

In the normal course of our ongoing business operations, we encounter economic risk. There are four main components of economic risk that impact us: interest rate risk, credit risk, market risk, and foreign currency risk. We are primarily subject to interest rate risk on our interest-bearing liabilities, including our Senior Unsecured Credit Facility and Unsecured Senior ~~Unsecured~~ Notes (Note 10). 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 securities and the shares or limited partnership units we hold in the Managed Programs due to changes in interest rates or other market factors. We own investments in North America, Europe, ~~Asia,~~ Australia, ~~Canada,~~ and ~~Mexico~~Asia and are subject to risks associated with fluctuating foreign currency exchange rates.

Derivative Financial Instruments

When we use derivative instruments, it is generally to reduce our exposure to fluctuations in interest rates and foreign currency exchange rate movements. We have not entered into, and do not plan to enter into, financial instruments for trading or speculative purposes. In addition to entering into derivative instruments on our own behalf, we may also be a party to derivative instruments that are embedded in other contracts, and we may be granted common stock warrants by lessees when structuring



	~~W. P. Carey 9/30/2016 10-Q~~– 29

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

lease transactions, which are considered to be derivative instruments. The primary risks related to our use of derivative



	W. P. Carey 9/30/2017 10-Q– 31

Notes to Consolidated Financial Statements (Unaudited)

instruments include a counterparty to a hedging arrangement defaulting on its obligation and a downgrade in the credit quality of a counterparty to such an extent that our ability to sell or assign our side of the hedging transaction is impaired. While we seek to mitigate these risks by entering into hedging arrangements with large financial institutions that we deem to be creditworthy, it is possible that our hedging transactions, which are intended to limit losses, could adversely affect our earnings. Furthermore, if we terminate a hedging arrangement, we may be obligated to pay certain costs, such as transaction or breakage fees. We have established policies and procedures for risk assessment and the approval, reporting, and monitoring of derivative financial instrument activities.

We measure derivative instruments at fair value and record them as assets or liabilities, depending on our rights or obligations under the applicable derivative contract. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. For a derivative designated, and that qualified, as a cash flow hedge, the effective portion of the change in fair value of the derivative is recognized in Other comprehensive ~~loss~~income (loss) until the hedged item is recognized in earnings. For a derivative designated, and that qualified, as a net investment hedge, the effective portion of the change in the fair value and/or the net settlement of the derivative is reported in Other comprehensive ~~loss~~income (loss) as part of the cumulative foreign currency translation adjustment. ~~Amounts are reclassified out of Other comprehensive loss into earnings when the hedged investment is either sold or substantially liquidated.~~ The ineffective portion of the change in fair value of any derivative is immediately recognized in earnings.

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

Derivatives Designated as Hedging Instruments Balance Sheet Location Asset Derivatives Fair Value at Liability Derivatives Fair Value at
September 30, 2016 December 31, 2015 September 30, 2016 December 31, 2015
Foreign currency forward contracts Other assets, net $ 28,094
$ 38,975
$ —
$ —
Foreign currency collars Other assets, net 11,500
7,718
—
—
Interest rate caps Other assets, net 26
—
—
—
Interest rate swaps Accounts payable, accrued expenses and other liabilities —
—
(5,881 ) (4,762 )
Foreign currency collars Accounts payable, accrued expenses and other liabilities —
—
(160 ) —
Derivatives Not Designated as Hedging Instruments
Stock warrants Other assets, net 3,752
3,618
—
—
Interest rate swaps ^(a)
Other assets, net —
9
—
—
Interest rate swaps ^(a)
Accounts payable, accrued expenses and other liabilities —
—
(16 ) (2,612 )
Total derivatives $ 43,372
$ 50,320
$ (6,057 ) $ (7,374 )

~~__________~~


~~(a)~~	~~These interest rate swaps do not qualify for hedge accounting; however, they do protect against fluctuations in interest rates related to the underlying variable-rate debt.~~

All derivative transactions with an individual counterparty are governed by a master International Swap and Derivatives Association agreement, which can be considered as a master netting arrangement; however, we report all our derivative instruments on a gross basis on our consolidated financial statements. At both September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, no cash collateral had been posted nor received for any of our derivative positions.

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



Derivatives Designated as Hedging Instruments	Balance Sheet Location	Asset Derivatives Fair Value at				Liability Derivatives Fair Value at
Derivatives Designated as Hedging Instruments	Balance Sheet Location	September 30, 2017		December 31, 2016		September 30, 2017			December 31, 2016
Foreign currency forward contracts	Other assets, net	$	15,636	$	37,040	$	—		$	—
Foreign currency collars	Other assets, net	5,837		17,382		—			—
Interest rate swaps	Other assets, net	227		190		—			—
Interest rate cap	Other assets, net	24		45		—			—
Foreign currency collars	Accounts payable, accrued expenses and other liabilities	—		—		(4,472		)	—
Interest rate swaps	Accounts payable, accrued expenses and other liabilities	—		—		(1,822		)	(2,996		)
Derivatives Not Designated as Hedging Instruments
Stock warrants	Other assets, net	3,551		3,752		—			—
Interest rate swap ^(a)	Other assets, net	14		9		—			—
Total derivatives		$	25,289	$	58,418	$	(6,294	)	$	(2,996	)

__________


(a)	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.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 3032

Notes to Consolidated Financial Statements (Unaudited)

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


	Amount of Gain (Loss) Recognized on Derivatives in Other Comprehensive (Loss) Income (Effective Portion) ^(a)												Amount of Gain (Loss) Recognized on Derivatives in Other Comprehensive Income (Loss) (Effective Portion) ^(a)
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationships	2016			2015			2016			2015			2017			2016			2017			2016
Foreign currency collars													$	(5,398	)	$	(439	)	$	(16,002	)	$	3,618
Foreign currency forward contracts	$	(3,622	)	$	1,056		$	(7,830	)	$	15,109		(4,752		)	(3,622		)	(16,422		)	(7,830		)
Interest rate swaps	961			(1,776		)	(1,536		)	(1,620		)	250			961			779			(1,536		)
Foreign currency collars	(439		)	2,028			3,618			4,094
Interest rate caps	(29		)	2			(21		)	3			(17		)	(29		)	(26		)	(21		)
Derivatives in Net Investment Hedging Relationships^(b)
Foreign currency forward contracts	(2,200		)	5,105			(3,357		)	8,411			(1,171		)	(2,200		)	(5,347		)	(3,357		)
Total	$	(5,329	)	$	6,415		$	(9,126	)	$	25,997		$	(11,088	)	$	(5,329	)	$	(37,018	)	$	(9,126	)


		Amount of Gain (Loss) on Derivatives Reclassified from Other Comprehensive Income (Loss) (Effective Portion)													Amount of Gain (Loss) on Derivatives Reclassified from Other Comprehensive Income (Loss) (Effective Portion)
Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income	Three Months Ended September 30,						Nine Months Ended September 30,						Location of Gain (Loss) Recognized in Income	Three Months Ended September 30,						Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income	2016			2015			2016			2015			Location of Gain (Loss) Recognized in Income	2017			2016			2017			2016
Foreign currency forward contracts	Other income and (expenses)	$	1,773		$	1,642		$	5,163		$	5,371		Other income and (expenses)	$	1,454		$	1,773		$	5,336		$	5,163
Foreign currency collars	Other income and (expenses)	654			—			1,259			357			Other income and (expenses)	735			654			3,154			1,259
Interest rate swaps and caps	Interest expense	(512		)	(672		)	(1,578		)	(1,890		)	Interest expense	(286		)	(512		)	(1,024		)	(1,578		)
Total		$	1,915		$	970		$	4,844		$	3,838			$	1,903		$	1,915		$	7,466		$	4,844

__________

(a)

Excludes net ~~gains~~losses of ~~less than $0.1~~$0.4 million and net ~~losses~~gains of less than $0.1 million recognized on unconsolidated ~~jointly-owned~~jointly owned investments for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively, and net losses of ~~$0.2~~$0.9 million and ~~net gains of $0.9~~$0.2 million for the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively.


(b)	The effective portion of the ~~change~~changes in fair value ~~and the settlement~~ of these contracts are reported in the foreign currency translation adjustment section of Other comprehensive ~~loss until the underlying investment is sold, at which time we reclassify the gain or loss to earnings.~~income (loss).



	W. P. Carey 9/30/~~2016~~2017 10-Q – 3133

Notes to Consolidated Financial Statements (Unaudited)

Amounts reported in Other comprehensive ~~loss~~income (loss) related to interest rate swaps will be reclassified to Interest expense as interest is incurred on our variable-rate debt. Amounts reported in Other comprehensive ~~loss~~income (loss) related to foreign currency derivative contracts will be reclassified to Other income and (expenses) when the hedged foreign currency contracts are settled. As of September 30, ~~2016,~~2017, we estimate that an additional ~~$0.9~~$0.7 million and ~~$9.7~~$7.5 million will be reclassified as interest expense and other income, respectively, during the next 12 months.

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


		Amount of Gain (Loss) on Derivatives Recognized in Income											Amount of Gain (Loss) on Derivatives Recognized in Income
Derivatives Not in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income	Three Months Ended September 30,					Nine Months Ended September 30,					Location of Gain (Loss) Recognized in Income	Three Months Ended September 30,						Nine Months Ended September 30,
Derivatives Not in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income	2016			2015		2016		2015			Location of Gain (Loss) Recognized in Income	2017			2016			2017			2016
Foreign currency collars												Other income and (expenses)	$	(225	)	$	78		$	(718	)	$	257
Stock warrants												Other income and (expenses)	134			335			(201		)	134
Foreign currency forward contracts												Other income and (expenses)	(19		)	—			(19		)	—
Interest rate swaps	Other income and (expenses)	$	401		$	1,013	$	2,656	$	3,097		Other income and (expenses)	2			401			11			2,656
Stock warrants	Other income and (expenses)	335			—		134		134
Foreign currency collars	Other income and (expenses)	78			238		257		243
Foreign currency forward contracts	Other income and (expenses)	—			52		—		(296		)
Derivatives in Cash Flow Hedging Relationships
Interest rate swaps ^(a)	Interest expense	165			140		428		476			Interest expense	153			165			455			428
Foreign currency forward contracts	Other income and (expenses)	(55		)	68		86		71			Other income and (expenses)	(14		)	(55		)	(75		)	86
Foreign currency collars	Other income and (expenses)	(26		)	41		12		64			Other income and (expenses)	(13		)	(26		)	(11		)	12
Total		$	898		$	1,552	$	3,573	$	3,789			$	18		$	898		$	(558	)	$	3,573

__________


(a)	Relates to the ineffective portion of the hedging relationship.

See below for information on our purposes for entering into derivative instruments and for information on derivative instruments owned by unconsolidated investments, which are excluded from the tables above.

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 investment partners may obtain variable-rate, non-recourse mortgage loans and, as a result, we have entered into, and may continue to enter into, interest rate swap agreements or interest rate cap agreements with counterparties. Interest rate swaps, which effectively convert the variable-rate debt service obligations of a loan to a fixed rate, are agreements in which one party exchanges a stream of interest payments for a counterparty’s stream of cash flow over a specific period. The notional, or face, amount on which the swaps are based is not exchanged. Interest rate caps limit the effective borrowing rate of variable-rate debt obligations while allowing participants to share in downward shifts in interest rates. Our objective in using these derivatives is to limit our exposure to interest rate movements.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 3234

Notes to Consolidated Financial Statements (Unaudited)

The interest rate swaps and caps that our consolidated subsidiaries had outstanding at September 30, ~~2016~~2017 are summarized as follows (currency in thousands):


	Number of Instruments	Notional Amount		Fair Value at September 30, 2016 ^(a)			Number of Instruments	Notional Amount		Fair Value at September 30, 2017 ^(a)
Interest Rate Derivatives
Designated as Cash Flow Hedging Instruments
Interest rate swaps	13	119,157	USD	$	(5,454	)	11	104,966	USD	$	(1,455	)
Interest rate swap	1	5,928	EUR	(427		)	1	5,813	EUR	(140		)
Interest rate caps	2	68,810	EUR	26
Interest rate cap							1	30,517	EUR	24
Not Designated as Cash Flow Hedging Instruments
Interest rate swap ^(b)	1	3,028	USD	(16		)	1	2,890	USD	14
				$	(5,871	)				$	(1,557	)

__________


(a)	Fair value amounts are based on the exchange rate of the euro at September 30, ~~2016,~~2017, 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.

Foreign Currency Contracts and Collars

We are exposed to foreign currency exchange rate movements, primarily in the euro and, to a lesser extent, the British pound sterling, the Australian dollar, and certain other currencies. 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 income and (expenses) in the 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. A foreign currency collar consists of a written call option and a purchased put option to sell the foreign currency at a range of predetermined exchange rates. 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 7877 months or less.

The following table presents the foreign currency derivative contracts we had outstanding at September 30, ~~2016,~~2017, which were designated as cash flow hedges (currency in thousands):


	Number of Instruments		Notional Amount				Fair Value at September 30, 2016			Number of Instruments		Notional Amount				Fair Value at September 30, 2017
Foreign Currency Derivatives			Notional Amount							Number of Instruments		Notional Amount				Fair Value at September 30, 2017
Designated as Cash Flow Hedging Instruments							Fair Value at September 30, 2016
Foreign currency forward contracts	Number of Instruments	40		106,066		EUR		$	21,148		25		77,208		EUR		$	12,553
Foreign currency collars	16		40,950		GBP		9,374			24		40,750		GBP		5,316
Foreign currency collars	16		68,275		EUR		1,966			24		87,150		EUR		(3,951		)
Foreign currency forward contracts	9		4,820		GBP		1,260			5		2,680		GBP		603
Foreign currency forward contracts	13		16,436		AUD		1,076			9		11,411		AUD		404
Designated as Net Investment Hedging Instruments
Foreign currency forward contracts	4		79,658		AUD		4,610			3		74,463		AUD		2,076
							$	39,434								$	17,001



	W. P. Carey 9/30/~~2016~~2017 10-Q – 3335

Notes to Consolidated Financial Statements (Unaudited)

Credit Risk-Related Contingent Features

We measure our credit exposure on a counterparty basis as the net positive aggregate estimated fair value of our derivatives, net of any collateral received. No collateral was received as of September 30, ~~2016.~~2017. At September 30, ~~2016,~~2017, our total credit exposure and the maximum exposure to any single counterparty was ~~$20.0~~$19.9 million and ~~$14.1~~$13.5 million, respectively.

Some of the agreements we have with our derivative counterparties contain cross-default provisions that could trigger a declaration of default on our derivative obligations if we default, or are capable of being declared in default, on certain of our indebtedness. At September 30, ~~2016,~~2017, 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 ~~$6.3~~$6.5 million and ~~$8.2~~$3.3 million at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, which included accrued interest and any nonperformance risk adjustments. If we had breached any of these provisions at September 30, ~~2016~~2017 or December 31, ~~2015,~~2016, we could have been required to settle our obligations under these agreements at their aggregate termination value of ~~$6.7~~$6.8 million and ~~$8.3~~$3.3 million, respectively.

Net Investment Hedges

At September 30, ~~2016 and December 31, 2015,~~2017, the ~~amounts~~€236.3 million borrowed in euro outstanding under our ~~Revolver~~Amended Term Loan was designated as a net investment hedge (Note 10) ~~were €339.0 million and €361.0 million, respectively.~~. Additionally, we have ~~issued~~had two issuances of euro-denominated senior notes, each with a principal amount of €500.0 million, (~~Note 10~~), which we refer to as the 2%2.0% Senior ~~Euro Notes.~~Notes and 2.25% Senior Notes (Note 10). These borrowings are designated as, and are effective as, economic hedges of our net investments in foreign entities. Variability in the exchange rates of the foreign currencies with respect to the U.S. dollar impacts our financial results as the financial results of our foreign subsidiaries are translated to U.S. dollars each period, with the effect of changes in the foreign currencies to U.S. dollar exchange rates being recorded in Other comprehensive ~~loss~~income (loss) as part of the cumulative foreign currency translation adjustment. As a result, the borrowings in euro under our ~~Revolver~~Amended Term Loan, 2.0% Senior Notes, and 2.25% Senior Notes are recorded at cost in the consolidated financial statements and all changes in the value related to changes in the spot rates will be reported in the same manner as a translation adjustment, which is recorded in Other comprehensive ~~loss~~income (loss) as part of the cumulative foreign currency translation adjustment.

At September 30, ~~2016,~~2017, we also had foreign currency forward contracts that were designated as net investment hedges, as discussed in “Derivative Financial Instruments” above.

Note 10. Debt

Senior Unsecured Credit Facility

As of ~~September 30,~~December 31, 2016, we had a senior credit facility that provided for a $1.5 billion unsecured revolving credit facility, or our ~~Revolver,~~Unsecured Revolving Credit Facility, and a $250.0 million term loan facility, or our Prior Term Loan, ~~Facility,~~ which we refer to collectively as the Senior Unsecured Credit Facility. The Senior Unsecured Credit Facility also contains a $500.0 million accordion feature that, if exercised, subject to lender commitments, would allow us to increase our maximum borrowing capacity under our Revolver from $1.5 billion to $2.0 billion and under the Senior Unsecured Credit Facility in the aggregate to $2.25 billion. At ~~September 30,~~December 31, 2016, the Senior Unsecured Credit Facility also permitted (i) up to $750.0 million under our ~~Revolver~~Unsecured Revolving Credit Facility to be borrowed in certain currencies other than the U.S. dollar, (ii) swing line loans up to $50.0 million under our ~~Revolver,~~Unsecured Revolving Credit Facility, and (iii) the issuance of letters of credit under our ~~Revolver~~Unsecured Revolving Credit Facility in an aggregate amount not to exceed $50.0 million. On January 26, 2017, we exercised our option to extend our Prior Term Loan by an additional year to January 31, 2018.

On February 22, 2017, we amended and restated our Senior Unsecured Credit Facility to increase its capacity to approximately $1.85 billion, which is comprised of $1.5 billion under our Unsecured Revolving Credit Facility, a €236.3 million term loan, or our Amended Term Loan, and a $100.0 million delayed draw term loan, or our Delayed Draw Term Loan. The Delayed Draw Term Loan allows for borrowings in U.S. dollars, euros, or British pounds sterling. We refer to our Prior Term Loan, Amended Term Loan, and Delayed Draw Term Loan collectively as the Unsecured Term Loans.

On February 22, 2017, we drew down our Amended Term Loan in full by borrowing €236.3 million (equivalent to $250.0 million) to repay and terminate our $250.0 million Prior Term Loan. On June 8, 2017, we drew down our Delayed Draw Term Loan in full by borrowing €88.7 million (equivalent to $100.0 million) to partially pay down the amounts then outstanding under our Unsecured Revolving Credit Facility.

The maturity date of the Unsecured Revolving Credit Facility is February 22, 2021. We have two options to extend the maturity date of the Unsecured Revolving Credit Facility by six months, subject to the conditions provided in the Third Amended and Restated Credit Facility dated February 22, 2017, as amended, or the Credit Agreement. The maturity date of both the Amended



	W. P. Carey 9/30/2017 10-Q– 36

Notes to Consolidated Financial Statements (Unaudited)

Term Loan and Delayed Draw Term Loan is February 22, 2022. The Senior Unsecured Credit Facility is being used for working capital needs, ~~to refinance our existing indebtedness,~~ for ~~new investments,~~acquisitions, and for other general corporate purposes.

~~We exercised~~The Credit Agreement also permits (i) a ~~prior accordion feature~~sub-limit for up to $1.0 billion under the Unsecured Revolving Credit Facility to be borrowed in certain currencies other than U.S. dollars, (ii) a sub-limit for swing line loans of up to $75.0 million under the Unsecured Revolving Credit Facility, and (iii) a sub-limit for the issuance of letters of credit under the Unsecured Revolving Credit Facility in an aggregate amount not to exceed $50.0 million. The aggregate principal amount (of revolving and term loans) available under the Credit Agreement may be increased up to an amount not to exceed the U.S. dollar equivalent of $2.35 billion, and may be allocated as an increase to the Unsecured Revolving Credit Facility, the Amended Term Loan, or the Delayed Draw Term Loan, or if the Amended Term Loan has been terminated, an add-on term loan, in each case subject to the conditions to increase provided in the Credit Agreement. In connection with the amendment and restatement of our Senior Unsecured Credit Facility, ~~on January 15, 2015, which allowed us to increase the maximum borrowing capacity of our Revolver from $1.0 billion to $1.5 billion. In connection with the exercise of this accordion feature,~~ we ~~incurred~~capitalized deferred financing costs totaling ~~$3.1~~$8.5 million, which ~~are~~is being amortized to Interest expense ~~in the consolidated financial statements~~ over the remaining terms of the ~~facility.~~Unsecured Revolving Credit Facility and Amended Term Loan.

At September 30, ~~2016,~~2017, our ~~Revolver~~Unsecured Revolving Credit Facility had unused capacity of ~~$1.1~~$1.3 billion, excluding amounts reserved for outstanding letters of credit. As of September 30, ~~2016,~~2017, our lenders had issued letters of credit totaling ~~$0.6~~$0.1 million on our behalf in connection with certain contractual obligations, which reduce amounts that may be drawn under our ~~Revolver~~Unsecured Revolving Credit Facility by the same amount. We also incur a facility fee of 0.20% of the total commitment on our ~~Revolver. On January 29, 2016, we exercised an option to extend~~Unsecured Revolving Credit Facility and a fee of 0.20% on the unused commitments under our Delayed Draw Term Loan ~~Facility by an additional year to January 31, 2017. We have options to extend the maturity dates of the Revolver and Term Loan Facility by another year, subject~~prior to the ~~conditions provided in the Second Amended and Restated Credit Agreement dated January 31, 2014, as amended,~~draw or ~~the Credit Agreement.~~



	~~W. P. Carey 9/30/2016 10-Q~~– 34

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

termination of such commitments.

The following table presents a summary of our Senior Unsecured Credit Facility (dollars in millions):

Interest Rate at
September 30, 2016 ^(a)
Principal Outstanding Balance at
Senior Unsecured Credit Facility Maturity Date September 30, 2016 December 31, 2015
Revolver:
Revolver - borrowing in euros ^(b)
EURIBOR + 1.10% 1/31/2018 $ 378.4
$ 393.0
Revolver - borrowing in U.S. dollars N/A 1/31/2018 —
92.0
378.4
485.0
Term Loan Facility ^(c)
LIBOR + 1.25% 1/31/2017 250.0
250.0
$ 628.4
$ 735.0



	Interest Rate at September 30, 2017 ^(a)	Maturity Date at September 30, 2017	Principal Outstanding Balance at
Senior Unsecured Credit Facility	Interest Rate at September 30, 2017 ^(a)	Maturity Date at September 30, 2017	September 30, 2017		December 31, 2016
Unsecured Term Loans:
Amended Term Loan — borrowing in euros ^{(b) (c)}	EURIBOR + 1.10%	2/22/2022	$	279.0	$	—
Delayed Draw Term Loan — borrowing in euros ^(c)	EURIBOR + 1.10%	2/22/2022	104.7		—
Prior Term Loan — borrowing in U.S. dollars ^(d)	N/A	N/A	—		250.0
			383.7		250.0
Unsecured Revolving Credit Facility:
Unsecured Revolving Credit Facility — borrowing in U.S. dollars	LIBOR + 1.00%	2/22/2021	113.0		390.0
Unsecured Revolving Credit Facility — borrowing in euros ^(c)	EURIBOR + 1.00%	2/22/2021	111.2		286.7
			224.2		676.7
			$	607.9	$	926.7

__________


(a)	~~Interest~~The applicable interest rate at September 30, ~~2016 is~~2017 was based on ~~our~~the credit rating for our Unsecured Senior Notes of BBB/Baa2.


(b)	Balance excludes unamortized deferred financing costs of $0.2 million and unamortized discount of $1.3 million at September 30, 2017.


(c)	EURIBOR means Euro Interbank Offered Rate.


~~(c)~~(d)	Balance excludes unamortized deferred financing costs of less than $0.1 million ~~and $0.3 million~~ at ~~September 30, 2016 and~~ December 31, ~~2015, respectively (Note 2~~). 2016.

Unsecured Senior ~~Unsecured~~ Notes

As ~~of September 30, 2016,~~set forth in the table below, we have unsecured senior ~~unsecured~~ notes outstanding with an aggregate principal balance outstanding of ~~$1.9 billion.~~$2.5 billion at September 30, 2017. We refer to these notes collectively as the Unsecured Senior ~~Unsecured~~ Notes. On ~~September 12, 2016,~~January 19, 2017, we ~~issued $350.0~~completed a public offering of €500.0 million of ~~4.25%~~2.25% Senior Notes, at a price of ~~99.682%~~99.448% of par value, ~~in a registered public offering.~~issued by our wholly owned subsidiary, WPC Eurobond B.V., which are guaranteed by us. These ~~4.25%~~2.25% Senior Notes have a ~~ten-year~~7.5-year term and are scheduled to mature on ~~October 1, 2026.~~July 19, 2024.



	W. P. Carey 9/30/2017 10-Q– 37

Notes to Consolidated Financial Statements (Unaudited)

Interest on the Unsecured Senior ~~Unsecured~~ Notes is payable annually in arrears for our euro-denominated notes and semi-annually for U.S. dollar-denominated notes. The Unsecured Senior ~~Unsecured~~ Notes can be redeemed at par within three months of their respective maturities, or we can call the notes at any time for the principal, accrued interest, and a make-whole amount based upon the applicable government bond yield plus 30 to 35 basis points. The following table presents a summary of our Unsecured Senior ~~Unsecured~~ Notes outstanding at September 30, 2017 (currency in millions):


						Original Issue Discount				Effective Interest Rate							Principal Outstanding Balance at											Original Issue Discount				Effective Interest Rate						Principal Outstanding Balance at
Senior Unsecured Notes, net ^(a)	Issue Date	Principal Amount		Price of Par Value					Coupon Rate			Maturity Date		September 30, 2016				December 31, 2015
2.0% Senior Euro Notes	1/21/2015	€	500.0	99.220	%	Original Issue Discount		$	4.6	Effective Interest Rate		2.107	%		2.0	%		1/20/2023	$	558.1		$	544.4
Unsecured Senior Notes, net ^(a)																							Issue Date	Principal Amount		Price of Par Value		Original Issue Discount			Original Issue Discount				Effective Interest Rate		Coupon Rate		Maturity Date	September 30, 2017			December 31, 2016
2.0% Senior Notes																							1/21/2015	€	500.0	99.220	%			2.0	Original Issue Discount			%	Effective Interest Rate		1/20/2023	$	590.3		$	527.1
4.6% Senior Notes	3/14/2014	$	500.0	99.639	%	$	1.8			4.645	%	4.6	%		4/1/2024		500.0			500.0			3/14/2014	$	500.0	99.639	%	$	1.8			4.645	%		4.6	%	4/1/2024	500.0			500.0
2.25% Senior Notes																							1/19/2017	€	500.0	99.448	%	$	2.9			2.332	%		2.25	%	7/19/2024	590.3			—
4.0% Senior Notes	1/26/2015	$	450.0	99.372	%	$	2.8			4.077	%	4.0	%		2/3/2025		450.0			450.0			1/26/2015	$	450.0	99.372	%	$	2.8			4.077	%		4.0	%	2/1/2025	450.0			450.0
4.25% Senior Notes	9/12/2016	$	350.0	99.682	%	$	1.1			4.290	%	4.25	%		10/1/2026		350.0			—			9/12/2016	$	350.0	99.682	%	$	1.1			4.290	%		4.25	%	10/1/2026	350.0			350.0
																	$	1,858.1		$	1,494.4																	$	2,480.6		$	1,827.1

__________


(a)	Aggregate balance excludes unamortized deferred financing costs totaling ~~$12.7~~$15.0 million and ~~$10.5~~$12.1 million, (~~Note 2~~), and unamortized discount totaling ~~$8.2~~$10.2 million and $7.8 million, at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

Proceeds from the issuances of each of these notes were used primarily to partially pay down the amounts then outstanding under ~~our Revolver.~~the unsecured revolving credit facility that we had in place at that time. In connection with the ~~offerings~~offering of the ~~2.0%~~2.25% Senior ~~Euro~~ Notes ~~and 4.0% Senior Notes,~~in January 2017, we incurred financing costs totaling ~~$7.8~~$4.0 million during the nine months ended September 30, ~~2015, and in connection with the offering of the 4.25% Senior Notes, we incurred financing costs totaling $3.1 million during the nine months ended September 30, 2016, all of~~2017, which are included in Unsecured Senior ~~unsecured notes,~~Notes, net in the consolidated financial statements ~~in accordance with our adoption of ASU 2015-03 (Note 2~~), and are being amortized to Interest expense over the ~~respective terms~~term of the 2.25% Senior ~~Unsecured~~ Notes.

Covenants

The Senior Unsecured Credit Facility, as amended, and each of the Unsecured Senior ~~Unsecured~~ Notes include customary financial maintenance covenants that require us to maintain certain ratios and benchmarks at the end of each quarter. The Senior Unsecured Credit Facility also contains various customary affirmative and negative covenants applicable to us and our subsidiaries, subject to materiality and other qualifications, baskets, and exceptions as outlined in the Credit Agreement.



	~~W. P. Carey 9/30/2016 10-Q~~– 35

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

We were in compliance with all of these covenants at September 30, 2017.

We ~~are required to ensure that the total~~may make unlimited Restricted Payments (as defined in the Credit Agreement), as long as no non-payment default or financial covenant default has occurred before, or would on a pro forma basis occur as a result of, the Restricted Payment. In addition, we may make Restricted Payments in an ~~aggregate~~ amount ~~in any fiscal year does not exceed the greater of~~required to (i) ~~95% of Adjusted Funds from Operations (as defined in the Credit Agreement) and (ii) the amount of Restricted Payments required in order for us to~~ maintain our REIT ~~status. Restricted Payments include quarterly dividends~~status and (ii) as a result of that status, not pay federal or state income or excise tax, as long as the ~~total amount~~loans under the Credit Agreement have not been accelerated and no bankruptcy or event of ~~shares repurchased by us, if any, in excess of $100.0 million per year.~~default has occurred.

Obligations under the Senior Unsecured Credit Facility may be declared immediately due and payable upon the occurrence of certain events of default as defined in the Credit Agreement, including failure to pay any principal when due and payable, failure to pay interest within five business days after becoming due, failure to comply with any covenant, representation or condition of any loan document, any change of control, cross-defaults, and certain other events as set forth in the Credit Agreement, with grace periods in some cases.

The Credit Agreement stipulates several financial covenants that require us to maintain certain ratios and benchmarks at the end of each quarter, as defined in the Credit Agreement. We were in compliance with all of these covenants at September 30, 2016.

Non-Recourse ~~Debt~~Mortgages

At September 30, ~~2016,~~2017, our mortgage notes payable bore interest at fixed annual rates ranging from 2.0% to 7.8% and variable contractual annual rates ranging from ~~0.7%~~0.9% to 6.9%, with maturity dates ranging from ~~October 2016~~December 2017 to June 2027.

In January 2017, we repaid two international non-recourse mortgage loans at maturity with an aggregate principal balance of approximately $243.8 million encumbering a German investment, comprised of certain properties leased to Hellweg Die Profi-Baumärkte GmbH & Co. KG, or the Hellweg 2 Portfolio, which is jointly owned with our affiliate, CPA^®:17 – Global. In connection with this repayment, CPA^®:17 – Global contributed $90.3 million, which was accounted for as a contribution from a noncontrolling interest. Amounts are based on the exchange rate of the euro as of the date of repayment. The weighted-average



	W. P. Carey 9/30/2017 10-Q– 38

Notes to Consolidated Financial Statements (Unaudited)

interest rate for these mortgage loans on the date of repayment was 5.4%. During the nine months ended September 30, 2017, we repaid additional loans at maturity with an aggregate principal balance of approximately $19.3 million.

During the nine months ended September 30, ~~2016,~~2017, we prepaid 15 non-recourse mortgage loans totaling ~~$193.0~~$157.4 million, including ~~a mortgage loan of $50.8~~$38.4 million encumbering ~~a property held for sale as~~properties that were disposed of ~~June 30, 2016. This property was sold in August 2016 (Note 15). In addition, we made a balloon payment at maturity on a non-recourse mortgage loan of $18.5 million during this period. In connection with these payments,~~ during the nine months ended September 30, ~~2016~~2017 (Note 15). Amounts are based on the exchange rate of the related foreign currency as of the date of repayment, as applicable. The weighted-average interest rate for these mortgage loans on their respective dates of prepayment was 5.5%. In connection with these payments, we recognized a ~~loss~~gain on extinguishment of debt of ~~$3.9~~$0.8 million during the nine months ended September 30, 2017, which was included in Other income and (expenses) in the consolidated financial statements.

~~On July 29, 2016, a jointly-owned investment with CPA~~^®:17 – Global, which we consolidate, refinanced a non-recourse mortgage loan that had an outstanding balance of $33.8 million with new financing of $34.6 million, inclusive of the amount attributable to a noncontrolling interest of $17.0 million. The previous loan had an interest rate of 5.9% and a maturity date of July 31, 2016. The new loan has a rate of EURIBOR plus a 3.3% margin and a term of five years.

Foreign Currency Exchange Rate Impact

During the nine months ended September 30, ~~2016,~~2017, the U.S. dollar weakened against the euro, ~~and strengthened against the British pound sterling,~~ resulting in an aggregate increase of ~~$42.1~~$204.7 million in the aggregate carrying values of our Non-recourse ~~debt,~~mortgages, net, Senior Unsecured Credit Facility, ~~- Revolver,~~ and Unsecured Senior ~~unsecured notes,~~Notes, net from December 31, ~~2015~~2016 to September 30, ~~2016, with the impact of the weakening of the U.S. dollar against the euro more than offsetting the impact of the U.S. dollar strengthening against the British pound sterling.~~2017.

Scheduled Debt Principal Payments

Scheduled debt principal payments during the remainder of ~~2016,~~2017, each of the next four calendar years following December 31, ~~2016,~~2017, and thereafter through 2027 are as follows (in thousands):


Years Ending December 31,	Total ^(a)			Total ^(a)
2016 (remainder)	$	94,036
2017	878,564
2017 (remainder)				$	40,784
2018	649,558			278,163
2019	99,962			99,384
2020	219,767			221,547
2021				384,004
Thereafter through 2027	2,471,905			3,320,040
	4,413,792
Deferred financing costs ^(b)	(13,879		)
Total principal payments				4,343,922
Unamortized deferred financing costs				(16,210		)
Unamortized discount, net ^(c)(b)	(8,093		)	(12,874		)
Total	$	4,391,820		$	4,314,838

__________



	~~W. P. Carey 9/30/2016 10-Q~~– 36

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


(a)	Certain amounts are based on the applicable foreign currency exchange rate at September 30, ~~2016.~~2017.


(b)	In accordance with ASU 2015-03, we reclassified deferred financing costs from Other assets, net to Non-recourse debt, net, Senior Unsecured Notes, net, and Senior Unsecured Credit Facility - Term Loan, net as of December 31, 2015 (~~Note 2~~).

~~(c)~~

Represents the unamortized discount on the Unsecured Senior ~~Unsecured~~ Notes of ~~$8.2 million, partially offset by unamortized premium of $0.1~~$10.2 million in aggregate, unamortized discount on the Unsecured Term Loans of $1.3 million, and unamortized discount of $1.4 million in aggregate resulting from the assumption of property-level debt in connection with both the CPA^®:15 Merger and the CPA^®:16 Merger (Note 1).

Note 11. Commitments and Contingencies

At September 30, ~~2016,~~2017, we were not involved in any material litigation. Various claims and lawsuits arising in the normal course of business are pending against us. The results of these proceedings are not expected to have a material adverse effect on our consolidated financial position or results of operations.

Note 12. Restructuring and Other Compensation

Expenses Recorded During 2017

On June 15, 2017, our Board approved a plan to exit all non-traded retail fundraising activities carried out by our wholly-owned broker-dealer subsidiary, Carey Financial, as of June 30, 2017 (Note 1). As a result, we incurred non-recurring charges to exit our fundraising activities, consisting primarily of severance costs. During the nine months ended September 30, 2017, we recorded $8.2 million of severance and benefits and $0.9 million of other related costs, which are all included in Restructuring and other compensation in the consolidated financial statements.



	W. P. Carey 9/30/2017 10-Q– 39

Notes to Consolidated Financial Statements (Unaudited)

Expenses Recorded During 2016

In connection with the resignation of our ~~then-Chief Executive Officer,~~then-chief executive officer, Trevor P. Bond, we and Mr. Bond entered into a letter agreement, dated February 10, 2016. Under the terms of the agreement, subject to certain conditions, Mr. Bond ~~will be~~is entitled to receive the severance benefits provided for in his employment agreement and, subject to satisfaction of applicable performance conditions and proration, vesting of his outstanding unvested ~~performance stock units, or~~ PSUs in accordance with their terms. In addition, the portion of his ~~previously-granted restricted stock units, or~~previously granted RSUs that were scheduled to vest on February 15, 2016, which would have been forfeited upon separation pursuant to their terms, were allowed to vest on that date. In connection with the separation agreement, we recorded $5.1 million of severance-related expenses during the nine months ended September 30, 2016, which are included in Restructuring and other compensation in the consolidated financial statements.

In February 2016, we entered into an agreement with Catherine D. Rice, our former ~~Chief Financial Officer,~~chief financial officer, in connection with the termination of her employment, which provides for the continued vesting of her outstanding RSUs and PSUs pursuant to their terms as though her employment had continued through their respective vesting dates. In connection with the modification of these award terms, we recorded incremental stock-based compensation expense of $2.4 million during the nine months ended September 30, 2016, which is included in Restructuring and other compensation in the consolidated financial statements.

In March 2016, as part of a cost savings initiative, we undertook a reduction in force, or RIF, and realigned and consolidated certain positions within the company, resulting in employee headcount reductions. As a result of these reductions in headcount and the separations described above, during the nine months ended September 30, 2016, we recorded $8.2 million of severance and benefits, $3.2 million of stock-based compensation, and $0.5 million of other related costs, which are all included in Restructuring and other compensation in the consolidated financial statements.

As of September 30, ~~2016,~~2017, the accrued liability for these severance obligations recorded during 2016 and 2017 was ~~$4.3~~$4.8 million, ~~and~~which is included within Accounts payable, accrued expenses and other liabilities in the consolidated financial statements.

Note 13. Stock-Based Compensation and Equity

Stock-Based Compensation

~~We maintain several stock-based compensation~~In June 2017, our shareholders approved the 2017 Share Incentive Plan, which replaced our predecessor plans for employees, the 2009 Share Incentive Plan, and for non-employee directors, the 2009 Non-Employee Directors’ Incentive Plan. No further awards will be granted under those predecessor plans, which are more fully described in the ~~2015~~2016 Annual Report. ~~There have been no significant changes~~The 2017 Share Incentive Plan authorizes the issuance of up to ~~the terms and conditions of any~~4,000,000 shares of our ~~stock-based compensation plans or arrangements during~~common stock, reduced by the number of shares (279,728) that were subject to awards granted under the 2009 Share Incentive Plan and the 2009 Non-Employee Directors’ Incentive Plan after December 31, 2016 and before the effective date of the 2017 Share Incentive Plan, which was June 15, 2017. The 2017 Share Incentive Plan provides for the grant of various stock- and cash-based awards, including (i) share options, (ii) RSUs, (iii) PSUs, (iv) RSAs, and (v) dividend equivalent rights.

~~nine months ended~~ ~~September 30, 2016.~~ During the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, we recorded stock-based compensation expense of ~~$18.2~~$14.6 million and ~~$16.1~~$18.2 million, respectively, of which $3.2 million was included in Restructuring and other compensation for the nine months ended September 30, 2016 (Note 12).



	W. P. Carey 9/30/~~2016~~2017 10-Q – 3740

Notes to Consolidated Financial Statements (Unaudited)

Restricted and Conditional Awards

Nonvested ~~restricted stock awards, or~~ RSAs, RSUs, and PSUs at September 30, ~~2016~~2017 and changes during the nine months ended September 30, ~~2016~~2017 were as follows:


	RSA and RSU Awards				PSU Awards				RSA and RSU Awards				PSU Awards
	Shares		Weighted-Average Grant Date Fair Value		Shares		Weighted-Average Grant Date Fair Value		Shares		Weighted-Average Grant Date Fair Value		Shares		Weighted-Average Grant Date Fair Value
Nonvested at January 1, 2016	356,771		$	64.09	340,358		$	52.26
Nonvested at January 1, 2017									356,865		$	61.63	310,018		$	73.80
Granted ^(a)	277,813		58.27		200,005		73.18		193,467		62.19		107,934		75.39
Vested ^(b)	(214,682	)	61.22		(180,683	)	80.22		(169,560	)	62.77		(132,412	)	74.21
Forfeited	(44,514	)	62.08		(35,241	)	75.33		(41,957	)	61.09		(45,258	)	76.91
Adjustment ^(c)	—		—		41,097		93.23		—		—		28,271		63.24
Nonvested at September 30, 2016 ^(d)	375,388		$	61.66	365,536		$	72.52
Nonvested at September 30, 2017 ^(d)									338,815		$	61.45	268,553		$	75.18

__________

(a)

The grant date fair value of RSAs and RSUs reflect our stock price on the date of ~~grant.~~grant on a one-for-one basis. The grant date fair value of PSUs ~~were~~was determined utilizing (i) a Monte Carlo simulation model to generate ~~a range~~an estimate of ~~possible~~our future stock ~~prices for both us and the plan defined peer index~~price over the three-year performance ~~period.~~period and (ii) future financial performance projections. To estimate the fair value of PSUs granted during the nine months ended September 30, ~~2016,~~2017, we used a risk-free interest ~~rates ranging from 0.9% - 1.1% and~~rate of 1.5%, an expected volatility ~~rates ranging from 18.2% - 19.1% (the plan defined peer index assumes a range~~rate of ~~15.0% - 15.6%)~~17.1%, and assumed a dividend yield of zero.

(b)

The total fair value of shares vested during the nine months ended September 30, ~~2016~~2017 was ~~$27.6~~$20.5 million. Employees have the option to take immediate delivery of the shares upon vesting or defer receipt to a future date pursuant to ~~previously-made~~previously made deferral elections. At September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, we had an obligation to issue ~~1,219,502~~1,135,563 and ~~1,395,907~~1,217,274 shares, respectively, of our common stock underlying such deferred awards, which is recorded within ~~W. P. Carey~~Total stockholders’ equity as a Deferred compensation obligation of ~~$50.6~~$46.7 million and ~~$56.0~~$50.2 million, respectively.

(c)

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


(d)	At September 30, ~~2016,~~2017, total unrecognized compensation expense related to these awards was approximately ~~$27.3~~$21.4 million, with an aggregate weighted-average remaining term of ~~2.1~~1.9 years.

During the three and nine months ended September 30, ~~2016, 6,396~~2017, 2,475 and ~~103,694~~134,709 stock options, respectively, were exercised with an aggregate intrinsic value of ~~$0.2~~less than $0.1 million and ~~$3.5~~$4.0 million, respectively. At September 30, ~~2016,~~2017, there were ~~154,831~~10,324 stock options outstanding, all of which ~~144,573~~ were ~~exercisable.~~exercisable and, if not exercised, will expire on December 31, 2017.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 3841

Notes to Consolidated Financial Statements (Unaudited)

Earnings Per Share

Under current authoritative guidance for determining earnings per share, all nonvested share-based payment awards that contain non-forfeitable rights to distributions are considered to be participating securities and therefore are included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. ~~Our~~Certain of our nonvested RSUs and RSAs contain rights to receive non-forfeitable distribution equivalents or distributions, respectively, and therefore we apply the two-class method of computing earnings per share. The calculation of earnings per share below excludes the income attributable to the nonvested participating RSUs and RSAs from the numerator and such nonvested shares in the denominator. The following table summarizes basic and diluted earnings (in thousands, except share amounts):

Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Net income attributable to W. P. Carey $ 110,943
$ 21,745
$ 220,043
$ 121,209
Allocation of distribution equivalents paid on nonvested RSUs and RSAs in excess of income (386 ) (73 ) (766 ) (408 )
Net income – basic and diluted $ 110,557
$ 21,672
$ 219,277
$ 120,801

Weighted-average shares outstanding – basic 107,221,668
105,813,237
106,493,145
105,627,423
Effect of dilutive securities 246,361
523,803
360,029
830,072
Weighted-average shares outstanding – diluted 107,468,029
106,337,040
106,853,174
106,457,495



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net income attributable to W. P. Carey	$	80,278		$	110,943		$	202,080		$	220,043
Net income attributable to nonvested participating RSUs and RSAs	(239		)	(386		)	(600		)	(766		)
Net income — basic and diluted	$	80,039		$	110,557		$	201,480		$	219,277

Weighted-average shares outstanding — basic	108,019,292			107,221,668			107,751,672			106,493,145
Effect of dilutive securities	124,402			246,361			195,818			360,029
Weighted-average shares outstanding — diluted	108,143,694			107,468,029			107,947,490			106,853,174

For the three and nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, there were no potentially dilutive securities excluded from the computation of diluted earnings per share.

At-The-Market Equity Offering Program

On ~~June 3, 2015,~~March 1, 2017, we filed a prospectus supplement with the SEC pursuant to which we may offer and sell shares of our common stock from time to time, up to an aggregate gross sales price of $400.0 million, through ana continuous “at-the-market,” or ATM, offering program with a consortium of banks acting as sales agents. On that date, we also terminated a prior ATM program that was established on June 3, 2015, under which we could also offer and sell shares of our common stock, up to an aggregate gross sales price of $400.0 million. During the three and nine months ended September 30, 2017, we issued 15,500 and 345,253 shares, respectively, of our common stock under the current ATM program at a weighted-average price of $67.05 and $67.78 per share, respectively, for net proceeds of $0.9 million and $22.8 million, respectively. During the three and nine months ended September 30, 2016, we issued 968,535 and 1,249,836 shares, respectively, of our common stock under the prior ATM program at a weighted-average price of $68.54 and $68.52 per share, respectively, for net proceeds of ~~$65.4~~$65.2 million and ~~$84.4~~$84.1 million, respectively. As of September 30, ~~2016, $314.4~~2017, $376.6 million remained available for issuance under our current ATM program.

Acquisition of Noncontrolling Interest

On May 24, 2017, we acquired the remaining 25% interest in an international jointly owned investment (which we already consolidated) from the noncontrolling interest holders for €2, bringing our ownership interest to 100%. No gain or loss was recognized on the transaction. We recorded an adjustment of approximately $1.8 million to Additional paid-in capital in our consolidated statement of equity for the nine months ended September 30, 2017 related to the difference between the consideration transferred and the carrying value of the noncontrolling interest related to this investment. The property owned by the investment was sold on May 26, 2017 and we recognized a gain on sale of less than $0.1 million (Note 15).

Redeemable Noncontrolling Interest

We account for the noncontrolling interest in our subsidiary, W. P. Carey International, LLC, or WPCI, held by a third party as a redeemable noncontrolling interest, because, pursuant to a put option held by the third party, we had an obligation to redeem the interest at fair value, subject to certain conditions. This obligation was required to be settled in shares of our common stock. On October 1, 2013, we received a notice from the holder of the noncontrolling interest in WPCI regarding the exercise of the put option, pursuant to which we were required to purchase the third party’s 7.7% interest in WPCI. Pursuant to the terms of the



	W. P. Carey 9/30/2017 10-Q– 42

Notes to Consolidated Financial Statements (Unaudited)

related put agreement, the value of that interest was determined based on a third-party valuation as of October 31, 2013, which is the end of the month that the put option was exercised. In March 2016, we issued 217,011 shares of our common stock to the holder of the redeemable noncontrolling interest, which had a value of $13.4 million at the date of issuance, pursuant to a formula set forth in the put agreement. Through the date of this Report, the third party has not formally transferred his interests in WPCI to us pursuant to the put agreement because of a dispute regarding any amounts that may still be owed to him.



	~~W. P. Carey 9/30/2016 10-Q~~– 39

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

The following table presents a reconciliation of redeemable noncontrolling interest (in thousands):


	Nine Months Ended September 30,					Nine Months Ended September 30,
	2016			2015		2017		2016
Beginning balance	$	14,944		$	6,071	$	965	$	14,944
Distributions	(13,418		)	—		—		(13,418		)
Redemption value adjustment	(561		)	8,551		—		(561		)
Ending balance	$	965		$	14,622	$	965	$	965

Reclassifications Out of Accumulated Other Comprehensive Loss

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


	Three Months Ended September 30, 2016												Three Months Ended September 30, 2017
	Gains and Losses on Derivative Instruments			Foreign Currency Translation Adjustments			Gains and Losses on Marketable Securities			Total			Gains and Losses on Derivative Instruments			Foreign Currency Translation Adjustments			Gains and Losses on Marketable Securities			Total
Beginning balance	$	34,744		$	(240,985	)	$	40		$	(206,201	)	$	24,636		$	(267,868	)	$	(416	)	$	(243,648	)
Other comprehensive loss before reclassifications	(1,178		)	(11,824		)	(7		)	(13,009		)
Other comprehensive income before reclassifications													(8,367		)	25,417			66			17,116
Amounts reclassified from accumulated other comprehensive loss to:
Gain on sale of real estate, net of tax (Note 15)													—			3,562			—			3,562
Interest expense	512			—			—			512			286			—			—			286
Other income and (expenses)	(2,427		)	—			—			(2,427		)	(2,189		)	—			—			(2,189		)
Total	(1,915		)	—			—			(1,915		)	(1,903		)	3,562			—			1,659
Net current period other comprehensive loss	(3,093		)	(11,824		)	(7		)	(14,924		)
Net current period other comprehensive income													(10,270		)	28,979			66			18,775
Net current period other comprehensive gain attributable to noncontrolling interests	17			(218		)	—			(201		)	8			(4,716		)	—			(4,708		)
Ending balance	$	31,668		$	(253,027	)	$	33		$	(221,326	)	$	14,374		$	(243,605	)	$	(350	)	$	(229,581	)


	Three Months Ended September 30, 2015											Three Months Ended September 30, 2016
	Gains and Losses on Derivative Instruments			Foreign Currency Translation Adjustments			Gains and Losses on Marketable Securities		Total			Gains and Losses on Derivative Instruments			Foreign Currency Translation Adjustments			Gains and Losses on Marketable Securities			Total
Beginning balance	$	30,796		$	(151,608	)	$	35	$	(120,777	)	$	34,744		$	(240,985	)	$	40		$	(206,201	)
Other comprehensive loss before reclassifications	2,259			(37,138		)	—		(34,879		)	(1,178		)	(11,824		)	(7		)	(13,009		)
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	672			—			—		672			512			—			—			512
Other income and (expenses)	(1,642		)	—			—		(1,642		)	(2,427		)	—			—			(2,427		)
Total	(970		)	—			—		(970		)	(1,915		)	—			—			(1,915		)
Net current period other comprehensive loss	1,289			(37,138		)	—		(35,849		)	(3,093		)	(11,824		)	(7		)	(14,924		)
Net current period other comprehensive gain attributable to noncontrolling interests	—			(43		)	—		(43		)	17			(218		)	—			(201		)
Ending balance	$	32,085		$	(188,789	)	$	35	$	(156,669	)	$	31,668		$	(253,027	)	$	33		$	(221,326	)



	W. P. Carey 9/30/~~2016~~2017 10-Q – 4043

Notes to Consolidated Financial Statements (Unaudited)


	Nine Months Ended September 30, 2016												Nine Months Ended September 30, 2017
	Gains and Losses on Derivative Instruments			Foreign Currency Translation Adjustments			Gains and Losses on Marketable Securities			Total			Gains and Losses on Derivative Instruments			Foreign Currency Translation Adjustments			Gains and Losses on Marketable Securities			Total
Beginning balance	$	37,650		$	(209,977	)	$	36		$	(172,291	)	$	46,935		$	(301,330	)	$	(90	)	$	(254,485	)
Other comprehensive loss before reclassifications	(1,155		)	(41,999		)	(3		)	(43,157		)
Other comprehensive income before reclassifications													(25,108		)	68,124			(260		)	42,756
Amounts reclassified from accumulated other comprehensive loss to:
Gain on sale of real estate, net of tax (Note 15)													—			3,562			—			3,562
Interest expense	1,578			—			—			1,578			1,024			—			—			1,024
Other income and (expenses)	(6,422		)	—			—			(6,422		)	(8,490		)	—			—			(8,490		)
Total	(4,844		)	—			—			(4,844		)	(7,466		)	3,562			—			(3,904		)
Net current period other comprehensive loss	(5,999		)	(41,999		)	(3		)	(48,001		)
Net current period other comprehensive income													(32,574		)	71,686			(260		)	38,852
Net current period other comprehensive gain attributable to noncontrolling interests	17			(1,051		)	—			(1,034		)	13			(13,961		)	—			(13,948		)
Ending balance	$	31,668		$	(253,027	)	$	33		$	(221,326	)	$	14,374		$	(243,605	)	$	(350	)	$	(229,581	)


	Nine Months Ended September 30, 2015											Nine Months Ended September 30, 2016
	Gains and Losses on Derivative Instruments			Foreign Currency Translation Adjustments			Gains and Losses on Marketable Securities		Total			Gains and Losses on Derivative Instruments			Foreign Currency Translation Adjustments			Gains and Losses on Marketable Securities			Total
Beginning balance	$	13,597		$	(89,177	)	$	21	$	(75,559	)	$	37,650		$	(209,977	)	$	36		$	(172,291	)
Other comprehensive loss before reclassifications	22,326			(103,127		)	14		(80,787		)	(1,155		)	(41,999		)	(3		)	(43,157		)
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	1,890			—			—		1,890			1,578			—			—			1,578
Other income and (expenses)	(5,728		)	—			—		(5,728		)	(6,422		)	—			—			(6,422		)
Total	(3,838		)	—			—		(3,838		)	(4,844		)	—			—			(4,844		)
Net current period other comprehensive loss	18,488			(103,127		)	14		(84,625		)	(5,999		)	(41,999		)	(3		)	(48,001		)
Net current period other comprehensive loss attributable to noncontrolling interests	—			3,515			—		3,515
Net current period other comprehensive gain attributable to noncontrolling interests												17			(1,051		)	—			(1,034		)
Ending balance	$	32,085		$	(188,789	)	$	35	$	(156,669	)	$	31,668		$	(253,027	)	$	33		$	(221,326	)

Distributions Declared

During the third quarter of ~~2016,~~2017, we declared a quarterly distribution of ~~$0.9850~~$1.0050 per share, which was paid on October ~~14, 2016~~16, 2017 to stockholders of record on October ~~3, 2016,~~2, 2017, in the aggregate amount of ~~$106.5~~$107.4 million.

During the nine months ended September 30, ~~2016,~~2017, we declared distributions totaling ~~$2.9392~~$3.00 per share in the aggregate amount of ~~$315.4~~$320.3 million.

Note 14. Income Taxes

We elected to be treated as a REIT and believe that we have been organized and have operated in such a manner to maintain our qualification as a REIT for federal and state income tax purposes. As a REIT, we are generally not subject to corporate level federal income taxes on earnings distributed to our stockholders. Since inception, we have distributed at least 100% of our taxable income annually and intend to do so for the tax year ending December 31, ~~2016.~~2017. Accordingly, we have not included any provisions for federal income taxes related to the REIT in the accompanying consolidated financial statements for the three and nine months ended September 30, ~~2016~~2017 and ~~2015.~~2016.

Certain of our subsidiaries have elected TRS status. A TRS may provide certain services considered impermissible for REITs and may hold assets that REITs may not hold directly. We also own real property in jurisdictions outside the United States



	W. P. Carey 9/30/2017 10-Q– 44

Notes to Consolidated Financial Statements (Unaudited)

through foreign subsidiaries and are subject to income taxes on our pre-tax income earned from properties in such countries.



	~~W. P. Carey 9/30/2016 10-Q~~– 41

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

The accompanying consolidated financial statements include an interim tax provision for our TRSs and foreign subsidiaries, as necessary, for the three and nine months ended September 30, ~~2016~~2017 and ~~2015.~~2016. Current income tax expense was $3.0 million and $4.8 million for ~~both~~ the three months ended September 30, 2017 and 2016, respectively, and ~~2015,~~$11.1 million and $14.7 ~~million and $24.9~~ million for the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

During the second quarter of 2016, we identified and recorded out-of-period adjustments related to adjustments to prior period income tax returns. This adjustment is reflected as a $3.0 million reduction of our Benefit from income taxes in the consolidated statements of income for the nine months ended September 30, 2016 (Note 2), and is included in current income tax expense for the nine months ended September 30, 2016.

Our TRSs and foreign subsidiaries are subject to U.S. federal, state, and foreign income taxes. As such, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance for deferred tax assets is provided if we believe that it is more likely than not that we will not realize the tax benefit of deferred tax ~~asset~~assets based on available evidence at the time the determination is made. A change in circumstances may cause us to change our judgment about whether the tax benefit of a deferred tax asset will more likely than not be realized. We generally report any change in the valuation allowance through our income statement in the period in which such changes in circumstances occur. Deferred tax assets (net of valuation allowance) and liabilities for our TRSs and foreign subsidiaries were recorded, as necessary, as of September 30, ~~2016~~2017 and December 31, ~~2015.~~2016. The majority of our deferred tax assets relate to the timing difference between the financial reporting basis and tax basis for ~~stock based~~stock-based compensation expense. The majority of our deferred tax liabilities relate to differences between the tax basis and financial reporting basis of the assets acquired in acquisitions ~~treated as business combinations under GAAP and~~ in which the tax basis of such assets was not stepped up to fair value for income tax purposes. ~~Provision for~~(Provision for) benefit from income taxes included deferred income tax benefits of ~~$1.6~~$1.2 million and ~~$1.4~~$1.6 million for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively, and ~~$19.2~~$8.2 million and ~~$4.5~~$19.2 million for the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

Note 15. Property Dispositions

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

~~The results~~2017 — During the three and nine months ended September 30, 2017, we sold five properties, and 11 properties and a parcel of ~~operations~~vacant land, respectively, for total proceeds of $58.7 million and $102.5 million, respectively, net of selling costs, and recognized a net gain on these sales of $19.3 million and $22.7 million, respectively. In connection with the sale of a property in Malaysia in August 2017, and in accordance with ASC 830-30-40, Foreign Currency Matters, we reclassified $3.6 million of foreign currency translation losses from Accumulated other comprehensive loss to Gain on sale of real estate, net of tax (as a reduction to Gain on sale of real estate, net of tax), since the sale represented a disposal of our Malaysian investments (Note 13). One of the properties sold during the nine months ended September 30, 2017 was held for sale at December 31, 2016 (Note 4). In addition, in January 2017, we transferred ownership of two international properties and the related non-recourse mortgage loan, which had an aggregate asset carrying value of $31.3 million and an outstanding balance of $28.1 million (net of $3.8 million of cash held in escrow that ~~have been sold or~~was retained by the mortgage lender), respectively, on the dates of transfer, to the mortgage lender, resulting in a net loss of less than $0.1 million.

During the nine months ended September 30, 2017, we entered into a contract to sell one international property, which was classified as held for sale ~~are included in the consolidated financial statements and are summarized~~ as ~~follows (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Revenues $ 16,242
$ 21,292
$ 90,264
$ 63,880
Expenses (1,872 ) (13,733 ) (40,330 ) (39,128 )
Gain on sale of real estate, net of tax 48,929
1,779
67,873
2,980
Impairment charges (5,524 ) (1,389 ) (40,952 ) (4,071 )
(Loss) gain on extinguishment of debt (2,058 ) 2,281
(3,999 ) 2,281
Benefit from (provision for) income taxes 836
(1,050 ) 11,260
(3,121 )
Income from properties sold or classified as held for sale, net of income taxes ^(a)
$ 56,553
$ 9,180
$ 84,116
$ 22,821

~~__________~~


~~(a)~~	Amounts included net income attributable to noncontrolling interests of $1.5 million and $2.0 million for the nine months ended September 30, 2016 and 2015, respectively. We did not recognize net income attributable to noncontrolling interests for the three months ended September 30, 2016 and 2015.



	~~W. P. Carey 9/30/2016 10-Q~~of September 30, 2017 (Note 4).– 42

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

2016 — During the three and nine months ended September 30, 2016, we sold three properties, and ten properties and a parcel of vacant land, respectively, for total proceeds of $192.0 million and $392.6 million, respectively, net of selling costs, and recognized a net gain on these sales of $37.4 million and $39.9 million, respectively, ~~inclusive of~~including amounts attributable to noncontrolling interests of $0.9 million for the nine months ended September 30, 2016. In April 2016, we transferred ownership



	W. P. Carey 9/30/2017 10-Q– 45

Notes to Consolidated Financial Statements (Unaudited)

of a vacant international property and the related non-recourse mortgage loan, which had a carrying value of $39.8 million and an outstanding balance of $60.9 million, respectively, on the date of transfer, to the mortgage lender, resulting in a net gain of $16.4 million. In addition, in July 2016, a vacant domestic property with an asset carrying value of $13.7 million, which was encumbered by a ~~$27.0~~$24.3 million non-recourse mortgage loan (net of $2.6 million of cash held in escrow that was retained by the mortgage lender), was foreclosed upon by the mortgage lender, resulting in a net gain of $11.6 million.

In connection with those sales that constituted businesses, during the three and nine months ended September 30, 2016 we allocated goodwill totaling $18.0 million and $32.9 million, respectively, to the cost basis of the properties for our Owned Real Estate segment based on the relative fair value at the time of the ~~sale (Note 7). At September 30, 2016, we had 16 properties classified as assets held for sale (Note 4). During the three and nine months ended September 30, 2016, we recognized impairment charges totaling $5.5 million and $41.0 million, respectively, on a portfolio of 14 of these properties (Note 8~~).sale.

In the fourth quarter of 2015, we executed a lease amendment with a tenant in a domestic office building. The amendment extended the lease term an additional 15 years to January 31, 2037 and provided a one-time rent payment of $25.0 million, which was paid to us on December 18, 2015. The lease amendment also provided an option to terminate the lease effective February 29, 2016, with additional lease termination fees of $22.2 million to be paid to us on or five days before February 29, 2016 upon exercise of the option. The tenant exercised the option on January 1, 2016. The aggregate of the additional rent payment of $25.0 million and the lease termination fees of $22.2 million were amortized to lease termination income from the lease amendment date on December 4, 2015 through the end of the non-cancelable lease term on February 29, 2016, resulting in $15.0 million recognized during the year ended December 31, 2015 and $32.2 million recognized during the ~~three~~nine months ended ~~March 31,~~September 30, 2016 within Lease termination income and other in the consolidated financial statements. In connection with the lease amendment, we defeased the mortgage loan encumbering the property with a principal balance of $36.5 million and recognized a loss on extinguishment of debt of $5.3 million, which was included in Other income and (expenses) in the consolidated financial statements for the year ended December 31, 2015. In addition, during the fourth quarter of 2015, we entered into an agreement to sell the property to a third party and the buyer placed a deposit of $12.7 million for the purchase of the property that was held in escrow. ~~At December 31, 2015, this property was classified as held for sale (Note 4). During the three months ended March 31,~~In February 2016, we sold the property for proceeds of $44.4 million, net of selling costs, and recognized a loss on the sale of $10.7 million.

~~2015 —~~ During the nine months ended September 30, 2015, we sold 11 properties for total proceeds of $28.8 million, net of selling costs, and we recognized a net gain on these sales of $2.4 million. In addition, during July 2015, a domestic vacant property was foreclosed upon and sold for $1.4 million. We recognized a gain on sale of $0.6 million in connection with that disposition. In connection with those sales that constituted a business, during the nine months ended September 30, 2015 we allocated goodwill totaling $1.1 million to the cost basis of the properties, for our Owned Real Estate segment, based on the relative fair value at the time of the sale (~~Note 7~~).



	W. P. Carey 9/30/~~2016~~2017 10-Q – 4346

Notes to Consolidated Financial Statements (Unaudited)

Note 16. Segment Reporting

We evaluate our results from operations through our two major business ~~segments —~~segments: Owned Real Estate and Investment ~~Management~~Management. As a result of our Board’s decision to exit all non-traded retail fundraising activities as of June 30, 2017 (Note 1)., we have revised how we view and present a component of our two reportable segments. As such, beginning with the second quarter of 2017, we include (i) equity in earnings of equity method investments in the Managed Programs and (ii) our equity investments in the Managed Programs in our Investment Management segment. Both (i) earnings from our investment in CCIF and (ii) our investment in CCIF continue to be included in our Investment Management segment. Results of operations and assets by segment for prior periods have been reclassified to conform to the current period presentation. The following tables present a summary of comparative results and assets for these business segments (in thousands):

Owned Real Estate


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Revenues
Lease revenues	$	163,786		$	164,741		$	506,358		$	487,480		$	161,511		$	163,786		$	475,547		$	506,358
Operating property revenues	8,524			8,107			23,696			23,645			8,449			8,524			23,652			23,696
Reimbursable tenant costs	6,537			5,340			19,237			17,409			5,397			6,537			15,940			19,237
Lease termination income and other	1,224			2,988			34,603			9,319			1,227			1,224			4,234			34,603
	180,071			181,176			583,894			537,853			176,584			180,071			519,373			583,894

Operating Expenses
Depreciation and amortization	61,740			74,529			210,557			203,048			62,970			61,740			186,481			210,557
Impairment charges	14,441			19,438			49,870			22,711
General and administrative													11,234			7,453			27,311			25,653
Property expenses, excluding reimbursable tenant costs	10,193			11,120			38,475			31,504			10,556			10,193			31,196			38,475
General and administrative	7,453			10,239			25,653			37,124
Reimbursable tenant costs	6,537			5,340			19,237			17,409			5,397			6,537			15,940			19,237
Stock-based compensation expense	1,572			1,468			4,316			5,943			1,880			1,572			4,733			4,316
Property acquisition and other expenses	—			3,642			2,975			11,213
Other expenses													65			—			1,138			2,975
Impairment charges													—			14,441			—			49,870
Restructuring and other compensation	—			—			4,413			—			—			—			—			4,413
	101,936			125,776			355,496			328,952			92,102			101,936			266,799			355,496
Other Income and Expenses
Interest expense	(44,349		)	(49,683		)	(139,496		)	(145,325		)	(41,182		)	(44,349		)	(125,374		)	(139,496		)
Equity in earnings of equity method investments in the Managed REITs and real estate	15,705			13,575			46,771			39,408
Equity in earnings of equity method investments in real estate													3,740			3,230			9,533			9,585
Other income and (expenses)	3,244			6,588			7,681			9,545			(4,918		)	3,244			(6,249		)	7,681
	(25,400		)	(29,520		)	(85,044		)	(96,372		)	(42,360		)	(37,875		)	(122,090		)	(122,230		)
Income before income taxes and gain on sale of real estate	52,735			25,880			143,354			112,529			42,122			40,260			130,484			106,168
(Provision for) benefit from income taxes	(530		)	(5,247		)	6,792			(7,820		)	(1,511		)	(530		)	(6,696		)	6,792
Income before gain on sale of real estate	52,205			20,633			150,146			104,709			40,611			39,730			123,788			112,960
Gain on sale of real estate, net of tax	49,126			1,779			68,070			2,980			19,257			49,126			22,732			68,070
Net Income from Owned Real Estate	101,331			22,412			218,216			107,689			59,868			88,856			146,520			181,030
Net income attributable to noncontrolling interests	(1,359		)	(1,814		)	(6,294		)	(5,871		)	(3,376		)	(1,359		)	(8,530		)	(6,294		)
Net Income from Owned Real Estate Attributable to W. P. Carey	$	99,972		$	20,598		$	211,922		$	101,818		$	56,492		$	87,497		$	137,990		$	174,736



	W. P. Carey 9/30/~~2016~~2017 10-Q – 4447

Notes to Consolidated Financial Statements (Unaudited)

Investment Management


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015			2017			2016			2017		2016
Revenues
Asset management revenue	$	15,978		$	13,004		$	45,596		$	36,236		$	17,938		$	15,978		$	53,271	$	45,596
Structuring revenue													9,817			12,301			27,981		30,990
Reimbursable costs from affiliates	14,540			11,155			46,372			28,401			6,211			14,540			45,390		46,372
Structuring revenue	12,301			8,207			30,990			67,735
Dealer manager fees	1,835			1,124			5,379			2,704			105			1,835			4,430		5,379
Other advisory revenue	522			—			522			203			99			522			896		522
	45,176			33,490			128,859			135,279			34,170			45,176			131,968		128,859
Operating Expenses
Reimbursable costs from affiliates	14,540			11,155			46,372			28,401			6,211			14,540			45,390		46,372
General and administrative	8,280			12,603			32,469			41,863			6,002			8,280			25,878		32,469
Subadvisor fees	4,842			1,748			10,010			8,555			5,206			4,842			11,598		10,010
Stock-based compensation expense													2,755			2,784			9,916		10,648
Restructuring and other compensation													1,356			—			9,074		7,512
Depreciation and amortization													1,070			1,062			2,838		3,278
Dealer manager fees and expenses	3,028			3,185			9,000			7,884			462			3,028			6,544		9,000
Stock-based compensation expense	2,784			2,498			10,648			10,120
Depreciation and amortization	1,062			983			3,278			3,031
Property acquisition and other expenses	—			1,118			2,384			1,120
Restructuring and other compensation	—			—			7,512			—
Other expenses													—			—			—		2,384
	34,536			33,290			121,673			100,974			23,062			34,536			111,238		121,673
Other Income and Expenses
Equity in earnings (losses) of equity method investment in CCIF	1,098			(940		)	1,472			(778		)
Equity in earnings of equity method investments in the Managed Programs													12,578			13,573			38,287		38,658
Other income and (expenses)	1,857			20			1,717			399			349			1,857			1,280		1,717
	2,955			(920		)	3,189			(379		)	12,927			15,430			39,567		40,375
Income (loss) before income taxes	13,595			(720		)	10,375			33,926
Income before income taxes													24,035			26,070			60,297		47,561
(Provision for) benefit from income taxes	(2,624		)	1,886			(2,254		)	(12,532		)	(249		)	(2,624		)	3,793		(2,254		)
Net Income from Investment Management	10,971			1,166			8,121			21,394
Net income attributable to noncontrolling interests	—			(19		)	—			(2,003		)
Net Income from Investment Management Attributable to W. P. Carey	$	10,971		$	1,147		$	8,121		$	19,391		$	23,786		$	23,446		$	64,090	$	45,307

Total Company


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Revenues	$	225,247		$	214,666		$	712,753		$	673,132		$	210,754		$	225,247		$	651,341		$	712,753
Operating expenses	136,472			159,066			477,169			429,926			115,164			136,472			378,037			477,169
Other income and (expenses)	(22,445		)	(30,440		)	(81,855		)	(96,751		)	(29,433		)	(22,445		)	(82,523		)	(81,855		)
Gain on sale of real estate, net of tax													19,257			49,126			22,732			68,070
(Provision for) benefit from income taxes	(3,154		)	(3,361		)	4,538			(20,352		)	(1,760		)	(3,154		)	(2,903		)	4,538
Gain on sale of real estate, net of tax	49,126			1,779			68,070			2,980
Net income attributable to noncontrolling interests	(1,359		)	(1,833		)	(6,294		)	(7,874		)	(3,376		)	(1,359		)	(8,530		)	(6,294		)
Net income attributable to W. P. Carey	$	110,943		$	21,745		$	220,043		$	121,209		$	80,278		$	110,943		$	202,080		$	220,043



	Total Assets at
	September 30, 2017		December 31, 2016
Owned Real Estate	$	7,975,925	$	8,104,974
Investment Management	358,486		348,980
Total Company	$	8,334,411	$	8,453,954



	W. P. Carey 9/30/~~2016~~2017 10-Q – 4548

Notes to Consolidated Financial Statements (Unaudited)

Total Long-Lived Assets at ^(a)
Total Assets at
September 30, 2016 December 31, 2015 September 30, 2016
December 31, 2015 ^(b)
Owned Real Estate $ 5,988,852
$ 6,079,803
$ 8,266,929
$ 8,537,544
Investment Management 23,083
22,214
201,356
204,545
Total Company $ 6,011,935
$ 6,102,017
$ 8,468,285
$ 8,742,089

~~__________~~


~~(a)~~	Consists of Net investments in real estate and Equity investments in the Managed Programs and real estate. Total long-lived assets for our Investment Management segment consists of our equity investment in CCIF (~~Note 6~~).


~~(b)~~	In accordance with ASU 2015-03, we reclassified deferred financing costs from Other assets, net to Non-recourse debt, net, Senior Unsecured Notes, net, and Senior Unsecured Credit Facility - Term Loan, net as of December 31, 2015 (~~Note 2~~).

Note 17. Subsequent Events

~~Dispositions~~Mortgage Loan Repayments

In October ~~2016, we sold 16 international properties, including 15 international properties that were held for sale at September 30, 2016 (Note 4), for gross proceeds of $132.3 million. At closing,~~2017, we repaid ~~the~~three non-recourse mortgage loans ~~encumbering the properties~~ with an aggregate principal balance of ~~$40.7~~approximately $25.2 million.

Repayments of Loans to Affiliates

In ~~addition, on~~ October ~~13, 2016, we transferred ownership~~2017, CWI 1 repaid a total of ~~an international property and~~$29.2 million of the ~~related non-recourse mortgage loan~~loans outstanding to ~~the mortgage lender. The property was held for sale~~us at September 30, ~~2016~~2017, of which $15.0 million reduced the amount outstanding under the revolving working capital facility and $14.2 million went toward repaying the bridge loan. In October 2017, CPA^®:18 – Globalrepaid in full the $19.0 million loan that was outstanding to us at September 30, 2017 (Note 43). ~~At the date of the transfer, the property had an asset carrying value of $3.4 million and the related non-recourse mortgage loan had an outstanding balance of $4.5 million.~~

Loan to Affiliate

On October ~~31, 2016,~~19, 2017, we ~~made~~entered into a ~~$27.5~~secured $25.0 million revolving working capital facility with CWI 2. The loan ~~to CPA~~^®~~:18 – Global~~bears interest at ~~an annual interest rate of~~ LIBOR plus ~~1.1%~~1.00% and matures on the earlier of December 31, 2018 and the expiration or termination by CWI 2 of its advisory agreement with ~~a scheduled maturity date of October 31, 2017 for the purpose of facilitating an investment approved by CPA~~^®~~:18 – Global’s investment committee~~us (Note 3).

~~Mortgage Loan Repayments~~

~~On November 1, 2016, we repaid four non-recourse mortgage loans with an aggregate principal balance of $30.1 million.~~



	W. P. Carey 9/30/~~2016~~2017 10-Q – 4649

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to 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. The discussion also provides information about the financial results of the segments of our business to provide a better understanding of how these segments and their results affect our financial condition and results of operations. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the ~~2015~~2016 Annual Report and subsequent reports filed under the Securities Exchange Act of 1934.

Business Overview

As described in more detail in Item 1 of the ~~2015~~2016 Annual Report, we provide long-term financing via sale-leaseback and build-to-suit transactions for companies worldwide and, as of September 30, ~~2016,~~2017, manage a global investment portfolio of ~~1,369~~1,381 properties, including ~~910~~890 net-leased properties and two operating properties within our owned real estate portfolio. Our business operates in two ~~segments –~~segments: Owned Real Estate and Investment Management.

~~Significant Developments~~

~~Management Changes~~

On ~~September 21, 2016, we announced that Mr. Mark A. Alexander, age 58, and Mr. Chris Niehaus, age 57, were appointed~~June 15, 2017, our Board approved a plan to exit all non-traded retail fundraising activities carried out by our ~~board of directors. We also announced the retirement of two directors, Mr. Robert Mittelstaedt, Jr., age 73, and Dr. Karsten von Köller, age 76, from the board,~~wholly-owned broker-dealer subsidiary, Carey Financial, effective as of June 30, 2017. We currently expect to continue to manage all existing Managed Programs through the ~~same date.~~

On September 22, 2016, we announced that Mr. Hisham A. Kader resigned as our Chief Financial Officer. Ms. ToniAnn Sanzone, our Chief Accounting Officer, was appointed interim Chief Financial Officer, having served as Chief Accounting Officer since 2015. Ms. Sanzone joined us in 2013 as Controller. We have engaged a recruiting firm in our search for a successor Chief Financial Officer.

On October 5, 2016, we announced that Mr. Arjun Mahalingam was appointed Chief Accounting Officer, succeeding Ms. Sanzone in that role. Mr. Mahalingam joined us in 2013 and has served as our Controller since 2015.

~~Issuance~~end of ~~Senior Unsecured Notes~~

On September 12, 2016, we issued $350.0 million of 4.25% Senior Notes, at a price of 99.682% of par value, in a registered public offering. These 4.25% Senior Notes have a ten-year term and are scheduled to mature on October 1, 2026their respective natural life cycles (Note 101).

~~At-The-Market Equity Offering Program~~

Financial Highlights

During the nine months ended September 30, 2017, we completed the following activities, as further described below and in the consolidated financial statements:


•	We capitalized and completed four construction projects at a cost totaling $59.0 million and acquired one investment for $6.0 million for our Owned Real Estate segment during the nine months ended September 30, 2017 (Note 4).


•	As part of our active capital recycling program, we disposed of 13 properties and a parcel of vacant land from our Owned Real Estate portfolio for total proceeds of $130.6 million, net of selling costs (Note 15).


•	On January 19, 2017, we completed a public offering of €500.0 million of 2.25% Senior Notes, at a price of 99.448% of par value, issued by our wholly owned subsidiary, WPC Eurobond B.V., which are guaranteed by us. These 2.25% Senior Notes have a 7.5-year term and are scheduled to mature on July 19, 2024 (Note 10).

•

On February 22, 2017, we amended and restated our Senior Unsecured Credit Facility to increase its capacity to $1.85 billion, which is comprised of a $1.5 billion Unsecured Revolving Credit Facility maturing in four years with two six-month extension options, a €236.3 million Amended Term Loan maturing in five years, and a $100.0 million Delayed Draw Term Loan also maturing in five years. On that date, we also drew down our Amended Term Loan in full by borrowing €236.3 million (equivalent to $250.0 million) and repaid in full, and terminated, our $250.0 million Prior Term Loan. On June 8, 2017, we drew down our Delayed Draw Term Loan in full by borrowing €88.7 million (equivalent to $100.0 million) (Note 10).


•	We reduced our mortgage debt outstanding by repaying at maturity or prepaying $417.9 million of non-recourse mortgage loans with a weighted-average interest rate of 5.4% during the nine months ended September 30, 2017 (Note 10).


•	In connection with our Board’s decision to exit all non-traded retail fundraising activities as of June 30, 2017, we recorded $1.4 million and $9.1 million of restructuring expenses during the three and nine months ended September 30, 2017, respectively, primarily related to severance costs (Note 1, Note 12).

During the three and nine months ended September 30, ~~2016,~~2017, we issued ~~968,535~~15,500 and ~~1,249,836~~345,253 shares, respectively, of our common stock under the current ATM program at a weighted-average price of ~~$68.54~~$67.05 and ~~$68.52~~$67.78 per share, respectively, for net proceeds of ~~$65.4~~$0.9 million and ~~$84.4~~$22.8 million, ~~respectively (Note 13). As~~respectively.

•

We structured new investments on behalf of the Managed Programs totaling $1.1 billion during the nine months ended September 30, 2017, increasing our assets under management to $13.2 billion as of September 30, 2017. In August 2017, we resigned as the advisor to CCIF, and our advisory agreement with CCIF was terminated, effective as of September 11, 2017. CCIF was included in the Managed Programs prior to our resignation as its advisor (Note 1).

We declared cash distributions totaling $3.00 per share in the aggregate amount of ~~September 30, 2016, $314.4~~$320.3 million ~~remained available~~ for ~~issuance under our ATM program.~~

~~Foreign Currency Fluctuation~~

~~We own investments outside~~ the United States, primarily in Europe, Australia, and Asia, and as a result, are subject to risk from exchange rate fluctuations in various foreign currencies, primarily the euro, and to a lesser extent the British pound sterling. The average exchange rate of the U.S. dollar in relation to the euro did not substantially change during the three and nine months ended September 30, ~~2016 as compared to the same periods in 2015. The average exchange rate~~2017, comprised of ~~the U.S. dollar in relation to the British pound sterling decreased by approximately 15.2%~~three quarterly dividends per share declared of $0.9950, $1.0000, and 9.0% during the three and nine months ended September 30, 2016, respectively, as compared to the same periods in 2015, primarily as a result of the referendum held in June 2016 in which voters in the United Kingdom approved an exit from the European Union, known as Brexit. In October 2016, an announcement by the Prime Minister of the United Kingdom that the formal withdrawal process would be triggered by the first quarter of 2017 resulted in a decrease in the exchange rate between the U.S. dollar and the British pound sterling.$1.0050.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 4750

We try to manage our exposure related to fluctuations in exchange rates of the U.S. dollar relative to the respective currencies of our foreign operations by entering into hedging arrangements utilizing derivatives instruments such as foreign currency forward contracts and collars. We also try to manage our exposure related to fluctuations in the exchange rate between the U.S. dollar and foreign currencies by incurring debt denominated in foreign currencies, including non-recourse debt, the Senior Euro Notes, and our ability to draw down on our Revolver.

~~Financial Update~~

~~Our results for the three and nine months ended September 30, 2016 as compared to the same periods in 2015 included the following significant items:~~

Properties acquired or placed into service in 2015 and 2016 generated increases in lease revenues and Property level contribution of $11.1 million and $6.2 million, respectively, for the three months ended September 30, 2016 as compared to the same period in 2015, and by $30.8 million and $16.2 million, respectively, for the nine months ended September 30, 2016 as compared to the same period in 2015;


•	~~We recognized an aggregate gain on sale of real estate of~~ ~~$49.1 million~~ ~~and~~ ~~$68.1 million~~ ~~during the three and nine months ended September 30, 2016, respectively, in connection with the disposition of properties (Note 15~~);


•	~~We recognized lease termination income of $32.2 million related to a property sold during the nine months ended September 30, 2016 (Note 15~~);

•

~~Interest expense decreased by~~ ~~$5.3 million~~ ~~and~~ ~~$5.8 million~~ for the three and nine months ended September 30, 2016, respectively, as compared to the same periods in 2015, primarily due to a lower weighted-average interest rate on our debt during the current year periods as a result of paying off certain non-recourse mortgage loans with our Revolver, which bears interest at a lower rate than our mortgage loans (~~Note 10~~);

Structuring revenue decreased by $36.7 million for the nine months ended September 30, 2016 as compared to the same period in 2015 due to lower investment volume for the Managed REITs during the current year period;

Asset management revenue increased by $3.0 million and $9.4 million for the three and nine months ended September 30, 2016, respectively, as compared to the same periods in 2015, primarily as a result of the growth in assets under management for the Managed Programs;


•	~~We incurred $11.9 million of Restructuring and other compensation expenses during the nine months ended September 30, 2016 resulting from the RIF and other employee severance arrangements (Note 12~~);

General and administrative expenses decreased by $7.1 million and $20.9 million for the three and nine months ended September 30, 2016, respectively, as compared to the same periods in 2015, due to lower commissions to investment officers resulting from lower investment volume and lower compensation and professional fees resulting from the RIF and other cost savings initiatives;


•	~~We recognized impairment charges on real estate assets totaling $14.4 million and $49.9 million during the three and nine months ended September 30, 2016, respectively (Note 8); and~~


•	~~We provided an allowance for credit losses of $7.1 million on a direct financing lease during the nine months ended September 30, 2016 (Note 5~~).



	~~W. P. Carey 9/30/2016 10-Q~~– 48

Consolidated Results

(in thousands, except shares)


	Three Months Ended September 30,				Nine Months Ended September 30,						Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016			2015			2017		2016		2017			2016
Real estate revenues	$	180,071	$	181,176	$	583,894		$	537,853
Revenues from Owned Real Estate											$	176,584	$	180,071	$	519,373		$	583,894
Reimbursable tenant costs	6,537		5,340		19,237			17,409			5,397		6,537		15,940			19,237
Real estate revenues (excluding reimbursable tenant costs)	173,534		175,836		564,657			520,444
Revenues from Owned Real Estate (excluding reimbursable tenant costs)											171,187		173,534		503,433			564,657

Investment management revenues	45,176		33,490		128,859			135,279
Reimbursable costs	14,540		11,155		46,372			28,401
Investment management revenues (excluding reimbursable costs from affiliates)	30,636		22,335		82,487			106,878
Revenues from Investment Management											34,170		45,176		131,968			128,859
Reimbursable costs from affiliates											6,211		14,540		45,390			46,372
Revenues from Investment Management (excluding reimbursable costs from affiliates)											27,959		30,636		86,578			82,487

Total revenues	225,247		214,666		712,753			673,132			210,754		225,247		651,341			712,753
Total reimbursable costs	21,077		16,495		65,609			45,810			11,608		21,077		61,330			65,609
Total revenues (excluding reimbursable costs)	204,170		198,171		647,144			627,322			199,146		204,170		590,011			647,144

Net income from Owned Real Estate attributable to W. P. Carey(a)	99,972		20,598		211,922			101,818			56,492		87,497		137,990			174,736
Net income from Investment Management attributable to W. P. Carey(a)	10,971		1,147		8,121			19,391			23,786		23,446		64,090			45,307
Net income attributable to W. P. Carey	110,943		21,745		220,043			121,209			80,278		110,943		202,080			220,043

Cash distributions paid	104,587		101,290		310,509			302,205			108,272		104,587		322,389			310,509

Net cash provided by operating activities					361,533			330,903							381,877			377,476
Net cash used in by investing activities					(27,984		)	(625,201		)
Net cash (used in) provided by financing activities					(282,153		)	309,382
Net cash provided by (used in) investing activities															175,305			(27,984		)
Net cash used in financing activities															(549,728		)	(298,096		)

Supplemental financial measures:
Adjusted funds from operations attributable to W. P. Carey (AFFO) — Owned Real Estate ^(a)	131,492		121,880		391,244			364,410
Adjusted funds from operations attributable to W. P. Carey (AFFO) — Investment Management ^(a)	12,979		4,768		24,929			31,240
Adjusted funds from operations attributable to W. P. Carey (AFFO) — Owned Real Estate ^{(a) (b)}											116,337		118,030		345,529			352,058
Adjusted funds from operations attributable to W. P. Carey (AFFO) — Investment Management ^{(a) (b)}											31,905		26,441		85,388			64,115
Adjusted funds from operations attributable to W. P. Carey (AFFO) ^(a)(b)	144,471		126,648		416,173			395,650			148,242		144,471		430,917			416,173

Diluted weighted-average shares outstanding	107,468,029		106,337,040		106,853,174			106,457,495			108,143,694		107,468,029		107,947,490			106,853,174

__________

(a)

As a result of our Board’s decision to exit all non-traded retail fundraising activities as of June 30, 2017, we have revised how we view and present a component of our two reportable segments. As such, beginning with the second quarter of 2017, we include equity in earnings of equity method investments in the Managed Programs in our Investment Management segment (Note 1). Earnings from our investment in CCIF continue to be included in our Investment Management segment. Results of operations for prior periods have been reclassified to conform to the current period presentation.

(b)

We consider ~~the performance metrics listed above, including~~ Adjusted funds from operations, or AFFO, a supplemental measure that is not defined by GAAP, referred to as a non-GAAP measure, to be an important ~~measures~~measure in the evaluation of our results of operations and capital resources. We evaluate our results of operations with a primary focus on the ability to generate cash flow necessary to meet our objective of funding distributions to stockholders.operating performance. See Supplemental Financial Measures below for our definition of this non-GAAP measure and a reconciliation to its most directly comparable GAAP measure.



	W. P. Carey 9/30/2017 10-Q– 51

Consolidated Results

Revenues and Net Income Attributable to W. P. Carey

Total revenues ~~increased~~decreased for the three months ended September 30, ~~2016~~2017 as compared to the same period in ~~2015, primarily~~2016, due to ~~higher revenues~~decreases within both our Investment Management ~~segment, partially offset by lower revenues within our~~and Owned Real Estate ~~segment.~~segments. Investment Management revenue ~~increased~~decreased primarily as a result of ~~an increase~~a decrease in structuring revenue and a decrease in dealer manager fees due to ~~higher investment volume for the Managed REITs during the current year period and~~our exit from all non-traded retail fundraising activities (Note 1), partially offset by an increase in asset management revenue ~~primarily~~ as a result of growth in assets under management for the Managed Programs. ~~The decrease in revenues within our~~



	~~W. P. Carey 9/30/2016 10-Q~~– 49

Owned Real Estate ~~segment was~~revenue declined primarily due to ~~lower~~a decrease in lease ~~termination income during the current year period and lower lease revenue~~revenues due to dispositions of properties since ~~September 30, 2015.~~July 1, 2016 (Note 15).

Total revenues ~~increased~~decreased for the nine months ended September 30, ~~2016~~2017 as compared to the same period in ~~2015, primarily~~2016, due to ~~higher revenues~~decreases within our Owned Real Estate segment, partially offset by ~~lower revenues~~increases within our Investment Management segment. ~~The growth in revenues within our~~ Owned Real Estate ~~segment was generated substantially from~~revenue declined primarily due to lease termination income recognized during the prior year period related to a domestic property sold ~~during the nine months ended September 30,~~in February 2016, as well as a decrease in lease revenues due to dispositions of properties since January 1, 2016 (Note 15), as well as from new acquisitions in 2015 and 2016. Investment Management revenue declined primarily as a result of a decrease in structuring revenue due to lower investment volume for the Managed REITs during the current year period, partially offset by an increase in lease revenues due to property acquisitions since January 1, 2016. Investment Management revenue increased primarily due to an increase in asset management ~~revenue.~~revenue as a result of growth in assets under management for the Managed Programs, partially offset by a decrease in structuring revenue and a decrease in dealer manager fees due to our exit from all non-traded retail fundraising activities (Note 1).

Net income attributable to W. P. Carey ~~increased~~decreased for the three ~~and nine~~ months ended September 30, ~~2016~~2017 as compared to the same ~~periods~~period in ~~2015,~~2016, primarily due to the lower aggregate gain on sale of real estate recognized during the current year ~~periods~~period (Note 15), ~~an overall decline in general and administrative expenses,~~as well as decreases in Owned Real Estate and Investment Management revenues. The decrease in Net income attributable to W. P. Carey was partially offset by lower interest expense ~~due to a lower weighted-average interest rate on our debt~~ during the current year ~~periods, and~~period as compared to the ~~increases~~same period in ~~total revenues described above. The increases in~~2016. In addition, during the prior year period, we recognized impairment charges on certain international properties (Note 8), as well as a related offsetting deferred tax benefit on those impairment charges, which reduced Net income attributable to W. P. Carey for the period.

Net income attributable to W. P. Carey decreased for the nine months ended September 30, ~~2016~~2017 as compared to the same period in ~~2015 were partially offset by impairment charges and other compensation-related expenses resulting from~~2016, primarily due to the ~~RIF and employment severance arrangements~~lower aggregate gain on sale of real estate recognized during the current year ~~period. These drivers~~period (Note 15), as well as a decrease in Owned Real Estate revenues. During the current year period, we also ~~resulted~~recognized non-recurring restructuring expenses, primarily comprised of severance costs, related to our exit from all non-traded retail fundraising activities (Note 12). The decrease in ~~a decline in~~Net income ~~taxes, generating an income tax benefit in~~attributable to W. P. Carey was partially offset by lower interest expense and general and administrative expenses during the current year period as compared to ~~an income tax expense~~the same period in 2016. In addition, during the prior year period, we recognized impairment charges on certain international properties (Note 8), as well as a related offsetting deferred tax benefit on those impairment charges, which reduced Net income attributable to W. P. Carey for the period. During the prior year period, we recognized one-time restructuring and other compensation expenses, consisting primarily of severance costs, related to the RIF (Note 12), as well as an allowance for credit losses on a direct financing lease (Note 5).

Net Cash Provided by Operating Activities

Net cash provided by operating activities increased for the nine months ended September 30, ~~2016~~2017 as compared to the same period in ~~2015,~~2016, primarily due to an increase in cash flow generated from properties acquired during 2016 and 2017, a decrease in interest expense, and lower general and administrative expenses in the current year period. These increases were partially offset by lease termination income received in connection with the sale of a property during the ~~nine months ended September 30, 2016, an increase in operating cash flow generated from new acquisitions in 2015~~prior year period and ~~2016, and higher Distributions of Available Cash received from the Managed REITs, partially offset by~~ a decrease in ~~structuring revenue received in~~ cash ~~from the Managed REITs due to lower investment volume~~flow as a result of property dispositions during ~~the current year period.~~2016 and 2017.

AFFO

AFFO increased for the three ~~and nine~~ months ended September 30, ~~2016~~2017 as compared to the same ~~periods~~period in ~~2015,~~2016, primarily due to ~~the increases~~lower interest expense, higher asset management revenue, and higher earnings from our equity interests in ~~total revenues described above, higher Distributions of Available Cash received from~~ the Managed ~~REITs,~~Programs, partially offset by lower structuring revenues, higher general and administrative expenses, and lower ~~interest expense, as well as a decrease in current income tax expense~~lease revenues.

AFFO increased for the nine months ended September 30, ~~2016~~2017 as compared to the same period in ~~2015.~~

~~Distributions~~

~~Our cash distributions totaled $2.9188 per share~~2016, primarily due to lower interest expense, higher asset management revenue, lower general and administrative expenses, and higher earnings from our equity interests in the Managed Programs, partially offset by lower lease revenues, lease termination income received in connection with the sale of a property during the ~~nine months ended September 30, 2016, comprised of three quarterly cash distributions of $0.9646, $0.9742,~~prior year period, and $0.9800 per share paid on January 15, April 15, and July 15, 2016, respectively. In addition, during the third quarter of 2016, our board of directors declared a quarterly distribution of $0.9850 per share, or $3.94 on an annualized basis, which was paid on October 14, 2016 to stockholders of record on October 3, 2016.

~~Owned Real Estate~~

~~Acquisitions~~

~~During the nine months ended September 30, 2016, we acquired two investments totaling $385.8 million, with an additional commitment for $128.1 million of build-to-suit financing (Note 4), which included:~~

one investment of $167.7 million in three private school campuses in Coconut Creek and Windermere, Florida and Houston, Texas, with a commitment to fund $128.1 million of build-to-suit financing over the next four years in order to fund expansions of the existing facilities; and

~~one investment of $218.2 million in 43 manufacturing facilities in various locations in the United States and six manufacturing facilities in various locations in Canada.~~

lower structuring revenues.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 5052

Owned Real Estate

Investments

During the nine months ended September 30, 2017, we capitalized and completed construction projects at a cost totaling $59.0 million (Note 4), as follows:

an expansion project at an industrial facility in Windsor, Connecticut in March 2017 at a cost totaling $3.3 million;

an expansion project at an educational facility in Coconut Creek, Florida in May 2017 at a cost totaling $18.2 million;

an expansion project at an industrial facility in Monarto, Australia in May 2017 at a cost totaling $15.9 million; and

a build-to-suit project for an industrial facility in McCalla, Alabama in June 2017 at a cost totaling $21.6 million.

In addition, during the nine months ended September 30, 2017, we acquired an industrial facility in Chicago, Illinois for $6.0 million and committed to fund an additional $3.6 million of building improvements at that facility by June 2018.

Dispositions

During the nine months ended September 30, ~~2016,~~2017, we sold ~~ten~~11 properties and a parcel of vacant land from our Owned Real Estate portfolio for total proceeds of ~~$392.6~~$102.5 million, net of selling costs, and recorded a net gain on sale of real estate of ~~$39.9 million, inclusive~~$22.7 million. We also disposed of ~~amounts attributable to noncontrolling interests of $0.9 million. In connection~~two properties with the sale of one of these properties, we recognized $32.2 million of lease termination income during the nine months ended September 30, 2016. We transferred ownership of a vacant international property and the related non-recourse mortgage loan, which had aan aggregate carrying value of ~~$39.8~~$31.3 million ~~and an outstanding balance of $60.9 million, respectively, on the date of transfer,~~by transferring ownership to the mortgage lender, in satisfaction of non-recourse mortgage loans encumbering the properties totaling $28.1 million (net of $3.8 million of cash held in escrow that was retained by the mortgage lender), resulting in a net gain of $16.4 million. In addition, in July 2016, a vacant domestic property with an asset carrying value of $13.7 million, which was encumbered by a $27.0 million mortgage loan, was foreclosed upon by the mortgage lender, resulting in a net gain of $11.6less than $0.1 million (Note 15).

Financing Transactions

During the nine months ended September 30, ~~2016,~~2017, we entered into the following financing transactions (Note 10):

On ~~September 12, 2016,~~January 19, 2017, we ~~issued $350.0~~completed a public offering of €500.0 million of ~~4.25%~~2.25% Senior Notes, at a price of ~~99.682%~~99.448% of par value, ~~in a registered public offering.~~issued by our wholly owned subsidiary, WPC Eurobond B.V., which are guaranteed by us. These ~~4.25%~~2.25% Senior Notes have a ~~ten-year~~7.5-year term and are scheduled to mature on ~~October 1, 2026.~~July 19, 2024.

•

~~On July 29, 2016, a jointly-owned investment~~In January 2017, we repaid two international non-recourse mortgage loans at maturity with an aggregate principal balance of approximately $243.8 million encumbering the Hellweg 2 Portfolio, which is jointly owned with our affiliate, CPA^®:17 – Global. In connection with this repayment, CPA^®:17 – Global contributed $90.3 million, which was accounted for as a contribution from a noncontrolling interest. Amounts are based on the exchange rate of the euro as of the date of repayment. The weighted-average interest rate for these mortgage loans on the date of repayment was 5.4%.

•

During the nine months ended September 30, 2017, we ~~consolidate, refinanced a~~prepaid non-recourse mortgage ~~loan~~loans totaling $157.4 million, including $38.4 million encumbering properties that ~~had an outstanding balance~~were disposed of ~~$33.8 million with new financing of $34.6 million, inclusive~~during the nine months ended September 30, 2017 (Note 15). Amounts are based on the exchange rate of the ~~amount attributable to a noncontrolling interest~~related foreign currency as of ~~$17.0 million.~~the date of repayment, as applicable. The ~~previous loan had an~~weighted-average interest rate for these mortgage loans on their respective dates of ~~5.9% and~~prepayment was 5.5%. In connection with these payments, we recognized a ~~maturity date~~gain on extinguishment of ~~July 31, 2016. The new loan has a rate~~debt of ~~EURIBOR plus a 3.3% margin and a term of five years.~~

During the nine months ended September 30, 2016, we prepaid 15 non-recourse mortgage loans totaling $193.0 million, including a mortgage loan of $50.8 million encumbering a property that was sold in August 2016 (~~Note 15~~). In addition, we made a balloon payment at maturity on a non-recourse mortgage loan of $18.5 million during this period. In connection with these payments, during the nine months ended September 30, 2016 we recognized a loss on extinguishment of debt of $3.9$0.8 million during the nine months ended September 30, 2017, which was included in Other income and (expenses) in the consolidated financial statements.



	W. P. Carey 9/30/2017 10-Q– 53

Composition

As of September 30, ~~2016,~~2017, our Owned Real Estate portfolio consisted of ~~910~~890 net-lease properties, comprising ~~91.8~~85.9 million square feet leased to ~~222~~211 tenants, and two hotels, which are classified as operating properties. As of that date, the weighted-average lease term of the net-lease portfolio was ~~9.4~~9.5 years and the occupancy rate was ~~99.1%~~99.8%.

Investment Management

During the nine months ended September 30, ~~2016,~~2017, we managed CPA^®:17 – Global, CPA^®:18 – Global, CWI 1, CWI 2, ~~CCIF,~~ and CESH I. As of September 30, ~~2016,~~2017, these Managed Programs had total assets under management of approximately ~~$12.2~~$13.2 billion. In August 2017, we resigned as the advisor to CCIF, and our advisory agreement with CCIF was terminated, effective as of September 11, 2017. CCIF was included in the Managed Programs prior to our resignation as its advisor (Note 1).

Non-Traded Retail Fundraising Platform Closure

On June 15, 2017, our Board approved a plan to exit all non-traded retail fundraising activities carried out by our wholly-owned broker-dealer subsidiary, Carey Financial, as of June 30, 2017, in keeping with our long-term strategy of focusing exclusively on net lease investing for our balance sheet. We currently expect to continue to manage all existing Managed Programs through the end of their respective natural life cycles (Note 1).

Investment Transactions

During the nine months ended September 30, ~~2016,~~2017, we structured new investments totaling ~~$1.0~~$1.1 billion on behalf of the Managed ~~REITs and CESH I, on~~Programs, from which we earned ~~$31.0~~$27.4 million in structuring revenue.

CWI 2: We structured two investments in domestic hotels for $423.5 million, including acquisition-related costs. One of these investments is jointly-owned with CWI 1.

CESH I: We structured investments in ~~five~~six international student housing development projects and one build-to-suit expansion on an existing project for an aggregate of $287.7 million, including acquisition-related costs.

CWI 1: We structured one investment in a domestic ~~hotels~~hotel for ~~$646.2~~$165.2 million, ~~inclusive of~~including acquisition-related ~~costs, on behalf of~~costs. This investment is jointly-owned with CWI 2.


•	~~We structured investments in nine properties for an aggregate of $156.8 million, inclusive of acquisition-related costs, on behalf of~~ CPA^®:1817 – ~~Global. Approximately $81.2 million was invested internationally and $75.6 million was invested in the United States.~~

~~We structured investments in two domestic hotels and a property adjacent to one of these hotels for an aggregate of $108.6 million, inclusive of acquisition-related costs, on behalf of CWI 1.~~


•	Global: We structured investments in 16two properties and aone build-to-suit expansion on an existing property for an aggregate of ~~$105.5~~$158.5 million, ~~inclusive of~~including acquisition-related ~~costs, on behalf of CPA~~^®~~:17 – Global.~~costs. Approximately ~~$95.9~~$147.0 million was invested in Europe and $11.5 million was invested in the United ~~States~~States.


•	CPA^®:18 – Global: We structured investments in two properties and ~~$9.6~~three build-to-suit expansions on existing properties, including increases in funding commitments, for an aggregate of $66.2 million, including of acquisition-related costs. Approximately $58.9 million was invested ~~internationally.~~internationally and $7.3 million was invested in the United States.

Financing Transactions

During the nine months ended September 30, 2017, we arranged mortgage financing totaling $439.9 million for CWI 2, $293.1 million for CPA^®:17 – Global, $175.5 million for CWI 1, and $89.4 million for CPA^®:18 – Global, from which we earned $0.6 million in structuring revenue.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 5154

~~We structured one investment in an international property for~~ ~~$30.6 million, inclusive of acquisition-related costs, on behalf of CESH I.~~

~~Financing Transactions~~Investor Capital Inflows

~~During~~In connection with our Board’s decision to exit from non-traded retail fundraising activities, we ceased active fundraising for the Managed Programs on June 30, 2017 (Note 1). The offerings for CWI 2 and CESH I closed on July 31, 2017. In August 2017, we resigned as the advisor to CCIF, effective as of September 11, 2017. The investor capital inflows for the funds managed by us during the nine months ended September 30, ~~2016, we arranged financing totaling $387.6 million for CWI 2, $324.8 million for CWI 1, $222.2 million for CPA~~2017 were as follows:^®~~:17 – Global, and $145.7 million for CPA~~^®~~:18 – Global.~~

~~Investor Capital Inflows~~

CWI 2 commenced its initial public offering in the first quarter of ~~2015 and began to admit new stockholders on May 15,~~ 2015. Through ~~September 30, 2016,~~the closing of its offering on July 31, 2017, CWI 2 had raised approximately ~~$535.8~~$851.3 million through its offering, of which ~~$288.8~~$235.0 million was raised during the nine months ended September 30, ~~2016.~~2017. We earned ~~$3.6~~$2.9 million in Dealer manager fees during the nine months ended September 30, ~~2016~~2017 related to this offering.

~~Two~~CESH I commenced its private placement in July 2016. Through the closing of the CCIF Feeder Funds commenced their respective initial public offerings in the third quarter of 2015 and invest the proceeds that they raise in the master fund, CCIF. Through September 30, 2016, these funds have invested $91.2its offering on July 31, 2017, CESH I had raised approximately $139.7 million ~~in CCIF,~~through its offering, of which ~~$89.2~~$26.9 million was ~~invested~~raised during the nine months ended September 30, ~~2016.~~2017. We earned ~~$1.3~~$0.5 million in Dealer manager fees during the nine months ended September 30, ~~2016~~2017 related to this offering.

•

Two CCIF Feeder Funds commenced their respective initial public offerings in the third quarter of 2015 and invested the proceeds that they raised in the master fund, CCIF. Through June 30, 2017, these funds had invested $195.3 million in CCIF, of which $70.2 million was invested during the nine months ended September 30, 2017. We earned $1.0 million in Dealer manager fees during the nine months ended September 30, 2017 related to these offerings. One of the CCIF Feeder Funds, CCIF 2016 T, closed its offering on April 28, 2017. In August 2017, we resigned as the advisor to CCIF, and our advisory agreement with CCIF was terminated, effective as of September 11, 2017. CCIF was included in the Managed Programs prior to our resignation as its advisor (Note 1).

~~In May 2016,~~

Significant Developments

Board of Directors Change

On October 3, 2017, we announced that Margaret G. Lewis, age 63, was appointed to our Board.

Management Change

On November 1, 2017, our Board appointed Mr. Jason E. Fox, our President, to succeed Mr. Mark J. DeCesaris as our Chief Executive Officer and as a ~~new feeder fund~~Director, both effective as of ~~CCIF, Carey Credit Income Fund 2017 T, filed a registration statement on Form N-2 with the SEC to sell up to 106,382,978 shares of common stock and~~January 1, 2018. Mr. DeCesaris intends to ~~invest~~retire from his positions as Chief Executive Officer and a Director, effective as of December 31, 2017.

Upon commencement of his new duties on January 1, 2018, Mr. Fox will be stepping down as our President. Mr. John J. Park, our Director of Strategy and Capital Markets, will succeed Mr. Fox as President on that date.

Mr. Fox, age 44, has served as W. P. Carey’s President since 2015 and previously served in various capacities in the ~~net proceeds from the public offering~~Investment Department, including as Head of Global Investments, since joining W. P. Carey in ~~CCIF. The registration statement was declared effective by the SEC~~2002. Mr. Park, age 53, has served as W. P. Carey’s Director of Strategy and Capital Markets since March 2016, after serving in ~~October 2016 but fundraising has not yet commenced.~~

~~CESH I commenced its private placement offering~~various capacities since joining W. P. Carey as an investment analyst in ~~July 2016. We earned $0.4 million in Dealer manager fees during the nine months ended September 30, 2016 related to this offering.~~1987.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 5255

Portfolio Overview

We intend to continue to acquire a diversified portfolio of income-producing commercial real estate properties and other real estate-related assets. We expect to make these investments both domestically and internationally. Portfolio information is provided on a pro rata basis, unless otherwise noted below, to better illustrate the economic impact of our various net-leased ~~jointly-owned~~jointly owned investments. See Terms and Definitions below for a description of pro rata amounts.

Portfolio Summary


	September 30, 2016			December 31, 2015			September 30, 2017			December 31, 2016
Number of net-leased properties	910			869			890			903
Number of operating properties ^(a)	2			3			2			2
Number of tenants (net-leased properties)	222			222			211			217
Total square footage (net-leased properties, in thousands)	91,842			90,120			85,883			87,866
Occupancy (net-leased properties)	99.1		%	98.8		%	99.8		%	99.1		%
Weighted-average lease term (net-leased properties, in years)	9.4			9.0			9.5			9.7
Number of countries	19			19			18			19
Total assets (consolidated basis, in thousands)	$	8,468,285		$	8,742,089		$	8,334,411		$	8,453,954
Net investments in real estate (consolidated basis, in thousands)(b)	5,717,245			5,826,544			6,751,905			6,781,900

Nine Months Ended September 30,
2016 2015
Financing obtained — consolidated (in millions) ^(b)
$ 384.6
$ 1,541.7
Financing obtained — pro rata (in millions) ^(b)
367.6
1,541.7
Acquisition volume (in millions, pro rata amount equals consolidated amount) ^(c)
385.8
543.3
Average U.S. dollar/euro exchange rate 1.1161
1.1148
Average U.S. dollar/British pound sterling exchange rate ^(d)
1.3939
1.5324
Change in the U.S. CPI ^(e)
2.1 % 1.3 %
Change in the German CPI ^(e)
0.7 % 0.3 %
Change in the French CPI ^(e)
0.3 % 0.1 %
Change in the Finnish CPI ^(e)
0.6 % (0.1 )%
Change in the Spanish CPI ^(e)
(0.5 )% (0.7 )%



	Nine Months Ended September 30,
	2017			2016
Financing obtained — consolidated (in millions) ^(c)	$	633.4		$	384.6
Financing obtained — pro rata (in millions) ^(c)	633.4			367.6
Acquisition volume (in millions) ^{(d) (e)}	6.0			385.8
Construction and expansion projects capitalized and completed (in millions) ^{(d) (f)}	59.0			—
Average U.S. dollar/euro exchange rate	1.1130			1.1161
Average U.S. dollar/British pound sterling exchange rate	1.2751			1.3939
Change in the U.S. CPI ^(g)	2.2		%	2.1		%
Change in the Germany CPI ^(g)	0.7		%	0.7		%
Change in the United Kingdom CPI ^(g)	2.1		%	0.8		%
Change in the Spain CPI ^(g)	(0.3		)%	(0.5		)%

__________


(a)	At both September 30, 2017 and December 31, 2016, operating properties consisted of two hotel properties with an average occupancy of ~~84.0%~~85.1% for the nine months ended September 30, ~~2016. During~~2017.


(b)	In 2017, we reclassified certain line items in our consolidated balance sheets. As a result, Net investments in real estate as of December 31, 2016 has been revised to conform to the ~~nine months ended September 30, 2016, we sold our remaining self-storage property~~current period presentation (Note 152).

~~(b)~~(c)

Both the consolidated and pro rata amounts for the nine months ended September 30, 2017 include the issuance of €500.0 million of 2.25% Senior Notes in January 2017 and the amendment and restatement of our Senior Unsecured Credit Facility in February 2017, which increased our borrowing capacity by approximately $100.0 million (Note 10). Both the consolidated and pro rata amounts for the nine months ended September 30, 2016 include the issuance of $350.0 million of 4.25% Senior Notes in September 2016. The consolidated amount for the nine months ended September 30, 2016 includes the refinancing of a non-recourse mortgage loan for $34.6 million, while the pro rata amount for the nine months ended September 30, 2016 includes our proportionate share of ~~the~~that refinancing of $17.6 million. ~~The amount for~~Dollar amounts are based on the ~~nine months ended September 30, 2015 represents the exercise~~exchange rate of the ~~accordion feature under our Senior Unsecured Credit Facility in January 2015, which increased our borrowing capacity under our Revolver by $500.0 million, and~~euro on the ~~issuances~~dates of ~~the €500.0 million 2.0% Senior Euro Notes and $450.0 million 4.0% Senior Notes in January 2015 (Note 10~~).


~~(c)~~	~~For the nine months ended September 30, 2016, amount excludes a commitment for $128.1 million of build-to-suit financing (Note 4). For the nine months ended September 30, 2015, amount includes acquisition-related costs for business combinations, which were expensed in the consolidated financial statements.~~activity, as applicable.


(d)	~~The average exchange rate~~Amounts are the same on both a consolidated and pro rata basis.

(e)

Amount for the ~~U.S. dollar~~nine months ended September 30, 2017 excludes a commitment for $3.6 million of building improvements in ~~relation to the British pound sterling decreased by 9.0% during~~connection with an acquisition (Note 4). Amount for the nine months ended September 30, 2016 ~~as compared to the same period in 2015, resulting in a negative impact on earnings in 2016 from our British pound sterling-denominated investments.~~excludes an aggregate commitment for $128.1 million of build-to-suit financing.


~~(e)~~(f)	Includes projects that were capitalized and partially completed in 2016.



	W. P. Carey 9/30/2017 10-Q– 56


(g)	Many of our lease agreements include contractual increases indexed to changes in the U.S. Consumer Price Index, or CPI, or similar indices in the jurisdictions in which the properties are located.



	~~W. P. Carey 9/30/2016 10-Q~~– 53

Net-Leased Portfolio

The tables below represent information about our net-leased portfolio at September 30, ~~2016~~2017 on a pro rata basis and, accordingly, exclude all operating properties. See Terms and Definitions below for a description of pro rata amounts and ABR.

Top Ten Tenants by ABR

(dollars in ~~thousands, except percentages)~~thousands)


Tenant/Lease Guarantor	Property Type	Tenant Industry	Location	Number of Properties	ABR		ABR Percent		Property Type	Tenant Industry	Location	Number of Properties	ABR		ABR Percent		Weighted-Average Remaining Lease Term (Years)
Hellweg Die Profi-Baumärkte GmbH & Co. KG ^(a)	Retail	Retail Stores	Germany	53	$	33,902	4.9	%	Retail	Retail Stores	Germany	53	$	36,265	5.3	%	12.4
U-Haul Moving Partners Inc. and Mercury Partners, LP	Self Storage	Cargo Transportation, Consumer Services	Various U.S.	78	31,853		4.7	%	Self Storage	Cargo Transportation, Consumer Services	United States	78	31,853		4.7	%	6.6
State of Andalucia ^(a)	Office	Sovereign and Public Finance	Spain	70	26,739		3.9	%	Office	Sovereign and Public Finance	Spain	70	28,708		4.2	%	17.2
Carrefour France SAS ^{(a) (b)}	Retail, Warehouse	Retail Stores	France	15	26,634		3.9	%
Pendragon Plc ^(a)	Retail	Retail Stores, Consumer Services	United Kingdom	73	21,327		3.1	%
Pendragon PLC ^(a)									Retail	Retail Stores, Consumer Services	United Kingdom	70	21,488		3.2	%	12.6
Marriott Corporation	Hotel	Hotel, Gaming and Leisure	Various U.S.	18	19,774		2.9	%	Hotel	Hotel, Gaming and Leisure	United States	18	20,065		3.0	%	6.1
Forterra Building Products ^{(a) (c)}	Industrial	Construction and Building	Various U.S. and Canada	49	17,034		2.5	%
Forterra Building Products ^{(a) (b)}									Industrial	Construction and Building	United States and Canada	49	17,517		2.6	%	18.5
OBI Group ^(a)									Office, Retail	Retail Stores	Poland	18	16,295		2.4	%	6.7
True Value Company	Warehouse	Retail Stores	Various U.S.	7	15,372		2.2	%	Warehouse	Retail Stores	United States	7	15,680		2.3	%	5.3
OBI Group ^(a)	Office, Retail	Retail Stores	Poland	18	15,220		2.2	%
UTI Holdings, Inc.	Education Facility	Consumer Services	Various U.S.	5	14,285		2.1	%	Education Facility	Consumer Services	United States	5	14,484		2.1	%	4.5
ABC Group Inc. ^(c)									Industrial, Office, Warehouse	Automotive	Canada, Mexico, and United States	14	13,771		2.0	%	19.2
Total				386	$	222,140	32.4	%				382	$	216,126	31.8	%	11.1

__________


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


(b)	~~At September 30, 2016, all 15~~Of the 49 properties ~~were classified as held for sale. Subsequent~~leased to ~~September 30, 2016, we sold all 15 properties (Note 17~~). Forterra Building Products, 44 are located in the United States and five are located in Canada.


(c)	Of the 4914 properties leased to ~~Forterra Building Products, 43~~ABC Group Inc., six are located in Canada, four are located in Mexico, and four are located in the United States, ~~and six are located~~subject to three master leases all denominated in ~~Canada.~~U.S. dollars.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 5457

Portfolio Diversification by Geography

(in thousands, except percentages)


Region	ABR		Percent		Square Footage	Percent		ABR		Percent		Square Footage ^(a)	Percent
United States
South
Texas	$	57,016	8.3	%	8,113	8.8	%	$	56,669	8.4	%	8,192	9.5	%
Florida	27,934		4.1	%	2,600	2.8	%	29,407		4.3	%	2,657	3.1	%
Georgia	19,049		2.8	%	2,928	3.2	%	20,863		3.1	%	3,293	3.8	%
Tennessee	12,701		1.9	%	1,915	2.1	%	15,589		2.3	%	2,306	2.7	%
Other ^(a)	9,586		1.4	%	1,987	2.2	%
Other ^(b)								11,722		1.7	%	2,280	2.7	%
Total South	126,286		18.5	%	17,543	19.1	%	134,250		19.8	%	18,728	21.8	%

East
North Carolina	19,630		2.9	%	4,518	4.9	%	19,867		2.9	%	4,518	5.3	%
New Jersey	19,125		2.8	%	1,232	1.3	%	18,768		2.8	%	1,097	1.3	%
New York								18,244		2.7	%	1,178	1.4	%
Pennsylvania	18,513		2.7	%	2,526	2.8	%	16,870		2.5	%	2,525	2.9	%
New York	18,055		2.6	%	1,178	1.3	%
Massachusetts	14,816		2.2	%	1,390	1.5	%	15,402		2.3	%	1,390	1.6	%
Virginia	8,040		1.2	%	1,093	1.2	%	7,616		1.1	%	1,025	1.2	%
Other ^(a)	23,211		3.4	%	4,741	5.2	%
Connecticut								6,940		1.0	%	1,135	1.3	%
Other ^(b)								17,967		2.6	%	3,781	4.4	%
Total East	121,390		17.8	%	16,678	18.2	%	121,674		17.9	%	16,649	19.4	%

West
California	42,003		6.1	%	3,303	3.6	%	42,578		6.3	%	3,303	3.9	%
Arizona	26,362		3.8	%	3,049	3.3	%	26,776		3.9	%	3,049	3.5	%
Colorado	10,710		1.6	%	1,268	1.4	%	9,834		1.5	%	864	1.0	%
Other ^(a)	25,008		3.6	%	3,282	3.6	%
Other ^(b)								26,621		3.9	%	3,241	3.8	%
Total West	104,083		15.1	%	10,902	11.9	%	105,809		15.6	%	10,457	12.2	%

Midwest
Illinois	20,990		3.1	%	3,246	3.5	%	21,689		3.2	%	3,295	3.9	%
Michigan	11,743		1.7	%	1,380	1.5	%	12,171		1.8	%	1,396	1.6	%
Indiana	9,163		1.3	%	1,418	1.6	%	9,329		1.4	%	1,418	1.7	%
Ohio	8,376		1.2	%	1,911	2.1	%	8,547		1.3	%	1,911	2.2	%
Missouri	7,091		1.0	%	1,305	1.4	%
Minnesota	6,856		1.0	%	811	0.9	%	6,932		1.0	%	811	0.9	%
Other ^(a)	17,047		2.5	%	3,233	3.5	%
Other ^(b)								24,064		3.5	%	4,385	5.1	%
Total Midwest	81,266		11.8	%	13,304	14.5	%	82,732		12.2	%	13,216	15.4	%
United States Total	433,025		63.2	%	58,427	63.7	%	444,465		65.5	%	59,050	68.8	%

International
Germany	59,991		8.7	%	7,131	7.8	%	60,506		8.9	%	6,272	7.3	%
France	41,962		6.1	%	7,619	8.3	%
United Kingdom	33,395		4.9	%	2,681	2.9	%	33,570		4.9	%	2,324	2.7	%
Spain	28,326		4.1	%	2,927	3.2	%	30,438		4.5	%	2,927	3.4	%
Finland	19,807		2.9	%	1,588	1.7	%
Poland	17,113		2.5	%	2,189	2.4	%	18,321		2.7	%	2,189	2.5	%
The Netherlands	14,466		2.1	%	2,233	2.4	%	15,341		2.3	%	2,233	2.6	%
France								14,542		2.1	%	1,266	1.5	%
Finland								13,030		1.9	%	1,121	1.3	%
Canada								12,638		1.9	%	2,196	2.6	%
Australia	11,500		1.7	%	3,160	3.4	%	12,507		1.8	%	3,272	3.8	%
Other ^(b)	25,724		3.8	%	3,887	4.2	%
Other ^(c)								23,504		3.5	%	3,033	3.5	%
International Total	252,284		36.8	%	33,415	36.3	%	234,397		34.5	%	26,833	31.2	%

Total ^(c)	$	685,309	100.0	%	91,842	100.0	%
Total								$	678,862	100.0	%	85,883	100.0	%



	W. P. Carey 9/30/~~2016~~2017 10-Q – 5558

Portfolio Diversification by Property Type

(in thousands, except percentages)


Property Type	ABR		Percent		Square Footage	Percent		ABR		Percent		Square Footage ^(a)	Percent
Industrial	$	189,918	27.8	%	38,035	41.4	%	$	203,127	29.9	%	38,564	44.9	%
Office	171,066		25.0	%	11,634	12.7	%	166,880		24.6	%	10,998	12.8	%
Retail								111,249		16.3	%	9,780	11.4	%
Warehouse	119,947		17.5	%	24,399	26.5	%	97,115		14.4	%	18,661	21.7	%
Retail	106,732		15.5	%	9,906	10.8	%
Self Storage	31,853		4.6	%	3,535	3.9	%	31,853		4.7	%	3,535	4.1	%
Other^(d)	65,793		9.6	%	4,333	4.7	%	68,638		10.1	%	4,345	5.1	%
Total ^(c)	$	685,309	100.0	%	91,842	100.0	%	$	678,862	100.0	%	85,883	100.0	%

__________


(a)	Includes square footage for any vacant properties.

(b)

Other properties within South include assets in Alabama, Louisiana, ~~Alabama,~~ Arkansas, Mississippi, and Oklahoma. Other properties within East include assets in ~~Connecticut,~~Kentucky, South Carolina, ~~Kentucky,~~ Maryland, New Hampshire, and West Virginia. Other properties within West include assets in ~~Alaska, Montana,~~Utah, Washington, Nevada, Oregon, New Mexico, ~~Nevada, Oregon, Utah, Washington,~~Wyoming, Alaska, and ~~Wyoming.~~Montana. Other properties within Midwest include assets in Missouri, Kansas, Wisconsin, Nebraska, Iowa, ~~North~~South Dakota, and ~~South~~North Dakota.


~~(b)~~	~~Includes assets in Norway, Austria, Hungary, Thailand, Sweden, Canada, Belgium, Malaysia, Mexico, and Japan.~~


(c)	Includes ~~square footage for any vacant properties.~~assets in Norway, Hungary, Austria, Thailand, Mexico, Sweden, Belgium, and Japan.


(d)	Includes ABR from tenants within the following property types: education facility, hotel, theater, ~~sports~~fitness facility, and ~~residential.~~net-lease student housing.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 5659

Portfolio Diversification by Tenant Industry

(in thousands, except percentages)


Industry Type	ABR		Percent		Square Footage	Percent		ABR		Percent		Square Footage	Percent
Retail Stores ^(a)	$	140,153	20.4	%	20,630	22.5	%	$	119,208	17.6	%	14,916	17.4	%
Consumer Services	68,894		10.1	%	5,565	6.0	%	71,119		10.5	%	5,604	6.5	%
Automotive								55,550		8.2	%	9,044	10.5	%
Sovereign and Public Finance	40,006		5.8	%	3,408	3.7	%	42,798		6.3	%	3,411	4.0	%
Automotive	39,513		5.8	%	6,599	7.2	%
Construction and Building	37,289		5.4	%	8,086	8.8	%	36,926		5.5	%	8,142	9.5	%
Hotel, Gaming and Leisure	34,065		5.0	%	2,254	2.4	%
Hotel, Gaming, and Leisure								35,352		5.2	%	2,254	2.6	%
Beverage, Food, and Tobacco								31,222		4.6	%	6,876	8.0	%
Cargo Transportation								28,823		4.2	%	3,860	4.5	%
Healthcare and Pharmaceuticals								28,203		4.2	%	1,988	2.3	%
Containers, Packaging, and Glass								27,278		4.0	%	5,325	6.2	%
High Tech Industries	33,600		4.9	%	2,905	3.2	%	26,133		3.8	%	2,354	2.7	%
Beverage, Food and Tobacco	29,524		4.3	%	6,680	7.3	%
Cargo Transportation	29,336		4.3	%	4,229	4.6	%
Media: Advertising, Printing and Publishing	27,750		4.0	%	1,695	1.8	%
Healthcare and Pharmaceuticals	27,699		4.0	%	1,988	2.2	%
Media: Advertising, Printing, and Publishing								25,448		3.7	%	1,588	1.8	%
Capital Equipment	26,897		3.9	%	4,932	5.4	%	24,668		3.6	%	4,037	4.7	%
Containers, Packaging and Glass	26,715		3.9	%	5,325	5.8	%
Business Services								14,175		2.1	%	1,730	2.0	%
Wholesale	14,554		2.1	%	2,806	3.1	%	13,500		2.0	%	2,572	3.0	%
Business Services	12,068		1.8	%	1,730	1.9	%
Durable Consumer Goods	11,089		1.6	%	2,485	2.7	%	11,509		1.7	%	2,485	2.9	%
Grocery	10,897		1.6	%	1,260	1.4	%	11,421		1.7	%	1,260	1.5	%
Aerospace and Defense	10,675		1.6	%	1,183	1.3	%	10,406		1.5	%	1,115	1.3	%
Chemicals, Plastics and Rubber	9,568		1.4	%	1,088	1.2	%
Chemicals, Plastics, and Rubber								9,357		1.4	%	1,108	1.3	%
Metals and Mining	9,350		1.4	%	1,413	1.5	%	9,177		1.4	%	1,341	1.6	%
Oil and Gas	8,402		1.2	%	368	0.4	%	8,659		1.3	%	368	0.4	%
Banking								8,412		1.2	%	702	0.8	%
Non-Durable Consumer Goods								8,115		1.2	%	1,883	2.2	%
Telecommunications	8,001		1.2	%	582	0.6	%	7,008		1.0	%	418	0.5	%
Non-Durable Consumer Goods	7,836		1.1	%	1,883	2.1	%
Banking	7,334		1.1	%	596	0.6	%
Other ^(b)	14,094		2.1	%	2,152	2.3	%	14,395		2.1	%	1,502	1.8	%
Total	$	685,309	100.0	%	91,842	100.0	%	$	678,862	100.0	%	85,883	100.0	%

__________


(a)	Includes automotive dealerships.


(b)	Includes ABR from tenants in the following industries: ~~insurance; electricity;~~insurance, electricity, media: broadcasting and ~~subscription;~~subscription, forest products and ~~paper;~~paper, and environmental ~~industries; and consumer transportation.~~industries. Also includes square footage for vacant properties.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 5760

Lease Expirations

(in thousands, except percentages and number of leases)


Year of Lease Expiration ^(a)	Number of Leases Expiring	ABR		Percent		Square Footage	Percent		Number of Leases Expiring	ABR		Percent		Square Footage	Percent
Remaining 2016 ^{(b) (c)}	5	$	8,751	1.3	%	749	0.8	%
2017	12	9,662		1.4	%	1,790	1.9	%
2018 ^(c)	24	36,819		5.4	%	7,043	7.7	%
2019 ^(c)	25	33,069		4.8	%	3,893	4.2	%
Remaining 2017 ^(b)									3	$	609	0.1	%	71	0.1	%
2018									5	8,129		1.2	%	1,107	1.3	%
2019									22	31,176		4.6	%	3,132	3.6	%
2020	25	36,504		5.3	%	3,552	3.9	%	24	33,390		4.9	%	3,343	3.9	%
2021	81	42,107		6.1	%	6,639	7.2	%	80	42,214		6.2	%	6,376	7.4	%
2022	38	66,221		9.7	%	8,674	9.4	%	40	70,121		10.3	%	9,442	11.0	%
2023	16	37,613		5.5	%	5,071	5.5	%	21	41,331		6.1	%	5,811	6.8	%
2024 ^(c)	45	93,435		13.6	%	11,726	12.8	%
2024									43	95,601		14.1	%	11,592	13.5	%
2025	44	33,147		4.8	%	3,645	4.0	%	41	34,083		5.0	%	3,689	4.3	%
2026	23	21,006		3.1	%	3,118	3.4	%	19	18,912		2.8	%	3,159	3.7	%
2027	27	44,726		6.5	%	6,911	7.5	%	26	42,632		6.3	%	6,052	7.0	%
2028	8	18,232		2.7	%	2,128	2.3	%	10	20,052		3.0	%	2,272	2.6	%
2029	11	19,449		2.8	%	2,897	3.2	%	11	19,970		2.9	%	2,897	3.4	%
Thereafter	93	184,568		27.0	%	23,201	25.3	%
2030									11	50,930		7.5	%	4,804	5.6	%
Thereafter (>2030)									96	169,712		25.0	%	21,953	25.6	%
Vacant	—	—		—	%	805	0.9	%	—	—		—	%	183	0.2	%
Total	477	$	685,309	100.0	%	91,842	100.0	%	452	$	678,862	100.0	%	85,883	100.0	%

__________


(a)	Assumes ~~tenant does~~tenants do not exercise any renewal ~~option.~~options.


(b)	~~Two~~One month-to-month ~~leases~~lease with ABR ~~totaling $0.3~~of $0.1 million ~~are~~is included in ~~2016~~2017 ABR.


~~(c)~~	For these periods, includes ABR totaling $26.6 million from a tenant in 15 properties that were held for sale as of September 30, 2016, including $23.8 million from leases expiring in 2018. The properties were sold subsequent to September 30, 2016 (~~Note 17~~).

Terms and Definitions

Pro Rata Metrics —The portfolio information above contains certain metrics prepared under the pro rata consolidation method. We refer to these metrics as pro rata metrics. We have a number of investments, usually with our affiliates, 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~~jointly owned investments, which we do not control, we report our net investment and our net income or loss from that investment. Under the pro rata consolidation method, we present our proportionate share, based on our economic ownership of these ~~jointly-owned~~jointly owned investments, of the portfolio metrics of those investments. Multiplying each of the jointly owned investments’ financial statement line items by our percentage ownership and adding those amounts to 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 such jointly owned investments.

ABR — ABR represents contractual minimum annualized base rent for our net-leased properties and reflects exchange rates as of ~~the date of this Report.~~September 30, 2017. If there is a rent abatement, we annualize the first monthly contractual base rent following the free rent period. ABR is not applicable to operating properties.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 5861

Results of Operations

We operate in two reportable segments: Owned Real Estate and Investment Management. We evaluate our results of operations with a primary focus on increasing and enhancing the value, quality, and number of properties in our Owned Real Estate segment, as well as assets owned by the Managed Programs, which are managed by us through our Investment Management segment. We focus our efforts on improving underperforming assets through re-leasing efforts, including negotiation of lease renewals, or selectively selling assets in order to increase value in our real estate portfolio. ~~The ability~~

As a result of our Board’s decision to ~~increase assets under management by structuring~~exit all non-traded retail fundraising activities as of June 30, 2017, we have revised how we view and present a component of our two reportable segments. As such, beginning with the second quarter of 2017, we include equity in earnings of equity method investments ~~on behalf of~~in the Managed Programs ~~is affected, among other things, by~~in our ~~ability~~Investment Management segment (Note 1). Earnings from our investment in CCIF continue to ~~raise capital on behalf~~be included in our Investment Management segment. Results of operations for prior periods have been reclassified to conform to the ~~Managed Programs and our ability to identify and enter into appropriate investments and related financing on their behalf.~~current period presentation.



	W. P. Carey 9/30/2017 10-Q– 62

Owned Real Estate

The following table presents the comparative results of our Owned Real Estate segment (in thousands):


	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended September 30,									Nine Months Ended September 30,
	2016			2015			Change			2016			2015			Change			2017			2016			Change			2017			2016			Change
Revenues
Lease revenues	$	163,786		$	164,741		$	(955	)	$	506,358		$	487,480		$	18,878		$	161,511		$	163,786		$	(2,275	)	$	475,547		$	506,358		$	(30,811	)
Operating property revenues	8,524			8,107			417			23,696			23,645			51			8,449			8,524			(75		)	23,652			23,696			(44		)
Reimbursable tenant costs	6,537			5,340			1,197			19,237			17,409			1,828			5,397			6,537			(1,140		)	15,940			19,237			(3,297		)
Lease termination income and other	1,224			2,988			(1,764		)	34,603			9,319			25,284			1,227			1,224			3			4,234			34,603			(30,369		)
	180,071			181,176			(1,105		)	583,894			537,853			46,041			176,584			180,071			(3,487		)	519,373			583,894			(64,521		)
Operating Expenses
Depreciation and amortization:
Net-leased properties	60,365			73,233			(12,868		)	206,468			199,242			7,226			61,583			60,337			1,246			182,314			206,312			(23,998		)
Operating properties	1,071			1,073			(2		)	3,174			3,143			31			1,067			1,071			(4		)	3,202			3,174			28
Corporate depreciation and amortization	304			223			81			915			663			252			320			332			(12		)	965			1,071			(106		)
	61,740			74,529			(12,789		)	210,557			203,048			7,509			62,970			61,740			1,230			186,481			210,557			(24,076		)
Property expenses:
Operating property expenses																			6,227			5,611			616			17,859			17,117			742
Reimbursable tenant costs	6,537			5,340			1,197			19,237			17,409			1,828			5,397			6,537			(1,140		)	15,940			19,237			(3,297		)
Operating property expenses	5,611			5,419			192			17,117			16,847			270
Net-leased properties	4,582			5,701			(1,119		)	21,358			14,657			6,701			4,329			4,582			(253		)	13,337			21,358			(8,021		)
	16,730			16,460			270			57,712			48,913			8,799			15,953			16,730			(777		)	47,136			57,712			(10,576		)
Impairment charges	14,441			19,438			(4,997		)	49,870			22,711			27,159
General and administrative	7,453			10,239			(2,786		)	25,653			37,124			(11,471		)	11,234			7,453			3,781			27,311			25,653			1,658
Stock-based compensation expense	1,572			1,468			104			4,316			5,943			(1,627		)	1,880			1,572			308			4,733			4,316			417
Property acquisition and other expenses	—			3,642			(3,642		)	2,975			11,213			(8,238		)
Other expenses																			65			—			65			1,138			2,975			(1,837		)
Impairment charges																			—			14,441			(14,441		)	—			49,870			(49,870		)
Restructuring and other compensation	—			—			—			4,413			—			4,413			—			—			—			—			4,413			(4,413		)
	101,936			125,776			(23,840		)	355,496			328,952			26,544			92,102			101,936			(9,834		)	266,799			355,496			(88,697		)
Other Income and Expenses
Interest expense	(44,349		)	(49,683		)	5,334			(139,496		)	(145,325		)	5,829			(41,182		)	(44,349		)	3,167			(125,374		)	(139,496		)	14,122
Equity in earnings of equity method investments in the Managed REITs and real estate	15,705			13,575			2,130			46,771			39,408			7,363
Equity in earnings of equity method investments in real estate																			3,740			3,230			510			9,533			9,585			(52		)
Other income and (expenses)	3,244			6,588			(3,344		)	7,681			9,545			(1,864		)	(4,918		)	3,244			(8,162		)	(6,249		)	7,681			(13,930		)
	(25,400		)	(29,520		)	4,120			(85,044		)	(96,372		)	11,328			(42,360		)	(37,875		)	(4,485		)	(122,090		)	(122,230		)	140
Income before income taxes and gain on sale of real estate	52,735			25,880			26,855			143,354			112,529			30,825			42,122			40,260			1,862			130,484			106,168			24,316
(Provision for) benefit from income taxes	(530		)	(5,247		)	4,717			6,792			(7,820		)	14,612			(1,511		)	(530		)	(981		)	(6,696		)	6,792			(13,488		)
Income before gain on sale of real estate	52,205			20,633			31,572			150,146			104,709			45,437			40,611			39,730			881			123,788			112,960			10,828
Gain on sale of real estate, net of tax	49,126			1,779			47,347			68,070			2,980			65,090			19,257			49,126			(29,869		)	22,732			68,070			(45,338		)
Net Income from Owned Real Estate	101,331			22,412			78,919			218,216			107,689			110,527			59,868			88,856			(28,988		)	146,520			181,030			(34,510		)
Net income attributable to noncontrolling interests	(1,359		)	(1,814		)	455			(6,294		)	(5,871		)	(423		)	(3,376		)	(1,359		)	(2,017		)	(8,530		)	(6,294		)	(2,236		)
Net Income from Owned Real Estate Attributable to W. P. Carey	$	99,972		$	20,598		$	79,374		$	211,922		$	101,818		$	110,104		$	56,492		$	87,497		$	(31,005	)	$	137,990		$	174,736		$	(36,746	)



	W. P. Carey 9/30/~~2016~~2017 10-Q – 5963

Lease Composition and Leasing Activities

As of September 30, ~~2016, 94.9%~~2017, 68.9% of our net leases, based on ABR, have rent ~~increases, of which 66.0% have~~increase adjustments based on CPI or similar indices and ~~28.9%~~26.2% of our net leases, based on ABR, have fixed rent increases. These leases comprise 95.1% of our portfolio. CPI and similar rent adjustments are based on formulas indexed to changes in the CPI, or other similar indices for the jurisdiction in which the property is located, some of which have caps and/or floors. Over the next 12 months, fixed rent escalations are scheduled to increase ABR by an average of ~~3.4%.~~2.5%, excluding leases that are set to expire within the next 12 months. We own international investments and, therefore, lease revenues from these investments are subject to exchange rate fluctuations in various foreign currencies, primarily the euro.

The following discussion presents a summary of rents on existing properties arising from leases with new tenants and renewed leases with existing tenants for the ~~periods~~period presented and, therefore, does not include new acquisitions or properties placed into service for our portfolio during the periods ~~presented.~~presented, as applicable.

During the three months ended September 30, ~~2016,~~2017, we entered into one new lease for approximately 3,000 square feet of leased space. The rent for the leased space is $22.50 per square foot. In addition, during the three months ended September 30, 2017, we extended two ~~new~~ leases with existing tenants for a total of approximately 0.1 million square feet of leased space. The average rent for the leased space is $12.94 per square foot. We provided a tenant improvement allowance on two of these leases totaling $2.2 million. In addition, during the three months ended September 30, 2016, we extended six leases with existing tenants for a total of approximately 2.2 million square feet of leased space. The estimated average new rent for the leased space is ~~$3.67~~$7.19 per square foot, compared to the average former rent of ~~$3.99~~$7.18 per square ~~foot, reflecting current market conditions. We provided a tenant improvement allowance on one of these leases totaling $3.2 million.~~foot.

During the nine months ended September 30, ~~2016,~~2017, we entered into ~~six~~five new leases for a total of approximately 0.4 million square feet of leased space. The average rent for the leased space is ~~$10.38~~$14.92 per square foot. We provided a tenant improvement ~~allowance on~~allowances for the four ~~of these~~new leases totaling ~~$2.6~~$8.8 million. In addition, during the nine months ended September 30, ~~2016,~~2017, we extended 1322 leases with existing tenants for a total of approximately ~~3.0~~2.8 million square feet of leased space. The ~~estimated~~ average new rent for the leased space is ~~$6.72~~$5.27 per square foot, compared to the average former rent of ~~$7.98~~$5.47 per square foot, reflecting current market conditions. We provided a tenant improvement ~~allowance~~allowances on ~~two~~four of these leases totaling ~~$10.2~~$4.0 million.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 6064

Property Level Contribution

The following table presents the Property level contribution for our consolidated net-leased and operating properties as well as a reconciliation to Net income from Owned Real Estate attributable to W. P. Carey (in thousands):


	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended September 30,									Nine Months Ended September 30,
	2016			2015			Change			2016			2015			Change			2017			2016			Change			2017			2016			Change
Existing Net-Leased Properties
Lease revenues	$	135,494		$	139,248		$	(3,754	)	$	405,874		$	413,885		$	(8,011	)	$	148,721		$	143,209		$	5,512		$	436,210		$	431,502		$	4,708
Property expenses	(3,509		)	(3,225		)	(284		)	(17,040		)	(9,737		)	(7,303		)	(3,776		)	(3,419		)	(357		)	(11,438		)	(10,048		)	(1,390		)
Depreciation and amortization	(51,205		)	(62,556		)	11,351			(153,827		)	(169,393		)	15,566			(56,244		)	(55,111		)	(1,133		)	(165,834		)	(165,842		)	8
Property level contribution	80,780			73,467			7,313			235,007			234,755			252			88,701			84,679			4,022			258,938			255,612			3,326
Recently Acquired Net-Leased Properties
Lease revenues	20,326			9,232			11,094			52,561			21,796			30,765			11,953			8,099			3,854			35,302			14,815			20,487
Property expenses	(664		)	(821		)	157			(2,007		)	(1,540		)	(467		)	(80		)	(28		)	(52		)	(325		)	(37		)	(288		)
Depreciation and amortization	(9,103		)	(4,022		)	(5,081		)	(23,195		)	(9,051		)	(14,144		)	(5,032		)	(3,823		)	(1,209		)	(14,845		)	(6,885		)	(7,960		)
Property level contribution	10,559			4,389			6,170			27,359			11,205			16,154			6,841			4,248			2,593			20,132			7,893			12,239
Properties Sold or Held for Sale
Lease revenues	7,966			16,261			(8,295		)	47,923			51,799			(3,876		)	837			12,478			(11,641		)	4,035			60,041			(56,006		)
Operating revenues	—			242			(242		)	61			797			(736		)	—			—			—			—			61			(61		)
Property expenses	(413		)	(1,719		)	1,306			(2,417		)	(3,624		)	1,207			(473		)	(1,139		)	666			(1,574		)	(11,379		)	9,805
Depreciation and amortization	(57		)	(6,681		)	6,624			(29,459		)	(20,876		)	(8,583		)	(307		)	(1,403		)	1,096			(1,635		)	(33,598		)	31,963
Property level contribution	7,496			8,103			(607		)	16,108			28,096			(11,988		)	57			9,936			(9,879		)	826			15,125			(14,299		)
Operating Properties
Revenues	8,524			7,865			659			23,635			22,848			787			8,449			8,524			(75		)	23,652			23,635			17
Property expenses	(5,607		)	(5,355		)	(252		)	(17,011		)	(16,603		)	(408		)	(6,227		)	(5,607		)	(620		)	(17,859		)	(17,011		)	(848		)
Depreciation and amortization	(1,071		)	(1,047		)	(24		)	(3,161		)	(3,065		)	(96		)	(1,067		)	(1,071		)	4			(3,202		)	(3,161		)	(41		)
Property level contribution	1,846			1,463			383			3,463			3,180			283			1,155			1,846			(691		)	2,591			3,463			(872		)
Property Level Contribution	100,681			87,422			13,259			281,937			277,236			4,701			96,754			100,709			(3,955		)	282,487			282,093			394
Add: Lease termination income and other	1,224			2,988			(1,764		)	34,603			9,319			25,284			1,227			1,224			3			4,234			34,603			(30,369		)
Less other expenses:
Impairment charges	(14,441		)	(19,438		)	4,997			(49,870		)	(22,711		)	(27,159		)
General and administrative	(7,453		)	(10,239		)	2,786			(25,653		)	(37,124		)	11,471			(11,234		)	(7,453		)	(3,781		)	(27,311		)	(25,653		)	(1,658		)
Stock-based compensation expense	(1,572		)	(1,468		)	(104		)	(4,316		)	(5,943		)	1,627			(1,880		)	(1,572		)	(308		)	(4,733		)	(4,316		)	(417		)
Corporate depreciation and amortization	(304		)	(223		)	(81		)	(915		)	(663		)	(252		)	(320		)	(332		)	12			(965		)	(1,071		)	106
Property acquisition and other expenses	—			(3,642		)	3,642			(2,975		)	(11,213		)	8,238
Other expenses																			(65		)	—			(65		)	(1,138		)	(2,975		)	1,837
Impairment charges																			—			(14,441		)	14,441			—			(49,870		)	49,870
Restructuring and other compensation	—			—			—			(4,413		)	—			(4,413		)	—			—			—			—			(4,413		)	4,413
Other Income and Expenses
Interest expense	(44,349		)	(49,683		)	5,334			(139,496		)	(145,325		)	5,829			(41,182		)	(44,349		)	3,167			(125,374		)	(139,496		)	14,122
Equity in earnings of equity method investments in the Managed REITs and real estate	15,705			13,575			2,130			46,771			39,408			7,363
Equity in earnings of equity method investments in real estate																			3,740			3,230			510			9,533			9,585			(52		)
Other income and (expenses)	3,244			6,588			(3,344		)	7,681			9,545			(1,864		)	(4,918		)	3,244			(8,162		)	(6,249		)	7,681			(13,930		)
	(25,400		)	(29,520		)	4,120			(85,044		)	(96,372		)	11,328			(42,360		)	(37,875		)	(4,485		)	(122,090		)	(122,230		)	140
Income before income taxes and gain on sale of real estate	52,735			25,880			26,855			143,354			112,529			30,825			42,122			40,260			1,862			130,484			106,168			24,316
(Provision for) benefit from income taxes	(530		)	(5,247		)	4,717			6,792			(7,820		)	14,612			(1,511		)	(530		)	(981		)	(6,696		)	6,792			(13,488		)
Income before gain on sale of real estate	52,205			20,633			31,572			150,146			104,709			45,437			40,611			39,730			881			123,788			112,960			10,828
Gain on sale of real estate, net of tax	49,126			1,779			47,347			68,070			2,980			65,090			19,257			49,126			(29,869		)	22,732			68,070			(45,338		)
Net Income from Owned Real Estate	101,331			22,412			78,919			218,216			107,689			110,527			59,868			88,856			(28,988		)	146,520			181,030			(34,510		)
Net income attributable to noncontrolling interests	(1,359		)	(1,814		)	455			(6,294		)	(5,871		)	(423		)	(3,376		)	(1,359		)	(2,017		)	(8,530		)	(6,294		)	(2,236		)
Net Income from Owned Real Estate Attributable to W. P. Carey	$	99,972		$	20,598		$	79,374		$	211,922		$	101,818		$	110,104		$	56,492		$	87,497		$	(31,005	)	$	137,990		$	174,736		$	(36,746	)



	W. P. Carey 9/30/~~2016~~2017 10-Q – 6165

Property level contribution is a non-GAAP ~~financial~~ 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 included in our Owned Real Estate segment over time. Property level contribution presents the lease and operating property revenues, less property expenses and depreciation and amortization. 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 income from Owned Real Estate attributable to W. P. Carey as an indication of our operating performance.

During the three months ended September 30, 2017, certain of our properties were damaged by Hurricane Harvey and Hurricane Irma. As a result, we evaluated such properties to determine if any losses should be recognized. We determined that the damages incurred were immaterial, and as such, no losses have been recorded.

Existing Net-Leased Properties

Existing net-leased properties are those that we acquired or placed into service prior to January 1, ~~2015~~2016 and that were not sold or held for sale during the periods presented. For the periods presented, there were ~~727~~808 existing net-leased properties.

For the three months ended September 30, ~~2016,~~2017 as compared to the same period in ~~2015, property level contribution for~~2016, lease revenues from existing net-leased properties increased by $7.3 million, primarily due to a decrease in depreciation and amortization expense of $11.4 million, partially offset by a decrease in lease revenues of $3.8 million. Depreciation and amortization decreased primarily due to the acceleration of lease intangible amortization in the prior year period as a result of various lease terminations. Lease revenues decreased by $4.7$2.2 million as a result of ~~lease expirations and terminations and by $1.6 million as a result of lease restructurings, which reduced lease revenues earned from these properties, partially offset by~~ an increase ~~of $2.1 million primarily due to new leases entered into upon the expiration of existing leases and an increase of $0.7 million due to scheduled rent increases.~~

For the nine months ended September 30, 2016, as compared to the same period in 2015, property level contribution for existing net-leased properties increased by $0.3 million, due to a decrease in depreciation and amortization expense of $15.6 million, partially offset by a decrease in lease revenues of $8.0 million and an increase in property expenses of $7.3 million. Depreciation and amortization decreased primarily due to the acceleration of lease intangible amortization in the prior year period as a result of various lease terminations. Depreciation and amortization expense also decreased as a result of the decrease in the average exchange rate of the U.S. dollar in relation to foreign currencies (primarily the ~~British pound sterling)~~euro) between the periods, $1.3 million related to scheduled rent increases, $1.2 million due to new leases with existing tenants, and $0.8 million related to completed build-to-suit or expansion projects on existing properties. Depreciation and amortization expense from existing net-leased properties increased primarily as a result of an increase in the average exchange rate of the U.S. dollar in relation to foreign currencies (primarily the euro) between the periods. ~~Lease~~

For the nine months ended September 30, 2017 as compared to the same period in 2016, lease revenues ~~decreased~~from existing net-leased properties increased by ~~$13.5~~$3.3 million related to scheduled rent increases, $2.8 million due to new leases with existing tenants, and $2.4 million related to completed build-to-suit or expansion projects on existing properties. These increases were partially offset by decreases of $2.2 million as a result of ~~lease expirations and terminations, $3.3 million as~~ a ~~result of lease restructurings, which reduced lease revenues earned from these properties, and $1.3 million as a result of the~~ decrease in the average exchange rate of the U.S. dollar in relation to foreign currencies (primarily the British pound sterling) between the periods, ~~partially offset by an increase of $6.0 million primarily due to new leases entered into upon the expiration of existing leases and an increase of $3.4~~$1.0 million due to ~~scheduled rent increases. In addition, during the nine months ended September 30, 2016, we recorded an allowance for credit losses of $7.1~~lease restructurings, and $1.0 million ~~on a direct financing lease~~ due to ~~a decline in the estimated amount of future payments we will receive from the tenant, including the possible early termination of the direct financing~~ lease (~~Note 5~~), which was recorded in Property expenses, excluding reimbursable tenant costs in the consolidated financial statements and, as such, reduced the property level contribution recognized from this investment.expirations.

Recently Acquired Net-Leased Properties

Recently acquired net-leased properties are those that we acquired or placed into service subsequent to December 31, ~~2014.~~2015. Since January 1, ~~2015,~~2016, we acquired 11four investments comprised of 67 properties, 51 of which we acquired during the second quarter of 2016, 15 of which we acquired during the fourth quarter of 2016, and ~~placed~~ one ~~property into service.~~of which we acquired during the second quarter of 2017.

For the three and nine months ended September 30, ~~2016 as compared to the same periods in 2015,~~2017, property level contribution from recently acquired net-leased properties increased by ~~$6.2~~$2.6 million and ~~$16.2~~$12.2 million, respectively, ~~primarily~~reflecting the results of operations of our investments completed during 2016 and 2017.

Properties Sold or Held for Sale

In addition to the impact on property level contribution related to properties we sold or classified as ~~a result~~held for sale during the periods presented, we recognized gains and losses on sale of real estate, lease termination income, impairment charges, allowances for credit losses, and gain (loss) on extinguishment of debt. The impact of these transactions is described in further detail below and in Note 15.

During the three months ended September 30, 2017, we disposed of five ~~investments we acquired after September 30, 2015. Total lease revenues from these properties were $10.9 million and $23.3 million for~~properties. During the ~~three and~~ nine months ended September 30, 2017, we disposed of 13 properties, one of which was held for sale at December 31, 2016, ~~respectively.~~and a parcel of vacant land. At September 30, 2017, we had one property classified as held for sale (Note 4). During the year ended December 31, 2016, we disposed of 33 properties and a parcel of vacant land.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 6266

~~Properties Sold or Held for Sale~~

During the three months ended September 30, 2016 we sold three properties and during the nine months ended September 30, 2016 we sold ten properties, one of which was held for sale at December 31, 2015, and a parcel of vacant land. During the three months ended June 30, 2016, we transferred ownership of a vacant international property and the related non-recourse mortgage loan, which had a carrying value of $39.8 million and an outstanding balance of $60.9 million, respectively, on the date of transfer, to the mortgage lender. In addition, during the three months ended September 30, 2016, a vacant domestic property with an asset carrying value of $13.7 million, which was encumbered by a $27.0 million mortgage loan, was foreclosed upon by the mortgage lender. At September 30, 2016, we had 16 properties classified as held for sale, all of which were disposed of subsequent to September 30, 2016 (~~Note 17~~). During the year ended December 31, 2015, we disposed of 14 properties. For the three months ended September 30, 2016 and 2015, property level contribution from properties sold or held for sale was $7.5 million and $8.1 million, respectively. For the nine months ended September 30, 2016 and 2015, property level contribution from properties sold or held for sale was $16.1 million and $28.1 million, respectively.

In the fourth quarter of 2015, we executed a lease amendment with a tenant in a domestic office building. The amendment extended the lease term an additional 15 years to January 31, 2037 and provided a one-time rent payment of $25.0 million, which was paid to us on December 18, 2015. The lease amendment also provided an option to terminate the lease effective February 29, 2016, with additional lease termination fees of $22.2 million to be paid to us on or five days before February 29, 2016 upon exercise of the option. The tenant exercised the option on January 1, 2016. The aggregate of the additional rent payment of $25.0 million and the lease termination fees of $22.2 million were amortized to lease termination income from the lease amendment date on December 4, 2015 through the end of the non-cancelable lease term on February 29, 2016, resulting in $15.0 million recognized during the year ended December 31, 2015 and $32.2 million recognized during the nine months ended September 30, 2016 within Lease termination income and other in the consolidated financial statements. In connection with the lease amendment, we defeased the mortgage loan encumbering the property with a principal balance of $36.5 million and recognized a loss on extinguishment of debt of $5.3 million, which was included in Other income and (expenses) in the consolidated financial statements for the year ended December 31, 2015. In addition, duringDuring the fourth quarter of 2015, we entered into an agreement to sell the property to a third ~~party and the buyer placed a deposit of $12.7 million for the purchase of the property that was held in escrow. At December 31, 2015, this property was classified as held for sale (Note 15). During the three months ended March 31,~~party. In February 2016, we sold the ~~property for proceeds of $44.4 million, net of selling costs, and recognized a loss on the sale of $10.7 million.~~property. As a result of this lease termination and sale, ~~lease revenues increased by $10.4~~we recognized accelerated amortization of below-market rent intangibles of $16.7 million ~~for~~during the nine months ended September 30, 2016, ~~as compared to the same period in 2015, due to accelerated amortization of below-market rent intangibles,~~ which iswas recorded as an adjustment to lease revenues. In addition, for the same property, we recognized accelerated amortization of in-place lease intangibles of $20.3 million during that period, which is included in depreciation and amortization ~~increased by $16.2 million for~~expense.

In addition, during the nine months ended September 30, 2016, we recorded an allowance for credit losses of $7.1 million on an international direct financing lease investment that was sold in August 2017, which was included in property expenses, due to a decline in the estimated amount of future payments we would receive from the tenant (Note 5).

Operating Properties

Operating properties consist of our investments in two hotels for all periods presented.

For the three and nine months ended September 30, 2017 as compared to the same ~~period~~periods in ~~2015,~~2016, property expenses for operating properties increased due to ~~accelerated amortization of in-place lease intangibles, which is included~~increases in ~~depreciation~~costs related to room and ~~amortization.~~food services, property management, and marketing.

Other Revenues and Expenses

Lease Termination Income and Other

~~2016~~2017 — For the nine months ended September 30, 2017, lease termination income and other was $4.2 million. We received proceeds from a bankruptcy settlement claim with a former tenant during both the second and third quarters of 2017 and recognized income during the first, second, and third quarters of 2017 related to a lease termination that occurred during the first quarter of 2017. Lease termination income and other also consists of earnings from our note receivable (Note 5).

2016— For the nine months ended September 30, 2016, lease termination income and other was $34.6 million, primarily consisting of the $32.2 million of lease termination income related to a domestic property that was sold ~~during the three months ended March 31,~~in February 2016, as discussed above (Note 15).

General and Administrative

Beginning with the third quarter of 2017, personnel and rent expenses included within general and administrative expenses that are recorded by our Owned Real Estate segment will be allocated based on time incurred by our personnel for the Owned Real Estate and Investment Management segments. All other overhead costs are charged to our Investment Management segment based on the trailing 12-month reported revenues of the Managed Programs and us.

~~2015~~As discussed in Note 3, certain personnel costs and overhead costs are charged to the CPA^® — REITs based on the trailing 12-month reported revenues of the Managed Programs and us. We allocate certain personnel and overhead costs to the CWI REITs based on the time incurred by our personnel. We allocate certain personnel costs based on the time incurred by our personnel to CESH I and, prior to our resignation as the advisor to CCIF in the third quarter of 2017, to the Managed BDCs.

For the three and nine months ended September 30, ~~2015, lease termination income~~2017 as compared to the same periods in 2016, general and administrative expenses in our Owned Real Estate segment, which excludes restructuring and other ~~was $3.0~~compensation expenses as described below, increased by $3.8 million and ~~$9.3~~$1.7 million, respectively. We recognized $2.7 million in lease termination income during the third quarter of 2015 related to repairs identified at the end of a tenant’s lease term. We recognized $2.7 million of lease termination incomerespectively, primarily due to the ~~early termination~~change in methodology for allocation of ~~two leases during the first quarter of 2015~~expenses between our Owned Real Estate and $2.4 million of termination income in connection with the termination by the buyer of a purchase and sale agreement on one of our self-storage properties during the second quarter of 2015, which was subsequently sold during the nine months ended September 30, 2016Investment Management segments (Note 151).



	W. P. Carey 9/30/~~2016~~2017 10-Q – 6367

Stock-based Compensation Expense

Beginning with the third quarter of 2017, stock-based compensation expense is being allocated to our Owned Real Estate and Investment Management segments based on time incurred by our personnel for those segments.

For the three and nine months ended September 30, 2017, stock-based compensation expense allocated to our Owned Real Estate segment was $1.9 million and $4.7 million, respectively, substantially unchanged from the prior year periods.

Other Expenses

For the nine months ended September 30, 2017 as compared to the same period in 2016, other expenses decreased by $1.8 million, primarily due to advisory expenses and professional fees incurred during the prior year period within our Owned Real Estate segment in connection with the formal strategic review that we completed in May 2016.

Impairment Charges

Where the undiscounted cash flows for an asset are less than the asset’s carrying value when considering and evaluating the various alternative courses of action that may occur, we recognize an impairment charge to reduce the carrying value of the asset to its estimated fair value. Further, when we classify an asset as held for sale, we carry the asset at the lower of its current carrying value or its fair value, less estimated cost to sell. Our impairment charges are more fully described in Note 8.

~~2016~~ — During the three months ended September 30, 2016, we recognized impairment charges totaling $14.4 million, ~~inclusive of~~including an amount attributable to a noncontrolling interest of $0.6 million, on 18 properties, including a portfolio of 14 properties, in order to reduce the carrying values of the properties to their estimated fair values. The impairment charges recognized on the portfolio of 14 properties were in addition to charges recognized on the portfolio during the six months ended June 30, 2016 as(as described ~~below,~~below), based on the purchase and sale agreement for the ~~portfolio received during the current period.~~portfolio. The fair value measurements for the properties approximated their estimated selling prices, less estimated costs to sell. We used available information, including third-party broker information and internal discounted cash flow models (Level 3 inputs), in determining the fair value of these properties. At September 30, 2016, theThe portfolio of 14 properties was sold in October 2016. Of the other four properties, one was sold in December 2016, two were disposed of in January 2017, and one property, which was classified as held for sale ~~and all were~~as of December 31, 2016, was sold ~~subsequent to September 30, 2016 (Note 4~~, ~~Note 17~~).in January 2017.

During the nine months ended September 30, 2016, we recognized impairment charges totaling $49.9 million, ~~inclusive of~~including an amount attributable to a noncontrolling interest of $0.6 million, on 18 properties in order to reduce the carrying values of the properties to their estimated fair values. In addition to the impairment charges of $14.4 million recognized during the three months ended September 30, 2016, described above, we ~~had~~ recognized impairment charges totaling $35.4 million on the portfolio of 14 properties during the six months ended June 30, 2016, in order to reduce the carrying values of the properties to their estimated fair values at that time. The fair value measurements for the properties approximated their estimated selling prices, less estimated costs to sell. ~~We used available information, including third-party broker information and internal discounted cash flow models (Level 3 inputs), in determining the fair value of these properties.~~

~~2015~~ — During the three months ended September 30, 2015, we recognized impairment charges totaling $19.4 million on four properties in order to reduce the carrying values of the properties to their estimated fair values. The fair value measurements for two of the properties approximated their estimated selling prices; therefore, we recognized impairment charges totaling $3.8 million on these properties. At September 30, 2016, one of these properties was classified as held for sale and disposed of subsequent to September 30, 2016 (~~Note 4~~, ~~Note 17~~). We reduced the estimated holding period for another property due to the expected termination of its related lease within one year after September 30, 2015, and recognized an impairment charge of $8.7 million. The building located on the remaining property was demolished in connection with the redevelopment of the property, which commenced in December 2015, and we recognized an impairment charge of $6.9 million on this property.

~~General and Administrative~~

~~As discussed in~~ ~~Note 3, certain personnel costs (i.e., those not related to our senior management, our legal transactions team, or our investments team) and overhead costs are charged to the CPA~~^® REITs and our Owned Real Estate Segment based on the trailing 12-month reported revenues of the Managed Programs and us. Personnel costs related to our senior management, our legal transactions team, and our investments team are allocated to our Owned Real Estate Segment based on the trailing 12-month investment volume. We allocate personnel costs (excluding our senior management and investments team) and overhead costs to the CWI REITs, the Managed BDCs, and CESH I based on the time incurred by our personnel.

For the three months ended September 30, 2016 as compared to the same period in 2015, general and administrative expenses in our Owned Real Estate segment, which excludes restructuring and other compensation expenses as described below, decreased by $2.8 million, primarily due to an overall decline in compensation expense and professional fees as a result of the reduction in headcount, including the RIF, and other cost savings initiatives implemented during 2016. Also contributing to the decrease were commissions to investment officers related to our owned real estate acquisitions, which decreased by $0.5 million during the three months ended September 30, 2016 as compared to the same period in 2015, resulting from lower acquisition volume in the current year period.



	~~W. P. Carey 9/30/2016 10-Q~~– 64

For the nine months ended September 30, 2016 as compared to the same period in 2015, general and administrative expenses in our Owned Real Estate segment decreased by $11.5 million. primarily due to an overall decline in compensation expense and professional fees as a result of the reduction in headcount, including the RIF, and other cost savings initiatives implemented during 2016. The allocation of personnel and overhead costs to our Owned Real Estate segment also declined as a result of a change in the mix of investment volume on which a portion of the allocation is based. Also contributing to the decrease were commissions to investment officers related to our owned real estate acquisitions, which decreased by $3.2 million during the nine months ended September 30, 2016 as compared to the same period in 2015, resulting from lower acquisition volume in the current year period.

~~Stock-based Compensation Expense~~

For the nine months ended September 30, 2016 as compared to the same period in 2015, stock-based compensation expense allocable to our Owned Real Estate segment decreased by $1.6 million, primarily due to the reduction in RSUs and PSUs outstanding resulting from the RIF (~~Note 12) as well as a reduced allocation of costs resulting from lower investment volume in our Owned Real Estate segment as compared to investment volume for the Managed REITs.~~

~~Property Acquisition and Other Expenses~~

Property acquisition and other expenses consist primarily of acquisition-related costs incurred on investments that are accounted for as business combinations, which are required to be expensed under current accounting guidance, as well as costs incurred related to the formal strategic review that we completed in May 2016.

~~2016~~ — For the nine months ended September 30, 2016, we incurred $2.9 million of advisory expenses and professional fees within our Owned Real Estate segment in connection with our formal strategic review.

~~2015~~ — For the three and nine months ended September 30, 2015, property acquisition and other expenses were $3.6 million and $11.2 million, respectively, consisting primarily of acquisition-related costs incurred on the one and five investments, respectively, that were accounted for as business combinations, which were required to be expensed under current accounting guidance.

Restructuring and Other Compensation

For the nine months ended September 30, 2016, we recorded total restructuring and other compensation expenses of $11.9 million, of which $4.4 million was allocated to our Owned Real Estate segment. Included in the total was $5.1 million of severance related to ~~our~~the employment agreement with our former ~~Chief Executive Officer~~chief executive officer and $6.8 million related to severance, stock-based compensation, and other costs incurred as part of the employee terminations and ~~reductions in headcount~~RIF during the period (Note 12).

Interest Expense

For the three and nine months ended September 30, ~~2016~~2017 as compared to the same periods in ~~2015,~~2016, interest expense decreased by ~~$5.3~~$3.2 million and ~~$5.8~~$14.1 million, respectively, primarily due to an overall decrease in our weighted-average interest rate, ~~partially offset by~~as well as an overall ~~increase~~decrease in our average outstanding debt ~~balance for~~balances. Our weighted-average interest rate was 3.5% and 3.8% during the three months ended September 30, 2017 and 2016, respectively, and 3.6% and 3.9% during the nine months ended September 30, 2017 and 2016, ~~as compared to the same period in 2015.~~respectively. Our average outstanding debt balance was ~~$4.5~~$4.3 billion and ~~$4.6~~$4.5 billion during the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively, and ~~$4.6~~$4.3 billion and ~~$4.5~~$4.6 billion during the nine months ended September 30, ~~2016~~2017 and ~~2015, respectively. Our weighted-average interest rate was 3.8% and 4.1% during the three months ended September 30,~~ 2016, ~~and 2015, respectively, and 3.9% and 4.1% during the nine months ended September 30, 2016 and 2015,~~ respectively. The weighted-average interest rate of our debt decreased primarily as a result of paying off certain non-recourse mortgage loans with unsecured borrowings, which bear interest at a lower rate than our mortgage loans (Note 10).



	W. P. Carey 9/30/~~2016~~2017 10-Q – 6568

~~Equity in Earnings of Equity Method Investments in the Managed REITs and Real Estate~~

Equity in earnings of equity method investments in the Managed REITs and real estate is recognized in accordance with the investment agreement for each of our equity method investments. In addition, we are entitled to receive distributions of Available Cash (~~Note 3~~) from the operating partnerships of each of the Managed REITs. The net income of our unconsolidated investments fluctuates based on the timing of transactions, such as new leases and property sales, as well as the level of impairment charges. The following table presents the details of our Equity in earnings of equity method investments in the Managed REITs and real estate (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Equity in earnings of equity method investments in the Managed REITs:
Equity in earnings of equity method investments in the Managed REITs $ 1,599
$ 301
$ 5,168
$ 761
Distributions of Available Cash:^(a)

CPA^®:17 – Global
5,276
5,837
17,803
17,690
CPA^®:18 – Global
1,662
1,705
5,319
4,021
CWI 1 2,838
2,463
6,931
6,356
CWI 2 1,100
177
1,965
177
Total equity in earnings of equity method investments in the Managed REITs 12,475
10,483
37,186
29,005
Equity in earnings of other equity method investments in real estate:
Total equity in earnings of other equity method investments in real estate 3,230
3,092
9,585
10,403
Total equity in earnings of equity method investments in the Managed REITs and real estate $ 15,705
$ 13,575
$ 46,771
$ 39,408

~~__________~~

~~(a)~~

We are entitled to receive distributions of our share of earnings up to 10% of the Available Cash from the operating partnerships of each of the Managed REITs, as defined in their respective operating partnership agreements. Distributions of Available Cash received and earned from the Managed REITs increased in the aggregate, primarily as a result of new investments that they entered into during 2016 and 2015.

Other Income and (Expenses)

Other income and (expenses) primarily consists of gains and losses on foreign currency transactions, derivative instruments, and extinguishment of debt. Gains and losses on foreign currency transactions are recognized on the remeasurement of certain of our euro-denominated unsecured debt instruments that are not designated as net investment hedges. We make certain foreign currency-denominated 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. We also recognize gains or losses on foreign currency transactions when we repatriate cash from our foreign investments. In addition, we have certain derivative instruments, including common stock warrants and foreign currency contracts, that are not designated as hedges for accounting purposes, for which realized and unrealized gains and losses are included in earnings. The timing and amount of such gains or losses cannot always be estimated and are subject to fluctuation.

2017 — For the three months ended September 30, 2017, net other expenses were $4.9 million. During the period, we recognized net realized and unrealized losses of $7.0 million on foreign currency transactions as a result of changes in foreign currency exchange rates and a net loss on extinguishment of debt totaling $1.6 million primarily related to the repayment of a non-recourse mortgage loan encumbering a domestic property that was sold in July 2017 (Note 15). These losses were partially offset by realized gains of $2.3 million related to foreign currency forward contracts and foreign currency collars and interest income of $0.5 million primarily related to our loans to affiliates (Note 3).

For the nine months ended September 30, 2017, net other expenses were $6.2 million. During the period, we recognized net realized and unrealized losses of $16.4 million on foreign currency transactions as a result of changes in foreign currency exchange rates and unrealized losses of $1.1 million primarily on foreign currency collars prior to their maturities on various dates during the period, as well as on common stock warrants that we own in connection with certain investments. These losses were partially offset by realized gains of $8.6 million related to foreign currency forward contracts and foreign currency collars and interest income of $1.5 million primarily related to our loans to affiliates (Note 3).

2016 — For the three months ended September 30, 2016, net other income was $3.2 million. During the period, we recognized realized gains of $2.4 million related to foreign currency forward contracts and foreign currency collars and unrealized gains of $0.7 million recognized primarily on interest rate swaps that did not qualify for hedge accounting. In addition, we recognized a gain of $0.7 million in our Owned Real Estate segment on the deconsolidation of an affiliate, CESH I (Note 2). These gains were partially offset by a net loss on extinguishment of debt of $2.1 million primarily related to the payoff of a non-recourse mortgage ~~loan (Note 10~~).loan.

For the nine months ended September 30, 2016, net other income was $7.7 million. During the period, we recognized realized gains of $6.4 million related to foreign currency forward contracts and foreign currency collars, unrealized gains of $3.2 million recognized primarily on interest rate swaps that did not qualify for hedge accounting, and interest income of $0.6 million ~~recognized on~~primarily related to our ~~deposits.~~loans to affiliates (Note 3). In addition, we recognized a gain of $0.7 million in our Owned Real Estate segment on the



	~~W. P. Carey 9/30/2016 10-Q~~– 66

deconsolidation of CESH I (Note 2). These gains were partially offset by a net loss on extinguishment of debt of $3.9 million primarily related to the payoff of two non-recourse mortgage ~~loans (Note 10~~).

~~2015~~ — For the three months ended September 30, 2015, net other income was $6.6 million, primarily due to a gain on extinguishment of debt of $2.3 million recognized during the quarter related to the disposition of a property (~~Note 15~~), realized gains of $1.9 million related to foreign currency forward contracts and foreign currency collars, and unrealized gains of $1.1 million recognized on interest rate swaps that did not qualify for hedge accounting. In addition, we recognized interest income of $0.6 million on our deposits.

For the nine months ended September 30, 2015, net other income was $9.5 million, primarily due to realized gains of $5.9 million related to foreign currency forward contracts and foreign currency collars, unrealized gains of $3.1 million recognized on interest rate swaps that did not qualify for hedge accounting, and a gain on extinguishment of debt of $2.3 million recognized during the third quarter of 2015 related to the disposition of a property (~~Note 15~~). In addition, we recognized interest income of $1.3 million on our deposits. Net other income for the nine months ended September 30, 2015 was partially offset by net realized and unrealized losses of $3.8 million recognized on foreign currency transactions as a result of changes in foreign currency exchange rates.loans.

(Provision for) Benefit from Income Taxes

~~2016~~ — For the three months ended September 30, 2017, as compared to the same period in 2016, ~~we recognized a~~ provision for income taxes ~~of $0.5~~within our Owned Real Estate segment increased by $1.0 million, primarily due to ~~$4.0~~(i) a decrease of $0.7 million ~~of current federal, foreign, and state franchise taxes recognized on our domestic TRSs and foreign properties, partially offset by $3.4 million of~~in deferred tax benefits, primarily associated with basis differences on certain foreign properties ~~primarily resulting from the impairment charges recorded~~and (ii) an increase of $0.2 million in ~~the period~~current federal, foreign, and state franchise taxes due to higher taxable income on ~~international properties (Note 8~~).our domestic TRSs and foreign properties.

For the nine months ended September 30, ~~2016,~~2017, we recognized a provision for income taxes of $6.7 million, compared to a benefit from income taxes of $6.8 million ~~due to~~recorded during the same period in 2016, within our Owned Real Estate segment. During the nine months ended September 30, 2016, we recorded $19.7 million of deferred tax benefits associated with basis differences on certain foreign properties, primarily resulting from the impairment charges recorded in the period on certain international properties (Note 8)~~, partially offset by $12.9 million of~~. In addition, current federal, foreign, and state franchise taxes ~~recognized on~~decreased by $1.1 million due to decreases in taxable income generated by our domestic TRSs and foreign properties.

~~2015~~ — For the three and nine months ended September 30, 2015, we recognized a provision for income taxes of $5.2 million and $7.8 million, respectively, due to $5.2 million and $11.6 million, respectively, of current federal, foreign, and state franchise taxes recognized on our domestic TRSs and foreign properties, partially offset by $3.8 million of deferred tax benefit associated with basis differences on certain foreign properties for the nine months ended September 30, 2015.



	W. P. Carey 9/30/2017 10-Q– 69

Gain on Sale of Real Estate, Net of Tax

Gain on sale of real estate, net of tax consists of gain on the sale of properties, net of tax that were disposed of during the three and nine months ended September 30, 2017 and 2016 (Note 15).

2017 — During the three and nine months ended September 30, 2017, we sold five properties, and 11 properties and a parcel of vacant land, respectively, for net proceeds of $58.7 million and $102.5 million, respectively, and recognized a net gain on these sales, net of tax totaling $19.3 million and $22.7 million, respectively. In connection with the sale of a property in Malaysia in August 2017, and in accordance with ASC 830-30-40, Foreign Currency Matters, we reclassified $3.6 million of foreign currency translation losses from Accumulated other comprehensive loss to Gain on sale of real estate, net of tax (as a reduction to Gain on sale of real estate, net of tax), since the sale represented a disposal of our Malaysian investments (Note 13). One of the properties sold during the nine months ended September 30, 2017 was held for sale at December 31, 2016 ~~and 2015~~ (Note 154). In addition, in January 2017, we transferred ownership of two international properties and the related non-recourse mortgage loan, which had an aggregate asset carrying value of $31.3 million and an outstanding balance of $28.1 million (net of $3.8 million of cash held in escrow that was retained by the mortgage lender), respectively, on the dates of transfer, to the mortgage lender, resulting in a net loss of less than $0.1 million.

2016 — During the three and nine months ended September 30, 2016, we sold three properties, and ten properties and a parcel of vacant land, respectively, for net proceeds of $192.0 million and $392.6 million, respectively, and recognized a net gain on these sales, net of tax totaling $37.4 million and $39.9 million, respectively, ~~inclusive of~~including amounts attributable to noncontrolling interests of $0.9 million for the nine months ended September 30, 2016. In addition, ~~during the three months ended June 30,~~in April 2016, we transferred ownership of a vacant international property and the related non-recourse mortgage loan, which had a carrying value of $39.8 million and an outstanding balance of $60.9 million, respectively, on the date of transfer, to the mortgage lender, resulting in a net gain of $16.4 million. Also, ~~during the three months ended September 30,~~in July 2016, a vacant domestic property with an asset carrying value of $13.7 million, which was encumbered by a ~~$27.0~~$24.3 million mortgage loan (net of $2.6 million of cash held in escrow that was retained by the mortgage lender), was foreclosed upon by the mortgage lender, resulting in a net gain of $11.6 million.

~~2015~~ — During the three and nine months ended September 30, 2015, we sold two and 11 properties, respectively, and recognized a net gain on these sales, net of tax of $1.2 million and $2.4 million, respectively. In addition, during July 2015, a domestic vacant property was foreclosed upon by the mortgage lender and sold; we recognized a gain of $0.6 million in connection with that disposition.



	~~W. P. Carey 9/30/2016 10-Q~~– 67

Investment Management

We earn revenue as the advisor to the Managed Programs. For the periods presented, we acted as advisor to the following affiliated ~~publicly owned, non-listed~~ Managed Programs: CPA^®:17 – Global, CPA^®:18 – Global, CWI 1, CWI 2, ~~(since February 9, 2015),~~ CCIF ~~(since February 27, 2015)~~(through September 10, 2017), and CESH I (since June 3, 2016). On June 15, 2017, our Board approved a plan to exit all non-traded retail fundraising activities carried out by our wholly-owned broker-dealer subsidiary, Carey Financial, as of June 30, 2017. We currently expect to continue to manage all existing Managed Programs through the end of their respective natural life cycles (Note 1). In August 2017, we resigned as the advisor to CCIF, and our advisory agreement with CCIF was terminated, effective as of September 11, 2017. CCIF was included in the Managed Programs prior to our resignation as its advisor (Note 1).

The following tables present other operating data that management finds useful in evaluating result of operations (dollars in millions):

September 30, 2016 December 31, 2015
Total properties — Managed REITs and CESH I 595
602
Assets under management — Managed Programs ^(a)
$ 12,243.5
$ 11,045.3
Cumulative funds raised — CPA^®:18 – Global offering ^{(b) (c)}
1,243.5
1,243.5
Cumulative funds raised — CWI 2 offering ^{(b) (d)}
535.8
247.0
Cumulative funds raised — CCIF offering ^{(b) (e)}
91.2
2.0
Cumulative funds raised — CESH I offering ^(f)
41.8
—



	September 30, 2017		December 31, 2016
Total properties — Managed Programs	627		606
Assets under management — Managed Programs ^(a)	$	13,244.8	$	12,874.8
Cumulative funds raised — CWI 2 offering ^{(b) (c)}	851.3		616.3
Cumulative funds raised — CCIF offering ^{(b) (d)}	195.3		125.1
Cumulative funds raised — CESH I offering ^(e)	139.7		112.8



	Nine Months Ended September 30,
	2017		2016
Financings structured — Managed Programs	$	997.9	$	1,080.3
Investments structured — Managed Programs ^(f)	1,101.1		1,047.8
Funds raised — CWI 2 offering ^{(b) (c)}	235.0		288.8
Funds raised — CCIF offering ^{(b) (d)}	70.2		89.2
Funds raised — CESH I offering ^(e)	26.9		41.8

__________

Nine Months Ended September 30,
2016 2015
Financings structured — Managed REITs $ 1,080.3
$ 884.8
Investments structured — Managed REITs ^(g)
1,047.8
1,898.7
Funds raised — CPA^®:18 – Global offering ^{(b) (c)}
—
100.4
Funds raised — CWI 2 offering ^{(b) (d)}
288.8
92.5
Funds raised — CCIF offering ^{(b) (e)}
89.2
—
Funds raised — CESH I offering ^(f)
41.8
—



	W. P. Carey 9/30/2017 10-Q– 70

~~__________~~

(a)

Represents the estimated fair value of the real estate assets owned by the Managed REITs, which was calculated by us as the advisor to the Managed REITs based in part upon third-party appraisals, plus cash and cash equivalents, less distributions payable. Amounts ~~also~~ include the fair value of the investment assets, plus cash, owned by ~~CCIF and~~ CESH I. Amount as of December 31, 2016 also includes the fair value of the investment assets, plus cash, owned by CCIF.


(b)	Excludes reinvested distributions through each entity’s distribution reinvestment plan.


(c)	~~Reflects funds raised from CPA~~^®~~:18 – Global’s initial public offering, which commenced in May 2013 and closed on April 2, 2015 (Note 3~~).


~~(d)~~	Reflects funds raised from CWI 2’s initial public offering, which commenced in February 2015. In connection with the end of active fundraising by Carey Financial on June 30, 2017, we facilitated the orderly processing of sales in the offering by CWI 2 through July 31, 2017, which then closed its offering on that date.

~~(e)~~(d)

Amount represents funding from the CCIF Feeder Funds to CCIF. We began to raise funds on behalf ~~of two~~ of the CCIF Feeder Funds in the fourth quarter of 2015. ~~Amount represents funding from~~One of the CCIF Feeder Funds, CCIF 2016 T, closed its offering on April 28, 2017. In August 2017, we resigned as the advisor to ~~CCIF.~~CCIF, and our advisory agreement with CCIF was terminated, effective as of September 11, 2017.


~~(f)~~(e)	Reflects funds raised from CESH I’s private placement, which commenced in July 2016. In connection with the end of active fundraising by Carey Financial on June 30, 2017, we facilitated the orderly processing of sales in the offering by CESH I through July 31, 2017, which then closed its offering on that date.


~~(g)~~(f)	Includes acquisition-related costs.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 6871

Below is a summary of comparative results of our Investment Management segment (in thousands):


	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended September 30,									Nine Months Ended September 30,
	2016			2015			Change			2016			2015			Change			2017			2016			Change			2017		2016			Change
Revenues
Asset management revenue	$	15,978		$	13,004		$	2,974		$	45,596		$	36,236		$	9,360		$	17,938		$	15,978		$	1,960		$	53,271	$	45,596		$	7,675
Structuring revenue																			9,817			12,301			(2,484		)	27,981		30,990			(3,009		)
Reimbursable costs from affiliates	14,540			11,155			3,385			46,372			28,401			17,971			6,211			14,540			(8,329		)	45,390		46,372			(982		)
Structuring revenue	12,301			8,207			4,094			30,990			67,735			(36,745		)
Dealer manager fees	1,835			1,124			711			5,379			2,704			2,675			105			1,835			(1,730		)	4,430		5,379			(949		)
Other advisory revenue	522			—			522			522			203			319			99			522			(423		)	896		522			374
	45,176			33,490			11,686			128,859			135,279			(6,420		)	34,170			45,176			(11,006		)	131,968		128,859			3,109
Operating Expenses
Reimbursable costs from affiliates	14,540			11,155			3,385			46,372			28,401			17,971			6,211			14,540			(8,329		)	45,390		46,372			(982		)
General and administrative	8,280			12,603			(4,323		)	32,469			41,863			(9,394		)	6,002			8,280			(2,278		)	25,878		32,469			(6,591		)
Subadvisor fees	4,842			1,748			3,094			10,010			8,555			1,455			5,206			4,842			364			11,598		10,010			1,588
Stock-based compensation expense																			2,755			2,784			(29		)	9,916		10,648			(732		)
Restructuring and other compensation																			1,356			—			1,356			9,074		7,512			1,562
Depreciation and amortization																			1,070			1,062			8			2,838		3,278			(440		)
Dealer manager fees and expenses	3,028			3,185			(157		)	9,000			7,884			1,116			462			3,028			(2,566		)	6,544		9,000			(2,456		)
Stock-based compensation expense	2,784			2,498			286			10,648			10,120			528
Depreciation and amortization	1,062			983			79			3,278			3,031			247
Property acquisition and other expenses	—			1,118			(1,118		)	2,384			1,120			1,264
Restructuring and other compensation	—			—			—			7,512			—			7,512
Other expenses																			—			—			—			—		2,384			(2,384		)
	34,536			33,290			1,246			121,673			100,974			20,699			23,062			34,536			(11,474		)	111,238		121,673			(10,435		)
Other Income and Expenses
Equity in earnings (losses) of equity method investment in CCIF	1,098			(940		)	2,038			1,472			(778		)	2,250
Equity in earnings of equity method investments in the Managed Programs																			12,578			13,573			(995		)	38,287		38,658			(371		)
Other income and (expenses)	1,857			20			1,837			1,717			399			1,318			349			1,857			(1,508		)	1,280		1,717			(437		)
	2,955			(920		)	3,875			3,189			(379		)	3,568			12,927			15,430			(2,503		)	39,567		40,375			(808		)
Income (loss) before income taxes	13,595			(720		)	14,315			10,375			33,926			(23,551		)
Income before income taxes																			24,035			26,070			(2,035		)	60,297		47,561			12,736
(Provision for) benefit from income taxes	(2,624		)	1,886			(4,510		)	(2,254		)	(12,532		)	10,278			(249		)	(2,624		)	2,375			3,793		(2,254		)	6,047
Net Income from Investment Management	10,971			1,166			9,805			8,121			21,394			(13,273		)
Net income attributable to noncontrolling interests	—			(19		)	19			—			(2,003		)	2,003
Net Income from Investment Management Attributable to W. P. Carey	$	10,971		$	1,147		$	9,824		$	8,121		$	19,391		$	(11,270	)	$	23,786		$	23,446		$	340		$	64,090	$	45,307		$	18,783

Asset Management Revenue

We earn asset management revenue from the Managed REITs based on the value of their real estate-related and lodging-related assets under management. We ~~earn asset management revenue from CCIF based on the average of its gross assets at fair value. We~~ also earn asset management revenue from CESH I based on its gross assets at fair value. ~~This~~We also earned asset management revenue from CCIF based on the average of its gross assets at fair value prior to our resignation as the advisor to CCIF in the third quarter of 2017. Asset management revenue may increase or decrease depending upon (i) increases in the Managed Programs’ asset bases as a result of new investments; (ii) decreases in the Managed Programs’ asset bases as a result of sales of investments; and (iii) increases or decreases in the appraised value of the real estate-related and lodging-related assets in the investment portfolios of the Managed ~~REITs and CESH I; and (iv)~~Programs. Prior to our resignation as the advisor to CCIF in the third quarter of 2017, asset management revenue also increased or decreased depending on increases or decreases in the fair value of CCIF’s investment portfolio. For 2017, we receive asset management fees from the Managed REITs in shares of their common stock and from CESH I in cash. Prior to our resignation as the advisor to CCIF in the third quarter of 2017, we received asset management fees from CCIF in cash.

For the three and nine months ended September 30, ~~2016~~2017 as compared to the same periods in ~~2015,~~2016, asset management revenue increased by ~~$3.0~~$2.0 million and ~~$9.4~~$7.7 million, respectively, as a result of the growth in assets under management due to investment volume after September 30, ~~2015.~~2016. Asset management revenue increased by ~~$1.0~~$0.9 million and ~~$2.4~~$3.2 million, respectively, from CWI 2, ~~$1.0~~$0.5 million and ~~$2.2~~$3.1 million, respectively, from CCIF, $0.4 million and ~~$2.2~~$1.0 million, respectively, from CPA^®:18 – Global, ~~$0.4~~$0.3 million and ~~$2.0~~$0.7 million, respectively, from CESH I, and less than $0.1 million and $0.2 million, respectively, from CWI ~~1, and~~1. These increases were partially offset by decreases of $0.1 million and ~~$0.6~~$0.4 million, respectively, in asset management revenue from CPA^®:17 – ~~Global.~~Global, which sold 34 self-storage properties during 2016, resulting in a decrease in assets under management for that fund.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 6972

~~Reimbursable Costs from Affiliates~~

Reimbursable costs from affiliates represent costs incurred by us on behalf of the Managed Programs, consisting primarily of broker-dealer commissions and marketing and personnel costs, which are reimbursed by the Managed Programs and are reflected as a component of both revenues and expenses.

For the three and nine months ended September 30, 2016 as compared to the same periods in 2015, reimbursable costs from affiliates increased by $3.4 million and $18.0 million, respectively, primarily due to $2.2 million of commissions paid during the current year periods to broker-dealers related to CESH I’s private placement, increases of $1.5 million and $3.6 million, respectively, of commissions paid to broker-dealers related to the sale of two of the CCIF Feeder Funds’ shares, which began in the fourth quarter of 2015, and increases of $1.0 million and $17.5 million, respectively, of commissions paid to broker-dealers related to CWI 2’s initial public offering, which began in February 2015, partially offset by decreases of $0.7 million and $1.8 million, respectively, in personnel costs reimbursed to us by the Managed Programs and decreases of $0.5 million and $3.9 million, respectively, in commissions paid to broker-dealers related to the CPA^®~~:18 – Global initial public offering, which closed on April 2, 2015.~~

Structuring Revenue

We earn structuring revenue when we structure investments and debt placement transactions for the Managed ~~REITs and CESH I.~~Programs. Structuring revenue is dependent on investment activity, which is subject to significant period-to-period variation.

For the three months ended September 30, ~~2016~~2017 as compared to the same period in ~~2015,~~2016, structuring revenue ~~increased~~decreased by ~~$4.1 million, primarily due to an increase of $10.1 million in~~$2.5 million. Structuring revenue from CWI 2 ~~which completed three investments during the current year period,~~ and ~~an increase of $0.4 million in revenue from~~ CPA^®:17 – Global ~~partially offset~~decreased by ~~a decrease of $7.1~~$3.6 million ~~in revenue from CPA~~^®~~:18 – Global~~and $1.1 million, respectively, as a result of lower investment and debt placement volume during the current year period. Structuring revenue for the three months ended September 30, 2017 also includes a $2.6 million adjustment related to a development deal for one of the Managed Programs, in accordance with ASC 605, Revenue Recognition. These decreases were partially offset by an increase of $3.5 million in structuring revenue from CWI 1 and $1.1 million of structuring revenue recognized during the current year period from CESH I.

For the nine months ended September 30, ~~2016~~2017 as compared to the same period in ~~2015,~~2016, structuring revenue decreased by ~~$36.7~~$3.0 million. Structuring revenue from CWI 2 and CPA^®:18 – Global ~~CWI 1, and CPA~~^®~~:17 – Global~~ decreased by ~~$31.3 million, $12.3~~$5.4 million and ~~$6.1~~$4.2 million, respectively, as a result of lower investment and debt placement volume during the current year period. Structuring revenue for the nine months ended September 30, 2017 also includes a $2.6 million adjustment related to a development deal for one of the Managed Programs, in accordance with ASC 605, Revenue Recognition. These decreases were partially offset by $5.5 million of structuring revenue recognized during the current year period from CESH I and increases of $3.1 million and $0.7 million in structuring revenue from CPA^®:17 – Global and CWI 1, respectively.

Reimbursable Costs from Affiliates

Reimbursable costs from affiliates represent costs incurred by us on behalf of the Managed Programs. During their respective offering periods, these costs consisted primarily of broker-dealer commissions, distribution and shareholder servicing fees, and marketing and personnel costs, which were reimbursed by the Managed Programs and were reflected as a component of both revenues and expenses. As a result of our exit from all non-traded retail fundraising activities, we will no longer incur offering-related expenses, including broker-dealer commissions, distribution and shareholder servicing fees, and marketing costs, on behalf of the Managed Programs.

For the three months ended September 30, 2017 as compared to the same period in 2016, reimbursable costs from affiliates decreased by $8.3 million, primarily due to a decrease of $5.2 million of distribution and shareholder servicing fees and commissions paid to broker-dealers related to the sale of the CCIF Feeder Funds’ shares, $2.0 million of commissions paid to broker-dealers related to CESH I’s private placement, and $1.4 million in distribution and shareholder servicing fees and commissions paid to broker-dealers related to CWI 2’s initial public offering, in each case due to our exit from all non-traded retail fundraising during the current year period, as described above. These decreases were partially offset by an increase of ~~$12.7~~$0.4 million in ~~structuring revenue~~overhead reimbursed to us by the Managed Programs.

For the nine months ended September 30, 2017 as compared to the same period in 2016, reimbursable costs from affiliates decreased by $1.0 million, primarily due to a decrease of $16.8 million of distribution and shareholder servicing fees and commissions paid to broker-dealers related to the sale of the CCIF Feeder Funds’ shares. This decrease was partially offset by an increase of $15.2 million of distribution and shareholder servicing fees and commissions paid to broker-dealers related to CWI ~~2, which completed five investments during~~2’s initial public offering, and an increase of $0.3 million in overhead reimbursed to us by the ~~current year period.~~Managed Programs.

Dealer Manager Fees

As discussed in Note 3, we ~~earn~~earned a dealer manager fee, depending on the class of common stock sold, of $0.30 or $0.26 per share sold, for the ~~class~~Class A common stock and ~~class~~Class T common stock, respectively, in connection with CWI 2’s initial public offering, ~~which began~~through March 31, 2017, when CWI 2 suspended its offering in ~~February 2015. In addition, we~~order to determine updated estimated NAVs as of December 31, 2016. As a result, CWI 2 had new offering prices and new dealer manager fees of $0.36 and $0.31 per Class A and Class T Shares, respectively, for its offering through its closing on July 31, 2017. We received dealer manager fees ~~depending on the class~~ of ~~common stock sold, of $0.30 or $0.21 per share sold, for the class A common stock and class C common stock, respectively, in connection with CPA~~^®~~:18 – Global’s initial public offering, which commenced in May 2013 and closed in April 2015. We receive dealer manager fees of 2.75%~~2.50% - 3.0% based on the selling price of each share sold in connection with the offerings of the CCIF Feeder Funds, which began in the fourth quarter of 2015. CCIF 2016 T’s offering closed on April 28, 2017. We also ~~receive~~received dealer manager fees of up to 3.0% of gross offering proceeds based on the selling price of each limited partnership unit sold in connection with CESH I’s private placement, offering. We may re-allow a portion of the dealer manager fees to selected dealers in the offerings. Dealer manager fees that were not re-allowed were classified as Dealer manager fees from affiliates in the consolidated financial statements. Dealer manager fees earned are generally offset by costs incurred in connection with the offerings, which are included in Dealer manager fees and expenses in the consolidated financial statements.

For the three months ended September 30, 2016 as compared to the same period in 2015, dealer manager fees increased by $0.7 million, primarily due to an increase of $0.6 million in fees earned in connection with the sale of two of the CCIF Feeder Funds’ shares, and $0.4 million in fees earned in the current year period in connection with the sale of limited partnership units of CESH I in its private placement, which commenced in July ~~2016. The increases were partially offset by a decrease of $0.3 million~~2016 and closed in ~~fees earned in connection with the sale of CWI 2 shares in its initial public offering, which had lower fundraising during the current year period.~~July 2017.

For the nine months ended September 30, 2016 as compared to the same period in 2015, dealer manager fees increased by $2.7 million, primarily due to an increase of $2.2 million in fees earned in connection with the sale of CWI 2 shares in its initial public offering, an increase of $1.3 million in fees earned in connection with the sale of two of the CCIF Feeder Funds’ shares, and $0.4 million in fees earned in the current year period in connection with the sale of limited partnership units of CESH I in



	W. P. Carey 9/30/~~2016~~2017 10-Q – 7073

We re-allowed a portion of the dealer manager fees to selected dealers in the offerings and reflected those amounts as Dealer manager fees and expenses in the consolidated financial statements. As discussed above, on June 15, 2017, our Board approved a plan to exit all non-traded retail fundraising activities as of June 30, 2017, and as a result, we no longer receive dealer manager fees following the completion of those fundraising activities on July 31, 2017.

For the three and nine months ended September 30, 2017 as compared to the same periods in 2016, dealer manager fees decreased due to our exit from all non-traded retail fundraising activities.

Other Advisory Revenue

Under the limited partnership agreement we have with CESH I, we paid all organization and offering costs on behalf of CESH I, and instead of being reimbursed by CESH I on a dollar-for-dollar basis for those costs, we received limited partnership units of CESH I equal to 2.5% of its ~~private placement. The increases were partially offset~~gross offering proceeds through the closing of its offering on July 31, 2017.

For the three months ended September 30, 2017 as compared to the same period in 2016, other advisory revenue decreased by ~~a decrease~~$0.4 million, primarily due to the completion of ~~$1.2~~CESH I fundraising in July 2017 (Note 2).

For the nine months ended September 30, 2017 as compared to the same period in 2016, other advisory revenue increased by $0.4 million, ~~in fees earned~~primarily due to the limited partnership units of CESH I received in connection with ~~the sale of CPA~~^®~~:18 – Global shares~~CESH I’s private placement, which commenced in ~~its initial public offering, due to the closing of the offering on April~~July 2016 and closed in July 2017 (Note 2 ~~2015.~~).

General and Administrative

Beginning with the third quarter of 2017, personnel and rent expenses included within general and administrative expenses that are recorded by our Investment Management segment will be allocated based on time incurred by our personnel for the Owned Real Estate and Investment Management segments. All other overhead costs are charged to our Owned Real Estate segment based on the trailing 12-month reported revenues of the Managed Programs and us.

As discussed in Note 3, certain personnel costs ~~(i.e., those not related to our senior management, our legal transactions team, or our investments team)~~ and overhead costs are charged to the CPA^® REITs ~~and our Owned Real Estate Segment~~ based on the trailing 12-month reported revenues of the Managed Programs and us. ~~Personnel costs related to our senior management, our legal transactions team, and our investments team are allocated to our Owned Real Estate Segment based on the trailing 12-month investment volume.~~ We allocate certain personnel ~~costs (excluding our senior management and investments team)~~ and overhead costs to the CWI REITs ~~the Managed BDCs, and CESH I~~ based on the time incurred by our personnel. We allocate certain personnel costs based on the time incurred by our personnel to CESH I and, prior to our resignation as the advisor to CCIF in the third quarter of 2017, to the Managed BDCs.

For the three and nine months ended September 30, ~~2016~~2017 as compared to the same periods in ~~2015,~~2016, general and administrative expenses in our Investment Management segment, which excludes restructuring and other compensation expenses as described below, decreased by ~~$4.3~~$2.3 million and ~~$9.4~~$6.6 million, respectively, primarily due to an overall decline in compensation expense ~~and professional fees~~ as a result of the reduction in headcount, including the RIF and the impact of our exit from all active non-traded retail fundraising activities as of June 30, 2017, and other cost savings initiatives implemented during ~~2016. Also contributing to~~2016 as well as the ~~decrease were commissions to investment officers, which decreased by $0.4 million~~change in methodology for allocation of expenses between our Owned Real Estate and ~~$5.1 million, respectively, resulting from lower investment volume on behalf of the Managed REITs in the current year periods.~~Investment Management segments (Note 1).

Subadvisor Fees

As discussed in Note 3, we earn investment management revenue from CWI 1, CWI 2, and CPA^®:18 – ~~Global.~~Global, and, prior to our resignation as advisor, from CCIF. Pursuant to the terms of the subadvisory agreements we have with the third-party subadvisors in connection with both CWI 1 and CWI 2, we pay a subadvisory fee equal to 20% of the amount of fees paid to us by CWI 1 and 25% of the amount of fees paid to us by CWI 2, including but not limited to: acquisition fees, asset management fees, loan refinancing fees, property management fees, and subordinated disposition fees, each as defined in the advisory agreements we have with each of CWI 1 and CWI 2. We also pay to ~~the~~each subadvisor 20% and 25% of the net proceeds resulting from any sale, financing, or recapitalization or sale of securities of CWI 1 and CWI 2, respectively, by us, the advisor. In addition, in connection with the multi-family properties acquired on behalf of CPA^®:18 – Global, we entered into agreements with third-party advisors for the ~~acquisition and~~ day-to-day management of the properties, for which we pay ~~30% of the initial acquisition fees and~~ 100% of asset management fees paid to us by CPA^®:18 – Global. Pursuant to the terms of the subadvisory agreement we had with the third-party subadvisor in connection with CCIF (prior to our resignation as the advisor to CCIF in the third quarter of 2017), we paid a subadvisory fee equal to 50% of the asset management fees and organization and offering costs paid to us by CCIF.

For the three and nine months ended September 30, 2016 as compared to the same periods in 2015, subadvisor fees increased by $3.1 million and $1.5 million, respectively, primarily due to increases of $3.0 million and $4.2 million, respectively, as a result of an increase in fees earned from CWI 2, which completed three and five investments during the three and nine months ended September 30, 2016, respectively, and fees we earned from CCIF during the current year periods of $0.6 million and $1.1 million, respectively. These increases were partially offset by decreases of $0.7 million and $1.8 million, respectively, as a result of decreases in fees earned from CPA^®:18 – Global due to lower multi-family property investment volume in the current year periods as compared to the same periods in the prior year. In addition, for the nine months ended September 30, 2016 as compared to the same period in 2015, subadvisor fees decreased by $2.1 million as a result of decreases in fees earned from CWI 1 due to lower investment volume in the current year period as compared to the same period in the prior year.

~~Dealer Manager Fees and Expenses~~

Dealer manager fees earned in the public offerings that we manage for the Managed Programs are generally offset by costs incurred in connection with the offerings, which are included in Dealer manager fees and expenses in the consolidated financial statements.

For the three months ended September 30, 2016 as compared to the same period in 2015, dealer manager fees and expenses decreased by $0.2 million, primarily due to a decrease of $1.8 million in expenses paid in connection with the CWI 2 initial public offering due to lower fundraising during the current year period, partially offset by an increase of $0.9 million in expenses paid in connection with the sale of two of the CCIF Feeder Funds’ shares and $0.7 million in expenses paid during the current year period in connection with the sale of limited partnership units of CESH I in its private placement, which commenced in July 2016.

For the nine months ended September 30, 2016 as compared to the same period in 2015, dealer manager fees and expenses increased by $1.1 million, primarily due to an increase of $2.2 million in expenses paid in connection with the sale of two of the CCIF Feeder Funds’ shares, an increase of $1.0 million in expenses paid in connection with the CWI 2 initial public offering,



	W. P. Carey 9/30/~~2016~~2017 10-Q – 7174

which began to admit stockholders on May 15, 2015, and $0.7 million in expenses paid during the current year period in connection with the sale of limited partnership units of CESH I in its private placement. These increases were partially offset by expenses of $2.9 million paid during the prior year period in connection with the sale of CPA^®~~:18 – Global shares in its initial public offering, which closed on April 2, 2015.~~

~~Property Acquisition and Other Expenses~~

~~2016~~ — For the nine months ended September 30, 2016, we incurred $2.4 million of advisory expenses and professional fees within our Investment Management segment in connection with the formal strategic review that we completed in May 2016.

~~2015~~ ~~— For both~~ the three and nine months ended September 30, ~~2015, we~~2017 as compared to the same periods in 2016, subadvisor fees increased by $0.4 million and $1.6 million, respectively, primarily due to increases of $0.7 million and $0.2 million, respectively, as a result of higher fees earned from CWI 1 and increases of $0.2 million and $1.5 million, respectively, as a result of higher fees earned from CCIF, each of which paid higher asset management fees to us during the current year periods as compared to the prior year periods. For the three and nine months ended September 30, 2017 as compared to the same periods in 2016, these increases were partially offset by decreases of $0.5 million and $0.2 million, respectively, as a result of lower fees earned from CWI 2 due to lower investment and debt placement volume during the current year periods.

Stock-based Compensation Expense

For the nine months ended September 30, 2017 as compared to the same period in 2016, stock-based compensation expense allocated to our Investment Management segment decreased by $0.7 million primarily due to the reduction in RSUs and PSUs outstanding as a result of ~~advisory expenses and professional fees~~a reduction in ~~connection with~~headcount related to our ~~formal strategic review.~~exit from all non-traded retail fundraising activities as of June 30, 2017 (Note 12).

Restructuring and Other Compensation

For the three and nine months ended September 30, 2017, we recorded total restructuring expenses of $1.4 million and $9.1 million, respectively, related to our Board’s decision to exit all non-traded retail fundraising activities as of June 30, 2017. These expenses, all of which were allocated to the Investment Management segment, consist primarily of severance costs (Note 1, Note 12).

For the nine months ended September 30, 2016, we recorded total restructuring and other compensation expenses of $11.9 million, of which $7.5 million was allocated to our Investment Management segment. Included in the total was $5.1 million of severance related to ~~our~~the employment agreement with our former ~~Chief Executive Officer~~chief executive officer and $6.8 million related to severance, stock-based compensation, and other costs incurred as part of ~~employee terminations and reductions in headcount~~the RIF during that period (Note 12).

~~Equity in Earnings (Losses) of Equity Method Investment in CCIF~~Other Expenses

~~In December 2014, we acquired a $25.0 million noncontrolling interest in CCIF (Note 6~~).

~~2016~~ — For ~~the three and~~ nine months ended September 30, 2016, we ~~recognized equity~~incurred advisory expenses and professional fees of $2.4 million within our Investment Management segment in connection with the formal strategic review that we completed in May 2016.



	W. P. Carey 9/30/2017 10-Q– 75

Equity in Earnings of Equity Method Investments in the Managed Programs

Equity in earnings of equity method investments in the Managed Programs is recognized in accordance with the investment ~~in CCIF~~agreement for each of ~~$1.1 million and $1.5 million, respectively, representing~~ our ~~portion~~equity method investments. In addition, we are entitled to receive distributions of Available Cash (Note 3) from the operating partnerships of each of the Managed REITs. The net income ~~recognized by CCIF.~~

~~2015~~ ~~— For~~of our unconsolidated investments fluctuates based on the ~~three~~timing of transactions, such as new leases and ~~nine months ended September 30, 2015, we recognized equity~~property sales, as well as the level of impairment charges. Equity in ~~losses~~earnings of our equity method investment in CCIF fluctuated based on changes in the fair value of ~~$0.9 million and $0.8 million, respectively, representing our portion of the net losses recognized~~investments owned by CCIF. Following our resignation as the advisor to CCIF, effective September 11, 2017, earnings from our cost method investment in CCIF are included in Other income and (expenses) in the consolidated financial statements (Note 7). The following table presents the details of our Equity in earnings of equity method investments in the Managed Programs (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Equity in earnings of equity method investments in the Managed Programs:
Equity in earnings of equity method investments in the Managed Programs ^(a)	$	531	$	2,697	$	3,719	$	6,640
Distributions of Available Cash:^(b)
CPA^®:17 – Global	5,459		5,276		19,240		17,803
CPA^®:18 – Global	2,196		1,662		6,057		5,319
CWI 1	2,498		2,838		5,743		6,931
CWI 2	1,894		1,100		3,528		1,965
Equity in earnings of equity method investments in the Managed Programs	$	12,578	$	13,573	$	38,287	$	38,658

__________

(a)

Decreases for the three and nine months ended September 30, 2017 as compared to the same periods in 2016 were primarily due to decreases of $1.1 million and $3.0 million, respectively, from our investment in shares of common stock of CPA^®:17 – Global, which recognized significant gains on the sale of real estate during each of the prior year periods. In addition, we recognized equity in earnings of our equity method investment in CCIF of $1.1 million during the three months ended September 30, 2016. We did not recognize any such earnings during the three months ended September 30, 2017.

(b)

We are entitled to receive distributions of our share of earnings up to 10% of the Available Cash from the operating partnerships of each of the Managed REITs, as defined in their respective operating partnership agreements (Note 3). Distributions of Available Cash received and earned from the Managed REITs increased in the aggregate, primarily as a result of new investments entered into by the Managed REITs during 2017 and 2016.

Other Income and (Expenses)

For both the three and nine months ended September 30, 2016, we recognized a gain of $1.2 million in our Investment Management segment on the deconsolidation of CESH I (Note 2).

(Provision for) Benefit from Income Taxes

~~2016~~ — For the three months ended September 30, 2017 as compared to the same period in 2016, provision for income taxes within our Investment Management segment decreased by $2.4 million, primarily due to the impact of lower pre-tax income recognized by our TRSs and a deferred windfall tax benefit of $0.6 million recognized during the current year period as a result of the adoption of ASU 2016-09 during the first quarter of 2017, under which such benefits are now reflected as a reduction to provision for income taxes (Note 2).

For the nine months ended September 30, 2017, we recorded a benefit from income taxes of $3.8 million, compared to a provision for income taxes of $2.3 million recognized during the same period in 2016, wewithin our Investment Management segment. We recorded a benefit from income taxes during the current year period primarily due to a deferred windfall tax benefit of $3.6 million as a result of the adoption of ASU 2016-09 during the first quarter of 2017, under which such benefits are now reflected as a reduction to provision for income taxes (Note 2). We recognized a provision for income taxes ~~of $2.6 million and $2.3 million, respectively,~~during the prior year period primarily due to ~~pre-tax income recognized by TRSs in the Investment Management segment. The provision for income taxes for the nine months ended September 30, 2016 was partially offset by the impact of~~ an out-of-period adjustment recorded during the period (Note 2).

~~2015~~ — For the three months ended September 30, 2015, we recognized a benefit from income taxes of $1.9 million, primarily due to deferred income tax benefits. For the nine months ended September 30, 2015, we recognized a provision for income taxes of $12.5 million, primarily due to pre-tax income recognized by TRSs in the Investment Management segment, partially offset by deferred income tax benefits.



	W. P. Carey 9/30/2017 10-Q– 76

Liquidity and Capital Resources

Sources and Uses of Cash During the Period

We use the cash flow generated from our investments primarily to meet our operating expenses, service debt, and fund distributions to stockholders. Our cash flows fluctuate periodically due to a number of factors, which may include, among other things: the timing of our equity and debt offerings; the timing of purchases and sales of real estate; the timing of the receipt of proceeds from, and the repayment of, mortgage loans and receipt of lease revenues; the receipt of the annual installment of deferred acquisition revenue and interest thereon from the CPA^® REITs; the receipt of the asset management fees in either shares of the ~~Managed Programs’~~ common stock or limited partnership units of the Managed Programs or cash; the timing and characterization of distributions from equity



	~~W. P. Carey 9/30/2016 10-Q~~– 72

investments in the Managed Programs and real estate; the receipt of distributions of Available Cash from the Managed REITs; and changes in foreign currency exchange rates. Despite these fluctuations, we believe that we will generate sufficient cash from operations ~~and from equity distributions in excess of equity income in real estate~~ to meet our normal recurring short-term and long-term liquidity needs. We may also use existing cash resources, ~~the proceeds of mortgage loans,~~ unused capacity under our ~~Revolver,~~Senior Unsecured Credit Facility, proceeds from dispositions of properties, proceeds of mortgage loans, net contributions from noncontrolling interests, and the issuance of additional debt or equity securities, such as sales of our stock through our ATM program, in order to meet these needs. We assess our ability to access capital on an ongoing basis. Our sources and uses of cash during the period are described below.

Operating Activities — Net cash provided by operating activities increased by ~~$30.6~~$4.4 million during the nine months ended September 30, ~~2016~~2017 as compared to the same period in ~~2015,~~2016, primarily due to an increase in cash flow generated from properties acquired during 2016 and 2017, a decrease in interest expense, and lower general and administrative expenses in the current year period. These increases were partially offset by lease termination income received in connection with the sale of a property during the ~~nine months ended September 30, 2016, an increase in operating cash flow generated from the 12 investments we acquired or placed into service since January 1, 2015,~~prior year period and ~~an increase in Distributions of Available Cash received from the Managed REITs, partially offset by~~ a decrease in ~~structuring revenue received in~~ cash ~~from the Managed REITs~~flow as a result of ~~their lower investment volume~~property dispositions during ~~the current year period.~~2016 and 2017.

Investing Activities — Our investing activities are generally comprised of real estate-related transactions (purchases and sales) and capitalized property-related costs.

During the nine months ended September 30, ~~2016,~~2017, we used ~~$385.8~~$123.5 million to ~~acquire two investments and $41.9~~fund short-term loans to the Managed Programs (Note 3), while $229.7 million ~~primarily to fund expansions on our existing properties.~~of such loans made by us in prior periods were repaid during the current year period. We sold ~~ten~~11 properties and a parcel of vacant land for net proceeds of ~~$392.9~~$102.5 million. We used ~~$7.1~~$36.7 million primarily to fund expansions on our existing properties. In addition, we used $10.8 million to invest in capital expenditures for owned real ~~estate.~~estate and $6.0 million to acquire an investment (Note 4). We also received ~~$3.5~~$6.5 million in distributions from equity investments in the Managed Programs and real estate in excess of cumulative equity income.

Financing Activities — During the nine months ended September 30, ~~2016,~~2017, gross borrowings under our Senior Unsecured Credit Facility were ~~$720.6 million~~$1.2 billion and repayments were ~~$837.6 million.~~$1.6 billion, which included the impact of the amendment and restatement of our Senior Unsecured Credit Facility in February 2017 (Note 10). We received ~~$348.9~~the equivalent of $530.5 million in net proceeds from the issuance of the ~~4.25%~~2.25% Senior Notes in ~~September 2016,~~January 2017, which we used primarily to pay down the outstanding balance on our ~~Revolver~~Unsecured Revolving Credit Facility at that ~~time.~~time (Note 10). In connection with the issuances of these notes and the amendment and restatement our Senior Unsecured Credit Facility in February 2017 (Note 10), we incurred financing costs totaling ~~$2.9~~$12.7 million. We also made ~~prepaid~~scheduled and ~~scheduled~~prepaid non-recourse mortgage loan principal payments of ~~$193.0~~$303.5 million and ~~$113.4~~$157.4 million, respectively. WeAdditionally, we paid distributions to stockholders totaling ~~$310.5~~$322.4 million related to the fourth quarter of ~~2015~~2016, the first quarter of 2017, and the ~~first and~~ second ~~quarters~~quarter of ~~2016,~~2017; and also paid distributions of ~~$13.4~~$16.9 million to affiliates that hold noncontrolling interests in various entities with us. We received ~~$84.1~~contributions from noncontrolling interests totaling $90.5 million, primarily from an affiliate in connection with the repayment at maturity of mortgage loans encumbering the Hellweg 2 Portfolio (Note 10). In addition, we received $22.8 million in net proceeds from the issuance of shares under our ATM ~~program.~~program (Note 13).



	W. P. Carey 9/30/~~2016~~2017 10-Q – 7377

Summary of Financing

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


	September 30, 2016			December 31, 2015			September 30, 2017			December 31, 2016
Carrying Value
Fixed rate:
Unsecured Senior Notes ^(a)							$	2,455,383		$	1,807,200
Non-recourse mortgages ^(a)	$	1,577,202		$	1,942,528		985,118			1,406,222
Senior Unsecured Notes ^(a)	1,837,216			1,476,084
	3,414,418			3,418,612			3,440,501			3,213,422
Variable rate:
Revolver	378,358			485,021
Term Loan Facility ^(a)	249,915			249,683
Non-recourse debt ^(a):
Amount subject to interest rate swaps and caps	198,191			283,441
Non-recourse mortgages	150,938			43,452
Unsecured Term Loans ^(a)							382,191			249,978
Unsecured Revolving Credit Facility							224,213			676,715
Non-recourse mortgages ^(a):
Amount subject to interest rate swaps and cap							149,824			158,765
Floating interest rate mortgage loans							118,109			141,934
	977,402			1,061,597			874,337			1,227,392
	$	4,391,820		$	4,480,209		$	4,314,838		$	4,440,814

Percent of Total Debt
Fixed rate	78		%	76		%	80		%	72		%
Variable rate	22		%	24		%	20		%	28		%
	100		%	100		%	100		%	100		%
Weighted-Average Interest Rate at End of Period
Fixed rate	4.5		%	4.8		%	3.9		%	4.5		%
Variable rate ^(b)	1.7		%	2.1		%	1.8		%	1.9		%

__________

(a)

In accordance with ASU 2015-03, we reclassified deferred financing costs from Other assets, net to Non-recourse debt, net, Senior Unsecured Notes, net, and Senior Unsecured Credit Facility - Term Loan, net as of December 31, 2015 (~~Note 2~~). Aggregate debt balance includes unamortized deferred financing costs totaling ~~$13.9~~$16.2 million and ~~$12.6~~$13.4 million as of September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, and unamortized discount totaling $12.9 million and $8.0 million as of September 30, 2017 and December 31, 2016, respectively.


(b)	The impact of our derivative instruments is reflected in the weighted-average interest rates.

Cash Resources

At September 30, ~~2016,~~2017, our cash resources consisted of the following:

~~Cash~~cash and cash equivalents totaling ~~$209.5~~$169.8 million. Of this amount, ~~$49.2~~$84.3 million, at then-current exchange rates, was held in foreign subsidiaries, and we could be subject to restrictions or significant costs should we decide to repatriate these amounts;

~~Our Revolver,~~our Unsecured Revolving Credit Facility, with unused capacity of ~~$1.1~~$1.3 billion, excluding amounts reserved for outstanding letters of credit; and

~~Unleveraged~~unleveraged properties that had an aggregate asset carrying value of ~~$3.0~~$4.4 billion at September 30, ~~2016,~~2017, although there can be no assurance that we would be able to obtain financing for these properties.

We also ~~have the ability to~~ access the capital markets ~~in the form of~~when necessary through additional ~~bond~~debt and equity offerings, such as the ~~$350.0~~€500.0 million ~~4.25%~~of 2.25% Senior Notes that we issued in ~~September 2016~~January 2017 (Note 10) and our ATM program. During the three and nine months ended September 30, 2017, we issued 15,500 and 345,253 shares, respectively, of our common stock under the current ATM program ~~if necessary.~~at a weighted-average price of $67.05 and $67.78 per share, respectively, for net proceeds of $0.9 million and $22.8 million, respectively. During the three and nine months ended September 30, 2016, we issued 968,535 and 1,249,836 shares, respectively, of our common stock under the prior ATM program at a weighted-average price of $68.54 and $68.52 per share, ~~respectively, for net proceeds of $65.4 million and $84.4 million, respectively (Note 13). As of September 30, 2016, $314.4 million remained available for issuance under our ATM offering program.~~



	W. P. Carey 9/30/~~2016~~2017 10-Q – 7478

respectively, for net proceeds of $65.2 million and $84.1 million, respectively. As of September 30, 2017, $376.6 million remained available for issuance under our current ATM program (Note 13).

Senior Unsecured Credit Facility

Our Senior Unsecured Credit Facility is more fully described in Note 10. A summary of ~~principal outstanding borrowings on~~ our Senior Unsecured Credit Facility is provided below (in thousands):

September 30, 2016 December 31, 2015
Outstanding Balance Maximum Available Outstanding Balance Maximum Available
Revolver $ 378,358
$ 1,500,000
$ 485,021
$ 1,500,000
Term Loan Facility ^(a)
250,000
250,000
250,000
250,000



	September 30, 2017				December 31, 2016
	Outstanding Balance		Maximum Available		Outstanding Balance		Maximum Available
Unsecured Term Loans, net ^(a)	$	383,695	$	383,695	$	250,000	$	250,000
Unsecured Revolving Credit Facility	224,213		1,500,000		676,715		1,500,000

__________


(a)	Outstanding balance excludes unamortized discount of $1.3 million at September 30, 2017. Outstanding balance also excludes unamortized deferred financing costs of ~~$0.1~~$0.2 million and ~~$0.3~~less than $0.1 million at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

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

Cash Requirements

During the next 12 months, we expect that our cash requirements will include payments to acquire new investments, funding capital commitments such as build-to-suit projects, paying distributions to our stockholders and to our affiliates that hold noncontrolling interests in entities we control, making scheduled interest payments on the Unsecured Senior ~~Unsecured~~ Notes, ~~and~~ scheduled mortgage loan principal payments, including ~~prepayments or~~ mortgage balloon payments ~~totaling $574.4 million~~ on our consolidated mortgage loan obligations, and prepayments of our consolidated mortgage loan obligations, as well as other normal recurring operating expenses. ~~In addition, our Term Loan Facility matures in January 2017, unless we exercise an option to extend the maturity by another year.~~

We expect to fund future investments, build-to-suit commitments, any capital expenditures on existing properties, scheduled debt maturities on non-recourse mortgage loans and any loans to certain of the Managed Programs (Note 3) through cash generated from operations, cash received from dispositions of properties, the use of our cash reserves or unused amounts on our ~~Revolver,~~Unsecured Revolving Credit Facility, issuances of shares through our ATM program, and/or additional equity or debt offerings.

Our liquidity would be adversely affected by unanticipated costs and greater-than-anticipated operating expenses. To the extent that our working capital reserve is insufficient to satisfy our cash requirements, additional funds may be provided from cash from operations and from equity distributions in excess of equity income in real estate to meet our normal recurring short-term and long-term liquidity needs. We may also use existing cash resources, the proceeds of mortgage loans, unused capacity on our ~~Revolver,~~Unsecured Revolving Credit Facility, net contributions from noncontrolling interests, and the issuance of additional debt or equity securities, such as through our ATM program, to meet these needs.



	W. P. Carey 9/30/2017 10-Q– 79

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 and lease obligations) at September 30, ~~2016~~2017 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		Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Non-recourse debt — principal ^(a)	$	1,927,384	$	635,690	$	416,588	$	404,178	$	470,928
Senior Unsecured Notes — principal ^{(a) (b)}	1,858,050		—		—		—		1,858,050
Unsecured Senior Notes — principal ^{(a) (b)}											$	2,480,600	$	—	$	—	$	—	$	2,480,600
Non-recourse mortgages — principal ^(a)											1,255,414		280,392		295,517		322,311		357,194
Senior Unsecured Credit Facility — principal ^(a) ^(c)	628,358		250,000		378,358		—		—		607,908		—		—		607,908		—
Interest on borrowings ^(d)	858,976		155,615		244,010		208,704		250,647		826,420		147,478		270,397		223,095		185,450
Operating and other lease commitments ^(e)	170,207		8,399		16,711		13,625		131,472		161,067		8,439		17,015		9,536		126,077
Capital commitments and tenant expansion allowances ^(f)	135,616		71,172		22,015		38,915		3,514		139,654		81,807		53,748		586		3,513
Restructuring and other compensation commitments ^(g)	4,313		3,201		1,112		—		—		4,829		4,532		297		—		—
	$	5,582,904	$	1,124,077	$	1,078,794	$	665,422	$	2,714,611	$	5,475,892	$	522,648	$	636,974	$	1,163,436	$	3,152,834

__________



	~~W. P. Carey 9/30/2016 10-Q~~– 75

(a)

Excludes unamortized deferred financing costs totaling ~~$13.9~~$16.2 million, the unamortized discount on the Unsecured Senior ~~Unsecured~~ Notes of ~~$8.2~~$10.2 million in aggregate, the unamortized discount on the Unsecured Term Loans of $1.3 million, and the unamortized fair market value adjustment of ~~$0.1~~$1.4 million resulting from the assumption of property-level debt in connection with both the CPA^®:15 Merger and the CPA^®:16 Merger (Note 10).


(b)	Our Unsecured Senior ~~Unsecured~~ Notes are scheduled to mature from 2023 through 2026.


(c)	Our ~~Revolver is scheduled to mature on January 31, 2018 and our Term Loan~~Unsecured Revolving Credit Facility is scheduled to mature on ~~January 31, 2017~~February 22, 2021 unless otherwise extended pursuant to ~~their~~its terms. Our Unsecured Term Loans are scheduled to mature on February 22, 2022.


(d)	Interest on unhedged variable-rate debt obligations was calculated using the applicable annual variable interest rates and balances outstanding at September 30, ~~2016.~~2017.

(e)

Operating and other lease commitments consist primarily of rental obligations under ground leases and the future minimum rents payable on the leases for our principal offices. Pursuant to their respective advisory agreements with us, we are reimbursed by the Managed Programs for their share of overhead costs, which includes a portion of those future minimum rent amounts. Our operating lease commitments are presented net of ~~$8.7~~$11.3 million, based on the allocation percentages as of September 30, ~~2016,~~2017, which we estimate the Managed Programs will reimburse us for in ~~full.~~full (Note 3).


(f)	Capital commitments include (i) ~~$118.0~~$109.6 million related to build-to-suit expansions and (ii) ~~$16.4~~$30.1 million related to unfunded tenant improvements, including certain discretionary ~~commitments, and (iii) $1.2 million related to other construction~~ commitments.


(g)	Represents severance-related obligations to our former ~~Chief Executive Officer~~chief executive officer and other ~~former~~ employees (Note 12).

Amounts in the table above that relate to our foreign operations are based on the exchange rate of the local currencies at September 30, ~~2016,~~2017, which consisted primarily of the euro. At September 30, ~~2016,~~2017, we had no material capital lease obligations for which we were the lessee, either individually or in the aggregate.

Supplemental Financial Measures

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

Adjusted Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc., or 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



	W. P. Carey 9/30/2017 10-Q– 80

REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to nor a substitute for net income or loss as determined under GAAP.

We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004. 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~~jointly owned investments. Adjustments for unconsolidated partnerships and ~~jointly-owned~~jointly owned investments are calculated to reflect FFO. Our FFO calculation complies with NAREIT’s policy described above.

We modify the NAREIT computation of FFO to include other adjustments to GAAP net income to adjust for certain non-cash charges such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rents, stock compensation, gains or losses from extinguishment of debt and deconsolidation of subsidiaries, and unrealized foreign currency exchange gains and losses. Our assessment of our operations is focused on long-term sustainability and not on such non-cash items, which may cause short-term fluctuations in net income but have no impact on cash flows. Additionally, we exclude non-core income and expenses such as certain lease termination income, ~~acquisition expenses,~~ restructuring and other compensation-related expenses resulting from a reduction in headcount and ~~employment~~employee severance arrangements, and other expenses (which includes expenses related to ~~our~~the formal strategic ~~review.~~review that we completed in May 2016 and accruals for estimated one-time legal settlement expenses). We also exclude realized gains/losses on foreign exchange transactions ~~other~~(other than those realized on the settlement of foreign currency ~~derivatives,~~derivatives), which are not considered fundamental attributes of our business plan and do not affect our overall long-term operating performance. We refer to our modified definition of FFO as AFFO. We



	~~W. P. Carey 9/30/2016 10-Q~~– 76

exclude these items from GAAP net income to arrive at AFFO as they are not the primary drivers in our decision making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs which are currently not engaged in acquisitions, mergers, and restructuring which are not part of our normal business operations. We use AFFO as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies, and determine executive compensation.

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



	W. P. Carey 9/30/~~2016~~2017 10-Q – 7781

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


��	Three Months Ended September 30,						Nine Months Ended September 30,
													Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Net income attributable to W. P. Carey	$	110,943		$	21,745		$	220,043		$	121,209		$	80,278		$	110,943		$	202,080		$	220,043
Adjustments:
Depreciation and amortization of real property	61,396			74,050			209,449			201,629			62,621			61,396			185,439			209,449
Gain on sale of real estate, net	(49,126		)	(1,779		)	(68,070		)	(2,980		)	(19,257		)	(49,126		)	(22,732		)	(68,070		)
Impairment charges	14,441			19,438			49,870			22,711			—			14,441			—			49,870
Proportionate share of adjustments for noncontrolling interests to arrive at FFO	(3,254		)	(2,632		)	(8,541		)	(7,925		)	(2,692		)	(3,254		)	(7,795		)	(8,541		)
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO	1,354			1,293			3,994			3,867
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO													866			1,354			4,416			3,994
Total adjustments	24,811			90,370			186,702			217,302			41,538			24,811			159,328			186,702
FFO attributable to W. P. Carey — as defined by NAREIT	135,754			112,115			406,745			338,511
FFO attributable to W. P. Carey (as defined by NAREIT)													121,816			135,754			361,408			406,745
Adjustments:
Above- and below-market rent intangible lease amortization, net ^(a)	12,564			10,184			23,851			37,154			12,459			12,564			37,273			23,851
Straight-line and other rent adjustments ^(b)	(5,116		)	(1,832		)	(34,262		)	(7,839		)
Other amortization and non-cash items ^{(c) (d) (e)}	(4,897		)	(2,248		)	(7,695		)	(755		)
Other amortization and non-cash items ^{(b) (c)}													6,208			(4,897		)	14,995			(7,695		)
Stock-based compensation	4,356			3,966			14,964			16,063			4,635			4,356			14,649			14,964
Tax benefit – deferred	(2,999		)	(1,412		)	(22,522		)	(4,530		)
Loss (gain) on extinguishment of debt	2,072			(2,305		)	3,885			(2,305		)
Realized losses on foreign currency	1,559			367			2,569			228
Amortization of deferred financing costs ^(d)	1,007			749			2,271			2,025
Property acquisition and other expenses ^(f)	—			4,760			5,359			12,333
Restructuring and other compensation ^(g)	—			—			11,925			—
Straight-line and other rent adjustments ^(d)													(3,212		)	(5,116		)	(9,677		)	(34,262		)
Amortization of deferred financing costs													2,184			1,007			6,126			2,271
Loss on extinguishment of debt													1,566			2,072			35			3,885
Restructuring and other compensation ^(e)													1,356			—			9,074			11,925
Tax benefit — deferred													(1,234		)	(2,999		)	(8,167		)	(22,522		)
Realized (gains) losses on foreign currency													(449		)	1,559			(424		)	2,569
Other expenses ^{(f) (g)}													65			—			1,138			5,359
Allowance for credit losses	—			—			7,064			—			—			—			—			7,064
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO	261			2,460			741			5,120
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at AFFO													3,064			261			5,592			741
Proportionate share of adjustments for noncontrolling interests to arrive at AFFO	(90		)	(156		)	1,278			(355		)	(216		)	(90		)	(1,105		)	1,278
Total adjustments	8,717			14,533			9,428			57,139			26,426			8,717			69,509			9,428
AFFO attributable to W. P. Carey	$	144,471		$	126,648		$	416,173		$	395,650		$	148,242		$	144,471		$	430,917		$	416,173

Summary
FFO attributable to W. P. Carey — as defined by NAREIT	$	135,754		$	112,115		$	406,745		$	338,511
FFO attributable to W. P. Carey (as defined by NAREIT)													$	121,816		$	135,754		$	361,408		$	406,745
AFFO attributable to W. P. Carey	$	144,471		$	126,648		$	416,173		$	395,650		$	148,242		$	144,471		$	430,917		$	416,173



	W. P. Carey 9/30/~~2016~~2017 10-Q – 7882

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


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Net income from Owned Real Estate attributable to W. P. Carey(h)	$	99,972		$	20,598		$	211,922		$	101,818		$	56,492		$	87,497		$	137,990		$	174,736
Adjustments:
Depreciation and amortization of real property	61,396			74,050			209,449			201,629			62,621			61,396			185,439			209,449
Gain on sale of real estate, net	(49,126		)	(1,779		)	(68,070		)	(2,980		)	(19,257		)	(49,126		)	(22,732		)	(68,070		)
Impairment charges	14,441			19,438			49,870			22,711			—			14,441			—			49,870
Proportionate share of adjustments for noncontrolling interests to arrive at FFO	(3,254		)	(2,632		)	(8,541		)	(7,925		)	(2,692		)	(3,254		)	(7,795		)	(8,541		)
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO	1,354			1,293			3,994			3,867
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO													866			1,354			4,416			3,994
Total adjustments	24,811			90,370			186,702			217,302			41,538			24,811			159,328			186,702
FFO attributable to W. P. Carey — as defined by NAREIT — Owned Real Estate	124,783			110,968			398,624			319,120
FFO attributable to W. P. Carey (as defined by NAREIT) — Owned Real Estate ^(h)													98,030			112,308			297,318			361,438
Adjustments:
Above- and below-market rent intangible lease amortization, net ^(a)	12,564			10,184			23,851			37,154			12,459			12,564			37,273			23,851
Straight-line and other rent adjustments ^(b)	(5,116		)	(1,832		)	(34,262		)	(7,839		)
Other amortization and non-cash items ^{(c) (d) (e)}	(4,356		)	(2,353		)	(7,587		)	(771		)
Tax benefit – deferred	(3,387		)	(28		)	(19,712		)	(3,821		)
Loss (gain) on extinguishment of debt	2,072			(2,305		)	3,885			(2,305		)
Other amortization and non-cash items ^{(b) (c)}													6,808			(4,356		)	15,855			(7,587		)
Straight-line and other rent adjustments ^(d)													(3,212		)	(5,116		)	(9,677		)	(34,262		)
Tax benefit — deferred													(2,694		)	(3,387		)	(5,121		)	(19,712		)
Amortization of deferred financing costs													2,184			1,007			6,126			2,271
Stock-based compensation	1,572			1,468			4,316			5,943			1,880			1,572			4,733			4,316
Realized losses on foreign currency	1,559			321			2,518			164
Amortization of deferred financing costs ^(d)	1,007			749			2,271			2,025
Property acquisition and other expenses ^(f)	—			3,642			2,975			11,213
Loss on extinguishment of debt													1,566			2,072			35			3,885
Realized (gains) losses on foreign currency													(454		)	1,559			(441		)	2,518
Other expenses ^{(f) (g)}													65			—			1,138			2,975
Allowance for credit losses	—			—			7,064			—			—			—			—			7,064
Restructuring and other compensation ^(g)(e)	—			—			4,413			—			—			—			—			4,413
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO	884			1,222			1,610			3,882
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at AFFO ^(h)													(79		)	(103		)	(605		)	(390		)
Proportionate share of adjustments for noncontrolling interests to arrive at AFFO	(90		)	(156		)	1,278			(355		)	(216		)	(90		)	(1,105		)	1,278
Total adjustments	6,709			10,912			(7,380		)	45,290			18,307			5,722			48,211			(9,380		)
AFFO attributable to W. P. Carey — Owned Real Estate	$	131,492		$	121,880		$	391,244		$	364,410
AFFO attributable to W. P. Carey — Owned Real Estate ^(h)													$	116,337		$	118,030		$	345,529		$	352,058

Summary
FFO attributable to W. P. Carey — as defined by NAREIT — Owned Real Estate	$	124,783		$	110,968		$	398,624		$	319,120
AFFO attributable to W. P. Carey — Owned Real Estate	$	131,492		$	121,880		$	391,244		$	364,410
FFO attributable to W. P. Carey (as defined by NAREIT) — Owned Real Estate ^(h)													$	98,030		$	112,308		$	297,318		$	361,438
AFFO attributable to W. P. Carey — Owned Real Estate ^(h)													$	116,337		$	118,030		$	345,529		$	352,058



	W. P. Carey 9/30/~~2016~~2017 10-Q – 7983

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

Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Net income from Investment Management attributable to W. P. Carey $ 10,971
$ 1,147
$ 8,121
$ 19,391
FFO attributable to W. P. Carey — as defined by NAREIT — Investment Management 10,971
1,147
8,121
19,391
Adjustments:
Stock-based compensation 2,784
2,498
10,648
10,120
Other amortization and non-cash items ^(c)
(541 ) 105
(108 ) 16
Tax expense (benefit) – deferred 388
(1,384 ) (2,810 ) (709 )
Property acquisition and other expenses ^(f)
—
1,118
2,384
1,120
Realized losses on foreign currency —
46
51
64
Restructuring and other compensation ^(g)
—
—
7,512
—
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at AFFO (623 ) 1,238
(869 ) 1,238
Total adjustments 2,008
3,621
16,808
11,849
AFFO attributable to W. P. Carey — Investment Management $ 12,979
$ 4,768
$ 24,929
$ 31,240

Summary
FFO attributable to W. P. Carey — as defined by NAREIT — Investment Management $ 10,971
$ 1,147
$ 8,121
$ 19,391
AFFO attributable to W. P. Carey — Investment Management $ 12,979
$ 4,768
$ 24,929
$ 31,240



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net income from Investment Management attributable to W. P. Carey ^(h)	$	23,786		$	23,446		$	64,090		$	45,307
FFO attributable to W. P. Carey (as defined by NAREIT) — Investment Management ^(h)	23,786			23,446			64,090			45,307
Adjustments:
Stock-based compensation	2,755			2,784			9,916			10,648
Tax expense (benefit) — deferred	1,460			388			(3,046		)	(2,810		)
Restructuring and other compensation ^(e)	1,356			—			9,074			7,512
Other amortization and non-cash items ^(b)	(600		)	(541		)	(860		)	(108		)
Realized losses on foreign currency	5			—			17			51
Other expenses ^(g)	—			—			—			2,384
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at AFFO ^(h)	3,143			364			6,197			1,131
Total adjustments	8,119			2,995			21,298			18,808
AFFO attributable to W. P. Carey — Investment Management ^(h)	$	31,905		$	26,441		$	85,388		$	64,115

Summary
FFO attributable to W. P. Carey (as defined by NAREIT) — Investment Management ^(h)	$	23,786		$	23,446		$	64,090		$	45,307
AFFO attributable to W. P. Carey — Investment Management ^(h)	$	31,905		$	26,441		$	85,388		$	64,115

__________


(a)	Amount for the nine months ended September 30, 2016 includes an adjustment of $15.6 million related to the acceleration of a below-market lease from a tenant of a domestic property that was sold during ~~the~~that period.


(b)	Represents primarily unrealized gains and losses from foreign exchange and derivatives.


(c)	~~Amount~~Amounts for the three and nine months ended September 30, 2016 include an adjustment of $0.6 million to exclude a portion of a gain recognized on the deconsolidation of CESH I (Note 2).

(d)

Amount for the nine months ended September 30, 2016 includes an adjustment to exclude $27.2 million of the $32.2 million of lease termination income recognized in connection with a domestic property that was sold during ~~the~~that period, as such amount was determined to be non-core income (Note 15). Amount for the nine months ended September 30, 2016 also reflects an adjustment to include $1.8 million of lease termination income received in December 2015 that represented core income for the nine months ended September 30, 2016.


~~(c)~~	~~Represents primarily unrealized gains and losses from foreign exchange and derivatives.~~

~~(d)~~

Effective July 1, 2016, the amortization of debt premiums and discounts, which was previously included in Other amortization and non-cash items, is included in Amortization of deferred financing costs. Prior periods are retrospectively adjusted to reflect this change. Amortization of debt premiums and discounts for the three months ended September 30, 2016 and 2015 was $0.3 million and $0.7 million, respectively, and for the nine months ended September 30, 2016 and 2015 was $1.7 million and $2.1 million, respectively.


(e)	Amounts for the three and nine months ended September 30, ~~2016 include an adjustment~~2017 represent restructuring expenses resulting from our exit from all non-traded retail fundraising activities, as of ~~$0.6 million to exclude a portion of a gain recognized on the deconsolidation of CESH I (Note 2~~).


~~(f)~~	~~Amounts~~June 30, 2017. Amount for the nine months ended September 30, 2016 are comprised of expenses related to our formal strategic review, which concluded in May 2016. Amounts for the three and nine months ended September 30, 2015 in our Investment Management segment are comprised of expenses related to our formal strategic review.


~~(g)~~	~~Amount~~ represents restructuring and other compensation-related expenses resulting from a reduction in headcount, including the RIF, and ~~employment~~employee severance arrangements (Note 12).


(f)	Amount for the nine months ended September 30, 2017 is primarily comprised of an accrual for estimated one-time legal settlement expenses.


(g)	Amount for the nine months ended September 30, 2016 reflects expenses related to our formal strategic review, which was completed in May 2016.

(h)



	W. P. Carey 9/30/2017 10-Q– 84

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



	~~W. P. Carey 9/30/2016 10-Q~~– 80

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market Risk

Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, and equity prices. The primary risks that we are exposed to are interest rate risk and foreign currency exchange risk. 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 can affect the ability of tenants in a particular industry/region to meet their respective lease obligations. In order to manage this risk, we view our collective tenant roster as a portfolio and we attempt to diversify such portfolio so that we are not overexposed to a particular industry or geographic region.

Generally, we do not use derivative instruments to hedge credit/market risks or for speculative purposes. However, from time to time, we may enter into foreign currency forward contracts and collars to hedge our foreign currency cash flow exposures.

Interest Rate Risk

The values of our real estate, related fixed-rate debt obligations, and our note receivable investments 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 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 owned and managed assets to decrease, which would create lower revenues from managed assets and lower investment performance for the Managed REITs. 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 historically attempted to obtain non-recourse 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 mortgage loans and, as a result, we have entered into, and may continue to enter into, interest rate swap agreements or interest rate cap agreements with lenders. Interest rate swap agreements effectively convert the variable-rate debt service obligations of a loan to a fixed rate, while interest rate cap agreements limit the underlying interest rate from exceeding a specified strike rate. Interest rate swaps are agreements in which one party exchanges a stream of interest payments for a counterparty’s stream of cash flows over a specific period, and interest rate caps limit the effective borrowing rate of variable-rate debt obligations while allowing participants to share in downward shifts in interest rates. These interest rate swaps and caps are derivative instruments that, where applicable, are designated as cash flow hedges on the forecasted interest payments on the debt obligation. The face amount on which the swaps or caps are based is not exchanged. Our objective in using these derivatives is to limit our exposure to interest rate movements. At September 30, ~~2016,~~2017, we estimated that the total fair value of our interest rate swaps and ~~caps,~~cap, which are included in Other assets, net and Accounts payable, accrued expenses and other liabilities in the consolidated financial statements, was in a net liability position of ~~$5.9~~$1.6 million (Note 9).



	W. P. Carey 9/30/2017 10-Q– 85

At September 30, ~~2016,~~2017, a significant portion (approximately ~~82.3%~~83.2%) of our long-term debt either bore interest at fixed rates, was swapped or capped to a fixed rate, or bore interest at fixed rates that were scheduled to convert to then-prevailing market fixed rates at certain future points during their term. The annual interest rates on our fixed-rate debt at September 30, ~~2016~~2017 ranged from 2.0% to 7.8%. The contractual annual interest rates on our variable-rate debt at September 30, ~~2016~~2017 ranged from ~~0.7%~~0.9% to 6.9%. Our debt obligations are more fully described ~~under~~in Note 10 and Liquidity and Capital Resources –— Summary of Financing, in Item 2 above. The following table presents principal cash outflows for the remainder of ~~2016,~~2017, each of the next four calendar years following December 31, ~~2016,~~2017, and thereafter, based upon expected maturity dates of our debt obligations outstanding at September 30, ~~2016~~2017 (in thousands):


	2016 (Remainder)		2017		2018		2019		2020		Thereafter		Total		Fair value		2017 (Remainder)		2018		2019		2020		2021		Thereafter		Total		Fair value
Fixed-rate debt ^(a)	$	56,846	$	573,117	$	135,216	$	86,751	$	176,746	$	2,405,990	$	3,434,666	$	3,518,185	$	38,805	$	135,368	$	86,143	$	178,496	$	116,682	$	2,911,666	$	3,467,160	$	3,572,112
Variable-rate debt ^(a)	$	37,190	$	305,447	$	514,342	$	13,211	$	43,021	$	65,915	$	979,126	$	974,358	$	1,979	$	142,795	$	13,241	$	43,051	$	267,322	$	408,374	$	876,762	$	874,357

__________


(a)	Amounts are based on the exchange rate at September 30, ~~2016,~~2017, as applicable.



	~~W. P. Carey 9/30/2016 10-Q~~– 81

The estimated fair value of our fixed-rate debt and our variable-rate debt that currently bears interest at fixed rates or has effectively been converted to a fixed rate through the use of interest rate swaps, or that has been subject to interest rate caps, is affected by changes in interest rates. Annual interest expense on our unhedged variable-rate debt that does not bear interest at fixed rates at September 30, ~~2016~~2017 would increase or decrease by ~~$7.8~~$7.2 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 the debt classified as variable-rate debt in the tables above bore interest at fixed rates at September 30, ~~2016~~2017 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, Australia, Asia, and ~~Australia,~~Canada, and as a result are subject to risk from the effects of exchange rate movements in various foreign currencies, primarily the euro, the British pound sterling, the Australian dollar, and the ~~Australian~~Canadian dollar, which may affect future costs and cash flows. We manage foreign currency exchange rate movements by generally placing our debt service obligation to the lender and the tenant’s rental obligation to us in the same currency. This reduces our overall exposure to the net cash flow from that investment. In addition, we may use currency hedging to further reduce the exposure to our equity cash flow. We are generally a net receiver of these currencies (we receive more cash than we pay out), and therefore our foreign operations benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar, relative to the foreign currency. As part of our investment strategy, 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. For the nine months ended September 30, ~~2016,~~2017, we recognized net foreign currency transaction losses (included in Other income and (expenses) in the consolidated financial statements) of ~~$0.2~~$15.9 million, primarily due to ~~the strengthening of the U.S. dollar relative to the British pound sterling during the period, partially offset by~~ the weakening of the U.S. dollar relative to the euro during the period. The end-of-period rate for the U.S. dollar in relation to the ~~British pound sterling at September 30, 2016 decreased by 12.6% to $1.2962 from $1.4833 at December 31, 2015. The end-of-period rate for the U.S. dollar in relation to the~~ euro at September 30, ~~2016~~2017 increased by ~~2.5%~~12.0% to ~~$1.1161~~$1.1806 from ~~$1.0887~~$1.0541 at December 31, ~~2015.~~2016.

The June 23, 2016 referendum by voters in the United Kingdom to exit the European Union, a process commonly referred to as “Brexit,” adversely impacted global markets, including the currencies, and resulted in a sharp decline in the value of the British pound sterling and, to a lesser extent, the euro, as compared to the U.S. dollar. In October 2016, the Prime Minister of the United Kingdom announced that the formal withdrawal process would be triggered in the first quarter of 2017. As a result, the end-of-period rate for the U.S. dollar in relation to the British pound sterling at October 31, 2016 decreased by 6.2% to $1.2155 from $1.2962 at September 30, 2016. Volatility in exchange rates is expected to continue as the United Kingdom negotiates its likely exit from the European Union. As of September 30, ~~2016,~~2017, 4.9% and ~~28.0%~~24.0% of our total ABR was from the United Kingdom and other European Union countries, respectively. We currently hedge a portion of our British pound sterling exposure and our euro exposure through the next ~~45 months,~~five years, thereby significantly reducing our currency risk.

Any impact from Brexit on us will depend, in part, on the outcome of tariff, trade, regulatory, and other negotiations. Although it is unknown what the result of those negotiations will be, it is possible that new terms may adversely affect our operations and financial results.

We enter into foreign currency forward contracts and collars to hedge certain of our foreign currency cash flow exposures. A foreign currency forward contract is a commitment to deliver a certain amount of foreign currency at a certain price on a specific date in the future. A foreign currency collar consists of a written call option and a purchased put option to sell the foreign currency at a range of predetermined exchange rates. 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



	W. P. Carey 9/30/2017 10-Q– 86

exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices. The estimated fair value of our foreign currency forward contracts and collars, which are included in Other assets, net and Accounts payable, accrued expenses and other liabilities in the consolidated financial statements, was in a net asset position of ~~$39.4~~$17.0 million at September 30, ~~2016.~~2017 (Note 9). We have obtained, and may in the future obtain, non-recourse mortgage financing in the local currency. We have also issued the euro-denominated 2.0% Senior ~~Euro~~Notes and 2.25% Senior Notes, and have borrowed under our ~~Revolver~~Unsecured Revolving Credit Facility and Unsecured Term Loans in foreign currencies, including the euro and the British pound sterling. 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.



	~~W. P. Carey 9/30/2016 10-Q~~– 82

Scheduled future minimum rents, exclusive of renewals, under non-cancelable operating leases for our consolidated foreign operations as of September 30, ~~2016~~2017 for the remainder of ~~2016,~~2017, each of the next four calendar years following December 31, ~~2016,~~2017, and thereafter are as follows (in thousands):


Lease Revenues ^(a)	2016 (Remainder)		2017		2018		2019		2020		Thereafter		Total		2017 (Remainder)		2018		2019		2020		2021		Thereafter		Total
Euro ^(b)	$	50,245	$	191,498	$	180,002	$	163,584	$	159,448	$	1,345,914	$	2,090,691	$	42,817	$	171,565	$	168,207	$	164,933	$	160,199	$	1,251,640	$	1,959,361
British pound sterling ^(c)	8,421		33,535		33,719		33,988		34,347		308,385		452,395		8,357		33,337		33,592		33,919		34,165		278,974		422,344
Australian dollar ^(d)	2,897		11,492		11,492		11,492		11,524		159,062		207,959		3,150		12,498		12,498		12,532		12,498		160,492		213,668
Other foreign currencies ^(e)	4,354		17,482		17,711		18,206		16,543		186,745		261,041		4,051		16,322		16,819		15,073		15,299		152,029		219,593
	$	65,917	$	254,007	$	242,924	$	227,270	$	221,862	$	2,000,106	$	3,012,086	$	58,375	$	233,722	$	231,116	$	226,457	$	222,161	$	1,843,135	$	2,814,966

Scheduled debt service payments (principal and interest) for our Unsecured Senior Notes, Senior Unsecured Credit Facility, and non-recourse mortgage notes payable ~~and Senior Unsecured Notes~~ for our consolidated foreign operations as of September 30, ~~2016~~2017 for the remainder of ~~2016,~~2017, each of the next four calendar years following December 31, ~~2016,~~2017, and thereafter are as follows (in thousands):


Debt service ^{(a) (f)}	2016 (Remainder)		2017		2018			2019		2020		Thereafter		Total
Debt Service ^{(a) (f)}																2017 (Remainder)		2018		2019		2020		2021		Thereafter		Total
Euro ^(b)	$	88,433	$	376,854	$	526,209		$	23,025	$	64,100	$	653,266	$	1,731,887	$	41,096	$	174,748	$	42,970	$	86,502	$	179,220	$	1,650,182	$	2,174,718
British pound sterling ^(c)	4,963		813		813			813		813		12,039		20,254		210		840		840		840		840		11,595		15,165
Other foreign currencies ^(e)	710		11,381		8,872		��	—		—		—		20,963
Thai baht																497		9,231		—		—		—		—		9,728
	$	94,106	$	389,048	$	535,894		$	23,838	$	64,913	$	665,305	$	1,773,104	$	41,803	$	184,819	$	43,810	$	87,342	$	180,060	$	1,661,777	$	2,199,611

__________


(a)	Amounts are based on the applicable exchange rates at September 30, ~~2016.~~2017. Contractual rents and debt obligations are denominated in the functional currency of the country of each property.

(b)

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 at September 30, ~~2016~~2017 of ~~$3.6 million.~~$2.2 million, excluding the impact of our derivative instruments. Amounts included the equivalent of ~~$378.4~~$590.3 million of 2.0% Senior Notes outstanding maturing in January 2023; the equivalent of $590.3 million of 2.25% Senior Notes outstanding maturing in July 2024; the equivalent of $383.7 million borrowed in euro in aggregate under our Unsecured Term Loans, which are scheduled to mature on February 22, 2022; and the equivalent of $111.2 million borrowed in euro under our ~~Revolver,~~Unsecured Revolving Credit Facility, which is scheduled to mature on ~~January 31, 2018~~February 22, 2021 unless extended pursuant to its terms, (~~Note 10), and the equivalent of $558.1 million of 2.0% Senior Euro Notes outstanding maturing in January 2023~~but may be prepaid prior to that date pursuant to its terms (Note 10).


(c)	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 at September 30, ~~2016~~2017 of ~~$4.3 million.~~$4.1 million, excluding the impact of our derivative instruments.


(d)	We estimate that, for a 1% increase or decrease in the exchange rate between the Australian dollar and the U.S. dollar, there would be a corresponding change in the projected estimated ~~property level~~ cash flow at September 30, ~~2016~~2017 of $2.1 million. There is no related mortgage loan on this investment.


(e)	Other foreign currencies for future minimum rents consist of the Canadian dollar, ~~the Malaysian ringgit,~~ the Swedish krona, the Norwegian krone, and the Thai baht.


(f)	Interest on unhedged variable-rate debt obligations was calculated using the applicable annual interest rates and balances outstanding at September 30, ~~2016.~~2017.



	W. P. Carey 9/30/2017 10-Q– 87

As a result of scheduled balloon payments on certain of our international non-recourse mortgage loans, ~~primarily denominated in euros,~~ projected debt service obligations denominated in euros exceed projected lease revenues denominated in ~~2016, 2017, and~~euros in 2018. In ~~2016,~~2018, balloon payments denominated in euros totaling ~~$75.8~~$130.1 million are due on ~~five~~three non-recourse mortgage loans that are collateralized by properties that we own with affiliates. In 2017, balloon payments totaling $346.4 million are due on 11 non-recourse mortgage loans that are collateralized by properties that we own with affiliates. In 2018, balloon payments totaling $131.1 million are due on five non-recourse mortgage loans that are collateralized by properties that we own with affiliates.own. We currently anticipate that, by their respective due dates, we will have refinanced or repaid these loans using our cash resources, including unused capacity on our ~~Revolver and~~Unsecured Revolving Credit Facility, as well as proceeds from dispositions of properties.



	~~W. P. Carey 9/30/2016 10-Q~~– 83

Projected debt service obligations denominated in euros exceed projected lease revenues denominated in euros in 2021 and thereafter, primarily due to amounts borrowed in euros under our Unsecured Term Loans, Unsecured Revolving Credit Facility, 2.0% Senior Notes, and 2.25% Senior Notes, as described above.

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 reasonably well diversified, it does contain concentrations in certain ~~areas in excess of 10%, based on the percentage of our consolidated total revenues or ABR.~~ areas.

For the nine months ended September 30, ~~2016,~~2017, our consolidated portfolio had the following significant characteristics in excess of 10%, based on the percentage of our consolidated total revenues:

~~69%~~68% related to domestic ~~properties;~~operations; and

~~31%~~32% related to international ~~properties.~~operations.

At September 30, ~~2016,~~2017, our net-lease portfolio, which excludes our operating properties, had the following significant property and lease characteristics in excess of 10% in certain areas, based on the percentage of our ABR as of that date:

~~63%~~65% related to domestic properties;

~~37%~~35% related to international properties;

~~28%~~30% related to industrial facilities, 25% related to office facilities, ~~18% related to warehouse facilities, and~~ 16% related to retail facilities, and 14% related to warehouse facilities; and

~~20%~~18% related to the retail stores industry and ~~10%~~11% related to the consumer services industry.



	W. P. Carey 9/30/~~2016~~2017 10-Q – 8488

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

Our chief executive officer and chief financial officer, after conducting an evaluation, together with members of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, ~~2016,~~2017, have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of September 30, ~~2016~~2017 at a reasonable level of assurance.

Changes in Internal Control Over Financial Reporting

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



	W. P. Carey 9/30/~~2016~~2017 10-Q – 8589

PART II — OTHER INFORMATION

Item 6. Exhibits.

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



Exhibit No.	Description	Method of Filing
~~1.1~~	Underwriting Agreement, dated September 7, 2016, by and among W. P. Carey Inc. and J.P. Morgan Securities LLC, Barclays Capital Inc. and Citigroup Global Markets Inc., as representatives of the several underwriters listed in Schedule 1 thereto	~~Incorporated by reference to Exhibit 1.1 to Current Report on Form 8-K filed September 12, 2016~~

~~4.1~~	~~Fourth Supplemental Indenture, dated as of September 12, 2016, by and between W. P. Carey Inc., as issuer, and U.S. Bank National Association, as trustee~~	~~Incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K filed September 12, 2016~~

~~4.2~~	~~Form of Note representing $350 Million Aggregate Principal Amount of 4.250% Senior Notes due 2026~~	~~Incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K filed September 12, 2016~~

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

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

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

101	The following materials from W. P. Carey Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2016,~~2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, (ii) Consolidated Statements of Income for the three and nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, (iii) Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the three and nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, (iv) Consolidated Statements of Equity for the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, (v) Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, and (vi) Notes to Consolidated Financial Statements.	Filed herewith



	W. P. Carey 9/30/~~2016~~2017 10-Q – 8690

SIGNATURES

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



			W. P. Carey Inc.
Date:	November 3, ~~2016~~2017
		By:	/s/ ToniAnn Sanzone
			ToniAnn Sanzone
			~~Interim~~ Chief Financial Officer
			(Principal Financial Officer)

Date:	November 3, ~~2016~~2017
		By:	/s/ Arjun Mahalingam
			Arjun Mahalingam
			Chief Accounting Officer
			(Principal Accounting Officer)



	W. P. Carey 9/30/~~2016~~2017 10-Q – 8791

EXHIBIT INDEX

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



Exhibit No.	Description	Method of Filing
~~1.1~~	Underwriting Agreement, dated September 7, 2016, by and among W. P. Carey Inc. and J.P. Morgan Securities LLC, Barclays Capital Inc. and Citigroup Global Markets Inc., as representatives of the several underwriters listed in Schedule 1 thereto	~~Incorporated by reference to Exhibit 1.1 to Current Report on Form 8-K filed September 12, 2016~~

~~4.1~~	~~Fourth Supplemental Indenture, dated as of September 12, 2016, by and between W. P. Carey Inc., as issuer, and U.S. Bank National Association, as trustee~~	~~Incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K filed September 12, 2016~~

~~4.2~~	~~Form of Note representing $350 Million Aggregate Principal Amount of 4.250% Senior Notes due 2026~~	~~Incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K filed September 12, 2016~~

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

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

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

101	The following materials from W. P. Carey Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2016,~~2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, (ii) Consolidated Statements of Income for the three and nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, (iii) Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the three and nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, (iv) Consolidated Statements of Equity for the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, (v) Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, and (vi) Notes to Consolidated Financial Statements.	Filed herewith



	Weighted-Average Life	Amount
Amortizable Intangible Assets
In-place lease	22.2	$	68,996



	Three Months Ended September 30, 2016				Three Months Ended September 30, 2015
	Fair Value Measurements		Total Impairment Charges		Fair Value Measurements		Total Impairment Charges
Impairment Charges
Real estate	$	158,803	$	14,441	$	46,608	$	19,438
			$	14,441			$	19,438



	Total Long-Lived Assets at ^(a)				Total Assets at
	September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015 ^(b)
Owned Real Estate	$	5,988,852	$	6,079,803	$	8,266,929	$	8,537,544
Investment Management	23,083		22,214		201,356		204,545
Total Company	$	6,011,935	$	6,102,017	$	8,468,285	$	8,742,089



	September 30, 2016		December 31, 2015
Total properties — Managed REITs and CESH I	595		602
Assets under management — Managed Programs ^(a)	$	12,243.5	$	11,045.3
Cumulative funds raised — CPA^®:18 – Global offering ^{(b) (c)}	1,243.5		1,243.5
Cumulative funds raised — CWI 2 offering ^{(b) (d)}	535.8		247.0
Cumulative funds raised — CCIF offering ^{(b) (e)}	91.2		2.0
Cumulative funds raised — CESH I offering ^(f)	41.8		—