UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

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

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

For the transition period from__________ to __________

Commission File Number: 001-13779

W. P. Carey Inc.

(Exact name of registrant as specified in its charter)


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

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

Investor Relations (212) 492-8920

(212) 492-1100

(Registrant’s telephone numbers, including area code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 Par Value

WPC

New York Stock Exchange

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

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

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

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

Registrant has ~~192,908,916~~213,925,817 shares of common stock, $0.001 par value, outstanding at July ~~22, 2022.~~21, 2023.

INDEX


		Page No.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
	Consolidated Balance Sheets as of June ~~30, 2022~~ 3 0 , 2023 and December 31, ~~2021~~2022	3
	Consolidated Statements of Income for the Three and Six Months Ended June 30 , 2023 and 2022 ~~and 2021~~	4
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	5
	Consolidated Statements of Equity for the Three and Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	8
	Notes to Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		4138
Item 3. Quantitative and Qualitative Disclosures About Market Risk		6562
Item 4. Controls and Procedures		6764

PART II — OTHER INFORMATION
Item ~~1A.~~ ~~Risk Factors~~		68
~~Item~~ 6. Exhibits		6965
Signatures		7066

W. P. Carey 6/30/~~2022~~2023 10-Q – 1

Forward-Looking Statements

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

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

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

W. P. Carey 6/30/~~2022~~2023 10-Q – 2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

W. P. CAREY INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share amounts)


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Assets	Assets					Assets
Investments in real estate:	Investments in real estate:					Investments in real estate:
Land, buildings and improvements		$	12,026,671	$	11,875,407
Net investments in direct financing leases and loans receivable		786,462		813,577
Land, buildings and improvements — net lease and other						Land, buildings and improvements — net lease and other	$	13,563,837	$	13,338,857
Land, buildings and improvements — operating properties						Land, buildings and improvements — operating properties	1,334,501		1,095,892
Net investments in finance leases and loans receivable						Net investments in finance leases and loans receivable	1,222,439		771,761
In-place lease intangible assets and other	In-place lease intangible assets and other	2,384,032		2,386,000		In-place lease intangible assets and other	2,748,013		2,659,750
Above-market rent intangible assets	Above-market rent intangible assets	822,470		843,410		Above-market rent intangible assets	806,619		833,751
Investments in real estate	Investments in real estate	16,019,635		15,918,394		Investments in real estate	19,675,409		18,700,011
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(3,043,146)		(2,889,294)		Accumulated depreciation and amortization	(3,378,385)		(3,269,057)
Assets held for sale, net	Assets held for sale, net	—		8,269		Assets held for sale, net	43,002		57,944
Net investments in real estate	Net investments in real estate	12,976,489		13,037,369		Net investments in real estate	16,340,026		15,488,898
Equity method investments	Equity method investments	344,360		356,637		Equity method investments	340,285		327,502
Cash and cash equivalents	Cash and cash equivalents	103,590		165,427		Cash and cash equivalents	204,103		167,996
Due from affiliates		18,937		1,826
Other assets, net	Other assets, net	1,119,389		1,017,842		Other assets, net	1,154,945		1,080,227
Goodwill	Goodwill	891,464		901,529		Goodwill	1,036,966		1,037,412
Total assets (a)	Total assets (a)	$	15,454,229	$	15,480,630	Total assets (a)	$	19,076,325	$	18,102,035
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Debt:	Debt:					Debt:
Senior unsecured notes, net	Senior unsecured notes, net	$	5,471,066	$	5,701,913	Senior unsecured notes, net	$	5,978,294	$	5,916,400
Unsecured term loans, net	Unsecured term loans, net	548,287		310,583		Unsecured term loans, net	1,113,491		552,539
Unsecured revolving credit facility	Unsecured revolving credit facility	417,455		410,596		Unsecured revolving credit facility	528,705		276,392
Non-recourse mortgages, net	Non-recourse mortgages, net	328,820		368,524		Non-recourse mortgages, net	995,435		1,132,417
Debt, net	Debt, net	6,765,628		6,791,616		Debt, net	8,615,925		7,877,748
Accounts payable, accrued expenses and other liabilities	Accounts payable, accrued expenses and other liabilities	529,719		572,846		Accounts payable, accrued expenses and other liabilities	643,830		623,843
Below-market rent and other intangible liabilities, net	Below-market rent and other intangible liabilities, net	174,766		183,286		Below-market rent and other intangible liabilities, net	157,728		184,584
Deferred income taxes	Deferred income taxes	135,128		145,572		Deferred income taxes	179,449		178,959
Dividends payable	Dividends payable	207,526		203,859		Dividends payable	232,461		228,257
Total liabilities (a)	Total liabilities (a)	7,812,767		7,897,179		Total liabilities (a)	9,829,393		9,093,391
Commitments and contingencies (Note 11)	Commitments and contingencies (Note 11)	0		0		Commitments and contingencies (Note 11)

Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued	Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued	—		—		Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued	—		—
Common stock, $0.001 par value, 450,000,000 shares authorized; 192,891,792 and 190,013,751 shares, respectively, issued and outstanding		193		190
Common stock, $0.001 par value, 450,000,000 shares authorized; 213,901,170 and 210,620,949 shares, respectively, issued and outstanding						Common stock, $0.001 par value, 450,000,000 shares authorized; 213,901,170 and 210,620,949 shares, respectively, issued and outstanding	214		211
Additional paid-in capital	Additional paid-in capital	10,201,614		9,977,686		Additional paid-in capital	11,959,060		11,706,836
Distributions in excess of accumulated earnings	Distributions in excess of accumulated earnings	(2,352,839)		(2,224,231)		Distributions in excess of accumulated earnings	(2,510,816)		(2,486,633)
Deferred compensation obligation	Deferred compensation obligation	57,012		49,810		Deferred compensation obligation	62,046		57,012
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(266,157)		(221,670)		Accumulated other comprehensive loss	(279,931)		(283,780)
Total stockholders’ equity	Total stockholders’ equity	7,639,823		7,581,785		Total stockholders’ equity	9,230,573		8,993,646
Noncontrolling interests	Noncontrolling interests	1,639		1,666		Noncontrolling interests	16,359		14,998
Total equity	Total equity	7,641,462		7,583,451		Total equity	9,246,932		9,008,644
Total liabilities and equity	Total liabilities and equity	$	15,454,229	$	15,480,630	Total liabilities and equity	$	19,076,325	$	18,102,035

__________

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

See Notes to Consolidated Financial Statements.

W. P. Carey 6/30/~~2022~~2023 10-Q – 3

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except share and per share amounts)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues	Revenues									Revenues
Real Estate:	Real Estate:									Real Estate:
Lease revenues	Lease revenues	$	314,354	$	289,064	$	622,079	$	573,729	Lease revenues	$	369,124	$	314,354	$	721,460	$	622,079
Income from direct financing leases and loans receivable		17,778		17,422		36,157		35,164
Income from finance leases and loans receivable										Income from finance leases and loans receivable	27,311		17,778		48,066		36,157
Operating property revenues	Operating property revenues	5,064		3,245		8,929		5,424		Operating property revenues	50,676		5,064		91,562		8,929
Lease termination income and other		2,591		5,059		16,713		6,644
Other lease-related income										Other lease-related income	5,040		2,591		18,413		16,713
		339,787		314,790		683,878		620,961			452,151		339,787		879,501		683,878
Investment Management:	Investment Management:									Investment Management:
Asset management and other revenue		3,467		3,966		6,887		7,920
Asset management revenue										Asset management revenue	303		3,467		642		6,887
Reimbursable costs from affiliates	Reimbursable costs from affiliates	1,143		968		2,070		2,009		Reimbursable costs from affiliates	124		1,143		225		2,070
		4,610		4,934		8,957		9,929			427		4,610		867		8,957
		344,397		319,724		692,835		630,890			452,578		344,397		880,368		692,835
Operating Expenses	Operating Expenses									Operating Expenses
Depreciation and amortization	Depreciation and amortization	115,080		114,348		230,473		224,670		Depreciation and amortization	143,548		115,080		299,957		230,473
Operating property expenses										Operating property expenses	26,919		3,191		48,168		5,978
General and administrative	General and administrative	20,841		20,464		43,925		42,547		General and administrative	24,788		20,841		51,236		43,925
Reimbursable tenant costs	Reimbursable tenant costs	16,704		15,092		33,664		30,850		Reimbursable tenant costs	20,523		16,704		42,499		33,664
Stock-based compensation expense										Stock-based compensation expense	8,995		9,758		16,761		17,591
Property expenses, excluding reimbursable tenant costs	Property expenses, excluding reimbursable tenant costs	11,851		11,815		25,630		22,698		Property expenses, excluding reimbursable tenant costs	5,371		11,851		18,143		25,630
Stock-based compensation expense		9,758		9,048		17,591		14,429
Impairment charges		6,206		—		26,385		—
Operating property expenses		3,191		2,049		5,978		3,960
Merger and other expenses	Merger and other expenses	1,984		(2,599)		(338)		(3,075)		Merger and other expenses	1,419		1,984		1,443		(338)
Reimbursable costs from affiliates	Reimbursable costs from affiliates	1,143		968		2,070		2,009		Reimbursable costs from affiliates	124		1,143		225		2,070
Impairment charges — real estate										Impairment charges — real estate	—		6,206		—		26,385
		186,758		171,185		385,378		338,088			231,687		186,758		478,432		385,378
Other Income and Expenses	Other Income and Expenses									Other Income and Expenses
Interest expense	Interest expense	(46,417)		(49,252)		(92,470)		(100,892)		Interest expense	(75,488)		(46,417)		(142,684)		(92,470)
Non-operating income										Non-operating income	4,509		5,974		9,135		14,520
Earnings from equity method investments										Earnings from equity method investments	4,355		7,401		9,591		12,173
Gain on sale of real estate, net	Gain on sale of real estate, net	31,119		19,840		42,367		29,212		Gain on sale of real estate, net	1,808		31,119		179,557		42,367
Other gains and (losses)	Other gains and (losses)	(21,746)		7,545		13,999		(33,643)		Other gains and (losses)	(1,366)		(21,746)		6,734		13,999
Earnings (losses) from equity method investments		7,401		(156)		12,173		(9,889)
Non-operating income		5,974		3,065		14,520		9,421
		(23,669)		(18,958)		(9,411)		(105,791)			(66,182)		(23,669)		62,333		(9,411)
Income before income taxes	Income before income taxes	133,970		129,581		298,046		187,011		Income before income taxes	154,709		133,970		464,269		298,046
Provision for income taxes	Provision for income taxes	(6,252)		(9,298)		(13,335)		(15,087)		Provision for income taxes	(10,129)		(6,252)		(25,248)		(13,335)
Net Income	Net Income	127,718		120,283		284,711		171,924		Net Income	144,580		127,718		439,021		284,711
Net income attributable to noncontrolling interests		(40)		(38)		(38)		(45)
Net loss (income) attributable to noncontrolling interests										Net loss (income) attributable to noncontrolling interests	40		(40)		(21)		(38)
Net Income Attributable to W. P. Carey	Net Income Attributable to W. P. Carey	$	127,678	$	120,245	$	284,673	$	171,879	Net Income Attributable to W. P. Carey	$	144,620	$	127,678	$	439,000	$	284,673

Basic Earnings Per Share	Basic Earnings Per Share	$	0.66	$	0.67	$	1.48	$	0.96	Basic Earnings Per Share	$	0.67	$	0.66	$	2.06	$	1.48
Diluted Earnings Per Share	Diluted Earnings Per Share	$	0.66	$	0.67	$	1.47	$	0.96	Diluted Earnings Per Share	$	0.67	$	0.66	$	2.05	$	1.47
Weighted-Average Shares Outstanding	Weighted-Average Shares Outstanding									Weighted-Average Shares Outstanding
Basic	Basic	194,019,451		180,099,370		192,971,256		178,379,654		Basic	215,075,114		194,019,451		213,522,150		192,971,256
Diluted	Diluted	194,763,695		180,668,732		193,706,035		178,902,259		Diluted	215,184,485		194,763,695		213,875,471		193,706,035

See Notes to Consolidated Financial Statements.

W. P. Carey 6/30/~~2022~~2023 10-Q – 4

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net Income	Net Income	$	127,718	$	120,283	$	284,711	$	171,924	Net Income	$	144,580	$	127,718	$	439,021	$	284,711
Other Comprehensive (Loss) Income
Other Comprehensive Income (Loss)										Other Comprehensive Income (Loss)
Foreign currency translation adjustments	Foreign currency translation adjustments	(43,993)		5,973		(53,145)		(7,929)		Foreign currency translation adjustments	9,479		(43,993)		15,936		(53,145)
Unrealized gain (loss) on derivative instruments		19,976		(2,023)		27,346		17,896
Unrealized (loss) gain on derivative instruments										Unrealized (loss) gain on derivative instruments	(4,937)		19,976		(12,200)		27,346
Reclassification of unrealized gain on investments to net income	Reclassification of unrealized gain on investments to net income	—		—		(18,688)		—		Reclassification of unrealized gain on investments to net income	—		—		—		(18,688)
		(24,017)		3,950		(44,487)		9,967			4,542		(24,017)		3,736		(44,487)
Comprehensive Income	Comprehensive Income	103,701		124,233		240,224		181,891		Comprehensive Income	149,122		103,701		442,757		240,224

Amounts Attributable to Noncontrolling Interests	Amounts Attributable to Noncontrolling Interests									Amounts Attributable to Noncontrolling Interests
Net income		(40)		(38)		(38)		(45)
Unrealized gain on derivative instruments		—		(21)		—		(21)
Comprehensive income attributable to noncontrolling interests		(40)		(59)		(38)		(66)
Net loss (income)										Net loss (income)	40		(40)		(21)		(38)
Foreign currency translation adjustments										Foreign currency translation adjustments	85		—		113		—
Comprehensive loss (income) attributable to noncontrolling interests										Comprehensive loss (income) attributable to noncontrolling interests	125		(40)		92		(38)
Comprehensive Income Attributable to W. P. Carey	Comprehensive Income Attributable to W. P. Carey	$	103,661	$	124,174	$	240,186	$	181,825	Comprehensive Income Attributable to W. P. Carey	$	149,247	$	103,661	$	442,849	$	240,186

See Notes to Consolidated Financial Statements.

W. P. Carey 6/30/~~2022~~2023 10-Q – 5

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(in thousands, except share and per share amounts)

W. P. Carey Stockholders
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 April 1, 2022 192,394,960 $ 192 $ 10,152,426 $ (2,274,619) $ 57,152 $ (242,140) $ 7,693,011 $ 1,650 $ 7,694,661
Shares issued under ATM Program, net 491,068 1 39,135 39,136 39,136
Shares issued upon delivery of vested restricted share awards 3,724 — — — —
Shares issued upon purchases under employee share purchase plan 2,040 — 155 155 155
Amortization of stock-based compensation expense 9,758 9,758 9,758
Delivery of deferred vested shares, net 140 (140) — —
Distributions to noncontrolling interests — (51) (51)
Dividends declared ($1.059 per share) (205,898) (205,898) (205,898)
Net income 127,678 127,678 40 127,718
Other comprehensive loss:
Foreign currency translation adjustments (43,993) (43,993) (43,993)
Unrealized gain on derivative instruments 19,976 19,976 19,976
Balance at June 30, 2022 192,891,792 $ 193 $ 10,201,614 $ (2,352,839) $ 57,012 $ (266,157) $ 7,639,823 $ 1,639 $ 7,641,462


	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 April 1, 2023	213,890,620	$	214	$	11,948,910	$	(2,425,031)	$	62,046	$	(284,558)	$	9,301,581	$	17,781	$	9,319,362
Shares issued upon delivery of vested restricted share awards	5,815	—		(292)								(292)				(292)
Shares issued upon purchases under employee share purchase plan	4,735	—		294								294				294
Amortization of stock-based compensation expense				8,995								8,995				8,995
Acquisition of noncontrolling interest				1,153								1,153		(1,153)		—
Distributions to noncontrolling interests												—		(144)		(144)
Dividends declared ($1.069 per share)						(230,405)						(230,405)				(230,405)
Net income						144,620						144,620		(40)		144,580
Other comprehensive income:
Foreign currency translation adjustments										9,564		9,564		(85)		9,479
Unrealized loss on derivative instruments										(4,937)		(4,937)				(4,937)
Balance at June 30, 2023	213,901,170	$	214	$	11,959,060	$	(2,510,816)	$	62,046	$	(279,931)	$	9,230,573	$	16,359	$	9,246,932

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 April 1, 2021 177,520,962 $ 178 $ 9,061,143 $ (1,988,440) $ 49,815 $ (233,889) $ 6,888,807 $ 1,648 $ 6,890,455
Shares issued under our Equity Forwards, net 4,523,209 5 309,502 309,507 309,507
Shares issued under ATM Program, net 2,205,509 1 162,335 162,336 162,336
Shares issued upon purchases under employee share purchase plan 2,597 — 176 176 176
Shares issued upon delivery of vested restricted share awards 874 — (33) (33) (33)
Amortization of stock-based compensation expense 9,048 9,048 9,048
Distributions to noncontrolling interests — (41) (41)
Dividends declared ($1.050 per share) (194,914) (194,914) (194,914)
Net income 120,245 120,245 38 120,283
Other comprehensive income:
Foreign currency translation adjustments 5,973 5,973 5,973
Unrealized loss on derivative instruments (2,044) (2,044) 21 (2,023)
Balance at June 30, 2021 184,253,151 $ 184 $ 9,542,171 $ (2,063,109) $ 49,815 $ (229,960) $ 7,299,101 $ 1,666 $ 7,300,767


	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 April 1, 2022	192,394,960	$	192	$	10,152,426	$	(2,274,619)	$	57,152	$	(242,140)	$	7,693,011	$	1,650	$	7,694,661
Shares issued under ATM Program, net	491,068	1		39,135								39,136				39,136
Shares issued upon delivery of vested restricted share awards	3,724	—		—								—				—
Shares issued upon purchases under employee share purchase plan	2,040	—		155								155				155
Amortization of stock-based compensation expense				9,758								9,758				9,758
Delivery of deferred vested shares, net				140				(140)				—				—
Distributions to noncontrolling interests												—		(51)		(51)
Dividends declared ($1.059 per share)						(205,898)						(205,898)				(205,898)
Net income						127,678						127,678		40		127,718
Other comprehensive loss:
Foreign currency translation adjustments										(43,993)		(43,993)				(43,993)
Unrealized gain on derivative instruments										19,976		19,976				19,976
Balance at June 30, 2022	192,891,792	$	193	$	10,201,614	$	(2,352,839)	$	57,012	$	(266,157)	$	7,639,823	$	1,639	$	7,641,462

(Continued)

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

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(Continued)

(in thousands, except share and per share amounts)


																				W. P. Carey Stockholders
		W. P. Carey Stockholders																							Distributions				Accumulated
							Distributions				Accumulated									Common Stock			Additional		in Excess of		Deferred		Other		Total
		Common Stock			Additional		in Excess of		Deferred		Other		Total							$0.001 Par Value			Paid-in		Accumulated		Compensation		Comprehensive		W. P. Carey		Noncontrolling
		$0.001 Par Value			Paid-in		Accumulated		Compensation		Comprehensive		W. P. Carey		Noncontrolling					Shares	Amount		Capital		Earnings		Obligation		Loss		Stockholders		Interests		Total
		Shares	Amount		Capital		Earnings		Obligation		Loss		Stockholders		Interests		Total
Balance at January 1, 2022		190,013,751	$	190	$	9,977,686	$	(2,224,231)	$	49,810	$	(221,670)	$	7,581,785	$	1,666	$	7,583,451
Balance at January 1, 2023																			Balance at January 1, 2023	210,620,949	$	211	$	11,706,836	$	(2,486,633)	$	57,012	$	(283,780)	$	8,993,646	$	14,998	$	9,008,644
Shares issued under ATM Program, net	Shares issued under ATM Program, net	2,740,295	3		218,098								218,101				218,101		Shares issued under ATM Program, net	3,081,867	3		249,860								249,863				249,863
Shares issued upon delivery of vested restricted share awards	Shares issued upon delivery of vested restricted share awards	135,706	—		(6,600)								(6,600)				(6,600)		Shares issued upon delivery of vested restricted share awards	193,619	—		(13,618)								(13,618)				(13,618)
Shares issued upon purchases under employee share purchase plan	Shares issued upon purchases under employee share purchase plan	2,040	—		155								155				155		Shares issued upon purchases under employee share purchase plan	4,735	—		294								294				294
Amortization of stock-based compensation expense	Amortization of stock-based compensation expense				17,591								17,591				17,591		Amortization of stock-based compensation expense				16,761								16,761				16,761
Deferral of vested shares, net	Deferral of vested shares, net				(6,696)				6,696				—				—		Deferral of vested shares, net				(4,521)				4,521				—				—
Acquisition of noncontrolling interest																			Acquisition of noncontrolling interest				1,153								1,153		(1,153)		—
Contributions from noncontrolling interests																			Contributions from noncontrolling interests												—		2,886		2,886
Distributions to noncontrolling interests	Distributions to noncontrolling interests												—		(65)		(65)		Distributions to noncontrolling interests												—		(280)		(280)
Dividends declared ($2.116 per share)					1,380		(413,281)		506				(411,395)				(411,395)
Dividends declared ($2.136 per share)																			Dividends declared ($2.136 per share)				2,295		(463,183)		513				(460,375)				(460,375)
Net income	Net income						284,673						284,673		38		284,711		Net income						439,000						439,000		21		439,021
Other comprehensive loss:
Other comprehensive income:																			Other comprehensive income:
Foreign currency translation adjustments	Foreign currency translation adjustments										(53,145)		(53,145)				(53,145)		Foreign currency translation adjustments										16,049		16,049		(113)		15,936
Unrealized gain on derivative instruments											27,346		27,346				27,346
Reclassification of unrealized gain on investments to net income											(18,688)		(18,688)				(18,688)
Balance at June 30, 2022		192,891,792	$	193	$	10,201,614	$	(2,352,839)	$	57,012	$	(266,157)	$	7,639,823	$	1,639	$	7,641,462
Unrealized loss on derivative instruments																			Unrealized loss on derivative instruments										(12,200)		(12,200)				(12,200)
Balance at June 30, 2023																			Balance at June 30, 2023	213,901,170	$	214	$	11,959,060	$	(2,510,816)	$	62,046	$	(279,931)	$	9,230,573	$	16,359	$	9,246,932

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, 2021 175,401,757 $ 175 $ 8,925,365 $ (1,850,935) $ 42,014 $ (239,906) $ 6,876,713 $ 1,656 $ 6,878,369
Shares issued under our Equity Forwards, net 4,523,209 5 309,502 309,507 309,507
Shares issued under ATM Program, net 4,225,624 4 302,619 302,623 302,623
Shares issued upon delivery of vested restricted share awards 99,964 — (3,777) (3,777) (3,777)
Shares issued upon purchases under employee share purchase plan 2,597 — 176 176 176
Amortization of stock-based compensation expense 14,429 14,429 14,429
Deferral of vested shares, net (7,049) 7,049 — —
Distributions to noncontrolling interests — (56) (56)
Dividends declared ($2.098 per share) 906 (384,053) 752 (382,395) (382,395)
Net income 171,879 171,879 45 171,924
Other comprehensive income:
Unrealized gain on derivative instruments 17,875 17,875 21 17,896
Foreign currency translation adjustments (7,929) (7,929) (7,929)
Balance at June 30, 2021 184,253,151 $ 184 $ 9,542,171 $ (2,063,109) $ 49,815 $ (229,960) $ 7,299,101 $ 1,666 $ 7,300,767


	W. P. Carey Stockholders
						Distributions				Accumulated
	Common Stock			Additional		in Excess of		Deferred		Other		Total
	$0.001 Par Value			Paid-in		Accumulated		Compensation		Comprehensive		W. P. Carey		Noncontrolling
	Shares	Amount		Capital		Earnings		Obligation		Loss		Stockholders		Interests		Total
Balance at January 1, 2022	190,013,751	$	190	$	9,977,686	$	(2,224,231)	$	49,810	$	(221,670)	$	7,581,785	$	1,666	$	7,583,451
Shares issued under ATM Program, net	2,740,295	3		218,098								218,101				218,101
Shares issued upon delivery of vested restricted share awards	135,706	—		(6,600)								(6,600)				(6,600)
Shares issued upon purchases under employee share purchase plan	2,040	—		155								155				155
Amortization of stock-based compensation expense				17,591								17,591				17,591
Deferral of vested shares, net				(6,696)				6,696				—				—
Distributions to noncontrolling interests												—		(65)		(65)
Dividends declared ($2.116 per share)				1,380		(413,281)		506				(411,395)				(411,395)
Net income						284,673						284,673		38		284,711
Other comprehensive loss:
Foreign currency translation adjustments										(53,145)		(53,145)				(53,145)
Unrealized gain on derivative instruments										27,346		27,346				27,346
Reclassification of unrealized gain on investments to net income										(18,688)		(18,688)				(18,688)
Balance at June 30, 2022	192,891,792	$	193	$	10,201,614	$	(2,352,839)	$	57,012	$	(266,157)	$	7,639,823	$	1,639	$	7,641,462

See Notes to Consolidated Financial Statements.

W. P. Carey 6/30/~~2022~~2023 10-Q – 7

W. P. CAREY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

Six Months Ended June 30,
2022 2021
Cash Flows — Operating Activities
Net income $ 284,711 $ 171,924
Adjustments to net income:
Depreciation and amortization, including intangible assets and deferred financing costs 237,672 232,111
Gain on sale of real estate, net (42,367) (29,212)
Straight-line rent adjustments (27,146) (21,986)
Impairment charges 26,385 —
Amortization of rent-related intangibles and deferred rental revenue 22,701 28,554
Stock-based compensation expense 17,591 14,429
Distributions of earnings from equity method investments 15,907 3,730
Net realized and unrealized (gains) losses on equity securities, extinguishment of debt, foreign currency exchange rate movements, and other (12,621) 39,781
(Earnings) losses from equity method investments (12,173) 9,889
Deferred income tax benefit (1,597) (2,351)
Asset management revenue received in shares of CPA:18 – Global (1,024) (6,292)
Change in allowance for credit losses (980) (6,249)
Net changes in other operating assets and liabilities (60,176) (35,581)
Net Cash Provided by Operating Activities 446,883 398,747
Cash Flows — Investing Activities
Purchases of real estate (614,397) (837,003)
Proceeds from sales of real estate 115,133 98,433
Proceeds from redemption of securities 65,000 —
Funding for real estate construction, redevelopments, and other capital expenditures on real estate (56,741) (54,381)
Capital contributions to equity method investments (39,609) (88,692)
Funding of short-term loans to affiliates (26,000) (31,000)
Investment in loan receivable (19,293) —
Proceeds from repayment of short-term loans to affiliates 10,000 37,048
Return of capital from equity method investments 8,105 11,627
Other investing activities, net (2,723) (21,913)
Net Cash Used in Investing Activities (560,525) (885,881)
Cash Flows — Financing Activities
Proceeds from Unsecured Revolving Credit Facility 696,984 1,088,217
Repayments of Unsecured Revolving Credit Facility (657,866) (893,104)
Dividends paid (407,728) (372,585)
Proceeds from term loan 283,139 —
Proceeds from shares issued under ATM Program, net of selling costs 218,095 302,512
Scheduled payments of mortgage principal (14,705) (20,239)
Prepayments of mortgage principal (10,380) (426,907)
Payments for withholding taxes upon delivery of equity-based awards (6,599) (3,777)
Other financing activities, net 5,656 2,250
Distributions paid to noncontrolling interests (65) (56)
Proceeds from issuance of Senior Unsecured Notes — 1,038,391
Redemption of Senior Unsecured Notes — (617,442)
Proceeds from shares issued under our Equity Forwards, net of selling costs — 309,864
Payment of financing costs — (8,176)
Net Cash Provided by Financing Activities 106,531 398,948
Change in Cash and Cash Equivalents and Restricted Cash During the Period
Effect of exchange rate changes on cash and cash equivalents and restricted cash (10,346) (5,390)
Net decrease in cash and cash equivalents and restricted cash (17,457) (93,576)
Cash and cash equivalents and restricted cash, beginning of period 217,950 311,779
Cash and cash equivalents and restricted cash, end of period $ 200,493 $ 218,203


	Six Months Ended June 30,
	2023		2022
Cash Flows — Operating Activities
Net income	$	439,021	$	284,711
Adjustments to net income:
Depreciation and amortization, including intangible assets and deferred financing costs	309,988		237,672
Gain on sale of real estate, net	(179,557)		(42,367)
Straight-line rent adjustments	(35,965)		(27,146)
Amortization of rent-related intangibles and deferred rental revenue	19,793		22,701
Stock-based compensation expense	16,761		17,591
Distributions of earnings from equity method investments	9,931		15,907
Earnings from equity method investments	(9,591)		(12,173)
Decrease in allowance for credit losses	(3,629)		(980)
Net realized and unrealized gains on equity securities, extinguishment of debt, foreign currency exchange rate movements, and other	(2,126)		(12,621)
Deferred income tax expense (benefit)	1,643		(1,597)
Impairment charges — real estate	—		26,385
Asset management revenue received in shares of CPA:18 – Global	—		(1,024)
Net changes in other operating assets and liabilities	(35,935)		(60,176)
Net Cash Provided by Operating Activities	530,334		446,883
Cash Flows — Investing Activities
Purchases of real estate	(895,034)		(614,397)
Funding for real estate construction, redevelopments, and other capital expenditures on real estate	(62,135)		(56,741)
Proceeds from sales of real estate	44,061		115,133
Tenant-funded escrow for investing activities	29,787		—
Capital contributions to equity method investments	(23,677)		(39,609)
Return of capital from equity method investments	9,943		8,105
Other investing activities, net	(8,563)		(2,723)
Proceeds from redemption of WLT preferred stock (Note 8)	—		65,000
Funding of short-term loans to affiliates	—		(26,000)
Investment in loan receivable	—		(19,293)
Proceeds from repayment of short-term loans to affiliates	—		10,000
Net Cash Used in Investing Activities	(905,618)		(560,525)
Cash Flows — Financing Activities
Proceeds from Unsecured Revolving Credit Facility	1,820,608		696,984
Repayments of Unsecured Revolving Credit Facility	(1,577,153)		(657,866)
Proceeds from term loans	546,014		283,139
Dividends paid	(456,171)		(407,728)
Proceeds from shares issued under ATM Program, net of selling costs	249,806		218,095
Scheduled payments of mortgage principal	(85,888)		(14,705)
Prepayments of mortgage principal	(52,876)		(10,380)
Payments for withholding taxes upon delivery of equity-based awards	(13,618)		(6,599)
Contributions from noncontrolling interests	2,886		—
Other financing activities, net	2,193		5,656
Distributions to noncontrolling interests	(280)		(65)
Net Cash Provided by Financing Activities	435,521		106,531
Change in Cash and Cash Equivalents and Restricted Cash During the Period
Effect of exchange rate changes on cash and cash equivalents and restricted cash	1,909		(10,346)
Net increase (decrease) in cash and cash equivalents and restricted cash	62,146		(17,457)
Cash and cash equivalents and restricted cash, beginning of period	224,141		217,950
Cash and cash equivalents and restricted cash, end of period	$	286,287	$	200,493

See Notes to Consolidated Financial Statements.

W. P. Carey 6/30/~~2022~~2023 10-Q – 8

W. P. CAREY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Business and Organization

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

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

On February 27, 2022, we, Corporate Property Associates 18 – Global Incorporated (“CPA:18 – Global”) (a publicly owned, non-traded REIT that primarily invests in commercial real estate properties and is advised by us), CPA:18 Limited Partnership (a subsidiary of CPA:18 – Global, “CPA:18 LP”), and certain of our subsidiaries entered into an agreement and plan of merger (the “Merger Agreement”), pursuant to which CPA:18 – Global will merge with and into one of our indirect subsidiaries in exchange for shares of our common stock and cash (the “Proposed Merger”). The Proposed Merger and related transactions were approved by the stockholders of CPA:18 – Global at a special meeting on July 26, 2022. We currently expect the transaction to close on August 1, 2022.

Subject to the terms and conditions contained in the Merger Agreement, at the effective time of the Proposed Merger, each share of CPA:18 – Global common stock issued and outstanding immediately prior to the effective time of the Proposed Merger will be canceled and, in exchange for cancellation of such share, the rights attaching to such share will be converted automatically into the right to receive (i) 0.0978 shares of our common stock and (ii) $3.00 in cash, which we refer to herein as the Merger Consideration. Each share of CPA:18 – Global common stock owned by us or any of our subsidiaries immediately prior to the effective time of the Proposed Merger will automatically be canceled and retired, and will cease to exist, for no Merger Consideration.

We elected to be taxed as a REIT under Section 856 through 860 of the Internal Revenue Code effective as of February 15, 2012. As a REIT, we are not subject to federal income taxes on income and gains that we distribute to our stockholders as long as we satisfy certain requirements, principally relating to the nature of our income and the level of our distributions, as well as other factors. We also own real property in jurisdictions outside the United States through foreign subsidiaries and are subject to income taxes on our pre-tax income earned from properties in such countries. Through our taxable REIT subsidiaries (“TRSs”), we also earn revenue as the advisor to certain non-traded investment programs. We hold substantially all of our real estate assets ~~attributable to our Real Estate segment~~ under the REIT structure, while the activities conducted by our Investment Management segment subsidiaries have been organized under TRSs.

On August 1, 2022, a non-traded REIT that we advised, Corporate Property Associates 18 – Global Incorporated (“CPA:18 – Global”) merged with and into one of our indirect subsidiaries (the “CPA:18 Merger”). At June 30, ~~2022,~~2023, we were the advisor to ~~the following entities (Note 3~~):

•~~CPA:18 – Global; and~~

•Carey European Student Housing Fund I, L.P. (“CESH”), a limited partnership formed for the purpose of developing, owning, and operating student housing properties ~~and similar investments~~ in ~~Europe.~~Europe (

Note 3

). We refer to CPA:18 – Global (prior to the CPA:18 Merger) and CESH collectively as the “Managed Programs.” We no longer raise capital for new or existing funds, but currently expect to continue managing ~~CPA:18 – Global and~~ CESH through the end of ~~their respective~~its life ~~cycles~~cycle (Note 3).

Reportable Segments

Real Estate — Lease revenues from our real estate investments generate the vast majority of our earnings. We invest primarily in commercial properties located in the United States and Northern and Western Europe, which are leased to companies on a triple-net lease basis. At June 30, ~~2022,~~2023, our ~~owned~~ portfolio was comprised of our full or partial ownership interests in ~~1,357~~1,475 properties, totaling approximately ~~161~~180 million square feet, substantially all of which were net leased to ~~356~~398 tenants, with a weighted-average lease term of ~~11.0~~11.2 years and an occupancy rate of ~~99.1%~~99.0%. In addition, at June 30, ~~2022,~~2023, our portfolio was comprised of full or partial ownership interests in 20100 operating properties, including 1985 self-storage properties, 13 hotels, and ~~1 hotel,~~two student housing properties, totaling approximately ~~1.4~~7.8 million square feet.

~~W. P. Carey 6/30/2022 10-Q~~– 9

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

Investment Management — Through our TRSs, we manage the real estate investment ~~portfolios~~portfolio for ~~the Managed Programs,~~CESH, for which we earn asset management revenue. We may ~~earn incentive revenue and~~also be entitled to receive ~~other compensation through~~certain distributions pursuant to our advisory ~~agreements~~arrangements with certain of the Managed Programs, including in connection with providing a liquidity event for CPA:18 – Global’s stockholders. In addition, we include equity income generated through our (i) ownership of shares and limited partnership units of the Managed Programs (~~Note 7) and (ii) special general partner interest in the operating partnership of CPA:18 – Global (through which we participate in its cash flows (Note 3)), in our Investment Management segment.~~

CESH. At June 30, ~~2022, the Managed Programs~~2023, CESH wholly owned ~~all or a portion of 46~~(i) two net-leased properties, ~~(including certain properties in which we also have an ownership interest),~~ totaling approximately ~~9.7~~0.2 million square feet, ~~substantially all~~both of which were leased to ~~47 tenants,~~one tenant, with an occupancy rate of ~~approximately 99.3%. The Managed Programs also had interests in 66 operating properties (totaling approximately 5.1 million square feet in the aggregate)~~100.0%, and ~~2 active~~(ii) one build-to-suit ~~projects at the same date.~~project.

W. P. Carey 6/30/2023 10-Q– 9

Notes to Consolidated Financial Statements (Unaudited)

Note 2. Basis of Presentation

Basis of Presentation

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

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

Basis of Consolidation

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

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

~~W. P. Carey 6/30/2022 10-Q~~– 10

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

At ~~both~~ June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we considered 1415 and 16 entities, respectively, to be VIEs, of which we consolidated 6,10 and 11, respectively, as we are considered the primary beneficiary. The following table presents a summary of selected financial data of the consolidated VIEs included in our consolidated balance sheets (in thousands):


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Land, buildings and improvements		$	429,623	$	426,831
Net investments in direct financing leases and loans receivable		144,103		144,103
Land, buildings and improvements — net lease and other						Land, buildings and improvements — net lease and other	$	170,638	$	590,390
Land, buildings and improvements — operating properties						Land, buildings and improvements — operating properties	73,057		143,390
Net investments in finance leases and loans receivable						Net investments in finance leases and loans receivable	595,524		144,103
In-place lease intangible assets and other	In-place lease intangible assets and other	44,165		42,884		In-place lease intangible assets and other	28,343		72,070
Above-market rent intangible assets	Above-market rent intangible assets	26,720		26,720		Above-market rent intangible assets	11,037		33,634
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(162,739)		(154,413)		Accumulated depreciation and amortization	(25,837)		(176,379)
Total assets	Total assets	499,806		500,884		Total assets	888,756		843,500

Non-recourse mortgages, net	Non-recourse mortgages, net	$	1,279	$	1,485	Non-recourse mortgages, net	$	56,738	$	132,950
Below-market rent and other intangible liabilities, net	Below-market rent and other intangible liabilities, net	19,711		20,568		Below-market rent and other intangible liabilities, net	32		18,891
Total liabilities	Total liabilities	44,233		46,302		Total liabilities	97,015		199,633

At both June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, our 8five unconsolidated VIEs included our interests in (i) 6three unconsolidated real estate investments, which we account for under the equity method of accounting (we do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities allows us to exercise significant influence on, but does not give us power over, decisions that significantly affect the economic performance of these entities), and (ii) 2two unconsolidated investments in equity securities, which we accounted for as investments in shares of the entities at fair value. As of June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, the net carrying amount of our investments in these entities was ~~$612.9~~$715.0 million and ~~$581.3~~$693.4 million, respectively, and our maximum exposure to loss in these entities was limited to our investments.

W. P. Carey 6/30/2023 10-Q– 10

Notes to Consolidated Financial Statements (Unaudited)

Reclassifications

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

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

Revenue Recognition

There have been no significant changes in our policies for revenue from contracts under Accounting Standards Codification (“ASC”) 606 from what was disclosed in the ~~2021~~2022 Annual Report. ASC 606 does not apply to our lease revenues, which constitute a majority of our revenues, but primarily applies to revenues generated from our hotel operating properties and our Investment Management segment. Revenue from contracts for our Real Estate segment primarily represented hotel operating property revenues of ~~$3.3~~$24.7 million and ~~$1.7~~$3.3 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$5.4~~$40.2 million and ~~$2.5~~$5.4 million for the six months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively, generated from 13 hotels located in the United States (12 of which were reclassified from net leases to operating properties in the first quarter of 2023 (Note 154)). Revenue from contracts under ASC 606 from our Investment Management segment is discussed in Note 3.

Lease revenue (including straight-line lease revenue) is only recognized when deemed probable of collection. Collectibility is assessed for each tenant receivable using various criteria including credit ratings (~~Note 5~~), guarantees, past collection issues, and the current economic and business environment affecting the tenant. If collectibility of the contractual rent stream is not deemed probable, revenue will only be recognized upon receipt of cash from the tenant.

~~W. P. Carey 6/30/2022 10-Q~~– 11

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

Restricted Cash

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


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	103,590	$	165,427	Cash and cash equivalents	$	204,103	$	167,996
Restricted cash (a)	Restricted cash (a)	96,903		52,523		Restricted cash (a)	82,184		56,145
Total cash and cash equivalents and restricted cash	Total cash and cash equivalents and restricted cash	$	200,493	$	217,950	Total cash and cash equivalents and restricted cash	$	286,287	$	224,141

__________

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

Reference Rate Reform

During the first quarter of 2023, we applied the guidance in ASC 848, Reference Rate Reform and elected the practical expedient to transition certain contracts that reference London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”), including our Senior Unsecured Credit Facility (Note 10) and certain derivative instruments. The application of this guidance did not have a material impact on our consolidated financial statements.

Note 3. Agreements and Transactions with Related Parties

~~Proposed Merger with CPA:18 – Global~~

~~The Proposed Merger with CPA:18 – Global is described in~~ ~~Note 1~~.

Advisory Agreements and Partnership Agreements with the Managed Programs

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

~~The merger between~~

W. P. Carey Watermark Investors Incorporated (“CWI 1”) and Carey Watermark Investors 2 Incorporated (“CWI 2”), two former affiliates (the “CWI 1 and CWI 2 Merger”), closed on April 13, 2020 and is discussed in detail in the 2021 Annual Report. Subsequently, CWI 2 was renamed Watermark Lodging Trust, Inc. (“WLT”). In connection with the CWI 1 and CWI 2 Merger, we entered into a transition services agreement, under which we provided certain transition services at cost to WLT generally for a period of 12 months from closing. On October 13, 2021, all services provided under the transition services agreement were terminated.6/30/2023 10-Q– 11

Notes to Consolidated Financial Statements (Unaudited)

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Asset management revenue (a) (b)	Asset management revenue (a) (b)	$	3,467	$	3,966	$	6,887	$	7,920	Asset management revenue (a) (b)	$	303	$	3,467	$	642	$	6,887
Reimbursable costs from affiliates (a)										Reimbursable costs from affiliates (a)	124		1,143		225		2,070
Distributions of Available Cash (c)	Distributions of Available Cash (c)	2,814		1,787		5,401		3,326		Distributions of Available Cash (c)	—		2,814		—		5,401
Reimbursable costs from affiliates (a)		1,143		968		2,070		2,009
Interest income on deferred acquisition fees and loans to affiliates (d)		75		30		108		64
Interest income on loans to affiliates (d)										Interest income on loans to affiliates (d)	—		75		—		108
		$	7,499	$	6,751	$	14,466	$	13,319		$	427	$	7,499	$	867	$	14,466


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
CESH										CESH	$	427	$	562	$	867	$	1,078
CPA:18 – Global	CPA:18 – Global	$	6,937	$	5,611	$	13,388	$	10,970	CPA:18 – Global	—		6,937		—		13,388
CESH		562		1,044		1,078		2,145
WLT (reimbursed transition services)		—		96		—		204
		$	7,499	$	6,751	$	14,466	$	13,319		$	427	$	7,499	$	867	$	14,466

__________

~~W. P. Carey 6/30/2022 10-Q~~– 12

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

(a)Amounts represent revenues from contracts under ASC 606.

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

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

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

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


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Short-term loans to affiliates, including accrued interest		$	16,108	$	—
Asset management fees receivable	Asset management fees receivable	1,767		494		Asset management fees receivable	$	300	$	386
Reimbursable costs	Reimbursable costs	873		974		Reimbursable costs	295		204
Accounts receivable	Accounts receivable	171		336		Accounts receivable	79		329
Current acquisition fees receivable		18		19
Deferred acquisition fees receivable, including accrued interest		—		3
		$	18,937	$	1,826		$	674	$	919

Asset Management Revenue

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

~~Managed Program~~

~~Rate~~

~~Payable~~

~~Description~~

~~CPA:18 – Global~~

~~0.5% – 1.5%~~

In shares of its Class A common stock and/or cash, at the option of CPA:18 – Global; payable in shares of its Class A common stock for 2021 through February 28, 2022; payable in cash effective as of March 1, 2022, in light of the Proposed Merger

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

~~CESH~~

~~1.0%~~

~~In cash~~

~~Based on gross assets at fair value~~

~~Structuring and Other Advisory Revenue~~

~~Under the terms of the advisory agreements with the Managed Programs, we may earn~~ revenue ~~for structuring and negotiating investments. For~~from CPA:18 – ~~Global and CESH, we may earn fees of 4.5% and 2.0%, respectively, of the total aggregate cost of the investments or commitments made.~~Global.

Reimbursable Costs from Affiliates

~~The existing Managed Programs reimburse~~CESH reimburses us in cash for certain personnel and overhead costs that we incur on their behalf. For CPA:18 – Global, such costs (excluding those related to our legal transactions group, our senior management, and our investments team) are charged to CPA:18 – Global based on the average of the trailing 12-month aggregate reported revenues of the Managed Programs and us, and personnel costs are capped at 1.0% of CPA:18 – Global’s pro rata lease revenues for both 2022 and 2021. For CESH, reimbursements areits behalf, based on actual expenses incurred.

Distributions of Available Cash

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

~~W. P. Carey 6/30/2022 10-Q~~– 13

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

Back-End Fees and Interests in the Managed Programs

Under our advisory ~~agreements~~arrangements with ~~certain of the Managed Programs,~~CESH, we may also receive compensation in connection with providing a liquidity ~~events~~event for ~~their stockholders.~~its investors. Such back-end fees or interests include ~~or may include disposition fees,~~ interests in disposition ~~proceeds, and distributions related to ownership of shares or limited partnership units in the Managed Programs.~~proceeds. There can be no assurance as to whether or when any back-end fees or interests will be realized. Subject to the terms and conditions of the Merger Agreement, upon consummation of the Proposed Merger, we have agreed to waive certain back-end fees that we would have been entitled to receive from CPA:18 – Global upon its liquidation pursuant to the terms of our advisory agreement and partnership agreement with CPA:18 – Global.

W. P. Carey 6/30/2023 10-Q– 12

Notes to Consolidated Financial Statements (Unaudited)

Other Transactions with Affiliates

Loans to Affiliates

From time to time, our board of directors has approved the making of secured and unsecured loans or lines of credit from us to certain of the Managed Programs, at our sole discretion, generally for the purpose of facilitating acquisitions or for working capital purposes.

The ~~principal outstanding balance on our line of credit to~~loan agreement with CPA:18 – Global was ~~$16.0 million as~~terminated upon completion of ~~June 30,~~the CPA:18 Merger on August 1, 2022. No ~~amounts were outstanding as~~such line of ~~December 31, 2021. In July 2022, CPA:18 – Global repaid~~credit with CESH existed during the ~~principal outstanding balance in full.~~reporting period.

Other

At June 30, ~~2022,~~2023, we owned interests in 9nine jointly owned investments in real estate, with the remaining interests held by ~~affiliates or~~ third parties. We consolidate five such investments and account for ~~8 such~~the remaining four investments under the equity method of accounting (Note 7) ~~and consolidate the remaining investment.~~. In addition, we owned ~~stock of CPA:18 – Global and~~ limited partnership units of CESH at that date. We ~~accounted for our investment in CPA:18 – Global under the equity method of accounting and~~ elected to account for our investment in CESH under the fair value option (Note 7).

Note 4. Land, Buildings and Improvements, and Assets Held for Sale

Land, Buildings and Improvements — ~~Operating Leases~~Net Lease and Other

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


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Land	Land	$	2,136,338	$	2,151,327	Land	$	2,436,946	$	2,400,002
Buildings and improvements	Buildings and improvements	9,743,900		9,525,858		Buildings and improvements	11,075,657		10,916,630
Real estate under construction	Real estate under construction	62,732		114,549		Real estate under construction	51,234		22,225
Less: Accumulated depreciation	Less: Accumulated depreciation	(1,530,006)		(1,448,020)		Less: Accumulated depreciation	(1,670,860)		(1,672,091)
		$	10,412,964	$	10,343,714		$	11,892,977	$	11,666,766

During the six months ended June 30, ~~2022,~~2023, the U.S. dollar ~~strengthened~~weakened against the euro, as the end-of-period rate for the U.S. dollar in relation to the euro ~~decreased~~increased by ~~8.3%~~1.9% to ~~$1.0387~~$1.0866 from ~~$1.1326.~~$1.0666. As a result of this fluctuation in foreign currency exchange rates, the carrying value of our Land, buildings and improvements ~~subject to operating leases decreased~~— net lease and other increased by ~~$328.8~~$67.6 million from December 31, ~~2021~~2022 to June 30, ~~2022.~~2023.

During the six months ended June 30, 2023, we reclassified a portfolio of 78 properties classified as Land, buildings and improvements — net lease and other to Net investments in finance leases and loans receivable due to the tenant’s notice of intention to exercise a purchase option. As a result, the carrying value of our Land, buildings and improvements — net lease and other decreased by $288.2 million from December 31, 2022 to June 30, 2023 (Note 5).

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

In connection with a change in lease classification due to ~~termination~~an extension of the underlying lease, we reclassified 1one property with an aggregate carrying value of ~~$17.3~~$10.9 million from Net investments in ~~direct financing~~finance leases and loans receivable to Land, buildings and improvements — net lease and other during the six months ended June 30, ~~2022~~2023 (Note 5).

Depreciation expense, including the effect of foreign currency translation, on our buildings and improvements subject to operating leases was ~~$73.0~~$79.7 million and ~~$69.4~~$73.0 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$145.0~~$171.0 million and ~~$136.4~~$145.0 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

W. P. Carey 6/30/~~2022~~2023 10-Q – 1413

Notes to Consolidated Financial Statements (Unaudited)

Acquisitions of Real Estate

During the six months ended June 30, ~~2022,~~2023, we entered into the following investments, which were deemed to be real estate asset acquisitions (dollars in thousands):

Property Location(s) Number of Properties Date of Acquisition Property Type Total Capitalized Costs
Pleasant Prairie, Wisconsin 1 1/10/2022 Industrial $ 20,024
Various, Spain (a)
26 2/3/2022 Funeral Home 146,364
Various, Denmark (a) (b)
8 2/11/2022 Retail 33,976
Laval, Canada (a)
1 2/18/2022 Industrial 21,459
Chattanooga, Tennessee (c)
1 3/4/2022 Warehouse 43,198
Various, United States (4 properties), Canada (1 property, and Mexico (1 property) 6 4/27/2022; 5/9/2022 Industrial 80,595
Various, United States 6 5/16/2022 Industrial; Warehouse 110,381
Various, Denmark (a) (b)
10 6/1/2022; 6/30/2022 Retail 42,635
Medina, Ohio 1 6/17/2022 Industrial 28,913
Bree, Belgium (a)
1 6/30/2022 Warehouse 96,697
61 $ 624,242


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

__________

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

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

(c)We also entered into a purchase ~~agreements~~agreement to acquire 13two additional retail (car wash) facilities leased to this tenant totaling ~~$49.3~~$8.7 million, ~~(based on the exchange rate of the Danish krone at June 30, 2022),~~ which is expected to be completed ~~in 2022.~~

~~(c)We also committed to fund an additional $22.8 million for an expansion at~~during the ~~facility, which is expected to be completed in the second~~third quarter of 2023.

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


	Total Capitalized Costs
Land	$	~~77,122~~135,502
Buildings and improvements	~~463,233~~604,973
Intangible ~~assets and liabilities:~~assets:
In-place lease (weighted-average expected life of ~~22.8~~21.9 years)	~~74,979~~
~~Below-market rent (expected life of 6.8 years)~~	~~(3,379)~~142,073
Right-of-use assets:
~~Prepaid rent~~Finance lease (a)	~~12,287~~ 12,981
Prepaid rent liabilities	(6,882)
	$	~~624,242~~888,647

__________

(a)Represents ~~prepaid rent for~~consideration paid to acquire a leasehold interest in land, ~~lease. Therefore, there is no future obligation on~~buildings and improvements. The lease was determined to be a finance lease due to our intention to acquire the land, buildings and improvements upon lease ~~asset and no corresponding operating lease liability. This asset is~~expiration. These assets are included in In-place lease intangible assets and other in the consolidated balance sheets.

Real Estate Under Construction

During the six months ended June 30, ~~2022,~~2023, we capitalized real estate under construction totaling ~~$46.4~~$54.5 million. The number of construction projects in progress with balances included in real estate under construction was 511 and 6eight as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Aggregate unfunded commitments totaled approximately ~~$34.0~~$90.9 million and ~~$55.3~~$61.1 million as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

W. P. Carey 6/30/~~2022~~2023 10-Q – 1514

Notes to Consolidated Financial Statements (Unaudited)

During the six months ended June 30, ~~2022,~~2023, we completed the following construction projects (dollars in thousands):

Property Location(s) Primary Transaction Type Number of Properties Date of Completion Property Type
Total Capitalized Costs (a)
Hurricane, Utah Expansion 1 3/8/2022 Warehouse $ 20,517
Breda, Netherlands (a)
Expansion 1 3/18/2022 Warehouse 4,721
Bowling Green, Kentucky Renovation 1 4/26/2022 Warehouse 72,971
3 $ 98,209

~~__________~~

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

Property Location(s)

Primary Transaction Type

Number of Properties

Date of Completion

Property Type

Total Capitalized Costs

Evansville, Indiana and Lawrence, Kansas

Renovation

3/23/2023

Industrial

20,637

During the six months ended June 30, ~~2022,~~2023, we committed to fund ~~a build-to-suit project for an outdoor advertising structure in Mount Laurel, New Jersey,~~two redevelopment projects, for an aggregate amount of ~~$2.1~~$61.7 million. We currently expect to complete ~~the~~one project in the ~~third~~first quarter of ~~2022.~~2024 and one project in the first quarter of 2025.

Capitalized interest incurred during construction was ~~$0.4~~less than $0.1 million and ~~$0.6~~$0.4 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$1.1~~$0.1 million and ~~$1.3~~$1.1 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, which reduces Interest expense in the consolidated statements of income.

Dispositions of Properties

During the six months ended June 30, ~~2022,~~2023, we sold 12six properties, which were classified as Land, buildings and improvements ~~subject to operating leases.~~— net lease and other. As a result, the carrying value of our Land, buildings and improvements ~~subject to operating leases~~— net lease and other decreased by ~~$58.8~~$28.1 million from December 31, ~~2021~~2022 to June 30, ~~2022~~2023 (Note 14).

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

~~2022~~2023 — For the three and six months ended June 30, ~~2022, lease termination~~2023, other lease-related income ~~and other~~ on our consolidated statements of income included: (i) other lease-related settlements totaling $4.3 million and $5.6 million, respectively and (ii) lease termination income totaling $11.4 million for the six months ended June 30, 2023, received from two tenants in connection with the sales of the properties they occupied.

2022 — For the three and six months ended June 30, 2022, other lease-related income on our consolidated statements of income included: (i) other lease-related settlements totaling $1.4 million and $6.1 million, ~~respectively~~;respectively; (ii) income from a parking garage attached to one of our net-leased properties totaling ~~$0.6~~$0.6 million and $1.2 million, ~~respectively,~~respectively; and (iii) lease termination income of $8.2 million received from a tenant during the six months ended June 30, 2022.

~~2021~~ — For the three and six months ended June 30, 2021, lease termination income and other on our consolidated statements of income included: (i) lease-related settlements totaling $4.4 million and $5.3 million, respectively; and (ii) income from a parking garage attached to one of our net-leased properties totaling $0.4 million and $0.9 million, respectively.

Leases

Operating Lease Income

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Lease income — fixed	Lease income — fixed	$	281,269	$	261,704	$	557,410	$	519,031	Lease income — fixed	$	324,468	$	281,269	$	632,534	$	557,410
Lease income — variable (a)	Lease income — variable (a)	33,085		27,360		64,669		54,698		Lease income — variable (a)	44,656		33,085		88,926		64,669
Total operating lease income	Total operating lease income	$	314,354	$	289,064	$	622,079	$	573,729	Total operating lease income	$	369,124	$	314,354	$	721,460	$	622,079

__________

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

W. P. Carey 6/30/~~2022~~2023 10-Q – 1615

Notes to Consolidated Financial Statements (Unaudited)

Land, Buildings and Improvements — Operating Properties

At ~~both~~ June 30, ~~2022 and December 31, 2021,~~2023, Land, buildings and improvements ~~attributable to~~— operating properties consisted of our investments in 1076 consolidated self-storage properties, 13 consolidated hotels, and 1two consolidated student housing properties. At December 31, 2022, Land, buildings and improvements — operating properties consisted of our investments in 75 consolidated self-storage properties, two consolidated student housing properties, and one consolidated hotel. Below is a summary of our Land, buildings and improvements ~~attributable to~~— operating properties (in thousands):


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Land	Land	$	10,452	$	10,452	Land	$	154,119	$	122,317
Buildings and improvements	Buildings and improvements	73,249		73,221		Buildings and improvements	1,180,382		955,009
Real estate under construction						Real estate under construction	—		18,566
Less: Accumulated depreciation	Less: Accumulated depreciation	(18,051)		(16,750)		Less: Accumulated depreciation	(99,679)		(28,295)
		$	65,650	$	66,923		$	1,234,822	$	1,067,597

As described above under Land, Buildings and Improvements — Net Lease and Other, on January 31, 2023, the master lease expired on certain hotel properties previously classified as net-lease properties, which converted to operating properties. As a result, in February 2023, we reclassified 12 consolidated hotel properties with an aggregate carrying value of $164.6 million from Land, buildings and improvements — net lease and other to Land, buildings and improvements — operating properties.

During the six months ended June 30, 2023, the U.S. dollar weakened against the British pound sterling, resulting in an increase of $4.6 million in the carrying value of our Land, buildings and improvements — operating properties from December 31, 2022 to June 30, 2023

During the six months ended June 30, 2023, we completed a student housing development project and reclassified $23.5 million from real estate under construction to buildings and improvements attributable to operating properties.

On June 22, 2023, we acquired a self-storage operating property located in Little Rock, Arkansas for $6.2 million, including land of $1.7 million, buildings and improvements of $4.4 million, and in-place lease intangible assets of $0.1 million (with an expected life of 0.5 years). We also committed to fund $3.6 million for an expansion at this facility, which is expected to be completed in the second quarter of 2024.

Depreciation expense on our buildings and improvements attributable to operating properties was $7.7 million and $0.7 million for ~~both~~ the three months ended June 30, 2023 and 2022, respectively, and ~~2021,~~$14.9 million and $1.4 million for ~~both~~ the six months ended June 30, ~~2022~~2023 and ~~2021.~~2022.

Assets Held for Sale, Net

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


	~~June 30, 2022~~		~~December 31, 2021~~
~~Land, buildings and improvements~~	$	—	$	~~10,628~~
~~Accumulated depreciation and amortization~~	—		~~(2,359)~~
~~Assets held for sale, net~~	$	—	$	~~8,269~~


	June 30, 2023		December 31, 2022
Land, buildings and improvements — net lease and other	$	34,679	$	47,134
In-place lease intangible assets and other	8,132		10,854
Above-market rent intangible assets	191		3,210
Accumulated depreciation and amortization	—		(3,254)
Assets held for sale, net	$	43,002	$	57,944

At June 30, 2023, we had one property classified as Assets held for sale, net, with a carrying value of $43.0 million. At December 31, ~~2021,~~2022 we had 2three properties classified as Assets held for sale, net, with an aggregate carrying value of ~~$8.3~~$57.9 million. ~~These~~Two of these properties were sold in the first quarter of ~~2022.~~2023.

W. P. Carey 6/30/2023 10-Q– 16

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~~finance leases and loans receivable (net of allowance for credit losses)~~, and deferred acquisition fees.~~. Operating leases are not included in finance receivables.

Finance Receivables

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

Maturity Date June 30, 2022 December 31, 2021
Net investments in direct financing leases (a)
2022 – 2036 $ 530,318 $ 572,205
Sale-leaseback transactions accounted for as loans receivable (b)
2038 – 2052 232,001 217,229
Secured loans receivable (c)
2022 – 2025 24,143 24,143
$ 786,462 $ 813,577


	Maturity Date	June 30, 2023		December 31, 2022
Net investments in direct financing leases (a)	2023 – 2036	$	495,881	$	498,313
Net investments in sales-type leases (b)	2024	451,421		—
Sale-leaseback transactions accounted for as loans receivable (b) (c)	2038 – 2052	235,887		234,198
Secured loans receivable (d)	2023 – 2024	39,250		39,250
		$	1,222,439	$	771,761

__________

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

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

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

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

~~W. P. Carey 6/30/2022 10-Q~~– 17

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

Net Investments in Direct Financing Leases

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


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Lease payments receivable	Lease payments receivable	$	354,530	$	414,002	Lease payments receivable	$	308,540	$	332,618
Unguaranteed residual value	Unguaranteed residual value	504,806		545,896		Unguaranteed residual value	465,995		470,839
		859,336		959,898			774,535		803,457
Less: unearned income	Less: unearned income	(317,396)		(370,353)		Less: unearned income	(273,550)		(296,411)
Less: allowance for credit losses (a)	Less: allowance for credit losses (a)	(11,622)		(17,340)		Less: allowance for credit losses (a)	(5,104)		(8,733)
		$	530,318	$	572,205		$	495,881	$	498,313

__________

(a)During the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, we recorded a net ~~reversal~~release of allowance for credit losses of ~~$1.0~~$3.6 million and ~~$6.2~~$1.0 million, respectively, on our net investments in direct financing leases due to changes in expected economic conditions and improved credit quality for certain tenants, which was included within Other gains and (losses) in our consolidated statements of income. In addition, during the six months ended June 30, 2022, we reduced the allowance for credit losses balance by $4.7 million, in connection with the reclassification of a property from Net investments in direct financing leases and loans receivable to Land, buildings and improvements subject to operating leases, as described below.

Income from direct financing leases, which is included in Income from ~~direct financing~~finance leases and loans receivable in the consolidated financial statements, was ~~$13.3~~$12.8 million and ~~$16.2~~$13.3 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$27.2~~$25.4 million and ~~$33.3~~$27.2 million for the six months ended June 30, ~~2022~~2023 and ~~2021, respectively.~~2022.

During the six months ended June 30, ~~2022,~~2023, we reclassified 1one property with an aggregate carrying value of ~~$17.3~~$10.9 million from Net investments in ~~direct financing~~finance leases and loans receivable to Land, buildings and improvements ~~subject to operating leases~~— net lease and other in connection with a change in lease classification due to ~~termination~~an extension of the underlying lease. During the six months ended June 30, ~~2022,~~2023, the U.S. dollar ~~strengthened~~weakened against the euro, resulting in a ~~$31.0~~$7.5 million ~~decrease~~increase in the carrying value of Net investments in ~~direct financing~~finance leases and loans receivable from December 31, ~~2021~~2022 to June 30, ~~2022.~~2023.

~~Loans Receivable~~

W. P. Carey 6/30/2023 10-Q– 17

Notes to Consolidated Financial Statements (Unaudited)

Net Investments in Sales-Type Leases

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

~~During~~In accordance with ASC 842, Leases, we reclassified these net-lease assets to net investments in sales-type leases totaling $451.4 million on our consolidated balance sheets as of June 30, 2023 (based on the present value of remaining rents and estimated purchase price, using the CPI rates as of the exercise notice date), since the related party of the tenant provided notice of its intention to exercise its purchase option. In connection with this transaction, we reclassified the following amounts to Net investments in finance leases and loans receivable: (i) $393.7 million from Land, buildings and improvements — net lease and other, (ii) $36.6 million from In-place lease intangible assets and other, (iii) $22.4 million from Above-market rent intangible assets, (iv) $18.5 million from Below-market rent and other intangible liabilities, net, and (v) $159.0 million from Accumulated depreciation and amortization. We recognized an aggregate Gain on sale of real estate, net, of $176.2 million during the six months ended June 30, ~~2022, we entered into the following sale-leaseback, which was deemed~~2023 related to ~~be a loan~~this transaction.

Earnings from our net investments in sales-type leases are included in Income from finance leases and loans receivable in ~~accordance with ASC 310,~~ ~~Receivables~~the consolidated financial statements, and ~~ASC 842,~~ ~~Leases~~ ~~(dollars~~totaled $9.7 million and $12.9 million for the three and six months ended June 30, 2023, respectively. Prior to this reclassification to net investments in ~~thousands):~~sales-type leases, earnings from this investment were recognized in Lease revenues in the consolidated financial statements.

Property Location(s) Number of Properties Date of Acquisition Property Type Total Investment
Various, Belgium (a)
5 6/22/2022 Retail $ 19,795
5 $ 19,795
Net investments in sales-type leases is summarized as follows (in thousands):


	June 30, 2023		December 31, 2022
Lease payments receivable (a)	$	480,484	$	—

	480,484		—
Less: unearned income	(29,063)		—

	$	451,421	$	—

__________

(a)~~Amount reflects the applicable exchange rate on the date of transaction.~~Includes estimated purchase price and total rents owed.

Loans Receivable

Earnings from our loans receivable are included in Income from ~~direct financing~~finance leases and loans receivable in the consolidated financial statements, and totaled ~~$4.5~~$4.9 million and ~~$1.2~~$4.5 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$8.9~~$9.7 million and ~~$1.8~~$8.9 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

In the first quarter of 2021, we entered into an agreement with the borrowers for our 2 secured loans receivable, who agreed to pay us at maturity a total of $3.7 million of unpaid interest due over the previous year. We did not recognize this interest in the consolidated financial statements due to uncertainty of collectibility.

~~W. P. Carey 6/30/2022 10-Q~~– 18

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

Credit Quality of Finance Receivables

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

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

W. P. Carey 6/30/2023 10-Q– 18

Notes to Consolidated Financial Statements (Unaudited)

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


		Number of Tenants / Obligors at		Carrying Value at					Number of Tenants / Obligors at		Carrying Value at
Internal Credit Quality Indicator	Internal Credit Quality Indicator	June 30, 2022	December 31, 2021	June 30, 2022		December 31, 2021		Internal Credit Quality Indicator	June 30, 2023	December 31, 2022	June 30, 2023		December 31, 2022
1 – 3	1 – 3	18	17	$	698,244	$	703,280	1 – 3	19	19	$	1,107,066	$	664,761
4	4	8	9	112,433		140,230		4	8	8	122,577		117,833
5	5	—	—	—		—		5	—	—	—		—
				$	810,677	$	843,510				$	1,229,643	$	782,594

Note 6. Goodwill and Other Intangibles

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

Net lease intangibles recorded in connection with property acquisitions during the six months ended June 30, 2023 are described in Note 4.

Goodwill decreased by $0.4 million during the six months ended June 30, 2023 due to foreign currency translation adjustments, and was fully reflected within our Real Estate segment as of both June 30, 2023 and December 31, 2022.

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


	June 30, 2023						December 31, 2022
	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	$	20,342	$	(19,347)	$	995	$	19,812	$	(19,144)	$	668
	20,342		(19,347)		995		19,812		(19,144)		668
Lease Intangibles:
In-place lease	2,597,957		(1,098,657)		1,499,300		2,523,318		(1,061,235)		1,462,083
Above-market rent	806,619		(509,189)		297,430		833,751		(507,436)		326,315
	3,404,576		(1,607,846)		1,796,730		3,357,069		(1,568,671)		1,788,398
Goodwill
Goodwill	1,036,966		—		1,036,966		1,037,412		—		1,037,412
Total intangible assets	$	4,461,884	$	(1,627,193)	$	2,834,691	$	4,414,293	$	(1,587,815)	$	2,826,478

Finite-Lived Intangible Liabilities
Below-market rent	$	(234,289)	$	76,561	$	(157,728)	$	(293,160)	$	125,287	$	(167,873)
Indefinite-Lived Intangible Liabilities
Below-market purchase option	—		—		—		(16,711)		—		(16,711)
Total intangible liabilities	$	(234,289)	$	76,561	$	(157,728)	$	(309,871)	$	125,287	$	(184,584)

W. P. Carey 6/30/~~2022~~2023 10-Q – 19

Notes to Consolidated Financial Statements (Unaudited)

Goodwill within our Real Estate segment decreased by $10.1 million during the six months ended June 30, 2022 due to foreign currency translation adjustments, from $872.2 million as of December 31, 2021 to $862.1 million as of June 30, 2022. Goodwill within our Investment Management segment was $29.3 million as of June 30, 2022, unchanged from December 31, 2021.

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

June 30, 2022 December 31, 2021
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 $ 19,661 $ (18,923) $ 738 $ 19,553 $ (18,682) $ 871
Trade name 3,975 (3,975) — 3,975 (3,581) 394
23,636 (22,898) 738 23,528 (22,263) 1,265
Lease Intangibles:
In-place lease 2,274,546 (983,304) 1,291,242 2,279,905 (934,663) 1,345,242
Above-market rent 822,470 (511,785) 310,685 843,410 (489,861) 353,549
3,097,016 (1,495,089) 1,601,927 3,123,315 (1,424,524) 1,698,791
Goodwill
Goodwill 891,464 — 891,464 901,529 — 901,529
Total intangible assets $ 4,012,116 $ (1,517,987) $ 2,494,129 $ 4,048,372 $ (1,446,787) $ 2,601,585
Finite-Lived Intangible Liabilities
Below-market rent $ (272,239) $ 114,184 $ (158,055) $ (272,483) $ 105,908 $ (166,575)
Indefinite-Lived Intangible Liabilities
Below-market purchase option (16,711) — (16,711) (16,711) — (16,711)
Total intangible liabilities $ (288,950) $ 114,184 $ (174,766) $ (289,194) $ 105,908 $ (183,286)

During the six months ended June 30, ~~2022,~~2023, the U.S. dollar ~~strengthened~~weakened against the euro, resulting in ~~a decrease~~an increase of ~~$53.4~~$11.4 million in the carrying value of our net intangible assets from December 31, ~~2021~~2022 to June 30, ~~2022.~~ 2023. See Note 5 for a description of intangible assets and liabilities reclassified to net investments in sales-type leases during the six months ended June 30, 2023.

Net amortization of intangibles, including the effect of foreign currency translation, was ~~$50.8~~$63.6 million and ~~$57.6~~$50.8 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$103.5~~$131.2 million and ~~$111.6~~$103.5 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Lease revenues and amortization of internal-use software development ~~trade name,~~ and in-place lease intangibles is included in Depreciation and amortization.

Note 7. Equity Method Investments

We own interests in ~~the Managed Programs and~~ certain unconsolidated real estate investments with ~~CPA:18 – Global~~third parties and in the Managed Programs. There have been no significant changes in our equity method investment policies from what was disclosed in the 2022 Annual Report.

Interests in Unconsolidated Real Estate Investments

We own equity interests in properties that are generally leased to companies through noncontrolling interests in partnerships and limited liability companies that we do not control but over which we exercise significant influence. The underlying investments are jointly owned with third parties. We account for ~~our interests in~~ these investments under the equity method of ~~accounting (i.e., at cost, increased or decreased by~~accounting. Operating results of our ~~share of earnings or losses, less distributions, plus contributions and other adjustments required by~~unconsolidated real estate investments are included in the Real Estate segment.

The following table sets forth our ownership interests in our equity method ~~accounting, such as basis differences) or at fair value by electing~~investments in real estate, excluding the Managed Programs, and their respective carrying values (dollars in thousands):


			Carrying Value at
Lessee/Fund/Description	Co-owner	Ownership Interest	June 30, 2023		December 31, 2022
Las Vegas Retail Complex (a)	Third Party	N/A	$	220,088	$	196,352
Johnson Self Storage	Third Party	90%	64,786		65,707
Kesko Senukai (b)	Third Party	70%	29,353		38,569
Harmon Retail Corner (c)	Third Party	15%	24,250		24,649
			$	338,477	$	325,277

__________

(a)On June 10, 2021, we entered into an agreement to fund a construction loan of approximately $261.9 million (as of June 30, 2023) for a retail complex in Las Vegas, Nevada. Through June 30, 2023, we funded $216.8 million, including $23.7 million during the six months ended June 30, 2023. Equity income from this investment was $5.9 million and $3.4 million for the six months ended June 30, 2023 and 2022, respectively, which was recognized within Earnings from equity method ~~fair~~investments in our consolidated statements of income.

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

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

We ~~classify~~received aggregate distributions ~~received~~of $19.9 million and $18.4 million from ~~equity method~~our unconsolidated real estate investments ~~using~~for the ~~cumulative earnings approach. In general, distributions received are considered returns~~six months ended June 30, 2023 and 2022, respectively. At June 30, 2023 and December 31, 2022, the aggregate unamortized basis differences on ~~the investment~~our unconsolidated real estate investments were $18.5 million and classified as cash inflows from operating activities. If, however, the investor’s cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earnings recognized, the excess is considered a return of investment and is classified as cash inflows from investing activities.$19.1 million, respectively.

W. P. Carey 6/30/~~2022~~2023 10-Q – 20

Notes to Consolidated Financial Statements (Unaudited)

Managed Programs

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

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

% of Outstanding Interests Owned at Carrying Amount of Investment at
Fund June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021
CPA:18 – Global (a)
5.718 % 5.578 % $ 60,989 $ 60,836
CPA:18 – Global operating partnership 0.034 % 0.034 % 209 209
CESH (b)
2.430 % 2.430 % 2,488 3,689
$ 63,686 $ 64,734

~~__________~~

~~(a)~~During the six months ended June 30, 2022, we received certain asset management revenue from CPA:18 – Global in shares of its common stock, which increased our ownership percentage in CPA:18 – Global. Effective as of March 1, 2022, we began receiving asset management revenue from CPA:18 – Global in cash in light of the Proposed Merger (~~Note 1~~).

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

CPA:18 – Global — On August 1, 2022, we acquired all of the remaining interests in CPA:18 – Global and the CPA:18 – Global operating partnership in the CPA:18 Merger (Note 1). We received distributions from this investment during the six months ended June 30, 2022 ~~and 2021~~ of $1.1 ~~million and $0.9 million, respectively.~~million. We received distributions from our investment in the CPA:18 – Global operating partnership during the six months ended June 30, 2022 ~~and 2021~~ of $5.4 million ~~and $3.3 million, respectively~~ (Note 3).

CESH — We have elected to account for our investment in 2.43% of CESH at fair value by selecting the equity method fair value option available under GAAP. We record our investment in CESH on a one quarter lag; therefore, the balance of our equity method investment in CESH recorded as of June 30, ~~2022~~2023 is based on the estimated fair value of our investment as of March 31, ~~2022.~~2023. The carrying amount of our investment in CESH was $1.8 million and $2.2 million as of June 30, 2023 and December 31, 2022, respectively. We received distributions from this investment during the six months ended June 30, 2023 and 2022 ~~and 2021~~ of ~~$1.2~~$0.5 million and ~~$0.1~~$1.2 million, respectively.

~~At June 30, 2022 and December 31, 2021, the aggregate unamortized basis differences on our equity method investments in the Managed Programs were $22.0 million and $23.3 million, respectively.~~

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

We own equity interests in properties that are generally leased to companies through noncontrolling interests in partnerships and limited liability companies that we do not control but over which we exercise significant influence. The underlying investments are jointly owned with affiliates or third parties. We account for these investments under the equity method of accounting. In addition, we own shares of WLT common stock, which we accounted for under the equity method of accounting as of December 31, 2021, but was reclassified to equity securities at fair value within Other assets, net on our consolidated balance sheets in January 2022, as described in ~~Note 8. Operating results of our unconsolidated real estate investments are included in the Real Estate segment.~~

~~W. P. Carey 6/30/2022 10-Q~~– 21

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

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

Carrying Value at
Lessee/Fund/Description Co-owner Ownership Interest June 30, 2022 December 31, 2021
Las Vegas Retail Complex (a)
Third Party N/A $ 141,341 $ 104,114
Johnson Self Storage Third Party 90% 66,552 67,573
Kesko Senukai (b)
Third Party 70% 33,416 41,955
Harmon Retail Corner (c)
Third Party 15% 24,725 24,435
State Farm Mutual Automobile Insurance Co. CPA:18 – Global 50% 6,411 7,129
Apply Sørco AS (d)
CPA:18 – Global 49% 3,977 5,909
Fortenova Grupa d.d. (b)
CPA:18 – Global 20% 2,146 2,936
Bank Pekao (b) (e)
CPA:18 – Global 50% 2,106 4,460
WLT (f)
WLT N/A — 33,392
$ 280,674 $ 291,903

~~__________~~

~~(a)~~On June 10, 2021, we entered into an agreement to fund a construction loan of approximately $261.9 million (as of June 30, 2022) for a retail complex in Las Vegas, Nevada. Through June 30, 2022, we funded $141.0 million, including $37.3 million during the six months ended June 30, 2022. Interest income from this investment was $3.4 million and $0.3 million for the six months ended June 30, 2022 and 2021, respectively, which was recognized within Earnings (losses) from equity method investments in our consolidated statements of income.

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

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

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

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

~~(f)~~We own 12,208,243 shares of common stock of WLT, which we accounted for as an equity method investment in real estate as of December 31, 2021, but was reclassified to equity securities at fair value within Other assets, net on our consolidated balance sheets in January 2022 (~~Note 8~~).

We received aggregate distributions of $18.4 million and $11.1 million from our other unconsolidated real estate investments for the six months ended June 30, 2022 and 2021, respectively. At June 30, 2022 and December 31, 2021, the aggregate unamortized basis differences on our unconsolidated real estate investments were $7.6 million and $7.9 million, respectively.

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, 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.

~~W. P. Carey 6/30/2022 10-Q~~– 22

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

Items Measured at Fair Value on a Recurring Basis

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

Derivative Assets and Liabilities — Our derivative assets and liabilities, which are included in Other assets, net and Accounts payable, accrued expenses and other liabilities, respectively, in the consolidated financial statements, are comprised of foreign currency collars, interest rate swaps, interest rate caps, and stock warrants (Note 9).

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

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

Equity Method Investment in CESH — We have elected to account for our investment in CESH, which is included in Equity method investments in the consolidated financial statements, at fair value by selecting the equity method fair value option available under GAAP (Note 7). We classified this investment as Level 3 because we primarily used valuation models that incorporate unobservable inputs to determine its fair value.

W. P. Carey 6/30/2023 10-Q– 21

Notes to Consolidated Financial Statements (Unaudited)

Investment in Shares of Lineage Logistics — We have elected to apply the measurement alternative under Accounting Standards Update 2016-01, Financial Instruments — Overall (Subtopic 825-10) to account for our investment in shares of Lineage Logistics (a cold storage REIT), which is included in Other assets, net in the consolidated financial statements. Under this alternative, the carrying value is adjusted for any impairments or changes in fair value resulting from observable transactions for similar or identical investments in the issuer. We classified this investment as Level 3 because it is not traded in an active market. We recognized non-cash unrealized gains on our investment in shares of Lineage Logistics of $23.4 million during the six months ended June 30, 2021, due to a secondary market transaction at a higher price per share, which was recorded within Other gains and (losses) in the consolidated financial statements. In addition, duringDuring the six months ended June 30, 2022, ~~and 2021,~~ we received cash dividends of $4.3 million ~~and $6.4 million, respectively,~~ from our investment in shares of Lineage Logistics, which was recorded within Non-operating income in the consolidated financial statements. The fair value of this investment was ~~$366.3~~$404.9 million at both June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

Investment in Shares of GCIF — We account for our investment in shares of Guggenheim Credit Income Fund (“GCIF”), which is included in Other assets, net in the consolidated financial statements, at fair value. We classified this investment as Level 2 because we used a quoted price from an inactive market to determine its fair value. During the six months ended June 30, ~~2022,~~2023, we received liquidating distributions from our investment in shares of GCIF totaling ~~$1.1~~$0.8 million, which reduced the cost basis of our investment (in March 2021, GCIF announced its intention to liquidate and to distribute substantially all of its assets). The fair value of our investment in shares of GCIF was ~~$3.3~~$0.9 million and ~~$4.3~~$1.7 million at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Investment in Preferred Shares of WLT — In January 2022, ~~WLT~~Watermark Lodging Trust, Inc. (“WLT”) redeemed in full our 1,300,000 shares of its preferred stock for gross proceeds of $65.0 million (based on the liquidation preference of $50.00 per share). In connection with this redemption, we reclassified an unrealized gain on this investment of $18.7 million from Accumulated other comprehensive loss to Other gains and (losses) in the consolidated financial statements (Note 12). Prior to this redemption, we accounted for this investment, which was included in Other assets, net in the consolidated financial statements, as available-for-sale debt securities at fair value (Level 3). During the six months ended June 30, 2022, we received cash dividends of $0.9 million from our investment in preferred shares of WLT, which was recorded within Non-operating income in the consolidated financial statements. ~~The fair value of our investment in preferred shares of WLT was $65.0 million as of December 31, 2021.~~

~~W. P. Carey 6/30/2022 10-Q~~– 23

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

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

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

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


			June 30, 2022				December 31, 2021						June 30, 2023				December 31, 2022
		Level	Carrying Value		Fair Value		Carrying Value		Fair Value			Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Senior Unsecured Notes, net (a) (b) (c)	Senior Unsecured Notes, net (a) (b) (c)	2	$	5,471,066	$	4,983,231	$	5,701,913	$	5,984,228	Senior Unsecured Notes, net (a) (b) (c)	2 and 3	$	5,978,294	$	5,344,811	$	5,916,400	$	5,238,588
Non-recourse mortgages, net (a) (b) (d)	Non-recourse mortgages, net (a) (b) (d)	3	328,820		324,326		368,524		369,841		Non-recourse mortgages, net (a) (b) (d)	3	995,435		981,273		1,132,417		1,109,449

__________

(a)The carrying value of Senior Unsecured Notes, net (Note 10) includes unamortized deferred financing costs of ~~$25.6~~$23.5 million and ~~$28.7~~$25.9 million at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The carrying value of Non-recourse mortgages, net includes unamortized deferred financing costs of less than $0.1 million at both June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

(b)The carrying value of Senior Unsecured Notes, net includes unamortized discount of ~~$26.0~~$22.1 million and ~~$29.2~~$24.1 million at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The carrying value of Non-recourse mortgages, net includes unamortized discount of ~~$0.4~~$7.7 million and ~~$0.8~~$10.3 million at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

W. P. Carey 6/30/2023 10-Q– 22

Notes to Consolidated Financial Statements (Unaudited)

(c)For those Senior Unsecured Notes for which there are no observable market prices (specifically, our private placement Senior Unsecured Notes (Note 10)), we used a discounted cash flow model that estimates the present value of future loan payments by discounting such payments at current estimated market interest rates. We consider these notes to be within the Level 3 category. For all other Senior Unsecured Notes, we determined the estimated fair value ~~of the Senior Unsecured Notes~~ using observed market prices in an open market, which may experience limited trading volume. We consider these notes to be within the Level 2 category.

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

We estimated that our other financial assets and liabilities, including amounts outstanding under our Senior Unsecured Credit Facility and Unsecured Term Loan due 2026 (Note 10), but excluding finance receivables (Note 5), had fair values that approximated their carrying values at both June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

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. There have been no significant changes in our impairment policies from what was disclosed in the ~~2021~~2022 Annual Report.

~~W. P. Carey 6/30/2022 10-Q~~– 24

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

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

Three Months Ended June 30,
2022 2021
Fair Value Measurements Impairment Charges Fair Value Measurements Impairment Charges
Impairment Charges
Land, buildings and improvements and intangibles $ 10,270 $ 6,206 $ — $ —
Equity method investments — — — —
$ 6,206 $ —


	Three Months Ended June 30,
	2023				2022
	Fair Value Measurements		Impairment Charges		Fair Value Measurements		Impairment Charges
Impairment Charges
Real estate and intangibles	$	—	$	—	$	10,270	$	6,206
			$	—			$	6,206

Six Months Ended June 30,
2022 2021
Fair Value
Measurements Impairment
Charges Fair Value
Measurements Impairment
Charges
Impairment Charges
Land, buildings and improvements and intangibles $ 24,497 $ 26,385 $ — $ —
Equity method investments — — 8,175 6,830
$ 26,385 $ 6,830


	Six Months Ended June 30,
	2023				2022
	Fair Value Measurements		Impairment Charges		Fair Value Measurements		Impairment Charges
Impairment Charges

Real estate and intangibles	$	—	$	—	$	24,497	$	26,385
			$	—			$	26,385

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

~~Land, Buildings and Improvements~~Real Estate and Intangibles

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

During the three and six months ended June 30, 2022, we recognized impairment charges totaling $6.2 million on 2two properties in order to reduce their carrying values to their estimated fair values, which approximated their estimated selling prices. We sold one property in August 2022 and one property in March 2023.

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

W. P. Carey 6/30/2023 10-Q– 23

Notes to Consolidated Financial Statements (Unaudited)

In March 2022, we entered into a transaction to restructure certain leases with Pendragon PLC (a tenant at certain automotive dealerships in the United Kingdom). Under this restructuring, we extended the leases on 30 properties by 11 years (no change to rent) and entered into an agreement to dispose of 12 properties, with the tenant continuing to pay rent until the earlier of sale date or certain specified dates over the following 12 months. As a result, during the six months ended June 30, 2022, we recognized impairment charges totaling $9.3 million on 6six of these properties in order to reduce the carrying values of the properties to their estimated fair values. The fair value measurements for the properties were determined using a direct capitalization rate analysis; the capitalization rate for the various scenarios ranged from 4.75% to 10.00%. Four of these impaired properties were sold in 2022.

~~Equity Method Investments~~

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

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

~~W. P. Carey 6/30/2022 10-Q~~– 25

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

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 (Note 10) and unhedged variable-rate non-recourse mortgage loans. Credit risk is the risk of default on our operations and our tenants’ inability or unwillingness to make contractually required payments. Market risk includes changes in the value of our properties and related loans, Senior Unsecured Notes, other securities, and the ~~shares or~~ limited partnership units we hold in ~~the Managed Programs,~~CESH, due to changes in interest rates or other market factors. We own investments in North America, Europe, and Japan and are subject to risks associated with fluctuating foreign currency exchange rates.

Derivative Financial Instruments

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

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


Derivatives Designated as Hedging Instruments	Derivatives Designated as Hedging Instruments	Balance Sheet Location		Derivative Assets Fair Value at								Derivative Liabilities Fair Value at						Derivatives Designated as Hedging Instruments			Balance Sheet Location		Derivative Assets Fair Value at				Derivative Liabilities Fair Value at
			June 30, 2022			December 31, 2021				June 30, 2022				December 31, 2021						June 30, 2023			December 31, 2022		June 30, 2023		December 31, 2022
Foreign currency collars	Foreign currency collars		Other assets, net			$	41,827			$	19,484			$	—				$	—		Foreign currency collars	Other assets, net		$	20,717	$	32,631	$	—	$	—
Interest rate swap		Other assets, net		503				—				—				—
Interest rate swaps																		Interest rate swaps			Other assets, net		3,839		2,679		—		—
Interest rate cap	Interest rate cap	Other assets, net		5				1				—				—		Interest rate cap			Other assets, net		4		14		—		—
Foreign currency collars	Foreign currency collars	Accounts payable, accrued expenses and other liabilities		—				—				—				(1,311)		Foreign currency collars			Accounts payable, accrued expenses and other liabilities		—		—		(2,168)		(1,445)
Interest rate swaps		Accounts payable, accrued expenses and other liabilities		—				—				—				(908)
				42,335				19,485				—				(2,219)							24,560		35,324		(2,168)		(1,445)
Derivatives Not Designated as Hedging Instruments	Derivatives Not Designated as Hedging Instruments																	Derivatives Not Designated as Hedging Instruments
Stock warrants	Stock warrants	Other assets, net		4,600				4,600				—				—		Stock warrants			Other assets, net		3,950		3,950		—		—
Foreign currency collars	Foreign currency collars	Other assets, net		1,126				—				—				—		Foreign currency collars			Accounts payable, accrued expenses and other liabilities		—		—		(289)		(248)
				5,726				4,600				—				—							3,950		3,950		(289)		(248)
Total derivatives	Total derivatives			$	48,061			$	24,085			$	—			$	(2,219)	Total derivatives					$	28,510	$	39,274	$	(2,457)	$	(1,693)

W. P. Carey 6/30/~~2022~~2023 10-Q – 2624

Notes to Consolidated Financial Statements (Unaudited)

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


		Amount of Gain (Loss) Recognized on Derivatives in Other Comprehensive Income (Loss) (a)									Amount of Gain (Loss) Recognized on Derivatives in Other Comprehensive Income (Loss) (a)
		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships	Derivatives in Cash Flow Hedging Relationships	2022		2021		2022		2021		Derivatives in Cash Flow Hedging Relationships	2023		2022		2023		2022
Foreign currency collars	Foreign currency collars	$	18,456	$	(2,539)	$	23,654	$	13,628	Foreign currency collars	$	(6,412)	$	18,456	$	(12,638)	$	23,654
Interest rate swaps	Interest rate swaps	575		235		1,356		3,648		Interest rate swaps	1,827		575		1,197		1,356
Interest rate caps		2		2		5		4
Interest rate cap										Interest rate cap	1		2		(6)		5
Total	Total	$	19,033	$	(2,302)	$	25,015	$	17,280	Total	$	(4,584)	$	19,033	$	(11,447)	$	25,015


				Amount of Gain (Loss) on Derivatives Reclassified from Other Comprehensive Income (Loss)																			Amount of Gain (Loss) on Derivatives Reclassified from Other Comprehensive Income (Loss)
Derivatives in Cash Flow Hedging Relationships	Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income		Three Months Ended June 30,								Six Months Ended June 30,						Derivatives in Cash Flow Hedging Relationships			Location of Gain (Loss) Recognized in Income		Three Months Ended June 30,				Six Months Ended June 30,
			2022			2021				2022				2021						2023			2022		2023		2022
Foreign currency collars	Foreign currency collars		Non-operating income			$	3,359			$	614			$	5,463				$	(567)		Foreign currency collars	Non-operating income		$	3,564	$	3,359	$	7,869	$	5,463
Interest rate swaps and caps (b)		Interest expense		(122)				(198)				(286)				(524)
Interest rate swaps and cap																		Interest rate swaps and cap			Interest expense		103		(122)		473		(286)
Total	Total			$	3,237			$	416			$	5,177			$	(1,091)	Total					$	3,667	$	3,237	$	8,342	$	5,177

__________

(a)Excludes net losses of $0.4 million and net gains of $0.9 ~~million and $0.3~~ million recognized on unconsolidated jointly owned investments for the three months ended June 30, 2023 and 2022, respectively, and ~~2021, respectively,~~net losses of $0.8 million and net gains of $2.3 ~~million and $0.6~~ million for the six months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively.

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

Amounts reported in Other comprehensive income (loss) ~~income~~ related to interest rate derivative contracts will be reclassified to Interest expense as interest is incurred on our variable-rate debt. Amounts reported in Other comprehensive income (loss) ~~income~~ related to foreign currency derivative contracts will be reclassified to Non-operating income when the hedged foreign currency contracts are settled. As of June 30, ~~2022,~~2023, we estimate that an additional ~~$0.2~~$3.1 million and ~~$18.1~~$9.9 million will be reclassified as Interest expense and Non-operating income, respectively, during the next 12 months.

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


				Amount of Gain (Loss) on Derivatives Recognized in Income																			Amount of Gain (Loss) on Derivatives Recognized in Income
Derivatives in Cash Flow Hedging Relationships	Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income		Three Months Ended June 30,								Six Months Ended June 30,						Derivatives in Cash Flow Hedging Relationships			Location of Gain (Loss) Recognized in Income		Three Months Ended June 30,				Six Months Ended June 30,
			2022			2021				2022				2021						2023			2022		2023		2022
Foreign currency collars	Foreign currency collars		Non-operating income			$	2,575			$	(841)			$	3,783				$	159		Foreign currency collars	Non-operating income		$	183	$	2,575	$	(16)	$	3,783
Interest rate swaps	Interest rate swaps	Interest expense		144				225				331				1,131		Interest rate swaps			Interest expense		(131)		144		(537)		331
Derivatives Not in Cash Flow Hedging Relationships	Derivatives Not in Cash Flow Hedging Relationships																	Derivatives Not in Cash Flow Hedging Relationships
Foreign currency collars	Foreign currency collars	Other gains and (losses)		842				—				1,126				—		Foreign currency collars			Other gains and (losses)		98		842		(41)		1,126
Stock warrants		Other gains and (losses)		—				(500)				—				(500)
Total	Total			$	3,561			$	(1,116)			$	5,240			$	790	Total					$	150	$	3,561	$	(594)	$	5,240

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

~~W. P. Carey 6/30/2022 10-Q~~– 27

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

Interest Rate Swaps and Caps

We are exposed to the impact of interest rate changes primarily through our borrowing activities. To limit this exposure, we generally seek long-term debt financing on a fixed-rate basis. However, from time to time, we ~~or our investment partners~~ have obtained, and may in the future obtain, variable-rate (i) non-recourse mortgage loans and (ii) unsecured term loans (Note 10) 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 6/30/2023 10-Q– 25

Notes to Consolidated Financial Statements (Unaudited)

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


Interest Rate Derivatives	Interest Rate Derivatives	Number of Instruments	Notional Amount		Fair Value at June 30, 2022 (a)		Interest Rate Derivatives	Number of Instruments	Notional Amount		Fair Value at June 30, 2023 (a)
Designated as Cash Flow Hedging Instruments	Designated as Cash Flow Hedging Instruments						Designated as Cash Flow Hedging Instruments
Interest rate swaps	Interest rate swaps	2	46,584	EUR	$	496	Interest rate swaps	5	545,356	EUR	$	2,611
Interest rate swap		1	15,718	USD	7
Interest rate swaps							Interest rate swaps	4	31,486	USD	1,228
Interest rate cap	Interest rate cap	1	10,608	EUR	5		Interest rate cap	1	10,296	EUR	4
					$	508					$	3,843

__________

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

Foreign Currency Collars

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

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


Foreign Currency Derivatives	Foreign Currency Derivatives	Number of Instruments	Notional Amount		Fair Value at June 30, 2022		Foreign Currency Derivatives	Number of Instruments	Notional Amount		Fair Value at June 30, 2023
Designated as Cash Flow Hedging Instruments	Designated as Cash Flow Hedging Instruments						Designated as Cash Flow Hedging Instruments
Foreign currency collars	Foreign currency collars	79	311,100	EUR	$	35,741	Foreign currency collars	66	280,000	EUR	$	15,753
Foreign currency collars	Foreign currency collars	85	55,120	GBP	6,086		Foreign currency collars	55	34,980	GBP	2,796
Not Designated as Cash Flow Hedging Instruments	Not Designated as Cash Flow Hedging Instruments						Not Designated as Cash Flow Hedging Instruments
Foreign currency collars	Foreign currency collars	2	15,100	EUR	1,126		Foreign currency collars	2	16,000	EUR	(289)
					$	42,953					$	18,260

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 June 30, ~~2022.~~2023. At June 30, ~~2022,~~2023, our total credit exposure and the maximum exposure to any single counterparty was ~~$43.8~~$22.2 million and ~~$8.5~~$4.6 million, respectively.

~~W. P. Carey 6/30/2022 10-Q~~– 28

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

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 June 30, ~~2022,~~2023, we had not been declared in default on any of our derivative obligations. The estimated fair value of our derivatives in a net liability position was ~~$2.2~~$2.5 million and $1.7 million at June 30, 2023 and December 31, ~~2021,~~2022, respectively, which included accrued interest and any nonperformance risk ~~adjustments (there was 0 such liability balance at June 30, 2022).~~adjustments. If we had breached any of these provisions at June 30, 2023 or December 31, ~~2021,~~2022, we could have been required to settle our obligations under these agreements at their aggregate termination value of ~~$2.3 million.~~$2.5 million and $1.7 million, respectively.

W. P. Carey 6/30/2023 10-Q– 26

Notes to Consolidated Financial Statements (Unaudited)

Net Investment Hedges

~~Borrowings~~Certain borrowings under our Senior Unsecured Notes, Unsecured Revolving Credit Facility, and Unsecured Term Loans (all as defined in Note 10) denominated in euro, British pounds sterling, or Japanese yen are designated as, and are effective as, economic hedges of our net investments in foreign entities.

Exchange rate variations impact our financial results because the financial results of our foreign subsidiaries are translated to U.S. dollars each period, with the effect of exchange rate variations being recorded in Other comprehensive income (loss) ~~income~~ as part of the cumulative foreign currency translation adjustment. As a result, changes in the value of our borrowings under our euro-denominated senior notes and changes in the value of our euro, Japanese yen, and British pound sterling borrowings under our Senior Unsecured Credit Facility, related to changes in the spot rates, will be reported in the same manner as foreign currency translation adjustments, which are recorded in Other comprehensive income (loss) ~~income~~ as part of the cumulative foreign currency translation adjustment. Such gains (losses) related to non-derivative net investment hedges were ~~$236.4~~$2.1 million and ~~$(44.5)~~$236.4 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$313.3~~$(69.4) million and ~~$98.0~~$313.3 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Note 10. Debt

Senior Unsecured Credit Facility

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

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

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

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

At June 30, ~~2022,~~2023, our Unsecured Revolving Credit Facility had available capacity of approximately ~~$1.4~~$1.3 billion (net of amounts reserved for standby letters of credit totaling ~~$0.6~~$1.9 million). We incur an annual facility fee of ~~0.20%~~0.15% of the total commitment on our Unsecured Revolving Credit Facility, which is included within Interest expense in our consolidated statements of income.

Term Loan Agreement

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

The Unsecured Term Loan due 2026 borrowing rate pursuant to the credit agreement is 85 basis points over EURIBOR, based on our credit ratings of BBB+ and Baa1. In conjunction with the closing of the Unsecured Term Loan due 2026, we executed variable-to-fixed interest rate swaps that fix the total per annum interest rate at 4.34% through the end of 2024 (Note 9).

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

W. P. Carey 6/30/~~2022~~2023 10-Q – 2927

Notes to Consolidated Financial Statements (Unaudited)

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


		Interest Rate at June 30, 2022 (a)	Maturity Date at June 30, 2022		Principal Outstanding Balance at
Senior Unsecured Credit Facility				June 30, 2022			December 31, 2021
Unsecured Term Loans and Unsecured Revolving Credit Facility										Unsecured Term Loans and Unsecured Revolving Credit Facility		Interest Rate at June 30, 2023 (a)	Maturity Date at June 30, 2023		Principal Outstanding Balance at
														June 30, 2023			December 31, 2022
Unsecured Term Loans:	Unsecured Term Loans:										Unsecured Term Loans:
Term Loan — borrowing in British pounds sterling (b) (c) (d)		SONIA + 0.9826%	2/20/2025		$	326,787		$	202,183
Delayed Draw Term Loan — borrowing in euros (e)		EURIBOR + 0.95%	2/20/2025		223,321			109,296
Unsecured Term Loan due 2026 — borrowing in euros (b)										Unsecured Term Loan due 2026 — borrowing in euros (b)		4.34%	4/24/2026		$	543,300		$	—
Term Loan due 2025 — borrowing in British pounds sterling (c) (d)										Term Loan due 2025 — borrowing in British pounds sterling (c) (d)		SONIA + 0.85%	2/20/2025		341,825			324,695
Delayed Draw Term Loan due 2025 — borrowing in euros (e)										Delayed Draw Term Loan due 2025 — borrowing in euros (e)		EURIBOR + 0.85%	2/20/2025		233,619			229,319
					550,108			311,479							1,118,744			554,014
Unsecured Revolving Credit Facility:	Unsecured Revolving Credit Facility:									Unsecured Revolving Credit Facility:
Borrowing in euros (e)	Borrowing in euros (e)	EURIBOR + 0.85%	2/20/2025		248,769			205,001		Borrowing in euros (e)		EURIBOR + 0.775%	2/20/2025		402,042			258,117
Borrowing in U.S. dollars (f)	Borrowing in U.S. dollars (f)	LIBOR + 0.85%	2/20/2025		151,000			—		Borrowing in U.S. dollars (f)		SOFR + 0.775%	2/20/2025		110,000			—
Borrowing in Japanese yen (g)	Borrowing in Japanese yen (g)	TIBOR + 0.85%	2/20/2025		17,686			20,935		Borrowing in Japanese yen (g)		TIBOR + 0.775%	2/20/2025		16,663			18,275
Borrowing in British pounds sterling		N/A	2/20/2025		—			184,660
					417,455			410,596							528,705			276,392
					$	967,563		$	722,075						$	1,647,449		$	830,406

__________

(a)The applicable interest rate at June 30, ~~2022~~2023 was based on the credit rating for our Senior Unsecured Notes of ~~BBB/Baa2 .~~BBB+/Baa1.

(b)Balance excludes unamortized discount of $3.8 million and unamortized deferred financing costs of $0.3 million at June 30, 2023.

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

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

(d)Balance excludes unamortized discount of ~~$1.8~~$1.1 million and ~~$0.9~~$1.5 million at June 30, ~~2022~~2023 and December 31, ~~2021, respectively.~~2022, respectively

(e)EURIBOR means Euro Interbank Offered Rate.

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

(g)TIBOR means Tokyo Interbank Offered Rate.

W. P. Carey 6/30/2023 10-Q– 28

Notes to Consolidated Financial Statements (Unaudited)

Senior Unsecured Notes

As set forth in the table below, we have euro and U.S. dollar-denominated senior unsecured notes outstanding with an aggregate principal balance outstanding of ~~$5.5~~$6.0 billion at June 30, ~~2022~~2023 (the “Senior Unsecured Notes”).

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

~~W. P. Carey 6/30/2022 10-Q~~– 30

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

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

Principal Amount Coupon Rate Maturity Date Principal Outstanding Balance at
Senior Unsecured Notes, net (a)
Issue Date June 30, 2022 December 31, 2021
4.6% Senior Notes due 2024 3/14/2014 $ 500,000 4.6 % 4/1/2024 $ 500,000 $ 500,000
2.25% Senior Notes due 2024 1/19/2017 € 500,000 2.25 % 7/19/2024 519,350 566,300
4.0% Senior Notes due 2025 1/26/2015 $ 450,000 4.0 % 2/1/2025 450,000 450,000
2.250% Senior Notes due 2026 10/9/2018 € 500,000 2.250 % 4/9/2026 519,350 566,300
4.25% Senior Notes due 2026 9/12/2016 $ 350,000 4.25 % 10/1/2026 350,000 350,000
2.125% Senior Notes due 2027 3/6/2018 € 500,000 2.125 % 4/15/2027 519,350 566,300
1.350% Senior Notes due 2028 9/19/2019 € 500,000 1.350 % 4/15/2028 519,350 566,300
3.850% Senior Notes due 2029 6/14/2019 $ 325,000 3.850 % 7/15/2029 325,000 325,000
0.950% Senior Notes due 2030 3/8/2021 € 525,000 0.950 % 6/1/2030 545,318 594,615
2.400% Senior Notes due 2031 10/14/2020 $ 500,000 2.400 % 2/1/2031 500,000 500,000
2.450% Senior Notes due 2032 10/15/2021 $ 350,000 2.450 % 2/1/2032 350,000 350,000
2.250% Senior Notes due 2033 2/25/2021 $ 425,000 2.250 % 4/1/2033 425,000 425,000
$ 5,522,718 $ 5,759,815


		Principal Amount		Coupon Rate		Maturity Date	Principal Outstanding Balance at
Senior Unsecured Notes, net (a)	Issue Date						June 30, 2023		December 31, 2022
4.6% Senior Notes due 2024	3/14/2014	$	500,000	4.6	%	4/1/2024	$	500,000	$	500,000
2.25% Senior Notes due 2024	1/19/2017	€	500,000	2.25	%	7/19/2024	543,300		533,300
4.0% Senior Notes due 2025	1/26/2015	$	450,000	4.0	%	2/1/2025	450,000		450,000
2.25% Senior Notes due 2026	10/9/2018	€	500,000	2.25	%	4/9/2026	543,300		533,300
4.25% Senior Notes due 2026	9/12/2016	$	350,000	4.25	%	10/1/2026	350,000		350,000
2.125% Senior Notes due 2027	3/6/2018	€	500,000	2.125	%	4/15/2027	543,300		533,300
1.35% Senior Notes due 2028	9/19/2019	€	500,000	1.35	%	4/15/2028	543,300		533,300
3.85% Senior Notes due 2029	6/14/2019	$	325,000	3.85	%	7/15/2029	325,000		325,000
3.41% Senior Notes due 2029	9/28/2022	€	150,000	3.41	%	9/28/2029	162,990		159,990
0.95% Senior Notes due 2030	3/8/2021	€	525,000	0.95	%	6/1/2030	570,465		559,965
2.4% Senior Notes due 2031	10/14/2020	$	500,000	2.4	%	2/1/2031	500,000		500,000
2.45% Senior Notes due 2032	10/15/2021	$	350,000	2.45	%	2/1/2032	350,000		350,000
3.7% Senior Notes due 2032	9/28/2022	€	200,000	3.7	%	9/28/2032	217,320		213,320
2.25% Senior Notes due 2033	2/25/2021	$	425,000	2.25	%	4/1/2033	425,000		425,000
							$	6,023,975	$	5,966,475

__________

(a)Aggregate balance excludes unamortized deferred financing costs totaling ~~$25.6~~$23.5 million and ~~$28.7~~$25.9 million, and unamortized discount totaling ~~$26.0~~$22.1 million and ~~$29.2~~$24.1 million, at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Covenants

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

Non-Recourse Mortgages

At June 30, ~~2022,~~2023, the weighted-average interest rate for our total non-recourse mortgage notes payable was ~~3.8%~~4.5% (fixed-rate and variable-rate non-recourse mortgage notes payable were ~~4.8%~~4.5% and ~~1.9%~~4.8%, respectively), with maturity dates ranging from ~~August 2022~~July 2023 to ~~September 2031.~~April 2039.

Repayments

During the six months ended June 30, ~~2022,~~2023, we (i) ~~prepaid a~~repaid non-recourse mortgage ~~loan of $10.4 million and (ii) repaid a non-recourse mortgage loan~~loans at maturity with aan aggregate principal balance of approximately ~~$2.5~~$67.8 million and (ii) prepaid non-recourse mortgage loans totaling $52.9 million. We recognized a net ~~loss~~gain on extinguishment of debt of ~~$1.1~~$2.7 million on these repayments, which is included within Other gains and (losses) on our consolidated statements of income. The weighted-average interest rate for these non-recourse mortgage loans on their respective dates of repayment was ~~5.8%.~~

During the six months ended June 30, 2021, we (i) prepaid non-recourse mortgage loans totaling $426.9 million, and (ii) repaid a non-recourse mortgage loan at maturity with a principal balance of approximately $3.0 million. We recognized an aggregate net loss on extinguishment of debt of $31.9 million on these repayments, primarily comprised of prepayment penalties totaling $31.8 million, which is included within Other gains and (losses) on our consolidated statements of income. The weighted-average interest rate for these non-recourse mortgage loans on their respective dates of repayment was 5.1%5.7%.

W. P. Carey 6/30/~~2022~~2023 10-Q – 3129

Notes to Consolidated Financial Statements (Unaudited)

Foreign Currency Exchange Rate Impact

During the six months ended June 30, ~~2022,~~2023, the U.S. dollar ~~strengthened~~weakened against the euro, resulting in an ~~aggregate decrease~~increase of ~~$329.4~~$77.8 million in the aggregate carrying values of our Non-recourse mortgages, net, Senior Unsecured Credit Facility, Unsecured Term Loan due 2026, and Senior Unsecured Notes, net from December 31, ~~2021~~2022 to June 30, ~~2022.~~2023.

Scheduled Debt Principal Payments

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


Years Ending December 31,	Years Ending December 31,	Total		Years Ending December 31,	Total
2022 (remainder)		$	30,717
2023		178,319
2023 (remainder)				2023 (remainder)	$	278,231
2024	2024	1,056,815		2024	1,241,957
2025	2025	1,466,474		2025	1,972,988
2026	2026	901,421		2026	1,536,988
Thereafter through 2033		3,185,790
2027				2027	543,968
Thereafter through 2039				Thereafter through 2039	3,100,466
Total principal payments	Total principal payments	6,819,536		Total principal payments	8,674,598
Unamortized discount, net	Unamortized discount, net	(28,209)		Unamortized discount, net	(34,796)
Unamortized deferred financing costs	Unamortized deferred financing costs	(25,699)		Unamortized deferred financing costs	(23,877)
Total	Total	$	6,765,628	Total	$	8,615,925

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

Note 11. Commitments and Contingencies

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

Note 12. Stock-Based Compensation and Equity

Stock-Based Compensation

We maintain several stock-based compensation plans, which are more fully described in the ~~2021~~2022 Annual Report. There have been no significant changes to the terms and conditions of any of our stock-based compensation plans or arrangements during the six months ended June 30, ~~2022.~~2023. We recorded stock-based compensation expense of ~~$9.8~~$9.0 million and ~~$9.0~~$9.8 million during the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$17.6~~$16.8 million and ~~$14.4~~$17.6 million during the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, which was included in Stock-based compensation expense in the consolidated financial statements.

W. P. Carey 6/30/~~2022~~2023 10-Q – 3230

Notes to Consolidated Financial Statements (Unaudited)

Restricted and Conditional Awards

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


		RSA and RSU Awards			PSU Awards				RSA and RSU Awards			PSU Awards
		Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value			Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value
Nonvested at January 1, 2022		306,994	$	71.21	398,255	$	86.86
Nonvested at January 1, 2023								Nonvested at January 1, 2023	376,298	$	74.78	531,781	$	89.14
Granted (a)	Granted (a)	212,226	80.10		144,311	104.97		Granted (a)	231,463	84.35		150,989	144.54
Vested (b)	Vested (b)	(136,412)	72.53		(165,615)	92.16		Vested (b)	(153,037)	75.81		(218,147)	104.65
Forfeited	Forfeited	(5,412)	76.54		—	—		Forfeited	—	—		—	—
Adjustment (c)	Adjustment (c)	—	—		143,984	81.65		Adjustment (c)	—	—		64,826	109.03
Nonvested at June 30, 2022 (d)		377,396	$	75.65	520,935	$	89.53
Nonvested at June 30, 2023 (d)								Nonvested at June 30, 2023 (d)	454,724	$	79.31	529,449	$	103.44

__________

(a)The grant date fair value of RSAs and RSUs reflect our stock price on the date of grant on a ~~1-for-one~~one-for-one basis. The grant date fair value of PSUs was determined utilizing ~~(i)~~ a Monte Carlo simulation model to generate an estimate of our future stock price over the three-year performance ~~period and (ii) future financial performance projections.~~period. To estimate the fair value of PSUs granted during the six months ended June 30, ~~2022,~~2023, we used a risk-free interest rate of ~~1.2%~~3.8%, an expected volatility rate of ~~36.7%~~38.2%, and assumed a dividend yield of zero.

(b)The grant date fair value of shares vested during the six months ended June 30, ~~2022~~2023 was ~~$25.2~~$34.4 million. Employees have the option to take immediate delivery of the shares upon vesting or defer receipt to a future date pursuant to previously made deferral elections. At June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had an obligation to issue ~~1,181,947~~1,196,955 and ~~1,104,020~~1,181,947 shares, respectively, of our common stock underlying such deferred awards, which is recorded within Total stockholders’ equity as a Deferred compensation obligation of ~~$57.0~~$62.0 million and ~~$49.8~~$57.0 million, respectively.

(c)Vesting and payment of the PSUs is conditioned upon certain company and/or market performance goals being met during the relevant three-year performance period. The ultimate number of PSUs to be vested will depend on the extent to which the performance goals are met and can range from zero to 3three times the original awards. As a result, we recorded adjustments at June 30, ~~2022~~2023 to reflect the number of shares expected to be issued when the PSUs vest.

(d)At June 30, ~~2022,~~2023, total unrecognized compensation expense related to these awards was approximately ~~$47.5~~$57.0 million, with an aggregate weighted-average remaining term of 2.2 years.

Earnings Per Share

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022

Net income — basic and diluted	Net income — basic and diluted	$	127,678	$	120,245	$	284,673	$	171,879	Net income — basic and diluted	$	144,620	$	127,678	$	439,000	$	284,673

Weighted-average shares outstanding — basic	Weighted-average shares outstanding — basic	194,019,451		180,099,370		192,971,256		178,379,654		Weighted-average shares outstanding — basic	215,075,114		194,019,451		213,522,150		192,971,256
Effect of dilutive securities	Effect of dilutive securities	744,244		569,362		734,779		522,605		Effect of dilutive securities	109,371		744,244		353,321		734,779
Weighted-average shares outstanding — diluted	Weighted-average shares outstanding — diluted	194,763,695		180,668,732		193,706,035		178,902,259		Weighted-average shares outstanding — diluted	215,184,485		194,763,695		213,875,471		193,706,035

For the three and six months ended June 30, ~~2022~~2023 and ~~2021, there were no~~2022, potentially dilutive securities excluded from the computation of diluted earnings per ~~share.~~share were insignificant.

W. P. Carey 6/30/~~2022~~2023 10-Q – 3331

Notes to Consolidated Financial Statements (Unaudited)

Acquisition of Noncontrolling Interest

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

ATM Program

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

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Shares of common stock issued	Shares of common stock issued	491,068		2,205,509		2,740,295		4,225,624		Shares of common stock issued	—		491,068		—		2,740,295
Weighted-average price per share	Weighted-average price per share	$	81.70	$	74.56	$	80.79	$	72.50	Weighted-average price per share	$	—	$	81.70	$	—	$	80.79
Net proceeds	Net proceeds	$	39,101	$	162,292	$	218,095	$	302,512	Net proceeds	$	—	$	39,101	$	—	$	218,095

Forward Equity

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

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

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

Agreement Date (a)
Shares Offered (b)
Average Gross Offering Price Average Gross Offering Proceeds at Closing Outstanding Shares as of June 30, 2022
June 2020 Equity Forwards (c)
6/17/2020 5,462,500 $ 70.00 $ 382,375 —
June 2021 Equity Forwards (d)
6/7/2021 6,037,500 75.30 454,624 —
August 2021 Equity Forwards 8/9/2021 5,175,000 78.00 403,650 3,925,000
ATM Forwards (e)
5/2/2022 3,674,187 83.98 308,553 3,674,187
7,599,187


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

__________

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

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

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

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

~~(e)We sold shares under our ATM Forwards during the second quarter of~~ 2022. ~~We did not settle any of the shares sold and therefore did not receive any proceeds from such sales.~~

W. P. Carey 6/30/~~2022~~2023 10-Q – 3432

Notes to Consolidated Financial Statements (Unaudited)

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Shares of common stock delivered	Shares of common stock delivered	—		4,523,209		—		4,523,209		Shares of common stock delivered	—		—		3,081,867		—
Net proceeds	Net proceeds	$	—	$	309,864	$	—	$	309,864	Net proceeds	$	—	$	—	$	249,806	$	—

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 June 30, 2022									Three Months Ended June 30, 2023
		Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total			Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total
Beginning balance	Beginning balance	$	23,717	$	(265,857)	$	—	$	(242,140)	Beginning balance	$	28,816	$	(313,374)	$	—	$	(284,558)
Other comprehensive loss before reclassifications		23,213		(43,993)		—		(20,780)
Other comprehensive income before reclassifications										Other comprehensive income before reclassifications	(1,270)		9,479		—		8,209
Amounts reclassified from accumulated other comprehensive loss to:	Amounts reclassified from accumulated other comprehensive loss to:									Amounts reclassified from accumulated other comprehensive loss to:
Non-operating income	Non-operating income	(3,359)		—		—		(3,359)		Non-operating income	(3,564)		—		—		(3,564)
Interest expense	Interest expense	122		—		—		122		Interest expense	(103)		—		—		(103)
Total	Total	(3,237)		—		—		(3,237)		Total	(3,667)		—		—		(3,667)
Net current period other comprehensive loss		19,976		(43,993)		—		(24,017)
Net current period other comprehensive income										Net current period other comprehensive income	(4,937)		9,479		—		4,542
Net current period other comprehensive loss attributable to noncontrolling interests										Net current period other comprehensive loss attributable to noncontrolling interests	—		85		—		85
Ending balance	Ending balance	$	43,693	$	(309,850)	$	—	$	(266,157)	Ending balance	$	23,879	$	(303,810)	$	—	$	(279,931)


		Three Months Ended June 30, 2021									Three Months Ended June 30, 2022
		Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total			Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total
Beginning balance	Beginning balance	$	982	$	(234,871)	$	—	$	(233,889)	Beginning balance	$	23,717	$	(265,857)	$	—	$	(242,140)
Other comprehensive income before reclassifications		(1,607)		5,973		—		4,366
Other comprehensive loss before reclassifications										Other comprehensive loss before reclassifications	23,213		(43,993)		—		(20,780)
Amounts reclassified from accumulated other comprehensive loss to:	Amounts reclassified from accumulated other comprehensive loss to:									Amounts reclassified from accumulated other comprehensive loss to:
Non-operating income	Non-operating income	(614)		—		—		(614)		Non-operating income	(3,359)		—		—		(3,359)
Interest expense	Interest expense	198		—		—		198		Interest expense	122		—		—		122
Total	Total	(416)		—		—		(416)		Total	(3,237)		—		—		(3,237)
Net current period other comprehensive income		(2,023)		5,973		—		3,950
Net current period other comprehensive income attributable to noncontrolling interests		(21)		—		—		(21)
Net current period other comprehensive loss										Net current period other comprehensive loss	19,976		(43,993)		—		(24,017)

Ending balance	Ending balance	$	(1,062)	$	(228,898)	$	—	$	(229,960)	Ending balance	$	43,693	$	(309,850)	$	—	$	(266,157)

W. P. Carey 6/30/~~2022~~2023 10-Q – 3533

Notes to Consolidated Financial Statements (Unaudited)


		Six Months Ended June 30, 2022									Six Months Ended June 30, 2023
		Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total			Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total
Beginning balance	Beginning balance	$	16,347	$	(256,705)	$	18,688	$	(221,670)	Beginning balance	$	36,079	$	(319,859)	$	—	$	(283,780)
Other comprehensive loss before reclassifications		32,523		(53,145)		—		(20,622)
Other comprehensive income before reclassifications										Other comprehensive income before reclassifications	(3,858)		15,936		—		12,078
Amounts reclassified from accumulated other comprehensive loss to:	Amounts reclassified from accumulated other comprehensive loss to:									Amounts reclassified from accumulated other comprehensive loss to:
Non-operating income	Non-operating income	(5,463)		—		—		(5,463)		Non-operating income	(7,869)		—		—		(7,869)
Interest expense	Interest expense	286		—		—		286		Interest expense	(473)		—		—		(473)
Other gains and (losses) (Note 8)		—		—		(18,688)		(18,688)
Total	Total	(5,177)		—		(18,688)		(23,865)		Total	(8,342)		—		—		(8,342)
Net current period other comprehensive loss		27,346		(53,145)		(18,688)		(44,487)
Net current period other comprehensive income										Net current period other comprehensive income	(12,200)		15,936		—		3,736
Net current period other comprehensive loss attributable to noncontrolling interests										Net current period other comprehensive loss attributable to noncontrolling interests	—		113		—		113
Ending balance	Ending balance	$	43,693	$	(309,850)	$	—	$	(266,157)	Ending balance	$	23,879	$	(303,810)	$	—	$	(279,931)


		Six Months Ended June 30, 2021									Six Months Ended June 30, 2022
		Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total			Gains and (Losses) on Derivative Instruments		Foreign Currency Translation Adjustments		Gains and (Losses) on Investments		Total
Beginning balance	Beginning balance	$	(18,937)	$	(220,969)	$	—	$	(239,906)	Beginning balance	$	16,347	$	(256,705)	$	18,688	$	(221,670)
Other comprehensive income before reclassifications		16,805		(7,929)		—		8,876
Other comprehensive loss before reclassifications										Other comprehensive loss before reclassifications	32,523		(53,145)		—		(20,622)
Amounts reclassified from accumulated other comprehensive loss to:	Amounts reclassified from accumulated other comprehensive loss to:									Amounts reclassified from accumulated other comprehensive loss to:
Interest expense										Interest expense	286		—		—		286
Non-operating income	Non-operating income	567		—		—		567		Non-operating income	(5,463)		—		—		(5,463)
Interest expense		524		—		—		524
Other gains and (losses) (Note 8)										Other gains and (losses) (Note 8)	—		—		(18,688)		(18,688)
Total	Total	1,091		—		—		1,091		Total	(5,177)		—		(18,688)		(23,865)
Net current period other comprehensive income		17,896		(7,929)		—		9,967
Net current period other comprehensive income attributable to noncontrolling interests		(21)		—		—		(21)
Net current period other comprehensive loss										Net current period other comprehensive loss	27,346		(53,145)		(18,688)		(44,487)

Ending balance	Ending balance	$	(1,062)	$	(228,898)	$	—	$	(229,960)	Ending balance	$	43,693	$	(309,850)	$	—	$	(266,157)

See Note 9 for additional information on our derivatives activity recognized within Other comprehensive income (loss) ~~income~~ for the periods presented.

Dividends Declared

During the second quarter of ~~2022,~~2023, our Board declared a quarterly dividend of ~~$1.059~~$1.069 per share, which was paid on July ~~15, 2022~~14, 2023 to stockholders of record as of June 30, ~~2022.~~2023.

During the six months ended June 30, ~~2022,~~2023, we declared dividends totaling ~~$2.116~~$2.136 per share.

Note 13. Income Taxes

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

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 through foreign subsidiaries and are subject to income taxes on our pre-tax income earned from properties in such countries. The accompanying consolidated financial statements include an interim tax provision for our TRSs and foreign subsidiaries, as necessary, for the three and six months ended June 30, ~~2022~~2023 and ~~2021.~~2022.

W. P. Carey 6/30/~~2022~~2023 10-Q – 3634

Notes to Consolidated Financial Statements (Unaudited)

Current income tax expense was ~~$6.6~~$12.9 million and ~~$9.1~~$6.6 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$14.9~~$23.6 million and ~~$17.5~~$14.9 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Deferred income tax benefit (expense) was ~~$0.4~~$2.7 million and ~~$(0.2)~~$0.4 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$1.6~~$(1.6) million and ~~$2.4~~$1.6 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Note 14. Property Dispositions

We have an active capital recycling program, with a goal of extending the average lease term through reinvestment, improving portfolio credit quality through dispositions and acquisitions of assets, increasing the asset criticality factor in our portfolio, and/or executing strategic dispositions of assets. We may decide to dispose of a property when it is vacant as a result of tenants vacating space, tenants electing not to renew their leases, tenant insolvency, or lease rejection in the bankruptcy process. In such cases, we assess whether we can obtain the highest value from the property by selling it, as opposed to re-leasing it. We may also sell a property when we receive an unsolicited offer or negotiate a price for an investment that is consistent with our strategy for that investment. When it is appropriate to do so, we classify the property as an asset held for sale on our consolidated balance sheet. All property dispositions are recorded within our Real Estate segment and are also discussed in Note 4.

2023— During the three and six months ended June 30, 2023, we sold three and eight properties, respectively, for total proceeds, net of selling costs, of $3.1 million and $44.1 million, respectively, and recognized a net gain on these sales totaling $1.8 million and $3.4 million, respectively.

2022 — During the three and six months ended June 30, 2022, we sold 8eight and 14 properties, respectively, for total proceeds, net of selling costs, of $88.4 million and $115.1 million, respectively, and recognized a net gain on these sales totaling $31.1 million and $42.4 million, respectively (inclusive of income taxes totaling less than $0.1 million for both the three and six months ended June 30, 2022, recognized upon sale).

~~2021~~— During the three and six months ended June 30, 2021, we sold 10 and 12 properties, respectively, for total proceeds, net of selling costs, of $85.0 million and $98.4 million, respectively, and recognized a net gain on these sales totaling $19.8 million and $29.2 million, respectively (inclusive of income taxes totaling $3.7 million and $3.8 million, respectively, recognized upon sale).

W. P. Carey 6/30/~~2022~~2023 10-Q – 3735

Notes to Consolidated Financial Statements (Unaudited)

Note 15. Segment Reporting

We evaluate our results from operations through our 2two major business segments: Real Estate and Investment Management. The following tables present a summary of comparative results and assets for these business segments (in thousands):

Real Estate


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues	Revenues									Revenues
Lease revenues	Lease revenues	$	314,354	$	289,064	$	622,079	$	573,729	Lease revenues	$	369,124	$	314,354	$	721,460	$	622,079
Income from direct financing leases and loans receivable		17,778		17,422		36,157		35,164
Income from finance leases and loans receivable										Income from finance leases and loans receivable	27,311		17,778		48,066		36,157
Operating property revenues ~~(a)~~	Operating property revenues ~~(a)~~	5,064		3,245		8,929		5,424		Operating property revenues ~~(a)~~	50,676		5,064		91,562		8,929
Lease termination income and other		2,591		5,059		16,713		6,644
Other lease-related income										Other lease-related income	5,040		2,591		18,413		16,713
		339,787		314,790		683,878		620,961			452,151		339,787		879,501		683,878

Operating Expenses	Operating Expenses									Operating Expenses
Depreciation and amortization	Depreciation and amortization	115,080		114,348		230,473		224,670		Depreciation and amortization	143,548		115,080		299,957		230,473
Operating property expenses										Operating property expenses	26,919		3,191		48,168		5,978
General and administrative	General and administrative	20,841		20,464		43,925		42,547		General and administrative	24,788		20,841		51,236		43,925
Reimbursable tenant costs	Reimbursable tenant costs	16,704		15,092		33,664		30,850		Reimbursable tenant costs	20,523		16,704		42,499		33,664
Stock-based compensation expense										Stock-based compensation expense	8,995		9,758		16,761		17,591
Property expenses, excluding reimbursable tenant costs	Property expenses, excluding reimbursable tenant costs	11,851		11,815		25,630		22,698		Property expenses, excluding reimbursable tenant costs	5,371		11,851		18,143		25,630
Stock-based compensation expense		9,758		9,048		17,591		14,429
Impairment charges		6,206		—		26,385		—
Operating property expenses		3,191		2,049		5,978		3,960
Merger and other expenses	Merger and other expenses	1,984		(2,599)		(341)		(3,090)		Merger and other expenses	1,419		1,984		1,443		(341)
Impairment charges — real estate										Impairment charges — real estate	—		6,206		—		26,385
		185,615		170,217		383,305		336,064			231,563		185,615		478,207		383,305
Other Income and Expenses	Other Income and Expenses									Other Income and Expenses
Interest expense	Interest expense	(46,417)		(49,252)		(92,470)		(100,892)		Interest expense	(75,488)		(46,417)		(142,684)		(92,470)
Non-operating income										Non-operating income	4,509		5,975		9,122		14,517
Earnings from equity method investments in real estate										Earnings from equity method investments in real estate	4,355		4,529		9,591		3,742
Gain on sale of real estate, net	Gain on sale of real estate, net	31,119		19,840		42,367		29,212		Gain on sale of real estate, net	1,808		31,119		179,557		42,367
Other gains and (losses)	Other gains and (losses)	(20,155)		7,472		14,263		(34,717)		Other gains and (losses)	(890)		(20,155)		6,696		14,263
Non-operating income		5,975		3,065		14,517		9,337
Earnings (losses) from equity method investments in real estate		4,529		(1,854)		3,742		(12,973)
		(24,949)		(20,729)		(17,581)		(110,033)			(65,706)		(24,949)		62,282		(17,581)
Income before income taxes	Income before income taxes	129,223		123,844		282,992		174,864		Income before income taxes	154,882		129,223		463,576		282,992
Provision for income taxes	Provision for income taxes	(5,955)		(9,119)		(12,868)		(15,545)		Provision for income taxes	(10,236)		(5,955)		(25,638)		(12,868)
Net Income from Real Estate	Net Income from Real Estate	123,268		114,725		270,124		159,319		Net Income from Real Estate	144,646		123,268		437,938		270,124
Net income attributable to noncontrolling interests		(40)		(38)		(38)		(45)
Net loss (income) attributable to noncontrolling interests										Net loss (income) attributable to noncontrolling interests	40		(40)		(21)		(38)
Net Income from Real Estate Attributable to W. P. Carey	Net Income from Real Estate Attributable to W. P. Carey	$	123,228	$	114,687	$	270,086	$	159,274	Net Income from Real Estate Attributable to W. P. Carey	$	144,686	$	123,228	$	437,917	$	270,086

W. P. Carey 6/30/~~2022~~2023 10-Q – 3836

Notes to Consolidated Financial Statements (Unaudited)

Investment Management


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues	Revenues									Revenues
Asset management and other revenue		$	3,467	$	3,966	$	6,887	$	7,920
Asset management revenue										Asset management revenue	$	303	$	3,467	$	642	$	6,887
Reimbursable costs from affiliates	Reimbursable costs from affiliates	1,143		968		2,070		2,009		Reimbursable costs from affiliates	124		1,143		225		2,070
		4,610		4,934		8,957		9,929			427		4,610		867		8,957
Operating Expenses	Operating Expenses									Operating Expenses
Reimbursable costs from affiliates	Reimbursable costs from affiliates	1,143		968		2,070		2,009		Reimbursable costs from affiliates	124		1,143		225		2,070
Merger and other expenses	Merger and other expenses	—		—		3		15		Merger and other expenses	—		—		—		3
		1,143		968		2,073		2,024			124		1,143		225		2,073
Other Income and Expenses	Other Income and Expenses									Other Income and Expenses
Earnings from equity method investments in the Managed Programs		2,872		1,698		8,431		3,084
Other gains and (losses)	Other gains and (losses)	(1,591)		73		(264)		1,074		Other gains and (losses)	(476)		(1,591)		38		(264)
Non-operating (loss) income	Non-operating (loss) income	(1)		—		3		84		Non-operating (loss) income	—		(1)		13		3
Earnings from equity method investments in the Managed Programs										Earnings from equity method investments in the Managed Programs	—		2,872		—		8,431
		1,280		1,771		8,170		4,242			(476)		1,280		51		8,170
Income before income taxes		4,747		5,737		15,054		12,147
(Provision for) benefit from income taxes		(297)		(179)		(467)		458
Net Income from Investment Management Attributable to W. P. Carey		$	4,450	$	5,558	$	14,587	$	12,605
(Loss) income before income taxes										(Loss) income before income taxes	(173)		4,747		693		15,054
Benefit from (provision for) income taxes										Benefit from (provision for) income taxes	107		(297)		390		(467)
Net (Loss) Income from Investment Management Attributable to W. P. Carey										Net (Loss) Income from Investment Management Attributable to W. P. Carey	$	(66)	$	4,450	$	1,083	$	14,587

Total Company


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues	Revenues	$	344,397	$	319,724	$	692,835	$	630,890	Revenues	$	452,578	$	344,397	$	880,368	$	692,835
Operating expenses	Operating expenses	186,758		171,185		385,378		338,088		Operating expenses	231,687		186,758		478,432		385,378
Other income and (expenses)	Other income and (expenses)	(23,669)		(18,958)		(9,411)		(105,791)		Other income and (expenses)	(66,182)		(23,669)		62,333		(9,411)
Provision for income taxes	Provision for income taxes	(6,252)		(9,298)		(13,335)		(15,087)		Provision for income taxes	(10,129)		(6,252)		(25,248)		(13,335)
Net income attributable to noncontrolling interests		(40)		(38)		(38)		(45)
Net loss (income) attributable to noncontrolling interests										Net loss (income) attributable to noncontrolling interests	40		(40)		(21)		(38)
Net income attributable to W. P. Carey	Net income attributable to W. P. Carey	$	127,678	$	120,245	$	284,673	$	171,879	Net income attributable to W. P. Carey	$	144,620	$	127,678	$	439,000	$	284,673

Total Assets at
June 30, 2022 December 31, 2021
Real Estate $ 15,314,097 $ 15,344,703
Investment Management 140,132 135,927
Total Company $ 15,454,229 $ 15,480,630

~~__________~~

~~(a)~~Operating property revenues from our hotels include $3.3 million and $1.7 million for the three months ended June 30, 2022 and 2021, respectively, and $5.4 million and $2.5 million for the six months ended June 30, 2022 and 2021, respectively, generated from a hotel in Bloomington, Minnesota (revenues reflect higher occupancy as the hotel’s business recovered from the COVID-19 pandemic).


	Total Assets at
	June 30, 2023		December 31, 2022
Real Estate	$	19,065,196	$	18,077,155
Investment Management	11,129		24,880
Total Company	$	19,076,325	$	18,102,035

~~W. P. Carey 6/30/2022 10-Q~~– 39

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

Note 16. Subsequent Events

~~Acquisitions and Completed Construction Project~~Dispositions

In July ~~2022,~~2023, we completed two ~~acquisitions~~dispositions for gross proceeds totaling approximately ~~$281.9~~$98.7 million. ~~They are as follows:~~

•~~$262.0 million for a portfolio of 20 industrial facilities in the United States; and~~

•~~$19.9 million for a portfolio of 5 retail facilities in Spain.~~Mortgage Loan Repayments

In ~~addition, in~~ July ~~2022,~~2023, we ~~completed a build-to-suit project for $25.7~~prepaid or repaid at maturity two non-recourse mortgage loans totaling approximately $94.0 million.

~~Amounts are based on the applicable exchange rate on the date of transaction.~~

W. P. Carey 6/30/~~2022~~2023 10-Q – 4037

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

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

~~Significant Developments~~

~~Proposed Merger with CPA:18 – Global~~

On February 27, 2022, we, CPA:18 – Global, CPA:18 LP, and certain of our subsidiaries entered into the Merger Agreement, pursuant to which CPA:18 – Global will merge with and into one of our indirect subsidiaries in exchange for shares of our common stock and cash (~~Note 1~~). The Proposed Merger and related transactions were approved by the stockholders of CPA:18 – Global at a special meeting on July 26, 2022. We currently expect the transaction to close on August 1, 2022.

Financial Highlights

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

Real Estate

Investments

•We acquired 11seven investments totaling ~~$644.0~~$894.8 million (Note 4, Note 5).

•We completed ~~three~~one construction ~~projects~~project at a cost totaling ~~$98.2~~$20.6 million (Note 4).

•We funded approximately ~~$37.3~~$23.7 million for a construction loan to build a retail complex in Las Vegas, Nevada, during the six months ended June 30, ~~2022.~~2023. Through June 30, ~~2022,~~2023, we have funded ~~$141.0~~$216.8 million (Note 7).

•We committed to fund ~~two build-to-suit~~three expansion or ~~expansion~~redevelopment projects totaling ~~$24.9~~$65.3 million. We currently expect to complete the projects in ~~2022~~2024 and ~~2023~~2025 (Note 4).

•We committed to purchase two retail (car wash) facilities in the United States for approximately $8.7 million, which is expected to take place during the third quarter of 2023.

Dispositions

•~~As part of our active capital recycling program, we~~We disposed of 14eight properties for total proceeds, net of selling costs, of ~~$115.1~~$44.1 million (Note 14).

•~~In January 2022, WLT redeemed in full our 1,300,000 shares of its preferred stock for gross proceeds of $65.0 million (Note 8~~).

Financing and Capital Markets Transactions

•~~On May 2, 2022,~~In January 2023, we ~~established~~entered into a ~~$1.0~~Third Amendment to the Credit Agreement to transition from LIBOR to SOFR. In connection with this amendment, we also increased the aggregate principal amount (of revolving and term loans) available under the Senior Unsecured Credit Facility to an amount not to exceed the U.S. dollar equivalent of $3.05 billion, ~~ATM Program,~~subject to the conditions to increase set forth in the credit agreement (Note 10).

•In April 2023, we entered into a new €500.0 million unsecured term loan maturing on April 2026, which was drawn in full at closing. The amount available under ~~which~~the term loan may be increased up to an amount not to exceed €750.0 million, subject to the conditions to increase set forth in the related credit agreement. In conjunction with the closing of this new term loan, we ~~may issue shares directly or defer delivery to a later date~~executed variable-to-fixed interest rate swaps that fix the total per annum interest rate at 4.34% through the end of 2024 (Note 10).

•We settled portions of our ATM ~~Forwards.~~Forwards by delivering 3,081,867 shares of common stock for net proceeds of $249.8 million. As of June 30, ~~2022,~~2023, we had approximately ~~$301.0~~$384.2 million of available proceeds under our ATM Forwards (Note 12).

•We ~~issued 2,740,295 shares~~reduced our mortgage debt outstanding by prepaying or repaying at maturity a total of ~~our common stock under our prior ATM Program at~~$120.7 million of non-recourse mortgage loans with a weighted-average ~~price~~interest rate of ~~$80.79 per share, for net proceeds of $218.1 million~~5.7% (Note 12).

•In April 2022, we increased the Term Loan to £270.0 million and the Delayed Draw Term Loan to €215.0 million, thereby increasing the total capacity of our Senior Unsecured Credit Facility to approximately $2.4 billion. We used the approximately $300 million of proceeds from this increase in the capacity of our Unsecured Term Loans to partially repay amounts outstanding under our Unsecured Revolving Credit Facility (~~Note~~ 10).

~~W. P. Carey 6/30/2022 10-Q~~– 41

~~Investment Management~~

~~Assets Under Management~~

•As of June 30, 2022, we managed total assets of approximately $2.5 billion on behalf of CPA:18 – Global and CESH. The vast majority of our Investment Management earnings are generated from asset management fees and our ownership interests in CPA:18 – Global and CESH. However, subject to the terms and conditions of the Merger Agreement, upon consummation of the Proposed Merger, we will no longer receive fees and distributions from CPA:18 – Global, and as a result, Investment Management earnings are expected to decline in future periods (~~Note 1~~).

Dividends to Stockholders

We declared cash dividends totaling ~~$2.116~~$2.136 per share during the six months ended June 30, ~~2022,~~2023, comprised of two quarterly dividends per share of ~~$1.057~~$1.067 and ~~$1.059~~$1.069 (Note 12).

W. P. Carey 6/30/2023 10-Q– 38

Consolidated Results

(in thousands, except shares)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues from Real Estate	Revenues from Real Estate	$	339,787	$	314,790	$	683,878	$	620,961	Revenues from Real Estate	$	452,151	$	339,787	$	879,501	$	683,878
Revenues from Investment Management	Revenues from Investment Management	4,610		4,934		8,957		9,929		Revenues from Investment Management	427		4,610		867		8,957
Total revenues	Total revenues	344,397		319,724		692,835		630,890		Total revenues	452,578		344,397		880,368		692,835

Net income from Real Estate attributable to W. P. Carey	Net income from Real Estate attributable to W. P. Carey	123,228		114,687		270,086		159,274		Net income from Real Estate attributable to W. P. Carey	144,686		123,228		437,917		270,086
Net income from Investment Management attributable to W. P. Carey		4,450		5,558		14,587		12,605
Net (loss) income from Investment Management attributable to W. P. Carey										Net (loss) income from Investment Management attributable to W. P. Carey	(66)		4,450		1,083		14,587
Net income attributable to W. P. Carey	Net income attributable to W. P. Carey	127,678		120,245		284,673		171,879		Net income attributable to W. P. Carey	144,620		127,678		439,000		284,673

Dividends declared	Dividends declared	205,898		194,914		411,395		382,395		Dividends declared	230,405		205,898		460,375		411,395

Net cash provided by operating activities	Net cash provided by operating activities					446,883		398,747		Net cash provided by operating activities					530,334		446,883
Net cash used in investing activities	Net cash used in investing activities					(560,525)		(885,881)		Net cash used in investing activities					(905,618)		(560,525)
Net cash provided by financing activities	Net cash provided by financing activities					106,531		398,948		Net cash provided by financing activities					435,521		106,531

Supplemental financial measures (a):	Supplemental financial measures (a):									Supplemental financial measures (a):
Adjusted funds from operations attributable to W. P. Carey (AFFO) — Real Estate	Adjusted funds from operations attributable to W. P. Carey (AFFO) — Real Estate	247,246		222,377		499,260		432,705		Adjusted funds from operations attributable to W. P. Carey (AFFO) — Real Estate	292,896		247,246		571,480		499,260
Adjusted funds from operations attributable to W. P. Carey (AFFO) — Investment Management	Adjusted funds from operations attributable to W. P. Carey (AFFO) — Investment Management	7,128		6,299		13,940		12,457		Adjusted funds from operations attributable to W. P. Carey (AFFO) — Investment Management	410		7,128		1,045		13,940
Adjusted funds from operations attributable to W. P. Carey (AFFO)	Adjusted funds from operations attributable to W. P. Carey (AFFO)	254,374		228,676		513,200		445,162		Adjusted funds from operations attributable to W. P. Carey (AFFO)	293,306		254,374		572,525		513,200

Diluted weighted-average shares outstanding	Diluted weighted-average shares outstanding	194,763,695		180,668,732		193,706,035		178,902,259		Diluted weighted-average shares outstanding	215,184,485		194,763,695		213,875,471		193,706,035

__________

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

~~W. P. Carey 6/30/2022 10-Q~~– 42

Revenues

Total revenues increased for the three and six months ended June 30, ~~2022~~2023 as compared to the same periods in ~~2021.~~2022. Real Estate revenue increased primarily due to higher lease revenues (substantially as a result of property acquisition activity and rent escalations, ~~partially offset by the impact of the weakening euro and British pound sterling,~~ as well as ~~property dispositions)~~the net-leased properties we acquired in the CPA:18 Merger on August 1, 2022) and higher ~~lease termination~~operating property revenues (primarily from the operating properties we acquired in the CPA:18 Merger on August 1, 2022 and ~~other income for~~ the ~~six months ended June 30, 2022 as compared~~12 hotel properties that converted from net-lease to operating properties during the ~~same period in 2021 (Note 4~~)first quarter of 2023).

Net Income Attributable to W. P. Carey

Net income attributable to W. P. Carey increased for the three and six months ended June 30, ~~2022~~2023 as compared to the same ~~period~~periods in ~~2021.~~2022. Net income from Real Estate attributable to W. P. Carey increased primarily due to the impact of real estate acquisitions (including from properties acquired in the CPA:18 Merger on August 1, 2022) and impairment charges recognized during the prior year periods, partially offset by higher interest expense. In addition, we recognized a ~~non-cash unrealized gain recognized on our investment in common shares of WLT (Note 8), a higher aggregate~~lower gain on sale of real estate (~~Note 14~~),for the three months ended June 30, 2023 as compared to the same period in 2022, and ~~the impact~~a significantly higher gain on sale of real estate ~~acquisitions, partially offset by the impact of the weakening euro and British pound sterling, and impairment charges recognized during the current year period.~~

~~Net income attributable to W. P. Carey increased~~ for the six months ended June 30, ~~2022~~2023 as compared to the same period in ~~2021.~~2022 (Note 5, Note 14). Net income from ~~Real Estate~~Investment Management attributable to W. P. Carey ~~increased~~decreased primarily due to ~~a lower loss on extinguishment~~the cessation of ~~debt (Note 10), non-cash unrealized gains recognized on our investment in common shares of WLT (Note 8~~),fees and distributions previously earned from CPA:18 – Global prior to the ~~impact of real estate acquisitions, and a higher aggregate gain on sale of real estate, partially offset by the impact of the weakening euro and British pound sterling, higher impairment charges (Note 8), and a non-cash unrealized gain recognized on our investment in shares of Lineage Logistics during the prior year period (Note 8~~).CPA:18 Merger.

W. P. Carey 6/30/2023 10-Q– 39

AFFO

AFFO increased for the three and six months ended June 30, ~~2022~~2023 as compared to the same periods in ~~2021,~~2022, primarily due to ~~higher lease revenues from net~~ investment activity and rent escalations, ~~partially offset by the impact of the weakening euro and British pound sterling,~~ as well as the accretive impact of the CPA:18 Merger, partially offset by higher interest expense. AFFO for the three and six months ended June 30, 2023 also included certain non-recurring items that resulted in lower non-reimbursed property expenses (due to the reversal of certain property tax accruals) and a higher provision for income taxes (due to the settlement a tax audit on a portfolio of properties in Europe). In addition, AFFO from Investment Management attributable to W. P. Carey decreased primarily due to the cessation of ~~cash dividends~~fees and distributions previously earned from ~~our investment in preferred shares of WLT following~~CPA:18 – Global prior to the ~~redemption of that investment in January 2022 (Note 8~~).CPA:18 Merger.

~~W. P. Carey 6/30/2022 10-Q~~– 43

Portfolio Overview

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

Portfolio Summary

June 30, 2022 December 31, 2021
ABR (in thousands) $ 1,270,226 $ 1,247,764
Number of net-leased properties 1,357 1,304
Number of operating properties (a)
20 20
Number of tenants (net-leased properties) 356 352
Total square footage (net-leased properties, in thousands) 161,294 155,674
Occupancy (net-leased properties) 99.1 % 98.5 %
Weighted-average lease term (net-leased properties, in years) 11.0 10.8
Number of countries (b)
25 24
Total assets (in thousands) $ 15,454,229 $ 15,480,630
Net investments in real estate (in thousands) 12,976,489 13,037,369


Net-leased Properties	June 30, 2023			December 31, 2022
ABR (in thousands)	$	1,469,750		$	1,381,899
Number of net-leased properties	1,475			1,449
Number of tenants	398			392
Total square footage (in thousands)	180,019			175,957
Occupancy	99.0		%	98.8		%
Weighted-average lease term (in years)	11.2			10.8

Operating Properties
Number of operating properties:	100			87
Number of self-storage operating properties	85			84
Number of hotel operating properties (a)	13			1
Number of student housing operating properties	2			2
Occupancy (self-storage operating properties)	91.9		%	91.0		%

Number of countries	26			26
Total assets (in thousands)	$	19,076,325		$	18,102,035
Net investments in real estate (in thousands)	16,340,026			15,488,898


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Acquisition volume (in millions) ~~(c)~~(b)	Acquisition volume (in millions) ~~(c)~~(b)	$	681.3	$	922.0	Acquisition volume (in millions) ~~(c)~~(b)	$	918.5	$	681.3
Construction projects completed (in millions)	Construction projects completed (in millions)	98.2		62.4		Construction projects completed (in millions)	20.6		98.2
Average U.S. dollar/euro exchange rate	Average U.S. dollar/euro exchange rate	1.0941		1.2046		Average U.S. dollar/euro exchange rate	1.0805		1.0941
Average U.S. dollar/British pound sterling exchange rate	Average U.S. dollar/British pound sterling exchange rate	1.2999		1.3874		Average U.S. dollar/British pound sterling exchange rate	1.2330		1.2999

__________

(a)~~At both June 30, 2022 and December 31, 2021,~~During the first quarter of 2023, the master lease expired on certain hotel properties previously classified as net-leased properties, which converted to operating properties consisted of 19 self-storage properties (of which we consolidated ten, with an average occupancy of 95.3% as of June 30, 2022) and one hotel property with an average occupancy of 59.2% for the six months ended June 30, 2022.

~~(b)We acquired investments in Belgium~~properties. As a result, during the six months ended June 30, ~~2022.~~2023, we reclassified 12 consolidated hotel properties from net leases to operating properties (Note 4).

~~(c)~~(b)Amounts for the six months ended June 30, 2023 and 2022 ~~and 2021~~ include ~~$37.3~~$23.7 million and ~~$84.9~~$37.3 million, respectively, of funding for a construction loan (Note 7).

W. P. Carey 6/30/~~2022~~2023 10-Q – 4440

Net-Leased Portfolio

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

Top Ten Tenants by ABR

(dollars in thousands)


Tenant/Lease Guarantor	Tenant/Lease Guarantor	Description	Number of Properties	ABR		ABR Percent		Weighted-Average Lease Term (Years)	Tenant/Lease Guarantor	Description	Number of Properties	ABR		ABR Percent		Weighted-Average Lease Term (Years)
U-Haul Moving Partners Inc. and Mercury Partners, LP(a)	U-Haul Moving Partners Inc. and Mercury Partners, LP(a)	Net lease self-storage properties in the U.S.	78	$	38,751	3.0	%	1.8	U-Haul Moving Partners Inc. and Mercury Partners, LP(a)	Net lease self-storage properties in the U.S.	78	$	38,751	2.6	%	0.8
State of Andalucía ~~(a)~~(b)	State of Andalucía ~~(a)~~(b)	Government office properties in Spain	70	28,506		2.2	%	12.5	State of Andalucía ~~(a)~~(b)	Government office properties in Spain	70	31,997		2.2	%	11.5
Hellweg Die Profi-Baumärkte GmbH & Co. KG (a)		Do-it-yourself retail properties in Germany	35	26,537		2.1	%	14.7
Apotex Pharmaceutical Holdings Inc. (c)									Apotex Pharmaceutical Holdings Inc. (c)	Pharmaceutical R&D and advanced manufacturing properties in Canada	11	31,528		2.1	%	19.8
Metro Cash & Carry Italia S.p.A. ~~(a)~~(b)	Metro Cash & Carry Italia S.p.A. ~~(a)~~(b)	Business-to-business wholesale stores in Italy and Germany	20	26,492		2.1	%	6.3	Metro Cash & Carry Italia S.p.A. ~~(a)~~(b)	Business-to-business wholesale stores in Italy and Germany	20	29,686		2.0	%	5.2
Hellweg Die Profi-Baumärkte GmbH & Co. KG (b)									Hellweg Die Profi-Baumärkte GmbH & Co. KG (b)	Do-it-yourself retail properties in Germany	35	29,680		2.0	%	13.7
Extra Space Storage, Inc.	Extra Space Storage, Inc.	Net lease self-storage properties in the U.S.	27	22,957		1.8	%	21.8	Extra Space Storage, Inc.	Net lease self-storage properties in the U.S.	27	25,036		1.7	%	20.8
OBI Group (a)		Do-it-yourself retail properties in Poland	26	21,515		1.7	%	8.1
Marriott Corporation		Net lease hotel properties in the U.S.	18	21,350		1.7	%	1.6
OBI Group (b)									OBI Group (b)	Do-it-yourself retail properties in Poland	26	24,348		1.7	%	8.0
ABC Technologies Holdings Inc. (d)									ABC Technologies Holdings Inc. (d)	Automotive component manufacturing properties in North America	23	24,251		1.7	%	19.8
Nord Anglia Education, Inc.	Nord Anglia Education, Inc.	K-12 private schools in the U.S.	3	20,981		1.7	%	21.2	Nord Anglia Education, Inc.	K-12 private schools in the U.S.	3	22,245		1.5	%	20.2
Pendragon PLC (a)		Automotive dealerships in the United Kingdom	63	20,214		1.6	%	12.9
Advance Auto Parts, Inc.		Distribution facilities in the U.S.	29	19,851		1.6	%	10.6
Fortenova Grupa d.d. (b)									Fortenova Grupa d.d. (b)	Grocery stores and warehouses in Croatia	19	21,994		1.5	%	10.8
Total	Total		369	$	247,154	19.5	%	10.5	Total		312	$	279,516	19.0	%	12.4

__________

(a)As of June 30, 2023, Mercury Partners, LP (a related party of U-Haul Moving Partners Inc.) provided notice that it intends to exercise its option to repurchase the 78 properties it is leasing (Note 5).

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

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

(d)Of the 23 properties leased to ABC Technologies Holdings Inc., nine are located in Canada, eight are located in the United States, and six are located in Mexico. ABR from the properties in Canada and Mexico is denominated in U.S. dollars.

W. P. Carey 6/30/~~2022~~2023 10-Q – 4541

Portfolio Diversification by Geography

(in thousands, except percentages)


Region	Region	ABR		ABR Percent		Square Footage (a)	Square Footage Percent		Region	ABR		ABR Percent		Square Footage (a)	Square Footage Percent
United States	United States								United States
Midwest									Midwest
Illinois									Illinois	$	73,739	5.0	%	10,582	5.9	%
Minnesota									Minnesota	34,901		2.4	%	3,406	1.9	%
Ohio									Ohio	33,341		2.3	%	7,008	3.9	%
Indiana									Indiana	29,756		2.0	%	5,137	2.8	%
Michigan									Michigan	29,166		2.0	%	4,816	2.7	%
Wisconsin									Wisconsin	18,853		1.3	%	3,276	1.8	%
Other (b)									Other (b)	44,413		3.0	%	6,237	3.5	%
Total Midwest									Total Midwest	264,169		18.0	%	40,462	22.5	%
South	South								South
Texas	Texas	$	105,724	8.3	%	11,983	7.4	%	Texas	116,359		7.9	%	12,609	7.0	%
Florida	Florida	53,372		4.2	%	4,456	2.7	%	Florida	53,160		3.6	%	4,380	2.4	%
Georgia									Georgia	28,404		1.9	%	4,454	2.5	%
Tennessee	Tennessee	25,193		2.0	%	4,136	2.6	%	Tennessee	26,871		1.8	%	4,296	2.4	%
Georgia		24,804		2.0	%	3,512	2.2	%
Alabama	Alabama	19,386		1.5	%	3,334	2.1	%	Alabama	21,195		1.5	%	3,346	1.9	%
Other (b)	Other (b)	15,469		1.2	%	2,237	1.4	%	Other (b)	15,827		1.1	%	2,402	1.3	%
Total South	Total South	243,948		19.2	%	29,658	18.4	%	Total South	261,816		17.8	%	31,487	17.5	%
Midwest
Illinois		62,824		4.9	%	8,734	5.4	%
Minnesota		32,584		2.6	%	3,225	2.0	%
Indiana		26,882		2.1	%	4,734	2.9	%
Ohio		21,055		1.7	%	4,503	2.8	%
Wisconsin		15,962		1.3	%	2,726	1.7	%
Michigan		15,410		1.2	%	2,496	1.6	%
Other (b)		35,706		2.8	%	5,634	3.5	%
Total Midwest		210,423		16.6	%	32,052	19.9	%
East	East								East
North Carolina	North Carolina	36,505		2.9	%	8,098	5.0	%	North Carolina	39,544		2.7	%	8,404	4.7	%
Pennsylvania	Pennsylvania	31,890		2.5	%	3,673	2.3	%	Pennsylvania	33,270		2.2	%	3,574	2.0	%
New Jersey		23,178		1.8	%	1,235	0.8	%
New York									New York	20,194		1.4	%	2,256	1.2	%
South Carolina									South Carolina	18,675		1.3	%	4,949	2.7	%
Massachusetts	Massachusetts	22,159		1.7	%	1,387	0.8	%	Massachusetts	18,357		1.2	%	1,387	0.8	%
New York		18,881		1.5	%	2,221	1.4	%
Kentucky	Kentucky	17,796		1.4	%	3,063	1.9	%	Kentucky	17,380		1.2	%	2,980	1.7	%
South Carolina		14,982		1.2	%	4,088	2.5	%
Virginia									Virginia	15,986		1.1	%	1,854	1.0	%
Other (b)	Other (b)	37,234		2.9	%	5,300	3.3	%	Other (b)	38,358		2.6	%	4,662	2.6	%
Total East	Total East	202,625		15.9	%	29,065	18.0	%	Total East	201,764		13.7	%	30,066	16.7	%
West	West								West
California	California	70,710		5.5	%	6,420	4.0	%	California	63,404		4.3	%	6,100	3.4	%
Arizona	Arizona	30,099		2.4	%	3,365	2.1	%	Arizona	30,692		2.1	%	3,437	1.9	%
Utah									Utah	15,144		1.0	%	2,085	1.1	%
Other (b)	Other (b)	63,158		5.0	%	6,720	4.1	%	Other (b)	59,350		4.1	%	5,146	2.9	%
Total West	Total West	163,967		12.9	%	16,505	10.2	%	Total West	168,590		11.5	%	16,768	9.3	%
United States Total	United States Total	820,963		64.6	%	107,280	66.5	%	United States Total	896,339		61.0	%	118,783	66.0	%
International	International								International
Germany									Germany	74,207		5.1	%	6,839	3.8	%
Spain	Spain	60,420		4.8	%	5,078	3.2	%	Spain	72,367		4.9	%	5,631	3.1	%
Germany		57,205		4.5	%	6,440	4.0	%
The Netherlands									The Netherlands	60,440		4.1	%	7,054	3.9	%
Poland	Poland	55,570		4.4	%	7,959	4.9	%	Poland	59,408		4.0	%	8,635	4.8	%
United Kingdom	United Kingdom	52,424		4.1	%	4,804	3.0	%	United Kingdom	54,633		3.7	%	4,742	2.6	%
The Netherlands		52,200		4.1	%	6,990	4.3	%
Canada (c)									Canada (c)	50,761		3.5	%	5,087	2.8	%
Italy	Italy	24,912		2.0	%	2,386	1.5	%	Italy	32,694		2.2	%	3,354	1.9	%
Denmark	Denmark	20,475		1.6	%	2,844	1.8	%	Denmark	25,022		1.7	%	3,039	1.7	%
Croatia									Croatia	22,810		1.6	%	2,063	1.2	%
France	France	19,013		1.5	%	1,685	1.0	%	France	21,143		1.4	%	1,679	0.9	%
Croatia		15,988		1.3	%	1,726	1.1	%
Canada		15,644		1.2	%	2,448	1.5	%
Other (c)		75,412		5.9	%	11,654	7.2	%
Norway									Norway	15,118		1.0	%	753	0.4	%
Other (d)									Other (d)	84,808		5.8	%	12,360	6.9	%
International Total	International Total	449,263		35.4	%	54,014	33.5	%	International Total	573,411		39.0	%	61,236	34.0	%
Total	Total	$	1,270,226	100.0	%	161,294	100.0	%	Total	$	1,469,750	100.0	%	180,019	100.0	%

W. P. Carey 6/30/~~2022~~2023 10-Q – 4642

Portfolio Diversification by Property Type

(in thousands, except percentages)


Property Type	Property Type	ABR		ABR Percent		Square Footage (a)	Square Footage Percent		Property Type	ABR		ABR Percent		Square Footage (a)	Square Footage Percent
Industrial	Industrial	$	339,070	26.7	%	56,461	35.0	%	Industrial	$	427,795	29.1	%	68,005	37.8	%
Warehouse	Warehouse	306,675		24.1	%	57,856	35.9	%	Warehouse	345,317		23.5	%	63,011	35.0	%
Retail (e)									Retail (e)	247,858		16.9	%	20,267	11.3	%
Office	Office	237,154		18.7	%	16,013	9.9	%	Office	237,324		16.1	%	16,071	8.9	%
Retail (d)		212,899		16.8	%	19,384	12.0	%
Self Storage (net lease)	Self Storage (net lease)	61,708		4.9	%	5,810	3.6	%	Self Storage (net lease)	63,786		4.3	%	5,810	3.2	%
Other ~~(e)~~(f)	Other ~~(e)~~(f)	112,720		8.8	%	5,770	3.6	%	Other ~~(e)~~(f)	147,670		10.1	%	6,855	3.8	%
Total	Total	$	1,270,226	100.0	%	161,294	100.0	%	Total	$	1,469,750	100.0	%	180,019	100.0	%

__________

(a)Includes square footage for any vacant properties.

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

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

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

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

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

W. P. Carey 6/30/~~2022~~2023 10-Q – 4743

Portfolio Diversification by Tenant Industry

(in thousands, except percentages)


Industry Type	Industry Type	ABR		ABR Percent		Square Footage	Square Footage Percent		Industry Type	ABR		ABR Percent		Square Footage	Square Footage Percent
Retail Stores (a)	Retail Stores (a)	$	265,377	20.9	%	34,369	21.3	%	Retail Stores (a)	$	296,390	20.2	%	36,258	20.1	%
Consumer Services	Consumer Services	110,204		8.7	%	8,067	5.0	%	Consumer Services	127,046		8.6	%	8,511	4.7	%
Beverage and Food	Beverage and Food	86,945		6.8	%	12,263	7.6	%	Beverage and Food	108,860		7.4	%	15,759	8.8	%
Automotive	Automotive	79,095		6.2	%	12,310	7.6	%	Automotive	95,549		6.5	%	14,648	8.1	%
Healthcare and Pharmaceuticals									Healthcare and Pharmaceuticals	88,412		6.0	%	7,825	4.4	%
Grocery	Grocery	69,117		5.4	%	7,756	4.8	%	Grocery	88,380		6.0	%	8,404	4.7	%
Cargo Transportation	Cargo Transportation	61,358		4.8	%	9,485	5.9	%	Cargo Transportation	65,929		4.5	%	9,550	5.3	%
Healthcare and Pharmaceuticals		60,276		4.7	%	5,372	3.3	%
Capital Equipment									Capital Equipment	56,603		3.9	%	8,459	4.7	%
Containers, Packaging, and Glass									Containers, Packaging, and Glass	49,899		3.4	%	8,266	4.6	%
Construction and Building	Construction and Building	51,403		4.1	%	9,077	5.6	%	Construction and Building	48,689		3.3	%	9,233	5.1	%
Business Services	Business Services	47,521		3.7	%	3,981	2.5	%	Business Services	48,672		3.3	%	4,113	2.3	%
Capital Equipment		47,088		3.7	%	7,755	4.8	%
Durable Consumer Goods	Durable Consumer Goods	44,337		3.5	%	10,276	6.4	%	Durable Consumer Goods	47,153		3.2	%	10,299	5.7	%
Sovereign and Public Finance									Sovereign and Public Finance	45,595		3.1	%	3,560	2.0	%
Hotel and Leisure	Hotel and Leisure	42,259		3.3	%	2,214	1.4	%	Hotel and Leisure	41,562		2.8	%	2,024	1.1	%
Containers, Packaging, and Glass		40,660		3.2	%	6,714	4.2	%
Sovereign and Public Finance		37,455		3.0	%	3,241	2.0	%
High Tech Industries	High Tech Industries	31,066		2.5	%	3,315	2.1	%	High Tech Industries	35,590		2.4	%	3,486	1.9	%
Chemicals, Plastics, and Rubber	Chemicals, Plastics, and Rubber	27,710		2.2	%	4,431	2.7	%	Chemicals, Plastics, and Rubber	35,249		2.4	%	6,186	3.4	%
Insurance	Insurance	25,973		2.0	%	1,749	1.1	%	Insurance	30,730		2.1	%	1,961	1.1	%
Telecommunications									Telecommunications	26,710		1.8	%	2,137	1.2	%
Metals									Metals	26,096		1.8	%	4,515	2.5	%
Non-Durable Consumer Goods	Non-Durable Consumer Goods	23,869		1.9	%	5,940	3.7	%	Non-Durable Consumer Goods	25,614		1.7	%	5,971	3.3	%
Banking	Banking	19,210		1.5	%	1,216	0.8	%	Banking	15,543		1.1	%	1,006	0.6	%
Aerospace and Defense		16,227		1.3	%	1,358	0.8	%
Telecommunications		15,007		1.2	%	1,479	0.9	%
Metals		14,913		1.2	%	3,068	1.9	%
Media: Broadcasting and Subscription		12,723		1.0	%	784	0.5	%
Other (b)	Other (b)	40,433		3.2	%	5,074	3.1	%	Other (b)	65,479		4.5	%	7,848	4.4	%
Total	Total	$	1,270,226	100.0	%	161,294	100.0	%	Total	$	1,469,750	100.0	%	180,019	100.0	%

__________

(a)Includes automotive dealerships.

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

W. P. Carey 6/30/~~2022~~2023 10-Q – 4844

Lease Expirations

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


Year of Lease Expiration (a)	Year of Lease Expiration (a)	Number of Leases Expiring	Number of Tenants with Leases Expiring	ABR		ABR Percent		Square Footage	Square Footage Percent		Year of Lease Expiration (a)	Number of Leases Expiring	Number of Tenants with Leases Expiring	ABR		ABR Percent		Square Footage	Square Footage Percent
Remaining 2022		20	17	$	24,073	1.9	%	1,500	0.9	%
2023 (b)		32	27	46,942		3.7	%	5,127	3.2	%
2024 (c)		43	37	94,116		7.4	%	12,221	7.6	%
Remaining 2023											Remaining 2023	23	19	$	20,650	1.4	%	3,232	1.8	%
2024 (b)											2024 (b)	40	34	89,035		6.1	%	10,933	6.1	%
2025	2025	52	30	58,981		4.6	%	7,144	4.4	%	2025	53	32	64,002		4.4	%	7,076	3.9	%
2026	2026	41	30	56,375		4.4	%	8,222	5.1	%	2026	46	37	67,475		4.6	%	9,088	5.0	%
2027	2027	57	33	79,785		6.3	%	8,715	5.4	%	2027	57	34	83,863		5.7	%	8,868	4.9	%
2028	2028	42	24	62,132		4.9	%	5,571	3.5	%	2028	47	29	70,175		4.8	%	5,224	2.9	%
2029	2029	51	24	55,657		4.4	%	6,882	4.3	%	2029	58	30	73,378		5.0	%	8,575	4.8	%
2030	2030	28	24	65,273		5.1	%	5,565	3.4	%	2030	34	30	75,751		5.2	%	6,165	3.4	%
2031	2031	33	17	64,229		5.1	%	8,056	5.0	%	2031	37	21	72,284		4.9	%	8,749	4.9	%
2032	2032	37	18	40,780		3.2	%	5,409	3.4	%	2032	41	22	45,915		3.1	%	6,200	3.4	%
2033	2033	28	22	74,922		5.9	%	10,159	6.3	%	2033	30	23	82,225		5.6	%	11,196	6.2	%
2034	2034	48	16	76,288		6.0	%	7,955	4.9	%	2034	50	19	93,321		6.3	%	9,023	5.0	%
2035	2035	13	13	26,224		2.1	%	4,725	2.9	%	2035	14	14	29,734		2.0	%	4,957	2.8	%
Thereafter (>2035)		277	109	444,449		35.0	%	62,519	38.8	%
2036											2036	47	19	72,504		4.9	%	11,260	6.3	%
Thereafter (>2036)											Thereafter (>2036)	278	117	529,438		36.0	%	67,644	37.6	%
Vacant	Vacant	—	—	—		—	%	1,524	0.9	%	Vacant	—	—	—		—	%	1,829	1.0	%
Total	Total	802		$	1,270,226	100.0	%	161,294	100.0	%	Total	855		$	1,469,750	100.0	%	180,019	100.0	%

__________

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

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

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

Note 5

~~Rent Collections~~

Through the date of this Report, we received from tenants over 99.6% of contractual base rent that was due during the second quarter of 2022 (based on contractual minimum annualized base rent (“ABR”) as of March 31, 2022).

Terms and Definitions

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

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

W. P. Carey 6/30/~~2022~~2023 10-Q – 4945

Results of Operations

We operate in two reportable segments: Real Estate and Investment Management. We evaluate our results of operations with a primary focus on increasing and enhancing the value, quality, and number of properties in our Real Estate segment. We focus our efforts on accretive investing and improving portfolio quality through re-leasing efforts, including negotiation of lease renewals, or selectively selling assets in order to increase value in our real estate portfolio. Through our Investment Management segment, we expect to continue to earn fees and other income from the management of the ~~portfolios~~portfolio of ~~the remaining Managed Programs~~CESH until ~~those programs reach~~it reaches the end of ~~their respective~~its life ~~cycles.~~cycle. Refer to Note 15 for tables presenting the comparative results of our Real Estate and Investment Management segments.

Real Estate

Revenues

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


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Real Estate Revenues	Real Estate Revenues													Real Estate Revenues
Lease revenues from:	Lease revenues from:													Lease revenues from:
Existing net-leased properties	Existing net-leased properties	$	282,633	$	273,925	$	8,708	$	562,924	$	552,371	$	10,553	Existing net-leased properties	$	305,248	$	289,484	$	15,764	$	604,047	$	576,742	$	27,305
Recently acquired net-leased properties	Recently acquired net-leased properties	31,017		12,381		18,636		57,558		14,794		42,764		Recently acquired net-leased properties	39,620		6,219		33,401		62,977		8,273		54,704
Net-leased properties sold or held for sale		704		2,758		(2,054)		1,597		6,564		(4,967)
Net-leased properties acquired in the CPA:18 Merger														Net-leased properties acquired in the CPA:18 Merger	21,299		—		21,299		42,401		—		42,401
Net-leased properties sold, held for sale, or reclassified to operating properties or sales-type leases														Net-leased properties sold, held for sale, or reclassified to operating properties or sales-type leases	2,957		18,651		(15,694)		12,035		37,064		(25,029)
Total lease revenues (includes reimbursable tenant costs)	Total lease revenues (includes reimbursable tenant costs)	314,354		289,064		25,290		622,079		573,729		48,350		Total lease revenues (includes reimbursable tenant costs)	369,124		314,354		54,770		721,460		622,079		99,381
Income from direct financing leases and loans receivable		17,778		17,422		356		36,157		35,164		993
Operating property revenues		5,064		3,245		1,819		8,929		5,424		3,505
Lease termination income and other		2,591		5,059		(2,468)		16,713		6,644		10,069
Income from finance leases and loans receivable														Income from finance leases and loans receivable	27,311		17,778		9,533		48,066		36,157		11,909
Operating property revenues from:														Operating property revenues from:
Operating properties acquired in the CPA:18 Merger														Operating properties acquired in the CPA:18 Merger	23,686		—		23,686		46,869		—		46,869
Operating properties recently reclassified from net-leased properties or recently acquired														Operating properties recently reclassified from net-leased properties or recently acquired	20,816		—		20,816		33,495		—		33,495
Existing operating properties														Existing operating properties	6,174		5,064		1,110		11,198		8,929		2,269
Total operating property revenues														Total operating property revenues	50,676		5,064		45,612		91,562		8,929		82,633
Other lease-related income														Other lease-related income	5,040		2,591		2,449		18,413		16,713		1,700
		$	339,787	$	314,790	$	24,997	$	683,878	$	620,961	$	62,917		$	452,151	$	339,787	$	112,364	$	879,501	$	683,878	$	195,623

W. P. Carey 6/30/~~2022~~2023 10-Q – 5046

Lease Revenues

“Existing net-leased properties” are those that we acquired or placed into service prior to January 1, ~~2021~~2022 and that were not sold or held for sale during the periods presented. For the periods presented, there were ~~1,108~~1,080 existing net-leased properties.

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

WPC 23Q2 MD&A Chart - Lease Revenues (QTD).jpg

WPC 23Q2 MD&A Chart - Lease Revenues (YTD).jpg

__________

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

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

“Recently acquired net-leased properties” are those that we acquired or placed into service subsequent to December 31, ~~2020~~2021 and that were not sold or held for sale during the periods presented. Since January 1, ~~2021,~~2022, we acquired 3628 investments (comprised of ~~129 properties and six land parcels under buildings that we already own)~~172 properties) and placed ~~one property~~two properties into service.

W. P. Carey 6/30/~~2022~~2023 10-Q – 5147

“Net-leased properties acquired in the CPA:18 Merger” on August 1, 2022 (Note 1) consisted of 38 net-leased properties that were not sold or held for ~~sale” include (i) 14~~sale during the periods presented.

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

•eight net-leased properties disposed of during the six months ended June 30, ~~2022 and (ii) 24~~2023;

•one net-leased property classified as held for sale at June 30, 2023;

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

•a portfolio of 12 net-leased hotel properties that converted to operating properties in the first quarter of 2023 upon expiration of the master lease with the Marriott Corporation, after which we began recognizing operating property revenues and expenses from these properties (Note 4); and

•a portfolio of 78 net-leased self-storage properties that were reclassified to net investments in sales-type leases in the first quarter of 2023, since the tenant provided notice of its intention to exercise its option to repurchase the properties; following this transaction, we began recognizing earnings from these properties within Income from finance leases and loans receivable in the consolidated financial statements (Note 5).

Our dispositions are more fully described in Note 14.

W. P. Carey 6/30/2023 10-Q– 48

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

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

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

WPC 23Q2 MD&A Chart - DFL and Loan Rec (QTD).jpg

WPC 23Q2 MD&A Chart - DFL and Loan Rec (YTD).jpg

W. P. Carey 6/30/~~2022~~2023 10-Q – 5249

Operating Property Revenues and Expenses

“Operating properties acquired in the CPA:18 Merger” on August 1, 2022 (Note 1) consisted of 65 self-storage properties and two student housing properties, which contributed operating property revenues, depreciation and amortization, and operating property expenses during the three and six months ended June 30, 2023.

“Operating properties recently reclassified from net-leased properties or recently acquired” include (i) the portfolio of 12 net-leased hotel properties that converted to operating properties in the first quarter of 2023 (after which we began recognizing operating property revenues and expenses from these properties (Note 4)) and (ii) a self-storage operating property acquired in June 2023 (Note 4).

“Existing operating properties” are those that we acquired or placed into service prior to January 1, 2022 and that were not sold or held for sale during the periods presented. For the periods presented, we recorded operating property revenues from 11 existing operating properties, comprised of ten self-storage operating properties (which excludes nine self-storage properties accounted for under the equity method) and one hotel operating ~~property.~~property, as well as a parking garage attached to one of our existing net-leased properties. For our existing hotel operating property, revenues and expenses increased by (i) ~~$1.5~~$0.6 million and ~~$1.1~~$0.4 million, respectively, for the three months ended June 30, ~~2022~~2023 as compared to the same period in ~~2021,~~2022, and (ii) ~~$3.0~~$1.3 million and ~~$2.0~~$0.8 million, respectively, for the six months ended June 30, ~~2022~~2023 as compared to the same period in ~~2021,~~2022, reflecting higher ~~occupancy as the hotel’s business recovers from the ongoing COVID-19 pandemic.~~occupancy.

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

~~Lease termination~~Other lease-related income ~~and other~~ is described in Note 4.

Operating Expenses

Depreciation and Amortization

~~The following table presents depreciation and amortization expense within our Real Estate segment (in thousands):~~

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 Change 2022 2021 Change
Depreciation and Amortization
Net-leased properties $ 113,650 $ 112,319 $ 1,331 $ 227,612 $ 220,822 $ 6,790
Operating properties 683 679 4 1,367 1,375 (8)
Corporate 747 1,350 (603) 1,494 2,473 (979)
$ 115,080 $ 114,348 $ 732 $ 230,473 $ 224,670 $ 5,803

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

General and Administrative

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

For the three and six months ended June 30, ~~2022~~2023 as compared to the same ~~period~~periods in ~~2021,~~2022, general and administrative expenses ~~allocated to our Real Estate segment~~ increased by ~~$1.4~~$3.9 million and $7.3 million, respectively, primarily due to higher compensation ~~expense.~~expense, increased employee benefits expense, increased professional fees and expenses resulting from the assets acquired in the CPA:18 Merger (Note 1), and no longer receiving reimbursements from CPA:18 – Global.

Property Expenses, Excluding Reimbursable Tenant Costs

For the three and six months ended June 30, ~~2022~~2023 as compared to the same ~~period~~periods in ~~2021,~~2022, property expenses, excluding reimbursable tenant costs, ~~increased~~decreased by ~~$2.9~~$6.5 million and $7.5 million, respectively, primarily due to ~~higher carrying costs related to~~the release of real estate taxes accrued for a cash basis tenant ~~vacancies (which resulted in property expenses no longer being reimbursable)~~during the current year periods. The tenant was previously not current on real estate taxes due, and ~~costs associated with repositioning certain properties.~~

~~Stock-based Compensation Expense~~

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

~~For~~repaid the ~~six months ended June 30, 2022 as compared to the same period in 2021, stock-based compensation expense allocated to our Real Estate segment increased by $3.2 million, primarily due to changes~~outstanding amount in the ~~projected payout for PSUs.~~second quarter of 2023.

Impairment Charges — Real Estate

Our impairment charges on real estate are more fully described in Note 8.

W. P. Carey 6/30/~~2022~~2023 10-Q – 5350

~~Merger and Other Expenses~~

~~The following table presents merger and other expenses within our Real Estate segment (in thousands):~~

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 Change 2022 2021 Change
Merger and Other Expenses
Costs incurred in connection with the Proposed Merger (Note 1)
$ 1,785 $ — $ 1,785 $ 2,734 $ — $ 2,734
Reversals of estimated liabilities for German real estate transfer taxes that were previously recorded in connection with mergers in prior years — (2,819) 2,819 (3,616) (3,262) (354)
Other expenses 199 220 (21) 541 172 369
$ 1,984 $ (2,599) $ 4,583 $ (341) $ (3,090) $ 2,749

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

Interest Expense

For the three and six months ended June 30, ~~2022~~2023 as compared to the same periods in ~~2021,~~2022, interest expense ~~decreased~~increased by ~~$2.8~~$29.1 million and ~~$8.4~~$50.2 million, respectively, primarily due to (i) $10.7 million and $20.8 million of interest expense incurred during the ~~weakening~~three and six months ended June 30, 2023, respectively, related to non-recourse mortgage loans assumed in the CPA:18 Merger, (ii) higher outstanding balances and interest rates on our Senior Unsecured Credit Facility, (iii) our Unsecured Term Loan due 2026 that we entered into in April 2023 (Note 10), and (iv) two senior unsecured notes issuances totaling $334.8 million (based on the exchange rate of ~~foreign currencies (primarily~~ the euro ~~and British pound sterling)~~on the dates of issuance) with a weighted-average interest rate of 3.6% completed in ~~relation to the U.S. dollar between the periods, (ii)~~September 2022, partially offset by the reduction of our mortgage debt outstanding by prepaying or repaying at or close to maturity a total of ~~$790.7~~$235.7 million of non-recourse mortgage loans with a weighted-average interest rate of ~~4.9%~~5.1% since January 1, ~~2021~~2022 (Note 10), and (iii) the redemption of the €500.0 million of 2.0% Senior Notes due 2023 in March 2021, partially offset by three senior unsecured notes issuances totaling $1.4 billion (based on the exchange rate of the euro on the date of issuance for our euro-denominated senior unsecured notes) with a weighted-average interest rate of 1.7% completed since January 1, 2021..

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


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021			2022			2021				2023			2022			2023			2022
Average outstanding debt balance	Average outstanding debt balance	$	6,833,452		$	7,000,966		$	6,876,996		$	6,908,325		Average outstanding debt balance	$	8,633,387		$	6,833,452		$	8,412,813		$	6,876,996
Weighted-average interest rate	Weighted-average interest rate	2.5		%	2.6		%	2.5		%	2.7		%	Weighted-average interest rate	3.2		%	2.5		%	3.1		%	2.5		%

Non-Operating Income

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

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2023		2022		Change		2023		2022		Change
Non-Operating Income
Realized gains on foreign currency collars (Note 9)	$	3,747	$	5,934	$	(2,187)	$	7,852	$	9,246	$	(1,394)
Interest income related to our loans to affiliates and cash deposits	762		41		721		1,270		51		1,219
Cash dividends from our investment in Lineage Logistics (Note 8)	—		—		—		—		4,308		(4,308)
Cash dividends from our investment in preferred shares of WLT (Note 8)	—		—		—		—		912		(912)
	$	4,509	$	5,975	$	(1,466)	$	9,122	$	14,517	$	(5,395)

W. P. Carey 6/30/2023 10-Q– 51

Earnings from Equity Method Investments in Real Estate

Our equity method investments in real estate are more fully described in Note 7. The following table presents earnings from equity method investments in real estate (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2023		2022		Change		2023		2022		Change
Earnings from Equity Method Investments in Real Estate
Existing Equity Method Investments:
Earnings from Las Vegas Retail Complex (a)	$	2,576	$	1,809	$	767	$	5,868	$	3,368	$	2,500
Earnings from Johnson Self Storage	1,119		1,087		32		2,224		2,027		197
Earnings from Kesko Senukai	450		576		(126)		1,073		1,230		(157)
Earnings from Harmon Retail Center	210		258		(48)		426		531		(105)
	4,355		3,730		625		9,591		7,156		2,435
Equity Method Investments Consolidated after the CPA:18 Merger:
Proportionate share of impairment charge recognized on Bank Pekao	—		—		—		—		(4,610)		4,610
Other	—		799		(799)		—		1,196		(1,196)
	—		799		(799)		—		(3,414)		3,414
	$	4,355	$	4,529	$	(174)	$	9,591	$	3,742	$	5,849

__________

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

Gain on Sale of Real Estate, Net

Gain on sale of real estate, net, consists of ~~gain~~gains on the sale of properties that were disposed of or subject to a purchase option during the reporting ~~period. Our dispositions are~~period, as more fully described inNote 5 and Note 14.

W. P. Carey 6/30/~~2022~~2023 10-Q – 5452

Other Gains and (Losses)

Other gains and (losses) primarily consists of gains and losses on (i) the mark-to-market fair value of equity securities, (ii) extinguishment of debt, and (iii) foreign currency exchange rate movements. The timing and amount of such gains or losses cannot always be estimated and are subject to fluctuation. Certain~~All~~ of our foreign currency-denominated unsecured debt instruments were designated as net investment hedges during the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022. Therefore, no gains and losses on foreign currency exchange rate movements were recognized on the remeasurement of such instruments during those periods (Note 9).

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


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Other Gains and (Losses)	Other Gains and (Losses)													Other Gains and (Losses)
Net realized and unrealized (losses) gains on foreign currency exchange rate movements (a)	Net realized and unrealized (losses) gains on foreign currency exchange rate movements (a)	$	(37,030)	$	3,270	$	(40,300)	$	(48,104)	$	(4,181)	$	(43,923)	Net realized and unrealized (losses) gains on foreign currency exchange rate movements (a)	$	(1,103)	$	(37,030)	$	35,927	$	1,374	$	(48,104)	$	49,478
Change in allowance for credit losses on finance receivables (Note 5)														Change in allowance for credit losses on finance receivables (Note 5)	209		1,753		(1,544)		3,629		980		2,649
(Loss) gain on extinguishment of debt														(Loss) gain on extinguishment of debt	(91)		(149)		58		2,662		(1,041)		3,703
Non-cash unrealized gains related to an increase in the fair value of our investment in common shares of WLT (Note 8)	Non-cash unrealized gains related to an increase in the fair value of our investment in common shares of WLT (Note 8)	15,357		—		15,357		43,397		—		43,397		Non-cash unrealized gains related to an increase in the fair value of our investment in common shares of WLT (Note 8)	—		15,357		(15,357)		—		43,397		(43,397)
Change in allowance for credit losses on finance receivables (Note 5)		1,753		4,890		(3,137)		980		6,249		(5,269)
Loss on extinguishment of debt (b)		(149)		(187)		38		(1,041)		(60,068)		59,027
Realized gains in connection with the redemption of our investment in preferred shares of WLT (Note 8)	Realized gains in connection with the redemption of our investment in preferred shares of WLT (Note 8)	—		—		—		18,688		—		18,688		Realized gains in connection with the redemption of our investment in preferred shares of WLT (Note 8)	—		—		—		—		18,688		(18,688)
Non-cash unrealized gains related to an increase in the fair value of our investment in shares of Lineage Logistics (Note 8)		—		—		—		—		23,381		(23,381)
Other	Other	(86)		(501)		415		343		(98)		441		Other	95		(86)		181		(969)		343		(1,312)
		$	(20,155)	$	7,472	$	(27,627)	$	14,263	$	(34,717)	$	48,980		$	(890)	$	(20,155)	$	19,265	$	6,696	$	14,263	$	(7,567)

__________

(a)~~We make~~Remeasurement of certain ~~foreign currency-denominated intercompany loans to a number of~~monetary assets and liabilities that are held by our ~~foreign~~ subsidiaries ~~most of which do not have the U.S. dollar as~~in currencies other than their functional ~~currency. Remeasurement of foreign~~ currency ~~intercompany transactions that are scheduled for settlement, consisting primarily of accrued interest and amortizing loans,~~ are included in other gains and (losses).

~~(b)Amount~~ This includes foreign currency-denominated intercompany loans to our foreign subsidiaries that are scheduled for settlement. Beginning in the ~~six months ended June 30, 2021 is related~~first quarter of 2023, our intercompany loans subject to ~~the prepayment~~remeasurement were hedged by certain of mortgage loans (primarily comprised of prepayment penalties totaling $31.8 million) and redemption of the €500.0 million of 2.0% Senior Notes due 2023 in March 2021 (primarily comprised of a “make-whole” amount of $26.2 million related to the redemption) (~~Note 10~~).our foreign currency-denominated unsecured debt that we de-designated as net investment hedges.

~~W. P. Carey 6/30/2022 10-Q~~– 55

~~Non-Operating Income~~

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

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

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 Change 2022 2021 Change
Non-Operating Income
Realized gains (losses) on foreign currency collars (Note 9)
$ 5,934 $ (228) $ 6,162 $ 9,246 $ (408) $ 9,654
Interest income related to our loans to affiliates and cash deposits 41 25 16 51 39 12
Cash dividends from our investment in preferred shares of WLT (Note 8)
— 3,268 (3,268) 912 3,268 (2,356)
Cash dividends from our investment in Lineage Logistics (Note 8)
— — — 4,308 6,438 (2,130)
$ 5,975 $ 3,065 $ 2,910 $ 14,517 $ 9,337 $ 5,180

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

~~Our equity method investments in real estate are more fully described in~~ ~~Note 7. The following table presents earnings (losses) from equity method investments in real estate (in thousands):~~

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 Change 2022 2021 Change
Earnings (Losses) from Equity Method Investments in Real Estate
Earnings from Las Vegas Retail Complex $ 1,809 $ 293 $ 1,516 $ 3,368 $ 293 $ 3,075
Earnings from Johnson Self Storage (a)
1,087 492 595 2,027 893 1,134
Earnings (losses) from Kesko Senukai (b)
576 660 (84) 1,230 (510) 1,740
Losses from WLT (c)
— (4,005) 4,005 — (8,488) 8,488
Proportionate share of impairment charge recognized on Bank Pekao (Note 7)
— — — (4,610) — (4,610)
Other-than-temporary impairment charge on State Farm Mutual Automobile Insurance Co. (Note 8)
— — — — (6,830) 6,830
Other 1,057 706 351 1,727 1,669 58
$ 4,529 $ (1,854) $ 6,383 $ 3,742 $ (12,973) $ 16,715

~~__________~~

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

~~(b)~~Increase for the six months ended June 30, 2022 as compared to the same period in 2021 is primarily due to higher rent collections at these retail properties, where certain rents were previously disputed and subsequently collected.

~~(c)~~Losses for the prior year periods were primarily due to the adverse impact of the COVID-19 pandemic on WLT’s operations. We recorded losses from this investment on a one quarter lag. This investment was reclassified to equity securities at fair value within Other assets, net on our consolidated balance sheets in January 2022 (~~Note 8~~).

~~W. P. Carey 6/30/2022 10-Q~~– 56

Provision for Income Taxes

For the three and six months ended June 30, ~~2022~~2023 as compared to the same periods in ~~2021,~~2022, provision for income taxes within our Real Estate segment ~~decreased~~increased by ~~$3.2~~$4.3 million and ~~$2.7~~$12.8 million, respectively, primarily due to (i) higher current taxes as a ~~one-time deferred tax expense recognized on a foreign~~result of rent increases driven by CPI adjustments at existing international properties, (ii) the impact of international property ~~during the prior year periods and~~acquisitions, (iii) tax benefits recognized on certain foreign properties during the ~~current~~prior year periods as a result of a tax court ~~ruling.~~ruling, and (iv) the release of deferred tax assets in connection with the tax restructuring of certain international properties during the six months ended June 30, 2023.

Investment Management

We earn revenue as the advisor to the Managed Programs. For the periods presented, we acted as advisor to the following Managed Programs: CPA:18 – Global (through August 1, 2022) and CESH. ~~The CWI~~Upon completion of the CPA:18 Merger on August 1, ~~and CWI 2 Merger closed on April 13, 2020, and as a result, CWI 2 was renamed Watermark Lodging Trust, Inc., for which we provided certain services pursuant to a transition services~~2022, the advisory agreement ~~which~~with CPA:18 – Global was terminated, ~~on October 13, 2021 (Note 3~~).and we ceased earning revenue from CPA:18 – Global.

We no longer raise capital for new or existing funds, but we currently expect to continue managing ~~CPA:18 – Global and~~ CESH and earn the various fees described below through the end of ~~their respective~~its life cycles. Upon the expected completion of the Proposed Merger, we will no longer receive fees and distributions from CPA:18 – Global, and as a result, Investment Management earnings are expected to decline in future periodscycle (Note 1, Note 3). ~~As of June 30, 2022, we managed total assets of approximately $2.5 billion on behalf of the Managed Programs.~~

W. P. Carey 6/30/2023 10-Q– 53

Revenues

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


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Investment Management Revenues	Investment Management Revenues													Investment Management Revenues
Asset management and other revenue
Asset management revenue														Asset management revenue
CESH														CESH	$	303	$	420	$	(117)	$	642	$	782	$	(140)
CPA:18 – Global	CPA:18 – Global	$	3,047	$	3,154	$	(107)	$	6,105	$	6,292	$	(187)	CPA:18 – Global	—		3,047		(3,047)		—		6,105		(6,105)
CESH		420		812		(392)		782		1,628		(846)
		3,467		3,966		(499)		6,887		7,920		(1,033)			303		3,467		(3,164)		642		6,887		(6,245)
Reimbursable costs from affiliates	Reimbursable costs from affiliates													Reimbursable costs from affiliates
CESH														CESH	124		142		(18)		225		296		(71)
CPA:18 – Global	CPA:18 – Global	1,001		641		360		1,774		1,289		485		CPA:18 – Global	—		1,001		(1,001)		—		1,774		(1,774)
CESH		142		231		(89)		296		516		(220)
WLT		—		96		(96)		—		204		(204)
		1,143		968		175		2,070		2,009		61			124		1,143		(1,019)		225		2,070		(1,845)
		$	4,610	$	4,934	$	(324)	$	8,957	$	9,929	$	(972)		$	427	$	4,610	$	(4,183)	$	867	$	8,957	$	(8,090)

Asset Management ~~and Other~~ Revenue

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

We earn structuring and other advisory revenue when we structure new investments on behalf of the Managed Programs. Since we no longer raise capital for new or existing funds, structuring and other advisory revenue has recently been and is expected to be insignificant going forward.

~~W. P. Carey 6/30/2022 10-Q~~– 57

Other Income and Expenses

Earnings from Equity Method Investments in the Managed Programs

~~Earnings from our equity method investments in the Managed Programs fluctuates based on the timing of transactions, such as new leases and property sales, as well as the level of impairment charges.~~ The following table presents the details of our earnings from equity method investments in the Managed Programs (Note 7) (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Earnings from equity method investments in the Managed Programs:	Earnings from equity method investments in the Managed Programs:									Earnings from equity method investments in the Managed Programs:
Distributions of Available Cash from CPA:18 – Global (a)	Distributions of Available Cash from CPA:18 – Global (a)	$	2,814	$	1,787	$	5,401	$	3,326	Distributions of Available Cash from CPA:18 – Global (a)	$	—	$	2,814	$	—	$	5,401
Earnings (losses) from equity method investments in the Managed Programs (b)		58		(89)		3,030		(242)
Earnings from equity method investments in the Managed Programs (a)										Earnings from equity method investments in the Managed Programs (a)	—		58		—		3,030
Earnings from equity method investments in the Managed Programs	Earnings from equity method investments in the Managed Programs	$	2,872	$	1,698	$	8,431	$	3,084	Earnings from equity method investments in the Managed Programs	$	—	$	2,872	$	—	$	8,431

__________

(a)~~We are entitled to receive distributions of up to 10%~~As a result of the ~~Available Cash from~~completion of the ~~operating partnership of~~ CPA:18 ~~– Global, as defined in its operating partnership agreement (Note 3). Distributions of Available Cash received and earned from CPA:18 – Global fluctuate based~~Merger on ~~the timing of certain events, including acquisitions and dispositions.~~

~~(b)Increase for the six months ended June 30,~~August 1, 2022, ~~as compared to the same period in 2021 was due to an increase of $3.3 million~~we no longer recognize equity income from our investment in shares of common stock of CPA:18 – Global or receive distributions of Available Cash from CPA:18 – Global.

W. P. Carey 6/30/2023 10-Q– 54

Liquidity and Capital Resources

Sources and Uses of Cash During the Period

We use the cash flow generated from our investments primarily to meet our operating expenses, service debt, and fund dividends to stockholders. Our cash flows fluctuate periodically due to a number of factors, which may include, among other things: the timing of our equity and debt offerings; the timing of purchases and sales of real estate; the timing of the repayment of mortgage loans and receipt of lease revenues; the timing and amount of other lease-related payments; the timing of settlement of foreign currency transactions; changes in foreign currency exchange rates; ~~the receipt of asset management fees in either shares of the common stock of CPA:18 – Global or cash;~~and the timing of distributions from equity method ~~investments;~~investments. We no longer receive certain fees and ~~the receipt of~~ distributions ~~of Available Cash~~ from CPA:18 – ~~Global.~~Global following the completion of the CPA:18 Merger on August 1, 2022 (Note 1). Despite these fluctuations, we believe that we will generate sufficient cash from operations to meet our normal recurring short-term and long-term liquidity needs. We may also use existing cash resources, available capacity under our Senior Unsecured Credit Facility, proceeds from term loans or other bank debt, proceeds from dispositions of properties (including expected proceeds from the exercise of purchase options), and the issuance of additional debt or equity securities, such as issuances of common stock through our ~~Equity~~ATM Forwards ~~and ATM Program~~ (Note 12), 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 ~~$48.1~~$83.5 million during the six months ended June 30, ~~2022~~2023 as compared to the same period in ~~2021,~~2022, primarily due to an increase in cash flow generated from net investment activity (including properties acquired in the CPA:18 Merger (Note 1)) and scheduled rent increases at existing properties, partially offset by higher ~~lease termination and other income, and lower~~ interest expense.

Investing Activities — Our investing activities are generally comprised of real estate-related transactions (purchases and sales) and funding for build-to-suit activities and other capital expenditures on real estate. In addition to these types of transactions, during the six months ended June 30, 2022, we used $26.0 million to fund short-term loans to the Managed Programs, while $10.0 million of such loans were repaid (~~Note 3). We also received $8.1 million in distributions from equity method investments.~~

Financing Activities — Our financing activities are generally comprised of borrowings and repayments under our Unsecured Revolving Credit Facility and Unsecured Term Loans, issuances of the Senior Unsecured Notes, payments and prepayments of non-recourse mortgage loans, and payments of dividends to stockholders. In addition to these types of transactions, during the six months ended June 30, ~~2022,~~2023, we received ~~$218.1~~$249.8 million in net proceeds from the issuance of ~~shares~~common stock under our ~~prior~~ ATM Program (Note 12).

W. P. Carey 6/30/~~2022~~2023 10-Q – 5855

Summary of Financing

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


		June 30, 2022			December 31, 2021				June 30, 2023			December 31, 2022
Carrying Value	Carrying Value							Carrying Value
Fixed rate:	Fixed rate:							Fixed rate:
Senior Unsecured Notes (a)	Senior Unsecured Notes (a)	$	5,471,066		$	5,701,913		Senior Unsecured Notes (a)	$	5,978,294		$	5,916,400
Non-recourse mortgages (a)		211,973			235,898
Non-recourse mortgages (a) (b)								Non-recourse mortgages (a) (b)	830,976			907,303
Unsecured Term Loans subject to interest rate swaps (a)								Unsecured Term Loans subject to interest rate swaps (a)	539,176			—
		5,683,039			5,937,811				7,348,446			6,823,703
Variable rate:	Variable rate:							Variable rate:
Unsecured Term Loans (a)	Unsecured Term Loans (a)	548,287			310,583			Unsecured Term Loans (a)	574,315			552,539
Unsecured Revolving Credit Facility	Unsecured Revolving Credit Facility	417,455			410,596			Unsecured Revolving Credit Facility	528,705			276,392
Non-recourse mortgages (a):	Non-recourse mortgages (a):							Non-recourse mortgages (a):
Amount subject to interest rate swaps and caps		69,250			79,055
Floating interest rate mortgage loans	Floating interest rate mortgage loans	47,597			53,571			Floating interest rate mortgage loans	153,271			213,958
Amount subject to interest rate caps								Amount subject to interest rate caps	11,188			11,156
		1,082,589			853,805				1,267,479			1,054,045
		$	6,765,628		$	6,791,616			$	8,615,925		$	7,877,748

Percent of Total Debt	Percent of Total Debt							Percent of Total Debt
Fixed rate	Fixed rate	84		%	87		%	Fixed rate	85		%	87		%
Variable rate	Variable rate	16		%	13		%	Variable rate	15		%	13		%
		100		%	100		%		100		%	100		%
Weighted-Average Interest Rate at End of Period	Weighted-Average Interest Rate at End of Period							Weighted-Average Interest Rate at End of Period
Fixed rate	Fixed rate	2.7		%	2.7		%	Fixed rate	3.0		%	2.9		%
Variable rate (b)		1.6		%	1.1		%
Variable rate (c)								Variable rate (c)	4.9		%	3.5		%
Total debt	Total debt	2.5		%	2.5		%	Total debt	3.3		%	3.0		%

__________

(a)Aggregate debt balance includes unamortized discount, net, totaling ~~$28.2~~$34.8 million and ~~$30.9~~$35.9 million as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and unamortized deferred financing costs totaling ~~$25.7~~$23.9 million and ~~$28.8~~$26.0 million as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

(b)Includes non-recourse mortgages subject to variable-to-fixed interest rate swaps totaling $80.1 million and $83.0 million as of June 30, 2023 and December 31, 2022, respectively.

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

Cash Resources

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

•cash and cash equivalents totaling ~~$103.6~~$204.1 million. Of this amount, ~~$65.1~~$160.7 million, at then-current exchange rates, was held in foreign subsidiaries, and we could be subject to restrictions or significant costs should we decide to repatriate these amounts;

•our Unsecured Revolving Credit Facility, with available capacity of approximately ~~$1.4~~$1.3 billion (net of amounts reserved for standby letters of credit totaling ~~$0.6~~$1.9 million);

•~~available proceeds under our Equity Forwards of approximately $285.0 million (based on 3,925,000 remaining shares outstanding and a net offering price of $72.61 per share as of June 30, 2022)~~;

•available proceeds under our ATM Forwards of approximately ~~$301.0 million (based on 3,674,187 shares outstanding and a weighted-average net offering price of $81.93 per share as of June 30, 2022);~~$384.2 million; and

•unleveraged properties that had an aggregate asset carrying value of approximately ~~$12.4~~$14.3 billion at June 30, ~~2022,~~2023, although there can be no assurance that we would be able to obtain financing for these properties.

W. P. Carey 6/30/~~2022~~2023 10-Q – 5956

~~Historically, we have~~We may also ~~accessed~~access the capital markets through additional debt (denominated in both U.S. dollars and euros) and equity ~~offerings. During the six months ended June 30, 2022, we issued 2,740,295 shares of common stock under our prior ATM Program for net proceeds of $218.1 million (Note 12). As of June 30, 2022, we had approximately $285.0 million of available proceeds under our Equity Forwards (Note 12). As of June 30, 2022, we had approximately $301.0 million of available proceeds under our ATM Forwards (Note 12~~).offerings, as well as term loans and other bank debt.

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

Cash Requirements and Liquidity

As of June 30, ~~2022,~~2023, we had (i) ~~$103.6~~$204.1 million of cash and cash equivalents, (ii) approximately ~~$1.4~~$1.3 billion of available capacity under our Unsecured Revolving Credit Facility (net of amounts reserved for standby letters of credit totaling ~~$0.6~~$1.9 million), ~~(iii) available proceeds under our Equity Forwards of approximately $285.0 million (based on 3,925,000 remaining shares outstanding~~ and ~~a net offering price of $72.61 per share as of that date), and (iv)~~(iii) available proceeds under our ATM Forwards of approximately ~~$301.0 million (based on 3,674,187 remaining shares outstanding and a weighted-average net offering price of $81.93 per share as of that date).~~$384.2 million. Our Senior Unsecured Credit Facility includes a $1.8 billion Unsecured Revolving Credit Facility and Unsecured Term Loans outstanding totaling ~~$548.3~~$574.3 million as of June 30, ~~2022~~2023 (Note 10), and is scheduled to mature on February 20, ~~2025.~~2025 (Note 10). Our Unsecured Term Loan due 2026 had $539.2 million outstanding as of June 30, 2023, and is scheduled to mature on April 24, 2026. As of June 30, ~~2022,~~2023, scheduled debt principal payments total ~~$30.7 million through December 31, 2022 and $209.0~~$278.2 million through December 31, 2023 and ~~our Senior Unsecured Notes do not start to mature until April~~$1.5 billion through December 31, 2024 (Note 10).

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

•~~paying dividends to our stockholders;~~

•funding acquisitions of new investments (Note 4);

•funding future capital commitments and tenant improvement allowances (Note 4);

•making scheduled principal and balloon payments on our debt obligations, including $500 million of senior notes due in April 2024 (Note 10);

•making scheduled interest payments on our debt obligations (future interest payments total ~~$798.3~~$911.5 million, with ~~$171.6~~$251.5 million due during the next 12 months; interest on unhedged variable-rate debt obligations was calculated using the applicable annual variable interest rates and balances outstanding at June 30, ~~2022);~~

•~~cash consideration and costs related to the Proposed Merger (Note 1~~)2023); and

•other normal recurring operating expenses.

We expect to fund these cash requirements through cash generated from operations, cash received from dispositions of properties, the use of our cash reserves or unused amounts on our Unsecured Revolving Credit Facility (as described above), proceeds from term loans or other bank debt, issuances of common stock through our ~~Equity Forwards and/or~~ ATM Program (Note 12), and potential issuances of additional debt or equity securities. We may also choose to ~~pursue prepayments of~~prepay certain of our non-recourse mortgage loan obligations, depending on our capital needs and market conditions at that time.

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

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

~~W. P. Carey 6/30/2022 10-Q~~– 60

Supplemental Financial Measures

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

W. P. Carey 6/30/2023 10-Q– 57

Funds from Operations and Adjusted Funds from Operations

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

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

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

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

W. P. Carey 6/30/~~2022~~2023 10-Q – 6158

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income attributable to W. P. Carey	Net income attributable to W. P. Carey	$	127,678	$	120,245	$	284,673	$	171,879	Net income attributable to W. P. Carey	$	144,620	$	127,678	$	439,000	$	284,673
Adjustments:	Adjustments:									Adjustments:
Depreciation and amortization of real property	Depreciation and amortization of real property	114,333		112,997		228,979		222,201		Depreciation and amortization of real property	142,932		114,333		298,800		228,979
Gain on sale of real estate, net(a)	Gain on sale of real estate, net(a)	(31,119)		(19,840)		(42,367)		(29,212)		Gain on sale of real estate, net(a)	(1,808)		(31,119)		(179,557)		(42,367)
Impairment charges		6,206		—		26,385		—
Proportionate share of adjustments to earnings from equity method investments (a) (b)		2,934		3,434		10,617		13,740
Impairment charges — real estate										Impairment charges — real estate	—		6,206		—		26,385
Proportionate share of adjustments to earnings from equity method investments (b) (c)										Proportionate share of adjustments to earnings from equity method investments (b) (c)	2,883		2,934		5,489		10,617
Proportionate share of adjustments for noncontrolling interests ~~(c)~~(d)	Proportionate share of adjustments for noncontrolling interests ~~(c)~~(d)	(4)		(4)		(8)		(8)		Proportionate share of adjustments for noncontrolling interests ~~(c)~~(d)	(268)		(4)		(567)		(8)
Total adjustments	Total adjustments	92,350		96,587		223,606		206,721		Total adjustments	143,739		92,350		124,165		223,606
FFO (as defined by NAREIT) attributable to W. P. Carey	FFO (as defined by NAREIT) attributable to W. P. Carey	220,028		216,832		508,279		378,600		FFO (as defined by NAREIT) attributable to W. P. Carey	288,359		220,028		563,165		508,279
Adjustments:	Adjustments:									Adjustments:
Other (gains) and losses (d)		21,746		(7,545)		(13,999)		33,643
Straight-line and other leasing and financing adjustments	Straight-line and other leasing and financing adjustments	(14,492)		(10,313)		(25,339)		(19,064)		Straight-line and other leasing and financing adjustments	(19,086)		(14,492)		(34,136)		(25,339)
Stock-based compensation										Stock-based compensation	8,995		9,758		16,761		17,591
Above- and below-market rent intangible lease amortization, net	Above- and below-market rent intangible lease amortization, net	10,548		14,384		21,552		26,499		Above- and below-market rent intangible lease amortization, net	8,824		10,548		19,685		21,552
Stock-based compensation		9,758		9,048		17,591		14,429
Amortization of deferred financing costs	Amortization of deferred financing costs	3,147		3,447		6,275		6,860		Amortization of deferred financing costs	5,904		3,147		10,844		6,275
Tax (benefit) expense — deferred and other										Tax (benefit) expense — deferred and other	(2,723)		(355)		1,643		(1,597)
Merger and other expenses ~~(e)~~	Merger and other expenses ~~(e)~~	1,984		(2,599)		(338)		(3,075)		Merger and other expenses ~~(e)~~	1,419		1,984		1,443		(338)
Other (gains) and losses (e)										Other (gains) and losses (e)	1,366		21,746		(6,734)		(13,999)
Other amortization and non-cash items	Other amortization and non-cash items	530		563		1,082		592		Other amortization and non-cash items	527		530		999		1,082
Tax (benefit) expense — deferred and other		(355)		217		(1,597)		(3,170)
Proportionate share of adjustments to earnings from equity method investments ~~(b)~~(c)	Proportionate share of adjustments to earnings from equity method investments ~~(b)~~(c)	1,486		4,650		(295)		9,861		Proportionate share of adjustments to earnings from equity method investments ~~(b)~~(c)	(255)		1,486		(1,181)		(295)
Proportionate share of adjustments for noncontrolling interests ~~(c)~~(d)	Proportionate share of adjustments for noncontrolling interests ~~(c)~~(d)	(6)		(8)		(11)		(13)		Proportionate share of adjustments for noncontrolling interests ~~(c)~~(d)	(24)		(6)		36		(11)
Total adjustments	Total adjustments	34,346		11,844		4,921		66,562		Total adjustments	4,947		34,346		9,360		4,921
AFFO attributable to W. P. Carey	AFFO attributable to W. P. Carey	$	254,374	$	228,676	$	513,200	$	445,162	AFFO attributable to W. P. Carey	$	293,306	$	254,374	$	572,525	$	513,200

Summary	Summary									Summary
FFO (as defined by NAREIT) attributable to W. P. Carey	FFO (as defined by NAREIT) attributable to W. P. Carey	$	220,028	$	216,832	$	508,279	$	378,600	FFO (as defined by NAREIT) attributable to W. P. Carey	$	288,359	$	220,028	$	563,165	$	508,279
AFFO attributable to W. P. Carey	AFFO attributable to W. P. Carey	$	254,374	$	228,676	$	513,200	$	445,162	AFFO attributable to W. P. Carey	$	293,306	$	254,374	$	572,525	$	513,200

W. P. Carey 6/30/~~2022~~2023 10-Q – 6259

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income from Real Estate attributable to W. P. Carey	Net income from Real Estate attributable to W. P. Carey	$	123,228	$	114,687	$	270,086	$	159,274	Net income from Real Estate attributable to W. P. Carey	$	144,686	$	123,228	$	437,917	$	270,086
Adjustments:	Adjustments:									Adjustments:
Depreciation and amortization of real property	Depreciation and amortization of real property	114,333		112,997		228,979		222,201		Depreciation and amortization of real property	142,932		114,333		298,800		228,979
Gain on sale of real estate, net(a)	Gain on sale of real estate, net(a)	(31,119)		(19,840)		(42,367)		(29,212)		Gain on sale of real estate, net(a)	(1,808)		(31,119)		(179,557)		(42,367)
Impairment charges		6,206		—		26,385		—
Proportionate share of adjustments to earnings from equity method investments (a) (b)		2,934		3,434		10,617		13,740
Impairment charges — real estate										Impairment charges — real estate	—		6,206		—		26,385
Proportionate share of adjustments to earnings from equity method investments (b) (c)										Proportionate share of adjustments to earnings from equity method investments (b) (c)	2,883		2,934		5,489		10,617
Proportionate share of adjustments for noncontrolling interests ~~(c)~~(d)	Proportionate share of adjustments for noncontrolling interests ~~(c)~~(d)	(4)		(4)		(8)		(8)		Proportionate share of adjustments for noncontrolling interests ~~(c)~~(d)	(268)		(4)		(567)		(8)
Total adjustments	Total adjustments	92,350		96,587		223,606		206,721		Total adjustments	143,739		92,350		124,165		223,606
FFO (as defined by NAREIT) attributable to W. P. Carey — Real Estate	FFO (as defined by NAREIT) attributable to W. P. Carey — Real Estate	215,578		211,274		493,692		365,995		FFO (as defined by NAREIT) attributable to W. P. Carey — Real Estate	288,425		215,578		562,082		493,692
Adjustments:	Adjustments:									Adjustments:
Other (gains) and losses (d)		20,155		(7,472)		(14,263)		34,717
Straight-line and other leasing and financing adjustments	Straight-line and other leasing and financing adjustments	(14,492)		(10,313)		(25,339)		(19,064)		Straight-line and other leasing and financing adjustments	(19,086)		(14,492)		(34,136)		(25,339)
Stock-based compensation										Stock-based compensation	8,995		9,758		16,761		17,591
Above- and below-market rent intangible lease amortization, net	Above- and below-market rent intangible lease amortization, net	10,548		14,384		21,552		26,499		Above- and below-market rent intangible lease amortization, net	8,824		10,548		19,685		21,552
Stock-based compensation		9,758		9,048		17,591		14,429
Amortization of deferred financing costs	Amortization of deferred financing costs	3,147		3,447		6,275		6,860		Amortization of deferred financing costs	5,904		3,147		10,844		6,275
Tax (benefit) expense — deferred and other										Tax (benefit) expense — deferred and other	(2,723)		(324)		1,643		(1,513)
Merger and other expenses ~~(e)~~	Merger and other expenses ~~(e)~~	1,984		(2,599)		(341)		(3,090)		Merger and other expenses ~~(e)~~	1,419		1,984		1,443		(341)
Other (gains) and losses (e)										Other (gains) and losses (e)	890		20,155		(6,696)		(14,263)
Other amortization and non-cash items	Other amortization and non-cash items	530		563		1,082		592		Other amortization and non-cash items	527		530		999		1,082
Tax (benefit) expense — deferred and other		(324)		208		(1,513)		(2,387)
Proportionate share of adjustments to earnings from equity method investments ~~(b)~~(c)	Proportionate share of adjustments to earnings from equity method investments ~~(b)~~(c)	368		3,845		535		8,167		Proportionate share of adjustments to earnings from equity method investments ~~(b)~~(c)	(255)		368		(1,181)		535
Proportionate share of adjustments for noncontrolling interests ~~(c)~~(d)	Proportionate share of adjustments for noncontrolling interests ~~(c)~~(d)	(6)		(8)		(11)		(13)		Proportionate share of adjustments for noncontrolling interests ~~(c)~~(d)	(24)		(6)		36		(11)
Total adjustments	Total adjustments	31,668		11,103		5,568		66,710		Total adjustments	4,471		31,668		9,398		5,568
AFFO attributable to W. P. Carey — Real Estate	AFFO attributable to W. P. Carey — Real Estate	$	247,246	$	222,377	$	499,260	$	432,705	AFFO attributable to W. P. Carey — Real Estate	$	292,896	$	247,246	$	571,480	$	499,260

Summary	Summary									Summary
FFO (as defined by NAREIT) attributable to W. P. Carey — Real Estate	FFO (as defined by NAREIT) attributable to W. P. Carey — Real Estate	$	215,578	$	211,274	$	493,692	$	365,995	FFO (as defined by NAREIT) attributable to W. P. Carey — Real Estate	$	288,425	$	215,578	$	562,082	$	493,692
AFFO attributable to W. P. Carey — Real Estate	AFFO attributable to W. P. Carey — Real Estate	$	247,246	$	222,377	$	499,260	$	432,705	AFFO attributable to W. P. Carey — Real Estate	$	292,896	$	247,246	$	571,480	$	499,260

W. P. Carey 6/30/~~2022~~2023 10-Q – 6360

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income from Investment Management attributable to W. P. Carey		$	4,450	$	5,558	$	14,587	$	12,605
Net (loss) income from Investment Management attributable to W. P. Carey										Net (loss) income from Investment Management attributable to W. P. Carey	$	(66)	$	4,450	$	1,083	$	14,587

FFO (as defined by NAREIT) attributable to W. P. Carey — Investment Management	FFO (as defined by NAREIT) attributable to W. P. Carey — Investment Management	4,450		5,558		14,587		12,605		FFO (as defined by NAREIT) attributable to W. P. Carey — Investment Management	(66)		4,450		1,083		14,587
Adjustments:	Adjustments:									Adjustments:
Other (gains) and losses	Other (gains) and losses	1,591		(73)		264		(1,074)		Other (gains) and losses	476		1,591		(38)		264
Tax (benefit) expense — deferred and other		(31)		9		(84)		(783)
Tax benefit — deferred and other										Tax benefit — deferred and other	—		(31)		—		(84)
Merger and other expenses	Merger and other expenses	—		—		3		15		Merger and other expenses	—		—		—		3
Proportionate share of adjustments to earnings from equity method investments (b)		1,118		805		(830)		1,694
Proportionate share of adjustments to earnings from equity method investments (c)										Proportionate share of adjustments to earnings from equity method investments (c)	—		1,118		—		(830)
Total adjustments	Total adjustments	2,678		741		(647)		(148)		Total adjustments	476		2,678		(38)		(647)
AFFO attributable to W. P. Carey — Investment Management	AFFO attributable to W. P. Carey — Investment Management	$	7,128	$	6,299	$	13,940	$	12,457	AFFO attributable to W. P. Carey — Investment Management	$	410	$	7,128	$	1,045	$	13,940

Summary	Summary									Summary
FFO (as defined by NAREIT) attributable to W. P. Carey — Investment Management	FFO (as defined by NAREIT) attributable to W. P. Carey — Investment Management	$	4,450	$	5,558	$	14,587	$	12,605	FFO (as defined by NAREIT) attributable to W. P. Carey — Investment Management	$	(66)	$	4,450	$	1,083	$	14,587
AFFO attributable to W. P. Carey — Investment Management	AFFO attributable to W. P. Carey — Investment Management	$	7,128	$	6,299	$	13,940	$	12,457	AFFO attributable to W. P. Carey — Investment Management	$	410	$	7,128	$	1,045	$	13,940

__________

(a)Amount for the six months ended June 30, 2023 includes a gain on sale of real estate of $176.2 million recognized upon a related party of a tenant’s notice of its intention to repurchase a portfolio of 78 net-lease self-storage properties and the reclassification of the investment to net investments in sales-type leases (Note 5).

(b)Amount for the six months ended June 30, 2022 includes our $4.6 million proportionate share of an impairment charge recognized on an equity method investment in real ~~estate (Note 7). Amount for the six months ended June 30, 2021 includes a non-cash other-than-temporary impairment charge of $6.8 million recognized on an equity method investment in real estate (Note 8~~).estate.

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

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

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

~~(e)Amounts for the three and six months ended June 30, 2022 and 2021 are primarily comprised of costs incurred in connection with the Proposed Merger (Note 1) and/or reversals of estimated liabilities for German real estate transfer taxes that were previously recorded in connection with mergers in prior years.~~

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 6/30/~~2022~~2023 10-Q – 6461

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market Risk

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

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

Interest Rate Risk

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

We are exposed to the impact of interest rate changes primarily through our borrowing activities. To limit this exposure, we generally seek long-term debt financing on a fixed-rate basis. However, ~~from time~~we are subject to ~~time, we or~~variable-rate interest on our ~~joint investment partners obtained,~~Unsecured Term Loans, Unsecured Revolving Credit Facility, and ~~may in the future obtain, variable-rate~~certain of our non-recourse mortgage ~~loans and, as a result, we~~debt. We have entered into, and may continue to enter into, interest rate swap agreements or interest rate cap agreements with ~~counterparties.~~counterparties related to certain of our variable-rate debt (Note 10). See Note 9 for additional information on our interest rate swaps and caps.

~~At June 30, 2022, a significant portion (approximately 85.0%) of our long-term debt either bore interest at fixed rates or was swapped or capped to a fixed rate.~~ Our debt obligations are more fully described in Note 10 and Liquidity and Capital Resources — Summary of Financing in Item 2 above. The following table presents principal cash flows based upon expected maturity dates of our debt obligations outstanding at June 30, ~~2022~~2023 (in thousands):


		2022 (Remainder)		2023		2024		2025		2026		Thereafter		Total		Fair Value			2023 (Remainder)		2024		2025		2026		2027		Thereafter		Total		Fair Value
Fixed-rate debt (a) (b)	Fixed-rate debt (a) (b)	$	18,392	$	87,272	$	1,043,216	$	498,911	$	901,421	$	3,185,790	$	5,735,002	$	5,191,465	Fixed-rate debt (a) (b)	$	199,209	$	1,238,181	$	788,506	$	1,536,988	$	543,968	$	3,100,466	$	7,407,318	$	6,702,290
Variable-rate debt (a)	Variable-rate debt (a)	$	12,325	$	91,047	$	13,599	$	967,563	$	—	$	—	$	1,084,534	$	1,081,834	Variable-rate debt (a)	$	79,022	$	3,776	$	1,184,482	$	—	$	—	$	—	$	1,267,280	$	1,265,990

__________

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

(b)Amounts include non-recourse mortgages and unsecured term loans subject to variable-to-fixed interest rate swaps. Amounts after 2023 are primarily comprised of principal payments for our Senior Unsecured Notes (Note 10).

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 June 30, ~~2022~~2023 would increase or decrease by ~~$5.2~~$7.6 million for our euro-denominated debt, by ~~$3.3~~$3.4 million for our British pound sterling-denominated debt, by ~~$1.5~~$1.1 million for our U.S. dollar-denominated debt, by $0.4 million for our Norwegian krone-denominated debt, and by $0.2 million for our Japanese yen-denominated debt, for each respective 1% change in annual interest rates.

W. P. Carey 6/30/~~2022~~2023 10-Q – 6562

Foreign Currency Exchange Rate Risk

We own international investments, primarily in Europe, Canada, and Japan, and as a result are subject to risk from the effects of exchange rate movements in various foreign currencies, primarily the euro, the British pound sterling, the Canadian dollar, ~~and~~ the Japanese yen, and certain other currencies which may affect future costs and cash flows. We have obtained, and may in the future obtain, non-recourse mortgage financing in the local currency. We have also completed several offerings of euro-denominated senior notes, and have borrowed under our Senior Unsecured Credit Facility and Unsecured Term Loan due 2026 in foreign currencies, including the euro, British pound sterling, and Japanese yen (Note 10). Volatile market conditions arising from ~~the ongoing effects of the COVID-19 global pandemic, as well as other~~certain macroeconomic factors may result in significant fluctuations in foreign currency exchange rates. To the extent that currency fluctuations increase or decrease rental revenues, as translated to U.S. dollars, the change in debt service (comprised of principal and interest, excluding balloon payments), as translated to U.S. dollars, will partially offset the effect of fluctuations in revenue and, to some extent, mitigate the risk from changes in foreign currency exchange rates. We estimate that, for a 1% increase or decrease in the exchange rate between the euro, British pound sterling, or Japanese yen and the U.S. dollar, there would be a corresponding change in the projected estimated cash flow (scheduled future rental revenues, net of scheduled future debt service payments for the next 12 months) for our consolidated foreign operations at June 30, ~~2022~~2023 of ~~$2.6~~$2.5 million, ~~$0.4~~$0.3 million, and less than $0.1 million, respectively, excluding the impact of our derivative instruments.

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

We enter into foreign currency collars to hedge certain of our foreign currency cash flow exposures. See Note 9 for additional information on our foreign currency collars.

Concentration of Credit Risk

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

W. P. Carey 6/30/~~2022~~2023 10-Q – 6663

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

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

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

Changes in Internal Control Over Financial Reporting

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

W. P. Carey 6/30/~~2022~~2023 10-Q – 6764

PART II — OTHER INFORMATION

~~Item 1A. Risk Factors~~

~~We are including the following additional risk factor, which should be read in conjunction with our description of risk factors provided in Part I, Item 1A. Risk Factors in our 2021 Annual Report:~~

~~Risks Related to Our Proposed Merger with CPA:18 – Global~~

~~Failure to complete the Proposed Merger could negatively affect us.~~

It is possible that the Proposed Merger may not be completed. The parties’ respective obligations to complete the Proposed Merger are subject to the satisfaction or waiver of specified conditions, some of which are beyond the control of CPA:18 – Global and us. If the Proposed Merger is not completed, we may be subject to a number of material risks, including the following:

•we will have incurred substantial costs and expenses related to the Proposed Merger, such as legal, accounting, and financial advisor fees, which will be payable by us even if the Proposed Merger is not completed, and are only subject to reimbursement from CPA:18 – Global under certain limited circumstances; and

•~~we may be required to pay CPA:18 – Global’s out-of-pocket expenses incurred in connection with the Proposed Merger if the Merger Agreement is terminated under certain circumstances.~~

~~The future results of the combined company will suffer if the combined company does not effectively manage its expanded operations following the Proposed Merger.~~

Following the Proposed Merger, the combined company may continue to expand its operations through additional acquisitions and other strategic transactions, some of which may involve complex challenges. The future success of the combined company will depend, in part, upon its ability to manage its expansion opportunities, integrate new operations into its existing business in an efficient and timely manner, successfully monitor its operations, costs, regulatory compliance and service quality, and maintain other necessary internal controls. There can be no assurance that the combined company’s expansion or acquisition opportunities will be successful, or that the combined company will realize its expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits.

~~Goodwill resulting from the consummation of the Proposed Merger may adversely affect the combined company’s results of operations.~~

Potential impairment of goodwill resulting from the Proposed Merger could adversely affect the combined company’s financial condition and results of operations. The combined company will assess its goodwill and other intangible assets and long-lived assets for impairment annually and more frequently when required by GAAP. The combined company will be required to record an impairment charge if circumstances indicate that the asset carrying values exceed their fair values the combined company’s assessment of goodwill, other intangible assets, or long-lived assets could indicate that an impairment of the carrying value of such assets may have occurred that could result in a material, non-cash write-down of such assets, which could have a material adverse effect on its results of operations and future earnings.

~~W. P. Carey 6/30/2022 10-Q~~– 68

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

~~10.1~~

Equity Sales Agreement, dated May 2, 2022, by and among W. P. Carey Inc. and each of Barclays Capital Inc., BMO Capital Markets Corp., BNY Mellon Capital Markets, LLC, BofA Securities, Inc., BTIG, LLC, Capital One Securities, Inc., Fifth Third Securities, Inc., Jefferies LLC, JMP Securities LLC, J.P. Morgan Securities LLC, RBC Capital Markets, LLC, Regions Securities LLC, Scotia Capital (USA) Inc., and Wells Fargo Securities, LLC, as agents, and each of Barclays Bank PLC, Bank of Montreal, The Bank of New York Mellon, Bank of America, N.A., Jefferies LLC, JPMorgan Chase Bank, National Association, Regions Securities LLC, Royal Bank of Canada, The Bank of Nova Scotia and Wells Fargo Bank, National Association, as forward purchasers

~~Incorporated by reference to Exhibit 1.1 to Current Report on Form 8-K, filed May 3, 2022~~

31.1

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

Filed herewith

31.2

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

Filed herewith

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

Filed herewith

101.INS

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

Filed herewith

101.SCH

XBRL Taxonomy Extension Schema Document

Filed herewith

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

Filed herewith

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

Filed herewith

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith

104

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

Filed herewith

W. P. Carey 6/30/~~2022~~2023 10-Q – 6965

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:	July ~~29, 2022~~28, 2023
		By:	/s/ ToniAnn Sanzone
			ToniAnn Sanzone
			Chief Financial Officer
			(Principal Financial Officer)

Date:	July ~~29, 2022~~28, 2023
		By:	/s/ ~~Arjun Mahalingam~~Brian Zander
			~~Arjun Mahalingam~~Brian Zander
			Chief Accounting Officer
			(Principal Accounting Officer)

W. P. Carey 6/30/~~2022~~2023 10-Q – 7066

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

~~10.1~~

~~Incorporated by reference to Exhibit 1.1 to Current Report on Form 8-K, filed May 3, 2022~~

31.1

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

Filed herewith

31.2

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

Filed herewith

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

Filed herewith

101.INS

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

Filed herewith

101.SCH

XBRL Taxonomy Extension Schema Document

Filed herewith

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

Filed herewith

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

Filed herewith

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith

104

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

Filed herewith


	% of Outstanding Interests Owned at				Carrying Amount of Investment at
Fund	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
CPA:18 – Global (a)	5.718	%	5.578	%	$	60,989	$	60,836
CPA:18 – Global operating partnership	0.034	%	0.034	%	209		209
CESH (b)	2.430	%	2.430	%	2,488		3,689
					$	63,686	$	64,734


	Agreement Date (a)	Shares Offered (b)	Average Gross Offering Price		Average Gross Offering Proceeds at Closing		Outstanding Shares as of June 30, 2022
June 2020 Equity Forwards (c)	6/17/2020	5,462,500	$	70.00	$	382,375	—
June 2021 Equity Forwards (d)	6/7/2021	6,037,500	75.30		454,624		—
August 2021 Equity Forwards	8/9/2021	5,175,000	78.00		403,650		3,925,000
ATM Forwards (e)	5/2/2022	3,674,187	83.98		308,553		3,674,187
							7,599,187