WP CAREY INC. Management’s discussion and analysis of financial condition and results of operations. (Form 10-Q)

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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 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 Annual Report for a
description of our business.

Significant Developments

CPA:18 Merger

On February 27, 2022, we, CPA:18 - Global, CPA:18 Limited Partnership (a
subsidiary of CPA:18 - Global), and certain of our subsidiaries entered into a
merger agreement, pursuant to which CPA:18 - Global would merge with and into
one of our indirect subsidiaries in exchange for shares of our common stock and
cash (  Note 3  ). The CPA:18 Merger and related transactions were approved by
the stockholders of CPA:18 - Global on July 26, 2022 and completed on August 1,
2022.

Financial Highlights

In the nine months ended September 30, 2022we have done the following (as further described in the consolidated financial statements):

Immovable

CPA:18 Fusion

On August 1, 2022we performed the CPA:18 merge (note 3).

•We acquired full or partial ownership interests in 42 properties in the CPA:18
Merger (including seven properties in which we already owned a partial ownership
interest), substantially all of which were triple-net leased with a
weighted-average lease term of 7.0 years, an occupancy rate of 99.3%, and an
estimated ABR totaling $81.0 million. We also acquired 65 self-storage operating
properties and two student housing operating properties totaling 5.1 million
square feet. The related property-level debt was comprised of non-recourse
mortgage loans with an aggregate consolidated fair value of approximately $900.2
million with a weighted-average annual interest rate of 5.1% as of August 1,
2022.
•We issued the following to CPA:18 - Global stockholders as part of the merger
consideration: (i) 13,786,302 shares of our common stock of approximately $1.2
billion, (ii) $3.00 per share of cash consideration totaling approximately
$423.3 million, and (iii) cash of $0.1 million paid in lieu of issuing any
fractional shares of our common stock.
•Lease revenues and operating property revenues from properties acquired in the
CPA:18 Merger were $16.5 million and $15.4 million, respectively, for both the
three and nine months ended September 30, 2022.
•We recognized a Gain on change in control of interests of $33.9 million in
connection with the CPA:18 Merger during the three and nine months ended
September 30, 2022, of which $11.4 million was attributable to our Real Estate
segment and $22.5 million was attributable to our Investment Management segment.

Investments

•We acquired 18 investments totaling $1.0 billion (  Note 5  ,   Note 6  ).
•We completed five construction projects at a cost totaling $147.3 million
(  Note 5  ).
•We funded approximately $65.2 million for a construction loan to build a retail
complex in Las Vegas, Nevada, during the nine months ended September 30, 2022.
Through September 30, 2022, we have funded $168.9 million (  Note 8  ).
•We committed to fund three build-to-suit or expansion projects totaling $25.5
million. We currently expect to complete the projects in 2023 (  Note 5  ).

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

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Provisions

•As part of our active capital recycling program, we disposed of 17 properties
for total proceeds, net of selling costs, of $170.3 million (  Note 15  ).
•In January 2022, WLT redeemed in full our 1,300,000 shares of its preferred
stock for gross proceeds of $65.0 million (  Note 9  ).
•In October 2022, we received $82.6 million in cash proceeds as a result of
certain private real estate funds' acquisition of all outstanding shares of WLT
common stock. As of the date of acquisition, we owned 12,208,243 shares of WLT
common stock (  Note 9  ). Upon completion of this transaction, we have no
remaining interest in WLT (  Note 17  ).

Financing operations and capital markets

•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 11  ).
•On May 2, 2022, we established a $1.0 billion ATM Program, under which we may
issue shares directly or defer delivery to a later date through our ATM
Forwards. As of September 30, 2022, we had approximately $455.7 million of
available proceeds under our ATM Forwards (  Note 13  ).
•We issued 2,740,295 shares of our common stock under our prior ATM Program at a
weighted-average price of $80.79 per share, for net proceeds of $218.1 million
(  Note 13  ).
•We settled portions of our Equity Forwards by delivering 1,337,500 shares of
common stock for net proceeds of $97.5 million. As of September 30, 2022,
2,587,500 shares remained outstanding under our Equity Forwards for available
proceeds of approximately $185.8 million (  Note 13  ).
•On September 28, 2022, we completed a private placement of (i) €150 million of
3.41% Senior Notes due 2029, which have a seven-year term and are scheduled to
mature on September 28, 2029, and (ii) €200 million of 3.70% Senior Notes due
2032, which have a ten-year term and are scheduled to mature on September 28,
2032 (  Note 11  ).

Investment Management

Assets Under Management

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

Dividends to shareholders

We have declared cash dividends totaling $3.177 per share during the nine months ended September 30, 2022consisting of three quarterly dividends per share of
$1.057, $1,059and $1.061 (Note 13).

                                                 W. P. Carey 9/30/2022 10-Q - 48

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Consolidated Results

(in thousands, except shares)

                                                  Three Months Ended September 30,                Nine Months Ended September 30,
                                                     2022                     2021                  2022                  2021
Revenues from Real Estate                    $         382,081          $   

320,841 $1,065,959 $941,802
Investment management revenue

                      1,541                  4,913                10,498                14,842
Total revenues                                         383,622                325,754             1,076,457               956,644

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

Dividends declared                                     222,350                197,374               633,745               579,769

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

Supplemental financial measures (a):
Adjusted funds from operations attributable
to W. P. Carey (AFFO) - Real Estate                    273,567                224,445               772,827               657,150
Adjusted funds from operations attributable
to W. P. Carey (AFFO) - Investment
Management                                               4,155                  6,279                18,095                18,736
Adjusted funds from operations attributable
to W. P. Carey (AFFO)                                  277,722                230,724               790,922               675,886

Diluted weighted-average shares outstanding        204,098,116            186,012,478           197,264,509           181,323,128


__________

(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.

Revenue

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

Net income attributable to WP Carey

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

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Net income attributable to W. P. Carey increased for the nine months ended
September 30, 2022 as compared to the same period in 2021. Net income from Real
Estate attributable to W. P. Carey increased primarily due to a lower loss on
extinguishment of debt (  Note 11  ), non-cash unrealized gains recognized on
our investment in common shares of WLT (  Note 9  ), and the impact of real
estate acquisitions, partially offset by non-cash unrealized gains recognized on
our investment in shares of Lineage Logistics during the prior year period
(  Note 9  ) and the impact of the weakening euro and British pound sterling.
Net income from Investment Management attributable to W. P. Carey decreased
primarily due to an impairment charge recognized on goodwill within our
Investment Management segment (  Note 9  ). In addition, we recognized a gain on
change in control of interests during the current year period in connection with
the CPA:18 Merger (  Note 3  ).

AFFO

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

Portfolio overview

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

Portfolio Summary

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


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



__________

(a)We acquired 35 net-leased properties (in which we did not already have an
ownership interest) in the CPA:18 Merger in August 2022 (  Note 3  ).
(b)At September 30, 2022, operating properties consisted of 84 self-storage
properties (of which we consolidated 75) with an average occupancy of 91.9% as
of September 30, 2022, two student housing properties, and one hotel property
with an average occupancy of 65.3% for the nine months ended September 30, 2022.
We acquired 65 self-storage properties, one student housing property, and one
student housing development project in the CPA:18 Merger in August 2022 (  Note
3  ,   Note 5  ). At December 31, 2021, operating properties consisted of 19
self-storage properties (of which we consolidated ten) and one hotel property.
                                                 W. P. Carey 9/30/2022 10-Q 

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(c)We acquired investments in Belgium during the nine months ended September 30,
2022. We acquired an investment in Mauritius in connection with the CPA:18
Merger in August 2022 (  Note 3  ).
(d)Amount for the nine months ended September 30, 2022 excludes properties
acquired in the CPA:18 Merger (  Note 3  ). Amounts for the nine months ended
September 30, 2022 and 2021 include $65.2 million and $93.5 million,
respectively, of funding for a construction loan (  Note 8  ).

Net leased portfolio

The tables below represent information on our net portfolio leased to
September 30, 2022 on a pro rata basis and therefore exclude all operating properties. See Terms and Definitions below for a description of prorated and ABR amounts.

Top Ten Tenants by ABR
(dollars in thousands)

                                                                                                                                                             Weighted-Average Lease
Tenant/Lease Guarantor                           Description                     Number of Properties             ABR                ABR Percent                  Term (Years)
U-Haul Moving Partners Inc.          Net lease self-storage properties in
and Mercury Partners, LP             the U.S.                                               78                $  38,751                       2.9  %                      1.6
                                     Government office properties in
State of Andalucía (a)               Spain                                                  70                   26,752                       2.0  %                     12.2
Metro Cash & Carry Italia            Business-to-business wholesale
S.p.A. (a)                           stores in Italy and Germany                            20                   25,047                       1.9  %                      6.1
Hellweg Die Profi-Baumärkte          Do-it-yourself retail properties in
GmbH & Co. KG (a)                    Germany                                                35                   24,904                       1.9  %                     14.4
                                     Net lease self-storage properties in
Extra Space Storage, Inc.            the U.S.                                               27                   22,957                       1.7  %                     21.6
                                     Net lease hotel properties in the
Marriott Corporation                 U.S.                                                   18                   21,350                       1.6  %                      1.3

North Anglia Education, Inc. K-12 Private Schools WE

                 3                   20,981                       1.6  %                     21.0
                                     Do-it-yourself retail properties in
OBI Group (a)                        Poland                                                 26                   20,192                       1.5  %                      7.9
Advance Auto Parts, Inc.             Distribution facilities in the U.S.                    29                   19,851                       1.5  %                     10.3
                                     Industrial properties in the U.S.
Forterra, Inc. (a) (b)               and Canada                                             27                   19,465                       1.4  %                     20.7
Total                                                                                      333                $ 240,250                      18.0  %                     10.9


__________

(a)ABR amounts are subject to fluctuations in foreign currency exchange rates.
(b)Of the 27 properties leased to Forterra, Inc., 25 are located in the United
States and two are located in Canada.

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Portfolio Diversification by Geography
(in thousands, except percentages)

                                                                                                                                Square Footage
Region                                                ABR                  ABR Percent              Square Footage (a)              Percent
United States
South
Texas                                            $   114,960                         8.6  %               12,656                          7.2  %
Florida                                               54,001                         4.0  %                4,544                          2.6  %
Georgia                                               28,342                         2.1  %                4,721                          2.7  %
Tennessee                                             25,243                         1.9  %                4,136                          2.4  %
Alabama                                               19,882                         1.5  %                3,334                          1.9  %
Other (b)                                             14,377                         1.1  %                2,237                          1.3  %
Total South                                          256,805                        19.2  %               31,628                         18.1  %
Midwest
Illinois                                              73,872                         5.5  %               10,738                          6.1  %
Minnesota                                             34,766                         2.6  %                3,686                          2.1  %
Indiana                                               29,197                         2.2  %                5,222                          3.0  %
Ohio                                                  28,596                         2.1  %                6,181                          3.5  %
Michigan                                              22,287                         1.7  %                3,652                          2.1  %
Wisconsin                                             18,056                         1.4  %                3,276                          1.9  %
Iowa                                                  13,450                         1.0  %                1,817                          1.0  %
Other (b)                                             29,446                         2.2  %                4,543                          2.6  %
Total Midwest                                        249,670                        18.7  %               39,115                         22.3  %
East
North Carolina                                        36,634                         2.7  %                8,098                          4.6  %
Pennsylvania                                          31,978                         2.4  %                3,527                          2.0  %
New York                                              19,306                         1.4  %                2,257                          1.3  %
Kentucky                                              18,578                         1.4  %                3,063                          1.8  %
South Carolina                                        18,462                         1.4  %                4,949                          2.8  %
Massachusetts                                         18,129                         1.4  %                1,387                          0.8  %
New Jersey                                            15,735                         1.2  %                  943                          0.5  %
Virginia                                              14,580                         1.1  %                1,854                          1.1  %
Other (b)                                             24,841                         1.9  %                3,884                          2.2  %
Total East                                           198,243                        14.9  %               29,962                         17.1  %
West
California                                            67,528                         5.1  %                6,417                          3.7  %
Arizona                                               30,471                         2.3  %                3,437                          2.0  %
Other (b)                                             64,759                         4.9  %                6,994                          4.0  %
Total West                                           162,758                        12.3  %               16,848                          9.7  %
United States Total                                  867,476                        65.1  %              117,553                         67.2  %
International
Germany                                               64,247                         4.8  %                7,020                          4.0  %
Spain                                                 58,290                         4.4  %                5,187                          3.0  %
Poland                                                57,874                         4.3  %                8,631                          4.9  %
The Netherlands                                       51,318                         3.8  %                7,054                          4.0  %
United Kingdom                                        46,967                         3.5  %                4,804                          2.8  %
Italy                                                 24,570                         1.8  %                2,541                          1.5  %
Denmark                                               20,748                         1.6  %                2,994                          1.7  %
France                                                18,205                         1.4  %                1,685                          1.0  %
Norway                                                18,033                         1.4  %                  953                          0.5  %
Croatia                                               17,787                         1.3  %                2,063                          1.2  %
Canada                                                15,950                         1.2  %                2,492                          1.4  %
Other (c)                                             72,276                         5.4  %               11,973                          6.8  %
International Total                                  466,265                        34.9  %               57,397                         32.8  %
Total                                            $ 1,333,741                       100.0  %              174,950                        100.0  %



                                                 W. P. Carey 9/30/2022 10-Q - 52

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Portfolio Diversification by Property Type
(in thousands, except percentages)

                                                                                                                                    Square Footage
Property Type                                             ABR                  ABR Percent              Square Footage (a)              Percent
Industrial                                           $   353,348                        26.5  %               61,514                         35.2  %
Warehouse                                                320,697                        24.1  %               62,692                         35.8  %
Office                                                   240,110                        18.0  %               17,150                          9.8  %
Retail (d)                                               213,357                        16.0  %               20,284                         11.6  %
Self Storage (net lease)                                  61,708                         4.6  %                5,810                          3.3  %
Other (e)                                                144,521                        10.8  %                7,500                          4.3  %
Total                                                $ 1,333,741                       100.0  %              174,950                        100.0  %


__________

(a)Includes square footage for any vacant properties.
(b)Other properties within South include assets in Louisiana, Arkansas,
Oklahoma, and Mississippi. Other properties within Midwest include assets in
Missouri, Kansas, Nebraska, South Dakota, and North Dakota. Other properties
within East include assets in Maryland, Connecticut, West Virginia, New
Hampshire, and Maine. Other properties within West include assets in Utah,
Oregon, Colorado, Washington, Nevada, Hawaii, Idaho, New Mexico, Wyoming, and
Montana.
(c)Includes assets in Mexico, Lithuania, Finland, Belgium, Hungary, Mauritius,
Slovakia, Portugal, the Czech Republic, Austria, Sweden, Japan, Latvia, and
Estonia.
(d)Includes automotive dealerships.
(e)Includes ABR from tenants within the following property types: education
facility, hotel (net lease), laboratory, specialty, fitness facility, research
and development, student housing (net lease), theater, funeral home, restaurant,
land, and parking.

                                                 W. P. Carey 9/30/2022 10-Q - 53

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Portfolio Diversification by Tenant Industry
(in thousands, except percentages)

                                                                                                                                      Square Footage
Industry Type                                                 ABR                  ABR Percent               Square Footage               Percent
Retail Stores (a)                                        $   262,384                        19.7  %              35,734                        20.4  %
Consumer Services                                            109,943                         8.3  %               8,067                         4.6  %
Beverage and Food                                            104,493                         7.8  %              15,759                         9.0  %
Automotive                                                    79,628                         6.0  %              13,038                         7.4  %
Grocery                                                       72,984                         5.5  %               8,363                         4.8  %
Cargo Transportation                                          60,119                         4.5  %               9,550                         5.5  %
Hotel and Leisure                                             55,498                         4.2  %               3,060                         1.7  %
Healthcare and Pharmaceuticals                                55,036                         4.1  %               5,557                         3.2  %
Capital Equipment                                             52,520                         3.9  %               8,255                         4.7  %
Business Services                                             48,089                         3.6  %               4,113                         2.3  %
Containers, Packaging, and Glass                              46,286                         3.5  %               8,266                         4.7  %
Construction and Building                                     46,021                         3.5  %               9,235                         5.3  %
Durable Consumer Goods                                        45,725                         3.4  %              10,299                         5.9  %
Sovereign and Public Finance                                  39,257                         2.9  %               3,560                         2.0  %
High Tech Industries                                          35,043                         2.6  %               3,574                         2.0  %
Insurance                                                     30,726                         2.3  %               2,024                         1.2  %
Chemicals, Plastics, and Rubber                               29,898                         2.2  %               5,254                         3.0  %
Non-Durable Consumer Goods                                    26,085                         2.0  %               6,244                         3.6  %
Banking                                                       22,821                         1.7  %               1,426                         0.8  %
Metals                                                        18,281                         1.4  %               3,259                         1.9  %
Aerospace and Defense                                         16,304                         1.2  %               1,358                         0.8  %
Telecommunications                                            16,214                         1.2  %               1,686                         1.0  %
Other (b)                                                     60,386                         4.5  %               7,269                         4.2  %
Total                                                    $ 1,333,741                       100.0  %             174,950                       100.0  %


__________

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

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

                                                       Number of
Year of Lease               Number of Leases         Tenants with                                                              Square              Square Footage
Expiration (a)                  Expiring            Leases Expiring            ABR                 ABR Percent                 Footage                Percent
Remaining 2022                        13                    12            $     7,642                        0.6  %                717                      0.4  %
2023 (b)                              33                    28                 57,787                        4.3  %              6,939                      4.0  %
2024 (c)                              42                    36                 91,852                        6.9  %             12,413                      7.1  %
2025                                  56                    34                 61,672                        4.6  %              7,325                      4.2  %
2026                                  44                    34                 57,810                        4.3  %              8,185                      4.7  %
2027                                  58                    34                 82,040                        6.2  %              8,986                      5.1  %
2028                                  44                    26                 65,870                        4.9  %              5,423                      3.1  %
2029                                  57                    29                 65,545                        4.9  %              8,341                      4.8  %
2030                                  31                    27                 69,011                        5.2  %              5,844                      3.3  %
2031                                  37                    21                 68,117                        5.1  %              8,749                      5.0  %
2032                                  40                    21                 41,216                        3.1  %              5,715                      3.3  %
2033                                  30                    24                 76,780                        5.8  %             10,907                      6.2  %
2034                                  49                    18                 77,608                        5.8  %              8,639                      4.9  %
2035                                  14                    14                 28,332                        2.1  %              4,957                      2.8  %
Thereafter (>2035)                   303                   122                482,459                       36.2  %             69,930                     40.0  %
Vacant                                 -                     -                      -                          -  %              1,880                      1.1  %
Total                                851                                  $ 1,333,741                      100.0  %            174,950                    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 Moving Partners, Inc. and
Mercury Partners, LP) that holds an option to repurchase the 78 properties it is
leasing in April 2024. There can be no assurance that such repurchase will be
completed.

Rent Collections

To the date of this report, we have received from tenants over 99.3% of the contractual base rent that was due during the third quarter of 2022 (based on the contractual minimum ABR at June 30th2022).

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

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

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

– 55

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Operating results

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

Real Estate

Revenues

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

                                                Three Months Ended September 30,                               Nine Months Ended September 30,
                                            2022                   2021             Change                2022                 2021              Change
Real Estate Revenues
Lease revenues from:
Existing net-leased properties      $    274,434               $ 276,236    

$(1,802) $834,410 $825,285 $9,125
Recently acquired net rental properties

                                39,780                  18,273            21,507                 97,338             33,068             64,270
Net-leased properties acquired in
the CPA:18 Merger                         14,068                       -            14,068                 14,068                  -             14,068
Net-leased properties sold or held
for sale                                   3,620                   4,107              (487)                 8,165             13,992             

(5,827)

Total lease revenues (includes
reimbursable tenant costs)               331,902                 298,616            33,286                953,981            872,345             81,636
Income from direct financing leases
and loans receivable                      20,637                  16,754             3,883                 56,794             51,917              4,877
Operating property revenues from:
Operating properties acquired in
the CPA:18 Merger                         15,415                       -            15,415                 15,415                  -             15,415
Existing operating properties              5,935                   4,050             1,885                 14,864              9,474              5,390
Total operating property revenues         21,350                   4,050            17,300                 30,279              9,474             20,805
Lease termination income and other         8,192                   1,421             6,771                 24,905              8,066             16,839
                                    $    382,081               $ 320,841          $ 61,240          $   1,065,959          $ 941,802          $ 124,157



                                                 W. P. Carey 9/30/2022 10-Q - 56

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Rental income

“Existing net leased properties” are those that we have acquired or brought into use before January 1, 2021 and which have not been sold or held for sale during the periods presented. For the periods presented, there were 1,108 existing properties under net rental.

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

[[Image Removed: wpc-20220930_g2.jpg]][[Image Removed: wpc-20220930_g3.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 of
contractual rental revenue from certain leases being deemed probable of
collection and (ii) write-offs of above/below-market rent intangibles.

"Recently acquired net-leased properties" are those that we acquired or placed
into service subsequent to December 31, 2020 and that were not sold or held for
sale during the periods presented. Since January 1, 2021, we acquired 43
investments (comprised of 168 properties and six land parcels under buildings
that we already own) and placed two properties into service.

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

– 57

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"Net-leased properties acquired in the CPA:18 Merger" on August 1, 2022 (  Note
3  ) consisted of 40 net-leased properties, which contributed two months of
lease revenue, depreciation and amortization, and property expenses during the
three and nine months ended September 30, 2022.

"Net-leased properties sold or held for sale" include (i) 17 net-leased
properties disposed of during the nine months ended September 30, 2022, (ii) one
net-leased property classified as held for sale at September 30, 2022, and (iii)
24 net-leased properties disposed of during the year ended December 31, 2021.
Our dispositions are more fully described in   Note 15  .

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

– 58

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Revenue from direct finance leases and loans receivable

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

For the three and nine months ended September 30, 2022 Compared to the same periods in 2021, revenue from direct finance leases and loans receivable increased due to the following items (in millions):

[[Image Removed: wpc-20220930_g4.jpg]][[Image Removed: wpc-20220930_g5.jpg]]

                                                 W. P. Carey 9/30/2022 10-Q - 59

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Operating property income and expenses

"Operating properties acquired in the CPA:18 Merger" on August 1, 2022 (  Note
3  ) consisted of 65 self-storage properties and two student housing properties,
which contributed two months of lease revenue, depreciation and amortization,
and property expenses during the three and nine months ended September 30, 2022.

"Existing operating properties" are those that we acquired or placed into
service prior to January 1, 2021 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. For our hotel
operating property, revenues and expenses increased by (i) $1.3 million and $0.5
million, respectively, for the three months ended September 30, 2022 as compared
to the same period in 2021, and (ii) $4.2 million and $2.5 million,
respectively, for the nine months ended September 30, 2022 as compared to the
same period in 2021, reflecting higher occupancy as the hotel's business
recovers from the ongoing COVID-19 pandemic.

Lease termination and other revenues

Lease termination and other revenues are described in Note 5 .

Functionnary costs

Depreciation and amortization

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

General and administrative

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

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

Merger and other expenses

For the three and nine months ended September 30, 2022 and 2021, merger and
other expenses are primarily comprised of costs incurred in connection with the
CPA:18 Merger (  Note 3  ) and/or reversals of estimated liabilities for German
real estate transfer taxes that were previously recorded in connection with
mergers in prior years.

Real estate expenses, excluding reimbursable rental charges

For the three months ended September 30, 2022 as compared to the same period in
2021, property expenses, excluding reimbursable tenant costs, decreased by $2.5
million, primarily due to higher property tax assessments at certain properties
during the prior year period.


Stock-based compensation expense

All stock-based compensation expense is recorded in our Real Estate segment.

For the three and nine months ended September 30, 2022 as compared to the same
periods in 2021, stock-based compensation expense increased by $1.2 million and
$4.3 million, respectively, primarily due to changes in the projected payout for
PSUs.

Impairment charges – Real estate

Our property impairment charges are further described in Note 9 .

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

– 60

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Other income and (expenses) and provision for income taxes

Interest charges

For the three and nine months ended September 30, 2022 as compared to the same
periods in 2021, interest expense increased by $10.3 million and $1.9 million,
respectively, primarily due to (i) $8.0 million of interest expense incurred
during August and September 2022 related to non-recourse mortgage loans assumed
in the CPA:18 Merger (  Note 3  ) and (ii) higher outstanding balances and
interest rates on our Senior Unsecured Credit Facility, partially offset by (i)
the weakening of foreign currencies (primarily the euro and British pound
sterling) in relation to the U.S. dollar between the periods and (ii) the
reduction of our mortgage debt outstanding by prepaying or repaying at or close
to maturity a total of $823.8 million of non-recourse mortgage loans with a
weighted-average interest rate of 4.8% since January 1, 2021 (  Note 11  ).

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

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



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. All
of our foreign currency-denominated unsecured debt instruments were designated
as net investment hedges during the three and nine months ended September 30,
2022 and 2021. Therefore, no gains and losses on foreign currency exchange rate
movements were recognized on the remeasurement of such instruments during those
periods (  Note 10  ).

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

                                                  Three Months Ended September 30,                                Nine Months Ended September 30,
                                              2022                  2021              Change                 2022                  2021              Change
Other Gains and (Losses)
Net realized and unrealized losses on
foreign currency exchange rate
movements (a)                         $    (36,288)              $ (7,005)         $ (29,283)         $    (84,392)            $ (11,186)         $ 

(73,206)

Net release of allowance for credit
losses on finance receivables (  Note
6  )                                        16,184                    488             15,696                17,164                 6,737             

10,427

Gain on repayment of secured loan
receivable (b)                              10,613                      -             10,613                10,613                     -             

10,613

Write-off of an insurance receivable
acquired as part of a prior merger
(c)                                         (9,358)                     -             (9,358)               (9,358)                    -             

(9,358)

Gain (loss) on extinguishment of debt
(d)                                          2,342                    (99)             2,441                 1,301               (60,167)            

61,468

Non-cash unrealized gains related to
an increase in the fair value of our
investment in shares of Lineage
Logistics (  Note 9  )                           -                 52,931            (52,931)                    -                76,312           

(76,312)

Non-cash unrealized gains related to
an increase in the fair value of our
investment in common shares of WLT
(  Note 9  )                                     -                      -                  -                43,397                     -             

43,397

Realized gains in connection with the
redemption of our investment in
preferred shares of WLT (  Note 9  )             -                      -                  -                18,688                     -             18,688
Other                                        2,547                  1,857                690                 2,890                 1,759              1,131
                                      $    (13,960)              $ 48,172          $ (62,132)         $        303             $  13,455          $ (13,152)


__________

                                                 W. P. Carey 9/30/2022 10-Q - 61

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(a)We make certain foreign currency-denominated intercompany loans to a number
of our foreign subsidiaries, most of which do not have the U.S. dollar as their
functional currency. Remeasurement of foreign currency intercompany transactions
that are scheduled for settlement, consisting primarily of accrued interest and
amortizing loans, are included in other gains and (losses).
(b)We acquired a secured loan receivable with a fair value of $23.4 million in
our merger with a former affiliate, Corporate Property Associates 17 - Global
Incorporated, in October 2018 ("CPA:17 Merger"), for which the outstanding
principal of $34.0 million was fully repaid to us in September 2022 (  Note
6  ). Therefore, we recorded a $10.6 million gain on repayment of this secured
loan receivable.
(c)This insurance receivable was acquired in the CPA:17 Merger.
(d)Amount for the nine months ended September 30, 2021 is related to the
prepayment of mortgage loans (primarily comprised of prepayment penalties
totaling $32.1 million) and redemption of the €500.0 million of 2.0% Senior
Notes due 2023 in March 2021 (primarily comprised of a "make-whole" amount of
$26.2 million related to the redemption) (  Note 11  ).

Gain on change in control of interests

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

).

Off-farm income

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

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

                                               Three Months Ended September 30,                          Nine Months Ended September 30,
                                            2022                2021            Change              2022                2021             Change
Non-Operating Income
Realized gains (losses) on foreign
currency collars (  Note 10  )         $      8,724          $   370        

$8,354 $17,970 $ (38) $18,008
Interest income from our affiliate loans and cash deposits

                 540              100              440                   591               139               452
Cash dividends from our investment in
preferred shares of WLT (  Note 9  )              -              813             (813)                  912             4,081            (3,169)
Cash dividends from our investment in
Lineage Logistics (  Note 9  )                    -                -                -                 4,308             6,438            (2,130)
                                       $      9,264          $ 1,283          $ 7,981          $     23,781          $ 10,620          $ 13,161



                                                 W. P. Carey 9/30/2022 10-Q - 62

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Profits (losses) from investments under the equity method in real estate

Our real estate investments using the equity method are further described in note 8 . The following table shows the earnings (losses) of real estate investments using the equity method (in thousands):

                                                   Three Months Ended September 30,                            Nine Months Ended September 30,
                                                2022                2021            Change                2022                   2021             Change
Earnings (Losses) from Equity Method
Investments in Real Estate
Existing Equity Method Investments:
Earnings from Las Vegas Retail Complex     $      2,860          $ 1,352          $ 1,508          $     6,228               $   1,645          $  

4,583

Earnings from Kesko Senukai (a)                   1,902              944              958                3,132                     434            

2,698

Earnings from Johnson Self Storage (b)            1,163              663              500                3,190                   1,556            

1,634

Earnings from Harmon Retail Center                  258              276              (18)                 789                     828               (39)
Losses from WLT (c)                                   -           (1,376)           1,376                    -                  (9,864)            9,864
                                                  6,183            1,859            4,324               13,339                  (5,401)           18,740
Equity Method Investments Consolidated
after the CPA:18 Merger (  Note 3  ):
Proportionate share of impairment charge
recognized on Bank Pekao (  Note 8  )                 -                -                -               (4,610)                      -           

(4,610)

Other-than-temporary impairment charge on
State Farm Mutual Automobile Insurance Co.
(  Note 9  )                                          -                -                -                    -                  (6,830)            6,830
Other                                               264              586             (322)               1,460                   1,703              (243)
                                                    264              586             (322)              (3,150)                 (5,127)            1,977
                                           $      6,447          $ 2,445          $ 4,002          $    10,189               $ (10,528)         $ 20,717


__________

(a)Increases for the three and nine months ended September 30, 2022 as compared
to the same periods in 2021 are primarily due to higher rent collections at
these retail properties, where certain rents were previously disputed and
subsequently collected.
(b)Increases for the three and nine months ended September 30, 2022 as compared
to the same periods in 2021 are primarily due to higher occupancy and unit rates
at these self-storage facilities.
(c)Losses for the prior year periods were primarily due to the adverse impact of
the COVID-19 pandemic on WLT's operations. We recorded losses from this
investment on a one quarter lag. This investment was reclassified to equity
securities at fair value within Other assets, net on our consolidated balance
sheets in January 2022 (  Note 9  ).

(Loss) Gain on sale of real estate, net

The (loss) gain on sale of real estate, net, includes losses and gains on the sale of properties that were sold during the reporting period. Our arrangements are further described in note 15 .

Provision for income taxes

For the three and nine months ended September 30, 2022 as compared to the same
periods in 2021, provision for income taxes within our Real Estate segment
decreased by $4.2 million and $6.9 million, respectively, primarily due to (i)
deferred tax benefits totaling $2.4 million recognized during the current year
periods related to the release of valuation allowances on certain foreign
properties and (ii) trade taxes of $1.8 million recognized during the prior year
periods as a result of the completion of a tax review on a portfolio of
properties in Germany. In addition, we recognized tax benefits of $0.7 million
on certain foreign properties during the nine months ended September 30, 2022 as
a result of a tax court ruling.

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

– 63

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Investment management

We earn revenue as the advisor to the Managed Programs. For the periods
presented, we acted as advisor to the following Managed Programs: CPA:18 -
Global (through August 1, 2022) and CESH. Upon completion of the CPA:18 Merger
on August 1, 2022 (  Note 3  ), the advisory agreement with CPA:18 - Global was
terminated, and we ceased earning revenue from CPA:18 - Global. The CWI 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 agreement, which was terminated on October 13, 2021
(  Note 4  ).

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

Revenue

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

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


Asset management and other income

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
management revenue may increase or decrease depending upon changes in the
Managed Programs' asset bases as a result of purchases, sales, or changes in the
appraised value of the assets in their investment portfolios. For 2022, we
received asset management fees from (i) CPA:18 - Global in shares of its common
stock through February 28, 2022; effective as of March 1, 2022, we receive asset
management fees from CPA:18 - Global in cash in light of the CPA:18 Merger,
which closed on August 1, 2022 (  Note 3  ), and (ii) CESH in cash.

Functionnary costs

Impairment charges – Investment management goodwill

Our impairment charges on Investment Management goodwill are further described in Note 9 .

Other income and expenses and provision for income taxes

Gain on change in control of interests

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

                                                 W. P. Carey 9/30/2022 10-Q - 64

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Profits from investments under the equity method in managed programs

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

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


__________

(a)As a result of the completion of the CPA:18 Merger on August 1, 2022 (  Note
3  ), we no longer recognize equity income from our investment in shares of
common stock of CPA:18 - Global or receive distributions of Available Cash from
CPA:18 - Global.
(b)Increase for the nine months ended September 30, 2022 as compared to the same
period in 2021 was due to an increase of $3.1 million from our investment in
shares of CPA:18 - Global.

Provision for Income Taxes

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

Cash and capital resources

Sources and uses of cash during the period

We use the cash flow generated from our investments primarily to meet our
operating expenses, service debt, and fund dividends to stockholders. Our cash
flows fluctuate periodically due to a number of factors, which may include,
among other things: the timing of our equity and debt offerings; the timing of
purchases and sales of real estate; the timing of the repayment of mortgage
loans and receipt of lease revenues; the timing and amount of other
lease-related payments; the timing of settlement of foreign currency
transactions; changes in foreign currency exchange rates; and the timing of
distributions from equity method investments. We no longer receive certain fees
and distributions from CPA:18 - Global following the completion of the CPA:18
Merger on August 1, 2022 (  Note 3  ). 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 dispositions of properties, and the issuance of additional debt or
equity securities, such as issuances of common stock through our Equity Forwards
and ATM Program (  Note 13  ), in order to meet these needs. We assess our
ability to access capital on an ongoing basis. Our sources and uses of cash
during the period are described below.

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

                                                 W. P. Carey 9/30/2022 10-Q - 65

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

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

Summary of Financing

The table below summarizes our senior unsecured notes, non-recourse mortgage loans and senior unsecured credit facility (in thousands of dollars):

                                                                  September 30, 2022         December 31, 2021
Carrying Value
Fixed rate:
Senior Unsecured Notes (a)                                       $       5,651,865          $       5,701,913
Non-recourse mortgages (a)                                                 876,092                    235,898
                                                                         6,527,957                  5,937,811
Variable rate:
Unsecured Term Loans (a)                                                   506,004                    310,583
Unsecured Revolving Credit Facility                                        462,660                    410,596
Non-recourse mortgages (a):
Floating interest rate mortgage loans                                      197,178                     53,571
Amount subject to interest rate swaps and caps                              89,544                     79,055
                                                                         1,255,386                    853,805
                                                                 $       7,783,343          $       6,791,616

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



__________

(a)Aggregate debt balance includes unamortized discount, net, totaling $37.6
million and $30.9 million as of September 30, 2022 and December 31, 2021,
respectively, and unamortized deferred financing costs totaling $26.4 million
and $28.8 million as of September 30, 2022 and December 31, 2021, respectively.
(b)The impact of our interest rate swaps and caps is reflected in the
weighted-average interest rates.

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

– 66

————————————————– ——————————

Cash resources

To September 30, 2022our cash resources consisted of the following:

•cash and cash equivalents totaling $186.4 million. Of this amount, $89.3
million, at then-current exchange rates, was held in foreign subsidiaries, and
we could be subject to restrictions or significant costs should we decide to
repatriate these amounts;
•our Unsecured Revolving Credit Facility, with available capacity of
approximately $1.3 billion (net of amounts reserved for standby letters of
credit totaling $0.6 million);
•available proceeds under our Equity Forwards of approximately $185.8 million
(based on 2,587,500 remaining shares outstanding and a net offering price of
$71.81 per share as of September 30, 2022);
•available proceeds under our ATM Forwards of approximately $455.7 million
(based on 5,538,037 shares outstanding and a weighted-average net offering price
of $82.29 per share as of September 30, 2022); and
•unleveraged properties that had an aggregate asset carrying value of
approximately $12.7 billion at September 30, 2022, although there can be no
assurance that we would be able to obtain financing for these properties.

Historically, we have also accessed capital markets through additional debt (denominated both in WE dollars and euros) and stock offers.

Our cash may be used for working capital requirements and other commitments and may be used for future investments.

Cash requirements and liquidity

As of September 30, 2022, we had (i) $186.4 million of cash and cash
equivalents, (ii) approximately $1.3 billion of available capacity under our
Unsecured Revolving Credit Facility (net of amounts reserved for standby letters
of credit totaling $0.6 million), (iii) available proceeds under our ATM
Forwards of approximately $455.7 million (based on 5,538,037 remaining shares
outstanding and a weighted-average net offering price of $82.29 per share as of
that date), and (iv) available proceeds under our Equity Forwards of
approximately $185.8 million (based on 2,587,500 remaining shares outstanding
and a net offering price of $71.81 per share as of that date). Our Senior
Unsecured Credit Facility includes a $1.8 billion Unsecured Revolving Credit
Facility and Unsecured Term Loans outstanding totaling $506.0 million as of
September 30, 2022 (  Note 11  ), and is scheduled to mature on February 20,
2025. As of September 30, 2022, scheduled debt principal payments total $96.7
million through December 31, 2022 and $525.0 million through December 31, 2023,
and our Senior Unsecured Notes do not start to mature until April 2024 (  Note
11  ).

Over the next 12 months September 30, 2022 and thereafter, we anticipate that our significant cash requirements will include:

•paying dividends to our stockholders (which we expect to be higher, following
the issuance of 13,786,302 shares of our common stock in the CPA:18 Merger
(  Note 3  ));
•funding acquisitions of new investments (  Note 5  );
•funding future capital commitments and tenant improvement allowances (  Note
5  );
•making scheduled principal and balloon payments on our debt obligations (  Note
11  );
•making scheduled interest payments on our debt obligations (future interest
payments total $957.6 million, with $228.5 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
September 30, 2022); 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), issuances of common stock through our Equity Forwards and/or
ATM Program (  Note 13  ), and potential issuances of additional debt or equity
securities. We may also choose to pursue prepayments of certain of our
non-recourse mortgage loan obligations, depending on our capital needs and
market conditions at that time.

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

– 67

————————————————– ——————————

Our liquidity could be adversely affected by unanticipated costs,
greater-than-anticipated operating expenses, and the adverse impact of the
continuing COVID-19 pandemic. 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 indicated above are based on the exchange rate applicable to the September 30, 2022.

Additional financial measures

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

Funds from operations and adjusted funds from operations

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

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

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

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

– 68

————————————————– ——————————

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

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

                                             Three Months Ended September 

30, nine months ended September 30,

                                                 2022                2021               2022                2021

Net income attributable to WP Carey $104,928 $138,547

         $  389,601          $ 310,426
Adjustments:
Depreciation and amortization of real
property                                        131,628            114,204             360,607            336,405
Gain on change in control of interests (a)
(b)                                             (33,931)                 -             (33,931)                 -
Impairment charges - Investment Management
goodwill (c)                                     29,334                  -              29,334                  -
Loss (gain) on sale of real estate, net           4,736             (1,702)            (37,631)           (30,914)
Impairment charges - real estate                      -             16,301              26,385             16,301
Proportionate share of adjustments to
earnings from equity method investments (d)
(e)                                               2,242              3,290              12,859             17,030
Proportionate share of adjustments for
noncontrolling interests (f)                       (189)                (4)               (197)               (12)
Total adjustments                               133,820            132,089             357,426            338,810
FFO (as defined by NAREIT) attributable to
W. P. Carey                                     238,748            270,636             747,027            649,236

Adjustments:

Merger and other expenses (g)                    17,667               (908)             17,329             (3,983)
Other (gains) and losses (h)                     15,020            (49,219)              1,021            (15,576)
Straight-line and other leasing and
financing adjustments                           (14,326)           (10,823)            (39,665)           (29,887)
Above- and below-market rent intangible
lease amortization, net                          11,186             12,004              32,738             38,503
Stock-based compensation                          5,511              4,361              23,102             18,790
Amortization of deferred financing costs          5,223              3,424              11,498             10,284
Tax expense (benefit) - deferred and other        1,163               (290)               (434)            (3,460)
Other amortization and non-cash items               359                557               1,441              1,149
Proportionate share of adjustments to
earnings from equity method investments (e)      (2,156)               988              (2,451)            10,849
Proportionate share of adjustments for
noncontrolling interests (f)                       (673)                (6)               (684)               (19)
Total adjustments                                38,974            (39,912)             43,895             26,650
AFFO attributable to W. P. Carey             $  277,722          $ 230,724  

$790,922 $675,886

Summary

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



                                                 W. P. Carey 9/30/2022 10-Q - 69

————————————————– ——————————

Real Estate FFOs and AFFOs were as follows (in thousands):

                                             Three Months Ended September 

30, nine months ended September 30,

                                                 2022                2021               2022                2021
Net income from Real Estate attributable to
W. P. Carey                                  $  111,375          $ 130,858          $  381,461          $ 290,132
Adjustments:
Depreciation and amortization of real
property                                        131,628            114,204             360,607            336,405
Gain on change in control of interests (a)      (11,405)                 -             (11,405)                 -
Loss (gain) on sale of real estate, net           4,736             (1,702)            (37,631)           (30,914)
Impairment charges - real estate                      -             16,301              26,385             16,301
Proportionate share of adjustments to
earnings from equity method investments (d)
(e)                                               2,242              3,290              12,859             17,030
Proportionate share of adjustments for
noncontrolling interests (f)                       (189)                (4)               (197)               (12)
Total adjustments                               127,012            132,089             350,618            338,810
FFO (as defined by NAREIT) attributable to
W. P. Carey - Real Estate                       238,387            262,947             732,079            628,942

Adjustments:

Merger and other expenses (g)                    17,667               (908)             17,326             (3,998)
Straight-line and other leasing and
financing adjustments                           (14,326)           (10,823)            (39,665)           (29,887)
Other (gains) and losses (h)                     13,960            (48,172)               (303)           (13,455)
Above- and below-market rent intangible
lease amortization, net                          11,186             12,004              32,738             38,503
Stock-based compensation                          5,511              4,361              23,102             18,790
Amortization of deferred financing costs          5,223              3,424              11,498             10,284
Tax (benefit) - deferred and other               (2,789)              (700)             (4,302)            (3,087)
Other amortization and non-cash items               359                557               1,441              1,149
Proportionate share of adjustments to
earnings from equity method investments (e)        (938)             1,761                (403)             9,928
Proportionate share of adjustments for
noncontrolling interests (f)                       (673)                (6)               (684)               (19)
Total adjustments                                35,180            (38,502)             40,748             28,208
AFFO attributable to W. P. Carey - Real
Estate                                       $  273,567          $ 224,445  

$772,827 $657,150

Summary

FFO (as defined by NAREIT) attributable to
W. P. Carey - Real Estate                    $  238,387          $ 262,947          $  732,079          $ 628,942
AFFO attributable to W. P. Carey - Real
Estate                                       $  273,567          $ 224,445          $  772,827          $ 657,150



                                                 W. P. Carey 9/30/2022 10-Q - 70

————————————————– ——————————

Investment Management FFOs and AFFOs are as follows (in thousands):

                                             Three Months Ended September 

30, nine months ended September 30,

                                                  2022                2021               2022                2021
Net (loss) income from Investment Management
attributable to W. P. Carey                  $    (6,447)         $   7,689          $    8,140          $  20,294
Adjustments:
Impairment charges - Investment Management
goodwill (c)                                      29,334                  -              29,334                  -
Gain on change in control of interests (b)       (22,526)                 -             (22,526)                 -
Total adjustments                                  6,808                  -               6,808                  -
FFO (as defined by NAREIT) attributable to
W. P. Carey - Investment Management                  361              7,689              14,948             20,294

Adjustments:

Tax expense (benefit) - deferred and other         3,952                410               3,868               (373)
Other (gains) and losses                           1,060             (1,047)              1,324             (2,121)
Merger and other expenses                              -                  -                   3                 15
Proportionate share of adjustments to
earnings from equity method investments (e)       (1,218)              (773)             (2,048)               921
Total adjustments                                  3,794             (1,410)              3,147             (1,558)
AFFO attributable to W. P. Carey -
Investment Management                        $     4,155          $   6,279 

$18,095 $18,736

Summary

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


__________

(a)Amounts for the three and nine months ended September 30, 2022 represent a
gain recognized on the remaining interests in four investments acquired in the
CPA:18 Merger, which we had previously accounted for under the equity method
(  Note 3  ).
(b)Amounts for the three and nine months ended September 30, 2022 represent a
gain recognized on our previously held interest in shares of CPA:18 - Global
common stock in connection with the CPA:18 Merger (  Note 3  ).
(c)Amounts for the three and nine months ended September 30, 2022 represent an
impairment charge recognized on goodwill within our Investment Management
segment, since future Investment Management cash flows are expected to be
minimal (  N    ote 7  ,   Note 9  ).
(d)Amount for the nine months ended September 30, 2022 includes our $4.6 million
proportionate share of an impairment charge recognized on an equity method
investment in real estate (  Note 8  ). Amount for the nine months ended
September 30, 2021 includes a non-cash other-than-temporary impairment charge of
$6.8 million recognized on an equity method investment in real estate (  Note
9  ).
(e)Equity income, including amounts that are not typically recognized for FFO
and AFFO, is recognized within Earnings (losses) from equity method investments
on the consolidated statements of income. This represents adjustments to equity
income to reflect FFO and AFFO on a pro rata basis.
(f)Adjustments disclosed elsewhere in this reconciliation are on a consolidated
basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
(g)Amounts for the three and nine months ended September 30, 2022 and 2021 are
primarily comprised of costs incurred in connection with the CPA:18 Merger
(  Note 3  ) and/or reversals of estimated liabilities for German real estate
transfer taxes that were previously recorded in connection with mergers in prior
years.
(h)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 leases.

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

– 71

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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.

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