W. P. CAREY INC.

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W. P. CAREY INC. Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

04/29/2022 | 04:12pm EDT
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

Proposed Merger with CPA:18 - Global


On February 27, 2022, we, CPA:18 - Global, CPA:18 LP, and certain of our
subsidiaries entered into the Merger Agreement, pursuant to which CPA:18 -
Global will merge with and into one of our indirect subsidiaries in exchange for
shares of our common stock and cash (  Note 1  ). Under the terms of the Merger
Agreement, a special committee of the board of directors of CPA:18 - Global,
consisting of all the independent directors of CPA:18 - Global, was allowed to
solicit, receive, evaluate, and enter into negotiations with respect to
alternative proposals from third parties for a 30-day period following the
execution of the Merger Agreement. This "go-shop" period expired on March 30,
2022, with no qualifying proposals or offers being received. On April 4, 2022,
we filed a registration statement on Form S-4 with the SEC to register the
shares of our common stock to be issued in the Proposed Merger. On April 25,
2022, we filed a Form S-4/A, which was declared effective by the SEC on April
27, 2022. CPA:18 - Global intends to mail the proxy statement/prospectus
contained therein to CPA:18 - Global's stockholders in connection with the
Proposed Merger in early May 2022. The Proposed Merger and related transactions
are subject to a number of closing conditions, including approval by the
stockholders of CPA:18 - Global at a special meeting scheduled for July 26,
2022. If this approval is obtained and the other closing conditions are met, we
currently expect the transaction to close in early August 2022, although there
can be no assurance that the Proposed Merger will be completed at such time or
at all.

COVID-19

We continue to actively engage in discussions with our tenants regarding the
impact of the COVID-19 pandemic on their business operations, liquidity, and
financial position. Through the date of this Report, we received from tenants
over 99.7% of contractual base rent that was due during the first quarter of
2022 (based on contractual minimum annualized base rent ("ABR") as of December
31, 2021). Given the ongoing uncertainty around the duration and severity of the
impact of the COVID-19 pandemic, we are unable to predict the impact it will
have on our tenants' continued ability to pay rent. Therefore, information
provided in this Report regarding recent rent collections should not serve as an
indication of expected future rent collections.

Financial Highlights

During the three months ended March 31, 2022, we completed the following (as further described in the consolidated financial statements):

Real Estate

Investments


•We acquired five investments totaling $265.0 million (  Note 4  ).
•We completed two construction projects at a cost totaling $25.2 million (  Note
4  ).
•We funded approximately $18.0 million for a construction loan to build a retail
complex in Las Vegas, Nevada, during the three months ended March 31, 2022.
Through March 31, 2022, we have funded $121.7 million (  Note 7  ).
•We committed to fund two build-to-suit or expansion projects totaling $24.9
million. We currently expect to complete the projects in 2022 and 2023 (  Note
4  ).

                                                 W. P. Carey 3/31/2022 10-Q - 37

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Dispositions


•As part of our active capital recycling program, we disposed of six properties
for total proceeds, net of selling costs, of $26.7 million (  Note 14  ).
•In January 2022, WLT redeemed in full our 1,300,000 shares of its preferred
stock for gross proceeds of $65.0 million (  Note 8  ).

Financing and Capital Markets Transactions


•We issued 2,249,227 shares of our common stock under our ATM Program at a
weighted-average price of $80.60 per share, for net proceeds of $179.0 million
(  Note 12  ).

Investment Management

Assets Under Management

•As of March 31, 2022, we managed total assets of approximately $2.6 billion on
behalf of CPA:18 - Global and CESH. The vast majority of our Investment
Management earnings are generated from asset management fees and our ownership
interests in CPA:18 - Global and CESH. However, subject to the terms and
conditions of the Merger Agreement, upon consummation of the Proposed Merger, we
will no longer receive fees and distributions from CPA:18 - Global, and as a
result, Investment Management earnings are expected to decline in future periods
(  Note 1  ).

Dividends to Stockholders

In March 2022, we declared cash dividends totaling $1.057 per share ( Note 12 ).

Consolidated Results

(in thousands, except shares)

Three Months Ended March 31,

                                                                        2022                    2021
Revenues from Real Estate                                        $       344,091          $     306,171
Revenues from Investment Management                                        4,347                  4,995
Total revenues                                                           348,438                311,166

Net income from Real Estate attributable to W. P. Carey                  146,858                 44,587

Net income from Investment Management attributable to W. P. Carey

                                                                     10,137                  7,047
Net income attributable to W. P. Carey                                   156,995                 51,634

Dividends declared                                                       205,497                187,481

Net cash provided by operating activities                                235,882                188,444
Net cash used in investing activities                                   (229,054)               (76,466)
Net cash provided by (used in) financing activities                       35,697               (132,780)

Supplemental financial measures (a): Adjusted funds from operations attributable to W. P. Carey (AFFO) - Real Estate

                                                     252,014                210,328

Adjusted funds from operations attributable to W. P. Carey (AFFO) - Investment Management

                                             6,812                  6,158

Adjusted funds from operations attributable to W. P. Carey (AFFO)

                                                                   258,826                216,486

Diluted weighted-average shares outstanding                          192,416,642            176,965,510


__________

                                                 W. P. Carey 3/31/2022 10-Q - 38

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

Revenues


Total revenues increased for the three months ended March 31, 2022 as compared
to the same period in 2021. Real Estate revenue increased primarily due to
higher lease revenues (substantially as a result of property acquisition
activity and rent escalations, partially offset by property dispositions) and
higher lease termination and other income (  Note 4  ).

Net Income Attributable to W. P. Carey


Net income attributable to W. P. Carey increased for the three months ended
March 31, 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 10  ), a non-cash unrealized gain recognized on
our investment in common shares of WLT (  Note 8  ), the impact of real estate
acquisitions, and higher lease termination and other income, partially offset by
higher impairment charges (  Note 8  ) and a non-cash unrealized gain recognized
on our investment in shares of Lineage Logistics during the prior year period
(  Note 8  ).

AFFO

AFFO increased for the three months ended March 31, 2022 as compared to the same
period in 2021, primarily due to higher lease revenues from net investment
activity and rent escalations, as well as higher lease termination and other
income.

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


                                                                  March 31, 2022         December 31, 2021
ABR (in thousands)                                               $   1,262,953          $       1,247,764
Number of net-leased properties                                          1,336                      1,304
Number of operating properties (a)                                          20                         20
Number of tenants (net-leased properties)                                  356                        352
Total square footage (net-leased properties, in thousands)             157,368                    155,674
Occupancy (net-leased properties)                                         98.5  %                    98.5  %
Weighted-average lease term (net-leased properties, in years)             10.8                       10.8
Number of countries                                                         24                         24
Total assets (in thousands)                                      $  15,569,532          $      15,480,630
Net investments in real estate (in thousands)                       13,067,807                 13,037,369


                                                                     Three Months Ended March 31,
                                                                      2022                   2021
Acquisition volume (in millions) (b)                            $        283.0          $     149.3
Construction projects completed (in millions)                             25.2                 55.1
Average U.S. dollar/euro exchange rate                                  1.1223               1.2051
Average U.S. dollar/British pound sterling exchange rate                1.3418               1.3775



__________

                                                 W. P. Carey 3/31/2022 10-Q - 39

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(a)At both March 31, 2022 and December 31, 2021, operating properties consisted
of 19 self-storage properties (of which we consolidated ten, with an average
occupancy of 95.3% as of March 31, 2022) and one hotel property with an average
occupancy of 49.7% for the three months ended March 31, 2022 (due to the adverse
effect of the COVID-19 pandemic).
(b)Amount for the three months ended March 31, 2022 includes $18.0 million of
funding for a construction loan (  Note 7  ).

Net-Leased Portfolio

The tables below represent information about our net-leased portfolio at March 31, 2022 on a pro rata basis and, accordingly, exclude all operating properties. See Terms and Definitions below for a description of pro rata amounts and ABR.


Top Ten Tenants by ABR
(dollars in thousands)

                                                                                                                                                           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
and Mercury Partners, LP             in the U.S.                                          78                $  38,751                       3.1  %                      2.1
                                     Government office properties in
State of Andalucía (a)               Spain                                                70                   30,465                       2.4  %                     12.7
Hellweg Die Profi-Baumärkte          Do-it-yourself retail properties
GmbH & Co. KG (a)                    in Germany                                           35                   28,361                       2.3  %                     14.9
Metro Cash & Carry Italia            Business-to-business wholesale
S.p.A. (a)                           stores in Italy and Germany                          20                   28,313                       2.2  %                      6.5
                                     Do-it-yourself retail properties
OBI Group (a)                        in Poland                                            26                   22,994                       1.8  %                      8.4
                                     Net lease self-storage properties
Extra Space Storage, Inc.            in the U.S.                                          27                   22,957                       1.8  %                     22.1
                                     Automotive dealerships in the
Pendragon PLC (a)                    United Kingdom                                       66                   22,607                       1.8  %                     12.7
                                     Net lease hotel properties in the
Marriott Corporation                 U.S.                                                 18                   21,350                       1.7  %                      1.8
                                     Distribution facilities in the
Advance Auto Parts, Inc.             U.S.                                                 29                   19,851                       1.6  %                     10.8

Nord Anglia Education, Inc. K-12 private schools in the U.S.

               3                   19,473                       1.5  %                     21.5
Total                                                                                    372                $ 255,122                      20.2  %                     10.7


__________

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

                                                 W. P. Carey 3/31/2022 10-Q - 40

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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                                            $   104,269                         8.2  %               11,869                          7.6  %
Florida                                               52,074                         4.1  %                4,456                          2.8  %
Georgia                                               24,737                         2.0  %                3,512                          2.2  %
Tennessee                                             24,072                         1.9  %                3,980                          2.5  %
Alabama                                               18,456                         1.5  %                3,085                          2.0  %
Other (b)                                             15,236                         1.2  %                2,254                          1.4  %
Total South                                          238,844                        18.9  %               29,156                         18.5  %
Midwest
Illinois                                              60,434                         4.8  %                8,328                          5.3  %
Minnesota                                             32,478                         2.6  %                3,225                          2.0  %
Indiana                                               26,525                         2.1  %                4,734                          3.0  %
Ohio                                                  18,368                         1.4  %                3,921                          2.5  %
Wisconsin                                             17,225                         1.4  %                3,420                          2.2  %
Michigan                                              15,194                         1.2  %                2,599                          1.7  %
Other (b)                                             32,668                         2.6  %                5,073                          3.2  %
Total Midwest                                        202,892                        16.1  %               31,300                         19.9  %
East
North Carolina                                        36,174                         2.9  %                8,098                          5.2  %
Pennsylvania                                          31,079                         2.4  %                3,673                          2.3  %
New Jersey                                            22,953                         1.8  %                1,235                          0.8  %
Massachusetts                                         21,964                         1.7  %                1,387                          0.9  %
New York                                              18,881                         1.5  %                2,221                          1.4  %
South Carolina                                        14,850                         1.2  %                4,088                          2.6  %
Other (b)                                             47,714                         3.8  %                8,009                          5.1  %
Total East                                           193,615                        15.3  %               28,711                         18.3  %
West
California                                            68,666                         5.4  %                6,445                          4.1  %
Arizona                                               29,985                         2.4  %                3,365                          2.1  %
Other (b)                                             62,858                         5.0  %                6,720                          4.3  %
Total West                                           161,509                        12.8  %               16,530                         10.5  %
United States Total                                  796,860                        63.1  %              105,697                         67.2  %
International
Spain                                                 64,573                         5.1  %                5,078                          3.2  %
Germany                                               60,910                         4.8  %                6,440                          4.1  %
Poland                                                59,059                         4.7  %                7,959                          5.1  %
United Kingdom                                        57,878                         4.6  %                5,062                          3.2  %
The Netherlands                                       55,719                         4.4  %                6,990                          4.4  %
Italy                                                 26,625                         2.1  %                2,386                          1.5  %
France                                                20,138                         1.6  %                1,685                          1.1  %
Denmark                                               19,464                         1.5  %                2,681                          1.7  %
Croatia                                               17,084                         1.4  %                1,726                          1.1  %
Canada                                                15,246                         1.2  %                2,376                          1.5  %
Other (c)                                             69,397                         5.5  %                9,288                          5.9  %
International Total                                  466,093                        36.9  %               51,671                         32.8  %
Total                                            $ 1,262,953                       100.0  %              157,368                        100.0  %



                                                 W. P. Carey 3/31/2022 10-Q - 41

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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                                           $   326,127                        25.8  %               54,559                         34.7  %
Warehouse                                                300,249                        23.8  %               55,922                         35.5  %
Office                                                   242,852                        19.2  %               16,050                         10.2  %
Retail (d)                                               221,266                        17.5  %               19,243                         12.2  %
Self Storage (net lease)                                  61,708                         4.9  %                5,810                          3.7  %
Other (e)                                                110,751                         8.8  %                5,784                          3.7  %
Total                                                $ 1,262,953                       100.0  %              157,368                        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, Iowa, North Dakota, and South Dakota. Other
properties within East include assets in Virginia, Kentucky, Maryland,
Connecticut, West Virginia, New Hampshire, and Maine. Other properties within
West include assets in Oregon, Utah, Colorado, Washington, Nevada, Hawaii, New
Mexico, Idaho, Wyoming, and Montana.
(c)Includes assets in Lithuania, Finland, Norway, Mexico, Hungary, Portugal, the
Czech Republic, Austria, Sweden, Slovakia, Japan, Latvia, and Estonia.
(d)Includes automotive dealerships.
(e)Includes ABR from tenants within the following property types: education
facility, hotel (net lease), laboratory, theater, fitness facility, student
housing (net lease), funeral home, restaurant, and land.

                                                 W. P. Carey 3/31/2022 10-Q 

- 42

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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)                                          $   272,676                        21.6  %              34,127                        21.7  %
Consumer Services                                              108,941                         8.6  %               8,092                         5.1  %
Automotive                                                      80,974                         6.4  %              12,310                         7.8  %
Beverage and Food                                               79,467                         6.3  %              10,182                         6.5  %
Grocery                                                         73,081                         5.8  %               7,756                         4.9  %
Cargo Transportation                                            63,939                         5.1  %               9,491                         6.0  %
Healthcare and Pharmaceuticals                                  60,000                         4.8  %               5,372                         3.4  %
Construction and Building                                       50,964                         4.0  %               9,077                         5.8  %
Business Services                                               48,092                         3.8  %               4,018                         2.5  %
Capital Equipment                                               44,679                         3.5  %               7,387                         4.7  %
Durable Consumer Goods                                          44,568                         3.5  %              10,276                         6.5  %
Hotel and Leisure                                               42,100                         3.3  %               2,214                         1.4  %
Containers, Packaging, and Glass                                40,121                         3.2  %               6,713                         4.3  %
Sovereign and Public Finance                                    40,082                         3.2  %               3,241                         2.1  %
High Tech Industries                                            31,275                         2.5  %               3,315                         2.1  %
Insurance                                                       26,114                         2.1  %               1,749                         1.1  %
Banking                                                         19,625                         1.6  %               1,216                         0.8  %
Non-Durable Consumer Goods                                      17,710                         1.4  %               5,940                         3.8  %
Aerospace and Defense                                           15,791                         1.3  %               1,358                         0.9  %
Metals                                                          15,376                         1.2  %               3,124                         2.0  %
Telecommunications                                              15,152                         1.2  %               1,479                         0.9  %
Chemicals, Plastics, and Rubber                                 14,372                         1.1  %               1,853                         1.2  %
Media: Broadcasting and Subscription                            13,227                         1.0  %                 784                         0.5  %
Wholesale                                                       12,988                         1.0  %               2,005                         1.3  %
Other (b)                                                       31,639                         2.5  %               4,289                         2.7  %
Total                                                      $ 1,262,953                       100.0  %             157,368                       100.0  %


__________

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

                                                 W. P. Carey 3/31/2022 10-Q 

- 43

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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                        25                    19            $    24,465                        1.9  %              1,587                      1.0  %
2023 (b)                              34                    29                 48,340                        3.8  %              5,187                      3.3  %
2024 (c)                              44                    38                 96,381                        7.6  %             12,401                      7.9  %
2025                                  51                    30                 60,040                        4.8  %              7,116                      4.5  %
2026                                  41                    29                 58,300                        4.6  %              8,248                      5.2  %
2027                                  58                    34                 85,309                        6.8  %              8,895                      5.7  %
2028                                  42                    24                 63,359                        5.0  %              5,572                      3.5  %
2029                                  50                    23                 55,590                        4.4  %              6,702                      4.3  %
2030                                  27                    23                 65,025                        5.2  %              5,520                      3.5  %
2031                                  33                    17                 64,767                        5.1  %              8,055                      5.1  %
2032                                  40                    20                 54,239                        4.3  %              7,227                      4.6  %
2033                                  28                    22                 76,691                        6.1  %             10,158                      6.5  %
2034                                  47                    15                 75,574                        6.0  %              7,765                      4.9  %
2035                                  14                    14                 26,919                        2.1  %              4,906                      3.1  %
Thereafter (>2035)                   261                   104                407,954                       32.3  %             55,668                     35.4  %
Vacant                                 -                     -                      -                          -  %              2,361                      1.5  %
Total                                795                                  $ 1,262,953                      100.0  %            157,368                    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.

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 March 31, 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 3/31/2022 10-Q 

- 44

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Results of Operations


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

Real Estate

Revenues


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

                                                                Three Months Ended March 31,
                                                         2022                2021              Change
Real Estate Revenues
Lease revenues from:
Existing net-leased properties                      $   281,290          $ 279,523          $    1,767
Recently acquired net-leased properties                  26,541              2,413              24,128
Net-leased properties sold or held for sale                (106)             2,729              (2,835)

Total lease revenues (includes reimbursable tenant costs)

                                                  307,725            284,665              23,060
Income from direct financing leases and loans
receivable                                               18,379             17,742                 637
Lease termination income and other                       14,122              1,585              12,537
Operating property revenues                               3,865              2,179               1,686
                                                    $   344,091          $ 306,171          $   37,920


Lease Revenues

"Existing net-leased 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, there were 1,114 existing net-leased properties.

For the three months ended March 31, 2022 as compared to the same period in 2021, lease revenues from existing net-leased properties increased due to the following items (in millions):


[[Image Removed: wpc-20220331_g2.jpg]]
__________

                                                 W. P. Carey 3/31/2022 10-Q - 45

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(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 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 31
investments (comprised of 104 properties and six land parcels under buildings
that we already own) and placed one property into service.

"Net-leased properties sold or held for sale" include (i) six net-leased
properties disposed of during the three months ended March 31, 2022 and (ii) 24
net-leased properties disposed of during the year ended December 31, 2021. Our
dispositions are more fully described in   Note 14  .

Income from Direct Financing 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 months ended March 31, 2022 as compared to the same period in 2021, income from direct financing leases and loans receivable increased due to the following items (in millions):

[[Image Removed: wpc-20220331_g3.jpg]]

Lease Termination Income and Other

Lease termination income and other is described in Note 4 .

Operating Property Revenues and Expenses


For the periods presented, we recorded operating property revenues from 11
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 $1.4 million and $0.9 million, respectively, for the three
months ended March 31, 2022 as compared to the same period in 2021, reflecting
higher occupancy as the hotel's business recovers from the ongoing COVID-19
pandemic.

                                                 W. P. Carey 3/31/2022 10-Q - 46

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Operating Expenses

Depreciation and Amortization

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


                                                   Three Months Ended March 

31,

                                                 2022             2021         Change
          Depreciation and Amortization
          Net-leased properties            $   113,962         $ 108,503      $ 5,459
          Operating properties                     684               696          (12)
          Corporate                                747             1,123         (376)
                                           $   115,393         $ 110,322      $ 5,071



For the three months ended March 31, 2022 as compared to the same period in
2021, depreciation and amortization expense for net-leased properties increased
primarily due to the impact of net acquisition activity, partially offset by the
weakening of foreign currencies (primarily the euro) in relation to the U.S.
dollar between the periods.

General and Administrative

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

For the three months ended March 31, 2022 as compared to the same period in 2021, general and administrative expenses allocated to our Real Estate segment increased by $1.0 million, primarily due to higher compensation expense.

Impairment Charges

Our impairment charges are more fully described in Note 8 .

Property Expenses, Excluding Reimbursable Tenant Costs


For the three months ended March 31, 2022 as compared to the same period in
2021, property expenses, excluding reimbursable tenant costs, increased by $2.9
million, primarily due to higher carrying costs related to tenant vacancies
(which resulted in property expenses no longer being reimbursable) and costs
associated with repositioning certain properties.

Stock-based Compensation Expense

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

For the three months ended March 31, 2022 as compared to the same period in 2021, stock-based compensation expense allocated to our Real Estate segment increased by $2.5 million, primarily due to changes in the projected payout for PSUs.


Merger and Other Expenses

For the three months ended March 31, 2022, merger and other expenses allocated
to our Real Estate segment totaled benefits of $2.3 million, primarily comprised
of (i) $3.6 million of reversals of estimated liabilities for German real estate
transfer taxes that were previously recorded in connection with mergers in prior
years and (ii) $0.9 million of costs incurred in connection with the Proposed
Merger (  Note 1  ).

                                                 W. P. Carey 3/31/2022 10-Q - 47

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

Interest Expense


For the three months ended March 31, 2022 as compared to the same period in
2021, interest expense decreased by $5.6 million, primarily due to the reduction
of our mortgage debt outstanding by prepaying or repaying at or close to
maturity a total of $785.9 million of non-recourse mortgage loans with a
weighted-average interest rate of 4.9% since January 1, 2021 (  Note 10  ) and
the redemption of the €500.0 million of 2.0% Senior Notes due 2023 in March
2021, partially offset by three senior unsecured notes issuances totaling $1.4
billion (based on the exchange rate of the euro on the date of issuance for our
euro-denominated senior unsecured notes) with a weighted-average interest rate
of 1.7% completed since January 1, 2021.

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

                                                 Three Months Ended March 31,
                                                    2022                2021

Average outstanding debt balance $ 6,920,540 $ 6,815,684

         Weighted-average interest rate                 2.5   %            2.8  %



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 transactions. 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 months ended March 31, 2022 and 2021.
Therefore, no gains and losses on foreign currency transactions were recognized
on the remeasurement of such instruments during those periods (  Note 9  ).

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

                                                                          Three Months Ended March 31,
                                                                   2022                 2021             Change

Other Gains and (Losses) Non-cash unrealized gains related to an increase in the fair value of our investment in common shares of WLT ( Note 8 ) $ 28,040

$ - $ 28,040 Realized gains in connection with the redemption of our investment in preferred shares of WLT ( Note 8 )

                18,688                    -            18,688

Net realized and unrealized losses on foreign currency transactions (a)

                                                 (11,074)              (7,451)           (3,623)
Loss on extinguishment of debt (b)                                  (892)             (59,882)           58,990

Change in allowance for credit losses on finance receivables ( Note 5 )

                                                        (773)               1,358            (2,131)
Non-cash unrealized gains related to an increase in the fair
value of our investment in shares of Lineage Logistics
(  Note 8  )                                                           -               23,381           (23,381)
Other                                                                429                  405                24
                                                              $   34,418            $ (42,189)         $ 76,607


__________

(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)Amount for the three months ended March 31, 2021 is related to the prepayment
of mortgage loans (primarily comprised of prepayment penalties totaling $31.8
million) and redemption of the €500.0 million of 2.0% Senior Notes due 2023 in
March 2021 (primarily comprised of a "make-whole" amount of $26.2 million
related to the redemption) (  Note 10  ).

Gain on Sale of Real Estate, Net


Gain on sale of real estate, net, consists of gain on the sale of properties
that were disposed of during the reporting period. Our dispositions are more
fully described in   Note 14  .

                                                 W. P. Carey 3/31/2022 10-Q - 48

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Non-Operating Income

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


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

                                                                           Three Months Ended March 31,
                                                                      2022                 2021            Change

Non-Operating Income Cash dividends from our investment in Lineage Logistics ( Note 8 )

                                                   $    4,308               $ 6,438          $ (2,130)

Realized gains (losses) on foreign currency collars ( Note 9 )

                                                                3,312                  (180)            3,492

Cash dividends from our investment in preferred shares of WLT ( Note 8 )

                                                          912                     -               912
Interest income related to our loans to affiliates and cash
deposits                                                               10                    14                (4)
                                                               $    8,542               $ 6,272          $  2,270


Losses from Equity Method Investments in Real Estate


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

                                                                            

Three Months Ended March 31,

                                                                         2022                 2021             Change

Losses from Equity Method Investments in Real Estate Proportionate share of impairment charge recognized on Bank Pekao ( Note 7 )

                                                        $   (4,610)           $       -          $ (4,610)
Earnings from Las Vegas Retail Complex                                   1,558                    -             1,558
Earnings from Johnson Self Storage (a)                                     939                  401               538
Earnings from Kesko Senukai (b)                                            655               (1,171)            1,826
Other-than-temporary impairment charge on State Farm Mutual
Automobile Insurance Co. (  Note 8  )                                        -               (6,830)            6,830
Losses from WLT (c)                                                          -               (4,483)            4,483
Other                                                                      671                  964              (293)
                                                                    $     (787)           $ (11,119)         $ 10,332


__________

(a)Increase for the three months ended March 31, 2022 as compared to the same
period in 2021 are primarily due to higher occupancy rates at these self-storage
facilities.
(b)Increase for the three months ended March 31, 2022 as compared to the same
period in 2021 is primarily due to higher rent collections at these retail
properties, which were adversely impacted by the COVID-19 pandemic.
(c)Loss for the prior year period was primarily due to the adverse impact of the
COVID-19 pandemic on WLT's operations. We recorded losses from this investment
on a one quarter lag. This investment was reclassified to equity securities at
fair value within Other assets, net on our consolidated balance sheets in
January 2022 (  Note 8  ).

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 and CESH. 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 3  ).

We no longer raise capital for new or existing funds, but we currently expect to
continue managing CPA:18 - Global and CESH and earn the various fees described
below through the end of their respective life cycles. Upon the expected
completion of the Proposed Merger, we will no longer receive fees and
distributions from CPA:18 - Global, and as a result, Investment Management
earnings are expected to decline in future periods (  Note 1  ). As of March 31,
2022, we managed total assets of approximately $2.6 billion on behalf of the
Managed Programs.

                                                 W. P. Carey 3/31/2022 10-Q - 49

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Revenues


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

                                              Three Months Ended March 31,
                                             2022               2021        Change
Investment Management Revenues
Asset management and other revenue
CPA:18 - Global                      $     3,058              $ 3,138      $  (80)
CESH                                         362                  816        (454)
                                           3,420                3,954        (534)
Reimbursable costs from affiliates
CPA:18 - Global                              773                  648         125
CESH                                         154                  285        (131)
WLT                                            -                  108        (108)
                                             927                1,041        (114)
                                     $     4,347              $ 4,995      $ (648)


Asset Management and Other Revenue


Asset management and other revenue includes asset management revenue,
structuring revenue, and other advisory revenue. During the periods presented,
we earned asset management revenue from (i) CPA:18 - Global 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 real
estate-related and lodging-related assets in their investment portfolios. For
2022, we receive asset management fees from (i) CPA:18 - Global in shares of its
common stock through February 28, 2022; effective as of March 1, 2022, we
receive asset management fees from CPA:18 - Global in cash in light of the
Proposed Merger (  Note 3  ), and (ii) CESH in cash.

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

Other Income and Expenses

Earnings from Equity Method Investments in the Managed Programs


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

                                                                     Three Months Ended March 31,
                                                                      2022                   2021

Earnings from equity method investments in the Managed Programs: Earnings (losses) from equity method investments in the Managed Programs (a)

                                                    $        2,972          $      (153)
Distributions of Available Cash from CPA:18 - Global (b)                 2,587                1,539

Earnings from equity method investments in the Managed Programs $ 5,559 $ 1,386



__________

(a)Increase for the three months ended March 31, 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.
(b)We are entitled to receive distributions of up to 10% of the Available Cash
from the operating partnership of CPA:18 - Global, as defined in its operating
partnership agreement (  Note 3  ). Distributions of Available Cash received and
earned from CPA:18 - Global fluctuate based on the timing of certain events,
including acquisitions and dispositions.

                                                 W. P. Carey 3/31/2022 10-Q 

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Liquidity and Capital Resources

Sources and Uses of Cash During the Period


We use the cash flow generated from our investments primarily to meet our
operating expenses, service debt, and fund dividends to stockholders. Our cash
flows fluctuate periodically due to a number of factors, which may include,
among other things: the timing of our equity and debt offerings; the timing of
purchases and sales of real estate; the timing of the repayment of mortgage
loans and receipt of lease revenues; the timing and amount of other
lease-related payments; the timing of settlement of foreign currency
transactions; changes in foreign currency exchange rates; the receipt of asset
management fees in either shares of the common stock of CPA:18 - Global or cash;
the timing of distributions from equity method investments; and the receipt of
distributions of Available Cash from CPA:18 - Global. 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 12  ), in order to meet these needs.
We assess our ability to access capital on an ongoing basis. Our sources and
uses of cash during the period are described below.

Operating Activities - Net cash provided by operating activities increased by
$47.4 million during the three months ended March 31, 2022 as compared to the
same period in 2021, primarily due to an increase in cash flow generated from
net investment activity and scheduled rent increases at existing properties,
higher lease termination and other income, and lower interest expense.

Investing Activities - Our investing activities are generally comprised of real
estate-related transactions (purchases and sales) and funding for build-to-suit
activities and other capital expenditures on real estate. In addition to these
types of transactions, during the three months ended March 31, 2022, we used
$18.0 million to fund short-term loans to the Managed Programs, while $7.0
million of such loans were repaid (  Note 3  ). We also received $1.4 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 three months ended March 31,
2022, we received $179.0 million in net proceeds from the issuance of shares
under our ATM Program (  Note 12  ).

                                                 W. P. Carey 3/31/2022 10-Q 

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Summary of Financing

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


                                                                  March 31, 2022          December 31, 2021
Carrying Value
Fixed rate:
Senior Unsecured Notes (a)                                       $    5,647,833          $       5,701,913
Non-recourse mortgages (a)                                              223,925                    235,898
                                                                      5,871,758                  5,937,811
Variable rate:
Unsecured Revolving Credit Facility                                     476,085                    410,596
Unsecured Term Loans (a)                                                303,138                    310,583
Non-recourse mortgages (a):
Amount subject to interest rate swaps and caps                           75,548                     79,055
Floating interest rate mortgage loans                                    51,702                     53,571
                                                                        906,473                    853,805
                                                                 $    6,778,231          $       6,791,616

Percent of Total Debt
Fixed rate                                                                   87  %                      87  %
Variable rate                                                                13  %                      13  %
                                                                            100  %                     100  %
Weighted-Average Interest Rate at End of Period
Fixed rate                                                                  2.7  %                     2.7  %
Variable rate (b)                                                           1.3  %                     1.1  %
Total debt                                                                  2.5  %                     2.5  %



__________

(a)Aggregate debt balance includes unamortized discount, net, totaling $29.1
million and $30.9 million as of March 31, 2022 and December 31, 2021,
respectively, and unamortized deferred financing costs totaling $27.4 million
and $28.8 million as of March 31, 2022 and December 31, 2021, respectively.
(b)The impact of our interest rate swaps and caps is reflected in the
weighted-average interest rates.

Cash Resources

At March 31, 2022, our cash resources consisted of the following:


•cash and cash equivalents totaling $205.4 million. Of this amount, $76.4
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 $289.1 million
(based on 3,925,000 remaining shares outstanding and a net offering price of
$73.67 per share as of March 31, 2022); and
•unleveraged properties that had an aggregate asset carrying value of
approximately $12.4 billion at March 31, 2022, although there can be no
assurance that we would be able to obtain financing for these properties.

                                                 W. P. Carey 3/31/2022 10-Q 

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Historically, we have also accessed the capital markets through additional debt
(denominated in both U.S. dollars and euros) and equity offerings. During the
three months ended March 31, 2022, we issued 2,249,227 shares of common stock
under our ATM Program for net proceeds of $179.0 million (  Note 12  ). As of
March 31, 2022, we had approximately $289.1 million of available proceeds under
our Equity Forwards and $90.8 million remained available for issuance under our
ATM Program (  Note 12  ). See   Note 1    6  , Subsequent Events for issuances
under our ATM Program subsequent to March 31, 2022 and through the date of this
Report.

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

Cash Requirements and Liquidity


As of March 31, 2022, we had $205.4 million of cash and cash equivalents,
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), and available proceeds under our Equity Forwards of approximately
$289.1 million (based on 3,925,000 remaining shares outstanding and a net
offering price of $73.67 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 $303.1 million as of March 31, 2022
(  Note 10  ), and is scheduled to mature on February 20, 2025. As of March 31,
2022, scheduled debt principal payments total $39.7 million through December 31,
2022 and $227.1 million through December 31, 2023, and our Senior Unsecured
Notes do not start to mature until April 2024 (  Note 10  ). 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 (  Note 16  ).

During the next 12 months following March 31, 2022 and thereafter, we expect that our significant cash requirements will include:


•paying dividends to our stockholders;
•funding acquisitions of new investments (  Note 4  );
•funding future capital commitments and tenant improvement allowances (  Note
4  );
•making scheduled principal and balloon payments on our debt obligations (  Note
10  );
•making scheduled interest payments on our debt obligations (future interest
payments total $877.3 million, with $170.4 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
March 31, 2022);
•costs related to the Proposed Merger (  Note 1  ); 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 12  ), 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.

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 disclosed above are based on the applicable foreign currency exchange rate at March 31, 2022.


                                                 W. P. Carey 3/31/2022 10-Q 

- 53

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Supplemental Financial Measures


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

Funds from Operations and Adjusted Funds from Operations


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

We define FFO, a non-GAAP measure, consistent with the standards established by
the White Paper on FFO approved by the Board of Governors of NAREIT, as restated
in December 2018. The White Paper defines FFO as net income or loss computed in
accordance with GAAP, excluding gains or losses from sales of property,
impairment charges on real estate, 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 transactions (other than those realized on the
settlement of foreign currency derivatives), which are not considered
fundamental attributes of our business plan and do not affect our overall
long-term operating performance. We refer to our modified definition of FFO as
AFFO. We exclude these items from GAAP net income to arrive at AFFO as they are
not the primary drivers in our decision-making process and excluding these items
provides investors a view of our portfolio performance over time and makes it
more comparable to other REITs that are currently not engaged in acquisitions,
mergers, and restructuring, which are not part of our normal business
operations. AFFO also reflects adjustments for unconsolidated partnerships and
jointly owned investments. We use AFFO as one measure of our operating
performance when we formulate corporate goals, evaluate the effectiveness of our
strategies, and determine executive compensation.

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

                                                 W. P. Carey 3/31/2022 10-Q 

- 54

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


                                                                      Three 

Months Ended March 31,

                                                                        2022                   2021
Net income attributable to W. P. Carey                           $       156,995          $    51,634
Adjustments:
Depreciation and amortization of real property                           114,646              109,204
Impairment charges                                                        20,179                    -
Gain on sale of real estate, net                                         (11,248)              (9,372)

Proportionate share of adjustments to earnings from equity method investments (a) (b)

                                                 7,683               10,306

Proportionate share of adjustments for noncontrolling interests (c)

                                                                           (4)                  (4)
Total adjustments                                                        131,256              110,134
FFO (as defined by NAREIT) attributable to W. P. Carey                   288,251              161,768

Adjustments:

Other (gains) and losses (d)                                             (35,745)              41,188

Above- and below-market rent intangible lease amortization, net 11,004

               12,115
Straight-line and other leasing and financing adjustments                (10,847)              (8,751)
Stock-based compensation                                                   7,833                5,381
Amortization of deferred financing costs                                   3,128                3,413
Merger and other expenses (e)                                             (2,322)                (476)
Tax benefit - deferred and other                                          (1,242)              (3,387)
Other amortization and non-cash items                                        552                   29

Proportionate share of adjustments to earnings from equity method investments (b)

                                                    (1,781)               5,211

Proportionate share of adjustments for noncontrolling interests (c)

                                                                           (5)                  (5)
Total adjustments                                                        (29,425)              54,718
AFFO attributable to W. P. Carey                                 $       

258,826 $ 216,486

Summary

FFO (as defined by NAREIT) attributable to W. P. Carey           $       288,251          $   161,768
AFFO attributable to W. P. Carey                                 $       258,826          $   216,486



                                                 W. P. Carey 3/31/2022 10-Q - 55

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


                                                                      Three 

Months Ended March 31,

                                                                        2022                   2021
Net income from Real Estate attributable to W. P. Carey          $       146,858          $    44,587
Adjustments:
Depreciation and amortization of real property                           114,646              109,204
Impairment charges                                                        20,179                    -
Gain on sale of real estate, net                                         (11,248)              (9,372)

Proportionate share of adjustments to earnings from equity method investments (a) (b)

                                                 7,683               10,306

Proportionate share of adjustments for noncontrolling interests (c)

                                                                           (4)                  (4)
Total adjustments                                                        131,256              110,134
FFO (as defined by NAREIT) attributable to W. P. Carey - Real
Estate                                                                   278,114              154,721
Adjustments:
Other (gains) and losses (d)                                             (34,418)              42,189

Above- and below-market rent intangible lease amortization, net 11,004

               12,115
Straight-line and other leasing and financing adjustments                (10,847)              (8,751)
Stock-based compensation                                                   7,833                5,381
Amortization of deferred financing costs                                   3,128                3,413
Merger and other expenses (e)                                             (2,325)                (491)
Tax benefit - deferred and other                                          (1,189)              (2,595)
Other amortization and non-cash items                                        552                   29

Proportionate share of adjustments to earnings from equity method investments (b)

                                                       167                4,322

Proportionate share of adjustments for noncontrolling interests (c)

                                                                           (5)                  (5)
Total adjustments                                                        (26,100)              55,607
AFFO attributable to W. P. Carey - Real Estate                   $       

252,014 $ 210,328

Summary

FFO (as defined by NAREIT) attributable to W. P. Carey - Real Estate

                                                           $       278,114          $   154,721
AFFO attributable to W. P. Carey - Real Estate                   $       252,014          $   210,328



                                                 W. P. Carey 3/31/2022 10-Q - 56

--------------------------------------------------------------------------------

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

Three Months Ended March 31,

                                                                        2022                    2021

Net income from Investment Management attributable to W. P. Carey

                                                            $         10,137          $     7,047
FFO (as defined by NAREIT) attributable to W. P. Carey -
Investment Management                                                      10,137                7,047
Adjustments:
Other (gains) and losses                                                   (1,327)              (1,001)
Tax benefit - deferred and other                                              (53)                (792)
Merger and other expenses                                                       3                   15

Proportionate share of adjustments to earnings from equity method investments (b)

                                                     (1,948)                 889
Total adjustments                                                          (3,325)                (889)

AFFO attributable to W. P. Carey - Investment Management $ 6,812 $ 6,158

Summary

FFO (as defined by NAREIT) attributable to W. P. Carey - Investment Management

                                            $         

10,137 $ 7,047 AFFO attributable to W. P. Carey - Investment Management $ 6,812 $ 6,158



__________

(a)Amount for the three months ended March 31, 2022 includes our $4.6 million
proportionate share of an impairment charge recognized on an equity method
investment in real estate (  Note 7  ). Amount for the three months ended March
31, 2021 includes a non-cash other-than-temporary impairment charge of $6.8
million recognized on an equity method investment in real estate (  Note 8  ).
(b)Equity income, including amounts that are not typically recognized for FFO
and AFFO, is recognized within Earnings (losses) from equity method investments
on the consolidated statements of income. This represents adjustments to equity
income to reflect FFO and AFFO on a pro rata basis.
(c)Adjustments disclosed elsewhere in this reconciliation are on a consolidated
basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
(d)Primarily comprised of gains and losses on extinguishment of debt, the
mark-to-market fair value of equity securities, and foreign currency
transactions, as well as non-cash allowance for credit losses on loans
receivable and direct financing leases.
(e)Amount for the three months ended March 31, 2022 is primarily comprised of
(i) $3.6 million of reversals of estimated liabilities for German real estate
transfer taxes that were previously recorded in connection with mergers in prior
years and (ii) $0.9 million of costs incurred in connection with the Proposed
Merger (  Note 1  ).

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.

© Edgar Online, source Glimpses

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