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W. P. CAREY INC.

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

07/29/2022 | 04:06pm 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  ). The Proposed Merger and
related transactions were approved by the stockholders of CPA:18 - Global at a
special meeting on July 26, 2022. We currently expect the transaction to close
on August 1, 2022.

Financial Highlights

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

Real Estate

Investments

•We acquired 11 investments totaling $644.0 million ( Note 4 , Note 5

).

•We completed three construction projects at a cost totaling $98.2 million
(  Note 4  ).
•We funded approximately $37.3 million for a construction loan to build a retail
complex in Las Vegas, Nevada, during the six months ended June 30, 2022. Through
June 30, 2022, we have funded $141.0 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  ).

Dispositions

•As part of our active capital recycling program, we disposed of 14 properties
for total proceeds, net of selling costs, of $115.1 million (  Note 14  ).
•In January 2022, WLT redeemed in full our 1,300,000 shares of its preferred
stock for gross proceeds of $65.0 million (  Note 8  ).

Financing and Capital Markets Transactions


•On May 2, 2022, 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 June 30, 2022, we had approximately $301.0 million of available
proceeds under our ATM Forwards (  Note 12  ).
•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 12  ).
•In April 2022, we increased the Term Loan to £270.0 million and the Delayed
Draw Term Loan to €215.0 million, thereby increasing the total capacity of our
Senior Unsecured Credit Facility to approximately $2.4 billion. We used the
approximately $300 million of proceeds from this increase in the capacity of our
Unsecured Term Loans to partially repay amounts outstanding under our Unsecured
Revolving Credit Facility (  Note 10  ).

                                                 W. P. Carey 6/30/2022 10-Q - 41

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Investment Management

Assets Under Management


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

Dividends to Stockholders

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


Consolidated Results

(in thousands, except shares)

                                                   Three Months Ended June 30,                     Six Months Ended June 30,
                                                   2022                    2021                   2022                    2021
Revenues from Real Estate                    $      339,787          $     

314,790 $ 683,878 $ 620,961 Revenues from Investment Management

                   4,610                  4,934                   8,957                  9,929
Total revenues                                      344,397                319,724                 692,835                630,890

Net income from Real Estate attributable to
W. P. Carey                                         123,228                114,687                 270,086                159,274
Net income from Investment Management
attributable to W. P. Carey                           4,450                  5,558                  14,587                 12,605
Net income attributable to W. P. Carey              127,678                120,245                 284,673                171,879

Dividends declared                                  205,898                194,914                 411,395                382,395

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

Supplemental financial measures (a):
Adjusted funds from operations attributable
to W. P. Carey (AFFO) - Real Estate                 247,246                222,377                 499,260                432,705
Adjusted funds from operations attributable
to W. P. Carey (AFFO) - Investment
Management                                            7,128                  6,299                  13,940                 12,457
Adjusted funds from operations attributable
to W. P. Carey (AFFO)                               254,374                228,676                 513,200                445,162

Diluted weighted-average shares outstanding     194,763,695            180,668,732             193,706,035            178,902,259


__________

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

                                                 W. P. Carey 6/30/2022 10-Q 

- 42

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Revenues


Total revenues increased for the three and six months ended June 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, partially offset by the impact of the weakening
euro and British pound sterling, as well as property dispositions) and higher
lease termination and other income for the six months ended June 30, 2022 as
compared to the same period in 2021 (  Note 4  ).

Net Income Attributable to W. P. Carey


Net income attributable to W. P. Carey increased for the three months ended June
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 non-cash unrealized
gain recognized on our investment in common shares of WLT (  Note 8  ), a higher
aggregate gain on sale of real estate (  Note 14  ), and the impact of real
estate acquisitions, partially offset by the impact of the weakening euro and
British pound sterling, and impairment charges recognized during the current
year period.

Net income attributable to W. P. Carey increased for the six months ended June
30, 2022 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  ), non-cash unrealized gains recognized on
our investment in common shares of WLT (  Note 8  ), the impact of real estate
acquisitions, and a higher aggregate gain on sale of real estate, partially
offset by the impact of the weakening euro and British pound sterling, higher
impairment charges (  Note 8  ), and a non-cash unrealized gain recognized on
our investment in shares of Lineage Logistics during the prior year period
(  Note 8  ).

AFFO


AFFO increased for the three and six months ended June 30, 2022 as compared to
the same periods in 2021, primarily due to higher lease revenues from net
investment activity and rent escalations, partially offset by the impact of the
weakening euro and British pound sterling, as well as the cessation of cash
dividends from our investment in preferred shares of WLT following the
redemption of that investment in January 2022 (  Note 8  ).

                                                 W. P. Carey 6/30/2022 10-Q 

- 43

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Portfolio Overview


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

Portfolio Summary


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


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



__________

(a)At both June 30, 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 June 30, 2022) and one hotel property with an average
occupancy of 59.2% for the six months ended June 30, 2022.
(b)We acquired investments in Belgium during the six months ended June 30, 2022.
(c)Amounts for the six months ended June 30, 2022 and 2021 include $37.3 million
and $84.9 million, respectively, of funding for a construction loan (  Note
7  ).

                                                 W. P. Carey 6/30/2022 10-Q - 44

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Net-Leased Portfolio

The tables below represent information about our net-leased portfolio at June 30, 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                       3.0  %                      1.8
                                     Government office properties in
State of Andalucía (a)               Spain                                                70                   28,506                       2.2  %                     12.5
Hellweg Die Profi-Baumärkte          Do-it-yourself retail properties
GmbH & Co. KG (a)                    in Germany                                           35                   26,537                       2.1  %                     14.7
Metro Cash & Carry Italia            Business-to-business wholesale
S.p.A. (a)                           stores in Italy and Germany                          20                   26,492                       2.1  %                      6.3
                                     Net lease self-storage properties
Extra Space Storage, Inc.            in the U.S.                                          27                   22,957                       1.8  %                     21.8
                                     Do-it-yourself retail properties
OBI Group (a)                        in Poland                                            26                   21,515                       1.7  %                      8.1
                                     Net lease hotel properties in the
Marriott Corporation                 U.S.                                                 18                   21,350                       1.7  %                      1.6

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

               3                   20,981                       1.7  %                     21.2
                                     Automotive dealerships in the
Pendragon PLC (a)                    United Kingdom                                       63                   20,214                       1.6  %                     12.9
                                     Distribution facilities in the
Advance Auto Parts, Inc.             U.S.                                                 29                   19,851                       1.6  %                     10.6
Total                                                                                    369                $ 247,154                      19.5  %                     10.5


__________

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

                                                 W. P. Carey 6/30/2022 10-Q - 45

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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                                            $   105,724                         8.3  %               11,983                          7.4  %
Florida                                               53,372                         4.2  %                4,456                          2.7  %
Tennessee                                             25,193                         2.0  %                4,136                          2.6  %
Georgia                                               24,804                         2.0  %                3,512                          2.2  %
Alabama                                               19,386                         1.5  %                3,334                          2.1  %
Other (b)                                             15,469                         1.2  %                2,237                          1.4  %
Total South                                          243,948                        19.2  %               29,658                         18.4  %
Midwest
Illinois                                              62,824                         4.9  %                8,734                          5.4  %
Minnesota                                             32,584                         2.6  %                3,225                          2.0  %
Indiana                                               26,882                         2.1  %                4,734                          2.9  %
Ohio                                                  21,055                         1.7  %                4,503                          2.8  %
Wisconsin                                             15,962                         1.3  %                2,726                          1.7  %
Michigan                                              15,410                         1.2  %                2,496                          1.6  %
Other (b)                                             35,706                         2.8  %                5,634                          3.5  %
Total Midwest                                        210,423                        16.6  %               32,052                         19.9  %
East
North Carolina                                        36,505                         2.9  %                8,098                          5.0  %
Pennsylvania                                          31,890                         2.5  %                3,673                          2.3  %
New Jersey                                            23,178                         1.8  %                1,235                          0.8  %
Massachusetts                                         22,159                         1.7  %                1,387                          0.8  %
New York                                              18,881                         1.5  %                2,221                          1.4  %
Kentucky                                              17,796                         1.4  %                3,063                          1.9  %
South Carolina                                        14,982                         1.2  %                4,088                          2.5  %
Other (b)                                             37,234                         2.9  %                5,300                          3.3  %
Total East                                           202,625                        15.9  %               29,065                         18.0  %
West
California                                            70,710                         5.5  %                6,420                          4.0  %
Arizona                                               30,099                         2.4  %                3,365                          2.1  %
Other (b)                                             63,158                         5.0  %                6,720                          4.1  %
Total West                                           163,967                        12.9  %               16,505                         10.2  %
United States Total                                  820,963                        64.6  %              107,280                         66.5  %
International
Spain                                                 60,420                         4.8  %                5,078                          3.2  %
Germany                                               57,205                         4.5  %                6,440                          4.0  %
Poland                                                55,570                         4.4  %                7,959                          4.9  %
United Kingdom                                        52,424                         4.1  %                4,804                          3.0  %
The Netherlands                                       52,200                         4.1  %                6,990                          4.3  %
Italy                                                 24,912                         2.0  %                2,386                          1.5  %
Denmark                                               20,475                         1.6  %                2,844                          1.8  %
France                                                19,013                         1.5  %                1,685                          1.0  %
Croatia                                               15,988                         1.3  %                1,726                          1.1  %
Canada                                                15,644                         1.2  %                2,448                          1.5  %
Other (c)                                             75,412                         5.9  %               11,654                          7.2  %
International Total                                  449,263                        35.4  %               54,014                         33.5  %
Total                                            $ 1,270,226                       100.0  %              161,294                        100.0  %



                                                 W. P. Carey 6/30/2022 10-Q - 46

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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                                           $   339,070                        26.7  %               56,461                         35.0  %
Warehouse                                                306,675                        24.1  %               57,856                         35.9  %
Office                                                   237,154                        18.7  %               16,013                          9.9  %
Retail (d)                                               212,899                        16.8  %               19,384                         12.0  %
Self Storage (net lease)                                  61,708                         4.9  %                5,810                          3.6  %
Other (e)                                                112,720                         8.8  %                5,770                          3.6  %
Total                                                $ 1,270,226                       100.0  %              161,294                        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, Iowa, Nebraska, North Dakota, and South Dakota. Other
properties within East include assets in Virginia, 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, Mexico, Finland, Norway, Belgium, 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 6/30/2022 10-Q 

- 47

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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)                                          $   265,377                        20.9  %              34,369                        21.3  %
Consumer Services                                              110,204                         8.7  %               8,067                         5.0  %
Beverage and Food                                               86,945                         6.8  %              12,263                         7.6  %
Automotive                                                      79,095                         6.2  %              12,310                         7.6  %
Grocery                                                         69,117                         5.4  %               7,756                         4.8  %
Cargo Transportation                                            61,358                         4.8  %               9,485                         5.9  %
Healthcare and Pharmaceuticals                                  60,276                         4.7  %               5,372                         3.3  %
Construction and Building                                       51,403                         4.1  %               9,077                         5.6  %
Business Services                                               47,521                         3.7  %               3,981                         2.5  %
Capital Equipment                                               47,088                         3.7  %               7,755                         4.8  %
Durable Consumer Goods                                          44,337                         3.5  %              10,276                         6.4  %
Hotel and Leisure                                               42,259                         3.3  %               2,214                         1.4  %
Containers, Packaging, and Glass                                40,660                         3.2  %               6,714                         4.2  %
Sovereign and Public Finance                                    37,455                         3.0  %               3,241                         2.0  %
High Tech Industries                                            31,066                         2.5  %               3,315                         2.1  %
Chemicals, Plastics, and Rubber                                 27,710                         2.2  %               4,431                         2.7  %
Insurance                                                       25,973                         2.0  %               1,749                         1.1  %
Non-Durable Consumer Goods                                      23,869                         1.9  %               5,940                         3.7  %
Banking                                                         19,210                         1.5  %               1,216                         0.8  %
Aerospace and Defense                                           16,227                         1.3  %               1,358                         0.8  %
Telecommunications                                              15,007                         1.2  %               1,479                         0.9  %
Metals                                                          14,913                         1.2  %               3,068                         1.9  %
Media: Broadcasting and Subscription                            12,723                         1.0  %                 784                         0.5  %
Other (b)                                                       40,433                         3.2  %               5,074                         3.1  %
Total                                                      $ 1,270,226                       100.0  %             161,294                       100.0  %


__________

(a)Includes automotive dealerships.
(b)Includes ABR from tenants in the following industries: media: advertising,
printing, and publishing, wholesale, 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 6/30/2022 10-Q 

- 48

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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                        20                    17            $    24,073                        1.9  %              1,500                      0.9  %
2023 (b)                              32                    27                 46,942                        3.7  %              5,127                      3.2  %
2024 (c)                              43                    37                 94,116                        7.4  %             12,221                      7.6  %
2025                                  52                    30                 58,981                        4.6  %              7,144                      4.4  %
2026                                  41                    30                 56,375                        4.4  %              8,222                      5.1  %
2027                                  57                    33                 79,785                        6.3  %              8,715                      5.4  %
2028                                  42                    24                 62,132                        4.9  %              5,571                      3.5  %
2029                                  51                    24                 55,657                        4.4  %              6,882                      4.3  %
2030                                  28                    24                 65,273                        5.1  %              5,565                      3.4  %
2031                                  33                    17                 64,229                        5.1  %              8,056                      5.0  %
2032                                  37                    18                 40,780                        3.2  %              5,409                      3.4  %
2033                                  28                    22                 74,922                        5.9  %             10,159                      6.3  %
2034                                  48                    16                 76,288                        6.0  %              7,955                      4.9  %
2035                                  13                    13                 26,224                        2.1  %              4,725                      2.9  %
Thereafter (>2035)                   277                   109                444,449                       35.0  %             62,519                     38.8  %
Vacant                                 -                     -                      -                          -  %              1,524                      0.9  %
Total                                802                                  $ 1,270,226                      100.0  %            161,294                    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

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

Terms and Definitions


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

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

                                                 W. P. Carey 6/30/2022 10-Q 

- 49

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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 June 30,                               Six Months Ended June 30,
                                        2022                2021             Change              2022               2021             Change
Real Estate Revenues
Lease revenues from:
Existing net-leased properties      $  282,633          $ 273,925          $  8,708          $ 562,924          $ 552,371          $ 10,553
Recently acquired net-leased
properties                              31,017             12,381            18,636             57,558             14,794            42,764
Net-leased properties sold or held
for sale                                   704              2,758            (2,054)             1,597              6,564            (4,967)
Total lease revenues (includes
reimbursable tenant costs)             314,354            289,064            25,290            622,079            573,729            48,350
Income from direct financing leases
and loans receivable                    17,778             17,422               356             36,157             35,164               993
Operating property revenues              5,064              3,245             1,819              8,929              5,424             3,505
Lease termination income and other       2,591              5,059            (2,468)            16,713              6,644            10,069
                                    $  339,787          $ 314,790          $ 24,997          $ 683,878          $ 620,961          $ 62,917



                                                 W. P. Carey 6/30/2022 10-Q - 50

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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 1,108 existing net-leased properties.


For the three and six months ended June 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-20220630_g2.jpg]][[Image Removed: wpc-20220630_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 36
investments (comprised of 129 properties and six land parcels under buildings
that we already own) and placed one property into service.

                                                 W. P. Carey 6/30/2022 10-Q 

- 51

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"Net-leased properties sold or held for sale" include (i) 14 net-leased
properties disposed of during the six months ended June 30, 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 and six months ended June 30, 2022 as compared to the same periods
in 2021, income from direct financing leases and loans receivable increased due
to the following items (in millions):

[[Image Removed: wpc-20220630_g4.jpg]][[Image Removed: wpc-20220630_g5.jpg]]

                                                 W. P. Carey 6/30/2022 10-Q - 52

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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 (i) $1.5 million and $1.1 million, respectively, for the
three months ended June 30, 2022 as compared to the same period in 2021, and
(ii) $3.0 million and $2.0 million, respectively, for the six months ended June
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 Income and Other

Lease termination income and other is described in Note 4 .

Operating Expenses

Depreciation and Amortization

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


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



For the three and six months ended June 30, 2022 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, 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 attributed to our Real Estate segment.

For the six months ended June 30, 2022 as compared to the same period in 2021, general and administrative expenses allocated to our Real Estate segment increased by $1.4 million, primarily due to higher compensation expense.

Property Expenses, Excluding Reimbursable Tenant Costs


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

Impairment Charges

Our impairment charges are more fully described in Note 8 .


                                                 W. P. Carey 6/30/2022 10-Q 

- 53

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Merger and Other Expenses


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

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


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

Interest Expense


For the three and six months ended June 30, 2022 as compared to the same periods
in 2021, interest expense decreased by $2.8 million and $8.4 million,
respectively, primarily due to (i) the weakening of foreign currencies
(primarily the euro and British pound sterling) in relation to the U.S. dollar
between the periods, (ii) the reduction of our mortgage debt outstanding by
prepaying or repaying at or close to maturity a total of $790.7 million of
non-recourse mortgage loans with a weighted-average interest rate of 4.9% since
January 1, 2021 (  Note 10  ), and (iii) the redemption of the €500.0 million of
2.0% Senior Notes due 2023 in March 2021, partially offset by three senior
unsecured notes issuances totaling $1.4 billion (based on the exchange rate of
the euro on the date of issuance for our euro-denominated senior unsecured
notes) with a weighted-average interest rate of 1.7% completed since January 1,
2021.

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

                                                       Three Months Ended June 30,                  Six Months Ended June 30,
                                                        2022                   2021                 2022                  2021
Average outstanding debt balance                  $    6,833,452          $ 

7,000,966 $ 6,876,996 $ 6,908,325 Weighted-average interest rate

                               2.5  %               2.6  %                2.5  %               2.7  %



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 6/30/2022 10-Q - 54

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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 six months ended June 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 9  ).

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

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


__________

(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 six months ended June 30, 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  ).

                                                 W. P. Carey 6/30/2022 10-Q - 55

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


Earnings (Losses) from Equity Method Investments in Real Estate

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


                                                       Three Months Ended June 30,                               Six Months Ended June 30,
                                                 2022                 2021             Change            2022               2021             Change
Earnings (Losses) from Equity Method
Investments in Real Estate
Earnings from Las Vegas Retail Complex     $    1,809              $    293 

$ 1,516 $ 3,368 $ 293 $ 3,075 Earnings from Johnson Self Storage (a) 1,087

                   492              595             2,027                893             1,134
Earnings (losses) from Kesko Senukai (b)          576                   660              (84)            1,230               (510)            1,740
Losses from WLT (c)                                 -                (4,005)           4,005                 -             (8,488)            

8,488

Proportionate share of impairment charge
recognized on Bank Pekao (  Note 7  )               -                     -                -            (4,610)                 -            (4,610)
Other-than-temporary impairment charge on
State Farm Mutual Automobile Insurance Co.
(  Note 8  )                                        -                     -                -                 -             (6,830)            6,830
Other                                           1,057                   706              351             1,727              1,669                58
                                           $    4,529              $ (1,854)         $ 6,383          $  3,742          $ (12,973)         $ 16,715


__________

(a)Increases for the three and six months ended June 30, 2022 as compared to the
same periods in 2021 are primarily due to higher occupancy and unit rates at
these self-storage facilities.
(b)Increase for the six months ended June 30, 2022 as compared to the same
period in 2021 is primarily due to higher rent collections at these retail
properties, where certain rents were previously disputed and subsequently
collected.
(c)Losses for the prior year periods were primarily due to the adverse impact of
the COVID-19 pandemic on WLT's operations. We recorded losses from this
investment on a one quarter lag. This investment was reclassified to equity
securities at fair value within Other assets, net on our consolidated balance
sheets in January 2022 (  Note 8  ).




                                                 W. P. Carey 6/30/2022 10-Q - 56

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Provision for Income Taxes


For the three and six months ended June 30, 2022 as compared to the same periods
in 2021, provision for income taxes within our Real Estate segment decreased by
$3.2 million and $2.7 million, respectively, primarily due to a one-time
deferred tax expense recognized on a foreign property during the prior year
periods and tax benefits recognized on certain foreign properties during the
current year periods as a result of a tax court ruling.

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 June 30,
2022, we managed total assets of approximately $2.5 billion on behalf of the
Managed Programs.

Revenues

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

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


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 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.

                                                 W. P. Carey 6/30/2022 10-Q 

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Other Income and Expenses

Earnings from Equity Method Investments in the Managed Programs


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

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


__________

(a)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.
(b)Increase for the six months ended June 30, 2022 as compared to the same
period in 2021 was due to an increase of $3.3 million from our investment in
shares of CPA:18 - Global.

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
$48.1 million during the six months ended June 30, 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 six months ended June 30, 2022, we used $26.0
million to fund short-term loans to the Managed Programs, while $10.0 million of
such loans were repaid (  Note 3  ). We also received $8.1 million in
distributions from equity method investments.

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

                                                 W. P. Carey 6/30/2022 10-Q - 58

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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):

                                                    June 30, 2022      December 31, 2021
Carrying Value
Fixed rate:
Senior Unsecured Notes (a)                         $  5,471,066       $       5,701,913
Non-recourse mortgages (a)                              211,973                 235,898
                                                      5,683,039               5,937,811
Variable rate:
Unsecured Term Loans (a)                                548,287                 310,583
Unsecured Revolving Credit Facility                     417,455             

410,596

Non-recourse mortgages (a):
Amount subject to interest rate swaps and caps           69,250             

79,055

Floating interest rate mortgage loans                    47,597                  53,571
                                                      1,082,589                 853,805
                                                   $  6,765,628       $       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                                                  2.7  %                  2.7  %
Variable rate (b)                                           1.6  %                  1.1  %
Total debt                                                  2.5  %                  2.5  %



__________

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

Cash Resources

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


•cash and cash equivalents totaling $103.6 million. Of this amount, $65.1
million, at then-current exchange rates, was held in foreign subsidiaries, and
we could be subject to restrictions or significant costs should we decide to
repatriate these amounts;
•our Unsecured Revolving Credit Facility, with available capacity of
approximately $1.4 billion (net of amounts reserved for standby letters of
credit totaling $0.6 million);
•available proceeds under our Equity Forwards of approximately $285.0 million
(based on 3,925,000 remaining shares outstanding and a net offering price of
$72.61 per share as of June 30, 2022);
•available proceeds under our ATM Forwards of approximately $301.0 million
(based on 3,674,187 shares outstanding and a weighted-average net offering price
of $81.93 per share as of June 30, 2022); and
•unleveraged properties that had an aggregate asset carrying value of
approximately $12.4 billion at June 30, 2022, although there can be no assurance
that we would be able to obtain financing for these properties.

                                                 W. P. Carey 6/30/2022 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
six months ended June 30, 2022, we issued 2,740,295 shares of common stock under
our prior ATM Program for net proceeds of $218.1 million (  Note 12  ). As of
June 30, 2022, we had approximately $285.0 million of available proceeds under
our Equity Forwards (  Note 12  ). As of June 30, 2022, we had approximately
$301.0 million of available proceeds under our ATM Forwards (  Note 12  ).

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

Cash Requirements and Liquidity


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

During the next 12 months following June 30, 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 $798.3 million, with $171.6 million due during the next 12
months; interest on unhedged variable-rate debt obligations was calculated using
the applicable annual variable interest rates and balances outstanding at
June 30, 2022);
•cash consideration and costs related to the Proposed Merger (  Note 1  ); 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 June 30, 2022.


                                                 W. P. Carey 6/30/2022 10-Q 

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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 rate movements (other than those realized on the
settlement of foreign currency derivatives), which are not considered
fundamental attributes of our business plan and do not affect our overall
long-term operating performance. We refer to our modified definition of FFO as
AFFO. We exclude these items from GAAP net income to arrive at AFFO as they are
not the primary drivers in our decision-making process and excluding these items
provides investors a view of our portfolio performance over time and makes it
more comparable to other REITs that are currently not engaged in acquisitions,
mergers, and restructuring, which are not part of our normal business
operations. AFFO also reflects adjustments for unconsolidated partnerships and
jointly owned investments. We use AFFO as one measure of our operating
performance when we formulate corporate goals, evaluate the effectiveness of our
strategies, and determine executive compensation.

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

                                                 W. P. Carey 6/30/2022 10-Q 

- 61

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

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


                                                 Three Months Ended June 30,                 Six Months Ended June 30,
                                                   2022                  2021                 2022                  2021
Net income attributable to W. P. Carey       $      127,678          $ 120,245          $      284,673          $ 171,879
Adjustments:
Depreciation and amortization of real
property                                            114,333            112,997                 228,979            222,201
Gain on sale of real estate, net                    (31,119)           (19,840)                (42,367)           (29,212)
Impairment charges                                    6,206                  -                  26,385                  -
Proportionate share of adjustments to
earnings from equity method investments (a)
(b)                                                   2,934              3,434                  10,617             13,740
Proportionate share of adjustments for
noncontrolling interests (c)                             (4)                (4)                     (8)                (8)
Total adjustments                                    92,350             96,587                 223,606            206,721
FFO (as defined by NAREIT) attributable to
W. P. Carey                                         220,028            216,832                 508,279            378,600

Adjustments:

Other (gains) and losses (d)                         21,746             (7,545)                (13,999)            33,643
Straight-line and other leasing and
financing adjustments                               (14,492)           (10,313)                (25,339)           (19,064)
Above- and below-market rent intangible
lease amortization, net                              10,548             14,384                  21,552             26,499
Stock-based compensation                              9,758              9,048                  17,591             14,429
Amortization of deferred financing costs              3,147              3,447                   6,275              6,860
Merger and other expenses (e)                         1,984             (2,599)                   (338)            (3,075)
Other amortization and non-cash items                   530                563                   1,082                592
Tax (benefit) expense - deferred and other             (355)               217                  (1,597)            (3,170)
Proportionate share of adjustments to
earnings from equity method investments (b)           1,486              4,650                    (295)             9,861
Proportionate share of adjustments for
noncontrolling interests (c)                             (6)                (8)                    (11)               (13)
Total adjustments                                    34,346             11,844                   4,921             66,562
AFFO attributable to W. P. Carey             $      254,374          $ 

228,676 $ 513,200 $ 445,162

Summary

FFO (as defined by NAREIT) attributable to
W. P. Carey                                  $      220,028          $ 

216,832 $ 508,279 $ 378,600 AFFO attributable to W. P. Carey

             $      254,374          $ 228,676          $      513,200          $ 445,162



                                                 W. P. Carey 6/30/2022 10-Q - 62

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


                                                 Three Months Ended June 30,                 Six Months Ended June 30,
                                                   2022                  2021                 2022                  2021
Net income from Real Estate attributable to
W. P. Carey                                  $      123,228          $ 114,687          $      270,086          $ 159,274
Adjustments:
Depreciation and amortization of real
property                                            114,333            112,997                 228,979            222,201
Gain on sale of real estate, net                    (31,119)           (19,840)                (42,367)           (29,212)
Impairment charges                                    6,206                  -                  26,385                  -
Proportionate share of adjustments to
earnings from equity method investments (a)
(b)                                                   2,934              3,434                  10,617             13,740
Proportionate share of adjustments for
noncontrolling interests (c)                             (4)                (4)                     (8)                (8)
Total adjustments                                    92,350             96,587                 223,606            206,721
FFO (as defined by NAREIT) attributable to
W. P. Carey - Real Estate                           215,578            211,274                 493,692            365,995

Adjustments:

Other (gains) and losses (d)                         20,155             (7,472)                (14,263)            34,717
Straight-line and other leasing and
financing adjustments                               (14,492)           (10,313)                (25,339)           (19,064)
Above- and below-market rent intangible
lease amortization, net                              10,548             14,384                  21,552             26,499
Stock-based compensation                              9,758              9,048                  17,591             14,429
Amortization of deferred financing costs              3,147              3,447                   6,275              6,860
Merger and other expenses (e)                         1,984             (2,599)                   (341)            (3,090)
Other amortization and non-cash items                   530                563                   1,082                592
Tax (benefit) expense - deferred and other             (324)               208                  (1,513)            (2,387)
Proportionate share of adjustments to
earnings from equity method investments (b)             368              3,845                     535              8,167
Proportionate share of adjustments for
noncontrolling interests (c)                             (6)                (8)                    (11)               (13)
Total adjustments                                    31,668             11,103                   5,568             66,710
AFFO attributable to W. P. Carey - Real
Estate                                       $      247,246          $ 

222,377 $ 499,260 $ 432,705

Summary

FFO (as defined by NAREIT) attributable to
W. P. Carey - Real Estate                    $      215,578          $ 211,274          $      493,692          $ 365,995
AFFO attributable to W. P. Carey - Real
Estate                                       $      247,246          $ 222,377          $      499,260          $ 432,705



                                                 W. P. Carey 6/30/2022 10-Q - 63

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

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


                                                 Three Months Ended June 30,                 Six Months Ended June 30,
                                                   2022                  2021                 2022                 2021
Net income from Investment Management
attributable to W. P. Carey                  $        4,450          $   5,558          $      14,587          $  12,605
FFO (as defined by NAREIT) attributable to
W. P. Carey - Investment Management                   4,450              5,558                 14,587             12,605

Adjustments:

Other (gains) and losses                              1,591                (73)                   264             (1,074)
Tax (benefit) expense - deferred and other              (31)                 9                    (84)              (783)
Merger and other expenses                                 -                  -                      3                 15
Proportionate share of adjustments to
earnings from equity method investments (b)           1,118                805                   (830)             1,694
Total adjustments                                     2,678                741                   (647)              (148)
AFFO attributable to W. P. Carey -
Investment Management                        $        7,128          $   

6,299 $ 13,940 $ 12,457

Summary

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


__________

(a)Amount for the six months ended June 30, 2022 includes our $4.6 million
proportionate share of an impairment charge recognized on an equity method
investment in real estate (  Note 7  ). Amount for the six months ended June 30,
2021 includes a non-cash other-than-temporary impairment charge of $6.8 million
recognized on an equity method investment in real estate (  Note 8  ).
(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 exchange
rate movements, as well as non-cash allowance for credit losses on loans
receivable and direct financing leases.
(e)Amounts for the three and six months ended June 30, 2022 and 2021 are
primarily comprised of costs incurred in connection with the Proposed Merger
(  Note 1  ) and/or reversals of estimated liabilities for German real estate
transfer taxes that were previously recorded in connection with mergers in prior
years.

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

                                                 W. P. Carey 6/30/2022 10-Q - 64

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

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