10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period endedJune 30, 2018

or

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

For the transition period from to

Commission File Number: 000-52891

CORPORATE PROPERTY ASSOCIATES 17 – GLOBAL INCORPORATED

(Exact name of registrant as specified in its charter)

Maryland	20-8429087
(State of incorporation)	(I.R.S. Employer Identification No.)
50 Rockefeller Plaza
New York, New York	10020
(Address of principal executive offices)	(Zip Code)

Investor Relations (212) 492-8920

(212) 492-1100

(Registrant’s telephone numbers, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

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

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

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

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

Registrant has 352,922,031 shares of common stock, $0.001 par value, outstanding at August 3, 2018.

INDEX

		Page No.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
	Consolidated Balance Sheets	2
	Consolidated Statements of Income	3
	Consolidated Statements of Comprehensive (Loss) Income	4
	Consolidated Statements of Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		36
Item 3. Quantitative and Qualitative Disclosures About Market Risk		62
Item 4. Controls and Procedures		65
PART II — OTHER INFORMATION
Item 1A. Risk Factors		66
Item 2. Unregistered Sales of Equity Securities		67
Item 6. Exhibits		68
Signatures		69

Forward-Looking Statements

This Quarterly Report on Form 10-Q, or this Report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of Part I of this Report, contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements include, but are not limited to, statements regarding: the Proposed Merger discussed herein, including the impact thereof; the amount and timing of any future dividends; statements regarding our corporate strategy and underlying assumptions about our portfolio (e.g. occupancy rate, lease terms, and tenant credit quality, including our expectations about tenant bankruptcies and interest coverage), possible new acquisitions and dispositions, and our international exposure and acquisition volume; our future capital expenditure levels, including any plans to fund our future liquidity needs, and future leverage and debt service obligations; our capital structure; statements that we make regarding our ability to remain qualified for taxation as a real estate investment trust, or REIT, and the recently adopted Tax Cuts and Jobs Act in the United States; the impact of recently issued accounting pronouncements; other regulatory activity, such as the General Data Protection Regulation in the European Union or other data privacy initiatives; and the general economic outlook. These statements are based on the current expectations of our management. It is important to note that our actual results could be materially different from those projected in such forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on our business, financial condition, liquidity, results of operations, Modified funds from operations, or MFFO, and prospects. You should exercise caution in relying on forward-looking statements as they involve known and unknown risks, uncertainties, and other factors that may materially affect our future results, performance, achievements, or transactions. Information on factors that could impact actual results and cause them to differ from what is anticipated in the forward-looking statements contained herein is included in this Report as well as in our other filings with the Securities and Exchange Commission, or the SEC, including but not limited to those described in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC on March 15, 2018, or the 2017 Annual Report and in Part II, Item 1A. Risk Factors herein. Moreover, because we operate in a very competitive and rapidly changing environment, new risks are likely to emerge from time to time. Given these risks and uncertainties, shareholders are cautioned not to place undue reliance on these forward-looking statements as a prediction of future results, which speak only as of the date of this Report, unless noted otherwise. Except as required by federal securities laws and the rules and regulations of the SEC, we do not undertake to revise or update any forward-looking statements.

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

CPA:17 – Global 6/30/2018 10-Q – 1

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

CORPORATE PROPERTY ASSOCIATES 17 – GLOBAL INCORPORATED

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share amounts)

	June 30, 2018			December 31, 2017
Assets
Investments in real estate:
Real estate — Land, buildings and improvements	$	2,760,620		$	2,772,611
Operating real estate — Land, buildings and improvements	348,710			340,772
Net investments in direct financing leases	501,539			509,228
In-place lease intangible assets	623,441			629,961
Other intangible assets	109,342			111,004
Investments in real estate	4,343,652			4,363,576
Accumulated depreciation and amortization	(672,274		)	(626,655		)
Assets held for sale, net	3,189			—
Net investments in real estate	3,674,567			3,736,921
Equity investments in real estate	397,896			409,254
Cash and cash equivalents	90,994			119,094
Accounts receivable and other assets, net	306,767			322,201
Total assets	$	4,470,224		$	4,587,470
Liabilities and Equity
Debt:
Mortgage debt, net	$	1,811,822		$	1,849,459
Senior credit facility, net	85,974			101,931
Debt, net	1,897,796			1,951,390
Accounts payable, accrued expenses and other liabilities	130,314			132,751
Below-market rent and other intangible liabilities, net	58,960			61,222
Deferred income taxes	26,983			30,524
Due to affiliates	9,510			11,467
Distributions payable	57,349			56,859
Total liabilities	2,180,912			2,244,213
Commitments and contingencies (Note 11)
Preferred stock, $0.001 par value; 50,000,000 shares authorized; none issued	—			—
Common stock, $0.001 par value; 900,000,000 shares authorized; and 352,910,073 and 349,899,827 shares, respectively, issued and outstanding	353			349
Additional paid-in capital	3,207,178			3,174,786
Distributions in excess of accumulated earnings	(921,427		)	(861,319		)
Accumulated other comprehensive loss	(102,802		)	(78,420		)
Total stockholders’ equity	2,183,302			2,235,396
Noncontrolling interests	106,010			107,861
Total equity	2,289,312			2,343,257
Total liabilities and equity	$	4,470,224		$	4,587,470

See Notes to Consolidated Financial Statements.

CPA:17 – Global 6/30/2018 10-Q – 2

CORPORATE PROPERTY ASSOCIATES 17 – GLOBAL INCORPORATED

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except share and per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Revenues
Lease revenues:
Rental income	$	74,179		$	71,754		$	148,870		$	163,008
Interest income from direct financing leases	14,668			14,581			29,308			29,277
Total lease revenues	88,847			86,335			178,178			192,285
Operating real estate income	11,786			9,575			23,999			18,912
Other interest income	5,003			3,151			9,566			4,891
Other operating income	4,190			7,452			11,365			13,430
	109,826			106,513			223,108			229,518
Operating Expenses
Depreciation and amortization	27,781			28,063			56,231			58,882
Property expenses	24,386			20,725			47,423			37,330
Operating real estate expenses	8,912			3,427			16,529			6,779
Impairment charges and other credit losses	6,168			—			11,572			4,519
General and administrative	3,419			3,806			6,538			7,376
Merger and other expenses	2,300			(440		)	2,357			310
	72,966			55,581			140,650			115,196
Other Income and Expenses
Interest expense	(20,801		)	(21,453		)	(41,351		)	(44,843		)
Equity in earnings of equity method investments in real estate	11,145			2,270			15,828			4,255
Other gains and (losses)	1,168			10,273			5,171			15,930
Loss on extinguishment of debt	—			(353		)	—			(1,967		)
	(8,488		)	(9,263		)	(20,352		)	(26,625		)
Income before income taxes and gain on sale of real estate	28,372			41,669			62,106			87,697
(Provision for) benefit from income taxes	(1,071		)	(1,115		)	332			(1,736		)
Income before gain on sale of real estate, net of tax	27,301			40,554			62,438			85,961
Gain on sale of real estate, net of tax	—			1,171			24			2,910
Net Income	27,301			41,725			62,462			88,871
Net income attributable to noncontrolling interests (inclusive of Available Cash Distributions to a related party of $5,185, $6,971, $11,355 and $13,781, respectively)	(7,746		)	(10,919		)	(16,170		)	(20,054		)
Net Income Attributable to CPA:17 – Global	$	19,555		$	30,806		$	46,292		$	68,817
Basic and Diluted Earnings Per Share	$	0.06		$	0.09		$	0.13		$	0.20
Basic and Diluted Weighted-Average Shares Outstanding	353,824,796			347,672,836			352,966,643			346,739,936
Distributions Declared Per Share	$	0.1625		$	0.1625		$	0.3250		$	0.3250

See Notes to Consolidated Financial Statements.

CPA:17 – Global 6/30/2018 10-Q – 3

CORPORATE PROPERTY ASSOCIATES 17 – GLOBAL INCORPORATED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net Income	$	27,301		$	41,725		$	62,462		$	88,871
Other Comprehensive (Loss) Income
Foreign currency translation adjustments	(54,804		)	50,309			(27,869		)	58,918
Change in net unrealized gain (loss) on derivative instruments	5,365			(10,139		)	3,033			(12,692		)
Change in unrealized gain on marketable investments	—			1			—			31
	(49,439		)	40,171			(24,836		)	46,257
Comprehensive (Loss) Income	(22,138		)	81,896			37,626			135,128
Amounts Attributable to Noncontrolling Interests
Net income	(7,746		)	(10,919		)	(16,170		)	(20,054		)
Foreign currency translation adjustments	1,001			(1,122		)	454			(1,381		)
Comprehensive income attributable to noncontrolling interests	(6,745		)	(12,041		)	(15,716		)	(21,435		)
Comprehensive (Loss) Income Attributable to CPA:17 – Global	$	(28,883	)	$	69,855		$	21,910		$	113,693

See Notes to Consolidated Financial Statements.

CPA:17 – Global 6/30/2018 10-Q – 4

CORPORATE PROPERTY ASSOCIATES 17 – GLOBAL INCORPORATED

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

Six Months EndedJune 30, 2018 and 2017

(in thousands, except share and per share amounts)

	CPA:17 – Global
	Total Outstanding Shares		Common Stock			Additional Paid-In Capital			Distributions in Excess of Accumulated Earnings			Accumulated Other Comprehensive Loss			Total CPA:17 – Global Stockholders			Noncontrolling Interests			Total
Balance at January 1, 2018	349,899,827		$	349		$	3,174,786		$	(861,319	)	$	(78,420	)	$	2,235,396		$	107,861		$	2,343,257
Cumulative-effect adjustment for the adoption of new accounting pronouncement (Note 2)									8,068						8,068						8,068
Shares issued	4,980,676		5			50,175									50,180						50,180
Shares issued to affiliates	1,484,554		2			14,920									14,922						14,922
Distributions declared ($0.3250 per share)									(114,468		)				(114,468		)				(114,468		)
Distributions to noncontrolling interests															—			(18,273		)	(18,273		)
Contributions from noncontrolling interests															—			706			706
Net income									46,292						46,292			16,170			62,462
Other comprehensive loss:
Foreign currency translation adjustments												(27,415		)	(27,415		)	(454		)	(27,869		)
Realized and unrealized gain on derivative instruments												3,033			3,033						3,033
Repurchase of shares	(3,454,984	)	(3		)	(32,703		)							(32,706		)				(32,706		)
Balance at June 30, 2018	352,910,073		$	353		$	3,207,178		$	(921,427	)	$	(102,802	)	$	2,183,302		$	106,010		$	2,289,312
Balance at January 1, 2017	343,575,840		$	343		$	3,106,456		$	(732,613	)	$	(156,676	)	$	2,217,510		$	97,494		$	2,315,004
Shares issued	5,059,937		6			51,475									51,481						51,481
Shares issued to affiliates	1,316,699		1			13,326									13,327						13,327
Distributions declared ($0.3250 per share)									(112,531		)				(112,531		)				(112,531		)
Distributions to noncontrolling interests															—			(20,468		)	(20,468		)
Net income									68,817						68,817			20,054			88,871
Other comprehensive income:
Foreign currency translation adjustments												57,537			57,537			1,381			58,918
Realized and unrealized loss on derivative instruments												(12,692		)	(12,692		)				(12,692		)
Change in unrealized gain on marketable investments												31			31						31
Repurchase of shares	(2,955,998	)	(3		)	(27,997		)							(28,000		)				(28,000		)
Balance at June 30, 2017	346,996,478		$	347		$	3,143,260		$	(776,327	)	$	(111,800	)	$	2,255,480		$	98,461		$	2,353,941

See Notes to Consolidated Financial Statements.

CPA:17 – Global 6/30/2018 10-Q – 5

CORPORATE PROPERTY ASSOCIATES 17 – GLOBAL INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Six Months Ended June 30,
	2018			2017
Cash Flows — Operating Activities
Net Cash Provided by Operating Activities	$	138,594		$	119,304
Cash Flows — Investing Activities
Funding for build-to-suit projects and expansions	(16,256		)	(9,197		)
Return of capital from equity investments in real estate	12,670			26,278
Capital contributions to equity investments in real estate	(6,410		)	(149,074		)
Capital expenditures on owned real estate	(2,143		)	(1,425		)
Proceeds from insurance settlements	1,874			—
Payment of deferred acquisition fees to an affiliate	(1,671		)	(1,979		)
Acquisitions of real estate and direct financing leases	(1,333		)	(11,439		)
Other investing activities, net	975			1,014
Value added taxes paid in connection with acquisition of real estate	(885		)	(1,792		)
Proceeds from sale of real estate	—			111,279
Proceeds from repayment of preferred equity interest	—			27,000
Value added taxes refunded in connection with acquisition of real estate	—			5,412
Net Cash Used in Investing Activities	(13,179		)	(3,923		)
Cash Flows — Financing Activities
Distributions paid	(113,978		)	(111,973		)
Proceeds from issuance of shares	50,180			51,481
Repurchase of shares	(32,706		)	(28,000		)
Repayments of Senior Credit Facility	(29,471		)	(40,677		)
Scheduled payments and prepayments of mortgage principal	(23,966		)	(329,641		)
Distributions to noncontrolling interests	(18,273		)	(20,468		)
Proceeds from Senior Credit Facility	13,590			67,261
Contributions from noncontrolling interests	706			—
Payment of financing costs and mortgage deposits, net of deposits refunded	(11		)	(966		)
Proceeds from mortgage financing	—			178,695
Other financing activities, net	—			(612		)
Net Cash Used in Financing Activities	(153,929		)	(234,900		)
Change in Cash and Cash Equivalents and Restricted Cash During the Period
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(1,632		)	6,392
Net decrease in cash and cash equivalents and restricted cash	(30,146		)	(113,127		)
Cash and cash equivalents and restricted cash, beginning of period	145,108			300,153
Cash and cash equivalents and restricted cash, end of period	$	114,962		$	187,026

See Notes to Consolidated Financial Statements.

CPA:17 – Global 6/30/2018 10-Q – 6

CORPORATE PROPERTY ASSOCIATES 17 – GLOBAL INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Organization

Corporate Property Associates 17 – Global Incorporated, or CPA:17 – Global, and together with its consolidated subsidiaries, we, us, or our, is a publicly owned REIT that invests primarily in commercial real estate properties leased to companies both domestically and internationally. We were formed in 2007 and are managed by W. P. Carey Inc., or WPC, through one of its subsidiaries, or collectively our Advisor. As a REIT, we are not subject to U.S. federal income taxation as long as we satisfy certain requirements, principally relating to the nature of our income and the level of our distributions, among other factors. We earn revenue primarily by leasing the properties we own to single corporate tenants, predominantly on a triple-net lease basis, which requires the tenant to pay substantially all of the costs associated with operating and maintaining the property. Revenue is subject to fluctuation due to the timing of new lease transactions, lease terminations, lease expirations, contractual rent adjustments, tenant defaults, sales of properties, and changes in foreign currency exchange rates.

Substantially all of our assets and liabilities are held by CPA:17 Limited Partnership, or the Operating Partnership, and at June 30, 2018, we owned 99.99% of general and limited partnership interests in the Operating Partnership. The remaining interest in the Operating Partnership is held by a subsidiary of WPC.

At June 30, 2018, our portfolio was comprised of full or partial ownership interests in 411 properties, substantially all of which were fully-occupied and triple-net leased to 114 tenants, and totaled approximately 44.4 million square feet with a weighted-average lease term of 11.3 years and an occupancy rate of 99.7%. In addition, our portfolio was comprised of full or majority ownership interests in 38 operating properties, including 37 self-storage properties and one hotel property, for an aggregate of approximately 2.7 million square feet.

We operate in two reportable business segments: Net Lease and Self Storage. Our Net Lease segment includes our domestic and foreign investments in net-leased properties, whether they are accounted for as operating or direct financing leases. Our Self Storage segment is comprised of our investments in self-storage properties. In addition, we have investments in loans receivable, commercial mortgage-backed securities, or CMBS, one hotel, and certain other properties, which are included in our All Other category (Note 14). Our reportable business segments and All Other category are the same as our reporting units.

We raised aggregate gross proceeds of approximately $2.9 billion from our initial public offering, which closed in April 2011, and our follow-on offering, which closed in January 2013. We have fully invested the proceeds from our initial and follow-on public offerings. In addition, from inception through June 30, 2018, $726.2 million of distributions to our shareholders were reinvested in our common stock through our Distribution Reinvestment Plan, or DRIP.

On June 17, 2018, we entered into a merger agreement with WPC and certain of its subsidiaries, or the Merger Agreement, pursuant to which we will merge with and into one of WPC’s subsidiaries, or the Proposed Merger. If the Proposed Merger is consummated, our stockholders will receive a fixed exchange ratio of 0.160 shares of WPC common stock for each share of our common stock. See Note 3 for additional information on the Proposed Merger.

Note 2. Basis of Presentation

Basis of Presentation

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

In the opinion of management, the unaudited financial information for the interim periods presented in this Report reflects all normal and recurring adjustments necessary for a fair statement of financial position, results of operations, and cash flows. Our interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for the year ended December 31, 2017, which are included in the 2017 Annual Report, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this Report. Operating results for interim periods are not necessarily indicative of operating results for an entire year.

CPA:17 – Global 6/30/2018 10-Q – 7

Notes to Consolidated Financial Statements (Unaudited)

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

Basis of Consolidation

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

When we obtain an economic interest in an entity, we evaluate the entity to determine if it should be deemed a variable interest entity, or VIE, and, if so, whether we are the primary beneficiary and are therefore required to consolidate the entity. We apply accounting guidance for consolidation of VIEs to certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Fixed price purchase and renewal options within a lease, as well as certain decision-making rights within a loan or joint-venture agreement, can cause us to consider an entity a VIE. Limited partnerships and other similar entities that operate as a partnership will be considered a VIE unless the limited partners hold substantive kick-out rights or participation rights. Significant judgment is required to determine whether a VIE should be consolidated. We review the contractual arrangements provided for in the partnership agreement or other related contracts to determine whether the entity is considered a VIE, and to establish whether we have any variable interests in the VIE. We then compare our variable interests, if any, to those of the other variable interest holders to determine which party is the primary beneficiary of the VIE based on whether the entity (i) has the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The liabilities of these VIEs are non-recourse to us and can only be satisfied from each VIE’s respective assets.

At both June 30, 2018 and December 31, 2017, we considered 21 entities VIEs, nine of which we consolidated as we are considered the primary beneficiary and one of which we accounted for as a loan receivable. The following table presents a summary of selected financial data of the consolidated VIEs, included in the consolidated balance sheets (in thousands):

	June 30, 2018			December 31, 2017
Real estate — Land, buildings and improvements	$	98,620		$	109,426
Operating real estate — Land, buildings and improvements	88,167			80,658
Net investments in direct financing leases	311,466			312,234
In-place lease intangible assets	8,501			8,650
Accumulated depreciation and amortization	(22,883		)	(26,395		)
Assets held for sale, net	3,189			—
Accounts receivable and other assets, net	65,752			73,620
Total assets	559,152			567,929
Mortgage debt, net	$	102,979		$	104,213
Accounts payable, accrued expenses and other liabilities	11,916			12,693
Deferred income taxes	10,251			12,374
Total liabilities	125,509			129,662

At both June 30, 2018 and December 31, 2017, we had 11 unconsolidated VIEs, all of which we account for under the equity method of accounting. We do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities allows us to exercise significant influence on, but does not give us power over, decisions that significantly affect the economic performance of these entities. As of June 30, 2018 and December 31, 2017, the net carrying amount of our investments in these entities was $275.4 million and $282.0 million, respectively, and our maximum exposure to loss in these entities was limited to our investments.

CPA:17 – Global 6/30/2018 10-Q – 8

Notes to Consolidated Financial Statements (Unaudited)

At both June 30, 2018 and December 31, 2017, we had an investment in a tenancy-in-common interest in a portfolio of international properties. Consolidation of this investment is not required as such interest does not qualify as a VIE and does not meet the control requirement for consolidation. Accordingly, we account for this investment using the equity method of accounting. We use the equity method of accounting because the shared decision-making involved in a tenancy-in-common interest investment provides us with significant influence on the operating and financial decisions of this investment.

At times, the carrying value of our equity investments may fall below zero for certain investments. We intend to fund our share of the jointly owned investments’ future operating deficits should the need arise. However, we have no legal obligation to pay for any of the liabilities of such investments nor do we have any legal obligation to fund operating deficits. At both June 30, 2018 and December 31, 2017, none of our equity investments had carrying values below zero.

Accounting Policy Update

Distributions from Equity Method Investments — We classify distributions received from equity method investments using the cumulative earnings approach. Distributions received are considered returns on the investment and classified as cash inflows from operating activities. If, however, the investor’s cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earning recognized, the excess is considered a return of investment and is classified as inflows from investing activities.

Reclassifications

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

Restricted Cash — In connection with our adoption of Accounting Standards Update, or ASU, 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, as described below, we revised our condensed consolidated statements of cash flows to include restricted cash when reconciling the beginning-of-period and end-of-period cash amounts shown on the statement of cash flows. As a result, we retrospectively revised prior periods presented to conform to the current period presentation. Restricted cash primarily consists of security deposits and amounts required to be reserved pursuant to lender agreements for debt service, capital improvements and real estate taxes.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total presented in the consolidated statement of cash flows.

	June 30, 2018		December 31, 2017
Cash and cash equivalents	$	90,994	$	119,094
Restricted cash (a)	23,968		26,014
Total cash and cash equivalents, and restricted cash	$	114,962	$	145,108

__________

(a) Restricted cash is included within Accounts receivable and other assets, net on our consolidated balance sheet.

Recent Accounting Pronouncements

Pronouncements Adopted as of June 30, 2018

In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 does not apply to our lease revenues, which constitute a majority of our revenues, but will primarily apply to revenues generated from our operating properties. We adopted this guidance for our interim and annual periods beginning January 1, 2018 using the modified retrospective method applied to any contracts not completed as of that date. There were no changes to the prior period presentations of revenue. Results of operations for reporting periods beginning January 1, 2018 are presented under Topic 606. The adoption of Topic 606 did not have a material impact on our consolidated financial statements.

CPA:17 – Global 6/30/2018 10-Q – 9

Notes to Consolidated Financial Statements (Unaudited)

Revenue is recognized when, or as, control of promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. At contract inception, we assess the services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, we consider all of the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

Revenue from contracts with customers primarily represents Operating real estate income of $11.8 million and $9.6 million for the three months ended June 30, 2018 and 2017, respectively, and $24.0 million and $18.9 million for the six months ended June 30, 2018 and 2017, respectively. Operating real estate income is primarily comprised of revenues from our self-storage portfolio as well as room rentals and food and beverage services at our hotel. We identified a single performance obligation for each distinct service. Performance obligations are typically satisfied at a point in time, at the time of sale, or at the rendering of the service. Fees are generally determined to be fixed. Payment is typically due immediately following the delivery of the service.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 requires all equity investments (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value, with changes in the fair value recognized through net income. We adopted this guidance for our interim and annual periods beginning January 1, 2018. The adoption of ASU 2016-01 did not have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 intends to reduce diversity in practice for certain cash flow classifications, including, but not limited to (i) debt prepayment or debt extinguishment costs, (ii) contingent consideration payments made after a business combination, (iii) proceeds from the settlement of insurance claims, and (iv) distributions received from equity method investees. We retrospectively adopted this guidance for our interim and annual periods beginning January 1, 2018. As a result, we reclassified debt extinguishment costs from net cash provided by operating activities to net cash used in financing activities on the condensed consolidated statement of cash flows for the six months ended June 30, 2017. The adoption of ASU 2016-15 did not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 intends to reduce diversity in practice for the classification and presentation of changes in restricted cash on the statement of cash flows. ASU 2016-18 requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We adopted ASU 2016-18 on January 1, 2018 and have retrospectively applied this standard to our condensed consolidated statements of cash flows for the six months ended June 30, 2018 and 2017. See Restricted Cash above for additional information.

In February 2017, the FASB issued ASU 2017-05, Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20). ASU 2017-05 clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments define the term “in substance nonfinancial asset,” in part, as a financial asset promised to a counterparty in a contract if substantially all of the fair value of the assets (recognized and unrecognized) that are promised to the counterparty in the contract is concentrated in nonfinancial assets. If substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets, then all of the financial assets promised to the counterparty are in substance nonfinancial assets within the scope of Subtopic 610-20. This amendment also clarifies that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent company may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. We adopted this guidance for our interim and annual periods beginning January 1, 2018 and applied the modified retrospective transition method (applicable to any contracts not completed as of that date). Results of operations for reporting periods beginning January 1, 2018 are presented under Subtopic 610-20, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for those periods.

CPA:17 – Global 6/30/2018 10-Q – 10

Notes to Consolidated Financial Statements (Unaudited)

As of January 1, 2018, there was one open contract, which was related to the I-drive Property disposition and I-drive Wheel restructuring (Note 13). On March 17, 2017, the developer exercised its purchase option and acquired the entertainment complex, which we refer to as the I-drive Property. The gain on sale was deferred during the first quarter of 2017 and was expected to be recognized in income upon recovery of the cost of the I-drive Property through the receipt of principal payments received on the mezzanine loan. As a result of the adoption of ASU 2017-05, we recognized a cumulative effect adjustment to the opening balance of stockholders’ equity and a reduction to Accounts payable, accrued expenses and other liabilities as of January 1, 2018 equal to the total gain on sale of the Property of $2.1 million that was previously deferred.

In addition to the sale of the I-drive Property, we restructured the $50.0 million loan, referred to as the I-drive Wheel Loan, to fund the construction of an observation wheel, which we refer to as the I-drive Wheel. This resulted in the elimination of our participation in the expected residual profits, with the loan no longer qualifying as an acquisition, development and construction of real estate arrangement, or ADC Arrangement, pursuant to the equity method of accounting. The gain recognized upon restructuring of the I-drive Wheel Loan of $16.4 million was deferred during 2017. As a result of the adoption of ASU 2017-05, the loan restructuring is now recognized as a receivable purchased at a discount of $18.6 million (which represents the carrying value of the ADC Arrangement upon restructuring on March 17, 2017) and will accrete up to the fair value of the loan in the amount of $35.0 million until maturity in December 2018. Accordingly, as of January 1, 2018, we recognized (i) a reduction of $16.4 million to Accounts payable, accrued expenses and other liabilities, (ii) a reduction of $10.4 million to Accounts receivable and other assets, net and (iii) an adjustment to the opening balance of stockholders’ equity for the accretion of the loan related to prior periods, using the effective interest method, of $6.0 million.

Pronouncements to be Adopted after June 30, 2018

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 modifies the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract, the lessee and the lessor. ASU 2016-02 provides new guidelines that change the accounting for leasing arrangements for lessees, whereby their rights and obligations under substantially all leases, existing and new, would be capitalized and recorded on the balance sheet. For lessors, however, the accounting remains largely equivalent to the current model, with the distinction between operating, sales-type, and direct financing leases retained, but updated to align with certain changes to the lessee model and the new revenue recognition standard. ASU 2016-02 also replaces existing sale-leaseback guidance with a new model that requires symmetrical accounting between the seller-lessee and buyer-lessor. Additionally, ASU 2016-02 requires lessors to record costs paid directly by a lessee on behalf of a lessor (e.g., real estate taxes and insurance costs) on a gross basis and will require extensive quantitative and qualitative disclosures.

Early application is permitted for all entities. ASU 2016-02 provides two transition methods. The first transition method allows for application of the new model at the beginning of the earliest comparative period presented. Under the second transition method, comparative periods would not be restated, with any cumulative effect adjustments recognized in the opening balance of retained earnings in the period of adoption. In addition, a practical expedient was recently issued by the FASB, which allows for lessors to combine non-lease components with related lease components if certain conditions are met. Further, in March 2018, the FASB approved, but has not yet finalized or issued, an update to allow lessors to make a policy election to record certain costs (e.g., insurance) paid directly by the lessee net, if the uncertainty regarding these variable amounts is not expected to ultimately be resolved. We will adopt this guidance for our interim and annual periods beginning January 1, 2019 and expect to use the second transition method. ASU 2016-02 is expected to impact our consolidated financial statements as we have certain operating office and land lease arrangements for which we are the lessee and also certain lease arrangements that include common area maintenance services (non-lease components) where we are the lessor. We are evaluating the impact of ASU 2016-02 and have not yet determined if it will have a material impact on our business or our consolidated financial statements.

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

CPA:17 – Global 6/30/2018 10-Q – 11

Notes to Consolidated Financial Statements (Unaudited)

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess hedge effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. ASU 2017-12 will be effective in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are in the process of evaluating the impact of adopting ASU 2017-12 on our consolidated financial statements, and expect to adopt the standard for the fiscal year beginning January 1, 2019.

Note 3. Agreements and Transactions with Related Parties

Transactions with Our Advisor

We have an advisory agreement with our Advisor whereby our Advisor performs certain services for us under a fee arrangement, including the identification, evaluation, negotiation, purchase, and disposition of real estate and related assets and mortgage loans; day-to-day management; and the performance of certain administrative duties. We also reimburse our Advisor for general and administrative duties performed on our behalf. The advisory agreement has a term of one year and may be renewed for successive one-year periods. We may terminate the advisory agreement upon 60 days’ written notice without cause or penalty.

The following tables present a summary of fees we paid, expenses we reimbursed, and distributions we made to our Advisor and other affiliates in accordance with the relevant agreements (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Amounts Included in the Consolidated Statements of Income
Asset management fees	$	7,493	$	7,339	$	14,985	$	14,664
Available Cash Distributions	5,185		6,971		11,355		13,781
Personnel and overhead reimbursements	1,826		2,310		3,591		4,601
Interest expense on deferred acquisition fees	60		68		124		132
Director compensation	40		53		80		106
	$	14,604	$	16,741	$	30,135	$	33,284
Advisor Fees Capitalized
Current acquisition fees	$	127	$	3,537	$	130	$	3,823
Deferred acquisition fees	101		2,829		104		3,058
Personnel and overhead reimbursements	—		379		50		486
	$	228	$	6,745	$	284	$	7,367

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

	June 30, 2018		December 31, 2017
Due to Affiliates
Deferred acquisition fees, including interest	$	4,771	$	6,564
Asset management fees payable	2,498		2,435
Reimbursable costs	2,078		2,162
Accounts payable	163		175
Current acquisition fees	—		131
	$	9,510	$	11,467

CPA:17 – Global 6/30/2018 10-Q – 12

Notes to Consolidated Financial Statements (Unaudited)

Acquisition and Disposition Fees

We pay our Advisor acquisition fees for structuring and negotiating investments and related mortgage financing on our behalf, a portion of which is payable upon acquisition of investments, with the remainder subordinated to the achievement of a preferred return, which is a non-compounded cumulative distribution of 5.0% per annum (based initially on our invested capital). Acquisition fees payable to our Advisor with respect to our long-term, net-leased investments are 4.5% of the total cost of those investments and are comprised of a current portion of 2.5%, typically paid upon acquisition, and a deferred portion of 2.0%, typically paid over three years and subject to the 5.0% preferred return described above. The preferred return was achieved as of each of the cumulative periods ended June 30, 2018 and December 31, 2017. For certain types of non-long term net-leased investments, initial acquisition fees are between 1.0% and 1.75% of the equity invested plus the related acquisition fees, with no portion of the payment being deferred. Unpaid installments of deferred acquisition fees are included in Due to affiliates in the consolidated financial statements. Unpaid installments of deferred acquisition fees bear interest at an annual rate of 5.0%. The cumulative total acquisition costs, including acquisition fees paid to our Advisor, may not exceed 6.0% of the aggregate contract purchase price of all investments, which is measured at the end of each year. Our cumulative total acquisition costs have not exceeded the amount that would require our Advisor to reimburse us.

Our Advisor may be entitled to receive a disposition fee equal to the lesser of (i) 50.0% of the competitive real estate commission (as defined in the advisory agreement) or (ii) 3.0% of the contract sales price of the investment being sold; however, payment of such fees is subordinated to the 5.0% preferred return. These fees are payable at the discretion of our board of directors.

Asset Management Fees

As described in the advisory agreement, we pay our Advisor asset management fees that vary based on the nature of the underlying investment. We pay 0.5% per annum of average market value for long-term net leases and certain other types of real estate investments, and 1.5% to 1.75% per annum of average equity value for certain types of securities. Asset management fees are payable in cash and/or shares of our common stock at our option, after consultation with our Advisor. If our Advisor receives all or a portion of its fees in shares, the number of shares issued is determined by dividing the dollar amount of fees by our most recently published estimated net asset value per share, or NAV, which was $10.04 as of December 31, 2017. Through May 31, 2018, all asset management fees earned by the Advisor were payable in shares of our common stock. In light of the Proposed Merger, in June 2018 our board of directors approved the payment of all asset management fees in cash instead of shares of our common stock, effective as of June 1, 2018. At June 30, 2018, our Advisor owned 16,131,967 shares (4.6%) of our common stock. Asset management fees are included in Property expenses in the consolidated financial statements.

Available Cash Distributions

WPC’s interest in the Operating Partnership entitles it to receive distributions of up to 10.0% of available cash generated by the Operating Partnership, referred to as the Available Cash Distribution, which is defined as cash generated from operations, excluding capital proceeds, as reduced by operating expenses and debt service, excluding prepayments and balloon payments. Available Cash Distributions are included in Net income attributable to noncontrolling interests in the consolidated financial statements.

Personnel and Overhead Reimbursements

Under the terms of the advisory agreement, our Advisor allocates a portion of its personnel and overhead expenses to us and the other entities that are managed by our Advisor, including Corporate Property Associates 18 – Global Incorporated, or CPA:18 – Global; Carey Watermark Investors Incorporated; Carey Watermark Investors 2 Incorporated; and Carey European Student Housing Fund I, L.P.; collectively referred to as the Managed Programs. Our Advisor also allocated a portion of its personnel and overhead expenses to Carey Credit Income Fund (now known as Guggenheim Credit Income Fund) prior to September 11, 2017, which was the effective date of its resignation as the advisor to that fund. Our Advisor allocates these expenses to us on the basis of our trailing four quarters of reported revenues in comparison to those of WPC and other entities managed by WPC and its affiliates.

We reimburse our Advisor for various expenses it incurs in the course of providing services to us. We reimburse certain third-party expenses paid by our Advisor on our behalf, including property-specific costs, professional fees, office expenses, and business development expenses. In addition, we reimburse our Advisor for the allocated costs of personnel and overhead in managing our day-to-day operations, including accounting services, stockholder services, corporate management, and property management and operations. We do not reimburse our Advisor for the cost of personnel if these personnel provide services for

CPA:17 – Global 6/30/2018 10-Q – 13

Notes to Consolidated Financial Statements (Unaudited)

transactions for which our Advisor receives a transaction fee, such as for acquisitions and dispositions. Under the advisory agreement, the amount of applicable personnel costs allocated to us is capped at 1.0% and 2.0% for 2018 and 2017, respectively, of pro rata lease revenues for each year. Costs related to our Advisor’s legal transactions group are based on a schedule of expenses relating to services performed for different types of transactions, such as financings, lease amendments, and dispositions, among other categories, and includes 0.25% of the total investment cost of an acquisition. In general, personnel and overhead reimbursements are included in General and administrative expenses in the consolidated financial statements. However, we capitalize certain of the costs related to our Advisor’s legal transactions group if the costs relate to a transaction that is not considered to be a business combination.

Excess Operating Expenses

Our Advisor is obligated to reimburse us for the amount by which our operating expenses exceeds the “2%/25% guidelines” (the greater of 2% of average invested assets or 25% of net income) as defined in the advisory agreement for any 12-month period, subject to certain conditions. For the most recent trailing four quarters, our operating expenses were below this threshold.

Proposed Merger

On June 17, 2018, we entered into the Merger Agreement with WPC and certain of its subsidiaries, pursuant to which we will merge with and into one of WPC’s subsidiaries. If the Proposed Merger is consummated, each share of our issued and outstanding common stock (excluding shares held by WPC and its subsidiaries) will be canceled and, in exchange for cancellation of such share, the rights attaching to such share will be converted automatically into the right to receive 0.160 shares of WPC common stock. All stockholders that are entitled to receive fractional shares of WPC will receive cash in lieu of such fractional shares.

On July 27, 2018 WPC filed a registration statement on Form S-4, which is currently under review by the SEC, to register the shares of its common stock to be issued to our stockholders in connection with the Proposed Merger. The Form S-4 includes a joint proxy statement that we intend to mail to our stockholders in connection with the Proposed Merger. The Proposed Merger and related transactions are subject to a number of closing conditions, including approvals by our stockholders and the stockholders of WPC. If these approvals are obtained and the other closing conditions are met, we currently expect the Proposed Merger to close at or around December 31, 2018, although there can be no assurance that the transaction will close at that time or at all.

Under the terms of the Merger Agreement, a special committee composed of our independent directors was permitted to solicit, receive, evaluate, and enter into negotiations with respect to alternative proposals from third parties through July 18, 2018. There were no qualifying proposals received through that date.

In light of the Proposed Merger, in June 2018, our board of directors suspended our DRIP, as well as repurchases of shares of our common stock from our stockholders under our quarterly discretionary redemption plan, except for special circumstance redemptions.

During the three and six months ended June 30, 2018, we have incurred expenses related to the Proposed Merger totaling approximately $2.3 million, which is included in Merger and other expenses in our consolidated financial statements. Further details concerning the Proposed Merger are described in a Form 8-K that we filed with the SEC on June 18, 2018.

Jointly Owned Investments and Other Transactions with Affiliates

At June 30, 2018, we owned interests ranging from 6% to 97% in jointly owned investments, with the remaining interests held by affiliates or by third parties. We consolidate certain of these investments and account for the remainder under the equity method of accounting. We also owned an interest in a jointly controlled tenancy-in-common interest in several properties, which we account for under the equity method of accounting (Note 6). At December 31, 2017, we had $0.2 million due from an affiliate primarily related to one of our jointly owned investments, which has since been repaid.

CPA:17 – Global 6/30/2018 10-Q – 14

Notes to Consolidated Financial Statements (Unaudited)

Note 4. Real Estate, Operating Real Estate and Assets Held for Sale

Real Estate — Land, Buildings and Improvements

Real estate, which consists of land and buildings leased to others, at cost, and which are subject to operating leases, is summarized as follows (in thousands):

	June 30, 2018			December 31, 2017
Land	$	557,277		$	567,113
Buildings and improvements	2,175,385			2,200,901
Real estate under construction (a)	27,958			4,597
Less: Accumulated depreciation	(377,967		)	(354,668		)
	$	2,382,653		$	2,417,943

__________

(a) Amount as of June 30, 2018 includes accrued capitalized costs of $13.3 million.

During the six months ended June 30, 2018, the U.S. dollar strengthened against the euro, as the end-of-period rate for the U.S. dollar in relation to the euro decreased by 2.8% to $1.1658 from $1.1993. As a result, the carrying value of our real estate decreased by $32.8 million from December 31, 2017 to June 30, 2018.

Depreciation expense, including the effect of foreign currency translation, on our real estate was $16.5 million and $15.9 million for the three months ended June 30, 2018 and 2017, respectively and $33.8 million and $32.2 million for the six months ended June 30, 2018 and 2017, respectively.

Real Estate Under Construction

At June 30, 2018 and December 31, 2017, we had two and three build-to-suit investments that were still under construction. During the six months ended June 30, 2018, we completed one of our build-to-suit investments, which had a total cost of $5.8 million and was placed into service. The aggregate unfunded commitment on our build-to-suit investments and certain other tenant improvements totaled approximately $40.2 million and $56.5 million at June 30, 2018 and December 31, 2017, respectively.

Operating Real Estate — Land, Buildings and Improvements

Operating real estate, which consists of our wholly owned domestic self-storage operations and a majority ownership in one hotel, at cost, is summarized as follows (in thousands):

	June 30, 2018			December 31, 2017
Land	$	90,560		$	90,042
Buildings and improvements	254,520			250,730
Real estate under construction (a)	3,630			—
Less: Accumulated depreciation	(29,977		)	(26,087		)
	$	318,733		$	314,685

__________

(a) Primarily represents restoration costs on our hotel property, which was impacted by Hurricane Irma as noted below.

Depreciation expense on our operating real estate was $2.2 million and $1.7 million, for the three months ended June 30, 2018 and 2017, respectively, and $3.9 million and $3.3 million for the six months ended June 30, 2018 and 2017, respectively.

CPA:17 – Global 6/30/2018 10-Q – 15

Notes to Consolidated Financial Statements (Unaudited)

Hurricane Impact Update

Hurricane Irma made landfall in September 2017, which directly impacted our hotel in Miami, Florida, leased to Shelborne Operating Associates, LLC, or the Shelborne Hotel. The hotel sustained damage and has since been operating at less than full capacity. We believe all of the damages are covered by our insurance policy, apart from the estimated insurance deductible of $1.8 million and certain professional fees. In May 2018, in response to a delay in collecting our outstanding insurance receivables, we filed a complaint against our insurance carrier in the State of Florida. As such, we assessed the outstanding insurance receivable for collectability and recorded a reserve for insurance receivables totaling $2.0 million for both the three and six months ended June 30, 2018 (Note 11), which is included within Operating real estate expenses on our consolidated financial statements. We will continue to assess the collectability of the insurance proceeds on a periodic basis. At June 30, 2018, we had $23.2 million of insurance receivables, net of reserves, in Accounts receivable and other assets on our consolidated financial statements. As a result of filing the complaint, the amount payable to our third-party insurance adjuster was reduced by $1.2 million, as per our contractual arrangement, which we recorded as a reduction to expenses within Other income and (expenses) on our consolidated financial statements during both the three and six months ended June 30, 2018.

Through June 30, 2018, we received $3.2 million of insurance proceeds for remediation and restoration costs. During the second quarter of 2018, we reassessed the estimated allocation of insurance proceeds that we received through June 30, 2018 and determined that these were solely related to property damages. In addition to the above, we have business interruption insurance coverage pertaining to the operating losses that resulted from Hurricane Irma. We will record revenue for covered business interruption when both the recovery is probable and contingencies have been resolved with the insurance carrier.

We are still assessing the impact of the hurricane to the Shelborne Hotel, and as a result, the final damages incurred could vary significantly from our estimate and additional remediation work may be performed. Any changes in estimates for property damage will be recorded in the periods in which they are determined and any additional work will be recorded in the periods in which it is performed.

The aggregate unfunded commitment on the estimated remaining repairs remaining at our Shelborne Hotel totaled approximately $28.2 million at June 30, 2018.

Assets Held for Sale, Net

At June 30, 2018, Assets held for sale consisted of a net-leased property located in Waldaschaff, Germany. On June 15, 2018, we entered into an agreement to sell this property for $7.7 million (amount is based on the exchange rate of the euro on the date of the agreement). There can be no assurance that we will be able to sell this facility for that amount, or at all. At December 31, 2017, we did not have any properties classified as Assets held for sale. See Note 13 for more information for our disposition and properties held for sale.

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

	June 30, 2018 (a)		December 31, 2017
Land, buildings and improvements, net	$	3,189	$	—
Assets held for sale, net	$	3,189	$	—

__________

(a) Amounts reflect $3.8 million related to an asset retirement obligation that buyer will assume upon consummation of the sale.

Note 5. Finance Receivables

Assets representing rights to receive money on demand or at fixed or determinable dates are referred to as finance receivables. Our finance receivables portfolio consists of our Net investments in direct financing leases and loans receivable. Operating leases are not included in finance receivables as such amounts are not recognized as an asset in the consolidated financial statements. Our loans receivable are included in Accounts receivable and other assets, net in the consolidated financial statements. Earnings from our loans receivable are included in Other interest income in the consolidated financial statements.

CPA:17 – Global 6/30/2018 10-Q – 16

Notes to Consolidated Financial Statements (Unaudited)

At June 30, 2018 and December 31, 2017, we had five loans receivable with outstanding balances of $104.8 million and $110.5 million, respectively, which are included in Accounts receivable and other assets, net in the consolidated financial statements. The adoption of ASU 2017-05 impacted our outstanding loan receivable balance at June 30, 2018. See Note 2 for more details.

On January 8, 2015, we provided a mezzanine loan of $30.0 million to a subsidiary of 1185 Broadway LLC for the development of a hotel on a parcel of land in New York, New York. The mezzanine loan is collateralized by an equity interest in a subsidiary of 1185 Broadway LLC. On July 2, 2018, we received full repayment of this $30.0 million mezzanine loan (Note 15). 

In January 2018, The New York Times Company, a tenant at one of our properties, exercised its bargain purchase option to acquire the property for $250.0 million in 2019. There can be no assurance that such repurchase will be completed.

Credit Quality of Finance Receivables

We generally invest in facilities that we believe are critical to a tenant’s business and therefore have a lower risk of tenant default. At June 30, 2018 and December 31, 2017, we had $1.9 million and $1.1 million, respectively, of finance receivable balances that were past due, of which we established allowances for credit losses of $1.5 million and $0.7 million, respectively.

During both the three and six months ended June 30, 2018, we recognized an allowance for credit losses totaling $6.2 million on two of our net-lease properties that are classified as direct financing leases due to the tenant informing us they will be going out of business and vacating the properties (Note 8). We evaluate the credit quality of our finance receivables utilizing an internal five-point credit rating scale, with one representing the highest credit quality and five representing the lowest. The credit quality evaluation of our finance receivables is updated quarterly.

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

	Number of Tenants / Obligors at		Carrying Value at
Internal Credit Quality Indicator	June 30, 2018	December 31, 2017	June 30, 2018		December 31, 2017
1	—	—	$	—	$	—
2	2	2	63,102		62,744
3	10	8	390,957		379,621
4	5	8	127,111		165,413
5	2	1	25,188		11,950
			$	606,358	$	619,728

Note 6. Equity Investments in Real Estate

We own equity interests in net-leased properties that are generally leased to companies through noncontrolling interests (i) in partnerships and limited liability companies that we do not control but over which we exercise significant influence or (ii) as tenants-in-common subject to common control. Generally, the underlying investments are jointly owned with affiliates. We account for these investments under the equity method of accounting. Earnings for each investment are recognized in accordance with each respective investment agreement and, where applicable, based upon an allocation of the investment’s net assets at book value as if the investment were hypothetically liquidated at the end of each reporting period.

As required by current authoritative accounting guidance, we periodically compare an investment’s carrying value to its estimated fair value and recognize an impairment charge to the extent that the carrying value exceeds fair value and such decline is determined to be other than temporary. Additionally, we provide funding to developers for ADC Arrangements, under which we have provided loans to third-party developers of real estate projects, which we account for as equity investments as the characteristics of the arrangement with the third-party developers are more similar to a jointly owned investment or partnership rather than a loan.

CPA:17 – Global 6/30/2018 10-Q – 17

Notes to Consolidated Financial Statements (Unaudited)

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Equity Earnings from Equity Investments:
Net Lease	$	11,745		$	2,475		$	16,447		$	7,430
All Other (a) (b) (c)	2			460			595			(1,648		)
	11,747			2,935			17,042			5,782
Amortization of Basis Differences on Equity Investments:
Net Lease	(525		)	(562		)	(1,060		)	(1,125		)
All Other (a) (b) (c)	(77		)	(103		)	(154		)	(402		)
	(602		)	(665		)	(1,214		)	(1,527		)
Equity in earnings of equity method investments in real estate	$	11,145		$	2,270		$	15,828		$	4,255

__________

(a) On October 3, 2017 we restructured our Shelborne Hotel investment. All equity interests in the investment were transferred to us in satisfaction of the underlying loan. Simultaneously, we transferred a 4.5% minority interest back to one of the original equity partners in exchange for a cash contribution of $4.0 million. As a result of the restructuring, we became the managing member with controlling financial interest in the investment. The minority interests have no decision-making control. Since the construction is now complete and the loan has been satisfied, we determined that this investment should no longer be accounted for as an ADC Arrangement and, as a result, have consolidated this investment as of the restructure date.

(b) On May 19, 2017, we received the full repayment of our preferred equity interest in BPS Nevada LLC; therefore, the preferred equity interest was retired as of that date. As a result, the three and six months ended June 30, 2018 in the table above does not include any activity related to this investment.

(c) On March 17, 2017, we restructured our investment in IDL Wheel Tenant, LLC (Note 13) and, as a result, this investment is accounted for as a loan receivable, included in Accounts receivable and other assets, net in the consolidated financial statements, and is no longer accounted for as an ADC Arrangement under the equity method of accounting.

CPA:17 – Global 6/30/2018 10-Q – 18

Notes to Consolidated Financial Statements (Unaudited)

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

		Ownership Interest at	Carrying Value at
Lessee/Equity Investee	Co-owner	June 30, 2018	June 30, 2018		December 31, 2017
Net Lease:
Hellweg Die Profi-Baumärkte GmbH & Co. KG (referred to as Hellweg 2) (a) (b)	WPC	37%	$	107,125	$	109,933
Kesko Senukai (a)	Third Party	70%	55,769		58,136
Jumbo Logistiek Vastgoed B.V. (a) (c)	WPC	85%	52,090		55,162
U-Haul Moving Partners, Inc. and Mercury Partners, LP (b)	WPC	12%	35,053		35,897
Bank Pekao S.A. (a) (b)	CPA:18 – Global	50%	23,945		25,582
BPS Nevada, LLC (b) (d)	Third Party	15%	23,435		23,455
State Farm Automobile Co.(b)	CPA:18 – Global	50%	15,261		16,072
Berry Global Inc. (b)	WPC	50%	14,045		14,476
Tesco Global Aruhazak Zrt. (a) (b)	WPC	49%	10,266		10,707
Eroski Sociedad Cooperativa — Mallorca (a)	WPC	30%	7,352		7,629
Apply Sørco AS (referred to as Apply) (a)	CPA:18 – Global	49%	7,328		6,298
Dick’s Sporting Goods, Inc. (b)	WPC	45%	3,396		3,750
Konzum d.d. (referred to as Agrokor) (a) (b)	CPA:18 – Global	20%	3,153		3,433
			358,218		370,530
All Other:
BG LLH, LLC (b) (d)	Third Party	6%	39,678		38,724
			39,678		38,724
			$	397,896	$	409,254

__________

(a) Carrying value of investment is impacted by fluctuations in the exchange rate of the applicable foreign currency.

(b) This investment is a VIE.

(c) This investment represents a tenancy-in-common interest, whereby the property is encumbered by debt for which we are jointly and severally liable. The co-obligor is WPC and the amount due under the arrangement was approximately $73.3 million at June 30, 2018. Of this amount, $62.3 million represents the amount we are liable for and is included within the carrying value of this investment at June 30, 2018.

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

Aggregate distributions from our interests in unconsolidated real estate investments were $14.8 million and $12.4 million for the three months ended June 30, 2018 and 2017, respectively, and $26.6 million and $33.7 million, for the six months ended June 30, 2018 and 2017, respectively. At June 30, 2018 and December 31, 2017, the unamortized basis differences on our equity investments were $25.0 million and $26.3 million, respectively.

CPA:17 – Global 6/30/2018 10-Q – 19

Notes to Consolidated Financial Statements (Unaudited)

Note 7.Intangible Assets and Liabilities

In-place lease intangibles are included in In-place lease intangible assets in the consolidated financial statements. Above-market rent and below-market ground lease and other (as lessee) intangibles are included in Other intangible assets in the consolidated financial statements. Goodwill is included in Accounts receivable and other assets, net in the consolidated financial statements. Below-market rent and above-market ground lease (as lessor) intangibles are included in Below-market rent and other intangible liabilities, net in the consolidated financial statements.

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

		June 30, 2018									December 31, 2017
	Amortization Period (Years)	Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
Finite-Lived Intangible Assets
In-place lease	4 – 53	$	623,441		$	(229,845	)	$	393,596		$	629,961		$	(213,641	)	$	416,320
Above-market rent	7 – 40	96,656			(33,643		)	63,013			98,162			(31,533		)	66,629
Below-market ground leases and other	55 – 94	12,686			(842		)	11,844			12,842			(726		)	12,116
		732,783			(264,330		)	468,453			740,965			(245,900		)	495,065
Indefinite-Lived Intangible Assets
Goodwill		304			—			304			304			—			304
Total intangible assets		$	733,087		$	(264,330	)	$	468,757		$	741,269		$	(245,900	)	$	495,369
Finite-Lived Intangible Liabilities
Below-market rent	7 – 53	$	(81,747	)	$	23,865		$	(57,882	)	$	(82,259	)	$	22,121		$	(60,138	)
Above-market ground lease	49 – 88	(1,145		)	67			(1,078		)	(1,145		)	61			(1,084		)
Total intangible liabilities		$	(82,892	)	$	23,932		$	(58,960	)	$	(83,404	)	$	22,182		$	(61,222	)

Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Rental income; amortization of below-market ground lease and other and above-market ground lease intangibles is included in Property expenses; and amortization of in-place lease intangibles is included in Depreciation and amortization expense on our consolidated financial statements. Amortization of below- and above-market rent intangibles, including the effect of foreign currency translation, decreased Rental income by $0.3 million for both the three months ended June 30, 2018 and 2017, respectively, and decreased Rental income by $0.7 million and increased Rental income by $18.5 million for the six months ended June 30, 2018 and 2017, respectively. The six months ended June 30, 2017 includes the impact of a below-market rent intangible liability write-off of $15.7 million recognized in conjunction with a lease modification that occurred during six months ended June 30, 2017 (Note 13). Net amortization expense of all of our other net intangible assets totaled $9.2 million and $10.5 million for the three months ended June 30, 2018 and 2017, respectively, and $18.5 million and $23.3 million for the six months ended June 30, 2018 and 2017, respectively.

Note 8. Fair Value Measurements

The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps, interest rate swaps, foreign currency forward contracts, and foreign currency collars; and Level 3, for securities and other derivative assets that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring us to develop our own assumptions.

CPA:17 – Global 6/30/2018 10-Q – 20

Notes to Consolidated Financial Statements (Unaudited)

Items Measured at Fair Value on a Recurring Basis

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

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

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

We did not have any transfers into or out of Level 1, Level 2, and Level 3 measurements during the three and six months ended June 30, 2018 and 2017. Gains and losses (realized and unrealized) recognized on items measured at fair value on a recurring basis included in earnings are reported within Other gains and (losses) on our consolidated financial statements.

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

		June 30, 2018				December 31, 2017
	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Mortgage debt, net (a) (b)	3	$	1,811,822	$	1,810,657	$	1,849,459	$	1,864,043
Loans receivable (c) (d)	3	104,819		110,500		110,500		110,500
CMBS (e)	3	1,144		1,144		6,548		7,237

___________

(a) The carrying value of Mortgage debt, net includes unamortized deferred financing costs of $6.8 million and $7.9 million at June 30, 2018 and December 31, 2017, respectively.

(b) We determined the estimated fair value of our Mortgage debt, net using a discounted cash flow model that estimates the present value of future loan payments by discounting such payments at current estimated market interest rates. The estimated market interest rates take into     account interest rate risk and the value of the underlying collateral, which includes the quality of the collateral, the credit quality of the tenant/obligor, and the time until maturity.

(c) We determined the estimated fair value of our Loans receivable using a discounted cash flow model with rates that take into account the credit of the tenant/obligor, order of payment tranches, and interest rate risk. We also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the tenant/obligor, the time until maturity, and the current market interest rate.

(d) Carrying value amount at June 30, 2018 includes the impact of adopting ASU 2017-05 (Note 2).

(e) At both June 30, 2018 and December 31, 2017, we had two separate tranches of CMBS investments. The carrying values of our CMBS investments are inclusive of impairment charges for both periods presented.

We estimated that our other financial assets and liabilities, including the amounts outstanding under the Senior Credit Facility (Note 10), but excluding net investments in direct financing leases, had fair values that approximated their carrying values at both June 30, 2018 and December 31, 2017.

CPA:17 – Global 6/30/2018 10-Q – 21

Notes to Consolidated Financial Statements (Unaudited)

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

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

The following table presents information about the assets for which we recorded impairment charges and other credit losses that were measured at fair value on a non-recurring basis (in thousands):

	Three Months Ended June 30, 2018				Three Months Ended June 30, 2017
	Fair Value Measurements		Total Impairment Charges and Other Credit Losses		Fair Value Measurements		Total Impairment Charges and Other Credit Losses
Impairment Charges and Other Credit Losses
Net investments in direct financing leases	$	13,597	$	6,168	$	—	$	—
Equity investments in real estate	—		—		4,780		2,510
			$	6,168			$	2,510

	Six Months Ended June 30, 2018				Six Months Ended June 30, 2017
	Fair Value Measurements		Total Impairment Charges and Other Credit Losses		Fair Value Measurements		Total Impairment Charges and Other Credit Losses
Impairment Charges and Other Credit Losses
Net investments in direct financing leases	$	13,597	$	6,168	$	—	$	—
CMBS	1,144		5,404		—		—
Real estate	—		—		4,719		4,519
Equity investments in real estate	—		—		4,780		2,510
			$	11,572			$	7,029

Net Investment in Direct Financing Leases

During both the three and six months ended June 30, 2018, we recognized an allowance for credit losses totaling $6.2 million on two properties classified as direct financing leases due to the tenant informing us that it will be going out of business and vacating the properties. We assessed the carrying amount of these properties for recoverability and, as a result of the decreased expected cash flows, we determined that the carrying value of the properties is not fully recoverable and recognized an allowance for credit losses to reflect the change in the estimate of the future cash flows, which includes rent. At June 30, 2018, the estimated fair value of the two properties approximated $13.6 million. The fair value measurement related to the credit losses was determined by estimating discounted cash flows using three significant unobservable inputs, which are the cash flow discount rate, the residual discount rate, and the residual capitalization rate equal to 9.5%, 9.5%, and 8.3%, respectively.

CPA:17 – Global 6/30/2018 10-Q – 22

Notes to Consolidated Financial Statements (Unaudited)

CMBS

During the six months ended June 30, 2018, we incurred an other-than-temporary impairment charge of $5.4 million on one of our CMBS tranches to reduce its carrying value to its estimated fair value due to defaults of certain underlying loans during the first quarter of 2018. The fair value of the CMBS portfolio after the impairment charge approximated $1.1 million. The fair value measurements related to the impairment charges were derived from third-party appraisals, which were based on input from dealers, buyers, and other market participants, as well as updates on prepayments, losses, and delinquencies within our CMBS portfolio.

Real Estate

During the six months ended June 30, 2017, we were notified by the tenant currently occupying a property that we own with an affiliate, located in Waldaschaff, Germany, that the tenant will not be renewing its lease. As a result of this information, and with the expectation that we will not be able to replace the tenant upon the lease expiration (primarily due to, among other things, the remote location of the facility and certain environmental concerns), we recognized an impairment charge of $4.5 million, which included $1.5 million attributed to a noncontrolling interest (amounts are based on the exchange rate of the euro at the date of impairment). The fair value of the property after the impairment charge approximated $4.7 million. The fair value measurement related to the impairment charge was determined by estimating discounted cash flows using a discount rate of 9.75%, which is considered a significant unobservable input. Significant increases or decreases to this input would result in a significant change in the fair value measurement. On June 15, 2018, we entered into an agreement to sell this facility (Note 4, Note 13).

We did not recognize any impairments of real estate during the three and six months ended June 30, 2018.

Equity Investments in Real Estate

During both the three and six months ended June 30, 2017, we recognized an other-than-temporary impairment charge of $2.5 million on our Agrokor equity method investment (Note 6), to reduce the carrying value of a property held by the jointly owned investment to its estimated fair value due to a decline in market conditions. The fair value measurement related to the impairment charge was determined by estimating discounted cash flows using three significant unobservable inputs, which are the cash flow discount rate, the residual discount rate, and the residual capitalization rate equal to 12.4%, 10.9%, and 10.4%, respectively. Significant increases or decreases to these inputs in isolation would result in a significant change in the fair value measurement.

Note 9. Risk Management and Use of Derivative Financial Instruments

Risk Management

In the normal course of our ongoing business operations, we encounter economic risk. There are four main components of economic risk that impact us: interest rate risk, credit risk, market risk, and foreign currency risk. We are primarily subject to interest rate risk on our interest-bearing liabilities, including the Senior Credit Facility (Note 10). Credit risk is the risk of default on our operations and our tenants’ inability or unwillingness to make contractually required payments. Market risk includes changes in the value of our properties and related loans, as well as changes in the value of our other investments due to changes in interest rates or other market factors. We own investments in Europe and Asia and are subject to risks associated with fluctuating foreign currency exchange rates.

Derivative Financial Instruments

When we use derivative instruments, it is generally to reduce our exposure to fluctuations in interest rates and foreign currency exchange rate movements. We have not entered into, and do not plan to enter into, financial instruments for trading or speculative purposes. In addition to entering into derivative instruments on our own behalf, we may also be a party to derivative instruments that are embedded in other contracts and we may be granted common stock warrants by lessees when structuring lease transactions, which are considered to be derivative instruments. The primary risks related to our use of derivative instruments include: (i) a counterparty to a hedging arrangement defaulting on its obligation and (ii) a downgrade in the credit quality of a counterparty to such an extent that our ability to sell or assign our side of the hedging transaction is impaired. While we seek to mitigate these risks by entering into hedging arrangements with large financial institutions that we deem to be creditworthy, it is possible that our hedging transactions, which are intended to limit losses, could adversely affect our earnings. Furthermore, if we terminate a hedging arrangement, we may be obligated to pay certain costs, such as transaction or breakage

CPA:17 – Global 6/30/2018 10-Q – 23

Notes to Consolidated Financial Statements (Unaudited)

fees. We have established policies and procedures for risk assessment, as well as the approval, reporting, and monitoring of derivative financial instrument activities.

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

All derivative transactions with an individual counterparty are governed by a master International Swap and Derivatives Association agreement, which can be considered as a master netting arrangement; however, we report all our derivative instruments on a gross basis on our consolidated financial statements. At both June 30, 2018 and December 31, 2017, no cash collateral had been posted or received for any of our derivative positions.

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

Derivatives Designated as Hedging Instruments		Asset Derivatives Fair Value at				Liability Derivatives Fair Value at
	Balance Sheet Location	June 30, 2018		December 31, 2017		June 30, 2018			December 31, 2017
Foreign currency forward contracts	Accounts receivable and other assets, net	$	14,130	$	14,382	$	—		$	—
Interest rate swaps	Accounts receivable and other assets, net	1,235		314		—			—
Interest rate caps	Accounts receivable and other assets, net	145		201		—			—
Interest rate swaps	Accounts payable, accrued expenses and other liabilities	—		—		(2,320		)	(3,852		)
Foreign currency collars	Accounts payable, accrued expenses and other liabilities	—		—		(957		)	(1,431		)
Derivatives Not Designated as Hedging Instruments
Stock warrants	Accounts receivable and other assets, net	1,914		1,815		—			—
Foreign currency forward contracts	Accounts receivable and other assets, net	480		86		—			—
Interest rate swap	Accounts payable, accrued expenses and other liabilities	—		—		(127		)	(128		)
Total derivatives		$	17,904	$	16,798	$	(3,404	)	$	(5,411	)

CPA:17 – Global 6/30/2018 10-Q – 24

Notes to Consolidated Financial Statements (Unaudited)

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

	Amount of Gain (Loss) Recognized on Derivatives in Other Comprehensive (Loss) Income (Effective Portion) (a)
	Three Months Ended June 30,						Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships	2018			2017			2018			2017
Foreign currency forward contracts	$	4,201		$	(8,729	)	$	(23	)	$	(12,478	)
Foreign currency collars	1,042			(945		)	486			(1,002		)
Interest rate swaps	448			44			2,470			1,037
Interest rate caps	(21		)	(105		)	(44		)	(363		)
Derivatives in Net Investment Hedging Relationships (b)
Foreign currency forward contracts	22			84			—			(207		)
Foreign currency collar	11			(7		)	(1		)	(9		)
Total	$	5,703		$	(9,658	)	$	2,888		$	(13,022	)

		Amount of Gain (Loss) Reclassified from Other Comprehensive (Loss) Income into Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Reclassified to Income	Three Months Ended June 30,						Six Months Ended June 30,
		2018			2017			2018			2017
Foreign currency forward contracts	Other gains and (losses)	$	1,315		$	1,161		$	2,807		$	4,019
Interest rate swaps	Interest expense	(313		)	(603		)	(744		)	(1,309		)
Interest rate caps	Interest expense	(14		)	—			(19		)	—
Total		$	988		$	558		$	2,044		$	2,710

__________

(a) Excludes net losses of $0.3 million and $0.4 million on unconsolidated jointly owned investments for the three months ended June 30, 2018 and 2017, respectively, and a net gain of $0.2 million and $0.1 million on unconsolidated jointly owned investments for the six months ended June 30, 2018 and 2017, respectively.

(b) The effective portion of the change in fair value and the settlement of these contracts are reported in the foreign currency translation adjustment section of Other comprehensive (loss) income.

Amounts reported in Other comprehensive (loss) income related to interest rate swaps will be reclassified to Interest expense as interest is incurred on our variable-rate debt. Amounts reported in Other comprehensive (loss) income related to foreign currency derivative contracts will be reclassified to Other gains and (losses) when the hedged foreign currency contracts are settled. At June 30, 2018, we estimated that an additional $0.5 million and $7.1 million will be reclassified as interest expense and as Other gains and (losses), respectively, during the next 12 months.

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

Derivatives Not in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income on Derivatives
		Three Months Ended June 30,						Six Months Ended June 30,
		2018			2017			2018			2017
Foreign currency forward contracts	Other gains and (losses)	$	194		$	(25	)	$	260		$	8
Stock warrants	Other gains and (losses)	(33		)	33			99			(165		)
Interest rate swap	Interest expense	(23		)	8			(31		)	26
Swaption	Other gains and (losses)	—			(86		)	—			(134		)
Derivatives in Cash Flow Hedging Relationships (a)
Interest rate swaps	Interest expense	(30		)	46			15			92
Foreign currency collars	Other gains and (losses)	(5		)	(5		)	(10		)	(5		)
Total		$	103		$	(29	)	$	333		$	(178	)

__________

CPA:17 – Global 6/30/2018 10-Q – 25

Notes to Consolidated Financial Statements (Unaudited)

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

See below for information regarding why we enter into our derivative instruments and concerning derivative instruments owned by unconsolidated investments, which are excluded from the tables above.

Interest Rate Swaps, Caps, and Swaption

We are exposed to the impact of interest rate changes primarily through our borrowing activities. To limit this exposure, we attempt to obtain non-recourse mortgage financing on a long-term, fixed-rate basis. However, from time to time, we or our joint investment partners have obtained, and may in the future obtain, variable-rate non-recourse mortgage loans and, as a result, we have entered into, and may continue to enter into, swaptions, interest rate swap agreements or interest rate cap agreements with counterparties. Interest rate swaps, which effectively convert the variable rate debt service obligations of a loan to a fixed rate, are agreements in which one party exchanges a stream of interest payments for a counterparty’s stream of cash flow over a specific period. The notional, or face, amount on which the swaps are based is not exchanged. Interest rate caps limit the effective borrowing rate of variable rate debt obligations while allowing participants to share downward shifts in interest rates. A swaption gives us the right but not the obligation to enter into an interest rate swap, of which the terms and conditions are set on the trade date, on a specified date in the future. Our objective in using these derivatives is to limit our exposure to interest rate movements.

The interest rate swaps and caps that our consolidated subsidiaries had outstanding at June 30, 2018 are summarized as follows (currency in thousands):

Interest Rate Derivatives	Number of Instruments	Notional Amount		Fair Value at June 30, 2018(a)
Designated as Cash Flow Hedging Instruments
Interest rate swaps	3	65,982	EUR	$	(728	)
Interest rate swaps	12	122,615	USD	(357		)
Interest rate caps	4	132,614	EUR	79
Interest rate cap	1	75,000	USD	58
Interest rate cap	1	6,394	GBP	8
Not Designated as Hedging Instrument
Interest rate swap	1	4,784	EUR	(127		)
				$	(1,067	)

__________

(a) Fair value amount is based on the exchange rate of the euro or British pound sterling at June 30, 2018, as applicable.

Foreign Currency Contracts

We are exposed to foreign currency exchange rate movements, primarily in the euro and, to a lesser extent, the British pound sterling, the Japanese yen, and the Norwegian krone. We manage foreign currency exchange rate movements by generally placing our debt service obligation on an investment in the same currency as the tenant’s rental obligation to us. This reduces our overall exposure to the net cash flow from that investment. However, we are subject to foreign currency exchange rate movements to the extent that there is a difference in the timing and amount of the rental obligation and the debt service. Realized and unrealized gains and losses recognized in earnings related to foreign currency transactions are included in Other gains and (losses) in the consolidated financial statements.

In order to hedge certain of our foreign currency cash flow exposures, we enter into foreign currency forward contracts and collars. A foreign currency forward contract is a commitment to deliver a certain amount of currency at a certain price on a specific date in the future. A foreign currency collar consists of a written call option and a purchased put option to sell the foreign currency at a range of predetermined exchange rates. By entering into forward contracts and holding them to maturity, we are locked into a future currency exchange rate for the term of the contract. A foreign currency collar guarantees that the exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices. Our foreign currency forward contracts and foreign currency collars have maturities of 77 months or less.

CPA:17 – Global 6/30/2018 10-Q – 26

Notes to Consolidated Financial Statements (Unaudited)

The following table presents the foreign currency derivative contracts we had outstanding and their designations at June 30, 2018 (currency in thousands):

Foreign Currency Derivatives	Number of Instruments	Notional Amount		Fair Value at June 30, 2018
Designated as Cash Flow Hedging Instruments
Foreign currency forward contracts	27	68,286	EUR	$	14,073
Foreign currency collars	2	15,100	EUR	(919		)
Foreign currency collars	3	2,000	NOK	(17		)
Not Designated as Hedging Instruments
Foreign currency forward contracts	7	2,105	EUR	414
Foreign currency forward contracts	7	5,733	NOK	66
Designated as Net Investment Hedging Instruments
Foreign currency forward contracts	2	4,329	NOK	57
Foreign currency collar	1	2,500	NOK	(21		)
				$	13,653

Credit Risk-Related Contingent Features

We measure our credit exposure on a counterparty basis as the net positive aggregate estimated fair value of our derivatives, net of any collateral received. No collateral was received as of June 30, 2018. At June 30, 2018, our total credit exposure was $14.2 million and the maximum exposure to any single counterparty was $8.2 million.

Some of the agreements with our derivative counterparties contain cross-default provisions that could trigger a declaration of default on our derivative obligations if we default, or are capable of being declared in default, on certain of our indebtedness. At June 30, 2018, we had not been declared in default on any of our derivative obligations. The estimated fair value of our derivatives that were in a net liability position was $3.5 million and $5.6 million at June 30, 2018 and December 31, 2017, respectively, which included accrued interest and any nonperformance risk adjustments. If we had breached any of these provisions at June 30, 2018 or December 31, 2017, we could have been required to settle our obligations under these agreements at their aggregate termination value of $3.6 million and $5.7 million, respectively.

Note 10. Debt

Mortgage Debt, Net

Mortgage debt, net consists of mortgage notes payable, which are primarily non-recourse and collateralized by the assignment of real estate properties. At June 30, 2018, our mortgage notes payable bore interest at fixed annual rates ranging from 1.9% to 7.4% and variable contractual annual rates ranging from 1.3% to 6.0%, with maturity dates ranging from 2018 to 2031.

Financing Activity During 2018

During the six months ended June 30, 2018, we repaid a total of $7.4 million (amount is based on the exchange rate of the euro as of the date of repayment) of principal to cure breaches of loan-to-value, or LTV, covenants on two of our non-recourse mortgage loans. In addition, we repaid one non-recourse mortgage loan totaling $3.1 million at its maturity date (amount is based on the exchange rate of the euro as of the date of repayment).

CPA:17 – Global 6/30/2018 10-Q – 27

Notes to Consolidated Financial Statements (Unaudited)

Senior Credit Facility

On August 26, 2015, we entered into a Credit Agreement with J.P. Morgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, and a syndicate of other lenders, which we refer to herein as the Credit Agreement. The Credit Agreement was amended on March 31, 2016 to clarify the Restricted Payments covenant (see below); no other terms were changed. The Credit Agreement provides for a $200.0 million senior unsecured revolving credit facility, or the Revolver, and a $50.0 million delayed-draw term loan facility, or the Term Loan. We refer to the Revolver and the Term Loan together as the Senior Credit Facility, which has a maximum aggregate principal amount of $250.0 million and, subject to lender approval, an accordion feature of $250.0 million. The Senior Credit Facility was initially scheduled to mature on August 26, 2018, subject to two 12-month extension periods. On July 24, 2018, we entered into an amendment to the Credit Agreement to exercise one of our two options to extend the maturity date of the Senior Credit Facility for an additional 12-month period, which is now scheduled to mature on August 26, 2019 (Note 15).

The Senior Credit Facility provides for an annual interest rate of either (i) the Eurocurrency Rate or (ii) the Base Rate, in each case plus the Applicable Rate (each as defined in the Credit Agreement). With respect to the Revolver, the Applicable Rate on Eurocurrency loans and letters of credit ranges from 1.50% to 2.25% (based on London Interbank Offered Rate, or LIBOR) and the Applicable Rate on Base Rate loans ranges from 0.50% to 1.25% (as defined in the Credit Agreement), depending on our leverage ratio. With respect to the Term Loan, the Applicable Rate on Eurocurrency loans and letters of credit ranges from 1.45% to 2.20% (based on LIBOR) and the Applicable Rate on Base Rate loans ranges from 0.45% to 1.20% (as defined in the Credit Agreement), depending on our leverage ratio. In addition, we pay a fee of either 0.15% or 0.30% on the unused portion of the Senior Credit Facility. If usage of the Senior Credit Facility is equal to or greater than 50% of the Aggregate Commitments, the Unused Fee Rate will be 0.15%, and if usage of the Senior Credit Facility is less than 50% of the Aggregate Commitments, the Unused Fee Rate will be 0.30%. In connection with the transaction, we incurred costs of $1.9 million, which are being amortized to interest expense over the remaining term of the Senior Credit Facility.

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

	Interest Rate at	Outstanding Balance at
Senior Credit Facility, Net	June 30, 2018	June 30, 2018		December 31, 2017
Term Loan (a)	LIBOR + 1.45%	$	49,981	$	49,915
Revolver:
Revolver — borrowing in yen (b)	1.50%	20,797		22,047
Revolver — borrowing in euros (b)	1.50%	15,196		29,969
		$	85,974	$	101,931

__________

(a) Includes unamortized deferred financing costs and discounts.

(b) Amounts are based on the exchange rate of the euro or yen at June 30, 2018.

On September 30, 2016, we exercised the delayed draw option on our Term Loan and borrowed $50.0 million. The Term Loan bears interest at LIBOR + 1.45%. The Revolver and Term Loan are used for our working capital needs and for new investments, as well as for general corporate purposes. During the six months ended June 30, 2018, we drew down $13.6 million from our Senior Credit Facility and repaid $29.5 million (amounts are based on the exchange rate of the euro or yen, as applicable, on the date of each draw/repayment).

We are required to ensure that the total Restricted Payments (as defined in the amended Credit Agreement) in an aggregate amount in any fiscal year does not exceed the greater of 95% MFFO and the amount of Restricted Payments required in order for us to (i) maintain our REIT status and (ii) avoid the payment of federal or state income or excise tax. Restricted Payments include quarterly dividends and the total amount of shares repurchased by us, if any, in excess of $100.0 million per year. In addition to placing limitations on dividend distributions and share repurchases, the Credit Agreement also stipulates certain customary financial covenants. We were in compliance with all such covenants at June 30, 2018.

CPA:17 – Global 6/30/2018 10-Q – 28

Notes to Consolidated Financial Statements (Unaudited)

Scheduled Debt Principal Payments

Scheduled debt principal payments for the remainder of 2018, each of the next four calendar years following December 31, 2018 and thereafter through 2031 are as follows (in thousands):

Years Ending December 31,	Total
2018 (remainder) (a)	$	134,796
2019	73,412
2020	425,173
2021	447,246
2022	348,438
Thereafter through 2031	480,185
Total principal payments	1,909,250
Deferred financing costs	(6,839		)
Unamortized discount, net	(4,615		)
Total	$	1,897,796

__________

(a) Includes the $50.0 million Term Loan and $36.0 million Revolver outstanding at June 30, 2018 under our Senior Credit Facility. On July 24, 2018, we entered into an amendment to the Credit Agreement to exercise one of our two options to extend the maturity of the Senior Credit Facility for an additional 12-month period, from August 26, 2018 to August 26, 2019 (Note 15).

Certain amounts in the table above are based on the applicable foreign currency exchange rate at June 30, 2018. The carrying value of our Debt, net decreased by $15.6 million from December 31, 2017 to June 30, 2018 due the strengthening of the U.S. dollar relative to foreign currencies, particularly the euro, during the same period.

Note 11. Commitments and Contingencies

At June 30, 2018, we were not involved in any material litigation. Various claims and lawsuits arising in the normal course of business are pending against us. The results of these proceedings are not expected to have a material adverse effect on our consolidated financial position or results of operations. See Note 4 for unfunded construction commitments.

CPA:17 – Global 6/30/2018 10-Q – 29

Notes to Consolidated Financial Statements (Unaudited)

Note 12. Equity

Reclassifications Out of Accumulated Other Comprehensive Loss

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

	Three Months Ended June 30, 2018
	Gains and (Losses) on Derivative Instruments			Gains and (Losses) on Marketable Investments			Foreign Currency Translation Adjustments			Total
Beginning balance	$	6,755		$	(15	)	$	(61,104	)	$	(54,364	)
Other comprehensive loss before reclassifications	6,353			—			(54,804		)	(48,451		)
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	327			—			—			327
Other gains and (losses)	(1,315		)	—			—			(1,315		)
Total	(988		)	—			—			(988		)
Net current-period Other comprehensive loss	5,365			—			(54,804		)	(49,439		)
Net current-period Other comprehensive loss attributable to noncontrolling interests	—			—			1,001			1,001
Ending balance	$	12,120		$	(15	)	$	(114,907	)	$	(102,802	)

	Three Months Ended June 30, 2017
	Gains and (Losses) on Derivative Instruments			Gains and (Losses) on Marketable Investments			Foreign Currency Translation Adjustments			Total
Beginning balance	$	26,996		$	(18	)	$	(177,827	)	$	(150,849	)
Other comprehensive income before reclassifications	(9,581		)	1			50,309			40,729
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	603			—			—			603
Other gains and (losses)	(1,161		)	—			—			(1,161		)
Total	(558		)	—			—			(558		)
Net current-period Other comprehensive income	(10,139		)	1			50,309			40,171
Net current-period Other comprehensive income attributable to noncontrolling interests	—			—			(1,122		)	(1,122		)
Ending balance	$	16,857		$	(17	)	$	(128,640	)	$	(111,800	)

CPA:17 – Global 6/30/2018 10-Q – 30

Notes to Consolidated Financial Statements (Unaudited)

	Six Months Ended June 30, 2018
	Gains and (Losses) on Derivative Instruments			Gains and (Losses) on Marketable Investments			Foreign Currency Translation Adjustments			Total
Beginning balance	$	9,087		$	(15	)	$	(87,492	)	$	(78,420	)
Other comprehensive loss before reclassifications	5,077			—			(27,869		)	(22,792		)
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	763			—			—			763
Other gains and (losses)	(2,807		)	—			—			(2,807		)
Total	(2,044		)	—			—			(2,044		)
Net current-period Other comprehensive loss	3,033			—			(27,869		)	(24,836		)
Net current-period Other comprehensive loss attributable to noncontrolling interests	—			—			454			454
Ending balance	$	12,120		$	(15	)	$	(114,907	)	$	(102,802	)

	Six Months Ended June 30, 2017
	Gains and (Losses) on Derivative Instruments			Gains and (Losses) on Marketable Investments			Foreign Currency Translation Adjustments			Total
Beginning balance	$	29,549		$	(48	)	$	(186,177	)	$	(156,676	)
Other comprehensive income before reclassifications	(9,982		)	31			58,918			48,967
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	1,309			—			—			1,309
Other gains and (losses)	(4,019		)	—			—			(4,019		)
Total	(2,710		)	—			—			(2,710		)
Net current-period Other comprehensive income	(12,692		)	31			58,918			46,257
Net current-period Other comprehensive income attributable to noncontrolling interests	—			—			(1,381		)	(1,381		)
Ending balance	$	16,857		$	(17	)	$	(128,640	)	$	(111,800	)

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

Distributions

During the second quarter of 2018, our board of directors declared a quarterly distribution of $0.1625 per share, which was paid on July 16, 2018 to stockholders of record on June 29, 2018, in the amount of $57.3 million. Distributions are declared at the discretion of our board of directors and are not guaranteed.

During the six months ended June 30, 2018, our board of directors declared distributions in the aggregate amount of $114.5 million, which equates to $0.3250 per share.

CPA:17 – Global 6/30/2018 10-Q – 31

Notes to Consolidated Financial Statements (Unaudited)

Note 13. Property Dispositions

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

2018 Assets Held for Sale

On June 15, 2018, we entered into an agreement to sell a net-leased property located in Waldaschaff, Germany for $7.7 million (amount is based on the exchange rate of the euro on the date of the agreement). There can be no assurance that we will be able to sell this facility for that amount, or at all. At June 30, 2018, this property was classified as held for sale and had a net asset carrying value of $3.2 million (Note 4).

2017 Dispositions

During the three months ended June 30, 2017, we sold three properties for total proceeds of $14.6 million, net of selling costs, and recorded an aggregate gain on sale of $1.2 million (amounts are based on the euro exchange rate on the applicable date of disposition), which was recorded under the full accrual method.

I-drive Property Disposition and I-drive Wheel Restructuring

In 2012, we entered into a contract for the construction of a domestic build-to-suit project with IDL Master Tenant, LLC, a developer, for the construction of the I-drive Property and the I-drive Wheel at that location. We had accounted for the construction of the I-drive Property as Real estate under construction. The funding for the construction of the I-drive Wheel was provided by the I-drive Wheel Loan. Pursuant to the accounting guidance regarding ADC Arrangements, we accounted for the I-drive Wheel Loan under the equity method of accounting as the characteristics of the arrangement with the third-party developer were more similar to a jointly owned investment or partnership rather than a loan. During 2015, the construction on both the I-drive Property and the I-drive Wheel were completed and they were placed into service.

On March 17, 2017, the developer exercised its purchase option and acquired the I-drive Property for a purchase price of $117.5 million (net proceeds of $23.5 million). The $60.0 million non-recourse mortgage loan encumbering the I-drive Property was repaid at closing by the buyer. In connection with the disposition, we provided seller financing in the form of a $34.0 million mezzanine loan, which was considered to be a non-cash investing activity, and the sale was accounted for under the cost recovery method. As a result, the $2.1 million gain on sale was deferred during the first quarter of 2017. As a result of the adoption of ASU 2017-05 (Note 2), we recognized a cumulative effect adjustment to recognize the deferred gain on our opening balance sheet as of January 1, 2018.

In addition to the sale of the I-drive Property, we restructured the I-drive Wheel Loan on March 17, 2017. In connection with the restructuring of the I-drive Wheel Loan, we determined that the loan no longer qualifies as an ADC Arrangement and should no longer be accounted for as an equity investment. As a result, we reclassified the aggregate loan balance noted above to loans receivable, included in Accounts receivable and other Assets, net, which was a non-cash investing activity. A deferred gain of $16.4 million was recorded during the first quarter of 2017, which was the difference between the fair value of the remaining $35.0 million loan and the $18.6 million carrying value of our previously held equity investment on March 17, 2017. As a result of the adoption of ASU 2017-05 (Note 2), we recognized a $6.0 million cumulative effect adjustment to partially recognize the deferred gain within our opening balance sheet as of January 1, 2018. The remaining portion of the deferred gain will be recognized into income through the accretion of the loan balance during the remaining life of the loan.

CPA:17 – Global 6/30/2018 10-Q – 32

Notes to Consolidated Financial Statements (Unaudited)

KBR Property Disposition

In August 2016, we simultaneously entered into two agreements with one of our tenants, KBR, Inc., to amend the lease at one property and terminate the lease at another property, both located in Houston, Texas. The lease modification and lease termination were contingent upon one another and became effective upon disposing of one net-lease property on March 13, 2017. Upon disposition, we received proceeds of $14.1 million, net of closing costs, and recognized a gain on sale, net of tax of $1.6 million during the six months ended June 30, 2017, which was recorded under the full accrual method. In addition, as a result of the aforementioned lease modification, contractual rents were renegotiated to be at market and the existing below-market rent lease liability of $15.7 million was written off and recognized in Rental income during the six months ended June 30, 2017 (Note 7). In addition, as a result of the termination of the lease noted above, we accelerated the below-market lease intangible liabilities of $3.3 million that were also recognized in Rental income during the six months ended June 30, 2017.

We did not have any significant dispositions during both the three and six months ended June 30, 2018.

CPA:17 – Global 6/30/2018 10-Q – 33

Notes to Consolidated Financial Statements (Unaudited)

Note 14. Segment Reporting

We operate in two reportable business segments: Net Lease and Self Storage. Our Net Lease segment includes our domestic and foreign investments in net-leased properties, whether they are accounted for as operating or direct financing leases. Our Self Storage segment is comprised of our investments in self-storage properties. In addition, we have investments in loans receivable, CMBS, one hotel, and certain other properties, which are included in our All Other category. The following tables present a summary of comparative results and assets for these business segments (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net Lease
Revenues (a) (b)	$	93,526		$	94,331		$	190,518		$	206,854
Operating expenses (c) (d)	(48,446		)	(37,867		)	(90,403		)	(79,175		)
Interest expense	(17,787		)	(18,698		)	(35,479		)	(39,349		)
Other income and (expenses), excluding interest expense	5,431			1,736			15,941			5,195
(Provision for) benefit from income taxes	(1,009		)	(316		)	(1,413		)	298
Gain on sale of real estate, net of tax	—			1,171			24			2,910
Net income attributable to noncontrolling interests	(3,571		)	(3,948		)	(6,686		)	(6,273		)
Net income attributable to CPA:17 – Global	$	28,144		$	36,409		$	72,502		$	90,460
Self Storage
Revenues	$	9,298		$	9,031		$	18,343		$	17,773
Operating expenses	(5,166		)	(6,340		)	(10,614		)	(13,539		)
Interest expense	(2,038		)	(1,974		)	(3,949		)	(3,977		)
Other income and (expenses), excluding interest expense	—			(258		)	—			(260		)
Provision for income taxes	(44		)	(30		)	(92		)	(62		)
Net income (loss) attributable to CPA:17 – Global	$	2,050		$	429		$	3,688		$	(65	)
All Other
Revenues (e)	$	7,002		$	3,151		$	14,247		$	4,891
Operating expenses (f) (g)	(6,037		)	(8		)	(15,557		)	(46		)
Other income and (expenses), excluding interest expense	1,137			187			1,708			(2,221		)
Benefit from (provision for) income taxes	26			(374		)	2,104			(1,024		)
Net loss attributable to noncontrolling interests	1,010			—			1,871			—
Net income attributable to CPA:17 – Global	$	3,138		$	2,956		$	4,373		$	1,600
Corporate
Unallocated Corporate Overhead (h)	$	(8,592	)	$	(2,017	)	$	(22,916	)	$	(9,397	)
Net income attributable to noncontrolling interests — Available Cash Distributions	$	(5,185	)	$	(6,971	)	$	(11,355	)	$	(13,781	)
Total Company
Revenues	$	109,826		$	106,513		$	223,108		$	229,518
Operating expenses	(72,966		)	(55,581		)	(140,650		)	(115,196		)
Interest expense	(20,801		)	(21,453		)	(41,351		)	(44,843		)
Other income and (expenses), excluding interest expense	12,313			12,190			20,999			18,218
(Provision for) benefit from income taxes	(1,071		)	(1,115		)	332			(1,736		)
Gain on sale of real estate, net of tax	—			1,171			24			2,910
Net income attributable to noncontrolling interests	(7,746		)	(10,919		)	(16,170		)	(20,054		)
Net income attributable to CPA:17 – Global	$	19,555		$	30,806		$	46,292		$	68,817

CPA:17 – Global 6/30/2018 10-Q – 34

Notes to Consolidated Financial Statements (Unaudited)

	Total Assets at
	June 30, 2018		December 31, 2017
Net Lease	$	3,907,121	$	3,980,445
All Other	262,780		277,702
Self-Storage	240,285		241,438
Corporate	60,038		87,885
Total Company	$	4,470,224	$	4,587,470

___________

(a) Includes a $15.7 million write-off of a below-market rent lease liabilities pertaining to our KBR, Inc. properties that was recognized in Rental income as a result of a lease modification during the six months ended June 30, 2017 (Note 13). In addition, as a result of a lease termination, we accelerated the below-market rent lease intangible liabilities of $3.3 million that was also recognized in Rental income during the six months ended June 30, 2017.

(b) We recognized straight-line rent adjustments of $2.4 million and $3.9 million during the three months ended June 30, 2018 and 2017, respectively, and $5.2 million and $7.2 million during the six months ended June 30, 2018 and 2017, respectively.

(c) Includes credit losses totaling $6.2 million related to two properties classified as direct financing leases (Note 8) recognized during both the three and six months ended June 30, 2018. Includes an impairment charge of $4.5 million related to a net-leased property (Note 8) recognized during the six months ended June 30, 2017.

(d) In April 2017, the Croatian government passed a special law assisting the restructuring of companies considered of systemic significance in Croatia. This law directly impacts our Agrokor tenant, which is currently experiencing financial distress and recently received a credit downgrade from both Standard & Poor’s and Moody’s. As a result of the financial difficulties and the uncertainty regarding future rent collections from the tenant, we recorded bad debt expense of $6.8 million and $3.2 million during the three months ended June 30, 2018 and 2017, respectively, and $11.2 million and $4.8 million during the six months ended June 30, 2018 and 2017, respectively. In July 2018, the creditors of Agrokor reached a settlement plan to attempt to restructure the company, but as of the date of this Report, we are unable to assess the potential impact of that plan on our investment.

(e) Amount includes the impact of adopting ASU 2017-05 (Note 2), which resulted in the recognition of $2.5 million and $4.7 million of accretion into income during the three and six months ended June 30, 2018, respectively.

(f) Includes an impairment charge of $5.4 million related to our CMBS investments (Note 8) recognized during the six months ended June 30, 2018.

(g) Includes an allowance for bad debt totaling $2.0 million for both the three and six months ended June 30, 2018 related to the delay in collecting our outstanding insurance receivables on our Shelborne Hotel investment (Note 4).

(h) Included in unallocated corporate overhead are asset management fees and general and administrative expenses, as well as interest expense and other charges related to our Senior Credit Facility. These expenses are calculated and reported at the portfolio level and not evaluated as part of any segment’s operating performance.

Note 15. Subsequent Events

On July 2, 2018, we received full repayment of a $30.0 million mezzanine loan related to one of our loan receivables (Note 5).  We also received a $3.0 million fee at payoff of this loan and forfeited our right to any ongoing equity interest in the related investment. 

On July 12, 2018, we entered into a joint venture investment to acquire a 90% interest in a self-storage portfolio containing seven properties for an aggregate amount of $63.6 million, with our portion of the investment totaling $57.3 million (including $1.0 million of acquisition fees payable to our Advisor); five of the properties are located in South Carolina, one is located in North Carolina, and one is located in Florida. As part of this investment, we have also agreed to purchase two additional self-storage properties in the second half of 2018 for an estimated aggregate amount of $20.3 million, with our portion of the investment totaling $18.3 million.

In July 2018, we drew down a net balance of $53.0 million on our Senior Credit Facility (Note 10).

On July 24, 2018, we entered into an amendment to the Credit Agreement to exercise one of our two options to extend the maturity date of the Senior Credit Facility for an additional 12-month period, from August 26, 2018 to August 26, 2019 (Note 10).

CPA:17 – Global 6/30/2018 10-Q – 35

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide the reader with information that will assist in understanding our financial statements and the reasons for changes in certain key components of our financial statements from period to period. Management’s Discussion and Analysis of Financial Condition and Results of Operations also provides the reader with our perspective on our financial position and liquidity, as well as certain other factors that may affect our future results. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the 2017 Annual Report and subsequent reports filed under the Securities Exchange Act of 1934.

We operate in two reportable business segments: Net Lease and Self Storage. Our Net Lease segment includes our domestic and foreign investments in net-leased properties, whether they are accounted for as operating or direct financing leases. Our Self Storage segment is comprised of our investments in self-storage properties. In addition, we have investments in loans receivable, CMBS, one hotel, and certain other properties, which are included in our All Other category (Note 14).

Business Overview

We are a publicly owned, non-traded REIT that invests primarily in commercial properties leased to companies domestically and internationally. As opportunities arise, we also make other types of commercial real estate-related investments. As a REIT, we are not subject to U.S. federal income taxation as long as we satisfy certain requirements, principally relating to the nature of our income, the level of our distributions, and other factors. We earn revenue principally by leasing the properties we own to single corporate tenants, primarily on a triple-net lease basis, which requires the tenant to pay substantially all of the costs associated with operating and maintaining the property. Revenue is subject to fluctuation because of the timing of new lease transactions, lease terminations, lease expirations, contractual rent adjustments, tenant defaults, sales of properties, and foreign currency exchange rates. We were formed in 2007 and are managed by our Advisor. We hold substantially all of our assets and conduct substantially all of our business through our Operating Partnership. We are the general partner of, and own 99.99% of the interests in, the Operating Partnership. The remaining interest in the Operating Partnership is held by a subsidiary of WPC.

Significant Development

Proposed Merger

As more fully described in Note 3, on June 17, 2018, we entered into the Merger Agreement with WPC and certain of its subsidiaries pursuant to which we will merge with and into one of WPC’s subsidiaries. If the Proposed Merger is consummated, each share of our issued and outstanding common stock (excluding shares held by WPC and its subsidiaries) will be canceled and, in exchange for cancellation of such share, the rights attaching to such share will be converted automatically into the right to receive 0.160 shares of WPC common stock. The Proposed Merger and related transactions are subject to a number of closing conditions, including approvals by our stockholders and the stockholders of WPC. If these approvals are obtained and the other closing conditions are met, we currently expect the transaction to close at or around December 31, 2018, although there can be no assurance that the transaction will close at that time or at all.

In light of the Proposed Merger, in June 2018, our board of directors suspended our DRIP, as well as repurchases of shares of our common stock from our stockholders under our discretionary quarterly redemption plan, except for special circumstance redemptions.

Financial Highlights

During the six months ended June 30, 2018, we completed the following, as further described in the consolidated financial statements.

Financing Activity

During the six months ended June 30, 2018, we drew down $13.6 million from our Senior Credit Facility and repaid $29.5 million (amounts are based on the exchange rate of the euro or yen, as applicable, on the date of each draw/repayment) (Note 10).

CPA:17 – Global 6/30/2018 10-Q – 36

During the six months ended June 30, 2018, we repaid a total of $7.4 million (amount is based on the exchange rate of the euro as of the date of repayment) of principal to cure breaches of LTV covenants on two of our non-recourse mortgage loans (Note 10). In addition, we repaid one non-recourse mortgage loan totaling $3.1 million at its maturity date (amount is based on the exchange rate of the euro as of the date of repayment).

Subsequent Events

On July 2, 2018, we received full repayment of a $30.0 million mezzanine loan related to one of our loan receivables (Note 15).  We also received a $3.0 million exit fee at payoff of this loan and forfeited our right to any ongoing equity interest in the related investment. 

On July 12, 2018, we entered into a joint venture investment to acquire a 90% interest in a self-storage portfolio containing seven properties for an aggregate amount of $63.6 million, with our portion of the investment totaling $57.3 million (including $1.0 million of acquisition fees payable to our Advisor); five of the properties are located in South Carolina, one is located in North Carolina, and one is located in Florida. As part of this investment, we have also agreed to purchase two additional self-storage properties in the second half of 2018 for an estimated aggregate amount of $20.3 million, with our portion of the investment totaling $18.3 million.

In July 2018, we drew down a net balance of $53.0 million on our Senior Credit Facility (Note 10).

On July 24, 2018, we entered into an amendment to the Credit Agreement to exercise one of our two options to extend the maturity date of the Senior Credit Facility for an additional 12-month period, from August 26, 2018 to August 26, 2019 (Note 15).

Hurricane Irma

Hurricane Irma made landfall in September 2017, which directly impacted our Shelborne Hotel investment in Miami, Florida. The hotel sustained damage and has since been operating at less than full capacity. We believe all of the damages are covered by our insurance policy, apart from the estimated insurance deductible of $1.8 million and certain professional fees. In May 2018, in response to a delay in collecting our outstanding insurance receivables, we filed a complaint against our insurance carrier in the State of Florida. As such, we assessed the outstanding insurance receivable for collectability and recorded a reserve for insurance receivables totaling $2.0 million for the three and six months ended June 30, 2018 (Note 11). As a result of filing the complaint, the amount payable to our third-party insurance adjuster was reduced by $1.2 million, as per our contractual arrangement, which we recorded as a reduction to expenses within Other income and (expenses) during both the three and six months ended June 30, 2018. At June 30, 2018, we had $23.2 million of insurance receivables, net of reserves, in Accounts receivable and other assets on our consolidated financial statements. Through June 30, 2018, we received $3.2 million of insurance proceeds for remediation and restoration costs. During the second quarter of 2018, we reassessed the estimated allocation of insurance proceeds that we received through June 30, 2018 and determined that these were solely related to property damages. In addition to the above, we have business interruption insurance coverage pertaining to the operating losses that resulted from Hurricane Irma. We will record revenue for covered business interruption when both the recovery is probable and contingencies have been resolved with the insurance carrier.

CPA:17 – Global 6/30/2018 10-Q – 37

Consolidated Results

(in thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018			2017
Total revenues	$	109,826	$	106,513	$	223,108		$	229,518
Net income attributable to CPA:17 – Global	19,555		30,806		46,292			68,817
Distributions paid	57,119		56,142		113,978			111,973
Net cash provided by operating activities (a)					138,594			119,304
Net cash used in investing activities (a)					(13,179		)	(3,923		)
Net cash used in financing activities (a)					(153,929		)	(234,900		)
Supplemental financial measures (b):
FFO attributable to CPA:17 – Global	55,596		67,532		119,106			145,533
MFFO attributable to CPA:17 – Global	63,730		57,343		126,841			114,616
Adjusted MFFO attributable to CPA:17 – Global	59,064		58,605		121,582			118,221

__________

(a) On January 1, 2018, we adopted ASU 2016-15 and ASU 2016-18, which revised how certain items are presented in the condensed consolidated statements of cash flows. As a result of adopting this guidance, we retrospectively revised Net cash provided by operating activities, Net cash used in investing activities, and Net cash used in financing activities within our condensed consolidated statements of cash flows for the six months ended June 30, 2017, as described in Note 2.

(b) We consider the performance metrics listed above, including Funds from operations, or FFO, MFFO, and Adjusted modified funds from operations, or Adjusted MFFO, which are supplemental measures that are not defined by GAAP, both referred to herein as non-GAAP measures, to be important measures in the evaluation of our operating performance. See Supplemental Financial Measures below for our definitions of these non-GAAP measures and reconciliations to their most directly comparable GAAP measures.

Revenues and Net Income Attributable to CPA:17 – Global

Total revenues increased during the three months ended June 30, 2018 as compared to the same period in 2017, primarily as a result of the increase in interest income pertaining to the I-drive Wheel Loan that was directly impacted by ASU 2017-05 that we adopted on January 1, 2018 (Note 2), which resulted in additional accretion income on this investment. In addition, the increase was due to the revenue generated from our Shelborne Hotel investment, which we consolidated as a result of a restructuring in October 2017 (Note 6), and foreign currency gains related to the strengthening of the euro as compared to the U.S. dollar between the periods.

Total revenues decreased during the six months ended June 30, 2018 as compared to the same period in 2017, primarily due to the write-off and acceleration of below-market lease intangible liabilities related to the KBR, Inc. lease modification/termination, which were recognized in Rental income in 2017 (Note 13). In addition, we had a decrease in revenues related to our 2017 property dispositions. These factors were partially offset by increases in foreign currency gains related to the strengthening of the euro as compared to the U.S. dollar between the periods.

CPA:17 – Global 6/30/2018 10-Q – 38

Net income attributable to CPA:17 – Global decreased during the three months ended June 30, 2018 as compared to the same period in 2017, primarily due to credit losses recognized on two of our net-lease properties in the current year period, a decrease in foreign currency gains related to the short-term intercompany loans on our international investments, an increase to Merger and other expenses, and increases to bad debt expense that pertained to our rental reserves on our Agrokor investment and to the insurance receivable reserve on our Shelborne Hotel investment, partially offset by an increase in Equity in earnings of equity method investments in real estate, which was primarily due to a deferred tax benefit recognized in one of our investments during the current year period.

Net income attributable to CPA:17 – Global decreased during the six months ended June 30, 2018 as compared to the same period in 2017, primarily due to a decrease in revenue driven by the 2017 property dispositions, the write-off and acceleration of below market intangible liabilities pursuant to a lease modification/termination in 2017 (Note 13), credit losses recognized on two of our net-lease properties in the current year period, a decrease in foreign currency gains related to the short-term intercompany loans on our international investments, an increase to Merger and other expenses, and an increase to bad debt expense that pertained to the insurance receivable reserve on our Shelborne Hotel investment. These factors were partially offset by an increase in Equity in earnings of equity method investments in real estate, primarily due to a deferred tax benefit recognized in one investment in the current year period, and a decrease in interest expense, primarily relating to loans paid off in 2017.

FFO Attributable to CPA:17 – Global

FFO attributable to CPA:17 – Global decreased for the three months ended June 30, 2018 compared to the same period in 2017, due to credit losses recognized on two of our net-lease properties in the current year period, increases to bad debt expense that pertained to our rental reserves on our Agrokor investment and to the insurance receivable reserve on our Shelborne Hotel investment, a decrease in foreign currency gains related to the short-term intercompany loans on our international investments, and an increase to Merger and other expenses, partially offset by an increase in Equity in earnings of equity method investments in real estate, primarily due to a deferred tax benefit recognized in one investment in the current year period.

FFO attributable to CPA:17 – Global decreased during the six months ended June 30, 2018 as compared to the same period in 2017, primarily due to the write-off of below-market lease intangible liabilities in the prior period noted above, credit losses recognized on two of our net-lease properties in the current year period, an increase in bad debt expense as noted above, an impairment charge on our CMBS portfolio recognized during the current period, a decrease in foreign currency gains related to the short-term intercompany loans on our international investments, and an increase to Merger and other expenses. These decreases were partially offset by a decrease in interest expense, a decrease in loss on extinguishment of debt, and an increase in Equity in earnings of equity method investments in real estate, primarily due to a deferred tax benefit recognized in one investment in the current year period.

MFFO and Adjusted MFFO Attributable to CPA:17 – Global

MFFO and Adjusted MFFO attributable to CPA:17 – Global increased for the three months ended June 30, 2018, compared to the same period in 2017, due to an increase in foreign currency gains related to the strengthening of the euro as compared to the U.S. dollar between the periods, and the accretive impact of our investments. In addition, there was an increase in interest income, primarily due to accretion income on the I-drive Wheel Loan that was restructured in March 2017 (Note 13). These factors were partially offset by an increase in bad debt expense as noted above. In addition, MFFO benefited from a deferred tax benefit in one of our equity method investments in the current year period.

MFFO and Adjusted MFFO attributable to CPA:17 – Global increased for the six months ended June 30, 2018, compared to the same period in 2017, due to improved operating performance of our equity investments, foreign currency gains related to the strengthening of the euro as compared to the U.S. dollar between the periods, the accretive impact of our investments and a decrease in interest expense due to repayments of mortgage loans and payments made under our Senior Credit Facility. In addition, there was an increase in interest income, primarily due to accretion income on the I-drive Wheel Loan noted above (Note 2). These factors were partially offset by an increase in bad debt expense as noted above. In addition, MFFO benefited from a deferred tax benefit in one of our equity method investments in the current year period.

CPA:17 – Global 6/30/2018 10-Q – 39

Portfolio Overview

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

Portfolio Summary

	June 30, 2018			December 31, 2017
Number of net-leased properties	411			411
Number of operating properties (a)	38			38
Number of tenants (b)	114			116
Total square footage (in thousands)	47,136			47,039
Occupancy (b)	99.7		%	99.7		%
Weighted-average lease term (in years) (b)	11.3			11.8
Number of countries	16			16
Total assets (consolidated basis in thousands)	$	4,470,224		$	4,587,470
Net investments in real estate (consolidated basis in thousands)	3,674,567			3,736,921
Mortgage debt — pro rata (in thousands)	2,083,570			2,128,673

	Six Months Ended June 30,
(dollars in millions, except exchange rates)	2018			2017
Acquisition volume — consolidated	$	—		$	11.5
Acquisition volume — pro rata	—			153.0
Financing obtained — consolidated (c)	—			180.0
Financing obtained — pro rata (c) (d)	—			268.0
Average U.S. dollar/euro exchange rate	1.2108			1.0821
Change in CPI (e)	2.2		%	1.5		%
Change in the Harmonized Index of Consumer Prices (e)	1.2		%	0.6		%

__________

(a) Operating properties are comprised of full ownership interests in 37 self-storage properties with an average occupancy of 93.1% and 91.9% at June 30, 2018 and December 31, 2017, respectively, and a majority interest in one hotel property at each date; all of which are managed by third parties.

(b) Excludes operating properties.

(c) Includes refinancings of $180.0 million during the six months ended June 30, 2017.

(d) Includes our share of the non-recourse mortgage financing related to certain of our joint venture investments.

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

CPA:17 – Global 6/30/2018 10-Q – 40

Net-Leased Portfolio

The tables below represent information about our net-leased portfolio on a pro rata basis and, accordingly, exclude all operating properties at June 30, 2018. See Terms and Definitions below for a description of pro rata amounts and ABR.

Top Ten Tenants by ABR

(dollars in thousands)

Tenant/Lease Guarantor	Property Type	Tenant Industry	Location	ABR		Percent
Metro Cash & Carry Italia S.p.A. (a)	Retail	Retail Stores	Germany; Italy	$	27,998	8	%
Advance Stores Company, Inc.	Office; Warehouse	Retail Stores	United States	18,345		5	%
KBR, Inc.	Office	Business Services	Houston, Texas	15,245		4	%
The New York Times Company (b)	Office	Media: Advertising, Printing and Publishing	New York, New York	15,211		4	%
Kesko Senukai (a)	Retail; Warehouse	Retail Stores	Estonia; Latvia; Lithuania	14,907		4	%
Lineage Logistics Holdings, LLC	Warehouse	Business Services	United States	14,734		4	%
Blue Cross and Blue Shield of Minnesota, Inc.	Education Facility; Office	Insurance	Various Minnesota	12,699		3	%
Hellweg 2 (a)	Retail	Retail Stores	Germany	12,091		3	%
Agrokor (a) (c)	Retail; Warehouse	Grocery	Croatia	11,254		3	%
Jumbo Logistiek Vastgoed B.V. (a)	Warehouse	Grocery	The Netherlands	10,876		3	%
Total				$	153,360	41	%

__________

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

(b) In January 2018, this tenant exercised its bargain purchase option to acquire the property it leases from us for $250.0 million in 2019. There can be no assurance that such repurchase will be completed.

(c) In April 2017, the Croatian government passed a special law assisting the restructuring of companies considered of systemic significance in Croatia. This law directly impacts our Agrokor tenant, which is currently experiencing financial distress and received a credit downgrade from both Standard & Poor’s and Moody’s. As a result of these financial difficulties and uncertainty regarding future rent collections from the tenant, the ABR amount above has been reduced by $13.5 million, which is the estimated reserves of rent receivables as determined under GAAP. In July 2018, the creditors of Agrokor reached a settlement plan to attempt to restructure the company, but as of the date of this Report, we are unable to assess the potential impact of that plan on our investment.

CPA:17 – Global 6/30/2018 10-Q – 41

Portfolio Diversification by Geography

(dollars in thousands)

	Pro Rata
Region	ABR		Percent
United States
Midwest (a)	$	71,624	19	%
South	63,990		17	%
East	46,221		13	%
West	31,652		9	%
United States Total	213,487		58	%
International
Poland	29,776		8	%
Italy	26,331		7	%
Germany	20,961		6	%
Spain	19,193		5	%
The Netherlands	16,364		4	%
Croatia	11,254		3	%
Lithuania	11,025		3	%
United Kingdom	5,174		1	%
Other (b)	17,421		5	%
International Total	157,499		42	%
Total	$	370,986	100	%

__________

(a) During both three and six months ended June 30, 2018, we were notified by a tenant currently occupying six properties that we own will be going out of business and vacating the properties in the third quarter of 2018. We assessed the carrying amount of these properties for recoverability and, as a result of the decreased expected cash flows, we determined that the carrying value for two of the properties, which were classified as direct financing leases, are not fully recoverable and recorded an allowance for credit losses totaling $6.2 million to reflect the change in the estimate of the future cash flows, which includes rent (Note 8). The amount above includes $7.2 million of ABR related to this tenant.

(b) Includes ABR from tenants in Hungary, the Czech Republic, Japan, Slovakia, Latvia, Norway, and Estonia.

Portfolio Diversification by Property Type

(dollars in thousands)

	Pro Rata
Property Type	ABR		Percent
Office	$	105,862	28	%
Warehouse	103,536		28	%
Retail	84,168		23	%
Industrial	55,187		15	%
Other (a)	22,233		6	%
Total	$	370,986	100	%

__________

(a) Includes ABR from tenants with the following property types: education facility, fitness facility, self-storage, land, and net-leased student housing.

CPA:17 – Global 6/30/2018 10-Q – 42

Portfolio Diversification by Tenant Industry

(dollars in thousands)

	Pro Rata
Industry Type	ABR		Percent
Retail Stores	$	107,771	29	%
Business Services	42,105		11	%
Grocery	37,708		10	%
Media: Advertising, Printing, and Publishing	18,763		5	%
Insurance	16,464		4	%
Cargo Transportation	16,284		4	%
Capital Equipment	14,665		4	%
Consumer Services	13,716		4	%
Telecommunications	11,494		3	%
Automotive	10,221		3	%
Media: Broadcasting and Subscription	10,020		3	%
Healthcare and Pharmaceuticals	9,816		3	%
Banking	9,150		3	%
Hotel, Gaming, and Leisure	9,109		2	%
Beverage, Food, and Tobacco	8,987		2	%
Containers, Packing, and Glass	7,816		2	%
Non-Durable Consumer Goods	7,567		2	%
High Tech Industries	6,479		2	%
Other (a)	12,851		4	%
Total	$	370,986	100	%

__________

(a) Includes ABR from tenants in the following industries: construction and building; wholesale; aerospace and defense; consumer transportation; chemicals, plastics, and rubber; durable consumer goods; real estate; metals and mining; finance; and environmental industries.

CPA:17 – Global 6/30/2018 10-Q – 43

Lease Expirations

(dollars in thousands)

	Pro Rata
Year of Lease Expiration (a)	Number of Leases Expiring	ABR		Percent
2018 remaining (b)	11	$	1,287	—	%
2019	5	2,500		1	%
2020	5	281		—	%
2021	7	1,799		1	%
2022	4	4,318		1	%
2023	7	4,639		1	%
2024 (c)	11	33,994		9	%
2025	16	24,138		7	%
2026	17	26,900		7	%
2027	22	31,470		9	%
2028	26	41,198		11	%
2029	4	6,485		2	%
2030	21	51,927		14	%
2031	7	22,826		6	%
Thereafter	60	117,224		31	%
Total	223	$	370,986	100	%

__________

(a) Assumes tenant does not exercise any renewal option.

(b) Month-to-month leases with ABR totaling $0.9 million are included in 2018.

(c) Amount includes $15.2 million of ABR related to The New York Times Company, a tenant at one of our properties. In January 2018, the tenant exercised its bargain purchase option to acquire the property for $250.0 million in 2019. There can be no assurance that such repurchase will be completed.

Operating Properties

At June 30, 2018, our operating properties were comprised as follows (square footage in thousands):

State	Number of Properties	Square Footage
Illinois	13	900
California	7	476
Florida (a)	5	452
New York	5	335
Hawaii	4	259
Georgia	2	79
North Carolina	1	80
Texas	1	75
Total	38	2,656

__________

(a) Includes the Shelborne Hotel property, which we consolidate (Note 4).

CPA:17 – Global 6/30/2018 10-Q – 44

Terms and Definitions

Pro Rata Metrics— The portfolio information above contains certain metrics prepared under the pro rata consolidation method.We refer to these metrics as pro rata metrics. We have a number of investments, usually with our affiliates, in which our economic ownership is less than 100%. Under the full consolidation method, we report 100% of the assets, liabilities, revenues, and expenses of those investments that are deemed to be under our control or for which we are deemed to be the primary beneficiary, even if our ownership is less than 100%. Also, for all other jointly owned investments, which we do not control, we report our net investment and our net income or loss from that investment. Under the pro rata consolidation method, we present our proportionate share, based on our economic ownership of these jointly owned 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, net of receivable reserves as determined by GAAP, and reflects exchange rates as of June 30, 2018. 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.

CPA:17 – Global 6/30/2018 10-Q – 45

Results of Operations

We evaluate our results of operations with a focus on (i) our ability to generate the cash flow necessary to meet our objectives of funding distributions to stockholders and (ii) increasing the value in our real estate investments. As a result, our assessment of operating results gives less emphasis to the effect of unrealized gains and losses, which may cause fluctuations in net income for comparable periods but have no impact on cash flows, and to other non-cash charges, such as depreciation and impairment charges.

The following table presents the comparative results of operations (in thousands):

	Three Months Ended June 30,									Six Months Ended June 30,
	2018			2017			Change			2018			2017			Change
Revenues
Lease revenues	$	88,847		$	86,335		$	2,512		$	178,178		$	192,285		$	(14,107	)
Operating real estate income	11,786			9,575			2,211			23,999			18,912			5,087
Interest income and other	5,318			3,448			1,870			10,247			5,549			4,698
Reimbursable tenant costs	3,875			7,155			(3,280		)	10,684			12,772			(2,088		)
	109,826			106,513			3,313			223,108			229,518			(6,410		)
Operating Expenses
Depreciation and amortization:
Net-leased properties	25,663			24,814			849			52,317			52,384			(67		)
Operating properties	2,118			3,249			(1,131		)	3,914			6,498			(2,584		)
	27,781			28,063			(282		)	56,231			58,882			(2,651		)
Property expenses:
Net-leased properties	13,018			6,231			6,787			21,754			9,894			11,860
Operating properties	8,912			3,427			5,485			16,529			6,779			9,750
Asset management fees	7,493			7,339			154			14,985			14,664			321
Reimbursable tenant costs	3,875			7,155			(3,280		)	10,684			12,772			(2,088		)
	33,298			24,152			9,146			63,952			44,109			19,843
Impairment charges and other credit losses	6,168			—			6,168			11,572			4,519			7,053
General and administrative	3,419			3,806			(387		)	6,538			7,376			(838		)
Merger and other expenses	2,300			(440		)	2,740			2,357			310			2,047
	72,966			55,581			17,385			140,650			115,196			25,454
Other Income and Expenses
Interest expense	(20,801		)	(21,453		)	652			(41,351		)	(44,843		)	3,492
Equity in earnings of equity method investments in real estate	11,145			2,270			8,875			15,828			4,255			11,573
Other gains and (losses)	1,168			10,273			(9,105		)	5,171			15,930			(10,759		)
Loss on extinguishment of debt	—			(353		)	353			—			(1,967		)	1,967
	(8,488		)	(9,263		)	775			(20,352		)	(26,625		)	6,273
Income before income taxes and gain on sale of real estate	28,372			41,669			(13,297		)	62,106			87,697			(25,591		)
(Provision for) benefit from income taxes	(1,071		)	(1,115		)	44			332			(1,736		)	2,068
Income before gain on sale of real estate	27,301			40,554			(13,253		)	62,438			85,961			(23,523		)
Gain on sale of real estate, net of tax	—			1,171			(1,171		)	24			2,910			(2,886		)
Net Income	27,301			41,725			(14,424		)	62,462			88,871			(26,409		)
Net income attributable to noncontrolling interests	(7,746		)	(10,919		)	3,173			(16,170		)	(20,054		)	3,884
Net Income Attributable to CPA:17 – Global	$	19,555		$	30,806		$	(11,251	)	$	46,292		$	68,817		$	(22,525	)

CPA:17 – Global 6/30/2018 10-Q – 46

Lease Composition

As of June 30, 2018, approximately 60.1% of our net leases, based on ABR, provide for adjustments based on formulas indexed to changes in the CPI, or similar indices for the jurisdiction in which the property is located, some of which have caps and/or floors. In addition, 37.9% of our net leases on that same basis have fixed rent adjustments, for which ABR is scheduled to increase by an average of 2.5% in the next 12 months. We own international investments and, therefore, lease revenues from these investments are subject to exchange rate fluctuations in various foreign currencies, primarily the euro.

CPA:17 – Global 6/30/2018 10-Q – 47

Property Level Contribution

The following table presents the property level contribution for our consolidated net-leased and operating properties, as well as a reconciliation to net income attributable to CPA:17 – Global (in thousands):

	Three Months Ended June 30,									Six Months Ended June 30,
	2018			2017			Change			2018			2017			Change
Existing Net-Leased Properties
Lease revenues	$	88,273		$	85,475		$	2,798		$	177,021		$	184,360		$	(7,339	)
Depreciation and amortization	(25,385		)	(24,593		)	(792		)	(51,074		)	(48,908		)	(2,166		)
Property expenses	(12,986		)	(6,220		)	(6,766		)	(20,983		)	(10,076		)	(10,907		)
Property level contribution	49,902			54,662			(4,760		)	104,964			125,376			(20,412		)
Recently Acquired Net-Leased Properties
Lease revenues	248			248			—			496			414			82
Depreciation and amortization	(83		)	(82		)	(1		)	(166		)	(135		)	(31		)
Property level contribution	165			166			(1		)	330			279			51
Existing Operating Properties
Operating property revenues	9,786			9,580			206			19,321			18,883			438
Operating property expenses	(3,366		)	(3,427		)	61			(7,010		)	(6,821		)	(189		)
Depreciation and amortization	(1,689		)	(3,249		)	1,560			(3,381		)	(6,498		)	3,117
Property level contribution	4,731			2,904			1,827			8,930			5,564			3,366
Recently Acquired Operating Property
Operating property revenues	2,000			—			2,000			4,678			—			4,678
Operating property expenses	(5,546		)	—			(5,546		)	(9,519		)	—			(9,519		)
Depreciation and amortization	(429		)	—			(429		)	(533		)	—			(533		)
Property level contribution	(3,975		)	—			(3,975		)	(5,374		)	—			(5,374		)
Properties Sold or Held for Sale
Lease revenues	326			612			(286		)	661			7,511			(6,850		)
Operating property revenues	—			(5		)	5			—			29			(29		)
Depreciation and amortization	(195		)	(139		)	(56		)	(1,077		)	(3,341		)	2,264
Property expenses	(32		)	(11		)	(21		)	(771		)	182			(953		)
Operating property expenses	—			—			—			—			42			(42		)
Property level contribution	99			457			(358		)	(1,187		)	4,423			(5,610		)
Total Property Level Contribution
Lease revenues	88,847			86,335			2,512			178,178			192,285			(14,107		)
Operating property revenues	11,786			9,575			2,211			23,999			18,912			5,087
Depreciation and amortization	(27,781		)	(28,063		)	282			(56,231		)	(58,882		)	2,651
Property expenses	(13,018		)	(6,231		)	(6,787		)	(21,754		)	(9,894		)	(11,860		)
Operating property expenses	(8,912		)	(3,427		)	(5,485		)	(16,529		)	(6,779		)	(9,750		)
Property Level Contribution	50,922			58,189			(7,267		)	107,663			135,642			(27,979		)
Add other income:
Interest income and other	5,318			3,448			1,870			10,247			5,549			4,698
Less other expenses:
Asset management fees	(7,493		)	(7,339		)	(154		)	(14,985		)	(14,664		)	(321		)
Impairment charges and other credit losses	(6,168		)	—			(6,168		)	(11,572		)	(4,519		)	(7,053		)
General and administrative	(3,419		)	(3,806		)	387			(6,538		)	(7,376		)	838
Merger and other expenses	(2,300		)	440			(2,740		)	(2,357		)	(310		)	(2,047		)
Other Income and Expenses
Interest expense	(20,801		)	(21,453		)	652			(41,351		)	(44,843		)	3,492
Equity in earnings of equity method investments in real estate	11,145			2,270			8,875			15,828			4,255			11,573
Other gains and (losses)	1,168			10,273			(9,105		)	5,171			15,930			(10,759		)
Loss on extinguishment of debt	—			(353		)	353			—			(1,967		)	1,967
	(8,488		)	(9,263		)	775			(20,352		)	(26,625		)	6,273
Income before income taxes and gain on sale of real estate	28,372			41,669			(13,297		)	62,106			87,697			(25,591		)
(Provision for) benefit from income taxes	(1,071		)	(1,115		)	44			332			(1,736		)	2,068
Income before gain on sale of real estate	27,301			40,554			(13,253		)	62,438			85,961			(23,523		)
Gain on sale of real estate, net of tax	—			1,171			(1,171		)	24			2,910			(2,886		)
Net Income	27,301			41,725			(14,424		)	62,462			88,871			(26,409		)
Net income attributable to noncontrolling interests	(7,746		)	(10,919		)	3,173			(16,170		)	(20,054		)	3,884
Net Income Attributable to CPA:17 – Global	$	19,555		$	30,806		$	(11,251	)	$	46,292		$	68,817		$	(22,525	)

CPA:17 – Global 6/30/2018 10-Q – 48

Property level contribution is a non-GAAP measure that we believe to be a useful supplemental measure for management and investors in evaluating and analyzing the financial results of our net-leased and operating properties over time. Property level contribution presents the lease and operating property revenues, less property expenses and depreciation and amortization. We believe that Property level contribution allows for meaningful comparison between periods of the direct costs of owning and operating our net-leased assets and operating properties. When a property is leased on a net lease basis, reimbursable tenant costs are recorded as both income and property expense and, therefore, have no impact on the Property level contribution. While we believe that Property level contribution is a useful supplemental measure, it should not be considered as an alternative to Net income attributable to CPA:17 – Global as an indication of our operating performance.

Existing Net-Leased Properties

Existing net-leased properties are those we acquired or placed into service prior to January 1, 2017 and were not sold during the periods presented. At June 30, 2018, we had 253 existing net-leased properties.

For the three months ended June 30, 2018 as compared to the same period in 2017, Property level contribution for existing net-leased properties decreased by $4.8 million, primarily due to increases in property expenses of $6.8 million and depreciation and amortization expenses of $0.8 million, partially offset by an increase in lease revenues of $2.8 million. Property expenses increased primarily due to an increase in bad debt expense of $3.3 million related to our Agrokor investment, a lease audit that concluded we overcharged $3.1 million to one of our tenants for common area expenses that we may be required to refund, and an increase of foreign currency losses of $0.4 million. Depreciation and amortization expenses and lease revenues both increased primarily due to the strengthening of the euro as compared to the U.S. dollar between the periods.

For the six months ended June 30, 2018 as compared to the same period in 2017, Property level contribution for existing net-leased properties decreased by $20.4 million, primarily due to increases in property expenses of $10.9 million and depreciation and amortization expenses of $2.2 million, as well as a decrease in lease revenues of $7.3 million. Property expenses increased primarily due to an increase in bad debt expense of $5.5 million related to our Agrokor investment, a lease audit that concluded we overcharged $3.1 million to one of our tenants for common area expenses that we may be required to refund, $1.4 million related to real estate taxes refunded during the six months ended June 30, 2017, and an increase of foreign currency losses of $1.2 million. Depreciation and amortization expenses increased due to the strengthening of the euro as compared to the U.S. dollar between the periods. Lease revenues decreased primarily due to the $15.7 million write-off of a below-market lease intangible liability that was recognized in Rental income due to a lease modification of one of our net-leased properties that occurred during the six months ended June 30, 2017, partially offset by an increase of $6.6 million due to the strengthening of the euro as compared to the U.S. dollar between the periods.

Recently Acquired Net-Leased Property

Recently acquired net-leased properties are those that we acquired or placed into service subsequent to December 31, 2016; we acquired one investment in February 2017.

Existing Operating Properties

Existing operating properties are those we acquired or placed into service prior to January 1, 2017 and were not sold during the periods presented. At June 30, 2018, we had 37 wholly owned existing self-storage properties. Additionally, other real estate operations includes the results of operations of a parking garage attached to one of our existing net-leased properties.

For the three and six months ended June 30, 2018, as compared to the same periods in 2017, Property level contribution from existing operating properties increased by $1.8 million and $3.4 million, respectively, primarily due to decreases in depreciation and amortization expenses of $1.6 million and $3.1 million, respectively. Depreciation and amortization decreased because certain of our in-place lease intangible assets became fully amortized during 2017.

CPA:17 – Global 6/30/2018 10-Q – 49

Recently Acquired Operating Property

Recently acquired operating property includes only the Shelborne Hotel, the ownership of which was restructured on October 3, 2017 by converting our underlying loan in the investment to equity and transferring the original partners’ equity interest in the investment to us (Note 6). As a result of the restructuring, we determined that this investment should no longer be accounted for as an ADC Arrangement and we consolidate this investment as of the restructure date.

For the three and six months ended June 30, 2018, Property level contribution from the Shelborne Hotel was directly impacted by the disruption caused by Hurricane Irma (Note 4). The hotel sustained damage and is still not operating at full capacity due to ongoing construction. As a result, for the three and six months ended June 30, 2018, hotel operating property expenses and depreciation and amortization expense exceeded operating revenues by $4.0 million and $5.4 million, respectively, in the aggregate, including a $2.0 million reserve related to our outstanding insurance receivables included in operating property expenses in both periods.

Properties Sold or Held for Sale

Properties sold or held for sale during the three and six months ended June 30, 2018 and 2017 are those that were sold or held for sale subsequent to December 31, 2016.

During the three and six months ended June 30, 2018, we had one net-leased property located in Waldaschaff, Germany, that was held for sale (Note 13). Property level contribution for the six months ended June 30, 2018 included incremental depreciation recognized in conjunction with an asset retirement obligation of $0.8 million on this property.

During the three and six months ended June 30, 2017, we disposed of three and five net-lease properties, respectively. Property level contribution for the six months ended June 30, 2017 included $3.3 million due to the acceleration of amortization of certain lease intangibles related to the KBR, Inc. lease termination, which is included in lease revenues (Note 13).

Other Revenues and Expenses

Interest Income and Other

Interest income and other primarily consists of interest earned on our loans receivable and CMBS investments, as well as other income received related to our properties.

For the three and six months ended June 30, 2018 as compared to the same period in 2017, interest income and other increased by $1.9 million and $4.7 million, respectively, primarily due to the additional accretion income on the I-drive Wheel Loan that resulted from the adoption of ASU 2017-05 (Note 2), which increased interest income by $2.5 million and $5.9 million, respectively, partially offset by a decrease in the accretion of principal on our CMBS investments of $0.7 million and $1.4 million, respectively. One of our CMBS investments was substantially impaired during the six months ended June 30, 2018 (Note 8), which directly impacted the accretion of the principal generated from these investments.

Asset Management Fees

For the three and six months ended June 30, 2018 as compared to the same periods in 2017, asset management fees increased by $0.2 million and $0.3 million, respectively, primarily due to an increase in the estimated fair market value of our real estate portfolio.

Impairment Charges and Other Credit Losses

Our impairment charges are more fully described in Note 8.

During both the three and six months ended June 30, 2018, we recognized an allowance for credit losses totaling $6.2 million on two of our net-lease properties that are classified as direct financing leases as a result of the tenant informing us they will be going out of business and vacating the properties. In addition, during the six months ended June 30, 2018, we incurred an other-than-temporary impairment charge of $5.4 million on one of our CMBS tranches to reduce its carrying value to its estimated fair value as a result of non-performance (Note 8).

CPA:17 – Global 6/30/2018 10-Q – 50

During the six months ended June 30, 2017, we incurred an impairment charge of $4.5 million on a property to reduce the carrying value of the property to its estimated fair value (Note 8). The fair value measurement approximated its estimated selling price, less estimated costs to sell at that time. As of June 30, 2018, this property was classified as held for sale (Note 13).

General and Administrative

During the three and six months ended June 30, 2018 as compared to the same periods in 2017, general and administrative expenses decreased by $0.4 million and $0.8 million, respectively, primarily due to a change in our advisory agreement where reimbursed compensation is capped at 1.0% of our pro rata lease revenues during 2018, as compared to the 2.0% cap that was in place during 2017 (Note 3).

Merger and Other Expenses

Merger and other expenses represent costs incurred related to the Proposed Merger and direct costs incurred to acquire properties in transactions that are accounted for as business combinations, whereby such costs are required to be expensed as incurred.

During both the three and six months ended June 30, 2018 Merger and other expenses included $2.3 million of legal and financial advisor fees incurred in connection with the Proposed Merger (Note 3).

Interest Expense

During the three and six months ended June 30, 2018 as compared to the same periods in 2017, interest expense decreased by $0.7 million and $3.5 million, respectively, primarily due to a decrease in our average outstanding debt balance between the periods presented. Our average outstanding debt balance was $1.9 billion for both the three and six months ended June 30, 2018 and $2.0 billion for both the three and six months ended June 30, 2017.

CPA:17 – Global 6/30/2018 10-Q – 51

Equity in Earnings of Equity Method Investments in Real Estate

Equity in earnings of equity method investments in real estate is recognized in accordance with the investment agreement for each of our equity method investments and, where applicable, based upon an allocation of the investment’s net assets at book value as if the investment were hypothetically liquidated at the end of each reporting period. Further details about our equity method investments are discussed in Note 6. The following table presents the details of our Equity in earnings of equity method investments in real estate (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
Lessee/Equity Investee	2018			2017			2018			2017
Net Lease:
Kesko Senukai (a) (b)	$	5,545		$	151		$	4,579		$	151
Hellweg 2 (a)	2,299			1,434			4,143			2,688
Jumbo Logistiek Vastgoed B.V. (a)	1,079			1,042			2,188			2,056
U-Haul Moving Partners, Inc. and Mercury Partners, LP	613			607			1,226			1,223
Berry Global Inc.	469			441			929			876
BPS Nevada, LLC	301			301			610			609
Tesco Global Aruhazak Zrt. (a)	226			326			500			485
Bank Pekao S.A. (a)	190			202			375			405
State Farm Automobile Co.	188			175			375			387
Eroski Sociedad Cooperativa — Mallorca (a)	169			152			342			300
Apply (a)	122			(141		)	98			(238		)
Dick’s Sporting Goods, Inc.	57			48			108			89
Agrokor (a) (c)	(38		)	(2,825		)	(86		)	(2,726		)
	11,220			1,913			15,387			6,305
All Other:
BG LLH, LLC	(75		)	874			441			130
Shelborne Hotel (d)	—			(943		)	—			(2,704		)
BPS Nevada, LLC — Preferred Equity (e)	—			426			—			1,211
IDL Wheel Tenant, LLC (f)	—			—			—			(687		)
	(75		)	357			441			(2,050		)
Total equity in earnings of equity method investments in real estate	$	11,145		$	2,270		$	15,828		$	4,255

__________

(a) Amounts include impact of fluctuations in the exchange rate of the applicable foreign currency.

(b) On May 23, 2017, we entered into a joint venture investment to acquire a 70% interest in a real estate portfolio which included 18 retail stores and one warehouse collectively located in Lithuania, Latvia, and Estonia. The increase in equity earnings for the three and six months ended June 30, 2018 as compared to the same periods in 2017 was primarily due to a release of a deferred tax liability in this investment that resulted from a change in Latvian tax law, for which our pro rata share was $5.1 million and $3.6 million, respectively.

(c) During both the three and six months ended June 30, 2017, we recognized an other-than-temporary impairment charge of $2.5 million on our Agrokor equity method investment to reduce the carrying value of our investment in the joint venture to its estimated fair value due to tenant financial difficulties (Note 8).

(d) On October 3, 2017, we restructured our Shelborne Hotel investment by converting the underlying loan to equity and transferring the original partners’ equity interest in the investment to us. Since the construction is now completed and the loan has been satisfied, we determined that this investment should no longer be accounted for as an ADC Arrangement and, as a result, we have consolidated this investment as of the restructure date (Note 6).

(e) This investment represents a preferred equity interest, with a preferred rate of return of 12%. On May 19, 2017, we received the full repayment of our preferred equity interest; therefore, the preferred equity interest is now retired (Note 6).

(f) This investment was restructured on March 17, 2017 and, as a result, we have reclassified the equity investment to a loan receivable, included in Accounts receivable and other assets, net in the consolidated financial statements (Note 6).

CPA:17 – Global 6/30/2018 10-Q – 52

Other Gains and (Losses)

Other gains and (losses) primarily consists of gains and losses on foreign currency transactions, and derivative instruments. We make intercompany loans to a number of our foreign subsidiaries, most of which do not have the U.S. dollar as their functional currency. Remeasurement of foreign currency intercompany transactions that are scheduled for settlement, consisting primarily of accrued interest and short-term loans, are included in the determination of net income. We also recognize gains or losses on foreign currency transactions when we repatriate cash from our foreign investments or hold foreign currencies in entities designated as U.S. dollar functional currency. In addition, we have certain derivative instruments, including common stock warrants, foreign currency contracts, and a swap, that are not designated as hedges for accounting purposes, for which realized and unrealized gains and losses are included in earnings. The timing and amount of such gains or losses cannot always be estimated and are subject to fluctuation.

For the three months ended June 30, 2018, as compared to the same period in 2017, net other gains decreased by $9.1 million, primarily due to a decrease in foreign currency gains related to the short-term intercompany loans on our international investments of $11.2 million, partially offset by a $1.2 million reversal of Hurricane Irma expenses that resulted from a reduction to the estimated fees payable to our third-party insurance adjuster originally incurred in the fourth quarter of 2017 regarding our Shelborne Hotel investment (Note 4) and an increase in gains recognized on derivatives of $0.4 million.

For the six months ended June 30, 2018, as compared to the same period in 2017, net other gains decreased by $10.8 million, primarily due to a decrease in foreign currency gains related to the short-term intercompany loans on our international investments of $11.9 million and a decrease in gains recognized on derivatives of $0.6 million, partially offset by a $1.2 million reversal of Hurricane Irma expenses that resulted from a reduction to the estimated fees payable to our third-party insurance adjuster originally incurred in the fourth quarter of 2017 regarding our Shelborne Hotel investment (Note 4).

Loss on Extinguishment of Debt

During the three and six months ended June 30, 2017, we recorded a loss on extinguishment of debt of $0.4 million and $2.0 million, respectively, primarily due to the early terminations of certain mortgage debt associated with our 2017 dispositions (Note 13). We did not recognize any loss on extinguishment of debt during the three and six months ended June 30, 2018.

(Provision for) Benefit From Income Taxes

Our (provision for) benefit from income taxes is primarily related to our international properties and taxable REIT subsidiaries.

During the three and six months ended June 30, 2018, we recorded a provision for and benefit from income taxes of $1.1 million and $0.3 million, respectively, comprised of current income taxes of $1.3 million and $3.3 million, respectively, and deferred income tax benefits of $0.2 million and $3.6 million, respectively.

During the three and six months ended June 30, 2017, we recorded a provision for income taxes of $1.1 million and $1.7 million, respectively, comprised of current income taxes of $0.5 million and $1.3 million, respectively, and deferred income tax provisions of $0.6 million and $0.4 million, respectively.

Gain on Sale of Real Estate, Net of Tax

During the three and six months ended June 30, 2017, we recognized a gain on sale of real estate, net of tax, of $1.2 million and $2.9 million, respectively, as a result of the three and five net-lease properties that were sold during the respective periods (Note 13).

We did not have any significant gain on sale of real estate, net of tax during both the three and six months ended June 30, 2018.

Net Income Attributable to Noncontrolling Interests

For the three and six months ended June 30, 2018 as compared to the same periods in 2017, net income attributable to noncontrolling interests decreased by $3.2 million and $3.9 million, respectively, primarily due to a decrease of $1.8 million and $2.4 million, respectively, in the Available Cash Distribution paid to our Advisor (Note 3) and a decrease of $1.0 million and $1.9 million, respectively, related to our Shelborne Hotel investment, which prior to its restructuring on October 3, 2017 (Note 6) was accounted for as an ADC Arrangement.

CPA:17 – Global 6/30/2018 10-Q – 53

Liquidity and Capital Resources

We use the cash flow generated from our investments primarily to meet our operating expenses, service debt, and fund distributions to stockholders. We currently expect that, for the short term, the aforementioned cash requirements will be funded by our cash on hand, financings, or unused capacity under our Senior Credit Facility.

Our liquidity would be affected adversely by unanticipated costs and greater-than-anticipated operating expenses. To the extent that our working capital reserve is insufficient to satisfy our cash requirements, additional funds may be provided from cash generated from operations or through short-term borrowings. In addition, we may incur indebtedness in connection with the acquisition of real estate, refinance debt on existing properties or arrange for the leveraging of any previously unfinanced property.

Sources and Uses of Cash During the Period

Our cash flows will fluctuate periodically due to a number of factors, which may include, among other things, the timing of purchases and sales of real estate; the timing of the receipt of the proceeds from, and the repayment of, non-recourse mortgage loans and the receipt of lease revenues; whether our Advisor receives fees in shares of our common stock or (as it does currently in light of the Proposed Merger) cash, which our board of directors must elect, after consultation with our Advisor; the timing and characterization of distributions received from equity investments in real estate; the timing of payments of the Available Cash Distribution to our Advisor; and changes in foreign currency exchange rates. Despite these fluctuations, we believe our investments will generate sufficient cash from operations and from equity distributions in excess of equity income in real estate to meet our normal recurring short-term and long-term liquidity needs. We may also use existing cash resources, the proceeds of non-recourse mortgage loans, sales of assets, unused capacity under our Senior Credit Facility, distributions reinvested in our common stock through our DRIP (which is currently suspended in light of the Proposed Merger), and the issuance of additional equity securities 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 $19.3 million during the six months ended June 30, 2018 as compared to the same period in 2017, primarily due to an increase in our distributions from our equity method investments, an increase in the rent collected on our Agrokor investments, a decrease in interest expense and increase to realized foreign currency gains, partially offset by the impact of cash flows associated with our 2017 dispositions.

Investing Activities —Our investing activities are generally comprised of real estate-related transactions (purchases and sales), payment of deferred acquisition fees to our Advisor related to asset acquisitions, and capitalized property-related costs. During the six months ended June 30, 2018, we funded $16.3 million for certain build-to-suit expansion projects and received $12.7 million as a return of capital from our equity method investments. We also used $6.4 million to fund capital contributions to our equity investments in real estate and $2.1 million to fund capital expenditures on certain of our properties.

Financing Activities — During the six months ended June 30, 2018, we paid distributions to our stockholders for the fourth quarter of 2017 and first quarter of 2018 totaling $114.0 million, which consisted of $63.8 million of cash distributions and $50.2 million of distributions that were reinvested by stockholders in shares of our common stock through our DRIP. We also paid $32.7 million for the repurchase of shares pursuant to our redemption plan as described below, and we repaid $29.5 million under our Senior Credit Facility and drew down $13.6 million of proceeds from that facility. We made scheduled and unscheduled mortgage principal payments totaling $24.0 million, and paid distributions of $18.3 million to affiliates that hold noncontrolling interests in various investments jointly owned with us.

Distributions and Redemptions

In light of the Proposed Merger, in June 2018, our board of directors suspended our DRIP, as well as repurchases of our common stock from our stockholders under our discretionary quarterly redemption plan, except for special circumstance redemptions.

During the six months ended June 30, 2018, we declared distributions to our stockholders totaling $114.5 million, which consisted of $89.4 million of cash distributions and $25.1 million of distributions reinvested by stockholders in our shares through our DRIP. We funded all of these distributions from Net cash provided by operating activities. We expect that, in the future, if distributions cannot be fully sourced from net cash provided by operating activities, they may be sourced from other sources of cash, such as financings, borrowings, or sales of assets.

CPA:17 – Global 6/30/2018 10-Q – 54

We maintain a quarterly redemption program pursuant to which we may, at the discretion of our board of directors, redeem shares of our common stock for stockholders seeking liquidity. During the six months ended June 30, 2018, we received requests from our stockholders to redeem 3,431,624 shares of our common stock pursuant to our redemption plan, comprised of 956 redemption requests at a weighted-average price per share of $9.47. As of the date of this Report, we have fulfilled all of the valid redemptions requests that have been received during the six months ended June 30, 2018.

Summary of Financing

The table below summarizes our Mortgage debt, net and Senior Credit Facility (dollars in thousands):

	June 30, 2018			December 31, 2017
Carrying Value (a)
Fixed rate	$	997,958		$	1,013,378
Variable rate:
Amount subject to interest rate swaps and caps	437,009			455,143
Floating interest rate mortgage loans	376,855			380,938
Senior Credit Facility — Term Loan	49,981			49,915
Senior Credit Facility—Revolver	35,993			52,016
	899,838			938,012
	$	1,897,796		$	1,951,390
Percent of Total Debt
Fixed rate	53		%	52		%
Variable rate	47		%	48		%
	100		%	100		%
Weighted-Average Interest Rate at End of Period
Fixed rate	4.8		%	4.8		%
Variable rate (b)	3.2		%	2.9		%

__________

(a) Aggregate debt balance includes unamortized deferred financing costs totaling $6.8 million and $8.0 million as of June 30, 2018 and December 31, 2017, respectively, and unamortized discount totaling $4.6 million and $5.5 million as of June 30, 2018 and December 31, 2017, respectively.

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

Cash Resources

At June 30, 2018, our cash resources consisted primarily of cash and cash equivalents totaling $91.0 million. Of this amount, $35.3 million, at then-current exchange rates, was held in foreign subsidiaries, but we could be subject to restrictions or significant costs should we decide to repatriate these funds. As of the date of this Report, we also had unused capacity of $110.5 million on our Senior Credit Facility. Our cash resources may be used for future investments and can be used for working capital needs, other commitments, and distributions to our stockholders. In addition, our unleveraged properties had an aggregate carrying value of $737.2 million at June 30, 2018, although there can be no assurance that we would be able to obtain financing for these properties.

CPA:17 – Global 6/30/2018 10-Q – 55

Cash Requirements

During the next 12 months, we expect that our cash requirements will include funding capital commitments, such as build-to-suit projects; paying distributions to our stockholders and to our affiliates that hold noncontrolling interests in entities we control; payments to acquire new investments; making scheduled mortgage debt service payments and repayments of borrowings under our Senior Credit Facility (Note 10); and paying costs related to the Proposed Merger; as well as other normal recurring operating expenses. Balloon payments totaling $130.1 million on our consolidated mortgage loan obligations are due during the next 12 months. Our Advisor is actively seeking to refinance certain of these loans, although there can be no assurance that it will be able to do so on favorable terms, or at all. Capital and other lease commitments totaling $70.5 million are expected to be funded during the next 12 months. We expect to fund capital commitments, any future investments, any capital expenditures on existing properties, scheduled and unscheduled debt payments on our mortgage loans, and repayments of borrowings under our Revolver through the use of our cash reserves; cash generated from operations; and proceeds from repayments of loans receivable, financings, and asset sales.

Off-Balance Sheet Arrangements and Contractual Obligations

The table below summarizes our debt, off-balance sheet arrangements, and other contractual obligations (primarily our capital commitments and lease obligations) at June 30, 2018 and the effect that these arrangements and obligations are expected to have on our liquidity and cash flow in the specified future periods (in thousands):

	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Mortgage debt, net — principal (a)	$	1,823,257	$	73,641	$	663,892	$	776,648	$	309,076
Senior Credit Facility — Term Loan — principal (b) (c)	50,000		50,000		—		—		—
Senior Credit Facility — Revolver — principal (c)	35,993		35,993		—		—		—
Deferred acquisition fees — principal	4,015		2,649		1,366		—		—
Interest on borrowings and deferred acquisition fees	265,349		73,954		118,647		56,745		16,003
Operating and other lease commitments (d)	70,284		3,012		5,322		1,664		60,286
Asset retirement obligations, net (e)	17,369		—		—		—		17,369
Capital commitments (f)	68,403		67,537		866		—		—
	$	2,334,670	$	306,786	$	790,093	$	835,057	$	402,734

__________

(a) Excludes deferred financing costs totaling $6.8 million and unamortized discount, net of $4.6 million, which were included in Mortgage debt, net at June 30, 2018.

(b) Excludes deferred financing costs of less than $0.1 million on our Term Loan within the Senior Credit Facility, which was initially scheduled to mature on August 26, 2018, unless extended pursuant to its terms (Note 10).

(c) On July 24, 2018, we entered into an amendment to the Credit Agreement to exercise one of our two options to extend the Senior Credit Facility for an additional 12-month period to August 26, 2019 (Note 15).

(d) Operating commitments consist of rental obligations under ground leases. Other lease commitments consist of our estimated share of future rents payable for the purpose of leasing office space pursuant to the advisory agreement. Amounts are estimated based on current allocation percentages among WPC and the other Managed Programs as of June 30, 2018 (Note 3).

(e) Represents the estimated amount of future obligations for the removal of asbestos and environmental waste in connection with several of our investments, payable upon the retirement or sale of the assets.

(f) Capital commitments include $67.4 million and $1.0 million related to unfunded construction commitments and tenant improvements allowances, respectively.

Amounts in the table above that relate to our foreign operations are based on the exchange rate of the local currencies at June 30, 2018, which consisted primarily of the euro. At June 30, 2018, we had no material capital lease obligations for which we were the lessee, either individually or in the aggregate.

CPA:17 – Global 6/30/2018 10-Q – 56

Equity Method Investments

We have interests in unconsolidated investments that primarily own single-tenant properties net leased to companies. Generally, the underlying investments are jointly owned with our affiliates (Note 6). At June 30, 2018, on a combined basis, these investments had total assets of approximately $4.6 billion and third-party non-recourse mortgage debt of $2.7 billion. At that date, our pro rata share of the aggregate debt for these investments was $427.0 million. Cash requirements with respect to our share of these debt obligations are discussed above under Cash Requirements.

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 FFO, MFFO, and Adjusted MFFO, which are non-GAAP measures. 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, MFFO, and Adjusted MFFO and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are provided below.

FFO, MFFO, and Adjusted MFFO

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

We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property, impairment charges on real estate, and depreciation and amortization from real estate assets; and after adjustments for unconsolidated partnerships and jointly owned investments. Adjustments for unconsolidated partnerships and jointly owned investments are calculated to reflect FFO. Our FFO calculation complies with NAREIT’s policy described above. However, NAREIT’s definition of FFO does not distinguish between the conventional method of equity accounting and the hypothetical liquidation at book value method of accounting for unconsolidated partnerships and jointly owned investments.

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements. We believe that, since real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment, and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate-related depreciation and amortization, as well as impairment charges of real estate-related assets, provides a more complete understanding of our performance to investors and to management; and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. In particular, we believe it is appropriate to disregard impairment charges, as this is a fair value adjustment that is largely based on market fluctuations and assessments regarding general market conditions, which can change over time. While impairment charges are excluded from the calculation of FFO, it could be difficult to recover any impairment charges. However, FFO, MFFO, and Adjusted MFFO, as described below, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating the operating performance of the company. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP measures FFO, MFFO, and Adjusted MFFO and the adjustments to GAAP in calculating FFO, MFFO, and Adjusted MFFO.

The Institute for Portfolio Alternatives (formerly known as the Investment Program Association), or the IPA, an industry trade group, has standardized a measure known as MFFO, which the Investment Program Association has recommended as a supplemental measure for publicly registered non-traded REITs and which we believe to be another appropriate non-GAAP

CPA:17 – Global 6/30/2018 10-Q – 57

measure to reflect the operating performance of a non-traded REIT. MFFO is not equivalent to our net income or loss as determined under GAAP, and MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate with a limited life and targeted exit strategy, as currently intended. We believe that, because MFFO excludes costs that we consider more reflective of investing activities and other non-operating items included in FFO, and also excludes acquisition fees and expenses that affect our operations only in periods in which properties are acquired, MFFO can provide, on a going forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we are acquiring properties and once our portfolio is in place. By providing MFFO, we believe we are presenting useful information that assists investors and analysts to better assess the sustainability of our operating performance now that our offering has been completed and once essentially all of our properties have been acquired. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-traded REIT industry. Further, we believe MFFO is useful in comparing the sustainability of our operating performance, with the sustainability of the operating performance of other real estate companies that are not as involved in acquisition activities. MFFO should only be used to assess the sustainability of a company’s operating performance after a company’s offering has been completed and properties have been acquired, as it excludes acquisition costs that have a negative effect on a company’s operating performance during the periods in which properties are acquired.

We define MFFO consistent with the IPA’s Practice Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations, or the Practice Guideline, issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, included in the determination of GAAP net income, as applicable: acquisition fees and expenses; amounts relating to deferred rent receivables and amortization of above- and below-market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments); accretion of discounts and amortization of premiums on debt investments; nonrecurring impairments of real estate-related investments (i.e., infrequent or unusual, not reasonably likely to recur in the ordinary course of business); mark-to-market adjustments included in net income; nonrecurring gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives, or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and jointly owned investments, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums on debt investments, unrealized gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses that are unrealized and may not ultimately be realized.

Our MFFO calculation complies with the IPA’s Practice Guideline described above. In calculating MFFO, we exclude acquisition-related expenses, amortization of above- and below-market leases, fair value adjustments of derivative financial instruments, deferred rent receivables, and the adjustments of such items related to noncontrolling interests. Under GAAP, acquisition fees and expenses are characterized as operating expenses in determining operating net income. These expenses are paid in cash by a company. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by the company, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the property, these fees and expenses, and other costs related to such property. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income in determining cash flow from operating activities.

Our management uses MFFO and the adjustments used to calculate it in order to evaluate our performance against other non-traded REITs, which have limited lives with short and defined acquisition periods and targeted exit strategies shortly thereafter. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate in this manner. We believe that MFFO and the adjustments used to calculate it allow us to present our performance in a manner that takes into account certain characteristics unique to non-traded REITs, such as their limited life, defined acquisition period, and targeted exit strategy, and is therefore a useful measure for investors. For example, acquisition costs are generally funded from the proceeds of our offering and other financing sources and not from operations. By excluding expensed acquisition costs, the use of MFFO provides information consistent with management’s analysis of the operating performance of the properties. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gains or losses, we believe MFFO provides useful supplemental information.

CPA:17 – Global 6/30/2018 10-Q – 58

In addition, our management uses Adjusted MFFO as another measure of sustainable operating performance. Adjusted MFFO adjusts MFFO for deferred income tax expenses and benefits, which are non-cash items that may cause short-term fluctuations in net income but have no impact on current period cash flows. Additionally, we adjust MFFO to reflect the realized gains/losses on the settlement of foreign currency derivatives to arrive at Adjusted MFFO. Foreign currency derivatives are a fundamental part of our operations in that they help us manage the foreign currency exposure we have associated with cash flows from our international investments

Presentation of this information is intended to provide useful information to investors as they compare the operating performance of different REITs, although it should be noted that not all REITs calculate FFO, MFFO, and Adjusted MFFO the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO, MFFO, and Adjusted MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO, MFFO, and Adjusted MFFO should be reviewed in conjunction with other GAAP measurements as an indication of our performance.

Neither the SEC, NAREIT, nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO, MFFO, and Adjusted MFFO. In the future, the SEC, NAREIT, or another regulatory body may decide to standardize the allowable adjustments across the non-traded REIT industry and we would have to adjust our calculation and characterization of FFO, MFFO, or Adjusted MFFO accordingly.

CPA:17 – Global 6/30/2018 10-Q – 59

FFO, MFFO, and Adjusted MFFO were as follows (in thousands): 

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net income attributable to CPA:17 – Global	$	19,555		$	30,806		$	46,292		$	68,817
Adjustments:
Depreciation and amortization of real property	27,805			28,099			56,281			58,948
Gain on sale of real estate	—			(1,171		)	(24		)	(2,910		)
Impairment charges on real estate	—			—			—			4,489
Proportionate share of adjustments to equity in net income of partially owned entities	8,481			9,917			17,219			17,941
Proportionate share of adjustments for noncontrolling interests (a)	(245		)	(119		)	(662		)	(1,752		)
Total adjustments	36,041			36,726			72,814			76,716
FFO (as defined by NAREIT) attributable to CPA:17 – Global	55,596			67,532			119,106			145,533
Adjustments:
Allowance for credit losses	6,168			—			6,168			—
Straight-line and other rent adjustments (b)	(2,898		)	(4,400		)	(5,978		)	(8,663		)
Merger and other expenses (c)	2,300			(440		)	2,357			310
Unrealized losses (gains) on foreign currency, derivatives, and other	1,402			(8,956		)	524			(11,572		)
Amortization of premiums/discounts on debt investments, net	370			433			747			1,182
Above- and below-market rent intangible    lease amortization, net (d) (e)	350			304			714			(18,511		)
Realized gains on foreign currency, derivatives, and other	(95		)	(1,211		)	(2,718		)	(3,811		)
Loss on extinguishment of debt	—			353			—			1,967
Impairment charges on held to maturity securities	—			—			5,404			—
Proportionate share of adjustments to equity in net income of partially owned entities	725			3,719			693			8,115
Proportionate share of adjustments for noncontrolling interests	(188		)	9			(176		)	66
Total adjustments	8,134			(10,189		)	7,735			(30,917		)
MFFO attributable to CPA:17 – Global	63,730			57,343			126,841			114,616
Adjustments:
Deferred taxes and other adjustments	(5,897		)	295			(8,257		)	25
Hedging gains	1,231			967			2,998			3,580
Total adjustments	(4,666		)	1,262			(5,259		)	3,605
Adjusted MFFO attributable to CPA:17 – Global	$	59,064		$	58,605		$	121,582		$	118,221

__________

(a) Amount for the six months ended June 30, 2017 includes $1.5 million related to an impairment charge recognized on one of our consolidated joint-venture investments (Note 8).

(b) Under GAAP, rental receipts are allocated to periods using an accrual basis. This may result in timing of income recognition that is significantly different than underlying contract terms. By adjusting for these items (to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), management believes that MFFO and Adjusted MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments, provides insight on the contractual cash flows of such lease terms and debt investments, and aligns results with management’s analysis of operating performance.

(c) Amounts for both the three and six months ended June 30, 2018 are primarily comprised of costs incurred in connection with the Proposed Merger (Note 3).

CPA:17 – Global 6/30/2018 10-Q – 60

(d) Under GAAP, certain intangibles are accounted for at cost and reviewed at least annually for impairment and certain intangibles are assumed to diminish predictably in value over time and amortized, similar to depreciation and amortization of other real estate related assets that are excluded from FFO. However, because real estate values and market lease rates historically rise or fall with market conditions, management believes that, by excluding charges relating to amortization of these intangibles, MFFO and Adjusted MFFO provides useful supplemental information on the performance of the real estate.

(e) Amount for the six months ended June 30, 2017 includes a $15.7 million write-off and $3.3 million acceleration of a below-market rent lease liabilities related to the KBR, Inc. lease modification/termination (Note 13).

CPA:17 – Global 6/30/2018 10-Q – 61

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market Risk

Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, and equity prices. The primary risks that we are exposed to are interest rate risk and foreign currency exchange risk. We are also exposed to further market risk as a result of tenant concentrations in certain industries and/or geographic regions, since adverse market factors can affect the ability of tenants in a particular industry/region to meet their respective lease obligations. In order to manage this risk, our Advisor views our collective tenant roster as a portfolio and attempts to diversify such portfolio so that we are not overexposed to a particular industry or geographic region.

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

Interest Rate Risk

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

We are exposed to the impact of interest rate changes primarily through our borrowing activities. To limit this exposure, we have historically attempted to obtain non-recourse mortgage financing on a long-term, fixed-rate basis. However, from time to time, we or our joint investment partners have obtained, and may in the future obtain, variable-rate non-recourse mortgage loans and, as a result, we have entered into, and may continue to enter into swaptions, interest rate swap agreements or interest rate cap agreements with counterparties. See Note 9 for additional information on our interest rate swaps, caps, and swaptions.

At June 30, 2018, our outstanding debt either bore interest at fixed rates, bore interest at floating rates, was swapped or capped to a fixed rate, or bore interest at fixed rates that were scheduled to convert to then-prevailing market fixed rates at certain future points during their term. Our debt obligations are more fully described in Note 10 and Liquidity and Capital Resources — Summary of Financing in Item 7 above. The following table presents principal cash outflows based upon expected maturity dates of our debt obligations outstanding at June 30, 2018 (in thousands):

	2018 (Remaining)		2019		2020		2021		2022		Thereafter		Total		Fair value
Fixed-rate debt (a)	$	41,596	$	29,369	$	124,160	$	213,972	$	270,228	$	323,645	$	1,002,970	$	992,322
Variable-rate debt (a) (b)	$	93,200	$	44,043	$	301,013	$	233,274	$	78,210	$	156,540	$	906,280	$	904,327

__________

(a) Amounts are based on the exchange rate at June 30, 2018, as applicable.

(b) Includes the $50.0 million Term Loan and $36.0 million Revolver under our Senior Credit Facility, which was initially scheduled to mature on August 26, 2018, unless extended pursuant to its terms. On July 24, 2018, we entered into an amendment to the Credit Agreement to exercise one of our two options to extend the Senior Credit Facility for an additional 12-month period, which is now scheduled to mature on August 26, 2019 (Note 15).

At June 30, 2018, the estimated fair value of our fixed-rate debt, as well as any variable-rate debt that currently bears interest at fixed rates or has effectively been converted to a fixed rate through the use of interest rate swaps, is affected by changes in interest rates. A decrease or increase in interest rates of 1% would change the estimated fair value of this debt at June 30, 2018 by an aggregate increase of $41.7 million or an aggregate decrease of $57.9 million, respectively. Annual interest expense on our unhedged variable-rate debt at June 30, 2018 would increase or decrease by $4.6 million for each respective 1% change in annual interest rates.

CPA:17 – Global 6/30/2018 10-Q – 62

As more fully described under Liquidity and Capital Resources — Summary of Financing in Item 2 above, a portion of our variable-rate debt in the table above bore interest at fixed rates at June 30, 2018, but has interest rate reset features that will change the fixed interest rates to then-prevailing market fixed rates at certain points during their term. This debt is generally not subject to short-term fluctuations in interest rates.

Foreign Currency Exchange Rate Risk

We own international investments, primarily in Europe and Asia, and as a result, are subject to risk from the effects of exchange rate movements in various foreign currencies, primarily the euro and, to a lesser extent, the British pound sterling, the Japanese yen, and the Norwegian krone, which may affect future costs and cash flows. Although all of our international investments through the second quarter of 2018 were conducted in these currencies, we may conduct business in other currencies in the future. We manage foreign currency exchange rate movements by generally placing both our debt service obligation to the lender and the tenant’s rental obligation to us in the same currency. This reduces our overall exposure to the actual equity that we have invested and the equity portion of our cash flow. In addition, we may use currency hedging to further reduce the exposure to our equity cash flow. We are generally a net receiver of these currencies (we receive more cash than we pay out), therefore our foreign operations benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar, relative to the foreign currency.

We have obtained, and may in the future obtain, non-recourse mortgage financing in local currencies. To the extent that currency fluctuations increase or decrease rental revenues, as translated to U.S. dollars, the change in debt service, as translated to U.S. dollars, will partially offset the effect of fluctuations in revenue and, to some extent, mitigate the risk from changes in foreign currency exchange rates. We enter into foreign currency forward contracts and collars to hedge certain of our foreign currency cash flow exposures. See Note 9 for additional information on our foreign currency forward contracts and collars.

Scheduled future minimum rents, exclusive of renewals, under non-cancelable operating leases, for our consolidated foreign operations for the remainder of 2018, during each of the next four calendar years following December 31, 2018 and thereafter, are as follows (in thousands):

Lease Revenues(a)	2018 (Remaining)		2019		2020		2021		2022		Thereafter		Total
Euro (b)	$	59,825	$	118,799	$	119,306	$	118,418	$	118,078	$	757,232	$	1,291,658
British pound sterling (c)	2,606		5,170		5,184		5,170		5,170		41,703		65,003
Japanese yen (d)	1,388		2,754		2,762		2,754		664		—		10,322
	$	63,819	$	126,723	$	127,252	$	126,342	$	123,912	$	798,935	$	1,366,983

Scheduled debt service payments (principal and interest) for mortgage notes payable for our consolidated foreign operations and our Revolver for the remainder of 2018, during each of the next four calendar years following December 31, 2018 and thereafter, are as follows (in thousands):

Debt Service(a) (e)	2018 (Remaining)		2019		2020		2021		2022		Thereafter		Total
Euro (b)	$	28,382	$	28,161	$	104,947	$	159,743	$	89,705	$	174,465	$	585,403
British pound sterling (c) (f)	858		12,347		439		17,165		—		—		30,809
Japanese yen (d) (f)	20,845		—		—		—		—		—		20,845
	$	50,085	$	40,508	$	105,386	$	176,908	$	89,705	$	174,465	$	637,057

__________

(a) Amounts are based on the applicable exchange rates at June 30, 2018. Contractual rents and debt obligations are denominated in the functional currency of the country of each property. Our foreign operations denominated in the Norwegian krone are related to an unconsolidated jointly owned investment and is excluded from the amounts in the tables.

(b) We estimate that, for a 1% increase or decrease in the exchange rate between the euro and the U.S. dollar, there would be a corresponding change in the projected estimated property-level cash flow at June 30, 2018 of $7.1 million.

(c) We estimate that, for a 1% increase or decrease in the exchange rate between the British pound sterling and the U.S. dollar, there would be a corresponding change in the projected estimated property-level cash flow at June 30, 2018 of $0.3 million.

(d) We estimate that, for a 1% increase or decrease in the exchange rate between the Japanese yen and the U.S. dollar, there would be a corresponding change in the projected estimated property-level cash flow at June 30, 2018 of $0.1 million.

CPA:17 – Global 6/30/2018 10-Q – 63

(e) Interest on unhedged variable-rate debt obligations was calculated using the applicable annual interest rates and balances outstanding at June 30, 2018.

(f) On July 24, 2018, we entered into an amendment to the Credit Agreement to exercise one of our two options to extend the Senior Credit Facility for an additional 12-month period, from August 26, 2018 to August 26, 2019 (Note 15).

Projected debt service obligations exceed projected lease revenues denominated in Japanese yen in 2018, British pound sterling in 2019, and euros and British pound sterling in 2021. This is primarily due to balloon payments on certain of our non-recourse mortgage loans that are collateralized by properties that we own with affiliates and our Revolver. We currently anticipate that, by their respective due dates, we will have refinanced or repaid certain of these loans using our cash resources, including unused capacity on our credit facility and proceeds from dispositions, but there can be no assurance that we will be able to do so on favorable terms, if at all.

Concentration of Credit Risk

Concentrations of credit risk arise when a number of tenants are engaged in similar business activities or have similar economic risks or conditions that could cause them to default on their lease obligations to us. We regularly monitor our portfolio to assess potential concentrations of credit risk. While we believe our portfolio is reasonably well diversified, it does contain concentrations in certain areas in excess of 10%, based on the percentage of our consolidated total revenues or pro rata ABR.

For the three months ended June 30, 2018, our consolidated portfolio had the following significant characteristics in excess of 10%, based on the percentage of our consolidated total revenues:

• 69% related to domestic properties; and

• 31% related to international properties.

At June 30, 2018, our net-leased portfolio, which excludes investments within our Self Storage segment as well as in our All Other category, had the following significant property and lease characteristics in excess of 10% in certain areas, based on the percentage of our pro rata ABR as of that date:

• 58% related to domestic properties;

• 42% related to international properties;

• 28% related to office facilities, 28% related to warehouse facilities, 23% related to retail facilities, and 15% related to industrial facilities; and

• 29% related to the retail stores industry, 11% related to the business services industry, and 10% related to the grocery industry.

CPA:17 – Global 6/30/2018 10-Q – 64

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our disclosure controls and procedures include internal controls and other procedures designed to provide reasonable assurance that information required to be disclosed in this and other reports filed under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized, and reported within the required time periods specified in the SEC’s rules and forms; and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures. It should be noted that no system of controls can provide complete assurance of achieving a company’s objectives and that future events may impact the effectiveness of a system of controls.

Our chief executive officer and chief financial officer, after conducting an evaluation, together with members of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2018, have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of June 30, 2018 at a reasonable level of assurance.

Changes in Internal Control Over Financial Reporting

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

CPA:17 – Global 6/30/2018 10-Q – 65

PART II — OTHER INFORMATION

Item 1A. Risk Factors.

We are including the following additional risk factors, which should be read in conjunction with our description of risk factors provided in Part I, Item 1A. Risk Factors in our 2017 Annual Report:

The pendency of the Proposed Merger could adversely affect our business and operations.

While we are undertaking the transaction described in the Merger Agreement, our tenants may delay or defer certain business decisions, such as whether or not to renew a lease, which could negatively impact our revenues, earnings, cash flows, and expenses, regardless of whether or not the Proposed Merger is completed. In addition, due to operating covenants in the Merger Agreement, we may restricted in our ability to pursue certain strategic transactions, undertake certain significant capital projects or financing transactions and otherwise pursue actions that outside of the ordinary course of business, even if such actions would prove beneficial.

Failure to complete the Proposed Merger could negatively affect us.

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

• our stockholders would not have had the opportunity to achieve the liquidity event provided by the Proposed Merger and our board of directors would have to review other alternatives for liquidity, which may not occur in the near future or on terms as favorable as the Proposed Merger;

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

• we may be required to pay a termination fee to WPC in the amount of $114.0 million if the Merger Agreement is terminated under certain circumstances; and

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

CPA:17 – Global 6/30/2018 10-Q – 66

Item 2. Unregistered Sales of Equity Securities.

Unregistered Sales of Equity Securities

During the three months ended June 30, 2018, we issued 746,284 shares of our common stock to our Advisor as consideration for asset management fees. These shares were primarily issued at $10.04 per share, which represented our most recently published NAV, as approved by our board of directors at the date of issuance. Since none of these transactions were considered to have involved a “public offering” within the meaning of Section 4(a)(2) of the Securities Act of 1933, as amended, the shares issued were deemed to be exempt from registration. In acquiring our shares, our Advisor represented that such interests were being acquired by it for investment purposes and not with a view to the distribution thereof. From inception through June 30, 2018, we have issued a total of 16,131,967 shares of our common stock to our Advisor as consideration for asset management fees.

All prior sales of unregistered securities have been reported in our previously filed quarterly and annual reports on Form 10-Q and Form 10-K, respectively.

In light of the Proposed Merger, in June 2018 our board of directors approved the payment of all asset management fees in cash instead of shares of our common stock, effective as of June 1, 2018.

Issuer Purchases of Equity Securities

The following table provides information with respect to repurchases of our common stock during the three months ended June 30, 2018:

	Total number of shares purchased (a)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or program (a)	Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or program (a)
2018 Period
April	—	$	—	N/A	N/A
May	900	10.00		N/A	N/A
June	1,813,561	9.49		N/A	N/A
Total	1,814,461

__________

(a) Represents shares of our common stock requested to be repurchased under our redemption plan, pursuant to which we may elect to redeem shares at the request of our stockholders subject to certain exceptions, conditions, and limitations. The maximum amount of shares purchasable by us in any period depends on a number of factors and is at the discretion of our board of directors. In light of the Proposed Merger, in June 2018, our board of directors suspended permitted distribution reinvestments under our DRIP and repurchases of shares of our common stock from our stockholders (except for special circumstance redemptions) in accordance with our discretionary quarterly redemption plan (Note 3). During the three months ended June 30, 2018, we received 498 redemption requests for our common stock. As of the date of this Report, we have fulfilled all of the valid requests that we received during the three months ended June 30, 2018. The average price paid per share will vary depending on the number of redemption requests that were made during the period, the most recently published NAV, and the amount of time a stockholder has held their respective shares.

CPA:17 – Global 6/30/2018 10-Q – 67

Item 6. Exhibits.

The following exhibits are filed with this Report. Documents other than those designated as being filed herewith are incorporated herein by reference.

Exhibit No.	Description	Method of Filing
10.1	Agreement and Plan of Merger dated as of June 17, 2018, by and between Corporate Property Associates 17 – Global Incorporated, W. P. Carey Inc., CPA17 Merger Sub LLC, and, for the limited purposes set forth therein, Carey Asset Management Corp., W. P. Carey & Co. B.V., W. P. Carey Holdings, LLC, and CPA®: 17 Limited Partnership.	Incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K (File No. 000-52891) filed with the SEC on June 18, 2018
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
101.INS	XBRL Instance Document	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith

CPA:17 – Global 6/30/2018 10-Q – 68

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

			Corporate Property Associates 17 – Global Incorporated
Date:	August 9, 2018	By:	/s/ Mallika Sinha
			Mallika Sinha
			Chief Financial Officer
			(Principal Financial Officer)

CPA:17 – Global 6/30/2018 10-Q – 69

EXHIBIT INDEX

The following exhibits are filed with this Report. Documents other than those designated as being filed herewith are incorporated herein by reference.

Exhibit No.	Description	Method of Filing
10.1	Agreement and Plan of Merger dated as of June 17, 2018, by and between Corporate Property Associates 17 – Global Incorporated, W. P. Carey Inc., CPA17 Merger Sub LLC, and, for the limited purposes set forth therein, Carey Asset Management Corp., W. P. Carey & Co. B.V., W. P. Carey Holdings, LLC, and CPA®: 17 Limited Partnership.	Incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K (File No. 000-52891) filed with the SEC on June 18, 2018
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
101.INS	XBRL Instance Document	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith

EX-31.1

Exhibit 31.1

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

I, Jason E. Fox, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Corporate Property Associates 17 – Global Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2018

/s/ Jason E. Fox    

Jason E. Fox

Chief Executive Officer

EX-31.2

Exhibit 31.2

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

I, Mallika Sinha, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Corporate Property Associates 17 – Global Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2018

/s/ Mallika Sinha    

Mallika Sinha

Chief Financial Officer

EX-32

Exhibit 32

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

In connection with the Quarterly Report of Corporate Property Associates 17 – Global Incorporated on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of Corporate Property Associates 17 – Global Incorporated, does hereby certify, to the best of such officer’s knowledge and belief, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Corporate Property Associates 17 – Global Incorporated.

Date: August 9, 2018

/s/ Jason E. Fox        

Jason E. Fox

Chief Executive Officer

Date: August 9, 2018

/s/ Mallika Sinha        

Mallika Sinha

Chief Financial Officer

The certification set forth above is being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report as a separate disclosure document of Corporate Property Associates 17 – Global Incorporated or the certifying officers.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Corporate Property Associates 17 – Global Incorporated and will be retained by Corporate Property Associates 17 – Global Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 03, 2018
Document Entity Information [Abstract]
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0001390213
Entity Filer Category	Non-accelerated Filer
Entity Registrant Name	CORPORATE PROPERTY ASSOCIATES 17 - GLOBAL INC
Entity Common Stock Shares Outstanding		352,922,031

XML

Consolidated Balance Sheets (UNAUDITED) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Investments in real estate
Real estate — Land, buildings and improvements	$ 2,760,620	$ 2,772,611
Operating real estate — Land, buildings and improvements	348,710	340,772
Net investments in direct financing leases	501,539	509,228
In-place lease intangible assets	623,441	629,961
Other intangible assets	109,342	111,004
Investments in real estate	4,343,652	4,363,576
Accumulated depreciation and amortization	(672,274)	(626,655)
Assets held for sale, net	3,189	0
Net investments in real estate	3,674,567	3,736,921
Equity investments in real estate	397,896	409,254
Cash and cash equivalents	90,994	119,094
Accounts receivable and other assets, net	306,767	322,201
Total assets	4,470,224	4,587,470
Debt:
Mortgage debt, net	1,811,822	1,849,459
Senior credit facility, net	85,974	101,931
Debt, net	1,897,796	1,951,390
Accounts payable, accrued expenses and other liabilities	130,314	132,751
Below-market rent and other intangible liabilities, net	58,960	61,222
Deferred income taxes	26,983	30,524
Due to affiliates	9,510	11,467
Distributions payable	57,349	56,859
Total liabilities	2,180,912	2,244,213
Commitments and contingencies (Note 11)
Preferred stock, $0.001 par value; 50,000,000 shares authorized; none issued	0	0
Common stock, $0.001 par value; 900,000,000 shares authorized; and 352,910,073 and 349,899,827 shares, respectively, issued and outstanding	353	349
Additional paid-in capital	3,207,178	3,174,786
Distributions in excess of accumulated earnings	(921,427)	(861,319)
Accumulated other comprehensive loss	(102,802)	(78,420)
Total stockholders’ equity	2,183,302	2,235,396
Noncontrolling interests	106,010	107,861
Total equity	2,289,312	2,343,257
Total liabilities and equity	$ 4,470,224	$ 4,587,470

XML

Consolidated Balance Sheets (UNAUDITED) (Parentheticals) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Stockholders' Equity Attributable to Parent [Abstract]
Preferred stock, par or stated value (usd per share)	$ 0.001	$ 0.001
Preferred stock shares authorized, shares	50,000,000	50,000,000
Preferred stock shares issued, shares	0	0
Common stock, par or stated value (usd per share)	$ 0.001	$ 0.001
Common stock shares authorized, shares	900,000,000	900,000,000
Common stock shares outstanding, shares	352,910,073	349,899,827

XML

Consolidated Statements of Income (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Lease revenues:
Rental income	$ 74,179	$ 71,754	$ 148,870	$ 163,008
Interest income from direct financing leases	14,668	14,581	29,308	29,277
Total lease revenues	88,847	86,335	178,178	192,285
Operating real estate income	11,786	9,575	23,999	18,912
Other interest income	5,003	3,151	9,566	4,891
Other operating income	4,190	7,452	11,365	13,430
Gross revenues	109,826	106,513	223,108	229,518
Operating Expenses
Depreciation and amortization	27,781	28,063	56,231	58,882
Property expenses	24,386	20,725	47,423	37,330
Operating real estate expenses	8,912	3,427	16,529	6,779
Impairment charges and other credit losses	6,168	0	11,572	4,519
General and administrative	3,419	3,806	6,538	7,376
Merger and other expenses	2,300	(440)	2,357	310
Operating expenses	72,966	55,581	140,650	115,196
Other Income and Expenses
Interest expense	(20,801)	(21,453)	(41,351)	(44,843)
Equity in earnings of equity method investments in real estate	11,145	2,270	15,828	4,255
Other gains and (losses)	1,168	10,273	5,171	15,930
Loss on extinguishment of debt	0	(353)	0	(1,967)
Other Income and Expenses	(8,488)	(9,263)	(20,352)	(26,625)
Income before income taxes and gain on sale of real estate	28,372	41,669	62,106	87,697
(Provision for) benefit from income taxes	(1,071)	(1,115)	332	(1,736)
Income before gain on sale of real estate, net of tax	27,301	40,554	62,438	85,961
Gain on sale of real estate, net of tax	0	1,171	24	2,910
Net Income	27,301	41,725	62,462	88,871
Net income attributable to noncontrolling interests (inclusive of Available Cash Distributions to a related party of $5,185, $6,971, $11,355 and $13,781, respectively)	(7,746)	(10,919)	(16,170)	(20,054)
Net Income Attributable to CPA:17 – Global	$ 19,555	$ 30,806	$ 46,292	$ 68,817
Basic and Diluted Earnings Per Share (usd per share)	$ 0.06	$ 0.09	$ 0.13	$ 0.20
Basic and Diluted Weighted-Average Shares Outstanding, shares	353,824,796	347,672,836	352,966,643	346,739,936
Distributions Declared Per Share (usd per share)	$ 0.1625	$ 0.1625	$ 0.325	$ 0.3250

XML

Consolidated Statements of Income (UNAUDITED) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Other Income and Expenses
Available Cash Distributions	$ 5,185	$ 6,971	$ 11,355	$ 13,781

XML

Consolidated Statements of Comprehensive (Loss) Income (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Comprehensive Income Attributable to Parent
Net Income	$ 27,301	$ 41,725	$ 62,462	$ 88,871
Other Comprehensive (Loss) Income
Foreign currency translation adjustments	(54,804)	50,309	(27,869)	58,918
Change in net unrealized gain (loss) on derivative instruments	5,365	(10,139)	3,033	(12,692)
Change in unrealized gain on marketable investments	0	1	0	31
Total other comprehensive (loss) income	(49,439)	40,171	(24,836)	46,257
Comprehensive (Loss) Income	(22,138)	81,896	37,626	135,128
Amounts Attributable to Noncontrolling Interests
Net income	(7,746)	(10,919)	(16,170)	(20,054)
Foreign currency translation adjustments	1,001	(1,122)	454	(1,381)
Comprehensive income attributable to noncontrolling interests	(6,745)	(12,041)	(15,716)	(21,435)
Comprehensive (Loss) Income Attributable to CPA:17 – Global	$ (28,883)	$ 69,855	$ 21,910	$ 113,693

XML

Consolidated Statements of Equity (UNAUDITED) - USD ($) $ in Thousands	Total	Total CPA:17 – Global Stockholders	Common Stock	Additional Paid-In Capital	Distributions in Excess of Accumulated Earnings	Accumulated Other Comprehensive Loss	Noncontrolling Interests
Beginning equity balance, value at Dec. 31, 2016	$ 2,315,004	$ 2,217,510	$ 343	$ 3,106,456	$ (732,613)	$ (156,676)	$ 97,494
Beginning equity balance, shares at Dec. 31, 2016			343,575,840
Statement of Equity
Shares issued, value	51,481	51,481	$ 6	51,475
Shares issued, shares			5,059,937
Shares issued to affiliates, value	13,327	13,327	$ 1	13,326
Shares issued to affiliates, shares			1,316,699
Distributions declared	(112,531)	(112,531)			(112,531)
Distributions to noncontrolling interests	(20,468)						(20,468)
Net Income	88,871	68,817			68,817		20,054
Other comprehensive (loss) income:
Foreign currency translation adjustments	58,918	57,537				57,537	1,381
Realized and unrealized gain (loss) on derivative instruments	(12,692)	(12,692)				(12,692)
Change in unrealized gain on marketable investments	31	31				31
Repurchase of shares, value	(28,000)	(28,000)	$ (3)	(27,997)
Repurchase of shares, shares			(2,955,998)
Ending equity balance, value at Jun. 30, 2017	2,353,941	2,255,480	$ 347	3,143,260	(776,327)	(111,800)	98,461
Ending equity balance, shares at Jun. 30, 2017			346,996,478
Beginning equity balance, value at Mar. 31, 2017						(150,849)
Statement of Equity
Net Income	41,725
Other comprehensive (loss) income:
Foreign currency translation adjustments	50,309
Realized and unrealized gain (loss) on derivative instruments	(10,139)
Change in unrealized gain on marketable investments	1
Ending equity balance, value at Jun. 30, 2017	2,353,941	2,255,480	$ 347	3,143,260	(776,327)	(111,800)	98,461
Ending equity balance, shares at Jun. 30, 2017			346,996,478
Statement of Equity
Cumulative-effect adjustment for the adoption of new accounting pronouncement	8,068	8,068			8,068
Beginning equity balance, value at Dec. 31, 2017	$ 2,343,257	2,235,396	$ 349	3,174,786	(861,319)	(78,420)	107,861
Beginning equity balance, shares at Dec. 31, 2017	349,899,827		349,899,827
Statement of Equity
Shares issued, value	$ 50,180	50,180	$ 5	50,175
Shares issued, shares			4,980,676
Shares issued to affiliates, value	14,922	14,922	$ 2	14,920
Shares issued to affiliates, shares			1,484,554
Distributions declared	(114,468)	(114,468)			(114,468)
Distributions to noncontrolling interests	(18,273)						(18,273)
Contributions from noncontrolling interests	706						706
Net Income	62,462	46,292			46,292		16,170
Other comprehensive (loss) income:
Foreign currency translation adjustments	(27,869)	(27,415)				(27,415)	(454)
Realized and unrealized gain (loss) on derivative instruments	3,033	3,033				3,033
Change in unrealized gain on marketable investments	0
Repurchase of shares, value	(32,706)	(32,706)	$ (3)	(32,703)
Repurchase of shares, shares			(3,454,984)
Ending equity balance, value at Jun. 30, 2018	$ 2,289,312	2,183,302	$ 353	3,207,178	(921,427)	(102,802)	106,010
Ending equity balance, shares at Jun. 30, 2018	352,910,073		352,910,073
Beginning equity balance, value at Mar. 31, 2018						(54,364)
Statement of Equity
Net Income	$ 27,301
Other comprehensive (loss) income:
Foreign currency translation adjustments	(54,804)
Realized and unrealized gain (loss) on derivative instruments	5,365
Change in unrealized gain on marketable investments	0
Ending equity balance, value at Jun. 30, 2018	$ 2,289,312	$ 2,183,302	$ 353	$ 3,207,178	$ (921,427)	$ (102,802)	$ 106,010
Ending equity balance, shares at Jun. 30, 2018	352,910,073		352,910,073

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Consolidated Statements of Equity (UNAUDITED) (Parentheticals) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Distribution per share
Distributions declared per share (usd per share)	$ 0.1625	$ 0.1625	$ 0.325	$ 0.3250

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Condensed Consolidated Statements of Cash Flows (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash Flow - Operating Activities
Net Cash Provided by Operating Activities	$ 138,594	$ 119,304
Cash Flows — Investing Activities
Funding for build-to-suit projects and expansions	(16,256)	(9,197)
Return of capital from equity investments in real estate	12,670	26,278
Capital contributions to equity investments in real estate	(6,410)	(149,074)
Capital expenditures on owned real estate	(2,143)	(1,425)
Proceeds from insurance settlements	1,874	0
Payment of deferred acquisition fees to an affiliate	(1,671)	(1,979)
Acquisitions of real estate and direct financing leases	(1,333)	(11,439)
Other investing activities, net	975	1,014
Value added taxes paid in connection with acquisition of real estate	(885)	(1,792)
Proceeds from sale of real estate	0	111,279
Proceeds from repayment of preferred equity interest	0	27,000
Value added taxes refunded in connection with acquisition of real estate	0	5,412
Net Cash Used in Investing Activities	(13,179)	(3,923)
Cash Flows — Financing Activities
Distributions paid	(113,978)	(111,973)
Proceeds from issuance of shares	50,180	51,481
Repurchase of shares	(32,706)	(28,000)
Repayments of Senior Credit Facility	(29,471)	(40,677)
Scheduled payments and prepayments of mortgage principal	(23,966)	(329,641)
Distributions to noncontrolling interests	(18,273)	(20,468)
Proceeds from Senior Credit Facility	13,590	67,261
Contributions from noncontrolling interests	706	0
Payment of financing costs and mortgage deposits, net of deposits refunded	(11)	(966)
Proceeds from mortgage financing	0	178,695
Other financing activities, net	0	(612)
Net Cash Used in Financing Activities	(153,929)	(234,900)
Change in Cash and Cash Equivalents and Restricted Cash During the Period
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(1,632)	6,392
Net decrease in cash and cash equivalents and restricted cash	(30,146)	(113,127)
Cash and cash equivalents and restricted cash, beginning of period	145,108	300,153
Cash and cash equivalents and restricted cash, end of period	$ 114,962	$ 187,026

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Organization

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Corporate Property Associates 17 – Global Incorporated, or CPA:17 – Global, and together with its consolidated subsidiaries, we, us, or our, is a publicly owned REIT that invests primarily in commercial real estate properties leased to companies both domestically and internationally. We were formed in 2007 and are managed by W. P. Carey Inc., or WPC, through one of its subsidiaries, or collectively our Advisor. As a REIT, we are not subject to U.S. federal income taxation as long as we satisfy certain requirements, principally relating to the nature of our income and the level of our distributions, among other factors. We earn revenue primarily by leasing the properties we own to single corporate tenants, predominantly on a triple-net lease basis, which requires the tenant to pay substantially all of the costs associated with operating and maintaining the property. Revenue is subject to fluctuation due to the timing of new lease transactions, lease terminations, lease expirations, contractual rent adjustments, tenant defaults, sales of properties, and changes in foreign currency exchange rates.

Substantially all of our assets and liabilities are held by CPA:17 Limited Partnership, or the Operating Partnership, and at June 30, 2018, we owned 99.99% of general and limited partnership interests in the Operating Partnership. The remaining interest in the Operating Partnership is held by a subsidiary of WPC.

At June 30, 2018, our portfolio was comprised of full or partial ownership interests in 411 properties, substantially all of which were fully-occupied and triple-net leased to 114 tenants, and totaled approximately 44.4 million square feet with a weighted-average lease term of 11.3 years and an occupancy rate of 99.7%. In addition, our portfolio was comprised of full or majority ownership interests in 38 operating properties, including 37 self-storage properties and one hotel property, for an aggregate of approximately 2.7 million square feet.

We operate in two reportable business segments: Net Lease and Self Storage. Our Net Lease segment includes our domestic and foreign investments in net-leased properties, whether they are accounted for as operating or direct financing leases. Our Self Storage segment is comprised of our investments in self-storage properties. In addition, we have investments in loans receivable, commercial mortgage-backed securities, or CMBS, one hotel, and certain other properties, which are included in our All Other category (Note 14). Our reportable business segments and All Other category are the same as our reporting units.

We raised aggregate gross proceeds of approximately $2.9 billion from our initial public offering, which closed in April 2011, and our follow-on offering, which closed in January 2013. We have fully invested the proceeds from our initial and follow-on public offerings. In addition, from inception through June 30, 2018, $726.2 million of distributions to our shareholders were reinvested in our common stock through our Distribution Reinvestment Plan, or DRIP.

On June 17, 2018, we entered into a merger agreement with WPC and certain of its subsidiaries, or the Merger Agreement, pursuant to which we will merge with and into one of WPC’s subsidiaries, or the Proposed Merger. If the Proposed Merger is consummated, our stockholders will receive a fixed exchange ratio of 0.160 shares of WPC common stock for each share of our common stock. See Note 3 for additional information on the Proposed Merger.

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Basis of Presentation

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Basis of Presentation

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

In the opinion of management, the unaudited financial information for the interim periods presented in this Report reflects all normal and recurring adjustments necessary for a fair statement of financial position, results of operations, and cash flows. Our interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for the year ended December 31, 2017, which are included in the 2017 Annual Report, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this Report. Operating results for interim periods are not necessarily indicative of operating results for an entire year.

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

Basis of Consolidation

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

When we obtain an economic interest in an entity, we evaluate the entity to determine if it should be deemed a variable interest entity, or VIE, and, if so, whether we are the primary beneficiary and are therefore required to consolidate the entity. We apply accounting guidance for consolidation of VIEs to certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Fixed price purchase and renewal options within a lease, as well as certain decision-making rights within a loan or joint-venture agreement, can cause us to consider an entity a VIE. Limited partnerships and other similar entities that operate as a partnership will be considered a VIE unless the limited partners hold substantive kick-out rights or participation rights. Significant judgment is required to determine whether a VIE should be consolidated. We review the contractual arrangements provided for in the partnership agreement or other related contracts to determine whether the entity is considered a VIE, and to establish whether we have any variable interests in the VIE. We then compare our variable interests, if any, to those of the other variable interest holders to determine which party is the primary beneficiary of the VIE based on whether the entity (i) has the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The liabilities of these VIEs are non-recourse to us and can only be satisfied from each VIE’s respective assets.

At both June 30, 2018 and December 31, 2017, we considered 21 entities VIEs, nine of which we consolidated as we are considered the primary beneficiary and one of which we accounted for as a loan receivable. The following table presents a summary of selected financial data of the consolidated VIEs, included in the consolidated balance sheets (in thousands):

	June 30, 2018			December 31, 2017
Real estate — Land, buildings and improvements	$	98,620		$	109,426
Operating real estate — Land, buildings and improvements	88,167			80,658
Net investments in direct financing leases	311,466			312,234
In-place lease intangible assets	8,501			8,650
Accumulated depreciation and amortization	(22,883		)	(26,395		)
Assets held for sale, net	3,189			—
Accounts receivable and other assets, net	65,752			73,620
Total assets	559,152			567,929
Mortgage debt, net	$	102,979		$	104,213
Accounts payable, accrued expenses and other liabilities	11,916			12,693
Deferred income taxes	10,251			12,374
Total liabilities	125,509			129,662

At both June 30, 2018 and December 31, 2017, we had 11 unconsolidated VIEs, all of which we account for under the equity method of accounting. We do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities allows us to exercise significant influence on, but does not give us power over, decisions that significantly affect the economic performance of these entities. As of June 30, 2018 and December 31, 2017, the net carrying amount of our investments in these entities was $275.4 million and $282.0 million, respectively, and our maximum exposure to loss in these entities was limited to our investments.

At both June 30, 2018 and December 31, 2017, we had an investment in a tenancy-in-common interest in a portfolio of international properties. Consolidation of this investment is not required as such interest does not qualify as a VIE and does not meet the control requirement for consolidation. Accordingly, we account for this investment using the equity method of accounting. We use the equity method of accounting because the shared decision-making involved in a tenancy-in-common interest investment provides us with significant influence on the operating and financial decisions of this investment.

At times, the carrying value of our equity investments may fall below zero for certain investments. We intend to fund our share of the jointly owned investments’ future operating deficits should the need arise. However, we have no legal obligation to pay for any of the liabilities of such investments nor do we have any legal obligation to fund operating deficits. At both June 30, 2018 and December 31, 2017, none of our equity investments had carrying values below zero.

Accounting Policy Update

Distributions from Equity Method Investments — We classify distributions received from equity method investments using the cumulative earnings approach. Distributions received are considered returns on the investment and classified as cash inflows from operating activities. If, however, the investor’s cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earning recognized, the excess is considered a return of investment and is classified as inflows from investing activities.

Reclassifications

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

Restricted Cash — In connection with our adoption of Accounting Standards Update, or ASU, 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, as described below, we revised our condensed consolidated statements of cash flows to include restricted cash when reconciling the beginning-of-period and end-of-period cash amounts shown on the statement of cash flows. As a result, we retrospectively revised prior periods presented to conform to the current period presentation. Restricted cash primarily consists of security deposits and amounts required to be reserved pursuant to lender agreements for debt service, capital improvements and real estate taxes.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total presented in the consolidated statement of cash flows.

	June 30, 2018		December 31, 2017
Cash and cash equivalents	$	90,994	$	119,094
Restricted cash (a)	23,968		26,014
Total cash and cash equivalents, and restricted cash	$	114,962	$	145,108

__________

(a) Restricted cash is included within Accounts receivable and other assets, net on our consolidated balance sheet.

Recent Accounting Pronouncements

Pronouncements Adopted as of June 30, 2018

In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 does not apply to our lease revenues, which constitute a majority of our revenues, but will primarily apply to revenues generated from our operating properties. We adopted this guidance for our interim and annual periods beginning January 1, 2018 using the modified retrospective method applied to any contracts not completed as of that date. There were no changes to the prior period presentations of revenue. Results of operations for reporting periods beginning January 1, 2018 are presented under Topic 606. The adoption of Topic 606 did not have a material impact on our consolidated financial statements.

Revenue is recognized when, or as, control of promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. At contract inception, we assess the services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, we consider all of the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

Revenue from contracts with customers primarily represents Operating real estate income of $11.8 million and $9.6 million for the three months ended June 30, 2018 and 2017, respectively, and $24.0 million and $18.9 million for the six months ended June 30, 2018 and 2017, respectively. Operating real estate income is primarily comprised of revenues from our self-storage portfolio as well as room rentals and food and beverage services at our hotel. We identified a single performance obligation for each distinct service. Performance obligations are typically satisfied at a point in time, at the time of sale, or at the rendering of the service. Fees are generally determined to be fixed. Payment is typically due immediately following the delivery of the service.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 requires all equity investments (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value, with changes in the fair value recognized through net income. We adopted this guidance for our interim and annual periods beginning January 1, 2018. The adoption of ASU 2016-01 did not have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 intends to reduce diversity in practice for certain cash flow classifications, including, but not limited to (i) debt prepayment or debt extinguishment costs, (ii) contingent consideration payments made after a business combination, (iii) proceeds from the settlement of insurance claims, and (iv) distributions received from equity method investees. We retrospectively adopted this guidance for our interim and annual periods beginning January 1, 2018. As a result, we reclassified debt extinguishment costs from net cash provided by operating activities to net cash used in financing activities on the condensed consolidated statement of cash flows for the six months ended June 30, 2017. The adoption of ASU 2016-15 did not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 intends to reduce diversity in practice for the classification and presentation of changes in restricted cash on the statement of cash flows. ASU 2016-18 requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We adopted ASU 2016-18 on January 1, 2018 and have retrospectively applied this standard to our condensed consolidated statements of cash flows for the six months ended June 30, 2018 and 2017. See Restricted Cash above for additional information.

In February 2017, the FASB issued ASU 2017-05, Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20). ASU 2017-05 clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments define the term “in substance nonfinancial asset,” in part, as a financial asset promised to a counterparty in a contract if substantially all of the fair value of the assets (recognized and unrecognized) that are promised to the counterparty in the contract is concentrated in nonfinancial assets. If substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets, then all of the financial assets promised to the counterparty are in substance nonfinancial assets within the scope of Subtopic 610-20. This amendment also clarifies that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent company may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. We adopted this guidance for our interim and annual periods beginning January 1, 2018 and applied the modified retrospective transition method (applicable to any contracts not completed as of that date). Results of operations for reporting periods beginning January 1, 2018 are presented under Subtopic 610-20, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for those periods.

As of January 1, 2018, there was one open contract, which was related to the I-drive Property disposition and I-drive Wheel restructuring (Note 13). On March 17, 2017, the developer exercised its purchase option and acquired the entertainment complex, which we refer to as the I-drive Property. The gain on sale was deferred during the first quarter of 2017 and was expected to be recognized in income upon recovery of the cost of the I-drive Property through the receipt of principal payments received on the mezzanine loan. As a result of the adoption of ASU 2017-05, we recognized a cumulative effect adjustment to the opening balance of stockholders’ equity and a reduction to Accounts payable, accrued expenses and other liabilities as of January 1, 2018 equal to the total gain on sale of the Property of $2.1 million that was previously deferred.

In addition to the sale of the I-drive Property, we restructured the $50.0 million loan, referred to as the I-drive Wheel Loan, to fund the construction of an observation wheel, which we refer to as the I-drive Wheel. This resulted in the elimination of our participation in the expected residual profits, with the loan no longer qualifying as an acquisition, development and construction of real estate arrangement, or ADC Arrangement, pursuant to the equity method of accounting. The gain recognized upon restructuring of the I-drive Wheel Loan of $16.4 million was deferred during 2017. As a result of the adoption of ASU 2017-05, the loan restructuring is now recognized as a receivable purchased at a discount of $18.6 million (which represents the carrying value of the ADC Arrangement upon restructuring on March 17, 2017) and will accrete up to the fair value of the loan in the amount of $35.0 million until maturity in December 2018. Accordingly, as of January 1, 2018, we recognized (i) a reduction of $16.4 million to Accounts payable, accrued expenses and other liabilities, (ii) a reduction of $10.4 million to Accounts receivable and other assets, net and (iii) an adjustment to the opening balance of stockholders’ equity for the accretion of the loan related to prior periods, using the effective interest method, of $6.0 million.

Pronouncements to be Adopted after June 30, 2018

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 modifies the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract, the lessee and the lessor. ASU 2016-02 provides new guidelines that change the accounting for leasing arrangements for lessees, whereby their rights and obligations under substantially all leases, existing and new, would be capitalized and recorded on the balance sheet. For lessors, however, the accounting remains largely equivalent to the current model, with the distinction between operating, sales-type, and direct financing leases retained, but updated to align with certain changes to the lessee model and the new revenue recognition standard. ASU 2016-02 also replaces existing sale-leaseback guidance with a new model that requires symmetrical accounting between the seller-lessee and buyer-lessor. Additionally, ASU 2016-02 requires lessors to record costs paid directly by a lessee on behalf of a lessor (e.g., real estate taxes and insurance costs) on a gross basis and will require extensive quantitative and qualitative disclosures.

Early application is permitted for all entities. ASU 2016-02 provides two transition methods. The first transition method allows for application of the new model at the beginning of the earliest comparative period presented. Under the second transition method, comparative periods would not be restated, with any cumulative effect adjustments recognized in the opening balance of retained earnings in the period of adoption. In addition, a practical expedient was recently issued by the FASB, which allows for lessors to combine non-lease components with related lease components if certain conditions are met. Further, in March 2018, the FASB approved, but has not yet finalized or issued, an update to allow lessors to make a policy election to record certain costs (e.g., insurance) paid directly by the lessee net, if the uncertainty regarding these variable amounts is not expected to ultimately be resolved. We will adopt this guidance for our interim and annual periods beginning January 1, 2019 and expect to use the second transition method. ASU 2016-02 is expected to impact our consolidated financial statements as we have certain operating office and land lease arrangements for which we are the lessee and also certain lease arrangements that include common area maintenance services (non-lease components) where we are the lessor. We are evaluating the impact of ASU 2016-02 and have not yet determined if it will have a material impact on our business or our consolidated financial statements.

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

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess hedge effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. ASU 2017-12 will be effective in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are in the process of evaluating the impact of adopting ASU 2017-12 on our consolidated financial statements, and expect to adopt the standard for the fiscal year beginning January 1, 2019.

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Agreements and Transactions with Related Parties

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Agreements and Transactions with Related Parties

Agreements and Transactions with Related Parties

Transactions with Our Advisor

We have an advisory agreement with our Advisor whereby our Advisor performs certain services for us under a fee arrangement, including the identification, evaluation, negotiation, purchase, and disposition of real estate and related assets and mortgage loans; day-to-day management; and the performance of certain administrative duties. We also reimburse our Advisor for general and administrative duties performed on our behalf. The advisory agreement has a term of one year and may be renewed for successive one-year periods. We may terminate the advisory agreement upon 60 days’ written notice without cause or penalty.

The following tables present a summary of fees we paid, expenses we reimbursed, and distributions we made to our Advisor and other affiliates in accordance with the relevant agreements (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Amounts Included in the Consolidated Statements of Income
Asset management fees	$	7,493	$	7,339	$	14,985	$	14,664
Available Cash Distributions	5,185		6,971		11,355		13,781
Personnel and overhead reimbursements	1,826		2,310		3,591		4,601
Interest expense on deferred acquisition fees	60		68		124		132
Director compensation	40		53		80		106
	$	14,604	$	16,741	$	30,135	$	33,284
Advisor Fees Capitalized
Current acquisition fees	$	127	$	3,537	$	130	$	3,823
Deferred acquisition fees	101		2,829		104		3,058
Personnel and overhead reimbursements	—		379		50		486
	$	228	$	6,745	$	284	$	7,367

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

	June 30, 2018		December 31, 2017
Due to Affiliates
Deferred acquisition fees, including interest	$	4,771	$	6,564
Asset management fees payable	2,498		2,435
Reimbursable costs	2,078		2,162
Accounts payable	163		175
Current acquisition fees	—		131
	$	9,510	$	11,467

Acquisition and Disposition Fees

We pay our Advisor acquisition fees for structuring and negotiating investments and related mortgage financing on our behalf, a portion of which is payable upon acquisition of investments, with the remainder subordinated to the achievement of a preferred return, which is a non-compounded cumulative distribution of 5.0% per annum (based initially on our invested capital). Acquisition fees payable to our Advisor with respect to our long-term, net-leased investments are 4.5% of the total cost of those investments and are comprised of a current portion of 2.5%, typically paid upon acquisition, and a deferred portion of 2.0%, typically paid over three years and subject to the 5.0% preferred return described above. The preferred return was achieved as of each of the cumulative periods ended June 30, 2018 and December 31, 2017. For certain types of non-long term net-leased investments, initial acquisition fees are between 1.0% and 1.75% of the equity invested plus the related acquisition fees, with no portion of the payment being deferred. Unpaid installments of deferred acquisition fees are included in Due to affiliates in the consolidated financial statements. Unpaid installments of deferred acquisition fees bear interest at an annual rate of 5.0%. The cumulative total acquisition costs, including acquisition fees paid to our Advisor, may not exceed 6.0% of the aggregate contract purchase price of all investments, which is measured at the end of each year. Our cumulative total acquisition costs have not exceeded the amount that would require our Advisor to reimburse us.

Our Advisor may be entitled to receive a disposition fee equal to the lesser of (i) 50.0% of the competitive real estate commission (as defined in the advisory agreement) or (ii) 3.0% of the contract sales price of the investment being sold; however, payment of such fees is subordinated to the 5.0% preferred return. These fees are payable at the discretion of our board of directors.

Asset Management Fees

As described in the advisory agreement, we pay our Advisor asset management fees that vary based on the nature of the underlying investment. We pay 0.5% per annum of average market value for long-term net leases and certain other types of real estate investments, and 1.5% to 1.75% per annum of average equity value for certain types of securities. Asset management fees are payable in cash and/or shares of our common stock at our option, after consultation with our Advisor. If our Advisor receives all or a portion of its fees in shares, the number of shares issued is determined by dividing the dollar amount of fees by our most recently published estimated net asset value per share, or NAV, which was $10.04 as of December 31, 2017. Through May 31, 2018, all asset management fees earned by the Advisor were payable in shares of our common stock. In light of the Proposed Merger, in June 2018 our board of directors approved the payment of all asset management fees in cash instead of shares of our common stock, effective as of June 1, 2018. At June 30, 2018, our Advisor owned 16,131,967 shares (4.6%) of our common stock. Asset management fees are included in Property expenses in the consolidated financial statements.

Available Cash Distributions

WPC’s interest in the Operating Partnership entitles it to receive distributions of up to 10.0% of available cash generated by the Operating Partnership, referred to as the Available Cash Distribution, which is defined as cash generated from operations, excluding capital proceeds, as reduced by operating expenses and debt service, excluding prepayments and balloon payments. Available Cash Distributions are included in Net income attributable to noncontrolling interests in the consolidated financial statements.

Personnel and Overhead Reimbursements

Under the terms of the advisory agreement, our Advisor allocates a portion of its personnel and overhead expenses to us and the other entities that are managed by our Advisor, including Corporate Property Associates 18 – Global Incorporated, or CPA:18 – Global; Carey Watermark Investors Incorporated; Carey Watermark Investors 2 Incorporated; and Carey European Student Housing Fund I, L.P.; collectively referred to as the Managed Programs. Our Advisor also allocated a portion of its personnel and overhead expenses to Carey Credit Income Fund (now known as Guggenheim Credit Income Fund) prior to September 11, 2017, which was the effective date of its resignation as the advisor to that fund. Our Advisor allocates these expenses to us on the basis of our trailing four quarters of reported revenues in comparison to those of WPC and other entities managed by WPC and its affiliates.

We reimburse our Advisor for various expenses it incurs in the course of providing services to us. We reimburse certain third-party expenses paid by our Advisor on our behalf, including property-specific costs, professional fees, office expenses, and business development expenses. In addition, we reimburse our Advisor for the allocated costs of personnel and overhead in managing our day-to-day operations, including accounting services, stockholder services, corporate management, and property management and operations. We do not reimburse our Advisor for the cost of personnel if these personnel provide services for transactions for which our Advisor receives a transaction fee, such as for acquisitions and dispositions. Under the advisory agreement, the amount of applicable personnel costs allocated to us is capped at 1.0% and 2.0% for 2018 and 2017, respectively, of pro rata lease revenues for each year. Costs related to our Advisor’s legal transactions group are based on a schedule of expenses relating to services performed for different types of transactions, such as financings, lease amendments, and dispositions, among other categories, and includes 0.25% of the total investment cost of an acquisition. In general, personnel and overhead reimbursements are included in General and administrative expenses in the consolidated financial statements. However, we capitalize certain of the costs related to our Advisor’s legal transactions group if the costs relate to a transaction that is not considered to be a business combination.

Excess Operating Expenses

Our Advisor is obligated to reimburse us for the amount by which our operating expenses exceeds the “2%/25% guidelines” (the greater of 2% of average invested assets or 25% of net income) as defined in the advisory agreement for any 12-month period, subject to certain conditions. For the most recent trailing four quarters, our operating expenses were below this threshold.

Proposed Merger

On June 17, 2018, we entered into the Merger Agreement with WPC and certain of its subsidiaries, pursuant to which we will merge with and into one of WPC’s subsidiaries. If the Proposed Merger is consummated, each share of our issued and outstanding common stock (excluding shares held by WPC and its subsidiaries) will be canceled and, in exchange for cancellation of such share, the rights attaching to such share will be converted automatically into the right to receive 0.160 shares of WPC common stock. All stockholders that are entitled to receive fractional shares of WPC will receive cash in lieu of such fractional shares.

On July 27, 2018 WPC filed a registration statement on Form S-4, which is currently under review by the SEC, to register the shares of its common stock to be issued to our stockholders in connection with the Proposed Merger. The Form S-4 includes a joint proxy statement that we intend to mail to our stockholders in connection with the Proposed Merger. The Proposed Merger and related transactions are subject to a number of closing conditions, including approvals by our stockholders and the stockholders of WPC. If these approvals are obtained and the other closing conditions are met, we currently expect the Proposed Merger to close at or around December 31, 2018, although there can be no assurance that the transaction will close at that time or at all.

Under the terms of the Merger Agreement, a special committee composed of our independent directors was permitted to solicit, receive, evaluate, and enter into negotiations with respect to alternative proposals from third parties through July 18, 2018. There were no qualifying proposals received through that date.

In light of the Proposed Merger, in June 2018, our board of directors suspended our DRIP, as well as repurchases of shares of our common stock from our stockholders under our quarterly discretionary redemption plan, except for special circumstance redemptions.

During the three and six months ended June 30, 2018, we have incurred expenses related to the Proposed Merger totaling approximately $2.3 million, which is included in Merger and other expenses in our consolidated financial statements. Further details concerning the Proposed Merger are described in a Form 8-K that we filed with the SEC on June 18, 2018.

Jointly Owned Investments and Other Transactions with Affiliates

At June 30, 2018, we owned interests ranging from 6% to 97% in jointly owned investments, with the remaining interests held by affiliates or by third parties. We consolidate certain of these investments and account for the remainder under the equity method of accounting. We also owned an interest in a jointly controlled tenancy-in-common interest in several properties, which we account for under the equity method of accounting (Note 6). At December 31, 2017, we had $0.2 million due from an affiliate primarily related to one of our jointly owned investments, which has since been repaid.

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Real Estate and Operating Real Estate

6 Months Ended

Jun. 30, 2018

Real Estate [Abstract]

Real Estate, Operating Real Estate and Assets Held for Sale

Real Estate, Operating Real Estate and Assets Held for Sale

Real Estate — Land, Buildings and Improvements

Real estate, which consists of land and buildings leased to others, at cost, and which are subject to operating leases, is summarized as follows (in thousands):

	June 30, 2018			December 31, 2017
Land	$	557,277		$	567,113
Buildings and improvements	2,175,385			2,200,901
Real estate under construction (a)	27,958			4,597
Less: Accumulated depreciation	(377,967		)	(354,668		)
	$	2,382,653		$	2,417,943

__________

(a) Amount as of June 30, 2018 includes accrued capitalized costs of $13.3 million.

During the six months ended June 30, 2018, the U.S. dollar strengthened against the euro, as the end-of-period rate for the U.S. dollar in relation to the euro decreased by 2.8% to $1.1658 from $1.1993. As a result, the carrying value of our real estate decreased by $32.8 million from December 31, 2017 to June 30, 2018.

Depreciation expense, including the effect of foreign currency translation, on our real estate was $16.5 million and $15.9 million for the three months ended June 30, 2018 and 2017, respectively and $33.8 million and $32.2 million for the six months ended June 30, 2018 and 2017, respectively.

Real Estate Under Construction

At June 30, 2018 and December 31, 2017, we had two and three build-to-suit investments that were still under construction. During the six months ended June 30, 2018, we completed one of our build-to-suit investments, which had a total cost of $5.8 million and was placed into service. The aggregate unfunded commitment on our build-to-suit investments and certain other tenant improvements totaled approximately $40.2 million and $56.5 million at June 30, 2018 and December 31, 2017, respectively.

Operating Real Estate — Land, Buildings and Improvements

Operating real estate, which consists of our wholly owned domestic self-storage operations and a majority ownership in one hotel, at cost, is summarized as follows (in thousands):

	June 30, 2018			December 31, 2017
Land	$	90,560		$	90,042
Buildings and improvements	254,520			250,730
Real estate under construction (a)	3,630			—
Less: Accumulated depreciation	(29,977		)	(26,087		)
	$	318,733		$	314,685

__________

(a) Primarily represents restoration costs on our hotel property, which was impacted by Hurricane Irma as noted below.

Depreciation expense on our operating real estate was $2.2 million and $1.7 million, for the three months ended June 30, 2018 and 2017, respectively, and $3.9 million and $3.3 million for the six months ended June 30, 2018 and 2017, respectively.

Hurricane Impact Update

Hurricane Irma made landfall in September 2017, which directly impacted our hotel in Miami, Florida, leased to Shelborne Operating Associates, LLC, or the Shelborne Hotel. The hotel sustained damage and has since been operating at less than full capacity. We believe all of the damages are covered by our insurance policy, apart from the estimated insurance deductible of $1.8 million and certain professional fees. In May 2018, in response to a delay in collecting our outstanding insurance receivables, we filed a complaint against our insurance carrier in the State of Florida. As such, we assessed the outstanding insurance receivable for collectability and recorded a reserve for insurance receivables totaling $2.0 million for both the three and six months ended June 30, 2018 (Note 11), which is included within Operating real estate expenses on our consolidated financial statements. We will continue to assess the collectability of the insurance proceeds on a periodic basis. At June 30, 2018, we had $23.2 million of insurance receivables, net of reserves, in Accounts receivable and other assets on our consolidated financial statements. As a result of filing the complaint, the amount payable to our third-party insurance adjuster was reduced by $1.2 million, as per our contractual arrangement, which we recorded as a reduction to expenses within Other income and (expenses) on our consolidated financial statements during both the three and six months ended June 30, 2018.

Through June 30, 2018, we received $3.2 million of insurance proceeds for remediation and restoration costs. During the second quarter of 2018, we reassessed the estimated allocation of insurance proceeds that we received through June 30, 2018 and determined that these were solely related to property damages. In addition to the above, we have business interruption insurance coverage pertaining to the operating losses that resulted from Hurricane Irma. We will record revenue for covered business interruption when both the recovery is probable and contingencies have been resolved with the insurance carrier.

We are still assessing the impact of the hurricane to the Shelborne Hotel, and as a result, the final damages incurred could vary significantly from our estimate and additional remediation work may be performed. Any changes in estimates for property damage will be recorded in the periods in which they are determined and any additional work will be recorded in the periods in which it is performed.

The aggregate unfunded commitment on the estimated remaining repairs remaining at our Shelborne Hotel totaled approximately $28.2 million at June 30, 2018.

Assets Held for Sale, Net

At June 30, 2018, Assets held for sale consisted of a net-leased property located in Waldaschaff, Germany. On June 15, 2018, we entered into an agreement to sell this property for $7.7 million (amount is based on the exchange rate of the euro on the date of the agreement). There can be no assurance that we will be able to sell this facility for that amount, or at all. At December 31, 2017, we did not have any properties classified as Assets held for sale. See Note 13 for more information for our disposition and properties held for sale.

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

	June 30, 2018 (a)		December 31, 2017
Land, buildings and improvements, net	$	3,189	$	—
Assets held for sale, net	$	3,189	$	—

__________

(a) Amounts reflect $3.8 million related to an asset retirement obligation that buyer will assume upon consummation of the sale.

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Finance Receivables

6 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Finance Receivables

Finance Receivables

Assets representing rights to receive money on demand or at fixed or determinable dates are referred to as finance receivables. Our finance receivables portfolio consists of our Net investments in direct financing leases and loans receivable. Operating leases are not included in finance receivables as such amounts are not recognized as an asset in the consolidated financial statements. Our loans receivable are included in Accounts receivable and other assets, net in the consolidated financial statements. Earnings from our loans receivable are included in Other interest income in the consolidated financial statements.

At June 30, 2018 and December 31, 2017, we had five loans receivable with outstanding balances of $104.8 million and $110.5 million, respectively, which are included in Accounts receivable and other assets, net in the consolidated financial statements. The adoption of ASU 2017-05 impacted our outstanding loan receivable balance at June 30, 2018. See Note 2 for more details.

On January 8, 2015, we provided a mezzanine loan of $30.0 million to a subsidiary of 1185 Broadway LLC for the development of a hotel on a parcel of land in New York, New York. The mezzanine loan is collateralized by an equity interest in a subsidiary of 1185 Broadway LLC. On July 2, 2018, we received full repayment of this $30.0 million mezzanine loan (Note 15). 

In January 2018, The New York Times Company, a tenant at one of our properties, exercised its bargain purchase option to acquire the property for $250.0 million in 2019. There can be no assurance that such repurchase will be completed.

Credit Quality of Finance Receivables

We generally invest in facilities that we believe are critical to a tenant’s business and therefore have a lower risk of tenant default. At June 30, 2018 and December 31, 2017, we had $1.9 million and $1.1 million, respectively, of finance receivable balances that were past due, of which we established allowances for credit losses of $1.5 million and $0.7 million, respectively.

During both the three and six months ended June 30, 2018, we recognized an allowance for credit losses totaling $6.2 million on two of our net-lease properties that are classified as direct financing leases due to the tenant informing us they will be going out of business and vacating the properties (Note 8). We evaluate the credit quality of our finance receivables utilizing an internal five-point credit rating scale, with one representing the highest credit quality and five representing the lowest. The credit quality evaluation of our finance receivables is updated quarterly.

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

	Number of Tenants / Obligors at		Carrying Value at
Internal Credit Quality Indicator	June 30, 2018	December 31, 2017	June 30, 2018		December 31, 2017
1	—	—	$	—	$	—
2	2	2	63,102		62,744
3	10	8	390,957		379,621
4	5	8	127,111		165,413
5	2	1	25,188		11,950
			$	606,358	$	619,728

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Equity Investments in Real Estate

6 Months Ended

Jun. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

Equity Investments in Real Estate

Equity Investments in Real Estate

We own equity interests in net-leased properties that are generally leased to companies through noncontrolling interests (i) in partnerships and limited liability companies that we do not control but over which we exercise significant influence or (ii) as tenants-in-common subject to common control. Generally, the underlying investments are jointly owned with affiliates. We account for these investments under the equity method of accounting. Earnings for each investment are recognized in accordance with each respective investment agreement and, where applicable, based upon an allocation of the investment’s net assets at book value as if the investment were hypothetically liquidated at the end of each reporting period.

As required by current authoritative accounting guidance, we periodically compare an investment’s carrying value to its estimated fair value and recognize an impairment charge to the extent that the carrying value exceeds fair value and such decline is determined to be other than temporary. Additionally, we provide funding to developers for ADC Arrangements, under which we have provided loans to third-party developers of real estate projects, which we account for as equity investments as the characteristics of the arrangement with the third-party developers are more similar to a jointly owned investment or partnership rather than a loan.

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Equity Earnings from Equity Investments:
Net Lease	$	11,745		$	2,475		$	16,447		$	7,430
All Other (a) (b) (c)	2			460			595			(1,648		)
	11,747			2,935			17,042			5,782
Amortization of Basis Differences on Equity Investments:
Net Lease	(525		)	(562		)	(1,060		)	(1,125		)
All Other (a) (b) (c)	(77		)	(103		)	(154		)	(402		)
	(602		)	(665		)	(1,214		)	(1,527		)
Equity in earnings of equity method investments in real estate	$	11,145		$	2,270		$	15,828		$	4,255

__________

(a) On October 3, 2017 we restructured our Shelborne Hotel investment. All equity interests in the investment were transferred to us in satisfaction of the underlying loan. Simultaneously, we transferred a 4.5% minority interest back to one of the original equity partners in exchange for a cash contribution of $4.0 million. As a result of the restructuring, we became the managing member with controlling financial interest in the investment. The minority interests have no decision-making control. Since the construction is now complete and the loan has been satisfied, we determined that this investment should no longer be accounted for as an ADC Arrangement and, as a result, have consolidated this investment as of the restructure date.

(b) On May 19, 2017, we received the full repayment of our preferred equity interest in BPS Nevada LLC; therefore, the preferred equity interest was retired as of that date. As a result, the three and six months ended June 30, 2018 in the table above does not include any activity related to this investment.

(c) On March 17, 2017, we restructured our investment in IDL Wheel Tenant, LLC (Note 13) and, as a result, this investment is accounted for as a loan receivable, included in Accounts receivable and other assets, net in the consolidated financial statements, and is no longer accounted for as an ADC Arrangement under the equity method of accounting.

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

		Ownership Interest at	Carrying Value at
Lessee/Equity Investee	Co-owner	June 30, 2018	June 30, 2018		December 31, 2017
Net Lease:
Hellweg Die Profi-Baumärkte GmbH & Co. KG (referred to as Hellweg 2) (a) (b)	WPC	37%	$	107,125	$	109,933
Kesko Senukai (a)	Third Party	70%	55,769		58,136
Jumbo Logistiek Vastgoed B.V. (a) (c)	WPC	85%	52,090		55,162
U-Haul Moving Partners, Inc. and Mercury Partners, LP (b)	WPC	12%	35,053		35,897
Bank Pekao S.A. (a) (b)	CPA:18 – Global	50%	23,945		25,582
BPS Nevada, LLC (b) (d)	Third Party	15%	23,435		23,455
State Farm Automobile Co.(b)	CPA:18 – Global	50%	15,261		16,072
Berry Global Inc. (b)	WPC	50%	14,045		14,476
Tesco Global Aruhazak Zrt. (a) (b)	WPC	49%	10,266		10,707
Eroski Sociedad Cooperativa — Mallorca (a)	WPC	30%	7,352		7,629
Apply Sørco AS (referred to as Apply) (a)	CPA:18 – Global	49%	7,328		6,298
Dick’s Sporting Goods, Inc. (b)	WPC	45%	3,396		3,750
Konzum d.d. (referred to as Agrokor) (a) (b)	CPA:18 – Global	20%	3,153		3,433
			358,218		370,530
All Other:
BG LLH, LLC (b) (d)	Third Party	6%	39,678		38,724
			39,678		38,724
			$	397,896	$	409,254

__________

(a) Carrying value of investment is impacted by fluctuations in the exchange rate of the applicable foreign currency.

(b) This investment is a VIE.

(c) This investment represents a tenancy-in-common interest, whereby the property is encumbered by debt for which we are jointly and severally liable. The co-obligor is WPC and the amount due under the arrangement was approximately $73.3 million at June 30, 2018. Of this amount, $62.3 million represents the amount we are liable for and is included within the carrying value of this investment at June 30, 2018.

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

Aggregate distributions from our interests in unconsolidated real estate investments were $14.8 million and $12.4 million for the three months ended June 30, 2018 and 2017, respectively, and $26.6 million and $33.7 million, for the six months ended June 30, 2018 and 2017, respectively. At June 30, 2018 and December 31, 2017, the unamortized basis differences on our equity investments were $25.0 million and $26.3 million, respectively.

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Intangible Assets and Liabilities

6 Months Ended

Jun. 30, 2018

Intangible Assets And Liabilities [Abstract]

Intangible Assets and Liabilities

Intangible Assets and Liabilities

In-place lease intangibles are included in In-place lease intangible assets in the consolidated financial statements. Above-market rent and below-market ground lease and other (as lessee) intangibles are included in Other intangible assets in the consolidated financial statements. Goodwill is included in Accounts receivable and other assets, net in the consolidated financial statements. Below-market rent and above-market ground lease (as lessor) intangibles are included in Below-market rent and other intangible liabilities, net in the consolidated financial statements.

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

		June 30, 2018									December 31, 2017
	Amortization Period (Years)	Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
Finite-Lived Intangible Assets
In-place lease	4 – 53	$	623,441		$	(229,845	)	$	393,596		$	629,961		$	(213,641	)	$	416,320
Above-market rent	7 – 40	96,656			(33,643		)	63,013			98,162			(31,533		)	66,629
Below-market ground leases and other	55 – 94	12,686			(842		)	11,844			12,842			(726		)	12,116
		732,783			(264,330		)	468,453			740,965			(245,900		)	495,065
Indefinite-Lived Intangible Assets
Goodwill		304			—			304			304			—			304
Total intangible assets		$	733,087		$	(264,330	)	$	468,757		$	741,269		$	(245,900	)	$	495,369
Finite-Lived Intangible Liabilities
Below-market rent	7 – 53	$	(81,747	)	$	23,865		$	(57,882	)	$	(82,259	)	$	22,121		$	(60,138	)
Above-market ground lease	49 – 88	(1,145		)	67			(1,078		)	(1,145		)	61			(1,084		)
Total intangible liabilities		$	(82,892	)	$	23,932		$	(58,960	)	$	(83,404	)	$	22,182		$	(61,222	)

Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Rental income; amortization of below-market ground lease and other and above-market ground lease intangibles is included in Property expenses; and amortization of in-place lease intangibles is included in Depreciation and amortization expense on our consolidated financial statements. Amortization of below- and above-market rent intangibles, including the effect of foreign currency translation, decreased Rental income by $0.3 million for both the three months ended June 30, 2018 and 2017, respectively, and decreased Rental income by $0.7 million and increased Rental income by $18.5 million for the six months ended June 30, 2018 and 2017, respectively. The six months ended June 30, 2017 includes the impact of a below-market rent intangible liability write-off of $15.7 million recognized in conjunction with a lease modification that occurred during six months ended June 30, 2017 (Note 13). Net amortization expense of all of our other net intangible assets totaled $9.2 million and $10.5 million for the three months ended June 30, 2018 and 2017, respectively, and $18.5 million and $23.3 million for the six months ended June 30, 2018 and 2017, respectively.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps, interest rate swaps, foreign currency forward contracts, and foreign currency collars; and Level 3, for securities and other derivative assets that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring us to develop our own assumptions.

Items Measured at Fair Value on a Recurring Basis

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

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

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

We did not have any transfers into or out of Level 1, Level 2, and Level 3 measurements during the three and six months ended June 30, 2018 and 2017. Gains and losses (realized and unrealized) recognized on items measured at fair value on a recurring basis included in earnings are reported within Other gains and (losses) on our consolidated financial statements.

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

		June 30, 2018				December 31, 2017
	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Mortgage debt, net (a) (b)	3	$	1,811,822	$	1,810,657	$	1,849,459	$	1,864,043
Loans receivable (c) (d)	3	104,819		110,500		110,500		110,500
CMBS (e)	3	1,144		1,144		6,548		7,237

___________

(a) The carrying value of Mortgage debt, net includes unamortized deferred financing costs of $6.8 million and $7.9 million at June 30, 2018 and December 31, 2017, respectively.

(b) We determined the estimated fair value of our Mortgage debt, net using a discounted cash flow model that estimates the present value of future loan payments by discounting such payments at current estimated market interest rates. The estimated market interest rates take into     account interest rate risk and the value of the underlying collateral, which includes the quality of the collateral, the credit quality of the tenant/obligor, and the time until maturity.

(c) We determined the estimated fair value of our Loans receivable using a discounted cash flow model with rates that take into account the credit of the tenant/obligor, order of payment tranches, and interest rate risk. We also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the tenant/obligor, the time until maturity, and the current market interest rate.

(d) Carrying value amount at June 30, 2018 includes the impact of adopting ASU 2017-05 (Note 2).

(e) At both June 30, 2018 and December 31, 2017, we had two separate tranches of CMBS investments. The carrying values of our CMBS investments are inclusive of impairment charges for both periods presented.

We estimated that our other financial assets and liabilities, including the amounts outstanding under the Senior Credit Facility (Note 10), but excluding net investments in direct financing leases, had fair values that approximated their carrying values at both June 30, 2018 and December 31, 2017.

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

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

The following table presents information about the assets for which we recorded impairment charges and other credit losses that were measured at fair value on a non-recurring basis (in thousands):

	Three Months Ended June 30, 2018				Three Months Ended June 30, 2017
	Fair Value Measurements		Total Impairment Charges and Other Credit Losses		Fair Value Measurements		Total Impairment Charges and Other Credit Losses
Impairment Charges and Other Credit Losses
Net investments in direct financing leases	$	13,597	$	6,168	$	—	$	—
Equity investments in real estate	—		—		4,780		2,510
			$	6,168			$	2,510

	Six Months Ended June 30, 2018				Six Months Ended June 30, 2017
	Fair Value Measurements		Total Impairment Charges and Other Credit Losses		Fair Value Measurements		Total Impairment Charges and Other Credit Losses
Impairment Charges and Other Credit Losses
Net investments in direct financing leases	$	13,597	$	6,168	$	—	$	—
CMBS	1,144		5,404		—		—
Real estate	—		—		4,719		4,519
Equity investments in real estate	—		—		4,780		2,510
			$	11,572			$	7,029

Net Investment in Direct Financing Leases

During both the three and six months ended June 30, 2018, we recognized an allowance for credit losses totaling $6.2 million on two properties classified as direct financing leases due to the tenant informing us that it will be going out of business and vacating the properties. We assessed the carrying amount of these properties for recoverability and, as a result of the decreased expected cash flows, we determined that the carrying value of the properties is not fully recoverable and recognized an allowance for credit losses to reflect the change in the estimate of the future cash flows, which includes rent. At June 30, 2018, the estimated fair value of the two properties approximated $13.6 million. The fair value measurement related to the credit losses was determined by estimating discounted cash flows using three significant unobservable inputs, which are the cash flow discount rate, the residual discount rate, and the residual capitalization rate equal to 9.5%, 9.5%, and 8.3%, respectively.

CMBS

During the six months ended June 30, 2018, we incurred an other-than-temporary impairment charge of $5.4 million on one of our CMBS tranches to reduce its carrying value to its estimated fair value due to defaults of certain underlying loans during the first quarter of 2018. The fair value of the CMBS portfolio after the impairment charge approximated $1.1 million. The fair value measurements related to the impairment charges were derived from third-party appraisals, which were based on input from dealers, buyers, and other market participants, as well as updates on prepayments, losses, and delinquencies within our CMBS portfolio.

Real Estate

During the six months ended June 30, 2017, we were notified by the tenant currently occupying a property that we own with an affiliate, located in Waldaschaff, Germany, that the tenant will not be renewing its lease. As a result of this information, and with the expectation that we will not be able to replace the tenant upon the lease expiration (primarily due to, among other things, the remote location of the facility and certain environmental concerns), we recognized an impairment charge of $4.5 million, which included $1.5 million attributed to a noncontrolling interest (amounts are based on the exchange rate of the euro at the date of impairment). The fair value of the property after the impairment charge approximated $4.7 million. The fair value measurement related to the impairment charge was determined by estimating discounted cash flows using a discount rate of 9.75%, which is considered a significant unobservable input. Significant increases or decreases to this input would result in a significant change in the fair value measurement. On June 15, 2018, we entered into an agreement to sell this facility (Note 4, Note 13).

We did not recognize any impairments of real estate during the three and six months ended June 30, 2018.

Equity Investments in Real Estate

During both the three and six months ended June 30, 2017, we recognized an other-than-temporary impairment charge of $2.5 million on our Agrokor equity method investment (Note 6), to reduce the carrying value of a property held by the jointly owned investment to its estimated fair value due to a decline in market conditions. The fair value measurement related to the impairment charge was determined by estimating discounted cash flows using three significant unobservable inputs, which are the cash flow discount rate, the residual discount rate, and the residual capitalization rate equal to 12.4%, 10.9%, and 10.4%, respectively. Significant increases or decreases to these inputs in isolation would result in a significant change in the fair value measurement.

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Risk Management and Use of Derivative Financial Instruments

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Risk Management and Use of Derivative Financial Instruments

Risk Management and Use of Derivative Financial Instruments

Risk Management

In the normal course of our ongoing business operations, we encounter economic risk. There are four main components of economic risk that impact us: interest rate risk, credit risk, market risk, and foreign currency risk. We are primarily subject to interest rate risk on our interest-bearing liabilities, including the Senior Credit Facility (Note 10). Credit risk is the risk of default on our operations and our tenants’ inability or unwillingness to make contractually required payments. Market risk includes changes in the value of our properties and related loans, as well as changes in the value of our other investments due to changes in interest rates or other market factors. We own investments in Europe and Asia and are subject to risks associated with fluctuating foreign currency exchange rates.

Derivative Financial Instruments

When we use derivative instruments, it is generally to reduce our exposure to fluctuations in interest rates and foreign currency exchange rate movements. We have not entered into, and do not plan to enter into, financial instruments for trading or speculative purposes. In addition to entering into derivative instruments on our own behalf, we may also be a party to derivative instruments that are embedded in other contracts and we may be granted common stock warrants by lessees when structuring lease transactions, which are considered to be derivative instruments. The primary risks related to our use of derivative instruments include: (i) a counterparty to a hedging arrangement defaulting on its obligation and (ii) a downgrade in the credit quality of a counterparty to such an extent that our ability to sell or assign our side of the hedging transaction is impaired. While we seek to mitigate these risks by entering into hedging arrangements with large financial institutions that we deem to be creditworthy, it is possible that our hedging transactions, which are intended to limit losses, could adversely affect our earnings. Furthermore, if we terminate a hedging arrangement, we may be obligated to pay certain costs, such as transaction or breakage fees. We have established policies and procedures for risk assessment, as well as the approval, reporting, and monitoring of derivative financial instrument activities.

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

All derivative transactions with an individual counterparty are governed by a master International Swap and Derivatives Association agreement, which can be considered as a master netting arrangement; however, we report all our derivative instruments on a gross basis on our consolidated financial statements. At both June 30, 2018 and December 31, 2017, no cash collateral had been posted or received for any of our derivative positions.

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

Derivatives Designated as Hedging Instruments		Asset Derivatives Fair Value at				Liability Derivatives Fair Value at
	Balance Sheet Location	June 30, 2018		December 31, 2017		June 30, 2018			December 31, 2017
Foreign currency forward contracts	Accounts receivable and other assets, net	$	14,130	$	14,382	$	—		$	—
Interest rate swaps	Accounts receivable and other assets, net	1,235		314		—			—
Interest rate caps	Accounts receivable and other assets, net	145		201		—			—
Interest rate swaps	Accounts payable, accrued expenses and other liabilities	—		—		(2,320		)	(3,852		)
Foreign currency collars	Accounts payable, accrued expenses and other liabilities	—		—		(957		)	(1,431		)
Derivatives Not Designated as Hedging Instruments
Stock warrants	Accounts receivable and other assets, net	1,914		1,815		—			—
Foreign currency forward contracts	Accounts receivable and other assets, net	480		86		—			—
Interest rate swap	Accounts payable, accrued expenses and other liabilities	—		—		(127		)	(128		)
Total derivatives		$	17,904	$	16,798	$	(3,404	)	$	(5,411	)

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

	Amount of Gain (Loss) Recognized on Derivatives in Other Comprehensive (Loss) Income (Effective Portion) (a)
	Three Months Ended June 30,						Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships	2018			2017			2018			2017
Foreign currency forward contracts	$	4,201		$	(8,729	)	$	(23	)	$	(12,478	)
Foreign currency collars	1,042			(945		)	486			(1,002		)
Interest rate swaps	448			44			2,470			1,037
Interest rate caps	(21		)	(105		)	(44		)	(363		)
Derivatives in Net Investment Hedging Relationships (b)
Foreign currency forward contracts	22			84			—			(207		)
Foreign currency collar	11			(7		)	(1		)	(9		)
Total	$	5,703		$	(9,658	)	$	2,888		$	(13,022	)

		Amount of Gain (Loss) Reclassified from Other Comprehensive (Loss) Income into Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Reclassified to Income	Three Months Ended June 30,						Six Months Ended June 30,
		2018			2017			2018			2017
Foreign currency forward contracts	Other gains and (losses)	$	1,315		$	1,161		$	2,807		$	4,019
Interest rate swaps	Interest expense	(313		)	(603		)	(744		)	(1,309		)
Interest rate caps	Interest expense	(14		)	—			(19		)	—
Total		$	988		$	558		$	2,044		$	2,710

__________

(a) Excludes net losses of $0.3 million and $0.4 million on unconsolidated jointly owned investments for the three months ended June 30, 2018 and 2017, respectively, and a net gain of $0.2 million and $0.1 million on unconsolidated jointly owned investments for the six months ended June 30, 2018 and 2017, respectively.

(b) The effective portion of the change in fair value and the settlement of these contracts are reported in the foreign currency translation adjustment section of Other comprehensive (loss) income.

Amounts reported in Other comprehensive (loss) income related to interest rate swaps will be reclassified to Interest expense as interest is incurred on our variable-rate debt. Amounts reported in Other comprehensive (loss) income related to foreign currency derivative contracts will be reclassified to Other gains and (losses) when the hedged foreign currency contracts are settled. At June 30, 2018, we estimated that an additional $0.5 million and $7.1 million will be reclassified as interest expense and as Other gains and (losses), respectively, during the next 12 months.

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

Derivatives Not in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income on Derivatives
		Three Months Ended June 30,						Six Months Ended June 30,
		2018			2017			2018			2017
Foreign currency forward contracts	Other gains and (losses)	$	194		$	(25	)	$	260		$	8
Stock warrants	Other gains and (losses)	(33		)	33			99			(165		)
Interest rate swap	Interest expense	(23		)	8			(31		)	26
Swaption	Other gains and (losses)	—			(86		)	—			(134		)
Derivatives in Cash Flow Hedging Relationships (a)
Interest rate swaps	Interest expense	(30		)	46			15			92
Foreign currency collars	Other gains and (losses)	(5		)	(5		)	(10		)	(5		)
Total		$	103		$	(29	)	$	333		$	(178	)

__________

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

See below for information regarding why we enter into our derivative instruments and concerning derivative instruments owned by unconsolidated investments, which are excluded from the tables above.

Interest Rate Swaps, Caps, and Swaption

We are exposed to the impact of interest rate changes primarily through our borrowing activities. To limit this exposure, we attempt to obtain non-recourse mortgage financing on a long-term, fixed-rate basis. However, from time to time, we or our joint investment partners have obtained, and may in the future obtain, variable-rate non-recourse mortgage loans and, as a result, we have entered into, and may continue to enter into, swaptions, interest rate swap agreements or interest rate cap agreements with counterparties. Interest rate swaps, which effectively convert the variable rate debt service obligations of a loan to a fixed rate, are agreements in which one party exchanges a stream of interest payments for a counterparty’s stream of cash flow over a specific period. The notional, or face, amount on which the swaps are based is not exchanged. Interest rate caps limit the effective borrowing rate of variable rate debt obligations while allowing participants to share downward shifts in interest rates. A swaption gives us the right but not the obligation to enter into an interest rate swap, of which the terms and conditions are set on the trade date, on a specified date in the future. Our objective in using these derivatives is to limit our exposure to interest rate movements.

The interest rate swaps and caps that our consolidated subsidiaries had outstanding at June 30, 2018 are summarized as follows (currency in thousands):

Interest Rate Derivatives	Number of Instruments	Notional Amount		Fair Value at June 30, 2018(a)
Designated as Cash Flow Hedging Instruments
Interest rate swaps	3	65,982	EUR	$	(728	)
Interest rate swaps	12	122,615	USD	(357		)
Interest rate caps	4	132,614	EUR	79
Interest rate cap	1	75,000	USD	58
Interest rate cap	1	6,394	GBP	8
Not Designated as Hedging Instrument
Interest rate swap	1	4,784	EUR	(127		)
				$	(1,067	)

__________

(a) Fair value amount is based on the exchange rate of the euro or British pound sterling at June 30, 2018, as applicable.

Foreign Currency Contracts

We are exposed to foreign currency exchange rate movements, primarily in the euro and, to a lesser extent, the British pound sterling, the Japanese yen, and the Norwegian krone. We manage foreign currency exchange rate movements by generally placing our debt service obligation on an investment in the same currency as the tenant’s rental obligation to us. This reduces our overall exposure to the net cash flow from that investment. However, we are subject to foreign currency exchange rate movements to the extent that there is a difference in the timing and amount of the rental obligation and the debt service. Realized and unrealized gains and losses recognized in earnings related to foreign currency transactions are included in Other gains and (losses) in the consolidated financial statements.

In order to hedge certain of our foreign currency cash flow exposures, we enter into foreign currency forward contracts and collars. A foreign currency forward contract is a commitment to deliver a certain amount of currency at a certain price on a specific date in the future. A foreign currency collar consists of a written call option and a purchased put option to sell the foreign currency at a range of predetermined exchange rates. By entering into forward contracts and holding them to maturity, we are locked into a future currency exchange rate for the term of the contract. A foreign currency collar guarantees that the exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices. Our foreign currency forward contracts and foreign currency collars have maturities of 77 months or less.

The following table presents the foreign currency derivative contracts we had outstanding and their designations at June 30, 2018 (currency in thousands):

Foreign Currency Derivatives	Number of Instruments	Notional Amount		Fair Value at June 30, 2018
Designated as Cash Flow Hedging Instruments
Foreign currency forward contracts	27	68,286	EUR	$	14,073
Foreign currency collars	2	15,100	EUR	(919		)
Foreign currency collars	3	2,000	NOK	(17		)
Not Designated as Hedging Instruments
Foreign currency forward contracts	7	2,105	EUR	414
Foreign currency forward contracts	7	5,733	NOK	66
Designated as Net Investment Hedging Instruments
Foreign currency forward contracts	2	4,329	NOK	57
Foreign currency collar	1	2,500	NOK	(21		)
				$	13,653

Credit Risk-Related Contingent Features

We measure our credit exposure on a counterparty basis as the net positive aggregate estimated fair value of our derivatives, net of any collateral received. No collateral was received as of June 30, 2018. At June 30, 2018, our total credit exposure was $14.2 million and the maximum exposure to any single counterparty was $8.2 million.

Some of the agreements with our derivative counterparties contain cross-default provisions that could trigger a declaration of default on our derivative obligations if we default, or are capable of being declared in default, on certain of our indebtedness. At June 30, 2018, we had not been declared in default on any of our derivative obligations. The estimated fair value of our derivatives that were in a net liability position was $3.5 million and $5.6 million at June 30, 2018 and December 31, 2017, respectively, which included accrued interest and any nonperformance risk adjustments. If we had breached any of these provisions at June 30, 2018 or December 31, 2017, we could have been required to settle our obligations under these agreements at their aggregate termination value of $3.6 million and $5.7 million, respectively.

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Debt

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt

Debt

Mortgage Debt, Net

Mortgage debt, net consists of mortgage notes payable, which are primarily non-recourse and collateralized by the assignment of real estate properties. At June 30, 2018, our mortgage notes payable bore interest at fixed annual rates ranging from 1.9% to 7.4% and variable contractual annual rates ranging from 1.3% to 6.0%, with maturity dates ranging from 2018 to 2031.

Financing Activity During 2018

During the six months ended June 30, 2018, we repaid a total of $7.4 million (amount is based on the exchange rate of the euro as of the date of repayment) of principal to cure breaches of loan-to-value, or LTV, covenants on two of our non-recourse mortgage loans. In addition, we repaid one non-recourse mortgage loan totaling $3.1 million at its maturity date (amount is based on the exchange rate of the euro as of the date of repayment).

Senior Credit Facility

On August 26, 2015, we entered into a Credit Agreement with J.P. Morgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, and a syndicate of other lenders, which we refer to herein as the Credit Agreement. The Credit Agreement was amended on March 31, 2016 to clarify the Restricted Payments covenant (see below); no other terms were changed. The Credit Agreement provides for a $200.0 million senior unsecured revolving credit facility, or the Revolver, and a $50.0 million delayed-draw term loan facility, or the Term Loan. We refer to the Revolver and the Term Loan together as the Senior Credit Facility, which has a maximum aggregate principal amount of $250.0 million and, subject to lender approval, an accordion feature of $250.0 million. The Senior Credit Facility was initially scheduled to mature on August 26, 2018, subject to two 12-month extension periods. On July 24, 2018, we entered into an amendment to the Credit Agreement to exercise one of our two options to extend the maturity date of the Senior Credit Facility for an additional 12-month period, which is now scheduled to mature on August 26, 2019 (Note 15).

The Senior Credit Facility provides for an annual interest rate of either (i) the Eurocurrency Rate or (ii) the Base Rate, in each case plus the Applicable Rate (each as defined in the Credit Agreement). With respect to the Revolver, the Applicable Rate on Eurocurrency loans and letters of credit ranges from 1.50% to 2.25% (based on London Interbank Offered Rate, or LIBOR) and the Applicable Rate on Base Rate loans ranges from 0.50% to 1.25% (as defined in the Credit Agreement), depending on our leverage ratio. With respect to the Term Loan, the Applicable Rate on Eurocurrency loans and letters of credit ranges from 1.45% to 2.20% (based on LIBOR) and the Applicable Rate on Base Rate loans ranges from 0.45% to 1.20% (as defined in the Credit Agreement), depending on our leverage ratio. In addition, we pay a fee of either 0.15% or 0.30% on the unused portion of the Senior Credit Facility. If usage of the Senior Credit Facility is equal to or greater than 50% of the Aggregate Commitments, the Unused Fee Rate will be 0.15%, and if usage of the Senior Credit Facility is less than 50% of the Aggregate Commitments, the Unused Fee Rate will be 0.30%. In connection with the transaction, we incurred costs of $1.9 million, which are being amortized to interest expense over the remaining term of the Senior Credit Facility.

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

	Interest Rate at	Outstanding Balance at
Senior Credit Facility, Net	June 30, 2018	June 30, 2018		December 31, 2017
Term Loan (a)	LIBOR + 1.45%	$	49,981	$	49,915
Revolver:
Revolver — borrowing in yen (b)	1.50%	20,797		22,047
Revolver — borrowing in euros (b)	1.50%	15,196		29,969
		$	85,974	$	101,931

__________

(a) Includes unamortized deferred financing costs and discounts.

(b) Amounts are based on the exchange rate of the euro or yen at June 30, 2018.

On September 30, 2016, we exercised the delayed draw option on our Term Loan and borrowed $50.0 million. The Term Loan bears interest at LIBOR + 1.45%. The Revolver and Term Loan are used for our working capital needs and for new investments, as well as for general corporate purposes. During the six months ended June 30, 2018, we drew down $13.6 million from our Senior Credit Facility and repaid $29.5 million (amounts are based on the exchange rate of the euro or yen, as applicable, on the date of each draw/repayment).

We are required to ensure that the total Restricted Payments (as defined in the amended Credit Agreement) in an aggregate amount in any fiscal year does not exceed the greater of 95% MFFO and the amount of Restricted Payments required in order for us to (i) maintain our REIT status and (ii) avoid the payment of federal or state income or excise tax. Restricted Payments include quarterly dividends and the total amount of shares repurchased by us, if any, in excess of $100.0 million per year. In addition to placing limitations on dividend distributions and share repurchases, the Credit Agreement also stipulates certain customary financial covenants. We were in compliance with all such covenants at June 30, 2018.

Scheduled Debt Principal Payments

Scheduled debt principal payments for the remainder of 2018, each of the next four calendar years following December 31, 2018 and thereafter through 2031 are as follows (in thousands):

Years Ending December 31,	Total
2018 (remainder) (a)	$	134,796
2019	73,412
2020	425,173
2021	447,246
2022	348,438
Thereafter through 2031	480,185
Total principal payments	1,909,250
Deferred financing costs	(6,839		)
Unamortized discount, net	(4,615		)
Total	$	1,897,796

__________

(a) Includes the $50.0 million Term Loan and $36.0 million Revolver outstanding at June 30, 2018 under our Senior Credit Facility. On July 24, 2018, we entered into an amendment to the Credit Agreement to exercise one of our two options to extend the maturity of the Senior Credit Facility for an additional 12-month period, from August 26, 2018 to August 26, 2019 (Note 15).

Certain amounts in the table above are based on the applicable foreign currency exchange rate at June 30, 2018. The carrying value of our Debt, net decreased by $15.6 million from December 31, 2017 to June 30, 2018 due the strengthening of the U.S. dollar relative to foreign currencies, particularly the euro, during the same period.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

At June 30, 2018, we were not involved in any material litigation. Various claims and lawsuits arising in the normal course of business are pending against us. The results of these proceedings are not expected to have a material adverse effect on our consolidated financial position or results of operations. See Note 4 for unfunded construction commitments.

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Equity

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Equity

Equity

Reclassifications Out of Accumulated Other Comprehensive Loss

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

	Three Months Ended June 30, 2018
	Gains and (Losses) on Derivative Instruments			Gains and (Losses) on Marketable Investments			Foreign Currency Translation Adjustments			Total
Beginning balance	$	6,755		$	(15	)	$	(61,104	)	$	(54,364	)
Other comprehensive loss before reclassifications	6,353			—			(54,804		)	(48,451		)
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	327			—			—			327
Other gains and (losses)	(1,315		)	—			—			(1,315		)
Total	(988		)	—			—			(988		)
Net current-period Other comprehensive loss	5,365			—			(54,804		)	(49,439		)
Net current-period Other comprehensive loss attributable to noncontrolling interests	—			—			1,001			1,001
Ending balance	$	12,120		$	(15	)	$	(114,907	)	$	(102,802	)

	Three Months Ended June 30, 2017
	Gains and (Losses) on Derivative Instruments			Gains and (Losses) on Marketable Investments			Foreign Currency Translation Adjustments			Total
Beginning balance	$	26,996		$	(18	)	$	(177,827	)	$	(150,849	)
Other comprehensive income before reclassifications	(9,581		)	1			50,309			40,729
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	603			—			—			603
Other gains and (losses)	(1,161		)	—			—			(1,161		)
Total	(558		)	—			—			(558		)
Net current-period Other comprehensive income	(10,139		)	1			50,309			40,171
Net current-period Other comprehensive income attributable to noncontrolling interests	—			—			(1,122		)	(1,122		)
Ending balance	$	16,857		$	(17	)	$	(128,640	)	$	(111,800	)

	Six Months Ended June 30, 2018
	Gains and (Losses) on Derivative Instruments			Gains and (Losses) on Marketable Investments			Foreign Currency Translation Adjustments			Total
Beginning balance	$	9,087		$	(15	)	$	(87,492	)	$	(78,420	)
Other comprehensive loss before reclassifications	5,077			—			(27,869		)	(22,792		)
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	763			—			—			763
Other gains and (losses)	(2,807		)	—			—			(2,807		)
Total	(2,044		)	—			—			(2,044		)
Net current-period Other comprehensive loss	3,033			—			(27,869		)	(24,836		)
Net current-period Other comprehensive loss attributable to noncontrolling interests	—			—			454			454
Ending balance	$	12,120		$	(15	)	$	(114,907	)	$	(102,802	)

	Six Months Ended June 30, 2017
	Gains and (Losses) on Derivative Instruments			Gains and (Losses) on Marketable Investments			Foreign Currency Translation Adjustments			Total
Beginning balance	$	29,549		$	(48	)	$	(186,177	)	$	(156,676	)
Other comprehensive income before reclassifications	(9,982		)	31			58,918			48,967
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	1,309			—			—			1,309
Other gains and (losses)	(4,019		)	—			—			(4,019		)
Total	(2,710		)	—			—			(2,710		)
Net current-period Other comprehensive income	(12,692		)	31			58,918			46,257
Net current-period Other comprehensive income attributable to noncontrolling interests	—			—			(1,381		)	(1,381		)
Ending balance	$	16,857		$	(17	)	$	(128,640	)	$	(111,800	)

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

Distributions

During the second quarter of 2018, our board of directors declared a quarterly distribution of $0.1625 per share, which was paid on July 16, 2018 to stockholders of record on June 29, 2018, in the amount of $57.3 million. Distributions are declared at the discretion of our board of directors and are not guaranteed.

During the six months ended June 30, 2018, our board of directors declared distributions in the aggregate amount of $114.5 million, which equates to $0.3250 per share.

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Property Dispositions

6 Months Ended

Jun. 30, 2018

Discontinued Operations and Disposal Groups [Abstract]

Property Dispositions

Property Dispositions

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

2018 Assets Held for Sale

On June 15, 2018, we entered into an agreement to sell a net-leased property located in Waldaschaff, Germany for $7.7 million (amount is based on the exchange rate of the euro on the date of the agreement). There can be no assurance that we will be able to sell this facility for that amount, or at all. At June 30, 2018, this property was classified as held for sale and had a net asset carrying value of $3.2 million (Note 4).

2017 Dispositions

During the three months ended June 30, 2017, we sold three properties for total proceeds of $14.6 million, net of selling costs, and recorded an aggregate gain on sale of $1.2 million (amounts are based on the euro exchange rate on the applicable date of disposition), which was recorded under the full accrual method.

I-drive Property Disposition and I-drive Wheel Restructuring

In 2012, we entered into a contract for the construction of a domestic build-to-suit project with IDL Master Tenant, LLC, a developer, for the construction of the I-drive Property and the I-drive Wheel at that location. We had accounted for the construction of the I-drive Property as Real estate under construction. The funding for the construction of the I-drive Wheel was provided by the I-drive Wheel Loan. Pursuant to the accounting guidance regarding ADC Arrangements, we accounted for the I-drive Wheel Loan under the equity method of accounting as the characteristics of the arrangement with the third-party developer were more similar to a jointly owned investment or partnership rather than a loan. During 2015, the construction on both the I-drive Property and the I-drive Wheel were completed and they were placed into service.

On March 17, 2017, the developer exercised its purchase option and acquired the I-drive Property for a purchase price of $117.5 million (net proceeds of $23.5 million). The $60.0 million non-recourse mortgage loan encumbering the I-drive Property was repaid at closing by the buyer. In connection with the disposition, we provided seller financing in the form of a $34.0 million mezzanine loan, which was considered to be a non-cash investing activity, and the sale was accounted for under the cost recovery method. As a result, the $2.1 million gain on sale was deferred during the first quarter of 2017. As a result of the adoption of ASU 2017-05 (Note 2), we recognized a cumulative effect adjustment to recognize the deferred gain on our opening balance sheet as of January 1, 2018.

In addition to the sale of the I-drive Property, we restructured the I-drive Wheel Loan on March 17, 2017. In connection with the restructuring of the I-drive Wheel Loan, we determined that the loan no longer qualifies as an ADC Arrangement and should no longer be accounted for as an equity investment. As a result, we reclassified the aggregate loan balance noted above to loans receivable, included in Accounts receivable and other Assets, net, which was a non-cash investing activity. A deferred gain of $16.4 million was recorded during the first quarter of 2017, which was the difference between the fair value of the remaining $35.0 million loan and the $18.6 million carrying value of our previously held equity investment on March 17, 2017. As a result of the adoption of ASU 2017-05 (Note 2), we recognized a $6.0 million cumulative effect adjustment to partially recognize the deferred gain within our opening balance sheet as of January 1, 2018. The remaining portion of the deferred gain will be recognized into income through the accretion of the loan balance during the remaining life of the loan.

KBR Property Disposition

In August 2016, we simultaneously entered into two agreements with one of our tenants, KBR, Inc., to amend the lease at one property and terminate the lease at another property, both located in Houston, Texas. The lease modification and lease termination were contingent upon one another and became effective upon disposing of one net-lease property on March 13, 2017. Upon disposition, we received proceeds of $14.1 million, net of closing costs, and recognized a gain on sale, net of tax of $1.6 million during the six months ended June 30, 2017, which was recorded under the full accrual method. In addition, as a result of the aforementioned lease modification, contractual rents were renegotiated to be at market and the existing below-market rent lease liability of $15.7 million was written off and recognized in Rental income during the six months ended June 30, 2017 (Note 7). In addition, as a result of the termination of the lease noted above, we accelerated the below-market lease intangible liabilities of $3.3 million that were also recognized in Rental income during the six months ended June 30, 2017.

We did not have any significant dispositions during both the three and six months ended June 30, 2018.

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Segment Reporting

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

We operate in two reportable business segments: Net Lease and Self Storage. Our Net Lease segment includes our domestic and foreign investments in net-leased properties, whether they are accounted for as operating or direct financing leases. Our Self Storage segment is comprised of our investments in self-storage properties. In addition, we have investments in loans receivable, CMBS, one hotel, and certain other properties, which are included in our All Other category. The following tables present a summary of comparative results and assets for these business segments (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net Lease
Revenues (a) (b)	$	93,526		$	94,331		$	190,518		$	206,854
Operating expenses (c) (d)	(48,446		)	(37,867		)	(90,403		)	(79,175		)
Interest expense	(17,787		)	(18,698		)	(35,479		)	(39,349		)
Other income and (expenses), excluding interest expense	5,431			1,736			15,941			5,195
(Provision for) benefit from income taxes	(1,009		)	(316		)	(1,413		)	298
Gain on sale of real estate, net of tax	—			1,171			24			2,910
Net income attributable to noncontrolling interests	(3,571		)	(3,948		)	(6,686		)	(6,273		)
Net income attributable to CPA:17 – Global	$	28,144		$	36,409		$	72,502		$	90,460
Self Storage
Revenues	$	9,298		$	9,031		$	18,343		$	17,773
Operating expenses	(5,166		)	(6,340		)	(10,614		)	(13,539		)
Interest expense	(2,038		)	(1,974		)	(3,949		)	(3,977		)
Other income and (expenses), excluding interest expense	—			(258		)	—			(260		)
Provision for income taxes	(44		)	(30		)	(92		)	(62		)
Net income (loss) attributable to CPA:17 – Global	$	2,050		$	429		$	3,688		$	(65	)
All Other
Revenues (e)	$	7,002		$	3,151		$	14,247		$	4,891
Operating expenses (f) (g)	(6,037		)	(8		)	(15,557		)	(46		)
Other income and (expenses), excluding interest expense	1,137			187			1,708			(2,221		)
Benefit from (provision for) income taxes	26			(374		)	2,104			(1,024		)
Net loss attributable to noncontrolling interests	1,010			—			1,871			—
Net income attributable to CPA:17 – Global	$	3,138		$	2,956		$	4,373		$	1,600
Corporate
Unallocated Corporate Overhead (h)	$	(8,592	)	$	(2,017	)	$	(22,916	)	$	(9,397	)
Net income attributable to noncontrolling interests — Available Cash Distributions	$	(5,185	)	$	(6,971	)	$	(11,355	)	$	(13,781	)
Total Company
Revenues	$	109,826		$	106,513		$	223,108		$	229,518
Operating expenses	(72,966		)	(55,581		)	(140,650		)	(115,196		)
Interest expense	(20,801		)	(21,453		)	(41,351		)	(44,843		)
Other income and (expenses), excluding interest expense	12,313			12,190			20,999			18,218
(Provision for) benefit from income taxes	(1,071		)	(1,115		)	332			(1,736		)
Gain on sale of real estate, net of tax	—			1,171			24			2,910
Net income attributable to noncontrolling interests	(7,746		)	(10,919		)	(16,170		)	(20,054		)
Net income attributable to CPA:17 – Global	$	19,555		$	30,806		$	46,292		$	68,817

	Total Assets at
	June 30, 2018		December 31, 2017
Net Lease	$	3,907,121	$	3,980,445
All Other	262,780		277,702
Self-Storage	240,285		241,438
Corporate	60,038		87,885
Total Company	$	4,470,224	$	4,587,470

___________

(a) Includes a $15.7 million write-off of a below-market rent lease liabilities pertaining to our KBR, Inc. properties that was recognized in Rental income as a result of a lease modification during the six months ended June 30, 2017 (Note 13). In addition, as a result of a lease termination, we accelerated the below-market rent lease intangible liabilities of $3.3 million that was also recognized in Rental income during the six months ended June 30, 2017.

(b) We recognized straight-line rent adjustments of $2.4 million and $3.9 million during the three months ended June 30, 2018 and 2017, respectively, and $5.2 million and $7.2 million during the six months ended June 30, 2018 and 2017, respectively.

(c) Includes credit losses totaling $6.2 million related to two properties classified as direct financing leases (Note 8) recognized during both the three and six months ended June 30, 2018. Includes an impairment charge of $4.5 million related to a net-leased property (Note 8) recognized during the six months ended June 30, 2017.

(d) In April 2017, the Croatian government passed a special law assisting the restructuring of companies considered of systemic significance in Croatia. This law directly impacts our Agrokor tenant, which is currently experiencing financial distress and recently received a credit downgrade from both Standard & Poor’s and Moody’s. As a result of the financial difficulties and the uncertainty regarding future rent collections from the tenant, we recorded bad debt expense of $6.8 million and $3.2 million during the three months ended June 30, 2018 and 2017, respectively, and $11.2 million and $4.8 million during the six months ended June 30, 2018 and 2017, respectively. In July 2018, the creditors of Agrokor reached a settlement plan to attempt to restructure the company, but as of the date of this Report, we are unable to assess the potential impact of that plan on our investment.

(e) Amount includes the impact of adopting ASU 2017-05 (Note 2), which resulted in the recognition of $2.5 million and $4.7 million of accretion into income during the three and six months ended June 30, 2018, respectively.

(f) Includes an impairment charge of $5.4 million related to our CMBS investments (Note 8) recognized during the six months ended June 30, 2018.

(g) Includes an allowance for bad debt totaling $2.0 million for both the three and six months ended June 30, 2018 related to the delay in collecting our outstanding insurance receivables on our Shelborne Hotel investment (Note 4).

(h) Included in unallocated corporate overhead are asset management fees and general and administrative expenses, as well as interest expense and other charges related to our Senior Credit Facility. These expenses are calculated and reported at the portfolio level and not evaluated as part of any segment’s operating performance.

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Subsequent Events

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On July 2, 2018, we received full repayment of a $30.0 million mezzanine loan related to one of our loan receivables (Note 5).  We also received a $3.0 million fee at payoff of this loan and forfeited our right to any ongoing equity interest in the related investment. 

On July 12, 2018, we entered into a joint venture investment to acquire a 90% interest in a self-storage portfolio containing seven properties for an aggregate amount of $63.6 million, with our portion of the investment totaling $57.3 million (including $1.0 million of acquisition fees payable to our Advisor); five of the properties are located in South Carolina, one is located in North Carolina, and one is located in Florida. As part of this investment, we have also agreed to purchase two additional self-storage properties in the second half of 2018 for an estimated aggregate amount of $20.3 million, with our portion of the investment totaling $18.3 million.

In July 2018, we drew down a net balance of $53.0 million on our Senior Credit Facility (Note 10).

On July 24, 2018, we entered into an amendment to the Credit Agreement to exercise one of our two options to extend the maturity date of the Senior Credit Facility for an additional 12-month period, from August 26, 2018 to August 26, 2019 (Note 10).

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Basis of Consolidation

Basis of Consolidation

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

Variable Interest Entity

When we obtain an economic interest in an entity, we evaluate the entity to determine if it should be deemed a variable interest entity, or VIE, and, if so, whether we are the primary beneficiary and are therefore required to consolidate the entity. We apply accounting guidance for consolidation of VIEs to certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Fixed price purchase and renewal options within a lease, as well as certain decision-making rights within a loan or joint-venture agreement, can cause us to consider an entity a VIE. Limited partnerships and other similar entities that operate as a partnership will be considered a VIE unless the limited partners hold substantive kick-out rights or participation rights. Significant judgment is required to determine whether a VIE should be consolidated. We review the contractual arrangements provided for in the partnership agreement or other related contracts to determine whether the entity is considered a VIE, and to establish whether we have any variable interests in the VIE. We then compare our variable interests, if any, to those of the other variable interest holders to determine which party is the primary beneficiary of the VIE based on whether the entity (i) has the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The liabilities of these VIEs are non-recourse to us and can only be satisfied from each VIE’s respective assets.

At both June 30, 2018 and December 31, 2017, we considered 21 entities VIEs, nine of which we consolidated as we are considered the primary beneficiary and one of which we accounted for as a loan receivable. The following table presents a summary of selected financial data of the consolidated VIEs, included in the consolidated balance sheets (in thousands):

	June 30, 2018			December 31, 2017
Real estate — Land, buildings and improvements	$	98,620		$	109,426
Operating real estate — Land, buildings and improvements	88,167			80,658
Net investments in direct financing leases	311,466			312,234
In-place lease intangible assets	8,501			8,650
Accumulated depreciation and amortization	(22,883		)	(26,395		)
Assets held for sale, net	3,189			—
Accounts receivable and other assets, net	65,752			73,620
Total assets	559,152			567,929
Mortgage debt, net	$	102,979		$	104,213
Accounts payable, accrued expenses and other liabilities	11,916			12,693
Deferred income taxes	10,251			12,374
Total liabilities	125,509			129,662

At both June 30, 2018 and December 31, 2017, we had 11 unconsolidated VIEs, all of which we account for under the equity method of accounting. We do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities allows us to exercise significant influence on, but does not give us power over, decisions that significantly affect the economic performance of these entities. As of June 30, 2018 and December 31, 2017, the net carrying amount of our investments in these entities was $275.4 million and $282.0 million, respectively, and our maximum exposure to loss in these entities was limited to our investments.

Equity Method Investments

Distributions from Equity Method Investments — We classify distributions received from equity method investments using the cumulative earnings approach. Distributions received are considered returns on the investment and classified as cash inflows from operating activities. If, however, the investor’s cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earning recognized, the excess is considered a return of investment and is classified as inflows from investing activities.

We own equity interests in net-leased properties that are generally leased to companies through noncontrolling interests (i) in partnerships and limited liability companies that we do not control but over which we exercise significant influence or (ii) as tenants-in-common subject to common control. Generally, the underlying investments are jointly owned with affiliates. We account for these investments under the equity method of accounting. Earnings for each investment are recognized in accordance with each respective investment agreement and, where applicable, based upon an allocation of the investment’s net assets at book value as if the investment were hypothetically liquidated at the end of each reporting period.

As required by current authoritative accounting guidance, we periodically compare an investment’s carrying value to its estimated fair value and recognize an impairment charge to the extent that the carrying value exceeds fair value and such decline is determined to be other than temporary. Additionally, we provide funding to developers for ADC Arrangements, under which we have provided loans to third-party developers of real estate projects, which we account for as equity investments as the characteristics of the arrangement with the third-party developers are more similar to a jointly owned investment or partnership rather than a loan.

Reclassification

Reclassifications

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

Restricted Cash

Restricted Cash — In connection with our adoption of Accounting Standards Update, or ASU, 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, as described below, we revised our condensed consolidated statements of cash flows to include restricted cash when reconciling the beginning-of-period and end-of-period cash amounts shown on the statement of cash flows. As a result, we retrospectively revised prior periods presented to conform to the current period presentation. Restricted cash primarily consists of security deposits and amounts required to be reserved pursuant to lender agreements for debt service, capital improvements and real estate taxes.

Recent Accounting Requirements

Pronouncements Adopted as of June 30, 2018

In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 does not apply to our lease revenues, which constitute a majority of our revenues, but will primarily apply to revenues generated from our operating properties. We adopted this guidance for our interim and annual periods beginning January 1, 2018 using the modified retrospective method applied to any contracts not completed as of that date. There were no changes to the prior period presentations of revenue. Results of operations for reporting periods beginning January 1, 2018 are presented under Topic 606. The adoption of Topic 606 did not have a material impact on our consolidated financial statements.

Revenue is recognized when, or as, control of promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. At contract inception, we assess the services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, we consider all of the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

Revenue from contracts with customers primarily represents Operating real estate income of $11.8 million and $9.6 million for the three months ended June 30, 2018 and 2017, respectively, and $24.0 million and $18.9 million for the six months ended June 30, 2018 and 2017, respectively. Operating real estate income is primarily comprised of revenues from our self-storage portfolio as well as room rentals and food and beverage services at our hotel. We identified a single performance obligation for each distinct service. Performance obligations are typically satisfied at a point in time, at the time of sale, or at the rendering of the service. Fees are generally determined to be fixed. Payment is typically due immediately following the delivery of the service.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 requires all equity investments (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value, with changes in the fair value recognized through net income. We adopted this guidance for our interim and annual periods beginning January 1, 2018. The adoption of ASU 2016-01 did not have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 intends to reduce diversity in practice for certain cash flow classifications, including, but not limited to (i) debt prepayment or debt extinguishment costs, (ii) contingent consideration payments made after a business combination, (iii) proceeds from the settlement of insurance claims, and (iv) distributions received from equity method investees. We retrospectively adopted this guidance for our interim and annual periods beginning January 1, 2018. As a result, we reclassified debt extinguishment costs from net cash provided by operating activities to net cash used in financing activities on the condensed consolidated statement of cash flows for the six months ended June 30, 2017. The adoption of ASU 2016-15 did not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 intends to reduce diversity in practice for the classification and presentation of changes in restricted cash on the statement of cash flows. ASU 2016-18 requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We adopted ASU 2016-18 on January 1, 2018 and have retrospectively applied this standard to our condensed consolidated statements of cash flows for the six months ended June 30, 2018 and 2017. See Restricted Cash above for additional information.

In February 2017, the FASB issued ASU 2017-05, Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20). ASU 2017-05 clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments define the term “in substance nonfinancial asset,” in part, as a financial asset promised to a counterparty in a contract if substantially all of the fair value of the assets (recognized and unrecognized) that are promised to the counterparty in the contract is concentrated in nonfinancial assets. If substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets, then all of the financial assets promised to the counterparty are in substance nonfinancial assets within the scope of Subtopic 610-20. This amendment also clarifies that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent company may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. We adopted this guidance for our interim and annual periods beginning January 1, 2018 and applied the modified retrospective transition method (applicable to any contracts not completed as of that date). Results of operations for reporting periods beginning January 1, 2018 are presented under Subtopic 610-20, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for those periods.

As of January 1, 2018, there was one open contract, which was related to the I-drive Property disposition and I-drive Wheel restructuring (Note 13). On March 17, 2017, the developer exercised its purchase option and acquired the entertainment complex, which we refer to as the I-drive Property. The gain on sale was deferred during the first quarter of 2017 and was expected to be recognized in income upon recovery of the cost of the I-drive Property through the receipt of principal payments received on the mezzanine loan. As a result of the adoption of ASU 2017-05, we recognized a cumulative effect adjustment to the opening balance of stockholders’ equity and a reduction to Accounts payable, accrued expenses and other liabilities as of January 1, 2018 equal to the total gain on sale of the Property of $2.1 million that was previously deferred.

In addition to the sale of the I-drive Property, we restructured the $50.0 million loan, referred to as the I-drive Wheel Loan, to fund the construction of an observation wheel, which we refer to as the I-drive Wheel. This resulted in the elimination of our participation in the expected residual profits, with the loan no longer qualifying as an acquisition, development and construction of real estate arrangement, or ADC Arrangement, pursuant to the equity method of accounting. The gain recognized upon restructuring of the I-drive Wheel Loan of $16.4 million was deferred during 2017. As a result of the adoption of ASU 2017-05, the loan restructuring is now recognized as a receivable purchased at a discount of $18.6 million (which represents the carrying value of the ADC Arrangement upon restructuring on March 17, 2017) and will accrete up to the fair value of the loan in the amount of $35.0 million until maturity in December 2018. Accordingly, as of January 1, 2018, we recognized (i) a reduction of $16.4 million to Accounts payable, accrued expenses and other liabilities, (ii) a reduction of $10.4 million to Accounts receivable and other assets, net and (iii) an adjustment to the opening balance of stockholders’ equity for the accretion of the loan related to prior periods, using the effective interest method, of $6.0 million.

Pronouncements to be Adopted after June 30, 2018

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 modifies the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract, the lessee and the lessor. ASU 2016-02 provides new guidelines that change the accounting for leasing arrangements for lessees, whereby their rights and obligations under substantially all leases, existing and new, would be capitalized and recorded on the balance sheet. For lessors, however, the accounting remains largely equivalent to the current model, with the distinction between operating, sales-type, and direct financing leases retained, but updated to align with certain changes to the lessee model and the new revenue recognition standard. ASU 2016-02 also replaces existing sale-leaseback guidance with a new model that requires symmetrical accounting between the seller-lessee and buyer-lessor. Additionally, ASU 2016-02 requires lessors to record costs paid directly by a lessee on behalf of a lessor (e.g., real estate taxes and insurance costs) on a gross basis and will require extensive quantitative and qualitative disclosures.

Early application is permitted for all entities. ASU 2016-02 provides two transition methods. The first transition method allows for application of the new model at the beginning of the earliest comparative period presented. Under the second transition method, comparative periods would not be restated, with any cumulative effect adjustments recognized in the opening balance of retained earnings in the period of adoption. In addition, a practical expedient was recently issued by the FASB, which allows for lessors to combine non-lease components with related lease components if certain conditions are met. Further, in March 2018, the FASB approved, but has not yet finalized or issued, an update to allow lessors to make a policy election to record certain costs (e.g., insurance) paid directly by the lessee net, if the uncertainty regarding these variable amounts is not expected to ultimately be resolved. We will adopt this guidance for our interim and annual periods beginning January 1, 2019 and expect to use the second transition method. ASU 2016-02 is expected to impact our consolidated financial statements as we have certain operating office and land lease arrangements for which we are the lessee and also certain lease arrangements that include common area maintenance services (non-lease components) where we are the lessor. We are evaluating the impact of ASU 2016-02 and have not yet determined if it will have a material impact on our business or our consolidated financial statements.

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

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess hedge effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. ASU 2017-12 will be effective in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are in the process of evaluating the impact of adopting ASU 2017-12 on our consolidated financial statements, and expect to adopt the standard for the fiscal year beginning January 1, 2019.

Intangible Assets and Liabilities

Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Rental income; amortization of below-market ground lease and other and above-market ground lease intangibles is included in Property expenses; and amortization of in-place lease intangibles is included in Depreciation and amortization expense on our consolidated financial statements.

Fair Value of Financial Instruments

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

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

The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps, interest rate swaps, foreign currency forward contracts, and foreign currency collars; and Level 3, for securities and other derivative assets that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring us to develop our own assumptions.

Derivatives

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

All derivative transactions with an individual counterparty are governed by a master International Swap and Derivatives Association agreement, which can be considered as a master netting arrangement; however, we report all our derivative instruments on a gross basis on our consolidated financial statements.

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Basis of Presentation (Tables)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Schedule of Variable Interest Entities

The following table presents a summary of selected financial data of the consolidated VIEs, included in the consolidated balance sheets (in thousands):

	June 30, 2018			December 31, 2017
Real estate — Land, buildings and improvements	$	98,620		$	109,426
Operating real estate — Land, buildings and improvements	88,167			80,658
Net investments in direct financing leases	311,466			312,234
In-place lease intangible assets	8,501			8,650
Accumulated depreciation and amortization	(22,883		)	(26,395		)
Assets held for sale, net	3,189			—
Accounts receivable and other assets, net	65,752			73,620
Total assets	559,152			567,929
Mortgage debt, net	$	102,979		$	104,213
Accounts payable, accrued expenses and other liabilities	11,916			12,693
Deferred income taxes	10,251			12,374
Total liabilities	125,509			129,662

Schedule of Cash and Cash Equivalents

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total presented in the consolidated statement of cash flows.

	June 30, 2018		December 31, 2017
Cash and cash equivalents	$	90,994	$	119,094
Restricted cash (a)	23,968		26,014
Total cash and cash equivalents, and restricted cash	$	114,962	$	145,108

__________

(a) Restricted cash is included within Accounts receivable and other assets, net on our consolidated balance sheet.

Restrictions on Cash and Cash Equivalents

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total presented in the consolidated statement of cash flows.

	June 30, 2018		December 31, 2017
Cash and cash equivalents	$	90,994	$	119,094
Restricted cash (a)	23,968		26,014
Total cash and cash equivalents, and restricted cash	$	114,962	$	145,108

__________

(a) Restricted cash is included within Accounts receivable and other assets, net on our consolidated balance sheet.

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Agreements and Transactions with Related Parties (Tables)

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The following tables present a summary of fees we paid, expenses we reimbursed, and distributions we made to our Advisor and other affiliates in accordance with the relevant agreements (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Amounts Included in the Consolidated Statements of Income
Asset management fees	$	7,493	$	7,339	$	14,985	$	14,664
Available Cash Distributions	5,185		6,971		11,355		13,781
Personnel and overhead reimbursements	1,826		2,310		3,591		4,601
Interest expense on deferred acquisition fees	60		68		124		132
Director compensation	40		53		80		106
	$	14,604	$	16,741	$	30,135	$	33,284
Advisor Fees Capitalized
Current acquisition fees	$	127	$	3,537	$	130	$	3,823
Deferred acquisition fees	101		2,829		104		3,058
Personnel and overhead reimbursements	—		379		50		486
	$	228	$	6,745	$	284	$	7,367

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

	June 30, 2018		December 31, 2017
Due to Affiliates
Deferred acquisition fees, including interest	$	4,771	$	6,564
Asset management fees payable	2,498		2,435
Reimbursable costs	2,078		2,162
Accounts payable	163		175
Current acquisition fees	—		131
	$	9,510	$	11,467

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Real Estate and Operating Real Estate (Tables)

6 Months Ended

Jun. 30, 2018

Real Estate [Abstract]

Schedule of Real Estate Properties

Operating real estate, which consists of our wholly owned domestic self-storage operations and a majority ownership in one hotel, at cost, is summarized as follows (in thousands):

	June 30, 2018			December 31, 2017
Land	$	90,560		$	90,042
Buildings and improvements	254,520			250,730
Real estate under construction (a)	3,630			—
Less: Accumulated depreciation	(29,977		)	(26,087		)
	$	318,733		$	314,685

__________

(a) Primarily represents restoration costs on our hotel property, which was impacted by Hurricane Irma as noted below.

Real estate, which consists of land and buildings leased to others, at cost, and which are subject to operating leases, is summarized as follows (in thousands):

	June 30, 2018			December 31, 2017
Land	$	557,277		$	567,113
Buildings and improvements	2,175,385			2,200,901
Real estate under construction (a)	27,958			4,597
Less: Accumulated depreciation	(377,967		)	(354,668		)
	$	2,382,653		$	2,417,943

__________

(a) Amount as of June 30, 2018 includes accrued capitalized costs of $13.3 million.

Summary of Property Held for Sale

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

	June 30, 2018 (a)		December 31, 2017
Land, buildings and improvements, net	$	3,189	$	—
Assets held for sale, net	$	3,189	$	—

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Finance Receivables (Tables)

6 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Financing Receivable Credit Quality Indicators

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

	Number of Tenants / Obligors at		Carrying Value at
Internal Credit Quality Indicator	June 30, 2018	December 31, 2017	June 30, 2018		December 31, 2017
1	—	—	$	—	$	—
2	2	2	63,102		62,744
3	10	8	390,957		379,621
4	5	8	127,111		165,413
5	2	1	25,188		11,950
			$	606,358	$	619,728

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Equity Investments in Real Estate (Tables)

6 Months Ended

Jun. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Equity Earnings from Equity Investments:
Net Lease	$	11,745		$	2,475		$	16,447		$	7,430
All Other (a) (b) (c)	2			460			595			(1,648		)
	11,747			2,935			17,042			5,782
Amortization of Basis Differences on Equity Investments:
Net Lease	(525		)	(562		)	(1,060		)	(1,125		)
All Other (a) (b) (c)	(77		)	(103		)	(154		)	(402		)
	(602		)	(665		)	(1,214		)	(1,527		)
Equity in earnings of equity method investments in real estate	$	11,145		$	2,270		$	15,828		$	4,255

__________

(a) On October 3, 2017 we restructured our Shelborne Hotel investment. All equity interests in the investment were transferred to us in satisfaction of the underlying loan. Simultaneously, we transferred a 4.5% minority interest back to one of the original equity partners in exchange for a cash contribution of $4.0 million. As a result of the restructuring, we became the managing member with controlling financial interest in the investment. The minority interests have no decision-making control. Since the construction is now complete and the loan has been satisfied, we determined that this investment should no longer be accounted for as an ADC Arrangement and, as a result, have consolidated this investment as of the restructure date.

(b) On May 19, 2017, we received the full repayment of our preferred equity interest in BPS Nevada LLC; therefore, the preferred equity interest was retired as of that date. As a result, the three and six months ended June 30, 2018 in the table above does not include any activity related to this investment.

(c) On March 17, 2017, we restructured our investment in IDL Wheel Tenant, LLC (Note 13) and, as a result, this investment is accounted for as a loan receivable, included in Accounts receivable and other assets, net in the consolidated financial statements, and is no longer accounted for as an ADC Arrangement under the equity method of accounting.

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

		Ownership Interest at	Carrying Value at
Lessee/Equity Investee	Co-owner	June 30, 2018	June 30, 2018		December 31, 2017
Net Lease:
Hellweg Die Profi-Baumärkte GmbH & Co. KG (referred to as Hellweg 2) (a) (b)	WPC	37%	$	107,125	$	109,933
Kesko Senukai (a)	Third Party	70%	55,769		58,136
Jumbo Logistiek Vastgoed B.V. (a) (c)	WPC	85%	52,090		55,162
U-Haul Moving Partners, Inc. and Mercury Partners, LP (b)	WPC	12%	35,053		35,897
Bank Pekao S.A. (a) (b)	CPA:18 – Global	50%	23,945		25,582
BPS Nevada, LLC (b) (d)	Third Party	15%	23,435		23,455
State Farm Automobile Co.(b)	CPA:18 – Global	50%	15,261		16,072
Berry Global Inc. (b)	WPC	50%	14,045		14,476
Tesco Global Aruhazak Zrt. (a) (b)	WPC	49%	10,266		10,707
Eroski Sociedad Cooperativa — Mallorca (a)	WPC	30%	7,352		7,629
Apply Sørco AS (referred to as Apply) (a)	CPA:18 – Global	49%	7,328		6,298
Dick’s Sporting Goods, Inc. (b)	WPC	45%	3,396		3,750
Konzum d.d. (referred to as Agrokor) (a) (b)	CPA:18 – Global	20%	3,153		3,433
			358,218		370,530
All Other:
BG LLH, LLC (b) (d)	Third Party	6%	39,678		38,724
			39,678		38,724
			$	397,896	$	409,254

__________

(a) Carrying value of investment is impacted by fluctuations in the exchange rate of the applicable foreign currency.

(b) This investment is a VIE.

(c) This investment represents a tenancy-in-common interest, whereby the property is encumbered by debt for which we are jointly and severally liable. The co-obligor is WPC and the amount due under the arrangement was approximately $73.3 million at June 30, 2018. Of this amount, $62.3 million represents the amount we are liable for and is included within the carrying value of this investment at June 30, 2018.

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

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Intangible Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2018

Intangible Assets And Liabilities [Abstract]

Schedule Of Intangible Assets and Liabilities

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

		June 30, 2018									December 31, 2017
	Amortization Period (Years)	Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
Finite-Lived Intangible Assets
In-place lease	4 – 53	$	623,441		$	(229,845	)	$	393,596		$	629,961		$	(213,641	)	$	416,320
Above-market rent	7 – 40	96,656			(33,643		)	63,013			98,162			(31,533		)	66,629
Below-market ground leases and other	55 – 94	12,686			(842		)	11,844			12,842			(726		)	12,116
		732,783			(264,330		)	468,453			740,965			(245,900		)	495,065
Indefinite-Lived Intangible Assets
Goodwill		304			—			304			304			—			304
Total intangible assets		$	733,087		$	(264,330	)	$	468,757		$	741,269		$	(245,900	)	$	495,369
Finite-Lived Intangible Liabilities
Below-market rent	7 – 53	$	(81,747	)	$	23,865		$	(57,882	)	$	(82,259	)	$	22,121		$	(60,138	)
Above-market ground lease	49 – 88	(1,145		)	67			(1,078		)	(1,145		)	61			(1,084		)
Total intangible liabilities		$	(82,892	)	$	23,932		$	(58,960	)	$	(83,404	)	$	22,182		$	(61,222	)

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Schedule Of Other Financial Instruments In Carrying Values And Fair Values

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

		June 30, 2018				December 31, 2017
	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Mortgage debt, net (a) (b)	3	$	1,811,822	$	1,810,657	$	1,849,459	$	1,864,043
Loans receivable (c) (d)	3	104,819		110,500		110,500		110,500
CMBS (e)	3	1,144		1,144		6,548		7,237

___________

(a) The carrying value of Mortgage debt, net includes unamortized deferred financing costs of $6.8 million and $7.9 million at June 30, 2018 and December 31, 2017, respectively.

(b) We determined the estimated fair value of our Mortgage debt, net using a discounted cash flow model that estimates the present value of future loan payments by discounting such payments at current estimated market interest rates. The estimated market interest rates take into     account interest rate risk and the value of the underlying collateral, which includes the quality of the collateral, the credit quality of the tenant/obligor, and the time until maturity.

(c) We determined the estimated fair value of our Loans receivable using a discounted cash flow model with rates that take into account the credit of the tenant/obligor, order of payment tranches, and interest rate risk. We also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the tenant/obligor, the time until maturity, and the current market interest rate.

(d) Carrying value amount at June 30, 2018 includes the impact of adopting ASU 2017-05 (Note 2).

(e) At both June 30, 2018 and December 31, 2017, we had two separate tranches of CMBS investments. The carrying values of our CMBS investments are inclusive of impairment charges for both periods presented.

Schedule Of Fair Value Impairment Charges Using Unobservable Inputs on a Nonrecurring Basis

The following table presents information about the assets for which we recorded impairment charges and other credit losses that were measured at fair value on a non-recurring basis (in thousands):

	Three Months Ended June 30, 2018				Three Months Ended June 30, 2017
	Fair Value Measurements		Total Impairment Charges and Other Credit Losses		Fair Value Measurements		Total Impairment Charges and Other Credit Losses
Impairment Charges and Other Credit Losses
Net investments in direct financing leases	$	13,597	$	6,168	$	—	$	—
Equity investments in real estate	—		—		4,780		2,510
			$	6,168			$	2,510

	Six Months Ended June 30, 2018				Six Months Ended June 30, 2017
	Fair Value Measurements		Total Impairment Charges and Other Credit Losses		Fair Value Measurements		Total Impairment Charges and Other Credit Losses
Impairment Charges and Other Credit Losses
Net investments in direct financing leases	$	13,597	$	6,168	$	—	$	—
CMBS	1,144		5,404		—		—
Real estate	—		—		4,719		4,519
Equity investments in real estate	—		—		4,780		2,510
			$	11,572			$	7,029

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Risk Management and Use of Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

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

Derivatives Designated as Hedging Instruments		Asset Derivatives Fair Value at				Liability Derivatives Fair Value at
	Balance Sheet Location	June 30, 2018		December 31, 2017		June 30, 2018			December 31, 2017
Foreign currency forward contracts	Accounts receivable and other assets, net	$	14,130	$	14,382	$	—		$	—
Interest rate swaps	Accounts receivable and other assets, net	1,235		314		—			—
Interest rate caps	Accounts receivable and other assets, net	145		201		—			—
Interest rate swaps	Accounts payable, accrued expenses and other liabilities	—		—		(2,320		)	(3,852		)
Foreign currency collars	Accounts payable, accrued expenses and other liabilities	—		—		(957		)	(1,431		)
Derivatives Not Designated as Hedging Instruments
Stock warrants	Accounts receivable and other assets, net	1,914		1,815		—			—
Foreign currency forward contracts	Accounts receivable and other assets, net	480		86		—			—
Interest rate swap	Accounts payable, accrued expenses and other liabilities	—		—		(127		)	(128		)
Total derivatives		$	17,904	$	16,798	$	(3,404	)	$	(5,411	)

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)

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

	Amount of Gain (Loss) Recognized on Derivatives in Other Comprehensive (Loss) Income (Effective Portion) (a)
	Three Months Ended June 30,						Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships	2018			2017			2018			2017
Foreign currency forward contracts	$	4,201		$	(8,729	)	$	(23	)	$	(12,478	)
Foreign currency collars	1,042			(945		)	486			(1,002		)
Interest rate swaps	448			44			2,470			1,037
Interest rate caps	(21		)	(105		)	(44		)	(363		)
Derivatives in Net Investment Hedging Relationships (b)
Foreign currency forward contracts	22			84			—			(207		)
Foreign currency collar	11			(7		)	(1		)	(9		)
Total	$	5,703		$	(9,658	)	$	2,888		$	(13,022	)

		Amount of Gain (Loss) Reclassified from Other Comprehensive (Loss) Income into Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Reclassified to Income	Three Months Ended June 30,						Six Months Ended June 30,
		2018			2017			2018			2017
Foreign currency forward contracts	Other gains and (losses)	$	1,315		$	1,161		$	2,807		$	4,019
Interest rate swaps	Interest expense	(313		)	(603		)	(744		)	(1,309		)
Interest rate caps	Interest expense	(14		)	—			(19		)	—
Total		$	988		$	558		$	2,044		$	2,710

__________

(a) Excludes net losses of $0.3 million and $0.4 million on unconsolidated jointly owned investments for the three months ended June 30, 2018 and 2017, respectively, and a net gain of $0.2 million and $0.1 million on unconsolidated jointly owned investments for the six months ended June 30, 2018 and 2017, respectively.

(b) The effective portion of the change in fair value and the settlement of these contracts are reported in the foreign currency translation adjustment section of Other comprehensive (loss) income.

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

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

Derivatives Not in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income on Derivatives
		Three Months Ended June 30,						Six Months Ended June 30,
		2018			2017			2018			2017
Foreign currency forward contracts	Other gains and (losses)	$	194		$	(25	)	$	260		$	8
Stock warrants	Other gains and (losses)	(33		)	33			99			(165		)
Interest rate swap	Interest expense	(23		)	8			(31		)	26
Swaption	Other gains and (losses)	—			(86		)	—			(134		)
Derivatives in Cash Flow Hedging Relationships (a)
Interest rate swaps	Interest expense	(30		)	46			15			92
Foreign currency collars	Other gains and (losses)	(5		)	(5		)	(10		)	(5		)
Total		$	103		$	(29	)	$	333		$	(178	)

__________

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

Schedule of Derivative Instruments

The following table presents the foreign currency derivative contracts we had outstanding and their designations at June 30, 2018 (currency in thousands):

Foreign Currency Derivatives	Number of Instruments	Notional Amount		Fair Value at June 30, 2018
Designated as Cash Flow Hedging Instruments
Foreign currency forward contracts	27	68,286	EUR	$	14,073
Foreign currency collars	2	15,100	EUR	(919		)
Foreign currency collars	3	2,000	NOK	(17		)
Not Designated as Hedging Instruments
Foreign currency forward contracts	7	2,105	EUR	414
Foreign currency forward contracts	7	5,733	NOK	66
Designated as Net Investment Hedging Instruments
Foreign currency forward contracts	2	4,329	NOK	57
Foreign currency collar	1	2,500	NOK	(21		)
				$	13,653

The interest rate swaps and caps that our consolidated subsidiaries had outstanding at June 30, 2018 are summarized as follows (currency in thousands):

Interest Rate Derivatives	Number of Instruments	Notional Amount		Fair Value at June 30, 2018(a)
Designated as Cash Flow Hedging Instruments
Interest rate swaps	3	65,982	EUR	$	(728	)
Interest rate swaps	12	122,615	USD	(357		)
Interest rate caps	4	132,614	EUR	79
Interest rate cap	1	75,000	USD	58
Interest rate cap	1	6,394	GBP	8
Not Designated as Hedging Instrument
Interest rate swap	1	4,784	EUR	(127		)
				$	(1,067	)

__________

(a) Fair value amount is based on the exchange rate of the euro or British pound sterling at June 30, 2018, as applicable.

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Debt (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Schedule of Senior Credit Facilities

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

	Interest Rate at	Outstanding Balance at
Senior Credit Facility, Net	June 30, 2018	June 30, 2018		December 31, 2017
Term Loan (a)	LIBOR + 1.45%	$	49,981	$	49,915
Revolver:
Revolver — borrowing in yen (b)	1.50%	20,797		22,047
Revolver — borrowing in euros (b)	1.50%	15,196		29,969
		$	85,974	$	101,931

__________

(a) Includes unamortized deferred financing costs and discounts.

(b) Amounts are based on the exchange rate of the euro or yen at June 30, 2018.

Schedule of Debt

Scheduled debt principal payments for the remainder of 2018, each of the next four calendar years following December 31, 2018 and thereafter through 2031 are as follows (in thousands):

Years Ending December 31,	Total
2018 (remainder) (a)	$	134,796
2019	73,412
2020	425,173
2021	447,246
2022	348,438
Thereafter through 2031	480,185
Total principal payments	1,909,250
Deferred financing costs	(6,839		)
Unamortized discount, net	(4,615		)
Total	$	1,897,796

__________

(a) Includes the $50.0 million Term Loan and $36.0 million Revolver outstanding at June 30, 2018 under our Senior Credit Facility. On July 24, 2018, we entered into an amendment to the Credit Agreement to exercise one of our two options to extend the maturity of the Senior Credit Facility for an additional 12-month period, from August 26, 2018 to August 26, 2019 (Note 15).

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Equity (Tables)

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Reclassification out of Accumulated Other Comprehensive Income

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

	Three Months Ended June 30, 2018
	Gains and (Losses) on Derivative Instruments			Gains and (Losses) on Marketable Investments			Foreign Currency Translation Adjustments			Total
Beginning balance	$	6,755		$	(15	)	$	(61,104	)	$	(54,364	)
Other comprehensive loss before reclassifications	6,353			—			(54,804		)	(48,451		)
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	327			—			—			327
Other gains and (losses)	(1,315		)	—			—			(1,315		)
Total	(988		)	—			—			(988		)
Net current-period Other comprehensive loss	5,365			—			(54,804		)	(49,439		)
Net current-period Other comprehensive loss attributable to noncontrolling interests	—			—			1,001			1,001
Ending balance	$	12,120		$	(15	)	$	(114,907	)	$	(102,802	)

	Three Months Ended June 30, 2017
	Gains and (Losses) on Derivative Instruments			Gains and (Losses) on Marketable Investments			Foreign Currency Translation Adjustments			Total
Beginning balance	$	26,996		$	(18	)	$	(177,827	)	$	(150,849	)
Other comprehensive income before reclassifications	(9,581		)	1			50,309			40,729
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	603			—			—			603
Other gains and (losses)	(1,161		)	—			—			(1,161		)
Total	(558		)	—			—			(558		)
Net current-period Other comprehensive income	(10,139		)	1			50,309			40,171
Net current-period Other comprehensive income attributable to noncontrolling interests	—			—			(1,122		)	(1,122		)
Ending balance	$	16,857		$	(17	)	$	(128,640	)	$	(111,800	)

	Six Months Ended June 30, 2018
	Gains and (Losses) on Derivative Instruments			Gains and (Losses) on Marketable Investments			Foreign Currency Translation Adjustments			Total
Beginning balance	$	9,087		$	(15	)	$	(87,492	)	$	(78,420	)
Other comprehensive loss before reclassifications	5,077			—			(27,869		)	(22,792		)
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	763			—			—			763
Other gains and (losses)	(2,807		)	—			—			(2,807		)
Total	(2,044		)	—			—			(2,044		)
Net current-period Other comprehensive loss	3,033			—			(27,869		)	(24,836		)
Net current-period Other comprehensive loss attributable to noncontrolling interests	—			—			454			454
Ending balance	$	12,120		$	(15	)	$	(114,907	)	$	(102,802	)

	Six Months Ended June 30, 2017
	Gains and (Losses) on Derivative Instruments			Gains and (Losses) on Marketable Investments			Foreign Currency Translation Adjustments			Total
Beginning balance	$	29,549		$	(48	)	$	(186,177	)	$	(156,676	)
Other comprehensive income before reclassifications	(9,982		)	31			58,918			48,967
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	1,309			—			—			1,309
Other gains and (losses)	(4,019		)	—			—			(4,019		)
Total	(2,710		)	—			—			(2,710		)
Net current-period Other comprehensive income	(12,692		)	31			58,918			46,257
Net current-period Other comprehensive income attributable to noncontrolling interests	—			—			(1,381		)	(1,381		)
Ending balance	$	16,857		$	(17	)	$	(128,640	)	$	(111,800	)

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Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Reconciliation of Revenue from Segments to Consolidated

(a) Includes a $15.7 million write-off of a below-market rent lease liabilities pertaining to our KBR, Inc. properties that was recognized in Rental income as a result of a lease modification during the six months ended June 30, 2017 (Note 13). In addition, as a result of a lease termination, we accelerated the below-market rent lease intangible liabilities of $3.3 million that was also recognized in Rental income during the six months ended June 30, 2017.

(b) We recognized straight-line rent adjustments of $2.4 million and $3.9 million during the three months ended June 30, 2018 and 2017, respectively, and $5.2 million and $7.2 million during the six months ended June 30, 2018 and 2017, respectively.

(c) Includes credit losses totaling $6.2 million related to two properties classified as direct financing leases (Note 8) recognized during both the three and six months ended June 30, 2018. Includes an impairment charge of $4.5 million related to a net-leased property (Note 8) recognized during the six months ended June 30, 2017.

(d) In April 2017, the Croatian government passed a special law assisting the restructuring of companies considered of systemic significance in Croatia. This law directly impacts our Agrokor tenant, which is currently experiencing financial distress and recently received a credit downgrade from both Standard & Poor’s and Moody’s. As a result of the financial difficulties and the uncertainty regarding future rent collections from the tenant, we recorded bad debt expense of $6.8 million and $3.2 million during the three months ended June 30, 2018 and 2017, respectively, and $11.2 million and $4.8 million during the six months ended June 30, 2018 and 2017, respectively. In July 2018, the creditors of Agrokor reached a settlement plan to attempt to restructure the company, but as of the date of this Report, we are unable to assess the potential impact of that plan on our investment.

(e) Amount includes the impact of adopting ASU 2017-05 (Note 2), which resulted in the recognition of $2.5 million and $4.7 million of accretion into income during the three and six months ended June 30, 2018, respectively.

(f) Includes an impairment charge of $5.4 million related to our CMBS investments (Note 8) recognized during the six months ended June 30, 2018.

(g) Includes an allowance for bad debt totaling $2.0 million for both the three and six months ended June 30, 2018 related to the delay in collecting our outstanding insurance receivables on our Shelborne Hotel investment (Note 4).

(h) Included in unallocated corporate overhead are asset management fees and general and administrative expenses, as well as interest expense and other charges related to our Senior Credit Facility. These expenses are calculated and reported at the portfolio level and not evaluated as part of any segment’s operating performance.

The following tables present a summary of comparative results and assets for these business segments (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net Lease
Revenues (a) (b)	$	93,526		$	94,331		$	190,518		$	206,854
Operating expenses (c) (d)	(48,446		)	(37,867		)	(90,403		)	(79,175		)
Interest expense	(17,787		)	(18,698		)	(35,479		)	(39,349		)
Other income and (expenses), excluding interest expense	5,431			1,736			15,941			5,195
(Provision for) benefit from income taxes	(1,009		)	(316		)	(1,413		)	298
Gain on sale of real estate, net of tax	—			1,171			24			2,910
Net income attributable to noncontrolling interests	(3,571		)	(3,948		)	(6,686		)	(6,273		)
Net income attributable to CPA:17 – Global	$	28,144		$	36,409		$	72,502		$	90,460
Self Storage
Revenues	$	9,298		$	9,031		$	18,343		$	17,773
Operating expenses	(5,166		)	(6,340		)	(10,614		)	(13,539		)
Interest expense	(2,038		)	(1,974		)	(3,949		)	(3,977		)
Other income and (expenses), excluding interest expense	—			(258		)	—			(260		)
Provision for income taxes	(44		)	(30		)	(92		)	(62		)
Net income (loss) attributable to CPA:17 – Global	$	2,050		$	429		$	3,688		$	(65	)
All Other
Revenues (e)	$	7,002		$	3,151		$	14,247		$	4,891
Operating expenses (f) (g)	(6,037		)	(8		)	(15,557		)	(46		)
Other income and (expenses), excluding interest expense	1,137			187			1,708			(2,221		)
Benefit from (provision for) income taxes	26			(374		)	2,104			(1,024		)
Net loss attributable to noncontrolling interests	1,010			—			1,871			—
Net income attributable to CPA:17 – Global	$	3,138		$	2,956		$	4,373		$	1,600
Corporate
Unallocated Corporate Overhead (h)	$	(8,592	)	$	(2,017	)	$	(22,916	)	$	(9,397	)
Net income attributable to noncontrolling interests — Available Cash Distributions	$	(5,185	)	$	(6,971	)	$	(11,355	)	$	(13,781	)
Total Company
Revenues	$	109,826		$	106,513		$	223,108		$	229,518
Operating expenses	(72,966		)	(55,581		)	(140,650		)	(115,196		)
Interest expense	(20,801		)	(21,453		)	(41,351		)	(44,843		)
Other income and (expenses), excluding interest expense	12,313			12,190			20,999			18,218
(Provision for) benefit from income taxes	(1,071		)	(1,115		)	332			(1,736		)
Gain on sale of real estate, net of tax	—			1,171			24			2,910
Net income attributable to noncontrolling interests	(7,746		)	(10,919		)	(16,170		)	(20,054		)
Net income attributable to CPA:17 – Global	$	19,555		$	30,806		$	46,292		$	68,817

Reconciliation of Assets from Segment to Consolidated

	Total Assets at
	June 30, 2018		December 31, 2017
Net Lease	$	3,907,121	$	3,980,445
All Other	262,780		277,702
Self-Storage	240,285		241,438
Corporate	60,038		87,885
Total Company	$	4,470,224	$	4,587,470

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Organization - Narratives (Details) ft² in Millions, $ in Millions	6 Months Ended	18 Months Ended	73 Months Ended
	Jun. 30, 2018 ft² segment property tenant	Jun. 30, 2018 USD ($) ft² property tenant	Jan. 31, 2013 USD ($)	Jun. 17, 2018
Real Estate Properties
Capital interest in operating partnership	99.99%	99.99%
Number of real estate properties (properties)	411	411
Number of tenants | tenant	114	114
Square footage of real estate properties | ft²	44.4	44.4
Weighted average lease term	11 years 3 months 18 days	11 years 3 months 18 days
Occupancy rate	99.70%
Number of reportable segments | segment	2
Proceeds from Senior Credit Facility | $			$ 2,900.0
Proceeds from DRIP shares | $		$ 726.2
WPC | Common Stock
Real Estate Properties
Share conversion ratio (per share)				0.160
Operating real estate
Real Estate Properties
Number of real estate properties (properties)	38	38
Square footage of operating properties | ft²	2.7	2.7
Self storage
Real Estate Properties
Number of real estate properties (properties)	37	37
Hotel
Real Estate Properties
Number of real estate properties (properties)	1	1

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Basis of Presentation - Narratives (Details) $ in Thousands		3 Months Ended		6 Months Ended
	Jan. 01, 2018 USD ($)	Jun. 30, 2018 USD ($) vie	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) vie	Jun. 30, 2017 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($) vie	Dec. 31, 2016 USD ($)
Property, Plant and Equipment
Variable interest entities, count | vie		21		21			21
Variable interest entities consolidated, count | vie		9		9			9
Variable interest entities unconsolidated, count | vie		11		11			11
Variable interest entities maximum risk exposure		$ 275,400		$ 275,400			$ 282,000
Operating real estate income		11,786	$ 9,575	23,999	$ 18,912
Gain on sale of real estate, net of tax		0	1,171	24	2,910
Adjustment to stockholders equity		2,289,312	$ 2,353,941	2,289,312	$ 2,353,941		2,343,257	$ 2,315,004
Reduction of accounts payable, accrued expenses and other liabilities		(130,314)		(130,314)			(132,751)
Reduction of accounts receivable and other assets		$ (306,767)		(306,767)			(322,201)
ASU 2017-05
Property, Plant and Equipment
Adjustment to stockholders equity	$ 6,000
Reduction of accounts payable, accrued expenses and other liabilities	16,400
Reduction of accounts receivable and other assets	10,400
I Drive Property
Property, Plant and Equipment
Gain on sale of real estate, net of tax	2,100
Loans restructured				$ 50,000
Deferred gain on debt restructuring							16,400
Loans receivable							$ 18,600
Adjustments
Property, Plant and Equipment
Adjustment to stockholders equity	2,100
Reduction of accounts payable, accrued expenses and other liabilities	$ 2,100
Forecasted | I Drive Property | Fair Value
Property, Plant and Equipment
Loans receivable						$ 35,000
Loans and Finance Receivables
Property, Plant and Equipment
Variable interest entities, count | vie		1		1			1

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Basis of Presentation - Variable Interest Entity Disclosure (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets
Real estate — Land, buildings and improvements	$ 2,760,620	$ 2,772,611
Operating real estate — Land, buildings and improvements	348,710	340,772
Net investments in direct financing leases	501,539	509,228
In-place lease intangible assets	623,441	629,961
Accumulated depreciation and amortization	(672,274)	(626,655)
Assets held for sale, net	3,189	0
Accounts receivable and other assets, net	306,767	322,201
Total assets	4,470,224	4,587,470
Liabilities
Mortgage debt, net	1,811,822	1,849,459
Accounts payable, accrued expenses and other liabilities	130,314	132,751
Deferred income taxes	26,983	30,524
Total liabilities	2,180,912	2,244,213
Variable Interest Entity, Primary Beneficiary
Assets
Real estate — Land, buildings and improvements	98,620	109,426
Operating real estate — Land, buildings and improvements	88,167	80,658
Net investments in direct financing leases	311,466	312,234
In-place lease intangible assets	8,501	8,650
Accumulated depreciation and amortization	(22,883)	(26,395)
Assets held for sale, net	3,189	0
Accounts receivable and other assets, net	65,752	73,620
Total assets	559,152	567,929
Liabilities
Mortgage debt, net	102,979	104,213
Accounts payable, accrued expenses and other liabilities	11,916	12,693
Deferred income taxes	10,251	12,374
Total liabilities	$ 125,509	$ 129,662

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Basis of Presentation - Cash, Cash Equivalents, and Restricted Cash Equivalents (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Cash and cash equivalents	$ 90,994	$ 119,094
Restricted cash	23,968	26,014
Total cash and cash equivalents, and restricted cash	$ 114,962	$ 145,108	$ 187,026	$ 300,153

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Agreements and Transactions with Related Parties - Narratives (Details) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) shares	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) shares	Jun. 30, 2017 USD ($)	Jun. 17, 2018	Dec. 31, 2017 USD ($) $ / shares shares
Acquisitions and Disposition Fees
Advisory agreement, term			1 year
Preferred return by advisor (as a percentage)			5.00%
Interest rate on unpaid deferred acquisition fees (as a percentage)			5.00%
Asset Management Fees and Available Cash Distributions
Net asset value (usd per share) | $ / shares						$ 10.04
Common stock shares outstanding, shares | shares	352,910,073		352,910,073			349,899,827
Available cash distribution to advisor (as a percentage)			10.00%
Personnel And Office Rent Reimbursement
Personnel and overhead reimbursement (as a percentage)	1.00%		1.00%			2.00%
Legal fee reimbursement rate (as a percentage)	0.25%		0.25%
Merger and other expenses | $	$ 2,300	$ (440)	$ 2,357	$ 310
Due from affiliate | $						$ 200
WPC | Common Stock
Personnel And Office Rent Reimbursement
Share conversion ratio (per share)					0.160
Advisor
Asset Management Fees and Available Cash Distributions
Common stock shares outstanding, shares | shares	16,131,967		16,131,967
Total common stock outstanding held by related party (as a percentage)			4.60%
Average invested assets
Personnel And Office Rent Reimbursement
Operating expenses reimbursements (as a percentage)			2.00%
Adjusted net income
Personnel And Office Rent Reimbursement
Operating expenses reimbursements (as a percentage)			25.00%
Minimum
Personnel And Office Rent Reimbursement
Ownership interest (as a percentage)	6.00%		6.00%
Minimum | Average equity value
Asset Management Fees and Available Cash Distributions
Asset management fees (as a percentage)			1.50%
Maximum
Acquisitions and Disposition Fees
Interest rate on unpaid deferred acquisition fees (as a percentage)			6.00%
Personnel And Office Rent Reimbursement
Ownership interest (as a percentage)	97.00%		97.00%
Maximum | Real estate commission
Acquisitions and Disposition Fees
Subordinated disposition fees (as a percentage)			50.00%
Maximum | Contract sales price of investment
Acquisitions and Disposition Fees
Subordinated disposition fees (as a percentage)			3.00%
Maximum | Average equity value
Asset Management Fees and Available Cash Distributions
Asset management fees (as a percentage)			1.75%
Long-term net lease
Acquisitions and Disposition Fees
Acquisition fees (as a percentage)			4.50%
Long-term net lease | Average market value
Asset Management Fees and Available Cash Distributions
Asset management fees (as a percentage)			0.50%
Long-term net lease | Current
Acquisitions and Disposition Fees
Acquisition fees (as a percentage)			2.50%
Long-term net lease | Deferred
Acquisitions and Disposition Fees
Acquisition fees (as a percentage)			2.00%
Non-long term net lease | Minimum
Acquisitions and Disposition Fees
Acquisition fees (as a percentage)			1.00%
Non-long term net lease | Maximum
Acquisitions and Disposition Fees
Acquisition fees (as a percentage)			1.75%

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Agreements and Transactions with Related Parties - Related Party Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Amounts Included in the Consolidated Statements of Income
Available Cash Distributions	$ 5,185	$ 6,971	$ 11,355	$ 13,781
Personnel and overhead reimbursements	1,826	2,310	3,591	4,601
Interest expense on deferred acquisition fees	60	68	124	132
Director compensation	40	53	80	106
Operating expenses	14,604	16,741	30,135	33,284
Advisor Fees Capitalized
Current acquisition fees	127	3,537	130	3,823
Deferred acquisition fees	101	2,829	104	3,058
Personnel and overhead reimbursements	0	379	50	486
Transaction fees incurred	228	6,745	284	7,367
Asset management
Amounts Included in the Consolidated Statements of Income
Operating expenses	$ 7,493	$ 7,339	$ 14,985	$ 14,664

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Agreements and Transactions with Related Parties - Due to Affiliates (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Due to Affiliates
Deferred acquisition fees, including interest	$ 4,771	$ 6,564
Asset management fees payable	2,498	2,435
Reimbursable costs	2,078	2,162
Accounts payable	163	175
Current acquisition fees	0	131
Due to related parties	$ 9,510	$ 11,467

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Real Estate and Operating Real Estate - Narratives (Details) $ in Thousands	3 Months Ended		6 Months Ended		10 Months Ended
	Jun. 30, 2018 USD ($) property $ / €	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) property $ / €	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) property $ / €	Dec. 31, 2017 USD ($) property $ / €	Sep. 30, 2017 USD ($)
Foreign Currency Translation
Capitalized construction costs	$ 13,300		$ 13,300		$ 13,300
Effects of foreign currency translation on balance sheet item	(54,804)	$ 50,309	(27,869)	$ 58,918
Construction In projects placed into service			5,800
Decrease in insurance liability			(1,200)
Proceeds from insurance settlements			1,874	0
Assets held for sale, net	3,189		3,189		3,189	$ 0
Shelborne
Foreign Currency Translation
Unfunded commitment	28,200		28,200		28,200
Land, buildings and improvements, net
Foreign Currency Translation
Assets held for sale, net	3,189		3,189		$ 3,189	$ 0
Real estate
Foreign Currency Translation
Effects of foreign currency translation on balance sheet item			(32,800)
Depreciation expense including effects of foreign currency translation	$ 16,500	15,900	$ 33,800	32,200
Real estate under construction
Foreign Currency Translation
Number of open built to suit projects | property	2		2		2	3
Unfunded commitment	$ 40,200		$ 40,200		$ 40,200	$ 56,500
Operating real estate
Foreign Currency Translation
Depreciation expense including effects of foreign currency translation	2,200	$ 1,700	3,900	$ 3,300
Hotel
Foreign Currency Translation
Insurance deductible							$ 1,800
Allowance for insurance receivables	2,000		2,000
Property damage insurance receivables	$ 23,200		23,200		23,200
Decrease in insurance liability			$ (1,200)
Proceeds from insurance settlements					$ 3,200
Euro
Foreign Currency Translation
Increase decrease in foreign currency exchange rate	(2.80%)		(2.80%)		(2.80%)
Foreign currency exchange rate | $ / €	1.1658		1.1658		1.1658	1.1993

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Real Estate and Operating Real Estate - Property Plant and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Investments in real estate
Net investments in real estate	$ 3,674,567	$ 3,736,921
Real estate
Investments in real estate
Land	557,277	567,113
Buildings and improvements	2,175,385	2,200,901
Real estate under construction	27,958	4,597
Less: Accumulated depreciation	(377,967)	(354,668)
Net investments in real estate	2,382,653	2,417,943
Operating real estate
Investments in real estate
Land	90,560	90,042
Buildings and improvements	254,520	250,730
Real estate under construction	3,630	0
Less: Accumulated depreciation	(29,977)	(26,087)
Net investments in real estate	$ 318,733	$ 314,685

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Real Estate, Operating Real Estate and Assets Held for Sale - Summary of Assets Held for Sale (Details) - USD ($) $ in Thousands	Jun. 15, 2018	Jun. 30, 2018	Dec. 31, 2017
Property, Plant and Equipment
Assets held for sale, net		$ 3,189	$ 0
Asset retirement obligation		3,800
Land, buildings and improvements, net
Property, Plant and Equipment
Assets held for sale, net		$ 3,189	$ 0
Land, buildings and improvements, net | Industrial facility in Waldaschaff, Germany
Property, Plant and Equipment
Selling price	$ 7,700

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Finance Receivables - Narratives (Details) $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 02, 2018 USD ($)	Jun. 30, 2018 USD ($) loan property	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) loan property	Jun. 30, 2017 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2017 USD ($) loan	Jan. 08, 2015 USD ($)
Accounts, Notes, Loans and Financing Receivable
Loans outstanding (loans) | loan		5		5			5
Financing receivable		$ 606,358		$ 606,358			$ 619,728
Past due receivables		1,900		1,900			1,100
Financing receivable allowance for credit loss		$ 1,500		$ 1,500			700
Number of real estate properties (properties) | property		411		411
Nonrecurring | Level 3
Accounts, Notes, Loans and Financing Receivable
Impairment charges		$ 6,168	$ 2,510	$ 11,572	$ 7,029
1185 Broadway LLC
Accounts, Notes, Loans and Financing Receivable
Financing receivable								$ 30,000
New York Times Company | Forecasted | Bargain purchase option
Accounts, Notes, Loans and Financing Receivable
Proceeds from sale of real estate						$ 250,000
Subsequent Event | 1185 Broadway LLC
Accounts, Notes, Loans and Financing Receivable
Proceeds from the collection of receivables	$ 30,000
Accounts receivable and other assets, net
Accounts, Notes, Loans and Financing Receivable
Financing receivable		104,800		104,800			$ 110,500
Net investments in direct financing leases | Nonrecurring | Level 3
Accounts, Notes, Loans and Financing Receivable
Impairment charges		$ 6,168	$ 0	$ 6,168	$ 0
Number of real estate properties (properties) | property		2		2

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Finance Receivables - Internal Credit Quality Rating (Details) $ in Thousands	Jun. 30, 2018 USD ($) tenant	Dec. 31, 2017 USD ($) tenant
Credit Quality Of Finanace Receivables:
Financing receivable	$ 606,358	$ 619,728
Net investments in direct financing leases | Internally Assigned Grade 1
Credit Quality Of Finanace Receivables:
Number of tenants and obligors | tenant	0	0
Financing receivable	$ 0	$ 0
Net investments in direct financing leases | Internally Assigned Grade 2
Credit Quality Of Finanace Receivables:
Number of tenants and obligors | tenant	2	2
Financing receivable	$ 63,102	$ 62,744
Net investments in direct financing leases | Internally Assigned Grade 3
Credit Quality Of Finanace Receivables:
Number of tenants and obligors | tenant	10	8
Financing receivable	$ 390,957	$ 379,621
Net investments in direct financing leases | Internally Assigned Grade 4
Credit Quality Of Finanace Receivables:
Number of tenants and obligors | tenant	5	8
Financing receivable	$ 127,111	$ 165,413
Net investments in direct financing leases | Internally Assigned Grade 5
Credit Quality Of Finanace Receivables:
Number of tenants and obligors | tenant	2	1
Financing receivable	$ 25,188	$ 11,950

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Equity Investments in Real Estate - Narratives (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Oct. 03, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Schedule of Equity Method Investments
Proceeds from equity method investment				$ 12,670	$ 26,278
Unamortized basis differences on our equity investments		$ 25,000		25,000		$ 26,300
Unconsolidated Equity Investments
Schedule of Equity Method Investments
Proceeds from equity method investment		14,800	$ 12,400	26,600	$ 33,700
Shelborne
Schedule of Equity Method Investments
Proceeds from noncontrolling interest	$ 4,000
Shelborne | Third Party
Schedule of Equity Method Investments
Ownership interest (as a percentage)	4.50%
Jumbo Logistiek Vastgooed B.V | Net Lease
Schedule of Equity Method Investments
Mortgage debt on tenancy in common		62,300		62,300
Jumbo Logistiek Vastgooed B.V | Net Lease | WPC
Schedule of Equity Method Investments
Mortgage debt on tenancy in common		$ 73,300		$ 73,300

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Equity Investments in Real Estate - Proportionate Share of Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Equity Method Investment, Financial Statement, Reported Amounts
Equity in earnings of equity method investments in real estate	$ 11,145	$ 2,270	$ 15,828	$ 4,255
Equity Method Investments
Equity Method Investment, Financial Statement, Reported Amounts
Equity in earnings of equity method investments in real estate	11,747	2,935	17,042	5,782
Equity Method Investments | Net Lease
Equity Method Investment, Financial Statement, Reported Amounts
Equity in earnings of equity method investments in real estate	11,745	2,475	16,447	7,430
Equity Method Investments | All Other
Equity Method Investment, Financial Statement, Reported Amounts
Equity in earnings of equity method investments in real estate	2	460	595	(1,648)
Amortization of Basis Difference on Equity Investments
Equity Method Investment, Financial Statement, Reported Amounts
Equity in earnings of equity method investments in real estate	(602)	(665)	(1,214)	(1,527)
Amortization of Basis Difference on Equity Investments | Net Lease
Equity Method Investment, Financial Statement, Reported Amounts
Equity in earnings of equity method investments in real estate	(525)	(562)	(1,060)	(1,125)
Amortization of Basis Difference on Equity Investments | All Other
Equity Method Investment, Financial Statement, Reported Amounts
Equity in earnings of equity method investments in real estate	$ (77)	$ (103)	$ (154)	$ (402)

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Equity Investments in Real Estate - Ownership Interest in Equity Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Ownership interest in equity investments:
Equity investments in real estate	$ 397,896	$ 409,254
Net Lease
Ownership interest in equity investments:
Equity investments in real estate	$ 358,218	370,530
Net Lease | Third Party | Kesko Senukai
Ownership interest in equity investments:
Ownership interest (as a percentage)	70.00%
Equity investments in real estate	$ 55,769	58,136
Net Lease | Third Party | BPS Nevada, LLC
Ownership interest in equity investments:
Ownership interest (as a percentage)	15.00%
Equity investments in real estate	$ 23,435	23,455
Net Lease | WPC | Hellweg Die Profi-Baumärkte GmbH & Co. KG (referred to as Hellweg 2)
Ownership interest in equity investments:
Ownership interest (as a percentage)	37.00%
Equity investments in real estate	$ 107,125	109,933
Net Lease | WPC | Jumbo Logistiek Vastgooed B.V
Ownership interest in equity investments:
Ownership interest (as a percentage)	85.00%
Equity investments in real estate	$ 52,090	55,162
Net Lease | WPC | U-Haul Moving Partners, Inc. and Mercury Partners, LP
Ownership interest in equity investments:
Ownership interest (as a percentage)	12.00%
Equity investments in real estate	$ 35,053	35,897
Net Lease | WPC | Berry Global Inc.
Ownership interest in equity investments:
Ownership interest (as a percentage)	50.00%
Equity investments in real estate	$ 14,045	14,476
Net Lease | WPC | Tesco Global Aruhazak Zrt.
Ownership interest in equity investments:
Ownership interest (as a percentage)	49.00%
Equity investments in real estate	$ 10,266	10,707
Net Lease | WPC | Eroski Sociedad Cooperativa - Mallorca
Ownership interest in equity investments:
Ownership interest (as a percentage)	30.00%
Equity investments in real estate	$ 7,352	7,629
Net Lease | WPC | Dick’s Sporting Goods, Inc.
Ownership interest in equity investments:
Ownership interest (as a percentage)	45.00%
Equity investments in real estate	$ 3,396	3,750
Net Lease | CPA 18 - Global | Bank Pekao S.A.
Ownership interest in equity investments:
Ownership interest (as a percentage)	50.00%
Equity investments in real estate	$ 23,945	25,582
Net Lease | CPA 18 - Global | State Farm
Ownership interest in equity investments:
Ownership interest (as a percentage)	50.00%
Equity investments in real estate	$ 15,261	16,072
Net Lease | CPA 18 - Global | Apply Sorco AS
Ownership interest in equity investments:
Ownership interest (as a percentage)	49.00%
Equity investments in real estate	$ 7,328	6,298
Net Lease | CPA 18 - Global | Konzum d.d. (referred to as Agrokor)
Ownership interest in equity investments:
Ownership interest (as a percentage)	20.00%
Equity investments in real estate	$ 3,153	3,433
All Other
Ownership interest in equity investments:
Equity investments in real estate	$ 39,678	38,724
All Other | Third Party | BG LLH, LLC
Ownership interest in equity investments:
Ownership interest (as a percentage)	6.00%
Equity investments in real estate	$ 39,678	$ 38,724

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Intangible Assets and Liabilities - Narratives (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Finite-Lived Intangible Assets
Net amortization of intangibles	$ 9.2	$ 10.5	$ 18.5	$ 23.3
Below and above market rent intangibles
Finite-Lived Intangible Assets
(Decrease) increase in rental income	$ (0.3)	$ (0.3)	$ (0.7)	18.5
Assets held for sale | Below-market rent | KBR
Finite-Lived Intangible Assets
Intangible liability written off				$ 15.7

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Intangible Assets and Liabilities - Intangible Assets and Liabilities Summary (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets
Finite-lived intangible assets, gross	$ 732,783	$ 740,965
Less: accumulated amortization	(264,330)	(245,900)
Finite-lived intangible assets, net	468,453	495,065
Indefinite-Lived Intangible Assets
Goodwill	304	304
Total intangible assets, gross	733,087	741,269
Total intangible assets, net	468,757	495,369
Finite-Lived Intangible Liabilities
Finite-lived intangible liabilities, gross	(82,892)	(83,404)
Less: accumulated amortization	23,932	22,182
Finite-lived intangible liabilities, net	(58,960)	(61,222)
Below-market rent
Finite-Lived Intangible Liabilities
Finite-lived intangible liabilities, gross	(81,747)	(82,259)
Less: accumulated amortization	23,865	22,121
Finite-lived intangible liabilities, net	$ (57,882)	(60,138)
Below-market rent | Minimum
Intangible Assets Liabilities
Finite lived intangible asset/liability, useful life	7 years
Below-market rent | Maximum
Intangible Assets Liabilities
Finite lived intangible asset/liability, useful life	53 years
Above-market ground lease
Finite-Lived Intangible Liabilities
Finite-lived intangible liabilities, gross	$ (1,145)	(1,145)
Less: accumulated amortization	67	61
Finite-lived intangible liabilities, net	$ (1,078)	(1,084)
Above-market ground lease | Minimum
Intangible Assets Liabilities
Finite lived intangible asset/liability, useful life	49 years
Above-market ground lease | Maximum
Intangible Assets Liabilities
Finite lived intangible asset/liability, useful life	88 years
In-place lease
Finite-Lived Intangible Assets
Finite-lived intangible assets, gross	$ 623,441	629,961
Less: accumulated amortization	(229,845)	(213,641)
Finite-lived intangible assets, net	$ 393,596	416,320
In-place lease | Minimum
Intangible Assets Liabilities
Finite lived intangible asset/liability, useful life	4 years
In-place lease | Maximum
Intangible Assets Liabilities
Finite lived intangible asset/liability, useful life	53 years
Above-market rent
Finite-Lived Intangible Assets
Finite-lived intangible assets, gross	$ 96,656	98,162
Less: accumulated amortization	(33,643)	(31,533)
Finite-lived intangible assets, net	$ 63,013	66,629
Above-market rent | Minimum
Intangible Assets Liabilities
Finite lived intangible asset/liability, useful life	7 years
Above-market rent | Maximum
Intangible Assets Liabilities
Finite lived intangible asset/liability, useful life	40 years
Below-market ground leases and other
Finite-Lived Intangible Assets
Finite-lived intangible assets, gross	$ 12,686	12,842
Less: accumulated amortization	(842)	(726)
Finite-lived intangible assets, net	$ 11,844	$ 12,116
Below-market ground leases and other | Minimum
Intangible Assets Liabilities
Finite lived intangible asset/liability, useful life	55 years
Below-market ground leases and other | Maximum
Intangible Assets Liabilities
Finite lived intangible asset/liability, useful life	94 years

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Fair Value Measurements - Narratives (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) property tranch	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) property tranch	Jun. 30, 2017 USD ($)	Dec. 31, 2017 USD ($) tranch
Fair Value, Balance Sheet Grouping
Deferred financing cost	$ 6,839		$ 6,839
Number of real estate properties (properties) | property	411		411
Nonrecurring | Level 3
Fair Value, Balance Sheet Grouping
Impairment charges	$ 6,168	$ 2,510	$ 11,572	$ 7,029
Fair value measurements				4,700
Nonrecurring | Noncontrolling Interests | Level 3
Fair Value, Balance Sheet Grouping
Impairment charges				1,500
Nonrecurring | Net investments in direct financing leases | Level 3
Fair Value, Balance Sheet Grouping
Impairment charges	$ 6,168	0	$ 6,168	0
Number of real estate properties (properties) | property	2		2
Fair value measurements	$ 13,597	$ 0	$ 13,597	0
Nonrecurring | Net investments in direct financing leases | Level 3 | Cash flow discount rate
Fair Value, Balance Sheet Grouping
Inputs for finance receivables fair value measurements	0.095		0.095
Nonrecurring | Net investments in direct financing leases | Level 3 | Residual discount rate
Fair Value, Balance Sheet Grouping
Inputs for finance receivables fair value measurements	0.095		0.095
Nonrecurring | Net investments in direct financing leases | Level 3 | Residual capitalization rate
Fair Value, Balance Sheet Grouping
Inputs for finance receivables fair value measurements	0.083		0.083
Nonrecurring | CMBS | Level 3
Fair Value, Balance Sheet Grouping
Impairment charges			$ 5,404	0
Fair value measurements			1,144	0
Nonrecurring | Real estate | Level 3
Fair Value, Balance Sheet Grouping
Impairment charges			0	4,519
Fair value measurements			0	$ 4,719
Nonrecurring | Real estate | Level 3 | Cash flow discount rate
Fair Value, Balance Sheet Grouping
Inputs for real estate fair value measurements		0.098		0.098
Nonrecurring | Equity investments in real estate | Level 3
Fair Value, Balance Sheet Grouping
Impairment charges	$ 0	$ 2,510	0	$ 2,510
Fair value measurements	$ 0	$ 4,780	$ 0	$ 4,780
Nonrecurring | Equity investments in real estate | Level 3 | Cash flow discount rate
Fair Value, Balance Sheet Grouping
Inputs for real estate fair value measurements	0.124		0.124
Nonrecurring | Equity investments in real estate | Level 3 | Residual discount rate
Fair Value, Balance Sheet Grouping
Inputs for real estate fair value measurements	0.109		0.109
Nonrecurring | Equity investments in real estate | Level 3 | Residual capitalization rate
Fair Value, Balance Sheet Grouping
Inputs for real estate fair value measurements	0.104		0.104
Carrying Value | Level 3
Fair Value, Balance Sheet Grouping
Deferred financing cost	$ 6,800		$ 6,800		$ 7,900
Number of tranches | tranch	2		2		2

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Fair Value Measurements - Carrying Value and Fair Value Measurements (Details) - Level 3 - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Carrying Value
Fair Value, Balance Sheet Grouping
Mortgage debt, net	$ 1,811,822	$ 1,849,459
Loans receivable	104,819	110,500
CMBS	1,144	6,548
Fair Value
Fair Value, Balance Sheet Grouping
Mortgage debt, net	1,810,657	1,864,043
Loans receivable	110,500	110,500
CMBS	$ 1,144	$ 7,237

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Fair Value Measurements - Nonrecurring Measurements (Details) - Nonrecurring - Level 3 - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Impairment Charges From Continuing Operations
Fair Value Measurements				$ 4,700
Impairment charges and other credit losses	$ 6,168	$ 2,510	$ 11,572	7,029
Net investments in direct financing leases
Impairment Charges From Continuing Operations
Fair Value Measurements	13,597	0	13,597	0
Impairment charges and other credit losses	6,168	0	6,168	0
CMBS
Impairment Charges From Continuing Operations
Fair Value Measurements			1,144	0
Impairment charges and other credit losses			5,404	0
Equity investments in real estate
Impairment Charges From Continuing Operations
Fair Value Measurements	0	4,780	0	4,780
Impairment charges and other credit losses	$ 0	$ 2,510	0	2,510
Real estate
Impairment Charges From Continuing Operations
Fair Value Measurements			0	4,719
Impairment charges and other credit losses			$ 0	$ 4,519

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Risk Management and Use of Derivative Financial Instruments - Narratives (Details) - USD ($)	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Derivative Instrument Detail
Derivative asset collateral offset	$ 0	$ 0
Derivative, remaining maturity	77 months
Collateral received	$ 0
Total credit exposure on derivatives	14,200,000
Derivatives, net liability position	3,500,000	5,600,000
Aggregate termination value for immediate settlement	3,600,000	$ 5,700,000
Single Counterparty
Derivative Instrument Detail
Total credit exposure on derivatives	8,200,000
Interest expense
Derivative Instrument Detail
Estimated amount reclassified from OCI to income, derivatives	500,000
Other gains and (losses)
Derivative Instrument Detail
Estimated amount reclassified from OCI to income, derivatives	$ (7,100,000)

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Risk Management and Use of Derivative Financial Instruments - Information Regarding Derivative Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Derivatives, Fair Value
Derivative assets, fair value, net	$ 17,904	$ 16,798
Derivative liability, fair value, net	(3,404)	(5,411)
Derivatives Designated as Hedging Instruments | Accounts receivable and other assets, net | Foreign currency forward contracts
Derivatives, Fair Value
Derivative assets, fair value, net	14,130	14,382
Derivatives Designated as Hedging Instruments | Accounts receivable and other assets, net | Interest rate swaps
Derivatives, Fair Value
Derivative assets, fair value, net	1,235	314
Derivatives Designated as Hedging Instruments | Accounts receivable and other assets, net | Interest rate caps
Derivatives, Fair Value
Derivative assets, fair value, net	145	201
Derivatives Designated as Hedging Instruments | Accounts payable, accrued expenses and other liabilities | Interest rate swaps
Derivatives, Fair Value
Derivative liability, fair value, net	(2,320)	(3,852)
Derivatives Designated as Hedging Instruments | Accounts payable, accrued expenses and other liabilities | Foreign currency collars
Derivatives, Fair Value
Derivative liability, fair value, net	(957)	(1,431)
Derivatives Not Designated as Hedging Instruments | Accounts receivable and other assets, net | Foreign currency forward contracts
Derivatives, Fair Value
Derivative assets, fair value, net	480	86
Derivatives Not Designated as Hedging Instruments | Accounts receivable and other assets, net | Stock warrants
Derivatives, Fair Value
Derivative assets, fair value, net	1,914	1,815
Derivatives Not Designated as Hedging Instruments | Accounts payable, accrued expenses and other liabilities | Interest rate swaps
Derivatives, Fair Value
Derivative liability, fair value, net	$ (127)	$ (128)

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Risk Management and Use of Derivative Financial Instruments - Derivative Gain Loss Recognized in OCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Derivative Instruments, Gain (Loss)
Derivatives, income (loss) recognized in OCI, effective portion, net	$ 5,703	$ (9,658)	$ 2,888	$ (13,022)
Equity Method Investments
Derivative Instruments, Gain (Loss)
Derivatives, income (loss) recognized in OCI, effective portion, net	(300)	(400)	200	100
Derivatives in Cash Flow Hedging Relationships | Foreign currency forward contracts
Derivative Instruments, Gain (Loss)
Derivatives, income (loss) recognized in OCI, effective portion, net	4,201	(8,729)	(23)	(12,478)
Derivatives in Cash Flow Hedging Relationships | Interest rate swaps
Derivative Instruments, Gain (Loss)
Derivatives, income (loss) recognized in OCI, effective portion, net	448	44	2,470	1,037
Derivatives in Cash Flow Hedging Relationships | Foreign currency collars
Derivative Instruments, Gain (Loss)
Derivatives, income (loss) recognized in OCI, effective portion, net	1,042	(945)	486	(1,002)
Derivatives in Cash Flow Hedging Relationships | Interest rate caps
Derivative Instruments, Gain (Loss)
Derivatives, income (loss) recognized in OCI, effective portion, net	(21)	(105)	(44)	(363)
Derivatives in Net Investment Hedging Relationships | Foreign currency forward contracts
Derivative Instruments, Gain (Loss)
Derivatives, income (loss) recognized in OCI, effective portion, net	22	84	0	(207)
Derivatives in Net Investment Hedging Relationships | Foreign currency collars
Derivative Instruments, Gain (Loss)
Derivatives, income (loss) recognized in OCI, effective portion, net	$ 11	$ (7)	$ (1)	$ (9)

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Risk Management and Use of Derivative Financial Instruments - Derivative Gain Loss Reclassified From OCI (Details) - Cash Flow Hedging - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Amount of Gain (Loss) Reclassified from Other Comprehensive Income into Income (Effective Portion)
Derivatives, income (loss) reclassified from AOCI to Income, effective portion, net	$ 988	$ 558	$ 2,044	$ 2,710
Foreign currency forward contracts | Other gains and (losses)
Amount of Gain (Loss) Reclassified from Other Comprehensive Income into Income (Effective Portion)
Derivatives, income (loss) reclassified from AOCI to Income, effective portion, net	1,315	1,161	2,807	4,019
Interest rate swaps | Interest expense
Amount of Gain (Loss) Reclassified from Other Comprehensive Income into Income (Effective Portion)
Derivatives, income (loss) reclassified from AOCI to Income, effective portion, net	(313)	(603)	(744)	(1,309)
Interest rate caps | Interest expense
Amount of Gain (Loss) Reclassified from Other Comprehensive Income into Income (Effective Portion)
Derivatives, income (loss) reclassified from AOCI to Income, effective portion, net	$ (14)	$ 0	$ (19)	$ 0

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Risk Management and Use of Derivative Financial Instruments - Derivative Gain Loss Recognized in Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Amount of Gain (Loss) Recognized in Income on Derivatives
Amount of gain (loss) recognized income on derivatives	$ 103	$ (29)	$ 333	$ (178)
Derivatives Not Designated as Hedging Instruments | Stock warrants | Other gains and (losses)
Amount of Gain (Loss) Recognized in Income on Derivatives
Amount of gain (loss) recognized income on derivatives	(33)	33	99	(165)
Derivatives Not Designated as Hedging Instruments | Foreign currency forward contracts | Other gains and (losses)
Amount of Gain (Loss) Recognized in Income on Derivatives
Amount of gain (loss) recognized income on derivatives	194	(25)	260	8
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Interest expense
Amount of Gain (Loss) Recognized in Income on Derivatives
Amount of gain (loss) recognized income on derivatives	(23)	8	(31)	26
Derivatives Not Designated as Hedging Instruments | Swaption | Other gains and (losses)
Amount of Gain (Loss) Recognized in Income on Derivatives
Amount of gain (loss) recognized income on derivatives	0	(86)	0	(134)
Derivatives in Cash Flow Hedging Relationships (a) | Interest rate swaps | Interest expense
Amount of Gain (Loss) Recognized in Income on Derivatives
Amount of gain (loss) recognized income on derivatives	(30)	46	15	92
Derivatives in Cash Flow Hedging Relationships (a) | Foreign currency collars | Other gains and (losses)
Amount of Gain (Loss) Recognized in Income on Derivatives
Amount of gain (loss) recognized income on derivatives	$ (5)	$ (5)	$ (10)	$ (5)

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Risk Management and Use of Derivative Financial Instruments - Interest Rate Swap and Swaptions Summary (Details) € in Thousands, £ in Thousands, $ in Thousands	Jun. 30, 2018 USD ($) instrument	Jun. 30, 2018 GBP (£) instrument	Jun. 30, 2018 EUR (€) instrument
Derivative
Fair value	$ (1,067)
Derivatives Designated as Hedging Instruments | Interest rate swaps | Euro
Derivative
Number of Instruments | instrument	3	3	3
Notional Amount | €			€ 65,982
Fair value	$ (728)
Derivatives Designated as Hedging Instruments | Interest rate swaps | USD
Derivative
Number of Instruments | instrument	12	12	12
Notional Amount	$ 122,615
Fair value	$ (357)
Derivatives Designated as Hedging Instruments | Interest rate cap | Euro
Derivative
Number of Instruments | instrument	4	4	4
Notional Amount | €			€ 132,614
Fair value	$ 79
Derivatives Designated as Hedging Instruments | Interest rate cap | USD
Derivative
Number of Instruments | instrument	1	1	1
Notional Amount	$ 75,000
Fair value	$ 58
Derivatives Designated as Hedging Instruments | Interest rate cap | GBP
Derivative
Number of Instruments | instrument	1	1	1
Notional Amount | £		£ 6,394
Fair value	$ 8
Not Designated as Hedging Instrument | Interest rate swap | Euro
Derivative
Number of Instruments | instrument	1	1	1
Notional Amount | €			€ 4,784
Fair value	$ (127)

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Risk Management and Use of Derivative Financial Instruments - Foreign Currency Derivatives Details (Details) € in Thousands, kr in Thousands, $ in Thousands	Jun. 30, 2018 USD ($) instrument	Jun. 30, 2018 NOK (kr) instrument	Jun. 30, 2018 EUR (€) instrument
Derivative Instrument Detail
Fair value, foreign currency derivatives	$ 13,653
Derivatives Designated as Hedging Instruments | Cash Flow Hedging | Foreign currency forward contracts | Euro
Derivative Instrument Detail
Number of Instruments | instrument	27	27	27
Notional Amount | €			€ 68,286
Fair value, foreign currency derivatives	$ 14,073
Derivatives Designated as Hedging Instruments | Cash Flow Hedging | Foreign currency collars | Euro
Derivative Instrument Detail
Number of Instruments | instrument	2	2	2
Notional Amount | €			€ 15,100
Fair value, foreign currency derivatives	$ (919)
Derivatives Designated as Hedging Instruments | Cash Flow Hedging | Foreign currency collars | NOK
Derivative Instrument Detail
Number of Instruments | instrument	3	3	3
Notional Amount | kr		kr 2,000
Fair value, foreign currency derivatives	$ (17)
Derivatives Designated as Hedging Instruments | Designated as Net Investment Hedging Instruments | Foreign currency forward contracts | NOK
Derivative Instrument Detail
Number of Instruments | instrument	2	2	2
Notional Amount | kr		kr 4,329
Fair value, foreign currency derivatives	$ 57
Derivatives Designated as Hedging Instruments | Designated as Net Investment Hedging Instruments | Foreign currency collars | NOK
Derivative Instrument Detail
Number of Instruments | instrument	1	1	1
Notional Amount | kr		kr 2,500
Fair value, foreign currency derivatives	$ (21)
Not Designated as Hedging Instrument | Foreign currency forward contracts | Euro
Derivative Instrument Detail
Number of Instruments | instrument	7	7	7
Notional Amount | €			€ 2,105
Fair value, foreign currency derivatives	$ 414
Not Designated as Hedging Instrument | Foreign currency forward contracts | NOK
Derivative Instrument Detail
Number of Instruments | instrument	7	7	7
Notional Amount | kr		kr 5,733
Fair value, foreign currency derivatives	$ 66

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Debt - Narratives (Details) - USD ($)			1 Months Ended	3 Months Ended		6 Months Ended		9 Months Ended
	Jul. 24, 2018	Aug. 26, 2015	Jul. 31, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Sep. 30, 2016	Dec. 31, 2017
Additional Debt Disclosures
Repayment of debt						$ 23,966,000	$ 329,641,000
Line of credit, maximum borrowing capacity		$ 250,000,000
Commitment fee threshold		50.00%
Credit facility fees		$ 1,900,000
Debt and capital lease obligation				$ 85,974,000		85,974,000			$ 101,931,000
Proceeds from senior credit facility						13,590,000	67,261,000
Repayments of credit facility						29,471,000	40,677,000
Restriction payment threshold				100,000,000.0		100,000,000.0
Debt scheduled to mature in 2018				134,796,000		134,796,000
Effects of foreign currency translation on balance sheet item				(54,804,000)	$ 50,309,000	(27,869,000)	$ 58,918,000
Non-recourse debt
Additional Debt Disclosures
Effects of foreign currency translation on balance sheet item						(15,600,000)
Revolver
Additional Debt Disclosures
Line of credit, maximum borrowing capacity		$ 200,000,000
Debt maturity date		Aug. 26, 2018
Debt scheduled to mature in 2018				36,000,000		36,000,000
Revolver | Accordion
Additional Debt Disclosures
Line of credit, maximum borrowing capacity		$ 250,000,000
Revolver | Subsequent Event
Additional Debt Disclosures
Proceeds from senior credit facility			$ 53,000,000
Term Loan
Additional Debt Disclosures
Line of credit, maximum borrowing capacity		$ 50,000,000
Debt and capital lease obligation				49,981,000		49,981,000		$ 50,000,000	$ 49,915,000
Debt scheduled to mature in 2018				$ 50,000,000		$ 50,000,000
Term Loan | LIBOR
Additional Debt Disclosures
Basis spread						1.45%		1.45%
Secured Debt
Additional Debt Disclosures
Payments to cure loan to value						$ 7,400,000
Repayment of debt						$ 3,100,000
Minimum
Additional Debt Disclosures
Debt maturity date						Dec. 31, 2018
Credit facility fee, rate		0.15%
Minimum | Revolver | Euro Currency Rate
Additional Debt Disclosures
Interest rate on debt		1.50%
Minimum | Revolver | Base Rate
Additional Debt Disclosures
Interest rate on debt		0.50%
Minimum | Revolver | Subsequent Event
Additional Debt Disclosures
Debt maturity date	Aug. 26, 2018
Minimum | Term Loan | Euro Currency Rate
Additional Debt Disclosures
Interest rate on debt		1.45%
Minimum | Term Loan | Base Rate
Additional Debt Disclosures
Interest rate on debt		0.45%
Maximum
Additional Debt Disclosures
Debt maturity date						Dec. 31, 2031
Credit facility fee, rate		0.30%
Maximum | Revolver | Euro Currency Rate
Additional Debt Disclosures
Interest rate on debt		2.25%
Maximum | Revolver | Base Rate
Additional Debt Disclosures
Interest rate on debt		1.25%
Maximum | Revolver | Subsequent Event
Additional Debt Disclosures
Debt maturity date	Aug. 26, 2019
Maximum | Term Loan | Euro Currency Rate
Additional Debt Disclosures
Interest rate on debt		2.20%
Maximum | Term Loan | Base Rate
Additional Debt Disclosures
Interest rate on debt		1.20%
Fixed interest rate | Minimum
Additional Debt Disclosures
Interest rate on mortgage loan						1.90%
Fixed interest rate | Maximum
Additional Debt Disclosures
Interest rate on mortgage loan						7.40%
Variable interest rate | Minimum
Additional Debt Disclosures
Interest rate on mortgage loan						1.30%
Variable interest rate | Maximum
Additional Debt Disclosures
Interest rate on mortgage loan						6.00%

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Debt - Summary of Senior Credit Facility (Details) - USD ($) $ in Thousands	6 Months Ended	9 Months Ended
	Jun. 30, 2018	Sep. 30, 2016	Dec. 31, 2017
Debt Instrument
Debt and capital lease obligation	$ 85,974		$ 101,931
Term Loan
Debt Instrument
Debt and capital lease obligation	$ 49,981	$ 50,000	49,915
Term Loan | LIBOR
Debt Instrument
Basis spread	1.45%	1.45%
Revolver | Yen
Debt Instrument
Debt and capital lease obligation	$ 20,797		22,047
Interest rate on debt	1.50%
Revolver | Euro
Debt Instrument
Debt and capital lease obligation	$ 15,196		$ 29,969
Interest rate on debt	1.50%

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Debt - Schedule of Debt Principal Payments (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Long-term Debt, Fiscal Year Maturity
2018 (remainder)	$ 134,796
2019	73,412
2020	425,173
2021	447,246
2022	348,438
Thereafter through 2031	480,185
Total principal payments	1,909,250
Deferred financing cost	(6,839)
Unamortized discount, net	(4,615)
Total	$ 1,897,796

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Equity - Narratives (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Distributions Per Share
Distributions declared per share (usd per share)	$ 0.1625	$ 0.1625	$ 0.325	$ 0.3250
Distributions payable	$ 57,349		$ 57,349		$ 56,859
Aggregate distributions			$ 114,468	$ 112,531

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Equity - Reclassifications Out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Accumulated Other Comprehensive Income (Loss)
Beginning equity balance, value			$ 2,343,257	$ 2,315,004
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	$ 20,801	$ 21,453	41,351	44,843
Total other comprehensive (loss) income	(49,439)	40,171	(24,836)	46,257
Ending equity balance, value	2,289,312	2,353,941	2,289,312	2,353,941
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Income (Loss)
Beginning equity balance, value	(54,364)	(150,849)	(78,420)	(156,676)
Amounts reclassified from accumulated other comprehensive loss to:
Ending equity balance, value	(102,802)	(111,800)	(102,802)	(111,800)
Gains and Losses on Derivative Instruments
Accumulated Other Comprehensive Income (Loss)
Beginning equity balance, value	6,755	26,996	9,087	29,549
Amounts reclassified from accumulated other comprehensive loss to:
Ending equity balance, value	12,120	16,857	12,120	16,857
Gains and Losses on Marketable Securities
Accumulated Other Comprehensive Income (Loss)
Beginning equity balance, value	(15)	(18)	(15)	(48)
Amounts reclassified from accumulated other comprehensive loss to:
Ending equity balance, value	(15)	(17)	(15)	(17)
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss)
Beginning equity balance, value	(61,104)	(177,827)	(87,492)	(186,177)
Amounts reclassified from accumulated other comprehensive loss to:
Ending equity balance, value	(114,907)	(128,640)	(114,907)	(128,640)
AOCI Including Portion Attributable to Noncontrolling Interest
Accumulated Other Comprehensive Income (Loss)
Other comprehensive loss before reclassifications	(48,451)	40,729	(22,792)	48,967
Amounts reclassified from accumulated other comprehensive loss to:
Total	(988)	(558)	(2,044)	(2,710)
Total other comprehensive (loss) income	(49,439)	40,171	(24,836)	46,257
AOCI Including Portion Attributable to Noncontrolling Interest | Reclassification out of Accumulated Other Comprehensive Income
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	327	603	763	1,309
Other income and (expenses)	(1,315)	(1,161)	(2,807)	(4,019)
Gains and (Losses) on Derivative Instruments
Accumulated Other Comprehensive Income (Loss)
Other comprehensive loss before reclassifications	6,353	(9,581)	5,077	(9,982)
Amounts reclassified from accumulated other comprehensive loss to:
Total	(988)	(558)	(2,044)	(2,710)
Total other comprehensive (loss) income	5,365	(10,139)	3,033	(12,692)
Gains and (Losses) on Derivative Instruments | Reclassification out of Accumulated Other Comprehensive Income
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	327	603	763	1,309
Other income and (expenses)	(1,315)	(1,161)	(2,807)	(4,019)
Gains and (Losses) on Marketable Investments
Accumulated Other Comprehensive Income (Loss)
Other comprehensive loss before reclassifications	0	1	0	31
Amounts reclassified from accumulated other comprehensive loss to:
Total	0	0	0	0
Total other comprehensive (loss) income	0	1	0	31
Gains and (Losses) on Marketable Investments | Reclassification out of Accumulated Other Comprehensive Income
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	0	0	0	0
Other income and (expenses)	0	0	0	0
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss)
Other comprehensive loss before reclassifications	(54,804)	50,309	(27,869)	58,918
Amounts reclassified from accumulated other comprehensive loss to:
Total	0	0	0	0
Total other comprehensive (loss) income	(54,804)	50,309	(27,869)	58,918
Foreign Currency Translation Adjustments | Reclassification out of Accumulated Other Comprehensive Income
Amounts reclassified from accumulated other comprehensive loss to:
Interest expense	0	0	0	0
Other income and (expenses)	0	0	0	0
Noncontrolling Interests
Amounts reclassified from accumulated other comprehensive loss to:
Net current-period Other comprehensive income attributable to noncontrolling interests	1,001	(1,122)	454	(1,381)
Gains and Losses on Derivative Instruments
Amounts reclassified from accumulated other comprehensive loss to:
Net current-period Other comprehensive income attributable to noncontrolling interests	0	0	0	0
Gains and Losses on Marketable Securities
Amounts reclassified from accumulated other comprehensive loss to:
Net current-period Other comprehensive income attributable to noncontrolling interests	0	0	0	0
Foreign Currency Translation Adjustments
Amounts reclassified from accumulated other comprehensive loss to:
Net current-period Other comprehensive income attributable to noncontrolling interests	$ 1,001	$ (1,122)	$ 454	$ (1,381)

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Property Dispositions - Narratives (Details) $ in Thousands			3 Months Ended	6 Months Ended
	Jun. 15, 2018 USD ($)	Mar. 17, 2017 USD ($)	Jun. 30, 2017 USD ($) property	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jan. 01, 2018 USD ($)	Dec. 31, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations
Assets held for sale, net					$ 3,189		$ 0
Financing receivable					606,358		619,728
Adjustment to stockholders equity			$ 2,353,941	$ 2,353,941	2,289,312		2,343,257		$ 2,315,004
ASU 2017-05
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations
Adjustment to stockholders equity						$ 6,000
I Drive Property
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations
Financing receivable		$ 34,000
Deferred gain on the sale of property		2,100
I Drive Property | Fair Value
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations
Debt instrument fair value								$ 35,000
I Drive Property | Carrying Value
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations
Debt instrument fair value								18,600
I Drive Property | Developer
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations
Investment purchase price		117,500
Non recourse mortgage loan assumed		60,000
I Drive Wheel
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations
Deferred gain on the sale of property								$ 16,400
Assets held for sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations
Proceeds from sale of real estate				14,100
Gain on sale of real estate, net of tax				1,600
Assets held for sale | KBR
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations
Intangible liability written off				$ 3,300
Assets held for sale | I Drive Property
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations
Proceeds from sale of real estate		$ 23,500
Disposal Group, Held-for-sale, Not Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations
Number of properties sold | property			3
Proceeds from sale of real estate			$ 14,600
Gain on sale of real estate, net of tax			$ 1,200
Land, buildings and improvements, net
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations
Assets held for sale, net					$ 3,189		$ 0
Land, buildings and improvements, net | Industrial facility in Waldaschaff, Germany
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations
Selling price	$ 7,700

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Segment Reporting - Narratives (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) property	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) segment property	Jun. 30, 2017 USD ($)
Segment Reporting Information
Number of reportable segments | segment			2
Straight line rent adjustment	$ 2,400	$ 3,900	$ 5,200	$ 7,200
Number of real estate properties (properties) | property	411		411
Revenues	$ 109,826	106,513	$ 223,108	229,518
Hotel
Segment Reporting Information
Number of real estate properties (properties) | property	1		1
Allowance for insurance receivables	$ 2,000		$ 2,000
Operating Segments | Net Lease
Segment Reporting Information
Bad debt expense	6,800	3,200	11,200	4,800
Revenues	93,526	94,331	190,518	206,854
All Other
Segment Reporting Information
Revenues	7,002	3,151	14,247	4,891
All Other | ASU 2017-05
Segment Reporting Information
Revenues	2,500		4,700
Level 3 | Nonrecurring
Segment Reporting Information
Impairment charges	6,168	2,510	11,572	7,029
Net investments in direct financing leases | Level 3 | Nonrecurring
Segment Reporting Information
Impairment charges	$ 6,168	$ 0	$ 6,168	0
Number of real estate properties (properties) | property	2		2
Real estate | Level 3 | Nonrecurring
Segment Reporting Information
Impairment charges			$ 0	4,519
CMBS | Level 3 | Nonrecurring
Segment Reporting Information
Impairment charges			$ 5,404	0
KBR | Assets held for sale
Segment Reporting Information
Intangible liability written off				$ 3,300

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Segment Reporting - Income Statement (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment Reporting Information, Profit (Loss)
Revenues	$ 109,826	$ 106,513	$ 223,108	$ 229,518
Operating expenses	(72,966)	(55,581)	(140,650)	(115,196)
Interest expense	(20,801)	(21,453)	(41,351)	(44,843)
Other income and expenses, excluding interest expense	12,313	12,190	20,999	18,218
(Provision for) benefit from income taxes	(1,071)	(1,115)	332	(1,736)
Gain on sale of real estate, net of tax	0	1,171	24	2,910
Net income attributable to noncontrolling interests	(7,746)	(10,919)	(16,170)	(20,054)
Net income attributable to CPA:17 – Global	19,555	30,806	46,292	68,817
Operating Segments | Net Lease
Segment Reporting Information, Profit (Loss)
Revenues	93,526	94,331	190,518	206,854
Operating expenses	(48,446)	(37,867)	(90,403)	(79,175)
Interest expense	(17,787)	(18,698)	(35,479)	(39,349)
Other income and expenses, excluding interest expense	5,431	1,736	15,941	5,195
(Provision for) benefit from income taxes	(1,009)	(316)	(1,413)	298
Gain on sale of real estate, net of tax	0	1,171	24	2,910
Net income attributable to noncontrolling interests	(3,571)	(3,948)	(6,686)	(6,273)
Net income attributable to CPA:17 – Global	28,144	36,409	72,502	90,460
Operating Segments | Self Storage
Segment Reporting Information, Profit (Loss)
Revenues	9,298	9,031	18,343	17,773
Operating expenses	(5,166)	(6,340)	(10,614)	(13,539)
Interest expense	(2,038)	(1,974)	(3,949)	(3,977)
Other income and expenses, excluding interest expense	0	(258)	0	(260)
(Provision for) benefit from income taxes	(44)	(30)	(92)	(62)
Net income attributable to CPA:17 – Global	2,050	429	3,688	(65)
All Other
Segment Reporting Information, Profit (Loss)
Revenues	7,002	3,151	14,247	4,891
Operating expenses	(6,037)	(8)	(15,557)	(46)
Other income and expenses, excluding interest expense	1,137	187	1,708	(2,221)
(Provision for) benefit from income taxes	26	(374)	2,104	(1,024)
Net income attributable to noncontrolling interests	1,010	0	1,871	0
Net income attributable to CPA:17 – Global	3,138	2,956	4,373	1,600
Corporate
Segment Reporting Information, Profit (Loss)
Net income attributable to noncontrolling interests	(5,185)	(6,971)	(11,355)	(13,781)
Unallocated Corporate Overhead	$ (8,592)	$ (2,017)	$ (22,916)	$ (9,397)

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Segment Reporting - Segment Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Segment Reporting Information, Additional Information
Assets	$ 4,470,224	$ 4,587,470
Operating Segments | Net Lease
Segment Reporting Information, Additional Information
Assets	3,907,121	3,980,445
Operating Segments | Self Storage
Segment Reporting Information, Additional Information
Assets	240,285	241,438
All Other
Segment Reporting Information, Additional Information
Assets	262,780	277,702
Corporate
Segment Reporting Information, Additional Information
Assets	$ 60,038	$ 87,885

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Subsequent Events (Details) $ in Thousands					1 Months Ended	5 Months Ended	6 Months Ended
	Jul. 24, 2018	Jul. 12, 2018 USD ($) property	Jul. 02, 2018 USD ($)	Aug. 26, 2015	Jul. 31, 2018 USD ($)	Dec. 13, 2018 USD ($)	Jun. 30, 2018 USD ($) property	Jun. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Subsequent Events
Number of real estate properties (properties) | property							411
Acquisition fees payable							$ 0		$ 131
Proceeds from senior credit facility							$ 13,590	$ 67,261
Minimum
Subsequent Events
Debt maturity date							Dec. 31, 2018
Maximum
Subsequent Events
Debt maturity date							Dec. 31, 2031
Revolver
Subsequent Events
Debt maturity date				Aug. 26, 2018
Self-Storage Facilities
Subsequent Events
Number of real estate properties (properties) | property							38
Self-Storage Facilities | Forecasted
Subsequent Events
Payments to acquire real estate						$ 18,300
Self-Storage Facilities | Joint venture | Forecasted
Subsequent Events
Payments to acquire real estate						$ 20,300
Subsequent Event | Revolver
Subsequent Events
Proceeds from senior credit facility					$ 53,000
Subsequent Event | Revolver | Minimum
Subsequent Events
Debt maturity date	Aug. 26, 2018
Subsequent Event | Revolver | Maximum
Subsequent Events
Debt maturity date	Aug. 26, 2019
Subsequent Event | Self-Storage Facilities
Subsequent Events
Ownership in joint venture		90.00%
Number of real estate properties (properties) | property		7
Payments to acquire real estate		$ 57,300
Acquisition fees payable		$ 1,000
Subsequent Event | Self-Storage Facilities | Self Storage Facility in South Carolina
Subsequent Events
Number of real estate properties (properties) | property		5
Subsequent Event | Self-Storage Facilities | Self Storage Facility in North Carolina
Subsequent Events
Number of real estate properties (properties) | property		1
Subsequent Event | Self-Storage Facilities | Self Storage Facility in Florida
Subsequent Events
Number of real estate properties (properties) | property		1
Subsequent Event | Self-Storage Facilities | Joint venture
Subsequent Events
Payments to acquire real estate		$ 63,600
Subsequent Event | 1185 Broadway LLC
Subsequent Events
Proceeds from the collection of receivables			$ 30,000
Proceeds from prepayment exit fees			$ 3,000