Segment Reporting

We operate in three reportable business segments: Net Lease, Self Storage, and Multi Family. Our Net Lease segment includes our investments in net-leased properties, whether they are accounted for as operating leases or direct financing leases. Our Self Storage segment is comprised of our investments in self-storage properties. Our Multi Family segment is comprised of our investments in multi-family residential properties and student-housing developments. In addition, we have an All Other category that includes our notes receivable investments (Note 1). 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,
	2017			2016 ^(a)			2017			2016 ^(a)
Net Lease
Revenues ^(b)	$	28,882		$	27,169		$	56,252		$	54,631
Operating expenses ^{(c) (d)}	(18,319		)	(15,438		)	(34,355		)	(30,722		)
Interest expense	(6,999		)	(7,263		)	(13,994		)	(14,580		)
Other income and expenses, excluding interest expense	540			640			745			711
(Provision for) benefit from income taxes	(705		)	405			(639		)	226
Loss on sale of real estate, net of tax	—			—			—			(63		)
Net income attributable to noncontrolling interests	(198		)	(376		)	(436		)	(835		)
Net income attributable to CPA^®:18 – Global	$	3,201		$	5,137		$	7,573		$	9,368
Self Storage
Revenues	$	13,856		$	12,397		$	27,049		$	22,706
Operating expenses ^(e)	(11,663		)	(16,500		)	(23,752		)	(30,248		)
Interest expense	(3,039		)	(2,734		)	(6,044		)	(4,995		)
Other income and expenses, excluding interest expense ^(f)	(308		)	(9		)	(406		)	(17		)
Provision for income taxes	(48		)	(56		)	(125		)	(91		)
Net loss attributable to CPA^®:18 – Global	$	(1,202	)	$	(6,902	)	$	(3,278	)	$	(12,645	)
Multi Family
Revenues	$	6,452		$	5,439		$	12,620		$	10,756
Operating expenses	(4,554		)	(4,131		)	(8,880		)	(8,048		)
Interest expense	(1,434		)	(1,211		)	(2,586		)	(2,419		)
Other income and expenses, excluding interest expense	3			—			4			—
Provision for income taxes	(200		)	(51		)	(227		)	(79		)
Net income attributable to noncontrolling interests	34			(2		)	23			(7		)
Net income attributable to CPA^®:18 – Global	$	301		$	44		$	954		$	203
All Other
Revenues	$	1,783		$	710		$	3,532		$	1,420
Operating expenses	(2		)	—			(10		)	—
Net income attributable to CPA^®:18 – Global	$	1,781		$	710		$	3,522		$	1,420
Corporate
Unallocated Corporate Overhead ^(g)	$	3,889		$	(6,821	)	$	1,495		$	(7,098	)
Net income attributable to noncontrolling interests — Available Cash Distributions	$	(2,186	)	$	(2,380	)	$	(3,861	)	$	(3,657	)
Total Company
Revenues	$	50,973		$	45,715		$	99,453		$	89,513
Operating expenses	(39,130		)	(40,030		)	(76,105		)	(77,513		)
Interest expense	(11,791		)	(10,320		)	(23,244		)	(20,680		)
Other income and expenses, excluding interest expense	9,205			(2,952		)	11,768			1,033
(Provision for) benefit from income taxes	(1,123		)	133			(1,193		)	(200		)
Loss on sale of real estate, net of tax	—			—			—			(63		)
Net income attributable to noncontrolling interests	(2,350		)	(2,758		)	(4,274		)	(4,499		)
Net income (loss) attributable to CPA^®:18 – Global	$	5,784		$	(10,212	)	$	6,405		$	(12,409	)



	Total Assets
	June 30, 2017		December 31, 2016
Net Lease ^(h)	$	1,537,643	$	1,453,148
Self Storage	406,343		410,781
Multi Family ^(h)	260,193		230,509
All Other	66,913		66,936
Corporate	25,109		48,072
Total Company	$	2,296,201	$	2,209,446

__________


(a)	Amounts for the three and six months ended June 30, 2016 are presented to conform to the three reportable business segment presentation for the current period.


(b)	We recognized straight-line rent adjustments of $1.1 million and $1.0 million during the three months ended June 30, 2017 and 2016, respectively, and $2.1 million and $2.2 million for the six months ended June 30, 2017 and 2016, respectively, which increased Lease revenues within our consolidated financial statements for each period.

(c)

In April 2016, the Croatian government passed a special law assisting the restructuring of companies considered of systematic significance in Croatia. This law directly impacts our 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 $1.0 million and $2.0 million during the three and six months ended June 30, 2017, respectively.


(d)	As a result of financial difficulties and uncertainty regarding future rent collections from a tenant in Stavanger, Norway, we recorded bad debt expense of $0.6 million and $1.1 million during the three and six months ended June 30, 2017, respectively.


(e)	Includes acquisition expenses incurred in connection with self-storage transactions. Since adopting ASU 2017-01 as of January 1, 2017 (Note 2), no acquisitions have been deemed business combinations.


(f)	Includes Equity in losses of equity method investment in real estate.


(g)	Included in unallocated corporate overhead are asset management fees and general and administrative expenses. These expenses are calculated and reported at the portfolio level and not evaluated as part of any segment’s operating performance.

(h)

On January 31, 2017, construction commenced on one of our previously acquired build-to-suit investments located in Cardiff, United Kingdom. Upon commencement of construction, the net investment was reclassified to Real estate under construction from Net investments in direct financing leases (Note 4). As the build-to-suit is intended to be a student-housing development, we reclassified the net investment to Multi Family from Net Lease during 2017.