W. P. Carey Inc.: Form 10-Q for the period ended Sep 30, 2025

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in understanding our financial statements and the reasons for changes in certain key components of our financial statements from period to period. This item also provides our perspective on our financial position and liquidity, as well as certain other factors that may affect our future results. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the 2024 Annual Report and subsequent reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Refer to Item 1 of the 2024 Annual Report for a description of our business.

Financial Highlights

During the nine months ended September 30, 2025, we completed the following (as further described in the consolidated financial statements):

Real Estate

Investments

• We acquired 21 investments totaling $1.4 billion (Note 4, Note 5).
• We completed two construction projects totaling $46.9 million (Note 4).
• We acquired a 47.50% ownership interest in the partnership that owns the Las Vegas Retail Complex for $5.0 million (Note 7). In addition, we funded approximately $6.0 million for construction loans for projects in Las Vegas, Nevada, during the nine months ended September 30, 2025 (Note 5, Note 7).
• We committed to fund five new construction projects totaling $168.0 million (on a consolidated basis). We currently expect to complete these projects in 2026 and 2027 (Note 4, Note 5).

Dispositions

• We disposed of 84 properties for total proceeds, net of selling costs, of $970.3 million, including (i) 32 self-storage operating properties for total proceeds, net of selling costs, of $451.2 million, and (ii) one student housing operating property for proceeds, net of selling costs, of $77.8 million (Note 14).

Financing and Capital Markets Transactions

• In February 2025, we repaid our $450 million of 4.000% Senior Notes due 2025 at maturity (Note 10).
• On March 31, 2025, we refinanced our €500.0 million term loan, extending the maturity date by three years to April 2029 (our Unsecured Term Loan due 2029). In conjunction with this refinancing, we executed variable-to-fixed interest rate swaps that fix the floating rate component of the per annum interest rate at 2.00% through the end of 2027, for a total annual interest rate of approximately 2.80% as of September 30, 2025 (inclusive of the current spread) (Note 10).
• On March 31, 2025, we executed variable-to-fixed interest rate swaps that fix the floating rate component of the per annum interest rate on our £270.0 million GBP Term Loan due 2028 at 3.92% through the end of 2027, for a total annual interest rate of approximately 4.72% as of September 30, 2025 (inclusive of the current spread) (Note 10).
• We repaid non-recourse mortgage debt outstanding totaling $215.8 million with a weighted-average interest rate of 4.4% (Note 10).
• On July 10, 2025, we completed an underwritten public offering of $400.0 million of 4.650% Senior Notes due 2030, at a price of 99.088% of par value. These 4.650% Senior Notes due 2030 have a five-year term and are scheduled to mature on July 15, 2030 (Note 10).
• We sold 2,757,370 shares of common stock during the third quarter of 2025 through our ATM Forwards at a weighted-average gross price of $67.91 per share, for anticipated gross proceeds of approximately $187.3 million as of September 30, 2025 (Note 12). In October 2025, we sold 628,090 additional shares of common stock through our ATM Forwards at a weighted-average price of $68.66 per share for anticipated gross proceeds of approximately $43.1 million (Note 15). As of the date of this Report, all of these shares of common stock sold through our ATM Forwards remain unsettled.

Dividends to Stockholders

We declared cash dividends totaling $2.700 per share during the nine months ended September 30, 2025, comprised of three quarterly dividends per share of $0.910, $0.900, and $0.890 (Note 12).

Consolidated Results

(in thousands, except shares)

(a) Amounts for the nine months ended September 30, 2025 and 2024 include $200.2 million and $807.0 million, respectively, of proceeds from the sales of net investments in sales-type leases (primarily the Grupo Memora portfolio sold during the current-year period and the U-Haul and State of Andalusia portfolios sold during the prior-year period) (Note 5). Such proceeds are included within Net cash provided by operating activities in accordance with ASC 842, Leases.

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

Revenues

Total revenues increased for the three and nine months ended September 30, 2025 as compared to the same periods in 2024, primarily due to net investment activity and rent escalations, partially offset by lower operating property revenues as a result of self-storage operating property dispositions (Note 14).

Net Income Attributable to W. P. Carey

Net income attributable to W. P. Carey increased for the three months ended September 30, 2025 as compared to the same period in 2024, primarily due to higher gain on sale of real estate, lower unrealized losses recognized on our investment in shares of Lineage (Note 8), and the accretive impact of net investment activity, partially offset by a gain on change in control of interests recognized in connection with the purchase of the remaining interest in a jointly owned investment during the prior-year period (Note 7).

Net income attributable to W. P. Carey decreased for the nine months ended September 30, 2025 as compared to the same period in 2024, primarily due to higher losses from remeasurement of foreign debt, higher unrealized losses recognized on our investment in shares of Lineage (Note 8), and a gain on change in control of interests recognized in connection with the purchase of the remaining interest in a jointly owned investment during the prior-year period, partially offset by higher gain on sale of real estate and the accretive impact of net investment activity.

AFFO

AFFO increased for the three and nine months ended September 30, 2025 as compared to the same periods in 2024, primarily due to the accretive impact of net investment activity and rent escalations.

Portfolio Overview

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

Portfolio Summary

(a) Amounts for the nine months ended September 30, 2025 and 2024 include $3.2 million and $8.8 million, respectively, of funding for a construction loan accounted for as an equity investment (Note 7). Amount for the nine months ended September 30, 2025 includes $5.0 million to acquire a 47.50% ownership interest in that equity investment (Note 7). Amount for the nine months ended September 30, 2025 includes $2.8 million of funding for two construction loans accounted for as secured loans receivable (Note 5). Amounts for the nine months ended September 30, 2025 and 2024 include $361.4 million and $83.9 million, respectively, of sale-leasebacks classified as loans receivable (Note 5).

Net-Leased Portfolio

The tables below represent information about our net-leased portfolio at September 30, 2025 on a pro rata basis and, accordingly, exclude all operating properties. See Terms and Definitions below for a description of pro rata amounts and ABR.

Top Ten Tenants by ABR

(dollars in thousands)

(a) ABR from these properties is denominated in U.S. dollars.

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

(c) Of the 22 properties leased to TI Automotive, nine are located in Canada, seven are located in the United States, and six are located in Mexico.

Portfolio Diversification by Geography

(in thousands, except percentages)

W. P. Carey 9/30/2025 10-Q – 41

Portfolio Diversification by Property Type

(in thousands, except percentages)

(a) Includes square footage for any vacant properties.

(b) Other properties within South include assets in Arkansas, Louisiana, Oklahoma, and Mississippi. Other properties within Midwest include assets in Iowa, Minnesota, Kansas, Missouri, Nebraska, South Dakota, and North Dakota. Other properties within East include assets in Virginia, Maryland, Connecticut, West Virginia, New Hampshire, and Maine. Other properties within West include assets in Utah, Oregon, Colorado, Washington, Montana, Hawaii, Idaho, Wyoming, and New Mexico.

(c) $50.4 million (85%) of ABR from properties in Canada is denominated in U.S. dollars, with the balance denominated in Canadian dollars.

(d) All ABR from properties in Mexico is denominated in U.S. dollars.

(e) Includes assets in Slovakia, Belgium, the Czech Republic, Norway, Mauritius, Portugal, Austria, Latvia, Sweden, Finland, Japan, Estonia, and Hungary.

(f) Includes automotive dealerships.

(g) Includes ABR from tenants within the following property types: education facility, self-storage (net lease), specialty, laboratory, research and development, hotel (net lease), office, and land.

Portfolio Diversification by Tenant Industry

(in thousands, except percentages)

(a) Industry classification is based on the Global Industry Classification Standard (GICS) framework.

(b) Includes square footage for vacant properties.

Lease Expirations

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

(a) Assumes tenants do not exercise any renewal options or purchase options.

Terms and Definitions

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

ABR — ABR represents contractual minimum annualized base rent for our net-leased properties and reflects exchange rates as of September 30, 2025. 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 and is presented on a pro rata basis.

Results of Operations

We evaluate our results of operations with a primary focus on increasing and enhancing the value, quality, and number of our properties. We focus our efforts on accretive investing and improving portfolio quality through re-leasing efforts, including negotiation of lease renewals, or selectively selling assets in order to increase value in our real estate portfolio.

Revenues

The following table presents revenues (in thousands):

W. P. Carey 9/30/2025 10-Q – 45

Lease Revenues

“Existing net-leased properties” are those that we acquired or placed into service prior to January 1, 2024 and that were not sold or held for sale during the periods presented. For the periods presented, there were 1,131 existing net-leased properties.

For the three and nine months ended September 30, 2025 as compared to the same periods in 2024, lease revenues from existing net-leased properties increased due to the following items (in millions):

(a) Excludes fixed minimum rent increases, which are reflected as straight-line rent adjustments within lease revenues.

(b) Includes (i) higher lease revenues of $2.7 million and $8.7 million for the three and nine months ended September 30, 2025 as compared to the same periods in 2024, respectively, from 16 self-storage operating properties that were converted to net leases on September 1, 2024, April 1, 2025, July 1, 2025, or August 1, 2025, and (ii) higher lease revenues of $0.2 million and $1.5 million during the three and nine months ended September 30, 2025 as compared to the same periods in 2024, respectively, as a result of a lease restructuring for 27 existing net-leased self-storage properties that was executed on September 1, 2024.

(c) During the first quarter of 2024, we entered into a lease restructuring with our tenant Hellweg, which included (i) abated rent from January 1, 2024 to March 31, 2024 and (ii) a reduction in annual base rent. In addition, these amounts reflect a decrease in lease revenues of $0.6 million related to lease terminations during the third quarter of 2025 at certain properties leased to Hellweg.

“Recently acquired net-leased properties” are those that we acquired or placed into service subsequent to December 31, 2023 and that were not sold or held for sale during the periods presented. Since January 1, 2024, we acquired 43 investments (comprised of 412 properties).

“Net-leased properties sold or held for sale” include:

• 51 net-leased properties disposed of during the nine months ended September 30, 2025;
• three net-leased properties classified as held for sale at September 30, 2025, two of which were sold in October 2025 (Note 15); and
• 175 net-leased properties disposed of during the year ended December 31, 2024.

Our dispositions are more fully described in Note 14.

Income from Finance Leases and Loans Receivable

For the three and nine months ended September 30, 2025 as compared to the same periods in 2024, income from finance leases and loans receivable increased due to the following items (in millions):

(a) We sold our U-Haul and State of Andalusia portfolios during the first quarter of 2024. Such investments were previously reclassified to net investments in sales-type leases during 2023.

Operating Property Revenues

“Existing operating properties” are those that we acquired or placed into service prior to January 1, 2024 and that were not sold, held for sale, or reclassified to net-leased properties during the periods presented. For the periods presented, we recorded operating property revenues from 46 existing operating properties, comprised of 41 self-storage operating properties, four hotel operating properties, and one student housing operating property.

“Recently acquired operating properties” include one self-storage operating property acquired during the third quarter of 2024.

“Operating properties sold, held for sale, or reclassified to net-leased properties” include:

• one hotel operating property sold during the second quarter of 2024;
• three self-storage operating properties that were reclassified to net-leased properties during the third quarter of 2024;
• two self-storage operating properties that were reclassified to net-leased properties during the second quarter of 2025;
• two self-storage operating properties that were reclassified to net-leased properties during the third quarter of 2025;
• ten self-storage operating properties sold during the second quarter of 2025;
• 22 self-storage operating properties sold during the third quarter of 2025; and
• one student housing operating property sold during the third quarter of 2025.

Other Lease-Related Income

Other lease-related income is described in Note 4.

Asset Management Revenue

During the periods presented, we earned asset management revenue from (i) NLOP and (ii) CESH (Note 3). Asset management revenues from NLOP and CESH are expected to decline as assets are sold (CESH owns one remaining build-to-suit project).

Other Advisory Income and Reimbursements

Other advisory income and reimbursements are comprised of (i) fixed administrative fees earned from NLOP and (ii) reimbursable costs from CESH (Note 3).

Operating Expenses

Depreciation and Amortization

For the three and nine months ended September 30, 2025 as compared to the same periods in 2024, depreciation and amortization expense increased by $9.9 million and $3.8 million, respectively, primarily due to the impact of net investment activity, partially offset by accelerated amortization of intangible assets in connection with certain lease restructurings during the nine months ended September 30, 2024.

Impairment Charges — Real Estate

Our impairment charges on real estate are more fully described in Note 8.

Operating Property Expenses

For the three and nine months ended September 30, 2025 as compared to the same periods in 2024, operating property expenses decreased by $2.7 million and $6.0 million, respectively, primarily due to the self-storage operating property dispositions and reclassifications to net leases during the reporting period, as described above and in Note 14.

Property Expenses, Excluding Reimbursable Tenant Costs

For the three and nine months ended September 30, 2025 as compared to the same periods in 2024, property expenses, excluding reimbursable tenant costs, increased by $3.6 million and $2.9 million, respectively, primarily due to higher real estate taxes at certain properties and tenant vacancies (which resulted in property expenses no longer being reimbursable).

Stock-Based Compensation Expense

For the three months ended September 30, 2025 as compared to the same period in 2024, stock-based compensation expense decreased by $2.3 million primarily due to changes in estimated future PSU payouts.

Merger and Other Expenses

For the nine months ended September 30, 2024, merger and other expenses are primarily comprised of the write-off of a value added tax receivable that was previously recorded in connection with an international investment.

Other Income and Expenses, and Provision for Income Taxes

Interest Expense

For the three and nine months ended September 30, 2025 as compared to the same periods in 2024, interest expense increased by $2.7 million and $9.3 million, respectively, primarily due to higher outstanding balances and interest rates on our Senior Unsecured Notes and Unsecured Revolving Credit Facility, partially offset by lower interest rates on our Unsecured Term Loans and the reduction of our mortgage debt outstanding by prepaying or repaying at or close to maturity a total of $430.9 million of non-recourse mortgage loans with a weighted-average interest rate of 4.4% since January 1, 2024 (Note 10).

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

Gain on Sale of Real Estate, Net

Gain on sale of real estate, net, consists of gains and losses on the sale of properties that were (i) disposed of, (ii) subject to the exercise of a purchase option, or (iii) subject to a purchase agreement resulting in a lease modification during the reporting period, as more fully described in Note 4, Note 5 and Note 14.

Other Gains and (Losses)

Other gains and (losses) primarily consists of gains and losses on (i) the mark-to-market fair value of equity securities, (ii) foreign currency exchange rate movements (except those foreign currency-denominated unsecured debt instruments that were designated as net investment hedges (Note 9)), (iii) changes in the non-cash allowance for credit losses on loans receivable and finance leases, and (iv) extinguishment of debt. The timing and amount of such gains or losses cannot always be estimated and are subject to fluctuation.

The following table presents other gains and (losses) (in thousands):

(a) Remeasurement of certain monetary assets and liabilities that are held by our subsidiaries in currencies other than their functional currency are included in other gains and (losses), including certain foreign currency-denominated unsecured debt instruments that are not designated as net investment hedges. This includes foreign currency-denominated intercompany loans to our foreign subsidiaries that are scheduled for settlement. Beginning in the first quarter of 2023, our intercompany loans subject to remeasurement were hedged by certain of our foreign currency-denominated unsecured debt that we de-designated as net investment hedges.

(b) We acquired a secured loan receivable with a fair value of $13.3 million in our merger with a former affiliate, Corporate Property Associates 17 – Global Incorporated, in October 2018, for which the outstanding principal of $24.0 million was fully repaid to us in March 2024 (Note 5). Therefore, we recorded a $10.7 million gain on repayment of this secured loan receivable during the nine months ended September 30, 2024.

Non-Operating Income

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

The following table presents non-operating income (in thousands):

(a) Decreases for the three and nine months ended September 30, 2025 as compared to the same periods in 2024 are due to lower cash deposit balances as a result of investment activity and debt repayments.

Earnings from Equity Method Investments

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

(a) Decrease is primarily due to rent collections from a tenant at the complex and the write-off of the related straight-line rent receivable balance (since we began recognizing lease revenue from the tenant on a cash basis).

(b) Increase is primarily due to higher rent collections at these retail properties, where certain rents were previously disputed and subsequently collected.

(c) On September 1, 2024, we acquired the remaining 10% controlling interest in the Johnson Self Storage jointly owned investment, bringing our ownership interest to 100%. Following this acquisition, we no longer recognize equity income from this consolidated investment (Note 7).

Gain on Change in Control of Interests

On September 1, 2024, we acquired the remaining interest in an investment in which we already had a joint interest and accounted for under the equity method. Due to the change in control of this jointly owned investment, we recorded a gain on change in control of interests of $31.8 million reflecting the difference between our carrying value and the fair value of our previously held equity interest. Subsequent to this acquisition, we consolidated this wholly owned investment (Note 7).

Provision for Income Taxes

For the nine months ended September 30, 2025 as compared to the same period in 2024, provision for income taxes increased by $9.3 million, primarily due to the impact of (i) international lease restructurings, (ii) strengthening foreign currencies, and (iii) international property acquisitions.

Liquidity and Capital Resources

Sources and Uses of Cash During the Period

We use the cash flow generated from our investments primarily to meet our operating expenses, service debt, and fund dividends to stockholders. Our cash flows fluctuate periodically due to a number of factors, which may include, among other things: the timing of our equity and debt offerings; the timing of purchases and sales of real estate; the timing of the repayment of mortgage loans, our Senior Unsecured Notes, and our Unsecured Term Loans; the timing of our receipt of lease revenues; the timing and amount of other lease-related payments; the timing of settlement of foreign currency transactions; changes in foreign currency exchange rates; and the timing of distributions from equity method investments. Despite these fluctuations, we believe that we will generate sufficient cash from operations to meet our normal recurring short-term liquidity needs. We may also use existing cash resources, available capacity under our Senior Unsecured Credit Facility, proceeds from term loans or other bank debt, proceeds from dispositions of properties, and the issuance of additional debt or equity securities, such as issuances of common stock through our ATM Program (Note 12), in order to meet our short-term and long-term liquidity 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 decreased by $559.1 million during the nine months ended September 30, 2025 as compared to the same period in 2024, primarily due to significantly lower proceeds received from the sales of net investments in sales-type leases (Note 5), partially offset by an increase in cash flow generated from net investment activity, scheduled rent increases at existing properties, and leasing activity.

Investing Activities — Our investing activities are generally comprised of real estate-related transactions (purchases and sales) and funding for build-to-suit activities and other capital expenditures on real estate.

Financing Activities — Our financing activities are generally comprised of borrowings and repayments under our Unsecured Revolving Credit Facility and Unsecured Term Loans, issuances and repayments of the Senior Unsecured Notes, payments of non-recourse mortgage loans, issuances of common equity, and payments of dividends to stockholders.

Summary of Financing

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

(a) Aggregate debt balance includes unamortized discount, net, totaling $41.7 million and $39.3 million as of September 30, 2025 and December 31, 2024, respectively, and unamortized deferred financing costs totaling $31.7 million and $30.9 million as of September 30, 2025 and December 31, 2024, respectively.

(b) Includes non-recourse mortgages subject to variable-to-fixed interest rate swaps totaling $46.4 million and $43.5 million as of September 30, 2025 and December 31, 2024, respectively.

Cash Resources

At September 30, 2025, our cash resources consisted of the following:

• cash and cash equivalents totaling $249.0 million. Of this amount, $196.2 million, at then-current exchange rates, was held in foreign subsidiaries, and we could be subject to restrictions or significant costs should we decide to repatriate these amounts;
• funds totaling $64.1 million that are held by an intermediary and have been designated for future tax-deferred like-kind exchanges under 1031 Exchange transactions (Note 2);
• our Unsecured Revolving Credit Facility, with available capacity of approximately $1.6 billion (net of amounts reserved for standby letters of credit totaling $1.0 million);
• available proceeds under our ATM Forwards of approximately $182.8 million (Note 12); and
• unleveraged properties that had an aggregate asset carrying value of approximately $15.0 billion at September 30, 2025, although there can be no assurance that we would be able to obtain financing for these properties.

We may also access the capital markets through additional debt (denominated in both U.S. dollars and euros) and equity offerings, as well as term loans and other bank debt.

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

Cash Requirements and Liquidity

As of September 30, 2025, we had (i) $249.0 million of cash and cash equivalents, (ii) $64.1 million of funds that are held by an intermediary and have been designated for future 1031 Exchange transactions (Note 2), (iii) approximately $1.6 billion of available capacity under our Unsecured Revolving Credit Facility (net of amounts reserved for standby letters of credit totaling $1.0 million), and (iv) available proceeds under our ATM Forwards of approximately $182.8 million (Note 12). As of September 30, 2025, scheduled debt principal payments total $2.5 million during the remainder of 2025 and $1.0 billion during 2026 (Note 10).

During the next 12 months following September 30, 2025 and thereafter, we expect that our significant cash requirements will include:

• paying dividends to our stockholders;
• funding acquisitions of new investments (Note 4);
• funding future capital commitments (Note 4) and tenant improvement allowances;
• making scheduled principal and balloon payments on our debt obligations, including €500 million of senior notes due in April 2026 (Note 10);
• making scheduled interest payments on our debt obligations (future interest payments total $1.4 billion, with $270.2 million due during the next 12 months; interest on unhedged variable-rate debt obligations was calculated using the applicable annual variable interest rates and balances outstanding at September 30, 2025); and
• other normal recurring operating expenses.

We expect to fund these cash requirements through cash generated from operations, cash received from dispositions of properties, the use of our cash reserves or unused amounts on our Unsecured Revolving Credit Facility (as described above), proceeds from term loans or other bank debt, issuances of common stock through our ATM Program (Note 12), and potential issuances of additional debt or equity securities.

Our liquidity could be adversely affected by an unanticipated disruption to our operating cash flow, which could include interrupted rent collections or 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 from operations to meet our normal recurring short-term and long-term liquidity needs. We may also use existing cash resources, available capacity under our Unsecured Revolving Credit Facility, mortgage loan proceeds, and the issuance of additional debt or equity securities to meet these needs.

Certain amounts disclosed above are based on the applicable foreign currency exchange rate at September 30, 2025.

New Tax Legislation

Effective July 4, 2025, certain changes to U.S. tax law were approved that may impact us and our stockholders. Among other changes, this legislation (i) permanently extended the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Code, (ii) increased the percentage limit under the REIT asset test applicable to TRSs from 20% to 25% for taxable years beginning after December 31, 2025, and (iii) increases the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization, and depletion from the definition of “adjusted taxable income” (i.e. based on EBITDA rather than EBIT) for taxable years beginning after December 31, 2024.

Supplemental Financial Measures

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

Funds from Operations and Adjusted Funds from Operations

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

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

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

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

FFO and AFFO were as follows (in thousands):

(a) Amounts for the three and nine months ended September 30, 2024 represent a gain recognized on the remaining interest in an investment acquired during the third quarter of 2024, which we had previously accounted for under the equity method (Note 7).

(b) Equity income, including amounts that are not typically recognized for FFO and AFFO, is recognized within Earnings from equity method investments on the consolidated statements of income. This represents adjustments to equity income to reflect FFO and AFFO on a pro rata basis.

(c) Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.

(d) Primarily comprised of gains and losses on the mark-to-market fair value of equity securities, foreign currency exchange rate movements, changes in the non-cash allowance for credit losses on loans receivable and finance leases, and extinguishment of debt. Includes mark-to-market unrealized losses for our investment in shares of Lineage of $22.6 million and $43.6 million during the three months ended September 30, 2025 and 2024, respectively, and $91.7 million and $43.6 million during the nine months ended September 30, 2025 and 2024, respectively (Note 8).

(e) Amount for the nine months ended September 30, 2024 is primarily comprised of the write-off of a value added tax receivable that was previously recorded in connection with an international investment.

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

Market Risk

Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, and equity prices. The primary market risks that we are exposed to are interest rate risk and foreign currency exchange risk; however, we do not use derivative instruments to hedge credit/market risks or for speculative purposes.

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, we view our collective tenant roster as a portfolio and we attempt to diversify such portfolio so that we are not overexposed to a particular industry or geographic region.

Interest Rate Risk

The values of our real estate and related fixed-rate debt obligations, as well as the values of our unsecured debt obligations, 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 our 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 generally seek long-term debt financing on a fixed-rate basis. However, we are subject to variable-rate interest on our Unsecured Term Loans and Unsecured Revolving Credit Facility. We have entered into, and may continue to enter into, interest rate swap agreements or interest rate cap agreements with counterparties related to certain of our variable-rate debt (Note 10). See Note 9 for additional information on our interest rate swaps and caps.

Our debt obligations are more fully described in Note 10 and Liquidity and Capital Resources — Summary of Financing in Item 2 above. The following table presents principal cash flows based upon expected maturity dates of our debt obligations outstanding at September 30, 2025 (in thousands):

(a) Amounts are based on the exchange rate at September 30, 2025, as applicable.

(b) Amounts include non-recourse mortgages and unsecured term loans subject to variable-to-fixed interest rate swaps. Amounts are primarily comprised of principal payments for our Senior Unsecured Notes (Note 10).

The estimated fair value of our fixed-rate debt and our variable-rate debt is affected by changes in interest rates. Annual interest expense on our unhedged variable-rate debt that does not bear interest at fixed rates at September 30, 2025 would increase or decrease by $3.4 million for our euro-denominated debt, by $1.0 million for our British pound sterling-denominated debt, by $0.5 million for our Norwegian krone-denominated debt, $0.5 million for our Canadian dollar-denominated debt, $0.4 million for our U.S. dollar-denominated debt, and by $0.2 million for our Japanese yen-denominated debt, for each respective 1% change in annual interest rates.

Foreign Currency Exchange Rate Risk

We own international investments, primarily in Europe, Canada, and Japan, and as a result are subject to risk from the effects of exchange rate movements in various foreign currencies, primarily the euro, British pound sterling, Danish krone, Canadian dollar, Japanese yen, and certain other currencies which may affect future costs and cash flows. We have obtained, and may in the future obtain, non-recourse mortgage financing in the local currency. We have also completed several offerings of euro-denominated senior notes, and have borrowed under our Senior Unsecured Credit Facility and Unsecured Term Loan due 2029 in foreign currencies, including the euro, British pound sterling, Norwegian krone, Japanese yen, and Canadian dollar (Note 10). Volatile market conditions arising from certain macroeconomic factors may result in significant fluctuations in foreign currency exchange rates. To the extent that currency fluctuations increase or decrease rental revenues, as translated to U.S. dollars, the change in debt service (comprised of principal and interest, excluding balloon payments), 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 estimate that, for a 1% increase or decrease in the exchange rate between the euro, British pound sterling, or Danish krone and the U.S. dollar, there would be a corresponding change in the projected estimated cash flow (scheduled future rental revenues, net of scheduled future debt service payments for the next 12 months) for our consolidated foreign operations at September 30, 2025 of $2.3 million, $0.4 million, and $0.3 million, respectively, excluding the impact of our derivative instruments.

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), and 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 enter into foreign currency collars to hedge certain of our foreign currency cash flow exposures. See Note 9 for additional information on our foreign currency collars.

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 well-diversified, it does contain concentrations in certain areas. There have been no material changes in our concentration of credit risk from what was disclosed in the 2024 Annual Report.

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 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 September 30, 2025, have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of September 30, 2025 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.