Equity Investments in the Managed Programs and Real Estate

We own interests in certain unconsolidated real estate investments with the Managed Programs and also own interests in the Managed Programs. We account for our interests in these investments under the equity method of accounting (i.e., at cost, increased or decreased by our share of earnings or losses, less distributions, plus contributions and other adjustments required by equity method accounting, such as basis differences) or at fair value by electing the equity method fair value option available under GAAP.

The following table presents Equity in earnings of equity method investments in the Managed Programs and real estate, which represents our proportionate share of the income or losses of these investments, as well as certain adjustments related to 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
Distributions of Available Cash (Note 3)	$	8,776		$	10,728		$	19,278		$	22,521
Proportionate share of equity in earnings of equity investments in the Managed Programs	1,167			1,603			3,030			3,802
Amortization of basis differences on equity method investments in the Managed Programs	(914		)	(324		)	(1,312		)	(614		)
Total equity in earnings of equity method investments in the Managed Programs	9,029			12,007			20,996			25,709
Equity in earnings of equity method investments in real estate	4,084			4,216			7,987			7,160
Amortization of basis differences on equity method investments in real estate	(555		)	(495		)	(1,100		)	(1,367		)
Total equity in earnings of equity method investments in real estate	3,529			3,721			6,887			5,793
Equity in earnings of equity method investments in the Managed Programs and real estate	$	12,558		$	15,728		$	27,883		$	31,502

Managed Programs

We own interests in the Managed Programs and account for these interests under the equity method because, as their advisor, we do not exert control over, but we do have the ability to exercise significant influence on, the Managed Programs. Operating results of the Managed Programs are included in the Investment Management segment.

The following table sets forth certain information about our investments in the Managed Programs (dollars in thousands):



	% of Outstanding Interests Owned at				Carrying Amount of Investment at
Fund	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
CPA:17 – Global ^(a)	4.571	%	4.186	%	$	133,843	$	125,676
CPA:17 – Global operating partnership	0.009	%	0.009	%	—		—
CPA:18 – Global ^(a)	3.000	%	2.540	%	33,008		28,433
CPA:18 – Global operating partnership	0.034	%	0.034	%	209		209
CWI 1 ^(a)	2.597	%	2.119	%	33,095		26,810
CWI 1 operating partnership	0.015	%	0.015	%	186		186
CWI 2 ^(a)	2.304	%	1.786	%	21,018		16,495
CWI 2 operating partnership	0.015	%	0.015	%	300		300
CESH I ^(b)	2.430	%	2.430	%	3,666		3,299
					$	225,325	$	201,408

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(a)	During 2018, we received asset management revenue from the Managed REITs in shares of their common stock, which increased our ownership percentage in each of the Managed REITs. Effective as of June 1, 2018, we began receiving asset management revenue from CPA:17 – Global in cash in light of the Proposed Merger (Note 3).


(b)	Investment is accounted for at fair value.

CPA:17 – Global — We received distributions from this investment during the six months ended June 30, 2018 and 2017 of $4.9 million and $4.0 million, respectively. We received distributions from our investment in the CPA:17 – Global operating partnership during the six months ended June 30, 2018 and 2017 of $11.4 million and $13.8 million, respectively (Note 3).

CPA:18 – Global — The carrying value of our investment in CPA:18 – Global at June 30, 2018 includes asset management fees receivable, for which 119,695 shares of CPA:18 – Global Class A common stock were issued during the third quarter of 2018. We received distributions from this investment during the six months ended June 30, 2018 and 2017 of $1.2 million and $0.7 million, respectively. We received distributions from our investment in the CPA:18 – Global operating partnership during the six months ended June 30, 2018 and 2017 of $4.7 million and $3.9 million, respectively (Note 3).

CWI 1 — The carrying value of our investment in CWI 1 at June 30, 2018 includes asset management fees receivable, for which 113,184 shares of CWI 1 common stock were issued during the third quarter of 2018. We received distributions from this investment during the six months ended June 30, 2018 and 2017 of $0.9 million and $0.5 million, respectively. We received distributions from our investment in the CWI 1 operating partnership during the six months ended June 30, 2018 and 2017 of $1.0 million and $3.2 million, respectively (Note 3).

CWI 2 — The carrying value of our investment in CWI 2 at June 30, 2018 includes asset management fees receivable, for which 78,215 shares of CWI 2 Class A common stock were issued during the third quarter of 2018. We received distributions from this investment during the six months ended June 30, 2018 and 2017 of $0.5 million and $0.1 million, respectively. We received distributions from our investment in the CWI 2 operating partnership during the six months ended June 30, 2018 and 2017 of $2.2 million and $1.6 million, respectively (Note 3).

CESH I — Under the limited partnership agreement we have with CESH I, we paid all organization and offering costs on behalf of CESH I, and instead of being reimbursed by CESH I for actual costs incurred, we received limited partnership units of CESH I equal to 2.5% of its gross offering proceeds (Note 3). In connection with the end of active fundraising by Carey Financial on June 30, 2017, we facilitated the orderly processing of sales in the CESH I offering through July 31, 2017, which then closed its offering on that date (Note 3). We have elected to account for our investment in CESH I at fair value by selecting the equity method fair value option available under GAAP. We record our investment in CESH I on a one quarter lag; therefore, the balance of our equity method investment in CESH I recorded as of June 30, 2018 is based on the estimated fair value of our equity method investment in CESH I as of March 31, 2018. We did not receive distributions from this investment during the six months ended June 30, 2018 or 2017.

CCIF — In August 2017, we resigned as the advisor to CCIF, effective as of September 11, 2017 (Note 1). As such, we reclassified our investment in CCIF (known since October 23, 2017 as GCIF) from Equity investments in the Managed Programs and real estate to Other assets, net in our consolidated balance sheets and accounted for it under the cost method, since we no longer shared decision-making responsibilities with the third-party investment partner. Following our adoption of ASU 2016-01, effective January 1, 2018 (Note 2), we account for our investment in GCIF at fair value. Our investment in GCIF had a carrying value of $23.8 million and $23.3 million at June 30, 2018 and December 31, 2017, respectively, and is included in our Investment Management segment. We received distributions from our equity method investment in CCIF during the six months ended June 30, 2017 of $0.5 million. Following our resignation as the advisor to CCIF in the third quarter of 2017, distributions of earnings from GCIF are recorded within Other gains and (losses) in the consolidated financial statements.

At June 30, 2018 and December 31, 2017, the aggregate unamortized basis differences on our equity investments in the Managed Programs were $66.4 million and $55.2 million, respectively.

Interests in Other Unconsolidated Real Estate Investments

We own equity interests in single-tenant 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. Operating results of our unconsolidated real estate investments are included in the Owned Real Estate segment.

The following table sets forth our ownership interests in our equity investments in real estate, excluding the Managed Programs, and their respective carrying values (dollars in thousands):



			Carrying Value at
Lessee	Co-owner	Ownership Interest	June 30, 2018		December 31, 2017
The New York Times Company ^(a)	CPA:17 – Global	45%	$	69,115	$	69,401
Frontier Spinning Mills, Inc.	CPA:17 – Global	40%	24,085		24,153
Beach House JV, LLC ^(b)	Third Party	N/A	15,105		15,105
ALSO Actebis GmbH ^(c)	CPA:17 – Global	30%	11,564		12,009
Jumbo Logistiek Vastgoed B.V. ^{(c) (d)}	CPA:17 – Global	15%	9,670		10,661
Wagon Automotive GmbH ^(c)	CPA:17 – Global	33%	7,700		8,386
Wanbishi Archives Co. Ltd. ^(e)	CPA:17 – Global	3%	1,058		334
			$	138,297	$	140,049

__________


(a)	In January 2018, this tenant exercised its option to repurchase the property it is leasing from the jointly owned investment with our affiliate, CPA:17 – Global, for $250.0 million (our proportionate share would be $112.5 million). There can be no assurance that such repurchase will be completed.


(b)	This investment is in the form of a preferred equity interest.


(c)	The carrying value of this investment is affected by fluctuations in the exchange rate of the euro.

(d)

This investment represents a tenancy-in-common interest, whereby the property is encumbered by the debt for which we are jointly and severally liable. The co-obligor is CPA:17 – Global and the amount due under the arrangement was approximately $73.3 million at June 30, 2018. Of this amount, $11.0 million represents the amount we are liable for and is included within the carrying value of the investment at June 30, 2018.


(e)	The carrying value of this investment is affected by fluctuations in the exchange rate of the yen. In January 2018, we contributed $0.7 million to this jointly owned investment in connection with the repayment of the non-recourse mortgage loan encumbering the investment.

We received aggregate distributions of $8.6 million and $8.1 million from our other unconsolidated real estate investments for the six months ended June 30, 2018 and 2017, respectively.