CORPORATE PROPERTY ASSOCIATES 16 GLOBAL INC – 10-Q – Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 Management's discussion and analysis of financial condition and results of operations ("MD&A") 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. MD&A 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 MD&A should be read in conjunction with our 2012 Annual Report.    Business Overview    As described in more detail in Item 1 in our 2012 Annual Report, we are a publicly owned, non-listed REIT that invests in commercial properties leased to companies domestically and internationally. 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, and sales of properties.   

Financial and Operating Highlights

 (In thousands)                                                                    Three Months Ended March 31,                                                                   2013                 2012 Total revenues                                               $       79,542$       82,102 Net income attributable to CPA®:16 - Global stockholders              2,742                7,320  Net cash provided by operating activities                            48,163               46,512 Net cash provided by investing activities                            32,196               38,775 Net cash used in financing activities                               (81,409 )           (113,124 )  Cash distributions paid                                              33,964               33,423  Supplemental financial measure: Modified funds from operations (a)                                   40,417               40,962    

--------------------------------------------------------------------------------   (a)     We consider the performance metrics listed above, including Modified funds from operations ("MFFO"), a supplemental measure that is not defined by GAAP ("non-GAAP"), to be important measures in the evaluation of our results of operations and capital resources. We evaluate our results of operations with a primary focus on the ability to generate cash flow necessary to meet our objectives of funding distributions to stockholders. See Supplemental Financial Measures below for our definition of this non-GAAP measure and a reconciliation to its most directly comparable GAAP measure.    Total revenues and Net income attributable to CPA®:16 - Global stockholders decreased for the three months ended March 31, 2013 as compared to the same period in 2012, primarily due to the impact of Carrefour France, SAS, one of our lessees, declining to exercise its lease termination options on five properties at June 30, 2012, thereby increasing the period over which straight-line revenue is recognized, and, in the case of Net income attributable to CPA®:16 - Global stockholders, impairment charges recognized during the three months ended March 31, 2013. These decreases were partially offset by the favorable impact of foreign currency fluctuations on operations and, in the case of Net income attributable to CPA®:16 - Global stockholders, the gain on the sales of several properties recognized during the three months ended March 31, 2013.    Net cash provided by operating activities increased for the three months ended March 31, 2013 as compared to the same period in 2012. An amendment to the advisory agreement in 2012 changed the basis of allocating advisor personnel expenses amongst WPC and the Managed REITs from individual time records to trailing four quarters of reported revenues, which increased management expenses for the three months ended March 31, 2013 as compared to the same period in 2012. However, at March 31, 2013, we had not yet paid the advisor for expenses incurred during the three months then ended, resulting in the increase in Net cash provided by operating activities for the three months ended March 31, 2013 as compared to the same period in 2012.      CPA®:16 - Global 3/31/2013 10-Q - 24        

Our MFFO supplemental measure decreased for the three months ended March 31, 2013 as compared to the same period in 2012, primarily as a result of the decrease in revenue as described above.

Our quarterly cash distribution was $0.1678 per share for the first quarter of 2013, which equates to $0.6712 per share on an annualized basis.

   Recent Developments   

Possible Liquidity Transaction

    We have previously stated our intention to consider liquidity events for investors generally commencing eight to twelve years following the investment of substantially all of the net proceeds from our initial public offering. We substantially invested those net proceeds as of December 2005. During the first quarter of 2013, our board of directors formed a special committee of independent directors to explore possible liquidity transactions, including transactions which may be proposed by our advisor. The special committee has retained legal and financial advisors to assist the committee in its review. A liquidity transaction could take a variety of forms, including, without limitation, a merger, sale of assets either on a portfolio basis or individually, or a listing of our shares on a stock exchange, and could involve our advisor and/or one or more entities managed by our advisor. The execution of a liquidity transaction could be affected by a variety of factors, such as conditions in the economy, stock market volatility, conditions in the commercial real estate market, and the performance of our tenants and the availability of financing on acceptable terms, many of which are factors outside of our control. There can be no assurance that a liquidity transaction will occur in the near future or at all.    Net Asset Values    The advisor generally calculates our estimated NAV by relying in part on an estimate of the fair market value of our real estate provided by a third party, adjusted to give effect to the estimated fair value of mortgages encumbering our assets (also provided by a third party) as well as other adjustments. Our NAV is based on a number of variables, including, among others, changes in the credit profiles of individual tenants; lease terms, expirations, and non-renewals; lending credit spreads; foreign currency exchange rates; potential asset sales; and tenant defaults and bankruptcies. We do not control all of these variables and, as such, cannot predict how they will change in the future.    The advisor usually calculates our NAV annually as of year-end. Our most recently published estimated NAV as of December 31, 2012 was $8.70 per share, compared to $9.10 per share as of December 31, 2011. Declines in the real estate value from approximately $3.73 billion at December 31, 2011 to approximately $3.61 billion at December 31, 2012 were somewhat offset by improvements in the fair value of our mortgage debt from approximately $1.74 billion to approximately $1.70 billion and a reduction in the outstanding balance of our Credit Agreement. The decline in the real estate value was primarily driven by circumstances related to specific assets, including notification by several tenants that they intend to vacate their properties at the end of their respective lease terms (beginning in 2015), asset sales, including at prices that were below the appraised values of the properties as of December 31, 2011, and tenant credit issues.      CPA®:16 - Global 3/31/2013 10-Q - 25         Results of Operations    

The following tables present other operating data that management finds useful in evaluating results of operations:

                                         March 31, 2013   December 31, 2012 Occupancy rate (a)                            97.4%               96.9% Number of leased properties (a)                 494                 498 Number of operating properties (b)                2                   2                                                       Three Months Ended March 31,                                                        2013                   2012 Financing obtained (in millions)             $                   13.0      $     11.1 Average U.S. dollar/euro exchange rate (c)   $                 1.3209      $   1.3110 U.S. Consumer Price Index ("CPI") (d)                           232.8           229.4    

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(a) These amounts reflect properties in which we had a full or partial ownership interest.

(b) For all periods presented, operating properties comprise two hotels, both of which are managed by third parties.

  (c)      The average conversion rate for the U.S. dollar in relation to the euro increased by approximately 0.8% during the three months ended March 31, 2013 in comparison to the same period in 2012, resulting in a positive impact on lease revenues in for our euro-denominated investments in the current year period.  

(d) Most of our domestic lease agreements include contractual increases indexed to the change in the CPI.

     CPA®:16 - Global 3/31/2013 10-Q - 26        

The following table sets forth the net lease revenues (i.e., rental income and interest income from direct financing leases) that we earned from lease obligations through our consolidated real estate investments (in thousands):

                                                                      Three Months Ended March 31, Lessee                                                              2013               2012 

Hellweg Die Profi-Baumärkte GmbH & Co. KG (Hellweg 2) (a) (b)

                                                            $         8,952    $         8,695 Dick's Sporting Goods, Inc. (b)                                          2,687              2,666 Telcordia Technologies, Inc.                                             2,604              2,540 Carrefour France, SAS (a) (c)                                            2,438              5,735 SoHo House/SHG Acquisition (UK) Limited                                  1,964              1,964 Nordic Atlanta Cold Storage, LLC                                         1,886              1,795 Tesco plc (a) (b)                                                        1,886              1,828 Berry Plastics Corporation (b)                                           1,765              1,722 

LFD Manufacturing Ltd., IDS Logistics (Thailand) Ltd., and IDS Manufacturing SDN BHD (a)

                                            1,379              1,361 Fraikin SAS (a)                                                          1,337              1,271 The Talaria Company (Hinckley) (b)                                       1,293              1,110 MetoKote Corp., MetoKote Canada Limited, and MetoKote de Mexico (a)                                                               1,223              1,218 Perkin Elmer, Inc.                                                       1,121              1,094 Best Brands Corp.                                                        1,061              1,025 Ply Gem Industries, Inc. (a) (d)                                         1,036              1,076 Huntsman International, LLC                                              1,006              1,006 Caremark Rx, Inc.                                                          985                990 Universal Technical Institute of California, Inc.                          932                919 Bob's Discount Furniture, LLC                                              920                930 TRW Vehicle Safety Systems Inc.                                            892                892 Kings Super Markets Inc.                                                   888                896 Performance Fibers GmbH (a) (d)                                            825                941 Finisar Corporation                                                        804                813 Other (a) (b)                                                           30,156             29,481                                                                $        70,040$        71,968

--------------------------------------------------------------------------------   (a)     Amounts are subject to fluctuations in foreign currency exchange rates. The average conversion rate for the U.S. dollar in relation to the euro increased by approximately 0.8% during the three months ended March 31, 2013 in comparison to the same period in 2012, resulting in a positive impact on lease revenues for our euro-denominated investments in the current year period.  (b)     These revenues are generated in consolidated investments, generally with our affiliates, and on a combined basis include revenues applicable to noncontrolling interests totaling $9.6 million and $9.3 million for the three months ended March 31, 2013 and 2012, respectively.  (c)      This decrease was due to the impact of the lessee declining to exercise its lease termination options on five properties at June 30, 2012. As a result, the straight-line periods over which revenue is to be recognized for the leases were increased.  

(d) This decrease was primarily due to an adjustment made in the first quarter of 2012 related to amendments and adjustments to direct financing leases.

     CPA®:16 - Global 3/31/2013 10-Q - 27         We recognize income from equity investments in real estate, of which lease revenues are a significant component. The following table sets forth the net lease revenues earned by these investments from both continuing and discontinued operations. Amounts provided are the total amounts attributable to the investments and do not represent our proportionate share (dollars in thousands):                                                       Ownership Interest       Three Months Ended March 31, Lessee                                              at March 31, 2013         2013               2012 U-Haul Moving Partners, Inc. and Mercury Partners, L.P.                                               31 %        $         8,122    $         8,122 The New York Times Company                                   27 %                  6,924              6,867 OBI A.G. (a)                                                 25 %                  4,181              4,022 Hellweg Die Profi-Baumärkte GmbH & Co. KG (Hellweg 1) (a) (b)                                          25 %                  3,783              2,988 True Value Company                                           50 %                  3,553              3,581 Advanced Micro Devices, Inc.                                 67 %                  2,986              2,986 Pohjola Non-life Insurance Company (a)                       40 %                  2,293              2,242 TietoEnator Plc (a)                                          40 %                  2,149              2,109 Police Prefecture, French Government (a)                     50 %                  2,096              1,946 Schuler A.G. (a)                                             33 %                  1,675              1,549 Frontier Spinning Mills, Inc.                                40 %                  1,141              1,160 Actebis Peacock GmbH (a)                                     30 %                  1,013                998 Del Monte Corporation                                        50 %                    882                882 Actuant Corporation (a)                                      50 %                    451                360 Consolidated Systems, Inc.                                   40 %                    448                469 Barth Europa Transporte e.K/MSR Technologies GmbH (a)                                                     33 %                    301                305 Town Sports International Holdings, Inc.                     56 %                    286                288 Thomson Broadcast, Veolia Transport, and Marchal Levage (formerly Thales S.A.) (a)                            35 %                    160                331                                                                          $        42,444$        41,205

--------------------------------------------------------------------------------   (a)     Amounts are subject to fluctuations in foreign currency exchange rates. The average conversion rate for the U.S. dollar in relation to the euro increased by approximately 0.8% during the three months ended March 31, 2013 in comparison to the same period in 2012, resulting in a positive impact on lease revenues for our euro-denominated investments in the current year period.  

(b) This increase was primarily due to an adjustment made in the first quarter of 2012 related to amendments and adjustments to direct financing leases.

    Lease Revenues    As of March 31, 2013, approximately 75% of our net leases, based on annualized contractual minimum base rent, provide for adjustments based on formulas indexed to changes in the CPI, or other similar indices for the jurisdiction in which the property is located, some of which have caps and/or floors. In addition, approximately 23% of our net leases on that same basis have fixed rent adjustments with contractual minimum base rent scheduled to increase by an average of 2% in the next 12 months. We own international investments and, therefore, lease revenues from these investments are subject to fluctuations in exchange rate movements in foreign currencies, primarily the euro.    During the three months ended March 31, 2013, we signed one lease, a short-term extension with an existing tenant, totaling less than 0.1 million square feet of leased space. The new rent for the lease was $12.50 per square foot and the former rent was $11.34 per square foot. The tenant did not receive any tenant improvement allowances or concessions.    During the three months ended March 31, 2012, we signed two leases, totaling approximately 0.4 million square feet of leased space. Both leases were renewals or short-term extensions with existing tenants. The average rent for these leases increased from $4.45 per square foot to $5.03 per square foot after the renewals. None of the tenants received tenant improvement allowances or concessions.    For the three months ended March 31, 2013 as compared to the same period in 2012, lease revenues decreased by $1.9 million, primarily due to the impact of Carrefour France, SAS declining to exercise its lease termination options on five properties at June 30, 2012 totaling $2.7 million and the effects of lease restructurings, rejections, and expirations totaling $0.9 million. These decreases      CPA®:16 - Global 3/31/2013 10-Q - 28        

were partially offset by scheduled rent increases of $1.3 million and the favorable impact of foreign currency fluctuations of $0.2 million.

   General and Administrative    For the three months ended March 31, 2013 as compared to the same period in 2012, general and administrative expense increased by $1.2 million, primarily due to an increase in management expenses of $1.7 million. Management expenses include our reimbursements to the advisor for the allocated costs of personnel and overhead in providing management of our day-to-day operations and increased primarily due to an amendment to the advisory agreement in 2012 related to the basis of allocating advisor personnel expenses amongst WPC and the Managed REITs from individual time records to trailing four quarters of reported revenues (Note 3). This increase was partially offset by a decrease in professional fees of $0.6 million. Professional fees include legal, accounting, and investor-related expenses incurred in the normal course of business.    Depreciation and Amortization    For the three months ended March 31, 2013 as compared to the same period in 2012, depreciation and amortization decreased by $1.0 million. The three months ended March 31, 2012 included a write-off of $0.6 million of lease intangibles related to a tenant bankruptcy.    Impairment Charges    During the three months ended March 31, 2013, we recognized an impairment charge of $9.3 million on a property in order to reduce its carrying value to its estimated fair value due to the property's tenant filing for bankruptcy (Note 8).    As part of our portfolio management strategy, we exit from investments containing lower quality, lower growth assets. We have been marketing several properties for sale. We evaluate all potential sale opportunities taking into account the long-term growth prospects of assets being sold, the use of proceeds, and the impact to our balance sheet, in addition to the impact on operating results. In our experience, it is difficult for many buyers to complete these transactions in the timing contemplated or at all. Where the undiscounted cash flows, when considering and evaluating the various alternative courses of action that may occur, are less than the assets' carrying values, we recognize impairment charges. Further, it is possible that we may sell an asset for a price below its estimated fair value and record a loss on sale.    

Net Income from Equity Investments in Real Estate

    Net income from equity investments in real estate represents our proportionate share of net income or loss (revenue less expenses) from investments entered into with affiliates or third parties in which we have a noncontrolling interest but over which we exercise significant influence.    

For the three months ended March 31, 2013 as compared to the same period in 2012, net income from equity investments in real estate decreased by $2.0 million, primarily due to our share of non-recurring lease termination income received from the Thomson Broadcast, Veolia Transport, and Marchal Levage (formerly Thales S.A.) jointly-owned investment in February 2012 of $1.7 million.

    Other Income and (Expenses)    Other income and (expenses) generally consists of gains and losses on foreign currency transactions and derivative instruments. We and certain of our foreign consolidated subsidiaries have intercompany debt and/or advances that are not denominated in the relevant entity's functional currency. When the intercompany debt or accrued interest thereon is remeasured against the functional currency of the entity, a gain or loss may result. For intercompany transactions that are of a long-term investment nature, the gain or loss is recognized as a cumulative translation adjustment in Other comprehensive (loss) income. We also recognize gains or losses on foreign currency transactions when we repatriate cash from our foreign investments. In addition, we have certain derivative instruments, including common stock warrants, 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 March 31, 2013, we recognized net other expense of $0.8 million, which was comprised primarily of net unrealized foreign currency transaction losses of $1.5 million, partially offset by net realized foreign currency transaction gains of $0.4 million and net realized gains related to derivatives of $0.3 million. During the comparable prior year period, we recognized net other income of $0.9 million, which was comprised primarily of net unrealized foreign currency transaction gains of $0.9 million and      CPA®:16 - Global 3/31/2013 10-Q - 29        

net realized gains related to derivatives of $0.1 million, partially offset by net realized foreign currency transaction losses of $0.4 million.

   Interest Expense    For the three months ended March 31, 2013 as compared to the same period in 2012, interest expense decreased by $2.9 million, primarily due to the impact of lower interest rates on the variable-rate debt encumbering the properties leased to Carrefour SAS totaling $0.9 million, the amendment to the Credit Agreement executed on August 1, 2012 totaling $0.8 million, and the repayment of several non-recourse mortgage loans during 2012 totaling $0.6 million.    Provision for Income Taxes    For the three months ended March 31, 2013 as compared to the same period in 2012, provision for income taxes increased by $0.8 million, primarily due to back trade taxes incurred by our third-party noncontrolling interest partner totaling $2.4 million, partially offset by trade taxes incurred by our Hellweg 2 investment during the first quarter of 2012 totaling $1.1 million not recurring in the current year period.   

Income (Loss) from Discontinued Operations, Net of Tax

During the three months ended March 31, 2013, we recognized income from discontinued operations of $2.9 million, primarily due to the net gain on sale of real estate totaling $2.7 million from the disposition of four properties.

    During the three months ended March 31, 2012, we recognized a loss from discontinued operations of $4.7 million, primarily due to the net loss on sale of real estate totaling $2.2 million from the disposition of five properties, loss generated from the operations of discontinued properties of $2.0 million, and impairment charges recognized totaling $0.5 million.    

Net Income Attributable to Noncontrolling Interests

    For the three months ended March 31, 2013 as compared to the same period in 2012, net income attributable to noncontrolling interests increased by $0.9 million, primarily due to a decrease in foreign tax estimates attributable to our Hellweg 2 jointly-owned investment affiliates totaling $1.3 million, partially offset by a decrease in the Available Cash Distribution paid to the Special General Partner of $0.7 million.    

Net Loss (Income) Attributable to Redeemable Noncontrolling Interest

    For the three months ended March 31, 2013, we recognized a loss attributable to redeemable noncontrolling interest of $1.9 million, primarily due to back trade taxes paid by our third-party noncontrolling interest partner totaling $2.4 million, offset by income attributable to redeemable noncontrolling interest totaling $0.5 million.   

Net Income Attributable to CPA®:16 - Global Stockholders

For the three months ended March 31, 2013 as compared to the same period in 2012, the resulting net income attributable to CPA®:16 - Global stockholders decreased by $4.6 million.

Modified Funds from Operations ("MFFO")

MFFO is a non-GAAP measure we use to evaluate our business. For a definition of MFFO and a reconciliation to net income attributable to CPA®:16 - Global stockholders, see Supplemental Financial Measures below.

For the three months ended March 31, 2013 as compared to the same period in 2012, MFFO decreased by $0.5 million, primarily due to the decrease in lease revenues, as described above.

     CPA®:16 - Global 3/31/2013 10-Q - 30         Financial Condition    

Sources and Uses of Cash during the Period

    We use the cash flow generated from our investments to meet our operating expenses, service debt, and fund distributions to stockholders. Our cash flows fluctuate period to period 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 proceeds from and the repayment of non-recourse mortgage loans and receipt of lease revenues, the advisor's annual election to receive fees in shares of our common stock or cash, the timing and characterization of distributions from equity investments in real estate, payment to the advisor of the annual installment of deferred acquisition fees and interest thereon in the first quarter, payment of Available Cash Distributions, and changes in foreign currency exchange rates. Despite these fluctuations, we believe that we 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, unused capacity on our line of credit, 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 during the three months ended March 31, 2013 increased by $1.7 million compared to the same period in 2012. An amendment to the advisory agreement in 2012 changed the basis of allocating advisor personnel expenses amongst the Managed REITs from individual time records to trailing four quarters of reported revenues, which increased management expenses for the three months ended March 31, 2013 as compared to the same period in 2012. However, at March 31, 2013, we had not yet paid the advisor for expenses incurred during the three months then ended, resulting in the increase in Net cash provided by operating activities for the three months ended March 31, 2013 as compared to the same period in 2012. During the three months ended March 31, 2013, we used cash flows provided by operating activities of $48.2 million primarily to fund net cash distributions to stockholders of $25.2 million, which excluded $8.8 million in distributions that were reinvested by stockholders through our distribution reinvestment and share purchase plan ("DRIP"), and to pay distributions of $7.9 million to affiliates that hold noncontrolling interests in various entities with us. For 2013, the advisor elected to receive its asset management fees in shares of our common stock and as a result, during the three months ended March 31, 2013 we paid asset management fees of $3.8 million through the issuance of stock rather than in cash.    Investing Activities    Our investing activities are generally comprised of real estate-related transactions (purchases and sales), payment of our annual installment of deferred acquisition fees to the advisor, and capitalized property-related costs. We received $27.9 million in connection with the sale of four properties (Note 13) and $4.4 million in distributions from equity investments in real estate in excess of equity in net income. Funds totaling $3.9 million and $3.0 million were invested in and released from, respectively, lender-held investment accounts. In January 2013, we paid $0.5 million as our annual installment of deferred acquisition fees to the advisor.    Financing Activities    As noted above, during the three months ended March 31, 2013, we paid distributions to stockholders and affiliates that hold noncontrolling interests in various entities with us. We drew down $25.0 million from our line of credit. We also repaid $68.0 million on our line of credit, prepaid several non-recourse mortgages totaling $4.9 million, and made scheduled mortgage principal installments totaling $10.6 million. We received proceeds of $13.0 million from new financing obtained on two properties, $8.8 million as a result of issuing shares through our DRIP, and $2.5 million in contributions from noncontrolling interests.    We maintain a quarterly redemption plan pursuant to which we may, at the discretion of our board of directors, redeem shares of our common stock from stockholders seeking liquidity. During the first quarter of 2013, we received requests to redeem 584,710 shares of our common stock pursuant to our redemption plan and we redeemed these shares at an average price per share of $8.47, which is net of redemption fees, totaling $5.0 million.      CPA®:16 - Global 3/31/2013 10-Q - 31         Summary of Financing    The table below summarizes our non-recourse debt and line of credit (dollars in thousands):                                                                 March 31, 2013     December 31, 2012 Carrying Value Fixed rate                                                  $      1,458,141   $         1,481,089 Variable rate (a)                                                    263,111               306,091 Total                                                       $      1,721,252   $         1,787,180  Percent of Total Debt Fixed rate                                                               85%                   83% Variable rate (a)                                                        15%                   17%                                                                         100%                  100% Weighted-Average Interest Rate at End of Period Fixed rate                                                              5.8%                  5.8% Variable rate (a)                                                       3.2%                  3.1%    

--------------------------------------------------------------------------------   (a)     Variable-rate debt at March 31, 2013 included (i) $100.0 million outstanding under our line of credit; (ii) $70.6 million that has been effectively converted to a fixed rate through interest rate swap derivative instruments; (iii) $68.1 million that was subject to an interest rate cap, but for which the applicable interest rate was below the effective interest rate of the cap at March 31, 2013; (iv) $12.4 million in non-recourse mortgage loan obligations that bore interest at floating rates; and (v) $12.0 million in non-recourse mortgage loan obligations that bore interest at fixed rates but have interest rate reset features that may change the interest rates to then-prevailing market fixed rates (subject to specific caps) at certain points during their terms. At March 31, 2013, we had no interest rate resets or expirations of interest rate swaps or caps scheduled to occur during the next 12 months.    Cash Resources    At March 31, 2013, our cash resources consisted of cash and cash equivalents totaling $64.2 million. Of this amount, $41.2 million, at then-current exchange rates, was held by foreign subsidiaries, but we could be subject to restrictions or significant costs should we decide to repatriate these amounts. We also had a line of credit with unused capacity of $111.5 million, as well as unleveraged properties that had an aggregate carrying value of $103.6 million at March 31, 2013, although there can be no assurance that we would be able to obtain financing for these properties. Our cash resources can be used for working capital needs and other commitments.    Cash Requirements    During the next 12 months, we expect that our cash payments will include paying distributions to our stockholders and to our affiliates that hold noncontrolling interests in our subsidiaries, making scheduled mortgage loan principal payments, as well as other normal recurring operating expenses. No balloon payments on our consolidated mortgage loan obligations are due during the next 12 months; however, our share of balloon payments due during the next 12 months on our unconsolidated jointly-owned investments totals $7.2 million. 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, if at all.    We expect to fund future investments, any capital expenditures on existing properties, and scheduled debt maturities on non-recourse mortgage loans through cash generated from operations, the use of our cash reserves, or unused amounts on our Credit Agreement.      CPA®:16 - Global 3/31/2013 10-Q - 32        

Off-Balance Sheet Arrangements and Contractual Obligations

    The table below summarizes our debt, off-balance sheet arrangements, and other contractual obligations at March 31, 2013 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):                                                       Less than                              More than                                         Total        1 year     1-3 years    3-5 years     5 years Non-recourse debt and line of credit - principal (a) (b)           $ 1,725,930$   45,350$  353,872$  874,784$  451,924 Deferred acquisition fees - principal                                  1,212          426          773           13            - Interest on borrowings and deferred acquisition fees (c)            449,524       93,121      168,363      101,973       86,067 Subordinated disposition fees (d)          1,197            -        1,197            -            - Operating and other lease commitments (e)                           59,065        2,603        4,864        6,189       45,409                                      $ 2,236,928$  141,500$  529,069$  982,959$  583,400

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(a) Excludes unamortized discount, net of $4.7 million (Note 10).

(b) Includes $100.0 million outstanding under our $225.0 million Credit Agreement, which is scheduled to mature on August 1, 2015.

(c) Interest on an unhedged variable-rate debt obligation was calculated using the variable interest rate and balance outstanding at March 31, 2013.

  (d)     Represents amounts that may be payable to the Special General Partner in connection with sales of assets, if minimum stockholder returns are satisfied. There can be no assurance as to whether or when these fees will be paid (Note 3).  (e)      Operating and other lease commitments consist primarily of rent obligations under ground leases and our share of future minimum rents payable pursuant to the advisory agreement for the purpose of leasing office space used for the administration of real estate entities. Amounts are allocated among the Managed REITs based on gross revenues and are adjusted quarterly. Rental obligations under ground leases are inclusive of amounts attributable to noncontrolling interests of approximately $11.7 million.    

Amounts in the table above related to our foreign operations are based on the exchange rate of the local currencies at March 31, 2013, which consisted primarily of the euro. At March 31, 2013, we had no material capital lease obligations for which we were the lessee, either individually or in the aggregate.

    Equity Investments    We have unconsolidated investments that own single-tenant properties net leased to companies. Generally, the underlying investments are jointly-owned with our affiliates. At March 31, 2013, on a combined basis, these investments had total assets and third-party debt of $1.6 billion and $932.2 million, respectively. At that date, our pro rata share of their aggregate debt was $337.9 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 supplemental non-GAAP measures which are uniquely defined by our management. We believe 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 these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures are provided below.    

Funds from Operations ("FFO") and Modified Funds from Operations ("MFFO")

    Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc., ("NAREIT"), an industry trade group, has promulgated a measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to nor a substitute for net income or loss as determined under GAAP.      CPA®:16 - Global 3/31/2013 10-Q - 33         We define FFO consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004, or the White Paper. 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; and after adjustments for unconsolidated partnerships and jointly-owned investments. Adjustments for unconsolidated partnerships and jointly-owned investments are calculated to reflect FFO.    The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, especially if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or is requested or required by lessees for operational purposes in order to maintain the value disclosed. 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. An asset will only be evaluated for impairment if certain impairment indications exist and if the carrying, or book value, exceeds the total estimated undiscounted future cash flows (including net rental and lease revenues, net proceeds on the sale of the property, and any other ancillary cash flows at a property or group level under GAAP) from such asset. Investors should note, however, that determinations of whether impairment charges have been incurred are based partly on anticipated operating performance, because estimated undiscounted future cash flows from a property, including estimated future net rental and lease revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred. While impairment charges are excluded from the calculation of FFO described above, investors are cautioned that, due to the fact that impairments are based on estimated future undiscounted cash flows and the relatively limited term of our operations, it could be difficult to recover any impairment charges. However, FFO and 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 FFO and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO.    Changes in the accounting and reporting promulgations under GAAP (for acquisition fees and expenses from a capitalization/depreciation model to an expensed-as-incurred model) were put into effect in 2009. These other changes to GAAP accounting for real estate subsequent to the establishment of NAREIT's definition of FFO have prompted an increase in cash-settled expenses, such as acquisition fees, that are typically accounted for as operating expenses. Management believes these fees and expenses do not affect our overall long-term operating performance. Publicly registered, non-listed REITs typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operation. In addition, non-listed REITs typically have a limited life with targeted exit strategies after acquisition activity ceases. Due to the above factors and other unique features of publicly registered, non-listed REITs, the Investment Program Association ("IPA"), an industry trade group, has standardized a measure known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered non-listed REITs and which we believe to be another appropriate supplemental measure to reflect the operating performance of a non-listed REIT having the characteristics described above. 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 essentially all of our properties have been acquired. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry. Further, we believe MFFO is useful in comparing the sustainability of our operating performance since our offering and essentially all of our acquisitions are completed with the sustainability of the operating performance of other real estate companies that are not as involved in acquisition activities. Investors are cautioned that MFFO should only be used to assess the sustainability of a company's operating performance after a      CPA®:16 - Global 3/31/2013 10-Q - 34         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 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, as applicable, included in the determination of GAAP net income: 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, nonrecurring 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 which are unrealized and may not ultimately be realized. While we are responsible for managing interest rate, hedge and foreign exchange risk, we retain an outside consultant to review all our hedging agreements. Inasmuch as interest rate hedges are not a fundamental part of our operations, we believe it is appropriate to exclude such infrequent gains and losses in calculating MFFO, as such gains and losses are not reflective of on-going operations.    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. In addition, we view fair value adjustments of derivatives and gains and losses from dispositions of assets as infrequent items or items which are unrealized and may not ultimately be realized, and which are not reflective of on-going operations and are therefore typically adjusted for assessing operating performance.    Our management uses MFFO and the adjustments used to calculate it in order to evaluate our performance against other non-listed 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 our use of MFFO and the adjustments used to calculate it allow us to present our performance in a manner that reflects certain characteristics that are unique to non-listed REITs, such as their limited life, limited and defined acquisition period and targeted exit strategy, and hence that the use of such measures is useful to investors. For example, acquisition costs were 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.    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 and MFFO the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO and MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income or income from continuing operations 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 and 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 or MFFO. In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable      CPA®:16 - Global 3/31/2013 10-Q - 35        

adjustments across the non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO accordingly.

FFO and MFFO were as follows (in thousands):

                                                                  Three Months Ended March 31,                                                                  2013                 2012

Net income attributable to CPA®:16 - Global stockholders $ 2,742

$        7,320 Adjustments: Depreciation and amortization of real property                      22,683               26,510 Impairment charges                                                   9,313                  495 (Gain) loss on sale of real estate                                  (2,701 )              2,191 

Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO: Depreciation and amortization of real property

                       3,661                3,454 Gain on sale of real estate                                              -                 (325 ) Proportionate share of adjustments for noncontrolling interests to arrive at FFO                                          (2,880 )             (3,254 ) Total adjustments                                                   30,076               29,071 FFO - as defined by NAREIT                                          32,818               36,391 Adjustments: Loss on extinguishment of debt                                           -                  506 Other depreciation, amortization and non-cash charges                1,528                 (999 ) Straight-line and other rent adjustments (a)                         1,188               (2,147 ) Acquisition expenses (b)                                               107                  107 Merger expenses (b)                                                      -                   93 Amortization of deferred financing costs                               320                  857 Above- and below-market rent intangible lease amortization, net (c)                                                4,174                4,508 Amortization of premiums on debt investments, net                       78                  628 

Realized (gains) losses on foreign currency, derivatives and other (d)

                                                         (756 )                 84 Unrealized losses on mark-to-market adjustments (e)                    238                   18 

Proportionate share of adjustments to equity in net income of partially owned entities to arrive at MFFO: Other depreciation, amortization and other non-cash charges

                                                                  -                   30 Straight-line and other rent adjustments (a)                          (140 )                113 Gain on extinguishment of debt                                          (2 )                  - Acquisition expenses (b)                                                64                   64 Above- and below-market rent intangible lease amortization, net (c)                                                  925                  925 

Realized (gains) losses on foreign currency, derivatives and other (d)

                                                          (15 )                 25 Proportionate share of adjustments for noncontrolling interests to arrive at MFFO                                           (110 )               (241 ) Total adjustments                                                    7,599                4,571 MFFO (a) (b)                                                $       40,417$       40,962

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(a) Under GAAP, rental receipts are allocated to periods using various

methodologies. This may result in income recognition that is significantly

different from the 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

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.       CPA®:16 - Global 3/31/2013 10-Q - 36        

(b) In evaluating investments in real estate, management differentiates the costs

to acquire the investment from the operations derived from the investment.

Such information would be comparable only for non-listed REITs that have

completed their acquisition activity and have other similar operating

characteristics. By excluding expensed acquisition costs, management believes

MFFO provides useful supplemental information that is comparable for each

type of real estate investment and is consistent with management's analysis

of the investing and operating performance of our properties. Acquisition

fees and expenses include payments to our advisor or third parties.

Acquisition fees and expenses under GAAP are considered operating expenses

and as expenses included in the determination of net income and income from

continuing operations, both of which are performance measures under GAAP. All

paid and accrued acquisition fees and expenses will have negative effects on

returns to stockholders, the potential for future distributions, and cash

flows generated by us, unless earnings from operations or net sales proceeds

from the disposition of properties are generated to cover the purchase price

of the property, these fees and expenses and other costs related to the

property.

(c) 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

provides useful supplemental information on the performance of the real

estate.

(d) Management believes that adjusting for fair value adjustments for derivatives

provides useful information because such fair value adjustments are based on

market fluctuations and may not be directly related or attributable to our

operations.

(e) Management believes that adjusting for mark-to-market adjustments is

appropriate because they are items that may not be reflective of on-going

operations and reflect unrealized impacts on value based only on then current

market conditions, although they may be based upon current operational issues

related to an individual property or industry or general market conditions.

The need to reflect mark-to-market adjustments is a continuous process and is

analyzed on a quarterly and/or annual basis in accordance with GAAP.