##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 001-32162
 
 CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
  Maryland
(State of incorporation)
    
    80-0067704
(I.R.S. Employer Identification No.)50 Rockefeller Plaza 
New York, New York
(Address of principal executive office)
    
    10020
(Zip Code)
 Investor Relations (212) 492-8920
(212) 492-1100
 þ o
 Yes
o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




---



##### 



INDEX
 Page No.PART I  FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Consolidated Balance Sheets
    
    
    2Consolidated Statements of Operations
    
    
    3Consolidated Statements of Comprehensive (Loss) Income
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    35PART II  OTHER INFORMATIONItem 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35Item 6. Exhibits
    
    
    36Signatures
    
    
    37Exhibit 31.1Exhibit 31.2Exhibit 32
  Forward Looking Statements
  CPA ® :16  Global 6/30/2010 10-Q 1




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##### Table of Contents



PART I
 
 Item 1. Financial Statements
 CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 CONSOLIDATED BALANCE SHEETS

(UNAUDITED)
 (in thousands, except share and per share amounts)
 June 30, 2010
    
    
    December 31, 2009AssetsInvestments in real estate:Real estate, at cost (inclusive of amounts attributable to consolidated variable interest
entities (VIEs) of $392,650 and $454,311, respectively)
    
    $
    1,599,832
    
    
    $
    1,696,872Operating real estate, at cost (inclusive of amounts attributable to VIEs of $29,219
for both periods presented
    
    
    84,267
    
    
    
    83,718Accumulated depreciation (inclusive of amounts attributable to VIEs of $31,282
and $30,292, respectively)
    
    
    (132,315
    )
    
    
    (118,833
    )Net investments in properties
    
    
    1,551,784
    
    
    
    1,661,757Real estate under construction
    
    
    73,333
    
    
    
    61,588Net investment in direct financing leases (inclusive of amounts attributable to VIEs of
$47,928 and $52,521, respectively)
    
    
    307,806
    
    
    
    342,055Equity investments in real estate
    
    
    145,651
    
    
    
    158,149Net investments in real estate
    
    
    2,078,574
    
    
    
    2,223,549Notes receivable (inclusive of amounts attributable to VIEs of $287,375 and $337,397,
respectively)
    
    
    316,119
    
    
    
    362,707Cash and cash equivalents (inclusive of amounts attributable to VIEs of $15,020
and $14,199, respectively)
    
    
    68,596
    
    
    
    83,985Intangible assets, net (inclusive of amounts attributable to VIEs of $24,462
and $29,209, respectively)
    
    
    148,224
    
    
    
    162,432Funds in escrow (inclusive of amounts attributable to VIEs of $10,510
and $12,339, respectively)
    
    
    18,212
    
    
    
    21,586Other assets, net (inclusive of amounts attributable to VIEs of $6,700
and $7,908, respectively)
    
    
    33,783
    
    
    
    34,746Total assets
    
    $
    2,663,508
    
    
    $
    2,889,005Liabilities and EquityLiabilities:Non-recourse debt (inclusive of amounts attributable to VIEs of $397,998 and $463,309,
respectively)
    
    $
    1,334,821
    
    
    $
    1,445,889Accounts payable, accrued expenses and other liabilities (inclusive of amounts attributable
to VIEs of $14,759 and $14,189, respectively)
    
    
    35,351
    
    
    
    36,290Prepaid and deferred rental income and security deposits (inclusive of amounts attributable
to VIEs of $10,522 and $12,476, respectively)
    
    
    56,537
    
    
    
    58,063Due to affiliates
    
    
    7,848
    
    
    
    14,193Distributions payable
    
    
    20,548
    
    
    
    20,346Total liabilities
    
    
    1,455,105
    
    
    
    1,574,781Redeemable noncontrolling interests
    
    
    287,374
    
    
    
    337,397Commitments and contingencies (Note 10)Equity:CPA®:16 - Global shareholders equity:Common stock, $0.001 par value; 250,000,000 shares authorized; 132,334,319 and
129,995,172 shares issued, respectively
    
    
    132
    
    
    
    130Additional paid-in capital
    
    
    1,195,452
    
    
    
    1,174,230Distributions in excess of accumulated earnings
    
    
    (252,978
    )
    
    
    (225,462
    )Accumulated other comprehensive (loss) income
    
    
    (25,200
    )
    
    
    5,397917,406
    
    
    
    954,295Less, treasury stock at cost, 8,244,513 and 7,134,071 shares, respectively
    
    
    (75,140
    )
    
    
    (65,636
    )Total CPA®:16 - Global shareholders equity
    
    
    842,266
    
    
    
    888,659Noncontrolling interests
    
    
    78,763
    
    
    
    88,168Total equity
    
    
    921,029
    
    
    
    976,827Total liabilities and equity
    
    $
    2,663,508
    
    
    $
    2,889,005
  CPA ® :16  Global 6/30/2010 10-Q 2




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##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)
 (in thousands, except share and per share amounts)
 Three months ended June 30,
    
    
    Six months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009RevenuesRental income
    
    $
    37,666
    
    
    $
    36,820
    
    
    $
    76,392
    
    
    $
    72,767Interest income from direct financing leases
    
    
    6,476
    
    
    
    6,934
    
    
    
    13,203
    
    
    
    13,597Interest income on notes receivable
    
    
    6,733
    
    
    
    7,050
    
    
    
    13,875
    
    
    
    13,709Other real estate income
    
    
    6,555
    
    
    
    6,153
    
    
    
    12,508
    
    
    
    11,770Other operating income
    
    
    740
    
    
    
    876
    
    
    
    1,349
    
    
    
    1,69858,170
    
    
    
    57,833
    
    
    
    117,327
    
    
    
    113,541Operating ExpensesDepreciation and amortization
    
    
    (11,956
    )
    
    
    (11,436
    )
    
    
    (24,175
    )
    
    
    (22,677
    )Property expenses
    
    
    (7,437
    )
    
    
    (8,520
    )
    
    
    (15,695
    )
    
    
    (16,759
    )Other real estate expenses
    
    
    (4,726
    )
    
    
    (4,596
    )
    
    
    (9,157
    )
    
    
    (9,037
    )General and administrative
    
    
    (1,969
    )
    
    
    (2,081
    )
    
    
    (4,232
    )
    
    
    (4,633
    )Impairment charges
    
    
    
    
    
    
    
    
    
    
    (8,030
    )
    
    
    (15,984
    )(26,088
    )
    
    
    (26,633
    )
    
    
    (61,289
    )
    
    
    (69,090
    )Other Income and ExpensesIncome from equity investments in real estate
    
    
    4,504
    
    
    
    5,329
    
    
    
    9,285
    
    
    
    8,393Other interest income
    
    
    108
    
    
    
    45
    
    
    
    130
    
    
    
    170Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,512Other income and (expenses)
    
    
    216
    
    
    
    1,314
    
    
    
    (525
    )
    
    
    982Interest expense
    
    
    (19,738
    )
    
    
    (19,264
    )
    
    
    (39,550
    )
    
    
    (39,067
    )(14,910
    )
    
    
    (12,576
    )
    
    
    (30,660
    )
    
    
    (23,010
    )Income before income taxes
    
    
    17,172
    
    
    
    18,624
    
    
    
    25,378
    
    
    
    21,441Provision for income taxes
    
    
    (987
    )
    
    
    (1,044
    )
    
    
    (1,961
    )
    
    
    (1,337
    )Income from continuing operations
    
    
    16,185
    
    
    
    17,580
    
    
    
    23,417
    
    
    
    20,104Discontinued Operations(Loss) income from operations of discontinued properties
    
    
    
    
    
    
    (148
    )
    
    
    98
    
    
    
    (107
    )Gain on deconsolidation of a subsidiary
    
    
    
    
    
    
    
    
    
    
    7,082
    
    
    
    Impairment charges
    
    
    
    
    
    
    (5,101
    )
    
    
    
    
    
    
    (5,101
    )(Loss) income from discontinued operations
    
    
    
    
    
    
    (5,249
    )
    
    
    7,180
    
    
    
    (5,208
    )Net Income
    
    
    16,185
    
    
    
    12,331
    
    
    
    30,597
    
    
    
    14,896Less: Net income attributable to noncontrolling interests
    
    
    (1,885
    )
    
    
    (1,244
    )
    
    
    (3,892
    )
    
    
    (5,427
    )Less: Net income attributable to redeemable noncontrolling
interests
    
    
    (6,792
    )
    
    
    (5,738
    )
    
    
    (13,237
    )
    
    
    (11,765
    )Net Income (Loss) Attributable to CPA®:16 - Global
Shareholders
    
    $
    7,508
    
    
    $
    5,349
    
    
    $
    13,468
    
    
    $
    (2,296
    )Earnings (Loss) Per ShareIncome from continuing operations attributable to
CPA®:16 - Global shareholders
    
    $
    0.06
    
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.02(Loss) income from discontinued operations attributable to
CPA®:16 - Global shareholders
    
    
    
    
    
    
    (0.04
    )
    
    
    0.03
    
    
    
    (0.04
    )Net income (loss) attributable to CPA®:16 - Global
shareholders
    
    $
    0.06
    
    
    $
    0.04
    
    
    $
    0.11
    
    
    $
    (0.02
    )Weighted Average Shares Outstanding
    
    
    124,211,608
    
    
    
    122,675,513
    
    
    
    123,912,035
    
    
    
    122,732,345Amounts Attributable to CPA®:16 - Global
ShareholdersIncome from continuing operations, net of tax
    
    $
    7,508
    
    
    $
    10,432
    
    
    $
    9,881
    
    
    $
    2,548(Loss) income from discontinued operations, net of tax
    
    
    
    
    
    
    (5,083
    )
    
    
    3,587
    
    
    
    (4,844
    )Net income (loss)
    
    $
    7,508
    
    
    $
    5,349
    
    
    $
    13,468
    
    
    $
    (2,296
    )Distributions Declared Per Share
    
    $
    0.1656
    
    
    $
    0.1656
    
    
    $
    0.3312
    
    
    $
    0.3309
  CPA ® :16  Global 6/30/2010 10-Q 3




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##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(UNAUDITED)
 (in thousands)
 Three months ended June 30,
    
    
    Six months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net Income
    
    $
    16,185
    
    
    $
    12,331
    
    
    $
    30,597
    
    
    $
    14,896Other Comprehensive (Loss) Income:Foreign currency translation adjustments
    
    
    (50,804
    )
    
    
    40,022
    
    
    
    (85,983
    )
    
    
    (1,110
    )Change in unrealized (loss) gain on derivative instruments
    
    
    (774
    )
    
    
    742
    
    
    
    (1,836
    )
    
    
    (357
    )Change in unrealized gain (loss) on marketable securities
    
    
    21
    
    
    
    (31
    )
    
    
    24
    
    
    
    (28
    )(51,557
    )
    
    
    40,733
    
    
    
    (87,795
    )
    
    
    (1,495
    )Comprehensive (loss) income
    
    
    (35,372
    )
    
    
    53,064
    
    
    
    (57,198
    )
    
    
    13,401Amounts Attributable to Noncontrolling Interests:Net income
    
    
    (1,885
    )
    
    
    (1,244
    )
    
    
    (3,892
    )
    
    
    (5,427
    )Foreign currency translation adjustments
    
    
    4,011
    
    
    
    (4,284
    )
    
    
    7,161
    
    
    
    (330
    )Change in unrealized (loss) gain on derivative instruments
    
    
    (6
    )
    
    
    (31
    )
    
    
    14
    
    
    
    (28
    )Comprehensive loss (income) attributable to noncontrolling
interests
    
    
    2,120
    
    
    
    (5,559
    )
    
    
    3,283
    
    
    
    (5,785
    )Amounts Attributable to Redeemable Noncontrolling
Interests:Net income
    
    
    (6,792
    )
    
    
    (5,738
    )
    
    
    (13,237
    )
    
    
    (11,765
    )Foreign currency translation adjustments
    
    
    29,354
    
    
    
    (19,773
    )
    
    
    50,023
    
    
    
    1,153Comprehensive loss (income) attributable to redeemable
noncontrolling interests
    
    
    22,562
    
    
    
    (25,511
    )
    
    
    36,786
    
    
    
    (10,612
    )Comprehensive (Loss) Income Attributable to
CPA®:16 - Global Shareholders
    
    $
    (10,690
    )
    
    $
    21,994
    
    
    $
    (17,129
    )
    
    $
    (2,996
    )
  CPA ® :16  Global 6/30/2010 10-Q 4




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##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)
 (in thousands)
 Six months ended June 30,2010
    
    
    2009Cash Flows  Operating ActivitiesNet income
    
    $
    30,597
    
    
    $
    14,896Adjustments to net income:Depreciation and amortization including intangible assets and deferred financing
costs
    
    
    24,894
    
    
    
    23,977Straight-line rent adjustments and amortization of rent-related intangibles
    
    
    941
    
    
    
    1,364Income from equity investments in real estate in excess of distributions received
    
    
    (1,720
    )
    
    
    (639
    )Issuance of shares to affiliate in satisfaction of fees due
    
    
    5,876
    
    
    
    5,916Realized (loss) gain on foreign currency transactions and other, net
    
    
    (63
    )
    
    
    760Unrealized loss (gain) on foreign currency and derivative transactions, net
    
    
    588
    
    
    
    (1,742
    )Gain on deconsolidation of a subsidiary (a)
    
    
    (7,082
    )
    
    
    Gain on extinguishment of debt
    
    
    
    
    
    
    (6,512
    )Impairment charges
    
    
    8,030
    
    
    
    21,085Change in other operating assets and liabilities, net
    
    
    1,071
    
    
    
    (1,476
    )Net cash provided by operating activities
    
    
    63,132
    
    
    
    57,629Cash Flows  Investing ActivitiesDistributions received from equity investments in real estate in excess of equity
income
    
    
    2,083
    
    
    
    5,695Contributions to equity investments in real estate
    
    
    
    
    
    
    (71,088
    )Acquisitions of real estate and other capital expenditures
    
    
    (12,413
    )
    
    
    (17,713
    )Funding/purchases of notes receivable
    
    
    (3,224
    )
    
    
    (3,159
    )Release of funds held in escrow for acquisition and construction of real estate
    
    
    20
    
    
    
    6,610Proceeds from sale of real estate
    
    
    
    
    
    
    120Payment of deferred acquisition fees to affiliate
    
    
    (6,261
    )
    
    
    (9,082
    )Net cash used in investing activities
    
    
    (19,795
    )
    
    
    (88,617
    )Cash Flows  Financing ActivitiesDistributions paid
    
    
    (40,782
    )
    
    
    (40,309
    )Distributions paid to noncontrolling interests
    
    
    (20,066
    )
    
    
    (21,827
    )Contributions from noncontrolling interests
    
    
    881
    
    
    
    2,786Proceeds from mortgages and notes payable
    
    
    36,947
    
    
    
    29,000Scheduled payments of mortgage principal
    
    
    (10,287
    )
    
    
    (8,738
    )Prepayment of mortgages and note payable
    
    
    (29,000
    )
    
    
    (32,500
    )Deferred financing costs and mortgage deposits
    
    
    
    
    
    
    (284
    )Proceeds from issuance of shares, net of costs of raising capital
    
    
    15,348
    
    
    
    16,491Purchase of treasury stock
    
    
    (9,504
    )
    
    
    (20,409
    )Net cash used in financing activities
    
    
    (56,463
    )
    
    
    (75,790
    )Change in Cash and Cash Equivalents During the PeriodEffect of exchange rate changes on cash
    
    
    (2,263
    )
    
    
    (1,674
    )Net decrease in cash and cash equivalents
    
    
    (15,389
    )
    
    
    (108,452
    )Cash and cash equivalents, beginning of period
    
    
    83,985
    
    
    
    174,209Cash and cash equivalents, end of period
    
    $
    68,596
    
    
    $
    65,757
 
 (a)
    
    See Note 12 for a description of the non-cash activity related to the deconsolidation.  CPA ® :16  Global 6/30/2010 10-Q 5




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##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note 1. Business
  Note 2. Basis of Presentation
    Basis of Consolidation
    CPA ® :16  Global 6/30/2010 10-Q 6




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##### Table of Contents



Notes to Consolidated Financial Statements
   Acquisition Costs
  Information about International Geographic Areas
  Note 3. Agreements and Transactions with Related Parties
  Asset Management and Performance Fees
  CPA ® :16  Global 6/30/2010 10-Q 7




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##### Table of Contents



Notes to Consolidated Financial Statements
 Transaction Fees
   Other Expenses
  Joint Ventures and Other Transactions with Affiliates
   CPA ® :16  Global 6/30/2010 10-Q 8




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##### Table of Contents



Notes to Consolidated Financial Statements
 Note 4. Net Investments in Properties
 Real Estate
  June 30, 2010
    
    
    December 31, 2009Land
    
    $
    320,854
    
    
    $
    345,347Buildings
    
    
    1,278,978
    
    
    
    1,351,525Less: Accumulated depreciation
    
    
    (124,288
    )
    
    
    (112,385
    )$
    1,475,544
    
    
    $
    1,584,487
  Operating Real Estate
  June 30, 2010
    
    
    December 31, 2009Land
    
    $
    8,296
    
    
    $
    8,296Buildings
    
    
    75,971
    
    
    
    75,422Less: Accumulated depreciation
    
    
    (8,027
    )
    
    
    (6,448
    )$
    76,240
    
    
    $
    77,270
 Real Estate Under Construction
  Other
  Note 5. Equity Investments in Real Estate
  CPA ® :16  Global 6/30/2010 10-Q 9




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##### Table of Contents



Notes to Consolidated Financial Statements
  Ownership Interest at
    
    
    Carrying Value atLessee
    
    June 30, 2010
    
    
    June 30, 2010
    
    
    December 31, 2009U-Haul Moving Partners, Inc. and Mercury Partners, LP
    
    
    31
    %
    
    $
    33,306
    
    
    $
    33,834The New York Times Company
    
    
    27
    %
    
    
    33,236
    
    
    
    33,195Schuler A.G. (a) (b)
    
    
    33
    %
    
    
    20,506
    
    
    
    23,469Hellweg Die Profi-Baumarkte GmbH & Co. KG (Hellweg 1) (a)
    
    
    25
    %
    
    
    16,931
    
    
    
    18,934TietoEnator Plc (a)
    
    
    40
    %
    
    
    7,089
    
    
    
    8,488Police Prefecture, French Government (a)
    
    
    50
    %
    
    
    6,801
    
    
    
    8,268Frontier Spinning Mills, Inc.
    
    
    40
    %
    
    
    6,246
    
    
    
    6,077Pohjola Non-life Insurance Company (a)
    
    
    40
    %
    
    
    5,703
    
    
    
    6,632Actebis Peacock GmbH (a)
    
    
    30
    %
    
    
    4,917
    
    
    
    5,644OBI A.G. (a) (c)
    
    
    25
    %
    
    
    4,302
    
    
    
    6,794Actuant Corporation (a)
    
    
    50
    %
    
    
    2,485
    
    
    
    2,758Consolidated Systems, Inc. (b)
    
    
    40
    %
    
    
    2,113
    
    
    
    2,131Barth Europa Transporte e.K/ Lindenmaier A.G. (a)
    
    
    33
    %
    
    
    1,351
    
    
    
    1,569Thales S.A. (a)
    
    
    35
    %
    
    
    665
    
    
    
    356$
    145,651
    
    
    $
    158,149
 
 (a)
    
    The carrying value of this investment is affected by the impact of fluctuations in the
exchange rate of the Euro.(b)
    
    Represents tenant-in-common interest.(c)
    
    Carrying value of this investment included our share of the net loss on interest rate swap
derivative instruments recognized by the venture.   June 30, 2010
    
    
    December 31, 2009Assets
    
    $
    1,364,673
    
    
    $
    1,504,375Liabilities
    
    
    (900,943
    )
    
    
    (1,003,311
    )Partners/members equity
    
    $
    463,730
    
    
    $
    501,064
 Three months ended June 30,
    
    
    Six months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues
    
    $
    34,464
    
    
    $
    36,602
    
    
    $
    70,494
    
    
    $
    68,775Expenses
    
    
    (20,257
    )
    
    
    (21,876
    )
    
    
    (41,354
    )
    
    
    (42,223
    )Net income
    
    $
    14,207
    
    
    $
    14,726
    
    
    $
    29,140
    
    
    $
    26,552
  CPA ® :16  Global 6/30/2010 10-Q 10




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Equity Investment in Direct Financing Lease Acquired   ®
 Note 6. Fair Value Measurements
  Items Measured at Fair Value on a Recurring Basis
 Fair Value Measurements at June 30, 2010 Using:Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Assets
    
    
    Observable Inputs
    
    
    InputsDescription
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Money market funds
    
    $
    18,264
    
    
    $
    18,264
    
    
    $
    
    
    
    $
    Other securities
    
    
    1,714
    
    
    
    
    
    
    
    
    
    
    
    1,714Derivative assets
    
    
    2,882
    
    
    
    
    
    
    
    265
    
    
    
    2,617$
    22,860
    
    
    $
    18,264
    
    
    $
    265
    
    
    $
    4,331Liabilities:Derivative liabilities
    
    $
    (455
    )
    
    $
    
    
    
    $
    (455
    )
    
    $
    Fair Value Measurements at December 31, 2009 Using:Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Assets
    
    
    Observable Inputs
    
    
    InputsDescription
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Money market funds
    
    $
    49,261
    
    
    $
    49,261
    
    
    $
    
    
    
    $
    Other securities
    
    
    1,851
    
    
    
    
    
    
    
    
    
    
    
    1,851Derivative assets
    
    
    2,228
    
    
    
    
    
    
    
    50
    
    
    
    2,178$
    53,340
    
    
    $
    49,261
    
    
    $
    50
    
    
    $
    4,029Liabilities:Derivative liabilities
    
    $
    (380
    )
    
    $
    
    
    
    $
    (380
    )
    
    $
    
 CPA®:16  Global 6/30/2010 10-Q 11




---



##### Table of Contents



Notes to Consolidated Financial Statements
  Fair Value Measurements Using Significant Unobservable Inputs (Level 3 Only)Three months ended June 30, 2010
    
    
    Three months ended June 30, 2009Other
    
    
    Derivative
    
    
    Total
    
    
    Other
    
    
    Derivative
    
    
    TotalSecurities
    
    
    Assets
    
    
    Assets
    
    
    Securities
    
    
    Assets
    
    
    AssetsBeginning balance
    
    $
    1,775
    
    
    $
    1,974
    
    
    $
    3,749
    
    
    $
    2,119
    
    
    $
    3,494
    
    
    $
    5,613Total gains or losses (realized and unrealized):Included in earnings
    
    
    
    
    
    
    792
    
    
    
    792
    
    
    
    
    
    
    
    703
    
    
    
    703Included in other comprehensive income (loss)
    
    
    21
    
    
    
    (149
    )
    
    
    (128
    )
    
    
    (32
    )
    
    
    176
    
    
    
    144Amortization and accretion
    
    
    (82
    )
    
    
    
    
    
    
    (82
    )
    
    
    (79
    )
    
    
    
    
    
    
    (79
    )Ending balance
    
    $
    1,714
    
    
    $
    2,617
    
    
    $
    4,331
    
    
    $
    2,008
    
    
    $
    4,373
    
    
    $
    6,381The amount of total gains or losses for the
period included in earnings attributable to the
change in unrealized gains or losses relating to
assets still held at the reporting date
    
    $
    
    
    
    $
    792
    
    
    $
    792
    
    
    $
    
    
    
    $
    703
    
    
    $
    703
 Fair Value Measurements Using Significant Unobservable Inputs (Level 3 Only)Six months ended June 30, 2010
    
    
    Six months ended June 30, 2009Other
    
    
    Derivative
    
    
    Total
    
    
    Other
    
    
    Derivative
    
    
    TotalSecurities
    
    
    Assets
    
    
    Assets
    
    
    Securities
    
    
    Assets
    
    
    AssetsBeginning balance
    
    $
    1,851
    
    
    $
    2,178
    
    
    $
    4,029
    
    
    $
    2,192
    
    
    $
    2,973
    
    
    $
    5,165Total gains or losses (realized and unrealized):Included in earnings
    
    
    
    
    
    
    641
    
    
    
    641
    
    
    
    
    
    
    
    1,350
    
    
    
    1,350Included in other comprehensive income
    
    
    24
    
    
    
    (202
    )
    
    
    (178
    )
    
    
    (29
    )
    
    
    50
    
    
    
    21Amortization and accretion
    
    
    (161
    )
    
    
    
    
    
    
    (161
    )
    
    
    (155
    )
    
    
    
    
    
    
    (155
    )Ending balance
    
    $
    1,714
    
    
    $
    2,617
    
    
    $
    4,331
    
    
    $
    2,008
    
    
    $
    4,373
    
    
    $
    6,381The amount of total gains or losses for
the period included
in earnings attributable to the
change in unrealized gains
or losses relating to assets still
held at the reporting date
    
    $
    
    
    
    $
    641
    
    
    $
    641
    
    
    $
    
    
    
    $
    1,350
    
    
    $
    1,350
   June 30, 2010
    
    
    December 31, 2009Carrying Value
    
    
    Fair Value
    
    
    Carrying Value
    
    
    Fair ValueNon-recourse debt
    
    $
    1,334,821
    
    
    $
    1,254,569
    
    
    $
    1,445,889
    
    
    $
    1,286,300Notes receivable
    
    
    316,119
    
    
    
    315,850
    
    
    
    362,707
    
    
    
    363,389
  Items Measured at Fair Value on a Non-Recurring Basis
 CPA®:16  Global 6/30/2010 10-Q  12




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##### Table of Contents



Notes to Consolidated Financial Statements
  Three months ended June 30, 2010
    
    
    Three months ended June 30, 2009Total Fair Value
    
    
    Total Impairment
    
    
    Total Fair Value
    
    
    Total ImpairmentMeasurements
    
    
    Charges
    
    
    Measurements
    
    
    ChargesAssets:Net investments in properties
    
    $
    
    
    
    $
    
    
    
    $
    1,376
    
    
    $
    4,599Intangible assets
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    502$
    
    
    
    $
    
    
    
    $
    1,526
    
    
    $
    5,101Six months ended June 30, 2010
    
    
    Six months ended June 30, 2009Total Fair Value
    
    
    Total Impairment
    
    
    Total Fair Value
    
    
    Total ImpairmentMeasurements
    
    
    Charges
    
    
    Measurements
    
    
    ChargesAssets:Net investments in properties
    
    $
    17,295
    
    
    $
    2,835
    
    
    $
    13,835
    
    
    $
    19,550Net investments in direct financing leases
    
    
    31,705
    
    
    
    5,195
    
    
    
    
    
    
    
    Intangible assets
    
    
    
    
    
    
    
    
    
    
    1,042
    
    
    
    1,572$
    49,000
    
    
    $
    8,030
    
    
    $
    14,877
    
    
    $
    21,122Liabilities:
    
    $
    
    
    
    $
    
    
    
    $
    (31
    )
    
    $
    (37
    )Intangible liabilities
    
    $
    
    
    
    $
    
    
    
    $
    (31
    )
    
    $
    (37
    )
 Note 7. Risk Management and Use of Derivative Financial Instruments
 Risk Management
 Foreign Currency Exchange
 Use of Derivative Financial Instruments
 CPA®:16  Global 6/30/2010 10-Q 13




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##### Table of Contents



Notes to Consolidated Financial Statements
   Derivatives Designated as Hedging
    
    Balance Sheet
    
    Asset Derivatives Fair Value at
    
    
    Liability Derivatives Fair Value atInstruments
    
    Location
    
    June 30, 2010
    
    
    December 31, 2009
    
    
    June 30, 2010
    
    
    December 31, 2009Foreign exchange collar contracts
    
    Other assets
    
    
    180
    
    
    
    
    
    
    
    
    
    
    
    Foreign exchange contracts
    
    Other assets (liabilities)
    
    
    80
    
    
    
    
    
    
    
    
    
    
    
    (143
    )Interest rate swaps
    
    Other liabilities
    
    
    
    
    
    
    
    
    
    
    (455
    )
    
    
    (237
    )260
    
    
    
    
    
    
    
    (455
    )
    
    
    (380
    )Derivatives not Designated as Hedging InstrumentsEmbedded credit derivatives
    
    Other assets
    
    
    1,483
    
    
    
    963
    
    
    
    
    
    
    
    Stock warrants
    
    Other assets
    
    
    1,134
    
    
    
    1,215
    
    
    
    
    
    
    
    Interest rate caps
    
    Other assets
    
    
    5
    
    
    
    50
    
    
    
    
    
    
    
    2,622
    
    
    
    2,228
    
    
    
    
    
    
    
    Total derivatives
    
    
    
    $
    2,882
    
    
    $
    2,228
    
    
    $
    (455
    )
    
    $
    (380
    )
  Amount of Gain (Loss)
    
    
    Amount of GainRecognized in OCI on Derivatives
    
    
    Reclassified from OCI into Income(Effective Portion)
    
    
    (Effective Portion)Three months ended June 30,
    
    
    Three months ended June 30,Derivatives in Cash Flow Hedging Relationships
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Interest
rate caps (a) (b)
    
    $
    12
    
    
    $
    61
    
    
    $
    
    
    
    $
    Interest rate swaps (a)
    
    
    (169
    )
    
    
    227
    
    
    
    
    
    
    
    Foreign
currency forward contracts (a) (c)
    
    
    100
    
    
    
    (160
    )
    
    
    39
    
    
    
    Foreign
currency collars (a) (c)
    
    
    144
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    87
    
    
    $
    128
    
    
    $
    39
    
    
    $
    Amount of Gain (Loss)
    
    
    Amount of GainRecognized in OCI on Derivative
    
    
    Reclassified from OCI into Income(Effective Portion)
    
    
    (Effective Portion)Six months ended June 30,
    
    
    Six months ended June 30,Derivatives in Cash Flow Hedging Relationships
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Interest
rate caps (a) (b)
    
    $
    (26
    )
    
    $
    57
    
    
    $
    
    
    
    $
    Interest rate swaps (a)
    
    
    (219
    )
    
    
    262
    
    
    
    
    
    
    
    Foreign
currency forward contracts (a) (c)
    
    
    223
    
    
    
    (142
    )
    
    
    29
    
    
    
    27Foreign
currency collars (a) (c)
    
    
    180
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    158
    
    
    $
    177
    
    
    $
    29
    
    
    $
    27
 
 (a)
    
    During the three and six months ended June 30, 2010 and 2009, no gains or losses were
reclassified from OCI into income related to ineffective portions of hedging relationships or
to amounts excluded from effectiveness testing.(b)
    
    Includes loss (gain) attributable to noncontrolling interests totaling less than $0.1 million
for both the three months ended June 30, 2010 and 2009 and the six months ended June 30, 2010
and 2009.(c)
    
    (Losses) gains reclassified from OCI into income for contracts that have settled are included
in Other income and (expenses). CPA®:16  Global 6/30/2010 10-Q 14




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##### Table of Contents



Notes to Consolidated Financial Statements
 Amount of Gain (Loss) Recognized in Income on DerivativesDerivatives not in Cash Flow
    
    Location of Gain (Loss)
    
    Three months ended June 30,
    
    
    Six months ended June 30,Hedging Relationships
    
    Recognized in Income
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Embedded credit derivatives (a)
    
    Other income and (expenses)
    
    $
    928
    
    
    $
    446
    
    
    $
    722
    
    
    $
    1,094Stock warrants
    
    Other income and (expenses)
    
    
    (135
    )
    
    
    257
    
    
    
    (81
    )
    
    
    256Total
    
    
    
    $
    793
    
    
    $
    703
    
    
    $
    641
    
    
    $
    1,350
 
 (a)
    
    Includes gains attributable to noncontrolling interests totaling $0.4 million and $0.3
million for the three months ended June 30, 2010 and 2009, respectively, and $0.5 million and
$0.8 million for the six months ended June 30, 2010 and 2009, respectively.  Interest Rate Swaps and Caps
  EffectiveNotional
    
    
    
    
    
    
    Interest
    

    Effective
    
    Expiration
    
    Fair Value atType
    
    Amount
    
    
    Cap Rate
    
    Spread
    
    Rate
    

    Date
    
    Date
    
    June 30, 20101-Month LIBOR
    
    Pay-fixed swap
    
    $
    3,844
    
    
    N/A
    
    N/A
    
    6.7
    %

    2/2008
    
    2/2018
    
    $
    (455
    )
  Ownership
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    EffectiveInterest at
    
    
    
    
    Notional
    
    
    
    
    
    
    
    
    Interest
    
    Effective
    
    Expiration
    
    Fair Value atJune 30, 2010
    
    
    Type
    
    Amount
    
    
    Cap Rate
    
    
    Spread
    
    
    Rate
    
    Date
    
    Date
    
    June 30, 20103-Month LIBOR
    
    
    25.0
    %
    
    Pay-fixed swap
    
    $
    144,495
    
    
    N/A
    
    
    N/A
    
    
    5.0%-5.6%
    
    7/2006-4/2008
    
    10/2015-7/1/2016
    
    $
    (12,322
    )3-Month LIBOR
    
    
    27.3
    %
    
    Interest rate cap
    
    
    117,920
    
    
    4.0
    %
    
    4.8
    %
    
    N/A
    
    8/2009
    
    8/2014
    
    
    853$
    (11,469
    )
 CPA®:16  Global 6/30/2010 10-Q 15




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##### Table of Contents



Notes to Consolidated Financial Statements
 Foreign Currency Contracts
    Embedded Credit Derivatives
 Stock Warrants
 Other
  Portfolio Concentration Risk
 CPA®:16  Global 6/30/2010 10-Q 16




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##### Table of Contents



Notes to Consolidated Financial Statements
   Note 8. Noncontrolling Interests
   CPA®:16 - Global
    
    
    NoncontrollingTotal
    
    
    Shareholders
    
    
    InterestsBalance at January 1, 2009
    
    $
    1,046,605
    
    
    $
    959,896
    
    
    $
    86,709Shares issued
    
    
    22,407
    
    
    
    22,407
    
    
    
    Contributions
    
    
    2,786
    
    
    
    
    
    
    
    2,786Net income (loss)
    
    
    3,131
    
    
    
    (2,296
    )
    
    
    5,427Distributions
    
    
    (49,240
    )
    
    
    (40,401
    )
    
    
    (8,839
    )Change in other comprehensive income (loss)
    
    
    (342
    )
    
    
    (700
    )
    
    
    358Shares repurchased
    
    
    (20,409
    )
    
    
    (20,409
    )
    
    
    Balance at June 30, 2009
    
    $
    1,004,938
    
    
    $
    918,497
    
    
    $
    86,441
 CPA®:16 - Global
    
    
    NoncontrollingTotal
    
    
    Shareholders
    
    
    InterestsBalance at January 1, 2010
    
    
    976,827
    
    
    
    888,659
    
    
    
    88,168Shares issued
    
    
    21,224
    
    
    
    21,224
    
    
    
    Contributions
    
    
    881
    
    
    
    
    
    
    
    881Net income
    
    
    17,360
    
    
    
    13,468
    
    
    
    3,892Distributions
    
    
    (47,987
    )
    
    
    (40,984
    )
    
    
    (7,003
    )Change in other comprehensive income (loss)
    
    
    (37,772
    )
    
    
    (30,597
    )
    
    
    (7,175
    )Shares repurchased
    
    
    (9,504
    )
    
    
    (9,504
    )
    
    
    Balance at June 30, 2010
    
    $
    921,029
    
    
    $
    842,266
    
    
    $
    78,763
 CPA®:16  Global 6/30/2010 10-Q 17




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##### Table of Contents



Notes to Consolidated Financial Statements
 Redeemable Noncontrolling Interests
  2010
    
    
    2009Balance at January 1,
    
    $
    337,397
    
    
    $
    331,841Foreign currency translation adjustment
    
    
    (50,023
    )
    
    
    (1,153
    )Balance at June 30,
    
    $
    287,374
    
    
    $
    330,688
  Note 9. Impairment Charges
   Three months ended June 30,
    
    
    Six months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net investments in properties
    
    $
    
    
    
    $
    
    
    
    $
    2,835
    
    
    $
    15,984Net investment in direct financing leases
    
    
    
    
    
    
    
    
    
    
    5,195
    
    
    
    Total impairment charges included in income from
continuing operations
    
    $
    
    
    
    $
    
    
    
    $
    8,030
    
    
    $
    15,984Impairment charges included in discontinued operations
    
    
    
    
    
    
    5,101
    
    
    
    
    
    
    
    5,101Total impairment charges
    
    $
    
    
    
    $
    5,101
    
    
    $
    8,030
    
    
    $
    21,085
   Note 10. Commitments and Contingencies
  CPA®:16  Global 6/30/2010 10-Q 18




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##### Table of Contents



Notes to Consolidated Financial Statements
 Note 11. Income Taxes
      Note 12. Discontinued Operations
   CPA®:16  Global 6/30/2010 10-Q 19




---



##### Table of Contents



Notes to Consolidated Financial Statements
   Three months ended June 30,
    
    
    Six months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues
    
    $
    
    
    
    $
    1,677
    
    
    $
    348
    
    
    $
    3,383Expenses
    
    
    
    
    
    
    (1,825
    )
    
    
    (250
    )
    
    
    (3,490
    )Gain on deconsolidation of a subsidiary
    
    
    
    
    
    
    
    
    
    
    7,082
    
    
    
    Impairment charges
    
    
    
    
    
    
    (5,101
    )
    
    
    
    
    
    
    (5,101
    )(Loss) Income from discontinued operations
    
    $
    
    
    
    $
    (5,249
    )
    
    $
    7,180
    
    
    $
    (5,208
    )
 CPA®:16  Global 6/30/2010 10-Q 20




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Business Overview
  Financial Highlights
 Three months ended June 30,
    
    
    Six months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Total revenues
    
    $
    58,170
    
    
    $
    57,833
    
    
    $
    117,327
    
    
    $
    113,541Net income (loss) attributable to
CPA®:16  Global shareholders
    
    
    7,508
    
    
    
    5,349
    
    
    
    13,468
    
    
    
    (2,296
    )Cash flow from operating activities
    
    
    
    
    
    
    
    
    
    
    63,132
    
    
    
    57,629Distributions paid
    
    
    20,437
    
    
    
    20,169
    
    
    
    40,782
    
    
    
    40,309Supplemental financial measures:Funds from operations  as adjusted (AFFO)
    
    $
    19,570
    
    
    $
    23,320
    
    
    $
    39,465
    
    
    $
    40,191Adjusted cash flow from operating activities
    
    
    
    
    
    
    
    
    
    
    57,053
    
    
    
    55,573
   ®
     CPA®:16  Global 6/30/2010 10-Q 21




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##### Table of Contents



Changes in Management   ® ® ® ®
 ® ® ®
 ® ®
 Current Trends
 General Economic Environment
 Tenant Defaults
    Foreign Exchange Rates
 CPA®:16  Global 6/30/2010 10-Q 22




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##### Table of Contents



Capital Markets
 Financing Conditions
 Real Estate Sector
 Net Asset Values
  Inflation
 Lease Expirations and Occupancy
  CPA®:16  Global 6/30/2010 10-Q 23




---



##### Table of Contents



Proposed Accounting Changes
 Results of Operations
  Six months ended June 30,2010
    
    
    2009Rental income
    
    $
    76,392
    
    
    $
    72,767Interest income from direct financing leases
    
    
    13,203
    
    
    
    13,597$
    89,595
    
    
    $
    86,364
  Six months ended June 30,Lessee
    
    2010
    
    
    2009Hellweg Die Profi-Baumarkte GmbH & Co. KG (Hellweg 2) (a) (b)
    
    
    17,216
    
    
    
    17,140Telcordia Technologies, Inc.
    
    
    4,803
    
    
    
    4,659Tesco plc (a) (b) (c)
    
    
    3,620
    
    
    
    Nordic Cold Storage LLC
    
    
    3,443
    
    
    
    3,349Berry Plastics Corporation (b)
    
    
    3,413
    
    
    
    3,320Fraikin SAS (a)
    
    
    2,691
    
    
    
    2,845MetoKote Corp., MetoKote Canada Limited and MetoKote de Mexico(a) (d)
    
    
    2,406
    
    
    
    2,311The Talaria Company (Hinckley) (b)(e)
    
    
    2,284
    
    
    
    2,524International Aluminum Corp. and United States Aluminum of Canada Ltd. (a)
    
    
    2,248
    
    
    
    2,246LFD Manufacturing Ltd., IDS Logistics (Thailand) Ltd. and IDS Manufacturing SDN BHD (a)
    
    
    2,099
    
    
    
    1,887Huntsman International, LLC
    
    
    2,002
    
    
    
    2,003Best Brands Corp.
    
    
    1,996
    
    
    
    1,980Ply Gem Industries, Inc. (a)
    
    
    1,959
    
    
    
    1,914Bobs Discount Furniture, LLC
    
    
    1,814
    
    
    
    1,759TRW Vehicle Safety Systems Inc. (d)
    
    
    1,784
    
    
    
    1,784Kings Super Markets Inc.
    
    
    1,732
    
    
    
    1,708Universal Technical Institute of California, Inc.
    
    
    1,700
    
    
    
    1,700Finisar Corporation
    
    
    1,644
    
    
    
    1,644Performance Fibers GmbH(a)
    
    
    1,611
    
    
    
    1,638Dicks Sporting Goods, Inc. (b)
    
    
    1,562
    
    
    
    1,562Other (a) (b) (d)
    
    
    27,568
    
    
    
    28,391$
    89,595
    
    
    $
    86,364
 
 (a)
    
    Amounts are subject to fluctuations in foreign currency exchange rates.(b)
    
    These revenues are generated in consolidated ventures, generally with our affiliates, and
include revenues applicable to noncontrolling interests totaling $21.2 million and $19.5
million for the six months ended June 30, 2010 and 2009, respectively.(c)
    
    This investment was acquired in July 2009.(d)
    
    This tenant operates in the automotive industry. Included in Other are lease revenues from
four additional tenants operating in the automotive industry totaling $3.2 million and $3.5
million for the six months ended June 30, 2010 and 2009, respectively, inclusive of amounts
attributable to noncontrolling interests of $0.3 million and $0.4 million, respectively.(e)
    
    During the second half of 2009, we entered into a lease amendment with the tenant to defer
certain rental payments until April 2010 as a result of the tenants financial difficulties.
In April 2010, the lease was further amended to extend the rental payment deferral period
through August 2010. In connection with a potential sale of this property, during the first
quarter of 2010, we recognized an impairment charge of $8.0 million, inclusive of amounts
attributable to noncontrolling interests of $2.4 million. CPA®:16
 Global 6/30/2010 10-Q 24




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##### Table of Contents



OwnershipInterest at
    
    
    Six months ended June 30,Lessee
    
    June 30, 2010
    
    
    2010
    
    
    2009U-Haul Moving Partners, Inc. and Mercury Partners, L.P. (a)
    
    
    31
    %
    
    $
    16,154
    
    
    $
    14,258The New York Times Company (b)
    
    
    27
    %
    
    
    13,285
    
    
    
    8,401OBI A.G. (c)
    
    
    25
    %
    
    
    8,034
    
    
    
    8,031Hellweg Die Profi-Baumarkte GmbH & Co. KG (a)(c)
    
    
    25
    %
    
    
    7,174
    
    
    
    7,072Pohjola Non-life Insurance Company(c)
    
    
    40
    %
    
    
    4,339
    
    
    
    4,424Police Prefecture, French Government (a)(c)
    
    
    50
    %
    
    
    4,143
    
    
    
    3,761TietoEnator Plc(c)
    
    
    40
    %
    
    
    4,097
    
    
    
    4,111Schuler A.G. (c)
    
    
    33
    %
    
    
    3,081
    
    
    
    3,121Frontier Spinning Mills, Inc.
    
    
    40
    %
    
    
    2,235
    
    
    
    2,230Thales S.A. (c) (d)
    
    
    35
    %
    
    
    2,087
    
    
    
    6,848Actebis Peacock GmbH (c)
    
    
    30
    %
    
    
    1,979
    
    
    
    1,981Consolidated Systems, Inc.
    
    
    40
    %
    
    
    911
    
    
    
    911Actuant Corporation (c)
    
    
    50
    %
    
    
    872
    
    
    
    884Barth Europa Transporte e.K/ Lindenmaier A.G. (c) (e)
    
    
    33
    %
    
    
    612
    
    
    
    1,256$
    69,003
    
    
    $
    67,289
 
 (a)
    
    The increase was due to a CPI-based (or equivalent) rent increase.(b)
    
    We acquired our interest in this investment in March 2009.(c)
    
    Amounts are subject to fluctuations in foreign currency exchange rates.(d)
    
    The venture sold four of the five properties leased to Thales in July 2009.(e)
    
    Lindenmaier operates in the automotive industry and has been operating under bankruptcy
protection since April 2009. In July 2009, the venture entered into an interim lease agreement
with Lindenmaier that provided for substantially lower rental income. In April 2010, the
venture entered into a lease agreement with a new tenant, Barth Europa, at a vacant property
formerly leased to Lindenmaier, which will generate annualized lease revenues of approximately
$0.3 million.  Lease Revenues
  CPA®:16  Global 6/30/2010 10-Q 25




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##### Table of Contents



Depreciation and Amortization
  Property Expenses
  Impairment Charges
   Income from Equity Investments in Real Estate
    Gain on Extinguishment of Debt
  Other Income and (Expenses)
    CPA®:16  Global 6/30/2010 10-Q 26




---



##### Table of Contents



Discontinued Operations
   Net Income (Loss) Attributable to CPA ® :16  Global Shareholders
 ®
 Funds from Operations  as Adjusted (AFFO)
 ®
 Financial Condition
 Sources and Uses of Cash During the Period
  Operating Activities
  Investing Activities
  CPA®:16  Global 6/30/2010 10-Q 27




---



##### Table of Contents



Financing Activities
    Adjusted Cash Flow from Operating Activities
  CPA®:16  Global 6/30/2010 10-Q 28




---



##### Table of Contents



Summary of Financing
  June 30, 2010
    
    
    December 31, 2009BalanceFixed rate
    
    $
    1,299,588
    
    
    $
    1,385,550Variable rate (a)
    
    
    35,233
    
    
    
    60,339Total
    
    $
    1,334,821
    
    
    $
    1,445,889Percent of total debtFixed rate
    
    
    97
    %
    
    
    96
    %Variable rate (a)
    
    
    3
    %
    
    
    4
    %100
    %
    
    
    100
    %Weighted average interest rate at end of periodFixed rate
    
    
    5.9
    %
    
    
    5.9
    %Variable rate (a)
    
    
    5.6
    %
    
    
    6.0
    %
 
 (a)
    
    Variable rate debt at June 30, 2010 included (i) $3.8 million that has been effectively
converted to a fixed rate through an interest rate swap derivative instrument and (ii) $31.4
million in non-recourse mortgage loan obligations that bore interest at fixed rates but that
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 term. At June 30, 2010,
we have one non-recourse mortgage loan obligation with an interest reset feature that is
scheduled to reset to 5.32% in the first quarter of 2011. No other interest rate resets or
expirations of interest rate swaps or caps are scheduled to occur during the next twelve
months. Cash Resources
  Cash Requirements
   CPA®:16  Global 6/30/2010 10-Q 29




---



##### Table of Contents



Off-Balance Sheet Arrangements and Contractual Obligations
  Less than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 year
    
    
    13 years
    
    
    35 years
    
    
    5 yearsNon-recourse debt  Principal (a)
    
    $
    1,332,620
    
    
    $
    22,989
    
    
    $
    53,954
    
    
    $
    200,031
    
    
    $
    1,055,646Deferred acquisition fees  Principal
    
    
    2,700
    
    
    
    1,911
    
    
    
    789
    
    
    
    
    
    
    
    Interest on borrowings and deferred acquisition
fees (b)
    
    
    556,312
    
    
    
    78,903
    
    
    
    152,838
    
    
    
    142,543
    
    
    
    182,028Subordinated disposition fees(c)
    
    
    1,013
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,013Build-to-suit commitments (d)
    
    
    7,171
    
    
    
    7,171
    
    
    
    
    
    
    
    
    
    
    
    Lending commitments (e)
    
    
    977
    
    
    
    977
    
    
    
    
    
    
    
    
    
    
    
    Operating and other lease commitments (f)
    
    
    52,895
    
    
    
    1,711
    
    
    
    3,460
    
    
    
    3,449
    
    
    
    44,275$
    1,953,688
    
    
    $
    113,662
    
    
    $
    211,041
    
    
    $
    346,023
    
    
    $
    1,282,962
 
 (a)
    
    Excludes $2.2 million of unamortized discount on a non-recourse loan which we purchased back
from the lender.(b)
    
    Interest on an unhedged variable rate debt obligation was calculated using the variable
interest rate and balance outstanding at June 30, 2010.(c)
    
    Payable to the advisor, subject to meeting contingencies, in connection with any liquidity
event. There can be no assurance that any liquidity event will be achieved in this time frame.(d)
    
    Represents remaining build-to-suit commitment. Total estimated construction costs for this
project are currently projected to be $70.8 million, of which $63.6 million had been funded at
June 30, 2010.(e)
    
    Represents unfunded amount on a commitment to provide a loan to a developer of a domestic
property. The total commitment for the loan is $19.0 million, of which $18.0 million had been
funded at June 30, 2010.(f)
    
    Operating and other lease commitments consist primarily of rent obligations under ground
leases and our share of future minimum rents payable under an office cost-sharing agreement
with certain affiliates for the purpose of leasing office space used for the administration of
real estate entities. Amounts under the cost-sharing agreement are allocated among the
entities based on gross revenues and are adjusted quarterly. Rental obligations under ground
leases are inclusive of noncontrolling interests of approximately $7.9 million.    CPA®:16  Global 6/30/2010 10-Q 30




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##### Table of Contents



Ownership Interest
    
    
    
    
    
    
    Total ThirdLessee
    
    June 30, 2010
    
    
    Total Assets
    
    
    Party Debt
    
    
    Maturity DateThales S.A. (a)
    
    
    35
    %
    
    $
    25,458
    
    
    $
    22,573
    
    
    
    7/2011U-Haul Moving Partners, Inc. and Mercury Partners, L.P.
    
    
    31
    %
    
    
    295,337
    
    
    
    162,279
    
    
    
    5/2014Actuant Corporation (a)
    
    
    50
    %
    
    
    15,572
    
    
    
    10,124
    
    
    
    5/2014TietoEnator Plc(a)
    
    
    40
    %
    
    
    83,475
    
    
    
    63,763
    
    
    
    7/2014The New York Times Company
    
    
    27
    %
    
    
    240,789
    
    
    
    117,920
    
    
    
    9/2014Pohjola Non-life Insurance Company (a)
    
    
    40
    %
    
    
    88,394
    
    
    
    72,466
    
    
    
    1/2015Hellweg Die Profi-Baumarkte GmbH & Co. KG (Hellweg 1)
(a)
    
    
    25
    %
    
    
    166,288
    
    
    
    88,790
    
    
    
    5/2015Actebis Peacock GmbH (a)
    
    
    30
    %
    
    
    44,529
    
    
    
    27,048
    
    
    
    7/2015Frontier Spinning Mills, Inc.
    
    
    40
    %
    
    
    39,029
    
    
    
    23,146
    
    
    
    8/2016Consolidated Systems, Inc.
    
    
    40
    %
    
    
    16,869
    
    
    
    11,454
    
    
    
    11/2016Barth Europa Transporte e.K/ Lindenmaier A.G. (a)
    
    
    33
    %
    
    
    15,337
    
    
    
    10,724
    
    
    
    10/2017OBI A.G. (a)
    
    
    25
    %
    
    
    177,664
    
    
    
    144,495
    
    
    
    3/2018Police Prefecture, French Government (a)
    
    
    50
    %
    
    
    92,408
    
    
    
    76,773
    
    
    
    8/2020Schuler A.G. (a)
    
    
    33
    %
    
    
    63,524
    
    
    
    
    
    
    
    N/A$
    1,364,673
    
    
    $
    831,555
 
 (a)
    
    Dollar amounts shown are based on the applicable exchange rate of the foreign currency at
June 30, 2010. Supplemental Financial Measures
  Funds from Operations  as Adjusted
   CPA®:16  Global 6/30/2010 10-Q 31




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##### Table of Contents



Three months ended June 30,
    
    
    Six months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
(loss) attributable to CPA®:16 - Global shareholders
    
    $
    7,508
    
    
    $
    5,349
    
    
    $
    13,468
    
    
    $
    (2,296
    )Adjustments:Depreciation and amortization of real property
    
    
    11,941
    
    
    
    11,766
    
    
    
    24,067
    
    
    
    23,381Proportionate share of adjustments to equity in net income of partially owned
entities to arrive at FFO:Depreciation and amortization of real property
    
    
    1,800
    
    
    
    2,345
    
    
    
    3,761
    
    
    
    4,573Proportionate share of adjustments for noncontrolling interests to arrive at FFO
    
    
    (9,050
    )
    
    
    (6,905
    )
    
    
    (5,028
    )
    
    
    (4,653
    )Total adjustments
    
    
    4,691
    
    
    
    7,206
    
    
    
    22,800
    
    
    
    23,301FFO  as defined by NAREIT
    
    
    12,199
    
    
    
    12,555
    
    
    
    36,268
    
    
    
    21,005Adjustments:Gain on deconsolidation of subsidiary
    
    
    
    
    
    
    
    
    
    
    (7,082
    )
    
    
    Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,512
    )Other depreciation, amortization and non-cash charges
    
    
    (629
    )
    
    
    (1,304
    )
    
    
    (81
    )
    
    
    (1,742
    )Straight-line and other rent adjustments
    
    
    357
    
    
    
    1,019
    
    
    
    694
    
    
    
    1,364Impairment charges
    
    
    
    
    
    
    5,101
    
    
    
    8,030
    
    
    
    21,085Proportionate share of adjustments to equity in net income of partially owned
entities to arrive at AFFO:Other depreciation, amortization and non-cash charges
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    (122
    )Straight-line and other rent adjustments
    
    
    (37
    )
    
    
    38
    
    
    
    (151
    )
    
    
    84Impairment charges
    
    
    
    
    
    
    987
    
    
    
    
    
    
    
    987Proportionate share of adjustments for noncontrolling interests to arrive at AFFO
    
    
    7,679
    
    
    
    4,923
    
    
    
    1,786
    
    
    
    4,042Total adjustments
    
    
    7,371
    
    
    
    10,765
    
    
    
    3,197
    
    
    
    19,186AFFO
    
    $
    19,570
    
    
    $
    23,320
    
    
    $
    39,465
    
    
    $
    40,191
 Adjusted Cash Flow from Operating Activities
   CPA®:16  Global 6/30/2010 10-Q 32




---



##### Table of Contents



Six months ended June 30,2010
    
    
    2009Cash flow provided by operating activities
    
    $
    63,132
    
    
    $
    57,629Adjustments:Distributions received from equity investments in real estate in excess of equity income, net
    
    
    2,084
    
    
    
    4,708Distributions paid to noncontrolling interests, net
    
    
    (6,121
    )
    
    
    (8,440
    )Changes in working capital
    
    
    (2,042
    )
    
    
    1,676Adjusted cash flow from operating activities
    
    $
    57,053
    
    
    $
    55,573Distributions declared
    
    $
    41,040
    
    
    $
    40,612
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Market Risk
   Interest Rate Risk
    CPA®:16  Global 6/30/2010 10-Q 33




---



##### Table of Contents



2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    Total
    
    
    Fair valueFixed rate debt
    
    $
    10,948
    
    
    $
    24,416
    
    
    $
    26,412
    
    
    $
    29,378
    
    
    $
    88,296
    
    
    $
    1,120,138
    
    
    $
    1,299,588
    
    
    $
    1,219,341Variable rate debt
    
    $
    267
    
    
    $
    579
    
    
    $
    665
    
    
    $
    712
    
    
    $
    798
    
    
    $
    32,212
    
    
    $
    35,233
    
    
    $
    35,228
  Foreign Currency Exchange Rate Risk
    Other
  CPA®:16  Global 6/30/2010 10-Q 34




---



##### Table of Contents



Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  
 PART II
 
 Item 2. Unregistered Sales of Equity Securities
  CPA®:16  Global 6/30/2010 10-Q 35




---



##### Table of Contents



Issuer Purchases of Equity Securities:
  Maximum number (orTotal number of shares
    
    
    approximate dollar value)purchased as part of
    
    
    of shares that may yet beTotal number of
    
    
    Average price
    
    
    publicly announced
    
    
    purchased under the2010 Period
    

shares purchased (a)
    
    
    paid per share
    
    

plans or programs (a)
    
    

plans or programs (a)April
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AMay
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AJune
    
    
    533,218
    
    
    $
    8.56
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    533,218
 
 (a)
    
    Represents shares of our common stock purchased pursuant to our redemption plan. In December
2003, we announced a redemption plan under which we may elect to redeem shares at the request
of our shareholders, subject to certain conditions and limitations. The maximum amount of
shares purchasable by us in any period depends on a number of factors and is at the discretion
of our board of directors. The redemption plan will terminate if and when our shares are
listed on a national securities market. 
 Item 6. Exhibits
 Exhibit No.
    
    Description
    
    Method of Filing31.1
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith31.2
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith32
    
    
    Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith
 CPA®:16  Global 6/30/2010 10-Q 36




---



##### Table of Contents



SIGNATURES
  Corporate Property Associates 16  Global IncorporatedDate 8/13/2010
    By:
    /s/ Mark J. DeCesarisMark J. DeCesarisManaging Director and Chief Financial Officer
(Principal Financial Officer)Date 8/13/2010
    By:
    /s/ Thomas J. Ridings, Jr.Thomas J. Ridings, Jr.Executive Director and Chief Accounting Officer
(Principal Accounting Officer) CPA®:16  Global 6/30/2010 10-Q 37




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description
    
    Method of Filing31.1
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith31.2
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith32
    
    
    Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith
 CPA®:16  Global 6/30/2010 10-Q 38