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1. Why should I add an investment like CPA®:16 - Global to my portfolio?
2. What are the risks involved in an investment in CPA®:16 - Global?
3. Will hedging be used for currency risk?
4. What is CPA®:16 - Global's geographic focus?
5. Will CPA®:16 - Global use leverage?
6. Can anyone invest in CPA®:16 - Global?
7. What are your liquidity strategies?
8. What happens if I should decide to sell my investment?
9. Can CPA®:16 - Global distributions be used for dollar cost averaging?
10. Is there a distribution reinvestment program?
11. What factors can affect my distribution rate and investment return?
12. How are my distributions tax deferred?
13. When will I get my tax information?
14. What is the minimum investment?
15. Will I be notified about how my investment is doing?
16. Who is the transfer agent for CPA®:16 - Global?
17. Will stock certificates be issued?
18. When are distributions paid?
1. Why should I add an investment like CPA®:16 - Global to my portfolio?- Proper diversification is critical to a well thought out investment strategy. Longer-term assets like real estate, that historically tend to move without regard to stocks and bonds, can act as portfolio stabilizers and reduce overall portfolio risk. In addition, the success of CPA®:16 – Global is not dependent on the performance of the stock market. You may want to consult with your financial advisor about how CPA®:16 – Global can help you achieve your financial objectives.
2. What are the risks involved in an investment in CPA®:16 - Global?- As with any investment, there are many risks associated with an investment in CPA®:16 – Global. You should read the detailed list of risks in the “Risk Factors” section of the prospectus. In particular, you should consider the following:
- The value of the properties we purchase may go down.
- The amount of any distributions we make is uncertain.
- If you have to sell your shares, you will most likely have to sell them for less than $10 per share.
- W. P. Carey may be subject to some conflicts of interest.
3. Will hedging be used for currency risk?- Our real estate investments outside the United States will be made primarily in Euros and British Pounds, although currencies of other developed European countries may be included. While mortgage financing will match the currency with which a property is acquired, our equity in the property will be subject to changes in the value of the U.S. dollar relative to the currency used to acquire a property. Though the long-term movement of European currencies relative to the U.S. dollar is varied, there has been no trend of appreciation or depreciation lasting longer than 6 years during the last 30-years of data, and the Fund’s long-term leases (averaging 15 to 20 years) will likely “sit out” a number of currency rallies and declines. It is possible that upon the sale of a property or the return of the exchange of foreign currency into dollars, there could be a loss or gain from currency fluctuations. In addition, the value of the funds available to make quarterly distributions will fluctuate with the value of the currencies used to make the foreign investments. Generally, we will not trade or “hedge” against currency movements. If the dollar gains against currencies in which we collect rent, we will receive fewer dollars; while a declining dollar will bolster our cash flow as measured in U.S. dollars.
4. What is CPA®:16 - Global's geographic focus?- The majority of our investments will be in the United States. For the balance we are focused on executing transactions in the developed economics of Europe, primarily the Eurozone (Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, The Netherlands, Austria, Portugal, Finland) and the United Kingdom.
5. Will CPA®:16 - Global use leverage?- CPA®:16 – Global will utilize non-recourse, fixed-rate, long-term financing in local currency denominations. We expect to use approximately 50% leverage to acquire properties in the United States and 75% leverage to acquire properties in Europe. Perhaps because European commercial real estate has produced steady, consistent appreciation over the long term, it is traditionally leveraged more highly than is real estate in the United States. Past CPA® funds have utilized a higher level of financing on their European acquisitions, and the overall level of non-recourse mortgage financing in CPA®:16 – Global will exceed that of the U.S. dominated CPA® funds.
European inflation and interest rates have fallen to low levels in recent years. As expectations for rental growth began to wane during 2001, real estate prices declined and yields began to increase. This development, in combination with lower financing costs, resulted in positive yield spreads. We expect CPA®:16 – Global to produce a high after-tax yield by taking advantage of the leverage available in the current low-interest rate environment to capture positive yield spreads.
6. Can anyone invest in CPA®:16 - Global?- CPA®:16 – Global is designed for investors looking for current income, long-term growth, tax deferral benefits and/or portfolio diversification benefits. Of course, there can be no assurance that these objectives will be achieved. Investors should understand that CPA®:16 – Global is designed to be a long-term investment and investors may not be able to sell their investment. In addition, minimum suitability standards have been established for investors that generally require an investor have a combined gross annual income of $45,000 and a net worth of $45,000 or a net worth of $150,000. Your state or broker-dealer may have different suitability requirements. Please consult the prospectus or ask your financial advisor to determine your suitability.
7. What are your liquidity strategies?- It is our goal to provide liquidity for CPA®:16 – Global shares. We may accomplish this by listing shares or providing some other form of liquidity, including through the redemption plan. If CPA®:16 – Global does not provide liquidity generally within eight to 12 years after proceeds from this offering are fully invested, we will sell the properties, market conditions permitting.
8. What happens if I should decide to sell my investment?- Investors who need to get out before CPA®:16 – Global’s liquidation strategy is fully implemented are likely to receive less than the underlying value of their investment at the time of sale. If the need to liquidate your investment should arise, please contact our Investor Relations department at 1-800-WP CAREY and a representative will help you find a buyer on a best efforts basis, either through CPA®:16 – Global (which may, through our Redemption Plan described in the CPA®:16 – Global Prospectus, periodically use excess working capital to purchase shares) or through selected secondary market firms.Shares redeemed through CPA®:16 – Global will be subject to a surrender charge. Please consult the prospectus for details about the Redemption Plan. The Board of Directors of CPA®:16 – Global, at its sole discretion, may amend or suspend the Redemption Plan at any time. Before selling shares, you may want to consult with your financial advisor concerning any change in your portfolio strategy.
9. Can CPA®:16 - Global distributions be used for dollar cost averaging?- Yes. Many investors have their CPA®:16 – Global deposited directly into investment accounts or mutual funds. Simply fill out the appropriate account information in Section 5 (the “Distribution Payment Options” section) of the order form.
10. Is there a distribution reinvestment program?- Yes. Shareholders who participate in the CPA®:16 – Global Distribution Reinvestment and Share Purchase Plan will be able to reinvest their quarterly distributions and purchase shares at net asset value. The plan offers shareholders a convenient and cost effective way for them to increase their investment in CPA®:16 – Global. Participants will receive quarterly statements that will track the shares purchased with the proceeds of their distributions.
11. What factors can affect my distribution rate and investment return?- Changes in the financial strength of CPA®:16 – Global’s tenants, including any bankruptcy, may affect the tenants’ ability to pay rent and, in turn, CPA®:16 – Global’s ability to continue making distribution payments or increasing distribution payments. Such changes have caused some previous CPA® funds to experience at times a reduction in cash flow and/or an increase in administration expenses. In addition, a reduction in cash flow may affect CPA®:16 – Global’s ability to make mortgage payments. This may lead to a loss of some or all of the principal invested in the affected property, due to foreclosure, if there has been a decline in the underlying real estate value. Other factors affecting distribution rate and investment return include the value of the U.S. dollar relative to the currencies in which we receive our revenues, the interest rate which can be earned by remaining cash not yet invested in real estate, the rate at which such cash can be invested into real estate, changes in market rates for leases and the nature and amount of negotiated rent increases.
12. How are my distributions tax deferred?- Most of the tax deferral arises from depreciation. The difference between your distributions and the taxable income reported on your 1099 is called nontaxable income and represents your tax deferral. You will not pay taxes on that portion of your distributions until the properties are eventually sold for a profit or you sell your shares for a profit. In the early years of the fund, while CPA®:16 – Global is still purchasing real estate, tax deferral will be limited. However, we anticipate that as the portfolio matures and the total depreciation increases, you will benefit from some degree of tax deferral as well as the conversion from ordinary income to capital gains tax rates.
13. When will I get my tax information?- Your 1099 tax information will be mailed to you by January 31 of each year.
14. What is the minimum investment?- Generally, the minimum investment in CPA®:16 – Global is $2,000 (200 shares). Your state or broker-dealer may have different suitability requirements. Please consult the prospectus or ask your financial advisor to determine your suitability.
15. Will I be notified about how my investment is doing?- Investors will receive periodic updates on the performance of their investment in CPA®:16 – Global, including:
- Four detailed quarterly distribution reports
- An Annual Report
- A 1099 report and tax summary
16. Who is the transfer agent for CPA®:16 - Global?- The transfer agent is Phoenix American Financial Services, Inc., located at 2401 Kerner Boulevard, San Rafael, CA 94901-5529.They can be reached at their website: www.phxa.com/wpc or by calling 1-888-241-3737. To ensure that any account changes are made promptly and accurately, all changes including shareholder address, ownership type and distribution mailing address should be directed to the transfer agent.
17. Will stock certificates be issued?- No stock certificates will be issued by CPA®:16 – Global. Ownership will be in book entry form as recorded on the books of the CPA®:16 – Global by the transfer agent. At the time an investment is made, shareholders will receive a statement acknowledging receipt of their funds for investment in CPA®:16 – Global.
18. When are distributions paid?- Distributions are generally paid by the fifteenth day of January, April, July and October.
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