| Dear Financial Advisor, As COVID-19 continues to have a significant impact on the global economy, we are closely monitoring its effect on all aspects of CPA:18’s portfolio. Primarily due to the long-term leases and strong credits of the net lease portfolio critical to our investment strategy, the CPA:18 portfolio has held up relatively well during the early stages of the pandemic. Given the significant uncertainty around the duration and impact of the crisis, we remain cautious. We are actively engaging with tenants and third-party managers of the operating properties regarding their business operations, liquidity, ability to pay rent and their financial position. CPA:18’s portfolio is diversified across property type, geography and industry so it is not overexposed to a particular industry or geographic region. CPA:18 received approximately 83% of contractual base rent due in the second quarter and approximately 90% of net lease contractual base rent due in July. The net lease portfolio includes exposure to hotel and student housing, two sectors significantly impacted by the pandemic. CPA:18’s net lease hotel assets, representing 7% of the portfolio based on Stabilized NOI, were effected immediately, with approximately $3.0 million of uncollected rent for the six months ended June 30, 2020. Other tenant industries may still be impacted over the longer-term as the outbreak is expected to have a continued adverse effect on market conditions for the foreseeable future. Long-term Liquidity In light of the uncertainty due to COVID-19 and the current stage of CPA:18’s lifecycle, we believe it is prudent to preserve cash and have made several difficult decisions to manage long-term liquidity and balance sheet flexibility: – As previously communicated, CPA:18’s Board of Directors reduced the second quarter 2020 distribution rate to $0.0625 per Class A share and $0.0438 per Class C share, equating to 2.50% for Class A shares and 1.87% for Class C shares on an annual basis.1 – Additionally, the Board of Directors recently updated the redemption program, limiting quarterly redemptions to the amount reinvested by stockholders in our distribution reinvestment plan. Furthermore, if the cash available for the redemption program is insufficient to satisfy all redemption requests or if the 5% Limit is reached, then we will prioritize qualifying special circumstance redemption requests (i.e., death, disability, receipt of long term care), with the remaining redemption requests to be redeemed on a pro rata basis. These policy changes to our redemption program are effective immediately and will be applied to currently pending requests. Requests not fulfilled in one quarter will automatically be carried forward to the next quarter (unless such request is revoked) and processed in accordance with the above. Decisions like these—those that impact investors—are not taken lightly but are done with a focus on maximizing value to preserve flexibility so that we may provide shareholders with a variety of exit options when markets recover and stabilize. We will continue to monitor the economic outlook and the financial performance of the portfolio and will make decisions in a manner that we believe preserves and protects shareholders’ investments. Net Asset Value as of June 30, 2020 CPA:18’s quarterly estimated Net Asset Values per share (NAVs) as of June 30, 2020, based in part on a third party appraisal provided by Robert A. Stanger & Co. Inc., were determined to be $8.41 for both Class A and Class C shares, a 1.4% increase from the prior NAVs of $8.29 as of March 31, 2020. – The increase in NAVs is primarily due to the impact of foreign exchange fluctuations, specifically, the exchange rates on June 30, 2020, the date of the valuation. – As of that date, the portfolio consisted of 47 net-leased properties with a weighted average lease term of 9.2 years and an occupancy rate of 98.7%, in addition to 70 operating properties and 12 development properties. We continue to proactively manage CPA:18’s diversified portfolio to enhance cash flow, maximize portfolio value and provide long-term value for CPA:18 shareholders: |
| Total Returns per $10,000 Invested2 |
| Class A Shares – Without DRIP$12,651 Class A Shares – With DRIP$13,563 |
| Class C Shares – Without DRIP$12,928 Class C Shares – With DRIP$13,749 |
| For additional information regarding the calculation of the NAV, please see the Form 8-K filed by CPA:18 with the Securities and Exchange Commission on September 1, 2020 at www.cpa18global.comor www.sec.gov. You may also contact our Investor Relations Department at 1 (800) WP CAREY (972-2739). As always, we thank you for your ongoing confidence and support as we continue to implement our 45+ year philosophy of Investing for the Long Run®. With best regards, Jason E. FoxChief Executive Officer |
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TC116684(0920)1