UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-13779

W. P. CAREY & CO. LLC

(Exact name of registrant as specified in its charter)

Delaware		13-3912578
(State of incorporation)		(I.R.S. Employer Identification No.)
50 Rockefeller Plaza
New York, New York		10020
(Address of principal executive offices)		(Zip code)

Registrant’s telephone numbers, including area code:
Investor Relations (212) 492-8920
(212) 492-1100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of exchange on which registered
Listed Shares, No Par Value		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

As of June 30, 2010, the aggregate market value of the registrants’ Listed Shares held by non-affiliates was $743.6 million.

As of February 14, 2011, there are 39,505,273 Listed Shares of registrant outstanding.

The registrant incorporates by reference its definitive Proxy Statement with respect to its 2011 Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission within 120 days following the end of its fiscal year, into Part III of this Annual Report on Form 10-K.

 

 

TABLE OF CONTENTS

PART I
Item 1. Business			2
Item 1A. Risk Factors			13
Item 1B. Unresolved Staff Comments			19
Item 2. Properties			19
Item 3. Legal Proceedings			19
Item 4. Removed and Reserved			19
PART II			19
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			19
Item 6. Selected Financial Data			21
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			45
Item 8. Financial Statements and Supplementary Data			47
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			97
Item 9A. Controls and Procedures			97
Item 9B. Other Information			97
PART III			98
Item 10. Directors, Executive Officers and Corporate Governance			98
Item 11. Executive Compensation			98
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			98
Item 13. Certain Relationships and Related Transactions, and Director Independence			98
Item 14. Principal Accounting Fees and Services			98
PART IV			99
Item 15. Exhibits, Financial Statement Schedules			99
SIGNATURES			101
Exhibit 21.1
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

Forward-Looking Statements

This Annual Report on Form 10-K, including Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of Part II of this Report, contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. It is important to note that our actual results could be materially different from those projected in such forward-looking statements. You should exercise caution in relying on forward-looking statements as they involve known and unknown risks, uncertainties and other factors that may materially affect our future results, performance, achievements or transactions. Information on factors which could impact actual results and cause them to differ from what is anticipated in the forward-looking statements contained herein is included in this Report as well as in our other filings with the Securities and Exchange Commission (the “SEC”), including but not limited to those described in Item 1A. Risk Factors of this Report. We do not undertake to revise or update any forward-looking statements. Additionally, a description of our critical accounting estimates is included in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Report.

W. P. Carey 2010 10-K — 1

PART I

Item 1.		Business.

(a) General Development of Business

Overview:

W. P. Carey & Co. LLC (“W. P. Carey” and, together with its consolidated subsidiaries and predecessors, “we”, “us” or “our”) provides long-term sale-leaseback and build-to-suit transactions for companies worldwide and manages a global investment portfolio. We invest primarily in commercial properties domestically and internationally that are each triple-net leased to single corporate tenants, which requires each tenant to pay substantially all of the costs associated with operating and maintaining the property. We also earn revenue as the advisor to publicly owned, non-actively traded real estate investment trusts (“REITs”), which are sponsored by us under the Corporate Property Associates brand name (the “CPA^® REITs”) and that invest in similar properties. We are currently the advisor to the following CPA^® REITs: Corporate Property Associates 14 Incorporated (“CPA^®:14”), Corporate Property Associates 15 Incorporated (“CPA^®:15”), Corporate Property Associates 16 — Global Incorporated (“CPA^®:16 — Global”) and Corporate Property Associates 17 — Global Incorporated (“CPA^®:17 — Global”).

We are also the advisor to Carey Watermark Investors Incorporated (“Carey Watermark”), which we formed in March 2008 for the purpose of acquiring interests in lodging and lodging-related properties. A registration statement to sell up to $1.0 billion of common stock of Carey Watermark was declared effective by the Securities and Exchange Commission (the “SEC”) in September 2010. We are currently fundraising for Carey Watermark, however Carey Watermark has had no investments or significant operating activity as of the date of this Report.

Most of our properties were either acquired as a result of our consolidation with certain affiliated Corporate Property Associates limited partnerships or subsequently acquired from other CPA^® REIT programs in connection with the provision of liquidity to shareholders of those REITs, as further described below. Because our advisory agreements with each of the existing CPA^® REITs require that we use our best efforts to present to them a continuing and suitable program of investment opportunities that meet their investment criteria, we generally provide investment opportunities to these funds first and earn revenues from transaction and asset management services performed on their behalf. Our principal focus on our owned real estate portfolio in recent years has therefore been on enhancing the value of our existing properties.

Under the advisory agreements with the CPA^® REITs, we manage the CPA^® REITs’ portfolios of real estate investments, for which we earn asset-based management and performance revenue, and we structure and negotiate investments and debt placement transactions for them, for which we earn structuring revenue. We also receive a percentage of distributions of available cash from CPA^®:17 — Global’s operating partnership. In addition, we earn incentive and disposition revenue and receive other compensation in connection with providing liquidity alternatives to CPA^® REIT shareholders. The CPA^® REITs also reimburse us for certain costs, primarily broker-dealer commissions paid on their behalf and marketing and personnel costs. As a result of electing to receive certain payments for services in shares, we also hold ownership interests in the CPA^® REITs.

We were formed as a limited liability company under the laws of Delaware on July 15, 1996. We commenced operations on January 1, 1998 by combining the limited partnership interests of nine CPA^® partnerships, at which time we listed on the New York Stock Exchange under the symbol “WPC.” As a limited liability company, we are not subject to federal income taxation as long as we satisfy certain requirements relating to our operations and pass through any tax liabilities or benefits to our shareholders; however, certain of our subsidiaries are engaged in investment management operations and are subject to United States (“U.S.”) federal, state and local income taxes, and some of our subsidiaries may also be subject to foreign taxes.

Our principal executive offices are located at 50 Rockefeller Plaza, New York, NY 10020, and our telephone number is (212) 492-1100. At December 31, 2010, we employed 170 individuals through our wholly-owned subsidiaries.

Significant Developments during 2010 include:

Acquisition Activity — During 2010, we structured investments on behalf of the CPA^® REITs totaling $1.0 billion and entered into several investments for our owned real estate portfolio totaling $76.8 million. International investments comprised 43% of these investments. Amounts are based on the exchange rate of the foreign currency at the date of acquisition, as applicable.

Fundraising Activities — Since beginning fundraising for CPA^®:17 — Global in December 2007, we have raised more than $1.4 billion on its behalf through the date of this Report. Included in this amount is $593.1 million that we raised during 2010 and $84.8 million that we have raised so far in 2011 through the date of this Report. We earn a wholesaling fee of up to $0.15 per share sold, which we use, along with any retained portion of selected dealer revenue, to cover underwriting costs incurred in connection with CPA^®:17 — Global’s offering and are reimbursed for marketing and personnel costs incurred in raising capital on behalf of CPA^®:17 — Global, subject to certain limitations.

W. P. Carey 2010 10-K — 2

CPA^®:17 — Global has filed a registration statement with the SEC for a possible continuous public offering of up to an additional $1.0 billion of common stock, which we currently expect will commence after the initial public offering terminates. We refer to the possible public offering as the “follow-on offering.” There can be no assurance that CPA^®:17 — Global will actually commence the follow-on offering or successfully sell the full number of shares registered. The initial public offering for CPA^®:17 — Global will terminate on the earlier of the date on which the registration statement for the follow-on offering becomes effective or May 2, 2011.

Financing Activity — During 2010, we obtained mortgage financing totaling $626.1 million on behalf of the CPA^® REITs and $70.3 million for our owned real estate portfolio, including financing for new transactions and refinancing of maturing debt. Amounts are based on the exchange rate of the foreign currency at the date of financing, as applicable.

Impairment Charges — During 2010, we recorded impairment charges on our owned portfolio totaling $15.4 million. We currently estimate that the CPA^® REITs will record impairment charges aggregating approximately $40.7 million of which our proportionate share is $3.0 million for 2010. Our cash distributions from the CPA^® REITs are not affected by the impairment charges recognized by them.

Proposed Merger of Affiliates — On December 13, 2010, two of the CPA^® REITs we manage, CPA^®:14 and CPA^®:16 — Global, entered into a definitive agreement pursuant to which CPA^®:14 will merge with and into a subsidiary of CPA^®:16 — Global, subject to the approval of the shareholders of CPA^®:14 (the “Proposed Merger”). In connection with this Proposed Merger, CPA^®:16 — Global filed a registration statement with the SEC, which has not been declared effective by the SEC as of the date of this Report. Special shareholder meetings for both CPA^®:14 and CPA^®:16 — Global are currently expected to be scheduled during the first half of 2011 to obtain CPA^®:14 shareholder approval of the Proposed Merger and the alternate merger described below, and CPA^®:16 — Global shareholder approval of the alternate merger, the UPREIT reorganization described below, and a charter amendment to increase the number of authorized shares of CPA^®:16 — Global in order to ensure that it will have sufficient shares to issue in the Proposed Merger. The alternate merger is intended to provide an alternate tax-efficient transaction if the amount of cash to be received by CPA^®:14 shareholders in the Proposed Merger could cause the Proposed Merger to be a taxable transaction. The closing of the Proposed Merger is also subject to customary closing conditions, as well as the closing of the CPA^®:14 asset sales described below. If the Proposed Merger is approved, we currently expect that the closing will occur in the second quarter of 2011, although there can be no assurance of such timing.

In connection with the Proposed Merger, we have agreed to purchase three properties from CPA^®:14, in which we already have a joint venture interest, for an aggregate purchase price of $32.1 million, plus the assumption of approximately $64.7 million of indebtedness. These properties all have remaining lease terms of less than 8 years, which are shorter than the average lease term of CPA^®:16 — Global’s portfolio of properties. Consequently, CPA^®:16 — Global required that these assets be sold by CPA^®:14 prior to the Proposed Merger. This asset sale to us and the sale of three other properties to another affiliate, CPA^®:17 — Global (the “CPA^®:14 Asset Sales”), are contingent upon the approval of the Proposed Merger by the shareholders of CPA^®:14.

If the Proposed Merger is consummated, we expect to earn revenues of $31.2 million in connection with the termination of the advisory agreements with CPA^®:14 and $21.3 million of subordinated disposition revenues. In addition, based on our ownership of 8,018,456 shares of CPA^®:14 at December 31, 2010, we expect to receive approximately $8.0 million as a result of a special $1.00 cash distribution to be paid by CPA^®:14 to its shareholders, in part from the proceeds of the CPA^®:14 Asset Sales, immediately prior to the Proposed Merger, as described below. We have agreed to elect to receive stock of CPA^®:16 — Global in respect of our shares of CPA^®:14 if the Proposed Merger is consummated. Carey Asset Management (“CAM”), our subsidiary that acts as the advisor to the CPA^® REITs, has also agreed to waive any acquisition fees payable by CPA^®:16 — Global under its advisory agreement with CAM in respect of the properties being acquired in the Proposed Merger and has also agreed to waive any disposition fees that may subsequently be payable by CPA^®:16 — Global upon a sale of such assets.

In the Proposed Merger, CPA^®:14 shareholders will be entitled to receive $11.50 per share, the "Merger Consideration," which is equal to the estimated net asset value ("NAV") of CPA^®:14 as of September 30, 2010. The Merger Consideration will be paid to shareholders of CPA^®:14, at their election, in either cash or a combination of the $1.00 per share special cash distribution and 1.1932 shares of CPA^®:16 - Global common stock, which equates to $10.50 based on the $8.80 per share NAV of CPA^®:16 - Global as of September 30, 2010. We computed these NAVs internally, relying in part upon a third-party valuation of each company’s real estate portfolio and indebtedness as of September 30, 2010. The board of directors of each of CPA^®:16 — Global and CPA^®:14 have the ability, but not the obligation, to terminate the transaction if more than 50% of the shareholders of CPA^®:14 elect to receive cash in the Proposed Merger. Assuming that holders of 50% of CPA^®:14’s outstanding stock elect to receive cash in the Proposed Merger, then the maximum cash required by CPA^®:16 — Global to purchase these shares would be approximately $416.1 million, based on the total shares of CPA^®:14 outstanding at December 31, 2010. If the cash on hand and available to CPA^®:14 and CPA^®:16 — Global, including the proceeds of the CPA^®:14 Asset Sales and a new $300.0 million senior credit facility of CPA^®:16 — Global, is not sufficient to enable CPA^®:16 — Global to fulfill cash elections in the Proposed Merger by CPA^®:14 shareholders, we have agreed to purchase a sufficient number of shares of CPA^®:16 — Global stock from CPA^®:16 — Global to enable it to pay such amounts to CPA^®:14 shareholders.

W. P. Carey 2010 10-K — 3

We currently expect to receive our $31.2 million termination fee in shares of CPA^®:14, which will then be exchanged at our election into shares of CPA^®:16 — Global in order to facilitate this transaction. In addition, we currently expect to use the special $1.00 per share cash distribution received from our ownership of CPA^®:14 shares, the post-tax proceeds from the disposition revenues, cash on hand, and amounts available under our line of credit to finance our potential obligations in connection with the Proposed Merger and the CPA^®:14 Asset Sales, as necessary.

In connection with the Proposed Merger, CPA^®:16 — Global proposes to implement an UPREIT reorganization. The proposed UPREIT reorganization is an internal reorganization of CPA^®:16 — Global into an umbrella partnership real estate investment trust, known as an UPREIT, to hold substantially all of its assets in an operating partnership, which is how CPA^®:17 — Global is currently structured. While the asset management fees to be paid by CPA^®:16 — Global to CAM are expected to decline as a result of the UPREIT reorganization, the pre-tax fees will be paid in a more tax-efficient manner and will result in a higher level of after-tax cash flow received by CAM.

(b) Financial Information About Segments

Refer to Note 18 in the accompanying consolidated financial statements for financial information about segments.

(c) Narrative Description of Business

Business Objectives and Strategy

We have two primary business segments, investment management and real estate ownership. These segments are each described below. Our objective is to increase shareholder value and earnings through expansion of our investment management operations and prudent management of our owned real estate assets.

Investment Management

We earn revenue as the advisor to the CPA^® REITs. Under the advisory agreements with the CPA^® REITs, we perform various services, including but not limited to the day-to-day management of the CPA^® REITs and transaction-related services. The advisory agreements allow us to elect to receive restricted stock for any revenue due from a CPA^® REIT.

Because of limitations on the amount of non-real estate-related income that may be earned by a limited liability company that is taxed as a publicly traded partnership, our investment management operations are currently conducted primarily through taxable subsidiaries.

From time to time, we explore alternatives for expanding our investment management operations beyond advising the CPA^® REITs. Any such expansion could involve the purchase of properties or other investments as principal, either for our owned portfolio or with the intention of transferring such investments to a newly-created fund, as well as the sponsorship of one or more funds to make investments other than primarily net lease investments.

Asset Management Revenue

Under the terms of the advisory agreements for CPA^®:14, CPA^®:15 and CPA^®:16 — Global, we earn asset management revenue totaling 1% per annum of average invested assets, which is calculated according to the advisory agreements for each CPA^® REIT. A portion of this asset management revenue is contingent upon the achievement of specific performance criteria for each CPA^® REIT, which is generally defined to be a cumulative distribution return for shareholders of the CPA^® REIT. For CPA^®:14, CPA^®:15 and CPA^®:16 — Global, this performance revenue is generally equal to 0.5% of the average invested assets of the CPA^® REIT. For CPA^®:17 — Global, we earn asset management revenue ranging from 0.5% of average market value for long-term net leases and certain other types of real estate investments up to 1.75% of average equity value for certain types of securities. For CPA^®:17 — Global, we do not earn performance revenue, but we receive up to 10% of distributions of available cash from its operating partnership. If CPA^®:16 — Global’s UPREIT reorganization is approved, we will no longer earn performance revenue from CPA^®:16 — Global but will instead receive up to 10% of distributions of available cash from its newly-formed operating partnership. We seek to increase our asset management revenue and performance revenue by increasing real estate-related assets under management, both as the CPA^® REITs make new investments and from organizing new investment entities. Such revenue may also increase, or decrease, based on changes in the appraised value of the real estate assets of the individual CPA^® REITs. Assets under management, and the resulting revenue earned by us, may also decrease if investments are disposed of, either individually or in connection with the liquidation of a CPA^® REIT.

W. P. Carey 2010 10-K — 4

Structuring Revenue

Under the terms of the advisory agreements, we earn revenue in connection with structuring and negotiating investments for the CPA^® REITs, which we call acquisition revenue. Under each of the advisory agreements, we may receive acquisition revenue of up to an average of 4.5% of the total cost of all investments made by each CPA^® REIT. A portion of this revenue (generally 2.5%) is paid to us when the transaction is completed, while the remainder (generally 2%) is payable to us in equal annual installments ranging from three to eight years, provided the relevant CPA^® REIT meets its performance criterion. Unpaid installments bear interest at annual rates ranging from 5% to 7%. For certain types of non-long term net lease investments acquired on behalf of CPA^®:17 — Global, initial acquisition revenue may range from 0% to 1.75% of the equity invested plus the related acquisition revenue, with no deferred acquisition revenue being earned. We may also be entitled, subject to CPA^® REIT board approval, to loan refinancing revenue of up to 1% of the principal amount refinanced in connection with structuring and negotiating investments. This loan refinancing revenue, together with the acquisition revenue, is referred to as structuring revenue.

Other Revenue

We may also earn revenue related to the disposition of properties, subject to subordination provisions, which will only be recognized as the relevant conditions are met. Such revenue may include subordinated disposition revenue of no more than 3% of the value of any assets sold, payable only after shareholders have received back their initial investment plus a specified preferred return, and subordinated incentive revenue of 15% of the net cash proceeds distributable to shareholders from the disposition of properties, after recoupment by shareholders of their initial investment plus a specified preferred return. We may also, in connection with the termination of the advisory agreements for CPA^®:14, CPA^®:15 and CPA^®:16 — Global, be entitled to a termination payment based on the amount by which the fair value of a CPA^® REITs’ properties, less indebtedness, exceeds investors’ capital plus a specified preferred return. CPA^®:17 — Global and, if the UPREIT reorganization is approved by CPA^®:16 — Global’s shareholders, CPA^®:16 — Global, will have the right, but not the obligation, upon certain terminations to repurchase our interests in their operating partnerships at fair market value. We will not receive a termination payment in circumstances where we receive subordinated incentive revenue.

In past years, we have earned substantial disposition and incentive or termination revenue in connection with providing liquidity to CPA^® REIT shareholders. In general, we begin evaluating liquidity alternatives for CPA^® REIT shareholders about eight years after a CPA^® REIT has substantially invested the net proceeds received in its initial public offering. These liquidity alternatives may include listing the CPA^® REITs shares on a national securities exchange, selling the assets of the CPA^® REIT or merging the affected CPA^® REIT with another entity, which could include another CPA^® REIT. However, the timing of liquidity events depends on market conditions and may also depend on other factors, including approval of the proposed course of action by the independent directors, and in some instances the shareholders, of the affected CPA^® REIT, and may occur well after the eighth anniversary of the date that the net proceeds of an offering have been substantially invested. Because of these factors, CPA^® REIT liquidity events have not typically taken place every year. In consequence, given the relatively substantial amounts of disposition revenue, as compared with the ongoing revenue earned from asset management and structuring investments, income from this business segment may be significantly higher in those years where a liquidity event takes place. If the Proposed Merger between CPA^®:14 and CPA^®:16 — Global is approved by the shareholders and the other closing conditions are satisfied, we currently expect that the transaction will be completed in the second quarter of 2011, although there can be no assurance of such timing.

The CPA^® REITs reimburse us for certain costs, primarily broker-dealer commissions paid on behalf of the CPA^® REITs and marketing and personnel costs. The CPA^® REITs also reimburse us for many of our costs associated with the evaluation of transactions on their behalf that are not completed. Marketing and personnel costs are apportioned based on the assets of each entity. These reimbursements may be substantial. These reimbursements, together with asset management revenue payable by a specific CPA^® REIT, may be subject to deferral or reduction if they exceed a specified percentage of that CPA^® REITs income or invested assets. We also earn a wholesaling fee from CPA^®:17 — Global of up to $0.15 per share sold, which we use, along with any retained portion of the selected dealer revenue, to cover other underwriting costs incurred in connection with CPA^®:17 — Global’s offering.

Effective September 15, 2010, we entered into an advisory agreement with Carey Watermark to perform certain services, including managing Carey Watermark’s offering and its overall business, identification, evaluation, negotiation, purchase and disposition of lodging-related properties and the performance of certain administrative duties. We are currently fundraising for Carey Watermark; however, as of December 31, 2010, Carey Watermark had no investments or significant operating activity. Costs incurred on behalf of Carey Watermark totaled $3.4 million through December 31, 2010. We anticipate being reimbursed for all or a portion of these costs in accordance with the terms of the advisory agreement if the minimum offering proceeds are raised.

Equity Investments in CPA^® REITs

As discussed above, we may elect to receive certain of our revenues from the CPA^® REITs in restricted shares of those entities. At December 31, 2010, we owned 9.2% of the outstanding shares of CPA^®:14, 7.1% of the outstanding shares of CPA^®:15, 5.6% of the outstanding shares of CPA^®:16 — Global and 0.6% of the outstanding shares of CPA^®:17 — Global.

W. P. Carey 2010 10-K — 5

Real Estate Ownership

We own and invest in commercial properties in the U.S. and the European Union that are then leased to companies, primarily on a single-tenant, triple-net leased basis. While our acquisition of new properties is constrained by our obligation to provide a continuing and suitable investment program to the CPA^® REITs, we seek to maximize the value of our existing portfolio through prudent management of our real estate assets, which may involve follow-on transactions, dispositions and favorable lease modifications, as well as refinancing of existing debt. In connection with providing liquidity alternatives to CPA^® REIT shareholders, we may acquire additional properties from the liquidating CPA^® REIT, as we did during 2006 and plan to do in 2011 with the CPA^®:14 Asset Sales in connection with the Proposed Merger of CPA^®:14 and CPA^®:16 — Global. We have also acquired properties and interests in properties through tax-free exchanges and as part of joint ventures with the CPA^® REITs. We may also, in the future, seek to increase our portfolio by making investments, including non-net lease investments and investments in emerging markets, that may not meet the investment criteria of the CPA^® REITs, particularly investments that are not current-income oriented. See Our Portfolio below for an analysis of our portfolio at December 31, 2010.

No tenant at any of our consolidated investments represented more than 10% of our total lease revenues from our real estate ownership during 2010.

The Investment Strategies, Financing Strategies, Asset Management, Competition and Environmental Matters sections described below pertain to both our investment management and real estate ownership segments.

Investment Strategies

The following description of our investment process applies to investments we make on behalf of the CPA^® REITs. In general, we would expect to follow a similar process in connection with any investments in triple-net lease, single-tenant commercial properties we may make directly, but we are not required to do so.

In analyzing potential investments, we review all aspects of a transaction, including tenant and real estate fundamentals, to determine whether a potential investment and lease can be structured to satisfy the CPA^® REITs’ investment criteria. In evaluating net lease transactions, we generally consider, among other things, the following aspects of each transaction:

Tenant/Borrower Evaluation — We evaluate each potential tenant or borrower for its creditworthiness, typically considering factors such as management experience, industry position and fundamentals, operating history, and capital structure, as well as other factors that may be relevant to a particular investment. We seek opportunities in which we believe the tenant may have a stable or improving credit profile or credit potential that has not been recognized by the market. In evaluating a possible investment, the creditworthiness of a tenant or borrower often will be a more significant factor than the value of the underlying real estate, particularly if the underlying property is specifically suited to the needs of the tenant; however, in certain circumstances where the real estate is attractively valued, the creditworthiness of the tenant may be a secondary consideration. Whether a prospective tenant or borrower is creditworthy will be determined by our investment department and the investment committee, as described below. Creditworthy does not mean “investment grade.”

Properties Important to Tenant/Borrower Operations — We generally will focus on properties that we believe are essential or important to the ongoing operations of the tenant. We believe that these properties provide better protection generally as well as in the event of a bankruptcy, since a tenant/borrower is less likely to risk the loss of a critically important lease or property in a bankruptcy proceeding or otherwise.

Diversification — We attempt to diversify the CPA^® REIT portfolios to avoid dependence on any one particular tenant, borrower, collateral type, geographic location or tenant/borrower industry. By diversifying these portfolios, we seek to reduce the adverse effect of a single under-performing investment or a downturn in any particular industry or geographic region. While we have not endeavored to maintain any particular standard of diversity in our owned portfolio, we believe that our owned portfolio is reasonably well diversified (see Our Portfolio below).

Lease Terms — Generally, the net leased properties in which the CPA^® REITs and we invest will be leased on a full recourse basis to the tenants or their affiliates. In addition, we seek to include a clause in each lease that provides for increases in rent over the term of the lease. These increases are fixed or tied generally to increases in indices such as the Consumer Price Index (“CPI”). In the case of retail stores and hotels, the lease may provide for participation in gross revenues of the tenant at the property above a stated level. Alternatively, a lease may provide for mandated rental increases on specific dates, and we may adopt other methods in the future.

W. P. Carey 2010 10-K — 6

Collateral Evaluation — We review the physical condition of the property, and conduct a market evaluation to determine the likelihood of replacing the rental stream if the tenant defaults or of a sale of the property in such circumstances. We also generally engage a third party to conduct, or require the seller to conduct, Phase I or similar environmental site assessments (including a visual inspection for the potential presence of asbestos) in an attempt to identify potential environmental liabilities associated with a property prior to its acquisition. If potential environmental liabilities are identified, we generally require that identified environmental issues be resolved by the seller prior to property acquisition or, where such issues cannot be resolved prior to acquisition, require tenants contractually to assume responsibility for resolving identified environmental issues post-closing and provide indemnification protections against any potential claims, losses or expenses arising from such matters. Although we generally rely on our own analysis in determining whether to make an investment on behalf of the CPA^® REITs, each real property to be purchased by them will be appraised by an independent appraiser. The contractual purchase price (plus acquisition fees, but excluding acquisition expenses, for properties acquired on behalf of the CPA^® REITs) for a real property we acquire for ourselves or on behalf of a CPA^® REIT will not exceed its appraised value. The appraisals may take into consideration, among other things, the terms and conditions of the particular lease transaction, the quality of the lessee’s credit and the conditions of the credit markets at the time the lease transaction is negotiated. The appraised value may be greater than the construction cost or the replacement cost of a property, and the actual sale price of a property if sold may be greater or less than the appraised value. In cases of special purpose real estate, a property is examined in light of the prospects for the tenant/borrower’s enterprise and the financial strength and the role of that asset in the context of the tenant’s overall viability. Operating results of properties and other collateral may be examined to determine whether or not projected income levels are likely to be met. We will also consider factors particular to the laws of foreign countries, in addition to the risks normally associated with real property investments, when considering an investment outside the U.S.

Transaction Provisions to Enhance and Protect Value — We attempt to include provisions in the leases that we believe may help protect an investment from changes in the operating and financial characteristics of a tenant that may affect its ability to satisfy its obligations to the CPA^® REIT or reduce the value of the investment. Such provisions include requiring our consent to specified tenant activity, requiring the tenant to provide indemnification protections, and requiring the tenant to satisfy specific operating tests. We may also seek to enhance the likelihood of a tenant’s lease obligations being satisfied through a guaranty of obligations from the tenant’s corporate parent or other entity or a letter of credit. This credit enhancement, if obtained, provides additional financial security. However, in markets where competition for net lease transactions is strong, some or all of these provisions may be difficult to negotiate. In addition, in some circumstances, tenants may retain the right to repurchase the property leased by the tenant. The option purchase price is generally the greater of the contract purchase price and the fair market value of the property at the time the option is exercised.

Other Equity Enhancements — We may attempt to obtain equity enhancements in connection with transactions. These equity enhancements may involve warrants exercisable at a future time to purchase stock of the tenant or borrower or their parent. If warrants are obtained, and become exercisable, and if the value of the stock subsequently exceeds the exercise price of the warrant, equity enhancements can help achieve the goal of increasing investor returns.

As other opportunities arise, we may also seek to expand the CPA^® REIT portfolios to include other types of real estate-related investments, such as:

•

equity investments in real properties that are not long-term net leased to a single-tenant and may include partially leased properties, multi-tenanted properties, vacant or undeveloped properties and properties subject to short-term net leases, among others;

•

mortgage loans secured by commercial real properties;

•

subordinated interests in first mortgage real estate loans, or B Notes;

•

mezzanine loans related to commercial real estate, which are senior to the borrower’s equity position but subordinated to other third-party financing;

•

commercial mortgage-backed securities, or CMBS; and

•

equity and debt securities (including preferred equity and other higher-yielding structured debt and equity investments) issued by companies that are engaged in real-estate-related businesses, including other REITs.

To date, our investments on behalf of the CPA^® REITs have not included significant amounts of these types of investments.

Investment Committee — We have an investment committee that provides services to the CPA^® REITs and may provide services to us. Our investment department, under the oversight of our chief investment officer, is primarily responsible for evaluating, negotiating and structuring potential investment opportunities. Before a property is acquired by a CPA^® REIT, the transaction is generally reviewed by the investment committee. The investment committee is not directly involved in originating or negotiating potential investments but instead functions as a separate and final step in the investment process. We place special emphasis on having experienced individuals serve on our investment committee and, subject to limited exceptions, generally do not invest in a transaction on behalf of the CPA^® REITs unless the investment committee approves it. The investment committee may delegate its authority, such as to investment advisory committees with specialized expertise in the particular geographic market, like our Asia Advisory Committee for potential investments in China. However, we do not currently expect that the investments delegated to these advisory committees will account for a significant portion of the investments we make in the near term.

W. P. Carey 2010 10-K — 7

In addition, the investment committee may at the request of our board of directors or executive committee also review any initial investment in which we propose to engage directly, although it is not required to do so. Our board of directors or executive committee may also determine that certain investments that may not meet the CPA^® REITs’ investment criteria (particularly transactions in emerging markets and investments that are not current income oriented) may be acceptable to us. For transactions that meet the investment criteria of more than one CPA^® REIT, our chief investment officer may allocate the investment to one of the CPA^® REITs or among two or more of the CPA^® REITs. In cases where two or more CPA^® REITs (or one or more CPA^® REITs and us) will hold the investment, a majority of the independent directors of each CPA^® REIT investing in the property must also approve the transaction.

The following people currently serve on our investment committee:

•

Nathaniel S. Coolidge, Chairman — Former senior vice president and head of the bond and corporate finance department of John Hancock Mutual Life Insurance (currently known as John Hancock Life Insurance Company). Mr. Coolidge’s responsibilities included overseeing its entire portfolio of fixed income investments.

•

Axel K.A. Hansing — Currently serving as a senior partner at Coller Capital, Ltd., a global leader in the private equity secondary market, and responsible for investment activity in parts of Europe, Turkey and South Africa.

•

Frank J. Hoenemeyer — Former vice chairman and chief investment officer of the Prudential Insurance Company of America. As chief investment officer, he was responsible for all of Prudential Insurance Company of America’s investments including stocks, bonds and real estate.

•

Jean Hoysradt — Currently serving as the chief investment officer of Mousse Partners Limited, an investment office based in New York.

•

Dr. Lawrence R. Klein — Currently serving as professor emeritus of economics and finance at the University of Pennsylvania and its Wharton School. Recipient of the 1980 Nobel Prize in economic sciences and former consultant to both the Federal Reserve Board and the President’s Council of Economic Advisors.

•

Richard C. Marston — Currently the James R.F. Guy professor of economics and finance at the University of Pennsylvania and its Wharton School.

•

Nick J.M. van Ommen — Former chief executive officer of the European Public Real Estate Association (EPRA), currently serves on the supervisory boards of several companies, including Babis Vovos International Construction SA, a listed real estate company in Greece, Intervest Retail and Intervest Offices, listed real estate companies in Belgium, BUWOG / ESG, a residential leasing and development company in Austria and IMMOFINANZ, a listed real estate company in Austria.

•

Dr. Karsten von Köller — Currently chairman of Lone Star Germany GMBH, a US private equity firm, Chairman of the Supervisory Board of Düsseldorfer Hypothekenbank AG and Vice Chairman of the Supervisory Boards of IKB Deutsche Industriebank AG, Corealcredit Bank AG and MHB Bank AG.

Messrs. Coolidge, Klein and von Köller also serve as members of our board of directors.

We are required to use our best efforts to present a continuing and suitable investment program to the CPA^® REITs but we are not required to present to the CPA^® REITs any particular investment opportunity, even if it is of a character which, if presented, could be taken by one or more of the CPA^® REITs.

Self-Storage Investments

In November 2006, we formed a subsidiary, Carey Storage Management LLC (“Carey Storage”), for the purpose of investing in self-storage real estate properties and their related businesses within the U.S. In January 2009, Carey Storage completed a transaction whereby it received cash proceeds, plus a commitment to invest additional equity, from a third party (the “Investor”) to fund the purchase of self-storage assets in the future in exchange for a 60% interest in its self-storage portfolio. During 2010, Carey Storage amended its agreement with the Investor to, among other things; remove a contingent purchase option held by Carey Storage to repurchase the Investor’s interest in the venture at fair value. Further information about current Carey Storage activity is described in Part II, Item 8, Note 4. Net Investments in Properties — Operating Real Estate.

W. P. Carey 2010 10-K — 8

Our Portfolio

At December 31, 2010, we owned and managed 955 properties domestically and internationally, including our owned portfolio. Our portfolio was comprised of our full or partial ownership interest in 164 properties, substantially all of which were triple-net leased to 75 tenants, and totaled approximately 14 million square feet (on a pro rata basis) with an occupancy rate of approximately 89%. Our portfolio has the following property and lease characteristics:

Geographic Diversification

Information regarding the geographic diversification of our properties at December 31, 2010 is set forth below (dollars in thousands):

		Consolidated Investments								Equity Investments in Real Estate (b)
		Annualized				% of Annualized				Annualized				% of Annualized
		Contractual				Contractual				Contractual				Contractual
		Minimum				Minimum				Minimum				Minimum
Region		Base Rent (a)				Base Rent				Base Rent (a)				Base Rent
United States
South		$	24,897				37	%		$	3,019				12	%
West			19,002				28				2,113				8
Midwest			10,755				16				1,630				6
East			5,984				8				6,575				26
Total U.S.			60,638				89				13,337				52
International
Europe (c)			7,423				11				12,446				48
Total		$	68,061				100	%		$	25,783				100	%

Property Diversification

Information regarding our property diversification at December 31, 2010 is set forth below (dollars in thousands):

		Consolidated Investments								Equity Investments in Real Estate (b)
		Annualized				% of Annualized				Annualized				% of Annualized
		Contractual				Contractual				Contractual				Contractual
		Minimum				Minimum				Minimum				Minimum
Property Type		Base Rent (a)				Base Rent				Base Rent (a)				Base Rent
Office		$	25,472				38	%		$	9,717				38	%
Industrial			20,656				30				5,254				20
Warehouse/Distribution			11,252				17				7,520				29
Retail			5,725				8				—				—
Other Properties (c)			4,956				7				3,292				13
Total		$	68,061				100	%		$	25,783				100	%

W. P. Carey 2010 10-K — 9

Tenant Diversification

Information regarding our tenant diversification at December 31, 2010 is set forth below (dollars in thousands):

		Consolidated Investments								Equity Investments in Real Estate (b)
		Annualized				% of Annualized				Annualized				% of Annualized
		Contractual				Contractual				Contractual				Contractual
		Minimum				Minimum				Minimum				Minimum
Tenant Industry (c)		Base Rent (a)				Base Rent				Base Rent (a)				Base Rent
Retail Stores		$	8,770				13	%		$	7,464				29	%
Business and Commercial Services			8,409				12				3,332				13
Telecommunications			7,957				12				—				—
Beverages, Food, and Tobacco			4,949				7				—				—
Aerospace and Defense			4,907				7				—				—
Healthcare, Education and Childcare			4,420				7				3,292				13
Forest Products and Paper			4,034				6				—				—
Banking			3,861				6				—				—
Electronics			3,701				5				1,270				5
Transportation — Personal			3,524				5				—				—
Consumer Goods			2,438				4				—				—
Media: Printing and Publishing			2,337				3				4,358				17
Hotels and Gaming			1,810				3				—				—
Federal, State and Local Government			1,170				2				—				—
Chemicals, Plastics, Rubber, and Glass			1,150				2				—				—
Mining, Metals, and Primary Metal Industries			529				1				948				3
Transportation — Cargo			325				—				2,869				11
Machinery			190				—				2,250				9
Other (d)			3,580				5				—				—
Total		$	68,061				100	%		$	25,783				100	%

W. P. Carey 2010 10-K — 10

Lease Expirations

At December 31, 2010, lease expirations of our properties are as follows (dollars in thousands):

		Consolidated Investments								Equity Investments in Real Estate (b)
		Annualized				% of Annualized				Annualized				% of Annualized
		Contractual				Contractual				Contractual				Contractual
		Minimum				Minimum				Minimum				Minimum
Year of Lease Expiration		Base Rent (a)				Base Rent				Base Rent (a)				Base Rent
2011		$	7,216				11	%		$	554				2	%
2012			8,898				13				—				—
2013			5,563				8				—				—
2014			11,313				17				—				—
2015			6,297				9				6,440				25
2016			5,247				8				1,584				6
2017			5,841				8				—				—
2018			3,808				6				—				—
2019 – 2023			6,455				9				9,649				38
2024 – 2029			1,171				2				7,556				29
2030			6,252				9				—				—
Total		$	68,061				100	%		$	25,783				100	%

Financing Strategies

Consistent with our investment policies, we use leverage when available on terms we believe are favorable. Substantially all of our mortgage loans, as well as those of the CPA^® REITs, are non-recourse and bear interest at fixed rates, or have been converted to fixed rates through interest rate caps or swap agreements. We may refinance properties or defease a loan when a decline in interest rates makes it profitable to prepay an existing mortgage loan, when an existing mortgage loan matures or if an attractive investment becomes available and the proceeds from the refinancing can be used to purchase such investment. The benefits of the refinancing may include an increased cash flow resulting from reduced debt service requirements, an increase in distributions from proceeds of the refinancing, if any, and/or an increase in property ownership if some refinancing proceeds are reinvested in real estate. The prepayment of loans may require us to pay a yield maintenance premium to the lender in order to pay off a loan prior to its maturity.

A lender on non-recourse mortgage debt generally has recourse only to the property collateralizing such debt and not to any of our other assets, while full recourse financing would give a lender recourse to all of our assets. The use of non-recourse debt, therefore, helps us to limit the exposure of all of our assets to any one debt obligation. Lenders may, however, have recourse to our other assets in limited circumstances not related to the repayment of the indebtedness, such as under an environmental indemnity or in the case of fraud.

We also have an unsecured line of credit that can be used in connection with refinancing existing debt and making new investments, as well as to meet other working capital needs. Our line of credit is discussed in detail in the Cash Resources section of Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition.

W. P. Carey 2010 10-K — 11

Some of our financing may require us to make a lump-sum or “balloon” payment at maturity. We are actively seeking to refinance loans that mature within the next several years but believe we have sufficient financing alternatives and/or cash resources to make these payments, if necessary. At December 31, 2010, scheduled balloon payments for the next five years are as follows (in thousands):

2011		$	169,075	(a) (b)
2012			28,260
2013			—
2014			—	(a)
2015			40,253

Asset Management

We believe that effective management of our assets is essential to maintain and enhance property values. Important aspects of asset management include restructuring transactions to meet the evolving needs of current tenants, re-leasing properties, refinancing debt, selling properties and knowledge of the bankruptcy process.

We monitor, on an ongoing basis, compliance by tenants with their lease obligations and other factors that could affect the financial performance of any of our properties. Monitoring involves receiving assurances that each tenant has paid real estate taxes, assessments and other expenses relating to the properties it occupies and confirming that appropriate insurance coverage is being maintained by the tenant. For international compliance, we often rely on third party asset managers. We review financial statements of tenants and undertake regular physical inspections of the condition and maintenance of properties. Additionally, we periodically analyze each tenant’s financial condition, the industry in which each tenant operates and each tenant’s relative strength in its industry.

Competition

In raising funds for investment by the CPA^® REITs and Carey Watermark, we face active competition from other funds with similar investment objectives that seek to raise funds from investors through publicly registered, non-traded funds, publicly-traded funds and private funds, such as hedge funds. In addition, we face broad competition from other forms of investment. Currently, we raise substantially all of our funds for investment in the CPA^® REITs and Carey Watermark within the U.S.; however, in the future we may seek to raise funds for investment from outside the U.S.

We face active competition from many sources for investment opportunities in commercial properties net leased to major corporations both domestically and internationally. In general, we believe that our management’s experience in real estate, credit underwriting and transaction structuring should allow us to compete effectively for commercial properties. However, competitors may be willing to accept rates of return, lease terms, other transaction terms or levels of risk that we may find unacceptable.

Environmental Matters

We and the CPA^® REITs have invested, and expect to continue to invest, in properties currently or historically used as industrial, manufacturing and commercial properties. Under various federal, state and local environmental laws and regulations, current and former owners and operators of property may have liability for the cost of investigating, cleaning-up or disposing of hazardous materials released at, on, under, in or from the property. These laws typically impose responsibility and liability without regard to whether the owner or operator knew of or was responsible for the presence of hazardous materials or contamination, and liability under these laws is often joint and several. Third parties may also make claims against owners or operators of properties for personal injuries and property damage associated with releases of hazardous materials. As part of our efforts to mitigate these risks, we typically engage third parties to perform assessments of potential environmental risks when evaluating a new acquisition of property and we frequently obtain contractual protection (indemnities, cash reserves, letters of credit or other instruments) from property sellers, tenants, a tenant’s parent company or another third party to address known or potential environmental issues.

W. P. Carey 2010 10-K — 12

(d) Financial Information About Geographic Areas

See Our Portfolio above and Note 18 of the consolidated financial statements for financial data pertaining to our geographic operations.

(e) Available Information

All filings we make with the SEC, including our Annual Report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K, and any amendments to those reports, are available for free on our website, www.wpcarey.com, as soon as reasonably practicable after they are filed or furnished to the SEC. Our SEC filings are available to be read or copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information regarding the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. Our filings can also be obtained for free on the SEC’s Internet site at http://www.sec.gov. We are providing our website address solely for the information of investors. We do not intend our website to be an active link or to otherwise incorporate the information contained on our website into this report or other filings with the SEC. We will supply to any shareholder, upon written request and without charge, a copy of this Annual Report on Form 10-K for the year ended December 31, 2010 as filed with the SEC. Generally, we also post the dates of our upcoming scheduled financial press releases, telephonic investor calls and investor presentations on the Investor Relations portion of our website at least ten days prior to the event. Our investor calls are open to the public and remain available on our website for at least two weeks thereafter.

Item 1A.		Risk Factors.

Our business, results of operations, financial condition and ability to pay distributions at the current rate could be materially adversely affected by various risks and uncertainties, including the conditions below. These risk factors may have affected, and in the future could affect, our actual operating and financial results and could cause such results to differ materially from those in any forward-looking statements. You should not consider this list exhaustive. New risk factors emerge periodically, and we cannot assure you that the factors described below list all material risks to us at any later time.

The recent financial and economic crisis adversely affected our business, and the continued uncertainty in the global economic environment may adversely affect our business in the future.

Although we have seen signs of modest improvement in the global economy following the significant distress in 2008 and 2009, the economic recovery remains weak, and our business in still dependent on the speed and strength of that recovery, which cannot be predicted at the present time. To date, its effects on our business have been somewhat limited, primarily in that a number of tenants, particularly in the portfolios of the CPA^® REITs, have experienced increased levels of financial distress, with several having filed for bankruptcy protection, although our experience in 2010 reflected an improvement from 2008 and 2009.

Depending on how long and how severe this crisis is, we could in the future experience a number of additional effects on our business, including higher levels of default in the payment of rent by our tenants, additional bankruptcies and impairments in the value of our property investments, as well as difficulties in refinancing existing loans as they come due. Any of these conditions may negatively affect our earnings, as well as our cash flow and, consequently, our ability to sustain the payment of dividends at current levels.

Our managed funds may also be adversely affected by these conditions, and their earnings or cash flow may also be adversely affected by other events, such as increases in the value of the U.S. Dollar relative to other currencies in which they receive rent, as well as the need to expend cash to fund increased redemptions. Additionally, the ability of CPA^®:17 — Global to make new investments will be affected by the availability of financing as well as its ability to raise new funds. Decreases in the value of the assets held by the CPA^® REITs will affect the asset management revenues payable to us, as well as the value of the stock we hold in the CPA^® REITs, and decreases in these funds’ earnings or ability to pay distributions may also affect their ability to make the payments due to us, as well as our income and cash flow from CPA^® REIT distribution payments.

Earnings from our investment management operations are subject to volatility.

Growth in revenue from our investment management operations is dependent in large part on future capital raising in existing or future managed entities, as well as on our ability to make investments that meet the investment criteria of these entities, both of which are subject to uncertainty, including with respect to capital market and real estate market conditions. This uncertainty creates volatility in our earnings because of the resulting fluctuation in transaction-based revenue. Asset management revenue may be affected by factors that include not only our ability to increase the CPA^® REITs’ portfolio of properties under management, but also changes in valuation of those properties, as well as sales of CPA^® REIT properties. In addition, revenue from our investment management operations, including our ability to earn performance revenue, as well as the value of our holdings of CPA^® REIT interests and dividend income from those interests, may be significantly affected by the results of operations of the CPA^® REITs. Each of the CPA^® REITs has invested substantially all of its assets (other than short-term investments) in triple-net leased properties substantially similar to those we hold, and consequently the results of operations of, and cash available for distribution by, each of the CPA^® REITs, is likely to be substantially affected by the same market conditions, and subject to the same risk factors, as the properties we own. Four of the sixteen CPA^® funds temporarily reduced the rate of distributions to their investors as a result of adverse developments involving tenants.

W. P. Carey 2010 10-K — 13

Each of the CPA^® REITs we currently manage may incur significant debt. This significant debt load could restrict their ability to pay revenue owed to us when due, due to either liquidity problems or restrictive covenants contained in their borrowing agreements. In addition, the revenue payable under each of our current investment advisory agreements is subject to a variable annual cap based on a formula tied to the assets and income of that CPA^® REIT. This cap may limit the growth of our management revenue. Furthermore, our ability to earn revenue related to the disposition of properties is primarily tied to providing liquidity events for CPA^® REIT investors. Our ability to provide that liquidity, and to do so under circumstances that will satisfy the applicable subordination requirements noted above in Item 1, Business — Other Revenue, will depend on market conditions at the relevant time, which may vary considerably over a period of years. In any case, liquidity events typically occur several years apart, and income from our investment management operations is likely to be significantly higher in those years in which such events occur. If the Proposed Merger between CPA^®:14 and CPA^®:16 — Global is approved by the shareholders and the other closing conditions are satisfied, we currently expect that the transaction will be completed in the second quarter of 2011, although there can be no assurance of such timing.

The revenue streams from the investment advisory agreements with the CPA^® REITs are subject to limitation or cancellation.

The agreements under which we provide investment advisory services may generally be terminated by each CPA^® REIT upon 60 days’ notice, with or without cause. There can be no assurance that these agreements will not be terminated. A termination without cause may, however, entitle us to termination revenue, equal to 15% of the amount by which the net fair value of the relevant CPA^® REITs assets exceeds the remaining amount necessary to provide investors with total distributions equal to their investment plus a preferred return. For CPA^®:17 — Global, and CPA^®:16 — Global if the UPREIT reorganization is approved by CPA^®:16 — Global’s shareholders, they have the right, but not the obligation, upon certain terminations to repurchase our interests in their operating partnerships at fair market value. If such right is not exercised, we would remain as a limited partner of the operating partnerships. Nonetheless, any such termination could have a material adverse effect on our business, results of operations and financial condition.

Changes in investor preferences or market conditions could limit our ability to raise funds or make new investments.

Substantially all of our and the CPA^® REITs’ current investments, as well as the majority of the investments we expect to originate for the CPA^® REITs in the near term, are investments in single-tenant commercial properties that are subject to triple-net leases. In addition, we have relied predominantly on raising funds from individual investors through the sale by participating selected dealers to their customers of publicly-registered, non-traded securities of the CPA^® REITs. Although we have increased the number of broker-dealers we use for fundraising, historically the majority of our fundraising efforts have been through one major selected dealer. If, as a result of changes in market receptivity to investments that are not readily liquid and involve high selected dealer fees, or for other reasons, this capital raising method were to become less available as a source of capital, our ability to raise funds for CPA^® REIT programs and Carey Watermark, and consequently our ability to make investments on their behalf, could be adversely affected. While we are not limited to this particular method of raising funds for investment (and, among other things, the CPA^® REITs and Carey Watermark may themselves be able to borrow additional funds to invest), our experience with other means of raising capital is limited. Also, many factors, including changes in tax laws or accounting rules, may make these types of investments less attractive to potential sellers and lessees, which could negatively affect our ability to increase the amount of assets of this type under management.

We face active competition.

In raising funds for investment by the CPA^® REITs and Carey Watermark, we face competition from other funds with similar investment objectives that seek to raise funds from investors through publicly registered, non-traded funds, publicly-traded funds and private funds. This competition could adversely affect our ability to make acquisitions and to raise funds for future investments, which in turn could ultimately reduce, or limit the growth of, revenues from our investment management operations.

We face active competition for our investments from many sources, including insurance companies, credit companies, pension funds, private individuals, financial institutions, finance companies and investment companies, among others. These institutions may accept greater risk or lower returns, allowing them to offer more attractive terms to prospective tenants. In addition, our evaluation of the acceptability of rates of return on behalf of the CPA^® REITs is affected by such factors as the cost of raising capital, the amount of revenue we can earn and the performance hurdle rates of the relevant CPA^® REITs. Thus, the effect of the cost of raising capital and the revenue we can earn may be to limit the amount of new investments we make on behalf of the CPA^® REITs, which will in turn limit the growth of revenues from our investment management operations.

W. P. Carey 2010 10-K — 14

A substantial amount of our leases will expire within the next three years, and we may have difficulty in re-leasing or selling our properties if tenants do not renew their leases.

Within the next three years, approximately 32% of our leases, based on annualized contractual minimum base rent, are due to expire. If these leases are not renewed, or if the properties cannot be re-leased on terms that yield payments comparable to those currently being received, then our lease revenues could be substantially adversely affected. The terms of any new or renewed leases of these properties may depend on market conditions prevailing at the time of lease expiration. In addition, if properties are vacated by the current tenants, we may incur substantial costs in attempting to re-lease such properties. We may also seek to sell these properties, in which event we may incur losses, depending upon market conditions prevailing at the time of sale.

Real estate investments generally lack liquidity compared to other financial assets, and this lack of liquidity will limit our ability to quickly change our portfolio in response to changes in economic or other conditions. Some of our net leases are for properties that are specially suited to the particular needs of the tenant. With these properties, we may be required to renovate the property or to make rent concessions in order to lease the property to another tenant. In addition, if we are forced to sell the property, we may have difficulty selling it to a party other than the tenant due to the special purpose for which the property may have been designed. These and other limitations may affect our ability to re-lease or sell properties without adversely affecting returns to shareholders.

International investments involve additional risks.

We have invested in and may continue to invest in properties located outside the U.S. These investments may be affected by factors particular to the laws of the jurisdiction in which the property is located. These investments may expose us to risks that are different from and in addition to those commonly found in the U.S., including:

•

Foreign currency risk due to potential fluctuations in exchange rates between foreign currencies and the U.S. dollar;

•

Changing governmental rules and policies;

•

Enactment of laws relating to the foreign ownership of property and laws relating to the ability of foreign entities to remove invested capital or profits earned from activities within the country to the United States;

•

Expropriation;

•

Legal systems under which the ability to enforce contractual rights and remedies may be more limited than would be the case under U.S. law;

•

The difficulty in conforming obligations in other countries and the burden of complying with a wide variety of foreign laws;

•

Adverse market conditions caused by changes in national or local economic or political conditions;

•

Tax requirements vary by country and we may be subject to additional taxes as a result of our international investments;

•

Changes in relative interest rates;

•

Changes in the availability, cost and terms of mortgage funds resulting from varying national economic policies;

•

Changes in real estate and other tax rates and other operating expenses in particular countries;

•

Changes in land use and zoning laws; and

•

More stringent environmental laws or changes in such laws.

Also, we may rely on third-party asset managers in international jurisdictions to monitor compliance with legal requirements and lending agreements with respect to properties we own or manage on behalf of the CPA^® REITs. Failure to comply with applicable requirements may expose us or our operating subsidiaries to additional liabilities.

W. P. Carey 2010 10-K — 15

Our portfolio growth is constrained by our obligations to offer property transactions to the CPA^® REITs.

Under our investment advisory agreements with the CPA^® REITs, we are required to use our best efforts to present a continuing and suitable investment program to them. In recent years, new property investment opportunities have generally been made available by us to the CPA^® REITs. While the allocation of new investments to the CPA^® REITs fulfills our duty to present a continuing and suitable investment program and enhances the revenues from our investment management operations, it also restricts the potential growth of revenues from our real estate ownership and our ability to diversify our portfolio.

We may recognize substantial impairment charges on our properties.

Historically, we have incurred substantial impairment charges, which we are required to recognize whenever we sell a property for less than its carrying value or we determine that the carrying amount of the property is not recoverable and exceeds its fair value (or, for direct financing leases, that the unguaranteed residual value of the underlying property has declined). By their nature, the timing or extent of impairment charges are not predictable. We may incur impairment charges in the future, which may reduce our net income, although it will not necessarily affect our cash flow from operations.

Our use of debt to finance investments could adversely affect our cash flow.

Most of our investments are made by borrowing a portion of the total investment and securing the loan with a mortgage on the property. If we are unable to make our debt payments as required, a lender could foreclose on the property or properties securing its debt. This could cause us to lose part or all of our investment, which in turn could cause the value of our portfolio, and revenues available for distribution to our shareholders, to be reduced. We generally borrow on a non-recourse basis to limit our exposure on any property to the amount of equity invested in the property.

Some of our financing may also require us to make a lump-sum or “balloon” payment at maturity. Our ability to make balloon payments on debt will depend upon our ability either to refinance the obligation when due, invest additional equity in the property or to sell the related property. When the balloon payment is due, we may be unable to refinance the balloon payment on terms as favorable as the original loan or sell the property at a price sufficient to make the balloon payment. Our ability to accomplish these goals will be affected by various factors existing at the relevant time, such as the state of the national and regional economies, local real estate conditions, available mortgage rates, our equity in the mortgaged properties, our financial condition, the operating history of the mortgaged properties and tax laws. A refinancing or sale could affect the rate of return to shareholders.

Our leases may permit tenants to purchase a property at a predetermined price, which could limit our realization of any appreciation or result in a loss.

In some circumstances, we grant tenants a right to repurchase the property they lease from us. The purchase price may be a fixed price or it may be based on a formula or the market value at the time of exercise. If a tenant exercises its right to purchase the property and the property’s market value has increased beyond that price, we could be limited in fully realizing the appreciation on that property. Additionally, if the price at which the tenant can purchase the property is less than our purchase price or carrying value (for example, where the purchase price is based on an appraised value), we may incur a loss.

We do not fully control the management of our properties.

The tenants or managers of net leased properties are responsible for maintenance and other day-to-day management of the properties. If a property is not adequately maintained in accordance with the terms of the applicable lease, we may incur expenses for deferred maintenance expenditures or other liabilities once the property becomes free of the lease. While our leases generally provide for recourse against the tenant in these instances, a bankrupt or financially troubled tenant may be more likely to defer maintenance and it may be more difficult to enforce remedies against such a tenant. In addition, to the extent tenants are unable to conduct their operation of the property on a financially successful basis, their ability to pay rent may be adversely affected. Although we endeavor to monitor, on an ongoing basis, compliance by tenants with their lease obligations and other factors that could affect the financial performance of our properties, such monitoring may not in all circumstances ascertain or forestall deterioration either in the condition of a property or the financial circumstances of a tenant.

W. P. Carey 2010 10-K — 16

The value of our real estate is subject to fluctuation.

We are subject to all of the general risks associated with the ownership of real estate. While the revenues from our leases and those of the CPA^® REITs are not directly dependent upon the value of the real estate owned, significant declines in real estate values could adversely affect us in many ways, including a decline in the residual values of properties at lease expiration; possible lease abandonments by tenants; a decline in the attractiveness of REIT investments that may impede our ability to raise new funds for investment by CPA^® REITs and a decline in the attractiveness of triple-net lease transactions to potential sellers. We also face the risk that lease revenue will be insufficient to cover all corporate operating expenses and debt service payments on indebtedness we incur. General risks associated with the ownership of real estate include:

•

Adverse changes in general or local economic conditions,

•

Changes in the supply of or demand for similar or competing properties,

•

Changes in interest rates and operating expenses,

•

Competition for tenants,

•

Changes in market rental rates,

•

Inability to lease or sell properties upon termination of existing leases,

•

Renewal of leases at lower rental rates,

•

Inability to collect rents from tenants due to financial hardship, including bankruptcy,

•

Changes in tax, real estate, zoning and environmental laws that may have an adverse impact upon the value of real estate,

•

Uninsured property liability, property damage or casualty losses,

•

Unexpected expenditures for capital improvements or to bring properties into compliance with applicable federal, state and local laws; and

•

Acts of God and other factors beyond the control of our management.

The inability of a tenant in a single-tenant property to pay rent will reduce our revenues.

Most of our properties are occupied by a single tenant and, therefore, the success of our investments is materially dependent on the financial stability of these tenants. Revenues from several of our tenants/guarantors constitute a significant percentage of our lease revenues. Our five largest tenants/guarantors represented approximately 32%, 30% and 28% of total lease revenues in 2010, 2009 and 2008, respectively. Lease payment defaults by tenants negatively impact our net income and reduce the amounts available for distributions to shareholders. As our tenants generally may not have a recognized credit rating, they may have a higher risk of lease defaults than if our tenants had a recognized credit rating. In addition, the bankruptcy of a tenant could cause the loss of lease payments as well as an increase in the costs incurred to carry the property until it can be re-leased or sold. We have had tenants file for bankruptcy protection. In the event of a default, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting the investment and re-leasing the property. If a lease is terminated, there is no assurance that we will be able to re-lease the property for the rent previously received or sell the property without incurring a loss.

We are subject to possible liabilities relating to environmental matters.

We own commercial properties and are subject to the risk of liabilities under federal, state and local environmental laws. These responsibilities and liabilities also exist for properties owned by the CPA^® REITs and if they become liable for these costs, their ability to pay for our services could be materially affected. Some of these laws could impose the following on us:

	•		Responsibility and liability for the cost of investigation and removal or remediation of hazardous substances released on our property, generally without regard to our knowledge of or responsibility for the presence of the contaminants;
	•		Liability for the costs of investigation and removal or remediation of hazardous substances at disposal facilities for persons who arrange for the disposal or treatment of such substances;

W. P. Carey 2010 10-K — 17

•

Potential liability for common law claims by third parties based on damages and costs of environmental contaminants; and

•

Claims being made against us by the CPA® REITs for inadequate due diligence.

Our costs of investigation, remediation or removal of hazardous or toxic substances, or for third-party claims for damages, may be substantial. The presence of hazardous or toxic substances at any of our properties, or the failure to properly remediate a contaminated property, could give rise to a lien in favor of the government for costs it may incur to address the contamination or otherwise adversely affect our ability to sell or lease the property or to borrow using the property as collateral. While we attempt to mitigate identified environmental risks by contractually requiring tenants to acknowledge their responsibility for complying with environmental laws and to assume liability for environmental matters, circumstances may arise in which a tenant fails, or is unable, to fulfill its contractual obligations. In addition, environmental liabilities, or costs or operating limitations imposed on a tenant to comply with environmental laws, could affect its ability to make rental payments to us. Also, and although we endeavor to avoid doing so, we may be required, in connection with any future divestitures of property, to provide buyers with indemnification against potential environmental liabilities.

A potential change in U.S. accounting standards regarding operating leases may make the leasing of facilities less attractive to our potential domestic tenants, which could reduce overall demand for our leasing services.

Under current authoritative accounting guidance for leases, a lease is classified by a tenant as a capital lease if the significant risks and rewards of ownership are considered to reside with the tenant. This situation is considered to be met if, among other things, the non-cancellable lease term is more than 75% of the useful life of the asset or if the present value of the minimum lease payments equals 90% or more of the leased property’s fair value. Under capital lease accounting for a tenant, both the leased asset and liability are reflected on their balance sheet. If the lease does not meet any of the criteria for a capital lease, the lease is considered an operating lease by the tenant and the obligation does not appear on the tenant’s balance sheet; rather, the contractual future minimum payment obligations are only disclosed in the footnotes thereto. Thus, entering into an operating lease can appear to enhance a tenant’s balance sheet in comparison to direct ownership. In response to concerns caused by a 2005 SEC study that the current model does not have sufficient transparency, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board conducted a joint project to re-evaluate lease accounting. In August 2010, the FASB issued a Proposed Accounting Standards Update titled “Leases,” providing its views on accounting for leases by both lessees and lessors. The FASB’s proposed guidance may require significant changes in how leases are accounted for by both lessees and lessors. As of the date of this Report, the FASB has not finalized its views on accounting for leases. Changes to the accounting guidance could affect both our and the CPA^® REITs’ accounting for leases as well as that of our and the CPA^® REITs’ tenants. These changes may affect how the real estate leasing business is conducted both domestically and internationally. For example, if the accounting standards regarding the financial statement classification of operating leases are revised, then companies may be less willing to enter into leases in general or desire to enter into leases with shorter terms because the apparent benefits to their balance sheets could be reduced or eliminated. This in turn could make it more difficult for the company to enter leases on terms the company finds favorable.

Proposed legislation may prevent us from qualifying for treatment as a partnership for U.S. federal income tax purposes, which may significantly increase our tax liability and may affect the market value of our shares.

Members of the U. S. Congress have introduced legislation that would, if enacted, preclude us from qualifying for treatment as a partnership for U.S. federal income tax purposes under the publicly traded partnership rules. If this or any similar legislation or regulation were to be enacted and to apply to us, we would incur a material increase in our tax liability and the market value of our shares could decline materially.

We depend on key personnel for our future success.

We depend on the efforts of our executive officers and key employees. The loss of the services of these executive officers and key employees could have a material adverse effect on our operations.

Our governing documents and capital structure may discourage a takeover.

Wm. Polk Carey, Chairman, is the beneficial owner of approximately 30% of our outstanding shares at December 31, 2010. The provisions of our Amended and Restated Limited Liability Company Agreement and the share ownership of Mr. Carey may discourage a tender offer for our shares or a hostile takeover, even though these may be attractive to shareholders.

W. P. Carey 2010 10-K — 18

Item 1B.		Unresolved Staff Comments.

None.

Item 2.		Properties.

Our principal corporate offices are located at 50 Rockefeller Plaza, New York, NY 10020 and our primary international investment offices are located in London and Amsterdam. We also have office space domestically in Dallas, Texas and internationally in Shanghai. We lease all of these offices and believe these leases are suitable for our operations for the foreseeable future.

See Item 1, Business — Our Portfolio for a discussion of the properties we hold for rental operations and Part II, Item 8, Financial Statements and Supplemental Data — Schedule III — Real Estate and Accumulated Depreciation for a detailed listing of such properties.

Item 3.		Legal Proceedings.

At December 31, 2010, we were not involved in any material litigation.

Various claims and lawsuits arising in the normal course of business are pending against us. The results of these proceedings are not expected to have a material adverse effect on our consolidated financial position or results of operations.

Item 4.		Removed and Reserved.

PART II

Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Listed Shares and Distributions

Our common stock is listed on the New York Stock Exchange under the ticker symbol “WPC.” At December 31, 2010 there were 29,095 holders of our common stock. The following table shows the high and low prices per share and quarterly cash distributions declared for the past two fiscal years:

		2010												2009
										Cash												Cash
										Distributions												Distributions
Period		High				Low				Declared				High				Low				Declared
First quarter		$	30.32			$	24.69			$	0.504			$	24.00			$	16.15			$	0.496
Second quarter			31.00				26.61				0.506				29.89				19.75				0.498
Third quarter			30.86				26.49				0.508				30.67				22.50				0.500
Fourth quarter			33.97				28.83				0.510				29.80				25.50				0.502	(a)

Our line of credit contains covenants that restrict the amount of distributions that we can pay. See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Cash Resources.

W. P. Carey 2010 10-K — 19

Stock Price Performance Graph

The graph below provides an indicator of cumulative total shareholder returns for our common stock for the period December 31, 2005 to December 31, 2010 compared with the S&P 500 Index and the FTSE NAREIT Equity REITs Index. The graph assumes a $100 investment on December 31, 2005, together with the reinvestment of all dividends.

		As of December 31,
		2005				2006				2007				2008				2009				2010
W. P. Carey & Co. LLC		$	100.00			$	126.68			$	149.41			$	113.39			$	146.22			$	177.06
S&P 500 Index			100.00				115.79				122.16				76.96				97.33				111.99
FTSE NAREIT Equity REITs Index			100.00				135.06				113.87				70.91				90.76				116.13

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

W. P. Carey 2010 10-K — 20

Item 6.		Selected Financial Data.

The following selected financial data should be read in conjunction with the consolidated financial statements and related notes in Item 8 (in thousands, except per share data):

		Years ended December 31,
		2010				2009				2008				2007				2006
Operating Data (a)
Revenues from continuing operations (b)		$	273,910			$	232,350			$	234,700			$	253,867			$	259,010
Income from continuing operations			79,579				65,345				70,193				68,559				81,057
Net income			74,951				70,568				78,605				88,789				87,115
Add: Net loss (income) attributable to noncontrolling interests			314				713				950				(4,781	)			220
Less: Net income attributable to redeemable noncontrolling interests			(1,293	)			(2,258	)			(1,508	)			(4,756	)			(1,032	)
Net income attributable to W. P. Carey members			73,972				69,023				78,047				79,252				86,303
Basic Earnings Per Share:
Income from continuing operations attributable W. P. Carey members			1.98				1.61				1.77				1.55				2.13
Net income attributable to W. P. Carey members			1.86				1.74				1.98				2.08				2.29
Diluted Earnings Per Share:
Income from continuing operations attributable W. P. Carey members			1.98				1.61				1.74				1.55				2.07
Net income attributable to W. P. Carey members			1.86				1.74				1.95				2.05				2.22
Cash distributions declared per share			2.03				2.00	(c)			1.96				1.88	(c)			1.82
Balance Sheet Data
Net investments in real estate (d)		$	946,975			$	884,460			$	918,741			$	918,734			$	850,107
Total assets			1,172,326				1,093,336				1,111,136				1,153,284				1,093,010
Long-term obligations (e)			396,982				326,330				326,874				316,751				279,314
Other Information
Cash provided by operating activities		$	86,417			$	74,544			$	63,247			$	47,471			$	119,940
Cash distributions paid			92,591				78,618				87,700				71,608				68,615
Payment of mortgage principal (f)			14,324				9,534				9,678				16,072				11,742

W. P. Carey 2010 10-K — 21

Item 7.		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. The discussion also provides information about the financial results of the segments of our business to provide a better understanding of how these segments and their results affect our financial condition and results of operations.

Business Overview

As described in more detail in Item 1 of this Report, we operate in two operating segments, investment management and real estate ownership. Within our investment management segment, we are currently the advisor to the following affiliated publicly-owned, non-actively traded real estate investment trusts: CPA^®:14, CPA^®:15, CPA^®:16 — Global and CPA^®:17 — Global.

Financial Highlights

(in thousands)

		Years ended December 31,
		2010				2009				2008
Total revenue (excluding reimbursed costs from affiliates)		$	213,887			$	184,816			$	193,600
Net income attributable to W. P. Carey members			73,972				69,023				78,047
Cash flow from operating activities			86,417				74,544				63,247

Total revenue increased in 2010 as compared to 2009, primarily due to the impact of increased investment volume on our investment management and real estate ownership segments.

Net income increased in 2010 as compared to 2009. Results from operations in our investment management segment were significantly higher in 2010, primarily due to the increased volume of investments structured on behalf of the CPA^® REITs as well as lower impairment charges recognized by the CPA^® REITs. Results from operations in our real estate ownership segment were significantly lower, however, primarily as a result of impairment charges taken in connection with the sale or potential sale of certain properties.

Cash flow from operating activities increased in 2010 as compared to 2009, primarily due to increases in net income as a result of the higher volume of investments structured on behalf of the CPA^® REITs, partially offset by lower cash flow in our real estate ownership segment and a decline in the amount of deferred acquisition revenue received.

Current Trends

General Economic Environment

We and our managed funds are impacted by macro-economic environmental factors, the capital markets, and general conditions in the commercial real estate market, both in the U.S. and globally. As of the date of this Report, we have seen signs of modest improvement in the global economy following the significant distress experienced in 2008 and 2009. Our experience during 2010 reflects increased investment volume over the prior year, as well as an improved financing and fundraising environment. While these factors reflect favorably on our business, the economic recovery remains weak, and our business remains dependent on the speed and strength of the recovery, which cannot be predicted at this time. Nevertheless, as of the date of this Report, the impact of current financial and economic trends on our business, and our response to those trends, is presented below.

Foreign Exchange Rates

We have foreign investments and, as a result, are subject to risk from the effects of exchange rate movements. Our results of foreign operations benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar relative to foreign currencies. During 2010, the Euro weakened primarily as a result of sovereign debt issues in several European countries. Investments denominated in the Euro accounted for approximately 11% of our annualized contractual minimum base rent and 29% of aggregate annualized contractual minimum base rent for the CPA^® REITs for 2010. During 2010, the U.S. dollar strengthened against the Euro, as the average conversion rate for the U.S. dollar in relation to the Euro decreased by 5% in comparison to 2009. Additionally, the end-of-period conversion rate of the Euro at December 31, 2010 decreased 8% to $1.3253 from $1.4333 at December 31, 2009. This strengthening had a negative impact on our balance sheet at December 31, 2010 as compared to our balance sheet at December 31, 2009. While we actively manage our foreign exchange risk, a significant unhedged decline in the value of the Euro could have a material negative impact on our net asset values, future results, financial position and cash flows. Such a decline would particularly impact the CPA^® REITs, which have higher levels of international investments than we have in our owned portfolio.

W. P. Carey 2010 10-K — 22

Capital Markets

We have recently seen evidence of a gradual improvement in capital market conditions, including new issuances of CMBS debt. Capital inflows to both commercial real estate debt and equity markets have helped increase the availability of mortgage financing and asset prices have begun to recover from their credit crisis lows. Over the past few quarters, there has been continued improvement in the availability of financing; however, lenders remain cautious and are employing more conservative underwriting standards. We have seen commercial real estate capitalization rates begin to narrow from credit crisis highs, especially for higher-quality assets or assets leased to tenants with strong credit. The improvement in financing conditions combined with a stabilization of asset prices has helped to increase transaction activity, and our market has seen an increase in competition from both public and private investors.

Investment Opportunities

We earn structuring revenue on the investments we structure on behalf of the CPA^® REITs. Our ability to complete these investments, and thereby earn structuring revenue, fluctuates based on the pricing and availability of transactions and the pricing and availability of financing, among other factors.

As a result of the recent improving economic conditions and increasing seller optimism, we have seen an increased number of investment opportunities that we believe will allow us to structure transactions on behalf of the CPA^® REITs on favorable terms. Although capitalization rates have remained compressed over the past few quarters compared to their credit crisis highs, we believe that the investment environment remains attractive and that we will be able to achieve the targeted returns of our managed funds. We believe that the significant amount of corporate debt that remains outstanding in the marketplace, which will need to be refinanced over the next several years, will provide attractive investment opportunities for net lease investors such as W. P. Carey and the CPA^® REITs. To the extent that these trends continue, we believe that investment volume will benefit. However, we have recently seen an increasing level of competition for investments, both domestically and internationally, and further capital inflows into the marketplace could put additional pressure on the returns that we can generate from investments.

We structured investments on behalf of the CPA^® REITs totaling $1.0 billion during 2010 and entered into several investments for our owned real estate portfolio totaling $76.8 million, and based on current conditions, we expect that in 2011 we will be able to continue to take advantage of the investment opportunities we are seeing in both the U.S. and Europe. International investments comprised 43% of total investments during 2010. We currently expect that international transactions will continue to form a significant portion of the investments we structure, although the relative portion of international investments in any given period will vary.

Financing Conditions

We have recently seen a gradual improvement in both the credit and real estate financing markets. During 2010, we saw an increase in the number of lenders for both domestic and international investments as market conditions improved compared to prior years. However, during the fourth quarter of 2010, the cost of debt rose, but we anticipate that this may be recoverable either through deal pricing or if lenders adjust their spreads, which had been unusually high during the crisis. The increase was primarily a result of a rise in the 10-year treasury rates for domestic deals and due to the impact of the sovereign debt issues in Europe. During 2010, we obtained non-recourse mortgage financing totaling $626.1 million on behalf of the CPA^® REITs and $70.3 million for our owned real estate portfolio.

Real Estate Sector

As noted above, the commercial real estate market is impacted by a variety of macro-economic factors, including but not limited to growth in gross domestic product, unemployment, interest rates, inflation, and demographics. Since the beginning of the credit crisis, these macro-economic factors have persisted, negatively impacting commercial real estate market fundamentals, which has resulted in higher vacancies, lower rental rates, and lower demand for vacant space. While more recently there have been some indications of stabilization in asset values and slight improvements in occupancy rates, general uncertainty surrounding commercial real estate fundamentals and property valuations continues. We and the CPA^® REITs are chiefly affected by changes in the appraised values of our properties, tenant defaults, inflation, lease expirations, and occupancy rates.

W. P. Carey 2010 10-K — 23

Net Asset Values of the CPA^® REITs

We own shares in each of the CPA^® REITs and earn asset management revenue based on a percentage of average invested assets for each CPA^® REIT. As such, we benefit from rising investment values and are negatively impacted when these values decrease. As a result of continued weakness in the economy and a weakening of the Euro versus the dollar during 2010 and 2009, the NAVs for CPA^®:14 and CPA^®:16 — Global at September 30, 2010, which were calculated in connection with the Proposed Merger, were lower than the NAVs at December 31, 2009, and we currently expect that the NAV for CPA^®:15 at December 31, 2010, which is not yet available, will also be lower. However, the negative impact on our asset management revenue related to tenant defaults during 2009 was substantially offset by asset management revenues earned related to new investments structured on behalf of CPA ^®:17 — Global during 2010.

The following table presents recent NAVs per share for these CPA^® REITs:

		September 30,				December 31,
		2010				2009				2008				2007
CPA®:14		$	11.50			$	11.80			$	13.00			$	14.50
CPA®:15			N/A				10.70				11.50				12.20
CPA®:16 — Global			8.80				9.20				9.80				10.00

The NAVs of the CPA^® REITs are based on a number of variables, including individual tenant credits, lease terms, lending credit spreads, foreign currency exchange rates, and tenant defaults, among others. We do not control these variables and, as such, cannot predict how they will change in the future.

Tenant Defaults

As a net lease investor, we are exposed to credit risk within our tenant portfolio, which can reduce our results of operations and cash flow from operations if our tenants are unable to pay their rent. Within our managed CPA^® REIT portfolios, tenant defaults can reduce our asset management revenue if they lead to a decline in the appraised value of the assets of the CPA^® REITs and can also reduce our income from equity investments in the CPA^® REITs. Tenants experiencing financial difficulties may become delinquent on their rent and/or default on their leases and, if they file for bankruptcy protection, may reject our lease in bankruptcy court resulting in reduced cash flow which may negatively impact net asset values and require us or the CPA^® REITs to incur impairment charges. Even where a default has not occurred and a tenant is continuing to make the required lease payments, we may restructure or renew leases on less favorable terms, or the tenant’s credit profile may deteriorate, which could affect the value of the leased asset and could in turn require us or the CPA^® REITs to incur impairment charges.

As of the date of this Report, we have no significant exposure to tenants operating under bankruptcy protection in our owned portfolio, while in the CPA^® REIT portfolios, tenants operating under bankruptcy protection, administration or receivership account for less than 1% of aggregate annualized contractual minimum base rent, a decrease from levels experienced during the crisis. During 2008 and 2009, the CPA^® REITs experienced a significant increase in tenant defaults as companies across many industries experienced financial distress due to the economic downturn and the seizure in the credit markets. Our experience for 2010 reflected an improvement from the unusually high level of tenant defaults experienced during 2008 and 2009 due to the economic downturn. We have observed that many of our tenants have benefited from continued improvements in general business conditions, which we anticipate will result in reduced tenant defaults going forward; however, it is possible that additional tenants may file for bankruptcy or default on their leases during 2011 and that economic conditions may again deteriorate.

To mitigate these risks, we have historically looked to invest in assets that we believe are critically important to a tenant’s operations and have attempted to diversify the portfolios by tenant, tenant industry and geography. We also monitor tenant performance through review of rent delinquencies as a precursor to a potential default, meetings with tenant management and review of tenants’ financial statements and compliance with any financial covenants. When necessary, our asset management process includes restructuring transactions to meet the evolving needs of tenants, re-leasing properties, refinancing debt and selling properties, as well as protecting our rights when tenants default or enter into bankruptcy.

W. P. Carey 2010 10-K — 24

Inflation

Our leases and those of the CPA^® REITs generally have rent adjustments that are either fixed or based on formulas indexed to changes in the CPI or other similar indices for the jurisdiction in which the property is located. Because these rent adjustments may be calculated based on changes in the CPI over a multi-year period, changes in inflation rates can have a delayed impact on our results of operations. Rent adjustments during 2009 and, to a lesser extent, 2010 generally benefited from increases in inflation rates during the years prior to the scheduled rent adjustment date. However, despite recent signs of inflationary pressure, we continue to expect that rent increases in our owned portfolio and in the portfolios of the CPA^® REITs will be significantly lower in coming years as a result of the current historically low inflation rates in the U.S. and the Euro zone.

Lease Expirations and Occupancy

We actively manage our owned real estate portfolio and the portfolios of the CPA^® REITs and begin discussing options with tenants in advance of the scheduled lease expiration. In certain cases, we obtain lease renewals from our tenants; however, tenants may elect to move out at the end of their term or may elect to exercise purchase options, if any, in their leases. In cases where tenants elect not to renew, we may seek replacement tenants or try to sell the property. As of the date of this Report, 9% of the annualized contractual minimum base rent in our owned portfolio is scheduled to expire in the next twelve months. For those leases that we believe will be renewed, we expect that renewed rents may be below the tenants’ existing contractual rents and that lease terms may be shorter than historical norms, reflecting current market conditions.

The occupancy rate for our owned real estate portfolio declined from 94% at December 31, 2009 to 90% as of the date of this Report, primarily reflecting the impact of two tenants who vacated during 2010.

Fundraising

Fundraising trends for non-traded REITs overall include an increase in average monthly volume during 2010 compared to 2009. Additionally, the number of offerings has increased over 2009 levels. Consequently, there has been an increase in the competition for investment dollars.

We are currently fundraising for CPA^®:17 — Global. While fundraising trends are difficult to predict, our recent fundraising continues to be strong. We raised $593.1 million for CPA^®:17 — Global’s initial public offering in 2010 and, through the date of this Report, have raised more than $1.4 billion on its behalf since beginning fundraising in December 2007. We have made a concerted effort to broaden our distribution channels and are seeing a greater portion of our fundraising come from an expanded network of broker-dealers as a result of these efforts.

CPA^®:17 — Global has filed a registration statement with the SEC for a possible continuous public offering of up to an additional $1.0 billion of common stock, which we currently expect will commence after the initial public offering terminates. There can be no assurance that CPA^®:17 — Global will actually commence the follow-on offering or successfully sell the full number of shares registered. The initial public offering for CPA^®:17 — Global will terminate on the earlier of the date on which the registration statement for the follow-on offering becomes effective or May 2, 2011.

We are currently fundraising for Carey Watermark, which has filed a registration statement to sell up to $1.0 billion of common stock in an initial public offering for the purpose of acquiring interests in lodging and lodging-related properties.

Proposed Accounting Changes

The International Accounting Standards Board and FASB have issued an Exposure Draft on a joint proposal that would dramatically transform lease accounting from the existing model. These changes would impact most companies but are particularly applicable to those that are significant users of real estate. The proposal outlines a completely new model for accounting by lessees, whereby their rights and obligations under all leases, existing and new, would be capitalized and recorded on the balance sheet. For some companies, the new accounting guidance may influence whether or not, or the extent to which, they may enter into the type of sale-leaseback transactions in which we specialize. At this time, the proposed guidance has not been finalized and as such we are unable to determine whether this proposal will have a material impact on our business.

W. P. Carey 2010 10-K — 25

The Emerging Issues Task Force (“EITF”) of the FASB discussed the accounting treatment for deconsolidating subsidiaries in situations other than a sale or transfer at its September 2010 meeting. While the EITF did not reach a consensus for exposure, the EITF determined that further research was necessary to more fully understand the scope and implications of the matter, prior to issuing a consensus for exposure. If the EITF reaches a consensus for exposure, we will evaluate the impact on such conclusion on our financial statements. During 2010, each of CPA^®:14, CPA^®:15 and CPA^®:16 — Global deconsolidated a subsidiary and recognized a net gain on deconsolidation of $12.9 million, $12.8 million and $7.1 million, respectively.

How We Evaluate Results of Operations

We evaluate our results of operations with a primary focus on increasing and enhancing the value, quality and amount of assets under management by our investment management segment and seeking to increase value in our real estate ownership segment. We focus our efforts on improving underperforming assets through re-leasing efforts, including negotiation of lease renewals, or selectively selling assets in order to increase value in our real estate portfolio. The ability to increase assets under management by structuring investments on behalf of the CPA^® REITs is affected, among other things, by the CPA^® REITs’ ability to raise capital and our ability to identify and enter into appropriate investments and financing.

Our evaluation of operating results includes our ability to generate necessary cash flow in order to fund distributions to our shareholders. As a result, our assessment of operating results gives less emphasis to the effects of unrealized gains and losses, which may cause fluctuations in net income for comparable periods but have no impact on cash flows, and to other non-cash charges such as depreciation and impairment charges. We do not consider unrealized gains and losses resulting from short-term foreign currency fluctuations when evaluating our ability to fund distributions. Our evaluation of our potential for generating cash flow includes an assessment of the long-term sustainability of both our real estate portfolio and the assets we manage on behalf of the CPA^® REITs.

We consider cash flows from operating activities, cash flows from investing activities, cash flows from financing activities and certain supplemental metrics that are not defined by GAAP (“non-GAAP”) performance metrics to be important measures in the evaluation of our results of operations, liquidity and capital resources. Cash flows from operating activities are sourced primarily by revenues earned from structuring investments and providing asset-based management services on behalf of the CPA^® REITs we manage and long-term lease contracts from our real estate ownership. Our evaluation of the amount and expected fluctuation of cash flows from operating activities is essential in evaluating our ability to fund operating expenses, service debt and fund distributions to shareholders.

We consider cash flows from operating activities plus cash distributions from equity investments in real estate and CPA^® REITs in excess of equity income as a supplemental measure of liquidity in evaluating our ability to sustain distributions to shareholders. We consider this measure useful as a supplemental measure to the extent the source of distributions in excess of equity income is the result of non-cash charges, such as depreciation and amortization, because it allows us to evaluate the cash flows from consolidated and unconsolidated investments in a comparable manner. In deriving this measure, we exclude cash distributions from equity investments in real estate and CPA^® REITs that are sourced from sales of equity investee’s assets or refinancing of debt because they are deemed to be returns on our investment.

We focus on measures of cash flows from investing activities and cash flows from financing activities in our evaluation of our capital resources. Investing activities typically consist of the acquisition or disposition of investments in real property and the funding of capital expenditures with respect to real properties. Financing activities primarily consist of the payment of distributions to shareholders, borrowings and repayments under our lines of credit and the payment of mortgage principal amortization.

W. P. Carey 2010 10-K — 26

Results of Operations

A summary of comparative results of these business segments is as follows:

Investment Management (in thousands)

		Years ended December 31,
		2010				2009				Change				2009				2008				Change
Revenues
Asset management revenue		$	76,246			$	76,621			$	(375	)		$	76,621			$	80,714			$	(4,093	)
Structuring revenue			44,525				23,273				21,252				23,273				20,236				3,037
Wholesaling revenue			11,096				7,691				3,405				7,691				5,208				2,483
Reimbursed costs from affiliates			60,023				47,534				12,489				47,534				41,100				6,434
			191,890				155,119				36,771				155,119				147,258				7,861
Operating Expenses
General and administrative			(69,007	)			(58,819	)			(10,188	)			(58,819	)			(55,587	)			(3,232	)
Reimbursable costs			(60,023	)			(47,534	)			(12,489	)			(47,534	)			(41,100	)			(6,434	)
Depreciation and amortization			(4,652	)			(3,807	)			(845	)			(3,807	)			(4,515	)			708
			(133,682	)			(110,160	)			(23,522	)			(110,160	)			(101,202	)			(8,958	)
Other Income and Expenses
Other interest income			1,145				1,538				(393	)			1,538				2,261				(723	)
Income (loss) from equity investments in CPA® REITs			14,948				(340	)			15,288				(340	)			6,211				(6,551	)
Other income and (expenses)			334				4,099				(3,765	)			4,099				1,850				2,249
			16,427				5,297				11,130				5,297				10,322				(5,025	)
Income from continuing operations before income taxes			74,635				50,256				24,379				50,256				56,378				(6,122	)
Provision for income taxes			(25,052	)			(21,038	)			(4,014	)			(21,038	)			(22,432	)			1,394
Net income from investment management			49,583				29,218				20,365				29,218				33,946				(4,728	)
Add: Net loss attributable to noncontrolling interests			2,372				2,374				(2	)			2,374				2,420				(46	)
Less: Net income attributable to redeemable noncontrolling interests			(1,293	)			(2,258	)			965				(2,258	)			(1,508	)			(750	)
Net income from investment management attributable to W. P. Carey members		$	50,662			$	29,334			$	21,328			$	29,334			$	34,858			$	(5,524	)

Asset Management Revenue

We earn asset-based management and performance revenue from the CPA^® REITs based on the value of their real estate-related assets under management. This asset management revenue may increase or decrease depending upon (i) increases in the CPA^® REIT asset bases as a result of new investments; (ii) decreases in the CPA^® REIT asset bases as a result of sales of investments; (iii) increases or decreases in the appraised value of the real estate-related assets in the CPA^® REIT investment portfolios; and (iv) whether the CPA^® REITs are meeting their performance criteria. Each CPA^® REIT met its performance criteria for all periods presented. The availability of funds for new investments is substantially dependent on our ability to raise funds for investment by the CPA^® REITs.

2010 vs. 2009 — For the year ended December 31, 2010 as compared to 2009, asset management revenue decreased by $0.4 million. Asset management revenue from the CPA^® REITs decreased by $3.1 million as a result of declines in the appraised value of the real estate-related assets of CPA^®:14, CPA^®:15 and CPA^®:16 — Global at December 31, 2009. This decrease was substantially offset by an increase in revenue of $2.6 million from CPA^®:17 — Global as a result of new investments entered into during 2009 and 2010.

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, asset management revenue decreased by $4.1 million, primarily due to declines in the appraised value of the real estate-related assets of CPA^®:14, CPA^®:15 and CPA^®:16 — Global at December 31, 2008.

W. P. Carey 2010 10-K — 27

Structuring Revenue

We earn structuring revenue when we structure and negotiate investments and debt placement transactions for the CPA^® REITs. Structuring revenue is dependent on investment activity, which is subject to significant period-to-period variation. Investment volume on behalf of the CPA^® REITs was $1.0 billion in 2010, $507.7 million in 2009 and $457.3 million in 2008. Included in the 2010 and 2008 investment activity were $91.7 million of real estate-related loans originated by us and $20.0 million of CMBS, respectively, acquired on behalf of CPA^®:17 — Global, for which we earned structuring revenues of 1% compared to an average of 4.5% that we generally earn for structuring long-term net lease investments.

2010 vs. 2009 — For the year ended December 31, 2010 as compared to 2009, structuring revenue increased by $21.3 million, primarily due to higher investment volume in 2010 compared to 2009.

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, structuring revenue increased by $3.0 million, primarily due to higher investment volume in 2009 compared to 2008.

Wholesaling Revenue

We earn wholesaling revenue based on the number of shares sold in connection with CPA^®:17 — Global’s initial public offering. Wholesaling revenue earned is offset by underwriting costs incurred in connection with the offering, which are included in general and administrative expenses.

2010 vs. 2009 — For the year ended December 31, 2010 as compared to 2009, wholesaling revenue increased by $3.4 million primarily due to an increase in the number of shares sold related to CPA^®:17 — Global’s initial public offering in 2010 compared to 2009. As described in Current Trends — Fundraising above, we have made a concerted effort over the past two years to broaden our distribution channels, which has led to stronger fundraising results in each year.

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, wholesaling revenue increased by $2.5 million primarily due to an increase in the number of shares sold related to CPA^®:17 — Global’s initial public offering in 2009 compared to 2008.

Reimbursed and Reimbursable Costs

Reimbursed costs from affiliates (revenue) and reimbursable costs (expenses) represent costs incurred by us on behalf of the CPA^® REITs, consisting primarily of broker-dealer commissions and marketing and personnel costs, which are reimbursed by the CPA^® REITs. Revenue from reimbursed costs from affiliates is offset by corresponding charges to reimbursable costs and therefore has no impact on net income.

2010 vs. 2009 — For the year ended December 31, 2010 as compared to 2009, reimbursed and reimbursable costs increased by $12.5 million, primarily due to a higher level of commissions paid to broker-dealers related to CPA^®:17 — Global’s initial public offering related to a corresponding increase in funds raised.

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, reimbursed and reimbursable costs increased by $6.4 million, primarily due to a higher level of commissions paid to broker-dealers related to CPA^®:17 — Global’s initial public offering related to a corresponding increase in funds raised.

General and Administrative

2010 vs. 2009 — For the year ended December 31, 2010 as compared to 2009, general and administrative expenses increased by $10.2 million, primarily due to increases in compensation-related costs of $5.8 million, underwriting costs of $3.7 million and business development costs of $0.9 million. Compensation-related costs were $6.8 million higher in 2010 primarily due to an increase in commissions to investment officers and our expected bonus payout as a result of the higher investment volume during 2010, partially offset by a $2.0 million decrease in stock-based compensation expense due to the resignations of two senior officers during 2010. Underwriting costs related to CPA^®:17 — Global’s offering are generally offset by wholesaling revenue, which we earn based on the number of shares of CPA^®:17 — Global sold.

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, general and administrative expenses increased by $3.2 million, primarily due to increases in compensation-related costs of $4.8 million and underwriting costs of $2.3 million. These increases were partially offset by decreases in professional fees of $2.9 million and business development costs of $1.4 million.

W. P. Carey 2010 10-K — 28

Compensation-related costs were higher in 2009 due to several factors, including an increase of $2.3 million in the amortization of stock-based compensation to key officers and directors, which reflected two years of grants under a new long-term incentive program initiated in 2008, and a $1.7 million increase in bonuses resulting primarily from higher investment volume in 2009 as compared to 2008. Professional fees primarily represent auditing, tax, legal and consulting services. Professional fees overall were lower in 2009 primarily due to the write-off in 2008 of previously capitalized offering costs totaling $1.6 million related to the proposed offering of Carey Watermark (Note 2) and fees incurred in 2008 in connection with a settlement we entered into with the SEC with respect to a previously disclosed investigation (Note 9) and the opening of our asset management office in Amsterdam. These decreases in professional fees were partially offset by transaction-related costs of $1.0 million incurred in connection with a Carey Storage transaction during 2009 (Note 4).

Income (Loss) from Equity Investments in CPA^® REITs

Income or loss from equity investments in CPA^® REITs represents our proportionate share of net income or loss (revenues less expenses) from our investments in the CPA^® REITs in which, because of the shares we elect to receive from them for revenue due to us, we have a noncontrolling interest but exercise significant influence. The net income of the CPA^® REITs fluctuates based on the timing of transactions, such as new leases and property sales, as well as the level of impairment charges.

2010 vs. 2009 — For the year ended December 31, 2010, we recognized income from equity investments in the CPA^® REITs of $14.9 million, compared to a loss of $0.3 million in 2009, primarily due to a reduction in impairment charges recognized by the CPA^® REITs, which are estimated to total approximately $40.7 million in 2010, compared to $170.0 million in 2009. In addition, CPA^®:14’s results of operations during 2010 included a gain on extinguishment of debt of $11.4 million and a gain on deconsolidation of a subsidiary of $12.9 million. CPA^®:15 and CPA^®:16 — Global’s results of operations during 2010 each also included a gain on the deconsolidation of a subsidiary of $12.8 million and $7.1 million, respectively. For CPA^®:17 — Global, we receive up to 10% of distributions of available cash from its operating partnership. For 2010 and 2009, we received $4.5 million and $2.2 million, respectively, in cash under this provision.

2009 vs. 2008 — For the year ended December 31, 2009, loss from equity investments in the CPA^® REITs was $0.3 million, compared to income of $6.2 million in 2008, primarily due to higher impairment charges recognized by the CPA^® REITs, which totaled $170.0 million in 2009, compared to $40.4 million in 2008. In addition, the CPA^® REITs recognized income totaling $20.0 million during 2008 related to the SEC Settlement. These factors were partially offset by an increase in net gains on sales of properties totaling $25.8 million recognized by the CPA^® REITs in 2009 over 2008 as well as the $2.2 million cash distribution received in 2009 from CPA^®:17 — Global’s operating partnership.

Other Income and (Expenses)

2010 — During 2010, we recognized other income of $0.3 million primarily due to gains realized on foreign currency transactions for the repatriation of cash from foreign countries.

2009 — During 2009, we recognized other income of $4.1 million primarily related to a settlement of a dispute with a vendor regarding certain fees we paid in prior years for services they performed.

2008 — We recognized other income of $1.9 million during 2008 primarily related to an insurance reimbursement of certain professional services costs incurred in connection with the now settled SEC investigation.

Provision for Income Taxes

2010 vs. 2009 — For the year ended December 31, 2010 as compared to 2009, our provision for income taxes increased by $4.0 million, primarily due to an increase in income from continuing operations before income taxes.

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, our provision for income taxes decreased by $1.4 million, primarily due to a reduction in income from continuing operations before income taxes.

Net Income from Investment Management Attributable to W. P. Carey Members

2010 vs. 2009 — For the year ended December 31, 2010 as compared to 2009, the resulting net income from investment management attributable to W. P. Carey members increased by $21.3 million.

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, the resulting net income from investment management attributable to W. P. Carey members decreased by $5.5 million.

W. P. Carey 2010 10-K — 29

Real Estate Ownership (in thousands)

		Years ended December 31,
		2010				2009				Change				2009				2008				Change
Revenues
Lease revenues		$	63,450			$	62,324			$	1,126			$	62,324			$	66,784			$	(4,460	)
Other real estate income			18,570				14,907				3,663				14,907				20,658				(5,751	)
			82,020				77,231				4,789				77,231				87,442				(10,211	)
Operating Expenses
Depreciation and amortization			(19,317	)			(18,631	)			(686	)			(18,631	)			(18,567	)			(64	)
Property expenses			(10,888	)			(7,113	)			(3,775	)			(7,113	)			(6,496	)			(617	)
General and administrative			(4,422	)			(5,000	)			578				(5,000	)			(7,082	)			2,082
Other real estate expenses			(8,121	)			(7,308	)			(813	)			(7,308	)			(8,196	)			888
Impairment charges			(9,512	)			(3,516	)			(5,996	)			(3,516	)			(473	)			(3,043	)
			(52,260	)			(41,568	)			(10,692	)			(41,568	)			(40,814	)			(754	)
Other Income and Expenses
Other interest income			123				175				(52	)			175				622				(447	)
Income from equity investments in real estate			16,044				13,765				2,279				13,765				7,987				5,778
Gain on sale of investment in direct financing lease			—				—				—				—				1,103				(1,103	)
Other income and (expenses)			1,073				3,258				(2,185	)			3,258				(406	)			3,664
Interest expense			(16,234	)			(14,979	)			(1,255	)			(14,979	)			(18,598	)			3,619
			1,006				2,219				(1,213	)			2,219				(9,292	)			11,511
Income from continuing operations before income taxes			30,766				37,882				(7,116	)			37,882				37,336				546
Provision for income taxes			(770	)			(1,755	)			985				(1,755	)			(1,089	)			(666	)
Income from continuing operations			29,996				36,127				(6,131	)			36,127				36,247				(120	)
(Loss) income from discontinued operations			(4,628	)			5,223				(9,851	)			5,223				8,412				(3,189	)
Net income from real estate ownership			25,368				41,350				(15,982	)			41,350				44,659				(3,309	)
Less: Net income attributable to noncontrolling interests			(2,058	)			(1,661	)			(397	)			(1,661	)			(1,470	)			(191	)
Net income from real estate ownership attributable to W. P. Carey members		$	23,310			$	39,689			$	(16,379	)		$	39,689			$	43,189			$	(3,500	)

W. P. Carey 2010 10-K — 30

The following table presents the components of our lease revenues (in thousands):

		Years ended December 31,
		2010				2009				2008
Rental income		$	53,356			$	51,705			$	55,856
Interest income from direct financing leases			10,094				10,619				10,928
		$	63,450			$	62,324			$	66,784

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 direct ownership of real estate (in thousands):

		Years ended December 31,
Lessee		2010				2009				2008
CheckFree Holdings, Inc. (a)		$	5,103			$	4,964			$	4,829
The American Bottling Company			4,390				4,591				4,563
Bouygues Telecom, S.A. (a) (b) (c) (d)			3,852				6,410				6,215
Orbital Sciences Corporation (e)			3,611				2,771				2,939
JP Morgan Chase Bank, N.A. (f)			3,448				—				—
Titan Corporation			2,912				2,912				2,912
AutoZone, Inc.			2,241				2,228				2,210
Unisource Worldwide, Inc. (g)			1,923				1,668				1,678
Quebecor Printing, Inc.			1,916				1,919				1,941
Sybron Dental Specialties Inc. (d)			1,816				1,953				1,770
Jarden Corporation			1,614				1,614				1,625
BE Aerospace, Inc.			1,580				1,580				1,580
Eagle Hardware & Garden, a subsidiary of Lowe’s Companies			1,568				1,574				1,486
Omnicom Group Inc. (h)			1,518				1,251				1,251
CSS Industries, Inc.			1,516				1,570				1,570
Career Education Corporation			1,502				1,502				1,502
Sprint Spectrum, L.P.			1,425				1,425				1,425
Enviro Works, Inc. (c)			1,255				1,426				1,421
Other (a) (b)			20,260				20,966				25,867
		$	63,450			$	62,324			$	66,784

W. P. Carey 2010 10-K — 31

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 ventures. Amounts provided are the total amounts attributable to the ventures and do not represent our proportionate share (dollars in thousands):

		Ownership
		Interest at				Years ended December 31,
Lessee		December 31, 2010				2010				2009				2008
The New York Times Company (a)			18	%		$	26,768			$	21,751			$	—
Carrefour France, SAS (b)			46	%			19,618				21,481				21,387
Federal Express Corporation			40	%			7,121				7,044				6,967
Medica — France, S.A. (b)			46	%			6,447				6,917				7,169
Schuler A.G. (b)			33	%			6,208				6,568				6,802
U. S. Airways Group, Inc. (c)			75	%			4,421				4,356				—
Information Resources, Inc. (d)			33	%			4,164				4,973				4,972
Amylin Pharmaceuticals, Inc. (e)			50	%			4,027				3,635				3,343
Hologic, Inc.			36	%			3,528				3,387				3,317
Consolidated Systems, Inc.			60	%			1,831				1,831				1,831
Childtime Childcare, Inc.			34	%			1,303				1,332				1,248
The Retail Distribution Group (f)			40	%			206				1,020				808
						$	85,642			$	84,295			$	57,844