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 (State of incorporation)		13-3912578 (I.R.S. Employer Identification No.)
50 Rockefeller Plaza New York, New York (Address of principal executive offices)		10020 (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 Listed Shares, No Par Value		Name of exchange on which registered 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 o 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. þ

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, 2009, the aggregate market value of the registrants’ Listed Shares held by non-affiliates was $639.0 million.

As of February 19, 2010, there are 39,218,570 Listed Shares of registrant outstanding.

The registrant incorporates by reference its definitive Proxy Statement with respect to its 2010 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

		Page No.
PART I
Item 1. Business			2
Item 1A. Risk Factors			12
Item 1B. Unresolved Staff Comments			17
Item 2. Properties			17
Item 3. Legal Proceedings			17
Item 4. Submission of Matters to a Vote of Security Holders			17
PART II			18
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			18
Item 6. Selected Financial Data			19
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			42
Item 8. Financial Statements and Supplementary Data			44
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			90
Item 9A. Controls and Procedures			90
Item 9B. Other Information			90
PART III			91
Item 10. Directors, Executive Officers and Corporate Governance			91
Item 11. Executive Compensation			91
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			91
Item 13. Certain Relationships and Related Transactions, and Director Independence			91
Item 14. Principal Accounting Fees and Services			91
PART IV			92
Item 15. Exhibits, Financial Statement Schedules			92
SIGNATURES			94
Exhibit 10.14
Exhibit 21.1
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32

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. 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 below 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 2009 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, which are sponsored by us under the Corporate Property Associates brand name (the “CPA^â REITs”) and 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”).

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 (“NYSE”) 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 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, 2009, we employed 156 individuals through our wholly-owned subsidiaries.

Significant Developments during 2009 include:

Acquisition Activity — During 2009, we structured investments totaling $547.7 million, including a transaction with The New York Times Company totaling $233.7 million. This 2009 investment activity consisted of investments structured on behalf of the CPA^® REITs totaling $507.7 million and our contribution of $40.0 million in The New York Times transaction. International investments comprised 36% of our total investments during 2009. Amounts are based on the exchange rate of the foreign currency at the date of acquisition, as applicable.

Financing Activity — During 2009, we obtained mortgage financing totaling $297.0 million on behalf of the CPA^® REITs and $61.5 million for our own 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.

W. P. Carey 2009 10-K — 2

Impairment Charges — During 2009, we recorded impairment charges on our own portfolio totaling $10.4 million, and we currently estimate that the CPA^® REITs will record impairment charges aggregating approximately $170 million. Primarily due to these impairment charges, our proportionate share of income from equity investments in the CPA^® REITs declined by $11.5 million for 2009.

Fundraising Activity — Since beginning fundraising for CPA^®:17 – Global in December 2007, we have raised more than $850.0 million on their behalf through the date of this Report. Included in this amount is $437.9 million that we raised during 2009 and $76.7 million that we have raised so far in 2010 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.

(b) Financial Information About Segments

Refer to Note 17 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 own 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. 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 estimated net asset valuations of the individual CPA^® REITs. Estimated net asset valuations are performed annually by a third party, beginning for each CPA^® REIT generally three years after completion of its public offering. 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 2009 10-K — 3

Structuring Revenue

Under the terms of the advisory agreements, we earn revenue in connection with structuring and negotiating investments and related mortgage financing 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 when the transaction is completed, while the remainder (generally 2%) is payable 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 agreement 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^® REIT’s properties, less indebtedness, exceeds investors’ capital plus a specified preferred return. CPA^®:17 – Global, upon certain terminations, has the right, beginning two years after the start of its operations, to repurchase our interest in its operating partnership at its then 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^® REIT’s 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. Because CPA^®:14 substantially invested the net proceeds received in its initial public offering in 2000, we began discussing liquidity alternatives with the board of directors of CPA^®:14 during 2008. However, in light of evolving market conditions during 2008, we recommended, and the board of CPA^®:14 agreed, that further consideration of liquidity alternatives be postponed until market conditions become more stable. In 2010, we expect to restart our discussion about liquidity alternatives for CPA^â:14 shareholders with the board of directors of CPA^®:14, but we are unable to predict when any liquidity event will occur.

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^® REIT’s 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.

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, 2009, we owned 8.5% of the outstanding shares of CPA^®:14, 6.5% of the outstanding shares of CPA^®:15, 4.7% of the outstanding shares of CPA^®:16 – Global and 0.4% of the outstanding shares of CPA^®:17 – Global. As a result of our election to receive certain asset management revenue for 2010 in restricted shares of these entities, we expect our ownership percentages to increase in 2010.

W. P. Carey 2009 10-K — 4

Real Estate Ownership

We own and invest in commercial properties in the United States (“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. 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, 2009.

While no tenant at any of our consolidated investments represented more than 10% of our total lease revenues from our real estate ownership during 2009, a joint venture that we account for under the equity method of accounting and that leases property to Carrefour France, SAS, earned lease revenue of $21.5 million in 2009. We have a 46% interest in this joint venture.

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 own portfolio, we believe that our own 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 2009 10-K — 5

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 2009 10-K — 6

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 has discretion to 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.

•

Trevor P. Bond — Co-founder of Credit Suisse’s real estate equity group. Currently managing member of private investment vehicle, Maidstone Investment Co., LLC.

•

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.

•

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.

•

Nick J.M. van Ommen — Former chief executive officer of the European Public Real Estate Association promoting, developing and representing the European public real estate sector, with over twenty years of financial industry experience.

•

Dr. Karsten von Köller — Currently chairman of Lone Star Germany GmbH, deputy chairman of the Supervisory Board of Corealcredit Bank AG, deputy chairman of the Supervisory Board of MHB Bank AG, and vice chairman of the Supervisory Board of IKB Deutsche Industriebank AG. Former chief executive officer of Eurohypo AG.

Messrs. Coolidge, Bond, 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”) for the purpose of investing in self-storage real estate properties and their related businesses within the U.S. In December 2006, we contributed $5.0 million in cash for equity interests in Carey Storage and loaned Carey Storage $5.9 million, and Carey Storage began acquiring domestic self-storage properties. In January 2009, Carey Storage completed a transaction whereby it received cash proceeds, plus a commitment to invest additional equity, from a third party to fund the purchase of self-storage assets in the future in exchange for a 60% interest in its self-storage portfolio. Further information about this transaction and other Carey Storage activity is described in Part II, Item 7, Carey Storage Activity and Item 8, Note 4. Real Estate – Carey Storage.

W. P. Carey 2009 10-K — 7

Our Portfolio

At December 31, 2009, we owned and managed 880 properties domestically and internationally, including our own portfolio. Our portfolio was comprised of our full or partial ownership interest in 170 properties, substantially all of which were triple-net leased to 79 tenants, and totaled approximately 14 million square feet (on a pro rata basis) with an occupancy rate of approximately 94%. Our portfolio has the following property and lease characteristics:

Geographic Diversification

Information regarding the geographic diversification of our properties at December 31, 2009 is set forth below (dollars in thousands):

		Consolidated Investments								Equity Investments in Real Estate(b)
		Annualized				% of Annualized				Annualized				% of Annualized
		Contractual Lease				Contractual				Contractual Lease				Contractual
Region		Revenue(a)				Lease Revenue				Revenue(a)				Lease Revenue
United States
South		$	26,758				39	%		$	2,988				10	%
West			15,917				23				3,590				12
Midwest			11,068				16				2,399				8
East			7,971				11				6,511				22
Total U.S.			61,714				89				15,488				52
International
Europe (c)			7,601				11				13,572				48
Total		$	69,315				100	%		$	29,060				100	%

Property Diversification

Information regarding our property diversification at December 31, 2009 is set forth below (dollars in thousands):

		Consolidated Investments								Equity Investments in Real Estate(b)
		Annualized				% of Annualized				Annualized				% of Annualized
		Contractual Lease				Contractual				Contractual Lease				Contractual
Property Type		Revenue(a)				Lease Revenue				Revenue(a)				Lease Revenue
Industrial		$	24,605				35	%		$	4,501				15	%
Office			23,917				35				12,360				43
Warehouse/Distribution			10,334				15				8,684				30
Retail			5,858				8				—				—
Other Properties (c)			4,601				7				3,515				12
Total		$	69,315				100	%		$	29,060				100	%

W. P. Carey 2009 10-K — 8

Tenant Diversification

Information regarding our tenant diversification at December 31, 2009 is set forth below (dollars in thousands):

		Consolidated Investments								Equity Investments in Real Estate(b)
		Annualized				% of Annualized				Annualized				% of Annualized
		Contractual Lease				Contractual				Contractual Lease				Contractual
Tenant Industry(c)		Revenue(a)				Lease Revenue				Revenue(a)				Lease Revenue
Telecommunications		$	12,367				18	%		$	—				—	%
Business and Commercial Services			11,660				17				1,863				6
Retail Stores			6,928				10				8,209				30
Electronics			5,407				8				1,270				4
Beverages, Food, and Tobacco			4,842				7				419				1
Forest Products and Paper			4,606				7				—				—
Aerospace and Defense			4,426				6				—				—
Healthcare, Education and Childcare			4,195				5				3,515				12
Media: Printing and Publishing			2,593				4				4,293				15
Consumer Goods			1,857				3				—				—
Chemicals, Plastics, Rubber, and Glass			1,813				3				—				—
Hotels and Gaming			1,510				2				—				—
Governmental			1,170				2				—				—
Mining			912				2				948				3
Machinery			692				1				2,408				8
Transportation — Cargo			295				—				2,838				10
Transportation — Personal			183				—				3,297				11
Other (d)			3,859				5				—				—
Total		$	69,315				100	%		$	29,060				100	%

W. P. Carey 2009 10-K — 9

Lease Expirations

At December 31, 2009, 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 Lease				Contractual				Contractual Lease				Contractual
Year of Lease Expiration		Revenue(a)				Lease Revenue				Revenue(a)				Lease Revenue
2010		$	10,070				15	%		$	—				—	%
2011			10,683				15				—				—
2012			6,975				10				1,094				4
2013			2,325				3				2,282				8
2014			7,868				11				3,297				11
2015			6,761				10				7,115				24
2016			1,160				2				560				2
2017			5,890				8				—				—
2018			10,751				16				—				—
2019 - 2023			5,787				8				7,063				24
2024 - 2028			1,045				2				7,649				27
Total		$	69,315				100	%		$	29,060				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 2009 10-K — 10

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, 2009, scheduled balloon payments for the next five years are as follows (in thousands):

2010		$	11,612	(a)
2011			133,325	(b) (c)
2012			28,260
2013			—	(b)
2014			—

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, 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 within the U.S.; however, in the future we may seek to raise funds for investment from outside the U.S.

While historically we faced active competition from many sources for investment opportunities in commercial properties net leased to major corporations both domestically and internationally, there has been a decrease in such competition as a result of the continued weakness in the credit and real estate financing markets. 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 2009 10-K — 11

(d) Financial Information About Geographic Areas

See Our Portfolio above and the Segment Reporting footnote 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, 2009 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 current financial and economic crisis could adversely affect our business.

Although we believe we are seeing an easing of the global economic and financial crisis that has severely curbed liquidity in the credit and real estate financing markets during recent periods, the full magnitude, effects and duration of the crisis cannot be predicted. To date, its effects on our business have been somewhat limited, primarily in that it has been generally more difficult to obtain financing for the sale-leaseback transactions we enter into on behalf of our managed funds and for refinancing of maturing debt. In addition, 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.

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 2009 10-K — 12

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.

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 33%, 31% and 29% of total lease revenues in 2009, 2008 and 2007, 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.

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 40% of our leases 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.

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 property has experienced an other-than-temporary decline in its carrying 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.

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^® REIT’s assets exceeds the remaining amount necessary to provide investors with total distributions equal to their investment plus a preferred return. For CPA^®:17 – Global, it has the right, but not the obligation, upon certain terminations to repurchase our interests in its operating partnership at fair market value. If such right is not exercised, we would remain as a limited partner of the operating partnership. Nonetheless, any such termination could have a material adverse effect on our business, results of operations and financial condition.

W. P. Carey 2009 10-K — 13

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 fund raising, the majority of our fund raising 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 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 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.

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.

We face active competition.

In raising funds for investment by the CPA^® REITs, 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.

As a result of the continued weakness in the credit and real estate financing markets, we believe there has been a recent decrease in the level of competition for the acquisition of office and industrial properties net leased to major corporations both domestically and internationally. Historically, however, we have faced active competition 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.

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.

W. P. Carey 2009 10-K — 14

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.

In addition, the lack of available information in accordance with accounting principles generally accepted in the United States of America (“GAAP”) could impair our ability to analyze transactions and may cause us to forego an investment opportunity. It may also impair our ability to receive timely and accurate financial information from tenants necessary to meet our reporting obligations to financial institutions or governmental or regulatory agencies.

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.

We do not fully control the management of our properties.

The tenants or managers of net lease 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.

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;

	•		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.

W. P. Carey 2009 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 diversity our portfolio.

A potential change in U.S. accounting standards regarding operating leases may make the leasing of facilities less attractive to our potential 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 (the “FASB”) and the International Accounting Standards Board conducted a joint project to re-evaluate lease accounting. In March 2009, the FASB issued a discussion paper providing its preliminary views that the scope of the proposed new standard should be based on the scope of the existing standards. Changes to the accounting guidance could affect both our accounting for leases as well as that of our current and potential customers. 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 us to enter leases on terms we find favorable.

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.

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.

W. P. Carey 2009 10-K — 16

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. 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.

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 United States 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.

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 San Francisco, California 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, 2009, 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.		Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders during the fourth quarter of the year ended December 31, 2009.

W. P. Carey 2009 10-K — 17

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, 2009 there were 24,958 holders of record 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:

		2009												2008
										Cash												Cash
										Distributions												Distributions
Period		High				Low				Declared				High				Low				Declared
First quarter		$	24.00			$	16.15			$	0.496			$	34.62			$	25.79			$	0.482
Second quarter			29.89				19.75				0.498				33.97				27.67				0.487
Third quarter			30.67				22.50				0.500				31.08				23.44				0.492
Fourth quarter			29.80				25.50				0.502	(a)			27.05				16.50				0.494

Our line of credit contains covenants that restrict the amount of distributions that we can pay.

Stock Price Performance Graph

The graph below provides an indicator of cumulative total stockholder returns for our common stock for the period December 31, 2004 to December 31, 2009 compared with the S&P 500 Index and the FTSE NAREIT Equity Index. The graph assumes a $100 investment on December 31, 2004, together with the reinvestment of all dividends.

		12/04				12/05				12/06				12/07				12/08				12/09
W. P. Carey & Co. LLC			100.00				76.94				97.47				114.96				87.25				112.50
S&P 500			100.00				104.91				121.48				128.16				80.74				102.11
FTSE NAREIT Equity			100.00				112.16				151.49				127.72				79.53				101.79

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

W. P. Carey 2009 10-K — 18

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,
		2009				2008				2007				2006				2005
Operating Data (a)
Revenues from continuing operations (b)		$	235,876			$	238,624			$	257,956			$	261,764			$	157,610
Income from continuing operations			60,435				71,749				70,392				82,269				41,793
Net income			70,568				78,605				88,789				87,115				48,868
Add: Net loss (income) attributable to noncontrolling interests			713				950				(4,781	)			220				1,197
Less: Net income attributable to redeemable noncontrolling interests			(2,258	)			(1,508	)			(4,756	)			(1,032	)			(1,461	)
Net income attributable to W. P. Carey members			69,023				78,047				79,252				86,303				48,604
Basic Earnings Per Share:
Income from continuing operations attributable W. P. Carey members			1.48				1.82				1.74				2.18				1.10
Net income attributable to W. P. Carey members			1.74				2.00				2.08				2.29				1.29
Diluted Earnings Per Share:
Income from continuing operations attributable W. P. Carey members			1.49				1.80				1.71				2.11				1.06
Net income attributable to W. P. Carey members			1.74				1.97				2.05				2.22				1.25
Cash distributions declared per share			2.00	(c)			1.96				1.88	(c)			1.82				1.79
Balance Sheet Data
Net investments in real estate (d)		$	884,460			$	918,741			$	918,734			$	850,107			$	747,700
Total assets			1,093,336				1,111,136				1,153,284				1,093,010				983,262
Long-term obligations (e)			326,330				326,874				316,751				279,314				247,298
Other Information
Cash provided by operating activities		$	74,544			$	63,247			$	47,471			$	119,940			$	52,707
Cash distributions paid			78,618				87,700				71,608				68,615				67,004
Payment of mortgage principal (f)			9,534				9,678				16,072				11,742				9,229

W. P. Carey 2009 10-K — 19

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,
		2009				2008				2007
Total revenue (excluding reimbursed costs from affiliates)		$	187,161			$	197,445			$	244,174
Net income attributable to W. P. Carey members			69,023				78,047				79,252
Cash flow from operating activities			74,544				63,247				47,471

Total revenue decreased in 2009 as compared to 2008, primarily due to recent tenant activities including lease restructurings and the reclassification of a property to an equity investment in real estate during 2009 within our real estate ownership segment. In addition, revenue from this segment in 2008 included a $6.5 million lease termination fee.

The reduction in Net income in 2009 as compared to 2008 was primarily due to an increase in the amount of impairment charges taken in 2009. We recognized impairment charges totaling $10.4 million in 2009 in our real estate ownership segment compared to impairments of $1.0 million in 2008. We were also impacted by an increase in the level of impairments taken by the CPA^® REITs, which are reflected in our investment management segment.

Cash flow in 2009 benefited from our election to receive more of the fees we earn from certain of the CPA^® REITs in cash instead of their common stock, our receipt of distributions of available cash from CPA^®:17 – Global and more efficient tax strategies. In addition, cash flow in 2008 was affected both by the receipt in January 2008 of $28.3 million of previously deferred revenue from CPA^®:16 – Global, which had been recognized when CPA^®:16 – Global met its performance criterion in 2007, and by the payment of $30.0 million related to a previously disclosed settlement with the SEC, described below.

Factors Affecting Comparability

Certain events have occurred over the past few years that affect comparability of our results of operations for the periods presented in this Report. These events, described below, significantly impacted the results of operations of our investment management segment for the year ended December 31, 2007 and as such make it difficult to compare 2007 with future periods.

Under the terms of our advisory agreement with CPA^®:16 – Global, certain revenues were to be deferred and were not payable to us until CPA^®:16 – Global met an agreed-upon performance criterion. In June 2007, CPA^®:16 – Global met its performance criterion, and as a result, we recognized previously deferred revenue totaling $45.9 million (consisting of asset management revenue of $11.9 million, structuring revenue of $31.7 million and interest income on the previously deferred structuring revenue of $2.3 million). Net income recognized in connection with CPA^®:16 – Global achieving its performance criterion totaled $21.6 million in 2007. In addition, as a result of CPA^®:16 – Global meeting its performance criterion, we recognized and paid to certain employees incentive and commission compensation of $6.6 million that had previously been deferred.

In March 2008, we entered into a settlement with the SEC with respect to all matters relating to a previously disclosed investigation (the “SEC Settlement”). In connection with this settlement, we made payments of $20.0 million, including interest, to certain of our managed REITs and paid a $10.0 million civil penalty. In anticipation of this settlement, we took a charge of $30.0 million in the fourth quarter of 2007 and recognized an offsetting $9.0 million tax benefit in the same period, which had a negative impact on the results of our investment management segment for the year ended December 31, 2007.

W. P. Carey 2009 10-K — 20

Current Trends

As of the date of this Report, we believe we are seeing an easing of the global economic and financial crisis that has severely curbed liquidity in the credit and real estate financing markets during recent periods, although the full magnitude, effects and duration of the crisis cannot be predicted. As a result of improving economic conditions, we have seen some positive trends affecting both our business as well as the CPA^® REITs, including: an increase in investment opportunities; improving financing conditions for new transactions and refinancing of maturing debt, both domestically and internationally; and continued improvement of capital fundraising for CPA^®:17 – Global. However, the lingering effects of the challenging economic environment have also resulted in some negative trends affecting both our business as well as the CPA^® REITs. These trends include: continued tenant defaults, particularly in the portfolios of the CPA^® REITs; renewals of tenant leases generally at lower rental rates than existing leases; and low inflation rates, which will likely limit rent increases in upcoming periods because most of our leases provide for rent adjustments indexed to changes in the CPI. Despite recent indicators that the economy is beginning to recover, the current trends that affect our business segments remain dependent on the rate and scope of the recovery, rendering any discussion of the impact of these trends highly uncertain. Nevertheless, as of the date of this Report, the impact of current financial and economic trends on our business segments, and our response to those trends, is presented below.

Investment Opportunities

We earn structuring revenue on the investment transactions we structure on behalf of the CPA^® REITs. Our ability to complete these investments, and thereby to earn structuring revenue, fluctuates based on the pricing of transactions and the availability of financing for our investments, among other factors. During 2009, pricing on sale-leaseback investment opportunities generally became more attractive, and we expect continued attractive pricing to continue in 2010 if economic conditions continue to improve. We believe that our sale-leaseback transactions can be an attractive alternative source of financing for corporations that have difficulty obtaining financing through traditional channels, and we are seeing increased demand for our services. We were able to achieve financing on many of the investments structured on behalf of the CPA^® REITs during 2009 and, when financing was unavailable, we were able to achieve desired returns that allowed us to structure transactions on behalf of the CPA^® REITs without financing. In addition, due to the recent volatility in the investment environment, we believe we are benefiting from a decreased level of competition for the investments we make on behalf of the CPA^® REITs, both domestically and internationally.

During 2009, we structured investments totaling $547.7 million, including a transaction with The New York Times Company totaling $233.7 million. This 2009 investment activity consists of investments structured on behalf of the CPA^® REITs totaling $507.7 million and our contribution of $40.0 million in the New York Times transaction. International investments comprised 36% of our total investments during 2009, as compared to 46% during 2008. We currently expect that international transactions will continue to form a significant portion of the investments we structure, although the percentage of international investments in any given period may vary.

Financing Conditions

Conditions in the real estate financing markets impact our ability to structure investments on behalf of the CPA^® REITs and to refinance maturing debt. Despite the recent weak financing environment, which has resulted in lenders for both domestic and international investments offering loans at shorter maturities and subject to variable interest rates, we have begun to see some improvements in the financing markets and to date have been successful refinancing maturing debt and obtaining financing for new transactions. We generally attempt to obtain interest rate caps or swaps to mitigate the impact of variable rate financing. During 2009, we obtained mortgage financing totaling $297.0 million on behalf of the CPA^® REITs, including financing for new transactions and refinancing of maturing debt, with a weighted annual average interest rate and term of up to 7.6% and 6.6 years, respectively. In addition, we also obtained mortgage financing totaling $61.5 million for our own real estate portfolio, including our share of financing for the New York Times transaction and refinancing of maturing debt, with a weighted average annual interest rate and term of up to 7.8% and 7.0 years, respectively.

At December 31, 2009, the CPA^® REITs had aggregate balloon payments totaling $101.4 million due in 2010 and $319.3 million in 2011, while we had balloon payments totaling $11.6 million that will be due during 2010 and $47.2 million that will be due during 2011, including our share of balloon payments related to unconsolidated ventures totaling $24.9 million in 2011. We are actively seeking to refinance this debt but believe we and the CPA^® REITs have sufficient financing alternatives and/or cash resources to make these payments, if necessary. In both our own portfolio and those of the CPA^® REITs, property level debt is generally non-recourse, which means that if we or any of the CPA^® REITs default on a mortgage loan obligation, our exposure is limited to our equity invested in that property (see Corporate Defaults below). We also have a line of credit that expires in 2011 and that can be extended for one year, subject to satisfying certain conditions. Amounts outstanding under this line totaled $111.0 million at December 31, 2009.

W. P. Carey 2009 10-K — 21

Corporate Defaults

Some of the tenants in our own portfolio and the CPA^® REIT portfolios have experienced financial stress, and we expect that this trend may continue, albeit at a less severe rate, in 2010. In our own real estate portfolio, corporate defaults can reduce our results of operations and cash flow from operations. Tenant defaults in the CPA^® REIT portfolios can reduce our asset management revenue if they lead to a decline in the net asset values of the CPA^® REITs, and can also reduce our income from equity investments in the CPA^® REITs.

Tenants in financial distress 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, all of which may 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. Based on tenant activity during 2009, including lease amendments, early lease renewals and lease rejections in bankruptcy court, we currently expect that 2010 lease revenue will decrease by approximately 7% in our own portfolio and by approximately 4% in the CPA^® REITs on an annualized basis, as compared with 2009 lease revenue. However, this amount may increase or decrease based on additional tenant activities and changes in economic conditions, both of which are outside of our control. If the North American and European economic zones continue to experience the improving economic conditions that they have experienced recently, we would expect to see an improvement in the general business conditions for our tenants, which should result in less stress for them financially. However, if economic conditions deteriorate, it is likely that our tenants’ financial condition will deteriorate as well.

We have no significant exposure to tenants operating under bankruptcy protection in our own portfolio as of the date of this Report. However, the CPA^® REITs have experienced increased levels of corporate defaults recently. During 2009, tenants accounting for less than 2.0% of aggregate annualized lease revenues of the CPA^® REITs entered into bankruptcy/administration. As a result of several of these corporate defaults, during 2009 the CPA^® REITs suspended debt service on six non-recourse mortgage loans with an aggregate outstanding balance of $83.3 million, or approximately 2% of the aggregate outstanding non-recourse debt of the CPA^® REITs, and suspended debt service and subsequently turned over to the lenders several properties that had been collateralized by two additional non-recourse mortgage loans with an aggregate outstanding balance of $27.7 million. During 2009, we recorded impairment charges on our own portfolio totaling $10.4 million and we currently estimate that the CPA^® REITs will record impairment charges aggregating approximately $170 million. As a result of the CPA^® REIT impairment charges, our income from equity investments in the CPA^® REITs declined by $11.5 million for 2009. Impairment charges do not necessarily reflect the true economic loss caused by the default of a tenant. The economic loss may be greater or less than the impairment amount.

To mitigate these risks, we have invested in assets that we believe are critically important to a tenant’s operations and have attempted to diversify the fully invested portfolios by tenant and tenant industry. 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, where possible, as well as protecting our rights when tenants default or enter into bankruptcy.

Fundraising

We are currently fundraising for CPA^®:17 – Global. While fundraising trends are difficult to predict, our recent fundraising has continued to strengthen. We generally experienced increases in our month over month fundraising results in 2009 and raised $141.5 million for CPA^®:17 – Global’s initial public offering in the fourth quarter of 2009, which represented an increase of 98%, 41% and 14% over the first, second and third quarters of 2009, respectively. Since beginning fundraising for CPA^®:17 – Global in December 2007, we have raised more than $850 million on its behalf through the date of this Report. We have made a concerted effort to broaden our distribution channels and are beginning to see a greater portion of our fundraising come from multiple channels as a result of these efforts. We expect these trends to continue in 2010.

Net Asset Values of the CPA^® REITs

We own shares in 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 market conditions deteriorating during 2008, asset values declined across all asset types, and the estimated net asset valuations for CPA^®:14, CPA^®:15 and CPA^®:16 – Global at December 31, 2008 declined as well, which negatively impacted our asset management revenue during 2009. Based on the overall continued weakness in the economy during 2009, we currently expect that estimated net asset valuations for CPA^®:14, CPA^®:15 and CPA^®:16 – Global at December 31, 2009 will be down slightly.

W. P. Carey 2009 10-K — 22

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

Redemptions and Distributions of the CPA^® REITs

During 2008 and 2009, CPA^®:14, CPA^®:15 and, to a lesser extent, CPA^®:16 – Global and CPA^®:17 – Global experienced higher levels of share redemptions. The redemption plan for each of the CPA^® REITs provides for certain limits on the amount of redemptions, including that redemptions cannot exceed 5% of outstanding shares. As a result of these increased redemption levels, the redemption plans of CPA^®:14 and CPA^®:15 were either nearing or had reached the 5% limitation, and as a result their boards of directors approved the suspension of their respective redemption plans. These suspensions will remain in effect until the boards of directors of CPA^®:14 and CPA^®:15, in their discretion, determine to reinstate the redemption plans. In addition, for the fourth quarter of 2009, CPA^®:16 – Global and CPA^®:17 – Global did not increase their quarterly distribution from the distribution paid in the third quarter. As a result of these events, the CPA^® REITs have conserved cash. To date, the CPA^® REITs have not experienced conditions that have affected their ability to continue to pay distributions, and we currently anticipate that the CPA^® REITs will continue to maintain adequate distribution coverage.

Lease Expirations

We actively manage our own real estate portfolio and begin discussing options with tenants generally three years in advance of the scheduled lease expiration. In certain cases, we obtain lease renewals from our tenants. However, tenants may exercise purchase options rather than renew their leases, while in other cases we may seek replacement tenants or sell the property. As of the date of this Report, a significant amount of the leases in our own portfolio expire between 2010 and 2012. Based on annualized contractual lease revenue, 15% of the leases on our consolidated real estate investments will expire in 2010, 15% will expire in 2011 and 10% will expire in 2012. We currently expect that most of our leases due to expire in 2010 will be renewed by our tenants, on what we believe are generally competitive terms given current market conditions. We expect that the leases will be renewed mostly with the existing tenants, which will allow us to avoid downtime, paying operating costs and paying for tenant improvements in most cases. On the other hand, we expect that a majority of the leases that are being renewed during 2010 will be at rents that are below the tenants’ existing contractual rent. Based on tenant activity during 2009, including lease amendments and early lease renewals, we currently expect lease revenue from our consolidated real estate investments in 2010 to decrease by approximately 7% on an annualized basis. In addition, two of our largest equity investments in real estate based on lease revenue, Carrefour France, SAS and Medica-France, S.A., were renewed early at a combined 19% reduction on an annualized basis. We own a 46% interest in these investments. Lease expirations may also affect the cash flow of certain of the CPA^® REITs, particularly CPA^®:14 and CPA^®:15.

Inflation and Foreign Exchange Rates

Our leases and those of the CPA^® REITs generally have rent adjustments 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 2008 and 2009 have generally benefited from increases in inflation rates during the years prior to the scheduled rent adjustment date. However, we expect that rent increases in our own portfolio and in 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.

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 recent months, the U.S. dollar has not fluctuated significantly against the Euro. To the extent foreign currency exchange rates remain stable, they will have a minimal impact on our financial conditions and results of operations. However, significant shifts in the value of the Euro could have a material impact on our future results and, especially, on the future results and cash flows of the CPA^® REITs, which have higher levels of international investments.

The average rate for the U.S. dollar in relation to the Euro strengthened by approximately 5% during 2009 in comparison to 2008, resulting in a modestly negative impact on our results of operations for Euro-denominated investments in the current year. For 2008 as compared with 2007, the average rate for the U.S. dollar in relation to the Euro weakened by approximately 7%, resulting in a modestly positive impact on our results of operations for Euro-denominated investments in 2008 as compared with 2007. Investments denominated in the Euro accounted for approximately 11% of our annualized lease revenues for 2009 and 9% of our annualized lease revenues for both 2008 and 2007, and 29%, 30% and 31% of aggregate lease revenues for the CPA^® REITs for 2009, 2008 and 2007, respectively.

W. P. Carey 2009 10-K — 23

W. P. Carey International Transaction

W. P. Carey International LLC (“WPCI”) is a subsidiary company that structures net lease transactions on behalf of the CPA^® REITs outside of the U.S. After exercising certain option rights in 2008, two officers of WPCI held interests totaling approximately 23% in WPCI. In December 2009, one of those officers resigned from W. P. Carey, WPCI, and all affiliated entities pursuant to a mutually agreed separation. As part of this separation, we effected the purchase of all of the interests in WPCI and these related entities held by that officer for cash, at a negotiated fair market value of $15.4 million. The remaining officer currently has an approximately 7.7% interest in each of WPCI and the related entities (Note 14).

Carey Storage Activity

In January 2009, Carey Storage completed a transaction whereby it received cash proceeds of $21.9 million, plus a commitment to invest up to a further $8.1 million of equity, from a third party to fund the purchase of self-storage assets in the future in exchange for a 60% interest in its self storage portfolio. Carey Storage incurred transaction-related costs totaling approximately $1.0 million in connection with this transaction. Because we have an option to repurchase this interest at fair value, we account for this transaction under the profit sharing method.

In connection with this transaction, Carey Storage repaid, in full, the $35.0 million outstanding balance on its secured credit facility at a discount for $28.0 million, terminated the facility, and recognized a gain of $7.0 million on the repayment of this debt, inclusive of the third party’s interest of $4.2 million. The debt repayment was financed with a portion of the proceeds from the exchange of the 60% interest and non-recourse debt with a new lender totaling $25.0 million, which is secured by individual mortgages on, and cross-collateralized by, the thirteen properties in the Self Storage portfolio. The new financing bears interest at a fixed rate of 7% per annum and has a 10 year term with a rate reset after 5 years. The $7.0 million gain recognized on the debt repayment and the third party’s $4.2 million interest in this gain are both reflected in Other income and (expenses) in the consolidated financial statements.

In August 2009, Carey Storage borrowed an additional $3.5 million that is secured by individual mortgages on, and cross-collateralized by, seven properties in the Self Storage portfolio and distributed the proceeds to its profit sharing interest holders. This new loan has an annual fixed interest rate of 7.25% and has a term of 9.6 years with a rate reset after 5 years. As part of this transaction, Carey Storage distributed $1.9 million to its third party investor, which has been reflected as a reduction of the profit sharing obligation.

We reflect our Carey Storage operations in our real estate ownership segment. Costs totaling $1.0 million incurred in structuring the transaction and bringing in a new investor into these operations are reflected in General and administrative expenses in our investment management segment.

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 consummate 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 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 of investment.

W. P. Carey 2009 10-K — 24

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.

Results of Operations

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

Investment Management (in thousands)

		Years ended December 31,
		2009				2008				Change				2008				2007				Change
Revenues
Asset management revenue		$	76,621			$	80,714			$	(4,093	)		$	80,714			$	83,051			$	(2,337	)
Structuring revenue			23,273				20,236				3,037				20,236				78,175				(57,939	)
Wholesaling revenue			6,550				5,129				1,421				5,129				27				5,102
Reimbursed costs from affiliates			48,715				41,179				7,536				41,179				13,782				27,397
			155,159				147,258				7,901				147,258				175,035				(27,777	)
Operating Expenses
General and administrative			(57,638	)			(55,508	)			(2,130	)			(55,508	)			(54,592	)			(916	)
Reimbursable costs			(48,715	)			(41,179	)			(7,536	)			(41,179	)			(13,782	)			(27,397	)
Depreciation and amortization			(3,807	)			(4,515	)			708				(4,515	)			(4,179	)			(336	)
Provision for settlement			—				—				—				—				(29,979	)			29,979
			(110,160	)			(101,202	)			(8,958	)			(101,202	)			(102,532	)			1,330
Other Income and Expenses
Other interest income			1,538				2,261				(723	)			2,261				6,031				(3,770	)
(Loss) income from equity investments in CPA® REITs			(340	)			6,211				(6,551	)			6,211				11,166				(4,955	)
Other income and (expenses)			4,059				1,850				2,209				1,850				—				1,850
			5,257				10,322				(5,065	)			10,322				17,197				(6,875	)
Income from continuing operations before income taxes			50,256				56,378				(6,122	)			56,378				89,700				(33,322	)
Provision for income taxes			(21,038	)			(22,432	)			1,394				(22,432	)			(50,158	)			27,726
Net income from investment management			29,218				33,946				(4,728	)			33,946				39,542				(5,596	)
Add: Net loss attributable to noncontrolling interests			2,374				2,420				(46	)			2,420				2,022				398
Less: Net income attributable to redeemable noncontrolling interests			(2,258	)			(1,508	)			(750	)			(1,508	)			(4,756	)			3,248
Net income from investment management attributable to W. P. Carey members		$	29,334			$	34,858			$	(5,524	)		$	34,858			$	36,808			$	(1,950	)

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 annual estimated net asset valuations of CPA^® REIT investment portfolios; (iv) increases or decreases in distributions of available cash (for CPA^®:17 – Global only); and (v) whether the CPA^® REITs are meeting their performance criteria. The availability of funds for new investments is substantially dependent on our ability to raise funds for investment by the CPA^® REITs.

W. P. Carey 2009 10-K — 25

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 annual estimated net asset valuations of CPA^® REIT funds as described below.

2008 vs. 2007 — For the year ended December 31, 2008 as compared to 2007, asset management revenue decreased by $2.3 million. This decrease was primarily due to performance revenue totaling $19.0 million (including previously deferred performance revenue totaling $11.9 million) recognized in 2007 as a result of CPA^®:16 – Global meeting its performance criterion in June of that year, compared to $12.0 million earned in 2008. This decrease was partially offset by increases in asset management revenue during 2008 resulting from higher investment volume as well as increases in the annual estimated net asset valuations of CPA^®:14 and CPA^®:15 in that year compared to 2007 as described below.

We obtain estimated net asset valuations for the CPA^® REITs on an annual basis and sometimes on an interim basis, which occurs generally in connection with our consideration of potential liquidity events. Currently, annual estimated net asset valuations are performed for CPA^®:14, CPA^®:15 and CPA^®:16 — Global. The following table presents recent estimated net asset valuations per share for these REITs:

		Years ended December 31,
		2008				2007				2006
CPA®:14		$	13.00			$	14.50			$	13.20
CPA®:15			11.50				12.20				11.40
CPA®:16 – Global			9.80				10.00				10.00

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 for the past three years was $507.7 million in 2009, $457.3 million in 2008 and $1.1 billion in 2007.

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. In addition, investment volume for 2008 included the acquisition of $20.0 million of CMBS 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 on behalf of the CPA^® REITs.

2008 vs. 2007 — For the year ended December 31, 2008 as compared to 2007, structuring revenue decreased by $57.9 million. This decrease was primarily the result of the recognition in 2007 of $42.4 million of previously deferred structuring revenue from CPA^®:16 – Global meeting its performance criterion in June of that year as well as a significant decrease in investment volume in 2008 compared to 2007. Investment volume for 2008 included the acquisition of $20.0 million of CMBS as described above.

Wholesaling Revenue

We earn wholesaling revenue based on the number of shares sold in connection with CPA^®:17 – Global’s initial public offering, which commenced in December 2007. Wholesaling revenue earned is substantially offset by underwriting costs incurred in connection with the offering, which are included in general and administrative expenses.

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, wholesaling revenue increased by $1.4 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. As described in Current Trends — Fundraising above, we have broadened our distribution channels and have experienced stronger fundraising results in 2009.

2008 vs. 2007 — For the year ended December 31, 2008, we earned wholesaling revenue of $5.1 million in connection with CPA^®:17 – Global’s initial pubic offering, which commenced in December 2007.

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.

W. P. Carey 2009 10-K — 26

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, reimbursed and reimbursable costs increased by $7.5 million, primarily due to higher level of commissions paid to broker-dealers related to CPA^®:17 – Global’s initial public offering as funds raised in 2009 where higher than in 2008.

2008 vs. 2007 — For the year ended December 31, 2008 as compared to 2007, reimbursed and reimbursable costs increased by $27.4 million, primarily due to broker-dealer commissions related to CPA^®:17 – Global’s initial public offering, which commenced in December 2007.

General and Administrative

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, general and administrative expenses increased by $2.1 million, primarily due to increases in compensation-related costs of $4.8 million and underwriting costs of $1.2 million. These increases were partially offset by decreases in professional fees of $2.9 million and business development costs of $1.4 million.

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 (the “LTIP”), and a $1.7 million increase in bonuses resulting primarily from higher investment volume in 2009. Underwriting costs represent costs incurred in connection with CPA^®:17 – Global’s initial public offering. The increased underwriting costs in 2009 were offset by higher wholesaling revenue, which we earn based on the number of shares of CPA^®:17 – Global sold. 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 a potential offering of Carey Watermark (Note 2) and fees incurred in 2008 in connection with the SEC Settlement 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 the Carey Storage transaction during 2009 (Note 4).

2008 vs. 2007 — For the year ended December 31, 2008 as compared to 2007, general and administrative expenses increased by $0.9 million, primarily due to increases in underwriting costs of $4.8 million, professional fees of $3.1 million and business development fees of $1.7 million, which were substantially offset by decreases in compensation-related costs of $8.4 million.

Underwriting costs increased in 2008, as CPA^®:17 – Global’s initial public offering commenced in December 2007. Professional fees for 2008, which included the write-off of offering expenses totaling $1.6 million described above, also reflected higher fees incurred in connection with our international operations, particularly relating to the opening of our asset management office in Amsterdam. The increase in business development costs also related primarily to our international operations.

Compensation-related costs were significantly higher in 2007, primarily due to CPA^®:16 – Global achieving its performance criterion in June 2007 as well as higher investment volume in 2007. As a result of CPA^®:16 – Global achieving its performance criterion, we recognized $6.6 million of previously deferred compensation costs in 2007. In addition, bonuses decreased by $6.3 million in 2008 compared to 2007, primarily due to relatively lower investment volume in 2008 and a reduction in the bonus level for 2008 implemented in response to the deterioration in economic conditions during 2008. These decreases were partially offset by increases in compensation-related costs totaling $4.5 million, primarily from an increase of $1.7 million in the amortization of stock-based compensation to key officers in connection with the initial grants under the LTIP as well as an increase in headcount during 2008 and severance costs.

Provision for Settlement

In March 2008, we entered into a settlement with the SEC with respect to all matters relating to a previously disclosed investigation. In connection with the SEC Settlement, we made payments of $20.0 million, including interest, to certain of our managed REITs and paid a $10.0 million civil penalty. In anticipation of this settlement, we took a charge of $30.0 million in the fourth quarter of 2007 (Note 9).

Other Interest Income

Other interest income is primarily comprised of interest earned on deferred structuring revenue due from the CPA^® REITs.

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, other interest income decreased by $0.7 million, primarily due to a decrease in deferred structuring revenue as a result of installment payments made by the CPA^® REITs.

2008 vs. 2007 — For the year ended December 31, 2008 as compared to 2007, other interest income decreased by $3.8 million, primarily due to the recognition of the $2.3 million of interest income earned on deferred structuring revenue from CPA^®:16 – Global in 2007 as a result of achieving its performance criterion that year, as well as a decrease in investment volume in 2008 compared to 2007.

W. P. Carey 2009 10-K — 27

(Loss) income 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.

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 are estimated to total approximately $170 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.

2008 vs. 2007 — For the year ended December 31, 2008 as compared to 2007, income from equity investments in CPA^® REITs decreased by $5.0 million, primarily due to the recognition of out-of-period adjustments totaling $3.5 million during 2007 (Note 2) and impairment charges recognized by the CPA^® REITs during 2008, which increased by $32.0 million from $8.4 million recognized in 2007.

Other Income and (Expenses)

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. Under the terms of the settlement agreement, we received cash of $2.0 million in the fourth quarter of 2009, with the remaining $2.0 million payable in either discounts on future services or, if the amount of services is insufficient, cash over the next four years.

2008 — We recognized a gain of $1.8 million during 2008 related to an insurance reimbursement of certain professional services costs incurred in connection with the now settled SEC investigation.

Provision for 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.

2008 vs. 2007 — For the year ended December 31, 2008 as compared to 2007, our provision for income taxes decreased by $27.7 million. Income from continuing operations before income taxes also decreased by a similar amount in 2008. The decrease was due to several factors, including international asset management revenue being taxed in a foreign jurisdiction beginning in the third quarter of 2008 and reductions in both tax-generating intercompany transactions and the amount of shares in the CPA^® REITs that we hold in taxable subsidiaries. In addition, our provision for income taxes for the year ended December 31, 2007 included taxes on asset management revenue and structuring revenue recognized as a result of CPA^®:16 – Global achieving its performance criterion that year.

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

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.

2008 vs. 2007 — For the year ended December 31, 2008 as compared to 2007, the resulting net income from investment management attributable to W. P. Carey members decreased by $2.0 million.

W. P. Carey 2009 10-K — 28

Real Estate Ownership (in thousands)

		Years ended December 31,
		2009				2008				Change				2008				2007				Change
Revenues
Lease revenues		$	65,493			$	70,696			$	(5,203	)		$	70,696			$	70,207			$	489
Other real estate income			15,224				20,670				(5,446	)			20,670				12,714				7,956
			80,717				91,366				(10,649	)			91,366				82,921				8,445
Operating Expenses
Depreciation and amortization			(19,817	)			(19,913	)			96				(19,913	)			(20,068	)			155
Property expenses			(8,128	)			(7,259	)			(869	)			(7,259	)			(5,908	)			(1,351	)
General and administrative			(4,977	)			(7,082	)			2,105				(7,082	)			(7,254	)			172
Other real estate expenses			(7,308	)			(8,196	)			888				(8,196	)			(7,690	)			(506	)
Impairment charges			(9,525	)			(473	)			(9,052	)			(473	)			(420	)			(53	)
			(49,755	)			(42,923	)			(6,832	)			(42,923	)			(41,340	)			(1,583	)
Other Income and Expenses
Other interest income			176				623				(447	)			623				811				(188	)
Income from equity investments in real estate			13,765				7,987				5,778				7,987				7,191				796
Gain on sale of investment in direct financing lease			—				1,103				(1,103	)			1,103				—				1,103
Other income and (expenses)			3,258				(406	)			3,664				(406	)			3,114				(3,520	)
Interest expense			(15,189	)			(18,858	)			3,669				(18,858	)			(20,266	)			1,408
			2,010				(9,551	)			11,561				(9,551	)			(9,150	)			(401	)
Income from continuing operations before income taxes			32,972				38,892				(5,920	)			38,892				32,431				6,461
Provision for income taxes			(1,755	)			(1,089	)			(666	)			(1,089	)			(1,581	)			492
Income from continuing operations			31,217				37,803				(6,586	)			37,803				30,850				6,953
Income from discontinued operations			10,133				6,856				3,277				6,856				18,397				(11,541	)
Net income from real estate ownership			41,350				44,659				(3,309	)			44,659				49,247				(4,588	)
Less: Net income attributable to noncontrolling interests			(1,661	)			(1,470	)			(191	)			(1,470	)			(6,803	)			5,333
Net income from real estate ownership attributable to W. P. Carey members		$	39,689			$	43,189			$	(3,500	)		$	43,189			$	42,444			$	745

Our evaluation of the sources of lease revenues is as follows (in thousands):

		Years ended December 31,
		2009				2008				2007
Rental income		$	54,874			$	59,768			$	58,486
Interest income from direct financing leases			10,619				10,928				11,721
		$	65,493			$	70,696			$	70,207

W. P. Carey 2009 10-K — 29

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		2009				2008				2007
Bouygues Telecom, S.A. (a) (b) (c)		$	6,410			$	6,215			$	5,529
CheckFree Holdings, Inc. (b)			4,964				4,829				4,711
The American Bottling Company			4,591				4,563				4,501
Titan Corporation			2,912				2,912				2,912
Orbital Sciences Corporation			2,771				2,939				3,023
AutoZone, Inc.			2,228				2,210				2,058
Lucent Technologies, Inc.			1,995				1,995				1,876
Sybron Dental Specialties Inc. (d)			1,953				1,770				1,770
Quebecor Printing, Inc.			1,919				1,941				1,941
Unisource Worldwide, Inc.			1,668				1,678				1,686
BellSouth Telecommunications, Inc.			1,617				1,711				1,771
Werner Corporation			1,614				1,625				1,627
BE Aerospace, Inc.			1,580				1,580				1,580
Eagle Hardware & Garden, a subsidiary of Lowe’s Companies (e)			1,574				1,486				1,680
CSS Industries, Inc.			1,570				1,570				1,570
Career Education Corporation			1,502				1,502				1,502
Enviro Works, Inc.			1,426				1,421				1,350
Sprint Spectrum, L.P.			1,425				1,425				1,425
AT&T Corporation			1,259				1,259				1,259
Omnicom Group Inc.			1,251				1,251				1,251
United States Postal Service			1,225				1,182				1,179
Other (a)			18,039				23,632				24,006
		$	65,493			$	70,696			$	70,207

W. P. Carey 2009 10-K — 30

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, 2009				2009				2008				2007
The New York Times Company (a)			18	%		$	21,751			$	—			$	—
Carrefour France, SAS (b) (c)			46	%			21,481				21,387				19,061
Federal Express Corporation			40	%			7,319				6,967				6,892
Medica — France, S.A. (b) (d)			46	%			6,917				7,169				6,348
Schuler A.G. (b) (e)			33	%			6,568				6,802				1,808
Information Resources, Inc.			33	%			4,973				4,972				4,972
Amylin Pharmaceuticals, Inc.			50	%			3,635				3,343				3,343
Hologic, Inc.			36	%			3,387				3,317				3,212
Consolidated Systems, Inc.			60	%			1,831				1,831				1,810
U. S. Airways Group, Inc. (f)			75	%			1,658				—				—
Childtime Childcare, Inc.			34	%			1,332				1,248				1,280
The Retail Distribution Group (g)			40	%			1,020				808				808
						$	81,872			$	57,844			$	49,534

The above table does not reflect our share of interest income from our 5% interest in a venture that acquired a note receivable in April 2007. The venture recognized interest income of $27.1 million, $37.2 million and $25.5 million for the years ended December 31, 2009, 2008 and 2007, respectively. This amount represents total amount attributable to the entire venture, not our proportionate share, and is subject to fluctuations in the exchange rate of the Euro.

Lease Revenues

Our net leases generally have rent adjustments based on formulas indexed to changes in the CPI or other similar indices for the jurisdiction in which the property is located, sales overrides or other periodic increases, which are intended to increase lease revenues in the future. We own international investments, and therefore lease revenues from these investments are subject to fluctuations in exchange rate movements in foreign currencies.

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, lease revenues decreased by $5.2 million, primarily due to the impact of recent activity, including lease restructurings, lease expirations and property sales, which resulted in a reduction to lease revenues of $3.4 million. In addition, the reclassification of a property to an equity investment in real estate in 2009 (see footnote (f) in the lease revenue from equity investments in real estate table above) resulted in a decrease of $3.1 million to lease revenues. These decreases were partially offset by scheduled rent increases at several properties totaling $1.6 million.

2008 vs. 2007 — For the year ended December 31, 2008 as compared to 2007, lease revenues increased by $0.5 million. Rent increases at several properties totaling $1.9 million and lease revenue from an investment entered into during December 2007 totaling $1.0 million were substantially offset by the impact of property sales and lease expirations totaling $2.6 million.

W. P. Carey 2009 10-K — 31

Other Real Estate Income

Other real estate income generally consists of revenue from Carey Storage, a subsidiary that invests in domestic self-storage properties (see Part I, Item I, Business – Investment Management - Self-Storage Investments), and Livho, a subsidiary that operates a Radisson hotel franchise in Livonia, Michigan. Other real estate income also includes lease termination payments and other non-rent related revenues from real estate ownership including, but not limited to, settlements of claims against former lessees. We receive settlements in the ordinary course of business; however, the timing and amount of settlements cannot always be estimated.

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, other real estate income decreased by $5.4 million, primarily due to lower lease termination income recognized in the current year. In October 2008, we terminated the lease on a domestic property in exchange for termination fees totaling $7.5 million, partially offset by the write-off of certain intangible assets totaling $1.0 million. Increases in reimbursable tenant costs, which are recorded as both revenue and expense and therefore have no impact on net income, were substantially offset by a reduction in income from Livho, whose operations have been impacted by the recent financial crisis.

2008 vs. 2007 — For the year ended December 31, 2008 as compared to 2007, other real estate income increased by $8.0 million, primarily due to the $6.5 million gain recognized on a lease termination in 2008 as described above. In addition, income from seven properties that Carey Storage acquired in 2007 also contributed $1.1 million of the increase.

Property Expenses

2009 vs. 2008 — For the year ended December 31, 2009 as compared to 2008, property expenses increased by $0.9 million primarily due to increases in reimbursable tenant costs.

2008 vs. 2007 — For the year ended December 31, 2008 as compared to 2007, property expenses increased by $1.4 million, primarily due to increases in other property-related expenses, including professional services, insurance and utilities, totaling $0.9 million.

General and Administrative

General and administrative expenses were $5.0 million, $7.1 million and $7.3 million in 2009, 2008 and 2007, respectively. The $2.1 million decrease in general and administrative expenses for the year ended December 31, 2009 as compared to 2008 was primarily due to decreases in professional expenses of $1.1 million and business development costs of $0.5 million. Professional fees include auditing, consulting and legal services associated with our real estate ownership. Professional fees in 2008 reflected costs incurred in connection with opening our asset management office in Amsterdam.

Impairment Charges

For the years ended December 31, 2009, 2008 and 2007, we recorded impairment charges related to our continuing real estate ownership operations totaling $9.5 million, $0.5 million and $0.4 million, respectively. The table below summarizes the impairment charges recorded for the past three fiscal years for both continuing and discontinued operations (in thousands):

Property		2009				2008				2007				Reason
Lafayette, Louisiana		$	3,138			$	—			$	—			Decline in estimated fair market value of the property
College Station, Texas			1,990				—				—			Decline in estimated fair market value of the property
Various properties			1,781				—				420			Decline in estimated fair market value of the properties
Various properties			2,616				473				—			Decline in unguaranteed residual value of properties
Impairment charges from continuing operations		$	9,525			$	473			$	420
Walbridge, Ohio		$	—			$	—			$	2,317			Property sold for less than carrying value
Various properties			899				538				597			Properties sold for less than carrying value
Impairment charges from discontinued operations		$	899			$	538			$	2,914