<PAGE>
 
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

[x]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 [FEE REQUIRED]

For the quarterly period ended        December 31, 1995
                               -------------------------------------------------
                                       or

[ ]  TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934 [NO FEE REQUIRED]

For the transition period from _________________________to _____________________

Commission file number    0-11982
                      ----------------------------------------------------------

        CORPORATE PROPERTY ASSOCIATES 4, a California limited partnership
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          CALIFORNIA                                      13-3126150
--------------------------------------------------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

50 ROCKEFELLER PLAZA, NEW YORK, NEW YORK                                10020
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (Zip Code)

Registrant's telephone number, including area code         (212) 492-1100
                                                  ------------------------------

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

         Title of each class           Name of each exchange on which registered

               NONE                                           NONE
--------------------------------                --------------------------------

--------------------------------                --------------------------------

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

                           LIMITED PARTNERSHIP UNITS
--------------------------------------------------------------------------------
                               (Title of Class)

--------------------------------------------------------------------------------
                               (Title of Class)

     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. [ X ] Yes     [   ] No


    Indicate by check mark if disclosure of deliquent filers pursuant to Item
405 of Regulation S-K (ss. 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. [ X ]

    Aggregate market value of the voting stock held by non-affiliates of
Registrant: There is no active market for Limited Partnership Units.
<PAGE>
 
                                     PART I

Item 1.  Business.

     Registrant  is engaged in the  business  of  investing  in  commercial  and
industrial  real  estate  properties  which  are net  leased to  commercial  and
industrial   entities.   Registrant  was  organized  as  a  California   limited
partnership  on August 10, 1982.  The General  Partners of Registrant  are Carey
Corporate  Property,   Inc.  (the  "Corporate  General  Partner"),   a  Delaware
corporation  and William  Polk Carey (the  "Individual  General  Partner").  The
Corporate  General  Partner  is 79.9%  owned by W. P. Carey & Co.,  Inc.  ("W.P.
Carey"),  10.1%  owned by William P.  Carey  ("Carey"),  and 10% owned by Lehman
Brothers Inc. The Corporate  General Partner and the Individual  General Partner
and/or certain  affiliates are also the General  Partners of Corporate  Property
Associates ("CPA(R):1"), Corporate Property Associates 2 ("CPA(R):2"), Corporate
Property   Associates   3   ("CPA(R):3"),   Corporate   Property   Associates  5
("CPA(R):5"), Corporate Property Associates 6 - a California limited partnership
("CPA(R):6"), Corporate Property Associates 7 - a California limited partnership
("CPA(R):7"),   Corporate  Property  Associates  8,  L.P.,  a  Delaware  limited
partnership  ("CPA(R):8"),  Corporate  Property  Associates  9, L.P., a Delaware
limited   partnership   ("CPA(R):9")  and  the  advisor  of  Corporate  Property
Associates  10  Incorporated   ("CPA(R):10"),   Carey  Institutional  Properties
Incorporated  ("CIP(TM)")  and Corporate  Property  Associates  12  Incorporated
("CPA(R):12").  Registrant  has a  management  agreement  with  Carey  Corporate
Property  Management  Company  ("Carey  Management"),  a division of W.P. Carey.
According to the terms of this agreement, Carey Management performs a variety of
management  services for  Registrant.  Registrant  has entered into an agreement
with Fifth Rock L.P.,  an  affiliate,  for the purpose of leasing  office space.
Reference is made to the  Prospectus  of  Registrant  dated October 28, 1982, as
supplemented by Supplements dated December 2, 1982, January 11, 1983 and May 25,
1983, filed pursuant to Rules 424(b) and 424(c) under the Securities Act of 1933
and such Prospectus and such  Supplements are  incorporated  herein by reference
(said Prospectus, as so supplemented, is hereinafter called the "Prospectus").

     Registrant  has two industry  segments  consisting of (a) the investment in
and the leasing of industrial and  commercial  real estate and (b) the operation
of a hotel  business.  Registrant  assumed the operation of a hotel  business in
August 1992 in connection with the eviction of a tenant.  By operating the hotel
business,  Management  is  seeking  to  preserve  the  value  of the  underlying
investment while generating a contribution to Registrant's  operating cash flow.
See Selected Financial Data in Item 6 for a summary of Registrant's  operations.
Also see the material  contained in the Prospectus under the heading  INVESTMENT
OBJECTIVES AND POLICIES.

     The  properties  owned by Registrant are described in Properties in Item 2.
Registrant's  entire net proceeds from the public  offering,  less any return of
capital and a working  capital  reserve  have been fully  invested in net leased
commercial  and  industrial  real  estate  since  March  12,  1984,  the date of
Registrant's final real estate acquisition.

     For the year ended December 31, 1995,  revenues from properties occupied by
lease obligors which accounted for 10% or more of leasing revenues of Registrant
were as follows:  Simplicity  Manufacturing  Inc.  ("Simplicity"),  26%;  Hughes
Markets,  Inc.  ("Hughes"),  19%; Brodart Co.  ("Brodart"),  17%; Genesco,  Inc.
("Genesco"), 14% and Continental Casualty Company ("Continental"), 10%. No other
property  owned by  Registrant  accounted  for 10% or more of its total  leasing
revenues  during 1995.  Revenues from the industrial and commercial  real estate
segment  represent  approximately  64% of total  revenues.  For the  year  ended
December  31,  1995,  gross  revenues  from  the  hotel  business  segment  were
$3,835,000  (approximately 32% of total revenues). The hotel property is located
in Kenner,  Louisiana and is owned as a tenant-in-common with CPA(R):8. See Note
9 to the Consolidated Financial Statements in Item 8.

     Six of  Registrant's  nine real estate  properties  are leased to corporate
tenants under long-term net leases.  A net lease generally  requires  tenants to
pay  all  operating  expenses  relating  to  the  leased  properties   including
maintenance,  real estate taxes, insurance and utilities which under other forms
of leases  are  often  paid by the  lessor.  Lessees  are  required  to  include
Registrant as an additional  insured party on all insurance policies relating to
the leased properties. In addition,  substantially all of the net leases include
indemnification provisions which require the lessees to indemnify Registrant and
the General Partners for
<PAGE>
 
liabilities on all matters related to the leased properties.  Registrant's lease
with Petrocon Engineering, Inc. ("Petrocon") for the property in Beaumont, Texas
is not a net lease and  Registrant  absorbs a portion of the property  operating
expenses.  The property  located in Salisbury,  North  Carolina is currently net
leased to Family Dollar Stores,  Inc. ("Family Dollar") under a short-term lease
and since  August 1992 the  Holiday  Inn New Orleans  Airport in Kenner has been
operated by  Registrant.  Registrant  believes  that the insurance and indemnity
provided  on its behalf by its  lessees at its net  leased  properties  provides
adequate  coverage for property damage and any liability  claims which may arise
against  Registrant's  ownership  interests.  In addition to the  insurance  and
indemnification provisions of the leases, Registrant has contingent property and
liability insurance on its leased properties. To the extent that any lessees are
not  financially  able  to  satisfy  indemnification  obligations  which  exceed
insurance  reimbursements,  Registrant  may incur the costs  necessary to repair
property  and settle  liabilities.  For  properties  not  subject to net leases,
Registrant  also has primary  property and liability  insurance  coverages which
Management believes to be adequate.  Presently,  there are no claims pending for
property  damages or  liability  claims  known to  Registrant  that would have a
material adverse effect on Registrant's financial condition or liquidity even in
the event that a lessee is unable to fulfill  its  indemnity  obligation  to the
Registrant.

     As described above, lessees, other than Petrocon, retain the obligation for
the operating  expenses of their leased  properties  so that,  other than rental
income,  there are no significant  operating data (i.e.  expenses) reportable on
Registrant's  leased  properties.  In  addition,  the  Petrocon  lease  includes
escalation provisions which pass through certain increases in operating expenses
to Petrocon. As discussed in Registrant's  Management's  Discussion and Analysis
in Item 7,  Registrant's  leases  generally  provide for periodic rent increases
during the  initial  lease term which are either  stated and  negotiated  at the
inception of the lease or based on formulas indexed to increases in the Consumer
Price Index.  The lease with Hughes for a dairy processing plant in Los Angeles,
California,  which accounts for 19% of Registrant's leasing revenues,  is due to
expire in April 1996. Registrant has entered into negotiations with Hughes for a
two-year lease extension,  however, there is no assurance that an extension will
be  executed.  Registrant  intends to remarket the property in the event that an
agreement  with Hughes is not reached.  Except for the lease with Petrocon which
expires in November 1997 and which  represents  approximately 5% of Registrant's
leasing revenue and the lease with Family Dollar which was extended for one year
through April 1997,  all of  Registrant's  other leases expire  between 1998 and
2008 and provide for  multiple  renewal  terms of  generally 5 years per renewal
term. Registrant's lease with Simplicity provides for a purchase option which is
exercisable  in 1998 at the  greater  of fair  market  value,  as defined in the
lease, or $9,684,000.

     As  Registrant's  objective  has been to  invest  in  properties  which are
occupied by a single  corporate tenant and subject to long-term leases with such
lease  obligation  backed by the credit of the  corporate  lessee,  Registrant's
properties  have not been  generally  subject to the  competitive  conditions of
local  and  regional  real  estate   markets.   In  selecting  its  real  estate
investments,  Registrant's  strategy  has  been  to  identify  properties  which
included  operations of material importance to the lessee so that the lessee may
be more  likely to extend  its lease  beyond  the  initial  term or  exercise  a
purchase option if such option was provided for in the lease agreement.  Because
Registrant's  properties in Beaumont,  Texas and  Salisbury,  North Carolina are
both subject to short-term leases with one tenant, the properties may be subject
to current market conditions. In addition, if Registrant is not able to reach an
agreement  with  Hughes,  the  property  will also be subject to current  market
conditions.  The  Beaumont  property  is  currently  leased at market  rates and
Registrant does not expect rentals to  significantly  change in the event that a
lease extension is executed.  The Salisbury property was leased in December 1994
to Family Dollar under a short-term  lease.  Other leased  properties have terms
which are not scheduled to expire until after the year 2000.  Because Registrant
may be  affected  by the  financial  condition  of its  lessees  rather than the
competitive conditions of the real estate marketplace, Registrant's strategy has
been to diversify its investments  among tenants,  property types and industries
in addition to achieving  geographical  diversification.  Although  Registrant's
hotel is subject to the competitive conditions that would be expected of a hotel
situated near the commercial airport of a major metropolitan area, the hotel has
maintained occupancy rates of approximately 85% and 82% in 1995 and 1994.
<PAGE>
 
     Registrant and Agency Management Systems, Inc. ("Agency Management"), which
leases  a  property  in  College  Station,   Texas,  and  the  lease  guarantor,
Continental,  agreed to amend an existing lease  effective  February 1, 1995. In
exchange  for  Registrant's   funding  of  approximately   $105,000  in  capital
improvements at the property,  Agency Management's monthly rental increased from
$59,086 to  $61,844.  The amended  lease also  provides  for a scheduled  rental
increase  on August 1, 1996 to $64,306  per month  through  October  31, 1998 at
which time the lease term expires.

     On June 30, 1995, Registrant sold its property in Allentown,  Pennsylvania,
which it purchased in June 1983 for  $11,702,128,  to Genesco,  the lessee,  for
$15,200,000 and recognized a gain on the sale of $3,330,098.  In connection with
the sale,  Registrant paid off the remaining  balance of a nonrecourse  mortgage
loan on the Genesco  property for  $5,722,508.  Registrant used a portion of the
net proceeds of $9,477,492 to pay a special  distribution to Limited Partners of
$4,278,400  ($50 per Limited  Partnership  Unit) and  $43,216 to the  Individual
General Partner in July 1995.

     Registrant  voluntarily contracted for Phase I environmental reviews of all
of its  properties in 1993.  Registrant  believes,  based on the results of such
reviews and Phase II environmental reviews on certain of its properties in 1994,
that its  properties  are in  substantial  compliance  with  Federal  and  state
environmental statutes and regulations.  Phase II reviews were only performed on
certain properties based on the recommendations of the Phase I reviews. Portions
of certain  properties  have been subject to a limited degree of  contamination,
principally in connection with either leakage from underground  storage tanks or
surface spills from facility activities. In many instances, tenants are actively
engaged in the remediation  process and addressing  identified  conditions.  For
those conditions which were identified,  Registrant  advised its tenants of such
findings and of their obligations to perform any required  remediation.  Tenants
are generally  subject to environmental  statutes and regulations  regarding the
discharge of hazardous  materials and any related  remediation  obligations.  In
addition,  Registrant's leases generally require tenants to indemnify Registrant
from all liabilities and losses related to the leased  properties.  Accordingly,
Management  believes that the ultimate  resolution of any environmental  matters
will not have a material  adverse effect on  Registrant's  financial  condition,
liquidity or results of operations.

     Registrant  does not have  any  employees.  In  February  1995,  Registrant
engaged  American General  Hospitality  Corp., a hotel  management  company,  to
manage   Registrant's   hotel  operation.   The  Corporate  General  Partner  of
Registrant,  together with its affiliates, employ twelve individuals who perform
accounting,  secretarial and transfer services for Registrant. Gemisys Inc. also
performs  certain  transfer  services  for  Registrant  and the Bank of New York
performs  certain banking services for Registrant.  In addition,  Registrant has
entered  into an  agreement  with  Carey  Management  pursuant  to  which  Carey
Management provides certain management  services for Registrant.  W.P. Carey has
substantially the same officers as the Corporate General Partner.
<PAGE>
 
Item 2. Properties.

     Registrant's properties are as follows:

<TABLE>
<CAPTION>
     LEASE                                                                                         TYPE OF OWNERSHIP
    OBLIGOR                       TYPE OF PROPERTY                     LOCATION                         INTEREST
    -------                       ----------------                     --------                         --------
<S>                               <C>                                  <C>                         <C>
HUGHES MARKETS,                   Land and Dairy                       Los Angeles,                Ownership of an
INC.                              Processing/                          California                  83.24% interest
                                  Distribution                                                     in land and
                                  Facilities                                                       buildings

SIMPLICITY                        Land and Manufac-                    Port Washington,            Ownership of land
MANUFACTURING,                    turing/Product                       Wisconsin                   and buildings (1)
INC.                              Testing Buildings
                                  - 2 locations

(2)                               Land and Hotel                       Kenner,                     Ownership of a
                                  Complex                              Louisiana                   46.383% interest in
                                                                                                   land and building (1)

CONTINENTAL                       Land and Office,                     College Station,            Ownership of land
CASUALTY COMPANY                  Manufacturing                        Texas                       and buildings (1)
                                  and Warehouse
                                  Buildings

BRODART CO.                       Land and Manufac-                    Williamsport,               Ownership of land
                                  turing, Distribution                 Pennsylvania                and buildings (1)
                                  and Office Buildings
                                  - 2 locations

FAMILY DOLLAR                     Land and Warehouse/                  Salisbury,                  Ownership of land
STORES, INC.                      Distribution Center                  North Carolina              and buildings (1)

PETROCON                          Land and Office                      Beaumont, Texas             Ownership of land
ENGINEERING,                      Building                                                         and building
INC.

WINN-DIXIE                        Land and Supermarket                 Leeds, Alabama              Ownership of land
STORES, INC.                                                                                       and building (1)
</TABLE>

(1)     These properties are encumbered by mortgage notes payable.

(2)     Registrant and CPA(R):8 operate a hotel business at this property.
<PAGE>
 
     The material terms of Registrant's leases with its significant tenants are
summarized in the following table:

<TABLE>
<CAPTION>
                Partnership's
                   Share of                Current
              Current Annual               Rent/Inc-
Lease         Rents/Operat-      Square    ome Per    Lease       Renewal  Ownership                                  Gross
Obligor          ing Income      Footage   Sq.Ft.(1)  Expiration  Terms    Interest          Terms of Purchase Option Costs (2)
-----------   ----------------   -------   ---------  ----------  -------  ---------------   ------------------------ ---------
<S>           <C>                <C>       <C>        <C>         <C>      <C>               <C>                      <C>
Simplicity
Manufact-
uring, Inc.     $1,996,710       419,676     $4.76      03/03       YES    100%              The greater of           $12,000,000
                                                                                             fair market value
                                                                                             of the property at
                                                                                             purchase date or
                                                                                             $9,684,000 with fair
                                                                                             market value not to be
                                                                                             in excess of $12,000,000
Hughes
Markets,
Inc.               505,000  (3)  390,000      4.67      04/96       YES    83.24%            N/A                        9,784,796
                                                                           interest;
                                                                           remaining
                                                                           interest owned
                                                                           by Corporate
                                                                           Property
                                                                           Associates 3

Brodart, Co.     1,344,764       521,231      2.58      06/08       YES    100%              N/A                        6,224,428
Continental
Casualty

Company            742,123        97,567      7.61      10/98       YES    100%              N/A                        8,615,638
Family
Dollar

Stores, Inc.       547,200       311,182      1.76      04/97       YES    100%              N/A                        6,153,179
Petrocon
Engineering
Inc.               364,668        48,700      7.49      11/97       YES    100%              N/A                        1,265,502

Winn-Dixie
Stores, Inc.       144,713        25,600      5.65      03/04       YES    100%              N/A                        1,245,846

Kenner,
Louisiana
Holiday Inn
New Orleans
Airport          1,431,000       168,190     18.34      N/A         N/A    46.383%           N/A                        7,769,780
                                                                           interest;
                                                                           remaining
                                                                           interest owned
                                                                           by Corporate
                                                                           Property
                                                                           Associates 8
</TABLE>

(1)  Represents rate for rent per square foot when combined with rents
     applicable to tenants-in-common.

(2)  Includes original cost of investment and net increases or decreases to net
     investment subsequent to purchase.

(3)  Represents rent due through the lease expiration date, April 1996.
<PAGE>
 
     The material terms on the nonrecourse mortgage debt of Registrant's
properties are summarized in the following table:

<TABLE>
<CAPTION>
                                      Mortgage
                   Annual Interest     Balance      Annual Debt    Maturity    Estimated Payment  
  Lease Obligor        Rate           12/31/95       Service        Date       Due at Maturity     Prepayment Provisions
  -------------        ----           --------       -------        ----       ---------------     ---------------------
<S>                <C>                <C>           <C>            <C>         <C>                 <C>                           
Simplicity                                                                                        
Manufact-                                                                                         
uring, Inc.           10.52%         $5,535,028     $1,062,374     07/01/98    $4,169,000          Prepayable at any time.
                                                                                                   Prepayment premium based on
                                                                                                   formula.
                                                                                                  
                                                                                                  
                                                                                                  
Brodart Co.            7.60           3,369,780        406,419     01/01/04     1,754,000          No premium if prepaid after
                                                                                                   1/31/03
                                                                                                  
                                                                                                  
    (1) (3)            8.9375(2)      7,130,000        817,000     06/30/98     6,680,000         
                                                                                                  
                                                                                                  
                                                                                                  
Kenner, Louisiana                                                                                 
hotel property         8.59           3,452,074        406,935     06/30/98     3,157,000          Prepayable in whole at any time.
                                                                                                   Prepayment premium based on a
                                                                                                   yield maintenance formula which
                                                                                                   shall not be less than 1% for
                                                                                                   prepayments through June 1996.
</TABLE>

(1)  One mortgage  loan  encumbers  these  properties.  This mortgage loan has a
     provision whereby lender may have recourse to assets of Registrant of up to
     $1,500,000.

(2)  Variable rate indexed to London Inter-Bank Offered Rate.

(3)  This  loan is also  cross-collateralized  by  properties  leased  to Family
     Dollar Stores,  Inc.,  Continental  Casualty Company and Winn-Dixie Stores,
     Inc.
<PAGE>
 
Item 3. Legal Proceedings.

     As of the date hereof,  Registrant  is not a party to any material  pending
legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders.

     No matter  was  submitted  during  the  fourth  quarter  of the year  ended
December 31, 1995 to a vote of security  holders,  through the  solicitation  of
proxies or otherwise.


                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

     Information   with  respect  to   Registrant's   common  equity  is  hereby
incorporated by reference to page 26 of Registrant's  Annual Report contained in
Appendix A.

Item 6. Selected Financial Data.

     Selected  Financial Data are hereby  incorporated by reference to page 1 of
Registrant's Annual Report contained in Appendix A.

Item 7. Management's Discussion and Analysis  of Financial Condition and Results
        of Operations.

     Management's  Discussion and Analysis are hereby  incorporated by reference
to pages 2 to 6 of Registrant's Annual Report contained in Appendix A.

Item 8. Consolidated Financial Statements and Supplementary Data.

     The following  financial  statements  and data are hereby  incorporated  by
reference to pages 7 to 20 of Registrant's  Annual Report  contained in Appendix
A:

  (i) Report of Independent Accountants.

 (ii) Consolidated Balance Sheets as of December 31, 1994 and 1995.

(iii) Consolidated Statements of Income for the years ended  December  31, 1993,
      1994 and 1995. (iv) Consolidated Statements  of Partners' Capital  for the
      years ended December 31, 1993, 1994 and 1995.

  (v) Consolidated  Statements  of Cash Flows for the  years ended  December 31,
      1993, 1994 and 1995.

 (vi) Notes to Consolidated Financial Statements.

Item 9. Disagreements on Accounting and Financial Disclosure.

     NONE
<PAGE>
 
                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

     Registrant  has no directors  or  officers.  The  directors  and  executive
officers of the Corporate General Partner are as follows:

<TABLE>
<CAPTION>
                                                                                                  Has Served as a
                                                                                                  Director and/or
         Name                       Age              Positions Held                              Officer Since (1)
         ----                       ---              --------------                              -----------------
<S>                                 <C>     <C>                                                  <C> 
William Polk Carey                  65      Chairman of the Board                                      8/82
                                            Director
                                           
Francis J. Carey                    70      President                                                  8/82
                                            Director
                                           
George E. Stoddard                  79      Chairman of the Investment Committee                       8/82
                                            Director
                                           
Raymond S. Clark                    82      Chairman of the Executive Committee                        8/82
                                            Director
                                           
Madelon DeVoe Talley                64      Vice Chairman of the Board                                 4/86
                                            Director
                                           
Barclay G. Jones III                35      Executive Vice President                                   8/82
                                            Director
                                           
Lawrence R. Klein                   75      Chairman of the Economic Policy                            4/84
                                                Committee
                                            Director
                                           
Claude Fernandez                    43      Executive Vice President                                   3/83
                                            Chief Administrative Officer
                                           
Howard J. Altmann                   32      Senior Vice President                                      8/90
                                           
H. Augustus Carey                   38      Senior Vice President                                      8/88
                                           
John J. Park                        31      Senior Vice President                                      7/91
                                            Treasurer
                                           
Michael D. Roberts                  44      First Vice President                                       4/89
                                            Controller
</TABLE>

(1)  Each officer and director of the Corporate General Partner will hold office
     until the next  annual  meeting of the Board of  Directors  and  thereafter
     until his  successor  shall have been  elected and shall have  qualified or
     until his prior death, resignation or removal.

     William  Polk Carey and Francis J. Carey are  brothers and Raymond S. Clark
is their  brother-in-law.  H. Augustus Carey is the nephew of William Polk Carey
and Raymond S. Clark and the son of Francis J. Carey.

     A  description  of the business  experience of each officer and director of
the Corporate General Partner is set forth below:

     William Polk Carey,  Chairman and Chief Executive Officer,  has been active
in lease  financing since 1959 and a specialist in net leasing of corporate real
estate  property  since 1964.  Before  founding W.P.  Carey & Co.,  Inc.  ("W.P.
Carey") in 1973, he served as Chairman of the Executive Committee of Hubbard,
<PAGE>
 
     Westervelt & Mottelay (now Merrill Lynch Hubbard),  head of Real Estate and
Equipment  Financing at Loeb Rhoades & Co. (now Lehman  Brothers),  head of Real
Estate and Private  Placements,  Director of Corporate Finance and Vice Chairman
of the  Investment  Banking  Board of duPont Glore Forgan Inc. A graduate of the
University of Pennsylvania's  Wharton School of Finance, Mr. Carey is a Governor
of the National  Association of Real Estate Investment Trusts (NAREIT).  He also
serves on the boards of The Johns Hopkins University and its medical school, The
James A. Baker III  Institute for Public  Policy at Rice  University,  and other
educational and philanthropic institutions. He founded the Visiting Committee to
the Economics  Department of the University of Pennsylvania  and co-founded with
Dr. Lawrence R. Klein the Economics Research Institute at that university.

     Francis J. Carey was  elected  President  and a Managing  Director  of W.P.
Carey in April 1987,  having served as a Director since its founding in 1973. He
served as a member of the  Executive  Committee  and  Board of  Managers  of the
Western  Savings  Bank of  Philadelphia  from 1972 until its takeover by another
bank in 1982 and is former  chairman  of the Real  Property,  Probate  and Trust
Section of the Pennsylvania Bar Association. Mr. Carey served as a member of the
Board of  Overseers  of the School of Arts and  Sciences  of the  University  of
Pennsylvania  from 1983  through 1990 and has served as a member of the Board of
Trustees of the Investment Program Association since 1990. From April 1987 until
August  1992,  he served as counsel to Reed  Smith  Shaw & McClay,  counsel  for
Registrant,  the General  Partners,  the CPA(R)  Partnerships and W.P. Carey and
some of its affiliates.  A real estate lawyer of more than 30 years' experience,
he holds A.B. and J.D. degrees from the University of Pennsylvania.

     George E. Stoddard,  Chief Investment  Officer,  was until 1979 head of the
bond  department of The Equitable Life  Assurance  Society of the United States,
with  responsibility  for all  activities  related to  Equitable's  portfolio of
corporate  investments  acquired  through direct  negotiation.  Mr. Stoddard was
associated  with  Equitable  for over 30  years.  He holds an A.B.  degree  from
Brigham Young  University,  an M.B.A.  from Harvard Business School and an LL.B.
from Fordham University Law School.

     Raymond S. Clark is former  President  and Chief  Executive  Officer of the
Canton  Company of  Baltimore  and the Canton  Railroad  Company.  A graduate of
Harvard College and Yale Law School,  he is presently a Director and Chairman of
the  Executive  Committee  of W.P.  Carey and served as Chairman of the Board of
W.P.  Carey from its  founding  in 1973 until 1982.  He is past  Chairman of the
Maryland Industrial Development Financing Authority.

     Madelon  DeVoe  Talley,  Vice  Chairman,  is a member of the New York State
Controller's  Investment Committee,  a Commissioner of the Port Authority of New
York and New Jersey, former CIO of New York State Common Retirement Fund and New
York State Teachers Retirement System. She also served as a managing director of
Rothschild,  Inc. and as the President of its asset management division. Besides
her duties at W.P. Carey,  Mrs. Talley is also a former Governor of the N.A.S.D.
and a director of Biocraft Laboratories,  a New York Stock Exchange company. She
is an alumna of Sarah Lawrence  College and the graduate school of International
Affairs at Columbia University.

     Barclay G. Jones III,  Executive Vice  President,  Managing  Director,  and
co-head of the Investment  Department.  Mr. Jones joined W.P. Carey as Assistant
to the President in July 1982 after his  graduation  from the Wharton  School of
the University of  Pennsylvania,  where he majored in Finance and Economics.  He
was elected to the Board of Directors of W.P.  Carey in April 1992. Mr. Jones is
also a Director of the Wharton Business School Club of New York.
<PAGE>
 
     Lawrence R. Klein, Chairman of the Economic Policy Committee since 1984, is
Benjamin  Franklin   Professor  of  Economics  Emeritus  at  the  University  of
Pennsylvania,  having joined the faculty of Economics and the Wharton  School in
1958. He holds earned  degrees from the University of California at Berkeley and
Massachusetts  Institute of  Technology  and has been awarded the Nobel Prize in
Economics as well as over 20 honorary  degrees.  Founder of Wharton  Econometric
Forecasting   Associates,   Inc.,  Dr.  Klein  has  been  counselor  to  various
corporations, governments, and government agencies including the Federal Reserve
Board and the President's Council of Economic Advisers.

     Claude Fernandez,  Chief  Administrative  Officer,  Managing Director,  and
Executive Vice President,  joined W.P. Carey in 1983. Previously associated with
Coldwell  Banker,  Inc.  for two years and with  Arthur  Andersen & Co., he is a
Certified  Public  Accountant.   Mr.  Fernandez  received  his  B.S.  degree  in
Accounting  from New York  University  in 1975 and his M.B.A.  in  Finance  from
Columbia University Graduate School of Business in 1981.

     Howard J. Altmann,  Senior Vice President,  Investment  Department,  joined
W.P.  Carey in August 1990.  He was a securities  analyst at Goldman Sachs & Co.
for  the  retail   industry  from  1986  to  1988.  Mr.  Altmann   received  his
undergraduate  degree in economics  and finance from McGill  University  and his
M.B.A. from the Stanford University Graduate School of Business.

     H. Augustus Carey,  Senior Vice President,  returned to W.P. Carey in 1988.
Mr. Carey previously worked for W.P. Carey from 1979 to 1981 as Assistant to the
President.  Prior to rejoining W.P. Carey, Mr. Carey served as a loan officer of
the North American Department of Kleinwort Benson Limited in London, England. He
received  an A.B.  from  Amherst  College in 1979 and an M.Phil.  in  Management
Studies  from Oxford  University  in 1984.  Mr. Carey is a trustee of the Oxford
Management Centre Associates Council.

     John J. Park, Senior Vice President and Treasurer,  joined W.P. Carey as an
Investment Analyst in December 1987. Mr. Park received his undergraduate  degree
from  Massachusetts  Institute of Technology and his M.B.A.  in Finance from New
York University.

     Michael  D.  Roberts  joined W. P.  Carey as a Second  Vice  President  and
Assistant  Controller  in April 1989 and is currently  First Vice  President and
Controller.  Prior to joining W.P. Carey,  Mr. Roberts was employed by Coopers &
Lybrand,  where he  attained  the title of audit  manager.  A  certified  public
accountant,  Mr. Roberts received a B.A. from Brandeis  University and an M.B.A.
from Northeastern University.

     The officers  and  directors of W.P.  Carey are  substantially  the same as
above.

Item 11. Executive Compensation.

     Under the Amended  Agreement  of Limited  Partnership  of  Registrant  (the
"Agreement"),  5% of Distributable Cash From Operations,  as defined, is payable
to the Corporate General Partner and 1% of Distributable Cash From Operations is
payable to the Individual General Partner. The Corporate General Partner and the
Individual  General Partner received  $239,045 and $91,025,  respectively,  from
Registrant as their share of Distributable  Cash From Operations during the year
ended  December  31,  1995.  As  owner of 200  Limited  Partnership  Units,  the
Corporate General Partner received cash distributions of $20,504 during the year
ended December 31, 1995. See Item 6 for the net income  allocated to the General
Partners  under the  Agreement.  Registrant  is not required to pay, and has not
paid,  any  remuneration  to the officers or directors of the Corporate  General
Partner,  W.P. Carey or any other affiliate of Registrant  during the year ended
December 31, 1995.

     In the future, the Corporate General Partner will continue to receive 5% of
Distributable Cash From Operations, the Individual General Partner will continue
to receive 1% of  Distributable  Cash From  Operations and each General  Partner
will continue to be allocated  the same  percentage of the profits and losses of
Registrant  as  had  been  allocated  in  the  past.  For a  description  of the
subordinated  interest  of the  Corporate  General  Partner  and the  Individual
General Partner in Cash From Sales and Cash From  Financings,  reference is made
to the  materials  contained  in the  Prospectus  under the  heading  MANAGEMENT
COMPENSATION.
<PAGE>
 
Item 12. Security Ownership of Certain Beneficial Owners and Management.

     As of  December  31,  1995,  no  person  owned of  record,  or was known by
Registrant to own beneficially more than 5% of the Limited  Partnership Units of
Registrant.

     The following table sets forth as of March 20, 1996 certain  information as
to  the  ownership  by  directors  and  executive   officers  of  securities  of
Registrant:

<TABLE>
<CAPTION>
                                                                    Number of Units
                                     Name of                         and Nature of                              Percent
Title of Class                  Beneficial Owner                  Beneficial Ownership (1)                      of Class
--------------                  ----------------                  ------------------------                      --------
<S>                             <C>                               <C>                                           <C> 
Limited
  Partnership Units             William Polk Carey (1)                    200    units                             .20%
                                Francis J. Carey                                                            
                                George E. Stoddard                                                          
                                Raymond S. Clark                           15                                      .02
                                Madelon DeVoe Talley                                                        
                                Barclay G. Jones III                                                        
                                Lawrence R. Klein                                                           
                                Claude Fernandez                                                            
                                Howard J. Altmann                                                           
                                H. Augustus Carey                                                           
                                John J. Park                                                                
                                Michael D. Roberts                                                          
                                                                          ---                                      --- 
                                                                                                            
All executive officers                                                                                      
and directors as a                                                                                          
group (12 persons)                                                        215    units                             .22%
                                                                          ===                                      ====
                                                                                                        
</TABLE>


(1)  As of March 20,  1996,  the  Corporate  General  Partner,  Carey  Corporate
     Property,  Inc. ("Carey Property"),  owned 200 Limited Partnership Units of
     Registrant. William Polk Carey, the majority shareholder of Carey Property,
     is the beneficial owner of these Units.

     There exists no  arrangement,  known to Registrant,  the operation of which
may at a subsequent date result in a change of control of Registrant.

Item 13. Certain Relationships and Related Transactions.

     For a  description  of  transactions  and  business  relationships  between
Registrant and its affiliates and their directors and officers,  see Notes 2 and
3 to the Consolidated  Financial Statements in Item 8. Michael B. Pollack, First
Vice President and Secretary of the Corporate  General Partner,  is a partner of
Reed  Smith  Shaw & McClay  which is  engaged  to  perform  legal  services  for
Registrant.

     No officer or director of the Corporate General Partner,  W.P. Carey or any
other  affiliate  of  Registrant  or any  member  of  the  immediate  family  or
associated  organization  of any  such  officer  or  director  was  indebted  to
Registrant at any time since the beginning of Registrant's last fiscal year.
<PAGE>
 
                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)  1. Consolidated Financial Statements:

     The following consolidated financial statements are filed as a part of this
Report:

Report of Independent Accountants.

Consolidated Balance Sheets, December 31, 1994 and 1995.

Consolidated  Statements of Income,  for the years ended December 31, 1993, 1994
and 1995.

Consolidated  Statements of Partners' Capital,  for the years ended December 31,
1993, 1994 and 1995.

Consolidated  Statements of Cash Flows,  for the years ended  December 31, 1993,
1994 and 1995.

Notes to Consolidated Financial Statements.

The financial  statements are hereby  incorporated by reference to pages 7 to 20
of Registrant's Annual Report contained in Appendix A.

(a)  2. Financial Statement Schedule:

     The following schedule is filed as a part of this Report:

Schedule III - Real Estate and Accumulated Depreciation as of December 31, 1995.

Notes to Schedule III.

Schedule III and notes thereto are hereby  incorporated by reference to pages 21
to 24 of Registrant's Annual Report contained in Appendix A.

     Financial  Statement  Schedules  other than those  listed above are omitted
because  the  required  information  is  given  in  the  Consolidated  Financial
Statements,  including the Notes thereto,  or because the  conditions  requiring
their filing do not exist.
<PAGE>
 
(a) 3. Exhibits:

     The following exhibits are filed as part of this Report. Documents other
than those designated as being filed herewith are incorporated herein by
reference.

<TABLE>
<CAPTION>
   Exhibit                                                                                      Method of
     No.             Description                                                                 Filing
     ---             -----------                                                                 ------
     <S>       <C>                                                                      <C>           
     3.1       Amended Agreement of Limited Partnership of                              Exhibit 3(B) to Regis-
               Registrant dated as of September 30, 1982.                               tration Statement (Form
                                                                                        S-11) No. 2-79041

     4.1       $4,500,000 Promissory Note dated December 30,                            Exhibit 4(B)(1) to Post-
               1982 from Registrant to The Mutual Benefit                               Effective Amendment No. 1
               Life Insurance Company.                                                  to Registration Statement
                                                                                        (Form S-11) No. 2-79041

     4.2       Mortgage and Security Agreement dated                                    Exhibit 4(B)(4) to Post-
               December 30, 1982 between Registrant and                                 Effective Amendment No. 1
               The Mutual Benefit Life Insurance Company.                               to Registration Statement
                                                                                        (Form S-11) No. 2-79041

     4.3       Assignment of Lessor's and Landlord's                                    Exhibit 4(B)(5) to Post-
               Interest in Leases, Rents and Profits                                    Effective Amendment No. 1
               dated December 30, 1982 from Registrant                                  to Registration Statement
               to The Mutual Benefit Life Insurance                                     (Form S-11) No. 2-79041
               Company.

     4.4       $8,000,000 Promissory Note dated March 3,                                Exhibit 4.1 to Form 8-K
               1983 from Registrant to Sunkist Service                                  filed March 17, 1983
               Company.

     4.5       Mortgage with Assignment of Leases and                                   Exhibit 4.3 to Form 8-K
               Rents and Security Agreement dated as of                                 filed March 17, 1983
               March 3, 1983 from Registrant to Sunkist
               Service Company.

     4.6       Assignment of Lease and Rents dated                                      Exhibit 4.4 to Form 8-K
               March 3, 1983 from Registrant to Sunkist                                 filed March 17, 1983
               Service Company.
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>
   Exhibit                                                                                      Method of
     No.             Description                                                                 Filing
     ---             -----------                                                                 ------
     <S>       <C>                                                                      <C>           
     4.9       $6,600,000 Promissory Note dated June 2,                                 Exhibit 4.1 to Form 8-K
               1983 from Registrant to First Eastern                                    dated June 22, 1983
               Bank, N.A. ("FEB").

     4.10      Mortgage with Assignment of Leases and                                   Exhibit 4.2 to Form 8-K
               Rents dated as of June 2, 1983 from                                      dated June 22, 1983
               Registrant to FEB.

     4.11      Term Loan Agreement dated June 2, 1983                                   Exhibit 4.3 to Form 8-K
               between Registrant and FEB.                                              dated June 22, 1983

     4.12      $3,800,000 Promissory Note dated July 1,                                 Exhibit 4.1 to Form 8-K
               1983 from Registrant to CP 4 Corp.                                       dated July 14, 1983

     4.13      Mortgage and Security Agreement dated                                    Exhibit 4.2 to Form 8-K
               July 1, 1983 from Registrant to CP 4 Corp.                               dated July 14, 1983

     4.14      Assignment of Leases, Rents and Profits                                  Exhibit 4.3 to Form 8-K
               dated July 1, 1983 from Registrant to                                    dated July 14, 1983
               CP 4 Corp.

     4.15      $2,750,000 Promissory Note dated                                         Exhibit 4.1 to Form 8-K
               August 11, 1983 from Registrant to FCA                                   dated November 2, 1983
               American Mortgage Corporation ("FCA").

     4.16      Deed of Trust, Mortgage with Assignments                                 Exhibit 4.2 to Form 8-K
               of Leases and Rents and Security                                         dated November 2, 1983
               Agreements dated as of August 11, 1983
               from Registrant to Harry M. Roberts, Jr.,
               as trustee for FCA.

     4.17      Assignment of Lease and Rents dated                                      Exhibit 4.3 to Form 8-K
               August 11, 1983 from Registrant to FCA.                                  dated November 2, 1983

     4.18      $4,300,000 Promissory Note dated                                         Exhibit 4.4 to Form 8-K
               October 17, 1983 from Registrant to                                      dated November 2, 1983
               Bankers Life Company ("Bankers").
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>
   Exhibit                                                                                      Method of
     No.             Description                                                                 Filing
     ---             -----------                                                                 ------
     <S>       <C>                                                                      <C>           
     4.19      Deed of Trust dated October 17, 1983                                     Exhibit 4.5 to Form 8-K
               from Registrant to Howard T. Ayres, Jr.,                                 dated November 2, 1983
               as trustee for Bankers.

     4.20      Collateral Assignment of Lease and                                       Exhibit 4.6 to Form 8-K
               Agreement dated October 17, 1983 from                                    dated November 2, 1983
               Registrant, as assignor, ARC Automation
               Services, Inc. ("ARC"), as lessee, and
               American Express Insurance Services,
               Inc. ("American Express"), as guarantor,
               to Bankers, as assignee.

     4.21      $3,500,000 Deed of Trust Note dated                                      Exhibit 4.21 to Form 10-K
               December 14, 1983 from Registrant to                                     dated March 31, 1984
               Mellon Bank, N.A. ("Mellon").

     4.22      Deed of Trust and Security Agreement                                     Exhibit 4.22 to Form 10-K
               dated December 14, 1983 between                                          dated March 31, 1984
               Registrant and John H. Noblitt, as
               trustee for Mellon.

     4.23      Assignment of Rentals and Leases dated                                   Exhibit 4.23 to Form 10-K
               December 14, 1983 from Registrant to                                     dated March 31, 1984
               Mellon.

     4.24      Agreement for Sale and Sale of Property and                              Exhibit 4.1 to Form 10-K
               Escrow Instructions, dated October 17, 1986,                             dated November 6, 1986
               by and between Registrant and CPA(R):3,
               collectively as Seller, and Kraft, Inc.
               ("Kraft"), as Purchaser.

     4.25      Agreement for Sale and Sale of Property and                              Exhibit 4.2 to Form 10-K
               Escrow Instructions, dated October 17, 1986,                             dated November 6, 1986
               by and between Registrant and CPA(R):3,
               collectively as Seller, and Hughes Markets,
               Inc. ("Hughes"), as Purchaser.

     4.26      Letter Agreement dated October 17, 1986 from                             Exhibit 4.3 to Form 8-K
               Registrant and CPA(R):3, and agreed to and                               dated November 6, 1986
               accepted by Kraft and Hughes.

     4.27      Guaranty made as of October 21, 1986 by                                  Exhibit 4.4 to Form 8-K
               Hughes, as Guarantor, to Registrant and                                  dated November 6, 1986
               CPA(R):3.

     4.28      Assumption of Note and Mortgage dated                                    Exhibit 4.1 to Form 8-K
               June 14, 1988 between Registrant, CPA(R):8,                              dated June 29, 1988
               Integra and Bell Atlantic TriCon Leasing
               Corporation.

     4.29      Agreement to Exchange dated June 14, 1988                                Exhibit 4.2 to Form 8-K
               by and between Registrant and Integra.                                   dated June 29, 1988
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>
   Exhibit                                                                                      Method of
     No.             Description                                                                 Filing
     ---             -----------                                                                 ------
    <S>        <C>                                                                      <C>           
    10.1       Lease Agreement dated December 30, 1982                                  Exhibit 10(H)(3) to Post-
               between Registrant, as landlord, and                                     Effective Amendment No. 1
               Brock Residence Inns, Inc. as tenant.                                    to Registration Statement
                                                                                        (Form S-11) No. 2-79041

    10.2       Lease Guaranty dated December 30, 1982                                   Exhibit 10(H)(4) to Post-
               from Brock Hotel Corporation to                                          Effective Amendment No. 1
               Registrant.                                                              to Registration Statement
                                                                                        (Form S-11) No. 2-79041

    10.3       Real Estate Purchase Agreement dated                                     Exhibit 10.1 to Form 8-K
               January 19, 1983 between Allis-Chalmers                                  filed March 17, 1983
               Corporation, as seller and Gibson
               Realty, Inc., as purchaser.

    10.4       Assignment of Real Estate Purchase                                       Exhibit 10.2 to Form 8-K
               Agreement dated March 3, 1983 from Gibson                                filed March 17, 1983
               Realty, Inc., as assignor, to Registrant,
               as assignee.

    10.5       Lease Agreement dated March 3, 1983                                      Exhibit 10.3 to Form 8-K
               between Registrant, as landlord, and                                     filed March 17, 1983
               Simplicity Manufacturing, Inc. as
               tenant, for two properties in Port
               Washington, Wisconsin.

    10.6       Management Agreement between Registrant                                  Exhibit 10(B) to Amendment
               and Carey Corporate Property Management,                                 No. 2 to Registration
               Inc.                                                                     Statement (Form S-11)
                                                                                        No. 2-79041

    10.7       Support Agreement among Registrant,                                      Exhibit 10(C) to Amendment
               Fourth Carey Corporate Property, Inc.                                    No. 2 Registration
               and W.P. Carey & Co., Inc.                                               Statement (Form S-11)
                                                                                        No. 2-79041

    10.8       Lease Agreement dated June 1, 1983 between                               Exhibit 10.1 to Form 8-K
               Registrant and CPA(R):3, as landlord, and                                dated June 22, 1983
               Knudsen Corporation, as tenant.

    10.9       Agreement dated June 1, 1983 between                                     Exhibit 10.2 to Form 8-K
               Registrant and CPA(R):3, as landlord, and                                dated June 22, 1983
               Knudsen, as tenant.

    10.10      Lease Agreement dated June 2, 1983 between                               Exhibit 10.3 to Form 8-K
               Registrant, as landlord, and Genesco, Inc.,                              dated June 22, 1983
               as lessee.
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>
   Exhibit                                                                                      Method of
     No.             Description                                                                 Filing
     ---             -----------                                                                 ------
    <S>        <C>                                                                      <C>           
    10.11      Lease Agreement dated July 1, 1983 between                               Exhibit 10.1 to Form 8-K
               Registrant, as landlord, and Broco, as                                   dated July 14, 1983
               tenant.

    10.13      Lease Agreement dated October 17, 1983                                   Exhibit 10.2 to Form 8-K
               between Registrant, as landlord, and                                     dated November 2, 1983
               ARC, as tenant.

    10.15      Purchase Agreement dated February 23, 1983                               Exhibit 10.15 to Form 10-K
               between J.D.N. Enterprises, Inc. and                                     dated March 31, 1984
               Winn-Dixie Montgomery, Inc. ("Winn-Dixie").

    10.16      Assignment of Purchase Agreement dated                                   Exhibit 10.16 to Form 10-K
               March 7, 1984 from Winn-Dixie to                                         dated March 31, 1984
               Registrant.

    10.18      Lease Agreement dated March 7, 1984                                      Exhibit 10.18 to Form 10-K
               between Registrant, as landlord, and                                     dated March 31, 1984
               Winn-Dixie, as tenant.

    10.19      Lease Guaranty dated March 7, 1984                                       Exhibit 10.19 to Form 10-K
               from Winn-Dixie, Stores, Inc. to                                         dated March 31, 1984
               Registrant.

    10.20      Second Amendment of Lease entered into as of                             Exhibit 10.1 to Form 8-K
               October 21, 1986, by and between Registrant                              dated November 6, 1986
               and CPA(R):3, collectively as Landlord, and
               Santee Dairies, Inc., as Tenant.

    10.21      Lease Agreement dated June 14, 1988                                      Exhibit 10.1 to Form 8-K
               by and between Registrant and CPA(R);8,                                  dated June 29, 1988
               together, as Landlord, and Integra,
               as Tenant.

    28.1       Exchange and Conveyance of Property Deed                                 Exhibit 28.1 to Form 8-K
               dated June 14, 1988 from Integra, as                                     dated June 29, 1988
               Transferor, to Registrant, as Transferee.
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>
   Exhibit                                                                                      Method of
     No.             Description                                                                 Filing
     ---             -----------                                                                 ------
    <S>        <C>                                                                      <C>           
    28.2       Bill of Sale dated June 14, 1988 from                                    Exhibit 28.2 to Form 8-K
               Integra, as Seller, to Registrant and                                    dated June 29, 1988
               CPA(R):8, together, as Purchaser.

    28.3       Seller/Lessee's Certificate dated June 14,                               Exhibit 28.3 to Form 8-K
               1988 from Integra, as Seller, to Registrant                              dated June 29, 1988
               and CPA(R):8, together, as Purchaser.

    28.4       Prospectus of Registrant                                                 Exhibit 28.4 to Form 10-K/A
               dated October 28, 1982.                                                  dated September 24, 1993

    28.5       Supplement dated December 2, 1982                                        Exhibit 28.5 to Form 10-K/A
               to Prospectus dated October 28, 1982.                                    dated September 24, 1993

    28.6       Supplement dated January 11, 1983                                        Exhibit 28.6 to Form 10-K/A
               to Prospectus dated October 28, 1982.                                    dated September 24, 1993

    28.7       Supplement dated May 25, 1983                                            Exhibit 28.7 to Form 10-K/A
               to Prospectus dated October 28, 1982.                                    dated September 24, 1993

    28.8       Press release dated June 30, 1993                                        Exhibit 28.1 to Form 8-K
               announcing the suspension of secondary                                   dated July 12, 1993
               market sales of Limited Partnership Units.

</TABLE>



(b) Reports on Form 8-K

     During the quarter ended  December 31, 1995 the Registrant was not required
to file any reports on Form 8-K.
<PAGE>
 
                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                CORPORATE PROPERTY ASSOCIATES 4
                (a California limited partnership)

                BY: CAREY CORPORATE PROPERTY, INC.

  03/28/96      BY:  /s/ Claude Fernandez
  --------          ------------------------------------
     Date           Claude Fernandez
                    Executive Vice President and
                    Chief Administrative Officer
                    (Principal Financial Officer)

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

                BY: CAREY CORPORATE PROPERTY, INC.

                    William P. Carey
                    Chairman of the Board
                    and Director
                    (Principal Executive Officer)

                    Francis J. Carey
                    President and Director

                    George E. Stoddard               BY:  /s/ George E. Stoddard
                    Chairman of the Investment           -----------------------
                    Committee and Director               George E. Stoddard
                                                         Attorney in fact  
                                                         March 28, 1996    

                    Dr. Lawrence R. Klein                
                    Chairman of the Economic Policy
                    Committee and Director

                    Madelon DeVoe Talley
                    Vice Chairman of the Board of
                    Directors and Director

  03/28/96      BY:  /s/ Claude Fernandez
  --------          ------------------------------------
     Date           Claude Fernandez
                    Executive Vice President and
                    Chief Administrative Officer
                    (Principal Financial Officer)

  03/28/96      BY:  /s/ Michael D. Roberts
  --------          ------------------------------------
     Date           Michael D. Roberts
                    First Vice President and Controller
                    (Principal Accounting Officer)
<PAGE>
 
                             APPENDIX A TO FORM 10-K




                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership





                               1995 ANNUAL REPORT
<PAGE>
 
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
-----------------------------------------------------------------------------------------------
(In thousands except per unit amounts)

                                                  1991      1992      1993      1994      1995
                                                -------   -------   -------   -------   -------
<S>                                             <C>       <C>       <C>       <C>       <C>    
OPERATING DATA:
  Revenues                                      $ 9,653   $ 9,959   $12,450   $11,571   $11,896
  Income before extraordinary
      item                                        4,236     3,698     4,741     4,443     8,679
  Income before extraordinary item allocated:
      To General Partners                           254       222       284       266       879
      To Limited Partners                         3,982     3,476     4,457     4,177     7,800
      Per unit                                    46.54     40.63     52.08     48.81     91.16
  Distributions attributable (1):
      To General Partners                           285       290       292       293       323
      To Limited Partners                         4,472     4,539     4,570     4,590     8,667
      Per unit                                    52.26     53.04     53.41     53.64    101.29(2)
Payment of mortgage
principal (3)                                       580       645       806     1,168     1,158

BALANCE SHEET DATA:
Total assets                                     59,892    58,331    57,497    56,108    48,508
Long-term
  obligations (4)                                25,141    10,029    26,418    24,999    18,540
</TABLE>


(1)  Includes  distributions  attributable  to the fourth quarter of each fiscal
     year payable in the following  fiscal year less  distributions in the first
     fiscal quarter attributable to the prior year.

(2)  The 1995 figure includes a $50 per Unit special distribution to the Limited
     Partners.

(3)  Represents scheduled mortgage principal amortization paid.

(4)  Represents mortgage obligations due after more than one year.


                                       1
<PAGE>
 
MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------

     Results of Operations

     Net  income  and  cash  provided  by  operating   activities  increased  by
$4,235,000  and $327,000,  respectively,  in 1995 as compared with 1994. Of this
increase,  $3,330,000  was  attributable  to the gain on the sale of the Genesco
Inc.  ("Genesco")  property in 1995.  Income  before gain on sale  reflected  an
increase of $905,000;  $184,000 of this increase was due to several nonrecurring
items;  the rest of the  increase was  primarily  due to an increase in earnings
from the hotel  operations,  a decrease in property  expenses and an increase in
interest  income.  The  decreases in lease  revenues and interest  expenses were
primarily  attributable to the sale of the Genesco property and repayment of the
Genesco mortgage loan.

     Income from hotel  operations  of  $1,431,000  increased  by 31% in 1995 as
compared with 1994.  This increase  resulted  primarily  from an increase in the
average daily room rate, which reflected an increase of  approximately  18%. The
occupancy  rate of 82%,  which  approximates  the  historical  occupancy  levels
achieved  prior to 1994,  reflect a 3% increase  for 1995 from 1994.  Due to the
renovation work performed in 1994, there were fewer room nights available, which
negatively  impacted the hotel's results of operations in 1994. The average room
rate  in 1995  improved  as  group  business,  which  is  generally  discounted,
decreased to 12% of rooms occupied compared with 19% of rooms occupied in 1994.

     Leasing  revenues  decreased by $713,000  solely as a result of the Genesco
sale. As a result of the sale,  Genesco  rentals were  $1,048,000  lower in 1995
than in 1994. The decrease  resulting from the Genesco sale was partially offset
by  revenue  increases  of  $313,000  from the  rental of the  Salisbury,  North
Carolina  property to Family Dollar Stores,  Inc. ("Family Dollar") for the full
year, a rent increase resulting from a lease modification with Agency Management
Services,  Inc.  ("Agency  Management"),  a modest  increase from the lease with
Petrocon Engineering,  Inc. ("Petrocon") and a rent increase in November 1995 on
the lease with Hughes Markets, Inc. ("Hughes").

     Interest expense decreased by $297,000,  almost entirely as a result of the
payoff of the  Genesco  loan upon the sale of  Genesco  in June  1995.  Interest
expense  relating to other fixed rate mortgage loans decreased by $63,000 due to
declining  balances  on those  loans.  The  interest on the  Partnership's  sole
variable rate loan increased by $61,000 due to increases in interest rates.  The
decrease in property expense in 1995 was primarily due to approximately $538,000
of  costs  incurred  in 1994  related  to the  evaluation  of the  Partnership's
liquidity  alternatives which costs included  environmental reviews and property
valuations.  Other  interest  income  increased  due  to  higher  cash  balances
generated from the sale of the Genesco property and higher interest rates during
the year.

     Net income and cash provided by operating  activities decreased by $642,000
and $459,000,  respectively,  in 1994 as compared with 1993.  Nonrecurring items
contributed  $1,187,000  and  $842,000  to 1993 net income and cash  provided by
operations,  respectively.   Nonrecurring  items  in  1993  include  a  $345,000
extraordinary  gain on  extinguishment  of debt and  $842,000  of  other  income
relating to funds received in connection with the exercise of an assignment on a
promissory note which had been pledged to the Partnership. Excluding the effects
of these nonrecurring items, income and cash provided from operations would have
reflected increases of 14% and 7%, respectively,  for 1994. Operating income and
cash  provided  from  operations  in 1994  were  favorably  affected  by  rental
increases in July 1993 on two leases and decreases in interest and  depreciation
expense.  These items were  partially  offset by a reduction  in rentals for two
properties and an increase in property expense.

     Although lease revenues remained  relatively  unchanged in 1994 as compared
with 1993,  the  Partnership  realized  increases  in leasing  revenue  from the
Partnership's leases with Genesco and Brodart Co. ("Brodart").  These leases had
rental increases effective July 1, 1993,  contributing an additional $276,000 to
revenues in 1994.  These  increases  were offset by a $165,000  decrease in rent
from the renewal of the Agency Management lease,  effective November 1, 1993. In
addition, the Partnership's property leased to Family Dollar was leased for only
six  months in 1994 and,  therefore,  the  Partnership's  revenue  decreased  by
$140,000 from 1993.


                                       2
<PAGE>
 
     Interest  expense  decreased in 1994 as a result of interest rate decreases
in 1994 and 1993 on various  loans.  In January  1994,  the interest rate on the
Brodart  mortgage loan  decreased  from 12.29% to 7.6%,  pursuant to an interest
rate reset  provision.  The interest rate on the hotel  mortgage loan  decreased
from 12% to 8.59% in June 1993 pursuant to an interest rate reset provision.  In
connection  with the April 1993  refinancing  of the Genesco  mortgage loan, the
interest rate decreased  from 11.79% to 9%. After a balloon  payment was made to
pay off a  mortgage  loan on the  Agency  Management  property,  which had a 13%
interest  rate,  the loan was  refinanced  at a variable rate which is currently
less than 10%.  Interest  expense also decreased due to the decreasing  interest
component of the Partnership's amortizing debt.

     Income from the hotel operations of $1,090,000 in 1994 increased by 2% from
the 1993 income of  $1,066,000.  During 1994, the hotel had an occupancy rate of
79%  representing  a  decrease  of 1.5% from 1993;  however,  there was a slight
increase in the average room rate. The decrease in occupancy also contributed to
a 10% decrease in food and beverage  sales.  The decrease in the  occupancy  was
caused by the  disruption  from the  major  renovations  performed  at the hotel
during  the  first  six  months  of  1994.   Subsequent  to  the  completion  of
renovations,  the occupancy rate rebounded to its  historical  averages.  As the
hotel operates in a competitive market, Management believes that the renovations
were  necessary  to retain its share of the market  surrounding  the New Orleans
airport.

     Included in 1994 property  expense are costs  related to the  evaluation of
liquidity alternatives.  The decrease in depreciation expense is due to the full
depreciation  of certain  assets which  resulted in higher  depreciation  in the
early years of owning real property.

     Net income and cash flow  provided by operating  activities  in 1996 may be
affected by the outcome of negotiations  relating to the Hughes lease. The lease
with Hughes for a dairy processing plant in Los Angeles, California is currently
scheduled to expire in April 1996. The  Partnership and Hughes have entered into
negotiations for a two-year lease extension. There can be no assurance that such
an extension will be executed.  The Partnership is in the process of remarketing
the property in the event that the lease is not  extended.  Annual rent from the
Hughes  lease  is  currently  $1,444,000.   If  the  property  is  vacated,  the
Partnership  estimates that annual  carrying  costs for  insurance,  real estate
taxes  and  maintenance  and  security  would  be  approximately  $467,000.  The
Partnership's  short-term  lease with Family Dollar for the Salisbury  property,
which contributed  $547,000 of rental revenues in 1995 has been extended through
April 1997. In addition,  several leases have rent increases  scheduled in 1998.
Solely  as a result  of the  sale of the  Genesco  property,  annual  cash  flow
(rentals,   net  of  mortgage  debt  service   installments)  will  decrease  by
$1,082,000.

     The  Partnership's  lease for an office  building in  Beaumont,  Texas with
Petrocon is not a net lease and,  therefore,  the  Partnership  pays real estate
taxes,  insurance and maintenance  costs;  however,  the lease includes  certain
escalation  provisions so that in the event operating costs increase,  a portion
of such increases will be passed through to the tenant. The lease with Petrocon,
which is due to expire in November  1997,  provided gross rentals of $369,000 in
1995.  Any renewals or extensions of the lease will be subject to the prevailing
market  conditions  in  Beaumont  at that  time.  Management  believes  that the
prospects for a lease renewal are positive,  although  there can be no assurance
that the  Petrocon  lease will be  extended.  The hotel  business is affected by
changing  prices and  competition  and Management is  continually  assessing the
impact of these  factors.  As the rate of inflation  has been moderate in recent
years, the Partnership believes that the hotel may not be significantly impacted
by changing prices. In addition, Management believes that increases in costs may
be offset by increases in room rates.

     The  Partnership's  leases are primarily net leases and long-term in nature
and, as such,  inflation and changing prices have not  unfavorably  affected the
Partnership's  revenue  and net  income  nor  have  they  had an  impact  on the
continuing operations of the Partnership's properties.  Substantially all of the
Partnership's net leases have either periodic mandated rent increases,  periodic
rent  increases  based on formulas  indexed to increases  in the Consumer  Price
Index ("CPI") or sales overrides which have the potential to increase the future
rentals from the  Partnership's  current  tenants.  Future rent increases may be
affected by changes in the method of how the CPI is  calculated.  Although there
are indications that there may be legislation which considers changes to the CPI
methodology, the Partnership cannot predict the outcome of any proposal relating
to the CPI formula.


                                       3
<PAGE>
 
     Financial Condition

     Other than the hotel property operated by the Partnership and the Salisbury
and  Beaumont   properties   which  are  subject  to  short-term   leases,   the
Partnership's properties are net leased to corporate tenants. Under a net lease,
the tenants are generally required to pay all operating expenses relating to the
leased properties. The Partnership depends on a stable cash flow from net leases
to meet operating  expenses,  service its debt, fund  distributions and maintain
adequate cash reserves. In addition, the Partnership maintains a cash reserve to
fund major outlays such as capital improvements and balloon debt payments.  Such
expenditures may also be funded from additional  borrowing on the  Partnership's
real estate portfolio. The cash flow of the hotel operation is more likely to be
subject to greater  variations than what the Partnership would experience if the
same  property  were  net  leased  to a  tenant.  Cash  flow  provided  by hotel
operations increased in 1995.

     Since its inception,  the Partnership has distributed a substantial portion
of its cash flow to its partners. Cash provided from operations of $6,099,000 in
1995 was sufficient to pay $4,781,000 of quarterly distributions from operations
to partners and scheduled mortgage debt service of $1,158,000. As cash flow from
operating activities may exceed earnings,  distributions per Limited Partnership
Unit may also be in excess of net income per Limited  Partnership  Unit.  During
the  five-year  period  ended  December 31,  1995,  distributions  per Unit have
exceeded net income per Unit by $5.42,  $12.31,  $4.78 and $11.36 in 1991, 1992,
1994 and 1995,  respectively.  Net income is  reduced  by  charges  which do not
impact operating cash flow such as depreciation and  amortization.  In addition,
the  proceeds  generated  from a  property  sale and  which  are  available  for
distribution  may  exceed  the gain that is  realized  for  financial  reporting
purposes.

     In 1995,  Partnership investing activities consisted of funding $105,000 of
improvements at the Agency Management property, $141,000 of capital expenditures
at the hotel property and the sale of the Genesco property.  The expenditures at
the hotel  consisted  primarily of the  replacement  of furniture,  fixtures and
equipment.  The hotel  operation  maintains a reserve account which is funded by
allocating 5% of hotel revenues to fund replacements of furniture,  fixtures and
equipment  which is necessary to remain  competitive in the hotel  business.  At
December 31, 1995, the reserve account had a balance of  approximately  $459,000
and is included in other assets in the accompanying financial statements. As the
result of successful negotiations with Holiday Inn in 1995, the Partnership will
not be required to make  additional  improvements to comply with the Holiday Inn
core  modernization  plan.  The  Partnership  does not  anticipate  funding  any
improvements  at the hotel  property,  other than  replacements  funded from the
aforementioned  reserve,  over  the  next  several  years  as  a  major  capital
improvement plan was completed at the hotel in 1994.

     The  Partnership's  financing  activities  generally  consist of using cash
provided from operating  activities to pay quarterly  distributions  to partners
and meeting scheduled  principal  payments on the  Partnership's  mortgage debt.
During 1995, the  Partnership  used  $5,723,000 of the proceeds from the Genesco
sale to satisfy the mortgage debt on that property. In addition, the Partnership
distributed  $4,321,000 ($50 per Limited Partnership Unit) of such proceeds as a
special  distribution to partners.  With this distribution,  the Partnership has
now  distributed  $70  in  special  distributions  since  the  inception  of the
Partnership,  representing 14% of the original capital  contribution per Unit of
$500. Cash flow from operations will decrease as the result of the Genesco sale.
The distribution  rate based on original  capital less the cumulative  amount of
special distributions has continued to increase. The Partnership's cash balances
have increased to $7,580,000 at December 31, 1995 as compared with $2,509,000 at
December 31, 1994,  primarily due to the remaining  undistributed  proceeds from
the Genesco sale.  Management is still  considering the most  appropriate use of
these funds which may include,  but is not limited to,  maintaining  higher cash
reserves  or  paying  off  mortgage  debt.  With the  increased  cash  reserves,
Management  has  continued  to increase  the rate of  distribution  based on its
judgment that this trend will not adversely affect the  Partnership's  financial
condition.


                                       4
<PAGE>
 
     Future  operating  cash  flow and the  Partnership's  ability  to  continue
increasing the distribution rate are subject to various uncertainties  including
the ability of the  Partnership  to extend the Hughes lease and/or  remarket the
Hughes property, extending the short-term lease with Petrocon, further extending
the Family Dollar lease,  and any changes in cash flow from the hotel  property.
In addition,  cash  balances and cash flow may be affected by the  Partnership's
ability  to  refinance  balloon  payments  on three  mortgage  loans  which  are
scheduled for payment in 1998, as described below. As a result of its ability to
maintain adequate cash reserves, the Partnership has no lines of credit or other
short-term  financing  arrangements.  Management  believes the  Partnership  has
additional  borrowing  capacity  based  on  its  operating  cash  flow  and  the
unleveraged portion of its real estate portfolio.

     The Partnership's mortgage loans are limited recourse mortgage obligations,
except as noted. In 1998,  mortgage loan balloon payments  totaling  $14,000,000
are  scheduled  on the  mortgage  loans on the hotel  property  and the property
leased  to  Simplicity   Manufacturing   ,  Inc.   ("Simplicity")   and  a  loan
cross-collateralized  on properties  leased to Family Dollar,  Agency Management
and Winn-Dixie Stores, Inc.  ("Winn-Dixie").  Under certain  circumstances,  the
cross-collateralized  loan  could  be  recourse  to  the  Partnership  for up to
$1,500,000. In the case of mortgage financing which does not fully amortize over
its term, the Partnership  would be responsible for the balloon payment required
only to the extent of its interest in the encumbered property because the holder
of each such obligation has recourse only to the property  collateralizing  such
debt. The  Partnership  could seek to refinance the loans,  restructure the debt
with  existing  lenders,  evaluate  its  ability to satisfy the  mortgages  from
existing reserves or sell the property and use the sales proceeds to satisfy the
mortgage  debt.  When  lessees  obligate  themselves  to remain as tenants,  the
Partnership's  ability to refinance loans is usually  enhanced.  The Partnership
was  able  to  successfully  refinance  the  loans  on the  Genesco  and  Agency
Management  properties in 1993 as the properties  remained  subject to long-term
leases.  Accordingly,  the  Partnership  believes  it  should be  successful  in
refinancing  the  Simplicity  loan;  however,  this  will  not be  necessary  if
Simplicity  elects to exercise its option to purchase the property,  which would
be  exercisable  at that  time.  Additionally,  as the cash  flow from the hotel
operation is positive and has been increasing, Management believes prospects for
refinancing  that loan are good.  If Family  Dollar does not further  extend its
lease,  the Partnership may consider using cash reserves to pay off a portion of
the cross-collateralized  loan. At that time, the Partnership could consider new
mortgage   financings  which  separately  encumber  the  Winn-Dixie  and  Agency
Management properties.

     Simplicity has a purchase option  exercisable in April 1998 for the greater
of  $9,684,000  or fair market  value capped at  $12,000,000.  In the event that
Simplicity  exercises  its option,  the  Partnership  could realize no less than
$5,362,000  before any necessary costs and after paying the outstanding  debt on
the mortgage loan on the property.  Cash flow from the property  (lease  rentals
less debt service on the mortgage loan) is $934,000.

     Except for the hotel  property,  all of the  Partnership's  properties  are
currently leased to corporate tenants, all of which are subject to environmental
statutes and  regulations  regarding  the  discharge of hazardous  materials and
related remediation obligations. The Partnership generally structures a lease to
require the tenant to comply with all laws.  In addition,  substantially  all of
the  Partnership's  net  leases  include  provisions  which  require  tenants to
indemnify  the  Partnership  from all  liabilities  and losses  related to their
operations at the leased properties.  If the Partnership  undertakes to clean up
or remediate any of its properties,  the General  Partners  believe that in most
cases the Partnership  will be entitled to  reimbursement  from tenants for such
costs. In the event that the Partnership absorbs a portion of such costs because
of a tenant's failure to fulfill its  obligations,  the General Partners believe
such  expenditures  will not have a material adverse effect on the Partnership's
financial   condition,   liquidity  or  results  of  operations.   None  of  the
environmental  conditions  found in the  Phase I  reviews  relate  to the  hotel
property.

     In 1994,  the  Partnership  voluntarily  conducted  Phase II  environmental
reviews  of  certain  of  its  properties  based  on  the  results  of  Phase  I
environmental reviews conducted in 1993. The Partnership believes,  based on the
results of such reviews, that its properties are in substantial  compliance with
Federal and state  environmental  statutes and regulations.  Portions of certain
properties  have been  documented as having a limited  degree of  contamination,
principally  in connection  with surface  spills from facility  activities.  For
those conditions which were identified, the Partnership has advised the affected
tenants of the Phase I findings  and of their  obligations,  if any,  to perform
required remediation.


                                       5
<PAGE>
 
     Effective  January 1, 1995,  the  Partnership  adopted  the  provisions  of
Statement  of  Financial  Accounting  Standards  No.  121 -  Accounting  for the
Impairment of Long-Lived  Assets and Long-Lived  Assets to Be Disposed Of ("SFAS
121").  Pursuant to SFAS 121, the Partnership assesses the recoverability of its
real estate assets,  including residual interests,  based on projections of cash
flows  over the life of such  assets.  In the event  that  such  cash  flows are
insufficient,  the assets are adjusted to their estimated net realizable  value.
The  adoption  of SFAS 121 did not have a material  effect on the  Partnership's
financial condition or results of operations.


                                       6
<PAGE>
 
                        REPORT of INDEPENDENT ACCOUNTANTS

To the Partners of
  Corporate Property Associates 4,
  a California limited partnership

     We have audited the accompanying  consolidated  balance sheets of Corporate
Property  Associates 4, a California limited  partnership,  and Subsidiary as of
December 31, 1994 and 1995, and the related  consolidated  statements of income,
partners' capital and cash flows for each of the three years in the period ended
December  31,  1995.  We have also  audited  the  financial  statement  schedule
included on pages 21 to 24 of this Annual Report. These financial statements and
financial statement schedule are the responsibility of the General Partners. Our
responsibility  is to  express  an opinion  on these  financial  statements  and
financial statement schedule based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting  principles used and significant  estimates made by the
General  Partners,  as  well  as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all  material  respects,  the  consolidated  financial  position of Corporate
Property  Associates 4, a California limited  partnership,  and Subsidiary as of
December 31, 1994 and 1995, and the consolidated results of their operations and
their cash flows for each of the three years in the period  ended  December  31,
1995 in conformity with generally accepted accounting  principles.  In addition,
in our opinion,  the Schedule of Real Estate and Accumulated  Depreciation as of
December 31, 1995, when considered in relation to the basic financial statements
taken as a whole,  presents  fairly,  in all material  respects,  the  financial
information  required to be included therein pursuant to Securities and Exchange
Commission Regulation S-X Rule 12-28.


                                                    /s/ Coopers & Lybrand L.L.P.

New York, New York
March 21, 1996


                                       7
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                           CONSOLIDATED BALANCE SHEETS

                           December 31, 1994 and 1995

<TABLE>
<CAPTION>
                                                                            1994                    1995
                                                                            ----                    ----
<S>                                                                     <C>                    <C>         
        ASSETS:
Real estate leased to others:
   Accounted for under the
      operating method:
         Land                                                           $ 4,294,809            $  4,294,809
         Buildings                                                       22,665,152              22,770,152
                                                                        -----------              ----------
                                                                         26,959,961              27,064,961
         Accumulated depreciation                                        11,717,884              12,626,558
                                                                        -----------              ----------
                                                                         15,242,077              14,438,403
   Net investment in direct financing leases                             29,952,612              18,224,428
                                                                        -----------              ----------
         Real estate leased to others                                    45,194,689              32,662,831
Operating real estate, net of accumulated
   depreciation of $495,099 in 1994 and
    $735,950 in 1995                                                      7,133,023               7,033,830
Cash and cash equivalents                                                 2,509,451               7,579,071
Accrued interest and rents receivable                                       262,998                 203,651
Other assets, net of accumulated amortization of
   $463,682 in 1994 and $435,047 in 1995                                  1,007,653               1,028,692
                                                                        -----------             -----------
             Total assets                                               $56,107,814             $48,508,075
                                                                        ===========             ===========

        LIABILITIES:
Mortgage notes payable                                                  $26,367,583             $19,486,882
Accrued interest payable                                                    193,839                 136,087
Accounts payable and accrued expenses                                       610,264                 435,977
Accounts payable to affiliates                                               31,427                  87,461
Prepaid rental income                                                       119,118
                                                                        -----------              ----------
             Total liabilities                                           27,322,231              20,146,407
                                                                        -----------             -----------
Commitments and contingencies

        PARTNERS' CAPITAL:

General Partners                                                           (486,282)                 62,061
Limited Partners (85,568 Limited
      Partnership Units issued and
      outstanding)                                                       29,271,865              28,299,607
                                                                        -----------              ----------
             Total partners' capital                                     28,785,583              28,361,668
                                                                        -----------              ----------
             Total liabilities and
             partners' capital                                          $56,107,814             $48,508,075
                                                                        ===========             ===========
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                       8
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                        CONSOLIDATED STATEMENTS of INCOME

              For the years ended December 31, 1993, 1994 and 1995

<TABLE>
<CAPTION>
                                                               1993                  1994                  1995
                                                               ----                  ----                  ----
<S>                                                         <C>                   <C>                   <C>        
Revenues:
   Rental income                                            $ 3,163,350           $ 2,921,429           $ 3,260,022
   Interest income from direct financing leases               5,137,870             5,414,500             4,362,928
   Other interest income                                        110,008               106,798               254,935
   Revenues of hotel operations                               3,197,476             3,127,894             3,834,671
   Other income                                                 841,670                                     183,768
                                                            -----------           -----------           -----------
                                                             12,450,374            11,570,621            11,896,324
                                                            -----------           -----------           -----------
Expenses:
   Interest on mortgages                                      2,987,868             2,396,017             2,098,857
   Depreciation                                               1,346,641             1,141,143             1,149,525
   General and administrative                                   394,867               444,307               454,000
   Property expense                                             769,999               983,409               327,528
   Operating expense of hotel operations                      2,131,271             2,037,764             2,404,091
   Amortization                                                  79,222               124,601               113,835
                                                            -----------           -----------            ----------
                                                              7,709,868             7,127,241             6,547,836
                                                            -----------           -----------            ----------
Income before gain on sale of real
   estate and extraordinary item                              4,740,506             4,443,380             5,348,488
Gain on sale of real estate                                                                               3,330,098
                                                            -----------           -----------            ----------
      Income before extraordinary item                        4,740,506             4,443,380             8,678,586
Extraordinary gain on extinguishment
   of debt                                                      345,000
                                                            -----------           -----------            ---------- 
Net income                                                  $ 5,085,506           $ 4,443,380            $8,678,586
                                                            ===========           ===========            ==========
Net income allocated to:
   Individual General Partner                               $    50,855           $    44,434            $  205,754
                                                            ===========           ===========            ==========
   Corporate General Partner                                $   254,275           $   222,169            $  672,659
                                                            ===========           ===========            ==========
   Limited Partners                                         $ 4,780,376           $ 4,176,777            $7,800,173
                                                            ===========           ===========            ==========
Net income per Limited
   Partnership Unit
   (85,568 Units outstanding):
      Income before extraordinary item                        $52.08                $48.81              $ 91.16
      Extraordinary item                                        3.79
                                                              ------                ------              -------
                                                              $55.87                $48.81              $ 91.16
                                                              ======                ======              =======
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                       9
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                  CONSOLIDATED STATEMENTS of PARTNERS' CAPITAL

              For the years ended December 31, 1993, 1994 and 1995

<TABLE>
<CAPTION>
                                                                Partners' Capital Accounts
                                                    --------------------------------------------------
                                                                                                             Limited
                                                                                                            Partners'
                                                                          General           Limited         Amount Per
                                                       Total             Partners           Partners         Unit (a)
                                                       -----             --------           --------         --------
<S>                                                 <C>                 <C>               <C>               <C>   
Balance, December 31, 1992                          $28,989,602         $(474,040)        $ 29,463,642        $  344

Distributions                                        (4,854,619)         (291,278)          (4,563,341)          (53)

Net income, 1993                                      5,085,506           305,130            4,780,376            56
                                                    -----------         ---------         ------------        ------

Balance, December 31, 1993                           29,220,489          (460,188)          29,680,677           347

Distributions                                        (4,878,286)         (292,697)          (4,585,589)          (54)

Net income, 1994                                      4,443,380           266,603            4,176,777            49
                                                    -----------         ---------         ------------        ------

Balance, December 31, 1994                           28,785,583          (486,282)          29,271,865           342

Distributions                                        (9,102,501)         (330,070)          (8,772,431)         (102)

Net income, 1995                                      8,678,586           878,413            7,800,173            91
                                                    -----------         ---------         ------------        ------

Balance, December 31, 1995                          $28,361,668         $  62,061         $ 28,299,607        $  331
                                                    ===========         =========         ============        ======
</TABLE>


(a) Based on 85,568 Units issued and outstanding during all periods.

The accompanying notes are an integral part of the consolidated financial
statements.


                                       10
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                      CONSOLIDATED STATEMENTS of CASH FLOWS
              For the years ended December 31, 1993, 1994 and 1995

<TABLE>
<CAPTION>
                                                                             1993                    1994                  1995
                                                                             ----                    ----                  ----
<S>                                                                      <C>                    <C>                  <C>         
Cash flows from operating activities:
    Net income                                                           $  5,085,506           $ 4,443,380          $  8,678,586
    Adjustments to reconcile net income
       to net cash provided by operating activities:
       Depreciation and amortization                                        1,425,863             1,265,744             1,263,360
       Cash receipts on operating and direct financing
         leases greater than income recognized                                 17,972                21,994                 9,808
       Gain on extinguishment of debt                                        (345,000)
       Gain on sale of real estate                                                                                     (3,330,098)
       Net change in operating assets and liabilities                          47,245                40,985              (522,176)
                                                                         ------------           -----------          ------------ 
            Net cash provided by operating activities                       6,231,586             5,772,103             6,099,480
                                                                         ------------           -----------          ------------


Cash flows from investing activities:
    Proceeds from sale of real estate                                                                                  15,200,000
    Additional capitalized costs                                             (261,596)             (845,935)             (246,658)
                                                                         ------------           -----------          ------------ 
            Net cash (used in) provided by
               investing activities                                          (261,596)             (845,935)           14,953,342
                                                                         ------------           -----------          ------------


Cash flows from financing activities:
    Distributions to partners                                              (4,854,619)           (4,878,286)           (9,102,501)
    Proceeds from mortgages                                                10,852,977
    Payments of mortgage principal                                           (806,474)           (1,168,014)           (1,158,193)
    Prepayments of mortgages payable                                      (10,899,160)                                 (5,722,508)
    Deferred financing costs                                                 (419,710)                 (366)
    Payment on extinguishment of debt                                         (30,000)
            Net cash used in financing activities                          (6,156,986)           (6,046,666)          (15,983,202)
                                                                         ------------           -----------          ------------ 
            Net (decrease) increase in cash
               and cash equivalents                                          (186,996)           (1,120,498)            5,069,620

Cash and cash equivalents, beginning of year                                3,816,945             3,629,949             2,509,451
                                                                         ------------           -----------          ------------

            Cash and cash equivalents, end of year                       $  3,629,949           $ 2,509,451          $  7,579,071
                                                                         ============           ===========          ============
</TABLE>



The accompanying notes are an integral part of the consolidated financial
statements.


                                       11
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS

1.   Summary of Significant Accounting Policies:

     Basis of Consolidation:

          The  financial  statements  for   1993   include   the   accounts   of
               Corporate  Property  Associates 4 and Beaumont Limited  Liability
               Company ("Beaumont"), a 99% owned subsidiary (the "Partnership").
               Effective December 31, 1993, Beaumont was dissolved.

     Use of Estimates:

          The  preparation of financial  statements in conformity with generally
               accepted  accounting   principles  requires  management  to  make
               estimates  and  assumptions  that affect the reported  amounts of
               assets and  liabilities  and disclosure of contingent  assets and
               liabilities  at the  date  of the  financial  statements  and the
               reported  amounts of revenues and expenses  during the  reporting
               period. Actual results could differ from those estimates.

     Real Estate Leased to Others:

          Real estate is generally  leased to others on a net lease basis.  In a
               net lease the tenant is generally  responsible  for all operating
               expenses  relating to the  property,  including  property  taxes,
               insurance, maintenance, repairs, renewals and improvements.

          The  Partnership diversifies its real estate investments among various
               corporate tenants engaged in different industries and by property
               type throughout the United States.

          The  leases are  accounted  for under  either the direct  financing or
               operating methods. Such methods are described below:

                    Direct  financing  method - Leases  accounted  for under the
                    direct financing method are recorded at their net investment
                    (Note 5).  Unearned  income is  deferred  and  amortized  to
                    income  over the lease  terms so as to  produce  a  constant
                    periodic rate of return on the  Partnership's net investment
                    in the lease.

                    Operating method - Real estate is recorded at cost,  revenue
                    is recognized as rentals are earned and expenses  (including
                    depreciation) are charged to operations as incurred.

          Substantially  all of the  Partnership's  leases  provide  for  either
               scheduled  rent  increases,  periodic  rent  increases  based  on
               formulas  indexed to  increases  in the  Consumer  Price Index or
               sales overrides.

     Operating Real Estate:

          Land, building  and personal  property  are  carried  at  cost.  Major
               renewals  and   improvements  are  capitalized  to  the  property
               accounts,  while  replacements,  maintenance and repairs which do
               not  improve  or extend  the lives of the  respective  assets are
               expensed currently.

     Long-Lived Assets:

          Effective January 1, 1995, the  Partnership  adopted the provisions of
               Statement of Financial  Accounting Standards No. 121 - Accounting
               for the Impairment of Long-Lived  Assets and Long-Lived Assets to
               Be  Disposed  Of  ("SFAS   121").   Pursuant  to  SFAS  121,  the
               Partnership  assesses  the  recoverability  of  its  real  estate
               assets,  including  residual  interests,  based on projections of
               cash flows over the life of such  assets.  In the event that such
               cash flows are insufficient, the assets

                                   Continued


                                       12
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

               are  adjusted  to  their  estimated  net  realizable  value.  The
               adoption  of SFAS  121  did not  have a  material  effect  on the
               Partership's financial condition or results of operations.

     Depreciation:

          Depreciation  is  computed  using the  straight-line  method  over the
               estimated   useful  lives  of   components   of  the   particular
               properties, which range from 5 to 40 years.

     Cash Equivalents:

          The  Partnership considers all short-term,  highly-liquid  investments
               that are both readily  convertible to cash and have a maturity of
               generally three months or less at the time of purchase to be cash
               equivalents.   Items  classified  as  cash  equivalents   include
               commercial paper and money market funds. Substantially all of the
               Partnership's  cash and cash equivalents at December 31, 1994 and
               1995 were held in the custody of three financial institutions.

     Other Assets:

          Included in other assets are deferred rental income,  deferred charges
               and  furniture,  fixture and  equipment  reserves  related to the
               hotel   property.   Deferred   rental  income  is  the  aggregate
               difference  for operating  leases between  scheduled  rents which
               vary   during  the  lease  term  and  income   recognized   on  a
               straight-line  basis.  Deferred costs incurred in connection with
               mortgage note  refinancings  are amortized  over the terms of the
               mortgages.

     Income Taxes:

          A    partnership  is not  liable  for  income  taxes  as each  partner
               recognizes his proportionate  share of the partnership  income or
               loss in his tax  return.  Accordingly,  no  provision  for income
               taxes is recognized for financial statement purposes.

2.   Partnership Agreement:

          The  Partnership  was  organized  on August 10, 1982 under the Uniform
               Limited  Partnership  Act of the  State  of  California  for  the
               purpose of engaging in the  business of  investing in and leasing
               industrial  and  commercial  real estate.  The Corporate  General
               Partner  purchased  200 limited  partnership  units in connection
               with the  Partnership's  public  offering.  The Partnership  will
               terminate on December 31, 2020, or sooner, in accordance with the
               terms  of the  Amended  Agreement  of  Limited  Partnership  (the
               "Agreement").

          The  Agreement provides that the General Partners are allocated 6% (1%
               to the Individual  General  Partner,  William P. Carey, and 5% to
               the Corporate General Partner,  Carey Corporate  Property,  Inc.)
               and the Limited  Partners  are  allocated  94% of the profits and
               losses  as well  as  distributions  of  Distributable  Cash  From
               Operations, as defined. The partners are also entitled to receive
               net  proceeds  from the  sale of the  Partnership  properties  as
               defined in the  Agreement.  An affiliate of the General  Partners
               may be entitled to receive  incentive fees during the liquidation
               stage of the  Partnership.  A division of W. P. Carey & Co., Inc.
               ("W.P.  Carey"),  an  affiliate,  is engaged  in the real  estate
               brokerage  business.  The Partnership may sell properties through
               the  division and pay  subordinated  real estate  commissions  as
               provided in the Agreement.  The division could ultimately earn up
               to $857,694 of real estate  commissions with respect to the sales
               of property  between  1986 and 1995 which amount will be retained
               by the  Partnership  unless the  subordination  provisions of the
               Agreement are satisfied.

                                   Continued


                                       13
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

          In   accordance  with  the  Agreement,   the  General   Partners  were
               allocated  a portion of the 1995 gain on sale of property as well
               as the  related  tax gain in order to  eliminate  their  negative
               balances.   The  Partnership  paid  a  special   distribution  of
               $4,321,618  related to the sale which  distribution was allocated
               1% to the  Individual  General  Partner  and  99% to the  Limited
               Partners in accordance with the Agreement.

3.   Transactions with Related Parties:

          The  Partnership's   ownership  interest  in  certain  properties  are
               jointly   held  with   affiliates   as   tenants-in-common.   The
               Partnership  has a 46.383% and 83.24%  ownership  interest in two
               properties which are jointly held.

          Under the Agreement,  a division  of W.P.  Carey is also  entitled  to
               receive a property  management fee and  reimbursement  of certain
               expenses   incurred   in   connection   with  the   Partnership's
               operations.  General and  administrative  expense  reimbursements
               consist  primarily  of the  actual  cost of  personnel  needed in
               providing  administrative services necessary for the operation of
               the  Partnership.   Property  management  fees  and  general  and
               administrative expense reimbursements are summarized as follows:

               <TABLE>
               <CAPTION>
                                                                          1993             1994              1995
                                                                          ----             ----              ----
                      <S>                                               <C>              <C>               <C>     
                      Property management fee                           $ 96,962         $ 98,187          $ 91,564
                      General and administrative
                        expense reimbursements                           119,738          160,125            95,644
                                                                        --------         --------          --------
                                                                        $216,700         $258,312          $187,208
                                                                        ========         ========          ========
               </TABLE>

          During 1993, 1994 and 1995, fees  aggregating  $165,800,  $172,675 and
               $28,683, respectively, were incurred for legal services performed
               by a firm in which the Secretary of the Corporate General Partner
               and other affiliates is a partner of such firm.

          The  Partnership  is a participant in an agreement with W.P. Carey and
               certain  affiliates  for the purpose of leasing office space used
               for the administration of the real estate entities and W.P. Carey
               and for sharing the  associated  costs.  Pursuant to the terms of
               the agreement,  the Partnership's share of rental,  occupancy and
               leasehold  improvement  costs is based on adjusted gross revenues
               as defined.  Net  expenses  incurred in 1993,  1994 and 1995 were
               $52,719, $56,446 and $130,986, respectively. The increase in 1995
               costs was due, in part, to certain nonrecurring costs incurred in
               connection with the relocation of the Partnership's offices.

4.   Real Estate Leased to Others Accounted for Under the Operating Method and
     Operating Real Estate:

     A. Real Estate Leased to Others

          The  scheduled  minimum future rentals,  exclusive of renewals,  under
               noncancellable   operating   leases   amount   to   approximately
               $2,227,000  in  1996,  $1,188,000  in  1997,  $788,000  in  1998,
               $145,000  in both  1999  and  2000  and  aggregate  approximately
               $4,963,000 through 2004.

     Contingent rentals were approximately $181,000 in both 1993 and 1994 and
$195,000 in 1995.

                                   Continued


                                       14
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

     B. Operating Real Estate:

        Operating real estate, at cost, is summarized as follows:

<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                                        ------------
                                                                                   1994                1995
                                                                                   ----                ----
                      <S>                                                       <C>                <C>       
                      Land                                                      $  850,000         $  850,000
                      Building                                                   6,693,973          6,818,635
                      Personal property                                             84,149            101,145
                                                                                ----------         ----------
                                                                                 7,628,122          7,769,780
                          Less: Accumulated depreciation                           495,099            735,950
                                                                                ----------         ----------
                                                                                $7,133,023         $7,033,830
                                                                                ==========         ==========
</TABLE>

5.   Net Investment in Direct Financing Leases:

     Net investment in direct financing leases is summarized as follows:

<TABLE>
<CAPTION>
                                                                                     December 31,
                                                                                     ------------
                                                                            1994                      1995
                                                                            ----                      ----
                      <S>                                                <C>                       <C>        
                      Minimum lease payments
                         receivable                                     $44,462,382               $28,653,756
                      Unguaranteed residual value                        25,085,107                13,382,979
                                                                        -----------                ----------
                                                                         69,547,489                42,036,735
                      Less, Unearned income                              39,594,877                23,812,307
                                                                        -----------               -----------
                                                                        $29,952,612               $18,224,428
                                                                        ===========               ===========
</TABLE>


          The scheduled minimum future rentals, exclusive of renewals, under
              noncancellable direct financing leases amount to approximately
              $2,616,000 in each of the years 1996 to 2000 and aggregate
              approximately $28,654,000 through 2008

          Contingent  rentals  were  approximately   $973,000,   $1,253,000  and
               $990,000 in 1993, 1994 and 1995, respectively.

6.   Mortgage Notes Payable:

          The  Partnership's mortgage loans are limited recourse obligations and
               are  collateralized  by lease  assignments  and by real property.
               Under  certain  circumstances,  one  loan  could  be  a  recourse
               obligation  of  the  Partnership   for  up  to  $1,500,000.   The
               encumbered  properties  have  an  aggregate  carrying  amount  of
               $42,009,000,  before accumulated depreciation. As of December 31,
               1995,  mortgage notes payable bear interest at rates varying from
               7.60% to 10.52% per annum and mature from 1998 to 2004.

                                   Continued


                                       15
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

          Scheduled principal payments during each of the next five years
              following December 31, 1995 and thereafter are as follows:

<TABLE>
<CAPTION>
               Year Ending December 31,
               ------------------------
                  <S>                                          <C>        
                  1996                                         $   946,493
                  1997                                           1,024,153
                  1998                                          14,640,023
                  1999                                             191,464
                  2000                                             206,750
                  Thereafter                                     2,477,999
                                                               -----------
                     Total                                     $19,486,882
                                                               ===========
</TABLE>

     Interest paid was $2,968,564 $2,408,669 and $2,156,609 for 1993, 1994 and
1995, respectively.

7.   Distributions to Partners:

     Distributions are declared and paid to partners quarterly and are
     summarized as follows:

<TABLE>
<CAPTION>
                                                                                                           Limited
         Year Ending            Distributions Paid to             Distributions Paid to                  Partners' Per
         December 31,             General Partners                  Limited Partners                     Unit Amount
         ------------             ----------------                  ----------------                     -----------
<S>                             <C>                               <C>                                    <C>    
           1993                        $291,278                          $4,563,341                        $ 53.33
                                       ========                          ==========                        =======
           1994                        $292,697                          $4,585,589                        $ 53.59
                                       ========                          ==========                        =======
           1995:
                  Quarterly
                   distributions       $286,854                          $4,494,031                        $ 52.52

                   Special
                   distribution
                    - Note 10            43,216                           4,278,400                          50.00
                                       --------                          ----------                        -------
                                       $330,070                          $8,772,431                        $102.52
                                       ========                          ==========                        =======
</TABLE>


          Distributions of $66,634 to the General Partners and $1,043,929 to the
          Limited Partners for the quarter ended December 31, 1995 were declared
          and paid in January 1996.

                                   Continued

                                       16
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

8.   Income for Federal Tax Purposes:

          Income for  financial  statement  purposes  differs  from  income  for
               Federal  income tax  purposes  because of the  difference  in the
               treatment of certain  items for income tax purposes and financial
               statement purposes. A reconciliation of accounting differences is
               as follows:

<TABLE>
<CAPTION>
                                                                       1993                 1994              1995
                                                                       ----                 ----              ----
<S>                                                                  <C>                  <C>               <C>        
      Net income per Statements of Income                            $ 5,085,506          $ 4,443,380       $ 8,678,586
      Excess tax depreciation                                         (2,124,785)          (1,746,077)       (1,242,601)
      Excess tax gain related to sale of property                                                             9,318,375
      Gain recognized for tax purposes in
         connection with dissolution of
         subsidiary                                                      957,340
      Other                                                              579,805             (234,766)         (211,474)
                                                                     -----------          -----------       ------------
         Income reported for
             Federal income tax purposes                             $ 4,497,866          $ 2,462,537       $16,542,886
                                                                     ===========          ===========       ===========
</TABLE>

9.   Industry Segment Information:

          The  Partnership's  operations  consist of the  investment  in and the
               leasing  of  industrial  and  commercial   real  estate  and  the
               operation of a hotel business.

          In   1993,  1994 and 1995,  the  Partnership  earned its total leasing
               revenues   (rental  income  plus  interest   income  from  direct
               financing leases) from the following lease obligors:

<TABLE>
<CAPTION>
                                                        1993      %               1994      %               1995       %
                                                        ----     ---              ----     ---              ----      --
<S>                                                 <C>          <C>          <C>          <C>           <C>          <C>
   Simplicity Manufacturing, Inc.                   $1,996,710    24%         $1,996,710    24%          $1,996,710     26%
   Hughes Markets, Inc.                              1,429,471    17           1,429,421    17            1,443,715     19
   Brodart Co.                                       1,200,174    15           1,322,770    16            1,318,708     17
   Genesco, Inc.                                     1,940,985    23           2,095,020    25            1,047,510     14
   Continental Casualty Company                        873,675    10             709,027     9              755,614     10
   Family Dollar Stores, Inc.                          421,200     5             280,800     3              547,200      7
   Petrocon Engineering, Inc.                          294,292     4             357,468     4              368,780      5
   Winn-Dixie Stores, Inc.                             144,713     2             144,713     2              144,713      2
                                                    ----------   ---          ----------   ----          ----------   ----
                                                    $8,301,220   100%         $8,335,929   100%          $7,622,950   100%
                                                    ==========   ====         ==========   ====          ==========   ====
</TABLE>

                                   Continued

                                       17
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

     Summarized  operating  results  of the  Partnership's  share  of the  hotel
operation are as follows:

<TABLE>
<CAPTION>
                                                                  1993                  1994                   1995
                                                                  ----                  ----                   ----
<S>                                                           <C>                    <C>                    <C>        
     Revenues                                                 $ 3,197,476            $ 3,127,894            $ 3,834,671
     Fees paid to hotel management company                        (89,316)               (95,660)              (112,713)
     Other operating expenses                                  (2,041,955)            (1,942,104)            (2,291,378)
                                                              -----------            -----------           ------------ 
     Partnership's interest in hotel
       operating income                                       $ 1,066,205            $ 1,090,130            $ 1,430,580
                                                              ===========            ===========            ===========
</TABLE>

10.  Gain on Sale of Real Estate:

          On   June 30, 1995, the  Partnership  sold its property,  subject to a
               direct  financing  lease,  in Allentown,  Pennsylvania,  which it
               purchased in June 1983 for $11,702,128,  to its lessee,  Genesco,
               Inc.  ("Genesco")  for  $15,200,000  and recognized a gain on the
               sale of $3,330,098, net of writing off certain deferred costs. In
               connection  with the sale, the  Partnership  paid off an existing
               limited  recourse  mortgage  loan  on the  Genesco  property  for
               $5,722,508.

          The  Partnership  used a portion of the net proceeds of  $9,477,492 to
               pay a special distribution to Limited Partners of $4,278,400 ($50
               per  Limited  Partnership  Unit) and  $43,216  to the  Individual
               General Partner.  The special  distribution was declared and paid
               in July 1995.

11.  Extraordinary Gain on Extinguishment of Debt:

          Pursuant to an  agreement  in January  1988 among the  Partnership,  a
               previous lender and Wesray Capital  Corporation  ("Wesray"),  the
               Partnership  received  $375,000  from Wesray which was applied to
               payment of principal under a modification agreement on a mortgage
               note  collateralized by the  Partnership's  property in Beaumont,
               Texas  currently  leased  to  Petrocon   Engineering,   Inc.  The
               Partnership purchased the mortgage note from the lender in 1990.

          Wesray's payments were evidenced by a nonrecourse promissory note made
               by the Partnership and  collateralized by a second deed of trust.
               In lieu of interest on the note,  Wesray would be entitled to 50%
               of the net  proceeds  in  excess of  $2,497,500  from any sale or
               refinancing of the Beaumont  property.  In November 1993,  Wesray
               accepted a payment of $30,000  from the  Partnership  in exchange
               for  releasing the  Partnership  from its  obligations  under the
               promissory note and the reconveyance of the second deed of trust.
               In connection  with this agreement,  the Partnership  realized an
               extraordinary  gain on the  extinguishment of debt of $345,000 in
               1993.

12.  Hotel Property:

          On   June 15, 1988, the Partnership and Corporate Property  Associates
               8, L.P.  ("CPA(R):8"),  an  affiliate,  purchased the New Orleans
               Airport  Holiday Inn in Kenner,  Louisiana from Integra - A Hotel
               and  Restaurant  Company  ("Integra")  with  46.383%  and 53.617%
               interests, respectively and net leased the hotel back to Integra.
               Subsequent  to the  purchase,  Integra  assigned  the  lease to a
               wholly-owned subsidiary, Kenner Management, Inc. ("Kenner").

                                   Continued


                                       18
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

          As a result of Integra's financial condition, Integra stopped paying
             rent in May 1992, and in July 1992 filed a voluntary bankruptcy
             petition under the United States Bankruptcy Code; however, no
             filing was made by Kenner. As a result, the Partnership and
             CPA(R):8 declared a lease default and filed a suit which required
             Kenner to pay its rent arrearages and penalties as provided for in
             the lease. Under a letter of agreement with Kenner, the Partnership
             and CPA(R):8 evicted Kenner and assumed control of the operations
             of the hotel as of August 15, 1992.

          Due to the lease default,  the mortgage loan on the hotel property was
             also in default; however, under a prior agreement with the lender
             and in consideration for the Partnership and CPA(R):8 satisfying
             certain conditions, the lender agreed not to exercise its remedies
             available to it under the mortgage. These conditions included the
             agreement by the Partnership and CPA(R):8 to transfer any and all
             proceeds from the Integra bankruptcy claim to the lender as a
             prepayment of principal on the mortgage loan, transfer the
             Partnership's and CPA(R):8's interest as holder of a promissory
             note from an indirect affiliate of Integra to the lender as
             described below and remain in compliance with the terms of the loan
             documents by the Partnership and CPA(R):8.

          In December 1993, Integra transferred its interest in Kenner's stock
             to the Partnership and CPA(R):8 which allowed for the orderly
             transfer of certain contracts, permits and licenses to the
             Partnership and CPA(R):8. Additionally, Integra transferred to the
             Partnership and CPA(R):8 its interest in a promissory note made by
             ShowBiz Pizza Time, Inc. The promissory note had previously been
             pledged by Integra to the Partnership and CPA(R):8. Subsequent to
             the transfer, the Partnership and CPA(R):8 received $1,814,609 as a
             full payoff of the promissory note. The $1,814,609 proceeds were
             transferred to the lender and applied as a reduction of the
             principal balance on the nonrecourse mortgage loan. The
             Partnership's $841,670 portion of the payoff is included in other
             income for 1993. The Partnership and CPA(R):8 have agreed that the
             $1,814,609 received in connection with the promissory note payoff
             will be credited toward funds they may be entitled to receive in
             the future in connection with their bankruptcy claims against
             Integra.

13   Environmental Matters:

          Based on the results of Phase I environmental reviews performed in
             1993, the Partnership voluntarily conducted Phase II environmental
             reviews on certain of its properties in 1994. The Partnership
             believes, based on the results of Phase I and Phase II reviews,
             that its properties are in substantial compliance with Federal and
             state environmental statutes and regulations. Portions of certain
             properties have been documented as having a limited degree of
             contamination, principally in connection with surface spills from
             facility activities. For the conditions that were identified, the
             Partnership has advised the affected tenants of the Phase II
             findings and of their obligations to perform required remediation.

          All of the  Partnership's  properties  are  subject to  environmental
             statutes and regulations regarding the discharge of hazardous
             materials and related remediation obligations. Except for the hotel
             property, all of the Partnership's properties are currently leased
             to corporate tenants. The Partnership generally structures a lease
             to require the tenant to comply with all laws. In addition,
             substantially all of the Partnership's net leases include
             provisions which require tenants to indemnify the Partnership from
             all liabilities and losses related to their operations at the
             leased properties. The costs for remediation, which are expected to
             be performed and paid by the affected tenant, are not expected to
             be material. In the event that the Partnership absorbs a portion of
             any costs because of a tenant's failure to fulfill its obligations,
             the General Partners believe such expenditures will not have a
             material adverse effect on the Partnership's financial

                                   Continued


                                       19
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

              condition,  liquidity  or  results  of  operations.  None  of the
              environmental  conditions  found in the Phase I reviews relate to
              the hotel property.

14.  Disclosures About Fair Value of Financial Instruments:

               The carrying  amounts of cash,  receivables and accounts  payable
               and accrued expenses  approximate fair value because of the short
               maturity of these items.

               The  Partnership  estimates that the fair value of mortgage notes
               payable  approximates  the carrying amount of such mortgage notes
               at December  31,  1995.  The fair value of debt  instruments  was
               evaluated  using a discounted cash flow model with discount rates
               which take into  account the credit of the  tenants and  interest
               rate risk.

                                   Continued


                                       20
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

              SCHEDULE OF REAL ESTATE and ACCUMULATED DEPRECIATION

                             as of December 31, 1995

<TABLE>
<CAPTION>
                                                                           
                                                 Initial Cost to              Cost                        
                                                   Partnership             Capitalized       
                                           ---------------------------     Subsequent to     Decrease In 
         Description       Encumbrances      Land           Buildings     Acquisition(a)    Investment (b)
         -----------       ------------      ----           ---------     ---------------   --------------
<S>                        <C>             <C>             <C>               <C>            <C>              
Operating method:                                                                           
 Dairy processing,                                                                          
  distribution and                                                                          
  office facilities                                                                         
  leased to Hughes                                                                          
  Markets, Inc.                            $1,689,536       $8,073,617        $21,643                      
                                                                                            
 Office building in                                                                         
  Beaumont, Texas                                                                           
  partially leased                                                                          
  to Petrocon                                                                               
  Engineering, Inc.                           510,000        4,490,000        612,462       $(4,346,960)     
                                                                                                           
                                                                                            
 Office, manufacturing                                                                      
  and warehouse                                                                             
  buildings leased to                                                                       
  a subsidiary of                                                                           
  Continental Casualty                                                                                     
  Company                  $3,815,840       1,800,000        6,710,638        105,000                      
                                                                                            
 Warehouse and                                                                              
  distribution center                                                                       
  leased to Family                                                                                         
  Dollar Stores, Inc.       2,755,571         291,540        5,708,460        153,179                      
                                                                                            
 Supermarket leased                                                                         
  to Winn-Dixie                                                                                            
  Stores, Inc.                558,589         213,289        1,032,557                                     
                           ----------      ----------      -----------     ----------       -----------      
                           $7,130,000      $4,504,365      $26,015,272       $892,284       $(4,346,960)     
                           ==========      ==========      ===========     ==========       ===========      
                                                                                         

Operating real estate (f)
 Property located in
  New Orleans, Louisana    $3,452,074     $850,000    $5,818,508  $1,101,272                   
                           ==========   ==========   ===========  ==========                   


<CAPTION>
                                                                                            
                                                                                            
                                                                                                                     Life On which
                                          Gross Amount at which Carried                                               Depreciation  

                                        Carried at Close of Period (d)(e)                                              in Latest
                                 --------------------------------------------------                                   Statement of
                                                Personal                                Accumulated                     Income
                                   Land        Property    Buildings       Total     Depreciation(e)  Date Acquired   is Computed
                                   ----        --------    ---------       -----     ---------------  -------------   -----------
<S>                             <C>          <C>           <C>           <C>         <C>              <C>             <C> 
Operating method:                                                                                                                 
 Dairy processing,                                                                                                                
  distribution and                                                                                                                
  office facilities                                                                                                               
  leased to Hughes                                                                                                                
  Markets, Inc.                 $1,711,179                 $8,073,617    $9,784,796     $4,901,436     June 1, 1983     8-36 yrs.   

                                                                                                                                  
 Office building in                                                                                                               
  Beaumont, Texas                                                                                                                 
  partially leased                                                                                                                
  to Petrocon                                                                                                                     
  Engineering, Inc.                278,801                    986,701     1,265,502        465,188      August 11,                  

                                                                                                         1983           30 yrs.     

                                                                                                                                  
 Office, manufacturing                                                                                                            
  and warehouse                                                                                                                   
  buildings leased to                                                                                                             
  a subsidiary of                                                                                                                 
  Continental Casualty                                                                                 October 20,                  

  Company                        1,800,000                  6,815,638     8,615,638      4,976,633       1983           10-40 yrs.  

                                                                                                                                  
 Warehouse and                                                                                                                    
  distribution center                                                                                                             
  leased to Family                                                                                     December 16,                 

  Dollar Stores, Inc.              291,540                  5,861,639     6,153,179      1,874,382       1983           30 yrs.   
                                                                                                                                  
 Supermarket leased                                                                                                               
  to Winn-Dixie                                                                                         March 12,                   

  Stores, Inc.                     213,289                  1,032,557     1,245,846        408,919       1984           30 yrs.    
                                ----------                -----------   -----------    -----------                                
                                $4,294,809                $22,770,152   $27,064,961    $12,626,558                                
                                ==========                ===========   ===========    ===========                                
                                                                                                                                  
                                                                                                                                  
Operating real estate (f)                                                                                                         
 Property located in                                                                                                              
  New Orleans, Louisana         $  850,000   $  101,145   $ 6,818,635   $ 7,769,780    $   735,950      June 15,                    

                                ==========   ==========   ===========   ===========    ===========      1988          5-30 yrs.    
</TABLE>


See accompanying notes to Schedule.


                                      -21-
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

              SCHEDULE OF REAL ESTATE and ACCUMULATED DEPRECIATION

                             as of December 31, 1995

<TABLE>
<CAPTION>
                                                Initial Cost to                    Gross Amount at which Carried
                                                 Partnership        Decrease In       at Close of Period  (d)
                                             --------------------     Net          -----------------------------
         Description         Encumbrances    Land       Buildings  Investment (c)  Land    Buildings       Total       Date Acquired

         -----------       --------------    ----       ---------  --------------  ----    ---------       -----       -------------

<S>                        <C>             <C>        <C>          <C>                                <C>              <C>
Direct financing method:
 Manufacturing and
  product testing
  buildings leased
  to Simplicity
  Manufacturing, Inc.        $5,535,028    $472,700   $11,527,300                                     $12,000,000      March 3, 1983


 Manufacturing,
  distribution and
  office buildings
  leased to
  Brodart Co.                 3,369,780     241,550     6,141,429      $(158,551)                       6,224,428      June 15, 1988

                             ----------    --------   -----------      ---------                      -----------
                             $8,904,808    $714,250   $17,668,729      $(158,551)                     $18,224,428
                             ==========    ========   ===========      =========                      ===========
</TABLE>


See accompanying notes to Schedule.


                                      -22-
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

          NOTES TO SCHEDULE OF REAL ESTATE and ACCUMULATED DEPRECIATION

(a)  Consists of the cost of improvements and acquisition costs, including legal
     fees,  appraisal fees, title costs and other related fees, and the purchase
     of additional land subsequent to original purchase.

(b)  Represents writedowns of property to net realizable value.

(c)  The decrease in net investment is due to the amortization of unearned
     income producing a constant periodic rate of return on the net investment,
     which is less than lease payments received.

(d)  At December 31, 1995,  the aggregate  cost of real estate owned for Federal
     income tax purposes is $58,874,893.

(e)

                                       Reconciliation of Real Estate Accounted
                                            for Under the Operating Method

                                                   December 31,
                                         ------------------------------
                                             1994              1995
                                         -----------        -----------
Balance at beginning
    of period                            $26,959,961        $26,959,961

Additions during period                                         105,000
                                         -----------        -----------
Balance at close of period               $26,959,961        $27,064,961
                                         ===========        ===========




                                  Reconciliation of Accumulated Depreciation

                                                 December 31,
                                        ------------------------------
                                            1994             1995
                                        -----------        -----------
Balance at beginning
    of period                           $10,794,329        $11,717,884

Depreciation expense for
    the period                              923,555            908,674
                                        -----------        -----------

Balance at close of period              $11,717,884        $12,626,558
                                        ===========        ===========


                                      -23-
<PAGE>
 
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                  NOTES TO SCHEDULE OF REAL ESTATE - Continued

(f)

                                       Reconciliation of Operating Real Estate

                                                   December 31,
                                           ----------------------------
                                              1994             1995
                                           ----------        ----------
Balance at beginning of period             $6,782,187        $7,628,122

Additions during period                       845,935           141,658
                                           ----------        ----------

Balance at close of
    period                                 $7,628,122        $7,769,780
                                           ==========        ==========





                                  Reconciliation of Accumulated Depreciation for
                                             Operating Real Estate

                                                December 31,
                                           -----------------------
                                             1994          1995
                                           --------       --------
Accumulated depreciation
    at beginning of period                 $277,511       $495,099

Depreciation expense for the period         217,588        240,851
                                           --------       --------

Balance at close of
    period                                 $495,099       $735,950
                                           ========       ========


                                      -24-
<PAGE>
 
PROPERTIES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

     LEASE                                                                                        TYPE OF OWNERSHIP
    OBLIGOR                       TYPE OF PROPERTY                     LOCATION                       INTEREST
    -------                       ----------------                     --------                       --------
<S>                               <C>                                  <C>                         <C>   
HUGHES MARKETS,                   Land and Dairy                       Los Angeles,                Ownership of an
INC.                              Processing/                          California                  83.24% interest
                                  Distribution                                                     in land and
                                  Facilities                                                       buildings

SIMPLICITY                        Land and Manufac-                    Port Washington,            Ownership of land
MANUFACTURING,                    turing/Product                       Wisconsin                   and buildings (1)
INC.                              Testing Buildings
                                  - 2 locations

   (2)                            Land and Hotel                       Kenner,                     Ownership of a
                                  Complex                              Louisiana                   46.383% interest in
                                                                                                   land and building (1)

CONTINENTAL                       Land and Office,                     College Station,            Ownership of land
CASUALTY COMPANY                  Manufacturing                        Texas                       and buildings (1)
                                  and Warehouse
                                  Buildings

BRODART CO.                       Land and Manufac-                    Williamsport,               Ownership of land
                                  turing, Distribution                 Pennsylvania                and buildings (1)
                                  and Office Buildings
                                  - 2 locations


FAMILY DOLLAR                     Land and Warehouse/                  Salisbury,                  Ownership of land
STORES, INC.                      Distribution Center                  North Carolina              and buildings (1)

PETROCON                          Land and Office                      Beaumont, Texas             Ownership of land
ENGINEERING,                      Building                                                         and building

INC.

WINN-DIXIE                        Land and Supermarket                 Leeds, Alabama              Ownership of land
STORES, INC.                                                                                       and building (1)
</TABLE>

(1)     These properties are encumbered by mortgage notes payable.
(2)     The Partnership and CPA(R):8 operate a hotel business at this property.



                                      -25-
<PAGE>
 
MARKET FOR THE PARTNERSHIP'S EQUITY AND RELATED
         UNITHOLDER MATTERS
--------------------------------------------------------------------------------

     Except for limited or sporadic transactions, there is no established public
trading  market for the  Limited  Partnership  Units of the  Partnership.  As of
December 31, 1995 there were 3,039 holders of record of the Limited  Partnership
Units of the Partnership.

     In accordance with the requirements of the Partnership's  Amended Agreement
of  Limited  Partnership  (the  "Agreement")  contained  as  Exhibit  A  to  the
Prospectus,  the Corporate General Partner expects to continue to make quarterly
distributions of Distributable Cash From Operations as defined in the Agreement.
The following  table shows the frequency  and amount of  distributions  paid per
Unit since 1992:

                                Cash Distributions Paid Per Unit
                            1993             1994              1995
                            ----             ----              ----
First quarter              $13.30           $13.38           $ 13.43
Second quarter              13.32            13.39             13.44
Third quarter               13.34            13.40             63.50(a)
Fourth quarter              13.37            13.42             12.15
                           ------           ------           -------
                           $53.33           $53.59           $102.52
                           ======           ======           =======


(a)  Includes a special distribution of $50 per unit.


REPORT ON FORM 10-K
--------------------------------------------------------------------------------

     The  Corporate  General  Partner  will  supply  to  any  owner  of  Limited
Partnership Units, upon written request and without charge, a copy of the Annual
Report on Form  10-K for the year  ended  December  31,  1995 as filed  with the
Securities and Exchange Commission.


                                      -26-
<PAGE>
 
DIRECTORS AND SENIOR OFFICERS
--------------------------------------------------------------------------------

     The  Partnership  has no directors or officers.  The  directors  and senior
officers of the Corporate General Partner are as follows:

   William Polk Carey                      Chairman of the Board
                                           Director
   Francis J. Carey                        President
                                           Director
   George E. Stoddard                      Chairman of the Investment Committee
                                           Director
   Raymond S. Clark                        Chairman of the Executive Committee
                                           Director
   Madelon DeVoe Talley                    Vice Chairman of the Board
                                           Director
   Barclay G. Jones III                    Executive Vice President
                                           Director
   Lawrence R. Klein                       Chairman of the Economic Policy
                                               Committee
                                           Director
   Claude Fernandez                        Executive Vice President
                                           Chief Administrative Officer
   Howard J. Altmann                       Senior Vice President
   H. Augustus Carey                       Senior Vice President
   John J. Park                            Senior Vice President
                                           Treasurer
   Debra E. Bigler                         First Vice President
   Ted G. Lagried                          First Vice President
   Anthony S. Mohl                         First Vice President
   Michael D. Roberts                      First Vice President
                                           Controller


     The  directors  and  senior  officers  of W.  P.  Carey  &  Co.,  Inc.  are
substantially the same as above.

     A  description  of the business  experience of each officer and director of
the Corporate General Partner is set forth below:

     William Polk Carey,  Chairman and Chief Executive Officer,  has been active
in lease  financing since 1959 and a specialist in net leasing of corporate real
estate  property  since 1964.  Before  founding W.P.  Carey & Co.,  Inc.  ("W.P.
Carey") in 1973,  he served as Chairman of the  Executive  Committee of Hubbard,
Westervelt  & Mottelay  (now  Merrill  Lynch  Hubbard),  head of Real Estate and
Equipment  Financing at Loeb Rhoades & Co. (now Lehman  Brothers),  head of Real
Estate and Private  Placements,  Director of Corporate Finance and Vice Chairman
of the  Investment  Banking  Board of duPont Glore Forgan Inc. A graduate of the
University of Pennsylvania's  Wharton School of Finance, Mr. Carey is a Governor
of the National  Association of Real Estate Investment Trusts (NAREIT).  He also
serves on the boards of The Johns Hopkins University and its medical school, The
James A. Baker III  Institute for Public  Policy at Rice  University,  and other
educational and philanthropic institutions. He founded the Visiting Committee to
the Economics  Department of the University of Pennsylvania  and co-founded with
Dr. Lawrence R. Klein the Economics Research Institute at that university.


                                      -27-
<PAGE>
 
     Francis J. Carey was  elected  President  and a Managing  Director  of W.P.
Carey in April 1987,  having served as a Director since its founding in 1973. He
served as a member of the  Executive  Committee  and  Board of  Managers  of the
Western  Savings  Bank of  Philadelphia  from 1972 until its takeover by another
bank in 1982 and is former  chairman  of the Real  Property,  Probate  and Trust
Section of the Pennsylvania Bar Association. Mr. Carey served as a member of the
Board of  Overseers  of the School of Arts and  Sciences  of the  University  of
Pennsylvania  from 1983  through 1990 and has served as a member of the Board of
Trustees of the Investment Program Association since 1990. From April 1987 until
August  1992,  he served as counsel to Reed  Smith  Shaw & McClay,  counsel  for
Registrant,  the General  Partners,  the CPA(R)  Partnerships and W.P. Carey and
some of its affiliates.  A real estate lawyer of more than 30 years' experience,
he holds A.B. and J.D. degrees from the University of Pennsylvania.

     George E. Stoddard,  Chief Investment  Officer,  was until 1979 head of the
bond  department of The Equitable Life  Assurance  Society of the United States,
with  responsibility  for all  activities  related to  Equitable's  portfolio of
corporate  investments  acquired  through direct  negotiation.  Mr. Stoddard was
associated  with  Equitable  for over 30  years.  He holds an A.B.  degree  from
Brigham Young  University,  an M.B.A.  from Harvard Business School and an LL.B.
from Fordham University Law School.

     Raymond S. Clark is former  President  and Chief  Executive  Officer of the
Canton  Company of  Baltimore  and the Canton  Railroad  Company.  A graduate of
Harvard College and Yale Law School,  he is presently a Director and Chairman of
the  Executive  Committee  of W.P.  Carey and served as Chairman of the Board of
W.P.  Carey from its  founding  in 1973 until 1982.  He is past  Chairman of the
Maryland Industrial Development Financing Authority.

     Madelon  DeVoe  Talley,  Vice  Chairman,  is a member of the New York State
Controller's  Investment Committee,  a Commissioner of the Port Authority of New
York and New Jersey, former CIO of New York State Common Retirement Fund and New
York State Teachers Retirement System. She also served as a managing director of
Rothschild,  Inc. and as the President of its asset management division. Besides
her duties at W.P. Carey,  Mrs. Talley is also a former Governor of the N.A.S.D.
and is a director of Biocraft  Laboratories,  a New York Stock Exchange company.
She  is an  alumna  of  Sarah  Lawrence  College  and  the  graduate  school  of
International Affairs at Columbia University.

     Barclay G. Jones III,  Executive Vice  President,  Managing  Director,  and
co-head of the Investment  Department.  Mr. Jones joined W.P. Carey as Assistant
to the President in July 1982 after his  graduation  from the Wharton  School of
the University of  Pennsylvania,  where he majored in Finance and Economics.  He
was elected to the Board of Directors of W.P.  Carey in April 1992. Mr. Jones is
also a Director of the Wharton Business School Club of New York.

     Lawrence R. Klein, Chairman of the Economic Policy Committee since 1984, is
Benjamin  Franklin   Professor  of  Economics  Emeritus  at  the  University  of
Pennsylvania,  having joined the faculty of Economics and the Wharton  School in
1958. He holds earned  degrees from the University of California at Berkeley and
Massachusetts  Institute of  Technology  and has been awarded the Nobel Prize in
Economics as well as over 20 honorary  degrees.  Founder of Wharton  Econometric
Forecasting   Associates,   Inc.,  Dr.  Klein  has  been  counselor  to  various
corporations, governments, and government agencies including the Federal Reserve
Board and the President's Council of Economic Advisers.

     Claude Fernandez,  Chief  Administrative  Officer,  Managing Director,  and
Executive Vice President,  joined W.P. Carey in 1983. Previously associated with
Coldwell  Banker,  Inc.  for two years and with  Arthur  Andersen & Co., he is a
Certified  Public  Accountant.   Mr.  Fernandez  received  his  B.S.  degree  in
Accounting  from New York  University  in 1975 and his M.B.A.  in  Finance  from
Columbia University Graduate School of Business in 1981.

     Howard J. Altmann,  Senior Vice President,  Investment  Department,  joined
W.P.  Carey in August 1990.  He was a securities  analyst at Goldman Sachs & Co.
for  the  retail   industry  from  1986  to  1988.  Mr.  Altmann   received  his
undergraduate  degree in economics  and finance from McGill  University  and his
M.B.A. from the Stanford University Graduate School of Business.


                                      -28-
<PAGE>
 
     H. Augustus Carey,  Senior Vice President,  returned to W.P. Carey in 1988.
Mr. Carey previously worked for W.P. Carey from 1979 to 1981 as Assistant to the
President.  Prior to rejoining W.P. Carey, Mr. Carey served as a loan officer of
the North American Department of Kleinwort Benson Limited in London, England. He
received  an A.B.  from  Amherst  College in 1979 and an M.Phil.  in  Management
Studies  from Oxford  University  in 1984.  Mr. Carey is a trustee of the Oxford
Management Centre Associates Council.

     John J. Park, Senior Vice President and Treasurer,  joined W.P. Carey as an
Investment Analyst in December 1987. Mr. Park received his undergraduate  degree
from  Massachusetts  Institute of Technology and his M.B.A.  in Finance from New
York University.

     Debra E.  Bigler,  First Vice  President,  joined W.P.  Carey in 1989 as an
assistant  marketing  director,  rising to her present  position where she bears
responsibility for investor services  throughout the southern United States. She
was previously employed by E. F. Hutton & Company for nine years where she began
as a Marketing Associate in Private Placement,  Sales and Marketing and was then
promoted to Regional Director.

     Ted G.  Lagreid,  First Vice  President,  joined W.P.  Carey in 1994 and is
regional  director  responsible  for  investor  services in the  western  United
States. Prior to joining the firm, he was a Vice President with Shurgard Capital
Group, then for Sun America where he was an executive in its mutual funds group.
He earned an A.B. from the University of Washington, received an M.P.A. from the
University  of Puget Sound and then spent  eight years in the city of  Seattle's
Office of Management  and Budget and  Department of Community  Development.  Mr.
Lagreid was a commissioner  of the City of Oakland,  California,  serving on its
Community and Economic Advisory Commission.

     Anthony S. Mohl,  First Vice President,  Director of Portfolio  Management,
joined W.P. Carey as Assistant to the President after receiving his M.B.A.  from
the Columbia University Graduate School of Business. Mr. Mohl was employed as an
analyst  in the  strategic  planning  group  at  Kurt  Salmon  Associates  after
receiving an undergraduate degree from Wesleyan University.

     Michael  D.  Roberts  joined W. P.  Carey as a Second  Vice  President  and
Assistant  Controller  in April 1989 and is currently  First Vice  President and
Controller.  Prior to joining W.P. Carey,  Mr. Roberts was employed by Coopers &
Lybrand,  where he  attained  the title of audit  manager.  A  certified  public
accountant,  Mr. Roberts received a B.A. from Brandeis  University and an M.B.A.
from Northeastern University.

                                      -29-