<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A
                                 AMENDMENT NO. 2

(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, 1996

                                       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)

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

50 ROCKEFELLER PLAZA, NEW YORK, NEW YORK                                        10020
(Address of principal executive offices)                                      (Zip Code)
</TABLE>

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 (Section 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>   2
                                     PART II





Item 8.  Financial Statements and Supplementary Data.


  (i) Report of Independent Accountants.

 (ii) Balance Sheets as of December 31, 1995 and 1996.

(iii) Statements of Income for the years ended December 31, 1994, 1995 and 1996.

 (iv) Statements of Partners' Capital for the years ended December 31, 1994,
      1995 and 1996.

  (v) Statements of Cash Flows for the years ended December 31, 1994, 1995 and
      1996.

 (vi) Notes to Financial Statements.


                                      -7-
<PAGE>   3
                        REPORT of INDEPENDENT ACCOUNTANTS





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


            We have audited the accompanying balance sheets of Corporate
Property Associates 4, a California limited partnership, as of December 31, 1995
and 1996, and the related statements of income, partners' capital and cash flows
for each of the three years in the period ended December 31, 1996. We have also
audited the financial statement schedule included on pages 20 to 22 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 audits
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 financial position of Corporate Property
Associates 4, a California limited partnership, as of December 31, 1995 and
1996, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. In addition, in our opinion, the Schedule of
Real Estate and Accumulated Depreciation as of December 31, 1996, 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, 1997


                                      -6-
<PAGE>   4
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                                 BALANCE SHEETS

                           December 31, 1995 and 1996


<TABLE>
<CAPTION>
                                                        1995            1996
                                                    ------------    ------------
<S>                                                 <C>             <C>
     ASSETS:

Real estate leased to others:
  Accounted for under the
    operating method:
      Land                                          $  4,294,809    $  4,294,809
      Buildings                                       22,770,152      22,770,152
                                                    ------------    ------------
                                                      27,064,961      27,064,961
      Accumulated depreciation                        12,626,558      13,487,845
                                                    ------------    ------------
                                                      14,438,403      13,577,116
  Net investment in direct financing leases           18,224,428      18,193,555
                                                    ------------    ------------
      Real estate leased to others                    32,662,831      31,770,671
Operating real estate, net of accumulated
  depreciation of $735,950 in 1995                     7,033,830
Cash and cash equivalents                              7,579,071       4,668,645
Accrued interest and rents receivable                    203,651         269,543
Other assets, net of accumulated amortization of
  $435,047 in 1995 and $399,342 in 1996                1,028,692       1,358,488
Equity investment                                                      3,999,632
                                                    ------------    ------------

         Total assets                               $ 48,508,075    $ 42,066,979
                                                    ============    ============

     LIABILITIES:

Mortgage notes payable                              $ 19,486,882    $ 10,699,799
Accrued interest payable                                 136,087          82,827
Accounts payable and accrued expenses                    435,977         288,509
Accounts payable to affiliates                            87,461         146,447
Prepaid rental income                                                     46,800
                                                    ------------    ------------

         Total liabilities                            20,146,407      11,264,382
                                                    ------------    ------------

Commitments and contingencies

     PARTNERS' CAPITAL:

General Partners                                          62,061        (210,626)
Limited Partners (85,568 and 85,528
    Limited Partnership Units issued
    and outstanding in 1995 and 1996)                 28,299,607      30,591,971
                                                    ------------    ------------
         Total partners' capital                      28,361,668      30,802,597
                                                    ------------    ------------

         Total liabilities and
         partners' capital                          $ 48,508,075    $ 42,066,979
                                                    ============    ============
</TABLE>

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


                                      -7-
<PAGE>   5
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                              STATEMENTS of INCOME

              For the years ended December 31, 1994, 1995 and 1996


<TABLE>
<CAPTION>
                                                     1994          1995          1996
                                                  ----------    ----------    ----------
<S>                                               <C>           <C>           <C>
Revenues:
  Rental income                                   $2,921,429    $3,260,022    $5,546,662
  Interest income from direct financing leases     5,414,500     4,362,928     3,310,601
  Other interest income                              106,798       254,935       370,765
  Other income                                                     183,768        94,345
                                                  ----------    ----------    ----------
                                                   8,442,727     8,061,653     9,322,373
                                                  ----------    ----------    ----------
Expenses:
  Interest on mortgages                            2,396,017     2,098,857     1,515,248
  Depreciation                                     1,141,143     1,149,525       921,702
  General and administrative                         444,307       454,000       447,901
  Property expense                                   983,409       327,528       551,785
  Amortization                                       124,601       113,835        90,529
                                                  ----------    ----------    ----------
                                                   5,089,477     4,143,745     3,527,165
                                                  ----------    ----------    ----------
    Income before income from equity
      investments and gain on sale                 3,353,250     3,917,908     5,795,208

Hotel operating income                             1,090,130     1,430,580       853,262
Income from equity investment                                                    265,056
                                                  ----------    ----------    ----------

    Income before gain on sale                     4,443,380     5,348,488     6,913,526

Gain on sale of real estate                                      3,330,098
                                                  ----------    ----------    ----------

    Net income                                    $4,443,380    $8,678,586    $6,913,526
                                                  ==========    ==========    ==========

Net income allocated to:
  Individual General Partner                      $   44,434    $  205,754    $   69,135
                                                  ==========    ==========    ==========

  Corporate General Partner                       $  222,169    $  672,659    $  345,676
                                                  ==========    ==========    ==========

  Limited Partners                                $4,176,777    $7,800,173    $6,498,715
                                                  ==========    ==========    ==========

Net income per Limited
  Partnership Unit
  (85,568 Units outstanding in 1994 and
   1995 and 85,548 weighted average Limited
   Partnership Units in 1996):                    $    48.81    $    91.16    $    75.97
                                                  ==========    ==========    ==========
</TABLE>

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


                                      -8-
<PAGE>   6
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                         STATEMENTS of PARTNERS' CAPITAL

              For the years ended December 31, 1994, 1995 and 1996



<TABLE>
<CAPTION>
                                               Partners' Capital Accounts
                                     ---------------------------------------------------------------
                                                                                          Limited
                                                                                          Partners'
                                                         General          Limited        Amount Per
                                         Total          Partners         Partners         Unit (a)
                                     ------------     ------------     ------------     ------------
<S>                                  <C>              <C>              <C>              <C>
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

Distributions                          (4,452,597)        (266,246)      (4,186,351)             (49)


Purchase of Limited Partner Units         (20,000)                          (20,000)

Net income, 1996                        6,913,526          414,811        6,498,715               76
                                     ------------     ------------     ------------     ------------

Balance, December 31, 1996           $ 30,802,597    $    (210,626)    $ 30,591,971     $        358
                                     ============     ============     ============     ============
</TABLE>

(a)  Based on weighted average Units issued and outstanding during all periods.

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


                                      -9-
<PAGE>   7
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                            STATEMENTS of CASH FLOWS
              For the years ended December 31, 1994, 1995 and 1996

<TABLE>
<CAPTION>
                                                                   1994             1995             1996
                                                               ------------     ------------     ------------
<S>                                                            <C>              <C>              <C>
Cash flows from operating activities:
   Net income                                                  $  4,443,380     $  8,678,586     $  6,913,526
   Adjustments to reconcile net income
     to net cash provided by operating activities:
     Depreciation and amortization                                1,265,744        1,263,360        1,012,231
     Cash receipts on operating and direct financing
       leases greater (less) than straight line adjustments
       and amortization of unearned income                           21,994            9,808         (945,667)
     Equity income in excess of distributions received                                               (147,800)
     Gain on sale of real estate                                                  (3,330,098)
     Net change in operating assets and liabilities                  40,985         (522,176)         335,351
                                                               ------------     ------------     ------------
        Net cash provided by operating activities                 5,772,103        6,099,480        7,167,641
                                                               ------------     ------------     ------------


Cash flows from investing activities:
   Proceeds from sale of real estate                                              15,200,000
   Purchase of equity investment and related costs                                                   (198,969)
   Additional capitalized costs                                    (845,935)        (246,658)          (8,182)
                                                               ------------     ------------     ------------
        Net cash (used in) provided by
          investing activities                                     (845,935)      14,953,342         (207,151)
                                                               ------------     ------------     ------------


Cash flows from financing activities:
   Distributions to partners                                     (4,878,286)      (9,102,501)      (4,452,597)
   Payments of mortgage principal                                (1,168,014)      (1,158,193)        (898,319)
   Prepayments of mortgages payable                                               (5,722,508)      (4,500,000)
   Deferred financing costs                                            (366)
   Purchase of Limited Partner Units                                                                  (20,000)
                                                               ------------     ------------     ------------
        Net cash used in financing activities                    (6,046,666)     (15,983,202)      (9,870,916)
                                                               ------------     ------------     ------------

        Net (decrease) increase in cash and
          cash equivalents                                       (1,120,498)       5,069,620       (2,910,426)

Cash and cash equivalents, beginning of year                      3,629,949        2,509,451        7,579,071
                                                               ------------     ------------     ------------

        Cash and cash equivalents, end of year                 $  2,509,451     $  7,579,071     $  4,668,645
                                                               ============     ============     ============
</TABLE>

Supplemental disclosure of noncash investing and financing activities:

In July 1996, the Partnership exchanged its interest in a hotel property and
related assets and liabilities for 427,008 units in the operating partnership of
a publicly-traded real estate investment trust. The assets and liabilities
transferred are as follows:

<TABLE>
     <S>                                                                <C>
     Real estate, net of accumulated depreciation                       $  6,981,597
     Mortgage note payable                                                (3,388,764)
     Other assets and liabilities transferred, net                            60,030
                                                                        ------------
       Equity investment                                                $  3,652,863
                                                                        ============
</TABLE>


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


                                      -10-
<PAGE>   8
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                          NOTES to FINANCIAL STATEMENTS


1.   Summary of Significant Accounting Policies:

      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.

        Corporate Property Associates 4 (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.

        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.

        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. As more
           fully described in Note 11, the Partnership transferred operating
           real estate in 1996 in connection with an exchange transaction.


                                   Continued

                                      -11-
<PAGE>   9
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                    NOTES to FINANCIAL STATEMENTS, Continued


      Depreciation:

        Depreciation is computed using the straight-line method over the
           estimated useful lives of components of the particular properties,
           which range from 10 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, 1995 and 1996 were held in the
           custody of three financial institutions.

      Other Assets:

        Included in other assets are deferred rental income and deferred
           charges. 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.


      Equity Investment:

        The Partnership's interest in American General Hospitality Operating
           Partnership, L.P. is accounted for under the equity method; i.e. at
           cost, increased by the Partnership's share of earnings or loss and
           reduced by distributions received (see Note 11).

      Income Taxes:

        A partnership is not liable for Federal 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.

      Reclassifications:

        Certain 1994 and 1995 amounts have been reclassified to conform with the
           1996 presentation.

 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").


                                   Continued

                                      -12-
<PAGE>   10
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                    NOTES to FINANCIAL STATEMENTS, Continued


        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, except
           as described below, 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. The General Partners may be entitled to
           receive a subordinated preferred return, measured based upon the
           cumulative proceeds arising from the sale of Partnership assets.
           Pursuant to the subordination provisions of the Agreement, the
           preferred return may be paid only after the limited partners receive
           100% of their initial investment from the proceeds of asset sales and
           a cumulative annual return of 6% since the inception of the
           Partnership. The General Partners interest in such preferred return
           amounts to $857,754 based upon the cumulative proceeds from the sale
           of assets since the inception of the Partnership through December 31,
           1996. The Partnership's ability to satisfy the subordination
           provisions of the Agreement may not be determinable until liquidation
           of a substantial portion of the Partnership's assets has been made,
           formal plans of liquidation are adopted or limited partnership units
           are converted to other securities which provide the security holder
           with greater liquidity than a limited partnership unit. Management
           believes that as of the report date, ultimate payment of the
           preferred return is reasonably possible but not probable, as defined
           pursuant to Statement of Financial Accounting Standards No. 5.

        The Agreement provides that profits from asset dispositions are
           allocated to partners with negative capital balances until such
           negative balances are eliminated. Accordingly, 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
           in 1995 related to such 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 an
           83.24% ownership interest in a property which is jointly held.

        Under the Agreement, a division of W. P. Carey & Co., Inc. ("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>
                                                1994        1995        1996
                                                ----        ----        ----
               <S>                            <C>         <C>         <C>
               Property management fee        $ 98,187    $ 91,564    $210,254
               General and administrative
                 expense reimbursements        160,125      95,644     148,728
                                              --------    --------    --------
                                              $258,312    $187,208    $358,982
                                              ========    ========    ========
</TABLE>


        During 1994, 1995 and 1996, fees aggregating $172,675, $28,683 and
           $68,895, 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.

        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


                                   Continued

                                      -13-
<PAGE>   11
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                    NOTES to FINANCIAL STATEMENTS, Continued


           Partnership's share of rental, occupancy and leasehold improvement
           costs is based on adjusted gross revenues as defined. Net expenses
           incurred in 1994, 1995 and 1996 were $56,446, $130,986 and $72,775,
           respectively. The 1995 amount included 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

        Scheduled future minimum rents, exclusive of renewals, under
           noncancellable operating leases amount to approximately $4,667,000 in
           1997, $4,939,000 in 1998; and $145,000 in each of the years 1999
           through 2001 and aggregate approximately $10,371,000 through 2004.

        Contingent rents were approximately $181,000 in 1994, $195,000 in 1995
           and $91,000 in 1996.

     B. Operating Real Estate:

        Operating real estate, at cost, as of December 31, 1995 is summarized as
           follows:

<TABLE>
               <S>                                        <C>
               Land                                        $  850,000
               Building                                     6,818,635
               Personal property                              101,145
                                                           ----------
                                                            7,769,780
                   Less: Accumulated depreciation             735,950
                                                           ----------
                                                           $7,033,830
                                                           ==========
</TABLE>

        The Partnership disposed of its operating real estate in 1996 (see Note
           11).


5.   Net Investment in Direct Financing Leases:

        Net investment in direct financing leases is summarized as follows:

<TABLE>
<CAPTION>
                                                       December 31,
                                                       ------------
                                                  1995              1996
                                                  ----              ----
               <S>                            <C>               <C>
               Minimum lease payments
                 receivable                   $28,653,756       $26,038,257
               Unguaranteed residual value     13,382,979        13,382,979
                                              -----------       -----------
                                               42,036,735        39,421,236
               Less: Unearned income           23,812,307        21,227,681
                                              -----------       -----------
                                              $18,224,428       $18,193,555
                                              ===========       ===========
</TABLE>


        Scheduled future minimum rents, exclusive of renewals, under
           noncancellable direct financing leases amount to approximately
           $2,616,000 in each of the years 1997 to 2001; and aggregate
           approximately $26,038,000 through 2008.

        Contingent rents were approximately $1,253,000, $990,000 and $726,000 in
           1994, 1995 and 1996, respectively.


                                   Continued

                                      -14-
<PAGE>   12
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                    NOTES to FINANCIAL STATEMENTS, Continued



6.   Mortgage Notes Payable:

        The Partnership's mortgage loans are limited recourse obligations and
           are collateralized by lease assignments and by real property. The
           encumbered properties have an aggregate carrying amount of
           $34,208,000, before accumulated depreciation. As of December 31,
           1996, mortgage notes payable bear interest at rates varying from
           7.60% to 10.52% per annum and mature from 1998 to 2004.

        Scheduled principal payments during each of the next five years
           following December 31, 1996 and thereafter are as follows:

<TABLE>
<CAPTION>
          Year Ending December 31,
          ------------------------
          <S>                                  <C>
            1997                               $   903,766
            1998                                 6,918,837
            1999                                   191,464
            2000                                   206,750
            2001                                   223,256
            Thereafter                           2,255,726
                                               -----------
               Total                           $10,699,799
                                               ===========
</TABLE>


        Interest paid was $2,408,669, $2,156,609 and $1,568,508 for 1994, 1995
           and 1996, 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>
        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
                                              ==========                    ==========                    =======

        1996                                  $  266,246                    $4,186,351                    $ 48.93
                                              ==========                    ==========                    =======
</TABLE>

     Distributions of $67,039 to the General Partners and $1,050,284 to the
     Limited Partners for the quarter ended December 31, 1996 were declared and
     paid in January 1997.


                                   Continued

                                      -15-
<PAGE>   13
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                    NOTES to 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>
                                                           1994             1995             1996
                                                       ------------     ------------     ------------
    <S>                                                <C>              <C>              <C>
    Net income per Statements of Income                $  4,443,380     $  8,678,586     $  6,913,526
    Excess tax depreciation                              (1,746,077)      (1,242,601)        (877,624)
    Excess tax gain related to sale of property                            9,318,375
    Cash receipts on operating and direct financing
      leases greater (less) than income recognized                             9,808         (945,667)
    Other                                                  (234,766)        (221,282)         (40,470)
                                                       ------------     ------------     ------------
      Income reported for
         Federal income tax purposes                   $  2,462,537     $ 16,542,886     $  5,049,765
                                                       ============     ============     ============
</TABLE>

 9.  Industry Segment Information:

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

        In 1994, 1995 and 1996, the Partnership earned its total leasing
           revenues (rental income plus interest income from direct financing
           leases) from the following lease obligors:

<TABLE>
<CAPTION>
                                                 1994             %            1995             %            1996             %
                                              ----------     ----------     ----------     ----------     ----------     ----------
  <S>                                         <C>            <C>            <C>            <C>            <C>            <C>
  Hughes Markets, Inc.                        $1,429,421             17     $1,443,715             19     $3,714,792             42
  Simplicity Manufacturing, Inc.               1,996,710             24%     1,996,710             26      1,996,710             22
  Brodart Co.                                  1,322,770             16      1,318,708             17      1,313,891             15
  Continental Casualty Company                   709,027              9        755,614             10        759,849              9
  Family Dollar Stores, Inc.                     280,800              3        547,200              7        556,800              6
  Petrocon Engineering, Inc.                     357,468              4        368,780              5        370,508              4
  Winn-Dixie Stores, Inc.                        144,713              2        144,713              2        144,713              2
  Genesco, Inc.                                2,095,020             25      1,047,510             14
                                              ----------     ----------     ----------     ----------     ----------     ----------
                                              $8,335,929            100%    $7,622,950            100%    $8,857,263            100%
                                              ==========     ==========     ==========     ==========     ==========     ==========
</TABLE>


                                   Continued

                                      -16-
<PAGE>   14
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                    NOTES to FINANCIAL STATEMENTS, Continued


10.  Gain on Sale of Real Estate:

        On June 30, 1995, the Partnership sold a property to Genesco, Inc.
           ("Genesco"), the lessee, for $15,200,000. The Partnership recognized
           a gain on the sale of $3,330,098, net of certain costs. In connection
           with the sale, the Partnership paid off the limited recourse mortgage
           loan on the 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.  Hotel Property in Kenner, Louisiana:

        The Partnership and Corporate Property Associates 8 ("CPA(R):8"), an
           affiliate, purchased a hotel property in Kenner, Louisiana, in June
           1988 as tenants-in-common with 46.383% and 53.617% interests,
           respectively. The Partnership and CPA(R):8 assumed operating control
           of the hotel in 1992 after evicting the lessee due to its financial
           difficulties. On July 30, 1996, the Partnership and CPA(R):8
           completed a transaction with American General Hospitality Operating
           Partnership L.P. (the "Operating Partnership"), the operating
           partnership of a newly-formed real estate investment trust, American
           General Hospitality Corporation, ("AGH"), in which the Partnership
           and CPA(R):8 received 920,672 limited partnership units (of which the
           Partnership's share was 427,008 units) in exchange for the hotel
           property and its operations. In connection with the transfer, the
           Partnership and CPA(R):8 paid a cash contribution of $391,221 (of
           which the Partnership's share was $181,460) and the Operating
           Partnership's assumed the mortgage loan obligation collateralized by
           the hotel property (of which the Partnership's share was $3,388,764).
           AGH owns an 81.3% equity interest in the Operating Partnership

        The exchange of the hotel property for limited partnership units has
           been treated as a nonmonetary exchange for tax and financial
           reporting purposes. The Partnership's interest in the Operating
           Partnership is being accounted for under the equity method. After one
           year, the Partnership will have the right to convert its Operating
           Partnership Units to shares of common stock in AGH on a one-for-one
           basis. AGH completed an initial public offering during 1996. The
           Partnership's carrying value for the limited partnership units at the
           time of the exchange of $3,851,832 was based on the historical basis
           of assets transferred, net of liabilities assumed by the Operating
           Partnership; cash contributed and costs incurred to complete the
           exchange.

        As of September 30, 1996, the audited consolidated financial statements
           of AGH reported total assets of $187,870,000 and shareholders' equity
           of $127,408,000 and for the period from inception (July 31, 1996)
           through September 30, 1996, revenues of $5,251,000, income before
           minority interest of $2,850,000 and net income of $2,302,000. As of
           March 15, 1997, AGH's quoted per share market value was $28 resulting
           in an aggregate value of approximately $11,956,000. The carrying
           value of the equity interest in the Operating Partnership as of
           December 31, 1996 was approximately $4,000,000. For the period from
           July 31, 1996 to December 31, 1996, the Partnership's share of
           Operating Partnership earnings was $265,056.

        Between January 1995 and July 1996, the Partnership and CPA(R):8 had
           engaged an affiliate of AGH to manage the operations of Kenner on
           their behalf.


                                   Continued

                                      -17-
<PAGE>   15
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                    NOTES to FINANCIAL STATEMENTS, Continued


        Summarized operating results of the Partnership's share of the hotel
           operation through the date of disposal (July 30,1996) are as follows:


<TABLE>
<CAPTION>
                                                1994            1995            1996
                                            -----------     -----------     -----------
   <S>                                      <C>             <C>             <C>
   Revenues                                 $ 3,127,894     $ 3,834,671     $ 2,314,569
   Fees paid to hotel management company        (95,660)       (112,713)        (83,062)
   Other operating expenses                  (1,942,104)     (2,291,378)     (1,378,245)
                                            -----------     -----------     -----------

     Hotel operating income                 $ 1,090,130     $ 1,430,580     $   853,262
                                            ===========     ===========     ===========
</TABLE>



12.  Property Leased to Hughes Markets, Inc.:

        The Partnership and Corporate Property Associates 3 ("CPA(R):3"), an
           affiliate, own a dairy processing facility in Los Angeles, California
           as tenants-in-common with 83.24% and 16.76% ownership interests,
           respectively. On May 1, 1996, the Partnership and CPA(R):3 entered
           into a lease amendment agreement with the lessee, Hughes Markets,
           Inc. ("Hughes"), to extend the lease term from April 30, 1996 to
           April 30, 1998. Under the extension agreement, Hughes' monthly rent
           increased to $336,166 (of which the Partnership's share is $279,825)
           from $151,686 (of which the Partnership's share was $126,266). At the
           end of the lease term, Hughes is obligated to pay a lump sum rental
           payment of $3,500,000 (of which the Partnership's share will be
           approximately $2,913,000). Hughes has an option to extend the lease
           on a month-to-month basis for up to six months at a rental of
           $500,000 per month.

        In accordance with the lease amendment agreement, Hughes has provided
           the Partnership and CPA(R):3 with an irrevocable letter of credit in
           the amount of $3,500,000, an amount equal to Hughes' lump sum payment
           obligation. For financial reporting purposes, the Partnership's share
           of the $3,500,000 lump sum rental payment due at the end of the lease
           term is being recognized on a straight-line basis over the lease
           extension term. For the year ended December 31, 1996, the difference
           between scheduled rents under the lease and rent recognized for
           financial reporting purposes with the adjustment for the lump sum
           payment was $971,133.


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.


                                   Continued

                                      -18-
<PAGE>   16
                        CORPORATE PROPERTY ASSOCIATES 4,
                        a California limited partnership

                    NOTES to FINANCIAL STATEMENTS, Continued





        All of the Partnership's properties are subject to environmental
           statutes and regulations regarding the discharge of hazardous
           materials and related remediation obligations. 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 condition, liquidity or results of
           operations.



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
           at December 31, 1996 approximates the carrying value of such mortgage
           notes at December 31, 1996. 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.


                                      -19-
<PAGE>   17
                                   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.



    09/03/97             BY:    /s/ Steven M. Berzin
--------------                ---------------------------------
     Date                     Claude Fernandez
                              Executive Vice President and
                              Chief Financial Officer
                              (Principal Financial Officer)



    09/03/97             BY:    /s/ Claude Fernandez
--------------                ---------------------------------
     Date                     Claude Fernandez
                              Executive Vice President and
                              Chief Administrative Officer
                              (Principal Accounting Officer)


                                      -20-