##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 001-32162
 CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 (Exact name of registrant as specified in its charter)
 Maryland
    
    80-0067704(State of incorporation)
    
    (I.R.S. Employer Identification No.)50 Rockefeller PlazaNew York, New York
    
    10020(Address of principal executive office)
    
    (Zip Code)
 Investor Relations (212) 492-8920
(212) 492-1100
 þ o
  o o þ
 o þ




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##### 



CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 INDEX
 PageNo.PART I  FINANCIAL INFORMATIONItem 1.  Financial Statements*Consolidated Balance Sheets as of June 30, 2006 and December 31, 2005
    
    
    2Consolidated Statements of Income for the three and six months ended June 30, 2006 and 2005
    
    
    3Consolidated Statements of Comprehensive Income for the three and six months ended June 30,
2006 and 2005
    
    
    3Consolidated Statement of Shareholders Equity for the six months ended June 30, 2006
    
    
    4Consolidated Statements of Cash Flows for the six months ended June 30, 2006 and 2005
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3.  Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4.  Controls and Procedures
    
    
    21PART II  OTHER INFORMATIONItem 2.  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 4.  Submission of Matters to a Vote of Security Holders
    
    
    22Item 6.  Exhibits
    
    
    22Signatures
    
    
    23EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32: CERTIFICATION
  
 *
    
    The summarized consolidated financial statements contained herein are unaudited; however, in
the opinion of management, all adjustments (consisting of normal recurring adjustments)
necessary for a fair statement of such financial statements have been included. Forward Looking Statements
  
 1




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##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 PART I
 
 ITEM 1.  FINANCIAL STATEMENTS
 
 CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands except share and per share amounts)
 December 31, 2005June 30, 2006
    
    
    (NOTE)ASSETSReal estate, net
    
    $
    477,350
    
    
    $
    386,615Net investment in direct financing leases
    
    
    180,934
    
    
    
    152,772Equity investments
    
    
    108,411
    
    
    
    97,179Real estate under construction
    
    
    27,612
    
    
    
    15,026Mortgage notes receivable
    
    
    9,590
    
    
    
    29,798Cash and cash equivalents
    
    
    222,896
    
    
    
    155,374Short-term investments
    
    
    2,234
    
    
    
    1,698Marketable securities
    
    
    2,858
    
    
    
    2,996Funds in escrow
    
    
    33,608
    
    
    
    6,377Intangible assets, net
    
    
    81,903
    
    
    
    66,589Due from affiliates
    
    
    
    
    
    
    590Deferred offering costs
    
    
    7,141
    
    
    
    4,028Other assets, net
    
    
    8,872
    
    
    
    10,607Total assets
    
    $
    1,163,409
    
    
    $
    929,649LIABILITIES AND SHAREHOLDERS EQUITYLiabilities:Limited recourse mortgage notes payable
    
    $
    434,022
    
    
    $
    358,370Accrued interest
    
    
    2,287
    
    
    
    2,330Prepaid and deferred rental income and security deposits
    
    
    22,508
    
    
    
    18,548Due to affiliates
    
    
    16,159
    
    
    
    9,475Distributions payable
    
    
    10,355
    
    
    
    8,926Deferred acquisition fees payable to affiliate
    
    
    21,409
    
    
    
    17,708Accounts payable, accrued expenses and other liabilities
    
    
    3,469
    
    
    
    10,163Total liabilities
    
    
    510,209
    
    
    
    425,520Minority interest in consolidated entities
    
    
    17,140
    
    
    
    17,134Commitments and contingencies (Note 9)Shareholders equity:Common stock, $.001 par value; 110,000,000 shares authorized;
74,622,506 and 57,268,850 shares issued and outstanding, respectively
    
    
    75
    
    
    
    57Additional paid-in capital
    
    
    667,035
    
    
    
    514,014Distributions in excess of accumulated earnings
    
    
    (29,974
    )
    
    
    (22,416
    )Accumulated other comprehensive income (loss)
    
    
    2,645
    
    
    
    (3,148
    )639,781
    
    
    
    488,507Less, treasury stock at cost, 400,179 and 162,564 shares, respectively
    
    
    (3,721
    )
    
    
    (1,512
    )Total shareholders equity
    
    
    636,060
    
    
    
    486,995Total liabilities and shareholders equity
    
    $
    1,163,409
    
    
    $
    929,649
   2




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands except share and per share amounts)
 Three months ended June 30,
    
    
    Six months ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005REVENUES:Rental income
    
    $
    11,798
    
    
    $
    7,000
    
    
    $
    22,153
    
    
    $
    10,887Interest income from direct financing leases
    
    
    3,370
    
    
    
    2,380
    
    
    
    6,522
    
    
    
    4,307Interest income on mortgage receivable
    
    
    638
    
    
    
    496
    
    
    
    1,366
    
    
    
    1,059Other operating income
    
    
    655
    
    
    
    141
    
    
    
    743
    
    
    
    20716,461
    
    
    
    10,017
    
    
    
    30,784
    
    
    
    16,460OPERATING EXPENSES:Depreciation and amortization
    
    
    (3,081
    )
    
    
    (1,828
    )
    
    
    (5,714
    )
    
    
    (2,720
    )Property expenses
    
    
    (2,912
    )
    
    
    (1,925
    )
    
    
    (5,724
    )
    
    
    (3,294
    )General and administrative
    
    
    (1,066
    )
    
    
    (1,137
    )
    
    
    (2,373
    )
    
    
    (2,045
    )(7,059
    )
    
    
    (4,890
    )
    
    
    (13,811
    )
    
    
    (8,059
    )OTHER INCOME AND EXPENSES:Income from equity investments
    
    
    1,777
    
    
    
    1,241
    
    
    
    3,480
    
    
    
    2,518Other interest income
    
    
    1,970
    
    
    
    1,506
    
    
    
    3,431
    
    
    
    3,007Minority interest in income
    
    
    (516
    )
    
    
    (130
    )
    
    
    (991
    )
    
    
    (130
    )Gain
(loss) on foreign currency transactions, derivative instruments
and other, net
    
    
    40
    
    
    
    (20
    )
    
    
    66
    
    
    
    (186
    )Interest expense
    
    
    (5,824
    )
    
    
    (3,680
    )
    
    
    (11,110
    )
    
    
    (5,722
    )(2,553
    )
    
    
    (1,083
    )
    
    
    (5,124
    )
    
    
    (513
    )NET INCOME
    
    $
    6,849
    
    
    $
    4,044
    
    
    $
    11,849
    
    
    $
    7,888BASIC EARNINGS PER SHARE
    
    $
    .10
    
    
    $
    .07
    
    
    $
    .19
    
    
    $
    .14DISTRIBUTIONS DECLARED PER SHARE
    
    $
    .1588
    
    
    $
    .1450
    
    
    $
    .3163
    
    
    $
    .2700WEIGHTED AVERAGE SHARES OUTSTANDING  BASIC
    
    
    65,680,890
    
    
    
    56,197,766
    
    
    
    61,420,609
    
    
    
    55,824,822
  CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
 
 (in thousands)
 Three months ended June 30,
    
    
    Six months ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    6,849
    
    
    $
    4,044
    
    
    $
    11,849
    
    
    $
    7,888Other comprehensive income (loss):Change in unrealized loss on marketable securities
    
    
    23
    
    
    
    
    
    
    
    (3
    )
    
    
    Change in foreign currency translation adjustment
    
    
    2,527
    
    
    
    (4,172
    )
    
    
    4,549
    
    
    
    (6,931
    )Unrealized gain on derivative instruments
    
    
    873
    
    
    
    
    
    
    
    1,247
    
    
    
    3,423
    
    
    
    (4,172
    )
    
    
    5,793
    
    
    
    (6,931
    )Comprehensive income (loss)
    
    $
    10,272
    
    
    $
    (128
    )
    
    $
    17,642
    
    
    $
    957
  3




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
For the six months ended June 30, 2006
(in thousands except share and per share amounts)
 Distributions in
    
    
    AccumulatedAdditional
    
    
    Excess of
    
    
    OtherCommon
    
    
    Paid-In
    
    
    Accumulated
    
    
    Comprehensive
    
    
    TreasuryStock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    TotalBalance at December 31, 2005
    
    $
    57
    
    
    $
    514,014
    
    
    $
    (22,416
    )
    
    $
    (3,148
    )
    
    $
    (1,512
    )
    
    $
    486,99517,353,656 shares issued $.001 par, at $10
per share, net of offering costs
    
    
    18
    
    
    
    153,021
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153,039Distributions declared
    
    
    
    
    
    
    
    
    
    
    (19,407
    )
    
    
    
    
    
    
    
    
    
    
    (19,407
    )Net income
    
    
    
    
    
    
    
    
    
    
    11,849
    
    
    
    
    
    
    
    
    
    
    
    11,849Change in other comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,793
    
    
    
    
    
    
    
    5,793Repurchase of 237,615 shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,209
    )
    
    
    (2,209
    )Balance at June 30, 2006
    
    $
    75
    
    
    $
    667,035
    
    
    $
    (29,974
    )
    
    $
    2,645
    
    
    $
    (3,721
    )
    
    $
    636,060
  4




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
 Six months ended June 30,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    11,849
    
    
    $
    7,888Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization including intangible assets and deferred financing costs
    
    
    5,912
    
    
    
    2,754(Gain) loss on foreign currency transactions, net
    
    
    (232
    )
    
    
    212Unrealized gain on derivative instrument
    
    
    
    
    
    
    (26
    )Equity income in excess of distributions received
    
    
    (867
    )
    
    
    (303
    )Issuance of shares to affiliate in satisfaction of fees due
    
    
    2,457
    
    
    
    1,190Minority interest in income
    
    
    991
    
    
    
    130Straight-line rent adjustments and amortization of rent-related intangibles
    
    
    (909
    )
    
    
    (434
    )(Decrease) increase in accrued interest
    
    
    (48
    )
    
    
    1,353Increase in due to affiliates (a)
    
    
    3,570
    
    
    
    2,332Increase in accounts payable, accrued expenses and other liabilities (a)
    
    
    263
    
    
    
    137Increase in prepaid and deferred rental income and security deposits
    
    
    1,462
    
    
    
    3,793Net change in other operating assets and liabilities
    
    
    (313
    )
    
    
    (752
    )Net cash provided by operating activities
    
    
    24,135
    
    
    
    18,274CASH FLOWS FROM INVESTING ACTIVITIES:Distributions received from equity investments in excess of equity income
    
    
    3,372
    
    
    
    1,079Acquisition of real estate and equity investments (b)
    
    
    (145,964
    )
    
    
    (351,534
    )Contributions to equity investments
    
    
    (10,088
    )
    
    
    (79
    )Funds held in escrow for future acquisition and construction
    
    
    (29,915
    )
    
    
    (4,253
    )Release of funds held in escrow for acquisition and construction of real estate
    
    
    2,251
    
    
    
    12,371VAT taxes recovered from purchase of real estate
    
    
    4,008
    
    
    
    Purchase of mortgage note receivable
    
    
    
    
    
    
    (12,778
    )Receipt of principal payment of mortgage note receivable
    
    
    135
    
    
    
    66Receipt of principal prepayment of mortgage note receivable
    
    
    20,000
    
    
    
    Purchase of short term investments
    
    
    
    
    
    
    (3,516
    )Purchases of securities
    
    
    
    
    
    
    (31,825
    )Proceeds from sale of securities
    
    
    
    
    
    
    90,825Net cash used in investing activities
    
    
    (156,201
    )
    
    
    (299,644
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of stock, net of costs of raising capital
    
    
    150,582
    
    
    
    41,340Proceeds from mortgages (c)
    
    
    73,732
    
    
    
    196,065Deferred financing costs and mortgage deposits, net of deposits refunded
    
    
    (691
    )
    
    
    44Scheduled payments of mortgage principal
    
    
    (2,634
    )
    
    
    (1,056
    )Distributions paid
    
    
    (17,978
    )
    
    
    (12,281
    )Distributions paid to minority partners
    
    
    (985
    )
    
    
    Purchase of treasury stock
    
    
    (2,209
    )
    
    
    (640
    )Net cash provided by financing activities
    
    
    199,817
    
    
    
    223,472Effect of exchange rate changes on cash
    
    
    (229
    )
    
    
    (236
    )Net increase (decrease) in cash and cash equivalents
    
    
    67,522
    
    
    
    (58,134
    )Cash and cash equivalents, beginning of period
    
    
    155,374
    
    
    
    217,310Cash and cash equivalents, end of period
    
    $
    222,896
    
    
    $
    159,176
 
 (a)
    
    Changes in due to affiliates and accounts payable, accrued expenses and other liabilities
excludes amounts related to the raising of capital (financing activities) pursuant to the
Companys public offerings. At June 30, 2006 and 2005, the amount due to the Companys advisor
for such costs was $7,141 and $3,583, respectively. The above caption also
excludes deferred acquisition fees payable related to the acquisition of real estate
(investing activities).(b)
    
    The cost basis of real estate investments acquired during the six months ended June 30, 2006
and 2005 also includes deferred acquisition fees payable of $3,701 and $6,716, respectively.(c)
    
    Net of $2,325 retained by mortgage lenders during the six months ended June 30, 2005.  5




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except share and per share amounts)
 NOTE 1. Business
 
 NOTE 2. Basis of Presentation
  Principles of Consolidation
   Information about International Geographic Areas
  Reclassifications
  6




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in thousands except share and per share amounts)
 Recent Accounting Pronouncements
   NOTE 3. Organization and Offerings
   NOTE 4. Transactions with Related Parties
   7




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in thousands except share and per share amounts)
    NOTE 5. Real Estate
  June 30, 2006
    
    
    December 31, 2005Cost
    
    $
    487,157
    
    
    $
    392,210Less: Accumulated depreciation
    
    
    (9,807
    )
    
    
    (5,595
    )$
    477,350
    
    
    $
    386,615
 NOTE 6. Equity Investments
 ® ®
  June 30, 2006
    
    
    December 31, 2005Assets (primarily real estate)
    
    $
    313,666
    
    
    $
    323,364Liabilities (primarily mortgage notes payable)
    
    
    (192,560
    )
    
    
    (196,752
    )Partners and members equity
    
    $
    121,106
    
    
    $
    126,612Companys share of equity investees net assets
    
    $
    37,476
    
    
    $
    39,182
 Six months ended June 30,2006
    
    
    2005Revenues (primarily rental income)
    
    $
    14,292
    
    
    $
    14,294Expenses (primarily interest on mortgages and depreciation)
    
    
    (9,492
    )
    
    
    (9,385
    )Net income
    
    $
    4,800
    
    
    $
    4,909Companys share of net income from equity investments
    
    $
    1,465
    
    
    $
    1,498
  8




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in thousands except share and per share amounts)
  June 30, 2006
    
    
    December 31, 2005Assets (primarily real estate)
    
    $
    807,162
    
    
    $
    575,944Liabilities (primarily mortgage notes payable)
    
    
    (600,434
    )
    
    
    (419,690
    )Partners and members equity
    
    $
    206,728
    
    
    $
    156,254Companys share of equity investees net assets
    
    $
    70,935
    
    
    $
    57,997
 Six months ended June 30,2006
    
    

2005Revenues (primarily rental income and interest income from direct financing leases)
    
    $
    27,462
    
    
    $
    14,368Expenses (primarily interest on mortgages and depreciation)
    
    
    (20,968
    )
    
    
    (11,748
    )Net income
    
    $
    6,494
    
    
    $
    2,620Companys share of net income from equity investments
    
    $
    2,015
    
    
    $
    1,020
 NOTE 7. Acquisitions of Real Estate-Related Investments
 Real Estate Acquired
 2006
 2005
 Equity Investments Acquired
 2006
 2005
 Mortgage Notes Receivable Acquired
 2005
 9




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in thousands except share and per share amounts)
  Real Estate Under Construction
 2006
 NOTE 8. Intangibles
   June 30, 2006
    
    
    December 31, 2005Lease
intangiblesIn-place lease
    
    $
    53,147
    
    
    $
    43,481Tenant relationship
    
    
    15,557
    
    
    
    12,808Above-market rent
    
    
    18,035
    
    
    
    13,150Less: accumulated amortization
    
    
    (4,836
    )
    
    
    (2,850
    )$
    81,903
    
    
    $
    66,589Below-market rent
    
    $
    (13,930
    )
    
    $
    (11,866
    )Less: accumulated amortization
    
    
    733
    
    
    
    420$
    (13,197
    )
    
    $
    (11,446
    )
  NOTE 9. Commitments and Contingencies
   ® ® ® ® ®
 ® ® ® ® ®
 10




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in thousands except share and per share amounts)
     NOTE 10. Pro Forma Financial Information
  Three months ended June 30,2006
    
    2005Pro forma total revenues
    
    $
    16,511
    
    
    $
    15,954Pro forma net income
    
    
    6,491
    
    
    
    5,772Pro forma earnings per share:Basic and diluted
    
    $
    .10
    
    
    $
    .09
 Six months ended June 30,2006
    
    2005Pro forma total revenues
    
    $
    32,478
    
    
    $
    30,497Pro forma net income
    
    
    11,422
    
    
    
    11,922Pro forma earnings per share:Basic and diluted
    
    $
    .19
    
    
    $
    .19
  NOTE 11. Subsequent Events
  11




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in thousands except share and per share amounts)
  12




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands except share and per share amounts)
  EXECUTIVE OVERVIEW
 Business Overview
 
 Current Developments and Trends
          13




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
(in thousands except share and per share amounts)
       How Management Evaluates Results of Operations
   Six months endedJune 30,2006
    
    
    2005Rental income
    
    $
    22,153
    
    
    $
    10,887Interest income from direct financing leases
    
    
    6,522
    
    
    
    4,307$
    28,675
    
    
    $
    15,194
 14




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
(in thousands except share and per share amounts)
  Six months endedJune 30,2006
    
    
    2005Telcordia Technologies, Inc. (a)
    
    $
    4,442
    
    
    $
    2,617The Talaria Company (Hinckley) (a) (b)
    
    
    2,507
    
    
    
    775Huntsman International, LLC (a)
    
    
    2,013
    
    
    
    MetoKote Corporation, MetoKote Canada Limited and MetoKote de Mexico (a) (c)
    
    
    1,884
    
    
    
    319Ply Gem Industries, Inc. (c)
    
    
    1,773
    
    
    
    1,708Finisar Corporation (a)
    
    
    1,632
    
    
    
    1,333Foss
Manufacturing Company, LLC (f)
    
    
    1,598
    
    
    
    1,598Polestar Petty Ltd. (c)
    
    
    1,313
    
    
    
    1,353LFD Manufacturing Limited and IDS Logistics (Thailand) Limited (a) (c) (e)
    
    
    1,163
    
    
    
    749Murray International Metals, Limited (a) (c)
    
    
    1,025
    
    
    
    HMS Healthcare, Inc.
    
    
    852
    
    
    
    897Xpedite Systems, Inc.
    
    
    796
    
    
    
    796Precise Technology Group, Inc. (a)
    
    
    724
    
    
    
    659Plantagen Finland Oy and Plantagen Sverige AB (c)
    
    
    722
    
    
    
    871Bobs Discount Furniture, LLC (a)
    
    
    687
    
    
    
    Castle Rock Industries, Inc.
    
    
    675
    
    
    
    655Dicks Sporting Goods, Inc. (a) (b)
    
    
    674
    
    
    
    Kings Super Markets Inc. (d)
    
    
    603
    
    
    
    Career Education Corp. (a)
    
    
    454
    
    
    
    11John McGavigan Limited (a) (c)
    
    
    449
    
    
    
    Other (a) (c) (d)
    
    
    2,689
    
    
    
    853$
    28,675
    
    
    $
    15,194
 
 (a)
    
    We acquired or placed into service our interest in this investment during 2005.(b)
    
    Includes lease revenues applicable to minority interests totaling $1,426 and $232 in 2006 and
2005, respectively.(c)
    
    Revenue amounts are subject to fluctuations in foreign currency exchange rates.(d)
    
    We acquired or placed into service our interest in this investment during 2006.(e)
    
    We completed an expansion at this property in December 2005.(f)
    
    In May 2006, Foss Manufacturing Company, LLC assumed the
lease of Foss Manufacturing Company, Inc., which was operating under
bankruptcy protection since September 2005.  Six months endedJune 30,2006
    
    
    2005U-Haul Moving Partners, Inc. and Mercury Partners, LP
    
    $
    4,391
    
    
    $
    4,391Thales S.A. (a)
    
    
    1,927
    
    
    
    2,002Hellweg Die Profi-Baumarkte GmbH & Co. KG (a) (b)
    
    
    1,551
    
    
    
    139Police Prefecture, French Government (a) (b)
    
    
    1,525
    
    
    
    Pohjola Non-life Insurance Company (a) (b)
    
    
    1,493
    
    
    
    1,534TietoEnator Plc (a)
    
    
    1,397
    
    
    
    1,442OBI A.G. (a) (c)
    
    
    875
    
    
    
    Actuant Corporation (a) (d)
    
    
    376
    
    
    
    194$
    13,535
    
    
    $
    9,702
 
 (a)
    
    Revenue amounts are subject to fluctuations in foreign currency exchange rates.(b)
    
    We acquired or placed into service our interest in this investment during 2005.(c)
    
    We acquired or placed into service our interest in this investment during 2006.(d)
    
    Increase due to rent increase in 2006. 15




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
(in thousands except share and per share amounts)
 RESULTS OF OPERATIONS
  Lease Revenues
     Depreciation and Amortization
  Property Expenses
   General and Administrative
  16




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
(in thousands except share and per share amounts)
  Income from Equity Investments
   Other Interest Income
  Minority Interest in Income
   Interest Expense
  Net Income
  FINANCIAL CONDITION
 Uses of Cash During the Period
  17




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
(in thousands except share and per share amounts)
     Cash Resources
   
    
    The impact of investments completed during 2006, the full year impact of investments completed in 2005 and the expected
completion of a build-to-suit project in 2006, all of which we expect will have a net positive impact on cash flow.
    
    The advisors election in 2006 to continue to receive asset management and performance fees in restricted shares.
    
    Scheduled rent increases on several properties during 2006 should result in additional cash from operations.
 Cash Requirements
   18




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
(in thousands except share and per share amounts)
  Summary of Financing
  June 30,2006
    
    
    2005Balance:Fixed rate
    
    $
    434,022
    
    
    $
    290,302Variable rate
    
    
    
    
    
    
    Total
    
    $
    434,022
    
    
    $
    290,302Weighted average interest rate at end of period:Fixed rate
    
    
    5.92
    %
    
    
    5.88
    %
 Aggregate Contractual Agreements
  Less Than
    
    
    
    
    
    
    
    
    
    
    More ThanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsMortgage notes payable  Principal
    
    $
    434,022
    
    
    $
    7,224
    
    
    $
    18,491
    
    
    $
    21,762
    
    
    $
    386,545Mortgage notes payable  Interest
    
    
    272,722
    
    
    
    25,411
    
    
    
    49,777
    
    
    
    47,319
    
    
    
    150,215Deferred acquisition fees due to affiliate  Principal
    
    
    21,409
    
    
    
    8,399
    
    
    
    11,769
    
    
    
    1,241
    
    
    
    Deferred acquisition fees due to affiliate  Interest
    
    
    3,471
    
    
    
    1,362
    
    
    
    1,908
    
    
    
    201
    
    
    
    Build-to-suit commitments(1)
    
    
    47,430
    
    
    
    47,430
    
    
    
    
    
    
    
    
    
    
    
    Operating leases(2)
    
    
    2,842
    
    
    
    165
    
    
    
    547
    
    
    
    559
    
    
    
    1,571$
    781,896
    
    
    $
    89,991
    
    
    $
    82,492
    
    
    $
    71,082
    
    
    $
    538,331
 
 (1)
    
    Represents remaining build-to-suit commitments for four projects. Commitments include a
project in Blairsville, Pennsylvania where estimated total construction costs are currently
projected to total approximately $25,152, of which $4,416 was funded as of June 30, 2006; a
project in Plainfield, Indiana where estimated total construction costs are currently
projected to total approximately $17,600 of which $8,725 was funded as of June 30, 2006; and a
project in Laramie, Wyoming, where estimated total construction costs are currently projected
to total approximately $24,731 of which $6,912 was funded as of June 30, 2006.(2)
    
    Operating lease obligations consist primarily of our share of minimum rents payable under an
office cost-sharing agreement with certain affiliates for the purpose of leasing office space
used for the administration of real estate entities. Such amounts are allocated among the
entities based on gross revenues and are adjusted quarterly.   SUBSEQUENT EVENTS
   19




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CORPORATE PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
(in thousands)
  Interest Rate Risk
   2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    Total
    
    Fair ValueFixed rate debt
    
    $
    3,409
    
    
    $
    8,108
    
    
    $
    9,287
    
    
    $
    10,016
    
    
    $
    10,797
    
    
    $
    392,405
    
    
    $
    434,022
    
    
    $
    419,258Weighted average
interest rate
    
    
    5.99
    %
    
    
    5.95
    %
    
    
    5.97
    %
    
    
    5.97
    %
    
    
    5.98
    %
    
    
    6.55
    %
   Foreign Currency Exchange Rate Risk
   20




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CORPORATE
PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 ITEM 4.  CONTROLS AND PROCEDURES
    21




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CORPORATE
PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 PART II
 
 ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 (a)
    
    For the quarter ended June 30, 2006, 166,717 shares of common stock were issued to the
advisor as consideration for asset management and performance fees. Shares were issued at $10
per share. Since none of these transactions were considered to have involved a public
offering within the meaning of Section 4(2) of the Securities Act, as amended, the shares
issued were deemed to be exempt from registration. In acquiring our shares, the advisor
represented that such interests were being acquired by it for the purposes of investment and
not with a view to the distribution thereof.
  Maximum Number(or ApproximateTotal Number of
    
    Dollar Value) ofShares Purchased as
    
    Shares That MayPart of Publicly
    
    Yet be PurchasedTotal Number of
    
    Average Price
    
    Announced Plans or
    
    Under the Plans2006
    
    Shares Purchased(1)
    
    Paid per Share
    
    Programs(1)
    
    or Programs(1)April
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AMay
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AJune
    
    
    125,260
    
    
    $
    9.29
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    125,260
 
 (1)
    
    All shares were purchased pursuant to our redemption plan, which we announced in December
2003. Under our redemption plan we may elect to redeem shares of our common stock subject to
certain conditions and limitations. The maximum amount of shares purchasable by us in any
period depends on the availability of funds generated by the Distribution Reinvestment and
Share Purchase Plan and other factors at the discretion of our Board of Directors. However, at
no time during a 12-month period may the number of shares redeemed by us exceed 5% of the
number of shares of our outstanding common stock at the beginning of such period. The
redemption plan will terminate if and when our shares are listed on a national securities
exchange or included for quotation on Nasdaq. 
 ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Name of Director
    
    Total Shares Voting
    
    Shares Voting For
    
    Shares WithheldTrevor P. Bond
    
    
    30,046,154
    
    
    
    30,025,278
    
    
    
    20,876William P. Carey
    
    
    30,046,154
    
    
    
    30,030,005
    
    
    
    16,149Gordon F. DuGan
    
    
    30,046,154
    
    
    
    30,036,140
    
    
    
    10,014Elizabeth P. Munson
    
    
    30,046,154
    
    
    
    30,034,817
    
    
    
    11,337James D. Price
    
    
    30,046,154
    
    
    
    30,024,584
    
    
    
    21,570
 
 ITEM 6.  EXHIBITS
 31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 22




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CORPORATE
PROPERTY ASSOCIATES 16  GLOBAL INCORPORATED
 
 SIGNATURES
  CORPORATE PROPERTY ASSOCIATES 16  GLOBAL
INCORPORATED8/14/2006
    
    By:
    
    /s/ Mark J. DeCesarisDate
    
    
    
    Mark J. DeCesarisManaging Director and acting Chief Financial Officer(acting Principal Financial Officer)8/14/2006
    
    By:
    
    /s/ Claude FernandezDate
    
    
    
    Claude FernandezManaging Director and Chief Accounting Officer(Principal Accounting Officer)
 23