<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

[X]  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                0-9174
                      ----------------------------------

                          CORPORATE PROPERTY ASSOCIATES
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             CALIFORNIA                                94-2572215
--------------------------------------------------------------------------------
(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 delinquent  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 July 24, 1978. The General Partners of Registrant are W.P. Carey
& Co., Inc. (the "Corporate General Partner" or "W.P. Carey") and William Polk
Carey (the "Individual General Partner"). The Corporate General Partner, the
Individual General Partner and/or certain affiliates are also the General
Partners of Corporate Property Associates 2 ("CPA(R):2"), Corporate Property
Associates 3 ("CPA(R):3"), Corporate Property Associates 4, a California limited
partnership ("CPA(R):4"), 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 January 16, 1979, as supplemented by Supplements
dated January 19, 1979 and April 30, 1979, 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").

     The properties owned by Registrant are described in Item 2. Registrant's
entire net proceeds from the public offering, less distributions of cash from
sales of properties and a working capital reserve have been fully invested in
net leased commercial and industrial real estate since December 11, 1980.

     Registrant has only one industry segment which consists of the investment
in and the leasing of industrial and commercial real estate. 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.

     All of Registrant's real estate properties are leased to corporate tenants
under long-term net leases. A net lease generally requires tenants to pay
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 liabilities on all matters related to the leased
properties. Accordingly, Registrant believes that the insurance and indemnity
provided on its behalf by its lessees 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 for its
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.
Presently, there are no claims pending for property damages or liability claims.

     As described above, lessees 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. As discussed in Registrant's Management's Discussion and Analysis in
Item 7, Registrant's leases generally provide for periodic rent increases which
are either stated and negotiated at the inception of the lease or based on
formulas indexed to increases in the Consumer Price Index. During the year ended
December 31, 1995, no material lease terms were modified or amended.
Registrant's leases have initial

                                      -1-
<PAGE>
 
terms ending between 1996 and 2009 with the majority of the leases providing for
multiple renewal terms at the option of the tenants, of generally 5 or 10 years
per renewal term. Registrant's lease with Varo, Inc. ("Varo") for the 5th Street
property expires in April 1996. As this property is adjacent to a second
property leased to Varo with such lease expiring in September 2002, Registrant
anticipates that the 5th Street lease will be extended. Various leases include
purchase options which are described in Item 2 and are generally exercisable at
the greater of fair market value, as defined in the lease, or a stated amount.
In 1993, Broomfield Tech Center Corporation ("Broomfield") notified Registrant
of its intention to exercise its option to purchase the two properties in
Broomfield, Colorado that it leases from Registrant. The exercise of the option
had been scheduled to occur in May 1994, however, no agreement has been reached
on the purchase price as of December 31, 1995 and currently there are no
negotiations being pursued in connection with the exercise of the option. The
Pre Finish Metals Incorporated ("Pre Finish") lease provides for a purchase
option which may be exercised between June 30, 1998 and June 30, 2003.
Registrant and CPA(R):2 own the Pre Finish property as tenants-in-common with
60% and 40% interests, respectively.

     As Registrant's objective has been to invest in properties which are
occupied by a single corporate tenant and subject to long-term net 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 was to identify properties which included
operations of material importance to the lessee so that the lessee might 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. Registrant believes that
this strategy reduces its exposure to the competitive conditions of the local
and regional real estate markets. 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.

     For the year ended December 31, 1995, revenues from properties occupied by
Pre Finish, The Gap, Inc. and Varo, amounted to 31%, 27% and 19%, respectively,
of the total operating revenues of Registrant. IMO Industries, Inc., Varo's
parent company, is the guarantor of the Varo lease. No other property owned by
Registrant accounted for more than 10% of its total operating revenues during
1995. See Note 9 to the Financial Statements in Item 8.

     Registrant voluntarily conducted 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 of certain properties in 1994, that
its properties are in substantial compliance with Federal and state
environmental statutes and regulations. Phase II reviews were only performed
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 the aforementioned
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. The Corporate General Partner of
Registrant together with its affiliates employ twelve individuals who perform
accounting, secretarial and transfer services for Registrant. Gemisys, Inc.
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.

                                      -2-
<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>    
THE GAP, INC.                     Land and Distribution/               Erlanger,                   Ownership of land
                                  Warehouse Building                   Kentucky                    and building (1)

PRE FINISH METALS                 Land and Warehouse/                  Walbridge,                  Ownership of a 60%
INCORPORATED                      Manufacturing Plant                  Ohio                        interest in land
                                  and building (1)

BROOMFIELD TECH                   Land and Office/                     Broomfield,                 Ownership of land
CENTER CORPORATION                Warehouse/Manufac-                   Colorado                    and buildings (1)
                                  turing Buildings -
                                  2 locations

UNISOURCE                         Land and Office/                     Anchorage,                  Ownership of land
WORLDWIDE,                        Warehouse Building                   Alaska                      and building
INC.

IMO INDUSTRIES, INC.              Land and Office/                     Garland,                    Ownership of land
                                  Manufacturing Build-                 Texas                       and buildings (1)(2)
                                  ings - 2 locations

KOBACKER STORES,                  Land and Retail Stores               In California:              Ownership of land
INC.                              - 14 locations                         Fontana,                  and buildings (1)
                                                                         Merced, Rialto,
                                                                         Stockton and two
                                                                         in Sacramento
                                                                       In Ohio:
                                                                         Cuyahoga Falls,
                                                                         Eastlake,
                                                                         Freemont, Marion,
                                                                         Reynoldsburg,
                                                                         Tallmadge and
                                                                         Cleveland
                                                                       In Indiana:
                                                                         Anderson

WINN-DIXIE                        Land and Supermarket                 Louisville,                 Ownership of land
STORES, INC.                                                           Kentucky                    and building
</TABLE>

(1)     These properties are encumbered by mortgage notes payable.
(2)     Only one of the locations is encumbered by a mortgage note payable.

                                      -3-
<PAGE>
 
     The material terms of  Registrant's  leases with its tenants are summarized
in the following table:

<TABLE>
<CAPTION>
                Registrant's
                   Share                   Current    Lease
Lease            of Current    Square      Rent Per   Expiration  Renewal  Ownership         Terms of                   Gross
Obligor       Annual Rents     Footage     Sq.Ft.(1)  (Mo/Year)   Terms    Interest          Purchase Option            Costs (2)
-----------   ------------     -------     ---------  ---------   -------  ---------------   ---------------            ---------
<S>           <C>              <C>         <C>        <C>         <C>      <C>               <C>                       <C>        
Pre Finish     $ 1,440,285 (3)   313,704     $7.65      06/03        YES   60% interest;     Greater of  fair market   $10,263,878
Metals Inc.                                                                as tenant-in      value of the property
                                                                           common,           or an amount equal
                                                                           remaining         to $7,873,226 plus
                                                                           interest owned    2 1/2% thereof per
                                                                           by Corporate      annum, not compounded
                                                                           Property          from 12/9/80 to the
                                                                           Associates 2      closing date.

The Gap          1,225,994       391,000      3.14      02/03        YES   100%              The greater of             11,846,079
Inc.                                                                                         fair market value
                                                                                             or $11,956,440
                                                                                             (less other amounts
                                                                                             stated in lease).

IMO
Industries,
Inc.
  Walnut St.
  property         687,750       150,203      4.58      09/02        YES   100%              N/A                         5,945,581

Unisource
Worldwide,
Inc.               312,700        44,712      6.99      12/09        YES   100%              Greater of fair             2,905,749
                                                                                             market value
                                                                                             of the property
                                                                                             or purchase cost.

Kobacker
Stores, Inc.       303,540        59,392      5.11      12/06        YES   100%              N/A                         3,177,494

Broomfield
Tech               294,136       101,100      2.91      12/01        NO    100%              The purchase price          3,988,192
Center                                                  and                                  shall be the greater
Corporation                                             05/02                                of (a) approximately
                                                                                             $2,550,000 as
                                                                                             adjusted for certain
                                                                                             allowances; (b) the
                                                                                             outstanding mortgage
                                                                                             balance at the date of
                                                                                             sale on the properties'
                                                                                             plus 50% of the fair
                                                                                             market value in excess
                                                                                             of the outstanding
                                                                                             mortgage balance less
                                                                                             allowable capital
                                                                                             improvements funded
                                                                                             by Broomfield or
                                                                                             (c) $2,375,000.
</TABLE>

                                      -4-
<PAGE>
 
<TABLE>
<CAPTION>
                Registrant's
                   Share                   Current    Lease
Lease            of Current    Square      Rent Per   Expiration  Renewal  Ownership         Terms of                  Gross
Obligor       Annual Rents     Footage     Sq.Ft.(1)  (Mo/Year)   Terms    Interest          Purchase Option           Costs (2)
-----------   ------------     -------     ---------  ---------   -------  ---------------   ---------------           ---------
<S>             <C>            <C>         <C>        <C>         <C>      <C>               <C>                       <C>
Winn-Dixie
Stores, Inc.    $  102,400     25,600      4.00       12/99        YES     100%              N/A                       $ 1,101,904
</TABLE>

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

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

(3)  Partnership's share of equity rent of $461,052 plus variable debt rent.





     The material  terms on the 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>
Pre Finish Metals
  Incorporated       9.00%   (1)     $2,185,344   $943,181  (2)  07/01/98          (3)         Loan may be prepaid in full or
                                                                                               in part (minimum of $500,000) at
                                                                                               any time.

The Gap, Inc.       10.00             6,249,698    844,000       07/06/09          (3)         Prepayment charges on prepayment
                                                                                               in excess of $400,000.

IMO Industries, Inc.
  Walnut Street
  property          10.00             2,896,413    586,749       10/01/02          (3)         After November 1, 1997,
                                                                                               principal balance may be paid in
                                                                                               full with a prepayment premium.

Kobacker Stores,
  Inc.              10.50             1,236,599    198,426       01/17/06          (3)         The loan may be prepaid in full
                                                                                               or in part (in multiples of
                                                                                               $10,000) with prepayment premium.

Broomfield Tech
  Center
  Corporation        9.00             2,320,753    276,136       09/01/11          (3)         The loan may be prepaid in part,
                                                                                               at any time, without a
                                                                                               prepayment premium.
</TABLE>

(1)  Variable rate indexed to lender's prime rate.
(2)  Estimate based on current interest rates.
(3)  Fully amortizing.

                                      -5-
<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 19 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 4 of Registrant's Annual Report contained in Appendix A.



Item 8. Financial Statements and Supplementary Data.

     The  following  financial  statements  and  supplementary  data are  hereby
incorporated  by  reference  to  pages  5 to 15 of  Registrant's  Annual  Report
contained in Appendix A.

       (i) Report of Independent Accountants.
      (ii) Balance Sheets as of December 31, 1994 and 1995.
     (iii) Statements of Income for the years ended  December 31, 1993, 1994 and
           1995.
      (iv) Statements of Partners' Capital for the years ended December 31,1993,
           1994 and 1995.
       (v) Statements of Cash Flows for the years ended  December 31, 1993, 1994
           and 1995.
      (vi) Notes to Financial Statements.

Item 9. Disagreements on Accounting and Financial Disclosure.

     NONE

                                      -6-
<PAGE>
 
                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

     Registrant  has no officers  or  directors.  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                             7/78
                                          Director
Francis J. Carey                 70       President                                         7/78
                                          Director
George E. Stoddard               79       Chairman of the Investment Committee             12/78
                                          Director
Raymond S. Clark                 82       Chairman of the Executive Committee               7/78
                                          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,

                                      -7-
<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 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.

                                      -8-
<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.


Item 11. Executive Compensation.

     Under the Amended  Agreement  of Limited  Partnership  of  Registrant  (the
"Agreement"), 9/10th of 1% of Distributable Cash From Operations, as defined, is
payable to the Corporate  General Partner and 1/10 of 1% of  Distributable  Cash
From  Operations is payable to the  Individual  General  Partner.  The Corporate
General Partner and the Individual  General Partner received $11,822 and $1,314,
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
$6,502 ($32.51 per Unit) 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 or any other affiliate of Registrant
during the year ended  December 31, 1995.  Although  Registrant is authorized to
pay the Individual  General Partner a fee of up to $15,000 in any year beginning
after  December  31,  1978,  no fee  will be paid  so long as Mr.  Carey  is the
Individual  General  Partner and no fee may be paid to any successor  Individual
General Partner appointed by Mr. Carey pursuant to the Agreement.

     In the future,  the Corporate General Partner will expect to receive 9/10th
of 1% of Distributable Cash From Operations, the Individual General Partner will
expect to receive 1/10th of 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.

                                      -9-
<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)                  205  units                        .51%
                                Raymond S. Clark                         24                               .06
                                Francis J. Carey
                                George E. Stoddard
                                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)                                                      229  units                        .57%
                                                                        ===                               ====
</TABLE>

(1)  As of March 20, 1996,  the Corporate  General  Partner,  W. P. Carey & Co.,
     Inc.,  owned 205 Limited  Partnership  Units of  Registrant.  William  Polk
     Carey,  the sole  shareholder  of the  Corporate  General  Partner,  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  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 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.

                                      -10-
<PAGE>
 
                                     PART IV

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

 (a)  1. Financial Statements:

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

Report of Independent Accountants.

Balance Sheets, December 31, 1994 and 1995.

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

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

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

Notes to Financial Statements.

The financial  statements are hereby  incorporated by reference to pages 5 to 15
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 16
to 17 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 Financial Statements, including
the Notes  thereto,  or because the  conditions  requiring  their  filing do not
exist.

                                      -11-
<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
-------           -----------                                                                    ------
<C>            <S>                                                                      <C>           
     3.1       Amended Agreement of Limited Partnership of                              Exhibit 3(B) to Regis-
               Registrant dated as of October 20, 1978.                                 tration Statement
                                                                                        S-11) No. 2-62195
                                                                                        (Form 8-K)

     4.1       Mortgage dated July 6, 1979 from Registrant                              Exhibit D to Form 8-K
               to the Equitable Life Assurance Society of                               filed July 20, 1979
               the United States.

     4.2       Secured Note dated July 6, 1979 from                                     Exhibit C to Form 8-K
               Registrant to the Equitable Life Assur-                                  filed July 20, 1979
               ance Society of the United States.

     4.3       Assignment of Lessor's Interest in Lease                                 Exhibit E to Form 8-K
               dated July 6, 1979 from Registrant and                                   filed July 20, 1979
               The Gap Stores, Inc. to The Equitable
               Life Assurance Society of the United States.

     4.4       Straw Party Agreement between Registrant                                 Exhibit 12(H) to Regis-
               and Broomfield Properties Corp. ("BPC")                                  tration Statement (Form
               dated as of November 17, 1978.                                           S-11) No. 2-62195

     4.5       First Mortgage Amortized Payment Note                                    Exhibit 12 to Regis-
               from BPC to General American Life                                        tration Statement (Form
               Insurance Company ("GA").                                                S-11) No. 2-62195

     4.6       Deed of Trust from BPC to the Public Trustees                            Exhibit 12(O) to Regis-
               of the County of Boulder, Colorado, as                                   tration Statement (Form
               trustee for GA.                                                          S-11) No. 2-62195

     4.7       Assignment of Rents and Lessor's Interest                                Exhibit 4.7 to Form
               in Leases from BPC to GA dated November 17,                              10-K filed March 31,
               1978.                                                                    1982

     4.8       Straw Party Agreement by and among Line 6                                Exhibit 4.8 to Form
               Corp., Registrant and CPA(R):2 dated                                     10-K filed March 31,
               December 11, 1980.                                                       1982

     4.9       Secured Note from Line 6 Corp. to                                        Exhibit 4.9 to Form
               Connecticut General Life Insurance                                       10-K filed March 31,
               Company ("CG").                                                          1982
</TABLE>

                                      -12-
<PAGE>
 
<TABLE>
<CAPTION>
Exhibit                                                                                         Method of
  No.             Description                                                                    Filing
-------           -----------                                                                    ------
<C>            <S>                                                                      <C>           
     4.10      Mortgage from Line 6 Corp. to CG dated                                   Exhibit 4.10 to Form
               as of December 1, 1980.                                                  10-K filed March 31,
                                                                                        1982

     4.11      Assignment of Lease from Line 6 Corp. to                                 Exhibit 4.11 to Form
               CG dated as of December 1, 1980.                                         10-K filed March 31,
                                                                                        1982

     4.12      Agreement to furnish instruments defining                                Exhibit 4.12 to Form
               the rights of holders of long-term debt                                  10-K filed March 31,
               of Registrant.                                                           1982

     4.13      $11,000,000 Note dated May 30, 1986 from                                 Exhibit 4.2 to Regis-
               Creditanstalt-Bankverein ("Creditanstalt"),                              trant's Form 8-K dated
               as Lender, to the Registrant and CPA(R):2,                               July 14, 1986
               Borrower.

     4.14      Note Purchase Agreement dated as of May                                  Exhibit 4.3 to Regis-
               30, 1986 between Material Sciences                                       trant's Form 8-K dated
               Corporation ("MSC"), as Purchaser, and                                   July 14, 1986
               Creditanstalt, as Lender.

     4.15      Letter dated June 27, 1986 from Registrant                               Exhibit 4.4 to Regis-
               and CPA(R):2 to Pre Finish Metals Incorporated                           trant's Form 8-K dated
               ("PFM") and MSC regarding Note Purchase                                  July 14, 1986
               Agreement.

     4.16      Mortgage and Security Agreement dated as of                              Exhibit 4.5 to Regis-
               May 30, 1986 between Registrant and CPA(R):2,                            trant's Form 8-K dated
               as Mortgagor, and Creditanstalt, as Mortgagee                            July 14, 1986
               and Secured Party.

     4.17      Assignment of Agreements dated as of May 30,                             Exhibit 4.6 to Regis-
               1986 from the Registrant and CPA(R):2, as                                trant's Form 8-K dated
               Assignors, to Creditanstalt, as Assignee.                                July 14, 1986

     4.18      Assignment of Sublease dated as of May 30,                               Exhibit 4.7 to Regis-
               1986 from PFM, as Assignor, to the Registrant                            trant's Form 8-K dated
               and CPA(R):2, as Assignees.                                              July 14, 1986

     4.19      Letter Agreement dated June 26, 1986 among                               Exhibit 4.8 to Regis-
               Creditanstalt, as Lender, and MSC and PFM.                               trant's Form 8-K dated
                                                                                        July 14, 1986

     4.20      Joint Tenancy Agreement dated May 30, 1986                               Exhibit 4.9 to Regis-
               between Registrant and CPA(R):2.                                         trant's Form 8-K dated
                                                                                        July 14, 1986

    10.1       Lease Agreement dated July 6, 1979 between                               Exhibit A to Form 8-K
               Registrant and The Gap Stores, Inc.                                      filed July 20, 1979

    10.2       Straw Party Agreement between Registrant                                 Exhibit 12(H) to Regis-
               and BPC dated as of November 17, 1978.                                   tration Statement (Form
                                                                                        S-11) No. 2-62195
</TABLE>

                                      -13-
<PAGE>
 
<TABLE>
<CAPTION>
Exhibit                                                                                         Method of
  No.             Description                                                                    Filing
-------           -----------                                                                    ------
<C>            <S>                                                                      <C>           
    10.3       Lease Agreement between BPC and Storage                                  Exhibit 12(P) to Regis-
               Technology Corporation dated as of                                       tration Statement (Form
               November 17, 1978.                                                       S-11) No. 2-62195

    10.4       Straw Party Agreement by and among Line 6                                Exhibit 4.8 to Form
               Corp., Registrant and CPA(R):2 dated                                     10-K filed March 31,
               December 11, 1980.                                                       1982

    10.5       Lease and Agreement between Line 6 Corp.                                 Exhibit 10.5 to Form
               and Pre Finish Metals, Inc. dated as of                                  10-K filed March 31,
               December 1, 1980.                                                        1982

    10.6       Management Agreement between Registrant and                              Exhibit 12(C) to Regis-
               Carey Corporate Property Management, Inc.                                tration Statement (Form
                                                                                        S-11) No. 2-62195

    10.7       Support Agreement among Registrant, Carey                                Exhibit 12(E) to Regis-
               Corporate Property Management, Inc. and                                  tration Statement (Form
               W.P. Carey & Co., Inc.                                                   S-11) No. 2-62195

    10.8       First Amendment to Lease and Agreement dated                             Exhibit 10.2 to Regis-
               as of May 30, 1986 between Registrant and                                trant's Form 8-K dated
               CPA(R):2, as Lessor, and PFM, as Lessee.                                 July 14, 1986

    10.9       Memorandum of First Amendment to Lease and                               Exhibit 10.3 to Regis-
               Agreement dated May 30, 1986 between                                     trant's Form 8-K dated
               Registrant and CPA(R):2, as Lessor, and PFM,                             July 14, 1986
               as Lessee.

    10.10      Letter dated June 30, 1986 from Creditanstalt                            Exhibit 10.4 to Regis-
               to PFM regarding Lease as amended by First                               trant's Form 8-K dated
               Amendment to Lease and Agreement, dated May                              July 14, 1986
               30, 1986.

    10.11      Lease Guaranty dated as of May 30, 1986                                  Exhibit 10.5 to Regis-
               from MSC to Registrant and CPA(R):2 and                                  trant's Form 8-K dated
               Creditanstalt.                                                           July 14, 1986

    10.12      Sublease dated as of May 30, 1986 between                                Exhibit 10.6 to Regis-
               PFM and Walbridge Coatings ("Walbridge").                                trant's Form 8-K dated
                                                                                        July 14, 1986

    10.13      Memorandum of Sublease dated as of May 30,                               Exhibit 10.7 to Regis-
               1986 by and between PFM and Walbridge.                                   trant's Form 8-K dated
                                                                                        July 14, 1986

    10.14      Lease Agreement between Registrant as landlord and                       Exhibit 10.1 to Registrant's Form
               Varo as tenant.                                                          8-K dated November 4, 1992

    10.15      Guaranty and Suretyship Agreement from IMO to Registrant.                Exhibit 10.2 to Registrant's Form
                                                                                        8-K dated November 4, 1992

    10.16      Construction Contract between Registrant, as owner, and                  Exhibit 10.3 to Registrant's Form
               Rule Construction Incorporated as contractor.                            8-K dated November 4, 1992
</TABLE>

                                      -14-
<PAGE>
 
<TABLE>
<CAPTION>
Exhibit                                                                                         Method of
  No.             Description                                                                    Filing
-------           -----------                                                                    ------
<C>            <S>                                                                      <C>           
    10.17      Construction Agency Agreement between Registrant, as                     Exhibit 10.4 to Registrant's Form
               owner, and Varo as agent.                                                8-K dated November 4, 1992

    10.18      Promissory Note of Registrant to MetLife.                                Exhibit 10.5 to Registrant's Form
                                                                                        8-K dated November 4, 1992

    10.19      Commercial Deed of Trust from Registrant to George C.                    Exhibit 10.6 to Registrant's Form
               Dunlap, Jr. as trustee for the benefit of MetLife.                       8-K dated November 4, 1992

    10.20      Indemnity Agreement between Registrant as indemnitor and                 Exhibit 10.7 to Registrant's Form
               MetLife as indemnitee.                                                   8-K dated November 4, 1992

    10.21      Lease Modification Agreement between Registrant and Varo.                Exhibit 10.8 to Registrant's Form
                                                                                        8-K dated November 4, 1992

    28.1       Instruction Letters from Cigna Corporation                               Exhibit 28.1 to Regis-
               dated June 25, 1986 to Creditanstalt and                                 trant's Form 8-K dated
               Louisville Title Agency regarding repayment                              July 14, 1986
               of loan.

    28.2       Estoppel Certificate dated as of June 30,                                Exhibit 28.2 to Regis-
               1986 from PFM to Creditanstalt.                                          trant's Form 8-K dated
                                                                                        July 14, 1986

    28.3       Estoppel Certificate dated as of June 30,                                Exhibit 28.3 to Regis-
               1986 from Walbridge to Creditanstalt.                                    trant's Form 8-K dated
                                                                                        July 14, 1986

    28.4       Seller's/Lessee's Certificate dated as of                                Exhibit 28.4 to Regis-
               June 30, 1986 from PFM to Registrant and                                 trant's Form 8-K dated
               CPA(R):2.                                                                July 14, 1986

    28.5       Bill of Sale dated as of May 30, 1986 from                               Exhibit 28.5 to Regis-
               PFM to Registrant and CPA(R):2.                                          trant's Form 8-K dated
                                                                                        July 14, 1986

    28.6       Deed dated as of May 30, 1986 from PFM                                   Exhibit 28.6 to Regis-
               to Registrant and CPA(R):2.                                              trant's Form 8-K dated
                                                                                        July 14, 1986

    28.7       Environmental Indemnity Agreement between Varo and IMO                   Exhibit 28.1 to Registrant's Form
               as indemnitors and MetLife as indemnitee.                                8-K dated November 4, 1992

    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.

                                      -15-
<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
                                    (a California limited partnership)

                                    BY:  W. P. CAREY & CO., 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: W. P. CAREY & CO., INC.               

               William P. Carey
               Chairman of the Board
               and Director
               (Principal Executive Officer) 
                                                         
               Francis J. Carey                      BY: /s/ George E. Stoddard
               President and Director                    -----------------------
                                                         George E. Stoddard
                                                         Attorney in fact
                                                         March 28, 1996
               George E. Stoddard
               Chairman of the Investment
               Committee and Director

               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)

                                      -16-
<PAGE>
 
                                                         APPENDIX A TO FORM 10-K













                          CORPORATE PROPERTY ASSOCIATES
                       (a California limited partnership)















                                                              1995 ANNUAL REPORT
<PAGE>
 
SELECTED FINANCIAL DATA
--------------------------------------------------------------------------------

(In thousands except per unit amounts)


<TABLE>
<CAPTION>
                                    1991      1992      1993      1994      1995
                                    ----      ----      ----      ----      ----
<S>                              <C>       <C>       <C>       <C>       <C>    
OPERATING DATA:

Revenues                         $ 4,094   $ 4,102   $ 4,418   $ 4,480   $ 4,831

Net income                           990     1,058     1,160     1,108     1,842

Net income allocated:
      To General Partners             10        11        12        11        19
      To Limited Partners            980     1,047     1,148     1,097     1,823
         Per unit                  24.49     26.18     28.71     27.43     45.58

Distributions attributable (1):
      To General Partners             12        12        13        13        13
      To Limited Partners          1,218     1,234     1,250     1,264     1,333
         Per unit                  30.46     30.86     31.25     31.53     33.32

Payment of mortgage
principal (2)                        877       972     1,178     1,306     1,417


BALANCE SHEET DATA:

Total assets                      25,222    26,776    25,531    24,418    23,530

Long-term
obligations (3)                   15,698    17,324     9,564    14,889    13,432
</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)  Represents scheduled mortgage principal amortization paid.

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


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

     Results of Operations

     Net income for the year ended December 31, 1995  increased by $734,000,  an
increase of 66%, as compared with the prior year. The results for 1995 benefited
from certain  nonrecurring  items totaling  $244,000 and which are classified as
other income in the accompanying financial statements. The results of operations
for 1995 also benefited from a decrease in property and interest  expenses,  and
an  increase in rental  revenues.  The  decrease in property  expense was due to
higher costs  incurred in 1994 in  connection  with the  assessment of liquidity
alternatives which included  environmental reviews and property valuations.  The
increase  in lease  revenues  was  primarily  as a result of an  increase in the
variable mortgage interest rate on the debt component of rentals from Pre Finish
Metals  Incorporated ("Pre Finish").  The increased debt service payments on the
Pre Finish  mortgage loan were directly passed through to the tenant in the form
of a rent adjustment,  thereby having no impact on the Partnership's  cash flow.
Interest  expense  decreased as a result of principal  payments of $1,417,000 of
mortgage balances.  The Partnership's cash flows from operating  activities also
increased by 20% as compared with the prior year.

     Net income and cash provided from operations for 1994 decreased  moderately
as compared with the prior year. The decreases were primarily due to an increase
in  property  expenses  and were  partially  offset by a  decrease  in  interest
expense.  The  increase  in property  expense was a result of costs  incurred in
connection with the assessment of the Partnership's liquidity alternatives.  The
decrease in interest  expense was due to lower  average  mortgage  balances as a
result of the scheduled paydown of $1,305,000 of mortgage principal during 1994.

     The  Partnership  expects  the  trend of  decreasing  interest  expense  to
continue  as the  Partnership's  mortgage  balances  continue  to  amortize.  In
addition,  lease  revenues  are  expected to  continue  to increase  moderately.
Effective January 1996, the equity component of Pre Finish rent has increased by
$36,000 per annum. A scheduled rent increase of $135,000 per annum on one of the
Partnership's  leases with IMO  Industries,  Inc.  ("IMO")  will be effective in
October 1997. As the Partnership  recognizes revenues from this IMO lease on the
straight-line  method,  rental revenue will not increase for financial reporting
purposes  even  though  operating  cash flow will  reflect  the  benefit  of the
scheduled  increase.  The other IMO lease  expires in April 1996. As a result of
this expiration, annual lease revenues and cash flow will decrease by $91,400. A
rent increase is also scheduled in 1998 on the Partnership's  lease with the The
Gap,  Inc.  ("The  Gap").  In  1995,  the  Partnership's  lease  with  Unisource
Worldwide,  Inc. ("Unisource") had a scheduled decrease.  Because this coincided
with the final  payment on the mortgage  loan  collateralized  by the  Unisource
property,  the Partnership's  annual cash flow from the Unisource  property will
increase by $80,000.  The Partnership is actively remarketing the property which
will be vacated by IMO.

     Because of the long-term nature of the Partnership's net leases,  inflation
and changing prices have not unfavorably affected the Partnership's revenues and
net income.  Certain of the  Partnership's  net leases have  increases  based on
formulas  indexed to increases in the Consumer  Price Index ("CPI") and may have
caps on such CPI increases,  periodic mandated rent increases or sales overrides
which should increase  operating  revenues in the future.  Future rent increases
may be affected by changes in the method of the calculation of the CPI. Although
there are indications that there may be legislation  which considers  changes to
the CPI methodology,  the Partnership cannot predict the outcome of any proposed
changes relating to the CPI formula.


                                     - 2 -
<PAGE>
 
     Financial Condition

     All of the  Partnership's  properties are leased to corporate tenants under
long-term  net leases  which  generally  require  tenants  to pay all  operating
expenses  relating  to  the  leased  properties.   The  Partnership  depends  on
relatively  stable or increasing cash flow from its net leases to meet operating
expenses,  service its debt,  fund  distributions  and  maintain  adequate  cash
reserves. 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.  As
a real estate limited  partnership,  the Partnership  has distributed  since its
inception  a  substantial  portion  of  its  cash  flow  to  its  partners.  The
Partnership's current strategy has been to utilize its funds from operations and
excess  cash  reserves  to  fund an  increasing  rate  of  distributions  to its
partners.

     Cash generated from operating  activities has generally  remained stable or
increased  over the  past  several  years.  Cash  reserves  utilized  in  paying
distributions  include cash that was  generated  from  operating  and  investing
activities in prior  periods.  Cash flow  generated from operating and investing
activities  has  generally  exceeded   distributions   paid;  however,  in  many
instances,  distributions have exceeded earnings. Management gives consideration
to its  projections  of cash flows and cash provided from  operations as well as
the Partnership's current cash balances in determining the distributions paid to
limited  partners.  Distributions  paid to limited  partners  have  exceeded net
income  per  Limited  Partnership  Unit in 1991,  1992,  1993 and 1994 by $5.87,
$4.58, $2.45 and $4.00, respectively.  This occurs because net income is reduced
by noncash charges, such as depreciation,  amortization and property writedowns,
which do not impact  cash flow.  Distributions  exceeded  net income per Limited
Partnership Unit in 1995.

     In 1995, cash provided from operations of $2,666,000 was sufficient to fund
distributions  of  $1,314,000  and  $1,352,000  of the  $1,417,000  of scheduled
mortgage principal  amortization.  Management believes that there are sufficient
cash  reserves to  continue to  moderately  increase  the rate of  distributions
without adversely affecting the financial condition of the Partnership even if a
portion of such reserves are used to pay mortgage principal.

     The Partnership did not have any investing  activities during 1995 nor does
it expect  to fund any  capital  expenditures  in the near  future  unless it is
necessary for the remarketing of the IMO property. Since funding improvements to
an IMO property in 1993 from mortgage  proceeds  encumbering  the property,  the
Partnership has not funded additional improvements to any of its properties.

     The Partnership's financing activities during 1995 consisted of the payment
of distributions and of scheduled mortgage principal payments. The Partnership's
financing  activities  over the past several years have  primarily  consisted of
meeting scheduled  principal payments on mortgage debt and paying  distributions
to partners,  which  Management  believes is consistent  with the  Partnership's
objectives.

     As a result  of its  stable  cash flow and  ability  to  maintain  adequate
reserves,  the Partnership has no lines of credit or other short-term  financing
arrangements.  Management  believes the  Partnership  has  additional  borrowing
capacity based on the unleveraged  portion of its real estate  portfolio and the
continuing principal  reductions of existing mortgage loans.  Principal payments
are scheduled to continue at current levels over the next several years.  All of
the Partnership's mortgage debt is fully amortizing, with all loans scheduled to
be fully paid between 1998 and 2011.  The  Partnership  may seek to utilize such
borrowing potential in the future to refinance existing mortgage loans.

     In January  1996 the  Partnership  received a  commitment  from a lender to
refinance  an existing  mortgage  loan on the  property  leased to the Gap.  The
current loan had an  outstanding  balance of $6,250,000 at December 31, 1995 and
would be fully repaid in 2009.  The new loan which,  if  executed,  would be for
$6,400,000 and require a balloon payment of approximately  $5,600,000 at the end
of its three year term,  would  increase  annual cash flow by  $143,000.  In the
event that the existing loan is not refinanced,  the outstanding balance will be
approximately $5,400,000 in three years.


                                     - 3 -
<PAGE>
 
     Broomfield notified the Partnership of its intention to exercise its option
to purchase the properties it leases from the Partnership.  Although exercise of
the  option  had been  scheduled  to occur in May 1994,  no  agreement  had been
reached on the purchase  price as of December 31, 1995.  There are  currently no
negotiations being pursued in connection with the exercise of the option. In the
event  that an  agreement  is  reached,  cash flow  would  not be  significantly
affected as rentals currently exceed debt service requirements on the properties
by  $24,000.  Beginning  June 30,  1998,  Pre Finish may  exercise  an option to
purchase  its leased  property  upon six months  notice with such option  period
ending in 2003.  The option would be  exercisable  at the greater of fair market
value or  $7,873,000  plus 2 1/2% thereof  compounded  from December 1998 to the
closing date. As the mortgage loan on the Pre Finish  properties  will have been
satisfied by the June 30, 1998 option  date,  the  Partnership  would retain the
full  proceeds  of a sale.  Annual  cash flow from the Pre  Finish  property  is
$497,000.

     All of the properties  are currently  leased to corporate  tenants,  all of
whom are  subject  to  environmental  statutes  and  regulations  regarding  the
discharge of hazardous  materials and any related remediation  obligations.  The
Partnership normally structures its leases to require tenants to comply with all
laws. In addition,  substantially  all of the  Partnership's  net leases include
indemnification  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
leased  properties,  the  General  Partners  believe  that  in  most  cases  the
Partnership will be entitled to full  reimbursement from tenants for such costs.
Further,  in the event that the  Partnership  either is  responsible  or becomes
responsible  for such  costs  because  of a  tenant's  failure  to  fulfill  its
obligations  the General  Partners  believe that the ultimate  resolution of the
aforementioned  environmental matters will not have a material adverse effect on
the Partnership's financial condition, liquidity or results of operations.

     In 1994, the Partnership  voluntarily conducted Phase II reviews of certain
of its  properties  based on the  results of the 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 either leakage from underground  storage tanks or surface spills
from  facility  activities.  For  those  conditions  which  have  been  recently
identified,  the  Partnership  has advised its tenants of such  findings  and of
their obligations, if any, to perform any required remediation.

     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  Partership's
financial condition or results of operations.


                                     - 4 -
<PAGE>
 
                        REPORT of INDEPENDENT ACCOUNTANTS


To the Partners of
  Corporate Property Associates:


     We have  audited the  accompanying  balance  sheets of  Corporate  Property
Associates (a California limited  partnership) as of December 31, 1994 and 1995,
and the related 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 16 to 17 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  financial  position  of  Corporate  Property
Associates (a California limited  partnership) as of December 31, 1994 and 1995,
and the results of its operations and its 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 18, 1996


                                     - 5 -
<PAGE>
 
                          CORPORATE PROPERTY ASSOCIATES
                       (a California limited partnership)

                                 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                                    $  3,546,994      $  3,546,994
         Buildings                                 30,785,997        30,785,997
                                                 ------------      ------------
                                                   34,332,991        34,332,991
         Accumulated depreciation                  16,860,783        17,950,541
                                                 ------------      ------------
                                                   17,472,208        16,382,450
   Net investment in direct
      financing leases                              4,919,462         4,895,886
                                                 ------------      ------------
         Real estate leased to others              22,391,670        21,278,336
Cash and cash equivalents                             937,631           872,864
Escrow funds                                          100,000           100,000
Accrued interest and rents receivable                 366,095           377,471
Due from affiliates                                     3,939
Other assets, net of accumulated
   amortization of $29,878 in 1994
   and $56,946 in 1995                                618,301           901,434
                                                 ------------      ------------
             Total assets                        $ 24,417,636      $ 23,530,105
                                                 ============      ============

        LIABILITIES:

Mortgage notes payable                           $ 16,306,218      $ 14,888,807
Accrued interest payable                              202,920           190,843
Accounts payable and accrued expenses                 181,118            81,726
Prepaid rental income                                 113,549           178,486
Security deposits                                      85,062            85,062
Accounts payable to affiliates                                           46,304
                                                 ------------      ------------
             Total liabilities                     16,888,867        15,471,228
                                                 ------------      ------------

Commitments and contingencies

        PARTNERS' CAPITAL:

General Partners                                     (103,980)          (98,679)

Limited Partners (40,000
   Limited Partnership Units
   issued and outstanding)                          7,632,749         8,157,556
                                                 ------------      ------------
             Total partners' capital                7,528,769         8,058,877
                                                 ------------      ------------

             Total liabilities and
             partners' capital                   $ 24,417,636      $ 23,530,105
                                                 ============      ============
</TABLE>

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


                                     - 6 -
<PAGE>
 
                          CORPORATE PROPERTY ASSOCIATES
                       (a California limited partnership)

                              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                                                   $3,843,731          $3,907,692          $3,994,281
   Interest income from direct financing leases                       522,366             518,483             525,673
   Other interest income                                               49,408              54,285              66,654
   Other income                                                         2,865                                 244,010
                                                                   ----------          ----------          ----------
                                                                    4,418,370           4,480,460           4,830,618
                                                                   ----------          ----------          ----------

Expenses:
   Interest on mortgages                                            1,672,658           1,598,614           1,524,837
   Depreciation                                                     1,120,162           1,106,712           1,089,758
   General and administrative                                         202,361             222,086             237,800
   Property expenses                                                  250,790             428,358             109,460
   Amortization                                                        12,397              16,511              27,068
                                                                   ----------          ----------          ----------
                                                                    3,258,368           3,372,281           2,988,923
                                                                   ----------          ----------          ----------


      Net income                                                   $1,160,002          $1,108,179          $1,841,695
                                                                   ==========          ==========          ==========


Net income allocated to:
   Individual General Partner                                      $    1,160          $    1,108          $    1,842
                                                                   ==========          ==========          ==========


   Corporate General Partner                                       $   10,440          $    9,974          $   16,575
                                                                   ==========          ==========          ==========


   Limited Partners                                                $1,148,402          $1,097,097          $1,823,278
                                                                   ==========          ==========          ==========


Net income per Unit
  (40,000 Limited Partnership
  Units outstanding)                                                 $28.71              $27.43              $45.58
                                                                     ======              ======              ======
</TABLE>

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


                                     - 7 -
<PAGE>
 
                          CORPORATE PROPERTY ASSOCIATES
                       (a California limited partnership)

                         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                          $ 7,789,277         $(101,373)         $ 7,890,650          $197

Distributions                                        (1,258,990)          (12,590)          (1,246,400)          (31)

Net income, 1993                                      1,160,002            11,600            1,148,402            29
                                                    -----------         ---------          -----------          ----

Balance, December 31, 1993                            7,690,289          (102,363)           7,792,652           195

Distributions                                        (1,269,699)          (12,699)          (1,257,000)          (31)

Net income, 1994                                      1,108,179            11,082            1,097,097            27
                                                    -----------         ---------          -----------          ----

Balance, December 31, 1994                            7,528,769          (103,980)           7,632,749           191

Distributions                                        (1,313,535)          (13,135)          (1,300,400)          (33)

Unrealized appreciation
   in marketable securities                               1,948                19                1,929

Net income, 1995                                      1,841,695            18,417            1,823,278            46
                                                    -----------         ---------          -----------          ----

Balance, December 31, 1995                          $ 8,058,877         $ (98,679)         $ 8,157,556          $204
                                                    ===========         =========          ===========          ====
</TABLE>

(a)  Based on 40,000 Units issued and outstanding during all periods.

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


                                     - 8 -
<PAGE>
 
                          CORPORATE PROPERTY ASSOCIATES
                       (a California limited partnership)

                            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                                                                  $ 1,160,002         $ 1,108,179         $ 1,841,695
    Adjustments to reconcile net income
       to net cash provided by operating activities:
       Depreciation and amortization                                              1,132,559           1,123,223           1,116,826
       Cash receipts on direct financing leases in
         excess of amortization of unearned income                                   34,707              38,590              23,576
       Cash receipts on operating leases less
         than income recognized                                                     (67,500)            (67,500)            (67,500)

       Securities received in connection with settlement                                                                    (44,561)
       Net change in operating assets and liabilities                                31,409              13,980            (203,857)

                                                                                -----------         -----------         -----------
            Net cash provided by operating
               activities                                                         2,291,177           2,216,472           2,666,179
                                                                                -----------         -----------         -----------

Cash flows from investing activities:
    Costs capitalized subsequent to acquisition                                    (321,855)
    Funds released from escrow in connection with
       investing activities                                                         321,855
    Purchase of note receivable                                                                         (77,254)
                                                                                -----------         -----------                    
            Net cash used in investing activities                                      --               (77,254)
                                                                                -----------         -----------                    

Cash flows from financing activities:
    Distributions to partners                                                    (1,258,990)         (1,269,699)         (1,313,535)

    Proceeds from mortgage note payable                                                               2,400,000
    Deferred refinancing costs                                                                         (272,746)
    Payments of mortgage principal                                               (1,177,987)         (1,305,967)         (1,417,411)

    Prepayment of mortgage payable                                                                   (2,112,194)
                                                                                -----------         -----------         -----------
            Net cash used in financing activities                                (2,436,977)         (2,560,606)         (2,730,946)

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

            Net decrease in cash
               and cash equivalents                                                (145,800)           (421,388)            (64,767)


Cash and cash equivalents, beginning of year                                      1,504,819           1,359,019             937,631
                                                                                -----------         -----------         -----------

       Cash and cash equivalents, end of year                                   $ 1,359,019         $   937,631         $   872,864
                                                                                ===========         ===========         ===========
</TABLE>

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



                                     - 9 -
<PAGE>
 
                         AMCORPORATE PROPERTY ASSOCIATES
                       (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 leased to others on a net lease  basis,  whereby  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.

            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.


            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.

     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 50 years.

     Cash Equivalents:

            Corporate  Property  Associates  (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 for both years ended December 31, 1994 and 1995
               were held in the custody of three financial institutions.

                                    Continued

                                     - 10 -
<PAGE>
 
                          CORPORATE PROPERTY ASSOCIATES
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued


     Other Assets:

            Included  in other  assets  are  deferred  rental  income,  deferred
               charges and marketable equity securities.  Deferred rental income
               is the aggregate  difference for operating  method leases between
               scheduled  rents  which  vary  during  the lease  term and income
               recognized  on a  straight-  line  basis.  Deferred  charges  are
               primarily   costs  incurred  in  connection  with  mortgage  note
               refinancing and are amortized on a  straight-line  basis over the
               terms of the mortgages.

            The Partnership's marketable  equity  securities,  which  consist of
               1,948 shares of Storage  Technology  Corporation  common stock at
               December  31,  1995,   are   classified   as   available-for-sale
               securities  and  are  reported  at fair  market  value  with  the
               Partnership's  interest in  unrealized  gains and losses on these
               securities reported as a separate component of partners' capital.

     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 July 24,  1978 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, 2016, 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 1%
               (1/10 of 1% to the Individual General Partner,  William P. Carey,
               and 9/10 of 1% to the Corporate  General  Partner,  W. P. Carey &
               Co., Inc. ("W.P.  Carey")) and the Limited Partners are allocated
               99% of the  profits  and  losses  as  well  as  distributions  of
               Distributable Cash From Operations,  as defined in the Agreement.
               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 is engaged in the real  estate  brokerage
               business  and the  Partnership  may sell  properties  through the
               division and pay subordinated real estate commissions as provided
               in the  Agreement.  The  division  may  ultimately  earn up up to
               approximately  $134,000  of real  estate  commissions  due to the
               sales of properties  between 1983 and 1991,  which amount will be
               retained by the Partnership  unless the subordination  provisions
               of the Agreement are satisfied.


 3.  Transactions with Related Parties:

            The Partnership holds a 60%  ownership  interest  in a  property  as
               tenants-in-common with an affiliate which holds the remaining 40%
               interest.

            Under the Agreement, a division of W.P. Carey is 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:

                                    Continued

                                     - 11 -
<PAGE>
 
                          CORPORATE PROPERTY ASSOCIATES
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued


<TABLE>
<CAPTION>
                                              1993          1994          1995
                                            --------      --------      --------

              <S>                           <C>           <C>           <C>     
              Property management fee       $ 65,904      $ 44,581      $ 72,881
              General and administrative
                expense reimbursements        55,674        51,607        44,250
                                            --------      --------      --------
                                            $121,578      $ 96,188      $117,131
                                            ========      ========      ========
</TABLE>

            During 1993, 1994 and 1995,  fees  aggregating  $67,655,  97,438 and
               $18,338, 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 other  affiliates for the purpose of leasing office space
               used for the  administration  of 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 $14,293,  $15,615 and $61,243,  respectively.  The 1995
               increase is due,  in part,  to certain  nonrecurring  costs which
               were   incurred  in  connection   with  the   relocation  of  the
               Partnerships offices.

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

            The scheduled minimum future rentals,  exclusive of renewals,  under
               noncancellable   operating   leases   amount   to   approximately
               $3,816,000 in 1996,  $3,824,000 in 1997,  $3,920,000 in both 1998
               and  1999,   $3,818,000  in  2000  and  aggregate   approximately
               $27,789,000 through 2006.

            Contingent rentals were approximately $56,000 in 1995. There were no
               contingent rentals in 1993 and 1994.

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                             $ 7,165,798   $ 6,666,724
              Unguaranteed residual value                5,075,137     5,075,137
                                                       -----------   -----------
                                                        12,240,935    11,741,861
                Less, Unearned income                    7,321,473     6,845,975
                                                       -----------   -----------
                                                       $ 4,919,462   $ 4,895,886
                                                       ===========   ===========
               </TABLE>

          The  scheduled  minimum future rentals,  exclusive of renewals,  under
               noncancellable  direct  financing  leases amount to approximately
               $499,000 in each of the years 1996 to 1999,  $515,000 in 2000 and
               aggregate approximately $6,667,000 through 2009.

6.   Mortgage Notes Payable:

            Mortgage  notes   payable,   all  of  which  are  limited   recourse
               obligations   of   the   Partnership   or   the   partners,   are
               collateralized  by real  property  with a  carrying  amount as of
               December   31,   1995  of   approximately   $35,221,000,   before
               accumulated   depreciation,   and   the   assignment  of  various


                                   Continued

                                     - 12 -
<PAGE>
 
                          CORPORATE PROPERTY ASSOCIATES
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued



               leases.  As of December 31,  1995,  mortgage  notes  payable bear
               interest at rates  varying  from 9% to 10.5% per annum and mature
               between 1998 and 2011.

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

<TABLE>
<CAPTION>
             Year Ending December 31,
             ------------------------
             <S>                                                    <C>
                  1996                                              $ 1,456,662
                  1997                                                1,612,809
                  1998                                                1,374,708
                  1999                                                  914,336
                  2000                                                5,860,177
                  Thereafter                                          3,670,115
                                                                    -----------
                     Total                                          $14,888,807
                                                                    ===========

</TABLE>

     Interest paid was  $1,682,736,  $1,604,379 and $1,536,914 in 1993, 1994 and
1995, respectively.


7.   Distributions to Partners:

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

<TABLE>
<CAPTION>
         Year Ending           Distributions Paid to             Distributions Paid to               Limited Partners'
         December 31,             General Partners                  Limited Partners                 Per Unit Amount
       ----------------        ----------------------            ----------------------              ---------------
       <S>                     <C>                               <C>                                <C>   
           1993                         $12,590                          $1,246,400                         $31.16
                                        =======                          ==========                         ======
           1994                         $12,699                          $1,257,000                         $31.43
                                        =======                          ==========                         ======
           1995                         $13,135                          $1,300,400                         $32.51
                                        =======                          ==========                         ======
</TABLE>


Distributions  of $3,535 to the  General  Partners  and  $350,000 to the Limited
Partners  for the quarter  ended  December  31, 1995 were  declared  and paid in
January 1996.

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   $ 1,160,002    $ 1,108,179    $ 1,841,695
Excess tax depreciation                  (156,786)       (24,267)         1,115
Other                                      95,136       (153,863)        (1,759)
                                      -----------    -----------    -----------
      Income reported for
        Federal income tax purposes   $ 1,098,352    $   930,049    $ 1,841,051
                                      ===========    ===========    ===========
</TABLE>

                                    Continued

                                     - 13 -
<PAGE>
 
                          CORPORATE PROPERTY ASSOCIATES
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued

9.   Industry Segment Information:

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

            In 1993, 1994 and 1995, the  Partnership  earned its total operating
               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>
Pre Finish Metals
  Incorporated                           $1,289,522              30%     $1,345,442              30%     $1,407,841              31%

The Gap, Inc.                             1,220,499              28       1,225,994              28       1,225,994              27
IMO Industries, Inc.                        846,743              19         846,743              19         846,743              19
Unisource Worldwide                         335,993               8         332,110               8         339,300               8
Kobacker Stores, Inc.                       303,540               7         303,540               7         303,540               7
Broomfield Tech Center
  Corporation                               267,400               6         269,946               6         294,136               6
Winn-Dixie Stores, Inc.                     102,400               2         102,400               2         102,400               2
                                         ----------      ----------      ----------      ----------      ----------      ----------
                                         $4,366,097             100%     $4,426,175             100%     $4,519,954             100%

                                         ==========      ==========      ==========      ==========      ==========      ==========
</TABLE>

10.  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's estimate of fair value of mortgage  notes  payable
               is approximately $15,815,000 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.

11.  Settlement Income:

            Included in other income is $118,784 in cash and securities received
               from  Storage  Technology   Corporation   ("STC")  as  the  final
               distribution  from STC's  disputed claim reserve which the United
               States   Bankruptcy  Court  ordered  paid  to  STC's  prepetition
               creditors.  STC,  which  had  been  a  tenant  of  three  of  the
               Partnership's   properties,   filed  a  petition   of   voluntary
               bankruptcy  in October 1984 and  subsequently  received  approval
               from the  bankruptcy  court in 1987 to  terminate  its lease.  In
               connection  with its claims  against  STC,  the  Partnership  had
               received  $1,161,358 of cash and debentures and 460,434 shares of
               STC  common  stock in 1987.  The  stock was sold at that time for
               $1,420,391.

            In May 1995, the Partnership received cash of $29,251 and recorded a
               receivable of $44,972 for taxes withheld by the Internal  Revenue
               Service  on  the  distribution.   In  addition,  the  Partnership
               received 1,948 shares of STC stock,  which were valued at $44,561
               based  on  STC's  market  value  at the  time of  receipt.  As of
               December  31,  1995,  unrealized  appreciation  of  $1,948 on the
               common stock was credited to partners' capital.

12.  Environmental Matters:

            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.  The costs for  remediation
               are expected to be performed and paid by the affected tenant.  In
               the  event  that  the  Partnership absorbs a portion of any costs


                                     - 14 -
<PAGE>
 
                          CORPORATE PROPERTY ASSOCIATES
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued

               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.

            In 1994,  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.   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
               either leakage from  underground  storage tanks or surface spills
               from  facility  activities.   For  those  conditions  which  were
               identified,  the Partnership  advised the affected tenants of the
               Phase II findings and of their  obligations  to perform  required
               remediation.




                                     - 15 -
<PAGE>
 
<TABLE>
<CAPTION>
                                                    CORPORATE PROPERTY ASSOCIATES
                                                 (a California limited partnership)

                                        SCHEDULE OF REAL ESTATE and ACCUMULATED DEPRECIATION

                                                       as of December 31, 1995


                                             Initial Cost to         Cost                          Gross Amount at which Carried    

                                                Partnership        Capitalized      Decrease In     at Close of Period  (c)(d)      

                                            --------------------   Subsequent to        Net         --------------------------------

         Description        Encumbrances    Land       Buildings  Acquisition (a)  Investment (b)   Land      Buildings      Total  

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


<S>                         <C>          <C>          <C>             <C>            <C>            <C>         <C>         <C>     

Operating Method:
 Office, warehouse and
  manufacturing buildings
  leased to Broomfield                                                                                                              

  Tech Center Corporation   $ 2,320,753  $  354,970   $ 3,073,575     559,647                    $  354,970  $ 3,633,222 $ 3,988,192


 Office and manufacturing
  buildings leased to IMO
  Industries Inc.             2,896,413     906,500     2,455,200   2,622,036        $ (38,155)     868,345    5,077,236   5,945,581


 Distribution facility
  and warehouse
  leased to
  The Gap, Inc.               6,249,698     669,722    10,990,000     186,357                       669,722   11,176,357  11,846,079


 Supermarket
  leased to Winn-Dixie                                                                                                              
  Stores, Inc.                               85,000     1,004,300      12,604                        85,000    1,016,904   1,101,904


 Land leased to                                                                                                                     
  Kobacker Stores, Inc.         759,272   1,236,735                                    (49,378)   1,187,357                1,187,357


 Warehouse and manufac-
  turing plant
  leased to Pre Finish                                                                                                              
  Metals Incorporated         2,185,344     381,600     9,882,278                                   381,600    9,882,278  10,263,878

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

                            $14,411,480  $3,634,527   $27,405,353  $3,380,644        $ (87,533)  $3,546,994  $30,785,997 $34,332,991

                            ===========  ==========   ===========  ==========        =========   ==========  =========== ===========


<CAPTION>
                                                                
                                                                Life on which 
                                                                 Depreciation    
                                                                  in Latest                   
                                                                 Statement of   
                            Accumulated                            Income     
         Description       Depreciation (d) Date Acquired        is Computed   
         -----------       ---------------- -------------       -------------    
<S>                        <C>              <C>                 <C>                  
Operating Method:                                                                      
 Office, warehouse and                                                                 
  manufacturing buildings                                                              
  leased to Broomfield                      November 17,                               
  Tech Center Corporation    $ 2,087,654         1978             10-30 yrs.           

 Office and manufacturing                                                              
  buildings leased to IMO                                                              
  Industries Inc.              2,713,746    April 20, 1979        17 yrs.              

 Distribution facility                                                                 
  and warehouse                                                                        
  leased to                                                                            
  The Gap, Inc.                7,935,437    July 6, 1979          5-50 yrs.            

 Supermarket                                                                           
  leased to Winn-Dixie                      December 28,                               
  Stores, Inc.                   647,881        1979              5-40 yrs.            

 Land leased to                             January 17,                                
  Kobacker Stores, Inc.                         1979                                   

 Warehouse and manufac-                                                                
  turing plant                                                                         
  leased to Pre Finish                      December 11, 1980     5-30 yrs.            
  Metals Incorporated          4,565,823    and June 30, 1986                          
                             -----------                                               
                             $17,950,541                                               
                             ===========                                               




                                             Initial Cost to         Cost                          Gross Amount at which Carried    

                                                Partnership        Capitalized      Decrease In     at Close of Period  (c)(d)      

                                            --------------------   Subsequent to        Net         --------------------------------

         Description        Encumbrances    Land       Buildings  Acquisition (a)  Investment (b)   Land      Buildings      Total  

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


<S>                         <C>          <C>          <C>             <C>            <C>            <C>         <C>         <C>     



Direct financing method:
 Office building and
  warehouse leased to
 Unisource Worldwide,                                                                                                               

  Inc.                                   $  298,655   $ 2,786,345                    $(179,251)                           $2,905,749


 Retail stores leased
  to Kobacker Stores,                                                                                                           
  Inc.                      $   477,327                 2,008,850  $  105,207         (123,920)                            1,990,137

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

                            $   477,327  $  298,655   $ 4,795,195  $  105,207        $(303,171)                           $4,895,886

                            ===========  ==========   ===========  ==========        =========                            ==========

                            
<CAPTION> 
                                                                
                                                                Life on which 
                                                                 Depreciation   
                                                                  in Latest                    
                                                                 Statement of   
                            Accumulated                            Income     
         Description       Depreciation (d) Date Acquired        is Computed    
         -----------       ---------------- -------------       -------------    
<S>                        <C>              <C>                 <C>                  


Direct financing method:                                                               
 Office building and                                                                   
  warehouse leased to                                                                  
 Unisource Worldwide,                       December 28,                               
  Inc.                                          1979                                   

 Retail stores leased                                                                  
  to Kobacker Stores,                       January 17,                                
  Inc.                                          1979                                   
                                                                                       
</TABLE>

See accompanying notes to Schedule.

                                     - 16 -
<PAGE>
 
                          CORPORATE PROPERTY ASSOCIATES
                       (a California limited partnership)

                        NOTES to SCHEDULE of REAL ESTATE
                          and ACCUMULATED DEPRECIATION



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

          (b)  The decrease in net investment is due to (i) the  amortization of
               unearned income  producing a constant  periodic rate of return on
               the net investment which is less than lease payments received and
               (ii) sales of property in prior periods.

          (c)  At December 31, 1995, the aggregate cost of real estate owned for
               Federal income tax purposes is $39,458,223.

          (d)  

     Reconciliation of Real Estate Accounted for Under the Operating Method

<TABLE>
<CAPTION>
                                                               December 31,
                                                           1994          1995
                                                           ----          ----
<S>                                                    <C>           <C>
Balance at beginning
    of period                                          $34,332,991   $34,332,991
                                                       ===========   ===========


<CAPTION>
                   Reconciliation of Accumulated Depreciation

                                                              December 31,
                                                           1994          1995
                                                           ----          ----
<S>                                                    <C>           <C>
Balance at beginning
    of period                                          $15,754,071   $16,860,783

Depreciation expense for
    the period                                           1,106,712     1,089,758
                                                       -----------   -----------
Balance at close of period                             $16,860,783   $17,950,541
                                                       ===========   ===========
</TABLE>



                                     - 17 -
<PAGE>
 
PROPERTIES
================================================================================


<TABLE>
<CAPTION>
     LEASE                                                                                         TYPE OF OWNERSHIP
    OBLIGOR                       TYPE OF PROPERTY                     LOCATION                        INTEREST
    -------                       ----------------                     --------                    -----------------
<S>                               <C>                                  <C>                         <C>    
THE GAP, INC.                     Land and Distribution/               Erlanger,                   Ownership of land
                                  Warehouse Building                   Kentucky                    and building (1)

PRE FINISH METALS                 Land and Warehouse/                  Walbridge,                  Ownership of a 60%
INCORPORATED                      Manufacturing Plant                  Ohio                        interest in land
                                                                                                   and building (1)

BROOMFIELD TECH                   Land and Office/                     Broomfield,                 Ownership of land
CENTER CORPORATION                Warehouse/Manufac-                   Colorado                    and buildings (1)
                                  turing Buildings -
                                  2 locations

UNISOURCE                         Land and Office/                     Anchorage,                  Ownership of land
WORLDWIDE,                        Warehouse Building                   Alaska                      and building
INC.

IMO INDUSTRIES, INC.              Land and Office/                     Garland,                    Ownership of land
                                  Manufacturing                        Texas                       and buildings (1)
                                  Buildings

KOBACKER STORES,                  Land and Retail Stores               In California:              Ownership of land
INC.                              - 14 locations                         Fontana,                  and buildings (1)
                                                                         Merced, Rialto,
                                                                         Stockton and two
                                                                         in Sacramento
                                                                       In Ohio:
                                                                         Cuyahoga Falls,
                                                                         Eastlake,
                                                                         Freemont, Marion,
                                                                         Reynoldsburg,
                                                                         Tallmadge and
                                                                         Cleveland
                                                                       In Indiana:
                                                                         Anderson

WINN-DIXIE                        Land and Supermarket                 Louisville,                 Ownership of land
STORES, INC.                                                           Kentucky                    and building
</TABLE>

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

                                      - 18-
<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 1,713 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:


<TABLE>
<CAPTION>
                                         Cash Distributions Paid Per Unit
                                         --------------------------------
                                      1993            1994              1995
                                      ----            ----              ----
          <S>                        <C>              <C>               <C>   
          First quarter              $ 7.75           $ 7.84            $ 7.94
          Second quarter               7.78             7.85              8.00
          Third quarter                7.80             7.86              8.13
          Fourth quarter               7.83             7.88              8.44
                                     ------           ------            ------
                                     $31.16           $31.43            $32.51
                                     ======           ======            ======
</TABLE>

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.




                                     - 19 -
<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.


                                     - 20 -
<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 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.


                                     - 21 -
<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.

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