##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 000-54263
 
 CAREY WATERMARK INVESTORS INCORPORATED
  Maryland
    
    26-2145060(State of incorporation)
    
    (I.R.S. Employer Identification No.)50 Rockefeller PlazaNew York, New York
    
    10020(Address of principal executive office)
    
    (Zip Code)
 Investor Relations (212) 492-8920
(212) 492-1100
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




---



##### 



INDEX
  
 Page No.PART I  FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Consolidated Balance Sheets
    
    
    2Consolidated Statement of Operations
    
    
    3Consolidated Statements of Equity
    
    
    4Consolidated Statement of Cash Flows
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    11Item 4. Controls and Procedures
    
    
    11PART II  OTHER INFORMATIONItem 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    12Item 6. Exhibits
    
    
    12Signatures
    
    
    13Exhibit 10.1Exhibit 31.1Exhibit 31.2Exhibit 32
  Forward-Looking Statements
  CWI 3/31/201110-Q  1




---



##### Table of Contents



PART I
 
 Item 1.
    
    Financial Statements
 CAREY WATERMARK INVESTORS INCORPORATED
 
 CONSOLIDATED BALANCE SHEETS

 (UNAUDITED)
 March 31, 2011
    
    
    December 31, 2010AssetsCash and cash equivalents
    
    $
    13,024,305
    
    
    $
    332,989Other assets, net
    
    
    6,672
    
    
    
    Total assets
    
    $
    13,030,977
    
    
    $
    332,989Liabilities and EquityLiabilities:Accounts payable, accrued expenses and other liabilities
    
    $
    505,709
    
    
    $
    190,752Due to affiliates
    
    
    487,318
    
    
    
    45,500Distributions payable
    
    
    40,908
    
    
    
    Total liabilities
    
    
    1,033,935
    
    
    
    236,252Commitments and contingencies (Note 4)EquityCommon stock $0.001 par value; authorized 300,000,000 shares;
issued and outstanding, 1,452,098 and 23,222 shares, respectively
    
    
    1,452
    
    
    
    23Additional paid-in capital
    
    
    12,868,583
    
    
    
    208,977Accumulated deficit
    
    
    (1,058,618
    )
    
    
    (297,888
    )Total Carey Watermark Investors Incorporated shareholders equity
    
    
    11,811,417
    
    
    
    (88,888
    )Noncontrolling interest
    
    
    185,625
    
    
    
    185,625Total equity
    
    
    11,997,042
    
    
    
    96,737Total liabilities and equity
    
    $
    13,030,977
    
    
    $
    332,989
  CWI 3/31/201110-Q  2




---



##### Table of Contents



CAREY WATERMARK INVESTORS INCORPORATED
 
 CONSOLIDATED STATEMENT OF OPERATIONS

 (UNAUDITED)
 Three Months EndedMarch 31, 2011Operating ExpensesGeneral and administrative
    
    $
    (719,822
    )Net Loss
    
    $
    (719,822
    )Loss Per ShareBasic and diluted
    
    $
    (1.77
    )Weighted Average Shares OutstandingBasic and diluted
    
    
    406,276
  CWI 3/31/201110-Q  3




---



##### Table of Contents



CAREY WATERMARK INVESTORS INCORPORATED
 
 CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)
 Additional
    
    
    Accumulated
    
    
    Total CWI
    
    
    NoncontrollingShares
    
    
    Common Stock
    
    
    Paid-In Capital
    
    
    Deficit
    
    
    Shareholders
    
    
    Interest
    
    
    TotalBalance at January 1, 2010
    
    
    1,000
    
    
    $
    1
    
    
    $
    8,999
    
    
    $
    (337
    )
    
    $
    8,663
    
    
    $
    
    
    
    $
    8,663Shares, $0.001 par value, issued to the
advisor at $9.00 per share
    
    
    22,222
    
    
    
    22
    
    
    
    199,978
    
    
    
    
    
    
    
    200,000
    
    
    
    
    
    
    
    200,000Contributions from noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185,625
    
    
    
    185,625Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (297,551
    )
    
    
    (297,551
    )
    
    
    
    
    
    
    (297,551
    )Balance at December 31, 2010
    
    
    23,222
    
    
    
    23
    
    
    
    208,977
    
    
    
    (297,888
    )
    
    
    (88,888
    )
    
    
    185,625
    
    
    
    96,737Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (719,822
    )
    
    
    (719,822
    )
    
    
    
    
    
    
    (719,822
    )Shares issued, net of offering costs
    
    
    1,424,876
    
    
    
    1,425
    
    
    
    12,618,453
    
    
    
    
    
    
    
    12,619,878
    
    
    
    
    
    
    
    12,619,878Stock-based compensation
    
    
    4,000
    
    
    
    4
    
    
    
    41,153
    
    
    
    
    
    
    
    41,157
    
    
    
    
    
    
    
    41,157Distributions declared ($0.1000 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,908
    )
    
    
    (40,908
    )
    
    
    
    
    
    
    (40,908
    )Balance at March 31, 2011
    
    
    1,452,098
    
    
    $
    1,452
    
    
    $
    12,868,583
    
    
    $
    (1,058,618
    )
    
    $
    11,811,417
    
    
    $
    185,625
    
    
    $
    11,997,042
  CWI 3/31/201110-Q  4




---



##### Table of Contents



CAREY WATERMARK INVESTORS INCORPORATED
 
 CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)
 Three MonthsEnded March 31,2011Cash Flows  Operating ActivitiesNet loss
    
    $
    (719,822
    )Adjustments to net loss:Stock-based compensation expense
    
    
    41,157Increase in due to affiliates
    
    
    231,136Net changes in other operating assets and liabilities
    
    
    314,958Net cash used in operating activities
    
    
    (132,571
    )Cash Flows  Financing ActivitiesProceeds from issuance of shares, net of offering costs
    
    
    12,823,887Net cash provided by financing activities
    
    
    12,823,887Change in Cash and Cash Equivalents During the PeriodNet increase in cash and cash equivalents
    
    
    12,691,316Cash and cash equivalents, beginning of period
    
    
    332,989Cash and cash equivalents, end of period
    
    $
    13,024,305Noncash investing and financing activities:(a) Noncash financing activities include $210,682 of offering costs paid by the advisor.
  CWI 3/31/201110-Q  5




---



##### Table of Contents



CAREY WATERMARK INVESTORS INCORPORATED
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note 1. Business
 Organization
   Public Offering
   Note 2. Summary of Significant Accounting Policies
 Basis of Presentation
     CWI 3/31/201110-Q  6




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Basis of Consolidation
     Cash and Cash Equivalents and Short-Term Investments
  Federal Income Taxes
   CWI 3/31/201110-Q  7




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Organization and Offering Costs
  Stock-Based Compensation
  Acquisition Costs
  Note 3. Agreements and Transactions with Related Parties
    CWI 3/31/201110-Q  8




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Note 4. Commitments and Contingencies
   Note 5. Stock-Based Compensation
 2010 Equity Incentive Plan and Directors Incentive Plan  2010 Incentive Plan
   Note 6. Acquisition
     CWI 3/31/201110-Q  9




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Business Overview
  Significant Developments
 Public Offering
   Subsequent Events
    Results of Operations
  CWI 3/31/201110-Q  10




---



##### Table of Contents



Financial Condition
    
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4.
    
    Controls and Procedures
 Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
  CWI 3/31/201110-Q  11




---



##### Table of Contents



PART II
 
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  Shares registered
    
    
    100,000,000Aggregate price of offering amount registered
    
    $
    1,000,000,000Shares sold
    
    
    1,424,876Aggregated offering price of amount sold
    
    $
    14,248,760Direct or indirect payments to directors, officers, general
partners of the issuer or their associates; to persons
owning ten percent or more of any class of equity
securities of the issuer; and to affiliates of the issuer
    
    
    (1,170,198
    )Direct or indirect payments to others
    
    
    (423,913
    )Net offering proceeds to the issuer after deducting expenses
    
    
    12,654,649Temporary investments in cash and cash equivalents
    
    $
    12,654,649
 
 Item 6.
    
    Exhibits
  Exhibit No.
    
    Description10.1
    
    
    Form of Employee Restricted Stock Unit Award10.2
    
    
    Amended and Restated Limited Liability Company Operating Agreement of
Long Beach Hotel Properties, LLC, dated as of May 2, 2011, by and between
CWI Long Beach Hotels, LLC and LBHP-Ensemble Partners, LLC (Incorporated
by reference to Current Report on Form 8-K filed May 11, 2011)31.1
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    
    Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 CWI 3/31/201110-Q  12




---



##### Table of Contents



SIGNATURES
  Carey Watermark Investors IncorporatedDate: 05/12/11
    By:
    /s/ Mark J. DeCesarisMark J. DeCesarisChief Financial Officer
(Principal Financial Officer)Date: 05/12/11
    By:
    /s/ Thomas J. Ridings, Jr.Thomas J. Ridings, Jr.Chief Accounting Officer
(Principal Accounting Officer) CWI 3/31/201110-Q  13




---



##### Table of Contents



EXHIBIT INDEX
  Exhibit No.
    
    Description10.1
    
    
    Form of Employee Restricted Stock Unit Award10.2
    
    
    Amended and Restated Limited Liability Company Operating Agreement of
Long Beach Hotel Properties, LLC, dated as of May 2, 2011, by and
between CWI Long Beach Hotels, LLC and LBHP-Ensemble Partners, LLC
(Incorporated by reference to Current Report on Form 8-K filed May 11,
2011)31.1
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    
    Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002