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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 September 30, 2010
 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: 333-149899
 (CAREY WATERMARK INVESTORS LOGO)
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




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INDEX
 Page No.PART I  FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Consolidated Balance Sheets
    
    
    2Consolidated Statements of Operations
    
    
    3Consolidated Statement 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
    
    
    9Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    10Item 4. Controls and Procedures
    
    
    10PART II  OTHER INFORMATIONItem 1A. Risk Factors
    
    
    11Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    11Item 6. Exhibits
    
    
    12Signatures
    
    
    13Exhibit 3.1Exhibit 4.1Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 10.5Exhibit 10.6Exhibit 10.7Exhibit 31.1Exhibit 31.2Exhibit 32
  Forward Looking Statements
  CWI 9/30/2010 10-Q 1




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

(UNAUDITED)
 September 30, 2010
    
    
    December 31, 2009AssetsCash and cash equivalents
    
    $
    208,663
    
    
    $
    8,663Total assets
    
    $
    208,663
    
    
    $
    8,663LiabilitiesDue to affiliates
    
    $
    45,500
    
    
    $
    Commitments and contingencies (Note 4)Stockholders EquityCommon stock, $0.001 par value; authorized 300,000,000 shares;
issued and outstanding, 23,222 and 1,000 shares, respectively
    
    
    23
    
    
    
    1Additional paid-in capital
    
    
    208,977
    
    
    
    8,999Accumulated deficit
    
    
    (45,837
    )
    
    
    (337
    )Total stockholders equity
    
    
    163,163
    
    
    
    8,663Total liabilities and stockholders equity
    
    $
    208,663
    
    
    $
    8,663
 Note:
    
    The balance sheet at December 31, 2009 has been derived from the audited financial statement
at that date.  CWI 9/30/2010 10-Q 2




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CAREY WATERMARK INVESTORS INCORPORATED
 
 CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)
 Three months ended
    
    
    Nine months endedSeptember 30, 2010
    
    
    September 30, 2010ExpensesGeneral and administrative
    
    $
    (45,500
    )
    
    $
    (45,500
    )Net Loss
    
    $
    (45,500
    )
    
    $
    (45,500
    )Loss Per Share
    
    $
    (3.76
    )
    
    $
    (9.59
    )Weighted Average Shares Outstanding
    
    
    12,111
    
    
    
    4,744
  CWI 9/30/2010 10-Q 3




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CAREY WATERMARK INVESTORS INCORPORATED
 
 CONSOLIDATED STATEMENT OF EQUITY

(UNAUDITED)
 Additional
    
    
    AccumulatedShares
    
    
    Common Stock
    
    
    Paid-In Capital
    
    
    Deficit
    
    
    TotalBalance at
January 1, 2010
    
    
    1,000
    
    
    $
    1
    
    
    $
    8,999
    
    
    $
    (337
    )
    
    $
    8,663Shares, $0.001 par value,
issued to the advisor
at $9.00 per share
    
    
    22,222
    
    
    
    22
    
    
    
    199,978
    
    
    
    
    
    
    
    200,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,500
    )
    
    
    (45,500
    )Balance at September 30, 2010
    
    
    23,222
    
    
    $
    23
    
    
    $
    208,977
    
    
    $
    (45,837
    )
    
    $
    163,163
  CWI 9/30/2010 10-Q 4




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CAREY WATERMARK INVESTORS INCORPORATED
 
 CONSOLIDATED STATEMENT OF CASH FLOWS

 (UNAUDITED)
 Nine months endedSeptember 30, 2010Cash Flows  Operating ActivitiesNet loss
    
    $
    (45,500
    )Adjustments to reconcile net loss to net cash provided by operating activities:Increase in amount due to affiliates
    
    
    45,500Net cash provided by operating activities
    
    
    Cash Flows  Financing ActivitiesProceeds from stock issuance
    
    
    200,000Net cash provided by financing activities
    
    
    200,000Net increase in cash and cash equivalents:
    
    
    200,000Cash and cash equivalents, beginning of period
    
    
    8,663Cash and cash equivalents, end of period
    
    $
    208,663
 Noncash investing and financing activities:(a)
    
    Amounts due to affiliate for general and administrative costs total $45,500 to date.  CWI 9/30/2010 10-Q 5




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note 1. Organization and Offering
 Organization
   Public Offering
   Note 2. Summary of Significant Accounting Policies
 Basis of Presentation
     Basis of Consolidation
  CWI 9/30/2010 10-Q 6




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Notes to Consolidated Financial Statements
   Cash and Cash Equivalents and Short-Term Investments
  Federal Income Taxes
   Organization and Offering Costs
  CWI 9/30/2010 10-Q 7




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Notes to Consolidated Financial Statements
 Note 3. Agreements and Transactions with Related Parties
    Note 4. Commitments and Contingencies
   Note 5. Subsequent Events
   CWI 9/30/2010 10-Q 8




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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
   Financial Condition
  CWI 9/30/2010 10-Q 9




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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 9/30/2010 10-Q 10




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PART II
 
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   CWI
9/30/2010 10-Q 11




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Item 6. Exhibits
 Exhibit No.
    
    Description
    
    Method of Filing3.1
    
    
    Articles of Amendment and Restatement of Carey Watermark Investors Incorporated
    
    Filed herewith3.2
    
    
    Bylaws of Carey Watermark Investors Incorporated (Incorporated by reference to
Exhibit 3.3 to the registrants Registration Statement on Form S-11 (File
No. 333-149899) filed on March 26, 2008)4.1
    
    
    Distribution Reinvestment and Stock Purchase Plan
    
    Filed herewith10.1
    
    
    Advisory Agreement dated September 15, 2010, between Carey Watermark Investors
Incorporated, CWI OP, LP, and Carey Lodging Advisors, LLC
    
    Filed herewith10.2
    
    
    Agreement of Limited Partnership of CWI OP, LP
    
    Filed herewith10.3
    
    
    Dealer Manager Agreement dated September 15, 2010, between Carey Watermark
Investors Incorporated and Carey Financial, LLC
    
    Filed herewith10.4
    
    
    Subscription Escrow Agreement dated September 15, 2010, between Carey
Financial, LLC, Carey Watermark Investors Incorporated and UMB Bank, N.A.
    
    Filed herewith10.5
    
    
    2010 Equity Incentive Plan
    
    Filed herewith10.6
    
    
    Indemnification Agreement dated September 15, 2010, between Carey Watermark
Investors Incorporated and CWA, LLC
    
    Filed herewith10.7
    
    
    Form of Indemnification Agreement between Carey Watermark Investors
Incorporated and its directors and executive officers
    
    Filed herewith31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith31.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith32
    
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith
 CWI 9/30/2010 10-Q 12




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SIGNATURES
  Carey Watermark Investors IncorporatedDate 11/12/2010
    By:
    /s/ Mark J. DeCesarisMark J. DeCesarisChief Financial Officer
(Principal Financial Officer)Date 11/12/2010
    By:
    /s/ Thomas J. Ridings, Jr.Thomas J. Ridings, Jr.Executive Director and Chief Accounting Officer
(Principal Accounting Officer) CWI 9/30/2010 10-Q 13




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EXHIBIT INDEX
 Exhibit No.
    
    Description
    
    Method of Filing3.1
    
    
    Articles of Amendment and Restatement of Carey Watermark Investors Incorporated
    
    Filed herewith3.2
    
    
    Bylaws of Carey Watermark Investors Incorporated (Incorporated by reference to
Exhibit 3.3 to the registrants Registration Statement on Form S-11 (File
No. 333-149899) filed on March 26, 2008)4.1
    
    
    Distribution Reinvestment and Stock Purchase Plan
    
    Filed herewith10.1
    
    
    Advisory Agreement dated September 15, 2010, between Carey Watermark Investors
Incorporated, CWI OP, LP, and Carey Lodging Advisors, LLC
    
    Filed herewith10.2
    
    
    Agreement of Limited Partnership of CWI OP, LP
    
    Filed herewith10.3
    
    
    Dealer Manager Agreement dated September 15, 2010, between Carey Watermark
Investors Incorporated and Carey Financial, LLC
    
    Filed herewith10.4
    
    
    Subscription Escrow Agreement dated September 15, 2010, between Carey
Financial, LLC, Carey Watermark Investors Incorporated and UMB Bank, N.A.
    
    Filed herewith10.5
    
    
    2010 Equity Incentive Plan
    
    Filed herewith10.6
    
    
    Indemnification Agreement dated September 15, 2010, between Carey Watermark
Investors Incorporated and CWA, LLC
    
    Filed herewith10.7
    
    
    Form of Indemnification Agreement between Carey Watermark Investors
Incorporated and its directors and executive officers
    
    Filed herewith31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith31.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith32
    
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith