<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-K

                      For the year ended DECEMBER 31, 1999

                                       of

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                    CPA(R):14

                             A MARYLAND Corporation
                   IRS Employer Identification No. 13-3951476
                            SEC File Number 333-31437


                              50 ROCKEFELLER PLAZA,
                            NEW YORK, NEW YORK 10020
                                 (212) 492-1100




CPA(R):14 has SHARES OF COMMON STOCK registered pursuant to Section 12(g) of the
Act.


CPA(R):14 is not registered on any exchanges.


CPA(R):14 does not have any Securities registered pursuant to Section 12(b) of
the Act.


CPA(R):14 is unaware of any delinquent filers pursuant to Item 405 of Regulation
S-K.


CPA(R):14 (1) has filed all reports required by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for 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.


CPA(R):14 has no active market for common stock at March 31, 2000.
Non-affiliates held 32,733,601 shares of common stock, $.001 Par Value
outstanding at March 31, 2000.
<PAGE>   2
                                     PART I

Item 1.  Business.

         Corporate Property Associates 14 Incorporated ("CPA(R):14") is a Real
Estate Investment Trust ("REIT") that acquires and owns commercial properties
leased to companies nationwide, primarily on a triple net basis. As of December
31, 1999, CPA(R):14's portfolio consisted of 26 properties leased to 19 tenants
and totaling more than 4.6 million square feet.

         CPA(R):14's core investment strategy is to purchase and own properties
leased to a variety of companies on a single tenant net lease basis. These
leases generally place the economic burden of ownership on the tenant by
requiring them to pay the costs of maintenance, insurance, taxes, structural
repairs and other operating expenses.

         CPA(R):14 also generally includes in its leases

         -        clauses providing for mandated rent increases or periodic rent
                  increases tied to increases in the consumer price index or
                  other indices or, when appropriate, increases tied to the
                  volume of sales at the property;

         -        covenants restricting the activity of the tenant to reduce the
                  risk of a change in credit quality;

         -        indemnification of CPA(R):14 for environmental and other
                  liabilities;

         -        guarantees from parent companies or other entities.

         CPA(R):14 was formed as a Maryland corporation on June 4, 1997. Between
November 1997 and December 1999, CPA(R):14 sold a total of 29,440,594 shares of
common stock for a total of $294,405,940 in gross offering proceeds. These
proceeds are being combined with limited recourse mortgage debt to acquire a
portfolio of properties. In November 1999, CPA(R):14 commenced a second public
offering of 40,000,000 shares of common stock at $10 per share on a "best
efforts" basis. As a real estate investment trust, CPA(R):14 is not subject to
federal income taxation as long as it satisfies certain requirements relating to
the nature of its income, the level of its distributions and other factors.

         Carey Property Advisors, CPA(R):14's Advisor, provides both strategic
and day-to-day management for CPA(R):14, including acquisition services,
research, investment analysis, asset management, capital funding services,
disposition of assets, investor relations and administrative services. Carey
Property Advisors also provides office space and other facilities for CPA(R):14.
Carey Property Advisors has dedicated senior executives in each area of its
organization so that CPA(R):14 functions as a fully integrated operating
company. CPA(R):14 pays asset management fees to Carey Property Advisors and
pays certain transactional fees. CPA(R):14 also reimburses Carey Property
Advisors for certain expenses. Carey Property Advisors also serves in this
capacity for Corporate Property Associates 10 Incorporated, Carey Institutional
Properties Incorporated ("CIP(R)") and Corporate Property Associates 12
Incorporated ("CPA(R):12"). On November 29, 1999, the Board of Directors of
CPA(R):14 approved a pending change of control of Carey Property Advisors. If
the change in control is effectuated, Carey Property Advisors will become a
wholly-owned subsidiary of W.P. Carey & Co. LLC (currently known as Carey
Diversified LLC), a publicly-traded company on the New York Stock Exchange and
Pacific Exchange under the symbol "WPC" ("CDC" prior to the change of control).
This change of control will be completed upon the approval of the shareholders
of Carey Diversified LLC.

         CPA(R):14's principal executive offices are located at 50 Rockefeller
Plaza, New York, NY 10020 and its telephone number is (212) 492-1100. As of
March 31, 2000, CPA(R):14 had no employees. An affiliate of Carey Property
Advisors employs 20 individuals who perform services for CPA(R):14.


BUSINESS OBJECTIVES AND STRATEGY

         CPA(R):14's objectives are to:

         -        pay quarterly dividend at an increasing rate that for taxable
                  shareholders are partially free from current taxation;

         -        purchase and own a portfolio of real estate that will increase
                  in value; and

         -        increase the equity in its real estate by making regular
                  mortgage principal payments.


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         CPA(R):14 seeks to achieve these objectives by purchasing and holding
industrial and commercial properties each net leased to a single corporate
tenant. CPA(R):14 's portfolio is diversified by geography, property type and by
tenant.


RECENT DEVELOPMENTS

         On February 3, 1999,through a 50% interest in a limited liability
company which CPA(R):14 formed with CPA(R):12, the Company acquired an interest
in land and buildings in Gilbert, Arizona and entered into a net lease with
Intesys Technologies, Inc. The total purchase price of the building was
$23,560,000. The Intesys lease has an initial term of 20 years with two ten-year
renewal options at the tenant's option. The lease provides for annual rent of
$2,274,750. There are rent increases every three years based on increases in the
Consumer Price Index ("CPI") with increases capped at 9%.

         On March 31, 1999, CPA(R):14 and two affiliates, CPA(R):12 and CIP(R)
through a newly-formed entity, in which CPA(R):14 and the two affiliates each
own 1/3 interests, purchased land and building in Dallas, Texas for $39,790,500
and entered into a net lease with Compucom Systems, Inc. The Compucom Systems
lease has an initial term of 20 years with two five-year renewal terms at
Compucom's option. The lease initially provides for annual rent of $3,914,000
with rent increases every three years based on a formula indexed to increases in
the CPI, with each increase capped at 13.3%. In connection with the purchase,
the jointly-owned entity obtained a limited recourse mortgage loan of
$23,000,000. The loan is collateralized by the Compucom property and an
assignment of the Compucom lease and bears interest at an annual interest rate
of 7.215% with monthly payments of interest and principal of $165,727 based on a
25-year amortization schedule. The loan matures in April 2009 when a balloon
payment will be due. A prepayment premium will apply if the loan is prepaid
prior to six months before maturity.

         On June 3, 1999, CPA(R):14 and Carey Diversified LLC, an affiliate,
both through 50% ownership interests in a limited liability company purchased
land and building in Norcross, Georgia for $30,785,340 and assumed existing net
leases with CheckFree Corporation, Inc. CheckFree's lease obligations have been
unconditionally guaranteed by its parent company, CheckFree Holdings, Inc. The
CheckFree leases have remaining terms through December 31, 2015. The annual
combined rent on the leases is currently $2,564,321. The annual rent on the land
lease with CheckFree provides for annual rent of $76,577 with stated rent
increases effective January 2000, 2005 and 2010. Annual rent on the building
lease is $2,487,744 with rent increases scheduled for January 2004 and each year
thereafter based on a formula indexed to increases in the CPI, capped at 2.5%
per year. The purchase of the CheckFree property was financed with a limited
recourse mortgage loan of $15,800,000 collateralized by a deed of trust on the
CheckFree property and lease assignments. The loan bears interest at an annual
variable rate of interest equal to the sum of the London InterBank Offered Rate
and 2.5% and provides for scheduled principal payments that approximate a
twenty-five year amortization schedule. The loan is scheduled to mature on June
1, 2006 at which time a balloon payment will be due. The loan is prepayable at
any time without premium. CPA(R):14 and CDC also assumed an existing agreement
to construct an additional office building at the CheckFree property on a
build-to-suit basis at a cost not to exceed $11,060,745. Upon completion of
construction, which is scheduled for June 2000, CheckFree's annual rent will
increase by approximately $1,550,000.

         On June 29, 1999, CPA(R):14 purchased a property in Harrisburg, North
Carolina for $7,805,807 upon which a build-to-suit facility was constructed and
net leased to Builders' Supply and Lumber Co., Inc ("Builders' Supply"). The
lease has an initial lease term of twenty years at an annual rent initially of
$760,000 with rent increases each year based on a formula indexed to increases
in the CPI, capped at 2% per year. The lease provides for a renewal term of ten
years at the option of Builders' Supply.

         On July 19, 1999, CPA(R):14 purchased land and building in Gardena,
California for $6,282,723 and entered into a net lease with Scott Co. of
California. The lease obligations of Scott are unconditionally guaranteed by its
parent company, The Scott Companies, Inc. The Scott lease has an initial term of
twenty years with three five-year renewal terms at Scott's option. Annual rent
is $681,000 with rent increases every three years based on a formula indexed to
increases in CPI. In connection with the purchase of the Scott property,
CPA(R):14 obtained $3,000,000 of limited recourse financing collateralized by a
deed of trust and a lease assignment. The loan provides for monthly payments of
interest and principal of $22,709 at an annual interest rate of 8.21%. The loan
matures in August 2009 at which time a balloon payment will be due.


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         On August 18 1999, CPA(R):14 and Corporate Property Associates 12,
formed two limited liability companies which entered into net leases for four
properties with Ameriserve Food Distribution, Inc. located in Burlington, New
Jersey; Shawnee, Kansas; Grand Rapids, Michigan and Manassas, Virginia. The
total cost of the transaction, including the funding of expansions and a
build-to-suit facility is expected to amount to $55,779,445. CPA(R):14 holds a
60% interest in the limited liability companies. A new facility will be built at
the Shawnee property and existing facilities will be expanded at the Burlington
and Manassas properties. Completion of the projects is scheduled to occur no
later than December 1, 2000. At the earlier of the completion of construction or
December 1, 2000, a lease term of 20 years will commence, followed by two
ten-year renewal terms at Ameriserve's option. The annual rent will be
$5,769,073, subject to reduction if total project costs are less than
$55,779,445. The leases provide for increases every three years based on a
formula indexed to increases in the CPI. Ameriserve has purchase options that
may be exercised at the end of the lease. In connection with the purchase of the
Ameriserve properties, the limited liability companies obtained limited recourse
mortgage financing of $32,000,000 collateralized by the Ameriserve properties
and lease assignments. The loans bear interest at an annual rate of 8.51% with
combined monthly payments of interest and principal of $246,279 and based on a
30-year amortization schedule. The loans mature September 30, 2009 at which time
balloon payments will be due. In February 2000, Ameriserve filed for bankruptcy
protection under Chapter 11 of the bankruptcy code in the Bankruptcy Court for
the District of Delaware. As of March 31, 2000, Ameriserve is current in its
payment obligations to CPA(R):12 and CPA(R):14, however there is no assurance
that this will continue and it is possible that the leases could be terminated
as a result of a plan of reorganization.

         On September 22, 1999, CPA(R):14 purchased land and a multiplex movie
theater under construction in Midlothian, Virginia for $6,029,580 and assumed a
lease with Richmond I Cinema L.L.C. ("Richmond I"). The lease obligations of
Richmond I are unconditionally guaranteed by Consolidated Theatres Holding, G.P.
Total project costs for the Richmond I multiplex are estimated to amount to
approximately $14,706,000. The target opening date for the multiplex is August
15, 2000. Upon completion of the project, an initial lease term of 20 years will
commence with two five-year renewal terms at Richmond I's option. Annual base
rent will initially be $1,550,489 with scheduled rent increases of ten percent
every five years during the initial lease term. Beginning with the third lease
year, Richmond I will pay as additional rent a stated percentage of sales in
excess of specific benchmark amounts. For the third through fifth lease year,
CPA(R):14 will be entitled to receive five percent of sales in excess of
$8,500,000; for the sixth through tenth lease years five percent of sales in
excess of $8,755,000 and six percent of sales in excess of $9,193,000
thereafter. CPA(R):14 obtained a limited recourse mortgage loan for up to
$9,391,159 collateralized by a deed of trust and a lease assignment. The loan
provides for annual interest at the sum of the monthly London Interbank Offered
Rate and two percent and will initially convert to payments of interest only.
Commencing on the earlier of the rent commencement date or September 30, 2000,
the loan will convert to payments of interest and principal based on a 25-year
amortization schedule. The loan is scheduled to fully amortize on October 1,
2025; however the lender, at its sole option, may call the loan on either
October 1, 2007, 2014 or 2021. The outstanding balance on the loan at September
30, 1999 was $611,028

         On October 15, 1999, CPA(R):14 purchased two properties in Burbank and
Los Angeles, California for $3,743,455 and entered into a net lease with
Production Resource Group L.L.C. The PRG lease has an initial term of 15 years
with two five-year renewal terms at PRG's option. Annual rent is $393,250 with
increases every two years based on a formula indexed to increases in the CPI.
CPA(R):14 had previously entered into a net lease with PRG for a property in Las
Vegas, Nevada.

         On November 1, 1999, CPA(R):14 purchased a property in Columbia,
Maryland for $22,855,080 and entered into a net lease with Amerix Corporation.
In addition, CPA(R):14 entered into a commitment to fund an expansion of up to
$3,500,000 of the existing office facility. The lease has an initial term ending
15 years after the earlier of the completion of the expansion or December 1,
2001 with two ten-year renewal terms at Amerix's option. Annual rent will
initially be $2,197,475 and will increase by $355,250 upon completion of the
expansion, subject to a reduction if the project costs for the expansion cost
are less than $3,500,000. The lease provides for rent increases on the sixth
anniversary of the lease and every three years thereafter based on a formula
indexed to increases in the CPI, subject to a cap on the increase of 1.04% per
annum.

                  On November 18, 1999, CPA(R):14 purchased land and a property
in Dallas, Texas, and land and two properties in Greenville, Texas for
$20,484,168 and entered into a master net lease with Atrium Companies, Inc. The
Atrium lease has an initial term of twenty years and eight months at an annual
rent of $2,075,000, with rent increases at the end of the fifth lease year and
every two years thereafter based on a formula indexed to increases in the CPI.
The first rent increase is capped at a maximum of 12.5% and each increase
thereafter is capped at a


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maximum of 5%. The lease provides Atrium with purchase options on the 15th and
20th lease anniversaries with such option exercisable at the greater of (i)
acquisition cost plus any prepayment premium on any existing mortgage loan (ii)
and fair market value, as defined. CPA(R):14 also purchased a fourth property in
Wylie, Texas on which a building is being constructed on a build-to-suit basis.
The total purchase price and construction costs are expected to be $8,381,675
with Atrium having the obligation to fund any additional costs necessary to
complete the project. Upon the earlier of completion and August 1, 2000, a lease
term of 20 years will commence at an annual rent in an amount equal to
CPA(R):14's total project costs multiplied by 10.75%, with rent increases every
two years based on increases in the CPI with each increase capped at a maximum
of 5%. On January 4, 2000, CPA(R):14 obtained a $13,123,000 limited recourse
mortgage loan collateralized by a deed of trust and a lease assignment on the
Dallas and Greenville properties. The loan provides for monthly interest only
payments, at an annual interest rate of 8.7%, for the first twelve months,
commencing February 2000, with monthly principal and interest payments of
$102,786, thereafter. The loan matures on January, 2010 at which time a balloon
payment is scheduled.

                  On December 29, 1999, CPA(R):14 purchased land and building in
Salt Lake City, Utah, assumed an existing lease guaranteed by Fitness Holdings
Worldwide, Inc. and entered into an agreement to fund an expansion at the
Fitness Holdings property. The purchase price and the costs of construction are
$5,016,367 with Fitness Holdings having the obligation to fund any excess costs
necessary to complete the project. Upon the earlier of completion or May 14,
2000, a lease term of twenty years will commence with annual rent under the
Fitness Holdings lease of $526,969 and three five-year renewal options. The
lease provides for rent increases commencing in the third lease year and every
two years thereafter with such increases based on a formula indexed to the CPI
with each increase capped at a maximum of 4%.

         In February 1998, CPA(R):14 entered into an agreement with Corporate
Property Associates 12 Incorporated ("CPA(R):12") to form a limited liability
company for the purpose of taking an ownership interest in a CPA(R):12 property
in Heyward, California leased to Etec Systems, Inc. Under the agreement,
CPA(R):14 agreed to advance funds necessary to represent a 49.99% interest in a
new building being constructed on the Etec property at a cost of up to
$52,356,000. Under the agreement, CPA(R):12 contributed its existing interest in
the property and committed to fund the remaining amounts necessary to complete
the new building. CPA(R):14 will share in the economic interests of the new
improvements only and will not be entitled to any of the economic interests of
the existing buildings. The new building was completed in July 1999 with annual
rent applicable to the new improvements of approximately $5,727,000. The Etec
lease has an initial term through May 2014 with three five-year renewals at
Etec's option. The limited liability company subsequently has obtained a
commitment for $30,000,000 of limited recourse mortgage financing on the new
building. The mortgage loan will provide for monthly payments of principal and
interest based on a 20-year amortization schedule and an annual interest rate of
7.11%.


ACQUISITION STRATEGIES

         Carey Property Advisors has a well-developed process with established
procedures and systems for acquiring net leased property on behalf of CPA(R):14.
As a result of its reputation and experience in the industry and the contacts
maintained by its professionals, Carey Property Advisors has a presence in the
net lease market that has provided it with the opportunity to invest in a
significant number of transactions on an ongoing basis. CPA(R):14 takes
advantage of Carey Property Advisors' presence in the net lease market to build
its portfolio. In evaluating opportunities for CPA(R):14, Carey Property
Advisors carefully examines the credit, management and other attributes of the
tenant and the importance of the property under consideration to the tenant's
operations. Careful credit analysis is a crucial aspect of every transaction.
CPA(R):14 believes that Carey Property Advisors has one of the most extensive
underwriting processes in the industry and has an experienced staff of
professionals involved with underwriting transactions. Carey Property Advisors
seeks to identify those prospective tenants whose creditworthiness is likely to
improve over time. CPA(R):14 believes that the experience of Carey Property
Advisors' management in structuring sale-leaseback transactions to meet the
needs of a prospective tenant enables Carey Property Advisors to obtain a higher
return for a given level of risk than would typically be available by purchasing
a property subject to an existing lease.

Carey Property Advisors' strategy in structuring its net lease investments for
CPA(R):14 is to:

         -        combine the stability and security of long-term lease
                  payments, including rent increases, with the appreciation
                  potential inherent in the ownership of real estate;

         -        enhance current returns by utilizing varied lease structures;


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         -        reduce credit risk by diversifying investments by tenant, type
                  of facility, geographic location and tenant industry; and

         -        increase potential returns by obtaining equity enhancements
                  from the tenant when possible, such as warrants to purchase
                  tenant common stock.

FINANCING STRATEGIES

         Consistent with its investment policies, CPA(R):14 is using leverage
when available on favorable terms. Carey Property Advisors intends to
continually seek opportunities and consider alternative financing techniques to
finance properties not currently subject to debt and, in the future will seek
opportunities to refinance debt, reduce interest expense or improve its capital
structure.

TRANSACTION ORIGINATION

         In analyzing potential acquisitions, Carey Property Advisors reviews
and structures many aspects of a transaction, including the tenant, the real
estate and the lease, to determine whether a potential acquisition can be
structured to satisfy CPA(R):14's acquisition criteria. The aspects of a
transaction which are reviewed and structured by Carey Property Advisors include
the following:

         -        Tenant Evaluation. Carey Property Advisors subjects each
                  potential tenant to an extensive evaluation of its credit,
                  management, position within its industry, operating history
                  and profitability. Carey Property Advisors seeks tenants it
                  believes will have stable or improving credit. By leasing
                  properties to these types of tenants, CPA(R):14 can generally
                  charge rent that is higher than the rent charged to tenants
                  with recognized credit and, thereby, enhance its current
                  return from these properties as compared with properties
                  leased to companies whose credit potential has already been
                  recognized by the market. Furthermore, if a tenant's credit
                  does improve, the value of CPA(R):14's properties leased to
                  that tenant will likely increase (if all other factors
                  affecting value remain unchanged). Carey Property Advisors may
                  also seek to enhance the likelihood of a tenant's lease
                  obligations being satisfied, such as through a letter of
                  credit or a guaranty of lease obligations from the tenant's
                  corporate parent. This credit enhancement provides CPA(R):14
                  with additional financial security.

         -        Leases with Increasing Rents. Carey Property Advisors seeks to
                  include clauses in CPA(R):14's leases that provide for
                  increases in rent over the term of the leases. These increases
                  are generally tied to increases in certain indices such as the
                  consumer price index, in the case of retail stores,
                  participation in gross sales above a stated level, mandated
                  rental increases on specific dates and through other methods.
                  CPA(R):14 seeks to avoid entering into leases that provide for
                  contractual reductions in rents during their primary term
                  (other than reductions related to reductions in debt service).

         -        Properties Important to Tenant Operations. Carey Property
                  Advisors, on behalf of CPA(R):14, generally seeks to acquire
                  properties with operations that are essential or important to
                  the ongoing operations of the tenant. CPA(R):14 believes that
                  these properties provide better protection in the event that
                  tenants file for bankruptcy, because leases on properties
                  essential or important to the operations of a bankrupt tenant
                  are less likely to be rejected and terminated by a bankrupt
                  tenant. Carey Property Advisors also seeks to assess the
                  income, cash flow and profitability of the business conducted
                  at the property, so that, if the tenant is unable to operate
                  its business, CPA(R):14 can either continue operating the
                  business conducted at the property or re-lease the property to
                  another entity in the industry which can operate the property
                  profitably.

         -        Lease Provisions that Enhance and Protect Value. When
                  appropriate, Carey Property Advisors attempts to include
                  provisions in CPA(R):14's leases that require CPA(R):14's
                  consent to certain tenant activity or require the tenant to
                  satisfy certain operating tests. These provisions include, for
                  example, operational and financial covenants of the tenant,
                  prohibitions on a change in control of the tenant and
                  indemnification from the tenant against environmental and
                  other contingent liabilities. Including these provisions in
                  its leases enables CPA(R):14 to protect its investment from
                  changes in the operating and financial characteristics of a
                  tenant that may impact its ability to satisfy its obligations
                  to CPA(R):14 or could reduce the value of CPA(R):14's
                  properties.


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<PAGE>   7
         -        Diversification. Carey Property Advisors tries to diversify
                  CPA(R):14's portfolio of properties to avoid dependence on any
                  one particular tenant, type of facility, geographic location
                  and tenant industry. By diversifying its portfolio, CPA(R):14
                  reduces the adverse effect on CPA(R):14 of a single
                  underperforming investment or a downturn in any particular
                  industry or geographic location.

         Carey Property Advisors employs a variety of other strategies and
practices in connection with CPA(R):14's acquisitions. These strategies include
attempting to obtain equity enhancements in connection with transactions.
Typically, these equity enhancements involve warrants to purchase stock of the
tenant to which the property is leased or the stock of the parent of the tenant.
In certain instances, CPA(R):14 grants to the tenant a right to purchase the
property leased by the tenant, but generally the option purchase price will be
not less than the fair market value of the property. Carey Property Advisors'
practices include performing evaluations of the physical condition of properties
and performing environmental surveys in an attempt to determine potential
environmental liabilities associated with a property prior to its acquisition.

         As a transaction is structured, it is evaluated by the Chairman of the
Investment Committee with respect to the potential tenant's credit, business
prospects, position within its industry and other characteristics important to
the long-term value of the property and the capability of the tenant to meet its
lease obligations. Before a property is acquired, the transaction is reviewed by
the Investment Committee to ensure that it satisfies CPA(R):14's investment
criteria. Aspects of the transaction that are typically reviewed by the
Investment Committee include the expected financial returns, the
creditworthiness of the tenant, the real estate characteristics and the lease
terms.

         The Investment Committee is not directly involved in originating or
negotiating potential acquisitions, but instead functions as a separate and
final step in the acquisition process. Carey Property Advisors places special
emphasis on having experienced individuals serve on its Investment Committee and
does not invest in a transaction unless it is approved by the Investment
Committee.

         CPA(R):14 believes that the Investment Committee review process gives
it a unique, competitive advantage over other unaffiliated net lease companies
because of the substantial experience and perspective that the Investment
Committee has in evaluating the blend of corporate credit, real estate and lease
terms that combine to make an acceptable risk.

         The following people serve on the Investment Committee:

         -        George E. Stoddard, Chairman, was formerly responsible for the
                  direct corporate investments of The Equitable Life Assurance
                  Society of the United States and has been involved with the
                  CPA(R) Programs for over 20 years.

         -        Frank J. Hoenemeyer, Vice Chairman, was formerly Vice
                  Chairman, Director and Chief Investment Officer of The
                  Prudential Insurance Company of America. As Chief Investment
                  Officer, Mr. Hoenemeyer was responsible for all of
                  Prudential's investments, including stocks, bonds, private
                  placements, real estate and mortgages.

         -        Nathaniel S. Coolidge previously served as Senior Vice
                  President - Head of Bond & Corporate Finance Department of the
                  John Hancock Mutual Life Insurance Company. His
                  responsibilities included overseeing $21 billion of fixed
                  income investments for Hancock, its affiliates and outside
                  clients.

         -        Lawrence R. Klein is Benjamin Franklin Professor of Economics
                  Emeritus at the University of Pennsylvania and its Wharton
                  School. Dr. Klein has been awarded the Alfred Nobel Memorial
                  Prize in Economic Sciences and currently advises various
                  governments and government agencies. Dr. Klein serves as an
                  alternate member of the Investment Committee


                                     - 6 -
<PAGE>   8
ASSET MANAGEMENT

         CPA(R):14 believes that effective management of its net lease assets is
essential to maintain and enhance property values. Important aspects of asset
management include restructuring transactions to meet the evolving needs of
current tenants, re-leasing properties, refinancing debt, selling properties and
knowledge of the bankruptcy process.

         Carey Property Advisors monitors, on an ongoing basis, compliance by
tenants with their lease obligations and other factors that could affect the
financial performance of any of its properties. Monitoring involves receiving
assurances that each tenant has paid real estate taxes, assessments and other
expenses relating to the properties it occupies and confirming that appropriate
insurance coverage is being maintained by the tenant. Carey Property Advisors
reviews financial statements of its tenants and undertakes regular physical
inspections of the condition and maintenance of its properties. Additionally,
Carey Property Advisors periodically analyzes each tenant's financial condition,
the industry in which each tenant operates and each tenant's relative strength
in its industry.

HOLDING PERIOD

         CPA(R):14 intends to hold each property it acquires for an extended
period. The determination of whether a particular property should be sold or
otherwise disposed of will be made after consideration of relevant factors with
a view to achieving maximum capital appreciation and after-tax return for the
CPA(R):14 shareholders. If CPA(R):14's common stock is not listed for trading on
a national securities exchange or included for quotation on Nasdaq, CPA(R):14
will generally begin selling properties within ten years after the proceeds of
the initial public offering are substantially invested, subject to market
conditions. The board of directors will make the decision whether to list the
shares, liquidate or devise an alternative liquidation strategy which is likely
to result in the greatest value for the shareholders.

COMPETITION

         CPA(R):14 faces competition for the acquisition of office and
industrial properties in general, and such properties net leased to major
corporations in particular, from insurance companies, credit companies, pension
funds, private individuals, investment companies and other REITs. CPA(R):14 also
faces competition from institutions that provide or arrange for other types of
commercial financing through private or public offerings of equity or debt or
traditional bank financings. CPA(R):14 believes its management's experience in
real estate, credit underwriting and transaction structuring will allow
CPA(R):14 to compete effectively for office and industrial properties.

ENVIRONMENTAL MATTERS

         Under various federal, state and local environmental laws, regulations
and ordinances, current or former owners of real estate, as well as certain
other categories of parties, may be required to investigate and clean up
hazardous or toxic chemicals, substances or waste or petroleum product or waste
(collectively, "Hazardous Materials") releases on, under, in or from such
property, and may be held liable to governmental entities or to third parties
for certain damage and for investigation and cleanup costs incurred by such
parties in connection with the release or threatened release of Hazardous
Materials. Such laws typically impose responsibility and liability without
regard to whether the owner knew of or was responsible for the presence of
Hazardous Materials, and the liability under such laws has been interpreted to
be joint and several under certain circumstances. CPA(R):14's leases often
provide that the tenant is responsible for all environmental liability and for
compliance with environmental regulations relating to the tenant's operations.

         CPA(R):14 typically undertakes an investigation of potential
environmental risks when evaluating an acquisition. Phase I assessments are
performed by independent environmental consulting and engineering firms for all
acquisitions. Where warranted, Phase II assessments are performed. Phase I
assessments do not involve subsurface testing, whereas Phase II assessments
involve some degree of soil and/or groundwater testing. CPA(R):14 may acquire a
property which is known to have had a release of Hazardous Materials in the
past, subject to a determination of the level of risk and potential cost of
remediation. CPA(R):14 normally requires property sellers to fully indemnify it
against any environmental problem existing as of the date of purchase.
Additionally, CPA(R):14 often structures its leases to require the tenant to
assume most or all responsibility for environmental compliance or environmental
remediation relating to the tenants operations and to provide that
non-compliance with environmental laws is deemed a lease default. In certain
instances, CPA(R):14 may also require a cash reserve, a letter of credit or a
guarantee from the tenant, the tenant's parent company or a third party to
assure lease compliance and funding of remediation. The value of any of these
protections depends on the amount of the collateral and/or financial strength


                                     - 7 -
<PAGE>   9
of CPA(R):14 providing the protection. Such a contractual arrangement does not
eliminate CPA(R):14's statutory liability or preclude claims against CPA(R):14
by governmental authorities or persons who are not a party to such an
arrangement. Contractual arrangements in CPA(R):14's leases may provide a basis
for CPA(R):14 to recover from the tenant damages or costs for which CPA(R):14
has been found liable.

         CPA(R):14 operates in one industry segment, investment in net leased
real property. For the year ended December 31, 1998, Advanced Micro Devices,
Inc. Best Buy Co., Inc. and Etec Systems, Inc. represented 24%, 14% and 12%,
respectively of total operating revenue of CPA(R):14. No other lessee
represented 10% or more of operating revenue, Advanced Micro Devices, Best Buy
and Etec are publicly-traded companies which file annual and quarterly reports
with the U.S. Securities and Exchange Commission.

FACTORS AFFECTING FUTURE OPERATING RESULTS

         The provisions of the Private Securities Litigation Reform Act of 1995
(the "Act") became effective in December 1995. The Act provides a "safe harbor"
for companies which make forward-looking statements providing prospective
information. The "safe harbor" under the Act relates to protection for companies
with respect to litigation filed on the basis of such forward-looking
statements.

         CPA(R):14 wishes to take advantage of the "safe harbor" provisions of
the Act and is therefore including this section in its Annual Report on Form
10-K. The statements contained in this Annual Report, if not historical, are
forward-looking statements and involve risks and uncertainties which are
described below that could cause actual results to differ materially from the
results, financial or otherwise, or other expectations described in such
forward-looking statements. These statements are identified with the words
"anticipated," "expected," "intends," "seeks" or "plans" or words of similar
meaning. Therefore, forward-looking statements should not be relied upon as a
prediction of actual future results or occurrences.

         CPA(R):14's future results may be affected by certain risks and
uncertainties including the following:

SINGLE TENANT LEASES INCREASES EXPOSURE TO FAILURE OF TENANT

         We focus our acquisition activities on net leased real properties or
interests therein. Due to the fact that our net leased real properties are
leased to single tenants, the financial failure of or other default by a tenant
resulting in the termination of a lease is likely to cause a reduction in the
operating cash flow of CPA(R):14 and might decrease the value of the property
leased to such tenant.

WE DEPEND ON MAJOR TENANTS

         Revenues from several of our tenants and/or their guarantors may
constitute a significant percentage of our consolidated rental revenues. As of
December 31, 1999, CPA(R):14 had nineteen tenants. Although the number of
tenants will increase, a small number of tenants may continue to represent a
significant percentage of revenues. The default, financial distress or
bankruptcy of any of the tenants of such properties could cause interruptions in
the receipt of lease revenues from such tenants and/or result in vacancies in
the respective properties, which would reduce our revenues until the affected
property is re-let, and could decrease the ultimate sale value of each such
property. Upon the expiration of the leases that are currently in place with
respect to these properties, we may not be able to re-lease the vacant property
at a comparable lease rate or without incurring additional expenditures in
connection with such re-leasing.

WE CAN BORROW A SIGNIFICANT AMOUNT OF FUNDS

         We have incurred, and may continue to incur, indebtedness (secured and
unsecured) in furtherance of our activities. Neither the certificate of
incorporation, bylaws nor any policy statement formally adopted by the board of
directors limits either the total amount of indebtedness or the specified
percentage of indebtedness (based upon the total market capitalization of
CPA(R):14) which may be incurred. Accordingly, we could become more highly
leveraged, resulting in increased risk of default on our obligations and in an
increase in debt service requirements which could adversely affect our financial
condition and results of operations and our ability to pay distributions.


                                     - 8 -
<PAGE>   10
WE MAY NOT BE ABLE TO REFINANCE BALLOON PAYMENT ON MORTGAGE DEBT

         A significant number of the properties we leverage with debt will be
subject to mortgages with balloon payments. Our ability to make such balloon
payments will depend upon our ability either to refinance the mortgage related
thereto, invest additional equity in the property or to sell the related
property. Our ability to accomplish these goals will be affected by various
factors existing at the relevant time, such as the state of the national and
regional economies, local real estate conditions, available mortgage rates, our
equity in the mortgaged properties, our financial condition, the operating
history of the mortgaged properties and tax laws. In October 2007, a mortgage
loan may be called at the option of the lender. Six mortgage loans, obtained in
1999, have balloon payments scheduled in 2009.

WE MAY BE UNABLE TO RENEW LEASES OR RE-LET VACATED SPACES

         We will be subject to the risks that, upon expiration of leases, the
premises may not be re-let or the terms of re-letting (including the cost of
concessions to tenants) may be less favorable than current lease terms. If we
are unable to re-let promptly all or a substantial portion of our properties or
if the rental rates upon such re-letting were significantly lower than current
rates, our net income and ability to make expected distributions to our
shareholders would be adversely affected. There can be no assurance that we will
be able to retain tenants in any of our properties upon the expiration of their
leases. Within the next five years our lease with Best Buy Co., Inc. is
scheduled to expire. This lease currently represents 14% of our current
annualized revenue.

WE ARE SUBJECT TO POSSIBLE LIABILITY RELATING TO ENVIRONMENTAL MATTERS

         We own industrial and commercial properties and are subject to the risk
of liabilities under federal, state and local environmental laws. Some of these
laws could impose the following on CPA(R):14:

         -        Responsibility and liability for the cost of investigation and
                  removal or remediation of hazardous substances released on our
                  property, generally without regard to our knowledge or
                  responsibility of the presence of the contaminants;

         -        Liability for the costs of investigation and removal or
                  remediation of hazardous substances at disposal facilities for
                  persons who arrange for the disposal or treatment of such
                  substances; and

         -        Potential liability for common law claims by third parties
                  based on damages and costs of environmental contaminants.

WE MAY BE UNABLE TO MAKE ACQUISITIONS ON AN ADVANTAGEOUS BASIS

         The consummation of any future acquisition will be subject to
satisfactory completion of our extensive analysis and due diligence review and
to the negotiation of definitive documentation. There can be no assurance that
we will be able to identify and acquire additional properties or that we will be
able to finance acquisitions in the future. In addition, there can be no
assurance that any such acquisition, if consummated, will be profitable for us.
If we are unable to consummate the acquisition of additional properties in the
future, there can be no assurance that we will be able to increase the cash
available for distribution to our shareholders.

WE MAY SUFFER UNINSURED LOSSES

         We require our tenants to carry comprehensive liability, fire, extended
coverage on most of our properties, with policy specifications and insured
limits customarily carried for similar properties. For those properties where a
tenant is not required to obtain insurance, CPA(R):14 will obtain the
appropriate insurance. However, there are certain types of losses (such as due
to wars or acts of God) that generally are not insured because they are either
uninsurable or not economically insurable. Should an uninsured loss or a loss in
excess of insured limits occur, we could lose capital invested in a property, as
well as the anticipated future revenues from a property, while remaining
obligated for any mortgage indebtedness or other financial obligations related
to the property. Any such loss would adversely affect our financial condition.
We believe that the properties are adequately insured in accordance with
industry standards.


                                     - 9 -
<PAGE>   11
CHANGES IN MARKET INTEREST RATES COULD CAUSE OUR STOCK PRICE TO GO DOWN

         The trading prices of equity securities issued by real estate companies
have historically been affected by changes in broader market interest rates,
with increases in interest rates resulting in decreases in trading prices, and
decreases in interest rates resulting in increases in such trading prices. An
increase in market interest rates could therefore adversely affect the trading
prices of any of our equity securities.

WE FACE INTENSE COMPETITION

         The real estate industry is highly competitive. Our principal
competitors include national REITs, many of which are substantially larger and
have substantially greater financial resources than us.

THE VALUE OF OUR REAL ESTATE IS SUBJECT TO FLUCTUATION

         We are subject to all of the general risks associated with the
ownership of real estate. In particular, we face the risk that rental revenue
from the properties will be insufficient to cover all corporate operating
expenses and debt service payments on indebtedness we incur. Additional real
estate ownership risks include:

                  -        Adverse changes in general or local economic
                           conditions;

                  -        Changes in supply of or demand for similar or
                           competing properties;

                  -        Changes in interest rates and operating expenses;

                  -        Competition for tenants;

                  -        Changes in market rental rates;

                  -        Inability to lease properties upon termination of
                           existing leases;

                  -        Renewal of leases at lower rental rates;

                  -        Inability to collect rents from tenants due to
                           financial hardship, including bankruptcy;

                  -        Changes in tax, real estate, zoning and environmental
                           laws that may have an adverse impact upon the value
                           of real estate;

                  -        Uninsured property liability;

                  -        property damage or casualty losses;

                  -        Unexpected expenditures for capital improvements or
                           to bring properties into compliance with applicable
                           federal, state and local laws; and

                  -        Acts of God and other factors beyond the control of
                           our management.

WE DEPEND ON KEY PERSONNEL FOR OUR FUTURE SUCCESS

         We depend on the efforts of the executive officers and key employees of
Carey Property Advisors. The loss of the services of these executive officers
and key employees could have a material adverse effect on our operations.

         The risk factors may have affected, and in the future could affect, our
actual operating and financial results and could cause such results to differ
materially from those in any forward-looking statements. You should not consider
this list exhaustive. New risk factors emerge periodically, and we cannot
completely assure you that the factors we describe above list all material risks
to CPA(R):14 any specific point in time. We have disclosed many of the important
risk factors discussed above in our previous filings with the Securities and
Exchange Commission.

YEAR 2000 ISSUES.

         In 1999, CPA(R):14 and its affiliates formed a task force to identify
year 2000 problems. The task force developed and implemented a plan that
included inventory, assessment, remediation, testing and contingency planning.
CPA(R):14 experienced no significant disruptions as a result of the year end
date change. The task force intends to monitor other critical dates in the
future, such as quarter-end dates. The impact of the year 2000 issues on the
company will continue to depend on the way the issues have been addressed by
third parties that provide services to CPA(R):14. To date, CPA(R):14 has not
been adversely impacted to any significant extent by the failure of third
parties to address year 2000 issues. The task force has developed contingency
plans to address risks associated with year 2000 issues that may arise. There
can be no assurance that these plans will fully mitigate any problems, if any
arise. The foregoing year 2000 discussions constitute a Year 2000 Readiness
Disclosure within the meaning of the Year 2000 Readiness and Disclosure and
Disclosure Act of 1998.


                                     - 10 -
<PAGE>   12
Item 2.       Properties.

    The following table provides certain information with respect to the
Company's properties as of March 31, 1999:

<TABLE>
<CAPTION>
                                                  Current     Rent
  Tenant/Guarantor                Square          Annual       Per               Ownership           Initial
Location of Properties            Footage        Rent (1)     Foot               Interest             Term
----------------------            -------        --------     ----               --------             ----
<S>                               <C>           <C>          <C>           <C>                       <C>
ETEC SYSTEMS, INC.                                                         Ownership of an           May
    Hayward, CA                   142,000       $2,872,690   40.47         interest in a limited     2014
                                                                           liability company
                                                                           owning land and
                                                                           buildings

BURLINGTON MOTOR                                                           100%                      June
CARRIERS, INC.                                                                                       2018
    Daleville, IN                 106,352          792,000    7.45

BEST BUY CO., INC.                                                         100%                      January
    Torrance, CA                  102,470        1,741,990   17.00                                   2005

METAGENICS                                                                 100%                      August
INCORPORATED                                                                                         2011
    San Clemente, CA               88,070        1,109,280   12.60

THE BENJAMIN                                                               100%                      November
ANSEHL COMPANY                                                                                       2013
    St. Louis, MO                 154,760          649,750    4.20

CONTRAVES                                                                  100%                      November
BRASHEAR                                                                                             2013
SYSTEMS, L.P.
    Pittsburgh, PA                146,103          643,750    4.41

ADVANCED MICRO                                                             Ownership of a            December
DEVICES, INC.                                                              33 1/3% interest in       2018
    Sunnyvale, CA                 362,000        3,048,500   25.27 (2)     a limited liability
                                                                           company owning
                                                                           land and buildings

INTESYS                                                                    Ownership of a 50%        February
TECHNOLOGIES, INC.                                                         interest in a limited     2019
    Gilbert, AZ                   243,370        1,137,375    9.35 (2)     liability company
                                                                           owning land and
                                                                           buildings

FITNESS HOLDINGS                                                           100%                      June
WORLDWIDE, INC.                                                                                      2020
    Salt Lake City, UT             36,851
    (under construction)

WEST UNION                                                                 100%                      January
CORPORATION                                                                                          2015
    Tempe, AZ                     116,922
    (under construction)

BARJAN PRODUCTS                                                            100%                      February
L.L.C.                                                                                               2016
    Rock Island, IL               241,950
    (under construction)
</TABLE>


                                     - 11 -
<PAGE>   13

<TABLE>
<CAPTION>
                                                 Current     Rent
  Tenant/Guarantor               Square          Annual       Per               Ownership             Initial
Location of Properties           Footage        Rent (1)     Foot               Interest               Term
----------------------           -------        --------     ----               --------               ----
<S>                              <C>            <C>          <C>           <C>                       <C>
STELLEX                                                                    100%                      March
TECHNOLOGIES, INC.                                                                                   2020
    North Amityville, NY          228,000
    Valencia, CA                   53,889
                                ---------
                                  281,889
    (under construction)

CHECKFREE                                                                  Ownership of a 50%        December
CORPORATION, INC.                                                          interest in a limited     2015
    Norcross, GA                  178,584        1,243,872   13.93         liability company

AMERISERVE FOOD                                                            Ownership of a 60%        August
DISTRIBUTION, INC.                                                         interest in two limited   2020
    Burlington, NJ                184,819                                  liability companies
    Shawnee, KS                   244,272
    Grand Rapids, MI              176,941
    Manassas, VA                  100,337
                                ---------
                                  706,369        2,536,262    5.98

COMPUCOM                                                                   33 1/3% interest,         March
SYSTEMS, INC.                                                              remaining interest        2020
    Dallas, TX                    497,714        1,304,667    7.86         owned by CIP(R)
                                                                           And CPA(R):12

PRODUCTION
RESOURCE
GROUP LLC
    Las Vegas, NV                 127,796          884,000    6.92         100%                      March
                                                                                                     2014
    Burbank, CA                    17,020                                  100%                      November
    Los Angeles, CA                47,216                                                            2014
                                ---------
                                   64,236          393,250    6.12
BUILDERS SUPPLY                                                            100%                      November
AND LUMBER CO., INC.                                                                                 2019
    Harrisburg, NC                112,000          760,000    6.79

SCOTT CO OF                                                                100%                      August
CALIFORNIA                                                                                           2019
    Gardenia, CA                   87,693          681,000    7.77

CONSOLIDATED                                                               100%                      (3)
THEATERS
HOLDING, G.P.
    Midlothian, VA                 88,000
    (under construction)

AMERIX CORPORATION                                                          100%                     December
    Columbia, MD                  159,577                                                            2014
    (under construction)

ATRIUM                                                                     100%                      July
COMPANIES, INC.                                                                                      2020
    Dallas, TX                    539,017
    Greenville, TX                462,463
    Wylie, TX                     207,000
                                ---------
(under construction)            1,208,480        2,075,000    2.07
</TABLE>


(1)      Does not include properties under construction.

(2)      This figure represents the rent per square foot of the property when
         combined with rents payable to co-owners.

(3)      Twenty year term commencing at the end of the construction period.


                                     - 12 -
<PAGE>   14
Item 3.  Legal Proceedings.

                  As of the date hereof, CPA(R):14 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, 1999 to a vote of security holders, through the solicitation
of proxies or otherwise.


                                     - 13 -
<PAGE>   15
                                     PART II


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

                  Information with respect to CPA(R):14's common equity is
hereby incorporated by reference to page 21 of the Company's Annual Report
contained in Appendix A.


Item 6.  Selected Financial Data.

                  Selected Financial Data are hereby incorporated by reference
to page 1 of CPA(R):14'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 CPA(R):14's Annual Report contained in Appendix
A.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk:

                  Approximately $47,656,000 of the Company's long-term debt
bears interest at fixed rates, and therefore the fair value of these instruments
is affected by changes in the market interest rates. The following table
presents principal cash flows based upon expected maturity dates of the debt
obligations and the related weighted-average interest rates by expected maturity
dates for the fixed rate debt. The interest rate on the variable rate debt as of
December 31, 1999 was the sum of LIBOR and 2%.

(in thousands)

<TABLE>
<CAPTION>
                      2000         2001          2002          2003          2004       Thereafter      Total      Fair Value
                      ----         ----          ----          ----          ----       ----------      -----      ----------
<S>                <C>           <C>           <C>           <C>           <C>           <C>           <C>          <C>
Fixed rate         $   413       $   466       $   505       $   548       $   585       $45,139       $47,656      $46,687

Average
   interest
   rate               7.66%         6.61%         6.59%         6.58%         6.55%        8.14%

Variable rate           25           107           118           129           141           975         1,495        1,495
</TABLE>

As of December 31, 1999, CPA(R):14 had no other material exposure to market
risk.

Item 8.   Financial Statements and Supplementary Data.

                  The following consolidated financial statements and
supplementary data of CPA(R):14 are hereby incorporated be reference to pages 5
to 18 of CPA(R):14's Annual Report contained in Appendix A:

(i)      Report of Independent Accountants

(ii)     Consolidated Balance Sheets at December 31, 1997, 1998 and 1999.

(iii)    Consolidated Statements of Operations for the period from Inception
         (June 4, 1997) to December 31, 1997 and for the years ended December
         31, 1998 and 1999.

(iv)     Consolidated Statements of Shareholders' Equity for the period from
         Inception (June 4, 1997) to December 31, 1997 and for the years ended
         December 31, 1998 and 1999.

(v)      Consolidated Statements of Cash Flows for the period from Inception
         (June 4, 1997) to December 31, 1997 and for the years ended December
         31, 1998 and 1999.

(vi)     Notes to Consolidated Financial Statements.


                                     - 14 -
<PAGE>   16
Item 9.  Disagreements on Accounting and Financial Disclosure.

                  NONE


                                    PART III


Item 10. Directors and Executive Officers of the Registrant.

                  This information will be contained in CPA(R):14's definitive
Proxy Statement with respect to the Company's Annual Meeting of Shareholders, to
be filed with the Securities and Exchange Commission within 120 days following
the end of the Company's fiscal year, and is hereby incorporated by reference.


Item 11. Executive Compensation.

                  This information will be contained in CPA(R):14's definitive
Proxy Statement with respect to the Company's Annual Meeting of Shareholders, to
be filed with the Securities and Exchange Commission within 120 days following
the end of CPA(R):14's fiscal year, and is hereby incorporated by reference.


Item 12. Security Ownership of Certain Beneficial Owners and Management.

                  This information will be contained in CPA(R):14's definitive
Proxy Statement with respect to the Company's Annual Meeting of Shareholders, to
be filed with the Securities and Exchange Commission within 120 days following
the end of CPA(R):14's fiscal year, and is hereby incorporated by reference.


Item 13. Certain Relationships and Related Transactions.

                  This information will be contained in CPA(R):14's definitive
Proxy Statement with respect to the Company's Annual Meeting of Shareholders, to
be filed with the Securities and Exchange Commission within 120 days following
the end of the CPA(R):14's fiscal year, and is hereby incorporated by reference.


                                     - 15 -
<PAGE>   17
                                     PART IV


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

    (a)  1.       Consolidated Financial Statements:

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

    Report of Independent Accountants.

    Consolidated Balance Sheets, December 31, 1998 and 1999.

    Consolidated Statements of Operations for the period from Inception (June 4,
    1997) to December 31, 1997 and the years ended December 31, 1998 and 1999.

    Consolidated Statements of Shareholders' Equity for the period from
    Inception (June 4, 1997) to December 31, 1997 and the years ended December
    31, 1998 and 1999.

    Consolidated Statements of Cash Flows for the period from Inception (June 4,
    1997) to December 31, 1997 and the years ended December 31, 1998 and 1999.

    Notes to Consolidated Financial Statements.

    The consolidated financial statements are hereby incorporated by reference
    to pages 5 to 18 of the Company's Annual Report contained in Appendix A.


    (a)  2.       Financial Statement Schedule:

                  The following schedules are filed as a part of this Report:

                  Schedule III - Real Estate and Accumulated Depreciation as of
December 31, 1999.

                  Schedule III of Registrant is contained on pages 22 to 24 of
this Form 10-K.

                  Financial Statement Schedules other than those listed above
are omitted because the required information is given in the Consolidated
Financial Statements, including the Notes thereto, or because the conditions
requiring their filing do not exist.


                                     - 16 -
<PAGE>   18
    (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
-------           -----------                                                           ---------
<S>        <C>                                                                          <C>
3.1        Articles of Amendment and Restatement.                                       Exhibit 3(A) to Registration
                                                                                        Statement (Form S-11)
                                                                                        No. 333-76761

3.2        Amended Bylaws of Registrant.                                                Exhibit 3(B) to Registration
                                                                                        Statement (Form S-11)
                                                                                        No. 333-31437

10.1       Amended Advisory Agreement .                                                 Exhibit 10.1 to Registration
                                                                                        Statement (Form S-11)
                                                                                        No. 333-31437

10.1(2)    Lease Agreement date July 27, 1998 by and between Best (CA)                  Exhibit 10.1 to Registrant's Form
                                                                                        8-K Dated February 2, 1999

10.2       Lease Agreement dated July 27, 1998 by and between Best                      Exhibit 10.1 to Registrant's Form
           (CA) QRS 14-4, as Landlord, and Best Buy Co. Inc., as Tenants.               8-K dated February 2, 1999

10.2(2)    Lease Agreement dated July 27, 1998 by and between Best (CA)                 Exhibit 10.2 (2) to Registration
           QRS 14-4, as Landlord, and Best Co. Inc., as Tenants                         Statement (Form S-11)
                                                                                        No. 333- 76761

10.2(3)    Lease Agreement dated July 27, 1998 by and between Best (CA)                 Exhibit 10.2 (3) to Registrant's
           QRS 14-4, as Landlord, and Best Co. Inc., as Tenants.                        Form Post AM dated
                                                                                        April 19, 1999

10.2(4)    Lease Agreement date July 27, 1998 by and between Best (CA)                 Exhibit 10.2 to Registrant's Form
           QRS 14-4, as Landlord, and Best Buy Co. Inc. as Tenants.                     10-k for the year ended December
                                                                                        31, 1998, dated March 30, 1999

10.2(5)    Lease Agreement date February 3, 1998 by and between ESI (CA)                Exhibit 10.2 to Registrant's Form
           QRS 12-6 INC., as Landlord and Etec Systems, Inc. as Tenant                  8-K dated February 2, 1999

10.3(2)    Lease Agreement dated February 2, 1998 by and between ESI                    Exhibit 10.3(2) to Registration
           (CA) QRS 12-6, as Landlord, and Etec Systems, Inc., as Tenants.              Statement (Form S-11) No
                                                                                        333- 76761

10.3(3)    Lease Agreement dated February 2, 1998 by and between ESI                    Exhibit 10.3(3). to Registrant's
           (CA) QRS 12-6, as Landlord, and Etec Systems, Inc., as                       Post Effective Amendment Tenants.
                                                                                        to Form S-11 Dated April 19, 1999


10.3(4)    Lease Agreement date February 3, 1998 by and between ESI                     Exhibit 10.3 to Registrant's Form
           (CA) QRS 12-6 Inc., as Landlord and ETEC Systems, Inc.,                      10-K for the year ended December
           February 2, 1999                                                             31, 1998. dated March 30, 1999

10.3 (5)   Lease Agreement date July 29, 1998 by and between META (CA)                  Exhibit 10.3 to Registrant's form
           QRS 14-16, as Landlord, and Metagenics Incorporated, as Tenants              8-K dated February 2, 1999
</TABLE>


                                     - 17 -
<PAGE>   19
<TABLE>
<CAPTION>
Exhibit                                                                                 Method of
  No.             Description                                                            Filing
-------           -----------                                                           ---------
<S>        <C>                                                                          <C>
10.4       Lease Agreement dated July 29, 1998 by and between META                      Exhibit 10.3 to Registrant's
           (CA) 14-16, as Landlord, and Metagenics Incorporated, as QRS                 Form 8-K dated February 2, 1999
           Tenants.

10.4(2)    Lease Agreement dated July 29, 1998 by and between META (CA)                 Exhibit 10.4(2) to Registration
           QRS 14-16, as Landlord, and Metagenics Incorporated, as Tenants.             Statement (Form S-11)
                                                                                        No. 333- 76761

10.4(3)    Lease Agreement dated July 29, 1998 by and between META (CA)                 Exhibit 10.4 (3) to Registrant's
           QRS 14-16, as Landlord, and Metagenics Incorporated, as                      Post Effective Amendment No. 2
           Tenants.                                                                     to Form S-11 dated April 19, 1999

10.4(4)    Lease Agreement date July 29, 1998 by and between META (CA)                  Exhibit 10.4 to Registrant's Form
           QRS 14-6, as Landlord and Metagenics Incorporated as Tenants                 For the year ended December 31,
                                                                                        1999, dated March 30, 1999

10.4 (5)   Lease Agreement dated July 30, 1998 by and between TRUCK (IN)                Exhibit 10.4 to
           QRS 14-3, INC., as Landlord, and Burlington Motor                            Registrant's Form 8-K
           Carrier as, Tenants.                                                         dated February 2, 1999

10.5(2)    Lease Agreement dated July 30, 1998 by and between TRUCK                     Exhibit 10.5 (2)
           (IN) QRS 14-3, as Landlord, and Burlington Motor Carrier Inc.,               (Form S-11)
           as Tenants.                                                                  No. 333- 76761

10.5(3)    Lease Agreement dated July 30, 1998 by and between TRUCK                     Exhibit 10.5 to Registrant's
           (IN) QRS 14-3, as Landlord, and Burlington Motor Carrier                     Post Effective Amendment No. 2
           as Tenants.                                                                  dated April 19, 1999

10.5(4)    Lease Agreement dated July 30, 1998 by and between TRUCK                     Exhibit 10.5 to Registrant's Form
           (IN) QRS 14-3, INC., as Landlord, and Burlington Motor Carrier               10-K for the year ended December
           Inc., as Tenants.                                                            31, 1998, dated March 30, 1999

10.5(5)    Lease Agreement dated November 24, 1998 by and                               Exhibit 10.5 to Registrant's
           between BAC (MO) QRS 14010, Inc., as Landlord,                               Form 8-k  dated
           and The Benjamin Ansehl Co., as Tenants                                      February 2, 1999

10.6       Lease Agreement dated December 22, 1998 by and between                       Exhibit 10.6 to Registrant's Form
           Conductor (CA) QRS 14-11, Inc., as Landlord, and                             8-K dated February 2, 1999
           Advance

10.6(2)    Lease Agreement dated November 24, 1998 by and between BAC                   Exhibit 10.6 (2)
           (MO) QRS 14-10, as Landlord, and The Benjamin Ansehl Co., as                 to Registration Statement
           Tenants                                                                      (Form S-11) No. 333- 76761

10.6(3)    Lease Agreement dated November 24, 1998 by and between BAC                   Exhibit 10.6(3) to Registrant's
           (MO) QRS 14-10, as Landlord, and The Benjamin Ansehl Co., as                 Post Effective Amendment to Form
           Tenants.                                                                     S-11 Date April 19, 1999

10.6 (5)   Lease Agreement dated November 24, 1998 by                                   Exhibit 10.6 to Registrant's
           and between BAC (MO) QRS 14-10, Inc.,                                        Form 10-K for the year
           as Landlord, and The Benjamin Ansehl Co., as Tenants.                        ended December 31, 1998,
           dated February 2, 1999
</TABLE>


                                     - 18 -
<PAGE>   20
<TABLE>
<CAPTION>
Exhibit                                                                                 Method of
  No.             Description                                                            Filing
-------           -----------                                                           ---------
<S>        <C>                                                                          <C>
10.7       Lease Agreement dated December 22, 1998 by and between                       Exhibit 10.6 to Registrant's
           Conductor (CA) QRS 14-11, Inc., as Landlord, and Advance                     Form 8-K dated
           Micro Devices, Inc., as Tenants.                                             February 2, 1999

10.7(2)    Lease Agreement dated December 22, 1998 by and between                       Exhibit 10.7 (2)
           Conductor (CA) QRS 14-11, as Landlord, and Advanced Micro                    to Registration Statement
           Devices, Inc., as Tenants.                                                   (Form S-11) No. 333- 76761

10.7(3)    Lease Agreement dated December 22, 1998 by and between                       Exhibit 10.7 (3) to Registrant's
           Conductor (CA) QRS 14-11, as Landlord, and Advanced Micro                    Post Effective Amendment No. 2
           Devices, Inc., as Tenants.                                                   dated April 19, 1999

10.7(4)    Lease Agreement dated December 22, 1998 by and between                       Exhibit 10.7 to Registrant's
           Conductor (CA) QRS 14-11, as Landlord, and Advance                           Form 10-K for year ended
           Micro Devices, Inc. as Tenants.                                              December 31, 1998, dated March 30, 1999

10.7(5)    Lease Agreement dated December 28, 1998 by and between CBS                   Exhibit 10.7 to Registrant's
           (PA) QRS 14-12, Inc. as Landlord, and Contraves Brashear Systems             Form 8-K,
           L. P., as Tenants                                                            dated February 2, 1999

10.8(2)    Lease Agreement dated December 28, 1998 by and between CBS                   Exhibit 10.8 (2) to Registration
           (PA) QRS 14-12, as Landlord, and Contraves Brashear Systems,                 (Form S-11) No. 333- 76761
           L.P., as Tenants.

10.8(3)    Lease Agreement dated December 28, 1998 by and between CBS                   Exhibit 10.8 (3) to Registrant's
           (PA) QRS 14-12, as Landlord, and Contraves Brashear Systems,                 Post Effective Amendment
           L.P., as Tenants.                                                            to Form S-11 dated
                                                                                        April 19, 1999

21.1       Subsidiaries of Registrant as of March 31, 2000.                             Filed herewith

23         Consent of PricewaterhouseCoopers LLP                                        Exhibit 23 to Registration
                                                                                        (Form S-11) No. 333- 76761

23(1)      Consent of PricewaterhouseCoopers LLP                                        Exhibit 23(1) to Registrant's
                                                                                        Post Effective Amendment
                                                                                        No. 2 to Form S-11
                                                                                        dated April 1, 1999

23.1       Consent of PricewaterhouseCoopers LLP Dated March 5, 2000                    Filed herewith
</TABLE>


                                     - 19 -
<PAGE>   21
    (b)    Reports on Form 8-K

                  During the quarter ended December 31, 1999 the Registrant was
not required to file any reports on Form 8-K.

    (c)
                  Pursuant to Rule 701 of Regulation S-K, the use of proceeds
through December 31, 1999 from the Company's offering of common stock which
commenced February 2, 1996 (File # 33-99994) is as follows:

<TABLE>
<S>                                                                        <C>
         Shares registered:                                                  30,000,000

         Aggregate price of offering amount registered:                    $300,000,000

         Shares sold:                                                        29,440,594

         Aggregated offering price of amount sold:                         $294,405,940

         Direct 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:                                                    $  3,684,995

         Direct or indirect payments to others:                            $ 25,477,481

         Net offering proceeds to the issuer after
            deducting expenses:                                            $265,243,464

         Purchases of real estate:                                         $230,724,916

         Working capital reserves:                                         $  2,944,059

         Temporary investments in cash and cash
            equivalents:                                                   $ 31,574,489
</TABLE>


                                     - 20 -
<PAGE>   22
                                   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 14 INCORPORATED
                                   a Maryland corporation

04/07/2000                         BY:  /s/ John J. Park
----------                             -----------------------------
     Date                              John J. Park
                                       Executive Vice President and
                                       Chief Financial 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.

                                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

04/07/2000                        BY:  /s/ William P. Carey
----------                            ----------------------------------
     Date                             William P. Carey
                                      Chairman of the Board and Director
                                      (Principal Executive Officer)

04/07/2000                        BY:  /s/ H. Augustus Carey
----------                            ----------------------------------
     Date                             H. Augustus Carey
                                      President

04/07/2000                        BY:  /s/ William Ruder
----------                            ----------------------------------
     Date                             William Ruder
                                      Director

04/07/2000                        BY:  /s/ George E. Stoddard
----------                            ----------------------------------
     Date                             George E. Stoddard
                                      Director

04/07/2000                        BY:  /s/ Charles C. Townsend, Jr.
----------                            ----------------------------------
     Date                             Charles C. Townsend, Jr.
                                      Director

04/07/2000                        BY:  /s/ Warren G. Wintrub
----------                            ----------------------------------
     Date                             Warren G. Wintrub
                                      Director

04/07/2000                        by:  /s/ Thomas E. Zacharias
----------                            ----------------------------------
     Date                             Thomas E. Zacharias
                                      Director

04/07/2000                        BY:  /s/ John J. Park
----------                            ----------------------------------
     Date                             John J. Park
                                      Executive Vice President and
                                      Chief Financial Officer
                                      (Principal Financial Officer)

04/07/2000                        BY:  /s/ Claude Fernandez
----------                            ----------------------------------
     Date                             Claude Fernandez
                                      Executive Vice President and
                                      Chief Administrative Officer
                                      (Principal Accounting Officer)


                                     - 21 -
<PAGE>   23
To the Board of Directors of
Corporate Property Associates 14 Incorporated
and Subsidiaries:

Our audits of the consolidated financial statements referred to in our report
dated April 7, 2000 appearing on page 16 of the 1999 Annual Report to
Shareholders of Corporate Property Associates 14 Incorporated and Subsidiaries
(which report and consolidated financial statements are incorporated by
reference in this Annual Report on Form 10-K) also included an audit of the
financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our
opinion, this financial statement schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements.



/s/ PricewaterhouseCoopers LLP

New York, New York
April 7, 2000


                                     - 22 -
<PAGE>   24
                 CORPORATE PROPERTY ASSOCIATES 14, INCORPORATED

             SCHEDULE III - REAL ESTATE and ACCUMULATED DEPRECIATION

                             as of December 31, 1999

<TABLE>
<CAPTION>


                                                                   Initial Cost to               Cost
                                                                       Company                Capitalized
                                                              --------------------------     Subsequent to
    Description                              Encumbrances        Land         Buildings     Acquisition (a)
    -----------                              ------------        ----         ---------     ---------------
<S>                                          <C>              <C>           <C>             <C>
Operating Method:

  Trucking facility leased to
    Burlington Motor Carriers, Inc.                           $ 2,100,000    $ 5,439,267

  Retail store leased to
    BestBuy Co., Inc.                                          13,059,980      6,933,851      $    41,666

  Research and development
    facility leased to Metagenics,
    Inc. (under construction)                                   2,390,000                       7,754,285

  Manufacturing facility leased to
    Benjamin Ansehl Co.                       $ 3,082,872         849,000      5,172,000

  Manufacturing facility leased to
    Contraves Systems, L.P.                     4,180,555         620,000      6,186,283

Manufacturing and distribution
  facilities leased to Production
  Resource Group L.L.C                          5,451,111       3,860,000      8,263,455

Distribution and warehouse
  facility leased to Ameriserve Food
  Distribution, Inc.                           31,950,721       4,344,000     11,656,000        1,786,814

Multi-plex motion picture
  theater leased to
  Consolidated Theaters L.L.C.                  1,494,867       3,515,000

Office and warehouse facility
  leased to Builders' Supply &
  Lumber Co., Inc.                                              2,769,976          3,035        3,387,968

Office and research facility
  leased to Amerix Corporation                                  2,622,500     20,232,580           60,615
                                              -----------     -----------    -----------      -----------
                                              $46,160,126     $36,130,456    $63,886,471      $13,031,348
                                              ===========     ===========    ===========      ===========
</TABLE>

<TABLE>
<CAPTION>


                                                       Gross Amount at which Carried
                                                          at Close of Period  (b)
                                                ------------------------------------------   Accumulated
    Description                                   Land         Buildings         Total       Depreciation      Date Acquired
    -----------                                   ----         ---------         -----       ------------      -------------
<S>                                             <C>            <C>            <C>            <C>               <C>
Operating Method:

  Trucking facility leased to
    Burlington Motor Carriers, Inc.             $ 2,100,000    $ 5,439,267    $  7,539,267     $  209,639      June 29, 1998

  Retail store leased to
    BestBuy Co., Inc.                            13,059,980      6,975,517      20,035,497        254,095      July 28, 1998

  Research and development
    facility leased to Metagenics,
    Inc. (under construction)                     2,390,000      7,754,285      10,144,285         53,339      July 29, 1998

  Manufacturing facility leased to
    Benjamin Ansehl Co.                             849,000      5,172,000       6,021,000        145,463      November 24, 1998

  Manufacturing facility leased to
    Contraves Systems, L.P.                         620,000      6,186,283       6,806,283        161,101      December 28, 1998

Manufacturing and distribution
  facilities leased to Production
  Resource Group L.L.C                                                                                        March 31, 1999 and
                                                  3,860,000      8,263,455      12,123,455        133,309      October 15, 1999

Distribution and warehouse
  facility leased to Ameriserve Food
  Distribution, Inc.                              4,344,000     13,442,814      17,786,814        133,297      August 18, 1999

Multi-plex motion picture
  theater leased to
  Consolidated Theaters L.L.C.                    3,515,000                      3,515,000                     September 22, 1999

Office and warehouse facility
  leased to Builders' Supply &
  Lumber Co., Inc.                                2,769,976      3,391,003       6,160,979                     June 29, 1999

Office and research facility
  leased to Amerix Corporation                    2,622,500     20,293,195      22,915,695         62,352      November 1, 1999
                                                -----------    -----------    ------------     ----------
                                                $36,130,456    $76,917,819    $113,048,275     $1,152,595
                                                ===========    ===========    ============     ==========
</TABLE>


<TABLE>
<CAPTION>
                                             Life on which
                                              Depreciation
                                               in Latest
                                              Statement of
                                                 Income
    Description                               is Computed
    -----------                              -------------
<S>                                          <C>
Operating Method:

  Trucking facility leased to
    Burlington Motor Carriers, Inc.              40 yrs.

  Retail store leased to
    BestBuy Co., Inc.                            40 yrs.

  Research and development
    facility leased to Metagenics,
    Inc. (under construction)                    40 yrs.

  Manufacturing facility leased to
    Benjamin Ansehl Co.                          40 yrs.

  Manufacturing facility leased to
    Contraves Systems, L.P.                      40 yrs.

Manufacturing and distribution
  facilities leased to Production
  Resource Group L.L.C                           40 yrs.

Distribution and warehouse
  facility leased to Ameriserve Food
  Distribution, Inc.                             40 yrs.

Multi-plex motion picture
  theater leased to
  Consolidated Theaters L.L.C.                   N/A

Office and warehouse facility
  leased to Builders' Supply &
  Lumber Co., Inc.                               40 yrs.

Office and research facility
  leased to Amerix Corporation                   40 yrs.
</TABLE>


                                     - 23 -
<PAGE>   25
                 CORPORATE PROPERTY ASSOCIATES 14, INCORPORATED

             SCHEDULE III - REAL ESTATE and ACCUMULATED DEPRECIATION

                             as of December 31, 1999


<TABLE>
<CAPTION>
                                                     Initial Cost to             Gross Amount at which
                                                         Company            Carried at Close of Period  (b)
                                                ------------------------    -------------------------------
    Description                 Encumbrances       Land       Buildings                  Total                  Date Acquired
    -----------                 ------------       ----       ---------                  -----                  -------------
<S>                              <C>            <C>          <C>            <C>                                <C>
Direct Financing Method:

  Industrial/manufacturing
    facilities leased to
    Atrium Companies, Inc.                      $  459,608   $20,419,510              $20,879,118              November 18, 1999

  Industrial/manufacturing
    facilities leased to
    Scott Companies, Inc.        $2,991,008      2,340,000     3,942,723                6,282,723              July 19, 1999
                                 ----------     ----------   -----------              -----------
                                 $2,991,008     $2,799,608   $24,362,233              $27,161,841
                                 ==========     ==========   ===========              ===========
</TABLE>


                                     - 24 -
<PAGE>   26
                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and SUBSIDIARIES

                       NOTES to SCHEDULE III - REAL ESTATE
                          and ACCUMULATED DEPRECIATION



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

(b)      At December 31, 1999, the aggregate cost of real estate owned by
         CPA(R):14 and its subsidiaries for Federal income tax purposes is
         $133,861,516.

(c)

<TABLE>
<CAPTION>
                                            Reconciliation of Real Estate Accounted
                                                for Under the Operating Method
                                                ------------------------------
                                                          December 31,
                                              ----------------------------------
                                                   1998                  1999
                                              ------------            ----------
<S>                                           <C>                   <C>
Balance at beginning
         of year                                                    $ 44,742,002

Additions                                     $ 44,742,002            68,306,273

                                              ------------          ------------
Balance at close of year                      $ 44,742,002          $113,048,275
                                              ============          ============
</TABLE>


<TABLE>
<CAPTION>
                                            Reconciliation of Accumulated Depreciation
                                            ------------------------------------------
                                                           December 31,
                                                 -------------------------------
                                                     1998                1999
                                                 ----------           ----------
<S>                                              <C>                  <C>
Balance at beginning
         of year                                                      $  175,977

Depreciation expense                             $  175,977              976,618

                                                 ----------           ----------
Balance at close of year                         $  175,977           $1,152,595
                                                 ==========           ==========
</TABLE>


                                     - 25 -
<PAGE>   27
                                                         APPENDIX A TO FORM 10-K













                 CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

                                AND SUBSIDIARIES
































                                                              1999 ANNUAL REPORT
<PAGE>   28
SELECTED FINANCIAL DATA

(In thousands except per share and share amounts)

<TABLE>
<CAPTION>
                                             1997 (1)                    1998                1999
                                             --------                    ----                ----
OPERATING DATA:
<S>                                          <C>                      <C>               <C>
Revenues                                                                  $2,209            $10,023

Net (loss) income                                ($12)                     1,058              7,678

Basic earnings per share                         (.61)                       .25                .39

Dividends paid (2)                                                         1,324              9,781

Dividends declared per share                                                 .47                .65

Weighted average
   Shares outstanding - basic                  20,000                  4,273,311         19,909,834



BALANCE SHEET DATA:

Total consolidated assets                         200                    107,956            331,063

Long-term obligations (3)                                                  1,629             54,350
</TABLE>


(1)      For the period from inception (June 4, 1997) through December 31, 1997.

(2)      The Company paid its first dividend in July 1998.

(3)      Represents mortgage notes payable and deferred acquisition fee
         installments that are due after more than one year.

                                      -1-
<PAGE>   29
MANAGEMENT'S DISCUSSION AND ANALYSIS

                  Overview

                  The following discussion and analysis of the financial
condition and results of operations of Corporate Property Associates 14
Incorporated should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended December 31, 1999. The following
discussion includes forward looking statements. Forward looking statements,
which are based on certain assumptions, describe our future plans, strategies
and expectations. Such statements involve known and unknown risks, uncertainties
and other factors that may cause our actual results, performance or achievement
to be materially different from the results of operations or plan expressed or
implied by these forward looking statements. Accordingly, this information
should not be regarded as representations that the results or condition
described in these statements or objectives and plans will be achieved.

                  Corporate Property Associates 14 Incorporated was formed in
1997 for the purpose of engaging in the business of investing in and owning
commercial and industrial real estate. In November 1997, we commenced a public
offering of 30,000,000 shares of common stock at $10 per share on a "best
efforts" basis. The offering concluded in 1999 at which time we had issued
29,440,595 shares and raised $294,405,905. In November 1999, we commenced a
second public offering of 40,000,000 shares of common stock at $10 per share on
a "best efforts" basis. The second offering will end no later than November 16,
2001 or earlier if the entire 40,000,000 shares are subscribed prior to that
date.

                  We are using the proceeds from the public offerings along with
limited recourse mortgage financing to purchase properties and enter into
long-term net leases with corporate tenants. A net lease is structured to place
certain economic burdens of ownership on these corporate tenants by requiring
them to pay the costs of maintenance and repair, insurance and real estate
taxes. The leases have generally been structured to include periodic rent
increases that are stated or based on increases in the consumer price index or,
for retail properties, provide for additional rents based on sales in excess of
a specified base amount.

                  Our primary objectives are to provide rising cash flow and to
protect our investors from the effects of inflation through rent escalation
provisions, property appreciation, tenant credit improvement and regular paydown
of limited recourse mortgage debt. In addition, we have successfully negotiated
grants of common stock warrants from selected tenants and expect to realize the
benefits of appreciation from those grants. We cannot guarantee that our
objectives will be ultimately achieved.

                  Public business enterprises are required to report financial
and descriptive information about their reportable operating segments. Operating
segments are components of an enterprise about which financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. Management
evaluates the performance of our portfolio of properties as a whole, rather than
by identifying discrete operating segments. This evaluation includes assessing
our ability to meet distribution objectives, increase the dividend and increase
value by evaluating potential investments in single tenant net lease real estate
and by seeking favorable limited recourse mortgage financing opportunities.

                  Financial Condition

                  We are using substantially all of the net proceeds from our
offerings (except for approximately 1% to establish a working capital reserve)
along with limited recourse mortgage financing to purchase a diversified
portfolio of commercial and industrial real estate and enter into long-term
leases with corporate tenants on a net lease, single tenant basis. Under a net
lease, a tenant is generally required to pay all expenses related to the leased
property in order to limit our exposure to the effects of increases in real
estate taxes and property maintenance and insurance costs. Our leases, which
generally have initial lease terms of 15 to 25 years, typically include rent
increase provisions which are fixed or based upon increases in the Consumer
Price Index. As of December 31, 1999, we raised $265,000,000, net of costs, from
our first offering, including approximately $160,000,000 that we raised in 1999.
We have used approximately $180,914,000 including $101,725,000 in 1999, along
with mortgage proceeds of $49,661,000 to purchase real estate and interests in
five single purpose entities formed with affiliates that have purchased real
estate and entered into net leases. The affiliates have the same investment
objectives as us. Since December 31, 1999, we have raised $33,838,000, invested
an additional $36,691,000 in real estate, and as of March 31, 2000 have
$111,193,000 of cash available for investment.

                                      -2-
<PAGE>   30
                  We have devoted a substantial portion of our resources to
build-to-suit projects because we have concluded that they should provide a
better return on investment than many other opportunities being evaluated by our
Advisor. In 1998, we entered into build-to-suit commitments in connection with
our lease with Metagenics Incorporated for a property in San Clemente,
California and a building in Hayward, California leased to Etec Systems, Inc.
that we own with an affiliate. The Metagenics and Etec projects were completed
during 1999. During 1999, we entered into build-to-suit commitments with Atrium
Companies, Inc., Ameriserve Food Distribution, Inc., Builders' Supply and Lumber
Co., Inc., CheckFree Holdings Corporation, Consolidated Theatres L.L.C., Amerix
Corporation and Fitness Holdings Worldwide, Inc. The Ameriserve Food
Distribution, Atrium, Amerix and CheckFree transactions also included
acquisition of properties that were occupied, have provided us with operating
revenues since their acquisition and do not require any additional investment by
us. After the build-to-suit project at Builders' Supply was completed, we
entered into a new commitment with them to fund an expansion at that property.
Remaining costs to complete these projects are expected to be $25,211,000. Our
build-to-suit commitments include provisions that require the lessee to fund any
cost overruns.

                  We are using the cash flow from our net leases to fund
quarterly dividends at an increasing rate, and pay debt service installments on
limited recourse mortgage debt. For 1999, cash flow from operations of
$8,801,000 when combined with the cash flow from our equity investments in
excess of equity income of $1,277,000 was sufficient to pay quarterly dividends
of $9,781,000 and mortgage principal payments of $144,000. Our cash flow from
our equity investments exceeds the income we recognize from these investments
because of noncash charges for depreciation. Although the amounts received in
excess of equity income are recorded as an investing cash flow in the
accompanying consolidated financial statements, Management does not distinguish
between directly owned properties and properties owned through equity
investments in evaluating the ability of the company to pay dividends. As we
continue to issue shares and invest the proceeds, both cash flow from operations
and dividends payable are expected to increase substantially.

                  In connection with the purchase of our properties, we require
the sellers to perform environmental reviews. Management believes, based on the
results of such reviews, that our properties were in substantial compliance with
Federal and state environmental statutes at the time the properties were
acquired. Tenants are generally subject to environmental statutes and
regulations regarding the discharge of hazardous materials and any related
remediation obligations. In addition, our leases generally require tenants to
indemnify us fully from all liabilities and losses related to the leased
properties with provisions of such indemnification specifically addressing
environmental matters. The leases generally include provisions that allow for
periodic environmental assessments, paid for by the tenant, and allow us to
extend leases until such time as a tenant has satisfied its environmental
obligations. We also attempt to negotiate lease provisions to require financial
assurances from tenants such as performance bonds or letters of credit if the
costs of remediating environmental conditions are, in our estimation, in excess
of specified amounts. Accordingly, we believe that the ultimate resolution of
any environmental matters would not have a material adverse effect on our
financial condition, liquidity or results of operations.

                  Since December 31, 1999, Ameriserve Food Distribution filed a
petition of voluntary bankruptcy. Ameriserve is expected to prepare a plan of
reorganization and under such a plan could seek to terminate lease obligations.
Accordingly, there is no assurance that Ameriserve Food distribution will affirm
its leases with us. Ameriserve Food Distribution; however, continues to meet its
lease obligations and Management believes that the properties acquired and being
constructed are necessary to Ameriserve Food Distribution's operations.
Accordingly, we currently expect Ameriserve Food Distribution to continue to
lease our properties during its reorganization and thereafter.

                  In 1999, we, along with our affiliates, formed a task force to
identify year 2000 problems. The task force developed and implemented a plan
that included inventory, assessment, remediation, testing and contingency
planning. We experienced no significant disruptions as a result of the year end
date change. The task force intends to monitor other critical dates in the
future, such as quarter-end dates. In connection with the procedures, our share
of expenses was minimal. The impact of the year 2000 issues on the company will
continue to depend on the way the issues have been addressed by third parties
that provide services to the company. To date, we have not been adversely
impacted to any significant extent by the failure of third parties to address
year 2000 issues. The task force has developed contingency plans to address
risks associated with year 2000 issues that may arise. There can be no assurance
that these plans will fully mitigate any problems, if any arise. The foregoing
year 2000 discussions constitute a Year 2000 Readiness Disclosure within the
meaning of the Year 2000 Readiness and Disclosure and Disclosure Act of 1998.

                                      -3-
<PAGE>   31
                  Results of Operations

                  Net income for 1999 as compared with 1998 increased to
$7,678,000 from $1,058,000 and increased by 56% on a per share basis. The
increase in net income was due to our investment of offering proceeds in real
estate, either directly owned or in equity investments with affiliates in single
tenant, net lease properties. During 1999, our asset base in real estate
(including equity investments) increased from approximately $80,000,000 to
$235,000,000. Our cash balances have increased from $26,747,000 to $91,420,000
as a result of the issuance of shares and resulted in a substantial increase in
interest income. Interest income, however, represents a lower proportion of
overall revenues as lease revenues (rental income and interest income from
direct financing leases) increased by approximately $6,000,000 and income
contributed from equity investments increased from 2% of earnings in 1998 to 38%
in 1999. Increases in depreciation and amortization and property and general
administrative expenses were attributable to the increase in our asset base, and
the increase in interest expense was due to our obtaining limited recourse
mortgage debt during the year. Results for future periods are expected to
reflect increases in these revenue and expense categories except for interest
income which is projected to decrease as funds from our offerings are invested
fully in accordance with our objectives. Because of the commencement of our
second offering in November 1999, it may be several years before the decrease in
interest income is realized. Interest income is earned solely as a result of
using uninvested cash to purchase money market instruments.

                  Our results of operations for 1998 are not comparable with the
results for 1997. During 1997, we had no real estate operations and had no
revenues. The commencement of our public offering did not begin until November,
1997. During 1998, we issued our initial shares of common stock pursuant to the
common stock offering, and purchased our first property in June 1998. The trend
of acquisitions activity started to accelerate during the fourth quarter of 1998
and thereafter. The results for 1998, therefore, are not representative of
results for future periods.

                  Accounting principles require that construction period rents
on build-to-suit projects be recorded as a reduction of cost rather than rental
income. As a result, rents on build-to-suit projects are not currently being
reflected in income nor cash flow from operations even though we believe that
these projects provide an economic return on our investment during the
construction period. The results for 1998 and 1999, therefore, did not reflect
earnings from investments during their construction periods. If the revenue of
build-to-suit projects was able to be recognized currently, our net income would
have been higher than the amounts presented in the accompanying consolidated
financial statements. We believe that the return on investment on our
build-to-suit projects will produce long-term returns that are superior to those
of other opportunities that we have evaluated.

                                      -4-
<PAGE>   32
                        REPORT of INDEPENDENT ACCOUNTANTS

To the Board of Directors of
  Corporate Property Associates 14 Incorporated and Subsidiaries:

         In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, shareholders' equity and cash
flows present fairly, in all material respects, the financial position of
Corporate Property Associates 14 Incorporated and Subsidiaries at December 31,
1998 and 1999, and the results of their operations and their cash flows for the
period from inception (June 4, 1997) to December 31, 1997 and the years ended
December 31, 1998 and 1999, in conformity with accounting principles generally
accepted in the United States. These financial statements are the responsibility
of Carey Property Advisors, a Pennsylvania limited partnership (the "Advisor");
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by the Advisor, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.



/s/ PricewaterhouseCoopers LLP

New York, New York
April 7, 2000

                                      -5-
<PAGE>   33
                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and Subsidiaries

                           Consolidated BALANCE SHEETS

                                  December 31,

<TABLE>
<CAPTION>
                                                                    1998                        1999
                                                                    ----                        ----
         ASSETS:
<S>                                                              <C>                          <C>
Real estate leased to others:
    Accounted for under the
        operating method
           Land                                                  $ 19,018,980                 $ 36,130,456
           Buildings                                               25,723,022                   76,917,819
                                                                 ------------                 ------------
                                                                   44,742,002                  113,048,275
           Accumulated depreciation                                   175,977                    1,152,595
                                                                 ------------                 ------------
                                                                   44,566,025                  111,895,680

Net investment in direct financing leases                                                       27,161,841
Real estate under construction
    leased to others                                                                            45,775,407
                                                                 ------------                 ------------
           Real estate leased to others                            44,566,025                  184,832,928
Equity investments                                                 36,097,004                   50,344,119
Cash and cash equivalents                                          26,747,058                   91,420,457
Other assets                                                          545,842                    4,465,449
                                                                 ------------                 ------------

           Total assets                                          $107,955,929                 $331,062,953
                                                                 ============                 ============


         LIABILITIES:

Limited recourse mortgage notes payable                                                       $ 49,517,692
Accrued interest                                                                                   292,118
Accounts payable to affiliates                                    $   537,874                    2,046,441
Accounts payable and accrued expenses                                 169,735                      265,889
Prepaid rental income and security deposits                           343,767                    1,324,379
Deferred acquisition fees payable to affiliate                      1,628,828                    5,905,602
Dividends payable                                                   1,365,622                    4,515,213
Escrow funds                                                                                     1,105,530
                                                                  -----------                 ------------
           Total liabilities                                        4,045,826                   64,972,864
                                                                  -----------                 ------------

Minority interest                                                                                8,212,097
                                                                                              ------------
Commitments and contingencies

         SHAREHOLDERS' EQUITY:

Common stock, $.001 par value; authorized, 120,000,000 shares; issued and
    outstanding, 11,837,901 and 29,460,594 shares
    at December 31, 1998 and 1999                                      11,838                       29,460
Additional paid-in capital                                        105,705,582                  265,487,028
Dividends in excess of accumulated earnings                        (1,643,957)                  (6,896,632)
                                                                 ------------                 ------------
                                                                  104,073,463                  258,619,856
Less, treasury stock at cost, 16,900 and 79,839
   shares at December 31, 1998 and 1999                              (163,360)                    (741,864)
                                                                 ------------                 ------------

           Total shareholders' equity                             103,910,103                  257,877,992
                                                                 ------------                 ------------
           Total liabilities and
               shareholders' equity                              $107,955,929                 $331,062,953
                                                                 ============                 ============
</TABLE>

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

                                      -6-
<PAGE>   34
                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and Subsidiaries

                      CONSOLIDATED STATEMENTS of OPERATIONS

      For the period from Inception (June 4, 1997) to December 31, 1997 and
                   the years ended December 31, 1998 and 1999

<TABLE>
<CAPTION>
                                                     1997               1998              1999
                                                     ----               ----              ----
<S>                                              <C>                <C>               <C>
Revenues:
   Rental income                                                    $  1,296,441      $  6,643,697
   Interest income from direct
      financing leases                                                                     688,810
   Other interest income                                                 912,759         2,690,097
                                                                    ------------      ------------
                                                                       2,209,200        10,022,604
                                                                    ------------      ------------
Expenses:
   Interest expense                                                       20,745         1,352,113
   Depreciation and amortization                                         175,977           991,513
   General and administrative                    $     12,255            702,828         1,164,036
   Property expense                                                      272,582         1,585,807
                                                 ------------       ------------      ------------
                                                       12,255          1,172,132         5,093,469
                                                 ------------       ------------      ------------
      (Loss) income before minority
         interest in income and income
         from equity investments                      (12,255)         1,037,068         4,929,135

Minority interest in income                                                               (152,219)
                                                 ------------       ------------      ------------
   (Loss) income before income
      from equity investments                         (12,255)         1,037,068         4,776,916

Income from equity investments                                            21,200         2,901,253
                                                 ------------       ------------      ------------

          Net (loss) income                      $    (12,255)      $  1,058,268      $  7,678,169
                                                 ============       ============      ============




Basic (loss) income per share                    $       (.61)      $        .25      $        .39
                                                 ============       ============      ============


Weighted average shares outstanding - basic            20,000          4,273,311        19,909,834
                                                 ============       ============      ============
</TABLE>

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

                                      -7-
<PAGE>   35
                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED


                 CONSOLIDATED STATEMENTS of SHAREHOLDERS' EQUITY

      For the period from Inception (June 4, 1997) to December 31, 1997 and
                   the years ended December 31, 1998 and 1999


<TABLE>
<CAPTION>
                                                                             DIVIDENDS IN
                                                           Additional         Excess of
                                            COMMON          PAID-IN          ACCUMULATED        TREASURY
                                            Stock           Capital           Earnings           Stock             Total
                                            -----           -------           --------           -----             -----
<S>                                        <C>            <C>                <C>                <C>              <C>
20,000 shares issued
  $.001 par, at $10 per share              $    20        $    199,980                                           $    200,000

Net loss                                                                     $   (12,255)                             (12,255)
                                           -------        ------------       -----------                         ------------

Balance at December 31, 1997                    20             199,980           (12,255)                             187,745

11,817,901 shares issued
  $.001 par, at $10 per share, net
      of offering costs                     11,818         105,505,602                                            105,517,420

Dividends declared                                                            (2,689,970)                          (2,689,970)

Purchase of treasury stock,
    16,900 shares                                                                               $(163,360)           (163,360)

Net income                                                                     1,058,268                            1,058,268
                                           -------        ------------       -----------         --------        ------------

Balance at December 31, 1998                11,838         105,705,582        (1,643,957)        (163,360)        103,910,103

17,622,693 shares issued $.001
    par, at $10 per share, net
      of offering costs                     17,622         159,781,446                                            159,799,068

Dividends declared                                                           (12,930,844)                         (12,930,844)

Purchase of treasury stock,
    62,939 shares                                                                                (578,504)           (578,504)

Net income                                                                     7,678,169                            7,678,169
                                           -------        ------------       -----------        ---------        ------------

Balance at December 31, 1999               $29,460        $265,487,028       $(6,896,632)       $(741,864)       $257,877,992
                                           =======        ============       ===========        =========        ============
</TABLE>

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

                                      -8-
<PAGE>   36
                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and Subsidiaries
                      CONSOLIDATED STATEMENTS of CASH FLOWS

      For the period from Inception (June 4, 1997) to December 31, 1997 and
                   the years ended December 31, 1998 and 1999

<TABLE>
<CAPTION>
                                                                       1997                1998                  1999
                                                                       ----                ----                  ----
<S>                                                                <C>                 <C>                     <C>
Cash flows from operating activities:
  Net (loss) income                                                  $(12,255)         $  1,058,268            $  7,678,169
  Adjustments to reconcile net (loss) income
      to net cash provided by operating activities:
      Depreciation and amortization                                                         175,977                 991,513
      Straight-line rent adjustments                                                        (65,686)               (234,261)
      Income from equity investments                                                        (21,200)
      Minority interest income                                                                                      152,219
      Provision for uncollected rent                                                                                 54,994
      Change in operating assets and liabilities, net (a)              12,255               558,965                 158,487
                                                                     --------          ------------            ------------

           Net cash provided by operating activities                       --             1,706,324               8,801,121
                                                                     --------          ------------            ------------

Cash flows from investing activities:
  Equity distributions received in excess of
      equity income                                                                                               1,277,311
  Purchase of equity investments, net (b)                                               (35,440,551)            (15,524,426)
  Purchases of real estate and other
      capitalized costs, net (b)                                                        (43,748,427)           (135,861,217)
                                                                     --------           -----------            ------------
        Net cash used in investing activities                              --           (79,188,978)           (150,108,332)
                                                                     --------          ------------            ------------

Cash flows from financing activities:
  Proceeds from stock issuance, net of costs                          200,000           105,517,420             159,799,068
  Proceeds from mortgages                                                                                        49,661,425
  Contributions received from minority partner                                                                    8,059,878
  Payments of mortgage principal                                                                                   (143,733)
  Deferred financing costs and mortgage deposits                                                                 (1,036,271)
  Dividends paid                                                                         (1,324,348)             (9,781,253)
  Purchase of treasury stock                                                               (163,360)               (578,504)
                                                                     --------          ------------            ------------
           Net cash provided by financing activities                  200,000           104,029,712             205,980,610
                                                                     --------          ------------            ------------

           Net increase in cash and cash equivalents                  200,000            26,547,058              64,673,399

Cash and cash equivalents, beginning of period                             --               200,000              26,747,058
                                                                     --------          ------------            ------------

Cash and cash equivalents, end of period                             $200,000          $ 26,747,058            $ 91,420,457
                                                                     ========          ============            ============
</TABLE>

Noncash investing and financing activities:

(a)        Excludes changes in accounts payable and accrued expenses and
           accounts payable to affiliates balances that relate to the raising of
           capital (financing activities) rather than the Company's real estate
           operations.

<TABLE>
<S>                                                                <C>                        <C>                <C>
 (b)       Deferred acquisition fee payable to affiliate                   --                 $1,628,828         $4,276,774
                                                                   ==========                 ==========         ==========
</TABLE>

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

                                      -9-
<PAGE>   37
                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and SUBSIDIARIES

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS

 1.     Summary of Significant Accounting Policies:

         Basis of Consolidation

            The consolidated financial statements include the accounts of
               Corporate Property Associates 14 Incorporated, its wholly-owned
               subsidiaries and a majority interest in two limited liability
               companies (collectively, the "Company"). All material
               inter-entity transactions have been eliminated.

         Use of Estimates:

            The preparation of financial statements in conformity with
               accounting principles generally accepted in the United States
               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. The most significant estimates will
               relate to the assessment of recoverability of real estate assets
               and investments. 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 Company 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 operating or direct
               financing method. Such methods are described below:

                      Operating method - Real estate is recorded at cost,
                      revenue is recognized on a straight-line basis over the
                      terms of the lease and expenses (including depreciation)
                      are charged to operations as incurred.

                      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 Company's net
                      investment in the lease.

            The Company assesses the recoverability of its real estate assets
               and investments, including residual interests based on
               projections of undiscounted cash flows over the life of such
               assets. In the event that such cash flows are insufficient, the
               assets will be adjusted to their estimated fair value.

            Substantially all of the Company's leases provide for either
               scheduled rent increases or periodic rent increases based on
               formulas indexed to increases in the Consumer Price Index
               ("CPI").

            For properties under construction, interest charges, if any, are
               capitalized rather than expensed and rentals received are
               recorded as a reduction of capitalized project (i.e.,
               construction) costs.

         Depreciation:

            Depreciation is computed using the straight-line method over the
               estimated useful lives of the properties - generally 40 years.

                                      -10-
<PAGE>   38
                 CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued


         Equity Investments:

            The Company's interests in five limited liability companies in which
               its ownership interests are 50% or less are accounted for under
               the equity method, i.e. at cost, increased or decreased by the
               Company's share of earnings or losses, less distributions.

         Cash Equivalents:

            The Company 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
               Company's cash and cash equivalents at December 31, 1998 and 1999
               were held in the custody of two financial institutions, and which
               balances at times exceed federally insurable limits. The Company
               mitigates this risk by depositing funds with major financial
               institutions.

         Other Assets:

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

         Offering Costs:

            Costs incurred in connection with the raising of capital through the
               sale of common stock are charged to shareholders' equity upon the
               issuance of shares.

         Treasury Stock:

            Treasury stock is recorded at cost

         Deferred Acquisition Fees:

            Fees are payable for services provided by Carey Property Advisors
               (the "Advisor") to the Company relating to the identification,
               evaluation, negotiation, financing and purchase of properties. A
               portion of such fees are deferred and are payable in annual
               installments with each installment equal to .25% of the purchase
               price of the properties over no less than eight years following
               the first anniversary of the date a property was purchased.
               Payment of such fees is subject to the 2%/25% Guidelines (see
               Note 3).

         Earnings Per Share:

            The Company has a simple equity capital structure with only common
               stock outstanding. As a result, the Company has presented basic
               per-share amounts only for all periods presented in the
               accompanying consolidated financial statements.

         Federal Income Taxes:

            The Company qualifies and intends to continue to qualify as a Real
               Estate Investment Trust ("REIT"). The Company is not subject to
               Federal income taxes, provided it distributes at least 95% of its
               REIT taxable income to its shareholders and meets certain other
               conditions necessary to retain REIT status.

                                      -11-

<PAGE>   39
                 CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and SUBSIDIARIES

             NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

         Operating Segments

             Accounting standards have been established for the way public
               business enterprises report selected information about operating
               segments and guidelines for defining the operating segment of an
               enterprise. Based on the standards' definitions, the Company has
               concluded that it engages in a single operating segment.

 2.     Organization and Offering:

            The Company was formed on June 4, 1997 under the General Corporation
               Law of Maryland for the purpose of engaging in the business of
               investing in and owning industrial and commercial real estate.
               Subject to certain restrictions and limitations, the business of
               the Company is managed by the Advisor.

            An initial offering of the Company's shares which commenced on
               November 10, 1997 concluded on November 10, 1999 at which time
               the Company had issued an aggregate of 29,440,594 shares
               ($294,405,940). On November 17, 1999, the Company commenced an
               offering for a maximum of 40,000,000 shares of common stock. The
               shares are being offered to the public on a "best efforts" basis
               at a price of $10 per share. The initial issuance of shares under
               the second offering occurred on February 23, 2000 at which time
               3,383,846 shares ($33,838,460) were issued.

            In connection with performing services relating to the Company's
               real estate purchases, affiliates of the Company received
               acquisition fees of $581,726 and $1,282,550 in 1998 and 1999,
               respectively.

 3.     Transactions with Related Parties:

            The Company has entered into an Advisory Agreement with the Advisor
               pursuant to which the Advisor performs certain services for the
               Company including the identification, evaluation, negotiation,
               purchase and disposition of property, the day-to-day management
               of the Company and the performance of certain administrative
               services. The Advisor and certain affiliates will receive fees
               and compensation in connection with the offering and the
               operation of the Company as described in the Prospectus of the
               Company.

            An affiliate of the Company received structuring and development
               fees of $1,454,315 and $3,206,374 , in 1998 and 1999,
               respectively. The affiliate is also entitled to receive deferred
               acquisition fees. As of December 31, 1999, deferred acquisition
               fees totaled $5,905,602. The deferred acquisition fees are
               payable in equal installments over a period of no less than eight
               years with the initial installment applicable to transactions
               completed in 1998 paid in January 2000. The initial installment
               for transactions completed in 1999 is not payable until January
               2001.

             The Company's interests in properties jointly held with affiliates
               range from 33 1/3% to 60%. Ownership interests in limited
               liability companies owned with affiliates in which the Company's
               ownership interest is 50% or less are accounted for under the
               equity method. Ownership interests in limited liability companies
               which are greater than 50% are consolidated with the ownership
               interest of the affiliate accounted for as a minority interest.
               The Company will account for any individual interests in assets
               and liabilities relating to tenants-in-common interests on a
               proportional basis.

            The Company's asset management and performance fees payable to the
               Advisor are each 1/2 of 1% per annum of Average Invested Assets,
               as defined in the Advisory Agreement. Until 7% cumulative rate of
               cash flow from operations, as defined in the Advisory Agreement,
               is achieved, the Advisor will not be entitled to receive the
               performance fee. The Company, however, is recognizing performance
               fee expense currently. At such time as the Advisor is entitled to
               receive the performance fee, the Advisor will have the option of
               electing to receive the fee in cash or restricted shares of the
               Company. As of December 31, 1999, the cumulative cash flow from
               operations criterion had not been achieved. Unpaid performance
               fees are accrued and included in accounts payable to affiliates
               in the accompanying consolidated financial statements. For the
               years ended December 31, 1998 and 1999, the Company incurred
               asset management



                                       12
<PAGE>   40
                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued


         fees of $129,746 and $730,285, respectively. Performance fees were in
         like amount. General and administrative expense reimbursement consists
         primarily of the actual cost of personnel needed in providing
         administrative services. For the years ended December 31, 1998 and 1999
         general and administrative reimbursements were $370,000 and $415,353,
         respectively. No fees or reimbursements were incurred in 1997.

      The Advisor shall reimburse the Company at least annually for the amount
         by which operating expenses of the Company exceed the 2%/25% Guidelines
         (2% of Average Invested Assets or 25% of net income) as defined in the
         Advisory Agreement. To the extent that operating expenses payable or
         reimbursable by the Company exceed the 2%/25% Guidelines and the
         independent directors find that such expenses were justified based on
         such unusual and nonrecurring factors which they deem sufficient, the
         Advisor may be reimbursed in future years for the full amount or any
         portion of such excess expenses, but only to the extent such
         reimbursement would not cause the Company's operating expenses to
         exceed the 2%/25% Guidelines in any such year.

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

            Scheduled future minimum rents, exclusive of renewals, under
               noncancellable operating leases amount to $11,132,000 in 2000,
               $11,149,000 in each of the years 2001 through 2003 $11,060,000 in
               2004 and aggregate approximately $158,345,000 through 2020.

            No contingent rents were realized in 1998 and 1999.

5. Net Investment in Direct Financing Leases:

            Net investment in direct financing leases is summarized as follows:
<TABLE>
<CAPTION>

                                                                         December 31, 1999
<S>                                                                      <C>
               Minimum lease payments receivable                            $56,103,417
               Unguaranteed residual value                                   27,161,841
                                                                            -----------
                                                                             83,265,258
               Less: unearned income                                         56,103,417
                                                                            -----------
                                                                            $27,161,841
                                                                            ===========
</TABLE>

      Scheduled future minimum rents, exclusive of renewals, under
         noncancellable direct financing leases are approximately $2,756,000 in
         each of the years 2000 through 2004 and aggregate approximately
         $56,103,000 through 2020.

      No contingent rents were realized in 1998 and 1999.

6. Mortgage Notes Payable:

      Mortgage notes payable, all of which are limited recourse to the Company,
         are collateralized by an assignment of various leases and by real
         property with a carrying value of $90,019,554. As of December 31, 1999,
         mortgage notes payable had annual interest rates ranging from 7.39% to
         8.51%.

      Scheduled principal payments during each of the five years following
         December 31, 1999 are as follows:
<TABLE>
<CAPTION>

<S>                         <C>                             <C>
                            2000                            $   804,863
                            2001                                572,598
                            2002                                623,225
                            2003                                677,398
                            2004                                726,526
                            Thereafter                       46,113,082
                                                            -----------
                            Total                           $49,517,692
                                                            ===========
</TABLE>

      No interest payments were made in 1997 and 1998. Interest paid, excluding
         any capitalized interest, was $1,059,995 in 1999.

      In connection with the placement of mortgages, fees of $496,999 were paid
         to an affiliate of the Company in 1999. No fees were paid in 1997 and
         1998.

                                       -13-
<PAGE>   41

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued


 7.     Commitments and Contingencies:

            The Company is liable for certain expenses of the second offering,
               including but not limited to filing, legal, accounting, printing
               and escrow fees, which are being deducted from the gross proceeds
               of the second offering and are presently estimated to aggregate a
               maximum of $16,000,000 assuming the sale of 40,000,000 shares.
               The Company will also be liable for selling commissions of up to
               $0.60 (6%) per share sold except for any shares sold to the
               Advisor, its Affiliates, the selected dealers or any of their
               employees for their own accounts. The Company is reimbursing
               Carey Financial for expenses (including fees and expenses of its
               counsel) and for the costs of sales, wholesaling services and
               information meetings of Carey Financial's employees relating to
               the offering. To the extent, if any, that all offering expenses,
               excluding selling commissions, and any fees paid and expenses
               reimbursed to the selected dealers or paid on behalf of the
               selected dealers, exceed 3.5% of the gross proceeds of the Second
               Offering, such excess will be paid by the Advisor.

8.       Dividends:

            Dividends paid to shareholders consist of ordinary income, capital
               gains, return of capital or a combination thereof for income tax
               purposes. Since the inception of the Company, dividends per share
               reported for tax purposes were as follows:
<TABLE>
<CAPTION>

                            1998           1999
                        --------       --------

<S>                     <C>            <C>
Ordinary income         $    .31       $    .55
Return of capital             --            .10
                        --------       --------
                        $    .31       $    .65
                        ========       ========
</TABLE>

      A  dividend of $.001773 per share per day in the period from October 1,
         1999 through December 31, 1999 ($4,515,213) was declared in December
         1999 and paid in January 2000.

9. Lease Revenues:

            The Company's operations consist of the investment in and the
               leasing of industrial and commercial real estate. For the years
               ended December 31, 1998 and 1999, the financial reporting sources
               are as follows:
<TABLE>
<CAPTION>

                                                                        1998                1999
                                                                ------------        ------------
         Per Statements of Income
<S>                                                             <C>                 <C>
             Rental income from operating leases                $  1,296,441        $  6,643,697
             Interest income from direct financing leases                                688,810
         Adjustment:
             Share of lease revenues applicable
               to minority interest                                                     (378,849)
             Share of leasing revenues from equity
               investments                                            84,672           7,472,522
                                                                ------------        ------------
                                                                $  1,381,113        $ 14,426,180
                                                                ============        ============

</TABLE>

                                      -14-
<PAGE>   42
                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued



      In 1998 and 1999, the Company earned its share of net lease revenues from
         its direct and indirect ownership of real estate from the following
         lease obligations:
<TABLE>
<CAPTION>


                                                                       1998                       1999
                                                                       ----                       ----

<S>                                                              <C>          <C>            <C>           <C>
        Advanced Micro Devices, Inc. (a)                         $   84,672    6%            $ 3,048,500   21%
        Best Buy Co. Inc.                                           824,582   60               1,973,824   14
        Etec Systems, Inc. (a)                                                                 1,675,736   12
        Intesys Technologies, Inc. (a)                                                         1,028,831    7
        Compucom Systems, Inc. (a)                                                               982,213    7
        Burlington Motor Carriers, Inc.                             398,200   29                 792,000    6
        Production Resource Group L.L.C.                                                         782,050    5
        CheckFree Holdings Corporation (a)                                                       737,242    5
        The Benjamin Ansehl Company                                  66,607    5                 649,750    5
        Contraves Brashear Systems, L.P.                              7,052                      643,500    4
        Ameriserve Food Distribution, Inc. (b)                                                   568,274    3
        Metagenics, Inc.                                                                         429,957    3
        Atrium Companies, Inc.                                                                   386,402    3
        Amerix Corporation                                                                       366,246    3
        Scott Companies, Inc.                                                                    302,408    2
        Builders' Supply and Lumber Co., Inc.                                                     59,247
                                                                 ----------  ----            -----------  ----
                                                                 $1,381,113  100%            $14,426,180  100%
                                                                 ==========  ====            ===========  ====
</TABLE>

(a) Represents the Company's proportionate share of lease revenues from equity
    investment.
(b) Net of rental amount applicable to minority interest of Corporate Property
   Associates 12 Incorporated.


10.      Acquisitions of Real Estate:

      A  summary of acquisitions of real estate for the period from October 1,
         1999 through December 31, 1999 is as follows:

   Production Resource Group L.L.C.

      On October 15, 1999, the Company purchased two properties in Burbank and
         Los Angeles, California for $3,743,455 and entered into a net lease
         with Production Resource Group L.L.C. ("PRG"). The PRG lease has an
         initial term of 15 years with two five-year renewal terms at PRG's
         option. Annual rent is $393,250 with increases every two years based on
         a formula indexed to increases in the CPI. The Company had also entered
         into a net lease with PRG in March 1999 for a property in Las Vegas,
         Nevada.

   Amerix Corporation

      On November 1, 1999, the Company purchased a property in Columbia,
         Maryland for $22,855,080 and entered into a net lease with Amerix
         Corporation ("Amerix"). The Company also entered into a commitment to
         fund up to $3,500,000 for an expansion of the existing office facility.
         The lease has an initial term ending 15 years after the earlier of the
         completion of the expansion or December 1, 2001 with two ten-year
         renewal terms at Amerix's option. Annual rent will initially be
         $2,197,475 and will increase by $355,250 upon completion of the
         expansion, subject to a reduction if the project costs for the
         expansion cost are less than $3,500,000. The lease provides for rent
         increases on the sixth anniversary of the lease and every three years
         thereafter based on a formula indexed to increases in the CPI, subject
         to a cap on the increase of 1.04% per annum.




                                      -15-
<PAGE>   43
                CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and SUBSIDIARIES

             NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued


   Atrium Companies, Inc.

   On November 18, 1999, the Company purchased land and a property in Dallas,
     Texas, and land and two properties in Greenville, Texas for $20,484,168 and
     entered into a master net lease with Atrium Companies, Inc. ("Atrium"). The
     Atrium lease has an initial term of twenty years and eight months at an
     annual rent of $2,075,000, with rent increases at the end of the fifth
     lease year and every two years thereafter based on a formula indexed to
     increases in the CPI. The first rent increase is capped at a maximum of
     12.5% and each increase thereafter is capped at a maximum of 5%. The lease
     provides Atrium with purchase options on the 15th and 20th lease
     anniversaries with such option exercisable at the greater of (i)
     acquisition cost plus any prepayment premium on any existing mortgage loan
     (ii) and fair market value, as defined.

   The Company also purchased a fourth property in Wylie, Texas on which a
     building is being constructed on a build-to-suit basis. The total purchase
     price and construction costs are expected to be $8,381,675 with Atrium
     having the obligation to fund any additional costs necessary to complete
     the project. Upon the earlier of completion and August 1, 2000, a lease
     term of 20 years will commence at an annual rent in an amount equal to the
     Company's total project costs multiplied by 10.75%, with rent increases
     every two years based on increases in the CPI with each increase capped at
     a maximum of 5%.

   On January 4, 2000, the Company obtained a $13,123,000 limited recourse
     mortgage loan collateralized by a deed of trust and a lease assignment on
     the Dallas and Greenville properties. The loan provides for monthly
     interest only payments, at an annual interest rate of 8.7%, for the first
     twelve months, commencing February 2000, with monthly principal and
     interest payments of $102,786, thereafter. The loan matures on January,
     2010 at which time a balloon payment is scheduled.


   Fitness Holdings Worldwide, Inc.

   On December 29, 1999, the Company purchased land and building in Salt Lake
     City, Utah, assumed an existing lease guaranteed by Fitness Holdings
     Worldwide, Inc. ("Fitness Holdings") and entered into an agreement to fund
     an expansion at the Fitness Holdings property. The purchase price and the
     costs of construction are $5,016,367 with Fitness Holdings having the
     obligation to fund any excess costs necessary to complete the project.

   Upon the earlier of completion or May 14, 2000, a lease term of twenty years
     will commence with annual rent under the Fitness Holdings lease of $526,969
     and three five-year renewal options. The lease provides for rent increases
     commencing in the third lease year and every two years thereafter with such
     increases based on a formula indexed to the CPI with each increase capped
     at a maximum of 4%.


11.     Equity Investments:

   The Company holds interests in five limited liability companies at December
     31, 1999 (and two at December 31, 1998) in which its ownership interest is
     50% or less. All of the underlying investments were formed and are owned
     with affiliates that have similar investment objectives as the Company. The
     Company owns a 33.33% interest in CHIP LLC which in December 1998 purchased
     property that is net leased to Advanced Micro Devices, Inc.. The Company
     owns interests, purchased in 1999, of 50%, 33.33% and 50% in Gilbert
     Plastics LLC, Comp LLC, and Carey Norcross LLC, respectively, that net
     lease properties to Intesys Technologies, Inc., Compucom Systems, Inc. and
     CheckFree Holdings Corporation, respectively. During 1999 and 1998 the
     Company held an interest in ET LLC, a limited liability company that net
     leases a property to Etec Systems, Inc. ("Etec"). The interest in the Etec
     investment is a 49.99% interest in a building on the Etec property for
     which construction was completed in July 1999. Corporate Property
     Associates 12 Incorporated, an affiliate, owns all remaining interests in
     the Etec property.



                                      -16-
<PAGE>   44
                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued


Summarized financial information of the Company's equity investees is as
follows: (In thousands)
<TABLE>
<CAPTION>


                                                                    December 31, 1998           December 31, 1999
                                                                    -----------------           -----------------
<S>                                                                 <C>                         <C>
               Assets (primarily real estate)                            $147,327                   $260,115
               Liabilities (primarily mortgage notes payable               84,458                    169,286
                                                                         --------                   --------
               Members' equity                                           $ 62,869                   $ 90,829
                                                                         ========                   ========

               Revenues (primarily rental revenues)                      $  2,977                   $ 21,966
               Expenses (primarily interest on mortgage
                  and depreciation)                                         1,466                     13,446
                                                                         --------                   --------
               Net income                                                $  1,511                   $  8,520
                                                                         ========                   ========
</TABLE>

12. Subsequent Events:

   West Union Corporation

   On January 12, 2000, the Company purchased land and building in Tempe,
     Arizona for $5,744,765 and entered into a net lease with West Union
     Corporation ("West Union"). The lease provides for annual rent of $530,250
     with stated rent increases of 14.525% every five years. The initial lease
     term is fifteen years with a ten year renewal term at the option of West
     Union.

   Barjan Products LLC

   On February 3, 2000, the Company purchased land and a building under
     construction in Rock Island, Illinois and entered into net lease and
     construction agency agreements with Barjan Products L.L.C. ("Barjan").
     Total purchase price and construction costs are expected to be
     approximately $11,900,000. During the construction period, Barjan will pay
     monthly installments based on an amount indexed to project costs advanced
     by the Company. Upon the earlier of completion of construction or October
     1, 2000, a lease term of sixteen years with a ten-year renewal term at
     Barjan's option will commence at an expected annual rent of $1,164,286 if
     the entire estimated funding of the build-to-suit project is required. The
     lease provides for stated rent increases of 6% every three years during the
     initial term of the lease.

   Stellex Technologies, Inc.

   On February 24, 2000, the Company purchased two properties in North
     Amityville, New York and Valencia, California for $19,329,988 and entered
     into net leases with two subsidiaries of Stellex Technologies, Inc.
     ("Stellex"). The lease obligations of the subsidiaries are unconditionally
     guaranteed be Stellex. The leases have initial terms of twenty years with
     two ten-year renewal terms at the option of the lessees. Combined annual
     rent under the Stellex leases is $1,886,934 with rent increases every two
     years based on a formula indexed to the CPI.

13. 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.

   In conjunction with structuring its leases with certain tenants, the Company
     was granted warrants that will allow the company to purchase common stock
     of the tenant company at a stated price. To the extent that the tenant
     companies are not publicly traded companies, the warrants are judged at the
     time of issuance to be speculative in nature and a nominal cost basis is
     attributed to them. The Company believes that it is not practicable to
     estimate the fair value of its stock warrants for closely-held companies.

   The Company estimates that the fair value of mortgage notes payable at
     December 31, 1999 was approximately $48,181,000. The fair value of debt
     instruments was evaluated using a discounted cash flow model with discount
     rates that take into account the credit of the tenants and interest rate
     risk.


                                      -17-
<PAGE>   45
                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued



14.     Accounting Pronouncement:

   In June 1998, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
     Instruments and Hedging Activities", effective January 1, 2000, which
     establishes accounting and reporting standards for derivative instruments.
     The Company believes that upon adoption SFAS will not have a material
     impact on the consolidated financial statements.



                                      -18-
<PAGE>   46
<TABLE>
<CAPTION>

PROPERTIES
----------
NAME OF LEASE                  TYPE OF                                                    TYPE OF OWNERSHIP
OBLIGOR                        PROPERTY                        LOCATION                   INTEREST
-------                        --------                        --------                   --------

<S>                            <C>                             <C>                        <C>
ETEC SYSTEMS, INC.             Office/Manufacturing            Hayward, California        Ownership of a 49.99% interest
                               Facilities                      (under construction)       in a building under construction
                                                                                          and owned through an interest
                                                                                          in a limited liability company (1)

BURLINGTON MOTOR               Trucking Facility               Daleville, Indiana         Ownership of land and building
CARRIERS, INC.

BEST BUY CO., INC.             Retail Store                    Torrance, California       Ownership of land and building

METAGENICS                     Research and                    San Clemente, California   Ownership of land and building
                               Development Facility

THE BENJAMIN                   Manufacturing Facility          St. Louis, Missouri        Ownership of land and building
ANSEHL COMPANY

CONTRAVES BRASHEAR             Manufacturing                   Pittsburgh,                Ownership of land and building
SYSTEMS, L.P.(1)               Facility                        Pennsylvania

ADVANCED MICRO                 Manufacturing                   Sunnyvale,                 Ownership of a 33 1/3%
DEVICES, INC.                  Facility                        California                 interest in a limited liability
                                                                                          company owning land and
                                                                                          buildings (1)

INTESYS                        Manufacturing                   Gilbert,                   Ownership of a 50% interest
TECHNOLOGIES, INC.             Facility                        Arizona                    in a limited liability company
                                                                                          owning land and buildings (1)

Compucom Systems, Inc.         Office/Research                 Dallas, Texas              Ownership of a 33 1/3% interest
                               Facility                                                   in a limited liability company
                                                                                          owning land and buildings (1)

PRODUCTION RESOURCE            Industrial/Manufacturing        Las Vegas, Nevada          Ownership of land and building (1)
GROUP LLC                      Facility

CHECKFREE                      Office/Research                 Norcross, Georgia          Ownership of a 50% interest
CORPORATION, INC.              Facility                                                   in a limited liability company
                                                                                          owning land and building (1)

BUILDERS' SUPPLY AND           Office/Warehouse                Harrisburg,                Ownership of land and building
LUMBER CO., INC.               Facility                        North Carolina

SCOTT CO. OF CALIFORNIA        Industrial/Manufacturing        Gardenia, California       Ownership of land and building (1)
                               Facility

AMERISERVE FOOD                Distribution/Warehouse          Burlington, New Jersey     Ownership of a 60% interest
CORPORATION, INC.                                              Shawnee, Kansas;           in a limited liability company
                                                               Grand Rapids, Michigan;    owning land and building (1)
                                                               and Manassas, Virginia

CONSOLIDATED THEATERS          Multi-plex Motion Picture       Midlothian, Virginia       Ownership of land and building (1)
HOLDING, G.P.                  Theater (under construction)

AMERIX CORPORATION             Office/Research - 1             Columbia, Maryland         Ownership of land and building (1)
                               location (under construction)

ATRIUM COMPANIES, INC.         Industrial/Manufacturing        Dallas - 1, Greenville,    Ownership of land and building
                               - 3 locations (under             - 2 and Wylie - 1, Texas
                               construction)

FITNESS HOLDINGS               Health Club (under             Salt Lake City, Utah        Ownership of land and building
WORLDWIDE, INC.                construction)


WEST UNION CORPORATION         Office/Research                 Tempe, Arizona             Ownership of land and building
                               (under construction)
</TABLE>
                                      -19-
<PAGE>   47
<TABLE>
<CAPTION>

<S>                                <C>                         <C>                        <C>
BARAJAN PRODUCTS, L.L.C.           Industrial/Manufacturing    Rock Island, Illinois      Ownership of land and building
                                   (under construction)

STELLEX                            Office/Manufacturing        North Amityville, New York Ownership of land and building
TECHNOLOGIES, INC.                 Facilities                  and Valencia, California
</TABLE>


(1) This property is encumbered by a mortgage note payable.


                                      -20-
<PAGE>   48
MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
         STOCKHOLDER MATTERS



                  Except for limited or sporadic transactions, there is no
established public trading market for the Shares of the Company. As of December
31, 1999, there were 10,777 holders of record of the Shares of the Company.

                  The Company is required to distribute annually its
Distributable REIT Taxable Income, as defined in the Prospectus, to maintain its
status as a REIT. Quarterly dividends paid by the Company since its inception
are as follows:
<TABLE>
<CAPTION>

                             1998               1999
                     ------------       ------------
<S>                  <C>                <C>
First quarter              --                .161000
Second quarter             --                .162504
Third quarter             .147560            .162700
Fourth quarter            .159528            .162932
                     ------------       ------------
                     $    .307088            .649136
                     ============       ============

</TABLE>
REPORT ON FORM 10-K



                  The Advisor will supply to any shareholder, upon written
request and without charge, a copy of the Annual Report on Form 10-K for the
year ended December 31, 1999 as filed with the Securities and Exchange
Commission.


                                       21