##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to.
 Commission file number: 000-25771
 CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
 (Exact name of registrant as specified in its charter)
 Maryland
    
    13-3951476(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)50 Rockefeller PlazaNew York, New York
    
    10020(Address of principal executive offices)
    
    (Zip code)
 Investor Relations (212) 492-8920
(212) 492-1100
 None
 Common Stock, Par Value $0.001 Per Share
 o þ
 o þ
 þ o
 o
  o o þ
 o þ




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##### 



TABLE OF CONTENTS
 PART I
    
    
    2Item 1. Business
    
    
    2Item 1A. Risk Factors
    
    
    13Item 1B. Unresolved Staff Comments
    
    
    20Item 2. Properties
    
    
    20Item 3. Legal Proceedings
    
    
    21Item 4. Submission of Matters to a Vote of Security Holders
    
    
    22PART II
    
    
    22Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    22Item 6. Selected Financial Data
    
    
    23Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    37Item 8. Financial Statements and Supplementary Data
    
    
    39Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    68Item 9A. Controls and Procedures
    
    
    68Item 9B. Other Information
    
    
    69PART III
    
    
    69Item 10. Directors, Executive Officers and Corporate Governance
    
    
    69Item 11. Executive Compensation
    
    
    69Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    69Item 13. Certain Relationships and Related Transactions and Director Independence
    
    
    69Item 14. Principal Accountant Fees and Services
    
    
    69PART IV
    
    
    70Item 15. Exhibits, Financial Statement Schedules
    
    
    70SIGNATURES
    
    
    71EX-10.2: CREDIT AGREEMENTEX-21.1: SUBSIDIARIESEX-23.1: CONSENT OF PRICEWATERHOUSECOOPERS LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32: CERTIFICATIONS
  Forward-Looking Statements
   CPA®:14 2006 10-K 1




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##### Table of Contents



Financial information in this report is in thousands except share and per share amounts.
 
 Item 1. Business.
 (a) General Development of Business
 Overview
   
    
    clauses providing for mandated rent increases or periodic rent increases over the term
of the lease tied to increases in the consumer price index (CPI) or other indices for the
jurisdiction in which the property is located or, when appropriate, increases tied to the
volume of sales at the property;
    
    indemnification for environmental and other liabilities;
    
    operational or financial covenants of the tenant; and
    
    guarantees of lease obligations from parent companies or letters of credit.
  ® ® ® ® ®
   Significant Developments During 2006:
 Merger with CPA ® :12 ® ® ® ® ® ® ®
 CPA®:14 2006 10-K  2




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Special Distributions
 ® ® ® Tenant Activity
 ® ® ®
   ® ® ®
 Tenant Activity
   CPA®:14 2006 10-K  3




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Disposition Activity
  ®
 Special Distributions
 CPA®:14 2006 10-K  4




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Financing Activity
  Directors
 
    
    In April 2006, James D. Price resigned from the board of directors. Mr. Price remained
an independent director of the board of directors of CPA®:12. Concurrently,
Gordon F. DuGan resigned from our board of directors in order to maintain a majority of
independent directors on the board of directors, as provided in our bylaws.
    
    In July 2006, Richard J. Pinola was appointed to the board of directors and serves as an
independent director and chairman of the audit committee of the board of directors.
    
    In December 2006, upon completion of the CPA®:12 merger, the independent
directors of CPA®:12, Mr. Price and Elizabeth P. Munson, joined our board of
directors.
 SEC Investigation ®
 Sarbanes-Oxley
  (b) Financial Information About Segments
  (c) Narrative Description of Business
 Business Objectives and Strategy
   
    
    own a diversified portfolio of triple-net leased real estate;
    
    fund distributions to shareholders; and
    
    increase our equity in our real estate by making regular mortgage principal payments.
  ®
 CPA®:14 2006 10-K  5




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Our Portfolio
  Geographic Diversification
  Consolidated Investments
    
    
    Equity Investments in Real Estate(2)Annualized
    
    
    % of
    
    
    Annualized
    
    
    % ofContractual
    
    
    Annualized
    
    
    Contractual
    
    
    AnnualizedLease
    
    
    Contractual
    
    
    Lease
    
    
    ContractualRegion
    
    Revenue(1)
    
    
    Lease Revenue
    
    
    Revenue(1)
    
    
    Lease RevenueUnited StatesEast
    
    $
    40,523
    
    
    
    25.23
    %
    
    $
    4,050
    
    
    
    10.51
    %South
    
    
    35,558
    
    
    
    22.13
    
    
    
    10,879
    
    
    
    28.24Midwest
    
    
    34,335
    
    
    
    21.37
    
    
    
    8,043
    
    
    
    20.88West
    
    
    27,494
    
    
    
    17.11
    
    
    
    15,545
    
    
    
    40.37Total U.S.
    
    
    137,910
    
    
    
    85.84
    
    
    
    38,517
    
    
    
    100.00InternationalEurope
    
    
    22,734
    
    
    
    14.16
    
    
    
    
    
    
    
    Total
    
    $
    160,644
    
    
    
    100.00
    %
    
    $
    38,517
    
    
    
    100.00
    %
 
 (1)
    
    Reflects annualized contractual minimum base rent for the fourth quarter of 2006.(2)
    
    Reflects our pro rata share of annualized contractual minimum base rent for the fourth
quarter of 2006 from equity investments in real estate. Property Diversification
  Consolidated Investments
    
    
    Equity Investments in Real Estate(2)Annualized
    
    
    % of
    
    
    Annualized
    
    
    % ofContractual
    
    
    Annualized
    
    
    Contractual
    
    
    AnnualizedLease
    
    
    Contractual
    
    
    Lease
    
    
    ContractualProperty Type
    
    Revenue(1)
    
    
    Lease Revenue
    
    
    Revenue(1)
    
    
    Lease RevenueIndustrial
    
    $
    53,542
    
    
    
    33.33
    %
    
    $
    10,491
    
    
    
    27.24
    %Warehouse/distribution
    
    
    44,706
    
    
    
    27.83
    
    
    
    7,953
    
    
    
    20.65Office
    
    
    34,370
    
    
    
    21.40
    
    
    
    6,107
    
    
    
    15.86Retail
    
    
    14,795
    
    
    
    9.21
    
    
    
    2,795
    
    
    
    7.26Other properties
    
    
    13,231
    
    
    
    8.23
    
    
    
    11,171
    
    
    
    28.99Total
    
    $
    160,644
    
    
    
    100.00
    %
    
    $
    38,517
    
    
    
    100.00
    %
 
 (1)
    
    Reflects annualized contractual minimum base rent for the fourth quarter of 2006.(2)
    
    Reflects our pro rata share of annualized contractual minimum base rent for the fourth
quarter of 2006 from equity investments in real estate. CPA®:14 2006 10-K  6




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Tenant Diversification
  Consolidated Investments
    
    
    Equity Investments in Real Estate(2)Annualized
    
    
    % of
    
    
    Annualized
    
    
    % ofContractual
    
    
    Annualized
    
    
    Contractual
    
    
    AnnualizedLease
    
    
    Contractual
    
    
    Lease
    
    
    ContractualTenant Industry(3)
    
    Revenue(1)
    
    
    Lease Revenue
    
    
    Revenue(1)
    
    
    Lease RevenueRetail Stores
    
    $
    36,223
    
    
    
    22.55
    %
    
    $
    3,144
    
    
    
    8.16
    %Electronics
    
    
    22,235
    
    
    
    13.84
    
    
    
    9,999
    
    
    
    25.96Chemicals, Plastics, Rubber, and Glass
    
    
    14,475
    
    
    
    9.01
    
    
    
    
    
    
    
    Automobile
    
    
    12,911
    
    
    
    8.04
    
    
    
    
    
    
    
    Construction and Building
    
    
    11,944
    
    
    
    7.44
    
    
    
    6,305
    
    
    
    16.37Transportation  Cargo
    
    
    11,561
    
    
    
    7.20
    
    
    
    
    
    
    
    Consumer and Non-Durable Goods
    
    
    9,079
    
    
    
    5.65
    
    
    
    
    
    
    
    Leisure, Amusement, Entertainment
    
    
    8,278
    
    
    
    5.15
    
    
    
    7,815
    
    
    
    20.29Beverages, Food, and Tobacco
    
    
    6,788
    
    
    
    4.23
    
    
    
    1,478
    
    
    
    3.84Business and Commercial Services
    
    
    6,768
    
    
    
    4.21
    
    
    
    
    
    
    
    Healthcare, Education and Childcare
    
    
    6,195
    
    
    
    3.86
    
    
    
    1,671
    
    
    
    4.34Machinery
    
    
    3,934
    
    
    
    2.45
    
    
    
    
    
    
    
    Hotels and Gaming
    
    
    2,339
    
    
    
    1.46
    
    
    
    
    
    
    
    Media: Printing and Publishing
    
    
    2,078
    
    
    
    1.29
    
    
    
    1,597
    
    
    
    4.15Aerospace and Defense
    
    
    1,743
    
    
    
    1.09
    
    
    
    
    
    
    
    Self-Storage / Trucking
    
    
    
    
    
    
    
    
    
    
    2,141
    
    
    
    5.56Telecommunications
    
    
    
    
    
    
    
    
    
    
    2,302
    
    
    
    5.98Other (4)
    
    
    4,093
    
    
    
    2.53
    
    
    
    2,065
    
    
    
    5.35Total
    
    $
    160,644
    
    
    
    100.00
    
    
    $
    38,517
    
    
    
    100.00
 
 (1)
    
    Reflects annualized contractual minimum base rent for the fourth quarter of 2006.(2)
    
    Reflects our pro rata share of annualized contractual minimum base rent for the fourth
quarter of 2006 from equity investments in real estate.(3)
    
    Based on the Moodys classification system and information provided by the tenant.(4)
    
    Includes revenue from tenants in the consumer goods, paper, mining, banking, grocery and
personal transportation industries. CPA®:14 2006 10-K  7




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Lease Expirations
  Consolidated Investments
    
    
    Equity Investments in Real Estate(2)Annualized
    
    
    % of
    
    
    Annualized
    
    
    % ofContractual
    
    
    Annualized
    
    
    Contractual
    
    
    AnnualizedLease
    
    
    Contractual
    
    
    Lease
    
    
    ContractualYear of Lease Expiration
    
    Revenue(1)
    
    
    Lease Revenue
    
    
    Revenue(1)
    
    
    Lease Revenue2007
    
    $
    54
    
    
    
    0.03
    %
    
    $
    
    
    
    
    
    %2008
    
    
    302
    
    
    
    0.19
    
    
    
    
    
    
    
    2009
    
    
    1,603
    
    
    
    1.00
    
    
    
    1,671
    
    
    
    4.342010
    
    
    2,152
    
    
    
    1.34
    
    
    
    
    
    
    
    2011
    
    
    17,745
    
    
    
    11.05
    
    
    
    
    
    
    
    2012
    
    
    103
    
    
    
    0.06
    
    
    
    
    
    
    
    2013
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2014
    
    
    2,447
    
    
    
    1.52
    
    
    
    1,153
    
    
    
    2.992015
    
    
    5,823
    
    
    
    3.62
    
    
    
    2,302
    
    
    
    5.982016
    
    
    13,461
    
    
    
    8.38
    
    
    
    1,478
    
    
    
    3.842017-2021
    
    
    101,646
    
    
    
    63.27
    
    
    
    13,479
    
    
    
    34.992022-2026
    
    
    14,066
    
    
    
    8.76
    
    
    
    18,434
    
    
    
    47.862027 and thereafter
    
    
    1,242
    
    
    
    0.78
    
    
    
    
    
    
    
    Total
    
    $
    160,644
    
    
    
    100.00
    %
    
    $
    38,517
    
    
    
    100.00
    %
 
 (1)
    
    Reflects annualized contractual minimum base rent for the fourth quarter of 2006.(2)
    
    Reflects our pro rata share of annualized contractual minimum base rent for the fourth
quarter of 2006 from equity investments in real estate. Asset Management
   Holding Period
  ®  ® ® ®
 CPA®:14 2006 10-K  8




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Financing Strategies
  
  Investment Strategies
     Tenant/Borrower Evaluation.
 Properties Important to Tenant/Borrower Operations.
 CPA®:14 2006 10-K  9




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Diversification.
 Lease Terms.
 Collateral Evaluation.
 Transaction Provisions that Enhance and Protect Value.
 Other Equity Enhancements.
 Investment Decisions ® ® ® ® ® ®
 CPA®:14 2006 10-K  10




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
    
    Nathaniel S. Coolidge, Chairman  Former senior vice president and head of the bond and
corporate finance department of John Hancock Mutual Life Insurance. Mr. Coolidges
responsibilities included overseeing its entire portfolio of fixed income investments.
    
    Frank Hoenemeyer  Former chairman and chief investment officer, Prudential Insurance
Company of America.
    
    Dr. Lawrence R. Klein  Currently serving as professor emeritus of economics and
finance at the University of Pennsylvania and its Wharton School. Recipient of the 1980
Nobel Prize in economic sciences and former consultant to both the Federal Reserve Board
and the Presidents Council of Economic Advisors.
    
    George E. Stoddard  Former officer-in-charge of the direct placement department of The
Equitable Life Assurance Society of the United States and our former chief investment
officer.
    
    Dr. Karsten von Köller  Currently chairman of
Lone Star Germany GmbH and vice chairman of the supervisory board
of Allgemeine HypothekenBank Rheinboden AG. Chairman of the board of management of this bank from
December 2005 to October 2006. Previously served as chairman of
the board of management of Eurohypo AG and was a member of the board of
managing directors of Rheinhyp Rheinische Hypothekenbank AG.
 Segments
  Competition
  Environmental Matters
     Transactions with Affiliates
 ®
 CPA®:14 2006 10-K  11




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® ®
 Types of Investments
  Ventures With Affiliates and Others ®
 Other Investments
      CPA®:14 2006 10-K 12




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(d) Financial Information About Geographic Areas
  (e) Available Information
  
 Item 1A. Risk Factors.
  We are subject to the risks of real estate ownership, which could reduce the value of our
properties.
  
    
    adverse changes in general or local economic conditions,
    
    changes in the 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.
 WPC and Carey Financial are the subjects of an ongoing SEC investigation, the effects of which
could be materially adverse to them and, possibly, us.
  We may have difficulty selling or re-leasing our properties.
  CPA®:14 2006 10-K 13




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Our success is dependent on the performance of the advisor.
  The advisor may be subject to conflicts of interest.
  
    
    the receipt of compensation by the advisor for property purchases, leases, sales and
financing for us may cause the advisor to engage in transactions that generate higher fees,
rather than transactions that are more appropriate or beneficial for our business;
    
    agreements between us and the advisor, including agreements regarding compensation, have
not been negotiated on an arms length basis as would occur if the agreements were with
unaffiliated third parties;
    
    sale of single properties or portfolios of our properties to our affiliates, including
WPC or the CPA® REITs may take the form of a direct purchase of our assets by an
affiliate, a merger with an affiliate or another type of transaction, which may result in
the payment of significant transactional fees to the advisor as well as management fees;
    
    purchases and loans from affiliates, subject to our investment procedures, objectives
and policies, will increase fees and interest payable to affiliates, thereby decreasing our
net income and possibly causing us to incur higher leverage levels; and
    
    disposition, incentive and termination fees, which are based on the sale price of
properties, may cause a conflict between the advisors desire to sell a property and our
plans to hold the property.
 We have limited independence from the advisor.
  There is not, and may never be a public market for our shares, so it will be difficult for
shareholders to sell shares quickly.
  We may recognize substantial impairment charges on our properties.
  Our net asset value is based on information that the advisor provides to a third party.
  CPA®:14 2006 10-K 14




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Potential liability for environmental matters could adversely affect our financial condition.
  
    
    Responsibility and liability for the cost of investigation, removal or remediation of
hazardous or toxic substances released on or from our property, generally without regard to
our knowledge of, or responsibility for, the presence of these contaminants.
    
    Liability for claims by third parties based on damages to natural resources or property,
personal injuries, or costs of removal or remediation of hazardous or toxic substances in,
on, or migrating from our property.
    
    Responsibility for managing asbestos-containing building materials, and third-party
claims for exposure to those materials.
  Failure to qualify as a REIT would adversely affect our operations and ability to make
distributions.
   The inability of a tenant in a single tenant property to pay rent will reduce our revenues.
  CPA®:14 2006 10-K 15




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The bankruptcy or insolvency of tenants or borrowers may cause a reduction in revenue.
  
    
    the loss of lease or interest payments;
    
    an increase in the costs incurred to carry the property;
    
    a reduction in the value of our shares; and
    
    a decrease in distributions to shareholders.
  ® ®
 Our leases may permit tenants to purchase a property at a predetermined price, which could limit
our realization of any appreciation or result in a loss.
  We may suffer uninsured losses.
  A potential change in United States accounting standards regarding operating leases may make the
leasing of facilities less attractive to our potential domestic tenants, which could reduce overall
demand for our leasing services.
  CPA®:14 2006 10-K 16




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Our use of debt to finance investments could adversely affect our cash flow.
   2007
    
    $
    2008
    
    
    17,6492009
    
    
    64,089
    (1) (2)2010
    
    
    71,253
    (2)2011
    
    
    273,479
    (2)
 
 (1)
    
    Does not include amounts that will be due upon maturity of our credit facility as these
amounts are prepayable at any time. As of December 31, 2006 we had drawn $25,000 from this
credit facility.(2)
    
    Excludes our pro rata share of mortgage obligations of equity investments in real estate
totaling $52,240 in 2009, $4,199 in 2010 and $9,810 in 2011. Our investments in properties outside of the United States subject us to foreign currency risks
which may adversely affect distributions.
   
    
    political and economic instability in some geographical locations;
    
    lack of uniform accounting standards, including availability of information in
accordance with accounting principles generally accepted in the United States of America;
    
    enactment of laws relating to the foreign ownership of property and laws relating to the
ability of foreign entities to remove profits earned from activities within the country to
the united states;
    
    currency transfer restrictions;
 CPA®:14 2006 10-K 17




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
    
    expropriation;
    
    the difficulty in enforcing obligations in other countries and the burden of complying
with a wide variety of foreign laws; and
    
    potential imposition of adverse or confiscatory taxes.
  Our participation in joint ventures creates additional risk.
 ®
 We do not fully control the management for our properties.
  Our distributions may exceed our earnings.
  Dividends payable by REITs generally do not qualify for reduced U.S. federal income tax rates
because qualifying REITs do not pay U.S. federal income tax on their net income.
 .
 Possible legislative or other actions affecting REITs could adversely affect our RIET qualification
and our shareholders.
  CPA®:14 2006 10-K 18




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The ability of our board of directors to change our investment policies or revoke our REIT election
without shareholder approval may cause adverse consequences to our shareholders.
   Maryland law could restrict change in control.
  
    
    any person who beneficially owns 10% or more of the voting power of outstanding shares,
referred to as an interested shareholder;
    
    an affiliate who, at any time within the two-year period prior to the date in question,
was the beneficial owner of 10% or more of the voting power of our outstanding shares, also
referred to as an interested shareholder; or
    
    an affiliate of an interested shareholder.
   Shareholders equity may be diluted
   Your investment return may be reduced if we are required to register as an investment company under
the investment company act.
  
    
    limitations on capital structure;
    
    restrictions on specified investments;
    
    prohibitions on transactions with affiliates; and
    
    compliance with reporting, record keeping, voting, proxy disclosure and other rules and
regulations that would significantly increase our operating expenses.
 CPA®:14 2006 10-K 19




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The
returns on our investments in net leased properties may not be as
great as returns on equity investments in real properties during
strong real estate markets.
  There are special considerations for pension or profit-sharing trusts, Keoghs or IRAs.
  
    
    whether your investment is consistent with the applicable provisions of ERISA and the Internal Revenue Code;
    
    whether your investment will produce unrelated business taxable income, referred to as UBTI, to the benefit plan; and
    
    your need to value the assets of the benefit plan annually.
   
 Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
   CPA®:14 2006 10-K 20




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Item 3. Legal Proceedings.
   ®
 ® ®
 ® ® ® ®
 ® ® ® ®
   CPA®:14 2006 10-K 21




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Item 4. Submission of Matters to a Vote of Security Holders.
 ®
 Shares voting for:
    
    
    37,649,128
    
    
    
    94.29
    %Shares voting against:
    
    
    1,376,417
    
    
    
    3.45
    %Shares abstaining:
    
    
    905,223
    
    
    
    2.27
    %Total shares voting:
    
    
    39,930,768
    
    
    
    100.00
    %
 
  
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
  Distributions
  2006
    
    
    2005First quarter
    
    $
    0.1924
    
    
    $
    0.1904Second quarter
    
    
    0.1929
    
    
    
    0.1909Third quarter
    
    
    0.1929
    
    
    
    0.1914Fourth quarter
    
    
    0.1929
    
    
    
    0.1919$
    0.7711
    
    
    $
    0.7646
  Unregistered Sales of Equity Securities
  Issuer Purchases of Equity Securities
 Maximum number (orTotal number of
    
    approximate dollar value)shares purchased as
    
    of shares that may yet beTotal number of
    
    Average price
    
    part of publicly announced
    
    purchased under the2006 Period
    
    shares purchased(1)
    
    paid per share
    
    plans or programs(1)
    
    plans or programs(1)October
    
    
    
    
    
    $
    
    
    
    
    N/A
    
    
    
    N/ANovember
    
    
    
    
    
    $
    
    
    
    
    N/A
    
    
    
    N/ADecember
    
    
    188,313
    
    
    $
    10.83
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    188,313
 
 (1)
    
    All shares were purchased pursuant to our redemption plan. In November 1997, we announced a
redemption plan under which we may elect to redeem shares subject to certain conditions and
limitations. The maximum amount of shares purchasable in any period depends on the
availability of funds generated by the Distribution Reinvestment and Share Purchase Plan and
other factors CPA®:14 2006 10-K 22




---



##### Table of Contents



at the discretion of our Board of Directors. The redemption plan will terminate
if and when our shares are listed on a national securities market. 
 Item 6. Selected Financial Data.
   For the year ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Operating Data:Revenues from continuing operations
    
    $
    135,192
    
    
    $
    131,910
    
    
    $
    127,771
    
    
    $
    123,924
    
    
    $
    107,153Income from continuing operations
    
    
    58,080
    
    
    
    46,325
    
    
    
    37,951
    
    
    
    33,002
    
    
    
    29,729Earnings from continuing operations per share
    
    
    0.83
    
    
    
    0.68
    
    
    
    0.56
    
    
    
    0.50
    
    
    
    0.45Net income
    
    
    69,618
    
    
    
    47,249
    
    
    
    38,940
    
    
    
    33,820
    
    
    
    30,266Earnings per share
    
    
    0.99
    
    
    
    0.69
    
    
    
    0.58
    
    
    
    0.51
    
    
    
    0.45Cash distributions paid
    
    
    83,633
    
    
    
    51,905
    
    
    
    50,973
    
    
    
    50,173
    
    
    
    48,581Cash distributions declared per share
    
    
    0.7711
    
    
    
    0.7646
    
    
    
    0.7592
    
    
    
    0.7552
    
    
    
    0.7493Payment of mortgage principal (1)
    
    
    12,580
    
    
    
    12,433
    
    
    
    11,046
    
    
    
    9,234
    
    
    
    6,543Balance Sheet Data:Total assets
    
    $
    1,675,323
    
    
    $
    1,295,036
    
    
    $
    1,346,355
    
    
    $
    1,345,747
    
    
    $
    1,319,897Long-term obligations (2)
    
    
    826,459
    
    
    
    679,522
    
    
    
    723,383
    
    
    
    724,705
    
    
    
    689,910
 
 (1)
    
    Represents scheduled mortgage principal paid.(2)
    
    Represents mortgage obligations and deferred acquisition fee installments. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Executive Overview
 Business Overview
  Current Developments and Trends
   ®
 CPA®:14 2006 10-K 23




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##### Table of Contents



How Management Evaluates Results of Operations
    CPA®:14 2006 10-K 24




---



##### Table of Contents



2006
    
    
    2005
    
    
    2004Rental income
    
    $
    116,963
    
    
    $
    113,391
    
    
    $
    110,774Interest income from direct financing leases
    
    
    14,353
    
    
    
    14,112
    
    
    
    13,430$
    131,316
    
    
    $
    127,503
    
    
    $
    124,204
  2006
    
    
    2005
    
    
    2004Carrefour France, SAS (a) (b)
    
    $
    15,161
    
    
    $
    14,460
    
    
    $
    13,696Petsmart, Inc. (c)
    
    
    8,395
    
    
    
    8,303
    
    
    
    8,303Federal Express Corporation (c)
    
    
    6,816
    
    
    
    6,742
    
    
    
    6,669Nortel Networks Limited
    
    
    6,014
    
    
    
    6,001
    
    
    
    6,001Atrium Companies, Inc.
    
    
    4,922
    
    
    
    4,787
    
    
    
    4,574Caremark Rx, Inc.
    
    
    4,300
    
    
    
    4,300
    
    
    
    4,300Tower Automotive, Inc. (d)
    
    
    4,218
    
    
    
    4,099
    
    
    
    3,895Katun Corporation (b)
    
    
    4,000
    
    
    
    3,815
    
    
    
    3,815Metaldyne Company LLC(d)
    
    
    3,673
    
    
    
    3,553
    
    
    
    3,307McLane Company Food Service Inc.
    
    
    3,662
    
    
    
    3,601
    
    
    
    3,560Collins & Aikman Corporation(d)
    
    
    3,594
    
    
    
    3,473
    
    
    
    3,373Perkin Elmer, Inc. (b)
    
    
    3,430
    
    
    
    3,370
    
    
    
    3,394APW North America Inc.
    
    
    3,084
    
    
    
    3,027
    
    
    
    2,954Amerix Corp.
    
    
    2,928
    
    
    
    2,569
    
    
    
    2,497Dicks Sporting Goods, Inc. (e) (f)
    
    
    2,706
    
    
    
    3,697
    
    
    
    3,811Builders FirstSource, Inc.
    
    
    2,598
    
    
    
    2,521
    
    
    
    2,497Gibson Guitar Corp.
    
    
    2,460
    
    
    
    2,566
    
    
    
    2,529Gerber Scientific, Inc.
    
    
    2,445
    
    
    
    2,361
    
    
    
    2,276Waddington North America, Inc.
    
    
    2,331
    
    
    
    2,321
    
    
    
    2,280Buffets, Inc.
    
    
    2,290
    
    
    
    2,280
    
    
    
    2,272Institutional Jobbers Company
    
    
    2,271
    
    
    
    2,271
    
    
    
    2,271Nexpak Corporation (b)
    
    
    2,182
    
    
    
    2,176
    
    
    
    2,121Best Buy Co.
    
    
    2,152
    
    
    
    2,131
    
    
    
    2,004Career Education Corp.
    
    
    2,079
    
    
    
    2,018
    
    
    
    1,967Other (b) (c) (d) (e)
    
    
    33,605
    
    
    
    31,061
    
    
    
    29,838$
    131,316
    
    
    $
    127,503
    
    
    $
    124,204
 
 (a)
    
    An expansion at this property was completed in July 2005.(b)
    
    Revenue amounts are subject to fluctuations in foreign currency exchange rates.(c)
    
    Includes lease revenues applicable to minority interests. Minority interests included in the
consolidated amounts above total $6,654, $8,040 and $7,975 for the years ended December 31,
2006, 2005 and 2004, respectively. CPA®:14 2006 10-K 25




---



##### Table of Contents



(d)
    
    Tenant operates in the automotive industry. Tower Automotive and Collins & Aikman both filed
for Chapter 11 bankruptcy protection in 2005. Included in Other are lease revenues from
American Tire Distributors, Inc. of $1,807, $1,715 and $1,693 for the years ended December 31,
2006, 2005 and 2004, respectively and lease revenues from Meridian Automotive Systems, Inc. of
$1,254, $1,216 and $1,180 for the years ended December 31, 2006, 2005 and 2004, respectively.(e)
    
    Includes lease revenues from properties acquired in the merger.(f)
    
    Investment reclassified to an equity investment in November 2005 as a result of a transaction
with CPA®:16  Global, an affiliate.  2006
    
    
    2005
    
    
    2004True Value Company
    
    $
    5,246
    
    
    $
    5,065
    
    
    $
    5,065Starmark Camhood, L.L.C. (a)
    
    
    4,699
    
    
    
    6,668
    
    
    
    6,651Advanced Micro Devices, Inc. (c)
    
    
    3,774
    
    
    
    3,484
    
    
    
    3,259Mercury Partners and U-Haul Moving Partners (b)
    
    
    3,294
    
    
    
    3,294
    
    
    
    2,215CheckFree Holdings, Inc.
    
    
    2,302
    
    
    
    2,247
    
    
    
    2,180Special Devices, Inc. (d)
    
    
    1,976
    
    
    
    2,088
    
    
    
    2,039Life Time Fitness, Inc.(a)
    
    
    1,725
    
    
    
    
    
    
    
    Compucom Systems, Inc. (c)
    
    
    1,642
    
    
    
    1,489
    
    
    
    1,408Textron, Inc. (d)
    
    
    1,238
    
    
    
    1,333
    
    
    
    1,240Dicks Sporting Goods, Inc. (e)
    
    
    606
    
    
    
    113
    
    
    
    Other(f)
    
    
    625
    
    
    
    
    
    
    
    $
    27,127
    
    
    $
    25,781
    
    
    $
    24,057
 
 (a)
    
    In 2006, the advisor approved a restructuring plan with Starmark. Amounts for Starmark
exclude the operations of four properties that were transferred to a third party and
reclassified as discontinued operations. Six properties were re-leased to Life Time Fitness,
Inc. in June 2006. See Item 1  Significant Developments During 2006.(b)
    
    Interest in this equity investment in real estate was acquired in April 2004.(c)
    
    Additional interest in this equity investment in real estate acquired in the merger.(d)
    
    Property is consolidated effective December 1, 2006 following acquisition of the remaining
interest in the property in the merger.(e)
    
    Investment reclassified to an equity investment in real estate in November 2005 as a result
of a transaction with CPA®:16  Global, an affiliate.(f)
    
    Consists of our share of net lease revenues from equity investments in real estate acquired
in the merger. Results of Operations
  Lease Revenues
 2006 vs. 2005 ®
 CPA®:14 2006 10-K 26




---



##### Table of Contents



2005 vs. 2004
  Depreciation and Amortization
 2006 vs. 2005
 2005 vs. 2004
 Property Expense
 2006 vs. 2005
  2005 vs. 2004
  Income from Equity Investments in Real Estate
  2006 vs. 2005
 CPA®:14 2006 10-K 27




---



##### Table of Contents



2005 vs. 2004
 Gain (Loss) on Derivative Instruments and Other Gains, Net
  2006 vs. 2005
 2005 vs. 2004
 Gain (Loss) on Foreign Currency Transactions, Net
  2006 vs. 2005
 2005 vs. 2004
 Interest Expense
 2006 vs. 2005
 2005 vs. 2004
 Income from Discontinued Operations
 2006
 CPA®:14 2006 10-K 28




---



##### Table of Contents



2005
 2004
 Net Income
 2006 vs. 2005
 2005 vs. 2004
 Financial Condition
 Uses of Cash During the Year
  Operating Activities
  Investing Activities
 ® ® ®
 Financing Activities
  CPA®:14 2006 10-K 29




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##### Table of Contents



®
 Summary of Financing
  December 31,2006
    
    
    2005Balance:Fixed rate
    
    $
    657,819
    
    
    $
    636,523Variable rate (1) (2)
    
    
    152,996
    
    
    
    26,575Total
    
    $
    810,815
    
    
    $
    663,098Percent of total debt:Fixed rate
    
    
    81
    %
    
    
    96
    %Variable rate (2)
    
    
    19
    %
    
    
    4
    %100
    %
    
    
    100
    %Weighted average interest rate at end of period:Fixed rate
    
    
    7.65
    %
    
    
    7.37
    %Variable rate (1)
    
    
    6.44
    %
    
    
    5.28
    %
 
 (1)
    
    Includes amounts outstanding under our credit facility totaling $25,000 at December 31, 2006.(2)
    
    Included in variable rate debt at December 31, 2006 is (i) $43,376 in aggregate principal of
our credit facility ($25,000) and variable rate mortgages ($18,376) which have not been
hedged; (ii) $97,698 in mortgage obligations which currently bear interest at fixed rates but
which convert to variable rates during their term and (iii) $11,922 in mortgage obligations
which are currently fixed rate but which have interest rate reset features which may change
the interest rates to then prevailing market fixed rates at certain points in their term. Cash Resources
  
    
    Cash and cash equivalents totaling $18,991, of which $7,981, at current exchange rates,
was held in foreign bank accounts to maintain local capital requirements;
    
    Credit facility with unused capacity of up to $125,000; and
    
    Unleveraged properties with a carrying value of $96,488, subject to meeting certain financial ratios on our credit facility.
  Credit Facility
  CPA®:14 2006 10-K 30




---



##### Table of Contents




    
    The full year impact from properties acquired in the merger, which we estimate will
generate annual lease revenue and cash flow of approximately $21,600 and $12,000,
respectively, and annual equity investment income of approximately $4,700. There are no
scheduled balloon payments on any of the properties acquired from CPA®:12 until
2008.
    
    The advisors election in 2007 to continue to receive performance fees in restricted shares.
    
    Scheduled rent increases on several properties during 2006 and 2007 should result in additional cash from operations.
    
    The full year impact of dispositions completed in 2006 which will reduce cash flow in 2007.
 Cash Requirements
  Aggregate Contractual Agreements
  Total
    
    
    Less than 1 Year
    
    

13 Years
    
    
    35 Years
    
    
    More than 5 yearsMortgage notes payable  Principal
    
    $
    785,815
    
    
    $
    16,707
    
    
    $
    117,377
    
    
    $
    376,219
    
    
    $
    275,512Mortgage notes payable  Interest
(1)
    
    
    297,648
    
    
    
    58,260
    
    
    
    109,416
    
    
    
    83,308
    
    
    
    46,664Credit facility  Principal
    
    
    25,000
    
    
    
    
    
    
    
    25,000
    
    
    
    
    
    
    
    Credit facility  Interest (1)
    
    
    4,958
    
    
    
    1,700
    
    
    
    3,258
    
    
    
    
    
    
    
    Deferred acquisition fees  Principal
    
    
    15,644
    
    
    
    4,369
    
    
    
    7,106
    
    
    
    3,631
    
    
    
    538Deferred acquisition fees  Interest
    
    
    2,548
    
    
    
    1,000
    
    
    
    1,130
    
    
    
    377
    
    
    
    41Subordinated disposition fees (2)
    
    
    3,507
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,507Property improvements (3)
    
    
    11,200
    
    
    
    5,600
    
    
    
    5,600
    
    
    
    
    
    
    
    Operating leases (4)
    
    
    6,650
    
    
    
    544
    
    
    
    1,315
    
    
    
    1,361
    
    
    
    3,430$
    1,152,970
    
    
    $
    88,180
    
    
    $
    270,202
    
    
    $
    464,896
    
    
    $
    329,692
 
 (1)
    
    Interest on variable rate debt obligations was calculated using the applicable variable
interest rate as of December 31, 2006.(2)
    
    Payable to the advisor, subject to meeting contingencies, in connection with any liquidity
event.(3)
    
    Represents our pro rata share of landlord improvements on the Life Time properties (see Item
1  Significant Developments During 2006). We acquired an additional 15% interest in these
properties in the merger.(4)
    
    Operating lease obligations consist primarily of our share of future minimum rents payable
under an office cost-sharing agreement with certain affiliates for the purpose of leasing
office space used for the administration of real estate entities. Such amounts are allocated
among the entities based on gross revenues and are adjusted quarterly.    CPA®:14 2006 10-K 31




---



##### Table of Contents



Subsequent Events
   Critical Accounting Estimates
  Classification of Real Estate Assets
  Identification of Tangible and Intangible Assets in Connection with Real Estate Acquisitions
    CPA®:14 2006 10-K 32




---



##### Table of Contents



Basis of Consolidation
   Impairments
  CPA®:14 2006 10-K 33




---



##### Table of Contents



Provision for Uncollected Amounts from Lessees
  Fair Value of Assets and Liabilities
   CPA®:14 2006 10-K 34




---



##### Table of Contents



Income Taxes
  Recent Accounting Pronouncements
 EITF 04-05
  FSP FAS 13-1
  SFAS 155
  FIN 48
  SAB 108
    CPA®:14 2006 10-K 35




---



##### Table of Contents



SFAS 157
  CPA®:14 2006 10-K 36




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  Market Risks
     Interest Rate Risk
      2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter
    
    Total
    
    Fair valueFixed rate debt
    
    $
    12,276
    
    
    $
    30,485
    
    
    $
    77,238
    
    
    $
    83,840
    
    
    $
    281,623
    
    
    $
    172,357
    
    
    $
    657,819
    
    
    $
    657,107Weighted average interest rate
    
    
    7.50
    %
    
    
    7.14
    %
    
    
    8.30
    %
    
    
    8.04
    %
    
    
    7.49
    %
    
    
    7.49
    %Variable rate debt
    
    $
    4,431
    
    
    $
    4,713
    
    
    $
    29,941
    
    
    $
    5,253
    
    
    $
    5,503
    
    
    $
    103,155
    
    
    $
    152,996
    
    
    $
    152,996
  CPA®:14
2006 10-K 37




---



##### Table of Contents



Foreign Currency Exchange Rate Risk
    Lease Revenues(1)
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    TotalEuro
    
    $
    19,359
    
    
    $
    19,359
    
    
    $
    19,359
    
    
    $
    19,359
    
    
    $
    11,809
    
    
    $
    53,964
    
    
    $
    143,209British pound sterling
    
    
    1,357
    
    
    
    1,357
    
    
    
    1,357
    
    
    
    1,482
    
    
    
    1,482
    
    
    
    38,357
    
    
    
    45,392$
    20,716
    
    
    $
    20,716
    
    
    $
    20,716
    
    
    $
    20,841
    
    
    $
    13,291
    
    
    $
    92,321
    
    
    $
    188,601
  Debt Service(1) (2)
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    TotalEuro
    
    $
    13,671
    
    
    $
    13,696
    
    
    $
    13,605
    
    
    $
    13,579
    
    
    $
    34,237
    
    
    $
    106,433
    
    
    $
    195,221British pound sterling
    
    
    557
    
    
    
    560
    
    
    
    561
    
    
    
    561
    
    
    
    563
    
    
    
    9,524
    
    
    
    12,326$
    14,228
    
    
    $
    14,256
    
    
    $
    14,166
    
    
    $
    14,140
    
    
    $
    34,800
    
    
    $
    115,957
    
    
    $
    207,547
 
 (1)
    
    Based on the applicable December 31, 2006 exchange rate. Contractual rents and debt
obligations are denominated in the functional currency of the country of each property.(2)
    
    Interest on variable rate debt obligations was calculated using the applicable variable
interest rate as of December 31, 2006.  CPA®:14
2006 10-K 38




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data.
  Report of Independent Registered Public Accounting Firm.
    
    
    40Consolidated Balance Sheets as of December 31, 2006 and 2005.
    
    
    41Consolidated Statements of Income for the years ended December 31, 2006, 2005 and 2004.
    
    
    42Consolidated Statements of Comprehensive Income for the years ended December 31, 2006, 2005 and 2004.
    
    
    43Consolidated Statements of Shareholders Equity for the years ended December 31, 2006, 2005 and 2004.
    
    
    43Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004.
    
    
    44Notes to Consolidated Financial Statements.
    
    
    46Schedule III  Real Estate and Accumulated Depreciation as of December 31, 2006.
    
    
    65Notes to Schedule III.
    
    
    68
  CPA®:14
2006 10-K 39




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
 
 CPA®:14
2006 10-K 40




---



##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CONSOLIDATED BALANCE SHEETS  (in thousands, except share and per share amounts)
 December 31,2006
    
    
    2005AssetsReal estate, net
    
    $
    1,154,336
    
    
    $
    943,637Net investment in direct financing leases
    
    
    137,147
    
    
    
    115,513Equity investments in real estate
    
    
    200,332
    
    
    
    143,417Cash and cash equivalents
    
    
    18,991
    
    
    
    37,871Marketable securities
    
    
    14,207
    
    
    
    9,267Intangible assets, net
    
    
    92,447
    
    
    
    Other assets, net
    
    
    57,863
    
    
    
    45,331Total assets
    
    $
    1,675,323
    
    
    $
    1,295,036Liabilities and Shareholders EquityLiabilities:Limited recourse in mortgage notes payable
    
    $
    785,815
    
    
    $
    663,098Credit facility
    
    
    25,000
    
    
    
    Accrued interest
    
    
    5,285
    
    
    
    4,358Accounts payable, accrued expenses and other liabilities
    
    
    8,636
    
    
    
    5,887Due to affiliates
    
    
    9,587
    
    
    
    4,894Prepaid and deferred rental income and security deposits
    
    
    30,924
    
    
    
    20,296Deferred acquisition fees payable to affiliate
    
    
    15,644
    
    
    
    16,424Distributions payable
    
    
    17,327
    
    
    
    13,103Total liabilities
    
    
    898,218
    
    
    
    728,060Minority interest in consolidated entities
    
    
    19,465
    
    
    
    25,012Commitments and contingencies (Note 13)Shareholders equity:Common stock, $0.001 par value; 120,000,000 shares authorized; 90,514,607
and 70,308,710 shares issued and outstanding, respectively
    
    
    90
    
    
    
    70Additional paid-in capital
    
    
    874,370
    
    
    
    636,009Distributions in excess of accumulated earnings
    
    
    (99,405
    )
    
    
    (81,166
    )Accumulated other comprehensive income
    
    
    11,801
    
    
    
    7,080786,856
    
    
    
    561,993Less, treasury stock at cost, 2,861,902 and 2,028,584 shares, respectively
    
    
    (29,216
    )
    
    
    (20,029
    )Total shareholders equity
    
    
    757,640
    
    
    
    541,964Total liabilities, minority interest and shareholders equity
    
    $
    1,675,323
    
    
    $
    1,295,036
  CPA®:14 2006 10-K 41




---



##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME  (in thousands, except share and per share amounts)
 For the years ended December 31,2006
    
    
    2005
    
    
    2004Revenues:Rental income
    
    $
    116,963
    
    
    $
    113,391
    
    
    $
    110,774Interest income from direct financing leases
    
    
    14,353
    
    
    
    14,112
    
    
    
    13,430Other operating income
    
    
    3,876
    
    
    
    4,407
    
    
    
    3,567135,192
    
    
    
    131,910
    
    
    
    127,771Operating Expenses:Depreciation and amortization
    
    
    (27,834
    )
    
    
    (23,105
    )
    
    
    (23,003
    )Property expense
    
    
    (22,905
    )
    
    
    (24,471
    )
    
    
    (22,281
    )General and administrative
    
    
    (6,758
    )
    
    
    (6,371
    )
    
    
    (6,150
    )(57,497
    )
    
    
    (53,947
    )
    
    
    (51,434
    )Other Income and Expenses:Income from equity investments in real estate
    
    
    27,410
    
    
    
    15,798
    
    
    
    14,304Other interest income
    
    
    3,104
    
    
    
    2,232
    
    
    
    1,239Minority interest in income
    
    
    (1,956
    )
    
    
    (2,153
    )
    
    
    (1,805
    )Gain (loss) on derivative instruments and other gains, net
    
    
    2,344
    
    
    
    5,540
    
    
    
    (719
    )Gain (loss) on foreign currency transactions, net
    
    
    930
    
    
    
    (446
    )
    
    
    1,438Interest expense
    
    
    (51,447
    )
    
    
    (52,609
    )
    
    
    (52,843
    )(19,615
    )
    
    
    (31,638
    )
    
    
    (38,386
    )Income from continuing operations
    
    
    58,080
    
    
    
    46,325
    
    
    
    37,951Discontinued Operations:(Loss) income from operations of discontinued properties
    
    
    (1,644
    )
    
    
    728
    
    
    
    989Gain on sale of real estate, net
    
    
    13,182
    
    
    
    196
    
    
    
    Income from discontinued operations
    
    
    11,538
    
    
    
    924
    
    
    
    989Net Income
    
    $
    69,618
    
    
    $
    47,249
    
    
    $
    38,940Earnings Per Share:Income from continuing operations
    
    $
    0.83
    
    
    $
    0.68
    
    
    $
    0.56Income from discontinued operations
    
    
    0.16
    
    
    
    0.01
    
    
    
    0.02Net income
    
    $
    0.99
    
    
    $
    0.69
    
    
    $
    0.58Distributions Declared Per Share
    
    $
    0.7711
    
    
    $
    0.7646
    
    
    $
    0.7592Weighted Average Shares Outstanding
    
    
    70,421,426
    
    
    
    68,208,208
    
    
    
    67,447,812
  CPA®:14 2006 10-K 42




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##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  (in thousands)
 For the years ended December 31,2006
    
    
    2005
    
    
    2004Net income
    
    $
    69,618
    
    
    $
    47,249
    
    
    $
    38,940Other comprehensive income:Foreign currency translation adjustment
    
    
    4,269
    
    
    
    (5,745
    )
    
    
    2,254Change in unrealized gain (loss) on marketable securities
    
    
    452
    
    
    
    (796
    )
    
    
    2174,721
    
    
    
    (6,541
    )
    
    
    2,471Comprehensive income
    
    $
    74,339
    
    
    $
    40,708
    
    
    $
    41,411
  
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
For the years ended December 31, 2006, 2005 and 2004  (in thousands, except share and per share amounts)
 Distributions inExcess of
    
    
    Accumulated OtherCommon
    
    
    Additional
    
    
    Accumulated
    
    
    Comprehensive
    
    
    TreasuryStock
    
    
    Paid-in Capital
    
    
    Earnings
    
    
    Income
    
    
    Stock
    
    
    TotalBalance at January 1, 2004
    
    $
    68
    
    
    $
    606,380
    
    
    $
    (64,036
    )
    
    $
    11,150
    
    
    $
    (7,133
    )
    
    $
    546,4291,287,321 shares issued $.001 par,
at $11.30 per share, net of
offering costs
    
    
    1
    
    
    
    13,986
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,987Distributions declared
    
    
    
    
    
    
    
    
    
    
    (51,205
    )
    
    
    
    
    
    
    
    
    
    
    (51,205
    )Net income
    
    
    
    
    
    
    
    
    
    
    38,940
    
    
    
    
    
    
    
    
    
    
    
    38,940Change in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,471
    
    
    
    
    
    
    
    2,471Repurchase of 388,848 shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,924
    )
    
    
    (3,924
    )Balance at December 31, 2004
    
    
    69
    
    
    
    620,366
    
    
    
    (76,301
    )
    
    
    13,621
    
    
    
    (11,057
    )
    
    
    546,6981,326,687 shares issued $.001 par,
at $12.10 per share, net of
offering costs
    
    
    1
    
    
    
    15,643
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,644Distributions declared
    
    
    
    
    
    
    
    
    
    
    (52,114
    )
    
    
    
    
    
    
    
    
    
    
    (52,114
    )Net income
    
    
    
    
    
    
    
    
    
    
    47,249
    
    
    
    
    
    
    
    
    
    
    
    47,249Change in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,541
    )
    
    
    
    
    
    
    (6,541
    )Repurchase of 837,094 shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,972
    )
    
    
    (8,972
    )Balance at December 31, 2005
    
    
    70
    
    
    
    636,009
    
    
    
    (81,166
    )
    
    
    7,080
    
    
    
    (20,029
    )
    
    
    541,9641,735,546 shares issued $.001 par, at
$12.40 and $11.85 per share, net of
offering costs
    
    
    2
    
    
    
    19,505
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,50718,470,351 shares issued in
connection with the CPA®:12 merger,
$.001 par, at $11.85 per share
    
    
    18
    
    
    
    218,856
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218,874Distributions declared
    
    
    
    
    
    
    
    
    
    
    (87,857
    )
    
    
    
    
    
    
    
    
    
    
    (87,857
    )Net income
    
    
    
    
    
    
    
    
    
    
    69,618
    
    
    
    
    
    
    
    
    
    
    
    69,618Change in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,721
    
    
    
    
    
    
    
    4,721Repurchase of 833,318 shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,187
    )
    
    
    (9,187
    )Balance at December 31, 2006
    
    $
    90
    
    
    $
    874,370
    
    
    $
    (99,405
    )
    
    $
    11,801
    
    
    $
    (29,216
    )
    
    $
    757,640
  CPA®:14 2006 10-K 43




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##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS  (in thousands)
 For the years ended December 31,2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    69,618
    
    
    $
    47,249
    
    
    $
    38,940Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization, including intangible assets and deferred financing costs
    
    
    29,366
    
    
    
    24,597
    
    
    
    24,642Straight-line rent adjustments
    
    
    (2,344
    )
    
    
    (3,173
    )
    
    
    (4,349
    )Income (loss) from equity investments in real estate in excess of distributions received
    
    
    8,989
    
    
    
    30
    
    
    
    (1,162
    )Minority interest in income
    
    
    1,956
    
    
    
    2,153
    
    
    
    1,805Issuance of shares to affiliate in satisfaction of fees due
    
    
    8,741
    
    
    
    8,947
    
    
    
    8,289Increase (decrease) in prepaid and deferred rental income and security deposits
    
    
    1,973
    
    
    
    (2,232
    )
    
    
    2,584Realized gain on foreign currency transactions, net
    
    
    (417
    )
    
    
    (334
    )
    
    
    (1,357
    )Unrealized (gain) loss on foreign currency transactions, net
    
    
    (513
    )
    
    
    780
    
    
    
    (81
    )Realized loss (gain) on sale of securities and warrants
    
    
    158
    
    
    
    (2,192
    )
    
    
    Reversal of unrealized (loss) gain on warrants and derivatives
    
    
    (229
    )
    
    
    7
    
    
    
    Unrealized (gain) loss on warrants and derivatives, net
    
    
    (2,273
    )
    
    
    (3,086
    )
    
    
    719Gain from sale of real estate
    
    
    (13,182
    )
    
    
    (465
    )
    
    
    Settlement proceeds received in the form of marketable securities
    
    
    
    
    
    
    (223
    )
    
    
    Change in other operating assets and liabilities, net
    
    
    389
    
    
    
    (1,163
    )
    
    
    560Net cash provided by operating activities
    
    
    102,232
    
    
    
    70,895
    
    
    
    70,590Cash flows from investing activities:Equity distributions received in excess of equity income in real estate
    
    
    81,788
    
    
    
    1,837
    
    
    
    2,412Cash payments to shareholders of acquired company
    
    
    (102,176
    )
    
    
    
    
    
    
    Cash overdraft assumed in acquisition of CPA®:12s business operations
    
    
    (3,950
    )
    
    
    
    
    
    
    Capital contributions to equity investments in real estate
    
    
    (45,481
    )
    
    
    
    
    
    
    Purchases of real estate and equity investments and other capitalized costs, net (a)
    
    
    (1,085
    )
    
    
    (3,279
    )
    
    
    (17,195
    )Proceeds from sale of real estate
    
    
    37,628
    
    
    
    5,808
    
    
    
    Funds placed in restricted account for future investment
    
    
    (21,741
    )
    
    
    
    
    
    
    Funds released from restricted account
    
    
    21,741
    
    
    
    
    
    
    
    Purchase of securities
    
    
    
    
    
    
    
    
    
    
    (10,825
    )Proceeds from sale of securities
    
    
    2,986
    
    
    
    9,432
    
    
    
    19,775Payment of deferred acquisition fees to an affiliate
    
    
    (3,514
    )
    
    
    (3,420
    )
    
    
    (3,266
    )Net cash (used in) provided by investing activities
    
    
    (33,804
    )
    
    
    10,378
    
    
    
    (9,099
    )Cash flows from financing activities:Distributions paid
    
    
    (83,633
    )
    
    
    (51,905
    )
    
    
    (50,973
    )Distributions paid to minority interest partner
    
    
    (3,869
    )
    
    
    (3,579
    )
    
    
    (2,735
    )Proceeds from mortgages and credit facility
    
    
    40,000
    
    
    
    
    
    
    
    Prepayment of mortgage principal and credit facility
    
    
    (27,167
    )
    
    
    (8,512
    )
    
    
    Scheduled payments of mortgage principal
    
    
    (12,580
    )
    
    
    (12,433
    )
    
    
    (11,046
    )Release of mortgage funds by lenders
    
    
    
    
    
    
    
    
    
    
    167Proceeds from loan from affiliate
    
    
    24,000
    
    
    
    
    
    
    
    Prepayment of loan from affiliate
    
    
    (24,000
    )Repayment of proceeds from note
    
    
    
    
    
    
    
    
    
    
    (1,617
    )Payment of financing costs
    
    
    (1,731
    )
    
    
    
    
    
    
    Proceeds from stock issuance, net of costs
    
    
    10,766
    
    
    
    6,697
    
    
    
    5,698Purchase of treasury stock
    
    
    (9,187
    )
    
    
    (8,972
    )
    
    
    (3,924
    )Net cash used in financing activities
    
    
    (87,401
    )
    
    
    (78,704
    )
    
    
    (64,430
    )Effect of exchange rate changes on cash
    
    
    93
    
    
    
    (1,093
    )
    
    
    609Net (decrease) increase in cash and cash equivalents
    
    
    (18,880
    )
    
    
    1,476
    
    
    
    (2,330
    )Cash and cash equivalents, beginning of year
    
    
    37,871
    
    
    
    36,395
    
    
    
    38,725Cash and cash equivalents, end of year
    
    $
    18,991
    
    
    $
    37,871
    
    
    $
    36,395
  CPA®:14 2006 10-K 44




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##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS  (in thousands, except share and per share amounts)
 Non-cash investing and financing activities:
 (a)
    
    Included in the cost basis of real estate and equity investments acquired in 2004 are
deferred acquisition fees payable to W. P. Carey & Co., LLC of $749. No such fees were
incurred in 2005 or 2006.
 (b)
    
    The merger with Corporate Property Associates 12 Incorporated (CPA®:12), an
affiliate, as described in Note 3, consisted of the acquisition and assumption of certain
assets and liabilities, respectively, at fair value in exchange for the issuance of shares, a
cash payment to CPA®:12 shareholders who elected to redeem their shares and certain
costs, as follows:
 Real estate accounted for under the operating method
    
    $
    214,858Net investment in direct financing leases
    
    
    19,799Intangible assets
    
    
    93,019Equity investments
    
    
    111,977Investment in mortgage loan securitization
    
    
    7,346Other assets
    
    
    4,415Mortgage notes payable (cost $110,041)
    
    
    (116,082
    )Redemption
of
CPA®:12
shareholders
    
    
    (102,176
    )Other
liabilities (1)
    
    
    (13,966
    )Elimination of minority interest
    
    
    3,634Issuance of common stock
    
    
    (218,874
    )Cash overdraft assumed in acquisition of CPA®:12s business operations
    
    $
    (3,950
    )
 
 (1)
    
    Includes deferred fees of $2,734 payable to the advisor (see Note 4). ® ®
 Supplemental cash flow information:
  CPA®:14 2006 10-K 45




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except share and per share amounts)
 Note 1. Business and Organization
   ®
 Note 2. Summary of Significant Accounting Policies
 Basis of Consolidation
    CPA®:14 2006 10-K 46




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##### Table of Contents



Notes to Consolidated Financial Statements
  Use of Estimates
  Reclassifications and Revisions
  Purchase Price Allocation
      Real Estate Under Construction and Redevelopment
  CPA®:14 2006 10-K 47




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##### Table of Contents



Notes to Consolidated Financial Statements
 Cash Equivalents
  Marketable Securities
  Other Assets
  Deferred Acquisition Fees Payable to Affiliate
  Treasury Stock
  Real Estate Leased to Others
    Operating leases
 Direct financing method
  CPA®:14 2006 10-K 48




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##### Table of Contents



Notes to Consolidated Financial Statements
  Depreciation
  Impairments
    Foreign Currency Translation
   CPA®:14 2006 10-K 49




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##### Table of Contents



Notes to Consolidated Financial Statements
   Derivative Instruments
    Assets Held for Sale
    Income Taxes
  CPA®:14 2006 10-K 50




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##### Table of Contents



Notes to Consolidated Financial Statements
 Earnings Per Share
  Recent Accounting Pronouncements
 EITF 04-05
  FSP FAS 13-1
  SFAS 155
  FIN 48
  SAB 108
    CPA®:14 2006 10-K 51




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##### Table of Contents



Notes to Consolidated Financial Statements
  SFAS 157
  Note 3. Business Combination with Corporate Property Associates 12 Incorporated
 ® ® ® ® ® ® ® ®
 ® ® ®
 ® ® ®
   CPA®:14 2006 10-K 52




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##### Table of Contents



Notes to Consolidated Financial Statements
 ® ® ®
 Note 4. Transactions with Related Parties
   ®
    CPA®:14 2006 10-K 53




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##### Table of Contents



Notes to Consolidated Financial Statements
     Note 5. Real Estate
  December 31,2006
    
    
    2005Cost
    
    $
    1,291,598
    
    
    $
    1,050,368Less: Accumulated depreciation
    
    
    (137,262
    )
    
    
    (106,731
    )$
    1,154,336
    
    
    $
    943,637
   Year ending December 31,2007
    
    $
    129,9992008
    
    
    130,5672009
    
    
    130,3492010
    
    
    127,4982011
    
    
    122,101Thereafter through 2024
    
    
    941,474
 CPA®:14 2006 10-K 54




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##### Table of Contents



Notes to Consolidated Financial Statements
 Note 6. Net Investment in Direct Financing Leases
  December 31,2006
    
    
    2005Minimum lease payments receivable
    
    $
    223,982
    
    
    $
    221,136Unguaranteed residual value
    
    
    133,081
    
    
    
    111,752357,063
    
    
    
    332,888Less: unearned income
    
    
    (219,916
    )
    
    
    (217,375
    )$
    137,147
    
    
    $
    115,513
  Year ending December 31,2007
    
    $
    14,5172008
    
    
    14,5172009
    
    
    14,5172010
    
    
    14,6842011
    
    
    14,784Thereafter through 2031
    
    
    150,963
  Note 7. Equity Investments in Real Estate
    CPA®:14 2006 10-K 55




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##### Table of Contents



Notes to Consolidated Financial Statements
  December 31,2006
    
    
    2005Assets (primarily real estate)
    
    $
    913,466
    
    
    $
    1,084,354Liabilities (primarily mortgage notes payable)
    
    
    (538,085
    )
    
    
    (652,119
    )Partners and members capital
    
    $
    375,381
    
    
    $
    432,235Companys share of equity investees net assets
    
    $
    200,332
    
    
    $
    143,417
 For the year ended December 31,2006(1)
    
    
    2005
    
    
    2004Revenue (primarily rental income and interest
income from direct financing leases)
    
    $
    105,543
    
    
    $
    117,156
    
    
    $
    105,488Expenses (primarily interest on mortgages,
defeasance costs/prepayment penalties and
depreciation) (2)(4)
    
    
    (86,461
    )
    
    
    (69,698
    )
    
    
    (64,085
    )Gain on sale of real estate(3)(4)
    
    
    73,590
    
    
    
    
    
    
    
    Impairment charge (2)
    
    
    (8,614
    )
    
    
    
    
    
    
    Net income
    
    $
    84,058
    
    
    $
    47,458
    
    
    $
    41,403Companys share of net income from equity investments
    
    $
    27,410
    
    
    $
    15,798
    
    
    $
    14,304
 
 (1)
    
    Results for equity investees are presented for the period during which the Company accounted
for the investee under the equity method of accounting (that is, for December 1, 2006 through
December 31, 2006 for investments acquired during the merger, and for January 1, 2006 through
November 30, 2006 for the two investments that are now consolidated following the Companys
acquisition of the remaining interests in the merger). Results for investments owned by the
Company as of January 1, 2006, including those investments in which the Company increased its
interest in an existing investment in the merger, are presented for the full year.(2)
    
    The Company and an affiliate own interests in a venture owning 15 properties formerly leased
to Starmark (formerly the parent of Starmark Camhood L.L.C.) under a master lease agreement.
The Company owned a 41% interest in this venture and acquired an additional 15% interest in
the venture in the merger. The Company continues to account for this investment under the
equity method of accounting as its affiliate is the managing member in the limited liability
company and is required to consolidate the investment under the provisions of EITF 04-05. The
Companys interest in this investment had a carrying value of $34,975 and $29,113 as of
December 31, 2006 and 2005, respectively and accounted for ($7,786), $2,835 and $2,682 of
(loss) income from equity investments in real estate for the years ended December 31, 2006,
2005 and 2004, respectively. The loss in 2006 reflects the recognition of impairment charges
and prepayment penalties and debt defeasance costs as described below.In January 2006, the advisor entered into a cooperation agreement with Starmark. Under this
cooperation agreement, the advisor, on behalf of ourselves and our affiliate, agreed to cooperate
in Starmarks efforts to sell its existing individual leasehold interests to third parties and
restructure the lease agreements. Additionally, Starmarks financial covenants were replaced by
certain payment restrictions and an agreement to reserve certain of the proceeds of sale of the
leasehold interests and other Starmark properties to cover certain costs the venture incurred in
connection with transactions under the cooperation agreement.In June 2006, the advisor approved a plan to restructure the master lease agreement with
Starmark. Under the restructuring plan, six properties under the master lease agreement were
re-leased to Life Time Fitness, Inc. (Life Time), a new tenant unaffiliated with Starmark, and
Life Time entered into a commitment to provide $20,000 of improvements to these six properties.
In connection with the restructuring, four properties formerly leased to Starmark were
transferred to Life Time in exchange for Life Times commitment to use $10,000 to fund a portion of the improvements to the six leased
properties. This commitment is secured by letters of credit totaling $10,000. The venture has
transferred title of these four properties to Life Time and the venture has no continuing
involvement in the transferred properties. No gain or loss was recorded on the transfer of the
four properties as the venture had previously written down the four transferred properties to
their estimated fair values, as described below. The remaining $10,000 of improvements to the six
leased properties will be funded through a rent abatement to the tenant of $2,322 and through
security deposits and prepaid rent totaling $7,678 that were released by Starmark prior to the
merger (of which the Companys pro rata share is $952 and $3,148, respectively). The $20,000 of
improvements (of which the Companys pro rata share, following the merger, is $11,200) are for
the benefit of the venture and will be retained by the venture upon expiration of the CPA®:14 2006 10-K 56




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##### Table of Contents



Notes to Consolidated Financial Statements
     (3)
    
    In June 2006, a venture in which the Company and an affiliate held 40% and 60% interests,
respectively, sold a property in New York, New York leased to Clear Channel for $200,012, net
of closing costs, and recognized a gain on the sale of $41,101, net of a $10,253 writeoff of
unrecoverable receivables related to future stated rent increases. In connection with the
sale, the venture repaid the existing limited recourse mortgage obligation of $81,166 and
incurred a charge for prepayment penalties and related costs totaling $2,981. The Companys
pro rata share of the gain, which was $16,441, and the charge for prepayment penalties of
$1,192 is included in income from equity investments in real estate in the accompanying
consolidated financial statements.(4)
    
    In October 2006, a venture through which the Company and an affiliate held 49.99% and 50.01%
interests, respectively, in a property in California leased to Applied Materials, sold the
property for $56,357 and recognized a gain on this sale of $14,362, of which the Companys
share is $28,172 and $7,180, respectively. The venture also recognized a gain on the sale of
additional properties in which the Company had no ownership interest. In connection with the sale, the
venture repaid the outstanding mortgage obligation on this property of $19,680 in October 2006
and incurred a charge on the early extinguishment of debt of $1,788, of which the Companys
share is $9,838 and $894, respectively.(5)
    
    In December 2005, the Company contributed a 55.1% interest in a limited liability company, which
owns land and building in Plainfield, Indiana. The Company retained a 44.9% interest in the
limited liability company and as a result now accounts for its interest under the equity
method of accounting.(6)
    
    On April 29, 2004, the Company, along with two affiliates, Corporate Property Associates 15
Incorporated and Corporate Property Associates 16  Global Incorporated, through a limited
partnership in which the Company owns an 11.54% interest through a subsidiary, purchased 78
retail self-storage and truck rental facilities and entered into master lease agreements with
two lessees that operate the facilities under the U-Haul brand name. The self-storage
facilities are leased to Mercury, and the truck rental facilities are leased to U-Haul. The
total cost was $312,445. In connection with the purchase, the limited partnership obtained
$183,000 of limited recourse mortgage financing collateralized by the properties and lease
assignments.The Mercury lease has an initial term of 20 years with two 10-year renewal options and provides
for annual rent of $18,551. The Mercury lease is guaranteed by Mercury 99, LLC, an entity that
owns a 99% ownership interest in Mercury. The U-Haul lease has an initial term of 10 years with
two 10-year renewal options and provides for annual rent of $9,990. In the event of default,
termination or expiration of the U-Haul lease, Mercury 99, LLC will automatically assume the
obligations of the U-Haul lease and Mercury 99, LLC will continue to lease the self-storage
facilities and shall lease the truck rental facilities pursuant to the terms (with extension) of
the U-Haul lease. Upon Mercury 99, LLCs assumption, the term of the U-Haul lease shall be deemed
extended so as to automatically become co-terminus for the term of the Mercury 99, LLC lease.
Each lease provides for rent increases every five years based on a formula indexed to the CPI. CPA®:14 2006 10-K 57




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##### Table of Contents



Notes to Consolidated Financial Statements
  Note 8. Intangibles
 ®
  December 31, 2006Lease intangiblesIn-place lease
    
    $
    35,715Tenant relationship
    
    
    10,920Above-market rent
    
    
    46,384Less: accumulated amortization
    
    
    (572
    )92,447Below-market rent
    
    
    (5,365
    )Less: accumulated amortization
    
    
    11(5,354
    )
  Note 9. Mortgage Financing Through Loan Securitization
 ®
 ®
 Fair value as of
    
    1% adverse
    
    2% adverseDecember 31, 2006
    
    change
    
    changeFair value of CPA® Interests
    
    $
    13,911
    
    
    $
    13,378
    
    
    $
    12,871
  CPA®:14 2006 10-K 58




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##### Table of Contents



Notes to Consolidated Financial Statements
 Note 10. Disclosures About Fair Value of Financial Instruments
  Note 11. Risk Management and Use of Financial Instruments
 Risk Management
  Use of Derivative Financial Instruments
      CPA®:14 2006 10-K 59




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##### Table of Contents



Notes to Consolidated Financial Statements
  For the year ended December 31,2006
    
    
    2005
    
    
    2004Unrealized gain (loss) on common stock warrants (1)
    
    $
    2,273
    
    
    $
    2,653
    
    
    $
    (64
    )Unrealized gain (loss) on interest rate swap agreement (2)
    
    
    229
    
    
    
    426
    
    
    
    (655
    )Unrealized loss on foreign currency option (3)
    
    
    
    
    
    
    (5
    )
    
    
    (9
    )$
    2,502
    
    
    $
    3,074
    
    
    $
    (728
    )
 
 (1)
    
    During 2005, an unrealized gain of $2,199 related to certain stock warrants of American Tire
Distributors, Inc. held by the Company was reversed and a corresponding gain of $2,192 was
recognized upon American Tires redemption of its outstanding warrants.(2)
    
    In connection with the termination of an interest rate swap agreement during 2006, the Company
reversed a cumulative unrealized loss of $229 recognized during 2005.(3)
    
    Included in gain (loss) on foreign currency transactions, net in the accompanying
consolidated financial statements. Concentration of Credit Risk
   Note 12. Mortgage Notes Payable and Notes Payable
   Year ending December 31,
    
    Total Debt
    
    
    Fixed Rate Debt
    
    
    Variable Rate Debt2007
    
    $
    16,707
    
    
    $
    12,276
    
    
    $
    4,4312008
    
    
    35,198
    
    
    
    30,485
    
    
    
    4,7132009 (1)
    
    
    107,179
    
    
    
    77,238
    
    
    
    29,9412010
    
    
    89,093
    
    
    
    83,840
    
    
    
    5,2532011
    
    
    287,126
    
    
    
    281,623
    
    
    
    5,503Thereafter through 2032
    
    
    275,512
    
    
    
    172,357
    
    
    
    103,155Total
    
    $
    810,815
    
    
    $
    657,819
    
    
    $
    152,996
 
 (1)
    
    Includes maturity of credit facility in November 2009. Credit Facility
  CPA®:14 2006 10-K 60




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##### Table of Contents



Notes to Consolidated Financial Statements
   Note 13. Commitments and Contingencies
   ®
 ® ®
 ® ® ® ®
 ® ® ® ®
  CPA®:14 2006 10-K 61




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##### Table of Contents



Notes to Consolidated Financial Statements
   Note 14. Shareholders Equity
 Distributions
  2006
    
2005
    

2004Ordinary income
    
    $
    0.31
    
$
0.56

$
0.57Capital gains
    
    
    0.44
    

0.04


Return of capital
    
    
    
    

0.16


0.190.75


0.76


0.76Spillover
distribution (1)


0.02





$
    0.77
    
$
0.76

$
0.76
 
 
  Accumulated Other Comprehensive Income
  2006
    
    
    2005Unrealized appreciation on marketable securities
    
    $
    771
    
    
    $
    319Foreign currency translation adjustment
    
    
    11,030
    
    
    
    6,761Accumulated other comprehensive (loss) income
    
    $
    11,801
    
    
    $
    7,080
 Note 15. Discontinued Operations
 2006
  2005
 CPA®:14 2006 10-K 62




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##### Table of Contents



Notes to Consolidated Financial Statements
  For the year ended December 31,2006
    
    
    2005
    
    
    2004Revenues (primarily rental revenues and other operating income):
    
    $
    1,003
    
    
    $
    2,676
    
    
    $
    2,889Expenses (primarily interest on mortgages, prepayment penalties,
depreciation and property expenses):
    
    
    (2,647
    )
    
    
    (1,948
    )
    
    
    (1,900
    )Gain on sales of real estate, net
    
    
    13,182
    
    
    
    196
    
    
    
    Income from discontinued operations
    
    $
    11,538
    
    
    $
    924
    
    
    $
    989
 Note 16. Segment Information
   Domestic
    
    
    Foreign(1)
    
    
    Total CompanyRevenues
    
    $
    110,894
    
    
    $
    24,298
    
    
    $
    135,192Operating expenses
    
    
    (50,661
    )
    
    
    (6,836
    )
    
    
    (57,497
    )Income from equity investments in real estate
    
    
    27,410
    
    
    
    
    
    
    
    27,410Interest expense, net
    
    
    (39,779
    )
    
    
    (8,564
    )
    
    
    (48,343
    )Other, net (2)
    
    
    388
    
    
    
    930
    
    
    
    1,318Income from continuing operations
    
    $
    48,252
    
    
    $
    9,828
    
    
    $
    58,080Total equity investments in real estate
    
    $
    200,332
    
    
    $
    
    
    
    $
    200,332Total long-lived assets
    
    
    1,300,717
    
    
    
    191,098
    
    
    
    1,491,815Total assets
    
    
    1,473,492
    
    
    
    201,831
    
    
    
    1,675,323
  Domestic
    
    
    Foreign(1)
    
    
    Total CompanyRevenues
    
    $
    108,470
    
    
    $
    23,440
    
    
    $
    131,910Operating expenses
    
    
    (47,090
    )
    
    
    (6,857
    )
    
    
    (53,947
    )Income from equity investments in real estate
    
    
    15,798
    
    
    
    
    
    
    
    15,798Interest expense, net
    
    
    (41,495
    )
    
    
    (8,882
    )
    
    
    (50,377
    )Other, net (2)
    
    
    3,382
    
    
    
    (441
    )
    
    
    2,941Income from continuing operations
    
    $
    39,065
    
    
    $
    7,260
    
    
    $
    46,325Total equity investments in real estate
    
    $
    143,417
    
    
    $
    
    
    
    $
    143,417Total long-lived assets
    
    
    1,027,312
    
    
    
    175,255
    
    
    
    1,202,567Total assets
    
    
    1,112,722
    
    
    
    182,314
    
    
    
    1,295,036
  Domestic
    
    
    Foreign(1)
    
    
    Total CompanyRevenues
    
    $
    105,296
    
    
    $
    22,475
    
    
    $
    127,771Operating expenses
    
    
    (44,778
    )
    
    
    (6,656
    )
    
    
    (51,434
    )Income from equity investments in real estate
    
    
    14,304
    
    
    
    
    
    
    
    14,304Interest expense, net
    
    
    (42,485
    )
    
    
    (9,119
    )
    
    
    (51,604
    )Other, net (2)
    
    
    (1,147
    )
    
    
    61
    
    
    
    (1,086
    )Income from continuing operations
    
    $
    31,190
    
    
    $
    6,761
    
    
    $
    37,951Total equity investments in real estate
    
    $
    134,905
    
    
    $
    
    
    
    $
    134,905Total long-lived assets
    
    
    1,048,775
    
    
    
    202,334
    
    
    
    1,251,109Total assets
    
    
    1,130,852
    
    
    
    215,503
    
    
    
    1,346,355
 
 (1)
    
    Consists of operations in the United Kingdom, France, Finland and the Netherlands. CPA®:14 2006 10-K 63




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##### Table of Contents



Notes to Consolidated Financial Statements (2)
    
    Consists of minority interest, gain (loss) on derivative instruments and other gains, net and
(loss) gain on foreign currency transactions, net. Note 17. Selected Quarterly Financial Data (unaudited)
 For the three months endedMarch 31, 2006
    
    June 30, 2006
    
    September 30, 2006
    
    December 31, 2006Revenues
    
    $
    32,248
    
    
    $
    32,761
    
    
    $
    34,713
    
    
    $
    35,470Operating expenses
    
    
    (12,701
    )
    
    
    (16,439
    )
    
    
    (14,404
    )
    
    
    (13,953
    )Net income
    
    
    12,074
    
    
    
    26,009
    
    
    
    7,632
    
    
    
    23,903Earnings per share
    
    
    0.18
    
    
    
    0.38
    
    
    
    0.11
    
    
    
    0.32Distributions declared per share
    
    
    0.1924
    
    
    
    0.1929
    
    
    
    0.1929
    
    
    
    0.1929
 For the three months endedMarch 31, 2005
    
    June 30, 2005
    
    September 30, 2005
    
    December 31, 2005Revenues
    
    $
    32,580
    
    
    $
    32,590
    
    
    $
    34,725
    
    
    $
    32,015Operating expenses
    
    
    (12,852
    )
    
    
    (13,484
    )
    
    
    (15,355
    )
    
    
    (12,256
    )Net income
    
    
    13,011
    
    
    
    10,667
    
    
    
    10,839
    
    
    
    12,732Earnings per share
    
    
    0.19
    
    
    
    0.16
    
    
    
    0.16
    
    
    
    0.18Distributions declared per share
    
    
    0.1904
    
    
    
    0.1909
    
    
    
    0.1914
    
    
    
    0.1919
 Note 18. Pro Forma Financial Information
  For the years ended December 31,2006
    
    2005Pro forma total revenues
    
    $
    166,414
    
    
    $
    165,088Pro forma income from continuing operations
    
    
    63,774
    
    
    
    52,612Pro forma income from continuing operations per share
    
    
    0.73
    
    
    
    0.60
  Note 19. Subsequent Events
 CPA®:14 2006 10-K 64




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##### Table of Contents



SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 2006  (in thousands)
 Life on whichCosts
    
    
    Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Depreciation inCapitalized
    
    
    (Decrease)
    
    
    Gross Amount at which Carried
    
    
    
    
    
    
    
    
    
    
    Latest Statement ofInitial Cost to Company
    
    
    Subsequent to
    
    
    in Net
    
    
    at Close of Period (e)
    
    
    Accumulated
    
    
    Date
    
    
    Income isDescription
    
    Encumbrances
    
    
    Land
    
    
    Buildings
    
    
    Acquisition (a)
    
    
    Investments (b)
    
    
    Land
    
    
    Buildings
    
    
    Total
    
    
    Depreciation (d)
    
    
    Acquired
    
    
    ComputedReal Estate Under Operating Leases:Retail store in Torrance, California
    
    $
    
    
    
    $
    13,060
    
    
    $
    6,934
    
    
    $
    153
    
    
    $
    
    
    
    $
    13,060
    
    
    $
    7,087
    
    
    $
    20,147
    
    
    $
    1,476
    
    
    Jul 1998
    
    40 yrs.Industrial facility in San Clemente, California
    
    
    
    
    
    
    2,390
    
    
    
    
    
    
    
    8,958
    
    
    
    53
    
    
    
    2,390
    
    
    
    9,011
    
    
    
    11,401
    
    
    
    1,628
    
    
    Jul 1998
    
    40 yrs.Industrial facility in Pittsburgh, Pennsylvania
    
    
    3,675
    
    
    
    620
    
    
    
    6,186
    
    
    
    
    
    
    
    
    
    
    
    620
    
    
    
    6,186
    
    
    
    6,806
    
    
    
    1,244
    
    
    Dec 1998
    
    40 yrs.Industrial facility Gilbert, Arizona (c)
    
    
    12,349
    
    
    
    1,310
    
    
    
    10,494
    
    
    
    10,974
    
    
    
    
    
    
    
    1,751
    
    
    
    21,027
    
    
    
    22,778
    
    
    
    2,136
    
    
    Feb 1999
    
    30.7 yrs.Dec 2006Industrial and warehouse facilities in Burbank, California and Las Vegas,
Nevada
    
    
    6,899
    
    
    
    3,860
    
    
    
    8,263
    
    
    
    
    
    
    
    2
    
    
    
    3,860
    
    
    
    8,265
    
    
    
    12,125
    
    
    
    1,580
    
    
    Mar 1999
    
    40 yrs.Oct 1999Warehouse and distribution facilities in Harrisburg, North Carolina;
Atlanta, Georgia; Cincinnati, Ohio and Elkwood, Virginia
    
    
    13,057
    
    
    
    3,930
    
    
    
    10,398
    
    
    
    8,476
    
    
    
    9
    
    
    
    3,945
    
    
    
    18,868
    
    
    
    22,813
    
    
    
    2,774
    
    
    Jun 1999
    
    40 yrs.Dec 2001Industrial facility in Gardena, California
    
    
    2,773
    
    
    
    2,340
    
    
    
    3,943
    
    
    
    
    
    
    
    (2,899
    )
    
    
    2,340
    
    
    
    1,044
    
    
    
    3,384
    
    
    
    79
    
    
    Jul 1999
    
    40 yrs.Warehouse and distribution facilities in Burlington, New Jersey; Shawnee,
Kansas and Manassas, Virginia (c)
    
    
    26,473
    
    
    
    3,604
    
    
    
    8,613
    
    
    
    23,709
    
    
    
    
    
    
    
    4,476
    
    
    
    31,450
    
    
    
    35,926
    
    
    
    5,202
    
    
    Aug 1999
    
    40 yrs.Dec 2006Warehouse and distribution facility in Grand Rapids, Michigan
    
    
    
    
    
    
    740
    
    
    
    3,043
    
    
    
    7,638
    
    
    
    
    
    
    
    740
    
    
    
    10,681
    
    
    
    11,421
    
    
    
    1,927
    
    
    Aug 1999
    
    40 yrs.Land in Midlothian, Virginia
    
    
    2,595
    
    
    
    3,515
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,515
    
    
    
    
    
    
    
    3,515
    
    
    
    
    
    
    Sep 1999
    
    
    N/AOffice facility in Columbia, Maryland
    
    
    13,184
    
    
    
    2,623
    
    
    
    20,233
    
    
    
    3,113
    
    
    
    
    
    
    
    2,623
    
    
    
    23,346
    
    
    
    25,969
    
    
    
    4,031
    
    
    Nov 1999
    
    40 yrs.Industrial facilities in Welcome, North Carolina; Murrysville, Pennsylvania and Wylie, Texas
    
    
    14,372
    
    
    
    1,596
    
    
    
    23,910
    
    
    
    323
    
    
    
    (125
    )
    
    
    1,596
    
    
    
    24,108
    
    
    
    25,704
    
    
    
    3,293
    
    
    Nov 1999
    
    40 yrs.Dec 2001Sports facilities in Salt Lake City, Utah and St. Charles, Missouri
    
    
    6,702
    
    
    
    2,920
    
    
    
    8,660
    
    
    
    836
    
    
    
    
    
    
    
    2,920
    
    
    
    9,496
    
    
    
    12,416
    
    
    
    1,479
    
    
    Dec 1999
    
    40 yrs.Dec 2000Warehouse and distribution facility in Tempe, Arizona
    
    
    3,163
    
    
    
    940
    
    
    
    4,557
    
    
    
    13
    
    
    
    
    
    
    
    940
    
    
    
    4,570
    
    
    
    5,510
    
    
    
    776
    
    
    Jan 2000
    
    40 yrs.Warehouse and distribution facility in Rock Island, Illinois
    
    
    6,833
    
    
    
    500
    
    
    
    9,945
    
    
    
    1,887
    
    
    
    
    
    
    
    500
    
    
    
    11,832
    
    
    
    12,332
    
    
    
    1,800
    
    
    Feb 2000
    
    40 yrs.Industrial facility in North Amityville, New York
    
    
    10,193
    
    
    
    2,932
    
    
    
    16,398
    
    
    
    18
    
    
    
    (4,120
    )
    
    
    1,482
    
    
    
    13,746
    
    
    
    15,228
    
    
    
    2,363
    
    
    Feb 2000
    
    40 yrs.Warehouse and distribution facilities in Monon, Indiana; Champlin, Minnesota; Robbinsville, New Jersey; Radford, Virginia and North Salt
Lake City, Utah
    
    
    16,047
    
    
    
    4,580
    
    
    
    24,844
    
    
    
    15
    
    
    
    
    
    
    
    4,580
    
    
    
    24,859
    
    
    
    29,439
    
    
    
    4,117
    
    
    May 2000
    
    40 yrs.Warehouse and distribution facility in Lakewood, New Jersey
    
    
    6,364
    
    
    
    710
    
    
    
    4,531
    
    
    
    3,439
    
    
    
    
    
    
    
    710
    
    
    
    7,970
    
    
    
    8,680
    
    
    
    1,219
    
    
    Jun 2000
    
    40 yrs.Retail facilities in Kennesaw, Georgia and Leadwood, Kansas
    
    
    13,823
    
    
    
    6,230
    
    
    
    15,842
    
    
    
    108
    
    
    
    
    
    
    
    6,230
    
    
    
    15,950
    
    
    
    22,180
    
    
    
    2,608
    
    
    Jun 2000
    
    40 yrs.Land in Scottsdale, Arizona
    
    
    8,228
    
    
    
    14,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,600
    
    
    
    
    
    
    
    14,600
    
    
    
    
    
    
    Sep 2000
    
    
    N/AIndustrial facility in Albuquerque, New Mexico
    
    
    3,311
    
    
    
    1,490
    
    
    
    4,636
    
    
    
    7
    
    
    
    
    
    
    
    1,490
    
    
    
    4,643
    
    
    
    6,133
    
    
    
    730
    
    
    Sep 2000
    
    40 yrs.Office facility in Houston, Texas
    
    
    4,735
    
    
    
    570
    
    
    
    6,760
    
    
    
    
    
    
    
    
    
    
    
    570
    
    
    
    6,760
    
    
    
    7,330
    
    
    
    1,063
    
    
    Sep 2000
    
    40 yrs.Office facility in Eagan, Minnesota
    
    
    9,080
    
    
    
    4,225
    
    
    
    15,518
    
    
    
    1
    
    
    
    (1,324
    )
    
    
    2,900
    
    
    
    15,520
    
    
    
    18,420
    
    
    
    2,441
    
    
    Sep 2000
    
    40 yrs.Warehouse and distribution facility in Kansas City, Missouri
    
    
    3,605
    
    
    
    570
    
    
    
    5,870
    
    
    
    39
    
    
    
    
    
    
    
    570
    
    
    
    5,909
    
    
    
    6,479
    
    
    
    929
    
    
    Sep 2000
    
    40 yrs.Warehouse and distribution facilities in Valdosta, Georgia and Johnson
City, Tennessee
    
    
    12,195
    
    
    
    650
    
    
    
    16,889
    
    
    
    410
    
    
    
    
    
    
    
    650
    
    
    
    17,299
    
    
    
    17,949
    
    
    
    2,685
    
    
    Oct 2000
    
    40 yrs.Land in Elk Grove Village, Illinois
    
    
    2,244
    
    
    
    4,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,100
    
    
    
    
    
    
    
    4,100
    
    
    
    
    
    
    Oct 2000
    
    
    N/AIndustrial facility in Salisbury, North Carolina
    
    
    6,817
    
    
    
    1,370
    
    
    
    2,672
    
    
    
    6,298
    
    
    
    (51
    )
    
    
    1,319
    
    
    
    8,970
    
    
    
    10,289
    
    
    
    1,131
    
    
    Nov 2000
    
    40 yrs.Office facility in Lafayette, Louisiana
    
    
    2,358
    
    
    
    660
    
    
    
    3,005
    
    
    
    19
    
    
    
    
    
    
    
    660
    
    
    
    3,024
    
    
    
    3,684
    
    
    
    454
    
    
    Dec 2000
    
    40 yrs.Office facility in Collierville, Tennessee
    
    
    42,027
    
    
    
    3,154
    
    
    
    70,646
    
    
    
    12
    
    
    
    
    
    
    
    3,154
    
    
    
    70,658
    
    
    
    73,812
    
    
    
    19,616
    
    
    Dec 2000
    
    7 - 40 yrs.Multiplex motion picture theater in Port St. Lucie and Pensacola, Florida
    
    
    
    
    
    
    3,200
    
    
    
    3,066
    
    
    
    6,800
    
    
    
    (4,112
    )
    
    
    3,685
    
    
    
    5,269
    
    
    
    8,954
    
    
    
    727
    
    
    Dec 2000
    
    40 yrs.Retail, warehouse and distribution facilities in York, Pennsylvania
    
    
    3,222
    
    
    
    1,974
    
    
    
    10,068
    
    
    
    3
    
    
    
    
    
    
    
    1,974
    
    
    
    10,071
    
    
    
    12,045
    
    
    
    5,201
    
    
    Dec 2000
    
    40 yrs.Office facilities in Lindon, Utah
    
    
    
    
    
    
    1,390
    
    
    
    1,123
    
    
    
    8,061
    
    
    
    
    
    
    
    1,841
    
    
    
    8,733
    
    
    
    10,574
    
    
    
    1,366
    
    
    Dec 2000
    
    40 yrs.Office facility in Houston, Texas
    
    
    3,814
    
    
    
    1,025
    
    
    
    4,530
    
    
    
    336
    
    
    
    
    
    
    
    1,025
    
    
    
    4,866
    
    
    
    5,891
    
    
    
    688
    
    
    Dec 2000
    
    40 yrs.Industrial and office facilities in Elgin, Illinois; Bozeman, Montana and
Nashville, Tennessee
    
    
    11,323
    
    
    
    3,900
    
    
    
    17,937
    
    
    
    14
    
    
    
    (292
    )
    
    
    3,900
    
    
    
    17,659
    
    
    
    21,559
    
    
    
    2,573
    
    
    Mar 2001
    
    40 yrs.Warehouse and distribution facility in Duluth, Georgia
    
    
    7,449
    
    
    
    2,167
    
    
    
    11,446
    
    
    
    5
    
    
    
    
    
    
    
    2,167
    
    
    
    11,451
    
    
    
    13,618
    
    
    
    1,658
    
    
    Mar 2001
    
    40 yrs.Industrial facilities in City of Industry, California; Florence, Kentucky;
Chelmsford, Massachusetts and Lancaster, Texas
    
    
    10,265
    
    
    
    4,398
    
    
    
    13,418
    
    
    
    3,745
    
    
    
    24
    
    
    
    4,643
    
    
    
    16,942
    
    
    
    21,585
    
    
    
    2,229
    
    
    Apr 2001
    
    7 - 40 yrs.Industrial facilities in Mesa, Arizona and Moorpark, California (c)
    
    
    22,462
    
    
    
    4,000
    
    
    
    14,951
    
    
    
    10,128
    
    
    
    
    
    
    
    5,945
    
    
    
    23,134
    
    
    
    29,079
    
    
    
    2,155
    
    
    Jun 2001
    
    34.5 yrs.Dec 2006
 CPA®:14 2006 10-K 65




---



##### Table of Contents



SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION  (in thousands)
 Life on whichCosts
    
    
    Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Depreciation inCapitalized
    
    
    (Decrease)
    
    
    Gross Amount at which Carried
    
    
    
    
    
    
    
    
    
    
    Latest Statement ofInitial Cost to Company
    
    
    Subsequent to
    
    
    in Net
    
    
    at Close of Period (e)
    
    
    Accumulated
    
    
    Date
    
    
    Income isDescription
    
    Encumbrances
    
    
    Land
    
    
    Buildings
    
    
    Acquisition (a)
    
    
    Investments (b)
    
    
    Land
    
    
    Buildings
    
    
    Total
    
    

Depreciation (e)
    
    
    Acquired
    
    
    ComputedReal Estate Under Operating Leases (Continued):Industrial facility in Helmond, Netherlands
    
    
    6,119
    
    
    
    2,230
    
    
    
    3,360
    
    
    
    
    
    
    
    2,607
    
    
    
    3,324
    
    
    
    4,873
    
    
    
    8,197
    
    
    
    681
    
    
    Jun 2001
    
    40 yrs.Industrial facilities in South Windsor and Manchester, Connecticut
    
    
    11,922
    
    
    
    1,555
    
    
    
    18,823
    
    
    
    250
    
    
    
    27
    
    
    
    1,555
    
    
    
    19,100
    
    
    
    20,655
    
    
    
    2,595
    
    
    Jul 2001
    
    
    N/AIndustrial and office facilities in Rome, Georgia; Niles, Illinois; Plymouth,
Michigan and Twinsburg, Ohio
    
    
    15,828
    
    
    
    4,140
    
    
    
    23,822
    
    
    
    1,405
    
    
    
    
    
    
    
    4,140
    
    
    
    25,227
    
    
    
    29,367
    
    
    
    3,468
    
    
    Aug 2001
    
    40 yrs.Industrial facility in Milford, Ohio
    
    
    9,491
    
    
    
    2,000
    
    
    
    12,869
    
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    
    12,869
    
    
    
    14,869
    
    
    
    1,702
    
    
    Sep 2001
    
    40 yrs.Retail
facilities in several cities in the following states: Arizona, California, Florida, Illinois, Massachusetts, Maryland, Michigan,
Minnesota and Texas
    
    
    41,168
    
    
    
    17,100
    
    
    
    54,743
    
    
    
    
    
    
    
    
    
    
    
    17,100
    
    
    
    54,743
    
    
    
    71,843
    
    
    
    7,014
    
    
    Nov 2001
    
    40 yrs.Office facility in Richardson, Texas
    
    
    28,554
    
    
    
    3,400
    
    
    
    45,054
    
    
    
    
    
    
    
    
    
    
    
    3,400
    
    
    
    45,054
    
    
    
    48,454
    
    
    
    5,679
    
    
    Dec 2001
    
    40 yrs.Office facility in Turku, Finland
    
    
    22,353
    
    
    
    801
    
    
    
    23,390
    
    
    
    81
    
    
    
    11,403
    
    
    
    1,195
    
    
    
    34,480
    
    
    
    35,675
    
    
    
    4,359
    
    
    Dec 2001
    
    40 yrs.Educational facilities in Union, New Jersey; Allentown and Philadelphia,
Pennsylvania and Grand Prairie, Texas
    
    
    5,802
    
    
    
    2,486
    
    
    
    7,602
    
    
    
    
    
    
    
    3
    
    
    
    2,486
    
    
    
    7,605
    
    
    
    10,091
    
    
    
    959
    
    
    Dec 2001
    
    40 yrs.Warehouse, distribution, office and industrial facilities in Perris,
California; Eugene, Oregon; West Jordan, Utah and Tacoma, Washington
    
    
    7,845
    
    
    
    6,050
    
    
    
    8,198
    
    
    
    
    
    
    
    5
    
    
    
    6,050
    
    
    
    8,203
    
    
    
    14,253
    
    
    
    1,000
    
    
    Feb 2002
    
    40 yrs.Warehouse and distribution facilities in Charlotte and Lincolnton, North
Carolina and Mauldin, South Carolina
    
    
    8,418
    
    
    
    1,860
    
    
    
    12,852
    
    
    
    
    
    
    
    1
    
    
    
    1,860
    
    
    
    12,853
    
    
    
    14,713
    
    
    
    1,541
    
    
    Mar 2002
    
    40 yrs.Warehouse and distribution facilities in Boe, Carpiquet, Mans, Vendin Le
Vieil, Lieusaint, Lagnieu, Luneville and St. Germain de Puy, France
    
    
    97,698
    
    
    
    15,724
    
    
    
    75,211
    
    
    
    13,755
    
    
    
    41,247
    
    
    
    24,571
    
    
    
    121,366
    
    
    
    145,937
    
    
    
    13,953
    
    
    Mar 2002
    
    40 yrs.Warehouse, distribution and office facilities in Davenport, Iowa and
Bloomington, Minnesota
    
    
    24,909
    
    
    
    3,260
    
    
    
    26,009
    
    
    
    
    
    
    
    
    
    
    
    3,260
    
    
    
    26,009
    
    
    
    29,269
    
    
    
    2,902
    
    
    Jul 2002
    
    40 yrs.Industrial facility in Gorinchem, Netherlands
    
    
    
    
    
    
    2,374
    
    
    
    3,864
    
    
    
    
    
    
    
    1,993
    
    
    
    3,169
    
    
    
    5,062
    
    
    
    8,231
    
    
    
    565
    
    
    Jul 2002
    
    40 yrs.Industrial facilities in Granite City, Illinois; Kendallville, Indiana and
Clinton Township, Michigan
    
    
    19,124
    
    
    
    4,390
    
    
    
    30,336
    
    
    
    
    
    
    
    7
    
    
    
    4,390
    
    
    
    30,343
    
    
    
    34,733
    
    
    
    3,572
    
    
    Aug 2002
    
    40 yrs.Educational facility in Upper Saucon Township, Pennsylvania
    
    
    11,446
    
    
    
    3,200
    
    
    
    15,415
    
    
    
    1,474
    
    
    
    
    
    
    
    3,200
    
    
    
    16,889
    
    
    
    20,089
    
    
    
    1,461
    
    
    Aug 2002
    
    40 yrs.Retail facilities in Lombard, Illinois and Fairfax, Virginia (d)
    
    
    15,478
    
    
    
    13,226
    
    
    
    18,248
    
    
    
    
    
    
    
    
    
    
    
    13,226
    
    
    
    18,248
    
    
    
    31,474
    
    
    
    44
    
    
    Dec 2006
    
    33.6 yrs.Retail facility in South Tulsa, Oklahoma (d)
    
    
    4,736
    
    
    
    1,649
    
    
    
    3,425
    
    
    
    
    
    
    
    
    
    
    
    1,649
    
    
    
    3,425
    
    
    
    5,074
    
    
    
    9
    
    
    Dec 2006
    
    30 yrs.Retail and warehouse and distribution facilities in Johnstown and
Whitehall, Pennsylvania (d)
    
    
    5,054
    
    
    
    2,115
    
    
    
    15,945
    
    
    
    
    
    
    
    
    
    
    
    2,115
    
    
    
    15,945
    
    
    
    18,060
    
    
    
    45
    
    
    Dec 2006
    
    30.3 yrs.Warehouse and distribution facility in Dallas, Texas (d)
    
    
    3,695
    
    
    
    323
    
    
    
    6,784
    
    
    
    
    
    
    
    
    
    
    
    323
    
    
    
    6,784
    
    
    
    7,107
    
    
    
    15
    
    
    Dec 2006
    
    30.8 yrs.Industrial facility in Shelburne, Vermont (d)
    
    
    2,362
    
    
    
    955
    
    
    
    2,919
    
    
    
    
    
    
    
    
    
    
    
    955
    
    
    
    2,919
    
    
    
    3,874
    
    
    
    8
    
    
    Dec 2006
    
    30.6 yrs.Industrial facilities in Fort Dodge, Indiana and Oconomowoc, Wisconsin
(d)
    
    
    6,700
    
    
    
    1,218
    
    
    
    11,879
    
    
    
    
    
    
    
    
    
    
    
    1,218
    
    
    
    11,879
    
    
    
    13,097
    
    
    
    41
    
    
    Dec 2006
    
    23.5 yrs.Industrial facility in Aurora, Illinois (d)
    
    
    9,967
    
    
    
    2,730
    
    
    
    10,391
    
    
    
    
    
    
    
    
    
    
    
    2,730
    
    
    
    10,391
    
    
    
    13,121
    
    
    
    27
    
    
    Dec 2006
    
    30.8 yrs.Industrial facility in Houston, Texas (d)
    
    
    
    
    
    
    2,299
    
    
    
    4,722
    
    
    
    
    
    
    
    
    
    
    
    2,299
    
    
    
    4,722
    
    
    
    7,021
    
    
    
    24
    
    
    Dec 2006
    
    16.3 yrs.Industrial, warehouse and distribution and office facilities in Waterloo,
Wisconsin (d)
    
    
    9,242
    
    
    
    922
    
    
    
    16,824
    
    
    
    
    
    
    
    
    
    
    
    922
    
    
    
    16,824
    
    
    
    17,746
    
    
    
    68
    
    
    Dec 2006
    
    20.3 yrs.Industrial and warehouse and distribution facilities in Westfield,
Massachusetts (d)
    
    
    6,705
    
    
    
    1,106
    
    
    
    9,952
    
    
    
    
    
    
    
    
    
    
    
    1,106
    
    
    
    9,952
    
    
    
    11,058
    
    
    
    24
    
    
    Dec 2006
    
    34.7 yrs.Industrial facility in Richmond, Missouri (d)
    
    
    5,894
    
    
    
    530
    
    
    
    6,505
    
    
    
    
    
    
    
    
    
    
    
    530
    
    
    
    6,505
    
    
    
    7,035
    
    
    
    15
    
    
    Dec 2006
    
    34.8 yrs.Retail facilities in Bourne, Sandwich and Chelmsford, Massachusetts (d)
    
    
    1,538
    
    
    
    1,418
    
    
    
    2,157
    
    
    
    
    
    
    
    
    
    
    
    1,418
    
    
    
    2,157
    
    
    
    3,575
    
    
    
    6
    
    
    Dec 2006
    
    31.1 yrs.Industrial facility in Carlsbad, California (d)
    
    
    4,880
    
    
    
    2,618
    
    
    
    4,880
    
    
    
    
    
    
    
    
    
    
    
    2,618
    
    
    
    4,880
    
    
    
    7,498
    
    
    
    13
    
    
    Dec 2006
    
    30.8 yrs.Fitness and recreational facility in Houston, Texas (d)
    
    
    3,980
    
    
    
    1,613
    
    
    
    3,398
    
    
    
    
    
    
    
    
    
    
    
    1,613
    
    
    
    3,398
    
    
    
    5,011
    
    
    
    9
    
    
    Dec 2006
    
    29.7 yrs.Theater in Hickory Creek, Texas (d)
    
    
    4,033
    
    
    
    3,138
    
    
    
    6,752
    
    
    
    
    
    
    
    
    
    
    
    3,138
    
    
    
    6,752
    
    
    
    9,890
    
    
    
    16
    
    
    Dec 2006
    
    34 yrs.Educational
facilities in Chandler, Arizona; Fleming Island, Florida; Ackworth, Georgia; Hauppauge and Patchogue, New York; Sugar Land,
Texas; Hampton, Virginia and Silverdale, Washington (d)
    
    
    6,301
    
    
    
    4,312
    
    
    
    9,963
    
    
    
    
    
    
    
    
    
    
    
    4,312
    
    
    
    9,963
    
    
    
    14,275
    
    
    
    27
    
    
    Dec 2006
    
    29.6 yrs.Industrial facility in Indianapolis, Indiana (d)
    
    
    1,949
    
    
    
    1,035
    
    
    
    6,594
    
    
    
    
    
    
    
    
    
    
    
    1,035
    
    
    
    6,594
    
    
    
    7,629
    
    
    
    18
    
    
    Dec 2006
    
    29.5 yrs.Warehouse and distribution facilities in Greenville, South Carolina (d)
    
    
    4,930
    
    
    
    625
    
    
    
    8,177
    
    
    
    
    
    
    
    
    
    
    
    625
    
    
    
    8,177
    
    
    
    8,802
    
    
    
    24
    
    
    Dec 2006
    
    27.8 yrs.$
    719,758
    
    
    $
    224,245
    
    
    $
    900,392
    
    
    $
    122,503
    
    
    $
    44,458
    
    
    $
    237,003
    
    
    $
    1,054,595
    
    
    $
    1,291,598
    
    
    $
    137,262
 CPA®:14 2006 10-K 66




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##### Table of Contents



SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION  (in thousands)
 Gross Amount atCosts Capitalized
    
    
    Increase
    
    
    which CarriedInitial Cost to Company
    
    
    Subsequent to
    
    
    (Decrease) in Net
    
    
    at Close of
    
    
    DateDescription
    
    Encumbrances (c)
    
    
    Land
    
    
    Buildings
    
    
    Acquisition (a)
    
    
    Investments (b)
    
    
    Period Total
    
    
    AcquiredDirect Financing Method:Industrial facilities in Dallas and Greenville, Texas
    
    $
    11,474
    
    
    $
    460
    
    
    $
    20,427
    
    
    $
    
    
    
    $
    (3,191
    )
    
    $
    17,696
    
    
    
    11/18/1999Multiplex theater facility in Midlothian, Virginia
    
    
    9,326
    
    
    
    
    
    
    
    10,819
    
    
    
    854
    
    
    
    960
    
    
    
    12,633
    
    
    
    9/22/1999Office facility in Scottsdale, Arizona
    
    
    14,323
    
    
    
    
    
    
    
    25,415
    
    
    
    
    
    
    
    
    
    
    
    25,415
    
    
    
    9/21/2000Warehouse and distribution facility in Elk Grove Village, Illinois
    
    
    2,287
    
    
    
    
    
    
    
    4,172
    
    
    
    4
    
    
    
    
    
    
    
    4,176
    
    
    
    10/30/2000Multiplex motion picture theater in Pensacola, Florida
    
    
    
    
    
    
    
    
    
    
    4,112
    
    
    
    2,541
    
    
    
    
    
    
    
    6,653
    
    
    
    12/7/2000Industrial facility in Doncaster, United Kingdom
    
    
    6,930
    
    
    
    
    
    
    
    8,383
    
    
    
    7
    
    
    
    4,228
    
    
    
    12,618
    
    
    
    1/9/2001Industrial and manufacturing facilities in Manchester, Michigan;
Farmville, Old Fort and Albemarie, North Carolina; Holmesville,
Ohio and Springfield, Tennessee
    
    
    15,642
    
    
    
    2,961
    
    
    
    24,474
    
    
    
    20
    
    
    
    
    
    
    
    27,455
    
    
    
    9/28/2001Educational facility in Mooresville, North Carolina
    
    
    6,075
    
    
    
    1,600
    
    
    
    9,276
    
    
    
    130
    
    
    
    (304
    )
    
    
    10,702
    
    
    
    2/11/2002Industrial
facility in Ashburn Junction, Virginia (d)
    
    
    
    
    
    
    4,683
    
    
    
    15,116
    
    
    
    
    
    
    
    
    
    
    
    19,799
    
    
    
    12/1/2006$
    66,057
    
    
    $
    9,704
    
    
    $
    122,194
    
    
    $
    3,556
    
    
    $
    1,693
    
    
    $
    137,147
 CPA®:14 2006 10-K 67




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##### Table of Contents



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)
    
    The increase (decrease) in net investment is due to the amortization of unearned income
producing a constant periodic rate of return on the net investment which is more (less) than
lease payments received, foreign currency translation adjustments, impairment losses and
property sales.
 (c)
    
    Additional interest in this property acquired in the CPA®:12 merger on December 1,
2006.
 (d)
    
    Property acquired in the CPA®:12 merger on December 1, 2006.(e)
    
    Reconciliation of real estate and accumulated depreciation:
 Reconciliation of Real Estate Subject toOperating LeasesDecember 31,2006
    
    
    2005
    
    
    2004Balance at beginning of year
    
    $
    1,050,368
    
    
    $
    1,086,073
    
    
    $
    1,072,543Additions
    
    
    218,017
    
    
    
    3,111
    
    
    
    2,035Dispositions
    
    
    (25,295
    )
    
    
    (1,376
    )
    
    
    Reclassification to asset held for sale
    
    
    
    
    
    
    
    
    
    
    (4,120
    )Foreign currency translation adjustment
    
    
    17,753
    
    
    
    (25,901
    )
    
    
    15,615Reclassification from (to) equity investment in real estate
    
    
    30,755
    
    
    
    (11,539
    )
    
    
    Balance at close of year
    
    $
    1,291,598
    
    
    $
    1,050,368
    
    
    $
    1,086,073
 Reconciliation of Accumulated DepreciationDecember 31,2006
    
    
    2005
    
    
    2004Balance at beginning of year
    
    $
    106,731
    
    
    $
    86,212
    
    
    $
    62,105Depreciation expense
    
    
    27,458
    
    
    
    23,500
    
    
    
    23,426Depreciation expense from discontinued operations
    
    
    190
    
    
    
    
    
    
    
    64Dispositions
    
    
    (2,933
    )
    
    
    
    
    
    
    Reclassification to asset held for sale
    
    
    
    
    
    
    
    
    
    
    (323
    )Foreign currency translation adjustment
    
    
    1,732
    
    
    
    (1,681
    )
    
    
    940Reclassification from (to) equity investment in real estate
    
    
    4,084
    
    
    
    (1,300
    )
    
    
    Balance at close of year
    
    $
    137,262
    
    
    $
    106,731
    
    
    $
    86,212
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
   CPA®:14 2006 10-K 68




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##### Table of Contents



Item 9B. Other Information.
  
  
 Item 10. Directors, Executive Officers and Corporate Governance.
  
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  
 Item 13. Certain Relationships and Related Transactions and Director Independence.
  
 Item 14. Principal Accountant Fees and Services
  CPA®:14 2006 10-K 69




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##### Table of Contents



Item 15. Exhibits, Financial Statement Schedules.
    Exhibit No.
    
    Description
    
    Method of Filing3.1
    
    Articles of Amendment
    
    Exhibit 3.1 to Registration
Statement (Form S-11) No.
333-767613.1(2)
    
    Articles of Incorporation of Registrant
    
    Exhibit 3.1 to Registration
Statement (Form S-11) No.
333-314373.2
    
    Form of Bylaws of Registrant
    
    Exhibit 3.2 to Registration
Statement (Form S-11) No.
333-314374.1
    
    Dividend Reinvestment and Share Purchase Plan
    
    Exhibit 4.1 to Registrants Form
S-3D dated July 22, 200210.1
    
    Amended and Restated Advisory Agreement dated September
30, 2005 between Corporate Property Associates 14
Incorporated and Carey Asset Management Corp
    
    Exhibit 10.1 to Registrants Form
10-Q dated November 14, 200510.2
    
    Credit Agreement dated as of November 30, 2006 among
Corporate Property Associates 14 Incorporated, the
lenders party hereto, Wells Fargo Bank, National
Association, PNC Bank, National Association, Citizens
Bank of Rhode Island, The Bank of New York and Eurohypo
AG, New York Branch
    
    Filed herewith21.1
    
    Subsidiaries of Registrant
    
    Filed herewith23.1
    
    Consent of PricewaterhouseCoopers LLP
    
    Filed herewith31.1
    
    Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith31.2
    
    Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith32
    
    Certification of Chief Executive Officer and Chief
Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
 CPA®:14 2006 10-K 70




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##### Table of Contents



SIGNATURES
  Corporate Property Associates 14 IncorporatedDate 3/26/2007
    By:
    /s/ Mark J. DeCesarisMark J. DeCesarisManaging Director and acting Chief Financial Officer  Signature
    
    Title
    
    Date/s/ William P. Carey

William P. Carey
    
    Chairman of the Board and Director
    
    3/26/2007/s/ Gordon F. DuGan

Gordon F. DuGan
    
    Chief Executive Officer and Director
(Principal Executive Officer)
    
    3/26/2007/s/ Mark J. DeCesaris

Mark J. DeCesaris
    
    Managing Director and acting Chief Financial
Officer
(acting Principal Financial Officer)
    
    3/26/2007/s/ Claude Fernandez

Claude Fernandez
    
    Managing Director and Chief Accounting Officer
(Principal Accounting Officer)
    
    3/26/2007/s/ Trevor P. Bond

Trevor P. Bond
    
    Director
    
    3/26/2007/s/ Elizabeth P. Munson

Elizabeth P. Munson
    
    Director
    
    3/26/2007/s/ Richard J. Pinola

Richard J. Pinola
    
    Chairman of the Audit Committee and Director
    
    3/26/2007/s/ James D. Price

James D. Price
    
    Director
    
    3/26/2007
 Report on Form 10-K
  CPA®:14 2006 10-K 71