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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

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

                                    FORM 10-K

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
         OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

                                       OR

[ ]      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)

               DELAWARE                                  13-3951476
       (STATE OF INCORPORATION)             (I.R.S. EMPLOYER IDENTIFICATION NO.)

         50 ROCKEFELLER PLAZA                               10020
       NEW YORK, NEW YORK 10020                          (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)

                         REGISTRANT'S TELEPHONE NUMBERS:

                        INVESTOR RELATIONS (212) 492-8920
                                 (212) 492-1100

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

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
                          COMMON STOCK, $.001 PAR VALUE

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

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained in this report, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes [X] No [ ].

         Registrant has no active market for its common stock as of March 5,
2004. Non-affiliates held 65,198,813 shares as of March 5, 2004.

         As of March 5, 2004, there are 66,944,487 shares of common stock of
Registrant outstanding.

         CPA(R):14 incorporates by reference its definitive Proxy Statement with
respect to its 2004 Annual Meeting of Shareholders, to be filed with the
Securities and Exchange Commission within 120 days following the end of its
fiscal year, into Part III of this Report.

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                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

                                     PART I

Item 1. Business.

Corporate Property Associates 14 Incorporated ("CPA(R):14") is a Real Estate
Investment Trust ("REIT") that acquires and owns commercial properties leased to
companies nationwide and internationally, primarily on a triple net basis. As of
December 31, 2003, CPA(R):14's portfolio consisted of 157 properties leased to
71 tenants and totaling more than 24,133 thousand square feet.

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

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

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

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

                  -   when appropriate, guarantees from parent companies or
                      other entities.

CPA(R):14 was formed as a Maryland corporation on June 4, 1997. Between November
1997 and November 2001, CPA(R):14 sold a total of 65,794,280 shares of common
stock for a total of $657,942,800 in gross offering proceeds. Through December
31, 2003, CPA(R):14 has also issued 147,550 shares ($1,475,500) through its
dividend reinvestment plan. These proceeds are being combined with limited
recourse mortgage debt to acquire a portfolio of properties. As a REIT,
CPA(R):14 is not subject to federal income taxation as long as it satisfies
certain requirements relating to the nature of its income, the level of its
distributions and other factors.

W. P. Carey & Co. LLC ("WPC"), CPA(R):14's advisor, provides both strategic and
day-to-day management for CPA(R):14, including acquisition services, research,
investment analysis, asset management, capital funding services, disposition of
assets, investor relations and administrative services. WPC also provides office
space and other facilities for CPA(R):14. WPC has dedicated senior executives in
each area of its organization so that CPA(R):14 functions as a fully integrated
operating company. CPA(R):14 pays asset management fees to WPC and pays certain
transactional fees. CPA(R):14 also reimburses WPC for certain expenses. WPC also
serves in this capacity for Carey Institutional Properties Incorporated,
Corporate Property Associates 12 Incorporated, Corporate Property Associates 15
Incorporated and Corporate Property Associates 16 - Global Incorporated. WPC is
listed on the New York Stock Exchange and Pacific Exchange under the symbol
"WPC."

CPA(R):14's principal executive offices are located at 50 Rockefeller Plaza, New
York, NY 10020 and its telephone number is (212) 492-1100. As of December 31,
2003, CPA(R):14 had no employees. WPC employs 120 individuals who perform
services for CPA(R):14.

BUSINESS OBJECTIVES AND STRATEGY

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

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

         -   provide inflation protected income;

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

         -   increase the value of its shares by increasing the equity in its
             real estate by making regular mortgage principal payments.

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

                                      -1-
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                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

ACQUISITION STRATEGIES

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

WPC's strategy in structuring its net lease investments for CPA(R):14 is to:

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

         -   enhance current returns by utilizing varied lease structures;

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

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

DEVELOPMENTS DURING 2003

SIGNIFICANT ACQUISITIONS:

On February 7, 2003, the Company, and two affiliates, Corporate Property
Associates 12 Incorporated ("CPA(R):12") and Corporate Property Associates 15
Incorporated ("CPA(R):15"), through a newly-formed limited liability company
with ownership interests of 41%, 15% and 44%, respectively, purchased land and
15 health club facilities for $178,010,471 and entered into a master net lease
with Starmark Camhood, LLC ("Starmark"). The lease obligations of Starmark are
jointly and unconditionally guaranteed by seven of its affiliates. The Starmark
lease provides for an initial lease term of 20 years with three ten-year renewal
terms. Annual rent is initially $18,272,400 with CPI-based increases scheduled
in November 2006, 2010, 2014, 2018 and 2021. In connection with the purchase,
the limited liability company obtained first mortgage limited recourse financing
of $88,300,000 and a mezzanine loan of $20,000,000. The first mortgage provides
for monthly payments of interest and principal of $563,936 at an annual interest
rate of 6.6% and based on a 30-year amortization schedule. The loan matures in
March 2013 at which time a balloon payment is payable. The mezzanine loan
provides for monthly payments of interest and principal of $277,201 at an annual
interest rate of 11.15% and will fully amortize over its ten-year term. The
limited liability company was granted warrants for Class C Unit interests in
Starmark. If exercised, the Unit interests would represent a 5% interest in
Starmark as of the date of grant. The warrants may be exercised at any time
through February 7, 2023 at an exercise price of $430 per unit. The warrant
agreement does not provide for a cashless exercise of units.

On July 24, 2003, the Company completed an expansion at its existing facility in
Le Mans, France leased to Carrefour France SAS ("Carrefour") at a cost of
E9,068,072 ($10,421,935 based on the exchange rate at the completion date) and
amended and restated its existing lease with Carrefour. The amended and restated
lease has a remaining term through March 2011 and provides for an increase in
annual rent of E867,851 to E2,306,612 ($2,650,989), with annual rent increases
based on a formula indexed to increases in the INSEE, a French construction cost
index. In connection with the expansion, the Company obtained E7,137,000
($8,202,554) of limited recourse mortgage financing collateralized by the
property. The loan provides for quarterly payments of interest at an annual
interest rate of 5.51%. The interest rate is fixed through July 2010, at which
time the loan will convert to a variable rate. Principal installments are
payable based on an initial 2.60% annuity, with scheduled increases throughout
the term of the loan. The loan matures on April 30, 2017, at which time a
balloon payment is scheduled.

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                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

During 2003, CPA(R):14 completed build-to-suit projects with Waddington North
America, Inc., Career Education Group and Rave Motion Pictures LLC which are
providing an increase in aggregate annual lease revenues of $2,690,902. In July
2003, the Company obtained $6,700,000 of limited recourse mortgage debt
collateralized by the UTI Holdings, Inc. property in Mooresville, North
Carolina, at an annual debt service of $586,729.

FINANCING STRATEGIES

Consistent with its investment policies, CPA(R):14 uses leverage when available
on favorable terms. CPA(R):14 has approximately $702,175,000 in property level
debt outstanding. These mortgages mature between 2006 and 2008 and have fixed
interest rates between 3.12% and 8.85%.

CPA(R):14 is a party to a mortgage financing securitization transaction with
three affiliates, W. P. Carey & Co. LLC, Carey Institutional Properties
Incorporated and Corporate Property Associates 12 Incorporated, entered into in
August 2002. CPA(R):14 and the three affiliates obtained an aggregate of
approximately $172,335,000 of limited recourse mortgage financing collateralized
by 62 leased properties. The lender pooled the loans into a trust, Carey
Commercial Mortgage Trust, a non-affiliate, whose assets consist solely of the
loans, and sold the interests in the trust as collateralized mortgage
obligations in a private placement to institutional investors. CPA(R):14 and the
three affiliates agreed to acquire a separate class of subordinated interests in
the trust (the "CPA(R) Interests"). The amount of CPA(R) Interests acquired by
CPA(R):14 was proportional to the mortgage amounts obtained. The CPA(R)
Interests were purchased for $24,129,000 of which CPA(R):14's share was
$6,032,000 or 25%, and are comprised of two components, a component that will
receive payments of principal and interest and a component that will receive
payments of interest only. CPA(R):14 is accounting for its interest in the
CPA(R) Interests as an available-for-sale security and will be measured at fair
value with all gains and losses from changes in fair value reported as a
component of other comprehensive income as part of shareholders' equity.

WPC continually seeks opportunities and considers alternative financing
techniques to finance properties not currently subject to debt, refinance debt,
reduce interest expense or improve its capital structure.

TRANSACTION ORIGINATION

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

         Tenant Evaluation. WPC evaluates each potential tenant for its credit,
         management, position within its industry, operating history and
         profitability. WPC seeks tenants it believes will have stable or
         improving credit. By leasing properties to these tenants, CPA(R):14 can
         generally charge rent that is higher than the rent charged to tenants
         with recognized credit and thereby enhance its current return from
         these properties as compared with properties leased to companies whose
         credit potential has already been recognized by the market.
         Furthermore, if a tenant's credit does improve, the value of
         CPA(R):14's property will likely increase (if all other factors
         affecting value remain unchanged). WPC may also seek to enhance the
         likelihood of a tenant's lease obligations being satisfied, such as
         through a letter of credit or a guaranty of lease obligations from the
         tenant's corporate parent. This credit enhancement provides CPA(R):14
         with additional financial security. In evaluating a possible
         investment, the creditworthiness of a tenant generally will be a more
         significant factor than the value of the property absent the lease with
         such tenant. While WPC will select tenants it believes are
         creditworthy, tenants will not be required to meet any minimum rating
         established by an independent credit rating agency. WPC's and the
         investment committee's standards for determining whether a particular
         tenant is creditworthy vary in accordance with a variety of factors
         relating to specific prospective tenants. The creditworthiness of a
         tenant is determined on a tenant by tenant, case by case basis.
         Therefore, general standards for creditworthiness cannot be applied.

         Leases with Increasing Rent. WPC typically includes, or attempts to
         include a clause in each lease that provides for increases in rent over
         the term of the lease. These increases are generally tied to increases
         in indices such as the consumer price index. In the case of retail
         stores, these leases often provide for participation in gross sales
         above a stated level. The lease may also provide for mandated rental
         increases on specific dates or other methods that may not have been in
         existence or contemplated by us as of the date of this report. WPC
         seeks to avoid entering into leases that provide for contractual
         reductions in rents during their primary term.

                                      -3-
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                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

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

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

         Diversification. WPC will continue to diversify CPA(R):14's portfolio
         to avoid dependence on any one particular tenant, type of facility,
         geographic location or tenant industry. By diversifying CPA(R):14's
         portfolio, WPC reduces the adverse effect of a single under-performing
         investment or a downturn in any particular industry or geographic
         region.

WPC uses a variety of other strategies in connection with its acquisitions.
These strategies include attempting to obtain equity enhancements in connection
with transactions. Typically, these equity enhancements involve warrants to
purchase stock of the tenant or the stock of the parent of the tenant. If the
value of the stock exceeds the exercise price of the warrant, equity
enhancements help CPA(R):14 to achieve its goal of increasing funds available
for the payment of distributions.

As a transaction is structured, it is evaluated by the chairman of WPC's
investment committee. Before a property is acquired, the transaction is reviewed
by the investment committee to ensure that it satisfies CPA(R):14's investment
criteria. The investment committee is not directly involved in originating or
negotiating potential acquisitions, but instead functions as a separate and
final step in the acquisition process. WPC places special emphasis on having
experienced individuals serve on its investment committee and does not invest in
a transaction unless it is approved by the investment committee.

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

The following people serve on the investment committee:

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

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

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

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

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                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

      -  Ralph F. Verni is a private investor and business consultant and
         formerly Chief Investment Officer of The New England Mutual Life
         Insurance Company.

      -  Karsten von Koller was formerly Chairman and Member of the Board of
         Managing Directors of Eurohypo AG, the leading commercial real estate
         financing company in Europe.

Each property purchased by CPA(R):14 has been and future purchases will be
appraised by an independent appraiser. CPA(R):14 will not purchase any property
that has a total property cost (the purchase price of the property plus all
acquisition fees) which is in excess of its appraised value. These appraisals
may take into consideration, among other things, the terms and conditions of the
particular lease transaction, the quality of the lessee's credit and the
conditions of the credit markets at the time the lease transaction is
negotiated. The appraised value may be greater than the construction cost or the
replacement cost of a property, and the actual sale price of a property if sold
by CPA(R):14 may be greater or less than the appraised value.

WPC's practices include performing evaluations of the physical condition of
properties and performing environmental surveys in an attempt to determine
potential environmental liabilities associated with a property prior to its
acquisition. CPA(R):14 will also consider factors peculiar to the laws of
foreign countries, in addition to the risk normally associated with real
property investments, when considering an investment located outside the United
States.

ASSET MANAGEMENT

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

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

HOLDING PERIOD

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

COMPETITION

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

                                      -5-
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                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

ENVIRONMENTAL MATTERS

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

CPA(R):14 typically undertakes an investigation of potential environmental risks
when evaluating an acquisition. Phase I environmental assessments are performed
by independent environmental consulting and engineering firms for all properties
acquired by CPA(R):14. Where warranted, Phase II environmental assessments are
performed. Phase I assessments do not involve subsurface testing, whereas Phase
II assessments involve some degree of soil and/or groundwater testing. CPA(R):14
may acquire a property which is known to have had a release of hazardous
materials in the past, subject to a determination of the level of risk and
potential cost of remediation. CPA(R):14 normally requires property sellers to
indemnify it fully against any environmental problem existing as of the date of
purchase. Additionally, CPA(R):14 often structures its leases to require the
tenant to assume most or all responsibility for compliance with the
environmental provisions of the lease or environmental remediation relating to
the tenant's operations and to provide that non-compliance with environmental
laws is a lease default. In some cases, CPA(R):14 may also require a cash
reserve, a letter of credit or a guarantee from the tenant, the tenant's parent
company or a third party to assure lease compliance and funding of remediation.
The value of any of these protections depends on the amount of the collateral
and/or financial strength of the entity providing the protection. Such a
contractual arrangement does not eliminate CPA(R):14's statutory liability or
preclude claims against CPA(R):14 by governmental authorities or persons who are
not a party to the arrangement. Contractual arrangements in CPA(R):14's leases
may provide a basis for CPA(R):14 to recover from the tenant damages or costs
for which it has been found liable.

INDUSTRY SEGMENT

CPA(R):14 operates in one industry segment, investment in net leased real
property. For the year ended December 31, 2003, no lessee represented 10% or
more of the total operating revenue of CPA(R):14.

FACTORS AFFECTING FUTURE OPERATING RESULTS

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

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

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

We are subject to the risks of real estate ownership which could reduce the
value of our properties.

Our properties may include net leased industrial and commercial property. The
performance of CPA(R):14 is subject to risks incident to the ownership and
operation of these types of properties, including:

         -  changes in the general economic climate;

         -  changes in local conditions such as an oversupply of space or
            reduction in demand for real estate;

         -  changes in interest rates and the availability of financing;

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                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

         -  competition from other available space; and

         -  changes in laws and governmental regulations, including those
            governing real estate usage, zoning and taxes.

We may have difficulty selling or re-leasing our properties.

Real estate investments are relatively illiquid compared to most financial
assets and this illiquidity will limit our ability to quickly change our
portfolio in response to changes in economic or other conditions. Many of the
net leases we enter into or acquire are for properties that are specially suited
to the particular needs of our tenant. With these properties, if the current
lease is terminated or not renewed, we may be required to renovate the property
or to make rent concessions in order to lease the property to another tenant. In
addition, in the event we are forced to sell the property, we may have
difficulty selling it to a party other than the tenant due to the special
purpose for which the property may have been designed. In addition, provisions
of the Internal Revenue Code relating to REITs limit our ability to sell
properties held for fewer than four years. These and other limitations may
affect our ability to sell properties without adversely affecting returns to our
shareholders.

The inability of a tenant in a single tenant property to pay rent will reduce
our revenues.

Most of our properties are occupied by a single tenant and, therefore, the
success of our investments is materially dependent on the financial stability of
our tenants. Lease payment defaults by tenants could cause us to reduce the
amount of distributions to shareholders. A default of a tenant on its lease
payments to us would cause us to lose the revenue from the property and cause us
to have to find an alternative source of revenue to meet the mortgage payment
and prevent a foreclosure if the property is subject to a mortgage. In the event
of a default, we may experience delays in enforcing our rights as landlord and
may incur substantial costs in protecting our investment and reletting our
property. If a lease is terminated, there is no assurance that we will be able
to lease the property for the rent previously received or sell the property
without incurring a loss.

The bankruptcy of tenants would cause a reduction in revenue.

A tenant in bankruptcy could cause:

         -  the loss of lease payments;

         -  an increase in the costs incurred to carry the property;

         -  a reduction in the value of shares; and

         -  a decrease in distributions to shareholders.

Under bankruptcy law, a tenant who is the subject of bankruptcy proceedings has
the option of continuing or terminating any unexpired lease. If the tenant
terminates the lease, any claim we have for breach of the lease (excluding
collateral securing the claim) will be treated as a general unsecured claim. The
maximum claim will be capped at the amount owed for unpaid rent prior to the
bankruptcy unrelated to the termination, plus the greater of one year's lease
payments or 15% of the remaining lease payments payable under the lease (but no
more than three years' lease payments). In addition, due to the long-term nature
of our leases and terms providing for the repurchase of a property by the
tenant, a bankruptcy court could recharacterize a net lease transaction as a
secured lending transaction. If that were to occur, we would not be treated as
the owner of the property, but might have additional rights as a secured
creditor.

Some of the programs managed by WPC or its affiliates have had tenants file for
bankruptcy protection and are involved in litigation. Four CPA(R) programs had
to reduce the rate of distributions to their partners as a result of adverse
developments involving tenants.

If our tenants are highly leveraged, they may have a higher possibility of
filing for bankruptcy.

Of tenants that experience downturns in their operating results due to adverse
changes to their business or economic conditions, those that are highly
leveraged may have a higher possibility of filing for bankruptcy. In bankruptcy,
a tenant has the option of vacating a property instead of paying rent. Until
such a property is released from bankruptcy, our revenues would be reduced and
could cause us to reduce distributions to shareholders. We have highly leveraged
tenants at this time, and we may have additional highly leveraged tenants in the
future.

Our tenants generally do not have a recognized credit rating, which may create a
higher risk of lease defaults and therefore lower revenues than if our tenants
had a recognized credit rating.

Generally, no credit rating agencies evaluate or rank the debt or the credit
risk of our tenants, as we seek tenants that we believe will have improving
credit profiles. Our long-term leases with certain of these tenants may
therefore pose

                                      -7-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

a higher risk of default than would long term leases with tenants
whose credit potential has already been recognized by the market.

There is not, and may never be a public market for our shares, so it will be
difficult for shareholders to sell shares quickly.

There is no current public market for the shares and, therefore, it will be
difficult for shareholders to sell their shares promptly. In addition, the price
received for any shares sold is likely to be less than the proportionate value
of the real estate we own.

Our success will be dependent on the performance of WPC.

Our ability to achieve our investment objectives and to pay distributions is
dependent upon the performance of WPC in the acquisition of investments, the
selection of tenants, the determination of any financing arrangements, and upon
the management of the assets. You will have no opportunity to evaluate the terms
of transactions or other economic or financial data concerning our investments.
You must rely entirely on the management ability of WPC and the oversight of the
board of directors.

WPC may be subject to conflicts of interest.

WPC manages our business and selects our real estate investments. WPC has some
conflicts of interest in its management of CPA(R):14, which arise primarily from
the involvement of WPC and its affiliates in other activities that may conflict
with CPA(R):14 and the payment of fees by us to WPC and its affiliates. The
activities in which a conflict could arise between CPA(R):14 and WPC are:

-     the receipt of commissions, fees and other compensation by WPC and its
      affiliates for property purchases, leases, sales and financing for
      CPA(R):14, which may cause WPC and its affiliates to engage in
      transactions that generate higher fees, rather than transactions that are
      more appropriate or beneficial for our business;

-     agreements between CPA(R):14 and WPC or any of its affiliates, including
      agreements regarding compensation of WPC and its affiliates, will not be
      negotiated on an arm's length basis as would occur if the agreements were
      with unaffiliated third parties;

-     purchases and loans from affiliates, subject to CPA(R):14's investment
      procedures, objectives and policies, which will increase fees and interest
      payable to affiliates, thereby decreasing our net income and possibly
      causing us to incur higher leverage levels;

-     competition with certain affiliates for property acquisitions, which may
      cause WPC and its affiliates to direct properties suitable for us to other
      related entities;

-     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 or sell the property.

Inherent in these transactions is the conflict of interest that arises due to
the potential impact of the transaction on the amount of fees received by WPC
and/or its affiliates and the distributions to shareholders.

Liability for uninsured losses could adversely affect our financial condition.

Losses from disaster-type occurrences (such as wars or earthquakes) may be
either uninsurable or not insurable on economically viable terms. Should an
uninsured loss occur, we could lose our capital investment and/or anticipated
profits and cash flow from one or more properties.

Potential liability for environmental matters could adversely affect our
financial condition.

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

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

      -  Liability for the costs of removal or remediation of hazardous
         substances at disposal facilities for persons who arrange for the
         disposal or treatment of these substances.

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

Our costs of investigation, remediation or removal of hazardous substances may
be substantial. In addition, the presence of hazardous substances on one of our
properties, or the failure to properly remediate a contaminated property, could
adversely affect our ability to sell or lease the property or to borrow using
the property as collateral.

                                      -8-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

Our use of debt to finance acquisitions could adversely affect our cash flow.

Most of our property acquisitions will be made by borrowing a portion of the
purchase price of our properties and securing the loan with a mortgage on the
property. If we are unable to make our debt payments as required, a lender could
foreclose on the property or properties securing its debt. This could cause us
to lose part or all of our investment which in turn could cause the value of the
shares and distributions to shareholders to be reduced. We generally borrow on a
non-recourse basis to limit our exposure on any property to the amount of equity
invested in the property. We typically borrow between 55% and 65% of the
purchase price of our properties. There is no limitation on the amount borrowed
on a single property and the aggregate borrowings may not exceed 75% of the
value of all properties. Any borrowings in excess of 75% of the value of all
properties must be approved by a majority of the independent directors and
disclosed to shareholders. As of December 31, 2003, we had limited recourse
mortgage notes payable outstanding of $702,175,000.

Failure to qualify as a REIT could adversely affect our operations and ability
to make distributions.

If we fail to qualify as a REIT for any taxable year, we would be subject to
federal income tax on our taxable income at corporate rates. In addition, we
would generally be disqualified from treatment as a REIT for the four taxable
years following the year of losing our REIT status. Losing our REIT status would
reduce our net earnings available for investment or distribution to shareholders
because of the additional tax liability. In addition, distributions to
shareholders would no longer qualify for the distributions paid deduction and we
would no longer be required to make distributions. We might be required to
borrow funds or liquidate some investments in order to pay the applicable tax.

Qualification as a REIT is subject to the satisfaction of tax requirements and
various factual matters and circumstances which are not entirely within our
control. New legislation, regulations, administrative interpretations or court
decisions could change the tax laws with respect to qualification as a REIT or
the federal income tax consequences of being a REIT.

The IRS may treat sale-leaseback transactions as loans, which could jeopardize
our REIT status.

The Internal Revenue Service may take the position that specific sale-leaseback
transactions we will treat as true leases are not true leases for federal income
tax purposes but are, instead, financing arrangements or loans. If a
sale-leaseback transaction were so recharacterized, we might fail to satisfy the
Asset Tests or the Income Tests and consequently lose our REIT status effective
with the year of recharacterization. Alternatively, the amount of our REIT
Taxable Income could be recalculated which could cause us to fail the
Distribution Test.

Balloon payment obligations may adversely affect our financial condition.

Some of our financing may require us to make a lump-sum or "balloon" payment at
maturity. Our ability to make any balloon payment is uncertain and may depend
upon our ability to obtain additional financing or our ability to sell the
property. At the time the balloon payment is due, we may or may not be able to
refinance the balloon payment on terms as favorable as the original loan or sell
the property at a price sufficient to make the balloon payment. A refinancing or
sale could affect the rate of return to shareholders and the projected time of
disposition of our assets. No balloon payments are scheduled in 2004 through
2007; in 2008, balloon payments totaling $5.3 million will be due.

A limit on the number of shares a person may own may discourage a takeover.

Our articles of incorporation restrict ownership of more than 9.8% of the
outstanding shares by one person. These restrictions may discourage a change of
control of CPA(R):14 and may deter individuals or entities from making tender
offers for shares, which offers might be financially attractive to shareholders
or which may cause a change in the management of CPA(R):14.

Maryland law could restrict change in control.

Provisions of Maryland law applicable to us prohibit business combinations with:

      -  any person who beneficially owns 10% or more of the voting power of
         outstanding shares;

      -  an affiliate of us 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 ("an interested shareholder");
         or

      -  an affiliate of an interested shareholder.

                                      -9-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

These prohibitions last for five years after the most recent date on which the
interested shareholder became an interested shareholder. Thereafter, any
business combination must be recommended by our board of directors and approved
by the affirmative vote of at least 80% of the votes entitled to be cast by
holders of our outstanding shares and two-thirds of the votes entitled to be
cast by holders of our shares other than shares held by the interested
shareholder. These requirements could have the effect of inhibiting a change in
control even if a change in control were in shareholders' interest. These
provisions of Maryland law do not apply, however, to business combinations that
are approved or exempted by our board of directors prior to the time that
someone becomes an interested shareholder.

Our participation in joint ventures creates additional risk.

We participate in joint ventures with other entities, some of which may be
unaffiliated with us. There are additional risks involved in these types of
transactions. These risks include the potential of our joint venture partner
becoming bankrupt and the possibility of diverging or inconsistent economic or
business interests of us and our partner. These diverging interests could result
in, among other things, exposing us to liabilities of the joint venture in
excess of our proportionate share of these liabilities. The partition rights of
each owner in a jointly owned property could reduce the value of each portion of
the divided property. In addition, the fiduciary obligation that WPC may owe to
our partner in an affiliated transaction may make it more difficult for us to
enforce our rights.

In some of our joint venture relationships with publicly registered investment
programs or other entities sponsored by WPC or one of its affiliates, we enter
into investments as tenants-in-common. This poses risks in addition to those
mentioned above. The partition rights of each co-tenant in a tenancy-in-common
could reduce the value of each portion of the divided property. In addition, the
fiduciary obligation that WPC may owe to our partner in an affiliated
transaction may make it more difficult for us to enforce our rights.

International investments involve additional risks.

We own properties in the United Kingdom, France, the Netherlands and Finland and
we may purchase additional property located outside the United States. These
investments may be affected by factors peculiar to the laws of the jurisdiction
in which the property is located. These laws may expose us to risks that are
different from and in addition to those commonly found in the United States.
Foreign investments could be subject to the following risks:

      -  changing governmental rules and policies;

      -  enactment of laws relating to the foreign ownership of property and
         laws relating to the ability of foreign persons or corporations to
         remove profits earned from activities within the country to the
         person's or corporation's country of origin;

      -  variations in the currency exchange rates;

      -  adverse market conditions caused by changes in national or local
         economic conditions;

      -  changes in relative interest rates;

      -  change in the availability, cost and terms of mortgage funds resulting
         from varying national economic policies;

      -  changes in real estate and other tax rates and other operating expenses
         in particular countries;

      -  changes in land use and zoning laws; and

      -  more stringent environmental laws or changes in such laws.

We may incur costs to finish build-to-suit properties.

We may sometimes acquire undeveloped or partially developed land parcels for the
purpose of owning to-be-built facilities for a prospective tenant. Oftentimes,
completion risk, cost overruns and on-time delivery are the obligations of the
prospective tenant. To the extent that the tenant or the third-party developer
experiences financial difficulty or other complications during the construction
process we may be required to incur project costs to complete all or part of the
project within a specified time frame. The incurrence of these costs or the
non-occupancy by the tenant may reduce the project's and our portfolio returns.

                                      -10-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

Item 2.  Properties.

Set forth below is certain information relating to CPA(R):14's properties owned
as of December 31, 2003.

<TABLE>
<CAPTION>
                                                                       RENT PER     SHARE OF
          LEASE OBLIGOR/                  OWNERSHIP          SQUARE     SQUARE       CURRENT       INCREASE     LEASE     MAXIMUM
             LOCATION                    INTEREST(1)        FOOTAGE      FOOT    ANNUAL RENTS(2)    FACTOR       TERM      TERM
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                    <C>         <C>       <C>              <C>         <C>         <C>
CARREFOUR FRANCE, SAS (3)
   Boe, Carpiquet, Le Mans,
   Vendin-le-Vieil, Lagnieu,
   Luneville, and St.
   Germain du                              100%             2,973,115   $ 2.43     $8,699,513(4)    INSEE(5)  Mar. 2011     None
   Puy, France
   Lieusaint, France                       100%               100,561    19.52      1,962,601(4)    INSEE(5)  Jun. 2011     None
   Le Mans, France                         100%               840,974     3.44      2,896,413(4)    INSEE(5)  Jul. 2012     None
                                                            ---------              ----------
                         Total:                             3,914,650              13,558,527

STARMARK CAMHOOD, L.L.C. (3)
   Tampa and Boca Raton, FL;
   Newton, MA; Bloomington (2),
   Brooklyn Center, Bumsville,       41% interest in a
   Eden Prairie (2), Fridley,        limited liability
   Minnetonka and St. Louis Park,      company owning
   MN; Albuquerque, NM (4)          land and buildings(5)   1,652,154    11.06      7,491,683        CPI      Feb. 2023   Feb. 2053

NORTEL NETWORKS LIMITED(3)
   Richardson, TX                          100%               281,758    18.77      5,287,500       Stated    Dec. 2016   Dec. 2031

PETSMART, INC. (3)
   Phoenix, AZ; Westlake Village,
   CA; Boca Raton, Lake Mary,
   Tallahassee, Plantation, FL;
   Evanston, IL; Braintree, MA;         70% interest
   Oxon Hill, MD; Flint, MI;           in two limited
   Fridley, MN; Dallas, Southlake,      partnerships
   TX                                 owning land and
                                         buildings(5)         946,177     7.68      5,083,924       Stated    Nov. 2021   Nov. 2041

ATRIUM COMPANIES, INC. (3)
   Dallas and
   Greenville, TX                          100%               823,713     2.13      1,757,940        CPI      Nov. 2019   Nov. 2029
   Welcome, NC; Murrysville, PA;
   Wylie, TX                               100%               826,702     3.38      2,791,356        CPI      Nov. 2021   Nov. 2031
                                                            ---------              ----------
                         Total:                             1,650,415               4,549,296

CLEAR CHANNEL COMMUNICATIONS, INC. (3)
   New York, NY                       40% interest in a
                                     limited partnership
                                       owning land and
                                          buildings           227,685    47.94      4,365,725       Stated    Sep. 2020   Sep. 2040

ADVANCE PARADIGM, INC. (3)
   Scottsdale, AZ                          100%               354,888    12.12      4,300,000     Fair value  Sep. 2021   Sep. 2051

TRUSERV CORPORATION (3)
   Kingman, AZ; Springfield, OR;       35% interest in
   Fogelsville, PA; Jonesboro, GA;      three limited
   Kansas City, MI; Woodland,           partnerships
   CA; Corsicana, TX                   owning land and
                                          buildings         3,628,160     3.31      4,202,502       Stated    Dec. 2022   Nov. 2042

FEDERAL EXPRESS CORPORATION(3)
   Collierville, TN                   60% interest in
</TABLE>

                                      -11-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

<TABLE>
<CAPTION>
                                                                       RENT PER     SHARE OF
          LEASE OBLIGOR/                  OWNERSHIP          SQUARE     SQUARE       CURRENT       INCREASE     LEASE     MAXIMUM
             LOCATION                    INTEREST(1)        FOOTAGE      FOOT    ANNUAL RENTS(2)    FACTOR       TERM      TERM
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                  <C>         <C>       <C>               <C>        <C>         <C>
                                         a limited
                                         liability
                                          company
                                        owning land
                                        and building

TOWER AUTOMOTIVE(3)
   Granite City, IL; Clinton
   Township, MI; Kendallville,
   IN; Upper Sandusky, OH                   100%           1,047,400      3.72     3,895,126         CPI      Apr. 2020   Apr. 2040

KATUN CORPORATION(3)
   Davenport, IA; Bloomington,              100%             343,423      8.65     2,971,350         CPI      Jul. 2022   Jul. 2042
   Gorinchem, NT                            100%             133,500      6.38       851,667(4)      CPI      Jul. 2022   Jul. 2042
                                                           ---------               ---------
                                                             476,923               3,823,017

GALYAN'S TRADING COMPANY(3)
   Kennesaw, GA; Plainfield, IN;
   Leawood, KS                              100%             401,252      8.60     3,451,027        Stated    Dec. 2020   Dec. 2060

COLLINS & AIKMAN CORPORATION(3)
   Manchester, MI; Albemarle,
   Farmville and Old Fort, NC;
   Holmesville, OH; Springfield,
   TN                                       100%           1,948,586      1.72     3,347,485         CPI      Sep. 2021   Sep. 2041

PERKINELMER, INC.(3)
                                                                                                   Finnish
   Turku, Finland                           100%             266,310     12.43     3,311,137         CPI      Dec. 2021   Dec. 2031

ADVANCED MICRO DEVICES, INC. (3)
                                           33 1/3%
                                        interest in a
                                      limited liability
                                           company
                                         owning land
   Sunnyvale, CA                        and buildings        361,965     27.01     3,258,612         CPI      Dec. 2018   Dec. 2038

METALDYNE COMPANY LLC(3)
   Rome, GA; Niles, IL;
   Plymouth, MI; Solon and
   Twinsburg, OH                            100%             534,501      6.08     3,250,804         CPI      Jun. 2021   Jun. 2041

APPLIED MATERIALS, INC. (ETEC SYSTEMS, INC.) (3)
                                      49.99% interest in
                                       a building owned
                                         by a limited
   Hayward, CA                        liability company      129,000     47.43     3,058,320         CPI      Sep. 2014  Jan.  2030

APW NORTH AMERICA, INC. (3)
   Monon, IN; Champlin, MN;
   Robbinsville, NJ; North Salt
   Lake City, UT; Radford, VA               100%             816,665      3.58     2,960,775         CPI      May  2017   May  2027

AMERIX CORP.(3)
   Columbia, MD                             100%             160,000     15.61     2,497,022         CPI      Feb. 2017   Feb. 2037

BUFFETS, INC.(3)
   Eagan, MN                                100%             154,394     14.68     2,266,366         CPI      Sep. 2020   Sep. 2040
</TABLE>

                                      -12-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

<TABLE>
<CAPTION>
                                                                       RENT PER     SHARE OF
          LEASE OBLIGOR/                 OWNERSHIP           SQUARE     SQUARE       CURRENT       INCREASE     LEASE     MAXIMUM
             LOCATION                    INTEREST(1)        FOOTAGE      FOOT    ANNUAL RENTS(2)    FACTOR       TERM      TERM
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                  <C>        <C>       <C>               <C>        <C>        <C>
GERBER SCIENTIFIC, INC.(3)
   South Windsor (2) and
   Manchester, CT                           100%             347,500      6.49      2,255,324        CPI      Jul. 2018  Jul. 2038

CELESTICA CORPORATION(3)
   Rochester, MN                            100%             204,846     10.71      2,193,900        CPI      Jul. 2017  Jul. 2026

WADDINGTON NORTH AMERICA, INC.(3)
   City of Industry, CA;
   Florence, KY; Chemsford,
   MA; Lancaster, TX                        100%             390,720      5.61      2,192,100        CPI      Apr. 2021  Apr. 2041

CHECKFREE HOLDINGS, INC.(3)
   Norcross, GA                        50% interest in
                                          a limited
                                          liability
                                           company
                                         owning land
                                        and building         220,676     19.29      2,128,373        CPI      Dec. 2015  Dec. 2015

NEXPAK CORPORATION(3)
   Duluth, GA                               100%             221,374      5.93      1,313,000        CPI      Mar. 2021  Mar. 2041

   Helmond, The Netherlands
                                            100%             117,000      6.33       740,974(4)      CPI      Jun. 2021  Jun. 2041
                                                             -------                ---------
                                                             338,374                2,053,974

SPECIAL DEVICES, INC.(3)

   Moorpark, CA; Mesa, AZ                    50%             249,276     16.36      2,038,513        CPI      Jun. 2021  Jun. 2041

MCLANE COMPANY, INC.(3)
   Shawnee, KS; Burlington, NJ;        60% interest in
   Manassas, VA                         a two limited
                                          liability
                                          companies
                                       owning land and
                                          buildings          539,428      6.25      2,021,600        CPI      Nov. 2015  Nov. 2025

STELLEX TECHNOLOGIES, INC.(3)
   Valencia, CA; North
   Amityville, NY                           100%             281,889      7.04      1,983,646        CPI      Feb. 2020  Feb. 2040

CAREER EDUCATION CORPORATION
   Upper Saucon Township, PA                100%              92,782     21.20      1,966,752        CPI      Jun. 2023  Jun. 2043

BEST BUY CO., INC.
   Torrance, CA                             100%             102,470     19.00      1,946,930      Stated     Jan. 2005  Jan. 2010

INSTITUTIONAL JOBBERS COMPANY(3)
   Valdosta, GA; Johnson City,
   TN                                       100%             411,417      4.72      1,942,159      Stated     Dec. 2019  Dec. 2028

BUILDERS FIRSTSOURCE, INC.(3)
   Harrisburg, NC                           100%             174,000      6.04      1,051,102        CPI      Jun. 2020  Jun. 2030

   Norcross, GA; Elkwood, VA;          60% interest in
   Cincinnati, OH                         a limited
                                         partnership         389,261      3.56        830,626        CPI      Jan. 2016  Jan. 2037
                                                             -------                ---------
</TABLE>

                                      -13-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

<TABLE>
<CAPTION>
                                                                       RENT PER     SHARE OF
          LEASE OBLIGOR/                 OWNERSHIP           SQUARE     SQUARE       CURRENT       INCREASE     LEASE     MAXIMUM
             LOCATION                    INTEREST(1)        FOOTAGE      FOOT    ANNUAL RENTS(2)    FACTOR       TERM      TERM
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                  <C>         <C>       <C>               <C>        <C>        <C>
                                        owning land
                                       and buildings

                         Total:                              563,261                1,881,728

RAVE REVIEWS CINEMAS, L.L.C.
   Pensacola, FL                            100%              58,916    18.42       1,085,164        CPI      Sep. 2023  Sep. 2043
   Port St. Lucie, FL                       100%              53,104    13.89         737,839        CPI      Jun. 2021  Jun. 2041
                                                             -------                ---------
                         Total:                              112,020                1,823,003

GIBSON GUITAR CORP. (3)
   Bozeman, MT; Elgin, IL;             82.5% interest
   Nashville, TN (2)                   in two limited
                                        partnerships
                                         owning land
                                        and buildings        336,721     6.44       1,790,239        CPI      Mar. 2021  Mar. 2031

PW EAGLE, INC. (3)
   Tacoma, WA; West Jordan,
   UT; Perris, CA; Eugene, OR               100%           1,079,424     1.53       1,650,875        CPI      Feb. 2022  Feb. 2042

AMERICAN TIRE DISTRIBUTORS, INC. (FORMERLY HEAFNER TIRE GROUP, INC.) (3)
   Mauldin, SC; Charlotte, NC;
   Lincolnton, NC                           100%             465,588     3.53       1,644,500        CPI      Mar. 2022  Mar. 2042

NEW CREATIVE ENTERPRISES, INC. (3)
   Milford, OH                              100%             437,000     3.73       1,629,114        CPI      Sep. 2021  Sep. 2046

CONSOLIDATED THEATERS HOLDING, G.P. (3)
   Midlothian, VA                           100%              80,730    19.21       1,550,489       Stated    Aug. 2020  Aug. 2030

PRODUCTION RESOURCE GROUP
   Las Vegas, NV                            100%             127,796     7.68         979,034        CPI      Mar. 2014  Mar. 2024
   Burbank and
   Los Angeles, CA                          100%              49,374     8.80         434,305        CPI      Oct. 2014  Oct. 2024
                                                             -------                ---------
                         Total:                              177,170                1,413,339

COMPUCOM SYSTEMS, INC. (3)
   Dallas, TX                         33 1/3% interest
                                        in a limited
                                         liability
                                          company
                                      owning land and
                                          building           255,378    16.54       1,408,043        CPI      Apr. 2019  Apr. 2029

FITNESS HOLDINGS, INC. (3)
   Salt Lake City, UT                       100%              36,851    16.80         618,949        CPI      May 2020   May 2035
   St. Charles, MO(3)                       100%              38,432    19.46         747,790        CPI      Dec. 2020  Dec. 2035
                                                              ------                ---------
                         Total:                               75,283                1,366,739

BARJAN PRODUCTS L.L.C. (3)
   Rock Island, IL                          100%             241,950     5.44       1,316,906       Stated    Oct. 2016  Oct. 2026

UTI HOLDINGS, INC. AND NASCAR
   TECHNICAL INSTITUTE, INC.
   Mooresville, NC                          100%             144,995     8.91       1,291,727     Fair value  Sep. 2022  Sep. 2043

THE BON-TON DEPARTMENT STORES, INC. (3)
   York, PA (2)                             100%             301,337     4.25       1,281,674        CPI      Dec. 2020   Dec. 2046
</TABLE>

                                      -14-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

<TABLE>
<CAPTION>
                                                                       RENT PER     SHARE OF
          LEASE OBLIGOR/                 OWNERSHIP           SQUARE     SQUARE       CURRENT       INCREASE     LEASE     MAXIMUM
             LOCATION                    INTEREST(1)        FOOTAGE      FOOT    ANNUAL RENTS(2)    FACTOR       TERM      TERM
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                   <C>        <C>       <C>               <C>        <C>        <C>
METAGENICS, INC.
   San Clemente, CA                         100%             88,070      14.45      1,272,924       Stated    Aug. 2011  Aug. 2021

TEXTRON, INC. (3)
   Gilbert, AZ                        50% interest in a
                                      limited liability
                                        company owning
                                           land and
                                           building         243,370      10.19      1,239,739        CPI      Jan. 2019  Jan. 2039

LINCOLN TECHNICAL INSTITUTE, INC. (3)
   Union, NJ; Grand Prairie, TX;
   Allentown and Philadelphia, PA           100%            158,202       7.56      1,196,485        CPI      Dec. 2016  Dec. 2016

MERIDIAN AUTOMOTIVE SYSTEMS, INC. (3)
   Salisbury, NC                            100%            333,830       3.51      1,170,830       Stated    Sep. 2021  Sep. 2041

BLP GROUP PLC(3)
   Doncaster, South Yorkshire,
   United Kingdom                           100%            225,998       4.56      1,031,530       Stated    Jan. 2031  Jan. 2031

INTERNATIONAL GARDEN PRODUCTS, INC. (3)
   Lakewood, NJ                             100%            218,201       4.15        905,674        CPI      Dec. 2021  Dec. 2031

TOWNE HOLDINGS, INC. (3)
   Elk Grove Village, IL                    100%             46,672      19.08        890,591        CPI      Oct. 2020  Oct. 2040

LENNAR CORPORATION(3)
   Houston, TX                              100%             52,144      13.73        715,750        CPI      Oct. 2015  Oct. 2035

BRASHEAR LP (3)
   Pittsburgh, PA                           100%            146,103       4.79        699,200        CPI      Dec. 2013  Dec. 2023

TRANSCORE HOLDINGS INC. (3)
   Albuquerque, NM                          100%             74,747       8.69        649,881       Stated    Sep. 2015  Sep. 2030

EARLE M. JORGENSEN COMPANY(3)
   Kansas City, MO                          100%            120,855       5.19        627,059       Stated    Mar. 2020  Mar. 2035

MCCOY, INC. (3)
                                      90% interest in a
                                           limited
   Houston, TX                           partnership
                                       owning land and
                                          building          140,000       4.26        536,760       Stated    Sep. 2007  Sep. 2007

WEST UNION CORPORATION(3)

   Tempe, AZ                                100%            116,922       4.55        532,350       Stated    Jan. 2015  Jan. 2035

NEWPARK RESOURCES, INC.

   Lafayette, LA                            100%             34,425      11.24        384,873        CPI      Nov. 2017  Nov. 2027
</TABLE>

                                      -15-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

<TABLE>
<CAPTION>
                                                                       RENT PER     SHARE OF
          LEASE OBLIGOR/                 OWNERSHIP           SQUARE     SQUARE       CURRENT       INCREASE     LEASE     MAXIMUM
             LOCATION                    INTEREST(1)        FOOTAGE      FOOT    ANNUAL RENTS(2)    FACTOR       TERM      TERM
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                    <C>        <C>       <C>               <C>        <C>        <C>
VARIOUS TENANTS(3)
   Nashville, TN                     82.5% interest in
                                         a limited
                                        partnership                                                           Sep. 2004  Sep. 2004
                                      owning land and                                                          through    through
                                         building            23,178      12.69       294,217        Stated    Feb. 2008  Feb. 2008

WASATCH SUMMIT
   Lindon, UT                              100%              20,100      12.00       241,200         CPI      Mar. 2008  Mar. 2013

TELESERVICES DIRECT
   Daleville, IN                           100%              11,343      12.00       136,116         CPI      Jul. 2005  Jul. 2007

BIG O DEVELOPMENT, INC.
   Torrance, CA                            100%               4,500      22.80       102,600         CPI      Jun. 2012  Jun. 2022

VACANT
   Daleville, IN;                          100%              95,009
   Gardena, CA                             100%              87,693
                                      60% interest in a
                                      limited liability
   Grand Rapids, MI                     company owning
                                      land and building     107,677
   Lindon, UT                              100%              39,186
</TABLE>

      1. Percentage of ownership in land and building, except as noted. Fee
         simple ownership interest unless otherwise noted.

      2. Share of Current Annual Rents is the product of the Square Footage, the
         Rent per Square Foot, and the Ownership Interest percentage.

      3. These properties are encumbered by mortgage notes payable.

      4. Based on exchange rates at December 31, 2003.

      5. INSEE construction index, an index published quarterly by the French
         Government.

      6. Annual Rent will be based on value of tenant improvements upon
         completion.

Item 3. Legal Proceedings.

As of the date hereof, CPA(R):14 is not a party to any material pending legal
proceedings.

Item 4. Submission of Matters to a Vote of Security Holders.

No matter was submitted during the fourth quarter of the year ended December 31,
2003 to a vote of security holders, through the solicitation of proxies or
otherwise.

                                      -16-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

                                     PART II

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

Information with respect to CPA(R):14's common equity is hereby incorporated by
reference to page 32 of CPA(R):14's Annual Report contained in Appendix A.

Item 6. Selected Financial Data.

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

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

Management's Discussion and Analysis are hereby incorporated by reference to
pages 2 to 11 of CPA(R):14's Annual Report contained in Appendix A.

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

Market risk is the exposure to loss resulting from changes in interest rates,
credit spreads, foreign currency exchange rates and equity prices. In pursuing
our business plan, the primary market risks to which we are exposed are interest
rate risk and currency exchange rates.

The value of our real estate is subject to fluctuations based on changes in
interest rates, local and regional economic conditions and changes in the
creditworthiness of lessees, and which may affect our ability to refinance our
debt when balloon payments are scheduled.

Approximately $674,134,000 of CPA(R):14's long-term debt bears interest at fixed
rates, and therefore the fair value of these instruments is affected by changes
in the market interest rates. The following table presents principal cash flows
based upon expected maturity dates of the debt obligations and the related
weighted-average interest rates by expected maturity dates for the fixed rate
debt. The interest rate on the fixed rate debt as of December 31, 2003 ranged
from 6.09% to 8.85%. The interest rate on the variable rate debt as of December
31, 2003 ranged from 3.12% to 6.49%.

<TABLE>
<CAPTION>
                       2004        2005        2006        2007        2008     Thereafter    Total    Fair Value
(in thousands)         ----        ----        ----        ----        ----     ----------    -----    ----------
<S>                  <C>         <C>         <C>         <C>         <C>        <C>          <C>       <C>
Fixed rate debt      $ 10,513    $ 11,534    $ 12,500    $ 13,449    $ 19,613    $606,525    $674,134   $677,999
Weighted average
  interest rate          7.17%       7.17%       7.17%       7.18%       7.33%       7.46%
Variable rate debt   $    580    $    605    $    624    $    643    $    662    $ 24,927    $ 28,041   $ 28,041
</TABLE>

CPA(R):14 conducts business in the United Kingdom, Finland, France and The
Netherlands. The foreign operations were not significant to CPA(R):14's
consolidated financial position, results of operations or cash flows during the
three-year period ended December 31, 2003. Realized and unrealized foreign
currency translation gains of $349 and $691, respectively, for the year ended
December 31, 2003 are included in the accompanying consolidated financial
statements and are due to changes in foreign currency on accrued interest
receivable on notes receivable from wholly-owned subsidiaries. CPA(R):14 was not
subject to material foreign currency exchange rate risk from the effects that
exchange rate movements of foreign currencies may have on its future costs or on
future cash flows it may receive from its foreign subsidiaries. To date,
CPA(R):14 has not entered into any foreign currency forward exchange contracts
to hedge the effects of adverse fluctuations in foreign currency exchange rates.
One lease provides CPA(R):14 the option to receive up to $77,500 of its rents in
U.S. dollars or the functional local currency. Under accounting principles
generally accepted in the United States, this option is considered a derivative
instrument. Scheduled future minimum rents, exclusive of renewals, under
non-cancelable leases resulting from CPA(R):14's foreign operations are as
follows:

                                      -17-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

<TABLE>
<CAPTION>
                                           2004        2005        2006        2007        2008     Thereafter     Total
(in thousands)                             ----        ----        ----        ----        ----     ----------     -----
<S>                                      <C>         <C>         <C>         <C>         <C>        <C>          <C>
Rental income(1)                         $ 18,223    $ 18,223    $ 18,223    $ 18,223    $ 18,223    $ 98,337    $189,452
Interest income from direct financing
     leases(1)                           $  1,127    $  1,127    $  1,127    $  1,232    $  1,232    $ 38,744    $ 44,589
</TABLE>

Scheduled principal payments for the mortgage notes payable during each of the
next five years following December 31, 2003 and thereafter are as follows:

<TABLE>
<CAPTION>
                           2004        2005        2006        2007        2008     Thereafter    Total
(in thousands)             ----        ----        ----        ----        ----     ----------    -----
<S>                      <C>         <C>         <C>         <C>         <C>        <C>          <C>
Fixed rate debt (1)      $  3,996    $  4,406    $  4,798    $  5,127    $  5,467    $115,801    $139,595
Variable rate debt(1)    $     84    $     88    $     94    $    101    $    108    $  6,082    $  6,557
</TABLE>

     (1) Based on December 31, 2003 exchange rate. The mortgage notes are
         denominated in the functional currency of the country of each property.

Item 8. Financial Statements and Supplementary Data.

The following consolidated financial statements and supplementary data of
CPA(R):14 are hereby incorporated by reference to pages 12 to 31 of CPA(R):14's
Annual Report contained in Appendix A:

   (i)   Report of Independent Auditors

   (ii)  Consolidated Balance Sheets at December 31, 2003 and 2002.

   (iii) Consolidated Statements of Income for the years ended December 31,
         2003, 2002, and 2001.

   (iv)  Consolidated Statement of Shareholders' Equity for the years ended
         December 31, 2001, 2002, and 2003.

   (v)   Consolidated Statements of Cash Flows for the years ended December 31,
         2003, 2002, and 2001.

   (vi)  Notes to Consolidated Financial Statements.

Item 9. Disagreements on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures

         The Co-Chief Executive Officers and Chief Financial Officer of the
         Company have conducted a review of the Company's disclosure controls
         and procedures as of December 31, 2003.

         The Company's disclosure controls and procedures include the Company's
         controls and other procedures designed to ensure that information
         required to be disclosed in this and other reports filed under the
         Securities Exchange Act of 1934, as amended (the "Exchange Act") is
         accumulated and communicated to the Company's management, including its
         chief executive officers and chief financial officer, to allow timely
         decisions regarding required disclosure and to ensure that such
         information is recorded, processed, summarized and reported, within the
         required time periods. Based upon this review, the Company's chief
         executive officers and chief financial officer have concluded that the
         Company's disclosure controls (as defined in pursuant to Rule 13a-14(c)
         promulgated under the Exchange Act) are sufficiently effective to
         ensure that the information required to be disclosed by the Company in
         the reports it files under the Exchange Act is recorded, processed,
         summarized and reported with adequate timeliness. There have been no
         significant changes in the Company's internal controls or in other
         factors that could significantly affect these controls subsequent to
         the date of the evaluation referred to above.

                                      -18-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

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

Item 11. Executive Compensation.

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

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

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

Item 13. Certain Relationships and Related Transactions.

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

Item 14. Principal Accountant Fees and Services.

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

                                      -19-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

                                     PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

         (a) 1. Consolidated Financial Statements:

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

                      Report of Independent Auditors.

                      Consolidated Balance Sheets, December 31, 2003 and 2002.

                      Consolidated Statements of Income for the years ended
                      December 31, 2003, 2002, 2001.

                      Consolidated Statement of Shareholders' Equity for the
                      years ended December 31, 2001, 2002, and 2003.

                      Consolidated Statements of Cash Flows for the years ended
                      December 31, 2003, 2002, and 2001.

                      Notes to Consolidated Financial Statements.

                  The consolidated financial statements are hereby incorporated
                  by reference to pages 12 to 31 of CPA(R):14's Annual Report
                  contained in Appendix A.

         (a) 2. Financial Statement Schedule:

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

                      Report of Independent Auditors.

                      Schedule III - Real Estate and Accumulated Depreciation as
                      of December 31, 2003.

                      Schedule III of Registrant is contained on pages 32 to 38
                      of this Form 10-K.

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

                                      -20-
<PAGE>
                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

(a) 3. Exhibits:

         The following exhibits are filed as part of this Report. Documents
         other than those designated as being filed herewith are incorporated
         herein by reference.

<TABLE>
<CAPTION>
Exhibit
  No.                             Description                                       Method of Filing
  ---                             -----------                                       ----------------
<S>         <C>                                                             <C>
 3.1        Articles of Amendment and Restatement.                          Exhibit 3(A) to Registration Statement
                                                                            (Form S-11) No. 333-76761

 3.1(2)     Amended and Restated Articles of Incorporation of Registrant    Exhibit 3.1(1) to Registrant's
                                                                            Post-Effective Amendment No. 2 dated
                                                                            November 22, 2000

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

 3.2(2)     Form of Bylaws of Registrant                                    Exhibit 3.2(2) to Post-Effective
                                                                            Amendment No. 1 dated April 28, 2000

 3.2(3)     Form of Bylaws of Registrant                                    Exhibit 3.2(2) to Registrant's
                                                                            Post-Effective Amendment No. 2 dated
                                                                            November 22, 2000

 4.1        Dividend Reinvestment and Share Purchase Plan                   Exhibit 4.1 to Registrant's Form S-3D
                                                                            dated July 22, 2002

 5.1        Opinion of Reed Smith LLP                                       Exhibit 5.1 to Registrant's Form S-3D
                                                                            dated July 22, 2002

 8.1(3)     Opinion of Reed Smith LLP as to certain tax matters             Exhibit 8.1 to Registrant's Form S-3D
                                                                            dated July 22, 2002

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

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

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

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

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

10.2(4)     Lease Agreement date July 27, 19998 by and between Best (CA)    Exhibit 10.2 to Registrant's Form 10-k
            QRS 14-4, as Landlord, and Best Buy Co. Inc. as Tenants.        for the year ended December 31, 1998,
                                                                            dated March 30, 1999
</TABLE>

                                      -21-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

<TABLE>
<CAPTION>
Exhibit
  No.                             Description                                       Method of Filing
  ---                             -----------                                       ----------------
<S>         <C>                                                             <C>
10.2(5)     Lease Agreement dated February 3, 1998 by and between ESI       Exhibit 10.2 to Registrant's Form 8-K
            (CA) QRS 12-6 INC., as Landlord and Etec Systems, Inc. as       dated February 2, 1999
            Tenants.

10.2(6)     Lease Agreement dated July 27, 1998 by and between Best (CA)    Exhibit 10.2(3) to Registrant's
            QRS 14-4, as Landlord, and Best Co. Inc., as Tenants.           Post-Effective Amendment No. 1 dated
                                                                            April 28, 2000

10.2(7)     Lease Agreement dated July 27, 1998 by and between Best (CA)    Exhibit 10.2(3) to Registrant's
            QRS 14-4, as Landlord, and Best Co. Inc., as Tenants.           Post-Effective Amendment No. 2 dated
                                                                            November 22, 2000

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

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

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

10.3(6)     Lease Agreement dated February 2, 1998 by and between ESI       Exhibit 10.3(3) to Registrant's
            (CA) QRS 12-6, as Landlord, and Etec Systems, Inc., as          Post-Effective Amendment No. 1 dated
            Tenants. April 28, 2000

10.3(7)     Lease Agreement dated February 2, 1998 by and between ESI       Exhibit 10.3(3) to Registrant's
            (CA) QRS 12-6, as Landlord, and Etec Systems, Inc., as          Post-Effective Amendment No. 2 dated
            Tenants.                                                        November 22, 2000

10.4        Lease Agreement dated July 29, 1998 by and between META (CA)    Exhibit 10.3 to Registrant's Form 8-K
            QRS  14-16, as Landlord, and Metagenics Incorporated, as        dated February 2, 1999
            Tenants.

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

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

10.4(4)     Lease Agreement date July 29, 1998 by and between META (CA)     Exhibit 10.4 to Registrant's Form 10K
            QRS 14-16, as Landlord, and Metagenics Incorporated, as         for the year ended December 31, 1999,
            Tenants.                                                        dated March 30, 1999

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

10.4(6)     Lease Agreement date July 29, 1998 by and between META (CA)     Exhibit 10.4(3) to Registrant's
            QRS 14-16, as Landlord, and Metagenics Incorporated, as         Post-Effective Amendment No. 1 dated
            Tenants.                                                        April 28, 2000
</TABLE>

                                      -22-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

<TABLE>
<CAPTION>
Exhibit
  No.                             Description                                       Method of Filing
  ---                             -----------                                       ----------------
<S>         <C>                                                             <C>
10.4(7)     Lease Agreement date July 29, 1998 by and between META (CA)     Exhibit 10.4(3) to Registrant's
            QRS 14-16, as Landlord, and Metagenics Incorporated, as         Post-Effective Amendment No. 2 dated
            Tenants.                                                        November 22, 2000

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

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

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

10.5(5)     Lease Agreement dated November 24, 1998 by and between BAC      Exhibit 10.5 to Registrant's Form 8-k
            (MO) QRS 14-10, Inc., as Landlord, and The Benjamin Ansehl      dated February 2, 1999
            Co., as Tenants

10.5(6)     Lease Agreement dated July 30, 1998 by and between TRUCK (IN)   Exhibit 10.5(3) to Registrant's
            QRS 14-3, as Landlord, and Burlington Motor Carrier Inc., as    Post-Effective Amendment No. 1 dated
            Tenants.                                                        April 28, 2000

10.5(7)     Lease Agreement dated July 30, 1998 by and between TRUCK (IN)   Exhibit 10.5(3) to Registrant's
            QRS 14-3, as Landlord, and Burlington Motor Carrier Inc., as    Post-Effective Amendment No. 2 dated
            Tenants.                                                        November 22, 2000

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

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

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

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

10.6(6)     Lease Agreement dated November 24, 1998 by and between BAC      Exhibit 10.6(3) to Registrant's
            (MO) QRS 14-10, as Landlord, and The Benjamin Ansehl Co., as    Post-Effective Amendment No. 1 dated
            Tenants.                                                        April 28, 2000

10.6(7)     Lease Agreement dated November 24, 1998 by and between BAC      Exhibit 10.6(3) to Registrant's
            (MO) QRS 14-10, as Landlord, and The Benjamin Ansehl Co., as    Post-Effective Amendment No. 2 dated
            Tenants. November                                               22, 2000

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

</TABLE>

                                      -23-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

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

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

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

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

10.7(6)     Lease Agreement dated December 22, 1998 by and between          Exhibit 10.7(3) to Registrant's
            Conductor (CA) QRS 14-11, as Landlord, and Advanced Micro       Post-Effective Amendment No. 1 dated
            Devices, Inc. as Tenants.                                       April 28, 2000

10.7(7)     Lease Agreement dated December 22, 1998 by and between          Exhibit 10.7(3) to Registrant's
            Conductor (CA) QRS 14-11, as Landlord, and Advanced Micro       Post-Effective Amendment No. 2 dated
            Devices, Inc. as Tenants.                                       November 22, 2000

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

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

10.8(4)     Lease Agreement dated December 28, 1998 by and between CBS      Exhibit 10.8(3) to Registrant's
            (PA) QRS 14-12, as Landlord, and Contraves Brashear Systems,    Post-Effective Amendment No. 1 dated
            L.P., as Tenants.                                               April 28, 2000

10.8(5)     Lease Agreement dated December 28, 1998 by and between CBS      Exhibit 10.8(3) to Registrant's
            (PA) QRS 14-12, as Landlord, and Contraves Brashear Systems,    Post-Effective Amendment No. 2 dated
            L.P., as Tenants.                                               November 22, 2000

10.28(4)    Form of Sales Agency Agreement.                                 Exhibit 10.28(4) to Registrant's
                                                                            Post-Effective Amendment No. 1 dated
                                                                            April 28, 2000

10.28(5)    Form of Sales Agency Agreement.                                 Exhibit 10.28(4) to Registrant's
                                                                            Post-Effective Amendment No. 2 dated
                                                                            November 22, 2000

10.29(4)    Form of Selected Dealer Agreement.                              Exhibit 10.29(4) to Registrant's
                                                                            Post-Effective Amendment No. 1 dated
                                                                            April 28, 2000

10.29(5)    Form of Selected Dealer Agreement.                              Exhibit 10.29(4) to Registrant's
                                                                            Post-Effective Amendment No. 2 dated
                                                                            November 22, 2000
</TABLE>

                                      -24-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

<TABLE>
<CAPTION>
Exhibit
  No.                             Description                                       Method of Filing
  ---                             -----------                                       ----------------
<S>         <C>                                                             <C>
10.30(1)    Advisory Agreement.                                             Exhibit 10.30(1) to Registrant's
                                                                            Post-Effective Amendment No. 1 dated
                                                                            April 28, 2000

10.30(2)    Advisory Agreement.                                             Exhibit 10.30(1) to Registrant's
                                                                            Post-Effective Amendment No. 2 dated
                                                                            November 22, 2000

10.31(4)    Form of Wholesaling Agreement.                                  Exhibit 10.31(4) to Registrant's
                                                                            Post-Effective Amendment No. 1 dated
                                                                            April 28, 2000

10.31(5)    Form of Wholesaling Agreement.                                  Exhibit 10.31(4) to Registrant's
                                                                            Post-Effective Amendment No. 2 dated
                                                                            November 22, 2000

10.32(4)    Form of Escrow Agreement.                                       Exhibit 10.32(4) to Registrant's
                                                                            Post-Effective Amendment No. 1 dated
                                                                            April 28, 2000

10.32(5)    Form of Escrow Agreement.                                       Exhibit 10.32(4) to Registrant's
                                                                            Post-Effective Amendment No. 2 dated
                                                                            November 22, 2000

21.1        Subsidiaries of Registrant as of March 11, 2004                 Filed herewith

23.1        Consent of PricewaterhouseCoopers LLP                           Filed herewith


23.2        Consent of PricewaterhouseCoopers LLP                           Exhibit 23.2 to Registrant's Form S-3D
                                                                            dated July 22, 2002

31.1        Certification of Co-Chief Executive Officers                    Filed herewith

31.2        Certification of Chief Financial Officer                        Filed herewith

32.1        Section 906 Certification of Co-Chief Executive Officers        Filed herewith

32.2        Section 906 Certification of Chief Financial Officer            Filed herewith
</TABLE>

(b) Reports on Form 8-K

         During the quarter ended December 31, 2003 the Registrant was not
         required to file any reports on Form 8-K.

                                      -25-
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

                                   SIGNATURES

                  Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                  a Maryland corporation

3/10/04                           BY: /s/ John J. Park
--------                              ----------------------------------
Date                                  John J. Park
                                      Managing Director and Chief
                                      Financial Officer
                                      (Principal Financial Officer)

                  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

                                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

3/10/04                           BY: /s/ William Polk Carey
--------                              ----------------------------------
Date                                  William Polk Carey
                                      Chairman of the Board, Co-Chief
                                      Executive Officer and Director
                                      (Principal Executive Officer)

3/10/04                           BY: /s/ Gordon F. DuGan
--------                              ----------------------------------
Date                                  Gordon F. DuGan
                                      Vice Chairman of the Board,
                                      Co-Chief Executive Officer,
                                      Senior Managing Director and Chief
                                      Acquisitions Officer

3/10/04                           BY: /s/ Gordon J. Whiting
--------                              ----------------------------------
Date                                  Gordon J. Whiting
                                      President

3/10/04                           BY: /s/ Charles E. Parente
--------                              ----------------------------------
Date                                  Charles E. Parente
                                      Director

3/10/04                           BY: /s/ William Ruder
--------                              ----------------------------------
Date                                      William Ruder
                                          Director

3/10/04                           BY: /s/ George E. Stoddard
--------                              ----------------------------------
Date                                  George E. Stoddard
                                      Director

3/10/04                           BY: /s/ Warren G. Wintrub
--------                              ----------------------------------
Date                                  Warren G. Wintrub
                                      Director

3/10/04                           BY: /s/ John J. Park
--------                              ----------------------------------
Date                                  John J. Park
                                      Managing Director and Chief
                                      Financial Officer
                                      (Principal Financial Officer)


3/10/04                           BY: /s/ Claude Fernandez
--------                              ----------------------------------
Date                                  Claude Fernandez
                                      Managing Director and Chief
                                      Accounting Officer
                                      (Principal Accounting Officer)

                                      -26-
<PAGE>

                         REPORT of INDEPENDENT AUDITORS
                         ON FINANCIAL STATEMENT SCHEDULE

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

Our audits of the consolidated financial statements referred to in our report
dated March 10, 2004 appearing in the 2003 Annual Report to Shareholders of
Corporate Property Associates 14 Incorporated (which report and consolidated
financial statements are incorporated by reference in this Annual Report on Form
10-K) also included an audit of the financial statement schedule listed in Item
15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

New York, New York
March 10, 2004

                                      -27-
<PAGE>

                 CORPORATE PROPERTY ASSOCIATES 14, INCORPORATED

             SCHEDULE III - REAL ESTATE and ACCUMULATED DEPRECIATION

                             as of December 31, 2003

<TABLE>
<CAPTION>

                                                  Initial Cost to Company
                                                  -----------------------

                                                                                 Costs            Increase
                                                                               Capitalized       (Decrease)
                                                                             Subsequent to         in Net
         Description            Encumbrances      Land         Buildings     Acquisition (a)    Investment (b)       Land
         -----------            ------------      ----         ---------     ---------------    --------------       ----
<S>                             <C>            <C>            <C>            <C>               <C>               <C>
Operating Method:
Vacant trucking facility in
  Daleville, Indiana                           $  2,100,000   $  5,439,267                      $ (3,810,000)    $  2,100,000
Retail store leased to
  BestBuy Co., Inc.                              13,059,980      6,933,851    $      45,914                        13,059,980
Research and development
  facility leased to
  Metagenics, Inc.                                2,390,000                       8,957,798                         2,390,000
Manufacturing facility
  leased to Brashear LP         $  3,903,265        620,000      6,186,283                                            620,000
Manufacturing and
  distribution facilities
  leased to Production
  Resource Group L.L.C             7,299,108      3,860,000      8,263,455                                          3,860,000
Vacant
  industrial/manufacturing
  facilities in Gardena,
  California                       2,882,785      2,340,000      3,942,723                        (2,900,000)       2,340,000
Distribution and warehouse
  facility leased to McLane
  Company, Inc.                   20,944,044      3,604,000      8,613,172       21,321,241                         3,604,000
Distribution and warehouse
  facility leased to The
  Retail Distribution Group,
  Inc.                             5,826,970        740,000      3,042,828        7,543,357                           740,000
Multiplex motion picture
  theater leased to
  Consolidated Theaters
  Holding, G.P.                    2,021,698      3,515,000                                                         3,515,000
Office and warehouse
  facility leased to
  Builders FirstSource, Inc.      13,787,176      3,929,891     10,397,514        8,476,016                         3,945,275
Office and research facility
  leased to Amerix
  Corporation                     13,870,677      2,622,500     20,232,580        3,113,719                         2,622,500
Industrial and manufacturing
  facility leased to Atrium
  Companies, Inc.                 13,748,732      1,596,442     23,910,092          322,771                         1,596,442
</TABLE>

<TABLE>
<CAPTION>
                                Gross Amount at which Carried
                                      at Close of Period
                                      ------------------
                                                                                                             Life on which
                                                                                                            Depreciation in
                                                                                                            Latest Statement
                                                                  Accumulated                                  of Income
         Description             Buildings         Total        Depreciation (d)      Date Acquired           is Computed
         -----------             ---------         -----        ----------------      -------------           -----------
<S>                             <C>            <C>              <C>                <C>                      <C>
Operating Method:
Vacant trucking facility in
  Daleville, Indiana            $  1,629,267   $    3,729,267     $   563,065          June 29, 1998             40 yrs.
Retail store leased to
  BestBuy Co., Inc.                6,979,765       20,039,745         951,899          July 28, 1998             40 yrs.
Research and development
  facility leased to
  Metagenics, Inc.                 8,957,798       11,347,798         947,267          July 29, 1998             40 yrs.
Manufacturing facility
  leased to Brashear LP            6,186,283        6,806,283         779,729        December 28, 1998           40 yrs.
Manufacturing and
  distribution facilities
  leased to Production                                                              March 31, 1999 and
  Resource Group L.L.C             8,263,455       12,123,455         959,655        October 15, 1999            40 yrs.
Vacant
  industrial/manufacturing
  facilities in Gardena,
  California                       1,042,723        3,382,723           1,086         July 19, 1999              40 yrs.
Distribution and warehouse
  facility leased to McLane
  Company, Inc.                   29,934,413       33,538,413       2,885,057        August 18, 1999             40 yrs.
Distribution and warehouse
  facility leased to The
  Retail Distribution Group,
  Inc.                            10,586,185       11,326,185       1,088,509        August 18, 1999             40 yrs.
Multiplex motion picture
  theater leased to
  Consolidated Theaters
  Holding, G.P.                                     3,515,000                       September 22, 1999            N/A
Office and warehouse
  facility leased to                                                                 June 29, 1999 and
  Builders FirstSource, Inc.      18,858,146       22,803,421       1,359,107        December 20, 2001           40 yrs.
Office and research facility
  leased to Amerix
  Corporation                     23,346,299       25,968,799       2,279,737        November 1, 1999            40 yrs.
Industrial and manufacturing
  facility leased to Atrium                                                        November 18, 1999 and
  Companies, Inc.                 24,232,863       25,829,305       1,498,217        December 1, 2001            40 yrs.
</TABLE>

                                       28
<PAGE>

                 CORPORATE PROPERTY ASSOCIATES 14, INCORPORATED

             SCHEDULE III - REAL ESTATE and ACCUMULATED DEPRECIATION

                             as of December 31, 2003

<TABLE>
<CAPTION>

                                                  Initial Cost to Company
                                                  -----------------------

                                                                                 Costs            Increase
                                                                               Capitalized       (Decrease)
                                                                             Subsequent to         in Net
         Description            Encumbrances      Land         Buildings     Acquisition (a)    Investment (b)       Land
         -----------            ------------      ----         ---------     ---------------    --------------       ----
<S>                             <C>            <C>            <C>            <C>               <C>               <C>
Operating Method:
Retail and service facility
  leased to Fitness
  Holdings, Inc.                   6,980,539      2,920,000      8,659,950          680,271                         2,920,000

Office and research facility
  leased to West Union
  Corporation                      3,261,612        940,000      4,557,382           12,498                           940,000
Office and warehouse
  facility leased to Barjan
  Products, LLC                    7,067,867        500,000      9,944,545        1,887,506                           500,000
Industrial and manufacturing
  facility leased to Stellex
  Technologies, Inc.              12,968,598      2,932,000     16,397,988           17,904                         2,932,000
Manufacturing and
  distribution facility
  leased to APW North
  America Inc.                    16,968,462      4,580,000     24,844,084           14,784                         4,580,000
Distribution and warehouse
  facility leased to
  Langeveld International,
  Inc.                             6,582,526        710,000      4,531,037        3,438,798                           710,000
Retail and services facility
  leased to Galyan's Trading
  Company                         19,118,614      7,330,000     22,305,554        4,177,399                         7,830,000
Land leased to Advanced
  Paradigm, Inc.                   8,670,575     14,600,000                                                        14,600,000
Industrial and manufacturing
  facility leased to
  Transcore Holdings, Inc.         3,414,617      1,490,000      4,635,655            7,176                         1,490,000
Office and research facility
  leased to Lennar
  Corporation                      4,880,639        570,000      6,759,843                                            570,000
Office and research facility
  leased to Buffets, Inc.         11,290,781      4,225,000     15,518,481            1,420                         4,225,000
Distribution and warehouse
  facility leased to Earle
  M. Jorgensen Company             3,718,948        570,000      5,869,790           39,219                           570,000
</TABLE>

<TABLE>
<CAPTION>
                                Gross Amount at which Carried
                                      at Close of Period
                                      ------------------
                                                                                                             Life on which
                                                                                                            Depreciation in
                                                                                                            Latest Statement
                                                                  Accumulated                                  of Income
         Description             Buildings         Total        Depreciation (d)      Date Acquired           is Computed
         -----------             ---------         -----        ----------------      -------------           -----------
<S>                             <C>            <C>              <C>                <C>                      <C>
Operating Method:
Retail and service facility
  leased to Fitness                                                                December 29, 1999 and
  Holdings, Inc.                   9,340,221       12,260,221         771,389        December 28, 2000           40 yrs.

Office and research facility
  leased to West Union
  Corporation                      4,569,880        5,509,880         433,187        January 12, 2000            40 yrs.
Office and warehouse
  facility leased to Barjan
  Products, LLC                   11,832,051       12,332,051         912,625        February 3, 2000            40 yrs.
Industrial and manufacturing
  facility leased to Stellex
  Technologies, Inc.              16,415,892       19,347,892       1,590,290        February 29, 2000           40 yrs.
Manufacturing and
  distribution facility
  leased to APW North
  America Inc.                    24,858,868       29,438,868       2,252,835          May 30, 2000              40 yrs.
Distribution and warehouse
  facility leased to
  Langeveld International,
  Inc.                             7,969,835        8,679,835         621,125         June 29, 2000              40 yrs.
Retail and services facility
  leased to Galyan's Trading
  Company                         25,982,953       33,812,953       2,243,637         June 29, 2000              40 yrs.
Land leased to Advanced
  Paradigm, Inc.                                   14,600,000                       September 21, 2000            N/A
Industrial and manufacturing
  facility leased to
  Transcore Holdings, Inc.         4,642,831        6,132,831         382,066       September 25, 2000           40 yrs.
Office and research facility
  leased to Lennar
  Corporation                      6,759,843        7,329,843         556,279       September 26, 2000           40 yrs.
Office and research facility
  leased to Buffets, Inc.         15,519,901       19,744,901       1,277,141       September 28, 2000           40 yrs.
Distribution and warehouse
  facility leased to Earle
  M. Jorgensen Company             5,909,009        6,479,009         486,132       September 29, 2000           40 yrs.
</TABLE>

                                       29
<PAGE>

                 CORPORATE PROPERTY ASSOCIATES 14, INCORPORATED

             SCHEDULE III - REAL ESTATE and ACCUMULATED DEPRECIATION

                             as of December 31, 2003

<TABLE>
<CAPTION>

                                                  Initial Cost to Company
                                                  -----------------------

                                                                                 Costs            Increase
                                                                               Capitalized       (Decrease)
                                                                             Subsequent to         in Net
         Description            Encumbrances      Land         Buildings     Acquisition (a)    Investment (b)       Land
         -----------            ------------      ----         ---------     ---------------    --------------       ----
<S>                             <C>            <C>            <C>            <C>               <C>               <C>
Operating Method:
Distribution and warehouse
  facility leased to
  Institutional Jobbers
  Company                         12,876,605        650,000     16,889,267          409,990                           650,000
Land leased to Towne
  Holdings, Inc.                   2,319,413      4,100,000                                                         4,100,000
Office facility leased to
  Newpark Resources, Inc.          2,485,358        660,000      3,004,921                                            660,000
Office and research facility
  leased to Federal Express
  Corporation                     43,697,946      3,154,425     70,645,575           12,000                         3,154,425
Retail, service,
  distribution and warehouse
  facility leased to The
  Bon-Ton Stores, Inc.             7,298,110      1,974,000     10,067,885            2,900                         1,974,000
Distribution and warehouse
  facility leased to McCoy,
  Inc.                             4,032,872      1,025,000      4,530,120            9,419                         1,025,000
Industrial and manufacturing
  facility leased to
  Metaldyne Company LLC           16,356,965      4,140,000     23,822,057            7,859                         4,140,000
Retail and service facility
  leased to Celestica
  Corporation                     12,113,470      3,348,824      9,275,468        8,941,752                         3,348,824
Industrial and manufacturing
  facility leased to Gerber
  Scientific, Inc.                12,297,876      1,555,400     18,822,872          250,000                         1,555,400
Industrial and manufacturing
  facility leased to
  Meridian Automotive
  Systems, Inc.                    7,185,542      1,370,000      2,671,897        6,298,329                         1,370,000
Industrial and manufacturing
  facility leased to
  Waddington North America,
  Inc.                            10,787,739      4,398,000     13,418,144        3,723,160                         4,643,000
Industrial and manufacturing
  facility leased to New
  Creative Enterprises, Inc.       9,809,192      2,000,000     12,869,110                                          2,000,000
</TABLE>

<TABLE>
<CAPTION>

                                 Gross Amount at which Carried
                                      at Close of Period
                                      ------------------
                                                                                                             Life on which
                                                                                                            Depreciation in
                                                                                                            Latest Statement
                                                                  Accumulated                                  of Income
         Description             Buildings         Total        Depreciation (d)      Date Acquired           is Computed
         -----------             ---------         -----        ----------------      -------------           -----------
<S>                             <C>            <C>              <C>                <C>                      <C>
Operating Method:
Distribution and warehouse
  facility leased to
  Institutional Jobbers
  Company                         17,299,257       17,949,257       1,387,936         October 6, 2000            40 yrs.
Land leased to Towne
  Holdings, Inc.                                    4,100,000                        October 30, 2000             N/A
Office facility leased to
  Newpark Resources, Inc.          3,004,921        3,664,921         228,499        December 1, 2000            40 yrs.
Office and research facility
  leased to Federal Express
  Corporation                     70,657,575       73,812,000       9,807,994        December 6, 2000         7 - 40 yrs.
Retail, service,
  distribution and warehouse
  facility leased to The
  Bon-Ton Stores, Inc.            10,070,785       12,044,785         765,938        December 27, 2000           40 yrs.
Distribution and warehouse
  facility leased to McCoy,
  Inc.                             4,539,539        5,564,539         345,234        December 27, 2000           40 yrs.
Industrial and manufacturing
  facility leased to                                                                 June 29, 2000 and
  Metaldyne Company LLC           23,829,916       27,969,916       1,606,200         August 16, 2001            40 yrs.
Retail and service facility
  leased to Celestica
  Corporation                     18,217,220       21,566,044       1,187,488         August 14, 2000            40 yrs.
Industrial and manufacturing
  facility leased to Gerber
  Scientific, Inc.                19,072,872       20,628,272       1,161,249          July 30, 2001              N/A
Industrial and manufacturing
  facility leased to
  Meridian Automotive
  Systems, Inc.                    8,970,226       10,340,226         457,775        November 16, 2000           40 yrs.
Industrial and manufacturing
  facility leased to
  Waddington North America,
  Inc.                            16,896,304       21,539,304         957,090         April 30, 2001          7 - 40 yrs.
Industrial and manufacturing
  facility leased to New
  Creative Enterprises, Inc.      12,869,110       14,869,110         737,293        September 6, 2001           40 yrs.
</TABLE>

                                       30

<PAGE>

                 CORPORATE PROPERTY ASSOCIATES 14, INCORPORATED

             SCHEDULE III - REAL ESTATE and ACCUMULATED DEPRECIATION

                             as of December 31, 2003

<TABLE>
<CAPTION>

                                                  Initial Cost to Company
                                                  -----------------------
                                                                                 Costs
                                                                               Capitalized        Increase
                                                                             Subsequent to    (Decrease) in Net
         Description            Encumbrances      Land         Buildings     Acquisition (a)    Investment (b)       Land
         -----------            ------------      ----         ---------     ---------------    --------------       ----
<S>                             <C>            <C>            <C>            <C>               <C>               <C>
Operating Method:
Retail and service facility
  leased to Lincoln
  Technical Institute, Inc.        6,126,905      2,486,384      7,601,852                                          2,486,384
Manufacturing and
  distribution facility
  leased to Gibson Guitar,
  Inc.                            11,774,386      3,900,000     17,937,226           13,947         (293,545)       3,900,000
Office and Research facility
  leased to Nortel Networks
  Limited                         29,493,209      3,400,000     45,053,608                                          3,400,000
Industrial and manufacturing
  facility leased to Perkin
  Elmer, Inc. - Finland           24,105,314        801,195     23,389,834           81,315        9,710,691        1,136,644
Retail and service
  facilities leased to
  Petsmart, Inc.                  42,428,290     17,100,000     54,742,917                                         17,100,000
Distribution and warehouse
  facility leased to Nexpak
  Corporation                      7,678,985      2,167,000     11,445,566            5,231                         2,167,000
Distribution and warehouse
  facility leased to Nexpak
  Corporation - Netherlands        6,331,729      2,230,224      3,360,091                         2,217,842        3,161,213
Multiplex motion picture
  theater leased to Rave
  Review Cinemas, LLC                             3,200,000      3,066,397        6,799,722       (4,112,076)       3,685,000
Office building in Lindon,
  Utah partially leased to
  Wasatch Summit LLC                              1,390,000      1,122,716        6,154,192                         1,390,000
Warehouse, distribution,
  office, and industrial
  facility to PW Eagle, Inc.       8,084,905      6,050,000      8,198,138                                          6,050,000
Distribution and Warehouse
  facility leased to Heafner
  Tire Group, Inc.                 8,645,813      1,860,000     12,851,675                                          1,860,000
Warehouse and distribution
  facility leased to
  Carrefour France, SAS          102,310,644     15,724,087     75,210,660        9,761,339       36,248,565       23,369,118
Warehouse, distribution, and
  office facility leased to
  Katun Corporation               18,774,473      3,260,000     26,009,123                                          3,260,000
</TABLE>

<TABLE>
<CAPTION>

                                 Gross Amount at which Carried
                                      at Close of Period
                                      ------------------
                                                                                                             Life on which
                                                                                                            Depreciation in
                                                                                                            Latest Statement
                                                                  Accumulated                                  of Income
         Description             Buildings         Total        Depreciation (d)      Date Acquired           is Computed
         -----------             ---------         -----        ----------------      -------------           -----------
<S>                             <C>            <C>              <C>                <C>                      <C>
Operating Method:
Retail and service facility
  leased to Lincoln
  Technical Institute, Inc.        7,601,852       10,088,236         388,441        December 28, 2001           40 yrs.
Manufacturing and
  distribution facility
  leased to Gibson Guitar,
  Inc.                            17,657,628       21,557,628       1,248,161         March 19, 2001             40 yrs.
Office and Research facility
  leased to Nortel Networks
  Limited                         45,053,608       48,453,608       2,299,610        December 19, 2001           40 yrs.
Industrial and manufacturing
  facility leased to Perkin
  Elmer, Inc. - Finland           32,846,391       33,983,035       1,687,760        December 28, 2001           40 yrs.
Retail and service
  facilities leased to
  Petsmart, Inc.                  54,742,917       71,842,917       2,908,664        November 28, 2001           40 yrs.
Distribution and warehouse
  facility leased to Nexpak
  Corporation                     11,450,797       13,617,797         799,072          March 28, 2001            40 yrs.
Distribution and warehouse
  facility leased to Nexpak
  Corporation - Netherlands        4,646,944        7,808,157         300,317          June 29, 2001             40 yrs.
Multiplex motion picture
  theater leased to Rave
  Review Cinemas, LLC              5,269,043        8,954,043         332,139        December 7, 2000            40 yrs.
Office building in Lindon,
  Utah partially leased to
  Wasatch Summit LLC               7,276,908        8,666,908         360,513        December 27, 2000           40 yrs.
Warehouse, distribution,
  office, and industrial
  facility to PW Eagle, Inc.       8,198,138       14,248,138         384,204        February 28, 2002           40 yrs.
Distribution and Warehouse
  facility leased to Heafner
  Tire Group, Inc.                12,851,675       14,711,675         577,194          March 26, 2002            40 yrs.
Warehouse and distribution
  facility leased to
  Carrefour France, SAS          113,575,533      136,944,651       4,696,390          March 26, 2002            40 yrs.
Warehouse, distribution, and
  office facility leased to
  Katun Corporation               26,009,123       29,269,123         948,231          July 5, 2002              40 yrs.
</TABLE>

                                       31

<PAGE>

                 CORPORATE PROPERTY ASSOCIATES 14, INCORPORATED

             SCHEDULE III - REAL ESTATE and ACCUMULATED DEPRECIATION

                             as of December 31, 2003

<TABLE>
<CAPTION>

                                                  Initial Cost to Company
                                                  -----------------------

                                                                                 Costs
                                                                               Capitalized        Increase
                                                                             Subsequent to    (Decrease) in Net
         Description            Encumbrances      Land         Buildings     Acquisition (a)    Investment (b)       Land
         -----------            ------------      ----         ---------     ---------------    --------------       ----
<S>                             <C>            <C>            <C>            <C>               <C>               <C>
Operating Method:
Industrial facility leased
  to Katun Corporation -
  Netherlands                      6,847,332      2,374,404      3,864,260                         1,603,239        3,013,680
Industrial facility leased
  to Tower Automotive, Inc.       19,619,558      4,390,000     30,336,328                                          4,390,000
Educational facility leased
  to Career Education Corp.       12,470,345      3,200,000     15,415,229        1,086,974                         3,200,000
                                ------------   ------------   ------------    -------------     ------------     ------------
                                $635,161,209   $183,653,756   $746,609,010    $ 103,615,920     $ 38,664,716     $194,449,885
                                ============   ============   ============    =============     ============     ============
</TABLE>

<TABLE>
<CAPTION>
                                Gross Amount at which Carried
                                      at Close of Period
                                      ------------------
                                                                                                             Life on which
                                                                                                            Depreciation in
                                                                                                            Latest Statement
                                                                  Accumulated                                  of Income
         Description             Buildings         Total        Depreciation (d)      Date Acquired           is Computed
         -----------             ---------         -----        ----------------      -------------           -----------
<S>                             <C>            <C>              <C>                <C>                      <C>
Operating Method:
Industrial facility leased
to Katun Corporation -
  Netherlands                      4,828,223        7,841,903         176,854          July 5, 2002
Industrial facility leased
  to Tower Automotive, Inc.       30,336,328       34,726,328       1,295,614        August 10, 2002             40 yrs.
Educational facility leased
  to Career Education Corp.       16,502,203       19,702,203         219,444         August 10, 2002            40 yrs.
                                ------------   --------------     -----------
                                $878,093,517   $1,072,543,402     $62,105,338
                                ============   ==============     ===========
</TABLE>

                                       32
<PAGE>

                 CORPORATE PROPERTY ASSOCIATES 14, INCORPORATED

             SCHEDULE III - REAL ESTATE and ACCUMULATED DEPRECIATION

                             as of December 31, 2003

<TABLE>
<CAPTION>
                                                                                   Costs Capitalized        Increase
                                                                                     Subsequent to     (Decrease) in Net
                                                       Initial Cost to Company        Acquisition       Investments (b)
                                                       -----------------------        -----------       ---------------
           Description                Encumbrances     Land          Buildings
           -----------                ------------     ----          ---------
<S>                                   <C>            <C>            <C>            <C>                 <C>
Direct Financing Method:

Industrial/manufacturing
  facilities leased to Atrium
  Companies, Inc.                       12,863,291   $    459,608   $ 20,426,564                         $ (3,191,407)

Multiplex theater facility leased
  to Consolidated Theaters
  Holding, G.P                           6,991,965                    10,818,996     $   854,117              483,380

Office and research facility
  leased to Advance Paradigm, Inc.      15,093,285                    25,414,917

Distribution and warehouse
  facility leased to Towne
  Holdings, Inc.                         2,362,503                     4,172,251           3,920

Multiplex motion picture theater
  leased to Rave Review Cinemas,
  LLC                                                                  4,112,076       2,398,737

Manufacturing and distribution
  facility leased to BLP Group plc       6,557,330                     8,383,364           7,099            2,305,486

Industrial and manufacturing
  facility leased to Collins and
  Aikman Corporation                    16,502,121      2,961,000     24,473,555          20,257

Office facility leased to UTI
  Holdings, Inc. and Nascar
  Technical Institute                    6,643,119      1,600,000      9,275,962         130,053             (202,686)
                                       -----------   ------------   ------------     -----------        -------------

                                       $67,013,614   $  5,020,608   $107,077,685     $ 3,414,183        $    (605,227)
                                       ===========   ============   ============     ===========        =============
</TABLE>

<TABLE>
<CAPTION>
                                        Gross Amount
                                     at which Carried at
                                       Close of Period
                                       ---------------
           Description                     Total             Date Acquired
           -----------                     -----             -------------
<S>                                  <C>                   <C>
Direct Financing Method:

Industrial/manufacturing
  facilities leased to Atrium
  Companies, Inc.                       $ 17,694,765       November 18, 1999

Multiplex theater facility leased
  to Consolidated Theaters
  Holding, G.P                            12,156,493       September 22, 1999

Office and research facility
  leased to Advance Paradigm, Inc.        25,414,917       September 21, 2000

Distribution and warehouse
  facility leased to Towne
  Holdings, Inc.                           4,176,171       October 30, 2000

Multiplex motion picture theater
  leased to Rave Review Cinemas,
  LLC                                      6,510,813       December 7, 2000

Manufacturing and distribution
  facility leased to BLP Group plc        10,695,949       January 9, 2001

Industrial and manufacturing
  facility leased to Collins and
  Aikman Corporation                      27,454,812       September 28, 2001

Office facility leased to UTI
  Holdings, Inc. and Nascar
  Technical Institute                     10,803,329       February 11, 2002
                                        ------------

                                        $114,907,249
                                        ============

</TABLE>

                                       33
<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
                                and SUBSIDIARIES

                       NOTES to SCHEDULE III - REAL ESTATE
                          and ACCUMULATED DEPRECIATION

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

(b)      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)      At December 31, 2003, the aggregate cost of real estate owned by
         CPA(R):14 and its subsidiaries for Federal income tax purposes
         $942,085,146.

(d)

<TABLE>
<CAPTION>
                                                         Reconciliation of Real Estate Accounted for
                                                         -------------------------------------------
                                                                Under the Operating Method
                                                                --------------------------
                                                                         December 31,
                                                                         ------------
                                                               2003                        2002
                                                               ----                        ----
<S>                                                      <C>                          <C>
Balance at beginning of year                             $1,010,142,307               $  799,046,644
Additions                                                    19,988,102                  189,179,533
Reclassification from real estate under construction         14,723,082                      571,164
Reclassification to direct financing lease, net of
reclassification from direct financing lease                   (729,353)                           -
Foreign currency translation adjustment                      28,419,264                   21,344,966
                                                         --------------               --------------
Balance at close of year                                 $1,072,543,402               $1,010,142,307
                                                         ==============               ==============
</TABLE>

<TABLE>
<CAPTION>
                                                          Reconciliation of Accumulated Depreciation
                                                          ------------------------------------------
                                                                          December 31,
                                                                          ------------
                                                               2003                         2002
                                                               ----                         ----
<S>                                                        <C>                           <C>
Balance at beginning of year                               $38,682,696                   $17,728,004
Depreciation expense                                        22,795,344                    20,698,586
Reclassification to direct financing lease                    (236,973)                            -
Foreign currency translation adjustment                        864,271                       256,106
                                                           -----------                   -----------
Balance at close of year                                   $62,105,338                   $38,682,696
                                                           ===========                   ===========
</TABLE>

                                       34
<PAGE>

                                                         APPENDIX A TO FORM 10-K

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

                                                              2003 ANNUAL REPORT

<PAGE>

SELECTED FINANCIAL DATA

(In thousands except per share and share amounts)

<TABLE>
<CAPTION>
                                           2003              2002              2001            2000              1999
                                           ----              ----              ----            ----              ----
<S>                                    <C>               <C>               <C>             <C>                <C>
OPERATING DATA:

     Revenues                            $128,452          $112,356        $   67,141      $   42,540         $    9,990

     Income from continuing
       operations  (1)                     33,820            29,861            18,237          21,438              7,645

     Net income                            33,820            30,266            18,377          21,577              7,678

     Basic and diluted earnings
       from continuing
       operations per share                   .51               .45               .36             .60                .39

     Basic and diluted earnings
       per share                              .51               .45               .36             .60                .39

     Dividends paid                        50,173            48,581            32,811          21,466              9,781

     Dividends declared per share             .76               .75               .71             .67                .65

     Weighted average shares
     outstanding - basic               66,638,026        66,193,674        51,422,168      32,721,141         19,909,834

     Payment of mortgage
     principal(2)                           9,234             6,543             2,557             628                144

BALANCE SHEET DATA:

     Total consolidated assets          1,345,747         1,319,897         1,097,238         645,762            331,063

      Long-term obligations (3)           710,346           678,401           471,942         224,015             54,350
</TABLE>

(1)      Includes loss from sale of real estate in 2001.

(2)      Represents scheduled mortgage principal amortization paid.

(3)      Represents mortgage obligations and deferred acquisition fees due after
         more than one year.

                                      -1-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS

(dollar amounts in thousands)

Overview

The following discussion and analysis of financial condition and results of
operations of Corporate Property Associates 14 Incorporated ("CPA(R):14") should
be read in conjunction with the consolidated financial statements and notes
thereto for the year ended December 31, 2003. The following discussion includes
forward-looking statements. Forward-looking statements, which are based on
certain assumptions, describe future plans, strategies and expectations of
CPA(R):14. Forward-looking statements discuss matters that are not historical
facts. Because they discuss future events or conditions, forward-looking
statements may include words such as "anticipate", "believe", "estimate",
"intend", "could", "should", "would", "may", or similar expressions. Do not
unduly rely on forward-looking statements. They give our expectations about the
future and are not guarantees, and speak only as of the date they are made. Such
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievement of CPA(R):14 to be
materially different from the results of operations or plan expressed or implied
by such forward looking statements. The risk factors are fully described in Item
1 of this Annual Report on Form 10-K. Accordingly, such information should not
be regarded as representations by CPA(R):14 that the results or conditions
described in such statements or objectives and plans of CPA(R):14 will be
achieved.

CPA(R):14 was formed in 1997 for the purpose of engaging in the business of
investing in and owning commercial and industrial real estate. Between November
1997 and November 2001, CPA(R):14 raised $657,943 in two "best efforts" public
offerings of common stock. CPA(R):14 used the proceeds from the public offerings
along with limited recourse mortgage financing to purchase properties and enter
into long-term net leases with corporate tenants. Substantially all of
CPA(R):14's net leases have been structured to place certain economic burdens of
ownership on these corporate tenants by requiring them to pay the costs of
maintenance and repair, insurance and real estate taxes. The lease obligations
are unconditional. When possible, CPA(R):14 also negotiates guarantees of the
obligations from the parent company of the lessees. The leases have generally
been structured to include periodic rent increases that are stated or based on
increases in the Consumer Price Index ("CPI") or, for certain retail properties,
may provide for additional rents based on sales in excess of a specified base
amount. In addition to investing directly, CPA(R):14 may also acquire interests
in real estate through joint ventures. These joint ventures are generally with
affiliates.

As a real estate investment trust ("REIT"), CPA(R):14 is not subject to federal
income taxes on amounts distributed to shareholders provided it meets certain
conditions including distributing at least 90% of its REIT taxable income to its
shareholders. The primary objectives of CPA(R):14 are to provide rising cash
flow and pay quarterly dividends at an increasing rate and to protect its
investors from the effects of inflation through rent escalation provisions,
property appreciation, tenant credit improvement and regular paydown of limited
recourse mortgage debt. In addition, CPA(R):14 has successfully negotiated
grants of common stock warrants from selected tenants and expects to realize the
benefits of appreciation from those grants. CPA(R):14 cannot guarantee that its
objectives will be ultimately realized.

CPA(R):14 is advised by W. P. Carey & Co. LLC ("WPC"), an affiliate, pursuant to
an Advisory Agreement. CPA(R):14's Advisory Agreement is renewable annually by
Independent Directors who are elected by CPA(R):14's shareholders. In connection
with each renewal, WPC is required to provide the Independent Directors with a
comparison of the fee structure with several similar companies. The Advisory
Agreement also provides, commencing in 2003, that an independent portfolio
valuation be performed annually. The portfolio valuation is used to determine
the asset base for calculating asset management and performance fees. Until the
initial valuation is performed, the fees are calculated based on the historical
cost of the purchased real estate assets.

Operating segments are components of an enterprise about which financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. Management evaluates the performance of CPA(R):14's portfolio of
properties as a whole, rather than by identifying discrete operating segments.
This evaluation includes assessing CPA(R):14's ability to meet distribution
objectives, increase the dividend and increase value by evaluating potential
investments in single tenant net lease real estate and by seeking favorable
limited recourse mortgage financing opportunities. As of December 31, 2003,
CPA(R):14 operates in one segment, real estate operations, and owned properties
in the United States, the Netherlands, Finland, France and the United Kingdom.

Management evaluates the results of CPA(R):14 with a primary focus on the
ability to generate cash flow necessary to meet its investment objectives of
overall property appreciation and increasing its distribution rate to its
shareholders.

                                      -2-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED

(dollar amounts in thousands)

As a result, Management's assessment of operating results gives less emphasis to
the effect of unrealized gains and losses which may cause fluctuations in net
income for comparable periods but has no impact on cash flow and to other
noncash charges such as depreciation and impairment charges. While impairment
charges are intended to reflect an actual or potential decrease in the value of
an asset, accounting principles do not permit increasing an asset to fair value
when such fair value exceeds the asset's carrying value (historical cost less
accumulated depreciation). Management believes that as the portfolio matures
there is a potential for a substantial increase in the value of the portfolio
and that any increase will not be reflected in its financial statements. In
evaluating cash flow from operations, Management includes equity distributions
that are included in investing activities to the extent that the distributions
in excess of equity income is the result of noncash charges such as depreciation
and amortization. For the year ended December 31, 2003, cash flow generated from
operations was greater than dividends paid but not sufficient to fully meet
other obligations including paying scheduled mortgage principal payments and
making distributions to minority interests which hold ownership interests in
several of CPA(R):14's properties. Such deficit is met from existing cash
reserves. Management expects based on its projections that over the long-term
cash flow from operations and equity investments will meet the objective of
increasing the distribution rate and meeting other cash obligations. CPA(R):14
still has a significant amount of cash which is available for investment in real
estate. It is likely that additional investments will be made with affiliates.
As of December 31, 2003, CPA(R):14 has approximately $55,000 of cash which it
believes is in excess of its operating needs. These funds are currently invested
in money market instruments which are bearing interest at historically low
yields; however, Management intends to invest these funds in real estate
investments which Management and the Investment Committee of the Advisor believe
are suitable. While the results of operations for the years presented in the
accompanying consolidated financial statements are not fully comparable because
CPA(R):14 has not fully invested its funds, income from continuing operations
before gains has reflected increases from year to year. Cash flow from
operations and equity investments in 2003 would have increased however changes
in other operating assets and liabilities such as prepaid rents reflected a net
use of cash. CPA(R):14's operating cash flow may be affected by such short-term
fluctutations. Management's evaluation of CPA(R):14's potential for generating
cash flow is based on a long-term analysis and, therefore, its evaluation of the
ability to generate cash flow does not take into account short-term changes in
assets and liabilities for items such as changes in prepaid rents.

Results of Operations

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Net income for the year ended December 31, 2003 increased by $3,554 to $33,820
and income from continuing operations before gains increased by $3,294 to
$32,800 as compared with 2002. The results of operations for 2003 included the
benefit from the forfeiture of a $2,588 security deposit to CPA(R):14 by a
former lessee and noncash impairment charges of $3,103 on real estate. The
increases in income from continuing operations, net of the forfeiture benefit
and impairment charge, are due to an increase in CPA(R):14's real estate asset
base including its equity investments and the completion of build-to-suit
projects.

Lease revenues increased by $11,805 in 2003, primarily as a result of completing
build-to-suit commitments and purchasing real estate. In July 2003, CPA(R):14
funded an expansion of an existing property leased to Carrefour France SAS in Le
Mans, France. Additional annual rent from the expansion will provide
approximately $1,131, based on current exchange rates. CPA(R):14 also completed
build-to-suit projects with Waddington North America, Inc., Career Education
Group and Rave Motion Pictures LLC during the year which are providing an
increase in aggregate annual lease revenues of $2,691. During 2002, CPA(R):14
purchased properties and entered into leases with Carrefour France SA, UTI
Holdings, Inc., Tower Automotive, Inc., PW Eagle, Inc., American Tire
Distributors and Katun Corporation, which provided for $9,607 of the increases
in lease revenues in 2003 as compared with 2002.

In March 2003, Fleming Companies, Inc. filed a voluntary petition of bankruptcy
and subsequently terminated its lease at a property in Grand Rapids, Michigan.
An affiliate owns a 40% minority interest in the property. CPA(R):14's share of
annual rent from the Fleming lease was $925. On January 1, 2004, the Company
entered into a net lease with The Retail Distribution Group for the property at
an initial annual rent of $903, of which the Company's share is $361. The Retail
Distribution lease provides for certain reductions of rent as it vacated another
property which is still subject to lease in order to lease the Grand Rapids
property. The reductions will be adjusted based on the sublease rentals Retail
Distribution receives from the other property. The Retail Distribution lease has
an initial term through August 31, 2009 with one four-year renewal term. In
November 2003, Scott Companies, Inc.

                                      -3-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED

(dollar amounts in thousands)

entered into liquidation proceedings and subsequently terminated its lease at
its property in Gardena, California. The property is being remarketed. The Scott
lease had provided lease revenues of $737. CPA(R):14 owns a property in
Rochester, Minnesota leased to Celestica Corporation. In July 2003, Celestica
vacated the property but continued to pay its $2,194 annual rent. In January
2004, CPA(R):14 agreed to assign the Celestica lease to the Mayo Foundation in
exchange for payments to the Mayo Foundation of $150 from CPA(R):14 and a
payment from Celestica. CPA(R):14 believes that this provides an overall benefit
because of Mayo's strong credit rating and its unique stature in Rochester.

More than 30 leases have rent increases scheduled in 2004. The initial term of a
lease with Best Buy, Inc. for a retail property in Torrance, California is
scheduled to expire in 2005 and contributes $1,900 of annual lease revenues.
Best Buy has not indicated whether it intends to extend its lease. BLP Group plc
leases a manufacturing and distribution facility in the United Kingdom which it
may purchase at its option in 2006. Earle M. Jorgensen Company has an option to
purchase the Kansas City, Missouri distribution and warehouse facility it leases
from CPA(R):14 in 2007. CPA(R):14 has not received any indication that the
purchase options will be exercised.

Income from equity investments increased by $7,672 for the year ended December
31, 2003, primarily as the result of acquiring interests in properties leased to
TruServ Corporation and Clear Channel Communications, Inc. in December 2002 and
Starmark Camhood, LLC in February 2003. CPA(R):14's annual distributions from
the real estate operations of these equity investments are $7,368 in 2003. The
increase in interest and other income of $4,291 during the year ended December
31, 2003 consisted of property expense reimbursements received from lessees,
interest income earned from CPA(R):14's interest in a mortgage securitization
and the forfeiture of the $2,588 security deposit. Reimbursements from tenants
of $2,214 were used to pay real estate taxes and other property expenses that a
lessee generally incurs under a net lease, and the reimbursements, net of the
expenses, have no effect on net income. CPA(R):14 acquired its subordinated
interest in the mortgage securitization in August 2002 along with three
affiliates and earned interest income of $792 from the investment in 2003, as
compared with $278 in 2002. Interest income from cash investments decreased by
$1,415 for the current year as CPA(R):14 has used its cash to purchase real
estate.

Interest expense for the year ended December 31, 2003 increased by $7,641 as a
result of obtaining $198,455 and $27,477 of mortgage financing in 2002 and 2003,
respectively. Increases in depreciation were directly attributable to the
increase in real estate assets purchased in 2002 and 2003. Property expense for
the year increased by $5,902 due to expenses which have been reimbursed by
lessees and an increase in asset management and performance fees of $4,072 since
2002. The asset-based fees increased as a result of the growth of CPA(R):14's
asset base. Property expenses increased due to the vacancies at the Grand Rapids
and Gardena properties. The re-leasing of the Grand Rapids property will
alleviate a portion of these carrying costs, and if the Gardena property is
re-leased, CPA(R):14 expects the lessee to pay or reimburse a portion or all of
such costs. Carrying costs on the Grand Rapids property were approximately $545
in 2003 and estimated carrying costs for the Gardena property are $196. General
and administrative expense increased by $1,967 for the year due to an increase
in investor-related costs and increases in certain variable costs which
increased as CPA(R):14's asset base increased.

As of December 31, 2003, CPA(R):14 recognized realized gains on foreign currency
transactions of $349 and an unrealized foreign currency gain of $691, offset by
an unrealized loss of $20 on its holdings of warrants for common stocks. In
evaluating its ability to fund dividends, CPA(R):14 does not consider unrealized
gains and losses from these derivative instruments.

Because of the long-term nature of CPA(R):14's net leases, inflation and
changing prices have not unfavorably affected CPA(R):14's revenues and net
income. CPA(R):14's net leases generally have rent increases based on formulas
indexed to increases in the CPI, sales overrides or other periodic increases
which are designed to increase lease revenues in the future. Most of CPA(R):14's
leases provide for rent increases, either based on fixed amounts or a formula
indexed to increases in CPI. Over the past several years, the CPI has increased
within a range of approximately 1.5% to 3% per year.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Net income for the year ended December 31, 2002 is not directly comparable to
net income for the year ended December 31, 2001 as a result of substantial
increase in CPA(R):14's asset base. Net income was $30,266 in 2002 as compared
to $18,377 in 2001. Since December 31, 2001, CPA(R):14's asset base increased by
more than $217,371,

                                      -4-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED

(dollar amounts in thousands)

or 20%, and by more than 100% since December 31, 2000. The asset base is
projected to continue to increase until available cash is fully invested in real
estate.

Income from continuing operations before gains and losses increased by $11,001
for the year ended December 31, 2002 as compared with the year ended December
31, 2001. The increase was due to an increase in lease revenues and an increase
in income from equity investments, which was offset, in part, by increases in
interest expense, depreciation, property and general and administrative
expenses. As a result of the on-going acquisition activity, CPA(R):14's revenue
and expense are projected to increase.

Lease revenues increased primarily as a result of real estate purchases and the
completion of built-to-suit projects during 2001 and 2002. During 2002,
CPA(R):14 purchased properties and entered into new leases with American Tire
Distributors, Carrefour, PW Eagle, UTI Holdings, Tower Automotive, Career
Education Group and Katun. These leases will provide annual revenues of $22,728
($11,594 of cash flow after debt service). These new leases contributed $14,186
of lease revenues in 2002. CPA(R):14 completed new acquisitions with thirteen
leases in 2001 and the results for 2002 reflected the first full year of results
from those lessees. Lease revenues also benefited from scheduled rent increases
on existing leases. Lease revenues for the year ended December 2002 reflect a
reduction of $605 as a result of the lease termination of the Burlington Motor
Carriers, Inc. lease in March 2002 pursuant to its reorganization in bankruptcy.
Annual revenues from the Burlington lease were $833.

Income from equity investments increased primarily due to the acquisition of
properties leased to Special Devices, Inc. and Clear Channel Communication, Inc.
in June 2001 and December 2002, respectively. In addition, equity income
benefited from rent increases on three existing leases. Of the $1,627 increase
in equity income from 2001, $387 was due to the acquisition of the interests in
the Special Devices and Clear Channel properties and $407 was due to rent
increases. An equity investment in properties leased to CheckFree Corporation
has a mortgage obligation with a variable rate indexed to the London Inter-Bank
Offered Rate. The LIBOR index declined in 2002 and 2001, and CPA(R):14's share
of income from the CheckFree investment increased by approximately $265 from
2001, solely as a result of this rate reduction. Equity income is projected to
increase due to the acquisition in December 2002 of 35% and 40% interests in
limited partnerships that lease properties to TruServ Corporation and Clear
Channel, respectively.

Interest expense for the year ended December 31, 2002 increased by $23,168,
primarily from obtaining new mortgage loans. In connection with its
participation in a mortgage securitization transaction, CPA(R):14 obtained
$42,332 of limited recourse mortgage financing on previously unencumbered
properties. As a result of this transaction, annual interest expense will
increase by $3,175. The increase in depreciation expense is the result of the
increase in real estate assets. Depreciation, a noncash charge, increased by
$8,107.

The increase in general and administrative expense of $2,130 was primarily due
to an increase in investor-related costs and other costs related to the increase
in CPA(R):14's asset base. Property expense increased primarily due to increases
in asset management and performance fees which are calculated based on the
Average Invested Assets (i.e. real estate assets) of CPA(R):14. Effective
January 1, 2003, asset management and performance fees are being determined
based on an independent valuation of CPA(R):14's real estate assets which will
be performed annually. Asset-based fees may be expected to increase as a result
of appreciation in the value of CPA(R):14's real estate assets and the
acquisition of properties. Property expense also increased to reflect the costs
of the initial valuation of CPA(R):14's real estate assets.

As of December 31, 2002, CPA(R):14 recognized an unrealized gain of $385 on its
holdings of warrants for common stocks and unrealized foreign currency loss of
$30. In evaluating its ability to fund dividends, CPA(R):14 does not consider
unrealized gains and losses from these derivative instruments. Discontinued
operations include a gain on sale of real estate property in Greenville, Texas
of $333, which was sold in June 2002, and $72 from the operations of the
Greenville property for the period prior to the sale.

Financial Condition

CPA(R):14's cash has decreased by $19,432 since December 31, 2002, primarily as
a result of acquiring new real estate investments. CPA(R):14 is using its cash
to purchase new properties to further diversify its portfolio, complete its
commitments on build-to-suit construction projects and maintain cash balances
sufficient to meet working capital

                                      -5-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED

(dollar amounts in thousands)

needs. As of December 31, 2003, CPA(R):14 had approximately $25,000 of cash
available for the acquisition of real estate investments.

For the year ended December 31, 2003, cash flows from operating activities and
equity investments of $60,588 were not sufficient to pay dividends to
shareholders of $50,173, meet scheduled principal payment installments on
mortgage debt of $9,234 and distribute $3,340 to minority partners ($400 from
the release of mortgage escrow funds was distributed to a minority partner).
Operating cash flow is expected to continue to increase as a result of acquiring
the Carrefour expansion and completing three build-to-suit projects, all of
which commenced paying rent in the third quarter of 2003. Annual cash flow
(lease revenues, net of property-level debt service) from the three
build-to-suit projects and the Carrefour expansion, net of property-level debt
service, is approximately $2,375. CPA(R):14's investment in Starmark is
projected to contribute annual distributions of $3,300, of which only $1,336 was
received in 2003. A portion of Starmark's rent has been used to fund certain
debt service escrow obligations which are to be reimbursed by the lessee. Based
on the projected increase in operating cash flows from the completed
build-to-suit projects and the investment in Starmark, cash flow from operations
and equity investments is expected to be sufficient to meet operating cash flow
objectives. Accordingly, CPA(R):14 expects to have sufficient cash flow to
continue increasing the distribution rate to its shareholders. Current
distributions are determined by Management's long-term projections of cash flow
and it is willing to sustain moderate cash flow deficits as the portfolio
matures.

CPA(R):14's investing activities included using $42,031 to purchase its 41%
interest in the Starmark properties, to complete the Waddington, Career
Education and Rave projects and to acquire the Carrefour expansion. In July
2003, CPA(R):14 used $10,422 for the Carrefour expansion (including obtaining
mortgage financing of $8,203 based on the exchange rate for the Euro at the
acquisition date). The annual cash flow from the expansion is projected to be
approximately $430, based on current exchange rates. In January 2003, CPA(R):14
received $8,722 from its share of mortgage proceeds obtained by an equity
investee. CPA(R):14 also paid an annual installment of deferred acquisition fees
in January 2003 of $2,373.

In addition to paying dividends to shareholders, principal payments on mortgage
debt and paying distributions to minority interest owners, CPA(R):14's financing
activities included obtaining proceeds of $21,582 from mortgage loans and $1,617
from a note payable collateralized by the Carrefour property. During 2003,
CPA(R):14 obtained the $8,203 mortgage loan collateralized by the Carrefour
property and $6,680 of additional proceeds on a mortgage loan collateralized by
the Career Education property, increasing the loan on the property to $12,500.
Annual debt service on the Carrefour and Career Education properties is $596 at
current exchange rates and $746, respectively. CPA(R):14 also obtained $6,700 of
limited recourse mortgage debt collateralized by the UTI Holdings, Inc. property
in Mooresville, North Carolina, at an annual debt service of $587. CPA(R):14 has
no mortgage balloon payments scheduled until February 2008. Substantially all of
CPA(R):14's mortgages are limited recourse and bear interest at fixed rates.
Accordingly, CPA(R):14's cash flow should not be adversely affected by increases
in interest rates which are at or near historical lows. A lender on limited
recourse mortgage debt has recourse only to the property collateralizing such
debt and not to any of CPA(R):14's other assets. Unsecured financing would give
a lender recourse to all of CPA(R): 14's assets. The use of limited recourse
debt, therefore, will allow CPA(R):14 to limit its exposure of all of its assets
to any one debt obligation. Management believes that the strategy of combining
equity and limited recourse mortgage debt will allow CPA(R):14 to meet its
short-term and long-term liquidity needs and will help to diversify CPA(R):14's
portfolio and, therefore, reduce concentration of risk in any particular lessee.

In 2002, CPA(R):14 purchased a participation in a mortgage pool consisting of
$172,335 of newly-issued mortgage debt collateralized by properties and lease
assignments on properties owned by CPA(R):14 and three affiliates. CPA(R):14 and
the affiliates also purchased subordinated interests of $24,129 in which
CPA(R):14 owns a 25% interest. The subordinated interests are payable only after
all other classes of ownership receive their stated interest and related
principal payments. The subordinated interests, therefore, will be affected by
any defaults or nonpayment by lessees. As of December 31, 2003, there have been
no defaults. Three Garden Ridge Corporation properties that are owned by
affiliates are included in the mortgage pool and the lessee has filed a petition
of bankruptcy. In the event the Garden Ridge leases are terminated, cash flow
from this investment might be adversely affected.

CPA(R):14 conducts business in Europe. While CPA(R):14 recognized foreign
currency transaction gains in 2003 of $349 in connection with the transfer of
cash from foreign subsidiaries, foreign currency transaction gains and losses
were not material to CPA(R):14's results of operations for the year ended
December 31, 2003. CPA(R):14 was not subject to material foreign currency
exchange rate risk from the effects of changes in exchange rates. To date,

                                      -6-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED

(dollar amounts in thousands)

CPA(R):14 has not entered into any foreign currency forward exchange contracts
or other derivative financial instruments to hedge the effects of adverse
fluctuations in foreign currency exchange rates. CPA(R):14 has obtained limited
recourse mortgage financing at fixed rates of interest in the local currency. To
the extent that currency fluctuations increase or decrease rental revenues as
translated to dollars, the change in debt service, as translated to dollars,
will partially offset the effect of fluctuations in revenue, and, to some extent
mitigate the risk from changes in foreign currency rates. As of December 31,
2003, Carrefour, which leases properties in France, contributed 8% of lease
revenues. The leverage used on the limited recourse financing of the Carrefour
investments is higher than the average leverage on CPA(R):14's domestic real
estate investments.

Off-Balance Sheet and Aggregate Contractual Agreements

A summary of CPA(R):14's contractual obligations and commitments are as follows:

<TABLE>
<CAPTION>
(in thousands)                            Total         2004          2005         2006         2007         2008        Thereafter
                                          -----         ----          ----         ----         ----         ----        ----------
<S>                                     <C>            <C>          <C>           <C>          <C>          <C>          <C>
Obligations:
  Mortgage notes payable                $702,175       $11,093      $12,139       $13,124      $14,092      $20,275      $631,452
  Deferred acquisition fees               22,530         3,266        3,483         3,483        3,483        3,214         5,601
  Subordinated disposition fees              240                                                                              240
Commitments:
  Share of minimum rents payable
     under office cost-sharing
     agreement                             1,026           373          373           280
                                        --------       -------      -------       -------      -------      -------      --------
                                        $725,971       $14,732      $15,995       $16,887      $17,575      $23,489      $637,293
                                        ========       =======      =======       =======      =======      =======      ========
</TABLE>

In connection with the purchase of its properties, CPA(R):14 requires the
sellers to perform environmental reviews. Management believes, based on the
results of such reviews, that CPA(R):14's properties were in substantial
compliance with Federal and state environmental statutes at the time the
properties were acquired. However, portions of certain properties have been
subject to some degree of contamination, principally in connection with either
leakage from underground storage tanks, surface spills from facility activities
or historical on-site activities. In most instances where contamination has been
identified, tenants are actively engaged in the remediation process and
addressing identified conditions. Tenants are generally subject to environmental
statutes and regulations regarding the discharge of hazardous materials and any
related remediation obligations. In addition, CPA(R):14's leases generally
require tenants to indemnify CPA(R):14 from all liabilities and losses related
to the leased properties with provisions of such indemnification specifically
addressing environmental matters. The leases generally include provisions which
allow for periodic environmental assessments, paid for by the tenant, and allow
CPA(R):14 to extend leases until such time as a tenant has satisfied its
environmental obligations. Certain of the leases allow CPA(R):14 to require
financial assurances from tenants such as performance bonds or letters of credit
if the costs of remediating environmental conditions are, in the estimation of
CPA(R):14, in excess of specified amounts. Accordingly, Management believes that
the ultimate resolution of any environmental matter will not have a material
adverse effect on CPA(R):14's financial condition, liquidity or results of
operations.

Critical Accounting Estimates

CPA(R):14 makes certain judgments and uses certain estimates and assumptions
when applying accounting principles generally accepted in the United States of
America in the preparation of its consolidated financial statements that affect
the reported amount of assets, liabilities, revenues and expenses. CPA(R):14
believes its most critical accounting estimates relate to its provision for
uncollected amounts from lessees, potential impairment of assets, identification
of discontinued operations, classification of real estate assets, determining
the fair value of assets and liabilities which are "marked to market" but not
actively traded in a public market and determining the interest to be
capitalized in connection with real estate under construction. CPA(R):14's
significant accounting policies are described in the notes to the financial
statements. Certain policies, while significant, may not require the use of
estimates.

CPA(R):14 must assess its ability to collect rent and other tenant-based
receivables and determine an appropriate charge for uncollected amounts. Because
CPA(R):14's real estate operations have a limited number of lessees, Management
believes that it is necessary to evaluate the collectibility of these
receivables based on the facts and circumstances of each situation rather than
solely use statistical methods. CPA(R):14 generally recognizes a provision

                                      -7-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED

(dollar amounts in thousands)

for uncollected rents which typically ranges between 0.25% and 1% of lease
revenues (rental income and interest income from direct financing leases) and
will measure its allowance against actual rent arrearages and adjust the
percentage applied. For amounts in arrears, Management makes subjective
judgments based on its knowledge of a lessee's circumstances and may reserve for
the entire receivable amount from a lessee because there has been significant or
continuing deterioration in the lessee's ability to meet its lease obligations.
Under net leases, lessees are obligated to pay real estate taxes on behalf of
CPA(R):14; however, when a lessee is in bankruptcy, CPA(R):14 may pay the tax
obligation in order to preserve its interest in the property. If such a payment
relates to a pre-petition period, CPA(R):14 may record such payment as an
expense rather than as a receivable when it assumes the chance of reimbursement
by the lessee is unlikely. Based on its actual experience in 2003, CPA(R):14
recorded a provision equal to approximately .5% of lease revenues.

Operating real estate is stated at cost less accumulated depreciation. Costs
directly related to build-to-suit projects, primarily interest, if applicable,
are capitalized. Interest capitalized in 2003, 2002 and 2001 was $357, $808 and
$1,986, respectively. CPA(R):14 considers a build-to-suit project as
substantially completed upon the completion of improvements, but no later than a
date that is negotiated and stated in the lease. If portions of a project are
substantially completed and occupied and other portions have not yet reached
that stage, the substantially completed portions are accounted for separately.
CPA(R):14 allocates costs incurred between the portions under construction and
the portions substantially completed and only capitalizes those costs associated
with the portion under construction. CPA(R):14 does not have a credit facility
and determines an interest rate to be applied for capitalizing interest based on
an average rate on its outstanding limited recourse mortgage debt.

CPA(R):14 classifies its directly-owned leased assets for financial reporting
purposes as either real estate leased under the operating method or net
investment in direct financing leases at the inception of a lease based on
several criteria, including, but not limited to, estimates of the remaining
economic life of the leased assets and the calculation of the present value of
future minimum rents. In determining the classification of a lease, CPA(R):14
uses estimates of remaining economic life provided by independent appraisals of
the leased assets. The calculation of the present value of future minimum rents
includes determining a lease's implicit interest rate, which requires an
estimate of the residual value of leased assets as of the end of the
non-cancelable lease term. Different estimates of residual value result in
different implicit interest rates and could possibly affect the financial
reporting classification of leased assets. The contractual terms of CPA(R):14's
leases are not necessarily different for operating and direct financing leases;
however the classification is based on accounting pronouncements which are
intended to indicate whether the risks and rewards of ownership are retained by
the lessor or transferred to the lessee. Management believes that it retains
certain risks of ownership regardless of accounting classification. Assets
classified as direct financing leases are not depreciated and, therefore, the
classification of assets may have a significant impact on net income even though
it has no effect on cash flows.

CPA(R):14 also uses estimates and judgments when evaluating whether long-lived
assets are impaired. When events or changes in circumstances indicate that the
carrying amount of a property accounted for under the operating method may not
be recoverable, Management must first determine if the property will be held for
use or held for sale. Management then performs projections of cash flows, and if
such cash flows are insufficient, the assets are adjusted (i.e., written down)
to their estimated fair value. An analysis of whether a real estate asset has
been impaired requires Management to make its best estimate of market rents,
residual values and holding periods. As CPA(R):14's investment objective is to
hold properties on a long-term basis, holding periods will generally range from
five to ten years. In its evaluations, CPA(R):14 obtains market information from
outside sources; however, such information requires Management to determine
whether the information received is appropriate to the circumstances. Depending
on the assumptions made and estimates used, the estimated cash flow projected in
the evaluation of long-lived assets can vary within a range of outcomes. Because
CPA(R):14's properties are leased to single tenants, CPA(R):14 is more likely to
incur significant writedowns when circumstances affecting a tenant deteriorate
because of the possibility that a property will be vacated in its entirety. The
risk of vacancy for single tenant properties is different from the risks faced
by companies that own multi-tenant properties. Events or changes in
circumstances can result in further writedowns and impact the gain or loss
ultimately realized upon sale of the asset.

For direct financing leases, CPA(R):14 performs a review of its estimated
residual value of properties at least annually to determine whether there has
been an other than temporary decline in CPA(R):14's current estimate of residual
value of the underlying real estate assets of direct financing leases. If the
review indicates a decline in residual values that is other than temporary, a
loss is recognized and the accounting for the direct financing lease will be
revised using

                                      -8-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED

(dollar amounts in thousands)

the changed estimate, that is, a portion of the future cash flow from the lessee
will be recognized as a return of principal rather than as revenue. While an
evaluation of potential impairment of real estate accounted for under the
operating method is determined by a change in circumstances, the evaluation of a
direct financing lease can be affected by changes in long-term market conditions
even though the obligations of the lessee are being met. Changes in
circumstances include, but are not limited to, vacancy of a property not subject
to a lease and termination of a lease. CPA(R):14 may also assess properties for
impairment because it expects a lease not to be renewed and the lease is within
one year of its expiration, a lessee is experiencing financial difficulty and
Management expects that there is a reasonable probability that the lease will be
terminated in a bankruptcy organization or a property remains vacant for a
period that exceeds the period anticipated in a prior impairment evaluation.

When assets are identified by management as held for sale, CPA(R):14
discontinues depreciating the assets and estimates the sales price, net of
selling costs, of such assets. If, in management's opinion, the net sales price
of the assets which have been identified for sale is less than the net book
value of the assets, an impairment charge is recognized, and a valuation
allowance is established. To the extent that a purchase and sale agreement has
been entered into, the allowance is based on the negotiated sales price. To the
extent that CPA(R):14 has adopted a plan to sell an asset but has not entered
into a sales agreement, it will make judgments of the net sales price based on
current market information. Accordingly, the initial assessment may be greater
or less than the purchase price subsequently committed to and may result in a
further adjustment to the fair value of the property. If circumstances arise
that previously were considered unlikely and, as a result, the Company decides
not to sell a property previously classified as held for sale, the property is
reclassified as held and used. A property that is reclassified is measured and
recorded individually at the lower of (a) its carrying amount before the
property was classified as held for sale, adjusted for any depreciation expense
that would have been recognized had the property been continuously classified as
held and used, or (b) the fair value at the date of the subsequent decision not
to sell.

In 2002, CPA(R):14 acquired a subordinated interest in a mortgage trust that
consists of limited recourse loans on 62 properties that are owned by CPA(R):14
or three of its affiliates. The fair value of the interests in the trust is
determined using a discounted cash flow model with assumptions of market rates
and the credit quality of the underlying lessees. If there are adverse changes
in either market rates or the credit quality of the lessees, the model and,
therefore, the income recognized from the subordinated interests and the fair
value will be adjusted. CPA(R):14 measures derivative instruments, including
certain derivative instruments embedded in other contracts, if any, at fair
value and records them as an asset or liability, depending on CPA(R):14's right
or obligations under the applicable derivative contract. For derivatives
designated as fair value hedges, the changes in the fair value of both the
derivative instrument and the hedged item are recorded in earnings (i.e., the
forecasted event occurs). For derivatives designated as cash flow hedges, the
effective portions of the derivatives are reported in other comprehensive income
and are subsequently reclassified into earnings when the hedged item affects
earnings. Changes in the fair value of derivative instruments not designated as
hedging and ineffective portions of hedges are recognized in earnings in the
affected period. To determine the value of warrants for common stock which are
classified as derivatives, various estimates are included in the options pricing
model used to determine the value of a warrant.

In connection with the acquisition of properties, purchase costs will be
allocated to the tangible and intangible assets and liabilities acquired based
on their estimated fair values. The value of the tangible assets, consisting of
land, buildings and tenant improvements, will be determined as if vacant.
Intangible assets including the above-market or below-market value of leases,
the value of in-place leases and the value of tenant relationships will be
recorded at their relative fair values.

The value attributed to tangible assets will be determined in part using a
discount cash flow model which is intended to approximate what a third party
would pay to purchase the property as vacant and rent at "market" rates. In
applying the model CPA(R):14 assumes that the disinterested party would sell the
property at the end of a market lease term. Assumptions used in the model are
property-specific as it is available; however, when certain necessary
information is not available, CPA(R):14 will use available regional and
property-type information. Assumptions and estimates include a discount rate or
internal rate of return, marketing period necessary to put a lease in place,
carrying costs during the marketing period, leasing commissions and tenant
improvements allowances, market rents and growth factors of such rents, market
lease term and a cap rate to be applied to an estimate of market rent at the end
of the market lease term.

                                      -9-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED

(dollar amounts in thousands)

Above-market and below-market lease intangibles will be based on the difference
between the market rent and the contractual rents and will be discounted to a
present value using an interest rate reflecting CPA(R):14's assessment of the
risk associated with the lease acquired. CPA(R):14 acquires properties subject
to net leases and considers the credit of the lessee in negotiating the initial
rent.

The total amount of other intangible assets will be allocated to in-place lease
values and tenant relationship intangible values based on our evaluation of the
specific characteristics of each tenant's lease and our overall relationship
with each tenant. Characteristics considered in allocating these values include
the nature and extent of the existing relationship with the tenant, prospects
for developing new business with the tenant, the tenant's credit quality and the
expectation of lease renewals, among other factors. The aggregate value of other
intangible assets acquired will be measured based on the difference between (i)
the property valued with an in-place lease adjusted to market rental rates and
(ii) the property valued as if vacant. Independent appraisals or our estimates
will be used to determine these values.

Factors considered include the estimated carrying costs of the property during a
hypothetical expected lease-up period, current market conditions and costs to
execute similar leases. Estimated carrying costs will include real estate taxes,
insurance, other property operating costs and estimates of lost rentals at
market rates during the hypothetical expected lease-up periods, based on
assessments of specific market conditions. Estimated costs to execute leases
include commissions and legal costs to the extent that such costs are not
already incurred with a new lease that has been negotiated in connection with
the purchase of the property.

Significant accounting policies are described in the notes to the consolidated
financial statements.

Accounting Pronouncements

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others," ("FIN 45") which changes the accounting for, and
disclosure of certain guarantees. Beginning with transactions entered into after
December 31, 2002, certain guarantees are required to be recorded at fair value,
which is different from prior practice, under which a liability was recorded
only when a loss was probable and reasonably estimable. In general, the change
applies to contracts or indemnification agreements that contingently require
CPA(R):14 to make payments to a guaranteed third-party based on changes in an
underlying asset, liability, or an equity security of the guaranteed party. The
adoption of the accounting provisions of FIN 45 on January 1, 2003 did not have
a material effect on CPA(R):14's financial statements.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure," which amends SFAS No. 123, Accounting
for Stock Based Compensation. SFAS No. 148 provides alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock based compensation (i.e., recognition of a charge for issuance of
stock options in the determination of income.). However, SFAS No. 148 does not
permit the use of the original SFAS No. 123 prospective method of transition for
changes to the fair value based method made in fiscal years beginning after
December 15, 2003. In addition, this Statement amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for stock based
employee compensation, description of transition method utilized and the effect
of the method used on reported results. The transition and annual disclosure
provisions for valuing stock-based compensation of SFAS No. 148 are to be
applied for fiscal years ending after December 15, 2002. CPA(R):14 does not have
any employees nor any stock-based compensation plans.

On January 17, 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"), the primary objective of which is to
provide guidance on the identification of entities for which control is achieved
through means other than voting rights ("variable interest entities" or "VIEs")
and to determine when and which business enterprise should consolidate the VIE
(the "primary beneficiary"). In December 2003, the FASB issued a revised FIN 46
which modifies and clarifies various aspects of the original Interpretation. FIN
46 applies when either (1) the equity investors (if any) lack one or more of the
essential characteristics of controlling financial interest, (2) the equity
investment at risk is insufficient to finance that entity's activities without
additional subordinated financial support or (3) the equity investors have
voting rights that are not proportionate to their economic interest. In addition
FIN 46 requires additional disclosures.

                                      -10-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED

(dollar amounts in thousands)

FIN 46 is effective immediately for VIEs created after January 31, 2003, and to
VIEs in which an enterprise obtains an interest after that date. For variable
interests in a VIE created or obtained prior to February 1, 2003, FIN 46 is
effective for periods ending after March 15, 2004.

CPA(R):14 has evaluated the potential impact and believes this interpretation
will not have a material impact on its accounting for its investments in
unconsolidated joint ventures as none of these investments are VIEs. CPA(R):14's
maximum loss exposure is the carrying value of its equity investments.

On April 30, 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." SFAS No. 149 amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging under SFAS No. 133. The
changes in the statement improve financial reporting by requiring that contracts
with comparable characteristics be accounted for similarly. In particular, the
statement (1) clarifies under what circumstances a contract with an initial net
investment meets the characteristics of a derivative instrument discussed in
paragraph 6(b) of SFAS No. 133, (2) clarifies when a derivative contains a
financing component, (3) amends the definition of an underlying to conform it to
language used in FIN 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others", and (4)
amends certain other existing pronouncements. SFAS No. 149 is generally
effective for contracts entered into or modified after June 30, 2003 and for
hedging relationships designated after June 30, 2003. The adoption of FASB No.
149 did not have a material effect on the financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
establishes standards for the classification and measurement of certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). In particular, it requires
that mandatorily redeemable financial instruments be classified as liabilities
and reported at fair value and that changes in their fair values be reported as
interest cost.

This statement was effective for financial instruments entered into or modified
after May 31, 2003, and otherwise is effective for CPA(R):14 as of July 1, 2003.
On November 7, 2003, the FASB indefinitely deferred the classification and
measurement provisions of SFAS No. 150 as they apply to certain mandatorily
redeemable non-controlling interests. This deferral is expected to remain in
effect while these provisions are further evaluated by the FASB. Based on the
FASB's deferral of this provision, the adoption of SFAS No. 150 did not have a
material effect on CPA(R):14's financial statements.

                                      -11-
<PAGE>

                         REPORT of INDEPENDENT AUDITORS

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

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' equity and cash flows present
fairly, in all material respects, the financial position of Corporate Property
Associates 14 Incorporated and its subsidiaries at December 31, 2003 and 2002,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 2003 in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of W. P. Carey & Co. LLC (the "Advisor"); our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by the Advisor, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

New York, New York
March 10, 2004

                                      -12-
<PAGE>

                 CORPORATE PROPERTY ASSOCIATES 14, INCORPORATED

                           CONSOLIDATED BALANCE SHEETS
                       (In thousands except share amounts)

<TABLE>
<CAPTION>
                                                                                    December 31,
                                                                                    ------------
                                                                          2003                         2002
                                                                          ----                         ----
<S>                                                                    <C>                          <C>
         ASSETS:

Real estate leased to others:
   Accounted for under the operating method
       Land                                                            $  194,450                   $  181,834
       Buildings                                                          878,093                      828,308
                                                                       ----------                   ----------
                                                                        1,072,543                    1,010,142
       Less, accumulated depreciation                                      62,105                       38,683
                                                                       ----------                   ----------
                                                                        1,010,438                      971,459
Net investment in direct financing leases                                 114,907                      113,428
Real estate under construction                                                  -                       14,723
Equity investments                                                        120,388                       99,320
Cash and cash equivalents                                                  54,675                       74,107
Marketable securities                                                       6,792                        6,258
Other assets, net of accumulated amortization of $2,360
     and $1,252 in 2003 and 2002 and allowance for
     uncollected rents of $619 and $574 in 2003 and 2002                   38,547                       40,602
                                                                       ----------                   ----------
            Total assets                                               $1,345,747                   $1,319,897
                                                                       ==========                   ==========

         LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS'
           EQUITY:

Liabilities:
Mortgage notes payable                                                 $  702,175                   $  666,740
Accrued interest                                                            4,461                        4,043
Due to affiliates                                                           4,559                        3,821
Accounts payable and accrued expenses                                       5,968                        7,898
Prepaid rental income and security deposits                                19,607                       20,642
Deferred acquisition fees payable to affiliate                             22,530                       23,170
Dividends payable                                                          12,662                       12,488
                                                                       ----------                   ----------
            Total liabilities                                             771,962                      738,802
                                                                       ----------                   ----------

Minority interest                                                          27,356                       29,206
                                                                       ----------                   ----------

Commitments and contingencies

Shareholders' equity:
Common stock, $.001 par value; authorized, 120,000,000
   shares; issued and outstanding, 67,694,702 and
   66,836,152 shares at December 31, 2003 and 2002                             68                           67
Additional paid-in capital                                                606,380                      597,852
Dividends in excess of accumulated earnings                               (64,036)                     (47,508)
Accumulated other comprehensive income                                     11,150                        6,113
                                                                       ----------                   ----------
                                                                          553,562                      556,524
Less, treasury stock at cost, 802,642 and 520,911 shares
   at December 31, 2003 and 2002                                           (7,133)                      (4,635)
                                                                       ----------                   ----------
            Total shareholders' equity                                    546,429                      551,889
                                                                       ----------                   ----------
            Total liabilities, minority interest and
                shareholders' equity                                   $1,345,747                   $1,319,897
                                                                       ==========                   ==========
</TABLE>

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

                                      -13-
<PAGE>

                 CORPORATE PROPERTY ASSOCIATES 14, INCORPORATED

                        CONSOLIDATED STATEMENTS of INCOME
                (In thousands except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                     For the years ended December 31,
                                                                                     --------------------------------
                                                                               2003                  2002                   2001
                                                                               ----                  ----                   ----
<S>                                                                          <C>                   <C>                    <C>
Revenues:
     Rental income                                                       $    108,705           $    98,112            $    55,490
     Interest income from direct financing leases                              13,010                11,798                  8,899
     Interest and other income                                                  6,737                 2,446                  2,752
                                                                         ------------           -----------            -----------
                                                                              128,452               112,356                 67,141
                                                                         ------------           -----------            -----------

Expenses:
     Interest                                                                  52,890                45,249                 22,081
     Depreciation                                                              22,795                20,699                 12,592
     General and administrative                                                 8,405                 6,438                  4,308
     Property expense                                                          19,962                14,060                  9,247
     Impairment charges on real estate                                          3,103                     -                  3,810
                                                                         ------------           -----------            -----------
                                                                              107,155                86,446                 52,038
                                                                         ------------           -----------            -----------

       Income from continuing operations before minority
         interest, equity investments and gains                                21,297                25,910                 15,103

Minority interest in income                                                    (1,489)               (1,724)                  (291)

Income from equity investments                                                 12,992                 5,320                  3,693
                                                                         ------------           -----------            -----------

       Income from continuing operations before gains                          32,800                29,506                 18,505

Unrealized gain on derivative instruments and foreign currency
  transactions, net                                                               671                   355                     78
Gain on foreign currency transactions                                             349                     -                      -
                                                                         ------------           -----------            -----------

       Income from continuing operations before loss on sale of
         real estate                                                           33,820                29,861                 18,583

Discontinued operations:
Income from operation of discontinued properties                                    -                    72                    140
Gain on sale of real estate                                                         -                   333                      -
                                                                         ------------           -----------            -----------

       Income from discontinued operations                                          -                   405                    140
                                                                         ------------           -----------            -----------

Loss on sale of real estate                                                         -                     -                   (346)
                                                                         ------------           -----------            -----------

       Net income                                                        $     33,820           $    30,266            $    18,377
                                                                         ============           ===========            ===========

Basic and diluted earnings per share:
       Income from continuing operations                                 $        .51           $       .45            $       .36
       Discontinued operations                                                      -                     -                      -
                                                                         ------------           -----------            -----------

       Net income                                                        $       .51            $       .45            $       .36
                                                                         ============           ===========            ===========

Weighted average shares outstanding - basic and diluted                    66,638,026           $66,193,674            $51,422,168
                                                                         ============           ===========            ===========
</TABLE>

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

                                      -14-
<PAGE>

                 CORPORATE PROPERTY ASSOCIATES 14, INCORPORATED

                 CONSOLIDATED STATEMENT of SHAREHOLDERS' EQUITY
                       (In thousands except share amounts)
              For the years ended December 31, 2001, 2002, and 2003

<TABLE>
<CAPTION>
                                                                        Dividends in
                                                                          Excess of     Accumulated Other
                                Common    Additional     Comprehensive   Accumulated      Comprehensive    Treasury
                                 Stock  Paid-in Capital     Income        Earnings           Income         Stock         Total
                                 -----  ---------------     ------      -----------           ------         -----         -----
<S>                             <C>     <C>              <C>            <C>             <C>                <C>           <C>
Balance at December 31, 2000    $   43    $    386,341                  $     (9,185)                      $ (1,338)     $375,861

23,233,922 shares issued
  $.001 par, at $10 per
  share, net of offering costs      23         207,146                                                                    207,169

Dividends declared                                                           (37,215)                                     (37,215)

Purchase of treasury stock,
  183,289  shares                                                                                            (1,612)       (1,612)

Comprehensive income:

  Net income                                             $     18,377         18,377                                       18,377
Other comprehensive income:
 Foreign currency translation
 adjustment                                                      (101)                     $    (101)                        (101)
                                                         ------------
                                                         $     18,276
                                ------    ------------   ============   ------------       ---------       --------      --------
Balance at December 31, 2001        66         593,487                       (28,023)           (101)        (2,950)      562,479

520,686 shares issued $.001
  par, at $10 per share, net
  of offering costs                  1           4,365                                                                      4,366

Dividends declared                                                           (49,751)                                     (49,751)

Purchase of treasury stock,
  190,935 shares                                                                                             (1,685)       (1,685)

Comprehensive income:

  Net income                                             $     30,266         30,266                                       30,266
                                                         ------------
Other comprehensive income:
  Unrealized appreciation on
  marketable securities                                           257
  Foreign currency
  translation adjustment                                        5,957
                                                         ------------
                                                                6,214                          6,214                        6,214
                                                         ------------
                                                         $     36,480
                                ------    ------------   ============   ------------       ---------       --------      --------
Balance at December 31, 2002        67         597,852                       (47,508)          6,113         (4,635)      551,889
                                ------    ------------                  ------------       ---------       --------      --------

858,550 shares issued $.001
  par, at $10 per share, net
  of offering costs                  1           8,528                                                                      8,529

Dividends declared                                                           (50,348)                                     (50,348)

Purchase of treasury stock,
  281,731 shares                                                                                             (2,498)       (2,498)

Comprehensive income:

   Net income                                            $     33,820         33,820                                       33,820
                                                         ------------
Other comprehensive income:
  Unrealized appreciation on
  marketable securities                                           641
  Foreign currency
  translation adjustment                                        4,396
                                                         ------------
                                                                5,037                          5,037                        5,037
                                                         ------------
                                                         $     38,857
                                ------    ------------   ============   ------------       ---------       --------      --------
Balance at December 31, 2003    $   68    $    606,380                  $    (64,036)      $  11,150       $ (7,133)     $546,429
                                ======    ============                  ============       =========       ========      ========
</TABLE>

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


<PAGE>

                 CORPORATE PROPERTY ASSOCIATES 14, INCORPORATED

                      CONSOLIDATED STATEMENTS of CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                              For the year ended December 31,
                                                                                              -------------------------------
                                                                                          2003               2002            2001
                                                                                          ----               ----            ----
<S>                                                                                     <C>                <C>             <C>
Cash flows from operating activities:
    Net income                                                                          $ 33,820           $ 30,266        $ 18,377
    Adjustments to reconcile net income to net cash provided by continuing
       operations:
       Income from discontinued operations, including gain on sale of real
          estate                                                                               -               (405)           (140)
       Depreciation and amortization                                                      23,964             21,548          12,951
       Straight-line rent adjustments                                                     (3,965)            (4,201)         (3,192)
       Income from equity investments in excess of distributions received                 (1,529)               (30)            (58)
       Minority interest in income                                                         1,489              1,724             291
       Loss on sale of real estate                                                             -                  -             346
       Issuance of shares in satisfaction of current and accrued performance
          fees                                                                             7,105              5,092           5,012
       Impairment charge on real estate                                                    3,103                  -           3,810
       Funds released from (deposited in) escrow                                               -                  -           6,144
       (Decrease) increase in prepaid rents and security deposits                         (1,727)             2,545           8,435
       Realized gain on foreign currency transactions                                       (349)                 -               -
       Unrealized gain on derivative instruments and foreign currency
          transactions, net                                                                 (643)              (355)            (78)
       Change in other operating assets and liabilities, net (a)                          (1,858)             4,311           1,233
                                                                                        --------           --------        --------
       Net cash provided by continuing operations                                         59,410             60,495          53,131
       Net cash provided by discontinued operations                                            -                 74             144
                                                                                        --------           --------        --------
          Net cash provided by operating activities                                       59,410             60,569          53,275
                                                                                        --------           --------        --------

Cash flows from investing activities:
    Equity distributions received in excess of equity income                               1,178              1,456           1,738
    Purchases of real estate and equity investments and other
       capitalized costs, net (b)                                                        (50,385)          (269,117)       (372,835)
    Value added taxes recoverable on purchase of real estate                                 827              1,448               -
    Purchase of securities                                                                     -             (8,396)              -
    Proceeds from sale of real estate and securities                                           -              5,998           2,903
    Payment of deferred acquisition fees                                                  (2,373)            (1,638)           (722)
    Capital distributions received from equity investments                                 8,722                  -          22,664
                                                                                        --------           --------        --------
          Net cash used in investing activities                                          (42,031)          (270,249)       (346,252)
                                                                                        --------           --------        --------

Cash flows from financing activities:
    Dividends paid                                                                       (50,173)           (48,581)        (32,811)
    Proceeds from stock issuance, net of costs                                             1,424             (1,725)        203,155
    Prepayment of mortgage principal                                                           -             (3,800)        (15,529)
    Release of mortgage funds by lenders                                                   2,776                  -               -
    Proceeds from mortgages                                                               21,582            196,596         262,136
    Proceeds from note                                                                     1,617                  -               -
    Payments of mortgage principal                                                        (9,234)            (6,543)         (2,557)
    Funding of defeasance escrow account                                                       -             (2,537)              -
    Deferred financing costs and mortgage deposits                                             -             (4,050)         (6,546)
    Purchase of treasury stock                                                            (2,498)            (1,685)         (1,612)
    Distributions paid to (contributions from) minority interest partner, net             (3,340)             7,661          (1,111)
                                                                                        --------           --------        --------
          Net cash (used in) provided by financing activities                            (37,846)           135,336         405,125
                                                                                        --------           --------        --------
</TABLE>

                                  - Continued -

                                     - 16 -
<PAGE>

                 CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

                CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued

<TABLE>
<S>                                                                             <C>               <C>                <C>
      Effect of exchange rates on cash                                             1,035               756                  -
                                                                                --------          --------           --------

      Net (decrease) increase in cash and cash equivalents                       (19,432)          (73,588)           112,148

Cash and cash equivalents, beginning of year                                      74,107           147,695             35,547
                                                                                --------          --------           --------

Cash and cash equivalents, end of year                                          $ 54,675          $ 74,107           $147,695
                                                                                ========          ========           ========
</TABLE>

Noncash operating, investing and financing activities:

In connection with the acquisition of properties during the year ended December
31, 2001, the Company assumed mortgage payable obligations of $2,076.

During 2002, a security deposit of $5,287,500 was assigned to a lender.

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

(b)  Included in the cost basis of real estate investments acquired in 2003,
     2002 and 2001 are deferred acquisition fees payable of $1,733, $6,146 and
     $6,554, respectively.

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

                                      -17-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS
            Amounts in thousands, except share and per share amounts

 1. Summary of Significant Accounting Policies:

         Basis of Consolidation:

                  The consolidated financial statements include the accounts of
                  Corporate Property Associates 14 Incorporated, its
                  wholly-owned subsidiaries and controlling majority-owned
                  interests in limited liability companies and partnerships
                  (collectively, the "Company"). The Company is not the primary
                  beneficiary of any variable interest entity. All material
                  inter-entity transactions have been eliminated.

         Use of Estimates:

                  The preparation of financial statements in conformity with
                  accounting principles generally accepted in the United States
                  of America requires management to make estimates and
                  assumptions that affect the reported amounts of assets and
                  liabilities and disclosure of contingent assets and
                  liabilities at the date of the financial statements and the
                  reported amounts of revenues and expenses during the reporting
                  period. The most significant estimates will relate to the
                  assessment of recoverability of real estate assets and
                  investments, classification of real estate leased by others
                  and identification of any intangible assets identified in
                  connection with asset acquisitions. Actual results could
                  differ from those estimates.

         Real Estate Leased to Others:

                  Real estate is leased to others on a net lease basis, whereby
                  the tenant is generally responsible for all operating expenses
                  relating to the property, including property taxes, insurance,
                  maintenance, repairs, renewals and improvements. For the year
                  ended December 31, 2003, lessees were responsible for the
                  direct payment of real estate taxes of approximately $13,197.
                  Expenditures for maintenance and repairs including routine
                  betterments are charged to operations as incurred, significant
                  renovations which increase the useful life of the properties
                  are capitalized.

                  The Company diversifies its real estate investments among
                  various corporate tenants engaged in different industries and
                  by property type.

                  The leases are accounted for under either the operating or
                  direct financing method. Such methods are described below:

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

                           Direct financing method - Leases accounted for under
                           the direct financing method are recorded at their net
                           investment (Note 5). Unearned income is deferred and
                           amortized to income over the lease terms so as to
                           produce a constant periodic rate of return on the
                           Company's net investment in the lease.

                  When events or changes in circumstances indicate that the
                  carrying amount of a long-lived asset may not be recoverable,
                  the Company assesses the recoverability of its long-lived
                  assets, including residual interests of real estate assets and
                  investments, based on projections of undiscounted cash flows,
                  without interest charges, over the life of such assets. In the
                  event that such cash flows are insufficient, the assets are
                  adjusted to their estimated fair value. Residual values of
                  direct financing leases are reviewed at least annually. If a
                  decline in the estimated residual value is other than
                  temporary, the accounting for the net investment in direct
                  financing lease will be revised using the changed estimate.
                  The resulting reduction in the net investment in the direct
                  financing lease is recognized as a loss in the period in which
                  the estimate is changed.

                                      -18-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
            Amounts in thousands, except share and per share amounts

                  In connection with the Company's acquisition of properties,
                  purchase costs are allocated to the tangible and intangible
                  assets and liabilities acquired based on their estimated fair
                  values. The value of the tangible assets, consisting of land,
                  buildings and tenant improvements, are determined as if
                  vacant. Intangible assets including the above-market or
                  below-market value of leases, the value of in-place leases and
                  the value of tenant relationships are recorded at their
                  relative fair values.

                  Above-market and below-market in-place lease values for owned
                  properties are recorded based on the present value (using an
                  interest rate reflecting the risks associated with the leases
                  acquired) of the difference between (i) the contractual
                  amounts to be paid pursuant to the leases negotiated and
                  in-place at the time of acquisition of the properties and (ii)
                  management's estimate of fair market lease rates for the
                  property or equivalent property, measured over a period equal
                  to the remaining non-cancelable term of the lease. The
                  capitalized above-market lease value is amortized as a
                  reduction of rental income over the remaining non-cancelable
                  term of each lease. The capitalized below-market lease value
                  is amortized as an increase to rental income over the initial
                  term and any fixed rate renewal periods in the respective
                  leases.

                  The total amount of other intangible assets is allocated to
                  in-place lease values and tenant relationship intangible
                  values based on management's evaluation of the specific
                  characteristics of each tenant's lease and the Company's
                  overall relationship with each tenant. Characteristics
                  considered in allocating these values include the nature and
                  extent of the existing relationship with the tenant, prospects
                  for developing new business with the tenant, the tenant's
                  credit quality and the expectation of lease renewals, among
                  other factors. The aggregate value of other intangible assets
                  acquired will be measured based on the difference between (i)
                  the property valued with an in-place lease adjusted to market
                  rental rates and (ii) the property valued as if vacant.
                  Independent appraisals or management's estimates are used to
                  determine these values.

                  Factors considered in the analysis include the estimated
                  carrying costs of the property during a hypothetical expected
                  lease-up period, current market conditions and costs to
                  execute similar leases. The Company also considers information
                  obtained about a property in connection with its
                  pre-acquisition due diligence. Estimated carrying costs
                  include real estate taxes, insurance, other property operating
                  costs and estimates of lost rentals at market rates during the
                  hypothetical expected lease-up periods, based on management's
                  assessment of specific market conditions. Estimated costs to
                  execute leases, including commissions and legal costs to the
                  extent that such costs are not already incurred with a new
                  lease that has been negotiated in connection with the purchase
                  of the property, are also considered.

                  The value of in-place leases will be amortized to expense over
                  the remaining initial term of each lease. The value of tenant
                  relationship intangibles will be amortized to expense over the
                  initial and renewal terms of the leases but no amortization
                  period for intangible assets will exceed the remaining
                  depreciable life of the building.

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

                  Substantially all of the Company's leases provide for either
                  scheduled rent increases, periodic rent increases based on
                  formulas indexed to increases in the Consumer Price Index
                  ("CPI") or sales overrides. Rents from sales overrides
                  (percentage rent) are recognized as reported by lessees, that
                  is, after the level of sales requiring a rental payment to the
                  Company is reached.

         Assets Held For Sale:

                  Assets held for sale are accounted for at the lower of
                  carrying value or fair value less costs to dispose. Assets are
                  classified as held for sale when the Company has committed to
                  a plan to actively market a property for sale and expects that
                  a sale will be completed within one year. The results of
                  operations and the related gain or loss on sale of properties
                  classified as held for sale by the Company after December 31,
                  2001, are included in discontinued operations.

                  If circumstances arise that previously were considered
                  unlikely and, as a result, the Company decides not to sell a
                  property previously classified as held for sale, the property
                  is reclassified as held and used. A property that is

                                      -19-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
            Amounts in thousands, except share and per share amounts

                  reclassified is measured and recorded individually at the
                  lower of (a) its carrying amount before the property was
                  classified as held for sale, adjusted for any depreciation
                  expense that would have been recognized had the property been
                  continuously classified as held and used, (b) the fair value
                  at the date of the subsequent decision not to sell, or (c) the
                  current carrying value.

                  The Company recognizes gains and losses on the sale of
                  properties when among other criteria, the parties are bound by
                  the terms of the contract, all consideration has been
                  exchanged and all conditions precedent to closing have been
                  performed. At the time the sale is consummated, a gain or loss
                  is recognized as the difference between the sale price less
                  any closing costs and the carrying value of the property.

         Depreciation:

                  Depreciation is computed using the straight-line method over
                  the estimated useful lives of the properties - generally 40
                  years. Depreciation of tenant improvements is computed using
                  the straight-line method over the remaining term of the lease.

        Equity Investments:

                  The Company's interests in entities in which the entity is not
                  considered to be a VIE, the Company is not deemed to be the
                  primary beneficiary and the Company's ownership is 50% or
                  less, and has the ability to exercise significant influence
                  are accounted for under the equity method, i.e. at cost,
                  increased or decreased by the Company's share of earnings or
                  losses, less distributions.

         Cash Equivalents:

                  The Company considers all short-term, highly liquid
                  investments that are both readily convertible to cash and have
                  a maturity of generally three months or less at the time of
                  purchase to be cash equivalents. Items classified as cash
                  equivalents include commercial paper and money market funds.
                  Substantially all of the Company's cash and cash equivalents
                  at December 31, 2003 and 2002 were held in the custody of two
                  financial institutions, and which balances at times exceed
                  federally insurable limits. The Company mitigates this risk by
                  depositing funds with major financial institutions.

         Foreign Currency Translation:

                  The Company consolidates its real estate investments in the
                  Netherlands, Finland, France and the United Kingdom. The
                  functional currencies for these investments are the Euro and
                  British Pound. The translation from these local currencies to
                  the U.S. dollar is performed for assets and liabilities using
                  current exchange rates in effect at the balance sheet date and
                  for revenue and expense accounts using a weighted average
                  exchange rate during the period. The gains and losses
                  resulting from such translation are reported as a component of
                  other comprehensive income as part of shareholders' equity. As
                  of December 31, 2003, the cumulative foreign currency
                  translation adjustment gain was $10,252.

                  Foreign currency transactions may produce receivables or
                  payables that are fixed in terms of the amount of foreign
                  currency that will be received or paid. A change in the
                  exchange rates between the functional currency and the
                  currency in which a transaction is denominated increases or
                  decreases the expected amount of functional currency cash
                  flows upon settlement of that transaction. That increase or
                  decrease in the expected functional currency cash flows is a
                  foreign currency transaction gain or loss that generally will
                  be included in determining net income for the period in which
                  the exchange rate changes. Likewise, a transaction gain or
                  loss (measured from the transaction date or the most recent
                  intervening balance sheet date) whichever is later, realized
                  upon settlement of a foreign currency transaction generally
                  will be included in net income for the period in which the
                  transaction is settled. Foreign currency transactions that are
                  (i) designated as, and are effective as, economic hedges of a
                  net investment and (ii) intercompany foreign currency
                  transactions that are of a long-term nature (that is,
                  settlement is not planned or anticipated in the foreseeable
                  future), when the entities to the transactions are
                  consolidated or accounted for by the equity method in the
                  Company's financial statements will not be included in

                                      -20-

<PAGE>
                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
            Amounts in thousands, except share and per share amounts

                  determining net income but will be accounted for in the same
                  manner as foreign currency translation adjustments and
                  reported as a component of other comprehensive income as part
                  of shareholder's equity. The contributions to the equity
                  investments were funded in part through subordinated debt.

                  Foreign currency intercompany transactions that are scheduled
                  for settlement, consisting primarily of accrued interest and
                  the translation to the reporting currency of intercompany
                  subordinated debt with scheduled principal repayments, are
                  included in the determination of net income, and, for the year
                  ended December 31, 2003, the Company recognized unrealized
                  gains of $720 from such transactions. In 2003, the Company
                  recognized realized gains of $349 on foreign currency
                  transactions, in connection with the transfer of cash from
                  foreign operations of subsidiaries to the parent company.

         Marketable Securities:

                  Marketable securities are classified as available for sale
                  securities and reported at fair value with the Company's
                  interest in unrealized gains and losses on these securities
                  reported as a component of other comprehensive income (loss)
                  until realized. Such marketable securities had a cost basis of
                  $5,894 and $6,001 and reflected a fair value of $6,792 and
                  $6,258 at December 31, 2003 and 2002, respectively.

         Other Assets:

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

         Derivative Instruments:

                  Statement of Financial Accounting Standards ("SFAS") No. 133
                  "Accounting for Derivative Instruments and Hedging Activities"
                  established accounting and reporting standards for derivative
                  instruments. Stock warrants granted to the Company by lessees
                  in connection with structuring the initial lease transactions
                  are defined as derivative instruments if such stock warrants
                  are readily convertible to cash or provide for net settlement
                  upon conversion. Pursuant to SFAS No. 133, changes in the fair
                  value of such derivative instruments as determined using an
                  option pricing model are recognized currently in earnings as
                  gains or losses. The Company recognized an unrealized loss of
                  $20 and an unrealized gain of $385 in 2003 and 2002,
                  respectively on warrants issued to the Company by PW Eagle,
                  Inc., American Tire Distributors, Inc. and Consolidated
                  Theaters Holding, G.P. No unrealized gain or loss were
                  recognized in 2001. The Company also holds stock warrants
                  which were not defined as derivative instruments and have been
                  recorded at nominal values. The Company has only recognized
                  unrealized gains or losses on stock warrants that are
                  derivative instruments.

                  A lease for a property located in the Netherlands provides the
                  Company with an option to receive a portion of rental payments
                  in Euros or U.S. dollars. Pursuant to the adoption of SFAS No.
                  133, the option is a derivative instrument and changes in the
                  fair value of the option are recognized in earnings as gains
                  or losses. An unrealized gain on the option of $78 was
                  recognized in 2001 and unrealized losses of $29 and $30 were
                  recognized in 2003 and 2002, respectively. As of December 31,
                  2003, the Company's cumulative unrealized foreign currency
                  gain was $19.

         Costs of Raising Capital:

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

         Treasury Stock:

                  Treasury stock is recorded at cost.

                                      -21-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
            Amounts in thousands, except share and per share amounts

         Deferred Acquisition Fees:

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

         Earnings Per Share:

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

         Federal Income Taxes:

                  The Company is qualified as a real estate investment trust
                  ("REIT") as of December 31, 2003 as defined under the Internal
                  Revenue Code of 1986. The Company is not subject to Federal
                  income taxes on amounts distributed to shareholders provided
                  it distributes at least 90% of its REIT taxable income to its
                  shareholders and meets certain other conditions. The Company
                  and subsidiaries are subject to state and local and foreign
                  taxes, which aggregate $255 in 2003 and $152 in 2002, and are
                  included in general and administrative expenses.

         Operating Segments

                  Accounting standards have been established for the way public
                  business enterprises report selected information about
                  operating segments and guidelines for defining the operating
                  segment of an enterprise. The Company has reported its real
                  estate operations both domestically and internationally (see
                  Note 11).

         Reclassification:

                  Certain prior year amounts have been reclassified to conform
                  to the current year's financial statement presentation.

        Accounting Pronouncements:

                  In November 2002, the FASB issued Interpretation No. 45,
                  "Guarantor's Accounting and Disclosure Requirements for
                  Guarantees, Including Indirect Guarantees of Indebtedness of
                  Others," ("FIN 45") which changes the accounting for, and
                  disclosure of certain guarantees. Beginning with transactions
                  entered into after December 31, 2002, certain guarantees are
                  required to be recorded at fair value, which is different from
                  prior practice, under which a liability was recorded only when
                  a loss was probable and reasonably estimable. In general, the
                  change applies to contracts or indemnification agreements that
                  contingently require the Company to make payments to a
                  guaranteed third-party based on changes in an underlying
                  asset, liability, or an equity security of the guaranteed
                  party. The adoption of the accounting provisions of FIN 45 on
                  January 1, 2003 did not have a material effect on the
                  Company's financial statements.

                  In December 2002, the FASB issued SFAS No. 148, "Accounting
                  for Stock-Based Compensation - Transition and Disclosure,"
                  which amends SFAS No. 123, Accounting for Stock Based
                  Compensation. SFAS No. 148 provides alternative methods of
                  transition for a voluntary change to the fair value based
                  method of accounting for stock based compensation (i.e.,
                  recognition of a charge for issuance of stock options in the
                  determination of income.). However, SFAS No. 148 does not
                  permit the use of the original SFAS No. 123 prospective method
                  of transition for changes to the fair value based method made
                  in fiscal years beginning after December 15, 2003. In
                  addition, this Statement amends the disclosure requirements of
                  SFAS No. 123 to require prominent disclosures in both annual
                  and interim financial statements about the method of
                  accounting for stock based employee compensation, description
                  of transition method utilized and the effect of the method
                  used on reported results.

                                      -22-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
            Amounts in thousands, except share and per share amounts

                  The transition and annual disclosure provisions for valuing
                  stock-based compensation of SFAS No. 148 are to be applied for
                  fiscal years ending after December 15, 2002. The Company does
                  not have any employees nor any stock-based compensation plans.

                  On January 17, 2003, the FASB issued Interpretation No. 46,
                  "Consolidation of Variable Interest Entities" ("FIN 46"), the
                  primary objective of which is to provide guidance on the
                  identification of entities for which control is achieved
                  through means other than voting rights ("variable interest
                  entities" or "VIEs") and to determine when and which business
                  enterprise should consolidate the VIE (the "primary
                  beneficiary"). In December 2003, the FASB issued a revised FIN
                  46 which modifies and clarifies various aspects of the
                  original Interpretation. FIN 46 applies when either (1) the
                  equity investors (if any) lack one or more of the essential
                  characteristics of controlling financial interest, (2) the
                  equity investment at risk is insufficient to finance that
                  entity's activities without additional subordinated financial
                  support or (3) the equity investors have voting rights that
                  are not proportionate to their economic interest. In addition
                  FIN 46 requires additional disclosures.

                  FIN 46 is effective immediately for VIEs created after January
                  31, 2003, and to VIEs in which an enterprise obtains an
                  interest after that date. For variable interests in a VIE
                  created or obtained prior to February 1, 2003, FIN 46 is
                  effective for periods ending after March 15, 2004.

                  The Company has evaluated the potential impact and believes
                  this interpretation will not have a material impact on its
                  accounting for its investments in unconsolidated joint
                  ventures as none of these investments are VIEs. The Company's
                  maximum loss exposure is the carrying value of its equity
                  investments.

                  On April 30, 2003, the FASB issued SFAS No. 149, "Amendment of
                  Statement 133 on Derivative Instruments and Hedging
                  Activities." SFAS No. 149 amends and clarifies accounting for
                  derivative instruments, including certain derivative
                  instruments embedded in other contracts, and for hedging under
                  SFAS No. 133. The changes in the statement improve financial
                  reporting by requiring that contracts with comparable
                  characteristics be accounted for similarly. In particular, the
                  statement (1) clarifies under what circumstances a contract
                  with an initial net investment meets the characteristics of a
                  derivative instrument discussed in paragraph 6(b) of SFAS No.
                  133, (2) clarifies when a derivative contains a financing
                  component, (3) amends the definition of an underlying to
                  conform it to language used in FIN 45, "Guarantor's Accounting
                  and Disclosure Requirements for Guarantees, Including Indirect
                  Guarantees of Indebtedness of Others", and (4) amends certain
                  other existing pronouncements. SFAS No. 149 is generally
                  effective for contracts entered into or modified after June
                  30, 2003 and for hedging relationships designated after June
                  30, 2003. The adoption of SFAS No. 149 did not have a material
                  effect on the financial statements.

                  In May 2003, the FASB issued SFAS No. 150, "Accounting for
                  Certain Financial Instruments with Characteristics of both
                  Liabilities and Equity." SFAS No. 150 establishes standards
                  for the classification and measurement of certain financial
                  instruments with characteristics of both liabilities and
                  equity. It requires that an issuer classify a financial
                  instrument that is within its scope as a liability (or an
                  asset in some circumstances). In particular, it requires that
                  mandatorily redeemable financial instruments be classified as
                  liabilities and reported at fair value and that changes in
                  their fair values be reported as interest cost.

                  This statement was effective for financial instruments entered
                  into or modified after May 31, 2003, and otherwise is
                  effective for CPA(R):14 as of July 1, 2003. On November 7,
                  2003, the FASB indefinitely deferred the classification and
                  measurement provisions of SFAS No. 150 as they apply to
                  certain mandatorily redeemable non-controlling interests. This
                  deferral is expected to remain in effect while these
                  provisions are further evaluated by the FASB. Based on the
                  FASB's deferral of this provision, the adoption of SFAS No.
                  150 did not have a material effect on the Company's financial
                  statements.

 2. Organization and Offering:

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

                                      -23-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
            Amounts in thousands, except share and per share amounts

         An initial offering of the Company's shares which commenced on November
         10, 1997 concluded on November 10, 1999 at which time the Company had
         issued an aggregate of 29,440,594 shares ($294,406). On November 17,
         1999, the Company commenced an offering for a maximum of 40,000,000
         shares of common stock. The shares were offered to the public on a
         "best efforts" basis at a price of $10 per share. The second offering
         concluded on November 15, 2001, by which time 36,353,686 shares
         ($363,537) were issued.

 3. Transactions with Related Parties:

         In connection with performing services on behalf of the Company, the
         Advisory Agreement between the Company and the Advisor provides that
         the Advisor receive asset management and performance fees, each of
         which are -1/2 of 1/% of Average Invested Assets as defined in the
         Advisory Agreement. The performance fee is subordinated to the
         Preferred Return, a cumulative rate of cash flow from operations of 7%.
         The Advisor has elected at its option to receive the performance fee in
         restricted shares of common stock of the Company rather than cash. The
         Advisor is also reimbursed for the actual cost of personnel needed to
         provide administrative services necessary to the operation of the
         Company. The Company incurred asset management fees of $7,550, $5,514
         and $3,592 in 2003, 2002 and 2001, respectively, with performance fees
         in like amount. The Company incurred personnel reimbursements of
         $3,088, $2,234 and $1,372 in 2003, 2002 and 2001, respectively.

         Fees are payable to the Advisor for services provided to the Company
         relating to the identification, evaluation, negotiation, financing and
         purchase of properties and refinancing of mortgages. A portion of such
         fees are deferred and payable in equal installments over no less than
         eight years following the first anniversary of the date a property was
         purchased. Such deferred fees are only payable if the Preferred Return
         has been met. The unpaid portion of the deferred fees bears interest at
         an annual rate of 6% from the date of acquisition of a property until
         paid. For transactions and refinancings that were completed in 2003,
         2002 and 2001, current fees were $2,166, $8,489 and $8,193,
         respectively and deferred fees were $1,733, $6,773 and $6,554,
         respectively.

         The Advisor is obligated to reimburse the Company for the amount by
         which operating expenses of the Company exceed the 2%/25% Guidelines
         (the greater of 2% of Average Invested Assets or 25% of Net Income) as
         defined in the Advisory Agreement for any twelve-month period. If in
         any year the operating expenses of the Company exceed the 2%/25%
         Guidelines, the Advisor will have an obligation to reimburse the
         Company for such excess, subject to certain conditions. Only if the
         Independent Directors find that such excess expenses were justified
         based on any unusual and nonrecurring factors which they deem
         sufficient, the Advisor may be paid in future years for the full amount
         or any portion of such excess expenses, but only to the extent that
         such reimbursement would not cause the Company's operating expenses to
         exceed this limit in any such year. Charges related to asset
         impairment, bankruptcy of lessees, lease payment defaults,
         extinguishment of debt or uninsured losses are generally not considered
         unusual and nonrecurring. A determination that a charge is unusual and
         nonrecurring, such as the costs of significant litigation that are not
         associated with day-to day operations, or uninsured losses that are
         beyond the size or scope of the usual course of business based on the
         event history and experience of the Advisor and Independent Directors,
         is made at the sole discretion of the Independent Directors. The
         Company will record any reimbursement of operating expenses as a
         liability until any contingencies are resolved and will record the
         reimbursement as a reduction of asset management and performance fees
         at such time that a reimbursement is fixed, determinable and
         irrevocable. The operating expenses of the Company have not exceeded
         the amount that would require the Advisor to reimburse the Company.

         The Advisor will be entitled to receive subordinated disposition fees
         based upon the cumulative proceeds arising from the sale of Company
         assets since the inception of the Company, subject to certain
         conditions. Pursuant to the subordination provisions of the Advisory
         Agreement, the disposition fees may be paid only after the shareholders
         receive 100% of their initial investment from the proceeds of asset
         sales and a cumulative annual return of 6% (based on an initial share
         price of $10) since the inception of the Company. The Advisor's
         interest in such disposition fees amounts to $240 as of December 31,
         2003. Payment of such amount, however, cannot be made until the
         subordination provisions are met. The Company has concluded that
         payment of such disposition fees is probable and all fees from
         completed property sales have been accrued. Subordinated disposition
         fees are included in the determination of realized gain or loss on the
         sale of properties. The obligation for disposition fees is included in
         due to affiliates in the accompanying consolidated financial
         statements.

                                      -24-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
            Amounts in thousands, except share and per share amounts

         The Company owns interests in entities which range from 33 1/3% to 90%
         and a jointly-controlled 50% tenancy-in-common interest in two
         properties subject to a net lease with the remaining interests held by
         affiliates. The Company has a significant influence in these
         investments, which are accounted for under the equity method of
         accounting.

         The Company is a participant in an agreement with certain affiliates
         for the purpose of leasing office space used for the administration of
         real estate entities and for sharing the associated costs. Pursuant to
         the terms of the agreement, the Company's share of rental, occupancy
         and leasehold improvement costs is based on gross revenues. Expenses
         incurred in 2003, 2002 and 2001 were $470, $376 and $237, respectively.
         The Company's current share of future minimum lease payments is $1,026
         through 2006.

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

         Scheduled future minimum rents, exclusive of renewals, under
         non-cancelable operating leases amount are approximately as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
-------------------------
<S>                                     <C>
2004                                    $  102,738
2005                                       101,391
2006                                       101,440
2007                                       102,836
2008                                       102,315
Thereafter through 2022                  1,035,965
                                        ----------
   Total                                $1,546,685
                                        ==========
</TABLE>
         Contingent rentals (including CPI-based increases) were approximately
         $1,405 in 2003, $532 in 2002 and $249 in 2001.

 5. Net Investment in Direct Financing Leases:

         Net investment in direct financing leases is summarized as follows:
<TABLE>
<CAPTION>
                                                              December 31,
                                                        --------------------------
                                                        2003                  2002
                                                        ----                  ----
<S>                                                   <C>                   <C>
Minimum lease payments receivable                     $246,161              $253,369
Unguaranteed residual value                            111,645               112,667
                                                      --------              --------
                                                       357,806               366,036
Less: unearned income                                  242,899               252,608
                                                      --------              --------
                                                      $114,907              $113,428
                                                      ========              ========
</TABLE>
         Scheduled future minimum rents, exclusive of renewals, under
         non-cancelable direct financing leases are approximately as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
<S>                                       <C>
2004                                      $ 12,481
2005                                        12,545
2006                                        12,636
2007                                        12,724
2008                                        12,724
Thereafter through 2031                    183,052
                                          --------
   Total                                  $246,162
                                          ========
</TABLE>
         Contingent rents (including CPI-based increases) were approximately
         $108 in 2003, $63 in 2002 and $36 in 2001.

 6. Equity Investments:

         The Company owns interests in properties leased to corporations through
         non-controlling interests. The ownership interests range from 33.33% to
         50%. Contributions, distributions and allocations of income or loss
         from the equity investees are based on ownership percentages and no
         fees are paid by the Company or the partnerships to any of the general
         partners of the limited partnerships. All of the underlying investments
         are owned with affiliates that have similar investment objectives as
         the

                                      -25-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
            Amounts in thousands, except share and per share amounts

         Company. The lessees are Advanced Micro Devices, Inc., Compucom
         Systems, Inc., Textron, Inc., Special Devices, Inc., Applied Materials,
         Inc. and CheckFree Holdings, Inc., Clear Channel Communications, Inc.
         and TruServ Corporation. The Company along with two affiliates,
         CPA(R):12 and Corporate Property Associates 15 Incorporated
         ("CPA(R):15") formed a limited liability company and, on February 7,
         2003, entered into a net lease with Starmark Camhood, L.L.C.
         ("Starmark").

         Summarized combined financial information of the Company's equity
         investees is as follows:

<TABLE>
<CAPTION>
                                                                              December 31,
                                                                        ------------------------
                                                                          2003           2002
                                                                          ----           -----
<S>                                                                     <C>             <C>
Assets (primarily real estate)                                          $781,144        $591,167
Liabilities (primarily limited recourse mortgage notes payable)          471,052         329,330
Members' equity                                                          310,092         261,837
</TABLE>

<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                                                  -----------------------
                                                                           2003            2002              2001
                                                                           ----            ----              ----
<S>                                                                       <C>             <C>              <C>
Revenues (primarily rental revenues)                                      $80,329         $34,521          $ 31,060
Expenses (primarily interest on mortgage and depreciation)                (46,429)        (20,352)          (19,539)
                                                                          -------         -------          --------
Net income                                                                $33,900         $14,169          $ 11,521
                                                                          =======         =======          ========
</TABLE>

         On February 7, 2003, the Company, CPA(R):12 and CPA(R):15, through a
         newly-formed limited liability company with ownership interests of 41%,
         15% and 44%, respectively, purchased land and 15 health club facilities
         for $178,010 and entered into a master net lease with Starmark. The
         lease obligations of Starmark are jointly unconditionally guaranteed by
         seven of its affiliates.

         The Starmark lease provides for an initial lease term of 20 years with
         three ten-year renewal terms. Annual rent is initially $18,272 with
         CPI-based increases scheduled in November 2006, 2010, 2014, 2018 and
         2021. $167 of annual rent will not be included in the determination of
         the future rent increases.

         In connection with the purchase, the limited liability company obtained
         first mortgage limited recourse financing of $88,300 and a mezzanine
         loan of $20,000. The first mortgage provides for monthly payments of
         interest and principal of $564 at an annual interest rate of 6.6% and
         based on a 30-year amortization schedule. The loan matures in March
         2013 at which time a balloon payment is scheduled. The mezzanine loan
         provides for monthly payments of interest and principal of $277 at an
         annual interest rate of 11.15% and will fully amortize over its
         ten-year term.

         The limited liability company was granted 5,276 warrants for Class C
         Unit interests in Starmark that represent a 5% interest in Starmark.
         The warrants may be exercised at any time through February 7, 2023 at
         an exercise price of $430 per unit. The warrant agreement does not
         provide for a cashless exercise of units.

 7. Mortgage Financing Through Securitization:

         In 2002, the Company and three affiliates, W.P. Carey & Co. LLC ("W. P.
         Carey"), Carey Institutional Properties Incorporated ("CIP(R)") and
         Corporate Property Associates 12 Incorporated ("CPA(R):12") obtained an
         aggregate of approximately $172,335 of limited recourse mortgage
         financing collateralized by 62 leased properties. The lender pooled the
         loans into a trust, Carey Commercial Mortgage Trust, a non-affiliate,
         whose assets consist solely of the loans, and sold the interests in the
         trust as collateralized mortgage obligations in a private placement to
         institutional investors (the "Offered Interests"). The Company and the
         three affiliates acquired a separate class of subordinated interests in
         the trust (the "CPA(R) Interests"). The amount of CPA(R) Interests
         acquired by the Company was proportional to the mortgage amounts
         obtained.

         All of the mortgage loans provide for payments of principal and
         interest at an annual rate of 7.5% and are based on a 25-year
         amortization schedule. Each loan is collateralized by mortgages on the
         properties and lease assignments. Under the lease assignments, the
         lessees direct their rent payment to the mortgage servicing company
         which in turn

                                      -26-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
            Amounts in thousands, except share and per share amounts

         distributes amounts in excess of debt service requirements to the
         applicable lessors. Under certain limited conditions, a property may be
         released from its mortgage by the substitution of another property.
         Such substitution is subject to the approval of the trustee of the
         trust.

         The initial Offered Interests consisted of $148,206 of mortgage loan
         balances with different tranches of principal entitled to distributions
         at annual interest rates as follows: $119,772 - 5.97%, $9,478 - 6.58%,
         $9,478 - 7.18% and $9,478 - 8.43%. The assumed final distribution dates
         for the four classes of Offered Interests range from December 2011
         through March 2012.

         The CPA(R) Interests were purchased for $24,129 of which the Company's
         share was $6,032, or 25%, and are comprised of two components, a
         component that will receive payments of principal and interest and a
         component that will receive payments of interest only. The CPA(R)
         Interests are subordinated to the Offered Interests and will be payable
         only when and if all distributions to the Offered Interests are
         current. The assumed final distribution date for the CPA(R) Interests
         is June 30, 2012. The distributions to be paid to the CPA(R) Interests
         do not have a stated rate of interest and will be affected by any
         shortfall in rents received from the lessees or defaults at the
         mortgaged properties. As of the purchase date, the Company's cost basis
         attributable to the principal and interest and interest only components
         was $3,612 and $2,420, respectively. Over the term of its ownership
         interest in the CPA(R) Interests, the value of the interest only
         component will fully amortize to $0 and the principal and interest
         component will amortize to its anticipated face value of its share in
         the underlying mortgages (which currently is $6,032). For financial
         reporting purposes, the effect of such amortization is reflected in
         interest income. Interest income, including all related amortization,
         is recognized using an effective interest method.

         The Company is accounting for its interest in the CPA(R) Interests as
         an available-for-sale security and it is measured at fair value with
         all gains and losses from changes in fair value reported as a component
         of other comprehensive income as part of shareholders' equity. The fair
         value of the Company's CPA(R) Interests was $6,792 and $6,258,
         reflecting an unrealized gain of $898 and $257 and accumulated
         amortization of $138 and $31 at December 31, 2003 and 2002,
         respectively. The fair value of the interests in the trust is
         determined using a discounted cash flow model with assumptions of
         market rates and the credit quality of the underlying lessees.

         The key variable in determining the fair value of the CPA(R) Interests
         is current interest rates. As required by SFAS No. 140, "Accounting for
         Transfer and Servicing of Financial Assets and Extinguishments of
         Liabilities," a sensitivity analysis of the current value of the CPA(R)
         Interests based on adverse changes in the market interest rates of 1%
         and 2% as of December 31, 2003 is as follows:

<TABLE>
<CAPTION>
                                               Actual          1% Adverse Change    2% Adverse Change
                                               ------          -----------------    -----------------
<S>                                            <C>             <C>                  <C>
Fair value of CPA(R) Interests                 $6,792                $6,461               $6,152
</TABLE>

         The above sensitivity is hypothetical and changes in fair value, based
         on a 1% or 2% variation, should not be extrapolated because the
         relationship of the change in assumption to the change in fair value
         may not always be linear.

 8. Mortgage Notes Payable:

         Mortgage notes payable, all of which are limited recourse to the
         Company, are collateralized by an assignment of various leases and by
         real property with a carrying value of $1,069,454. As of December 31,
         2003, mortgage notes payable had fixed interest rates ranging from
         6.09% to 8.85% and variable interest rates ranging from 3.12% to 6.49%
         and maturity dates ranging from 2008 to 2026.

         Scheduled principal payments during each of the five years following
         December 31, 2003 are as follows:

<TABLE>
<CAPTION>
Year Ending December 31,                     Total Debt          Fixed Rate Debt      Variable Rate Debt
------------------------                     ----------          ---------------      ------------------
<S>                                          <C>                 <C>                  <C>
     2004                                     $ 11,093               $ 10,513                $   580
     2005                                       12,139                 11,534                    605
     2006                                       13,124                 12,500                    624
     2007                                       14,092                 13,449                    643
     2008                                       20,275                 19,613                    662
     Thereafter through 2026                   631,452                606,525                 24,927
                                              --------               --------                -------
        Total                                 $702,175               $674,134                $28,041
                                              ========               ========                =======
</TABLE>

                                      -27-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
            Amounts in thousands, except share and per share amounts

         Interest paid, excluding capitalized interest, was $50,445, $42,813 and
         $20,271 in 2003, 2002 and 2001, respectively. Capitalized interest was
         $357 in 2003, $808 in 2002 and $1,986 in 2001.

  9. Dividends:

         Dividends paid to shareholders consist of ordinary income, capital
         gains, return of capital or a combination thereof for income tax
         purposes. For the three years ended December 31, dividends per share
         reported for tax purposes were as follows:

<TABLE>
<CAPTION>
                             2003       2002       2001
                             ----       ----       ----
<S>                         <C>        <C>        <C>
Capital gain dividend                  $ .01
Ordinary income             $ .57        .36      $ .44
Return of capital             .19        .38        .27
                            -----      -----      -----
                            $ .76      $ .75      $ .71
                            =====      =====      =====
</TABLE>

         A dividend of $.18920 per share for the quarter ended December 31, 2003
         ($12,662) was declared in December 2003 and paid in January 2004.

 10. Lease Revenues:

         The Company's operations consist of the investment in and the leasing
         of industrial and commercial real estate. For the years ended December
         31, 2003, 2002, and 2001 the financial reporting sources are as
         follows:

<TABLE>
<CAPTION>
                                                            2003       2002       2001
                                                            ----       ----       ----
<S>                                                       <C>        <C>         <C>
Per Statements of Income:
  Rental income from operating leases                     $108,705    $ 98,112    $55,490
  Interest income from direct financing leases              13,010      11,798      8,899
  Share of lease revenues applicable to minority
      interest                                              (7,838)     (7,629)    (4,579)
  Share of leasing revenues from equity
      investments                                           30,556      13,279     11,769
                                                          --------    --------    -------
                                                          $144,433    $115,560    $71,579
                                                          ========    ========    =======
</TABLE>

                                      -28-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
            Amounts in thousands, except share and per share amounts

         In 2003, 2002 and 2001, the Company earned its share of net lease
         revenues from its direct and indirect ownership of real estate from the
         following lease obligations:

<TABLE>
<CAPTION>
                                                             2003         %          2002          %        2001         %
                                                             ----                    ----                   ----
<S>                                                        <C>          <C>        <C>          <C>        <C>         <C>
Carrefour France, SAS                                      $ 11,597       8%       $  6,671       6%             -       -
Starmark Camhood, L.L.C. (b)                                  6,713       5               -       -              -       -
Nortel Networks Limited                                       6,001       4           6,001       5        $   157       -
Petsmart, Inc. (a)                                            5,812       4           6,228       5            635       1%
Clear Channel Communications, Inc.                            5,660       4               -       -              -       -
TruServ Corporation (b)                                       5,056       4              11       -              -       -
Atrium Companies, Inc.                                        4,457       3           4,451       4          2,810       4
Advance PCS, Inc.                                             4,300       3           4,300       4          4,300       6
Federal Express Corporation (a)                               3,958       3           3,915       3          3,872       5
Tower Automotive, Inc.                                        3,895       3           2,813       2              -       -
Galyan's Trading Company                                      3,811       3           3,811       3          3,811       5
Katun Corporation                                             3,739       3           1,746       2              -       -
Collins & Aikman Corporation                                  3,296       2           3,249       3            836       1
Advanced Micro Devices, Inc. (b)                              3,259       2           3,259       3          3,049       4
Metaldyne Company LLC                                         3,207       2           3,142       3          2,071       3
Applied Materials, Inc. (b)                                   3,097       2           3,099       3          3,072       4
Perkin Elmer, Inc.                                            2,985       2           2,494       2             26       -
APW North America Inc.                                        2,857       2           2,761       2          2,650       4
Amerix Corporation                                            2,477       2           2,458       2          2,393       3
Celestica Corporation                                         2,421       2           2,420       2          1,614       2
Institutional Jobbers Company                                 2,271       2           2,271       2          2,271       3
Buffets, Inc.                                                 2,224       2           2,133       2          2,131       3
Gerber Scientific, Inc.                                       2,202       2           2,134       2            894       1
CheckFree Holdings, Inc. (b)                                  2,128       2           2,108       2          2,088       3
McLane Company, Inc. (a)                                      2,113       1           2,090       2          2,075       3
Gibson Guitar Corp. (c)                                       2,053       1           1,892       2          1,493       2
Waddington North America, Inc.                                2,038       1           1,811       2          1,202       2
Best Buy Co., Inc.                                            2,004       1           1,959       2          1,989       3
Special Devices, Inc. (b)                                     1,995       1           1,962       2          1,119       2
Stellex Technologies, Inc.                                    1,984       1           1,883       3          1,563       4
Builders FirstSource, Inc. (a)                                1,871       1           1,944       2          1,052       1
Consolidated Theaters Holding, G.P.                           1,733       1           1,711       1          1,691       2
PW Eagle, Inc.                                                1,651       1           1,374       1              -       -
American Tire Distributors, Inc.                              1,645       1           1,261       1              -       -
New Creative Enterprises, Inc.                                1,590       1           1,576       1            504       -
Rave Reviews Cinemas, L.L.C.                                  1,531       1           1,405       1            780       -
Other (a) (b) (c)                                            24,802      17          23,217      18         19,431      29
                                                           --------     ---        --------     ---        -------     ---
                                                           $144,433     100%       $115,560     100%       $71,579     100%
                                                           ========     ===        ========     ===        =======     ===
</TABLE>

(a) Net of minority interest of an affiliate.

(b) Represents the Company's proportionate share of lease revenues from its
    equity investments.

(c) Net of unaffiliated third party's minority interest.

11. Segment Information:

         The Company has determined that it operates in one business segment,
         real estate operations with domestic and foreign investments. The
         Company acquired its first foreign real estate investment in January
         2001.

         For 2003, geographic information for the real estate operations segment
         is as follows:

                                      -29-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
            Amounts in thousands, except share and per share amounts

<TABLE>
<CAPTION>
                                                   Domestic                Foreign              Total Company
                                                  ----------               --------             ------------
<S>                                               <C>                      <C>                  <C>
Revenues                                          $  109,622               $ 18,830               $  128,452
Expenses                                              88,026                 19,129                  107,155
Income from equity investments                        12,992                      -                   12,992
Net operating income (loss) (1)                       33,099                   (299)                  32,800
Total assets                                       1,143,581                202,166                1,345,747
Total long-lived assets                            1,055,321                190,412                1,245,733
</TABLE>

         For 2002, geographic information for the real estate operations segment
         is as follows:

<TABLE>
<CAPTION>
                                                   Domestic                Foreign              Total Company
                                                  ----------               --------             ------------
<S>                                               <C>                      <C>                   <C>
Revenues                                          $  101,202               $ 11,154               $  112,356
Expenses                                              76,348                 10,098                   86,446
Income from equity investments                         5,320                      -                    5,320
Net operating income(1)                               28,451                  1,055                   29,506
Total assets                                       1,151,723                168,174                1,319,897
Total long-lived assets                            1,043,682                155,248                1,198,930
</TABLE>

         For 2001, geographic information for the real estate operations segment
         is as follows:

<TABLE>
<CAPTION>
                                                   Domestic                Foreign              Total Company
                                                  ----------               --------             ------------
<S>                                               <C>                      <C>                  <C>
Revenues                                             $65,845                 $1,296                  $67,141
Expenses                                              51,032                  1,006                   52,038
Income from equity investments                         3,693                      -                    3,693
Net operating income(1)                               18,215                    290                   18,505
Total assets                                       1,058,123                 39,115                1,097,238
Total long-lived assets                              889,238                 38,092                  927,330
</TABLE>

         (1) Income from continuing operations before (loss) gain.

12. Impairment Charges:

         2003

         The Company owns a property in Gardena, California leased to Scott
         Companies Inc. Scott has rent arrearages of $474 as of December 31,
         2003 and as a result of its financial difficulties has defaulted on its
         lease. The Company has written down the property to its estimated fair
         value and recognized an impairment charge of $2,900.

         In connection with the Company's annual review of the estimated
         residual values on its properties classified as net investments in
         direct financing leases, the Company determined that an other than
         temporary decline in estimated residual value had occurred at its
         property in Mooresville, North Carolina leased to NASCAR Technical
         Institute, Inc., and the accounting for the direct financing lease was
         revised using the changed estimates. The resulting change in estimate
         resulted in the recognition of an impairment charge of $203.

         2001

         The Company purchased a property in Daleville, Indiana in June 1998 and
         entered into a net lease with Burlington Motor Carriers, Inc.
         ("Burlington"). Subsequent to Burlington's petition of bankruptcy, the
         lease was terminated. The Company recorded an impairment charge of
         $3,810 on the Burlington property in 2001.

13. Purchases of Real Estate:

         On July 24, 2003, the Company completed an expansion at its existing
         facility in Le Mans, France leased to Carrefour France SAS
         ("Carrefour") at a cost of E9,068 ($10,422 based on the exchange rate
         at the completion date) and amended and restated its existing lease
         with Carrefour. The amended and restated lease has a remaining term
         through March 2011 and provides for an increase in annual rent of E870
         to E2,307 ($2,651), with annual rent increases based on a formula
         indexed to increases in the INSEE, a French construction cost index.

                                      -30-

<PAGE>

                  CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
            Amounts in thousands, except share and per share amounts

         In connection with the expansion, the Company obtained E7,137 ($8,203)
         of limited recourse mortgage financing collateralized by the property.
         The loan provides for quarterly payments of interest at an annual
         interest rate of 5.15%. The interest rate is fixed through July 2010,
         at which time the loan will convert to a variable rate. Principal
         installments are payable based on an initial 2.60% annuity per annum,
         with scheduled increases throughout the term of the loan. The loan
         matures on April 30, 2017, at which time a balloon payment is
         scheduled.

14. Discontinued Operations:

         In accordance with SFAS No. 144, "Accounting for the Impairment or
         Disposal of Long-Lived Assets", effective for financial statements
         issued for fiscal years beginning after December 15, 2001, the results
         of operations and gain or loss on sales of real estate for properties
         sold or held for sale are to be reflected in the consolidated
         statements of operations as "Discontinued Operations" for all periods
         presented. The provisions of SFAS No. 144 are effective for disposal
         activities initiated by the Company's commitment to a plan of
         disposition after the date it is initially applied (January 1, 2002).
         Properties held for sale as of December 31, 2001 are not included in
         discontinued operations.

         No properties are held for sale as of December 31, 3003. At December
         31, 2002, the operations from a property in Greenville, Texas which was
         sold in June 2002 at a gain of $333 were included as "Discontinued
         Operations." A summary of Discontinued Operations for the years ended
         December 31, 2002 and 2001 is as follows.

<TABLE>
<CAPTION>
                                                          Year Ended December 31,
                                                          -----------------------
                                                             2002         2001
                                                             ----         ----
<S>                                                       <C>             <C>
Revenues (primarily rental revenues)                         $150         $317
Expenses (primarily interest on mortgages,
   depreciation and property expenses)                        (78)        (177)
Gain on sale of real estate                                   333            -
                                                             ----          ---
    Income from discontinued operations                      $405         $140
                                                             ====         ====
</TABLE>

15. Disclosures About Fair Value of Financial Instruments:

         The Company estimates that the fair value of mortgage and notes payable
         at December 31, 2003 and 2002 was approximately $706,040 and $681,711,
         respectively. The fair value of debt instruments was evaluated using a
         discounted cash flow model with rates that take into account the credit
         of the tenants and interest rate risk.

16. Selected Quarterly Financial Data (unaudited):

<TABLE>
<CAPTION>
                                                                             Three Months Ended
                                                                             ------------------
                                                 March 31, 2003     June 30, 2003     September 30, 2003      December 31, 2003
                                                 --------------     -------------     ------------------      -----------------
<S>                                              <C>                <C>               <C>                     <C>
Revenues                                            $32,864            $30,906             $32,815                  $31,867
Expenses                                             25,136             25,039              30,418                   26,562
Net income                                           10,604              8,666               6,124                    8,426
Net income per share - Basic and diluted                .16                .13                 .09                      .13
Dividends declared per share                          .1884              .1887               .1889                    .1892
</TABLE>

<TABLE>
<CAPTION>
                                                                             Three Months Ended
                                                                             ------------------
                                                 March 31, 2002     June 30, 2002     September 30, 2002      December 31, 2002
                                                 --------------     -------------     ------------------      -----------------
<S>                                              <C>                <C>               <C>                     <C>
Revenues                                            $24,931            $27,815             $29,500                  $30,110
Expenses                                             18,888             20,195              22,556                   24,807
Income from continuing operations                     7,311              8,468               7,784                    6,298
Income from continuing operations per
   share - Basic and diluted                            .11                .13                 .12                      .09
Net income                                            7,347              8,837               7,784                    6,298
Net income per share - Basic and diluted                .11                .13                 .12                      .09
Dividends declared per share                          .1875              .1877               .1879                    .1882
</TABLE>

                                      -31-

<PAGE>

MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
        STOCKHOLDER MATTERS

There is no established public trading market for the Shares of the Company. As
of December 31, 2003, there were 21,137 holders of record of the Shares of the
Company.

The Company is required to distribute annually at least 90% of its Distributable
REIT Taxable Income to maintain its status as a REIT. Quarterly dividends paid
by the Company since December 31, 2000 are as follows:

<TABLE>
<CAPTION>
                                  Cash Dividends Paid Per Share
                             ----------------------------------------
                               2003             2002           2001
                               ----             ----           ----
<S>                          <C>              <C>            <C>
First quarter                $.188200         $.186245       $.171249
Second quarter                .188400          .187500        .175005
Third quarter                 .188700          .187700        .178751
Fourth quarter                .188900          .187900        .182500
                             --------         --------       --------
                             $.754200         $.749345       $.707505
                             ========         ========       ========
</TABLE>

REPORT ON FORM 10-K

         The Advisor will supply to any shareholder, upon written request and
         without charge, a copy of the Annual Report on Form 10-K ("10-K") for
         the year ended December 31, 2003 as filed with the Securities and
         Exchange Commission ("SEC"). The 10-K may also be obtained through the
         SEC's EDGAR database at www.sec.gov.

                                      -32-