##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to.
 Commission file number: 000-25771
 (CPA LOGO)
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
  Maryland
    
    13-3951476(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)50 Rockefeller PlazaNew York, New York
    
    10020(Address of principal executive offices)
    
    (Zip code)
  Investor Relations (212) 492-8920
 (212) 492-1100
 None
  Common Stock, Par Value $0.001 Per Share
 o þ
 o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer
o
    
    Non-accelerated filer
þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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TABLE OF CONTENTS
 Page No.PART IItem 1. Business
    
    2Item 1A. Risk Factors
    
    11Item 1B. Unresolved Staff Comments
    
    20Item 2. Properties
    
    20Item 3. Legal Proceedings
    
    20Item 4. Submission of Matters to a Vote of Security Holders
    
    21PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
    
    21Item 6. Selected Financial Data
    
    22Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    22Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    36Item 8. Financial Statements and Supplementary Data
    
    39Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    70Item 9A. Controls and Procedures
    
    70Item 9B. Other Information
    
    71PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    71Item 11. Executive Compensation
    
    71Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    71Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    71Item 14. Principal Accountant Fees and Services
    
    71PART IVItem 15. Exhibits, Financial Statement Schedules
    
    72SIGNATURES
    
    73EX-21.1: SUBSIDIARIES OF REGISTRANTEX-23.1: CONSENT OF PRICEWATERHOUSECOOPERS LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32: CERTIFICATIONS
  Forward-Looking Statements
   CPA®:14
2007 10-K 1




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##### Table of Contents



Financial information in this report is in thousands except share and per share amounts.
  Item 1. Business.
 (a) General Development of Business
 Overview
   
    
    clauses providing for mandated rent increases or periodic rent increases over the term of the lease tied to increases in the Consumer Price Index (CPI) or other indices for the jurisdiction in which the property is located or,
when appropriate, increases tied to the volume of sales at the property;
    
    indemnification for environmental and other liabilities;
    
    operational or financial covenants of the tenant; and
    
    guarantees of lease obligations from parent companies or letters of credit.
  ® ® ® ® ® ®
   Significant Developments During 2007:
 Investment Activity
 Financing Activity
 CPA®:14
2007 10-K 2




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##### Table of Contents



Disposition Activity 
  Tenant Activity
  SEC Investigation ® ® ®
 Credit Facility
 Directors and Senior Management 
 (b) Financial Information About Segments
  (c) Narrative Description of Business
 Business Objectives and Strategy
  CPA®:14
2007 10-K 3




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##### Table of Contents




    
    own a diversified portfolio of triple-net leased real estate;
    
    fund distributions to shareholders; and
    
    increase our equity in our real estate by making regular mortgage principal payments.
  ®
 Our Portfolio
  Geographic Diversification
  Consolidated Investments
    
    

Equity Investments in Real Estate (b)Annualized
    
    
    % of Annualized
    
    
    Annualized
    
    
    % of AnnualizedContractual Lease
    
    
    Contractual
    
    
    Contractual Lease
    
    
    ContractualRegion
    

Revenue (a)
    
    
    Lease Revenue
    
    

Revenue (a)
    
    
    Lease RevenueUnited StatesEast
    
    $
    40,018
    
    
    
    25
    %
    
    $
    4,215
    
    
    
    9
    %South
    
    
    35,674
    
    
    
    22
    
    
    
    10,549
    
    
    
    21Midwest
    
    
    34,872
    
    
    
    21
    
    
    
    8,151
    
    
    
    17West
    
    
    25,108
    
    
    
    15
    
    
    
    14,018
    
    
    
    29Total U.S.
    
    
    135,672
    
    
    
    83
    
    
    
    36,933
    
    
    
    76InternationalEurope
    
    
    27,398
    
    
    
    17
    
    
    
    12,134
    
    
    
    24Total
    
    $
    163,070
    
    
    
    100
    %
    
    $
    49,067
    
    
    
    100
    %
 
 (a)
    
    Reflects annualized contractual minimum base rent for the fourth quarter of 2007.(b)
    
    Reflects our pro rata share of annualized contractual minimum base rent for the fourth
quarter of 2007 from equity investments in real estate. Property Diversification
  Consolidated Investments
    
    

Equity Investments in Real Estate (b)Annualized
    
    
    % of Annualized
    
    
    Annualized
    
    
    % of AnnualizedContractual Lease
    
    
    Contractual
    
    
    Contractual Lease
    
    
    ContractualProperty Type
    

Revenue (a)
    
    
    Lease Revenue
    
    

Revenue (a)
    
    
    Lease RevenueIndustrial
    
    $
    50,943
    
    
    
    31
    %
    
    $
    13,605
    
    
    
    28
    %Warehouse/distribution
    
    
    47,147
    
    
    
    29
    
    
    
    8,148
    
    
    
    17Office
    
    
    36,025
    
    
    
    22
    
    
    
    6,163
    
    
    
    13Retail
    
    
    15,554
    
    
    
    10
    
    
    
    11,985
    
    
    
    24Other properties(c)
    
    
    13,401
    
    
    
    8
    
    
    
    9,166
    
    
    
    18Total
    
    $
    163,070
    
    
    
    100
    %
    
    $
    49,067
    
    
    
    100
    %
 
 (a)
    
    Reflects annualized contractual minimum base rent for the fourth quarter of 2007. CPA®:14
2007 10-K 4




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##### Table of Contents



(b)
    
    Reflects our pro rata share of annualized contractual minimum base rent for the fourth
quarter of 2007 from equity investments in real estate.(c)
    
    Includes educational facilities, movie theaters, sports/fitness facilities and undeveloped
land. Tenant Diversification
  Consolidated Investments
    
    

Equity Investments in Real Estate (b)Annualized
    
    
    % of Annualized
    
    
    Annualized
    
    
    % of AnnualizedContractual Lease
    
    
    Contractual
    
    
    Contractual Lease
    
    
    ContractualTenant Industry (c)
    

Revenue (a)
    
    
    Lease Revenue
    
    

Revenue (a)
    
    
    Lease RevenueRetail Stores
    
    $
    39,890
    
    
    
    24
    %
    
    $
    15,374
    
    
    
    31
    %Electronics
    
    
    23,703
    
    
    
    15
    
    
    
    9,999
    
    
    
    21Automobile
    
    
    16,393
    
    
    
    10
    
    
    
    
    
    
    
    Construction and Building
    
    
    11,913
    
    
    
    7
    
    
    
    6,431
    
    
    
    13Transportation  Cargo
    
    
    11,729
    
    
    
    7
    
    
    
    
    
    
    
    Consumer and Non-Durable Goods
    
    
    8,638
    
    
    
    5
    
    
    
    
    
    
    
    Leisure, Amusement, Entertainment
    
    
    8,599
    
    
    
    5
    
    
    
    5,810
    
    
    
    12Chemicals, Plastics, Rubber, and Glass
    
    
    7,856
    
    
    
    5
    
    
    
    
    
    
    
    Beverages, Food and Tobacco
    
    
    6,941
    
    
    
    4
    
    
    
    1,478
    
    
    
    3Business and Commercial Services
    
    
    6,559
    
    
    
    4
    
    
    
    2,357
    
    
    
    5Healthcare, Education and Childcare
    
    
    6,383
    
    
    
    4
    
    
    
    1,671
    
    
    
    4Machinery
    
    
    4,010
    
    
    
    3
    
    
    
    
    
    
    
    Buildings and Real Estate
    
    
    
    
    
    
    
    
    
    
    2,140
    
    
    
    4Transportation  Personal
    
    
    
    
    
    
    
    
    
    
    1,153
    
    
    
    2Grocery
    
    
    
    
    
    
    
    
    
    
    1,054
    
    
    
    2Other (d)
    
    
    10,456
    
    
    
    7
    
    
    
    1,600
    
    
    
    3Total
    
    $
    163,070
    
    
    
    100
    %
    
    $
    49,067
    
    
    
    100
    %
 
 (a)
    
    Reflects annualized contractual minimum base rent for the fourth quarter of 2007.(b)
    
    Reflects our pro rata share of annualized contractual minimum base rent for the fourth
quarter of 2007 from equity investments in real estate.(c)
    
    Based on the Moodys classification system and information provided by the tenant.(d)
    
    Includes revenue from tenants in the following industries: hotels and gaming; printing and
publishing; aerospace and defense; consumer and durable goods; forest products and paper;
mining; banking; buildings and real estate; personal transportation and grocery. CPA®:14
2007 10-K 5




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##### Table of Contents



Lease Expirations
  Consolidated Investments
    
    

Equity Investments in Real Estate (b)Annualized
    
    
    % of Annualized
    
    
    Annualized
    
    
    % of AnnualizedContractual Lease
    
    
    Contractual
    
    
    Contractual Lease
    
    
    ContractualYear of Lease Expiration
    

Revenue (a)
    
    
    Lease Revenue
    
    

Revenue (a)
    
    
    Lease Revenue2008
    
    $
    525
    
    
    
    
    %
    
    $
    
    
    
    
    
    %2009
    
    
    1,665
    
    
    
    1
    
    
    
    
    
    
    
    2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2011
    
    
    20,679
    
    
    
    13
    
    
    
    
    
    
    
    2012
    
    
    277
    
    
    
    
    
    
    
    
    
    
    
    2013
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2014
    
    
    1,827
    
    
    
    1
    
    
    
    1,153
    
    
    
    22015
    
    
    6,643
    
    
    
    4
    
    
    
    2,358
    
    
    
    52016
    
    
    13,484
    
    
    
    8
    
    
    
    1,477
    
    
    
    32017
    
    
    14,770
    
    
    
    9
    
    
    
    
    
    
    
    2018-2022
    
    
    96,945
    
    
    
    60
    
    
    
    22,939
    
    
    
    472023-2027
    
    
    4,872
    
    
    
    3
    
    
    
    9,006
    
    
    
    182028 and thereafter
    
    
    1,383
    
    
    
    1
    
    
    
    12,134
    
    
    
    25Total
    
    $
    163,070
    
    
    
    100
    %
    
    $
    49,067
    
    
    
    100
    %
 
 (a)
    
    Reflects annualized contractual minimum base rent for the fourth quarter of 2007.(b)
    
    Reflects our pro rata share of annualized contractual minimum base rent for the fourth
quarter of 2007 from equity investments in real estate. Asset Management
 
 
 Holding Period
 
 ®
 CPA®:14
2007 10-K 6




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® ® ®
 Financing Strategies
 
 
  Investment Strategies
     Tenant/Borrower Evaluation
 CPA®:14
2007 10-K 7




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##### Table of Contents



Properties Important to Tenant/Borrower Operations
 Diversification.
 Lease Terms.
 Collateral Evaluation.
 Transaction Provisions that Enhance and Protect Value.
 Other Equity Enhancements.
 Investment Decisions. ® ® ® ® ® ®
 CPA®:14
2007 10-K 8




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##### Table of Contents




    
    Nathaniel S. Coolidge  Former senior vice president and head of the bond and corporate
finance department of John Hancock Mutual Life Insurance (currently known as John Hancock
Life Insurance Company). Mr. Coolidges responsibilities included overseeing its entire
portfolio of fixed income investments.
    
    Trevor P. Bond  Co-founder of Credit Suisses real estate equity group. Currently
managing member of private investment vehicle, Maidstone Investment Co., LLC.
    
    Frank J. Hoenemeyer  Former vice chairman and chief investment officer of the
Prudential Insurance Company of America. As chief investment officer, he was responsible
for all of Prudential Insurance Company of Americas investments including stocks, bonds
and real estate.
    
    Dr. Lawrence R. Klein  Currently serving as professor emeritus of economics and finance
at the University of Pennsylvania and its Wharton School. Recipient of the 1980 Nobel Prize
in economic sciences and former consultant to both the Federal Reserve Board and the
Presidents Council of Economic Advisors.
    
    George E. Stoddard  Former officer-in-charge of the direct placement department of The
Equitable Life Assurance Society of the United States and our former chief investment
officer.
    
    Dr. Karsten von Köller  Currently chairman of Lone Star Germany GmbH and deputy
chairman of the supervisory board of Corealcredit Bank AG.
 Segments
  Competition
  Environmental Matters
     CPA®:14
2007 10-K 9




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##### Table of Contents



Transactions with Affiliates
 ® ® ®
 Types of Investments
  Ventures With Affiliates and Others. ®
 Other Investments.
      CPA®:14
2007 10-K 10




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##### Table of Contents



(d) Financial Information About Geographic Areas
  (e) Available Information
  
 Item 1A. Risk Factors.
   WPC and Carey Financial have recently settled the previously disclosed SEC investigation.
If other actions are brought against WPC or Carey Financial, we could be adversely affected.
 ®
 ®
  We are subject to the risks of real estate ownership, which could reduce the value of our
properties.
  
    
    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; 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.
  CPA®:14
2007 10-K 11




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##### Table of Contents



We may recognize substantial impairment charges on our properties.
  The inability of a tenant in a single tenant property to pay rent will reduce our revenues.
  The bankruptcy or insolvency of tenants or borrowers may cause a reduction in revenue.
  
    
    the loss of lease or interest payments;
    
    an increase in the costs incurred to carry the property;
    
    a reduction in the value of our shares; and
    
    a decrease in distributions to shareholders.
    ® ®
 CPA®:14
2007 10-K 12




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##### Table of Contents



Our participation in joint ventures creates additional risk.
  We do not fully control the management for our properties.
  Our leases may permit tenants to purchase a property at a predetermined price, which could limit
our realization of any appreciation or result in a loss.
  Liability for uninsured losses could adversely affect our financial condition.
  Our success is dependent on the performance of the advisor.
 ®
 CPA®:14
2007 10-K 13




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##### Table of Contents



The advisor may be subject to conflicts of interest.
  
    
    the receipt of compensation by the advisor for property purchases, leases, sales and
financing for us may cause the advisor to engage in transactions that generate higher fees,
rather than transactions that are more appropriate or beneficial for our business;
    
    agreements between us and the advisor, including agreements regarding compensation,
will not be negotiated on an arms length basis as would occur if the agreements were with
unaffiliated third parties;
    
    acquisitions of single properties or portfolios of properties from affiliates,
including WPC or the CPA® REITs, subject to our investment policies and
procedures, may take the form of a direct purchase of assets, a merger or another type of
transaction;
    
    competition with certain affiliates for property acquisitions may cause the advisor and
its affiliates to direct properties suitable for us to other related entities;
    
    a decision by the advisor (on our behalf) of whether to hold or sell a property could
impact the timing and amount of fees payable to the advisor because it receives asset
management fees and may decide not to sell a property;
    
    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.
 We have limited independence from the advisor.
  The termination or replacement of the advisor could trigger a default or repayment event under our
financing arrangements for some of our assets.
  Our net asset value is based in part on information that the advisor provides to a third party.
  Appraisals that we obtain may include leases in place on the property being appraised and if the
leases terminate, the value of the property may become significantly lower.
  There is not, and may never be a public market for our shares, so it will be difficult for
shareholders to sell shares quickly.
  CPA®:14
2007 10-K 14




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Our use of debt to finance investments could adversely affect our cash flow.
   2008
    
    $
    17,6492009
    
    49,064

(a)2010
    
    63,162
(a)2011
    
    259,824
(a)2012
    
    161,237
(a)
 
 (a)
    
    Excludes our pro rata share of mortgage obligations of equity investments in real estate
totaling $52,240 in 2009, $4,199 in 2010, $9,836 in 2011 and $8,580 in 2012. Deterioration in the credit markets could adversely affect our ability to finance or refinance
investments and the ability of our tenants to meet their obligations which could affect our ability
to make distributions.
    Failure to qualify as a REIT would adversely affect our operations and ability to make
distributions.
   CPA®:14
2007 10-K 15




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Possible legislative or other actions affecting REITs could adversely affect our REIT qualification
and our shareholders.
  Dividends payable by REITs generally do not qualify for reduced U.S. federal income tax rates
because qualifying REITs do not pay U.S. federal income tax on their net income.
 .
 Our distributions may exceed our earnings.
  The ability of our board of directors to change our investment policies or revoke our REIT election
without shareholder approval may cause adverse consequences to our shareholders.
   Potential liability for environmental matters could adversely affect our financial condition.
  CPA®:14
2007 10-K 16




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##### Table of Contents




    
    Responsibility and liability for the cost of investigation, removal or remediation of
hazardous or toxic substances released on or from our property, generally without regard to
our knowledge of, or responsibility for, the presence of these contaminants.
    
    Liability for claims by third parties based on damages to natural resources or property,
personal injuries, or costs of removal or remediation of hazardous or toxic substances in,
on, or migrating from our property.
    
    Responsibility for managing asbestos-containing building materials, and third-party
claims for exposure to those materials.
  International investments involve additional risks.
  
    
    Changing governmental rules and policies;
    
    Enactment of laws relating to the foreign ownership of property and laws relating to the
ability of foreign entities to remove invested capital or profits earned from activities
within the country to the U.S.;
    
    Expropriation;
    
    Legal systems under which the ability to enforce contractual rights and remedies may be
more limited than would be the case under U.S. law;
    
    The difficulty in conforming obligations in other countries and the burden of complying
with a wide variety of foreign laws including tax requirements, land use, zoning laws, and
environmental laws;
    
    Adverse market conditions caused by changes in national or local economic or political conditions;
    
    Changes in relative interest rates;
    
    Changes in the availability, cost and terms of mortgage funds resulting from varying national economic policies; and
    
    Changes in real estate and other tax rates and other operating expenses in particular countries.
    We are not required to meet any diversification standards; therefore, our investments may become
subject to concentration of risk.
  CPA®:14
2007 10-K 17




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##### Table of Contents



The returns on our investments in net leased properties may not be as great as returns on equity
investments in real properties during strong real estate markets.
  A potential change in U.S. accounting standards regarding operating leases may make the leasing of
facilities less attractive to our potential domestic tenants, which could reduce overall demand for
our leasing services.
  Our net tangible book value may be adversely affected if we are required to adopt the fair value
accounting provisions of SOP 07-1.
   CPA®:14
2007 10-K 18




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##### Table of Contents



Your investment return may be reduced if we are required to register as an investment company under
the Investment Company Act.
  
    
    limitations on capital structure;
    
    restrictions on specified investments;
    
    prohibitions on transactions with affiliates; and
    
    compliance with reporting, record keeping, voting, proxy disclosure and other rules and
regulations that would significantly increase our operating expenses.
   Maryland law could restrict change in control.
  
    
    any person who beneficially owns 10% or more of the voting power of outstanding shares,
referred to as an interested shareholder;
    
    an affiliate who, at any time within the two-year period prior to the date in question,
was the beneficial owner of 10% or more of the voting power of our outstanding shares, also
referred to as an interested shareholder; or
    
    an affiliate of an interested shareholder.
   Shareholders equity may be diluted
  CPA®:14
2007 10-K 19




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##### Table of Contents



Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
   
 Item 3. Legal Proceedings.
 SEC Investigation
 ® ®
 ® ® ®
 ® ® ®
  Other
   CPA®:14
2007 10-K 20




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders.
     Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
  Distributions
  2007
    
    
    2006First quarter
    
    $
    0.1934
    
    
    $
    0.1924Second quarter
    
    
    0.1939
    
    
    
    0.1929
    (a)Third quarter
    
    
    0.1944
    
    
    
    0.1929Fourth quarter
    
    
    0.1949
    
    
    
    0.1929
    (b)$
    0.7766
    
    
    $
    0.7711
 
 (a)
    
    Excludes a special distribution approved by our board of directors in connection with our
disposition activity of $0.45 per share that was paid in July 2006 to shareholders of record
as of June 30, 2006.(b)
    
    Excludes a special distribution approved by our board of directors in connection with our
disposition activity of $0.04 per share that was paid in January 2007 to shareholders of
record as of November 30, 2006. Unregistered Sales of Equity Securities
  Issuer Purchases of Equity Securities
 Maximum number (orTotal number of shares
    
    approximate dollar value)purchased as part of
    
    of shares that may yet beTotal number of
    
    Average price
    
    publicly announced
    
    purchased under the2007 Period
    

shares purchased (a)
    
    paid per share
    
    plans or programs (a)
    
    plans or programs (a)October
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ANovember
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ADecember
    
    
    345,851
    
    
    $
    12.28
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    345,851
 
 (a)
    
    All shares were purchased pursuant to our redemption plan. In November 1997, we announced a
redemption plan under which we may elect to redeem shares subject to certain conditions and
limitations. The maximum amount of shares purchasable in any period depends on the
availability of funds generated by the distribution reinvestment and stock purchase plan and
other factors at the discretion of our board of directors. The redemption plan will terminate
if and when our shares are listed on a national securities market. CPA®:14
2007 10-K 21




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##### Table of Contents



Item 6. Selected Financial Data.
   Years ended December 31,2007
    
    2006
    
    2005
    
    2004
    
    2003Operating DataRevenues from continuing operations
    
    $
    165,598
    
    
    $
    134,998
    
    
    $
    131,910
    
    
    $
    127,771
    
    
    $
    123,924Income from continuing operations
    
    
    56,943
    
    
    
    58,077
    
    
    
    46,325
    
    
    
    37,951
    
    
    
    33,002Earnings from continuing operations per share
    
    
    0.65
    
    
    
    0.83
    
    
    
    0.68
    
    
    
    0.56
    
    
    
    0.50Net income
    
    
    64,390
    
    
    
    69,618
    
    
    
    47,249
    
    
    
    38,940
    
    
    
    33,820Earnings per share
    
    
    0.73
    
    
    
    0.99
    
    
    
    0.69
    
    
    
    0.58
    
    
    
    0.51Cash distributions paid
    
    
    68,323
    
    
    
    83,633
    
    
    
    51,905
    
    
    
    50,973
    
    
    
    50,173Cash distributions declared per share
    
    
    0.7766
    
    
    
    0.7711
    
    
    
    0.7646
    
    
    
    0.7592
    
    
    
    0.7552Payment of mortgage principal (a)
    
    
    16,552
    
    
    
    12,580
    
    
    
    12,433
    
    
    
    11,046
    
    
    
    9,234Balance Sheet DataTotal assets
    
    $
    1,715,148
    
    
    $
    1,675,323
    
    
    $
    1,295,036
    
    
    $
    1,346,355
    
    
    $
    1,345,747Long-term obligations (b)
    
    
    861,902
    
    
    
    826,459
    
    
    
    679,522
    
    
    
    723,383
    
    
    
    724,705
 
 (a)
    
    Represents scheduled mortgage principal paid, excluding balloon payments.(b)
    
    Represents mortgage and note obligations and deferred acquisition fee installments. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Executive Overview
 Business Overview
  Current Developments and Trends
   ®
  CPA®:14
2007 10-K 22




---



##### Table of Contents



How Management Evaluates Results of Operations
    CPA®:14
2007 10-K 23




---



##### Table of Contents



2007
    
    
    2006
    
    
    2005Rental income
    
    $
    143,690
    
    
    $
    116,770
    
    
    $
    113,391Interest income from direct financing leases
    
    
    16,472
    
    
    
    14,353
    
    
    
    14,112$
    160,162
    
    
    $
    131,123
    
    
    $
    127,503
  Lessee
    
    2007
    
    
    2006
    
    
    2005Carrefour France, SAS (a)
    
    $
    17,379
    
    
    $
    15,161
    
    
    $
    14,460Petsmart, Inc. (b)
    
    
    8,303
    
    
    
    8,395
    
    
    
    8,303Federal Express Corporation (b)
    
    
    6,891
    
    
    
    6,816
    
    
    
    6,742Nortel Networks Limited
    
    
    6,165
    
    
    
    6,014
    
    
    
    6,001Dicks Sporting Goods, Inc. (c) (d)
    
    
    5,409
    
    
    
    2,706
    
    
    
    3,697Atrium Companies, Inc.
    
    
    5,017
    
    
    
    4,922
    
    
    
    4,787Katun Corporation (a)
    
    
    4,400
    
    
    
    4,000
    
    
    
    3,815Caremark Rx, Inc.
    
    
    4,300
    
    
    
    4,300
    
    
    
    4,300Tower Automotive, Inc. (e)
    
    
    4,194
    
    
    
    4,218
    
    
    
    4,099Special Devices, Inc. (e) (f)
    
    
    4,029
    
    
    
    333
    
    
    
    Perkin Elmer, Inc. (a)
    
    
    3,838
    
    
    
    3,430
    
    
    
    3,370Metaldyne Company LLC(e)
    
    
    3,797
    
    
    
    3,673
    
    
    
    3,553Collins & Aikman Corporation(e)
    
    
    3,644
    
    
    
    3,594
    
    
    
    3,473McLane Company Food Service Inc.
    
    
    3,569
    
    
    
    3,662
    
    
    
    3,601APW North America Inc. (g)
    
    
    2,957
    
    
    
    3,084
    
    
    
    3,027Amerix Corp.
    
    
    2,928
    
    
    
    2,928
    
    
    
    2,569Builders FirstSource, Inc.
    
    
    2,633
    
    
    
    2,598
    
    
    
    2,521Gibson Guitar Corp.
    
    
    2,556
    
    
    
    2,460
    
    
    
    2,566Gerber Scientific, Inc.
    
    
    2,508
    
    
    
    2,445
    
    
    
    2,361Waddington North America, Inc.
    
    
    2,468
    
    
    
    2,331
    
    
    
    2,321Other (a) (b) (c) (e)
    
    
    63,177
    
    
    
    44,053
    
    
    
    41,937$
    160,162
    
    
    $
    131,123
    
    
    $
    127,503
 
 (a)
    
    Increase is due to fluctuations in foreign currency exchange rates and inflation-indexed rent
increase.(b)
    
    Includes lease revenues applicable to minority interests totaling $6,356, $6,654 and $8,040
for the years ended December 31, 2007, 2006 and 2005, respectively.(c)
    
    Includes lease revenues from properties acquired in the merger.(d)
    
    Increase in 2007 is due to properties acquired in the merger. Decrease in 2006 is related to
the reclassification of a property as an equity investment in real estate in November 2005
following a transaction with CPA®:16  Global, an affiliate. CPA®:14
2007 10-K 24




---



##### Table of Contents



(e)
    
    Tenant operates in the automotive industry. Tower Automotive and Collins & Aikman both
emerged from Chapter 11 bankruptcy protection in 2007. Amounts for Collins & Aikman include
lease revenues totaling $1,231, $1,261 and $1,220 for the years ended December 31, 2007, 2006
and 2005, respectively from two properties that we sold in December 2007. Other includes
lease revenues from Meridian Automotive Systems, Inc., which emerged from bankruptcy
protection in 2006, totaling $1,297, $1,254 and $1,216 for the years ended December 31, 2007,
2006 and 2005, respectively.(f)
    
    We acquired the remaining interest in this property in the merger and now consolidate the
entity which holds the assets. We previously accounted for this entity under the equity method
of accounting.(g)
    
    Tenant terminated its lease for four of the five properties it leases from us in November
2007. We have entered into leases with existing subtenants at the properties that provide for
aggregate annual rent of $1,882 and expire between July 2008 and May 2017.  Ownership Interest
    
    
    Years ended December 31,Lessee
    
    at December 31, 2007
    
    
    2007
    
    
    2006
    
    
    2005U-Haul Moving Partners, Inc. and Mercury Partners, L.P.
    
    
    12
    %
    
    $
    28,541
    
    
    $
    28,541
    
    
    $
    28,541Hellweg Die Profi-Baumarkte GmbH & Co. KG (a)
    
    
    32
    %
    
    
    25,536
    
    
    
    
    
    
    
    True Value Company (b)
    
    
    50
    %
    
    
    14,171
    
    
    
    14,471
    
    
    
    14,471Advanced Micro Devices, Inc. (b)
    
    
    67
    %
    
    
    10,451
    
    
    
    10,451
    
    
    
    10,451LifeTime Fitness, Inc. (b) (c)
    
    
    56
    %
    
    
    9,406
    
    
    
    2,622
    
    
    
    CheckFree Holdings, Inc.
    
    
    50
    %
    
    
    4,711
    
    
    
    4,604
    
    
    
    4,494Compucom Systems, Inc. (b)
    
    
    67
    %
    
    
    4,549
    
    
    
    4,549
    
    
    
    4,467Best Buy Co., Inc. (b)
    
    
    37
    %
    
    
    4,484
    
    
    
    375
    
    
    
    Sicor, Inc.(b)
    
    
    50
    %
    
    
    3,343
    
    
    
    279
    
    
    
    The Upper Deck Company (b)
    
    
    50
    %
    
    
    3,194
    
    
    
    265
    
    
    
    Dicks Sporting Goods, Inc.(d)
    
    
    45
    %
    
    
    3,030
    
    
    
    1,349
    
    
    
    113Del Monte Corporation (b)
    
    
    50
    %
    
    
    2,955
    
    
    
    245
    
    
    
    ShopRite Supermarkets, Inc. (b)
    
    
    45
    %
    
    
    2,442
    
    
    
    204
    
    
    
    Town Sports International Holdings, Inc.(b) (c)
    
    
    56
    %
    
    
    1,086
    
    
    
    505
    
    
    
    Starmark Camhood, L.L.C. (c)
    
    
    
    
    
    
    
    
    
    
    6,338
    
    
    
    12,731Special Devices, Inc. (e)
    
    
    
    
    
    
    
    
    
    
    3,952
    
    
    
    4,175$
    117,899
    
    
    $
    78,750
    
    
    $
    79,443
 
 (a)
    
    We acquired our interest in this investment during 2007. In addition to lease revenues, the
venture also earned interest income of $19,508 on a note receivable. Amounts are subject to
fluctuations in foreign currency exchange rates.(b)
    
    Interest or additional interest in this equity investment in real estate acquired in the
merger.(c)
    
    Lease with Starmark Camhood was restructured in 2006, at which time we entered into new
leases with Life Time Fitness and Town Sports International.(d)
    
    Expansion at this property completed in January 2007. Prior to the completion of
construction, 100% of the lease revenues and net income of this investment were attributed to
us.(e)
    
    Property is consolidated effective December 1, 2006 following acquisition of the remaining
interest in the property in the merger. Results of Operations
 ®
 Lease Revenues
  CPA®:14
2007 10-K 25




---



##### Table of Contents



2007 vs. 2006
 2006 vs. 2005 ®
 Depreciation and Amortization
 2007 vs. 2006
 2006 vs. 2005
 Property Expense
 2007 vs. 2006
 2006 vs. 2005
 General and Administrative Expense
 2007 vs. 2006
 2006 vs. 2005
 Impairment Charges
 2007
 Income from Equity Investments in Real Estate
  CPA®:14
2007 10-K 26




---



##### Table of Contents



2007
   2006
 2005
 Gain on Exchange or Sale of Real Estate, Net
 2007
 Gain (Loss) on Foreign Currency Transactions, Derivative Instruments and Other, Net
  2007
 2006
 CPA®:14
2007 10-K 27




---



##### Table of Contents



2005
 Interest Expense
 2007 vs. 2006
 2006 vs. 2005
 Income from Discontinued Operations
 2007
 2006
 2005
 Net Income
 2007 vs. 2006
 2006 vs. 2005
 Financial Condition
 Sources and Uses of Cash During the Year
   CPA®:14
2007 10-K 28




---



##### Table of Contents



Operating Activities
 Investing Activities
 Financing Activities
 Summary of Financing
  December 31,2007
    
    
    2006BalanceFixed rate
    
    $
    724,766
    
    
    $
    657,819Variable rate (a)
    
    
    122,821
    
    
    
    152,996Total
    
    $
    847,587
    
    
    $
    810,815Percent of total debtFixed rate
    
    
    86
    %
    
    
    81
    %Variable rate (a)
    
    
    14
    %
    
    
    19
    %100
    %
    
    
    100
    %Weighted average interest rate at end of periodFixed rate
    
    
    7.3
    %
    
    
    7.7
    %Variable
rate (a)
    
    
    6.4
    %
    
    
    6.4
    %
 
 (a)
    
    Includes amounts outstanding under our credit facility totaling $0 and $25,000 at December
31, 2007 and 2006, respectively. Variable rate debt at December 31, 2007 and 2006 includes
$104,664 and $97,698, respectively, in mortgage obligations which currently bear interest at fixed rates but
which convert to variable rates during their term. There are no interest rate resets scheduled
during 2008. Cash Resources
  
    
    Cash and cash equivalents totaling $122,503. Of this amount, $13,282, at current
exchange rates, was held in foreign bank accounts, and we could be subject to significant
costs should we decide to repatriate these amounts.
    
    Credit facility with unused capacity of up to $100,000.
    
    We may also be able to borrow against certain currently unleveraged properties which
have an aggregate carrying value of $36,680.
 CPA®:14
2007 10-K 29




---



##### Table of Contents



Credit Facility
   
    
    New or refinanced non-recourse mortgage financing in 2007 on several directly owned
properties and equity investments in real estate, which we expect will reduce annual cash
flow from operations and distributions from equity investments in real estate by
approximately $4,500 and $1,200, respectively.
    
    The sale of properties during 2007, which we expect will reduce annual cash flow from
operations and distributions from equity investments in real estate by approximately $2,100
and $2,000, respectively.
    
    Our investment in a property in Finland and our receipt of a condominium interest in a
newly constructed retail facility, as well as our investment in two German ventures in
April 2007, which we expect will generate annual lease revenues and distributions from
equity investments in real estate of approximately $1,300 and $4,000, respectively.
    
    Scheduled rent increases on several properties during 2008, which should result in additional cash flow from operations.
    
    The advisors election for 2008 to continue to receive performance fees in restricted shares.
 Cash Requirements
  Off-Balance Sheet Arrangements and Contractual Obligations
  Total
    
    
    Less than 1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    More than 5 YearsNon-recourse debt  Principal
    
    $
    847,587
    
    
    $
    35,242
    
    
    $
    149,517
    
    
    $
    446,381
    
    
    $
    216,447Deferred acquisition fees  Principal
    
    
    14,315
    
    
    
    3,847
    
    
    
    6,283
    
    
    
    2,544
    
    
    
    1,641Interest on non-recourse debt and
deferred acquisition fees (a)
    
    
    285,966
    
    
    
    60,937
    
    
    
    109,007
    
    
    
    56,389
    
    
    
    59,633Subordinated disposition fees (b)
    
    
    4,870
    
    
    
    4,870
    
    
    
    
    
    
    
    
    
    
    
    Operating leases (c)
    
    
    4,451
    
    
    
    479
    
    
    
    972
    
    
    
    1,021
    
    
    
    1,979$
    1,157,189
    
    
    $
    105,375
    
    
    $
    265,779
    
    
    $
    506,335
    
    
    $
    279,700
 
 (a)
    
    Interest on variable rate debt obligations was calculated using the applicable variable
interest rates and balances outstanding as of December 31, 2007. CPA®:14
2007 10-K 30




---



##### Table of Contents



(b)
    
    Payable to the advisor, subject to meeting contingencies, in connection with any liquidity
event. In the first quarter of 2008 we asked our advisor to begin reviewing possible liquidity
alternatives for us. However, we have not yet considered such possible alternatives and there
can be no assurances any liquidity event for us will occur in the near future.(c)
    
    Operating and other lease commitments consist of our share of future minimum rents payable
under an office cost-sharing agreement with certain affiliates for the purpose of leasing
office space used for the administration of real estate entities. Amounts under the
cost-sharing agreement are allocated among the entities based on gross revenues and are
adjusted quarterly. The table above excludes the rental obligations under ground leases of two
ventures in which we own a combined interest of 32%. These obligations total approximately
$36,822 over the lease terms, which extend through 2091. We account for these ventures under
the equity method of accounting.    OwnershipInterest at
    
    
    
    
    
    
    Total ThirdLessee
    
    December 31, 2007
    
    
    Total Assets
    
    
    Party Debt
    
    
    Maturity DateAdvanced Micro Devices, Inc.
    
    
    67
    %
    
    $
    89,849
    
    
    $
    61,005
    
    
    
    1/2009Compucom Systems, Inc.
    
    
    67
    %
    
    
    32,119
    
    
    
    19,328
    
    
    
    4/2009ShopRite Supermarkets, Inc.
    
    
    45
    %
    
    
    16,258
    
    
    
    10,034
    
    
    
    7/2010The Upper Deck Company
    
    
    50
    %
    
    
    26,403
    
    
    
    11,437
    
    
    
    2/2011Del Monte Corporation
    
    
    50
    %
    
    
    15,757
    
    
    
    10,918
    
    
    
    8/2011Best Buy Co., Inc.
    
    
    37
    %
    
    
    41,868
    
    
    
    25,854
    
    
    
    2/2012True Value Company
    
    
    50
    %
    
    
    134,615
    
    
    
    71,649
    
    
    
    1/2013U-Haul
Moving Partners, Inc. and Mercury Partners, LP
    
    
    12
    %
    
    
    300,582
    
    
    
    171,803
    
    
    
    5/2014Checkfree Holdings, Inc.
    
    
    50
    %
    
    
    35,124
    
    
    
    30,000
    
    
    
    6/2016Starmark Holdings LLC, LifeTime Fitness, Inc.
and Town Sports International Holdings, Inc.
    
    
    56
    %
    
    
    125,924
    
    
    
    86,531
    
    
    
    12/2016,5/2017Hellweg Die Profi-Baumarkte GmbH & Co. KG(a)
    
    
    32
    %
    
    
    939,440
    
    
    
    417,766
    (b)
    
    
    1/2017Sicor,
Inc.(c)
    
    
    50
    %
    
    
    17,354
    
    
    
    35,350
    
    
    
    7/2017Dicks Sporting Goods, Inc.
    
    
    45
    %
    
    
    28,223
    
    
    
    22,775
    
    
    
    1/2022$
    1,803,516
    
    
    $
    974,450
 
 (a)
    
    We acquired this investment in April 2007. Ownership interest represents our combined
interest in two ventures as described in Note 7. Amounts shown are based on the exchange rate
of the Euro as of December 31, 2007.(b)
    
    Excludes manditorily redeemable minority interests of
$346,719 at December 31, 2007.(c)
    
    In June 2007, this venture completed the refinancing of an existing $2,483 non-recourse
mortgage with new non-recourse financing of $35,350 based on the appraised value of the
underlying real estate of the venture and distributed the proceeds to the venture partners.  CPA®:14
2007 10-K 31




---



##### Table of Contents



Critical Accounting Estimates
  Classification of Real Estate Assets
  Identification of Tangible and Intangible Assets in Connection with Real Estate Acquisitions
     CPA®:14
2007 10-K 32




---



##### Table of Contents



Basis of Consolidation
   Impairments
   CPA®:14
2007 10-K 33




---



##### Table of Contents



Provision for Uncollected Amounts from Lessees
  Fair Value of Assets and Liabilities
   Income Taxes
  CPA®:14
2007 10-K 34




---



##### Table of Contents



Adoption of New Accounting Pronouncements
 SFAS 155
  Recent Accounting Pronouncements
 SFAS 157
  SFAS 159
  SOP 07-1
  CPA®:14
2007 10-K 35




---



##### Table of Contents



FIN 46R-7
  SFAS 141R
  SFAS 160
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  Market Risks
   Interest Rate Risk
     CPA®:14
2007 10-K 36




---



##### Table of Contents



®
  2008
    
    2009
    
    2010
    
    2011
    
    2012
    
    Thereafter
    
    Total
    
    Fair valueFixed rate debt
    
    $
    30,299
    
    
    $
    62,357
    
    
    $
    76,493
    
    
    $
    269,243
    
    
    $
    155,680
    
    
    $
    130,694
    
    
    $
    724,766
    
    
    $
    727,519Variable rate debt
    
    $
    4,943
    
    
    $
    5,171
    
    
    $
    5,496
    
    
    $
    5,751
    
    
    $
    15,707
    
    
    $
    85,753
    
    
    $
    122,821
    
    
    $
    130,271
  Foreign Currency Exchange Rate Risk
    Lease Revenues (a)
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    TotalEuro
    
    $
    26,243
    
    
    $
    26,243
    
    
    $
    26,243
    
    
    $
    12,927
    
    
    $
    7,568
    
    
    $
    7,568
    
    
    $
    106,792British pound sterling
    
    
    1,383
    
    
    
    1,383
    
    
    
    1,445
    
    
    
    1,511
    
    
    
    1,511
    
    
    
    1,579
    
    
    
    8,812$
    27,626
    
    
    $
    27,626
    
    
    $
    27,688
    
    
    $
    14,438
    
    
    $
    9,079
    
    
    $
    9,147
    
    
    $
    115,604
 CPA®:14
2007 10-K 37




---



##### Table of Contents



Debt Service(a) (b)
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    TotalEuro
    
    $
    15,485
    
    
    $
    15,998
    
    
    $
    16,313
    
    
    $
    21,570
    
    
    $
    15,271
    
    
    $
    164,741
    
    
    $
    249,378British pound sterling
    
    
    571
    
    
    
    572
    
    
    
    572
    
    
    
    574
    
    
    
    577
    
    
    
    9,133
    
    
    
    11,999$
    16,056
    
    
    $
    16,570
    
    
    $
    16,885
    
    
    $
    22,144
    
    
    $
    15,848
    
    
    $
    173,874
    
    
    $
    261,377
 
 (a)
    
    Based on the applicable December 31, 2007 exchange rate. Contractual rents and debt
obligations are denominated in the functional currency of the country of each property.(b)
    
    Interest on variable rate debt obligations was calculated using the applicable variable
interest rate as of December 31, 2007.  CPA®:14
2007 10-K 38




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data.
            CPA®:14
2007 10-K 39




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
 
 CPA®:14
2007 10-K 40




---



##### Table of Contents



CORPORATE
PROPERTY ASSOCIATES 14 INCORPORATED


CONSOLIDATED BALANCE SHEETS  (in thousands, except share amounts)
 December 31,2007
    
    
    2006AssetsReal estate, net
    
    $
    1,139,131
    
    
    $
    1,154,336Net investment in direct financing leases
    
    
    128,058
    
    
    
    137,147Equity investments in real estate
    
    
    166,125
    
    
    
    200,332Cash and cash equivalents
    
    
    122,503
    
    
    
    18,991Intangible assets, net
    
    
    79,353
    
    
    
    92,447Other assets, net
    
    
    79,978
    
    
    
    72,070Total assets
    
    $
    1,715,148
    
    
    $
    1,675,323Liabilities and Shareholders EquityLiabilities:Non-recourse debt
    
    $
    847,587
    
    
    $
    785,815Credit facility
    
    
    
    
    
    
    25,000Accounts payable, accrued expenses and other liabilities
    
    
    15,515
    
    
    
    13,921Prepaid and deferred rental income and security deposits
    
    
    27,898
    
    
    
    30,924Due to affiliates
    
    
    26,039
    
    
    
    25,231Distributions payable
    
    
    17,116
    
    
    
    17,327Total liabilities
    
    
    934,155
    
    
    
    898,218Minority interest in consolidated entities
    
    
    18,033
    
    
    
    19,465Commitments and contingencies (Note 13)Shareholders equity:Common stock, $0.001 par value; 120,000,000 shares authorized; 92,112,004 and 90,514,607
shares issued and outstanding, respectively
    
    
    92
    
    
    
    90Additional paid-in capital
    
    
    894,773
    
    
    
    874,370Distributions in excess of accumulated earnings
    
    
    (103,207
    )
    
    
    (99,405
    )Accumulated other comprehensive income
    
    
    18,074
    
    
    
    11,801809,732
    
    
    
    786,856Less, treasury stock at cost, 4,293,933 and 2,861,902 shares, respectively
    
    
    (46,772
    )
    
    
    (29,216
    )Total shareholders equity
    
    
    762,960
    
    
    
    757,640Total liabilities and shareholders equity
    
    $
    1,715,148
    
    
    $
    1,675,323
  CPA®:14
2007 10-K 41




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##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME  (in thousands, except share and per share amounts)
 Years ended December 31,2007
    
    
    2006
    
    
    2005RevenuesRental income
    
    $
    143,690
    
    
    $
    116,770
    
    
    $
    113,391Interest income from direct financing leases
    
    
    16,472
    
    
    
    14,353
    
    
    
    14,112Other operating income
    
    
    5,436
    
    
    
    3,875
    
    
    
    4,407165,598
    
    
    
    134,998
    
    
    
    131,910Operating ExpensesDepreciation and amortization
    
    
    (32,332
    )
    
    
    (27,727
    )
    
    
    (23,105
    )Property expense
    
    
    (30,508
    )
    
    
    (22,904
    )
    
    
    (24,471
    )General and administrative
    
    
    (7,999
    )
    
    
    (6,712
    )
    
    
    (5,959
    )Impairment charges
    
    
    (1,652
    )
    
    
    
    
    
    
    (72,491
    )
    
    
    (57,343
    )
    
    
    (53,535
    )Other Income and ExpensesIncome from equity investments in real estate
    
    
    17,089
    
    
    
    27,410
    
    
    
    15,798Other interest income
    
    
    3,961
    
    
    
    3,104
    
    
    
    2,232Minority interest in income
    
    
    (1,564
    )
    
    
    (1,956
    )
    
    
    (2,153
    )Gain on exchange or sale of real estate, net
    
    
    9,509
    
    
    
    
    
    
    
    269Gain on foreign currency transactions, derivative instruments and other, net
    
    
    1,482
    
    
    
    3,274
    
    
    
    4,825Interest expense
    
    
    (64,692
    )
    
    
    (51,366
    )
    
    
    (52,609
    )(34,215
    )
    
    
    (19,534
    )
    
    
    (31,638
    )Income from continuing operations before income taxes
    
    
    58,892
    
    
    
    58,121
    
    
    
    46,737Provision for income taxes
    
    
    (1,949
    )
    
    
    (44
    )
    
    
    (412
    )Income from continuing operations
    
    
    56,943
    
    
    
    58,077
    
    
    
    46,325Discontinued Operations(Loss) income from operations of discontinued properties
    
    
    (333
    )
    
    
    (1,641
    )
    
    
    728Gain on sale of real estate, net
    
    
    7,780
    
    
    
    13,182
    
    
    
    196Income from discontinued operations
    
    
    7,447
    
    
    
    11,541
    
    
    
    924Net Income
    
    $
    64,390
    
    
    $
    69,618
    
    
    $
    47,249Earnings Per ShareIncome from continuing operations
    
    $
    0.65
    
    
    $
    0.83
    
    
    $
    0.68Income from discontinued operations
    
    
    0.08
    
    
    
    0.16
    
    
    
    0.01Net income
    
    $
    0.73
    
    
    $
    0.99
    
    
    $
    0.69Weighted Average Shares Outstanding
    
    
    87,860,052
    
    
    
    70,421,426
    
    
    
    68,208,208Distributions Declared Per Share(a)
    
    $
    0.7766
    
    
    $
    0.7711
    
    
    $
    0.7646
 
 (a)
    
    Excludes special distributions totaling $0.49 declared in 2006 (Note 14).  CPA®:14
2007 10-K 42




---



##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  (in thousands)
 Years ended December 31,2007
    
    
    2006
    
    
    2005Net Income
    
    $
    64,390
    
    
    $
    69,618
    
    
    $
    47,249Other Comprehensive IncomeForeign currency translation adjustment
    
    
    5,888
    
    
    
    4,269
    
    
    
    (5,745
    )Change in unrealized gain (loss) on marketable securities
    
    
    385
    
    
    
    452
    
    
    
    (796
    )6,273
    
    
    
    4,721
    
    
    
    (6,541
    )Comprehensive Income
    
    $
    70,663
    
    
    $
    74,339
    
    
    $
    40,708
  CPA®:14
2007 10-K 43




---



##### Table of Contents



CORPORATE
PROPERTY ASSOCIATES 14 INCORPORATED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
For the years ended December 31, 2007, 2006 and 2005  (in thousands, except share and per share amounts)
 DistributionsAdditional
    
    
    in Excess of
    
    
    Accumulated OtherCommon
    
    
    Paid-In
    
    
    Accumulated
    
    
    Comprehensive
    
    
    TreasuryShares
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    Stock
    
    
    TotalBalance at January 1, 2005
    
    
    67,790,533
    
    
    $
    69
    
    
    $
    620,366
    
    
    $
    (76,301
    )
    
    $
    13,621
    
    
    $
    (11,057
    )
    
    $
    546,698Shares issued $.001 par, at
$12.10 per share, net of
offering costs
    
    
    587,264
    
    
    
    
    
    
    
    6,697
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,697Shares, $.001 par, issued
to the advisor at $12.10
per share
    
    
    739,423
    
    
    
    1
    
    
    
    8,946
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,947Distributions declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (52,114
    )
    
    
    
    
    
    
    
    
    
    
    (52,114
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,249
    
    
    
    
    
    
    
    
    
    
    
    47,249Change in other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,541
    )
    
    
    
    
    
    
    (6,541
    )Repurchase of shares
    
    
    (837,094
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,972
    )
    
    
    (8,972
    )Balance at December 31, 2005
    
    
    68,280,126
    
    
    
    70
    
    
    
    636,009
    
    
    
    (81,166
    )
    
    
    7,080
    
    
    
    (20,029
    )
    
    
    541,964Shares issued $.001 par, at
$11.85 - $12.40 per share,
net of offering costs
    
    
    1,023,137
    
    
    
    1
    
    
    
    10,768
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,769Shares issued in connection
with the CPA®:12
merger, $.001 par, at
$11.85 per share
    
    
    18,470,351
    
    
    
    18
    
    
    
    218,856
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218,874Shares, $.001 par, issued
to the advisor at $12.40
per share
    
    
    712,409
    
    
    
    1
    
    
    
    8,737
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,738Distributions declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (87,857
    )
    
    
    
    
    
    
    
    
    
    
    (87,857
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,618
    
    
    
    
    
    
    
    
    
    
    
    69,618Change in other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,721
    
    
    
    
    
    
    
    4,721Repurchase of shares
    
    
    (833,318
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,187
    )
    
    
    (9,187
    )Balance at December 31, 2006
    
    
    87,652,705
    
    
    
    90
    
    
    
    874,370
    
    
    
    (99,405
    )
    
    
    11,801
    
    
    
    (29,216
    )
    
    
    757,640Cumulative effect adjustment
from adoption of FIN 48
(Note 15)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    
    
    
    
    
    
    
    
    (80
    )Balance at January 1, 2007
    
    
    87,652,705
    
    
    
    90
    
    
    
    874,370
    
    
    
    (99,485
    )
    
    
    11,801
    
    
    
    (29,216
    )
    
    
    757,560Shares issued $.001 par, at
$13.20 per share, net of
offering costs
    
    
    745,265
    
    
    
    1
    
    
    
    9,156
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,157Shares, $.001 par, issued
to the advisor at $13.20
per share
    
    
    852,132
    
    
    
    1
    
    
    
    11,247
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,248Distributions declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (68,112
    )
    
    
    
    
    
    
    
    
    
    
    (68,112
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,390
    
    
    
    
    
    
    
    
    
    
    
    64,390Change in other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,273
    
    
    
    
    
    
    
    6,273Repurchase of shares
    
    
    (1,432,031
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,556
    )
    
    
    (17,556
    )Balance at December 31, 2007
    
    
    87,818,071
    
    
    $
    92
    
    
    $
    894,773
    
    
    $
    (103,207
    )
    
    $
    18,074
    
    
    $
    (46,772
    )
    
    $
    762,960
  CPA®:14
2007 10-K 44




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##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS  (in thousands)
 Years ended December 31,2007
    
    
    2006
    
    
    2005Cash Flows  Operating ActivitiesNet income
    
    $
    64,390
    
    
    $
    69,618
    
    
    $
    47,249Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization, including intangible assets and deferred financing costs
    
    
    38,831
    
    
    
    29,366
    
    
    
    24,597Straight-line rent adjustments
    
    
    (2,289
    )
    
    
    (2,344
    )
    
    
    (3,173
    )(Income) loss from equity investments in real estate in excess of distributions received
    
    
    598
    
    
    
    8,989
    
    
    
    30Minority interest in income
    
    
    1,564
    
    
    
    1,956
    
    
    
    2,153Issuance of shares to affiliate in satisfaction of fees due
    
    
    11,346
    
    
    
    8,741
    
    
    
    8,947(Decrease) increase in prepaid and deferred rental income and security deposits
    
    
    (3,422
    )
    
    
    1,973
    
    
    
    (2,232
    )Impairment charges on real estate
    
    
    1,652
    
    
    
    
    
    
    
    Realized gain on foreign currency transactions, net
    
    
    (2,018
    )
    
    
    (417
    )
    
    
    (334
    )Unrealized loss (gain) on foreign currency transactions, net
    
    
    289
    
    
    
    (513
    )
    
    
    780Realized (gain) loss on sale of securities
    
    
    (1,648
    )
    
    
    158
    
    
    
    (2,192
    )Reversal of unrealized gain (loss) on warrants and derivatives
    
    
    2,207
    
    
    
    (229
    )
    
    
    7Unrealized gain on warrants and derivatives, net
    
    
    (312
    )
    
    
    (2,273
    )
    
    
    (3,086
    )Gain from sale or exchange of real estate
    
    
    (17,289
    )
    
    
    (13,182
    )
    
    
    (465
    )Settlement proceeds received in the form of marketable securities
    
    
    
    
    
    
    
    
    
    
    (223
    )Change in other operating assets and liabilities, net
    
    
    (4,170
    )
    
    
    389
    
    
    
    (1,163
    )Net cash provided by operating activities
    
    
    89,729
    
    
    
    102,232
    
    
    
    70,895Cash Flows  Investing ActivitiesEquity distributions received in excess of equity income in real estate
    
    
    57,150
    
    
    
    81,788
    
    
    
    1,837Acquisitions of real estate and equity investments in real estate and other capitalized costs (a)
    
    
    (32,664
    )
    
    
    (1,085
    )
    
    
    (3,279
    )Proceeds from sale of real estate
    
    
    49,220
    
    
    
    37,628
    
    
    
    5,808Exercise of common stock warrants
    
    
    (999
    )
    
    
    
    
    
    
    Proceeds from sale of securities
    
    
    3,160
    
    
    
    2,986
    
    
    
    9,432Cash payments to shareholders of acquired company
    
    
    
    
    
    
    (102,176
    )
    
    
    Cash overdraft assumed in acquisition of CPA®:12s business operations (b)
    
    
    
    
    
    
    (3,950
    )
    
    
    Capital contributions to equity investments in real estate
    
    
    
    
    
    
    (45,481
    )
    
    
    Funds placed in restricted account for future investment
    
    
    
    
    
    
    (21,741
    )
    
    
    Funds released from restricted account
    
    
    617
    
    
    
    21,741
    
    
    
    Payment of deferred acquisition fees to an affiliate
    
    
    (4,369
    )
    
    
    (3,514
    )
    
    
    (3,420
    )Net cash provided by (used in) investing activities
    
    
    72,115
    
    
    
    (33,804
    )
    
    
    10,378Cash Flows  Financing ActivitiesDistributions paid
    
    
    (68,323
    )
    
    
    (83,633
    )
    
    
    (51,905
    )Distributions paid to minority interest partner
    
    
    (2,996
    )
    
    
    (3,869
    )
    
    
    (3,579
    )Proceeds from mortgages and credit facility
    
    
    171,657
    
    
    
    40,000
    
    
    
    Prepayment of mortgage principal and credit facility
    
    
    (134,074
    )
    
    
    (27,167
    )
    
    
    (8,512
    )Scheduled payments of mortgage principal
    
    
    (16,552
    )
    
    
    (12,580
    )
    
    
    (12,433
    )Proceeds from loan from affiliate
    
    
    
    
    
    
    24,000
    
    
    
    Prepayment of loan from affiliate
    
    
    
    
    
    
    (24,000
    )
    
    
    Deferred financing costs and mortgage deposits
    
    
    (768
    )
    
    
    (1,731
    )
    
    
    Proceeds from stock issuance, net of costs
    
    
    9,059
    
    
    
    10,766
    
    
    
    6,697Purchase of treasury stock
    
    
    (17,556
    )
    
    
    (9,187
    )
    
    
    (8,972
    )Net cash used in financing activities
    
    
    (59,553
    )
    
    
    (87,401
    )
    
    
    (78,704
    )Change in Cash and Cash Equivalents During the YearEffect of exchange rate changes on cash
    
    
    1,221
    
    
    
    93
    
    
    
    (1,093
    )Net increase (decrease) in cash and cash equivalents
    
    
    103,512
    
    
    
    (18,880
    )
    
    
    1,476Cash and cash equivalents, beginning of year
    
    
    18,991
    
    
    
    37,871
    
    
    
    36,395Cash and cash equivalents, end of year
    
    $
    122,503
    
    
    $
    18,991
    
    
    $
    37,871
 CPA®:14
2007 10-K 45




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##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED  (in thousands)
 Non-cash investing and financing activities
 (a)
    
    Included in the cost basis of real estate and equity investments acquired in 2007 are
deferred acquisition fees payable to W. P. Carey & Co., LLC of $3,041. No such fees were
incurred in 2006 or 2005.
 (b)
    
    The merger with Corporate Property Associates 12 Incorporated (CPA®:12), an
affiliate, as described in Note 3, consisted of the acquisition and assumption of certain
assets and liabilities, respectively, at fair value in exchange for the issuance of shares, a
cash payment to CPA®:12 shareholders who elected to redeem their shares and certain
costs, as follows:
 Real estate accounted for under the operating method
    
    $
    214,858Net investment in direct financing leases
    
    
    19,799Intangible assets
    
    
    93,019Equity investments
    
    
    111,977Investment in mortgage loan securitization
    
    
    7,346Other assets
    
    
    4,415Non-recourse debt (cost $110,041)
    
    
    (116,082
    )Redemption of CPA®:12 shareholders
    
    
    (102,176
    )Other liabilities (1)
    
    
    (13,966
    )Elimination of minority interest
    
    
    3,634Issuance of common stock
    
    
    (218,874
    )Cash overdraft assumed in acquisition of CPA®:12s business operations
    
    $
    (3,950
    )
 
 (1)
    
    Includes deferred fees of $2,734 payable to the advisor (Note 4). ® ®
 Supplemental cash flow information
   CPA®:14
2007 10-K 46




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except share and per share amounts)
 Note 1. Business and Organization
 
  ®
 Note 2. Summary of Significant Accounting Policies
 Basis of Consolidation
     CPA®:14
2007 10-K 47




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##### Table of Contents



Notes to Consolidated Financial Statements
 Use of Estimates
  Reclassifications and Revisions
  Out-of-Period Adjustments
   Purchase Price Allocation
     CPA®:14
2007 10-K 48




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##### Table of Contents



Notes to Consolidated Financial Statements
  Real Estate Under Construction and Redevelopment
  Cash Equivalents
  Marketable Securities
  Other Assets
  Deferred Acquisition Fees Payable to Affiliate
  Treasury Stock
  Real Estate Leased to Others
   CPA®:14
2007 10-K 49




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##### Table of Contents



Notes to Consolidated Financial Statements
  Operating leases
 Direct financing method
  Depreciation
 
 Impairments
     CPA®:14
2007 10-K  50




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##### Table of Contents



Notes to Consolidated Financial Statements
 Foreign Currency Translation
    Derivative Instruments
     CPA®:14
2007 10-K  51




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Assets Held for Sale
   Income Taxes
    Earnings Per Share
  Adoption of New Accounting Pronouncements
 SFAS 155
 Recent Accounting Pronouncements
 SFAS 157
 CPA®:14
2007 10-K  52




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##### Table of Contents



Notes to Consolidated Financial Statements
  SFAS 159
 SOP 07-1
 FIN 46R-7
 SFAS 141R
 SFAS 160
 Note 3. Business Combination with Corporate Property Associates 12 Incorporated
 ® ® ® ® ® ®
 CPA®:14
2007 10-K  53




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##### Table of Contents



Notes to Consolidated Financial Statements
 ® ®
 ® ® ® ®
 ® ® ®
  ® ®
 Note 4. Agreements and Transactions with Related Parties
 1 2
 ®
  CPA®:14
2007 10-K  54




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##### Table of Contents



Notes to Consolidated Financial Statements
       Note 5. Real Estate
  December 31,2007
    
    
    2006Land
    
    $
    236,546
    
    
    $
    237,003Buildings
    
    
    1,064,959
    
    
    
    1,054,595Less: Accumulated depreciation
    
    
    (162,374
    )
    
    
    (137,262
    )$
    1,139,131
    
    
    $
    1,154,336
  CPA®:14
2007 10-K  55




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##### Table of Contents



Notes to Consolidated Financial Statements
  Year ended December 31,2008
    
    $
    148,3392009
    
    
    147,9422010
    
    
    146,1982011
    
    
    132,3482012
    
    
    127,344Thereafter through 2024
    
    
    902,801
  Note 6. Net Investment in Direct Financing Leases
  December 31,2007
    
    
    2006Minimum lease payments receivable
    
    $
    219,468
    
    
    $
    251,477Unguaranteed residual value
    
    
    123,675
    
    
    
    133,081343,143
    
    
    
    384,558Less: unearned income
    
    
    (215,085
    )
    
    
    (247,411
    )$
    128,058
    
    
    $
    137,147
   Year ending December 31,2008
    
    $
    14,8992009
    
    
    14,8992010
    
    
    15,0312011
    
    
    15,1972012
    
    
    15,197Thereafter through 2031
    
    
    144,245
  Note 7. Equity Investments in Real Estate
   CPA®:14
2007 10-K  56




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##### Table of Contents



Notes to Consolidated Financial Statements
   Ownership Interest at
    
    Carrying Value at December 31,Lessee
    
    December 31, 2007
    
    2007
    
    2006True Value Company
    
    
    50
    %
    
    $
    32,164
    
    
    $
    32,555Hellweg Die Profi-Baumarkte GmbH & Co. KG(a)
    
    
    32
    %
    
    
    23,852
    
    
    Best Buy Co., Inc.
    
    
    37
    %
    
    
    22,559
    
    
    
    24,318Advanced Micro Devices, Inc.
    
    
    67
    %
    
    
    18,533
    
    
    
    20,169The Upper Deck Company
    
    
    50
    %
    
    
    13,430
    
    
    
    13,622U-Haul Moving Partners, Inc. and Mercury Partners, LP
    
    
    12
    %
    
    
    13,028
    
    
    
    13,484Compucom Systems, Inc.
    
    
    67
    %
    
    
    11,788
    
    
    
    12,623Starmark Holdings LLC, LifeTime Fitness, Inc. and Town Sports
International Holdings, Inc. (b)
    
    
    56
    %
    
    
    11,615
    
    
    
    35,011Del Monte Corporation
    
    
    50
    %
    
    
    8,832
    
    
    
    9,669ShopRite Supermarkets, Inc.
    
    
    45
    %
    
    
    6,824
    
    
    
    6,851Checkfree Holdings, Inc.
    
    
    50
    %
    
    
    2,053
    
    
    
    2,532Sicor, Inc.(c)
    
    
    50
    %
    
    
    2,005
    
    
    
    19,286Dicks Sporting Goods, Inc.(d)
    
    
    45
    %
    
    
    (558
    )
    
    
    10,212$ 166,125
    
    
    
    $ 200,332
 
 (a)
    
    In April 2007, we acquired an interest in a venture (the property venture) that in turn
acquired a 24.7% ownership interest in a limited partnership owning 37 properties throughout
Germany. We also acquired an interest in a second venture (the lending venture), which made
a loan (the note receivable) to the holder of the remaining 75.3% interests in the limited
partnership (the partner). Under the terms of the note receivable, the lending venture will
receive interest that approximates 75% of all income earned by the limited partnership, less
adjustments. Our total effective ownership interest in the ventures is 32%. The total cost of
the interests in these ventures, which are owned with affiliates, is $446,387. In connection
with these transactions, the ventures obtained combined non-recourse financing of $378,596,
having a fixed annual interest rate of 5.5% and a term of 10 years. All amounts are based upon
the exchange rate of the Euro at the date of acquisition.In connection with the acquisition, the property venture agreed to an option agreement which
gives the property venture the right to purchase, from the partner, an additional 75% interest
in the limited partnership no later than December 2010 at a price which will equal the principal
amount of the note receivable at the time of purchase. Upon exercise of this purchase option,
the property venture would own 99.7% of the limited partnership. The property venture has also
agreed to a second assignable option agreement to acquire the remaining 0.3% interest in the
limited partnership by December 2012. If the property venture does not exercise its option
agreements, the partner has option agreements to put its remaining interests in the limited
partnership to the property venture during 2014 at a price which will equal the principal amount
of the note receivable at the time of purchase.(b)
    
    Together with an affiliate, we own an interest in a venture that owned fifteen properties
formerly leased to Starmark Holdings LLC under a master lease agreement. We owned a 41%
interest in this venture and acquired an additional 15% interest in the venture in the merger,
and account for this investment under the equity method of accounting. Our interest in this
investment accounted for $7,318, $(7,786) and $2,835 of income (loss) from equity investments
in real estate for the years ended December 31, 2007, 2006 and 2005, respectively. The loss in
2006 reflects the recognition of impairment charges and prepayment penalties and debt
defeasance costs as described below.In June 2006, the advisor entered into a lease restructuring agreement with Starmark under
which six properties under the master lease agreement were re-leased to Life Time Fitness, Inc.,
a new tenant unaffiliated with Starmark. Life Time agreed to provide a total of $20,000 of
improvements to these six properties, comprised of a rent abatement to Life Time of $2,322,
security deposits and prepaid rent released by Starmark totaling $7,678 and a commitment by Life
Time to fund $10,000 of improvements in exchange for the transfer to Life Time of four
properties formerly leased to Starmark. The $10,000 commitment by Life Time is secured by
letters of credit totaling $10,000. The venture transferred title of these four properties to
Life Time and the venture has no continuing involvement in the transferred properties. No gain
or loss was recorded on the transfer of the four properties as the CPA®:14
2007 10-K  57




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##### Table of Contents



Notes to Consolidated Financial Statements
 
 venture had previously written down the four transferred properties to their estimated fair
values, as described below. Of the $20,000 of improvements, which are for the benefit of the
venture and will be retained by the venture upon expiration of the lease, $11,950 has been
funded as of December 31, 2007. An additional property was re-leased to Town Sports
International Holdings, Inc., a second new tenant unaffiliated with Starmark, on terms similar
to the original lease with Starmark. In December 2006, upon entering into new leases for the
ventures four remaining properties, the venture terminated the agreement with Starmark and
recognized lease termination income of $8,145, comprised of security deposits and prepaid rent
from Starmark totaling $7,678 and the release of real estate tax escrows of $467. During the
fourth quarter of 2007, the venture sold these four properties for $41,449, net of selling costs
and recognized a gain on the sale of $12,253.In connection with these transactions, we recognized impairment charges on this investment
during 2006 totaling $24,978, comprised of a charge of $18,678 to write off intangible assets on
properties leased to Starmark and an impairment charge of $6,300 to reduce the carrying value of
the four transferred properties to their estimated fair values.In April 2006, the venture prepaid/defeased the existing debt of $100,857 and incurred
prepayment penalties and debt defeasance costs totaling $10,072. In November 2006, the venture
obtained new non-recourse mortgage financing of $80,000 on the Life Time properties at a fixed
annual interest rate of 5.8% with a 10-year term. In April 2007, the venture obtained new
non-recourse mortgage financing of $8,000 on the Town Sports property at a fixed annual interest
rate of 5.6% and with a 10-year term.Our share of the effects of the ventures transactions is reflected as part of income from
equity investments in our statements of income in the periods described.(c)
    
    In June 2007, this venture completed the refinancing of an existing $2,483 non-recourse
mortgage with new non-recourse financing of $35,350 based on the appraised value of the
underlying real estate of the venture and distributed the proceeds to the venture partners.(d)
    
    In January 2007, this venture obtained non-recourse mortgage financing of $23,000 and
distributed the proceeds to the venture partners. Although we are not obligated to do so,
based on the fair value of the property we are committed to funding any deficits this venture
may incur.  December 31,2007
    
    
    2006Assets
    
    $
    1,803,515
    
    
    $
    913,466Liabilities
    
    
    (1,113,645
    )
    
    
    (538,085
    )Partners and members equity
    
    $
    689,870
    
    
    $
    375,381
 Years ended December 31,2007
    
    
    2006(a)
    
    
    2005Revenue
    
    $
    144,038
    
    
    $
    105,543
    
    
    $
    117,156Expenses
    
    
    (80,333
    )
    
    
    (70,576
    )
    
    
    (69,698
    )Gain on sale of real estate(b)
    
    
    12,253
    
    
    
    74,069
    
    
    
    Impairment charge (c)
    
    
    
    
    
    
    (24,978
    )
    
    
    Net income
    
    $
    75,958
    
    
    $
    84,058
    
    
    $
    47,458Our share of net income from equity investments in real estate (d)
    
    $
    17,089
    
    
    $
    27,410
    
    
    $
    15,798
 
 (a)
    
    Results for equity investees are presented for the period during which we accounted for the
investee under the equity method of accounting (that is, for December 1, 2006 through December
31, 2006 for investments acquired during the merger, and for January 1, 2006 through November
30, 2006 for the two investments that we consolidate following our acquisition of the
remaining interests in the merger). Results for investments we owned as of January 1, 2006,
including those in which we acquired an additional interest in the merger, are presented for
the full year. CPA®:14
2007 10-K  58




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##### Table of Contents



Notes to Consolidated Financial Statements
  (b)
    
    Gain on sale of real estate in 2007 reflects gain on the sale of certain properties formerly
leased to Starmark Holdings as described above.In June 2006, a venture in which we and an affiliate held 40% and 60% interests, respectively,
sold a property in New York for $200,012, net of closing costs, and recognized a gain on the sale
of $41,101, net of a $10,253 writeoff of unrecoverable receivables related to future stated rent
increases. In connection with the sale, the venture repaid the existing non-recourse mortgage
obligation of $81,166 and incurred a charge for prepayment penalties and related costs totaling
$2,981.In October 2006, a venture through which the we and an affiliate held 49.99% and 50.01%
interests, respectively, in a property in California sold the property for $56,357 and recognized
a gain on this sale of $14,362. The venture also recognized a gain of $18,606 on the sale of
additional properties in which we had no ownership interest. In connection with the sale, the
venture repaid the outstanding mortgage obligation on this property of $19,680 in October 2006
and incurred a charge on the early extinguishment of debt of $1,788.(c)
    
    Impairment charge in 2006 reflects impairment charges and the writeoff of intangible assets
incurred in connection with the Starmark Holdings transaction as described above.(d)
    
    Inclusive of amortization of differences between the fair value of investments acquired in
the merger and the carrying value of the ventures net assets as of the date of the merger. Note 8. Intangibles
 ®
 December 31,2007
    
    
    2006Lease intangiblesIn-place lease
    
    $
    33,448
    
    
    $
    35,715Tenant relationship
    
    
    10,224
    
    
    
    10,920Above-market rent
    
    
    42,398
    
    
    
    46,384Less: accumulated amortization
    
    
    (6,717
    )
    
    
    (572
    )$
    79,353
    
    
    $
    92,447Below-market rent
    
    $
    (5,365
    )
    
    $
    (5,365
    )Less: accumulated amortization
    
    
    149
    
    
    
    11$
    (5,216
    )
    
    $
    (5,354
    )
   Note 9. Interest in Mortgage Loan Securitization
 ®
 CPA®:14
2007 10-K  59




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##### Table of Contents



Notes to Consolidated Financial Statements
  Fair value as of
    
    1% adverse
    
    2% adverseDecember 31, 2007
    
    change
    
    changeFair value of our interest in CCMT
    
    $
    13,899
    
    
    $
    13,428
    
    
    $
    12,976
  Note 10. Disclosures About Fair Value of Financial Instruments
  Note 11. Risk Management and Use of Financial Instruments
 Risk Management
  Use of Derivative Financial Instruments
  Interest Rate Swaps
   Embedded Credit Derivative
  CPA®:14
2007 10-K  60




---



##### Table of Contents



Notes to Consolidated Financial Statements
  Foreign Currency Exchange
  Stock Warrants
   Concentration of Credit Risk
     Note 12. Debt
  CPA®:14
2007 10-K  61




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##### Table of Contents



Notes to Consolidated Financial Statements
   Years ended December 31,
    
    Total Debt
    
    
    Fixed Rate Debt
    
    
    Variable Rate Debt2008
    
    $
    35,242
    
    
    $
    30,299
    
    
    $
    4,9432009
    
    
    67,528
    
    
    
    62,357
    
    
    
    5,1712010
    
    
    81,989
    
    
    
    76,493
    
    
    
    5,4962011
    
    
    274,994
    
    
    
    269,243
    
    
    
    5,7512012
    
    
    171,387
    
    
    
    155,680
    
    
    
    15,707Thereafter through 2023
    
    
    216,447
    
    
    
    130,694
    
    
    
    85,753Total
    
    $
    847,587
    
    
    $
    724,766
    
    
    $
    122,821
 Credit Facility
  Note 13. Commitments and Contingencies
 SEC Investigation
  ® ® ®
 ® ® ®
 CPA®:14
2007 10-K  62




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##### Table of Contents



Notes to Consolidated Financial Statements
  Other
   Note 14. Shareholders Equity
 Distributions
  2007
    
    
    2006
    
    
    2005Ordinary income
    
    $
    0.43
    
    
    $
    0.31
    
    
    $
    0.56Capital gains
    
    
    0.25
    
    
    
    0.44
    
    
    
    0.04Return of capital
    
    
    
    
    
    
    
    
    
    
    0.160.68
    
    
    
    0.75
    
    
    
    0.76Spillover distribution (a)
    
    
    0.10
    
    
    
    0.02
    
    
    
    $
    0.78
    
    
    $
    0.77
    
    
    $
    0.76
 
 (a)
    
    For 2007, this portion of the distribution is not taxable to shareholders until 2008;
therefore, its taxability and classification will be determined in 2008. For 2006, this
portion of the distribution was paid and taxed to shareholders in 2007 as ordinary income
($.01) and long term capital gain ($.01).   Accumulated Other Comprehensive Income
  2007
    
    
    2006Unrealized appreciation on marketable securities
    
    $
    1,156
    
    
    $
    771Foreign currency translation adjustment
    
    
    16,918
    
    
    
    11,030Accumulated other comprehensive income
    
    $
    18,074
    
    
    $
    11,801
 CPA®:14
2007 10-K  63




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##### Table of Contents



Notes to Consolidated Financial Statements
 Note 15. Income Taxes
    Balance at January 1, 2007
    
    $
    75Additions based on tax positions related to the current year
    
    
    21Additions for tax positions of prior years
    
    
    80Reductions for tax positions of prior years
    
    
    (70
    )Settlements
    
    
    Balance at December 31, 2007
    
    $
    106
   Note 16. Discontinued Operations
 2007
 2006
 2005
 CPA®:14
2007 10-K  64




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##### Table of Contents



Notes to Consolidated Financial Statements
  Years ended December 31,2007
    
    
    2006
    
    
    2005Revenues
    
    $
    2,176
    
    
    $
    1,197
    
    
    $
    2,676Expenses
    
    
    (2,509
    )
    
    
    (2,838
    )
    
    
    (1,948
    )Gain on sale of real estate, net
    
    
    7,780
    
    
    
    13,182
    
    
    
    196Income from discontinued operations
    
    $
    7,447
    
    
    $
    11,541
    
    
    $
    924
 Note 17. Segment Information
   2007
    
    Domestic
    
    Foreign (a)
    
    Total CompanyRevenues
    
    $
    138,123
    
    
    $
    27,475
    
    
    $
    165,598Total long-lived assets (b)
    
    
    1,189,988
    
    
    
    243,326
    
    
    
    1,433,314
 2006
    
    Domestic
    
    Foreign (a)
    
    Total CompanyRevenues
    
    $
    110,700
    
    
    $
    24,298
    
    
    $
    134,998Total long-lived assets (b)
    
    
    1,300,717
    
    
    
    191,098
    
    
    
    1,491,815
 2005
    
    Domestic
    
    Foreign (a)
    
    Total CompanyRevenues
    
    $
    108,470
    
    
    $
    23,440
    
    
    $
    131,910Total long-lived assets (b)
    
    
    1,027,312
    
    
    
    175,255
    
    
    
    1,202,567
 
 (a)
    
    Consists of operations in the United Kingdom, France, Finland and the Netherlands and, in
2007, in Germany.(b)
    
    Consists of real estate, net; net investment in direct financing leases and equity
investments in real estate. Note 18. Selected Quarterly Financial Data (unaudited)
 For the three months endedMarch 31, 2007
    
    June 30, 2007
    
    September 30, 2007
    
    December 31, 2007Revenues (a)
    
    $
    39,764
    
    
    $
    40,866
    
    
    $
    42,323
    
    
    $
    42,645Operating expenses (a)
    
    
    (17,323
    )
    
    
    (18,648
    )
    
    
    (19,388
    )
    
    
    (17,132
    )Net income (b) (c)
    
    
    8,741
    
    
    
    8,758
    
    
    
    15,510
    
    
    
    31,381Earnings per share
    
    
    0.10
    
    
    
    0.10
    
    
    
    0.18
    
    
    
    0.35Distributions declared per share
    
    
    0.1934
    
    
    
    0.1939
    
    
    
    0.1944
    
    
    
    0.1949
 For the three months endedMarch 31, 2006
    
    June 30, 2006
    
    September 30, 2006
    
    December 31, 2006Revenues (a)
    
    $
    32,248
    
    
    $
    32,762
    
    
    $
    34,713
    
    
    $
    35,275Operating expenses (a)
    
    
    (12,773
    )
    
    
    (16,350
    )
    
    
    (14,334
    )
    
    
    (13,886
    )Net income
    
    
    12,074
    
    
    
    26,009
    
    
    
    7,632
    
    
    
    23,903Earnings per share
    
    
    0.18
    
    
    
    0.38
    
    
    
    0.11
    
    
    
    0.32Distributions declared per share (d)
    
    
    0.1924
    
    
    
    0.1929
    
    
    
    0.1929
    
    
    
    0.1929
 
 (a)
    
    Certain amounts from previous quarters have been retrospectively adjusted as discontinued
operations (Note 16). CPA®:14
2007 10-K  65




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##### Table of Contents



Notes to Consolidated Financial Statements
 
 (b)
    
    Includes impact of out of period adjustment in the periods ended March 31, 2007 and September
30, 2007 (Note 2).(c)
    
    Net income for the fourth quarter of 2007 includes gains on the sale of real estate of $9,509
and $7,780 which are included in income from continuing operations and income from
discontinued operations, respectively.(d)
    
    Excludes a special distribution of $0.45 per share that was paid in July 2006 to shareholders
of record as of June 30, 2006 and a special distribution of $0.04 per share that was paid in
January 2007 to shareholders of record as of November 30, 2006. CPA®:14
2007 10-K  66




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##### Table of Contents



SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION   (in thousands)
 Life on whichDepreciationin LatestCosts Capitalized
    
    
    Increase
    
    
    Gross Amount at which Carried
    
    
    
    
    
    
    
    
    
    
    Statement ofInitial Cost to Company
    
    
    Subsequent to
    
    
    (Decrease) in Net
    
    
    at Close of Period
    
    
    Accumulated
    
    
    Date
    
    
    Income isDescription
    
    Encumbrances
    
    
    Land
    
    
    Buildings
    
    
    Acquisition (a)
    
    

Investments (b)
    
    
    Land
    
    
    Buildings
    
    
    Total
    
    
    Depreciation (e)
    
    
    Acquired
    
    
    ComputedReal Estate Under Operating Leases:Retail store in Torrance, California
    
    $
    28,624
    
    
    $
    13,060
    
    
    $
    6,934
    
    
    $
    153
    
    
    $
    
    
    
    $
    13,060
    
    
    $
    7,087
    
    
    $
    20,147
    
    
    $
    1,653
    
    
    Jul. 1998
    
    40 yrs.Industrial facility in San Clemente, California
    
    
    
    
    
    
    2,390
    
    
    
    
    
    
    
    8,958
    
    
    
    53
    
    
    
    2,390
    
    
    
    9,011
    
    
    
    11,401
    
    
    
    1,854
    
    
    Jul. 1998
    
    40 yrs.Industrial facility in Pittsburgh, Pennsylvania
    
    
    5,984
    
    
    
    620
    
    
    
    6,186
    
    
    
    
    
    
    
    
    
    
    
    620
    
    
    
    6,186
    
    
    
    6,806
    
    
    
    1,398
    
    
    Dec. 1998
    
    40 yrs.Industrial and warehouse facilities in Burbank, California and Las
Vegas, Nevada
    
    
    6,742
    
    
    
    3,860
    
    
    
    8,263
    
    
    
    
    
    
    
    2
    
    
    
    3,860
    
    
    
    8,265
    
    
    
    12,125
    
    
    
    1,786
    
    
    Mar. 1999, Oct.1999
    
    40 yrs.Warehouse and distribution facilities in Harrisburg, North
Carolina; Atlanta, Georgia; Cincinnati, Ohio and Elkwood, Virginia
    
    
    12,776
    
    
    
    3,930
    
    
    
    10,398
    
    
    
    8,476
    
    
    
    10
    
    
    
    3,946
    
    
    
    18,868
    
    
    
    22,814
    
    
    
    3,246
    
    
    Jun. 1999, Dec. 2001
    
    40 yrs.Industrial facility in Gardena, California
    
    
    2,730
    
    
    
    2,340
    
    
    
    3,943
    
    
    
    
    
    
    
    (2,899
    )
    
    
    2,340
    
    
    
    1,044
    
    
    
    3,384
    
    
    
    106
    
    
    Jul. 1999
    
    40 yrs.Warehouse and distribution facilities in Burlington, New Jersey;
Shawnee, Kansas and Manassas, Virginia
(c)
    
    
    20,452
    
    
    
    3,604
    
    
    
    8,613
    
    
    
    23,709
    
    
    
    
    
    
    
    4,476
    
    
    
    31,450
    
    
    
    35,926
    
    
    
    6,111
    
    
    Aug. 1999
    
    40 yrs.Warehouse and distribution facility in Grand Rapids, Michigan
    
    
    5,556
    
    
    
    740
    
    
    
    3,043
    
    
    
    7,638
    
    
    
    
    
    
    
    740
    
    
    
    10,681
    
    
    
    11,421
    
    
    
    2,211
    
    
    Aug. 1999
    
    40 yrs.Land in Midlothian, Virginia
    
    
    2,534
    
    
    
    3,515
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,515
    
    
    
    
    
    
    
    3,515
    
    
    
    
    
    
    Sep. 1999
    
    
    N/AOffice facility in Columbia, Maryland
    
    
    12,911
    
    
    
    2,623
    
    
    
    20,233
    
    
    
    3,113
    
    
    
    
    
    
    
    2,623
    
    
    
    23,346
    
    
    
    25,969
    
    
    
    4,614
    
    
    Nov. 1999
    
    40 yrs.Industrial facilities in Welcome, North Carolina; Murrysville,
Pennsylvania and Wylie, Texas
    
    
    13,125
    
    
    
    1,596
    
    
    
    23,910
    
    
    
    323
    
    
    
    (125
    )
    
    
    1,596
    
    
    
    24,108
    
    
    
    25,704
    
    
    
    3,896
    
    
    Nov. 1999, Dec. 2001
    
    40 yrs.Sports facilities in Salt Lake City, Utah and St. Charles, Missouri
    
    
    6,594
    
    
    
    2,920
    
    
    
    8,660
    
    
    
    836
    
    
    
    
    
    
    
    2,920
    
    
    
    9,496
    
    
    
    12,416
    
    
    
    1,717
    
    
    Dec. 1999, Dec. 2000
    
    40 yrs.Warehouse and distribution facility in Tempe, Arizona
    
    
    3,124
    
    
    
    940
    
    
    
    4,557
    
    
    
    13
    
    
    
    
    
    
    
    940
    
    
    
    4,570
    
    
    
    5,510
    
    
    
    890
    
    
    Jan. 2000
    
    40 yrs.Warehouse and distribution facility in Rock Island, Illinois
    
    
    6,743
    
    
    
    500
    
    
    
    9,945
    
    
    
    1,887
    
    
    
    
    
    
    
    500
    
    
    
    11,832
    
    
    
    12,332
    
    
    
    2,096
    
    
    Feb. 2000
    
    40 yrs.Industrial facility in North Amityville, New York
    
    
    9,980
    
    
    
    2,932
    
    
    
    16,398
    
    
    
    18
    
    
    
    (4,120
    )
    
    
    1,482
    
    
    
    13,746
    
    
    
    15,228
    
    
    
    2,706
    
    
    Feb. 2000
    
    40 yrs.Warehouse and distribution facilities in Monon, Indiana; Champlin,
Minnesota; Robbinsville, New Jersey; Radford, Virginia and North
Salt Lake City, Utah
    
    
    15,692
    
    
    
    4,580
    
    
    
    24,844
    
    
    
    15
    
    
    
    
    
    
    
    4,580
    
    
    
    24,859
    
    
    
    29,439
    
    
    
    4,739
    
    
    May. 2000
    
    40 yrs.Warehouse and distribution facility in Lakewood, New Jersey
    
    
    6,280
    
    
    
    710
    
    
    
    4,531
    
    
    
    3,439
    
    
    
    
    
    
    
    710
    
    
    
    7,970
    
    
    
    8,680
    
    
    
    1,418
    
    
    Jun. 2000
    
    40 yrs.Retail facilities in Kennesaw, Georgia and Leadwood, Kansas
    
    
    13,626
    
    
    
    6,230
    
    
    
    15,842
    
    
    
    108
    
    
    
    
    
    
    
    6,230
    
    
    
    15,950
    
    
    
    22,180
    
    
    
    3,007
    
    
    Jun. 2000
    
    40 yrs.Land in Scottsdale, Arizona
    
    
    8,055
    
    
    
    14,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,600
    
    
    
    
    
    
    
    14,600
    
    
    
    
    
    
    Sep. 2000
    
    
    N/AIndustrial facility in Albuquerque, New Mexico
    
    
    3,271
    
    
    
    1,490
    
    
    
    4,636
    
    
    
    7
    
    
    
    
    
    
    
    1,490
    
    
    
    4,643
    
    
    
    6,133
    
    
    
    846
    
    
    Sep. 2000
    
    40 yrs.Office facility in Houston, Texas
    
    
    4,673
    
    
    
    570
    
    
    
    6,760
    
    
    
    
    
    
    
    
    
    
    
    570
    
    
    
    6,760
    
    
    
    7,330
    
    
    
    1,232
    
    
    Sep. 2000
    
    40 yrs.Office facility in Eagan, Minnesota
    
    
    19,861
    
    
    
    4,225
    
    
    
    15,518
    
    
    
    2
    
    
    
    (1,325
    )
    
    
    2,900
    
    
    
    15,520
    
    
    
    18,420
    
    
    
    2,829
    
    
    Sep. 2000
    
    40 yrs.Warehouse and distribution facility in Kansas City, Missouri
    
    
    3,560
    
    
    
    570
    
    
    
    5,870
    
    
    
    39
    
    
    
    
    
    
    
    570
    
    
    
    5,909
    
    
    
    6,479
    
    
    
    1,077
    
    
    Sep. 2000
    
    40 yrs.Warehouse and distribution facilities in Valdosta, Georgia and
Johnson City, Tennessee
    
    
    11,927
    
    
    
    650
    
    
    
    16,889
    
    
    
    410
    
    
    
    
    
    
    
    650
    
    
    
    17,299
    
    
    
    17,949
    
    
    
    3,118
    
    
    Oct. 2000
    
    40 yrs.Land in Elk Grove Village, Illinois
    
    
    2,215
    
    
    
    4,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,100
    
    
    
    
    
    
    
    4,100
    
    
    
    
    
    
    Oct. 2000
    
    
    N/AIndustrial facility in Salisbury, North Carolina
    
    
    6,675
    
    
    
    1,370
    
    
    
    2,672
    
    
    
    6,298
    
    
    
    (51
    )
    
    
    1,319
    
    
    
    8,970
    
    
    
    10,289
    
    
    
    1,355
    
    
    Nov. 2000
    
    40 yrs.Office facility in Lafayette, Louisiana
    
    
    2,309
    
    
    
    660
    
    
    
    3,005
    
    
    
    
    
    
    
    
    
    
    
    660
    
    
    
    3,005
    
    
    
    3,665
    
    
    
    529
    
    
    Dec. 2000
    
    40 yrs.Office facility in Collierville, Tennessee
    
    
    41,381
    
    
    
    3,154
    
    
    
    70,646
    
    
    
    12
    
    
    
    
    
    
    
    3,154
    
    
    
    70,658
    
    
    
    73,812
    
    
    
    22,885
    
    
    Dec. 2000
    
    7 - 40 yrs.Multiplex motion picture theater in Port St. Lucie and Pensacola,
Florida
    
    
    6,135
    
    
    
    3,200
    
    
    
    3,066
    
    
    
    6,800
    
    
    
    (4,112
    )
    
    
    3,685
    
    
    
    5,269
    
    
    
    8,954
    
    
    
    859
    
    
    Dec. 2000
    
    40 yrs.Retail, warehouse and distribution facilities in York, Pennsylvania
    
    
    3,179
    
    
    
    1,974
    
    
    
    10,068
    
    
    
    8,433
    
    
    
    (5,456
    )
    
    
    849
    
    
    
    14,170
    
    
    
    15,019
    
    
    
    1,020
    
    
    Dec. 2000
    
    40 yrs.
 CPA®:14
2007 10-K  67




---



##### Table of Contents



SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION   (in thousands)
 Life on whichDepreciationin LatestCosts Capitalized
    
    
    Increase
    
    
    Gross Amount at which Carried
    
    
    
    
    
    
    
    
    
    
    Statement ofInitial Cost to Company
    
    
    Subsequent to
    
    
    (Decrease) in Net
    
    
    at Close of Period
    
    
    Accumulated
    
    
    Date
    
    
    Income isDescription
    
    Encumbrances
    
    
    Land
    
    
    Buildings
    
    
    Acquisition (a)
    
    
    Investments (b)
    
    
    Land
    
    
    Buildings
    
    
    Total
    
    
    Depreciation (e)
    
    
    Acquired
    
    
    ComputedReal Estate Under Operating Leases (Continued):Office facilities in Lindon, Utah
    
    
    
    
    
    
    1,390
    
    
    
    1,123
    
    
    
    8,072
    
    
    
    (428
    )
    
    
    1,851
    
    
    
    8,306
    
    
    
    10,157
    
    
    
    1,707
    
    
    Dec. 2000
    
    40 yrs.Office facility in Houston, Texas
    
    
    3,728
    
    
    
    1,025
    
    
    
    4,530
    
    
    
    341
    
    
    
    
    
    
    
    1,025
    
    
    
    4,871
    
    
    
    5,896
    
    
    
    811
    
    
    Dec. 2000
    
    40 yrs.Industrial and office facilities in Elgin, Illinois; Bozeman,
Montana and Nashville, Tennessee
    
    
    11,147
    
    
    
    3,900
    
    
    
    17,937
    
    
    
    138
    
    
    
    (293
    )
    
    
    3,900
    
    
    
    17,782
    
    
    
    21,682
    
    
    
    3,014
    
    
    Mar. 2001
    
    40 yrs.Warehouse and distribution facility in Duluth, Georgia
    
    
    7,347
    
    
    
    2,167
    
    
    
    11,446
    
    
    
    5
    
    
    
    
    
    
    
    2,167
    
    
    
    11,451
    
    
    
    13,618
    
    
    
    1,944
    
    
    Mar. 2001
    
    40 yrs.Industrial facilities in City of Industry, California; Florence,
Kentucky; Chelmsford, Massachusetts and Lancaster, Texas
    
    
    10,060
    
    
    
    4,398
    
    
    
    13,418
    
    
    
    3,745
    
    
    
    24
    
    
    
    4,643
    
    
    
    16,942
    
    
    
    21,585
    
    
    
    2,653
    
    
    Apr. 2001
    
    7 - 40 yrs.Industrial facilities in Mesa, Arizona and Moorpark, California (c)
    
    
    22,232
    
    
    
    4,000
    
    
    
    14,951
    
    
    
    10,146
    
    
    
    
    
    
    
    5,945
    
    
    
    23,152
    
    
    
    29,097
    
    
    
    2,767
    
    
    Jun. 2001, Dec. 2006
    
    34.5 yrs.Industrial facility in Helmond, Netherlands
    
    
    6,600
    
    
    
    2,230
    
    
    
    3,360
    
    
    
    
    
    
    
    3,526
    
    
    
    3,708
    
    
    
    5,408
    
    
    
    9,116
    
    
    
    892
    
    
    Jun. 2001
    
    40 yrs.Industrial facilities in South Windsor and Manchester, Connecticut
    
    
    11,775
    
    
    
    1,555
    
    
    
    18,823
    
    
    
    250
    
    
    
    27
    
    
    
    1,555
    
    
    
    19,100
    
    
    
    20,655
    
    
    
    3,073
    
    
    Jul. 2001
    
    
    N/AIndustrial and office facilities in Rome, Georgia; Niles,
Illinois; Plymouth, Michigan and Twinsburg, Ohio
    
    
    15,621
    
    
    
    4,140
    
    
    
    23,822
    
    
    
    1,405
    
    
    
    
    
    
    
    4,140
    
    
    
    25,227
    
    
    
    29,367
    
    
    
    4,098
    
    
    Aug. 2001
    
    40 yrs.Industrial facility in Milford, Ohio
    
    
    9,367
    
    
    
    2,000
    
    
    
    12,869
    
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    
    12,869
    
    
    
    14,869
    
    
    
    2,024
    
    
    Sep. 2001
    
    40 yrs.Retail facilities in several cities in the following states:Arizona, California, Florida, Illinois, Massachusetts, Maryland,
Michigan, Minnesota and Texas
    
    
    40,675
    
    
    
    17,100
    
    
    
    54,743
    
    
    
    
    
    
    
    
    
    
    
    17,100
    
    
    
    54,743
    
    
    
    71,843
    
    
    
    8,383
    
    
    Nov. 2001
    
    40 yrs.Office facility in Richardson, Texas
    
    
    28,189
    
    
    
    3,400
    
    
    
    45,054
    
    
    
    
    
    
    
    (501
    )
    
    
    3,400
    
    
    
    44,553
    
    
    
    47,953
    
    
    
    6,729
    
    
    Dec. 2001
    
    40 yrs.Office facility in Turku, Finland
    
    
    50,314
    
    
    
    801
    
    
    
    23,390
    
    
    
    12,291
    
    
    
    15,696
    
    
    
    1,863
    
    
    
    50,315
    
    
    
    52,178
    
    
    
    5,809
    
    
    Dec. 2001, Dec. 2007
    
    25-40 yrs.Educational facilities in Union, New Jersey; Allentown and
Philadelphia, Pennsylvania and Grand Prairie, Texas
    
    
    5,676
    
    
    
    2,486
    
    
    
    7,602
    
    
    
    
    
    
    
    3
    
    
    
    2,486
    
    
    
    7,605
    
    
    
    10,091
    
    
    
    1,149
    
    
    Dec. 2001
    
    40 yrs.Warehouse, distribution, office and industrial facilities in
Perris, California; Eugene, Oregon; West Jordan, Utah and Tacoma,
Washington
    
    
    6,687
    
    
    
    6,050
    
    
    
    8,198
    
    
    
    
    
    
    
    (1,845
    )
    
    
    4,200
    
    
    
    8,203
    
    
    
    12,403
    
    
    
    1,205
    
    
    Feb. 2002
    
    40 yrs.Warehouse and distribution facilities in Charlotte and Lincolnton,
North Carolina and Mauldin, South Carolina
    
    
    8,328
    
    
    
    1,860
    
    
    
    12,852
    
    
    
    
    
    
    
    1
    
    
    
    1,860
    
    
    
    12,853
    
    
    
    14,713
    
    
    
    1,863
    
    
    Mar. 2002
    
    40 yrs.Warehouse and distribution facilities in Boe, Carpiquet, Mans,
Vendin Le Vieil, Lieusaint, Lagnieu, Luneville and St. Germain de
Puy, France
    
    
    104,664
    
    
    
    15,724
    
    
    
    75,211
    
    
    
    13,755
    
    
    
    57,583
    
    
    
    27,411
    
    
    
    134,862
    
    
    
    162,273
    
    
    
    18,884
    
    
    Mar. 2002
    
    40 yrs.Warehouse, distribution and office facilities in Davenport, Iowa
and Bloomington, Minnesota
    
    
    17,952
    
    
    
    3,260
    
    
    
    26,009
    
    
    
    
    
    
    
    
    
    
    
    3,260
    
    
    
    26,009
    
    
    
    29,269
    
    
    
    3,549
    
    
    Jul. 2002
    
    40 yrs.Industrial facility in Gorinchem, Netherlands
    
    
    7,351
    
    
    
    2,374
    
    
    
    3,864
    
    
    
    
    
    
    
    2,911
    
    
    
    3,535
    
    
    
    5,614
    
    
    
    9,149
    
    
    
    768
    
    
    Jul. 2002Industrial facilities in Granite City, Illinois; Kendallville,
Indiana and Clinton Township, Michigan
    
    
    18,916
    
    
    
    4,390
    
    
    
    30,336
    
    
    
    
    
    
    
    7
    
    
    
    4,390
    
    
    
    30,343
    
    
    
    34,733
    
    
    
    4,330
    
    
    Aug. 2002
    
    40 yrs.Educational facility in Upper Saucon Township, Pennsylvania
    
    
    11,205
    
    
    
    3,200
    
    
    
    15,415
    
    
    
    1,475
    
    
    
    
    
    
    
    3,200
    
    
    
    16,890
    
    
    
    20,090
    
    
    
    1,884
    
    
    Aug. 2002
    
    40 yrs.Retail facilities in Lombard, Illinois and Fairfax, Virginia (d)
    
    
    15,278
    
    
    
    13,226
    
    
    
    18,248
    
    
    
    
    
    
    
    (696
    )
    
    
    13,226
    
    
    
    17,552
    
    
    
    30,778
    
    
    
    566
    
    
    Dec. 2006
    
    33.6 yrs.Retail facility in South Tulsa, Oklahoma (d)
    
    
    4,733
    
    
    
    1,649
    
    
    
    3,425
    
    
    
    
    
    
    
    
    
    
    
    1,649
    
    
    
    3,425
    
    
    
    5,074
    
    
    
    124
    
    
    Dec. 2006
    
    30 yrs.Retail and warehouse and distribution facilities in Johnstown and
Whitehall, Pennsylvania (d)
    
    
    4,774
    
    
    
    2,115
    
    
    
    15,945
    
    
    
    
    
    
    
    (609
    )
    
    
    2,115
    
    
    
    15,336
    
    
    
    17,451
    
    
    
    549
    
    
    Dec. 2006
    
    30.3 yrs.
 CPA®:14
2007 10-K  68




---



##### Table of Contents



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

Depreciation (e)
    
    Acquired
    
    ComputedReal Estate Under Operating Leases (Continued):Warehouse and distribution facility in Dallas, Texas (d)
    
    
    3,569
    
    
    
    323
    
    
    
    6,784
    
    
    
    
    
    
    
    
    
    
    
    323
    
    
    
    6,784
    
    
    
    7,107
    
    
    
    199
    
    
    Dec. 2006
    
    30.8 yrs.Industrial facility in Shelburne, Vermont (d)
    
    
    2,214
    
    
    
    955
    
    
    
    2,919
    
    
    
    
    
    
    
    
    
    
    
    955
    
    
    
    2,919
    
    
    
    3,874
    
    
    
    103
    
    
    Dec. 2006
    
    30.6 yrs.Industrial facilities in Fort Dodge, Indiana and Oconomowoc, Wisconsin
(d)
    
    
    6,567
    
    
    
    1,218
    
    
    
    11,879
    
    
    
    
    
    
    
    
    
    
    
    1,218
    
    
    
    11,879
    
    
    
    13,097
    
    
    
    548
    
    
    Dec. 2006
    
    23.5 yrs.Industrial facility in Aurora, Illinois (d)
    
    
    9,605
    
    
    
    2,730
    
    
    
    10,391
    
    
    
    
    
    
    
    
    
    
    
    2,730
    
    
    
    10,391
    
    
    
    13,121
    
    
    
    365
    
    
    Dec. 2006
    
    30.8 yrs.Industrial facility in Houston, Texas (d)
    
    
    
    
    
    
    2,299
    
    
    
    4,722
    
    
    
    
    
    
    
    
    
    
    
    2,299
    
    
    
    4,722
    
    
    
    7,021
    
    
    
    313
    
    
    Dec. 2006
    
    16.3 yrs.Industrial, warehouse and distribution and office facilities in
Waterloo, Wisconsin (d)
    
    
    8,983
    
    
    
    922
    
    
    
    16,824
    
    
    
    
    
    
    
    (642
    )
    
    
    922
    
    
    
    16,182
    
    
    
    17,104
    
    
    
    862
    
    
    Dec. 2006
    
    20.3 yrs.Industrial and warehouse and distribution facilities in Westfield,
Massachusetts (d)
    
    
    6,632
    
    
    
    1,106
    
    
    
    9,952
    
    
    
    
    
    
    
    
    
    
    
    1,106
    
    
    
    9,952
    
    
    
    11,058
    
    
    
    312
    
    
    Dec. 2006
    
    34.7 yrs.Industrial facility in Richmond, Missouri (d)
    
    
    5,812
    
    
    
    530
    
    
    
    6,505
    
    
    
    
    
    
    
    
    
    
    
    530
    
    
    
    6,505
    
    
    
    7,035
    
    
    
    202
    
    
    Dec. 2006
    
    34.8 yrs.Retail facilities in Bourne, Sandwich and Chelmsford, Massachusetts (d)
    
    
    1,502
    
    
    
    1,418
    
    
    
    2,157
    
    
    
    
    
    
    
    
    
    
    
    1,418
    
    
    
    2,157
    
    
    
    3,575
    
    
    
    75
    
    
    Dec. 2006
    
    31.1 yrs.Industrial facility in Carlsbad, California (d)
    
    
    4,850
    
    
    
    2,618
    
    
    
    4,880
    
    
    
    
    
    
    
    
    
    
    
    2,618
    
    
    
    4,880
    
    
    
    7,498
    
    
    
    171
    
    
    Dec. 2006
    
    30.8 yrs.Fitness and recreational facility in Houston, Texas (d)
    
    
    3,908
    
    
    
    1,613
    
    
    
    3,398
    
    
    
    
    
    
    
    
    
    
    
    1,613
    
    
    
    3,398
    
    
    
    5,011
    
    
    
    124
    
    
    Dec. 2006
    
    29.7 yrs.Theater in Hickory Creek, Texas (d)
    
    
    3,958
    
    
    
    3,138
    
    
    
    6,752
    
    
    
    
    
    
    
    
    
    
    
    3,138
    
    
    
    6,752
    
    
    
    9,890
    
    
    
    215
    
    
    Dec. 2006
    
    34 yrs.Educational facilities in Chandler, Arizona; Fleming Island, Florida;
Ackworth, Georgia; Hauppauge and Patchogue, New York; Sugar Land,
Texas; Hampton, Virginia and Silverdale, Washington (d)
    
    
    6,186
    
    
    
    4,312
    
    
    
    9,963
    
    
    
    
    
    
    
    (380
    )
    
    
    4,312
    
    
    
    9,583
    
    
    
    13,895
    
    
    
    353
    
    
    Dec. 2006
    
    29.6 yrs.Industrial facility in Indianapolis, Indiana (d)
    
    
    1,908
    
    
    
    1,035
    
    
    
    6,594
    
    
    
    
    
    
    
    
    
    
    
    1,035
    
    
    
    6,594
    
    
    
    7,629
    
    
    
    242
    
    
    Dec. 2006
    
    29.5 yrs.Warehouse and distribution facilities in Greenville, South Carolina (d)
    
    
    4,849
    
    
    
    625
    
    
    
    8,178
    
    
    
    
    
    
    
    
    
    
    
    625
    
    
    
    8,178
    
    
    
    8,803
    
    
    
    317
    
    
    Dec. 2006
    
    27.8 yrs.$
    779,876
    
    
    $
    222,935
    
    
    $
    889,899
    
    
    $
    132,310
    
    
    $
    56,361
    
    
    $
    236,546
    
    
    $
    1,064,959
    
    
    $
    1,301,505
    
    
    $
    162,374
 Gross Amount atCosts Capitalized
    
    
    Increase
    
    
    which CarriedInitial Cost to Company
    
    
    Subsequent to
    
    
    (Decrease) in Net
    
    
    at Close of
    
    
    DateDescription
    
    Encumbrances (c)
    
    
    Land
    
    
    Buildings
    
    
    Acquisition (a)
    
    
    Investments (b)
    
    
    Period Total
    
    
    AcquiredDirect Financing Method:Industrial facilities in Dallas and Greenville, Texas
    
    $
    12,404
    
    
    $
    460
    
    
    $
    20,427
    
    
    $
    
    
    
    $
    (3,192
    )
    
    $
    17,695
    
    
    Nov. 1999Multiplex theater facility in Midlothian, Virginia
    
    
    9,186
    
    
    
    
    
    
    
    10,819
    
    
    
    854
    
    
    
    1,069
    
    
    
    12,742
    
    
    Sep. 1999Office facility in Scottsdale, Arizona
    
    
    14,021
    
    
    
    
    
    
    
    25,415
    
    
    
    
    
    
    
    
    
    
    
    25,415
    
    
    Sep. 2000Warehouse and distribution facility in Elk Grove Village, Illinois
    
    
    2,257
    
    
    
    
    
    
    
    4,172
    
    
    
    4
    
    
    
    1
    
    
    
    4,177
    
    
    Oct. 2000Multiplex motion picture theater in Pensacola, Florida
    
    
    9,598
    
    
    
    
    
    
    
    4,112
    
    
    
    2,542
    
    
    
    
    
    
    
    6,654
    
    
    Dec. 2000Industrial facility in Doncaster, United Kingdom
    
    
    6,952
    
    
    
    
    
    
    
    8,383
    
    
    
    7
    
    
    
    4,719
    
    
    
    13,109
    
    
    Jan. 2001Industrial and manufacturing facilities in Old Fort and
Albemarie, North Carolina; Holmesville, Ohio and Springfield,
Tennessee
    
    
    7,433
    
    
    
    2,961
    
    
    
    24,474
    
    
    
    20
    
    
    
    (9,644
    )
    
    
    17,811
    
    
    Sep. 2001Educational facility in Mooresville, North Carolina
    
    
    5,860
    
    
    
    1,600
    
    
    
    9,276
    
    
    
    130
    
    
    
    (350
    )
    
    
    10,656
    
    
    Feb. 2002Industrial facility in Ashburn Junction, Virginia (d)
    
    
    
    
    
    
    4,683
    
    
    
    15,116
    
    
    
    
    
    
    
    
    
    
    
    19,799
    
    
    Dec. 2006$
    67,711
    
    
    $
    9,704
    
    
    $
    122,194
    
    
    $
    3,557
    
    
    $
    (7,397
    )
    
    $
    128,058
 CPA®:14
2007 10-K  69




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##### Table of Contents



NOTES TO SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION
 (a)
    
    Consists of the costs of improvements subsequent to purchase and acquisition costs including
legal fees, appraisal fees, title costs and other related professional fees.(b)
    
    The increase (decrease) in net investment is due to the amortization of unearned income
producing a constant periodic rate of return on the net investment which is more (less) than
lease payments received, foreign currency translation adjustments, impairment losses, property
acquisitions subsequent to the initial investment and property sales.(c)
    
    Additional interest in this property acquired in the CPA®:12 merger on December 1,
2006.(d)
    
    Property acquired in the CPA®:12 merger on December 1, 2006.(e)
    
    Reconciliation of real estate and accumulated depreciation:
 Reconciliation of Real Estate Subject toOperating LeasesDecember 31,2007
    
    
    2006
    
    
    2005Balance at beginning of year
    
    $
    1,291,598
    
    
    $
    1,050,368
    
    
    $
    1,086,073Additions
    
    
    17,524
    
    
    
    218,018
    
    
    
    3,111Dispositions
    
    
    (30,088
    )
    
    
    (25,295
    )
    
    
    (1,376
    )Foreign currency translation adjustment
    
    
    22,471
    
    
    
    17,753
    
    
    
    (25,902
    )Reclassification from (to) equity investment
    
    
    
    
    
    
    30,754
    
    
    
    (11,539
    )Balance at close of year
    
    $
    1,301,505
    
    
    $
    1,291,598
    
    
    $
    1,050,367
 Reconciliation of Accumulated DepreciationDecember 31,2007
    
    
    2006
    
    
    2005Balance at beginning of year
    
    $
    137,262
    
    
    $
    106,731
    
    
    $
    86,212Depreciation expense
    
    
    29,085
    
    
    
    27,458
    
    
    
    23,500Depreciation expense from discontinued operations
    
    
    479
    
    
    
    190
    
    
    
    Dispositions
    
    
    (6,950
    )
    
    
    (2,933
    )
    
    
    Foreign currency translation adjustment
    
    
    2,498
    
    
    
    1,732
    
    
    
    (1,681
    )Reclassification from (to) equity investment
    
    
    
    
    
    
    4,084
    
    
    
    (1,300
    )Balance at close of year
    
    $
    162,374
    
    
    $
    137,262
    
    
    $
    106,731
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
 Disclosure Controls And Procedures
   Managements Report on Internal Control Over Financial Reporting
  CPA®:14
2007 10-K  70




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
  
 Item 9B. Other Information.
  
  
 Item 10. Directors, Executive Officers and Corporate Governance.
  
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence.
  
 Item 14. Principal Accountant Fees and Services
  CPA®:14
2007 10-K  71




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##### Table of Contents



Item 15. Exhibits, Financial Statement Schedules.
    Exhibit No.
    
    Description
    
    Method of Filing3.1
    
    Articles of Incorporation of Registrant
    
    Exhibit 3.1 to Registration Statement
Form S-11 (No. 333-31437) filed on July 16, 19973.2
    
    Articles of Amendment
    
    Exhibit 3.1 to Registration Statement
Form S-11 (No. 333-76761) filed on November 16, 19993.3
    
    Bylaws of Registrant
    
    Exhibit 3.2 to Registration Statement
Form S-11 (No. 333-31437) filed on July 16, 19974.1
    
    Dividend Reinvestment and Share Purchase Plan
    
    Exhibit 4.1 to Form S-3D filed on
July 22, 200210.1
    
    Agreement and Plan of Merger dated as of
June 29, 2006 by and among Corporate
Property Associates 14 Incorporated,
Corporate Property Associates 12
Incorporated, CPA 14 Acquisition Inc., CPI
Holdings Incorporated and CPA 12 Merger Sub
Inc.
    
    Exhibit 10.1 to Form 8-K/A filed on
July 6, 200610.2
    
    Credit Agreement dated as of November 30,
2006 among Corporate Property Associates 14
Incorporated, the lenders party hereto,
Wells Fargo Bank, National Association, PNC
Bank, National Association, Citizens Bank of
Rhode Island, The Bank of New York and
Eurohypo AG, New York Branch
    
    Exhibit 10.2 to Form 10-K filed on
March 26, 200710.3
    
    First Amendment to Credit Agreement and
Consent dated as of April 3, 2007 by and
among Corporate Property Associates 14
Incorporated, the lender parties thereto,
and Wells Fargo Bank, National Association,
as agent.
    
    Exhibit 10.1 to Form 10-Q filed on
May 15, 200710.4
    
    Amended and Restated Advisory Agreement
dated September 30, 2007 between Corporate
Property Associates 14 Incorporated and
Carey Asset Management Corp.
    
    Exhibit 10.1 to Form 10-Q filed on
November 14, 200721.1
    
    Subsidiaries of Registrant
    
    Filed herewith23.1
    
    Consent of PricewaterhouseCoopers LLP
    
    Filed herewith31.1
    
    Certification of Chief Executive Officer
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith31.2
    
    Certification of Chief Financial Officer
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith32
    
    Certification of Chief Executive Officer and
Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith
 CPA®:14
2007 10-K  72




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##### Table of Contents



SIGNATURES
   Date 3/31/2008
    By:
    /s/ Mark J. DeCesarisMark J. DeCesarisManaging Director and acting Chief Financial Officer  Signature
    
    Title
    
    Date/s/ Wm. Polk Carey

Wm. Polk Carey
    
    Chairman of the Board and Director
    
    3/31/2008/s/ Gordon F. DuGan

Gordon F. DuGan
    
    Chief Executive Officer and Director
(Principal Executive Officer)
    
    3/31/2008/s/ Mark J. DeCesaris

Mark J. DeCesaris
    
    Managing Director and acting Chief Financial
Officer
(acting Principal Financial Officer)
    
    3/31/2008/s/ Thomas J. Ridings

Thomas J. Ridings
    
    Executive Director and Chief Accounting Officer
(Principal Accounting Officer)
    
    3/31/2008/s/ Richard J. Pinola

Richard J. Pinola
    
    Chairman of the Audit Committee and Director
    
    3/31/2008/s/ Marshall E. Blume

Marshall E. Blume
    
    Director
    
    3/31/2008/s/ James D. Price

James D. Price
    
    Director
    
    3/31/2008
 Report on Form 10-K
  CPA®:14
2007 10-K  73