<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A
                                 AMENDMENT NO. 1

(Mark One)

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

For the quarterly period ended          DECEMBER 31, 1996

                                       or

[ ]   TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 [NO FEE REQUIRED]

For the transition period from                       to

Commission file number                       0-11948

                         CORPORATE PROPERTY ASSOCIATES 5
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                               <C>
         CALIFORNIA                                                                13-3164925
(State or other jurisdiction of incorporation or organization)    (I.R.S. Employer Identification No.)

50 ROCKEFELLER PLAZA, NEW YORK, NEW YORK                                        10020
(Address of principal executive offices)                                      (Zip Code)
</TABLE>

Registrant's telephone number, including area code           (212) 492-1100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class                    Name of each exchange on which registered

        NONE                                           NONE



           Securities registered pursuant to Section 12(g) of the Act:

                            LIMITED PARTNERSHIP UNITS
                                (Title of Class)


                                (Title of Class)

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

                                                               [X] Yes   [ ] No

      Indicate by check mark if disclosure of deliquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.  [ X ]

      Aggregate market value of the voting stock held by non-affiliates of
Registrant: There is no active market for Limited Partnership Units.
<PAGE>   2
                                     PART II





Item 8.  Financial Statements and Supplementary Data.


  (i) Report of Independent Accountants.

 (ii) Balance Sheets as of December 31, 1995 and 1996.

(iii) Statements of Income for the years ended December 31, 1994, 1995 and 1996.

 (iv) Statements of Partners' Capital for the years ended December 31, 1994,
      1995 and 1996.

  (v) Statements of Cash Flows for the years ended December 31, 1994, 1995 and
      1996.

(vi) Notes to Financial Statements.


                                      -7-
<PAGE>   3
                        REPORT of INDEPENDENT ACCOUNTANTS



To the Partners of
  Corporate Property Associates 5:



            We have audited the accompanying balance sheets of Corporate
Property Associates 5 (a California limited partnership) as of December 31, 1995
and 1996, and the related statements of income, partners' capital and cash flows
for each of the three years in the period ended December 31, 1996. We have also
audited the financial statement schedule included on pages 22 to 25 of this
Annual Report. These financial statements and financial statement schedule are
the responsibility of the General Partners. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.

            We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partners, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

            In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Corporate Property
Associates 5 (a California limited partnership) as of December 31, 1995 and
1996, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. In addition, in our opinion, the Schedule of
Real Estate and Accumulated Depreciation as of December 31, 1996, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the financial information required to
be included therein pursuant to Securities and Exchange Commission Regulation
S-X Rule 12-28.






                                                     /s/Coopers & Lybrand L.L.P.

New York, New York
March 21, 1997


                                      -6-
<PAGE>   4
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                                 BALANCE SHEETS

                           December 31, 1995 and 1996

<TABLE>
<CAPTION>
                                                              1995             1996
                                                          ------------     ------------
<S>                                                       <C>              <C>
     ASSETS:

Real estate leased to others:
  Accounted for under the
    operating method:
      Land                                                $  4,722,767     $  3,960,767
      Buildings                                             34,271,786       22,753,408
                                                          ------------     ------------
                                                            38,994,553       26,714,175
      Accumulated depreciation                              12,371,727        9,111,827
                                                          ------------     ------------
                                                            26,622,826       17,602,348
  Net investment in direct financing leases                 19,352,938       19,298,726
                                                          ------------     ------------
      Real estate leased to others                          45,975,764       36,901,074
Operating real estate, net of accumulated depreciation
  of $4,265,218 in 1995 and $4,637,421 in 1996               7,735,809        7,463,300
Real estate held for sale                                   10,388,398
Cash and cash equivalents                                    2,300,682        5,237,995
Funds in escrow                                              2,977,622          575,051
Other assets, net of accumulated amortization of
  $130,589 and reserve for uncollected
  rent of $165,164 in 1995                                   2,890,127        2,474,117
                                                          ------------     ------------
         Total assets                                     $ 72,268,402     $ 52,651,537
                                                          ============     ============

     LIABILITIES:

Mortgage notes payable                                    $ 36,065,145     $ 14,283,940
Note payable to affiliate                                    1,151,000        1,151,000
Accrued interest payable                                       170,877           45,707
Accounts payable and accrued expenses                          572,267          433,842
Accounts payable to affiliates                                 144,553          111,526
Deferred gains, net of accumulated amortization of
  $245,788 in 1995 and $180,278 in 1996                      1,366,593          901,390
Other liabilities                                            1,051,904          658,542
                                                          ------------     ------------
         Total liabilities                                  40,522,339       17,585,947
                                                          ------------     ------------
Commitments and contingencies

     PARTNERS' CAPITAL:

General Partners                                              (262,961)         (67,666)
Limited Partners (113,200 Limited Partnership
  Units issued and outstanding)                             32,009,024       35,133,256
                                                          ------------     ------------
         Total partners' capital                            31,746,063       35,065,590
                                                          ------------     ------------
         Total liabilities and
         partners' capital                                $ 72,268,402     $ 52,651,537
                                                          ============     ============
</TABLE>

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


                                      -7-
<PAGE>   5
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                              STATEMENTS of INCOME

              For the years ended December 31, 1994, 1995 and 1996


<TABLE>
<CAPTION>
                                                      1994           1995           1996
                                                  -----------    -----------    -----------
<S>                                               <C>            <C>            <C>
Revenues:
  Rental income                                   $ 5,606,618    $ 4,642,686    $ 3,225,129
  Interest income from direct financing leases      5,805,643      3,879,125      3,409,166
  Other interest income                               117,325        307,951        210,913
  Revenue of hotel operations                       6,595,570      6,768,268      6,359,758
  Other income                                                       170,107
                                                  -----------    -----------    -----------
                                                   18,125,156     15,768,137     13,204,966
                                                  -----------    -----------    -----------
Expenses:
  Interest                                          4,534,425      3,495,872      2,075,230
  Depreciation                                      2,181,422      2,065,781      1,331,028
  General and administrative                          571,189        841,920        460,948
  Property expenses                                 1,516,194        810,581        579,189
  Amortization                                         63,932         33,599         13,301
  Writedown to net realizable value                                1,980,550      1,300,000
  Operating expense of hotel operations             4,959,699      5,241,370      4,952,959
                                                  -----------    -----------    -----------
                                                   13,826,861     14,469,673     10,712,655
                                                  -----------    -----------    -----------

    Income before gains on sale                     4,298,295      1,298,464      2,492,311

  Gains on sale of real estate, net                 1,140,891        614,234      5,284,165
                                                  -----------    -----------    -----------

    Net income                                    $ 5,439,186    $ 1,912,698    $ 7,776,476
                                                  ===========    ===========    ===========

Net income allocated to:
  Individual General Partner                      $   171,409    $    52,520    $   119,855
                                                  ===========    ===========    ===========

  Corporate General Partner                       $   832,262    $   148,208    $   342,857
                                                  ===========    ===========    ===========

  Limited Partners                                $ 4,435,515    $ 1,711,970    $ 7,313,764
                                                  ===========    ===========    ===========

Net income per Limited
  Partnership Unit
  (113,200 Units outstanding)                     $     39.18    $     15.12    $     64.61
                                                  ===========    ===========    ===========
</TABLE>

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


                                      -8-
<PAGE>   6
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                         STATEMENTS of PARTNERS' CAPITAL

              For the years ended December 31, 1994, 1995 and 1996


<TABLE>
<CAPTION>
                                            Partners' Capital Accounts
                                   ---------------------------------------------------------------
                                                                                        Limited
                                                                                        Partners'
                                                       General          Limited        Amount Per
                                      Total           Partners         Partners         Unit (a)
                                   ------------     ------------     ------------     ------------
<S>                                <C>              <C>              <C>              <C>
Balance, December 31, 1993         $ 38,311,475     $   (746,920)    $ 39,058,395     $        345

Distributions                        (5,862,314)        (351,738)      (5,510,576)             (49)

Net income, 1994                      5,439,186        1,003,671        4,435,515               39
                                   ------------     ------------     ------------     ------------

Balance, December 31, 1994           37,888,347          (94,987)      37,983,334              335

Distributions                        (8,054,982)        (368,702)      (7,686,280)             (68)

Net income, 1995                      1,912,698          200,728        1,711,970               15
                                   ------------     ------------     ------------     ------------

Balance, December 31, 1995           31,746,063         (262,961)      32,009,024              282

Distributions                        (4,456,949)        (267,417)      (4,189,532)             (37)

Net income, 1996                      7,776,476          462,712        7,313,764               65
                                   ------------     ------------     ------------     ------------

Balance, December 31, 1996         $ 35,065,590     $    (67,666)    $ 35,133,256     $        310
                                   ============     ============     ============     ============
</TABLE>

(a)  Based on 113,200 Units issued and outstanding during all periods.

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


                                      -9-
<PAGE>   7
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)
                            STATEMENTS of CASH FLOWS

              For the years ended December 31, 1994, 1995 and 1996


<TABLE>
<CAPTION>
                                                                1994             1995             1996
                                                            ------------     ------------     ------------
<S>                                                         <C>              <C>              <C>
Cash flows from operating activities:
   Net income                                               $  5,439,186     $  1,912,698     $  7,776,476
   Adjustments to reconcile net income to net
     cash provided by operating activities:
     Depreciation and amortization                             2,245,354        2,099,380        1,344,329
     Amortization of deferred gains                              (71,609)         (71,678)         (64,974)
     Cash receipts on operating and financing
       leases greater than straight-line adjustments and
       amortization of unearned income                             8,388           13,162           54,212
     Writedown to net realizable value                                          1,980,550        1,300,000
     Net gain on sale of real estate                          (1,140,891)        (614,234)      (5,284,165)
     Net change in operating assets and liabilities             (187,595)        (631,808)         480,432
                                                            ------------     ------------     ------------
        Net cash provided by operating
          activities                                           6,292,833        4,688,070        5,606,310
                                                            ------------     ------------     ------------
Cash flows from investing activities:
   Issuance of note receivable                                  (188,910)
   Additional capitalized costs                                 (407,538)      (1,078,951)        (172,447)
   Proceeds on sale and transfer of real estate               16,939,000        3,387,362       18,592,329
   Purchase of limited partnership interests                                   (1,750,175)
                                                            ------------     ------------     ------------
        Net cash provided by investing activities             16,342,552          558,236       18,419,882
                                                            ------------     ------------     ------------

Cash flows from financing activities:
   Distributions to partners                                  (5,862,314)      (8,054,982)      (4,456,949)
   Release of escrow funds in
     connection with mortgage prepayment                                                         2,295,000
   Prepayments of mortgage payable                           (10,413,985)      (2,200,000)     (18,561,812)
   Payments on mortgage principal                               (725,239)        (463,487)        (365,118)
   Partial prepayment of note payable to affiliate                               (144,000)
   Deferred financing costs                                       (1,247)         (10,000)
                                                            ------------     ------------     ------------
        Net cash used in financing activities                (17,002,785)     (10,872,469)     (21,088,879)
                                                            ------------     ------------     ------------

        Net increase (decrease) in cash and
          cash equivalents                                     5,632,600       (5,626,163)       2,937,313

Cash and cash equivalents, beginning of year                   2,294,245        7,926,845        2,300,682
                                                            ------------     ------------     ------------

        Cash and cash equivalents, end of year              $  7,926,845     $  2,300,682     $  5,237,995
                                                            ============     ============     ============
</TABLE>

Supplemental Schedule of noncash investing and financing activity:

   In connection with the sales of properties, purchasers assumed a mortgage
   loan obligation of $2,854,275 and accrued interest thereon of $12,049 in 1996
   and a mortgage loan obligation of $720,401 and accrued interest thereon of
   $5,780 in 1995 in lieu of paying cash.

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


                                      -10-
<PAGE>   8
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                          NOTES to FINANCIAL STATEMENTS



1.   Summary of Significant Accounting Policies:

      Use of Estimates:

        The preparation of financial statements in conformity with generally
           accepted accounting principles requires management to make estimates
           and assumptions that affect the reported amounts of assets and
           liabilities and disclosure of contingent assets and liabilities at
           the date of the financial statements and the reported amounts of
           revenues and expenses during the reporting period. Actual results
           could differ from those estimates.

      Real Estate Leased to Others:

        Real estate is leased to others on a net lease basis, whereby the tenant
           is generally responsible for all operating expenses relating to the
           property, including property taxes, insurance, maintenance, repairs,
           renewals and improvements.

        Corporate Property Associates 5 (the "Partnership") diversifies its real
           estate investments among various corporate tenants engaged in
           different industries and by property type throughout the United
           States.

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

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

               Operating method - Under this method, real estate is recorded at
               cost, revenue is recognized as rentals are earned and expenses
               (including depreciation) are charged to operations as incurred.
               When scheduled rents vary during the lease term, income is
               recognized on a straight-line basis so as to produce a constant
               periodic rent.

        The Partnership assesses the recoverability of its real estate assets,
           including residual interests, based on projections of undiscounted
           cash flows over the life of such assets. In the event that such cash
           flows are insufficient, the assets are adjusted to their estimated
           net realizable value.

        Substantially all of the Partnership's leases provide for either
           scheduled rent increases, periodic rent increases based on formulas
           indexed to increases in the Consumer Price Index or sales overrides.

      Operating Real Estate:

        Land, buildings and personal property are carried at cost. Major
           renewals and improvements are capitalized to the property accounts,
           while replacements, maintenance and repairs which do not improve or
           extend the lives of the respective assets are expensed currently.

      Real Estate Held for Sale:

        Real estate held for sale is accounted for at the lower of cost or fair
           value less cost of sale.

      Depreciation:

        Depreciation is being computed using the straight-line method over the
           estimated useful lives of components of the particular properties,
           which range from 5 to 30 years.

      Cash Equivalents:

        The Partnership considers all short-term, highly liquid investments that
           are both readily convertible to cash and have a maturity of generally
           three months or less at the time of purchase to be cash


                                   Continued

                                      -11-
<PAGE>   9
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued


           equivalents. Items classified as cash equivalents include commercial
           paper and money market funds. Substantially all of the Partnership's
           cash and cash equivalents at December 31, 1995 and 1996 were held in
           the custody of three financial institutions.

      Other Assets and Liabilities:

        Included in other assets are deferred charges incurred in connection
           with mortgage note financings and refinancings and an investment in a
           limited partnership. Deferred charges are amortized on a
           straight-line basis over the terms of the mortgages. The
           Partnership's 17.5% investment in an unaffiliated limited partnership
           is accounted for under the cost method, i.e., income is recorded
           based on distributions received from net accumulated earnings.
           Included in other liabilities is deferred rental income for the
           aggregate difference on an operating method lease between scheduled
           rents which vary during the lease term and rent recognized on a
           straight-line basis.

      Deferred Gains:

        Deferred gains consist of assets acquired in excess of liabilities
           assumed in connection with acquiring the operations of a hotel
           property in Rapid City, South Dakota and certain funds received in
           connection with the two loan refinancings. The deferred gain from the
           refinancings is being amortized on a straight-line basis over 24
           years. The deferred gain on acquisition had been amortized on a
           straight-line basis on a 20-year schedule until sale of the property
           in October 1996, at which time the remaining unamortized gain was
           recognized.

      Income Taxes:

        A partnership is not liable for Federal income taxes as each partner
           recognizes his proportionate share of the partnership income or loss
           in his tax return. Accordingly, no provision for income taxes is
           recognized for financial statement purposes.

      Reclassifications:

        Certain 1994 and 1995 amounts have been reclassified to conform to the
           1996 financial statement presentation.

 2.  Partnership Agreement:

        The Partnership was organized on April 12, 1983 under the Uniform
           Limited Partnership Act of the State of California for the purpose of
           engaging in the business of investing in and leasing industrial and
           commercial real estate. The Corporate General Partner purchased 200
           Limited Partnership Units in connection with the Partnership's public
           offering. All the Units were sold prior to December 21, 1983, at
           which time the offering terminated. The Partnership will terminate on
           December 31, 2005, or sooner, in accordance with the terms of the
           Amended Agreement of Limited Partnership (the "Agreement").

        The Agreement provides that the General Partners are allocated 6% (1% to
           the Individual General Partner, William P. Carey, and 5% to the
           Corporate General Partner, Carey Corporate Property, Inc.) and the
           Limited Partners are allocated 94% of the profits and losses, except
           as described below, as well as distributions of Distributable Cash
           From Operations, as defined. The General Partners may be entitled to
           receive a subordinated preferred return, measured based upon the
           cumulative proceeds arising from the sale of Partnership assets.
           Pursuant to the subordination provisions of the Agreement, the
           preferred return may be paid after the limited partners receive 100%
           of their initial investment from the proceeds of asset sales and a
           cumulative annual return


                                   Continued

                                      -12-
<PAGE>   10
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued


           of 6% since the inception of the Partnership. The General Partners
           interest in such preferred return amounts to $1,422,844 based upon
           the cumulative proceeds from the sale of assets since the inception
           of the Partnership through December 31, 1996. The Partnership's
           ability to satisfy the subordination provisions of the Agreement may
           not be determinable until liquidation of a substantial portion of the
           Partnership's assets has been made, formal plans of liquidation are
           adopted or limited partnership units are converted to other
           securities which provide the security holder with greater liquidity
           than a limited partnership unit. Management believes that as of the
           report date, ultimate payment of the preferred return is reasonably
           possible but not probable, as defined pursuant to Statement of
           Financial Accounting Standards No. 5.

        In accordance with the Agreement, the General Partners, due to having
           negative capital balances at the beginning of each year, were
           allocated a portion of the 1994, 1995 and 1996 gains on sale of
           property as well as the related tax gain in order to reduce their
           negative balances. The Partnership paid a special distribution in
           1995 of proceeds from a property sale which distribution was
           allocated 1% to the Individual General Partner and 99% to the Limited
           Partners in accordance with the Agreement.


3.   Transactions with Related Parties:

        The Partnership holds a 65% interest as tenants-in-common in hotel
           properties in Alpena and Petoskey, Michigan with Corporate Property
           Associates 6 ("CPA(R):6"), an affiliate which owns the remaining 35%
           interest. The Partnership accounts for its interest in the Alpena and
           Petoskey properties on a proportional basis.

        Under the Agreement, W.P. Carey & Co., Inc. ("W.P. Carey") and other
           affiliates are also entitled to receive a property management fee and
           reimbursement of certain expenses incurred in connection with the
           Partnership's operations.  General and administrative expense
           reimbursements consist primarily of the actual cost of personnel
           needed in providing administrative services necessary to the
           operation of the Partnership.

          Property management fee and general and administrative expense
           reimbursements are summarized as follows:

<TABLE>
<CAPTION>
                                                1994        1995        1996
                                                ----        ----        ----
            <S>                               <C>         <C>         <C>
            Property management fee           $156,947    $116,825    $ 76,763
            General and administrative
               expense reimbursements          178,840     117,584     113,288
                                              --------    --------    --------
                                              $335,787    $234,409    $190,051
                                              ========    ========    ========
</TABLE>


        During 1994, 1995 and 1996, fees aggregating $339,112, $180,242 and
           $91,265 respectively, were incurred for legal services performed by a
           firm in which the Secretary of the Corporate General Partner and
           other affiliates is a partner.

        The mortgage loans on the Alpena and Petoskey properties consist of
           tax-exempt bond obligations of $7,330,000 for each property of which
           the Partnership's share of each is $4,764,500. The bonds are also
           collateralized by mortgage and/or lease assignments on eight other
           Partnership properties. In the event of default, the bondholders have
           recourse to the Partnership's collateral to the full extent of the
           outstanding balance of the bonds including the portion of the
           obligation applicable to CPA(R)6. In connection with restructuring
           the bond obligation in 1992, the Partnership received cash and other
           consideration from CPA(R)6.


                                   Continued

                                      -13-
<PAGE>   11
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued


        The Partnership is a participant in an agreement with W.P. Carey and
           other affiliates for the purpose of leasing office space used for the
           administration of real estate entities and W.P. Carey and for sharing
           the associated costs. Pursuant to the terms of the agreement, the
           Partnership's share of rental, occupancy and leasehold improvement
           costs is based on adjusted gross revenues, as defined. Net expenses
           incurred in 1994, 1995 and 1996 were $76,426, $182,843 and $83,533,
           respectively. Net expenses in 1995 included certain nonrecurring
           items.


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

    A.  Real Estate Leased to Others:

        Scheduled future minimum rents, exclusive of renewals, under
           noncancellable operating leases amount to approximately $2,850,000 in
           1997, $2,822,000 in 1998, $2,647,000 in 1999, $1,077,000 in both of
           the years 2000 and 2001, and aggregate approximately $16,650,000
           through 2010.

        Contingent rents were approximately $106,000, $5,000 and $6,000 in 1994,
           1995 and 1996, respectively.

    B.  Operating Real Estate:

        Operating real estate, at cost, is summarized as follows:

<TABLE>
<CAPTION>
                                                             December 31,
                                                             ------------
                                                         1995           1996
                                                     -----------    -----------
               <S>                                   <C>            <C>
               Land                                  $   479,050    $   479,050
               Buildings                               9,603,750      9,603,750
               Personal property                       1,918,227      2,017,921
                                                     -----------    -----------
                                                      12,001,027     12,100,721
                   Less: Accumulated depreciation      4,265,218      4,637,421
                                                     -----------    -----------
                                                     $ 7,735,809    $ 7,463,300
                                                     ===========    ===========
</TABLE>

5.   Net Investment in Direct Financing Leases:

        Net investment in direct financing leases is summarized as follows:

<TABLE>
<CAPTION>
                                                            December 31,
                                                            ------------
                                                        1995           1996
                                                    -----------    -----------
               <S>                                  <C>            <C>
               Minimum lease payments receivable    $34,887,327    $32,483,668
               Unguaranteed residual value           17,495,677     17,495,677
                                                    -----------    -----------
                                                     52,383,004     49,979,345
                   Less: Unearned income             33,030,066     30,680,619
                                                    -----------    -----------
                                                    $19,352,938    $19,298,726
                                                    ===========    ===========
</TABLE>

        Scheduled future minimum rents, exclusive of renewals, under
           noncancellable financing leases amount to approximately $2,585,000 in
           each of the years from 1997 to 2001 and aggregate approximately
           $32,484,000 through 2017.


                                   Continued

                                      -14-
<PAGE>   12
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued


        Contingent rents were approximately $995,000, $758,000 and $776,000 in
           1994, 1995 and 1996, respectively.

 6.  Mortgage Notes Payable and Note Payable to Affiliate:

     A. Mortgage Notes Payable

        The Partnership's mortgage notes payable are limited recourse
           obligations and are collateralized by lease assignments and by real
           property with a carrying amount of approximately $32,914,000, before
           accumulated depreciation (also see Note 3). As of December 31, 1996,
           mortgage notes payable bear interest at rates varying from 6.6% to
           10% per annum and mature from 1997 to 2015.

      Scheduled principal payments during each of the next five years following
           December 31, 1996 and thereafter, including a mortgage loan subject
           to acceleration, are as follows:

<TABLE>
<CAPTION>
          Year Ending December 31,
          ------------------------
          <S>                                  <C>
            1997                               $ 4,988,940
            1998                                   253,500
            1999                                   266,500
            2000                                   286,000
            2001                                   312,000
            Thereafter                           8,177,000
                                               -----------
               Total                           $14,283,940
                                               ===========
</TABLE>

     B. Note Payable to Affiliate:

        A note payable to CPA(R):6 of $1,151,000 provides for payments of
           interest only at a rate of 13.48% per annum through August 1, 1999,
           at which time the interest rate will reset to the Applicable Federal
           Rate (as defined in the Internal Revenue Code of 1986). The note,
           which is a recourse obligation of the Partnership, matures on May 1,
           2012, at which time a balloon payment for any unpaid principal is
           due. The note may be prepaid in part or whole at any time.

        Interest paid on mortgage notes payable and the note payable to
           affiliate was $4,642,849, $3,554,413 and $2,254,150 in 1994, 1995 and
           1996, respectively.


 7.  Distributions to Partners:

        Distributions declared and paid to partners are summarized as follows:

<TABLE>
<CAPTION>
                                                                                                            Limited
       Year Ending                          Distributions Paid to        Distributions Paid to           Partners' Per
       December 31,                           General Partners              Limited Partners              Unit Amount
       ------------                         ---------------------        ---------------------           -------------
      <S>                                   <C>                          <C>                             <C>
         1994                                    $  351,738                    $5,510,576                    $48.68
                                                 ==========                    ==========                    ======
         1995:
      Quarterly distributions                    $  345,833                    $5,422,280                    $47.90
      Special distribution                           22,869                     2,264,000                     20.00
                                                 ----------                    ----------                    ------
         Total 1995                              $  368,702                    $7,686,280                    $67.90
                                                 ==========                    ==========                    ======
         1996                                    $  267,417                    $4,189,532                    $37.01
                                                 ==========                    ==========                    ======
</TABLE>


        Distributions of $61,056 to the General Partners and $956,540 to the
           Limited Partners for the quarter ended December 31, 1996 were
           declared and paid in January 1997.


                                   Continued

                                      -15-
<PAGE>   13
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued


 8.  Income for Federal Tax Purposes:

        Income for financial statement purposes differs from income for Federal
           income tax purposes because of the difference in the treatment of
           certain items for income tax purposes and financial statement
           purposes. A reconciliation of accounting differences is as follows:

<TABLE>
<CAPTION>
                                               1994             1995             1996
                                           ------------     ------------     ------------
    <S>                                    <C>              <C>              <C>
    Net income per Statements of Income    $  5,439,186     $  1,912,698     $  7,776,476
    Excess tax depreciation                  (2,979,063)      (2,399,357)      (1,980,182)
    Writedowns of assets                                       1,980,550        1,300,000
    Difference in gains or losses on
      dispositions of property                8,776,856         (157,203)       3,475,585
    Other                                      (351,394)         284,878         (544,552)
                                           ------------     ------------     ------------
      Income reported for Federal
         income tax purposes               $ 10,885,585     $  1,621,566     $ 10,027,327
                                           ============     ============     ============
</TABLE>


9.   Industry Segment Information:

        The Partnership's operations consist primarily of the investment in and
           the leasing of industrial and commercial real estate and the
           operations of three hotel properties.

        In 1994, 1995 and 1996, the Partnership earned its total leasing
           revenues (rental income plus interest income from financing leases)
           from the following lease obligors:

<TABLE>
<CAPTION>
                                            1994              %             1995              %             1996             %
                                         -----------     -----------     -----------     -----------     -----------    -----------
  <S>                                    <C>             <C>             <C>             <C>             <C>            <C>
  Gould, Inc.                            $ 1,125,000              10%    $ 1,132,500              13%    $ 1,215,000             18%
  Spreckels Industries, Inc.                 880,264               8       1,020,717              12       1,020,717             15
  DeVlieg Bullard, Inc.                      830,984               7         830,984              10         912,864             14
  Arley Merchandise
    Corporation                              600,000               5         600,000               7         600,000              9
  Exide Electronics
    Corporation                              485,726               4         528,926               6         572,130              9
  Penn Virginia Corporation                  498,750               5         498,750               6         498,750              8
  Stoody Deloro Stellite, Inc.               380,325               3         404,719               5         390,068              6
  GATX Logistics, Inc.                     1,834,350              16       1,398,600              16         380,730              6
  Harcourt General Corporation               233,750               2         233,750               3         233,750              4
  Rochester Button Company                   204,743               2         199,968               2         225,706              3
  Penberthy Products, Inc.                   182,529               2         182,529               2         200,514              3
  Winn Dixie Stores, Inc.                    191,534               2         191,534               2         191,534              3
  Sunds Defibrator Woodhandling, Inc.
    (formerly FMP/Rauma Company)             124,430               1         131,033               2         144,239              2
  Other                                      146,342               1         212,383               2          31,602
  IBM Corporation                            318,097               3         318,097               4          16,691
  Industrial General Corporation           1,385,643              12         637,321               8
  Pace Membership Warehouse, Inc.            601,718               5
  Liberty Fabrics of New York              1,388,076              12
                                         -----------     -----------     -----------     -----------     -----------    -----------
                                         $11,412,261             100%    $ 8,521,811             100%    $ 6,634,295            100%
                                         ===========     ===========     ===========     ===========     ===========    ===========
</TABLE>


                                   Continued

                                      -16-
<PAGE>   14
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued


        The Partnership's share of the operating results for the three hotel
           properties are as follows:


<TABLE>
<CAPTION>
                                      1994            1995            1996
                                  -----------     -----------     -----------
      <S>                         <C>             <C>             <C>
      Revenues                    $ 6,595,570     $ 6,768,268     $ 6,359,758
      Fees to hotel management
        company                      (131,911)       (143,498)       (134,872)
      Other operating expenses     (4,827,788)     (5,097,872)     (4,818,087)
                                  -----------     -----------     -----------
      Hotel operating income      $ 1,635,871     $ 1,526,898     $ 1,406,799
                                  ===========     ===========     ===========
</TABLE>

10.  Rochester Button Company:

        In June 1992, the Partnership and Rochester Button Company ("RBC")
           entered into restructuring and lease modification agreements for
           properties leased by RBC in South Boston and Kenbridge, Virginia.
           Under the restructuring agreement, the Partnership agreed to exchange
           a $300,000 subordinated promissory note from RBC for 300 shares of
           preferred stock ($1,000 par value, 5%). In January 1994, the
           Partnership agreed to lend $250,000 to RBC at an annual interest rate
           of 9% evidenced by a subordinated promissory note. In 1995, the
           Partnership incurred a charge of $288,910 in writing off the note
           receivable and preferred stock as a result of RBC experiencing
           financial difficulties and its inability to pay dividends and debt
           service installments in a timely manner. The Partnership had
           previously written down the investment in the preferred stock. In
           addition, the Partnership incurred charges on uncollected rents of
           $165,164 and $235,314 for the years ended December 31, 1995 and 1996,
           respectively.

        On December 30, 1996, the Partnership entered into a new lease agreement
           with RBC and agreed to forgive all previously uncollected rents. The
           lease amendment provides for a reduction of annual rent from $286,000
           to $180,000. Additionally, RBC granted the Partnership warrants which
           are exercisable at any time prior to December 31, 2006, to purchase
           up to 273.5 shares of RBC common stock, representing 40% of the
           outstanding common stock of RBC, at an exercise price of $18.28 per
           share prior to December 31, 2006.

        The South Boston and Kenbridge properties are pledged as collateral for
           $400,000 of bond financings issued to RBC by industrial development
           authorities.


                                   Continued

                                      -17-
<PAGE>   15
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued


11.  Funds in Escrow:

        Funds in escrow at December 31, 1995 and 1996 consist of reserves and
           escrow funds for the hotel properties and related mortgage debt.

<TABLE>
<CAPTION>
                                                             December 31,
                                                             ------------
                                                          1995          1996
                                                       ----------    ----------
               <S>                                     <C>           <C>
               Security reserve on Rapid City
                 property                              $1,895,000
               Debt service escrow account and bond
                 reserves on Alpena and Petoskey
                 properties                               412,100    $  490,100
               Hotel furniture, fixture
                 and equipment reserves                   270,522        84,951
               Special escrow accounts
                 on Rapid City hotel property             400,000
                                                       ----------    ----------
                                                       $2,977,622    $  575,051
                                                       ==========    ==========
</TABLE>

12.  Gains and Losses on the Sale of Real Estate:

     Pace Membership Warehouse, Inc.:

        On November 10, 1994, Pace Membership Warehouse, Inc. ("Pace"),
           purchased its leased property in Tampa, Florida from the Partnership
           for $7,000,000. A portion of the Partnership's proceeds from the sale
           was used to satisfy the remaining $3,290,437 mortgage balance on the
           Tampa property. In connection with the sale, the Partnership
           recognized a gain of $2,027,891.

     Industrial General Corp.:

        In August 1985, the Partnership purchased from and net leased to
           Industrial General Corporation ("IGC") and certain of its
           wholly-owned subsidiaries, seven properties located in Elyria and
           Bellville, Ohio; Forrest City and Bald Knob, Arkansas; Carthage, New
           York; and Newburyport, Massachusetts. Subsequent to the purchase, the
           Partnership agreed to exchange the Saginaw property for an expansion
           of the Newburyport facility, severed the Carthage property from the
           lease and entered into a lease with FMP/Rauma Company ("FMP"). In
           December 1994, the Partnership sold the Forrest City property for
           $650,000 and recognized a loss of $887,000.

        In July 1995, IGC filed a voluntary petition of bankruptcy under Chapter
           11 of the United States Bankruptcy Code. In connection with an asset
           acquisition of the plastics division of IGC, on September 14, 1995,
           the Partnership entered into a series of transactions which resulted
           in the termination of the IGC lease, the sale of the Bald Knob,
           Bellville and Newburyport properties and the full satisfaction of the
           mortgage loan obligation collateralized by all of the IGC properties
           and the FMP property which had been scheduled to mature on September
           1, 1995. In connection with the sale of the Bald Knob property to
           IGC, the Partnership received cash of $987,362 and IGC, with the
           consent of the mortgage lender, assumed a mortgage obligation from
           the Partnership of $720,401 and accrued interest thereon of $5,780.
           Additionally, IGC agreed to pay an additional $200,000 in
           installments to the Partnership of which $185,000 had been received
           as of December 31, 1996. The Bellville and Newburyport properties
           were sold for $2,400,000 in cash to G.I. Plastek Industrial
           Properties Limited Partnership ("Plastek Properties"), an affiliate
           of G.I. Plastek Limited Partnership ("Plastek") which acquired the
           assets of the IGC plastics division.


                                   Continued

                                      -18-
<PAGE>   16
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued


           The Partnership used $2,200,000 of the proceeds to pay off the
           remaining balance on the matured mortgage loan obligation on the IGC
           and FMP properties. In connection with the sale of the three
           properties, the Partnership realized a loss of $1,719,828.

        The Partnership also purchased limited partnership interests in Plastek.
           The Partnership made capital contributions of $175 and $1,750,000 for
           Class A and Class B limited partnership interests, respectively. The
           Class A interest provides for a 17.5% participation in the profits
           and losses of Plastek after payment of preferred returns to Class B
           interests. Class B interests are entitled to a cumulative preferred
           return of 10% on their contributions; however, it does not
           participate in nor receive other allocations of any gains or losses
           of Plastek. The Class B interest is redeemable on September 8, 2000.
           As of December 31, 1996, the Partnership has not received any
           distributions.

        The Partnership retains ownership of the Elyria property. In 1995, based
           on the appraised value of the property and the costs that would need
           to be incurred to prepare the property for sale or lease after IGC
           vacated, the Partnership wrote off the value of the property and
           recognized a charge of $691,640. The Elyria property is presently
           leased to InnoTech Industries, Inc. through April 1998 for an annual
           rental of $60,000.

      Liberty Fabrics of New York:

        In January 1984, the Partnership purchased properties in Gordonsville,
           Virginia and in North Bergen, New Jersey and entered into a net lease
           with Liberty Fabrics of New York ("Liberty"). In December 1993,
           Liberty notified the Partnership of its intention to exercise its
           purchase option on the properties. Pursuant to the lease, the
           purchase price would be the greater of $7,000,000, the Partnership's
           purchase price for the property, or fair market value as encumbered
           by the lease.

        On December 29, 1994, the Partnership and Liberty terminated the lease
           and agreed that the properties would be transferred to Liberty for
           $9,359,000, subject to a final determination of the fair value of the
           property. Liberty would have the right within 30 days of the
           determination to rescind the transfer, in which case all proceeds
           would be returned to Liberty, title of the properties transferred
           back to the Partnership and Liberty would pay all rents in arrears
           for the period from the initial transfer of title if the fair market
           value was determined to be greater than $9,359,000. The final
           determination was made with no adjustment made to the fair market
           value thereby completing the sale. As a result, the Partnership
           recognized a gain of $2,334,062 in 1995 on the sale of the
           properties.

     Rapid City Hotel:

        In 1985, the Partnership purchased a hotel in Rapid City, South Dakota,
           which it operated as a Holiday Inn, with $6,800,000 of tax-exempt
           bonds which were supported by a letter of credit issued by a third
           party. In September 1994, the Partnership was advised by Holiday Inn
           that it would need to upgrade the hotel's physical plant by January
           1997 in order to meet the requirements of a modernization plan
           adopted by Holiday Inn or surrender its Holiday Inn license. As the
           cost of such upgrade was estimated to be $1,925,000, Management
           concluded that such additional investment would not justify
           compliance with the modernization plan. Although Management was
           considering an affiliation with another national hotel chain,
           earnings were expected to decline after any change in affiliation.


                                   Continued

                                      -19-
<PAGE>   17
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued


        In 1995, under an agreement with the issuer of the letter of credit
           supporting the $6,800,000 tax-exempt mortgage bond on the Rapid City
           property, the Partnership agreed to use its best efforts to sell the
           hotel property in exchange for an extension of the letter of credit
           from October 1995 to October 1997. Annual cash flow from the hotel
           (hotel earnings, adjusted for depreciation and amortization, less
           debt service on the tax-exempt bonds) for 1995, the last full year of
           operations, was $305,000. In 1995, the Partnership reevaluated the
           net realizable value of the property and recognized a noncash charge
           of $1,000,000 on the writedown. In the second quarter of 1996, the
           Partnership charged an additional $1,300,000 as a writedown to net
           realizable value to an amount Management believed would approximate
           the proceeds from a sale.

        On October 1, 1996, the Partnership sold the property and the operating
           assets and liabilities of the hotel for $4,105,000. The Partnership
           recognized a gain of $784,618 on the sale. The bond was paid off by
           utilizing the net proceeds from the sale, $302,000 of cash and
           various escrow accounts which had been held by the bond trustee or
           issuer of the letter of credit. The gain includes the recognition of
           the release of unamortized deferred gains relating to the acquisition
           of the hotel operation in 1991 from the former lessee.

     Helena, Montana Office Building :

        In May 1985, the Partnership purchased an office building in Helena,
           Montana and was assigned an existing net lease with IBM Corporation
           ("IBM") as lessee. In 1992, the lease with IBM and the mortgage loan
           on the property were modified at which time IBM reduced its occupancy
           from 100% to 40% of the leasable space. The Partnership subsequently
           leased the remaining space to various other tenants.

        On January 19, 1996, the Partnership sold the property for $4,800,000
           including the purchaser's assumption of the existing mortgage loan on
           the property. Net of closing costs, the Partnership received cash
           proceeds of $1,741,261, assigned the mortgage loan obligation of
           $2,854,275 and accrued interest thereon of $12,049 to the purchaser
           and recognized a gain of $90,356 on the sale.

     GATX Logistics, Inc.:

        In June 1985, the Partnership purchased a warehouse property in
           Hodgkins, Illinois leased to General Motors Corporation ("GM"). In
           November 1993, GM terminated its lease and the Partnership entered
           into a short-term lease with GATX Logistics, Inc.("GATX").
           Subsequently, in November 1994, GATX and the Partnership entered into
           a new lease which provided for a five-year term and a renewal term of
           five years at GATX's option.

        On April 9, 1996, the Partnership sold the Hodgkins property for
           $13,200,000 and assigned the GATX lease, as lessor, to the purchaser.
           Net of costs and amounts necessary to pay the remaining $3,208,526
           balance on the property's mortgage loan, the Partnership received
           cash proceeds of $9,428,270 and recognized a gain on sale of
           $4,409,191.


                                   Continued

                                      -20-
<PAGE>   18
                         CORPORATE PROPERTY ASSOCIATES 5
                       (a California limited partnership)

                    NOTES to FINANCIAL STATEMENTS, Continued


13.  Environmental Matters:

        All of the Partnership's properties, other than the hotel properties are
           currently leased to corporate tenants, all of which are subject to
           environmental statutes and regulations regarding the discharge of
           hazardous materials and related remediation obligations. The
           Partnership generally structures a lease to require the tenant to
           comply with all laws. In addition, substantially all of the
           Partnership's net leases include provisions which require tenants to
           indemnify the Partnership from all liabilities and losses related to
           their operations at the leased properties. The costs for remediation,
           which are expected to be performed and paid by the affected tenant,
           are not expected to be material. In the event that the Partnership
           absorbs a portion of any costs because of a tenant's failure to
           fulfill its obligations, the General Partners believe such
           expenditures will not have a material adverse effect on the
           Partnership's financial condition, liquidity or results of
           operations.

        In 1994, based on the results of Phase I environmental reviews performed
           in 1993, the Partnership voluntarily conducted Phase II environmental
           reviews on certain of its properties. The Partnership believes, based
           on the results of Phase I and Phase II reviews, that its leased
           properties are in substantial compliance with Federal and state
           environmental statutes and regulations. Portions of certain
           properties have been documented as having a limited degree of
           contamination, principally in connection with surface spills from
           facility activities and leakage from underground storage tanks. For
           those conditions which were identified, the Partnership advised the
           affected tenants of the Phase II findings and of their obligations to
           perform required remediation.

14.  Disclosure on Fair Value of Financial Instruments:

        The carrying amounts of cash, receivables and accounts payable and
           accrued expenses approximate fair value because of the short maturity
           of these items.

        The Partnership estimates that the fair value of mortgage notes payable
           approximates $13,914,000 at December 31, 1996. The fair value of debt
           instruments was evaluated using a discounted cash flow model with
           discount rates which take into account the credit of the tenants and
           interest rate risk.

        The carrying amount of the Partnership's limited partnership investment
           in Plastek, which interest was purchased in September 1995 and which
           is accounted for under the cost method, approximates fair value.


                                      -21-
<PAGE>   19
                                   SIGNATURES

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

                        CORPORATE PROPERTY ASSOCIATES 5
                        (a California limited partnership)

                        BY:   CAREY CORPORATE PROPERTY, INC.




    09/3/97             BY:    /s/ Steven M. Berzin
---------------               -------------------------------
     Date                     Claude Fernandez
                              Executive Vice President and
                              Chief Financial Officer
                              (Principal Financial Officer)



    09/3/97             BY:    /s/ Claude Fernandez
---------------               -------------------------------
     Date                     Claude Fernandez
                              Executive Vice President and
                              Chief Administrative Officer
                              (Principal Accounting Officer)


                                      -22-