##### 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, 2005
 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: 033-68728
 CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
  MARYLAND
(State or other jurisdiction of incorporation or organization)
    
    13-3726306
(I.R.S. Employer Identification No.)50 ROCKEFELLER PLAZA
NEW YORK, NEW YORK
(Address of principal executive offices)
    
    10020
(Zip code)
 
  
 £ R
 £ R
 R £
 £
  £ £ R
 £ R
      1




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TABLE OF CONTENTS  PART IITEM 1. BusinessITEM 1A. Risk Factors.ITEM 1B. Unresolved Staff CommentsITEM 2. PropertiesITEM 3. Legal Proceedings.ITEM 4. Submission of Matters to a Vote of Security HoldersPART IIITEM 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesITEM 6. Selected Financial DataITEM 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsITEM 7A. Quantitative and Qualitative Disclosures about Market Risk (In thousands)ITEM 8. Financial Statements and Supplementary DataITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureITEM 9A. Controls and ProceduresITEM 9B. Other InformationPART IIIITEM 10. Directors and Executive Officers of the RegistrantITEM 11. Executive CompensationITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersITEM 13. Certain Relationships and Related TransactionsITEM 14. Principal Accountant Fees and ServicesPART IVITEM 15. Exhibits, Financial Statements SchedulesSIGNATURESEX-21.1: SUBSIDIARIES OF REGISTRANTEX-23.1: CONSENT OF PRICEWATERHOUSECOOPERS LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION    Table of Contents   
  
 Financial information in this report is in thousands except share and per share amounts.
 
 ITEM 1. Business.
     
    
    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.
  ® ® ® ® ® ®
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
    
    In March 2005, Gordon F. DuGan, was elected chief executive officer. Mr. DuGan was previously
co-chief executive officer with William Polk Carey, who remains chairman of the board.
    
    In March 2005, Thomas E. Zacharias was appointed chief operating officer. Mr. Zacharias also
continues to serve as managing director and head of the asset management department.
    
    In March 2005, the board of directors accepted the resignation of John J. Park as chief
financial officer and elected Claude Fernandez, who had been the chief accounting officer, as
acting chief financial officer. Mr. Park is currently managing director  strategic planning.
    
    In November 2005, Mark J. DeCesaris, managing director, was appointed acting chief financial
officer and chief administrative officer. Mr. DeCesaris has been a consultant in the finance
department since May 2005. Mr. Fernandez has resumed his responsibilities as chief accounting
officer.
  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.
       Consolidated Investments
    
    
    Combined Investments (2)Annualized
    
    
    % of Annualized
    
    
    Annualized
    
    
    % of AnnualizedContractual Lease
    
    
    Contractual
    
    
    Contractual Lease
    
    
    ContractualRegion
    
    Revenue (1)
    
    
    Lease Revenue
    
    
    Revenue (1)
    
    
    Lease RevenueUnited StatesMidwest
    
    $
    11,165
    
    
    
    30.18
    %
    
    $
    15,424
    
    
    
    23.63
    %East
    
    
    8,964
    
    
    
    24.23
    
    
    
    12,090
    
    
    
    18.52West
    
    
    8,896
    
    
    
    24.05
    
    
    
    20,851
    
    
    
    31.94South
    
    
    7,968
    
    
    
    21.54
    
    
    
    10,961
    
    
    
    16.79Total U.S.
    
    
    36,993
    
    
    
    100.00
    
    
    
    59,326
    
    
    
    90.88InternationalEurope
    
    
    
    
    
    
    
    
    
    
    5,953
    
    
    
    9.12Total
    
    $
    36,993
    
    
    
    100.00
    %
    
    $
    65,279
    
    
    
    100.00
    %
 
 (1)
    
    Reflects annualized contractual base rent for the fourth quarter of 2005.(2)
    
    Reflects information regarding our consolidated investments and our pro rata share of
annualized contractual base rent from equity investments. 4




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Consolidated Investments
    
    
    Combined Investments (2)Annualized
    
    
    % of Annualized
    
    
    Annualized
    
    
    % of AnnualizedContractual
    
    
    Contractual
    
    
    Contractual
    
    
    ContractualProperty Type
    
    Lease Revenue (1)
    
    
    Lease Revenue
    
    
    Lease Revenue (1)
    
    
    Lease RevenueIndustrial
    
    $
    21,530
    
    
    
    58.21
    %
    
    $
    30,966
    
    
    
    47.44
    %Warehouse/distribution
    
    
    4,239
    
    
    
    11.46
    
    
    
    13,420
    
    
    
    20.56Retail
    
    
    4,004
    
    
    
    10.82
    
    
    
    6,798
    
    
    
    10.41Office
    
    
    1,747
    
    
    
    4.72
    
    
    
    4,099
    
    
    
    6.28Other properties
    
    
    5,473
    
    
    
    14.79
    
    
    
    9,996
    
    
    
    15.31Total
    
    $
    36,993
    
    
    
    100.00
    %
    
    $
    65,279
    
    
    
    100.00
    %
 
 (1)
    
    Reflects annualized contractual base rent for the fourth quarter of 2005.(2)
    
    Reflects information regarding our consolidated investments and our pro rata share of
annualized contractual base rent from equity investments.   Consolidated Investments
    
    
    Combined Investments (2)Annualized
    
    
    % of Annualized
    
    
    Annualized
    
    
    % of AnnualizedContractual
    
    
    Contractual
    
    
    Contractual
    
    
    ContractualTenant Industry (3)
    
    Lease Revenue (1)
    
    
    Lease Revenue
    
    
    Lease Revenue (1)
    
    
    Lease RevenueManufacturing
    
    $
    16,455
    
    
    
    44.48
    %
    
    $
    28,044
    
    
    
    42.96
    %Professional, scientific and
technical services
    
    
    5,486
    
    
    
    14.83
    
    
    
    5,486
    
    
    
    8.40Retail trade
    
    
    5,323
    
    
    
    14.39
    
    
    
    12,289
    
    
    
    18.83Transportation and warehousing
    
    
    2,865
    
    
    
    7.74
    
    
    
    2,864
    
    
    
    4.39Health care and social assistance
    
    
    1,850
    
    
    
    5.00
    
    
    
    3,632
    
    
    
    5.56Educational services
    
    
    1,732
    
    
    
    4.68
    
    
    
    1,732
    
    
    
    2.65Arts, entertainment and recreation
    
    
    1,608
    
    
    
    4.35
    
    
    
    4,349
    
    
    
    6.66Wholesale trade
    
    
    606
    
    
    
    1.64
    
    
    
    5,815
    
    
    
    8.91Other (4)
    
    
    1,068
    
    
    
    2.89
    
    
    
    1,068
    
    
    
    1.64Total
    
    $
    36,993
    
    
    
    100.00
    %
    
    $
    65,279
    
    
    
    100.00
    %
 
 (1)
    
    Reflects annualized contractual base rent for the fourth quarter of 2005.(2)
    
    Reflects information regarding our consolidated investments and our pro rata share of
annualized contractual base rent from equity investments.(3)
    
    Based on the North American Industry Classification System (NAICS) and information provided
by the tenant.(4)
    
    Includes revenue from tenants in the information and finance and insurance industries. 5




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Consolidated Investments
    
    
    Combined Investments (2)Annualized
    
    
    % of Annualized
    
    
    Annualized
    
    
    % of AnnualizedContractual
    
    
    Contractual
    
    
    Contractual
    
    
    ContractualYear of Lease Expiration
    
    Lease Revenue (1)
    
    
    Lease Revenue
    
    
    Lease Revenue (1)
    
    
    Lease Revenue2006
    
    $
    606
    
    
    
    1.64
    %
    
    $
    606
    
    
    
    .93
    %2007  2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2009
    
    
    324
    
    
    
    .87
    
    
    
    2,356
    
    
    
    3.612010
    
    
    2,182
    
    
    
    5.90
    
    
    
    3,965
    
    
    
    6.072011
    
    
    2,693
    
    
    
    7.28
    
    
    
    6,290
    
    
    
    9.632012
    
    
    
    
    
    
    
    
    
    
    574
    
    
    
    .882013
    
    
    822
    
    
    
    2.22
    
    
    
    822
    
    
    
    1.262014
    
    
    7,263
    
    
    
    19.63
    
    
    
    7,263
    
    
    
    11.132015
    
    
    
    
    
    
    
    
    
    
    1,477
    
    
    
    2.262016  2020
    
    
    19,013
    
    
    
    51.40
    
    
    
    30,177
    
    
    
    46.232021  2025
    
    
    4,090
    
    
    
    11.06
    
    
    
    11,749
    
    
    
    18.00Total
    
    $
    36,993
    
    
    
    100.00
    %
    
    $
    65,279
    
    
    
    100.00
    %
 
 (1)
    
    Reflects annualized contractual base rent for the fourth quarter of 2005.(2)
    
    Reflects information regarding our consolidated investments and our pro rata share of
annualized contractual base rent from equity investments.      ®
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® ®
          .
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® ® ® ® ® ®
 8




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
    
    Ralph F. Verni, Chairman  Currently serving as a board of director member of Commonwealth
Capital, First Pioneer Credit and the Eaton Vance Mutual Fund Family. Former board member of
The MacGregor Group and former executive vice president, board member and chief investment
officer of The New England Mutual Life Insurance Company and former president and chief
executive officer of State Street Research Management.
 
    
    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.
 
    
    Nathaniel S. Coolidge  Former senior vice president and head of the bond and corporate
finance department of John Hancock Mutual Life Insurance. Mr. Coolidges responsibilities
included overseeing its entire portfolio of fixed income investments.
 
    
    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 chairman and member
of the board of managing directors of Allgemeine HypothekenBank Rheinboden AG.
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##### Table of Contents



ITEM
1A. Risk Factors.
  We are subject to the risks of real estate ownership which could reduce the value of our
properties.
  
    
    Adverse changes in general or local economic conditions,
    
    Changes in supply of or demand for similar or competing properties,
    
    Changes in interest rates and operating expenses,
    
    Competition for tenants,
    
    Changes in market rental rates,
    
    Inability to lease properties upon termination of existing leases,
    
    Renewal of leases at lower rental rates,
    
    Inability to collect rents from tenants due to financial hardship, including bankruptcy,
    
    Changes in tax, real estate, zoning and environmental laws that may have an adverse impact upon the value of real estate,
    
    Uninsured property liability, property damage or casualty losses,
    
    Unexpected expenditures for capital improvements or to bring properties into compliance with
applicable federal, state and local laws, and
    
    Acts of God and other factors beyond the control of our management.
 WPC and Carey Financial are the subjects of an ongoing SEC investigation, the effects of which
could be materially adverse to them and, possible, us.
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We may have difficulty selling or re-leasing our properties.
  We may recognize substantial impairment charges on properties we own.
  Our success is dependent on the performance of our advisor.
  Our advisor may be subject to conflicts of interest.
  
    
    the receipt of compensation by our advisor for property purchases, leases, sales and
financing for us, which may cause our 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 our advisor, including agreements regarding compensation, have not
been negotiated on an arms length basis as would occur if the agreements were with
unaffiliated third parties;
    
    sale of single properties or portfolios of our properties to our affiliates, including WPC or
the CPA® REITs, which may take the form of a direct purchase of our assets by an
affiliate, a merger with an affiliate or another type of transaction, which may result in the
payment of significant transactional fees to our advisor as well as management fees;
    
    purchases and loans from affiliates, subject to our investment procedures, objectives and
policies, which will increase fees and interest payable to affiliates, thereby decreasing our
net income and possibly causing us to incur higher leverage levels; and
    
    disposition, incentive and termination fees, which are based on the sale price of properties,
may cause a conflict between the advisors desire to sell a property and our plans to hold the
property.
 We have limited independence from our advisor.
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There is not, and may never be a public market for our shares, so it will be difficult for
shareholders to sell shares quickly.
  Our net asset value is based on information that our advisor provides to a third party.
  Potential liability for environmental matters could adversely affect our financial condition.
  
    
    Responsibility and liability for the cost of investigation, removal or remediation of
hazardous or toxic substances released on or from our property, generally without regard to
our knowledge of, or responsibility for, the presence of these contaminants.
    
    Liability for claims by third parties based on damages to natural resources or property,
personal injuries, or costs of removal or remediation of hazardous or toxic substances in, on,
or migrating from our property.
    
    Responsibility for managing asbestos-containing building materials, and third-party claims
for exposure to those materials.
  Failure to qualify as a REIT would adversely affect our operations and ability to make
distributions.
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The inability of a tenant in a single tenant property to pay rent will reduce our revenues.
  Our highly leveraged tenants may have a higher possibility of filing for bankruptcy or insolvency.
  The bankruptcy or insolvency of tenants may cause a reduction in revenue.
  
    
    the loss of lease payments;
    
    an increase in the costs incurred to carry the property;
    
    a reduction in the value of shares; and
    
    a decrease in distributions to shareholders.
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®
 Our tenants generally may not have a recognized credit rating, and may have a higher risk of lease
defaults than if our tenants had a recognized credit rating.
  Our sale-leaseback agreements 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 use of debt to finance investments could adversely affect our cash flow.
  Balloon payment obligations may adversely affect our financial condition.
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2006
    
    $
    5,2382007
    
    $
    4,5012008
    
    $
    16,8592009
    
    $
    14,902
    (1)2010
    
    $
    9,421
    (1)
 
 (1)
    
    Excludes our pro rata share of mortgage obligations of equity investees totaling $37,388 and
$8,680 in 2009 and 2010, respectively. Our investments in properties outside of the United States subject us to foreign currency risks
which may adversely affect distributions.
  International investment risks, including adverse political or economic developments, lack of
uniform accounting standards (including availability of information in accordance with U.S.
generally accepted accounting principles), uncertainty of foreign laws and the difficulty of
enforcing certain obligations in other countries may adversely affect our operations and our
ability to make distributions.
  Our participation in joint ventures creates additional risk.
 ®
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We do not fully control the management for our properties.
  Payment of fees to our advisor will reduce cash available for investment and distribution.
  We may need to use leverage to make distributions.
  The IRS may treat sale-leaseback transactions as loans, which could jeopardize our REIT
qualification.
  Dividends payable by REITS generally do not qualify for reduced U.S. federal income tax rates
because qualifying REITs so not pay U.S. federal income tax on their net income.
  .
 Possible legislative or other actions affecting REITs could adversely affect our shareholders and
us.
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The ability of our board of directors to revoke our REIT election without shareholder approval may
cause adverse consequences to our shareholders.
  The limit on the number of our shares a person may own may discourage a takeover.
  Maryland law could restrict change in control.
  
    
    any person who beneficially owns 10% or more of the voting power of outstanding shares;
    
    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, referred to
as an interested shareholder; or
    
    an affiliate of an interested shareholder.
  Shareholders equity interests may be diluted.
  Our board of directors may change our investment policies without shareholder approval, which could
alter the nature of your investment.
  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;
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
    
    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.
  There are special considerations for pension or profit-sharing trusts, Keoghs or IRAs.
  
    
    whether your investment is consistent with the applicable provisions of ERISA and the Internal Revenue Code;
    
    whether your investment will produce unrelated business taxable income, referred to as UBTI, to the benefit plan; and
    
    our need to value the assets of the benefit plan annually.
 Compliance with the Americans with Disabilities Act may require us to spend substantial amounts of
money which could adversely affect our operating results.
   
 ITEM 1B. Unresolved Staff Comments.
  18




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ITEM 2. Properties.
   
 ITEM
3. Legal Proceedings.
   ®
 ® ®
 ® ® ® ®
 ® ® ® ®
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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
     2005
    
    
    2004First quarter
    
    $
    .2067
    
    
    $
    .2067Second quarter
    
    
    .2067
    
    
    
    .2067Third quarter
    
    
    .2067
    
    
    
    .2067Fourth quarter
    
    
    .2067
    
    
    
    .2067$
    .8268
    
    
    $
    .8268
    Total Number of Shares
    
    Maximum Number (orPurchased as Part of
    
    Approximate Dollar Value) ofTotal Number of
    
    Average Price
    
    Publicly Announced
    
    Shares that may yet be purchasedPeriod
    
    Shares Purchased (1)
    
    Paid Per Share
    
    Plans or Programs (1)
    
    under the Plans or Programs (1)October 1, 2005 - October 31, 2005
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ANovember 1, 2005 - November 30, 2005
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ADecember 1, 2005 - December 31, 2005
    
    
    103,666
    
    
    $
    11.78
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    103,666
 
 (1)
    
    All shares were purchased pursuant to our redemption plan which we announced in February 1996.
 Under our redemption plan, we may elect to redeem shares subject to certain conditions and
limitations. The maximum amount of shares purchasable in any period depends on the availability of
funds generated by the Distribution Reinvestment and Share Purchase Plan and other factors 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. 20




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ITEM 6. Selected Financial Data.
  (In thousands except per share amounts)
 For the years ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001OPERATING DATA (1):Revenues (2)
    
    $
    49,462
    
    
    $
    40,813
    
    
    $
    39,827
    
    
    $
    39,681
    
    
    $
    39,554Income from continuing operations (3)
    
    
    27,215
    
    
    
    22,368
    
    
    
    18,803
    
    
    
    13,126
    
    
    
    25,558Basic earnings from continuing operations per share
    
    
    .88
    
    
    
    .73
    
    
    
    .62
    
    
    
    .44
    
    
    
    .86Net income
    
    
    22,683
    
    
    
    22,071
    
    
    
    21,501
    
    
    
    16,650
    
    
    
    27,948Basic earnings per share
    
    
    .73
    
    
    
    .72
    
    
    
    .71
    
    
    
    .55
    
    
    
    .94Cash distributions paid
    
    
    25,431
    
    
    
    25,173
    
    
    
    24,960
    
    
    
    24,692
    
    
    
    24,205Cash distributions declared per share
    
    
    .8268
    
    
    
    .8268
    
    
    
    .8266
    
    
    
    .8240
    
    
    
    .8208Payments of mortgage principal (4)
    
    
    6,327
    
    
    
    5,943
    
    
    
    5,529
    
    
    
    4,981
    
    
    
    4,416BALANCE SHEET DATA:Total assets
    
    $
    427,228
    
    
    $
    453,042
    
    
    $
    462,191
    
    
    $
    472,129
    
    
    $
    447,241Long-term obligations (5)
    
    
    142,208
    
    
    
    167,669
    
    
    
    183,443
    
    
    
    189,166
    
    
    
    166,446
 
 (1)
    
    Certain prior year balances have been reclassified to discontinued operations.(2)
    
    Includes lease termination fee of $7,500 in 2005.(3)
    
    Includes gain from sale of real estate in 2001.(4)
    
    Represents scheduled mortgage principal paid.(5)
    
    Represents mortgage obligations and deferred acquisition fee installments that are due
after more than one year. 
 ITEM 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 (In thousands except share and per share amounts)
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2005
    
    
    2004
    
    
    2003Rental income
    
    $
    39,771
    
    
    $
    38,060
    
    
    $
    36,851Interest income from direct financing leases
    
    
    1,761
    
    
    
    2,432
    
    
    
    2,586$
    41,532
    
    
    $
    40,492
    
    
    $
    39,437
  2005
    
    
    %
    
    
    2004
    
    
    %
    
    
    2003
    
    
    %Applied Materials, Inc. (a)
    
    $
    9,927
    
    
    
    24
    %
    
    $
    9,842
    
    
    
    24
    %
    
    $
    9,382
    
    
    
    24
    %Dicks Sporting Goods, Inc.
    
    
    2,733
    
    
    
    7
    
    
    
    2,733
    
    
    
    7
    
    
    
    2,733
    
    
    
    7Perry Graphic Communications, Inc. and Judds Incorporated
    
    
    2,192
    
    
    
    5
    
    
    
    2,192
    
    
    
    5
    
    
    
    2,192
    
    
    
    6Remec, Inc. (formerly Spectrian Corporation) (b)
    
    
    2,140
    
    
    
    5
    
    
    
    2,151
    
    
    
    5
    
    
    
    2,151
    
    
    
    5Westell Technologies, Inc.
    
    
    1,984
    
    
    
    5
    
    
    
    1,984
    
    
    
    5
    
    
    
    1,984
    
    
    
    5Telos Corporation
    
    
    1,761
    
    
    
    4
    
    
    
    1,666
    
    
    
    4
    
    
    
    1,666
    
    
    
    4Career Education Corporation
    
    
    1,693
    
    
    
    4
    
    
    
    1,693
    
    
    
    4
    
    
    
    1,737
    
    
    
    4PPD Development, Inc.
    
    
    1,615
    
    
    
    4
    
    
    
    1,543
    
    
    
    4
    
    
    
    1,504
    
    
    
    424-Hour Fitness
    
    
    1,595
    
    
    
    4
    
    
    
    1,575
    
    
    
    4
    
    
    
    1,557
    
    
    
    4Silgan Containers Corporation
    
    
    1,554
    
    
    
    4
    
    
    
    1,488
    
    
    
    4
    
    
    
    1,421
    
    
    
    4The Bon-Ton Stores, Inc.
    
    
    1,444
    
    
    
    3
    
    
    
    1,444
    
    
    
    4
    
    
    
    1,412
    
    
    
    4Jen-Coat, Inc.
    
    
    1,291
    
    
    
    3
    
    
    
    1,225
    
    
    
    3
    
    
    
    1,210
    
    
    
    3Learning Care Group, Inc.
    
    
    1,280
    
    
    
    3
    
    
    
    1,280
    
    
    
    3
    
    
    
    1,273
    
    
    
    3Orbseal LLC
    
    
    1,082
    
    
    
    3
    
    
    
    1,013
    
    
    
    3
    
    
    
    1,012
    
    
    
    3Pacific Logistics, L.P.
    
    
    1,065
    
    
    
    3
    
    
    
    1,039
    
    
    
    3
    
    
    
    1,019
    
    
    
    3Sunland Distribution, Inc. (c)
    
    
    959
    
    
    
    2
    
    
    
    250
    
    
    
    1
    
    
    
    
    
    
    
    Celadon Group, Inc.
    
    
    955
    
    
    
    2
    
    
    
    927
    
    
    
    2
    
    
    
    906
    
    
    
    2Randall International, Inc.
    
    
    936
    
    
    
    2
    
    
    
    936
    
    
    
    2
    
    
    
    892
    
    
    
    2Nutramax Products, Inc.
    
    
    923
    
    
    
    2
    
    
    
    891
    
    
    
    2
    
    
    
    869
    
    
    
    2Garden Ridge Corporation
    
    
    919
    
    
    
    2
    
    
    
    996
    
    
    
    2
    
    
    
    996
    
    
    
    2Rave Reviews Cinemas, LLC
    
    
    853
    
    
    
    2
    
    
    
    812
    
    
    
    2
    
    
    
    812
    
    
    
    2The Vermont Teddy Bear Co., Inc.
    
    
    711
    
    
    
    2
    
    
    
    704
    
    
    
    2
    
    
    
    676
    
    
    
    2Other
    
    
    1,920
    
    
    
    5
    
    
    
    2,108
    
    
    
    5
    
    
    
    2,033
    
    
    
    5$
    41,532
    
    
    
    100
    %
    
    $
    40,492
    
    
    
    100
    %
    
    $
    39,437
    
    
    
    100
    %
 
 (a)
    
    Includes lease revenues applicable to minority interests. Minority interests included in the
consolidated amounts above total $3,277, $3,248 and $3,097 for the years ended December 31,
2005, 2004 and 2003, respectively.(b)
    
    In December 2005, we entered into an agreement to terminate this lease (see Item 1 -
Significant Developments During 2005).(c)
    
    We acquired this investment in September 2004.  2005
    
    
    %
    
    
    2004
    
    
    %
    
    
    2003
    
    
    %Carrefour France, SA (a) (b)
    
    $
    4,214
    
    
    
    15
    %
    
    $
    4,119
    
    
    
    15
    %
    
    $
    3,180
    
    
    
    12
    %Advanced Micro Devices, Inc.
    
    
    3,484
    
    
    
    12
    
    
    
    3,259
    
    
    
    12
    
    
    
    3,259
    
    
    
    12Starmark Camhood, LLC (b)
    
    
    2,730
    
    
    
    10
    
    
    
    2,741
    
    
    
    10
    
    
    
    2,456
    
    
    
    9True Value Company
    
    
    2,171
    
    
    
    8
    
    
    
    2,171
    
    
    
    8
    
    
    
    2,171
    
    
    
    8Special Devices, Inc.
    
    
    2,088
    
    
    
    7
    
    
    
    2,039
    
    
    
    7
    
    
    
    1,995
    
    
    
    8Médica-France, SA (a) (b)
    
    
    1,831
    
    
    
    6
    
    
    
    1,757
    
    
    
    6
    
    
    
    1,549
    
    
    
    6Sicor, Inc.
    
    
    1,671
    
    
    
    6
    
    
    
    1,556
    
    
    
    6
    
    
    
    1,473
    
    
    
    6Best Buy Co., Inc.
    
    
    1,625
    
    
    
    6
    
    
    
    1,720
    
    
    
    6
    
    
    
    1,736
    
    
    
    7Compucom Systems, Inc.
    
    
    1,489
    
    
    
    5
    
    
    
    1,408
    
    
    
    5
    
    
    
    1,408
    
    
    
    5Del Monte Corporation
    
    
    1,471
    
    
    
    5
    
    
    
    1,478
    
    
    
    5
    
    
    
    1,478
    
    
    
    6The Upper Deck Company
    
    
    1,452
    
    
    
    5
    
    
    
    1,452
    
    
    
    5
    
    
    
    1,452
    
    
    
    6
 23




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2005
    
    
    %
    
    
    2004
    
    
    %
    
    
    2003
    
    
    %McLane Company Food Service, Inc.
    
    
    1,440
    
    
    
    5
    
    
    
    1,424
    
    
    
    5
    
    
    
    1,409
    
    
    
    5Textron, Inc.
    
    
    1,333
    
    
    
    5
    
    
    
    1,240
    
    
    
    5
    
    
    
    1,240
    
    
    
    5ShopRite Supermarkets Inc.
    
    
    1,106
    
    
    
    4
    
    
    
    1,100
    
    
    
    4
    
    
    
    1,093
    
    
    
    4The Retail Distribution Group, Inc. (c)
    
    
    329
    
    
    
    1
    
    
    
    317
    
    
    
    1
    
    
    
    
    
    
    
    The Fleming Companies (c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    252
    
    
    
    1$
    28,434
    
    
    
    100
    %
    
    $
    27,781
    
    
    
    100
    %
    
    $
    26,151
    
    
    
    100
    %
 
 (a)
    
    Revenue amounts are subject to fluctuations in foreign currency exchange rates.(b)
    
    The interest in this property was acquired in 2003.(c)
    
    The lease with The Fleming Companies for our property in Michigan was terminated in 2003
pursuant to Flemings bankruptcy proceeding. A new lease for the Michigan property was entered
into with The Retail Distribution Group, Inc., effective January 1, 2004.            24




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25




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26
    Table of Contents    
           -
    
    The advisors election in 2006 to receive the base asset management fees in cash, which we anticipate will result in
fees of approximately $3,800 being paid in cash rather than restricted common stock.-
    
    The elimination of annual carrying costs on three underperforming properties that were sold in 2005 and 2006. We
expect annual carrying cost savings of approximately $1,200 as a result of these transactions. In addition, we
received proceeds of $3,652, net of selling costs, from the sale of our Piscataway, New Jersey property in February
2006 (see Subsequent Events below).-
    
    A reduction in interest expense from the prepayment of outstanding mortgage obligations in 2005. We anticipate
savings of approximately $1,595 as a result of these prepayments.-
    
    Scheduled rent increases on several properties during 2005 and 2006 should result in additional cash from operations.
    27




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Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    YearsMortgage notes payable  Principal
    
    $
    150,081
    
    
    $
    10,610
    
    
    $
    32,617
    
    
    $
    35,232
    
    
    $
    71,622Mortgage
notes payable  Interest
    
    
    49,683
    
    
    
    10,777
    
    
    
    19,452
    
    
    
    13,841
    
    
    
    5,613Deferred acquisition fees due to affiliates  Principal
    
    
    3,983
    
    
    
    1,249
    
    
    
    1,457
    
    
    
    855
    
    
    
    422Deferred acquisition fees due to affiliates  Interest
    
    
    789
    
    
    
    279
    
    
    
    323
    
    
    
    146
    
    
    
    41Subordinated disposition fees (1)
    
    
    1,940
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,940Operating leases (2)
    
    
    2,666
    
    
    
    167
    
    
    
    451
    
    
    
    501
    
    
    
    1,547$
    209,142
    
    
    $
    23,082
    
    
    $
    54,300
    
    
    $
    50,575
    
    
    $
    81,185
 
 (1)
    
    Payable to the advisor, subject to meeting contingencies, in connection with any liquidity
event.(2)
    
    Operating lease obligations consist primarily of our share of minimum rents payable under an
office cost-sharing agreement with certain affiliates for the purpose of leasing office space
used for the administration of real estate entities. Such amounts are allocated among the
entities based on gross revenues and are adjusted quarterly.          28




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29




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##### Table of Contents




    
    Our equity investment is not sufficient to allow the entity to finance its activities without additional third party financing;
    
    We do not have the direct or indirect ability to make decisions about the entitys business;
    
    We are not obligated to absorb the expected losses of the entity;
    
    We do not have the right to receive the expected residual returns of the entity; and
 
    
    Our voting rights are not proportionate to our economic interests, and substantially all
of the entitys activities either involve or are conducted on behalf of an investor that has
disproportionately few voting rights.
     30




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31




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ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk.  (In thousands)
      2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    Total
    
    
    Fair ValueFixed rate debt
    
    $
    10,610
    
    
    $
    10,142
    
    
    $
    22,475
    
    
    $
    20,290
    
    
    $
    14,942
    
    
    $
    71,622
    
    
    $
    150,081
    
    
    $
    149,831Weighted average interest rate
    
    
    7.71
    %
    
    
    7.20
    %
    
    
    6.67
    %
    
    
    8.36
    %
    
    
    7.40
    %
    
    
    7.38
    %
 32




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##### Table of Contents



ITEM 8. Financial Statements and Supplementary Data.
            33




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34




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##### Table of Contents



December 31,2005
    
    
    2004ASSETS:Real estate, net
    
    $
    277,540
    
    
    $
    309,818Net investment in direct financing leases
    
    
    12,153
    
    
    
    12,153Equity investments
    
    
    88,765
    
    
    
    93,915Assets held for sale
    
    
    7,720
    
    
    
    2,753Cash and cash equivalents
    
    
    13,694
    
    
    
    8,044Marketable securities
    
    
    7,810
    
    
    
    8,465Intangible assets, net
    
    
    1,393
    
    
    
    1,462Other assets, net
    
    
    18,153
    
    
    
    16,432Total assets
    
    $
    427,228
    
    
    $
    453,042LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS EQUITY:Liabilities:Limited recourse mortgage notes payable
    
    $
    142,472
    
    
    $
    175,646Limited recourse mortgage notes payable on assets held for sale
    
    
    7,609
    
    
    
    Accrued interest
    
    
    811
    
    
    
    972Accounts payable and accrued expenses
    
    
    1,974
    
    
    
    916Due to affiliates
    
    
    3,676
    
    
    
    3,545Deferred acquisition fees payable to affiliate
    
    
    3,983
    
    
    
    5,403Distributions payable
    
    
    6,405
    
    
    
    6,322Other liabilities, net
    
    
    2,791
    
    
    
    2,344Prepaid rental income and security deposits
    
    
    2,226
    
    
    
    3,662Total liabilities
    
    
    171,947
    
    
    
    198,810Minority interest
    
    
    8,415
    
    
    
    8,159Commitment and contingencies (Note 13)
Shareholders equity:Common stock, $.001 par value; 40,000,000 shares authorized; 32,614,354 and 31,818,107
shares issued and outstanding at December 31, 2005 and 2004
    
    
    33
    
    
    
    32Additional paid-in capital
    
    
    298,603
    
    
    
    288,830Distributions in excess of accumulated earnings
    
    
    (35,933
    )
    
    
    (33,102
    )Accumulated other comprehensive income
    
    
    996
    
    
    
    2,518263,699
    
    
    
    258,278Less, treasury stock at cost, 1,628,932 and 1,233,519 shares at December 31, 2005 and 2004
    
    
    (16,833
    )
    
    
    (12,205
    )Total shareholders equity
    
    
    246,866
    
    
    
    246,073Total liabilities, minority interest and shareholders equity
    
    $
    427,228
    
    
    $
    453,042
  35




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For the years ended December 31,2005
    
    
    2004
    
    
    2003REVENUES:Rental income
    
    $
    39,771
    
    
    $
    38,060
    
    
    $
    36,851Interest income from direct financing leases
    
    
    1,761
    
    
    
    2,432
    
    
    
    2,586Other operating income
    
    
    7,930
    
    
    
    321
    
    
    
    39049,462
    
    
    
    40,813
    
    
    
    39,827OPERATING EXPENSES:Depreciation and amortization of intangibles
    
    
    (7,264
    )
    
    
    (6,994
    )
    
    
    (6,849
    )Property expenses
    
    
    (8,568
    )
    
    
    (7,839
    )
    
    
    (8,003
    )General and administrative
    
    
    (3,064
    )
    
    
    (2,930
    )
    
    
    (4,041
    )Impairment charges
    
    
    (575
    )
    
    
    
    
    
    
    (19,471
    )
    
    
    (17,763
    )
    
    
    (18,893
    )OTHER INCOME AND EXPENSES:Income from equity investments
    
    
    12,218
    
    
    
    11,730
    
    
    
    9,425Other interest income
    
    
    1,180
    
    
    
    1,109
    
    
    
    1,136Minority interest in income
    
    
    (2,023
    )
    
    
    (1,736
    )
    
    
    (1,528
    )Gain on warrants, net
    
    
    3
    
    
    
    372
    
    
    
    35(Loss) gain on foreign currency transactions, net
    
    
    (1,512
    )
    
    
    887
    
    
    
    898Gain on sale of interest in equity investment
    
    
    
    
    
    
    
    
    
    
    1,433Interest expense
    
    
    (12,642
    )
    
    
    (13,044
    )
    
    
    (13,530
    )(2,776
    )
    
    
    (682
    )
    
    
    (2,131
    )Income from continuing operations
    
    
    27,215
    
    
    
    22,368
    
    
    
    18,803DISCONTINUED OPERATIONS:(Loss) income from operations of discontinued properties
    
    
    (1,465
    )
    
    
    (1,901
    )
    
    
    3,698Gain on sale of real estate
    
    
    228
    
    
    
    1,754
    
    
    
    Impairment charges on properties held for sale
    
    
    (3,295
    )
    
    
    (150
    )
    
    
    (1,000
    )(Loss) income from discontinued operations
    
    
    (4,532
    )
    
    
    (297
    )
    
    
    2,698NET INCOME
    
    $
    22,683
    
    
    $
    22,071
    
    
    $
    21,501BASIC EARNINGS PER SHARE:Income from continuing operations
    
    $
    .88
    
    
    $
    .73
    
    
    $
    .62(Loss) income from discontinued operations
    
    
    (.15
    )
    
    
    (.01
    )
    
    
    .09Net income
    
    $
    .73
    
    
    $
    .72
    
    
    $
    .71DISTRIBUTIONS DECLARED PER SHARE
    
    $
    .8268
    
    
    $
    .8268
    
    
    $
    .8266WEIGHTED AVERAGE SHARES OUTSTANDING  BASIC
    
    
    30,851,315
    
    
    
    30,497,565
    
    
    
    30,234,073
  36




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##### Table of Contents



For the years ended December 31,2005
    
    
    2004
    
    
    2003Net income
    
    $
    22,683
    
    
    $
    22,071
    
    
    $
    21,501Other comprehensive income:Change in unrealized gain on marketable securities
    
    
    54
    
    
    
    (218
    )
    
    
    825Foreign currency translation adjustment
    
    
    (1,576
    )
    
    
    1,140
    
    
    
    462(1,522
    )
    
    
    922
    
    
    
    1,287Comprehensive income
    
    $
    21,161
    
    
    $
    22,993
    
    
    $
    22,788
  
 Additional
    
    
    Distributions in Excess
    
    
    Accumulated OtherCommon
    
    
    Paid-in
    
    
    of Accumulated
    
    
    Comprehensive
    
    
    TreasuryStock
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    Stock
    
    
    TotalBalance at January 1, 2003
    
    $
    31
    
    
    $
    278,735
    
    
    $
    (26,442
    )
    
    $
    309
    
    
    $
    (7,026
    )
    
    $
    245,607405,949 shares issued, net of costs
    
    
    
    
    
    
    4,227
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,227Distributions declared
    
    
    
    
    
    
    
    
    
    
    (25,009
    )
    
    
    
    
    
    
    
    
    
    
    (25,009
    )Net income
    
    
    
    
    
    
    
    
    
    
    21,501
    
    
    
    
    
    
    
    
    
    
    
    21,501Change in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,287
    
    
    
    
    
    
    
    1,287Repurchase of 228,723 shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,283
    )
    
    
    (2,283
    )Balance at December 31, 2003
    
    
    31
    
    
    
    282,962
    
    
    
    (29,950
    )
    
    
    1,596
    
    
    
    (9,309
    )
    
    
    245,330533,820 shares issued, net of costs
    
    
    1
    
    
    
    5,868
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,869Distributions declared
    
    
    
    
    
    
    
    
    
    
    (25,223
    )
    
    
    
    
    
    
    
    
    
    
    (25,223
    )Net income
    
    
    
    
    
    
    
    
    
    
    22,071
    
    
    
    
    
    
    
    
    
    
    
    22,071Change in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    922
    
    
    
    
    
    
    
    922Repurchase of 257,544 shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,896
    )
    
    
    (2,896
    )Balance at December 31, 2004
    
    
    32
    
    
    
    288,830
    
    
    
    (33,102
    )
    
    
    2,518
    
    
    
    (12,205
    )
    
    
    246,073796,247 shares issued, net of costs
    
    
    1
    
    
    
    9,773
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,774Distributions declared
    
    
    
    
    
    
    
    
    
    
    (25,514
    )
    
    
    
    
    
    
    
    
    
    
    (25,514
    )Net income
    
    
    
    
    
    
    
    
    
    
    22,683
    
    
    
    
    
    
    
    
    
    
    
    22,683Change in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,522
    )
    
    
    
    
    
    
    (1,522
    )Repurchase of 395,413 shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,628
    )
    
    
    (4,628
    )Balance at December 31, 2005
    
    $
    33
    
    
    $
    298,603
    
    
    $
    (35,933
    )
    
    $
    996
    
    
    $
    (16,833
    )
    
    $
    246,866
  37




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##### Table of Contents



For the years ended December 31,2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income
    
    $
    22,683
    
    
    $
    22,071
    
    
    $
    21,501Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    8,077
    
    
    
    8,018
    
    
    
    8,210Straight-line rent adjustments
    
    
    (952
    )
    
    
    (1,042
    )
    
    
    (975
    )Minority interest in income
    
    
    2,023
    
    
    
    1,736
    
    
    
    1,528Reversal of unrealized gain on warrants on conversion to shares
    
    
    295
    
    
    
    
    
    
    
    237Gain on settlement of derivatives contract
    
    
    (289
    )
    
    
    
    
    
    
    (237
    )Gain on sale of interest in equity investment
    
    
    
    
    
    
    
    
    
    
    (1,433
    )Loss (gain) on sale of real estate
    
    
    (228
    )
    
    
    (1,754
    )
    
    
    Income from equity investments in excess of distributions received
    
    
    1,591
    
    
    
    (3,177
    )
    
    
    (1,023
    )Loss (gain) on foreign currency transactions
    
    
    58
    
    
    
    
    
    
    
    (76
    )Fees paid by issuance of stock to affiliate
    
    
    7,270
    
    
    
    3,612
    
    
    
    3,230Noncash settlement income
    
    
    
    
    
    
    
    
    
    
    (368
    )Lease termination proceeds assigned to lender
    
    
    (534
    )
    
    
    
    
    
    
    (2,540
    )Unrealized loss (gain) on foreign currency transactions and warrants
    
    
    1,445
    
    
    
    (1,259
    )
    
    
    (857
    )Impairment charge on real estate and marketable securities
    
    
    3,870
    
    
    
    150
    
    
    
    1,000Change in operating assets and liabilities, net
    
    
    (1,024
    )
    
    
    (826
    )
    
    
    782Net cash provided by operating activities
    
    
    44,285
    
    
    
    27,529
    
    
    
    28,979Cash flows from investing activities:Distributions received in excess of equity income
    
    
    483
    
    
    
    1,371
    
    
    
    2,244Distribution of mortgage financing proceeds received from equity investments
    
    
    
    
    
    
    
    
    
    
    3,738Receipt of amount due from sale of equity investment
    
    
    
    
    
    
    1,430
    
    
    
    Proceeds from sale of warrants
    
    
    338
    
    
    
    
    
    
    
    Proceeds from sales of real estate assets (a)
    
    
    16,349
    
    
    
    12,615
    
    
    
    1,972Payment of deferred acquisition fees
    
    
    (1,420
    )
    
    
    (1,467
    )
    
    
    (1,275
    )Purchases of real estate and equity investments and other capitalized costs (b)
    
    
    (52
    )
    
    
    (10,686
    )
    
    
    (23,888
    )Sales of securities
    
    
    
    
    
    
    4,900
    
    
    
    14,200Purchases of securities
    
    
    
    
    
    
    (4,900
    )
    
    
    (200
    )Net cash provided by (used in) investing activities
    
    
    15,698
    
    
    
    3,263
    
    
    
    (3,209
    )Cash flows from financing activities:Distributions paid
    
    
    (25,431
    )
    
    
    (25,173
    )
    
    
    (24,960
    )Payments of mortgage principal
    
    
    (6,327
    )
    
    
    (5,943
    )
    
    
    (5,529
    )Prepayment of mortgages payable
    
    
    (18,684
    )
    
    
    (2,617
    )
    
    
    (5,199
    )Payment of financing costs and mortgage deposits
    
    
    
    
    
    
    (80
    )
    
    
    (132
    )Proceeds from issuance of shares, net of costs
    
    
    2,504
    
    
    
    2,255
    
    
    
    997Distributions to minority partner
    
    
    (1,767
    )
    
    
    (1,599
    )
    
    
    (1,443
    )Purchase of treasury stock
    
    
    (4,628
    )
    
    
    (2,896
    )
    
    
    (2,283
    )Net cash used in financing activities
    
    
    (54,333
    )
    
    
    (36,053
    )
    
    
    (38,549
    )Net increase (decrease) in cash and cash equivalents
    
    
    5,650
    
    
    
    (5,261
    )
    
    
    (12,779
    )Cash and cash equivalents, beginning of year
    
    
    8,044
    
    
    
    13,305
    
    
    
    26,084Cash and cash equivalents, end of year
    
    $
    13,694
    
    
    $
    8,044
    
    
    $
    13,305
   38




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
    
    The Companys equity investment is not sufficient to allow the entity to finance its
activities without additional third party financing;
    
    The Company does not have the direct or indirect ability to make decisions about the entitys business;
    
    The Company is not obligated to absorb the expected losses of the entity;
    
    The Company does not have the right to receive the expected residual returns of the entity; and
    
    The Companys voting rights are not proportionate to its economic interests, and
substantially all of the entitys activities either involve or are conducted on behalf of an
investor that has disproportionately few voting rights.
    40




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46




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December 31,2005
    
    
    2004Cost
    
    $
    329,452
    
    
    $
    358,027Less: Accumulated depreciation
    
    
    (51,912
    )
    
    
    (48,209
    )$
    277,540
    
    
    $
    309,818
  Years ending December 31,2006
    
    $
    36,3152007
    
    
    35,8782008
    
    
    36,3062009
    
    
    36,4122010
    
    
    35,990Thereafter through 2024
    
    
    204,923
   December 31,2005
    
    
    2004Minimum lease payments receivable
    
    $
    14,832
    
    
    $
    16,279Unguaranteed residual value
    
    
    12,153
    
    
    
    12,15326,985
    
    
    
    28,432Less: unearned income
    
    
    (14,832
    )
    
    
    (16,279
    )$
    12,153
    
    
    $
    12,153
  Years ending December 31,2006
    
    $
    1,4472007
    
    
    1,4472008
    
    
    1,4472009
    
    
    1,4472010
    
    
    1,447Thereafter through 2016
    
    
    7,597
   47




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December 31,2005
    
    
    2004Assets (primarily real estate)
    
    $
    874,012
    
    
    $
    916,775Liabilities (primarily mortgage notes payable)
    
    
    (595,788
    )
    
    
    (630,037
    )Partners and members equity
    
    $
    278,224
    
    
    $
    286,738Companys share of equity investees net assets
    
    $
    88,765
    
    
    $
    93,915
 For the years ended December 31,2005
    
    
    2004
    
    
    2003Revenues (primarily rental income and interest income from direct financing leases)
    
    $
    98,610
    
    
    $
    95,593
    
    
    $
    86,273Expenses (primarily interest on mortgages and depreciation)
    
    
    (58,500
    )
    
    
    (62,678
    )
    
    
    (55,177
    )Net income
    
    $
    40,110
    
    
    $
    32,915
    
    
    $
    31,096Companys share of net income from equity investments
    
    $
    12,218
    
    
    $
    11,730
    
    
    $
    9,425
             48




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For the years ended December 31,2005
    
    
    2004
    
    
    2003Revenues (primarily rental revenues and miscellaneous income)
    
    $
    1,832
    
    
    $
    2,241
    
    
    $
    8,076Expenses (primarily interest on mortgages, depreciation and property expenses)
    
    
    (3,297
    )
    
    
    (4,142
    )
    
    
    (4,378
    )Gain on sale of real estate
    
    
    228
    
    
    
    1,754
    
    
    
    Impairment charges on properties held for sale
    
    
    (3,295
    )
    
    
    (150
    )
    
    
    (1,000
    )(Loss) income from discontinued operations
    
    $
    (4,532
    )
    
    $
    (297
    )
    
    $
    2,698
  ® ® ® ®
   ® ® ® ® ®
 49




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® ®
 ® ®
 Fair Value as ofDecember 31
    
    
    1% Adverse
    
    
    2% Adverse2005
    
    
    Change
    
    
    ChangeFair value of CPA® Interests
    
    $
    7,720
    
    
    $
    7,396
    
    
    $
    7,089
     December 31,2005
    
    
    2004Lease Intangibles:In-place lease
    
    $
    725
    
    
    $
    725Tenant relationship
    
    
    758
    
    
    
    758Less: accumulated amortization
    
    
    (90
    )
    
    
    (21
    )$
    1,393
    
    
    $
    1,462Below-market rent
    
    $
    (1,046
    )
    
    $
    (1,046
    )Less: accumulated amortization
    
    
    39
    
    
    
    10$
    (1,007
    )
    
    $
    (1,036
    )
    50




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##### Table of Contents



Years ending December 31,
    
    Total Debt2006
    
    $
    10,6102007
    
    
    10,1422008
    
    
    22,4752009
    
    
    20,2902010
    
    
    14,942Thereafter through 2014
    
    
    71,622Total
    
    $
    150,081
    ®
 ® ®
 ® ® ® ®
  51




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® ® ® ®
      2005
    
    
    2004
    
    
    2003Ordinary income
    
    $
    .68
    
    
    $
    .46
    
    
    $
    .72Capital gains
    
    
    
    
    
    
    .06
    
    
    
    Return of capital
    
    
    
    
    
    
    .31
    
    
    
    .11Distributions
reported for income tax purposes
    
    
    .68
    
    
    
    .83
    
    
    
    .83Spillover
distribution (1)
    
    
    .15
    
    
    
    
    
    
    
    Total
distributions
    
    $
    .83
    
    
    $
    .83
    
    
    $
    .83
  (1)
    
    This portion of the distribution is not taxable to the shareholder until 2006, therefore the taxability
and classification of this portion will be determined in 2006.








December 31,2005
    
    
    2004Unrealized gains on marketable securities
    
    $
    970
    
    
    $
    916Foreign currency translation adjustment
    
    
    26
    
    
    
    1,602Accumulated other comprehensive income
    
    $
    996
    
    
    $
    2,518










52




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Domestic
    
    
    Foreign (1)
    
    
    Total CompanyRevenues
    
    $
    49,462
    
    
    $
    
    
    
    $
    49,462Operating expenses
    
    
    (19,471
    )
    
    
    
    
    
    
    (19,471
    )Income from equity investments
    
    
    10,587
    
    
    
    1,631
    
    
    
    12,218Interest expense, net
    
    
    (11,462
    )
    
    
    
    
    
    
    (11,462
    )Other, net (2)
    
    
    (2,020
    )
    
    
    (1,512
    )
    
    
    (3,532
    )Income from continuing operations
    
    $
    27,096
    
    
    $
    119
    
    
    $
    27,215Total equity investments
    
    $
    76,083
    
    
    $
    12,682
    
    
    $
    88,765Total long-lived assets
    
    
    367,169
    
    
    
    12,682
    
    
    
    379,851Total assets
    
    
    414,546
    
    
    
    12,682
    
    
    
    427,228
  Domestic
    
    
    Foreign (1)
    
    
    Total CompanyRevenues
    
    $
    40,813
    
    
    $
    
    
    
    $
    40,813Operating expenses
    
    
    (17,763
    )
    
    
    
    
    
    
    (17,763
    )Income from equity investments
    
    
    9,547
    
    
    
    2,183
    
    
    
    11,730Interest expense, net
    
    
    (11,935
    )
    
    
    
    
    
    
    (11,935
    )Other, net (2)
    
    
    (1,364
    )
    
    
    887
    
    
    
    (477
    )Income from continuing operations
    
    $
    19,298
    
    
    $
    3,070
    
    
    $
    22,368Total equity investments
    
    $
    77,016
    
    
    $
    16,899
    
    
    $
    93,915Total long-lived assets
    
    
    400,449
    
    
    
    16,899
    
    
    
    417,348Total assets
    
    
    436,143
    
    
    
    16,899
    
    
    
    453,042
  Domestic
    
    
    Foreign (1)
    
    
    Total CompanyRevenues
    
    $
    39,827
    
    
    $
    
    
    
    $
    39,827Operating expenses
    
    
    (18,893
    )
    
    
    
    
    
    
    (18,893
    )Income from equity investments
    
    
    9,085
    
    
    
    340
    
    
    
    9,425Interest expense, net
    
    
    (12,394
    )
    
    
    
    
    
    
    (12,394
    )Other, net (2)
    
    
    (1,493
    )
    
    
    2,331
    
    
    
    838Income from continuing operations
    
    $
    16,132
    
    
    $
    2,671
    
    
    $
    18,803Total equity investments
    
    $
    77,171
    
    
    $
    13,035
    
    
    $
    90,206Total long-lived assets
    
    
    399,353
    
    
    
    13,035
    
    
    
    412,388Total assets
    
    
    449,156
    
    
    
    13,035
    
    
    
    462,191
 
 (1)
    
    Consists of operations in France. 53




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##### Table of Contents



(2)
    
    Consists of other interest income, minority interest, gains (losses) on foreign currency
transactions and warrants and sale of interest in equity investment.
  Three months endedMarch 31, 2005
    
    June 30, 2005
    
    September 30, 2005
    
    December 31, 2005 (1)Revenues
    
    $
    10,498
    
    
    $
    10,557
    
    
    $
    10,435
    
    
    $
    17,972Operating expenses
    
    
    (5,270
    )
    
    
    (4,802
    )
    
    
    (4,721
    )
    
    
    (4,678
    )Net income
    
    
    1,142
    
    
    
    5,205
    
    
    
    4,123
    
    
    
    12,213Earnings per share  basic
    
    
    .04
    
    
    
    .17
    
    
    
    .13
    
    
    
    .39Distributions declared per share
    
    
    .2067
    
    
    
    .2067
    
    
    
    .2067
    
    
    
    .2067
 Three months endedMarch 31, 2004
    
    June 30, 2004
    
    September 30, 2004
    
    December 31, 2004Revenues
    
    $
    9,980
    
    
    $
    10,185
    
    
    $
    10,129
    
    
    $
    10,519Operating expenses
    
    
    (4,690
    )
    
    
    (4,291
    )
    
    
    (4,292
    )
    
    
    (4,490
    )Net income
    
    
    4,308
    
    
    
    5,949
    
    
    
    5,121
    
    
    
    6,693Earnings per share  basic
    
    
    .14
    
    
    
    .20
    
    
    
    .17
    
    
    
    .21Distributions declared per share
    
    
    .2067
    
    
    
    .2067
    
    
    
    .2067
    
    
    
    .2067
 
 (1)
    
    Revenue and net income include a lease termination fee of $7,500.     54




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Life on whichDepreciation inInitial Cost to Company
    
    
    Costs
    
    
    
    
    
    
    Gross Amount at which Carried
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Latest StatementCapitalized
    
    
    
    
    
    
    at Close of Period (d)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    of IncomePersonal
    
    
    Subsequent to
    
    
    Decrease in Net
    
    
    
    
    
    
    
    
    
    
    Personal
    
    
    
    
    
    
    Accumulated
    
    
    Date
    
    
    isDescription
    
    Encumbrances
    
    
    Land
    
    
    Buildings
    
    
    Property
    
    
    Acquisition (a)
    
    
    Investments (b)
    
    
    Land
    
    
    Buildings
    
    
    Property
    
    
    Total (d)
    
    
    Depreciation (d)
    
    
    Acquired
    
    
    ComputedOperating Method:Warehouse/distribution facility in Greenfield, Indiana
    
    
    
    
    
    $
    452,871
    
    
    $
    3,325,909
    
    
    
    
    
    
    $
    715,114
    
    
    
    
    
    
    $
    454,420
    
    
    $
    4,039,474
    
    
    
    
    
    
    $
    4,493,894
    
    
    $
    946,090
    
    
    
    2/10/1995
    
    
    40 yrs.Industrial facility in Hayward, California
    
    $
    30,917,643
    
    
    
    1,272,418
    
    
    
    10,588,221
    
    
    
    
    
    
    
    66,962,157
    
    
    $
    (2,633,473
    )
    
    
    1,272,444
    
    
    
    74,916,879
    
    
    
    
    
    
    
    76,189,323
    
    
    
    13,829,570
    
    
    
    2/16/1995
    
    
    40 yrs.Fitness and Recreational Sports Centers in Austin and Houston, Texas
    
    
    7,231,379
    
    
    
    3,152,874
    
    
    
    8,524,126
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,152,874
    
    
    
    8,524,126
    
    
    
    
    
    
    
    11,677,000
    
    
    
    2,118,103
    
    
    
    6/8/1995 and7/25/1996
    
    
    40 yrs.Industrial facility in Chattanooga, Tennessee
    
    
    
    
    
    
    1,544,265
    
    
    
    5,430,735
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,544,265
    
    
    
    5,430,735
    
    
    
    
    
    
    
    6,975,000
    
    
    
    164,053
    
    
    
    6/20/1995
    
    
    40 yrs.Industrial, warehouse/distribution, office facilities in Austin, Texas.
    
    
    5,265,833
    
    
    
    1,550,928
    
    
    
    11,017,367
    
    
    
    
    
    
    
    27,856
    
    
    
    
    
    
    
    1,550,985
    
    
    
    11,045,166
    
    
    
    
    
    
    
    12,596,151
    
    
    
    2,795,237
    
    
    
    11/13/1995
    
    
    40 yrs.Industrial facility in Indianapolis, Indiana
    
    
    1,995,298
    
    
    
    1,480,600
    
    
    
    5,320,400
    
    
    
    
    
    
    
    943,061
    
    
    
    
    
    
    
    1,480,600
    
    
    
    6,263,461
    
    
    
    
    
    
    
    7,744,061
    
    
    
    1,326,725
    
    
    
    6/19/1996
    
    
    40 yrs.Industrial facility and vacant industrial facility in Sunnyvale, California
    
    
    
    
    
    
    5,570,775
    
    
    
    12,073,204
    
    
    
    
    
    
    
    4,119
    
    
    
    
    
    
    
    5,570,775
    
    
    
    12,077,323
    
    
    
    
    
    
    
    17,648,098
    
    
    
    2,755,023
    
    
    
    11/19/1996
    
    
    40 yrs.Land in San Leandro, California
    
    
    
    
    
    
    5,734,782
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,984,998
    )
    
    
    749,784
    
    
    
    
    
    
    
    
    
    
    
    749,784
    
    
    
    
    
    
    
    12/24/1996Retail store in South Tulsa, Oklahoma
    
    
    5,234,510
    
    
    
    1,857,607
    
    
    
    6,204,923
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,857,607
    
    
    
    6,204,923
    
    
    
    
    
    
    
    8,062,530
    
    
    
    1,402,571
    
    
    
    12/16/1996
    
    
    40 yrs.Educational facilities in Chandler, Arizona; Fleming Island, Florida;
Ackworth, Georgia; Hauppauge and Patchogue, New York; Sugar Land, Texas;
Hampton, Virginia; Silverdale, Washington
    
    
    6,527,124
    
    
    
    2,581,896
    
    
    
    
    
    
    
    
    
    
    
    7,459,165
    
    
    
    
    
    
    
    2,581,896
    
    
    
    7,459,165
    
    
    
    
    
    
    
    10,041,061
    
    
    
    1,413,492
    
    
    
    1/29/1997
    
    
    40 yrs.Retail store in Johnstown, Pennsylvania and a warehouse/distribution
facility in Whitehall, Pennsylvania
    
    
    5,386,203
    
    
    
    1,780,000
    
    
    
    10,261,885
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,780,000
    
    
    
    10,261,885
    
    
    
    
    
    
    
    12,041,885
    
    
    
    2,234,098
    
    
    
    4/10/1997
    
    
    40 yrs.Industrial facilities in Oconomowoc and Menomonie, Wisconsin and in Fort
Dodge, Iowa
    
    
    6,873,765
    
    
    
    758,670
    
    
    
    11,630,675
    
    
    
    
    
    
    
    1,535,174
    
    
    
    
    
    
    
    758,670
    
    
    
    13,165,849
    
    
    
    
    
    
    
    13,924,519
    
    
    
    2,478,385
    
    
    
    6/13/1997
    
    
    40 yrs.Industrial facility in Shelburne, Vermont
    
    
    2,508,555
    
    
    
    1,465,000
    
    
    
    4,398,874
    
    
    
    
    
    
    
    1,640
    
    
    
    (43,950
    )
    
    
    1,421,050
    
    
    
    4,400,514
    
    
    
    
    
    
    
    5,821,564
    
    
    
    930,507
    
    
    
    7/18/1997
    
    
    40 yrs.Warehouse/distribution facility in Dallas, Texas
    
    
    3,848,195
    
    
    
    257,458
    
    
    
    
    
    
    $
    1,109,900
    
    
    
    7,150,544
    
    
    
    
    
    
    
    257,458
    
    
    
    7,150,544
    
    
    $
    1,109,900
    
    
    
    8,517,902
    
    
    
    2,416,499
    
    
    
    9/23/1997
    
    

    7 to 40 yrs.Industrial facility in Aurora, Illinois
    
    
    10,513,707
    
    
    
    2,500,000
    
    
    
    14,952,055
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500,000
    
    
    
    14,952,055
    
    
    
    
    
    
    
    17,452,055
    
    
    
    3,099,436
    
    
    
    9/29/1997
    
    
    40 yrs.Industrial facility in Carlsbad, California
    
    
    5,271,489
    
    
    
    2,000,000
    
    
    
    471,454
    
    
    
    
    
    
    
    5,104,034
    
    
    
    (12,370
    )
    
    
    2,000,000
    
    
    
    5,563,118
    
    
    
    
    
    
    
    7,563,118
    
    
    
    480,978
    
    
    
    10/17/1997
    
    
    40 yrs.Education facility in Mendota Heights, Minnesota
    
    
    7,083,478
    
    
    
    1,150,000
    
    
    
    8,840,486
    
    
    
    
    
    
    
    2,788,170
    
    
    
    
    
    
    
    1,150,000
    
    
    
    11,628,656
    
    
    
    
    
    
    
    12,778,656
    
    
    
    2,270,641
    
    
    
    11/12/1997
    
    
    40 yrs.Industrial facility in Baraboo, Wisconsin and industrial,
warehouse/distribution, office facilities in Waterloo, Wisconsin
    
    
    9,546,068
    
    
    
    642,000
    
    
    
    18,467,948
    
    
    
    
    
    
    
    8,000
    
    
    
    
    
    
    
    642,000
    
    
    
    18,475,948
    
    
    
    
    
    
    
    19,117,948
    
    
    
    3,714,427
    
    
    
    12/16/1997
    
    
    40 yrs.Retail facilities in Bourne, Sandwich and Wareham, Massachusetts
    
    
    1,544,921
    
    
    
    300,000
    
    
    
    1,520,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000
    
    
    
    1,520,000
    
    
    
    
    
    
    
    1,820,000
    
    
    
    304,000
    
    
    
    12/30/1997
    
    
    40 yrs.Industrial facility in Houston, Texas
    
    
    
    
    
    
    1,160,000
    
    
    
    6,127,722
    
    
    
    
    
    
    
    709,688
    
    
    
    
    
    
    
    1,160,000
    
    
    
    6,837,410
    
    
    
    
    
    
    
    7,997,410
    
    
    
    1,296,069
    
    
    
    3/28/1998
    
    
    40 yrs.Office facility in Mechanicsburg, Pennsylvania
    
    
    
    
    
    
    558,600
    
    
    
    
    
    
    
    
    
    
    
    4,291,443
    
    
    
    
    
    
    
    558,600
    
    
    
    4,291,443
    
    
    
    
    
    
    
    4,850,043
    
    
    
    669,095
    
    
    
    6/23/1998
    
    
    40 yrs.Retail stores in Fairfax, Virginia and Lombard, Illinois
    
    
    15,743,987
    
    
    
    8,070,000
    
    
    
    16,134,421
    
    
    
    
    
    
    
    57,241
    
    
    
    
    
    
    
    8,070,000
    
    
    
    16,191,662
    
    
    
    
    
    
    
    24,261,662
    
    
    
    2,243,220
    
    
    
    6/29/2000
    
    
    40 yrs.Movie theater in Hickory Creek, Texas
    
    
    4,178,430
    
    
    
    1,760,000
    
    
    
    5,176,372
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,760,000
    
    
    
    5,176,372
    
    
    
    
    
    
    
    6,936,372
    
    
    
    641,654
    
    
    
    12/7/2000
    
    
    40 yrs.Industrial and warehouse/distribution facilities in Westfield, Massachusetts
    
    
    6,864,798
    
    
    
    1,193,200
    
    
    
    10,325,125
    
    
    
    
    
    
    
    2,447
    
    
    
    
    
    
    
    1,193,200
    
    
    
    10,327,572
    
    
    
    
    
    
    
    11,520,772
    
    
    
    1,129,143
    
    
    
    8/15/2001
    
    
    40 yrs.Industrial facility in Richmond, Missouri
    
    
    5,937,237
    
    
    
    760,000
    
    
    
    9,187,644
    
    
    
    
    
    
    
    250
    
    
    
    (79,274
    )
    
    
    760,000
    
    
    
    9,108,620
    
    
    
    
    
    
    
    9,868,620
    
    
    
    977,265
    
    
    
    9/28/2001
    
    
    40 yrs.Warehouse/distribution facilities in Greenville, South Carolina
    
    
    
    
    
    
    250,000
    
    
    
    8,552,697
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    8,552,697
    
    
    
    
    
    
    
    8,802,697
    
    
    
    276,181
    
    
    
    9/28/2004
    
    
    40 yrs.$
    142,472,620
    
    
    $
    49,803,944
    
    
    $
    188,532,243
    
    
    $
    1,109,900
    
    
    $
    97,760,103
    
    
    $
    (7,754,065
    )
    
    $
    44,776,628
    
    
    $
    283,565,597
    
    
    $
    1,109,900
    
    
    $
    329,452,125
    
    
    $
    51,912,462
  Costs
    
    
    Gross Amount at whichInitial Cost to Company
    
    
    Capitalized
    
    
    CarriedSubsequent to
    
    
    at Close of PeriodDescription
    
    Encumbrances
    
    
    Land
    
    
    Buildings
    
    
    Acquisition (a)
    
    
    Total
    
    
    Date AcquiredDirect Financing Method:Industrial facility in Ashburn Junction, Virginia
    
    $
    
    
    
    $
    1,549,022
    
    
    $
    10,597,978
    
    
    $
    5,500
    
    
    $
    12,152,500
    
    
    
    3/11/1996
  55




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##### Table of Contents



(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)
    
    Represents (i) partial refund of purchase price, (ii) impairment charges and (iii) property
sales.(c)
    
    At December 31, 2005, the aggregate cost of real estate owned by the Company and its
subsidiaries for U.S. federal income tax purposes is $289,058,296.(d)
    
    Reconciliation of real estate and accumulated depreciation: Reconciliation of Real Estate Accounted forUnder the Operating MethodDecember 31,2005
    
    
    2004
    
    
    2003Balance at beginning of year
    
    $
    358,026,986
    
    
    $
    344,229,205
    
    
    $
    350,424,262Additions
    
    
    
    
    
    
    10,226,781
    
    
    
    702,191Dispositions
    
    
    (17,165,572
    )
    
    
    
    
    
    
    Impairment charge
    
    
    
    
    
    
    (150,000
    )
    
    
    (1,000,000
    )Reclassification to assets held for sale
    
    
    (11,409,289
    )
    
    
    (3,254,000
    )
    
    
    (11,756,799
    )Reclassification from net investment in direct financing leases
    
    
    
    
    
    
    6,975,000
    
    
    
    5,859,551Balance at close of year
    
    $
    329,452,125
    
    
    $
    358,026,986
    
    
    $
    344,229,205
 Reconciliation of Accumulated DepreciationDecember 31,2005
    
    
    2004
    
    
    2003Balance at beginning of year
    
    $
    48,208,706
    
    
    $
    41,176,156
    
    
    $
    34,815,471Depreciation expense
    
    
    7,194,754
    
    
    
    7,508,543
    
    
    
    7,664,081Reclassification to assets held for sale
    
    
    (3,490,998
    )
    
    
    (475,993
    )
    
    
    (1,303,396
    )Balance at close of year
    
    $
    51,912,462
    
    
    $
    48,208,706
    
    
    $
    41,176,156
 
 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 ITEM 9A. Controls and Procedures.
   
 ITEM 9B. Other Information.
  56




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##### Table of Contents



ITEM 10. Directors and Executive Officers of the Registrant.
  
 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.
  
 ITEM 14. Principal Accountant Fees and Services.
  57




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##### Table of Contents



ITEM 15. Exhibits, Financial Statements Schedules.
 (1)
    
    and (2)  Financial Statements and schedules  see index to financial statements and
schedules included in Item 8.(3)
    
    Exhibits:The following exhibits are filed as part of this Report. Documents other than those designated as
being filed herewith are incorporated herein by reference.
 ExhibitNo.
    
    Description
    
    Method of Filing3.1
    
    Articles of Incorporation of Registrant
    
    Exhibit 3(A) to Registration
Statement 
(Form S-11) No. 33-687283.2
    
    Bylaws of Registrant.
    
    Exhibit 3(B) to Registration
Statement 
(Form S-11) No. 33-687284.1
    
    Dividend Reinvestment and Share Purchase Plan
    
    Exhibit 4.1 to
Registrants Form S-3 dated June 13, 200110.1
    
    Amended and Restated Advisory Agreement
    
    Exhibit 10.5 to Registrants 
Form 8-K filed February 22, 200510.2
    
    Lease agreement dated February 3, 1998 by and between CPA®:12, Inc.
and CPA®:14, Inc., as Landlords, and Etec Systems, Inc., as Tenant
    
    Exhibit 10.8 to Registrants 
Form 8-K dated March 31, 199821.1
    
    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 herewith32.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith32.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
 58




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##### Table of Contents



CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED3/24/06
    
    
    
    BY:
    
    /s/ Mark J. DeCesarisDate
    
    
    
    
    
    Mark J. DeCesarisManaging Director and acting Chief Financial Officer
  3/24/06
    
    
    
    BY:
    
    /s/ William Polk CareyDate
    
    
    
    
    
    William Polk CareyChairman of the Board and Director3/24/06
    
    
    
    BY:
    
    /s/ Gordon F. DuGanDate
    
    
    
    
    
    Gordon F. DuGanVice Chairman of the Board, Chief Executive Officer
and Director(Principal Executive Officer)3/24/06
    
    
    
    BY:
    
    /s/ Trevor P. BondDate
    
    
    
    
    
    Trevor P. BondDirector3/24/06
    
    
    
    BY:
    
    /s/ Charles E. ParenteDate
    
    
    
    
    
    Charles E. ParenteDirector3/24/06
    
    
    
    BY:
    
    /s/ James D. PriceDate
    
    
    
    
    
    James D. PriceDirector3/24/06
    
    
    
    BY:
    
    /s/ Mark J. DeCesarisDate
    
    
    
    
    
    Mark J. DeCesarisManaging Director and acting Chief Financial Officer(acting Principal Financial Officer)3/24/06
    
    
    
    BY:
    
    /s/ Claude FernandezDate
    
    
    
    
    
    Claude FernandezManaging Director and Chief Accounting Officer(Principal Accounting Officer)
   59