Financial Highlights
(In thousands)

                                                    Three months ended September 30,                Nine months ended September 30,
                                                      2009                    2008                    2009                    2008
Total revenue (excluding reimbursed costs
from affiliates)                                $       47,667          $       55,190          $      142,479          $      149,366
Net income attributable to W. P. Carey
members                                                 13,351                  19,198                  46,037                  56,147
Cash flow from operating activities                                                                     49,383                  47,492

Revenues and net income decreased for both the three and nine months ended September 30, 2009 as compared to the same prior year periods. These decreases were primarily driven by lower volume of investments structured on behalf of the CPAŽ REITs, reductions in the estimated net asset values of several of the CPAŽ REITs, and the impact of recent lease restructurings and expirations. In addition, we recognized impairment charges totaling $4.7 million year-to-date in 2009 as compared to $0.5 million in the same period in 2008. Our cash flow from operating activities fluctuates period to period due to a number of factors, as described in Financial Condition below. Cash flow in 2009 benefited from our election to receive more of the fees we earn from certain of the CPAŽ REITs in cash instead of common stock of the CPAŽREITs.
Our quarterly cash distribution increased to $0.50 per share for the third quarter of 2009, or $2.00 per share on an annualized basis.
We consider the performance metrics listed above as well as certain non-GAAP performance metrics to be important measures in the evaluation of our results of operations, liquidity and capital resources. We evaluate our results of operations with a primary focus on

increasing and enhancing the value, quality and amount of assets under management by our investment management segment and seeking to increase value in our real estate ownership segment. Results of operations by reportable segment are described below.
Current Trends
As of the date of this Report, global economic and financial conditions remain challenging, and liquidity in the credit and real estate financing markets is scarce. Fewer financial institutions are offering financing, and the terms of the financing that is available are generally less advantageous for the borrower when compared to periods prior to the financial crises. In addition, tenants in both our own portfolio as well as in the portfolios of the CPAŽ REITs continue to experience increased levels of financial distress, with several tenants filing for bankruptcy protection during the nine months ended September 30, 2009. The full magnitude, effects and duration of the current financial and economic crisis cannot be predicted and necessarily renders any discussion of current trends that affect our business segments highly uncertain. Nevertheless, as of the date of this Report, the impact of current financial and economic trends on our business segments, and our response to those trends, is presented below.
Investment Opportunities
Because of the lack of liquidity in the credit and real estate financing markets, we believe sale-leaseback transactions can often be a particularly attractive alternative for a corporation seeking to raise capital. As a result, there may be increased and more attractive investment opportunities for the CPAŽ REITs. In addition, due to the continued deterioration in these markets, we believe there has been a decrease in the level of competition for the investments we make on behalf of the CPAŽ REITs, both domestically and internationally.
We are seeing increasingly attractive pricing on sale-leaseback investment opportunities, although we continue to experience challenges in completing transactions as a result of slow acceptance of pricing changes by sellers and the difficult financing markets. In this environment, however, we have been able to achieve financing on most of the investments structured on behalf of the CPAŽ REITs, and when financing has not been available, we have achieved desired returns that have allowed us to structure transactions on behalf of the CPAŽ REITs without financing. During the nine months ended September 30, 2009, we structured investments on behalf of the CPAŽ REITs totaling $355.4 million. In addition, we contributed $40.0 million to an equity investment in real estate in our owned real estate portfolio. International investments comprised 34% of our total investments during the nine months ended September 30, 2009, as compared to 46% during the year ended December 31, 2008. We currently expect international transactions to continue to comprise a significant portion of the investments we structure, although the percentage of international investments in any given period may vary. We earn structuring revenue on acquisitions structured on behalf of the CPAŽ REITs and expect this revenue to fluctuate based on changes in our investment volume period over period. Financing Conditions
Current real estate financing markets remain weak as of the date of this Report, and we continue to experience difficulties in financing investments on behalf of the CPAŽ REITs, both domestically and internationally. This weak financing environment has resulted in lenders generally offering shorter maturities, often subject to variable interest rates. We generally attempt to obtain interest rate caps or swaps to mitigate the impact of variable rate financing. During the nine months ended September 30, 2009, we obtained mortgage financing totaling $61.5 million for our owned real estate portfolio, including financing for new transactions and refinancing of maturing debt, with a weighted average annual interest rate and term of up to 7.8% and 7.0 years, respectively. In addition, we also obtained mortgage financing totaling $262.4 million on behalf of the CPAŽ REITs, including financing for new transactions and refinancing of maturing debt, with a weighted annual average interest rate and term of up to 7.7% and 6.2 years, respectively.
As of September 30, 2009, we have balloon payments totaling $5.0 million on our consolidated investments that will be due during the remainder of 2009, with an additional $6.6 million due during 2010 and $22.3 million due during 2011. In addition, the CPAŽ REITs have aggregate balloon payments totaling $5.8 million due during the remainder of 2009, with an additional $95.5 million due in 2010 and $319.7 million in 2011, inclusive of our share of the balloon payments totaling $24.9 million due in 2011. We are actively seeking to refinance this debt but believe we and the CPAŽ REITs have sufficient financing alternatives and/or cash resources to make these payments, if necessary. In both our own portfolio and those of the CPAŽ REITs, property level debt is generally non-recourse, which means that if we or any of the CPAŽ REITs default on a mortgage loan obligation, our exposure is limited to our equity invested in that property.
Corporate Defaults
We expect that some of the tenants in our own portfolio and the CPAŽ REIT portfolios will continue to experience financial stress. Tenants in financial distress may become delinquent on their rent and/or default on their leases and, if they file for bankruptcy protection, may reject our lease in bankruptcy court, all of which may require us or the CPAŽ REITs to incur impairment charges. Even where a default has not occurred and a tenant is continuing to make the required lease payments, we may restructure or renew

leases on less favorable terms, or the tenant's credit profile may deteriorate, which could affect the value of the leased asset and could in turn require us or the CPAŽ REITs to incur impairment charges. Based on tenant activity during the nine months ended September 30, 2009, including lease amendments, early lease renewals and lease rejections in bankruptcy court, we currently expect 2009 lease revenue in the CPAŽ REITs will decrease by approximately 3.5% on an annualized basis. However, this amount may increase or decrease based on additional tenant activities and changes in economic conditions, both of which are outside our control. If the North American and European economic zones continue to experience the improving economic conditions that they have experienced very recently, we would expect to see an improvement in the general business conditions for our tenants, which should result in less stress for them financially. However, if economic conditions deteriorate, it is likely that our tenants' financial condition may deteriorate as well.
The CPAŽ REITs have experienced increased levels of corporate defaults recently; however, we have no significant exposure to tenants operating under bankruptcy protection in our own portfolio as of the date of this Report. During the nine months ended September 30, 2009, tenants accounting for less than 3.0% of aggregate annualized lease revenues of the CPAŽREITs entered into bankruptcy/administration. During the nine months ended September 30, 2009, we have incurred impairment charges on our own portfolio totaling $4.7 million and the CPAŽ REITs have incurred impairment charges aggregating $108.7 million. As a result of the CPAŽ REIT impairment charges, our income from equity investments in the CPAŽ REITs declined by $6.4 million for the nine months ended September 30, 2009. Impairment charges do not necessarily reflect the true economic loss caused by the default of a tenant. The economic loss may be greater or less than the impairment amount.
To mitigate these risks, we have invested in assets that we believe are critically important to a tenant's operations and have diversified the fully-invested portfolios by tenant and tenant industry. We also monitor tenant performance through review of rent delinquencies as a precursor to a potential default, meetings with tenant management and review of tenants' financial statements and compliance with any financial covenants. When necessary, our asset management process includes restructuring transactions to meet the evolving needs of tenants, re-leasing properties, refinancing debt and selling properties, where possible, as well as protecting our rights when tenants default or enter into bankruptcy.
Fundraising
We are currently fundraising for CPAŽ:17 - Global. Fundraising trends are very difficult to predict, particularly in the current economic environment. However, although industry fundraising has for the most part been trending downward in the first nine months of 2009, we have generally experienced increases in our month over month fundraising results so far in 2009. We raised $124.6 million for CPAŽ:17 - Global's initial public offering in the third quarter of 2009. This represents a $24.3 million increase over the second quarter of 2009 and a $53.1 million increase over the first quarter of 2009. Since beginning fundraising for CPAŽ:17 - Global in December 2007, we have raised more than $685.0 million on their behalf through October 31, 2009, with October 2009 being our largest fundraising month to date. We have made a concerted effort to broaden our distribution channels and are beginning to see a greater portion of our fundraising come from multiple channels as a result of these efforts. We expect these trends to continue for the remainder of 2009. Net Asset Values and Redemptions
We own shares in the CPAŽ REITs and earn asset management revenue based on a percentage of average invested assets for each CPAŽ REIT. As such, we benefit from rising investment values and are negatively impacted when these values decrease. As a result of market conditions worsening during 2008, asset values declined across all asset types, and the estimated net asset valuations for CPAŽ:14, CPAŽ:15 and CPAŽ:16 - Global as of December 31, 2008 declined as well, which has negatively impacted our asset management revenue during the nine months ended September 30, 2009. The estimated net asset valuations of the CPAŽ REITs are based on a number of variables, including individual tenant credits, tenant defaults, lease terms, lending credit spreads, and foreign currency exchange rates, among other variables. We do not control these variables and, as such, cannot predict how these variables will change in the future. CPAŽ:14, CPAŽ:15 and, to a lesser extent, CPAŽ:16 - Global have experienced higher levels of share redemptions during 2008 and 2009, which consume cash. In June 2009, CPAŽ:15's board of directors approved the suspension of its redemption plan, effective for all redemption requests received subsequent to June 1, 2009. In September 2009, CPAŽ:14's board of directors approved the suspension of its redemption plan, effective for all redemption requests received subsequent to September 1, 2009. The suspensions will remain in effect until the boards of directors of CPAŽ:14 and CPAŽ:15, in their discretion, determine to reinstate the redemption plans. To date, however, the CPAŽREITs, including CPAŽ:14 and CPAŽ:15, have not experienced conditions that have affected their ability to continue to pay dividends. Lease Expirations
As of the date of this Report, a significant amount of the leases in our own portfolio expire in 2011 and 2012. Based on annualized contractual lease revenue, lease expirations from our consolidated real estate investments for each of the next few years are as follows: 3% in the remainder of 2009, 16% in 2010, 13% in 2011 and 9% in 2012. Based on tenant activity during the nine months ended

September 30, 2009, including lease amendments and early lease renewals, we currently expect lease revenue from our consolidated real estate investments will decrease by approximately 1.9% on an annualized basis. In addition, two or our largest equity investments in real estate based on lease revenue, Carrefour France, SAS and Medica-France, S.A., were renewed early at a combined 19% reduction on an annualized basis. We actively manage our portfolio and begin discussing options with tenants generally three years in advance of the scheduled lease expiration. In certain cases, we obtain lease renewals from our tenants. However, tenants may exercise purchase options rather than renew their leases, while in other cases we may seek replacement tenants or sell the property. We currently expect that most of our leases due to expire in the remainder of 2009 and 2010 will be renewed by our tenants, on what we believe are generally competitive terms given current market conditions. We expect that the leases will be mostly renewed with the existing tenants, which will allow us to avoid downtime, paying operating costs and paying for tenant improvements in most cases. On the other hand, we expect that a majority of the leases that are being renewed during the remainder of 2009 and 2010 will be at rents that are below the tenants' existing contractual rent. Lease expirations may also affect the cash flow of certain of the CPAŽ REITs, particularly CPAŽ:14 and CPAŽ:15. Inflation and Foreign Exchange Rates
Our leases and those of the CPAŽ REITs generally have rent adjustments based on formulas indexed to changes in the consumer price index ("CPI") or other similar indices for the jurisdiction in which the property is located. Because these rent adjustments may be calculated based on changes in the CPI over a multi-year period, changes in inflation rates can have a delayed impact on our results of operations. Rent adjustments during 2008 and the nine months ended September 30, 2009 have generally benefited from increases in inflation rates during the years prior to the scheduled rent adjustment date. Current inflation rates in the U.S. and the Euro zone, which are historically low, will impact rent increases in our own portfolio and in the CPAŽREITs in coming years.
We have foreign investments and as a result are subject to risk from the effects of exchange rate movements. Our results of foreign operations benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar relative to foreign currencies. Despite the weakening of the U.S. dollar during the third quarter of 2009, the average rate for the U.S. dollar in relation to the Euro strengthened by approximately 5% and 10% during the three and nine months ended September 30, 2009, respectively, in comparison to the same periods in 2008, resulting in a negative impact on our results of operations for Euro-denominated investments in the current year periods. Investments denominated in the Euro accounted for approximately 10% and 9% of our annualized lease revenues for the nine months ended September 30, 2009 and 2008, respectively, and 29% and 31% of aggregate lease revenues for the CPAŽ REITs revenues for the nine month periods ended September 30, 2009 and 2008, respectively. Carey Storage Transaction
In January 2009, Carey Storage completed a transaction whereby it received cash proceeds of $21.9 million, plus a commitment to invest up to a further $8.1 million of equity, from a third party to fund the purchase of self-storage assets in the future in exchange for a 60% interest in its self storage portfolio. Carey Storage incurred transaction-related costs totaling approximately $1.0 million in connection with this transaction. Because we have an option to repurchase this interest at fair value, we account for this transaction under the profit sharing method.
In connection with this transaction, Carey Storage repaid, in full, the $35.0 million outstanding balance on its secured credit facility at a discount for $28.0 million and recognized a gain of $7.0 million on the repayment of this debt, inclusive of the third party's interest of $4.2 million. The debt repayment was financed with a portion of the proceeds from the exchange of the 60% interest and non-recourse debt with a new lender totaling $25.0 million, of which $18.0 million is secured by individual mortgages on seven of the self storage properties in the portfolio and $7.0 million is secured by individual mortgages on the other six self storage properties in the portfolio. The new financing bears interest at a fixed rate of 7% per annum and has a 10 year term with a rate reset after 5 years. The $7.0 million gain recognized on the debt repayment and the third party's interest in this gain of $4.2 million are both reflected in Other income and expenses in the consolidated financial statements for the nine months ended September 30, 2009.
In August 2009, Carey Storage borrowed an additional $3.5 million that is collateralized by individual mortgages on seven of the self storage properties in the portfolio and distributed the proceeds to its profit sharing interest holders. This new loan has an annual fixed interest rate of 7.25% and has a term of 9.6 years with rate reset after 5 years. As part of this transaction, Carey Storage distributed $1.9 million to its third party investor, which has been reflected as a reduction of the profit sharing obligation.
We reflect our Carey Storage operations in our real estate ownership segment. Costs totaling $1.0 million incurred in structuring the transaction and bringing in a new investor into these operations are reflected in General and administrative expenses in our investment management segment.

Results of Operations
We evaluate our results of operations by our two major business segments -
investment management and real estate ownership. A summary of comparative
results of these business segments is as follows:
Investment Management (in thousands)

                                   Three months ended September 30,                      Nine months ended September 30,
                                2009               2008            Change            2009               2008            Change
Revenues
Asset management
revenue                     $     19,106         $  20,205        $ (1,099 )      $    57,441         $  60,370        $  (2,929 )
Structuring revenue                5,476            10,818          (5,342 )           16,250            17,403           (1,153 )
Wholesaling revenue                1,869             1,517             352              4,426             4,145              281
Reimbursed costs from
affiliates                        13,503            11,303           2,200             33,747            32,749              998

                                  39,954            43,843          (3,889 )          111,864           114,667           (2,803 )


Operating Expenses
General and
administrative                   (13,987 )         (15,423 )         1,436            (44,513 )         (42,165 )         (2,348 )
Reimbursable costs               (13,503 )         (11,303 )        (2,200 )          (33,747 )         (32,749 )           (998 )
Depreciation and
amortization                      (1,124 )          (1,160 )            36             (2,758 )          (3,285 )            527

                                 (28,614 )         (27,886 )          (728 )          (81,018 )         (78,199 )         (2,819 )


Other Income and
Expenses
Other interest income                394               586            (192 )            1,127             1,667             (540 )
(Loss) income from
equity investments in
CPAŽ REITs                          (744 )             200            (944 )             (169 )           4,759           (4,928 )
Other income and
(expenses)                           102                 -             102                297             1,850           (1,553 )

                                    (248 )             786          (1,034 )            1,255             8,276           (7,021 )

Income from continuing
operations before
income taxes                      11,092            16,743          (5,651 )           32,101            44,744          (12,643 )
Provision for income
taxes                             (5,606 )          (5,846 )           240            (14,811 )         (20,186 )          5,375

Net income from
investment management              5,486            10,897          (5,411 )           17,290            24,558           (7,268 )
Add: Net loss
attributable to
noncontrolling
interests                            592               645             (53 )            1,785             1,771               14
Less: Net income
attributable to
redeemable
noncontrolling
interests                         (1,019 )            (341 )          (678 )           (1,357 )          (1,074 )           (283 )

Net income from
investment management
attributable to W. P.
Carey members               $      5,059         $  11,201        $ (6,142 )      $    17,718         $  25,255        $  (7,537 )

Asset Management Revenue
We earn asset-based management and performance revenue from the CPAŽ REITs based on the value of their real estate-related assets under management. This asset management revenue may increase or decrease depending upon (i) increases in the CPAŽ REIT asset bases as a result of new investments; (ii) decreases in the CPAŽ REIT asset bases as a result of sales of investments; (iii) increases or decreases in the annual estimated net asset valuations of CPAŽ REIT funds (which are not recorded for financial reporting purposes); (iv) increases or decreases in distributions of available cash (for CPAŽ:17 - Global only); and (v) whether the CPAŽ REITs are meeting their performance criteria. The availability of funds for new investments is substantially dependent on our ability to raise funds for investment by the CPAŽ REITs.
For the three and nine months ended September 30, 2009 as compared to the same periods in 2008, asset management revenue decreased by $1.1 million and $2.9 million, respectively, primarily due to a decline in the annual estimated net asset valuations of CPAŽ REIT funds as described below.

We obtain estimated net asset valuations for the CPAŽ REITs on an annual basis and sometimes on an interim basis, which occurs generally in connection with our consideration of potential liquidity events. Currently, annual estimated net asset valuations are performed for CPAŽ:14, CPAŽ:15 and CPAŽ:16 - Global. The . . .