UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-50249

CORPORATE PROPERTY ASSOCIATES 15 INCORPORATED

(Exact name of registrant as specified in its charter)

Maryland (State of incorporation)		52-2298116 (I.R.S. Employer Identification No.)
50 Rockefeller Plaza New York, New York (Address of principal executive offices)		10020 (Zip Code)

Investor Relations (212) 492-8920
(212) 492-1100
(Registrant’s telephone numbers, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer þ (Do not check if a smaller reporting company)

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Registrant had 125,637,527 shares of common stock, $.001 par value, outstanding at November 9, 2009.

 

 

INDEX

		Page No.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets			2
Consolidated Statements of Operations			3
Consolidated Statements of Comprehensive Income (Loss)			4
Consolidated Statements of Cash Flows			5
Notes to Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			21
Item 3. Quantitative and Qualitative Disclosures About Market Risk			32
Item 4T. Controls and Procedures			33
PART II — OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			34
Item 6. Exhibits			34
Signatures			35
Exhibit 10.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32

Forward Looking Statements

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this Report, contains forward-looking statements within the meaning of the federal securities laws. It is important to note that our actual results could be materially different from those projected in such forward-looking statements. You should exercise caution in relying on forward-looking statements as they involve known and unknown risks, uncertainties and other factors that may materially affect our future results, performance, achievements or transactions. Information on factors which could impact actual results and cause them to differ from what is anticipated in the forward-looking statements contained herein is included in this Report as well as in our other filings with the Securities and Exchange Commission (the “SEC”), including but not limited to those described in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2008 as filed with the SEC on March 26, 2009 (the “2008 Annual Report”). We do not undertake to revise or update any forward-looking statements. Additionally, a description of our critical accounting estimates is included in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our 2008 Annual Report. There has been no significant change in our critical accounting estimates.

CPA^®:15 9/30/2009 10-Q — 1

PART I

Item 1. Financial Statements

CORPORATE PROPERTY ASSOCIATES 15 INCORPORATED

Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share amounts)

		September 30, 2009				December 31, 2008
Assets
Investments in real estate:
Real estate, at cost		$	2,300,026			$	2,306,018
Accumulated depreciation			(269,984	)			(238,360	)
Net investments in properties			2,030,042				2,067,658
Net investment in direct financing leases			399,333				448,635
Equity investments in real estate			191,308				199,124
Net investments in real estate			2,620,683				2,715,417
Cash and cash equivalents			67,993				112,032
Intangible assets, net			219,766				241,083
Other assets, net			141,827				120,673
Total assets		$	3,050,269			$	3,189,205
Liabilities and Equity
Liabilities:
Non-recourse debt		$	1,741,614			$	1,805,397
Accounts payable, accrued expenses and other liabilities			50,463				34,214
Prepaid and deferred rental income and security deposits			83,084				81,064
Due to affiliates			18,397				28,327
Distributions payable			22,546				22,055
Total liabilities			1,916,104				1,971,057
Commitments and contingencies
Equity:
CPA®:15 shareholders’ equity:
Common stock, $0.001 par value; 240,000,000 shares authorized; 141,049,145 and 138,840,480 shares issued, respectively			141				139
Additional paid-in capital			1,307,759				1,282,826
Distributions in excess of accumulated earnings			(281,534	)			(207,949	)
Accumulated other comprehensive income			5,277				460
			1,031,643				1,075,476
Less, treasury stock at cost, 15,862,125 and 12,308,293 shares, respectively			(167,253	)			(129,233	)
Total CPA®:15 shareholders’ equity			864,390				946,243
Noncontrolling interests			269,775				271,905
Total equity			1,134,165				1,218,148
Total liabilities and equity		$	3,050,269			$	3,189,205

See Notes to Consolidated Financial Statements.

CPA^®:15 9/30/2009 10-Q — 2

CORPORATE PROPERTY ASSOCIATES 15 INCORPORATED

Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share amounts)

		Three months ended September 30,								Nine months ended September 30,
		2009				2008				2009				2008
Revenues
Rental income		$	61,704			$	60,836			$	179,962			$	182,421
Interest income from direct financing leases			9,871				11,925				29,891				35,676
Other operating income			1,666				978				4,758				3,663
			73,241				73,739				214,611				221,760
Operating Expenses
Depreciation and amortization			(15,591	)			(15,628	)			(45,376	)			(49,463	)
Property expenses			(8,996	)			(10,498	)			(33,123	)			(30,666	)
General and administrative			(1,872	)			(1,964	)			(6,483	)			(7,251	)
Impairment charges			(13,766	)			—				(47,216	)			—
			(40,225	)			(28,090	)			(132,198	)			(87,380	)
Other Income and Expenses
Advisor settlement (Note 10)			—				—				—				9,111
(Loss) income from equity investments in real estate			(3,419	)			2,332				4,119				10,426
Other interest income			508				1,397				1,914				4,743
Other income and (expenses)			(1,730	)			(614	)			(1,116	)			7,254
Interest expense			(26,203	)			(27,161	)			(77,441	)			(83,973	)
			(30,844	)			(24,046	)			(72,524	)			(52,439	)
Income from continuing operations before income taxes			2,172				21,603				9,889				81,941
Provision for income taxes			(1,829	)			(2,075	)			(6,298	)			(6,589	)
Income from continuing operations			343				19,528				3,591				75,352
Discontinued Operations
Loss from operations of discontinued properties			(2,348	)			(16,225	)			(322	)			(14,618	)
Gain on sale of real estate			11,084				—				11,935				90
Income (loss) from discontinued operations			8,736				(16,225	)			11,613				(14,528	)
Net Income			9,079				3,303				15,204				60,824
Less: Net income attributable to noncontrolling interests			(7,024	)			(2,108	)			(21,903	)			(19,842	)
Net Income (Loss) Attributable to CPA®:15 Shareholders		$	2,055			$	1,195			$	(6,699	)		$	40,982
Earnings (Loss) Per Share
Income (loss) from continuing operations attributable to CPA®:15 shareholders		$	(0.02	)		$	0.10			$	(0.11	)		$	0.40
Income (loss) from discontinued operations attributable to CPA®:15 shareholders			0.04				(0.09	)			0.06				(0.08	)
Net income (loss) attributable to CPA®:15 shareholders		$	0.02			$	0.01			$	(0.05	)		$	0.32
Weighted Average Shares Outstanding			125,008,341				128,627,044				125,900,460				128,832,916
Amounts Attributable to CPA®:15 Shareholders
Income (loss) from continuing operations, net of tax		$	(2,991	)		$	13,067			$	(13,850	)		$	51,562
Income (loss) from discontinued operations, net of tax			5,046				(11,872	)			7,151				(10,580	)
Net income		$	2,055			$	1,195			$	(6,699	)		$	40,982
Distributions Declared Per Share		$	0.1801			$	0.1736			$	0.5347			$	0.5159

See Notes to Consolidated Financial Statements.

CPA^®:15 9/30/2009 10-Q — 3

CORPORATE PROPERTY ASSOCIATES 15 INCORPORATED

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(in thousands)

		Three months ended September 30,								Nine months ended September 30,
		2009				2008				2009				2008
Net Income		$	9,079			$	3,303			$	15,204			$	60,824
Other Comprehensive Income:
Foreign currency translation adjustment			8,366				(35,531	)			7,068				(15,531	)
Change in unrealized gain (loss) on marketable securities			623				(327	)			685				(1,092	)
Change in unrealized loss on derivative instruments			(2,634	)			(6,640	)			(2,890	)			(2,681	)
			6,355				(42,498	)			4,863				(19,304	)
Comprehensive income (loss)			15,434				(39,195	)			20,067				41,520
Amounts Attributable to Noncontrolling Interests:
Net income attributable to noncontrolling interests			(7,024	)			(2,108	)			(21,903	)			(19,842	)
Foreign currency translation adjustment			(1,996	)			11,606				(1,033	)			4,250
Change in unrealized (gain) loss on derivative instruments			784				1,440				987				548
Comprehensive (income) loss attributable to noncontrolling interests			(8,236	)			10,938				(21,949	)			(15,044	)
Comprehensive Income (Loss) Attributable to CPA®:15 Shareholders		$	7,198			$	(28,257	)		$	(1,882	)		$	26,476

See Notes to Consolidated Financial Statements.

CPA^®:15 9/30/2009 10-Q — 4

CORPORATE PROPERTY ASSOCIATES 15 INCORPORATED

Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

		Nine months ended September 30,
		2009				2008
Cash Flows — Operating Activities
Net income		$	15,204			$	60,824
Adjustments to net income:
Depreciation and amortization including intangible assets and deferred financing costs			47,278				52,318
Straight-line rent adjustments			4,874				3,816
Loss (income) from equity investments in real estate in excess of distributions received			4,608				(307	)
Issuance of shares to affiliate in satisfaction of fees due			9,887				11,948
Realized loss (gain) on foreign currency transactions, derivative instruments and other, net			920				(8,346	)
Unrealized (gain) loss on foreign currency transactions, derivative instruments and other, net			(1,898	)			1,128
Gain on sale of real estate, net			(9,836	)			(90	)
Impairment charges			47,216				17,233
(Increase) decrease in cash held in escrow for operating activities			(9,011	)			1,076
Changes in operating assets and liabilities			3,802				7,101
Net cash provided by operating activities			113,044				146,701
Cash Flows — Investing Activities
Distributions from equity investments in real estate in excess of equity income			5,790				1,773
Capital expenditures			(1,490	)			(8,346	)
Contributions to equity investments in real estate			—				(8,708	)
Proceeds from sale of real estate			5,023				1,010
Repayment of loan by affiliate			—				7,569
Payment of deferred acquisition fees to an affiliate			(6,903	)			(8,413	)
Net cash provided by (used in) investing activities			2,420				(15,115	)
Cash Flows — Financing Activities
Distributions paid (a)			(66,395	)			(75,996	)
Distributions paid to noncontrolling interests			(31,444	)			(31,514	)
Contributions from noncontrolling interests			7,365				—
Proceeds from mortgages			34,234				25,000
Prepayment of mortgage principal			(7,224	)			(17,588	)
Scheduled payments of mortgage principal			(74,632	)			(32,448	)
Deferred financing costs and mortgage deposits, net of deposits refunded			—				(195	)
Proceeds from issuance of shares, net of costs			15,048				14,432
Purchase of treasury stock			(38,020	)			(35,751	)
Net cash used in financing activities			(161,068	)			(154,060	)
Change in Cash and Cash Equivalents During the Period
Effect of exchange rate changes on cash			1,565				935
Net decrease in cash and cash equivalents			(44,039	)			(21,539	)
Cash and cash equivalents, beginning of period			112,032				166,851
Cash and cash equivalents, end of period		$	67,993			$	145,312

See Notes to Consolidated Financial Statements.

CPA^®:15 9/30/2009 10-Q — 5

CORPORATE PROPERTY ASSOCIATES 15 INCORPORATED

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Business

Corporate Property Associates 15 Incorporated (together with its consolidated subsidiaries and predecessors, “we”, “us” or “our”) is a publicly owned, non-actively traded real estate investment trust (“REIT”) that invests in commercial properties leased to companies domestically and internationally. As a REIT, we are not subject to United States (“U.S.”) federal income taxation as long as we satisfy certain requirements, principally relating to the nature of our income, the level of our distributions and other factors. We earn revenue principally by leasing the properties we own to single corporate tenants, primarily on a triple-net lease basis, which requires the tenant to pay substantially all of the costs associated with operating and maintaining the property. Revenue is subject to fluctuation because of the timing of new lease transactions, lease terminations, lease expirations, contractual rent increases, tenant defaults and sales of properties. As of September 30, 2009, our portfolio was comprised of our full or partial ownership interests in 363 properties, substantially all of which were triple-net leased to 79 tenants, and totaled approximately 30 million square feet (on a pro rata basis), with an occupancy rate of 97%. We were formed in 2001 and are managed by W. P. Carey & Co. LLC (“WPC”) and its subsidiaries (collectively, the “advisor”).

Note 2. Basis of Presentation

Our interim consolidated financial statements have been prepared, without audit, in accordance with the instructions to Form 10-Q and therefore do not necessarily include all information and footnotes necessary for a fair statement of our consolidated financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

In the opinion of management, the unaudited financial information for the interim periods presented in this Report reflects all normal and recurring adjustments, necessary for a fair statement of results of operations, financial position and cash flows. Our interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for the year ended December 31, 2008, which are included in our 2008 Annual Report, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this Report. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year presentation. The consolidated financial statements included in this Report have been retrospectively adjusted to reflect the adoption of certain new accounting pronouncements during the nine months ended September 30, 2009 (Note 11).

In May 2009, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance for subsequent events, which we adopted as required in the second quarter of 2009. The guidance establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. We evaluated subsequent events through November 13, 2009, the date on which we filed this Report with the SEC.

Basis of Consolidation

The consolidated financial statements include all of our accounts and those of our majority-owned and/or controlled subsidiaries. The portion of equity in a subsidiary that is not attributable, directly or indirectly, to us is presented as noncontrolling interests. All significant intercompany accounts and transactions have been eliminated. Under current authoritative guidance, we have determined that we are not the primary beneficiary of, nor do we hold a significant variable interest in, any variable interest entity (“VIE”). We hold investments in tenant-in-common interests, which we account for as equity investments in real estate under current authoritative accounting guidance.

Information about International Geographic Areas

As of September 30, 2009, our international investments were comprised of investments in the European Union. Revenues from these investments totaled $26.5 million and $30.8 million for the three months ended September 30, 2009 and 2008, respectively, and $84.2 million and $93.5 million for the nine months ended September 30, 2009 and 2008, respectively. Our net investments in real estate for these investments totaled $1.1 billion and $1.2 billion at September 30, 2009 and December 31, 2008, respectively.

CPA^®:15 9/30/2009 10-Q — 6

Notes to Consolidated Financial Statements

Future Accounting Requirements

In June 2009, the FASB issued amended guidance related to the consolidation of VIEs. These amendments require an enterprise to qualitatively assess the determination of the primary beneficiary of a VIE based on whether the entity (1) has the power to direct matters that most significantly impact the activities of the VIE, and (2) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The amendments change the consideration of kick-out rights in determining if an entity is a VIE, which may cause certain additional entities to now be considered VIEs. Additionally, they require an ongoing reconsideration of the primary beneficiary and provide a framework for the events that trigger a reassessment of whether an entity is a VIE. This guidance will be effective for us beginning January 1, 2010. We are currently in the process of evaluating the impact that the adoption of this guidance will have on our financial position and results of operations.

Note 3. Agreements and Transactions with Related Parties

We have an advisory agreement with the advisor whereby the advisor performs certain services for us for a fee. Under the terms of this agreement, which was amended and renewed effective October 1, 2009, the advisor manages our day-to-day operations, for which we pay the advisor asset management and performance fees, and structures and negotiates the purchase and sale of investments and debt placement transactions for us, for which we pay the advisor structuring and subordinated disposition fees. In addition, we reimburse the advisor for certain administrative duties performed on our behalf. We also have certain agreements with joint ventures. These transactions are described below.

Asset Management and Performance Fees

Under the advisory agreement, we pay the advisor asset management and performance fees, each of which are 1/2 of 1% per annum of our average invested assets and are computed as provided for in the advisory agreement. The performance fees are subordinated to the performance criterion, a non-compounded cumulative annual distribution return of 6%. The asset management and performance fees are payable in cash or restricted shares of our common stock at the advisor’s option. If the advisor elects to receive all or a portion of its fees in restricted shares, the number of restricted shares issued is determined by dividing the dollar amount of fees by our most recently published estimated net asset value per share as approved by our board of directors. For both 2009 and 2008, the advisor elected to receive its asset management fees in cash. For 2009, the advisor elected to receive 80% of its performance fees from us in restricted shares of our common stock, with the remaining 20% payable in cash. For 2008, the advisor elected to receive all of its performance fees in restricted shares of our common stock. We incurred base asset management fees of $3.5 million and $4.0 million for the three months ended September 30, 2009 and 2008, respectively, and $10.8 million and $11.9 million for the nine months ended September 30, 2009 and 2008, respectively, with performance fees in like amounts, both of which are included in Property expenses in the consolidated financial statements. As of September 30, 2009, the advisor owned 7,916,009 shares (6.3%) of our common stock.

Transaction Fees

Under the advisory agreement, we also pay the advisor acquisition fees for structuring and negotiating investments and related mortgage financing on our behalf. Acquisition fees average 4.5% or less of the aggregate cost of investments acquired and are comprised of a current portion of 2.5%, which is paid at the date the property is purchased, and a deferred portion of 2%, which is payable in equal annual installments each January of the three calendar years following the date a property was purchased, subject to satisfying the 6% performance criterion. Interest on unpaid installments is 6% per year. During both the three and nine months ended September 30, 2008, we incurred current acquisition fees of $0.5 million and deferred acquisition fees of $0.4 million. We did not incur any current or deferred acquisition fees during the three and nine months ended September 30, 2009. Unpaid installments of deferred acquisition fees totaled $7.1 million and $14.1 million as of September 30, 2009 and December 31, 2008, respectively, and are included in Due to affiliates in the consolidated financial statements. We paid annual deferred acquisition fee installments of $6.9 million and $8.4 million in cash to the advisor in January 2009 and 2008, respectively. We also pay the advisor mortgage refinancing fees, which totaled less than $0.1 million for the nine months ended September 30, 2009. No such mortgage refinancing fees were paid during the three months ended September 30, 2009 or the three and nine months ended September 30, 2008.

We also pay fees to the advisor for services provided to us in connection with the disposition of investments. These fees, which are subordinated to the performance criterion, are deferred and are payable to the advisor only in connection with a liquidity event. Subordinated disposition fees totaled $6.2 million and $6.1 million at September 30, 2009 and December 31, 2008, respectively.

CPA^®:15 9/30/2009 10-Q — 7

Notes to Consolidated Financial Statements

Other Expenses

We reimburse the advisor for various expenses it incurs in the course of providing services to us. We reimburse certain third-party expenses paid by the advisor on our behalf including property-specific costs, professional fees, office expenses and business development expenses. In addition, we reimburse the advisor for the allocated costs of personnel and overhead in providing management of our day-to-day operations, including accounting services, shareholder services, corporate management, and property management and operations. We do not reimburse the advisor for the cost of personnel if these personnel provide services for transactions for which the advisor receives a transaction fee, such as acquisitions, dispositions and refinancings. We incurred personnel reimbursements of $0.8 million and $0.7 million for the three months ended September 30, 2009 and 2008, respectively, and $2.2 million and $2.6 million for the nine months ended September 30, 2009 and 2008, respectively, which are included in General and administrative expenses in the consolidated financial statements.

Joint Ventures and Other Transactions with Affiliates

Together with certain affiliates, we participate in an entity that leases office space used for the administration of real estate entities. Under the terms of an agreement among the participants in this entity, rental, occupancy and leasehold improvement costs are allocated among the participants based on gross revenues and are adjusted quarterly. Our share of expenses incurred was $0.2 million for each of the three months ended September 30, 2009 and 2008 and $0.6 million for each of the nine months ended September 30, 2009 and 2008. Based on gross revenues through September 30, 2009, our current share of future minimum lease payments under this agreement would be $0.8 million annually through 2016.

We own interests in entities ranging from 30% to 75%, as well as jointly-controlled tenant-in-common interests in properties, with the remaining interests generally held by affiliates. We consolidate certain of these entities (Note 2) and account for the remainder under the equity method of accounting (Note 5).

Note 4. Real Estate

Real Estate

Real estate, which consists of land and buildings leased to others, at cost, and accounted for as operating leases, is summarized as follows (in thousands):

		September 30, 2009				December 31, 2008
Land		$	529,441			$	543,027
Buildings			1,770,585				1,762,991
Less: Accumulated depreciation			(269,984	)			(238,360	)
		$	2,030,042			$	2,067,658

Acquisition Costs

The FASB has revised its guidance for business combinations. The revised guidance establishes principles and requirements for how the acquirer in a business combination must recognize and measure in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interests in the entity acquired, and goodwill acquired in a business combination. Additionally, the revised guidance requires that an acquiring entity must immediately expense all acquisition costs and fees associated with a business combination, while such costs are capitalized for transactions deemed to be acquisitions. We adopted the revised guidance as required on January 1, 2009. To the extent we make investments that are deemed to be business combinations, our results of operations will be negatively impacted by the immediate expensing of acquisition costs and fees incurred in accordance with the revised guidance, whereas in the past such costs and fees would have been capitalized and allocated to the cost basis of the acquisition. Post acquisition, there will be a subsequent positive impact on our results of operations through a reduction in depreciation expense over the estimated life of the properties. For those investments that are not deemed to be a business combination, the revised guidance is not expected to have a material impact on our consolidated financial statements. The revised guidance had no impact on us during the three and nine months ended September 30, 2009 as we did not make any investments during either period.

Other

In connection with our acquisition of properties, we have recorded net lease intangibles of $309.2 million, which are being amortized over periods ranging from two years to 40 years. Amortization of below-market and above-market rent intangibles is recorded as an adjustment to lease revenues, while amortization of in-place lease and tenant relationship intangibles is included in Depreciation and amortization. Below-market rent intangibles are included in Prepaid and deferred rental income and security deposits in the consolidated financial statements. Net amortization of intangibles, including the effect of foreign currency translation, was $5.5 million and $7.6 million for the three months ended September 30, 2009 and 2008, respectively, and $16.5 million and $20.8 million for the nine months ended September 30, 2009 and 2008, respectively.

CPA^®:15 9/30/2009 10-Q — 8

Notes to Consolidated Financial Statements

Note 5. Equity Investments in Real Estate

We own interests in single-tenant net leased properties leased to corporations through noncontrolling interests in (i) partnerships and limited liability companies in which our ownership interests are 50% or less but over which we exercise significant influence, and (ii) as tenants-in-common subject to common control, including a 64% tenant-in-common interest in a venture (Note 2). All of the underlying investments are generally owned with affiliates that have similar investment objectives to ours. We account for these investments under the equity method of accounting (i.e., at cost, increased or decreased by our share of earnings or losses, less distributions, plus fundings).

The following table sets forth our ownership interests in our equity investments in real estate and their respective carrying values. The carrying value of ventures is affected by the timing and nature of distributions (dollars in thousands):

		Ownership
		Interest at				Carrying Value at
Lessee		September 30, 2009				September 30, 2009				December 31, 2008
Marriott International, Inc.			47	%		$	67,376			$	68,933
Schuler A.G. (a)			34	%			49,942				45,607
Hellweg Die Profi-Baumarkte GmbH & Co. KG (Hellweg 2) (a) (b)			38	%			20,261				23,126
The Upper Deck Company			50	%			12,400				11,668
PETsMART, Inc.			30	%			8,706				8,920
Hologic, Inc.			64	%			8,487				8,523
The Talaria Company (Hinckley)			30	%			7,843				7,731
Del Monte Corporation			50	%			6,476				7,024
Wagon Automotive GmbH and Wagon Automotive Nagold GmbH (a) (c)			33	%			5,085				8,592
Görtz & Schiele GmbH & Co. and Goertz & Schiele Corp. (a) (d)			50	%			2,985				7,263
Builders FirstSource, Inc.			40	%			1,747				1,737
						$	191,308			$	199,124

CPA^®:15 9/30/2009 10-Q — 9

Notes to Consolidated Financial Statements

The following tables present combined summarized financial information of our venture properties. Amounts provided are the total amounts attributable to the venture properties and do not represent our proportionate share (in thousands):

		September 30, 2009				December 31, 2008
Assets		$	1,338,835			$	1,347,755
Liabilities			(606,380	)			(621,078	)
Partners’/members’ equity		$	732,455			$	726,677

		Three months ended September 30,								Nine months ended September 30,
		2009				2008				2009				2008
Revenue		$	27,548			$	26,911			$	87,633			$	89,096
Expenses			(16,688	)			(14,696	)			(46,284	)			(42,844	)
Impairment charges (a)			(17,001	)			—				(17,001	)			—
Net income		$	(6,141	)		$	12,215			$	24,348			$	46,252

We recognized a loss from equity investments in real estate of $3.4 million and income from equity investments in real estate of $2.3 million for the three months ended September 30, 2009 and 2008, respectively, and income from equity investments in real estate of $4.1 million and $10.4 million for the nine months ended September 30, 2009 and 2008, respectively. Income from equity investments in real estate represents our share of the income of these ventures as well as certain depreciation and amortization adjustments related to purchase accounting and other-than-temporary impairment charges.

Note 6. Interest in Mortgage Loan Securitization

We account for our subordinated interest in the Carey Commercial Mortgage Trust (“CCMT”) mortgage securitization as an available-for-sale marketable security, which is measured at fair value with all gains and losses from changes in fair value reported as a component of Accumulated other comprehensive income as part of shareholders’ equity. Our interest in CCMT consists of interests in Class IO and Class E certificates. Our interest in the Class IO certificates, which are rated Aaa by Moody’s Investors Service, Inc. and AAA by Fitch Inc., had an estimated fair value of $0.8 million and $1.3 million at September 30, 2009 and December 31, 2008, respectively. Our interest in the Class E certificates, which are rated between Baa3 and Caa by Moody’s and between BBB- and CCC by Fitch, had an estimated fair value of $8.7 million and $7.8 million at September 30, 2009 and December 31, 2008, respectively. As of September 30, 2009 and December 31, 2008, the total estimated fair value of our interest was $9.5 million and $9.1 million, respectively, and reflected an aggregate unrealized loss of $0.6 million and $1.3 million, respectively, and a cumulative net amortization of $1.9 million and $1.6 million, respectively. We use a discounted cash flow model with assumptions of market credit spreads and the credit quality of the underlying lessees to determine the fair value of our interest in CCMT.

One key variable in determining the fair value of the subordinated interest is current interest rates. The following table presents a sensitivity analysis of the fair value of our interest at September 30, 2009 based on adverse changes in market interest rates of 1% and 2% (in thousands):

		Fair value as of				1% adverse				2% adverse
		September 30, 2009				change				change
Fair value of our interest in CCMT		$	9,549			$	9,322			$	9,102

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

In April 2009, the FASB amended the existing guidance related to other-than-temporary impairments for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities. The new guidance does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. We adopted the new guidance as required in the second quarter of 2009. The adoption of the new guidance did not have a material effect on our financial position and results of operations.

CPA^®:15 9/30/2009 10-Q — 10

Notes to Consolidated Financial Statements

Note 7. Fair Value Measurements

In September 2007, the FASB issued authoritative guidance for using fair value to measure assets and liabilities, which we adopted as required on January 1, 2008, with the exception of nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value on a recurring basis, which we adopted as required on January 1, 2009. In April 2009, the FASB provided additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased, which we adopted as required in the second quarter of 2009. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps and swaps; and Level 3, for which little or no market data exists, therefore requiring us to develop our own assumptions, such as certain marketable securities.

The following tables set forth our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2009 and December 31, 2008 (in thousands):

						Fair Value Measurements at Reporting Date Using:
						Quoted Prices in
						Active Markets for				Significant Other				Unobservable
						Identical Assets				Observable Inputs				Inputs
Description		September 30, 2009				(Level 1)				(Level 2)				(Level 3)
Assets:
Money market funds		$	44,051			$	44,051			$	—			$	—
Debt/equity securities			9,636				—				—				9,636
Derivative assets			2,112				—				152				1,960
		$	55,799			$	44,051			$	152			$	11,596
Liabilities:
Derivative liabilities		$	(10,617	)		$	—			$	(10,617	)		$	—

						Fair Value Measurements at Reporting Date Using:
						Quoted Prices in
						Active Markets for				Significant Other				Unobservable
						Identical Assets				Observable Inputs				Inputs
Description		December 31, 2008				(Level 1)				(Level 2)				(Level 3)
Assets:
Money market funds		$	73,194			$	73,194			$	—			$	—
Debt/equity securities			9,188				—				—				9,188
Derivative assets			1,305				—				5				1,300
		$	83,687			$	73,194			$	5			$	10,488
Liabilities:
Derivative liabilities		$	(5,551	)		$	—			$	(5,551	)		$	—

Assets and liabilities presented above exclude assets and liabilities owned by unconsolidated ventures.

CPA^®:15 9/30/2009 10-Q — 11

Notes to Consolidated Financial Statements

		Fair Value Measurements Using Significant
		Unobservable Inputs (Level 3 Only)
		Marketable				Derivative								Marketable				Derivative
		Securities				Assets				Total Assets				Securities				Assets				Total Assets
		Three months ended September 30, 2009												Three months ended September 30, 2008
Beginning balance		$	9,086			$	1,680			$	10,766			$	10,265			$	1,300			$	11,565
Total gains or losses (realized and unrealized):
Included in earnings			—				280				280				—				—				—
Included in other comprehensive income			623				—				623				(327	)			—				(327	)
Amortization and accretion			(73	)			—				(73	)			(85	)			—				(85	)
Purchases, issuances, and settlements			—				—				—				—				—				—
Ending balance		$	9,636			$	1,960			$	11,596			$	9,853			$	1,300			$	11,153
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date		$	—			$	280			$	280			$	—			$	—			$	—

		Fair Value Measurements Using Significant
		Unobservable Inputs (Level 3 Only)
		Marketable				Derivative								Marketable				Derivative
		Securities				Assets				Total Assets				Securities				Assets				Total Assets
		Nine months ended September 30, 2009												Nine months ended September 30, 2008
Beginning balance		$	9,188			$	1,300			$	10,488			$	11,212			$	1,379			$	12,591
Total gains or losses (realized and unrealized):
Included in earnings			—				671				671				(4	)			(79	)			(83	)
Included in other comprehensive income			685				—				685				(1,092	)			—				(1,092	)
Amortization and accretion			(237	)			—				(237	)			(263	)			—				(263	)
Purchases, issuances, and settlements			—				(11	)			(11	)			—				—				—
Ending balance		$	9,636			$	1,960			$	11,596			$	9,853			$	1,300			$	11,153
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date		$	—			$	660			$	660			$	(4	)		$	(79	)		$	(83	)

Gains and losses (realized and unrealized) included in earnings are reported in Other income and (expenses) in the consolidated financial statements.

At September 30, 2009, we performed our quarterly assessment of the value of our real estate investments in accordance with current authoritative accounting guidance. The valuation of these assets was determined using widely accepted valuation techniques, including discounted cash flow on the expected cash flows of each asset as well as the income capitalization approach, which considers prevailing market capitalization rates. We reviewed each investment based on the highest and best use of the investment and market participation assumptions. We determined that the significant inputs used to value these investments fall within Level 3. Based on this valuation, during the nine months ended September 30, 2009 we recorded impairment charges totaling $53.8 million, calculated based on market conditions and assumptions at September 30, 2009. Actual results may differ materially if market conditions or the underlying assumptions change. See Note 9 for a discussion of impairment charges incurred during the three and nine months ended September 30, 2009 and 2008, respectively.

In April 2009, the FASB amended the existing guidance for disclosing the fair value of financial instruments to require disclosing the fair value of financial instruments for interim reporting periods as well as in annual financial statements. The new guidance also amended the existing guidance for interim financial reporting to require those disclosures in summarized financial information at interim reporting periods. The disclosures required by this guidance as of September 30, 2009 and December 31, 2008 are presented below (in thousands):

CPA^®:15 9/30/2009 10-Q — 12

Notes to Consolidated Financial Statements

		September 30, 2009								December 31, 2008
		Carrying Value				Fair Value				Carrying Value				Fair Value
Non-recourse debt		$	1,741,614			$	1,649,380			$	1,805,397			$	1,685,820
Marketable securities (a)			10,175				9,636				10,410				9,188

The estimated fair value of our debt instruments was determined using a discounted cash flow model with rates that take into account the credit of the tenants and interest rate risk. We estimate that our other financial assets and liabilities (excluding net investments in direct financing leases) had fair values that approximated their carrying values at both September 30, 2009 and December 31, 2008.

Note 8. Risk Management and Use of Derivative Financial Instruments

Risk Management

In the normal course of our on-going business operations, we encounter economic risk. There are three main components of economic risk: interest rate risk, credit risk and market risk. We are subject to interest rate risk on our interest-bearing liabilities. Credit risk is the risk of default on our operations and tenants’ inability or unwillingness to make contractually required payments. Market risk includes changes in the value of our properties and related loans as well as changes in the value of our marketable securities due to changes in interest rates or other market factors. In addition, we own investments in the European Union and are subject to the risks associated with changing foreign currency exchange rates.

Foreign Currency Exchange

We are exposed to foreign currency exchange rate movements, primarily in the Euro and British Pound Sterling. We manage foreign currency exchange rate movements by generally placing both our debt obligation to the lender and the tenant’s rental obligation to us in the same currency, but we are subject to foreign currency exchange rate movements to the extent of the difference in the timing and amount of the rental obligation and the debt service. We also face challenges with repatriating cash from our foreign investments. We may encounter instances where it is difficult to repatriate cash because of jurisdictional restrictions or because repatriating cash may result in current or future tax liabilities. Realized and unrealized gains and losses recognized in earnings related to foreign currency transactions are included in Other income and expenses in the consolidated financial statements.

Use of Derivative Financial Instruments

In March 2008, the FASB amended the existing guidance for accounting for derivative instruments and hedging activities to require additional disclosures that are intended to help investors better understand how derivative instruments and hedging activities affect an entity’s financial position, financial performance and cash flows. The enhanced disclosure requirements primarily surround the objectives and strategies for using derivative instruments by their underlying risk as well as a tabular format of the fair values of the derivative instruments and their gains and losses. The required additional disclosures are presented below.

When we use derivative instruments, it is generally to reduce our exposure to fluctuations in interest rates. We have not entered, and do not plan to enter into financial instruments for trading or speculative purposes. In addition to derivative instruments that we entered into on our own behalf, we may also be a party to derivative instruments that are embedded in other contracts, and we may own common stock warrants, granted to us by lessees when structuring lease transactions, that are considered to be derivative instruments. The primary risks related to our use of derivative instruments are that a counterparty to a hedging arrangement could default on its obligation or that the credit quality of the counterparty may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction. While we seek to mitigate these risks by entering into hedging arrangements with counterparties that are large financial institutions that we deem to be credit worthy, it is possible that our hedging transactions, which are intended to limit losses, could adversely affect our earnings. Furthermore, if we terminate a hedging arrangement, we may be obligated to pay certain costs, such as transaction or breakage fees. We have established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities.

CPA^®:15 9/30/2009 10-Q — 13

Notes to Consolidated Financial Statements

We measure derivative instruments at fair value and record them as assets or liabilities, depending on our rights or obligations under the applicable derivative contract. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. If a derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income (“OCI”) until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings. The following table sets forth our derivative instruments at September 30, 2009 and December 31, 2008 (in thousands):

		Balance Sheet		Asset Derivatives Fair Value at								Liability Derivatives Fair Value at
		Location		September 30, 2009				December 31, 2008				September 30, 2009				December 31, 2008
Derivatives designated as hedging instruments
Interest rate cap		Other assets		$	5			$	5			$	—			$	—
Interest rate swaps		Other liabilities			147				—				(10,617	)			(5,551	)
					152				5				(10,617	)			(5,551	)
Derivatives not designated as hedging instruments
Stock warrants		Other assets			1,960				1,300				—				—
Total derivatives				$	2,112			$	1,305			$	(10,617	)		$	(5,551	)

The following tables present the impact of derivative instruments on, and their location within, the consolidated financial statements (in thousands):

		Amount of Gain (Loss) Recognized in
		OCI on Derivative (Effective Portion)
		Three months ended September 30,								Nine months ended September 30,
Derivatives in Cash Flow Hedging Relationships		2009				2008				2009				2008
Interest rate cap		$	4			$	—			$	5			$	—
Interest rate swaps (a)			(2,638	)			(6,640	)			(2,895	)			(2,681	)
Total		$	(2,634	)		$	(6,640	)		$	(2,890	)		$	(2,681	)

						Amount of Gain (Loss) Recognized in Income on Derivatives
						(Ineffective Portion and Amount Excluded from Effectiveness Testing)
Derivatives in Cash Flow		Location of Gain (Loss)				Three months ended September 30,								Nine months ended September 30,
Hedging Relationships		Recognized in Income				2009				2008				2009				2008
Interest rate swap (b)		Other income and (expenses)				$	—			$	—			$	—			$	1,076
Interest rate swap (c)		Interest expense					(37	)			—				(1,133	)			—
Total						$	(37	)		$	—			$	(1,133	)		$	1,076

During the three and nine months ended September 30, 2009 and 2008, no gains or losses were reclassified from OCI into income related to amounts excluded from effectiveness testing.

CPA^®:15 9/30/2009 10-Q — 14

Notes to Consolidated Financial Statements

						Amount of Gain (Loss) Recognized in Income on Derivatives
Derivatives not in Cash Flow		Location of Gain (Loss)				Three months ended September 30,								Nine months ended September 30,
Hedging Relationships		Recognized in Income				2009				2008				2009				2008
Stock warrants		Other income and (expenses)				$	280			$	—			$	671			$	(79	)
Total						$	280			$	—			$	671			$	(79	)

See below for information on our purposes for entering into derivative instruments, including those not designated as hedging instruments, and for information on derivative instruments owned by unconsolidated ventures, which are excluded from the tables above.

Interest Rate Swaps and Caps

We are exposed to the impact of interest rate changes primarily through our borrowing activities. To limit this exposure, we attempt to obtain mortgage financing on a long-term, fixed-rate basis. However, from time to time, we or our venture partners may obtain variable rate non-recourse mortgage loans and, as a result, may enter into interest rate swap agreements or interest rate cap agreements with counterparties. Interest rate swaps, which effectively convert the variable rate debt service obligations of the loan to a fixed rate, are agreements in which one party exchanges a stream of interest payments for a counterparty’s stream of cash flow over a specific period. The notional, or face, amount on which the swaps are based is not exchanged. Interest rate caps limit the effective borrowing rate of variable rate debt obligations while allowing participants to share in downward shifts in interest rates. Our objective in using these derivatives is to limit our exposure to interest rate movements.

The interest rate swap and interest rate cap derivative instruments that we had outstanding at September 30, 2009 were designated as cash flow hedges and are summarized as follows (dollars in thousands):

						Notional				Effective				Effective				Expiration
		Type				Amount(a)				Interest Rate(b)				Date				Date				Fair Value(a)
3-Month LIBOR		“Pay-fixed” swap				$	13,510				6.9	%			10/2005				2/2014			$	(1,428	)
3-Month Euribor (d)		“Pay-fixed” swap					138,533				5.6	%			7/2006				7/2016				(7,212	)
3-Month Euribor (d)		“Pay-fixed” swap					12,992				5.0	%			4/2007				7/2016				(677	)
3-Month Euribor (d)		“Pay-fixed” swap					23,567				5.6	%			4/2008				10/2015				(1,226	)
1-Month LIBOR (d)		Interest rate cap					33,886				5.0	%			12/2008				12/2010				5
3-Month LIBOR (d)		“Pay-fixed” swap					22,067				5.9	%(c)			5/2009				3/2019				147
1-Month LIBOR		“Pay-fixed” swap					3,500				6.5	%			8/2009				9/2012				(74	)
																						$	(10,465	)

Stock Warrants

We own stock warrants that were generally granted to us by lessees in connection with structuring the initial lease transactions. These warrants are defined as derivative instruments because they are readily convertible to cash or provide for net cash settlement upon conversion.

Embedded Credit Derivative

In April 2007 and August 2008, we acquired interests in certain German unconsolidated ventures that obtained non-recourse mortgage financing for which the interest rate has both fixed and variable components. We account for these ventures under the equity method of accounting. In connection with providing the financing, the lenders entered into interest rate swap agreements on their own behalf through which the fixed interest rate component on the financing was converted into a variable interest rate instrument. The ventures have the right, at their sole discretion, to prepay the debt at any time and to participate in any realized gain or loss on the interest rate swap at that time. These participation rights are deemed to be embedded credit derivatives. Based on valuations obtained at September 30, 2009 and December 31, 2008 and including the effect of foreign currency translation, the embedded credit derivatives had an estimated total fair value of $2.0 million and $2.1 million, respectively. For the three months ended September 30, 2009 and 2008, these derivatives generated total unrealized losses of $1.3 million and $4.2 million, respectively. For the nine months ended September 30, 2009 and 2008, these derivatives generated total unrealized losses of $0.2 million and $3.0 million, respectively. Amounts provided are the total amounts attributable to the venture and do not represent our proportionate share. Changes in the fair value of the embedded credit derivatives are recognized in the ventures’ earnings.

CPA^®:15 9/30/2009 10-Q — 15

Notes to Consolidated Financial Statements

Other

Amounts reported in OCI related to derivatives will be reclassified to interest expense as interest payments are made on our non-recourse variable-rate debt. As of September 30, 2009, we estimate that an additional $5.3 million will be reclassified as interest expense during the next twelve months, inclusive of amounts attributable to noncontrolling interests totaling $1.5 million.

We have agreements with certain of our derivative counterparties that contain certain credit contingent provisions that could result in us being declared in default on our derivative obligations if we either default or are capable of being declared in default on any of our indebtedness. As of September 30, 2009, we have not been declared in default on any of our derivative obligations. The estimated fair value of our derivatives that were in a net liability position was $10.6 million as of September 30, 2009, which includes accrued interest but excludes any adjustment for nonperformance risk. If we had breached any of these provisions at September 30, 2009, we could have been required to settle our obligations under these agreements at their termination value of $12.7 million, inclusive of amounts attributable to noncontrolling interests totaling $2.7 million.

Portfolio Concentration Risk

Concentrations of credit risk arise when a group of tenants is engaged in similar business activities or is subject to similar economic risks or conditions that could cause them to default on their lease obligations to us. We regularly monitor our portfolio to assess potential concentrations of credit risk. While we believe our portfolio is reasonably well diversified, it does contain concentrations in excess of 10% of current annualized lease revenues in certain areas, as described below. Although we view our exposure from properties that we purchased together with our affiliates based on our ownership percentage in these properties, the percentages below are based on our consolidated ownership and not on our actual ownership percentage in these investments.

At September 30, 2009, our directly owned real estate properties were located in the U.S. (69%), with California (10%) representing the only domestic concentration, and in Europe (31%), with France (10%) representing the only international concentration. As of September 30, 2009, our directly owned real estate properties contain concentrations in the following asset types: office (27%), industrial (18%), retail (16%), warehouse/distribution (13%) and self-storage (11%); and in the following tenant industries: retail trade (21%) and electronics (15%).

At September 30, 2009, we had several tenants that were in various stages of the bankruptcy process, including two that terminated their leases in bankruptcy proceedings or liquidation proceedings. As of September 30, 2009, these tenants accounted for lease revenues and net income or loss from equity investments in real estate as follows: lease revenues from these tenants were $1.7 million and $2.9 million for the three months ended September 30, 2009 and 2008, respectively, and $6.1 million and $8.6 million for the nine months ended September 30, 2009 and 2008, respectively. For our equity investments in real estate, we recognized net losses of less than $0.1 million and net income of less than $0.1 million for the three months ended September 30, 2009 and 2008, respectively, and net losses of $1.1 million and less than $0.1 million for the nine months ended September 30, 2009 and 2008, respectively. These investments had an aggregate carrying value of $61.1 million and $113.7 million at September 30, 2009 and December 31, 2008, respectively. During the three and nine months ended September 30, 2009, we incurred impairment charges totaling $19.5 million and $52.3 million, respectively, related to these properties (Note 9).

Included in the investments described above are tenants of two consolidated investments and two equity investments in real estate that have stopped making rent payments. As a result of their non-compliance with the terms of their leases, beginning in July 2009 we suspended debt service payments on the related non-recourse mortgage loans. In October 2009, we returned the two consolidated investments to the lenders in exchange for the lenders’ agreement to relieve of us of all mortgage obligations, as further described in Note 9. These investments had an aggregate carrying value and outstanding mortgage loan balance of $28.8 million and $28.2 million, respectively, at September 30, 2009. One of these tenants was operating under bankruptcy protection at September 30, 2009 and the second had previously rejected our lease in bankruptcy court.

Note 9. Impairment Charges

We assess whether there are any indicators that the value of our real estate properties may be impaired or that their carrying value may not be recoverable. For real estate assets in which an impairment indicator is identified, we follow a two-step process to determine whether an asset is impaired and to determine the amount of the charge. First, we compare the carrying value of the property to the future net undiscounted cash flow that we expect the property will generate, including any estimated proceeds from the eventual sale of the property. If this amount is less than the carrying value, the property is considered to be impaired, and we then measure the loss

CPA^®:15 9/30/2009 10-Q — 16

Notes to Consolidated Financial Statements

as the excess of the carrying value of the property over the estimated fair value of the property, which is primarily determined using market information from outside sources such as recent comparable sales or broker quotes. If relevant market information is not available, we then perform a future net cash flow analysis discounted for inherent risk associated with each asset. For assets held for sale, we compare the estimated net sales price of the property to its carrying value and, if the net sales price is less than the property’s carrying value, we reduce the carrying value to the estimated sales price. We also review our direct financing leases to determine whether there has been an other-than-temporary decline in the current estimate of the residual value of the property. The residual value is our estimate of what we could realize upon the sale of the property at the end of the lease term. If this review indicates that a decline in residual value of a direct financing lease has occurred that is other-than-temporary, we recognize an impairment charge and revise the accounting for the direct financing lease to reflect a portion of the future cash flow from the lessee as a return of principal rather than as revenue. In addition, we evaluate equity investments in real estate to determine if there are any indicators that the value of our equity investment may be impaired and whether or not that impairment is other-than-temporary. To the extent impairment has occurred, the charge is measured as the excess of the carrying value of our investment over its estimated fair value.

The following table summarizes impairment charges recognized on our consolidated and unconsolidated real estate investments during the three and nine months ended September 30, 2009 and 2008 (in thousands):

Impairment Charges

		Three months ended September 30,								Nine months ended September 30,
		2009				2008				2009				2008
Net investments in properties		$	12,328			$	—			$	26,709			$	—
Net investment in direct financing lease			1,438				—				20,507				—
Total impairment charges included in expenses			13,766				—				47,216				—
Equity investments in real estate(a)			6,582				—				6,582				400
Total impairment charges included in income from continuing operations			20,348				—				53,798				400
Impairment charges included in discontinued operations			—				17,233				—				17,233
Total impairment charges		$	20,348			$	17,233			$	53,798			$	17,633

Impairment charges recognized during the three and nine months ended September 30, 2009 were as follows:

Shires Limited

During the three and nine months ended September 30, 2009, we recognized impairment charges of $0.6 million and $19.3 million, respectively, to reduce the carrying values of several properties leased to Shires Limited to their estimated fair values. This decline was considered other-than-temporary. In April 2009, Shires Limited filed for bankruptcy and subsequently vacated four of the six properties it leased from us in the United Kingdom and Ireland. As a result, beginning in July 2009, we suspended debt service payments on the related non-recourse mortgage loan and used proceeds of $3.6 million drawn from a letter of credit provided by Shires Limited to prepay a portion of the mortgage loan. In September 2009, we sold one of the properties to a third party for $1.0 million and recognized a loss on the sale of $2.1 million. We used the sale proceeds to prepay a further portion of the outstanding mortgage loan balance. In October 2009, we returned the remaining five properties to the lender in exchange for the lenders’ agreement to relieve of us of all mortgage obligations. These five properties and related mortgage loan had carrying values of $14.0 million and $13.5 million, respectively, at September 30, 2009. The impairment charges for the three months ended September 30, 2009 solely reflect the impact of foreign currency translation related to charges recognized during the first half of 2009. At September 30, 2009, substantially all of the properties were classified as Net investments in direct financing leases in the consolidated financial statements, with the exception of land at one of the properties that was classified as Net investments in properties.

Lindenmaier A.G.

During each of the three and nine months ended September 30, 2009, we recognized an impairment charge of $12.1 million related to two German properties where the tenant, Lindenmaier A.G., filed for bankruptcy in April 2009. In July 2009, we entered into an interim lease agreement with Lindenmaier that expires in February 2010 and that provides for substantially lower rental income than the original lease. We calculated the estimated fair value of these properties based on a discounted cash flow analysis. At September 30, 2009, these properties were classified as Net investments in properties in the consolidated financial statements.

CPA^®:15 9/30/2009 10-Q — 17

Notes to Consolidated Financial Statements

Innovate Holdings Limited

During the three and nine months ended September 30, 2009, we recognized impairment charges of $0.2 million and $7.2 million, respectively, related to a property in the United Kingdom formerly leased to Innovate Holdings Limited, which terminated its lease in bankruptcy court and vacated the property. Beginning in July 2009, we suspended debt service payments on the related non-recourse mortgage loan, and in October 2009 we returned the property to the lender in exchange for the lender’s agreement to relieve us of all mortgage obligations. The property and related mortgage loan had carrying values of $14.8 million and $14.7 million, respectively, at September 30, 2009. The impairment charges for the three months ended September 30, 2009 solely reflect the impact of foreign currency translation related to charges recognized during the first half of 2009. At September 30, 2009, this property was classified as Net investment in properties in the consolidated financial statements.

Advanced Accessory Systems LLC

During the nine months ended September 30, 2009, we recognized an impairment charge of $7.1 million on a domestic property formerly leased to Advanced Accessory Systems, LLC to reduce its carrying value of $11.3 million to its estimated fair value of $4.2 million. Advanced Accessory Systems entered into liquidation proceedings and vacated the property during the first half of 2009. We calculated the estimated fair value of this property using third party broker quotes. At September 30, 2009, this property was classified as Net investment in properties in the consolidated financial statements.

Wagon Automotive GmbH and Wagon Automotive Nagold GmbH

During each of the three and nine months ended September 30, 2009, we recognized other-than-temporary impairment charges of $3.8 million to reduce the carrying value of two ventures to the estimated fair value of the ventures’ underlying net assets. The ventures lease properties in Germany to Wagon Automotive GmbH and Wagon Automotive Nagold GmbH. Wagon Automotive GmbH terminated its lease in bankruptcy proceedings effective May 2009 but as of the date of this Report was paying rent, albeit at a significantly reduced rate. Wagon Automotive Nagold GmbH has not filed for bankruptcy, and while it briefly ceased making rent payments during the second quarter of 2009, it subsequently resumed paying rent substantially in accordance with the terms stated in its lease. In October 2009, the venture terminated the existing lease, and signed a new lease, with Wagon Automotive Nagold GmbH on substantially the same terms. These ventures are classified as Equity investments in real estate in the consolidated financial statements.

Görtz & Schiele GmbH & Co. and Goertz & Schiele Corp.

We recognized other-than-temporary impairment charges of $2.8 million during each of the three and nine months ended September 30, 2009 and of $0.4 million during the nine months ended September 30, 2008 to reduce the carrying value of two ventures to the estimated fair value of the ventures’ underlying net assets. The ventures lease properties in Germany to Görtz & Schiele GmbH & Co. and in the U.S. to Goertz & Schiele Corp., which filed for bankruptcy in November 2008 and September 2009, respectively. Both tenants ceased making rent payments during the second quarter of 2009, and as a result, the ventures suspended the debt service payments on the related mortgage loans beginning in July 2009. These ventures are classified as Equity investments in real estate in the consolidated financial statements.

Other

During the three and nine months ended September 30, 2009, we recognized impairment charges of $0.8 million and $1.5 million, respectively, on two domestic properties to reduce their carrying values to the estimated sale prices. During the third quarter of 2009, we entered into a contract to sell one of these properties for approximately $2.4 million, and we completed the sale in October 2009. At September 30, 2009, both properties were classified as Net investment in direct financing leases in the consolidated financial statements.

Impairment charges recognized during the three and nine months ended September 30, 2008 were as follows:

Thales S.A.

During each of the three and nine months ended September 30, 2008, we recognized impairment charges of $13.2 million, inclusive of amounts attributable to noncontrolling interests of $4.6 million, on two vacant French properties leased to Thales S.A. to reduce their carrying values to the estimated fair value. We sold these properties during the third quarter of 2009. The results of operations of these properties are included in Income (loss) from discontinued operations in the consolidated financial statements. See Note 13 for additional information on these properties.

Other

During each of the three and nine months ended September 30, 2008, we recognized impairment charges of $4.0 million on two domestic properties that were sold in December 2008 to reduce the properties’ carrying values to the expected sale price. This impairment charge is included in Income (loss) from discontinued operations in the consolidated financial statements; however, because this lease was previously accounted for as a Net investment direct financing lease, the remaining results of operations for these properties are included in Income from continuing operations prior to the date of the lease termination in September 2008. During the nine months ended September 30, 2008, we also recognized other-than-temporary impairment charges totaling $0.4 million as described in “Görtz & Schiele GmbH & Co. and Goertz & Schiele Corp.” above.

CPA^®:15 9/30/2009 10-Q — 18

Notes to Consolidated Financial Statements

Note 10. Advisor Settlement

In March 2008, the advisor entered into a settlement with the SEC with respect to all matters relating to a previously disclosed investigation. In connection with the settlement, we recognized income of $9.1 million, including interest, from the advisor. We received payment of this amount from the advisor in April 2008. The settlement is reflected as Advisor settlement in our Consolidated Statements of Operations. For additional information about the SEC investigation and the settlement, please refer to our 2008 Annual Report.

Note 11. Noncontrolling Interests

Noncontrolling interest is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. In December 2007, the FASB amended the existing authoritative guidance for accounting for noncontrolling interests in consolidated financial statements, which we adopted as required on January 1, 2009. The new guidance establishes and expands accounting and reporting standards for noncontrolling interests and, if applicable, for the deconsolidation of a subsidiary.

The following table presents a reconciliation of total equity, the equity attributable to our shareholders and the equity attributable to noncontrolling interests (in thousands):

						CPA®:15				Noncontrolling
		Total				Shareholders				Interests
Balance at January 1, 2008		$	1,361,928			$	1,061,897			$	300,031
Shares issued			35,588				35,588				—
Contributions			11,128				—				11,128
Net income			51,193				28,694				22,499
Distributions			(139,886	)			(88,153	)			(51,733	)
Change in other comprehensive loss			(44,724	)			(34,704	)			(10,020	)
Shares repurchased			(57,079	)			(57,079	)			—
Balance at January 1, 2009			1,218,148				946,243				271,905
Shares issued			24,935				24,935				—
Contributions			7,365				—				7,365
Net income			15,204				(6,699	)			21,903
Distributions			(98,330	)			(66,886	)			(31,444	)
Change in other comprehensive income			4,863				4,817				46
Shares repurchased			(38,020	)			(38,020	)			—
Balance at September 30, 2009		$	1,134,165			$	864,390			$	269,775

Note 12. Income Taxes

We have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. We believe we have operated, and we intend to continue to operate, in a manner that allows us to continue to qualify as a REIT. Under the REIT operating structure, we are permitted to deduct distributions paid to our shareholders and generally will not be required to pay U.S. federal income taxes. Accordingly, no provision has been made for U.S. federal income taxes in the consolidated financial statements.

We conduct business in the various states and municipalities within the U.S. and the European Union, and as a result, we file income tax returns in the U.S. federal jurisdiction and various state and certain foreign jurisdictions.

We account for uncertain tax positions in accordance with current authoritative accounting guidance. At September 30, 2009, we had unrecognized tax benefits of $0.8 million that, if recognized, would have a favorable impact on the effective income tax rate in future periods. We recognize interest and penalties related to uncertain tax positions in income tax expense. As of September 30, 2009, we had approximately $0.1 million of accrued interest related to uncertain tax positions. Our tax returns are subject to audit by taxing authorities. These audits can often take years to complete and settle. The tax years 2004 — 2008 remain open to examination by the major taxing jurisdictions to which we are subject.

CPA^®:15 9/30/2009 10-Q — 19

Notes to Consolidated Financial Statements

Note 13. Discontinued Operations

From time to time, tenants may vacate space due to lease buy-outs, elections not to renew their leases, company insolvencies or lease rejections in the bankruptcy process. In these cases, we assess whether we can obtain the highest value from the property by re-leasing or selling it. In addition, in certain cases, we may elect to sell a property that is occupied if selling the property yields the highest value. When it is appropriate to do so under current accounting guidance for the disposal of long-lived assets, we reclassify the property as an asset held for sale and the current and prior period results of operations of the property are reclassified as discontinued operations.

In July 2009, a venture that owned a portfolio of five French properties leased to Thales S.A. and in which we and an affiliate have 65% and 35% interests, respectively, and which we consolidate, sold four properties back to Thales for $46.6 million and recognized a gain on sale of $11.1 million, inclusive of the impact of impairment charges recognized during 2008 totaling $35.4 million. As required by the lender, we used the sales proceeds to repay a portion of the existing non-recourse mortgage loan on these properties, which had an outstanding balance of $74.7 million as of the date of sale. The remaining loan balance of $28.1 million is collateralized by the unsold fifth property. In connection with the repayment of a portion of the outstanding loan balance in accordance with the provisions of the loan, we were required to pay the lender additional interest charges of $2.0 million to reimburse certain breakage costs, which were expensed as incurred. All amounts are inclusive of the 35% interest in the venture owned by our affiliate as the noncontrolling interest partner.

In March 2009, we sold a property for proceeds of $4.1 million, net of selling costs, for a gain of $0.9 million. Concurrent with the sale, we used $2.7 million to defease a portion of the existing non-recourse mortgage obligation of $8.5 million that was collateralized by four properties (including the property sold) and incurred defeasance charges totaling $0.6 million.

In April 2008, we sold a property for proceeds of $1.1 million, net of selling costs, for a gain of $0.1 million. Concurrent with the sale, we used $0.8 million to partially defease the existing non-recourse mortgage obligation of $16.8 million that was collateralized by five properties (including the property sold). All costs associated with the partial defeasance were incurred by the buyer.

In September 2008, we agreed to terminate a lease at two domestic properties and in December 2008 we sold the properties to a third party for $6.8 million, net of selling costs. In connection with the sale, we incurred an impairment charge of $4.0 million on these properties to reduce their carrying values to the expected sale price. Because this lease was previously accounted for as a direct financing lease, results of operations for these properties are included in Income from continuing operations prior to the date of the lease termination in September 2008.

The results of operations for properties that are held for sale or have been sold are reflected in the consolidated financial statements as discontinued operations for all periods presented and are summarized as follows (in thousands):

		Three months ended September 30,								Nine months ended September 30,
		2009				2008				2009				2008
Revenues		$	405			$	2,940			$	5,641			$	8,829
Expenses			(2,753	)			(1,932	)			(5,963	)			(6,214	)
Impairment charges			—				(17,233	)			—				(17,233	)
Gain on sale of real estate			11,084				—				11,935				90
Income (loss) from discontinued operations		$	8,736			$	(16,225	)		$	11,613			$	(14,528	)

CPA^®:15 9/30/2009 10-Q — 20

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to provide the reader with information that will assist in understanding our financial statements and the reasons for changes in certain key components of our financial statements from period to period. MD&A also provides the reader with our perspective on our financial position and liquidity, as well as certain other factors that may affect our future results. Our MD&A should be read in conjunction with our 2008 Annual Report.

Business Overview

We are a publicly owned, non-actively traded REIT that invests in commercial properties leased to companies domestically and internationally. As a REIT, we are not subject to U.S. federal income taxation as long as we satisfy certain requirements, principally relating to the nature of our income, the level of our distributions and other factors. We earn revenue principally by leasing the properties we own to single corporate tenants, primarily on a triple-net lease basis, which requires the tenant to pay substantially all of the costs associated with operating and maintaining the property. Revenue is subject to fluctuation because of the timing of new lease transactions, lease terminations, lease expirations, contractual rent increases, tenant defaults and sales of properties. As of September 30, 2009, our portfolio was comprised of our full or partial ownership interests in 363 properties, substantially all of which were net leased to 79 tenants, and totaled approximately 30 million square feet (on a pro rata basis), with an occupancy rate of 97%. We were formed in 2001 and are managed by WPC and its subsidiaries.

Financial Highlights
(In thousands)

		Three months ended September 30,								Nine months ended September 30,
		2009				2008				2009				2008
Total revenues (a)		$	73,241			$	73,739			$	214,611			$	221,760
Net income (loss) attributable to CPA®:15 shareholders (b)			2,055				1,195				(6,699	)			40,982
Cash flow from operating activities (c)											113,044				146,701

Our quarterly cash distribution increased to $0.18 per share for the second quarter of 2009, or $0.72 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 the ability to generate cash flow necessary to meet our objectives of funding distributions to shareholders and increasing equity in our real estate.

Current Trends

While we have substantially invested the proceeds of our offerings, we expect to continue to participate in future investments with our affiliates to the extent we have funds available for investment.

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 crisis. In addition, our tenants continue to experience increased levels of financial distress, with five 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, and our response to those trends, is presented below.

CPA^®:15 9/30/2009 10-Q — 21

Financing Conditions

Current real estate financing markets remain weak as of the date of this Report, and refinancing maturing debt and obtaining financing on unencumbered properties, both domestically and internationally, remains more difficult than in periods prior to the current economic crisis. 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 refinanced maturing debt with new non-recourse mortgage financing of $34.2 million, inclusive of amounts attributable to noncontrolling interests of $15.1 million. The new financing has a weighted average interest rate and term of up to 6.2% and 7.9 years, respectively.

We have balloon payments totaling $5.8 million that will be due during the remainder of 2009, with an additional $28.9 million due during 2010 and $63.9 million due during 2011. The amounts due during 2010 and 2011 are inclusive of noncontrolling interests of $4.2 million and $9.2 million, respectively. In addition, our share of balloon payments due in 2011 on certain of our unconsolidated ventures is $21.3 million. We are actively seeking to refinance this debt but believe we have sufficient financing alternatives and/or cash resources to make these payments, if necessary. Our property level debt is generally non-recourse, which means that if we or the ventures in which we own investments default on a mortgage loan obligation, our exposure is limited to our equity invested in that property.

Corporate Defaults

Due to the current weak economic environment, we expect that some of our tenants will continue to experience financial stress and that some will become financially distressed. 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 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 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 that our lease revenue 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 of 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 will deteriorate as well.

We have several tenants that were in various stages of the bankruptcy process as of September 30, 2009, including two that had terminated their leases in bankruptcy or liquidation proceedings. During the nine months ended September 30, 2009, we incurred impairment charges totaling $53.8 million, substantially all of which relates to these tenants. Impairment charges do not necessarily reflect the true economic loss caused by the default of a tenant, which may be greater or less than the impairment amount. Several of these properties are vacant, and we anticipate that we will incur significant carrying costs until we are able to re-lease or sell them. As a result of several of these corporate defaults, during the third quarter of 2009 we suspended debt service on two mortgage loans, and in October 2009 we returned the related properties to the lenders in exchange for the lenders’ agreements to relieve of us of all mortgage obligations. These investments had an aggregate carrying value and outstanding mortgage loan balance of $28.8 million and $28.2 million, respectively, at September 30, 2009. In addition, two unconsolidated ventures in which we have a 50% interest suspended debt service on two mortgage loans with an aggregate outstanding balance of $23.4 million at September 30, 2009.

To mitigate these risks, we have assets that we believe are critically important to a tenant’s operations and have attempted to diversify our portfolio 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.

Net Asset Values

As a result of market conditions worsening during 2008, asset values declined across all asset types, and our estimated net asset valuation as of December 31, 2008 declined as well. Our estimated net asset valuation as of December 31, 2008 decreased to $11.50 per share, a 5.7% decline from our December 31, 2007 estimated net asset value of $12.20 per share. Our estimated net asset valuation, which is generally calculated on an annual basis, is based on a number of variables, including individual tenant credits, tenant defaults, lease terms, lending credit spreads, and foreign currency exchange rates. We do not control these variables and, as such, cannot predict how these variables will change in the future.

CPA^®:15 9/30/2009 10-Q — 22

Redemptions

We have experienced higher levels of share redemptions during 2008 and 2009, which consume cash. In general, our redemption plan provides that redemptions are limited to proceeds from our distribution reinvestment plan plus 1% of the operating cash flow from our previous fiscal year and is also limited to 5% of outstanding shares on a rolling basis. With the redemption requests for the second quarter of 2009 fulfilled, we reached the 5% limitation. In light of this limitation and our desire to preserve capital and liquidity, in June 2009 our board of directors approved the suspension of our redemption plan, effective for all redemption requests received subsequent to June 1, 2009, which was the deadline for all redemptions taking place in the second quarter of 2009, with limited exceptions in cases of death or qualifying disability. The suspension will remain in effect until our board of directors, in its discretion, determines to reinstate the redemption plan. See Financial Condition — Financing Activities below.

Inflation and Foreign Exchange Rates

Our leases 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 portfolio 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 second 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 30% and 36% of our annualized lease revenues for each of the nine month periods ended September 30, 2009 and 2008, respectively.

Results of Operations

Management’s evaluation of the sources of lease revenues is as follows (in thousands):

		Nine months ended September 30,
		2009				2008
Rental income		$	179,962			$	182,421
Interest income from direct financing leases			29,891				35,676
		$	209,853			$	218,097

CPA^®:15 9/30/2009 10-Q — 23

During the nine months ended September 30, 2009 and 2008, we earned net lease revenues (i.e., rental income and interest income from direct financing leases) from our direct ownership of real estate from the following lease obligations (in thousands):

		Nine months ended September 30,
Lessee		2009				2008
U-Haul Moving Partners, Inc. and Mercury Partners, L.P. (a)		$	22,379			$	21,329
Carrefour France, S.A. (a) (b)			15,923				16,581
OBI A.G. (a) (b)			12,158				13,373
Hellweg Die Profi-Baumarkte GmbH & Co. KG (Hellweg 1) (a) (b)			10,914				11,760
True Value Company (a)			10,871				11,077
LifeTime Fitness, Inc. (a)			10,650				10,650
Advanced Micro Devices (a)			7,450				7,450
Pohjola Non-Life Insurance Company (a) (b)			6,793				7,251
Universal Technical Institute			6,502				6,531
TietoEnator plc. (a) (b)			6,348				6,822
Police Prefecture, French Government (a) (b)			5,979				6,247
Médica — France, S.A. (a) (b)			5,169				5,519
Foster Wheeler, Inc. (c)			4,702				4,332
Information Resources, Inc. (a)			3,729				3,729
Compucom Systems, Inc. (a)			3,402				3,285
Other (a) (b)			76,884				82,161
		$	209,853			$	218,097