W. P. Carey announces proposed acquisition of CPA:15 and conversion to REIT (US/UK)

Investment firm W. P. Carey & Co. LLC ("W. P. Carey") announced that its Board of Directors has approved its conversion to a real estate investment trust ("REIT") and that its Board of Directors and the Board of Directors of its publicly held, non-traded REIT affiliate, Corporate Property Associates 15 Incorporated ("CPA®:15"), have unanimously approved a definitive merger agreement pursuant to which W. P. Carey will acquire CPA®:15 immediately following the REIT conversion.

Under the terms of the proposed merger, CPA®:15 stockholders will receive $1.25 in cash and 0.2326 of a share of W. P. Carey common stock for each CPA®:15 share at closing. The transaction values CPA®:15 at $2.6 billion, including the assumption of CPA®:15 debt of $1.2 billion, as of December 31, 2011. The new REIT, to be named W. P. Carey Inc., will continue to trade on the New York Stock Exchange under the symbol WPC (NYSE: WPC). The conversion to a REIT is subject to the approval of W. P. Carey shareholders and the merger is subject to approval of both the shareholders of W. P. Carey and the stockholders of CPA®:15.

Following the merger, W. P. Carey Inc. is expected to have a total equity market capitalization of approximately $3 billion, total market capitalization of $5 billion and a portfolio of 43 million ft² (4 mln. m²) of corporate real estate leased to 135 companies around the world. W. P. Carey Inc. will continue to manage the firm's Corporate Property Associates (CPA®) series of publicly held, non-traded REITs.

The proposed merger is expected to be accretive to both AFFO per share and CAD per share for W. P. Carey. W. P. Carey currently anticipates that, following the transactions, the new REIT will increase its annual dividend to $2.60 per share to maintain compliance with REIT tax requirements.

W. P. Carey believes that the benefits of the proposed merger and conversion to REIT status include:

• Significant increase in W. P. Carey Inc.'s scale and real estate under ownership
• Increased financial strength and flexibility to access capital for growth
• Enhanced cash available for continued dividend growth
• Simplified tax reporting for shareholders
• Further diversification of its shareholder base over time, including from active and passive REIT investors

W. P. Carey President and CEO Trevor Bond commented, "We believe that the proposed merger and REIT conversion are in the best interests of both W. P. Carey and CPA®:15 investors. In addition to providing liquidity for CPA®:15 investors, this transaction will enhance our strength and flexibility, with a larger balance sheet and more diversified portfolio. Over the long-term, we believe it will allow us to capitalize on new opportunities that are consistent with our established investment parameters and our overall business strategy of growing assets under ownership and enhancing shareholder value."

BofA Merrill Lynch is acting as financial advisor to W. P. Carey and DLA Piper US LLP is acting as the legal advisor to W. P. Carey. Deutsche Bank is acting as financial advisor to CPA®:15 and Clifford Chance LLP is acting as legal advisor to CPA®:15.

A joint proxy statement/prospectus will be filed on Form S-4 with the Securities and Exchange Commission, which will describe the proposed merger and REIT conversion. Completion of the transactions is subject to receipt of all third-party consents as well as the approval of shareholders and stockholders of both companies and satisfaction of customary closing conditions. The transactions are currently expected to close by the third quarter of 2012, although there can be no assurance of such timing.

Source: Pelham Bell Pottinger

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