CWI Standard Marketing Kit

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CAREY WATERMARK INVESTORS INCORPORATED

Supplement No. 6 dated November 26, 2012to the Prospectus dated April 30, 2012

This Supplement No. 6 supersedes and replaces the following prior supplements to ourprospectus dated April 30, 2012: Supplement No. 1 dated May 15, 2012, Supplement No. 2dated June 22, 2012, Supplement No. 3 dated August 8, 2012, Supplement No. 4 dated

August 16, 2012 and Supplement No. 5 dated October 12, 2012. This Supplement No. 6 providesinformation that shall be deemed part of, and must be read in conjunction with, the prospectusdated April 30, 2012 and the additional information incorporated by reference herein anddescribed under the heading Incorporation by Reference in this Supplement No. 6. This

Supplement No. 6 updates, modifies or supersedes certain information contained in theprospectus sections as described below. Capitalized terms used in this Supplement No. 6 havethe same meanings in the prospectus dated April 30, 2012 unless otherwise stated herein.References to specific sections and pages in the prospectus dated April 30, 2012 shall also bedeemed to include related disclosures appearing elsewhere in the prospectus.

TABLE OF CONTENTS TO THIS SUPPLEMENT

Page

Extension of the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1Suitability Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1W. P. Carey Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1Investment Objectives, Procedures and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1Description of the Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2Our Offering and Issuances through our Distribution Reinvestment Plan . . . . . . . . . . . . . S-12The Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12Management Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-13Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14

Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15Unaudited Pro Forma Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-16Information Regarding Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-28Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-30Lodging Industry Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . S-41The Offering/Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-42

Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-42Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-42


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EXTENSION OF THE OFFERING

Our board of directors has extended our primary offering of up to $1.0 billion in shares ofcommon stock for one year to September 15, 2013, which is three years after the effective dateof such offering. If we file another registration statement prior to September 15, 2013 in orderto sell additional shares, we could continue to sell shares in the ongoing primary offering untilthe earlier of March 16, 2014 or the effective date of the subsequent registration statement. Ourboard of directors may terminate the primary offering at any time. It is unlikely that we willsuccessfully sell the full number of shares registered.

SUITABILITY STANDARDS

The paragraph regarding the New Hampshire special suitability standards as set forth inthe Suitability Standards section, which begins on page i of our prospectus, is deleted in itsentirety. The second paragraph in the Suitability Standards section is replaced with thefollowing information, which applies to residents of New Hampshire and is also incorporatedinto the order form:

In consideration of these factors, we have established suitability standards for initialstockholders in this offering and subsequent transferees. These suitability standards requirethat a purchaser of shares have either:

a gross annual income of at least $70,000 and a net worth (excluding the value of apurchasers home, furnishings and automobiles) of at least $70,000; or

a net worth of at least $250,000 (excluding the value of a purchaser s home, furnishingsand automobiles).

The following paragraph shall be inserted alphabetically in the Suitability Standardssection, which begins on page i of our prospectus.

North Dakota North Dakota investors must represent that, in addition to the standardslisted above, they have a net worth of at least ten times their investment in our offering.

W. P. CAREY INC.

On September 28, 2012, as part of the plan to reorganize its business operations,

W. P. Carey & Co. LLC, the parent of our advisor, merged with and into its wholly ownedsubsidiary, W. P. Carey Inc., with W. P. Carey Inc. as the surviving corporation succeeding to andcontinuing to operate the existing business of W. P. Carey & Co. LLC. All references toW. P. Carey & Co. LLC in our prospectus shall be replaced with references to W. P. Carey Inc.

INVESTMENT OBJECTIVES, PROCEDURES AND POLICIES

The following information replaces the fourth bullet contained in the ProspectusSummary Investment Objectives, Procedures and Policies section on page 3 of our prospectus,and the first two sentences of the paragraph below the heading A differentiated investmentapproach contained in the Investment Objectives, Procedures and Policies section on page 97 ofour prospectus.

A differentiated investment approach. We intend to make some of our investmentsthrough joint ventures with qualified owners and operators of properties. Indicative of thisstrategy are four of our first five investments, which are joint venture investments. Over hismany years as a real estate professional, our chief executive officer has developed a network ofrelationships with operating partners in a variety of sectors and geographies that may providesources of investment opportunities for us. In addition to expanding our investment sourcingnetwork, investing through joint ventures provides us and may continue to provide us withspecialized resources and capabilities.

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DESCRIPTION OF THE PROPERTIES

The following information replaces the discussion contained in the Prospectus Summary Description of the Properties section, which begins on page 6 of our prospectus.

In May 2011, we completed a joint venture investment with Ensemble Hotel Partners, LLC,or Ensemble, the owner of the leasehold interests in two waterfront hotel properties located inLong Beach, California: the Hotel Maya, a Doubletree by Hilton Hotel, a 194-room upscale

full-service urban resort, or the Hotel Maya; and the Residence Inn Long Beach Downtown, a178-suite extended stay hotel, or the Residence Inn. We acquired a 49% interest in this venture,or the Long Beach Venture, with assets totaling $43,642,044, which includes our allocable shareof the Long Beach Ventures debt and an acquisition fee of $1,085,206 to the advisor. The LongBeach Ventures total capitalization, including partner equity and debt, is approximately$88,000,000. Our investment was made in the form of a preferred equity interest that carries acumulative preferred dividend of 9.5% per year and is senior to Ensemble s equity interest. Thehotels are managed by third parties that receive management fees.

In September 2011, we completed a joint venture investment with Historic RestorationIncorporated, or HRI, the owner of the leasehold interests in the Chateau Bourbon Hotel, a251-room upscale full-service hotel located in the French Quarter of New Orleans, Louisiana,and an adjacent 300-stall parking garage. The property also includes approximately 20,000

square feet of leasable commercial space. Effective May 15, 2012, this hotel operates as theHyatt French Quarter Hotel. We acquired an 80.39% interest in the venture, or the HyattFrench Quarter Venture, with assets totaling $31,300,000, which includes our commitmentrelated to our allocable share of the Hyatt French Quarter Venture s debt. We paid anacquisition fee of $857,072 to the advisor. The Hyatt French Quarter Ventures expected projectfunding, including partner equity and debt, is approximately $45,700,000. Our investment wasmade in the form of a preferred equity interest that carries a cumulative preferred dividend of8.5% per year and is senior to HRIs equity interest. The hotel is managed by an affiliate of HRIthat receives management fees and certain fees associated with the renovation of the property.

On May 31, 2012, we completed the acquisition of the Hampton Inn Boston/Braintree fromNMG-Braintree, LLC, an unaffiliated third party, for $12,500,000. The 4-story, 103 room selectservice hotel is located in Braintree, Massachusetts. The hotel is managed by a third party thatwill receive management fees. We paid an acquisition fee of $383,941 to the advisor. In addition,as part of our franchise agreement with Hampton Inn, we have committed $1,869,419 forrenovations which are expected to be completed in early 2013.

On June 8, 2012, we acquired a controlling interest in the Hilton Garden Inn New OrleansFrench Quarter/CBD. The non-controlling interest is held by HRI Properties, the formerproperty owner and an unaffiliated third party. The 155-room hotel includes 1,800 square feet ofmeeting space, lobby restaurant, bar, business center, fitness center, rooftop deck and swimmingpool, guest laundry and onsite valet parking. We acquired an 87.56% controlling interest in thejoint venture for a capital contribution of $9,910,000. The hotel is managed by an affiliate ofHRI that receives management fees. We also paid an acquisition fee of $487,099 to the advisor.In addition, as part of our franchise agreement with Hilton Garden Inn, we have placed

$3,469,549 into lender-held escrow accounts primarily to fund our commitment for renovationswhich are expected to be completed by September 2013.

On July 9, 2012, we completed the acquisition of a 97.35% interest in Lake ArrowheadResort & Spa from Fulton Village Green Investors, LLC, an unaffiliated third party. The173-room lakefront resort is located in Lake Arrowhead, California and includes 20,000 squarefeet of indoor and outdoor meeting space, an 8,000 square foot spa, restaurant, lounge, businesscenter, fitness center, gift shop, outdoor pool, 270 surface parking spaces and a private beach

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and dock. We acquired our interest in the property for a cash investment of approximately$8,345,000. We also paid an acquisition fee of $633,872 to the advisor. Total funding for theventure, including debt but excluding the acquisition fee, is $26,700,000. A $3,700,000renovation of the property is expected to be completed in early 2013. The hotel is managed by athird-party that receives management fees.

In October 2012, we completed a joint venture investment with Arden-Marcus Perimeter

LLC (Arden Marcus), a joint venture between The Arden Group and Marcus Hotels & Resorts,a division of The Marcus Corporation, to acquire the fee simple interest in the Westin AtlantaPerimeter North Hotel. The property is a 372-room hotel and includes 20,000 square feet ofmeeting space, restaurant, lounge, business center, fitness center, gift shop, outdoor pool and338 parking spaces. It is located 15 miles from downtown Atlanta in the Perimeter sub-market.We acquired a 57% interest in the joint venture for a capital contribution of $12,400,000. Wealso paid an acquisition fee of $815,000 to our advisor, Carey Lodging Advisors, LLC. Ourinvestment was made in the form of a preferred equity interest that carries a cumulative,compound preferred return of 8.5% per year through December 31, 2014. The hotel is managedby a third party that receives management fees.

The following information replaces the discussion contained in the Description of theProperties section, which begins on page 109 of our prospectus.

Long Beach Venture

Acquisition

In May 2011, we completed a joint venture investment with Ensemble, the owner of theleasehold interests in two waterfront hotel properties located in Long Beach, California: theHotel Maya, a Doubletree by Hilton Hotel, a 194-room upscale full-service urban resort; and theResidence Inn Long Beach Downtown, a 178-suite extended stay hotel.

The hotels are managed by third parties that receive management fees. The occupancy,average daily rate, or ADR, and RevPAR of the two properties for 2007 through 2011 andyear-to-date through September 2012 are illustrated in the table below. The Hotel Mayaunderwent a comprehensive redevelopment from November 2008 to July 2009 and converted to

the Doubletree brand in November 2010. The Residence Inn opened in May 2009.

Hotel Maya Residence Inn

Year Occupancy(1) ADR(2) RevPAR(3) Occupancy(1) ADR(2) RevPAR(3)

2007 68.9% $130.10 $ 89.66 N/A N/A N/A 2008 58.2% $126.82 $ 73.82 N/A N/A N/A 2009 35.1% $126.98 $ 44.60 61.3% $121.19 $ 74.302010 59.0% $129.60 $ 76.48 66.6% $126.46 $ 84.272011 69.0% $141.21 $ 97.48 75.0% $130.10 $ 97.532012 (through September)(4) 77.1% $147.60 $113.79 80.4% $138.62 $111.42

(1) Occupancy is the percentage of rooms sold divided by rooms available.

(2) ADR is room revenues divided by rooms sold, displayed as the average rental rate for a single room.(3) RevPAR is room revenue divided by available rooms.

(4) The occupancy, ADR, and RevPAR through September may not be indicative of these measures for the full yeardue to seasonality generally experienced by hotel properties.

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Purchase Terms

We acquired a 49% interest in the Long Beach Venture for $42,556,838, which includes ourallocable share of the Long Beach Ventures debt. We also paid an acquisition fee of $1,085,206to the advisor. The Long Beach Ventures total capitalization, including partner equity and debt,is approximately $88,000,000. We have the right, subject to certain conditions, to increase ourownership in the Long Beach Venture to 50%. Our investment was made in the form of a

preferred equity interest that carries a cumulative preferred dividend of 9.5% per year and issenior to Ensembles equity interest.

Description of Leases

The ground leases for both hotels are with the City of Long Beach and expire onSeptember 30, 2072 in the case of the Hotel Maya and September 30, 2071 in the case of theResidence Inn. Both ground leases have been prepaid through their terms.

Description of Financing

Both properties are subject to existing mortgage financing. The financing on the HotelMaya, which was refinanced in June 2012, is a three-year $15,000,000 mortgage that bearsinterest at the London inter-bank offered rate (LIBOR) plus 2.5% per year, which was effectively

fixed at 4.5% through an interest rate cap, and has an initial maturity date of July 1, 2015, plusoptions for two 12-month extensions upon meeting certain conditions. The loan will be interestonly for the first three years and will be amortized over a 30-year period thereafter. Thefinancing on the Residence Inn is a 10-year $31,875,000 mortgage that bears interest at 7.25%per year and has a maturity date of September 1, 2017 and is being amortized over 30 years.For both properties, on maturity, the entire unpaid principal balances of the loans plus allaccrued interest thereon will be due and payable in full. Both financings can be prepaid at anytime with a fee.

The Long Beach Venture is a guarantor of the mortgage financing on the Hotel Maya.Ensemble has agreed to be responsible for, and has indemnified us regarding, any and allamounts due under the guarantee. Additionally, the investment was financed in part by a$4,000,000 loan from an affiliate of our advisor. We repaid this loan in full at maturity.

Description of Ensemble Real Estate

Ensemble has advised us that it is engaged in the development and management of hotelproperties. Ensemble is part of a group of companies, Ensemble Real Estate, that own, manageand lease in excess of 5.5 million square feet of commercial properties in Arizona, California,Nevada, Pennsylvania and Washington.

Description of the Property Operators

Both properties are managed by third parties. Ensemble is the managing member of ourjoint venture partner, LBHP-Ensemble Partners, LLC, and will continue as the manager of theHotel Maya. The Hotel Maya is franchised by Doubletree Franchise LLC under a long-term

franchise agreement and under which Doubletree Franchise is paid royalty and marketing feesbased on a percentage of gross room revenues. The Residence Inn will continue to be managedby Residence Inn by Marriott, LLC under a long-term management agreement and under whichResidence Inn by Marriott, LLC is paid a management fee based on a percentage of grossrevenues with the opportunity for an incentive fee based on achieving certain cash flow hurdles.We, Watermark Capital Partners and W. P. Carey are unrelated parties to the managers andfranchisors of the properties.

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Description of Proposed Renovations and Tax Costs

The Residence Inn opened in 2009 and has no significant renovations planned in the nearterm. The Hotel Maya has completed several renovation projects during our period of ownership,of which the most significant was to increase the room count by five through the development ofa new fitness center and the relocation of the administrative offices. At closing, $1,250,000 wasearmarked for capital improvements and funded through existing equity. To date, approximately

$870,000 has been expended in completing the various projects. Total real estate taxes for theHotel Maya and Residence Inn for fiscal year 2011 were approximately $238,058 and $270,834,respectively, both of which were levied at a rate of 1.2% of the assessed real estate value.

Hyatt French Quarter Venture

Acquisition

In September 2011, we completed a joint venture investment with HRI, the owner of theleasehold interests in the Chateau Bourbon Hotel, a 251-room upscale full-service hotel locatedin the French Quarter of New Orleans, Louisiana, and an adjacent 300-stall parking garage.The property also includes approximately 20,000 square feet of leasable commercial space.Effective May 15, 2012, this hotel operates as the Hyatt French Quarter Hotel.

The hotel is managed by an affiliate of HRI that will receive management fees and certainfees associated with the renovation of the property. The occupancy, ADR and RevPAR of theproperty for 2007 through 2011 and year-to-date through September 2012 are illustrated in thetable below.

Hyatt French Quarter Hotel

Year Occupancy(1) ADR(2) RevPAR(3)

2007 55.0% $139.01 $76.452008 49.1% $146.64 $72.042009 42.5% $128.42 $54.642010 71.9% $116.05 $83.472011 70.7% $124.32 $87.932012 (through September)(4) 58.2% $144.25 $84.02


(2) ADR is room revenues divided by rooms sold, displayed as the average rental rate for a single room.

(3) RevPAR is room revenue divided by available rooms.

(4) The occupancy, ADR, and RevPAR through September may not be indicative of these measures for the full yeardue to seasonality generally experienced by hotel properties and renovation displacement in the second quarter of2012.

Purchase Terms

We acquired an 80.39% interest in the Hyatt French Quarter Venture for approximately$31,300,000, which includes our commitment related to our allocable share of the Hyatt French

Quarter Ventures debt. We also paid an acquisition fee of $857,072 to the advisor. The HyattFrench Quarter Ventures expected project funding, including partner equity and debt, isapproximately $45,700,000. Our investment was made in the form of a preferred equity interestthat carries a cumulative preferred dividend of 8.5% per year and is senior to HRI s equityinterest.

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Description of Leases

The ground lease for the hotel and the parking garage lease are both with Canal StreetDevelopment Corporation, a nonprofit, public benefit corporation formed to stimulate businessdevelopment in the central business district of the City of New Orleans and the adaptive reuseand development of Canal Street for commercial purposes. The leases both expire onSeptember 2, 2110.


The property is subject to $23,800,000 of debt financing, consisting of a non-amortizing$22,800,000 mortgage with a fixed annual interest rate of 11.5% and maturity date ofSeptember 2, 2014. The Hyatt French Quarter Venture has also obtained a $1,000,000non-recourse unsecured community development loan with a fixed annual interest rate of 1.0%and maturity date of September 1, 2018. Additionally, the investment was financed in part by a$2,000,000 loan from an affiliate of our advisor which has been repaid in full.

Description of HRI Properties

HRI has advised us that it is a New Orleans based full-service real estate developmentcompany and a national leader in the adaptive reuse of historic structures. HRI has completed

over 50 large scale projects, including 30 in New Orleans, including 4,500 apartment units,3,500 hotel rooms, and 500,000 square feet of office and retail space.

Description of the Property Operator

HRI Lodging, Incorporated, an affiliate of HRI, will continue as the manager of theproperty. As of the date of this supplement, HRI Lodging manages a total of six hotels. Thehotel was formerly franchised by Wyndham Hotels and Resorts, LLC under a franchiseagreement whereby Wyndham Hotels and Resorts was paid royalty and marketing fees based ona percentage of gross room revenues. Upon the completion of a comprehensive renovation duringthe first half of 2012, the property was converted to the Hyatt brand through a franchiseagreement with an affiliate of Hyatt Hotels Corporation and the property was renamed theHyatt French Quarter Hotel. We, Watermark Capital Partners and W. P. Carey are unrelatedparties to the manager and franchisor of the property.

Description of Renovation and Tax Costs

The propertys comprehensive renovation was completed in May 2012, including all publicspaces, reconcepting and repositioning of the food and beverage spaces, selective mechanicalupgrades, corridors, and guestrooms. The current estimate of the total costs of the renovations,which will be funded through debt proceeds, is approximately $17,700,000. Total real estatetaxes for the Hyatt French Quarter Hotel for the year ended December 31, 2011 were $108,863which were levied at a rate of 2.2% of the assessed real estate value.

Hampton Inn Boston/Braintree

Acquisition

In May 2012, one of our wholly-owned subsidiaries completed the acquisition of theHampton Inn Boston/Braintree from NMG-Braintree, LLC, an unaffiliated third party. Thehotel, located in Braintree, Massachusetts, is a 4-story, 103 room select service hotel.

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The hotel is managed by a third party that receives management fees. The occupancy, ADR,and RevPAR of the property for 2007 through 2011 and year-to-date through September 2012are illustrated in the table below.

Hampton Inn


2007 72.7% $114.12 $ 82.95

2008 68.0% $122.15 $ 83.122009 63.2% $114.70 $ 72.482010 73.5% $117.62 $ 86.422011 75.5% $126.24 $ 95.372012 (through September)(4) 80.4% $137.63 $110.62





Purchase Terms

We acquired Hampton Inn Boston/Braintree for $12,500,000. Our total investment in theproperty was $15,512,640, inclusive of a $1,869,419 renovation that is expected be completed in2013, an acquisition fee of $383,941 to the advisor, other acquisition-related costs of $604,280and working capital of $155,000.


The property is subject to $9,800,000 of limited-recourse debt financing, with an annualinterest rate fixed at approximately 5.0% through an interest rate swap agreement andmaturity date of May 31, 2015. The loan is interest only for the first year and will be amortizedover a 25-year period thereafter.


The hotel is managed by StepStone Hospitality, a Rhode Island-based hotel managementcompany that manages urban, suburban and resort properties.

Description of Proposed Renovation and Tax Costs

A $1,869,419 renovation of the hotel, which is to be funded through debt proceeds, isexpected be completed by September 2013. A comprehensive renovation of all guest rooms andpublic spaces is planned to begin in early 2013. Total real estate taxes for the Hampton InnBoston/Braintree for the year ended December 31, 2011 were $130,927 which were levied at arate of 2.3% of the assessed real estate value.

Hilton Garden Inn Venture

Acquisition

In June 2012, we completed an investment with HRI, the owner of the Hilton Garden InnNew Orleans French Quarter/CBD. The 155-room hotel includes 1,800 square feet of meetingspace, lobby restaurant, bar, business center, fitness center, rooftop deck and swimming pool,

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guest laundry and onsite valet parking. The hotel is located on floors 11-18 of an 18-storystructure with 10 floors of parking below, which is owned and operated by a third party.

The hotel is managed by a third party that receives management fees. The occupancy, ADR,and RevPAR of the property for 2007 through 2011 and year-to-date through September 2012are illustrated in the table below.

Hilton Garden Inn


2007 56.9% $123.95 $ 70.512008 58.4% $132.61 $ 77.442009 61.9% $117.47 $ 72.672010 76.5% $121.24 $ 92.802011 81.8% $127.67 $104.482012 (through September)(4) 75.6% $126.15 $ 95.33





Purchase Terms

We acquired an 87.56% interest in the property for a capital contribution of $9,910,000. Wealso paid an acquisition fee of $487,099 to the advisor. Our investment was made in the form ofa preferred equity interest that carries a cumulative preferred dividend of 8.5% per year and issenior to HRI Properties equity interest.


The property is subject to $11,000,000 of non-recourse debt financing, with an annualinterest rate of 5.3% and maturity date of July 1, 2019. The loan will require monthly principaland interest payments beginning August 1, 2012 and will be amortized over a 30-year periodthereafter.

Description of HRI Properties

HRI has advised us that it is a New Orleans based full-service real estate developmentcompany and a national leader in the adaptive reuse of historic structures. HRI has completedover 50 large scale projects, including 30 in New Orleans, including 4,500 apartment units,3,500 hotel rooms, and 500,000 square feet of office and retail space.

Description of the Property Operators

HRI Lodging, Incorporated, an affiliate of HRI, will continue as the manager of the

property. As of the date of this Supplement, HRI Lodging manages a total of seven hotelsincluding the hotel described under Hyatt French Quarter Venture, above.

Description of Proposed Renovations and Tax Costs

A $3,469,549 renovation of the hotel, which is to be funded through debt proceeds, isexpected be completed by September 2013. All guestrooms and public spaces are expected to be

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renovated. Total real estate taxes for the year ended December 31, 2011 were $151,620 whichwere levied at a rate of 2.2% of the assessed real estate value.

Lake Arrowhead Resort & Spa Venture

Acquisition

On July 9, 2012, we acquired a controlling interest in Lake Arrowhead Resort & Spa from

the property owner Fulton Village Green Investors, LLC, an affiliate of Pacific Capital Investors.The 173-room lakefront resort includes 20,000 square feet of indoor and outdoor meeting space,an 8,000 square foot spa, restaurant, lounge, business center, fitness center, gift shop, outdoorpool, 270 surface parking spaces and a private beach and dock. The resort, located in LakeArrowhead, California, was built in 1982 and completely renovated and upgraded in 2007including the addition of a spa.

The property will be managed by a third party that receives management fees. Theoccupancy, ADR, and RevPAR of the property for 2007 through September 2012 are illustratedin the table below.

Arrowhead Resort & Spa


2007 54.7% $177.52 $ 97.092008 51.1% $190.31 $ 97.282009 47.3% $156.13 $ 73.792010 43.8% $164.08 $ 71.892011 48.5% $151.69 $ 73.512012 (through September)(4) 57.2% $185.14 $105.84





Purchase Terms

We acquired a 97.35% interest in Lake Arrowhead Resort & Spa from the property owner,Fulton Village Green Investors, LLC, an affiliate of Pacific Capital Investors, for a totalinvestment of approximately $25,900,000, which includes a cash investment of approximately$8,345,000 and our allocable share of the ventures debt which represents the carrying value ofthe debt at the reduced payoff amount as described below. We also paid an acquisition fee of$633,872 to the advisor. The Lake Arrowhead Resort & Spa Venture s total capitalization,including partner equity and debt, is approximately $26,700,000. Our investment was made inthe form of a preferred equity interest, under which we receive all cash flow after debt serviceand lender participation payments until we achieve a 25% internal rate of return. Thereafter, of

the remaining cash flow, we collect 35% and our partner collects 65%.


The property is subject to non-recourse debt financing, with a maturity date of July 1, 2015,that allows early settlement at any time prior to maturity upon 60 days notice with no penaltyat a reduced amount of $18,000,000 comprised of a reduced payoff of $16,000,000 and a lenderparticipation payment of up to $2,000,000, provided there is no uncured event of default under

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the loan agreement or the cash management agreement. The annual interest rate is 3% the firstyear, 4% the second year and 6% thereafter, and is calculated on the reduced payoff amount of$16,000,000. The non-discounted principal balance of the debt is $27,400,000.


The resort and spa is managed by Crescent Hotels & Resorts. Crescent Hotels & Resorts

has advised us that it is an owner, investor and third-party operator of hotels and resorts andcurrently operates approximately 62 hotels and resorts with approximately 13,000 rooms in 27states, Canada and the Caribbean.


The property will undergo a $3,700,000 renovation of guestrooms and public spaces, whichis anticipated to be completed in early 2013. These renovations will be funded through existingequity. Upon completion, the property will become a member of the Autograph Collection, adiverse collection of upper-upscale and luxury independent hotels sponsored by MarriottInternational. Total real estate taxes for the Lake Arrowhead Resort & Spa for the year endedDecember 31, 2011 were $270,247 which were levied at a rate of 1.4% of the assessed realestate value.

Atlanta Westin Venture

Acquisition

In October 2012, we completed a joint venture investment with Arden-MarcusPerimeter LLC (Arden Marcus), a joint venture between The Arden Group and MarcusHotels & Resorts, a division of The Marcus Corporation, to acquire the fee simple interest in theWestin Atlanta Perimeter North Hotel. The property is a 372-room hotel and includes 20,000square feet of meeting space, restaurant, lounge, business center, fitness center, gift shop,outdoor pool and 338 parking spaces. It is located 15 miles from downtown Atlanta in thePerimeter sub-market.

The hotel is managed by a third party that receives management fees. The occupancy, ADR,

and RevPAR of the property for 2007 through September 2012 are illustrated in the table below.

Westin Atlanta Perimeter North


2007 66.6% $139.82 $93.052008 61.5% $136.74 $84.132009 67.6% $100.48 $67.912010 69.8% $102.45 $71.512011 69.6% $108.94 $75.622012 (through September)(4) 78.7% $107.76 $84.75

(1) Occupancy is the percentage of room sold divided by rooms available.

(2) ADR is room revenues divided by rooms sold, displayed as the average rental rate for a single room.(3) RevPAR is room revenue divided by available rooms.

(4) The occupancy, ADP and RevPAR through September may not be indicative of these measures for the full year dueto seasonality generally experienced by hotel properties.

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Purchase Terms

We acquired a 57% interest in the joint venture for a capital contribution of $12,400,000.We also paid an acquisition fee of $815,000 to our advisor, Carey Lodging Advisors, LLC. Ourinvestment was made in the form of a preferred equity interest that carries a cumulative,compound preferred return of 8.5% per year through December 31, 2014.

Description of FinancingThe Atlanta Westin Venture obtained $35,000,000 of new, limited-recourse debt financing,

$28,000,000 of which was funded at closing and the remaining $7,000,000 will be funded duringthe renovation. The annual interest rate is 6.0% plus one-month LIBOR, with a 1% floor. Theinterest rate is fixed at 7.0% via an interest rate cap. The maturity date of the loan isOctober 2, 2015. The loan cannot be repaid for the first 24 months.

Description of Property Operator

Marcus Hotels & Resorts is a division of The Marcus Corporation (NYSE: MCS). With theaddition of the Westin Atlanta Perimeter North, the company owns and/or manages 20 hotels,resorts and other properties in 11 states. Marcus Hotels & Resorts provides expertise inmanagement, development and historic renovations. The companys portfolio includes a wide

variety of properties including city-center meeting hotels, upscale resorts and branded first-classhotels.


An estimated $14,400,000 renovation is planned for the hotel, which is to be funded by acombination of debt proceeds and additional capital by our partner, Arden Marcus. Therenovation of guest rooms and public spaces is anticipated to be completed in early 2014. Totaltaxes for the Westin Atlanta Perimeter North for the year ending December 31, 2012 are$605,014, which were levied at a rate of 3.8% of the assessed value.

Other Information

William H. Reynolds, Jr. is a member of our board of directors and of our investmentcommittee. He serves as the Senior Managing Director of MCS Capital, LLC, an affiliate ofMarcus Hotels. Mr. Reynolds did not participate in any discussions regarding the investment inthe Westin Atlanta Venture by our board or our investment committee.

Insurance

We believe that each of our properties are adequately covered by insurance.

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OUR OFFERING AND ISSUANCES THROUGH OUR DISTRIBUTIONREINVESTMENT PLAN

The following information replaces the discussion contained in the Prospectus Summary Our Offering and Issuances through our Distribution Reinvestment Plan section, which beginson page 7 of our prospectus.

We are offering up to $1,237,500,000 in shares of our common stock, including $237,500,000

in shares of common stock through our distribution reinvestment plan. As of September 30,2012, we have issued 10,868,802 shares of our common stock in connection with our offeringraising aggregate gross proceeds of $108,173,734, as follows:

Period Funds Raised

March 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,195,989April 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,922,406May 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,392,305June 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,185,924July 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,530,092August 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,055,272September 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,800,233October 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,862,731November 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,535,827December 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,646,114January 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,283,157February 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,929,460March 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,454,130April 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,528,339May 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,062,172June 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,717,609July 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,763,364August 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,490,916September 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,817,694

$108,173,734

Through September 30, 2012, we have also issued a total of 147,017 shares, raising gross

proceeds of approximately $1,396,659, pursuant to our distribution reinvestment plan. We mayissue up to 89,131,198 additional shares of our common stock in this offering and up to24,852,983 additional shares pursuant to our distribution reinvestment plan.

THE OFFERING

The following information replaces the third paragraph contained in the ProspectusSummary The Offering section, on page 13 of our prospectus.

We may sell our shares in the offering until September 15, 2013. If we file anotherregistration statement prior to September 15, 2013 in order to sell additional shares, we couldcontinue to sell shares in this offering until the earlier of March 16, 2014 or the effective date ofthe subsequent registration statement. If we file a subsequent registration statement, we could

continue offering shares with the same or different terms and conditions. Nothing in ourorganizational documents prohibits us from engaging in additional subsequent public offeringsof our stock. Our board of directors may terminate this offering at any time prior to thetermination date. It is unlikely that we will successfully sell the full number of sharesregistered. This offering must be registered in every state, the District of Columbia and PuertoRico in which we offer or sell shares. Generally, such registrations are for a period of one year.Thus, we may have to stop selling shares in any state, the District of Columbia and Puerto Ricoin which the registration is not renewed annually.

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MANAGEMENT COMPENSATION

The second paragraph and table in the Prospectus Summary Compensation section onpage 19 of our prospectus is superseded in its entirety by the following:

W. P. Carey, CLA, Carey Financial, Watermark, CWA and their respective affiliates earnedthe compensation and expense reimbursements shown below in connection with their servicesduring the nine months ended September 30, 2012 and the period from inception (March 10,

2008) to September 30, 2012 relating to our organization and offering stage and our acquisitionand operational stage. All fees and expenses that have been paid or accrued during such periodsare reflected in the table. We pay certain fees and expenses as they are incurred, while othersaccrue and will be paid in future periods, subject in some cases to achieving performancecriteria.

Nine Months Ended September 30, 2012Since Inception

Paid Accrued Total Total(a)

Organization and Offering StageOrganization and offering expenses(b) . . . $ 833,295 $ 402,777 $1,236,072 $ 2,178,650Selling commissions paid in connection

with the offering(c) . . . . . . . . . . . . . . . . 3,916,109 3,916,109 7,106,946

Dealer manager fee(d)

. . . . . . . . . . . . . . . 1,836,534 1,836,534 3,247,5726,585,938 402,777 6,988,715 12,533,168

Acquisition and Operational StageAcquisition fee . . . . . . . . . . . . . . . . . . . . 1,504,912 1,504,912 3,447,190Reimbursement of expenses incurred in

connection with CLAs provision ofservices to us . . . . . . . . . . . . . . . . . . . 282,598 196,704 479,302 1,038,580

Asset management fees . . . . . . . . . . . . . 298,111 60,336 358,447 529,141Special general partner profits interest

distributions to Carey WatermarkHoldings . . . . . . . . . . . . . . . . . . . . . . .

Payments to independent directors . . . . . 175,750 175,750 482,000

2,261,371 257,040 2,518,411 5,496,911

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,847,309 $ 659,817 $9,507,126 $18,030,079

(a) Represents total incurred during the period from inception (March 10, 2008) to September 30, 2012.

(b) Through September 30, 2012, the advisor has incurred organization and offering costs on our behalf ofapproximately $6,683,645. However were only obligated to pay $2,178,650 of these costs due to the 2% limitation ofoffering proceeds under the advisory agreement, of which $402,777 were payable to the advisor as of September 30,2012.

(c) These fees are initially paid to Carey Financial and then re-allowed to third-party broker-dealers.

(d) These fees are initially paid to Carey Financial, and Carey Financial may re-allow a portion of such fees to selecteddealers.

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SELECTED FINANCIAL DATA

This section supersedes the information under the caption Prospectus Summary SelectedFinancial Data, which begins on page 20 of our prospectus.

We are providing this information to aid you in your analysis of the financial aspects of thisoffering. The following table sets forth selected operating and balance sheet information on aconsolidated historical basis. This information is only a summary and should be read in

conjunction with the discussion in Managements Discussion and Analysis of FinancialCondition and Results of Operations and our consolidated financial statements and relatednotes to those financial statements included in our Annual Report on Form 10-K for the yearended December 31, 2011 and our Quarterly Report on Form 10-Q for the quarterly periodended September 30, 2012, which are incorporated herein by reference.

The historical operating and balance sheet information as of and for the nine months endedSeptember 30, 2012 and 2011 have been derived from the unaudited consolidated financialstatements included in our Quarterly Report on Form 10-Q for the quarterly period endedSeptember 30, 2012. The historical operating and balance sheet information as of and for theyears ended December 31, 2011 and 2010 have been derived from the audited consolidatedfinancial statements included in our Annual Report on Form 10-K for the year endedDecember 31, 2011. For the period from inception (March 10, 2008) through December 31, 2009,

we had no significant assets, cash flows, or results of operations and accordingly periods prior toJanuary 1, 2010 are not presented.

Nine Months Ended Nine Months Ended Year Ended Year EndedSeptember 30, 2012 September 30, 2011 December 31, 2011 December 31, 2010

Operating DataTotal revenues . . . . . . $ 6,777,874 $ $ $ Net income (loss) . . . . . 647,970 (1,366,850) (711,857) (297,551)

Add: Lossattributable tononcontrollinginterest . . . . . . . . . 872,384

Net income (loss)

attributable to CWIstockholders . . . . . . . 1,520,354 (1,366,850) (711,857) (297,551)

Income (loss) pershare(a): . . . . . . . . . . 0.20 (0.67) (0.27) (31.65)

Cash distributionsdeclared per share . . 0.4000 0.3000 0.4000

Balance Sheet DataTotal assets . . . . . . . . . $137,513,116 $35,535,775 $41,775,082 $ 332,989Equity investments in

real estate . . . . . . . . 32,820,570 33,530,972 33,465,628 Due to affiliates . . . . . 727,287 776,786 456,367 45,500Limited-recourse and

non-recourse debt . . . 36,683,081 Other InformationCash used in operating

activities . . . . . . . . . $ (987,258) $ (1,114,966) $ (1,091,232) $ (61,299)Cash distributions paid 1,888,608 259,283 605,778

(a) For purposes of determining the weighted average number of shares of common stock outstanding and income(loss) per share, historical amounts have been adjusted to treat stock distributions declared through September 30,2012 as if they were outstanding as of the beginning of the periods presented.

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DISTRIBUTIONS

This section supersedes the information under the caption Prospectus Summary Distributions, which begins on page 20 of our prospectus.

We make distributions on a quarterly basis. Aggregate quarterly distributions for the periodfrom inception (March 10, 2008) through September 30, 2012 were as follows:

Sources of Total DistributionsGAAP CashFlow fromDistributionsOperating Coverage Offering

For the Period Ended Total Cash(1) Reinvested Activities(2) %(3) Proceeds %

Cumulative throughSeptember 30, 2012 . . . . . . . . . . $3,716,407 $1,613,706 $2,102,701 $ 0% $3,716,407 100%

9/30/2012(4) . . . . . . . . . . . . . . . . . . . 1,222,024 515,985 706,039 (5) 0% 1,222,024 100%6/30/2012 . . . . . . . . . . . . . . . . . . . . 914,259 389,755 524,504 (5) 0% 914,259 100%3/31/2012 . . . . . . . . . . . . . . . . . . . . 533,211 234,977 298,234 (5) 0% 533,211 100%12/31/2011 . . . . . . . . . . . . . . . . . . . 437,738 197,046 240,692 (5) 0% 437,738 100%9/30/2011 . . . . . . . . . . . . . . . . . . . . 349,892 160,589 189,303 (5) 0% 349,892 100%6/30/2011 . . . . . . . . . . . . . . . . . . . . 218,375 97,220 121,155 (5) 0% 218,375 100%3/31/2011 . . . . . . . . . . . . . . . . . . . . 40,908 18,134 22,774 (5) 0% 40,908 100%

(1) Cash distributions were paid generally within fifteen days following the end of the stated period.

(2) Amounts shown represent the portion used for distributions only.

(3) Coverage represents amount of total distributions sourced by GAAP cash flow from operating activities.

(4) Distributions for this period excluded 42,661 shares of common stock with a par value of $0.001 distributed tostockholders.

(5) Our year-to-date GAAP cash flow for this period was negative. Therefore 100% of distributions for this period weresourced from offering proceeds.

For the nine months ended September 30, 2012, net income attributable to us was$1,520,354. Net income attributable to us was $510,946 and net loss attributable to us was$711,857 for the period from inception through September 30, 2012 and for the fiscal year endedDecember 31, 2011, respectively.

Our objectives are to generate sufficient cash flow over time to provide stockholders withincreasing distributions and to seek investments with potential for capital appreciationthroughout varying economic cycles. We have funded all of our cash distributions paid to dateusing net proceeds from this offering and we may do so in the future, particularly during theinitial phase of our operations before we have substantially invested the proceeds of thisoffering. In determining our distribution policy during the periods we are raising funds andinvesting capital, we place primary emphasis on projections of cash flow from operations,together with equity distributions in excess of equity income in real estate, from ourinvestments, rather than on historical results of operations (though these and other factors maybe a part of our consideration). In setting a distribution rate, we thus focus primarily onexpected returns from those investments we have already made, as well as our anticipated rateof future investment, to assess the sustainability of a particular distribution rate over time.

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UNAUDITED PRO FORMA FINANCIAL DATA

The following information replaces the discussion continued in the Unaudited Pro FormaFinancial Data section, which begins on page 112 of our prospectus.

The pro forma condensed consolidated financial statements of Carey Watermark InvestorsIncorporated (we, us, and our), which are unaudited, have been prepared based on ourhistorical financial statements. Our pro forma condensed consolidated statements of operations

for the year ended December 31, 2011 and nine months ended September 30, 2012 have beenprepared as if the significant investments and the related financings (noted herein) hadoccurred on January 1, 2011. In addition, adjustments have been recorded to reflect assetmanagement expense incurred related to each of these acquisitions. Pro forma adjustments areintended to reflect what the effect would have been, had we held our ownership interests as ofJanuary 1, 2011, less amounts which have been recorded in the historical consolidatedstatements of operations. In our opinion, all adjustments necessary to reflect the effects of theseinvestments have been made. No pro forma balance sheet has been presented as theinvestments and related financings included hereafter are reflected our historical balance sheetas of September 30, 2012. The pro forma condensed consolidated financial information should beread in conjunction with the historical consolidated financial statements and notes thereto ofour Annual Report on Form 10-K for the year ended December 31, 2011 and our Quarterly

Report on Form 10-Q for the nine months ended September 30, 2012.The pro forma information is not necessarily indicative of the financial condition or results

of operations had the investments occurred on January 1, 2011, nor are they necessarilyindicative of the financial position, cash flows or results of operations of future periods. No proforma balance sheet has been presented as the investments and related financings includedhereafter are reflected in our balance sheet as of September 30, 2012.

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PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2011

(Unaudited)

Pro Forma Adjustments

(Weighted2011 2012 AverageHistorical Acquistions Acquistions Shares) Pro Forma

Hotel RevenueRooms, net . . . . . . . . . . . . . . . . . $ $ $14,374,258 A $ 14,374,258Food and beverage . . . . . . . . . . . . 4,900,175 A 4,900,175Other hotel income . . . . . . . . . . . . 2,573,430 A 2,573,430

21,847,863 21,847,863Operating Expenses

Hotel ExpensesRooms . . . . . . . . . . . . . . . . . . . . . (4,094,619) B (4,094,619)Food and beverage . . . . . . . . . . . . (4,106,945) B (4,106,945)Repairs and maintenance . . . . . . . (1,250,443) B (1,250,443)Utilities . . . . . . . . . . . . . . . . . . . (1,008,983) B (1,008,983)

Sales and marketing . . . . . . . . . . . (1,878,136) B (1,878,136)Management fees . . . . . . . . . . . . . (536,913) B (536,913)General and administrative . . . . . . (2,620,118) B (2,620,118)Depreciation and amortization . . . . (2,263,664) B (2,263,664)Property taxes and insurance . . . . (874,943) B (874,943)Operating expenses . . . . . . . . . . . (1,790,348) B (1,790,348)

(20,425,112) (20,425,112)

Other Operating ExpensesAcquisition-related costs . . . . . . . . (498,472) 481,604 H (16,868)Management expenses . . . . . . . . . (487,574) (487,574)Corporate general and

administrative . . . . . . . . . . . . . (626,065) (626,065)Asset management fees . . . . . . . (170,694) (184,212) C (290,483) C (645,389)

(1,782,805) 297,392 (290,483) (1,775,897)

Other Income and (Expenses)Income from equity investments in real

estate . . . . . . . . . . . . . . . . . . . . . . 1,081,590 698,910 D 1,780,500Interest expense . . . . . . . . . . . . . . . . . (10,642) (1,854,330) E (1,864,972)

(Loss) income from operations beforeincome taxes . . . . . . . . . . . . . . . . . . (711,857) 996,302 (722,062) (437,618)

Provision for income taxes . . . . . . . . . . (293,224) F (293,224)

Net (loss) income . . . . . . . . . . . . . . . (711,857) 996,302 (1,015,286) (730,842)Loss attributable to noncontrolling

interests . . . . . . . . . . . . . . . . . . . . . 906,086 G 906,086

Net (loss) income attributable toCWI Stockholders . . . . . . . . . . . . . $ (711,857) $ 996,302 $ (109,200) $ 175,245

Basic and diluted net (loss) income

per share attributable to CWIStockholders . . . . . . . . . . . . . . . . $ (0.27) $ 0.03

Basic and Diluted WeightedAverage Shares Outstanding . . . . 2,630,328 4,260,056 J 6,890,384

The accompanying notes are an integral part of these pro forma condensed consolidatedfinancial statements.

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PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2012

(Unaudited)

Pro Forma

Adjustments(Weighted

2012 AverageHistorical Acquistions Shares) Pro Forma

Hotel RevenueRooms, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,627,249 $ 6,538,608 A $ 11,165,857Food and beverage . . . . . . . . . . . . . . . . . . . . . . . . 1,398,388 1,902,471 A 3,300,859Other hotel income . . . . . . . . . . . . . . . . . . . . . . . . 688,487 1,217,755 A 1,906,242

6,714,124 9,658,834 16,372,958Other Revenue

Other real estate income . . . . . . . . . . . . . . . . . . . . 63,750 63,750

6,777,874 9,658,834 16,436,708

Operating ExpensesHotel Expenses

Rooms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,254,008) (1,834,063) B (3,088,071)Food and beverage . . . . . . . . . . . . . . . . . . . . . . . . (1,097,496) (1,842,004) B (2,939,500)Repairs and maintenance . . . . . . . . . . . . . . . . . . . (315,910) (583,478) B (899,388)Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (373,422) (442,829) B (816,251)Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . (593,280) (986,351) B (1,579,631)Management fees . . . . . . . . . . . . . . . . . . . . . . . . . (103,341) (348,367) B (451,708)General and administrative . . . . . . . . . . . . . . . . . . (604,389) (1,516,685) B (2,121,074)Depreciation and amortization . . . . . . . . . . . . . . . . (621,021) (1,072,320) B (1,693,341)Property taxes and insurance . . . . . . . . . . . . . . . . . (312,592) (476,467) B (789,059)Operating expenses . . . . . . . . . . . . . . . . . . . . . . . (427,665) (663,902) B (1,091,567)

(5,703,124) (9,766,466) (15,469,590)

Other Operating ExpensesAcquisition-related expenses . . . . . . . . . . . . . . . . (2,825,925) 2,519,262 H (306,663)Management expenses . . . . . . . . . . . . . . . . . . . . (479,302) (479,302)Corporate general and administrative . . . . . . . . . . (1,187,488) (1,187,488)

Asset management fees . . . . . . . . . . . . . . . . . . . (358,447) (164,427) C (522,874)

(4,851,162) 2,354,835 (2,496,327)

Other Income and (Expenses)Income from equity investments in real estate . . . . . . . . 1,345,034 1,345,034Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,875 84,875Bargain purchase gain . . . . . . . . . . . . . . . . . . . . . . . . 3,809,441 (3,809,441) I Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (559,205) (876,155) E (1,435,360)

4,680,145 (4,685,596) (5,451)(Loss) income from operations before income taxes . . . . . 903,733 (2,438,393) (1,534,660)(Provision for) benefit from income taxes . . . . . . . . . . . . (255,763) 83,173 F (172,590)

Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . 647,970 (2,355,220) (1,707,250)Loss (income) attributable to noncontrolling interests . . . 872,384 (487,557) G 384,827

Net (loss) income attributable to CWI Stockholders . $ 1,520,354 $(2,842,777) $ (1,322,423)

Basic and diluted net loss per share attributable toCWI Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.20 $ (0.14)

Basic and Diluted Weighted Average SharesOutstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,508,313 1,693,080 J 9,201,393

The accompanying notes are an integral part of these pro forma condensed consolidatedfinancial statements.

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NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited pro forma condensed consolidated statements of operations ofCarey Watermark Investors Incorporated and its subsidiaries (collectively, the Company) arepresented as of and for the nine months ended September 30, 2012 and the year endedDecember 31, 2011 (the Pro Forma Periods), and includes certain pro forma adjustments toillustrate the estimated effect of the Companys acquisitions, described in Note 2, as if they hadoccurred as of January 1, 2011. The amounts included in the historical columns represent theCompanys historical operating results for the respective Pro Forma Periods presented.

The accompanying Unaudited Pro Forma Consolidated Financial Statements have beenprepared in accordance with Article 11 of Regulation S-X and do not include all of theinformation and note disclosures required by generally accepted accounting principles of theUnited States (GAAP). Pro forma financial information is intended to provide informationabout the continuing impact of a transaction by showing how a specific transaction or group of

transactions might have affected historical financial statements. Pro forma financial informationillustrates only the isolated and objectively measurable (based on historically determinedamounts) effects of a particular transaction, and excludes effects based on judgmental estimatesof how historical management practices and operating decisions may or may not have changedas a result of the transaction. Therefore, pro forma financial information does not includeinformation about the possible or expected impact of current actions taken by management inresponse to the pro forma transaction, as if management s actions were carried out in previousreporting periods.

This unaudited pro forma condensed consolidated financial information is presented forinformational purposes only and does not purport to be indicative of the Company s financialresults if the transactions reflected herein had occurred on January 1, 2011 or been in effectduring the Pro Forma Periods. In addition, this pro forma consolidated financial information

should not be viewed as indicative of the Company s expected financial results for futureperiods.

Note 2. Pro Forma Transactions

2011 Acquisitions

Long Beach Venture

On May 5, 2011, we completed a joint venture investment in Long Beach HotelProperties, LLC with LBHP-Ensemble Hotel Partners, LLC (Ensemble), the members of whichwere the then owners of the leasehold interests in two waterfront hotel properties in LongBeach, California: the Hotel Maya, a DoubleTree by Hilton Hotel (the Hotel Maya); and theResidence Inn Long Beach Downtown (the Residence Inn).

We acquired a 49% noncontrolling interest in this venture (the Long Beach Venture) withassets totaling $43,642,044, which includes our allocable share of the Long Beach Ventures debtof $22,851,003, a capital contribution of $19,699,086 and an acquisition fee of $1,085,206 paid tothe advisor as well as other transaction costs. On the date of our acquisition, the Long BeachVentures total capitalization, including partner equity and debt, was approximately$88,000,000. We have the right, subject to certain conditions, to increase our ownership in theLong Beach Venture to 50%. Our investment was financed in part by a $4,000,000 loan from a

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NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)

Note 2. Pro Forma Transactions (Continued)subsidiary of W. P. Carey, which was repaid in full at maturity on June 6, 2011. Our investmentwas made in the form of a preferred equity interest that carries a cumulative preferred dividendof 9.5% per year and is senior to Ensembles equity interest.

Both properties are subject to existing mortgage financing. The debt on the Hotel Maya,which was refinanced in June 2012, is a three-year $15,000,000 mortgage that bears interest atLIBOR plus 2.5% per year and has a maturity date of July 1, 2015. The interest rate on thisobligation is effectively capped at 4.5% through an interest rate hedge. The loan is interest onlyfor the first three years and has a 30-year amortization period thereafter. The financing on theResidence Inn is a 10-year, $31,875,000 mortgage that bears interest at 7.25% per year and hasa maturity date of September 1, 2017. The Long Beach Venture is a guarantor of the mortgagefinancing on the Hotel Maya. Ensemble has agreed to be responsible for, and has indemnified us

regarding, any and all amounts due under the guarantee.

Hyatt French Quarter Venture

On September 6, 2011, we completed a joint venture investment with HRI, the owner of theleasehold interests in the Chateau Bourbon Hotel, an upscale full-service hotel located in theFrench Quarter of New Orleans, Louisiana, and an adjacent parking garage. The property alsoincludes approximately 20,000 square feet of leasable commercial space. On May 15, 2012, thehotel began operating as the Hyatt French Quarter Hotel.

We acquired an approximate 80% noncontrolling interest in the joint venture (the HyattFrench Quarter Venture) with assets totaling $31,300,000, which includes our commitmentrelated to our allocable share of the Hyatt French Quarter Venture s debt and a capitalcontribution of $12,300,000. We paid an acquisition fee to our advisor in the amount of$857,072. The Hyatt French Quarter Ventures expected project funding, including partnerequity and debt, is approximately $45,700,000. Our investment was made in the form of apreferred equity interest that carries a cumulative preferred dividend of 8.5% per year and issenior to HRIs equity interest. The Hyatt French Quarter Venture is subject to joint controland, therefore, we use the equity method to account for this investment.

The property is subject to $23,800,000 of debt financing, consisting of a non-amortizing$22,800,000 mortgage with a fixed annual interest rate of 11.5% and maturity date ofSeptember 2, 2014 and a $1,000,000 non-recourse unsecured community development loan fromthe State of Louisiana with a fixed annual interest rate of 1.0% and maturity date ofSeptember 1, 2018. Our investment was financed in part by a $2,000,000 loan from a subsidiaryof W. P. Carey, which was repaid in full as of October 6, 2011.

2012 Acquisitions

Hampton Inn

On May 31, 2012, we completed the acquisition of the Hampton Inn (the Hampton Inn)from NMG-Braintree, LLC, an unaffiliated third party, for $12,500,000. The 4-story, 103-roomselect service hotel is located in Braintree, Massachusetts. The hotel is managed by StepStoneHospitality. In connection with this acquisition, we paid acquisition costs of $601,571.

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(Unaudited)

Note 2. Pro Forma Transactions (Continued)Acquisition costs of $601,571 are reflected in the historical statement of operations for the ninemonths ended September 30, 2012. We have reflected a pro forma adjustment, described below,to exclude these costs in our pro forma statements.

Hilton Garden Inn

On June 8, 2012, we obtained an 87.56% controlling interest in the Hilton Garden Inn NewOrleans French Quarter/CBD venture (the Hilton Garden Inn) for a capital contribution of$9,910,000. The noncontrolling interest is held by HRI Properties ( HRI), an unaffiliated thirdparty and the former property owner. The 155-room select service hotel is located in NewOrleans, Louisiana. The hotel is managed by HRI Lodging, Inc., an affiliate of HRI. Ourinvestment was made in the form of a preferred equity interest that carries a cumulative

preferred dividend of 8.5% per year and is senior to HRI s equity interest. The noncontrollinginterest was recorded at its fair value of $1,408,118. The venture, which we consolidate,acquired the property for $17,584,500 and paid acquisition costs of $786,027. Our pro forma lossand income attributable to noncontrolling interests would be approximately $678,676 and$276,315, for the year ended December 31, 2011 and the nine months ended September 30,2012, respectively, based upon our cumulative 8.5% preferred dividend on our initial capitalcontribution. Acquisition costs of $786,027 are reflected in the historical statement of operationsfor the nine months ended September 30, 2012. We have reflected a pro forma adjustment,described below, to exclude these costs in our pro forma statements.

Lake Arrowhead Resort

On July 9, 2012, we obtained a 97.35% controlling interest in the Lake Arrowhead Resort &

Spa (Lake Arrowhead) for a total investment of approximately $25,900,000, which includes acash investment of approximately $8,345,000 and our allocable share of the venture s debt. TheLake Arrowhead ventures total capitalization, including partner equity and debt, isapproximately $26,700,000. Our investment was made in the form of a preferred equity interest,under which we receive all cash flow after debt service and lender participation payments untilwe achieve a 25% internal rate of return. Thereafter, of the remaining cash flow, we collect 35%and our partner collects 65%. The noncontrolling interest is held by Fulton Village GreenInvestors, LLC, an unaffiliated third party and the former property owner. The 173-room resortis located in Lake Arrowhead, California. The hotel is managed by Crescent Hotels and Resorts.

Acquisition costs of $1,131,664 are reflected in the historical statement of operations for thenine months ended September 30, 2012. We have reflected a pro forma adjustment, describedbelow, to exclude these costs in our pro forma statements. Had the acquisition costs been

absorbed by the venture partner, the amount of losses absorbed by the venture partner duringthe periods presented would have been reduced up to the venture partners equity.

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(Unaudited)

Note 3. Pro Forma Adjustments

A. Hotel Revenue

Pro forma adjustments for hotel revenues related to our 2012 acquisitions are derived fromthe historical financial statements of each of our investments. The pro forma adjustments forthe nine months ended September 30, 2012 represent revenues earned from January 1, 2012 totheir respective acquisition dates and are as follows:

Year Ended December 31, 2011

HiltonHampton Inn Garden Inn Arrowhead Total

Rooms . . . . . . . . . . . . . . . . . . . . . . . . . $3,585,543 $5,911,216 $ 4,877,499 $14,374,258Food and beverage . . . . . . . . . . . . . . . . 112,275 620,418 4,167,482 4,900,175Other hotel income . . . . . . . . . . . . . . . . 951,534 1,621,896 2,573,430

$3,697,818 $7,483,168 $10,666,877 $21,847,863

Nine Months Ended September 30, 2012


Rooms . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,379,851 $3,194,670 $1,964,087 $6,538,608Food and beverage . . . . . . . . . . . . . . . . . . 18,186 235,717 1,648,568 1,902,471Other hotel income . . . . . . . . . . . . . . . . . . 40,067 278,115 899,573 1,217,755

$1,438,104 $3,708,502 $4,512,228 $9,658,834

B. Hotel Expenses

Pro forma adjustments for hotel expenses related to our 2012 acquisitions are derived fromthe historical financial statements of each of our investments. The pro forma adjustments for

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(Unaudited)

Note 3. Pro Forma Adjustments (Continued)the nine months ended September 30, 2012 represent expenses recognized from January 1, 2012to their respective acquisition dates and are as follows:

Year Ended December 31, 2011


Rooms . . . . . . . . . . . . . . . . . . . . . . . . $ (774,096) $(2,003,077) $ (1,317,446) $ (4,094,619)Food and beverage . . . . . . . . . . . . . . . (675,748) (3,431,197) (4,106,945)Repairs and maintenance . . . . . . . . . (174,814) (457,884) (617,745) (1,250,443)Utilities . . . . . . . . . . . . . . . . . . . . . . (238,866) (291,923) (478,194) (1,008,983)Sales and marketing . . . . . . . . . . . . . (466,422) (697,684) (714,030) (1,878,136)Management fees . . . . . . . . . . . . . . . (168,889) (145,903) (222,121) (536,913)

General and administrative . . . . . . . . (281,824) (718,420) (1,619,874) (2,620,118)Depreciation and amortization . . . . . . (552,862) (583,239) (1,127,563) (2,263,664)Property taxes and insurance . . . . . . . (161,406) (298,055) (415,482) (874,943)Operating expenses . . . . . . . . . . . . . . (123,780) (735,111) (931,457) (1,790,348)

$(2,942,959) $(6,607,044) $(10,875,109) $(20,425,112)

Nine Months Ended September 30, 2012


Rooms . . . . . . . . . . . . . . . . . . . . . . . . . $ (323,535) $ (893,493) $ (617,035) $(1,834,063)Food and beverage . . . . . . . . . . . . . . . . (294,596) (1,547,408) (1,842,004)Repairs and maintenance . . . . . . . . . . . (76,663) (206,646) (300,169) (583,478)

Utilities . . . . . . . . . . . . . . . . . . . . . . . . (79,268) (117,366) (246,195) (442,829)Sales and marketing . . . . . . . . . . . . . . . (195,463) (329,333) (461,555) (986,351)Management fees . . . . . . . . . . . . . . . . . (83,584) (150,019) (114,764) (348,367)General and administrative . . . . . . . . . . (156,419) (305,187) (1,055,079) (1,516,685)Depreciation and amortization . . . . . . . . (230,359) (251,997) (589,963) (1,072,319)Property taxes and insurance . . . . . . . . (61,966) (133,301) (281,201) (476,468)Operating expenses . . . . . . . . . . . . . . . . (42,428) (214,875) (406,599) (663,902)

$(1,249,685) $(2,896,813) $(5,619,968) $(9,766,466)

All pro forma adjustments for hotel expenses reflect expenses incurred by the propertyexcept for those related to depreciation and amortization. Pro forma adjustments reflectdepreciation and amortization of the acquired assets at fair value on a straight-line basis using

an estimated useful life not to exceed 40 years for building and building improvements, two toten years for furniture, fixtures and equipment and approximately 15 years for intangibleassets.

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(Unaudited)

Note 3. Pro Forma Adjustments (Continued)C. Transactions with the Advisor

We pay our advisor an annual asset management fee equal to 0.50% of the aggregateaverage market value of our investments. Pro forma adjustments for asset management fees arereflected in property expenses in the accompanying pro forma condensed consolidatedstatements of operations in order to reflect what the fee would have been had the investmentsbeen made on January 1, 2011. The pro forma adjustments for the Long Beach Venture andHyatt French Quarter Venture for the year ended December 31, 2011 represent incrementalasset management fees that would have been incurred in addition to asset management feespresented in the historical financial statements. The pro forma adjustments for Hampton Inn,Hilton Garden Inn and Lake Arrowhead for the nine months ended September 30, 2012represent incremental asset management fees that would have been incurred in addition to

asset management fees presented in the historical financial statements.

NineYear Ended Months EndedDecember 31, September 30,

2011 2012

Long Beach Venture . . . . . . . . . . . . . . . . . . . . . . $ (72,792) $ Hyatt French Quarter Venture . . . . . . . . . . . . . . (111,420)

$(184,212) $

Hampton Inn . . . . . . . . . . . . . . . . . . . . . . . . . . . (73,862) (30,994)Hilton Garden Inn . . . . . . . . . . . . . . . . . . . . . . . (94,983) (41,423)Arrowhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (121,638) (92,010)

$(290,483) $(164,427)

D. Income from Equity Investments in Real Estate

Earnings for our equity method investments are recognized in accordance with eachrespective investment agreement and, where applicable, based upon the allocation of theinvestments net assets at book value as if the investment were hypothetically liquidated at theend of each reporting period. Under the conventional approach, an investor applies itspercentage ownership interest to the ventures net income to determine the investors share ofthe earnings or losses of the venture. This approach is difficult to use if the venture s capitalstructure gives different rights and priorities to its investors as it is difficult to describe aninvestors interest in a venture simply as a specified percentage. As we have priority return onour investments, we follow the hypothetical liquidation at book value method in determining our

share of the ventures earnings or losses for the reporting period as this method better reflectsour claim on the ventures book value at the end of each reporting period. Due to our preferredinterests, we are not responsible and will not reflect losses to the extent our partners continueto have equity in the investments.

Based on the hypothetical liquidation at book value method, our pro forma equity inearnings in the Long Beach Venture would have been $735,000 for the year ended December 31,

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(Unaudited)

Note 3. Pro Forma Adjustments (Continued)2011. Our pro forma equity in earnings in the New Orleans Venture would have beenapproximately $1,045,500 for the year ended December 31, 2011 based upon our cumulative8.5% preferred dividend on our cash contribution. The historical statements of operations for theyear ended December 31, 2011 includes $735,000 and $346,590 related to equity earnings fromthe Long Beach Venture and Hyatt French Quarter Venture, respectively, since their acquisitiondates. Accordingly, we have included a pro forma adjustment of $698,910 representing theincremental difference related to the Hyatt French Quarter Venture.

E. Interest Expense

We acquired the Hampton Inn property through a wholly-owned subsidiary and obtained amortgage in the amount of up to $9,800,000, of which $7,930,581 was drawn upon purchase.

The mortgage has an initial 36-month term plus options for two 12-month extensions and amaturity date of May 31, 2015. The interest rate is effectively fixed at 5.0% for the first36 months. The loan is interest-only for the first 12 months and has a 25-year amortizationperiod thereafter. We have reflected pro forma adjustments of $402,036 and $166,322 for theyear ended December 31, 2011 and the nine months ended September 30, 2012, respectively, inorder to reflect what the expense would have been had the investment and related financingbeen made on January 1, 2011.

We acquired the Hilton Garden Inn property through a wholly-owned subsidiary andobtained a non-recourse mortgage in the amount of $11,000,000. The mortgage requires monthlyprincipal and interest payments beginning August 1, 2012 and has a 30-year amortizationperiod thereafter. The interest rate is fixed at 5.3% and the maturity date is July 1, 2019. Wehave reflected pro forma adjustments of $587,627 and $258,547 for the year ended December 31,

2011 and the nine months ended September 30, 2012, respectively, in order to reflect what theexpense would have been had the investment and related financing been made on January 1,2011.

We acquired the Lake Arrowhead Resort property through a wholly-owned subsidiary,subject to a mortgage, which we assumed. The mortgage has a 36-month term and a maturitydate of July 1, 2015. The mortgage agreement allows early settlement at any time prior tomaturity upon 60 days notice with no penalty at a discounted amount of up to $18,000,000comprised of a discounted payoff of $16,000,000 and a lender participation payment of up to$2,000,000, provided there is no uncured event of default under the loan agreement. The loan isinterest-only with an interest rate of 3.0% in year 1, 4.0% in year 2 and 6.0% in year 3. Uponassumption of the mortgage, we recorded a fair market value adjustment of $270,000. We havereflected pro forma adjustments of $864,667 and $451,285 for the year ended December 31, 2011

and the nine months ended September 30, 2012, respectively, in order to reflect what theexpense would have been, using the effective interest method, had the investment and relatedfinancing been made on January 1, 2011.

The combined pro forma adjustments to interest expense described above were $1,854,330and $876,155 for the year ended December 31, 2011 and the nine months ended September 30,2012, respectively.

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(Unaudited)

Note 3. Pro Forma Adjustments (Continued)F. (Provision For) Benefit From Income Taxes

We have reflected pro forma adjustments related to each of our investments based uponestimated effective tax rates for each investment which take into account the fact that certainactivities are taxable and other activities are pass-through items for income tax purposes. Thesepro forma adjustments reflect what the income tax provisions would have been had theinvestments been made on January 1, 2011. The pro forma adjustments for the nine monthsended September 30, 2012 represent incremental tax expense that would have been incurred inaddition to income tax presented in the historical financial statements.

NineYear Ended Months EndedDecember 31, September 30,

2011 2012Hampton Inn . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (79,704) $ (31,349)Hilton Garden Inn . . . . . . . . . . . . . . . . . . . . . . . (69,823) (129,663)Arrowhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (143,697) 244,185

$(293,224) $ 83,173

G. Loss Attributable to Noncontrolling Interests

Our pro forma adjustments to loss and income attributable to noncontrolling interests forour Hilton Garden Inn investment would have been approximately $678,676 and $260,147 forthe year ended December 31, 2011 and the nine months ended September 30, 2012, respectively,based upon our cumulative 8.5% preferred dividend on our initial capital contribution.

Our pro forma adjustments to loss and income attributable to noncontrolling interests forour Lake Arrowhead investment would have been approximately $227,410 and $227,410, for theyear ended December 31, 2011 and the nine months ended September 30, 2012, respectively,based upon our 12.0% preferred equity interest calculation. Noncontrolling interest is notrequired to fund any losses upon depletion of its initial equity.

The combined pro forma adjustments to loss attributable to noncontrolling interestdescribed above were $906,086 and $(487,557) for the year ended December 31, 2011 and thenine months ended September 30, 2012, respectively.

H. Acquisition-related Expenses

Acquisition costs of $481,604 related to our Long Beach Venture and Hyatt French QuarterVenture are reflected in the historical statement of operations for the year ended December 31,

2011. We have reflected a pro forma adjustment to exclude these costs in our pro formastatement of operations for the year ended December 31, 2011.

Acquisition costs of $601,571, $786,027 and $1,131,664 related to our Hampton Inn, HiltonGarden Inn and Lake Arrowhead investments, respectively, are reflected in the historicalstatement of operations for the nine months ended September 30, 2012. We have reflected a pro

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(Unaudited)

Note 3. Pro Forma Adjustments (Continued)forma adjustment to exclude the total costs of $2,519,262 in our pro forma statement ofoperations for the nine months ended September 30, 2012.

I. Bargain Purchase Gain

A bargain purchase gain of $3,809,441 is reflected in the historical statement of operationsfor the nine months ended September 30, 2012 related to our acquisition of the Lake ArrowheadResort. We have reflected a pro forma adjustment to exclude this transaction-related gain in ourpro forma statements of operations for the nine months ended September 30, 2012, as this isnot expected to have a recurring impact on us.

J. Weighted Average Shares

The pro forma weighted average shares outstanding were determined as if the number ofshares required to raise the funds used for each acquisition included in these pro formafinancial statements were issued on January 1, 2011.

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INFORMATION REGARDING DILUTION

The following section updates the net tangible book value per share in the discussioncontained in the Prospectus Summary Information Regarding Dilution section which beginson page 22 of our prospectus.

As of September 30, 2012, our net tangible book value per share was $8.53. The offeringprice of shares under our primary offering (ignoring purchase price discounts for certain

categories of purchasers) at September 30, 2012 was $10.00 per share. The difference betweenthe net tangible book value per share and the offering price represents immediate dilution fromthe offering price absorbed by investors.

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RISK FACTORS

The following information replaces the risk factor caption From inception throughDecember 31, 2011, our cumulative distributions of $1,046,913 were sourced 100% from offeringproceeds. Future distributions may also be paid from offering proceeds, borrowings and othersources, without limitation, particularly during the period before we have substantially investedthe remaining net proceeds from this offering, which would reduce amounts available for the

acquisition of properties or require us to repay such borrowings, both of which could reduce youroverall return. in the Risk Factors Risks Related to This Offering section beginning onpage 26 of our prospectus.

For the period from inception through September 30, 2012, for the fiscal year endedDecember 31, 2011, and for the nine months ended September 30, 2012, our cumulativedistributions of $3,716,450, $1,046,913, and $2,669,537, respectively, were sourced 100%from offering proceeds. Future distributions may also be paid from offering proceeds,borrowings and other sources, without limitation, particularly during the period beforewe have substantially invested the remaining net proceeds from this offering, whichwould reduce amounts available for the acquisition of properties or require us to repaysuch borrowings, both of which could reduce your overall return.

The following information replaces the first sentence in the risk factor under the caption The

interest of future investors in our common stock may be diluted as a result of our stockdistribution. in the Risk Factors Risks Related to This Offering section on page 27 of ourprospectus.

Our board of directors has authorized a daily stock distribution on the outstanding sharesof all common stockholders fo

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