-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OIY3vWBf49MFSN2K+FQ7L+21RuxPpsrtDPlu1gmtrI22wtLH7dU4p89RhlCrVRz+ mj0JVZNujtk/+5wPP+YOGA== 0000950123-97-006633.txt : 19970812 0000950123-97-006633.hdr.sgml : 19970812 ACCESSION NUMBER: 0000950123-97-006633 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970811 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORPORATE PROPERTY ASSOCIATES CENTRAL INDEX KEY: 0000276280 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 942572215 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09174 FILM NUMBER: 97655766 BUSINESS ADDRESS: STREET 1: 50 ROCKFELLOW PALZA SECOND FLOOR CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2124921100 MAIL ADDRESS: STREET 1: 50 ROCKEFELLOW CENTER CITY: NEW YORK STATE: NY ZIP: 10020 10-Q 1 CORPORATE PROPERTY ASSOCIATES 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 1997 or [ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ________________ Commission file number 0-9174 CORPORATE PROPERTY ASSOCIATES (Exact name of registrant as specified in its charter)
CALIFORNIA 94-2572215 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 50 ROCKEFELLER PLAZA, NEW YORK, NEW YORK 10020 (Address of principal executive offices) (Zip Code)
(212) 492-1100 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) 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. /X/ Yes / / No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. / / Yes / / No 2 CORPORATE PROPERTY ASSOCIATES (a California limited partnership) INDEX
Page No. -------- PART I Item 1. - Financial Information* Balance Sheets, December 31, 1996 and June 30, 1997 2 Statements of Income for the three and six months ended June 30, 1996 and 1997 3 Statements of Cash Flows for the six months ended June 30, 1996 and 1997 4 Notes to Financial Statements 5-6 Item 2. - Management's Discussion of Operations 7 PART II Item 6. - Exhibits and Reports on Form 8-K 8 Signatures 9
*The summarized financial information contained herein is unaudited; however in the opinion of management, all adjustments necessary for a fair presentation of such financial information have been included. - 1 - 3 CORPORATE PROPERTY ASSOCIATES (a California limited partnership) PART I Item 1. - FINANCIAL INFORMATION BALANCE SHEETS
December 31, June 30, 1996 1997 ---- ---- (Note) Unaudited) ASSETS: Land and buildings, net of accumulated depreciation of $18,252,546 at December 31, 1996 and $18,705,454 at June 30, 1997 $ 14,851,807 $ 14,398,899 Net investment in direct financing leases 4,660,571 4,669,898 Real estate held for sale 434,339 434,339 Cash and cash equivalents 864,889 741,871 Accrued interest and rents receivable 397,309 538,425 Other assets 1,017,079 1,012,349 ------------ ------------ Total assets $ 22,225,994 $ 21,795,781 ============ ============ LIABILITIES: Mortgage notes payable $ 13,429,484 $ 12,591,452 Accrued interest payable 108,755 101,842 Accounts payable and accrued expenses 83,443 47,105 Prepaid rental income and security deposits 198,610 218,610 Accounts payable to affiliates 45,840 116,679 ------------ ------------ Total liabilities 13,866,132 13,075,688 ------------ ------------ PARTNERS' CAPITAL: General Partners (95,847) (92,245) Limited Partners (40,000 Limited Partnership Units issued and outstanding) 8,455,709 8,812,338 ------------ ------------ Total partners' capital 8,359,862 8,720,093 ------------ ------------ Total liabilities and partners' capital $ 22,225,994 $ 21,795,781 ============ ============
The accompanying notes are an integral part of the financial statements. Note: The balance sheet at December 31, 1996 has been derived from the audited financial statements at that date. - 2 - 4 CORPORATE PROPERTY ASSOCIATES (a California limited partnership) STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended June 30, 1996 June 30, 1997 June 30, 1996 June 30, 1997 ------------- ------------- ------------- ------------- Revenues: Rental income from operating leases $ 1,007,779 $ 985,144 $2,015,106 $1,976,750 Interest from direct financing leases 128,964 124,342 257,927 247,745 Other interest income 6,520 10,994 19,662 24,568 Other income 5,852 ----------- ----------- ---------- ---------- 1,143,263 1,120,480 2,292,695 2,254,915 ----------- ----------- ---------- ---------- Expenses: Interest on mortgages 331,183 269,488 686,898 517,560 Depreciation 240,626 189,995 510,100 452,908 General and administrative 48,926 59,645 103,470 126,088 Property expense 54,276 22,297 68,305 41,364 Amortization 15,550 22,702 22,320 39,892 ----------- ----------- ---------- ---------- 690,561 564,127 1,391,093 1,177,812 ----------- ----------- ---------- ---------- Income before extra- ordinary item 452,702 556,353 901,602 1,077,103 Extraordinary charge on extinguishment of debt (255,438) (255,438) ----------- ----------- ---------- ---------- Net income $ 197,264 $ 556,353 $ 646,164 $1,077,103 =========== =========== ========== ========== Net income allocated to General Partners $ 1,973 $ 5,563 $ 6,462 $ 10,771 =========== =========== ========== ========== Net income allocated to Limited Partners $ 195,291 $ 550,790 $ 639,702 $1,066,332 =========== =========== ========== ========== Net income per Unit (40,000 Limited Partnership Units): Income before extra- ordinary charge $ 11.20 $ 13.77 $ 22.31 $ 26.66 Extraordinary charge (6.32) (6.32) ----------- ----------- ---------- ---------- $ 4.88 $ 13.77 $ 15.99 $ 26.66 =========== =========== ========== ==========
The accompanying notes are an integral part of the financial statements. - 3 - 5 CORPORATE PROPERTY ASSOCIATES (a California limited partnership) STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, ------------------------ 1996 1997 ---- ---- Cash flows from operating activities: Net income $ 646,164 $ 1,077,103 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 532,420 492,800 Other noncash adjustments 213,298 (43,077) Net change in operating assets and liabilities (18,163) (100,297) ----------- ----------- Net cash provided by operating activities 1,373,719 1,426,529 ----------- ----------- Cash flows from financing activities: Distributions to partners (707,475) (711,515) Prepayment of mortgage payable (6,194,941) Proceeds from mortgage note payable 6,400,000 Deferred financing costs (158,149) Prepayment charges paid on extinguishment of debt (255,438) Payments of mortgage principal (673,430) (838,032) ----------- ----------- Net cash used in financing activities (1,598,433) (1,549,547) ----------- ----------- Net decrease in cash and cash equivalents (215,714) (123,018) Cash and cash equivalents, beginning of period 872,864 864,889 ----------- ----------- Cash and cash equivalents, end of period $ 657,150 $ 741,871 =========== =========== Supplemental disclosure of cash flows information: Interest paid $ 760,933 $ 524,473 =========== ===========
The accompanying notes are an integral part of the financial statements. - 4 - 6 CORPORATE PROPERTY ASSOCIATES (a California limited partnership) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) Note 1. Basis of Presentation: The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1996. Note 2. Distributions to Partners: Distributions declared and paid to partners during the six months ended June 30, 1997 are summarized as follows:
Quarter Ended General Partners Limited Partners Per Limited Partnership Unit ------------- ---------------- ---------------- ---------------------------- December 31, 1996 $3,556 $352,000 $8.80 ====== ======== ===== March 31, 1997 $3,559 $352,400 $8.81 ====== ======== =====
A distribution of $8.82 per Limited Partner Unit for the quarter ended June 30, 1997 was declared and paid in July 1997. Note 3. Transactions with Related Parties: For the three-month and six-month periods ended June 30, 1996, the Partnership incurred property management fees of $14,219 and $24,375, respectively and general and administrative expense reimbursements of $11,089 and $21,606, respectively, payable to an affiliate. For the three-month and six-month periods ended June 30, 1997, the Partnership incurred property management fees of $14,395 and $30,644, respectively and general and administrative expense reimbursements of $13,362 and $25,149, respectively, payable to an affiliate. The Partnership, in conjunction with certain affiliates, is a participant in a cost sharing agreement for the purpose of renting and occupying office space. Under the agreement, the Partnership pays its proportionate share of rent and other costs of occupancy. Net expenses incurred for the six months ended June 30, 1996 and 1997 were $16,296 and $15,640, respectively. - 5 - 7 CORPORATE PROPERTY ASSOCIATES (a California limited partnership) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED) Note 4. Industry Segment Information: The Partnership's operations consist of the investment in and the leasing of industrial and commercial real estate. For the six-month periods ended June 30, 1996 and 1997, the Partnership earned its total operating revenues (rental income plus interest income from financing leases) from the following lease obligors:
1996 % 1997 % ---- ---- ---- -- Prefinish Metals Incorporated $ 718,887 31% $ 725,643 33% The Gap, Inc. 612,997 27 612,997 28 IMO Industries, Inc. 423,371 19 385,250 17 Unisource Worldwide, Inc. 164,740 7 165,679 7 Broomfield Tech Center Corporation 150,068 7 150,068 7 Kobacker Stores, Inc. 151,770 7 133,658 6 Winn-Dixie Stores, Inc. 51,200 2 51,200 2 ---------- ---- ---------- --- $2,273,033 100% $2,224,495 100% ========== ==== ========== ====
Note 5. Real Estate Held for Sale: On September 17, 1996, the Partnership entered into a purchase and sale agreement for the sale of the Partnership's property in Louisville, Kentucky, leased to Winn-Dixie Stores, Inc. ("Winn-Dixie") for $1,100,000, less selling costs, which include a 5% brokerage commission. The sales transaction is scheduled to occur on August 11, 1997. The Winn-Dixie lease provides annual rentals of $102,000 and is scheduled to expire in December 1999. - 6 - 8 CORPORATE PROPERTY ASSOCIATES (a California limited partnership) Item 2. - MANAGEMENT'S DISCUSSION OF OPERATIONS Results of Operations: Excluding the effect of an extraordinary charge of $255,000 in the second quarter of 1996, income for the three-month and six-month periods ended June 30, 1997 increased by $104,000 and $176,000, respectively, as compared with the similar periods ended June 30, 1996. The increases were due to decreases in interest, property and depreciation expenses, and were partially offset by decreases in lease revenues and, to a lesser extent, increases in general and administrative expenses. The decreases in interest were due to the benefit realized on refinancing the mortgage loan on The Gap, Inc. property at a lower rate of interest in the second quarter of 1996 and the continuing amortization of mortgage loans on the Pre Finish Metals Incorporated and IMO Industries, Inc. properties. The Pre Finish Metals loan will fully amortize in 1998 and the IMO Industries loan is amortizing over ten years through 2002. The decreases in depreciation were due to the full depreciation of certain improvements which utilize component-method depreciation schedules. The decreases in property expense were due to charges incurred in 1996 for the writeoff of certain property-related receivables. The decreases in lease revenues were due to the termination of a lease with IMO Industries in February 1997 which provided annual rentals of $91,000 and a reduction in rentals from Kobacker Stores, Inc. subsequent to the sale of two Kobacker properties in the fourth quarter of 1996. Financial Condition: There has been no material change in the Partnership's condition since December 31, 1996. Cash flow from operations of $1,427,000 was sufficient to fund distributions of $712,000 and $715,000 of scheduled principal payment installments of $838,000. Scheduled amortization of mortgage principal will decrease substantially beginning in July 1998 when the loan on the Pre Finish Metals property will be paid off; principal paid on the Pre Finish Metal mortgage loan during the six-month period ended June 30, 1997 amounted to $420,000. Accordingly, Management believes that the Partnership can sustain the current distribution rate even though uses of cash currently exceed cash generated from operations. Annual operating cash flow is expected to decrease by $102,400 when the sale of the Winn-Dixie Stores, Inc. property in Louisville, Kentucky is completed. Proceeds from the proposed sale will be approximately $1,100,000, less selling costs. The sale is scheduled to occur on August 11, 1997. The Partnership released IMO Industries from its lease on a property in February 1997 and in exchange, IMO returned the property in an "as is" condition and paid $486,000 into an escrow account held by an affiliate of the Partnership. The escrow account is being used to fund repair costs and construction management fees. Any unused funds will be released to the Partnership. A second lease with IMO has an initial term which expires in September 2002. The General Partners are currently investigating ways to provide liquidity for limited partners on a tax-effective basis. - 7 - 9 CORPORATE PROPERTY ASSOCIATES (a California limited partnership) PART II Item 6. - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: None (b) Reports on Form 8-K: During the quarter ended June 30, 1997, the Partnership was not required to file any reports on Form 8-K. - 8 - 10 CORPORATE PROPERTY ASSOCIATES (a California limited partnership) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CORPORATE PROPERTY ASSOCIATES (a California limited partnership) By: W.P. CAREY & CO., INC. 08/08/97 By: /s/ Steven M. Berzin ---------------- ------------------------------------------ Date Steven M. Berzin Executive Vice President and Chief Financial Officer (Principal Financial Officer) 08/08/97 By: /s/ Claude Fernandez ---------------- ------------------------------------------ Date Claude Fernandez Executive Vice President and Chief Administrative Officer (Principal Accounting Officer) 08/08/97 By: /s/ Michael D. Roberts ---------------- ------------------------------------------ Date Michael D. Roberts First Vice President and Controller - 9 - EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 741,871 0 538,425 0 0 1,280,296 37,774,251 18,705,454 21,795,781 484,236 12,591,452 0 0 0 8,720,093 27,795,781 0 2,254,915 0 0 660,252 0 517,560 1,077,130 0 1,077,130 0 0 0 1,077,130 26.66 26.66
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