-----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, EfMfDYGJXZvp9eib/Q5tdbifYJTHz653zNp6TUkAPvLR3tbJ+5JZPfE7sSpkLBr2 J2Gq+iTS9txYeBJzzXyKiA== 0000950130-95-002363.txt : 19951201 0000950130-95-002363.hdr.sgml : 19951201 ACCESSION NUMBER: 0000950130-95-002363 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951109 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORPORATE PROPERTY ASSOCIATES CENTRAL INDEX KEY: 0000276280 STANDARD INDUSTRIAL CLASSIFICATION: 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: 95589039 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 FORM 10-Q FOR 3RD QUARTER 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 SEPTEMBER 30, 1995 --------------------------------------------- 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 (I.R.S. Employer Identification No.) incorporation or organization) 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 CORPORATE PROPERTY ASSOCIATES (a California limited partnership) INDEX Page No. -------- PART I ------ Item 1. - Financial Information* Balance Sheets, December 31, 1994 and September 30, 1995 2 Statements of Income for the three and nine months ended September 30, 1994 and 1995 3 Statements of Cash Flows for the nine months ended September 30, 1994 and 1995 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- CORPORATE PROPERTY ASSOCIATES (a California limited partnership) PART I ------ Item 1. - FINANCIAL INFORMATION ------------------------------- BALANCE SHEETS
December 31, SEPTEMBER 30, 1994 1995 ------------- -------------- (Note) (UNAUDITED) ASSETS: Land and buildings, net of accumulated depreciation of $16,860,783 at December 31, 1994 and $17,681,067 at September 30, 1995 $17,472,208 $16,651,924 Net investment in direct financing leases 4,919,462 4,892,114 Cash and cash equivalents 937,631 826,118 Accrued interest and rents receivable 366,095 379,244 Other assets 722,240 896,480 ----------- ----------- Total assets $24,417,636 $23,645,880 =========== =========== LIABILITIES: Mortgage notes payable $16,306,218 $15,230,383 Accrued interest payable 202,920 193,512 Accounts payable and accrued expenses 181,118 76,353 Prepaid rental income and security deposits 198,611 198,146 Accounts payable to affiliates 31,234 ----------- ----------- Total liabilities 16,888,867 15,729,628 ----------- ----------- PARTNERS' CAPITAL: General Partners (103,980) (100,105) Limited Partners (40,000 Limited Partnership Units issued and outstanding) 7,632,749 8,016,357 ----------- ----------- Total partners' capital 7,528,769 7,916,252 ----------- ----------- Total liabilities and partners' capital $24,417,636 $23,645,880 =========== ===========
The accompanying notes are an integral part of the financial statements. Note: The balance sheet at December 31, 1994 has been derived from the audited financial statements at that date. -2- CORPORATE PROPERTY ASSOCIATES (a California limited partnership) STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Nine Months Ended SEPTEMBER 30, 1994 SEPTEMBER 30, 1995 SEPTEMBER 30, 1994 SEPTEMBER 30, 1995 ------------------ ------------------ ------------------ ------------------ Revenues: Rental income from operating leases $ 978,854 $ 997,568 $2,918,227 $2,996,254 Interest from direct financing leases 129,620 140,050 388,862 397,132 Other interest income 13,779 15,405 37,133 51,052 Other income 161,038 ---------- ---------- ---------- ---------- 1,122,253 1,153,023 3,344,222 3,605,476 ---------- ---------- ---------- ---------- Expenses: Interest on mortgages 397,095 373,014 1,200,996 1,156,127 Depreciation 276,695 270,387 830,040 820,284 General and administrative 55,833 44,258 165,109 182,844 Property expense 153,670 19,706 354,805 70,053 Amortization 3,545 6,766 9,744 20,300 ---------- ---------- ---------- ---------- 886,838 714,131 2,560,694 2,249,608 ---------- ---------- ---------- ---------- Net income $ 235,415 $ 438,892 $ 783,528 $1,355,868 ========== ========== ========== ========== Net income allocated to General Partners $ 2,354 $ 4,389 $ 7,835 $ 13,559 ========== ========== ========== ========== Net income allocated to Limited Partners $ 233,061 $ 434,503 $ 775,693 $1,342,309 ========== ========== ========== ========== Net income per Unit (40,000 Limited Partnership Units) $5.82 $10.87 $19.39 $33.56 ===== ====== ====== ======
The accompanying notes are an integral part of the financial statements. -3- CORPORATE PROPERTY ASSOCIATES (a California limited partnership) STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, ---------------------------- 1994 1995 ------------ -------------- Cash flows from operating activities: Net income $ 783,528 $ 1,355,868 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 839,784 840,584 Other noncash items (21,683) (23,277) Securities received in connection with settlement (44,561) Net change in operating assets and liabilities 45,814 (191,767) ----------- ----------- Net cash provided by operating activities 1,647,443 1,936,847 ----------- ----------- Cash flows from investing activities: Purchase of note receivable (77,254) ----------- Net cash used in investing activities (77,254) ----------- Cash flows from financing activities: Distributions to partners (951,516) (972,525) Payments on mortgage principal (966,105) (1,075,835) Deferred financing costs (272,746) Proceeds from mortgage 2,400,000 Prepayment of mortgage payable (2,112,194) ----------- ----------- Net cash used in financing activities (1,902,561) (2,048,360) ----------- ----------- Net decrease in cash and cash equivalents (332,372) (111,513) Cash and cash equivalents, beginning of period 1,359,019 937,631 ----------- ----------- Cash and cash equivalents, end of period $ 1,026,647 $ 826,118 =========== =========== Supplemental disclosure of cash flows information: Interest paid $ 1,217,056 $ 1,165,535 =========== ===========
The accompanying notes are an integral part of the financial statements. -4- 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, 1994. Pursuant to SFAS No. 115 - Accounting for Certain Investments in Debt and Equity Securities, marketable securities available for sale are reflected in the accompanying financial statements at market value, with changes in unrealized appreciation credited or charged to Partners' Capital. Included in Partners' Capital at September 30, 1995 is unrealized appreciation of $4,140. Note 2. Distributions to Partners: ------------------------- Distributions declared and paid to partners during the nine months ended September 30, 1995 are summarized as follows:
Quarter Ended General Partners Limited Partners Per Limited Partner Unit - - ------------------------ ---------------- ---------------- ------------------------ December 31, 1994 $3,208 $317,600 $7.94 ====== ======== ===== March 31, 1995 $3,232 $320,000 $8.00 ====== ======== ===== June 30, 1995 $3,285 $325,200 $8.13 ====== ======== =====
A distribution of $8.44 per Limited Partner Unit for the quarter ended September 30, 1995 was declared and paid in October 1995. Note 3. Transactions with Related Parties: --------------------------------- For the three-month and nine-month periods ended September 30, 1994, the Partnership incurred management fees of $16,050 and $47,038, respectively, and general and administrative expense reimbursements of $13,540 and $39,848, respectively, payable to an affiliate. For the three-month and nine-month periods ended September 30, 1995, the Partnership incurred management fees of $17,958 and $46,109, respectively and general and administrative expense reimbursements of $11,136 and $34,052, 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 nine months ended September 30, 1994 and 1995 were $9,848 and $46,242, respectively. -5- 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 nine-month periods ended September 30, 1994 and 1995, the Partnership earned its total operating revenues (rental income plus interest income from financing leases) from the following lease obligors:
1994 % 1995 % ---------- ---- ---------- ---- Pre Finish Metals Incorporated $ 998,088 30% $1,056,425 31% The Gap, Inc. 919,495 28 919,495 27 IMO Industries, Inc. 635,057 19 635,057 19 Unisource Worldwide, Inc. 249,082 8 257,352 7 Kobacker Stores, Inc. 227,655 7 227,655 7 Broomfield Tech Center Corporation 200,912 6 220,602 7 Winn-Dixie Stores, Inc. 76,800 2 76,800 2 ---------- --- ---------- --- $3,307,089 100% $3,393,386 100% ========== === ========== ===
-6- CORPORATE PROPERTY ASSOCIATES (a California limited partnership) Item 2. - MANAGEMENT'S DISCUSSION OF OPERATIONS ----------------------------------------------- Results of Operations: ---------------------- Net income for the three-month and nine-month periods ended September 30, 1995 increased by $203,000 and $572,000, respectively, as compared with net income for the three-month and nine-month periods ended September 30, 1994. For the nine-month period ended September 30, 1995 approximately $161,000 of the increase in net income resulted from the effect of nonrecurring events which are included as Other income in the accompanying financial statements. Other income included a concession of $42,000 allowed to the Partnership by a vendor during the first quarter which had been accrued as a payable at December 31, 1994, and $119,000 realized in connection with the final distribution from the Storage Technology Corporation ("STC") bankruptcy; STC had been a tenant of three of the Partnership's properties until 1987, at which time the STC lease was terminated pursuant to the order of the bankruptcy court. Net of the effect of the above-mentioned nonrecurring items, net income for the nine- month period ended September 30, 1995 would have reflected an increase of $411,000. The nonrecurring items did not impact the comparable three-month periods. The increase in income, net of nonrecurring items for both the three- month and nine-month periods was primarily due to the decrease in property expense. The decrease was due to costs incurred in 1994 in connection with the assessment of liquidity alternatives. Property expenses for the three- month and nine-month periods ended September 30, 1995 are generally expected to be more representative of future property expenses in the near- term than the property expenses incurred for the periods ended September 30, 1994. For both the three-month and nine-month periods ended September 30, 1995, the Partnership benefitted from moderate increases in lease revenues and moderate decreases in interest expense. Lease revenue increased as a result of an increase in rents received from Pre Finish Metals Incorporated ("Pre Finish"). Revenue from the Pre Finish lease increased due to a direct pass through of higher debt service payments on the related mortgage loan. Increases in debt service on the Pre Finish mortgage loan were due to increasing principal payments. In addition, there was an increase in rent from Broomfield Tech Center Corporation ("Broomfield") which increase was negotiated under the 1994 lease modification agreement with Broomfield. The decrease in interest expense is due to the declining balances of the Partnership's mortgage loans. The trend of decreases in interest expense is expected to continue as the Partnership's mortgages continue to amortize. Financial Condition: -------------------- There has been no material change in the Partnership's financial condition since December 31, 1994 and Management believes that the current cash balance of $826,000 and cash provided from operating activities will be sufficient to meet the Partnership's current cash requirements which consist solely of paying quarterly distributions and meeting scheduled debt service obligations. Cash provided from operations was sufficient to fund distributions of $973,000 and $964,000 of the $1,076,000 of principal payment installments. Amortization of mortgage principal during the current nine-month period increased to $1,076,000 and represented payment of 7% of the mortgage principal balance at the beginning of the nine-month period. In August 1995, the Partnership agreed to extend the maturity of a $77,253 promissory note, purchased in connection with the 1994 refinancing of the mortgage loan collateralized by the Broomfield properties, to April 1996. In September 1995, the mortgage loan collateralized by the Unisource Worldwide, Inc. property fully amortized and, as a result of the satisfaction of the mortgage, net annual cash flow from that property will increase by $80,000. -7- 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 September 30, 1995, the Partnership was not required to file any reports on Form 8-K. -8- 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. 11/09/95 By: /s/ Claude Fernandez -------------- ----------------------- Date Claude Fernandez Executive Vice President and Chief Administrative Officer (Principal Financial Officer) 11/09/95 By: /s/ Michael D. Roberts -------------- ---------------------------- Date Michael D. Roberts First Vice President and Controller (Principal Accounting Officer) -9- EX-27 2 ARTICLE 5 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Form 10-Q for the nine months ended September 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 826,118 48,701 379,244 0 0 847,779 39,225,105 17,681,067 23,645,880 499,245 15,230,383 0 0 0 7,916,252 23,645,880 0 3,605,476 0 0 252,897 0 1,156,127 1,355,868 0 1,355,868 0 0 0 1,355,868 33.56 33.56
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