-----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, Rs43R0Izv7Ncj7q4GXs0sK3ZM/X2ExWoO877PaBd4ppyLnskzrOiSAq9YlEO2/mG d7vN19434F8A2VwkngUnsw== 0000950130-95-002355.txt : 19951201 0000950130-95-002355.hdr.sgml : 19951201 ACCESSION NUMBER: 0000950130-95-002355 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 4 CENTRAL INDEX KEY: 0000706005 STANDARD INDUSTRIAL CLASSIFICATION: 6512 IRS NUMBER: 133126150 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11982 FILM NUMBER: 95588875 BUSINESS ADDRESS: STREET 1: 50 ROCKEFELLER PLAZA CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2124921100 MAIL ADDRESS: STREET 1: 50 ROCKEFELLER PLAZA 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 0-11982 ------- CORPORATE PROPERTY ASSOCIATES 4, a California limited partnership ----------------------------------------------------------------- (Exact name of registrant as specified in its charter) CALIFORNIA 13-3126150 ---------- ---------- (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 4 (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 7-8 PART II ------- Item 6. - Exhibits and Reports on Form 8-K 9 Signatures 10 *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 4, 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 $12,212,983 at December 31, 1994 and $13,082,961 at September 30, 1995 $22,375,100 $21,716,040 Net investment in direct financing leases 29,952,612 18,231,362 Cash and cash equivalents 2,509,451 7,326,823 Accrued interest and rents receivable 262,998 201,888 Other assets 1,007,653 1,036,803 ----------- ----------- Total assets $56,107,814 $48,512,916 =========== =========== LIABILITIES: Mortgage notes payable $26,367,583 $19,712,408 Accrued interest payable 193,839 137,779 Accounts payable and accrued expenses 610,264 421,920 Prepaid rental income 119,118 Accounts payable to affiliates 31,427 72,254 ----------- ----------- Total liabilities 27,322,231 20,344,361 ----------- ----------- PARTNERS' CAPITAL: General Partners (486,282) 21,840 Limited Partners (85,568 Limited Partnership Units issued and outstanding) 29,271,865 28,146,715 ----------- ----------- Total partners' capital 28,785,583 28,168,555 ----------- ----------- Total liabilities and partners' capital $56,107,814 $48,512,916 =========== ===========
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 4, 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 $ 660,157 $ 812,362 $2,261,271 $2,432,852 Interest from direct financing leases 1,353,513 828,723 4,061,229 3,534,494 Other interest income 26,424 103,049 79,277 154,573 Revenue of hotel operations 775,723 918,388 2,281,993 2,867,234 Other income 44,764 ---------- ---------- ---------- ---------- 2,815,817 2,662,522 8,683,770 9,033,917 ---------- ---------- ---------- ---------- Expenses: Interest on mortgages 597,583 453,836 1,781,813 1,654,203 Depreciation 287,913 288,827 852,361 869,978 General and administrative 103,724 103,781 321,593 347,767 Property expense 329,909 59,868 769,576 232,864 Amortization 31,151 25,768 93,451 88,068 Operating expenses of hotel operations 540,071 609,118 1,538,074 1,791,675 ---------- ---------- ---------- ---------- 1,890,351 1,541,198 5,356,868 4,984,555 ---------- ---------- ---------- ---------- Income before gain on sale of real estate 925,466 1,121,324 3,326,902 4,049,362 Gain on sale of real estate (167,774) 3,330,098 ---------- ---------- ---------- ---------- Net income $ 925,466 $ 953,550 $3,326,902 $7,379,460 ========== ========== ========== ========== Net income allocated to General Partners $ 55,528 $ 65,601 $ 199,614 $ 771,830 ========== ========== ========== ========== Net income allocated to Limited Partners $ 869,938 $ 887,949 $3,127,288 $6,607,630 ========== ========== ========== ========== Net income per Unit (85,568 Limited Partnership Units) $10.17 $10.38 $36.55 $77.22 ========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements. -3- CORPORATE PROPERTY ASSOCIATES 4, a California limited partnership STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, ---------------------------- 1994 1995 ------------ -------------- Cash flows from operating activities: Net income $ 3,326,902 $ 7,379,460 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 945,812 958,046 Other noncash items 16,141 7,305 Gain on sale of real estate (3,330,098) Net change in operating assets and liabilities 94,279 (534,760) ----------- ------------ Net cash provided by operating activities 4,383,134 4,479,953 ----------- ------------ Cash flows from investing activities: Proceeds from sale of real estate 15,200,000 Additional capitalized costs (790,212) (210,918) ----------- ------------ Net cash (used in) provided by investing activities (790,212) 14,989,082 ----------- ------------ Cash flows from financing activities: Distributions to partners (3,656,667) (7,996,488) Payments on mortgage principal (842,573) (932,667) Prepayment of mortgage payable (5,722,508) ----------- ------------ Net cash used in financing activities (4,499,240) (14,651,663) ----------- ------------ Net (decrease) increase in cash and cash equivalents (906,318) 4,817,372 Cash and cash equivalents, beginning of period 3,629,949 2,509,451 ----------- ------------ Cash and cash equivalents, end of period $ 2,723,631 $ 7,326,823 =========== ============ Supplemental disclosure of cash flows information: Interest paid $ 1,807,741 $ 1,710,263 =========== ============
The accompanying notes are an integral part of the financial statements. -4- CORPORATE PROPERTY ASSOCIATES 4, 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 (consisting of 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. 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 $73,352 $1,149,178 $13.43 ======= ========== ====== March 31, 1995 $73,406 $1,150,034 $13.44 ======= ========== ====== June 30, 1995 $73,734 $1,155,168 $13.50 ======= ========== ====== Special distribution - paid July 1995 $43,216 $4,278,400 $50.00 ======= ========== ======
A distribution of $12.15 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 $23,277 and $75,556, respectively, and general and administrative expense reimbursements of $34,450 and $112,453, respectively. For the three-month and nine-month periods ended September 30, 1995, the Partnership incurred management fees of $19,642 and $73,136, respectively, and general and administrative expense reimbursements of $28,450 and $71,180, respectively. 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 $36,173 and $101,250, respectively. The Amended Agreement of Limited Partnership (the "Limited Partnership Agreement") provides that any gains from sales are first allocated to partners with negative capital balances. As a result of their negative capital balances, the General Partners were allocated a portion of the gain on sale of real estate leased by Genesco, Inc. described in Quarterly Report on Form 10-Q for the period ended June 30, 1995 as well as the related tax liability. Pursuant to the Limited Partnership Agreement, the allocation of distributions from sales are allocated 1% to the Individual General Partner and 99% to the Limited Partners. The allocation of cash distributions from operations are not affected by the aforementioned allocation of gain. -5- CORPORATE PROPERTY ASSOCIATES 4, 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 and the operation of a hotel business. For the nine-month periods ended September 30, 1994 and 1995, the Partnership earned its total lease revenues (rental income plus interest income from financing leases) from the following lease obligors:
1994 % 1995 % ---------- ---- ---------- ---- Simplicity Manufacturing, Inc. $1,497,533 24% $1,497,533 25% Hughes Markets, Inc. 1,072,065 17 1,072,065 18 Genesco, Inc. 1,571,265 25 1,047,510 18 Brodart Co. 992,431 16 989,451 17 Continental Casualty Company 531,770 8 565,652 9 Family Dollar Stores, Inc. 280,800 4 410,400 7 Petrocon Engineering, Inc. 268,102 4 276,201 4 Winn-Dixie Stores, Inc. 108,534 2 108,534 2 ---------- --- ---------- --- $6,322,500 100% $5,967,346 100% ========== === ========== ===
Operating results of the hotel for the nine-month periods ended September 30, 1994 and 1995 are summarized as follows:
1994 1995 ------------ ------------ Revenues $ 2,281,993 $ 2,867,234 Fees paid to hotel management company (53,626) (95,033) Other operating expenses (1,484,448) (1,696,642) ----------- ----------- Hotel operating income $ 743,919 $ 1,075,559 =========== ===========
-6- CORPORATE PROPERTY ASSOCIATES 4, 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 $28,000 and $4,053,000, respectively, as compared with net income for the three-month and nine-month periods ended September 30, 1994. A substantial portion of the increase for the nine-month period ended September 30, 1995 was due to the gain of $3,330,000 on the sale of Genesco, Inc. ("Genesco") property in June 1995. Net of the effect of the sale, income for the comparable three-month and nine-month periods would have still reflected increases of $196,000 and $722,000, respectively. For both the three-month and nine-month periods, the increase in income before the gain on sale was primarily attributable to an increase in earnings from the hotel operation, a decrease in property expense and, to a lesser extent, an increase in other interest income. The increase in other interest income was due to an increase in average cash balances subsequent to the Genesco sale. This was partially offset by lower operating revenues (lease revenue less related mortgage interest) for both the three-month and nine-month periods as a result of the Genesco property sale. Earnings from the hotel operations have continued to benefit from a sustained increase in the average daily room rate in 1995. The occupancy rate of approximately 82% reflected an increase for the nine-month period ended September 30, 1995 as compared with the similar period in 1994 while the occupancy rates for the comparable three-month periods were approximately 79%. The current occupancy rate approximates historical levels. Due to renovation work performed in 1994, there were fewer rooms available which negatively impacted the hotel's results of operations. The decrease in property expense was due to costs incurred in 1994 related to the Partnership's assessment of liquidity alternatives. Other interest income increased due to higher cash balances due to the sale of the Genesco property. As described below, future results of operations and cash flow will be significantly affected by the sale of the Genesco property as revenues from the Genesco lease represented 24% and 18% of the Partnership's lease revenues and gross investment in real estate assets, respectively. Financial Condition: ------------------- There has been no material change in the Partnership's financial condition since December 31, 1994. Cash balances increased to $7,327,000 primarily as the result of the receipt of proceeds from the sale of the Genesco property, net of the payment made to satisfy the related mortgage loan obligation. In July 1995, the Partnership paid a special distribution of $4,322,000 from the Genesco sale proceeds. Cash flow from operating activities for the nine-month period ended September 30, 1995 was sufficient to pay quarterly distributions from operations to partners and a substantial portion of principal payment installments on the Partnership's mortgage loans. Management is currently evaluating the most appropriate use for the remaining $5,155,000 generated from the sale of the Genesco property. Alternatives include, but are not limited to, paying off mortgage debt or maintaining higher cash reserves. As a result of the sale of the Genesco property, the Partnership's cash flow will decrease by $1,082,000 (lease revenues, net of mortgage installment payments). Although future cash flow will decrease as a result of the sale and the dollar amount of quarterly distributions are not expected to match the level achieved prior to the sale of the property, the distribution rate as adjusted for return of capital as defined, is expected to continue to increase as the distribution rate takes into account capital returned to limited partners through special distributions. The special distribution paid in July 1995 of $50 per Limited Partnership Unit represents a return of 10% of the original capital of $500 per Limited Partnership Unit. Limited partners have received returns of capital of $70 per Limited Partner Unit as special distributions since the inception of the Partnership. -7- CORPORATE PROPERTY ASSOCIATES 4, a California limited partnership Item 2. - MANAGEMENT'S DISCUSSION OF OPERATIONS, Continued ---------------------------------------------------------- Financial Condition, continued: ------------------------------ As noted in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994, future liquidity may be impacted by the scheduled termination of the Hughes Markets, Inc. lease in April 1996 and the Partnership's share of annual carrying costs for the property, which, if vacant, is estimated to be $467,000. Although there is a possibility that the Partnership may need to incur carrying costs at the termination of the lease, there is a reasonable probability that the lease will be extended until late 1997, which would give the Partnership the opportunity to minimize any period of vacancy which might occur after the extension term. The Partnership maintains a reserve account to replace furniture, fixtures and equipment at its hotel operations which is funded by allocating 5% of hotel revenues to the reserve account. The Partnership does not anticipate utilizing any funds in excess of the reserve amount to fund any replacements of furniture, fixtures and equipment within the next year. The furniture, fixture and equipment reserve account for the hotel of $391,000 is included in other assets on the accompanying balance sheet at September 30, 1995. -8- CORPORATE PROPERTY ASSOCIATES 4, 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. -9- CORPORATE PROPERTY ASSOCIATES 4, 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 4, a California limited partnership By: CAREY CORPORATE PROPERTY, 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) -10- 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 7,326,823 0 201,888 0 0 1,036,803 53,030,363 13,082,961 48,512,916 631,953 19,712,408 0 0 0 28,168,555 48,512,916 0 9,033,917 0 0 2,372,306 0 1,654,203 7,379,460 0 7,379,460 0 0 0 7,379,460 77.22 77.22
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