-----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, UXPisC1rK50TMNFyOex+Eqz/01zKJk+C+slq6GoEPb4LWcRvGMMbkcCbDhIQDxoo 557deOCm41yIQz06ZA9GBQ== 0000950123-97-004360.txt : 19970520 0000950123-97-004360.hdr.sgml : 19970520 ACCESSION NUMBER: 0000950123-97-004360 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORPORATE PROPERTY ASSOCIATES 5 CENTRAL INDEX KEY: 0000718075 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 133164925 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11948 FILM NUMBER: 97606469 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 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 MARCH 31, 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 0-11948 CORPORATE PROPERTY ASSOCIATES 5 (Exact name of registrant as specified in its charter) CALIFORNIA 13-3164925 (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 5 (a California limited partnership) INDEX Page No. -------- PART I Item 1. - Financial Information* Balance Sheets, December 31, 1996 and March 31, 1997 2 Statements of Operations for the three months ended March 31, 1996 and 1997 3 Statements of Cash Flows for the three months ended March 31, 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 5 (a California limited partnership) PART I Item 1. - FINANCIAL INFORMATION BALANCE SHEETS
December 31, March 31 1996 1997 ------------ ------------ (Note) (Unaudited) ASSETS: Land and buildings, net of accumulated depreciation of $13,749,248 at December 31, 1996 and $14,026,319 at March 31, 1997 $ 25,065,648 $ 24,911,729 Net investment in direct financing leases 19,298,726 19,288,743 Cash and cash equivalents 5,237,995 4,334,883 Escrow funds 575,051 633,551 Other assets 2,474,117 2,576,095 ------------ ------------ Total assets $ 52,651,537 $ 51,745,001 ============ ============ LIABILITIES: Mortgage notes payable $ 14,283,940 $ 14,283,940 Note payable to affiliate 1,151,000 1,151,000 Accrued interest payable 45,707 45,707 Accounts payable and accrued expenses 433,842 396,750 Accounts payable to affiliates 111,526 99,334 Deferred gains 901,390 890,123 Other liabilities 658,542 608,110 ------------ ------------ Total liabilities 17,585,947 17,474,964 ------------ ------------ PARTNERS' CAPITAL: General Partners (67,666) (67,856) Limited Partners (113,200 Limited Partnership Units outstanding) 35,133,256 34,337,893 ------------ ------------ Total partners' capital 35,065,590 34,270,037 ------------ ------------ Total liabilities and partners' capital $ 52,651,537 $ 51,745,001 ============ ============
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 5 (a California limited partnership) STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended March 31, 1996 March 31, 1997 -------------- -------------- Revenues: Rental income from operating leases $1,071,969 $ 714,026 Interest income from direct financing leases 823,158 872,633 Other interest income 28,511 33,919 Revenue of hotel operations 1,293,606 874,428 ---------- ---------- 3,217,244 2,495,006 ---------- ---------- Expenses: Interest on mortgages 759,171 341,237 Depreciation 454,234 277,071 General and administrative 142,885 115,416 Property expenses 117,134 36,500 Amortization 9,792 Operating expenses of hotel operations 1,230,044 710,338 ---------- ---------- 2,713,260 1,480,562 ---------- ---------- Income before gain on sale of real estate 503,984 1,014,444 Gain on sale of real estate 90,356 ---------- ---------- Net income $ 594,340 $1,014,444 ========== ========== Net income allocated to General Partners $ 120,595 $ 60,867 ========== ========== Net income allocated to Limited Partners $ 473,745 $ 953,577 ========== ========== Net income per Unit (113,200 Limited Partnership Units) $ 4.19 $ 8.42 ========== ==========
The accompanying notes are an integral part of the financial statements. -3- 5 CORPORATE PROPERTY ASSOCIATES 5 (a California limited partnership) STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, --------------------------------- 1996 1997 ----------- ----------- Cash flows from operating activities: Net income $ 594,340 $ 1,014,444 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 464,026 277,071 Other noncash items (2,385) (1,284) Gain on sale of real estate (90,356) Net change in operating assets and liabilities 187,604 (260,194) ----------- ----------- Net cash provided by operating activities 1,153,229 1,030,037 ----------- ----------- Cash flows from investing activities: Additional capitalized costs (97,500) (123,152) Proceeds from sale of real estate 1,741,261 ----------- ----------- Net cash provided by (used in) investing activities 1,643,761 (123,152) ----------- ----------- Cash flows from financing activities: Distributions to partners (1,415,000) (1,809,997) Payments of mortgage principal (89,951) ----------- ----------- Net cash used in financing activities (1,504,951) (1,809,997) ----------- ----------- Net increase (decrease) in cash and cash equivalents 1,292,039 (903,112) Cash and cash equivalents, beginning of period 2,300,682 5,237,995 ----------- ----------- Cash and cash equivalents, end of period $ 3,592,721 $ 4,334,883 =========== =========== Supplemental disclosure of cash flows information: Interest paid $ 781,524 $ 352,504 =========== ===========
Supplemental schedule of noncash investing and financing activities: In connection with the January 1996 sale of a Partnership property, the purchaser assumed a mortgage obligation of $2,854,275 and accrued interest thereon of $12,049 from the Partnership. The accompanying notes are an integral part of the financial statements. -4- 6 CORPORATE PROPERTY ASSOCIATES 5 (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, 1996. Note 2. Distributions to Partners: Distributions declared and paid to partners during the three months ended March 31, 1997 are summarized as follows:
Quarter Ended General Partners Limited Partners Per Limited Partner Unit - ----------------- ---------------- ---------------- ------------------------ December 31, 1996 $61,057 $ 956,540 $8.45 ======= ========== =====
A special distribution of $7 per Limited Partner Unit ($792,400) was declared and paid in January 1997. A distribution of $8.34 per Limited Partner Unit for the quarter ended March 31, 1997 was declared and paid in April 1997. Note 3. Transactions with Related Parties: For the three-month periods ended March 31, 1996 and 1997, the Partnership incurred management fees of $29,364 and $15,121 respectively, and general and administrative expense reimbursements of $29,921 and $20,287, respectively. The Partnership, in conjunction with certain affiliates, is a participant in an 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 three months ended March 31, 1996 and 1997 were $25,201 and $27,739, respectively. -5- 7 CORPORATE PROPERTY ASSOCIATES 5 (a California limited partnership) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED) Note 4. Industry Segment Information: The Partnership's operations consist primarily of the investment in and the leasing of industrial and commercial real estate and the operation of two hotel properties. For the three-month periods ended March 31, 1996 and 1997, the Partnership earned its total lease revenues (rental income plus interest income from financing leases) from the following lease obligors:
1996 % 1997 % ---- ---- ---- --- Gould, Inc. $ 303,750 16% $ 303,750 19% Spreckels Industries, Inc. 255,179 13 255,179 16 DeVlieg Bullard, Inc. 207,746 11 238,451 15 Arley Merchandise Corporation 150,000 8 150,000 10 Exide Electronics Corporation 143,033 8 143,033 9 Stoody Deloro Stellite, Inc. 100,568 5 126,785 8 Penn Virginia Corporation 124,688 7 124,688 8 Harcourt General Corporation 58,438 3 58,438 4 Penberthy Products, Inc. 45,632 2 52,377 3 Winn-Dixie Stores, Inc. 47,884 3 47,884 3 FMP/Rauma Company 36,060 2 36,060 2 Rochester Button Company 49,208 3 35,014 2 Other 23,291 1 15,000 1 GATX Logistics, Inc. 349,650 18 ---------- --- ---------- --- $1,895,127 100% $1,586,659 100% ========== === ========== ===
Operating results of the three hotel properties for the three-month periods ended March 31, 1996 and 1997 are summarized as follows:
1996 1997 ----------- ---------- Revenues $ 1,293,606 $ 874,428 Fees paid to hotel management company (27,663) (20,870) Other operating expenses (1,202,381) (689,468) ----------- ---------- Hotel operating income $ 63,562 $ 164,090 =========== ==========
-6- 8 CORPORATE PROPERTY ASSOCIATES 5 (a California limited partnership) Item 2. - MANAGEMENT'S DISCUSSION OF OPERATIONS Results of Operations: Net income for the three-month period ended March 31, 1997 increased by $420,000 as compared with net income for the three-month period ended December 31, 1996. Excluding the effect of a $90,000 gain on the sale of real estate in 1996, such increase was $510,000. The increase in income was due to decreases in interest, depreciation, general and administrative and property expenses and an increase in hotel operating income. This was partially offset by a decrease in lease revenues. The decrease in interest expense was due to the satisfaction of mortgage loans in connection with the sale of properties in 1996 and the prepayment of three mortgage loans on properties which remain subject to leases, also in 1996. Of the $418,000 decrease in interest expense, $162,000 was due to the satisfaction of mortgages in connection with the sales of properties and $241,000 was due to the three mortgage loan prepayments. The decrease in depreciation expense was due to the disposition of the warehouse property in Hodgkins, Illinois in the second quarter of 1996 which was leased to GATX Logistics, Inc. and the Rapid City, South Dakota hotel property in the fourth quarter of 1996. The decrease in general and administrative expense was due to lower partnership level state taxes as a result of disposing of the GATX property. The decrease in property expenses was due to $63,000 of charges in 1996 for uncollected rent from Rochester Button Company. As a result of the modification of the Rochester Button lease agreement in December 1996, Rochester Button is currently able to pay its rent in a timely manner. The decrease in lease revenues was solely due to the disposition of the GATX property. Hotel operating income for the three-month periods is not directly comparable due to the sale of the Rapid City hotel. During the three-month period ended March 31, 1996, the Rapid City operation contributed revenues of $509,000 and incurred a net loss of $13,000. For the three-month period ended March 31, 1997, revenues for the Alpena and Petoskey, Michigan operations increased from $785,000 to $874,000 and earnings increased from $77,000 to $164,000 as compared with 1996. The occupancy rate of the Alpena hotel increased from 53% to 57% and the average room rate increased by 5%, and the occupancy rate of the Petoskey hotel increased from 47% to 51% and the average room rate increased by 5%. The increase in expenses for the two hotels was less than 1%. The hotel business is seasonal in nature with the most significant portions of earnings generated during the third quarter. Accordingly, the results for the quarter ended March 31, 1997 are not necessarily indicative of results for the yearly operating cycle. Financial Condition: There has been no material change in the Partnership's financial condition since December 31, 1996. Cash flow from operations of $1,030,000 was sufficient to pay quarterly distributions of $1,018,000. In addition, a special distribution of $7 per Limited Partner Unit totaling $792,400 was paid during the quarter. Accordingly, the decrease in the Partnership's cash balances was due to the special distribution. Although the April 1997 distribution per Limited Partnership Unit decreased from $8.45 to $8.34, the distribution rate per Unit based on adjusted capital, as defined in the Amended Agreement of Limited Partnership, reflected an increase. The Partnership's cash flow is subject to fluctuation due to the uncertainties related to operating the hotels, including the need to use cash to replace furniture, fixtures and equipment on an on-going basis. The General Partners are currently investigating ways to provide liquidity for limited partners on a tax-effective basis. -7- 9 CORPORATE PROPERTY ASSOCIATES 5 (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 March 31, 1997, the Partnership was not required to file any reports on Form 8-K. -8- 10 CORPORATE PROPERTY ASSOCIATES 5 (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 5 (a California limited partnership) By: CAREY CORPORATE PROPERTY, INC. 05/14/97 By: /s/ Claude Fernandez -------- ---------------------------- Date Claude Fernandez Executive Vice President and Chief Administrative Officer (Principal Financial Officer) 05/14/97 By: /s/ Michael D. Roberts -------- ---------------------------- Date Michael D. Roberts First Vice President and Controller (Principal Accounting Officer) -9- EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 4,334,883 0 0 0 0 4,334,883 58,226,791 14,026,319 51,745,001 1,149,901 15,434,940 0 0 0 34,270,037 51,745,001 0 2,495,006 0 0 1,139,325 0 341,237 1,014,444 0 1,014,444 0 0 0 1,014,444 8.42 8.42
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