-----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, RTz5uDDgmlFJsL62yH4zTtdf8PyeclssWnH8v0iDl/DqBY+sUiDDUPd0CEjxj07E VipWBBRVHNN8PJ4//s4MXQ== 0000950123-97-006637.txt : 19970812 0000950123-97-006637.hdr.sgml : 19970812 ACCESSION NUMBER: 0000950123-97-006637 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 6 CENTRAL INDEX KEY: 0000750456 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 133247122 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14551 FILM NUMBER: 97655787 BUSINESS ADDRESS: STREET 1: 50 ROCKEFELLER PLZ 2ND FL 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 CORPORATE PROPERTY ASSOCIATES 6 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 0-14551 CORPORATE PROPERTY ASSOCIATES 6 (Exact name of registrant as specified in its charter)
CALIFORNIA 13-3247122 (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 6 - a California limited partnership INDEX
Page No. -------- PART I Item 1. - Financial Information* Consolidated Balance Sheets, December 31, 1996 and June 30, 1997 2 Consolidated Statements of Income for the three and six months ended June 30, 1996 and 1997 3 Consolidated Statements of Cash Flows for the six months ended June 30, 1996 and 1997 4 Notes to Consolidated 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 6 - a California limited partnership PART I Item 1. - FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEETS
December 31, June 30, 1996 1997 ---- ---- (Note) (Unaudited) ASSETS: Land, buildings and personal property, net of accumulated depreciation of $16,594,902 at December 31, 1996 and $17,473,245 at June 30, 1997 $ 47,968,552 $47,121,324 Net investment in direct financing leases 32,887,655 32,887,655 Cash and cash equivalents 3,338,391 2,889,939 Notes receivable from affiliate 1,151,000 1,151,000 Other assets 2,807,973 2,816,132 ------------ ----------- Total assets $ 88,153,571 $86,866,050 ============ =========== LIABILITIES: Mortgage notes payable $ 32,057,088 $29,608,323 Note payable 10,000,000 10,000,000 Accrued interest payable 439,078 423,601 Accounts payable and accrued expenses 372,012 326,729 Accounts payable to affiliates 131,275 408,530 Other liabilities 361,816 374,409 Deferred rental income 3,544,624 3,422,043 ------------ ----------- Total liabilities 46,905,893 44,563,635 ------------ ----------- PARTNERS' CAPITAL: General Partners (4,515) 66,379 Limited Partners (47,930 Limited Partnership Units issued and outstanding) 41,252,193 42,236,036 ------------ ----------- Total partners' capital 41,247,678 42,302,415 ------------ ----------- Total liabilities and partners' capital $ 88,153,571 $86,866,050 ============ ===========
The accompanying notes are an integral part of the consolidated financial statements. Note: The consolidated balance sheet at December 31, 1996 has been derived from the audited financial statements at that date. - 2 - 4 CORPORATE PROPERTY ASSOCIATES 6 - a California limited partnership CONSOLIDATED 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 $1,443,022 $1,527,843 $2,745,961 $3,055,689 Interest from direct financing leases 1,377,229 1,512,860 2,782,939 2,930,034 Other interest income 68,415 77,237 158,351 144,819 Revenue of hotel operations 1,173,653 1,232,076 2,309,540 2,438,897 Other income 126,985 ---------- ---------- ---------- ---------- 4,062,319 4,350,016 7,996,791 8,696,424 ---------- ---------- ---------- ---------- Expenses: Interest 1,018,738 950,939 2,058,253 1,907,664 Depreciation 396,068 453,076 786,500 878,343 General and administrative 142,813 157,640 244,069 334,889 Property expenses 83,435 33,810 130,279 88,002 Amortization 75,875 69,294 133,434 137,958 Operating expenses of hotel operations 885,614 908,168 1,798,296 1,828,922 ---------- ---------- ---------- ---------- 2,602,543 2,572,927 5,150,831 5,175,778 ---------- ---------- ---------- ---------- Income before gain on sales of real estate 1,459,776 1,777,089 2,845,960 3,520,646 Gain on sales of real estate 39,422 70,878 ---------- ---------- ---------- ---------- Net income $1,499,198 $1,777,089 $2,916,838 $3,520,646 ========== ========== ========== ========== Net income allocated to General Partners $ 89,952 $ 106,626 $ 175,010 $ 211,239 ========== ========== ========== ========== Net income allocated to Limited Partners $1,409,246 $1,670,463 $2,741,828 $3,309,407 ========== ========== ========== ========== Net income per Unit: (47,930 Limited Partnership Units) $ 29.40 $ 34.85 $ 57.20 $ 69.04 ========== ========== ========== ==========
The accompanying notes are an integral part of the consolidated financial statements. - 3 - 5 CORPORATE PROPERTY ASSOCIATES 6 - a California limited partnership CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, ---------------------- 1996 1997 ---- ---- Cash flows from operating activities: Net income $ 2,916,838 $ 3,520,646 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 919,934 1,016,301 Other noncash items (11,845) (29,864) Amortization of deferred rental income (122,581) (122,581) Gain on sales of real estate (70,878) Net change in operating assets and liabilities 62,817 (67,165) ----------- ----------- Net cash provided by operating activities 3,694,285 4,317,337 ----------- ----------- Cash flows from investing activities: Additional capitalized costs (1,766,609) (31,115) Proceeds from sales of real estate 603,286 ----------- ----------- Net cash used in investing activities (1,163,323) (31,115) ----------- ----------- Cash flows from financing activities: Distributions to partners (2,425,180) (2,465,909) Proceeds from mortgage 6,000,000 Prepayment of mortgage payable (4,257,315) (1,872,107) Payments on mortgage principal (859,184) (576,658) Refund of deferred financing costs 180,000 Deferred financing costs (274,753) ----------- ----------- Net cash used in financing activities (1,816,432) (4,734,674) ----------- ----------- Net increase (decrease) in cash and cash equivalents 714,530 (448,452) Cash and cash equivalents, beginning of period 3,476,915 3,338,391 ----------- ----------- Cash and cash equivalents, end of period $ 4,191,445 $ 2,889,939 =========== =========== Supplemental disclosure of cash flows information: Interest paid $ 2,076,707 $ 1,923,141 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. - 4 - 6 CORPORATE PROPERTY ASSOCIATES 6 - a California limited partnership NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1. Basis of Presentation: The accompanying unaudited consolidated 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 six months ended June 30, 1997 are summarized as follows:
Quarter Ended General Partners Limited Partners Per Limited Partner Unit ------------- ---------------- ---------------- ------------------------ December 31, 1996 $70,142 $1,162,303 $24.25 ======= ========== ====== March 31, 1997 $70,203 $1,163,261 $24.27 ======= ========== ======
A distribution of $24.29 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 $27,636 and $54,737, respectively, and general and administrative expense reimbursements of $35,612 and $62,154, respectively. For the three-month and six-month periods ended June 30, 1997, the Partnership incurred property management fees of $32,456 and $58,998, respectively, and general and administrative expense reimbursements of $42,757 and $89,364, 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 six months ended June 30, 1996 and 1997 were $60,482 and $47,401, respectively. - 5 - 7 CORPORATE PROPERTY ASSOCIATES 6 - a California limited partnership NOTES TO CONSOLIDATED 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 three hotel properties. For the three and six-month periods ended June 30, 1996 and 1997, the Partnership earned its total real estate lease revenues (rental income plus interest income from financing leases) as follows:
1996 % 1997 % ---- ---- ---- -- Stoody Deloro Stellite, Inc. $1,117,095 20% $1,117,095 19% AP Parts Manufacturing, Inc. 857,044 16 918,267 15 Peerless Chain Company 757,307 14 854,293 14 AutoZone, Inc. 676,111 12 756,469 13 Kinney Shoe Corporation 336,380 6 482,471 8 Wal-Mart Stores, Inc. 413,632 7 445,565 7 Anthony's Manufacturing Company, Inc. 438,000 8 438,000 7 Motorola, Inc. 270,000 5 270,000 5 Harcourt General Corporation 233,750 4 233,750 4 Yale Security, Inc. 126,092 2 229,614 4 Lockheed Martin Corporation 149,333 3 155,000 3 Winn-Dixie Stores, Inc. 85,199 2 85,199 1 Folger Adam Company 68,957 1 ---------- --- ---------- ---- $5,528,900 100% $5,985,723 100% ========== ==== ========== ====
Operating results of the three hotels for the six-month periods ended June 30, 1996 and 1997 are summarized as follows:
1996 1997 ---- ---- Revenue $ 2,309,540 $ 2,438,897 Fees paid to hotel management company (57,483) (69,406) Other operating expenses (1,740,813) (1,759,516) ----------- ----------- Hotel operating income $ 511,244 $ 609,975 =========== ===========
- 6 - 8 CORPORATE PROPERTY ASSOCIATES 6 - a California limited partnership Item 2. - MANAGEMENT'S DISCUSSION OF OPERATION Results of Operations: Net income for the three-month and six-month periods ended June 30, 1997 increased by $278,000 and $604,000, respectively, as compared with net income for the similar periods ended June 30, 1996. The increases were due to increases in lease revenues and earnings from the Partnership's hotel operations, and decreases in interest expense. The increases in lease revenues were due to the commencement of a lease with Yale Security, Inc. in March 1996 at a property in Lemont, Illinois which had previously been leased to Folger Adam Company, rent increases in 1996 and 1997 on the Partnership's leases with Wal-Mart Stores, Inc., Kinney Shoe Corporation , Peerless Chain Company and AP Parts Manufacturing, Inc. and percentage rent from AutoZone, Inc., based on AutoZone retail sales in excess of specified base amounts pursuant to the AutoZone leases. Solely as a result of the aforementioned rent increases, annual cash flow will increase by $516,000. Of the increases in hotel earnings, approximately 70% of such increases were due to improved earnings at the Livonia, Michigan Holiday Inn. The increases in earnings at the Livonia operation were due to the Partnership maintaining its strategy of sustaining a high average room rate in the favorable economic climate for the Detroit metropolitan area. Accordingly, for the comparable three-month and six-month periods, hotel revenues increased by 3% even though the overall year-to-date occupancy rate decreased by 1% to 75%. In addition, there were no corresponding increases in Livonia's operating expenses. The earnings of the Alpena and Petoskey, Michigan hotel operations increased moderately. The occupancy rate of the Alpena Holiday Inn increased by approximately 1% to 58% and average room rate increased by approximately 5%. The occupancy rate for the Petoskey Holiday Inn increased by 5% to 47% with the average room rate increasing by 2%. Historically, the earnings for Alpena and Petoskey are seasonal in nature with occupancy rates higher in the third quarter than during the other periods of the year. Accordingly, hotel earnings for the six-month period are not necessarily indicative of a full year's operating cycle. The decreases in interest expense were due to the payoff of the mortgage loan on the property leased to Winn Dixie in 1996 and the continuing amortization of the Partnership's limited recourse mortgage loans. Financial Condition: There has been no material change in the Partnership's financial condition since December 31, 1996. Cash flow from operations of $4,317,000 was sufficient to fund distributions to partners of $2,466,000, scheduled mortgage principal installments of $577,000 and replacement of furniture and fixtures at the hotel properties of $31,000. The Partnership also used $1,872,000 to satisfy the limited recourse mortgage loan on the Yale Security property which had matured and had been extended on a short-term basis. The maturity of the limited recourse mortgage on the property leased to Motorola, Inc. has been extended on a short-term basis to allow the Partnership to seek refinancing. The outstanding balance on the Motorola mortgage loan was $2,122,000 as of June 30, 1997, and cash reserves are not sufficient to pay off the loan. The Partnership has several unleveraged properties which could be refinanced to provide the necessary funds without violating the financial covenants of the credit agreement on its $10,000,000 note payable. The Partnership believes that the prospects for refinancing the Motorola mortgage loan are favorable. The initial term of the Motorola lease expires in December 2000, and a lender may consider a maturity which precedes the lease expiration date with an option to extend the maturity if Motorola elects to exercise its renewal option. The General Partners are currently investigating ways to provide liquidity for limited partners on a tax-effective basis. - 7 - 9 CORPORATE PROPERTY ASSOCIATES 6 - 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 6 - 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 6 - a California limited partnership By: CAREY CORPORATE PROPERTY, INC. 08/11/97 By: /s/ Steven M. Berzin --------------- ---------------------------------------- Date Steven M. Berzin Executive Vice President and Chief Financial Officer (Principal Financial Officer) 08/11/97 By: /s/ Claude Fernandez --------------- ---------------------------------------- Date Claude Fernandez Executive Vice President and Chief Administrative Officer (Principal Accounting Officer) 08/11/97 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 REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 2,889,939 0 0 0 0 2,889,939 97,482,224 17,473,245 86,866,050 1,533,269 39,608,323 0 0 0 42,302,415 86,866,050 0 8,696,424 0 0 3,268,114 0 1,907,664 3,520,646 0 3,520,646 0 0 0 3,520,646 69.04 69.04
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