-----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, G8WcU9okDycyzmR70KMhTNksFZ1uIjoKJk/w29qidN3Wn0Ub1KYb29FzJWWZQCcr Jy8sPuoF/5EkzWiyDy6+Sw== 0000950130-95-002356.txt : 19951201 0000950130-95-002356.hdr.sgml : 19951201 ACCESSION NUMBER: 0000950130-95-002356 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 6 CENTRAL INDEX KEY: 0000750456 STANDARD INDUSTRIAL CLASSIFICATION: 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: 95588879 BUSINESS ADDRESS: STREET 1: 50 ROCKEFELLER PLZ 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 THE THIRD 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 0-14551 ------- CORPORATE PROPERTY ASSOCIATES 6 --------------------------------------------------------------------- (Exact name of registrant as specified in its charter) CALIFORNIA 13-3247122 ---------- ---------- (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 6 -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 4-5 Notes to Financial Statements 6-7 Item 2. - Management's Discussion of Operations 8-9 PART II ------- Item 6. - Exhibits and Reports on Form 8-K 10 Signatures 11 *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 6 - a California limited partnership PART I ------ Item 1. - FINANCIAL INFORMATION ------------------------------- CONSOLIDATED BALANCE SHEETS
December 31, SEPTEMBER 30, 1994 1995 ------------- -------------- (Note) (UNAUDITED) ASSETS: Land, buildings and personal property, net of accumulated depreciation of $13,405,377 at December 31, 1994 and $14,548,716 at September 30, 1995 $45,342,342 $44,478,458 Net investment in direct financing leases 36,920,755 36,920,755 Cash and cash equivalents 4,412,869 3,253,997 Notes receivable from affiliate 1,295,000 1,151,000 Accrued interest and rents receivable 79,510 53,844 Other assets 2,135,538 2,685,829 ----------- ----------- Total assets $90,186,014 $88,543,883 =========== =========== LIABILITIES: Mortgage notes payable $51,433,354 $36,954,650 Note payable 10,000,000 Accrued interest payable 876,506 515,661 Accounts payable and accrued expenses 481,110 272,496 Accounts payable to affiliates 34,190 151,677 Prepaid rental income and other liabilities 360,238 339,075 ----------- ----------- Total liabilities 53,185,398 48,233,559 ----------- ----------- PARTNERS' CAPITAL: General Partners (345,685) (144,805) Limited Partners (47,950 and 47,930 Limited Partnership Units issued and outstanding at December 31, 1994 and September 30, 1995) 37,346,301 40,455,129 ----------- ----------- Total partners' capital 37,000,616 40,310,324 ----------- ----------- Total liabilities and partners' capital $90,186,014 $88,543,883 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. Note: The consolidated balance sheet at December 31, 1994 has been derived from the audited financial statements at that date. -2- CORPORATE PROPERTY ASSOCIATES 6 - a California limited partnership CONSOLIDATED 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 $1,366,233 $1,248,207 $ 4,098,699 $ 3,949,542 Interest from direct financing leases 1,300,697 1,516,521 3,951,282 4,342,524 Other interest income 97,977 119,051 273,473 252,921 Revenue of hotel operations 1,191,249 1,269,516 3,274,403 3,514,183 Other income 28,680 224,138 802,556 ---------- ---------- ----------- ----------- 3,956,156 4,181,975 11,821,995 12,861,726 ---------- ---------- ----------- ----------- Expenses: Interest 1,219,895 1,133,768 3,768,388 3,388,500 Depreciation 407,252 381,244 1,222,444 1,143,339 General and administrative 97,595 169,646 354,166 479,721 Property expenses 670,967 (37,821) 1,404,318 239,698 Amortization 41,044 57,348 123,925 152,306 Operating expenses of hotel operations 840,559 899,124 2,513,765 2,672,106 ---------- ---------- ----------- ----------- 3,277,312 2,603,309 9,387,006 8,075,670 ---------- ---------- ----------- ----------- Income before extraordinary gain 678,844 1,578,666 2,434,989 4,786,056 Extraordinary gain on extinguishment of debt 2,088,268 ----------- ----------- ----------- ----------- Net income $ 678,844 $1,578,666 $ 2,434,989 $ 6,874,324 ========== ========== =========== =========== Net income allocated to General Partners $ 40,730 $ 94,720 $ 146,099 $ 412,459 ========== ========== =========== =========== Net income allocated to Limited Partners $ 638,114 $1,483,946 $ 2,288,890 $ 6,461,865 ========== ========== =========== =========== Net income per Unit (47,930 Limited Partnership Units): Income before extra- ordinary gain $13.31 $30.96 $47.73 $ 93.87 Extraordinary gain 40.95 ------ ------ ------ ------- $13.31 $30.96 $47.73 $134.82 ====== ====== ====== =======
The accompanying notes are an integral part of the consolidated financial statements. -3- CORPORATE PROPERTY ASSOCIATES 6 - a California limited partnership CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, ---------------------------- 1994 1995 ------------ -------------- Cash flows from operating activities: Net income $ 2,434,989 $ 6,874,324 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,346,369 1,295,645 Extraordinary gain on extinguishment of debt (2,088,268) Note receivable received in connection with bankrupcty settlement (172,414) Net change in operating assets and liabilities 424,198 (130,738) ----------- ------------ Net cash provided by operating activities 4,033,142 5,950,963 ----------- ------------ Cash flows from investing activities: Amounts received on partial prepayment of note receivable from affiliate 144,000 Additional capitalized costs (85,104) (279,455) ----------- ------------ Net cash used in investing activities (85,104) (135,455) ----------- ------------ Cash flows from financing activities: Distributions to partners (3,526,733) (3,544,616) Retirement of Limited Partner Units (20,000) Proceeds from note payable 10,000,000 Prepayment of mortgages payable (12,055,148) Payments on mortgage principal (993,394) (1,009,590) Deferred financing costs (13,069) (345,026) ----------- ------------ Net cash used in financing activities (4,533,196) (6,974,380) ----------- ------------ Net decrease in cash and cash equivalents (585,158) (1,158,872) Cash and cash equivalents, beginning of period 5,464,578 4,412,869 ----------- ------------ Cash and cash equivalents, end of period $ 4,879,420 $ 3,253,997 =========== ============
(Continued) -4- CORPORATE PROPERTY ASSOCIATES 6 - a California limited partnership CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED), Continued Supplemental disclosure of cash flows information: A. Interest paid $ 3,446,378 $ 3,043,958 =========== =========== B. During the nine-month period ended September 30, 1995, the Partnership recognized an extraordinary gain on the extinguishment of debt. Cash payment made in connection with satisfaction of debt obligation $(5,440,000) Direct costs of transaction (31,085) Mortgage note payable balance at extinguishment 6,853,966 Accrued interest on mortgage debt at extinguishment 705,387 ----------- Extraordinary gain on extinguishment of debt $ 2,088,268 =========== The accompanying notes are an integral part of the consolidated financial statements. -5- 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, 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 $70,403 $1,109,084 $23.13 ======= ========== ====== March 31, 1995 $70,435 $1,109,580 $23.15 ======= ========== ====== June 30, 1995 $70,741 $1,114,373 $23.25 ======= ========== ======
A distribution of $23.38 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 $25,566 and $75,325, respectively, and general and administrative expense reimbursements of $36,521 and $128,150, respectively. For the three-month and nine-month periods ended September 30, 1995, the Partnership incurred management fees of $(581) and $92,222, respectively, and general and administrative expense reimbursements of $65,897 and $124,534, 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 nine months ended September 30, 1994 and 1995 were $39,431 and $73,283, respectively. -6- 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 nine-month periods ended September 30, 1994 and 1995, the Partnership earned its total real estate lease revenues (rental income plus interest income from financing leases) as follows:
1994 % 1995 % ---------- ---- ---------- ---- Stoody Deloro Stellite, Inc. $1,283,492 16% $1,588,498 19% AP Parts Manufacturing, Inc. 1,144,790 14 1,144,790 14 AutoZone, Inc. 1,035,905 13 1,122,015 13 Peerless Chain Company 952,090 12 952,090 11 Anthony's Manufacturing Company, Inc. 1,011,080 13 853,710 10 Wal-Mart Stores, Inc. 620,449 8 620,449 8 Kinney Shoe Corporation 504,570 6 504,570 6 Folger Adam Company 424,431 5 432,770 5 Motorola, Inc. 375,000 4 375,000 5 Harcourt General Corporation 350,624 4 350,624 4 Lockheed Martin Corporation 219,750 3 219,750 3 Winn-Dixie Stores, Inc. 127,800 2 127,800 2 ---------- --- ---------- --- $8,049,981 100% $8,292,066 100% ========== === ========== ===
Operating results of the three hotels for the nine-month periods ended September 30, 1994 and 1995 are summarized as follows:
1994 1995 ------------ ------------ Revenue $ 3,274,403 $ 3,514,183 Fees paid to hotel management company (68,473) (79,390) Other operating expenses (2,445,292) (2,592,716) ----------- ----------- Hotel operating income $ 760,638 $ 842,077 =========== ===========
-7- 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 nine-month periods ended September 30, 1995 increased by $900,000 and $4,439,000, respectively, as compared with the three-month and nine-month periods ended September 30, 1994. The results of operations for the nine-month period ended September 30, 1995 benefitted from the receipt of a payment in settlement of a dispute with Anthony's Manufacturing Company, Inc. ("Anthony's) which provided Other income of $754,000 and a related extraordinary gain of $2,088,000 on the extinguishment of the mortgage debt collateralized by the Anthony's properties. Net of the effect of these nonrecurring items, the Partnership's income for the comparable nine-month periods would have reflected an increase of $1,597,000. The comparable three-month periods were not significantly affected by nonrecurring items. The increase in income, net of the nonrecurring items, for the comparable nine-month periods was primarily due to a decrease in property expenses as well as, to a lesser extent, an increase in lease revenues and a decrease in interest expense. These benefits were partially offset by an increase in general and administrative expense. The decrease in property expenses was primarily due to costs incurred in 1994 in connection with the Partnership's assessment of liquidity alternatives and legal costs incurred in 1994 related to the Partnership's defending its interests in a dispute with Anthony's which has since been resolved. The increase in lease revenues was due to rental increases on the Partnership's leases with Stoody Deloro Stellite, Inc. ("Stoody") and Folger Adam Company which were effective in March 1995 and September 1995, respectively, and the modification of the AutoZone, Inc. ("AutoZone") lease which was retroactively effective to March 1995. These rent increases were partially offset by the modification to the Anthony's lease which was executed in May 1995. The decrease in interest expense was due to lower overall loan balances as the result of the satisfaction of the mortgage loans on the Stoody and Anthony's properties replaced with a variable rate recourse loan obligation which has a lower current interest than the interest cost that would have been recognized on the Anthony's and Stoody loans. General and administrative costs increased due to certain nonrecurring costs incurred by the Partnership in connection with the office space cost sharing agreement and related relocation costs in the first quarter of 1995 and higher legal costs related to general partnership matters. The increase in net income for the comparable three-month periods ended September 30, 1994 and 1995 was primarily due to increases in lease revenues and decreases in interest and property expenses as described above. Property expense also benefitted from a change in the estimate for certain accruals between the beginning and end of the fiscal quarter ended September 30, 1995. Earnings from the Partnership's hotel operations reflected an increase of approximately 11% for the comparable nine-month periods primarily as the result of increases of 3% and 13% in the occupancy and average room rates, respectively, at the Livonia hotel. Operating results for the Alpena and Petoskey hotels were relatively stable with Alpena realizing a moderate increase in overall revenues and Petoskey a moderate decrease. The Alpena and Petoskey operations are seasonal in nature with their most significant share of earnings realized during the third fiscal quarter. Accordingly, these two hotels are not expected to contribute significantly to earnings for the remainder of the year. The operations of the Livonia hotel which represented 60% of hotel revenues and 67% of hotel earnings for the current nine-month period are not seasonal in nature, although they are affected by the economic conditions in the Detroit metropolitan area. Solely as a result of the rent increases of Stoody, Folger Adam Company and AutoZone and the modification of the Anthony's lease, annual lease revenues and cash flow will increase by approximately $765,000 (of which a benefit of $196,000 from such adjustments is already reflected in the current nine-month results). In addition, increases in rent on five leases are scheduled to occur in 1996. -8- CORPORATE PROPERTY ASSOCIATES 6 - a California limited partnership Item 2. - MANAGEMENT'S DISCUSSION OF OPERATION, Continued Financial Condition: ------------------- There has been no material change in the Partnership's financial condition since December 31, 1994. The debt financing structure of the Partnership has changed significantly as the result of obtaining $10,000,000 of recourse debt pursuant to a credit agreement that requires the Partnership to meet certain financial covenants. All of the proceeds from the issuance of the debt was used to satisfy a balloon payment on the Stoody mortgage loan which had matured and to pay off the Anthony's mortgage loan at a substantial discount. Prior to the execution of the credit agreement, all of the Partnership's debt financing consisted of nonrecourse mortgage debt. At September 30, 1995, the Partnership was in compliance with all financial covenants under the credit agreement. For the nine-month period ended September 30, 1995 cash flow from operating activities of $5,951,000 was sufficient to fund quarterly distributions to partners of $3,545,000, payment of scheduled mortgage principal installment obligations of $1,010,000 as well as paying the costs related to entering into the credit agreement. Management believes that its cash balance of $3,254,000 and cash from operating activities will be sufficient to meet the Partnership's cash requirements which consist primarily of paying quarterly distributions to partners, meeting scheduled principal payment obligations on its mortgages and funding the replenishment of furniture, fixtures and equipment in the ordinary course of business for its hotel operations. The Partnership is currently committed to retaining the Livonia, Michigan hotel's affiliation with Holiday Inn as a franchisee. Included in other assets on the accompanying balance sheet at September 30, 1995, is a furniture, fixture and equipment reserve account for the Livonia hotel of $165,000. The reserve account is funded by allocating 3% of Livonia's revenues to the account. The Partnership does not anticipate utilizing any funds in excess of the reserve amount and further regularly scheduled additions from hotel revenues to fund any existing replacements of furniture, fixtures and equipment within the next twelve months. In addition, the Partnership is currently committed to meeting the requirements of the Holiday Inn core modernization plan for the Partnership's hotel properties in Alpena and Petoskey, Michigan. The Partnership's share of costs necessary to meet the requirements of the modernization plan, as approved by Holiday Inn, are approximately $395,000. It is anticipated that the improvements required under the plan will be made over the next two years. The Partnership believes its current cash reserves will be sufficient to fund the required improvements. -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 quater ended September 30, 1995 the Partnership was not required to file any reports on Form 8-K. -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. 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) -11- EX-27 2 ART. 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE NINE MOTHNS 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 3,253,997 0 1,204,844 0 0 2,685,829 95,947,929 14,548,716 88,543,883 0 46,954,650 1,278,909 0 0 40,310,324 88,543,883 0 12,861,726 0 0 3,391,525 0 3,388,500 4,786,056 0 4,786,056 0 2,088,268 0 6,874,324 134.82 134.82
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