-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, WPt0dUfxiGP4aHMWNM6DamcIYzEAs5rFXwLUGUHvUK0NiC6L9E4NOZsyR07gAEKv LGkNs9Rwy0WI1BOyaWDttA== 0000950130-95-000954.txt : 19950530 0000950130-95-000954.hdr.sgml : 19950530 ACCESSION NUMBER: 0000950130-95-000954 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORPORATE PROPERTY ASSOCIATES 7 CENTRAL INDEX KEY: 0000789459 STANDARD INDUSTRIAL CLASSIFICATION: 6500 IRS NUMBER: 133327950 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15778 FILM NUMBER: 95537736 BUSINESS ADDRESS: STREET 1: 50 ROCKEFELLER PLAZA CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2124921100 MAIL ADDRESS: STREET 1: 620 FIFTH AVE STREET 2: 620 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10020 10-Q 1 FORM 10-Q --------------------------------- OMB APPROVAL --------------------------------- OMB NUMBER 3235-0070 EXPIRES OCTOBER 31, 1995 ESTIMATED AVERAGE BURDEN HOURS PER RESPONSE 190.00 --------------------------------- 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, 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 0-15778 -------------------------------------------------------- CORPORATE PROPERTY ASSOCIATES 7, A CALIFORNIA LIMITED PARTNERSHIP - - - - - - - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) CALIFORNIA 13-3327950 - - - - - - - ------------------------------------------------------------------------------- (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 7 - a California limited partnership INDEX Page No. -------- PART I ------ Item 1. - Financial Information* Consolidated Balance Sheets, December 31, 1994 and March 31, 1995 2 Consolidated Statements of Income for the three months ended March 31, 1994 and 1995 3 Consolidated Statements of Cash Flows for the three months ended March 31, 1994 and 1995 4 Notes to Consolidated Financial Statements 5-7 Item 2. - Management's Discussion of Operations 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 7 - a California limited partnership PART I ------ Item 1. - FINANCIAL INFORMATION ------------------------------- CONSOLIDATED BALANCE SHEETS
December 31, March 31, 1994 1995 ------------- ------------ (Note) (UNAUDITED) ASSETS: Land, buildings and personal property, net of accumulated depreciation of $10,532,608 at December 31, 1994 and $10,853,656 at March 31, 1995 $38,920,078 $38,611,942 Net investment in direct financing leases 15,761,594 15,761,594 Cash and cash equivalents 10,525,885 3,722,480 Accrued interest and rents receivable 97,984 19,365 Other assets 1,559,084 1,451,155 ----------- ----------- Total assets $66,864,625 $59,566,536 =========== =========== LIABILITIES: Mortgage notes payable $17,314,570 $16,950,266 Note payable 9,606,837 9,606,837 Accrued interest payable 403,686 451,039 Accounts payable and accrued expenses 961,073 853,863 Accounts payable to affiliates 69,568 70,563 Prepaid and deferred rental income 450,341 450,200 ----------- ----------- Total liabilities 28,806,075 28,382,768 ----------- ----------- PARTNERS' CAPITAL: General Partners 113,032 43,530 Limited Partners (45,274 Limited Partnership Units issued and outstanding) 37,945,518 31,140,238 ----------- ----------- Total partners' capital 38,058,550 31,183,768 ----------- ----------- Total liabilities and partners' capital $66,864,625 $59,566,536 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. Note: The balance sheet at December 31, 1994 has been derived from the audited consolidated financial statements at that date. - 2 - CORPORATE PROPERTY ASSOCIATES 7 - a California limited partnership CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended March 31, 1994 March 31, 1995 -------------- --------------- Revenues: Rental income from operating leases $ 864,596 $1,076,977 Interest income from direct financing leases 942,558 559,137 Other interest income 31,148 65,581 Revenue from restaurant operations, net of cost of sales 1,064,572 1,085,410 Revenue of hotel operations 1,101,731 1,221,915 Other income 434,868 Loss from equity investment (37,795) (36,496) ---------- ---------- 4,401,678 3,972,524 ---------- ---------- Expenses: Interest on mortgages and note payable 839,074 660,220 Operating expenses of hotel operations 846,925 925,679 Operating expenses of restaurant operations 757,513 781,505 Depreciation 411,159 321,048 General and administrative 88,329 213,973 Property expenses 64,890 64,415 Amortization 19,250 17,517 ---------- ---------- 3,027,140 2,984,357 ---------- ---------- Net income $1,374,538 $ 988,167 ========== ========== Net income allocated to General Partners $ 82,472 $ 59,290 ========= ========= Net income allocated to Limited Partners $1,292,066 $ 928,877 ========== ========== Net income per Unit (45,274 Limited Partnership Units) $28.54 $20.52 ====== ======
The accompanying notes are an integral part of the consolidated financial statements. - 3 - CORPORATE PROPERTY ASSOCIATES 7 - a California limited partnership CONSOLIDATED STATEMENTS of CASH FLOWS (UNAUDITED)
Three Months Ended March 31, ------------------------ 1994 1995 ---------- ----------- Cash flows from operating activities: Net income $1,374,538 $ 988,167 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 430,409 338,565 Other noncash items (38,654) 37,244 Loss from equity investment 37,795 36,496 Distributions from equity investment (38,944) Restructuring fees received in connection with lease modification 240,741 Note receivable received in connection with bankruptcy settlement (327,586) Net change in operating assets and liabilities (825,589) 75,232 ---------- ----------- Net cash provided by operating activities 891,654 1,436,760 ---------- ----------- Cash flows from investing activities: Additional capitalized costs (30,205) (12,912) ---------- ----------- Net cash used in investing activities (30,205) (12,912) ---------- ----------- Cash flows from financing activities: Distributions to partners (746,539) (7,862,949) Payments on mortgage principal (164,098) (364,304) Deferred financing costs (11,643) ---------- ----------- Net cash used in financing activities (922,280) (8,227,253) ---------- ----------- Net decrease in cash and cash equivalents (60,831) (6,803,405) Cash and cash equivalents, beginning of period 3,260,303 10,525,885 ---------- ----------- Cash and cash equivalents, end of period $3,199,472 $ 3,722,480 ========== =========== Supplemental disclosure of cash flows information: Interest paid $ 902,552 $ 612,867 ========== ===========
The accompanying notes are an integral part of the consolidated financial statements. - 4 - CORPORATE PROPERTY ASSOCIATES 7 - a California limited partnership NOTES TO CONSOLIDATED 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 three months ended March 31, 1995 are summarized as follows:
Per Limited Partner Quarter Ended General Partners Limited Partners Unit - - - - - - - -------------------- ---------------- ---------------- ---------------------- December 31, 1994 $60,195 $ 943,057 $ 20.83 ======= ========== ======= Special distribution $68,597 $6,791,100 $150.00 ======= ========== =======
A distribution of $17.74 per Limited Partner Unit for the quarter ended March 31, 1995 was declared and paid in April 1995. Note 3. Transactions with Related Parties: --------------------------------- For the three-month periods ended March 31, 1994 and 1995, the Partnership incurred property management and leasing fees of $31,128 and $27,239, respectively, and general and administrative expense reimbursements of $37,860 and $26,326, 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 three months ended March 31, 1994 and 1995 were $9,685 and $38,359, respectively. - 5 - CORPORATE PROPERTY ASSOCIATES 7 - a California limited partnership NOTES TO CONSOLIDATED 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 food service facility and a hotel business. For the three-month periods ended March 31, 1994 and 1995, the Partnership earned its lease revenues (rental income plus interest income from financing leases) from the following lease obligors:
1994 % 1995 % ---------- ---- ---------- ---- Advanced System Applications, Inc. $ 177,843 10% $ 394,658 25% The Gap, Inc. 231,892 13 231,892 14 Sybron Acquisition Company 204,791 11 204,791 12 KSG, Inc. 187,605 10 204,445 12 Swiss M-Tex, L.P. 125,414 7 136,097 8 AutoZone, Inc. 108,591 6 108,591 7 Other 114,710 6 99,525 6 Northern Automotive, Inc. 97,141 6 97,208 6 NVRyan L.P. 73,046 4 72,889 5 NYNEX Corporation 53,900 3 53,900 3 Winn-Dixie Stores, Inc. 32,118 2 32,118 2 Mid Continent Bottlers, Inc. 400,103 22 ---------- --- ---------- --- $1,807,154 100% $1,636,114 100% ========== === ========== ===
Operating results for the food service business for the three-month periods ended March 31, 1994 and 1995 are summarized as follows:
1994 1995 ----------- ----------- Net sales $1,491,072 $1,517,310 Cost of goods sold (426,500) (431,900) Other operating expenses (757,513) (781,505) ---------- ---------- Food service operating income $ 307,059 $ 303,905 ========== ==========
- 6 - CORPORATE PROPERTY ASSOCIATES 7 - a California limited partnership NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED) Operating results for the hotel business for the three-month periods ended March 31, 1994 and 1995 are summarized as follows:
1994 1995 ----------- ----------- Revenues $1,101,731 $1,221,915 Fees paid to hotel management company (16,526) (31,564) Other operating expenses (830,399) (894,115) ---------- ---------- Income from hotel operations $ 254,806 $ 296,236 ========== ==========
Note 5. Equity Investment: ----------------- The Partnership and Corporate Property Associates 8, an affiliate, own 50% interests in a limited partnership which owns a hotel property in Topeka, Kansas leased to Hotel Corporation of America. The Partnership's carrying value in its investment at March 31, 1995 is included in Other assets. Summarized financial information of the limited partnership is as follows:
(in thousands) December 31, March 31, 1994 1995 ------------ --------- Assets, net of accumulated depreciation $8,395 $8,265 Mortgage notes and bonds payable 8,866 8,814 Other liabilities 14 15 Partners' capital (485) (564) Three Months Ended March 31, 1994 March 31, 1995 -------------- -------------- Revenues $ 211 $ 211 Interest expense (160) (157) Other operating expenses (126) (127) ------ ------ Net loss $ (75) $ (73) ====== ======
- 7 - CORPORATE PROPERTY ASSOCIATES 7 - a California limited partnership Item 2. - MANAGEMENT'S DISCUSSION OF OPERATIONS ----------------------------------------------- Net income decreased by $386,000 for the three-month period ended March 31, 1995 as compared with net income for the three-month period ended March 31, 1994. As the results for the three-month period ended March 31, 1994 included $435,000 from nonrecurring sources, results from on-going operations would have reflected an increase, even though the Partnership sold properties in November 1994 which represented over 20% of its lease revenues for the comparable prior period. The nonrecurring other income in the three-month period ended March 31, 1994 represented amounts received in a settlement from an affiliate of the former lessee of the Partnership's hotel property. The decrease in lease revenues of $171,000 was attributable to the sale in November 1994 of properties leased to Mid- Continent Bottlers, Inc. ("Mid-Continent") which contributed $400,000 of lease revenues for the comparable 1994 period. Lease revenues benefited from the July 1, 1994 lease modification with Advanced Systems Applications, Inc. ("ASA") which contributed an additional $217,000 to lease revenues. General and administrative expenses increased as a result of the increase in partnership level taxes due to several states. Interest expense decreased due to the satisfaction of the Mid-Continent mortgage loan in connection with the sale of the properties, the payoff of the mortgage loans on the KSG, Inc., AutoZone, Inc., NYNEX Corporation and The Gap Inc. properties and the partial prepayment of the ASA mortgage loan during the fourth quarter of 1994. Depreciation decreased due to the full depreciation in the fourth quarter of 1994 of certain furniture, fixtures and equipment at the hotel property. Hotel operating income increased by 16% as the result of a strong occupancy rate, which increased to 78% from 72%, and a 6% increase in the average room rate. Earnings from the food service operation were relatively unchanged from the prior period, maintaining the substantial increase that was attained in 1994. There has been no material change in the Partnership's financial condition since December 31, 1994. The Partnership distributed $6,860,000 of proceeds from the Mid-Continent sale to partners during the quarter. Such distribution of $150 per Limited Partner Unit represented a return of capital distribution pursuant to the Partnership's Amended Agreement of Limited Partnership. The amount from this special distribution to Limited Partners represented 15% of the amount raised under the Partnership's public offering. With its current cash balance of $3,722,000 and its cash flow from operations, the Partnership still has sufficient liquidity to pay its quarterly distributions to partners, meet scheduled debt service installment obligations and fund replacement of fixtures, furniture and equipment in the ordinary course of operating the hotel and food service facility. In addition, the Partnership's cash reserves would be sufficient to fund the $280,000 in improvements which are required to comply with Holiday Inn's modernization plan in the event that a decision is made to retain the hotel's affiliation as a Holiday Inn franchise. Management believes that it may need to incur such costs in order to remain competitive even if the affiliation with Holiday Inn is not retained. Included in other assets on the accompanying consolidated balance sheet at March 31, 1995, is a furniture, fixture and equipment reserve account of $128,000 which would be available to partially fund any necessary upgrade. The reserve account is funded by allocating 3% of hotel revenues to the reserve account. A balloon payment of $3,871,000 will be due in December 1995 on two mortgage loans collateralized by the food service facility. The Partnership has the option of extending one of the loans if it elects to make a partial prepayment of $600,000, in which event the entire $1,083,000 principal balance of the second loan would be forgiven. If the Partnership is not able to fully fund the balloon payment from cash reserves, Management believes that the Partnership currently has the ability to leverage several of its properties in the event that the current loan cannot be extended or refinanced. Accordingly, this balloon payment commitment should not have a significant impact on the Partnership's liquidity. - 8 - CORPORATE PROPERTY ASSOCIATES 7 - 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, 1995 the Partnership was not required to file any reports on Form 8-K. - 9 - CORPORATE PROPERTY ASSOCIATES 7 - 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 7 - a California limited partnership By: SEVENTH CAREY CORPORATE PROPERTY, INC. 05/12/95 By: /s/ Claude Fernandez -------------- ------------------------------ Date Claude Fernandez Executive Vice President and Chief Administrative Officer (Principal Financial Officer) 05/12/95 By: /s/ Michael D. Roberts -------------- ------------------------------- Date Michael D. Roberts First Vice President and Controller (Principal Accounting Officer) - 10 - EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 3,722,480 0 19,365 0 0 1,451,155 65,227,192 10,853,656 59,566,536 1,825,665 26,557,103 0 0 0 31,183,768 59,566,536 0 3,972,524 0 0 2,324,137 0 660,220 988,167 0 988,167 0 0 0 988,167 20.52 20.52
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