<PAGE> 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 SEPTEMBER 30, 1998
-------------------------------------------------
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 333-31437
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MARYLAND 13-3951476
(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)
</TABLE>
(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
8,975,399 shares of common stock;
$.001 Par Value outstanding
at November 9, 1998
<PAGE> 2
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I
Item 1. - Financial Information*
Condensed Consolidated Balance Sheets, September 30, 1998
and December 31, 1997 2
Condensed Consolidated Statements of Income for the
three and nine months ended September 30, 1998 3
Condensed Consolidated Statement of Cash Flows for the
nine months ended September 30, 1998 4
Notes to Condensed Consolidated Financial Statements 5-7
Item 2. - Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-10
PART II - Other Information
Item 4. - Submission of Matters to a Vote of Security Holders 11
Item 6. - Exhibits and Reports on Form 8-K 11
Signatures 12
</TABLE>
* 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-
<PAGE> 3
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
PART I
Item 1. - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
------------ ------------
(Note) (Unaudited)
<S> <C> <C>
ASSETS:
Land and buildings, net of accumulated depreciation of
$63,210 at September 30, 1998 $ 30,449,192
Cash and cash equivalents $ 200,000 9,015,964
Equity investment 11,101,219
Other assets 1,103,539
------------ ------------
Total assets $ 200,000 $ 51,669,914
============ ============
LIABILITIES:
Accounts payable to affiliates $ 4,255 $ 1,017,144
Accounts payable and accrued expenses 8,000 183,600
Prepaid rental income and security deposits 74,600
Deferred acquisition fees payable to affiliate 737,005
Dividends payable 897,838
------------ ------------
Total liabilities 12,255 2,910,187
------------ ------------
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value; authorized, 40,000,000 shares; issued and
outstanding, 20,000 and 5,729,604 shares at December 31,
1997 and September 30, 1998 20 5,730
Additional paid-in capital 199,980 49,467,288
Dividends in excess of accumulated earnings (12,255) (685,091)
------------ ------------
187,745 48,787,927
Less, common stock in treasury, at cost,
3,000 shares at September 30, 1998 (28,200)
------------ ------------
Total shareholders' equity 187,745 48,759,727
------------ ------------
Total liabilities and shareholders' equity $ 200,000 $ 51,669,914
============ ============
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Note: The condensed consolidated balance sheet at December 31, 1997 has been
derived from the audited financial statements at that date.
-2-
<PAGE> 4
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS of INCOME (UNAUDITED)
For the three and nine months ended September 30, 1998
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1998 September 30, 1998
------------------ ------------------
<S> <C> <C>
Revenues:
Rental income $ 545,372 $ 547,572
Other interest income 286,706 605,292
---------- ----------
832,078 1,152,864
---------- ----------
Expenses:
Depreciation 57,544 63,210
Interest 7,837 7,862
General and administrative 72,607 319,194
Property expenses 99,973 111,086
---------- ----------
237,961 501,352
---------- ----------
Net income $ 594,117 $ 651,512
========== ==========
Basic earnings per share $ .30 $ .23
========== ==========
Weighted average shares outstanding
- basic and diluted 1,977,584 2,847,868
========== ==========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Note: The Company was formed on June 4, 1997 and had no operating history for
the period from the date of inception (June 4, 1997) through September
30, 1997.
-3-
<PAGE> 5
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT of CASH FLOWS (UNAUDITED)
For the nine months ended September 30, 1998
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $ 651,512
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 63,210
Straight-line rent adjustments (32,359)
Increase in other assets (a) (321,180)
Increase in accounts payable and
accrued expenses (a) 83,600
Increase in accounts payable to affiliates (a) 354,889
Increase in prepaid rental income and security deposits 74,600
------------
Net cash provided by operating activities 874,272
------------
Cash flows from investing activities:
Purchases of real estate and additional capitalized costs (29,775,397)
Contributions to equity investment (11,101,219)
------------
Net cash used in investing activities (40,876,616)
------------
Cash flows from financing activities:
Proceeds from stock issuance, net of costs 49,273,018
Purchase of treasury stock (28,200)
Dividends paid (426,510)
------------
Net cash provided by financing activities 48,818,308
------------
Net increase in cash and cash equivalents 8,815,964
Cash and cash equivalents, beginning of period 200,000
------------
Cash and cash equivalents, end of period $ 9,015,964
============
</TABLE>
(a) Excludes changes in other assets of $750,000 and accounts payable and
accrued expenses and accounts payable to affiliates of $92,000 and
$658,000, respectively, which relate to the raising of capital
(financing activities) rather than the Company's operating
activities.
The accompanying notes are an integral part of the condensed consolidated
financial statements.
-4-
<PAGE> 6
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Basis of Presentation:
The accompanying unaudited condensed financial statements of Corporate Property
Associates 14 Incorporated (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Article 10 of Regulation S-X of the Securities and
Exchange Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
condensed financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation of the results of the interim periods presented have been included.
The results of operations for the interim periods are not necessarily indicative
of results for the full year. For further information refer to the condensed
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 ("SFAS 130"). SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
(revenues, expenses, gains and losses) in general purpose financial statements.
For the three-month and nine-month periods ended September 30, 1998, there were
no differences between net income and comprehensive income.
Note 2. Organization and Offering:
The Company was formed on June 4, 1997 under the General Corporation Law of
Maryland for the purpose of engaging in the business of investing in and owning
industrial and commercial real estate. Subject to certain restrictions and
limitations, the business of the Company is managed by Carey Property Advisors
(the "Advisor").
A maximum of 30,000,000 Shares are being offered to the public on a best efforts
basis by Carey Financial Corporation, an affiliate of the Advisor ("Carey
Financial"), and selected dealers at a price of $10 per share. The offering
commenced November 10, 1997. On June 30, 1997, the Advisor purchased 20,000
shares of common stock for $200,000. Sale of the shares to the public commenced
on December 11, 1997. During the nine-month period ended September 30, 1998,
5,709,604 shares were issued for $57,087,257, net of discounts. In October,
1998, an additional 3,248,795 shares were issued for $32,487,189, net of
discounts.
Note 3. Federal Income Taxes:
The Company intends to qualify as a real estate investment trust ("REIT") under
the Internal Revenue Code of 1986, and accordingly will not be subject to
Federal income taxes on amounts distributed to shareholders provided it
distributes at least 95% of its real estate investment trust taxable income to
shareholders and meets other conditions necessary to retain REIT status.
Note 4. Agreements and Transactions with Related Parties:
The Company has entered into an advisory agreement with the Advisor pursuant to
which the Advisor performs certain services for the Company including the
identification, evaluation, negotiation, purchase and disposition of property,
the day-to-day management of the Company and the performance of certain
administrative services. The Advisor and certain affiliates will receive
substantial fees and compensation in connection with the offering and the
operation of the Company as described in the Prospectus of the Company. In the
future, real property may be acquired by limited partnerships, REITs or other
entities formed by affiliates of the Company and, accordingly, transactions with
related parties may arise between the Company and affiliated entities.
-5-
<PAGE> 7
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
(CONTINUED)
The Company's asset management and performance fees payable to the Advisor are
.50% per annum of Average Invested Assets, as defined in the Prospectus. The
Advisor will not be entitled to receive the performance fees until a 7%
cumulative rate of cash flow from operations, as defined in the Prospectus is
achieved. The Advisor will have the option of receiving the performance fee in
restricted shares of the Company instead of cash, if both parties agree. General
and administrative expense reimbursement consists primarily of the actual cost
of personnel needed in providing administrative services. For the three-month
and nine-month periods ended September 30, 1998, the Company incurred general
and administrative reimbursements of $65,000 and $85,000, respectively. For the
three-month and nine-month periods ended September 30, 1998, asset management
fees of $99,529 and $105,086 were incurred with performance fees in like
amounts.
The Advisor must reimburse the Company at least annually for the amount by which
operating expenses of the Company exceed the 2%/25% Guidelines (2% of Average
Invested Assets or 25% of net income) as defined in the Prospectus. To the
extent that operating expenses payable or reimbursable by the Company exceed the
2%/25% Guidelines and the independent directors of the Company determine that
such expenses were justified based on unusual and nonrecurring factors they deem
sufficient, the Advisor may be reimbursed in future years for the full amount or
any portion of such excess expenses, but only to the extent such reimbursement
would not cause the Company's operating expenses to exceed the 2%/25% Guidelines
in any such future year.
Fees are payable for services provided by the Advisor to the Company relating to
the identification, evaluation, negotiation, financing and purchase of
properties. A portion of such fees will be deferred and payable in annual
installments with each installment equal to .25% of the purchase price of the
properties over eight years following the first anniversary of the date a
property was purchased.
As of September 30, 1998, accounts payable to affiliates consists of $304,144
and $658,000 relating to operating and capital raising activities, respectively.
Note 5. Commitments and Contingencies:
The Company will be liable for certain expenses of the offering (the "Offering")
described in the Prospectus of the Company, including but not limited to filing,
legal, accounting, printing and escrow fees, which are to be deducted from the
gross proceeds of the Offering and are presently estimated to aggregate a
maximum of $10,500,000 assuming the sale of 30,000,000 Shares. The Company will
also be liable for selling commissions of up to $0.65 (6.5%) per Share sold
except for any Shares sold to the Advisor, its Affiliates, the selected dealers
or any of their employees for their own accounts. The Company will pay a
selected dealer fee not to exceed 1% of the price of each Share sold by the
selected dealer. The Company will reimburse Carey Financial for expenses
(including fees and expenses of its counsel) and for the costs of sales,
wholesaling services and information meetings of Carey Financial's employees
relating to the Offering. To the extent, if any, that all organization and
offering expenses, excluding selling commissions, and any fees paid and expenses
reimbursed to the selected dealers or paid on behalf of the selected dealers,
exceed 3.5% of the gross proceeds of the Offering, such excess will be paid by
the Advisor without recourse to or reimbursement by the Company.
-6-
<PAGE> 8
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -UNAUDITED (CONTINUED)
Note 6. Industry Segment Information:
The Company's operations consist of the investment in and the leasing of
industrial and commercial real estate. For the nine-month period ended September
30, 1998, the Company earned leasing revenues from the following lease obligors:
<TABLE>
<CAPTION>
1998 %
-------- ---
<S> <C> <C>
Best Buy Co., Inc. $347,372 63%
Burlington Motor Carriers, Inc. 200,200 37
-------- ---
$547,572 100%
======== ===
</TABLE>
Note 7. Dividends:
On April 7, 1998, the Board of Directors declared a dividend at the rate of
$.001736 per share per day for each day of the period from and including April
7, 1998 through June 30, 1998. Dividends of $426,510 were paid on July 15, 1998.
On September 24, 1998, the Board of Directors declared a dividend at the rate of
$.001734 per share per day for each day of the period from and including July 1,
1998 through September 30, 1998. Dividends of $897,838 were paid on October 15,
1998, and are recorded as dividends payable in the accompanying condensed
consolidated financial statements.
Note 8. Purchase of Real Estate
On July 28, 1998, the Company purchased a retail property in Torrance,
California for $19,582,000 and assumed an existing net lease, as lessor, with
Best Buy Co., Inc., as lessee. The lease has a remaining initial term through
January 2005 with a five-year renewal option. The lease currently provides for
annual rent of $1,741,990 until November 1999 at which time annual rent will
increase to $1,946,930.
On July 29, 1998, the Company purchased land in San Clemente, California for
$1,900,000 upon which an office facility is being constructed pursuant to a
construction and development agreement with a developer and a lease agreement
with Metagenics Incorporated ("Metagenics"). Total purchase price and
construction costs are expected to be $11,500,000. The developer has the
obligation to fund any excess costs necessary to complete the project. During
the construction period, Metagenics will pay monthly installments based on an
amount indexed to project costs advanced by the Company. Monthly installments
received by the Company during the construction period are recorded as a
reduction in the basis of the building and not as a rental revenue in accordance
with generally accepted accounting principles. Upon completion of construction,
a lease term of twelve years will commence with Metagenics having options for
two five-year renewal terms. The initial annual rent will be equal to 11% of the
Company's total project costs with stated annual increases of 3.5% during the
initial term.
-7-
<PAGE> 9
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with the Company's
condensed consolidated financial statements and notes thereto as of September
30, 1998 included in this quarterly report and the Company's Annual Report on
Form 10-K for the period ended December 31, 1997. This quarterly report contains
forward looking statements. Such statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievement of the Company to be materially different from the results of
operations or plan expressed or implied by such forward looking statements.
Accordingly, such information should not be regarded as representations by the
Company that the results or conditions described in such statements or the
objectives and plans of the Company will be achieved.
The Company was formed in June 1997 for the purpose of investing in net
lease commercial and industrial real estate. A maximum of 30,000,000 shares of
common stock are being offered to the public on a "best efforts" basis at a
price of $10 per share. As of September 30, 1998, the Company had issued
5,729,604 shares ($57,296,040) pursuant to the public offering of common stock.
An additional 3,248,795 shares ($32,487,950) have been issued since September
30, 1998. Other than the costs related to the offering and establishing a
working capital reserve to satisfy liquidity requirements, the net proceeds will
be used, along with limited recourse mortgage debt, to acquire properties. It is
anticipated that approximately 86% of the money raised in the offering will be
used to purchase real estate.
The Company's investment objectives are to pay quarterly dividends at an
increasing rate, use the net proceeds of the offering and limited recourse
mortgage debt to invest in a diversified portfolio of real estate that will
increase in value and to increase the Company's equity in real estate by making
regular principal payments on its limited recourse mortgage debt. In addition,
in structuring lease transactions, the Company will attempt to negotiate grants
of common stock warrants in order to realize benefits of appreciation that may
occur if the credit rating of a tenant improves or the tenant completes an
initial public offering of common stock. The Company received a grant of
warrants to purchase common stock in connection with structuring its transaction
with Burlington Motor Carriers in June 1998. The warrants received represent
1.5% of the fully diluted shares of Burlington Motor Carriers.
To date, the Company has (i) purchased a retail property in Torrance,
California and assumed an existing net lease with Best Buy Co., Inc., (ii)
purchased a distribution facility in Daleville, Indiana and entered into a net
lease with Burlington Motor Carriers, Inc., (iii) purchased land in San
Clemente, California upon which the Company is constructing an office facility
on a build-to-suit basis for Metagenics Incorporated and (iv) is funding an
equity interest of up to 49.99% in a joint venture owning a building under
construction in Heyward, California and leased to Etec Systems, Inc.. Corporate
Property Associates 12 Incorporated ("CPA(R):12"), an affiliate, leases other
buildings to Etec at that site and owns the majority interest in the project.
The total estimated project costs for the Etec project are $52,356,000 with
$30,000,000 to be funded by a limited recourse mortgage loan for which the
Company and CPA(R):12 have received a commitment from a lender. As of September
30,1998, the Company has used $40,877,000 to fund these investments. The Company
intends to place limited recourse mortgage loans collateralized by its
properties and to use the proceeds of such loans to purchase additional real
estate interests in order to further diversify its holdings. As of November 6,
1998, the Company has $33,000,000 available to invest in real estate and to fund
its build-to-suit commitments.
For the nine-month period ended September 30, 1998, cash flow from
operations of $874,000 was sufficient to pay dividends of $427,000.
-8-
<PAGE> 10
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
The so-called "Year 2000 issue" is the name that has been given to the
series of problems that have resulted or may result from computer programs
having been written using two digits rather than four to define a year. For
example, any program that has time-software may recognize a date using "00" as
the year 1900 rather than 2000. This shortcoming could result in the failure of
major systems or miscalculations causing major disruptions to business
operations. The Company has no computer systems of its own, but is dependent
upon the systems maintained by an affiliate of its Advisor and certain other
third parties including its bank and transfer agent.
The Company and its affiliates are actively evaluating their readiness
relating to the Year 2000 issue. In 1998, the Company, its Advisor, and
affiliates commenced an assessment of their local area network of personal
computers and related equipment and are in the process of replacing or upgrading
the equipment that has been identified as not being Year 2000 compliant. The
program is expected to be completed in the first or second quarter of 1999. The
Company and its affiliates have also engaged outside consultants experienced in
detecting and addressing Year 2000 issues, and they will continue to research
and test the affiliate's applications and systems.
At the same time, the Company, its Advisor, and affiliates are evaluating
all of their applications software, all of which are commercial "off the shelf"
programs that have not been customized. During 1998, the Company commenced a
project to select a comprehensive integrated real estate accounting and asset
management software package to replace its existing applications. A commercial
Windows-based integrated accounting and asset management based application is
being tested and is scheduled to be installed during the second or third quarter
of 1999. This software has been designed to use four digits to define a year.
Because the Company's primary operations consist of investing in and receiving
rents on long-term net leases of real estate, while the failure of the Advisor
and its affiliates to correct fully Year 2000 issues could disrupt its
administrative operations, the resulting disruptions would not likely have a
material impact on the Company's results of operations, financial condition or
liquidity. Contingency plans to address potential disruptions are in the process
of being developed. The Company's share of costs associated with required
modifications to become Year 2000 compliant is not expected to be material to
the Company's financial position. The Company's share of the estimated total
cost of the Year 2000 project is expected to be approximately $25,000.
Although the Company believes that it will address its internal Year 2000
issues in a timely manner, there is a risk that the inability of third-party
suppliers and lessees to meet Year 2000 readiness issues could have an adverse
impact on the Company. The Company and its affiliates have identified their
critical suppliers and are requiring that these suppliers communicate their
plans and progress in addressing Year 2000 readiness. The most critical
processes provided by third-party suppliers are the Company's bank and transfer
agent. The Company's operations may be significantly affected if such providers
are ineffective or untimely in addressing Year 2000 issues.
The Company contacted each of its lessees regarding Year 2000 readiness
and has emphasized the need to address Year 2000 issues. Generally, lessees are
contractually required to maintain their leased properties in good working order
and to make necessary alterations, foreseen or unforeseen, to meet their
contractual obligations. Because of those obligations, the Company believes that
the risks and costs of upgrading systems related to operations of the buildings
and that contain technology affected by Year 2000 issues will generally be
absorbed by lessees rather than the Company. The major risk to the Company is
that Year 2000 issues have such an adverse effect on the financial condition of
a lessee that its ability to meet its lease obligations, including the timely
payment of rent, is impaired. In such an event, the Company may ultimately incur
the costs for Year 2000 readiness at the affected properties. The potential
materiality of any impact is not known at this time.
-9-
<PAGE> 11
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
The Company's net income for the three-month and nine-month periods ended
September 30, 1998 resulted primarily from interest income earned on uninvested
cash and rents from the Company's new leases with Best Buy and Burlington Motor
Carriers. The results of operations are not indicative of future results as the
objective of the Company is to invest the proceeds of its offering in real
estate and only to maintain cash balances at levels deemed to be sufficient for
working capital needs. Accordingly, as cash is used to purchase real estate,
interest income is expected to lessen as a component of total revenues. As the
Company's assets increase, general and administrative and property expenses will
also increase. Interest expense will be a significant component of operating
expenses as mortgage loans are obtained.
Under generally accepted accounting principles, no income or expense is
recognized on projects under construction. Currently no income is being
recognized on the investment in Etec and the Metagenics lease even though leases
are in effect for these build-to-suits. During the build-to-suit construction
period, the cash flow received from these investments is recorded as a reduction
of investment rather than income. Upon completion of construction, annual cash
flow (rents less mortgage debt service) from the Etec and Metagenics
investments, assuming the Company funds the maximum commitments on these two
projects, is expected to be $2,500,000. Annual cash flow from the leases with
Burlington Motor Carriers and Best Buy total $2,534,000.
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 131, "Disclosure about
Segments of an Enterprise and Related Information". SFAS No. 131 establishes
accounting standards for the way that public business enterprises report
selected information about operating segments in interim financial reports
issued to shareholders. It also establishes standards for related disclosures
about products, geographic area and major customers. The statement is effective
for financial periods beginning after December 15, 1997, however, SFAS No. 131
does not need to be applied to interim financial statements in 1998. In June
1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities". SFAS No. 133 establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS No. 133 is effective
for all quarters of fiscal years beginning after June 15, 1999. The Company is
currently evaluating the impact, if any, of SFAS No. 131 and SFAS No. 133.
-10-
<PAGE> 12
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
PART II
Item 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended September 30, 1998 no matters were
submitted to a vote of Security Holders.
Item 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Pursuant to Rule 701 of Regulation S-K, the use of proceeds
from the Company's offering of common stock which commenced
November 10, 1997 is as follows:
<TABLE>
<S> <C>
Shares registered: 30,000,000
Aggregate price of offering amount registered: $300,000,000
Shares sold: 5,709,604
Aggregated offering price of amount sold: $ 57,096,040
Direct or indirect payments to directors, officers, general
partners of the issuer or their associates, to persons
owning ten percent or more of any class of equity
securities of the issuer and to affiliates of
the issuer: $ 1,577,974
Direct or indirect payments to others: $ 6,245,048
Net offering proceeds to the issuer after
deducting expenses: $ 49,273,018
Purchases of real estate: $ 40,876,616
Working capital reserves: $ 570,960
Temporary investments in cash and cash
equivalents: $ 7,825,442
</TABLE>
(b) Reports on Form 8-K:
During the quarter ended September 30, 1998 the Company was
not required to file any report on Form 8-K.
-11-
<PAGE> 13
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
11/9/98 By: /s/ Steven M. Berzin
- ------- --------------------------------------
Date Steven M. Berzin
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
11/9/98 By: /s/ Claude Fernandez
- ------- --------------------------------------
Date Claude Fernandez
Executive Vice President and
Chief Administrative Officer
(Principal Accounting Officer)
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 9,015,964
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,015,964
<PP&E> 30,512,402
<DEPRECIATION> 63,210
<TOTAL-ASSETS> 51,669,914
<CURRENT-LIABILITIES> 2,910,187
<BONDS> 0
0
0
<COMMON> 5,730
<OTHER-SE> 48,753,997
<TOTAL-LIABILITY-AND-EQUITY> 51,669,914
<SALES> 0
<TOTAL-REVENUES> 1,152,864
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 501,352
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 651,512
<INCOME-TAX> 0
<INCOME-CONTINUING> 651,512
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 651,512
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.23
</TABLE>
