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CORPORATE PROPERTY ASSOCIATES 14
INCORPORATED
SUPPLEMENT DATED NOVEMBER 16, 1998 TO
PROSPECTUS DATED AUGUST 18, 1998
(HEREINAFTER THE "PROSPECTUS")
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SUMMARY OF THE SUPPLEMENT
RISK FACTORS (PAGE 2)
This section sets forth information on risks to the Company
associated with the Year 2000 Issue.
MANAGEMENT AND DIRECTORS (PAGE 2)
This section sets forth information with respect to certain changes
in the officers and Directors of the Company.
DESCRIPTION OF PROPERTIES (PAGE 3)
This section sets forth information on the Company's proposed
acquisition of the office and manufacturing facility to be leased to The
Benjamin Ansehl Co.
THE OFFERING (PAGE 4)
This section sets forth information on the sale of shares and the
issuance of shares to shareholders.
Capitalized terms not defined herein will have the meanings ascribed to them in
the Prospectus.
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RISK FACTORS
The Year 2000 issue exists because many software systems, which use
only two digits to identify a year in a date field, were designed without
considering the impact of the upcoming change in the century. There is
significant uncertainty concerning the scope and magnitude of problems
associated with the century change. Some of systems critical to the Company's
operations could fail or function improperly if not made Year 2000 compliant.
The Company's books and records are maintained by the Advisor. An
Affiliate of the Advisor services the computer system used for maintaining such
books and records. The Affiliate has completed a preliminary assessment of Year
2000 issues. Based on the results of that assessment, the Affiliate believes
that such issues will not materially affect the Company's operations. Such
assessment is not complete and there can be no assurance that the Affiliate will
identify and remedy all potential Year 2000 issues in a timely fashion. Computer
problems could interfere with the Company's operations.
The Company also faces risks that any third parties with which it
transacts business may not be Year 2000 compliant. The Company relies on its
bank and transfer agent for certain computer-related services and has entered
into discussions regarding their Year 2000 readiness. If the Year 2000 issue
prevents these or any other third parties from delivering products or services
required by the Company, the Company's operations could be adversely affected.
MANAGEMENT AND DIRECTORS
The following changes were made to the management and Directors of
Corporate Property Associates 14 Incorporated (the "Company"):
H. Augustus Carey was elected President and Secretary of the Company
on October 8, 1998. On the same date, Gordon J. Whiting was elected Executive
Vice President and Portfolio Manager of the Company. On September 30, 1998,
Barclay G. Jones resigned as President and Director of the Company.
The following is an updated biographical summary for Thomas E. Zacharias,
a Director of the Company:
Thomas E. Zacharias, age 44, was elected a Director in June 1997.
Prior to the merger of the $5.8 billion Corporate Property Investors portfolio
with Simon Property Group in September 1998, Mr. Zacharias was Vice President of
Corporate Property Investors, a position he held since 1986, and was responsible
for various acquisitions, development and asset management activities. Corporate
Property Investors, a party which is unaffiliated with CPA(R):14, was the
largest privately held real estate investment trust (REIT) in the United States
and focused on the ownership and management of high quality super-regional
shopping malls. Prior to joining Corporate Property Investors in 1981, Mr.
Zacharias was Project Director for the New York State Urban Development
Corporation from 1980 - 1981, and served as the Assistant to the Chief Operating
Officer 1979 - 1980. Mr. Zacharias received his undergraduate degree, magna cum
laude, from Princeton University in 1976 and a MBA from the Yale School of
Management in 1979. He is a member of the National Association of Real Estate
Investment Trusts, Urban Land Institute and International Council of Shopping
Centers. Mr. Zacharias formerly served as a Director of U.S. Prime Properties,
Inc. Mr. Zacharias is a Director of CIP(R) and CPA(R):12.
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DESCRIPTION OF THE PROPERTIES
PROPOSED ACQUISITION OF PROPERTY TO BE LEASED TO THE BENJAMIN ANSEHL CO.
The Company has entered into a letter of intent to purchase from The
Benjamin Ansehl Company ("Ansehl") an office and manufacturing facility (the
"Ansehl Facility") consisting of approximately 154,760 square feet of space
located on 8.5 acres of land in Overland, Missouri. The Ansehl Facility is
suitable and adequate for use as a manufacturing, warehousing and office space.
If the proposed transaction occurs, the Company will form a subsidiary (the
"Ansehl Subsidiary") to take title to the Ansehl Facility.
Concurrently with the acquisition of the Ansehl Facility, the Ansehl
Subsidiary will enter into a net lease (the "Ansehl Lease"). Material terms of
the proposed Ansehl Lease are described below.
PURCHASE TERMS
The cost to the Company of acquiring the Ansehl Facility, including
the Acquisition Fee payable to an Affiliate of the Advisor, is expected to be
$6,021,000 which amount is less than the leased fee Appraised Value of the
Ansehl Facility. An Acquisition Fee of $271,000 will be paid to W.P. Carey &
Co., Inc., ("W.P. Carey & Co.") an Affiliate of the Advisor, by the Ansehl
Subsidiary. W.P. Carey & Co. will also receive a Subordinated Acquisition Fee of
$15,056, payable in each of the next eight years, but only if the Company
satisfies the Preferred Return.
Warrants
The Company will also receive warrants to purchase 1.50% of the
fully diluted shares of the outstanding common stock of Ansehl. The warrants
will have a term of 15 years and a strike price of $26.738, which is the same
strike price at which management received its warrants.
DESCRIPTION OF THE LEASE
General
The Ansehl Lease will be absolutely net and bondable and in
financable form. Ansehl will pay maintenance, insurance, taxes and all other
expenses associated with the operation and maintenance of the Ansehl Facility,
except for the Ansehl Subsidiary's debt service, if any, and income taxes.
Term
The initial term of the Ansehl Lease will be fifteen years, followed
by two five-year renewal terms at the option of Ansehl.
Rent
The initial annual rent under the Ansehl Lease is expected to be
$649,750 payable quarterly in equal installments of $162,437.50. Additionally,
the Ansehl Lease provides that at the beginning of the third year of the initial
term and every two years thereafter, the annual rent will be adjusted by the
cumulative increase in the Consumer Price Index over the prior two years.
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Description of Financing
The Company is seeking mortgage financing in the amount of
$3,500,000 for the Ansehl Facility, but the Company has not obtained a
commitment for any such financing at this time.
Description of Ansehl
Ansehl is a diversified manufacturer/marketer of liquid filled
health and beauty care products.
The following is a summary of selected financial data for Ansehl for
the last three years:
<TABLE>
<CAPTION>
STATEMENT OF EARNINGS
FOR THE FISCAL YEAR ENDED March 1996 March 1997 March 1998
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(in thousands)
<S> <C> <C> <C>
Revenues.............................. $25,180 $43,552 $50,543
Gross Profit.......................... 5,779 7,749 8,200
Selling, general and administrative
expenses.............................. 3,500 4,761 5,467
Operating Income...................... 1,435 1,946 1,619
Net Income............................ 359 (206) (196)
BALANCE SHEET DATA
FOR THE FISCAL YEAR ENDED March 1996 March 1997 March 1998
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(in thousands)
Total Assets.......................... $16,568 $31,150 $29,025
Long-term debt........................ 3,877 6,886 14,260
Shareholders' equity.................. 1,724 4,789 4,593
</TABLE>
THE OFFERING
On October 23, 1998 the Company issued 3,248,795 shares to investors
in return for approximately $32,487,000 in net proceeds previously held in
escrow. As of October 23, 1998, the Company had issued a total of 8,965,899
shares in exchange for gross proceeds of approximately $89,619,000.
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