<PAGE> 1
CORPORATE PROPERTY ASSOCIATES 14
INCORPORATED
SUPPLEMENT DATED SEPTEMBER 21, 1999 TO
PROSPECTUS DATED JUNE 1, 1999
(HEREINAFTER THE "PROSPECTUS")
SUMMARY OF THE SUPPLEMENT
DESCRIPTION OF PROPERTIES (PAGE 2)
This section sets forth information on CPA(R):14's acquisition of an office
facility and build-to-suit property leased to CheckFree Corporation, a
build-to-suit property leased to Builders' Supply & Lumber Co., Inc., a
distribution and production facility leased to The Scott Co. of California,
Inc., and four distribution facilities leased to AmeriServe Food Distribution,
Inc.
THE OFFERING (PAGE 7)
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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DESCRIPTION OF THE PROPERTIES
PROPERTY LEASED TO CHECKFREE CORPORATION
General
On June 3, 1999, CPA(R):14 and Carey Diversified LLC, an affiliate, both
through 50% ownership interests in a limited liability company, purchased
approximately 80 acres of land and two existing office buildings in Norcross,
Georgia which comprise approximately 120,550 square feet. CPA(R):14 and Carey
Diversified assumed a net lease with CheckFree Corporation, Inc. on the existing
buildings. CPA(R):14 and Carey Diversified will construct upon the land and
lease to CheckFree a build-to-suit building which will contain approximately
100,125 square feet upon completion. The existing buildings are suitable and
adequate for their intended uses, and upon completion, the build-to suit
building will be suitable and adequate for its intended uses. The cost of the
existing buildings and the build-to-suit building will be depreciated for tax
purposes over a 40-year period on a straight-line basis. In addition, CPA(R):14
and Carey Diversified are leasing a portion of the 80 acres of land to CheckFree
under a ground lease.
Purchase Terms
The cost of acquiring the existing buildings and land and of constructing
the build-to-suit building, including the acquisition fee payable to an
affiliate of the Carey Property Advisors LP, the advisor, is $30,785,340, of
which $11,060,745 will be disbursed for construction of the build-to-suit
building. CPA(R):14 and Carey Diversified paid an acquisition fee of $1,059,162
to W.P. Carey & Co., Inc. Carey Property Advisors will receive a deferred fee of
$52,958, payable each of the next eight years, but only if CPA(R):14 satisfies
the preferred return.
DESCRIPTION OF THE LEASES
General
The leases are absolutely net and bondable and in normal financeable form.
CheckFree will pay maintenance, insurance, taxes and all other expenses
associated with the operation and maintenance of the facility. In the opinion of
management, the facility is adequately covered by insurance.
Term
The initial term of the lease on the existing buildings and the land
commenced on September 19, 1990, and will terminate on December 31, 2015. The
lease on the existing building has three five-year renewal terms at the option
of CheckFree.
The initial term of the lease on the build-to-suit property commenced on
February 1, 1999, and will terminate on December 31, 2015. The lease on the
build-to-suit property has three successive five-year renewal terms at the
option of CheckFree.
Rent
Annual rent under the lease on the existing buildings is $2,487,744 with
rent increases scheduled for January 2004 and each year thereafter based on a
formula indexed to increases in the Consumer Price Index capped at 2.5% per
year. The current rent under the lease on the land is approximately $76,500 per
annum.
Annual rent under the lease for the build-to-suit property, upon completion
of the building (which is scheduled for June 1, 2000), will be approximately
$1,552,000. Commencing on January 1, 2001 and on each January 1 thereafter, the
annual rent will be adjusted based on increases in the Consumer Price Index,
capped at 2.5% per year.
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Description of Financing
The purchase of the facility and construction of the build-to-suit building
was financed with a limited recourse mortgage loan in the amount of $23,300,000
collateralized by a deed of trust on the facility and lease assignments. The
loan is evidenced by two notes, one in the amount of $7,500,000 which will be
disbursed for costs of constructing the build-to-suit building and the other in
the amount of $15,800,000. The loan bears interest at an annual variable rate of
interest equal to the sum of LIBOR and 2.5%. Principal payments will be based on
a twenty-five year amortization schedule beginning August 1, 2000. The loan is
scheduled to mature on June 1, 2006 at which time a balloon payment will be due.
The loan is prepayable at any time without premium.
DESCRIPTION OF CHECKFREE CORPORATION, INC.
CheckFree is a leading provider of electronic commerce services,
institutional portfolio management services, and financial application software
for financial institutions and businesses.
Financial statements for CheckFree are on file with the Securities and
Exchange Commission. The following is a summary of selected financial
information for CheckFree:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------
1999 1998 1997
-------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS
Total revenue........................................... $250,131 $233,864 $ 176,445
Total expenses.......................................... 258,440 277,213 357,844
Net income (loss)....................................... 10,457 (3,703) (161,813)
Diluted income (loss) per common share.................. 0.20 (0.07) (3.44)
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30,
---------------------------------
1999 1998 1997
-------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA
Total assets............................................ $252,761 $250,112 $ 223,836
Long-term obligations, less current portion............. 3,882 6,467 8,401
Total shareholders' equity.............................. 186,903 183,854 148,644
</TABLE>
PROPERTY LEASED TO BUILDERS' SUPPLY AND LUMBER CO., INC.
General
On June 29, 1999, CPA(R):14 purchased from Crosland Commercial, LLC a
parcel of land upon which a built-to-suit facility is to be constructed. The
land, containing approximately 2,356,700 square feet, is located in Harrisburg,
North Carolina. The facility will be suitable and adequate for its intended
uses. The cost of the facility attributable to building and improvements will be
depreciated for tax purposes over a 40-year period on a straight-line basis.
Concurrently with the acquisition of the land, CPA(R):14 entered into a
construction management agreement with Crosland for the construction of the
facility and assumed from Crosland a net lease with Builders' Supply and Lumber
Co., Inc.
Purchase Terms
The cost to CPA(R):14 of acquiring the land was $7,805,807, an amount less
than the appraised value of the land. CPA(R):14 paid an acquisition fee of
$156,116 to W.P. Carey & Co., which was included in the total purchase price.
Carey Property Advisors will receive a deferred fee of $15,612, payable each of
the next eight years, but only if CPA(R):14 satisfies the preferred return.
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DESCRIPTION OF THE LEASE
General
The lease is absolutely net and bondable and in normal financeable form.
Builders' Supply will pay maintenance (except the foundations and structure),
insurance, taxes post construction and all other expenses associated with the
operation and maintenance of the facility. In the opinion of management of
CPA(R):14, the facility is adequately covered by insurance.
Term
Construction is expected to be completed in February 2000 at which time an
initial term of twenty years will commence. There is a renewal term of ten years
at the option of Builder Supply.
Rent
The initial annual rent under the lease is payable monthly in advance in
equal installments of $63,333 ($760,000 annually). Additionally, the lease
provides that after the first year of the lease term, the rent increases each
year in accordance with the percentage increase of the Consumer Price Index over
the preceding year, capped at 2% per year.
DESCRIPTION OF FINANCING
CPA(R):14 is currently seeking mortgage financing for the facility.
DESCRIPTION OF BUILDERS' SUPPLY AND LUMBER CO., INC.
Builders' Supply and Lumber Co., Inc. operates as a distributor and seller
of lumber and other building and construction supplies.
The following is a summary of selected financial data for Builders' Supply
supplied by Builders' Supply:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1998 1997 1996
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS
Net sales................................................ $281,411 $255,676 $192,252
Cost of goods sold....................................... 226,513 216,026 161,043
Gross profit............................................. 54,898 39,650 31,209
Net income............................................... 1,199 3,987 619
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF DECEMBER 31,
1998 1997
------------------ ------------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA
Cash and cash equivalents............................. $ 130 $ 925
Receivables........................................... 36,143 22,868
Total asset........................................... 94,524 82,788
Total shareholders' equity............................ 15,172 22,791
</TABLE>
PROPERTY LEASED TO THE SCOTT CO. OF CALIFORNIA, INC.
General
On July 19, 1999, CPA(R):14 purchased from The Scott Co. of California,
Inc. a production and distribution facility. The facility, containing
approximately 86,924 square feet, is located on approximately seven acres of
land in Gardenia, California. The facility is suitable and adequate for its
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intended uses. The cost of the facility attributable to building and
improvements will be depreciated for tax purposes over a 40-year period on a
straight-line basis. Concurrently with the acquisition of the facility,
CPA(R):14 entered into a net lease with Scott.
The cost to CPA(R):14 of acquiring the facility, including the acquisition
fee payable to W.P. Carey & Co. was $6,282,723, an amount less than the
appraised value of the facility. CPA(R):14 paid an acquisition fee of $125,654
to W.P. Carey & Co. Carey Property Advisors will receive a deferred fee of
$12,565, payable each of the next eight years, but only if CPA(R):14 satisfies
the preferred return.
DESCRIPTION OF THE LEASE
General
The lease is absolutely net and bondable and in normal financeable form.
Scott will pay maintenance, insurance, taxes and all other expenses associated
with the operation and maintenance of the facility. In the opinion of management
of CPA(R):14, the facility is adequately covered by insurance.
Term
The initial term of the lease is twenty years with three five-year renewal
terms at the option of Scott.
Rent
The initial annual rent under the lease is $681,000 annually. Additionally,
the lease provides that annual rent will be adjusted every three years based on
a formula indexed to increases in the Consumer Price Index, not to exceed 4% per
year.
DESCRIPTION OF FINANCING
The purchase of the facility was financed with a limited recourse mortgage
loan of $3,000,000 collateralized by a deed of trust on the facility and lease
assignments. The loan bears interest at a fixed rate of 8.21% annually with
principal payment installments, starting on October 1, 1999, based on a thirty
year amortization schedule. The loan is scheduled to mature on August 1, 2009 at
which time a balloon payment will be due.
DESCRIPTION OF SCOTT CO.
Scott specializes in the engineering of mechanical systems.
The following is a summary of selected financial data for Scott supplied by
Scott:
<TABLE>
<CAPTION>
YEAR ENDED,
SIX MONTHS ENDED, ----------------------------------
JUNE 30, 1999(1) APRIL 30, 1998 APRIL 30, 1998
----------------- --------------- ---------------
<S> <C> <C> <C>
INCOME STATEMENT
Contract revenue......................... $83,094,792 $199,388,092 $171,388,454
Gross profit............................. 14,416,273 16,341,377 20,010,386
Other income (net)....................... (96,188) 1,786,644 869,553
Net earnings............................. 1,136,601 549,160 1,656,486
</TABLE>
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<TABLE>
<CAPTION>
AS OF JUNE 30, AS OF MARCH 31,
1999 1999
-------------- ---------------
<S> <C> <C>
BALANCE SHEET DATA
Cash........................................................ $ 456,324 $ 895,483
Total current assets........................................ 67,971,572 69,004,563
Total assets................................................ 90,330,320 91,488,543
Current portion of long-term debt........................... 4,438,296 5,459,434
Total equity................................................ 14,157,995 13,091,639
</TABLE>
- ---------------
(1) Beginning 1999, Scott changed their fiscal year end from April 30 to
December 31.
PROPERTY LEASED TO AMERISERVE FOOD DISTRIBUTION, INC.
General
On August 18, 1999, CPA(R):14 and CPA(R):12, an affiliate, through 60% and
40% ownership interests, respectively, in two limited liability companies,
purchased four distribution facilities from AmeriServe Food Distribution, Inc.
The facilities are located in Burlington, New Jersey; Manassas, Virginia; Grand
Rapids, Michigan; and Shawnee, Kansas and will contain in the aggregate
approximately 860,000 square feet. As part of the transaction, CPA(R):14 and
CPA(R):12 are advancing funds for completion of the Kansas facility and
expansion of the New Jersey and Virginia facilities. The facilities are or will
be suitable and adequate for their intended uses. The cost of the facilities
will be depreciated for tax purposes over a 40-year period on a straight-line
basis.
Concurrently with the acquisition of the facilities, the limited liability
companies entered into two net leases with AmeriServe. Material terms of the
leases are described below.
Purchase Terms
The cost of acquiring the facilities, including the acquisition fee is
approximately $55,800,000, an amount less than the appraised value of the
facilities. CPA(R):14 paid an acquisition fee of $1,395,000 to W.P. Carey & Co.
Carey Property Advisors will receive a deferred fee of $83,670, payable each of
the next eight years, but only if CPA(R):14 satisfies the preferred return.
DESCRIPTION OF THE LEASES
General
The leases are absolutely net and bondable and in normal financeable form.
AmeriServe will pay maintenance, insurance, taxes and all other expenses
associated with the operation and maintenance of the facilities. In the opinion
of management, the facilities are adequately covered by insurance.
Term
The initial term of the leases is twenty years with two ten-year renewal
terms at the option of AmeriServe.
Rent
Annual rent under the leases is approximately $5,770,000 per annum.
Additionally, the leases provides that annual rent will be adjusted every three
years based on increases in the Consumer Price Index.
Description of Financing
The purchase of the facilities in Manassas, Virginia and Shawnell, Kansas
was financed with a limited recourse mortgage loan of $16,900,000 collateralized
by a deed of trust on the facilities and lease assignments. The loan bears
interest at a fixed rate of 8.51%. The loan is scheduled to mature on September
1, 2009 at which time a balloon payment will be due.
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The purchase of the facilities in Burlington, New Jersey and Grand Rapids,
Michigan was financed with a limited recourse mortgage loan of $15,100,00
collateralized by a deed of trust on the facilities and lease assignments. The
loan bears interest at a fixed rate of 8.51%. The loan is scheduled to mature on
September 1, 2009 at which time a balloon payment will be due.
DESCRIPTION OF AMERISERVE FOOD DISTRIBUTION, INC.
AmeriServe is North America's largest systems foodservice distributor
specializing in food distribution to chain restaurants across the United States
and Canada.
Financial statements for AmeriServe are on file with the Securities and
Exchange Commission. The following is a summary of selected financial
information for AmeriServe:
<TABLE>
<CAPTION>
YEAR ENDED,
--------------------------------------------
DECEMBER 26, DECEMBER 27, DECEMBER 28,
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
INCOME STATEMENT
Net sales....................................... $7,420,951 $3,446,191 $1,280,598
Cost of goods sold.............................. 6,740,926 3,104,012 1,151,749
Distribution, selling and administrative
expense....................................... 561,985 266,692 104,449
Net income (loss)............................... (146,973) (74,223) 2,518
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 26, AS OF DECEMBER 27,
1998 1997
------------------ ------------------
<S> <C> <C>
BALANCE SHEET DATA
Cash and cash equivalents............................. $ 4,667 $ 231,131
Total current assets.................................. 550,758 580,536
Total assets.......................................... 1,887,323 1,462,321
Total shareholders' equity............................ 1,082 98,055
</TABLE>
THE OFFERING
On September 16, 1999 CPA(R):14 issued 4,076,438 shares to investors in
return for approximately $40,525,789 in net proceeds previously held in escrow.
As of September 16, 1999, CPA(R):14 had issued a total of 26,514,833 shares in
exchange for gross proceeds of approximately $264,867,173.
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