<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported)
December 28, 1998
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
(Exact name of Registrant as specified in charter)
MARYLAND 333-31434 13-3951476
(State of (Commission File No.) (IRS Employer
organization) Identification No.)
50 Rockefeller Plaza, 2nd Floor
New York, New York 10020
(Address of principal executive offices)
(212) 492-1100
(Registrant's telephone number)
<PAGE> 2
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) PRO FORMA FINANCIAL INFORMATION
- - Consolidated Balance Sheet September 30, 1998 (Unaudited)
- - Consolidated Statement of Income for the year ended December 31, 1997
(Unaudited)
- - Consolidated Statement of Income for the nine months ended September
30, 1998 (Unaudited)
- - Pro Forma Annualized Consolidated Statement of Taxable Income and After
Tax Cash Flow for the year ended December 31, 1997
<PAGE> 3
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Metagenics Benjamin
Historical ETEC (A) AMD (B) (C) Ansehl (D)
---------- -------- ------- --- ----------
<S> <C> <C> <C> <C> <C>
Assets:
Real estate leased to others under the
operating method $30,449,192 $8,536,954 $6,021,000
Equity Investments 11,101,219 $ 74,525 $9,012,652
Cash and cash equivalents 9,015,964 449,035 (8,377,399) (8,501,174) (5,900,552)
Other assets 1,103,539
----------- -------- ---------- ---------- ----------
Total assets $51,669,914 $523,560 $ 635,253 $ 35,780 $ 120,448
=========== ======== ========== ========== ==========
Liabilities:
Cash overdraft
Accounts payable to affiliates $ 1,017,144
Accounts payable and accrued expenses 183,600
Prepaid rental income and security deposits 74,600
Deferred acquisition fees payable to affiliate 737,005 523,560 635,253 35,780 120,448
Dividends payable 897,838
--------- ------- ------- ------ -------
Total Liabilities 2,910,187 523,560 635,253 35,780 120,448
--------- ------- ------- ------ -------
Shareholders' Equity:
Common stock 5,730
Additional paid-in capital 49,467,288
Dividends in excess of accumulated
earnings (685,091)
-----------
48,787,927
Less, common stock in treasury at cost (28,200)
-----------
Total shareholders' equity 48,759,727
----------- -------- -------- ------- --------
Total liabilities and shareholders' equity $51,669,914 $523,560 $635,253 $35,780 $120,448
=========== ======== ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
Contraves
Brashear (E) Other (H) Proforma
------------ --------- --------
<S> <C> <C> <C>
Assets:
Real estate leased to others under the
operating method $6,806,283 $51,813,429
Equity Investments 20,188,396
Cash and cash equivalents (6,670,157) $ 19,984,283 0
Other assets 1,103,539
---------- ------------ -----------
Total assets $ 136,126 $ 19,984,283 $73,105,364
========== ============ ===========
Liabilities:
Cash overdraft $ 19,984,283 $19,984,283
Accounts payable to affiliates 1,017,144
Accounts payable and accrued expenses 183,600
Prepaid rental income and security deposits 74,600
Deferred acquisition fees payable to affiliate 136,126 2,188,172
Dividends payable 897,838
------- ---------- ----------
Total Liabilities 136,126 19,984,283 24,345,637
------- ---------- ----------
Shareholders' Equity:
Common stock 5,730
Additional paid-in capital 49,467,288
Dividends in excess of accumulated
earnings (685,091)
48,787,927
Less, common stock in treasury at cost (28,200)
Total shareholders' equity 48,759,727
-------- ----------- -----------
Total liabilities and shareholders' equity $136,126 $19,984,283 $73,105,364
======== =========== ===========
</TABLE>
<PAGE> 4
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Burlington
Contraves Motor
Metagenics Benjamin Brashear Carriers
Historical ETEC (A) AMD (B) (C) Ansehl (D) (E) (F)
---------- -------- ------- --- ---------- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income $1,208,075 $649,750 $643,750 $792,000
Other interest income
---------- -------- -------- --------
1,208,075 649,750 643,750 792,000
---------- -------- -------- --------
Expenses:
Depreciation 227,750 129,300 154,657 135,982
Interest 319,310
General and
administrative $ 12,225
Property expenses
-------- --------- -------- -------- --------
12,225 227,750 129,300 473,967 135,982
-------- --------- -------- -------- --------
Income before
income from equity
investments (12,225) 980,325 520,450 169,783 656,018
Income from equity
investments $1,176,102 $872,529
-------- ---------- -------- -------- -------- -------- --------
Net Income $(12,225) $1,176,102 $872,529 $980,325 $520,450 $169,783 $656,018
======== ========== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Best Buy Co.,
Inc. (G) Other (H) Pro forma
-------- --------- ---------
<S> <C> <C> <C>
Revenues:
Rental income $1,741,990 $5,035,565
Other interest income
---------- -----------
1,741,990 5,035,565
---------- ----------
Expenses:
Depreciation 163,051 810,740
Interest $ 131,290 450,600
General and
administrative 12,225
Property expenses
---------- ---------
163,051 131,290 1,273,565
---------- --------- ----------
Income before
income from equity
investments 1,578,939 (131,290) 3,762,000
Income from equity
investments 2,048,631
---------- --------- -----------
Net Income $1,578,939 $(131,290) $4,739,021
========== ========= ==========
</TABLE>
<PAGE> 5
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Burlington
Contraves Motor
Metagenics Benjamin Brashear Carriers
Historical ETEC (A) AMD (B) (C) Ansehl (D) (E) (F)
---------- -------- ------- --- ---------- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 547,572 $ 937,768 $487,312 $482,813 $393,800
Other interest income 605,292
---------- ---------- -------- -------- --------
$1,152,864 937,768 487,312 482,813 393,800
---------- ---------- -------- -------- --------
Expenses:
Depreciation 63,210 170,813 96,975 115,993 62,325
Interest 7,862 235,989
General and
administrative 319,194
Property expenses 111,086
-------- --------- -------- -------- --------
501,352 170,813 96,975 351,982 62,325
-------- --------- -------- -------- --------
Income before
income from equity
investments 651,512 766,955 390,337 130,831 331,475
Income from equity
investments $ 898,881 $664,832
-------- ---------- -------- -------- -------- -------- --------
Net Income $651,512 $ 898,881 $664,832 $766,955 $390,337 $130,831 $331,475
======== ========== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Best Buy Co.,
Inc. (G) Other (H) Pro forma
-------- --------- ---------
<S> <C> <C> <C>
Revenues:
Rental income $ 959,121 $3,808,386
Other interest income $(605,292)
---------- --------- ----------
959,121 (605,292) 3,808,386
---------- --------- ----------
Expenses:
Depreciation 98,740 608,056
Interest 90,606 334,457
General and
administrative 319,194
Property expenses 698,623 809,709
---------- --------- ----------
98,740 789,229 2,071,416
---------- --------- ----------
Income before
income from equity
investments 860,381 (1,394,521) 1,736,970
Income from equity
investments 1,563,713
---------- --------- -----------
Net Income $ 860,381 $(789,229) $3,300,683
========== ========= ==========
</TABLE>
<PAGE> 6
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED AND SUBSIDIARIES
PRO FORMA ANNUALIZED CONSOLIDATED STATEMENT
OF TAXABLE INCOME AND AFTER TAX CASH FLOW
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Consolidated pro forma net income and taxable income for the year ended
December 31, 1997 (I) $4,739,021
Add: Depreciation expense per pro forma statement of income 810,740
Difference between taxable income of equity investments and cash
generated (J) 510,173
Less: Principal paid (K) (55,358)
----------
$6,004,576
==========
</TABLE>
<PAGE> 7
1. BASIS OF PRESENTATION
The unaudited consolidated pro forma financial statements of Corporate
Property Associates 14 Incorporated and subsidiaries (the "Company") have been
prepared based on the historical financial statements of the Company. The pro
forma unaudited consolidated balance sheet of the Company at September 30, 1998
has been prepared as if the purchase of properties net leased to Benjamin Ansehl
Co. ("Benjamin Ansehl") and Contraves Brashear L.P. ("Contraves Brashear") and
the equity interest in a limited liability company owning property net leased to
Advanced Micro Devices, Inc. ("AMD"), completion of build-to-suit construction
on a property net leased to Metagenics Incorporated ("Metagenics") and
completion of a build-to-suit facility net leased to Etec Systems, Inc. ("Etec")
in which the Company will ultimately own a 49.99% interest. The unaudited pro
forma consolidated statements of income for the year ended December 31, 1997 and
the nine-month period ended September 30, 1998 have been prepared as if the
acquisition of all properties and the completion of construction as well as any
related mortgage financing occurred on January 1, 1997. The pro forma statements
of income include properties net leased to Burlington Motor Carriers, Inc.
("Burlington Motor Carriers") and Best Buy Co., Inc. ("Best Buy") that the
Company purchased prior to the pro forma balance sheet date. The Company owned
no property prior to January 1, 1997.
Adjustments have been presented to reflect the Company's asset
management and performance fees and interest expense at the rate of 6% per annum
on its subordinated acquisition fees payable. For pro forma purposes, the
Company eliminates interest income on uninvested cash; however, the Company
would still have had substantial cash resources as additional shares of common
stock were issued subsequent to September 30, 1998. Because the Company
commenced its offering of common stock in December 1997 and did not own any
property at that time, the general and administrative expenses presented in the
pro forma statement of operations for the year ended December 31, 1997 would not
reflect such expenses for a full year of Company operations. In management's
opinion, all adjustments necessary to reflect the effects of the aforementioned
acquisitions and completions of build-to-suit construction projects have been
made. The pro forma financial information should be read in conjunction with the
historical consolidated financial statements of the Company.
The pro forma financial results are not necessarily indicative of the
financial condition or the results of operations had the acquisitions and
completion of construction and related mortgage financing occurred on January 1,
1997 or prior, nor are they necessarily indicative of the financial position or
results of operations for future periods.
2. PRO FORMA ADJUSTMENTS
A. The Company will own an interest in a limited liability
company ("LLC"), reflecting a 49.99% interest in a building
leased to Etec ("Project II"). Corporate Property Associates
12 Incorporated (CPA:12"), an affiliate, owns the remaining
interest in the LLC consisting of a 50.01 % interest in
Project II and a 100% interest in the land and all other
buildings at the Etec property. The LLC's lease with Etec is
for all of the buildings, however, the LLC agreement provides
that the Company's economic interest is for 49.99% interest in
the Project II building with all remaining economic interests
retained by CPA:12. The cost of Project II is estimated to be
$52,356,000 including fees, however, the ultimate cost may be
less. Project II rent will based on the amount necessary to
amortize the cost of the building, net of acquisition fees -
estimated to be $50,000,000, over the term of the lease at an
interest rate of 7.98%. For pro forma purposes, we have used
an amortization period of 180 months resulting in an initial
annual rent of $5,726,987 and rent for the nine-month period
of $4,295,240. The LLC has obtained a commitment for
$30,000,000 of limited recourse mortgage financing on Project
II at an annual rate of interest of 6.96% based on a 20-year
<PAGE> 8
amortization schedule. Based on the mortgage commitment, pro
forma interest expense on the mortgage reflect $2,065,413 and
$1,515,443 for the year ended December 31, 1997 and the nine
months ended September 30, 1998, respectively. Annual
depreciation expense on the Project II building of $1,308,900
is computed on a straight-line basis over 40 years and is
based on buildings and improvements with a depreciable basis
of $52,356,000. Project II pro forma net income for the year
ended December 31, 1997 and the nine-month period ended
September 30, 1998 is $2,352,674 and $1,798,122, respectively,
of which the Company's 49.99% share of equity income is
$1,176,102 and $898,881, respectively.
B. The Company owns an one-third interest in the AMD LLC. AMD LLC
owns a property leased to Advanced Micro Devices, Inc. The AMD
lease provides for annual rent of $9,145,000. The LLC obtained
mortgage financing of $68,250,000 in connection with the
purchase of the AMD property. The limited recourse mortgage
loan provides for interest an annual rate of 7.78% based on a
30-year amortization schedule. Based on the provisions of the
limited recourse mortgage, pro forma interest expense is
$5,288,913 and $3,935,380 for the year ended December 31, 1997
and the nine-month period ended September 30, 1998,
respectively. Annual depreciation expense of $1,238,500 is
computed on a straight-line basis over 40 years and is based
on buildings and improvements with a depreciable basis of
$49,540,000. Pro forma net income of the LLC for the year
ended December 31, 1997 and the nine-month period ended
September 30, 1998 is $2,617,587 and $1,994,495, respectively,
of which the Company 33.333% share equity interest in income
is $872,529 and $664,832, respectively.
C. The cost of completing the Metagenics facility is estimated to
not exceed $11,500,000. Initial annual rent for the Metagenics
facility will be in an amount equal to 11% of the cost of
construction (including the cost of acquiring the land) but
excluding acquisition fees. For pro forma purposes, we have
assumed an initial annual rent of $1,208,075 based on a cost,
net of fees, of $10,982,500. The lease provides for stated
annual rent increases of 3.5%. Annual depreciation expense of
$170,813 is computed on a straight-line basis over 40 years
and is based on projected building and improvements with a
depreciable basis of $6,832,520. Currently, there is no
mortgage debt on the property nor has a commitment from a
lender for such debt been obtained.
D. The Benjamin Ansehl lease provides for annual rent of
$649,750. Annual depreciation of $129,300 is computed on a
straight-line basis over 40 years and is based on buildings
and improvements with a depreciable basis of $5,172,000.
Currently, there is no mortgage debt on the property nor has a
commitment from a lender for such debt been obtained.
E. The Contraves Brashear lease provides for annual rent of
$643,750. The Company has obtained a commitment for $4,225,000
of limited recourse mortgage financing on the Contraves
Brashear property at an annual interest rate of 7.5% based on
a 25-year amortization schedule. Based on the mortgage
commitment, pro forma interest expense for the year ended
December 31, 1997 and the nine-month period ended September
30, 1998 is $319,310 and $235,989, respectively. Annual
depreciation of $154,657 is computed on a straight-line basis
over 40 years and is based on buildings and improvements with
a depreciable basis of $6,186,283.
<PAGE> 9
F. The Burlington Motor Carrier lease provides for annual rent of
$792,000. Annual depreciation of $135,982 is computed on a
straight-line basis over 40 years and is based on buildings
and improvements with a depreciable basis of $5,439,280. The
historical results of operations for the nine months ended
include rental income and depreciation expense of $200,200 and
$39,662, respectively. Currently, there is no mortgage debt on
the property nor has a commitment from a lender for such debt
been obtained.
G. The Best Buy lease provides for annual rent of $1,741,990.
Annual depreciation of $163,051 is computed on a straight-line
basis over 40 years and is based on buildings and improvements
with a depreciable basis of $6,522,040. The historical results
of operations for the nine months ended September 30, 1998
include rental income and depreciation expense of $347,372 and
$23,548. Currently, there is no mortgage debt on the property
nor has a commitment from a lender for such debt been
obtained.
H. For pro forma purposes, no interest income has been reflected.
Even when the Company is fully invested after using
substantially all of the proceeds from its offering, it
expects to realize interest on its cash balances because of
timing differences between collection of rents and payment of
dividends to shareholders. However, since the amount of
interest income that would be realized had the funds been
invested in properties rather than held as cash cannot be
reasonably estimated, a pro forma adjustment to eliminate
interest has been presented in the accompanying pro forma
statements of income. The Company accrues interest on the
deferred acquisition fee of $2,188,172 payable to an
affiliate. Annual pro forma interest expense is $131,290. For
the nine months ended September 30, 1998, interest expense of
$7,862 has been reflected in the historical results of
operations. The asset management and performance fee payable
to the Company's Advisor are each based on 1/2 of 1% of
Average Invested Assets of $107,161,040. Pro forma Average
Invested Assets include the cost of directly owned properties
and the pro rata cost of equity investments less deferred fees
payable of $2,188,172. The annual pro forma fees are
$1,071,610. Asset management and performance fees of $105,086
are included in the historical results of operations for the
nine months ended September 30, 1998.
I. For the year ended December 31, 1997, there are no pro forma
differences between net income for financial reporting
purposes and taxable income.
J. The Company's share of taxable income from its interest in
equity investments is expected to differ from its share of
equity income for financial reporting purposes. The cash
generated from the two investments is expected to be greater
than its share of income from these investments. The
difference is due to depreciation and is partially offset by
the effect of principal amortization on the equity investees'
mortgage loans. The Company's pro rata share of depreciation
and mortgage principal mortgage amortization from its interest
in the Etec and AMD properties is $1,067,111 and $556,938,
respectively.
K. Pro forma mortgage principal amortization is based on the
mortgage commitment on the Contraves Brashear property.
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
By:/s/ H. Augustus Carey
------------------------------------------
H. Augustus Carey
Dated: February 11, 1999
