<PAGE>
OMB APPROVAL
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OMB Number 3235-0070
Expires October 31, 1995
UNITED STATES Estimated average burden
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 hours per response 190.00
FORM 10-Q
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(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
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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 0-9174
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CORPORATE PROPERTY ASSOCIATES
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(Exact name of registrant as specified in its charter)
CALIFORNIA 94-2572215
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
50 ROCKEFELLER PLAZA, NEW YORK, NEW YORK 10020
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(Address of principal executive offices) (Zip Code)
(212) 492-1100
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(Registrant's telephone number, including area code)
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(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
<PAGE>
CORPORATE PROPERTY ASSOCIATES
(a California limited partnership)
INDEX
Page No.
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PART I
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Item 1. - Financial Information*
Balance Sheets, December 31, 1994 and
March 31, 1995 2
Statements of Income for the three
months ended March 31, 1994 and 1995 3
Statements of Cash Flows for the three
months ended March 31, 1994 and 1995 4
Notes to Financial Statements 5-6
Item 2. - Management's Discussion of Operations 7
PART II
-------
Item 6. - Exhibits and Reports on Form 8-K 8
Signatures 9
*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>
CORPORATE PROPERTY ASSOCIATES
(a California limited partnership)
PART I
------
Item 1. - FINANCIAL INFORMATION
-------------------------------
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1994 1995
------------- ------------
(Note) (Unaudited)
<S> <C> <C>
ASSETS:
Land and buildings, net of
accumulated depreciation of
$16,860,783 at December 31, 1994 and
$17,135,732 at March 31, 1995 $17,472,208 $17,197,259
Net investment in direct
financing lease 4,919,462 4,908,735
Cash and cash equivalents 937,631 853,000
Accrued interest and rents receivable 366,095 418,958
Other assets 722,240 747,761
----------- -----------
Total assets $24,417,636 $24,125,713
=========== ===========
LIABILITIES:
Mortgage notes payable $16,306,218 $15,957,583
Accrued interest payable 202,920 200,501
Accounts payable and accrued expenses 181,118 114,103
Prepaid rental income and security deposits 198,611 202,252
Accounts payable to affiliates 7,685
----------- -----------
Total liabilities 16,888,867 16,482,124
----------- -----------
PARTNERS' CAPITAL:
General Partners (103,780) (102,632)
Limited Partners (40,000 Limited
Partnership Units issued and
outstanding) 7,632,549 7,746,221
----------- -----------
Total partners' capital 7,528,769 7,643,589
----------- -----------
Total liabilities and
partners' capital $24,417,636 $24,125,713
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Note: The balance sheet at December 31, 1994 has been derived from the
audited financial statements at that date.
-2-
<PAGE>
CORPORATE PROPERTY ASSOCIATES
(a California limited partnership)
STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1994 March 31, 1995
------------------ --------------
<S> <C> <C>
Revenues:
Rental income from operating leases $ 965,103 $ 997,902
Interest income from direct financing
leases 129,621 128,541
Other interest income 10,673 18,554
Other income 42,254
---------- ----------
1,105,397 1,187,251
---------- ----------
Expenses:
Interest on mortgages 401,813 394,524
Depreciation 276,672 274,949
General and administrative 57,076 55,650
Property expense 39,897 19,730
Amortization 3,099 6,770
---------- ----------
778,557 751,623
---------- ----------
Net income $ 326,840 $ 435,628
========== ==========
Net income allocated
to General Partners $ 3,268 $ 4,356
========== ==========
Net income allocated
to Limited Partners $ 323,572 $ 431,272
========== ==========
Net income per Unit
(40,000 Limited
Partnership Units) $ 8.09 $ 10.78
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE>
CORPORATE PROPERTY ASSOCIATES
(a California limited partnership)
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1994 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 326,840 $ 435,628
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 279,771 281,719
Other noncash items (7,228) (6,148)
Net change in operating assets and liabilities (6,314) (126,387)
---------- ----------
Net cash provided by operating activities 593,069 584,812
---------- ----------
Cash flows from financing activities:
Distributions to partners (316,768) (320,808)
Payments on mortgage principal (313,829) (348,635)
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Net cash used in financing activities (630,597) (669,443)
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Net decrease in cash and cash equivalents (37,528) (84,631)
Cash and cash equivalents, beginning of period 1,359,019 937,631
---------- ----------
Cash and cash equivalents, end of period $1,321,491 $ 853,000
========== ==========
Supplemental disclosure of cash flows information:
Interest paid $ 404,757 $ 396,943
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE>
CORPORATE PROPERTY ASSOCIATES
(a California limited partnership)
NOTES TO 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 (including 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:
Quarter Ended General Partners Limited Partners Per Limited Partner Unit
------------- ---------------- ---------------- ------------------------
December 31, $3,208 $317,600 $7.94
1994 ====== ======== =====
A distribution of $8.00 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 management fees of $15,575 and $13,509, respectively and general
and administrative expense reimbursements of $13,151 and $11,610,
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 $3,383 and $12,266, respectively.
-5-
<PAGE>
CORPORATE PROPERTY ASSOCIATES
(a California limited partnership)
NOTES TO 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. For the three-month periods
ended March 31, 1994 and 1995, the Partnership earned its total operating
revenues (rental income plus interest income from financing leases) from
the following lease obligors:
<TABLE>
<CAPTION>
1994 % 1995 %
---------- ---- ---------- ----
<S> <C> <C> <C> <C>
Pre Finish Metals Incorporated $ 325,180 30% $ 351,293 31%
The Gap, Inc. 306,498 28 306,498 27
IMO Industries, Inc. 211,685 19 211,685 19
Unisource Worldwide, Inc. 83,027 8 81,948 7
Kobacker Stores, Inc. 75,885 7 75,885 7
Broomfield Tech Center Corporation 66,849 6 73,534 7
Winn-Dixie Stores, Inc. 25,600 2 25,600 2
---------- --- ---------- ---
$1,094,724 100% $1,126,443 100%
========== === ========== ===
</TABLE>
-6-
<PAGE>
CORPORATE PROPERTY ASSOCIATES
(a California limited partnership)
Item 2. - MANAGEMENT'S DISCUSSION OF OPERATIONS
-----------------------------------------------
Net income for the three-month period ended March 31, 1995 increased by
$109,000 as compared with net income for the three-month period ended
March 31, 1994. Although this was partially attributable to $42,000 of
other income which reflects a concession allowed to the Partnership by a
vendor and which had been accrued as a payable at December 31, 1994, income
from on-going operations increased substantially as the result of lower
interest expense, higher lease revenues and a decrease in property expense.
The decrease in interest expense was due to the decreasing interest
component on the Partnership's amortizing fixed rate debt. This decrease
was partially offset by an increase in interest on the variable rate loan
collateralized by the Pre Finish Metals Incorporation ("Pre Finish")
property; however, increases in interest and loan principal requirements on
this mortgage loan are passed through as a rent adjustment to Pre Finish.
Lease revenue increased as a result of the increase from the Pre Finish
debt service pass through and an increase in rent from Broomfield Tech
Center Corporation ("Broomfield") which increase was negotiated under the
1994 lease modification agreement with Broomfield. The decrease in
property expense is due to costs incurred in connection with the assessment
of liquidity alternatives in 1994. Net income in 1995 also benefited from
a moderate increase in other interest income as the result of higher
interest rates on short-term cash investments.
There has been no material change in the Partnership's financial
condition since December 31, 1994 and Management believes that the current
cash balance of $853,000 and cash provided from operating activities will
be sufficient to meet the Partnership's current cash requirements which
currently consist solely of paying quarterly distributions and meeting
scheduled debt service obligations. Amortization of mortgage principal
during the current three-month period increased to $349,000 and represented
payment of 2% of the mortgage principal balance at the beginning of the
three-month period. In September 1995, the mortgage loan on the Unisource
Worldwide, Inc. property will be satisfied and net annual cash flow from
that property will increase by $80,000.
-7-
<PAGE>
CORPORATE PROPERTY ASSOCIATES
(a California limited partnership)
PART II
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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.
-8-
<PAGE>
CORPORATE PROPERTY ASSOCIATES
(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
(a California limited partnership)
By: W.P. CAREY & CO., INC.
05/10/95 By: /s/ Claude Fernandez
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Date Claude Fernandez
Executive Vice President and
Chief Administrative Officer
(Principal Financial Officer)
05/10/95 By: /s/ Michael D. Roberts
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Date Michael D. Roberts
First Vice President and Controller
(Principal Accounting Officer)
-9-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 853,00
<SECURITIES> 0
<RECEIVABLES> 418,958
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 747,761
<PP&E> 39,241,726
<DEPRECIATION> 17,135,732
<TOTAL-ASSETS> 24,125,713
<CURRENT-LIABILITIES> 524,271
<BONDS> 15,957,583
<COMMON> 0
0
0
<OTHER-SE> 7,643,589
<TOTAL-LIABILITY-AND-EQUITY> 24,125,713
<SALES> 0
<TOTAL-REVENUES> 1,187,251
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 357,099
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 394,524
<INCOME-PRETAX> 435,628
<INCOME-TAX> 0
<INCOME-CONTINUING> 435,628
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 435,628
<EPS-PRIMARY> 10.78
<EPS-DILUTED> 10.78
</TABLE>
