<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 JUNE 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 0-19156
CORPORATE PROPERTY ASSOCIATES 10 INCORPORATED, A MARYLAND CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MARYLAND 13-3559213
(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
7,621,656 shares of common stock; $.001 Par Value
outstanding at August 10, 1998
<PAGE> 2
CORPORATE PROPERTY ASSOCIATES 10 INCORPORATED
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I
Item 1. - Financial Information*
Condensed Consolidated Balance Sheets, as of December 31, 1997
and June 30, 1998 2
Condensed Consolidated Statements of Income for the three and
six months ended June 30, 1997 and 1998 3
Condensed Consolidated Statements of Comprehensive Income
for the three and six months ended June 30, 1997 and 1998 4
Condensed Consolidated Statements of Cash Flows for the six
months ended June 30, 1997 and 1998 5
Notes to Condensed Consolidated Financial Statements 6-8
Item 2. - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
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 10 INCORPORATED
PART I
Item 1. - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ ------------
(Note) (Unaudited)
<S> <C> <C>
ASSETS:
Land and buildings,
net of accumulated depreciation of
$11,498,122 at December 31, 1997 and
$12,519,734 at June 30, 1998 $ 89,600,840 $ 88,579,228
Net investment in direct financing leases 16,758,447 16,758,447
Equity investment 11,657,088 12,001,021
Cash and cash equivalents 2,608,523 2,544,736
Other assets 414,332 914,310
------------ ------------
Total assets $121,039,230 $120,797,742
============ ============
LIABILITIES:
Mortgage notes payable $ 61,536,571 $ 60,909,766
Accrued interest payable 678,446 786,706
Accounts payable and accrued expenses 245,126 225,912
Accounts payable to affiliates 5,523,241 1,537,792
Prepaid rental income 70,308
------------ ------------
Total liabilities 67,983,384 63,530,484
------------ ------------
Minority interest 3,870,416 3,756,620
------------ ------------
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value; 40,000,000 shares authorized;
7,217,294 and 7,633,558 shares, issued and outstanding at
December 31, 1997 and June 30, 1998 7,217 7,634
Additional paid-in capital 62,160,058 66,530,408
Unrealized appreciation, marketable securities 189,624
Dividends in excess of accumulated
earnings (12,893,753) (13,119,248)
------------ ------------
49,273,522 53,608,418
Less, common stock in treasury, at cost, 10,652
and 11,902 shares at December 31, 1997
and June 30, 1998 (88,092) (97,780)
------------ ------------
Total shareholders' equity 49,185,430 53,510,638
------------ ------------
Total liabilities and shareholders' equity $121,039,230 $120,797,742
============ ============
</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
<TABLE>
<CAPTION>
CORPORATE PROPERTY ASSOCIATES 10 INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended
June 30, 1997 June 30, 1998 June 30, 1997 June 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $2,838,170 $2,895,837 $6,092,529 $6,248,516
Interest from direct
financing leases 558,539 549,291 1,308,491 1,098,768
Other interest income 81,234 31,975 168,373 61,917
Other income 112,313 112,313
---------- ---------- ---------- ----------
3,590,256 3,477,103 7,681,706 7,409,201
---------- ---------- ---------- ----------
Expenses:
Interest 1,590,245 1,537,397 3,301,206 3,076,190
Depreciation 515,343 511,606 999,421 1,021,612
General and administrative 285,389 369,649 614,990 632,597
Property expenses 544,690 611,594 949,752 1,085,880
Amortization 23,700 11,308 42,903 22,614
---------- ---------- ---------- ----------
2,959,367 3,041,554 5,908,272 5,838,893
---------- ---------- ---------- ----------
Income before minority
interest, income from
equity investments and
extraordinary item 630,889 435,549 1,773,434 1,570,308
Minority interest in income (148,554) (158,753) (297,280) (316,484)
---------- ---------- ---------- ----------
Income before income from
equity investments and
extraordinary item 482,335 276,796 1,476,154 1,253,824
Income from equity investment 391,905 398,388 983,170 1,060,304
---------- ---------- ---------- ----------
Income before
extraordinary item 874,240 675,184 2,459,324 2,314,128
Extraordinary gain on
extinguishment of debt 427,447 427,447
---------- ---------- ---------- ----------
Net income $1,301,687 $ 675,184 $2,886,771 $2,314,128
========== ========== ========== ==========
Basic earnings per common share:
Income before extraordinary
item $.12 $.09 $.34 $.32
Extraordinary item .06 .06
---- ---- ---- ----
$.18 $.09 $.40 $.32
==== ==== ==== ====
Weighted average shares outstanding
- basic and diluted 7,206,642 7,302,497 7,206,642 7,254,833
========= ========= ========= =========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
- 3 -
</TABLE>
<PAGE> 5
CORPORATE PROPERTY ASSOCIATES 10 INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1997 June 30, 1998 June 30, 1997 June 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income $1,301,687 $ 675,184 $2,886,771 $2,314,128
Other comprehensive income:
Change in unrealized gains on
securities during the period 189,624 189,624
---------- ---------- ---------- ----------
Comprehensive income $1,301,687 $ 864,808 $2,886,771 $2,503,752
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
- 4 -
<PAGE> 6
<TABLE>
<CAPTION>
CORPORATE PROPERTY ASSOCIATES 10 INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six months Ended
June 30,
----------------------------------------
1997 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,886,771 $ 2,314,128
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,042,324 1,044,226
Income from equity investment
in excess of dividends received (313,267) (343,933)
Distributions to minority interest in excess of
minority interest in income (100,245) (113,796)
Straight-line rent adjustments and other
noncash rent adjustments 68,894 5,683
Extraordinary gain on extinguishment of debt (427,447)
Provision for uncollected rents 55,105
Net change in operating assets and liabilities 418,642 436,026
----------- -----------
Net cash provided by operating activities 3,575,672 3,397,439
----------- -----------
Cash flows from investing activities:
Proceeds from repayment of note receivable 110,750
Purchase of marketable securities (285,110)
----------- -----------
Net cash provided by (used in) investing activities 110,750 (285,110)
----------- -----------
Cash flows from financing activities:
Dividends paid (2,760,143) (2,539,623)
Proceeds from note payable 1,600,000
Purchase of treasury stock (9,688)
Prepayment of mortgages payable (5,450,000)
Payments of mortgage principal (573,180) (626,805)
----------- -----------
Net cash used in financing activities (7,183,323) (3,176,116)
----------- -----------
Net decrease in cash and cash equivalents (3,496,901) (63,787)
Cash and cash equivalents, beginning of period 6,452,554 2,608,523
----------- -----------
Cash and cash equivalents, end of period $ 2,955,653 $ 2,544,736
=========== ===========
Supplemental disclosure of cash flows information:
Interest paid $ 3,241,580 $ 2,967,930
=========== ===========
Noncash operating and financing activities:
In June 1998, the Company issued 416,264 shares of common stock to the
Advisor in settlement of $4,370,767 of performance fees that had been
voluntarily deferred by the Advisor.
The accompanying notes are an integral part of the condensed consolidated
financial statements.
- 5 -
</TABLE>
<PAGE> 7
CORPORATE PROPERTY ASSOCIATES 10 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Basis of Presentation:
The accompanying unaudited condensed consolidated 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 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 financial statements. All significant
intercompany balances and transactions have been eliminated. 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 financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
Note 2. Transactions with Related Parties:
For the three-month and six-month periods ended June 30, 1997, the Company
incurred asset management fees of $206,949 and $393,899, respectively,
performance fees in like amount and general and administrative expense
reimbursements of $136,397 and $299,313, respectively, payable to an affiliate.
For the three-month and six-month periods ended June 30, 1998, the Company
incurred asset management fees of $208,823 and $403,525, respectively,
performance fees in like amount and general and administrative expense
reimbursements of $139,290 and $264,588, respectively, payable to an affiliate.
On June 10, 1998, the Company's shareholders approved a proposal to allow the
Company, subject to the consent of the Advisor, to pay fees to the Advisor in
Company stock rather than cash. In connection with such approval, the Company
issued 416,264 shares of common stock to the Advisor in settlement of accrued
performance fees of $4,370,767 which collection had previously been voluntarily
deferred by the Advisor. The stock is subject to certain restrictions and will
vest ratably over a five year period. In issuing the shares, the Company used a
share value of $10.50. This per share value was based on an independent
valuation of the Company's real estate assets at December 31, 1997. The Advisor
currently owns approximately 5.7% of the Company's outstanding shares of common
stock as of August 10, 1998.
Pursuant to the Advisory Agreement, asset management and performance fees,
respectively, are equal to 1/2 of 1% of Average Invested Assets, as defined.
Payment of the performance fee is subordinated to achievement of a cumulative
dividend return of 8% (based on an initial issuance of common stock at $10 per
share). Beginning with the period subsequent to September 30, 1997, the
cumulative dividend return criterion of 8% was not achieved, and performance
fees aggregating $588,926 are not currently payable until such time as this
criterion is achieved. This accrued performance fee is included in accounts
payable to affiliates in the accompanying condensed consolidated financial
statements.
The Company, 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 Company pays its proportionate share of rent and other costs
of occupancy. Net expenses incurred for the six-month periods ended June 30,
1997 and 1998 were $55,543 and $76,195, respectively.
Note 3. Dividends:
Dividends declared and paid to shareholders during the six months ended June 30,
1998 are summarized as follows:
<TABLE>
<CAPTION>
Quarter Ended Paid Per Share
------------- ---- ---------
<S> <C> <C>
December 31, 1997 $1,269,091 $0.17610
========== ========
March 31, 1998 $1,270,532 $0.17630
========== ========
</TABLE>
A dividend of $.1765 per share was declared and paid in July 1998 for the
quarter ended June 30, 1998.
- 6 -
<PAGE> 8
CORPORATE PROPERTY ASSOCIATES 10 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -
(CONTINUED)
Note 4. Industry Segment Information:
The Company's operations consist of the direct and indirect investment in and
leasing of industrial and commercial real estate. The financial reporting
sources of leasing revenues for the six-month periods ended June 30, 1997 and
1998 are as follows:
<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Per Statements of Income:
Rental income from operating leases $6,092,529 $6,248,516
Interest from direct financing leases 1,308,491 1,098,768
Adjustments:
Rental income attributable to
minority interests (958,656) (971,436)
Share of interest income from equity
investment's direct financing lease 2,293,886 2,341,490
---------- ----------
$8,736,250 $8,717,338
========== ==========
</TABLE>
For the six-month periods ended June 30, 1997 and 1998, the Company earned its
proportionate net lease revenues from its investments from the following lease
obligors:
<TABLE>
<CAPTION>
1997 % 1998 %
---- ---- ---- --
<S> <C> <C> <C> <C>
Marriott International, Inc. (a) $2,293,886 26% $2,341,490 27%
Information Resources Incorporated (b) 1,458,007 17 1,458,007 17
The Titan Corporation (b) 1,009,517 12 1,065,668 12
New WAI, L.P./Warehouse Associates 725,643 8 726,620 8
EnviroWorks, Inc. 693,878 8 708,511 8
Wal-Mart Stores, Inc. 591,505 7 633,946 7
Kmart Corporation 504,023 6 537,303 6
Childtime Childcare Inc. 397,477 5 402,727 5
Neodata Corporation 293,864 3 293,864 3
CalComp Technology, Inc. 220,839 2 219,917 3
Other 260,645 3 329,285 4
Harvest Foods, Inc. 286,966 3
---------- --- ---------- ---
$8,736,250 100% $8,717,338 100%
========== ==== ========== ====
</TABLE>
(a) Represents the Company's proportionate share of lease revenues from an
equity investment.
(b) Net of Corporate Property Associates 9's ("CPA(R):9") minority
interest.
- 7 -
<PAGE> 9
CORPORATE PROPERTY ASSOCIATES 10 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
Note 5. Equity Investment:
The Company owns an approximate 23.7% interest in Marcourt Investments
Incorporated ("Marcourt") which net leases 13 Courtyard by Marriott hotels to a
wholly-owned subsidiary of Marriott International, Inc. Summarized financial
information of Marcourt is as follows:
(in thousands)
<TABLE>
<CAPTION>
December 31, 1997 June 30, 1998
----------------- -------------
<S> <C> <C>
Assets $149,413 $149,242
Liabilities 102,826 101,111
Shareholders' equity 46,587 48,131
</TABLE>
<TABLE>
<CAPTION>
Six months Ended
June 30, 1997 June 30, 1998
------------- -------------
<S> <C> <C>
Revenue $ 9,696 $ 9,892
Interest and other expense (5,391) (5,244)
Other expenses (64) (76)
-------- --------
Net income $ 4,241 $ 4,572
======== ========
</TABLE>
Note 6. Purchase of Securities:
In connection with purchasing a property in San Diego, California and entering
into a net lease with The Titan Corporation ("Titan") in July 1991, the Company
and CPA(R):9, the co-owner of the Titan property, were granted warrants to
purchase 81,460 and 18,540 shares of common stock of Titan, respectively, at an
exercise price of $3.50 per share. The warrants were exercisable until July 11,
1998. On April 29, 1998, the Company exercised its warrants and purchased 81,460
Titan shares for $285,110. As of June 30, 1998, based on the quoted market value
of Titan common stock of 5 15/16 per share, the fair value of the Company's
holding in Titan common stock was $483,669. Titan common stock is publicly
traded on the New York Stock Exchange.
- 8 -
<PAGE> 10
CORPORATE PROPERTY ASSOCIATES 10 INCORPORATED
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
June 30, 1998 included in this quarterly report and the Company's Annual Report
on Form 10-K for the year 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.
RESULTS OF OPERATIONS:
Net income for the three-month and six-month periods ended June 30,
1998 decreased by $627,000 and $573,000, respectively, as compared with the
three-month and six-month periods ended June 30, 1997. Results for the prior
year's three-month and six-month periods reflect the benefit of a $427,000
extraordinary gain on extinguishment of a nonrecourse mortgage loan and $112,000
of nonrecurring income. As adjusted for nonrecurring items, income for the
three-month and six-month periods would have reflected decreases of $88,000 and
$34,000, respectively.
The decreases in income, as adjusted for the nonrecurring items, for
the three-month and six-month periods was due to a decrease in other interest
income and an increase in property expenses. This was partially offset by a
decrease in interest expense and an increase in equity income. Lease revenues
(rental income and interest income on direct financing leases) were stable. The
decrease in interest income was due to lower average cash balances in 1998, as
$3,850,000 of cash was used in 1997 to payoff a mortgage loan at a substantial
discount. The increase in property expenses was due to a moderate increase in
asset management and performance fees due to the higher fair value of the
Company's real estate assets as determined pursuant to an independent valuation,
carrying costs for unleased properties and an increase in the Company's
provision for uncollected rents, a noncash charge. The decrease in interest
expense was due to the payoff of mortgage loans in 1997 on the Harvest Foods,
Inc. properties and a property leased to Kmart Corporation as well as the
continuing principal amortization of the Company's nonrecourse mortgage loans.
The increase in equity income was due to increased percentage rents on the
Courtyard by Marriott properties and the decrease in interest expense on the
related mortgage loans on the Courtyard properties.
Lease revenues decreased solely as a result of the March 1997
termination of the Harvest leases. The decreases resulting from the Harvest
termination were almost entirely offset by rent increases on the Company's
leases with The Titan Corporation and EnviroWorks, Inc. in August 1997 and April
1998, respectively, increased percentage rents on the Company's leases for
retail stores with Wal-Mart Stores, Inc. and Kmart Corporation and the execution
of leases with Affiliated Foods Southwest, Inc. and the Kroger Co. for certain
of former Harvest Foods properties. The Company continues to re-market six
vacant properties formerly leased to Harvest. As these properties are leased,
lease revenues will increase and some or all of the carrying costs for the
properties will be absorbed by the lessees.
- 9 -
<PAGE> 11
CORPORATE PROPERTY ASSOCIATES 10 INCORPORATED
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
FINANCIAL CONDITION:
There has been no material change in the Company's financial condition
since December 31, 1997. Cash flow from operations of $3,397,000 was sufficient
to fund dividends to shareholders of $2,540,000 and scheduled mortgage principal
payments of $627,000.
In June 1998, the shareholders of the Company approved a proposal to
amend the Company's Advisory Agreement to allow the Company, with the consent of
the Advisor, to pay its asset management and performance fees in common stock
rather than cash. As a result of this amendment to the Advisory Agreement, the
Company was able to convert liabilities for unpaid performance fees of
$4,371,000 to equity. By paying all or a portion of such fees through the
issuance of stock rather than the payment of cash, the Company's liquidity has
been enhanced. The current issuance of shares and any future issuance of shares
to pay fees will reduce the cash required by the Company to pay expenses,
strengthen the Company's balance sheet through the replacement of debt with
equity and increase the equity ownership of the Advisor which will further align
the interests of the Advisor and the shareholders of the Company. The per share
value of stock issued to the Advisor was determined pursuant to an independent
valuation of the Company's real estate assets as of December 31, 1997. With such
issuance, the Advisor's ownership in the Company has increased to more than 5%.
The Company used $285,000 to exercise warrants for 81,460 shares of
common stock of The Titan Corporation. Such warrants had been granted in
connection with structuring a net lease with Titan in 1991. As of June 30, 1998,
the fair value of the Titan common stock, based on its quoted per share value,
was $484,000.
The Company's mortgage loan collateralized by properties leased to
Wal-Mart Stores, Inc. matures in January 1999 at which time a balloon payment of
$6,910,000 is scheduled. The Company will seek refinancing on the property and
expects to benefit from the current interest rate environment. The Wal-Mart
mortgage loan bears an annual interest of 9.42%. The loan has not been prepaid
as the Company would incur a prepayment charge.
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.
The Company's Advisor has responsibility for maintaining the Company's
books and records. An affiliate of the Advisor services the computer systems
used for maintaining such books and records. In its preliminary assessment of
Year 2000 issues, the affiliate believes that such issues will not have a
material effect on the Company's operations, however, such assessment has not
been completed. The Company relies on its bank and transfer agent for certain
computer-related services and has initiated discussions to determine whether
they are addressing Year 2000 issues that may affect the Company.
- 10 -
<PAGE> 12
CORPORATE PROPERTY ASSOCIATES 10 INCORPORATED
PART II
Item 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An annual Shareholders meeting was held on June 10, 1998, at
which time a vote was taken to elect the Company's directors
through the solicitation of proxies. The following directors
were elected for a one-year term:
<TABLE>
<CAPTION>
Total Shares Shares Shares
Name Of Director Shares Voting Voting Yes Voting No Abstaining
---------------- ------------- ---------- --------- ----------
<S> <C> <C> <C> <C>
William P. Carey 3,693,325 3,620,659 21,542 51,124
Ralph G. Coburn 3,693,325 3,606,049 36,152 51,124
George E. Stoddard 3,693,325 3,602,099 40,102 51,124
Warren G. Wintrub 3,693,325 3,631,846 10,355 51,124
William Ruder 3,693,325 3,630,096 12,105 51,124
</TABLE>
An amendment to the Company's Advisory Agreement was approved
which allows the Company, with the consent of the Advisor, to
pay fees to its Advisor through issuance of common stock.
<TABLE>
<CAPTION>
Total Shares Shares Shares
Shares Voting Voting Yes Voting No Abstaining
------------- ---------- --------- ----------
<S> <C> <C> <C> <C>
3,693,325 3,142,426 333,506 217,393
</TABLE>
Item 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K:
During the quarter ended June 30, 1998, the Company
was not required to file any reports on Form 8-K.
- 11 -
<PAGE> 13
CORPORATE PROPERTY ASSOCIATES 10 INCORPORATED
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 10 INCORPORATED
08/10/98 By: /s/ Steven M. Berzin
-------- -----------------------------------
Date Steven M. Berzin
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
08/10/98 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 SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,544,736
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,544,736
<PP&E> 117,857,409
<DEPRECIATION> 12,519,734
<TOTAL-ASSETS> 120,797,742
<CURRENT-LIABILITIES> 2,620,718
<BONDS> 60,909,766
0
0
<COMMON> 7,634
<OTHER-SE> 53,510,638
<TOTAL-LIABILITY-AND-EQUITY> 120,797,742
<SALES> 0
<TOTAL-REVENUES> 7,409,201
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,718,477
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,076,190
<INCOME-PRETAX> 2,314,128
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,314,128
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,314,128
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
</TABLE>
