<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
(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, 1996
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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
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Commission file number 0-17620
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CORPORATE PROPERTY ASSOCIATES 8, L.P., A DELAWARE LIMITED PARTNERSHIP
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3469700
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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
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<PAGE> 2
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
INDEX
<TABLE>
<CAPTION>
Page No.
--------
PART I
<S> <C>
Item 1. - Financial Information*
Balance Sheets, December 31, 1995 and
March 31, 1996 2
Statements of Income for the three
months ended March 31, 1996 and 1995 3
Statements of Cash Flows for the three
months ended March 31, 1995 and 1996 4
Notes to Financial Statements 5-8
Item 2. - Management's Discussion of Operations 9-10
PART II
Signatures 11
</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 8, L.P.,
a Delaware limited partnership
PART I
Item 1. - FINANCIAL INFORMATION
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
------------ ------------
(Note) (Unaudited)
ASSETS:
<S> <C> <C>
Land, buildings and personal property,
net of accumulated depreciation of
$10,386,418 at December 31, 1995 and
$9,223,435 at March 31, 1996 $ 59,362,502 $ 49,364,665
Net investment in direct financing leases 47,095,414 47,095,414
Real estate held for sale 9,532,030
Equity investments 1,234,480 1,148,272
Cash and cash equivalents 5,119,385 5,274,340
Other assets 2,077,926 2,108,052
------------ ------------
Total assets $114,889,707 $114,522,773
============ ============
LIABILITIES:
Mortgage notes payable $ 52,685,656 $ 51,821,539
Note payable 5,102,144 5,102,144
Accrued interest payable 610,754 603,480
Accounts payable and accrued expenses 522,575 463,195
Accounts payable to affiliates 127,994 117,891
Prepaid and deferred rental income and
security deposits 1,015,946 904,818
------------ ------------
Total liabilities 60,065,069 59,013,067
------------ ------------
PARTNERS' CAPITAL:
General Partners (412,915) (344,408)
Limited Partners (67,582 Limited
Partnership Units issued and outstanding
at December 31, 1995 and March 31, 1996) 55,237,553 55,854,114
------------ ------------
Total partners' capital 54,824,638 55,509,706
------------ ------------
Total liabilities and
partners' capital $114,889,707 $114,522,773
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date.
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<PAGE> 4
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1995 March 31, 1996
-------------- --------------
<S> <C> <C>
Revenues:
Rental income from operating leases $2,363,625 $2,224,072
Interest income from direct financing leases 1,396,127 1,604,469
Revenue from hotel operations 1,152,370 1,183,802
Other interest income 57,945 59,573
---------- ----------
4,970,067 5,071,916
---------- ----------
Expenses:
Interest 1,515,356 1,361,328
Depreciation 498,664 469,732
General and administrative 185,899 146,386
Property expenses 40,366 77,387
Operating expenses of hotel operations 681,403 683,509
Amortization 9,277 9,277
---------- ----------
2,930,965 2,747,619
---------- ----------
Income before loss from equity investments 2,039,102 2,324,797
Loss from equity investments 17,856 15,008
---------- ----------
Net income $2,021,246 $2,309,289
========== ==========
Net income allocated to
General Partners $ 202,125 $ 230,929
========== ==========
Net income allocated to
Limited Partners $1,819,121 $2,078,360
========== ==========
Net income per Unit
(67,749 and 67,582 Limited Partnership
Units at March 31, 1995 and 1996) $26.85 $30.75
====== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE> 5
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
STATEMENTS of CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------
1995 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,021,246 $ 2,309,289
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 507,941 479,009
Other noncash items 63,000 73,590
Loss from equity investments 17,856 15,008
Net change in operating assets and liabilities (77,878) (300,878)
----------- -----------
Net cash provided by operating activities 2,532,165 2,576,018
----------- -----------
Cash flows from investing activities:
Distributions from equity investments 59,938 71,200
Additional capitalized costs 24,925 (3,925)
----------- -----------
Net cash provided by investing activities 84,863 67,275
----------- -----------
Cash flows from financing activities:
Distributions to partners (1,594,367) (1,624,221)
Payment of mortgage principal (768,950) (864,117)
Repurchase of Limited Partnership Units (30,000)
----------- -----------
Net cash used by financing activities (2,393,317) (2,488,338)
----------- -----------
Net increase in cash and
cash equivalents 223,711 154,955
Cash and cash equivalents, beginning of period 4,680,685 5,119,385
----------- -----------
Cash and cash equivalents, end of period $ 4,904,396 $ 5,274,340
=========== ===========
Supplemental disclosure of cash flows information:
Interest paid $ 1,493,413 $ 1,368,602
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE> 6
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware 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 (consisting of 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, 1995.
Note 2. Distributions to Partners:
Distributions declared and paid to partners during the three months ended March
31, 1996 are summarized as follows:
<TABLE>
<CAPTION>
Quarter Ended General Partners Limited Partners Per Limited Partnership Unit
------------- ---------------- ---------------- ----------------------------
<S> <C> <C> <C>
December 31, 1995 $162,422 $1,461,799 $21.63
======== ========== ======
</TABLE>
A distribution of $21.75 per Limited Partner Unit for the quarter ended March
31, 1996 was declared and paid in April 1996.
Note 3. Transactions with Related Parties:
For the three-month periods ended March 31, 1995 and 1996, the Partnership
incurred leasing fees of $10,648 and $3,048, respectively, and general and
administrative expense reimbursements of $24,508 and $22,846, 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, 1995 and 1996 were $60,339 and $48,182, respectively.
-5-
<PAGE> 7
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
Note 4. Industry Segment Information:
The Partnership's operations consist of the direct and indirect investment in
and the leasing of industrial and commercial real estate and operating a hotel
business (see Note 5). For the three-month periods ended March 31, 1996 and
1995, the Partnership earned its real estate leasing revenues (rental income
plus interest income from financing leases) from its directly owned real estate
investments as follows:
<TABLE>
<CAPTION>
1995 % 1996 %
---- ---- ---- ---
Lease Obligor:
<S> <C> <C> <C> <C>
Advanced System Applications, Inc. $ 778,523 21% $ 778,523 20%
Sybron Acquisition Company 622,980 17 622,980 16
Dr Pepper Bottling Company of Texas 499,750 13 499,750 13
Amerisig, Inc. (formerly ASG Acquisition Corp.) 349,491 9 348,723 9
High Voltage Engineering Corporation 288,470 8 295,812 8
Orbital Sciences Corporation 244,345 7 244,345 6
Furon Company 204,861 5 207,482 5
United Stationers Supply Co. 160,250 4 203,177 5
Detroit Diesel Corporation 166,405 4 182,269 5
AutoZone, Inc. 131,098 3 131,098 3
NVRyan L.P. 123,879 3 123,879 3
Mayfair Molded Products Corporation 115,189 3 115,189 3
Winn-Dixie Stores, Inc. 33,625 1 33,625 1
Other 26,711 1 27,514 1
Federal Express Corporation 14,175 1 14,175 1
---------- ---- ---------- ----
$3,759,752 100% $3,828,541 100%
========== ==== ========== ====
</TABLE>
Note 5. Hotel Property in Kenner, Louisiana:
The Partnership and Corporate Property Associates 4 ("CPA(R):4"), an affiliate,
own a hotel property in Kenner, Louisiana as tenants-in-common with 53.617% and
46.383% interests, respectively. On April 17, 1996, the Investment Committee of
the Corporate General Partners of the Partnership and CPA(R):4 approved a
proposal to transfer ownership of the hotel property to the operating
partnership of a newly-formed real estate investment trust formed by an
affiliate of American General Hospitality Corp. ("AGH"), the hotel management
company which is currently engaged by the Partnership and CPA(R):4 to manage the
hotel property. In exchange for the contribution of the hotel to the operating
partnership, the Partnership and CPA(R):4 will receive an equity interest in the
operating partnership with an expected initial value of approximately
$18,000,000, of which the Partnership's share would be approximately $9,650,000.
In addition, the operating partnership will assume the existing mortgage loan
obligation on the property of approximately $7,365,000, of which the
Partnership's share is currently approximately $3,950,000. The value of the
consideration received by the Partnership and CPA(R):4 will be dependent upon
the price of the stock issued by AGH in its initial public offering. The
Partnership and CPA(R):4 purchased the property in June 1988 for $17,500,000 (of
which the Partnership contributed equity of approximately $4,020,000) including
$10,000,000 of mortgage financing, and assumed operating control of the hotel in
1992 when they evicted the lessee due to its financial difficulties.
The exchange transaction is subject to the ability of AGH to complete an initial
public offering for the newly-formed real estate investment trust. It is
intended that the exchange of the hotel property for securities initially be
treated as a nonmonetary exchange for tax and financial reporting purposes and
that the Partnership retain the funds included in the hotel furniture, fixture
and equipment reserves. After one year, the Partnership will have the right to
convert its equity interest in the operating partnership to shares of the
publicly-traded real estate investment trust. The Partnership does not
anticipate incurring any significant costs in connection with
-6-
<PAGE> 8
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
the proposed exchange. In connection with the proposed transaction, the
$9,111,232 carrying value of the hotel property has been reclassified as real
estate held for sale.
Operating results of the hotel business for the three-month periods ended March
31, 1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Revenues $1,152,370 $1,183,802
Fees paid to hotel management
company (42,105) (45,089)
Other operating expenses (639,298) (638,420)
---------- ----------
Hotel operating income $ 470,967 $ 500,293
========== ==========
</TABLE>
Note 6. Properties leased to ASG Acquisition Corp.:
The Partnership owns a 100% interest in a property in Olive Branch, Mississippi
and a 26.43% interest as a tenant-in-common with Corporate Property Associates 9
("CPA(R):9"), an affiliate, which owns the remaining interest in a property in
Dekalb County, Georgia, which had been leased to ASG Acquisition Corp. ("ASG").
The Partnership and CPA(R):9 entered into litigation against Heller Financial,
Inc. ("Heller"), a creditor of ASG, asserting that in 1992, the assets of ASG
and certain subsidiaries were transferred to newly-formed operating companies
controlled by Heller in lieu of foreclosure. The newly-formed subsidiaries
entered into short-term subleases for the properties. The Partnership and
CPA(R):9 informed Heller at that time that its actions were contrary to the
lease, and, therefore, not permissible. The Partnership's offer to allow the
operating companies formed by Heller to assume the lease obligation and for
Heller to provide a guaranty of the lease obligations was rejected. The
Partnership and CPA(R):9 also alleged that the subleases were made with the
intent of defrauding the Partnership and CPA(R):9.
On May 2, 1996, the Partnership and CPA(R):9 reached a settlement with Heller
and its wholly-owned subsidiary, Amerisig, Inc. ("Amerisig"), the successor
company to ASG. Under the settlement agreement, all parties have agreed to
mutual releases which will result in the withdrawal of all litigation among the
parties. New lease agreements were executed for both properties, and Amerisig
executed a guaranty and suretyship agreement which unconditionally guarantees
the lease obligations of both leases.
The annual rent for the Olive Branch property will remain at the current amount
of $980,643; however, rent increases based on a formula indexed to the Consumer
Price Index ("CPI") have been replaced with stated increases in July 1998 and
July 2003 to $1,078,707 and $1,186,578, respectively. To the extent that
interest expense on the new mortgage loan on the Olive Branch property, as
described below, varies from what interest would have been on the retired loan,
such difference will be applied as an adjustment to the Olive Branch rent. In
addition, Amerisig will relinquish its interest in a security deposit of
$224,000 held by the Partnership. The annual rent on the Dekalb property will
remain at an amount equal to $797,011 (of which the Partnership's share is
approximately $210,650) plus debt service on the mortgage loan; however, there
will be no rent increases until January 2005. The initial lease terms for the
Olive Branch and Dekalb properties expire in 2008 and 2009, respectively, which
were the expiration dates under the prior ASG leases. Both leases provide
Amerisig a purchase option which is exercisable upon 60 days written notice. The
exercise price for Olive Branch property is the greater of (i) the Partnership's
purchase cost for the property (including the cost of any subsequent
improvements) or (ii) fair market value as encumbered by the lease based on a
discount rate of 10%. The exercise price for the Dekalb property is the greater
of (i) purchase cost or (ii) fair market value as encumbered by the lease.
Also on May 2, 1996, the Partnership refinanced the existing mortgage loan of
$3,901,431 on the Olive Branch property, which matured on May 1, 1996 with a
$4,000,000 limited recourse mortgage obligation collateralized by a deed of
trust on the Olive Branch property and a lease assignment. The loan provides for
monthly principal payments $7,528 along with interest which is payable at an
annual interest rate of the London Inter-
-7-
<PAGE> 9
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
Bank Offered Rate ("LIBOR") plus 3% and matures in April 2001, at which time a
balloon payment for the entire unpaid principal balance will be due. The lender
has provided a commitment of up to $2,450,000 toward an expansion of the Olive
Branch facility with the total costs of such expansion estimated to amount to
$3,500,000. The lender's commitment expires in June 1998. The retired loan had
been a recourse obligation of the Partnership.
In addition, the lender which holds the note on the Dekalb property extended the
maturity on that loan through April 2001. The loan had been scheduled to mature
in January 1997. As restated, the loan provides for monthly principal
installments of $12,234 along with interest payable at an annual rate of LIBOR
plus 3%. The loan currently has a balance of $6,397,435 (of which the
Partnership's share is $1,690,842).
Note 7. Properties leased to Furon Company:
In January 1990, the Partnership and CPA(R):9 purchased nine properties as
tenants-in-common with 32.28% and 67.72% ownership interests, respectively, and
entered into a master lease with Furon Company ("Furon"). In August 1993, the
Partnership and CPA(R):9 consented to Furon's sublease of two properties in
Liverpool and Twinsburg, Ohio to IER Industries, Inc. ("IER") through July 2007,
the end of Furon's initial lease term. In connection with consenting to the
sublease, the Partnership granted IER a purchase option on the two subleased
properties in consideration for an irrevocable payment of $75,000 (of which the
Partnership's share was $24,210). The $75,000 paid in 1993 would be credited to
the IER's purchase price for the properties if the option were exercised.
On February 15, 1996, IER notified the Partnership and CPA(R):9 that it was
exercising its option and would seek to complete the purchase on or about July
8, 1996. The sublease provides that the purchase price will be the greater of
fair market value determined pursuant to an appraisal process or the sum of (i)
$1,450,000 and (ii) any prepayment premium resulting from any mandatory
prepayment to the lender on the mortgage loan collateralized by the nine Furon
properties. The appraisal process has been started; however, no determination
has yet been made as to fair market value. In the event that the properties are
sold, the Partnership's share of Furon's rent will be reduced by $55,290. In
connection with the proposed transaction, the $420,798 carrying value of the
Twinsburg and Liverpool properties has been reclassified as real estate held for
sale.
Note 8. Properties leased Advanced System Applications, Inc.:
The Partnership and Corporate Property Associates 7 ("CPA(R):7") own property in
Bloomingdale, Illinois, as tenants-in-common with 66.36% and 33.64% ownership
interests, respectively which is leased to Advanced System Applications, Inc.
("ASA"). In July 1994 the Partnership and CPA(R):7 entered into a lease
modification agreement, annual rent increased to $5,200,000 (of which the
Partnership's share is $3,450,000) from $1,850,000 (of which the Partnership's
share was $1,227,660). In consenting to the modification, the mortgage loan
payments were substantially increased so that the loan fully amortized on March
1, 1996. Although ASA is obligated to make is lease payments through June 1997,
it is in the process of vacating the property. To the extent that the
Partnership and CPA(R):7 enter into new leases for any vacated space, ASA is
entitled to one-third of all rentals received, net of any landlord costs, during
the remaining term of its lease.
On January 31, 1996, the Partnership and CPA(R):7 entered into a lease with the
United States Postal Service (the "Postal Service") for approximately 35% of the
leasable space at the ASA property. The lease has a 10-year term commencing May
1, 1996 with annual rentals of $722,800 (of which the Partnership's share will
be $479,650), increasing to $822,800 after five years. The Partnership and
CPA(R):7 retain the obligation to provide maintenance and support services to
the lessee. The lease provides for rent escalations in 1998 based on increases
in certain operating costs of the property incurred by the Partnership and
CPA(R):7. In addition, the Postal Service will reimburse the Partnership and
CPA(R):7 for its pro rata share of real estate taxes. The Postal Service has an
option to terminate the lease after five years and right of first refusal on
space vacated by ASA.
The Partnership and CPA(R):7 will provide the Postal Service a tenant
improvement allowance of up to $600,000 (of which the Partnership's share is
$398,160).
-8-
<PAGE> 10
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
Item 2. - MANAGEMENT'S DISCUSSION OF OPERATIONS
Results of Operations:
Net income for the three-month period ended March 31, 1996 reflected
substantial increases in earnings as compared with the prior year. The 14%
increase in net income was due to an increase in lease revenues and decreases in
interest and general and administrative expenses. The increase in lease revenues
was due to the July 1995 rent increase on the Detroit Diesel Corporation lease
and the March 1995 restructuring of the Partnership's lease with United
Stationers Supply Co., at which time an annual rent increase of $177,000 was
negotiated. The decrease in interest expense was due to the full amortization in
March 1996 of the mortgage loan collateralized by the Advanced System
Applications, Inc. ("ASA") property. The decrease in general and administrative
expenses was primarily due to lower estimates for partnership level state
franchise taxes. The benefit from the increase in lease revenues and decreases
in interest and general and administrative costs was partially offset by an
increase in property expenses. Such increase was primarily due to certain costs
incurred in connection with extending the Partnership's lease with Allied
Plywood, Inc. ("Allied"), for an additional five years through 2002. Allied is a
lessee of a property formerly leased to NV Ryan, L.P.
Income from the hotel operation, which the Partnership has made formal
plans to exchange for an investment, as described below, increased by 6%. The
increase was entirely due to an increase in revenues as hotel operating expenses
were unchanged for the comparable periods. The hotel realized the revenue
increase even though the occupancy rate for the quarter decreased by 2%. Higher
average room rates were realized as a result of the hotel's ability to increase
rates and changes in usage. In 1996, corporate rates represented 39% of
available rooms versus 34% in 1995, while group business decreased to 11% from
19% of available rooms. This change in usage was beneficial to earnings as the
average room rate for corporate business is substantially higher than the rates
negotiated by groups.
Financial Condition:
There has been no material change in the Partnership's financial condition
since December 31, 1995. The Partnership's cash provided from operations and
equity investments was sufficient to fund distributions to partners and pay
scheduled mortgage principal payments.
The Partnership will benefit from its agreements with Amerisig, Inc.
("Amerisig") whereby the Partnership and Amerisig have resolved their
differences resulting in the withdrawal of all outstanding litigation. In
connection with the settlement, short-term subleases, which the Partnership
asserted were not permissible, were eliminated. Amerisig has provided an
unconditional guarantee of the leases that had been provided by its predecessor
company. In addition, the Partnership was able to refinance a mortgage loan that
had matured on one of the Amerisig properties and extend a mortgage loan on the
other Amerisig property which had been scheduled to mature in 1997. Both loans,
which are limited recourse obligations, are now scheduled to mature in 2001. The
matured loan had been a recourse obligation of the Partnership. The Partnership
has a commitment for up to $3,500,000 to fund an expansion of the Amerisig
facility in Olive Branch, Mississippi by no later than March 1998, with up to
$2,450,000 of such funding to be provided by limited recourse mortgage
financing.
The Partnership will benefit from the commencement in May 1996 of the
Partnership's lease with the United States Postal Service (the "Postal Service")
and the satisfaction of the ASA loan. Annual rent from the Postal service lease
will be approximately $480,000 before operating costs; however, until June 1997,
the Partnership is obligated to share one-third of Postal Service rentals, net
of expenses, with ASA in lieu of reducing ASA's rent for relinquishing its
space. With the satisfaction of the ASA loan, the Partnership's annual cash flow
will increase by approximately $2,650,000 until the expiration of the ASA lease
in June 1997. Based on current cash balances, the Partnership has the ability to
fully fund from cash reserves its 398,000 tenant improvement allowance for the
Postal Service and other costs which may be necessary to retrofit the ASA
property for multi-tenant use.
-9-
<PAGE> 11
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
Item 2. - MANAGEMENT'S DISCUSSION OF OPERATIONS, Continued
Financial Condition (continued):
If the exchange of the Kenner, Louisiana hotel property and related
assumption of the mortgage loan obligation for equity interests in the operating
partnership of a real estate investment trust is completed, the Partnership
would expect to receive a relatively stable cash flow from such investment as
the objective of the real estate investment trust and the underlying partnership
is to distribute at least 95% of its taxable income so that it can maintain its
tax status as a real estate investment trust. With this investment, the
Partnership will eliminate the uncertainty related to operating a hotel business
with a single hotel and replace such uncertainty with a stable cash flow from
the operating partnership's distributions which comprise of the operation of
many hotels which are initially estimated to be approximately $825,000 annually.
Although cash flow from the hotel operations when combined with debt service on
the property mortgage was approximately $1,150,000 in 1995, the Partnership
funded improvements of nearly $1,000,000 in the prior year. Funding major
capital improvements at the hotel property are needed to remain competitive;
therefore, if ownership of the hotel were retained, the Partnership would be
required to use funds for additional improvements in the future. Accordingly,
cash flow from the hotel could vary significantly from year to year. The
Partnership had operated the hotel since 1992, subsequent to evicting the
lessee. At that time, the Partnership's objectives were to generate positive
cash flow from the hotel operation and enhance the underlying property value. If
the proposed transaction is consummated, the Partnership may realize these
objectives of having enhanced the property's value.
-10-
<PAGE> 12
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
PART II
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 8, L.P.,
a Delaware limited partnership
By: EIGHTH CAREY CORPORATE PROPERTY, INC.
04/10/97 By: /s/ Claude Fernandez
-------- -------------------------------
Date Claude Fernandez
Executive Vice President and
Chief Administrative Officer
(Principal Financial Officer)
04/10/97 By: /s/ Michael D. Roberts
-------- -------------------------------
Date Michael D. Roberts
First Vice President and Controller
(Principal Accounting Officer)
-11-
