<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the quarterly period ended December 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 0-17620
CORPORATE PROPERTY ASSOCIATES 8, L.P., a Delaware limited partnership
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(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
incorporation or organization) Identification No.)
50 ROCKEFELLER PLAZA, NEW YORK, NEW YORK 10020
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 492-1100
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
NONE NONE
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Securities registered pursuant to Section 12(g) of the Act:
SUBSIDIARY PARTNERSHIP UNITS
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(Title of Class)
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(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates of
Registrant: There is no active market for Subsidiary Partnership Units.
<PAGE> 2
PART I
Item 1. Business.
Registrant is engaged in the business of investing in commercial and
industrial real estate properties which are net leased to commercial and
industrial entities. Registrant was organized as a Delaware limited partnership
on October 20, 1987. Effective January 1, 1998, the General Partner of
Registrant is Carey Diversified LLC ("Carey Diversified"). Eighth Carey
Corporate Property, Inc., a Delaware corporation, and William Polk Carey were
formerly Corporate General Partner and Individual General Partner, respectively.
Carey Diversified is also the General Partner of Corporate Property Associates
("CPA(R):1"), Corporate Property Associates 2 ("CPA(R):2"), Corporate Property
Associates 3 ("CPA(R):3"), Corporate Property Associates 4, a California limited
partnership ("CPA(R):4"), Corporate Property Associates 5 ("CPA(R):5"),
Corporate Property Associates 6 - a California limited partnership ("CPA(R):6"),
Corporate Property Associates 7 - a California limited partnership ("CPA(R):7"),
Corporate Property Associates 9, L.P., a Delaware limited partnership
("CPA(R):9"). Registrant has entered into an agreement with Carey Management LLC
("Carey Management") pursuant to which Carey Management performs a variety of
management services for Registrant.
Commencing on February 17, 1988, Registrant offered to the public (the
"Public Offering") 49,900 Limited Partnership Units (the "Units") through Carey
Financial Corporation ("Carey Financial"), as Sales Agent, at a price of $1,000
per Unit. The Units were registered under the Securities Act of 1933
(Registration No. 33-18478). Under the terms of the Public Offering, as the
Registrant received subscriptions for more than 49,900 Units, the Sales Agent
exercised its right to sell a maximum of an additional 50,000 Units. Registrant
issued a total of 67,649.316 Units during the offering and on March 15, 1989
Registrant filed Post Effective Amendment No. 4 with the Securities and Exchange
Commission withdrawing from registration the balance of the Units.
The properties owned by Registrant are described in Item 2. Registrant's
net proceeds from the public offering, less a working capital reserve, have been
fully invested in net leased commercial and industrial real estate since October
26, 1990, the date of Registrant's final real estate acquisition.
Registrant has one industry segment consisting of the investment in and
the leasing of industrial and commercial real estate. In 1996, Registrant
transferred ownership of a hotel property in Kenner, Louisiana for an interest
in the operating partnership of a real estate investment trust. See Selected
Financial Data in Item 6 for a summary of Registrant's operations. Also see the
material contained in the Prospectus under the heading INVESTMENT OBJECTIVES AND
POLICIES.
Except for a property in Bloomingdale, Illinois which is partially
occupied by the United States Postal Service, all of Registrant's properties are
leased to corporate tenants under long-term net leases. A net lease generally
requires tenants to pay all operating expenses relating to the leased properties
including maintenance, real estate taxes, insurance and utilities which under
other forms of leases are often paid by the lessor. Lessees are required to
include Registrant as an additional insured party on all insurance policies
relating to the leased properties. In addition, substantially all of the net
leases include indemnification provisions which require the lessees to indemnify
Registrant and the General Partners for liabilities on all matters related to
the leased properties. Registrant believes that the insurance and indemnity
provided on its behalf by its lessees provides adequate coverage for property
damage and any liability claims which may arise against Registrant's ownership
interests. In addition to the insurance and indemnification provisions of the
leases, Registrant has contingent property and liability insurance on the leased
properties and primary property and liability coverages on its vacant property.
Management believes that its insurance is adequate. To the extent that any
lessees are not financially able to satisfy indemnification obligations which
exceed insurance reimbursements, Registrant may incur the costs necessary to
repair property and settle liability or environmental claims. Currently, there
are no claims pending for property damages or liability claims.
As described above, lessees retain the obligation for the operating
expenses of their leased properties so that, other than rental income, there are
no significant operating data (i.e. expenses) reportable with respect to
Registrant's leased properties. Current rental income is reported in Note 9 to
the Financial Statements in Item 8. As discussed in Registrant's Management's
Discussion and Analysis in Item 7, Registrant's leases generally provide for
periodic rent increases which are either stated and negotiated at the
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inception of the lease or based on formulas indexed to increases in the Consumer
Price Index. Registrant's leases generally provide for multiple renewal terms
with the initial term on its significant leases scheduled to expire between 1998
and 2014. Several of the leases include purchase options, with such options
generally at an exercise price based on the greater of fair market value, as
defined in the lease, or a stated amount.
Since Registrant's objective has been to invest in long-term net leases
for properties which are occupied by a single corporate tenant backed by the
credit of the corporate lessee, Registrant's properties generally have not been
subject to competitive conditions of local and regional real estate markets.
Competitive conditions of local and regional real estate markets may have a more
material affect on Registrant as leases terminate in the future. In selecting
real estate for investment, Registrant's strategy was to identify properties
which included operations of material importance to the lessee so that the
lessee would be more likely to extend its lease beyond the initial term or
exercise a purchase option if such option was provided for in the lease
agreement. Because Registrant may be affected by the financial condition of its
lessees rather than the competitive conditions of the real estate marketplace,
Registrant's strategy has been to diversify its investments among tenants,
property types and industries in addition to achieving geographical
diversification.
For the year ended December 31, 1997, revenues from properties occupied by
lessees which accounted for 10% or more of the total operating revenues of
Registrant were as follows: Advanced System Applications, Inc. ("ASA"), 10 %;
Sybron International Corporation, 17%; Dr Pepper Bottling Company of Texas ("Dr
Pepper"), 14% and Quebecor Printing Inc., 11%. No other property owned by
Registrant accounted for 10% or more of its total operating revenue during 1997.
Net of rentals received from a subtenant at the ASA property, revenues from ASA
would have accounted for 9% of the total operating revenues of Registrant. See
Note 9 to the Financial Statements in Item 8.
The Registrant has a 50% equity interest in a property leased to Lockheed
Martin Corporation. The initial term of the Lockheed Martin lease ends in July
1998. Since December 31, 1998, Lockheed Martin has agreed to an extension term
of five years. Subsequent to December 31, 1997, the equity interest has been
converted to an undivided interest as a tenant-in-common.
In connection with the purchase of its properties, Registrant required
sellers of such properties to perform environmental reviews. Management
believes, based on the results of such reviews, that Registrant's properties
were in substantial compliance with Federal and state environmental statutes at
the time the properties were acquired. However, portions of certain properties
have been subject to a limited degree of contamination, principally in
connection with either leakage from underground storage tanks or surface spills
from facility activities. In most instances where contamination has been
identified, tenants are actively engaged in the remediation process and
addressing identified conditions. Tenants are generally subject to environmental
statutes and regulations regarding the discharge of hazardous materials and any
related remediation obligations. In addition, Registrant's leases generally
require tenants to indemnify Registrant from all liabilities and losses related
to the leased properties with provisions of such indemnification specifically
addressing environmental matters. Accordingly, Management believes that the
ultimate resolution of environmental matters will not have a material adverse
effect on Registrant's financial condition, liquidity or results of operations.
On October 16, 1997, Registrant distributed a Consent Solicitation
Statement/Prospectus to the Limited Partners that described a proposal to
consolidate Registrant with the other CPA(R) Partnerships. Proposals that each
of the nine CPA(R) limited partnerships be merged with a corresponding
subsidiary partnership of Carey Diversified, of which Carey Diversified is the
general partner, were approved by the Limited Partners of all nine of the CPA(R)
limited partnerships. Each limited partner had the option of either exchanging
his or her limited partnership interest for an interest in Carey Diversified
("Listed Shares") or to retain a limited partnership interest in the subsidiary
partnership ("Subsidiary Partnership Units"). On January 1, 1998, 3,491 holders
representing 66,094 of the 67,582 limited partnership units exchanged such units
for 4,596,838 Listed Shares with 54 holders with the remaining 1,488 limited
partnership units exchanging such units for Subsidiary Partnership Units. The
former General Partners received 193,778 Listed Shares for their interest in
their share of the appreciation in Registrant properties.
The Listed Shares are listed on the New York Stock Exchange. The
Subsidiary Partnership Units provide substantially the same economic interest
and legal rights as those of a limited partnership unit in Registrant prior to
the Consolidation, but are not listed on a securities exchange. A liquidating
distribution to
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holders of Subsidiary Partnership Units will be made after an appraisal of
Registrant's properties. The date of such an appraisal is to be no later than
December 31, 2002.
Registrant does not have any employees. Carey Management, an affiliate of
the General Partner of Registrant, performs accounting, secretarial and transfer
services for Registrant. Chase Mellon Shareholder Services, Inc. performs
certain transfer services for Registrant and The Chase Manhattan Bank performs
certain banking services for Registrant. In addition, Registrant has entered
into an agreement with Carey Management pursuant to which Carey Management
provides certain management services for Registrant.
Registrant's management company has responsibility for maintaining
Registrant's books and records. An affiliate of the management company services
the computer systems used in 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 Registrant's operations; however, such
assessment has not been completed. Registrant 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 might affect
Registrant.
Item 2. Properties.
<TABLE>
<CAPTION>
LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
- ----------------- ------------------- ------------------------ ---------------------
<S> <C> <C> <C>
LOCKHEED MARTIN Office/Research King of Prussia, Ownership of a 50%
CORPORATION Facility Pennsylvania interest in
land and building (1)
QUEBECOR PRINTING Industrial Olive Branch, Ownership of land
INC. and Office Mississippi and building (1)
Buildings
QUEBECOR PRINTING Industrial Building Dekalb County, Ownership of a 26.43%
INC. and Office Facility Georgia interest in land and
buildings
AUTOZONE, INC. Retail Stores Jacksonville, Ownership of land
Florida - 2; and buildings
Albany, Augusta,
Brunswick and
Macon, Georgia;
Columbia, South Carolina;
Houston and San Antonio,
Texas; Albuquerque and
Farmington, New Mexico
UNITED STATES Office Building Bloomingdale, Ownership of a
POSTAL SERVICE Illinois 66.36% interest in
land and building
HIGH VOLTAGE Manufacturing Sterling, Ownership of land
ENGINEERING and Office Massachusetts; and buildings (1)
CORP. Buildings East Hempfield
Township, Pennsylvania
WOZNIAK INDUSTRIES, Manufacturing Schiller Park, Ownership of land
INC./MAYFAIR MOLDED Facility Illinois and building
PRODUCTS
CORPORATION
</TABLE>
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<TABLE>
<CAPTION>
LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
- ----------------- ------------------- ------------------------ ---------------------
<S> <C> <C> <C>
SYBRON Manufacturing and Penfield, Ownership of a
INTERNATIONAL Office Buildings New York; 75.26% interest in
CORPORATION Portsmouth, land and buildings
New Hampshire; (1)
Dubuque, Iowa;
Glendora, California;
Romulus, Michigan
UNITED STATIONERS Office/Warehouse San Antonio, Texas; Ownership of land
SUPPLY CO. Facility Memphis, Tennessee; and buildings (1)
New Orleans, Louisiana
FEDERAL EXPRESS Office/Warehouse College Ownership of land
CORPORATION Facility Station, Texas and building
NVR, INC. Manufacturing Thurmont, Ownership of a
Facility Maryland and 62.963% interest
Farmington, New York in land and buildings
DR PEPPER BOTTLING Bottling/ Irvine and Ownership of a 50%
COMPANY OF TEXAS Distribution Houston, Texas interest in land and
Office Facility and buildings (1)
ORBITAL SCIENCES Engineering & Chandler, Ownership of a 42%
CORPORATION Fabrication Arizona interest in land and
Facility buildings (1)
FURON COMPANY Manufacturing, Office New Haven, Ownership of a 32.28%
and Warehouse Connecticut; interest in land and
Facilities Mickleton, New Jersey; buildings (1)
Aurora and Mantua, Ohio;
Bristol, Rhode Island;
Mt. Pleasant, Texas;
Milwaukee, Wisconsin.
DETROIT DIESEL Office, Warehouse, Detroit, Ownership of a 20%
CORPORATION Manufacturing, Truck Michigan interest in land and
Repair Facilities and buildings (1)
Waste Treatment Plant
WINN-DIXIE Supermarket Brewton, Alabama Ownership of building (2)
STORES, INC.
ALLIED PLYWOOD, Manufacturing/ Manassas, Virginia Ownership of a 62.963%
INC. Office building interest in land and building
STAIRPANS, INC. Manufacturing/ Fredricksburg, Ownership of a
Office building Virginia 62.963% interest
in land and building
HOTEL CORPORATION Hotel Topeka, Kansas 50% ownership of a limited
OF AMERICA partnership which owns
land and building (1)
</TABLE>
(1) These properties are encumbered by mortgage notes payable.
(2) This property is subject to a ground lease.
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The material terms of Registrant's leases with its significant tenants are
summarized in the following table:
<TABLE>
<CAPTION>
Partnership's
Share of Current Lease
Lease Current Square Rent Per Expiration Renewal Ownership Terms of
Obligor Annual Rent Footage Sq.Ft.(1) (Mo/Year) Terms Interest Purchase Option
- ------- ----------- ------- --------- --------- ----- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sybron $2,491,920 705,900 $ 4.69 12/13 YES 75.26% interest; The greater of
International remaining interest fair market value or
Corporation (3) owned by $18,897,786 and any
Corporate Property prepayment premium.
Associates 7
("CPA(R):7")
Dr Pepper 1,999,000 721,947 5.54 06/14 YES 50% interest; The greater of
Bottling remaining interest fair market value
Company owned by of the property
of Texas (3) Corporate Property or $14,100,000
Associates 9
("CPA(R):9")
U.S. Postal 723,312 60,320 18.07 04/06 NO 66.36% interest; N/A
Service remaining
interest owned
by CPA(R):7
Orbital 977,378 280,000 7.95 09/09 YES 42% interest; N/A
Sciences remaining
Corporation (3) interest owned
by CPA(R):9
Quebecor
Printing Inc.
Olive Branch, 992,349 270,500 3.67 06/08 YES 100% The greater of fair
MS (3) market value or
$7,685,000 (less
other amounts
stated in lease)
Dekalb 395,666 432,559 3.46 12/09 YES 26.43% interest; N/A
County, remaining interest
Georgia (2)(3) owned by CPA(R):9
NVR, 459,072 179,741 4.06 03/14 YES 62.963% interest; N/A
Inc. remaining interest
owned by CPA(R):7
High Voltage
Engineering
Corp.;
Sterling, 574,440 70,000 8.21 11/13 YES 100% The greater of fair
MA (2)(3) market value or
$4,050,000 and
any prepayment
premium.
Lancaster, 599,986 70,712 8.48 11/13 YES 100% The greater of fair
PA (2)(3) market value or
$5,600,000 and
any prepayment
penalty.
Furon 779,901 699,870 3.45 07/07 YES 32.28% interest N/A
Company (3) in a limited
liability company,
remaining
interest owned
by CPA(R):9
</TABLE>
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<TABLE>
<CAPTION>
Partnership's
Share of Current Lease
Lease Current Square Rent Per Expiration Renewal Ownership Terms of
Obligor Annual Rent Footage Sq.Ft.(1) (Mo/Year) Terms Interest Purchase Option
- ------- ----------- ------- --------- --------- ----- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Detroit $ 729,078 2,730,750 $1.34 06/10 YES 20% interest; N/A
Diesel remaining
Corporation (3) interest owned
by CPA(R):9
AutoZone, 545,883 54,000 10.11 08/13 YES 100% N/A
Inc.
United
Stationers 812,708 197,321 4.12 03/10 YES 100% N/A
Supply
Company, Inc. (3)
Wozniak 460,755 84,197 5.47 12/03 YES 100% The greater of
Industries, Inc./ fair market value or
Mayfair Molded $3,250,000 and any
Products prepayment premium.
Corporation
</TABLE>
(1) Represents rent per square foot when combined with rents applicable to
tenants-in-common.
(2) A portion of the rent is variable, based on changes in monthly mortgage
debt service requirements on the properties.
(3) These properties are encumbered by limited recourse mortgages.
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Item 3. Legal Proceedings.
As of the date hereof, Registrant is not a party to any material pending
legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
Information with respect to matters submitted to a vote of security
holders during the fourth quarter of the year ended December 31, 1997 is hereby
incorporated by reference to page 27 of Registrant's Annual Report contained in
Appendix A.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
Information with respect to Registrant's common equity is hereby
incorporated by reference to page 27 of Registrant's Annual Report contained in
Appendix A.
Item 6. Selected Financial Data.
Selected Financial Data are hereby incorporated by reference to page 1 of
Registrant's Annual Report contained in Appendix A.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Management's Discussion and Analysis are hereby incorporated by reference
to pages 2 to 4 of Registrant's Annual Report contained in Appendix A.
Item 8. Financial Statements and Supplementary Data.
The following financial statements and supplementary data are hereby
incorporated by reference to pages 5 to 19 of Registrant's Annual Report
contained in Appendix A:
(i) Report of Independent Accountants.
(ii) Balance Sheets as of December 31, 1996 and 1997.
(iii) Statements of Income for the years ended December 31, 1995, 1996
and 1997.
(iv) Statements of Partners' Capital for the years ended December 31,
1995, 1996 and 1997.
(v) Statements of Cash Flows for the years ended December 31, 1995,
1996 and 1997.
(vi) Notes to Financial Statements.
Item 9. Disagreements on Accounting and Financial Disclosure.
NONE
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PART III
Item 10. Directors and Executive Officers of the Registrant.
Registrant has no officers or directors. The directors and executive
officers of the General Partner, Carey Diversified LLC, are as follows:
<TABLE>
<CAPTION>
Has Served as a
Director and/or
Name Age Positions Held Officer Since (1)
---- --- -------------- -----------------
<S> <C> <C> <C>
Francis J. Carey 72 Chairman of the Board 1/98
Chief Executive Officer
Director
William Polk Carey 67 Chairman of the Executive Committee 1/98
Director
Steven M. Berzin 47 Vice Chairman 1/98
Chief Legal Officer
Director
Gordon F. DuGan 31 President 1/98
Chief Acquisitions Officer
Director
Donald E. Nickelson 64 Chairman of the Audit Committee 1/98
Director
Eberhard Faber, IV 61 Director 1/98
Barclay G. Jones III 37 Director 1/98
Lawrence R. Klein 77 Director 1/98
Charles C. Townsend, Jr. 69 Director 1/98
Reginald Winssinger 55 Director 1/98
Claude Fernandez 45 Executive Vice President 1/98
- Financial Operations
John J. Park 33 Executive Vice President 1/98
Chief Financial Officer
Treasurer
H. Augustus Carey 40 Senior Vice President 1/98
Secretary
Samantha K. Garbus 29 Vice President - Asset Management 1/98
Susan C. Hyde 29 Vice President - Shareholder Services 1/98
Robert C. Kehoe 37 Vice President - Accounting 1/98
Edward V. LaPuma 24 Vice President - Acquisitions 1/98
</TABLE>
William Polk Carey and Francis J. Carey are brothers. H. Augustus Carey is
the nephew of William Polk Carey and the son of Francis J. Carey.
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<PAGE> 10
A description of the business experience of each officer and director of
the Corporate General Partner is set forth below:
Francis J. Carey, Chairman of the Board, Chief Executive Officer and
Director, was elected President and a Managing Director of W. P. Carey & Co.
("W.P. Carey") in April 1987, having served as a Director since its founding in
1973. Prior to joining the firm full-time, he was a senior partner in
Philadelphia, head of the Real Estate Department nationally and a member of the
executive committee of the Pittsburgh based firm of Reed Smith Shaw & McClay,
counsel for Registrant, the General Partners, the CPA(R) Partnerships, W.P.
Carey and some of its affiliates. He served as a member of the Executive
Committee and Board of Managers of the Western Savings Bank of Philadelphia from
1972 until its takeover by another bank in 1982 and is former chairman of the
Real Property, Probate and Trust Section of the Pennsylvania Bar Association.
Mr. Carey served as a member of the Board of Overseers of the School of Arts and
Sciences of the University of Pennsylvania from 1983 through 1990. He has also
served as a member of the Board of Trustees of the Investment Program
Association since 1990 and on the Business Advisory Council of the Business
Council for the United Nations since 1994. He holds A.B. and J.D. degrees from
the University of Pennsylvania.
Gordon F. DuGan, President, Chief Acquisitions Officer and Director, was
elected Executive Vice President and a Managing Director of W.P. Carey in June
1997. Mr. Dugan rejoined W.P. Carey as Deputy Head of Acquisitions in February
1997. Mr. Dugan was until September 1995 a Senior Vice President in the
Acquisitions Department of W.P. Carey. Mr. Dugan joined W.P. Carey as Assistant
to the Chairman in May 1988, after graduating from the Wharton School at the
University of Pennsylvania where he concentrated in Finance. From October 1995
until February 1997, Mr. Dugan was Chief Financial Officer of Superconducting
Core Technologies, Inc., a Colorado-based wireless communications equipment
manufacturer.
Steven M. Berzin, Vice Chairman, Chief Legal Officer and Director, was
elected Executive Vice President, Chief Financial Officer, Chief Legal Officer
and a Managing Director of W.P. Carey in July 1997. From 1993 to 1997, Mr.
Berzin was Vice President - Business Development of General Electric Capital
Corporation in the office of the Executive Vice President and, more recently, in
the office of the President, where he was responsible for business development
activities and acquisitions. From 1985 to 1992, Mr. Berzin held various
positions with Financial Guaranty Insurance Company, the last two being Managing
Director, Corporate Development and Senior Vice President and Chief Financial
Officer. Mr. Berzin associated with the law firm of Cravath, Swaine & Moore from
1978 to 1985 and from 1976 to 1977, he served as law clerk to the Honorable
Anthony M. Kennedy, then a United States Circuit Judge. Mr. Berzin received a
B.A. and M.A. in Applied Mathematics from Harvard University, a B.A. in
Jurisprudence and an M.A. from Oxford University and a J.D. from Harvard Law
School..
Donald E. Nickelson, Chairman of the Audit Committee and Director, serves
as Chairman of the Board and a Director of Greenfield Industries, Inc. and a
Director of Allied Healthcare Products, Inc. Mr. Nickelson is Vice-Chairman and
a Director of the Harbor Group, a leverage buy-out firm. He is also a Director
of Sugen Corporation and D.T.I. Industries, Inc. and a Trustee of mainstay
Mutual Fund Group. From 1986 to 1988, Mr. Nickelson was President of PaineWebber
Incorporated; from 1988 to 1990, he was President of the PaineWebber Group; and
from 1980 to 1993 a Director. Prior to 1986, Mr. Nickelson served in various
capacities with affiliates of PaineWebber Incorporated and its predecessor firm.
From 1988 to 1989, Mr. Nickelson was a Director of a diverse group of
corporations in the manufacturing, service and retail sectors, including Wyndham
Baking Co., Inc., Hoover Group, Inc., Peebles, Inc. and Motor Wheel Corporation.
He is a former Chairman of National Car Rentals, inc. Mr. Nickelson is also a
former Director of the Chicago Board Options Exchange and is the former Chairman
of the Pacific Stock Exchange.
William Polk Carey, Chairman of the Executive Committee and Director, has
been active in lease financing since 1959 and a specialist in net leasing of
corporate real estate property since 1964. Before founding W.P. Carey in 1973,
he served as Chairman of the Executive Committee of Hubbard, Westervelt &
Mottelay (now Merrill Lynch Hubbard), head of Real Estate and Equipment
Financing at Loeb Rhoades & Co. (now Lehman Brothers), head of Real Estate and
Private Placements, Director of Corporate Finance and Vice Chairman of the
Investment Banking Board of duPont Glore Forgan Inc. A graduate of the
University of Pennsylvania's Wharton School of Finance and Commerce, Mr. Carey
is a Governor of the National Association of Real Estate Investment Trusts
(NAREIT). He also serves on the boards of The Johns Hopkins University, The
James A. Baker III Institute for Public Policy at Rice University, Templeton
College of
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Oxford University and other educational and philanthropic institutions. He
founded the Visiting Committee to the Economics Department of the University of
Pennsylvania and co-founded with Dr. Lawrence R. Klein the Economics Research
Institute at that University. Mr. Carey is also a Director of CPA(R):10, CIP(TM)
and CPA(R):12.
Eberhard Faber IV, is currently a Director of PNC Bank, N.A., Chairman of
the Board and Director of the newspaper Citizens Voice, a Director of Ertley's
Motorworld, Inc., Vice-Chairman of the Board of King's College and a Director of
Geisinger Wyoming Valley Hospital. Mr. Faber served as Chairman and Chief
Executive Officer of Eberhard Faber, Inc., from 1973 to 1987. Mr. Faber also
served as the Director of the Philadelphia Federal Reserve Bank, including
service as the Chairman of its Budget and Operations Committee from 1980 to
1986. Mr. Faber has served on the boards of several companies, including First
Eastern bank from 1980 to 1993.
Barclay G. Jones III, Executive Vice President, Managing Director, and
head of the Investment Department. Mr. Jones joined W.P. Carey as Assistant to
the President in July 1982 after his graduation from the Wharton School of the
University of Pennsylvania, where he majored in Finance and Economics. He was
elected to the Board of Directors of W.P. Carey in April 1992. Mr. Jones is also
a Director of the Wharton Business School Club of New York.
Lawrence R. Klein, Director, is Benjamin Franklin Professor of Economics
Emeritus at the University of Pennsylvania, having joined the faculty of
Economics and the Wharton School in 1958. He holds earned degrees from the
University of California at Berkeley and Massachusetts Institute of Technology
and has been awarded the Nobel Prize in Economics as well as over 20 honorary
degrees. Founder of Wharton Econometric Forecasting Associates, Inc., Dr. Klein
has been counselor to various corporations, governments, and government agencies
including the Federal Reserve Board and the President's Council of Economic
Advisers.
Charles C. Townsend, Jr., Director, currently is an Advisory Director of
Morgan Stanley & Co., having held such position since 1979. Mr. Townsend was a
Partner and a Managing Director of Morgan Stanley & Co. from 1963 to 1978 and
served as Chairman of Morgan Stanley Realty Corporation from 1977 to 1982. Mr.
Townsend holds a B.S.E.E. from Princeton University and an M.B.A. from Harvard
University. Mr. Townsend serves as Director of CIP(TM) and CPA(R)14.
Reginald Winssinger, Director, is currently Chairman of the Board and
Director of Horizon Real Estate Group, Inc. Mr. Winssinger has managed
portfolios of diversified real estate assets exceeding $500 million throughout
the United States for more than 20 years. Mr. Winssinger is active in the
planning and development of major land parcels and has developed 20 commercial
properties. Mr. Winssinger is a native of Belgium with more than 25 years of
real estate practice, including 10 years based in Brussels, overseeing
appraisals, construction and management. Mr. Winssinger holds a B.S. in
Geography from the University of California at berkeley and received a degree in
Appraisal and Survey in Belgium. Mr. Winssinger presently serves as Honorary
Belgium Consul to the State of Arizona, a position he has held since 1991.
Claude Fernandez, Executive Vice President - Financial Operations, joined
W.P. Carey in 1983. Previously associated with Coldwell Banker, Inc. for two
years and with Arthur Andersen & Co., he is a Certified Public Accountant. Mr.
Fernandez received a B.S. degree in accounting from New York University in 1975
and his M.B.A. in Finance from Columbia University Graduate School of Business
in 1981.
John J. Park, Executive Vice President, Chief Financial Officer and
Treasurer, joined W.P. Carey as an Investment Analyst in December 1987. Mr. Park
received his undergraduate degree from Massachusetts Institute of Technology and
his M.B.A. in Finance from New York University.
H. Augustus Carey, Senior Vice President and Secretary, returned to W.P.
Carey in 1988 and is President of W.P. Carey's broker-dealer subsidiary. Mr.
Carey previously worked for W.P. Carey from 1979 to 1981 as Assistant to the
President. Prior to rejoining W.P. Carey, Mr. Carey served as a loan officer of
the North American Department of Kleinwort Benson Limited in London, England. He
received an A.B. from Amherst College in 1979 and an M.Phil. in Management
Studies from Oxford University in 1984. Mr. Carey is a trustee of the Oxford
Management Centre Associates Council.
-10-
<PAGE> 12
Samantha K Garbus, Vice President - Director of Asset Management, became a
Second Vice President of W.P. Carey in April 1995 and a Vice President in April
1997. Ms. Garbus joined W. P. Carey as a Property Management Associate in
January 1992. Ms. Garbus received a B.A. in History from Brown University in May
1990 and an M.B.A. from the Stern School of New York University in January 1997.
Susan C. Hyde, Vice President - Director of Shareholder Services, joined
W. P. Carey in 1990, became a Second Vice President in April 1995 and a Vice
President in April 1997. Ms. Hyde graduated from Villanova University in 1990
where she received a B.S. in Business Administration with a concentration in
Marketing and a B.A. in English.
Robert C. Kehoe, Vice President - Accounting, joined W.P. Carey as a
Senior Accountant in 1987. Mr. Kehoe became a Second Vice President of W. P.
Carey in April 1992 and a Vice President in July 1997. Prior to joining the
company, Mr. Kehoe was associated with Deloitte, Haskins & Sells for three years
and was Manager of Financial Controls at CBS Educational and Professional
Publishing for two years. Mr. Kehoe received a B.S. in Accounting from Manhattan
College in 1982 and an M.B.A. in Finance from Pace University in 1993.
Edward V. LaPuma, Vice President - Acquisitions, joined W. P. Carey as an
Assistant to the Chairman in July 1995, became a Second Vice President in July
1996 and a Vice President in April 1997. A graduate of the University of
Pennsylvania, Mr. LaPuma received a B.A. in Global Economic Strategies from The
College of Arts and Sciences and a B.S. in Economics with a Concentration in
Finance from the Wharton School.
Item 11. Executive Compensation.
Until January 1, 1998, under the Amended Agreement of Limited Partnership
of Registrant (the "Agreement"), 9% of Distributable Cash From Operations, as
defined, was payable to the former Corporate General Partner and 1% of
Distributable Cash From Operations was payable to the former Individual General
Partner. The former Corporate General Partner and the former Individual General
Partner received $595,533 and $66,170, respectively, from Registrant as their
share of Distributable Cash From Operations during the year ended December 31,
1997. As owner of 100 Limited Partnership Units, the former Corporate General
Partner received cash distributions of $9,908 ($99.08 per Unit) during the year
ended December 31, 1997. See Item 6 for the net income allocated to the General
Partners under the Agreement. Registrant is not required to pay, and has not
paid, any remuneration to the officers or directors of the former Corporate
General Partner or any other affiliate of Registrant during the year ended
December 31, 1997.
In the future, a special limited partner, Carey Management LLC, will
receive 9% of Distributable Cash From Operations, and William Polk Carey, the
former Individual General Partner will receive, as a special limited partner, 1%
of Distributable Cash From Operations and each will be allocated the same
percentage of the profits and losses of Registrant.
-11-
<PAGE> 13
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
As of December 31, 1997, no person owned of record, or was known by
Registrant to own beneficially more than 5% of Registrant.
The following table sets forth as of March 25, 1998 certain information as
to the ownership by directors and executive officers of securities of
Registrant:
<TABLE>
<CAPTION>
Number of Units
Name of and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
- -------------- ---------------- -------------------- --------
<S> <C> <C> <C>
Listed Shares William Polk Carey
Francis J. Carey
Steven M. Berzin
Gordon F. DuGan
Donald E. Nickelson
Eberhard Faber IV
Barclay G. Jones III
Lawrence R. Klein
Charles C. Townsend, Jr.
Reginald Winssinger
John J. Park
Claude Fernandez
H. Augustus Carey
Samantha K. Garbus
Susan C. Hyde
Robert C. Kehoe
Edward V. LaPuma
All executive officers
and directors as a
group (17 persons)
</TABLE>
In connection with Consolidation of Registrant into Carey Diversified LLC,
effective January 1, 1998, no officer or director, other than William Polk
Carey, owns a direct interest in Registrant. William Polk Carey owns a 1%
interest in Registrant as a special limited partner and has a controlling
interest in Carey Management LLC which owns a 9% interest in Registrant as a
special limited partner. Effective January 1, 1998, Carey Diversified owns an
approximate 88% interest in Registrant.
There exists no arrangement, known to Registrant, the operation of which
may at a subsequent date result in a change of control of Registrant.
Item 13. Certain Relationships and Related Transactions.
For a description of transactions and business relationships between
Registrant and its affiliates and their directors and officers, see Notes 2 and
3 to the Financial Statements in Item 8. Michael B. Pollack, Senior Vice
President and Secretary, until July 1997, of the former Corporate General
Partner, is a partner of Reed Smith Shaw & McClay which is engaged to perform
legal services for Registrant.
No officer or director of the Corporate General Partner, W.P. Carey, or
any other affiliate of Registrant or any member of the immediate family or
associated organization of any such officer or director was indebted to
Registrant at any time since the beginning of Registrant's last fiscal year.
-12-
<PAGE> 14
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) 1. Financial Statements:
The following Financial Statements are filed as a part of this
Report:
Report of Independent Accountants.
Balance Sheets, December 31, 1996 and 1997
Statements of Income for the years ended December 31, 1995, 1996 and 1997
Statements of Partners' Capital for the years ended December 31, 1995, 1996 and
1997
Statements of Cash Flows for the years ended December 31, 1995, 1996 and 1997
Notes to Financial Statements.
The financial statements are hereby incorporated by reference to pages 5 to 20
of Registrant's Annual Report contained in Appendix A.
(a) 2. Financial Statement Schedule:
The following schedule is filed as a part of this Report:
Schedule III -Real Estate and Accumulated Depreciation as of December 31, 1997.
Notes to Schedule III.
Schedule III and notes thereto are hereby incorporated by reference to pages 21
to 23 of Registrant's Annual Report contained in Appendix A.
Financial Statement Schedules other than those listed above are omitted
because the required information is given in the Financial Statements or the
Notes thereto, or because the conditions requiring their filing do not exist.
-13-
<PAGE> 15
(a) 3. Exhibits:
The following exhibits are filed as part of this Report.
Documents other than those designated as being filed herewith are incorporated
herein by reference.
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
3.1 Amended agreement of Limited Partnership of Exhibit 3B to Registration
Registrant dated as of February 12, 1988. Statement (Form S-11)
No. 33-18478
4.3 Deed of Trust Note dated June 23, 1988 from Filed as Exhibit 28(G)(5)
Registrant, as maker, to Sovran Bank/Central to Registrant's Post-
South ("Sovran"), as payee. Effective Amendment No. 1
to Form S-11
4.4 Deed of Trust and Security Agreement dated Filed as Exhibit 28(G)(6)
June 23, 1988 between Registrant, as grantor, to Registrant's Post-
and James E. Woods, Trustee, as trustee. Effective Amendment No. 1
to Form S-11
4.5 Real Estate Note dated August 24, 1988 Filed as Exhibit 28(H)(4)
from Registrant, as maker, to Pan American to Registrant's Post-
Life Insurance Company, as payee. Effective Amendment No. 1
to Form S-11
4.6 Master Mortgage, Deed of Trust, Deed to Secure Debt, Filed as Exhibit 28(H)(5)
with Uniform Commercial Code Security Agreement and to Registrant's Post-
with Assignment of Leases, Rents and Profits among Effective Amendment No. 1
Registrant, Theodore Tumminello and Pan American Life to Form S-11
Insurance Company.
4.7 Loan Modification Agreement dated September Filed as Exhibit 28(L)(1)
29, 1988 among Prudential Insurance Company to Registrant's Post-
of America, American National Bank and Trust Effective Amendment No. 2
Company of Chicago, Registrant and CPA(R):7. to Form S-11
4.8 Promissory Note dated November 10, 1988 Filed as Exhibit 28(M)(1)
between Registrant, as Borrower, and Far to Registrant's Post-
West Federal Bank, S.B. ("Far West"), Effective Amendment No. 2
as Lender (Pennsylvania property). to Form S-11
4.9 Promissory Note dated November 10, 1988 Filed as Exhibit 28(M)(2)
between Registrant, as Borrower, and Far to Registrant's Post-
West, as Lender (Massachusetts properties). Effective Amendment No. 2
to Form S-11
4.10 Commercial Mortgage with Assignment of Filed as Exhibit 28(M)(3)
Rents and Leases dated November 10, 1988 to Registrant's Post-
between Registrant, as Mortgagor, and Far Effective Amendment No. 2
West, as Mortgagee (Pennsylvania property). to Form S-11
4.11 Commercial Mortgage with Assignment of Filed as Exhibit 28(M)(4)
Rents and Leases dated November 10, 1988 to Registrant's Post-
between Registrant, as Mortgagor, and Far Effective Amendment No. 2
West, as Mortgagee (Massachusetts properties). to Form S-11
</TABLE>
-14-
<PAGE> 16
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
4.12 Security Agreement dated November 10, 1988 Filed as Exhibit 28(M)(5)
between Registrant as Debtor, and Far West, to Registrant's Post-
as Secured Party (Pennsylvania property). Effective Amendment No. 2
to Form S-11
4.13 Security Agreement dated November 10, 1988 Filed as Exhibit 28(M)(6)
between Registrant as Debtor, and Far West, to Registrant's Post-
as Secured Party (Massachusetts properties). Effective Amendment No. 2
to Form S-11
4.14 Note Agreement dated December 21, 1988 Filed as Exhibit 4.1
among New England Mutual Life Insurance to Registrant's Form 8-K
Company ("New England"), Registrant and CPA(R):7. dated May 18, 1989
4.15 $15,000,000 Secured Note from Registrant Filed as Exhibit 4.2
and CPA(R):7 to New England dated to Registrant's Form 8-K
December 22, 1988. dated May 18, 1989
4.16 Deed of Trust and Security Agreement dated December 21, Filed as Exhibit 4.3
1988 between Registrant and CPA(R):7, as Trustor, and New to Registrant's Form 8-K
England, as Beneficiary, covering the California Property. dated May 18, 1989
4.17 Mortgage and Security Agreement dated December 21, 1988 Filed as Exhibit 4.4
between Registrant and CPA(R):7, as Mortgagor, and New to Registrant's Form 8-K
England, as Mortgagee, covering the Iowa Property. dated May 18, 1989
4.18 Mortgage and Security Agreement dated December 21, 1988 Filed as Exhibit 4.5
between Registrant and CPA(R):7, as Mortgagor, and New to Registrant's Form 8-K
England, as Mortgagee, covering the Michigan Property. dated May 18, 1989
4.19 Mortgage and Security Agreement dated December 21, 1988 Filed as Exhibit 4.6
between Registrant and CPA(R):7, as Mortgagor, and New to Registrant's Form 8-K
England, as Mortgagee, covering the New Hampshire Property. dated May 18, 1989
4.20 Mortgage and Security Agreement dated December 21, 1988 Filed as Exhibit 4.7
between Registrant and CPA(R):7, as Mortgagor, and New to Registrant's Form 8-K
England, as Mortgagee, covering the New York Property. dated May 18, 1989
4.21 Assignment of Leases, Rents and Guaranty dated December Filed as Exhibit 4.8
21, 1988 between Registrant and CPA(R):7, as Assignor, to to Registrant's Form 8-K
New England, as Assignee, covering the California Property. dated May 18, 1989
4.22 Assignment of Leases, Rents and Guaranty dated December Filed as Exhibit 4.9
21, 1988 between Registrant and CPA(R):7, as Assignor, to to Registrant's Form 8-K
New England, as Assignee, covering the Iowa Property. dated May 18, 1989
4.23 Assignment of Leases, Rents and Guaranty dated December Filed as Exhibit 4.10
21, 1988 between Registrant and CPA(R):7, as Assignor, to to Registrant's Form 8-K
New England, as Assignee, covering the Michigan Property. dated May 18, 1989
4.24 Assignment of Leases, Rents and Guaranty dated December Filed as Exhibit 4.11
21, 1988 between Registrant and CPA(R):7, as Assignor, to New to Registrant's Form 8-K
England, as Assignee, covering the New Hampshire Property. dated May 18, 1989
</TABLE>
-15-
<PAGE> 17
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
4.25 Assignment of Leases, Rents and Guaranty dated December Filed as Exhibit 4.12
21, 1988 between Registrant and CPA(R):7, as Assignor, to to Registrant's Form 8-K
New England, as Assignee, covering the New York Property. dated May 18, 1989
4.26 $2,250,000 Promissory Note dated February 3, 1989 Filed as Exhibit 4.13
between Registrant and CPA(R):9, as Borrower, to Registrant's Form 8-K
and New England, as Lender. dated May 18, 1989
4.27 Mortgage and Security Agreement dated February 3, 1989 Filed as Exhibit 4.14
between Registrant and CPA(R):9, as Borrower, to Registrant's Form 8-K
and New England, as Lender. dated May 18, 1989
4.28 Assignment of Leases and Rents dated February 3, 1989 Filed as Exhibit 4.15
between Registrant and CPA(R):9, as Borrower, to Registrant's Form 8-K
and New England, as Lender. dated May 18, 1989
4.41 Note Agreement dated June 28, 1989 among Filed as Exhibit 4.1
New England, Registrant and CPA(R):9. to Registrant's Form 8-K
dated September 28, 1989
4.42 Deed of Trust and Security Agreement dated Filed as Exhibit 4.2
June 28, 1989 between Registrant and CPA(R):9, to Registrant's Form 8-K
as Trustor, and New England, as Beneficiary. dated September 28, 1989
4.43 Assignment of Leases, Rents and Guaranty Filed as Exhibit 4.3
dated June 28, 1989 from Registrant and CPA(R):9, to Registrant's Form 8-K
as Assignor, to New England, as Assignee. dated September 28, 1989
4.44 $16,200,000 Promissory Note dated June 28, Filed as Exhibit 4.4
1989 from Registrant and CPA(R):9, as Borrower, to Registrant's Form 8-K
to New England, as Lender. dated September 28, 1989
4.45 $9,000,000 Replacement Promissory Note dated Filed as Exhibit 4.1
September 29, 1989 from Registrant and CPA(R):9, to Registrant's Form 8-K
as Maker, to First Interstate Bank of Arizona dated November 16, 1989
("First Interstate").
4.46 Loan Agreement dated May 17, 1989 between Filed as Exhibit 4.2
Space Data Corporation ("SDC"), as Borrower, to Registrant's Form 8-K
and First Interstate, as Lender. dated November 16, 1989
4.47 Deed of Trust, Assignment of Rents, Security Filed as Exhibit 4.3
1989 by and among SDC, as Trustor, and First dated November 16, 1989
Interstate, as Trustee and Beneficiary.
4.48 Assumption and Modification Agreement dated Filed as Exhibit 4.4
September 29, 1989 by and among First Interstate, as to Registrant's Form 8-K
Lender, SDC, as Original Borrower, Orbital Sciences dated November 16, 1989
Corporation ("OSC"), as Guarantor, and Registrant
and CPA(R):9, as Assuming Borrower.
4.49 Assignment of Rents, Leases and Guaranty dated Filed as Exhibit 4.5
September 29, 1989 from Registrant and CPA(R):9, to Registrant's Form 8-K
as Assignor, to First Interstate, as Assignee. dated November 16, 1989
</TABLE>
-16-
<PAGE> 18
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
4.50 $885,500 Promissory Note dated November 13, Filed as Exhibit 4.1
1989 from Registrant, as Maker, to Far to Registrant's Form 8-K
West. dated January 25, 1990
4.51 Act of Mortgage, Chattel Mortgage and Filed as Exhibit 4.2
Assignment of Leases by Registrant in to Registrant's Form 8-K
favor of Far West, dated November 13, 1989. dated January 25, 1990
4.52 Assignment of Rents dated November 13, 1989 Filed as Exhibit 4.3
from Registrant, as Maker, to Far to Registrant's Form 8-K
West. dated January 25, 1990
4.53 $766,700 Promissory Note dated November 13, Filed as Exhibit 4.4
1989 from Registrant, as Maker, to Far to Registrant's Form 8-K
West. dated January 25, 1990
4.54 Deed of Trust dated November 13, 1989 by and Filed as Exhibit 4.5
among Registrant, as Trustor, William Earthman to Registrant's Form 8-K
III, as Trustee and Far West, as Beneficiary. dated January 25, 1990
4.55 Assignment of Rents dated November 13, 1989 Filed as Exhibit 4.6
from Registrant, as Assignor, to to Registrant's Form 8-K
Far West, as Assignee. dated January 25, 1990
4.56 Security Agreement dated November 13, 1989 Filed as Exhibit 4.7
between Registrant, as Debtor, and Far to Registrant's Form 8-K
West, as Secured Party. dated January 25, 1990
4.57 $847,800 Promissory Note dated November 13, Filed as Exhibit 4.8
1989 from Registrant, as Maker, to Far to Registrant's Form 8-K
West. dated January 25, 1990
4.58 Deed of Trust dated November 13, 1989 by and Filed as Exhibit 4.9
among Registrant, as Trustor, Charles R. Snakard, to Registrant's Form 8-K
as Trustee and Far West, as Beneficiary. dated January 25, 1990
4.59 Assignment of Rents dated November 13, 1989 Filed as Exhibit 4.10
from Registrant, as Assignor, to to Registrant's Form 8-K
Far West, as Assignee. dated January 25, 1990
4.60 Security Agreement dated November 13, 1989 Filed as Exhibit 4.11
between Registrant, as Debtor, and Far to Registrant's Form 8-K
West, as Secured Party. dated January 25, 1990
4.61 $1,000,000 Extendable Secured Note dated January 29, Filed as Exhibit 4.1
1990 from Registrant and CPA(R):9 to Commercial Union to Registrant's Form 8-K
Life Insurance Company of America ("Commercial"). dated March 12, 1990
4.62 $1,000,000 Extendable Secured Note dated January 29, Filed as Exhibit 4.2
1990 from Registrant and CPA(R):9 to Ministers Life - A to Registrant's Form 8-K
Mutual Life Insurance Company ("Ministers"). dated March 12, 1990
4.63 $1,500,000 Extendable Secured Note dated January 29, Filed as Exhibit 4.3
1990 from Registrant and CPA(R):9 to The North Atlantic to Registrant's Form 8-K
Life Insurance Company of America ("North Atlantic"). dated March 12, 1990
</TABLE>
-17-
<PAGE> 19
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
4.64 $5,000,000 Extendable Secured Note dated Filed as Exhibit 4.4
January 29, 1990 from Registrant and CPA(R):9 to Registrant's Form 8-K
to Northern Life Insurance Company ("Northern"). dated March 12, 1990
4.65 $5,000,000 Extendable Secured Note dated January 29, Filed as Exhibit 4.5
1990 from Registrant and CPA(R):9 to Northwestern to Registrant's Form 8-K
National Life Insurance Company ("Northwestern"). dated March 12, 1990
4.66 $500,000 Extendable Secured Note dated January 29, Filed as Exhibit 4.6
1990 from Registrant and CPA(R):9 to TNB Stock to Registrant's Form 8-K
Company, FAO Texas Life Insurance Custody Account. dated March 12, 1990
4.67 Note Purchase Agreement dated as of January 1, 1990 between Filed as Exhibit 4.7
Registrant and CPA(R):9, as Sellers, and Commercial, Ministers, to Registrant's Form 8-K
North Atlantic, Northern, Northwestern and Texas Life dated March 12, 1990
Insurance Company (collectively, the "Lenders"), as Purchasers.
4.68 Combination Open-end Mortgage Deed, Security Filed as Exhibit 4.8
Agreement and Fixture Financing Statement dated January to Registrant's Form 8-K
29, 1990 between Registrant and CPA(R):9, as Mortgagors, dated March 12, 1990
and the Lenders, as Mortgagees (New Haven Premises).
4.69 Combination Open-end Mortgage Deed, Security Filed as Exhibit 4.9
Agreement and Fixture Financing Statement dated January to Registrant's Form 8-K
29, 1990 between Registrant and CPA(R):9, as Mortgagors, dated March 12, 1990
and the Lenders, as Mortgagees (Mickleton Premises).
4.70 Combination Open-end Mortgage Deed, Security Filed as Exhibit 4.10
Agreement and Fixture Financing Statement dated January to Registrant's Form 8-K
29, 1990 between Registrant and CPA(R):9, as Mortgagors, dated March 12, 1990
and the Lenders, as Mortgagees (Aurora and Mantua Premises).
4.73 Combination Mortgage Deed, Security Agreement and Filed as Exhibit 4.13
Fixture Financing Statement dated January 29, 1990 to Registrant's Form 8-K
between Registrant and CPA(R):9, as Mortgagors, dated March 12, 1990
and the Lenders, as Mortgagees (Bristol Premises).
4.74 Combination Deed of Trust, Security Agreement and Filed as Exhibit 4.14
Fixture Financing Statement dated January 29, 1990 to Registrant's Form 8-K
between Registrant and CPA(R):9, as Mortgagors, and dated March 12, 1990
the Lenders, as Mortgagees (Mt. Pleasant Premises).
4.75 Combination Mortgage, Security Agreement and Filed as Exhibit 4.15
Fixture Financing Statement dated January 29, 1990 to Registrant's Form 8-K
between Registrant and CPA(R):9, as Mortgagors, and dated March 12, 1990
the Lenders, as Mortgagees (Milwaukee Premises).
4.76 Agreement and Assignment of Lessors' Interest in Leases Filed as Exhibit 4.16
dated January 29, 1990 by Registrant and CPA(R):9, to Registrant's Form 8-K
as Lessors, and the Lenders (New Haven Premises). dated March 12, 1990
4.77 Agreement and Assignment of Lessors' Interest in Leases Filed as Exhibit 4.17
dated January 29, 1990 by Registrant and CPA(R):9, as to Registrant's Form 8-K
Lessors, and the Lenders (Mickleton Premises). dated March 12, 1990
</TABLE>
-18-
<PAGE> 20
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
4.78 Agreement and Assignment of Lessors' Interest in Leases Filed as Exhibit 4.18
dated January 29, 1990 by Registrant and CPA(R):9, as to Registrant's Form 8-K
Lessors, and the Lenders (Aurora, Mantua and Twinsburg dated March 12, 1990
Premises).
4.80 Agreement and Assignment of Lessors' Interest in Leases Filed as Exhibit 4.20
dated January 29, 1990 by Registrant and CPA(R):9, to Registrant's Form 8-K
as Lessors, and the Lenders (Bristol Premises). dated March 12, 1990
4.81 Agreement and Assignment of Lessors' Interest in Leases Filed as Exhibit 4.21
dated January 29, 1990 by Registrant and CPA(R):9, to Registrant's Form 8-K
as Lessors, and the Lenders (Mt. Pleasant Premises). dated March 12, 1990
4.82 Agreement and Assignment of Lessors' Interest in Leases Filed as Exhibit 4.22
dated January 29, 1990 by Registrant and CPA(R):9, to Registrant's Form 8-K
as Lessors, and the Lenders (Milwaukee Premises). dated March 12, 1990
4.83 $6,750,000 Real Estate Note dated January 30, 1990 Filed as Exhibit 4.23
from Registrant and CPA(R):9, as Maker, to Creditanstalt- to Registrant's Form 8-K
Bankverein (the "Bank"), as Holder. dated March 12, 1990
4.84 Deed to Secure Debt and Security Agreement dated Filed as Exhibit 4.24
January 30, 1990 between Registrant and CPA(R):9, as to Registrant's Form 8-K
Borrower, and the Bank, as Lender. dated March 12, 1990
4.85 Assignment of Rentals and Leases dated Filed as Exhibit 4.25
January 30, 1990 from Registrant and CPA(R):9, to Registrant's Form 8-K
as Assignor, to the Bank, as Assignee. dated March 12, 1990
10.3 Lease Agreement dated June 23, 1988 between Filed as Exhibit 28(G)(4)
Registrant, as landlord, and ASG, as tenant. to Registrant's Post-
Effective Amendment No. 1
to Form S-11
10.4 Lease Agreement dated August 24, 1988 Filed as Exhibit 28(H)(3)
between Registrant, as landlord, and to Registrant's Post-
AutoZone, Inc. ("AutoZone"), as tenant. Effective Amendment No. 1
to Form S-11
10.5 Lease Agreement dated September 29, 1988 Filed as Exhibit 28(L)(2)
between Registrant, and CPA(R):7 as landlord, to Registrant's Post-
and ASA, Inc. as tenant. Effective Amendment No. 2
to Form S-11
10.6 Co-Tenancy Agreement dated September 29, Filed as Exhibit 28(L)(3)
1988 between Registrant and CPA(R):7. to Registrant's Post-
Effective Amendment No. 2
to Form S-11
10.7 Lease Agreement dated November 10, 1988 Filed as Exhibit 28(M)(7)
between Registrant, as landlord, and High to Registrant's Post-
Voltage Engineering Corporation, as tenant. Effective Amendment No. 2
to Form S-11
</TABLE>
-19-
<PAGE> 21
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
10.8 Lease Agreement dated November 10, 1988 Filed as Exhibit 28(M)(8)
between Registrant, as landlord, and Datcon to Registrant's Post-
Instrument Company, as tenant. Effective Amendment No. 2
to Form S-11
10.9 Guaranty and Suretyship Agreement dated Filed as Exhibit 28(M)(9)
November 10, 1988 between Registrant and to Registrant's Post-
High Voltage Engineering Corporation. Effective Amendment No. 2
to Form S-11
10.10 Lease Agreement dated December 20, 1988 Filed as Exhibit 10.1
by and between Registrant, as Landlord, to Registrant's Form 8-K
and Stationers, as Tenant. dated May 18, 1989
10.11 Guaranty and Suretyship Agreement dated Filed as Exhibit 10.2
December 20, 1988 from SDC Distributing to Registrant's Form 8-K
as Guarantor, to Registrant, as dated May 18, 1989
Purchaser.
10.12 Guarantor's Certificate dated December 20, Filed as Exhibit 10.3
1988 from SDC Distributing, as Guarantor, to Registrant's Form 8-K
to Registrant, as Purchaser. dated May 18, 1989
10.13 Lease Agreement dated July 28, 1988 between Filed as Exhibit 10.4
SDC-GESCO Associates, as Landlord, and to Registrant's Form 8-K
General Electric, as Tenant. dated May 18, 1989
10.14 Assignment of Lease and Assumption of Agreement dated Filed as Exhibit 10.5
December 21, 1988 between SDC-GESCO Associates, to Registrant's Form 8-K
as Assignor, and Registrant and CPA(R):9, as Assignee. dated May 18, 1989
10.15 Lease Agreement dated December 21, 1988 Filed as Exhibit 10.6
between Registrant and CPA(R):7, as Landlord, to Registrant's Form 8-K
and Ormco Corporation, as Tenant. dated May 18, 1989
10.16 Lease Agreement dated December 21, 1988 between Filed as Exhibit 10.7
Registrant and CPA(R):7, as Landlord, and Barnstead to Registrant's Form 8-K
Thermolyne Corporation, as Tenant. dated May 18, 1989
10.17 Lease Agreement dated December 21, 1988 Filed as Exhibit 10.8
between Registrant and CPA(R):7, as Landlord, to Registrant's Form 8-K
and Kerr Manufacturing Company, as Tenant. dated May 18, 1989
10.18 Lease Agreement dated December 21, 1988 Filed as Exhibit 10.9
between Registrant and CPA(R):7, as Landlord, to Registrant's Form 8-K
and Erie Scientific Company, as Tenant. dated May 18, 1989
10.19 Lease Agreement dated December 21, 1988 Filed as Exhibit 10.10
between Registrant and CPA(R):7, as Landlord, to Registrant's Form 8-K
and Nalge Company, as Tenant. dated May 18, 1989
10.20 Guaranty and Suretyship Agreement dated Filed as Exhibit 10.11
December 21, 1988 from Sybron Acquisition to Registrant's Form 8-K
Company to Registrant and CPA(R):7. dated May 18, 1989
</TABLE>
-20-
<PAGE> 22
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
10.21 Co-Tenancy Agreement dated December 21, 1988 Filed as Exhibit 10.12
between Registrant and CPA(R):7. to Registrant's Form 8-K
dated May 18, 1989
10.22 Lease Agreement dated October 25, 1988 Filed as Exhibit 10.13
between D/S College Station Joint Venture to Registrant's Form 8-K
("D/S College Station"), as Lessor, and dated May 18, 1989
Federal Express, as Lessee.
10.23 Assignment of Lease dated March 21, 1988 Filed as Exhibit 10.14
from D/S College Station, as Assignor, to Registrant's Form 8-K
to Registrant, as Assignee. dated May 18, 1989
10.24 Lease Agreement dated as of March 31, 1989 Filed as Exhibit 10.15
by and between Registrant and CPA(R):7, as to Registrant's Form 8-K
Landlord, and the Ryan Tenants, as Tenant. dated May 18, 1989
10.25 Guaranty dated March 31, 1989 from NVR, Filed as Exhibit 10.16
as Guarantor, to Registrant and CPA(R):7, to Registrant's Form 8-K
as Landlord. dated May 18, 1989
10.26 Guarantor's Certificate dated March 31, 1989 Filed as Exhibit 10.17
from NVR, as Guarantor, to Registrant and to Registrant's Form 8-K
CPA(R):7, as Purchaser. dated May 18, 1989
10.27 Lease Agreement dated June 28, 1989 by and Filed as Exhibit 10.1
between Registrant and CPA(R):9, as Landlord, to Registrant's Form 8-K
and Dr. Pepper, as Tenant. dated September 28, 1989
10.28 Guaranty and Suretyship Agreement dated Filed as Exhibit 10.2
June 28, 1989 from Holdings, as Guarantor, to Registrant's Form 8-K
to Registrant and CPA(R):9, as Landlord. dated September 28, 1989
10.29 Guarantor's Certificate dated June 28, 1989 Filed as Exhibit 10.3
from Holdings, as Guarantor, to Registrant to Registrant's Form 8-K
and CPA(R):9, as Landlord. dated September 28, 1989
10.30 Co-Tenancy Agreement dated June 28, 1989 Filed as Exhibit 10.4
between Registrant and CPA(R):9. to Registrant's Form 8-K
dated September 28, 1989
10.31 Lease Agreement dated September 29, 1989 Filed as Exhibit 10.1
by and between Registrant and CPA(R):9, to Registrant's Form 8-K
as Landlord, and SDC, as Tenant. dated November 16, 1989
10.32 Guaranty and Suretyship Agreement dated Filed as Exhibit 10.2
September 29, 1989 from Holdings, as Guarantor, to Registrant's Form 8-K
to Registrant and CPA(R):9, as Landlord. dated November 16, 1989
10.33 Construction Management Agreement dated Filed as Exhibit 10.3
September 29, 1989 between SDC, as Tenant, to Registrant's Form 8-K
and Registrant and CPA(R):9, as Owner. dated November 16, 1989
</TABLE>
-21-
<PAGE> 23
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
10.34 Assignment of Rights Under Construction Contract Filed as Exhibit 10.4
dated September 29, 1989 between SDC, as Assignor, to Registrant's Form 8-K
and Registrant and CPA(R):9, as Assignee. dated November 16, 1989
10.35 Lease Agreement dated December 29, 1989 Filed as Exhibit 10.1
by and between Registrant and CPA(R):9, as to Registrant's Form 8-K
Landlord, and Foote & Davies ("F&D"), as Tenant. dated January 25, 1990
10.36 Guaranty and Suretyship Agreement dated December 29, Filed as Exhibit 10.2
1989 by ASG Acquisition Corporation ("ASG"), as to Registrant's Form 8-K
Guarantor, to Registrant and CPA(R):9, as Landlord. dated January 25, 1990
10.37 Lease Agreement dated as of January 29, 1990 Filed as Exhibit 10.1
by and between Registrant and CPA(R):9, as to Registrant's Form 8-K
Landlord, and Furon, as Tenant. dated March 12, 1990
10.38 Sublease dated January 29, 1990 by and between Furon, Filed as Exhibit 10.2
as Sublandlord, and CHR Industries, Inc., as Subtenant, to Registrant's Form 8-K
and consented to by Registrant and CPA(R):9, as Landlord. dated March 12, 1990
10.39 Sublease dated January 29, 1990 by and between Furon, as Filed as Exhibit 10.3
Sublandlord, and Bunnell Plastics, Inc., as Subtenant, and to Registrant's Form 8-K
consented to by Registrant and CPA(R):9, as Landlord. dated March 12, 1990
10.40 Sublease dated January 29, 1990 by and between Furon, as Filed as Exhibit 10.4
Sublandlord, and Dixon Industries Corporation, as Subtenant, to Registrant's Form 8-K
and consented to by Registrant and CPA(R):9, as Landlord. dated March 12, 1990
10.41 Assignment of Lease Agreement dated January 29, Filed as Exhibit 10.5
1990 by and between Furon, as Assignor, to Registrant's Form 8-K
and Registrant and CPA(R):9, as Assignee. dated March 12, 1990
10.42 Lessee's and Guarantor's Certificate dated Filed as Exhibit 10.6
December 29, 1989 between F&D, as Lessee, to Registrant's Form 8-K
and Registrant and CPA(R):9, as Lessor. dated March 12, 1990
10.43 First Amendment to Lease Agreement dated as of Filed as Exhibit 10.7
January 30, 1990 between F&D, as Tenant, to Registrant's Form 8-K
and Registrant and CPA(R):9, as Landlord. dated March 12, 1990
10.44 Agreement to Guaranty and Suretyship Agreement dated Filed as Exhibit 10.8
as of January 30, 1990 made by ASG, as Guarantor, to Registrant's Form 8-K
to Registrant and CPA(R):9, as Landlord. dated March 12, 1990
10.45 Lease Agreement between Registrant and Filed as Exhibit 10.1
CPA(R):9, as Landlord, and DDC, as Tenant. to Registrant's Form 8-K
dated July 13, 1990
28.1 Cash Sale Deed dated June 14, 1988 from Filed as Exhibit 28(F)(4)
Integra, as Grantor, to Registrant, as to Registrant's Post-
Grantee. Effective Amendment No. 1
to Form S-11
</TABLE>
-22-
<PAGE> 24
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
28.2 Bill of Sale dated June 14, 1988 from Filed as Exhibit 28(F)(5)
Integra, as Seller, to Registrant and CPA(R):4, to Registrant's Post-
together, as Purchaser. Effective Amendment No. 1
to Form S-11
28.3 Seller's/Lessee's Certificate dated June 14, Filed as Exhibit 28(F)(6)
1988 from Integra, as Seller, to Registrant to Registrant's Post-
and CPA(R):4, together, as Purchaser. Effective Amendment No. 1
to Form S-11
28.4 Sale and Purchase Agreement dated June 23, Filed as Exhibit 28(G)(1)
1988 between ASG, as Seller, and Registrant, to Registrant's Post-
as Purchaser. Effective Amendment No. 1
to Form S-11
28.5 Special Warranty Deed dated June 23, 1988 Filed as Exhibit 28(G)(2)
from ASG, as Grantor, to Registrant, as to Registrant's Post-
Grantee. Effective Amendment No. 1
to Form S-11
28.6 Bill of Sale dated June 23, 1988 from ASG, Filed as Exhibit 28(G)(3)
as Seller, to Registrant, as Purchaser. to Registrant's Post-
Effective Amendment No. 1
to Form S-11
28.7 Seller's/Lessee's Certificate dated August Filed as Exhibit 28(H)(1)
24, 1988 from AutoZone, to Registrant. to Registrant's Post-
Effective Amendment No. 1
to Form S-11
28.8 Deeds dated August 24, 1988 from AutoZone, Filed as Exhibit 28(H)(2)
as Grantor, to Registrant, as Grantee, to Registrant's Post-
conveying properties located in the following Effective Amendment No. 1
locations: to Form S-11
(a) Duval County, Florida (Atlantic Boulevard)
(b) Duval County, Florida (Beach Boulevard)
(c) Dougherty County, Georgia
(d) Richmond County, Georgia
(e) Glynn County, Georgia
(f) Bibb County, Georgia
(g) Bernalillo County, New Mexico
(h) San Juan County, New Mexico
(i) Lexington County, South Carolina
(j) Harris County, Texas
(k) Bexar County, Texas
28.9 Letter of Intent dated May 24, 1988 from Filed as Exhibit 28(I)
Registrant to Michael I. Mil of Wozniak to Registrant's Post-
Industrial, regarding purchase of property Effective Amendment No. 1
from Mayfair Molded Products Corporation in Illinois. to Form S-11
</TABLE>
-23-
<PAGE> 25
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
28.10 Letter of Intent dated August 9, 1988 from Filed as Exhibit 28(J)
Registrant and CPA(R):7 to ASA Plaza Venture II to Registrant's Post-
and Advanced System Applications, Inc., Effective Amendment No. 1
regarding purchase of property located in Illinois. to Form S-11
28.11 Letter of Intent dated June 22, 1988 from Registrant to Clifford Filed as Exhibit 28(K)
Press of Hyde Park Holdings, Inc., regarding purchase of to Registrant's Post-
property from High Voltage Engineering Corporation in Effective Amendment No. 1
Lancaster County, Pennsylvania and Sterling, Massachusetts. to Form S-11
28.12 Trustee's Deed dated September 23, 1988 Filed as Exhibit 28(L)(4)
from American National Bank & Trust Company to Registrant's Post-
of Chicago, as Grantor to Registrant and Effective Amendment No. 2
CPA(R):7, as Grantee. to Form S-11
28.13 Bill of Sale dated September 29, 1988 among Filed as Exhibit 28(L)(5)
ASA Plaza Venture II, Registrant and CPA(R):7. to Registrant's Post-
Effective Amendment No. 2
to Form S-11
28.14 Seller's Certificate dated September 29, Filed as Exhibit 28(L)(6)
1988 among ASA, Inc. Registrant and CPA(R):7. to Registrant's Post-
Effective Amendment No. 2
to Form S-11
28.15 Lessee's Certificate dated September 29, Filed as Exhibit 28(L)(7)
1988 among Registrant, ASA, Inc. and CPA(R):7. to Registrant's Post-
Effective Amendment No. 2
to Form S-11
28.16 Lessor's Certificate dated September 29, Filed as Exhibit 28(L)(8)
1988 among Registrant, CPA(R):7 and ASA, Inc. to Registrant's Post-
Effective Amendment No. 2
to Form S-11
28.17 Bill of Sale dated November 10, 1988 from Filed as Exhibit 28(M)(10)
High Voltage Engineering Corporation as to Registrant's Post-
Seller to Registrant, as Purchaser. Effective Amendment No. 2
to Form S-11
28.18 Bill of Sale dated November 10, 1988 from Filed as Exhibit 28(M)(11)
Datcon Instrument Company, as Seller, to Registrant's Post-
Registrant, as Purchaser. Effective Amendment No. 2
to Form S-11
28.19 Seller's/Lessee's Certificate dated November Filed as Exhibit 28(M)(12)
10, 1988 between Registrant and High Voltage to Registrant's Post-
Engineering Corporation. Effective Amendment No. 2
to Form S-11
28.20 Seller's/Lessee's Certificate dated November Filed as Exhibit 28(M)(13)
10, 1988 from Datcon Instrument Company, to Registrant's Post-
Seller to Registrant, Purchaser. Effective Amendment No. 2
to Form S-11
</TABLE>
-24-
<PAGE> 26
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
28.21 Deed dated November 10, 1988 from Datcon Filed as Exhibit 28(M)(14)
Instrument Company, as Grantor, to Registrant, to Registrant's Post-
as Grantee, conveying property located in Effective Amendment No. 2
East Hempfield Township, PA. to Form S-11
28.22 Quitclaim Deed dated November 10, 1988 from Filed as Exhibit 28(M)(15)
High Voltage Engineering Corporation, as to Registrant's Post-
Grantor, and Registrant, as Grantee, conveying Effective Amendment No. 2
two parcels of land located in Sterling and to Form S-11
Leominster, MA.
28.23 Seller's/Lessee's Certificate dated Filed as Exhibit 28.1
December 20, 1988 from Stationers, as Lessee, to Registrant's Form 8-K
to Registrant, as Purchaser. dated May 18, 1989
28.24 Warranty Deed dated December 20, 1988 Filed as Exhibit 28.2
from SDC Distributing, as Grantor, to to Registrant's Form 8-K
Registrant, as Grantee. dated May 18, 1989
28.25 Special Warranty Deed dated December 20, Filed as Exhibit 28.3
1988 from SDC Distributing, as Grantor, to Registrant's Form 8-K
to Registrant, as Grantee. dated May 18, 1989
28.26 Bill of Sale dated December 20, 1988 Filed as Exhibit 28.4
from SDC Distributing, as Seller, to Registrant's Form 8-K
to Registrant, as Purchaser. dated May 18, 1989
28.27 Seller's Certificate dated December 21, Filed as Exhibit 28.5
1988 from SDC-GESCO Associates, as Seller, to Registrant's Form 8-K
to Registrant and CPA(R):9, as Purchaser. dated May 18, 1989
28.28 Corporation Deed dated December 21, Filed as Exhibit 28.6
1988 from SDC-GESCO Associates, as Grantor, to Registrant's Form 8-K
to Registrant and CPA(R):9, as Grantee. dated May 18, 1989
28.29 Seller's/Lessee's Certificate dated Filed as Exhibit 28.7
December 21, 1988 from Ormco, as Lessee, to Registrant's Form 8-K
to Registrant and CPA(R):7, as Purchaser. dated May 18, 1989
28.30 Seller's/Lessee's Certificate dated Filed as Exhibit 28.8
December 21, 1988 from Barnstead, as Lessee, to Registrant's Form 8-K
to Registrant and CPA(R):7, as Purchaser. dated May 18, 1989
28.31 Seller's/Lessee's Certificate dated Filed as Exhibit 28.9
December 21, 1988 from Kerr, as Seller, to Registrant's Form 8-K
to Registrant and CPA(R):7, as Purchaser. dated May 18, 1989
28.32 Seller's/Lessee's Certificate dated Filed as Exhibit 28.10
December 21, 1988 from Erie, as Lessee, to Registrant's Form 8-K
to Registrant and CPA(R):7, as Purchaser. dated May 18, 1989
</TABLE>
-25-
<PAGE> 27
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
28.33 Seller's Lessee's Certificate dated Filed as Exhibit 28.11
December 20, 1988 from Nalge, as Lessee, to Registrant's Form 8-K
to Registrant and CPA(R):7, as Purchaser. dated May 18, 1989
28.34 Grant Deed dated December 21, 1988 Filed as Exhibit 28.12
from Ormco, as Grantor, to Registrant to Registrant's Form 8-K
and CPA(R):7, as Grantee. dated May 18, 1989
28.35 Warranty Deed dated December 21, 1988 Filed as Exhibit 28.13
from Barnstead Thermolyne, as Grantor, to Registrant's Form 8-K
to Registrant and CPA(R):7, as Grantee. dated May 18, 1989
28.36 Deed dated December 21, 1988 from Kerr, Filed as Exhibit 28.14
as Grantor, to Registrant and CPA(R):7, to Registrant's Form 8-K
as Grantee. dated May 18, 1989
28.37 Warranty Deed dated December 21, 1988 Filed as Exhibit 28.15
from Erie, as Grantor, to Registrant and to Registrant's Form 8-K
CPA(R):7, as Grantee. dated May 18, 1989
28.38 Indenture dated December 21, 1988 Filed as Exhibit 28.16
from Nalge, as Grantor, to Registrant to Registrant's Form 8-K
and CPA(R):7, as Grantee. dated May 18, 1989
28.39 Bill of Sale dated December 21, 1988 Filed as Exhibit 28.17
from Ormco Corporation to Registrant to Registrant's Form 8-K
and CPA(R):7. dated May 18, 1989
28.40 Bill of Sale dated December 21, 1988 Filed as Exhibit 28.18
from Barnstead, as Seller, to Registrant to Registrant's Form 8-K
and CPA(R):7, as Purchaser. dated May 18, 1989
28.41 Bill of Sale dated December 21, 1988 Filed as Exhibit 28.19
from Kerr, as Seller, to Registrant to Registrant's Form 8-K
and CPA(R):7, as Purchaser. dated May 18, 1989
28.42 Bill of Sale dated December 21, 1988 Filed as Exhibit 28.20
from Erie, as Seller, to Registrant to Registrant's Form 8-K
and CPA(R):7, as Purchaser. dated May 18, 1989
28.43 Bill of Sale dated December 21, 1988 Filed as Exhibit 28.21
from Nalge, as Seller, to Registrant to Registrant's Form 8-K
and CPA(R):7, as Purchaser. dated May 18, 1989
28.44 Seller's/Lessee's Certificate dated Filed as Exhibit 28.22
March 21, 1989 from D/S College Station, to Registrant's Form 8-K
as Seller, to Registrant, as Purchaser. dated May 18, 1989
28.45 General Warranty Certificate dated Filed as Exhibit 28.23
March 21, 1989 from D/S College Station, to Registrant's Form 8-K
as Lessee, to Registrant, as Purchaser. dated May 18, 1989
</TABLE>
-26-
<PAGE> 28
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
28.46 Bill of Sale dated March 21, 1989 from Filed as Exhibit 28.24
D/S College Station, as Seller, to to Registrant's Form 8-K
Registrant and CPA(R):7, as Purchaser. dated May 18, 1989
28.47 Warranty Deed dated March 31, 1989 from Ryan, Filed as Exhibit 28.25
as Grantor, to Registrant and CPA(R):7, as to Registrant's Form 8-K
Grantee, for the Plant City, Florida Property. dated May 18, 1989
28.48 Deed dated March 31, 1989 from Ryan, as Filed as Exhibit 28.26
Grantor, to Registrant and CPA(R):7, as Grantee, to Registrant's Form 8-K
for the Frederick County, Maryland Property. dated May 18, 1989
28.49 Deed dated March 31, 1989 from Ryan, as Filed as Exhibit 28.27
Grantor, to Registrant and CPA(R):7, as Grantee, to Registrant's Form 8-K
for the Farmington, New York Property. dated May 18, 1989
28.50 Deed dated March 31, 1989 from Ryan, as Filed as Exhibit 28.28
Grantor, to Registrant and CPA(R):7, as Grantee, to Registrant's Form 8-K
for the Fredericksburg, Virginia Property. dated May 18, 1989
28.51 Deed dated March 31, 1989 from Ryan, as Filed as Exhibit 28.29
Grantor, to Registrant and CPA(R):7, as Grantee to Registrant's Form 8-K
for the Manassas, Virginia Property. dated May 18, 1989
28.53 Bill of Sale dated March 31, 1989 from Ryan, as Filed as Exhibit 28.31
Seller, to Registrant and CPA(R):7, as Purchaser, to Registrant's Form 8-K
for the Frederick County, Maryland Property. dated May 18, 1989
28.54 Bill of Sale dated March 31, 1989 from Ryan, as Filed as Exhibit 28.32
Seller, to Registrant and CPA(R):7, as Purchaser, to Registrant's Form 8-K
for the Fredericksburg, Virginia Property. dated May 18, 1989
28.55 Bill of Sale dated March 31, 1989 from Ryan, Filed as Exhibit 28.33
as Seller, to Registrant and CPA(R):7, as to Registrant's Form 8-K
Purchaser, for the Manassas, Virginia Property. dated May 18, 1989
28.56 Seller's Certificate dated March 31, 1989 Filed as Exhibit 28.34
from NV Homes, L.P., as Seller, to to Registrant's Form 8-K
Registrant, and CPA(R):7, as Purchaser. dated May 18, 1989
28.57 Seller's Certificate dated March 31, 1989 Filed as Exhibit 28.35
from Ryan as Seller, to Registrant, to Registrant's Form 8-K
and CPA(R):7, as Purchaser. dated May 18, 1989
28.58 Lessee's Certificate dated March 31, 1989 Filed as Exhibit 28.36
from NV Homes, L.P., as Lessee, to to Registrant's Form 8-K
Registrant, and CPA(R):7, as Lessor. dated May 18, 1989
28.59 Lessee's Certificate dated March 31, 1989 Filed as Exhibit 28.37
from Ryan, as Lessee, to Registrant, to Registrant's Form 8-K
and CPA(R):7, as Lessor. dated May 18, 1989
</TABLE>
-27-
<PAGE> 29
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
28.60 Lessee's Certificate dated March 31, 1989 Filed as Exhibit 28.38
from Ryan Operations, G.P., as Lessee, to to Registrant's Form 8-K
Registrant, and CPA(R):7, as Lessor. dated May 18, 1989
28.61 Co-Tenancy Agreement dated March 31, 1989 Filed as Exhibit 28.39
between Registrant and CPA(R):7 as tenants to Registrant's Form 8-K
in common. dated May 18, 1989
28.62 Seller's/Lessee's Certificate dated Filed as Exhibit 28.1
June 28, 1989 from Dr. Pepper, as Seller, to Registrant's Form 8-K
to Registrant and CPA(R):9, as Purchaser. dated September 28, 1989
28.63 Warranty Deed dated June 28, 1989 from Filed as Exhibit 28.2
Dr. Pepper, as Grantor, to Registrant and to Registrant's Form 8-K
CPA(R):9, as Grantee, for the Irving Property. dated September 28, 1989
28.64 Warranty Deed dated June 28, 1989 from Filed as Exhibit 28.3
Dr. Pepper, as Grantor, to Registrant and to Registrant's Form 8-K
CPA(R):9, as Grantee, for the Houston Property. dated September 28, 1989
28.65 Bill of Sale dated June 28, 1989 from Filed as Exhibit 28.4
Dr. Pepper, as Seller, to Registrant and to Registrant's Form 8-K
CPA(R):9, as Purchaser, for the Irving Property. dated September 28, 1989
28.66 Bill of Sale dated June 28, 1989 from Filed as Exhibit 28.5
Dr. Pepper, as Seller, to Registrant and to Registrant's Form 8-K
CPA(R):9, as Purchaser, for the Houston Property. dated September 28, 1989
28.67 Joint Venture Agreement made as of December 8, Filed as Exhibit 28.6
1988 between Registrant and CPA(R):9. to Registrant's Form 8-K
dated September 28, 1989
28.68 Special Warranty Deed dated September 29, 1989 Filed as Exhibit 28.1
from SDC, as Grantor, to Registrant and CPA(R):9, to Registrant's Form 8-K
as Grantee. dated November 16, 1989
28.69 Bill of Sale dated September 29, 1989 Filed as Exhibit 28.2
from SDC, as Seller, to Registrant and CPA(R):9, to Registrant's Form 8-K
as Purchaser. dated November 16, 1989
28.70 Seller's/Lessee's Certificate dated Filed as Exhibit 28.3
September 29, 1989 from SDC, as Seller, to Registrant's Form 8-K
to Registrant and CPA(R):9, as Purchaser. dated November 16, 1989
28.71 Guarantor's Certificate dated Filed as Exhibit 28.4
September 29, 1989 from SDC, as Guarantor, to Registrant's Form 8-K
to Registrant and CPA(R):9, as Purchaser. dated November 16, 1989
28.72 Co-Tenancy Agreement dated September 29, 1989 Filed as Exhibit 28.5
between Registrant and CPA(R):9. to Registrant's Form 8-K
dated November 16, 1989
</TABLE>
-28-
<PAGE> 30
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
28.73 Assignment of Rights Under Agreement dated Filed as Exhibit 28.6
September 29, 1989 from SDC, as Assignor, to Registrant's Form 8-K
to Registrant and CPA(R):9, as Assignee. dated November 16, 1989
28.74 Co-Tenancy Agreement dated December 29, 1989 Filed as Exhibit 28.1
between Registrant and CPA(R):9. to Registrant's Form 8-K
dated January 25, 1990
28.75 Special Warranty Deed dated December 29, 1989 Filed as Exhibit 28.2
from Footland, as Grantor, to Registrant and to Registrant's Form 8-K
CPA(R):9, as Grantee. dated January 25, 1990
28.76 Bill of Sale dated December 29, 1989 from Filed as Exhibit 28.3
Footland, as Seller, to Registrant and to Registrant's Form 8-K
CPA(R):9, as Purchaser. dated January 25, 1990
28.77 Seller's Certificate dated December 29, 1989 Filed as Exhibit 28.4
from Footland, as Seller, to Registrant to Registrant's Form 8-K
and CPA(R):9, as Purchaser. dated January 25, 1990
28.78 Lessee's Certificate dated December 29, 1989 Filed as Exhibit 28.5
from F&D, as Tenant, to Registrant and to Registrant's Form 8-K
CPA(R):9, as Landlord. dated January 25, 1990
28.79 Guarantor's Certificate dated December 29, 1989 Filed as Exhibit 28.6
from ASG, as Guarantor, to Registrant and to Registrant's Form 8-K
CPA(R):9, as Purchaser. dated January 25, 1990
28.80 Agreement dated December 29, 1989 between Filed as Exhibit 28.7
Heller Financial, Inc., Registrant and to Registrant's Form 8-K
CPA(R):9. dated January 25, 1990
28.81 Deed dated January 29, 1990 from CHR Filed as Exhibit 28.1
Industries, Inc. as Grantor, to Registrant to Registrant's Form 8-K
and CPA(R):9, as Grantees (New Haven Premises). dated March 12, 1990
28.82 Deed dated January 29, 1990 from Bunnell Filed as Exhibit 28.2
Plastics, Inc. as Grantor, to Registrant to Registrant's Form 8-K
and CPA(R):9, as Grantees (Mickleton Premises). dated March 12, 1990
28.83 Deed dated January 29, 1990 from Furon, Filed as Exhibit 28.3
as Grantor, to Registrant and CPA(R):9, to Registrant's Form 8-K
as Grantees (Mantua Premises). dated March 12, 1990
28.85 Deed dated January 29, 1990 from Furon, Filed as Exhibit 28.5
as Grantor, to Registrant and CPA(R):9, to Registrant's Form 8-K
as Grantees (Aurora Premises). dated March 12, 1990
28.87 Quitclaim Deed dated January 29, 1990 from Filed as Exhibit 28.7
Furon, as Grantor, to Registrant and to Registrant's Form 8-K
CPA(R):9, as Grantees (Bristol Premises). dated March 12, 1990
</TABLE>
-29-
<PAGE> 31
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
28.88 Special Warranty Deed dated January 29, 1990 Filed as Exhibit 28.8
from Furon, as Grantor, to Registrant and to Registrant's Form 8-K
CPA(R):9, as Grantees (Mt. Pleasant Premises). dated March 12, 1990
28.89 Warranty Deed dated January 29, 1990 from Filed as Exhibit 28.9
Furon, as Grantor, to Registrant and to Registrant's Form 8-K
CPA(R):9, as Grantees (Milwaukee Premises). dated March 12, 1990
28.90 Seller's Certificate dated January 29, 1990 Filed as Exhibit 28.10
from CHR Industries, Inc., as Seller, to to Registrant's Form 8-K
Registrant and CPA(R):9, as Purchaser and dated March 12, 1990
Lenders (New Haven Premises).
28.91 Seller's Certificate dated January 29, 1990 Filed as Exhibit 28.11
from Bunnell Plastics, Inc., as Seller, to to Registrant's Form 8-K
Registrant and CPA(R):9, as Purchaser and dated March 12, 1990
Lenders (Mickleton Premises).
28.92 Seller's Certificate dated January 29, 1990 Filed as Exhibit 28.12
from Dixon Industries Corporation, as Seller, to Registrant's Form 8-K
to Registrant and CPA(R):9, as Purchaser and dated March 12, 1990
Lenders (Bristol Premises).
28.93 Seller's/Lessee's Certificate dated January 29, Filed as Exhibit 28.13
1990 from Furon, as Seller, to Registrant and to Registrant's Form 8-K
CPA(R):9, as Purchaser and Lenders (Aurora, dated March 12, 1990
Mantua, Twinsburg, Liverpool, Mt. Pleasant,
and Milwaukee Premises).
28.94 Co-Tenancy Agreement dated as of January 29, Filed as Exhibit 28.14
1990 by and between Registrant and CPA(R):9. to Registrant's Form 8-K
dated March 12, 1990
28.95 General Warranty Deed dated from DDC Filed as Exhibit 28.1
to Registrant and CPA(R):9. to Registrant's Form 8-K
dated July 13, 1990
28.96 Bill of Sale from DDC to Registrant Filed as Exhibit 28.2
and CPA(R):9. to Registrant's Form 8-K
dated July 13, 1990
28.97 Assignment of Leases and Agreements from Filed as Exhibit 28.3
DDC to Registrant and CPA(R):9. to Registrant's Form 8-K
dated July 13, 1990
28.98 Co-tenancy Agreement between Registrant Filed as Exhibit 28.4
and CPA(R):9. to Registrant's Form 8-K
dated July 13, 1990
28.99 Prospectus of Registrant Filed as Exhibit 28.99
dated February 17, 1988 to Form 10-K/A dated
September 24, 1993
</TABLE>
-30-
<PAGE> 32
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
------- ----------- ---------
<S> <C> <C>
28.100 Supplement dated June 22, 1988 Filed as Exhibit 28.100
to Prospectus dated February 17, 1988. to Form 10-K/A dated
September 24, 1993
28.101 Supplement dated August 31, 1988 Filed as Exhibit 28.101
to Prospectus dated February 17, 1988. to Form 10-K/A dated
September 24, 1993
28.102 Supplement dated November 22, 1988 Filed as Exhibit 28.102
to Prospectus dated February 17, 1988. to Form 10-K/A dated
September 24, 1993
</TABLE>
(b) Reports on Form 8-K
The Registrant filed a report on Form 8-K dated January 1,
1998 pursuant to Item 5 -Other Events (EX-99.1 Press Release From W.P. Carey &
Co., Inc. (December 17, 1997)).
-31-
<PAGE> 33
Pursuant to the requirements of Section 13 or 15(d) 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
<TABLE>
<S> <C>
BY: CAREY DIVERSIFIED LLC
03/25/98 BY: /s/ John J. Park
- ------------------ ------------------------------------
Date John J. Park
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
BY: CAREY DIVERSIFIED LLC
03/25/98 BY: /s/ Francis J. Carey
- ------------------ ------------------------------------
Date Francis J. Carey
Chairman of the Board, Chief Executive Officer and Director
(Principal Executive Officer)
03/25/98 BY: /s/ William P. Carey
- ------------------ ------------------------------------
Date William P. Carey
Chairman of the Executive Committee and Director
03/25/98 BY: /s/ Steven M. Berzin
- ------------------ ------------------------------------
Date Steven M. Berzin
Vice Chairman, Chief Legal Officer and Director
03/25/98 BY: /s/ Gordon F. DuGan
- ------------------ ------------------------------------
Date Gordon F. DuGan
President, Chief Acquisitions Officer and Director
03/25/98 BY: /s/ Donald E. Nickelson
- ------------------ ------------------------------------
Date Donald E. Nickelson
Chairman of the Audit Committee and Director
03/25/98 BY: /s/ Eberhard Faber IV
- ------------------ ------------------------------------
Date Eberhard Faber IV
Director
03/25/98 BY: /s/ Barclay G. Jones, III
- ------------------ ------------------------------------
Date Barclay G. Jones, III
Director
03/25/98 BY: /s/ Dr. Lawrence R. Klein
- ------------------ ------------------------------------
Date Dr. Lawrence R. Klein
Director
03/25/98 BY: /s/ Charles C. Townsend, Jr.
- ------------------ ------------------------------------
Date Charles C. Townsend, Jr.
Director
03/25/98 BY: /s/ Reginald Winssinger
- ------------------ ------------------------------------
Date Reginald Winssinger
Director
03/25/98 BY: /s/ John J. Park
- ------------------ ------------------------------------
Date John J. Park
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
03/25/98 BY: /s/ Claude Fernandez
- ------------------ ------------------------------------
Date Claude Fernandez
Executive Vice President - Financial Operations
(Principal Accounting Officer)
</TABLE>
-32-
<PAGE> 34
APPENDIX A TO FORM 10-K
CORPORATE PROPERTY ASSOCIATES 8, L.P.
- a Delaware limited partnership
1997 ANNUAL REPORT
<PAGE> 35
SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------
(In thousands except per unit amounts)
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
OPERATING DATA:
<S> <C> <C> <C> <C> <C>
Revenues 14,364 $ 15,189 $ 15,454 $ 16,207 $ 14,928
Income before
extraordinary item 5,258 6,012 8,338 9,453 7,879
Income before
extraordinary item
allocated:
To General Partners 526 601 834 965 788
To Limited Partners 4,732 5,411 7,504 8,488 7,091
Per unit 69.84 79.86 110.93 125.60 104.92
Distributions attributable (1):
To General Partners 634 637 644 658 579
To Limited Partners 5,702 5,729 5,799 5,919 5,209
Per unit 84.16 84.56 85.76 87.58 77.08
Payment of mortgage
principal (2) 457 969 3,358 1,769 1,198
BALANCE SHEET DATA:
Total assets 120,670 116,323 114,890 108,629 104,467
Long-term
obligations (3) 62,098 57,908 52,324 44,264 42,077
</TABLE>
(1) Includes distributions attributable to the fourth quarter of each fiscal
year payable in the following fiscal year less distributions in the first
fiscal quarter attributable to the prior year. The distribution
attributable to the fourth quarter of 1997 was paid to Limited Partners in
December 1997.
(2) Represents scheduled mortgage principal amortization paid.
(3) Represents mortgage and note payable obligations due after more than one
year.
-1-
<PAGE> 36
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Results of Operations
Net income for the year ended December 31, 1997 decreased by $1,574,000 as
compared with the year ended December 31, 1996. The decrease in net income was
primarily due to decreases in lease revenues (rental income and interest income
from direct financing leases) and equity income (hotel operating income and
income from equity investments) and increases in general and administrative and
property expenses. The effect of these items was partially offset by a decrease
in interest expense and depreciation.
The decrease in lease revenues was due to the expiration of the Advanced
System Applications, Inc. lease for a property in Bloomingdale, Illinois in June
1997. This decrease was partially offset by an increase in lease revenues
related to the lease with the United States Postal Service. Under a 1994
modification agreement, the Partnership agreed to a termination of the lease in
1997 rather than 2003 in consideration for an increase in annual rent of
$2,223,000. As a result of exchanging an interest in a hotel property for an
equity interest in the operating partnership of a publicly-traded investment
trust, American General Hospitality Corporation, equity income (when combined
with hotel earnings) decreased by $500,000. As more fully described below,
Management believes that this transaction has substantially increased the
liquidity of the Partnership by acquiring an equity interest which is freely
exchangeable to a marketable security, and eliminating the need to use the
Partnership's resources to maintain and upgrade a hotel property on an ongoing
basis. The increase in general and administrative expenses was the result of
costs incurred in connection with the structuring of the Consolidation with
Carey Diversified LLC. The increase in property expenses was due to the
Partnership's obligation to pay the operating costs for the Bloomingdale
property for the entire year. The decrease in interest expense reflected the
satisfaction of the mortgage obligation on the hotel property in connection with
the exchange of the hotel for an operating partnership interest in July 1996,
the prepayment of the mortgage loans collateralized by the AutoZone, Inc.
properties in the fourth quarter of 1996, the refinancing of the Furon Company
properties mortgage loan in June 1997 as well as the continuing amortization of
the Partnership's remaining mortgage loans. The decrease in depreciation
reflected the disposition of the hotel property in 1996 and the reclassification
of the Furon lease from the operating method to a direct financing method in
1997. On December 31, 1997, the Partnership converted its 32.28% interest in the
Furon property to an equity investment, in which an affiliate owns the majority
interest. As a result, the Partnership has recorded an asset of $1,685,000 as
its equity interest representing the net assets and liabilities transferred.
Net income increased by $1,115,000 for the year ended December 31, 1996 as
compared with the year ended December 31, 1995. Income in 1996 included the
benefit of nonrecurring other income of $353,000. Increases in income for 1996,
excluding nonrecurring items, included an increase in lease revenues and
decreases in depreciation and interest expenses. This was partially offset by an
increase in property expenses and a decrease in equity income.
The increase in lease revenues was primarily resulted from the
commencement of the lease with the United States Postal Service in May 1996,
and, to a lesser extent, rent increases on the Detroit Diesel Corporation and
United Stationers Supply Co. leases in 1995. The decrease in interest expense
was due to the satisfaction of the mortgage loan on the Advanced System
Application property which amortized fully in March 1996, the satisfaction of
the mortgage loan on the hotel property and the continuing amortization of other
limited recourse mortgage loans. Depreciation decreased as a result of the
disposition of the hotel property. The increase in property expenses was due to
the Partnership's assumption of the contractual responsibility for the operating
costs including insurance, maintenance and real estate taxes at the Bloomingdale
property during the second quarter of 1996. Property expenses relating to the
Quebecor Printing Inc. (formerly AmerSig, Inc.) properties decreased as the
Partnership's reached a settlement regarding the those leases with the former
owner of the AmerSig operations. The decrease in equity income reflected the
exchange of the hotel property and the hotel business for an interest in the
American General Hospitality operating partnership. In connection with the
settlement, the Partnership recognized other income of $224,000 as a result of
being released from a security deposit obligation. The Partnership also received
$129,000 from its bankruptcy claim against the former lessee of the Kenner hotel
property.
-2-
<PAGE> 37
In July 1996, the Partnership exchanged its ownership interests in a hotel
property in Kenner, Louisiana for 493,664 units in American General Hospitality
Operating Partnership L.P. at which time the Partnership transferred the hotel
operation to the operating partnership. Management's expectation was that the
exchange would eliminate the uncertainty and fluctuation in cash flow related to
operating a single hotel as the operating partnership owns a diversified
portfolio of hotel properties and continues to acquire properties. On an
annualized basis, distributions from the American General Hospitality
investment, at current distribution rates, approximate $820,000. The Partnership
has the right to exchange its 493,664 units on a one-for-one basis for shares of
common stock of American General Hospitality Corporation. American General
Hospitality Corporation is a publicly-traded real estate investment trust and
the common stock would be freely transferable on conversion. The quoted market
value of a share of common stock at December 31, 1997 was $26 3/4 resulting in
an aggregate value of approximately $13,200,000, if converted. The carrying
value of this investment as of December 31, 1997 was approximately $5,576,000.
Cash flow is expected to benefit from rent increases scheduled on leases
with Quebecor Printing and High Voltage Engineering Corp. in 1998 and leases
with Stationers and Mayfair Molded Products Corporation in 1999. The partnership
has a 50% equity interest in a property leased to Lockheed Martin Corporation
with an initial term ending in July 1998. In February 1998, the Lockheed Martin
lease was extended for five years with the Partnership's share of annual rent
increasing by $20,000. Cash flow will also benefit from the receipt of a full
year's rent from the Postal Service lease at the Bloomingdale property. During
1997, the Postal Service increased its occupancy from 34% of the leasable space
to 52% at that property. The Partnership is negotiating leases for the remaining
leasable space at the Bloomingdale property; however, there is no assurance that
any leases will be executed.
Because of the long-term nature of the Partnership's net leases, inflation
and changing prices should not unfavorably affect the Partnership's revenues and
net income or have an impact on the continuing operations of the Partnership's
properties. Most of the Partnership's net leases have rent increases based on
formulas indexed to increases in the Consumer Price Index or other periodic
mandated increases which should increase revenues from these leases in the
future.
Financial Condition
The Partnership's cash balances of $5,704,000 at December 31, 1997
increased by $854,000 from the previous year. Cash flows from operations and
equity investments of $9,628,000 were sufficient to pay distributions of
$7,358,000, and mortgage principal payments of $1,198,000. Distributions paid
included a distribution in December 1997 of $10.96 per Limited Partnership Unit.
The distribution paid in December 1997 reflects an exchange transaction
which occurred on January 1, 1998. The majority of the Partnership's Limited
Partners and its General Partners approved a consolidation by merger with a
subsidiary limited partnership of Carey Diversified, as proposed in the Consent
Solicitation Statement/Prospectus of Carey Diversified, dated October 16, 1997.
In connection with the merger, 3,491 Limited Partnership Unitholders owning
66,094 Limited Partnership Units elected to exchange their limited partnership
units for interests in Carey Diversified. The December 1997 distribution was
intended to distribute funds in order to adjust the net assets of the
Partnership with the estimate of Total Exchange Value, as defined in the Consent
Solicitation Statement/Prospectus, of assets.
Limited Partners owning 1,488 Limited Partnership Units who did not elect
to receive interests in Carey Diversified elected to retain a limited
partnership interest as Subsidiary Partnership Unitholders. Subsidiary
Partnership Units have economic interests and legal rights in the Partnership
that are substantially similar to those of Limited Partnership Units and
represent a direct ownership interest in the Partnership. The holders of
Subsidiary Partnership Units will be paid a pro rata share of any distribution
paid by the Partnership to Carey Diversified. The Partnership will continue to
pay distributions on a quarterly basis until liquidating distributions are made,
as described in the Consent Solicitation Statement/Prospectus. The objective
with respect to Subsidiary Partnership Units will be to pay distributions as if
the Consolidation never had occurred based upon the net cash flows generated by
the Partnership.
The Partnership's investing activities in 1997 included using $216,000 to
pay for tenant improvements in connection with the expansion of space leased to
the Postal Service. The Partnership estimates that additional improvements at
the Bloomingdale property to retrofit space for new tenants will amount to
$531,000.
-3-
<PAGE> 38
The Partnership's financing activities in 1997 include the Partnership's
refinancing of its existing mortgage loan of $4,021,000 collateralized by
properties leased to the Furon Company for a new limited recourse loan of
$4,100,000. In connection with the refinancing, the annual interest rate on the
Furon mortgage loan decreased from 10.4% to 8.42%.
In the case of limited recourse mortgage financing which does not fully
amortize over its term, the Partnership would be responsible for the balloon
payment, but only to the extent of its interest in the encumbered property since
the holder of each such obligation has recourse only to the property
collateralizing such debt. The Partnership could refinance the loans,
restructure the debt with existing lenders, evaluate its ability to satisfy the
loan from existing cash reserves or sell the property and use the proceeds to
satisfy the mortgage debt. In 1999, balloon payments of approximately
$20,095,000 are scheduled on the mortgage loans collateralized by Sybron
International Corporation, Dr Pepper Bottling Company of Texas and High Voltage
properties. Based on the existing long-term leases with these lessees, the
Partnership believes that the loans can be refinanced. The Partnership's note
payable of $5,102,000 is also scheduled to mature in 1999. To the extent that
the Partnership does not seek to refinance the loans, it will have the ability
to borrow from Carey Diversified. Carey Diversified is entering into an
agreement for a line of credit and may have funds available for the Partnership,
if necessary. Carey Diversified may also make funds available to the Partnership
to pay off its share of the limited recourse loan on the Lockheed Martin
Corporation property which matures in May 1998. Lockheed Martin has agreed to a
renewal term of five years. The initial term had been scheduled to end in 1998.
A number of the Partnership's leases provide purchase options, generally
at the greater of fair market value as encumbered by the lease or the
Partnership's cost of acquiring the property. The purchase options on the
properties leased to Sybron and Mayfair Molded Products Corporation will be
exercisable by the lessees in 1998 at the greater of (i) fair market value as
encumbered by the lease or (ii) the Partnership's acquisition cost. In the event
that these options are exercised, the Partnership would receive no less than
$11,738,000 (based on the minimum purchase option price, net of amounts needed
to pay the mortgage loans). If all the options are exercised, annual cash flow
would decrease by $1,532,000. The Partnership has not received any indication
from any of these lessees as to whether they intend to exercise their options.
In connection with the purchase of its properties, the Partnership
required sellers of such properties to perform environmental reviews. Management
believes, based on the results of such reviews, that the Partnership's
properties were in substantial compliance with Federal and state environmental
statutes at the time the properties were acquired. However, portions of certain
properties have been subject to a limited degree of contamination, principally
in connection with leakage from underground storage tanks or surface spills. In
most instances where contamination has been identified, tenants are actively
engaged in the remediation process and addressing identified conditions. Tenants
are generally subject to environmental statutes and regulations regarding the
discharge of hazardous materials and any related remediation obligations. In
addition, the Partnership's leases generally require tenants to indemnify the
Partnership from all liabilities and losses related to the leased properties
with provisions of such indemnification specifically addressing environmental
matters. Accordingly, Management believes that the ultimate resolution of
environmental matters will not have a material adverse effect on the
Partnership's financial condition, liquidity or results of operations.
In June 1997, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosure
about Segments of an Enterprise and Related Information." SFAS No. 130
establishes standards for reporting and display of comprehensive income and its
components (revenues, expenses, gains and losses) in full set general purpose
financial statements. 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. SFAS No. 130 and
SFAS No. 131 are required to be adopted by 1998. The Partnership is currently
evaluating the impact, if any, of SFAS No. 130 and SFAS 131.
The Partnership's management company has responsibility for maintaining
the Partnership's books and records and servicing the computer systems used in
maintaining such books and records. In its preliminary assessment of Year 2000
issues, the management company believes that such issues will not have a
material effect on the Partnership's operations; however such assessment has not
been completed. The Partnership 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 might affect the Partnership.
-4-
<PAGE> 39
REPORT of INDEPENDENT ACCOUNTANTS
To the Partners of
Corporate Property Associates 8, L.P.:
We have audited the accompanying balance sheets of Corporate Property
Associates 8, L.P., a Delaware limited partnership, as of December 31, 1996 and
1997, and the related statements of income, partners' capital, and cash flows
for each of the three years in the period ended December 31, 1997. We have also
audited the financial statement schedule included on pages 21 to 23 of this
Annual Report. These financial statements and financial statement schedule are
the responsibility of the General Partners. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
General Partners, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Corporate Property
Associates 8, L.P., a Delaware limited partnership, as of December 31, 1996 and
1997, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. In addition, in our opinion, the Schedule of
Real Estate and Accumulated Depreciation as of December 31, 1997, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the financial information required to
be included therein pursuant to Securities and Exchange Commission Regulation
S-X Rule 12-28.
/s/ Coopers & Lybrand L.L.P.
New York, New York
March 25, 1998
-5-
<PAGE> 40
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
BALANCE SHEETS
December 31, 1996 and 1997
<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
ASSETS:
Real estate leased to others:
Accounted for under the
operating method:
Land $ 16,102,755 $ 14,856,512
Buildings 42,890,140 37,293,673
------------ ------------
58,992,895 52,150,185
Accumulated depreciation 10,293,440 10,189,488
------------ ------------
48,699,455 41,960,697
Net investment in direct financing leases 47,095,414 47,095,414
------------ ------------
Real estate leased to others 95,794,869 89,056,111
Equity investments 6,513,068 7,831,471
Cash and cash equivalents 4,850,145 5,704,033
Other assets, net of accumulated amortization
of $155,759 in 1996 and $141,141 in 1997 and net of
reserve for uncollected rents of $114,115 in 1997 1,471,121 1,875,812
------------ ------------
Total assets $108,629,203 $104,467,427
============ ============
LIABILITIES:
Mortgage notes payable $ 44,139,958 $ 38,966,104
Note payable 5,102,144 5,102,144
Accrued interest payable 473,317 463,973
Accounts payable and accrued expenses 274,822 608,868
Accounts payable to affiliates 209,112 486,965
Prepaid and deferred rental income and security deposits 698,443 722,296
------------ ------------
Total liabilities 50,897,796 46,350,350
------------ ------------
Commitments and contingencies
PARTNERS' CAPITAL:
General Partners (103,774) (113,082)
Limited Partners (67,582 Limited Partnership
Units issued and outstanding) 57,835,181 58,230,159
------------ ------------
Total partners' capital 57,731,407 58,117,077
------------ ------------
Total liabilities and
partners' capital $108,629,203 $104,467,427
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
-6-
<PAGE> 41
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
STATEMENTS of INCOME
For the years ended December 31, 1995, 1996 and 1997
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Revenues:
Rental income $ 8,979,476 $ 9,108,093 $ 7,558,182
Interest income from direct financing leases 6,244,145 6,452,577 6,858,810
Other interest income 229,928 293,329 287,740
Other income 353,401 223,166
----------- ----------- -----------
15,453,549 16,207,400 14,927,898
----------- ----------- -----------
Expenses:
Interest 5,799,127 5,232,928 4,543,266
Depreciation 1,912,503 1,539,737 1,325,929
General and administrative 576,717 626,400 874,658
Property expenses 381,606 579,147 1,006,644
Amortization 37,108 37,108 37,469
----------- ----------- -----------
8,707,061 8,015,320 7,787,966
----------- ----------- -----------
Income before (loss) income from equity
investments and gain on sale 6,746,488 8,192,080 7,139,932
Hotel operating income 1,653,696 986,339
(Loss) income from equity investments (62,359) 253,061 738,979
----------- ----------- -----------
Income before gain on sale 8,337,825 9,431,480 7,878,911
Gain on sale of real estate 21,697
----------- ----------- -----------
Net income $ 8,337,825 $ 9,453,177 $ 7,878,911
=========== =========== ===========
Net income allocated to:
Individual General Partner $ 83,378 $ 96,484 $ 78,789
=========== =========== ===========
Corporate General Partner $ 750,405 $ 868,361 $ 709,102
=========== =========== ===========
Limited Partners $ 7,504,042 $ 8,488,332 $ 7,091,020
=========== =========== ===========
Net income per weighted average Limited
Partnership Units $110.93 $125.60 $104.92
======= ======= =======
Weighted average Limited Partnership Units 67,645 67,582 67,582
====== ====== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
-7-
<PAGE> 42
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
STATEMENTS of PARTNERS' CAPITAL
For the years ended December 31, 1995, 1996 and 1997
<TABLE>
<CAPTION>
Partners' Capital Accounts
---------------------------------------------------------------------
Limited
Partners'
General Limited Amount Per
Total Partners Partners Unit (a)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 $53,080,410 $(605,304) $53,685,714 $793
Purchase of Limited Partnership Units (179,670) (179,670) (3)
Distributions (6,413,927) (641,394) (5,772,533) (85)
Net income, 1995 8,337,825 833,783 7,504,042 111
------------ ------------ ------------ ------------
Balance, December 31, 1995 54,824,638 (412,915) 55,237,553 816
Distributions (6,549,558) (655,704) (5,893,854) (87)
Adjustment to purchase of Limited
Partnership Units 3,150 3,150
Net income, 1996 9,453,177 964,845 8,488,332 126
------------ ------------ ------------ ------------
Balance, December 31, 1996 57,731,407 (103,774) 57,835,181 855
Distributions (7,440,186) (744,144) (6,696,042) (99)
Accrued preferred distribution (53,055) (53,055)
Net income, 1997 7,878,911 787,891 7,091,020 105
------------ ------------ ------------ ------------
Balance, December 31, 1997 $58,117,077 $(113,082) $58,230,159 $861
============ ============ ============ ============
</TABLE>
(a) Based on weighted average Units issued and outstanding.
The accompanying notes are an integral part of the financial statements.
-8-
<PAGE> 43
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
STATEMENTS of CASH FLOWS
For the years ended December 31, 1995, 1996 and 1997
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 8,337,825 $ 9,453,177 $ 7,878,911
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,949,611 1,576,845 1,363,398
Straight-line adjustments 274,471 244,698 (19,642)
Loss from equity investments 62,359
Amortization of deferred income (36,446) (36,446) (36,446)
Gain on sale (21,697)
Provision for uncollected rents 114,115
Net change in operating assets and liabilities (316,586) (268,906) (39,191)
----------- ------------ ------------
Net cash provided by operating activities 10,271,234 10,947,671 9,261,145
----------- ------------ -----------
Cash flows from investing activities:
Distributions from equity investments in excess
of equity (loss) income 282,992 161,795 366,663
Additional capitalized costs (163,752) (414,256) (215,670)
Proceeds from sales of real estate 442,495
Purchase of interest in operating partnership and
related costs
----------- ------------- -----------
Net cash provided by (used in) investing activities 119,240 (40,244) 150,993
----------- ------------ -----------
Cash flows from financing activities:
Distributions to partners (6,413,927) (6,549,558) (7,357,886)
Purchase of Limited Partnership Units (179,670) 3,150
Proceeds from mortgages 4,000,000 4,099,560
Prepayment of mortgage payable (6,860,859) (4,021,244)
Deferred financing costs (80,450)
Payment of mortgage principal (3,358,177) (1,769,400) (1,198,230)
----------- ------------ -----------
Net cash used in financing activities (9,951,774) (11,176,667) (8,558,250)
----------- ------------ -----------
Net increase (decrease) in cash
and cash equivalents 438,700 (269,240) 853,888
Cash and cash equivalents, beginning of year 4,680,685 5,119,385 4,850,145
----------- ------------ ------------
Cash and cash equivalents, end of year $ 5,119,385 $ 4,850,145 $ 5,704,033
=========== ============ ===========
</TABLE>
(Continued)
-9-
<PAGE> 44
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
STATEMENTS of CASH FLOWS, Continued
Supplemental Schedule of noncash investing and financing activity:
<TABLE>
<S> <C>
A. Accrued preferred distribution $53,055
===========
</TABLE>
B. In July 1996, the Partnership exchanged its interest in a hotel property
and related assets and liabilities for 493,664 units in the operating
partnership of a publicly-traded real estate investment trust. The assets
and liabilities transferred are as follows:
<TABLE>
<S> <C>
Real estate, net of accumulated depreciation $ 9,116,767
Mortgage note payable (3,915,439)
Other assets and liabilities transferred, net 8,777
-----------
Equity investment $5,210,105
===========
</TABLE>
C. On December 31, 1997, the Partnership contributed its 32.28% interest as a
tenant-in-common in properties leased to Furon Company to a limited
liability company in which Corporate Property Associates 9, L.P., an
affiliate, owns the remaining majority interest. The assets and
liabilities transferred are as follows:
<TABLE>
<S> <C>
Net investment in direct financing lease (1) $ 5,628,499
Mortgage note payable (4,053,940)
Other assets and liabilities, net 110,507
-----------
Equity investment $1,685,066
===========
</TABLE>
(1) These properties were reclassified to net investment in direct financing
leases in the second quarter of 1997.
The accompanying notes are an integral part of the financial statements.
-10-
<PAGE> 45
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES to FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies:
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. The most significant estimates relate to the assessment
of recoverability of real estate assets. Actual results could
differ from those estimates.
Real Estate Leased to Others:
Real estate is leased to others on a net lease basis, whereby the
tenant is generally responsible for all operating expenses
relating to the property, including property taxes, insurance,
maintenance, repairs, renewals and improvements.
Corporate Property Associates 8, L.P. (the "Partnership")
diversifies its real estate investments among various corporate
tenants engaged in different industries and by property type
throughout the United States.
The leases are accounted for under either the direct financing or
operating methods. Such methods are described below:
Direct financing method - Leases accounted for under the
direct financing method are recorded at their net
investment (Note 5). Unearned income is deferred and
amortized to income over the lease terms so as to produce
a constant periodic rate of return on the Partnership's
net investment in the lease.
Operating method - Real estate is recorded at cost, rental
revenue is recognized on a straight-line basis over the
term of the leases and expenses (including depreciation)
are charged to operations as incurred.
The Partnership assesses the recoverability of its real estate
assets, including residual interests, based on projections of
undiscounted cash flows over the life of such assets. In the
event that such cash flows are insufficient, the assets are
adjusted to their estimated fair value.
Substantially all of the Partnership's leases provide for either
scheduled rent increases, increases based on increases to the
Consumer Price Index or Producer Price Index or sales overrides.
Depreciation:
Depreciation is computed using the straight-line method over the
estimated useful lives of the properties - 5 to 30 years.
Cash Equivalents:
The Partnership considers all short-term, highly liquid investments
that are both readily convertible to cash and have a maturity of
generally three months or less at the time of purchase to be cash
equivalents. Items classified as cash equivalents include
commercial paper and money market funds. Substantially all of the
Partnership's cash and cash equivalents at December 31, 1996 and
1997 were held in the custody of three and two financial
institutions, respectively.
Continued
-11-
<PAGE> 46
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES to FINANCIAL STATEMENTS, Continued
Equity Investments:
The Partnership's 50% interests in a joint venture and a limited
partnership and its ownership interest in the operating
partnership of a real estate investment trust are accounted for
under the equity method, i.e. at cost, increased or decreased by
the Partnership's share of earnings or losses, less
distributions. On December 31, 1997, the Partnership contributed
its 32.28% interest as a tenant-in-common in property leased to
Furon Company to a limited liability company, FON LLC. The
remaining 67.72% interest is owned by Corporate Property
Associates 9 L.P. ("CPA.9(R)"), an affiliate. The investment in
the limited liability company is being accounted for as an equity
investment from the date of contribution.
Other Assets:
Included in other assets are deferred rental income, deferred
charges and deferred costs of Consolidation (see Note 14).
Deferred rental income is the aggregate difference for operating
method leases between scheduled rents which vary during the lease
term and income recognized on a straight-line basis. Deferred
charges are costs incurred in connection with mortgage note
financings and refinancings and are deferred and amortized over
the terms of the mortgages. Deferred costs of Consolidation
represent certain costs related to a Consolidation transaction
which have been capitalized. Consolidation costs will be included
in the revaluation of assets subsequent to December 31, 1997.
Deferred Rental Income:
Deferred rental income recognized in connection with the amendment
of one of the Partnership's leases is being amortized from the
date of the amendment through the end of the initial term of the
lease (20.5 years).
Income Taxes:
A partnership is not liable for Federal income taxes as each
partner recognizes his proportionate share of the partnership
income or loss in his tax return. Accordingly, no provision for
income taxes is recognized for financial statement purposes.
Reclassifications:
Certain 1995 and 1996 amounts have been reclassified to conform to
the 1997 financial statement presentation.
2. Partnership Agreement:
The Partnership was organized on October 20, 1987 under the Delaware
Revised Uniform Limited Partnership Act for the purpose of
engaging in the business of investing in and owning industrial
and commercial real estate. The Partnership will terminate on
December 31, 2011, or sooner, in accordance with the terms of the
Amended Agreement of Limited Partnership (the "Agreement").
Through December 31, 1997, the Agreement provided that the General
Partners were allocated 10% (1% to the Individual General
Partner, William Polk Carey and 9% to the Corporate General
Partner, Eighth Carey Corporate Property, Inc. ("Eighth Carey")),
and the Limited Partners were allocated 90% of the profits and
losses as well as distributions of Distributable Cash From
Operations, as defined. Effective January 1, 1998, in connection
with the merger (see Note 14) of the Partnership with a
subsidiary partnership of Carey Diversified LLC ("Carey
Diversified"),
Continued
-12-
<PAGE> 47
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES to FINANCIAL STATEMENTS, Continued
Carey Diversified is the sole general partner of the Partnership.
Carey Diversified and the holders of Subsidiary Partnership Units
are allocated 90% of the profits and losses and distributable cash
and two special limited partners, Carey Management LLC ("Carey
Management") and William Polk Carey, are allocated 5% and 1% of
the profits and losses and distributable cash.
In connection with the merger with Carey Diversified and the listing
on the New York Stock Exchange, a division of W.P. Carey & Co.,
Inc. ("W.P. Carey ), an affiliate of the Corporate General Partner
satisfied the provisions for receiving a subordinated preferred
return of $53,055, which was measured based upon the cumulative
proceeds arising from the sale of the Partnership's assets. Such
amount has been included in accounts payable to affiliates as of
December 31, 1997. The preferred return, paid in January 1998, was
subject to provisions which limited such payment that a specified
cumulative return to limited partners was achieved. The Exchange
Value of a Limited Partnership Unit to a Listed Share of Carey
Diversified was included in calculating the cumulative return.
3. Transactions with Related Parties:
Under the Agreement, Eighth Carey was entitled to receive a property
leasing fee and reimbursement of certain expenses incurred in
connection with the Partnership's operations. General and
administrative expense reimbursements consist primarily of the
actual cost of personnel needed in providing administrative
services necessary to the operation of the Partnership. Effective
January 1, 1998, the fees and reimbursements are payable to Carey
Management, an affiliate of Carey Diversified. Property leasing
fee and general and administrative expense reimbursements are
summarized as follows:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Property leasing fee $ 26,777 $ 22,037 $ 28,619
General and administrative
expense reimbursements 87,856 135,221 289,549
-------- -------- --------
$114,633 $157,258 $318,168
======== ======== ========
</TABLE>
In 1995, 1996 and 1997, fees aggregating $69,691, $79,385 and
$32,099, respectively, were incurred for legal services performed
by a law firm in which the Secretary, until July 1997, of the
Corporate General Partner and other affiliates is a partner.
The Partnership is a participant in an agreement with W.P. Carey and
other affiliates for the purpose of leasing office space used for
the administration of real estate entities and W.P. Carey and for
sharing the associated costs. Pursuant to the terms of the
agreement, the Partnership's share of rental, occupancy and
leasehold improvement costs is based on adjusted gross revenues,
as defined. Expenses incurred in 1995, 1996 and 1997 were
$145,341, $143,404 and $120,887, respectively.
The Partnership's ownership interests in certain properties are
jointly held with affiliated entities. The interests are held as
tenants-in-common, and joint venture and limited liability company
interests with such interests ranging from 20% to 75.26%. The
Partnership accounts for its undivided interests in assets and
liabilities relating to tenants-in-common interests on a
proportional basis.
Continued
-13-
<PAGE> 48
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES to FINANCIAL STATEMENTS, Continued
4. Real Estate Leased to Others Accounted for Under the Operating
Method:
Scheduled future minimum rents, exclusive of renewals, under
noncancellable operating leases amount to approximately $5,230,000
in 1998, $5,223,000 in 1999, $5,218,000 in 2000, $4,736,000 in
2001, $4,408,000 in 2002, and aggregate approximately $55,823,000
through 2014.
Contingent rent was approximately $497,000 in 1995, $417,000 in 1996
and $511,000 in 1997.
5. Net Investment in Direct Financing Leases:
Net investment in direct financing leases is summarized as follows:
<TABLE>
<CAPTION>
December 31,
1996 1997
---- ----
<S> <C> <C>
Minimum lease payments
receivable $ 99,526,391 $ 93,530,497
Unguaranteed residual value 47,095,414 47,095,414
------------ ------------
146,621,805 140,625,911
Less: Unearned income 99,526,391 93,530,497
------------ ------------
$ 47,095,414 $ 47,095,414
============ ============
</TABLE>
Scheduled future minimum rents, exclusive of renewals, under
noncancellable direct financing leases amount to approximately
$5,996,000 in each of the years 1998 to 2002 and aggregate
approximately $93,530,000 through 2014.
Contingent rent was approximately $415,000 in 1995, $420,000 in 1996
and $863,000 in 1997.
6. Mortgage Notes Payable and Note Payable:
A. Mortgage Notes Payable:
Mortgage notes payable are collateralized by the lease assignments
and by real property with a gross amount of approximately
$71,997,000 before accumulated depreciation. The mortgage loans
are limited recourse obligations of the Partnership. As of
December 31, 1997, mortgage notes payable bear interest at rates
varying from 7.16% to 11.85% per annum and mature from 1997 to
2010.
Scheduled principal payments during each of the next five years
following December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1998 $ 995,718
1999 20,665,204
2000 596,973
2001 5,590,535
2002 522,700
Thereafter 10,594,974
-----------
Total $38,966,104
===========
</TABLE>
Continued
-14-
<PAGE> 49
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES to FINANCIAL STATEMENTS, Continued
B. Note Payable:
The $5,102,144 note payable is a recourse obligation of the
Partnership and provides for quarterly payments of interest at an
annual interest rate equivalent to the London Inter-Bank Offered
Rate ("LIBOR") plus 4.25% (9.81% at December 31, 1997). The note
payable matures in July 1999, at which time a balloon payment for
the entire outstanding principal balance will be due.
Covenants under the note payable restrict the Partnership from
incurring additional debt; however, new limited recourse mortgage
financing may be obtained for the purpose of replacing existing
mortgage debt. The Partnership must maintain a net worth of
$20,000,000, aggregate appraised property value of $15,000,000 and
a ratio of operating cash flow to debt service on the note payable
of from 3:1 to 3.4:1 over the term of the loan. The Partnership is
in compliance with such terms. In addition, the Partnership must
offer the lender the proceeds of any asset disposition as a loan
prepayment. Under limited circumstances, the Partnership may
prepay the loan in whole or in part.
Interest paid on the mortgage notes payable and the note payable was
$5,798,935, $5,370,365 and $4,552,610 in 1995, 1996 and 1997,
respectively.
7. Distributions to Partners:
Distributions are declared and paid to partners quarterly and are
summarized as follows:
<TABLE>
<CAPTION>
Limited
Year Ending Distributions Paid and Distributions Paid to Partners' Per
December 31, Payable to General Partners Limited Partners Unit Amount
- ------------ --------------------------- ---------------- -----------
<S> <C> <C> <C>
1995 $641,394 $5,772,533 $85.31
======== ========== ======
1996 $655,704 $5,893,854 $87.21
======== ========== ======
1997 $744,144 $6,696,042 $99.08
======== ========== ======
</TABLE>
Distributions for 1997 include distributions of $740,703 to Limited
Partners and $82,300 to General Partners declared in December 1997.
8. Income for Federal Tax Purposes:
Income for financial statement purposes differs from income for
Federal income tax purposes because of the difference in the
treatment of certain items for income tax purposes and financial
statement purposes.
A reconciliation of the accounting differences is as follows:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Net income per Statements of Income $ 8,337,825 $ 9,453,177 $ 7,878,911
Writedown to net realizable value
Excess tax depreciation (1,335,846) (1,518,852) (1,548,119)
Other 473,199 (91,589) 251,806
----------- ------------ -----------
Income for Federal
income tax purposes $ 7,475,178 $ 7,842,736 $ 6,582,598
=========== =========== ===========
</TABLE>
Continued
-15-
<PAGE> 50
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES to FINANCIAL STATEMENTS, Continued
9. Industry Segment Information:
The Partnership's operations consist of the investment in and the
leasing of industrial and commercial real estate.
In 1995, 1996 and 1997, the Partnership earned its total leasing
revenues (rental income plus interest income from financing
leases) from the following lease obligors:
<TABLE>
<CAPTION>
1995 % 1996 % 1997 %
---- --- ---- --- ---- --
<S> <C> <C> <C> <C> <C> <C>
Sybron International Corporation $ 2,491,920 17% $ 2,491,920 16% $ 2,491,920 17%
Dr Pepper Bottling Company
of Texas 1,999,000 13 1,999,000 13 1,999,000 14
Quebecor Printing Inc.
(formerly AmerSig, Inc.) 1,400,166 9 1,409,700 9 1,517,178 11
Advanced System Applications, Inc. 3,114,091 21 3,042,597 20 1,504,547 10
High Voltage Engineering
Corp. 1,167,744 8 1,179,019 8 1,174,426 8
Orbital Sciences Corporation 977,378 6 977,378 6 977,378 7
United Stationers Supply, Inc. 769,625 5 812,708 5 812,708 6
Furon Company 819,443 5 816,217 5 779,892 6
Detroit Diesel Corporation 699,114 5 729,078 5 729,078 5
U.S. Postal Service 319,423 2 593,536 4
AutoZone, Inc. 529,748 3 525,003 3 545,883 4
NVR, Inc. 495,518 3 495,518 3 495,518 3
Wozniak Industries, Inc./ Mayfair
Molded Products Corporation 460,755 3 460,755 3 460,755 3
Other lease obligors 107,919 1 111,154 1 143,973 1
Winn-Dixie Stores, Inc. 134,500 1 134,500 1 134,500 1
Federal Express Corporation 56,700 56,700 56,700
----------- ---- ----------- ---- ----------- ----
$15,223,621 100% $15,560,670 100% $14,416,992 100%
=========== ==== =========== ==== =========== ====
</TABLE>
Continued
-16-
<PAGE> 51
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES to FINANCIAL STATEMENTS, Continued
10. Equity Investments:
The Partnership owns a 50% equity interest in CPA(R):8-CPA(R):9
Joint Venture I ("Lockheed JV") with CPA(R):9, an affiliate, and a
50% interest in Carey Topeka Associates, L.P. ("HCA") with
Corporate Property Associates 7 ("CPA(R):7"), an affiliate.
Lockheed JV owns land and a building located in King of Prussia,
Pennsylvania, leased to Lockheed Martin Corporation. HCA owns a
leasehold interest in a hotel property in Topeka, Kansas subleased
to the Hotel Corporation of America. On December 31, 1997, the
Partnership contributed its 32.28% interests in property leased to
Furon Company and the related mortgage payable obligation to FON
LLC ("FON"). CPA(R):9 owns the remaining 67.72% interest in FON.
The Partnership also owns an equity interest in American General
Hospitality Operating Partnership L.P. (see Note 11). The
investment in the limited liability company is being accounted for
as an equity investment from the date of contribution. Summarized
combined financial information of Lockheed JV, HCA and FON is as
follows:
<TABLE>
<CAPTION>
(In thousands)
December 31,
------------------------------
1996 1997
------- -------
<S> <C> <C>
Assets, net of accumulated depreciation
and amortization $13,790 $30,671
Liabilities 11,989 24,311
Capital 1,801 6,360
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Revenues $1,597 $1,597 $1,597
Expenses 1,721 1,707 1,694
Net loss (124) (110) (97)
</TABLE>
The exchange of the Furon property for the investment in the limited
liability company was treated as a nonmonetary exchange for tax
and financial reporting purposes.
Subsequent to December 31, 1997, the equity interest in the Lockheed
JV has been converted to an undivided interest as a
tenant-in-common.
Continued
-17-
<PAGE> 52
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES to FINANCIAL STATEMENTS, Continued
11. Investment in American General Hospitality Operating Partnership L.P.:
The Partnership and Corporate Property Associates 4 ("CPA(R):4"), an
affiliate, purchased a hotel property in Kenner, Louisiana, in
June 1988 as tenants-in-common with 53.617% and 46.383% interests,
respectively. The Partnership and CPA(R):4 assumed operating
control of the hotel in 1992 after evicting the lessee due to its
financial difficulties. On July 30, 1996, the Partnership and
CPA(R):4 completed a transaction with American General Hospitality
Operating Partnership L.P. (the "Operating Partnership"), the
operating partnership of a newly-formed real estate investment
trust, American General Hospitality Corporation, ("AGH"), in which
the Partnership and CPA(R):4 received 920,672 limited partnership
units (of which the Partnership's share was 493,664 units) in
exchange for the hotel property and its operations. In connection
with the transfer, the Partnership and CPA(R):4 paid a cash
contribution of $391,221 (of which the Partnership's share was
$209,761) and the Operating Partnership's assumed the mortgage
loan obligation collateralized by the hotel property (of which the
Partnership's share was $3,915,439).
The exchange of the hotel property for limited partnership units was
treated as a nonmonetary exchange for tax and financial reporting
purposes, and for financial reporting purposes, and is being
accounted for under the equity method. The Partnership has the
right to convert its Operating Partnership Units to shares of
common stock in AGH on a one-for-one basis at any time. The
conversion of Operating Partnership Units to shares of common
stock would be a taxable exchange. As AGH has registered such
shares, the Partnership would have the right to sell the shares
after conversion.
As of September 30, 1997, the unaudited consolidated financial
statements of AGH reported total assets of $562,013,000 and
shareholders' equity of $284,629,000 and for the nine months then
ended, revenues of $43,439,000, income before minority interest of
$19,771,000 and net income of $17,212,000. As of December 31,1997,
AGH's quoted per share market value was $26 3/4 resulting in an
aggregate fair value for the investment in the Operating
Partnership of approximately $13,206,000, if converted.
Summarized operating results of the Partnership's share of the hotel
operation through the date of disposal (July 30, 1996) were as
follows:
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Revenues $ 4,432,735 $ 2,675,555
Fees paid to hotel management company (130,293) (96,017)
Other operating expenses (2,648,746) (1,593,199)
----------- ------------
Hotel operating income $ 1,653,696 $ 986,339
=========== ===========
</TABLE>
12. Gain on Sale of Real Estate:
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 properties in Liverpool,
Pennsylvania and Twinsburg, Ohio to IER Industries, Inc. ("IER")
through July 2007, the end of Furon's initial lease term. On
February 15, 1996, IER notified the Partnership and CPA(R):9 that
it was exercising a purchase option which had been granted at the
time the sublease was agreed to.
Continued
-18-
<PAGE> 53
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES to FINANCIAL STATEMENTS, Continued
On September 9, 1996, the Partnership and CPA(R):9 sold the two
properties to IER for $1,465,495, a purchase price determined
pursuant to an appraisal process provided for in the lease. Net of
its share of $24,210 of consideration received in 1993 in granting
the purchase option and other costs of the transaction, the
Partnership's share of net proceeds from the sale was $442,495 of
which $287,996 was used to pay a mandatory prepayment on the
mortgage loan. In connection with the sale, the Partnership
recognized a gain of $21,697. As a result of the sale and the
reamortization of the mortgage loan, annual rent from Furon and
debt service on the Furon properties mortgage loan have decreased
by approximately $55,000 and $34,000, respectively.
13. Disclosures About Fair Value of Financial Instruments:
The carrying amounts of cash, receivables and accounts payable and
accrued expenses approximate fair value because of the short
maturity of these items.
The Partnership estimates that the fair value of mortgage notes
payable approximates the carrying value of such mortgage notes at
December 31, 1996 and $39,885,000 at December 31, 1997. The fair
value of debt instruments was evaluated using a discounted cash
flow model with discount rates which take into account the credit
of the tenants and interest rate risk.
The Partnership's note payable is a variable rate obligation indexed
to the LIBOR. Accordingly, the carrying amount of the note payable
approximates fair value as of December 31, 1997.
14. Exchange of Limited Partnership Units:
On October 16, 1997, Carey Diversified distributed a Consent
Solicitation Statement/Prospectus to the Limited Partners which
described a proposal to consolidate the Partnership with the other
CPA(R) Partnerships. The General Partners' proposals that each of
the nine CPA(R) limited partnerships be merged with a
corresponding subsidiary partnership of Carey Diversified, of
which Carey Diversified is the general partner, was approved by
the Limited Partners of all nine of the CPA(R) limited
partnerships. Each limited partner had the option of either
exchanging his or her limited partnership interest for an interest
in Carey Diversified ("Listed Shares") or to retain a limited
partnership interest in the subsidiary partnership ("Subsidiary
Partnership Units"). On January 1, 1998, 3,491 holders owning
66,094 of the 67,582 limited partnership units exchanged such
units for 4,596,838 Listed Shares with 54 holders with the
remaining 1,488 limited partnership units exchanging such units
for Subsidiary Partnership Units. The General Partners received
193,778 Listed Shares for their interests in their share of the
appreciation in Partnership properties.
Listed Shares commenced public trading on the New York Stock
Exchange on January 21, 1998. Subsidiary Partnership Units provide
substantially the same economic interest and legal rights as those
of a limited partnership unit in the Partnership, but are not
listed on a securities exchange. A liquidating distribution to
holders of Subsidiary Partnership Units will be made as soon as
practicable after an appraisal of the Partnership's properties
which appraisal date is to be no later than December 31, 2002.
-19-
<PAGE> 54
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES to FINANCIAL STATEMENTS, Continued
15. Accounting Pronouncements:
In June 1997, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income" and
SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information." SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components
(revenues, expenses, gains and losses) in full set general purpose
financial statements. 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. SFAS No. 130 and SFAS No. 131 are
required to be adopted by 1998. The Partnership is currently
evaluating the impact, if any, of SFAS No. 130 and SFAS 131.
-20-
<PAGE> 55
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
SCHEDULE of REAL ESTATE and ACCUMULATED DEPRECIATION
as of December 31, 1997
<TABLE>
<CAPTION>
Costs Increase
Initial Cost to Capitalized (Decrease) Gross Amount at which Carried
Partnership Subsequent to In Net at Close of Period (c)(d)
---------------------- Acquisition Investment --------------------------------
Description Encumbrances Land Buildings (a) (b) Land Building Total
----------- -------------- ---- --------- ------- ----------- ---- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating method:
Manufacturing facility
leased to
Quebecor Printing Inc.
(formerly AmerSig, Inc.) $3,856,956 $ 899,145 $ 6,785,855 $ 497 $ 899,203 $ 6,786,294 $ 7,685,497
Land leased to
AutoZone, Inc. 2,014,722 46,846 $ (6,176) 2,055,392 2,055,392
Office facility
leased to
United States
Postal Service 984,786 9,845,253 658,732 985,521 10,503,250 11,488,771
Land leased to High
Voltage Engineering
Corporation 742,407 1,720,000 1,601 1,721,601 1,721,601
Manufacturing facility
leased to Wozniak Industries,
Inc./ Mayfair Molded
Products Corporation 793,325 2,456,675 4,356 794,388 2,459,968 3,254,356
Land leased to Sybron
International Corporation 311,874 558,614 3,218 561,832 561,832
Manufacturing and office
facility leased to
Federal Express
Corporation 47,000 551,000 19,102 48,504 568,598 617,102
Land leased to Dr Pepper
Bottling Company
of Texas 2,002,237 3,675,870 17,433 3,693,303 3,693,303
Manufacturing facility
Inc. ( formerly AmerSig, Inc
leased to Quebecor Printing.) 1,626,819 808,500 2,425,500 3,611 809,403 2,428,208 3,237,611
<CAPTION>
Life on which
Depreciation
in Latest
Statement of
Accumulated Income
Description Depreciation(d) Date Acquired is Computed
----------- --------------- ------------- ------------
<S> <C> <C> <C>
Operating method:
Manufacturing facility
leased to
Quebecor Printing Inc.
(formerly AmerSig, Inc.) $2,153,937 June 24, 1988 30 yrs.
Land leased to
AutoZone, Inc. N/A August 24, 1988 N/A
Office facility
leased to
United States September 29
Postal Service 3,071,103 1988 30 yrs.
Land leased to High
Voltage Engineering November 10,
Corporation N/A 1988 N/A
Manufacturing facility
leased to Wozniak Industries,
Inc./ Mayfair Molded December 8,
Products Corporation 743,364 1988 30 yrs.
Land leased to Sybron December 21,
International Corporation N/A 1988 N/A
Manufacturing and office
facility leased to
Federal Express
Corporation 166,252 March 24, 1989 30 yrs.
Land leased to Dr Pepper
Bottling Company
of Texas N/A June 30, 1989 N/A
Manufacturing facility
Inc. ( formerly AmerSig, In
leased to Quebecor Printing.) 647,922 December 29,1989 30 yrs.
</TABLE>
(Continued)
See accompanying notes to Schedule.
-21-
<PAGE> 56
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
SCHEDULE of REAL ESTATE and ACCUMULATED DEPRECIATION
as of December 31, 1997
<TABLE>
<CAPTION>
Costs Increase
Initial Cost to Capitalized (Decrease) Gross Amount at which Carried
Partnership Subsequent to In Net at Close of Period (c)(d)
---------------------- Acquisition Investment --------------------------------
Description Encumbrances Land Buildings (a) (b) Land Building Total
----------- -------------- ---- --------- ------- ----------- ---- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating method (continued):
Manufacturing facility
leased to Detroit Diesel
Corporation $4,531,679 $ 997,290 $ 5,302,710 $ 1,384 $ 997,509 $ 5,303,875 $ 6,301,384
Supermarket leased to
Winn-Dixie Stores, Inc. 1,345,000 26,855 1,371,855 1,371,855
Engineering and
Fabrication Facility
leased to Orbital
Sciences Corporation 4,247,094 1,837,983 3,878,541 2,325,852 1,838,246 6,204,130 8,042,376
Manufacturing and office
facility leased to
Allied Plywood, Inc. 416,309 1,217,073 9,499 416,740 1,226,141 1,642,881
Manufacturing and office
facilities leased to Stairpans,
Inc. 55,322 700,009 1,665 $(280,772) 34,870 441,354 476,224
----------- ----------- ----------- --------- ---------- ----------- ----------- -----------
$17,319,066 $14,808,866 $34,507,616 $3,120,651 $(286,948) $14,856,512 $37,293,673 $52,150,185
=========== =========== =========== ========== =========== =========== =========== ===========
Direct financing method:
Retail stores leased
to AutoZone, Inc. $ 2,887,278 $ 67,135 $2,954,413
Manufacturing and
generating facilities
leased to High
Voltage Engineering
Corp. $ 3,422,846 $ 688,000 7,242,000 7,394 7,937,394
Office/warehouse
facilities leased to
United Stationers
Supply Co. 2,307,669 1,120,000 3,510,000 293 $(732,255) 3,898,038
Manufacturing facility
leased to Sybron
International Corporation 10,238,527 1,493,464 16,845,708 105,225 18,444,397
Manufacturing facility
leased to NVR, Inc. 359,347 2,863,431 164,827 3,387,605
Bottling and Distribution
facilities lease to
Dr Pepper Bottling
Company of Texas 5,677,996 10,424,130 49,437 10,473,567
----------- ---------- ----------- -------- --------- -----------
$21,647,038 $3,660,811 $43,772,547 $394,311 $(732,255) $47,095,414
=========== ========== =========== ======== ========= ===========
<CAPTION>
Life on which
Depreciation
in Latest
Statement of
Accumulated Income
Description Depreciation(d) Date Acquired is Computed
----------- --------------- ------------- ------------
<S> <C> <C> <C>
Operating method (continued):
Manufacturing facility
leased to Detroit Diesel
Corporation $ 1,333,314 June 15, 1990 30 yrs.
Supermarket leased to
Winn-Dixie Stores, Inc. 331,532 October 26, 1990 30 yrs.
Engineering and
Fabrication Facility
leased to Orbital September 29,
Sciences Corporation 1,499,331 1989 30 yrs.
Manufacturing and office
facility leased to
Allied Plywood, Inc. 173,703 March 31, 1989 30 yrs.
Manufacturing and office
facilities leased to Stairpans,
Inc. 69,030 March 31, 1989 30 yrs.
-----------
$10,189,488
===========
Direct financing method:
Retail stores leased
to AutoZone, Inc. August 24, 1988
Manufacturing and
generating facilities
leased to High
Voltage Engineering
Corp. November 10, 1988
Office/warehouse
facilities leased to
United Stationers December 29,
Supply Co. 1988
Manufacturing facility
leased to Sybron December 22,
International Corporation 1988
Manufacturing facility
leased to NVR, Inc. March 31, 1989
Bottling and Distribution
facilities lease to
Dr Pepper Bottling
Company of Texas June 30, 1989
</TABLE>
See accompanying notes to Schedule.
-22-
<PAGE> 57
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
a Delaware limited partnership
NOTES to SCHEDULE of REAL ESTATE and ACCUMULATED DEPRECIATION
(a) Consists of acquisition costs including legal fees, appraisal fees,
title costs and other related professional fees and capital
expenditures for improvements on the building leased to Orbital
Sciences Corporation.
(b) The decrease in net investment is due to sales of excess parcels of
land and a writedown to net realizable value of a property and the
effect of accumulated depreciation on carrying amount in connection
with the reclassification of a property from real estate accounted
for under the operating method to net investment in direct financing
leases.
(c) At December 31, 1997, the aggregate cost of real estate owned for
Federal income tax purposes is $111,204,473.
(d)
<TABLE>
<CAPTION>
Reconciliation of Real Estate Accounted
for Under the Operating Method
---------------------------------------
December 31,
-------------------------
1996 1997
---- ----
<S> <C> <C>
Balance at beginning of year $59,088,698 $58,992,895
Sale of real estate (500,599)
Additions 404,796 215,670
Reclassification of operating lease
to direct financing lease (7,058,380)
----------- -----------
Balance at close of year $58,992,895 $52,150,185
=========== ===========
<CAPTION>
Reconciliation of Accumulated Depreciation
------------------------------------------
December 31,
-------------------------
1996 1997
---- ----
<S> <C> <C>
Balance at beginning of year $ 8,945,959 $10,293,440
Depreciation expense 1,427,282 1,325,929
Reclassification of operating lease
to direct financing lease (1,429,881)
Write-off resulting from sale of property (79,801)
----------- -----------
Balance at close of year $10,293,440 $10,189,488
=========== ===========
</TABLE>
-23-
<PAGE> 58
PROPERTIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME OF LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
-------------- --------------- -------- -----------------
<S> <C> <C> <C>
LOCKHEED MARTIN Office/Research King of Prussia, Ownership of a 50%
CORPORATION Facility Pennsylvania interest in land
and building (1)
QUEBECOR PRINTING Industrial Olive Branch, Ownership of land
INC. (formerly AMERSIG, and Office Mississippi and building
INC.) Buildings
AUTOZONE, INC. Retail Stores Jacksonville, Ownership of land
Florida - 2; and buildings (1)
Albany, Augusta,
Brunswick and
Macon, Georgia;
Columbia,
South Carolina;
Houston and
San Antonio,
Texas;
Albuquerque and
Farmington,
New Mexico
UNITED STATES Office Building Bloomingdale, Ownership of a
POSTAL SERVICE Illinois 66.36% interest in
land and building (1)
HIGH VOLTAGE Manufacturing Sterling, Ownership of land
ENGINEERING and Office Massachusetts; and buildings (1)
CORP. Buildings East Hempfield
Township,
Pennsylvania
WOZNIAK INDUSTRIES,
INC./MAYFAIR MOLDED Manufacturing Schiller Park, Ownership of land
PRODUCTS Facility Illinois and building
CORPORATION
</TABLE>
-24-
<PAGE> 59
<TABLE>
<CAPTION>
NAME OF LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
-------------- --------------- -------- -----------------
<S> <C> <C> <C>
SYBRON Manufacturing and Penfield, Ownership of a
INTERNATIONAL Office Buildings New York; 75.26% interest in
CORPORATION Portsmouth, land and buildings (1)
New Hampshire;
Dubuque, Iowa;
Glendora,
California;
Romulus,
Michigan
UNITED STATIONERS Office/Warehouse San Antonio, Ownership of land
SUPPLY CO. Facility Texas; and buildings (1)
Memphis,
Tennessee;
New Orleans,
Louisiana
FEDERAL EXPRESS Office/Warehouse College Ownership of land
CORPORATION Facility Station, Texas and building
NVR, INC. Manufacturing/Office Thurmont, Ownership of a
Buildings Maryland and 62.963% interest
Farmington, in land and
New York buildings
DR PEPPER BOTTLING Bottling/ Irvine and Ownership of a 50%
COMPANY OF TEXAS Distribution Houston, Texas interest in land and
Office Facility and buildings (1)
ORBITAL SCIENCES Engineering & Chandler, Ownership of a 42%
CORPORATION Fabrication Arizona interest in land and
Facility buildings (1)
QUEBECOR PRINTING Industrial Building Dekalb County, Ownership of a 26.43%
INC (formerly AMERSIG, and Office Facility Georgia interest in land and
INC.) buildings (1)
</TABLE>
-25-
<PAGE> 60
<TABLE>
<CAPTION>
NAME OF LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
-------------- --------------- -------- -----------------
<S> <C> <C> <C>
FURON COMPANY Manufacturing, Office New Haven, Ownership of a 32.28%
and Warehouse Connecticut; interest in a limited liability
Facilities Mickleton, company which owns
New Jersey; land and buildings (1)
Aurora and Mantua,
Ohio; Bristol,
Rhode Island;
Mt. Pleasant,
Texas; Milwaukee,
Wisconsin;
DETROIT DIESEL Office, Warehouse, Detroit, Ownership of a 20%
CORPORATION Manufacturing, Truck Michigan interest in land and
Repair Facilities and buildings (1)
Waste Treatment Plant
WINN-DIXIE Supermarket Brewton, Alabama Ownership of building (2)
STORES, INC.
ALLIED PLYWOOD, Manufacturing/ Manassas, Ownership of a
INC. Office buildings Virginia 62.963% interest
in land and
buildings
STAIRPANS, INC. Manufacturing/ Fredricksburg, Ownership of a
Office buildings Virginia 62.963% interest
in land and
building
HOTEL CORPORATION Hotel Topeka, Kansas 50% ownership interest
OF AMERICA in a limited partnership
which owns land and
building (1)
</TABLE>
(1) These properties are encumbered by mortgage notes payable.
(2) This property is subject to a ground lease.
-26-
<PAGE> 61
MARKET FOR THE PARTNERSHIP'S EQUITY AND RELATED
UNITHOLDER MATTERS
- --------------------------------------------------------------------------------
As of December 31, 1997, there were 3,545 holders of record of the Limited
Partnership Units of the Partnership. On January 1, 1998, 3,491 holders of
Limited Partnership Units exchanged such units for interests in Carey
Diversified LLC and 54 holders exchanged such units for Subsidiary Partnership
Units. There is no established public trading market for Subsidiary Partnership
Units.
In accordance with the requirements of the Partnership's Amended Agreement
of Limited Partnership (the "Agreement") contained as Exhibit A to the
Prospectus, the Corporate General Partner expects to make quarterly
distributions of Distributable Cash From Operations as defined in the Agreement.
The following table shows the frequency and amount of distributions paid per
Unit since 1994:
<TABLE>
<CAPTION>
Cash Distributions Paid Per Unit
--------------------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
First quarter $21.18 $21.63 $22.00
Second quarter 21.25 21.75 22.02
Third quarter 21.38 21.88 22.04
Fourth quarter 21.50 21.95 33.02(a)
------ ------ ------
$85.31 $87.21 $99.08
====== ====== ======
</TABLE>
(a) Includes distributions of $22.06 and $10.96 per Limited Partnership Unit
paid in October 1997 and December 1997, respectively.
On October 16, 1997, the Partnership began the solicitation of consents
from limited partners to approve the merger of the Partnership with all of the
CPA(R) Partnerships into Carey Diversified LLC, a Delaware limited liability
company. Limited Partners were offered the opportunity to vote to approve or
disapprove the merger and to choose either interests ("Listed Shares") in the
Carey Diversified LLC or interests ("Subsidiary Partnership Units") in the
partnership which survived the merger. The solicitation period ended on December
16, 1997. The results of the voting were as follows:
<TABLE>
<CAPTION>
Units Voted Units Voted Units Voted Units Not
Yes No Abstaining Voting
--- -- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Merger of Partnership
with Carey Diversified 44,747 66.21% 1,531 2.27% 356 .52% 20,948 31.00%
</TABLE>
<TABLE>
<CAPTION>
Subsidiary
Listed Shares Partnership Units
------------- -----------------
<S> <C> <C>
Number of Units
Electing 66,094 1,488
</TABLE>
-27-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 5,704,033
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,704,033
<PP&E> 99,245,599
<DEPRECIATION> 10,189,488
<TOTAL-ASSETS> 104,467,427
<CURRENT-LIABILITIES> 2,282,102
<BONDS> 44,068,248
0
0
<COMMON> 0
<OTHER-SE> 58,117,077
<TOTAL-LIABILITY-AND-EQUITY> 104,467,427
<SALES> 0
<TOTAL-REVENUES> 14,927,898
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,130,585
<LOSS-PROVISION> 114,115
<INTEREST-EXPENSE> 4,543,266
<INCOME-PRETAX> 7,878,911
<INCOME-TAX> 0
<INCOME-CONTINUING> 7,878,911
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,878,911
<EPS-PRIMARY> 104.92
<EPS-DILUTED> 104.92
</TABLE>
