<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended MARCH 31, 1997
------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from to
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Commission file number 0-18750
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CORPORATE PROPERTY ASSOCIATES 9, L.P., A DELAWARE LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
DELAWARE 13-3489133
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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)
(212) 492-1100
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(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
[X] Yes No [ ]
<PAGE>
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
INDEX
Page No.
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PART I
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Item 1. - Financial Information*
Balance Sheets, December 31, 1996 and
March 31, 1997 2
Statements of Income for the three
months ended March 31, 1996 and 1997 3
Statements of Cash Flows for the three
months ended March 31, 1996 and 1997 4
Notes to Financial Statements 5-7
Item 2. - Management's Discussion of Operations 8
PART II
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Item 6. - Exhibits and Reports on Form 8-K 9
Signatures 10
*The summarized financial information contained herein is unaudited; however in
the opinion of management, all adjustments necessary for a fair presentation of
such financial information have been included.
- 1 -
<PAGE>
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
PART I
------
Item 1. - FINANCIAL INFORMATION
-------------------------------
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31
1996 1997
------------- ------------
(Note) (Unaudited)
<S> <C> <C>
ASSETS:
Land, buildings and personal property,
net of accumulated depreciation of
$11,169,434 at December 31, 1996 and
$11,587,053 at March 31, 1997 $58,384,238 $57,966,619
Net investment in direct
financing leases 31,682,628 31,706,097
Equity investments 5,460,825 5,367,274
Cash and cash equivalents 1,436,555 1,295,058
Other assets 1,553,739 1,702,572
----------- -----------
Total assets $98,517,985 $98,037,620
=========== ===========
LIABILITIES:
Mortgage notes payable $57,669,975 $57,286,213
Accrued interest payable 347,772 355,786
Accounts payable and accrued expenses 78,500 102,744
Accounts payable to affiliates 1,648,110 1,666,518
Prepaid rental income 10,514 10,514
----------- -----------
Total liabilities 59,754,871 59,421,775
----------- -----------
PARTNERS' CAPITAL:
General Partners (1,273,499) (1,288,226)
Limited Partners (59,918 Limited
Partnership Units issued and
outstanding) 40,036,613 39,904,071
----------- -----------
Total partners' capital 38,763,114 38,615,845
----------- -----------
Total liabilities and
partners' capital $98,517,985 $98,037,620
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date.
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<PAGE>
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1996 March 31, 1997
-------------- --------------
<S> <C> <C>
Revenues:
Rental income from operating leases $2,101,037 $2,061,580
Interest income from direct financing leases 933,832 923,124
Other interest income 15,015 11,258
---------- ----------
3,049,884 2,995,962
---------- ----------
Expenses:
Interest on mortgages 1,352,429 1,310,629
Depreciation 424,400 417,619
General and administrative 101,605 150,832
Property expense 24,116 8,341
Amortization 9,578 10,064
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1,912,128 1,897,485
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Income before income from equity
investments 1,137,756 1,098,477
Income from equity investments 163,068 168,325
---------- ----------
Net income $1,300,824 $1,266,802
========== ==========
Net income allocated to
General Partners $ 130,082 $ 126,680
========== ==========
Net income allocated to
Limited Partners $1,170,742 $1,140,122
========== ==========
Net income per Unit
(59,918 Limited
Partnership Units) $19.54 $19.03
====== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE>
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income........................................ $1,300,824 $1,266,802
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization................... 433,978 427,683
Other noncash items............................. (34,063) (17,972)
Net change in operating assets and liabilities.. (2,986) (113,728)
---------- ----------
Net cash provided by operating activities.... 1,697,753 1,562,785
---------- ----------
Cash flows from investing activities:
Distributions received from equity investments
in excess of equity income 98,955 93,551
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Net cash provided by investing activities 98,955 93,551
----------- -----------
Cash flows from financing activities:
Distributions to partners (1,411,549) (1,414,071)
Payments on mortgage principal (352,770) (383,762)
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Net cash used in financing activities (1,764,319) (1,797,833)
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Net increase (decrease) in cash and cash equivalents 32,389 (141,497)
Cash and cash equivalents, beginning of period 1,657,504 1,436,555
----------- -----------
Cash and cash equivalents, end of period $ 1,689,893 $ 1,295,058
=========== ===========
Supplemental disclosure of cash flows information:
Interest paid $ 1,368,179 $ 1,302,615
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE>
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Basis of Presentation:
---------------------
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. For
further information, refer to the financial statements and footnotes thereto
included in the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1996.
Note 2. Distributions to Partners:
-------------------------
Distributions declared and paid or payable to partners during the three months
ended March 31, 1997 are as follows:
Quarter Ended General Partners Limited Partners Per Limited Partner Unit
- ----------------- ---------------- ---------------- ------------------------
December 31, 1996 $141,407 $1,272,664 $21.24
======== ========== ======
A distribution of $21.24 per Limited Partner Unit for the quarter ended March
31, 1997 was declared and paid in April 1997.
Note 3. Transactions with Related Parties:
---------------------------------
For the three-month period ended March 31, 1996, the Partnership incurred
leasing fees of $3,574. The Partnership did not incur any leasing fees for the
three-month period ended March 31, 1997 as the five-year fee period on all of
the Partnership's leases had previously expired. For the three-month periods
ended March 31, 1996 and 1997, the Partnership incurred general and
administrative expense reimbursements of $22,406 and $50,708, respectively,
payable to an affiliate.
The Partnership, in conjunction with certain affiliates, is a participant in a
cost sharing agreement for the purpose of renting and occupying office space.
Under the agreement, the Partnership pays its proportionate share of rent and
other costs of occupancy. Net expenses incurred for the three-months periods
ended March 31, 1996 and 1997 were $25,637 and $28,914, respectively.
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<PAGE>
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
Note 4. Industry Segment Information:
----------------------------
The Partnership's operations consist of the direct and indirect investment in
and the leasing of industrial and commercial real estate. The financial
reporting sources of leasing revenues for the three-month periods ended March
31, 1996 and 1997 are as follows:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Per Statements of Income:
Rental income from operating leases $2,101,037 $2,061,580
Interest from direct financing leases 933,832 923,124
Adjustment:
Share of rental income from equity
investments' operating leases 570,648 570,648
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$3,605,517 $3,555,352
========== ==========
</TABLE>
For the three-month periods ended March 31, 1996 and 1997, the Partnership
earned its proportionate net leasing revenues from its investments from the
following lease obligors:
<TABLE>
<CAPTION>
1996 % 1997 %
---- ---- ---- ----
<S> <C> <C> <C> <C>
Lease Obligor:
- -------------
Detroit Diesel Corporation $ 729,077 20% $ 729,077 21%
Dr Pepper Bottling Company of Texas 499,750 14 499,750 14
Furon Company 435,284 12 409,037 12
Information Resources, Inc. (a) 364,447 10 364,447 10
Red Bank Distribution, Inc. 350,141 10 350,141 10
Orbital Sciences Corporation 294,090 8 294,090 8
Amerisig, Inc. 288,207 8 274,988 8
NVRyan L.P. 274,072 8 257,981 7
The Titan Corporation (a) 114,881 3 114,881 3
Child Time Childcare, Inc. 95,322 3 100,714 3
General Electric Company (a) 91,320 3 91,320 3
Federal Express Corporation 44,373 1 44,373 1
PepsiCo, Inc. 24,553 24,553
---------- --- ---------- ---
$3,605,517 100% $3,555,352 100%
========== === ========== ===
</TABLE>
(a) Represents the Partnership's proportionate share of rental revenue from an
equity investment in which the above named company is the lease obligor.
- 6 -
<PAGE>
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
Note 5. Equity Investments :
-------------------
Summarized financial information of the Partnership's equity investments in two
limited partnerships and a joint venture is as follows:
<TABLE>
<CAPTION>
(in thousands)
December 31, March 31,
1996 1997
--------------- ----------
<S> <C> <C>
Assets $55,073 $54,675
Liabilities 36,932 36,781
Partners' capital 18,141 17,894
<CAPTION>
Three Months Ended
March 31, 1996 March 31, 1997
-------------- --------------
<S> <C> <C>
Revenue $ 1,896 $ 1,896
Interest and other expenses (965) (946)
Depreciation and amortization (346) (346)
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Net income $ 585 $ 604
======= =======
</TABLE>
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<PAGE>
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
Item 2. - MANAGEMENT'S DISCUSSION OF OPERATIONS
-----------------------------------------------
Results of Operations:
- ---------------------
Net income for the three-month period ended March 31, 1997 decreased by
$34,000 as compared with net income for the three-month period ended March 31,
1996. This decrease was primarily due to an increase in general and
administrative expenses. Such increase was due, in part, to a nonrecurring
increase in administrative reimbursements. Lease revenues decreased due to the
modification of the Furon Company rent subsequent to the sale of two properties
in the third quarter of 1996. The decrease in Furon rent was partially offset
by a decrease in interest expense as a portion of the proceeds from the sale of
two Furon properties was used to partially prepay the mortgage loans
collateralized by the Furon properties. Interest expense also decreased as a
result of the refinancing of the limited recourse mortgage loan collateralized
by the Childtime Childcare, Inc. properties at a lower rate of interest in
December 1996.
Financial Condition:
- -------------------
There has been no material change in the Partnership's financial condition
since December 31, 1996. Cash provided from operations and equity investments
of $1,656,000 was sufficient to pay distributions to partners of $1,414,000 and
$242,000 of total scheduled principal payment installments of $384,000 on the
Partnership's limited recourse mortgage debt. There was no increase in the
distribution rate in April, 1997 as the Partnership is attempting to stabilize
its cash balances. Management will continue to monitor cash flow to determine
whether current cash flow is sufficient to maintain the current distribution
rate. Cash flow for the quarter was impacted by a rent arrearge of $241,000
from Red Bank Distribution, Inc., representing five months of the equity
component of Red Bank's rent. The Partnership is currently seeking its remedies
against Red Bank in an effort to collect all amounts due including interest and
penalties. The Partnership's cash position has benefited from the Corporate
General Partner's continuing its voluntary, temporary deferral of the collection
of $1,510,000 of accrued leasing fees.
The maturity of the mortgage loan collateralized by the Furon properties has
been extended through June 1, 1997. The General Partners believe that the
Partnership will be able to refinance the loan, in part because there are more
than ten years remaining on the Furon lease. However, the lender's due
diligence process has not been completed. A limited recourse loan on the Red
Bank property of $2,175,000 continues to be extended on a short-term basis.
There is no assurance that additional extensions will be granted.
The General Partners are continuing to investigate ways to provide liquidity
for limited partners on a tax-effective basis.
- 8 -
<PAGE>
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
PART II
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Item 6. - EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------
(a) Exhibits:
None.
(b) Reports on Form 8-K:
During the quarter ended March 31, 1997, the Partnership was not
required to file any reports on Form 8-K.
- 9 -
<PAGE>
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
By: NINTH CAREY CORPORATE PROPERTY, INC.
5/8/97 By: /s/ Claude Fernandez
---------- ------------------------------
Date Claude Fernandez
Executive Vice President and
Chief Administrative Officer
(Principal Financial Officer)
5/8/97 By: /s/ Michael D. Roberts
---------- -------------------------------
Date Michael D. Roberts
First Vice President and Controller
(Principal Accounting Officer)
- 10 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE
THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1295058
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1295058
<PP&E> 101250769
<DEPRECIATION> 11587053
<TOTAL-ASSETS> 98037620
<CURRENT-LIABILITIES> 2135562
<BONDS> 57966619
0
0
<COMMON> 0
<OTHER-SE> 38615845
<TOTAL-LIABILITY-AND-EQUITY> 98037620
<SALES> 0
<TOTAL-REVENUES> 2995962
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 576792
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1310629
<INCOME-PRETAX> 1266802
<INCOME-TAX> 0
<INCOME-CONTINUING> 1266802
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1266802
<EPS-PRIMARY> 19.03
<EPS-DILUTED> 19.03
</TABLE>
