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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 ________________________
Commission file number 0-18750
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 (I.R.S. Employer
of 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
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 deliquent 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. [ X ]
Aggregate market value of the voting stock held by non-affiliates of
Registrant: There is no active market for Subsidiary Partnership Units.
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PART I
Item 1. Business.
Registrant is engaged in the business of investing in commercial and
industrial properties which are net leased to commercial and industrial
entities. Registrant was organized as a Delaware limited partnership on October
17, 1988. Effective January 1, 1998 the General Partner of Registrant is Carey
Diversified LLC ("Carey Diversified"). Ninth 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 8, L.P., a Delaware limited partnership ("CPA(R):8"). 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 March 21, 1989, 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. 33-26399). Reference is made to the Prospectus of Registrant.
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. A total of 59,918 Units were ultimately
issued, including 100 Units to the Corporate General Partner for $100,000. On
July 12, 1990, Registrant filed Post-Effective Amendment No. 5 to its
Registration Statement with the Securities and Exchange Commission to withdraw
the balance of the Units from registration.
Registrant has only one industry segment which consists of the
investment in and the leasing of industrial and commercial real estate. See
Selected Financial Data and Management's Discussion and Analysis in Item 6 and
Item 7, respectively, for a summary of Registrant's operations. Also see the
material contained in the Prospectus under the heading INVESTMENT OBJECTIVES AND
POLICIES.
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 July 9, 1991, the date of Registrant's final real estate
acquisition.
For the year ended December 31, 1997, revenues from properties
occupied by Detroit Diesel Corporation ("Detroit Diesel"), Dr Pepper Bottling
Company of Texas ("Dr Pepper"), Furon Company ("Furon"), Information Resources,
Inc., and Red Bank Distribution, Inc. ("Red Bank") amounted to 20%, 14%, 12%,
10%, and 10% respectively, of the total operating revenues of Registrant. No
other property owned by Registrant accounted for 10% or more of its total
operating revenue during 1997. See Note 9 to the Financial Statements in Item 8.
Audited financial statements for Detroit Diesel, a publicly-traded company, for
the year ended December 31, 1996 and the unaudited financial statements for the
nine month period ended September 30, 1997, reported revenues of $1,962,900,000
and $1,601,200,000, respectively, net income of $3,800,000 and $22,000,000,
respectively, total assets of $1,112,600,000 and $1,143,600,000, respectively,
and total shareholders' equity of $321,200,000 and $339,300,000 respectively.
All of Registrant's present real estate 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
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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 secured contingent property and liability insurance on the
properties owned. 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 reportable on 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 inception of the lease or based on formulas
indexed to increases in the Consumer Price Index or Producer Price Index.
Registrant's leases with Dr Pepper, NVRyan, Inc., and Red Bank include purchase
options which are exercisable between 1999 and 2000 and provide for exercise
prices which are the greater of fair market value, as defined in the lease, or a
stated purchase amount. Registrant is seeking to resolve a dispute with Red
Bank. Red Bank has had a history of late payments of rents, and, to date, had
refused to pay assessments of additional rent (i.e., penalties and interest on
late rent payments) as provided for in the lease. Registrant is currently
negotiating with Red Bank and has reached a short-term agreement that will allow
Red Bank to continue to occupy the property provided that it pays an agreed-upon
amount within 60 days (May 4, 1998). Such amounts include payment of all overdue
rents, additional assessments and reimbursement of Registrant's legal costs. Red
Bank has accepted a judgment of termination. Registrant will have 60 days to
enforce the judgment; however, Registrant will allow the judgment to lapse if
Red Bank fulfills its commitment under the short-term agreement. There is no
assurance that Red Bank will fulfill the terms of the agreement. Lockheed Martin
Corporation has elected to an extension term of five years commencing August 8,
1998. Subsequent to December 31, 1997, Registrant's 50% interest in a joint
venture which owns the Lockheed Martin Corporation property has been converted
to a tenancy-in-common.
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 are not generally
subject to the competitive conditions of local and regional real estate markets.
In selecting its real estate investments, Registrant's strategy has been 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. Competitive conditions of local and regional real estate markets
may have a more material affect on Registrant as leases terminate in the future;
however, Registrant believes that its strategy may reduce its exposure to such
competitive conditions. Most of Registrant's leases do not expire until after
the year 2000. Accordingly, Registrant believes it is currently more affected by
the financial conditions 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.
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
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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, 3,233 holders
representing 58,990 of the 59,918 limited partnership units exchanged such units
for 3,104,644 Listed Shares with 41 holders with the remaining 928 limited
partnership units exchanging such units for Subsidiary Partnership Units. The
former General Partners received 177 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 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.
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Item 2. Properties.
Registrant's properties are as follows:
<TABLE>
<CAPTION>
LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
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<S> <C> <C> <C>
LOCKHEED MARTIN Office/Research King of Prussia, Ownership of a 50%
CORPORATION Facility Pennsylvania interest in
land and building (1)
NVRYAN, INC. Office Pittsburgh, Ownership of land
Buildings Pennsylvania and buildings (1)
FEDERAL EXPRESS Distribution Facility Corpus Christi, Ownership of land
CORPORATION Texas and buildings
DR PEPPER BOTTLING Bottling/ Irving and Ownership of a 50%
COMPANY OF TEXAS Distribution/ Houston, interest in land
Office Facilities Texas and buildings (1)
ORBITAL SCIENCES Engineering & Chandler, Ownership of a 58%
CORPORATION Fabrication Arizona interest in land
Facility and buildings (1)
PEPSICO, INC. Distribution Houston, Ownership of land
Facility Texas and buildings
QUEBECOR PRINTING, Office/ Dekalb County, Ownership of a 73.57%
INC. Manufacturing Georgia interest in land
Facility and buildings (1)
FURON Manufacturing, New Haven, Ownership of a 67.72%
COMPANY Office and Connecticut; interest in a limited
Warehouse Mickelton, liability company
Facilities New Jersey; which owns land
Aurora (2) and Mantua, and buildings (1)
Ohio; and Bristol,
Rhode Island;
DETROIT DIESEL Office, Warehouse, Detroit, Ownership of a 80%
CORPORATION Manufacturing, Truck Michigan interest in land
Repair and Waste and buildings (1)
Treatment Plant
RED BANK Warehouse Fairfax, Ohio Ownership of land
DISTRIBUTION, INC. and buildings (1)
INFORMATION Office Buildings Chicago, Ownership of a 33.33%
RESOURCES INC. Illinois limited partnership interest
in a limited partnership
owning land and buildings (1)
</TABLE>
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<TABLE>
<CAPTION>
LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
- ------- ---------------- -------- --------
<S> <C> <C> <C>
CHILDTIME Child Daycare Westland (2) and Ownership of a 33.93%
CHILDCARE, INC. Centers Sterling Heights, interest in land and
- 12 locations Michigan; Chandler buildings (1)
and Tuscon, Arizona;
Duncanville, Carrollton
and Lewisville, Texas;
Alhambra, Chino,
Garden Grove and
Tustin/Santa Ana,
California
TITAN Office Building San Diego, Ownership of a 18.54%
CORPORATION California limited partnership interest
in a limited partnership
owning land and buildings (1)
</TABLE>
(1) These properties are encumbered by mortgage notes payable.
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The material terms of Registrant's leases with its significant
tenants are summarized in the following table:
<TABLE>
<CAPTION>
Registrant's
Share Current Lease
Lease of Current Square Rent Per Expiration Renewal Ownership Terms of
Obligor Annual Rents Footage Sq.Ft.(1) (Mo/Year) Terms Interest Purchase Option
- ----------- ------------ ------- --------- --------- ------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Detroit $ 2,926,447 2,730,750 $1.34 06/10 YES 80% interest; N/A
Diesel remaining
Corporation(2) interest owned
by Corporate
Property Associates
8 ("CPA(R):8")
Dr Pepper 1,999,000 721,947 5.54 06/14 YES 50% interest; The greater of
Bottling remaining fair market value
Co. of Texas(2) interest owned of the property
by CPA(R):8 and $14,100,000
Furon 1,636,149 699,870 3.45 07/07 YES 67.72% interest; N/A
Company(2) remaining
interest owned
by CPA(R):8
Red Bank 1,400,567 589,150 2.29 07/15 YES 100% The greater of
Distribution, fair market value
Inc.(2) of the property
and $10,638,000 and
any prepayment
penalty.
NVRyan, 938,046 78,000 12.03 05/14 YES 100% The greater of
Inc.(2) fair market value
of the property
and $11,700,000 and
any prepayment
penalty.
Orbital 1,249,169 280,000 7.95 09/09 YES 58% interest; N/A
Sciences remaining
Corporation(2) interest owned
by CPA(R):8
Quebecor 1,101,114 432,559 3.46 12/09 YES 73.57% interest; N/A
Printing, Inc.(2) remaining
interest owned
by CPA(R):8
Childtime 413,638 83,694 14.57 01/16 YES 33.93% interest; N/A
Childcare remaining
Inc.(2) interest owned
by Corporate
Property Associates
10 Incorporated
("CPA(R):10")
</TABLE>
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<TABLE>
<CAPTION>
Registrant's
Share Current Lease
Lease of Current Square Rent Per Expiration Renewal Ownership Terms of
Obligor Annual Rents Footage Sq.Ft.(1) (Mo/Year) Terms Interest Purchase Option
- ----------- ------------ ------- --------- --------- ------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Information $1,457,788 252,000 $17.36 09/05 YES 33.33% limited N/A
Resources, partner interest;
Inc.(2) remaining interest
owned by CPA(R):10
Titan 485,084 166,403 15.72 7/07 YES 18.54% limited N/A
Corporation(2) partner interest;
remaining interest
owned by CPA(R):10
Lockheed 467,093 88,578 10.55 7/98 YES 50% joint venture N/A
Martin interest; remaining
Corporation(2) interest owned
by CPA(R):8
</TABLE>
(1) Represents rate for rent per square foot when combined with rents
applicable to tenants-in-common.
(2) 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 25 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 25 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) Consolidated Balance Sheets as of December 31, 1996 and 1997.
(iii) Consolidated Statements of Income for the years ended December 31,
1995, 1996 and 1997.
(iv) Consolidated Statements of Partners' Capital for the years ended
December 31, 1995, 1996 and 1997.
(v) Consolidated Statements of
Cash Flows for the years ended December 31, 1995, 1996 and 1997.
(vi) Notes to Consolidated 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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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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<PAGE> 12
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.
- 11 -
<PAGE> 13
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 $509,066 and $56,563, 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 Corporate General
Partner received cash distributions of $10,370 ($103.70 per unit) during the
year ended December 31, 1997.
- 12 -
<PAGE> 14
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 Corporate General Partner, W.P. Carey 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, a special limited
partner, William Polk Carey, the former Individual General Partner will receive
1% of Distributable Cash From Operations and each will be allocated the same
percentage of the profits and losses of Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
As of December 31, 1997, no person owned of record other than
William Polk Carey, 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 Listed
Name of Shares and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
- -------------- ---------------- -------------------- --------
<S> <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 the 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 89% 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.
- 13 -
<PAGE> 15
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 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, 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.
- 14 -
<PAGE> 16
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.
Consolidated Balance Sheets, December 31, 1996 and 1997.
Consolidated Statements of Income for the years ended December 31, 1995, 1996
and 1997.
Consolidated Statements of Partners' Capital for the years ended December 31,
1995, 1996 and 1997.
Consolidated Statements of Cash Flows for the years ended December 31, 1995,
1996 and 1997.
Notes to Consolidated Financial Statements.
The financial statements are hereby incorporated by reference to pages 5 to 19
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 20
to 22 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.
- 15 -
<PAGE> 17
(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. 33-26399
4.1 Promissory Note dated February 3, 1989 from Exhibit 28 (B)(7) to
CPA(R):8 - CPA(R):9 Joint Venture I in favor of Registration Statement
New England Mutual Life Insurance Company (Form S-11) No. 33-26399
("New England") in the original principal
sum of $2,250,000
4.2 Mortgage Note "A" dated May 15, 1989 from Files as Exhibit 28 (D)(12)
Registrant, as Maker, to Nationwide Life to Registrant's Post
Insurance Company, as Holder Effective Amendment No. 1
to Form S-11
4.3 Mortgage Note "B" dated May 15, 1989 from Files as Exhibit 28 (D)(13)
Registrant, as Maker, to Financial Horizons to Registrant's Post
Life Insurance Company, as Holder Effective Ammendment No. 1
to Form S-11
4.4 Mortgage and Security Agreement dated May 15, Files as Exhibit 28 (D)(14)
1988 from Registrant, as Mortgagor, to to Registrant's Post
Nationwide Life Insurance Company and Financial Effective Amendment No. 1
Horizons Life Insurance Company, as Mortgagee to Form S-11
4.5 Assignment of Leases, Rents and Profits dated Files as Exhibit 28 (D)(15)
May 15, 1989 from Registrant, as Assignor, to to Registrant's Post
Nationwide Life Insurance Company and Financial Effective Amendment No. 1
Horizons Life Insurance Company, as Assignee to Form S-11
4.6 Tri-Party Agreement dated May 15, 1989 by and Files as Exhibit 28 (D)(16)
among Nationwide Life Insurance Company, to Registrant's Post
Financial Horizons Life Insurance Company, Effective Amendment No. 1
Registrant, NVHomes, L.P., Ryan Operations G.P., to Form S-11
and Ryan Homes, Inc.
4.7 Note Agreement dated June 28, 1989 among New Files as Exhibit 28 (E)(1)
England, Registrant, and CPA(R):8 to Registrant's Post
Effective Amendment No. 1
to Form S-11
4.8 Deed of Trust and Security Agreement dated Files as Exhibit 28 (E)(2)
June 28, 1989 between Registrant and CPA(R):8, to Registrant's Post
as Trustor, and New England, as Beneficiary Effective Amendment No. 1
to Form S-11
</TABLE>
- 16 -
<PAGE> 18
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
4.9 Assignment of Leases, Rents and Guaranty Files as Exhibit 28 (E)(3)
dated June 28, 1989 from Registrant and CPA(R):8, to Registrant's Post
as Assignor, to New England, as Assignee Effective Amendment No. 1
to Form S-11
4.10 $16,200,000 Promissory Note dated June 28, Files as Exhibit 28 (E)(4)
1989 from Registrant and CPA(R):8, as Borrower, to Registrant's Post
to New England, as Lender Effective Amendment No. 1
to Form S-11
4.11 Assumption and Modification Agreement dated Files as Exhibit 28 (F)(12)
September 29, 1989 among First Interstate Bank to Registrant's Post
of Arizona, N.A. ("First Interstate") as Lender, Effective Amendment No. 2
Registrant, CPA(R):8, Space Data Corporation to Form S-11
("SDC") and Orbital Sciences Corporation II
4.12 $9,000,000 Replacement Promissory Note dated Files as Exhibit 28 (F)(13)
September 29, 1989 from Registrant and CPA(R):8, to Registrant's Post
as Maker, to First Interstate Effective Amendment No. 2
to Form S-11
4.13 Assignment of Rents, Lease and Guaranty dated Files as Exhibit 28 (F)(14)
September 29, 1989 from Registrant and CPA(R):8, as to Registrant's Post
Assignor, to First Interstate, as Assignee Effective Amendment No. 2
to Form S-11
4.14 Loan Agreement dated May 17, 1989 between SDC, Files as Exhibit 28 (F)(15)
as Borrower, and First Interstate, as Lender to Registrant's Post
Effective Amendment No. 2
to Form S-11
4.15 Deed of Trust, Assignment of Rents, Security Files as Exhibit 28 (F)(16)
by and among SDC, as Trustor, First Interstate, Effective Amendment No. 2
as Trustee, and First Interstate, as Beneficiary. to Form S-11
4.16 Agreement dated December 29, 1989 between Filed as Exhibit 28(H)(11)
Heller Financial, Inc. Registrant and to Registrant's Post
CPA:(R)8. Effective Amendment
No. 3 to Form S-11
4.17 $6,750,000 Real Estate Note dated January Filed as Exhibit 28(H)(12)
30, 1990 from Registrant and CPA:(R)8, as Maker, to Registrant's Post
to Creditanstalt-Bankverein (the "Bank"), Effective Amendment
as Holder. No. 3 to Form S-11
4.18 Deed to Secure Debt and Security Agreement Filed as Exhibit 28(H)(13)
dated January 30, 1990 between Registrant to Registrant's Post
and CPA:(R)8, as Borrower, and the Bank, as Effective Amendment
Lender. No. 3 to Form S-11
4.19 Assignment of Rentals and Leases dated Filed as Exhibit 28(H)(14)
January 30, 1990 from Registrant and CPA:(R)8, to Registrant's Post
as Assignor, to the Bank, as Assignee. Effective Amendment
No. 3 to Form S-11
</TABLE>
- 17 -
<PAGE> 19
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
4.20 $1,000,000 Extendible Secured Note dated Filed as Exhibit 28(I)(25)
January 29, 1990 from Registrant and CPA:(R)8 to Registrant's Post
to Commercial Union Life Insurance Company Effective Amendment
of America ("Commercial"). No. 3 to Form S-11
4.21 $1,000,000 Extendible Secured Note dated Filed as Exhibit 28(I)(26)
January 29, 1990 from Registrant and CPA:(R)8 to Registrant's Post
to Ministers Life - A Mutual Life Insurance Effective Amendment
Company ("Ministers"). No. 3 to Form S-11
4.22 $1,500,000 Extendible Secured Note dated Filed as Exhibit 28(I)(27)
January 29, 1990 from Registrant and CPA:(R)8 to Registrant's Post
to The North Atlantic Life Insurance Company Effective Amendment
of America ("North Atlantic"). No. 3 to Form S-11
4.23 $5,000,000 Extendible Secured Note dated Filed as Exhibit 28(I)(28)
January 29, 1990 from Registrant and CPA:(R)8 to Registrant's Post
to Northern Life Insurance Company Effective Amendment
("Northern"). No. 3 to Form S-11
4.24 $5,000,000 Extendible Secured Note dated Filed as Exhibit 28(I)(29)
January 29, 1990 from Registrant and CPA:(R)8 to Registrant's Post
to Northwestern National Life Insurance Effective Amendment
Company ("Northwestern"). No. 3 to Form S-11
4.25 $500,000 Extendible Secured Note dated Filed as Exhibit 28(I)(30)
January 29, 1990 from Registrant and CPA:(R)8 to Registrant's Post
to TNB Stock Company, FAO Texas Life Effective Amendment
Insurance Custody Account. No. 3 to Form S-11
4.26 Note Purchase Agreement dated as of Filed as Exhibit 28(I)(31)
January 1, 1990 between Registrant and to Registrant's Post
CPA:(R)8, as Sellers, and Commercial, Effective Amendment
Ministers, North Atlantic, Northern, No. 3 to Form S-11
Northwestern and Texas Life Insurance
Company (collectively, the "Lenders"), as Purchasers.
4.27 Combination Open-end Mortgage Deed, Security Filed as Exhibit 28(I)(32)
Agreement and Fixture Financing Statement to Registrant's Post
dated January 29, 1990 between Registrant Effective Amendment
and CPA:(R)8, as Mortgagors, and the Lenders, No. 3 to Form S-11
as Mortgagees (New Haven Premises).
4.28 Combination Open-end Mortgage Deed, Security Filed as Exhibit 28(I)(33)
Agreement and Fixture Financing Statement to Registrant's Post
dated January 29, 1990 between Registrant Effective Amendment
and CPA:(R)8, as Mortgagors, and the Lenders, No. 3 to Form S-11
as Mortgagees (Mickleton Premises).
</TABLE>
- 18 -
<PAGE> 20
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
4.29 Combination Open-end Mortgage Deed, Security Filed as Exhibit 28(I)(34)
Agreement and Fixture Financing Statement to Registrant's Post
dated January 29, 1990 between Registrant Effective Amendment
and CPA:(R)8, as Mortgagors, and the Lenders, No. 3 to Form S-11
as Mortgagees (Aurora and Mantua Premises).
4.30 Combination Open-end Mortgage Deed, Security Filed as Exhibit 28(I)(35)
Agreement and Fixture Financing Statement to Registrant's Post
dated January 29, 1990 between Registrant Effective Amendment
and CPA:(R)8, as Mortgagors, and the Lenders, No. 3 to Form S-11
as Mortgagees (Twinsburg Premises).
4.33 Combination Deed of Trust, Security Agreement and Filed as Exhibit 28(I)(38)
Fixture Financing Statement dated January 29, 1990 to Registrant's Post
between Registrant and CPA:(R)8, as Mortgagors, and Effective Amendment
the Lenders, as Mortgagees (Mt. Pleasant Premises). No. 3 to Form S-11
4.34 Combination Mortgage, Security Agreement and Filed as Exhibit 28(I)(39)
Fixture Financing Statement dated January 29, 1990 to Registrant's Post
between Registrant and CPA:(R)8, as Mortgagors, and Effective Amendment
the Lenders, as Mortgagees (Milwaukee Premises). No. 3 to Form S-11
4.35 Agreement and Assignment of Lessors' Filed as Exhibit 28(I)(40)
Interest in Leases dated January 29, 1990 to Registrant's Post
by Registrant and CPA:(R)8, as Lessors, and Effective Amendment
the Lenders (New Haven Premises). No. 3 to Form S-11
4.36 Agreement and Assignment of Lessors' Filed as Exhibit 28(I)(41)
Interest in Leases dated January 29, 1990 to Registrant's Post
by Registrant and CPA:(R)8, as Lessors, and Effective Amendment
the Lenders (Mickleton Premises). No. 3 to Form S-11
4.37 Agreement and Assignment of Lessors' Filed as Exhibit 28(I)(42)
Interest in Leases dated January 29, 1990 to Registrant's Post
by Registrant and CPA:(R)8, as Lessors, and Effective Amendment
the Lenders (Aurora, Mantua and Twinsburg Premises). No. 3 to Form S-11
4.39 Agreement and Assignment of Lessors' Interest in Leases Filed as Exhibit 28(I)(44)
dated January 29, 1990 by Registrant and CPA:(R)8, as to Registrant's Post
Lessors, and the Lenders (Bristol Premises). Effective Amendment
No. 3 to Form S-11
4.40 Agreement between Furon Company ("Furon"), Filed as Exhibit 28(I)(47)
Lenders, Registrant and CPA:(R)8 regarding the to Registrant's Post
condition of title to Mantua Premises. Effective Amendment
No. 3 to Form S-11
</TABLE>
- 19 -
<PAGE> 21
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
4.41 $3,886,181.16 Mortgage Note dated July 20, 1990 Filed as Exhibit 4.1
from Registrant, as Borrower, to Red Bank to Registrant's Form 8-K
Distribution, Inc. ("Red Bank"), as Lender. dated August 10, 1990
4.42 Open End Mortgage, Security Agreement and Assignment Filed as Exhibit 4.2
of Rents, Income and Proceeds dated July 20, 1990 to Registrant's Form 8-K
from Registrant, as Mortgagor, to Red Bank, as Mortgagee. dated August 10, 1990
4.43 First Amendment to Open End Mortgage, Security Filed as Exhibit 4.3
Agreement and Assignment of Rents, Income and to Registrant's Form 8-K
Proceeds dated July 20, 1990 by and between Registrant, dated August 10, 1990
as Mortgagor, and Red Bank, as Mortgagee.
4.44 $3,113,818.54 Purchase Money Mortgage Filed as Exhibit 4.4
Note dated July 20, 1990 from Registrant, to Registrant's Form 8-K
as Maker, to Red Bank, as Payee. dated August 10, 1990
4.45 Open End Mortgage Deed and Security Agreement dated Filed as Exhibit 4.5
July 20, 1990 from Registrant, as Grantor, to Red Bank, to Registrant's Form 8-K
as Grantee, with Subordination. dated August 10, 1990
4.46 Amendment to Open End Mortgage, Security Agreement Filed as Exhibit 4.6
and Assignment of Rents, Income and Proceeds dated to Registrant's Form 8-K
July 20, 1990 by and between Red Bank, as Mortgagor, dated August 10, 1990
and Hunter Savings Association, as Mortgagee.
4.47 $23,500,000 Note Secured by First Real Estate Lien dated Filed as Exhibit 4.1
September 27, 1990 from Randolph/Clinton Limited to Registrant's Form 8-K
Partnership ("Randolph/Clinton"), as Maker, to The Mutual dated October 30, 1990
Life Insurance Company of New York ("MONY"), as Payee.
4.48 Mortgage and Security Agreement dated Filed as Exhibit 4.2
September 27, 1990 from Randolph/Clinton, to Registrant's Form 8-K
as Mortgagor, to MONY, as Mortgagee. dated October 30, 1990
4.49 Assignment of Lessor's Interest in Filed as Exhibit 4.3
Leases dated September 27, 1990 from to Registrant's Form 8-K
Randolph/Clinton, as Assignor, to MONY, as Assignee. dated October 30, 1990
4.50 $11,700,000.00 Promissory Note dated July 9, 1991 Filed as Exhibit 10.2
from Torrey Pines Limited Partnership ("Torrey Pines"), to Registrant's Form 8-K
as Borrower to The Northwestern Mutual Life Insurance dated September 12, 1991
Company ("Northwestern"), as Lender.
4.51 Deed of Trust and Security Agreement, dated July 9, Filed as Exhibit 10.3
1991 between Torrey Pines and Northwestern. to Registrant's Form 8-K
dated September 12, 1991
4.52 Absolute Assignment of Leases and Rents, Filed as Exhibit 10.4
dated July 9, 1991 from Torrey Pines, as to Registrant's Form 8-K
Assignor to Northwestern, as Assignee. dated September 12, 1991
</TABLE>
- 20 -
<PAGE> 22
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
10.1 Joint Venture Agreement dated December 8, 1988 Exhibit 28 (B)(1) to
between Registrant and CPA(R):8 as joint ventures Registration Statement
(collectively, "Joint Venture") (Form S-11) No. 33-26399
10.2 Parcel "C" Lease dated July 28, 1988 between Exhibit 28 (B)(2) to
SDC-GESCO Associates, a Pennsylvania limited Registration Statement
partnership ("SDC-GESCO"), as lessor and General (Form S-11) No. 33-26399
Electric Company, a New York corporation, as
lessee.
10.3 Assignment of Lease and Assumption Agreement Exhibit 28 (B)(3) to
dated December 21, 1988 between SDC-GESCO as, Registration Statement
assignor, and Joint Venture, as assignee (Form S-11) No. 33-26399
10.4 Lease Agreement dated August 3, 1988 between D/S Exhibit 28 (C)(2) to
Corpus Christi Joint Venture and Federal Express Registration Statement
Corporation (Form S-11) No. 33-26399
10.5 Assignment of Lease dated June 23, 1989 from Filed as Exhibit 28 (C)(6)
Seller, as Assignor, to Registrant, as Assignee to Registrant's Post
Effective Amendment No. 2
to Form S-11
10.6 Lease Agreement dated May 15, 1989 by and Filed as Exhibit 28 (D)(7)
between Registrant, as Landlord, and NVHomes to Registrant's Post
L.P., Ryan Operations G.P., and Ryan Homes, Effective Amendment No. 1
Inc., as Tenant to Form S-11
10.7 Mortgage and Security Agreement dated May 15, Filed as Exhibit 28 (D)(8)
1989 by and between NVHomes L.P., Ryan to Registrant's Post
Operations G.P. and Ryan Homes, Inc., as Effective Amendment No. 1
Mortgagor, and Registrant, as Mortgagee to Form S-11
10.8 Lessee's Certificate dated May 15, 1989 from Filed as Exhibit 28 (D)(9)
Ryan Operations G.P., as Lessee, to Registrant, to Registrant's Post
as Lessor Effective Amendment No. 1
to Form S-11
10.9 Guaranty dated May 15, 1989 from NVR L.P., as Filed as Exhibit 28 (D)(10)
Guarantor, to Registrant, as Landlord to Registrant's Post
Effective Amendment No. 1
to Form S-11
10.10 Guarantor's Certificate dated May 15, 1989 Filed as Exhibit 28 (D)(11)
from NVR L.P., as Guarantor, to Registrant, to Registrant's Post
as Purchaser Effective Amendment No. 1
to Form S-11
10.11 Lease Agreement dated June 28, 1989 by and Filed as Exhibit 28 (E)(5)
between Registrant and CPA(R):8, as landlord, to Registrant's Post
and Dr Pepper Bottling Company of Texas Effective Amendment No. 1
("Dr Pepper"), as Tenant to Form S-11
</TABLE>
- 21 -
<PAGE> 23
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
10.12 Guaranty and Suretyship Agreement dated June 28, Filed as Exhibit 28 (E)(6)
1989 from Dr Pepper Bottling Holdings, Inc. to Registrant's Post
("Holdings"), as Guarantor, to Registrant and Effective Amendment No. 1
CPA(R):8, as Landlord to Form S-11
10.13 Guarantor's Certificate dated June 28, 1989 from Filed as Exhibit 28 (E)(7)
Holdings, as Guarantor, to Registrant and CPA(R):8, to Registrant's Post
as Purchaser Effective Amendment No. 1
to Form S-11
10.14 Co-Tenancy Agreement dated June 28, 1989 between Filed as Exhibit 28 (E)(8)
Registrant and CPA(R):8 to Registrant's Post
Effective Amendment No. 1
to Form S-11
10.15 Lease Agreement dated September 24, 1989 Filed as Exhibit 28 (F)(2)
by and between Registrant and CPA(R):8, as To Registrant's Post
Landlord, and SDC, as Tenant Effective Ammendment
No. 2 to Form S-11
10.16 Special Warranty Deed dated September 29, Filed as Exhibit 28 (F)(3)
1989 from SDC, as Grantor, to Registrant To Registrant's Post
and CPA(R):8, as Grantees Effective Ammendment
No. 2 to Form S-11
10.17 Co-Tenancy Agreement dated September 29, 1989 Filed as Exhibit 28 (F)(5)
between Registrant and CPA(R):8 to Registrant's Post
Effective Amendment No. 2
to Form S-11
10.18 Guaranty and Suretyship Agreement dated Filed as Exhibit 28 (F)(7)
September 29, 1989 from Orbital Sciences to Registrant's Post
Corporation II, as Guarantor, to Registrant Effective Amendment No. 2
and CPA(R):8, as Landlord. to Form S-11
10.19 Amendment No. 1 to Lease Agreement dated Filed as Exhibit 28 (G)(5)
November 15, 1989 between Davis/DeBlanc to Registrant's Post
("DDC"), as Landlord, and Pepsi Cola Company Effective Amendment No. 2
South, a division of PepsiCo, Inc., as Tenant to Form S-11
10.20 Assignment of Tenant Lease dated November 16, Filed as Exhibit 28 (G)(6)
1989 from DDC, as Assignor, to Registrant, to Registrant's Post
as Assignee Effective Amendment No. 2
to Form S-11
10.21 Co-Tenancy Agreement dated December 29, 1989 Filed as Exhibit 28(H)(1)
between Registrant and Corporate Property to Registrant's Post
Associates 8, L.P., a Delaware limited Effective Amendment
partnership ("CPA(R):8"). No. 3 to Form S-11
10.22 Lease Agreement dated December 29, 1989 by Filed as Exhibit 28(H)(5)
and between Registrant and CPA(R):8, as Landlord, to Registrant's Post
and Foote & Davies, Inc. ("F&D"), as Tenant. Effective Amendment
No. 3 to Form S-11
</TABLE>
- 22 -
<PAGE> 24
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
10.23 First Ammendment to Lease Agreement dated as Filed as Exhibit 28(H)(6)
of January 30, 1990 between F&D, as Tenant, to Registrant's Post
and Registrant and CPA(R):8, as Landlord. Effective Amendment
No. 3 to Form S-11
10.24 Lessee's Certificate dated December 29, 1989 Filed as Exhibit 28(H)(7)
from F&D, as Tenant, to Registrant and to Registrant's Post
CPA(R):8 as landlord. Effective Amendment
No. 3 to Form S-11
10.25 Guaranty and Suretyship Agreement dated Filed as Exhibit 28(H)(8)
December 29, 1989 by ASG Acquisition Corp. to Registrant's Post
("ASG"), as Guarantor, to Registrant and CPA(R):8, Effective Amendment
as Landlord. No. 3 to Form S-11
10.26 Amendment to Guaranty and Suretyship Agreement Filed as Exhibit 28(H)(9)
dated as of January 30, 1990 made by ASG, as to Registrant's Post
Guarantor, to Registrant and CPA(R):8, as Landlord. Effective Amendment
No. 3 to Form S-11
10.27 Guarantor's Certificate dated December 29, 1989 Filed as Exhibit 28(H)(10)
from ASG, as Guarantor, to Registrant and to Registrant's Post
CPA(R):8, as Purchaser. Effective Amendment
No. 3 to Form S-11
10.28 Co-Tenancy Agreement dated as of January 29, Filed as Exhibit 28(I)(1)
1990 by and between Registrant and CPA(R):8. to Registrant's Post
Effective Amendment
No. 3 to Form S-11
10.29 Lease Agreement dated as of January 29, 1990 Filed as Exhibit 28(I)(20)
by and between Registrant and CPA(R):8, as to Registrant's Post
Landlord, and Furon, as Tenant. Effective Amendment
No. 3 to Form S-11
10.30 Sublease dated January 29, 1990 by and Filed as Exhibit 28(I)(21)
between Furon, as Sublandlord and CHR to Registrant's Post
Industries, Inc., as Subtenant and consented Effective Amendment
to by Registrant and CPA(R):8, as Landlord. No. 3 to Form S-11
10.31 Sublease dated January 29, 1990 by and between Filed as Exhibit 28(I)(22)
Furon, as Sublandlord and Bunnell Plastics, to Registrant's Post
Inc., as Subtenant and consented to by Effective Amendment
Registrant and CPA(R):8, as Landlord. No. 3 to Form S-11
10.32 Sublease dated January 29, 1990 by and between Filed as Exhibit 28(I)(23)
Furon, as Sublandlord and Dixon Industries to Registrant's Post
Corporation, as Subtenant and consented to Effective Amendment
by Registrant and CPA(R):8, as Landlord. No. 3 to Form S-11
10.33 Assignment of Lease Agreement dated January 29, Filed as Exhibit 28(I)(24)
1990 by and between Furon, as Assignor, and to Registrant's Post
Registrant and CPA(R):8, as Assignee. Effective Amendment
No. 3 to Form S-11
</TABLE>
- 23 -
<PAGE> 25
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
10.34 Lease Agreement between Registrant and Filed as Exhibit 10.1
CPA(R):8, as Landlord, and DDC, as Tenant. to Registrant's Form 8-K
dated July 16, 1990
10.35 Lease Agreement dated July 20, 1990 by and Filed as Exhibit 10.1
between Registrant, as Landlord, and to Registrant's Form 8-K
Red Bank, as Tenant. dated August 10, 1990
10.36 Lease Agreement dated September 27, 1990 Filed as Exhibit 10.1
between Randolph/Clinton, as Landlord, and to Registrant's Form 8-K
Information Resources, Inc. ("IRI"), as Tenant. dated October 30, 1990
10.37 Assignment of Subleases and Rents dated Filed as Exhibit 10.2
September 27, 1990 from IRI, as Assignor, to Registrant's Form 8-K
and Randolph/Clinton, as Assignee. dated October 30, 1990
10.38 Lease Agreement dated July 9, 1991 by and Filed as Exhibit 10.1
between Torrey Pines, as Landlord and The to Registrant's Form 8-K
Titan Corporation, as Tenant. dated September 12, 1991
10.39 Indemnity Agreement dated July 9, 1991 of Torrey Pines, Filed as Exhibit 10.5
Corporate Property Associates 10 Incorporated, a to Registrant's Form 8-K
Maryland corporation, ("CPA(R):10") and Registrant. dated September 12, 1991
28.1 Seller's Certificate dated December 21, 1988 Exhibit 28 (B)(4) to
from SDC-GESCO, as seller, to Joint Venture, Registration Statement
as purchaser (Form S-11) No. 33-26399
28.2 Purchaser's Certificate dated December 21, Exhibit 28 (B)(5) to
1988 from Joint Venture, as purchaser to Registration Statement
SDC-GESCO, as seller (Form S-11) No. 33-26399
28.3 Deed dated December 21, 1988 from SDC-GESCO, Exhibit 28 (B)(6) to
as grantor, to Joint Venture, as grantee Registration Statement
(Form S-11) No. 33-26399
28.4 Letter of Intent dated February 9, 1989 Exhibit 28 (C)(1) to
relating to the purchase of property in Registration Statement
Corpus Christi, Texas. (Form S-11) No. 33-26399
28.5 Letter of Intent dated September 28, 1988 Exhibit 28 (D) to
Relating to the Purchase by Registrant of Registration Statement
Property in Pittsburgh, Pennsylvania (Form S-11) No. 33-26399
28.6 Seller's Certificate dated May 15, 1989 from Filed as Exhibit 28 (D)(2)
Ryan Homes, Inc., as Seller, to Registrant, To Registrant's Post
as Purchaser Effective Amendment
No. 1 to Form S-11
28.7 Deed dated May 15, 1989 from Ryan Homes, Inc., Filed as Exhibit 28 (D)(3)
as Grantor, to Registrant, as Grantee To Registrant's Post
Effective Amendment
No. 1 to Form S-11
</TABLE>
- 24 -
<PAGE> 26
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
28.8 Deed dated May 15, 1989 from Allegheny County Filed as Exhibit 28 (D)(4)
Industrial Development Authority, as Grantor, To Registrant's Post
to Registrant, as Grantee Effective Amendment
No. 1 to Form S-11
28.9 Bill of Sale dated May 15, 1989 from Ryan Filed as Exhibit 28 (D)(5)
Homes, Inc., as Seller, to Registrant, To Registrant's Post
as Purchaser Effective Amendment
No. 1 to Form S-11
28.10 Bill of Sale dated May 15, 1989 from Filed as Exhibit 28 (D)(6)
Allegheny County Industrial Development To Registrant's Post
Authority, as Seller, to Registrant, as Effective Amendment
Purchaser No. 1 to Form S-11
28.11 Seller's/Lessee's Certificate dated June 28, Filed as Exhibit 28 (E)(9)
1989 from Dr Pepper, as Seller, to Registrant To Registrant's Post
and CPA(R):8 , as Purchaser Effective Amendment
No. 1 to Form S-11
28.12 Warranty Deed dated June 28, 1989 from Filed as Exhibit 28 (E)(10)
Dr Pepper, as Grantor, to Registrant and To Registrant's Post
CPA(R):8, as Grantee, for Irving, Texas property Effective Amendment
No. 1 to Form S-11
28.13 Warranty Deed dated June 28, 1989 from Filed as Exhibit 28 (E)(11)
Dr Pepper, as Grantor, to Registrant and To Registrant's Post
CPA(R):8, as Grantee, for Houston, Texas property Effective Amendment
No. 1 to Form S-11
28.14 Bill of Sale dated June 28, 1989 from Filed as Exhibit 28 (E)(12)
Dr Pepper, as Seller, to Registrant and To Registrant's Post
CPA(R):8, as Purchaser, for Irving, Texas Effective Amendment
property. No. 1 to Form S-11
28.15 Bill of Sale dated June 28, 1989 from Filed as Exhibit 28 (E)(13)
Dr Pepper, as Seller, to Registrant and To Registrant's Post
CPA(R):8, as Purchaser, for Houston, Texas Effective Amendment
property. No. 1 to Form S-11
28.16 General Warranty Deed dated June 23, 1989 from Filed as Exhibit 28 (C)(3)
D/S Corpus Christi Joint Venture ("D/S Corpus To Registrant's Post
Christi"), as Grantor, to Registrant, as Grantee Effective Amendment
No. 2 to Form S-11
28.17 Seller's Certificate dated June 23, 1989 from Filed as Exhibit 28 (C)(4)
D/S Corpus Christi to Registrant To Registrant's Post
Effective Amendment
No. 2 to Form S-11
28.18 Bill of Sale dated June 23, 1989 from D/S Filed as Exhibit 28 (C)(5)
Corpus Christi to Registrant. To Registrant's Post
Effective Amendment
No. 2 to Form S-11
</TABLE>
- 25 -
<PAGE> 27
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
28.19 Letter of Intent dated May 24, 1989 from Filed as Exhibit 28 (F)(1)
Registrant to Orbital Sciences Corporation II. To Registrant's Post
Effective Amendment
No. 2 to Form S-11
28.20 Bill of Sale dated September 29, 1989 from Filed as Exhibit 28 (F)(4)
SDC, as Seller, to Registrant and CPA(R):8, To Registrant's Post
as Purchaser. Effective Amendment
No. 2 to Form S-11
28.21 Seller's/Lessee's Certificate dated September 29, Filed as Exhibit 28 (F)(6)
1989 from SDC, as Seller, to Registrant and To Registrant's Post
CPA(R):8 as Purchaser. Effective Amendment
No. 2 to Form S-11
28.22 Guarantor's Certificate dated September 29, 1989 Filed as Exhibit 28 (F)(8)
from Orbital Sciences Corporation II, as to Registrant's Post
Guarantor, to Registrant and CPA(R):8 as Purchaser Effective Amendment
No. 2 to Form S-11
28.23 Construction Management Agreement dated Filed as Exhibit 28 (F)(9)
September 29, 1989 between Registrant and To Registrant's Post
CPA(R):8, as Owner, and SDC. Effective Amendment
No. 2 to Form S-11
28.24 Assignment of Rights Under Construction Filed as Exhibit 28 (F)(10)
Contract dated September 29, 1989 from SDC, To Registrant's Post
as Assignor, to Registrant and CPA(R):8, as Assignee Effective Amendment
No. 2 to Form S-11
28.25 Assignment of Rights Under Agreement dated Filed as Exhibit 28 (F)(11)
September 29, 1989 from SDC, as Assignor, to To Registrant's Post
Registrant and CPA(R):8, as Assignee Effective Amendment
No. 2 to Form S-11
28.26 Agreement of Purchase and Sale dated Filed as Exhibit 28 (G)(1)
June 6, 1989 between DDC, as Seller, and To Registrant's Post
Registrant, as Purchaser Effective Amendment
No. 2 to Form S-11
28.27 Special Warranty Deed dated November 16, 1989 Filed as Exhibit 28 (G)(2)
for DDC, as Grantor, to Registrant, as Grantee To Registrant's Post
Effective Amendment
No. 2 to Form S-11
28.28 Bill of Sale and Assignment of Incidental Filed as Exhibit 28 (G)(3)
Rights dated November 16, 1989 from DDC, To Registrant's Post
as Seller, to Registrant, as Purchaser Effective Amendment
No. 2 to Form S-11
28.29 Special Warranty Deed dated December 29, 1989 Filed as Exhibit 28(H)(2)
from Footland Corporation ("Footland"), as to Registrant's Post
Grantor, to Registrant and CPA(R):8, as Grantee. Effective Amendment
No. 3 to Form S-11
</TABLE>
- 26 -
<PAGE> 28
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
28.30 Bill of Sale dated December 29, 1989 from Filed as Exhibit 28(H)(3)
Footland, as Seller, to Registrant and CPA(R):8, to Registrant's Post
as Grantee. Effective Amendment
No. 3 to Form S-11
28.31 Seller's Certificate dated December 29, 1989 Filed as Exhibit 28(H)(4)
from Footland, as Seller, to Registrant and to Registrant's Post
CPA(R):8, as Purchaser. Effective Amendment
No. 3 to Form S-11
28.32 Estoppel Certificate date November 14, 1989 Filed as Exhibit 28 (G)(4)
from Pepsi Cola Company South, a division of To Registrant's Post
PepsiCo, Inc., as Tenant, to Registrant and DDC Effective Amendment
No. 2 to Form S-11
28.33 Deed dated January 29, 1990 from CHR Filed as Exhibit 28(I)(2)
Industries, as Grantor, to Registrant and to Registrant's Post
CPA(R):8, as Grantees (New Haven Premises). Effective Amendment
No. 3 to Form S-11
28.34 Bill of Sale date January 29, 1990 from CHR Filed as Exhibit 28(I)(3)
Industries, Inc. to Registrant and CPA(R):8 to Registrant's Post
concerning the New Haven Premises. Effective Amendment
No. 3 to Form S-11
28.35 Deed dated January 29, 1990 between Bunnell Filed as Exhibit 28(I)(4)
Plastics, Inc., as Grantor, and Registrant to Registrant's Post
and CPA(R):8, as Grantee (Mickleton Premises). Effective Amendment
No. 3 to Form S-11
28.36 Bill of Sale dated January 29, 1990 from Filed as Exhibit 28(I)(5)
Bunnell Plastics, Inc. to Registrant and to Registrant's Post
CPA(R):8 concerning the Mickleton Premises. Effective Amendment
No. 3 to Form S-11
28.37 Deed dated January 29, 1990 from the Filed as Exhibit 28(I)(6)
Fluorocarbon Company, which changed to Registrant's Post
its name to Furon, as Grantor, and Effective Amendment
and Registrant and CPA(R):8, as Grantees No. 3 to Form S-11
(Mantua Premises).
28.38 Deed dated January 29, 1990 from Furon, Filed as Exhibit 28(I)(8)
as Grantor, to Registrant and CPA(R):8, to Registrant's Post
as Grantees (Aurora Premises). Effective Amendment
No. 3 to Form S-11
28.39 Quitclaim Deed dated January 29, 1990 from Filed as Exhibit 28(I)(10)
Dixon Industries Corporation, as Grantor, to Registrant's Post
to Registrants and CPA(R):8, as Grantees Effective Amendment
(Bristol Premises). No. 3 to Form S-11
28.40 Bill of Sale dated January 29, 1990 from Filed as Exhibit 28(I)(11)
Dixon Industries Corporation to Registrant to Registrant's Post
and CPA(R):8 concerning the Bristol Premises. Effective Amendment
No. 3 to Form S-11
</TABLE>
- 27 -
<PAGE> 29
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
28.41 Bill of Sale dated January 29, 1990 from Furon Filed as Exhibit 28(I)(15)
to Registrant and CPA(R):8 concerning the Mantua to Registrant's Post
Premises, the Twinsburg Premises, the Aurora Effective Amendment
Premises, the Liverpool Premises and the No. 3 to Form S-11
Milwaukee Premises.
28.42 Seller's/Lessee's Certificate dated January 29, Filed as Exhibit 28(I)(16)
1990 from Furon, as Seller, to Registrant and to Registrant's Post
CPA(R):8, as Purchaser, and Commercial Union, Effective Amendment
Ministers, North Atlantic, Northern, Northwestern, No. 3 to Form S-11
and Texas Life (collectively referred to as Lenders)
concerning the Aurora, Mantua, Twinsburg, Liverpool,
Mt. Pleasant and Milwaukee Premises.
28.43 Seller's Certificate dated January 29, 1990 from Filed as Exhibit 28(I)(17)
CHR Industries, Inc., as Seller, to Registrant to Registrant's Post
and CPA(R):8, as Purchaser and Lenders (New Haven Effective Amendment
Premises). No. 3 to Form S-11
28.44 Seller's Certificate dated January 29, 1990 from Filed as Exhibit 28(I)(18)
Bunnell Plastics, Inc., as Seller, to Registrant to Registrant's Post
and CPA(R):8, as Purchaser and Lenders (Mickleton Effective Amendment
Premises). No. 3 to Form S-11
28.45 Seller's Certificate dated January 29, 1990 from Filed as Exhibit 28(I)(19)
Dixon Industries Corporation, as Seller, to to Registrant's Post
Registrant and CPA(R):8, as Purchaser and Lenders Effective Amendment
(Bristol Premises). No. 3 to Form S-11
28.46 General Warranty Deed from DDC to Registrant Filed as Exhibit 28.1
and CPA(R):8. to Registrant's Form 8-K
dated July 16, 1990
28.47 Bill of Sale from DDC to Registrant and Filed as Exhibit 28.2
CPA(R):8. to Registrant's Form 8-K
dated July 16, 1990
28.48 Assignment of Leases and Agreements Filed as Exhibit 28.3
from DDC to Registrant and CPA(R):8. to Registrant's Form 8-K
dated July 16, 1990
28.49 Co-Tenancy Agreement between Registrant Filed as Exhibit 28.4
and CPA(R):8. to Registrant's Form 8-K
dated July 16, 1990
</TABLE>
- 28 -
<PAGE> 30
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
28.50 Guaranty and Suretyship Agreement dated July 20, 1990 Filed as Exhibit 28.1
from Morley P. Thompson ("Thompson"), as Guarantor, to Registrant's Form 8-K
to Registrant, as Landlord. dated August 10, 1990
28.51 Sublease dated July 20, 1990 by and between Red Filed as Exhibit 28.2
Bank, as Landlord, and Stearns Technical Textiles to Registrant's Form 8-K
("Stearns"), as Tenant. dated August 10, 1990
28.52 Equipment Lease dated July 20, 1990 by Filed as Exhibit 28.3
and between Red Bank, as Lessor , and to Registrant's Form 8-K
Stearns, as Lessee. dated August 10, 1990
28.53 Assignment of Equipment Lease and Security Filed as Exhibit 28.4
Agreement dated July 20, 1990 from Red to Registrant's Form 8-K
Bank, as Tenant, to Registrant, as Landlord. dated August 10, 1990
28.54 Sublease Agreement dated July 20, 1990 by and Filed as Exhibit 28.5
between Red Bank, as Landlord, and M-West to Registrant's Form 8-K
Mortgage Corporation ("M-West"), as Tenant. dated August 10, 1990
28.55 Assignment of Subleases, Rents and Guaranties Filed as Exhibit 28.6
dated July 20, 1990 from Red Bank, as to Registrant's Form 8-K
Tenant, to Registrant, as Landlord. dated August 10, 1990
28.56 Guaranty and Suretyship Agreement dated July 20, 1990 Filed as Exhibit 28.7
from The Thompson Trust (the "Trust"), Patricia S. Thompson, to Registrant's Form 8-K
beneficiary of Trust, and Thompson, beneficiary of Trust, dated August 10, 1990
(collectively "Grantor") to Red Bank, as Sublandlord.
28.57 Guaranty and Suretyship Agreement dated Filed as Exhibit 28.8
July 20, 1990 from M-West, as Guarantor, to Registrant's Form 8-K
to Red Bank, as Sublandlord. dated August 10, 1990
28.58 Stock Pledge Agreement dated July 20, 1990 Filed as Exhibit 28.9
by and between Thompson, as Pledgor, and to Registrant's Form 8-K
the Registrant, as Pledgee. dated August 10, 1990
28.59 Agreement of Limited Partnership dated September 21, Filed as Exhibit 28.1
1990 between 564 Randolph Co. #2 ("564 Randolph") to Registrant's Form 8-K
and North Clinton Corporation ("NCC"). dated October 30, 1990
28.60 Assignment of Partnership Interests dated September 27, 1990 Filed as Exhibit 28.2
from 564 Randolph and NCC, as Assignors, to Registrant to Registrant's Form 8-K
and QRS 10-1 (ILL), Inc. ("QRS 10-1"), as Assignees. dated October 30, 1990
28.61 Amended and Restated Agreement of Limited Partnership Filed as Exhibit 28.3
dated September 27, 1990 between Registrant and to Registrant's Form 8-K
QRS 10-1, joined by 564 Randolph and NCC. dated October 30, 1990
</TABLE>
- 29 -
<PAGE> 31
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ---------
<S> <C> <C>
28.62 Warranty Deed dated September 27, 1990 from 564 Randolph Filed as Exhibit 28.4
to Randolph/Clinton; Trustee's Deed dated September 20, 1990 to Registrant's Form 8-K
from American National Bank and Trust Company of Chicago, dated October 30, 1990
to Randolph/Clinton, Trustee's Deed dated September 20, 1990
from LaSalle National Trust, N.A., as Successor Trustee to
LaSalle National Bank, Trustee, to 564 Randolph.
28.63 Bill of Sale dated September 25, 1990 from 564 Randolph to Filed as Exhibit 28.5
Randolph/Clinton; Bill of Sale dated September 25, 1990 to Registrant's Form 8-K
from NCC to Randolph/Clinton; Bill of Sale dated dated October 30, 1990
September 25, 1990 from IRI to 564 Randolph.
28.64 General Warranty Deed dated July 9, 1991 from Filed as Exhibit 28.1
Titan Linkabit Corporation to Torrey Pines. to Registrant's Form 8-K
dated September 12, 1991
28.65 Bill of Sale dated July 9, 1991 from Titan Filed as Exhibit 28.2
Linkabit Corporation to Torrey Pines. to Registrant's Form 8-K
dated September 12, 1991
28.66 Prospectus of Registrant Filed as Exhibit 28.72
dated March 21, 1989. to Registrant's Form 10-K/A
dated September 27, 1993
28.67 Supplement dated June 27, 1989 Filed as Exhibit 28.73
to Prospectus dated March 21, 1989. to Registrant's Form 10-K/A
dated September 27, 1993
28.68 Supplement dated October 23, 1989 Filed as Exhibit 28.74
to Prospectus dated March 21, 1989. to Registrant's Form 10-K/A
dated September 27, 1993
28.69 Supplement dated January 22, 1990 Filed as Exhibit 28.75
to Prospectus dated March 21, 1989. to Registrant's Form 10-K/A
dated September 27, 1993
28.70 Supplement dated March 9, 1990 Filed as Exhibit 28.76
to Prospectus dated March 21, 1989. to Registrant's Form 10-K/A
dated September 27, 1993
</TABLE>
(b) Reports on Form 8-K
The Registrant has 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)).
- 30 -
<PAGE> 32
SIGNATURES
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 9, L.P.
- a Delaware limited partnership
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)
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.
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)
- 31 -
<PAGE> 33
APPENDIX A TO FORM 10-K
CORPORATE PROPERTY ASSOCIATES 9, L.P.
- a Delaware limited partnership
1997 ANNUAL REPORT
<PAGE> 34
SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------
(In thousands except per unit amounts)
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues $ 12,217 $ 11,612 $ 11,947 $ 12,075 $ 11,986
Income before
extraordinary item 3,866 3,908 3,189 5,175 4,686
Income before
extraordinary item
allocated:
To General Partners 387 391 319 517 469
To Limited Partners 3,479 3,517 2,870 4,658 4,217
Per unit 58.07 58.69 47.91 77.73 70.38
Distributions attributable (1):
To General Partners 557 560 562 566 549
To Limited Partners 5,013 5,037 5,060 5,084 4,941
Per unit 83.66 84.06 84.46 84.85 82.46
Payment of mortgage
principal (2) 465 530 766 1,465 1,620
BALANCE SHEET DATA:
Total assets 105,608 104,024 101,072 98,518 101,429
Long-term obligations (3) 56,626 56,799 55,503 45,134 53,577
</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 obligations due after more than one year.
- 1 -
<PAGE> 35
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Results of Operations
Net income for the year ended December 31, 1997 decreased by
$489,000 as compared with the year ended December 31, 1996. The decrease in net
income was primarily due to increases in property and general and administrative
expenses and was partially offset by a decrease in interest expense and
depreciation. Lease revenues (rental income and interest income from direct
financing leases) were stable.
The increase in general and administrative costs was due to certain
administrative costs incurred in connection with structuring the Consolidation
of the Partnership into Carey Diversified LLC. The increase in property expenses
resulted from the Partnership's dispute with Red Bank Distribution, Inc. Such
expenses included the costs of litigation related to the Partnership's motions
to terminate the Red Bank lease and establishing reserves for uncollected rent
from Red Bank. The decrease in interest expense was due to the benefit of
refinancing the mortgage loans on the Childtime Childcare, Inc. and Furon
Company properties in December 1996 and June 1997, respectively, at lower rates
of interest as well as the continuing amortization of the Partnership's other
limited recourse mortgage loans. The decrease in depreciation expense was solely
due to the reclassification of an operating lease with Furon to a direct
financing lease during the year. On December 31, 1997, Corporate Property
Associates 8, L.P., an affiliate contributed its 32.28% tenants-in-common
interest in the Furon properties to a limited liability company in which the
Partnership owns the remaining 67.72% interest. As a result, the Partnership has
recorded as minority interest $1,685,000 representing the net assets and
liabilities contributed.
Net income for the year ended December 31, 1996 increased by
$1,986,000 as compared with net income for 1995. Excluding the effects of the
nonrecurring charge of $1,173,000 in 1995 for the writedown of a real estate
investment and the $45,000 gain on sale of real estate in 1996, income would
have reflected an increase of $768,000. The increase in income, as adjusted, was
primarily due to a decrease in property expenses and, to a lesser extent, a
decrease in interest expense and an increase in lease revenues.
The decrease in property expenses was due to the successful
resolution of the Partnership's dispute with AmerSig, Inc. (currently Quebecor
Printing Inc.) and, to a lesser extent, the end of the five-year period for
charging property leasing fees. In 1992, the assets of the predecessor company
of AmerSig were transferred to a creditor. In connection with the transfer, a
newly-formed subsidiary of the creditor entered into a short-term sublease for
the property. The Partnership opposed such action, asserting that it was
contrary to the lease, and, therefore not permissible. In May 1996, the
Partnership reached a settlement with the creditor and AmerSig in which all
litigation was withdrawn, the sublease was terminated and a new lease, with
rental terms equivalent to the prior lease with the predecessor company, was
executed.
The Amended Agreement of Limited Partnership provides that the
Partnership incur a leasing fee payable to the Corporate General Partner of 3%
of all pro rata cash basis rents attributable to the first five years of each
lease. Such five-year period expired on all of the Partnership's leases between
1994 and 1996, and contributed to the decrease in property expenses in 1996. The
decrease in interest expense was due to the commencement of principal payments
in December 1995 on the $20,000,000 mortgage loan on the Detroit Diesel
Corporation properties. The loan, which represented approximately 30% of the
Partnership's mortgage indebtedness at that time, is fully amortizing over 14
1/2 years. Lease revenues increased as a result of rent increases in the third
quarter of 1995 on the Partnership's leases with Detroit Diesel and Red Bank,
and, in the first quarter of 1996, on the Partnership's lease with Furon.
The Partnership is seeking to resolve its dispute with Red Bank. Red
Bank has had a history of late payment of rents and, to date, has refused to pay
assessments of additional rent (i.e., penalties and interest on late rent
payments) as provided for in its lease with the Partnership. The Partnership is
currently negotiating with Red Bank, and, has reached a short-term agreement
that will allow Red Bank to continue to occupy the property provided that it
pays an agreed-upon amount within 60 days (May 4, 1998). Such amounts include
payment of all overdue rents, additional assessments and reimbursement of the
Partnership's legal costs. Red Bank has accepted a judgment of termination. The
Partnership will have 60 days to enforce the judgment; however, the Partnership
will allow the judgment to lapse if Red Bank fulfills its commitments under the
short-term agreement. There is no assurance that Red Bank will fulfill the terms
of the agreement.
- 2 -
<PAGE> 36
In the event that Red Bank is evicted, the Partnership may elect to engage a
manager to operate the Red Bank warehouse property as a multi-tenant property.
The partnership has a 50% equity interest in a property leased to
Lockheed Martin Company. Lockheed Martin has elected to an extension term of
five years commencing August 1, 1998. Under the lease extension, the
Partnership's share of annual cash flow from the equity interest in the Lockheed
Martin lease will increase by $20,000. Subsequent to December 31, 1997, the
equity interest has been converted to an undivided interest as a
tenant-in-commmon.
Because of the long-term nature of the Partnership's net leases,
inflation and changes in prices have not unfavorably affected the Partnership's
net income or had an impact on the continuing operations of the Partnership's
properties. All of the Partnership's net leases have either periodic mandated
rent increases, sales overrides or periodic rent increases based on formulas
indexed to increases in the Consumer Price Index, and may have caps on such CPI
increases.
Financial Condition:
As of December 31, 1997, the Partnership had no cash on hand. The
decrease in the cash balance was due to the distribution paid in December in
connection with the Consolidation into Carey Diversified. Cash flow from
operations and cash distributions received from equity investments totaled
$6,919,000, and was $357,000 less than the funds needed to pay four quarterly
distributions and scheduled mortgage principal payment installments. An
affiliate of the General Partner has provided the Partnership with a short-term
loan of $200,000. The Partnership will pay such loan back from its operating
cash flow.
The distribution paid in December 1997 resulted from 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, 3,233 Limited Partnership Unitholders
of 58,990 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 total assets.
Limited Partners owning 928 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.
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 property
encumbered by such loan 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 or sell the property and
use the proceeds to satisfy the mortgage debt. The first priority loan on the
Red Bank property of $2,585,000 continues to be extended on a short-term basis.
The lender has continued to accept monthly payments and has not sought to
accelerate the loan. There is no assurance that the lender will not attempt to
demand payment of the outstanding balance. In addition, the mortgage loan of the
joint venture which is collateralized by the Lockheed Martin property matures in
May 1998 at which time a balloon payment of approximately $3,300,000 is due (of
which the Partnership's share is approximately $1,650,000). Carey Diversified is
in the process of obtaining a line of credit and may have sufficient borrowing
capacity to loan funds to the Partnership that would allow the Partnership to
pay off maturing loans if necessary. During 1997,
- 3 -
<PAGE> 37
the Partnership refinanced an existing mortgage loan on the Furon Company
properties at a lower rate of interest. The Partnership used the refinancing
proceeds of $8,600,000 to pay off the outstanding balance of $8,436,000 and pay
certain refinancing costs. As a result of such refinancing, annual cash flow
from the Furon property increased by $55,000.
Since December 31, 1997, the Partnership has paid its entire accrued
and unpaid leasing fee to the former Corporate General Partner, Ninth Carey
Corporate Property, Inc. Such amount as of December 31, 1997 was $1,509,000.
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 some spills from facility activities or
historical on-site 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, 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." 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. 130 is required to be adopted by 1998. The
Partnership is currently evaluating the impact, if any, of SFAS No. 130.
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 may
affect the Partnership.
- 4 -
<PAGE> 38
REPORT of INDEPENDENT ACCOUNTANTS
To the Partners of
Corporate Property Associates 9, L.P.:
We have audited the accompanying consolidated balance sheets of
Corporate Property Associates 9, L.P., a Delaware limited partnership, as of
December 31, 1996 and 1997, and the related consolidated 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 19 to 21 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 9, L.P., a Delaware limited partnership, as of December 31, 1996 and
1997, and the consolidated results of their operations and their 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> 39
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
CONSOLIDATED 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 $ 19,439,437 $ 16,822,591
Buildings 50,114,235 37,920,993
------------- -------------
69,553,672 54,743,584
Accumulated depreciation 11,169,434 9,619,781
------------- -------------
58,384,238 45,123,803
Net investment in direct financing leases 31,682,628 49,215,423
------------- -------------
Real estate leased to others 90,066,866 94,339,226
Equity investments 5,460,825 5,110,461
Cash and cash equivalents 1,436,555
Other assets, net of accumulated
amortization of $166,706 in 1996 and
$133,170 in 1997 and reserve for uncollected
rents of $287,744 in 1997 1,553,739 1,979,233
------------- -------------
Total assets $ 98,517,985 $ 101,428,920
============= =============
LIABILITIES:
Mortgage notes payable $ 57,669,975 $ 60,268,625
Note payable to affiliate 200,000
Accrued interest payable 347,772 328,054
Accounts payable and accrued expenses 78,500 518,345
Accounts payable to affiliates 1,648,110 1,844,469
Prepaid rental income 10,514 69,053
------------- -------------
Total liabilities 59,754,871 63,228,546
------------- -------------
Minority interest 1,685,066
-------------
Commitments and contingencies
PARTNERS' CAPITAL:
General Partners (1,273,499) (1,525,126)
Limited Partners (59,918
Limited Partnership Units issued
and outstanding) 40,036,613 38,040,434
------------- -------------
Total partners' capital 38,763,114 36,515,308
------------- -------------
Total liabilities and
partners' capital $ 98,517,985 $ 101,428,920
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 6 -
<PAGE> 40
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
CONSOLIDATED 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 $ 8,278,481 $ 8,345,949 $ 7,429,399
Interest income from direct
financing leases 3,604,478 3,665,739 4,518,960
Other interest income 63,651 62,890 37,827
------------ ------------ ------------
11,946,610 12,074,578 11,986,186
------------ ------------ ------------
Expenses:
Interest on mortgages 5,525,604 5,360,760 5,121,709
Depreciation 1,697,599 1,677,253 1,450,319
General and administrative 500,879 457,511 747,795
Property expense 459,569 69,081 615,794
Amortization 38,314 38,313 52,053
------------ ------------ ------------
8,221,965 7,602,918 7,987,670
------------ ------------ ------------
Income before income from equity
investments and gain on sale 3,724,645 4,471,660 3,998,516
Income from equity investments 637,806 658,416 687,423
Write-off of investment in limited partnership (1,173,143)
------------ ------------ ------------
Income before gain 3,189,308 5,130,076 4,685,939
Gain on sale of real estate 45,066
------------ ------------ ------------
Net income $ 3,189,308 $ 5,175,142 $ 4,685,939
============ ============ ============
Net income allocated to:
Individual General Partner $ 31,893 $ 51,751 $ 46,859
============ ============ ============
Corporate General Partner $ 287,038 $ 465,763 $ 421,735
============ ============ ============
Limited Partners $ 2,870,377 $ 4,657,628 $ 4,217,345
============ ============ ============
Net income per Unit
(59,918 Limited Partnership
Units outstanding) $ 47.91 $ 77.73 $ 70.38
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 7 -
<PAGE> 41
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
CONSOLIDATED 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 $ 41,658,722 $ (983,265) $ 42,641,987 $ 712
Distributions (5,616,322) (561,616) (5,054,706) (84)
Net income, 1995 3,189,308 318,931 2,870,377 48
------------ ------------ ------------ ------------
Balance, December 31, 1995 39,231,708 (1,225,950) 40,457,658 676
Distributions (5,643,736) (565,063) (5,078,673) (85)
Net income, 1996 5,175,142 517,514 4,657,628 78
------------ ------------ ------------ ------------
Balance, December 31, 1996 38,763,114 (1,273,499) 40,036,613 669
Distributions (6,903,915) (690,391) (6,213,524) (104)
Accrued preferred distribution (29,830) (29,830)
Net income, 1997 4,685,939 468,594 4,217,345 70
------------ ------------ ------------ ------------
Balance, December 31, 1997 $ 36,515,308 $ (1,525,126) $ 38,040,434 $ 635
============ ============ ============ ============
</TABLE>
(a) Based on 59,918 Units issued and outstanding.
The accompanying notes are an integral part of the financial statements.
- 8 -
<PAGE> 42
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
CONSOLIDATED 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 $ 3,189,308 $ 5,175,142 $ 4,685,939
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,735,913 1,715,566 1,502,372
Cash receipts on operating and direct financing leases
less than straight-line adjustments and
amortization of unearned income (209,275) (121,806) (72,190)
Write-off of investment in limited partnership 1,173,143
Gain on sale of real estate (45,066)
Provision for uncollected rents 284,853
Net change in operating assets and liabilities 32,471 (561,534) 167,349
----------- ----------- -----------
Net cash provided by operating activities 5,921,560 6,162,302 6,568,323
----------- ----------- -----------
Cash flows from investing activities:
Cash distributions in excess of income from
equity investments 463,274 388,329 350,364
Proceeds from sale of real estate 928,310
----------- ----------- -----------
Net cash provided by investing activities 463,274 1,316,639 350,364
----------- ----------- -----------
Cash flows from financing activities:
Distributions to partners (5,616,322) (5,643,736) (6,779,152)
Proceeds from note payable to affiliate 200,000
Proceeds from mortgages 1,289,340 8,600,440
Prepayment of mortgage payable (1,880,341) (8,436,142)
Deferred financing costs (163,897)
Cash overdraft (156,903)
Payment of mortgage principal (766,462) (1,465,153) (1,619,588)
----------- ----------- -----------
Net cash used in financing activities (6,382,784) (7,699,890) (8,355,242)
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents 2,050 (220,949) (1,436,555)
Cash and cash equivalents, beginning of year 1,655,454 1,657,504 1,436,555
----------- ----------- -----------
Cash and cash equivalents, end of year $ 1,657,504 $ 1,436,555 $ --
=========== =========== ===========
Supplemental Schedule of noncash investing and financing activity:
A. Accrued preferred distribution $ 29,830
===========
</TABLE>
- 9 -
<PAGE> 43
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
CONSOLIDATED STATEMENTS of CASH FLOWS
For the years ended December 31, 1995, 1996 and 1997 (Continued)
B. On December 31, 1997, the Partnership contributed its 67.72% interest
as a tenant-in-common in properties leased to Furon Company to a
limited liability company in which Corporate Property Associates 8,
L.P. ("CPA(R):8"), an affiliate, owns the remaining minority interest.
For financial reporting purposes, the Partnership has assumed assets
and liabilities from CPA(R):8 as follows:
<TABLE>
<S> <C>
Net Investment in direct financing lease 5,628,499
Mortgage note payable (4,053,940)
Other assets and liabilities, net 110,507
-----------
Minority interest $ 1,685,066
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 10 -
<PAGE> 44
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
NOTES to CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies:
Basis of Consolidation:
The consolidated financial statements include the accounts of
Corporate Property Associates 9, L.P. (the "Partnership") and a
majority interest in a limited liability company. On December 31,
1997, the Partnership transferred its tenants-in-common interest in
properties leased to Furon Company to the limited liability company,
FON LLC ("FON"). The Partnership has a 67.72% interest in FON with
Corporate Property Associates 8, L.P. ("CPA(R): 8"), an affiliate,
owning a minority interest of 32.28%. All material inter-entity
transactions have been eliminated.
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.
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 - 30 years.
Continued
- 11 -
<PAGE> 45
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
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 financial institutions.
Equity Investments:
The Partnership's interests in a joint venture and two limited
partnerships are accounted for under the equity method; i.e. at
cost, increased or decreased by the Partnership's share of earnings
or loss and reduced by distributions.
Other Assets:
Included in other assets are deferred rental income, deferred charges
and deferred costs of Consolidation. Deferred rental income is the
aggregate difference for operating method leases between scheduled
rents which vary during the lease term and rents 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 (see Note 14) 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.
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. Therefore, no provision for income taxes is made
in the financial statements of the Partnership.
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 17, 1988 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, 2050, 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, Ninth
Carey Corporate Property, Inc. ("Ninth Carey")), and the Limited
Partners were allocated 90% of the profits and losses as well as
distributions of Distributable Cash From Operations, as defined. The
partners are also to receive net proceeds from the sale of
Partnership properties as defined in the Agreement. Effective
January 1, 1998, in connection with the merger of the Partnership
with a subsidiary partnership of Carey Diversified LLC ("Carey
Diversified"), 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
Continued
- 12 -
<PAGE> 46
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
distributable cash, and two special limited partners, Carey
Management LLC ("Carey Management") and William Polk Carey, are
allocated 9% and 1% of the profits and losses and distributable
cash, respectively.
In connection with the merger with Carey Diversified and its 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 $29,830, 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, including the per share value
of Carey Diversified shares received, 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, Ninth Carey was entitled to receive a property
leasing fee, generally based on rents received for the first five
years of each lease, 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 to provide administrative services
necessary to the operation of the Partnership. Effective January 1,
1998, the reimbursements are payable to Carey Management, an
affiliate of Carey Diversified. Property leasing fee and general and
administrative expense reimbursements incurred are summarized as
follows:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C>
Property leasing fee $131,703 $ 7,354
General and administrative
expense reimbursements 93,245 109,085 $281,693
-------- -------- --------
$224,948 $116,439 $281,693
======== ======== ========
</TABLE>
In 1995, 1996 and 1997 fees aggregating $49,645, $64,543 and $54,906,
respectively, were incurred for legal services performed by a firm
in which the Secretary, until July 1997, of the Corporate General
Partner 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 $119,379,
$95,490 and $87,420, respectively.
The Partnership's ownership interests in certain properties are
jointly held with affiliated entities. The interests are held as
tenants-in-common or joint ventures and limited partnerships and
limited liability company interests with such interests in jointly
held properties ranging from 18.54% to 80%. The Partnership accounts
for its undivided interests in assets and liabilities relating to
tenants-in-common interests on a proportional basis.
Continued
- 13 -
<PAGE> 47
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
NOTES to CONSOLIDATED 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 $6,232,000
in 1998; $6,123,000 in 1999; $6,056,000 in each of the years 2000
through 2002; and aggregate approximately $78,728,000 through 2016.
Contingent rents were approximately $482,000 in 1995, $527,000 in 1996
and $415,000 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 $ 74,904,918 $ 93,614,834
Unguaranteed residual value 22,808,279 40,246,896
------------ ------------
97,713,197 133,861,730
Less, Unearned income 66,030,569 84,646,307
------------ ------------
$ 31,682,628 $ 49,215,423
============ ============
</TABLE>
Scheduled future minimum rents, exclusive of renewals, under
noncancellable direct financing leases amount to approximately
$5,914,000 in 1998; $5,959,000 in both 1999 and 2000; $5,978,000 in
2001 and $6,037,000 in 2002; and aggregate approximately $93,615,000
through 2016.
Contingent rents were approximately $3,000 in 1996 and $47,000 in
1997.
6. Mortgage Notes Payable:
Mortgage notes payable, all of which are limited recourse obligations,
are collateralized by the assignment of various leases and by real
property with a gross amount of approximately $101,029,000,
before accumulated depreciation. As of December 31, 1997, mortgage
notes payable bear interest at rates ranging from 7.16% to 11.85%
per annum and mature from 1998 to 2020.
Scheduled principal payments, including mortgages subject to
acceleration, during each of the next five years following December
31, 1997 and thereafter are as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1998 $ 6,691,612
1999 9,097,416
2000 1,692,152
2001 5,913,299
2002 8,007,955
Thereafter 28,866,191
-----------
Total $60,268,625
===========
</TABLE>
Interest paid was $5,530,133, $5,389,486 and $5,101,991 in 1995, 1996
and 1997, respectively.
Continued
- 14 -
<PAGE> 48
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
7. Distributions to Partners:
Distributions are declared and paid to partners quarterly and are
summarized as follows:
<TABLE>
<CAPTION>
Distributions Paid
Year Ending and Payable to Distributions Paid to Limited Partners'
December 31, General Partners Limited Partners Per Unit Amount
------------ ---------------- ---------------- ---------------
<S> <C> <C> <C>
1995 $561,616 $5,054,706 $ 84.36
======== ========== =======
1996 $565,063 $5,078,673 $ 84.76
======== ========== =======
1997 $690,391 $6,213,524 $103.70
======== ========== =======
</TABLE>
Distributions for 1997 include distributions of $1,122,868 to Limited
Partners and $124,763 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 accounting differences is as
follows:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Net income per Statements of Income $ 3,189,308 $ 5,175,142 $ 4,685,939
Excess tax depreciation (695,277) (702,705) (916,721)
Other 138,040 65,021 (395,383)
Write-off of investment in limited partnership 1,173,143
----------- ----------- -----------
Income reported for Federal income
tax purposes $ 3,805,214 $ 4,537,458 $ 3,373,835
=========== =========== ===========
</TABLE>
9. Industry Segment Information:
The Partnership's operations consist of the investment in and the
leasing of industrial and commercial real estate. The financial
reporting sources of the leasing revenues are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Per Statements of Income:
Rental income from operating leases $ 8,278,481 $ 8,345,949 $ 7,429,399
Interest income from direct financing leases 3,604,478 3,665,739 4,518,960
Adjustments:
Share of rental income from equity
investees' operating leases 2,494,339 2,282,594 2,293,243
----------- ----------- -----------
$14,377,298 $14,294,282 $14,241,602
=========== =========== ===========
</TABLE>
Continued
- 15 -
<PAGE> 49
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
In 1995, 1996 and 1997, the Partnership earned its share of net
leasing revenues from its direct and indirect ownership of real
estate from the following lease obligors:
<TABLE>
<CAPTION>
1995 % 1996 % 1997 %
----------- --- ----------- --- ----------- ---
<S> <C> <C> <C> <C> <C> <C>
Detroit Diesel Corporation $ 2,796,455 19% $ 2,916,308 20% $ 2,916,308 20%
Dr Pepper Bottling
Company of Texas 1,999,000 14 1,999,000 14 1,999,000 14
Furon Company 1,719,105 12 1,712,336 12 1,636,148 12
Information Resources, Inc. (a) 1,392,937 10 1,457,788 10 1,457,788 10
Red Bank Distribution, Inc. 1,349,761 9 1,400,567 10 1,400,567 10
Orbital Sciences Corporation 1,176,361 8 1,176,361 8 1,176,361 8
Quebecor Printing Inc.
(formerly AmerSig, Inc.) 1,169,008 8 1,123,392 8 1,101,105 8
NVR. Inc. 1,016,279 7 1,026,734 7 1,032,225 7
The Titan Corporation (a) 459,525 3 459,525 3 470,174 3
Childtime Childcare, Inc. 381,287 3 381,287 3 410,942 3
Lockheed Martin Corporation (a) 365,281 3 365,281 3 365,281 3
Federal Express Corporation 177,491 1 177,491 1 177,491 1
PepsiCo, Inc. 98,212 1 98,212 1 98,212 1
Xerox Corporation (a) 276,596 2
----------- --- ----------- --- ----------- ---
$14,377,298 100% $14,294,282 100% $14,241,602 100%
=========== === =========== === =========== ===
</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.
10. Equity Investments:
The Partnership owns equity interests in a joint venture and two
limited partnerships as limited partner with affiliates which own
the remaining interests. An investment in a third limited
partnership was written off in September 1995. The joint venture and
limited partnerships own land and buildings which are net leased to
corporate tenants.
Summarized financial information for the joint venture and the limited
partnerships is as follows:
<TABLE>
<CAPTION>
(In thousands)
Lockheed Martin Titan Information
Lease Obligor: Corporation Corporation Resources, Inc. Total
- ------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Ownership interest: 50% 18.54% 33.33%
December 31, 1997:
Assets (a) $ 5,930 $17,352 $30,314 $53,596
Liabilities 3,336 10,436 22,550 36,322
Capital 2,594 6,916 7,764 17,274
December 31, 1996:
Assets (a) 6,354 17,639 31,080 55,073
Liabilities 3,417 10,745 22,770 36,932
Capital 2,937 6,894 8,310 18,141
</TABLE>
Continued
- 16 -
<PAGE> 50
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1995(b) 1996 1997
------- ---- ----
<S> <C> <C> <C>
Revenue $ 8,255 $ 7,583 $ 7,640
Expenses 13,487 5,228 5,164
-------- -------- --------
Net income (loss) $ (5,232) $ 2,355 $ 2,476
======== ======== ========
</TABLE>
(a) Net of accumulated depreciation and amortization.
(b) Included in the operating results is a writedown of a property to fair
value. At that time the Partnership wrote off its investment in the
limited partnership owning the property (see Note 11).
Subsequent to December 31, 1997, the 50% equity interest in the joint
venture which leases land and building to Lockheed Martin
Corporation has been converted to an undivided interest as a
tenant-in-common.
11. Property in Stamford, Connecticut:
In January 1991, the Partnership and Corporate Property Associates 10
Incorporated ("CPA(R):10"), an affiliate, formed a limited
partnership, Hope Street Connecticut Limited Partnership ("Hope
Street"), for the purpose of purchasing land and an office building
in Stamford, Connecticut for $11,000,000. The Partnership
contributed $1,500,000 to Hope Street for a 31.915% limited
partnership interest and CPA(R):10 contributed $3,200,000 for a
68.085% general partnership interest. Hope Street used this equity
and assumed an existing limited recourse mortgage loan of $6,300,000
collateralized by the property and also assumed an existing net
lease, as lessor, with Xerox Corporation ("Xerox"), as lessee. The
Xerox lease provided for annual rent of $1,300,000 with an initial
term through August 31, 1995 and two five-year renewal terms at
Xerox's option. The mortgage loan was scheduled to mature on
September 1, 1995 with a balloon payment of $6,300,000 due at that
time. Based on its 31.915% interest, the Partnership accounted for
its investment in the limited partnership under the equity method.
In August 1995, Xerox vacated the property at the end of the initial
term. Hope Street was unsuccessful in its efforts to remarket the
property and find a new lessee even at a substantially lower annual
rental. Given the conditions of the Stamford market in 1995, the
general partner concluded that the net realizable value of the
property was less than the outstanding balance of the mortgage loan.
Under those circumstances, the general partner considered various
alternatives, including negotiating with the lender to extend the
maturity, restructuring the loan or satisfying the balloon payment
obligation at a substantial discount or selling the property back to
the
Continued
- 17 -
<PAGE> 51
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
lender for $10,000 in excess of the mortgage balance; however, the
lender did not agree to any of these proposals. Since the
Partnership did not anticipate receiving any further cash
distributions from Hope Street and the Partnership did not have any
obligation to Hope Street, the Partnership wrote off its remaining
equity investment in Hope Street and recognized a charge of
$1,173,143 in 1995 even though the limited partnership had not been
dissolved.
In December 1996, the Boards of Directors of the Corporate General
Partner of the Partnership and CPA(R):10 approved a transaction
which resulted in CPA(R):10 transferring its interests in Hope
Street to the Partnership. The lender had advised the Partnership of
its intention to foreclose on the property and, in September 1997,
the foreclosure proceeding was completed.
12. Gain on Sale of Real Estate:
In January 1990, the Partnership and CPA(R):8 purchased nine
properties as tenants-in-common with 67.72% and 32.28% ownership
interests, respectively, and entered into a master lease with Furon
Company ("Furon"). In August 1993, the Partnership and CPA(R):8
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):8 that it
was exercising a purchase option which had been granted at the time
the sublease was agreed to.
On September 9, 1996, the Partnership and CPA(R):8 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 $50,790 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 $928,310 of
which $604,184 was used to pay a mandatory prepayment on the
mortgage loan. In connection with the sale, the Partnership
recognized a gain of $45,066.
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 was $56,505,000 and $59,250,000 at December 31, 1996 and
1997, respectively. 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 holds warrants to purchase 18,540 common shares of The
Titan Corporation ("Titan") at an exercise price of $5.30 per common
share with such exercise period ending July 11, 1998. The quoted
price of Titan's common stock, as of December 31, 1997, was $6.25.
The warrants are carried on the books at a nominal cost.
Continued
- 18 -
<PAGE> 52
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
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, 3,233 holders owning 58,990 of the 59,918 limited
partnership units exchanged such units for 3,104,644 Listed Shares
with 41 holders of the remaining 928 limited partnership units
exchanging such units for Subsidiary Partnership Units. The General
Partners received 177 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.
15. Accounting Pronouncements:
In June 1997, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income." 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. 130 is required to be adopted by 1998. The Partnership is
currently evaluating the impact, if any, of SFAS No. 130.
- 19 -
<PAGE> 53
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
SCHEDULE OF REAL ESTATE and ACCUMULATED DEPRECIATION
as of December 31, 1997
<TABLE>
<CAPTION>
Initial Cost to Cost
Partnership Capitalized
---------------------------- Subsequent to
Description Encumbrances Land Buildings Acquisition (a)
- ------------------------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating Method:
Land leased to
NVR, Inc. $ 1,828,657 $ 3,342,854 $ 23,850
Land leased to
Dr Pepper Bottling
Company of Texas 2,002,237 3,675,870 16,937
Land and engineering
fabrication facility
leased to Orbital
Sciences Corporation 4,247,094 1,837,983 $ 3,878,540 3,650,853
Land and distribution
facility leased to
PepsiCo, Inc. 156,327 829,488 15,075
Land and manufacturing
facility leased to Quebecor
Printing Inc., (formerly
AmerSig, Inc.) 4,527,212 2,250,000 6,750,000 9,674
Distribution facility
leased to Federal
Express Corporation 347,544 1,551,456 29,939
Land and manufacturing
facility leased to
Detroit Diesel
Corporation 18,126,713 3,989,160 21,210,840 6,746
Land leased to Childtime
Childcare, Inc. 518,986 1,170,448
----------- ----------- ----------- -----------
$31,250,899 $16,770,186 $34,220,324 $ 3,753,074
=========== =========== =========== ===========
<CAPTION>
Life On which
Gross Amount at which Depreciation
Carried at Close of Period (c)(d) in Latest
--------------------------------------- Accumulated Statement of Income
Description Land Buildings Total Depreciation (d) Date Acquired is Computed
----------- ---- --------- ----- ---------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Operating Method:
Land leased to
NVR, Inc. $ 3,366,704 $ 3,366,704 May 16, 1989 N/A
Land leased to
Dr Pepper Bottling
Company of Texas 3,692,807 3,692,807 June 30,1989 N/A
Land and engineering
fabrication facility
leased to Orbital
Sciences Corporation 1,838,246 $ 7,529,130 9,367,376 $ 1,808,498 September 29, 1989 30 yrs.
Land and distribution
facility leased to
PepsiCo, Inc. 158,717 842,173 1,000,890 228,117 November 16, 1989 30 yrs.
Land and manufacturing
facility leased to Quebecor
Printing Inc., (formerly
AmerSig, Inc.) 2,252,419 6,757,255 9,009,674 1,803,046 December 29, 1989 30 yrs.
Distribution facility
leased to Federal
Express Corporation 353,022 1,575,917 1,928,939 446,808 June 30, 1989 30 yrs.
Land and manufacturing
facility leased to
Detroit Diesel
Corporation 3,990,228 21,216,518 25,206,746 5,333,512 June 15, 1990 30 yrs.
Land leased to Childtime
Childcare, Inc. 1,170,448 1,170,448 January 4, 1991 N/A
----------- ----------- ----------- -----------
$16,822,591 $37,920,993 $54,743,584 $ 9,619,981
=========== =========== =========== ===========
</TABLE>
See accompanying notes to Schedule.
- 20 -
<PAGE> 54
CORPORATE PROPERTY ASSOCIATES 9, L.P.,
a Delaware limited partnership
SCHEDULE OF REAL ESTATE and ACCUMULATED DEPRECIATION
as of December 31, 1997
<TABLE>
<CAPTION>
Cost
Initial Cost to Capitalized Increase In
Partnership Subsequent to Net
Description Encumbrances Land Buildings Acquisition (a) Investment (b)
- ------------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Direct Financing method:
Office facility leased
to NVR, Inc. $ 4,871,343 $ 8,357,146 $ 59,625 $ 551,758
Office/bottling/
distribution facility
leased to Dr Pepper
Bottling Company
of Texas 5,677,996 10,424,130 48,030
Land and office/ware-
house facility leased
to Red Bank
Distribution, Inc. 5,161,768 $ 1,572,296 9,065,704 11,302
Day care facilities
leased to Childtime
Childcare, Inc. 747,947 1,686,816
Land and industrial/
warehouse/office
facilities leased to
Furon Company 12,558,672 2,835,955 12,937,761 86,955 1,577,945
----------- ----------- ----------- ----------- -----------
$29,017,726 $ 4,408,251 $42,471,557 $ 205,912 $ 2,129,703
=========== =========== =========== =========== ===========
<CAPTION>
Gross Amount at which
Carried at Close of Period (c)(d)
---------------------------------- Statement of
Description Total Date Acquired
----------- ----- -------------
<S> <C> <C>
Direct Financing method:
Office facility leased
to NVR, Inc. $ 8,968,529 May 16, 1989
Office/bottling/
distribution facility
leased to Dr Pepper
Bottling Company
of Texas 10,472,160 June 30, 1989
Land and office/ware-
house facility leased
to Red Bank
Distribution, Inc. 10,649,302 July 20, 1990
Day care facilities
leased to Childtime
Childcare, Inc. 1,686,816 January 4, 1991
Land and industrial/
warehouse/office
facilities leased to
Furon Company 17,438,616 January 29, 1990
-----------
$49,215,423
===========
</TABLE>
See accompanying notes to Schedule.
- 21 -
<PAGE> 55
CORPORATE PROPERTY ASSOCIATES 9, 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 as well as capital expenditures
for improvements on the building leased to Orbital Sciences Corporation.
(b) The increase in net investment in direct financing leases is (i) due to
the amortization of unearned income producing a periodic rate of return
which at times may be greater or less than the lease payments received,
(ii) accumulated depreciation from an operating lease that was
reclassified, and (iii) the effect of assuming the minority interest of a
direct financing lease in connection with the formation of a limited
liability company which is consolidated by the Partnership for financial
reporting purposes.
(c) At December 31, 1997, the aggregate cost of real estate owned for Federal
income tax purposes is $98,825,264.
(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 $ 70,604,089 $ 69,553,672
Reclassification to net investment
in direct financing leases (14,810,088)
Sale of land and buildings (1,050,417)
------------ ------------
Balance at close of year $ 69,553,672 $ 54,743,584
============ ============
</TABLE>
<TABLE>
<CAPTION>
Reconciliation of Accumulated Depreciation
December 31,
-------------------------------
1996 1997
---- ----
<S> <C> <C>
Balance at beginning
of year $ 9,659,357 $ 11,169,434
Disposition (167,176)
Reclassification to net investment
in direct financing leases (2,999,972)
Depreciation expense 1,677,253 1,450,319
------------ ------------
Balance at close of
year $ 11,169,434 $ 9,619,781
============ ============
</TABLE>
- 22 -
<PAGE> 56
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)
NVR, INC. Office Pittsburgh, Ownership of land
Buildings Pennsylvania and buildings (1)
FEDERAL EXPRESS Distribution Corpus Christi, Ownership of land
CORPORATION Facility Texas and buildings
DR PEPPER BOTTLING Bottling/ Irving and Ownership of a 50%
COMPANY OF TEXAS Distribution/ Houston, interest in land
Office Texas and buildings (1)
Facilities
ORBITAL SCIENCES Engineering & Chandler, Ownership of a 58%
CORPORATION Fabrication Arizona interest in land
Facility and buildings (1)
PEPSICO, INC. Distribution Houston, Ownership of land
Facility Texas and buildings
QUEBECOR PRINTING Office/ Dekalb County, Ownership of a 73.57%
INC. (formerly AMERSIG, Manufacturing Georgia interest in land
INC.) Facility and buildings (1)
</TABLE>
- 23 -
<PAGE> 57
<TABLE>
<CAPTION>
NAME OF LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
- ------- ---------------- -------- --------
<S> <C> <C> <C>
FURON Manufacturing, New Haven, Ownership of a 67.72%
COMPANY Office and Connecticut; interest in a limited
Warehouse Mickelton, liability company which
Facilities New Jersey; owns land
Aurora (2) and Mantua, and buildings (1)
Ohio and Bristol,
Rhode Island
DETROIT DIESEL Office, Warehouse, Detroit, Ownership of a 80%
CORPORATION Manufacturing, Truck Michigan interest in land
Repair and Waste and buildings (1)
Treatment Plant
RED BANK Warehouse Fairfax, Ohio Ownership of land
DISTRIBUTION, INC. and buildings (1)
INFORMATION Office Buildings Chicago, Ownership of a 33.33%
RESOURCES INC. Illinois interest in a limited
partnership owning land
and buildings (1)
CHILDTIME Childcare Westland (2) and Ownership of a 33.93%
CHILDCARE, INC. Centers Sterling Heights, interest in land and
- 12 locations Michigan; Chandler buildings (1)
and Tuscon, Arizona;
Duncanville, Carrollton
and Lewisville, Texas;
Alhambra, Chino,
Garden Grove and
Tustin/Santa Ana,
California
TITAN Office Building San Diego, Ownership of a 18.54%
CORPORATION California interest in a limited
partnership owning land
and a building (1)
</TABLE>
(1) These properties are encumbered by mortgage notes payable.
- 24 -
<PAGE> 58
MARKET FOR THE PARTNERSHIP'S EQUITY AND RELATED
UNITHOLDER MATTERS
- --------------------------------------------------------------------------------
As of December 31, 1997, there were 3,274 holders of record of the
Limited Partnership Units of the Partnership. On January 1, 1998, 3,233 holders
of Limited Partnership Units exchanged such units for interests in Carey
Diversified LLC and 41 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 $ 21.05 $ 21.15 $ 21.24
Second quarter 21.08 21.18 21.24
Third quarter 21.10 21.20 21.24
Fourth quarter 21.13 21.23 39.98(a)
-------- -------- --------
$ 84.36 $ 84.76 $ 103.70
======== ======== ========
</TABLE>
(a) Includes distributions of $21.24 and $18.74 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 40,017 66.79% 814 1.36% 197 .33% 18,890 31.52%
</TABLE>
<TABLE>
<CAPTION>
Subsidiary
Listed Shares Partnership Units
------------- -----------------
<S> <C> <C>
Number of Units
Electing 58,990 928
</TABLE>
- 25 -
<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> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 103,959,007
<DEPRECIATION> 9,619,781
<TOTAL-ASSETS> 101,428,920
<CURRENT-LIABILITIES> 2,759,921
<BONDS> 60,468,625
0
0
<COMMON> 0
<OTHER-SE> 36,515,308
<TOTAL-LIABILITY-AND-EQUITY> 101,428,920
<SALES> 0
<TOTAL-REVENUES> 11,986,186
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,581,108
<LOSS-PROVISION> 284,853
<INTEREST-EXPENSE> 5,121,709
<INCOME-PRETAX> 4,685,939
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,685,939
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,685,939
<EPS-PRIMARY> 70.38
<EPS-DILUTED> 70.38
</TABLE>
