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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
For the year ended DECEMBER 31, 1999
of
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
CIP(R)
A MARYLAND Corporation
IRS Employer Identification No. 13-3602400
SEC File Number 0-20016
50 ROCKEFELLER PLAZA,
NEW YORK, NEW YORK 10020
(212) 492-1100
CIP(R) has SHARES OF COMMON STOCK registered pursuant to Section 12(g) of the
Act.
CIP(R) is not registered on any exchanges.
CIP(R) does not have any Securities registered pursuant to Section 12(b) of
the Act.
CIP(R) is unaware of any delinquent filers pursuant to Item 405 of Regulation
S-K.
CIP(R) (1) has filed all reports required by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for 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.
CIP(R) has no active market for common stock at March 31, 2000.
Non-affiliates held 20,807,696 shares of common stock, $.001 Par Value
outstanding at March 31, 2000.
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PART I
Item 1. Business.
Carey Institutional Properties Incorporated ("CIP(R)") is a reaL estate
investment trust ("REIT") that acquires and owns commercial properties leased to
companies nationwide, primarily on a triple net basis. As of December 31, 1999,
CIP(R)'s portfolio consisted of 95 properties leased to 39 tenants and totaling
more than 9.2 million square feet.
CIP(R)'s core investment strategy is to purchase and own properties leased
to a variety of companies on a single tenant, net lease basis. These leases
generally place the economic burden of ownership on the tenant by requiring them
to pay the costs of maintenance, insurance, taxes, structural repairs and other
operating expenses. CIP(R) also generally includes in its leases:
- - clauses providing for mandated rent increases or periodic rent
increases tied to increases in the consumer price index or other
indices or, when appropriate, increases tied to the volume of sales at
the property;
- - covenants restricting the activity of the tenant to reduce the risk of
a change in credit quality;
- - indemnification of CIP(R) for environmental and other liabilities; and
- - guarantees from parent companies or other entities.
CIP(R) was formed as a Maryland corporation on February 15, 1991. Between
August 1991 and August 1993, CIP(R) sold a total of 14,167,581 shares of common
stock for a total of $141,675,810 in gross offering proceeds. In 1995, CIP(R)'s
board of directors authorized a private placement of common stock. Through
December 31, 1999, CIP(R) has issued a total of 6,250,262 shares for a total of
$74,440,000 in connection with the private placement. Through December 31, 1999,
CIP(R) has also issued 905,109 shares through its dividend reinvestment plan.
These proceeds have been combined with limited recourse mortgage debt to
purchase CIP(R)'s property portfolio. As a REIT, CIP(R) is not subject to
federal income taxatioN as long as it satisfies certain requirements relating to
the nature of its income, the level of its distributions and other factors.
Carey Property Advisors provides both strategic and day-to-day management
for CIP(R), including acquisition services, research, investment analysis, asset
management, capital funding services, disposition of assets, investor relations
and administrative services. Carey Property Advisors also provides office space
and other facilities for CIP(R). Carey Property Advisors has dedicated senior
executives in each area of its organization so that CIP(R) functions as a fully
integrated operating company. CIP(R) pays asset management fees to Carey
Property Advisors and pays certain transactional fees. CIP(R) also reimburses
Carey Property Advisors foR certain expenses. Carey Property Advisors also
serves in this capacity for Corporate Property Associates 10 Incorporated
("CPA(R):10"), Corporate Property Associates 12 Incorporated ("CPA(R):12") and
Corporate Property Associates 14 Incorporated ("CPA(R):14"). On November 29,
1999, the Board of Directors of CIP(R) approved a pending change of control of
Carey Property Advisors. If the change in control is effectuated, Carey Property
Advisors will become a wholly-owned subsidiary of W.P. Carey & Co. LLC
(currently known as Carey Diversified LLC), a publicly-traded company on the New
York Stock Exchange and Pacific Exchange under the symbol "WPC" ("CDC" prior to
the change of control). This change of control will be completed upon the
approval of the shareholders of Carey Diversified LLC.
CIP(R)'s principal executive offices are located at 50 Rockefeller Plaza,
New York, NY 10020 and its telephone number is (212) 492-1100. As of December
31, 1999, CIP(R) had no employees. An affiliate of Carey Property Advisors
employs 20 individuals who perform services for CIP(R).
BUSINESS OBJECTIVES AND STRATEGY
CIP(R)'s objectives are to:
- - pay quarterly dividends at an increasing rate that for taxable
shareholders may be partially free from current taxation;
- - purchase and own a portfolio of real estate that will increase in
value; and
- - increase the equity in its real estate by making regular mortgage
principal payments.
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CIP(R) seeks to achieve these objectives by purchasing and holding
industrial and commercial properties each net leased to a single corporate
tenant. CIP(R)'s portfolio is diversified by geography, property type and by
tenant.
DEVELOPMENTS DURING 1999
CIP(R) and CPA(R):10, an affiliate, owned as tenants-in-common properties
in Ruston, Louisiana, Jonesboro and Little Rock, Arkansas that had been leased
to Harvest Foods, Inc. The properties had been vacant since the termination of
the Harvest lease in 1997. The properties were sold in 1999 with CIP(R)
receiving net proceeds on the sale of approximately $1,128,000.
In January 1999, CalComp Technology, Inc., the lessee of a property in
Austin, Texas in which CIP(R) and CPA(R):10 hold 50% ownership interests as
tenants-in-common, announced its intention to liquidate and stopped paying its
rent. In response to CalComp's action, CIP(R) and CPA(R):10 initiated litigation
against CalComp seeking judgement for all unpaid and future rents plus
associated costs. CalComp agreed to pay to CIP(R) and CPA(R):10 a total of
$2,500,000 ($1,250,000 to each) and CIP(R) and CPA(R):10 agreed to withdraw
their lawsuits with prejudice and to terminate the CalComp lease. The limited
recourse mortgage loan collateralized by the Austin property matured in August
1999 at which time a scheduled balloon payment was due. In October 1999, CIP(R)
used the lease termination proceeds to reduce the outstanding balance on the
loan from $1,559,923 to $309,923 and negotiated an agreement to extend the
maturity of the loan until August 2000.
On February 5, 1999, CIP(R) purchased land and buildings in Texarkana,
Texas and Orem, Utah for $7,748,691 and entered into a net lease agreement with
Humco Holding Group, Inc. The Humco lease provides for a seventeen year lease
term at an annual rent of $825,100, with rent increases every two years based on
a formula indexed to increases in the Consumer Price Index. Each increase is
capped at a maximum of 3% for the first five years, 4%, for the next five years,
and 5% thereafter. The lease provides for a purchase option, exercisable on the
seventh, twelfth and seventeenth anniversary dates of the lease, and is also
exercisable in the event 80% or more of Humco's voting stock is acquired by a
third party, subject to certain conditions. The purchase option is exercisable
at the greater of (a) the fair value of the properties, as defined, and (b)
CIP(R)'s acquisition cost for the properties plus any prepayment premium on any
mortgage loan on the Humco properties. In connection with the purchase of the
Humco property, CIP(R) obtained $4,200,000 of limited recourse financing. The
loan is collateralized by the Humco properties and an assignment of the Humco
lease, and bears interest at an annual rate of 7.75% with monthly interest and
principal payments of $31,724, based on a 25-year amortization schedule. The
interest rate will reset on the fifth anniversary of the loan to 3.25% plus the
average yield on U.S. Treasury instruments adjusted to a maturity of five years.
The loan matures in March 2009 when a balloon payment will be due. The loan may
be prepaid at any time, in whole or in part, without a prepayment penalty.
On March 31, 1999, CIP(R) and two affiliates, CPA(R):12 and CPA(R):14,
through a newly-formed entity, in which CIP(R) and the two affiliates each own
1/3 interests, purchased land and building in Dallas, Texas for $39,790,500 and
entered into a net lease with Compucom Systems, Inc. The Compucom Systems lease
has an initial term of 20 years with two five-year renewal terms at Compucom's
option. The lease initially provides for annual rent of $3,914,000 with rent
increases every three years based on a formula indexed to increases in the CPI,
with each increase capped at 13.3%. In connection with the purchase, the
jointly-owned entity obtained a limited recourse mortgage loan of $23,000,000.
The loan is collateralized by the Compucom property and an assignment of the
Compucom lease and bears interest at an annual interest rate of 7.215% with
monthly payments of interest and principal of $165,727 based on a 25-year
amortization schedule. The loan matures in April 2009 when a balloon payment
will be due. A prepayment premium will apply if the loan is prepaid prior to six
months before maturity.
On April 16, 1999, CIP(R) purchased a property in Golden, Colorado for
$6,620,942 and assumed existing leases with Bolder Technology, Inc. and
Northstar Computer Forms, Inc. The Bolder lease currently provides for annual
rent of $533,490 with rent increases scheduled in 2000, 2003, and 2007. Each
rent increase will be based on a formula indexed to increases in the Consumer
Price Index subject to maximum 4% annual increases. The Northstar lease provides
for annual rent of $110,141. The Bolder and Northstar leases have remaining
terms through April 2008 and September 2005, respectively. On June 17, 1999
CIP(R) obtained $3,500,000 of limited recourse mortgage financing collateralized
by a deed of trust on the property and lease assignments. The mortgage loan
provides for monthly payments of principal and interest of $24,833 at an annual
interest rate of 7.65% based on a 30-year amortization schedule. The loan
matures on July 1, 2009 at which time a balloon payment of approximately
$3,053,000 will be due. The loan is prepayable at any time, subject to a
prepayment premium.
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On May 12, 1999, CIP(R) purchased a property in Eugene, Oregon for
$8,717,278 and entered into a net lease with PSC Scanning, Inc. The PSC lease
has a 15-year term through May 31, 2014 with an initial annual rent of $820,013.
The lease provides for annual rent increases with such increases based on a
formula indexed to increases in the CPI, capped at 3.75%. On June 9, 1999,
CIP(R) obtained $5,500,000 of limited recourse mortgage financing collateralized
by a deed of trust on the PSC property and a lease assignment. The mortgage loan
provides for monthly payments of interest and principal of $39,755 at an annual
interest rate of 7.25% based on a 25-year amortization schedule. The loan
matures on July 1, 2009 at which time a balloon payment of approximately
$4,368,000 will be due. The loan may not be prepaid during the first five loan
years except for certain limited circumstances. The loan is prepayable
thereafter, in part or whole, subject to a prepayment premium.
On December 8, 1999, CIP(R) purchased land and building in Rotherdam,
South Yorkshire in the United Kingdom for $7,216,000 and entered into a net
lease agreement with Gloystarne & Co. ("Gloystarne"). In connection with the
purchase, the Company obtained $4,202,000 of limited recourse mortgage
financing. The Gloystarne lease provides for a twenty year term through December
8, 2019 with annual rent based on current exchange rates of approximately
$620,000, with rent increases every five years at the higher of (i) the rent for
the prior five-year period increased at 3% per year and (ii) the fair market
rental as of the rent increase date multiplied by 1.03%. The loan has a twenty
year term and provides for quarterly interest only payments during the first
five years, at an annual interest rate equal to the 3-month London Interbank
Offered Rate plus 1.2%, initially 7.3%, followed by quarterly principal and
interest payment with stated quarterly principal payments, based on current
exchange rates, approximately $28,630 in years 6-10, $57,260 in years 11-15 and
$65,440 in years 16-20. The loan maybe prepaid at any time subject to a
prepayment premium.
ACQUISITION STRATEGIES
Carey Property Advisors has a well-developed process with established
procedures and systems for acquiring net leased property on behalf of CIP(R). As
a result of its reputation and experience in the industry and the contacts
maintained by its professionals, Carey Property Advisors has a presence in the
net lease market that has provided it with the opportunity to invest in a
significant number of transactions on an ongoing basis. CIP(R) takes advantage
of Carey Property Advisors' presence in the net lease market to build its
portfolio. In evaluating opportunities for CIP(R), Carey Property Advisors
carefully examines the credit, management and other attributes of the tenant and
the importance of the property under consideration to the tenant's operations.
Careful credit analysis is a crucial aspect of every transaction. CIP(R)
believes that Carey Property Advisors has one of the most extensive underwriting
processes in the industry and has an experienced staff of professionals involved
with underwriting transactions. Carey Property Advisors seeks to identify those
prospective tenants whose creditworthiness is likely to improve over time.
CIP(R) believes that the experience of Carey Property Advisors' management in
structuring sale-leaseback transactions to meet the needs of a prospective
tenant enables Carey Property Advisors to obtain a higher return for a given
level of risk than would typically be available by purchasing a property subject
to an existing lease.
Carey Property Advisors' strategy in structuring its net lease investments
for CIP(R) is to:
- - combine the stability and security of long-term lease payments,
including rent increases, with the appreciation potential inherent in
the ownership of real estate;
- - enhance current returns by utilizing varied lease structures;
- - reduce credit risk by diversifying investments by tenant, type of
facility, geographic location and tenant industry; and
- - increase potential returns by obtaining equity enhancements from the
tenant when possible, such as warrants to purchase tenant common stock.
FINANCING STRATEGIES
Consistent with its investment policies, CIP(R) uses leverage when
available on favorable terms. As of December 31, 1999, CIP(R) had approximately
$166,640,000 in property level debt outstanding. These mortgages mature between
2000 and 2020 and have interest rates between 5.14% and 10%. Carey Property
Advisors continually seeks opportunities and considers alternative financing
techniques to finance properties not currently subject to debt, refinance debt,
reduce interest expense or improve its capital structure.
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TRANSACTION ORIGINATION
In analyzing potential acquisitions, Carey Property Advisors reviews and
structures many aspects of a transaction, including the tenant, the real estate
and the lease, to determine whether a potential acquisition can be structured to
satisfy CIP(R)'s acquisition criteria. The aspects of a transaction which are
reviewed and structured by Carey Property Advisors include the following:
TENANT EVALUATION
Carey Property Advisors subjects each potential tenant to an extensive
evaluation of its credit, management, position within its industry, operating
history and profitability. Carey Property Advisors seeks tenants it believes
will have stable or improving credit. By leasing properties to these types of
tenants, CIP(R) can generally charge rent that is higher than the rent charged
to tenants with recognized credit and, thereby, enhance its current return from
these properties as compared with properties leased to companies whose credit
potential has already been recognized by the market. Furthermore, if a tenant's
credit does improve, the value of CIP(R)'s properties leased to that tenant will
likely increase (if all other factors affecting value remain unchanged). Carey
Property Advisors may also seek to enhance the likelihood of a tenant's lease
obligations being satisfied, such as through a letter of credit or a guaranty of
lease obligations from the tenant's corporate parent. This credit enhancement
provides CIP(R) with additional financial security.
LEASES WITH INCREASING RENTS
Carey Property Advisors seeks to include clauses in CIP(R)'s leases that
provide for increases in rent over the term of the leases. These increases are
generally tied to increases in certain indices such as the consumer price index,
in the case of certain retail stores, participation in gross sales above a
stated level, mandated rental increases on specific dates and through other
methods. CIP(R) seeks to avoid entering into leases that provide for contractual
reductions in rents during their primary term (other than reductions related to
reductions in debt service).
PROPERTIES IMPORTANT TO TENANT OPERATION
Carey Property Advisors, on behalf of CIP(R), generally seeks to acquire
properties with operations that are essential or important to the ongoing
operations of the tenant. CIP(R) believes that these properties provide better
protection in the event that tenants file for bankruptcy, because leases on
properties essential or important to the operations of a bankrupt tenant are
less likely to be rejected and terminated by a bankrupt tenant. Carey Property
Advisors also seeks to assess the income, cash flow and profitability of the
business conducted at the property, so that, if the tenant is unable to operate
its business, CIP(R) can either continue operating the business conducted at the
property or re-lease the property to another entity in the industry which can
operate the property profitably.
LEASE PROVISIONS THAT ENHANCE AND PROTECT VALUE
When appropriate, Carey Property Advisors attempts to include provisions
in CIP(R)'s leases that require CIP(R)'s consent to certain tenant activity or
require the tenant to satisfy certain operating tests. These provisions include,
for example, operational and financial covenants of the tenant, prohibitions on
a change in control of the tenant and indemnification from the tenant against
environmental and other contingent liabilities. Including these provisions in
its leases enables CIP(R) to protect its investment from changes in the
operating and financial characteristics of a tenant that may impact its ability
to satisfy its obligations to CIP(R) or could reduce the value of CIP(R)'s
properties.
DIVERSIFICATION
Carey Property Advisors tries to diversify CIP(R)'s portfolio of
properties to avoid dependence on any one particular tenant, type of facility,
geographic location and tenant industry. By diversifying its portfolio, CIP(R)
reduces the adverse effect on CIP(R) of a single under-performing investment or
a downturn in any particular industry or geographic location.
Carey Property Advisors employs a variety of other strategies and
practices in connection with CIP(R)'s acquisitions. These strategies include
attempting to obtain equity enhancements in connection with transactions.
Typically, these equity enhancements involve warrants to purchase stock of the
tenant to which the property is leased or the stock of the parent of the tenant.
In certain instances, CIP(R) grants to the tenant a right to purchase the
property leased by the tenant, but generally the option purchase price will be
not less than the fair market value of the property. Carey Property Advisors'
practices include performing evaluations of the physical condition of properties
and performing
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environmental surveys in an attempt to determine potential environmental
liabilities associated with a property prior to its acquisition.
As a transaction is structured, it is evaluated by the Chairman of the
Investment Committee with respect to the potential tenant's credit, business
prospects, position within its industry and other characteristics important to
the long-term value of the property and the capability of the tenant to meet its
lease obligations. Before a property is acquired, the transaction is reviewed by
the Investment Committee to ensure that it satisfies CIP(R)'s investment
criteria. Aspects of the transaction that are typically reviewed by the
Investment Committee include the expected financial returns, the
creditworthiness of the tenant, the real estate characteristics and the lease
terms.
The Investment Committee is not directly involved in originating or
negotiating potential acquisitions, but instead functions as a separate and
final step in the acquisition process. Carey Property Advisors places special
emphasis on having experienced individuals serve on its Investment Committee and
does not invest in a transaction unless it is approved by the Investment
Committee.
CIP(R) believes that the Investment Committee review process gives it a
unique, competitive advantage over other unaffiliated net lease companies
because of the substantial experience and perspective that the Investment
Committee has in evaluating the blend of corporate credit, real estate and lease
terms that combine to make an acceptable risk.
The following people serve on the Investment Committee:
- - George E. Stoddard, Chairman, was formerly responsible for the direct
corporate investments of The Equitable Life Assurance Society of the
United States and has been involved with the CPA(R) Programs for over
20 years.
- - Frank J. Hoenemeyer, Vice Chairman, was formerly Vice Chairman,
Director and Chief Investment Officer of The Prudential Insurance
Company of America. As Chief Investment Officer, Mr. Hoenemeyer was
responsible for all of Prudential's investments, including stocks,
bonds, private placements, real estate and mortgages.
- - Nathaniel S. Coolidge previously served as Senior Vice President - Head
of Bond & Corporate Finance Department of the John Hancock Mutual Life
Insurance Company. His responsibilities included overseeing $21 billion
of fixed income investments for Hancock, its affiliates and outside
clients.
- - Lawrence R. Klein is Benjamin Franklin Professor of Economics Emeritus
at the University of Pennsylvania and its Wharton School. Dr. Klein has
been awarded the Alfred Nobel Memorial Prize in Economic Sciences and
currently advises various governments and government agencies.
ASSET MANAGEMENT
CIP(R) believes that effective management of its net lease assets is
essential to maintain and enhance property values. Important aspects of asset
management include restructuring transactions to meet the evolving needs of
current tenants, re-leasing properties, refinancing debt, selling properties and
knowledge of the bankruptcy process.
Carey Property Advisors monitors, on an ongoing basis, compliance by
tenants with their lease obligations and other factors that could affect the
financial performance of any of its properties. Monitoring involves receiving
assurances that each tenant has paid real estate taxes, assessments and other
expenses relating to the properties it occupies and confirming that appropriate
insurance coverage is being maintained by the tenant. Carey Property Advisors
reviews financial statements of its tenants and undertakes regular physical
inspections of the condition and maintenance of its properties. Additionally,
Carey Property Advisors periodically analyzes each tenant's financial condition,
the industry in which each tenant operates and each tenant's relative strength
in its industry.
HOLDING PERIOD
CIP(R) intends to hold each property it acquires for an extended period.
The determination of whether a particular property should be sold or otherwise
disposed of will be made after consideration of relevant factors with a view to
achieving maximum capital appreciation and after-tax return for the CIP(R)
shareholders. If CIP(R)'s common stock is not listed for trading on a national
securities exchange or included for quotation on Nasdaq, CIP(R) will generally
begin selling properties within ten years after the proceeds of the public
offering were substantially invested, subject to market
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conditions. The board of directors will make the decision whether to list the
shares, liquidate or devise an alternative liquidation strategy which is likely
to result in the greatest value for the shareholders.
COMPETITION
CIP(R) faces competition for the acquisition of office and industrial
properties in general, and such properties net leased to major corporations in
particular, from insurance companies, credit companies, pension funds, private
individuals, investment companies and other REITs. CIP(R) also faces competition
from institutions that provide or arrange for other types of commercial
financing through private or public offerings of equity or debt or traditional
bank financings. CIP(R) believes its management's experience in real estate,
credit underwriting and transaction structuring will allow CIP(R) to compete
effectively for office and industrial properties.
ENVIRONMENTAL MATTERS
Under various federal, state and local environmental laws, regulations and
ordinances, current or former owners of real estate, as well as other parties,
may be required to investigate and clean up hazardous or toxic chemicals,
substances or waste or petroleum product or waste, releases on, under, in or
from a property. These parties may be held liable to governmental entities or to
third parties for specified damages and for investigation and cleanup costs
incurred by these parties in connection with the release or threatened release
of hazardous materials. These laws typically impose responsibility and liability
without regard to whether the owner knew of or was responsible for the presence
of hazardous materials, and the liability under these laws has been interpreted
to be joint and several under some circumstances. CIP(R)'s leases often provide
that the tenant is responsible for all environmental liability and for
compliance with environmental regulations relating to the tenant's operations.
CIP(R) typically undertakes an investigation of potential environmental
risks when evaluating an acquisition. Phase I environmental assessments are
performed by independent environmental consulting and engineering firms for all
properties acquired by CIP(R). Where warranted, Phase II environmental
assessments are performed. Phase I assessments do not involve subsurface
testing, whereas Phase II assessments involve some degree of soil and/or
groundwater testing. CIP(R) may acquire a property which is known to have had a
release of hazardous materials in the past, subject to a determination of the
level of risk and potential cost of remediation. CIP(R) normally requires
property sellers to indemnify it fully against any environmental problem
existing as of the date of purchase. Additionally, CIP(R) often structures its
leases to require the tenant to assume most or all responsibility for compliance
with the environmental provisions of the lease or environmental remediation
relating to the tenant's operations and to provide that non-compliance with
environmental laws is a lease default. In some cases, CIP(R) may also require a
cash reserve, a letter of credit or a guarantee from the tenant, the tenant's
parent company or a third party to assure lease compliance and funding of
remediation. The value of any of these protections depends on the amount of the
collateral and/or financial strength of the entity providing the protection.
Such a contractual arrangement does not eliminate CIP(R)'s statutory liability
or preclude claims against CIP(R) by governmental authorities or persons who are
not a party to the arrangement. Contractual arrangements in CIP(R)'s leases may
provide a basis for CIP(R) to recover from the tenant damages or costs for which
it has been found liable.
INDUSTRY SEGMENT
CIP(R) operates in one industry segment, investment in net leased real
property. For the year ended December 31, 1999, Marriott International, Inc.
represented 10% of lease revenues. No other tenant represented 10% or more of
the total operating revenue of CIP(R).
FACTORS AFFECTING FUTURE OPERATING RESULTS
The provisions of the Private Securities Litigation Reform Act of 1995
(the "Act") became effective in December 1995. The Act provides a "safe harbor"
for companies which make forward-looking statements providing prospective
information. The "safe harbor" under the Act relates to protection for companies
with respect to litigation filed on the basis of such forward-looking
statements.
CIP(R) wishes to take advantage of the "safe harbor" provisions of the Act
and is therefore including this section in its Annual Report on Form 10-K. The
statements contained in this Annual Report, if not historical, are
forward-looking statements and involve risks and uncertainties which are
described below that could cause actual results to differ materially from the
results, financial or otherwise, or other expectations described in such
forward-looking statements. These statements are identified with the words
"anticipated," "expected," "intends," "seeks" or "plans" or words of similar
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meaning. Therefore, forward-looking statements should not be relied upon as a
prediction of actual future results or occurrences.
CIP(R)'s future results may be affected by certain risks and uncertainties
including the following:
SINGLE TENANT LEASES INCREASE OUR EXPOSURE IN THE EVENT OF A FAILURE OF TENANT.
We focus our acquisition activities on net leased real properties or
interests therein. Due to the fact that our net leased real properties are
leased to single tenants, the financial failure of or other default by a tenant
resulting in the termination of a lease is likely to cause a reduction in the
operating cash flow of CIP(R) and might decrease the value of the property
leased to such tenant.
WE DEPEND ON MAJOR TENANTS.
Revenues from several of our tenants and/or their guarantors constitute a
significant percentage of our consolidated rental revenues. Our five largest
tenants/guarantors, which occupy 34 properties, represent 37% of annualized
revenues. The default, financial distress or bankruptcy of any of the five
tenants could cause interruptions in the receipt of lease revenues from these
tenants and/or result in vacancies in the respective properties, which would
reduce our revenues until the affected property is re-let, and could decrease
the ultimate sale value of each property.
WE CAN BORROW A SIGNIFICANT AMOUNT OF FUNDS.
We have incurred, and may continue to incur, indebtedness (secured and
unsecured) in furtherance of our activities. Neither the certificate of
incorporation, bylaws nor any policy statement formally adopted by the board of
directors limits either the total amount of indebtedness or the specified
percentage of indebtedness (based upon the total market capitalization of
CIP(R)) that may be incurred. Accordingly, we could become more highly
leveraged, resulting in increased risk of default on our obligations and in an
increase in debt service requirements which could adversely affect our financial
condition and results of operations and our ability to pay distributions.
WE MAY NOT BE ABLE TO REFINANCE BALLOON PAYMENTS ON OUR MORTGAGE DEBTS.
A significant number of our properties are subject to mortgages with
balloon payments. Scheduled balloon payments for the next five years are as
follows:
- - 2000 - $15 million;
- - 2001 - $4 million;
- - 2002 - $13 million;
- - 2003 - $7 million; and
- - 2004 - $11 million.
Our ability to make such balloon payments will depend upon our ability either to
refinance the obligations when due, invest additional equity in the property or
to sell the related property. Our ability to accomplish these goals will be
affected by various factors existing at the relevant time, such as the state of
the national and regional economies, local real estate conditions, available
mortgage rates, our equity in the mortgaged properties, our financial condition,
the operating history of the mortgaged properties and tax laws.
WE MAY BE UNABLE TO RENEW LEASES OR RE-LET VACATED SPACES.
We will be subject to the risks that, upon expiration of leases, the
premises may not be re-let or the terms of re-letting (including the cost of
concessions to tenants) may be less favorable than current lease terms. If we
are unable to re-let promptly all or a substantial portion of our properties or
if the rental rates upon such re-letting were significantly lower than current
rates, our net income and ability to make expected distributions to our
shareholders would be adversely affected. There can be no assurance that we will
be able to retain tenants in any of our properties upon the expiration of their
leases. Our scheduled lease expiration, as a percentage of annualized revenues
for the next five years, are as follows:
- - 2000 - 0%
- - 2001 - 0%
- - 2002 - 9%
- - 2003 - 0%
- - 2004 - 0%
-7-
<PAGE> 9
WE ARE SUBJECT TO POSSIBLE LIABILITIES RELATING TO ENVIRONMENTAL MATTERS.
We own industrial and commercial properties and are subject to the risk of
liabilities under federal, state and local environmental laws. Some of these
laws could impose the following on CIP(R):
- - Responsibility and liability for the cost of investigation and
removal or remediation of hazardous substances released on our
property, generally without regard to our knowledge or
responsibility of the presence of the contaminants;
- - Liability for the costs of investigation and removal or remediation
of hazardous substances at disposal facilities for persons who
arrange for the disposal or treatment of such substances; and
- - Potential liability for common law claims by third parties based on
damages and costs of environmental contaminants.
WE MAY BE UNABLE TO MAKE ACQUISITIONS ON AN ADVANTAGEOUS BASIS.
The consummation of any future acquisition will be subject to satisfactory
completion of our extensive analysis and due diligence review and to the
negotiation of definitive documentation. There can be no assurance that we will
be able to identify and acquire additional properties or that we will be able to
finance acquisitions in the future. In addition, there can be no assurance that
any such acquisition, if consummated, will be profitable for us. If we are
unable to consummate the acquisition of additional properties in the future,
there can be no assurance that we will be able to increase the cash available
for distribution to our shareholders.
WE MAY SUFFER UNINSURED LOSSES.
There are certain types of losses (such as due to wars or some natural
disasters) that generally are not insured because they are either uninsurable or
not economically insurable. Should an uninsured loss or a loss in excess of the
limits of our insurance occur, we could lose capital invested in a property, as
well as the anticipated future revenues from a property, while remaining
obligated for any mortgage indebtedness or other financial obligations related
to the property. Any such loss would adversely affect our financial condition.
WE FACE INTENSE COMPETITION.
The real estate industry is highly competitive. Our principal competitors
include national REITs, many of which are substantially larger and have
substantially greater financial resources than us.
THE VALUE OF OUR REAL ESTATE IS SUBJECT TO FLUCTUATION.
We are subject to all of the general risks associated with the ownership
of real estate. In particular, we face the risk that rental revenue from the
properties will be insufficient to cover all corporate operating expenses and
debt service payments on indebtedness we incur. Additional real estate ownership
risks include:
- - Adverse changes in general or local economic conditions;
- - Changes in supply of or demand for similar or competing properties;
- - Changes in interest rates and operating expenses;
- - Competition for tenants;
- - Changes in market rental rates;
- - Inability to lease properties upon termination of existing leases;
- - Renewal of leases at lower rental rates;
- - Inability to collect rents from tenants due to financial hardship,
including bankruptcy;
- - Changes in tax, real estate, zoning and environmental laws that may
have an adverse impact upon the value of real estate; Uninsured
property liability;
- - Property damage or casualty losses;
- - Unexpected expenditures for capital improvements or to bring properties
into compliance with applicable federal, state and local laws; and
- - Acts of God and other factors beyond the control of our management.
WE DEPEND ON KEY PERSONNEL FOR OUR FUTURE SUCCESS.
We depend on the efforts of the executive officers and key employees of
Carey Property Advisors. The loss of the services of these executive officers
and key employees could have a material adverse effect on our operations.
-8-
<PAGE> 10
The risk factors may have affected, and in the future could affect, our
actual operating and financial results and could cause such results to differ
materially from those in any forward-looking statements. You should not consider
this list exhaustive. New risk factors emerge periodically, and we cannot
completely assure you that the factors we describe above list all material risks
to CIP(R) any specific point in time. We have disclosed many of the important
risk factors discussed above in our previous filings with the Securities and
Exchange Commission.
YEAR 2000 ISSUES.
In 1999, CIP(R) and its affiliates formed a task force to identify
year 2000 problems. The task force developed and implemented a plan that
included inventory, assessment, remediation, testing and contingency planning.
CIP(R) experienced no significant disruptions as a result of the year end date
change. The task force intends to monitor other critical dates in the future,
such as quarter-end dates. The impact of the year 2000 issues on the company
will continue to depend on the way the issues have been addressed by third
parties that provide services to CIP(R). To date, CIP(R) has not been adversely
impacted to any significant extent by the failure of third parties to address
year 2000 issues. The task force has developed contingency plans to address
risks associated with year 2000 issues that may arise. There can be no assurance
that these plans will fully mitigate any problems, if any arise. The foregoing
year 2000 discussions constitute a Year 2000 Readiness Disclosure within the
meaning of the Year 2000 Readiness and Disclosure and Disclosure Act of 1998.
-9-
<PAGE> 11
Item 2. Properties.
CIP(R)'s properties are as follows:
<TABLE>
<CAPTION>
NAME OF LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
- ------- ---------------- -------- -----------------
<S> <C> <C> <C>
WAL-MART STORES, INC. Retail Stores Center, Groves, Ownership of a 50%
- 6 locations Silsbee and Vidor, interest in land
Texas; and buildings (1)
Weatherford,
Oklahoma;
Fort Smith,
Arkansas
SAFEWAY STORES Supermarket Broken Arrow, Ownership of a 50%
INCORPORATED Oklahoma interest in land
and building
MARRIOTT Hotels Irvine, Sacramento, Ownership of a 23.69%
INTERNATIONAL, - 13 locations and San Diego, interest in a real estate
INC. California; investment trust owning
Orlando, land and buildings (1)
Florida - 2;
Des Plains, Illinois;
Indianapolis, Indiana;
Louisville,
Kentucky;
Linthicum, Maryland;
Las Vegas, Nevada;
Newark, New Jersey;
Albuquerque,
New Mexico;
Spokane,
Washington
VACANT Supermarkets and Hot Springs, and Ownership of a 50%
Office Buildings Texarkana, Arkansas interest in land
- 3 locations and Clarksdale, and buildings (2)
Mississippi
KROGER CO. Retail Stores North Little Rock Ownership of a 50%
- 2 locations and Conway, Arkansas interest in land
and buildings
except as noted (2)
AFFILIATED Retail Stores Little Rock - 3, and Ownership of a 50%
SOUTHWEST, INC. - 4 locations Hope, Arkansas interest in land
and buildings
except as noted(2)
Vacant Office/Manufacturing Austin, Ownership of a 50%
Facilities Texas interest in land and
buildings (1)
CENTROBE, INC. Manufacturing/ Boulder, Ownership of a 80%
Distribution Facility Colorado interest in land and
building (1)
BELL SPORTS, INC. Warehouse/ Rantoul, Ownership of land
Manufacturing Facility Illinois and building
OSHMAN SPORTING
GOODS, INC. Retail Store Plano, Ownership of land
Texas and building (1)
</TABLE>
-10-
<PAGE> 12
<TABLE>
<CAPTION>
NAME OF LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
- ------- ---------------- -------- -----------------
<S> <C> <C> <C>
MICHIGAN MUTUAL Office Complex Charleston, Ownership of land
INSURANCE COMPANY South Carolina and building (1)
GATX LOGISTICS, INC. Warehouse Jacksonville, Ownership of land
Florida and building (1)
BIG V HOLDING CORP. Supermarkets Greenport, Ownership of land and
- 3 locations Ellenville, buildings in Greenport and
and Warwick, ownership of a 55% interest in
New York land and buildings in
Ellenville
and Warwick, New York
(1-Ellenville and Warwick)
LUCENT Warehouse Charlotte, Ownership of land
TECHNOLOGIES, INC. North Carolina and building (1)
BARNES & NOBLE, INC. Retail Stores Farmington, Ownership of land
- 2 locations Connecticut and buildings (1)
and Braintree,
Massachusetts
BEST BUY CO., INC. Retail Stores Denver and Ownership of a 63%
- 17 locations Fort Collins, interest in a general
Colorado; Aurora, partnership owning land
Bedford Park, and buildings (1)
Bloomingdale,
Matteson and
Schaumburg, Illinois;
Omaha, Nebraska;
Albuquerque, New Mexico;
Arlington, Beaumont,
Dallas, El Paso,
Fort Worth, Houston,
Plano, Texas; and
Madison, Wisconsin
LINCOLN TECHNICAL Technical Training Glendale Heights, Ownership of land
INSTITUTE OF Institute Illinois and buildings
ARIZONA, INC.
MERIT MEDICAL Office/Warehouse South Jordan, Utah Ownership of land
SYSTEMS, INC. and building (1)
WABAN, INC. Retail Facility Farmingdale, Ownership of land
New York and building (1)
Q CLUBS, INC. Health Clubs Memphis, Ownership of land
- 2 locations Tennessee and and buildings
Bedford, Texas
PETSMART, INC. Warehouse Ennis, Texas Ownership of land
and building (1)
GARDEN RIDGE Retail Stores Round Rock, Texas Ownership of land
CORPORATION and Oklahoma City, and buildings (1)
Oklahoma (under
construction)
NICHOLSON Warehouse Maple Heights, Ownership of land
WAREHOUSE, L.P. Ohio and building (1)
SUPERIOR Manufacturing Brownwood, Ownership of land
TELECOMMUNICATIONS, Texas and building (1)
INC.
</TABLE>
-11-
<PAGE> 13
<TABLE>
<CAPTION>
NAME OF LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
------- ---------------- -------- -----------------
<S> <C> <C> <C>
SICOR, INC. Office/Research and San Diego, Ownership of a 50%
Development Facility California interest in a general
partnership owning land
and buildings (1)
CHILDTIME Daycare Centers Newport News, Ownership of a 50%
CHILDCARE, INC. Centreville, Manassas, interest in land
and Century Oaks, VA; and buildings (1)
Naperville, IL
PLEXUS CORP. Manufacturing Neenah, WI Ownership of land
and building (1)
CFP GROUP, INC. Food Processing/ Owingsville, KY Ownership of land
Warehouse Facility and building (1)
OMNICOM GROUP, Office Buildings Venice and Ownership of land
INC. Playa Vista, CA and buildings (1)
DEL MONTE Warehouses and a Mendota, Illinois; Ownership of a 50%
CORPORATION Special Purpose Plover, Wisconsin; interest in land
Facility Toppenish and and buildings (1)
Yakima, Washington
THE UPPER Office Buildings Carlsbad, Ownership of a 50%
DECK COMPANY California interest in a limited
liability company owning
land and buildings (1)
HIBBETT SPORTING Warehouse/Office Birmingham, Ownership of land
GOODS, INC. Facility Alabama and building (1)
DETROIT DIESEL Distribution/Warehouse Orlando and Ownership of land
CORPORATION Facilities Hollywood, Florida and building
ADVANCED MICRO Office/Research Sunnyvale, California Ownership of a 33 1/3%
DEVICES, INC. Facilities interest in a limited
liability company owning
land and buildings (1)
HUMCO HOLDING Manufacturing/Warehouse Texarkana, Texas Ownership of Land
GROUP, INC. Facilities and Orem, Utah and buildings (1)
PSC SCANNING, INC. Office/Warehouse Eugene, Oregon Ownership of land and
Facility building (1)
BOLDER
TECHNOLGIES, INC. Industrial/Manufacturing Golden, Colorado Ownership of land and
Facility building (1)
GLOYSTARNE & CO. Distribution/Warehouse Rotherdam, South Ownership of land and
Facility Yorkshire, building
United Kingdom
</TABLE>
(1) These properties are encumbered by mortgage notes payable.
(2) Ownership of buildings with ground leases of land for one property in
Little Rock, Arkansas and properties in Hot Springs and North Little Rock,
-12-
<PAGE> 14
The material terms of CIP(R)'s leases with its significant tenants
as of December 31, 1999 are summarized in the following table:
<TABLE>
<CAPTION>
Share Current Lease
Lease of Current Square Rent Per Expiration Renewal Ownership
Obligor Annual Rents Footage Sq.Ft.(1) (Mo/Year) Terms Interest
- ------- ------------ ------- --------- --------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
Wal-Mart Stores, Inc. (2) $1,013,389 454,251 $4.46 1/08 YES 50% interest; remaining interest
owned by Corporate Property
Associates
10 Incorporated ("CPA(R):10")
Centrobe, Inc. 2,354,252 403,871 7.29 6/13 YES 80% interest; remaining
interest owned by CPA(R):10
Bell Sports, Inc. 1,108,341 307,397 3.61 11/12 YES 100%
Michigan Mutual Insurance 1,362,252 137,729 9.89 12/07 YES 100%
GATX Logistics, Inc. 804,720 240,000 3.35 12/02 YES 100%
636,515 59,772 10.65 12/17 YES 100%
Big V Holding Corp. 1,233,742 141,428 15.86 10/24 YES 55% interest; remaining interest
owned by Corporate Property
Associates
12 Incorporated ("CPA(R):12")
Lucent Technologies, Inc. 1,852,829 568,670 3.26 3/02 YES 100%
Best Buy Co., Inc. 3,165,474 558,695 8.99 4/18 YES 63% general partnership interest;
remaining interest owned by
CPA(R):12
Lincoln Technical Institute 1,206,953 74,410 16.22 11/10 YES 100%
of Arizona, Inc.
Merit Medical Systems, Inc. 1,465,404 172,925 7.54 01/20 YES 100%
Waban, Inc. 1,183,879 114,680 10.32 01/02 YES 100%
Garden Ridge Corporation -
Texas 656,124 152,500 4.30 12/13 YES 100%
Oklahoma 840,093 141,284 5.95 12/15 YES 100%
Nicholson Warehouse, L.P. 950,718 341,282 2.79 12/18 YES 100%
Superior 641,510 307,850 2.08 12/13 YES 100%
Telecommunications, Inc.
Sicor, Inc. 1,472,736 144,311 20.41 07/09 YES 50% general partnership
interest; remaining interest
owned by CPA(R):12
Plexus Corp. 1,184,409 179,000 6.62 08/14 YES 100%
Omnicom Group, Inc. 982,027 77,719 12.64 10/14 YES 100%
3,214,996 120,000 26.79 10/18 YES 100%
The Upper Deck Company 1,319,875 294,779 8.96 12/21 YES 50% interest remaining
interest owned by CPA(R):12
Del Monte Corporation 1,286,250 748,000 3.44 6/16 YES 50% interest; remaining
interest owned by CPA(R):12
Detroit Diesel Corporation 845,000 80,310 10.52 12/19 YES 100%
Compucom Systems, Inc. 1,304,667 153,256 25.54 04/19 YES 33 1/3% interest;
remaining interests owned
by CPA(R):12 and CPA(R):14
Advanced Micro 3,048,500 362,000 25.26 12/18 YES 33 1/3% interest;
Devices, Inc. remaining interests owned
by CPA(R):12 and CPA(R):14
PSC Scanning, Inc. 820,013 110,665 7.41 5/14 NO 100%
</TABLE>
(1) Represents rate per square foot when combined with rents applicable to
other owners.
(2) Includes percentage of sales rents.
-13-
<PAGE> 15
Item 3. Legal Proceedings.
As of the date here of, the Company is not a party of to any
material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the year ended
December 31, 1999 to a vote of security holders, through the solicitation of
proxies or otherwise.
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 22 of the Company's Annual Report contained in
Appendix A.
Item 6. Selected Financial Data.
Selected Financial Data are hereby incorporated by reference to page
1 of the Company'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 the Company's Annual Report contained in Appendix
A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk:
Approximately $136,022,000 of CIP(R)'s long-term debt bears interest
at fixed rates, and therefore the fair value of these instruments is affected by
changes in the market interest rates. The following table presents principal
cash flows based upon expected maturity dates of the debt obligations and the
related weighted-average interest rates by expected maturity dates for the fixed
rate debt. The interest rate on the variable rate debt as of December 31, 1999
ranged from the sum of LIBOR and 1.625% to the sum of the lender's prime rate
and 1.5%.
<TABLE>
<CAPTION>
(in thousands)
2000 2001 2002 2003 2004 Thereafter Total Fair Value
---- ---- ---- ---- ---- --------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed rate $9,694 $3,282 $3,623 $11,101 $12,145 $96,177 $136,022 $135,877
Weighted
average
interest
rate 9.23% 8.80% 8.78% 8.92% 9.53% 6.76%
Variable rate 9,231 5,172 13,143 158 2,914 - 30,618 30,618
</TABLE>
As of December 31, 1999, CIP(R) had no other material exposure to
market risk.
-14-
<PAGE> 16
Item 8. Consolidated Financial Statements and Supplementary Data.
The following consolidated financial statements and supplementary
data are hereby incorporated by reference to pages 5 to 21 of the Company's
Annual Report contained in Appendix A:
(i) Report of Independent Accountants.
(ii) Consolidated Balance Sheets as of December 31, 1997, 1998 and 1999.
(iii) Consolidated Statements of Income for the years ended December 31,
1997, 1998 and 1999.
(iv) Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1997, 1998 and 1999.
(v) Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1998 and 1999.
(vi) Notes to Consolidated Financial Statements.
Item 9. Disagreements on Accounting and Financial Disclosure.
NONE
PART III
Item 10. Directors and Executive Officers of the Registrant.
This information will be contained in the Company's definitive Proxy
Statement with respect to the Company's 2000 Annual Meeting of Shareholders, to
be filed with the Securities and Exchange Commission within 120 days following
the end of the Company's fiscal year, and is hereby incorporated by reference.
Item 11. Executive Compensation.
This information will be contained in the Company's definitive Proxy
Statement with respect to the Company's 2000 Annual Meeting of Shareholders, to
be filed with the Securities and Exchange Commission within 120 days following
the end of the Company's fiscal year, and is hereby incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
This information will be contained in the Company's definitive Proxy
Statement with respect to the Company's 2000 Annual Meeting of Shareholders, to
be filed with the Securities and Exchange Commission within 120 days following
the end of the Company's fiscal year, and is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions.
This information will be contained in the Company's definitive Proxy
Statement with respect to the Company's 2000 Annual Meeting of Shareholders, to
be filed with the Securities and Exchange Commission within 120 days following
the end of the Company's fiscal year, and is hereby incorporated by reference.
-15-
<PAGE> 17
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a) 1. Consolidated Financial Statements:
The following consolidated financial statements are filed as a
part of this Report:
Report of Independent Accountants.
Consolidated Balance Sheets, December 31, 1997, 1998 and 1999.
Consolidated Statements of Income for the years ended December 31, 1997, 1998
and 1999.
Consolidated Statements of Shareholders' Equity for the years ended December
31, 1997, 1998 and 1999.
Consolidated Statements of Cash Flows for the years ended December 31, 1997,
1998 and 1999.
Notes to Consolidated Financial Statements.
The consolidated financial statements are hereby incorporated by reference to
pages 5 to 21 of the Company's Annual Report contained in Appendix A.
(a) 2. Financial Statement Schedule:
The following schedule is filed as a part of this Report:
Report of Independent Accountants.
Schedule III -Real Estate and Accumulated Depreciation as of December 31,
1999.
Notes to Schedule III.
Schedule III and notes thereto are contained herein on pages 37 to 41 of this
Form 10-K.
Financial Statement Schedules other than those listed above
are omitted because the required information is given in the Consolidated
Financial Statements, including the Notes thereto, or because the conditions
requiring their filing do not exist.
-16-
<PAGE> 18
(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 Articles of Amendment and Restatement. Exhibit 3(A) to Regis-
tration Statement (Form
S-11) No. 33-39409
3.2 Amended Bylaws of Registrant. Exhibit 3(B) to Regis-
tration Statement (Form
S-11) No. 33-39409
10.1 Amended Advisory Agreement. Exhibit 10(A)(2) to
Registration Statement
(Form S-11) No. 33-39409
10.2 Lease between Marcourt Investments Filed as Exhibit 10(D)(1)
Incorporated ("Marcourt") and CTYD to Registrant's Post
III Corporation ("CTYD"). Effective Amendment No. 1
to Form S-11
10.3 Series A-2 9.94% Secured Note from Filed as Exhibit 10(D)(2)
Marcourt to the registered owner of to Registrant's Post
note (Various Series A-1 9.94% Notes Effective Amendment No. 1
in an aggregate amount of 38,750,000 to Form S-11
substantially in the form of the Series
A-1 9.94% Note attached, were issued by
Marcourt in connection with the Financing).
10.4 Series A-2 11.18% Secured Note from Filed as Exhibit 10(D)(3)
Marcourt to the registered owner of to Registrant's Post
note (Various notes in an aggregate Effective Amendment No. 1
amount of 70,250,000 substantially to Form S-11
in the form of the Series A-2 11.18%
Note attached, were issued by Marcourt
in connection with the Financing.
10.5 Indenture between Marcourt, as Filed as Exhibit 10(D)(4)
borrower, to First Fidelity Bank, to Registrant's Post
National Association, New Jersey, as Effective Amendment No. 1
trustee ("Trustee"). to Form S-11
</TABLE>
-17-
<PAGE> 19
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
--- ----------- ------
<S> <C> <C>
10.6 Real Estate Deed of Trust from Filed as Exhibit 10(D)(5)
Marcourt to Albuquerque Title Company, to Registrant's Post
as trustee for benefit of the Trustee Effective Amendment No. 1
filed in New Mexico, securing Series to Form S-11
A-1 9.94% Notes and Series A-2 ll.18%
notes allocated to Albuquerque, New
Mexico Marriott property (Deeds of Trust
or Mortgages substantially similar to
this Deed of Trust were filed in all other
jurisdictions in which Marriott Properties
are located. Such other deeds of trust or
mortgages secure the principal amount of
Series A-1 9.94% Notes and Series A-2 11.18%
Notes allocated to the Marriott Properties
located in such other jurisdictions)
10.7 Second Real Estate Deed of Trust from Filed as Exhibit 10(D)(6)
Marcourt to Albuquerque Title Company as to Registrant's Post
trustee for the benefit of the Trustee, filed Effective Amendment No. 1
in New Mexico, securing all Series A-1 9.94% to Form S-11
Notes and Series A-2 11.18% Notes other than
those notes allocated to the Albuquerque, New
Mexico Marriott property (Deeds of trust or
mortgages substantially similar to this
Second Real Estate Deed of Trust were filed
in all other jurisdictions in which the
remaining Marriott Properties are located.
Such other deeds of trust or mortgages
secure the principal amount of Series A-1
9.94% Notes and Series A-2 11.18% Notes
allocated to all Marriott Properties not
located in the jurisdiction in which such
other deeds of trust were filed for
recording).
10.8 Guaranty from the Registrant, Corporate Filed as Exhibit 10(D)(7)
Property Associates 10 Incorporated, Trammell to Registrant's Post
Crow Equity Partners II, Ltd. ("TCEP II") and Effective Amendment No. 1
PA/First Plaza Limited Partnership ("First to Form S-11
Plaza") as guarantors, to the Trustee.
10.9 Shareholders Agreement between the Filed as Exhibit 10(D)(8)
Registrant, Corporate Property Associates to Registrant's Post
10 Incorporated ("CPA(R):10"), TCEP II and Effective Amendment No. 1
First Plaza. to Form S-11
10.10 Assignment and Assumptions of Lease Agreement Filed as Exhibit 10(E)(1)(a)
for property located in Glendale, Arizona to Registrant's Post
Effective Amendment No. 1
to Form S-11
</TABLE>
-18-
<PAGE> 20
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- --- ----------- ------
<S> <C> <C>
10.11 Assignment and Assumptions of Lease Agreement Filed as Exhibit 10(E)(1)(b)
for property located in Ft. Smith, Arkansas. to Registrant's Post
Effective Amendment No. 1
to Form S-11
10.12 Assignment and Assumptions of Lease Agreement Filed as Exhibit 10(E)(1)(c)
for property located in Escondido, California. to Registrant's Post
Effective Amendment No. 1
to Form S-11
10.13 Assignment and Assumptions of Lease Agreement Filed as Exhibit 10(E)(1)(d)
for property located in Broken Arrow, Oklahoma. to Registrant's Post
Effective Amendment No. 1
to Form S-11
10.14 Assignment and Assumptions of Lease Agreement Filed as Exhibit 10(E)(1)(e)
for property located in Weatherford, Oklahoma. to Registrant's Post
Effective Amendment No. 1
to Form S-11
10.15 Assignment and Assumptions of Lease Agreement Filed as Exhibit 10(E)(1)(f)
for property located in Center, Texas. to Registrant's Post
Effective Amendment No. 1
to Form S-11
10.16 Assignment and Assumptions of Lease Agreement Filed as Exhibit 10(E)(1)(g)
for property located in Groves, Texas. to Registrant's Post
Effective Amendment No. 1
to Form S-11
10.17 Assignment and Assumptions of Lease Agreement Filed as Exhibit 10(E)(1)(h)
for property located in Silsbee, Texas. to Registrant's Post
Effective Amendment No. 1
to Form S-11
10.18 Assignment and Assumptions of Lease Agreement Filed as Exhibit 10(E)(1)(i)
for property located in Vidor, Texas. to Registrant's Post
Effective Amendment No. 1
to Form S-11
10.19 Lease Amendments for the Ft. Smith, Arkansas Filed as Exhibit 10(E)(2)
and Weatherford, Oklahoma properties. to Registrant's Post
Effective Amendment No. 1
to Form S-11
10.20 Promissory Note from subsidiaries of the Filed as Exhibit 10(E)(3)
Registrant CPA(R):10 to The New England to Registrant's Post
Mutual Life Insurance Company ("New England"). Effective Amendment No. 1
to Form S-11
</TABLE>
-19-
<PAGE> 21
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
--- ----------- ------
<S> <C> <C>
10.21 Mortgage/Deed of Trust from subsidiaries Filed as Exhibit 10(E)(4)(a)
of the Registrant and CPA(R):10 to to Registrant's Post
New England encumbering the property Effective Amendment No. 1
in Ft. Smith, Arkansas to Form S-11
10.22 Mortgage/Deed of Trust from subsidiaries Filed as Exhibit 10(E)(4)(b)
of the Registrant and CPA(R):10 to to Registrant's Post
New England encumbering the property Effective Amendment No. 1
in Weatherford, Oklahoma to Form S-11
10.23 Mortgage/Deed of Trust from Filed as Exhibit 10(E)(4)(c)
subsidiaries of the Registrant and to Registrant's Post
CPA(R):10 to New England encumbering Effective Amendment No. 1
the properties in Center, Groves, to Form S-11
Silsbee, and Vidor, Texas.
10.24 Lease Agreement between QRS 10-9(AR), Filed as Exhibit 10(F)(1)
Inc. ("QRS 10-9") and QRS 11-2(AR), Inc. to Registrant's Post
("QRS 11-2") as landlord and Acadia Effective Amendment No. 3
Stores 63, Inc. ("Tenant") as tenant. to Form S-11
10.25 Co-Tenancy Agreement between QRS 10-9 Filed as Exhibit 10(F)(2)
and QRS 11-2. to Registrant's Post
Effective Amendment No. 3
to Form S-11
10.26 Term Loan Agreement among The First Filed as Exhibit 10(F)(3)
National Bank of Boston ("First to Registrant's Post
Lender"), QRS 10-9 and QRS 11-2. Effective Amendment No. 3
to Form S-11
10.27 Note of QRS 10-9 and QRS 11-2 to First Filed as Exhibit 10(F)(4)
Lender. to Registrant's Post
Effective Amendment No. 3
to Form S-11
10.28 Fee and Leasehold Mortgages from QRS Filed as Exhibit 10(F)(5)
10-9 and QRS 11-2 to First Lender to Registrant's Post
for the following jurisdictions: Effective Amendment No. 3
to Form S-11
a. Arkansas (one representative fee
mortgage and leasehold mortgage
included)
b. Louisiana
c. Mississippi
10.29 Term Loan Agreement among Acadia Filed as Exhibit 10(F)(6)
Partners , L.P. ("Second Lender"), to Registrant's Post
QRS 10-9 and QRS 11-2. Effective Amendment No. 3
to Form S-11
</TABLE>
-20-
<PAGE> 22
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
--- ----------- ------
<S> <C> <C>
10.30 Note of QRS 10-9 and QRS 11-2 to Filed as Exhibit 10(F)(7)
Second Lender. to Registrant's Post
Effective Amendment No. 3
to Form S-11
10.31 Fee Mortgages and Leasehold Mortgages Filed as Exhibit 10(F)(8)
from QRS 10-9 and QRS 11-2 to Second to Registrant's Post
Lender for the following jurisdictions: Effective Amendment No. 3
to Form S-11
a. Arkansas (one representative fee
mortgage and leasehold mortgage
included)
b. Louisiana
c. Mississippi
10.32 Guaranty from Harvest Foods, Inc., a Filed as Exhibit 10(F)(9)
Delaware corporation, to QRS 10-9 and to Registrant's Post
QRS 11-2. Effective Amendment No. 3
to Form S-11
10.33 Guaranty from Harvest Foods, Inc., an Filed as Exhibit 10(F)(10)
Arkansas corporation, to QRS 10-9 and to Registrant's Post
QRS 11-2. Effective Amendment No. 3
to Form S-11
10.34 Lease between QRS 10-12 (TX), Inc. Filed as Exhibit 10(G)(1)
("QRS 10-12"), QRS 11-5 (TX), Inc. to Registrant's Post
("QRS 11-5") and Summagraphics. Effective Amendment No. 3
to Form S-11
10.35 Co-Tenancy Agreement between QRS 10-12, Filed as Exhibit 10(G)(2)
and QRS 11-5. to Registrant's Post
Effective Amendment No. 3
to Form S-11
10.36 $3,700,000 Promissory Note from QRS Filed as Exhibit 10(H)(1)
10-12 (TX), Inc., ("QRS 10-12"), to Registrant's Post
and QRS 11-5 (TX) Inc. ("QRS 11-5"), Effective Amendment No. 4
to Creditanstalt-Bankverein ("Lender"). to Form S-11
10.37 Deed of Trust and Security Agreement Filed as Exhibit 10(H)(2)
from QRS 10-12 and QRS 11-5 to John O. to Registrant's Post
Langdon, Trustee, for benefit of Lender. Effective Amendment No. 4
to Form S-11
10.38 Guaranty Agreement between Registrant Filed as Exhibit 10(H)(3)
and Corporate Property Associates 10 to Registrant's Post
Incorporated as guarantor and Lender. Effective Amendment No. 4
to Form S-11
10.39 Real Estate Purchase and Sale Contract Filed as Exhibit 10(I)(1)
between Belmet (IL) QRS 11-9, Inc. to Registrant's Post
("QRS 11-9") as purchaser and Mission Effective Amendment No. 4
Leasing and Bank of Rantoul (collectively,
to Form S-11 "Seller").
</TABLE>
-21-
<PAGE> 23
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ----- ----------- ------
<S> <C> <C>
10.40 Assignment and Assumption of Lease Filed as Exhibit 10(I)(2)
between QRS 11-9 and Seller. to Registrant's Post
Effective Amendment No. 4
to Form S-11
10.41 Assignment of Permits and Warranties Filed as Exhibit 10(I)(3)
from Seller to QRS 11-9. to Registrant's Post
Effective Amendment No. 4
to Form S-11
10.42 Industrial Building Lease ("Lease") Filed as Exhibit 10(I)(4)
dated November 16, 1989 between Seller to Registrant's Post
and Bell, together with First Amendment Effective Amendment No. 4
to Lease, dated September 19, 1991. to Form S-11
10.43 Second Amendment to Lease. Filed as Exhibit 10(I)(5)
to Registrant's Post
Effective Amendment No. 4
to Form S-11
10.44 Land Purchase Agreement between MMI Filed as Exhibit 10(J)(1)
(SC) QRS 11-11 Inc. ("QRS 11-11") and to Registrant's Post
Amerisure, Inc. regarding three acre Effective Amendment No. 5
parcel. to Form S-11
10.45 Mortgage from Amerisure, Inc. to QRS Filed as Exhibit 10(J)(2)
11-11 regarding three acre parcel. to Registrant's Post
Effective Amendment No. 5
to Form S-11
10.46 Lease Agreement between QRS 11-11, Filed as Exhibit 10(J)(3)
as Landlord. and MMI, as tenant. to Registrant's Post
Effective Amendment No. 5
to Form S-11
10.47 Assignment, Reassignment and Assumption Filed as Exhibit 10(J)(4)
of Lease among Amerisure, Inc., QRS to Registrant's Post
11-11 and UIC. Effective Amendment No. 5
to Form S-11
10.48 Loan Agreement between The Penn Mutual Filed as Exhibit 10(J)(5)
Life Insurance Company ("Penn Mutual") to Registrant's Post
and QRS 11-11. Effective Amendment No. 5
to Form S-11
10.49 $9,500,000 Promissory Note from QRS Filed as Exhibit 10(J)(6)
11-11 to Penn Mutual. to Registrant's Post
Effective Amendment No. 5
to Form S-11
</TABLE>
-22-
<PAGE> 24
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ------
<S> <C> <C>
10.50 Mortgage and Security Agreement from Filed as Exhibit 10(J)(7)
QRS 11-11 to Penn Mutual. to Registrant's Post
Effective Amendment No. 5
to Form S-11
10.51 Lease Agreement between BVS (NY) QRS Filed as Exhibit 10(K)(1)
11-10, Inc. ("QRS 11-10") as landlord, to Registrant's Post
and BVS, as tenant. Effective Amendment No. 5
to Form S-11
10.52 Reciprocal Easement and Operation Filed as Exhibit 10(K)(2)
Agreement between QRS 11-10 and Fairview to Registrant's Post
Plaza Corporation ("FPC"). Effective Amendment No. 5
to Form S-11
10.53 Lease Agreement between QRS 11-12, (FL), Filed as Exhibit 10(L)(2)
Inc., ("QRS 11-12"), as Landlord, and to Registrant's Post
Unit, as tenant. Effective Amendment No. 5
to Form S-11
10.54 Guaranty and Suretyship Agreement Filed as Exhibit 10(L)(4)
from Unit to QRS 11-12. to Registrant's Post
Effective Amendment No. 5
to Form S-11
10.55 Indemnity Agreement between GATX Filed as Exhibit 10(L)(5)
Corporation and QRS 11-12. to Registrant's Post
Effective Amendment No. 5
to Form S-11
10.56 Assignment and Assumption of Lease by Filed as Exhibit 10(M)(1)
Charlotte Telephone Associates Limited to Registrant's Post
Partnership ("CTA") to QRS 11-14 (NC), Effective Amendment No. 5
Inc. ("QRS 11-14"). to Form S-11
10.57 Purchase and Sale Agreement between Filed as Exhibit 10.1 to
Neoserv (CO) QRS 10-13, Inc. ("QRS:10") Registrant's Form 8-K dated
d Neoserv (CO) QRS 11-8, Inc. ("QRS:11") October 29, 1992
as purchasers and Homart Development Co.
("Homart").
10.58 Promissory Note of QRS:10 and QRS:11 to Filed as Exhibit 10.2 to
Homart. Registrant's Form 8-K dated
October 29, 1992
10.59 Deed of Trust from QRS:10 and QRS:11 for Filed as Exhibit 10.3 to
benefit of Homart. Registrant's Form 8-K dated
October 29, 1992
10.60 Option Agreement between QRS:10 and Filed as Exhibit 10.4 to
QRS:11 as option grantee and Homart as Registrant's Form 8-K dated
option grantor. October 29, 1992
</TABLE>
-23-
<PAGE> 25
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------ ----------- ------
<S> <C> <C>
10.61 Co-Tenancy Agreement between QRS:10 and Filed as Exhibit 10.5 to
QRS:11. Registrant's Form 8-K dated
October 29, 1992
10.62 Lease from QRS:10 and QRS:11 as lessor Filed as Exhibit 10.6 to
and Neodata Services, Inc. ("Neodata") Registrant's Form 8-K dated
as lessee. October 29, 1992
10.63 Guaranty Agreement from Neodata Filed as Exhibit 10.7 to
Corporation as guarantor to QRS:10 and Registrant's Form 8-K dated
QRS:11. October 29, 1992
10.64 Promissory Note of QRS:10 and QRS:11 to Filed as Exhibit 10.8 to
Neodata. Registrant's Form 8-K dated
October 29, 1992
10.65 Deed of Trust from QRS:10 and QRS:11 for Filed as Exhibit 10.9 to
benefit of Neodata. Registrant's Form 8-K dated
October 29, 1992
10.66 Construction Contract between QRS:10 and Filed as Exhibit 10.10 to
QRS:11 as owners and Austin Commercial, Registrant's Form 8-K dated
Inc. ("Austin") as contractor. October 29, 1992
10.67 Guaranty from Austin to QRS:10 and Filed as Exhibit 10.11 to
QRS:11. Registrant's Form 8-K dated
October 29, 1992
10.68 Construction Agency Agreement between Filed as Exhibit 10.12 to
QRS:10 and QRS:11 as owners and Neodata Registrant's Form 8-K dated
as agent. October 29, 1992
10.69 Land Purchase Agreement between MMI (SC) Filed as Exhibit 10.1 to
QRS 11-11, Inc. ("QRS 11-11") and Registrant's Form 8-K dated
Amerisure, Inc. ("Amerisure") regarding January 5, 1993
three acre parcel.
10.70 Mortgage from Amerisure to QRS 11-11 Filed as Exhibit 10.2 to
regarding three acre parcel. Registrant's Form 8-K dated
January 5, 1993
10.71 Lease Agreement between QRS 11-11, as Filed as Exhibit 10.3 to
Landlord, and MMI as tenant. Registrant's Form 8-K dated
January 5, 1993
10.72 Assignment, Reassignment and Assumption Filed as Exhibit 10.4 to
of Lease among Amerisure, Inc., QRS 11-11 Registrant's Form 8-K dated
and UIC. January 5, 1993
10.73 Loan Agreement between The Penn Mutual Filed as Exhibit 10.5 to
Life Insurance Company ("Penn Mutual") Registrant's Form 8-K dated
and QRS 11-11. January 5, 1993
</TABLE>
-24-
<PAGE> 26
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
<S> <C> <C>
10.74 $9,500,000 Promissory Note from QRS Filed as Exhibit 10.6 to
11-11 to Penn Mutual.
Registrant's Form
8-K dated January 5,
1993
10.75 Mortgage and Security Agreement from Filed as Exhibit 10.7 to
QRS 11-11 to Penn Mutual. Registrant's Form 8-K dated
January 5, 1993
10.76 Lease Agreement between BVS (NY) QRS Filed as Exhibit 10.8 to
11-10, Inc. ("QRS 11-10"), as landlord, Registrant's Form 8-K dated
and BVS, as tenant. January 5, 1993
10.77 Reciprocal Easement and Operation Filed as Exhibit 10.9 to
Agreement between QRS 11-10 and Fairview Registrant's Form 8-K dated
Plaza, Inc. January 5, 1993
10.78 Lease Agreement between QRS 11-12 Filed as Exhibit 10.10 to
(FL), Inc. ("QRS 11-12"), as landlord, Registrant's Form 8-K dated
and Unit, as tenant. January 5, 1993
10.79 Guaranty and Suretyship Agreement from Filed as Exhibit 10.11 to
Unit to QRS 11-12. Registrant's Form 8-K dated
January 5, 1993
10.80 Indemnity Agreement between GATX Filed as Exhibit 10.12 to
Corporation and QRS 11-12. Registrant's Form 8-K dated
January 5, 1993
10.81 Assignment and Assumption of Lease Filed as Exhibit 10.1 to
and Lease Guaranty from Oakbrook Registrant's Form 8-K dated
Development Corp. ("Oakbrook") to April 5, 1993
Books CT QRS 11-15, Inc. ("QRS 11-15").
10.82 Co-Tenancy Agreement between DDI (NE) Filed as Exhibit 10.2 to
QRS 10-15, Inc. ("QRS 10-15") and DDI Registrant's Form 8-K dated
(NE) QRS 11-13, Inc. ("QRS 11-13"). April 5, 1993
10.83 Cross Indemnity Agreement between Filed as Exhibit 10.3 to
QRS 10-15 and QRS 11-13. Registrant's Form 8-K dated
April 5, 1993
10.84 Lease Agreement between QRS 10-15 Filed as Exhibit 10.4 to
and QRS 11-13, as landlord, and Registrant's Form 8-K dated
Data Documents, Inc. ("DDI"), April 5, 1993
as tenant.
10.85 Loan Agreement between QRS 10-15 Filed as Exhibit 10.5 to
and QRS 11-13, as borrower, and Registrant's Form 8-K dated
U S West Financial Services, Inc. April 5, 1993
("US West"), as lender.
</TABLE>
-25-
<PAGE> 27
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ------
<S> <C> <C>
10.86 $8,000,000 Promissory Note from Filed as Exhibit 10.6 to
QRS 10-15 and QRS 11-13 to Registrant's Form 8-K dated
US West. April 5, 1993
10.87 Deed of Trust from QRS 10-15 and Filed as Exhibit 10.7 to
QRS 11-13 to US West (for filing Registrant's Form 8-K dated
in the states of Colorado, Nebraska April 5, 1993
and Texas).
10.88 Mortgage from QRS 10-15 and QRS 11-13 Filed as Exhibit 10.8 to
to US West (for filing in the state of Registrant's Form 8-K dated
Kansas). April 5, 1993
10.89 Assignment of Parent Guaranty from Filed as Exhibit 10.9 to
QRS 10-15 and QRS 11-13. Registrant's Form 8-K dated
April 5, 1993
10.90 Deed of Trust Note from QRS 11-14 (NC), Filed as Exhibit 10.1 to
Inc. ("QRS 11-14") to Kredietbank N.V. Registrant's Form 8-K dated
("Kredietbank"). April 13, 1993
10.91 Deed of Trust from QRS 11-14 for the Filed as Exhibit 10.2 to
benefit of Kredietbank. Registrant's Form 8-K dated
April 13, 1993
10.92 Assignment of Leases and Rents from Filed as Exhibit 10.3 to
QRS 11-14 to Kredietbank. Registrant's Form 8-K dated
April 13, 1993
10.93 Escrow Agreement between Filed as Exhibit 10.4 to
QRS 11-14 and Kredietbank. Registrant's Form 8-K dated
April 13, 1993
10.94 Lease Agreement between BB Property Filed as Exhibit 10.1 to
Company, as lessor, and Best Buy, Registrant's Form 8-K dated
as lessee. May 6, 1993
10.95 Note Purchase Agreement among BB Filed as Exhibit 10.2 to
Property Company, Best Buy, and Registrant's Form 8-K dated
TIAA. May 6, 1993
10.96 $32,800,000 Note from BB Property Filed as Exhibit 10.3 to
Property Company to TIAA. Registrant's Form 8-K dated
May 6, 1993
10.97 Deed of Trust and Security Agreement Filed as Exhibit 10.4 to
from BB Property Company for the benefit Registrant's Form 8-K dated
of TIAA. May 6, 1993
10.98 $3,200,000 Promissory Note from BVS (NY) Filed as Exhibit 10.5 to
QRS 11-10, Inc. ("BVS") to Orix. Registrant's Form 8-K dated
May 6, 1993
</TABLE>
-26-
<PAGE> 28
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ------
<S> <C> <C>
10.99 Mortgage, Assignment of Leases and Rents, Filed as Exhibit 10.6 to
Security Agreement and Fixture Filing Registrant's Form 8-K dated
from BVS to Orix. May 6, 1993
10.100 Purchase Agreement between QRS 11-19, Filed as Exhibit 10.2 to
as owner, and Lincoln Technical Registrant's Form 8-K dated
Institute, as buyer. August 13, 1993
10.101 Lease Agreement between Unitech (IL) Filed as Exhibit 10(P)(1) to
QRS 11-19, Inc. ("QRS 11-19"), as Registrant's Post Effective
landlord, and UTI. Amendment No. 6 to Form S-11
10.102 Guaranty and Suretyship Agreement Filed as Exhibit 10(P)(2) to
from Lincoln Technical Institute Registrant's Post Effective
of Arizona, Inc. to QRS 11-19. Amendment No. 6 to Form S-11
10.103 Modification of Loan Documents and Filed as Exhibit 10(P)(3) to
Assumption Agreement among Chicago Registrant's Post Effective
Investment Properties Limited Partnership, Amendment No. 6 to Form S-11
the Guarantors QRS 11-19 and the
Fidelity Mutual Life Insurance Company.
10.104 Rate Cap Transaction letter Agreement Filed as Exhibit 10(Q)(4) to
between BVS and Chemical Bank Registrant's Post Effective
("Chemical"). Amendment No. 6 to Form S-11
10.105 Consent and Agreement Filed as Exhibit 10(Q)(5) to
between Chemical, Orix and BVS. Registrant's Post Effective
Amendment No. 6 to Form S-11
10.106 Assignment of Interest Rate Filed as Exhibit 10(Q)(6) to
Protection Agreement from BVS Registrant's Post Effective
to Orix. Amendment No. 6 to Form S-11
10.107 Warrant issued by Merit to Filed as Exhibit 10(S)(1) to
the Registrant. Registrant's Post Effective
Amendment No. 6 to Form S-11
10.108 Lease Agreement between QRS 11-20 (UT), Filed as Exhibit 10(S)(2) to
Inc. ("QRS 11-20"), as landlord, and Registrant's Post Effective
Merit, as tenant. Amendment No. 6 to Form S-11
10.109 Guaranty Agreement from the Filed as Exhibit 10(S)(3) to
Registrant to Merit. Registrant's Post Effective
Amendment No. 6 to Form S-11
10.110 Construction Management Agreement Filed as Exhibit 10(S)(4) to
Merit and the Koll Company. Registrant's Post Effective
Amendment No. 6 to Form S-11
</TABLE>
-27-
<PAGE> 29
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ------
<S> <C> <C>
10.111 Construction Agreement between Merit Filed as Exhibit 10(S)(5) to
and Camco Construction Company, Inc. Registrant's Post Effective
Amendment No. 6 to Form S-11
10.112 Construction Agency Agreement between Filed as Exhibit 10(S)(6) to
Merit and QRS 11-20. Registrant's Post Effective
Amendment No. 6 to Form S-11
10.113 $8,250,000 Promissory Note from QRS 11-20 Filed as Exhibit 10(S)(7) to
to First Interstate Bank of Utah, N.A. Registrant's Post Effective
("Lender"). Amendment No. 6 to Form S-11
10.114 Deed of Trust, Assignment of Rents, Security Filed as Exhibit 10(S)(8) to
Agreement and Financing Statement from Registrant's Post Effective
QRS 11-20 for the benefit of Lender. Amendment No. 6 to Form S-11
10.115 Assignment of Leases and Rents made by Filed as Exhibit 10(S)(9) to
QRS 11-20 in favor of Lender. Registrant's Post Effective
Amendment No. 6 to Form S-11
10.116 Loan Agreement between QRS 11-20 and Filed as Exhibit 10(S)(10) to
Lender. Registrant's Post Effective
Amendment No. 6 to Form S-11
10.117 Assignment and Assumption of Bid dated Filed as Exhibit 10(T)(1) to
as of April 14, 1993 among QRS 11-17 (NY), Registrant's Post Effective
Inc. ("QRS 11-17"), E.B. Properties, Inc. Amendment No. 7 to Form S-11
("EB") and The Dime Savings Bank of New York,
FSB ("Dime"), as amended and supplemented by
the First Supplement dated April 15, 1993 and
by the Second Supplement dated April 22, 1993
and by letters dated May 12, June 9 and
June 18, 1993.
10.118 Assignment and Assumption Agreement, dated Filed as Exhibit 10(T)(2) to
March 4, 1993, as amended , between Registrant's Post Effective
Dime and EB, as assigned by Assignment Amendment No. 7 to Form S-11
dated April 14, 1993.
10.119 Lease dated as of August 1, 1986 between Filed as Exhibit 10(T)(3) to
D. Grossman and Mormax Corporation (as Registrant's Post Effective
assumed by QRS 11-21, Inc. ("QRS 11-21") Amendment No. 7 to Form S-11
by virtue of documents listed at (10)(T)(1)).
10.120 Promissory Note from QRS 11-17 to Dime Filed as Exhibit 10(T)(4) to
in the amount of $7,000,000. Registrant's Post Effective
Amendment No. 7 to Form S-11
10.121 Mortgage from QRS 11-17 to Dime. Filed as Exhibit 10(T)(5) to
Registrant's Post Effective
Amendment No. 7 to Form S-11
</TABLE>
-28-
<PAGE> 30
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ------
<S> <C> <C>
10.122 Collateral Assignment of Leases and Rents Filed as Exhibit 10(T)(6) to
by QRS 11-17 in favor of Dime. Registrant's Post Effective
Amendment No. 7 to Form S-11
10.123 Agreement of Indemnity Filed as Exhibit 10(T)(7) to
by QRS 11-17 in favor of Dime. Registrant's Post Effective
Amendment No. 7 to Form S-11
10.124 Lease Agreement between SCF (TN) Filed as Exhibit 10(U)(1) to
QRS 11-21, as landlord, and SCM, Registrant's Post Effective
as tenant. Amendment No. 7 to Form S-11
10.125 Warrant issued by Sports & Fitness Filed as Exhibit 10(U)(2) to
Clubs Inc. ("SFC") to QRS 11-21. Registrant's Post Effective
Amendment No. 7 to Form S-11
10.126 Guaranty and Suretyship Agreement by Filed as Exhibit 10(U)(3) to
SFC and Sports and Fitness Clubs of Registrant's Post Effective
America, Inc. ("SFCA") to QRS 11-21. Amendment No. 7 to Form S-11
10.127 Purchase Agreement between QRS 11-21, Filed as Exhibit 10(U)(4) to
as owner, and SFC, as buyer. Registrant's Post Effective
Amendment No. 7 to Form S-11
10.128 Term Loan Agreement between QRS 11-21, Filed as Exhibit 10(U)(5) to
as borrower, and Union Planters National Registrant's Post Effective
Bank, as lender ("Union Planters"). Amendment No. 7 to Form S-11
10.129 Note in the amount of $2,800,000 dated Filed as Exhibit 10(U)(6) to
July 20, 1993 from QRS 11-21 for the Registrant's Post Effective
benefit of Union Planters. Amendment No. 7 to Form S-11
10.130 Deed of Trust, Assignment of Rents and Filed as Exhibit 10(U)(7) to
Security Agreement from QRS 11-21 for the Registrant's Post Effective
benefit of Union Planters. Amendment No. 7 to Form S-11
10.131 Acknowledgment of Assignment of Lease, Filed as Exhibit 10(U)(8) to
Guaranty and Purchase Agreements between Registrant's Post Effective
SCM, SFC, SFCA, QRS 11-21 and Union Planters. Amendment No. 7 to Form S-11
10.132 Real Estate Contract of Sale between Filed as Exhibit 10(V)(1) to
Abacus Capital Corporation, as seller, Registrant's Post Effective
and Registrant, or its assigns, as Buyer. Amendment No. 7 to Form S-11
10.133 Real Estate Contract of Sale between Filed as Exhibit 10.1 to
Abacus Capital Corporation ("Abacus"), as Registrant's Form 8-K
seller, and Registrant, as buyer. dated February 24, 1994
10.134 Assignment of Real Estate Contract of Filed as Exhibit 10.2 to
Sale from Registrant to the PETSMART Registrant's Form 8-K
Subsidiary. dated February 24, 1994
</TABLE>
-29-
<PAGE> 31
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------ ----------- ------
<S> <C> <C>
10.135 Assignment and Assumption of Lease Filed as Exhibit 10.3 to
between Abacus and the PETsMART Registrant's Form 8-K
Subsidiary. dated February 24, 1994
10.136 Loan Agreement between NationsBank and Filed as Exhibit 10.4 to
the PETsMART Subsidiary. Registrant's Form 8-K
dated February 24, 1994
10.137 $2,500,000 Promissory Note made by the Filed as Exhibit 10.5 to
PETsMART Subsidiary to NationsBank. Registrant's Form 8-K
dated February 24, 1994
10.138 Deed of Trust, Assignment, Security Filed as Exhibit 10.6 to
Agreement and Financing Statement from Registrant's Form 8-K
the PETsMART Subsidiary to NationsBank. dated February 24, 1994
10.139 Lease Agreement between the Braintree Filed as Exhibit 10.7 to
Subsidiary, as landlord, and Barnes Registrant's Form 8-K
& Noble, as tenant. dated February 24, 1994
10.140 Real Estate Purchase and Sale Contract Filed as Exhibit 10.8 to
between the ELWA Subsidiary, as buyer, Registrant's Form 8-K
and Big V, as seller. dated February 24, 1994
10.141 Lease Agreement between the ELWA Filed as Exhibit 10.9 to
Subsidiary, as landlord, and Registrant's Form 8-K
Big V as tenant. dated February 24, 1994
10.142 Guaranty and Suretyship Agreement Filed as Exhibit 10.10 to
executed by Big V Holding. Registrant's Form 8-K
dated February 24, 1994
10.143 Amended, Restated and Consolidated Bonds Filed as Exhibit 10.11 to
to Key Bank, as lender, from the ELWA Registrant's Form 8-K
Subsidiary, as borrower. dated February 24, 1994
10.144 Amended and Restated Mortgage and Filed as Exhibit 10.12 to
Security Agreement from the ELWA Registrant's Form 8-K
Subsidiary, to Key Bank. dated February 24, 1994
10.145 Limited Guaranty of Payment from the Filed as Exhibit 10.13 to
Company to Key Bank. Registrant's Form 8-K
dated February 24, 1994
10.146 Lease Agreement between the Brownwood Filed as Exhibit 10.14 to
Subsidiary, as landlord, and Superior, Registrant's Form 8-K
as tenant. dated February 24, 1994
10.147 Guaranty and Suretyship Agreement from Filed as Exhibit 10.15 to
Alpine to Registrant. Registrant's Form 8-K
dated February 24, 1994
</TABLE>
-30-
<PAGE> 32
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------ ----------- ------
<S> <C> <C>
10.148 $2,700,000 Real Estate Note from the Filed as Exhibit 10.16 to
Brownwood Subsidiary, as maker, to Registrant's Form 8-K
Creditanstalt, as holder. dated February 24, 1994
10.149 Deed of Trust and Security Agreement by Filed as Exhibit 10.17 to
the Brownwood Subsidiary, as guarantor Registrant's Form 8-K
to Hazen H. Dempster, as trustee. dated February 24, 1994
10.150 Guaranty and Agreement between the Filed as Exhibit 10.18 to
Company and Creditanstalt. Registrant's Form 8-K
dated February 24, 1994
10.151 Assignment of Contract from Hyde Park Filed as Exhibit 10.19 to
Holdings, Inc. to the Cleveland Registrant's Form 8-K
Subsidiary. dated February 24, 1994
10.152 Lease Agreement between the Cleveland Filed as Exhibit 10.20 to
Subsidiary, as landlord, and Nicholson, Registrant's Form 8-K
as tenant. dated February 24, 1994
10.153 $4,000,000 Cognovit Promissory Note Filed as Exhibit 10.21 to
from the Cleveland Subsidiary to Bank Registrant's Form 8-K
One. dated February 24, 1994
10.154 Mortgage Deed, Security Agreement and Filed as Exhibit 10.22 to
Assignment of Rents and Leases from the Registrant's Form 8-K
Cleveland Subsidiary to Bank One. dated February 24, 1994
10.155 Business Loan Agreement between the Filed as Exhibit 10.23 to
Cleveland Subsidiary, and Bank One. Registrant's Form 8-K
dated February 24, 1994
10.156 Guaranty from Registrant to Bank One. Filed as Exhibit 10.24 to
Registrant's Form 8-K
dated February 24, 1994
10.157 Lease Agreement between the Gensia Filed as Exhibit 10.25 to
Partnership, as landlord, and Gensia, Registrant's Form 8-K
as tenant. dated February 24, 1994
10.158 $13,000,000 Promissory Note from the Filed as Exhibit 10.26 to
Gensia Partnership to Northwestern. Registrant's Form 8-K
dated February 24, 1994
10.159 Deed of Trust, Security Agreement and Filed as Exhibit 10.27 to
Financing Statement from the Gensia Registrant's Form 8-K
Partnership to Northwestern. dated February 24, 1994
10.160 Guarantee of Recourse Obligations from Filed as Exhibit 10.28 to
Registrant and CPA(R):12 to Northwestern. Registrant's Form 8-K
dated February 24, 1994
</TABLE>
-31-
<PAGE> 33
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ------
<S> <C> <C>
10.161 Assignment of Earnest Money Contract Filed as Exhibit 10.29 to
from Garden Ridge to the Round Rock Registrant's Form 8-K
Subsidiary. dated February 24, 1994
10.162 Lease Agreement between the Round Rock Filed as Exhibit 10.30 to
Subsidiary, as landlord, and Garden Registrant's Form 8-K
Ridge, as tenant. dated February 24, 1994
10.163 $3,465,000 Note from the Round Rock Filed as Exhibit 10.31 to
Subsidiary to Garden Ridge. Registrant's Form 8-K
dated February 24, 1994
10.164 Deed of Trust and Security Agreement Filed as Exhibit 10.32 to
from the Round Rock Subsidiary to Garden Registrant's Form 8-K
Ridge. dated February 24, 1994
10.165 $1,700,000 Promissory Note from the Filed as Exhibit 10.33 to
Plano Subsidiary to National Western. Registrant's Form 8-K
dated February 24, 1994
10.166 Deed of Trust, Security Agreement and Filed as Exhibit 10.34 to
Financing Statement from the Plano Registrant's Form 8-K
Subsidiary to National Western. dated February 24, 1994
10.167 Lease Agreement dated June 15, 1994 between Filed as Exhibit 10.167 to
CTC (VA) QRS 11-32, Inc., as Landlord, and Registrant's Form 10-K for
the Childtime Childcare, Inc., as Tenant. year ended December 31, 1994
dated March 31, 1995
10.168 Construction Agency Agreement dated Filed as Exhibit 10.168 to
June 15, 1994 between Childtime Registrant's Form 10-K for the
Childcare, Inc. and CTC (VA) QRS 11-32, Inc. year ended December 31, 1994
dated March 31, 1995
10.169 Lease Agreement dated August 11, 1994 by and Filed as Exhibit 10.169
to between Neenah (WI) QRS 11-31, Inc., as Registrant's Form 10-K for
Landlord, and Exide Electronic Assembly the year ended December 31,
1994 Corporation, as Tenant. dated March 31, 1995
10.170 $5,000,000 Real Estate Note dated Filed as Exhibit 10.170 to
August 11, 1994 from Neenah (WI) QRS 11-31, Registrant's Form 10-K for the
Inc., as Maker, and Creditanstalt Corporate Finance, Inc., as year ended
Holder. December 31, 1994 dated March 31, 1995
10.171 Lease Agreement dated September 30, 1994 Filed as Exhibit 10.171 to by
and between CFP Associates, as Landlord, Registrant's Form 10-K for
Custom Foods Products, Inc., as Tenant. the and year ended December
31, 1994 dated March 31, 1995
10.172 Loan Agreement dated September 30, 1994 Filed as Exhibit 10.172 to
between CFP Associates, as Borrower, and Registrant's Form 10-K for the
Greyrock Capital Group Inc., as Lender. year ended December 31, 1994
dated March 31, 1995
</TABLE>
-32-
<PAGE> 34
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ------
<S> <C> <C>
10.173 $2,000,000 Note dated September 30, 1994 Filed as Exhibit 10.173 to
from CFP Associates, as Maker, and Registrant's Form 10-K for the
Greyrock Capital Group Inc., as Payee. year ended December 31, 1994
dated March 31, 1995
10.174 $200,000 Maximum Amount Promissory Note Filed as Exhibit 10.174 to
dated September 30, 1994 from CFP Associates, Registrant's Form 10-K
as Maker, to Custom Foods Products, for the year ended December 31,
Inc., as Payee. 1994 dated March 31, 1995
10.175 Lease Agreement dated October 14, 1994 by and Filed as Exhibit 10.175 to
between ADS (CA) QRS 11-34, Inc., as Landlord, Registrant's Form 10-K for the
and Chiat/Day Inc. Advertising, as Tenant. year ended December 31, 1994
dated March 31, 1995
10.176 $6,000,000 Promissory Note dated October Filed as Exhibit 10.176 to
14, 1994 from ADS (CA) QRS 11-34, Inc., Registrant's Form 10-K for the
as Borrower, to Kearneys Street Real Estate year ended December 31, 1994
Company, L.P., as Lender. dated March 31, 1995
10.177 $3,000,000 Purchase Money Promissory Filed as Exhibit 10.177 to
Note secured by Deed of Trust dated Registrant's Form 10-K for
October 14, 1994 from ADS (CA) the year ended December 31, 1994
QRS 11-34, Inc., as Maker, to Venice dated March 31, 1995
Operating Corp., as Holder.
10.178 Lease Agreement dated October 31, 1995 Filed as Exhibit 10.33 to
by and between DELMO (PA) QRS 11-36 and Registrant's Form 8-K
DELMO (PA) QRS 12-10 together as Landlord dated March 21, 1996
and Del Monte Corporation, as Tenant.
10.179 Lease Agreement dated December 26, 1995 by Filed as Exhibit 2.1 to
and between Cards Limited Liability Company, Registrant's Form 8-K
as Landlord, and The Upper Deck Company, dated March 21, 1996
as Tenant.
10.180 $15,000,000 Promissory Note dated January 3, Filed as Exhibit 2.2 to
1996 from Cards Limited Liability Company to Registrant's Form 8-K
Column Financial, Inc. dated March 21, 1996
21.1 Subsidiaries of Registrant as of March __, 2000 Filed herewith
23.1 Consent of PricewaterhouseCoopers LLP dated Filed herewith
March __, 2000,
28.1 General Warranty Deed from Filed as Exhibit 28(C)(1)
Amerisure, Inc. to (SC) QRS 11-11 to Registrant's Post
Effective Amendment No. 5
to Form S-11
28.2 Amended and Restated Sublease Agreement Filed as Exhibit 28(C)(2)
between MMI, as sublandlord, and Unisun to Registrant's Post Effective
Insurance Company ("UIC"). Amendment No. 5 to Form S-11
28.3 General warranty Deed from FPC to QRS Filed as Exhibit 28(D)(1) to
11-10. Registrant's Post Effective
Amendment No. 5 to Form S-11
</TABLE>
-33-
<PAGE> 35
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ----- ----------- ------
<S> <C> <C>
28.4 Deed from Unit to QRS 11-12. Filed as Exhibit 28(E)(1)
to Registrant's Post
Effective Amendment No. 5
to Form S-11
28.5 Lease between Unit, as landlord, and Filed as Exhibit 28(E)(2)
SLS, as tenant, as amended. to Registrant's Post
Effective Amendment No. 5
to Form S-11
28.6 Special warranty Deed from CTA, as Filed as Exhibit 28(F)(1)
Grantor to QRS 11-14, as Grantee. to Registrant's Post
Effective Amendment No. 5
to Form S-11
28.7 Lease Agreement between CTA and AT&T. Filed as Exhibit 28(F)(2)
to Registrant's Post
Effective Amendment No. 5
to Form S-11
28.8 Leasehold Deed of Trust from Neodata for Filed as Exhibit 28.1 to
benefit of General Electric Capital Registrant's Form 8-K dated
Corporation. October 29, 1992
28.9 General Warranty Deed from Amerisure Filed as Exhibit 28.1 to
QRS 11-11. Registrant's Form 8-K dated
January 5, 1993
28.10 Amended and Restated Sublease Agreement Filed as Exhibit 28.2 to
between MMI, as sublandlord, and Unisun Registrant's Form 8-K dated
Insurance Company. January 5, 1993
28.11 General Warranty Deed from Fairview Plaza Filed as Exhibit 28.3 to
Corporation to QRS 11-10. Registrant's Form 8-K dated
January 5, 1993
28.12 Deed from Unit to QRS 11-12. Filed as Exhibit 28.4 to
Registrant's Form 8-K dated
January 5, 1993
28.13 Lease between Unit, as landlord, and Filed as Exhibit 28.5 to
SLS, as tenant, as amended. Registrant's Form 8-K dated
January 5, 1993
28.14 Prospectus dated January 21, 1993 of Filed pursuant to Rule
Registrant. 424(b)(s) on January 26, 1993
(Registration No. 33-39409)
</TABLE>
-34-
<PAGE> 36
<TABLE>
<CAPTION>
Exhibit Method of
No. Description Filing
- ------- ----------- ------
<S> <C> <C>
28.15 Supplement No. 1 dated March 17, 1993 Filed pursuant to Rule
to Prospectus dated January 21, 1993. 424(b)(s) on March 17, 1993
(Registration No. 33-39409)
28.16 Quit Claim Deed from Oakbrook to Filed as Exhibit 28.1 to
QRS 11-15. Registrant's Form 8-K dated April 5, 1993
28.17 Lease Agreement between Oakbrook and Filed as Exhibit 28.2 to
B. Dalton Bookseller, Inc. ("B. Dalton"). Registrant's Form 8-K dated April 5, 1993
28.18 First Amendment between Oakbrook and Filed as Exhibit 28.3 to
B. Dalton Bookseller, Inc. Registrant's Form 8-K dated April 5, 1993
28.19 Lease Guaranty to Oakbrook from Barnes Filed as Exhibit 28.4 to
& Noble, Inc. Registrant's Form 8-K dated April 5, 1993
28.20 Guaranty and Suretyship Agreement from Filed as Exhibit 28.5 to
Data Documents Holdings, Inc. to QRS Registrant's Form 8-K dated
10-15 and QRS 11-13. April 5, 1993
28.21 Guaranty from Corporate Property Filed as Exhibit 28.6 to
Associates 10 Incorporated and Registrant's Form 8-K dated
Registrant to US West. April 5, 1993
28.22 Guaranty from Registrant to Orix. Filed as Exhibit 28.1 to
Registrant's Form 8-K dated May 6, 1993
28.23 Special Warranty Deed from Merit Filed as Exhibit 28(G)(1) to
to QRS 11-20. Registrant's Post Effective
Amendment No. 6 to Form S-11
28.24 Table VI: Acquisitions of Properties Filed as Exhibit 28(H) to
by Prior Programs. Registrant's Post Effective
Amendment No. 6 to Form S-11
28.25 Limited Warranty Deed from Filed as Exhibit 28.1 to
the David F. Bolger Revocable Trust Registrant's Form 8-K
to the Braintree Subsidiary. dated February 24, 1994
28.26 Special Warranty Deed from Superior to Filed as Exhibit 28.2 to
the Brownwood Subsidiary. Registrant's Form 8-K
dated February 24, 1994
28.27 Corporation Grant Deed from Gensia to Filed as Exhibit 28.3 to
the Gensia Partnership. Registrant's Form 8-K
dated February 24, 1994
28.28 Supplement No. 2 dated June 15, 1993 Filed as Exhibit 28.28 to
to Prospectus dated January 21, 1993. Registrant's Form 10-K for the
year ended December 31, 1993
28.29 Supplement No. 3 dated August 11, 1993 Filed as Exhibit 28.29 to
to Prospectus dated January 21, 1993. Registrant's Form 10-K for the
year ended December 31, 1993
</TABLE>
(b) Reports on Form 8-K
During the quarter ended December 31, 1998 the Company was not required
to file any reports on Form 8-K.
-35-
<PAGE> 37
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.
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
a Maryland corporation
4/7/2000 BY: /s/ John J. Park
- -------- -----------------------------
Date John J,. Park
Executive Vice President, and
Chief Financial Officer
(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.
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
4/7/2000 BY: /s/ William P. Carey
- ----------- -----------------------------
Date William P. Carey
Chairman of the Board and Director
(Principal Executive Officer)
4/7/2000 BY: /s/ H. Augustus Carey
- ----------- -----------------------------
Date H. Augustus Carey
President
4/7/2000 BY: /s/ Ralph G. Coburn
- ----------- -----------------------------
Date Ralph G. Coburn
Director
4/7/2000 BY: /s/ George E. Stoddard
- ----------- -----------------------------
Date George E. Stoddard
Director
4/7/2000 BY: /s/ Charles C. Townsend, Jr.
- ----------- -----------------------------
Date Charles C. Townsend, Jr.
Director
4/7/2000 BY: /s/ Warren G. Wintrub
- ----------- -----------------------------
Date Warren G. Wintrub
Director
4/7/2000 BY: /s/ Thomas E. Zacharias
- ----------- -----------------------------
Date Thomas E. Zacharias
Director
4/7/2000 BY: /s/ John J. Park
- ----------- -----------------------------
Date John J. Park
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
4/7/2000 BY: /s/ Claude Fernandez
- ----------- -----------------------------
Date Claude Fernandez
Executive Vice President and
Chief Administrative Officer
(Principal Accounting Officer)
-36-
<PAGE> 38
REPORT of INDEPENDENT ACCOUNTANTS
To the Board of Directors of
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and Subsidiaries:
Our audits of the consolidated financial statements referred to in our report
dated April 7, 2000 appearing on page 5 of the 1999 Annual Report to
Shareholders of CAREY INSTITUTIONAL PROPERTIES INCORPORATED and Subsidiaries
(which report and consolidated financial statements are incorporated by
reference in this Annual Report on Form 10-K) also included an audit of the
financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our
opinion, this financial statement schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
New York, New York
April 7, 2000
-37-
<PAGE> 39
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1999
<TABLE>
<CAPTION>
Costs
Initial Cost to Capitalized
Company Subsequent to Decrease in
Description Encumbrances Land Buildings Acquisition (a) Net Investments(b)
<S> <C> <C> <C> <C> <C>
Operating Method:
Retail stores leased to
Wal-Mart Stores, Inc. $ 6,774,269 $ 807,423 $ 6,864,802 $ 87,746
Supermarket leased
to Safeway Stores
Incorporated 336,426 941,959 14,621
Office/Manufacturing
Facility formerly leased
to CalComp Technology, Inc. 309,923 751,453 2,536,047 841
Manufacturing/Distributing
facility leased to
Centrobe, Inc. 10,217,071 1,515,879 503,734 15,125,189
Warehouse/Manufacturing
facility leased to
Bell Sports, Inc. 4,100,400 283,726 5,066,274 3,322,270
Warehouse leased to GATX
Logistics, Inc. 3,638,240 1,350,444 4,574,557 60,676
Warehouse leased to
Lucent Technologies, Inc. 8,450,000 1,290,631 15,937,369 232,870
Land leased to
Barnes & Noble, Inc. 2,227,390 4,759,017 47,962
Land leased to
Best Buy Co., Inc. 11,492,521 18,579,019 646
Land leased to Lincoln
Technical Institute
of Arizona, Inc. 2,516,671 696
Office/Warehouse leased to
Merit Medical Systems, 5,771,475 380,000 10,505,349
Inc.
Retail store leased
to Waban, Inc. 6,352,190 6,119,530 3,630,470 230,327
Land leased to
Q Clubs, Inc. 2,073,578 1,026
Manufacturing/Warehouse
facilities leased to Humco 4,151,371 1,240,000 6,604,324
Holding Group
Office/Warehouse
facility leased to
PSC Scanning, Inc. 5,460,249 1,125,000 7,615,414
</TABLE>
<TABLE>
<CAPTION>
Life on which
Depreciation
Gross Amount at which Carried in Latest
at Close of Period (b)(d) Statement of
Accumulated Income is
Description Land Buildings Total Depreciation Date Acquired Computed
(d)
<S> <C> <C> <C> <C> <C> <C>
Operating Method:
Retail stores leased to
Wal-Mart Stores, Inc. $ 816,658 $ 6,943,313 $ 7,759,971 $ 1,395,863 December 19, 1991 40 yrs.
Supermarket leased
to Safeway Stores
Incorporated 340,274 952,732 1,293,006 191,533 December 19, 1991 40 yrs
Office/Manufacturing
Facility formerly leased
to CalComp Technology, Inc. 751,645 2,536,696 3,288,341 483,552 May 28, 1992 40 yrs.
Manufacturing/Distributing
facility leased to
Centrobe, Inc. 1,519,885 15,624,917 17,144,802 1,953,112 October 1, 1992 40 yrs.
Warehouse/Manufacturing
facility leased to
Bell Sports, Inc. 283,793 8,388,477 8,672,270 1,383,494 November 6, 1992 40 yrs.
Warehouse leased to GATX
Logistics, Inc. 1,364,272 4,621,405 5,985,677 813,536 December 23, 1992 40 yrs.
Warehouse leased to
Lucent Technologies, Inc. 1,295,387 16,165,483 17,460,870 2,835,306 December 30, 1992 40 yrs.
Land leased to February 23,1993
Barnes & Noble, Inc. 4,806,979 4,806,979 and October 1,1993 N/A
Land leased to
Best Buy Co., Inc. 18,579,665 18,579,665 April 15, 1993 N/A
Land leased to Lincoln
Technical Institute
of Arizona, Inc. 2,517,367 2,517,367 May 3, 1993 N/A
Office/Warehouse leased to
Merit Medical Systems, 380,000 10,505,349 10,885,349 1,291,282 June 3, 1993 40 yrs.
Inc.
Retail store leased
to Waban, Inc. 6,263,907 3,716,420 9,980,327 607,179 June 29, 1993 40 yrs.
Land leased to
Q Clubs, Inc. 2,074,604 2,074,604 July 16, 1993 N/A
Manufacturing/Warehouse
facilities leased to Humco 1,240,000 6,604,324 7,844,324 144,470 February 5, 1999 40 yrs.
Holding Group
Office/Warehouse
facility leased to
PSC Scanning, Inc. 1,125,000 7,615,414 8,740,414 118,991 May 12, 1999 40 yrs.
</TABLE>
(Continued)
-38-
<PAGE> 40
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1999
<TABLE>
<CAPTION>
Costs
Initial Cost to Capitalized
Company Subsequent to Decrease in
Description Encumbrances Land Buildings Acquisition (a) Net Investments(b)
<S> <C> <C> <C> <C> <C>
Industrial/Manufacturing
facility lease to Bolder
Technologies Corporation 3,484,634 1,076,000 5,759,878
Warehouse facility leased
to Petsmart, Inc. 2,120,225 106,603 4,444,397 42,817
Manufacturing facility
leased to Plexus Corp. 4,317,300 125,340 9,124,660 5,745
Childcare centers leased
to Childtime Childcare, Inc. 2,355,317 1,198,750 3,422,172
Office building leased to
Omnicom Group, Inc. 25,268,390 6,316,880 27,397,945 9,229,475
Retail stores leased to
Garden Ridge Corporation 7,378,881 2,197,500 4,112,500 5,054,413
Warehouses and special
purpose facility leased to
Del Monte Corporation 5,572,140 304,073 10,230,842
Health club leased to
Q Clubs, Inc. 912,855 4,323,145
Warehouse/office leased
to Hibbett Sporting
Goods, Inc. 2,678,155 660,000 4,040,000 2,323,784
Distribution/warehouse
leased to Detroit
Diesel Corporation. 2,782,860 6,542,140
Office buildings and
supermarkets formerly
leased to Harvest Foods,
Inc. 808,800 4,246,200 1,171 (3,654,905)
Supermarkets leased
to Affiliated
Southwest, Inc. 343,120 1,801,380 497 (492,527)
-------------------------------------------------------------------------------------------
$122,120,141 $59,961,578 $126,067,195 $59,941,135 $(4,147,432)
===========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Life on
which
Depreciation
in Latest
Gross Amount at which Carried Statement
at Close of Period (b)(d) Accumulated of Income
Description Land Buildings Total Depreciation Date Acquired is Computed
(d)
<S> <C> <C> <C> <C> <C> <C>
Industrial/Manufacturing
facility lease to Bolder
Technologies Corporation 1,076,000 5,759,878 6,835,878 100,914 April 16, 1999 40 yrs.
Warehouse facility leased
to Petsmart, Inc. 107,606 4,486,211 4,593,817 696,297 October 26, 1993 40 yrs.
Manufacturing facility
leased to Plexus Corp. 125,418 9,130,327 9,255,745 1,226,888 August 11, 1994 40 yrs.
Childcare centers leased June 15, 1994
to Childtime Childcare, through
Inc. 1,198,750 3,422,172 4,620,922 367,170 November 18, 1994 40 yrs.
Office building leased to
Omnicom Group, Inc. 6,319,147 36,625,153 42,944,300 2,728,573 October 14, 1994 11-40 yrs.
Retail stores leased to
Garden Ridge Corporation 2,197,998 9,166,415 11,364,413 848,633 March 30, 1998 40 yrs.
Warehouses and special
purpose facility leased to
Del Monte Corporation 374,698 10,160,217 10,534,915 870,076 November 9, 1995 40 yrs.
Health club leased to
Q Clubs, Inc. 912,855 4,323,145 5,236,000 418,805 February 6, 1996 40 yrs.
Warehouse/office leased
to Hibbett Sporting
Goods, Inc. 660,000 6,363,784 7,023,784 391,375 February 12, 1996 40 yrs.
Distribution/warehouse
leased to Detroit
Diesel Corporation. 2,782,860 6,542,140 9,325,000 497,475 December 17, 1996 40 yrs.
Office buildings and
supermarkets formerly
leased
to Harvest Foods, Inc. 353,440 1,047,826 1,401,266 72,042 February 21, 1992 40 yrs.
Supermarkets leased
to Affiliated
Southwest, Inc. 416,802 1,235,668 1,652,470 84,952 February 21, 1992 40 yrs.
-----------------------------------------------------------------
$59,885,010 $181,937,466 $241,822,476 $19,521,518
=================================================================
</TABLE>
See accompanying notes to Schedule.
-39-
<PAGE> 41
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1999
<TABLE>
<CAPTION>
Initial Cost to Costs
Company Capitalized
-------------------------------- Subsequent to Decrease in
Description Encumbrances Land Buildings Acquisition (a) Net Investments(b)
<S> <C> <C> <C> <C> <C>
Direct Financing Method:
Retail store leased to
Oshman Sporting
Goods, Inc. $ 1,447,947 $ 700,356 $2,494,843 $37,695 $ 309,844
Office buildings leased
to Michigan Mutual
Insurance Company 9,500,000 1,965,093 11,884,907 5,919 122,174
Supermarkets leased
to Big V Holding Corp. 3,886,620 3,724,889 16,399,261 1,298,867 (4,753,882)
Retail stores leased to
Barnes & Noble, Inc. 3,066,599 5,525,983 49,806 1,042,304
Retail stores leased to
Best Buy Co., Inc. 16,476,903 27,653,981 962 (1,017,154)
Technical training institute
leased to Lincoln Technical
Institute of Arizona, Inc. 6,083,329 1,684
Health club leased to Q Clubs,
Inc. 3,511,422 1,737
Warehouse/distribution
facility leased to
Nich olson Warehouse, Inc. 3,466,449 598,544 6,316,456 1,370 (139,876)
Manufacturing facility leased
to Superior Telecomm-
unications, Inc. 2,282,305 295,032 4,704,968 1,885 (161,794)
Food processing/warehouse
facility leased to Custom
Food Products, Inc. 190,495 27,000 5,536,384
Office buildings and
supermarkets leased
to Kroger Company 251,760 1,321,740
Warehouse/distribution
facility leased to
Gloystarne & Co., Limited 4,202,900 1,132,627 6,069,257
----------- ---------- ----------- ---------- -----------
$44,520,218 $8,695,301 $91,966,147 $6,936,309 $(4,598,384)
=========== ========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at which Carried
at Close of Period (b)(d)
Description Total Date Acquired
<S> <C> <C>
Direct Financing Method:
Retail store leased to
Oshman Sporting
Goods, Inc. $ 3,542,738 December 10, 1992
Office buildings leased
to Michigan Mutual
Insurance Company 13,978,093 December 21, 1993
Supermarkets leased
to Big V Holding Corp. 16,669,135 December 23, 1993 and
Retail stores leased to October 8, 1993
Barnes & Noble, Inc. February 23, 1993 and
Retail stores leased to 6,618,093 October 1, 1993
Best Buy Co., Inc. April 15, 1993
Technical training institute 26,637,789
leased to Lincoln Technical
Institute of Arizona, Inc. May 3, 1993
Health club leased to Q Clubs, 6,085,013
Inc. July 16, 1999
Warehouse/distribution 3,513,159
facility leased to
Nich olson Warehouse, Inc. 6,776,494 December 13, 1993
Manufacturing facility leased
to Superior Telecomm-
unications, Inc. 4,840,091 December 16, 1993
Food processing/warehouse
facility leased to Custom
Food Products, Inc. 5,563,384 September 30, 1994
Office buildings and
supermarkets leased
to Kroger Company 1,573,500 February 21, 1992
Warehouse/distribution
facility leased to
Gloystarne & Co., Limited 7,201,884 December 8, 1999
------------
$102,999,373
============
</TABLE>
See accompanying notes to Schedule.
-40-
<PAGE> 42
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
NOTES to SCHEDULE III - REAL ESTATE
and ACCUMULATED DEPRECIATION
(a) Consists of the costs of improvements subsequent to purchase
and other acquisition costs including legal fees, appraisal
fees, title costs and other related professional fees.
(b) At December 31, 1999, the aggregate cost of real estate owned
by Registrant and its subsidiaries for Federal income tax
purposes is $298,433,205.
(c) The increase (decrease) in net investment is due to the
amortization of unearned income producing a constant periodic
rate of return on the net investment which is more (less) than
lease payments received, the sales of properties, sale of a
tenancy-in-common interest to an affiliate in a prior year and
writedowns to fair value.
(d)
<TABLE>
<CAPTION>
Reconciliation of Real Estate Accounted
for Under the Operating Method
December 31,
1998 1999
<S> <C> <C>
Balance at beginning
of year $191,471,733 $218,521,997
Additions 27,050,264 25,794,403
Writedown to fair value (424,580)
Dispositions (2,069,344)
------------ ------------
Balance at close of
year $218,521,997 $241,822,476
============ ============
</TABLE>
<TABLE>
<CAPTION>
Reconciliation of Accumulated Depreciation
December 31,
1998 1999
<S> <C> <C>
Balance at beginning
of year $11,396,602 $14,974,151
Depreciation expense 3,577,549 4,657,284
Writedown to fair value (21,827)
Dispositions (88,090)
----------- -----------
Balance at close of
year $14,974,151 $19,521,518
=========== ===========
</TABLE>
-41-
<PAGE> 43
APPENDIX A TO FORM 10-K
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
AND SUBSIDIARIES
1999 ANNUAL REPORT
<PAGE> 44
SELECTED FINANCIAL DATA
(In thousands except per share amounts)
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues $ 29,238 $ 32,547 $ 34,247 $ 35,044 $ 39,599
Income before
extraordinary item 9,629 10,421 10,659 12,093 14,836
Net income 9,228 10,146 11,086 13,732 14,836
Basic earnings
per share before
extraordinary item .68 .66 .63 .64 .68
Diluted earnings per share
before extraordinary
items (1) .63 .63 .67
Basic
earnings per share .65 .64 .66 .72 .68
Diluted earnings per
share (1) .66 .71 .67
Dividends paid 11,453 12,488 13,682 14,958 17,715
Dividends per share .81 .82 .82 .83 .83
Payments of mortgage
principal (2) 2,905 3,353 3,658 4,159 4,355
BALANCE SHEET DATA:
Total assets 299,434 320,510 320,485 372,076 381,711
Long-term obligations (3) 150,829 145,836 141,052 142,389 147,715
</TABLE>
(1) For the years prior to 1997, the Company had a simple equity structure
with only common stock outstanding.
(2) Represents scheduled mortgage principal amortization paid.
(3) Represents limited recourse mortgage and note payable obligations due
after more than one year.
-1-
<PAGE> 45
MANAGEMENT'S DISCUSSION AND ANALYSIS
Overview
The following discussion and analysis of financial condition
and results of operations of Carey Institutional Properties Incorporated
("CIP(R)") should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended December 31, 1999. The following
discussion includes forward looking statements. Forward looking statements,
which are based on certain assumptions, describe future plans, strategies and
expectations of CIP(R). Such statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievement of CIP(R) to be materially different from the results of
operations or plan expressed or implied by such forward looking statements.
Accordingly, such information should not be regarded as representations by
CIP(R) that the results or conditions described in such statements or objectives
and plans of CIP(R) will be achieved.
CIP(R) was formed in 1991 and used the proceeds from its
public offering of shares of common stock along with limited recourse mortgage
financing to purchase properties and enter into long-term net leases with
corporate tenants. CIP(R) has also raised proceeds of $74,440,000, beginning in
1995, from a private placement of common stock to institutional investors. A
majority of CIP(R)'s net leases have been structured to place certain economic
burdens of ownership on these corporate tenants by requiring them to pay the
costs of maintenance and repair, insurance and real estate taxes. The leases
have generally been structured to include periodic rent increases that are
stated or based on increases in the consumer price index or, for certain retail
properties, provide for additional rents based on sales in excess of a specified
base amount.
CIP(R)'s primary objectives are to provide rising cash flow
and to protect its investors from the effects of inflation through rent
escalation provisions, property appreciation, tenant credit improvement and
regular paydown of limited recourse mortgage debt. In addition, CIP(R) has
successfully negotiated grants of common stock warrants from selected tenants
and expects to realize the benefits of appreciation from those grants. While
CIP(R) cannot guarantee that its objectives will be ultimately realized, annual
independent valuations of CIP(R)'s assets have reflected significant
appreciation in property values.
Public business enterprises are required to report financial
and descriptive information about their reportable operating segments. Operating
segments are components of an enterprise about which financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. Management
evaluates the performance of its portfolio of properties as a whole, rather than
by identifying discrete operating segments. This evaluation includes assessing
CIP(R)'s ability to meet distribution objectives, increase the dividend and
increase value by evaluating potential investments in single tenant net lease
real estate and by seeking opportunities such as refinancing mortgage debt at
lower rates of interest, restructuring leases or paying off lenders at a
discount to the face value of the outstanding mortgage balance.
Results of Operations
Net income for 1999 and 1998 is not fully comparable due to
the effect of an extraordinary gain from the early extinguishment of debt in
1998 and a net gain of $362,000 from the sales of securities and real estate,
other income of $1,250,000 recognized in connection with a lease termination and
a noncash writedown of a property of $403,000 to fair value in 1999. Excluding
the effects of those nonrecurring items, CIP(R) would have reflected an increase
in earnings of $1,533,000 in 1999 as compared to 1998. The increase in income,
as adjusted, for these nonrecurring items was due to increases in lease revenues
(rental income and interest income from direct financing leases) and income from
equity investments, and was partially offset by increases in depreciation and
amortization and property and general and administrative expenses.
The increase in lease revenues was due to the CIP(R)'s new
leases in 1999 with Humco Holding Group, Inc., PSC Scanning, Inc., Bolder
Technologies, Inc. and Gloystarne, Inc. and a new lease during 1998 with Omnicom
Group, Inc., and to a lesser extent, scheduled rent increases on several leases
in 1999 and 1998. Lease revenues are projected to increase in 2000 as CIP(R)
will reflect a full year's revenues on the leases entered into in 1999 and
revenues will increase on the leases with Hibbett Sporting Goods, Inc. and Big V
Holding Corp as CIP(R) has recently completed expansions of their properties.
The increase in equity income was due to the acquisition with two affiliates of
properties leased to Advanced Micro Devices, Inc. and Compucom Systems, Inc. in
December 1998 and March 1999, respectively, as well as an increase in CIP(R)'s
share of earnings from its investment in thirteen Courtyard by Marriott hotels
that are net
-2-
<PAGE> 46
leased to Marriott International, Inc. The increase in property expenses was due
to higher asset management fees and an increase in the provision for uncollected
rents. The higher asset management fees reflect both an increase in the value of
the portfolio at December 31, 1998 on which the asset management fee is based.
The increase in the provision for uncollected rents is intended to strengthen
the reserve for amounts due from Nicholson Warehouse, L.P. Nicholson has been
able to pay its rent currently in 1999 and 2000, but has made no significant
progress on an arrearage from prior periods. The increase in depreciation, a
noncash charge, was due to new properties acquired in 1998 and 1999. Interest
expense increased moderately (approximately 2%) and reflects the effect the
leveraging of properties acquired in 1999 with limited recourse mortgage debt.
This was offset, however, by paying off several mortgages in 1998 and 1999.
Net income for the years 1998 and 1997 is not fully comparable
due to the effects of extraordinary gains on the extinguishment of debt in both
years and gains from the sale of real estate in 1997. Excluding these items and
other nonrecurring items included in other income, income would have reflected
an increase of $1,549,000 in 1998 as compared to 1997. The increase in income,
as adjusted, was due primarily to increases in lease revenues and other interest
income and a decrease in interest expense. These benefits were partially offset
by an increase in property expenses. Lease revenues increased from a new lease
with Omnicom Group, Inc. for a newly constructed property in Los Angeles,
California and several rent increases on other leases during the year. The
increase in other interest income reflected higher average cash balances during
the year as a result of issuing shares pursuant to CIP(R)'s on-going private
placement offering to institutional investors. CIP(R) paid off several mortgages
resulting in a decrease in interest expense. The decrease in interest expense
also resulted from the continuing amortization of CIP(R)'s mortgage debt. The
increase in property expenses reflected higher asset management and performance
fees and the carrying costs for six vacant properties formerly leased to Harvest
Foods, Inc. CIP(R) has subsequently sold four of the properties and as of March
31, 2000, owns interests in two vacant properties formerly leased to Harvest.
CIP(R) recognized an extraordinary gain of $1,638,000 in 1998,
as the result of reaching a settlement with the holder of a subordinated
mortgage loan on the former Harvest Foods, Inc. properties. CIP(R) paid $250,000
to the holder, in settlement of a $1,500,000 mortgage and accrued interest. The
extraordinary gain of $427,000 in 1997 reflects the gain related to the payoff
of the first priority loan on the Harvest Foods properties.
Because of the long-term nature of CIP(R)'s net leases,
inflation and changing prices have not unfavorably affected CIP(R)'s revenues
and net income. CIP(R)'s net leases have rent increases based on formulas
indexed to increases in the Consumer Price Index, sales overrides, or other
periodic increases that are designed to increase lease revenues in the future.
The initial lease term of properties leased to GATX Logistics, Inc., Waban, Inc.
and Lucent Technologies, Inc. are scheduled to end in 2002. These lessees have
not indicated whether they intend to remain at the leased properties, and there
is no assurance that these leases will be extended. Annual cash flow (rent less
mortgage debt service) from these properties is approximately $1,505,000.
Financial Condition
Except for three vacant properties currently being remarketed,
CIP(R)'s properties are leased to corporate tenants under long-term net leases
that generally require tenants to pay all operating expenses relating to the
leased properties. One of CIP(R)'s objectives is to use the cash flow from net
leases to meet operating expenses, service its debt, maintain adequate cash
reserves and fund an increasing rate of dividends to shareholders. A significant
portion of the cash provided from operations is distributed to the shareholders
in keeping with this objective. Cash provided from operations of $23,335,000 was
sufficient to fund dividend payments of $17,715,000, scheduled mortgage
principal installments of $4,355,000 and distributions of $575,000 to an
affiliate which owns the minority interest in the Best Buy Co., Inc. properties.
CIP(R)'s investing activities consisted of using $39,839,000
to purchase properties leased to Gloystarne, Humco, PSC Scanning and Bolder
Technologies, purchase an equity interest in the Compucom net lease and fund
expansions at properties leased to Big V and Hibbett. CIP(R) will use an
additional $3,023,000 to complete these expansions. CIP(R) has no other
commitments to fund major outlays at its properties, however, CIP(R) is
evaluating redevelopment opportunities at its three vacant properties. To the
extent that two of the properties, formerly leased to Harvest, are unleveraged
and the mortgage balance on the former CalComp technology, Inc. property could
be paid from cash reserves, CIP(R) may be able to obtain new limited recourse
mortgage financing to pay for any necessary improvements, rather than use
existing cash reserves. Whether any improvements are to be funded at these
properties during 2000 and the amount of any such improvements is still in the
process of being evaluated. As of March 31, 2000, CIP(R) has $3,526,000 of cash
available for additional investment in real estate. In March 2000, CIP(R)
purchased a property in Little Germany, Bradford in the United Kingdom for
$6,370,000. During 1999, CIP(R) realized cash proceeds of $3,166,000 on the sale
of three former Harvest properties and sales of securities. CIP(R) sold its
shares of Garden Ridge
-3-
<PAGE> 47
Corporation common stock and redeemed its warrants in Q Clubs, Inc. CIP(R) had
been granted warrants to purchase common stock of the lessees in connection with
structuring net leases with Garden Ridge and Q Clubs.
In addition to paying quarterly dividends and scheduled
principal payment installments, CIP(R)'s financing activities included obtaining
new limited recourse mortgage financing of $17,402,000 in connection with
newly-purchased real estate, paying off a balloon payment of $5,413,000, using
proceeds of $1,250,000 from a lease termination to pay down a mortgage balance
on the mortgage loan on the former CalComp property and using $648,000 to
purchase treasury stock. In connection with paying down the CalComp loan, the
maturity of the loan was extended until August 2000 and the monthly debt service
requirement was changed to interest only.
A balloon payment of $6,900,000 on a limited recourse mortgage
loan collateralized by six properties leased to Wal-Mart Corporation which had
been scheduled to be paid in January 1999 had been extended during 1999. CIP(R)
has not paid off the loan and continues to pay monthly debt services as it
evaluates refinancing opportunities. There is no assurance that CIP(R) will be
able to obtain new financing for the Wal-Mart properties. Although the lender
has the right to demand payment for the entire outstanding balance at any time,
the lender has not yet made a demand for payment of the loan in its entirety.
Monthly debt service on the Wal-Mart loan is in excess of monthly base rent from
the Wal-Mart leases. Net cash flow from the Wal-Mart leases is positive solely
because of the annual percentage of sales rent that CIP(R) receives.
CIP(R)'s financing strategy has been to purchase substantially
all of its properties with a combination of equity and limited recourse mortgage
debt. A lender on a limited recourse mortgage loan has recourse only to the
property collateralizing such debt and not to any of CIP(R)'s other assets. This
strategy has allowed CIP(R) to diversify its portfolio of properties and,
thereby, limit its risk. In the event that a balloon payment comes due, CIP(R)
may seek to refinance the loan, restructure the debt with existing lenders,
evaluate its ability to pay the balloon payment from its cash reserves or sell
the property and use the proceeds to satisfy the mortgage debt. CIP(R) currently
has sufficient cash reserves to pay off the Wal-Mart loan. Mortgage loans
collateralized by properties leased to Del Monte Corporation and Superior
Telecommunications, Inc. are scheduled to mature in 2000 with balloon payments
totaling approximately $7,750,000. CIP(R) expects to refinance these loans.
Balloon payments of approximately $4,000,000 and $5,700,000 are scheduled in
2001 and 2002.
In connection with the purchase of its properties, CIP(R)
requires the sellers to perform environmental reviews. Management believes,
based on the results of such reviews, that CIP(R)'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 degree of contamination, principally in connection with either
leakage from underground storage tanks, surface 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, CIP(R)'s leases generally require
tenants to indemnify CIP(R) from all liabilities and losses related to the
leased properties with provisions of such indemnification specifically
addressing environmental matters. The leases generally include provisions which
allow for periodic environmental assessments, paid for by the tenant, and allow
CIP(R) to extend leases until such time as a tenant has satisfied its
environmental obligations. Certain of the leases allow CIP(R) to require
financial assurances from tenants such as performance bonds or letters of credit
if the costs of remediating environmental conditions are, in the estimation of
CIP(R), in excess of specified amounts. Accordingly, Management believes that
the ultimate resolution of any environmental matter will not have a material
adverse effect on CIP(R)'s financial condition, liquidity or results of
operations.
In 1999, CIP(R) and its affiliates formed a task force to
identify year 2000 problems. The task force developed and implemented a plan
that included inventory, assessment, remediation, testing and contingency
planning. CIP(R) experienced no significant disruptions as a result of the year
end date change. The task force intends to monitor other critical dates in the
future, such as quarter-end dates. In connection with the procedures, CIP(R)
incurred expenses of $110,000. The impact of the year 2000 issues on the CIP(R)
will continue to depend on the way the issues have been addressed by third
parties that provide services to the CIP(R). To date CIP(R) has not been
adversely impacted to any significant extent by the failure of third parties to
address year 2000 issues. The task force has developed contingency plans to
address risks associated with year 2000 issues that may arise. There can be no
assurance that these plans will fully mitigate any problems, if any arise. The
foregoing year 2000 discussions constitute a Year 2000 Readiness Disclosure
within the meaning of the Year 2000 Readiness and Disclosure and Disclosure Act
of 1998.
-4-
<PAGE> 48
REPORT of INDEPENDENT ACCOUNTANTS
To the Board of Directors of
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and Subsidiaries:
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, shareholders' equity and cash flows
present fairly, in all material respects, the financial position of CAREY
INSTITUTIONAL PROPERTIES INCORPORATED and Subsidiaries at December 31, 1997,
1998 and 1999, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of Carey Property Advisors, a Pennsylvania
limited partnership (the "Advisor"); our responsibility is to express an opinion
on these financial statements based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audits 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, assessing the
accounting principles used and significant estimates made by the Advisor, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
New York, New York
April 7, 2000
-5-
<PAGE> 49
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
1997 1998 1999
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS:
Real estate leased to others:
Accounted for under the operating method:
Land $ 53,323,052 $ 57,073,052 $ 59,885,010
Buildings 138,148,681 161,448,945 181,937,466
------------- ------------- -------------
191,471,733 218,521,997 241,822,476
Accumulated depreciation 11,396,602 14,974,151 19,521,518
------------- ------------- -------------
180,075,131 203,547,846 222,300,958
Net investment in direct financing leases 94,235,594 94,473,412 102,999,373
------------- ------------- -------------
Real estate leased to others 274,310,725 298,021,258 325,300,331
Equity investments 22,835,403 32,749,198 38,895,662
cash and cash equivalents 17,331,710 36,787,777 14,100,580
Other assets, net of accumulated amortization
of $1,257,577, $1,432,028, and $1,620,607
in 1997, 1998 and 1999, and net of reserves
for uncollected rents of $248,035, $626,479 and
$1,406,534 in 1997, 1998 and 1999 6,007,626 4,517,389 3,414,212
------------- ------------- -------------
Total assets $ 320,485,464 $ 372,075,622 $ 381,710,785
============= ============= =============
LIABILITIES:
Limited recourse mortgage notes payable $ 154,348,585 $ 160,255,378 $ 166,640,359
Accrued interest 1,248,886 1,088,678 642,793
Accounts payable and accrued expenses 523,821 769,381 825,489
Accounts payable to affiliates 8,483,741 10,565,418 1,394,734
Dividends payable 3,466,189 4,409,132 4,540,035
Prepaid rental income and security deposits 1,053,186 862,282 1,600,779
------------- ------------- -------------
Total liabilities 169,124,408 177,950,269 175,644,189
------------- ------------- -------------
Minority interest 4,988,932 5,233,926 5,500,939
------------- ------------- -------------
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value; authorized,
40,000,000 shares; 17,440,556, 21,046,424 and
22,215,675 shares issued and outstanding at
December 31, 1997, 1998 and 1999 17,440 21,046 22,216
Additional paid-in capital 159,636,566 205,320,138 220,747,880
Dividends in excess of accumulated earnings (11,549,928) (13,718,867) (16,728,182)
Accumulated other comprehensive income 638,539 121,335 23,757
------------- ------------- -------------
148,742,617 191,743,652 204,065,671
Less, common stock in treasury at cost, 241,404,
287,305 and 351,308 shares at
December 31, 1997, 1998 and 1999 (2,370,493) (2,852,225) (3,500,014)
------------- ------------- -------------
Total shareholders' equity 146,372,124 188,891,427 200,565,657
------------- ------------- -------------
Total liabilities and
shareholders' equity $ 320,485,464 $ 372,075,622 $ 381,710,785
============= ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-6-
<PAGE> 50
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
CONSOLIDATED STATEMENTS of INCOME
For the years ended December 31,
<TABLE>
<CAPTION>
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Rental income $ 21,834,831 $ 22,679,719 $ 26,038,006
Interest income from direct financing leases 11,236,439 11,112,788 11,302,619
Other interest income 643,827 1,177,973 959,958
Other income 532,298 73,430 1,298,000
------------ ------------ ------------
34,247,395 35,043,910 39,598,583
------------ ------------ ------------
Expenses:
Interest 14,202,295 13,542,952 13,818,463
Depreciation and amortization 3,741,235 3,752,000 4,845,863
Property expenses 5,104,762 5,711,410 6,946,659
General and administrative 2,532,011 2,399,707 2,779,252
Writedown to fair value 402,753
------------ ------------ ------------
25,580,303 25,406,069 28,792,990
------------ ------------ ------------
Income before minority interest,
income from equity investments, gain (loss)
on sale and extraordinary item 8,667,092 9,637,841 10,805,593
Minority interest in income (773,371) (809,309) (842,152)
------------ ------------ ------------
Income before income from equity
investments, gain (loss) on sale and
extraordinary item 7,893,721 8,828,532 9,963,441
Income from equity investments 3,109,120 3,264,738 4,510,943
------------ ------------ ------------
Income before gain (loss) on sale
and extraordinary item 11,002,841 12,093,270 14,474,384
Gain on sale of securities 1,224,297
Subordinated disposition fees (449,094)
Gain (loss) on sale of real estate 105,131 (862,593)
------------ ------------ ------------
Income before extraordinary item 10,658,878 12,093,270 14,836,088
Extraordinary gain on early extinguishment of debt 427,448 1,638,375
------------ ------------ ------------
Net income $ 11,086,326 $ 13,731,645 $ 14,836,088
============ ============ ============
Basic earnings per common share:
Income before extraordinary item $ .63 $ .64 $ .68
Extraordinary item .03 .08 --
------------ ------------ ------------
$ .66 $ .72 $ .68
============ ============ ============
Diluted earnings per common share:
Income before extraordinary item $ .63 $ .63 $ .67
Extraordinary item .03 .08 --
------------ ------------ ------------
$ .66 $ .71 $ .67
============ ============ ============
Weighted average shares outstanding-basic 16,698,515 18,986,347 21,674,189
============ ============ ============
Weighted average shares outstanding-diluted 16,790,392 19,293,039 22,010,100
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-7-
<PAGE> 51
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
CONSOLIDATED STATEMENTS of SHAREHOLDERS' EQUITY
For the years ended December 31,
<TABLE>
<CAPTION>
Dividends Accumulated
Additional in Excess of Other
Common Paid-in Comprehensive Accumulated Comprehensive Treasury
Stock Capital Income Earnings Income Stock Total
---------- ----------- ------------ -------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1996 $16,725 $151,143,243 $ (5,488,526) $ 73,058 $ (971,000) $144,773,500
715,615 shares issued,
$.001 par, net of costs 715 8,493,323 8,494,038
Cost of raising capital
issuance of stock warrants (780,000) (780,000)
Capital contributions
issuance of stock warrants 780,000 780,000
Repurchase of
141,132 shares (1,399,493) (1,399,493)
Dividends declared (17,147,728) (17,147,728)
Comprehensive income:
Net income $11,086,326 11,086,326 11,086,326
Other comprehensive
income:
Unrealized appreciation
of marketable
securities for 1997 565,481 565,481 565,481
-----------
$11,651,807
===========
Balance at ------- ------------ ------------ -------- ----------- -------------
December 31, 1997 17,440 159,636,566 (11,549,928) 638,539 (2,370,493) 146,372,124
3,605,868 shares issued,
$.001 par, net of costs 3,606 45,683,572 45,687,178
Repurchase of 45,901 shares (481,732) (481,732)
Cost of raising capital -
issuance of stock
warrants (180,000) (180,000)
Capital contributions -
issuance of stock
warrants 180,000 180,000
Dividends declared (15,900,584) (15,900,584)
Comprehensive income:
Net income $13,731,645 13,731,645 13,731,645
Other comprehensive
income:
Unrealized appreciation
of marketable
securities for 1998 (517,204) (517,204) (517,204)
-----------
$13,214,441
===========
Balance at ------- ------------ ------------ -------- ----------- -------------
December 31, 1998 21,046 205,320,138 (13,718,867) 121,335 (2,852,225) 188,891,427
1,169,251 shares issued,
$.001 par, net of costs 1,170 15,427,742 15,428,912
Dividends declared (17,845,403) (17,845,403)
Repurchase of 64,003
shares (647,789) (647,789)
Comprehensive income:
Net income $14,836,088 14,836,088 14,836,088
-----------
Other comprehensive
income:
Foreign currency
translation adjustment 23,757
Change in unrealized
appreciation resulting
from sale of securities (121,335)
-----------
(97,578) (97,578) (97,578)
-----------
$14,738,510
===========
------- ------------ ------------ -------- ----------- ------------
$22,216 $220,747,880 $(16,728,182) $ 23,757 $(3,500,014) $200,565,657
======= ============ ============ ======== =========== ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-8-
<PAGE> 52
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
CONSOLIDATED STATEMENTS of CASH FLOWS
For the years ended December 31,
<TABLE>
<CAPTION>
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 11,086,326 $ 13,731,645 $ 14,836,088
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 3,741,235 3,752,000 4,845,863
Straight-line adjustments and
other noncash rent adjustments (262,454) (165,022) (118,349)
Minority interest in income 773,371 809,309 842,152
Income from equity investments in excess of
distributions received (801,398) (807,728) (512,289)
Gain on sale of real estate and securities, net (105,131) (361,704)
Writedown to fair value 402,753
Extraordinary gain on extinguishment of debt (427,448) (1,638,375)
Accrual of subordinated disposition fees 449,094
Issuance of stock in satisfaction of current year
performance fee 1,950,817
Accrual of subordinated performance fee 2,075,000 2,163,157
Provision for uncollected rents 248,035 431,377 819,882
Net change in operating assets and liabilities (1,289,428) 331,678 629,380
------------ ------------ ------------
Net cash provided by operating activities 15,487,202 18,608,041 23,334,593
------------ ------------ ------------
Cash flows from investing activities:
Purchases of real estate and equity investments
and other capitalized costs (142,683) (35,992,257) (39,839,329)
Proceeds from sales of real estate and securities 1,194,272 3,166,039
Proceeds from repayments on note receivable 110,750
Purchases of securities (429,750)
------------ ------------ ------------
Net cash provided by (used in) investing activities 732,589 (35,992,257) (36,673,290)
============ ============ ============
</TABLE>
(Continued)
-9-
<PAGE> 53
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
CONSOLIDATED STATEMENTS of CASH FLOWS, CONTINUED
For the years ended December 31,
<TABLE>
<CAPTION>
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from mortgages 18,400,000 17,402,900
Purchase of treasury stock (1,399,493) (481,732) (647,789)
Prepayments of mortgages (3,850,000) (7,083,794) (6,663,727)
Proceeds from issuance of shares, net of costs 8,494,038 45,687,178 3,644,967
Payments of mortgage principal (3,658,073) (4,159,413) (4,354,912)
Dividends paid (13,681,539) (14,957,641) (17,714,500)
Distributions paid to minority partners (533,597) (564,315) (575,139)
Deferred financing costs (440,300)
------------ ------------ ------------
Net cash (used in) provided by financing activities (14,628,664) 36,840,283 (9,348,500)
------------ ------------ ------------
Net increase (decrease) in
cash and cash equivalents 1,591,127 19,456,067 (22,687,197)
Cash and cash equivalents, beginning of year 15,740,583 17,331,710 36,787,777
------------ ------------ ------------
Cash and cash equivalents, end of year $ 17,331,710 $ 36,787,777 14,100,580
============ ============ ============
</TABLE>
Noncash investing and financing activities:
In 1997 and 1998, the Company granted warrants to an affiliate for
common stock with a value of $780,000 and $180,000, respectively, as
compensation for services provided in raising capital.
In 1997, the Company converted $700,000 of accrued rents receivable
from a lessee to a note receivable.
In 1999, the Company issued 744,934 shares of common stock ($9,833,129)
to the Advisor for performance fees accrued in prior periods (see Note
3 to the consolidated financial statements).
The accompanying notes are an integral part of the consolidated financial
statements.
-10-
<PAGE> 54
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies:
Basis of Consolidation:
The consolidated financial statements include the accounts of Carey
Institutional Properties Incorporated, its wholly-owned subsidiaries
and controlling general partnership interests (collectively, the
"Company"). All material inter-entity transactions are eliminated.
Use of Estimates:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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 dates 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 the realizability of
real estate assets and investments. 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 Company 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 the
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 Company'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 Company 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.
For properties under construction, interest on mortgages is capitalized
rather than expensed and rentals received are recorded as a reduction
of capitalized project (i.e., construction) costs.
Substantially all of the Company's leases provide for either scheduled
rent increases, periodic rent increases based on formulas indexed to
increases in the Consumer Price Index or Producer Price Index or, for
certain retail properties, sales overrides.
Continued
-11-
<PAGE> 55
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
Depreciation:
Depreciation is computed using the straight-line method over the
estimated useful lives of the properties - generally 40 years.
Depreciation of tenant improvements is computed using the straight-line
method over the remaining term of the leases.
Equity Investments:
The Company's ownership interests in entities in which it owns 50% or
less, are accounted for under the equity method; i.e., at cost,
increased or decreased by the Company's share of earnings or losses,
less distributions.
Cash Equivalents:
The Company 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 Company's cash and cash
equivalents at December 31, 1997, 1998 and 1999 were held in the
custody of two financial institutions, and which at times exceed
federally insurable limits. The Company mitigates this risk by
depositing funds with major financial institutions.
Other Assets:
Included in other assets are deferred charges, deferred rental income,
marketable equity securities and other investments. Deferred charges
are costs incurred in connection with mortgage note financing and
refinancing and are deferred and amortized over the terms of the
mortgages. Deferred rental income is the aggregate difference between
scheduled rents that vary during the lease term and income recognized
on a straight-line basis.
The Company's marketable equity securities, which consisted of 104,400
shares of common stock of the Garden Ridge Corporation ("Garden Ridge")
at December 31, 1998, were classified as available-for-sale securities
and were reported at fair value with the Company's interest in
unrealized gains and losses on these securities reported as a separate
component of shareholders' equity (accumulated other comprehensive
income) until realized. As of December 31, 1998, the Company's cost
basis in the Garden Ridge common stock was $819,073 and at fair value
reflected unrealized appreciation of $121,335 at that date. The Company
disposed of its marketable equity securities in 1999.
Foreign Currency Translation:
The Company consolidates its real estate investment in the United
Kingdom. The functional currency for this investment is the British
Pound. The translation from British Pounds to U. S. dollars is
performed for balance sheet accounts using current exchange rates at
the balance sheet date and for revenue and expense accounts using a
weighted average exchange rate during the period. The gains and losses
resulting from such translation are included in other comprehensive
income as part of shareholders' equity.
Treasury Stock:
Treasury stock is recorded at cost.
Continued
-12-
<PAGE> 56
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
Offering Costs:
Costs incurred in connection with the raising of capital through the
sale of common stock are charged to shareholders' equity upon the
issuance of shares.
Federal Income Taxes:
The Company is qualified and intends to continue to qualify as a Real
Estate Investment Trust ("REIT") under the Internal Revenue Code of
1986 and, accordingly, is not subject to Federal income taxes on
amounts distributed to shareholders provided it distributes at least
95% of its REIT taxable income to its shareholders and meets other
conditions necessary to retain its REIT status.
Earnings Per Share:
The Company presents both basic and diluted earnings per share ("EPS").
Basic EPS excludes dilution and is computed by dividing net income
available to shareholders by the weighted average number of shares
outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue shares were
executed or converted into common stock, where such exercise or
conversion would result in a lower EPS amount.
Basic and diluted earnings per share were calculated as follows:
<TABLE>
<CAPTION>
Income Available Weighted Average
to Common Shares Per-Share
Shareholders Outstanding Amount
<S> <C> <C> <C>
1997
- ----
Basic earnings before
extraordinary items $10,658,878 16,698,515 $ .63
Basic earnings -
extraordinary items 427,448 16,698,515 .03
--------
$11,086,326 16,698,515 $ .66
=========== ========
Effect of dilutive
securities-stock warrants 91,877
-----------
Diluted earnings
before extraordinary items $10,658,878 16,790,392 $ .63
Diluted earnings -
extraordinary items 427,448 16,790,392 .03
----------- --------
$11,086,326 16,790,392 $ .66
=========== ========
1998
- ----
Basic earnings before
extraordinary items $12,093,270 18,986,347 $ .64
Basic earnings -
extraordinary items 1,638,375 18,986,347 .08
----------- --------
$13,731,645 18,986,347 $ .72
=========== ========
Effect of dilutive
securities-stock warrants 306,692
----------
Diluted earnings
before extraordinary items $12,093,270 19,293,039 $ .63
Diluted earnings -
extraordinary items 1,638,375 19,293,039 .08
----------- --------
$13,731,645 19,293,039 $ .71
=========== ========
</TABLE>
Continued
-13-
<PAGE> 57
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
<TABLE>
<CAPTION>
Income Available Weighted Average
to Common Shares Per-Share
Shareholders Outstanding Amount
<S> <C> <C> <C>
1999
Basic earnings $14,836,088 21,674,189 $ .68
=========== =====
Effect of dilutive
securities-stock warrants 335,911
-------
Diluted earnings $14,836,088 22,010,100 $ .67
=========== =====
</TABLE>
Operating Segments:
Accounting standards have been established for the way public business
enterprises report selected information about operating segments and
guidelines for defining the operating segment of an enterprise. Based
on the standards' definition, the Company has concluded that it engages
in a single operating segment.
Reclassifications:
Certain 1997 and 1998 amounts have been reclassified to conform to the
1999 financial statement presentation.
2. Organization and Offering:
The Company was formed on February 15, 1991 under the General
Corporation Law of Maryland for the purpose of engaging in the business
of investing in and owning industrial real estate. Subject to certain
restrictions and limitations, the business of the Company is managed by
Carey Property Advisors, a Pennsylvania limited partnership (the
"Advisor"). Pursuant to a public offering, which concluded in August
1993, the Company issued 14,167,581 shares of common stock.
3. Transactions with Related Parties:
The Company's asset management and performance fees are each -1/2 of 1%
per annum of Average Invested Assets, as defined in the Advisory
Agreement between the Company and the Advisor. Asset management fees
were $2,075,000, $2,163,157 and $2,621,388 in 1997, 1998 and 1999,
respectively, with performance fees for such periods in like amount.
Payment of the performance fee is subordinated to achievement of a
cumulative dividend return of 8% (based on an initial issuance of
Company stock at $10 per share in accordance with the Advisory
Agreement). This cumulative dividend criterion was initially met in
January 1999. During 1999, 892,723 shares were issued in satisfaction
of $11,783,945 of performance fees including 744,934 ($9,833,129) which
had not been payable in prior periods, subject to achieving the
preferred return. The shares issued to pay the performance fee were
priced at $13.20 per share based on the most recent independent
valuation of the Company's portfolio.
General and administrative expense reimbursement consists primarily of
the actual cost of personnel needed in providing administrative
services necessary to the operations of the Company. Reimbursements
incurred were $1,148,113, $805,006 and $825,054 in 1997, 1998 and 1999,
respectively.
Continued
-14-
<PAGE> 58
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
The Advisor will be entitled to receive subordinated disposition fees,
based upon the cumulative proceeds arising from the sale of the
Company's assets since the inception of the Company. Pursuant to the
subordination provisions of the Advisory Agreement, the disposition
fees may be paid only after the shareholders receive 100% of their
initial investment from the proceeds of asset sales and a cumulative
annual return of 6% since the inception of the Company. The affiliate's
interest in such disposition fees amounts to $503,469 through December
31, 1999 and is included in accounts payable to affiliates in the
accompanying consolidated financial statements. Payment of such amount,
however, cannot be made until the subordination provisions are met.
Pursuant to an Advisory Agreement, the Advisor performs certain
services for the Company including the identification, evaluation,
negotiation, purchase and disposition of property, the day-to-day
management of the Company and the performance of certain administrative
services. If in any year the operating expenses exceed the 2%/25%
Guidelines (the greater of 2% of Average Invested Assets or 25% of net
income) as defined in the Advisory Agreement, the Advisor will have an
obligation to reimburse the Company for such excess.
The Company's ownership interests in certain properties are jointly
held with affiliated entities with such interests held as
tenants-in-common and through ownership interests in a real estate
investment trust, general partnerships and limited liability companies.
The Company's interests in jointly held properties range from 23.7% to
80%. The Company's share of its undivided interests in assets and
liabilities relating to tenants-in-common interests are accounted for
on a proportional basis.
In connection with performing services relating to the Company's real
estate purchases, affiliates of the Company received fees of $589,878
and $343,146 in 1998 and 1999, respectively. No such fees were paid in
1997.
In 1995, the Company's Board of Directors authorized the offering of
10,000,000 Shares in a private placement to a limited number of
institutional investors. Through December 31, 1999 the Company has
raised $74,440,000 from institutional investors, issuing 6,250,262
shares. The offering has been conducted by W. P. Carey & Co., Inc. ("W.
P. Carey"), an affiliate of the Advisor. In 1997, the Company's
shareholders approved a proposal to grant warrants for the Company's
common stock to W. P. Carey in lieu of cash compensation. Under the
plan, W. P. Carey was granted, subject to the approval of the Company's
Board of Directors, 3,732,082 warrants with 866,667 exercisable at $10
per share, 750,000 warrants exercisable at $11.50 per share, 243,062
exercisable at $11.90 per share and 1,872,353 exercisable at $12.80 per
share. The options are exercisable over a ten-year period. The exercise
prices are based on the share price at the time the shares were issued
to the institutional investors. The granting of the options was
intended to compensate W. P. Carey in an amount equivalent to a fee of
3% of the capital raised. The warrants have been valued by an
independent consultant. As the compensation is directly related to
raising capital, such compensation cost has been charged to additional
paid-in capital. Pursuant to Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation, the charge
for stock-based compensation has been offset by a credit to additional
paid-in capital.
In connection with services performed relating to the identification,
evaluation, structuring and development of the Company's investments in
real estate, affiliates of the Company received structuring and
development fees of $1,474,694 and $857,865 in 1998 and 1999,
respectively. No such fees were paid in 1997.
Continued
-15-
<PAGE> 59
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
The Company is a participant in an agreement with W. P. Carey and
certain 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
Company's share of rental, occupancy and leasehold improvement costs is
based on gross revenues. Expenses incurred in 1997, 1998 and 1999 were
$226,616, $230,412 and $225,321, respectively.
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 $26,133,000 in
2000; $26,253,000 in 2001; $23,698,000 in 2002; $22,198,000 in 2003;
$22,205,000 in 2004; and aggregate approximately $355,343,000 through
2020.
Contingent rents were approximately $551,000, $783,000, and $870,486 in
1997, 1998 and 1999, respectively.
5. Net Investment in Direct Financing Leases:
Net investment in direct financing leases is summarized as follows:
<TABLE>
<CAPTION>
December 31,
1997 1998 1999
<S> <C> <C> <C>
Minimum lease payments
receivable $194,489,838 $183,949,276 $203,395,121
Unguaranteed residual value 92,900,350 92,900,350 101,311,101
------------ ------------ ------------
287,390,188 276,849,626 304,706,222
Less: unearned income 193,154,594 182,376,214 201,706,849
------------ ------------ ------------
$ 94,235,594 $ 94,473,412 $102,999,373
============ ============ ============
</TABLE>
Scheduled future minimum rents, exclusive of renewals, under
noncancellable direct financing leases amount to approximately
$11,648,000 in 2000; $11,671,000 in 2001; $11,422,000 in 2002;
$11,673,000 in 2003; $11,841,000 in 2004; and aggregate approximately
$203,395,000 through 2024.
The Company is committed under long-term ground leases for certain
properties formerly occupied by Harvest Foods, Inc. through 2009.
Future ground lease rental commitments aggregate $630,000.
Contingent rents were approximately $302,000, $334,000 and $456,000 in
1997, 1998 and 1999, respectively.
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 carrying value of approximately $291,894,000. As of
December 31, 1999, mortgage notes payable have interest rates varying
from 5.14% to 10% per annum and mature from 2000 to 2020.
Continued
-16-
<PAGE> 60
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
Scheduled principal payments during each of the five years following
December 31, 1999 and thereafter are as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
<S> <C>
2000 $ 18,924,879
2001 8,454,039
2002 16,765,907
2003 11,258,880
2004 15,060,123
Thereafter 96,176,531
------------
Total $166,640,359
============
</TABLE>
Interest paid, excluding capitalized interest, was $14,170,087,
$13,509,785 and $14,264,348 in 1997, 1998 and 1999, respectively.
In connection with the placement of mortgages, fees of $589,878 and
$343,146 were paid to an affiliate of the Company in 1998 and 1999. No
mortgage placement fees were paid in 1997.
7. Dividends:
Dividends paid to shareholders consist of ordinary income, capital
gains, return of capital or a combination thereof for income tax
purposes. For the years ended December 31, 1997, 1998 and 1999,
dividends paid per share were reported as follows for tax purposes:
<TABLE>
<CAPTION>
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Ordinary income $.67 $.75 $.70
Capital gains - - .06
Return of capital .15 .08 .07
---- ---- ----
$.82 $.83 $.83
==== ==== ====
</TABLE>
A dividend of $.2076 per share for the quarter ended December 31, 1999
($4,540,035) was declared in December 1999 and paid in January 2000.
8. Lease Revenues:
The Company'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>
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Per Statements of Income:
Rental income from operating leases $21,834,831 $22,679,719 $26,038,006
Interest income from direct
financing leases 11,236,439 11,112,788 11,302,619
Adjustments:
Share of leasing revenues applicable
to minority interest (1,793,239) (1,787,480) (1,779,485)
Share of leasing revenues from equity
investments 7,017,675 7,150,066 11,189,703
----------- ----------- -----------
$38,295,706 $39,155,093 $46,750,843
=========== =========== ===========
</TABLE>
Continued
-17-
<PAGE> 61
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
The Company earned its share of net leasing revenues in 1997, 1998 and
1999 from its direct and indirect ownership of real estate from the
following lease obligors:
<TABLE>
<CAPTION>
1997 % 1998 % 1999 %
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Marriott International, Inc. (1) $ 4,388,800 12% $ 4,436,519 11% $ 4,461,891 10%
Omnicom Group, Inc. 1,867,500 5 2,412,381 6 4,265,066 9
Advanced Micro Devices, Inc. (1) 84,672 3,048,500 7
Best Buy Co., Inc. (2) 3,053,352 8 3,043,548 8 3,029,933 6
Centrobe, Inc. 2,350,911 6 2,354,252 6 2,358,928 5
Lucent Technologies, Inc. 1,852,829 5 1,852,829 5 1,852,829 4
Big V Holding Corp. 1,718,359 5 1,748,210 5 1,831,101 4
Garden Ridge Corporation 1,361,004 4 1,426,128 4 1,467,013 3
Barnes & Noble, Inc. 1,357,758 4 1,385,861 4 1,398,758 3
Sicor, Inc. (1) 1,309,000 3 1,309,000 3 1,377,224 3
Michigan Mutual Insurance
Company 1,361,424 4 1,362,779 4 1,362,833 3
The Upper Deck Company (1) 1,319,875 3 1,319,875 3 1,319,875 3
Q Clubs, Inc. 1,288,875 3 1,288,875 3 1,319,212 3
Merit Medical Systems, Inc. 1,303,291 3 1,303,291 3 1,303,292 3
Del Monte Corporation 1,286,250 3 1,286,250 3 1,286,250 3
Lincoln Technical Institute
of Arizona, Inc. 1,155,055 3 1,206,952 3 1,206,952 3
Plexus Corp. 1,122,470 3 1,184,409 3 1,184,409 3
Waban, Inc. 1,118,251 3 1,118,356 3 1,118,356 2
Bell Sports, Inc. 1,038,545 3 1,064,328 3 1,088,067 2
Wal-Mart Stores, Inc. 970,948 3 1,013,389 3 1,070,232 2
Compucom Systems, Inc. (1) 982,213 2
Custom Food Products, Inc. 869,422 2 870,024 2 928,890 2
Detroit Diesel Corporation 845,000 2 845,000 2 845,000 2
Nicholson Warehouse L.P. 805,124 2 805,160 2 805,200 2
GATX Logistics, Inc. 794,893 2 794,893 2 794,893 2
Humco Holding Group 746,519 2
Superior Telecommunications, Inc. 667,727 2 657,733 2 640,310 1
Childtime Childcare, Inc. 584,426 2 608,856 2 608,856 1
PSC Scanning, Inc. 523,273 1
Petsmart, Inc. 485,113 1 492,553 1 498,636 1
Hibbett Sporting Goods, Inc. 475,784 1 475,784 1 493,587 1
Bolder Technologies, Inc. 459,911 1
Oshman Sporting Goods, Inc. 449,972 1 455,985 1 459,491 1
Affiliated Foods Southwest, Inc.(3) 51,953 152,279 224,515
Kroger Co.(3) 164,555 206,806 1 206,806
Safeway Stores Incorporated 141,750 141,750 141,750
Gloystarne & Co., Inc. 40,272
CalComp Technology, Inc. 443,024 1 446,366 1
Harvest Foods, Inc. (3) 291,466 1
Other 1,000
----------- ---- ----------- ---- ----------- ----
$38,295,706 100% $39,155,093 100% $46,750,843 100%
=========== ==== =========== ==== =========== ====
</TABLE>
(1) Represents the Company's share of revenues from its equity investment.
(2) Net of rental amount applicable to CPA(R):12's 37% minority interest.
(3) Net of ground lease rental expense of approximately $158,000, in each
of the years 1997, 1998 and 1999.
Continued
-18-
<PAGE> 62
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
9. Equity Investments:
The Company owns a 23.7% interest in a real estate investment trust
which net leases 13 hotel properties to a wholly-owned subsidiary of
Marriott International, Inc., a 50% equity interest in a general
partnership which owns land and buildings in San Diego, California, net
leased to Sicor Inc., a 50% interest in a general partnership which net
leases two office buildings in San Diego, California to The Upper Deck
Company, a 33 1/3% interest in a limited liability company which owns
land and buildings in Sunnyvale, California, net leased to Advanced
Micro Devices, Inc. ("AMD") and a 33 1/3% interest in a limited
liability company which owns land and building in Dallas, Texas net
leased to Compucom Systems, Inc. ("Compucom"). The interests in AMD and
Compucom net leases were purchased in December 1998 and March 1999,
respectively.
Summarized combined financial information of the Company's equity
investees is as follows:
(In thousands)
<TABLE>
<CAPTION>
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Assets (primarily real estate) $197,852 $287,777 $323,347
Liabilities (primarily mortgage notes payable) 130,008 193,443 211,058
-------- -------- --------
Capital $ 67,844 $ 94,334 $112,289
======== ======== ========
Revenues (primarily rental revenues) $ 23,908 $ 24,255 $ 36,332
Expenses (primarily interest on mortgages
and depreciation) 13,458 13,246 21,049
-------- -------- --------
Net income $ 10,450 $ 11,009 $ 15,283
======== ======== ========
</TABLE>
10. Gains (Losses) on Sale of Real Estate and Securities:
In 1997, subsequent to the termination of its master lease with Harvest
Foods, Inc. ("Harvest"), the Company sold three vacant properties and
recognized a gain on sales of $105,131. In 1999, the Company sold three
vacant properties formerly leased to Harvest for $1,127,625 and
recognized a loss on sale of $862,593. The Company sold a vacant
Harvest property in Clarksdale, Mississippi in March 2000 for a nominal
amount and has recognized an impairment loss in 1999 of $402,753 in
connection with the agreement to sell the property.
In 1993 and 1995, the Company entered into net leases with Garden Ridge
Corporation ("Garden Ridge") and was awarded warrants to purchase
164,000 shares of Garden Ridge common stock of which 97,200 warrants
were exercisable at $6.67 per share and 67,500 warrants were
exercisable at $10 per share. The Company subsequently exercised all of
its warrants and sold 112,500 shares, recognizing gains on such sales
of $628,099 and $664,431 in 1995 and 1996, respectively. Garden Ridge
common stock subsequently split on a 2-for-1 basis and in December
1999, the Company sold its remaining 104,400 shares at a gain of
$369,312. The Company also recognized a gain of $854,985 in connection
with the redemption of warrants that had been granted by Q Clubs, Inc.
11. Extraordinary Gains on Extinguishment of Debt:
In June 1997, the Company paid off the first priority mortgage loan
collateralized by the properties formerly leased to Harvest. The lender
accepted a payment of $3,850,000 as a settlement of an outstanding
balance of $4,277,447. In connection with the prepayment the Company
recognized an extraordinary gain on the early extinguishment of debt of
$427,448. On December 22, 1998, the holder of a limited recourse
subordinated mortgage note on the former Harvest properties agreed to
accept a payment of $250,000 from the Company in satisfaction of the
$1,500,000 mortgage loan obligation and accrued interest thereon of
$388,375. In connection with the payoff of the subordinated mortgage
loan, the Company recognized an extraordinary gain on the
extinguishment of debt of $1,638,375 in 1998.
Continued
-19-
<PAGE> 63
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
12. Property in Austin, Texas:
In January 1999, CalComp Technology, Inc. ("CalComp"), the lessee of a
property in Austin, Texas announced its intention to liquidate and
stopped paying its rent. In response to CalComp's action, the Company
initiated litigation against CalComp seeking judgement for all unpaid
and future rents plus associated costs. The Company also entered into
discussions with CalComp in order to negotiate a settlement in
recognition of the fact that it could take an extended period to obtain
a resolution to the litigation. On August 5, 1999, the Company and
CalComp agreed to a settlement. Under the terms of the agreement, the
Company agreed to withdraw its lawsuits with prejudice and to terminate
the CalComp lease in consideration for a lump sum payment from CalComp
of $1,250,000. This amount was recognized in 1999 as other income in
the accompanying consolidated financial statements.
The limited recourse mortgage loan collateralized by the Austin
property matured in August 1999 at which time a scheduled balloon
payment was due. In October 1999, the Company agreed to use the lease
termination proceeds of $1,250,000 to reduce the outstanding balance on
the loan from $1,559,923 to $309,923. In consideration for the payment,
the lender agreed to modify the loan to provide for monthly debt
service installments of interest only rather than installments of
interest and principal and to extend the maturity of the loan until
August 2000 at which time the balloon payment for the outstanding
principal balance is scheduled.
13. Purchase of Real Estate:
On December 8, 1999, the Company purchased land and building in
Rotherdam, South Yorkshire in the United Kingdom for $7,216,000 and
entered into a net lease agreement with Gloystarne & Co.
("Gloystarne"). In connection with the purchase, the Company obtained
$4,202,000 of limited recourse mortgage financing. The Gloystarne lease
provides for a twenty-year term through December 8, 2019 with annual
rent, based on current exchange rates, of approximately $620,000, based
on current exchange rates, with rent increases every five years at the
higher of (i) the rent for the prior five-year period increased at 3%
per year and (ii) the fair market rental as of the rent increase date
multiplied by 1.03%.
The loan has a twenty year term and provides for quarterly payments of
interest only during the first five years, at an annual interest rate
equal to the 3-month London Interbank Offered Rate plus 1.2%, initially
7.3%, followed by quarterly payments of principal and interest with
principal payments, based on current exchange rates, of approximately
as follows: $28,630 in years 6-10, $57,260 in years 11-15 and $65,440
in years 16-20. The loan maybe prepaid at any time subject to a
prepayment premium.
14. 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 Company estimates that the fair value of mortgage notes payable at
December 31, 1997 and 1998 was approximately $163,512,000 and
$166,640,000, respectively at December 31, 1999. 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 risks.
Continued
-20-
<PAGE> 64
CAREY INSTITUTIONAL PROPERTIES INCORPORATED
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
In conjunction with executing several of its leases, the Company was
granted warrants to purchase common stock of the lessee or lease
guarantor. To the extent that the lessee or lease guarantor is not a
publicly traded company, the warrants have been judged at the time of
issuance to be speculative in nature and a nominal cost basis has been
attributed to them. The Company believes it is not practicable to
estimate the fair value of its stock warrants for closely held
companies. At December 31, 1998 and 1999, the Company held stock
warrants to purchase 155,461 shares of the common stock of Merit
Medical Systems, Inc. ("Merit"), a publicly traded company. The fair
value of the Company's stock warrants in Merit as of December 31, 1999,
based on quoted prices for Merit's common stock, was approximately
$272,000. Such warrants are exercisable currently and are carried at a
nominal value.
15. Accounting Pronouncement:
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities", effective January 1,
2000, which establishes accounting and reporting standards for
derivative instruments. The Company believes that upon adoption SFAS
will not have a material impact on the consolidated financial
statements.
Continued
-21-
<PAGE> 65
MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
- --------------------------------------------------------------------------------
Except for limited or sporadic transactions, there is no established
public trading market for the Shares of the Company. As of December 31, 1999,
there were 8,664 holders of record of the Shares of the Company.
The Company is required to distribute annually its Distributable REIT
Taxable Income, as defined in the Prospectus, to maintain its status as a REIT.
Quarterly dividends paid by the Company since December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Cash Dividends Paid Per Share
--------------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
First quarter $.20520 $.20600 $.20680
Second quarter .20540 .20620 .20700
Third quarter .20560 .20622 .20720
Fourth quarter .20580 .20663 .20740
------- ------- -------
$.82200 $.82505 .82840
======= ======= =======
</TABLE>
REPORT ON FORM 10-K
- --------------------------------------------------------------------------------
The Advisor will supply to any shareholder, upon written request and
without charge, a copy of the Annual Report on Form 10-K for the year ended
December 31, 1999 as filed with the Securities and Exchange Commission.
-22-
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF REGISTRANT
WALSAFE (CA) QRS 11-1, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF CALIFORNIA AND DOING
BUSINESS UNDER THE NAME WALSAFE (CA) QRS 11-1, INC.
QRS 11-2 (AR), INC., A WHOLLY-OWNED SUBSIDIARY OF REGISTRANT
INCORPORATED UNDER THE LAWS OF THE STATE OF ARKANSAS AND DOING BUSINESS UNDER
THE NAME QRS 11-2 (AR), INC.
QRS 11-3 (MD), INC., A WHOLLY-OWNED SUBSIDIARY OF REGISTRANT
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND AND DOING BUSINESS UNDER
THE NAME ORS 11-3 (MD), INC.
QRS 11-5 (TX), INC., A WHOLLY-OWNED SUBSIDIARY OF REGISTRANT
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS AND DOING BUSINESS UNDER THE
NAME OF QRS II -5 (TX), INC.
PLANO (TX) ORS 11-7, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS AND DOING BUSINESS
UNDER THE NAME PLANO (TX) QRS 11-7, INC.
NEOSERV (CO) ORS 11-8, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF COLORADO AND DOING
BUSINESS UNDER THE NAME NEOSERV (CO) QRS 11-8, INC.
BELMET (IL) ORS 11-9, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS AND DOING
BUSINESS UNDER THE NAME BELMET (IL) QRS 11-9, INC.
BVS (NY) QRS 11-10, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK AND DOING
BUSINESS UNDER THE NAME BVS (NY) ORS 11-10, INC.
MMI (SC) QRS 11-11, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF SOUTH CAROLINA AND DOING
BUSINESS UNDER THE NAME MMI (SC) QRS 11-11, INC.
QRS 11-12 (FL), INC., A WHOLLY-OWNED SUBSIDIARY OF REGISTRANT
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA AND DOING BUSINESS UNDER THE
NAME QRS 11-12 (FL), INC.
DDI (NE) ORS 11-13, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF NEBRASKA AND DOING
BUSINESS UNDER THE NAME DDI (NE) QRS 11-13, INC.
QRS 11-14 (NC), INC., A WHOLLY-OWNED SUBSIDIARY OF REGISTRANT
INCORPORATED UNDER THE LAWS OF THE STATE OF NORTH CAROLINA AND DOING BUSINESS
UNDER THE NAME QRS 11-14, (NC), INC.
BOOKS (CT) QRS 11-16, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF CONNECTICUT AND DOING
BUSINESS UNDER THE NAME BOOKS (CT) QRS 11-15, INC.
QRS 11-17 (NY), INC., A WHOLLY-OWNED SUBSIDIARY OF REGISTRANT
INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK AND DOING BUSINESS UNDER
THE NAME QRS 11-17 (NY), INC.
BBC (NE) QRS 11-18, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF NEBRASKA AND DOING
BUSINESS UNDER THE NAME BBC (NE) QRS 11-18, INC.
UNITECH (IL) QRS 11-19, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS AND DOING
BUSINESS UNDER THE NAME UNITECH (IL) QRS 11-19, INC.
QRS 11-20 (UT), INC., A WHOLLY-OWNED SUBSIDIARY OF REGISTRANT
INCORPORATED UNDER THE LAWS OF THE STATE OF UTAH AND DOING BUSINESS UNDER THE
NAME QRS 11-20. (UT), INC.
SFC (TN) QRS 11-21, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF TENNESSEE AND DOING
BUSINESS UNDER THE NAME SFC (TN) QRS 11-21, INC.
PETS (TX) QRS 11-23, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS AND DOING BUSINESS
UNDER THE NAME PETS (TX) QRS 11-23, INC.
ELWA-BV (NY) QRS 11-24, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK AND DOING
BUSINESS UNDER THE NAME ELWA-BV (NY) QRS 11-24, INC.
GENA (CA) QRS 11-25, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF CALIFORNIA AND DOING
BUSINESS UNDER THE NAME GENA (CA) QRS 11-25, INC.
BN (MA) QRS 11-26, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF MASSACHUSETTS AND DOING
BUSINESS UNDER THE NAME BN (MA) QRS 11-26, INC.
QRS 11-27 (OH), INC., A WHOLLY-OWNED SUBSIDIARY OF REGISTRANT
INCORPORATED UNDER THE LAWS OF THE STATE OF OHIO AND DOING BUSINESS UNDER THE
NAME QRS 11-27 (OH), INC.
ALP (TX) QRS 11-28, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS AND DOING BUSINESS
UNDER THE NAME ALP (TX) QRS 11-28, INC.
QRS 11-29 (TX), INC., A WHOLLY-OWNED SUBSIDIARY OF REGISTRANT
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS AND DOING BUSINESS UNDER THE
NAME QRS 11-29 (TX), INC.
<PAGE> 2
SUBSIDIARIES OF REGISTRANT
(CONTINUED)
CFP (MD) ORS 11-30, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND AND DOING
BUSINESS UNDER THE NAME CFP (MD) QRS 11-30, INC.
NEENAH (WI) QRS 11-31, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF WISCONSIN AND DOING
BUSINESS UNDER THE NAME NEENAH (WI) QRS 11-31, INC.
CTC (VA) QRS 11-32, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF VIRGINIA AND DOING
BUSINESS UNDER THE NAME CTC (VA) QRS 11-32, INC.
CFP (MD) QRS 11-33, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND AND DOING
BUSINESS UNDER THE NAME CFP (MD) ORS 11-33, INC.
ADS (CA) QRS 11-34, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF CALIFORNIA AND DOING
BUSINESS UNDER THE NAME ADS (CA) QRS 11-34, INC.
DELMO (PA) QRS 11-36, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF PENNSYLVANIA AND DOING
BUSINESS UNDER THE NAME DELMO (PA) QRS 11-36, INC.
CARDS (CA) QRS 11-37, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF CALIFORNIA AND DOING
BUSINESS UNDER THE NAME CARDS (CA) QRS 11-37, INC.
SFC (TX) QRS 11-38, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS AND DOING BUSINESS
UNDER THE NAME SFC (TX) QRS 11-38, INC.
QRS 12-14 (AL), INC., A WHOLLY-OWNED SUBSIDIARY OF REGISTRANT
INCORPORATED UNDER THE LAWS OF THE STATE OF ALABAMA AND DOING BUSINESS UNDER THE
NAME QRS 12-14 (AL), INC.
AUTO (FL) QRS 11-39, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA AND DOING
BUSINESS UNDER THE NAME AUTO (FL) QRS 11-39, INC.
CPFLOAN (MD) QRS 11-40, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND AND DOING
BUSINESS UNDER THE NAME CPFLOAN (MD) QRS 11-40, INC.
QRS 11-PAYING AGENT, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK AND DOING
BUSINESS UNDER THE NAME QRS 11-PAYING AGENT, INC.
ADS2 (CA) QRS 11-41, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF CALIFORNIA AND DOING
BUSINESS UNDER THE NAME ADS2 (CA) QRS 11-41, INC.
MICRO (CA) QRS 11-43, INC., A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND DOING
BUSINESS UNDER THE NAME MICRO (CA) QRS 11-43, INC.
HUM (DE) QRS 11-45, INC. A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND DOING
BUSINESS UNDER THE NAME HUM (DE) QRS 11-45, INC.
COMP (TX) QRS 11-42, INC. A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND DOING
BUSINESS UNDER THE NAME COMP (TX) QRS 11-42, INC.
OVEN (DE) QRS 11-46, INC. A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND DOING
BUSINESS UNDER THE NAME OVEN (DE) QRS 11-46, INC.
SCAN (OR) QRS 11-47, INC. A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND DOING
BUSINESS UNDER THE NAME SCAN (OR) QRS 11-47, INC.
TSR (TX) QRS 11-48, INC. A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND DOING
BUSINESS UNDER THE NAME TSR (TX) QRS 11-48, INC.
LOGIC (UK) QRS 11-49, INC. A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND DOING
BUSINESS UNDER THE NAME LOGIC (UK) QRS 11-49, INC.
CIP FINANCE COMPANY (UK) QRS 11-50, INC. A WHOLLY-OWNED
SUBSIDIARY OF REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
AND DOING BUSINESS UNDER THE NAME CIP FINANCE COMPANY (UK) QRS 11-50, INC.
ISA JERSEY QRS 11-51, INC. A WHOLLY-OWNED SUBSIDIARY OF
REGISTRANT INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND DOING
BUSINESS UNDER THE NAME ISA JERSEY QRS 11-51, INC.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (File No. 33-96294) of Carey Institutional Properties
Incorporated and subsidiaries of our report dated April 7, 2000, relating to the
consolidated financial statements and financial statement schedule, which
appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
New York, New York
April 7, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 14,100,580
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,100,580
<PP&E> 344,821,849
<DEPRECIATION> 19,521,518
<TOTAL-ASSETS> 381,710,785
<CURRENT-LIABILITIES> 9,003,830
<BONDS> 166,640,359
0
0
<COMMON> 22,216
<OTHER-SE> 200,543,441
<TOTAL-LIABILITY-AND-EQUITY> 381,710,785
<SALES> 0
<TOTAL-REVENUES> 39,598,583
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,747,892
<LOSS-PROVISION> 1,226,635
<INTEREST-EXPENSE> 13,818,463
<INCOME-PRETAX> 14,836,088
<INCOME-TAX> 0
<INCOME-CONTINUING> 14,836,088
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,836,088
<EPS-BASIC> .68
<EPS-DILUTED> .67
</TABLE>
