<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended JUNE 30, 1996
________________________________________________
or
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from_______________ to ______________________________
Commission file number 033-99994
_________________________________________________________
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED, A MARYLAND CORPORATION
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
MARYLAND 13-3726306
_______________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 ROCKEFELLER PLAZA, NEW YORK, NEW YORK 10020
_______________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(212) 492-1100
_______________________________________________________________________________
(Registrant's telephone number, including area code)
_______________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [_] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
[_] Yes [_] No
10,405,613 shares of common stock; $.001 Par Value
outstanding at August 8, 1996
<PAGE>
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
INDEX
Page No.
--------
PART I
- ------
Item 1. - Financial Information*
Consolidated Balance Sheets, December 31, 1995
and June 30, 1996 2
Consolidated Statements of Income for the three
months ended June 30, 1995 and 1996 3
Consolidated Statement of Cash Flows for the three
and six months ended June 30, 1995 and 1996 4
Notes to Consolidated Financial Statements 5-9
Item 2. - Management's Discussion of Operations 10-11
PART II
- -------
Item 4. - Submission of Matters to a Vote of Security
Holders 12
Item 6. - Exhibits and Reports on Form 8-K 12
Signatures 13
* The summarized financial information contained herein is unaudited; however,
in the opinion of management, all adjustments necessary for a fair presentation
of such financial information have been included.
-1-
<PAGE>
<TABLE>
<CAPTION>
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
PART I
------
Item 1. - FINANCIAL INFORMATION
-------------------------------
CONSOLIDATED BALANCE SHEETS
December 31, June 30,
1995 1996
------------- -------------
(Note) (Unaudited)
ASSETS:
<S> <C> <C>
Land and buildings, net of accumulated
depreciation of $390,307 at December 31, 1995
and $749,349 at June 30, 1996 $35,058,832 $ 41,396,891
Net investment in direct financing leases 13,545,609 40,781,566
Equity investments 10,382,492 16,031,854
Cash and cash equivalents 20,239,764 37,634,830
Deferred offering costs 1,066,262 855,367
Security deposits 325,000 1,499,000
Other assets 413,102 372,946
Accrued interest and rents receivable 141,716 362,482
----------- ------------
Total assets $81,172,777 $138,934,936
=========== ============
LIABILITIES:
Limited recourse mortgage notes payable $18,127,538 $ 39,080,505
Accrued interest payable 136,086 289,802
Accounts payable to affiliates 2,499,284 2,587,072
Accounts payable and accrued expenses 104,141 232,589
Dividends payable 1,189,830 1,433,816
Security deposits 667,581 1,717,581
Prepaid rental income 217,000 658,040
Deferred acquisition fees payable to an affiliate 1,577,639 2,539,464
----------- ------------
Total liabilities 24,519,099 48,538,869
----------- ------------
Commitments and contingencies
Common stock subject to redemption
Common stock, $.001 par value;
526,921 shares issued and outstanding 5,269,210
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value; authorized
40,000,000 shares; 6,027,868 and
10,405,613 issued and outstanding shares
at December 31, 1995 and June 30, 1996 6,028 10,406
Additional paid-in capital 52,488,567 92,229,853
Dividends in excess of accumulated earnings (1,110,127) (1,844,192)
----------- ------------
Total shareholders' equity 51,384,468 90,396,067
----------- ------------
Total liabilities and shareholders' equity $81,172,777 $138,934,936
=========== ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Note: The balance sheet at December 31, 1995 has been derived from the audited
consolidated financial statements at that date.
-2-
<PAGE>
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1995 June 30, 1996 June 30, 1995 June 30, 1996
------------------ ---------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income from
operating leases $486,655 $ 927,756 $ 712,208 $1,858,332
Interest from direct
financing leases 221,296 1,304,809 417,303 1,921,142
Other interest income 149,655 356,254 265,231 701,687
-------- ---------- ---------- ----------
857,606 2,588,819 1,394,742 4,481,161
-------- ---------- ---------- ----------
Expenses:
Interest 266,942 904,616 470,116 1,472,612
Depreciation 90,978 179,491 134,496 359,042
General and administrative 210,997 440,703 370,881 801,171
Property expenses 136,061 308,642 248,907 568,534
Amortization 1,172 7,214 2,343 13,266
-------- ---------- ---------- ----------
706,150 1,840,666 1,226,743 3,214,625
-------- ---------- ---------- ----------
Income before
income from equity
investments 151,456 748,153 167,999 1,266,536
Income from equity
investments 327,908 505,528 666,651 1,012,859
-------- ---------- ---------- ----------
Net income $ 479,364 $1,253,681 $ 834,650 $2,279,395
========= ========== ========== ==========
Net income per
common share $ .13 $ .14 $ .26 $ .27
========= ========== ========== ==========
Weighted average shares 3,613,528 9,191,370 3,242,765 8,515,623
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-3-
<PAGE>
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------------
1995 1996
----------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 834,650 $ 2,279,395
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 136,839 372,308
Other noncash items (45,918) (109,536)
Income from equity investments in excess
of distributions received (108,954)
Change in security deposits, net 342,581 (124,000)
(Increase) decrease in other assets (122,603) 164,664
Increase in accrued interest payable 116,061 153,716
Increase in prepaid rental income 441,040
Increase in accrued interest and rents receivable (133,334) (220,766)
Increase in accounts payable to affiliates (a) 501,050 348,683
Increase in accounts payable and accrued expenses (a) 138,063 78,448
------------ ------------
Net cash provided by operating activities 1,767,389 3,274,998
------------ ------------
Cash flows from investing activities:
Purchases of real estate and additional capitalized costs (27,573,722) (33,118,197)
Purchase of equity interest in general partnership (5,283,908)
Purchase of stock warrants (124,000)
Distributions received from equity investments in excess
of income from equity investments 46,913
Additional contribution to equity investments (14,958)
Capital distribution from equity investment 1,375,000
------------ -------------
Net cash used in investing activities (26,166,767) (38,526,105)
------------ ------------
Cash flows from financing activities:
Proceeds from mortgages 9,000,000 21,450,000
Payments on mortgage principal (75,940) (497,033)
Proceeds from stock issuance, net of costs 9,800,501 34,513,954
Redemption of stock (37,500)
Deferred financing costs (13,774)
Dividends paid (883,481) (2,769,474)
------------ ------------
Net cash provided by financing activities 17,841,080 52,646,173
------------ ------------
Net (decrease) increase in cash and cash equivalents (6,558,298) 17,395,066
Cash and cash equivalents,beginning of period 10,661,712 20,239,764
------------ ------------
Cash and cash equivalents, end of period $ 4,103,414 $ 37,634,830
============ ============
Supplemental disclosure of cash flows information:
Interest paid (including capitalized interest) $ 297,172 $ 1,318,896
============ ============
</TABLE>
(a) Excludes changes in accounts payable and accrued expenses and account
payable to affiliates balances which relate to the raising of capital
(financing activities) rather than the Company's real estate
operations.
The accompanying notes are an integral part of the consolidated financial
statements.
-4-
<PAGE>
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Basis of Presentation:
---------------------
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The
consolidated financial statements include the accounts of Corporate
Property Associates 12 Incorporated and its wholly-owned subsidiaries (the
"Company"). For further information refer to the financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
Note 2. Organization and Offering:
-------------------------
The Company was formed on July 30, 1993 under the General Corporation Law
of Maryland for the purpose of engaging in the business of investing in and
owning industrial and commercial real estate. The Company qualifies as a
real estate investment trust and will maintain such qualification provided
it distributes at least 95% of its taxable income to shareholders and meets
other conditions. The Company is managed by Carey Property Advisors, a
Pennsylvania limited partnership (the "Advisor").
An initial offering of the Company's shares which commenced on February 18,
1994 concluded on January 26, 1996, at which time the Company had issued an
aggregate of 8,135,992 shares ($81,359,920). The Company filed a post-
effective amendment on March 14, 1996, withdrawing from registration the
balance of unsold shares from such offering.
On February 2, 1996, the Company commenced an offering for a maximum of
20,000,000 shares of common stock. The shares are being offered to the
public on a "best efforts" basis by Carey Financial Corporation ("Carey
Financial") and other selected dealers at a price of $10 per share. It is
anticipated that approximately 87% of the funds raised in the second
offering will be invested in real estate with the remaining funds used to
establish a working capital reserve and to pay the expenses and fees
related to the offering. On April 8, 1996 and June 13, 1996, the Company
issued 836,155 shares ($8,361,550) and 1,433,466 shares ($14,334,660),
respectively. Deferred offering costs of $855,637 at June 30, 1996
represent costs associated with the current offering which will be charged
to shareholders' equity upon the issuance of shares. As described in Note
3, a portion of the deferred offering costs may ultimately be reimbursable
to the Company from the Advisor.
Note 3. Commitments and Contingencies:
-----------------------------
The Company is liable for certain costs of the Offering described in the
prospectus of the Company (the "Prospectus"), which include but are not
limited to filing, legal, accounting, printing and escrow fees, which are
to be deducted from the gross proceeds of the Offering. These costs are
presently estimated to aggregate a maximum of $7,233,600 assuming a sale of
20,000,000 shares. The Company is also liable for selling commissions of
$0.60 (6%) per Share sold and a Selected Dealer fee of $0.10 (1%) for each
Share sold by certain selected dealers.
The Company will reimburse Carey Financial for its costs (including fees
and expenses of its counsel) and for the costs of sales and information
meetings of Carey Financial's employees relating to the Offering. The
Company will reimburse Carey Financial for its identified expenses incurred
in connection with wholesaling
-5-
<PAGE>
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
services provided to the Company. If the aggregate of certain organization
and offering costs, including all selling commissions, exceed 10% of the
gross proceeds of the Offering (plus an additional 0.5% of gross proceeds
which may be paid for bona fide due diligence expenses), such excess will
be paid by the Advisor with no recourse by or reimbursement to the Advisor.
For the six-month period ended June 30, 1996, the Company incurred costs of
$3,265,702 in connection with both offerings, a portion of which has been
capitalized as deferred offering costs, and made payments, including
prepayments of selling commissions, of which $4,031,786 has been charged to
shareholders' equity. Such payments include reimbursement to the Advisor
of $1,451,575 for payments the Advisor had made on the Company's behalf.
For the six-month period ended June 30, 1995, the Company incurred costs of
$1,822,379 in connection with its offering and made payments of $1,362,479.
Such 1995 payments include reimbursements to the Advisor of $303,500 for
payments the Advisor had made on the Company's behalf.
As the result of selling shares of the Company between March 31, 1995
through May 9, 1995 with a prospectus that did not include updated
financial statements, the Company offered to all shareholders who purchased
a total of 526,921 shares ($5,269,210) between these dates an opportunity
to rescind such purchases. The redemption period ended May 9, 1996 at
which time the Company had received subscriptions for the redemption of a
total of 3,750 shares ($37,500). The 523,171 shares ($5,231,710) which
were not redeemed were reclassified as shareholders' equity as of March 31,
1996.
Note 4. Transactions with Related Parties:
---------------------------------
The Company has entered into an advisory agreement with the Advisor.
Pursuant to the advisory agreement, the Advisor will perform certain
services for the Company including the identification, evaluation,
negotiation, purchase and disposition of property, the day-to-day
administration and management of the Company and the performance of certain
administrative services. For the three-month and six-month periods ended
June 30, 1995, the Company incurred asset management fees of $67,923 and
$124,346, respectively, with performance fees in like amount. General and
administrative expense reimbursements for three-month and six-month periods
ended June 30, 1995 were $124,633 and $246,825, respectively. For the
three-month and six-month periods ended June 30, 1996, the Company incurred
asset management fees of $151,577 and $279,572, respectively, with
performance fees in like amount. General and administrative expense
reimbursements for the three-month and six-month periods ended June 30,
1996 were $184,975 and $373,454, respectively.
As of December 31, 1995, accounts payable to affiliates were comprised of
deferred offering costs of $1,066,262, asset management and performance
fees of $748,795, accrued interest on deferred acquisition fees of $106,175
and amounts due for other operating costs of $578,052. As of June 30,
1996, accounts payable to affiliates were comprised of deferred offering
costs of $805,367, asset management and performance fees of $1,120,439,
accrued interest on deferred acquisition fees of $185,464 and amounts due
for other operating costs of $475,802.
The Company, in conjunction with certain affiliates, is a participant in a
cost sharing agreement for the purpose of renting and occupying office
space. Under the agreement, the Company pays its proportionate share of
rent and other costs of occupancy. Net expenses incurred for the six-
months ended June 30, 1996 were $13,378. The Company did not incur any
expenses under the agreement for the period ended June 30, 1995.
-6-
<PAGE>
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
Note 5. Industry Segment Information:
----------------------------
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 below for the six-month periods ended June 30, 1995
and 1996 are as follows:
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Per Statements of Income:
Rental income from operating leases $ 712,208 $1,858,332
Interest income from direct financing leases 417,303 1,921,142
Adjustment:
Share of leasing revenue from equity
investments 1,555,552 2,206,420
---------- ----------
$2,685,063 $5,985,894
========== ==========
</TABLE>
For the six-month periods ended June 30, 1995 and 1996, the Company earned
its proportionate net leasing revenues from its investments from the
following lease obligors:
<TABLE>
<CAPTION>
1995 % 1996 %
---------- ----------- ---------- ---
<S> <C> <C> <C> <C>
Best Buy Co., Inc. (a) $901,052 33% $899,215 15%
Etec Systems, Inc. 517,074 19 674,719 11
Gensia, Inc. (a) 654,500 24 654,500 11
The Upper Deck Company (a) 652,705 11
Applied Bioscience International, Inc. 651,000 11
Telos Corporation 443,435 7
Rheometric Scientific, Inc. 415,901 7
The Garden Companies, Inc. 24,604 1 408,200 7
Big V Holding Corp. 392,699 15 398,520 7
Sports and Fitness Clubs, Inc. 40,263 2 334,000 6
Lanxide Corporation 255,086 4
Wal-Mart Stores, Inc. 154,871 6 198,613 3
-------- ---------- -------- --
$2,685,063 100% $5,985,894 100%
========== ========== ========== ===
</TABLE>
(a) Represents the Company's proportionate share of lease revenues from its
equity investments.
Note 6. Dividends:
---------
Dividends declared and paid to shareholders during the six-month ended June
30, 1996 are summarized as follows:
<TABLE>
<CAPTION>
Quarter Ended Total Paid Per Share
-------------- ---------- ---------
<S> <C> <C>
December 31, 1995 $1,190,411 $0.2005
========== =======
March 31, 1996 $1,579,063 $0.2008
========== =======
</TABLE>
Dividends for the quarter ended June 30, 1996 were comprised of dividends
declared of $.015462 per share ($125,857) to shareholders of record as of April
7, 1996, $.14578 per share ($1,307,960) to shareholders of record as of June 11,
1996 and $.039758 per share ($413,706) to shareholders of record as of July 9,
1996. Such dividends were paid in July 1996. Dividends declared prior to June
30, 1996 ($1,433,817) have been accrued as dividends payable as of June 30,
1996.
-7-
<PAGE>
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
Note 7. Equity Investments:
------------------
The Company holds a 37% interest in BB Property Company ("BB Property"), a
general partnership which net leases 17 retail stores to Best Buy Co., Inc., a
50% interest in Gena Property Company ("Gena"), a general partnership which net
leases two office buildings to Gensia, Inc. and a 50% interest in Cards LLC, a
general partnership which net leases office and manufacturing facilities to The
Upper Deck Company. Summarized financial information of Gena, BB Property, and
Cards LLC is as follows:
<TABLE>
<CAPTION>
(in thousands)
Gena BB Property Cards LLC
--------------------------------------------------------------------
December 31, June 30, December 31, June 30, June 30,
1995 1996 1995 1996 1996
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land and buildings, net
of accumulated
depreciation $22,287 $22,056 $18,580 $18,580
Net investment in
direct financing lease 27,261 26,211 $25,831
Other assets 750
------- ------- ------- ------- -------
Total assets $22,287 $22,056 $45,841 $45,791 $26,581
======= ======= ======= ======= =======
Mortgage notes payable $12,241 $11,974 $31,235 $30,888 14,941
Other liabilities 141 135 235 232 855
------- ------- ------- ------- -------
Total liabilities 12,382 12,109 31,470 31,120 15,796
Partners' capital 9,905 9,947 14,371 14,671 10,785
------- ------- ------- ------- -------
Total liabilities and
partners' capital $22,287 $22,056 $45,841 $45,791 $26,581
======= ======= ======= ======= =======
<CAPTION>
For The Six Months Ended
-------------------------------------------------------------------------
June 30, 1995 June 30, 1996
--------------------------------------------------------------------------
GENA BB Property GENA BB Property Cards LLC
<S> <C> <C> <C> <C> <C>
Lease revenues $ 1,309 $ 2,435 $ 1,309 $ 2,430 $ 1,312
------- ------- ------- ------- -------
Interest expense on
mortgages 489 1,428 490 1,398 628
Depreciation 230 230
Other 3 5 6 2
------- ------- ------- ------- -------
719 1,431 725 1,404 630
------- ------- ------- ------- -------
Net income $ 590 $ 1,004 $ 584 $ 1,026 $ 682
======= ======= ======= ======= =======
</TABLE>
-8-
<PAGE>
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
Note 8. Subsequent Events:
-----------------
Sports & Fitness Clubs of America, Inc.
---------------------------------------
On July 25, 1996, the Company purchased land and a health club facility in
Houston, Texas for $6,180,000 of equity and entered into a net lease
agreement with Sports & Fitness Clubs of America, Inc. ("Sports &
Fitness"). The lease obligations of Sports & Fitness are guaranteed by its
parent company, Q Clubs, Inc. ("Q Clubs"). The lease has an initial term
of 20 years and provides for four five-year renewal options. Annual rent
is $694,000 with rent increases every five years with such increases based
on a formula indexed to increases in the Consumer Price Index.
In connection with its purchase, the Company was granted warrants
exercisable for 5,089 shares of common stock of Q Clubs at an exercise
price of $275. The exercise price increases by 3% annually beginning on
July 23, 1997.
Del Monte Corporation
---------------------
In November 1995, the Company and Carey Institutional Properties, ("CIP"),
an affiliate, each with 50% interests as tenants-in-common, purchased land
in Illinois, Wisconsin and Washington and subsequently constructed three
warehouses and a special purpose facility at a total cost of $21,990,000
pursuant to construction agency and lease agreements with Del Monte
Corporation ("Del Monte"). In July 1996, the Company and CIP each made a
final payment of $2,145,000 to complete the construction project. Del
Monte annual rent is $2,572,500 (of which the Company's share is
$1,286,250).
After completion of construction, the Company and CIP obtained $12,500,000
(of which the Company's share is $6,250,000) of limited recourse financing.
The loan is collateralized by mortgages on the Del Monte properties and a
lease assignment. The loan provides for a fixed interest rate of 10% per
annum on $11,000,000 with the remaining balance of $1,500,000 at a variable
interest rate of either the lender's prime rate plus 2% or the London
Inter-Bank Offering Rate plus 4% (10.25% at inception) with quarterly
interest and principal payments based on a 20-year amortization schedule.
The initial quarterly payment, based on current interest rates, will be
approximately $353,000 (of which the Company's share is $176,500). The
loan is scheduled to mature on November 30, 2000 at which time a balloon
payment of $11,450,000 will be due (of which the Company's share will be
$5,725,000).
-9-
<PAGE>
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
Item 2. - MANAGEMENT'S DISCUSSION OF OPERATIONS
-----------------------------------------------
In January 1996, the Company concluded an initial offering of common stock
at which time it had raised equity of $81,359,920 (8,135,992 shares). On
February 2, 1996, the Company commenced a second public offering of
20,000,000 shares of common stock at $10 per share on a "best efforts"
basis. As of August 10, 1996 the Company had issued 2,269,621 shares
($22,696,210) under the second offering. The Company intends to raise
capital pursuant to this offering for approximately two years unless the
full amount of registered shares are subscribed before that time. The
Company is expanding its selected dealer network and expects the network to
participate in the sale of common stock through the term of the offering.
The Company intends to invest the net offering proceeds (except for 1% of
proceeds used to establish a working capital reserve) along with the
remaining proceeds from the initial offering in additional real estate
investments so as to further diversify the Company's portfolio. As of
August 8, 1996, approximately $56,430,000 of the Company's net offering
proceeds was invested in real estate and $30,690,000 of funds was available
for investment. All net offering proceeds not currently invested in real
estate are invested in cash and cash equivalents.
With the utilization of available limited recourse mortgage financing
and net offering proceeds, the Company has purchased direct or indirect
interests in commercial properties with the following lease obligors:
Date Acquired Lease Obligor
------------- -------------
May 13, 1994 Best Buy Co., Inc.
July 15, 1994 Big V Holding Corp.
October 14, 1994 Gensia, Inc.
February 10, 1995 Wal-Mart Stores, Inc.
February 16, 1995 Etec Systems, Inc.
June 8, 1995 and July 25, 1996 Sports & Fitness Clubs, Inc.
June 20, 1995 The Garden Companies, Inc.
November 9, 1995 Del Monte Corporation
November 13, 1995 Applied Bioscience International,
Inc.
January 4, 1996 The Upper Deck Company
February 23, 1996 Rheometric Scientific, Inc.
March 11, 1996 Telos Corporation
March 28, 1996 Lanxide Corporation
In July 1996, subsequent to the completion of a build-to-suit project for
buildings leased to Del Monte Corporation ("Del Monte") which required a
total investment of approximately $14,995,000, the Company obtained limited
recourse mortgage financing of $6,250,000. 526,921 shares ($5,269,210) of
common stock, sold between March 31, 1995 and May 9, 1995 were subject to
redemption. The redemption period ended May 9, 1996, at which time only
3,750 of such shares ($37,500) were redeemed. With the end of the
redemption period, the Company's uncertainty as to whether a significant
amount would need to be used to fund redemptions has been eliminated. As
of August 8, 1996, the Company has raised $104,056,130 through its
offerings of common stock.
-10-
<PAGE>
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
Item 2. - MANAGEMENT'S DISCUSSION OF OPERATIONS, Continued
----------------------------------------------------------
The results of operations for the three-month and six-month periods
ended June 30, 1995 and 1996 are not directly comparable as the Company's
direct and indirect investment in net leased real estate has materially
increased during 1995 and 1996. Increases in lease revenues, equity
income, interest, general and administrative expenses, property expenses,
depreciation and amortization were solely due to the increase in real
estate assets and related mortgage financing. The increase in other
interest income was due to the increase in cash balances. Such interest
income will eventually decrease as cash available for investment is
utilized for additional real estate purchases, and the Company maintains
cash balances judged by its management to be prudent for its operations.
Although there has been an increase in general administrative expense for
the comparable three-month periods, a substantial portion are fixed rather
than variable, and the rate of increase in such costs is expected to
moderate even as the Company's real estate assets and related lease
revenues increase.
-11-
<PAGE>
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
PART II
-------
Item 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------------------------------------------------------------
An annual Shareholders meeting was held on June 6, 1996, at which time a
vote was taken to elect the Company's directors through the solicitation of
proxies. The following directors were reelected for a one-year term:
<TABLE>
<CAPTION>
Total Shares Shares Shares
Name Of Director Shares Voting Voting Yes Voting No Abstaining
- ---------------- ------------- ---------- --------- ----------
<S> <C> <C> <C> <C>
William P. Carey 4,548,892 4,502,733 46,159 0
Ralph G. Coburn 4,548,892 4,475,551 73,341 0
William Ruder 4,548,892 4,499,233 49,659 0
Warren G. Wintrub 4,548,892 4,500,233 48,659 0
Francis J. Carey 4,548,892 4,501,533 47,359 0
Henry Cabot Lodge, III 4,548,892 4,501,858 47,034 0
Charles C. Townsend, Jr. 4,548,892 4,501,953 46,939 0
</TABLE>
No other matters were subject to a vote at this meeting.
Item 6. - EXHIBITS AND REPORTS ON FORM 8-K
------------------------------------------
(a) Exhibits:
None.
(b) Reports on Form 8-K:
During the quarter ended June 30, 1996, the Company filed a
report on Form 8-K on April 18, 1996 under Item 2, Acquisition
and Disposition of Assets and a report on Form 8-K/A on May 13,
1996 under Item 7b, Pro forma financial information.
-12-
<PAGE>
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
8/08/96 By: /s/ Claude Fernandez
-------------- ------------------------------
Date Claude Fernandez
Executive Vice President and
Chief Administrative Officer
(Principal Financial Officer)
8/08/96 By: /s/ Michael D. Roberts
-------------- -------------------------------
Date Michael D. Roberts
First Vice President and Controller
(Principal Accounting Officer)
-13-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 37634830
<SECURITIES> 0
<RECEIVABLES> 362482
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 40724625
<PP&E> 82927806
<DEPRECIATION> 749349
<TOTAL-ASSETS> 138934936
<CURRENT-LIABILITIES> 6918900
<BONDS> 39080505
0
0
<COMMON> 10,406
<OTHER-SE> 90385661
<TOTAL-LIABILITY-AND-EQUITY> 138934936
<SALES> 0
<TOTAL-REVENUES> 4481161
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1728747
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1472612
<INCOME-PRETAX> 2279395
<INCOME-TAX> 0
<INCOME-CONTINUING> 2279395
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2279395
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
