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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) January 23, 1997
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
(Exact name of Registrant as specified in charter)
MARYLAND 33-99994 13-3726306
(State of (Commission File No.) (IRS Employer
organization) Identification No.)
50 Rockefeller Plaza, 2nd Floor
New York, New York 10020
(Address of principal executive offices)
(212) 492-1100
(Registrant's telephone number)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
DESCRIPTION OF PROPERTY LEASED TO SCOTT COMPANIES, INC.
General
On January 23, 1997, the Company, through a wholly-owned subsidiary
(the "Scott Subsidiary"), purchased from Scott Co. of California ("Scott") the
manufacturing, office, warehouse and parking facilities of Scott (the "Scott
Facilities") consisting of 432,000 square feet of space located on two separate
parcels of land totaling approximately 24 acres in Alameda County, California.
The Scott Facilities are suitable and adequate for use as manufacturing, office,
warehouse and parking facilities. The cost of the Scott Facilities will be
depreciated for tax purposes over a 40-year period on a straight-line basis.
Concurrently with the acquisition of the Scott Facilities by the
Scott Subsidiary, the Scott Subsidiary entered into a net lease (the "Scott
Lease") with Scott for the Scott Facilities. The obligations of Scott under the
Scott Lease were guaranteed by the Scott Companies, Inc., the sole shareholder
of Scott. Material terms of the Scott Lease are described below.
PURCHASE TERMS
The cost to the Company of acquiring the Scott Facilities, including
the Acquisition Fee payable to an Affiliate of the Advisor, was $17,910,000, an
amount less than the leased fee Appraised Value of the Scott Facilities. An
Acquisition Fee of $450,000 was paid to W.P. Carey & Co., an Affiliate of the
Advisor. W.P. Carey & Co. will receive a Subordinated Acquisition Fee of
$360,000, payable over an eight year period, but only if the Company satisfies
the Preferred Return.
DESCRIPTION OF THE LEASE
General
The Scott Lease is absolutely net and bondable and in normal
financeable form. Scott will pay maintenance, insurance, taxes and all other
expenses associated with the operation and maintenance of the Scott Facilities,
except for the Company's debt service and income taxes. In the opinion of
management of the Company, the Scott Facilities are adequately covered by
insurance.
Term
The initial term of the Scott Lease (the "Initial Term") is 20
years, followed by three five-year renewal terms (each, an "Extended Term") at
the option of Scott.
Rent
The initial annual rent ("Basic Rent") under the Scott Lease is
$1,94,850 payable quarterly in advance, in equal installments of $485,212.50.
Additionally, the Scott Lease provides that at the end of the third year of the
Initial Term and at the end of each additional third year of the Initial Term
and each Extended Term thereafter, the annual rent for each of the next three
years of the term will be adjusted by a formula that would increase the annual
rent by the cumulative increase in the Consumer Price Index over the immediately
preceding three years, but not in excess of 4% for any one year during such
three year period.
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Right of First Refusal
The Scott Lease provides Scott with a right of first refusal to
purchase the Scott Facilities. In the event the leased premises are contracted
for sale by the Company to a third party, the Company shall give written notice
to Scott of such sale. Scott has the option to elect to purchase the Scott
Facilities for the period of 15 days following receipt of such notice, at a
price equal to the contract price agreed to between the Company and the third
party. Scott may exercise this right upon each proposed sale of the Scott
Facilities within the first ten years of the Scott Lease and may exercise this
right only once after the tenth year of the Scott Lease.
DESCRIPTION OF FINANCING
The Company is seeking mortgage financing for the Scott Facilities,
but has not yet obtained a commitment with respect to any such mortgage
financing. There can be no assurance that the Company will obtain such mortgage
financing.
DESCRIPTION OF SCOTT
Scott builds, installs and supports the entire mechanical plant of
industrial and commercial developments and retrofits. Scott works on a wide
variety of projects that include facilities for aerospace and semiconductors
refineries, power plants, hospitals, office buildings, shopping malls and
multi-residential complexes. Scott is capable of providing a total mechanical
construction project and, licensed as a general contractor, can participate as a
turn key prime contractor with the ability to engage subcontractors or can act
strictly as a subcontractor.
The following is a summary of selected financial data for Scott
Companies, Inc. over the last three years:
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF EARNINGS DATA
YEAR ENDED APRIL 30,
----------------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Contract revenues $108,731,784 $127,971,182 $153,492,464
Contract costs 91,990,639 110,043,579 135,142,303
Gross profits on 16,741,145 17,927,603 18,350,161
contracts
Net earnings $ 577,068 $ 795,325 $ 746,658
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET DATA
AS OF APRIL 30,
-------------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents $ 1,338,501 $ 750,965 $ 352,158
</TABLE>
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<TABLE>
<S> <C> <C> <C>
Net accounts receivable
23,528,495 38,068,775 40,936,588
Total assets
57,595,069 74,159,389 74,841,020
Total indebtedness
45,673,806 61,911,132 62,568,852
Common stock
5,306,772 5,058,423 4,707,235
Stockholders' equity
11,921,263 12,248,257 12,272,168
</TABLE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) PRO FORMA FINANCIAL INFORMATION
The pro forma financial information is currently unavailable and will be
filed by amendment within 60 days from the date hereof.
(C) EXHIBITS
The following exhibits are filed as part of this Current Report on Form 8-K:
EXHIBIT NO. EXHIBIT
PAGE NO.
10.1(*) Lease Agreement dated January 23, 1997 by and between
BUILD (CA) QRS 12-24, Inc., as Landlord, and Scott
Corporation, as Tenants.
- -----------
* Will be filed with pro forma financial information by amendment.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CORPORATE PROPERTY ASSOCIATES 12
INCORPORATED
By: /s/Michael D. Roberts
--------------------------------
Michael D. Roberts
First Vice President and
Controller
Dated: February 10, 1997
