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Filed Pursuant to Rule 424 (b) (3)
Registration No. 33-99994
CORPORATE PROPERTY ASSOCIATES 12
INCORPORATED
SUPPLEMENT DATED JANUARY 27, 1997 TO
PROSPECTUS DATED OCTOBER 21, 1996
(HEREINAFTER THE "PROSPECTUS")
SUMMARY OF THE SUPPLEMENT
DESCRIPTION OF PROPERTIES (PAGE 2)
This section sets forth information on the Company's acquisition of two
parcels of land containing office, research and development and manufacturing
facilities leased to Spectrian Corporation, a parcel of land containing an
office and warehouse facility leased to Knogo North America, Inc., a parcel of
land containing a retail sales facility leased to Garden Ridge, L.P. and two
parcels of land containing manufacturing, office, warehouse and parking
facilities leased to the Scott Companies.
THE OFFERING (PAGE 11)
This section sets forth information on the sale of Shares and the issuance
of Shares to Shareholders.
Capitalized terms not defined herein will have the meanings ascribed to
them in the Prospectus.
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DESCRIPTION OF PROPERTIES
DESCRIPTION OF PROPERTY LEASED TO SPECTRIAN CORPORATION
General
On November 19, 1996, Corporate Property Associates 12 Incorporated (the
"Company"), through a subsidiary (the "Spectrian Subsidiary"), purchased from
Spectrian Corporation ("Spectrian") office, research and development and
manufacturing facilities (the "Spectrian Facilities") consisting of two
buildings containing approximately 141,787 square feet of space, located on two
separate parcels of land totaling approximately 9.3 acres in Santa Clara County,
California. The Spectrian Facilities are suitable and adequate for the uses for
which they are intended. The cost of the Spectrian Facilities will be
depreciated for tax purposes over a 40-year period on a straight-line basis.
Concurrently with the acquisition of the Spectrian Facilities by the
Spectrian Subsidiary, the Spectrian Subsidiary entered into a net lease (the
"Spectrian Lease") with Spectrian for the Spectrian Facilities. Material terms
of the Spectrian Lease are described below.
PURCHASE TERMS
The cost to the Company of acquiring the Spectrian Facilities, including
the Acquisition Fee payable to an Affiliate of the Advisor, was $17,643,979, an
amount less than the leased fee Appraised Value of the Spectrian Facilities. An
Acquisition Fee of $441,099 was paid to W.P. Carey & Co., an Affiliate of the
Advisor. W.P. Carey & Co. will receive a Subordinated Acquisition Fee of
$352,879, payable over an eight year period, but only if the Company satisfies
the Preferred Return.
DESCRIPTION OF THE LEASE
General
The Spectrian Lease is absolutely net and bondable and in normal
financeable form. Spectrian will pay maintenance, insurance, taxes and all other
expenses associated with the operation and maintenance of the Spectrian
Facilities, except for the Spectrian Subsidiary's debt service and income taxes.
In the opinion of management of the Company, the Spectrian Facilities are
adequately covered by insurance.
Term
The initial term of the Spectrian Lease (the "Initial Term") is 15 years,
followed by three five-year renewal terms at the option of Spectrian (each, an
"Extended Term").
Rent
The initial annual rent ("Basic Rent") under the Spectrian Lease is
$1,925,000, payable quarterly in advance in equal installments of $481,250.
Additionally, the Spectrian 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
following three years of the such will be adjusted by a formula that would
increase the annual rent by 75% of the cumulative increase in the Consumer Price
Index over the immediately preceding three years, but such increase shall not
exceed 4.5% for any one year during such three-year period.
Right of First Refusal
The Spectrian Lease provides Spectrian with a right of first refusal to
purchase the Spectrian 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 Spectrian of such sale. Spectrian has the option to elect to
purchase the Spectrian 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. Spectrian may exercise this right upon each
proposed
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sale of the Spectrian Facilities within the first ten years of the Spectrian
Lease and may exercise this right only once after the tenth year of the
Spectrian Lease.
DESCRIPTION OF FINANCING
The Company is seeking mortgage financing for the Spectrian 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 SPECTRIAN
Spectrian is a leading independent supplier of highly linear amplifiers to
wireless communication infrastructure equipment manufacturers. Spectrian's
amplifiers increase the linearity and power of radio frequency signals, and are
critical components for enabling low distortion transmission of signals within
wireless communications networks. Spectrian's amplifiers improve spectrum
efficiency, allow lower capital costs per subscriber, enhance the quality and
reliability of service and help service providers achieve rapid and large scale
deployment of infrastructure equipment.
Financial statements of Spectrian are on file with the Securities and
Exchange Commission. The following is a summary of selected financial
information for Spectrian over the last three years:
CONSOLIDATED STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Results of Operations Data:
Gross Revenues............................................ $37,859,000 $62,478,000 $72,113,000
Costs and Expenses........................................ 37,741,000 57,226,000 67,353,000
Income (loss) from operations............................. (549,000) 5,473,000 5,480,000
Net income (loss)......................................... $ (549,000) $ 5,473,000 $ 5,480,000
</TABLE>
CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
AS OF MARCH 31,
----------------------------------------
1994 1995 1996
------------ ----------- -----------
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents................................ $ 3,125,000 $ 8,420,000 $ 1,116,000
Net accounts receivable.................................. 8,587,000 10,620,000 11,980,000
Inventories.............................................. 3,546,000 4,785,000 7,229,000
Total assets............................................. 20,965,000 45,070,000 55,922,000
Total indebtedness....................................... 11,200,000 8,014,000 11,084,000
Common stock............................................. 940 50,027 51,956
Stockholders' equity..................................... (14,840,000) 37,056,000 44,838,000
</TABLE>
DESCRIPTION OF PROPERTY LEASED TO KNOGO NORTH AMERICA INC.
General
On December 24, 1996, the Company, through a subsidiary (the "Knogo
Subsidiary"), purchased from Knogo North America Inc. ("Knogo") an office and
warehouse facility (the "Knogo Facility") consisting of one building containing
approximately 49,381 square feet of space located a parcel of land totaling
approximately eight acres in Suffolk County, New York. The Knogo Facility is
suitable and adequate for the use for which it is intended. The costs of the
Knogo Facility will be depreciated for tax purposes over a 40-year period on a
straight-line basis.
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Concurrently with the acquisition of the Knogo Facility by the Knogo
Subsidiary, the Knogo Subsidiary entered into a net lease (the "Knogo Lease")
with Knogo for the Knogo Facility. Material terms of the Knogo Lease are
described below.
PURCHASE TERMS
The cost to the Company of acquiring the Knogo Facility, including the
Acquisition Fee payable to an Affiliate of the Advisor, was $4,925,000, an
amount less than the leased fee Appraised Value of the Knogo Facility. An
Acquisition Fee of $123,125 was paid to W.P. Carey & Co., an Affiliate of the
Advisor. W.P. Carey & Co. will receive a Subordinated Acquisition Fee of
$100,000, payable over an eight-year period, but only if the Company satisfies
the Preferred Return.
DESCRIPTION OF THE LEASE
General
The Knogo Lease is absolutely net and bondable and in normal financeable
form. Knogo will pay maintenance, insurance, taxes and all other expenses
associated with the operation and maintenance of the Knogo Facility, except for
the Knogo Subsidiary's debt service and income taxes. In the opinion of
management of the Company, the Knogo Facility is adequately covered by
insurance.
Term
The initial term of the Knogo Lease (the "Initial Term") is 20 years,
followed by one four-year renewal term at the option of Knogo (the "Extended
Term").
Rent
The initial annual rent ("Basic Rent") under the Knogo Lease is $524,000,
payable quarterly in advance, in equal installments of $131,000. Additionally,
the Knogo 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 thereafter, and
the end of the first year of the Extended Term, the annual rent for each of the
following three years of such term will be adjusted by a formula that would
increase the annual rent by 75% of the cumulative increase in the Consumer Price
Index over the immediately preceding three years.
DESCRIPTION OF FINANCING
The Company is seeking mortgage financing for the Knogo Facility, 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 KNOGO
Knogo is engaged in the design, manufacture, sale, installation and
servicing of a complete line of electronic article surveillance equipment.
Financial statements of Knogo are on file with the Securities and Exchange
Commission. The following is a summary of selected financial information for
Knogo over the last three years:
CONSOLIDATED STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
TEN MONTHS
YEAR ENDED ENDED YEAR ENDED
FEBRUARY 28, DECEMBER 31, DECEMBER 31,
1994 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Results of Operations Data:
Gross revenues........................................... $ 29,618,000 $20,681,000 $29,404,000
Costs and Expenses....................................... 28,856,000 23,539,000 27,463,000
Net income (loss)........................................ $ 123,000 $(2,833,000) $ 1,731,000
</TABLE>
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CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
AS OF
------------------------------------------
FEBRUARY 28, DECEMBER 31, DECEMBER 31,
1994 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents................................ $ 4,331,000 $ 1,258,000 $ 409,000
Net accounts receivable.................................. 5,159,000 4,742,000 9,599,000
Inventories.............................................. 8,553,000 6,335,000 5,954,000
Total assets............................................. 34,583,000 26,522,000 29,338,000
Total indebtedness....................................... 7,528,000 5,634,000 6,669,000
Common stock............................................. 54,000 56,000 57,000
Stockholders' equity..................................... 27,055,000 20,888,000 22,669,000
</TABLE>
DESCRIPTION OF PROPERTY LEASED TO GARDEN RIDGE, L.P.
General
On December 16, 1996, the Company, through a subsidiary (the "Garden Ridge
Subsidiary"), purchased from Butler Real Estate Inc. ("Butler") a retail sales
facility (the "Garden Ridge Facility") consisting of a building containing
approximately 142,000 square feet of space located on approximately 12.83 acres
of land in Tulsa County, Oklahoma. The Garden Ridge Facility is suitable and
adequate for the use for which it is intended. The costs of the Garden Ridge
Facility will be depreciated for tax purposes over a 40-year period on a
straight-line basis.
Prior to the acquisition of the Garden Ridge Facility by the Garden Ridge
Subsidiary, Butler entered into a net lease, an assignment of leases and a rent
commencement date and amendment to lease agreement (the "Garden Ridge Lease and
Amendments") with Garden Ridge for the Garden Ridge Facility. On December 12,
1996, Garden Ridge entered into an Amendment to Lease with the Garden Ridge
Subsidiary evidencing the assignment of Butler's rights as Landlord under a net
lease to the Garden Ridge Subsidiary. Material terms of the Garden Ridge Lease
and Amendments are described below.
PURCHASE TERMS
The cost to the Company of acquiring the Garden Ridge Facility, including
the Acquisition Fee payable to an Affiliate of the Advisor, was $8,062,295, an
amount less than the leased fee Appraised Value of the Garden Ridge Facility. An
Acquisition Fee of approximately $213,830 was paid to W.P. Carey & Co., an
Affiliate of the Advisor. W.P. Carey & Co. will receive a Subordinated
Acquisition Fee of approximately $161,170, payable over an eight year period,
but only if the Company satisfies the Preferred Return.
DESCRIPTION OF THE LEASE
General
The Garden Ridge Lease is absolutely net and bondable and in normal
financeable form. Garden Ridge will pay maintenance, insurance, taxes and all
other expenses associated with the operation and maintenance of the Garden Ridge
Facility, except for the Garden Ridge Subsidiary's debt service and income
taxes. In the opinion of management of the Company, the Garden Ridge Facility is
adequately covered by insurance.
Term
The initial term of the Garden Ridge Lease (the "Initial Term"), which
commenced on October 11, 1995, is 20 years, followed by four five-year renewal
terms at the option of Garden Ridge (each, an "Extended Term").
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Rent
The annual rent ("Basic Rent") for the first five years of the Initial Term
under the Garden Ridge Lease is $854,164, payable in equal monthly installments
of $71,180.33. Additionally, the Garden Ridge Lease provides that at the end of
the fifth year of the Initial Term and at the end of each additional fifth year
of the Initial Term and each Extended Term thereafter, the annual rent for each
of the succeeding five years of the term will be adjusted by a formula that
would increase the annual rent the lesser of (a) 110% of the annual Basic Rent
for the immediately preceding lease year and (b) the Consumer Price Index
("CPI") adjusted rent which is an amount equal to the product of one month's
Basic Rent times one plus a fraction, the numerator which is 20 times the
difference between the CPI most recently published at the time of calculation
minus the CPI as published at the time Garden Ridge commenced payment of Basic
Rent ("Base CPI"), and the denominator which shall be the Base CPI.
DESCRIPTION OF FINANCING
The Company has obtained a non-recourse mortgage loan for the Garden Ridge
Facility in the amount of $4,600,000 from GMAC Commercial Mortgage Corporation
("GMAC"). The GMAC financing, which closed on December 27, 1996, has a term of
ten years, a fixed interest rate of 8.72% and will require monthly payments of
interest and principal of $37,724.89 based upon a 30 year amortization schedule,
commencing on February 1, 1997. The GMAC financing may not be prepaid in whole
or in part before December 31, 2000. Commencing January 1, 2001 and continuing
through and including June 20, 2006, the GMAC financing may be prepaid upon not
less than 45 and not more than 90 days prior written notice by the Company.
DESCRIPTION OF GARDEN RIDGE
Garden Ridge is an arts and crafts specialty retailer.
Financial statements of Garden Ridge are on file with the Securities and
Exchange Commission. The following is a summary of selected financial
information for Garden Ridge over the last three years:
CONSOLIDATED STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------
JANUARY 30, JANUARY 29, JANUARY 28,
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Results of Operations Data:
Gross revenues...................................... $24,025,000 $38,064,000 $55,759,000
Operating expenses.................................. 19,393,000 30,071,000 44,482,000
Income(loss) from operations........................ 4,632,000 7,993,000 11,277,000
Net income (loss)................................... $ 2,057,000 $ 3,590,000 $ 6,725,000
</TABLE>
CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
AS OF
--------------------------------------------
JANUARY 29, JANUARY 28,
1995 1996 JULY 28,
----------- ----------- 1996
------------
(UNAUDITED)
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.......................... $ 117,000 $ 7,544,000 $ 33,786,000
Accounts receivable................................ 330,000 906,000 2,756,000
Inventories........................................ 16,566,000 27,850,000 46,854,000
Total assets....................................... 43,992,000 73,326,000 127,946,000
Total indebtedness................................. 28,725,000 17,795,000 21,001,000
Common stock....................................... 47,000 79,000 91,000
Stockholders' equity............................... 7,922,000 55,531,000 106,945,000
</TABLE>
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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.
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.
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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:
CONSOLIDATED STATEMENT OF EARNINGS DATA
<TABLE>
<CAPTION>
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 contracts......................... 16,741,145 17,927,603 18,350,161
Net earnings....................................... $ 577,068 $ 795,325 $ 746,658
</TABLE>
CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
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
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>
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THE OFFERING
On December 13, 1996, the Company issued 2,562,364 shares to investors in
return for $25,578,409 in net proceeds previously held in escrow. As of December
13, 1996, the Company has issued a total of 15,679,085 shares in exchange for
gross proceeds of $148,867,211.
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