<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended SEPTEMBER 30, 2000
of
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
CPA(R):12
A MARYLAND Corporation
IRS Employer Identification No. 13-3726306
SEC File Number 033-68728
50 ROCKEFELLER PLAZA,
NEW YORK, NEW YORK 10020
(212) 492-1100
CPA(R):12 has SHARES OF COMMON STOCK registered pursuant to Section 12(g) of the
Act.
CPA(R):12 is not registered on any exchanges.
CPA(R):12 does not have any Securities registered pursuant to Section 12(b) of
the Act.
CPA(R):12 is unaware of any delinquent filers pursuant to Item 405 of Regulation
S-K.
CPA(R):12 (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.
CPA(R):12 has no active market for common stock at November 10, 2000.
CPA(R):12 has 28,766,710 shares of common stock, $.001 par value outstanding at
November 10, 2000.
<PAGE> 2
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I
------
Item 1. - Financial Information*
Condensed Consolidated Balance Sheets, as of December 31, 1999
and September 30, 2000 2
Condensed Consolidated Statements of Income for the three
and nine months ended September 30, 1999 and 2000 3
Condensed Consolidated Statements of Comprehensive Income
for the three and nine months ended September 30, 1999 and 2000 4
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 1999 and 2000 5
Notes to Condensed Consolidated Financial Statements 6-8
Item 2. - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
Item 3. - Quantitative and Qualitative Disclosure About Market Risk 11
PART II - Other Information
-------
Item 4. - Submission of Matters to a Vote of Security Holders 11
Item 6. - Exhibits and Reports on Form 8-K 11
Signatures 12
</TABLE>
* 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> 3
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
PART I
Item 1. - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1999 September 30, 2000
---------------------------- -----------------------------
(Note) (Unaudited)
<S> <C> <C>
ASSETS:
Land and buildings,
net of accumulated depreciation of
$16,002,192 at December 31, 1999 and
$20,483,208 at September 30, 2000 $316,492,829 $324,619,748
Net investment in direct financing leases 40,479,390 41,073,758
Equity investments 45,068,997 41,222,675
Cash and cash equivalents 8,847,449 8,807,804
Other assets 7,199,306 7,489,792
---------------------------- ----------------------------
Total assets $418,087,971 $423,213,777
============================ ============================
LIABILITIES:
Limited recourse mortgage notes payable $138,361,131 $144,638,258
Accrued interest 422,598 991,858
Accounts payable to affiliates 2,885,052 3,796,077
Accounts payable and accrued expenses 487,020 408,806
Dividends payable 5,852,519 5,872,912
Prepaid rental income and security deposits 5,520,543 4,584,171
Deferred acquisition fees payable to an affiliate 7,911,752 7,351,650
---------------------------- ----------------------------
Total liabilities 161,440,615 167,643,732
---------------------------- ----------------------------
Minority interest 22,397,277 22,996,700
---------------------------- ----------------------------
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value; authorized, 40,000,000 shares;
issued and outstanding 28,909,098 and 29,103,161 shares at
December 31, 1999 and September 30, 2000 28,909 29,103
Additional paid-in capital 259,581,829 261,133,164
Accumulated other comprehensive income 483,269 -
Dividends in excess of accumulated earnings (23,346,983) (24,919,580)
---------------------------- ----------------------------
236,747,024 236,242,687
Less: common stock in treasury at cost,
285,051 and 402,605 shares at December 31, 1999
and September 30, 2000 (2,496,945) (3,669,342)
---------------------------- ----------------------------
Total shareholders' equity 234,250,079 232,573,345
---------------------------- ----------------------------
Total liabilities and shareholders' equity $418,087,971 $423,213,777
============================ ============================
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Note: The balance sheet at December 31, 1999 has been derived from the audited
consolidated financial statements at that date.
2
<PAGE> 4
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30,
1999 2000
------------------------ ------------------------
<S> <C> <C>
Revenues:
Rental income $9,527,443 $10,047,444
Interest income from direct
financing leases 1,201,778 1,291,251
Other interest income 120,911 100,768
------------------------ ------------------------
10,850,132 11,439,463
------------------------ ------------------------
Expenses:
Interest 2,494,809 3,124,426
Depreciation and amortization 1,842,452 1,948,912
General and administrative 704,197 802,218
Property expenses 1,069,658 1,585,321
------------------------ ------------------------
6,111,116 7,460,877
------------------------ ------------------------
Income before minority interest,
income from equity investments,
and (loss) gain on sale of
securities and real estate 4,739,016 3,978,586
Minority interest in income (763,729) (224,185)
------------------------ ------------------------
Income before income from equity
investments and (loss) gain on
sale of securities and real
estate 3,975,287 3,754,401
Income from equity investments 927,626 974,078
------------------------ ------------------------
Income before gain on sale of
securities and real estate 4,902,913 4,728,479
Gain on sale of securities - -
(Loss) gain on sale of real estate (196,323) (11,765)
------------------------ ------------------------
Net income $4,706,590 $4,716,714
======================== ========================
Basic income per common share $ .16 $.16
================ =================
Weighted average shares
outstanding - basic 28,601,803 28,671,301
======================== ========================
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1999 2000
------------------------ --------------------------
<S> <C> <C>
Revenues:
Rental income $24,507,559 $29,509,241
Interest income from direct
financing leases 3,496,629 3,817,704
Other interest income 509,562 357,284
------------------------ --------------------------
28,513,750 33,684,229
------------------------ --------------------------
Expenses:
Interest 7,083,917 8,748,043
Depreciation and amortization 4,797,707 5,952,081
General and administrative 2,137,836 2,283,823
Property expenses 3,453,419 4,990,016
------------------------ --------------------------
17,472,879 21,973,963
------------------------ --------------------------
Income before minority interest,
income from equity investments,
and (loss) gain on sale of
securities and real estate 11,040,871 11,710,266
Minority interest in income (763,729) (819,884)
------------------------ --------------------------
Income before income from equity
investments and (loss) gain on
sale of securities and real
estate 10,277,142 10,890,382
Income from equity investments 2,892,884 2,947,601
------------------------ --------------------------
Income before gain on sale of
securities and real estate 13,170,026 13,837,983
Gain on sale of securities - 969,946
(Loss) gain on sale of real estate (196,323) 1,201,121
------------------------ --------------------------
Net income $12,973,703 $16,009,050
======================== ==========================
Basic income per common share $ .45 $.56
================= =================
Weighted average shares
outstanding - basic 28,578,396 28,679,071
======================== ==========================
</TABLE>
3
<PAGE> 5
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30,
1999 2000
----------------------- ----------------------
<S> <C> <C>
Net income $4,706,590 $4,716,714
----------------------- ----------------------
Other comprehensive income:
Change in unrealized gain on marketable
securities during
the period 285,203 -
Change in unrealized appreciation
resulting from sale of securities - -
----------------------- ----------------------
Other comprehensive income: 285,203 -
----------------------- ----------------------
Comprehensive income $4,991,793 $4,716,714
======================= ======================
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1999 2000
------------------------- -------------------------
<S> <C> <C>
Net income $12,973,703 $16,009,050
------------------------- -------------------------
Other comprehensive income:
Change in unrealized gain on marketable
securities during
the period (154,824) 295,677
Change in unrealized appreciation
resulting from sale of securities - (778,946)
------------------------- -------------------------
Other comprehensive income: (154,824) (483,269)
------------------------- -------------------------
Comprehensive income $12,818,879 $15,525,781
========================= =========================
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
<PAGE> 6
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1999 2000
--------------------------- ---------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $12,973,703 $16,009,050
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 4,797,707 5,952,081
Straight-line rent adjustments and other
noncash rent adjustments (830,128) (906,874)
Fees paid by issuance of stock 1,004,861 1,966,348
Minority interest in income 763,729 819,884
Loss (gain) on sale of securities and real estate 196,323 (2,171,067)
Provision for uncollected rent 210,032 -
Change in operating assets and liabilities, net (658,643) (282,070)
--------------------------- ---------------------------
Net cash provided by operating activities 18,457,584 21,387,352
--------------------------- ---------------------------
Cash flows from investing activities:
Distributions from equity investments in excess of equity income 402,836 667,277
Capital distribution from equity investments - 4,195,380
Purchases of real estate and equity investments and additional
capitalized costs (48,730,162) (11,531,674)
Proceeds from sale of securities and real estate 256,315 15,482,585
Payment of deferred acquisition fees (1,529,131) (560,102)
--------------------------- ---------------------------
Net cash (used in) provided by investing activities (49,600,142) 8,253,466
--------------------------- ---------------------------
Cash flows from financing activities:
Proceeds from mortgages 32,500,000 -
Prepayment of mortgage payable - (7,370,926)
Payments on mortgage principal (2,050,565) (2,940,606)
Distributions to minority interest partner (718,173) (704,281)
Capital distributions to minority interest partner (15,000,000) -
Contributions from minority interest partner 18,463,434 483,822
Deferred financing costs and mortgage deposits (422,554) -
Costs of raising capital - (414,818)
Dividends paid (17,439,174) (17,561,255)
Purchase of treasury stock (861,302) (1,172,397)
--------------------------- ---------------------------
Net cash provided by (used in) financing activities 14,471,666 (29,680,461)
--------------------------- ---------------------------
Net decrease in cash and cash equivalents (16,670,892) (39,643)
Cash and cash equivalents, beginning of period 37,790,505 8,847,449
--------------------------- ---------------------------
Cash and cash equivalents, end of period $21,119,613 $ 8,807,806
=========================== ===========================
</TABLE>
Noncash investing and financing activities:
In connection with the acquisition of properties during the nine-months
ended September 30, 2000, the Company assumed mortgage obligations of
$16,588,659.
The accompanying notes are an integral part of the condensed consolidated
financial statements.
5
<PAGE> 7
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Article 10 of Regulation S-X of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States for complete
financial statements. All significant intercompany balances and transactions
have been eliminated. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation of
the results of the interim periods presented have been included. The results of
operations for the interim periods are not necessarily indicative of results for
the full year. 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, 1999.
The Company has adopted the provisions of Staff Accounting Bulletin No. 101 -
Revenue Recognition ("SAB 101"). The adoption of SAB 101 has not had a material
effect on the Company's financial position and results of operations.
Note 2. Transactions with Related Parties:
The Company incurred asset management fees of $434,654 and $685,952 for the
three months ended September 30, 1999 and 2000, respectively, and $1,439,515 and
$2,035,474 for the nine months ended September 30, 1999 and 2000, respectively,
with performance fees in like amount. General and administrative expense
reimbursements were $242,770 and $269,634 for the three months ended September
30, 1999 and 2000, respectively, and $625,103 and $824,644 for the nine months
ended September 30, 1999 and 2000, respectively.
Note 3. 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 below for the nine-month periods ended September 30, 1999 and
2000 are as follows:
<TABLE>
<CAPTION>
1999 2000
---- ----
<S> <C> <C>
Per Statements of Income:
Rental income from operating leases $24,507,559 $29,509,241
Interest from direct financing leases 3,496,629 3,817,704
Adjustment:
Share of leasing revenue applicable to
minority interest (957,564) (2,167,175)
Share of leasing revenue from equity
investments 7,031,374 8,552,612
--------------------------- ----------------------------
$34,077,998 $39,712,382
=========================== ============================
</TABLE>
6
<PAGE> 8
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
For the nine-month periods ended September 30, 1999 and 2000, the Company earned
its proportionate net leasing revenues from its investments from the following
lease obligors:
<TABLE>
<CAPTION>
1999 % 2000 %
------------------------- ----------- ------------------------- -----------
<S> <C> <C> <C> <C>
Applied Materials, Inc. (a) $3,198,729 9% $4,420,859 11%
Advanced Micro Devices, Inc. (b) 2,286,375 7 2,286,375 6
BAE Systems, Inc. 946,523 3 1,884,454 5
Perry Graphic Communications, Inc.
and Judd's Incorporated 1,643,675 5 1,643,675 4
Scott Companies Inc. 1,455,638 4 1,536,591 4
Spectrian Corporation 1,443,750 4 1,496,553 4
Westell Technologies, Inc. 1,437,290 4 1,437,290 4
Best Buy Co., Inc. (b) 1,336,023 4 1,329,446 3
Career Education Corporation 1,302,606 4 1,302,606 3
Telos Corporation 1,133,379 3 1,157,443 3
Sicor, Inc. (b) 1,009,040 3 1,104,552 3
Q Clubs, Inc. 1,060,552 3 1,073,236 3
Applied Bioscience International, Inc. 1,043,786 3 1,043,786 3
The Upper Deck Company (b) 989,906 3 989,907 2
The Bon-Ton Stores, Inc. 953,063 3 985,300 2
Compucom Systems, Inc. (b) 656,047 2 978,500 2
Del Monte Corporation 964,688 3 964,688 2
Silgan Containers Corporation 956,250 3 956,250 2
Childtime Childcare, Inc. 759,347 2 886,716 2
QMS, Inc. 1,267,031 4 879,389 2
Intesys Technologies, Inc. (b) 744,488 2 853,031 2
Big V Holding Corp. 625,298 2 799,967 2
Lanxide Corporation 438,295 1 760,380 2
Garden Ridge Corporation 746,823 2 746,823 2
Texas Freezer Company, Inc. 698,063 2 698,063 2
Galyan's Trading Company - - 696,344 2
The Garden Companies, Inc. 612,300 2 638,273 2
Rheometric Scientific, Inc. 622,736 2 637,598 2
NutraMax Products, Inc. 622,679 2 636,768 2
Other 3,123,618 9 4,887,519 12
------------------------- ----------- ------------------------- -----------
$34,077,998 100% $39,712,382 100%
========================= == =========== ========================= ===========
</TABLE>
(a) Net of Corporate Property Associates 14 Incorporated's minority
interest in the Etec Systems, Inc. ("Etec") property. The lease
obligations of Etec are unconditionally guaranteed by Applied
Materials, Inc.
(b) Represents the Company's proportionate share of lease revenues
from its equity investments.
7
<PAGE> 9
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -
(CONTINUED)
Note 4. Equity Investments:
The Company holds interests in eight entities in which its ownership interest is
50% or less. All of the entities were formed and are owned with affiliates that
have similar investment objectives as the Company. The Company's ownership in
entities that net lease to the following tenants is as follows: Best Buy Co.,
Inc., 37%; Intesys Technologies, Inc., 50%; Sicor, Inc., 50%; Ameriserve Food
Distribution, Inc., 40%, The Upper Deck Company, 50%; Advanced Micro Devices,
Inc., 33.33% and Compucom Systems, Inc., 33.33%. Combined summarized financial
information on the Company's equity investments is as follows:
<TABLE>
<CAPTION>
(In thousands) December 31, 1999 September 30, 2000
----------------- ------------------
<S> <C> <C>
Assets (primarily real estate) $296,378 $287,014
Liabilities (primarily mortgage notes
payable) 189,151 187,888
Partners' and members' equity 107,227 99,126
Nine Months Ended
September 30, 1999 September 30, 2000
------------------ ------------------
Revenues (primarily rental revenue) $17,982 $21,953
Expenses (primarily interest on
mortgages and depreciation) (10,707) (14,466)
------------------ ------------------
Net income $ 7,275 $ 7,487
================== ==================
</TABLE>
8
<PAGE> 10
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with Corporate Property
Associates 12, Incorporated's ("CPA(R):12") condensed consolidated financial
statements and notes thereto as of September 30, 2000 included in this quarterly
report and CPA(R):12's Annual Report on Form 10-K for the year ended December
31, 1999. This quarterly report contains forward looking statements. Such
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievement of CPA(R):12 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 CPA(R):12 that the results or conditions
described in such statements or the objectives and plans of CPA(R):12 will be
achieved.
RESULTS OF OPERATIONS:
Net income for the three-month and nine-month periods ended September 30, 2000
increased by $10,000 and $3,035,000, respectively, as compared with the
three-month and nine-month periods ended September 30, 1999. Excluding the
effect of gains on sale of securities and real estate in 2000, income would have
reflected a decrease of $174,000 and an increase of $668,000 for the three-month
and nine-month periods ended September 30, 2000, respectively. The decrease in
income before gains for the three-month period ended September 30, 2000 was
primarily due to increases in interest and property expenses and was partially
offset by increases in lease revenues (rental income and interest income from
direct financing leases). The increase in income before gains for the nine-month
period ended September 30, 2000 was due to an increase in lease revenues, and
was partially offset by increases in property and interest expenses.
Lease revenues for the three-month and nine-month periods ended September 30,
2000 have increased as result of the completion of build-to-suit projects at the
Applied Materials, Inc., Balanced Care Corporation and BAE Systems, Inc.
properties in 1999 and scheduled rent increases during 1999 and 2000 on several
other properties. The increase is also due to the acquisition in June 2000 of
properties leased to the Galyan's Trading Company, Inc. As a result of
completing the Applied Materials, Balanced Care and BAE properties, annual
rentals increased $4,286,000. Interest expense has increased primarily as a
result of a $30,000,000 limited recourse mortgage loan that was obtained in
September 1999 on the $52,000,000 expansion to the Applied Materials property
subsequent to its occupancy in July 1999. Interest expense also increased as
result of limited recourse mortgage financing assumed in connection with the
acquisition of the Galyan properties. Depreciation, a non-cash expense, has
increased primarily as a result of the completion of the Applied Materials
expansion. Property expenses have increased as a result of increases in asset
management and performance fees. The fees are based on CPA(R):12's real estate
asset values, pursuant to an independent valuation as of December 31, 1999.
Until this initial valuation was performed, CPA(R):12's fees were calculated
based on the historical cost of real estate assets, so that the increase in fees
reflects, in part, the increase in value of the portfolio's properties. Income
from equity investments for the three-month and nine-month periods remained
stable.
Management continues to monitor the bankruptcy of Ameriserve Food Distribution,
Inc. CPA(R):12 owns a 40% interest in four Ameriserve properties and an
affiliate, Corporate Property Associates 14 Incorporated ("CPA(R):14") owns the
remaining 60% interest. The joint ownership of properties with affiliates such
as CPA(R):14 and the use of limited recourse mortgage debt has allowed for the
diversification of the portfolio and helped reduce exposure to the risks of any
single lessee. In March 2000, one of the Ameriserve property lenders released
funds from an escrow account of $10,488,000, of which CPA(R):12 received
$4,195,000 with the remaining amounts available to fund construction of the
Ameriserve properties. As of September 30, 2000, CPA(R):12's equity in the
Ameriserve property (land and building less limited recourse mortgage debt and
CPA(R):14's 60% ownership interest), was $4,635,000. In August 2000, CPA(R):12
and CPA(R):14 funded $1,175,000 of construction costs for work that had been
completed at the Ameriserve property. CPA(R):12 and CPA(R):14 hold an $8,700,000
letter of credit from Ameriserve from which funds may be received, subject to
the consent of the lender, if Ameriserve does not meet certain obligations under
its lease. Although Ameriserve pays its rent quarterly in advance installments
and is currently meeting its rental obligations, CPA(R):12 and CPA(R):14 intend
to draw on the letter of credit. The availability of any funds drawn from the
letter of credit is subject to negotiations with the lender. Management is
continuing to monitor the developments relating to Ameriserve's reorganization
closely.
9
<PAGE> 11
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
FINANCIAL CONDITION:
Cash flows from operations of $21,387,000 were sufficient to pay quarterly
dividends of $17,561,000, scheduled mortgage principal installments of
$2,941,000, and distributions of $704,000 to the minority interest partner in
the Applied Materials property which are based solely on the cash flow from that
property.
CPA(R):12's investing activities included using $7,717,000 and assuming existing
limited recourse loans of $16,589,000 to acquire two properties leased to
Galyan's Trading Company and $3,815,000 to fund the completion of two
build-to-suit projects that went into service in 1999 and other capital costs.
CPA(R):12 paid an annual installment of $560,000 to its Advisor for deferred
acquisition fees in accordance with CPA(R):12's advisory agreement. CPA(R):12
received $4,195,000 from the release of an escrow held by one of the Ameriserve
lenders, thereby representing a return of capital on CPA(R):12's equity
investment in the Ameriserve properties. As of September 30, 2000, CPA(R):12's
equity invested in the Ameriserve properties was $4,635,000. CPA(R):12 received
proceeds of $14,186,000 from the sale of the QMS, Inc. property in Mobile,
Alabama and $1,297,000 from the sale of securities.
In addition to paying dividends, minority interest distributions and scheduled
mortgage principal payment installments, CPA(R):12's financing activities
included using $5,062,000 from the QMS sale proceeds to pay off the mortgage
loan on the property, making a scheduled mortgage balloon payment of $2,309,000
on a maturing mortgage, and paying $1,172,000 in treasury stock purchases.
CPA(R):12 exercised its option to extend the maturity of its credit facility for
an additional year until June 2001. In connection with the extension, CPA(R):12
reduced the facility from $40,000,000 to $20,000,000. The credit facility may be
used to fund acquisitions. Any advances under the facility are recourse
obligations of CPA(R):12 and are subject to CPA(R):12 meeting specific financial
covenants. CPA(R):12 is in compliance with its financial covenants.
10
<PAGE> 12
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
AND SUBSIDIARIES
PART II
Item 3. - Quantitative and Qualitative disclosures about market risk
Approximately $130,164,000 of CPA(R):12'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 September 30, 2000
ranged from LIBOR plus 3.5% to the lender's prime rate plus 2.0%. There has been
no material change since December 31, 1999.
(in thousands)
<TABLE>
<CAPTION>
2000 2001 2002 2003 2004 Thereafter Total Fair Value
---- ---- ---- ---- ---- ---------- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed rate debt $ 938 $3,932 $4,255 $4,578 $4,988 $111,473 $130,164 $132,217
Average interest rate 7.50% 7.50% 7.51% 7.51% 7.53% 7.73%
Variable rate debt $5,595 $ 371 $ 395 $5,478 $2,635 - $ 14,474 $ 14,474
</TABLE>
As of September 30, 2000, CPA(R):12 had no other material exposure to market
risk.
Item 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended September 30, 2000, no matters were submitted to
a vote of Security Holders.
Item 6. - EXHIBITS AND REPORTS ON FORM 8-K
(b) Reports on Form 8-K:
During the quarter ended September 30, 2000, CPA(R):12 was not
required to file any reports on Form 8-K.
11
<PAGE> 13
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
11/10/00 By: /s/ John J. Park
---------- ------------------------------------------------
Date John J. Park
Executive Vice President, Treasurer and
Chief Financial Officer
(Principal Financial Officer)
11/10/00 By: /s/ Claude Fernandez
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Date Claude Fernandez
Executive Vice President and
Chief Administrative Officer
(Principal Accounting Officer)
12
