1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
(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, 1997
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or
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission file number 0-11948
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CORPORATE PROPERTY ASSOCIATES 5
(Exact name of registrant as specified in its charter)
CALIFORNIA 13-3164925
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
50 ROCKEFELLER PLAZA, NEW YORK, NEW YORK 10020
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(Address of principal executive offices) (Zip Code)
(212) 492-1100
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(Registrant's telephone number, including area code)
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(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
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CORPORATE PROPERTY ASSOCIATES 5
(a California limited partnership)
PART I
Item 1. - FINANCIAL INFORMATION
BALANCE SHEETS
December 31, June 30,
1996 1997
------------ ------------
(Note) (Unaudited)
ASSETS:
Land and buildings, net of accumulated
depreciation of $13,749,248 at
December 31, 1996 and
$14,347,833 at June 30, 1997 $ 25,065,648 $ 23,301,410
Net investment in direct
financing leases 19,298,726 19,278,575
Cash and cash equivalents 5,237,995 4,091,246
Escrow funds 575,051 687,974
Other assets 2,474,117 2,772,715
------------ ------------
Total assets $ 52,651,537 $ 50,131,920
============ ============
LIABILITIES:
Mortgage notes payable $ 14,283,940 $ 14,283,940
Note payable to affiliate 1,151,000 1,151,000
Accrued interest payable 45,707 45,707
Accounts payable and accrued expenses 433,842 277,063
Accounts payable to affiliates 111,526 102,914
Deferred gains 901,390 878,855
Other liabilities 658,542 674,503
------------ ------------
Total liabilities 17,585,947 17,413,982
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PARTNERS' CAPITAL:
General Partners (67,666) (160,981)
Limited Partners (113,200 Limited
Partnership Units outstanding) 35,133,256 32,878,919
------------ ------------
Total partners' capital 35,065,590 32,717,938
------------ ------------
Total liabilities and
partners' capital $ 52,651,537 $ 50,131,920
============ ============
The accompanying notes are an integral part of the financial statements.
Note: The balance sheet at December 31, 1996 has been derived from the
audited financial statements at that date.
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CORPORATE PROPERTY ASSOCIATES 5
(a California limited partnership)
STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended
June 30, 1996 June 30, 1997 June 30, 1996 June 30, 1997
------------- ------------- ------------- -------------
Revenues:
Rental income from
operating leases $ 730,107 $ 714,027 $ 1,802,076 $ 1,428,053
Interest from direct
financing leases 847,016 886,683 1,670,174 1,759,316
Other interest income 60,990 33,309 89,501 67,228
Revenue of hotel
operations 1,644,627 831,975 2,938,233 1,706,403
Other income 4,750 10,000 4,750 10,000
------------- ------------- ------------- -------------
3,287,490 2,475,994 6,504,734 4,971,000
------------- ------------- ------------- -------------
Expenses:
Interest 494,182 351,627 1,253,353 692,864
Depreciation 300,990 321,514 755,224 598,585
General and
administrative 99,059 260,665 241,944 376,081
Property expenses 210,482 56,176 327,616 92,676
Amortization 2,218 12,010
Operating expenses of
hotel operations 1,231,749 683,763 2,461,793 1,394,101
Writedown to net realizable
value 1,300,000 1,350,000 1,300,000 1,350,000
------------- ------------- ------------- -------------
3,638,680 3,023,745 6,351,940 4,504,307
------------- ------------- ------------- -------------
Income (loss) before gain
on sales of real estate (351,190) (547,751) 152,794 466,693
Gain on sales of
real estate 4,408,467 4,498,823
------------- ------------- ------------- -------------
Net income (loss) $ 4,057,277 $ (547,751) $ 4,651,617 $ 466,693
============= ============= ============= =============
Net income (loss) allocated
to General Partners $ 193,893 $ (32,865) $ 314,488 $ 28,002
============= ============= ============= =============
Net income (loss) allocated
to Limited Partners $ 3,863,384 $ (514,886) $ 4,337,129 $ 438,691
============= ============= ============= =============
Net income (loss) per Unit
(113,200 Limited
Partnership Units)
$ 34.12 $ (4.55) $ 38.31 $ 3.87
============= ============= ============= =============
The accompanying notes are an integral part of the financial statements.
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CORPORATE PROPERTY ASSOCIATES 5
(a California limited partnership)
STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
June 30,
----------------------------
1996 1997
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Cash flows from operating activities:
Net income $ 4,651,617 $ 466,693
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 767,234 598,585
Other noncash items (9,385) (2,384)
Gain on sale of real estate (4,498,823)
Writedown to net realizable value 1,300,000 1,350,000
Net change in operating assets and liabilities (168,730) (560,951)
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Net cash provided by operating activities 2,041,913 1,851,943
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Cash flows from investing activities:
Additional capitalized costs (101,665) (184,347)
Proceeds from sale of real estate 14,378,057
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Net cash provided by (used in) investing activities 14,276,392 (184,347)
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Cash flows from financing activities:
Distributions to partners (2,426,575) (2,814,345)
Payments on mortgage principal (117,618)
Payments of mortgages payable (10,685,612)
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Net cash used in financing activities (13,229,805) (2,814,345)
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Net increase (decrease) in cash and cash equivalents 3,088,500 (1,146,749)
Cash and cash equivalents, beginning of period 2,300,682 5,237,995
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Cash and cash equivalents, end of period $ 5,389,182 $ 4,091,246
============ ============
Supplemental disclosure of cash flows information:
Interest paid $ 1,374,757 $ 715,399
============ ============
Supplemental schedule of noncash investing and financing activities:
In connection with the January 1996 sale of a Partnership property, the
purchaser assumed a mortgage obligation of $2,854,275 and accrued interest
thereon of $12,049 from the Partnership.
The accompanying notes are an integral part of the financial statements.
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CORPORATE PROPERTY ASSOCIATES 5
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Basis of Presentation:
The accompanying unaudited 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. For
further information, refer to the financial statements and footnotes thereto
included in the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1996.
Note 2. Distributions to Partners:
Distributions declared and paid to partners during the six months ended June 30,
1997 are summarized as follows:
QUARTER ENDED GENERAL PARTNERS LIMITED PARTNERS PER LIMITED PARTNER UNIT
- --------------- ---------------- ---------------- ------------------------
December 31, 1996 $61,057 $956,540 $8.45
======= ======== =====
March 31, 1997 $60,260 $944,088 $8.34
======= ======== =====
A special distribution of $7 per Limited Partner Unit ($792,400) was declared
and paid in January 1997.
A distribution of $8.34 per Limited Partner Unit for the quarter ended June 30,
1997 was declared and paid in July 1997.
Note 3. Transactions with Related Parties:
For the three-month and six-month periods ended June 30, 1996, the Partnership
incurred property management fees of $17,999 and $47,363, respectively, and
general and administrative expense reimbursements of $40,624 and $70,545,
respectively. For the three-month and six-month periods ended June 30, 1997, the
Partnership incurred property management fees of $16,396 and $31,517,
respectively, and general and administrative expense reimbursements of $72,472
and $92,759, respectively. Management believes that ultimate payment of a
preferred return to the General Partners of $1,422,844, based upon cumulative
proceeds of sales of assets, is reasonably possible but not probable, as defined
pursuant to Statement of Financial Accounting Standards No. 5.
The Partnership, in conjunction with certain affiliates, is a participant in an
agreement for the purpose of renting and occupying office space. Under the
agreement, the Partnership pays its proportionate share of rent and other costs
of occupancy. Net expenses incurred for the six months ended June 30 1996 and
1997 were $48,587 and $36,571, respectively.
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CORPORATE PROPERTY ASSOCIATES 5
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
Note 4. Industry Segment Information:
The Partnership's operations consist primarily of the investment in and the
leasing of industrial and commercial real estate and the operation of two hotel
properties. For the six-month periods ended June 30, 1996 and 1997, the
Partnership earned its total lease revenues (rental income plus interest income
from financing leases) from the following lease obligors:
1996 % 1997 %
---------- ---------- ---------- ----
Gould, Inc. $ 607,500 17% $ 607,500 19%
Spreckels Industries, Inc. 510,359 15 510,359 16
DeVlieg Bullard, Inc. 435,962 12 476,902 15
Arley Merchandise Corporation 300,000 9 300,000 10
Exide Electronics Corporation 286,065 8 286,065 9
Stoody Deloro Stellite, Inc. 200,363 6 267,804 8
Penn Virginia Corporation 249,375 7 249,375 8
Harcourt General Corporation 116,875 3 116,875 4
Penberthy Products, Inc. 95,761 3 104,753 3
Winn-Dixie Stores, Inc. 95,767 3 95,767 3
Sunds Defibrator Woodhandling, Inc. 72,120 2 72,120 2
Rochester Button Company 98,082 3 69,849 2
Other 23,291 1 30,000 1
GATX Logistics, Inc. 380,730 11
---------- ---------- ---------- ----
$3,472,250 100% $3,187,369 100%
========== ========== ========== ====
Operating results of the three hotel properties for the six-month periods
ended June 30, 1996 and 1997 are summarized as follows:
1996 1997
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Revenues $ 2,938,233 $ 1,706,403
Fees paid to hotel management company (62,084) (43,919)
Other operating expenses (2,399,709) (1,350,182)
----------- -----------
Hotel operating income $ 476,440 $ 312,302
=========== ===========
Note 5. Properties Leased to Arley Merchandise Corporation:
The Partnership owns two properties in Sumter and Columbia, South Carolina
leased to Arley Merchandise Corporation ("Arley"). A limited recourse mortgage
loan of $4,764,500, collateralized by the properties and an assignment of the
Arley lease, matured in January 1993. The Partnership and the lender entered
into a forbearance agreement at that time and attempted to reach an agreement to
restructure the loan. Such agreement was not reached and the forbearance
agreement expired on July 1, 1995.
On May 15, 1997, the lender made a demand for payment of the entire outstanding
principal balance of the loan. Although the Partnership made certain offers to
the lender, the lender rejected such offers and, on June 18, 1997, the lender
initiated a lawsuit for the purpose of foreclosing on the Arley properties. The
Partnership is evaluating whether it will contest the foreclosure action. In
connection with such foreclosure the Partnership has estimated that the fair
value of the Arley properties is approximately $3,940,000 and has recorded a
writedown of $1,350,000, representing the excess of the properties' carrying
value over their estimated fair value. As the loan is limited recourse, the
lender's sole recourse is to the Arley properties.
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CORPORATE PROPERTY ASSOCIATES 5
(a California limited partnership)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORPORATE PROPERTY ASSOCIATES 5
(a California limited partnership)
By: CAREY CORPORATE PROPERTY, INC.
09/03/97 By: /s/ Steven M. Berzin
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Date Steven M. Berzin
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
09/03/97 By: /s/ Claude Fernandez
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Date Claude Fernandez
Executive Vice President and
Chief Administrative Officer
(Principal Accounting Officer)
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