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 0-15778
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CORPORATE PROPERTY ASSOCIATES 7, A CALIFORNIA LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
CALIFORNIA 13-3327950
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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 7
a California limited partnership
PART I
Item 1. - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
December 31, June 30,
1996 1997
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(Note) (Unaudited)
ASSETS:
Land, buildings and personal property,
net of accumulated depreciation of
$11,101,853 at December 31, 1996 and
$11,691,609 at June 30, 1997 $33,276,821 $32,755,005
Net investment in direct financing leases 15,542,368 10,844,344
Cash and cash equivalents 5,591,985 6,065,650
Real estate held for sale 4,698,024
Other assets 1,020,950 1,469,470
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Total assets $55,432,124 $55,832,493
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LIABILITIES:
Mortgage notes payable $10,314,828 $10,118,118
Note payable 9,606,837 9,606,837
Accrued interest payable 324,737 328,478
Accounts payable and accrued expenses 676,737 652,620
Accounts payable to affiliates 113,485 89,132
Prepaid and deferred rental income 371,116 392,375
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Total liabilities 21,407,740 21,187,560
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PARTNERS' CAPITAL:
General Partners 161,740 198,973
Limited Partners (45,209 Limited
Partnership Units issued and outstanding) 33,862,644 34,445,960
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Total partners' capital 34,024,384 34,644,933
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Total liabilities and
partners' capital $55,432,124 $55,832,493
=========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
Note: The balance sheet at December 31, 1996 has been derived from the audited
consolidated financial statements at that date.
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CORPORATE PROPERTY ASSOCIATES 7
a California limited partnership
CONSOLIDATED STATEMENTS OF INCOME (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 $ 1,077,086 $ 1,113,789 $ 2,128,766 $ 2,225,703
Interest from direct
financing leases 554,596 631,312 1,111,616 1,183,156
Other interest income 68,358 73,801 131,140 139,840
Other income 241,272
Revenue of hotel operations 1,437,277 1,489,766 2,792,618 2,888,115
----------- ----------- ----------- -----------
3,137,317 3,308,668 6,164,140 6,678,086
----------- ----------- ----------- -----------
Expenses:
Interest 487,819 447,975 985,546 911,079
Operating expenses of
hotel operations 1,030,732 1,025,972 2,040,324 2,048,675
Depreciation 287,547 298,554 573,917 589,756
General and administrative 116,089 215,332 220,089 372,459
Property expenses 114,692 173,057 219,804 284,790
Amortization 24,780 14,719 31,996 29,438
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2,061,659 2,175,609 4,071,676 4,236,197
----------- ----------- ----------- -----------
Income before loss from equity
investments and gain on
sales of real estate 1,075,658 1,133,059 2,092,464 2,441,889
Loss from equity investments (32,980) (31,658) (65,783) (62,037)
----------- ----------- ----------- -----------
Income before gain on
sales of real estate 1,042,678 1,101,401 2,026,681 2,379,852
Gain on sales of real estate 74,729
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Net income $ 1,042,678 $ 1,101,401 $ 2,101,410 $ 2,379,852
=========== =========== =========== ===========
Net income allocated
to General Partners $ 62,561 $ 66,084 $ 122,348 $ 142,791
=========== =========== =========== ===========
Net income allocated
to Limited Partners $ 980,117 $ 1,035,317 $ 1,979,062 $ 2,237,061
=========== =========== =========== ===========
Net income per Unit:
(45,209 Limited
Partnership Units) $ 21.68 $ 22.90 $ 43.78 $ 49.48
=========== =========== =========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
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CORPORATE PROPERTY ASSOCIATES 7
a California limited partnership
CONSOLIDATED STATEMENTS of CASH FLOWS (UNAUDITED)
Six Months Ended
June 30,
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1996 1997
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Cash flows from operating activities:
Net income $ 2,101,410 $ 2,379,852
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 605,913 619,194
Other noncash items 74,566 74,566
Loss from equity investments 65,783 62,037
Gain on sales of real estate (74,729)
Net change in operating assets and liabilities (276,102) (654,956)
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Net cash provided by operating activities 2,496,841 2,480,693
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Cash flows from investing activities:
Additional capitalized costs (109,262) (67,940)
Distributions from equity investments 16,456 16,925
Net proceeds from sales of real estate 617,867
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Net cash by provided by (used in) investing activities 525,061 (51,015)
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Cash flows from financing activities:
Distributions to partners (1,732,367) (1,759,303)
Payments on mortgage principal (448,694) (196,710)
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Net cash used in financing activities (2,181,061) (1,956,013)
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Net increase in cash and cash equivalents 840,841 473,665
Cash and cash equivalents, beginning of period 4,968,410 5,591,985
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Cash and cash equivalents, end of period $ 5,809,251 $ 6,065,650
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Supplemental disclosure of cash flows information:
Interest paid $ 1,003,510 $ 907,338
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The accompanying notes are an integral part of the consolidated financial
statements.
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CORPORATE PROPERTY ASSOCIATES 7
a California limited partnership
NOTES TO CONSOLIDATED 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 there to
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
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December 31, 1996 $52,750 $826,421 $18.28
======= ======== ======
March 31, 1997 $52,808 $827,324 $18.30
======= ======== ======
A distribution of $18.32 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 $25,574 and $49,294, respectively, and
general and administrative expense reimbursements of $30,444 and $67,943,
respectively. For the three-month and six-month periods ended June 30, 1997, the
Partnership incurred property management fees of $28,738 and $57,844,
respectively, and general and administrative expense reimbursements of $35,006
and $87,603, respectively. Management believes that ultimate payment of a
preferred return to the General Partners of $805,015, 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 a
cost sharing 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 $40,920 and $30,217, respectively.
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CORPORATE PROPERTY ASSOCIATES 7
a California limited partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
Note 4. Industry Segment Information:
The Partnership's operations consist of the investment in and the leasing of
industrial and commercial real estate and the operation of a hotel business. For
the three and six-month periods ended June 30, 1996 and 1997, the Partnership
earned its lease revenues (rental income plus interest income from financing
leases) from the following lease obligors:
1996 % 1997 %
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Advanced System Applications, Inc. $ 780,090 24% $ 762,221 22%
KSG, Inc. 410,842 13 486,687 14
The Gap, Inc. 463,784 14 463,784 14
Sybron Acquisition Company 409,581 13 409,581 12
Swiss M-Tex, L.P. 265,496 8 260,677 8
AutoZone, Inc. 203,594 6 196,800 6
Other 154,242 5 195,306 6
Northern Automotive, Inc. 194,415 6 194,415 6
NVRyan L.P. 145,778 5 145,778 4
United States Postal Service 40,525 1 121,575 4
NYNEX Corporation 107,800 3 107,800 3
Winn-Dixie Stores, Inc. 64,235 2 64,235 1
---------- --- ---------- ---
$3,240,382 100% $3,408,859 100%
========== === ========== ===
Results for the Partnership's hotel operations of a Holiday Inn in Livonia,
Michigan for the six-month periods ended June 30, 1996 and 1997 are summarized
as follows:
1996 1997
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Revenues $ 2,792,618 $ 2,888,115
Fees paid to hotel management company (74,065) (86,940)
Other operating expenses (1,966,259) (1,961,735
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Hotel operating income $ 752,294 $ 839,440
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CORPORATE PROPERTY ASSOCIATES 7
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 7
a California limited partnership
By: SEVENTH 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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