UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the quarterly period ended DECEMBER 31, 1995
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or
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED]
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 (I.R.S. Employer Identification
incorporation or organization) No.)
50 ROCKEFELLER PLAZA, NEW YORK, NEW YORK 10020
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 492-1100
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
NONE NONE
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Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP UNITS
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(Title of Class)
(Title of Class)
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
Indicate by check mark if disclosure of deliquent filers pursuant to Item 405
of Regulation S-K ((S) 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ X ]
Aggregate market value of the voting stock held by non-affiliates of
Registrant: There is no active market for Limited Partnership Units.
PART I
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Item 1. Business.
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Registrant is engaged in the business of investing in commercial and
industrial real estate properties which are net leased to commercial and
industrial entities. Registrant was organized as a California limited
partnership on February 3, 1986. The General Partners of Registrant are Seventh
Carey Corporate Property, Inc. (the "Corporate General Partner"), a Delaware
corporation, and William Polk Carey (the "Individual General Partner"). The
Corporate General Partner is 79.9% owned by W. P. Carey & Co., Inc. ("W.P.
Carey") and 20.1% owned by the Individual General Partner. Affiliates of the
Corporate General Partner and the Individual General Partner are also the
General Partners of affiliates of Registrant, Corporate Property Associates
("CPA(R):1"), Corporate Property Associates 2 ("CPA(R):2"), Corporate Property
Associates 3 ("CPA(R):3"), Corporate Property Associates 4, a California limited
partnership ("CPA(R):4"), Corporate Property Associates 5 ("CPA(R):5"),
Corporate Property Associates 6 - a California limited partnership ("CPA(R):6"),
Corporate Property Associates 8, L.P., a Delaware limited partnership
("CPA(R):8"), Corporate Property Associates 9, L.P., a Delaware limited
partnership ("CPA(R):9"), and the advisor of Corporate Property Associates 10
Incorporated ("CPA(R):10"), Carey Institutional Properties Incorporated
("CIP(TM)") and Corporate Property Associates 12 Incorporated ("CPA(R):12").
Jupiter Food Service, Inc. is a wholly-owned subsidiary of Registrant.
Registrant has a management agreement with Carey Property Management Company
("Carey Management"), a division of W.P. Carey. According to the terms of this
agreement, Carey Management performs a variety of management services for
Registrant. Registrant has entered into an agreement with Fifth Rock L.P., an
affiliate, for the purpose of leasing office space. Reference is made to the
Prospectus of Registrant dated April 25, 1986 filed pursuant to Rule 424(b), as
supplemented by Supplements dated September 2, 1986, December 18, 1986, March
30, 1987, April 27, 1987 and July 14, 1987 under the Securities Act of 1933 and
such Prospectus and such Supplements are incorporated herein by reference (said
Prospectus, as so supplemented, is hereinafter called the "Prospectus").
Registrant has two industry segments, the investment in and the
leasing of industrial and commercial real estate and the operation of a hotel
business which was assumed subsequent to a lease termination. As described
hereafter, Registrant sold its food service operation in December 1995. By
assuming the operation of the hotel business, Management is seeking to preserve
the value of the underlying investment while generating a contribution to
Registrant's cash flow. See Selected Financial Data in Item 6 and Management's
Discussion and Analysis in Item 7 for a summary of Registrant's operations.
Also see the material contained in the Prospectus under the heading INVESTMENT
OBJECTIVES AND POLICIES.
The properties owned by Registrant are described in Item 2.
Registrant's net proceeds from the public offering, less a working capital
reserve, have been fully invested in net leased commercial and industrial real
estate (except as described above) since March 31, 1989, the date of
Registrant's final real estate acquisition.
For the year ended December 31, 1995, revenues from property occupied
by lease obligors which accounted for 10% or more of the revenues of the
industrial and commercial real estate segment of Registrant were as follows:
Advanced System Applications, Inc. ("ASA") 24%, The Gap, Inc., 14%; KSG, Inc.
("KSG") 13% and Sybron Acquisition Company ("Sybron") 13%. No other property
owned by Registrant accounted for 10% or more of its total leasing revenue
during 1995. Revenues from the industrial and commercial real estate segment
represent approximately 55% of total revenues. For the year ended December 31,
1995, revenue for the hotel business segment was $5,411,000 (approximately 44%
of total revenues). See Note 9 to the Consolidated Financial Statements in Item
8.
Except for the properties in which Registrant operates a hotel
business and a property formerly leased to NVRyan L.P. ("NVRyan") which is
vacant, substantially all of Registrant's properties are leased to corporate
tenants under net leases. A net lease generally requires tenants to pay all
operating expenses relating to the leased properties including maintenance, real
estate taxes, insurance and utilities which under
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other forms of leases are often paid by the lessor. Lessees are required to
include Registrant as an additional insured party on all insurance policies
relating to the leased properties. In addition, substantially all of the net
leases include indemnification provisions which require the lessees to indemnify
Registrant and the General Partners for liabilities on all matters related to
the leased properties. Registrant believes that the insurance and indemnity
provided on its behalf by its lessees provides adequate coverage for property
damage and any liability claims which may arise against Registrant's ownership
interests. In addition to the insurance and indemnification provisions of the
leases, Registrant has contingent property and liability insurance on its leased
properties and primary property and liability coverages on the properties
operated by Registrant which Management believes to be adequate. To the extent
that any lessees are not financially able to satisfy indemnification obligations
which exceed insurance reimbursements, Registrant may incur the costs necessary
to repair property and settle liabilities.
Three of Registrant's lessees have purchase options which are
exercisable as follows: 1997 - KSG, Inc. and Swiss M-Tex, L.P. ("M-Tex") and
1998 - Sybron. The purchase options are all exercisable at the higher of (i) the
Partnership's purchase cost for the properties and any prepayment charge that
Registrant would incur in paying off the mortgage loans on the properties or
(ii) the fair market values of the properties as encumbered by their leases. In
the event that both options are exercised in 1997, Registrant would expect to
receive proceeds, net of the amount necessary to pay off the M-Tex mortgage loan
of no less than $6,138,000. If the properties are sold, annual cash flow would
be reduced by approximately $1,056,000.
As Registrant's objective has been to invest in properties which are
occupied by a single corporate tenant subject to long-term net leases with such
lease obligation backed by the credit of the corporate lessee, Registrant's
properties are not generally subject to competitive conditions of local and
regional real estate markets. In selecting its real estate investments,
Registrant's strategy has been to identify properties which included operations
judged to be of material importance to the lessee so that the lessee may be more
likely to extend its lease beyond the initial term. Because Registrant may be
affected by the financial conditions of its lessees rather than the competitive
conditions of the real estate marketplace, Registrant's strategy has been to
diversify its investments among tenants, property types and industries in
addition to achieving geographical diversification. Registrant has not been
fully insulated from the competitive conditions of the real estate market due to
the termination of its master lease with Yellow Front Stores, Inc. ("Yellow
Front") in 1990 and the restructuring of the NVRyan lease in 1993 as discussed
below. Since September 1993, two of the four NVRyan properties have been sold
and one of the remaining two properties is leased. Four of Registrant's leases
are scheduled to expire within the next five years; however, Registrant's other
leases generally do not expire until after 2000. Registrant's operation of a
hotel is more strongly affected by both increasing competition and economic
conditions. The hotel's occupancy rate for 1995 and 1994, was 77% and 75%,
respectively.
As described above, lessees retain the obligation for the operating
expenses of their leased properties so that, other than rental income, there are
no significant operating data reportable on Registrant's leased properties.
Current rental income is reported in Note 9 to the Financial Statements in Item
8. As discussed in Registrant's Management's Discussion and Analysis in Item 7,
Registrant's leases generally provide for periodic rent increases which are
either stated and negotiated at the inception of the lease or based on formulas
indexed to increases in the Consumer Price Index. The initial terms of
Registrant's leases are scheduled to expire between 1996 and 2014. Except for
leases to tenants of properties formerly leased to Yellow Front, NVRyan and ASA,
no initial term will expire until 2003. Leases generally include renewal terms
at the option of the tenant which renewals are 5 or 10 years per renewal term.
On December 20, 1995, Registrant sold the food service facility in
Jupiter, Florida for $4,140,000, at which it operated a restaurant. In
connection with the sale, it satisfied the two mortgage note obligations on the
property. In January 1994, the terms of the loan collateralized by the property
were modified by dividing the loan into two notes with balances of $2,700,000
("Note A") and $1,082,883 ("Note B"), respectively. Under the modification,
interest and principal payments on Note B were deferred. In accordance with the
terms of the 1994 loan modification agreement, the $1,082,883 balance of Note B
plus accrued interest thereon was forgiven upon payment of Note A. The
Partnership used a portion of the sales proceeds to payoff the $2,603,000
balance of Note A.
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Subsequent to December 31, 1995, Registrant has:
(i) on January 31, 1996, together with CPA(R):8 entered into a lease
with the United States Postal Service (the "Postal Service"). In July 1994
Registrant and CPA(R):8 entered into a lease modification agreement with ASA
which allows ASA to terminate its lease for the Bloomingdale, Illinois property
in June 1997 instead of June 2003. Registrant and CPA(R):8 own the ASA property
as tenants-in-common with 33.64% and 66.36% ownership interests, respectively.
Under the modification agreement, annual rent increased to $5,200,000 (of which
the Partnership's share is $1,749,280) from $1,850,000 (of which Registrant's
share was $622,340). In consenting to the modification, the mortgage lender
required that the mortgage loan payments be substantially increased so that the
loan fully amortized on March 1, 1996. Although ASA is obligated to make its
lease payments through June 1997, it is in the process of vacating the property.
To the extent that Registrant and CPA(R):8 enter into new leases for any vacated
space, ASA is entitled to one-third of all rentals received, net of any landlord
costs, during the remaining term of its lease. The Postal Service lease for a
portion of the property in Bloomingdale, Illinois, has a 10-year term commencing
May 1, 1996 with annual rentals of $722,800 (of which Registrant's share will be
$243,150), increasing to $822,800 after 5 years. Registrant and CPA(R):8 retain
the obligation to provide maintenance and support services to the lessee. The
lease provides for rent escalations in 1998 based on increases in certain
operating costs incurred by Registrant and CPA(R):8. In addition, the Postal
Service will reimburse Registrant and CPA(R):8 for a portion of real estate
taxes on the property based on the area it occupies. The lease also provides the
Postal Service an option to terminate the lease after 5 years. As more space is
vacated by ASA, the Postal Service has a right of first refusal for such space.
Registrant and CPA(R):8 will provide the Postal Service a tenant improvement
allowance of up to $600,000 (of which the Partnership's share is $201,840).
(ii) on February 12, 1996, sold a property located in Denham Springs,
Louisiana and leased to AutoZone, Inc. ("AutoZone") for $431,779 net of costs.
AutoZone's lease allows it to purchase back those leased retail stores it judges
to be uneconomical. On February 14, 1996, Registrant sold its property in Monte
Vista, Colorado for $186,090, net of costs. Solely as a result of the sales,
Registrant's annual cash flow will decrease by approximately $61,000.
In connection with the purchase of its properties, Registrant required
sellers of such properties to perform environmental reviews. Management
believes, based on the results of such reviews, that Registrant's properties
were in substantial compliance with Federal and state environmental statutes at
the time properties were acquired. However, portions of certain properties have
been subject to a limited degree of contamination, principally in connection
with either leakage from underground storage tanks or surface spills from
facility activities. In most instances where contamination has been identified,
tenants are actively engaged in the remediation process and addressing
identified conditions. Tenants are generally subject to environmental statutes
and regulations regarding the discharge of hazardous materials and any related
remediation obligations. In addition, Registrant's leases generally require
tenants to indemnify Registrant from all liabilities and losses related to the
leased properties. Accordingly, Management believes that the ultimate resolution
of environmental matters will not have a material adverse effect on Registrant's
financial condition, liquidity or results of operations.
Registrant does not have any employees. The Corporate General Partner
of Registrant together with its affiliates employ twelve individuals who perform
accounting, secretarial and transfer services for Registrant. Gemisys, Inc.
performs certain transfer services for Registrant and The Bank of New York
performs certain banking services for Registrant. In addition, Registrant has
entered into an agreement with Carey Management pursuant to which Carey
Management provides certain management services to Registrant. Carey Management
has substantially the same officers as the Corporate General Partner. In
February 1995, Registrant engaged American General Hospitality Corp., a hotel
management company, to manage Registrant's hotel operation.
- 3 -
Item 2. Properties:
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LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
- ----------------------- ------------------ ------------------ ------------------------
NYNEX Office and Service Milton, Vermont Ownership of land
Facility and building
THE GAP, INC. Distribution Erlanger, Kentucky Ownership of land
Center and building
SWISS M-TEX, L.P. Manufacturing Travelers Rest Ownership of land
Facilities and Liberty, and buildings (1)
South Carolina
KSG, INC. Manufacturing, Hazelwood, Ownership of land
Warehouse and Missouri and building
Distribution
Facility
(2) Hotel Complex Livonia, Ownership of a
Michigan 65.5172% interest
in land and building (1)
AUTOZONE, INC. Retail Stores Pensacola (3), Ownership of land
Panama City and and buildings,
Jacksonville, except as noted
Florida;
Baton Rouge-2 (3),
and Hammond
Louisiana;
St. Peters-2,
Michigan;
Shelby, Kannapolis (3),
and Morgantown (3),
North Carolina;
East Ridge (3) and
Knoxville (3),
Tennessee
Various Lease Retail Stores Scottsdale, Casa Ownership of land
Obligors including Grande, Apache and buildings
NORTHERN AUTOMOTIVE, Junction, Glendale
INC. and Mesa, Arizona;
Silver City, New Mexico;
Denver and Monte Vista,
Colorado;
Colville, Washington
WINN DIXIE Retail Store Bay Minette, Ownership of a
STORES, INC. Alabama building and a
leasehold interest
in land (1)
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LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
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ADVANCED SYSTEM Office Building Bloomingdale, Ownership of a
APPLICATIONS, INC. Illinois 33.64% interest in
and the UNITED STATES land and building
POSTAL SERVICE
SYBRON ACQUISITION Office and Romulus, Michigan; Ownership of a
COMPANY Manufacturing Dubuque, Iowa; 24.74% interest in
Facilities Portsmouth, land and buildings
New Hampshire; (1)
Penfield, New York;
Glendora,
California
NVRYAN L.P. Manufacturing Thurmont, Ownership of a
Facilities Maryland and 37.037% interest in
Farmington, land and buildings
New York
HOTEL CORPORATION Hotel Complex Topeka, 50% ownership of a
OF AMERICA Kansas limited partnership
which owns land and
building (1)
ALLIED PLYWOOD, Manufacturing Manassas, Ownership of a
INC. Facility Virginia 37.037% interest in
land and buildings
(4) Manufacturing Fredricksburg, Ownership of a
Facility Virginia 37.037% interest in
land and building
(1) These properties are encumbered by mortgage notes payable.
(2) These properties are operated by Registrant.
(3) Ownership of building with ground lease of land.
(4) This property is vacant.
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The material terms of Registrant's leases with its significant tenants are
summarized in the following table:
Partnership's
Share Current Lease Terms of
Lease of Current Square Rent Per Expiration Renewal Ownership Purchase Gross
Obligor Annual Rents Footage Sq.Ft.(1) (Mo/Year) Terms Interest Option Costs (2)
- --------------------------- ------------- -------- ---------- ----------- ------- ------------ ---------- -----------
The Gap, $ 927,568 $362,750 $ 2.56 2/03 YES 100% The $8,809,212
Inc. greater of
fair market
value or
$8,776,600.
KSG, Inc. 832,566 (4) 148,100 5.62 3/12 YES 100% The greater of 4,698,024
fair market
value or
$4,697,920.
Sybron 819,162 705,900 4.69 12/13 YES 24.74% The Greater of 6,246,319
Acquisition Interest; fair market
Corp. remaining value or
interest $6,212,214
owned by and any
Corporate prepayment
Property premium. (3)
Associates
8("CPA(R):8")
Swiss 546,095 (4) 195,193 2.80 8/07 YES 100% For the 4,673,579
M-Tex, Travelers
L.P. Rest property
only: The
greater of
fair market value
or $4,800,000 and
any prepayment
premium.
NVRyan, 245,235 179,741 3.68 3/14 YES 37.037% N/A 1,992,501
L.P. Interest;
remaining
interest
owned by
CPA(R):8
AutoZone, 393,598 70,425 5.59 10/03-8/12 YES NO N/A 3,798,857
Inc.
Advanced
System 1,749,000 116,000 44.82 6/97 YES 33.64% N/A 5,508,940
Applications, Interest;
Inc. remaining
interest
owned by
CPA(R):8
NYNEX 215,600 30,624 7.04 2/03 YES 100% Fair 2,255,276
market
value.
(1) Represents rate for rent per square foot when combined with rents applicable
to tenants-in-common.
(2) Includes original cost of investment and net increases or decreases to net
investment subsequent to purchase.
(3) Each of the five properties is subject to a separate purchase option.
Amount presented represents aggregate for all options.
(4) A portion of rent is variable based on changes in debt service requirements
on the mortgage loan.
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The material terms on the mortgage debt of Registrant's properties are
summarized in the following table:
Mortgage
Annual Interest Balance Annual Debt Maturity Estimated Payment
Lease Obligor Rate 12/31/95 Service Date Due at Maturity Prepayment Provisions
- --------------------------- ---------------- ---------- ----------- -------- ----------------- ------------------------
Sybron
Acquistion
Company 11.25% $3,605,415 $467,106 01/01/99 $3,387,000 Loan may be prepaid in
full or in part (in
multiples of $100,000)
with a prepayment
premium based on U.S.
Treasury yields.
Hotel Corporation
of America 7.75 1,795,040(1) 168,193(1) 09/27/03 1,489,000(1)
6.75 2,562,292(1) 198,940(1) 10/01/03 2,109,167(1)
Swiss M-Tex, L.P. 9.50(2) 1,807,212 270,000 09/05/97 1,652,000 Loan may be prepaid
without a prepayment
premium.
(4) 9.406(3) 5,025,537 531,100 11/15/97 4,923,000 Loan may be prepaid
without a prepayment
premium.
Winn-Dixie
Stores, Inc. 9.22 1,000,000 92,200 09/01/96 1,000,000 Prepayable in full with
a premium pursuant to a
formula based on U.S.
Treasury yields.
(1) Represents proportional amount from 50% interest in limited partnership
holding such mortgage debts.
(2) Variable rate based on the Prime Rate.
(3) Variable rate based on London Inter-Bank Offered Rate.
(4) Operated by Registrant.
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Item 3. Legal Proceedings.
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As of the date hereof, Registrant is not a party to any material
pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
No matter was submitted during the fourth quarter of the year ended
December 31, 1995 to a vote of security holders, through the solicitation of
proxies or otherwise.
PART II
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Item 5. Market for Registrant's Common Equity and Related
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Stockholder Matters.
--------------------
Information with respect to Registrant's common equity is hereby
incorporated by reference to page 30 of Registrant's Annual Report contained
in Appendix A.
Item 6. Selected Financial Data.
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Selected Financial Data are hereby incorporated by reference to page 1
of Registrant's Annual Report contained in Appendix A.
Item 7. Management's Discussion and Analysis of Financial Condition
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and Results of Operations.
--------------------------
Management's Discussion and Analysis are hereby incorporated by
reference to pages 2 to 5 of Registrant's Annual Report contained in Appendix A.
Item 8. Consolidated Financial Statements and Supplementary Data.
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The following financial statements and supplementary data are hereby
incorporated by reference to pages 6 to 23 of Registrant's Annual Report
contained in Appendix A:
(i) Report of Independent Accountants.
(ii) Consolidated Balance Sheets as of December 31, 1994 and 1995.
(iii) Consolidated Statements of Income for the years ended December 31,
1993, 1994 and 1995.
(iv) Consolidated Statements of Partners' Capital for the years ended December
31, 1993, 1994 and 1995.
(v) Consolidated Statements of Cash Flows for the years ended December 31,
1993, 1994 and 1995.
(vi) Notes to Consolidated Financial Statements.
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Item 9. Disagreements on Accounting and Financial Disclosure.
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NONE
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PART III
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Item 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
Registrant has no directors or officers. The directors and executive
officers of the Corporate General Partner are as follows:
Has Served as a
Director and/or
Name Age Positions Held Officer Since (1)
- ------------------------------------------------------- --- ------------------------------------ ----------------
William Polk Carey 65 Chairman of the Board 2/86
Director
Francis J. Carey 70 President 2/86
Director
George E. Stoddard 79 Chairman of the Investment Committee 2/86
Director
Raymond S. Clark 82 Chairman of the Executive Committee 2/86
Director
Madelon DeVoe Talley 64 Vice Chairman of the Board 2/86
Director
Stephen H. Hamrick 44 Director 2/86
Barclay G. Jones III 35 Executive Vice President 2/86
Director
Lawrence R. Klein 75 Chairman of the Economic Policy 2/86
Committee
Director
Claude Fernandez 43 Executive Vice President 2/86
Chief Administrative Officer
Howard J. Altmann 32 Senior Vice President 8/90
H. Augustus Carey 38 Senior Vice President 8/88
John J. Park 31 Senior Vice President 7/91
Treasurer
Michael D. Roberts 44 First Vice President 4/89
Controller
(1) Each officer and director of the Corporate General Partner will hold office
until the next annual meeting of the Board of Directors and thereafter until
his successor shall have been elected and shall have qualified or until his
prior death, resignation or removal.
William Polk Carey and Francis J. Carey are brothers and Raymond S. Clark is
their brother-in-law. H. Augustus Carey is the nephew of William Polk Carey
and Raymond S. Clark and the son of Francis J. Carey.
A description of the business experience of each officer and director
of the Corporate General Partner is set forth below:
William Polk Carey, Chairman and Chief Executive Officer, has been
active in lease financing since 1959 and a specialist in net leasing of
corporate real estate property since 1964. Before founding W.P. Carey & Co.,
Inc. ("W.P. Carey") in 1973, he served as Chairman of the Executive Committee of
Hubbard,
- 10 -
Westervelt & Mottelay (now Merrill Lynch Hubbard), head of Real Estate and
Equipment Financing at Loeb Rhoades & Co. (now Lehman Brothers), head of Real
Estate and Private Placements, Director of Corporate Finance and Vice Chairman
of the Investment Banking Board of duPont Glore Forgan Inc. A graduate of the
University of Pennsylvania's Wharton School of Finance, Mr. Carey is a Governor
of the National Association of Real Estate Investment Trusts (NAREIT). He also
serves on the boards of The Johns Hopkins University and its medical school, The
James A. Baker III Institute for Public Policy at Rice University, and other
educational and philanthropic institutions. He founded the Visiting Committee
to the Economics Department of the University of Pennsylvania and co-founded
with Dr. Lawrence R. Klein the Economics Research Institute at that university.
Francis J. Carey was elected President and a Managing Director of W.P.
Carey in April 1987, having served as a Director since its founding in 1973. He
served as a member of the Executive Committee and Board of Managers of the
Western Savings Bank of Philadelphia from 1972 until its takeover by another
bank in 1982 and is former chairman of the Real Property, Probate and Trust
Section of the Pennsylvania Bar Association. Mr. Carey served as a member of the
Board of Overseers of the School of Arts and Sciences of the University of
Pennsylvania from 1983 through 1990 and has served as a member of the Board of
Trustees of the Investment Program Association since 1990. From April 1987 until
August 1992, he served as counsel to Reed Smith Shaw & McClay, counsel for
Registrant, the General Partners, the CPA(R) Partnerships and W.P. Carey and
some of its affiliates. A real estate lawyer of more than 30 years' experience,
he holds A.B. and J.D. degrees from the University of Pennsylvania.
George E. Stoddard, Chief Investment Officer, was until 1979 head of
the bond department of The Equitable Life Assurance Society of the United
States, with responsibility for all activities related to Equitable's portfolio
of corporate investments acquired through direct negotiation. Mr. Stoddard was
associated with Equitable for over 30 years. He holds an A.B. degree from
Brigham Young University, an M.B.A. from Harvard Business School and an LL.B.
from Fordham University Law School.
Raymond S. Clark is former President and Chief Executive Officer of
the Canton Company of Baltimore and the Canton Railroad Company. A graduate of
Harvard College and Yale Law School, he is presently a Director and Chairman of
the Executive Committee of W.P. Carey and served as Chairman of the Board of
W.P. Carey from its founding in 1973 until 1982. He is past Chairman of the
Maryland Industrial Development Financing Authority.
Madelon DeVoe Talley, Vice Chairman, is a member of the New York State
Controller's Investment Committee, a Commissioner of the Port Authority of New
York and New Jersey, former CIO of New York State Common Retirement Fund and New
York State Teachers Retirement System. She also served as a managing director of
Rothschild, Inc. and as the President of its asset management division. Besides
her duties at W.P. Carey, Mrs. Talley is also a former Governor of the N.A.S.D.
and a director of Biocraft Laboratories, a New York Stock Exchange company. She
is an alumna of Sarah Lawrence College and the graduate school of International
Affairs at Columbia University.
Stephen H. Hamrick is the former Executive Vice President and Managing
Director of Wall Street Investor Services where he completed the sale and
turnaround of its bank based brokerage business. Previously, he served six years
as the Director of Private Investments for PaineWebber Incorporated. From 1975
until joining PaineWebber in 1988, Mr. Hamrick was associated with E.F. Hutton &
Company (and the successor firm Shearson Lehman Hutton Inc.), where he held the
position of First Vice President and National Director of Private Placements.
Mr. Hamrick is a former Chairman of the Securities Industry Association's Direct
Investment Committee and the Investment Program Association. He is a Certified
Financial Planner and was graduated with degrees in English and Economics from
Duke University.
Barclay G. Jones III, Executive Vice President, Managing Director, and
co-head of the Investment Department. Mr. Jones joined W.P. Carey as Assistant
to the President in July 1982 after his graduation from the Wharton School of
the University of Pennsylvania, where he majored in Finance and Economics. He
was elected to the Board of Directors of W.P. Carey in April 1992. Mr. Jones is
also a Director of the Wharton Business School Club of New York.
- 11 -
Lawrence R. Klein, Chairman of the Economic Policy Committee since
1984, is Benjamin Franklin Professor of Economics Emeritus at the University of
Pennsylvania, having joined the faculty of Economics and the Wharton School in
1958. He holds earned degrees from the University of California at Berkeley and
Massachusetts Institute of Technology and has been awarded the Nobel Prize in
Economics as well as over 20 honorary degrees. Founder of Wharton Econometric
Forecasting Associates, Inc., Dr. Klein has been counselor to various
corporations, governments, and government agencies including the Federal Reserve
Board and the President's Council of Economic Advisers.
Claude Fernandez, Chief Administrative Officer, Managing Director, and
Executive Vice President, joined W.P. Carey in 1983. Previously associated with
Coldwell Banker, Inc. for two years and with Arthur Andersen & Co., he is a
Certified Public Accountant. Mr. Fernandez received his B.S. degree in
Accounting from New York University in 1975 and his M.B.A. in Finance from
Columbia University Graduate School of Business in 1981.
Howard J. Altmann, Senior Vice President, Investment Department,
joined W.P. Carey in August 1990. He was a securities analyst at Goldman Sachs &
Co. for the retail industry from 1986 to 1988. Mr. Altmann received his
undergraduate degree in economics and finance from McGill University and his
M.B.A. from the Stanford University Graduate School of Business.
H. Augustus Carey, Senior Vice President, returned to W.P. Carey in
1988. Mr. Carey previously worked for W.P. Carey from 1979 to 1981 as Assistant
to the President. Prior to rejoining W.P. Carey, Mr. Carey served as a loan
officer of the North American Department of Kleinwort Benson Limited in London,
England. He received an A.B. from Amherst College in 1979 and an M.Phil. in
Management Studies from Oxford University in 1984. Mr. Carey is a trustee of the
Oxford Management Centre Associates Council.
John J. Park, Senior Vice President and Treasurer, joined W.P. Carey
as an Investment Analyst in December 1987. Mr. Park received his undergraduate
degree from Massachusetts Institute of Technology and his M.B.A. in Finance from
New York University.
Michael D. Roberts joined W. P. Carey as a Second Vice President and
Assistant Controller in April 1989 and is currently First Vice President and
Controller. Prior to joining W.P. Carey, Mr. Roberts was employed by Coopers &
Lybrand, where he attained the title of audit manager. A certified public
accountant, Mr. Roberts received a B.A. from Brandeis University and an M.B.A.
from Northeastern University.
The officers and directors of W.P. Carey are substantially the same
as above.
Item 11. Executive Compensation.
-----------------------
Under the Amended Agreement of Limited Partnership of Registrant (the
"Agreement"), 5% of Distributable Cash From Operations, as defined, is payable
to the Corporate General Partner and 1% of Distributable Cash From Operations is
payable to the Individual General Partner. The Corporate General Partner's and
the Individual General Partner's share of Distributable Cash From Operations
from Registrant during the year ended December 31, 1995 was $178,780 and
$104,353, respectively. As owner of 100 Limited Partnership Units, the
Corporate General Partner received cash distributions of $22,425 during the year
ended December 31, 1995. See Item 6 for the net income allocated to the General
Partners under the Agreement. Registrant is not required to pay, and has not
paid, any remuneration to the officers or directors of the Corporate General
Partner, W.P. Carey or any other affiliate of Registrant during the year ended
December 31, 1995.
In the future, the Corporate General Partner will expect to receive 5%
of Distributable Cash From Operations, the Individual General Partner will
expect to receive 1% of Distributable Cash From Operations and each General
Partner will continue to be allocated the same percentage of the profits and
losses of Registrant as had been allocated in prior years. For a description of
the subordinated interest of the Corporate General Partner and the Individual
General Partner in Cash From Sales and Cash From Financings, reference is made
to the materials contained in the Prospectus under the heading MANAGEMENT
COMPENSATION.
- 12 -
Item 12. Security Ownership of Certain Beneficial Owners and
---------------------------------------------------
Management.
-----------
As of December 31, 1995, no person owned of record or was known by
Registrant to own beneficially more than 5% of the Limited Partnership Units.
The following table sets forth as of March 20, 1996 certain
information as to the ownership by directors and executive officers of
securities of Registrant:
NUMBER OF UNITS
Name of and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
- ------------------------- ---------------------- -------------------- ---------
Limited Partnership
Units of Registrant William Polk Carey (1) 110 UNITS .24%
Francis J. Carey 10 .02
Raymond S. Clark 10 .02
George E. Stoddard
Madelon DeVoe Talley
Stephen H. Hamrick
Barclay G. Jones, III 4 .01
Lawrence R. Klein
Claude Fernandez
Howard J. Altmann
H. Augustus Carey 20 .05
John J. Park
Michael D. Roberts --- -----
All executive officers
and directors as a
group (13 persons) 154 units .34%
=== ========
(1) As of March 20, 1996, the Corporate General Partner, Seventh Carey Corporate
Property, Inc., owned 100 Limited Partnership Units of Registrant. William
Polk Carey, the majority shareholder of the Corporate General Partner, is
the beneficial owner of these Units.
There exists no arrangement, known to Registrant, the operation of
which may at a subsequent date result in a change of control of Registrant.
Item 13. Certain Relationships and Related Transactions.
-----------------------------------------------
For a description of transactions and business relationships between
Registrant and its affiliates and their directors and officers, see Notes 2 and
3 to the Consolidated Financial Statements in Item 8. Michael B. Pollack, First
Vice President and Secretary of the Corporate General Partner, is a partner of
Reed Smith Shaw & McClay which is engaged to perform legal services for
Registrant.
No officer or director of the Corporate General Partner, W.P. Carey or
any other affiliate of Registrant or any member of the immediate family or
associated organization of any such officer or director was indebted to
Registrant at any time since the beginning of Registrant's last fiscal year.
- 13 -
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on
------------------------------------------------------
Form 8-K
--------
(a) 1. Consolidated Financial Statements:
----------------------------------
The following consolidated financial statements are filed as a part of
this Report:
Report of Independent Accountants.
Consolidated Balance Sheets, December 31, 1994 and 1995.
Consolidated Statements of Income for the years ended December 31, 1993, 1994
and 1995.
Consolidated Statements of Partners' Capital for the years ended December 31,
1993, 1994 and 1995.
Consolidated Statements of Cash Flows for the years ended December 31, 1993,
1994 and 1995.
Notes to Consolidated Financial Statements.
The financial statements are hereby incorporated by reference to pages 6 to 23
of Registrant's Annual Report contained in Appendix A.
(a) 2. Financial Statement Schedule:
-----------------------------
The following schedule is filed as a part of this Report:
Schedule III -Real Estate and Accumulated Depreciation as of December 31, 1995.
Notes to Schedule III.
Schedule III and notes thereto are hereby incorporated by reference to pages
24 to 27 of Registrant's Annual Report contained in Appendix A.
Financial Statement Schedules other than those listed
above are omitted because the required information is given in the Consolidated
Financial Statements, including the Notes thereto, or because the conditions
requiring their filing do not exist.
- 14 -
(a) 3. Exhibits:
---------
The following exhibits are filed as part of this Report. Documents
other than those designated as being filed herewith are incorporated herein by
reference.
Exhibit Method of
No. Description Filing
- -------------- --------------------------------------------- -----------------------
3.1 Amended agreement of Limited Partnership Exhibit to Registration
of Registrant dated as of April 10, 1986. Statement (Form S-11)
No. 33-3213
4.1 Mortgage and Security Agreement dated as Exhibit 4.1 to Form 8-K
of December 9, 1986 between the Registrant, dated December 24, 1986
as Mortgagor, and NCNB National Bank of
Florida ("NCNB") as Mortgagee.
4.2 $4,000,000 Promissory Note dated December Exhibit 4.2 to Form 8-K
11, 1986 between the Registrant, as Maker, dated December 24, 1986
and NCNB, as Payee.
4.3 Assignment of Leases and Rents and Consent Exhibit 4.3 to Form 8-K
of Lessee dated as of December 9, 1986 from dated December 24, 1986
Registrant, as Assignor, in favor of NCNB,
as Assignee.
4.4 Assignment of Lien on HL Associates Limited's Exhibit 4.4 to Form 8-K
United States and Florida Trademarks and dated December 24, 1986
Service Marks dated as of December 9, 1986
from Registrant, as Assignor, to NCNB, as
Assignee.
4.5 $7,500,000 Promissory Note dated Filed as Exhibit 4.1
December 31, 1986 from Registrant, as to Registrant's
Borrower, to Security Pacific, as Form 8-K dated
Lender. January 14, 1987
4.6 Term Loan and Security Agreement dated Filed as Exhibit 4.2
as of December 26, 1986 and effective to Registrant's
on December 31, 1986 between Registrant, Form 8-K dated
as Borrower, and Security Pacific Business January 14, 1987
Credit Inc. ("Security Pacific"), as
Lender and Secured Party.
4.7 First Mortgage dated as of December 26, 1986 Filed as Exhibit 4.3
between Registrant, as Mortgagor, and to Registrant's
Security Pacific, as Mortgagee (for Cedar Form 8-K dated
Rapids, Iowa property). January 14, 1987
- 15 -
Exhibit Method of
No. Description Filing
- ------------------ -------------------------------------------- ---------------------
4.8 First Mortgage dated as of December 26, 1986 Filed as Exhibit 4.4
between Registrant, as Mortgagor, and to Registrant's
Security Pacific, as Mortgagee (for Form 8-K dated
Davenport, Iowa property). January 14, 1987
4.9 First Mortgage dated as of December 26, 1986 Filed as Exhibit 4.5
between Registrant, as Mortgagor, and to Registrant's
Security Pacific, as Mortgagee, (for Form 8-K dated
Des Moines, Iowa property). January 14, 1987
4.10 First Mortgage dated as of December 26, 1986 Filed as Exhibit 4.6
between Registrant, as Mortgagor, and to Registrant's
Security Pacific, as Mortgagee (for Form 8-K dated
Dubuque, Iowa property). January 14, 1987
4.11 Deed of Trust and Security Agreement dated Filed as Exhibit 4.7
as of December 26, 1986 between Registrant, to Registrant's
as Grantor, Marvin Young, Esquire, as Form 8-K dated
Trustee, and Security Pacific, as January 14, 1987
Beneficiary and Secured Party (for St.
Joseph, Missouri property).
4.12 Deed of Trust and Security Agreement dated Filed as Exhibit 4.8
as of December 26, 1986 between Registrant, to Registrant's
as Grantor, Marvin Young, Esquire, as Form 8-K dated
Trustee, and Security Pacific, as January 14, 1987
Beneficiary and Secured Party (for
Hazelwood, Missouri property).
4.13 Deed of Trust and Security Agreement dated Filed as Exhibit 4.9
as of December 26, 1986 between Registrant, to Registrant's
as Grantor, Stephen Nelson, Esquire, as Form 8-K dated
Trustee, and Security Pacific, as January 14, 1987
Beneficiary and Secured Party (for
Lincoln, Nebraska property).
4.14 Deed of Trust and Security Agreement dated Filed as Exhibit 4.10
as of December 26, 1986 between Registrant, to Registrant's
as Grantor, Stephen Nelson, Esquire, as Form 8-K dated
Trustee, and Security Pacific, as January 14, 1987
Beneficiary and Secured Party (for
Omaha, Nebraska property).
4.15 Assignment of Rents and Leases dated as Filed as Exhibit 4.11
of December 26, 1986 from Registrant, as to Registrant's
Assignor, to Security Pacific, as Assignee. Form 8-K dated
January 14, 1987
4.16 Mortgage and Security Agreement dated as of Filed as Exhibit 4.1
August 24, 1987 between Registrant, as to Registrant's
Mortgagor, and NCNB, as Mortgagee. Form 8-K dated
` September 9, 1987
- 16 -
Exhibit Method of
No. Description Filing
- ------------------- ----------------------------------------------- ------------------------
4.17 Term Note dated August 24, 1987 from Filed as Exhibit 4.2
Registrant to NCNB. to Registrant's
Form 8-K dated
September 9, 1987
4.18 Assignment of Leases and Rents and Consent of Filed as Exhibit 4.3
Lessee dated as of August 24, 1987 between to Registrant's
Registrant, as Assignor, and NCNB, as Form 8-K dated
Assignee, and consented to by Emb-Tex, as September 9, 1987
Lessee.
4.19 Consent to Assignment and Sublease dated as of Filed as Exhibit 4.4
August 24, 1987 by and among American National to Registrant's
Insurance Company, as Landlord, Auto Shack, Form 8-K dated
as Assignor, and Registrant, as Assignee. September 9, 1987
4.20 Agreement and Assignment of Ground Lease dated Filed as Exhibit 4.5
August 28, 1987 by and among Auto Shack, as to Registrant's
Assignor, Registrant, as Assignee, and Henry Form 8-K dated
and Ruby Creswell, as Fee Owners. September 9, 1987
4.21 Agreement and Assignment of Ground Lease dated Filed as Exhibit 4.6
August 28, 1987 by and among Auto Shack, as to Registrant's
Assignor, Registrant, as Assignee, and Form 8-K dated
Commercial Investments of Greensboro, Inc., September 9, 1987
as Fee Owner.
4.22 Agreement and Assignment of Ground Lease dated Filed as Exhibit 4.7
August 28, 1987 by and among Auto Shack, as to Registrant's
Assignor, Registrant, as Assignee, and K.W.W. Form 8-K dated
Associates, as Fee Owner. September 9, 1987
4.23 Agreement and Assignment of Ground Lease dated Filed as Exhibit 4.8
August 28, 1987 by and among Auto Shack, as to Registrant's
Assignor, Registrant, as Assignee, and Mabel Form 8-K dated
D. and Jimmy S. Snyder, as Fee Owner. September 9, 1987
4.24 Agreement and Assignment of Ground Lease dated Filed as Exhibit 4.9
August 28, 1987 by and among Auto Shack, as to Registrant's
Assignor, and Registrant, as Assignee. Form 8-K dated
September 9, 1987
4.25 $12,000,000 Promissory Note dated Filed as Exhibit 4.1
November 16, l987 from Registrant and CPA(R):6, to Registrant's Form 8-K
as Borrower, to Ford, as Holder. dated February 15, 1988
4.26 Mortgage and Assignment of Leases and Rents Filed as Exhibit 4.2
and Security Agreement dated November 18, to Registrant's Form 8-K
1987 between Registrant and CPA(R):6, as dated February 15, 1988
Mortgagor, and Ford, as Mortgagee.
- 17 -
Exhibit Method of
No. Description Filing
- -------------- ---------------------------------------------- ------------------------
4.27 $5,487,300 Promissory Note dated Filed as Exhibit 4.3
January 28, 1988 from Registrant, as to Registrant's Form 8-K
Borrower, to The Arizona Bank, as Holder. dated February 15, 1988
4.28 Deed of Trust, Assignment of Leases and Rents Filed as Exhibit 4.4
and Security Agreement dated January 28, 1988 to Registrant's Form 8-K
between Registrant, as Trustor, and The dated February 15, 1988
Arizona Bank, as Trustee (for the Arizona
properties).
4.29 Deed of Trust, Assignment of Leases and Rents Filed as Exhibit 4.5
and Security Agreement dated January 28, 1988 to Registrant's Form 8-K
between Registrant, as Trustor, and The dated February 15, 1988
Arizona Bank, as Trustee (for the Denver,
Colorado property).
4.30 Deed of Trust, Assignment of Leases and Rents Filed as Exhibit 4.6
and Security Agreement dated January 28, 1988 to Registrant's Form 8-K
between Registrant, as Trustor, and The dated February 15, 1988
Arizona Bank, as Trustee (for the Monte Vista,
Colorado property).
4.31 Mortgage, Assignment of Leases and Rents Filed as Exhibit 4.7
and Security Agreement dated January 28, 1988 to Registrant's Form 8-K
between Registrant, as Trustor, and dated February 15, 1988
The Arizona Bank, as Trustee (for the
New Mexico property).
4.32 Deed of Trust, Assignment of Leases and Rents Filed as Exhibit 4.8
and Security Agreement dated January 28, 1988 to Registrant's Form 8-K
between Registrant, as Trustor, and The dated February 15, 1988
Arizona Bank, as Trustee (for the Washington
property).
4.33 $5,000,000 Secured Promissory Note dated Filed as Exhibit 4.1
February 16, 1988 from Registrant, as to Registrant's Form 8-K
Borrower, to Principal Mutual, as Lender. dated March 1, 1988
4.34 Mortgage dated February 16, 1988 between Filed as Exhibit 4.2
Registrant, as Mortgagor, and Principal to Registrant's Form 8-K
Mutual, as Mortgagee. dated March 1, 1988
- 18 -
Exhibit Method of
No. Description Filing
- ----------- --------------------------------------------- ------------------------
4.35 Loan Modification Agreement dated as of Filed as Exhibit 4.1 to
September 29, 1988 among Prudential Insurance Registrant's Form 8-K
Company of America, as Lender, American dated October 13, 1988
National Bank and Trust Company of Chicago as
Trustee under Trust Agreement dated November
8, 1984 ("American National Trust No. 62782")
and American National Bank and Trust Company
of Chicago as Trustee under Trust Agreement
dated September 14, 1984 ("American National
Trust No. 62230")(collectively, "Trusts"),
Venture ("Beneficiary"), Trusts and
Beneficiary collectively known as Borrower,
and Registrant and CPA(R):8, as Purchaser.
4.36 Note Agreement dated December 21, 1988 Filed as Exhibit 4.1 to
among New England Mutual Life Insurance Registrant's Form 8-K
Company ("New England"), Registrant and dated January 5, 1989
CPA(R):8.
4.37 $15,000,000 Secured Note from Registrant Filed as Exhibit 4.2 to
and CPA(R):8 to New England dated Registrant's Form 8-K
December 22, 1988. dated January 5, 1989
4.38 Deed of Trust and Security Agreement Filed as Exhibit 4.3(A)
dated December 21, 1988 between Registrant to Registrant's Form 8-K
and CPA(R):8, as trustor, and New England, dated January 5, 1989
as beneficiary, covering the California
Property.
4.39 Mortgage and Security Agreement dated Filed as Exhibit 4.3(B)
December 21, 1988 between Registrant to Registrant's Form 8-K
and CPA(R):8, as mortgagor, and New England, dated January 5, 1989
as mortgagee, covering the Iowa Property.
4.40 Mortgage and Security Agreement dated Filed as Exhibit 4.3(C)
December 21, 1988 between Registrant to Registrant's Form 8-K
and CPA(R):8, as mortgagor, and New England, dated January 5, 1989
as mortgagee, covering the Michigan Property.
4.41 Mortgage and Security Agreement dated Filed as Exhibit 4.3(D)
December 21, 1988 between Registrant to Registrant's Form 8-K
and CPA(R):8, as mortgagor, and New England, dated January 5, 1989
as mortgagee, covering the New Hampshire
Property.
4.42 Mortgage and Security Agreement dated Filed as Exhibit 4.3(E)
December 21, 1988 between Registrant to Registrant's Form 8-K
and CPA(R):8, as mortgagor, and New England, dated January 5, 1989
as mortgagee, covering the New York Property.
- 19 -
Exhibit Method of
No. Description Filing
- ----------- ----------------------------------------------- ------------------------
4.43 Assignment of Leases, Rents and Guaranty Filed as Exhibit 4.4(A)
dated December 21, 1988 from Registrant to Registrant's Form 8-K
and CPA(R):8, as assignor to New England, dated January 5, 1989
as assignee, covering the California
Property.
4.44 Assignment of Leases, Rents and Guaranty Filed as Exhibit 4.4(B)
dated December 21, 1988 from Registrant to Registrant's Form 8-K
and CPA(R):8, as assignor to New England, dated January 5, 1989
as assignee, covering the Iowa Property.
4.45 Assignment of Leases, Rents and Guaranty Filed as Exhibit 4.4(C)
dated December 21, 1988 from Registrant to Registrant's Form 8-K
and CPA(R):8, as assignor to New England, dated January 5, 1989
as assignee, covering the Michigan Property.
4.46 Assignment of Leases, Rents and Guaranty Filed as Exhibit 4.4(D)
dated December 21, 1988 from Registrant to Registrant's Form 8-K
and CPA(R):8, as assignor to New England, dated January 5, 1989
as assignee, covering the New Hampshire
Property.
4.47 Assignment of Leases, Rents and Guaranty Filed as Exhibit 4.4(E)
dated December 21, 1988 from Registrant to Registrant's Form 8-K
and CPA(R):8, as assignor to New England, dated January 5, 1989
as assignee, covering the New York Property.
4.48 $8,000,000 Promissory Note dated March 31, Filed as Exhibit 4.1
1989 from Registrant and CPA(R):8, as Borrower, to Registrant's Form 8-K
to TriCon, as Lender. dated May 11, 1989
4.49 Mortgage, Assignment of Leases and Rents and Filed as Exhibit 4.2
Other Income and Security Agreement dated to Registrant's Form 8-K
March 31, 1989 between Registrant and CPA(R):8, dated May 11, 1989
as Mortgagor, to TriCon, as Mortgagee, for the
Plant City, Florida property.
4.50 Deed to Secure Debt, Assignment of Leases, Filed as Exhibit 4.3
Rents and Other Income and Security Agreement to Registrant's Form 8-K
dated March 31, 1989 between Registrant and dated May 11, 1989
CPA(R):8, as Grantor, to TriCon, as Grantee,
for the Jackson County, Georgia property.
- 20 -
Exhibit Method of
No. Description Filing
- --------- ----------------------------------------------- ------------------------
4.51 Deed of Trust, Assignment of Leases, Rents Filed as Exhibit 4.4
and Other Income and Security Agreement to Registrant's Form 8-K
dated March 31, 1989 from Registrant and dated May 11, 1989
CPA(R):8, as Grantor, to TriCon, as Grantee,
for the Frederick County, Maryland property.
4.52 Mortgage, Assignment of Leases, Rents and Filed as Exhibit 4.5
Other Income and Security Agreement dated to Registrant's Form 8-K
March 31, 1989 between Registrant and CPA(R):8, dated May 11, 1989
as Mortgagor, to TriCon, as Mortgagee, for
the Farmington, New York property.
4.53 Deed of Trust, Assignment of Leases, Rents Filed as Exhibit 4.6
and Other Income and Security Agreement to Registrant's Form 8-K
dated March 31, 1989 from Registrant and dated May 11, 1989
CPA(R):8, as Grantor, to TriCon, as Grantee,
for the Fredericksburg, Virginia property.
4.54 Deed of Trust, Assignment of Leases, Rents Filed as Exhibit 4.7
and Other Income and Security Agreement to Registrant's Form 8-K
dated March 31, 1989 from Registrant and dated May 11, 1989
CPA(R):8, as Grantor, to TriCon, as Grantee,
for the Manassas, Virginia property.
4.55 Assignment of Rents and Leases dated Filed as Exhibit 4.8
March 31, 1989 from Registrant and CPA(R):8, to Registrant's Form 8-K
as Assignor, to TriCon, as Assignee, dated May 11, 1989
for the Plant City, Florida property.
4.56 Assignment of Rents and Leases dated Filed as Exhibit 4.9
March 31, 1989 from Registrant and CPA(R):8, to Registrant's Form 8-K
as Assignor, to TriCon, as Assignee, dated May 11, 1989
for the Jackson County, Georgia property.
4.57 Assignment of Rents and Leases dated Filed as Exhibit 4.10
March 31, 1989 from Registrant and CPA(R):8, to Registrant's Form 8-K
as Assignor, to TriCon, as Assignee, dated May 11, 1989
for the Jackson County, Georgia property.
4.58 Assignment of Rents and Leases dated Filed as Exhibit 4.11
March 31, 1989 from Registrant and CPA(R):8, to Registrant's Form 8-K
as Assignor, to TriCon, as Assignee, dated May 11, 1989
for the Jackson County, Georgia property.
4.59 Assignment of Rents and Leases dated Filed as Exhibit 4.12
March 31, 1989 from Registrant and CPA(R):8, to Registrant's Form 8-K
as Assignor, to TriCon, as Assignee, dated May 11, 1989
for the Jackson County, Georgia property.
- 21 -
Exhibit Method of
No. Description Filing
- ------------------ ---------------------------------------------- ------------------------
10.1 Lease Agreement dated as of December 9, Exhibit 10.1 to Form 8-K
1986 by and between Registrant, as Landlord, dated December 24, 1986
and HL Associates, as Tenant.
10.2 Memorandum of Lease made as of December 9, Exhibit 10.2 to Form 8-K
1986 between Registrant and HL Associates dated December 24, 1986
Limited.
10.3 Guaranty and Suretyship Agreement dated Exhibit 10.3 to Form 8-K
as of December 9, 1986 among Uokuni U.S.A. dated December 24, 1986
Company, Inc., as Guarantor, Registrant,
as Landlord, and NCNB.
10.4 Lease Agreement dated December 26, 1986 Filed as Exhibit 10.1
between Registrant, as Landlord, and to Registrant's
Mid-Continent Bottlers, Inc. ("Mid- Form 8-K dated
Continent"), as Tenant. January 14, 1987
10.5 Memorandum of Lease dated as of December 26, Filed as Exhibit 10.2
1986 between Registrant, as Landlord, and to Registrant's
Mid-Continent, as Tenant. Form 8-K dated
January 14, 1987
10.6 Lease Agreement dated June 17, 1987 between Filed as Exhibit 10.1
Registrant, as Landlord and Winn-Dixie, as to Registrant's
Tenant. Form 8-K dated
July 1, 1987
10.7 Lease Guaranty dated as of June 17, 1987 by Filed as Exhibit 10.2
Winn-Dixie Stores, as Guarantor, to to Registrant's
Registrant, as Lessor. Form 8-K dated
July 1, 1987
10.8 Ground Lease dated as of November 27, 1985 Filed as Exhibit 10.3
between Hooper Brothers, an Alabama general to Registrant's
partnership, as Landlord, and Winn-Dixie, Form 8-K dated
as Tenant. July 1, 1987
10.9 Assignment of Rights Under Ground Lease dated Filed as Exhibit 10.4
June 15, 1987 between Winn-Dixie, as Assignor, to Registrant's
and Registrant, as Assignor, and Registrant, Form 8-K dated
as Assignee. July 1, 1987
10.10 Lease Agreement dated as of August 24, 1987 Filed as Exhibit 10.1
between Registrant, as Landlord, and Emb-Tex, to Registrant's
as Tenant. Form 8-K dated
September 9, 1987
- 22 -
Exhibit Method of
No. Description Filing
- ---------- ---------------------------------------------- ------------------------
10.11 Lease Agreement dated as of August 28, 1987 Filed as Exhibit 10.2
between Registrant, as Landlord, and Auto to Registrant's
Shack, as Tenant for the Auto Shack Leasehold Form 8-K dated
Properties. September 9, 1987
10.12 Lease Agreement dated as of August 28, 1987 Filed as Exhibit 10.3
between Registrant, as Landlord, and Auto to Registrant's
Shack, as Tenant, for Pensacola, Florida Form 8-K dated
property. September 9, 1987
10.13 Lease Agreement dated as of August 28, 1987 Filed as Exhibit 10.4
between Registrant, as Landlord, and Auto to Registrant's
Shack, as Tenant, for Baton Rouge, Louisiana Form 8-K dated
property. September 9, 1987
10.14 Lease Agreement dated as of August 28, 1987 Filed as Exhibit 10.5
between Registrant, as Landlord, and Auto to Registrant's
Shack, as Tenant, for Kannapolis, North Form 8-K dated
Carolina property. September 9, 1987
10.15 Lease Agreement dated as of August 28, 1987 Filed as Exhibit 10.6
between Registrant, as Landlord, and Auto to Registrant's
Shack, as Tenant, for Morgantown, North Form 8-K dated
Carolina property. September 9, 1987
10.16 Lease Agreement dated as of August 28, 1987 Filed as Exhibit 10.7
between Registrant, as Landlord, and Auto to Registrant's
Shack, as Tenant, for East Ridge, Tennessee Form 8-K dated
property. September 9, 1987
10.17 Lease Agreement dated as of August 28, 1987 Filed as Exhibit 10.8
between Registrant, as Landlord, and Auto to Registrant's
Shack, as Tenant, for Knoxville, Tennessee Form 8-K dated
property. September 9, 1987
10.18 Lease Agreement dated November 16, 1987 by Filed as Exhibit 10.1
and between Registrant and CPA(R):6, as to Registrant's Form 8-K
Landlord, and Brock, as Tenant. dated February 15, 1988
10.19 Lease Agreement dated January 28, 1988 by and Filed as Exhibit 10.2
between Registrant, as Landlord, and Yellow to Registrant's Form 8-K
Front, as Tenant. dated February 15, 1988
10.20 Subordination, Nondisturbance and Attornment Filed as Exhibit 10.3
Agreement dated January 28, 1988 by and to Registrant's Form 8-K
between Registrant, as Landlord, Yellow Front, dated February 15, 1988
as Tenant, and The Arizona Bank, as Lender.
10.21 Lease Agreement dated January 26, 1988 by and Filed as Exhibit 10.4
between Plotkin, as Lessor, and New England to Registrant's Form 8-K
Telephone, as Lessee. dated February 15, 1988
- 23 -
Exhibit Method of
No. Description Filing
- ------------ ----------------------------------------------- ------------------------
10.22 Lease Assignment dated January 29, 1988 Filed as Exhibit 10.5
between Plotkin, as Assignor, and Registrant, to Registrant's Form 8-K
as Assignee. dated February 15, 1988
10.23 Lease Agreement dated February 16, 1988 by Filed as Exhibit 10.1
and between Registrant, Landlord, and to Registrant's Form 8-K
The Gap, as Tenant. dated March 1, 1988
10.24 Lease Agreement dated as of September 29, 1988 Filed as Exhibit 10.1 to
among Registrant and CPA(R):8, as Landlord, and Registrant's Form 8-K
ASA, as Tenant. dated October 13, 1988
10.25 Lease Agreement dated December 21, 1988 Filed as Exhibit 10.1(A)
between Registrant and CPA(R):8, as Landlord, to Registrant's Form 8-K
and Ormco Corporation, as Tenant. dated January 5, 1989
10.26 Lease Agreement dated December 21, 1988 Filed as Exhibit 10.1(B)
between Registrant and CPA(R):8, as Landlord, to Registrant's Form 8-K
and Barnstead Thermolyne Corporation, dated January 5, 1989
as Tenant.
10.27 Lease Agreement dated December 21, 1988 Filed as Exhibit 10.1(C)
between Registrant and CPA(R):8, as Landlord, to Registrant's Form 8-K
and Kerr Manufacturing Company, as Tenant. dated January 5, 1989
10.28 Lease Agreement dated December 21, 1988 Filed as Exhibit 10.1(D)
between Registrant and CPA(R):8, as Landlord, to Registrant's Form 8-K
and Erie Scientific Company, as Tenant. dated January 5, 1989
10.29 Lease Agreement dated December 21, 1988 Filed as Exhibit 10.1(E)
between Registrant and CPA(R):8, as Landlord, to Registrant's Form 8-K
and Nalge Company, as Tenant. dated January 5, 1989
10.30 Guaranty and Suretyship Agreement dated Filed as Exhibit 10.2
December 21, 1988 from Sybron Acquisition to Registrant's Form 8-K
Company to Registrant and CPA(R):8 dated January 5, 1989
10.31 Co-Tenancy Agreement dated December 21, 1988 Filed as Exhibit 10.3
between Registrant and CPA(R):8 to Registrant's Form 8-K
dated January 5, 1989
10.32 Seller/Lessee's Certificate dated Filed as Exhibit 28.1(A)
December 21, 1988 from Ormco Corporation to Registrant's Form 8-K
Registrant and CPA(R):8 dated January 5, 1989
10.33 Lease Agreement dated as of March 31, 1989 Filed as Exhibit 10.1
by and between Registrant and CPA(R):8, as to Registrant's Form 8-K
Landlord, to the Ryan Tenants, as Tenants. dated May 11, 1989
- 24 -
Exhibit Method of
No. Description Filing
- ------------------ --------------------------------------------------------- ------------------------
10.34 Guaranty dated March 31, 1989 from NVR, as Filed as Exhibit 10.2
Guarantor, to Registrant and CPA(R):8, as to Registrant's Form 8-K
Landlord. dated May 11, 1989
10.35 Guarantor's Certificate dated March 31, 1989 Filed as Exhibit 10.3
from NVR, as Guarantor, to Registrant and to Registrant's Form 8-K
CPA(R):8, as Purchaser. dated May 11, 1989
10.36 Lease Assignment and Assumption Agreement from Filed as Exhibit 10.1
Registrant, as Assignor, to Mid-Continent Bottlers, Inc., to Registrant's Form 8-K
as Assignee. dated October 14, 1994
28.1 Supplement dated December 18, 1986 to Exhibit 28.1 to Form 8-K
Registrant's Prospectus dated April 25, 1986. dated December 24, 1986
28.2 Compiled Financial Statements of Jupiter Exhibit 28.2 to Form 8-K
Inlet Trading Company, Inc. as of dated December 24, 1986
November 30, 1985 and 1984.
28.3 Deed dated as of December 24, 1986 from Filed as Exhibit 28.1
Packaged Food & Beverage Co., Inc. to Registrant's
("Packaged Food"), as Grantor, to Registrant, Form 8-K dated
as Grantee (for Cedar Rapids, Iowa property). January 14, 1987
28.4 Deed dated as of December 24, 1986 from Filed as Exhibit 28.2
Packaged Food, as Grantor, to Registrant, to Registrant's
as Grantee (for Davenport, Iowa property). Form 8-K dated
January 14, 1987
28.5 Deed dated as of December 24, 1986 from Filed as Exhibit 28.3
Packaged Food, as Grantor, to Registrant, to Registrant's
as Grantee (for Des Moines, Iowa property). Form 8-K dated
January 14, 1987
28.6 Deed dated as of December 24, 1986 from Filed as Exhibit 28.4
Packaged Food, as Grantor, to Registrant, to Registrant's
as Grantee (for Dubuque, Iowa property). Form 8-K dated
January 14, 1987
28.7 Deed dated as of December 24, 1986 from Filed as Exhibit 28.5
Packaged Food, as Grantor, to Registrant, to Registrant's
as Grantee (for St. Joseph, Missouri Form 8-K dated
property). January 14, 1987
28.8 Deed dated as of December 24, 1986 from Filed as Exhibit 28.6
Packaged Food, as Grantor, to Registrant, to Registrant's
as Grantee (for Hazelwood, Missouri Form 8-K dated
property). January 14, 1987
28.9 Deed dated as of December 24, 1986 from Filed as Exhibit 28.7
Packaged Food, as Grantor, to Registrant, to Registrant's
as Grantee (for Lincoln, Nebraska Form 8-K dated
property). January 14, 1987
- 25 -
Exhibit Method of
No. Description Filing
- ------------------- --------------------------------------------- ----------------------
28.10 Deed dated as of December 24, 1986 from Filed as Exhibit 28.8
Packaged Food, as Grantor, to Registrant, to Registrant's
as Grantee (for Omaha, Nebraska Form 8-K dated
property). January 14, 1987
28.11 Bill of Sale dated December 31, 1986 Filed as Exhibit 28.9
from Packaged Food to Registrant for to Registrant's
all properties. Form 8-K dated
January 14, 1987
28.12 Seller's Certificate dated December 31, Filed as Exhibit 28.10
1986 from Packaged Food to Registrant. to Registrant's
From 8-K dated
January 14, 1987
28.13 Letter dated December 31, 1986 from Filed as Exhibit 28.11
Mid-Continent, as Tenant, to Registrant, to Registrant's
as Landlord. Form 8-K dated
January 14, 1987
28.14 Intercreditor Agreement dated as of Filed as Exhibit 28.12
December 30, 1986 between Meritor Savings to Registrant's
Bank ("Meritor"), Security Pacific, Mid- Form 8-K dated
Continent, Mid-Continent Bottlers of St. January 14, 1987
Louis, Inc. ("St. Louis Subsidiary") and
Registrant.
28.15 Bill of Sale dated June 17, 1987 from Filed as Exhibit 28.1
Winn-Dixie to Registrant. to Registrant's
Form 8-K dated
July 1, 1987
28.16 Seller's Certificate dated June 17, 1987 from Filed as Exhibit 28.2
Winn-Dixie to Registrant to Registrant's
Form 8-K dated
July 1, 1987
28.17 Bill of Sale dated as of August 24, 1987 from Filed as Exhibit 28.1
E.T.C. to Registrant. to Registrant's
Form 8-K dated
September 9, 1987
28.18 Deed dated August 24, 1987 from E.T.C., as Filed as Exhibit 28.2
Grantor, to Registrant, as Grantee. to Registrant's
Form 8-K dated
September 9, 1987
28.19 Deed dated August 24, 1987 from E.T.C., as Filed as Exhibit 28.3
Grantor, to Registrant, as Grantee. to Registrant's
Form 8-K dated
September 9, 1987
- 26 -
Exhibit Method of
No. Description Filing
- ------------------- ---------------------------------------------- ----------------------
28.20 Seller's Certificate dated August 24, 1987 Filed as Exhibit 28.4
from E.T.C. to Registrant. to Registrant's
Form 8-K dated
September 9, 1987
28.21 Lessee's Certificate dated August 24, 1987 Filed as Exhibit 28.5
from Emb-Tex to Registrant. to Registrant's
Form 8-K dated
September 9, 1987
28.22 Bill of Sale dated as of August 28, 1987 Filed as Exhibit 28.6
from Auto Shack to Registrant. to Registrant's
Form 8-K dated
September 9, 1987
28.23 Warranty Deed dated August 28, 1987 between Filed as Exhibit 28.7
Auto Shack to Registrant for Jacksonville, to Registrant's
Florida property. Form 8-K dated
September 9, 1987
28.24 Warranty Deed dated August 28, 1987 between Filed as Exhibit 28.8
Auto Shack to Registrant for Panama City, to Registrant's
Florida property. Form 8-K dated
September 9, 1987
28.25 Corporate Deed dated August 28, 1987 between Filed as Exhibit 28.9
Auto Shack and Registrant for Shelby, North to Registrant's
Carolina property. Form 8-K dated
September 9, 1987
28.26 General Warranty Deed dated August 28, 1987 Filed as Exhibit 28.10
between Auto Shack and Registrant for Centre to Registrant's
Point Drive, St. Peters, Missouri property. Form 8-K dated
September 9, 1987
28.27 General Warranty Deed dated August 28, 1987 Filed as Exhibit 28.11
between Auto Shack and Registrant for W. to Registrant's
Mexico Road, St. Peters, Missouri property. Form 8-K dated
September 9, 1987
28.28 Deed dated August 28, 1987 from Auto Shack Filed as Exhibit 28.12
to Registrant for Denham Springs, Louisiana to Registrant's
property. Form 8-K dated
September 9, 1987
28.29 Deed dated August 28, 1987 from Auto Shack Filed as Exhibit 28.13
to Registrant for Hammond, Louisiana property. to Registrant's
Form 8-K dated
September 9, 1987
- 27 -
Exhibit Method of
No. Description Filing
- ------------------- ---------------------------------------------- ------------------------
28.30 Seller's/Lessee's Certificate dated August 28, Filed as Exhibit 28.14
1987 from Auto Shack to Registrant. to Registrant's
Form 8-K dated
September 9, 1987
28.31 Deed dated November 12, 1987 between Filed as Exhibit 28.1
Northwestern, as Transferor, and Registrant to Registrant's Form 8-K
and CPA(R):6, as Transferee. dated February 15, 1988
28.32 Bill of Sale dated November 12, 1987 from Filed as Exhibit 28.2
Northwestern, as Seller, to Registrant, as to Registrant's Form 8-K
Purchaser. dated February 15, 1988
28.33 Seller's Certificate dated November 16, 1987 Filed as Exhibit 28.3
from Northwestern, as Seller, to Registrant to Registrant's Form 8-K
and CPA(R):6, as Purchaser. dated February 15, 1988
28.34 Lessee's Certificate dated November 16, 1987 Filed as Exhibit 28.4
from Brock, as Lessee, to Registrant, to Registrant's Form 8-K
as Lessor. dated February 15, 1988
28.35 Bill of Sale dated January 28 1988 from Filed as Exhibit 28.5
Bonanza Stores, Inc. ("Bonanza Stores"), to Registrant's Form 8-K
as Seller, to Registrant, as Purchaser. dated February 15, 1988
28.36 Bill of Sale dated January 28, 1988 from Filed as Exhibit 28.6
Yellow Front, as Seller, to Registrant, to Registrant's Form 8-K
as Purchaser. dated February 15, 1988
28.37 Seller's Certificate dated January 28, 1988 Filed as Exhibit 28.7
from Bonanza, as Seller, to Registrant, to Registrant's Form 8-K
as Purchaser. dated February 15, 1988
28.38 Seller's/Lessee's Certificate dated January Filed as Exhibit 28.8
28, 1988 from Yellow Front, as Seller, to to Registrant's Form 8-K
Registrant, as Purchaser. dated February 15, 1988
28.39 Deed dated January 29, 1988 from Plotkin, Filed as Exhibit 28.9
as Grantor, to Registrant, as Grantee. to Registrant's Form 8-K
dated February 15, 1988
28.40 Deed and Easement dated February 16, 1988 Filed as Exhibit 28.1
from the Gap, as Grantor, to Registrant, to Registrant's Form 8-K
as Grantee. dated March 1, 1988
28.41 Bill of Sale dated February 16, 1988 from Filed as Exhibit 28.2
The Gap to Registrant. to Registrant's Form 8-K
dated March 1, 1988
28.42 Seller/Lessee's Certificate dated Filed as Exhibit 28.3
February 16, 1988 from the Gap to to Registrant's Form 8-K
Registrant. dated March 1, 1988
- 28 -
Exhibit Method of
No. Description Filing
- ------------- ------------------------------------------------- ------------------------
28.43 Trustee's Deed dated as of September 23, 1988 Filed as Exhibit 28.1 to
between American National Trust No. 62782, as Registrant's Form 8-K
Grantor, and Registrant and CPA(R):8, as Grantee. dated October 13, 1988
28.44 Trustee's Deed dated as of September 23, 1988 Filed as Exhibit 28.2 to
between American National Trust No. 62230, as Registrant's Form 8-K
Grantor, and Registrant and CPA(R):8, as Grantee. dated October 13, 1988
28.45 Bill of Sale dated as of September 29, 1988 Filed as Exhibit 28.3 to
from Venture, as Seller, to Registrant and Registrant's Form 8-K
CPA(R):8, as Purchaser. dated October 13, 1988
28.46 Seller's Certificate dated as of September 29, Filed as Exhibit 28.4 to
1988 from Venture, as Seller, to Registrant Registrant's Form 8-K
and CPA(R):8, as Purchaser. dated October 13, 1988
28.47 Lessee's Certificate dated as of September 29, Filed as Exhibit 28.5 to
1988 from ASA, as Seller, to Registrant and Registrant's Form 8-K
CPA(R):8, as Purchaser. dated October 13, 1988
28.48 Seller/Lessee's Certificate dated Filed as Exhibit 28.1(B)
December 21, 1988 from Barnstead Thermolyne to Registrant's Form 8-K
Corporation to Registrant and CPA(R):8. dated January 5, 1989
28.49 Seller/Lessee's Certificate dated Filed as Exhibit 28.1(C)
December 21, 1988 from Kerr Manufacturing to Registrant's Form 8-K
Corporation to Registrant and CPA(R):8. dated January 5, 1989
28.50 Seller/Lessee's Certificate dated Filed as Exhibit 28.1(D)
December 21, 1988 from Erie Scientific to Registrant's Form 8-K
Company to Registrant and CPA(R):8. dated January 5, 1989
28.51 Seller/Lessee's Certificate dated Filed as Exhibit 28.1(E)
December 21, 1988 from Nalge Company to Registrant's Form 8-K
to Registrant and CPA(R):8. dated January 5, 1989
28.52 Grant Deed dated December 21, 1988 Filed as Exhibit 28.2(A)
from Ormco Corporation, as grantor, to Registrant's Form 8-K
to Registrant and CPA(R):8, as grantee. dated January 5, 1989
28.53 Warranty Deed dated December 21, 1988 Filed as Exhibit 28.2(B)
from Barnstead Thermolyne Corporation, to Registrant's Form 8-K
as grantor, to Registrant and CPA(R):8, dated January 5, 1989
as grantee.
28.54 Deed dated December 21, 1988 from Kerr Filed as Exhibit 28.2(C)
Manufacturing Company, as grantor, to to Registrant's Form 8-K
Registrant and CPA(R):8, as grantee. dated January 5, 1989
- 29 -
Exhibit Method of
No. Description Filing
- ---------- ----------------------------------------------- ------------------------
28.55 Warranty Deed dated December 21, 1988 Filed as Exhibit 28.2(D)
from Erie Scientific Company, as grantor, to Registrant's Form 8-K
to Registrant and CPA(R):8, as grantee. dated January 5, 1989
28.56 Indenture dated December 21, 1988 from Filed as Exhibit 28.2(E)
Nalge Company, as grantor, to Registrant to Registrant's Form 8-K
and CPA(R):8, as grantee. dated January 5, 1989
28.57 Bill of Sale dated December 21, 1988 from Filed as Exhibit 28.3(A)
Ormco Corporation to Registrant and CPA(R):8. to Registrant's Form 8-K
dated January 5, 1989
28.58 Bill of Sale dated December 21, 1988 from Filed as Exhibit 28.3(B)
Barnstead Thermolyne Corporation to to Registrant's Form 8-K
Registrant and CPA(R):8. dated January 5, 1989
28.59 Bill of Sale dated December 21, 1988 from Filed as Exhibit 28.3(C)
Kerr Manufacturing Company to Registrant to Registrant's Form 8-K
and CPA(R):8. dated January 5, 1989
28.60 Bill of Sale dated December 21, 1988 from Filed as Exhibit 28.3(D)
Erie Scientific Company to Registrant and to Registrant's Form 8-K
CPA(R):8. dated January 5, 1989
28.61 Bill of Sale dated December 21, 1988 from Filed as Exhibit 28.3(E)
Nalge Company to Registrant and CPA(R):8. to Registrant's Form 8-K
dated January 5, 1989
28.62 Warranty Deed dated March 31, 1989 from Ryan, Filed as Exhibit 28.1
as Guarantor, to Registrant and CPA(R):8, as to Registrant's Form 8-K
Grantee, for the Plant City, Florida property. dated May 11, 1989
28.63 Deed dated March 31, 1989 from Ryan, as Filed as Exhibit 28.2
Guarantor, to Registrant and CPA(R):8, as to Registrant's Form 8-K
Grantee, for the Frederick County, dated May 11, 1989
Maryland property.
28.64 Warranty Deed dated March 31, 1989 from Ryan, Filed as Exhibit 28.3
as Guarantor, to Registrant and CPA(R):8, as to Registrant's Form 8-K
Grantee, for the Framington, New York property. dated May 11, 1989
28.65 Deed dated March 31, 1989 from Ryan, as Filed as Exhibit 28.4
Guarantor, to Registrant and CPA(R):8, as to Registrant's Form 8-K
Grantee, for the Fredericksburg, dated May 11, 1989
Virginia property.
28.66 Deed dated March 31, 1989 from NV Ryan L.P., Filed as Exhibit 28.5
as Guarantor, to Registrant and CPA(R):8, as to Registrant's Form 8-K
Grantee, for the Manassas, Virginia property. dated May 11, 1989
- 30 -
Exhibit Method of
No. Description Filing
- ---------- ------------------------------------------------ --------------------------
28.67 Bill of Sale dated March 31, 1989 from Ryan, Filed as Exhibit 28.6
as Seller, to Registrant and CPA(R):8, as to Registrant's Form 8-K
Purchaser, for the Plant City, Florida property. dated May 11, 1989
28.68 Bill of Sale dated March 31, 1989 from Ryan, Filed as Exhibit 28.7
as Seller, to Registrant and CPA(R):8, as to Registrant's Form 8-K
Purchaser, for the Frederick County, dated May 11, 1989
Maryland property.
28.69 Bill of Sale dated March 31, 1989 from Ryan, Filed as Exhibit 28.8
as Seller, to Registrant and CPA(R):8, as to Registrant's Form 8-K
Purchaser, for the Fredericksburg, dated May 11, 1989
Virginia property.
28.70 Bill of Sale dated March 31, 1989 from Filed as Exhibit 28.9
NV Homes, L.P., as Seller, to Registrant to Registrant's Form 8-K
and CPA(R):8, as Purchaser, for the dated May 11, 1989
Manassas, Virginia property.
28.71 Seller's Certificate dated March 31, 1989 Filed as Exhibit 28.10
from NVHomes, L.P., as Seller, to to Registrant's Form 8-K
Registrant and CPA(R):8, as Purchaser. dated May 11, 1989
28.72 Seller's Certificate dated March 31, 1989 Filed as Exhibit 28.11
from Ryan, as Seller, to Registrant to Registrant's Form 8-K
and CPA(R):8, as Purchaser. dated May 11, 1989
28.73 Lessee's Certificate dated March 31, 1989 Filed as Exhibit 28.12
from NVHomes, L.P., as Lessee, to to Registrant's Form 8-K
Registrant and CPA(R):8, as Lessor. dated May 11, 1989
28.74 Lessee's Certificate dated March 31, 1989 Filed as Exhibit 28.13
from Ryan, as Lessee, to Registrant to Registrant's Form 8-K
and CPA(R):8, as Lessor. dated May 11, 1989
28.75 Lessee's Certificate dated March 31, 1989 Filed as Exhibit 28.14
from Ryan Operations, G.P., as Lessee, to Registrant's Form 8-K
to Registrant and CPA(R):8, as Lessor. dated May 11, 1989
28.76 Co-Tenancy Agreement dated March 31, 1989 Filed as Exhibit 28.15
Between Registrant and CPA(R):8, as to Registrant's Form 8-K
tenants in common. dated May 11, 1989
28.77 Prospectus of Registrant Filed as Exhibit 28.77
dated April 25, 1986. to Registrant's Form 10-KA
dated September 24, 1994
28.78 Supplement dated September 2, 1986 Filed as Exhibit 28.78
to Prospectus dated April 25, 1986. to Registrant's Form 10-KA
dated September 24, 1994
28.79 Supplement dated December 18, 1986 Filed as Exhibit 28.79
to Prospectus dated April 25, 1986. to Registrant's Form 10-KA
dated September 24, 1994
- 31 -
Exhibit Method of
No. Description Filing
- ---------- ----------------------------------- --------------------------
28.80 Supplement dated March 30, 1987 Filed as Exhibit 28.80
to Prospectus dated April 25, 1986. to Registrant's Form 10-KA
dated September 24, 1994
28.81 Supplement dated April 27, 1987 Filed as Exhibit 28.81
to Prospectus dated April 25, 1986. to Registrant's Form 10-KA
dated September 24, 1994
28.82 Supplement dated July 14, 1987 Filed as Exhibit 28.82
to Prospectus dated April 25, 1986. to Registrant's Form 10-KA
dated September 24, 1994
(b) Reports on Form 8-K
-------------------
During the quarter ended December 31, 1995, Registrant was not
required to file any reports on Form 8-K.
- 32 -
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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
and SUBSIDIARIES
BY: SEVENTH CAREY CORPORATE PROPERTY, INC.
04/01/96 BY: /s/ Claude Fernandez
-------------- ---------------------
Date Claude Fernandez
Executive Vice President and
Chief Administrative Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
BY: SEVENTH CAREY CORPORATE PROPERTY, INC.
William P. Carey
Chairman of the Board
and Director
(Principal Executive Officer)
Francis J. Carey
President and Director
George E. Stoddard BY: /s/ George E. Stoddard
Chairman of the Investment -----------------------
Committee and Director George E. Stoddard
Attorney in fact
April 1, 1996
Raymond S. Clark
Chairman of the Executive
Committee and Director
Dr. Lawrence R. Klein
Chairman of the Economic Policy
Committee and Director
Madelon DeVoe Talley
Vice Chairman of the Board of
Directors and Director
04/01/96 BY: /s/ Claude Fernandez
- ------------ ---------------------
Date Claude Fernandez
Executive Vice President and
Chief Administrative Officer
(Principal Financial Officer)
04/01/96 BY: /s/ Michael D. Roberts
- ------------ -----------------------
Date Michael D. Roberts
First Vice President and Controller
(Principal Accounting Officer)
- 33 -
APPENDIX A TO FORM 10-K
CORPORATE PROPERTY ASSOCIATES 7
- A CALIFORNIA LIMITED PARTNERSHIP
AND SUBSIDIARIES
1995 ANNUAL REPORT
SELECTED FINANCIAL DATA
- -------------------------------------------------------------------------------
(In thousands except per unit amounts)
1991 1992 1993 1994 1995
------ ------- ------- ------- -------
OPERATING DATA:
Revenues $8,588 $10,123 $12,243 $13,840 $12,196
Income (loss) from
continuing operations (1) 1,171 1,885 (836) 12,049 3,956
Income (loss) from continuing
operations (1):
To General Partners 121 113 244 431 187
To Limited Partners 1,050 1,772 (1,080) 11,618 3,769
Per unit 23.19 39.13 (23.85) 256.62 83.31
Distributions attributable (2):
To General Partners 240 191 178 279 206
To Limited Partners 3,767 2,997 2,784 10,084 (3) 3,229
Per unit 83.20 60.62 61.49 222.74 71.38
Payment of mortgage
principal (4) 472 560 740 739 1,567
BALANCE SHEET DATA:
Total assets 77,785 77,074 73,240 66,865 56,229
Long-term
obligations (5) 35,124 26,643 37,770 21,613 19,829
(1) 1994 income includes an extraordinary loss of $511,503. 1993 and 1995 net
income includes extraordinary gains of $879,000 and $1,324,000 respectively,
on the extinguishment of debt.
(2) Includes distributions attributable to the fourth quarter of each fiscal
year payable in the following fiscal year less distributions in the first
fiscal quarter attributable to the prior year.
(3) Includes a special distribution of $150 per Limited Partnership Unit paid in
January 1995.
(4) Represents scheduled principal amortization paid.
(5) Represents mortgage and note obligations due after more than one year.
- 1 -
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Results of Operations
Net income for the year ended December 31, 1995 decreased by
$6,468,000 from the prior year to $5,526,000, largely as the result of a number
of nonrecurring items in 1994 which are classified as other income in the
accompanying Consolidated Financial Statements, as well as gains and losses from
asset sales and the extinguishment of mortgage debt in both years. In addition,
the Partnership discontinued operating its food service business segment in
December 1995.
The gains on the sale of the Mid-Continent Bottlers, Inc. ("Mid-
Continent") properties and of related limited partnership units of a Mid-
Continent affiliate contributed $8,497,000 to 1994 net income, representing 71%
of 1994 earnings. After adjusting for the effects of gains and losses,
nonrecurring items included in other income, discontinued operations and
property writedowns, income from continuing operations would have reflected an
increase of $317,000 in 1995. The Partnership realized this increase even though
its asset base was reduced by using a portion of the proceeds from the Mid-
Continent sales to pay a special distribution of $150 per Limited Partnership
Unit.
The increase in income in 1995 from continuing operations, as
adjusted, was primarily due to decreases in both interest and depreciation
expense and improved earnings from the hotel operation. This was partially
offset by decreases in lease revenues and other interest income and an increase
in general and administrative expense. Of the $1,082,000 decrease in interest
expense, $850,000 was due to the prepayment of mortgages in December 1994 on
properties which are still subject to leases. The remaining decrease was
attributable to the payoff of the Mid-Continent mortgage in connection with the
sale of the properties and the decline in interest expense on the Advanced
System Applications, Inc. ("ASA") mortgage loan which will fully amortize in
March 1996. Lease revenues decreased by $818,000. This decrease was due to the
1994 disposition of the Mid-Continent properties which contributed $1,287,000 of
lease revenues in 1994. This was partially offset by an increase of $434,000 in
ASA lease revenues pursuant to a lease modification. The ASA lease will
terminate in June 1997. The decrease in other interest income occurred because
the Partnership held substantially higher cash balances between October 1994,
when it sold the Mid-Continent properties, and December 1994, when a portion of
that cash was used to retire mortgage debt. General and administrative expenses
increased due to an increase in partnership level state franchise tax paid in
1995, due in part to increased income attributable to Illinois from the ASA
property.
Earnings for the hotel in Livonia, Michigan increased by 8% or
$101,000 as the result of a rise in occupancy rates from 75% to 77% and an 8%
increase in the average room rate. The Livonia hotel's earnings reflect a trend
of continuing improvement since 1993. The earnings of the hotel operation are
affected by economic conditions in the Detroit metropolitan area.
Since November 1988, when a lessee terminated its lease subject to a
voluntary bankruptcy petition, the Partnership had operated a restaurant in
Jupiter, Florida. On December 20, 1995, the Partnership sold the Jupiter
property and the restaurant business for $4,140,000, recognizing gains of
$1,019,000 on the sale of the property and $1,324,000 on the forgiveness of a
mortgage note collateralized by the property. Although the food service segment
had been profitable over the last several years, 1995 sales had declined by
approximately 5% due to increasing price competition. Over the past two years,
the Partnership had benefited from a restructuring of the limited recourse
mortgage debt on the Jupiter property. Under the restructuring, the mortgage
loan was bifurcated into two notes. One note (for $2,700,000) required making a
principal payment of $600,000 in December 1995 to extend the loan for two years.
Pursuant to the restructuring agreement, if this note was paid off entirely, the
second note would be forgiven. All payments on this second note, including
interest, had been deferred during the initial two years. Management concluded
that committing additional cash to pay down or pay the first mortgage note and
continue operating the restaurant in an increasingly competitive environment
would not yield an adequate return on its investment. Accordingly, Management
accepted an offer for the purchase of the property from a third party which
wanted to open a new restaurant at the property.
- 2 -
Net income increased by $11,749,000 and cash provided by operating
activities increased by $1,247,000 for 1994 as compared with 1993. The change in
net income for 1994 as compared with 1993 was largely the result of $8,497,000
of gains recognized in 1994, $3,303,000 of noncash charges for property
writedowns in 1993, including a writedown of $2,900,000 on the Jupiter property,
and the effect of extraordinary gains and losses on extinguishment of debt in
both 1994 and 1993. In addition to these items, there were a number of other
nonrecurring items which affected the comparability of the results of operations
in both 1994 and 1993, including the gain on sale of securities and the loss on
sale of real estate in 1993, a series of other items in 1994 and 1993 which are
reflected on the financial statements as other income and $642,000 of property
writedowns during 1994 on properties which were held for sale. Operating income
(net income before nonrecurring items, gains and losses and discontinued
operations) would have reflected an increase of 19% for 1994 as compared with
1993. The increase in operating income is due to a substantial increase in the
profits of the hotel operations, an increase in other interest income and a
decrease in property expenses. This increase in income was partially offset by
an increase in interest expense. Interest expense increased as a result of the
increase in interest rates on a variable rate debt. Interest income increased as
a result of interest received on the NVRyan L.P. ("NVRyan") restructuring fees
and a note received from Hallwood Group, Inc. as well as from both an increase
in cash balances and an increase in interest rates on short-term cash
instruments. Property expenses declined in 1994 as 1993 property expenses were
affected by costs incurred in resolving various property related issues. Lease
revenues were unchanged in 1994 as compared with 1993. The increase from the ASA
restructuring was offset by the termination of the Mid-Continent lease after the
sale of the properties in October 1994.
The occupancy rate at the Livonia hotel was 75% for 1994 and 1993;
while the average room rate increased by approximately 10% in 1994 as compared
to 1993. As a result of the ability to achieve a higher room rate, the
Partnership's share of hotel operating income increased by 32%. To some extent,
the increase reflects an improved economy in the Detroit metropolitan area.
The ASA lease restructuring had a very beneficial effect on the
Partnership's income and cash flow in 1995, and it will be even more beneficial
in 1996 as a result of the full amortization of the mortgage loan on that
property in March 1996. Rental payments will be $1,749,000 before any reductions
for any rents on space vacated by ASA. The ASA agreement ends in June 1997 and,
although the Partnership has already been successful in remarketing some of the
space already vacated by ASA, future cash flow from this property cannot be
expected to rise to the level that will be achieved in 1996. Beginning on May 1,
1995, approximately 35% of the leasable space of the ASA property will be leased
to the United States Postal Service (the "Postal Service"). The Partnership's
share of rents will be $243,000. The Postal Service lease is not a net lease,
and the Partnership will be responsible for certain operating costs. ASA will be
entitled to one-third of rents, net of landlord costs, through the end of its
lease term. Accordingly, the net cash flow which will be provided from the
Postal Service lease will vary based on the level of operating costs incurred by
the Partnership. Cash flow will not be significantly impacted by the disposition
of the food service segment since its contribution to cash flow, net of debt
service payments on the property, was only slightly positive. In addition, there
are no rent increases scheduled in 1996. Rent increases are scheduled on three
leases in 1997 and one lease in 1998. Interest on mortgage loans is expected to
decrease as the Partnership's outstanding mortgage balances decreased by more
than 30% between 1994 and 1995. The Partnership's $9,607,000 note payable is a
variable rate obligation and interest will vary based on the short-term interest
rate environment.
Because of the long-term nature of the Partnership's net leases,
inflation and changing prices have not unfavorably affected the Partnership's
leasing revenues and net income. The Partnership's net leases generally provide
for rent increases indexed to increases in the Consumer Price Index ("CPI") and
may include caps on such CPI increases or other periodic mandated increases
which should increase leasing revenues in the future. Future rent increases may
be affected by changes in the method of calculating the CPI. Although there are
indications that there may be legislation which considers changes to the CPI
methodology, the Partnership cannot predict the outcome of any proposed changes
relating the CPI formula. As the rate of inflation has been moderate in recent
years, Management believes that hotel operations may not be significantly
impacted by changing prices. In addition, Management believes that reasonable
increases in costs may be partially or entirely offset by increases in room
rates.
- 3 -
Financial Condition
-------------------
Except for the hotel property, substantially all of the Partnership's
properties are leased to corporate tenants under long-term net leases which
generally require tenants to pay all operating expenses relating to the leased
properties. The Partnership depends on cash flow from its net leases to meet
operating expenses, service its debt, fund distributions and maintain adequate
cash reserves. In addition, the Partnership maintains cash reserves to fund
major outlays such as capital improvements and balloon debt payments. Such
expenditures may also be funded from additional borrowing on the Partnership's
real estate portfolio. The Partnership's cash and cash equivalents at December
31, 1995 of $4,968,000 decreased by $5,558,000 during the year. The decrease in
cash was due to payment of a special distribution to partners of $6,860,000
($150 per Limited Partnership Unit).
In 1995, the Partnership's cash flows provided from operating
activities and distributions received from the operating cash flow of an equity
investment, together totalled $5,121,000. This amount was sufficient to pay
quarterly distributions to partners of $3,575,000 and contribute $1,546,000
toward the payment of scheduled principal payment installments of $1,567,000.
The Partnership's investing activities consisted of selling the
Jupiter property and replacing furniture, fixtures and equipment at the hotel in
the ordinary course of business and which are necessary for the hotel to remain
competitive. A portion of the proceeds received on the sale were used to satisfy
the mortgage loan on the property. As a result of successful negotiations with
Holiday Inn, the hotel is currently in compliance with the Holiday Inn core
modernization plan and will not be required to make any required capital
improvements. The Partnership had originally estimated that it would be
necessary to make $280,000 in improvements to remain in compliance.
The Partnership's financing activities consist primarily of utilizing
the cash flow from operations to pay distributions and meet scheduled principal
payment obligations. During 1995, the Partnership used the remaining proceeds of
the Mid-Continent sale to make a special distribution of $150 per Limited
Partnership Unit representing a return to Limited Partners of 15% of the initial
cost of a Unit. Based on current cash flow and cash balances, which remain above
the historical levels prior to the Mid-Continent sale, the Partnership expects
to continue to increase the rate of distributions paid to its partners. This may
be affected by the Partnership's ability to remarket space at the ASA property
after the termination of the ASA lease. The Partnership has significant unused
borrowing capacity as it paid off a number of mortgage loans over the past
several years and has several unleveraged properties subject to long-term leases
including properties leased to The Gap, Inc., NYNEX and AutoZone, Inc.
All of the Partnership's mortgage loans either fully amortize or come
due over the next three years. A $1,000,000 balloon payment on the limited
recourse mortgage loan collateralized by the Winn-Dixie Stores, Inc. is due in
September 1996. The Livonia hotel and Swiss M-Tex, L.P. ("M-Tex") mortgage loans
have balloon payments which total approximately $6,700,000 and are due in 1997.
A balloon payment on the Sybron Acquisition Company ("Sybron") mortgage loan is
due in 1998. As these properties, except for the hotel, remain subject to long-
term leases and the hotel generates strong operating cash flow, the Partnership
believes that its prospects for refinancing the loans are good. In the case of
limited recourse mortgage financing which does not fully amortize over its term,
the Partnership would be responsible for the balloon payment required, but only
to the extent of its interest in the encumbered property since the holder of
each such obligation has recourse only to the property collateralizing the debt.
The balloon payment could be funded from several alternative sources as
determined by management to be in the best interest of the Partnership at the
time, such as obtaining new mortgage financing to satisfy the loan, seeking an
extension of the loan with the existing lender, evaluating whether a payment
could be funded from existing cash reserves, financing unleveraged properties,
the sale of a property and use of proceeds from such sale or an increase in
Partnership level unsecured debt. The Partnership also has a $9,606,837 loan
obligation which matures in 1999 and is recourse to the Partnership's assets.
The Partnership is in compliance with the financial covenants of the loan
obligation at December 31, 1995.
- 4 -
Three of the Partnership's lessees have purchase options which are
exercisable as follows: 1997 - KSG, Inc. and M-Tex and 1998 - Sybron. The
purchase options are all exercisable at the higher of (i) the Partnership's
purchase cost for the properties and any prepayment charge that the Partnership
would incur in paying off the mortgage loans on the properties or (ii) the fair
market value of the properties as encumbered by their leases. In the event that
both options are exercised in 1997, the Partnership would expect to receive
proceeds, net of the amount necessary to pay off the M-Tex mortgage loan, of no
less than $6,138,000. If the properties are sold, annual cash flow would be
reduced by approximately $1,056,000.
In connection with the purchase of its properties, the Partnership
required sellers of such properties to perform environmental reviews. Management
believes, based on the results of such reviews, that the Partnership's
properties were in substantial compliance with Federal and state environmental
statutes at the time properties were acquired. However, portions of certain
properties have been subject to a limited degree of contamination, principally
in connection with either leakage from underground storage tanks or surface
spills from facility activities. In most instances where contamination has been
identified, tenants are actively engaged in the remediation process and
addressing identified conditions. Tenants are generally subject to environmental
statutes and regulations regarding the discharge of hazardous materials and any
related remediation obligations. In addition, the Partnership's leases generally
require tenants to indemnify the Partnership from all liabilities and losses
related to the leased properties. Accordingly, Management believes that the
ultimate resolution of environmental matters will not have a material adverse
effect on the Partnership's financial condition or liquidity.
Effective January 1, 1995, the Partnership adopted the provisions of
Statement of Financial Accounting Standards No. 121 - Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of ("SFAS
121"). Pursuant to SFAS 121, the Partnership assesses the recoverability of its
real estate assets, including residual interests, based on projections of cash
flows over the life of such assets. In the event that such cash flows are
insufficient, the assets are adjusted to their estimated net realizable value.
The adoption of SFAS 121 did not have a material effect on the Partnership's
financial condition or results of operations.
- 5 -
REPORT of INDEPENDENT ACCOUNTANTS
To the Partners of
Corporate Property Associates 7 -
a California limited partnership
and Subsidiaries:
We have audited the accompanying consolidated balance sheets of
Corporate Property Associates 7 - a California limited partnership and
Subsidiaries as of December 31, 1994 and 1995, and the related consolidated
statements of income, partners' capital and cash flows for each of the three
years in the period ended December 31, 1995. We have also audited the financial
statement schedule included on pages 24 to 27 of this Form 10-K. These financial
statements and financial statement schedule are the responsibility of the
General Partners. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
General Partners, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Corporate Property Associates 7 - a California limited partnership and
Subsidiaries as of December 31, 1994 and 1995, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles. In addition, in our opinion, Schedule of Real Estate and Accumulated
Depreciation as of December 31, 1995, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the financial information required to be included therein pursuant to
Securities and Exchange Commission Regulation S-X Rule 12-28.
/s/Coopers & Lybrand L.L.P.
New York, New York
March 22, 1996
- 6 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1994 and 1995
1994 1995
----------- -----------
ASSETS:
Real estate leased to others:
Accounted for under the
operating method:
Land $ 6,862,871 $ 6,552,033
Buildings 25,709,286 25,296,740
----------- -----------
32,572,157 31,848,773
Accumulated depreciation 5,407,880 6,185,070
----------- -----------
27,164,277 25,663,703
Net investment in direct financing leases 15,761,594 15,542,368
----------- -----------
Real estate leased to others 42,925,871 41,206,071
Operating real estate, net of accumulated
depreciation of $5,124,728 in 1994
and $3,762,695 in 1995 11,755,801 8,343,020
Real estate held for sale 543,138
Cash and cash equivalents 10,525,885 4,968,410
Accrued interest and rent receivable 97,984 24,838
Other assets, net of accumulated amortization of
$89,852 in 1994 and $148,276 in 1995 1,559,084 1,143,067
----------- -----------
Total assets $66,864,625 $56,228,544
=========== ===========
LIABILITIES:
Mortgage notes payable $17,314,570 $11,928,751
Note payable 9,606,837 9,606,837
Accrued interest payable 403,686 345,418
Accounts payable and accrued expenses 961,073 708,394
Accounts payable to affiliates 69,568 102,020
Prepaid and deferred income 450,341 428,827
----------- -----------
Total liabilities 28,806,075 23,120,247
----------- -----------
Commitments and contingencies
PARTNERS' CAPITAL:
General Partners 113,032 110,512
Limited Partners (45,274 and 45,209 Limited
Partnership Units issued and outstanding
in 1994 and 1995) 37,945,518 32,997,785
----------- -----------
Total partners' capital 38,058,550 33,108,297
----------- -----------
Total liabilities and
partners' capital $66,864,625 $56,228,544
=========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
- 7 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
CONSOLIDATED STATEMENTS of INCOME
For the years ended December 31, 1993, 1994 and 1995
1993 1994 1995
------------ ----------- -----------
Revenues:
Rental income $ 3,432,139 $ 3,862,385 $ 4,298,952
Interest income from direct financing leases 3,954,037 3,537,977 2,283,445
Other interest income 143,923 346,970 203,166
Other income 191,015 1,271,691
Revenues of hotel operations 4,521,915 4,821,029 5,410,689
----------- ----------- -----------
12,243,029 13,840,052 12,196,252
----------- ----------- -----------
Expenses:
Interest 3,324,398 3,537,640 2,456,129
Depreciation 1,647,397 1,619,726 1,361,952
General and administrative 382,661 412,173 600,271
Property expenses 537,014 317,277 299,608
Amortization 22,864 78,528 70,067
Writedown to net realizable value 3,303,228 641,731 319,685
Operating expenses of hotel operations 3,543,089 3,528,257 4,016,639
----------- ----------- -----------
12,760,651 10,135,332 9,124,351
----------- ----------- -----------
(Loss) income before loss from equity
investment, gains and losses,
discontinued operations and
extraordinary item (517,622) 3,704,720 3,071,901
Loss from equity investment 49,469 152,617 135,621
----------- ----------- -----------
(Loss) income before gains and losses,
discontinued operations and
extraordinary item (567,091) 3,552,103 2,936,280
Net (losses) gains on sale of real estate (552,383) 7,814,474 1,019,362
Gains on sale of securities 283,740 682,500
----------- ----------- -----------
(Loss) income from continuing
operations (835,734) 12,049,077 3,955,642
Earnings from discontinued operations 200,835 456,272 246,847
----------- ----------- -----------
(Loss) income before extraordinary
items (634,899) 12,505,349 4,202,489
(Continued)
- 8 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
CONSOLIDATED STATEMENTS of INCOME, Continued
For the years ended December 31, 1993, 1994 and 1995
1993 1994 1995
----------- ----------- -----------
Extraordinary gain (loss) on
extinguishment of debt 879,433 (511,503) 1,323,858
----------- ------------ -----------
Net income $ 244,534 $11,993,846 $ 5,526,347
=========== =========== ===========
Net (loss) income allocated to:
Individual General Partner $ 46,898 $ 140,990 $ 55,263
=========== =========== ===========
Corporate General Partner $ 262,109 $ 286,822 $ 225,350
=========== =========== ===========
Limited Partners $ (64,473)$11,566,034 $ 5,245,734
=========== =========== ===========
Net (loss) income per Unit:
(45,274 Limited Partnership
Units in 1993 and 1994 and
45,242 weighted average Limited
Partnership Units in 1995):
Continuing operations $ (23.85) $ 256.62 $ 83.31
Discontinued operations 4.17 9.47 5.13
Extraordinary items 18.26 (10.62) 27.51
-------- ----------- ----------
$ (1.42) $ 255.47 $ 115.95
======== =========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
- 9 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
CONSOLIDATED STATEMENTS of PARTNERS' CAPITAL
For the years ended December 31, 1993, 1994 and 1995
Partners' Capital Accounts
----------------------------------------------
Limited
Partners'
General Limited Amount Per
Total Partners Partners Unit (a)
------------ ----------- ------------ ----------
Balance, December 31, 1992 $ 32,015,489 $(252,067) $ 32,267,556 $ 713
Distributions (2,948,590) (176,916) (2,771,674) (61)
Net income (loss), 1993 244,534 309,007 (64,473) (1)
------------ --------- ------------ -----
Balance, December 31, 1993 29,311,433 (119,976) 29,431,409 651
Distributions (3,246,729) (194,804) (3,051,925) (67)
Net income, 1994 11,993,846 427,812 11,566,034 255
------------ --------- ------------ -----
Balance, December 31, 1994 38,058,550 113,032 37,945,518 839
Distributions (10,434,626) (283,133) (10,151,493) (224)
Purchase of Limited Partner Units (41,974) (41,974) (1)
Net income, 1995 5,526,347 280,613 5,245,734 116
------------ --------- ------------ -----
Balance, December 31, 1995 $ 33,108,297 $ 110,512 $ 32,997,785 $ 730
============ ========= ============ =====
(a) Based on weighted average Units issued and outstanding during the periods.
The accompanying notes are an integral part of the consolidated financial
statements.
- 10 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
CONSOLIDATED STATEMENTS of CASH FLOWS
For the years ended December 31, 1993, 1994 and 1995
1993 1994 1995
------------ ------------- -------------
Cash flows from operating activities:
Net income $ 244,534 $ 11,993,846 $ 5,526,347
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,670,261 1,698,254 1,432,019
Extraordinary (gain) loss on extinguishment of debt (879,433) 511,503 (1,323,858)
Net losses (gains) on sales 268,643 (8,496,974) (1,019,361)
Noncash consideration received in connection
WITH SETTLEMENTS (346,105)
Cash receipts on operating leases (less) greater
than income recognized (90,316) 40,807 170,647
Writedown to net realizable value 3,303,228 641,731 319,685
Amortization of deferred income (30,352) (60,930) (21,514)
Accretion of mortgage principal 133,000
Loss from equity investment 49,469 152,617 135,621
Deferred rental income recognized in connection
with disposition of properties (811,101)
Restructuring fees collected 240,740 722,222
Net change in operating assets and liabilities,
net of disposition of food service assets (774,726) (698,639) (129,810)
----------- ------------ ------------
Net cash provided by operating activities 4,135,048 5,347,231 5,089,776
----------- ------------ ------------
Cash flows from investing activities:
Additional capitalized costs (257,575) (164,292) (180,758)
Proceeds from sales 1,331,630 19,257,324 4,148,903
Distributions received from equity investment 3,578 38,281 31,457
Capital contribution to limited partnership (595)
----------- ------------ ------------
Net cash provided by investing activities 1,077,038 19,131,313 3,999,602
----------- ------------ ------------
Cash flows from financing activities:
Distributions to partners (2,948,590) (3,246,729) (10,434,626)
Payments of mortgage principal (740,044) (739,391) (1,567,369)
Prepayments of mortgage payable (9,488,485) (12,763,584) (2,602,884)
Purchase of Limited Partnership Units (41,974)
Proceeds from note payable 9,606,837
Deferred financing costs, net of reimbursement (346,654) 6,292
Payments in connection with extinguishment of debt (46,083) (469,550)
----------- ------------ ------------
Net cash used in financing activities (3,963,019) (17,212,962) (14,646,853)
----------- ------------ ------------
Net increase in cash and cash equivalents 1,249,067 7,265,582 (5,557,475)
Cash and cash equivalents, beginning of year 2,011,236 3,260,303 10,525,885
----------- ------------ ------------
Cash and cash equivalents, end of year $ 3,260,303 $ 10,525,885 $ 4,968,410
=========== ============ ============
The 1995 extraordinary gain on extinguishment of debt of $1,323,858
was comprised of $1,215,566 forgiveness of principal and $108,292 of accrued
interest thereon.
The accompanying notes are an integral part of the consolidated financial
statements.
- 11 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies:
-------------------------------------------
Basis of Consolidation:
- -----------------------
The consolidated financial statements include the accounts of Corporate
Property Associates 7, a wholly-owned subsidiary and a 99% owned
subsidiary (collectively, the "Partnership").
Use of Estimates:
- -----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Real Estate Leased to Others:
- -----------------------------
Real estate is leased to others on a net lease basis, whereby the tenant is
generally responsible for all operating expenses relating to the
property, including property taxes, insurance, maintenance, repairs,
renewals and improvements.
The Partnership diversifies its real estate investments among various
corporate tenants engaged in different industries and by property type
throughout the United States.
The leases are accounted for under either the direct financing or operating
methods. Such methods are described below:
Direct financing method - Leases accounted for under the direct
-----------------------
financing method are recorded at their net investment (Note 5).
Unearned income is deferred and amortized to income over the lease
terms so as to produce a constant periodic rate of return on the
Partnership's net investment in the lease.
Operating method - Real estate is recorded at cost, revenue is
----------------
recognized as rentals are earned and expenses (including
depreciation) are charged to operations as incurred. When scheduled
rents vary during the lease term, income is recognized on a
straight-line basis so as to produce a constant periodic rent.
Substantially all of the Partnership's leases provide for either scheduled
rent increases, periodic rent increases based on formulas indexed to
increases in the Consumer Price Index or sales overrides.
Operating Real Estate:
- ----------------------
Land, buildings and personal property are carried at cost. Major renewals and
improvements are capitalized to the property accounts, while
replacements, maintenance and repairs which do not improve or extend the
lives of the respective assets are expensed currently.
Long-Lived Assets:
- ------------------
Effective January 1, 1995, the Partnership adopted the provisions of Statement
of Financial Accounting Standards No. 121 - Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
("SFAS 121"). Pursuant to SFAS 121, the Partnership assesses
- 12 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
the recoverability of its real estate assets, including residual
interests, based on projections of cash flows over the life of such
assets. In the event that such cash flows are insufficient, the assets
are adjusted to their estimated net realizable value. The adoption of
SFAS 121 did not have a material effect on the Partnership's financial
condition or results of operations.
Real Estate Held for Sale:
- --------------------------
Real estate held for sale is accounted for at the lower of cost or net
realizable value.
Depreciation:
- -------------
Depreciation is being computed using the straight-line method over the
estimated useful lives of the properties which range from 5 to 30 years.
Cash Equivalents:
- -----------------
The Partnership considers all short-term, highly liquid investments that
are both readily convertible to cash and have a maturity of generally
three months or less at the time of purchase to be cash equivalents.
Items classified as cash equivalents include commercial paper and money
market funds. Substantially all of the Partnership's cash and cash
equivalents at December 31, 1994 and 1995 were held in the custody of
three financial institutions.
Other Assets:
- -------------
Included in other assets are deferred rental income, deferred charges,
inventory (principally food and beverages for the hotel), organization
costs and an investment in a limited partnership. Deferred rental income
is the aggregate difference for operating method leases between
scheduled rents which vary during the lease term and income recognized
on a straight-line basis. Inventory is stated at the lower of cost or
market using the FIFO (first in, first out) method. Deferred charges are
primarily costs incurred in connection with mortgage note financings and
refinancings and are deferred and amortized on a straight-line basis
over the terms of the mortgages. The Partnership's 50% interest in a
limited partnership is accounted for under the equity method, i.e. at
cost, increased or decreased by the Partnership's share of earnings or
losses, less distributions.
Deferred Rental Income:
- -----------------------
Deferred rental income recognized in connection with the amendment of two of
the Partnership's leases, one of which was terminated in October 1994,
is being amortized on a straight-line basis from the date of the
amendments through the end of the initial terms of the leases (20.5 and
23 years) or date of sale, if sooner.
Income Taxes:
- -------------
A partnership is not liable for income taxes as each partner recognizes his
proportionate share of the partnership income or loss in his tax return.
Accordingly, no provision for income taxes is recognized for financial
statement purposes.
Reclassifications:
- ------------------
Certain 1993 and 1994 amounts have been reclassified to conform to the 1995
presentation.
- 13 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
2. Partnership Agreement:
----------------------
The Partnership was organized on February 3, 1986 under the Revised Uniform
Limited Partnership Act of the State of California for the purpose of
engaging in the business of investing in and leasing industrial and
commercial real estate. The Corporate General Partner purchased 100
Limited Partnership Units in connection with the Partnership's public
offering. The Partnership will terminate on December 31, 2010, or
sooner, in accordance with the terms of the Amended Agreement of Limited
Partnership (the "Agreement").
The Agreement provides that the General Partners are allocated 6% (1% to
the Individual General Partner, William P. Carey, and 5% to the
Corporate General Partner, Seventh Carey Corporate Property, Inc.) and
the Limited Partners are allocated 94% of the profits and losses as well
as distributions of Distributable Cash From Operations, as defined,
except as described below. The General Partners may be entitled to
certain incentive fees during the liquidation stage of the Partnership.
A division of W.P. Carey & Co., Inc. ("W.P. Carey"), is engaged in the
real estate brokerage business and the Partnership may sell properties
through the division and pay subordinated real estate commissions as
provided in the Agreement. The division could ultimately earn up to
approximately $724,000 of real estate commissions due to the sales of
properties between 1990 and 1995, which amount will be retained by the
Partnership unless subordination provisions of the Agreement are
satisfied.
In accordance with the Agreement, the General Partners were allocated a
portion of the 1993 and 1994 gains on sale in order to eliminate their
negative balances as well as a portion of the related tax gains. This
did not affect the allocation of cash distributions to Partners. The
Partnership paid a special distribution of $6,859,597 in 1995 related to
the sales which distribution was allocated 1% to the Individual General
Partner and 99% to the Limited Partners in accordance with the
Agreement.
3. Transactions with Related Parties:
----------------------------------
Under the Agreement, W.P. Carey and other affiliates are also entitled to
receive property management and leasing fees and reimbursement of
certain expenses incurred in connection with the Partnership's
operations. General and administrative expense reimbursements consist
primarily of the actual cost of personnel needed in providing
administrative services necessary for the operation of the Partnership.
Property management and leasing fees and general and administrative
expense reimbursements incurred are summarized as follows:
1993 1994 1995
-------- -------- --------
Property management and leasing fees $173,032 $135,794 $102,753
General and administrative
expense reimbursements 109,226 113,171 123,492
-------- -------- --------
$282,258 $248,965 $226,245
======== ======== ========
During 1993, 1994 and 1995, fees aggregating $75,799, $23,426 and $67,230
respectively, were incurred for legal services performed by a firm in
which the Secretary of the Corporate General Partner and other
affiliates is a partner.
The Partnership is a participant in an agreement with W.P. Carey and other
affiliates for the purpose of leasing office space used for the
administration of real estate entities and W.P. Carey and for sharing
the associated costs. Pursuant to the terms of the agreement, the
Partnership's share of rental, occupancy and leasehold improvement costs
is based on adjusted gross revenues, as defined. Net expenses incurred
in 1993, 1994 and 1995 were $39,995 $51,874, and $90,569,
- 14 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
respectively. The increase in 1995 is due, in part, to certain
nonrecurring costs incurred in connection with the relocation of the
Partnership's offices.
The Partnership's ownership interests in certain properties are jointly held
with affiliated entities as tenants-in-common or limited partners with
the Partnership's interests in such jointly held properties ranging from
24.74% to 65.5172%. The Partnership accounts for its assets and
liabilities relating to tenants-in-common interests on a proportional
basis.
4. Real Estate Leased to Others Accounted for Under the Operating Method
---------------------------------------------------------------------
and Operating Real Estate:
--------------------------
A. Real Estate Leased to Others:
-----------------------------
The scheduled minimum future rentals, exclusive of renewals, under
noncancellable operating leases amount to approximately $4,218,000 in
1996, $3,286,000 in 1997, $2,410,000 in 1998, $2,412,000 in 1999,
$2,315,000 in 2000 and aggregate approximately $23,421,000 through 2013.
Contingent rentals were approximately $129,000, $139,000 and $138,000 in
1993, 1994 and 1995, respectively.
B. Operating Real Estate:
----------------------
Operating real estate, at cost, is summarized as follows:
December 31,
1994 1995
----------- -----------
Land $ 4,550,688 $ 2,050,688
Building 9,354,875 8,250,352
Personal property 2,974,966 1,804,675
----------- -----------
16,880,529 12,105,715
Less, Accumulated
depreciation 5,124,728 3,762,695
----------- -----------
$11,755,801 $ 8,343,020
=========== ===========
5. Net Investment in Direct Financing Leases:
------------------------------------------
Net investment in direct financing leases is summarized as follows:
December 31,
------------
1994 1995
----------- -----------
Minimum lease payments
receivable $33,946,223 $31,518,276
Unguaranteed residual value 15,761,594 15,542,368
----------- -----------
49,707,817 47,060,644
Less, Unearned income 33,946,223 31,518,276
----------- -----------
$15,761,594 $15,542,368
=========== ===========
The scheduled minimum future rentals, exclusive of renewals, under
noncancellable direct financing leases amount to approximately
$1,888,000 in 1996, $1,885,000 in each of the years 1997 to 2000 and
aggregate approximately $31,518,000 through 2014.
Contingent rentals were approximately $394,000, $490,000 and $322,000 in
1993, 1994 and 1995, respectively.
- 15 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
Future minimum ground lease commitments for certain properties
occupied by AutoZone, Inc. aggregate $946,000 through 2005.
6. Mortgage Notes Payable and Note Payable:
----------------------------------------
A. Mortgage Notes Payable:
-----------------------
Mortgage notes payable, all of which are nonrecourse to the
Partnership and the partners, are collateralized by real property
with a carrying amount of approximately $29,785,000, before
accumulated depreciation and the assignment of various leases. As
of December 31, 1995, mortgage notes payable bear interest at
rates varying from 9.22% to 11.25% per annum and mature from 1996
to 1998. Scheduled principal payments during each of the next
three years following December 31, 1995 are as follows:
Year Ending December 31,
------------------------
1996 $ 1,706,980
1997 6,753,569
1998 3,468,202
-----------
Total $11,928,751
===========
B. Note Payable:
-------------
The $9,606,837 note payable is a recourse obligation of the
Partnership and provides for quarterly payments of interest at a
floating rate equal to the London Inter-Bank Offered Rate
("LIBOR") plus 4.25% per annum (9.97% at December 31, 1995). The
note payable matures in July 1999, at which time a balloon payment
for the entire outstanding principal will be due.
Covenants under the credit agreement include a requirement that the
Partnership may not incur any additional debt unless the new debt
replaces existing debt and does not exceed a maximum nonrecourse
debt limitation of $36,897,696 less an adjustment for subsequent
scheduled principal amortization on existing nonrecourse loans
plus closing costs of any new nonrecourse loans. Additionally, the
Partnership must maintain certain debt coverage ratios and
maintain a minimum consolidated net worth and aggregate appraised
property value of $15,000,000. The debt coverage ratio requires
the Partnership to maintain ratios of free operating cash flow to
the debt service on the note ranging from 3:1 to 3.4:1 over the
terms of the agreement. The Partnership is in compliance with such
terms at December 31, 1995.
The credit agreement requires the Partnership to offer the lender the
proceeds from property sales as a prepayment of the note payable.
The lender has declined to accept all mandatory offers of proceeds
by the Partnership to date.
Interest paid was $4,010,425, $3,426,650 and $2,467,322 in 1993, 1994
and 1995, respectively.
Continued
- 16 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
7. Distributions to Partners:
--------------------------
Distributions are declared and paid to partners quarterly and are
summarized as follows:
Limited
Year Ending Distributions Declared Distributions Declared Partners' Per
December 31, to General Partners to Limited Partners Unit Amount
- --------------------------- ---------------------- ---------------------- -------------
1993 $176,916 $ 2,771,674 $ 61.22
======== =========== =======
1994 $194,804 $ 3,051,925 $ 67.41
======== =========== =======
1995:
Quarterly distributions $214,536 $ 3,360,393 $ 74.25
Special distribution -
Note 12 68,597 6,791,100 150.00
-------- ----------- -------
$283,133 $10,151,493 $224.25
======== =========== =======
Distributions of $51,827 to the General Partners and $811,954 to the Limited
Partners for the quarter ended December 31, 1995 were declared and paid in
January 1996.
8. Income for Federal Tax Purposes:
--------------------------------
Income for financial statement purposes differs from income for Federal
income tax purposes, because of the difference in the treatment of
certain items for income tax purposes and financial statement purposes.
A reconciliation of accounting differences is as follows:
1993 1994 1995
---------- ----------- -----------
Net income per Consolidated
Statements of Income $ 244,534 $11,993,846 $ 5,526,347
Excess tax depreciation (921,909) (825,140) (549,851)
Difference in tax treatment of gains on
sales of real estate 2,645,850 (1,889,176)
Writedown to net realizable value 3,303,228 641,731 319,685
Other (534,066) (861,038) 44,808
---------- ----------- -----------
Net income reported for
Federal income tax purposes $2,091,787 $13,595,249 $ 3,451,813
========== =========== ===========
Continued
- 17 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
9. 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 food service facility and a hotel business.
In 1993, 1994 and 1995, the Partnership earned its total commercial and
industrial leasing revenues (rental income plus interest income
from financing leases) from the following lease obligors:
1993 % 1994 % 1995 %
---------- --- ---------- --- ---------- ---
Advanced System
Applications, Inc. $ 711,373 10% $1,145,003 15% $1,578,632 24%
The Gap, Inc. 922,373 12 927,568 13 927,568 14
Sybron Acquisition Company 712,314 10 819,162 11 819,162 13
KSG, Inc. 765,913 10 785,273 11 832,566 13
Swiss M-Tex, L.P. 514,555 7 518,774 7 546,095 8
AutoZone, Inc. (1) 457,690 6 462,076 6 466,473 7
Northern Automotive, Inc. 374,355 5 388,763 5 388,830 6
Various other obligors 439,098 6 411,893 6 387,445 6
NVRyanL.P. 541,176 7 310,807 4 291,556 4
NYNEX 215,600 3 215,600 3 215,600 3
Winn-Dixie Stores, Inc. 128,470 2 128,470 2 128,470 2
Mid-Continent Bottlers, Inc. 1,603,259 22 1,286,973 17
---------- --- ---------- --- ---------- ---
$7,386,176 100% $7,400,362 100% $6,582,397 100%
========== === ========== === ========== ===
(1) Rental income is net of ground lease rental expense of $93,000, $97,000 and
$101,000 in 1993, 1994 and 1995, respectively (see Note 5).
The summarized results of the Partnership's share of the hotel operations
are as follows:
1993 1994 1995
------------ ------------ ------------
Revenues $ 4,521,915 $ 4,821,029 $ 5,410,689
Fees paid to hotel management company (80,276) (136,412) (112,423)
Other operating expenses (3,462,813) (3,391,845) (3,904,216)
----------- ----------- -----------
Partnership's interest in hotel
Operating Income $ 978,826 $ 1,292,772 $ 1,394,050
=========== =========== ===========
10. Discontinued Operations:
------------------------
On December 20, 1995, the Partnership sold the food service facility in
Jupiter, Florida, at which it operated a restaurant, for $4,140,000,
recognizing a gain on the sale of $1,019,362. In connection with the
sale, it satisfied the two mortgage note obligations on the property
and recognized an extraordinary gain on extinguishment of debt of
$1,323,858.
Continued
- 18 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
In January 1994, the terms of the loan collateralized by the property
were modified by dividing the loan into two notes with balances of
$2,700,000 ("Note A") and $1,082,883 ("Note B"), respectively.
Under the modification, interest and principal payments on Note B
were deferred. In accordance with the terms of the 1994 loan
modification agreement, the $1,082,883 balance of Note B plus
accrued interest thereon was forgiven upon payment of Note A,
resulting in an extraordinary gain of $1,323,858 on extinguishment
of debt. The Partnership used a portion of the sales proceeds to
pay off the $2,603,000 balance of Note A.
During 1993, Management determined that the net realizable value of its
investment in the Jupiter property was impaired. As a result, the
Partnership recorded a writedown to estimated net realizable value
of $2,900,000 in 1993.
In connection with sale of the Jupiter property, the Partnership did not
incur any gain or loss on the disposal of the food service
business. Results for the food service operation business segment
for 1993, 1994 and 1995 have been reclassified in the accompanying
Consolidated Financial Statements as discontinued operations and
are as follows:
1993 1994 1995
------------ ------------ ------------
Net sales $ 4,439,918 $ 4,035,009 $ 3,821,631
Cost of goods sold (1,211,427) (1,181,181) (1,165,386)
Other operating expenses (3,027,656) (2,397,556) (2,409,398)
----------- ----------- -----------
$ 200,835 $ 456,272 $ 246,847
=========== =========== ===========
11. Hotel Property in Livonia, Michigan:
------------------------------------
On November 20, 1987, the Partnership and Corporate Property Associates
6 ("CPA(R):6"), an affiliate, purchased a Holiday Inn in Livonia,
Michigan as tenants-in-common with 65.5172% and 34.4828%
interests, respectively, and entered into a net lease with Brock
Hotel Corporation which subsequently changed its name to Integra -
A Hotel and Restaurant Company ("Integra"). Integra subsequently
assigned its interest in the lease to a wholly-owned subsidiary,
Livonia Inn Management, Inc., while Integra remained the guarantor
of the lease.
As a result of Integra's financial condition, the subsidiary stopped
paying rent in May 1992 with Integra subsequently filing a
voluntary bankruptcy petition in July 1992. Both of these events
were defaults under the lease as well as the mortgage note
collateralized by the Livonia property. In August 1992, pursuant
to a letter of agreement, the Partnership and CPA(R):6 assumed
control of the hotel operations.
In September 1993, the mortgage loan on the property of approximately
$12,000,000 (of which the Partnership's share was approximately
$7,862,064) was restructured. In consideration for a mortgage
principal payment of $4,000,000, the annual interest rate on the
mortgage loan was reduced from a fixed rate of 10.9% to LIBOR plus
3.5% retroactive to June 1992 and the lender agreed not to
accelerate the loan. CPA(R):6 advanced the Partnership's share of
the mortgage prepayment which was repaid in November 1993. In
connection with providing the advance, CPA(R):6 received $90,000
from the Partnership based on a formula pursuant to a fairness
opinion provided by an independent investment banking firm.
Continued
- 19 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
On March 8, 1994, the Partnership and CPA(R):6, executed a settlement
agreement with the Hallwood Group, Inc. ("Hallwood Group"),
Integra's largest shareholder, under which the Partnership and
CPA(R):6 agreed to surrender a promissory note made by Hallwood
Group, which had been pledged by Integra to the Partnership and
CPA(R):6 as additional security to Integra's lease obligation, in
exchange for $150,000 in cash, a $500,000 promissory note from
Hallwood Group and an equity participation having a potential
value of up to $500,000 from the Hallwood Group. The $500,000 note
bears interest at 8% per annum and matures no later than March 8,
1998 and, subject to certain conditions, is redeemable at an
earlier date. The note is collateralized by the Hallwood Group's
pledge of 446,345 of its limited partnership units of Hallwood
Realty Partners, L.P. ("Hallwood Realty"), a publicly traded
limited partnership. The pledged units represent 5.2% of all
outstanding limited partnership units of Hallwood Realty. Under
the settlement agreement, the Hallwood Group has the obligation to
pay to the Partnership and CPA(R):6 an amount equal to 25% of the
increase in value of the Hallwood Realty units of up to $500,000,
from March 1994 to the note maturity date. If the price per unit
increases to $9 or greater, the Partnership and CPA(R):6 may,
subject to certain restrictions, receive a payment from the
Hallwood Group representing the 25% appreciation of the pledged
units prior to the note maturity date. At December 31, 1995, the
pledged limited partner units had a market value of $16.50 per
unit.
The Partnership's share of the cash proceeds and the note receivable of
$425,862 are included in other income in 1994.
12. Gains and Losses on Sale:
-------------------------
A. In October 1994, the Partnership sold its properties leased to Mid-
Continent Bottlers, Inc.'s ("Mid-Continent") to the lessee for
$17,800,000 and sold the Partnership's 3.29% limited partnership
interest in Midcon Bottlers, L.P., an affiliate of Mid-Continent,
for $700,000.
In connection with the sales, the Partnership recognized gains of
$7,814,474 and $682,500, respectively. The Partnership used
$3,895,320 of the sales proceeds to satisfy the Mid-Continent
mortgage loan. In addition, the Partnership used a portion of the
proceeds to prepay certain mortgage loans on properties which
remain subject to leases. In January 1995, the Partnership used a
portion of the proceeds to pay a special distribution to limited
partners of $6,791,000 ($150 per Limited Partnership Unit) and
$68,597 to a general partner.
The Partnership purchased the Mid-Continent properties in December
1986 for $9,984,200. Upon sale of the properties, $321,000 of
deferred rental income was recognized and included in other income
in 1994.
B. In August 1993, the Partnership sold excess land on property in
Travelers Rest, South Carolina leased to Swiss M-Tex, L.P. ("M
Tex"). The Partnership realized a gain of $156,486 from the sale
and used the net proceeds of $166,600 to prepay a portion of the
mortgage note collateralized by the property.
Continued
- 20 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
In December 1993, the Partnership sold a property in Phoenix, Arizona to its
lessee, Overnite Transportation Company ("Overnite"), and incurred a
loss on the sale of $708,869. The Overnite lease included an option to
purchase the property for $925,000.
In connection with the transfer of Mid-Continent's interest in the Hazelwood,
Missouri property to Tandem Holdings, Inc. ("Tandem") in 1986, the
Partnership received warrants to purchase shares of Tandem's common
stock. In February 1993, in connection with the merger of Tandem with
another company, the Partnership sold the warrants and realized a gain
of $283,740.
13. Properties Formerly Leased to NVRyan, L.P.:
-------------------------------------------
Pursuant to a restructuring agreement with NVRyan L.P. ("NVRyan") in September
1993, which was reached in connection with the confirmation by the
Bankruptcy Court of NVRyan's reorganization plan, NVRyan was permitted
to sever four properties from its lease in exchange for restructuring
fees of $2,600,000 (of which the Partnership's share was $962,962). For
financial reporting purposes, the fees were deferred and are being
amortized over the remaining term of the NVRyan lease. In connection
with the sale of the two properties in 1994, $490,101 of such deferred
fees were recognized and included in other income.
In August 1994, the Partnership and CPA(R):8 sold a property formerly leased to
NVRyan in Jefferson, Georgia for $844,778 (of which the Partnership's
share was $312,880), net of costs. In addition, the Partnership and
CPA(R):8 sold the property in Plant City, Florida in April 1994 to an
NVRyan sublessee for $1,200,000 (of which the Partnership's share was
$444,444). No gain or loss was recognized on the sales as the
properties were written down prior to the sales to an amount equal to
the estimated sales proceeds. A writedown of $484,296 was recognized on
the Jefferson property in 1994 and a writedown of $403,328 was
recognized on the Plant City property in 1993.
In June 1994, the Partnership and Corporate Property Associates 8, L.P.
("CPA(R):8"), an affiliate, entered into a contract to sell the vacant
Fredricksburg, Virginia property for $728,500 (of which the
Partnership's share was $269,815), net of costs. Subsequently, the
potential buyer withdrew its offer to buy the Fredricksburg, Virginia
property. Although the transaction was not consummated, the
Partnership's interest in the property was written down in 1994 by
$157,433 to an amount equal to the anticipated net proceeds.
14. Equity Investment:
------------------
The Partnership and CPA(R):8 own 50% interests in a limited partnership which in
September 1993 purchased a leasehold interest in a hotel property in
Topeka, Kansas subleased to Hotel Corporation of America. Summarized
financial information of the limited partnership is as follows:
(In thousands)
December 31, 1994 December 31, 1995
------------------ ------------------
Assets, net of accumulated depreciation $8,395 $7,905
Mortgage notes payable 8,866 8,715
Other liabilities 14 10
Partners' capital (485) (820)
- 21 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
Year Ended December 31
-----------------------
1994 1995
---- ----
Rental income $ 844 $ 866
Interest expense (642) (631)
Other operating expenses (506) (505)
----- -----
Net loss $(304) $(270)
===== =====
15. Extraordinary Gains and Losses on Extinguishment of Debt:
---------------------------------------------------------
A. As fully described in Note 10, in connection with the sale of the Jupiter,
Florida property in December 1995, the Partnership recognized an
extraordinary gain on extinguishment of debt of $1,323,808.
B. In December 1994, the Partnership paid off $1,886,148 of the mortgage loan on
the AutoZone, Inc. ("AutoZone") and NYNEX properties. In connection
with paying off the mortgage loan, the Partnership incurred an
extraordinary charge of $136,260 on the extinguishment of debt
consisting of a prepayment premium of $94,307 and the writeoff of
$41,953 in unamortized financing costs.
In December 1994, the Partnership, through a newly formed subsidiary, paid off
mortgage loans of $4,587,600 and $1,902,158 on The Gap, Inc. ("Gap") and
KSG, Inc. ("KSG") properties, respectively. In connection with the
paying off of the Gap mortgage loan, the Partnership incurred a
prepayment premium of $375,243, resulting in an extraordinary charge on
the extinguishment of debt.
C. In November 1993, the Partnership obtained financing of $9,606,837 and used a
portion of the proceeds to pay off the mortgage loans collateralized by
the properties formerly leased to Yellow Front Stores, Inc. ("Yellow
Front"). The Yellow Front loan, which had a principal balance of
$4,725,516 was satisfied with a payment of $3,800,000, resulting in an
extraordinary gain of $879,433 in 1993 on the extinguishment of debt,
net of related costs incurred.
16. Properties Leased to Advanced System Applications, Inc.:
--------------------------------------------------------
The Partnership and CPA(R):8 own property in Bloomingdale, Illinois, as tenants-
in-common with 33.64% and 66.36% ownership interests, respectively which
is leased to Advanced System Applications, Inc. ("ASA"). In July 1994
the Partnership and CPA(R):8 entered into a lease modification agreement
with ASA which allows ASA to terminate its lease in June 1997 instead of
June 2003. Under the modification agreement, annual rent increased to
$5,200,000 (of which the Partnership's share is $1,749,280) from
$1,850,000 (of which the Partnership's share was $622,340). In
consenting to the modification, the mortgage loan payments were
substantially increased so that the loan fully amortized on March 1,
1996. Although ASA is obligated to make its lease payments through June
1997, it is in the process of vacating the property. To the extent that
the Partnership and CPA(R):7 enter into new leases for any vacated
space, ASA is entitled to one-third of all rentals received, net of any
landlord costs, during the remaining term of its lease.
- 22 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued
On January 31, 1996, the Partnership and CPA(R):8 entered into a lease with the
United States Postal Service (the "Postal Service"). The lease has a
10-year term commencing May 1, 1996 with annual rentals of $722,800 (of
which the Partnership's share will be $243,150), increasing to $822,800
after five years. The Partnership and CPA(R):8 retain the obligation to
provide maintenance and support services to the lessee. The lease
provides for rent escalations in 1998 based on increases in certain
operating costs incurred by the Partnership and CPA(R):8. In addition,
the Postal Service will reimburse the Partnership and CPA(R):8 for its
pro rata share of real estate taxes. The Postal Service has an option
to terminate the lease after five years and right of first refusal on
space vacated by ASA.
The Partnership and CPA(R):8 will provide the Postal Service a tenant
improvement allowance of up to $600,000 (of which the Partnership's
share is $201,840).
17. Subsequent Events:
------------------
On February 12, 1996, the Partnership sold a property located in Denham Springs,
Louisiana and leased to AutoZone, Inc. ("AutoZone") for $431,779, net of
costs. AutoZone's lease allows it to purchase back those leased retail
stores it judges to be uneconomical and the Denham Springs property was
so deemed. On February 14, 1996, the Partnership sold its property in
Monte Vista, Colorado for $186,090, net of costs. No gain or loss will
be reported in 1996, as the Monte Vista property was written down by
$319,685 at December 31, 1995 to an amount equal to the net sales
proceeds received by the Partnership.
The two properties have been reclassified as real estate held for sale in the
accompanying consolidated financial statements. Solely as a result of
the sales, annual cash flow will decrease by approximately $61,000.
18. Disclosures About Fair Value of Financial Instruments:
------------------------------------------------------
The carrying amounts of cash, accounts receivable and amounts payable and
accrued expenses approximate fair value because of the short maturity of
these items.
The Partnership estimates that the fair value of mortgage notes payable
approximates the carrying amount of such mortgage notes at December 31,
1995. The fair value of debt instruments was evaluated using a
discounted cash flow model with discount rates which take into account
the credit of the tenants and interest rate risk.
The Partnership's note payable is a variable rate obligation indexed to the
London Inter-Bank Offered Rate. Accordingly, the carrying amount of the
note payable approximates fair value as of December 31, 1995.
- 23 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
SCHEDULE of REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1995
Costs
Initial Cost to Partnership Capitalized Decrease
--------------------------- Subsequent to In Net
Description Encumbrances Land Buildings Acquisition(a) Investment(c)
----------- ------------ ---- --------- -------------- -------------
Operating method:
Retail store leased to
Winn Dixie Stores, Inc. $1,000,000 $1,215,000 $ 35,870
Manufacturing facilities
leased to Swiss
M-Tex, L.P. 1,807,212 $ 420,440 4,379,560 1,300 $ (127,721)
Land leased to
AutoZone, Inc. 994,740 13,949
Retail stores formerly
leased to Yellow
Front Stores, Inc. 4,934,160 3,897,549 329,838 (2,238,493)
Office facility leased to
NYNEX 275,363 1,955,820 24,093
Distribution Center
leased to The Gap, Inc. 694,187 8,075,813 39,212
Land leased to Sybron
Acquisition Company 108,162 183,632 1,012
Office facility leased
to Advanced System
Applications, Inc. 490,587 499,554 4,990,408 18,978
Manufacturing and office
facility leased to
Allied Plywood, Inc. 244,887 715,924 3,884
Manufacturing and office
facility formerly leased
to NVRyan, L.P. 32,614 410,838 1,793 (175,431)
----------- ---------- ----------- -------- ------------
$3,405,961 $8,279,577 $25,640,912 $469,929 $(2,541,645)
=========== ========== =========== ======== ============
Life on which
Depreciation
Gross Amount at which Carrie in Latest
at Close of Period(b)(d) Statement
-------------------------------------- Accumulated of Income
Description Land Building Total Depreciation(d) Date Aquired is Computed
----------- ---- --------- ----- --------------- ------------ -------------
Operating method:
Retail store leased to
Winn Dixie Stores, Inc. $ 1,250,870 $ 1,250,870 $ 356,149 June 17, 1987 30 yrs.
Manufacturing facilities
leased to Swiss
M-Tex, L.P. $ 292,719 4,380,860 4,673,579 1,216,891 August 24, 1987 30 yrs.
Land leased to
AutoZone, Inc. 1,008,689 1,008,689 August 24, 1987 N/A
Retail stores formerly
leased to Yellow
Front Stores, Inc. 3,332,294 3,590,760 6,923,054 682,253 January 29, 1988 30 yrs.
Office facility leased to
NYNEX 275,363 1,979,913 2,255,276 522,477 January 29, 1988 30 yrs.
Distribution Center
leased to The Gap, Inc. 694,187 8,115,025 8,809,212 2,130,194 February 16, 1988 30 yrs.
Land leased to Sybron
Acquisition Company 184,644 184,644 December 22, 1988 N/A
Office facility leased
to Advanced System
Applications, Inc. 499,554 5,009,386 5,508,940 1,210,615 September 29, 1988 30 yrs.
Manufacturing and office
facility leased to
Allied Plywood, Inc. 244,887 719,808 964,695 53,985 March 31, 1989 30 yrs.
Manufacturing and office
facility formerly leased
to NVRyan, L.P. 19,696 250,118 269,814 12,506 March 31, 1989 30 yrs.
---------- ----------- ------------ -----------
$6,552,033 $25,296,740 $31,848,773 $6,185,070
========== =========== ============ ===========
See accompanying notes to Schedule.
- 24 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
SCHEDULE of REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1995
Initial Cost
to Partnership Costs
------------------------ Capitalized Decrease
Personal Subsequent to in Net
Description Encumbrances Land Buildings Property Acquisition(a) Investment(c)
- --------------------------- ------------ ----------- ----------- ----------- ------------- -------------
Direct financing method:
Manufacturing and warehouse
facility leased to
KSG, Inc. (formerly
Tandem Holdings, Inc.) $1,099,700 $ 3,598,220 $ 104
Retail stores leased to
AutoZone, Inc. 2,758,373 31,795
Manufacturing and office
facility leased to Sybron
Acquisition Company $3,497,253 490,942 5,537,640 33,093
Manufacturing and office
facility leased to
NVRyan L.P. 211,382 1,684,371 96,748
------------ ----------- ------------ --------
$3,497,253 $1,802,024 $13,578,604 $161,740
============ =========== ============ ========
Operating real estate (e):
Hotel facility located
in Livonia, Michigan $5,025,537 $2,050,688 $ 8,130,685 $1,480,689 $443,653
============ =========== ============ ========== ========
Real estate held for sale:
AutoZone, Inc. $ 136,124 $ 216,522 $ 4,404
Property in Monte Vista, CO. 182,673 435,618 $(352,416)
----------- ------------ -------- ----------
$ 318,797 $ 652,140 $ 4,404 $(352,416)
========== ============ ======== ==========
Life on which
Gross Amount at which Carried Depreciation
at Close of Period (b) in Latest
---------------------------------- Statement of
Personal Accumulated Income Operations
Description Land Proerty Building Total Depreciation(e) Date Acquired is Computed
- --------------------------- ---------- ---------- ---------- ---------- ---------------- -------------- -----------------
Direct financing method:
Manufacturing and warehouse
facility leased to
KSG, Inc. (formerly
Tandem Holdings, Inc.) $ 4,698,024 March 12, 1987
Retail stores leased to
AutoZone, Inc. 2,790,168 August 28, 1987
Manufacturing and office
facility leased to Sybron
Acquisition Company 6,061,675 December 22, 1988
Manufacturing and office
facility leased to
NVRyan L.P. 1,992,501 March 31, 1989
-----------
$15,542,368
===========
Operating real estate (e):
Hotel facility located November 20, 1987
in Livonia, Michigan $2,050,688 $9,250,352 $1,804,675 $12,105,715 $3.762,695
========== ========== ========== =========== ==========
Real estate held for sale: August 24, 1987 and
AutoZone, Inc. $ 137,824 $ 219,226 $ 357,050 August 28, 1987
Property in Monte Vista, CO 76,948 188,927 265,875 79,787 January 29, 1987
---------- ---------- ----------- ------
$ 214,772 $ 408,153 $ 622,925 79,787
========== ========== =========== ======
See accompanying notes to Schedule.
-25-
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES TO SCHEDULE of REAL ESTATE
AND ACCUMULATED DEPRECIATION
(a) Consists of acquisition costs including legal fees, appraisal fees, title
costs as well as other related professional fees and capital improvements
at various properties.
(b) At December 31, 1995, the aggregate cost of real estate owned for Federal
income tax purposes is $61,148,788.
(c) The decrease in net investment is due to the writedowns and sales of
properties.
(d)
Reconciliation of Real Estate Accounted
---------------------------------------
for Under the Operating Method
------------------------------
December 31,
------------------------------
1994 1995
----------- -----------
Balance at beginning
of period $33,563,870 $32,572,157
Reclassification to real
estate held for sale (403,699)
Writedown to net realizable value (175,431) (319,685)
Sales of property (816,282)
----------- -----------
Balance at close of period $32,572,157 $31,848,773
=========== ===========
Reconciliation of Accumulated Depreciation
------------------------------------------
December 31,
-----------------------------
1994 1995
---------- ----------
Accumulated depreciation
at beginning of period $4,564,879 $5,407,880
Reclassification to real
estate held for sale (79,787)
Writeoff resulting from sale of property (32,022)
Depreciation expense 875,023 856,977
---------- ----------
Balance at close of period $5,407,880 $6,185,070
========== ==========
(Continued)
- 26 -
CORPORATE PROPERTY ASSOCIATES 7
- a California limited partnership
and SUBSIDIARIES
NOTES TO SCHEDULE of REAL ESTATE
AND ACCUMULATED DEPRECIATION - Continued
(e)
Reconciliation of Operating Real Estate
---------------------------------------
December 31,
------------------------------
1994 1995
----------- -----------
Balance at beginning
of period $16,716,237 $16,880,529
Additions during period 164,292 180,758
Sale of property (4,955,572)
----------- -----------
Balance at close of
period $16,880,529 $12,105,715
=========== ===========
Reconciliation of Accumulated Depreciation for
----------------------------------------------
Operating Real Estate
---------------------
December 31,
------------------------------
1994 1995
---------- -----------
Accumulated depreciation
at beginning of period $4,380,025 $ 5,124,728
Depreciation expense 744,703 504,975
Writeoff resulting from sale
of property (1,867,008)
---------- -----------
Balance at close of
period $5,124,728 $ 3,762,695
========== ===========
- 27 -
PROPERTIES
LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
- ------------------------- ------------------ ------------------------ -------------------------
NYNEX Office and Service Milton, Vermont Ownership of land
Facility and building
THE GAP, INC. Distribution Erlanger, Kentucky Ownership of land
Center and building
SWISS M-TEX, L.P. Manufacturing Travelers Rest Ownership of land
Facilities and Liberty, and buildings (1)
South Carolina
KSG, INC. Manufacturing, Hazelwood, Ownership of land
Warehouse and Missouri and building
Distribution
Facility
(2) Hotel Livonia, Ownership of a
Michigan 65.5172% interest
in land and building (1)
AUTOZONE, INC. Retail Stores Pensacola (3), Ownership of land
Panama City, and and buildings,
Jacksonville, except as noted
Florida;
Baton Rouge-2 (3),
Hammond and
St. Peters-2,
Michigan;
Shelby, Kannapolis (3),
and Morgantown (3),
North Carolina;
East Ridge (3) and
Knoxville (3),
Tennessee
Various Lease Retail Stores Scottsdale, Casa Ownership of land
Obligors including Grande, Apache and buildings
NORTHERN AUTOMOTIVE, Junction, Glendale,
INC. and Mesa, Arizona;
Silver City, New Mexico;
Denver, Colorado;
Colville, Washington
WINN DIXIE Supermarket Bay Minette, Ownership of a
STORES, INC. Alabama building and a
leasehold interest
in land (1)
- 28 -
LEASE TYPE OF OWNERSHIP
OBLIGOR TYPE OF PROPERTY LOCATION INTEREST
- -------------------- ------------------- ------------------ --------------------
ADVANCED SYSTEM Office Building Bloomingdale, Ownership of a
APPLICATIONS, INC. Illinois 33.64% interest in
AND UNITED STATES and building
POSTAL SERVICE (1)
SYBRON ACQUISITION Office and Romulus, Michigan; Ownership of a
COMPANY Manufacturing Dubuque, Iowa; 24.74% interest in
Facilities Portsmouth, land and buildings
New Hampshire; (1)
Penfield, New York;
Glendora,
California
NVRYAN L.P. Manufacturing Thurmont, Ownership of a
Facilities Maryland and 37.037% interest in
Farmington, land and buildings
New York
HOTEL CORPORATION Hotel Topeka, 50% ownership of a
OF AMERICA Kansas limited partnership
which owns land and
building (1)
ALLIED PLYWOOD, Manufacturing Manassas, Ownership of a
INC. Facility Virginia 37.037% interest in
land and buildings
(4) Manufacturing Fredricksburg, Ownership of a
Facility Virginia 37.037% interest in
land and building
(1) These properties are encumbered by mortgage notes payable.
(2) These properties are operated by Registrant.
(3) Ownership of building with ground lease of land.
(4) This property is vacant.
- 29 -
MARKET FOR THE PARTNERSHIP'S EQUITY AND RELATED
UNITHOLDER MATTERS
- --------------------------------------------------------------------------------
Except for limited or sporadic transactions, there is no established
public trading market for the Limited Partnership Units of the Partnership.
As of December 31, 1995, there were 2,269 holders of record of the
Limited Partnership Units of the Partnership.
In accordance with the requirements of the Partnership's Amended
Agreement of Limited Partnership (the "Agreement") contained as Exhibit A to the
Prospectus, the Corporate General Partner expects to continue to make quarterly
distributions of Distributable Cash From Operations, as defined, in the
Agreement. The following table shows the frequency and amount of distributions
paid per Unit since 1992:
Cash Distributions Paid Per Unit
1993 1994 1995
------ ------ -------
First quarter $15.23 $15.50 $170.83 (a)
Second quarter 15.28 15.63 17.74
Third quarter 15.33 16.25 17.81
Fourth quarter 15.38 20.03 17.87
------ ------ -------
$61.22 $67.41 $224.25
====== ====== =======
(a) Includes a special distribution of $150 per Limited Partnership Unit.
REPORT ON FORM 10-K
- --------------------------------------------------------------------------------
The Corporate General Partner will supply to any owner of Limited
Partnership Units, upon written request and without charge, a copy of the Annual
Report on Form 10-K for the year ended December 31, 1995 as filed with the
Securities and Exchange Commission.
- 30 -
DIRECTORS AND SENIOR OFFICERS
The Partnership has no directors or officers. The directors and senior
officers of the Corporate General Partner are as follows:
William Polk Carey Chairman of the Board
Director
Francis J. Carey President
Director
George E. Stoddard Chairman of the Investment Committee
Director
Raymond S. Clark Chairman of the Executive Committee
Director
Madelon DeVoe Talley Vice Chairman of the Board
Director
Stephen H. Hamrick Director
Barclay G. Jones III Executive Vice President
Director
Lawrence R. Klein Chairman of the Economic Policy Committee
Director
Claude Fernandez Executive Vice President
Chief Administrative Officer
Howard J. Altmann Senior Vice President
H. Augustus Carey Senior Vice President
John J. Park Senior Vice President
Treasurer
Debra E. Bigler First Vice President
Ted G. Lagried First Vice President
Anthony S. Mohl First Vice President
Michael D. Roberts First Vice President
Controller
The directors and senior officers of W. P. Carey & Co., Inc. are
substantially the same as above.
A description of the business experience of each director of the
Corporate General Partner is set forth below:
William Polk Carey, Chairman and Chief Executive Officer, has been
active in lease financing since 1959 and a specialist in net leasing of
corporate real estate property since 1964. Before founding W.P. Carey & Co.,
Inc. ("W.P. Carey") in 1973, he served as Chairman of the Executive Committee of
Hubbard, Westervelt & Mottelay (now Merrill Lynch Hubbard), head of Real Estate
and Equipment Financing at Loeb Rhoades & Co. (now Lehman Brothers), head of
Real Estate and Private Placements, Director of Corporate Finance and Vice
Chairman of the Investment Banking Board of duPont Glore Forgan Inc. A graduate
of the University of Pennsylvania's Wharton School of Finance, Mr. Carey is a
Governor of the National Association
- 31 -
of Real Estate Investment Trusts (NAREIT). He also serves on the boards of The
Johns Hopkins University and its medical school, The James A. Baker III
Institute for Public Policy at Rice University, and other educational and
philanthropic institutions. He founded the Visiting Committee to the Economics
Department of the University of Pennsylvania and co-founded with Dr. Lawrence R.
Klein the Economics Research Institute at that university.
Francis J. Carey was elected President and a Managing Director of W.P.
Carey in April 1987, having served as a Director since its founding in 1973. He
served as a member of the Executive Committee and Board of Managers of the
Western Savings Bank of Philadelphia from 1972 until its takeover by another
bank in 1982 and is former chairman of the Real Property, Probate and Trust
Section of the Pennsylvania Bar Association. Mr. Carey served as a member of the
Board of Overseers of the School of Arts and Sciences of the University of
Pennsylvania from 1983 through 1990 and has served as a member of the Board of
Trustees of the Investment Program Association since 1990. From April 1987 until
August 1992, he served as counsel to Reed Smith Shaw & McClay, counsel for
Registrant, the General Partners, the CPA(R) Partnerships and W.P. Carey and
some of its affiliates. A real estate lawyer of more than 30 years' experience,
he holds A.B. and J.D. degrees from the University of Pennsylvania.
George E. Stoddard, Chief Investment Officer, was until 1979 head of the
bond department of The Equitable Life Assurance Society of the United States,
with responsibility for all activities related to Equitable's portfolio of
corporate investments acquired through direct negotiation. Mr. Stoddard was
associated with Equitable for over 30 years. He holds an A.B. degree from
Brigham Young University, an M.B.A. from Harvard Business School and an LL.B.
from Fordham University Law School.
Raymond S. Clark is former President and Chief Executive Officer of the
Canton Company of Baltimore and the Canton Railroad Company. A graduate of
Harvard College and Yale Law School, he is presently a Director and Chairman of
the Executive Committee of W.P. Carey and served as Chairman of the Board of
W.P. Carey from its founding in 1973 until 1982. He is past Chairman of the
Maryland Industrial Development Financing Authority.
Madelon DeVoe Talley, Vice Chairman, is a member of the New York State
Controller's Investment Committee, a Commissioner of the Port Authority of New
York and New Jersey, former CIO of New York State Common Retirement Fund and New
York State Teachers Retirement System. She also served as a managing director of
Rothschild, Inc. and as the President of its asset management division. Besides
her duties at W.P. Carey, Mrs. Talley is also a former Governor of the N.A.S.D.
and is a director of Biocraft Laboratories, a New York Stock Exchange company.
She is an alumna of Sarah Lawrence College and the graduate school of
International Affairs at Columbia University.
Stephen H. Hamrick is the former Executive Vice President and Managing
Director of Wall Street Investor Services where he completed the sale and
turnaround of its bank based brokerage business. Previously, he served six years
as the Director of Private Investments for PaineWebber Incorporated. From 1975
until joining PaineWebber in 1988, Mr. Hamrick was associated with E.F. Hutton &
Company (and the successor firm Shearson Lehman Hutton Inc.), where he held the
position of First Vice President and National Director of Private Placements.
Mr. Hamrick is a former Chairman of the Securities Industry Association's Direct
Investment Committee and the Investment Program Association. He is a Certified
Financial Planner and was graduated with degrees in English and Economics from
Duke University.
Barclay G. Jones III, Executive Vice President, Managing Director, and
co-head of the Investment Department. Mr. Jones joined W.P. Carey as Assistant
to the President in July 1982 after his graduation from the Wharton School of
the University of Pennsylvania, where he majored in Finance and Economics. He
was elected to the Board of Directors of W.P. Carey in April 1992. Mr. Jones is
also a Director of the Wharton Business School Club of New York.
Lawrence R. Klein, Chairman of the Economic Policy Committee since 1984,
is Benjamin Franklin Professor of Economics Emeritus at the University of
Pennsylvania, having joined the faculty of Economics and the Wharton School in
1958. He holds earned degrees from the University of California at Berkeley and
Massachusetts Institute of Technology and has been awarded the Nobel Prize in
Economics as
- 32 -
well as over 20 honorary degrees. Founder of Wharton Econometric Forecasting
Associates, Inc., Dr. Klein has been counselor to various corporations,
governments, and government agencies including the Federal Reserve Board and the
President's Council of Economic Advisers.
Claude Fernandez, Chief Administrative Officer, Managing Director, and
Executive Vice President, joined W.P. Carey in 1983. Previously associated with
Coldwell Banker, Inc. for two years and with Arthur Andersen & Co., he is a
Certified Public Accountant. Mr. Fernandez received his B.S. degree in
Accounting from New York University in 1975 and his M.B.A. in Finance from
Columbia University Graduate School of Business in 1981.
Howard J. Altmann, Senior Vice President, Investment Department, joined
W.P. Carey in August 1990. He was a securities analyst at Goldman Sachs & Co.
for the retail industry from 1986 to 1988. Mr. Altmann received his
undergraduate degree in economics and finance from McGill University and his
M.B.A. from the Stanford University Graduate School of Business.
H. Augustus Carey, Senior Vice President, returned to W.P. Carey in
1988. Mr. Carey previously worked for W.P. Carey from 1979 to 1981 as Assistant
to the President. Prior to rejoining W.P. Carey, Mr. Carey served as a loan
officer of the North American Department of Kleinwort Benson Limited in London,
England. He received an A.B. from Amherst College in 1979 and an M.Phil. in
Management Studies from Oxford University in 1984. Mr. Carey is a trustee of the
Oxford Management Centre Associates Council.
John J. Park, Senior Vice President and Treasurer, joined W.P. Carey as
an Investment Analyst in December 1987. Mr. Park received his undergraduate
degree from Massachusetts Institute of Technology and his M.B.A. in Finance from
New York University.
Debra E. Bigler, First Vice President, joined W.P. Carey in 1989 as an
assistant marketing director, rising to her present position where she bears
responsibility for investor services throughout the southern United States. She
was previously employed by E. F. Hutton & Company for nine years where she began
as a Marketing Associate in Private Placement, Sales and Marketing and was then
promoted to Regional Director.
Ted G. Lagreid, First Vice President, joined W.P. Carey in 1994 and is
regional director responsible for investor services in the western United
States. Prior to joining the firm, he was a Vice President with Shurgard Capital
Group, then for Sun America where he was an executive in its mutual funds group.
He earned an A.B. from the University of Washington, received an M.P.A. from the
University of Puget Sound and then spent eight years in the city of Seattle's
Office of Management and Budget and Department of Community Development. Mr.
Lagreid was a commissioner of the City of Oakland, California, serving on its
Community and Economic Advisory Commission.
Anthony S. Mohl, First Vice President, Director of Portfolio Management,
joined W.P. Carey as Assistant to the President after receiving his M.B.A. from
the Columbia University Graduate School of Business. Mr. Mohl was employed as an
analyst in the strategic planning group at Kurt Salmon Associates after
receiving an undergraduate degree from Wesleyan University.
Michael D. Roberts joined W. P. Carey as a Second Vice President and
Assistant Controller in April 1989 and is currently First Vice President and
Controller. Prior to joining W.P. Carey, Mr. Roberts was employed by Coopers &
Lybrand, where he attained the title of audit manager. A certified public
accountant, Mr. Roberts received a B.A. from Brandeis University and an M.B.A.
from Northeastern University.
- 33 -