SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDED CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 20,
1995
CORPORATE PROPERTY ASSOCIATES 7, A CALIFORNIA LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
CALIFORNIA 0-15778 13-3327950
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(State of Organization) (Commission File No.) (IRS Employer
Identification Number)
50 Rockefeller Plaza, 2nd Floor
New York, NY 10020
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(Address of principal executive offices)
(212) 492-1100
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(Registrant's telephone number, including area code)
ITEM 2. DISPOSITION OF PROPERTY
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On December 11, 1986, Corporate Property Associates 7, a California
limited partnership (the "Partnership"), purchased a fee simple interest in an
improved parcel of real property located in Jupiter, Palm Beach County, Florida
(the "Jupiter Property") in addition to the equipment (the "Equipment") located
at the Jupiter Property. At the closing, the Jupiter Property and Equipment
were net leased to HL Associates Limited ("HL Associates"), whose obligations
were unconditionally guaranteed by Maruki U.S.A. Company, Inc. ("Maruki").
In August 1988, HL and Maruki filed for protection from creditors under
Chapter 11 of the Federal Bankruptcy Code and in November 1988, the Partnership
evicted HL and obtained possession of the Jupiter Property. Once obtaining
possession, the Partnership operated the food service facility on the Jupiter
Property through Jupiter Food Service, Inc., a separate wholly-owned subsidiary.
On December 20, 1995, the Partnership sold to Crab House Inc. the
Jupiter Property, the Equipment and all intangible property associated with the
operation of the food service facility for a net sales price of $4,140,000. At
the closing, the Jupiter Property was assigned to U.S. Properties Operating,
L.P., a partnership related to the Crab House, Inc., which took title to the
real estate and personal property. The Partnership applied approximately
$2,613,000 of the net sale proceeds to repayment of the remaining debt on the
Jupiter Property, which debt was held by Juplox associates, a Georgia
partnership. The remaining proceeds were applied to working capital.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(b) PRO FORMA FINANCIAL INFORMATION
Pro Forma Annualized statement of Taxable Operations and Cash Generated
(Unaudited)
PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements for the Company
have been prepared based upon certain pro forma adjustments to the historical
financial statements of the Company.
The statement covers only the properties or interests in entities owning
properties which have been disposed of by the Company and its wholly-owned
subsidiaries and does not cover any properties which the Company may acquire or
dispose of in the future or any future financings of these properties.
CORPORATE PROPERTY ASSOCIATES 7
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the year ended December 31, 1995
(Unaudited)
Historical Pro Forma Adjustment Pro Forma
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Revenues:
Rental income from operating leases $ 4,298,952 $ 4,298,952
Interest income for direct financing leases 2,283,445 2,283,445
Other interest income 203,166 203,166
Revenues of hotel operations 5,410,689 5,410,689
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Total revenue 12,196,252 12,196,252
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Expenses:
Interest 2,456,129 ($230,515) 2,225,614
Depreciation 1,361,952 (226,084) 1,135,868
General and administrative 600,271 600,271
Property expenses 299,608 299,608
Amortization 70,067 (6,075) 63,992
Writedown to net realizable value 319,685 319,685
Operating expenses of hotel operations 4,016,639 4,016,639
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Total expenses 9,124,351 (462,674) 8,661,677
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Income before loss from equity investment, net gains
on sale, discontinued operations and extraordinary item 3,071,901 462,674 3,534,575
Loss from equity investment 135,621 135,621
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Income before net gains on sale, discontinued operations
and extraordinary item 2,936,280 462,674 3,398,954
Net gain on sale of real estate 1,019,362 (1,019,362) -
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Income from continuing operations 3,955,642 (556,688) 3,398,954
Earnings from discontinued operations 246,847 (246,847) -
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Income before extraordinary item 4,202,489 (803,535) 3,398,954
Extraordinary gain on extinguishment of debt 1,323,858 (1,323,858) -
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Net income $5,526,347 ($2,127,393) $3,398,954
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CORPORATE PROPERTY ASSOCIATES 7
PRO FORMA CONSOLIDATED STATEMENT OF TAXABLE INCOME and AFTER-TAX CASH FLOW
For the year ended December 31, 1995
(Unaudited)
Net income per consoldiated pro forma income for the
year ended December 31, 1995 $ 3,398,954
Differences in depreciation between tax and GAAP (528,477)
Amortization of deferred gains (21,514)
Straight-line lease adjustments 170,647
Writedown to net realizable value 319,685
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Pro forma taxable income 3,339,295
Add: Depreciation expense 1,664,345
Less: amortization of mortgage principal (1,514,763)
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After-tax cash flow $ 3,488,877
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1. Basis of Presentation:
The unaudited pro forma consolidated statement of income of Corporate
Property Associates 7 and Subsidiaries (the "Partnership") for the year ended
December 31, 1995 and the related pro forma consolidated statement of taxable
income and after-tax cash flow have been prepared based on the historical
financial statements of the the Partnership. As the sale of the Jupiter
Property was completed on December 31, 1995, pro forma consolidated balance
sheets at December 31, 1995 and March 31, 1996 and a pro forma consolidated
statement of income for the three-month period ended March 31, 1996 have not
been prepared as there are no significant pro forma adjustments to such
historical statements. Substantially all assets and liabilities relating to the
Jupiter Property and the food service facility operated by the Partnership had
been transferred or settled before December 31, 1995. In addition, the
Partnership's results of operations for the three-month period ended March 31,
1996 do not include revenues or expenses relating to the Jupiter Property or
food service operation. The pro forma consodliated statements of income and
taxable income and after-tax cash flow have been prepared as if the dispositions
of the Jupiter Property and the food service facility which had been operated by
the Partnership at the Jupiter Property had occurred on January 1, 1995. The
pro forma financial information should be read in conjunction with the
historical financial statements of the Partnership. The pro forma financial
results are not necessarily indicative of the results of operations had the
dispositions occurred on January 1, 1995 nor are they necessarily indicative of
results of operations for future periods.
2. Pro Forma Adjustments:
A. The pro forma adjustments on the pro forma consolidated statement of income
consist of (i) the elimination of specifically identified expenses relating to
the ownership of the Jupiter Property and the mortgage debt collateralized by
the Jupiter Property with such expenses consisting of depreciation, interest
expense and amortization of deferred financing costs, (ii) elimination of
earnings from discontinued operations as such earnings are from the food service
facility which was operated by the Partnership as a
distinct business segment subsequent to the eviction of the lessee in November
1988, (iii) elimination of the gain on sale of the Jupiter Property and (iv)
elimination of the gain on extinguishment of the debt on the Jupiter Property
mortgage loan. The mortgage loan agreement provided for the forgiveness of
certain interest and principal amounts if certain prepayments were made in
December 1995.
B. The pro forma tax adjustments to the pro forma consolidated statement of
taxable income and after-tax cash flow consist of (i) differences in
depreciation for tax and financial reporting purposes due to (a) the use of
different depreciable lives for tax and financial reporting purposes on assets
which have been classified as operating leases and depreciation charged for tax
purposes on assets which have been classified as direct financing leases for
which no depreciation incurred for financial reporting purposes, (ii)
amortization of deferred gains which had not been deferred for tax purposes as
the entire benefit for tax purposes was recognized in prior periods, (iii) the
effect of straight-line lease adjustments and writedowns to net realizable value
which are not recognized for tax purposes. The pro forma after-tax adjustments
consist of (i) adding depreciation expense as a noncash charge consisting of the
sum of pro forma depreciation of $1,135,868 and the depreciation adjustment to
taxable income of $528,477 and (ii) the cash flow effect of paying principal on
mortgages. All adjustments exclude the effect of the owning and operating the
Jupiter Property.
(c) EXHIBITS
The following exhibits are filed as part of this Current Report on Form
8-K:
Exhibit No. Exhibit Page No.
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2.1 Agreement of Sale dated December 12,
1995 between Corporate Property
Associates 7, the seller, and Crab
House, Inc., as buyer.
2.2 Assignment Agreement dated December 19, 1995
Crab House, Inc., Assignor, and U.S. Restaurant
Properties Operating L.P., Assignee.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on this
11th day of July, 1996.
CORPORATE PROPERTY ASSOCIATES 3
By: W.P. Carey & Co., Inc.,
its managing general partner
By: __________________________
______________________________
Michael D. Roberts
First Vice President and
Controller
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on this
11th day of July, 1996.
CORPORATE PROPERTY ASSOCIATES 3
By: W.P. Carey & Co., Inc.,
its managing general partner
By: /s/ Michael D. Roberts
_____________________________
Michael D. Roberts
First Vice President and
Controller
EXHIBIT INDEX
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Exhibit No. Exhibit Page No.
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2.1 Agreement of Sale dated December 12,
1995 between Corporate Property
Associates 7, the seller, and Crab
House, Inc., as buyer.
2.2 Assignment Agreement dated December 19, 1995
Crab House, Inc., Assignor, and U.S. Restaurant
Properties Operating L.P., Assignee.