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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended JUNE 30, 2002
of
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CPA(R):14
A MARYLAND Corporation
IRS Employer Identification No. 13-3951476
SEC File Number 333-31437
50 ROCKEFELLER PLAZA,
NEW YORK, NEW YORK 10020
(212) 492-1100
CPA(R):14 has SHARES OF COMMON STOCK registered pursuant to Section
12(g) of the Act.
CPA(R):14 HAS NO SECURITIES registered on any exchanges.
CPA(R):14 does not have any Securities registered pursuant to Section
12(b) of the Act.
CPA(R):14 (1) has filed all reports required by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or for
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
CPA(R):14 has no active market for common stock at August 13, 2002.
CPA(R):14 has 66,170,386 shares of common stock, $.001 Par Value
outstanding at August 13, 2002.
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
INDEX
Page No.
--------
PART I
Item 1. - Financial Information*
Condensed Consolidated Balance Sheets, December 31, 2001
and June 30, 2002 2
Condensed Consolidated Statements of Income for the three
and six months ended June 30, 2001 and 2002 3
Condensed Consolidated Statements of Comprehensive Income for the
three and six months ended June 30, 2001 and 2002 4
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 2001 and 2002 5
Notes to Condensed Consolidated Financial Statements 6-10
Item 2. - Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-15
Item 3. - Quantitative and Qualitative Disclosures About Market Risk 16
PART II - Other Information
Item 2(d). - Use of Proceeds of Registered Offering 17
Item 4. - Submission of Matters to a Vote of Security Holders 17
Item 6. - Exhibits and Reports on Form 8-K 17
Signatures 18
* The summarized financial information contained herein is unaudited; however,
in the opinion of management, all adjustments necessary for a fair presentation
of such financial information have been included.
-1-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
PART I
Item 1. - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31, 2001 June 30, 2002
(Note) (Unaudited)
ASSETS:
Real estate leased to others:
Land and buildings, net of accumulated depreciation of $17,728 at
December 31, 2001 and $27,564 at June 30, 2002 $ 781,319 $ 924,200
Net investment in direct financing leases 104,321 101,794
Real estate under construction -- 17,144
----------- -----------
Real estate leased to others 885,640 1,043,138
Equity investments 41,690 41,257
Cash and cash equivalents 147,695 102,192
Other assets 22,213 35,459
----------- -----------
Total assets $ 1,097,238 $ 1,222,046
=========== ===========
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY:
Liabilities:
Limited recourse mortgage notes payable $ 463,864 $ 572,882
Accrued interest 2,426 3,792
Accounts payable to affiliates 3,651 3,026
Accounts payable and accrued expenses 2,207 6,709
Prepaid rental income and security deposits 12,811 14,678
Deferred acquisition fees payable to affiliate 18,661 19,945
Dividends payable 11,318 12,417
----------- -----------
Total liabilities 514,938 633,449
----------- -----------
Minority interest 19,822 30,272
----------- -----------
Commitments and contingencies
Shareholders' equity:
Common stock, $.001 par value; authorized, 120,000,000 shares; issued and
outstanding, 66,315,466 shares at December 31, 2001 and
66,550,636 shares at June 30, 2002 66 67
Additional paid-in capital 593,487 595,038
Dividends in excess of accumulated earnings (28,023) (36,654)
Accumulated other comprehensive (loss) income (101) 3,673
----------- -----------
565,429 562,124
Less, treasury stock at cost, 329,976 shares at December 31, 2001 and
425,974 shares at June 30, 2002 (2,951) (3,799)
----------- -----------
Total shareholders' equity 562,478 558,325
----------- -----------
Total liabilities, minority interest and shareholders'
equity $ 1,097,238 $ 1,222,046
=========== ===========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
Note: The balance sheet at December 31, 2001 has been derived from the
audited consolidated financial statements at that date.
-2-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS of INCOME (UNAUDITED)
(In thousands, except share and per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2001 2002 2001 2002
------------ ------------ ------------ ------------
Revenues:
Rental income $ 13,084 $ 24,500 $ 24,052 $ 45,869
Interest income from direct financing leases 2,043 2,853 4,022 5,692
Interest and other income 495 462 1,115 1,185
------------ ------------ ------------ ------------
15,622 27,815 29,189 52,746
------------ ------------ ------------ ------------
Expenses:
Interest 4,415 10,191 8,384 20,384
Depreciation 2,851 5,173 5,440 9,742
General and administrative 1,254 1,477 2,024 2,705
Property expenses 2,406 3,354 4,123 6,252
Impairment loss on real estate 272 -- 272 --
------------ ------------ ------------ ------------
11,198 20,195 20,243 39,083
------------ ------------ ------------ ------------
Income from continuing operations
before minority interest, equity
investments and gain 4,424 7,620 8,946 13,663
Minority interest in income (22) (482) (17) (741)
Income from equity investments 1,026 1,301 1,921 2,589
------------ ------------ ------------ ------------
Income from continuing operations
before gain 5,428 8,439 10,850 15,511
Unrealized gain on warrants and foreign currency
contract, net -- 29 -- 268
------------ ------------ ------------ ------------
Income from continuing operations 5,428 8,468 10,850 15,779
Discontinued operations:
Income from operations of discontinued
properties in 2002 35 36 72 72
Gain on sale of real estate -- 333 -- 333
------------ ------------ ------------ ------------
Net income $ 5,463 $ 8,837 $ 10,922 $ 16,184
============ ============ ============ ============
Basic and diluted earnings per share:
Income from continuing operations $ .11 $ .13 $ .24 $ .24
Discontinued operations -- -- -- --
------------ ------------ ------------ ------------
Net income $ .11 $ .13 $ .24 $ .24
============ ============ ============ ============
Weighted average shares outstanding - basic and
diluted 47,763,676 66,171,078 45,725,176 66,100,129
============ ============ ============ ============
The accompanying notes are an integral part of the
condensed consolidated financial statements.
-3-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(In thousands)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2001 2002 2001 2002
-------- -------- -------- --------
Net income $ 5,463 $ 8,837 $ 10,922 $ 16,184
-------- -------- -------- --------
Other comprehensive (loss) income:
Change in foreign currency translation
adjustment (11) 3,373 (211) 3,774
-------- -------- -------- --------
Comprehensive income $ 5,452 $ 12,210 $ 10,711 $ 19,958
======== ======== ======== ========
The accompanying notes are an integral part of the
condensed consolidated financial statements.
-4-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS (UNAUDITED)
(In thousands)
Six Months Ended June 30,
-------------------------
2001 2002
--------- ---------
Cash flows from operating activities:
Net income $ 10,922 $ 16,184
Adjustments to reconcile net income to net cash provided
by continuing operating activities:
Income from discontinued operations, including gain on sale
of real estate (72) (405)
Depreciation and amortization of financing costs 5,604 10,106
Straight-line rent adjustments (1,372) (2,120)
Income from equity investments in excess of
distributions received -- (10)
Fees paid by issuance of stock 3,112 2,266
Minority interest in income 17 741
Funds released from escrow 4,568 --
Impairment loss on real estate 272 --
Unrealized gain on warrants and foreign currency contract, net -- (268)
Change in other operating assets and liabilities, net 81 852
--------- ---------
Net cash provided by continuing operations 23,132 27,346
Net cash provided by discontinued operations 74 74
--------- ---------
Net cash provided by operating activities 23,206 27,420
--------- ---------
Cash flows from investing activities:
Proceeds from sale of real estate -- 3,634
Purchases of real estate and equity investments and additional
capitalized costs (119,512) (152,748)
Capital distribution from equity investments 15,003 --
Distributions from equity investments in excess of equity income 754 443
Funds deposited in construction escrow (8,000) --
Payment of deferred acquisition fees (722) (1,638)
--------- ---------
Net cash used in investing activities (112,477) (150,309)
--------- ---------
Cash flows from financing activities:
Prepayment of mortgage principal (4,568) (3,800)
Proceeds from mortgages 68,009 105,151
Payments on mortgage principal (1,074) (2,614)
Funding of defeasance escrow account -- (2,537)
Distributions to minority interest partner (1,817) (1,048)
Contributions from minority interest partner 1,381 10,758
Proceeds from issuance of shares, net of costs 69,578 (1,954)
Deferred financing costs and mortgage deposits (2,335) (2,338)
Dividends paid (14,557) (23,716)
Purchase of treasury stock (695) (848)
--------- ---------
Net cash provided by financing activities 113,922 77,054
--------- ---------
Effect of exchange rate changes on cash -- 332
--------- ---------
Net increase (decrease) in cash and cash equivalents 24,651 (45,503)
Cash and cash equivalents, beginning of period 35,547 147,695
--------- ---------
Cash and cash equivalents, end of period $ 60,198 $ 102,192
========= =========
The accompanying notes are an integral part of the
condensed consolidated financial statements.
-5-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
Note 1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements of
Corporate Property Associates 14 Incorporated (the "Company") have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim financial information and with the instructions to
Article 10 of Regulation S-X of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States of America for
complete financial statements. All significant intercompany balances and
transactions have been eliminated. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation of the results of the interim period presented have been included.
The results of operations for the interim period are not necessarily indicative
of results for the full year. For further information, refer to the financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 2001.
Certain prior year amounts have been reclassified to conform to current year
financial statement presentation.
Note 2. Transactions with Related Parties:
The Company's asset management and performance fees payable to the Advisor,
Carey Asset Management Corp., a wholly-owned subsidiary of W. P. Carey & Co.
LLC, are each 1/2 of 1% per annum of Average Invested Assets, as defined in the
Company's advisory agreement. Asset management fees were $972 and $1,373 for the
three-month periods ended June 30, 2001 and 2002, respectively, and $1,626 and
$2,601 for the six months ended June 30, 2001 and 2002, respectively, with
performance fees in like amount. General and administrative reimbursements were
$374 and $547 for the three months ended June 30, 2001 and 2002, respectively,
and $592 and $967 for the six months ended June 30, 2001 and 2002, respectively.
Fees are payable to the Advisor for services provided to the Company relating to
the identification, evaluation, negotiation, financing and purchase of
properties. A portion of such fees are deferred and are payable in equal
installments over no less than eight years following the first anniversary of
the date a property is purchased. For transactions that were completed during
the six months ended June 30, 2002, the current fees were $3,652.
Note 3. Lease Revenues:
The Company's operations consist of the investment in and the leasing of
industrial and commercial real estate. The financial reporting sources of the
lease revenues for the six-month periods ended June 30, 2001 and 2002 are as
follows:
2001 2002
-------- --------
Per Statements of Income:
Rental income from operating leases $ 24,052 $ 45,869
Interest from direct financing leases 4,022 5,692
Adjustment:
Share of leasing revenue applicable to
minority interest (2,123) (3,553)
Share of leasing revenue from equity
investments 5,449 6,495
-------- --------
$ 31,400 $ 54,503
======== ========
-6-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Amounts in thousands, except share and per share amounts)
For the six-month periods ended June 30, 2001 and 2002, the Company earned its
net lease revenues from its investments as follows:
2001 % 2002 %
------- ------- ------- -------
Petsmart, Inc. (e) -- -- $ 3,321 6%
Nortel Networks Limited -- -- 3,000 5
Atrium Companies, Inc. $ 1,326 5% 2,227 4
Advance PCS, Inc. 2,150 7 2,150 4
Federal Express Corporation (a) 1,929 6 1,950 4
Carrefour France, SAS -- -- 1,941 4
Galyan's Trading Company 1,905 6 1,905 3
Advanced Micro Devices, Inc. (b) 1,524 5 1,629 3
Collins & Aikman Corporation -- -- 1,618 3
Metaldyne Company LLC 551 2 1,560 3
Applied Materials, Inc. (b) 1,521 5 1,550 3
APW North America Inc. 1,314 4 1,381 2
Amerix Corporation 1,164 4 1,229 2
Celestica Corporation 366 1 1,210 2
PerkinElmer, Inc. -- -- 1,185 2
Institutional Jobbers Company 1,135 4 1,135 2
Buffets, Inc. 1,066 3 1,066 2
Gerber Scientific, Inc. -- -- 1,059 2
Checkfree Holdings Corporation, Inc. (b) 1,044 3 1,054 2
McLane Company, Inc. (c) 1,039 3 1,043 2
Builders Firstsource, Inc. (e) 498 2 1,013 2
Special Devices, Inc. (b) 139 -- 981 2
Stellex Technologies, Inc. 941 3 975 2
Best Buy Co., Inc. 994 3 957 2
Gibson Guitar Corp. (d) 547 2 933 2
Nexpak Corporation 345 1 922 2
Waddington North America, Inc. 302 1 905 2
Tower Automotive, Inc. -- -- 866 2
Other (d) 9,600 30 13,738 24
------- ------- ------- -------
$31,400 100% $54,503 100%
======= ======= ======= -------
(a) Net of W. P. Carey & Co. LLC's minority interest.
(b) Represents the Company's proportionate share of lease revenues from its
equity investments.
(c) Net of Corporate Property Associates 12 Incorporated's minority interest.
(d) Net of unaffiliated third party's minority interest.
(e) Net of Corporate Property Associates 15 Incorporated's minority interest.
Note 4. Equity Investments:
The Company owns interests in properties leased to corporations through equity
interests in various partnerships and limited liability companies and as
tenants-in-common subject to joint control. The ownership interests range from
33.33% to 50%. All of the underlying investments are owned with affiliates that
have similar investment objectives as the Company. The lessees are Advanced
Micro Devices, Inc., Compucom Systems, Inc., Textron, Inc., CheckFree Holdings,
Inc., Special Devices, Inc. and Applied Materials, Inc.
-7-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Amounts in thousands, except share and per share amounts)
Summarized financial information of the Company's equity investees is as
follows:
(In thousands) December 31, 2001 June 30, 2002
- -------------- ----------------- -------------
Assets (primarily real estate) $306,233 $302,133
Liabilities (primarily mortgage notes payable) 200,810 197,484
Partners' and members' equity 105,423 104,649
Six Months Ended June 30,
-------------------------
2001 2002
------- -------
Revenues (primarily rental revenues) $14,387 $16,894
Expenses (primarily interest on mortgages and depreciation) 9,116 9,978
------- -------
Net income $ 5,271 $ 6,916
======= =======
Note 5. Acquisitions of Real Estate:
On April 10, 2002, the Company purchased land and buildings in Granite City,
Illinois; Kendallville, Indiana; Clinton, Michigan and Upper Sandusky, Ohio for
$34,711 and entered into a master net lease with Tower Automotive Products
Company, Inc. and Tower Automotive Tool LLC (collectively, "Tower"). The lease
obligations have been unconditionally guaranteed by Tower Automotive, Inc., the
parent company.
The lease has an initial term of 18 years followed by two ten-year renewal
options. Annual rent is initially $3,895 with rent increases every three years
based on a formula indexed to increases in the Consumer Price Index ("CPI"). In
connection with the purchase, the Company obtained $19,878 of limited recourse
mortgage financing collateralized by the Tower properties and a lease
assignment. The loan provides for monthly payments of interest and principal of
$146 at an annual interest rate of 7.89% and based on a 30-year amortization
schedule. The loan matures in May 2012 at which time a balloon payment is
scheduled.
On May 22, 2002, the Company purchased a property in Upper Saucon Township,
Pennsylvania on which a building is being constructed on a build-to-suit basis
and entered into a net lease with Allentown Business School, Ltd. The lease
obligations have been unconditionally guaranteed by Career Education Corp., the
parent company. The total purchase price including construction costs is
estimated to be $19,372. On July 1, 2003, a lease term of 20 years with two
ten-year renewal terms will commence at an annual rent of $1,952 if the entire
estimated funding of the build-to-suit project is required. Initial annual rent
will be increased by 10.55% of the funding of any project cost overruns
resulting from lessee change orders during the construction period, or decreased
by 10.55% of the amounts for a tenant improvement allowance that are not used.
The lease provides for rent increases every two years based on a formula indexed
to increases in the CPI, capped at 6.5%.
Note 6. Sale of Real Estate:
On June 21, 2002, the Company sold a property in Greenville, Texas leased to
Atrium Companies, Inc. ("Atrium") for $3,634 and recognized a gain on sale of
$333. The results of operations of the Greenville property and the related gain
on sale have been included in income from discontinued operations in the
accompanying condensed consolidated financial statements. Atrium continues to
lease five properties from the Company.
The Greenville property was subject to a mortgage note payable which did not
allow for prepayment. The Company used $2,537 of the sales proceeds to establish
a defeasance escrow account. The account has been funded with fixed rate
instruments that are intended to meet scheduled debt service payments and a
balloon payment of $1,852 scheduled in January 2010, at which time the loan
obligation will be satisfied. At June 30, 2002, the fund held investments with a
face amount of $3,720 and amortized cost of $2,537. In the event that amounts in
the defeasance escrow account are insufficient to meet any scheduled payment,
including the balloon payment, the Company would have the obligation to fund any
shortfall. The defeasance fund has been structured so that fixed debt
instruments mature to meet each debt service installment, including the balloon
payment.
-8-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Amounts in thousands, except share and per share amounts)
Note 7. Subsequent Events:
On July 1, the Company purchased a property in Lieusaint, France for Euro
15,166 ($15,016 at the date of acquisition) and entered into a net lease with
Societe Logidis. The lease obligations of Societe Logidis are unconditionally
guaranteed by its parent company, Carrefour France, SAS ("Carrefour"). The lease
has a nine-year term and provides for annual rent of Euro 1,520 ($1,507 at the
date of acquisition), with annual rent increases based on a formula indexed to
increases in the INSEE, a French construction cost index.
In connection with the purchase of the Carrefour property, the Company
obtained a limited recourse mortgage loan of Euro 12,400 ($12,296 at the date of
acquisition) which provides for quarterly payments of interest at an annual
interest rate of 6.38%. The interest rate is fixed through 2012, at which time
the Company has the option to choose either a variable rate based on the Euribor
three-month rate or a fixed rate based on the lenders' cost to refinance the
loan. Principal installments are payable based on an initial 2.20% annuity per
annum, with scheduled increases throughout the term of the loan. The loan
matures on April 30, 2017, at which time a balloon payment is scheduled.
On July 5, 2002, the Company purchased land and buildings in Davenport, Iowa,
Bloomington, Minnesota and Edisonweg, Gorinchem, the Netherlands for $35,524 and
entered into a master net lease with Katun Corporation ("Katun") for the Iowa
and Minnesota properties and a net lease with Katun (E.D.C.) B.V. for the
Netherlands property. The lease obligations of Katun (E.D.C.) B.V. have been
unconditionally guaranteed by Katun, the parent company. Both leases have an
initial term of 20 years followed by two ten-year renewal options. Annual rent
is initially $2,971 for the Iowa and Minnesota properties and Euros 678 ($664 as
of the date of acquisition) for the Netherlands property. Both leases provide
for rent increases on the fourth lease anniversary and every three years
thereafter based on a formula indexed to increases in the CPI.
In connection with the purchase of the Iowa and Minnesota properties, the
Company obtained $19,000 of limited recourse mortgage financing collateralized
by a mortgage on the properties and a lease assignment. The loan provides for
monthly payments of interest and principal of $128 at an annual interest rate of
7.15% and based on a 30-year amortization schedule. The loan matures in August
2012 at which time a balloon payment is scheduled. In connection with the
purchase of the Netherlands property, the Company obtained Euros 5,600 ($5,486
as of the date of acquisition) of limited recourse mortgage financing
collateralized by a mortgage on the property. The loan provides for quarterly
payments of interest at an annual interest rate of 6.50%. Principal installments
are payable based on an initial 1.75% annuity per annum, with scheduled
increases throughout the term of the loan. The loan matures on June 30, 2022, at
which time a balloon payment is scheduled.
Note 8. Accounting Pronouncements:
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 141 "Business
Combinations" and No. 142 "Goodwill and Other Intangibles," which establish
accounting and reporting standards for business combinations and certain assets
and liabilities acquired in business combinations.
SFAS No. 141 requires that all business combinations and asset acquisitions be
accounted for under the purchase method, establishes specific criteria for the
recognition of intangible assets separately from goodwill and requires that
unallocated negative goodwill be written off immediately as an extraordinary
gain. Use of the pooling-of-interests method for business combinations is no
longer permitted. The adoption of SFAS No. 141 did not have a material effect on
the Company's financial statements.
SFAS No. 142 primarily addresses the accounting for goodwill and intangible
assets subsequent to their acquisition. SFAS No. 142 provides that goodwill and
indefinite-lived intangible assets are no longer amortized but are tested for
impairment at least annually. Intangible assets acquired and liabilities assumed
in business combinations are only amortized if such assets and liabilities are
capable of being separated or divided and sold, transferred, licensed, rented or
exchanged or arise from contractual or legal rights (including leases), and are
amortized over their useful lives. The adoption of SFAS No. 142 on January 1,
2002 did not have a material effect on the Company's financial statements.
-9-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Amounts in thousands, except share and per share amounts)
In August 2001, FASB issued SFAS No. 144 "Accounting for the Impairment of
Long-Lived Assets" which addresses the accounting and reporting for the
impairment and disposal of long-lived assets and supercedes SFAS No. 121 while
retaining SFAS No. 121's fundamental provisions for the recognition and
measurement of impairments. SFAS No. 144 removes goodwill from its scope,
provides for a probability-weighted cash flow estimation approach for analyzing
situations in which alternative courses of action to recover the carrying amount
of long-lived assets are under consideration and broadens that presentation of
discontinued operations to include a component of an entity. The adoption of
SFAS No. 144 on January 1, 2002 did not have a material effect on the Company's
financial statements; however, the revenues and expenses relating to an asset
held for sale or sold will be presented as a discontinued operation for all
periods presented. The provisions of SFAS No. 144 are effective for disposal
activities initiated by the Company's commitment to a plan of disposition after
the date of adoption (January 1, 2002).
In May 2002, FASB issued SFAS No. 145 "Rescission of SFAS Nos. 4, 44 and 64,
Amendment of SFAS No. 13 and Technical Corrections" which eliminates the
requirement that gains and losses from the extinguishment of debt be classified
as extraordinary items unless it can be considered unusual in nature and
infrequent in occurrence. The provisions of SFAS No. 145 are effective for
fiscal years beginning after May 15, 2002. Early adoption is permitted. Upon
adoption, the Company will no longer classify gains and losses for the
extinguishment of debt as extraordinary items and will adjust comparative
periods presented. The Company has not elected early adoption.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Exit or Disposal
Activities". SFAS No. 146 addresses significant issues regarding the
recognition, measurement, and reporting of costs that are associated with exit
and disposal activities, including restructuring activities that are currently
accounted for pursuant to the guidance that the Emerging Issues Task Force
("EITF") has set forth in EITF Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)". The scope of SFAS No.
146 also includes (1) costs related to terminating a contract that is not a
capital lease and (2) termination benefits that employees who are involuntarily
terminated receive under the terms of a one-time benefit arrangement that is not
an ongoing benefit arrangement or an individual deferred-compensation contract.
The provisions of this Statement are effective for exit or disposal activities
that are initiated after December 31, 2002, with early application encouraged.
The Company does not expect SFAS No. 146 to have a material effect on the
Company's financial statements.
-10-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except share and per share amounts)
The following information should be read in conjunction with Corporate Property
Associates 14 Incorporated's ("CPA(R):14") condensed consolidated financial
statements and notes thereto as of June 30, 2002 included in this quarterly
report and CPA(R):14's Annual Report on Form 10-K for the year ended December
31, 2001. This quarterly report contains forward looking statements. Such
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievement of CPA(R):14 to be
materially different from the results of operations or plans expressed or
implied by such forward looking statements. Accordingly, such information should
not be regarded as representations by CPA(R):14 that the results or conditions
described in such statements or the objectives and plans of CPA(R):14 will be
achieved. Item 1 of the Annual Report on Form 10-K for the year ended December
31, 2001 provides a description of CPA(R):14's business objectives, acquisition
and financing strategies and risk factors which could affect future operating
results.
Certain accounting policies are critical to the understanding of CPA(R):14's
financial condition and results of operations. Management believes that an
understanding of financial condition and results of operations requires an
understanding of accounting policies relating to the use of estimates.
The preparation of financial statements requires that Management make estimates
and assumptions that affect the reported amount of assets, liabilities, revenues
and expenses. For instance, CPA(R):14 must assess its ability to collect rent
and other tenant-based receivables and determine an appropriate charge for
uncollected amounts. Because CPA(R):14's real estate operations have a limited
number of lessees, Management believes that it is necessary to evaluate specific
situations rather than solely use statistical methods.
CPA(R):14 also uses estimates and judgments when evaluating whether long-lived
assets are impaired. When events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable, Management performs
projections of undiscounted cash flows, and if such cash flows are insufficient,
the assets are adjusted (i.e., written down) to their estimated fair value. An
analysis of whether a real estate asset has been impaired requires Management to
make its best estimate of market rents, residual values and holding periods. In
its evaluations, CPA(R):14 generally obtains market information from outside
sources; however, such information requires Management to determine whether the
information received is appropriate to the circumstances. As CPA(R):14's
investment objectives are to hold properties on a long-term basis, holding
periods used in the analyses generally range from five to ten years. Depending
on the assumptions made and estimates used, the future cash flow projected in
the evaluation of long-lived assets can vary within a range of outcomes.
CPA(R):14 will consider the likelihood of possible outcomes in determining the
best possible estimate of future cash flows. Because CPA(R):14's properties are
leased to single tenants, CPA(R):14 is more likely to incur significant
writedowns when circumstances deteriorate because of the possibility that a
property will be vacated in its entirety. This makes the risks faced by
CPA(R):14 different from the risks faced by companies that own multi-tenant
properties. Events or changes in circumstances can result in further writedowns
and impact the gain or loss ultimately realized upon sale of the asset.
CPA(R):14 recognizes rental income from sales overrides when reported by
lessees, that is, after the level of sales requiring a rental payment to
CPA(R):14 is reached.
CPA(R):14 and certain affiliates are investors in certain real estate ventures.
Certain of the investments are held through incorporated or unincorporated
jointly-held entities and certain investments are held directly as tenants in
common. Substantially all of these investments represent jointly purchased
properties which were net leased to a single tenant and were structured to
provide diversification and reduce concentration of a risk from a single lessee
for CPA(R):14 and the affiliate. The placement of an investment in a
jointly-held entity or tenancy in common requires the approval of CPA(R):14's
Independent Directors. All of the jointly held investments are structured so
that CPA(R):14 and the affiliate contribute equity, receive distributions and
are allocated profit or loss in amounts that are proportional to their ownership
interests. The presentation of these jointly-held investments and their related
results in the accompanying consolidated financial statements is determined
based on factors such as controlling interest, significant influence and whether
either party has the ability to make independent decisions. All of the
jointly-held investments are subject to contractual agreements.
-11-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
(Dollars in thousands, except share and per share amounts)
CPA(R):14 classifies its directly-owned leased assets for financial reporting
purposes as either real estate leased under the operating method or net
investment in direct financing leases based on several criteria, including, but
not limited to, estimates of the remaining economic life of the leased assets
and the calculation of the present value of future minimum rents. In determining
the classification of a lease, CPA(R):14 uses estimates of remaining economic
life provided by independent appraisals of the leased assets. The calculation of
the present value of future minimum rents includes determining a lease's
implicit interest rate which requires an estimate of the residual value of
leased assets as of the end of the noncancellable lease term. Different
estimates of residual value result in different implicit interest rates and
could possibly affect the financial reporting classification of leased assets.
RESULTS OF OPERATIONS:
Between November 1997 and November 2001, CPA(R):14 raised approximately $660,000
in two "best efforts" public offerings. Since December 31, 2001, CPA(R):14 has
acquired new real estate investments in excess of $150,000 and currently has
more than $54,250 available for the acquisition of real estate investments. As a
result, its asset base has increased by more than 10% since the beginning of the
current year and is projected to continue to increase until its available cash
is deployed fully in real estate. As a result of the on-going acquisition
activity, the results of operations for the three months and six month periods
ended June 30, 2002 are not directly comparable to the results for the three and
six months ended June 30, 2001. Income before gains and discontinued operations
increased by $3,011 and $4,661 for the comparable three-month and six-month
periods, respectively. The increases were due to an increase in lease revenues
(rental income and interest income from direct financing leases) and were
offset, in part, by corresponding increases in interest, depreciation and
property expenses, and, to a lesser extent, an increase in general and
administrative expense. All of the revenues and expenses had been projected to
increase as the asset base increased and additional mortgage financing was
obtained. Income from properties disposed of, unless such disposal activities
were initiated prior to January 1, 2002, including any gain on sale of such
properties, are presented as discontinued operations. As CPA(R):14 will dispose
of properties in the ordinary course of business and there is a reasonable
probability that a portion of the funds from the sale will be reinvested in real
estate, Management evaluates its results and ability to meet dividend objectives
inclusive of income from discontinued operations.
Lease revenues increased primarily as a result of real estate purchases and the
completion of build-to-suit commitments. Lease revenues also benefited from
periodic rent increases on several leases which increased annual revenues by
$157. Substantially all of CPA(R):14's leases provide for rent increases, either
based on fixed amounts or a formula indexed to increases to the Consumer Price
Index, with such increases generally scheduled every one, two or three years.
The increases in depreciation were attributable to the increase in real estate
assets. Depreciation, a noncash charge which has no effect on cash flow,
increased by $2,322 and $4,302 in 2002 for the comparable three-month and
six-month periods. The increase in interest expense was due to $264,211 of new
mortgage financing obtained in 2001 and $105,151 in 2002. The increases in
property expenses were due to the increase in management and performance fees
which are calculated based on CPA(R):14's real estate assets, including equity
investments.
The increase in income from equity investments was due to the acquisition in
June 2001 of properties leased to Special Devices Inc. and represented $335 of
the $668 increase for the current six-month period. The remaining increase was
due to rent increases on three of the leases and lower interest charges on a
variable rate debt obligation which is indexed to short-term LIBOR rates.
Through June 30, 2002, CPA(R):14 has entered into new leases with American Tire
Distributors (formerly Heafner Tire Group, Inc.), Carrefour Group SAS (in
France), PW Eagle, Inc., UTI Holdings, Inc, Tower Automotive, Inc. and Career
Education Group. These leases provide annual revenues of $17,795 and annual cash
flow (lease revenues less property-level mortgage debt service) of $13,128.
Since June 30, 2002, CPA(R):14 purchased an additional Carrefour Group property
in France and three properties leased to Katun Corporation, including a property
in the Netherlands. Annual revenues and cash flow from the newly-acquired
Carrefour property and the Katun properties are projected to be $5,143 and
$2,098, respectively, subject to some foreign currency fluctuation. CPA(R):14
completed $165,466 of acquisitions in Europe and believes that it has mitigated
its foreign currency risk on those leases by obtaining mortgage debt in the
local currency. Several of the lessees or lease guarantors are based in
-12-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
(Dollars in thousands, except share and per share amounts)
the United States or have significant domestic operations including Nexpak
Corporation, Katun Corporation and Perkin-Elmer, Inc.
CPA(R):14's lease with Burlington Motor Carriers, Inc. was terminated in
connection with Burlington's plan of reorganization in bankruptcy. The lease had
provided annual lease revenues of $833. The Burlington property is currently
partially rented under a short-term lease and CPA(R):14 is actively remarketing
the property. Cash flow has decreased by $128 as the result of the sale of a
property leased to Atrium Companies, Inc. CPA(R):14 continues to net lease five
properties to Atrium.
FINANCIAL CONDITION:
There has been no material change in CPA(R):14's financial condition since
December 31, 2001. For the six months ended June 30, 2002, cash flows from
operating activities and equity investments of $27,863 were sufficient to pay
dividends to shareholders of $23,716, meet scheduled principal payment
installments on mortgage debt of $2,614 and distribute $1,048 to minority
interests. As a result of the new leases that have been entered into since
December 31, 2001, operating cash flow is projected to continue to be sufficient
to meet CPA(R):14's dividend objectives.
For the six months ended June 30, 2002, CPA(R):14's investing activities
included using $152,748 to purchase the Carrefour SAS, American Tire, UTI
Holdings, PW Eagle, Tower Automotive, Inc. and Career Education Corp.
properties. CPA(R):14 has a remaining commitment on the UTI Holdings and Career
Education Corp. build-to-suits in Mooresville, North Carolina and Allentown,
Pennsylvania, respectively, of up to $12,931. CPA(R):14 also paid its annual
installment of deferred acquisition fees of $1,638. Deferred acquisition fees
are payable in equal annual installments over a period of no less than eight
years. In connection with selling a property for $3,634, $2,537 was deposited in
a defeasance escrow account. The account has been funded with fixed rate
instruments that are intended to meet scheduled debt service payments on the
loan which had been collateralized by the property.
In addition to paying dividends to shareholders, principal payments on mortgage
debt and paying distributions to minority interest owners, CPA(R):14's financing
activities for the six months ended June 30, 2002 included obtaining new limited
recourse mortgage financing of $105,151, paying off a matured mortgage loan of
$3,800 and receiving $10,758 from a minority interest owner. The $3,800 loan was
refinanced.
In February 2002, CPA(R):14 received $10,886 from Corporate Property Associates
15 Incorporated ("CPA(R):15") in connection with CPA(R):15's obligation to
increase its ownership interests in two jointly-owned investments. CPA(R):14 and
CPA(R):15 entered into the investments in the fourth quarter of 2001 at which
time CPA(R):15 had a de minimus interest. CPA(R):15 is currently raising capital
pursuant to a "best efforts" public offering and its obligation to increase its
ownership interests in the investments was contingent on raising a specified
level of capital. CPA(R):14 will consider jointly acquiring additional real
estate interests with affiliates to the extent that investment objectives are
consistent. By jointly acquiring properties with affiliates, CPA(R):14 is able
to reduce the concentration of risk associated with a single lessee. As of June
30, 2002, no lessee represented more than 6% of revenues on a proportionate
basis (see Note 4 to the accompanying condensed consolidated financial
statements).
-13-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
(Dollars in thousands, except share and per share amounts)
A summary of CPA(R):14's contractual obligations and commitments is as follows:
(in thousands) Total 2002 2003 2004 2005 2006 Thereafter
-------- -------- -------- -------- -------- -------- ----------
Obligations:
Limited recourse mortgage notes
payable $572,882 $ 3,677 $ 7,911 $ 8,543 $ 9,366 $ 10,131 $533,254
Deferred acquisition fees 19,945 2,436 2,863 2,863 2,863 8,920
Subordinated disposition fees 240 240
Commitments:
Commitments for build-to-suit
construction 12,931 866 12,065
Real estate purchase commitment 15,016 15,016
Share of minimum rents payable
under office cost-sharing
agreement 1,255 105 307 307 307 229 --
-------- -------- -------- -------- -------- -------- --------
$622,269 $ 19,664 $ 22,719 $ 11,713 $ 12,536 $ 13,223 $542,414
======== ======== ======== ======== ======== ======== ========
CPA(R):14 is continuing to diversify its portfolio by using its net offering
proceeds along with limited recourse mortgage financing to purchase properties
subject to long-term net leases with corporate tenants on a single tenant basis.
Under a net lease, a tenant is generally required to pay all expenses related to
the leased property for real estate taxes, property maintenance and insurance
costs. A net lease, therefore, limits the impact on CPA(R):14 of the effects of
inflation on these property costs. CPA(R):14's leases, which generally have
initial lease terms of 10 to 20 years and provide the lessee with options for
renewal terms, typically include rent increase provisions which are fixed or
based upon increases in the Consumer Price Index. As of June 30, 2002, CPA(R):14
had $67,439 available for investment and has subsequently used $13,189 to
purchase four properties.
CPA(R):14 and certain affiliates are currently negotiating with a single lender
to obtain limited recourse mortgage financing on currently unencumbered
properties or refinance existing mortgage loans on several leased properties. In
the event the negotiations are successful, the lender will pool the loans and
place them in a trust that will sell the interests as collateralized mortgage
obligations ("CMO") in a private placement to institutional investors. The sole
assets of the trust would consist of the loans from CPA(R):14 and its
affiliates. CPA(R):14 and its affiliates believe that the ability to securitize
its mortgage obligations in a CMO pool facilitates placement of mortgage
financing on a wider range of properties including, but not limited to,
supermarkets, movie theaters and health clubs and at more favorable interest
rates. None of the loans will be cross-collateralized nor include cross-default
provisions.
As a condition of pooling the loans, CPA(R):14 and its affiliates would acquire
a separate class of interests in the trust (the "CPA(R) Interests").
Distributions to the CPA(R) Interests would be subordinate to all ownership
interests in the trust and payable only when all other distributions are
current. The ability to pay distributions to the CPA(R) Interests may be
affected by defaults on any of the loans resulting from the nonpayment of rent
by lessees. If there are no or few defaults, ownership of the subordinated
CPA(R) Interests may provide additional income to CPA(R):14. The sale of the
loans and related formation of the trust is currently scheduled for the third
quarter; however, there is no assurance that the contemplated transaction will
be completed.
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 141 "Business
Combinations" and No. 142 "Goodwill and Other Intangibles," which establish
accounting and reporting standards for business combinations and certain assets
and liabilities acquired in business combinations.
SFAS No. 141 requires that all business combinations and asset acquisitions be
accounted for under the purchase method, establishes specific criteria for the
recognition of intangible assets separately from goodwill and requires that
unallocated negative goodwill be written off immediately as an extraordinary
gain. Use of the pooling-of-
-14-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
(Dollars in thousands, except share and per share amounts)
interests method for business combinations is no longer permitted. The adoption
of SFAS No. 141 did not have a material effect on CPA(R):14's financial
statements.
SFAS No. 142 primarily addresses the accounting for goodwill and intangible
assets subsequent to their acquisition. SFAS No. 142 provides that goodwill and
indefinite-lived intangible assets are no longer amortized but are tested for
impairment at least annually. Intangible assets acquired and liabilities assumed
in business combinations are only amortized if such assets and liabilities are
capable of being separated or divided and sold, transferred, licensed, rented or
exchanged or arise from contractual or legal rights (including leases), and will
be amortized over their useful lives. The adoption of SFAS No. 142 on January 1,
2002 did not have a material effect on CPA(R):14's financial statements.
In August 2001, FASB issued SFAS No. 144 "Accounting for the Impairment of
Long-Lived Assets" which addresses the accounting and reporting for the
impairment and disposal of long-lived assets and supercedes SFAS No. 121 while
retaining SFAS No. 121's fundamental provisions for the recognition and
measurement of impairments. SFAS No. 144 removes goodwill from its scope,
provides for a probability-weighted cash flow estimation approach for analyzing
situations in which alternative courses of action to recover the carrying amount
of long-lived assets are under consideration and broadens that presentation of
discontinued operations to include a component of an entity. The adoption of
SFAS No. 144 on January 1, 2002 did not have a material effect on CPA(R):14's
financial statements; however, the revenues and expenses relating to an asset
held for sale or sold will be presented as a discontinued operation for all
periods presented. The provisions of SFAS No. 144 are effective for disposal
activities initiated by CPA(R):14's commitment to a plan of disposition after
the date of adoption (January 1, 2002).
In May 2002, FASB issued SFAS No. 145 "Rescission of SFAS Nos. 4, 44 and 64,
Amendment of SFAS No. 13 and Technical Corrections" which eliminates the
requirement that gains and losses from the extinguishment of debt be classified
as extraordinary items unless it can be considered unusual in nature and
infrequent in occurrence. The provisions of SFAS No. 145 are effective for
fiscal years beginning after May 15, 2002. Early adoption is permitted. Upon
adoption, CPA(R):14 will no longer classify gains and losses for the
extinguishment of debt as extraordinary items and will adjust comparative
periods presented. CPA(R):14 has not elected early adoption.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Exit or Disposal
Activities". SFAS No. 146 addresses significant issues regarding the
recognition, measurement, and reporting of costs that are associated with exit
and disposal activities, including restructuring activities that are currently
accounted for pursuant to the guidance that the Emerging Issues Task Force
("EITF") has set forth in EITF Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)". The scope of SFAS No.
146 also includes (1) costs related to terminating a contract that is not a
capital lease and (2) termination benefits that employees who are involuntarily
terminated receive under the terms of a one-time benefit arrangement that is not
an ongoing benefit arrangement or an individual deferred-compensation contract.
The provisions of this Statement are effective for exit or disposal activities
that are initiated after December 31, 2002, with early application encouraged.
CPA(R):14 does not expect SFAS No. 146 to have a material effect on its
financial statements.
-15-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
Item 3. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the exposure to loss resulting from changes in interest rates,
foreign currency exchange rates and equity prices. In pursuing its business
plan, the primary market risks to which CPA(R):14 is exposed are interest rate
risk and foreign currency exchange risk.
The value of CPA(R):14's real estate is subject to fluctuations based on changes
in interest rates, local and regional economic conditions and changes in the
creditworthiness of lessees, and which may affect CPA(R):14's ability to
refinance its debt when balloon payments are scheduled.
Approximately $557,931,000 of CPA(R):14's long-term debt bears interest at fixed
rates, and therefore the fair value of these instruments is affected by changes
in the market interest rates. The following table presents principal cash flows
based upon expected maturity dates of the debt obligations and the related
weighted-average interest rates by expected maturity dates for the fixed rate
debt. The interest rate on the fixed rate debt as of June 30, 2002 ranged from
6.091% to 8.85%. The interest rate on the variable rate debt as of June 30, 2002
ranged from 6.55% to 8.11%.
(in thousands) 2002 2003 2004 2005 2006 Thereafter Total Fair Value
-------- -------- -------- -------- -------- ---------- -------- ----------
Fixed rate debt $ 3,584 $ 7,715 $ 8,330 $ 9,141 $ 9,900 $519,261 $557,931 $551,951
Weighted average
interest rate 7.30% 7.30% 7.29% 7.30% 7.30% 7.59%
Variable rate debt $ 93 $ 196 $ 213 $ 225 $ 231 $ 13,993 $ 14,951 $ 14,951
CPA(R):14 has foreign operations. Accordingly, CPA(R):14 is subject to foreign
currency exchange risk from the effects of exchange rate movements of foreign
currencies and this may affect future costs and cash flows; however, exchange
rate movements to date have not had a significant effect on CPA(R):14's
financial position or results of operations. To date CPA:14 has not entered into
any foreign currency forward exchange contracts to hedge the effects of adverse
fluctuations in foreign currency exchange rates. One of CPA(R):14's lease
agreements provides the option to receive a portion of the rent in dollars or
the local currency; this option is considered a derivative financial instrument
and changes in the fair value of the option are included in the determination of
net income.
-16-
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
PART II
Item 2 (d). - USE OF PROCEEDS OF REGISTERED OFFERING
Pursuant to Rule 701 of Regulation S-K, the use of proceeds from the Company's
offering of common stock which commenced November 17, 1999 (File # 333-76761) is
as follows as of June 30, 2002:
Shares registered: 40,000,000
Aggregate price of offering amount registered: $400,000,000
Shares sold: 36,353,686
Aggregated offering price of amount sold: $363,536,860
Direct or indirect payments to directors, officers, general
partners of the issuer or their associates, to persons owning
ten percent or more of any class of equity
securities of the issuer and to affiliates of the issuer: $ 6,756,359
Direct or indirect payments to others: $ 28,984,925
Net offering proceeds to the issuer after deducting expenses: $327,795,576
Purchases of real estate: $232,298,192
Working capital reserves: $ 3,635,369
Temporary investments in cash and cash equivalents: $ 91,862,015
Item 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An annual Shareholders meeting was held on June 11, 2002, at which time a vote
was taken to elect the Company's directors through the solicitation of proxies.
The following directors were elected for a one-year term:
Name Of Director Total Shares Voting Shares Voting Yes Shares Voting No Shares Abstaining
- ---------------- ------------------- ----------------- ---------------- -----------------
William P. Carey 34,374,636 34,085,191 25,607 263,838
Elizabeth P. Munson 34,374,636 34,090,901 19,897 263,838
William Ruder 34,374,636 33,988,901 121,897 263,838
George E. Stoddard 34,374,636 33,914,959 195,839 263,838
Warren G. Wintrub 34,374,636 34,090,941 19,857 263,838
Item 6. - EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits:
99.1 Chief Executive Officer's Certification Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
99.2 Chief Financial Officer's Certification Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
During the quarter ended June 30, 2002, the Company was not
required to file any reports on Form 8-K.
-17-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED
8/13/02 By: /s/ John J. Park
- ------------- ----------------------------------
Date John J. Park
Executive Vice President,
Treasurer and
Chief Financial Officer
(Principal Financial Officer)
8/13/02 By: /s/ Claude Fernandez
- ------------- ----------------------------------
Date Claude Fernandez
Executive Vice President and
Chief Administrative Officer
(Principal Accounting Officer)
-18-