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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
-------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________.
COMMISSION FILE NUMBER: 033-68728
-------------------------
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 13-3726306
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
50 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020 10020
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBERS:
INVESTOR RELATIONS (212) 492-8920
(212) 492-1100
-------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
-------------------------
CPA(R):12 has SHARES OF COMMON STOCK registered pursuant to Section 12(g)
of the Act.
CPA(R):12 HAS NO SECURITIES registered on any exchanges.
CPA(R):12 does not have any Securities registered pursuant to Section
12(b) of the Act.
CPA(R):12 (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.
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ].
CPA(R):12 has no active market for common stock at August 6, 2004.
CPA(R):12 has 30,357,786 shares of common stock, $.001 par value
outstanding at August 6, 2004.
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
INDEX
PART I Page No.
- ------ --------
Item 1. - Financial Information*
Condensed Consolidated Balance Sheets as of June 30, 2004
and December 31, 2003 2
Condensed Consolidated Statements of Income for the three and six
months ended June 30, 2004 and 2003 3
Condensed Consolidated Statements of Comprehensive Income for
the three and six months ended June 30, 2004 and 2003 3
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 2004 and 2003 4
Notes to Condensed Consolidated Financial Statements 5-8
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-13
Item 3. - Quantitative and Qualitative Disclosure About Market Risk 14
Item 4. - Controls and Procedures 14
PART II - Other Information
Item 2. - Changes in Securities, Use of Proceeds and Issuer Purchases of
Equity Securities 15
Item 4. - Submission of Matters to a Vote of Security Holders 15
Item 6. - Exhibits and Reports on Form 8-K 15
Signatures 16
- ----------
* The summarized condensed consolidated financial statements contained herein
are unaudited; however, in the opinion of management, all adjustments necessary
for a fair presentation of such financial statements have been included.
1
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
PART I
Item 1. - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2004 December 31, 2003
------------- -----------------
(Unaudited) (Note)
ASSETS:
Land and buildings, net of accumulated depreciation of $44,400,952 at
June 30, 2004 and $41,176,156 at December 31, 2003 $297,848,337 $303,053,049
Net investment in direct financing leases 19,127,500 19,127,500
Equity investments 89,884,354 90,206,460
Assets held for sale 2,752,849 10,453,403
Cash and cash equivalents 21,474,920 13,305,343
Marketable securities 8,197,545 8,810,482
Other assets, net 16,720,258 17,234,625
------------ ------------
Total assets $456,005,763 $462,190,862
============ ============
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY:
Liabilities:
Mortgage notes payable $181,283,855 $180,981,200
Mortgage note payable on asset held for sale -- 3,224,335
Accrued interest 994,242 1,035,859
Accounts payable and accrued expenses 2,654,120 2,473,641
Due to affiliates 3,276,840 3,062,758
Deferred acquisition fees payable to affiliate 5,219,379 6,658,067
Dividends payable 6,299,882 6,271,709
Prepaid rental income and security deposits 4,587,996 5,131,254
------------ ------------
Total liabilities 204,316,314 208,838,823
------------ ------------
Minority interest 8,084,684 8,021,816
------------ ------------
Commitments and contingencies
Shareholders' equity:
Common stock, $.001 par value; authorized, 40,000,000 shares; issued and
outstanding, 31,530,586 shares at June 30, 2004 and 31,284,287
shares at December 31, 2003 31,530 31,284
Additional paid-in capital 285,741,781 282,962,414
Dividends in excess of accumulated earnings (32,281,065) (29,949,878)
Accumulated other comprehensive income 650,524 1,594,782
------------ ------------
254,142,770 254,638,602
Less, treasury stock at cost, 1,098,583 shares at June 30, 2004 and
975,975 shares at December 31, 2003 (10,538,005) (9,308,379)
------------ ------------
Total shareholders' equity 243,604,765 245,330,223
------------ ------------
Total liabilities, minority interest and shareholders'
equity $456,005,763 $462,190,862
============ ============
The accompanying notes are an integral part of the condensed
consolidated financial statements.
Note: The balance sheet at December 31, 2003 has been derived from the audited
consolidated financial statements at that date.
2
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
------------------------------- -----------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Revenues:
Rental income $10,097,057 $10,083,289 $19,898,603 $20,238,507
Interest income from direct financing leases 646,458 646,458 1,292,916 1,292,916
Other operating income 138,640 296,152 197,718 2,924,320
----------- ----------- ----------- -----------
10,882,155 11,025,899 21,389,237 24,455,743
----------- ----------- ----------- -----------
Operating expenses:
Depreciation 1,851,135 1,845,257 3,700,788 3,685,519
General and administrative 684,477 1,102,455 1,693,181 2,078,162
Property expenses 2,338,725 2,029,763 5,132,144 4,106,388
----------- ----------- ----------- -----------
4,874,337 4,977,475 10,526,113 9,870,069
----------- ----------- ----------- -----------
Income from continuing operations before other
interest income, minority interest, equity
investments, (loss) gain and interest expense 6,007,818 6,048,424 10,863,124 14,585,674
Other interest income 277,634 179,564 529,568 666,904
Minority interest in income (439,728) (378,026) (845,299) (756,718)
Income from equity investments 2,686,222 2,594,006 5,854,180 5,065,811
Unrealized losses on foreign currency transactions and
warrants (125,179) (76,152) (246,938) (323,312)
Gain on settlement of derivatives contract -- -- -- 237,340
Interest expense (3,651,643) (3,738,395) (7,200,216) (7,481,019)
----------- ----------- ----------- -----------
Income from continuing operations 4,755,124 4,629,421 8,954,419 11,994,680
Discontinued operations:
(Loss) income from operations of discontinued
properties (178,474) 114,974 (451,127) 233,203
Gain on sale of real estate 1,372,105 -- 1,753,664 --
----------- ----------- ----------- -----------
Income from discontinued operations 1,193,631 114,974 1,302,537 233,203
----------- ----------- ----------- -----------
Net income $ 5,948,755 $ 4,744,395 $10,256,956 $12,227,883
=========== =========== =========== ===========
Basic and diluted income per common share:
Earnings from continuing operations $ .16 $ .16 $ .30 $ .40
Earnings from discontinued operations .04 -- .04 .01
----------- ----------- ----------- -----------
Net income $ .20 $ .16 $ .34 $ .41
========== ========== ========== ==========
Weighted average shares outstanding -- basic and diluted 30,460,228 30,222,388 30,428,321 30,188,997
========== ========== ========== ==========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS of COMPREHENSIVE INCOME (Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
----------------------------- -----------------------------
2004 2003 2004 2003
---------- ---------- ----------- -----------
Net income $5,948,755 $4,744,395 $10,256,956 $12,227,883
Other comprehensive income (loss):
Change in unrealized (depreciation) appreciation on
marketable securities (411,326) 567,388 (549,058) 728,441
Change in foreign currency translation adjustment (85,481) 620,471 (395,200) 466,323
---------- ---------- ----------- -----------
(496,807) 1,187,859 (944,258) 1,194,764
---------- ---------- ----------- -----------
Comprehensive income $5,451,948 $5,932,254 $ 9,312,698 $13,422,647
========== ========== =========== ===========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
3
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30,
----------------------------------
2004 2003
----------- -----------
Cash flows from operating activities:
Net income $10,256,956 $12,227,883
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations, including gain on sale of real estate (1,302,537) (233,203)
Depreciation and amortization 3,925,614 3,962,190
Straight-line rent adjustments (216,523) (783,064)
Income from equity investments in excess of distributions received (1,493,332) (906,822)
Fees paid by issuance of stock 1,777,479 1,505,512
Minority interest in income 845,299 756,718
Unrealized losses on foreign currency transactions and derivative instruments, net 246,938 323,312
Gain on settlement of derivatives contract -- (237,340)
Lease termination proceeds assigned to lender -- (2,250,000)
Securities received in connection with lease termination agreement -- (338,000)
Change in operating assets and liabilities, net (843,390) (701,328)
----------- -----------
Net cash provided by continuing operations 13,196,504 13,325,858
Net cash (used in) provided by discontinued operations (271,866) 397,630
----------- -----------
Net cash provided by operating activities 12,924,638 13,723,488
----------- -----------
Cash flows from investing activities:
Distributions from equity investments in excess of equity income 756,010 612,831
Distribution of mortgage financing proceeds received from equity investment -- 3,738,075
Receipt of amount due from sale of equity investment 1,429,567 --
Purchases of real estate and equity investments and additional capitalized costs (1,516,618) (22,159,402)
Proceeds from sale of assets held for sale 12,615,124 --
Payment of deferred acquisition fees to an affiliate (1,467,170) (1,274,925)
----------- -----------
Net cash provided by (used in) investing activities 11,816,913 (19,083,421)
----------- -----------
Cash flows from financing activities:
Prepayments of mortgage principal -- (5,199,402)
Payments on mortgage principal (2,921,680) (2,736,352)
Distributions to minority interest partner (782,431) (720,060)
Payment of financing costs and mortgage deposits (80,401) (71,231)
Proceeds from issuance of shares, net of costs 1,002,134 374,920
Dividends paid (12,559,970) (12,463,673)
Purchase of treasury stock (1,229,626) (1,377,111)
----------- -----------
Net cash used in financing activities (16,571,974) (22,192,909)
----------- -----------
Net increase (decrease) in cash and cash equivalents 8,169,577 (27,552,842)
Cash and cash equivalents, beginning of period 13,305,343 40,084,470
----------- -----------
Cash and cash equivalents, end of period $21,474,920 $12,531,628
=========== ===========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
4
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements of
Corporate Property Associates 12 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 periods presented have been included.
The results of operations for the interim periods are not necessarily indicative
of results for the full year. These condensed consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2003.
The financial statements included in this Form 10-Q have been adjusted to
reflect the disposition (or planned disposition) of certain properties as
discontinued operations for all periods presented (refer to note 6). As a
result, certain prior year amounts have been reclassified to conform to current
year financial statement presentation.
Note 2. Transactions with Related Parties:
In connection with performing services on behalf of the Company, the Advisory
Agreement between the Company and W. P. Carey & Co. LLC (the "Advisor"),
provides that the Advisor receive asset management and performance fees, each of
which are 1/2 of 1% of Average Invested Assets as defined in the Advisory
Agreement. The Advisor has elected at its option to receive the performance fee
in restricted shares of common stock of the Company rather than cash. The
Advisor is also reimbursed for the actual cost of personnel needed to provide
administrative services necessary to the operation of the Company. The Company
incurred asset management fees of $916,428 and $862,422 for the three months
ended June 30, 2004 and 2003, respectively, and $1,832,836 and $1,655,286 for
the six months ended June 30, 2004 and 2003, respectively, with performance fees
in like amounts, both of which are included in property expenses in the
accompanying condensed consolidated financial statements. For the three months
ended June 30, 2004 and 2003, the Company incurred personnel cost reimbursements
of $287,577 and $347,598, respectively, and $596,921 and $704,810, for the six
months ended June 30, 2004 and 2003, respectively, which are included in general
and administrative expenses in the accompanying condensed consolidated financial
statements.
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 is deferred and is payable in equal
installments each January over no less than eight years following the first
anniversary of the date a property was purchased. Such deferred fees are only
payable if the Preferred Return is met. The unpaid portion of the deferred fees
bears interest at an annual rate of 7% from the date of acquisition until paid.
For transactions completed during the six months ended June 30, 2004, current
and deferred fees were $35,602 and $28,482, respectively. During the six months
ended June 30, 2003, the current and deferred fees were $667,539 and $534,031,
respectively.
Note 3. Equity Investments:
The Company owns interests in properties leased to corporations through
noncontrolling interests in (i) various partnerships and limited liability
companies in which its ownership interests are 50% or less and the Company
exercises significant influence, and (ii) tenancies-in-common subject to common
control. The ownership interests range from 15% to 50%. All of the underlying
investments are owned with affiliates that have similar investment objectives as
the Company. The lessees are Best Buy Co., Inc., Sicor, Inc., The Upper Deck
Company, Advanced Micro Devices, Inc., Compucom Systems, Inc., Textron, Inc.,
McLane Company, Inc., The Retail Distribution Group, Inc., Del Monte
Corporation, Special Devices, Inc., ShopRite Supermarkets, Inc., TruServ
Corporation, Starmark Camhood LLC, Medica-France, SA and affiliates of Carrefour
France, SAS.
5
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
Summarized financial information of the Company's equity investees is as
follows:
(In thousands) June 30, 2004 December 31, 2003
------------- -----------------
Assets (primarily real estate) $898,226 $914,682
Liabilities (primarily mortgage notes payable) 617,225 635,153
-------- --------
Partners' and members' equity $281,001 $279,529
======== ========
Company's share of equity investees' net assets $ 89,884 $ 90,206
======== ========
Six Months Ended June 30,
---------------------------------
(In thousands) 2004 2003
-------- --------
Revenues (primarily rental income and interest income
from direct financing leases) $ 45,470 $ 43,039
Expenses (primarily interest on mortgages and
depreciation) (29,139) (25,780)
-------- --------
Net income $ 16,331 $ 17,259
======== ========
Company's share of net income from equity investments $ 5,854 $ 5,066
======== ========
Note 4. Interest in Mortgage Loan Securitization:
The Company is accounting for its subordinated interest in the Carey Commercial
Mortgage Trust ("CCMT") mortgage securitization as an available-for-sale
marketable security which is measured at fair value with all gains and losses
from changes in fair value reported as a component of other comprehensive income
as part of shareholders' equity. As of June 30, 2004, the fair value of the
Company's interests was $7,983,288, reflecting an aggregate unrealized gain of
$974,708 and cumulative net amortization of $230,042 ($63,879 for the six months
ended June 30, 2004). The fair value of the Company's interests in the trust is
determined using a discounted cash flow model with assumptions of market rates
and the credit quality of the underlying lessees.
One of the key variables in determining fair value of the subordinated interest
is current interest rates. As required by Statement of Financial Accounting
Standards ("SFAS") No. 140, "Accounting for Transfer and Servicing of Financial
Assets and Extinguishments of Liabilities," a sensitivity analysis of the
current value of the interest based on adverse changes in market interest rates
of 1% and 2% is as follows:
Fair Value as of
June 30, 2004 1% Adverse Change 2% Adverse Change
------------- ----------------- -----------------
Fair value of the interests $7,983,288 $7,607,309 $7,255,384
The above sensitivity is hypothetical and changes in fair value, based on a 1%
or 2% variation, should not be extrapolated because the relationship of the
change in assumption to the change in fair value may not always be linear.
Note 5. Lease Revenues:
The Company's operations consist of the direct and indirect 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, 2004 and
2003 are as follows:
2004 2003
----------- -----------
Per Statements of Income:
Rental income from operating leases $19,898,603 $20,238,507
Interest from direct financing leases 1,292,916 1,292,916
Adjustment:
Share of lease revenue applicable to minority interest (1,609,176) (1,548,695)
Share of lease revenue from equity investments 13,792,625 12,335,716
----------- -----------
$33,374,968 $32,318,444
=========== ===========
6
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
For the six-month periods ended June 30, 2004 and 2003, the Company earned its
net lease revenues from its investments is as follows:
2004 % 2003 %
----------- --- ----------- ---
Applied Materials, Inc. (a) $ 3,266,052 10% $ 3,143,226 10%
Carrefour France, SAS (b) 2,030,024 6 1,204,210 4
Advanced Micro Devices, Inc. (b) 1,629,469 5 1,629,469 5
Starmark Camhood, LLC (b) 1,370,430 4 1,085,615 3
Galyan's Trading Company 1,366,577 4 1,366,577 4
Perry Graphic Communications, Inc. and Judd's Incorporated 1,095,783 3 1,095,783 3
TruServ Corporation (b) 1,085,461 3 1,083,342 3
Spectrian Corporation 1,075,500 3 1,075,500 3
Special Devices, Inc. (b) 1,019,257 3 981,000 3
Westell Technologies, Inc. 991,854 3 991,854 3
McLane Company, Inc. (b) 869,624 3 703,147 2
Best Buy Co., Inc. (b) 862,179 3 870,155 3
Medica-France, SA (b) 851,628 3 455,746 1
Career Education Corporation 846,650 3 868,404 3
Telos Corporation 832,770 2 832,770 3
Q Clubs, Inc. 783,644 2 773,226 2
PPD Development, Inc. 752,095 2 752,095 2
Del Monte Corporation (b) 738,857 2 738,857 2
Sicor, Inc. (b) 736,368 2 736,368 2
The Upper Deck Company (b) 726,110 2 726,110 2
The Bon-Ton Stores, Inc. 721,751 2 689,957 2
Silgan Containers Corporation 711,040 2 710,677 2
Compucom Systems, Inc. (b) 704,022 2 704,022 2
Childtime Childcare, Inc. 640,170 2 632,648 2
Textron, Inc. (b) 619,869 2 619,869 2
Jen-Coat, Inc. 605,000 2 605,000 2
ShopRite Supermarkets, Inc. (b) 549,326 2 545,341 2
Pacific Logistics, L.P. 519,636 2 509,668 2
Orbseal LLC 505,875 2 505,875 2
Other 4,867,947 14 5,681,933 19
----------- --- ----------- ---
$33,374,968 100% $32,318,444 100%
=========== === =========== ===
(a) Net of minority interest of an affiliate.
(b) Represents the Company's proportionate share of lease revenues from its
equity investments.
The Company recorded $2,722,000 of other operating income during the first six
months of 2003 in connection with the termination of a lease on property in New
Jersey.
Note 6. Assets Held for Sale and Discontinued Operations:
In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", the results of operations and gain or loss on sales of real
estate for properties sold or held for sale are reflected in the condensed
consolidated financial statements as "Discontinued Operations" for all periods
presented.
In July 2003, the Company and Sentry Technology Corporation ("Sentry") entered
into a termination agreement at a property in Hauppauge, New York. Under the
agreement, Sentry vacated the property in September 2003, and assigned the
Company the right to collect rent directly from Sentry's sub-tenants. The sale
of the Hauppauge property was completed in April 2004 for approximately
$5,924,000, net of selling costs and the Company recognized a gain on sale of
$1,372,105. In connection with the sale, CCMT, the lender of the mortgage loan
on the property consented to the transfer of the loan obligation to the
Company's property in Austin, Texas leased to Q Clubs, Inc.
7
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
On March 18, 2004, the Company sold a property in Ashburn, Virginia and received
$6,691,000, net of selling costs. In connection with the sale, the Company
recognized a gain of $381,559.
The Company owns a property in Newark, Delaware formerly leased to Lanxide
Corporation. In May 2004, the Company entered into an agreement with a third
party to sell the Newark property for approximately $2,900,000 less selling
costs. Accordingly, the property is classified as held for sale with a carrying
value of $2,752,849 as of June 30, 2004.
The results of operations for the Newark property, which is classified as held
for sale as of June 30, 2004, and the results of operations of properties in
Ashburn, Virginia and Hauppauge, New York which properties were sold in March
2004 and April 2004, respectively are included in "Discontinued Operations" and
are summarized as follows:
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
2004 2003 2004 2003
---------- --------- ---------- ----------
Revenues (primarily rental revenues and
miscellaneous income) $ 19,950 $534,579 $ 178,722 $1,152,820
Expenses (primarily interest on mortgages,
depreciation and property expenses) (198,424) (419,605) (629,849) (919,617)
Gain on sale of real estate 1,372,105 -- 1,753,664 --
---------- -------- ---------- ----------
Income from discontinued operations $1,193,631 $114,974 $1,302,537 $233,203
========== ======== ========== ==========
Note 7. Accounting Pronouncements:
In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"), the primary objective of which is to
provide guidance on the identification of entities for which control is achieved
through means other than voting rights ("variable interest entities" or "VIEs")
and to determine when and which business enterprise should consolidate the VIE
(the "primary beneficiary"). In December 2003, the FASB issued a revised FIN 46
which modifies and clarifies various aspects of the original Interpretation. FIN
46 applies when either (1) the equity investors (if any) lack one or more of the
essential characteristics of controlling financial interest, (2) the equity
investment at risk is insufficient to finance that entity's activities without
additional subordinated financial support or (3) the equity investors have
voting rights that are not proportionate to their economic interest. In addition
FIN 46 requires additional disclosures. The adoption of FIN 46 did not have a
material impact on the financial statements as either the unconsolidated joint
ventures are not VIEs or for two unconsolidated investments which are VIEs, the
Company was not considered the primary beneficiary.
8
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of
operations of Corporate Property Associates 12 Incorporated ("CPA(R):12") should
be read in conjunction with the condensed consolidated financial statements and
notes thereto as of June 30, 2004 included in this quarterly report and
CPA(R):12's Annual Report on Form 10-K for the year ended December 31, 2003. The
following discussion includes forward-looking statements. Forward looking
statements, which are based on certain assumptions, describe future plans,
strategies and expectations of CPA(R):12. Forward-looking statements discuss
matters that are not historical facts. Because they discuss future events or
conditions, forward-looking statements may include words such as "anticipate",
"believe", "estimate", "intend", "could", "should", "would", "may", or similar
expressions. Do not unduly rely on forward-looking statements. They give our
expectations about the future and are not guarantees, and speak only as of the
date they are made. Such statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievement of CPA(R):12 to be materially different from the results of
operations or plan expressed or implied by such forward looking statements. The
risk factors are fully described in Item 1 of the Annual Report on Form 10-K for
the year ended December 31, 2003. Accordingly, such information should not be
regarded as representations by CPA(R):12 that the results or conditions
described in such statements or objectives and plans of CPA(R):12 will be
achieved. Additionally, a description of CPA(R):12's critical accounting
estimates is included in the management's discussion and analysis in the Annual
Report on Form 10-K. There has been no significant change in such critical
accounting estimates.
EXECUTIVE OVERVIEW
How CPA(R):12 Earns Revenue
The primary sources of CPA(R):12's revenues are earned from leasing real estate.
CPA(R):12 acquires and owns commercial properties that are then leased to
companies, primarily on a net lease basis. Revenue is subject to fluctuation
because of lease expirations, lease terminations, the timing of new lease
transactions and sales of property.
How Management Evaluates Results of Operations
Management evaluates the results of CPA(R):12 with a primary focus on the
ability to generate cash flow necessary to meet its investment objectives of
increasing its distribution rate to its shareholders and overall property
appreciation. As a result, management's assessment of operating results gives
less emphasis to the effect of unrealized gains and losses which may cause
fluctuations in net income for comparable periods but have no impact on cash
flow and to other noncash charges such as depreciation and impairment charges.
In evaluating cash flow from operations, management includes equity
distributions that are included in investing activities to the extent that the
distributions in excess of equity income are the result of noncash charges such
as depreciation. In determining the distribution rate to shareholders,
management considers its assessment of future operations.
For the six-month period ended June 30, 2004, cash flow generated from
operations and equity investments was not sufficient to fully fund
dividends paid, distributions to minority partners, that is, to affiliates who
have interests in investments that are included in CPA(R):12's condensed
consolidated financial statements, and scheduled mortgage principal payments.
Cash flow generated was $13,681,000 and the uses were $16,264,000, a net
operating shortfall of $2,583,000.
As of June 30, 2004, CPA(R):12 has cash balances of $21,475,000 which can be
used for working capital needs and other commitments and may be used for future
real estate purchases.
Current Developments and Trends
As general economic conditions continue to improve, inflation and interest rates
are expected to continue to rise as well. In addition, competition for both real
estate properties and for investors' money continues to increase. These trends
generally present challenges to the real estate leasing market. Management feels
that its strategy of maintaining a diverse portfolio of properties with
long-term leases and long-term, fixed rate debt obligations provides investors
protection from these trends. In addition, the majority of lease transactions
include Consumer Price Index ("CPI") escalation clauses that are intended to
help protect our investors against potential future inflation.
Management will continue to pursue its objectives through long-term transactions
and continuing to diversify its portfolio. To that end, management is seeking to
continue to invest in the international commercial real estate market as a means
of diversifying its portfolio. While more complex and generally requiring a
longer lead time to
9
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
complete, international transactions currently provide the benefits of more
favorable interest rates and greater flexibility to leverage the underlying
property.
CPA(R):12 is addressing challenges at several underperforming properties (refer
to Lease Revenues below) but it also has used its resources during the past year
to participate in new transactions with its affiliates including noncontrolling
interests in (i) a master net lease for fifteen health club properties and (ii)
properties in France, in order to attempt to offset the decrease in cash flow
from the underperforming properties. If CPA(R):12 is not successful in
addressing these challenges, there is no assurance that the dividend rate can be
maintained.
Current developments include:
CPA (R):12 completed the sale of an underperforming property located in
Hauppauge, New York in April 2004 for proceeds of $5,924,000, net of selling
costs. This property was underperforming as a result of a lease termination
agreement entered into with the tenant in July 2003, whereby the tenant vacated
the property in September 2003. CPA(R):12 recognized a gain on the sale of
approximately $1,372,000. Results of operations related to this property are
classified within "Discontinued Operations" for all periods presented in this
Form 10-Q.
In May 2004, CPA(R):12 entered into an agreement to sell an underperforming
property located in Newark, Delaware for $2,900,000 less selling costs.
Accordingly, this property is classified as an asset held for sale within
"Discontinued Operations" for all periods presented in this Form 10-Q.
In June 2004, the Board of Directors of CPA(R):12 approved the second quarter
dividend of $.2067 per share payable on July 15, 2004 to shareholders of record
as of June 30, 2004.
On June 30, 2004, CPA(R):12 acquired a newly constructed manufacturing and
distribution warehouse facility from Silgan Containers Manufacturing Corp. in
Fort Dodge, Indiana. The cost, which represents an expansion of an existing
property leased to Silgan, was $1,424,000 and provided for an extension of the
original lease to 2020. Under the terms of the lease agreement entered into with
Silgan, initial annual rent increased to $1,554,000 with rent increases every
five years beginning July 2007 based on increases in the CPI.
RESULTS OF OPERATIONS:
Lease Revenues - For the comparable quarters ended June 30, 2004 and 2003, lease
revenues (rental income and interest income from direct financing leases)
remained constant. Additional rent of approximately $261,000 primarily from
scheduled rent increases at eight properties was substantially offset by lower
rent from two underperforming properties in Piscataway, New Jersey and San
Leandro, California. The majority of the rent increases are based on formulas
where rents are indexed to increases in the CPI. A new lease entered into on
June 30, 2004 with Silgan for a property in Fort Dodge, Indiana will contribute
annual rent of approximately $1,554,000.
For the comparable six-month periods ended June 30, 2004 and 2003, lease
revenues decreased $340,000 primarily due to two underperforming properties in
Piscataway, New Jersey and San Leandro, California which resulted in a reduction
of rental income of $709,000. This decrease was partially offset by scheduled
rent increases at ten properties, which contributed $333,000 of additional rent
during the period. The majority of the rent increases are based on formulas
where rents are indexed to increases in the CPI.
CPA(R):12 faces several challenges including re-leasing the Piscataway property
which has been vacant since January 2004 and the former Scott Companies, Inc.
property located in San Leandro. Scott entered into liquidation in November
2003. A portion of the former Scott property is currently occupied by several
tenants under short-term leases with combined monthly rent of approximately
$50,000. Garden Ridge Corporation, the lessee of a retail property in Tulsa,
Oklahoma has filed a petition of bankruptcy and is in the process of preparing a
plan of reorganization. As part of its reorganization plan, Garden Ridge may
decide to terminate its lease. CPA(R):12 is discussing alternative plans with
Garden Ridge including an extension of the current lease term in return for
reduced rent payments. The final outcome of Garden Ridge's reorganization plan
is currently not known. Annual rent from Garden Ridge is $940,000. CPA(R):12
also owns a property in Chattanooga, Tennessee net leased to The Garden
Companies, Inc. which is experiencing financial difficulties and has been unable
to pay full rent since November 2003. CPA(R):12 granted a short-term deferral of
rent to Garden Companies and accepted reduced monthly rent payments of $50,000
through June 2004. Garden Companies is currently trying to secure additional
financing which will help resolve their cash flow problems. Annual rent from the
Garden Companies lease is $920,000.
10
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Other Operating Income - For the comparable quarters ended June 30, 2004 and
2003, other operating income decreased $158,000 primarily due to a reduction in
reimbursable costs from tenants. Such reimbursable costs are recorded as both
revenue and expense and therefore have no impact on net income. This reduction
was partially offset by lease termination income.
For the comparable six-month periods ended June 30, 2004 and 2003, other
operating income decreased $2,727,000 primarily due to the recognition of
$2,722,000 of other income in connection with the termination of the lease on
the Piscataway property in 2003.
General and Administrative Expense - For the comparable three and six-month
periods ended June 30, 2004 and 2003, general and administrative expenses
decreased $418,000 and $385,000, respectively, primarily due to a reduction in
several general and administrative expenses, including personnel cost
reimbursements and investor related service costs which were partially offset by
increases in state taxes and fees for accounting and auditing services.
Property Expense - For the comparable quarters ended June 30, 2004 and 2003,
property expenses increased $309,000 primarily due to absorbing carrying costs
at the former Scott property in San Leandro of $137,000 and $137,000 of legal
fees. CPA(R):12's asset management and performance fees also increased $108,000
primarily as a result of the growth of CPA(R):12's asset base. These increases
were partially reduced by a reduction in the provision for uncollectable rents.
For the comparable six-month periods ended June 30, 2004 and 2003, property
expenses increased $1,026,000 primarily due to absorbing carrying costs at the
former Scott property in San Leandro of $365,000 and $192,000 of legal fees.
CPA(R):12's asset management and performance fees also increased $355,000.
Income From Equity Investments - For the comparable quarters ended June 30, 2004
and 2003, income from equity investments increased $92,000. For the comparable
six-month periods ended June 30, 2004 and 2003, income from equity investments
increased $788,000 primarily due to acquiring interests in properties leased to
Starmark Camhood LLC in February 2003 and Medica-France, SA and Carrefour
France, SAS in March 2003. A distribution facility in Grand Rapids, Michigan
held as an equity investment had been vacant due to the termination of a lease
with Fleming Companies since March 2003, pursuant to Fleming's bankruptcy. On
January 1, 2004, The Retail Distribution Group entered into a lease at the Grand
Rapids property at an initial annual rent of $903,000 of which the Company's
share is $361,000. The lease has an initial term through August 2009. The Retail
Distribution lease is subject to adjustments because Retail Distribution vacated
another property, which is still subject to lease. The adjustments will be
reduced for the sublease rentals Retail Distribution receives from the other
property.
Interest Expense - For the three and six-month periods ended June 30, 2004,
interest expense decreased $87,000 and $281,000, respectively, from the
comparable prior year periods primarily as a result of a decrease in mortgage
balances, all of which provide for scheduled mortgage principal payments.
Net Income - For the comparable quarters ended June 30, 2004 and 2003, net
income increased $1,204,000 primarily due to reductions in general and
administrative expenses as well as a gain from the sale of a property located in
Hauppauge, New York. For the comparable six-month periods ended June 30, 2004
and 2003, net income decreased $1,971,000 primarily due to the recognition of
lease termination income of $2,722,000 in 2003 which was partially offset by
reductions in general and administrative expenses as well as gains from the
sales of properties which were classified as discontinued operations.
FINANCIAL CONDITION:
Uses of Cash During the Period
There has been no material change in CPA(R):12's financial condition since
December 31, 2003. CPA(R):12's cash balances have increased by $8,170,000 since
December 31, 2003 and management believes CPA(R):12 has sufficient cash balances
to meet its working capital needs and to currently support its distribution
rate. CPA(R):12's use of cash during the period is described below.
11
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Operating Activities - One of CPA(R):12's objectives is to use the cash flow
from net leases (including its equity investments) to meet operating expenses,
service its debt and fund dividends to shareholders. Cash flows from operations
and equity investments of $13,681,000 were not fully sufficient to pay dividends
to shareholders of $12,560,000, meet scheduled mortgage principal installments
of $2,922,000 and distribute $782,000 to minority interest partners. Annual
distributions from two equity investments in France are scheduled to be paid in
the fourth quarter. The distributions, subject to fluctuations in foreign
currency exchange rates are expected to approximate $1,350,000. There is no
assurance that cash flow from operating activities will be sufficient to meet
CPA (R):12's operating and dividend objectives for an extended period, and,
therefore, management will continue to assess whether the dividend rate can be
maintained.
Annual operating cash flow may benefit as management continues to focus on
increasing performance at underperforming properties through leases with new
tenants or property sales, such as the two sales completed during the first six
months of 2004. A new lease with Silgan, an existing tenant, was entered into on
June 30, 2004, and is expected to contribute additional annual cash flow of
$133,000. Scheduled rent increases on several properties during 2004 and 2005
will also result in additional cash from operations.
Investing Activities - CPA(R):12's investing activities are generally comprised
of real estate purchases, payment of its annual installment of deferred
acquisition fees and receipt of proceeds from the sale of property. Proceeds
from the sales of properties were $12,615,000 consisting of $6,691,000 related
to the Ashburn, Virginia property and $5,924,000 related to the Hauppauge, New
York property. CPA(R):12 also received $1,430,000 from the final payment of sale
proceeds from a 2003 sale of a portion of an interest in the Carrefour France,
SAS properties to an affiliate. The annual installment of deferred acquisition
fees is paid each January and approximated $1,467,000. Other cash outlays
included $1,517,000 for real estate purchases and capitalized costs, primarily
related to the Silgan property in June 2004.
Financing Activities - In addition to making scheduled mortgage principal
payments, paying dividends to shareholders and making distributions to minority
partners, CPA(R):12 obtained $1,002,000 as a result of issuing shares through
its dividend reinvestment plan, and used $1,230,000 to purchase treasury shares.
All of CPA(R):12's mortgages are limited recourse and bear interest at fixed
rates. Accordingly, CPA(R):12's cash flow should not be adversely affected by
increases in interest rates which are near historical lows. CPA(R):12 may seek
to refinance maturing or recently paid-off mortgage debt with new property-level
financing. There is no assurance that existing debt will be refinanced at lower
rates of interest as such debt matures. Many of the loans restrict CPA(R):12's
ability to prepay a loan or provide for payment of premiums if paid prior to its
scheduled maturity, but allow defeasance of the loan that is, a deposit is made
to service the loan commitment even if the underlying property is sold.
A lender on limited recourse mortgage debt has recourse only to the property
collateralizing such debt and not to any of CPA(R):12's other assets, while
unsecured financing would give a lender recourse to all of CPA(R): 12's assets.
The use of limited recourse debt, therefore, will allow CPA(R):12 to limit its
exposure of all of its assets to any one debt obligation. Management believes
that the strategy of combining equity and limited recourse mortgage debt will
allow CPA(R):12 to meet its short-term and long-term liquidity needs and will
help to diversify CPA(R):12's portfolio and, therefore, reduce concentration of
risk in any particular lessee.
Cash Resources
As of June 30, 2004, CPA(R):12 has $21,475,000 in cash and cash equivalents
which can be used for working capital needs and other commitments and may be
used for future real estate purchases. In addition, debt may be incurred on
unleveraged properties with a carrying value of $19,110,000 as of June 30, 2004
and any proceeds may be used to finance future real estate purchases.
Cash Requirements
During the next twelve months, cash requirements will include scheduled mortgage
principal payments (CPA(R):12 has no mortgage balloon payments scheduled until
August 2005 and October 2005 for $2,460,000 and $1,688,000, respectively),
paying dividends to shareholders, making distributions to minority partners as
well as other normal recurring operating expenses. CPA(R):12 may also seek to
use its cash to purchase new properties to further diversify its portfolio and
maintain cash balances sufficient to meet working capital needs. Based on its
current cash balances, CPA(R):12 may use existing cash reserves to satisfy the
balloon payment obligations.
12
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
CPA(R):12's ability to sustain its dividend on a long-term basis will be
affected by its ability to generate cash from its properties in Piscataway and
San Leandro and the ability of Garden Companies and Garden Ridge to fulfill
their lease obligations. Management is aggressively seeking to re-lease or sell
its vacant properties in order to generate cash and reduce or eliminate
absorbing carrying costs on such properties. Because CPA(R):12 has sufficient
cash resources, it may use its cash reserves to acquire real estate investments,
pay down debt or support its distribution rate at its current level.
Other Matters
CPA(R):12 and three affiliates own subordinated interests in a mortgage pool
consisting of mortgage debt collateralized by properties and lease assignments
on properties owned by CPA(R):12 and its affiliates. The Garden Ridge property
is included in the mortgage pool and in the event the lease is terminated, cash
flow from this investment might be adversely affected as subordinated interests
in the mortgage pool are only paid after all other classes of ownership receive
their stated interests and related principal payments. CPA(R):12 was successful
in negotiating the substitution of a property in Austin, Texas as collateral for
a loan in the mortgage pool formerly on the Hauppauge property and would likely
seek to substitute one of its unleveraged properties in the event that the
Garden Ridge lease is terminated.
OFF-BALANCE SHEET ARRANGEMENTS, GUARANTEES AND AGGREGATE CONTRACTUAL AGREEMENTS:
A summary of CPA(R):12's contractual obligations and commitments as of June 30,
2004 is as follows:
(in thousands) Total 2004 2005 2006 2007 2008 Thereafter
-------- ------ ------- ------- -------- ------- ----------
Obligations:
Limited recourse mortgage notes
payable (1) $181,284 $3,031 $10,447 $11,539 $24,546 $18,049 $113,672
Deferred acquisition fees 5,219 - 1,420 1,226 832 579 1,162
Subordinated disposition fees 1,784 - - - - - 1,784
Commitments:
Share of minimum rents payable
under office cost-sharing
agreement 333 60 156 117 - _ - _ - _
-------- ------ ------- ------- ------- ----- --------
$188,620 $3,091 $12,023 $12,882 $25,378 $18,628 $116,618
======== ====== ======= ======= ======= ======= ========
- ----------
(1) The limited recourse mortgage notes payable were obtained in connection
with the acquisition of properties in the ordinary course of business.
13
CORPORATE PROPERTY ASSOCIATES 12 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 risk to which CPA(R):12 is exposed is interest rate
risk and foreign currency exchange risk.
The value of CPA(R):12's real estate is subject to fluctuations based on changes
in interest and foreign currency exchange rates, local and regional economic
conditions and changes in the creditworthiness of lessees. These factors may
affect CPA(R):12's ability to refinance its debt when balloon payments are
scheduled.
CPA(R):12 owns marketable securities through its ownership interests in Carey
Commercial Mortgage Trust ("CCMT"). The value of the marketable securities is
subject to fluctuations based on changes in interest rates, economic conditions
and the creditworthiness of lessees at the mortgaged properties. As of June 30,
2004 the interests in CCMT had a fair value of $7,983,000. CPA(R):12 also owns
marketable equity securities of Proterion Corporation and Sentry Technology
Corporation which based on their quoted per share prices had a fair value of
$214,000 as of June 30, 2004.
All of CPA(R):12's $181,283,855 long-term debt bears interest at fixed rates,
and the fair value of these instruments is affected by changes in 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, 2004 ranged from 5.15% to 8.75%.
(in thousands)
2004 2005 2006 2007 2008 Thereafter Total Fair Value
------ ------- ------- ------- ------- ---------- -------- ----------
Fixed rate debt $3,031 $10,447 $11,539 $24,546 $18,049 $113,672 $181,284 $180,201
Average interest
rate 7.37% 7.70% 7.73% 7.57% 6.72% 7.54%
A change in interest rates of 1% would not have an effect on annual interest
expense as CPA(R):12 has no variable rate debt.
CPA(R):12 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):12's financial position or results of operations.
In addition, the underlying properties are financed with fixed-rate mortgage
debt in the local currency so that changes in exchange rates that would increase
or decrease rental revenues from the properties would be partially offset by
exchange rate changes on debt service. CPA(R):12 has not entered into any
foreign currency forward exchange contracts to hedge the effects of adverse
fluctuations in foreign currency exchange.
Item 4. - CONTROLS AND PROCEDURES
The Co-Chief Executive Officers and Chief Financial Officer of the Company have
conducted a review of the Company's disclosure controls and procedures as of
June 30, 2004.
The Company's disclosure controls and procedures include the Company's controls
and other procedures designed to ensure that information required to be
disclosed in this and other reports filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act") is accumulated and communicated to the
Company's management, including its Co-Chief Executive Officers and Chief
Financial Officer, to allow timely decisions regarding required disclosure and
to ensure that such information is recorded, processed, summarized and reported,
within the required time periods.
Based upon this review, the Company's Co-Chief Executive Officers and Chief
Financial Officer have concluded that the Company's disclosure controls (as
defined in Rule 13a-14(c) promulgated under the Exchange Act) are sufficiently
effective to ensure that the information required to be disclosed by the Company
in the reports it files under the Exchange Act is recorded, processed,
summarized and reported with adequate timeliness.
14
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
PART II
Item 2. - CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES
OF EQUITY SECURITIES
(c) For the three and six-month periods ended June 30, 2004, 78,326
and 151,922 shares, respectively, were issued to the Advisor as
consideration for performance fees and 47,947 and 94,378
shares, respectively, were issued pursuant to the Company's
Stock Purchase and Dividend Reinvestment Plan. Shares were
issued at per share amounts, which ranged from $10.60 to
$11.70.
(e) Issuer Purchases of Equity Securities
Total Number of Shares
Purchased as Part of
Total Number of Average Price Publicly Announced Plans
Period Shares Purchased Paid Per Share or Programs (1)
------ ---------------- -------------- ---------------
January 1, 2004 - January 31, 2004 47,825 $10.07 N/A
February 1, 2004 - February 29, 2004 - - N/A
March 1, 2004 - March 31, 2004 1,200 10.07 N/A
April 1, 2004 - April 30, 2004 73,583 10.00 N/A
May 1, 2004 - May 31, 2004 - - N/A
June 1, 2004 - June 30, 2004 - _ - N/A
-------
Total 122,608
=======
- ----------
(1) All shares were purchased pursuant to the Company's Redemption Plan. The
maximum amount of shares purchasable in any period depends on the
availability of funds generated by the Dividend Reinvestment Plan and
other factors at the discretion of the Company's Board of Directors.
Item 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An annual Shareholders' meeting was held on June 10, 2004, 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 16,056,433 15,988,040 19,500 48,893
William Ruder 16,056,433 15,969,628 37,912 48,893
George E. Stoddard 16,056,433 15,941,936 65,604 48,893
Elizabeth P. Munson 16,056,433 15,986,803 20,737 48,893
Charles E. Parente 16,056,433 15,988,303 19,237 48,893
Item 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
31.1 Certification of Co-Chief Executive Officers
31.2 Certification of Chief Financial Officer
32.1 Certification of Co-Chief Executive Officers Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
None
15
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
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 12 INCORPORATED
8/6/2004 By: /s/ John J. Park
- ------------ ----------------------------------------
Date John J. Park
Managing Director and
Chief Financial Officer
(Principal Financial Officer)
8/6/2004 By: /s/ Claude Fernandez
- ----------- ----------------------------------------
Date Claude Fernandez
Managing Director and
Chief Accounting Officer
(Principal Accounting Officer)
16