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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
-------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 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 10020
NEW YORK, NEW YORK 10020 (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
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 November 5, 2004.
CPA(R):12 has 30,419,138 shares of common stock, $.001 par value outstanding
at November 5, 2004.
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
INDEX
Page No.
PART I
Item 1. - Financial Statements*
Condensed Consolidated Balance Sheets as of September 30, 2004
and December 31, 2003 2
Condensed Consolidated Statements of Income for the three and nine
months ended September 30, 2004 and 2003 3
Condensed Consolidated Statements of Comprehensive Income for the three and
nine months ended September 30, 2004 and 2003 3
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 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. - Unregistered Sales of Equity Securities and Use of Proceeds 15
Item 4. - Submission of Matters to a Vote of Security Holders 15
Item 6. - Exhibits 15
Signatures 16
* The summarized condensed consolidated financial statements contained herein
are unaudited; however, in the opinion of management, all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of such financial statements have been included.
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
PART I
Item 1. - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2004 December 31, 2003
------------------ -----------------
(Unaudited) (Note)
----------- ------
ASSETS:
Land and buildings, net of accumulated depreciation of $46,268,414 at September
30, 2004 and $41,176,156 at December 31, 2003 $ 304,783,572 $ 303,053,049
Net investment in direct financing leases 19,127,500 19,127,500
Intangible assets, net of accumulated amortization of $2,917 at September 30, 2004 1,480,130 -
Equity investments 90,955,573 90,206,460
Assets held for sale 2,752,849 10,453,403
Cash and cash equivalents 10,151,294 13,305,343
Marketable securities 8,356,978 8,810,482
Other assets, net 17,028,810 17,234,625
------------- -------------
Total assets $ 454,636,706 $ 462,190,862
============= =============
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY:
Liabilities:
Mortgage notes payable $ 179,788,694 $ 180,981,200
Mortgage note payable on asset held for sale - 3,224,335
Accrued interest 985,442 1,035,859
Accounts payable and accrued expenses 2,418,602 2,473,641
Due to affiliates 3,354,039 3,062,758
Deferred acquisition fees payable to affiliate 5,403,148 6,658,067
Dividends payable 6,310,765 6,271,709
Other liabilities 1,044,555 -
Prepaid rental income and security deposits 3,666,451 5,131,254
------------- -------------
Total liabilities 202,971,696 208,838,823
------------- -------------
Minority interest 8,120,726 8,021,816
------------- -------------
Commitments and contingencies
Shareholders' equity:
Common stock, $.001 par value; authorized, 40,000,000 shares; issued and
outstanding, 31,667,317 shares at September 30, 2004 and 31,284,287 shares
at December 31, 2003 31,667 31,284
Additional paid-in capital 287,311,369 282,962,414
Dividends in excess of accumulated earnings (33,470,773) (29,949,878)
Accumulated other comprehensive income 1,087,739 1,594,782
------------- -------------
254,960,002 254,638,602
Less, treasury stock at cost, 1,177,550 shares at September 30, 2004 and 975,975
shares at December 31, 2003 (11,415,718) (9,308,379)
------------- -------------
Total shareholders' equity 243,544,284 245,330,223
------------- -------------
Total liabilities, minority interest and shareholders' equity $ 454,636,706 $ 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 September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2004 2003 2004 2003
---- ---- ---- ----
Revenues:
Rental income $ 9,910,605 $ 10,140,813 $ 29,809,208 $ 30,379,320
Interest income from direct financing leases 646,458 646,458 1,939,374 1,939,374
Other operating income 28,559 446,995 226,277 3,371,315
------------ ------------ ------------ ------------
10,585,622 11,234,266 31,974,859 35,690,009
------------ ------------ ------------ ------------
Operating expenses:
Depreciation and amortization of intangibles 1,870,379 1,845,256 5,571,167 5,530,775
General and administrative 623,546 1,004,868 2,316,727 3,083,030
Property expenses 2,110,290 2,394,698 7,242,434 6,501,086
------------ ------------ ------------ ------------
4,604,215 5,244,822 15,130,328 15,114,891
------------ ------------ ------------ ------------
Income from continuing operations before other interest
income, minority interest, equity investments, gain
(loss) and interest expense 5,981,407 5,989,444 16,844,531 20,575,118
Other interest income 286,473 203,185 816,041 870,089
Minority interest in income (443,592) (383,151) (1,288,891) (1,139,869)
Income from equity investments 2,705,281 2,534,573 8,559,461 7,600,384
Unrealized gain (loss) on foreign currency transactions and
warrants 252,684 111,396 5,746 (211,916)
Gain on settlement of derivatives contract - - - 237,340
Interest expense (3,606,398) (3,712,379) (10,806,614) (11,193,398)
------------ ------------ ------------ ------------
Income from continuing operations 5,175,855 4,743,068 14,130,274 16,737,748
Discontinued operations:
(Loss) income from operations of discontinued properties (54,798) 108,524 (355,925) 341,727
Gain on sale of real estate - - 1,753,664 -
Impairment charge on real estate - (1,000,000) (150,000) (1,000,000)
------------ ------------ ------------ ------------
(Loss) income from discontinued operations (54,798) (891,476) 1,247,739 (658,273)
------------ ------------ ------------ ------------
Net income $ 5,121,057 $ 3,851,592 $ 15,378,013 $ 16,079,475
============ ============ ============ ============
Basic and diluted income per common share:
Earnings from continuing operations $ .17 $ .16 $ .46 $ .55
(Loss) earnings from discontinued operations - (.03) .04 (.02)
------------ ------------ ------------ ------------
Net income $ .17 $ .13 $ .50 $ .53
============ ============ ============ ============
Weighted average shares outstanding - basic and diluted 30,520,851 30,242,024 30,459,389 30,206,867
============ ============ ============ ============
The accompanying notes are an integral part of the condensed consolidated
financial statements.
CONDENSED CONSOLIDATED STATEMENTS of COMPREHENSIVE INCOME (Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2004 2003 2004 2003
---- ---- ---- ----
Net income $ 5,121,057 $ 3,851,592 $ 15,378,013 $ 16,079,475
Other comprehensive income (loss):
Change in unrealized appreciation (depreciation) on
marketable securities 191,038 284,820 (358,020) 1,013,261
Change in foreign currency translation adjustment 246,177 152,209 (149,023) 618,532
------------ ------------ ------------ ------------
437,215 437,029 (507,043) 1,631,793
------------ ------------ ------------ ------------
Comprehensive income $ 5,558,272 $ 4,288,621 $ 14,870,970 $ 17,711,268
============ ============ ============ ============
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)
Nine Months Ended September 30,
-------------------------------
2004 2003
---- ----
Cash flows from operating activities:
Net income $ 15,378,013 $ 16,079,475
Adjustments to reconcile net income to net cash provided by operating activities:
(Income) loss from discontinued operations, including gain on sale of real estate (1,247,739) 658,273
Depreciation and amortization 5,915,055 5,937,519
Straight-line rent adjustments (649,220) (1,140,745)
Income from equity investments in excess of distributions received (2,155,745) (1,726,146)
Fees paid by issuance of stock 2,693,906 2,332,140
Minority interest in income 1,288,891 1,139,869
Unrealized (gain) loss on foreign currency transactions and derivative instruments, net (5,746) 262,764
Gain on settlement of derivatives contract - (237,340)
Lease termination proceeds assigned to lender - (2,540,000)
Securities received in connection with lease termination agreement - (368,000)
Change in operating assets and liabilities, net (1,872,803) (889,383)
------------ ------------
Net cash provided by continuing operations 19,344,612 19,508,426
Net cash (used in) provided by discontinued operations (326,664) 588,365
------------ ------------
Net cash provided by operating activities 19,017,948 20,096,791
------------ ------------
Cash flows from investing activities:
Distributions from equity investments in excess of equity income 917,670 1,165,682
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 (10,668,206) (22,160,839)
Proceeds from sale of assets 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 2,826,985 (18,532,007)
------------ ------------
Cash flows from financing activities:
Prepayments of mortgage principal - (5,199,402)
Payments on mortgage principal (4,416,841) (4,126,920)
Distributions to minority interest partner (1,189,981) (1,081,740)
Payment of financing costs and mortgage deposits (80,401) (132,478)
Proceeds from issuance of shares, net of costs 1,655,432 634,522
Dividends paid (18,859,852) (18,707,198)
Purchase of treasury stock (2,107,339) (1,988,271)
------------ ------------
Net cash used in financing activities (24,998,982) (30,601,487)
------------ ------------
Net decrease in cash and cash equivalents (3,154,049) (29,036,703)
Cash and cash equivalents, beginning of period 13,305,343 40,084,470
------------ ------------
Cash and cash equivalents, end of period $ 10,151,294 $ 11,047,767
============ ============
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 adjustments) 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 (see Note 7). As a result,
certain prior period amounts have been reclassified to conform to current period
financial statement presentation.
Dividends declared per share for the three and nine-month periods ended
September 30, 2004 were $.2067 and $.6201, respectively.
Note 2. Transactions with Related Parties:
In connection with performing services on behalf of the Company, the advisory
agreement ("Advisory Agreement") between the Company and W. P. Carey & Co. LLC
("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 fees 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 $918,528 and $862,423 for the three
months ended September 30, 2004 and 2003, respectively, and $2,751,364 and
$2,517,709 for the nine months ended September 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 September 30, 2004 and 2003, the Company incurred
personnel cost reimbursements of $205,661 and $338,433, respectively, and
$802,582 and $1,043,243, for the nine months ended September 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, as defined in the Advisory Agreement, is met.
The unpaid portion of the deferred fees bears interest at an annual rate of 7%
from the date of purchase until paid. For transactions completed during the nine
months ended September 30, 2004, current and deferred fees were $265,314 and
$212,251, respectively. During the nine months ended September 30, 2003, the
current and deferred fees were $667,539 and $534,031, respectively.
Note 3. Acquisitions of Real Estate:
On September 28, 2004, the Company purchased property in Greenville, South
Carolina for $9,188,482 and entered into a net lease with Sunland Distribution
Company, Inc. The lease has an initial term of 15 years with two ten-year
renewal options and provides for initial annual rent of $807,787. The lease
provides for annual rent increases of 2%.
Note 4. 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
5
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
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.
Summarized financial information of the Company's equity investees is as
follows:
(In thousands) September 30, 2004 December 31, 2003
------------------ -----------------
Assets (primarily real estate) $ 902,214 $ 914,682
Liabilities (primarily mortgage notes payable) (588,262) (598,938)
-------- --------
Partners' and members' equity $ 313,952 $ 315,744
======== ========
Company's share of equity investees' net assets $ 90,956 $ 90,206
======== ========
Nine Months Ended September 30,
-------------------------------
(In thousands) 2004 2003
---- ----
Revenues (primarily rental income and interest income from
direct financing leases) $ 71,698 $ 65,803
Expenses (primarily interest on mortgages and depreciation) (47,251) (40,577)
-------- --------
Net income $ 24,447 $ 25,226
======== ========
Company's share of net income from equity investments $ 8,559 $ 7,600
======== ========
Note 5. 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 September 30, 2004, the fair value of the
Company's interests was $8,221,446, reflecting an aggregate unrealized gain of
$1,244,471 and cumulative net amortization of $261,649 ($95,484 for the nine
months ended September 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
September 30, 2004 1% Adverse Change 2% Adverse Change
------------------ ----------------- -----------------
Fair value of the interests $8,221,446 $7,835,525 $7,473,882
The above sensitivity analysis 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 6. 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 lease revenues for the nine-month periods ended September 30,
2004 and 2003 are as follows:
6
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
2004 2003
---- ----
Per Statements of Income:
Rental income from operating leases $ 29,809,208 $ 30,379,320
Interest income from direct financing leases 1,939,374 1,939,374
Adjustment:
Share of lease revenue applicable to minority interest (2,428,953) (2,322,804)
Share of lease revenue from equity investments 20,732,484 19,090,603
------------ ------------
$ 50,052,113 $ 49,086,493
============ ============
For the nine-month periods ended September 30, 2004 and 2003, the Company earned
net lease revenues from its investments as follows:
2004 % 2003 %
---- - ---- -
Applied Materials, Inc. (a) $ 4,929,925 10% $ 4,714,356 10%
Carrefour France, SAS (b) (c) 3,041,489 6 2,203,937 4
Advanced Micro Devices, Inc. (b) 2,444,203 5 2,444,203 5
Starmark Camhood, LLC (b) 2,055,645 4 1,770,830 4
Galyan's Trading Company 2,049,865 4 2,049,865 4
Perry Graphic Communications, Inc. and Judd's Incorporated 1,643,675 3 1,643,675 3
TruServ Corporation (b) 1,628,192 3 1,625,014 3
Spectrian Corporation 1,613,250 3 1,613,250 3
Special Devices, Inc. (b) 1,528,885 3 1,485,527 3
Westell Technologies, Inc. 1,487,780 3 1,487,780 3
Best Buy Co., Inc. (b) 1,292,304 3 1,304,428 3
Medica-France, SA (b) (c) 1,291,195 3 841,908 2
Career Education Corporation 1,269,976 3 1,302,606 3
Telos Corporation 1,249,154 2 1,249,154 3
Q Clubs, Inc. 1,179,187 2 1,165,047 2
Sicor, Inc. (b) 1,137,664 2 1,104,552 2
PPD Development, Inc. 1,128,142 2 1,128,142 2
Del Monte Corporation (b) 1,108,285 2 1,108,285 2
Silgan Containers Corporation 1,099,528 2 1,066,015 2
The Upper Deck Company (b) 1,089,165 2 1,089,165 2
The Bon-Ton Stores, Inc. 1,082,626 2 1,050,833 2
McLane Company, Inc. (b) 1,067,533 2 1,055,934 2
Compucom Systems, Inc. (b) 1,056,033 2 1,056,033 2
Childtime Childcare, Inc. 960,255 2 952,733 2
Textron, Inc. (b) 929,804 2 929,804 2
Jen-Coat, Inc. 907,500 2 907,500 2
ShopRite Supermarkets, Inc. (b) 824,010 2 818,521 2
Pacific Logistics, L.P. 779,454 2 764,502 2
Orbseal LLC 758,813 2 758,813 2
Other 7,418,576 15 8,394,081 17
----------- --- ----------- ---
$50,052,113 100% $49,086,493 100%
=========== === =========== ===
(a) Net of minority interest of an affiliate.
(b) Represents the Company's proportionate share of lease revenues from its
equity investments.
(c) The Carrefour France, SAS and Medica-France, SA interests were acquired in
March 2003.
The Company recorded $3,012,000 of other operating income during the nine months
ended September 30, 2003 in connection with the termination of a lease on
property in Piscataway, New Jersey.
Note 7. 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.
7
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
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 which had been classified as an asset held for sale, consented
to the transfer of the loan obligation to the Company's property in Austin,
Texas leased to Q Clubs, Inc.
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. An agreement to sell the Newark property, which had been entered
into in May 2004 with a third party, was terminated during the current quarter.
The Company is still committed to selling this property, and accordingly, the
property is classified as held for sale.
The results of operations for the Newark property, which is classified as held
for sale as of September 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 September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2004 2003 2004 2003
---- ---- ---- ----
Revenues (primarily rental revenues and other
operating income) $ 19,950 $ 235,789 $ 198,673 $ 1,388,609
Expenses (primarily interest on mortgages,
depreciation and property expenses) (74,748) (127,265) (554,598) (1,046,882)
Gain on sale of real estate - - 1,753,664 -
Impairment charge on real estate - (1,000,000) (150,000) (1,000,000)
----------- ----------- ----------- -----------
(Loss) income from discontinued operations $ (54,798) $ (891,476) $ 1,247,739 $ (658,273)
=========== =========== =========== ===========
Note 8. Accounting Pronouncements:
In December 2003, the FASB issued Interpretation No. 46(R), "Consolidation of
Variable Interest Entities" ("FIN 46(R)"), 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"). FIN 46(R) 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(R) requires
additional disclosures. The adoption of FIN 46(R) 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 September 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 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 on 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.
Current Developments and Trends
If 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 or stated increases that
are intended to help protect our investors against potential future inflation.
As of September 30, 2004, CPA(R):12 has cash balances of $10,151,000 which can
be used for working capital needs and other commitments and may be used for
future real estate purchases. For the nine-month period ended September 30,
2004, cash flow generated from continuing operations and equity investments was
not sufficient to fully fund dividends paid, distributions to minority partners,
and scheduled mortgage principal payments. Cash flow generated was $20,262,000
and the uses were $24,467,000, representing a net operating shortfall of
$4,205,000.
9
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CPA(R):12 is addressing challenges at several underperforming properties (see
Lease Revenues below). During the first nine months of 2004, CPA(R):12 has sold
two underperforming properties and has reinvested a portion of the proceeds from
these sales into new cash generating investments. Management is focused on
improving cash flow at several vacant and/or underperforming properties by
aggressively working to lease or sell such property and/or work with existing
tenants to meet their rental obligations. CPA(R):12's ability to maintain its
current dividend rate depends on a successful resolution of these challenges.
Current developments during the quarterly period ended September 30, 2004
include:
In September 2004, the Board of Directors of CPA(R):12 approved the third
quarter dividend of $.2067 per share payable on October 15, 2004 to shareholders
of record as of September 30, 2004.
On September 28, 2004, CPA(R):12 purchased property in Greenville, South
Carolina for $9,188,000 and entered into a net lease with Sunland Distribution
Company, Inc. The Sunland lease will initially provide annual rent of $808,000
with 2% increases annually.
RESULTS OF OPERATIONS:
Lease Revenues - For the comparable quarters ended September 30, 2004 and 2003,
lease revenues (rental income and interest income from direct financing leases)
decreased by $230,000 primarily as the result of lower rent from underperforming
properties in Piscataway, New Jersey and San Leandro, California. This was
partially offset by rents of approximately $189,000 from scheduled rent
increases from 10 leases since September 30, 2003 and $41,000 of rent from the
June 2004 expansion of a facility leased to Silgan Containers Manufacturing
Corp. The majority of the rent increases are based on formulas where rents are
indexed to increases in the CPI. A new lease entered into in September 2004 with
Sunland provides annual rent of $808,000.
For the comparable nine-month periods ended September 30, 2004 and 2003, lease
revenues decreased $570,000 primarily due to the two underperforming properties,
which resulted in a reduction of rental income of $1,191,000. This decrease was
partially offset by rent increases at existing properties.
CPA(R):12 faces several challenges including re-leasing or selling the
Piscataway property, which has been vacant since January 2004 and the former
Scott Companies, Inc. property 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 $49,000. Garden Ridge Corporation, the lessee of a retail property
in Tulsa, Oklahoma filed a petition of bankruptcy. As part of its reorganization
plan, Garden Ridge has entered into a lease modification with CPA(R):12 that is
subject to confirmation of the bankruptcy court. Under the modification, Garden
Ridge's annual rent would decrease from $940,000 to $742,000 and the initial
lease term would be extended five years. Garden Ridge had the option under
bankruptcy laws to terminate the lease.
CPA(R):12 has successfully resolved the uncertainty related to its property in
Chattanooga, Tennessee which was leased to The Garden Companies, Inc. On October
22, 2004, CPA(R):12 entered into a net lease at the Chattanooga property with
Plantation Products Inc., which purchased certain of Garden Companies assets in
a bankruptcy proceeding. The lease provides for a two-year term at an annual
rent of $606,000. The Garden Companies lease provided for annual rents of
$920,000. Due to its financial difficulties, however, Garden Companies had been
granted a deferral of a significant portion of the contractual rent so the
decrease in contractual rents does not represent a decrease in cash flows from
the property relative to the period prior to the asset sale. The new lease with
Plantation is a net lease and should eliminate the risk that CPA(R):12 would
incur carrying costs of the property. Additionally, in October 2004, CPA(R):12
received a distribution of $747,000 in settlement of its bankruptcy claims
against Garden Companies.
Other Operating Income - For the comparable quarters ended September 30, 2004
and 2003, other operating income decreased $418,000 primarily due to $320,000 of
other income received in connection with lease termination considerations
recognized in the third quarter of 2003, with the remaining amount 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.
10
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
For the comparable nine-month periods ended September 30, 2004 and 2003, other
operating income decreased $3,145,000 primarily due to the recognition of
$3,012,000 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 nine-month
periods ended September 30, 2004 and 2003, general and administrative expenses
decreased $381,000 and $766,000, respectively, primarily due to a reduction in
several general and administrative expenses, including personnel cost
reimbursements and investor related service costs. The decrease was partially
offset by increases in state taxes and fees for accounting and auditing
services.
Property Expense - For the comparable quarters ended September 30, 2004 and
2003, property expenses decreased $284,000 primarily due to a reduction of
$318,000 in the provision for uncollected rents.
For the comparable nine-month periods ended September 30, 2004 and 2003,
property expenses increased $741,000 primarily due to absorbing carrying costs
at the former Scott property in San Leandro of $321,000 and $211,000 of legal
fees. CPA(R):12's asset management and performance fees also increased $467,000,
which was caused by both the annual third party evaluation of its portfolio as
of December 31, 2003 and the growth of CPA(R):12's asset base. These increases
were partially offset by lower provisions for uncollected rents.
Income From Equity Investments - For the comparable quarters ended September 30,
2004 and 2003, income from equity investments increased $171,000. For the
comparable nine-month periods ended September 30, 2004 and 2003, income from
equity investments increased $959,000 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 nine-month periods ended September 30,
2004, interest expense decreased $106,000 and $387,000, respectively, from the
comparable prior year periods primarily as a result of a $4,417,000 decrease in
mortgage balances, all of which provide for scheduled mortgage principal
payments.
Net Income - For the comparable quarters ended September 30, 2004 and 2003, net
income increased $1,269,000 primarily due to a lower loss from discontinued
operations and lower property and general and administrative expenses. For the
comparable nine-month periods ended September 30, 2004 and 2003, net income
decreased $701,000 primarily due to the recognition of lease termination income
of $3,012,000 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. Management believes CPA(R):12 has sufficient cash balances to
meet its existing working capital needs. CPA(R):12's ability to maintain its
current dividend rate depends on successfully resolving cash flow challenges at
several underperforming properties (see Current Developments and Trends and
Lease Revenues above). CPA(R):12's use of cash during the period is described
below.
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 debt and fund dividends to shareholders. Cash flows from continuing
operations and equity investments of $20,262,000 were not fully sufficient to
pay dividends to
11
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
shareholders of $18,860,000, meet scheduled mortgage principal installments of
$4,417,000 and distribute $1,190,000 to minority interest partners. Annual
distributions from two equity investments in France are scheduled to be paid in
the fourth quarter. Those 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 nine
months of 2004. New leases with Silgan, an existing tenant, and Sunland
Distribution were entered into in June and September 2004, respectively, and are
expected to contribute additional annual cash flow of $941,000. The prepayment
of a loan in October 2004 will reduce annual debt service obligations by
$292,000. Scheduled rent increases on several properties during 2004 and 2005
should 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 was paid in January 2004 and approximated $1,467,000. Other cash outlays
included $10,668,000 for real estate purchases and capitalized costs, primarily
related to the Silgan and Sunland Distribution properties.
Financing Activities - In addition to making scheduled mortgage principal
payments, paying dividends to shareholders and making distributions to minority
partners, CPA(R):12 obtained $1,665,000 as a result of issuing shares through
its Distribution Reinvestment and Share Purchase Plan, and used $2,107,000 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 September 30, 2004, CPA(R):12 has $10,151,000 in cash and cash equivalents
that 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 $27,861,000 as of September 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 payment installments (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 underperforming properties,
including properties in Piscataway and San Leandro and the ability of Garden
Ridge to successfully reorganize and emerge from bankruptcy. The agreed-upon
restructuring of the Garden Ridge lease will be effective only when its
bankruptcy plan is confirmed by the Bankruptcy Court and the modified lease
should enhance Garden Ridge's ability to meet its business objectives in which
event it will be better able to meet its lease commitment on a long-term basis.
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.
OFF-BALANCE SHEET ARRANGEMENTS, GUARANTEES AND AGGREGATE CONTRACTUAL AGREEMENTS:
A summary of CPA(R):12's contractual obligations and commitments as of September
30, 2004 is as follows:
(in thousands) Total 2004 2005 2006 2007 2008 Thereafter
----- ---- ---- ---- ---- ---- ----------
Obligations:
Mortgage notes payable (1) $179,789 $ 1,536 $ 10,447 $ 11,539 $ 24,546 $ 18,049 $113,672
Deferred acquisition fees 5,403 - 1,420 1,249 855 602 1,277
Subordinated disposition fees 1,784 - - - - - 1,784
Commitments:
Share of minimum rents payable under
office cost-sharing agreement 3,236 34 201 228 270 270 2,233
-------- -------- -------- -------- -------- -------- --------
$190,212 $ 1,570 $ 12,068 $ 13,016 $ 25,671 $ 18,921 $118,966
======== ======== ======== ======== ======== ======== ========
(1) 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 September
30, 2004 the interests in CCMT had a fair value of $8,221,000. 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
$136,000 as of September 30, 2004.
All of CPA(R):12's $179,789,000 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 September 30, 2004 ranged from 5.15% to 8.75%.
(in thousands) 2004 2005 2006 2007 2008 Thereafter Total Fair Value
---- ---- ---- ---- ---- ---------- ----- ----------
Fixed rate debt $1,536 $10,447 $11,539 $24,546 $18,049 $113,672 $179,789 $182,947
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. A change in interest rates of 1%
would impact the fair value of CPA(R):12's fixed rate debt at September 30, 2004
by approximately $7,600,000.
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 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.
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
September 30, 2004.
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.
There have been no changes during the most recent fiscal quarter in the
Company's internal control over financial reporting that have materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.
14
CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED
PART II
Item 2. - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a)For the three and nine-month periods ended September 30, 2004, 78,327 and
230,294 shares, respectively, were issued to the Advisor as consideration
for performance fees and 49,696 and 144,074 shares, respectively, were
issued pursuant to CPA(R):12's Distribution Reinvestment and Share
Purchase Plan. Shares were issued at per share amounts, which ranged from
$10.60 to $11.70.
(c)Issuer Purchases of Equity Securities
Total Number of Shares
Purchased as Part of
Total Number of Average Price Publicly Announced
Period Shares Purchased Paid Per Share Plans 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
July 1, 2004 - July 31, 2004 74,217 11.12 N/A
August 1, 2004 - August 31, 2004 1,250 11.12 N/A
September 1, 2004 - September 30, 2004 3,500 11.12 N/A
-------
Total 201,575
=======
(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 Distribution Reinvestment and Share
Purchase 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
During the quarter ended September 30, 2004, no matters were submitted to a vote
of Security Holders.
Item 6. - 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
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
11/5/2004 By: /s/ John J. Park
--------- -----------------------------------
Date John J. Park
Managing Director and
Chief Financial Officer
(Principal Financial Officer)
11/5/2004 By: /s/ Claude Fernandez
--------- -----------------------------------
Date Claude Fernandez
Managing Director and
Chief Accounting Officer
(Principal Accounting Officer)
16